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SUBJECT MATTER OF SALE

1. MELLIZA vs CITY OF ILOILO (23 SCRA 477)
Facts: Juliana Melliza during her lifetime owned, among other properties, 3
parcels of residential land in Iloilo City (OCT 3462).Said parcels of land were
known as Lots Nos. 2, 5 and 1214. The total area of Lot 1214 was 29,073 sq.
m. On 27 November 1931she donated to the then Municipality of Iloilo, 9,000
sq. m. of Lot 1214, to serve as site for the municipal hall. The donation was
however revoked by the parties for the reason that the area donated was
found inadequate to meet the requirements of the development plan of the
municipality, the so-called Arellano Plan.
Subsequently, Lot 1214 was divided by Certeza Surveying Co., Inc. into Lots
1214-A and 1214-B. And still later, Lot 1214-B was further divided into Lots
1214-B-1, Lot 1214-B-2 and Lot1214-B-3. As approved by the Bureau of
Lands, Lot 1214-B-1, with 4,562 sq. m., became known as Lot 1214-B; Lot
1214-B-2,with 6,653 sq. m., was designated as Lot 1214-C; and Lot 1214-B3, with 4,135 sq. m., became Lot 1214-D. On 15 November1932, Juliana
Melliza executed an instrument without any caption providing for the absolute
sale involving all of lot 5, 7669 sq.m. of Lot 2 (sublots 2-B and 2-C), and a
portion of 10,788 sq. m. of Lot 1214 (sublots 1214-B2 and 1214-B3) in favor
of the Municipal Government of Iloilo for the sum of P6,422; these lots and
portions being the ones needed by the municipal government for the
construction of avenues, parks and City hall site according the Arellano
plan.
On 14 January 1938, Melliza sold her remaining interest in Lot 1214 to
Remedios Sian Villanueva (thereafter TCT 18178). Remedios in turn on 4
November1946 transferred her rights to said portion of land to Pio Sian
Melliza (thereafter TCT 2492). Annotated at the back of Pio Sian Mellizas
title certificate was the following that a portion of 10,788 sq. m. of Lot 1214
now designated as Lots 1412-B-2 and1214-B-3 of the subdivision plan
belongs to the Municipality of Iloilo as per instrument dated 15 November
1932. On 24 August 1949 the City of Iloilo, which succeeded to the
Municipality of Iloilo, donated the city hall site together with the building
thereon, to the University of the Philippines (Iloilo branch). The site donated
consisted of Lots 1214-B, 1214-C and 1214-D, with a total area of 15,350 sq.
m., more or less. Sometime in 1952, the University of the Philippines
enclosed the site donated with a wire fence. Pio Sian Melliza thereupon

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made representations, thru his lawyer, with the city authorities for payment of
the value of the lot (Lot 1214-B). No recovery was obtained, because as
alleged by Pio Sian Melliza, the City did not have funds. The University of the
Philippines, meanwhile, obtained Transfer Certificate of Title No. 7152
covering the three lots, Nos. 1214-B,1214-C and 1214-D.On 10 December
1955 Pio Sian Melizza filed an action in the CFI Iloilo against Iloilo City and
the University of the Philippines for recovery of Lot 1214-B or of its value.
After stipulation of facts and trial, the CFI rendered its decision on 15 August
1957, dismissing the complaint. Said court ruled that the instrument executed
by Juliana Melliza in favor of Iloilo municipality included in the conveyance
Lot 1214-B, and thus it held that Iloilo City had the right to donate Lot 1214-B
to UP. Pio Sian Melliza appealed to the Court of Appeals. On 19 May 1965,
the CA affirmed the interpretation of the CFI that the portion of Lot 1214 sold
by Juliana Melliza was not limited to the 10,788 square meters specifically
mentioned but included whatever was needed for the construction of
avenues, parks and the city hall site. Nonetheless, it ordered the remand of
the case for reception of evidence to determine the area actually taken by
Iloilo City for the construction of avenues, parks and for city hall site. Hence,
the appeal by Pio San Melliza to the Supreme Court.
One of his causes of action was that the contract of sale executed between
Melliza and the Mun. referred only to lots 1214-C and 1214-D and it is
unwarranted to include lot 1214-B as being included under the description
therein because that would mean that the object of the contract of sale would
be indeterminate. One of the essential requirements for a contract of sale is
that it should have for its object a determinate thing.
HELD: The paramount intention of the parties was to provide Iloilo
municipality with lots sufficient or adequate in area for the construction of the
Iloilo City hall site, with its avenues and parks. For this matter, a previous
donation for this purpose between the same parties was revoked by them,
because of inadequacy of the area of the lot donated. Said instrument
described 4parcels of land by their lot numbers and area; and then it goes on
to further describe, not only those lots already mentioned, but the lots object
of the sale, by stating that said lots were the ones needed for the
construction of the city hall site, avenues and parks according to the Arellano
plan. If the parties intended merely to cover the specified lots (Lots 2, 5,
1214-C and 1214-D), there would scarcely have been any need for the next
paragraph, since these lots were already plainly and very clearly described

