G.R. No.

149353 June 26, 2006

JOCELYN B. DOLES,
Petitioner,
vs.
MA. AURA TINA ANGELES,
Respondent.
FACTS
: Ma. Aura Tina Angeles (respondent) filed with
the RTC a complaint for Specific Performance with
Damages against Jocelyn B. Doles (petitioner).
Respondent alleged that petitioner was indebted
to the former in the concept of a personal loan
amounting to P405,430.00 representing the
principal amount and interest; by virtue of a
"Deed of
Absolute Sale",
petitioner, as seller, ceded to respondent, as
buyer, a parcel of land, as well as the
improvements thereon, with an area of 42 square
meters, covered by Transfer Certificate of Title
No. 382532, and located at a subdivision project
known as Camella Townhomes Sorrente in
Bacoor, Cavite, in order to satisfy her personal
loan with respondent. Petitioner, then defendant,
while admitting some allegations in the
Complaint, denied that she borrowed money from
respondent, and averred that, she referred her
friends to respondent whom she knew to be
engaged in the business of lending money in
exchange for personal checks through her
capitalist Arsenio Pua. She alleged that her
friends, namely, Zenaida Romulo, Theresa
Moratin, Julia Inocencio, Virginia Jacob, and
Elizabeth Tomelden, borrowed money from
respondent and issued personal checks in
payment of the loan; that the checks bounced for
insufficiency of funds; that despite her efforts to
assist respondent to collect from the borrowers,
she could no longer locate them; that, because of
this, respondent became furious and threatened
petitioner that if the accounts were not settled, a
criminal case will be filed against her.
ISSUE:
Is the respondent an agent of Arsenio Pua, the
principal financier, on one hand; and the
petitioner to the debtors, on the other?
RULING:
Yes. The Court has affirmed that, under Article
1868 of the Civil Code, the basis of agency is
representation. The question of whether an
agency has been created is ordinarily a question
which may be established in the same way as
any other fact, either by direct or circumstantial
evidence. The question is ultimately one of
intention.
Agency may even be implied from the words and
conduct of the parties and the circumstances of

the particular case. Though the fact or extent of

authority of the agents may not, as a general
rule, be established from the declarations of the
agents alone, if one professes to act as agent for
another, she may be estopped to deny her
agency both as against the asserted principal and
the third persons interested in the transaction in
which he or she is engaged.
COMMISSIONER OF INTERNAL REVENUE vs.
COURT OF APPEALS
G.R. No. 115349 April 18, 1997
Facts:
ADMU Institute of Philippine Culture is engaged in
social science studies of Philippine society and
culture. Occasionally, it accepts sponsorships for
its
research
activities
from
international
organizations,
private
foundations
and
government agencies.
On July 1983, CIR sent a demand letter assessing
the sum of P174,043.97 for alleged deficiency
contractors tax. Accdg to CIR, ADMU falls under
the purview of independent contractor pursuant
to Sec 205 of Tax Code and is also subject to 3%
contractors tax under Sec 205 of the same code.
(Independent Contractor means any person
whose activity consists essentially of the sale of
all kinds of services for a fee regardless of
whether or not the performance of the service
calls for the exercise or use of the physical or
mental faculties of such contractors or their
employees.)
Issue:
1) WON ADMU is an independent contractor
hence liable for tax? NO.
2) WON the acceptance of research projects by
the IPC of ADMU a contract of sale or a contract
for a piece of work? NEITHER.
Held:
1. Hence, to impose the three percent
contractors tax on Ateneos Institute of Philippine
Culture, it should be sufficiently proven that the
private respondent is indeed selling its services
for a fee in pursuit of an independent business.
2) Records do not show that Ateneos IPC in fact
contracted to sell its research services for a fee.
In the first place, the petitioner has presented no
evidence to prove its bare contention that,
indeed, contracts for sale of services were ever
entered into by the private respondent. Funds
received by the Ateneo de Manila University are
technically not a fee. They may however fall as
gifts or donations which are tax-exempt. Another
fact that supports this contention is that for about
30 years, IPC had continuously operated at a loss,

which means that sponsored funds are less than

actual expenses for its research projects.
In fact, private respondent is mandated by law to
undertake research activities to maintain its
university status. In fact, the research activities
being carried out by the IPC is focused not on
business or profit but on social sciences studies of
Philippine society and culture. Since it can only
finance a limited number of IPCs research
projects, private respondent occasionally accepts
sponsorship for unfunded IPC research projects
from
international
organizations,
private
foundations
and
governmental
agencies.
However, such sponsorships are subject to
private respondents terms and conditions,
among which are, that the research is confined to
topics consistent with the private respondents
academic agenda; that no proprietary or
commercial purpose research is done; and that
private respondent retains not only the absolute
right to publish but also the ownership of the
results of the research conducted by the IPC.
SALE vs. CONTRACT FOR PIECE OF WORK
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 therefore a price certain in
money or its equivalent. By its very nature, a
contract of sale requires a transfer of ownership.
In the case of a contract for a piece of work, the
contractor binds himself to execute a piece of
work for the employer, in consideration of a
certain price or compensation. If the contractor
agrees to produce the work from materials
furnished by him, he shall deliver the thing
produced to the employer and transfer dominion
over the thing. Whether the contract be one of
sale or one for a piece of work, a transfer of
ownership is involved and a party necessarily
walks away with an object. In this case, there was
no sale either of objects or services because
there was no transfer of ownership over the
research data obtained or the results of research
projects undertaken by the Institute of Philippine
Culture.
Heirs of Escanlar, et.al. v. CA [G.R. No.
119777. October 23, 1997.]
Holgado, et. al. v. CA [G.R. No. 120690.
October 23, 1997.]
Facts: Spouses Guillermo Nombre and Victoriana
Cari-an died without issue in 1924 and 1938,
respectively. Nombres heirs
include
his
nephews
and
grandnephews.
Victoriana Cari-an was succeeded by her late
brothers son, Gregorio Cari-an. The latter was
declared as Victorianas heir in the estate

