PART I : CONCEPT OF SALE

I. BASIC CONCEPTS
1. Contract of Sale (Article 1458)

G.R. No. 118114 December 7, 1995

TEODORO ACAP, petitioner,

Leasehold Tenant
Failure to pay rent
dispossesed
DECLARATION OF HEIRSHIP AND WAIVER OF RIGHTS
Edy de los Reyes acquired the lot

RTC grant
CA Affirmed RTC

FACTS:
Lot No. 1130, Cadastral Survey of Hinigiran, Negros Occidental, OCT No. R-12179. 13,720 sqm.
in the name of Sps Santiago Vasquez and Lorenza Oruma.
Sps died.
the only son Felixberto inherited the lot.
In 1975, Declaration of heirship and DOS in favor of Cosme Pido was executed.

Teodoro Acap had been a tenant since 1960 to an area of 9,500 sqm.
When ownership was transferred to Pido, Acap continued to be the registered tenant thereof.

When Pido died intestate, his surviving heirs executed a Declaration of heirship with waivr of rights in favor of Edy de los
Reyes.

. . . Cosme Pido died in the Municipality of Hinigaran, Negros Occidental, he died intestate and without any known debts and obligations which the said parcel of
land is (sic) held liable.

That Cosme Pido was survived by his/her legitimate heirs, namely: LAURENCIANA PIDO, wife, ELY, ERVIN, ELMER, and ELECHOR all surnamed PIDO;
children;

That invoking the provision of Section 1, Rule 74 of the Rules of Court, the above-mentioned heirs do hereby declare unto [sic] ourselves the only heirs of the late
Cosme Pido and that we hereby adjudicate unto ourselves the above-mentioned parcel of land in equal shares.

Now, therefore, We LAURENCIANA3 , ELY, ELMER, ERVIN and ELECHOR all surnamed PIDO, do hereby waive, quitclaim all our rights, interests and
participation over the said parcel of land in favor of EDY DE LOS REYES, of legal age, (f)ilipino, married to VIRGINIA DE LOS REYES, and resident of Hinigaran,
Negros Occidental, Philippines. . . .4 (Emphasis supplied)

The document was signed by all of Pido's heirs. Private respondent Edy de los Reyes did not sign said document.

It will be noted that at the time of Cosme Pido's death, title to the property continued to be registered in the name of the
Vasquez spouses. Upon obtaining the Declaration of Heirship with Waiver of Rights in his favor, private respondent Edy de
los Reyes filed the same with the Registry of Deeds as part of a notice of an adverse claim against the original certificate of
title.
BETWEEN EDY AND ACAP:
1. oral lease agreement (10 cavans of rice per annum)
2. petitioner complied with
3. petitioner refused to pay further rental
4. Petitioner did not recognize Edy's ownership (Ministry of Agrarian Reform)

On 28 April 1988, after the lapse of four (4) years, private respondent filed a complaint for recovery of possession and
damages against petitioner, alleging in the main that as his leasehold tenant, petitioner refused and failed to pay the agreed
annual rental of ten (10) cavans of palay despite repeated demands.

When Pido died, he continued to pay rentals to Pido's widow. When the latter left for abroad, she instructed him to stay in the
landholding and to pay the accumulated rentals upon her demand or return from abroad.

R.A. 3844, as amended, grants him the right to redeem the same at a reasonable price. Petitioner also bewailed
private respondent's ejectment action as a violation of his right to security of tenure under P.D. 27.

RTC:
Sold

There is no doubt that defendant is a registered tenant of Cosme Pido. However, when the latter died their
tenancy relations changed since ownership of said land was passed on to his heirs who, by executing a Deed of
Sale, which defendant admitted in his affidavit, likewise passed on their ownership of Lot 1130 to herein plaintiff
(private respondent). As owner hereof, plaintiff has the right to demand payment of rental and the tenant is
obligated to pay rentals due from the time demand is made. . . .6

xxx xxx xxx

Certainly, the sale of the Pido family of Lot 1130 to herein plaintiff does not of itself extinguish the relationship.
There was only a change of the personality of the lessor in the person of herein plaintiff Edy de los Reyes who
being the purchaser or transferee, assumes the rights and obligations of the former landowner to the tenant
Teodoro Acap, herein defendant.7

CA:
The Court of Appeals brushed aside petitioner's argument that the Declaration of Heirship and Waiver of Rights
as excluded by the lower court in its order
since the Declaration of Heirship and Waiver of Rights appears to have been duly notarized, no further proof of its due
execution was necessary.

Like the trial court, respondent court was also convinced that the said document stands as prima facie proof of appellee's
(private respondent's) ownership of the land in dispute.

respondent court considered this fact of rental payment in 1982 as estoppel on petitioner's part to thereafter refute private
respondent's claim of ownership over the said land.
 ISSUE:
1. WHETHER OR NOT THE SUBJECT DECLARATION OF HEIRSHIP AND WAIVER OF RIGHTS IS A RECOGNIZED MODE OF ACQUIRING OWNERSHIP
BY PRIVATE RESPONDENT OVER THE LOT IN QUESTION.