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by their respective lot number and areas. Said next paragraph does not really
add to the clear description that was already given to them in the previous
one. It is therefore the more reasonable interpretation to view it as describing
those other portions of land contiguous to the lots that, by reference to the
Arellano plan, will be found needed for the purpose at hand, the construction
of the city hall site.
The requirement of the law that a sale must have for its object a determinate
thing, is fulfilled as long as, at the time the contract is entered into, the object
of the sale is capable of being made determinate without the necessity of a
new or further agreement between the parties (Art. 1273, old Civil Code; Art.
1460, New Civil Code). The specific mention of some of the lots plus the
statement that the lots object of the sale are the ones needed for city hall
site; avenues and parks, according to the Arellano plan, sufficiently provides
a basis, as of the time of the execution of the contract, for rendering
determinate said lots without the need of a new and further agreement of the
parties.
The Supreme Court affirmed the decision appealed from insofar as it affirms
that of the CFI, and dismissed the complaint; without costs
2. YU TEK vs GONZALES (29 Phil 384)
FACTS: A written contract was executed between Basilio Gonzalez and Yu
Tek and Co., where Gonzales was obligated to deliver600 piculs of sugar of
the 1st and 2nd grade to Yu Tek, within the period of 3 months (1 January-31
March 1912) at any place within the municipality of Sta. Rosa, which Yu Tek
& Co. or its representative may designate; and in case, Gonzales does not
deliver, the contract will be rescinded and Gonzales shall be obligated to
return the P3,000 received and also the sum of P1,200by way of indemnity
for loss and damages. No sugar had been delivered to Yu Tek & Co. under
this contract nor had it been able to recover the P3,000. Yu Tek & Co. filed a
complaint against Gonzales, and prayed for judgment for the P3,000 and the
additional P1,200. Judgment was rendered for P3,000 only, and from this
judgment both parties appealed.
Defendant alleges that the court erred in refusing to permit parol evidence
showing that the parties intended that the sugar was to be secured from the
crop which the defendant raised on his plantation, and that he was unable to
fulfill the contract by reason of the almost total failure of his crop.

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The second contention of the defendant arises from the first. He assumes
that the contract was limited to the sugar he might raise upon his own
plantation; that the contract represented a perfected sale; and that by failure
of his crop he was relieved from complying with his undertaking by loss of the
thing due. (Arts. 1452, 1096, and 1182, Civil Code.)
ISSUES: 1) Whether compliance of the obligation to deliver depends upon
the production in defendants plantation
2) Whether there is a perfected sale
3) Whether liquidated damages of P1,200 should be awarded to the plaintiff
HELD: 1) The case appears to be one to which the rule which excludes parol
evidence to add to or vary the terms of a written contract is decidedly
applicable. There is not the slightest intimation in the contract that the sugar
was to be raised by the defendant. Parties are presumed to have reduced to
writing all the essential conditions of their contract. While parol evidence is
admissible in a variety of ways to explain the meaning of written contracts, it
cannot serve the purpose of incorporating into the contract additional
contemporaneous conditions which are not mentioned at all in the writing,
unless there has been fraud or mistake. It may be true that defendant owned
a plantation and expected to raise the sugar himself, but he did not limit his
obligation to his own crop of sugar. Our conclusion is that the condition which
the defendant seeks to add to the contract by parol evidence cannot be
considered. The rights of the parties must be determined by the writing itself.
2) Article 1450 defines a perfected sale as follows: The sale shall be
perfected between vendor and vendee and shall be binding on both of them,
if they have agreed upon the thing which is the object of the contract and
upon the price, even when neither has been delivered. Article 1452 provides
that the injury to or the profit of the thing sold shall, after the contract has
been perfected, be governed by the provisions of articles 1096 and 1182.
There is a perfected sale with regard to the thing whenever the article of
sale has been physically segregated from all other articles
In McCullough vs. Aenlle & Co. (3 Phil 285), a particular tobacco factory with
its contents was held sold under a contract which did not provide for either
delivery of the price or of the thing until a future time. In Barretto vs. Santa
Marina (26 Phil 200),specified shares of stock in a tobacco factory were held

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sold by a contract which deferred delivery of both the price and the stock until
the latter had been appraised by an inventory of the entire assets of the
company. In Borromeo vs. Franco (5 Phil.Rep., 49) a sale of a specific house
was held perfected between the vendor and vendee, although the delivery of
the price was withheld until the necessary documents of ownership were
prepared by the vendee. In Tan Leonco vs. Go Inqui (8 Phil. Rep.,531) the
plaintiff had delivered a quantity of hemp into the warehouse of the
defendant. The defendant drew a bill of exchange in the sum of P800,
representing the price which had been agreed upon for the hemp thus
delivered. Prior to the presentation of the bill for payment, in said case, the
hemp was destroyed. Whereupon, the defendant suspended payment of the
bill. It was held that the hemp having been already delivered, the title had
passed and the loss was the vendees. It is our purpose to distinguish the
case at bar from all these cases.
The contract in the present case was merely an executory agreement; a
promise of sale and not a sale. As there was no perfected sale, it is clear that
articles 1452, 1096, and 1182 are not applicable. The agreement upon the
thing which was the object of the contract was not within the meaning of
article 1450. Sugar is one of the staple commodities of this country. For the
purpose of sale its bulk is weighed, the customary unit of weight being
denominated a picul.' There was no delivery under the contract. If called
upon to designate the article sold, it is clear that Gonzales could only say that
it was sugar. He could only use this generic name for the thing sold. There
was no appropriation of any particular lot of sugar. Neither party could point
to any specific quantity of sugar.
The contract in the present case is different from the contracts discussed in
the cases referred to. In the McCullough case, for instance, the tobacco
factory which the parties dealt with was specifically pointed out and
distinguished from all other tobacco factories. So, in the Barretto case, the
particular shares of stock which the parties desired to transfer were capable
of designation. In the Tan Leonco case, where a quantity of hemp was the
subject of the contract, it was shown that quantity had been deposited in a
specific warehouse, and thus set apart and distinguished from all other hemp
The Supreme Court affirmed the judgment appealed from with the
modification allowing the recovery of P1,200 under paragraph 4 of the
contract, without costs