proceedings for Nombre and his wife (Special

Proceeding 7-7279). After Gregorio died in 1971,
his wife, Generosa Martinez, and children,
Rodolfo, Carmen, Leonardo and Fredisminda Carian, were also adjudged as heirs by representation
to Victorianas estate. Leonardo Cari-an passed
away, leaving his widow, Nelly Chua vda. De Carian and minor son Leonell, as his heirs.
2 parcels of land, denominated as Lot 1616 and
1617 of the Kabankalan Cadastre with an area of
29,350 sq.ms. and 460,948 sq.ms., respectively,
formed part of the estate of Nombre and Cari-an.
On 15 September 1978, Gregorio Cari-ans heirs
executed the Deed of Sale of Rights, Interests
and Participation in favor of Pedro Escanlar and
Francisco Holgado portion pro-indiviso of Lot
1616 and 1617 of the Kabankalan Cadastre,
pertaining to the portion pro-indiviso of the late
Victoriana Cari-an in consideration of P275,000 to
be paid to the heirs except the share of the minor
Leonell Cari-an, which shall be deposited with the
Municipal Treasurer of Himamaylan, Negros
Occidental; pursuant to the order of the CFI
Negros Occidental (Branch VI)
Hiimamaylan; said contract of sale being effective
only upon the approval of said CFI in
Himamaylan. Escanlar and Holgado, the vendees,
were concurrently the lessees of the lots referred
to. They stipulated that the balance of the
purchase price (P225,000.00) shall be paid on or
before May 1979 in a Deed of Agreement
executed by the parties on the same day
confirming and affirming the Deed of Sale of 15
September
1978;
that
pending
complete
payment thereof, the vendees are not to assign,
sell, lease, nor mortgage the rights, interests and
participation over said land; and that in the event
the vendees fail and/or omit to pay the balance of
said purchase price on 31 May 1979 and the
cancellation of said Contract of Sale is made
thereby, the sum of P50,000.00 shall be deemed
as damages thereof to vendors. Escanlar and
Holgado were unable to pay the Cari-an heirs
individual shares, amounting to P55,000.00 each,
by the due date. However, said heirs received at
least 12 installments from
them after May 1979. Rodolfo Cari-an was fully
paid by 21 June 1979. Generosa Martinez,
Carmen Cari-an and Fredisminda Carian were
likewise fully compensated for their individual
shares, per receipts given in evidence. The minor
Leonells share was
HEIRS OF SANDEJAS VS. LINA
G.R. No. 141634, February 5, 2001
Facts: On February 17, 1981, Eliodoro Sandejas,
Sr. filed a petition in the lower court praying that
letters of administration be issued in his favor for
the settlement of the estate of his wife,
REMEDIOS R. SANDEJAS. Letters of Administration

were issued by the lower court appointing

Eliodoro as administrator.
On November 19, 1981, the 4th floor of Manila
City Hall was burned and among the records
burned were the records of the Court where
Sandejas filed his petition.
On April 19, 1983, an Omnibus Pleading for
motion to intervene and petition-in-intervention
was filed by Alex A. Lina alleging that Sandejas, in
his capacity as seller, obligated to sell to Lina 4
parcels of land.
Eliodoro died sometime in November 1984 in
Canada His counsel is still waiting for official word
on the fact of the death of the administrator. He
also alleged that the matter of the claim of Alex
becomes a money claim to be filed in Eliodoros
estate. the lower court issued an order directing
the other heirs of Sandejas to move for the
appointment of a new administrator within 15
days from receipt of the order.
On January 1986, Alex filed a Motion for his
appointment as a new administrator of the
Intestate Estate of Remedios R. Sandejas on the
following reasons: that Alex has not received any
motion for the appointment of an administrator in
place of Eliodoro; that his appointment would be
beneficial to the heirs; that he is willing to give
away his being an administrator as long as the
heirs has found one. The heirs chose Sixto
Sandejas as new administrator. They were
reasoning out that it was only at a later date that
Sixto accepted the appointment. The lower court
substituted Alex Lina with Sixto Sandejas as
administrator.
On November 1993, Alex filed an Omnibus Motion
to approve the deed of conditional sale executed
between Alex A. Lina and Elidioro and to compel
the heirs to execute a deed of absolute sale in
favor of Alex. The lower court granted Alexs
motion.
Overturning the RTC ruling, the CA held that the
contract between Eliodoro Sandejas Sr. and
respondent was merely a contract to sell, not a
perfected contract of sale. It ruled that the
ownership of the four lots was to remain in the
intestate estate of Remedios until the approval of
the sale was obtained from the settlement court.