2. WHETHER OR NOT THE SAID DOCUMENT CAN BE CONSIDERED A DEED OF SALE IN FAVOR OF PRIVATE RESPONDENT OF THE LOT IN
QUESTION.

RULING:
In the first place, an asserted right or claim to ownership or a real right over a thing arising from a juridical act, however justified, is not per se sufficient to give rise
to ownership over the res.
That right or title must be completed by fulfilling certain conditions imposed by law.

Hence, ownership and real rights are acquired only pursuant to a legal mode or process.

While title is the juridical justification, mode is the actual process of acquisition or transfer of ownership over a thing in question.

Under Article 712 of the Civil Code, the modes of acquiring ownership are generally classified into 2:
1. Original mode:
- occupation
- acquisitive prescription
- law
- intellectual creation

2. Derivative mode
- succession mortis causa
- tradition as a result of certain contracts:
sale
barter
donation
assignment or
mutuum

In the case at bench, the trial court was obviously confused as to the nature and effect of the Declaration of Heirship and Waiver of Rights, equating
the same with a contract (deed) of sale. They are not the same.

In a Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate
thing, and the other party to pay a price certain in money or its equivalent.

Upon the other hand, a declaration of heirship and waiver of rights operates as a public instrument when filed with the
Registry of Deeds whereby the intestate heirs adjudicate and divide the estate left by the decedent among themselves as they
see fit. It is in effect an extrajudicial settlement between the heirs under Rule 74 of the Rules of Court.

Hence, there is a marked difference between a sale of hereditary rights and a waiver of hereditary rights. The first presumes the existence of a contract
or deed of sale between the parties.11 The second is, technically speaking, a mode of extinction of ownership where there is an abdication or intentional
relinquishment of a known right with knowledge of its existence and intention to relinquish it, in favor of other persons who are co-heirs in the
succession.12 Private respondent, being then a stranger to the succession of Cosme Pido, cannot conclusively claim ownership over the subject lot on
the sole basis of the waiver document which neither recites the elements of either a sale,13 or a donation,14 or any other derivative mode of acquiring
ownership.

A notice of adverse claim, by its nature, does not however prove private respondent's ownership over the tenanted lot. "A notice of adverse claim is
nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court at some future date, and is no
better than a notice of lis pendens which is a notice of a case already pending in court."
It is to be noted that while the existence of said adverse claim was duly proven, there is no evidence whatsoever that a deed of sale was executed
between Cosme Pido's heirs and private respondent transferring the rights of Pido's heirs to the land in favor of private respondent. Private
respondent's right or interest therefore in the tenanted lot remains an adverse claim which cannot by itself be sufficient to cancel the OCT to the land
and title the same in private respondent's name.

Consequently, while the transaction between Pido's heirs and private respondent may be binding on both parties, the right of petitioner as a registered
tenant to the land cannot be perfunctorily forfeited on a mere allegation of private respondent's ownership without the corresponding proof thereof.

In fact, petitioner even secured a certificate from the MAR dated 9 May 1988 to the effect that he continued to be the registered tenant of Cosme Pido
and not of private respondent. The reason is that private respondent never registered the Declaration of Heirship with Waiver of Rights with the
Registry of Deeds or with the MAR. Instead, he (private respondent) sought to do indirectly what could not be done directly, i.e., file a notice of adverse
claim on the said lot to establish ownership thereover.

It stands to reason, therefore, to hold that there was no unjustified or deliberate refusal by petitioner to pay the lease rentals or amortizations to the
landowner/agricultural lessor which, in this case, private respondent failed to establish in his favor by clear and convincing evidence.

G.R. No. L-116650 May 23, 1995

TOYOTA SHAW, INC., petitioner,

vs.

COURT OF APPEALS and LUNA L. SOSA, respondents.

DAVIDE, JR., J.:

4-Jun-89

AGREEMENTS BETWEEN MR. SOSA

& POPONG BERNARDO OF TOYOTA

SHAW, INC.

1. all necessary documents will be submitted to TOYOTA SHAW, INC. (POPONG BERNARDO) a week after, upon arrival of Mr. Sosa from the Province
(Marinduque) where the unit will be used on the 19th of June.

2. the downpayment of P100,000.00 will be paid by Mr. Sosa on June 15, 1989.

3. the TOYOTA SHAW, INC. LITE ACE yellow, will be pick-up [sic] and released by TOYOTA SHAW, INC. on the 17th of June at 10 a.m.

Very truly yours,

(Sgd.) POPONG BERNARDO.

FACTS:
Sosa looked for a car and met Popong Bernardo, sales rep.

It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B.A. Finance, and for this Gilbert, on
behalf of his father, signed the documents of Toyota and B.A. Finance pertaining to the application for financing.
customer's name is "MR. LUNA SOSA"
CONDITIONS OF SALES

1. This sale is subject to availability of unit.

2. Stated Price is subject to change without prior notice, Price prevailing and in effect at time of selling will apply. . . .

Rodrigo Quirante, the Sales Supervisor of Bernardo, checked and approved the VSP.