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3. NATONAL GRAINS AUTHORITY vs IAC

FACTS: National Grains Authority (now National Food Authority, NFA) is a
government agency created under PD 4. One of its incidental functions is the
buying of palay grains from qualified farmers. On 23 August 1979, Leon
Soriano offered to sell palay grains to the NFA, through the Provincial
Manager (William Cabal) of NFA in Tuguegarao, Cagayan. He submitted the
documents required by the NFA for pre-qualifying as a seller, which were
processed and accordingly, he was given a quota of 2,640 cavans of palay.
The quota noted in the Farmers Information Sheet represented the
maximum number of cavans of palay that Soriano may sell to the NFA. On
23 and 24 August 1979, Soriano delivered 630 cavans of palay. The palay
delivered were not rebagged, classified and weighed. When Soriano
demanded payment of the 630 cavans of palay, he was informed that its
payment will beheld in abeyance since Mr. Cabal was still investigating on an
information he received that Soriano was not a bona fide farmer and the
palay delivered by him was not produced from his farmland but was taken
from the warehouse of a rice trader, Ben de Guzman. On 28 August 1979,
Cabal wrote Soriano advising him to withdraw from the NFA warehouse the
630 cavans stating that NFA cannot legally accept the said delivery on the
basis of the subsequent certification of the BAEX technician (Napoleon
Callangan) that Soriano is not a bona fide farmer.
Instead of withdrawing the 630 cavans of palay, Soriano insisted that the
palay grains delivered be paid. He then filed a complaint for specific
performance and/or collection of money with damages on 2 November 1979,
against the NFA and William Cabal (Civil Case 2754). Meanwhile, by
agreement of the parties and upon order of the trial court, the 630 cavans of
palay in question were withdrawn from the warehouse of NFA. On 30
September 1982, the trial court found Soriano a bona fide farmer and
rendered judgment ordering the NFA, its officers and agents to pay Soriano
the amount of P47,250.00 representing the unpaid price of the 630 cavans of
palay plus legal interest thereof (12% per annum, from the filing of complaint
on 20 November1979 until fully paid). NFA and Cabal filed a motion for
reconsideration, which was denied by the court on 6 December 1982.Appeal
was filed with the Intermediate Appellate Court. On 23 December 1986, the
then IAC upheld the findings of the trialc ourt and affirmed the decision
ordering NFA and its officers to pay Soriano the price of the 630 cavans of
rice plus interest. Themotion for reconsideration of the appellate courts

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decision was denied in a resolution dated 17 April 1986. Hence, the present
petition for review with the sole issue of whether or not there was a contract
of sale in the present case.
ISSUE: Whether there was a perfected sale
HELD: Soriano initially offered to sell palay grains produced in his farmland
to NFA. When the latter accepted the offer by noting in Soriano's Farmer's
Information Sheet a quota of 2,640 cavans, there was already a meeting of
the minds between the parties. The object of the contract, being the palay
grains produced in Soriano's farmland and the NFA was to pay the same
depending upon its quality.
The fact that the exact number of cavans of palay to be delivered has not
been determined does not affect the perfection of the contract. Article 1349 of
the New Civil Code provides: ".The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract, provided it is
possible to determine the same, without the need of a new contract between
the parties." In this case, there was no need for NFA and Soriano to enter
into a new contract to determine the exact number of cavans of palay to be
sold. Soriano can deliver so much of his produce as long as it does not
exceed 2,640 cavans. From the moment the contract of sale is perfected, it is
incumbent upon the parties to comply with their mutual obligations or "the
parties may reciprocally demand performance" thereof.
The Supreme Court dismissed the instant petition for review, and affirmed
the assailed decision of the then IAC (now Court of Appeals) is affirmed;
without costs.
4. SCHUBACK & SONS vs. CA
FACTS: In 1981, Ramon San Jose (Philippine SJ Industrial Trading)
established contact with Johannes Schuback & Sons Philippine Trading
Corporation through the Philippine Consulate General in Hamburg, West
Germany, because he wanted to purchase MAN bus spare parts from
Germany. Schuback communicated with its trading partner, Johannes
Schuback and Sohne Handelsgesellschaft m.b.n. & Co. (Schuback
Hamburg) regarding the spare parts San Jose wanted to order. On 16
October 1981,San Jose submitted to Schuback a list of the parts he wanted
to purchase with specific part numbers and description. Schuback referred

