Sales-Outline_Ateneo.pdf

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ATENEODE MANILA LAW SCHOOL

LAW ON SALES OUTLINE 1 DEAN CESAR L. VILLANUEVA First Semester, SY 2011-2012 A TTY. ALE ANDER C. D Y

ATTY

. RAY

!AOLO

". SANTIA#O

I. THE NATURE OF SALE A. DEFINITION $Art. 1%&'(

Sale is a contract whereby one of the contracting parties [the seller] obligates himself to transferthe ownership2 and to deliver the possession, of a determinate thing, and the other party [the buyer] topay therefor a price certain in money or its equivalent. xCruz v. Fernando , 477 SC ! "7# $%&&'(.)

1. E*eme+ts S *e)lements of sale* $a( consent or meeting of the minds+ $b( determinate sub ect matter+ and $c(

price certain in money or its equivalent. xNavarra v. Planters Dev. Bank , '%7 SC ! '-% $%&&7(.4

Sale being a consensual contract, its essential elements must be proven. xVillanueva v. CA ,

%-7 SC ! / $"//7(. !bsence of any essential elements negates a sale xDizon v. CA , #&% SC ! % $"///(,' even

when earnest money has been paid. xManila Metal Container Corp. v. PNB , '"" SC ! 444 $%&&-(.0ut once all elements are proven, a sale1s validity is not affected by a previously e2ecuted

fictitious deed of sale. xPealosa v. Santos, #-# SC ! '4' $%&&"(+ and the burden is on the otherparty to prove otherwise. 2Heirs o !rnesto Biona v. CA, #-% SC ! %/ $%&&"(.

2. St /es C +tr t S *ePolicitacion covers the period from the time the prospective contracting parties indicate interest

in the contract to the time the contract is perfected.Perfection ta3es place upon the concurrence ofthe essential elements, which are the meeting of the minds of the parties as to the ob ect of thecontract and upon the price. Consummation begins when the parties perform their respectiveunderta3ings, culminating in the e2tinguishment thereof. 2San Mi"uel Properties P#ilippines, $n%. v.Huan", ##- SC ! 7#7 $%&&&(.-

). S *e Cre tes Re * O *i/ ti +s T #i3e4 $Art. 115&(

%. Esse+ti * C6 r teristi s S *e7

. N mi+ te +8 !ri+ i9 * ! contract of sale is what the law defines it to be, ta3ing into consideration its essential

elements, and not what the contracting parties call it. xSantos v. Court o Appeals , ##7 SC ! -7$%&&&(.7

. C +se+s: * $Art. 1%;&(

"T6e O:t*i+e 9rese+ts t6e m ++er < =6i 6 t6e L AW ON SALES =i** e t >e+-:9 i+ * ss. T6e x's +8 t6 se t+ te8 i+ t6e O:t*i+ere9rese+t ses r t 9i s =6i 6 +ee8 + e?te+8e8 8is :ssi +s, eit6er e :se t6e esse+ e t6e r:*i+/s re *re 8< s:mm ri@e8i+ t6e O:t*i+e r t6e< +t i+ simi* r r:*i+/s r 8 tri+es s t6er ses t e 8is :sse8. U+*ess t6er=ise i+8i te8, t6e+:m ere8 rti *es re er t rti *es t6e Ci3i* C 8e t6e !6i*i99i+es.

% wnership is the independent and general power of a person over a thing for purposes recogni5ed by law and within the limits establishedthereby. !ccording to !rt. 4% of the Civil Code, this means that* 6he owner has the right to en oy and dispose of a thing, without otherlimitations than those established by law. 2 2 2 !side from the &us utendi and the &us a'utendi inherent in the right to en oy the thing, the rightto dispose, or the &us disponendi , is the power of the owner to alienate, e+ :m er , transform and even destroy the thing owned. Flan%ia v.Court o Appeals , 4'7 SC ! %%4 $%&&'(.

# Al redo v. Borras , 4&4 SC ! "4' $%&(+Manila Metal Container Corp. v. PNB , '"" SC ! 444 $%&&-(+(o'erts v. Papio , '"' SC ! #4-$%&&7(.

4)ovan *and, $n%. v. CA , %- SC ! "-& $"//7(+ +ui&ada v. CA , %// SC ! -/' $"// (+ Co v. CA , #"% SC ! '% $"///(+ San Andres v.(odri"uez , ##% SC ! 7-/ $%&&&(+(o'le v. Ar'asa, #-% SC ! -/ $%&&"(+Pol te%#ni% -niversit v. CA , #- SC ! -/" $%&&"(+ atipunan v.

atipunan , #7' SC ! "// $%&&%(+*ondres v. CA, #/4 SC ! "## $%&&%(+Manon"son" v. !sti/o , 4&4 SC ! - # $%&(+)i/enez, )r. v.)ordana , 444 SC ! %'& $%&&4(+San *orenzo Dev. Corp. v. CA , 44/ SC ! // $%&&'(+ 0ason v. Ar%ia"a , 44/ SC ! 4' $%&&'(+(o'erts v.Papio , '"' SC ! #4- $%&&7(+Navarra v. Planters Dev. Bank , '%7 SC ! '-% $%&&7(+(epu'li% v. Florendo , '4/ SC ! '%7 $%&& (+1S$S v.*opez , '/% SC ! 4'- $%&&/(+Baladad v. (u'li%o , '/' SC ! "%' $%&&/(+ Del Prado v. Ca'allero , -"4 SC ! "&% $%&"&(+Monte%alvo v.Heirs o !u"enia 2. Pri/ero , -%4 SC ! '7' $%&"&(.

' (o'erts v. Papio , '"' SC ! #4- $%&&7(+ 30S2 Corp. v. DMC -r'an Properties Dev., $n%. , '/4 SC ! '/ $%&&/(.- *i/ketkai Sons Millin", $n%. v. Court o Appeals , %'& SC ! '%# $"//'(+ )ovan *and, $n%. v. CA , %- SC ! "-& $"//7(+ Bu"atti v. Court o

Appeals , #4# SC ! ##' $%&&&(+Moreno, )r. v. Private Mana"e/ent 4 i%e , '&7 SC ! -# $%&&-(+Manila Metal Container Corp. v. PNB , '""SC ! 444 $%&&-(+ Navarra v. Planters Dev. Bank , '%7 SC ! '-% $%&&7(+Provin%e o Ce'u v. Heirs o (u ina Morales , '4- SC ! #"'$%&& (+1S$S v. *opez , '/% SC ! 4'- $%&&/(+ 30S2 Corp. v. DMC -r'an Properties Dev., $n%. , '/4 SC ! '/ $%&&/(.

7Bo5e v. CA , %%& SC ! "' $"//#(+ (o/ero v. CA , %'& SC ! %%# $"//'(+*ao v. CA , %7' SC ! %#7 $"//7(+ Cavite Develop/ent Bankv. *i/ , #%4 SC ! #4- $%&&&(.


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! contract of sale is not a real, but a consensual contract, and becomes valid and bindingupon the meeting of the minds of the parties as to the ob ect and the price, consequently*

pon its perfection, the parties may reciprocally demand performance. 2Heirs o Venan%ioBe&entin" v. Baez , '&% SC ! '#" $%&&-(+/ sub ect only to the provisions of the law governingthe form of contracts. xCruz v. Fernando , 477 SC ! "7# $%&&'(.

8t remains valid even if parties have not affi2ed their signatures to its written form, x1a'elov. CA, #"- SC ! # - $"///(, or the manner of payment is breached. xPilipinas S#ell Petroleu/Corp v. 1o'onsen" , 4/- SC ! #&' $%&&-(.

8n an )2tra udicial Settlement of )state with !bsolute Sale, it would be immaterial that thebuyer1s signature does not appear thereon since the contract of sale is consensual andperfected by mere consent. xBaladad v. (u'li%o , '/' SC ! "%' $%&&/(.

9ailure of the subdivision developer to obtain a license to sell the subdivision lots does notrender the sales void on that ground alone especially that the parties have impliedly admittedthat there was already a meeting of the minds as to the sub ect of the sale and price of thecontract. Cante/prate v. C(S (ealt Dev. Corp . ' 7 SC ! 4/% $%&&/(.

6he binding effect of sale is based on the principle that the obligations arising therefrom havethe force of law between the parties. 2Veterans Federation o t#e P#ilippines v. Court o Appeals ,#4' SC ! #4 $%&&&(.

Perfection Distinguished from Demandability : ;ot all contracts of sale becomeautomatically and immediately effective. 8n sales with assumption of mortgage, there is acondition precedent to the seller1s consent and without the approval of the mortgagee, the sale isnot perfected. xBian Steel Corp. v. Court o Appeals , #/" SC ! /& $%&&%(.

No Contract Situation versus Void Contract : !bsence of consent $ i.e., %o/plete/eetin" o /inds6 negates the e2istence of a perfected sale. xFir/e v. Bukal !nterprises andDev. Corp. , 4"4 SC ! "/& $%&(. 6he contract then is null and voida' initio , absolutely wantingin civil effects+ hence, it does not create, modify, or e2tinguish the uridical relation to which itrefers. xCa'ota&e v. Pudunan , 4#- SC ! 4%# $%&&4(.

and does notserve as a binding uridical relation between the parties. 2Manila Metal Container Corp. v. PNB ,

'"" SC ! 444 $%&&-(,"&

and should be more accurately denominated as ine2istent, as it did notpass the stage of generation to the point of perfection. 2NHA v. 1ra%e Baptist C#ur%# , 4%4 SC !"47 $%&&4(.

. i* ter * +8 Re i9r *$Arts. 115B +8 11B1( ! contract of sale gives rise to =reciprocal obligations>, which arise from the same cause with

each party being a debtor and creditor of the other, such that the obligation of one is dependentupon the obligation of the other+ and they are to be performed simultaneously, so that theperformance of one is conditioned upon the simultaneous fulfillment of the other.Cortes v. Courto Appeals , 4/4 SC ! '7& $%&&-(.""

! perfected contract of sale carries the correlative duty of the seller to deliver the propertyand the obligation of the buyer to pay the agreed price. Con"re"ation o t#e (eli"ious o t#eVir"in Mar v. 4rola , ''# SC ! '7 $%&& (.

6he power to rescind is implied in reciprocal ones in case one of the obligors should notcomply with what is incumbent upon him, and without need of prior demand. Al/o%era v. 4n" ,'4- SC ! "-4 $%&& (."%

8. O+er :s $ Gaite v !onacier" 2 SCRA ')0 1B51 (

e. C mm:t ti3e $# $% S&& Arts. 1)&& +8 1%;0(8n a contract of sale, there is no requirement that the price be equal to the e2act value of the

sub ect matter of sale+ all that is required is that the parties believed that they will receive goodvalue in e2change for what they will give. #uenaventura v C( , %15 SCRA 25) $200)(.

. S *e Is Tit*e +8 N t M 8e(o/ero v. CA , %'& SC ! %%# $"//'(+ Balat'at v. CA, %-" SC ! "% $"//-(+ Coronel v. CA , %-# SC ! "' $"//-(+ Cit o Ce'u v. Heirs

o Candido (u'i, #&- SC ! 4& $"///(+ A"asen v. CA , #%' SC ! '&4 $%&&&(+*a orteza v. Ma%#u%a, ### SC ! -4# $%&&&(+ *ondres v.Court o Appeals , #/4 SC ! "## $%&&%(+ Al%antara7Daus v. de *eon , 4&4 SC ! 74 $%&(+Buenaventura v. Court o Appeals , 4"- SC !%-# $%&(+San *orenzo Dev. Corp. v. CA , 44/ SC ! // $%&&'(+ 0ason v. Ar%ia"a , 44/ SC ! 4' $%&&'(+ Ainza v. Padua , 4-% SC ! -"4$%&&'(+(o'erts v. Papio , '"' SC ! #4- $%&&7(+MCC $ndustrial Sales Corp. v. Ssan" on" Corp. , '#- SC ! 4& $%&&7(+Castillo v. (e es .'#/ SC ! "/# $%&&7(+ 30S2 Corp. v. DMC -r'an Properties Dev., $n%. , '/4 SC ! '/ $%&&/(+ Del Prado v. Ca'allero , -"4 SC ! "&%$%&"&(.

