A. Formation of Contract of Sale (Art.

1475-1479)

1.Heirs of Fausto C. Ignacio vs. Home Bankers Savings and Trust Company, GR 177783,
January 23, 2013, 689 SCRA 17

FACTS:

Fausto C. Ignacio mortgaged the properties to Home Bankers Savings and Trust Company
(Bank) as security for a loan extended by the Bank. After Ignacio defaulted in the payment of
the loan, the property was foreclosed and subsequently sold to the Bank in a public auction.
Ignacio offered to repurchase the property. Universal Properties Inc. (UPI), the bank’s collecting
agent sent

Ignacio a letter which contained the terms of the repurchase. However, Ignacio annotated in
the letter new terms and conditions. He claimed that these were verbal agreements between
himself and the Bank’s collection agent, UPI. No repurchase agreement was finalized between
Ignacio and the Bank. Thereafter the Bank sold the property to third parties. Ignacio then filed
an action for specific performance against the Bank for the reconveyance of the properties after
payment of the balance of the purchase price. He argued that there was implied acceptance of
the counter offer of the sale through the receipt of the terms by representatives of UPI. The
Bank denied that it gave its consent to the counter offer of Ignacio. It countered that it did
not approve the unilateral amendments placed by Ignacio.

ISSUE:

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

RULING:

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

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

FACTS:

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

ISSUE:
Whether there was a perfected contract of sale.

RULING:
 A perusal of the records persuades the Court to hold otherwise.
 The elements of a contract of sale are, to wit: a) Consent or meeting of the minds, that is,
consent to transfer ownership in exchange for the price; b) Determinate subject matter; and c)
Price certain in money or its equivalent. It is the absence of the first element which
distinguishes a contract of sale from that of a contract to sell.
 In a contract to sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer
ownership of the property subject of the contract to sell until the happening of an event, such
as, in most cases, the full payment of the purchase price. What the seller agrees or obliges
himself to do is to fulfill his promise to sell the subject property when the entire amount of
the purchase price is delivered to him. In other words, the full payment of the purchase price
partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell
from arising and, thus, ownership is retained by the prospective seller without further remedies
by the prospective buyer. Since there was a meeting of the minds, there was consent on the
part of David to transfer ownership of the power transformer to MOELCI in exchange for the
price, thereby complying with the first element. Thus, the said document cannot just be
considered a contract to sell but rather a perfected contract of sale.
  
3.Starbright Sales Enterprises, Inc. vs. Philippines Realty Corporation,Msgr. Domingo A.
Cirilos, et. al., GR 177936, January 18, 2012

FACTS:

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

ISSUE:

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

RULING:

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

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

FACTS:

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

ISSUE:

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

RULING:

 As a rule, a contract is perfected upon the meeting of the minds of the two parties. Under Art.
1475 of the Civil Code, a contract of sale is perfected the moment there is a meeting of the
minds on the thing which is the object of the contract and on the price. The present case does
not fall under this article because there is no perfected contract of sale to speak of. Medrano’s
failure to comply with the conditions set forth by DBP prevented the perfection of the contract
of sale. Hence, Medrano and DBP remained as prospective-seller and prospective-buyer and
not parties to a contract of sale. This notwithstanding, however, the Court still did not agree
with DBP’s argument that since there is no perfected contract of sale, DBP should not be
ordered to pay Medrano any amount. It was not proper for DBP to hold on to Medrano’s shares
of stock after it became obvious that he will not be able to comply with the conditions for the
contract of sale. From that point onwards, the prudent and fair thing to do for DBP was to
return Medrano’s shares because DBP had no just or legal ground to retain them. Equitable
considerations militate against DBP’s claimed right over the subject shares.
5.Sps. Tongson, et.al. vs. Emergency pawnshop Bula, Inc. et. al vs. Rachel G. Mandap, GR
196182, September 1, 2014, 734 SCRA 76FACTS:

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

ISSUE:

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

RULING:

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

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

FACTS:

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

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

RULING:

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

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

FACTS:

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

ISSUE:

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

RULING:

 Petitioner argues that the present case is not an exception to the ministerial

issuance of a writ of possession because respondent’s actual possession

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

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

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

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

Should fungible things be sold for a price fixed according to weight, number, or measure, the
risk shall not be imputed to the vendee until they have been weighed, counted, or measured
and delivered, unless the latter has incurred in delay. (1452a)
B. Sale by Sample or by Description (Art. 1481)

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

FACTS:

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

ISSUE:

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

RULING:

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

C. Earnest Money (Art. 1482)

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

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

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

 D. Form for a Contract of Sale (1983)

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

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

ISSUE:

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

RULING:

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

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

Recto Law

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

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

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

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

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

G. Expropriation of Property (Art. 1488)

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