Section 8 of Rule 89 allows this action to proceed.

The factual differences have no bearing on the
intestate courts jurisdiction over the approval of
the subject conditional sale. Probate jurisdiction
covers all matters relating to the settlement of
estates (Rules 74 & 86-91) and the probate of
wills (Rules 75-77) of deceased persons, including
the
appointment
and
the
removal
of
administrators and executors (Rules 78-85). It
also extends to matters incidental and collateral
to the exercise of a probate courts recognized
powers such as selling, mortgaging or otherwise
encumbering realty belonging to the estate.
Indeed, the rules on this point are intended to
settle the estate in a speedy manner, so that the
benefits that may flow from such settlement may
be immediately enjoyed by the heirs and the
beneficiaries.
In the present case, the Motion was meant to
settle the decedents obligation to Alex; hence,
that obligation clearly falls under the jurisdiction
of the settlement court. To require respondent to
file a separate action on whether petitioners
should convey the title to Eliodoro Sr.s share of
the disputed realty will unnecessarily prolong
the settlement of the intestate estates of the
deceased spouses.

Issue: What is the settlement courts jurisdiction?

covering 1,000 square meters of the1,665

square meters of land in favor of respondents
Spouses
Pacson
for
a
consideration
of
P170,000.00, which was duly notarized on
February 21, 1977.

Held:Court approval is required in any disposition

of the decedents estate per Rule 89 of the Rules
of Court. One can sell their rights, interests or
participation
in
the
property
under
administration. A stipulation requiring court
approval does not affect the validity and the
effectivity of the sale as regards the selling heirs.
It merely implies that the property may be taken
out of custodia legis, but only with the courts
permission.

NABUS vs. PACSON , G.R. No. 161318,

November 25, 2009FACTS:
The spouses Bate and Julie Nabus were the
owners of parcels of land with a total area of
1,665 square meters, situatedin Pico, La Trinidad,
Benguet, duly registered in their names under
TCT No. T-9697 of the Register of Deeds of
theProvince of Benguet. The property was
mortgaged by the Spouses Nabus to the
Philippine National Bank (PNB), LaTrinidad
Branch, to secure a loan in the amount of
P30,000.00.

On February 19, 1977, the Spouses Nabus

executed a Deed of Conditional Sale

Pursuant to the Deed of Conditional Sale,

respondents paid PNB the amount of P12,038.86
on February 22, 19776 andP20,744.30 on July 17,
19787 for the full payment of the loan.
On December 24, 1977, before the payment of
the balance of the mortgage amount with PNB,

Bate Nabus died. OnAugust 17, 1978, his

surviving spouse, Julie Nabus, and their minor
daughter, Michelle Nabus, executed a Deed of
Extra Judicial Settlement over the registered land
covered by TCT No. 9697. On the basis of the said
document, TCTNo. T- 177188 was issued on
February 17, 1984 in the names of Julie Nabus
and Michelle Nabus.
Meanwhile, respondents continued paying their
balance, not in installments of P2,000.00 as
agreed upon, but invarious, often small amounts
ranging from as low as P10.009 to as high as
P15,566.00,10 spanning a period of almost seven
years, from March 9, 197711 to January 17,
1984.12
There was a total of 364 receipts of payment. The
receipts showed that the total sum paid by
respondents
to
theSpouses
Nabus
was
P112,455.16,14 leaving a balance of P57,544.84.
During the last week of January 1984, Julie Nabus,
accompanied
by
her
second
husband,
approached Joaquin Pacsonto ask for the full
payment of the lot. Joaquin Pacson agreed to pay,
but told her to return after four days as
hisdaughter, Catalina Pacson, would have to go
over the numerous receipts to determine the
balance to be paid. WhenJulie Nabus returned
after four days, Joaquin sent her and his
daughter, Catalina, to Atty. Elizabeth Rillera for
theexecution of the deed of absolute sale. Since
Julie was a widow with a minor daughter, Atty.
Rillera required JulieNabus to return in four days
with the necessary documents, such as the deed
of extrajudicial settlement, the transfercertificate
of title in the names of Julie Nabus and minor
Michelle Nabus, and the guardianship papers of
Michelle.However, Julie Nabus did not return.
Getting suspicious, Catalina Pacson went to the
Register of Deeds of the Province of Benguet and
asked for a copy of the title of the land. She found
that it was still in the name of Julie and Michelle
Nabus.
After a week, Catalina Pacson heard a rumor that
the lot was already sold to petitioner Betty Tolero.