/ Provin%e o Ce'u v. Heirs o (u ina Morales , '4- SC ! #"' $%&& (."&(o'erts v. Papio , '"' SC ! #4- $%&&7(."" 4n" v. Court o Appeals , #"& SC ! " $"///(+ Mortel v. ASSC4 , #4 SC ! #/" $%&&&(+ A"ro Con"lo/erates, $n%. v. CA , #4 SC !

4'& $%&&& 68 Velarde v. Court o Appeals , #-" SC ! '- $%&&"(+Carras%oso, )r. v. Court o Appeals , 477 SC ! --- $%&&'(+Heirs o AntonioF. Berna'e v. Court o Appeals , ''/ SC ! '# $%&& (+ Heirs o Antonio F. Berna'e v. Court o Appeals , ''/ SC ! '# $%&& (.

"%Vda. De +uirino v. Palar%a, %/ SC ! " $"/-/(

2


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Sale is not a mode, but merely a title. ! mode is the legal means by which dominion orownership is created, transferred or destroyed, but title is only the legal basis by which to affectdominion or ownership. Sale by itself does not transfer or affect ownership+ the most that saledoes is to create the obligation to transfer ownership. 8t is tradition or delivery, as a consequenceof sale, that actually transfers ownership. xSan *orenzo Dev. Corp. v. CA , 44/ SC ! // $%&&'(, "# %itin" ? 8@@!; )?! , AB8@8AA8;) @ !< ; S !@)S, "//' ed., at p. '.

Seller1s ownership of the thing sold is not an element of perfection+ what the law requires isthat seller has the right to transfer ownership at the time of delivery. 2+ui&ada v. CA, %// SC !-/' $"// (. "4

# $% S && 722iton" v. CA, % 7 SC ! "&% $"// (, which defined a =sale> as =a %ontra%t trans errin"do/inion and ot#er real ri"#ts in t#e t#in" sold. >

. SALE DISTIN#UISHED FROM SIMILAR CONTRACTS ! contract is what the law defines it to be, ta3ing into consideration its essential elements, and the

title given to it by the parties is not as much significant as its substance."' 6he transfer of ownership ine2change for a price paid or promised is the very essence of a contract of sale. 2Santos v. Court o

Appeals, ##7 SC ! -7 $%&&&(.8n determining the real character of sale, courts loo3 at the intent of the parties, their true aim and

purpose in entering into the contract, as well as =by their conduct, words, actions and deeds prior to,during and immediately after e2ecuting the agreement,> and not at the nomenclature used to describeit, 2*ao v. Court o Appeals , %7' SC ! %#7 $"//7(.

1. D + ti +$Arts. ;2& +8 1%;1(nli3e a donation, sale is a disposition for valuable consideration with no diminution of the estate

but merely substitution of values, with the property sold replaced by the equivalent monetaryconsideration+ unli3e donation, a valid sale cannot have the legal effect of depriving the compulsoryheirs of their legitimes. xManon"son" v. !sti/o , 4&4 SC ! - # $%&(.

6he rules on double sales under !rt. "'44 find no relevance to contracts of donation. 2 He/edesv. Court o Appeals, #"- SC ! #47 $"///(.

2. rter $Arts. 1%5', 15)' t 15%1(

). C +tr t r !ie e- -W r> $Arts. 1%5;, 1;1) t 1;1& (Crux =8neluctably, whether the contract be one of sale or one for a piece of wor3, a transfer of

ownership is involved and a party necessarily wal3s away with an ob ect.> 2Co//issioner o$nternal (evenue v. CA , %7" SC ! -&' $"//7(, %itin" ? 8@@!; )?! , @ !< ; S !@)S, pp. 7 / $"//'(. 8nboth, the provisions on warranty of title against hidden defects applies. 2Dio v. CA , #'/ SC ! /"$%&&"(.


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acquiring the property for the purported principal. Puyat v (rco (musement Co , ;2 !6i*. %02$1B%1(.

ne factor that most clearly distinguishes agency from other legal concepts, including sale, is%ontrol + one person : the agent : agrees to act under the control or direction of another : theprincipal. 2Vi%torias Millin" Co., $n%. v. CA, ### SC ! --# $%&&&(.

Commercial bro3er, commission merchant or indentor is a/iddle/an a%tin" in #is o5n na/e ,

and acts as agent for both seller and buyer to effect a sale between them. !lthough he is neitherseller nor buyer to the contract effected he may voluntarily assume warranties of seller. xS%#/idand 4'erl , $n%. v. ()* Martinez , "-- SC ! 4/# $"/ (.

&. Dacion &n Pago $Arts. 12%& +8 1B)%(1overned ' t#e la5 on sales , dation in payment is a transaction that ta3es place when property

is alienated to the creditor in full satisfaction of a debt in money : it involves the delivery andtransmission of ownership of a thing as an accepted equivalent of the performance of the obligation.0uson v. Vitan , 4/- SC ! '4& $%&&7(.

8n its modern concept, what actually ta3es place inda%ion en pa"o is an ob ective novation ofthe obligation where the thing offered as an accepted equivalent of the performance of an obligationis considered as the ob ect of the contract of sale, while the debt is considered as the purchase

price. xA:uinte v. 2i'on" '"" SC ! 4"4 $%&&-(."7

)lements of dation in payment* $a( performance of the prestation in lieu of payment $ani/osolvendi ( which may consist in the delivery of a corporeal thing or a real right or a credit against thethird person+ $b( some difference between the prestation due and that which is given in substitution$aliud pro alio (+ and $c( agreement between the creditor and debtor that the obligation is immediatelye2tinguished by reason of the performance of a presentation different from that due. /o v 01S&co2!orm3or4 System Phil " *nc , %1) SCRA 1'2 $200)(."

6here is no dation in payment where there is no transfer of ownership in the creditor1s favor, aswhen the possession of the thing is merely given to the creditor by way of security.Fort Boni a%ioDev. Corp. v. 0llas *endin" Corp. , '-7 SC ! 4'4 $%&& (+ as when the possession is only by way ofsecurity. 2PNB v. Pineda , "/7 SC ! " $"//"(.

9or da%ion to arise, there must be actual delivery of the property to the creditor by way ofe2tinguishment of the pre e2isting debt.P#ilippine *a5in Bus Co. v. CA, #74 SC ! ##% $%&&%(."/ # $% S && 5 #*%&+ SSS v. Court o Appeals , ''# SC ! -77 $%&& (.

8n a trueda%ion en pa"o , the assignment of the property e2tinguishes the monetary debt. 4n"v. (o'an *endin" Corp. , ''7 SC ! '"- $%&& (.

! creditor, especially a ban3, which enters into da%ion en pa"o , should 3now and must acceptthe legal consequence thereof, that the pre e2isting obligation is totally e2tinguished. x!stanislao v.!ast ;est Bankin" Corp. , '44 SC ! #-/ $%&& (.

! property sub ect to a real estate mortgage, which has not been foreclosed, may validly be thesub ect ofda%ion en pa"o , for a mortgage does not ta3e away the property rights of the mortgagor+however, the creditor who becomes the buyer of the property is sub ect to the real estate mortgagelien. x2 pin"%o v. *i/ , -&4 SC ! #/- $%&&/(.

5. Le se $Arts. 1%'% +8 1%'&( are clearly meant to be installment payments to a sale contract,

despite the nomenclature given by the parties, it is a sale by installments and governed by the ecto@aw. 2Filinvest Credit Corp. v. CA , "7 SC ! " $"/ /(.

II. ! ARTIES TO A CONTRACT OF SALES $Arts. 1%'B-1%B2(1. #e+er * R:*e7 )very person having legal capacity to obligate himself, may validly enter into a

contract of sale, whether as seller or as buyer. $Art. 1%'B(

2. Mi+ rs, I+s +e +8 Deme+te8 !ers +s, De -M:tes $Arts. 1)2;, 1)B; +8 1)BB ( ! minor cannot be deemed to have given her consent to a contract of sale+ consent is amongthe essential requisites of a contract, including one of sale, absent of which there can be no validcontract. 2*a'a"ala v. Santia"o , #7" SC ! #-& $%&&"(.

. Ne ess ries $Arts. 1%'B +8 2B0(

"7Dao Hen" Bank, $n%.


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. x Em + i9 ti + $Arts. )BB +8 1)B;+*nutile 7 Da ority age now at " years, !rts. %#4 and %#-,9amily Code, amended by .!. - &/(.

. !r te ti + t6e Se+i*e +8 E*8er* Calimlim2Canullas v !ortun" 12B SCRA 5;& $1B'%(.%%

Since under !rt. "4/&, the spouses cannot validly sell property to one another, then policyconsideration and the dictates of morality require that the prohibition should apply also to commonlaw relationships.% . Mata'uena v. Cervantes , # SC ! % 4 $"/7"(.

;evertheless, when property resold to a third party buyer in good faith and for value,reconveyance is no longer available. 2Cruz v. CA, % " SC ! 4/" $"//7(.

6he in pari deli%to doctrine would apply to the spouses parties under !rt. "4/&, since only theheirs and the creditors can question the sale1s nullity. 2Modina v. Court o Appeals, #"7 SC ! -/-$"///(.

%. Ot6ers Re* ti3e*< Dis : *i ie8 $Arts. 1%B1 +8 1%B2(Contracts entered into in violation of !rts. "4/& and "4/% are not merely voidable,'ut are nulland void . +ubias v #atiller , &1 SCRA 120 $1B;)(.%#

. #: r8i +s, A/e+ts +8 A8mi+istr t rs;o more need to comply with 2(odri:uez v. Ma%tal , -& Ahil. "# $"/#4( which required

showing that a third party bought as conduitFnominee of the buyer disqualified under !rt. "4/"+rather, the presumption now is that such disqualified party obtained the property in violation ofsaid article. Phili--ine %rust Co v +oldan , BB !6i*. )B2 $1B&5(.

Arohibition against agents does not apply if the principal consents to the sale of the propertyin the hands of the agent. xDista&o v. CA, ##/ SC ! '% $%&&&(.

Bereditary rights are not included in the prohibition insofar as administrator or e2ecutor of theestate of the deceased. 2 Naval v. !nri:uez , # Ahil. --/ $"/&4(.

. Att r+e


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Arohibition applies only to a sale to ala5 er o re%ord , and does not cover assignment of theproperty given in udgment made by a client to an attorney, who has not ta3en part in the case.Muni%ipal Coun%il o $loilo v. !van"elista , '' Ahil. %/& $"/#&(+%4 nor to a lawyer who acquiredproperty prior to the time he intervened as counsel in the suit involving such property.Del(osario v. Millado , %- SC ! 7&& $"/-/(.

Arohibition does not apply* $a( to sale of a land acquired by a client to satisfy a udgment inhis favor, to his attorney as long as the property was not the sub ect of the litigation. 2Daro v.