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the list to Schuback Hamburg for quotations. Upon receipt of the quotations,
Schuback sent to San Jose a letter dated25 November 1981 enclosing its
offer on the items listed. On 4 December 1981, San Jose informed Schuback
that he preferred genuine to replacement parts, and requested that he be
given a 15% discount on all items. On 17 December 1981, Schuback
submitted its formal offer containing the item number, quantity, part number,
description, unit price and total to San Jose. On24 December 1981, San
Jose informed Schuback of his desire to avail of the prices of the parts at that
time and enclosed its Purchase Order 0101 dated 14 December 1981. On 29
December 1981, San Jose personally submitted the quantities he wanted to
Mr. Dieter Reichert, General Manager of Schuback, at the latters residence.
The quantities were written in ink by San Jose in the same PO previously
submitted. At the bottom of said PO, San Jose wrote in ink above his
signature: NOTE: Above PO will include a 3% discount. The above will serve
as our initial PO. Schuback immediately ordered the items needed by San
Jose from Schuback Hamburg. Schuback Hamburg in turn ordered the items
from NDK, a supplier of MAN spare parts in West Germany.
On 4 January 1982, Schuback Hamburg sent Schuback a proforma invoice
to be used by San Jose in applying for a letter of credit. Said invoice required
that the letter of credit be opened in favor of Schuback Hamburg. San Jose
acknowledged receipt of the invoice. An order confirmation was later sent by
Schuback Hamburg to Schuback which was forwarded to and received by
San Jose on 3 February 1981. On 16 February 1982, Schuback reminded
San Jose to open the letter of credit to avoid delay in shipment and payment
of interest. In the meantime, Schuback Hamburg received invoices from NDK
for partial deliveries on Order 12204. On 16 February 1984, Schuback
Hamburg paid NDK. On 18 October 1982, Schuback again reminded San
Jose of his order and advised that the case may be endorsed to its lawyers.
San Jose replied that he did not make any valid PO and that there was no
definite contract between him and Schuback. Schuback sent a rejoinder
explaining that there is a valid PO and suggesting that San Jose either
proceed with the order and open a letter of credit or cancel the order and pay
the cancellation fee of 30% F.O.B. value, or Schuback will endorse the case
to its lawyers. Schuback Hamburg issued a Statement of Account to
Schuback enclosing therewith Debit Note charging Schuback 30%
cancellation fee, storage and interest charges in the total

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amount of DM 51,917.81. Said amount was deducted from Schubacks
account with Schuback Hamburg. Demand letters sent to San Jose by
Schubacks counsel dated 22 March 1983 and 9J une 1983 were to no avail.
Schuback filed a complaint for recovery of actual or compensatory damages,
unearned profits, interest, attorneys fees and costs against San Jose. In its
decision dated 13 June 1988, the trial court ruled in favor of Schuback by
ordering San Jose to pay it, among others, actual compensatory damages in
the amount of DM 51,917.81, unearned profits in the amount of
DM14,061.07, or their peso equivalent. San Jose elevated his case before
the Court of Appeals. On 18 February 1992, the appellate court reversed the
decision of the trial court and dismissed Schubacks complaint. It ruled that
there was no perfection of contract since there was no meeting of the minds
as to the price between the last week of December 1981 and the first week of
January 1982. Hence, the petition for review on certiorari.
ISSUE: Whether or not a contract of sale has been perfected between the
parties
HELD: Article 1319 of the Civil Code states: "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 the acceptance
absolute. A qualified acceptance constitutes a counter offer." The facts
presented to us indicate that consent on both sides has been manifested.
The offer by petitioner was manifested on December 17, 1981 when
petitioner submitted its proposal containing the item number, quantity, part
number, description, the unit price and total to private respondent. On
December 24, 1981, private respondent informed petitioner of his desire to
avail of the prices of the parts at that time and simultaneously enclosed its
Purchase Order. At this stage, a meeting of the minds between vendor and
vendee has occurred, the object of the contract: being the spare parts and
the consideration, the price stated in petitioner's offer dated December 17,
1981 and accepted by the respondent on December 24, 1981.
Although the quantity to be ordered was made determinate only on 29
December 1981, quantity is immaterial in the perfection of a sales contract.
What is of importance is the meeting of the minds as to the object and cause,
which from the facts disclosed, show that as of 24 December 1981, these
essential elements had already concurred. Thus, perfection of the contract
took place, not on 29 December 1981, but rather on 24 December 1981.