On 17 June 1989, at around 9:30 a.m., Bernardo called Gilbert to inform him that the vehicle would not be ready for pick up at 10:00 a.m. as previously agreed
upon but at 2:00 p.m. that same day. At 2:00 p.m., Sosa and Gilbert met Bernardo at the latter's office. According to Sosa, Bernardo informed them that the Lite
Ace was being readied for delivery. After waiting for about an hour, Bernardo told them that the car could not be delivered because "nasulot ang unit ng ibang
malakas."

Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the disapproval by B.A. Finance of the credit financing application of Sosa. It
further alleged that a particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of the
balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused.

CAR WAS NOT DELIVERED

ASKED FOR A REFUND WITH INTEREST AND DAMAGES

n 20 November 1989 with Branch 38 of the Regional Trial Court (RTC) of Marinduque a complaint against
Toyota for damages under Articles 19 and 21 of the Civil Code in the total amount of P1,230,000.00.9 He
alleges, inter alia, that:

9. As a result of defendant's failure and/or refusal to deliver the vehicle to plaintiff, plaintiff suffered
embarrassment, humiliation, ridicule, mental anguish and sleepless nights because: (i) he and his family were
constrained to take the public transportation from Manila to Lucena City on their way to Marinduque; (ii) his
balikbayan-guest canceled his scheduled first visit to Marinduque in order to avoid the inconvenience of taking
public transportation; and (iii) his relatives, friends, neighbors and other provincemates, continuously irked
him about "his Brand-New Toyota Lite Ace — that never was." Under the circumstances, defendant should be
made liable to the plaintiff for moral damages in the amount of One Million Pesos (P1,000,000.00).

1. Bernardo had no authority to sign

TRIAL COURT:
the "AGREEMENTS BETWEEN MR. SOSA AND POPONG BERNARDO," was a valid perfected contract of sale
between Sosa and Toyota which bound Toyota to deliver the vehicle to Sosa, and further agreed with Sosa
that Toyota acted in bad faith in selling to another the unit already reserved for him.

ISSUE:
whether or not the standard VSP was the true and documented understanding of the parties which would
have led to the ultimate contract of sale,

(b) whether or not Sosa has any legal and demandable right to the delivery of the vehicle despite the non-
payment of the consideration and the non-approval of his credit application by B.A. Finance,

RULING:

Article 1458 of the Civil Code defines a contract of sale as follows:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

and Article 1475 specifically provides when it is deemed perfected:

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative
obligation on the part of the latter to pay therefor a price certain appears therein.
It is not a contract of sale.

The provision on the downpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it was
intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP executed the
following day confirmed. But nothing was mentioned about the full purchase price and the manner the
installments were to be paid.

This Court had already ruled that a definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of sale.

a disagreement on the manner of payment is tantamount to a failure to agree on the price.

Definiteness as to the price is an essential element of a binding agreement to sell personal property.

A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.
At the most, Exhibit "A" may be considered as part of the initial phase of the generation or negotiation stage
of a contract of sale. There are three stages in the contract of sale, namely:

(a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending at the
moment of agreement of the parties;

(b) perfection or birth of the contract, which is the moment when the parties come to agree on the terms of
the contract; and

(c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the contract.

Financing companies are defined in Section 3(a) of R.A. No. 5980, as amended by P.D. No. 1454 and P.D. No.
1793, as "corporations or partnerships, except those regulated by the Central Bank of the Philippines, the
Insurance Commission and the Cooperatives Administration Office, which are primarily organized for the
purpose of extending credit facilities to consumers and to industrial, commercial, or agricultural enterprises,
either by discounting or factoring commercial papers or accounts receivables, or by buying and selling
contracts, leases, chattel mortgages, or other evidence of indebtedness, or by leasing of motor vehicles, heavy
equipment and industrial machinery, business and office machines and equipment, appliances and other
movable property."

Accordingly, in a sale on installment basis which is financed by a financing company, three parties are thus
involved: the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased
on installment, the seller who assigns the notes or discounts them with a financing company, and the
financing company which is subrogated in the place of the seller, as the creditor of the installment buyer. 24
Since B.A. Finance did not approve Sosa's application, there was then no meeting of minds on the sale on
installment basis.

The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created
no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause
any legally indemnifiable injury.

Since Sosa is not entitled to moral damages and there being no award for temperate, liquidated, or
compensatory damages, he is likewise not entitled to exemplary damages. Under Article 2229 of the Civil
Code, exemplary or corrective damages are imposed by way of example or correction for the public good, in
addition to moral, temperate, liquidated, or compensatory damages.

Also, it is settled that for attorney's fees to be granted, the court must explicitly state in the body of the
decision, and not only in the dispositive portion thereof, the legal reason for the award of attorney's fees. 26
No such explicit determination thereon was made in the body of the decision of the trial court. No reason thus
exists for such an award.

WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV
NO. 40043 as well as that of Branch 38 of the Regional Trial Court of Marinduque in Civil Case No. 89-14 are
REVERSED and SET ASIDE and the complaint in Civil Case No. 89-14 is DISMISSED. The counterclaim therein is
likewise DISMISSED.