A'e%ia, %/ SC ! "7% $"// (+ or $b( toa contingency fee arrangement which grants thelawyer of record proprietary rights to the property in litigation since the payment of said fee is notmade during the pendency of litigation but only after udgment has been rendered.!abillo v*(C , 1B& SCRA 2' $1BB1(.%'

. ":8/es ! udge should restrain himself from participating in the sale of propertiesGit is incumbent

upon him to advise the parties to discontinue the transaction if it is contrary to law.Britani%o v.!spinosa , 4 - SC ! '%# $%&&-(.

! udge who buys property in litigation before his courta ter t#e &ud"/ent 'e%o/es inal doesnot violate !rt. "4/", but he can be administratively disciplined for violation of the Code of Hudicial)thics. 2 Ma%ariola v. Asun%ion , ""4 SC ! 77 $"/ %(.

)ven when the main cause is a collection of a sum of money, the properties levied are stillsub ect to the prohibition. 21an 2in"%o v. Pa'in"uit , #' Ahil. " $"/"-(.

III. SU "ECT MATTER OF SALE $Arts. 1%&B t 1%5&( =6ransfer of title or an agreement to transfer it for a price paid or promised to be paid is the

essence of sale.> 2Co//issioner o $nternal (evenue v. CA and Ateneo de Manila -niversit , %7"SC ! -&' $"//7(.

6he Civil Code provisions defining sales is a =catch all> provision which effectively brings within itgrasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration.

Polytechnic $niversity v C( , )5' SCRA 5B1 $2001(.


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Sub ect matter is determinable when by a formula or description agreed upon at perfectionthere is a way by which the courts can delineate independent of the will of the parties.

7elli8a v City of *loilo , 2) SCRA %;; $1B5'(. on three sides thereof, the

sub ect lot is capable of being determined without the need of any new contract, even whenthe e2act area of the ad oining residential lot is sub ect to the result of a survey. 2San Andresv. (odri"uez, ##% SC ! 7-/ $%&&&(.

Eeterminable sub ect matter of sale are not sub ect to ris3 of loss until they are physicallysegregated or particularly designated. 9u %e4 ) Co v Gon8ales , 2B !6i*. )'% $1B1&(.

. U+8i3i8e8 I+terest $!rt. "4-#( r U+8i3i8e8 S6 re i+ M ss F:+/i *e # 8s $!rt. "4-4( : Day result it co ownership.

%. J: +tit< S: e t M tter N t Esse+ti * r !er e ti + $Art. 1)%B(Sale of grains is perfected even when the e2act quantity or quality is not 3nown, so long as

the source of the sub ect is certain. NG( v *(C , 1;1 SCRA 1)1 $1B'B(. Nool v C(" 2;5SCRA 1%B $1BB;(.

. S: se :e+t A :isiti + Tit*e < N +-O=+er Se**er $Art. 1%)%( : validates the sale andtitle passes to the seller by operation of law.

. A :isiti + < t6e :


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IV. ! RICE AND OTHER CONSIDERATION $Arts. 1%5B-1%;%(=Arice> signifies the sum stipulated as the equivalent of the thing sold and also every incident

ta3en into consideration for the fi2ing of the price put to the debit of the buyer and agreed to by him.$n%#austi 9 Co. v. Cro/5ell, %& Ahil. #4' $"/""(.

Seller cannot unilaterally increase the price previously agreed upon with the buyer, even whendue to increased construction costs. 1S$S v. Court o Appeals , %% SC ! " # $"//#(.

0uyer who opted to purchase the land on installment basis with imposed interest, cannot laterunilaterally disavow the obligation created by the stipulation in the contract which sets the interest at%4J per annum* =6he rationale behind having to pay a higher sum on the installment is tocompensate the vendor for waiting a number of years before receiving the total amount due. 6heamount of the stated contract price paid in full today is worth much more that a series of smallpayments totaling the same amount. 2 2 2 6o assert that mere prompt payment of the monthlyinstallments should obviate imposition of the stipulated interest is to ignore an economic fact andnegate one of the most important principles on which commerce operates.>Bortike v. AFP (SBS ,477 SC ! '"" $%&&'(.

1. !ri e M:st e Re * $Art. 1%;1(

. W6e+ !ri e Sim:* te84$1( 7a-alo v 7a-alo , 1; SCRA 11% $1B55(,versus 2Heirs o Pedro !s%anlar v. Court o Appeals, % " SC ! "7-$"//7( .'

#adge %hat Price *s Simulated" Not 1ust $n-aid 8t is a badge of simulated price, whichrender the sale void, when the price, which appears thereon as paid, has in fact never been paidby the purchaser to the seller. xVda. de Catindi". v. Heirs o Catalina (o:ue , 74 SC ! #$"/7-( .-

#0u Bun 1uan v. 4n", , #-7 SC ! ''/ $%&&"(+ 1onzales v. 2rinidad, -7 Ahil. - % $"/#/(4Pealosa v. Santos, #-# SC ! '4' $%&&"(+Soliva v. 2#e $ntestate !state o Mar%elo M. Villal'a , 4"7 SC ! %77 $%&(+Provin%e o

Ce'u v. Heirs o (u ina Morales , '4- SC ! #"' $%&& (.' Villa lor v. Court o Appeals , % & SC ! %/7 $"//7(.

8


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2. M:st e i+ M +e< r Its E :i3 *e+t $Arts. 1%&' +8 1%5'(Arice must be =valuable consideration> as mandated by Civil @aw, instead of =any price>

mandated in common law. 5ng v 5ng , 1)B SCRA 1)) $1B'&(G #agnas v C( , 1;5 SCRA1&B $1B'B(+ +e-ublic v Phil +esources Dev , 102 !6i*. B50 $1B&'(.

Consideration for sale can ta3e different forms, such as the prestation or promise of a thing orservice by another, thus*


10/52

&. I+ 8e : < !ri e D es N t A e t Or8i+ r< S *e $Arts. 1)&& +8 1%;0(Dere inadequacy of the price does not affect the validity of the sale when both parties are in a

position to form an independent udgment concerning the transaction, unless fraud, mista3e, or undueinfluence indicative of a defect in consent is present. 6he contract may be annulled for vitiatedconsent and not due to the inadequacy of price. 2Bautista v. Court o Appeals , 4#- SC ! "4"$%&&4(."&

!bsent any evidence of the fair mar3et value of a land as of the time of its sale, it cannot beconcluded that the price at which it was sold was inadequate. 2 A%a'al v. A%a'al, 4'4 SC ! /7$%&&'(.""

. #r ss I+ 8e : < !ri e M < A3 i81udicial Sale $i( nly when it is shoc3ing to the conscience of man. xPas%ua v. Si/eon , "-" SC ! " $"/ (+

and$ii( 6here is showing that, in the event of a resale, a better price can be obtained. 2Cu Bie v. Court

o Appeals , "' SC ! #&7 $"/-'(. "%

UNLESS 6here is right of redemption, in which case the proper remedy is to redeem xDe *eon v.Salvador , #- SC ! '-7 $"/7&(. "#

UT 7 0y way of e2traordinary circumstances perceived, when in a udicial sale the right ofredemption has been lost, where the inadequacy of the price is purel s#o%kin" to t#e%ons%ien%e,such that the mind revolts at it and such that a reasonable man would neitherdirectly or indirectly be li3ely to consent to it, the same will be se aside. 2Co/eta v. Courto Appeals, #'" SC ! %/4 $%&&"(.

Iross inadequacy of price by itself will not result in a void contract. Iross inadequacy of pricedoes not even affect the validity of a contract of sale, unless it signifies a defect in the consent orthat the parties actually intended a donation or some other contract. 8nadequacy of cause will notinvalidate a contract unless there has been fraud, mista3e or undue influence. $at p. -4/(Ba%un"an v. Court o Appeals , '74 SC ! -4% $%&& (.

6here is =gross inadequacy in price> if a reasonable man will not agree to dispose of hisproperty. Dorado Vda. De Del in v. Dellota , '4% SC ! #/7 $%&& (.

which signifies or implies the rightto choose with whom to contract. ! property owner is free to offer his property for sale to anyinterested person, and is not duty bound to sell the same to the occupant thereof, absent any prioragreement vesting the occupants the right of first priority to buy. 21a'elo v. Court o Appeals, #"-SC ! # - $"///(.

! negotiation is formally initiated by an offer, which, however, must be certain. !t any time priorto the perfection of the contract, either negotiating party may stop the negotiation. !t this stage, theoffer may be withdrawn+ the withdrawal is effective immediately after its manifestation. 6o convertthe offer into a contract, the acceptance must be absolute and must not qualify the terms of theoffer+ it must be plain, unequivocal, unconditional and without variance of any sort from theproposal. 7anila 7etal Container Cor- v PN# , &11 SCRA %%% $2005(."4

!n unaccepted unilateral promise $offer to buy or to sell( prior to acceptance, does not give riseto any obligation or right. x(aro:ue v. Mar:uez , #7 .I. "/"".


11/52

6he @etter of 8ntent to 0uy and Sell is ust thatGa manifestation of Sea 9oods Corporation1s$S9C( intention to sell the property and nited Duslim and Christian rban Aoor !ssociation, 8nc.$ DC A!8( intention to acquire the sameGwhich is neither a contract to sell nor a conditionalcontract of sale. 7uslim and Christian $rban Poor (ssociation" *nc v #+9C2V Develo-mentCor- , &B% SCRA ;2% $200B(.

1. O!TION CONTRACT

!n option is a preparatory contract in which one party grants to the other, for a fi2ed period andunder specified conditions, the power to decide, whether or not to enter into a principal contract. 8tbinds the party who has given the option, not to enter into the principal contract with any otherperson during the period designated, and, within that period, to enter into such contract with theone to whom the option was granted, if the latter should decide to use the option. 8t is a separateagreement distinct from the contract of sale which the parties may enter into upon theconsummation of the option. Carceller v Court of (--eals" )02 SCRA ;1' $1BBB(."'

!n option imposes no binding obligation on the person holding the option aside from theconsideration for the offer. ntil accepted, it is not treated as a sale. %ayag v /acson , %25SCRA 2'2 $200%(."-

6enants, not being the registered owners, cannot grant an option on the land, much less any=e2clusive right> to buy the property under the @atin saying =ne/ dat :uod non #a'et .> x2a a" v.*a%son , 4%- SC ! % % $%&&4(.

. Me +i+/ Se9 r te C +si8er ti +4 $Arts. 1%;B +8 1)2%( ! unilateral promise to sell, in order to be binding upon the promissor, must be for a price

certain and supported by a consideration separate from such price. xSala/e v. Court o Appeals , %#/ SC ! #'- $"//'( ."7

6he =separate consideration> in an option may be anything of value, unli3e in sale where itmust be the price certain in money or its equivalent. Villamor v Court of (--eals" 202 SCRA50; $1BB1(," such when the option is attached to a real estate mortgage xSoriano v. Bautista , -SC ! /4- $"/-%(.

!lthough no consideration is e2pressly mentioned in an option contract, it is presumed that

it e2ists and may be proved, and once proven, the option is binding. xMontinola v. Co&uan"%o ,7 Ahil. 4 " $"/47(.

. N Se9 r te C +si8er ti +7 V i8 s O9ti +, V *i8 s Cert i+ O erSanche8 v +igos , %& SCRA )5' $1B;2(."/

# $% / (%&/9 x0ao a Sin 2radin" v. CA , %&/ SC ! 7-# $"//"(+ xMontilla v. CA , "-" SC ! ''$"/ (+ xNatino v. $AC, "/7 SC ! #%# $"//"(+ and xDia/ante v. CA, %&- SC !'% $"//%(.

. T6ere M:st e A e9t + e O9ti + O er. Va8,ue8 v C( , 1BB SCRA 102 $1BB1(.