On March 28, 2008, respondents Joaquin and Julia

Pacson filed with the Regional Trial Court of La
Trinidad, Benguet (trial court) a Complaint for
Annulment of Deeds, with damages and prayer
for the issuance of a writ of preliminaryinjunction.
Julie and Michelle Nabus alleged that respondent
Joaquin Pacson did not proceed with the
conditional sale of thesubject property when he
learned that there was a pending case over the
whole property. Joaquin proposed that hewould

rather lease the property with a monthly rental of

P2,000.00 and apply the sum ofP13,000.00 as
rentals, sincethe amount was already paid to the
bank and could no longer be withdrawn. Hence,
he did not affix his signature tothe second page
of a copy of the Deed of Conditional Sale.26 Julie
Nabus alleged that in March 1994, due to her
owneconomic needs and those of her minor
daughter, she sold the property to Betty Tolero,
with authority from the court.
Betty Tolero put up the defense that she was a
purchaser in good faith and for value. She
testified that it was JulieNabus who went to her
house and offered to sell the property consisting
of two lots with a combined area of 1,000square
meters. She consulted Atty. Aurelio de Peralta
before she agreed to buy the property. She and
Julie Nabusbrought to Atty. De Peralta the
pertinent papers such as TCT No. T-17718 in the
names
of
Julie
and
Michelle
Nabus,the
guardianship papers of Michelle Nabus and the
blueprint copy of the survey plan showing the two
lots. Afterexamining the documents and finding
that the title was clean, Atty. De Peralta gave her
the go-signal to buy theproperty.
ISSUES:
1.Whether or not the Deed of Conditional Sale
was converted into a contract of lease.
2. Whether the Deed of Conditional Sale was a
contract to sell or a contract of sale.
RULING:
1. The Deed of Conditional Sale entered into by
the Spouses Pacson and the Spouses Nabus was
not converted into acontract of lease. The 364
receipts issued to the Spouses Pacson contained
either the phrase "as partial payment of lot
located in Km. 4" or "cash vale" or "cash vale
(partial payment of lot located in Km. 4),"
evidencing sale under the
contract and not the lease of the property.
Further, as found by the trial court, Joaquin
Pacsons non -signing of the second page of a
carbon copy of the Deed of Conditional Sale was
through
sheer
inadvertence,
since
the
originalcontract and the other copies of the
contract were all signed by Joaquin Pacson and
the other parties to the contract.2.
The Court holds that the contract entered into by
the Spouses Nabus and respondents was a
contract to sell, not acontract of sale.
A contract of sale is defined in Article 1458 of the
Civil Code, thus: Art. 1458. By the contract of
sale, one of the contracting parties obligates
himself to transfer theownership of and to deliver
a determinate thing, and the other to pay
therefor a price certain in money or itsequivalent.
A contract of sale may be absolute or conditional.

Unfortunately for the Spouses Pacson, since the

Deed of Conditional Sale executed in their favor
was merely acontract to sell, the obligation of the
seller to sell becomes demandable only upon the
happening of thesuspensive condition. The full
payment of the purchase price is the positive
suspensive condition, the failureof which is not a
breach of contract, but simply an event that
prevented the obligation of the vendor to
conveytitle from acquiring binding force. Thus, for
its non-fulfilment, there is no contract to speak of,
the obligorhaving failed to perform the
suspensive condition which enforces a juridical
relation. With this circumstance,there can be no
rescission or fulfilment of an obligation that is still
non-existent, the suspensive condition not having
occurred as yet. Emphasis should be made that
the breach contemplated in Article 1191 of the
New
Civil Code is the obligors failure to comply with
an obligation already extant, not a failure of a
condition to render binding that obligation.
Since the contract to sell was without force and
effect, Julie Nabus validly conveyed the subject
property toanother buyer, petitioner Betty Tolero,
through a contract of absolute sale, and on the
strength thereof, newtransfer certificates of title
over the subject property were duly issued to
Tolero.

The Spouses Pacson, however, have the right to

the reimbursement of their payments to the
Nabuses, and areentitled to the award of nominal
damages.

WHEREFORE, the petition is GRANTED. The

Decision of the Court of Appeals in CA-G.R. CV No.
44941, datedNovember 28, 2003, is REVERSED
and SET ASIDE. Judgment is hereby rendered
upholding the validity of thesale of the subject
property made by petitioners Julie Nabus and
Michelle Nabus in favor of petitioner BettyTolero,
as well as the validity of Transfer Certificates of
Title Nos. T-18650 and T-18651 issued in the
name of Betty Tolero. Petitioners Julie Nabus and
Michelle Nabus are ordered to reimburse
respondents spousesJoaquin and Julia Pacson the
sum of One Hundred Twelve Thousand Four
Hundred Fifty-Five Pesos andSixteen Centavos
(P112,455.16), and to pay Joaquin and Julia
Pacson nominal damages in the amount of
TenThousand Pesos (P10,000.00), with annual
interest of twelve percent (12%) until full
payment of theamounts due to Joaquin and Julia
Pacson.
LIMKETKAI SONS MILLING, INC., petitioner,
G.R. No. 118509