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5. NOOL vs CA
FACTS: One lot formerly owned by Victorio Nool (TCT T-74950) has an area
of 1 hectare. Another lot previously owned byF rancisco Nool (TCT T100945) has an area of 3.0880 hectares. Both parcels are situated in San
Manuel, Isabela. Spouses Conchita Nool and Gaudencio Almojera (plaintiffs)
alleged that they are the owners of the subject land as they bought the same
from Victorio and Francisco Nool, and that as they are in dire need of money,
they obtained a loan from the Ilagan Branch of the DBP (Ilagan, Isabela),
secured by a real estate mortgage on said parcels of land, which were still
registered in the names of Victorino and Francisco Nool, at the time, and for
the failure of the plaintiffs to pay the said loan, including interest and
surcharges, totaling P56,000.00, the mortgage was foreclosed; that within
the period of redemption, the plaintiffs contacted Anacleto Nool for the latter
to redeem the foreclosed properties from DBP, which the latter did; and as a
result, the titles of the2 parcels of land in question were transferred to
Anacleto; that as part of their arrangement or understanding, Anacleto
agreed to buy from Conchita the 2 parcels of land under controversy, for a
total price of P100,000.00, P30,000.00 of which price was paid to Conchita,
and upon payment of the balance of P14,000.00, the plaintiffs were to regain
possession of the 2 hectares of land, which amounts spouses Anacleto Nool
and Emilia Nebre (defendants) failed to pay, and the same day the said
arrangement was made; another covenant was entered into by the parties,
whereby the defendants agreed to return to plaintiffs the lands in question, at
anytime the latter have the necessary amount; that latter asked the
defendants to return the same but despite the intervention of the Barangay
Captain of their place, defendants refused to return the said parcels of land
to plaintiffs; thereby impelling the plaintiffs to come to court for relief. On the
other hand, defendants theorized that they acquired the lands in question
from the DBP, through negotiated sale, and were misled by plaintiffs when
defendant Anacleto Nool signed the private writing, agreeing to return subject
lands when plaintiffs have the money to redeem the same; defendant
Anacleto having been made to believe, then, that his sister, Conchita, still
had the right to redeem the said properties
It should be stressed that Manuel S. Mallorca, authorized officer of DBP,
certified that the 1-year redemption period (from 16March 1982 up to 15
March 1983) and that the mortgagors right of redemption was not exercised
within this period. Hence, DBP became the absolute owner of said parcels of

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land for which it was issued new certificates of title, both entered on 23
May1983 by the Registry of Deeds for the Province of Isabela. About 2 years
thereafter, on 1 April 1985, DBP entered into a Deed of Conditional Sale
involving the same parcels of land with Anacleto Nool as vendee.
Subsequently, the latter was issued new certificates of title on 8 February
1988.
The trial court ruled in favor of the defendants, declaring the private writing to
be an option to sell, not binding and considered validly withdrawn by the
defendants for want of consideration; ordering the plaintiffs to return to the
defendants the sum of P30,000.00 plus interest thereon at the legal rate,
from the time of filing of defendants counterclaim until the same is fully paid;
to deliver peaceful possession of the 2 hectares; and to pay reasonable rents
on said 2 hectares at P5,000.00 per annum or at P2,500.00 per cropping
from the time of judicial demand until the said lots shall have been delivered
to the defendants; and to pay the costs. The plaintiffs appealed to the Court
of Appeals (CA GR CV 36473), which affirmed the appealed judgment intoto
on 20 January 1993. Hence, the petition before the Supreme Court.
ISSUE: Whether the Contract of Repurchase is valid.
HELD: Nono dat quod non habet, No one can give what he does not
have; Contract of repurchase inoperative thus void.
A contract of repurchase arising out of a contract of sale where the seller did
not have any title to the property sold is not valid. Since nothing was sold,
then there is also nothing to repurchase.
Article 1505 of the Civil Code provides that where goods are sold by a
person who is not the owner thereof, and who does not sell them under
authority or with consent of the owner, the buyer acquires no better title to the
goods than the seller had, unless the owner of the goods is by his conduct
precluded from denying the sellers authority to sell. Jurisprudence, on the
other hand, teaches us that a person can sell only what he owns or is
authorized to sell; the buyer can as a consequence acquire no more than
what the seller can legally transfer. No one can give what he does not have
nono dat quod non habet.
In the present case, there is no allegation at all that petitioners were
authorized by DBP to sell the property to the private respondents. Further,

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the contract of repurchase that the parties entered into presupposes that
petitioners could repurchase the property that they sold to private
respondents. As petitioners sold nothing, it follows that they can also
repurchase nothing. In this light, the contract of repurchase is also
inoperative and by the same analogy, void.
The Supreme Court denied the petition, and affirmed the assailed decision of
the Court of Appeals
6. VILLAFLOR vs CA
FACTS: On 16 January 1940, Cirilo Piencenaves, in a Deed of Absolute
Sale, sold to Vicente Villafor, a parcel of agricultural land (planted to Abaca)
containing an area of 50 hectares, more or less. The deed states that the
land was sold to Villaflor on 22 June1937, but no formal document was then
executed, and since then until the present time, Villaflor has been in
possession and occupation of the same. Before the sale of said property,
Piencenaves inherited said property form his parents and was in adverse
possession of such without interruption for more than 50 years. On the same
day, Claudio Otero, in a Deed of Absolute Sale sold to Villaflor a parcel of
agricultural land (planted to corn), containing an area of 24 hectares, more or
less; Hermogenes Patete, in a Deed of Absolute Sale sold to Villaflor, a
parcel of agricultural land (planted to abaca and corn), containing an area of
20 hectares, more or less. Both deed state the same details or
circumstances as that of Piencenaves. On 15 February 1940, Fermin
Bocobo, in a Deed of Absolute Sale sold to Villaflor, a parcel of agricultural
land (planted with abaca), containing an area of 18 hectares, more or less.
On 8 November 1946, Villaflor leased to Nasipit Lumber Co., Inc. a parcel of
land, containing an area of 2 hectares, together with all the improvements
existing thereon, for a period of 5 years (from 1 June 1946) at a rental of
P200.00 per annum to cover the annual rental of house and building sites for
33 houses or buildings. The lease agreement allowed the lessee to sublease
the premises to any person, firm or corporation; and to build and construct
additional houses with the condition the lessee shall pay to the lessor the
amount of 50 centavos per month for every house and building; provided that
said constructions and improvements become the property of the lessor at
the end of the lease without obligation on the part of the latter for expenses
incurred in the construction of the same.