8. !r 9er E?er ise O9ti + C +tr t. Nietes v C( , %5 SCRA 5&% $1B;2(. !n option attached to a lease when not e2ercised within the option period is e2tinguished

and cannot be deemed to have been included in the implied renewal $ta%ita re%ondu%%ion( of thelease. 2Dizon v. CA , #&% SC ! % $"///(.

Aroper e2ercise of an option gives rise to the reciprocal obligations of sale 2Heirs o *uisBa%us v. Court o Appeals, #7" SC ! %/' $%&&"(,%& which must be enforced with ten $"&( yearsas provided under !rt. ""44. 2 Dizon v. Court o Appeals , #&% SC ! % $"///(.

6here must be =virtual> e2ercise of option with the option period.Carceller v Court of (--eals , )02 SCRA ;1' $1BBB(.

2. RI#HT OF FIRST REFUSAL ! right of first refusal cannot be the sub ect of specific performance, but breach would allow a

recovery of damages. x1uerrero v. 0i"o, /- Ahil. #7 $"/'4(.

ights of first refusal only constitute =innovative uridical relations>, but do not rise to the levelof contractual commitment since with the absence of agreement on price certain, they are not

"' *a orteza v. Ma%#u%a, ### SC ! -4# $%&&&(+Buot v. CA , #'7 SC ! 4- $%&&"(+ A'alos v. Ma%atan"a , )r., 4#/ SC ! -4/ $%&&4(+Vas:uez v. A ala Corp. , 44# SC ! %#" $%&&4(+!ulo"io v. Apeles , '7- SC ! '-" $%&&/(.

"- Adel a Properties, $n%. v. CA , %4& SC ! '-' $"//'(+ ilos'a an, $n%. v. Morato , %4- SC ! '4& $"//'(+ San Mi"uel PropertiesP#ilippines, $n%. v. Huan", ##- SC ! 7#7 $%&&&(+*i/son v. CA , #'7 SC ! %&/ $%&&"(.

"7)MA House, $n%. v. Sta. Moni%a $ndustrial and Dev. Corp. , '&& SC ! '%- $%&&-(." De la Cavada v. Diaz , #7 Ahil. / % $"/" (+San Mi"uel Properties P#ilippines, $n%. v. Huan", ##- SC ! 7#7 $%&&&("/ (ffirming Atkins, roll 9 Co., $n%. v. Cua , "&% Ahil. /4 $"/' (+5verturning Sout#5estern Su"ar Molasses Co. v. Atlanti% 1ul 9

Pa%i i% Co., /7 Ahil. %4/ $"/''(.%&*i/son v. Court o Appeals, #'7 SC ! %&/ $%&&"(.

11


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sub ect to contractual enforcement. (ng 9u (suncion v Court of (--eals , 2)' SCRA 502$1BB%(.

ight of first refusal contained in a lease, when breached by promissor allows enforcement bythe promisee by way of rescission of the sale entered into with the third party, pursuant to !rts."# "$#( and "# ' of Civil Code. 21uz/an, Bo%alin" 9 Co. v. Bonnevie , %&- SC ! -- $"//%(+

&,uatorial +ealty Dev " *nc v 7ayfair %heater" *nc , 25% SCRA %') $1BB5(+%" Parana,ue0ings &nter-rises" *nc v C(" 25' SCRA ;2;, ;%1 $1BB;( .

8n a right of first refusal, while the ob ect might be made determinate, the e2ercise of the rightwould be dependent not only on the grantor1s eventual intention to enter into a binding uridicalrelation with another but also on terms, including the price, that are yet to be firmed up. . . the=offer> may be withdrawn anytime by communicating the withdrawal to the other party.Vas,ue8v (yala Cor- , %%) SCRA 2)1 $200%(.

! right of first refusal clause simply means that should the lessor decide to sell the leasedproperty during the term of the lease, such sale should first be offered to the lessee+and t#e serieso ne"otiations t#at transpire 'et5een t#e lessor and t#e lessee on t#e 'asis o su%# pre eren%e isdee/ed a %o/plian%e o su%# %lause even 5#en no inal pur%#ase a"ree/ent is per e%ted'et5een t#e parties . 6he lessor was then at liberty to offer the sale to a third party who paid ahigher price, and there is no violation of the right of the lessee. +iviera !ili-ina" *nv v Court of

(--eals , )'0 SCRA 2%& $2002(.%%


13/52

acceptance of the offer which is absolute in that it refers to the e2act ob ect and considerationembodied in said offer. xVillanueva v. PNB , '"& SC ! %7' $%&&-(.%-

8f a material element of a contemplated contract is left for future negotiations, the same is tooindefinite to be enforceable. 9or a contract to be enforceable, its terms must be certain and e2plicit,not vague or indefinite. xBoston Bank o t#e P#il. v. Manalo , 4 % SC ! "& $%&&-(.

So long as there is any uncertainty or indefiniteness, or future negotiations or consideration yet

to be had between the parties, there is no contract at all. xMoreno, )r. v. Private Mana"e/ent4 i%e, '&7 SC ! -# $%&&-(.6he essence of consent is the conformity of the parties on the terms of the contract, that is, the

acceptance by one of the offer made by the other. Bowever, the acceptance must be absolute+otherwise, the same constitutes a counter offer and has the effect of re ecting the offer. 30S2 Corp.v. DMC -r'an Properties Dev., $n%. , '/4 SC ! '/ $%&&/(.

1. A s *:te A e9t + e Cert i+ O er $Art. 1%;&(nder !rticle "#"/, the acceptance of an offer must therefore be unqualified and absolute. 8n

other words, it must be identical in all respects with that of the offer so as to produce consent ormeeting of the minds. 6his was not the case herein considering that petitioner1s acceptance of theoffer was qualified, which amounts to a re ection of the original offer.*i/ketkai Sons Millin", $n%. v.

Court o Appeals , %'' SC ! -%- $"//-(. ! qualified acceptance or one that involves a new proposal constitutes a counter offer and are ection of the original offer. 6he acceptance must be identical in all respects with that of the offerso as to produce consent or meeting of minds. 7anila 7etal Container Cor- v PN# , &11SCRA %%% $2005(.%7

Alacing the word =;oted> and signing such note at the bottom of the written offer cannot beconsidered an acceptance that would give rise to a valid contract of sale. x DBP v. 4n" , 4-& SC !"7& $%&&'(.

*f sale sub=ect to sus-ensive condition ;o perfected sale of a lot where the award thereofwas e2pressly made sub ect to approval by the higher authorities and there eventually was noacceptance manifested by the supposed awardee. xPeople=s Ho/esite 9 Housin" Corp. v. CA ,"## SC ! 777 $"/ 4(.

2. W6e+ De3i ti +4 A** =e878t is true that an acceptance may contain a request for certain changes in the terms of the

offer and yet be a binding acceptance, so long as it is clear that the meaning of the acceptance ispositively and unequivocally to accept the offer, whether such request is granted or not, acontract is formed. 6he vendor1s change in a phrase of the offer to purchase, which change doesnot essentially change the terms of the offer, does not amount to a re ection of the offer and thetender or a counter offer. Villonco v #ormaheco , 5& SCRA )&2 $1B;&(.%

). S *e < A: ti + $Arts. 1%;5, 1%0)$2($8(, 1)25(6he terms and conditions provided by the owner of property to be sold at auction are binding

upon all bidders, whether they 3new of such conditions or not. x*eo:uin%o v. Postal Savin"sBank , 47 Ahil. 77% $"/%'(.

!n auction sale is perfected by the fall of the hammer or in other customary manner and itdoes not matter that another was allowed to match the bid of the highest bidder. 2Provin%e oCe'u v. Heirs o (u ina Morales , '4- SC ! #"' $%&& (.

%. E r+est M +e< $Art. 1%'2()arnest money given by the buyer shall be considered as part of the price and as proof of the

perfection of the contract. 8t constitutes an advance payment to be deducted from the total price. x!s%ueta v. *i/ , '"% SC ! 4"" $%&&7(.

!bsent proof of the concurrence of all the essential elements of a contract of sale, the giving ofearnest money cannot establish the e2istence of a perfected contract of sale. K7anila 7etalContainer Cor- v PN# , &11 SCRA %%% $2005(. %/

!rticle "4 % does not apply when earnest money given in a contract to sell xSerrano v.Ca"uiat , '"7 SC ! '7 $%&&7(, especially where by stipulation the buyer has the right to wal3 awayfrom the transaction, with no obligation to pay the balance, although he will forfeit the earnestmoney. 2C#ua v. Court o Appeals , 4&" SC ! '4 $%&(.#&

%-Moreno, )r. v. Private Mana"e/ent 4 i%e , '&7 SC ! -# $%&&-(.%7Beau/ont v. Prieto , 4" Ahil. -7& $"/"-(+>a %o v. Serra, 44 Ahil. #%- $"/%#(.% (eiterated in *i/ketkai Sons Millin", $n%. v. Court o Appeals , %'& SC ! '%# $"//'(, but reversed in >?? SC+(%/*i/&o%o v. CA , #7 SC ! --# $"/7"(+ ? illon%o v. Bor/a#e%o , -' SC ! #'% $"/7'(+ Spouses Doro/al, Sr. v. CA , -- SC ! '7' $"/7'(+

PNB v. CA , %-% SC ! 4-4 $"//-(+ San Mi"uel Properties P#ilippines, $n%. v. Huan", ##- SC ! 7#7 $%&&&(+Platinu/ Plans P#il. $n%. v.Cu%ue%o, 4 SC ! "'- $%&&-(.

#&San Mi"uel Properties P#ilippines, $n%. v. Huan", ##- SC ! 7#7 $%&&&(.

13


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15/52

. V *:e :si+ess F rms t !r 3e S *e0usiness forms, e."., order slip, delivery charge invoice and the li3e, which are issued by

the seller in the ordinary course of the business are not always fully accomplished to containall the necessary information describing in detail the whole business transactionGmore oftenthan not they are accomplished perfunctorily without proper regard to any legal repercussionfor such neglect such that despite their being often incomplete, said business forms arecommonly recogni5ed in ordinary commercial transactions as valid between the parties and atthe very least they serve as an ac3nowledgment that a business transaction has in facttranspired. 2Donato C. Cruz 2radin" Corp. v. CA , #47 SC ! "# $%&&&(.

6hese documents are not mere scraps of paper bereft of probative value but vital piecesof evidence of commercial transactions. 6hey are written memorials of the details of theconsummation of contracts. 2*a"on v. Hooven Co/al%o $ndustries, $n%., #4/ SC ! #-#$%&&"(.

2. WHEN FORM IM!ORTANT IN SALE

. T i+8 T6ir8 ! rties !rticle "#' 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.9ormal requirements are, therefore, for the benefit of third parties+ and non compliancetherewith does not adversely affect the validity of the contract nor the contractual rights andobligations of the parties thereunder. !ule v C( , 2'5 SCRA 5B' $1BB'(+#7 Dalion v C( , 1'2SCRA ';2 $1BB0(.#

!rticle "#' of the Civil Code which requires the embodiment of certain contracts in a publicinstrument, in only for convenience+ and registration of the instrument only adversely affectsthird parties, and non compliance therewith does not adversely affect the validity of the contractor the contractual rights and obligations of the parties thereunder. 2!streller v. 0s/ael , ' "SC ! %47 $%&&/(.#/

is not covered by the statute of frauds.9urthermore, !rt. "4$%($e( of Civil Code presupposes the e2istence of a perfected, albeitunwritten, contract of sale+ a right of first refusal, such as the one involved in the instant case, is

not by any means a perfected contract of sale of real property. x(osen%or Dev. Corp. v. $n:uin" ,#'4 SC ! ""/ $%&&"(.