vs.
March 29, 1996
COURT OF APPEALS, ET. AL., respondents.
FACTS:
Phil.Remnants Co. constituted BPI to manage,
administer and sell its real property located in
Pasig, Metro Manila.
BPI gave authority to real estate broker Pedro
Revilla Jr. to sell the lot for P1000 per square
meter.
Revilla contacted Alfonso Lim of petitioner
company who agreed to buy the land and
thereafter was allowed to view the land.
Lim and Alfonso LImketkai went to BPI to confirm
the sale and both finally agreed that the land
would be sold for P1000 per square meter.
Notwithstanding the agreement, Alfonso asked
BPI if it was possible to pay in terms provided that
in case the term is disapproved, the price shall be
paid in cash.
Two or three days later, petitioner learned that its
offer to pay on terms had been frozen. Alfonso
Lim went to BPI on July 18, 1988 and tendered
the full payment of P33,056,000.00 to Albano.
The payment was refused because Albano stated
that the authority to sell that particular piece of
property in Pasig had been withdrawn from his
unit
An action for specific performance with damages
was thereupon filed on August 25, 1988 by
petitioner against BPI. In the course of the trial,
BPI informed the trial court that it had sold the
property under litigation to NBS
ISSUE:
WON there was a perfected contract of sale
between Limketkai Co. and BPI.
HELD:
There was already a perfected contract of sale
because both parties already agreed to the sale
of P1000/sq.m. Even if Lim tried to negotiate for a
payment in terms, it is clear that if it be
disapproved, the payment will be made in cash.
The perfection of the contract took place when
Aromin and Albano, acting for BPI, agreed to sell
and Alfonso Lim with Albino Limketkai, acting for
petitioner Limketkai, agreed to buy the disputed
lot at P1,000.00 per square meter. Aside from this
there was the earlier agreement between
petitioner and the authorized broker. There was a
concurrence of offer and acceptance, on the
object, and on the cause thereof.
The phases that a contract goes through may be
summarized as follows:
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
Limketkai Sons Milling vs CA & BPI (1995 &
1996)
FACTS:
Philippine Remnants was the owner of a piece of
land which it then entrusted to BPI. Pedro Revilla
was authorized by BPI to sell the lot for
PHP1000/sqm. Revilla contacted Alfonso Lim who
agreed to buy the land. Alfonso Lim and Albino
Limketkai went to BPI and were entertained by VP
Albano and Asst. VP Aromin. BPI set the price at
1,100 while Limketkai haggled to 900. They
subsequently agreed on Php1,000 on cash basis.
Alfonso Lim asked if it was possible to pay on
terms and BPI officials said there was no harm in
trying to ask for payment in terms but if
disapproved, the price would have to be paid in
cash. Limketkai paid the initial 10% with the
remaining 90% to follow. Two or three days later,
Alfonso Lim found out that their offer had been
frozen and then went to BPI to tender full
payment of 33M to Albano but was refused by
both Albano & Bona.
Issue: W/N there was a perfected contract of sale
Held:
1995 decision
> Perfection of the contract took place when
Aromin and Albano, acting for BPI, agreed to sell
and Alfonso Lim & Albino Limketkai, agreed to
buy the lot at Php1000/sqm. A consensual
contract is perfected upon mere meeting of the
minds and although the deed of sale had yet to
be notarized, it does not mean that no contract
was perfected.
1996 decision
> Consent is manifested by the meeting of the
offer and acceptance upon the thing, and the
cause which are to constitute the contract. The
offer must be certain and aceptance absolute.
Limketkais acceptance was qualified and
therefore, was actually a counter offer.
Manila Metal Container Corporation vs Philippine
National Bank
[GR No. 166862, December 20, 2006]
Facts:
Petitioner was the owner of 8,015 square meters
of parcel of land located in Mandaluyong City,
Metro Manila. To secure a P900,000.00 loan it had

obtained from respondent Philippine National

Bank, petitioner executed a real estate mortgage
over the lot. Respondent PNB later granted
petitioner a new credit accommodation. On
August 5, 1982, respondent PNB filed a petition
for extrajudicial foreclosure of the real estate
mortgage and sought to have the property sold at
public auction. After due notice and publication,
the property was sold at public action where
respondent PNB was declared the winning bidder.
Petitioner sent a letter to PNB, requesting it to be
granted
an
extension
of
time
to
redeem/repurchase the property. Some PNB
personnel informed that as a matter of policy, the
bank does not accept partial redemption. Since
petitioner failed to redeem the property, the
Register of Deeds cancelled TCT No. 32098 and
issued a new title in favor of PNB.
Meanwhile, the Special Asset Management
Department (SAMD) had prepared a statement of
account of petitioners obligation. It also
recommended the management of PNB to allow
petitioner to repurchase the property for
P1,574,560.oo. PNB rejected the offer and
recommendation of SAMD. It instead suggested
to petitioner to purchase the property for
P2,660,000.00, in its minimum market value.
Petitioner declared that it had already agreed to
SAMDs offer to purchase for P1,574,560.47 and
deposited a P725,000.00.
Issue:
Whether or not petitioner and respondent PNB
had entered into a perfected contract for
petitioner to repurchase the property for
respondent.
Ruling:
The SC affirmed the ruling of the appellate court
that there was no perfected contact of sale
between the parties.
A contract is meeting of minds between two
persons whereby one binds himself, with respect
to the other, to give something or to render some
service. Under 1818 of the Civil Code, there is no
contract unless the following requisites concur:
1.
Consent of the contracting parties;
2.
Objection certain which is the subject matter
of the contract;
3.
Cause of the obligation which is established.
Contract is perfected by mere consent which is
manifested by the meeting of the offer and the
acceptance upon the thing and causes which are
to constitute the contract. Once perfected, the
bind between other contracting parties and the
obligations arising therefrom have the form of law
between the parties and should be complied in
good faith. The absence of any essential element
will negate the existence of a perfected contract
of sale.