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On 7 July 1948, in an Agreement to Sell Villaflor conveyed to Nasipit
Lumber, 2 parcels of land. Parcel 1 contains an area of 112,000 hectares
more or less, divided into lots 5412, 5413, 5488, 5490,5491, 5492, 5850,
5849, 5860, 5855, 5851, 5854, 5855, 5859, 5858, 5857, 5853, and 5852; and
containing abaca, fruit trees, coconuts and thirty houses of mixed materials
belonging to the Nasipit Lumber Company. Parcel 2 contains an area of
48,000more or less, divided into lots 5411, 5410, 5409, and 5399, and
containing 100 coconut trees, productive, and 300 cacao trees. From said
day, the parties agreed that Nasipit Lumber shall continue to occupy the
property not anymore in concept of lessee but as prospective owners.
On 2 December 1948, Villaflor filed Sales Application V-807 with the Bureau
of Lands, Manila, to purchase under the provisions of Chapter V, XI or IX of
CA 141 (The Public Lands Act), as amended, the tract of public lands.
Paragraph 6 of the Application, states: I understand that this application
conveys no right to occupy the land prior to its approval, and I recognize that
the land covered by the same is of public domain and any and all rights I may
have with respect thereto by virtue of continuous occupation and cultivation
are hereby relinquished to the Government.
On 7 December 1948, Villaflor and Nasipit Lumber executed an Agreement,
confirming the Agreement to Sell of 7 July 1948, but with reference to the
Sales Application filed with the Bureau of Land. On 31 December 1949, the
Report by the public land inspector (District Land Office, Bureau of Lands, in
Butuan) contained an endorsement of the said officer recommending
rejection of the Sales Application of Villaflor for having leased the property to
another even before he had acquired transmissible rights thereto. In a letter
of Villaflor dated 23 January1950, addressed to the Bureau of Lands, he
informed the Bureau Director that he was already occupying the property
when the Bureaus Agusan River Valley Subdivision Project was inaugurated,
that the property was formerly claimed as private property, and that therefore,
the property was segregated or excluded from disposition because of the
claim of private ownership. Likewise, in a letter of Nasipit Lumber dated 22
February 1950 addressed to the Director of Lands, the corporation informed
the Bureau that it recognized Villaflor as the real owner, claimant and
occupant of the land; that since June 1946, Villaflor leased 2hectares inside
the land to the company; that it has no other interest on the land; and that the
Sales Application of Villaflor should be given favorable consideration.

SALES under ATTY. PAOLO DIMAYUGA

COMPILED BY atorni2be AUSL

On 24 July 1950, the scheduled date of auction of the property covered by

the Sales Application, Nasipit Lumber offered the highest bid of P41.00 per
hectare, but since an applicant under CA 141, is allowed to equal the bid of
the highest bidder, Villaflor tendered an equal bid, deposited the equivalent of
10% of the bid price and then paid the assessment in full.
On 16 August 1950, Villaflor executed a document, denominated as a Deed
of Relinquishment of Rights, in favor on Nasipit Lumber, in consideration of
the amount of P5,000 that was to be reimbursed to the former representing
part of the purchase price of the land, the value of the improvements Villaflor
introduced thereon, and the expenses incurred in the publication of the
Notice of Sale; in light of his difficulty to develop the same as Villaflor has
moved to Manila. Pursuant thereto, on 16 August1950, Nasipit Lumber filed a
Sales Application over the 2 parcels of land, covering an area of 140
hectares, more or less. This application was also numbered V-807. On 17
August 1950 the Director of Lands issued an Order of Award in favor of
Nasipit Lumber; and its application was entered in the record as Sales Entry
V-407.On 27 November 1973, Villafor wrote a letter to Nasipit Lumber,
reminding the latter of their verbal agreement in 1955; but the new set of
corporate officers refused to recognize Villaflors claim.
In a formal protest dated 31 January 1974 which Villaflor filed with the
Bureau of Lands, he protested the Sales Application of Nasipit Lumber,
claiming that the company has not paid him P5,000.00 as provided in the
Deed of Relinquishment of Rights dated 16 August 1950. On 8 August 1977,
the Director of Lands found that the payment of the amount of P5,000.00 in
the Deed and the consideration in the Agreement to Sell were duly proven,
and ordered the dismissal of Villaflors protest.
On 6 July 1978, Villaflor filed a complaint in the trial court for Declaration of
Nullity of Contract (Deed of Relinquishment of Rights), Recovery of
Possession (of two parcels of land subject of the contract), and Damages at
about the same time that he appealed the decision of the Minister of Natural
Resources to the Office of the President. On 28 January 1983, he died. The
trial court ordered his widow, Lourdes D. Villaflor, to be substituted as
petitioner. After trial in due course, the then CFI Agusan del Norte and
Butuan City, Branch III, dismissed the complaint on the grounds that: (1)
petitioner admitted the due execution and genuineness of the contract and
was estopped from proving its nullity, (2) the verbal lease agreements were