#7-niversal (o'ina Su"ar Millin" Corp. v. Heirs o An"el 2eves , # / SC ! #"- $%&&%(.# *i/ketkai Sons Millin", $n%. v. CA , %'& SC ! '%# $"//'(+ A"asen v. CA, #%' SC ! '&4 $%&&&(.#/ -niversal (o'ina Su"ar Millin" Corp. v. Heirs o An"el 2eves , # / SC ! #"- $%&&%(.4&2alusan v. 2a a", #'- SC ! %-# $%&&"(+Santos v. Manalili, 47- SC ! -7/ $%&&'(.4"(osen%or Develop/ent Corp. v. $n:uin" , #'4 SC ! ""/ $%&&"(.4% Al'a Vda. De (a v. Court o Appeals, #"4 SC ! #- $"///(.4#2or%uator v. Berna'e , 4'/ SC ! 4#/ $%&&'(.

15


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$i3(&,uitable 7ortgage : Statute does not stand in the way of treating an absolute deed as amortgage, when such was the parties1 intention, although the agreement for redemption ordefeasance is proved by parol evidence. xCu u"an v. Santos , #4 Ahil. "&& $"/"-(.44

$3( +ight to +e-urchase : 6he deed of sale and the verbal agreement allowing the right ofrepurchase should be considered as an integral whole+ the deed of sale is itself the note ormemorandum evidencing the contract. 2Ma%tan Ce'u $nternational Airport Aut#orit v. Court o

Appeals, %-# SC ! 7#- $"//-(.

$2( Mem r +8:m $ 9uviengco v Dacuycuy , 10% SCRA 55' 1B'1 Gnder !rticle "4, an e2ception to the unenforceability of contracts pursuant to the

Statute of 9rauds is the e2istence of a written note or memorandum evidencing the contract.6he memorandum may be found in several writings, not necessarily in one document. 6hememorandum or memoranda isFare written evidence that such a contract was entered into.6he e2istence of a written contract of the sale is not necessary so long as the agreement tosell real property is evidenced by a written note or memorandum, embodying the essentialsof the contract and signed by the party charged or his agent. /im4et4ai Sons 7illing" *ncv C( , 2&0 SCRA &2) $1BB&(.

# $% 6he memoranda must be signed by the party sought to be charged, and mustclearly provide a deed of sale categorically conveying the sub ect property./im4et4ai Sons7illing" *nc v C( , 2&& SCRA 5 $1BB5(+ %-" SC ! 4-4 $"//-(.

9or the memorandum to ta3e the sale out of the coverage of the Statute of 9rauds, itmust contain =all the essential terms of the contract> of sale. x2or%uator v. Berna'e , 4'/SC ! 4#/ $%&&'(,4' even when scattered into various correspondences which can be broughttogether 2Cit o Ce'u v. Heirs o Candido (u'i, #&- SC ! 4& $"///(. 4-

E CE!TION 7 E*e tr +i D :me+ts :+8er t6e E-COMMERCE ACT $R.A. ';B2(

$)( ! rti * E?e :ti + $Art. 1%0&( 5rtega v /eonardo , 10) !6i*. ';0 $1B&'(G Claudel vCourt of (--eals , 1BB SCRA 11) $1BB1(.

Eelivery of the deed to buyer1s agent, with no intention to part with the title until thepurchase price is paid, does not ta3e the case out of the Statute of 9rauds. 2 Baretto v.Manila (ailroad Co. , 4- Ahil. /-4 $"/%4(.

6he Statute of 9rauds does not apply to contracts either partially or totally performed. 8naddition, a contract that violates the Statute of 9rauds is ratified by the acceptance of benefitsunder the contract, such as the acceptance of the purchase price and using the proceeds topay outstanding loans. (lfredo v #orras" %0% SCRA 1%& $200)(.47

$%( W i3er : $!rt. "4&'( Cross e2amination on the contract is deemed a waiver of the defenseof the Statute. xA'reni%a v. 1onda , #4 Ahil. 7#/ $"/"-(+ 2alosi" v. Vda. De Nie'a , 4# SC !47% $"/7%(.4


17/52

Sales invoices are not evidence of payment of the price, but evidence of the receipt ofthe goods+ since the best evidence to prove payment is the official receipt.!l 4ro !n"raversCorp. v. Court o Appeals , '4- SC ! 4% $%&& (.

! receipt which is merely an ac3nowledgment of the sum received, without anyindication therein of the total purchase price of the land or of the monthly installments to bepaid, cannot be the basis of valid sale. 2*ea'res v. CA , "4- SC ! "' $"/ -(. 4/

8n itself, the absence of receipts, or any proof of consideration, would not be conclusiveof the ine2istence of a sale since consideration is always presumed. 22i"no v. A:uino , 444SC ! -" $%&(.

eceipts proves payment which ta3es the sale out of the Statute of 9rauds. %oyotaSha3" *nc v Court of (--eals" 2%% SCRA )20 $1BB&(.

. F r V *i8it


18/52

right to inheritance and to avoid payment of estate ta2, the sale is void because illegal motivepredetermined purpose of the contract. x4le"ario v. CA , %# SC ! /- $"//4(. '-


19/52

!rticle "4'/ of the Civil Code on contracts of sale =specifically requires that the vendormust have ownership of the property at the time it is delivered.> xHeirs o Arturo (e es v.So%%o7Beltran , '7% SC ! %"", %%& %%" $%&& (.

! contract to sell, or a condition contract of sale where the suspensive condition has nothappened, even when found in a public document, cannot be treated as constitutingconstructive delivery, especially when from the face of the instrument it is shown that theseller =was not yet the owner of the property and was only e2pecting to inherit it.> $at p. %%"(Heirs o Arturo (e es v. So%%o7Beltran , '7% SC ! %"" $%&& (.

ne can sell only what one owns or is authori5ed to sell, and the buyer can acquire nomore than what the seller can transfer legally.Da%la" v. Ma%a#ili" , '-& SC ! "#7 $%&& (.

! ta2 declaration, by itself, is not considered conclusive evidence of ownership : it ismerely an indi%iu/ of a claim of ownership.Da%la" v. Ma%a#ili" , '-& SC ! "#7 $%&& (.;evertheless when at the time of delivery there is no proof that the seller had ownership andas in fact the ta2 declaration to the sub ect property was in the name of another person, thenthere was no transfer of ownership by delivery. 2Heirs o Severina San Mi"uel v. Court o

Appeals , #-4 SC ! '%# $%&&"(.

. #e+er * D tri+es + Tr 8iti +, W6et6er A t: * r C +str: ti3e7

8t may be stipulated that ownership in the thing shall not pass to buyer until he has fullypaid price $!rt. "47 (.8n the absence of such stipulation to the contrary, tradition produces its natural effects in

law, most important of which being conveyance of ownership, without pre udice to right of theseller to claim payment of the price. 2Froilan v. Pan 4riental S#ippin" Co. , "% SC ! %7-$"/-4( .'

Eelivery contemplates =the absolute giving up of the control and custody of the property onthe part of the vendor, and the assumption of the same by the vendee. Non nudis pa%tis sedtraditione do/inia reru/ trans erantur . !nd there is said to be delivery if and when the thingsold =is placed in the control and possession of the vendee.> !:uatorial (ealt Dev. $n%. v.Ma air 2#eater, $n%. , #7& SC ! '- $%&&"(.

=Eelivery> as used in the @aw on Sales refers to the concurrent transfer of two things* $"(possession and $%( ownership. 8f the vendee is placed in actual possesion of the property, butby agreement of the parties ownership of the same is retained by the vendor until the vendeehas fully paid the price, the mere transfer of the possesion of the property sub ect of the sale isnot the =delivery> contemplated in the @aw on Sales or as used in !rticle "'4# of the CivilCode. Ce'u ;inland Dev. Corp. v. 4n" Siao Hua , ' SC ! "%& $%&&/(.

Since delivery of sub ect matter of sale is an obligation on the part of the seller, theacceptance thereof by the buyer is not a condition for the completeness of delivery. 2*aFuerza v. CA , %# SC ! "%"7 $"/- (.

8n the absence of an e2press stipulation to the contrary, payment of purchase price of thegoods is not a condition precedent to the transfer of title to the buyer, but title passes by thedelivery of the goods. 2P#il. Su'ur'an Dev. Corp. v. Auditor 1eneral , -# SC ! #/7 $"/7'(. '/

9ailure of the buyer to ma3e good the price does not, in law, cause the ownership to revestto the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to !rt.""/". 2 Balat'at v. CA , %-" SC ! "% $"//-(.

! contract to sell, or a condition contract of sale where the suspensive condition has nothappened, even when found in a public document, cannot be treated as constitutingconstructive delivery, especially when from the face of the instrument it is shown that the seller=was not yet the owner of the property and was only e2pecting to inherit it.> 2Heirs o Arturo(e es v. So%%o7Beltran , '7% SC ! %"", %%" $%&& (.

. !6


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nder !rt. "4/ , the mere e2ecution of the deed of conveyance in a public instrument isequivalent to the delivery of the property, and that prior physical delivery or possession is notlegally required, since ownership and possession are two entirely different legal concepts.;otwithstanding the presence of illegal occupants on the sub ect property, transfer ofownership by symbolic delivery under !rt. "4/ can still be effected through the e2ecution ofthe deed of conveyance. 2Sa'io v. $nternational Corporate Bank, #-4 SC ! # ' $%&&"(.

!s a general rule, when the sale is made through a public instrument, the e2ecution thereofshall be equivalent to the delivery of the thing which is the ob ect of the contract, if from thedeed the contrary does not appear or cannot clearly be inferred. 8n order the e2ecution of apublic instrument to effect tradition, the purchaser must be placed in control of the thing sold. !person who does not have actual possession of the thing sold cannot transfer constructivepossession by the e2ecution and delivery of a public instrument. Asset Privatization 2rust v.2.). !nterprises , ' 7 SC ! 4 " $%&&/(.

6here is nothing in !rticle "4/ that provides that e2ecution of a deed of sale is aconclusive presumption of delivery of possession+ presumptive delivery can be negated by thefailure of the vendee to ta3e actual possession of the land or the continued en oyment ofpossession by the vendor. Santos v Santos" )55 SCRA )B& $2001(.-"

6he presumptive delivery by the e2ecution of a public instrument can be negated by thefailure of the vendee to ta3e actual possession of the land sold. Ce'u ;inland Dev. Corp. v.4n" Siao Hua , ' SC ! "%& $%&&/(.

$i( As t M 3 *es $Arts. 1%B'-1%BB, 1&1)-1&1%+ Dy" 1r v C( , 1B' SCRA '25 (


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# $% S && nder !rt. "4/', seller is obliged to transfer title over the property and deliverthe same to the vendee. Vive &agle /and" *nc v Court of (--eals , %%%SCRA %%& $200%(.

$2(Customary Ste-s in Selling *mmovables : =Customarily, in the absence of a contraryagreement, the submission by an individual seller to the buyer of the following paperswould complete a sale of real estate* $"( owner1s duplicate copy of the 6orrens title+ $%(signed deed of absolute sale+ $#( ta2 declaration+ and $4( latest realty ta2 receipt. 6heybuyer can retain the amount for the capital gains ta2 and pay it upon authority of theseller, or the seller can pay the ta2, depending on the agreement of the parties.> Chuav Court of (--eals" %01 SCRA &% $200)(.