The court ruled in Boston Bank of the Philippines

vs Manalo:
A definite agreement as to the price is an
essential element of a binding agreement to sell
personal or real property because it seriously
affects the rights and obligations of the parties.
Price is an essential element in the formation of a
binding and enforceable contract of sale. The
fixing of the price can never be left to the
decision of one of the contracting parties. But a
price fixed by one of the contracting parties, if
accepted by the other, gives rise to a perfected
sale.
In the case at bar, the parties to the contract is
between Manila Metal Container Corporation and
Philippine National Bank and not to Special Asset
Management Department. Since the price offered
by PNB was not accepted, there is no contract.
Hence it cannot serve as a binding juridical
relation between the parties.
Onapal Philippines Commodities, Inc. v.
Court of Appeals and Susan Chua
FACTS
In April 1983, Susan Chua entered into a
Trading
Contract
with
Onapal
Philippines
Commodities, Inc., a commission merchant/broker
licensed to engage in commodity futures trading
in Cebu, through the companys Account
Executive Elizabeth Diaz.
Every time a customer enters into a
trading transaction with Onapal, the latter
communicates the trading order by telex to its
principal, Frankwell Enterprises of Hongkong. A
Confirmation of Contract and Balance Sheet is
issued upon consummation of a transaction,
either buying or selling commodity futures. An
order is transmitted to Manila from Cebu, then to
Hongkong and finally to Japan.
Susan Chua invested P500,000.00 upon
Diazs advice that the business is profitable and
that Chua can withdraw her money anytime. A
Trading Contract was executed without Susan
Chuas awareness of the risks involved.
Another P300,000.00 was invested by
Susan Chua upon Diazs advice to pay the
difference in prices, lest she lose her original
deposit of P500,000.00.
Susan Chua attempted to withdraw her
money but to no avail after Diaz told her that she
could not get out because some accounts are
hanging on the transactions.
In asserting withdrawal, Susan Chua said
that she realized that speculating in prices and
her paying the difference between gains and
losses without actual delivery of goods to be
gambling. She was not aware of the risks and she
wanted to discontinue.
She was given only P470,000.00 out of the
P800,000.00, thus this action for recovery of the
P330,000.00 balance.
ISSUE/S

Whether or not the transactions violated

the rules in commodity futures contracts thereby
rendering the Trading Contract null and void and
entitling Susan Chua to the recovery of her
losses.
HELD
YES. The Trading Contract executed
between Susan Chua and Onapal purports to be
for the delivery of goods with the intention that
the difference between the price stipulated and
the exchange or market price at the time of the
pretended delivery shall be paid by the loser to
the winner.
This is simple speculation, gambling or
wagering on prices within a given time; it is not
buying and selling and is illegal as against public
policy.
The Court is convinced that the parties
never really intended to make or accept delivery
of any commodity being traded because all of
Onapals customers were mere speculators who
merely forecast the rise or fall in the market of
the commodity.
The Trading Contract bears all the indicia
of a valid trading contract reflecting as it did that
the seller or the buyer may elect to make or
demand delivery of goods agreed to be bought
and sold.
However, the implementation thereof
deviates from the true import of the agreement
as when no such delivery, actual or constructive,
of the commodity of goods is made, and there
was only a payment and receipt of the difference
in prices (the margin) at the time of delivery from
that prevailing at the time the sale is made.
-The following circumstances, rather irregular,
would further reveal that Susan Chua is justly
entitled to a refund:
o
There is no evidence that orders of Chua
were actually transmitted to Hongkong and Tokyo.
oThere was no arrangement with the Central
Bank for Onapals remittance of its customers
money abroad.
oThe money is in fact only kept in a separate
account in a local bank.
oOnapal failed to prove that Chuas orders and
money were transmitted abroad.
DOCTRINE
A contract for the sale or purchase of
goods/commodity to be delivered at future time,
if entered into without the intention of having any
goods/commodity pass from one party to
another, but with an understanding that at the
appointed time, the purchaser is merely to
receive or pay the difference between the
contract and the market prices (the so-called
margin), is a transaction which the law will not
sanction, for being illegal.
Commodity
futures
contract

an
agreement to buy or sell a specified quantity and

grade of a commodity at a future date at a price

established at the floor of the exchange.
Futures commission merchant/broker a
corporation or partnership, which must be
registered and licensed, engaged in soliciting or
in accepting orders for the purchase or sale of
any commodity for future delivery on or subject
to the rules of the contract market and that, in
connection with such solicitation or acceptance of
orders, accepts any money, securities or property
to margin, guarantee or secure any trade of
contract that results or may result therefrom.

Perpetua Vda De Ape vs CA (GR No.