COMPILATION OF CASE DIGESTS

unenforceable under Article 1403 (2)(e) of the Civil Code, and (3) his causes
of action were barred by extinctive prescription and/or laches. It ruled that
there was prescription and/or laches because the alleged verbal lease ended
in 1966, but the action was filed only on 6 January 1978. The 6-year period
within which to file an action on an oral contract per Article 1145 (1) of the
Civil Code expired in 1972. Nasipit Lumber was declared the lawful owner
and actual physical possessor of the 2 parcels of land (containing a total area
of 160 hectares). The Agreements to Sell Real Rights and the Deed of
Relinquishment of Rights over the 2 parcels were likewise declared binding
between the parties, their successors and assigns; with double costs against
Villaflor. The heirs of petitioner appealed to the Court of Appeals which,
however, rendered judgment against them via the assailed Decision dated 27
September 1990 finding petitioners prayers (1) for the declaration of nullity
of the deed of relinquishment, (2) for the eviction of private respondent from
the property and (3) for the declaration of petitioners heirs as owners to be
without basis.
Not satisfied, petitioners heirs filed the petition for review dated 7 December
1990. In a Resolution dated 23 June 1991, the Court denied this petition for
being late. On reconsideration, the Court reinstated the petition.
ISSUE: Whether the sale is valid or void for the alleged existence of
simulation of contract
HELD: The provision of the law is specific that public lands can only be
acquired in the manner provided for therein and not otherwise(Sec. 11, CA.
No. 141, as amended). In his sales application, petitioner expressly admitted
that said property was public land. This is formidable evidence as it amounts
to an admission against interest. The records show that Villaflor had applied
for the purchase of lands in question with this Office (Sales Application V807) on 2 December 948. There is a condition in the sales application to the
effect that he recognizes that the land covered by the same is of public
domain and any and all rights he may have with respect thereto by virtue of
continuous occupation and cultivation are relinquished to the Government of
which Villaflor is very much aware. It also appears that Villaflor had paid for
the publication fees appurtenant to the sale of the land. He participated in the
public auction where he was declared the successful bidder. He had fully
paid the purchase price thereof. It would be a height of absurdity for Villaflor
to be buying that which is owned by him if his claim of private ownership

SALES under ATTY. PAOLO DIMAYUGA

COMPILED BY atorni2be AUSL

thereof is to be believed. The area in dispute is not the private property of the
petitioner.
It is a basic assumption of public policy that lands of whatever classification
belong to the state. Unless alienated in accordance with law, it retains its
rights over the same as dominus. No public land can be acquired by private
persons without any grant, express or implied from the government. It is
indispensable then that there be showing of title from the state or any other
mode of acquisition recognized by law. s such sales applicant manifestly
acknowledged that he does not own the land and that the same is a public
land under the administration of the Bureau of Lands, to which the
application was submitted, all of its acts prior thereof, including its real estate
tax declarations, characterized its possessions of the land as that of a sales
applicant. And consequently, as one who expects to buy it, but has not as
yet done so, and is not, therefore, its owner.
The rule on the interpretation of contracts (Article 1371) is used in affirming,
not negating, their validity. Article 1373, which is a conjunct of Article 1371,
provides that, if the instrument is susceptible of two or more interpretations,
the interpretation which will make it valid and effectual should be adopted. In
this light, it is not difficult to understand that the legal basis urged by
petitioner does not support his allegation that the contracts to sell and the
deed of relinquishment are simulated and fictitious.
Simulation occurs when an apparent contract is a declaration of a fictitious
will, deliberately made by agreement of the parties, in order to produce, for
the purpose of deception, the appearance of a juridical act which does not
exist or is different from that which was really executed. Such an intention is
not apparent in the agreements. The intent to sell, on the other hand, is as
clear as daylight. The fact, that the agreement to sell (7 December 1948) did
not absolutely transfer ownership of the land to private respondent, does not
show that the agreement was simulated. Petitioners delivery of the
Certificate of Ownership and execution of the deed of absolute sale were
suspensive conditions, which gave rise to a corresponding obligation on the
part of the private respondent, i.e., the payment of the last installment of the
consideration mentioned in the Agreement. Such conditions did not affect the
perfection of the contract or prove simulation
Nonpayment, at most, gives the vendor only the right to sue for collection.
Generally, in a contract of sale, payment of the price is a resolutory condition