6he e2ecution of the notari5ed deed of sale and the delivery of the owner1s duplicatecopy of the original certificate of title to the buyer is tantamount to constructive delivery ofthe ob ect of the sale. in"s Properties Corp. v. 1alido , -&- SC ! "#7 $%&&/(.

$iii( As t I+ r9 re * !r 9ert< $Arts. 1%B' +8 1&01(.8n the sale of shares of stoc3, physical delivery of a stoc3 certificate is one of the

essential requisites for the transfer of ownership of the stoc3s purchased. 9ilinvest1s failure todelivery the stoc3 certificates representing the shares of stoc3 purchased by 6)D8 andIarcia amounted to a substantial breach of their contract which gave rise to a right to rescindthe sale. (a:uel7Santos v. Court o Appeals , '/% SC ! "-/ $%&&/(.

e. Constitutum Possessorium $Art. 1&00( : ! provision in the deed of sale granting to seller a rightto lease the sub ect matter of the sale is valid* the possession is deemed to be constituted in thevendee by virtue of this mode of tradition.> 2 A/i"o v. 2eves , /- Ahil. %'% $"/'4(.

.%raditio #revi 7anu : Arior to the sale, petitioners were in possession of the sub ect property aslessees. pon sale to them of the rights, interests and participation as to the M portion proindiviso , they remained in possession, not in the concept of lessees anymore but as owners nowthrough symbolic delivery 3nown astraditio 'revi /anu . 2Heirs o Pedro !s%anlar v. CA, % "SC ! "7- $"//7(.

%. Tr +s er O=+ers6i9 t Ve+8ee U9 + De*i3er< $Arts. 1%;;, 1%;', +8 1%B5(. W6e+ :


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$i( FAS S *es : =6he seller pays all charges and is sub ect to ris3 until the goods are placedalongside the vessel>. 2 A. Soriano 0 Cia. v. Colle%tor , /7 Ahil. '&' $"/''(.

$ii( FO S *es : 8n mercantile contracts of !merican origin, =9. .0.> stand for the words =9reeon 0oard,> i.e ., that the seller shall bear all e2penses until the goods are deliveredaccording as to whether the goods are to be delivered =9. .0.> at the point of shipment orat the point of destination determines the time when property passes. #ehn 7eyer )Co v 9angco , )' !6i*. 502, 505 $1B1'( .-'

$iii( CIF S *es General !oods v N(C5C5 , 100 !6i*. )); $1B&5(.=C.8.9.> found in 0ritish contracts stand for costs, insurance, and freight+ they signify that

the price fi2ed covers not only the costs of the goods, but the e2pense of freight and insuranceto be paid by the seller. #ehn 7eyer ) Co v 9angco , )' !6i*. 502, 505 $1B1'( .

nder an arrangement =c.i.f. Aacific Coast> $destination(, =the vendor is to pay not only thecost of the goods, but also the freight and insurance e2penses, and, as it was udiciallyinterpreted, this is ta3en to indicate that the delivery is to be made at the port of destination.>

Pacific Vegetable 5il Cor- v Sing8on , S:9reme C :rt A83 + e De isi +s, 2B A9ri*1B&&.

. S *e + A99r 3 *, Tri * r S tis ti + $Art. 1&02(8n a =sale or return,> the ownership passes to the buyer on delivery pursuant to a

perfected contract of sale+ and the subsequent return of the goods reverts ownership bac3 tothe seller. 8n such case, tradition as a mode of acquiring ownership must bein %onse:uen%eo a contract. 2Vallarta v. Court o Appeals , "'& SC ! ##- $"/ 7(.

8n a =sale on approval> $also called =sale on acceptance, =sale on trial> or =sale onsatisfaction>(, the delivery of the ob ect does not transfer ownership to the buyer since thedelivery was not for purposes of transferring ownership, since the prestation to effect ameeting of the minds to give rise to a valid contract is incumbent on the buyer. x Vallarta v.Court o Appeals , "'& SC ! ##- $"/ 7(.

9or a sale to be a =sale or return> or a =sale on approval,> there must be a clearagreement to either of such effect, otherwise, the provisions of !rt. "'&% of Civil Codegoverning such sales cannot be invo3ed by either party to the contract. x$ndustrial 2extileManu a%turin" Co. v. *P) !nterprises, $n%. , %"7 SC ! #%% $"//#(.

. S *e < Des ri9ti + +8 r S m9*e$Art. 1%'1(6here is a sale by sample when a small quantity is e2hibited by the seller as a fair

specimen of the bul3, which is not present and there is no opportunity to inspect or e2aminethe same+ and the parties treated the sample as the standard of quality and that theycontracted with reference to the sample with the understanding that the product to be deliveredwould correspondent with the sample. 2Mendoza v. David , 44" SC ! "7% $&&4(

)ven in sales by description andFor sample, buyer will not be released from his obligationto accept and pay for the goods by deviations on the part of the seller from the e2act terms ofthe contract, if buyer had acquiesced to such deviations after due notice thereof. x!n"el v.Mariano Velas%o 9 Co. , 47 Ahil. ""' $"/%4(.


23/52

8n a contract of sale of land in a mass, the specific boundaries stated in the contract mustcontrol over any statement with respect to the area contained within its boundaries.Salinas v.Faustino , '-- SC ! " $%&& (.

8n a lump sum sale, when the land delivered to the buyer is e2actly as that described in thedeed and covered within the boundaries designated, the difference in actual area $#4versus "&hectares( will not authori5e the buyer to rescind the contract because the seller has compliedwith delivering the sub ect matter agreed upon. 22eran v. Villanueva , '- Ahil. -77 $"/#%(+ this isthe rule when evidence shows that the parties never gave importance to the area of the land infi2ing the price $/7 versus -& hectares(. 2 Azarra"a v. 1a , '% Ahil. '// $"/% (.


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). Re :isites r D : *e S *e7 Cheng v Genato , )00 SCRA ;22 $1BB'(.7"

. T6ere M:st e T= Di ere+t V *i8 S *es !rticle "'44 does not apply where* 6here is only one valid sale, while the other sale over the same property is void.Fudot v.

Cattle a *and, $n%. , '## SC ! #'& $%&&7(+7% or


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egistration of the )2tra udicial Aartition which merely mentions the sale is not theregistration covered under !rt. "'44 and cannot prevail over the registration of the pa%to deretro sale. 2Vda. de Al%antara v. CA , %'% SC ! 4'7 $"//-(.

=6here can be no constructive notice to the second buyer through registration under !ct##44 if the property is registered under the 6orrens system.> xA/odia Vda. De Melen%ion v.Court o Appeals , '#4 SC ! -%, % $%&&7(,t#ere' overturnin" o'iter in Santia"o v. Court o

Appeals , %47 SC ! ##- $"//'(.

. Re/istr ti + M:st A*=


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presumed, upon those who allege bad faith on the part of the possessors rests the burden of proof.22en Fort (ealt and Dev. Corp. v. Cruz, 4"& SC ! 4 4 $%&(.&

&. W6 is !:r 6 ser i+ # 8 F it68n the determination of whether or not a buyer is in good faith, the point in time to be

considered is the moment when the parties actually entered into the contract of sale. &state of/ino 5laguer v 5ng=oco , &5) SCRA );) $200'( .

. M:st H 3e ! i8 !ri e i+ F:** : ! purchaser is good faith is one who buys property of another,without notice that some other person has a right to, or interest in, such propertyand -ays afull and fair -rice for the same at the time of such -urchase , or before he has notice of theclaim or interest of some other person in the property. 2an"lao v. Parun"ao , '#' SC ! "%#$%&&7("

nder !rticle "'44, mere registration is not enough to acquire a new title. Iood faith mustconcur. Clearly, when the buyer has not yet fully paid the purchase price, and as long as sellerremains unpaid, the buyer cannot feign good faith. 2Porti% v. Cristo'al , '4- SC ! '77 $%&&'(.

0 6 S)) * 8n the determination of whether or not the buyer is in good faith, the point in time tobe considered is the moment when the parties actually entered into the contract of sale.!stateo *ino 4la:uer v. 4n"&o%o , '-# SC ! #7# $%&& (.

. :r8e+ !r : 6he burden of proving the status of a purchaser in good faith lies upon himwho asserts that status. 8t is not sufficient to invo3e the ordinary presumption of good faith, thatis, that everyone is presumed to have acted in good faith, since the good faith that is hereessential is integral with the very status that must be established. x2an"lao v. Parun"ao , '#'SC ! "%# $%&&7(.%

!s a general rule, the question of whether or not a person is a purchaser in good faith is afactual matter that will not be delved into by this Court, since only questions of law may beraised in petitions for review.2io v. A'a ata , ''- SC ! "7' $%&& (.# $% S && 8t is an2iomatic that good faith is always presumed in the absence of any direct

evidence of bad faith. xSantia"o v. CA, %47 SC ! ##- $"//'(.

. I+st + es W6e+ N # 8 F it67$1(#eing *n #usiness on +ealty : ! mortgagee who eventually ended buying the property

at the public auction, cannot claim to be a buyer in good faith when his business in theconstructing and selling townhouses and e2tending credit to the public, including realestate loans+ for he is charged with greater diligence that ordinary buyers orencumbrances for value, because it would be standard in his business, as a matter ofdue diligence required of ban3s and financing companies, to ascertain whether theproperty being offered as security for the debt has already been sold to another toprevent in ury to prior innocent buyers. x!xpress%redit Finan%in" Corp. v. Velas%o , 47#SC ! '7& $%&&'(. #

! ban3ing institution is e2pected to e2ercise due diligence before entering into a

mortgage contract, and the ascertainment of the statute or condition of a proper offeredto it as security for a loan must be a standard and indispensable part of its operations+and it cannot simply rely upon reviewing the title to the property offered for mortgage.2iov. A'a ata , ''- SC ! "7' $%&& (. 4

$2(Close +elationshi- : 6he sale to one1s daughter and sons will give rise to the conclusionthat the buyers, not being really third parties, 3new of the previous sales and cannot beconsidered in good faith. 6he buyers =are deemed to have constructive 3nowledge byvirtue of their relationship> to their sellers. 2Pilapil v. Court o Appeals , %'& SC ! '--$"//'(.

$)( Gross *nade,uacy of Price : Dere inadequacy of price is not ipso a%to a badge of lac3of good faithGto be so, the price must be grossly inadequate or shoc3ing to the

conscience such that the mind revolts against it and such that a reasonable man would&San%#ez v. (a/os , 4& Ahil. -"4 $"/"/(++ui/son v. (osete , 7 Ahil. "'/ $"/'&(+ Navera v. CA , " 4 SC ! ' 4 $"//&(." A"ri%ultural and Ho/e !xtension Dev. v. CA. , %"# SC ! '#- $"//%(+ Veloso v. CA , %-& SC ! '/# $"//-(+ Balat'at v. CA , %-" SC !

"% $"//-(+Mat#a v. CA, %/' SC ! ''- $"// (+ Diaz7Duarte v. 4n", %/ SC ! # $"// (+*iao v. CA, #%# SC ! 4#& $%&&&(+2anon"onv. Sa/son , # % SC ! "#& $%&&%(+-niversal (o'ina Su"ar Millin" Corp. v. Heirs o An"el 2eves , # / SC ! #"- $%&&%(+ A"uirre v. Court o

Appeals , 4%" SC ! #"& $%&&4(+1alvez v. Court o Appeals , 4 ' SC ! #4- $%&&-(+C#ua v. Soriano , '%" SC ! - $%&&7(+(a /undo v.Bandon" , '%- SC ! '"4 $%&&7(+De *eon v. 4n" , -"" SC ! # " $%&"&(+ in"s Properties Corp. v. 1alido , -&- SC ! "#7 $%&&/(+2#eHeirs o (o/ana Saves v. 2#e Heirs o !s%olasti%o Saves , -#% SC ! %#- $%&"&(.