133638, 15 April 2005 456 SCRA 193 Civil
Law Law on Sales Elements of a Contract of
Sale Consent Vitiated
Cleopas Ape died in 1950 and left a parcel of land
(Lot 2319) to his 11 children. The children never
formally
divided
the
property
amongst
themselves
except
through
hantal-hantal
whereby each just occupied a certain portion and
developed each.
On the other hand, the spouses Lumayno were
interested in the land so they started buying the
portion of land that each of the heirs occupied.
On 11 Apr 1973, one of the children, Fortunato,
entered into a contract of sale with Lumayno. In
exchange of his lot, Lumayno agreed to pay
P5,000.00. She paid in advance P30.00. Fortunato
was given a receipt prepared by Lumaynos son in
law (Andres Flores). Flores also acted as witness.
Lumayno also executed sales transactions with
Fortunatos siblings separately.
In 1973, Lumayno compelled Fortunato to make
the the delivery to her of the registrable deed of
sale over Fortunatos portion of the Lot No. 2319.
Fortunato assailed the validity of the contract of
sale. He also invoked his right to redeem (as a coowner) the portions of land sold by his siblings to
Lumayno. Fortunato died during the pendency of
the case.
ISSUE: Whether or not there was a valid contract
of sale?
HELD: No. Fortunato was a no read no write
person. It was incumbent for the the other party
to prove that details of the contract was fully
explained to Fortunato before Fortunato signed
the receipt.
A contract of sale is a consensual contract, thus,
it is perfected by mere consent of the parties. It
is born from the moment there is a meeting of
minds upon the thing which is the object of the
sale and upon the price. Upon its perfection, the
parties may reciprocally demand performance,

that is, the vendee may compel the transfer of

the ownership and to deliver the object of the
sale while the vendor may demand the vendee to
pay the thing sold. For there to be a perfected
contract of sale, however, the following elements
must be present: consent, object, and price in
money or its equivalent.
For consent to be valid, it must meet the
following requisites:
(a) it should be intelligent, or with an exact notion
of the matter to which it refers;
(b) it should be free and
(c) it should be spontaneous. Intelligence in
consent is vitiated by error; freedom by violence,
intimidation or undue influence; spontaneity by
fraud.
Lumayno claimed that she explained fully the
receipt to Fortunato, but Flores testimony belies
it. Flores said there was another witness but the
other was a maid who also lacked education.
Further, Flores himself was not aware that the
receipt was to transfer the ownership of
Fortunatos land to her mom-in-law. It merely
occurred to him to explain the details of the
receipt but he never did.
REPUBLIC V. FLORENDO
Facts:
Petitioner Republic of the Philippines is
represented in this case by the Philippine
Economic Zone Authority (PEZA), a government
corporation created under RA 7916, as amended.
On April 14, 1991, the Export Processing Zone
Authority, (PEZA), predecessor of PEZA, filed a
complaint for the expropriation of seven parcels
of land located at Barrio Ibo, Lapu-Lapu City,
Cebu, owned by respondents. The purpose of the
expropriation was to establish and develop an
export processing zone or a part thereof on those
real properties. After trial on the merits, the RTC
rendered a decision ordering the expropriation of
the seven parcels of land and payment of just
compensation of P1,500 per sq. m. with 12%
interest per annum from the time petitioner took
possession. During the pendency of petitioners
appeal for the correctness of valuation, both
parties reached an amicable settlement and
agreed for the payment as fixed by RTC; as well
as presentation by respondents of clean titles of
all the subject properties before payment by
petitioner.
Accordingly, the parties executed a deed of
absolute sale dated June 25, 2001 which set out
the terms and conditions of their settlement, the

transfer of ownership from respondents to

petitioner and the execution by the parties of the
corresponding deed of absolute sale for the
remaining six lots as soon as respondents could
settle or clear the encumbrances or other
problems affecting them. Petitioner prepared a
joint motion to dismiss the expropriation case but
respondent Antonio Florendo refused to sign
because there were still three lots which had not
yet been paid. Respondents could not clear these
properties of their encumbrances and liens as
there were pending cases filed by third party
claimants over them. Instead, they proposed that
a partial compromise agreement be executed to
cover the four lots that had already been sold and
transferred to PEZA. Petitioner, however, found
the proposal unacceptable and contrary to their
compromise agreement.
Issue:
Whether or not there was a perfected
compromise agreement between the parties.
Ruling:
The compromise agreement the parties executed
was in the form of a contract of sale. The
elements of a valid contract of sale are: (a)
consent or meeting of the minds; (b) determinate
subject matter and (c) price certain in money or
its equivalent. All the elements are present here.
The parties agreed on the sale of a determinate
object and the price certain. The contention of
the respondent that there was no meeting of
mind because the condition relating to the
delivery of clean titles was not fulfilled is wrong.
The delivery of clean titles was not a condition
imposed on the perfection of the contract of sale
but a condition imposed on petitioner's obligation
to pay the purchase price of these lots. As ruled
in the case of Jardine Davies Inc. vs CA, the court
distinguished between a condition imposed on
the perfection of a contract and a condition
imposed merely on the performance of an
obligation. While failure to comply with the first
condition results in the failure of a contract, noncompliance with the second merely gives the
other party options and/or remedies to protect its
interest.
Topic:
Contract to sell

Art. 1478
Case:
Sacobia Hills Devt Corp. v. Ty
, 470 SCRA 395, September 20, 2005
Prepared by:
Leny Ignalaga
Facts
:
Petitioner
Sacobia
Hills
Development
Corporation (Sacobia) is the developer of True