%2sai v. CA , #-- SC ! #%4 $%&&"(+ A"uirre v. CA , 4%" SC ! #"& $%&&4(8 (a /undo v. Bandon" , '%- SC ! '"4 $%&&7(+!a"le (ealtCorp. V. (epu'li% , ''7 SC ! 77 $%&& (+Pudadera v. Ma"allanes , -## SC ! ##% $%&"&(.

# Adriano v. Pan"ilinan , #7# SC ! '44 $%&&%(+ *lo d?s !nterprises and Credit Corp. v. Dolleton , ''' SC ! "4% $%&& (+!a"le (ealt Corpv. (epu'li% , ''7 SC ! 77 $%&& (+!a"le (ealt Corp v. (epu'li% , ''7 SC ! 77 $%&& (.

84 A"a" v. Alp#a Finan%in" Corp. , 4&7 SC ! -&% $%&(+Bank o Co//er%e v. San Pa'lo, )r. , '%% SC ! 7"# $%&&7(+*lo d?s !nterprises

and Credit Corp. v. Dolleton , ''' SC ! "4% $%&& (+2 v. +ueen?s (o5 Su'division, $n%. , -&7 SC ! #%4 $%&&/(.

26


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neither directly or indirectly be li3ely to consent to it.2io v. A'a ata , ''- SC ! "7'$%&& (.

$%(5bligation to *nvestigate or %o !ollo3 /eads : ! purchaser who is aware of factswhich should put a reasonable man upon his guard cannot turn a blind eye and laterclaim that he acted in good faith, such as G

! buyer of a registered land would be in bad faith when he purchases without as3ing to see theowner1s copy of the title andFor without visiting the land where he would then have seen firstbuyer occupying the same. xSantia"o v. CA, %47 SC ! ##- $"//'( . '

as e2presslyprovided for in then Sec. #', ule #/ of the evised ules of Court on e2ecution sale [now Sec.##, ule #/, "//7 ules of Civil Arocedure(]. Carumba v C( , )1 SCRA &&' $1B;0(.

' (.(. Paredes v. Calilun" , '"7 SC ! #-/ $%&&7(+C#ua v. Soriano , '%" SC ! - $%&&7(.-Mat#a v. CA, %/' SC ! ''- $"// (+ (epu'li% v. De 1uz/an, #%- SC ! %-7 $%&&&(+Heirs o (a/on Durano, Sr. v. - , #44 SC ! %#

$%&&&(+Heirs o Celestial v. Heirs o Celestial , 4& SC ! %/" $%&(+!rasusta, )r. v. Court o Appeals , 4/' SC ! #"/ $%&&-(+ De la Cena v.Briones , '& SC ! -% $%&&-(+2an"lao v. Parun"ao , '#' SC ! "%#, "#% $%&&7(.

7 !a"le (ealt Corp v. (epu'li% , ''7 SC ! 77 $%&& (.Modina v. CA, #"7 SC ! -/-, 7&- $"///(+ (epu'li% v. De 1uz/an, #%- SC ! %-7 $%&&&(+Martinez v. CA, #' SC ! # $%&&"(+Heirs

o 2rinidad de *eon Vda. De (oxas v. Court o Appeals , 4%% SC ! "&" $%&&4(+4%%ena v. !sponilla , 4#" SC ! ""- $%&&4(+PNB v. Heirso !stanislao Militar , 4/4 SC ! #& $%&&-(+ (a /undo v. Bandon" , '%- SC ! '"4 $%&&7(+2an"lao v. Parun"ao , '#' SC ! "%# $%&&7(+2io v. A'a ata , ''- SC ! "7' $%&& (+ 4rdua v. Fuente'ella , -%% SC ! "4- $%&"&(+Deanon v. Ma"7a'o , -%% SC ! " & $%&"&(+2#e Heirso (o/ana Saves v. 2#e Heirs o !s%olasti%o Saves , -#% SC ! %#- $%&"&(.

/Pudadera v. Ma"allanes , -## SC ! ##% $%&"&(.

27


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nder !ct ##44, registration of instruments affecting unregistered lands is =without pre udice toa third party with a better right,> which means that mere registration does not give the buyer anyright over the land if the seller was not anymore the owner of the land having previously sold thesame to somebody else even if the earlier sale was unrecorded. 6he rules on double sale under !rt. "'44 has no application to land no registered under the 6orrens system. (cabal v (cabal"%&% SCRA &&& $200&(./&

D. O LI#ATIONS OF UYER1. ! < t6e !ri e $Art. 1&'2(


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5. R:*es Le3< # r+is6me+t # 8s $Arts. 1&1%, 1&1B, 1&20(.

VIII. S ALE YN ON-OWNER OR YO NE H AVIN# V OIDA LET ITLE 7% 6& / *!& 5! ( C 5N%+(C% 5! S (/&

1. E e t S *e W6ere Se**er N t O=+er t Time De*i3er< $Art. 1&0&+ Paulmitan v Courtof (--eals , 21& SCRA '55 1BB2(.8n sale, it is essential that the seller is the owner of the property he is selling. 6he principal

obligation of a seller is =to transfer the ownership of> the property sold $!rt. "4' (. 6his lawstems from the principle that nobody can dispose of that which does not belong to him*N!M4DA2 +-4D N4N HAB!2 . Noel v. CA, %4& SC ! 7 $"//'(. /"

!lthough a situation $where the sellers were no longer owners( does not appear to be one ofthe void contracts enumerated in !rt. "4&/ of Civil Code, and under !rt. "4&% Civil Code itselfrecogni5es a sale where the goods are to be =acquired 2 2 2 by the seller after the perfection ofthe contract of sale> clearly implying that a sale is possible even if the seller was not the ownerat the time of sale, provided he acquires title to the property later on, but when delivery ofownership is no longer possible, the sale should be considered void, and consequently, the rightto repurchase provided therein would also be void Nool v. CA, %7- SC ! "4/ $"//7(.

8f one buys the land of another, to which the seller is supposed to have a good title, and inconsequence of facts un3nown ali3e to both parties, the seller has in fact no title at all, equitywill cancel the sale and cause the purchase money to be restored to the buyer, putting bothparties in status :uo . DBP v. CA , %4/ SC ! ##" $"//'(.

. S *es < C -O=+ers$Art. %B)(8n a contract of sale of co owned property, what the vendee obtains by virtue of such a sale

are the same rights as the vendor had as co owner $i.e., his spiritual share(, and the vendeemerely steps into the shoes of the vendor as co owner. 2Pan"ani'an v. 4a/il , '4% SC ! "--$%&& (+/% e2cept when the intention of the purchase was clearly the property itself and not ustthe spiritual share. 7indanao v 9a- , 1) SCRA 1B0 $1B5&(.

!n agreement that purports a specific portion of an un partitioned co owned property is notvoid+ it shall effectively transfer the seller1s ideal share in the co ownership.Heirs o t#e *ateSpouses Aurelio and !speranza Balite v. *i/ , 44- SC ! '4 $%&&4(./#

8n which case, the proper action is not for nullification of sale, or for the recovery ofpossession of the property owned in common from the other co owners, but for division orpartition of the entire property. 22o/as Claudio Me/orial Colle"e, $n%. v. Court o Appeals , #"-SC ! '&% $"///( ./4

! co owner who sells one of the two lands owned in common with another co owner, anddoes not turn over one half of the proceeds of the sale to the other co owner, the latter may bylaw and equity lay e2clusive claim to the remaining parcel of land. 2$/perial v. Court o

Appeals , %'/ SC ! -' $"//-(.

2. E? e9ti +s7 W6e+ O=+ers6i9 Tr +s ers < A t t6e N +-O=+er . Est 99e* + Tr:e O=+er $Art. 1%)%( #ucton v Gabar , && SCRA %BB $1B;%(.

. Re r8i+/ L =sG T rre+s S


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public confidence in the certificate of title. )very person dealing with the registered land maysafely rely on the correctness of the certificate of title issued therefor and the law will in no wayoblige him to go behind the certificate to determine the condition of the property. 2Heirs oSpouses Benito 1avino. v. Court o Appeals, %/" SC ! 4/' $"// (.

!n innocent purchaser for value is one who buys the property of another without notice thatsome other person has a right to or interest in it, and who pays a full and fair price at the time ofthe purchase or before receiving any notice of another person1s claim. 6he burden of provingthe status of a purchaser in good faith and for value lies upon one who asserts that status. 6hisonus pro'andi cannot be discharged by mere invocation of the ordinary presumption of goodfaith.(u loe v. Bur"os , '77 SC ! %-4, %7% %7# $%&&/(.

. St t:t r< ! =er Or8er C :rts of the sub ect matter under !rt. ''/.

%agatac v 1imene8 , &) O.#. );B2 $1B&;(G &DC( Publishing v Santos , 1'% SCRA 51%$1BB0(.

6hus, when owner did not voluntarily deliver possession of the car, and in effect it was stolenfrom him, then one who buys the car even in good faith from the thief will lose the car to theowner who is deemed to have been unlawfully deprived. (8nar v 9a-diangco , 1) SCRA %'5$1B5&(.

8n all other cases of unlawful deprivation done through estafa, the original owner recoverseven from the buyer in good faith. Cru8 v Pahati , B' !6i*. ;'' $1B&5( . CLV7 De isi +s6 =e8 t6 t se +8 :


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8. A ter De*i3er< $Art. 1&0%( /a3yer's Coo- v %abora , 1) SCRA ;52 $1B5&(./-

. REMEDIES FOR REACH OF CONTRACT OR SALE $Arts. 1&B%-1&BB(A. ON !ART OF SELLER

1. I+ C se M 3 *es $Arts. 1&B), 1&B& t 1&B;(nder !rticle "'/7, when the buyer of scrap iron fails to put up the letter of credit in favor of the

seller as the condition of the sale, the seller had a right to terminate the contract, and noncompliance with the condition meant that the seller1s obligation to sell never did arise. 2Visa anSa5/ill Co. v. Court o Appeals , %"/ SC ! #7 $"//#(.

2. U+9 i8 Se**er # 8s$Arts. 1&2%-1&)&(. De i+iti + U+9 i8 Se**er4 $Art. 1&2&(. Ri/6ts U+9 i8 Se**er7

! ssess r< *ie+ $Arts. 1&25-1&2B, 1&0), 1&)&( St 99 /e in transitu $Arts. 1&)0-1&)2, 1&)&, 15)5 2( Ri/6t Res *e $Art. 1&))( Ri/6t t Res i+8 $Art. 1&)%(

)ven before the formal statutory adoption of the remedies of an unpaid seller, the SupremeCourt had already recogni5ed the right of a seller,5#en t#e %ontra%t o sale is still exe%utor insta"e, to resell the movables sub ect matter of the sale, when the buyer fails to pay the purchaseprice. 2Hanlon v. Hausser/an , 4& Ahil. 7/- $"/%&(.

Seller in possession of the goods may sell them at buyerLs ris3. 2ati"'ak v. Court o Appeals , 4 SC ! %4# $"/-%(.

). RECTO LAW7 SALES OF MOVA LES ON INSTALLMENTS $Arts. 1%'%, 1%'&, 1%'5(6he ecto @aw prevents mortgagee from sei5ing the mortgaged property, buying it atforeclosure sale for a low price and then bringing the suit against the mortgagor for a deficiency udgment. 6he almost invariable result was that the mortgagor found himself minus the propertyand still owing practically the full amount of his original indebtedness. 2Ma"na Finan%ial Servi%es1roup, $n%. v. Colarina , 477 SC ! %4' $%&&'(.

. I+st **me+t S *e4 requires at least stipulated two $%( payments in the future, whether or notthere is a downpayment. /evy v Gervacio , 5B !6i*. &2 $1B)B(.

. C +tr ts t Se** M 3 *es N t C 3ere8. 2Visa an Sa5/ill Co/pan , $n%. v. Court o Appeals , %"/ SC ! #7 $"//#(.

. Reme8ies A3 i* *e t U+9 i8 Se**er N t C:m:* ti3e :t A*ter+ ti3e +8 E? *:si3e.Delta 7otor Sales Cor- v Niu 0im Duan , 21) SCRA 2&B $1BB2(./7

See3ing a writ of replevin consistent with any of the three remedies. 2-niversal MotorsCorp. v. D Hian 2at , % SC ! "-" $"/-/(.

8. Reme8< S9e i i !er rm + e6he fact that the seller obtained a writ of e2ecution against the property mortgaged, but

pursuant to an action for specific performance with a plea for a writ of replevin, does notamount to a foreclosure of the chattel mortgage covered by the ecto @aw. %a=anglangit vSouthern 7otors , 101 !6i*. 505 $1B&;(./

e. N t:re Reme8< Res issi + Surrender of mortgaged property is not necessarily equivalent to rescission. 2Vda. de

+uia/'ao v. Manila Motors Co., $n%. , # SC ! 444 $"/-"(.Dutual restitution prevents recovering on the balance of the purchase price. Nonato v

*(C , 1%0 SCRA 2&& $1B'&(Gbut stipulation on non return of payments is valid provided notunconscionable. 2Delta Motor Sales Corp. v. Niu i/ Duan, %"# SC ! %'/ $"//%(.

. Reme8< F re * s:re

/- Son" Fo 9 Co. v. 4ria , ## Ahil. # $"/"'(+ *a5 er=s Coop v. Nar%iso , '' .I. ##"#(./7 De la Cruz v. Asian Consu/er , %"4 SC ! " $"//%(+Bor'on $$ v. Servi%e5ide Spe%ialists, $n%. , %' SC ! -#4 $"//-(./ Sout#ern Motors v. Mos%oso , % SC ! "- $"/-"(+ $ndustrial Finan%e Corp. v. (a/irez , 77 SC ! "'% $"/77(+ (osario v. PC$ *easin"

and Finan%e, $n%. , 474 SC ! '&& $%&&'(.

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0arring effect would cover a third party mortgage, when it was the chattel mortgage thatwas first foreclosed. +idad v !ili-inas *nvestment , 120 SCRA 2%5 $1B')(.

2Casa Filipinas (ealt Corp. v. 4 i%e o t#e President , %4" SC ! "-' $"//'(.

Section %& of A.E. /'7 directs every owner and developer of real property to provide thenecessary facilities, improvements, infrastructure and other forms of development, failure tocarry out which is sufficient cause for the buyer to suspend payment, and any sums of moneyalready paid shall not be forfeited. 22a/a o v. Huan" , 4 & SC ! "'- $%&&-(.

8n case the developer of a subdivision or condominium fails in its obligation underSection %&, Section %# gives the buyer*

the option to demand reimbursement of the total amount paid, or to wait for furtherdevelopment of the subdivision, and when the buyer opts for the latter alternative, he maysuspend payment of the installments until such time that the owner or developer has fulfilled itsobligations. 22a/a o v. Huan" , 4 & SC ! "'- $%&&-(+

buyer required only to give due notice to the owner or developer of the buyer1s intention tosuspend payment. x>a/ora (ealt and Dev. Corp. v. 4 i%e o t#e President , '&- SC ! '/"$%&&-(+

// Bor'on $$ v. Servi%e5ide Spe%ialists, $n%. , %' SC ! -#4 $"//-(."&&Manila Motor Co. v. Fernandez , // Ahil. 7 % $"/'-(+ Ma"na Finan%ial Servi%es 1roup, $n%. v. Colarina , 477 SC ! %4' $%&&'(."&"Pas%ual v. -niversal Motors Corp. , -" SC ! "%" $"/74(."&%Vda. de )ose v. Barrue%o , -7 Ahil. "/" $"/#/(+ -.S. Co//er%ial v. Halili , /# Ahil. %7" $"/'#(+H.!. Hea%o%k v. Bantal Manu a%turin" , --

Ahil. %4' $"/# (+Manila 1as Corp. v. Calupita , -- Ahil. 747 $"/# (+Filinvest Credit Corp. v. CA , "7 SC ! " $"/ /(.

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Sec. %# does not require that a notice be given first by the buyer to the seller before a demandfor refund can be made as the notice and demand can be made in the same letter orcommunication. 2Casa Filipinas (ealt Corp v. 4 i%e o t#e President , %4" SC ! "-' $"//'(+and

ption granted by law is with buyer and not the developerFseller. 2(elu%io v. Brillante71ar in," 7 SC ! 4&' $"//&(.

=0uyer> under A.E. /'7 would include one who acquires for a valuable consideration acondominium unit by way of assignment by the condominium pro ect owner in payment of itsindebtedness for contractor1s fee. xAMA Co/puter Colle"e, $n%. v. Fa%tora , #7 SC ! "%"$%&&%(.

0uyers of condominium units would be ustified in suspending payments, when thedeveloper seller fails to give them a copy of the Contract to Sell despite repeated demands.21old *oop Properties, $n%. v. CA, #'& SC ! #7" $%&&"(. Bowever, when the eservation !greement provides that the buyer shall be entitled to a Contract to Sell only upon itspayment of at least #&J of the total contract price, the non happening yet of that conditiondoes not render the seller in default as to warrant the buyer the right to rescind the sale anddemand a refund. 1.1. Sport5ear M ". Corp. v. ;orld Class Properties, $n%. , -"4 SC ! 7'$%&"&(.

;othing in A.E. /'7 provides for the nullification of a contract to sell in the event theseller, at the time the contract was entered into, did not possess a certificate of registration ora license to sell, sale being a consensual contract. Co C#ien v. Sta. *u%ia (ealt , '"# SC !'7& $%&&7(."

6he dissatisfaction of the buyer under a Contract of Sale as to the completion date of thepro ect does not itself constitute substantial breach as to authori5e the buyer to rescind thecontract and as3 for refund of the amounts paid to the seller. 1.1. Sport5ear M ". Corp. v.;orld Class Properties, $n%. , -"4 SC ! 7' $%&"&(.

nder A.E. ;o. /'7, a buyer cause of action against the developer for failure to developripens only when the developer fails to complete the pro ect on the lapse of the completionperiod stated on the sale contract or the developer1s @icenses to Sell. !ny premature demandprior to the indicated completion date would be premature. 1.1. Sport5ear M ". Corp. v.

;orld Class Properties, $n%. , -"4 SC ! 7' $%&"&(.6he lac3 of Certificate of egistration or the @icense to Sell of the developer seller merely

sub ects the developer to administrative sanctions, but do not render the contracts to sellentered into on the pro ect null and void.1.1. Sport5ear M ". Corp. v. ;orld ClassProperties, $n%. , -"4 SC ! 7' $%&"&(.

Since the lots are involved in litigation and there is a notice oflis pendens at the bac3 ofthe titles involved, the subdivision developer have to be given a reasonable period of time towor3 on the adverse claims and deliver clean titles to the buyer, and should the former fail todeliver clean titles at the end of the period, it ought to reimburse the buyers not only for thepurchase price of the subdivision lots sold to them but also the incremental value arising fromthe appreciation of the lots.Cante/prate v. C(S (ealt Dev. Corp. , ' 7 SC ! 4/% $%&&/(.

&. MACEDA LAW7 SALES OF RESIDENTIAL REALTY ON INSTALLMENTS $R.A. 5&&2(.=6he contract for the purchase of a piece of land on installment basis is not only lawful+ it is

also of widespread usage or custom in our economic system. . . . 8f [buyer] eventually found theinterest stipulation in the contract financially disadvantageous to him, he cannot now turn to thisCourt for succor without impairing the constitutional right to the obligation of contracts. 6his Courtwill not relieve petitioner of the necessary consequences of his free and voluntary, and otherwiselawful, act.>Bortike v. AFP (etire/ent and Separation Bene its S ste/ , 477 SC ! '"" $%&&'(.

. R *e4 M e8 L = : Daceda @aw1s declared policy is to protect buyers of real estate oninstallment basis against onerous and oppressive conditions, and see3s to address the acutehousing shortage problem in our country that has prompted thousands of middle and lowerclass buyers of houses, lots and condominium units to enter into all sorts of contracts with

private housing developers involving installment schemes. A%tive (ealt 9 Dev. Corp. Daro a ,# % SC ! "'% $%&&%(."&4

Daceda @aw recogni5es in conditional sales of all 3inds of real estate seller1s right to cancelthe contract upon non payment of an installment by the buyer, which is simply an event thatprevents the obligation of the vendor to convey title from acquiring binding force.Pa"tulunan v.Dela Cruz Vda. De Manzano , '## SC ! %4% $%&& (."&'

. Tr +s ti +s C 3ere8

"Cante/plate v. C(S (ealt Dev. Corp. , ' 7 SC ! 4/% $%&&/(."&44$ /pia Housin" $n%. v. Panasiati% 2ravel Corp. , #/' SC ! %/ $%&(+)estra Dev. and Mana"e/ent Corp. v. Pa%i i%o , '"# SC ! 4"#

$%&&7(."&'*eao v. Court o Appeals , #-/ SC ! #- $%&&"(+Cordero v. F.S. Mana"e/ent 9 Dev. Corp. , '&- SC ! 4'" $%&&-(.

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6he formal requirements of rescission under the Daceda @aw apply even to contractsentered into prior to its effectivity. xSiska Dev. Corp. v. 4 i%e o t#e President , %#" SC ! -74$"//4( ."&- # $% S && 2People?s $ndustrial and Co//er%ial Corp. v. CA, % " SC ! %&- $"//7(.

Daceda @aw finds no application to a contract to sell where the suspensive condition hasnot been fulfilled, because said @aw presuppose the e2istence of a valid and effective contractto sell a condominium. xM ortel v. ASSC4, $n%., #4 SC ! #/", #/ $%&&&(."&7

Daceda @aw ma3es no distinctions between =option> and =sale> which under A.E. /'7 alsoincludes =an e2change or attempt to sell, an option of sale or purchase, a solicitation of a saleor an offer to sell directly,> and the all embracing definition virtually includes all transactionsconcerning land and housing acquisition, including reservation agreements. x(ealt !x%#an"eVenture Corp. v. Sendino , %## SC ! --' $"//4(.

Daceda @aw has no application to protect the developer or one who succeeds thedeveloper. x*a"andaon v. Court o Appeals, %/& SC ! 4-# $"// (.

6he sale of large tracts of land $-/,&% square meters( do not constitute residential realestate within the contemplation of the Daceda @aw. x1ar%ia v. Court o Appeals , -"/ SC !% & $%&"&(.

. H = t Determi+e Ye rs I+st **me+ts7 1estra Dev and 7anagement Cor- v Pacifico ,

&1) SCRA %1) $200;(.8. H = C + e** ti + C +tr t C + e E e te8 : 6he cancellation of the contract under the

Daceda @aw must follow the following steps* First , the seller should e2tend the buyer a grace period of at least si2ty $-&( days from the

due date of the installments. Se%ond , at the end of the grace period, the seller shall furnish the buyer with a notarial

notice of cancellation or dem

Sales-Outline_Ateneo.pdf

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