North Golf and Country Club which boasts of

amenities that include a golf course, clubhouse,
sports complex andseveral vacation villas.
Respondent Allan U. Ty wrote to Sacobia a letter
expressing his intention to acquireone Class A
share of True North and accordingly paid the
reservation fee of P180,000.00 as evidenced
byPCI Bank Check No. 0038053. Sacobia assured
its
prospective
shareholders
that
the
development of True North was proceeding on
schedule; that the golf course would be playable
by
October
1999;
that
theEnvironmental
Clearance Certificate (ECC) by the Department of
Environment and Natural Resources(DENR) as
well as the Permit to Sell from the Securities and
Exchange Commission (SEC) should have been
released by October 1997; and that their
registration deposits remained intact in an escrow
account.Sacobia then approved the purchase
application
and
membership
of
Ty
for
P600,000.00, subject to certainterms and
conditions. The notice of approval provided the
following:
Terms and Conditions
1. Approval of an application to purchase
golf/country club shares is subjected to the full
payment of the total purchase price. Should the
buyer opt for the deferred payment scheme,
approval is subject to our receipt of a down
payment of at least 30% and the balance payable
in installments over a maximum of eleven (11)
months from the date of application, and covered
by postdated cheques.
2. Your reserved share shall be considered
withdrawn and may be deemed cancelled should
you fail tosettle your obligation within fifteen (15)
days from due date, or failure to cover the value
of the postdatedcheques upon their maturity, or
your failure to issue the required postdated
cheques. In which case, weshall reserve the right
to offer the said shares to other interested
parties. This also means forfeiture of 50%of the
total amount you have already paid.3. We will
undertake to execute the corresponding sales
documents/ Deed of Absolute Sale coveringthe
reserved shares upon full payment of the total
purchase price. The Certificate of Membership
shall beissued thereafter.However, on January 12,
1998, Ty notified Sacobia that he is rescinding the
contract and sought refund of the payments
already made due to the latters failure to
complete the project on time as
Promised (supposedly October 1997). Sacobia
wrote him a letter, stating that the DENR had
issued the requiredECC only on March 5, 1998,
and that the golf course would be ready for use
by end of 1998( in fact aheadof promised date
which is October 1999). Sacobia again wrote the
respondent advising him that the 18-holegolf
course would be fully operational by summer of
1999. Sacobia also sought to collect from

respondent the latters outstanding balance of

P190,909.08 which was covered by five (5) post
dated checks. However,Ty notified Sacobia that
he had stopped payment on the five (5) post
dated checks and reiterated hisdemand for the
refund of his payments which amounted to
P409,090.92. Sacobia denied his request thusTy
filed a complaint for rescission and damages.
Issue
: Whether or not respondent Ty can rescind the
contract and demand for damages from Sacobia
Hillsfor breach of contract
Held:
No, Ty cannot rescind the contract and demand
for damages from Sacobia Hills for breach of
contract because the contract to sell between
them has not yet been perfected for failure by Ty
to pay the full purchase price. The Supreme Court
ruled as follows:
1. The terms of the agreement between Sacobia
and Ty can be deduced, not on a formal
document like a
deed of sale, but from a series of correspondence
and acts signifying the parties intention to enter
into a
contract. The absence of a formal deed of
conveyance is a strong indication that Sacobia
did not intend totransfer title until respondent
shall have completely complied with his
correlative obligation of paying thecontact
price.2. In a Contract to Sell, the payment of the
purchase price is a positive suspensive condition,
the failure of which is not a breach, casual or
serious, but a situation that prevents the
obligation of the vendor to conveytitle from
acquiring an obligatory force. It is one where the
happening of the event gives rise to anobligation.
Thus, for its non-fulfillment there will be no
contract to speak of, the obligor having failed to
perform the suspensive condition which enforces
a juridical relation. In fact with this circumstance,
therecan be no rescission of an obligation that is
still non-existent, the suspensive condition not
having occurredas yet. Emphasis should be made
that the breach contemplated in Article 1191 of
the New Civil Code is the

obligors failure to comply with an obligation

already extant, not a failure of
a condition to render bindingthat obligation.3. Ty
did not pay the full purchase price which is his
obligation under the contract to sell, therefore,
itcannot be said that Sacobia breached its
obligation. No obligations arose on its part
because respond
ents
non-fulfillment of the suspensive condition
rendered the contract to sell ineffective and
unperfected.Indeed, there can be no rescission
under Article 1191of the Civil Code because until
the happening of thecondition, i.e. full payment
of the contr
act price, Sacobias obligation to deliver the title
and object of the
sale is not yet extant. A non-existent obligation
cannot be subject of rescission. Article 1191
speaks of obligations already existing, which may
be rescinded in case one of the obligors fails to
comply with whatis incumbent upon him.
4. In the present case, respondents failure to
fulfill this suspensive condition prevented the
perfection of
the contract to sell. With an ineffective contract,
Ty had not acquired the status of a shareholder
butremained, at most, a prospective investor. In
the absence of a juridical tie between the parties,
Ty cannot
claim the rights and privileges accorded to
Sacobias full
-fledged members and shareowners, including
thefull enjoyment of the amenities being offered.
Unfortunately for Ty, he cannot avail of rescission
asenvisioned by Article 1191 of the Civil Code.
However, he can withdraw his investment subject
to therestrictions under the terms and conditions
pertinent to a reneging investor.
5. Tys complaint for rescission of contract and
damages in Civil Case No. 01-99696 is dismissed
Heis ordered to pay to Sacobia Hills Development
Corporation the amount of Pesos: One Hundred
NinetyThousand Nine Hundred Nine and Eight
Centavos (P190,909.08) without interest within
thirty (30) daysfrom finality of this decision;
otherwise, fifty percent (50%) of his total
payments shall be forfeited.