COMPILATION OF CASE DIGESTS

and the remedy of the seller is to exact fulfillment or, in case of a substantial
breach, to rescind the contract under Article 1191 of the Civil Code. However,
failure to pay is not even a breach, but merely an event which prevents the
vendors obligation to convey title from acquiring binding force.
T he requirements for a sales application under the Public Land Act are: (1)
the possession of the qualifications required by said Act (under Section 29)
and (2) the lack of the disqualifications mentioned therein (under Sections
121, 122, and 123). Section121 of the Act pertains to acquisitions of public
land by a corporation from a grantee: The private respondent, not the
petitioner, was the direct grantee of the disputed land. Sections 122 and 123
disqualify corporations, which are not authorized by their charter, from
acquiring public land; the records do not show that private respondent was
not so authorized under its charter
The Supreme Court dismissed the petition.
PRICE
7. LOYOLA vs CA
FACTS: A parcel of land (Lot 115-A-1 of subdivision plan [LRC] Psd-32117, a
portion of Lot 115-A described on Plan Psd-55228, LRC[GLRO] Record
8374, located in Poblacion, Binan, Laguna, and containing 753 sq.m., TCT T32007) was originally owned in common by the siblings Mariano and
Gaudencia Zarraga, who inherited it from their father. Mariano predeceased
his sister who died single, without offspring on 5 August 1983, at the age of
97. Victorina Zarraga vda. de Loyola and Cecilia Zarraga, are sisters of
Gaudencia and Mariano. The property was subject of Civil Case B-1094
before the then CFI Laguna (Branch 1, Spouses Romualdo Zarraga, et al.
v .Gaudencia Zarraga, et al.). Romualdo Zarraga was the plaintiff in Civil
Case B-1094. The defendants were his siblings: Nieves, Romana, Guillermo,
Purificacion, Angeles, Roberto, Estrella, and Jose, all surnamed Zarraga, as
well as his aunt, Gaudencia. The trial court decided Civil Case B-1094 in
favor of the defendants. Gaudencia was adjudged owner of the 1/2 portion of
Lot 115-A-1. Romualdo elevated the decision to the Court of Appeals and
later the Supreme Court. The petition (GR 59529) was denied by the Court
on 17 March 1982.On 24 August 1980, nearly 3 years before the death of
Gaudencia while GR 59529 was still pending before the Supreme Court.

SALES under ATTY. PAOLO DIMAYUGA

COMPILED BY atorni2be AUSL

On said date, Gaudencia allegedly sold to the children of Mariano Zarraga

(Nieves, Romana, Romualdo, Guillermo, Lucia, Purificacion, Angeles,
Roberto, Estrella Zarraga) and the heirs of Jose Zarraga Aurora, Marita,
Jose, Ronaldo, Victor, Lauriano,and Ariel Zarraga; first cousins of the
Loyolas) her share in Lot 115-A- 1 for P34,000.00. The sale was evidenced
by a notarizeddocument denominated as Bilihang Tuluyan ng Kalahati (1/2)
ng Isang Lagay na Lupa. Romualdo, the petitioner in GR 59529, was among
the vendees.The decision in Civil Case B-1094 became final. The children of
Mariano Zarraga and the heirs of Jose Zarraga (privaterespondents) filed a
motion for execution.
On 16 February 1984, the sheriff executed the corresponding deed of
reconveyance to Gaudencia. On 23 July 1984, however, the Register of
Deeds of Laguna, Calamba Branch, issued in favor of private respondents,
TCT T-116067, on the basis of the sale on 24 August 1980 by Gaudencia to
them. On 31 January 1985, Victorina and Cecilia filed a complaint, docketed
as Civil Case B-2194, with the RTC of Bian, Laguna, for the purpose of
annulling the sale and the TCT. Victorina died on 18 October 1989, while Civil
Case B-2194 was pending with the trial court. Cecilia died on 4 August 1990,
unmarried and childless. Victorina and Cecilia were substituted by Ruben,
Candelaria,Lorenzo, Flora, Nicadro, Rosario, Teresita and Vicente Loyola as
plaintiffs. The trial court rendered judgment in favor of complainants;
declaring the simulated deed of absolute sale as well as the issuance of the
corresponding TCT null and void, ordering the Register of Deeds of Laguna
to cancel TCT T-116087 and to issue another one in favor of the plaintiffs and
the defendants as co-owners and legal heirs of the late Gaudencia, ordering
the defendants to reconvey and deliver the possession of the shares of the
plaintiff on the subject property, ordering the defendants to pay P20,000 as
attorneys fees and cost of suit, dismissing the petitioners claim for moral
and exemplary damages, and dismissing the defendants counterclaim for
lack of merit. On appeal, and on 31 August 1993, the appellate court
reversed the trial court (CA-GR CV 36090). On September 15, 1993, the
petitioners (as substitute parties for Victorina and Cecilia, the original
plaintiffs) filed a motion for reconsideration, which was denied on 6 June
1994. Hence, the petition for review on certiorari.
ISSUE: Whether the alleged sale between Gaudencia and respondents is
valid

COMPILATION OF CASE DIGESTS

HELD: Petitioners vigorously assail the validity of the execution of the deed
of absolute sale suggesting that since the notary public who prepared and
acknowledged the questioned Bilihan did not personally know Gaudencia,
the execution of the deed was suspect. The rule is that a notarized document
carries the evidentiary weight conferred upon it with respect to its due
execution, and documents acknowledged before a notary public have in their
favor the presumption of regularity. By their failure to overcome this
presumption, with clear and convincing evidence, petitioners are estopped
from questioning the regularity of the execution of the deed.
Petitioners suggest that all the circumstances lead to the conclusion that the
deed of sale was simulated. Simulation is "the declaration of a fictitious will,
deliberately made by agreement of the parties, in order to produce, for the
purposes of deception, the appearances of a juridical act which does not
exist or is different what that which was really executed." Characteristic of
simulation is that the apparent contract is not really desired or intended to
produce legal effect or in any way alter the juridical situation of the parties.
Perusal of the questioned deed will show that the sale of the property would
convert the co-owners to vendors and vendees, a clear alteration of the
juridical relationships. This is contrary to the requisite of simulation that the
apparent contract was not really meant to produce any legal effect. Also in a
simulated contract, the parties have no intention to be bound by the contract.
But in this case, the parties clearly intended to be bound by the contract of
sale, an intention they did not deny. The requisites for simulation are: (a) an
outward declaration of will different from the will of the parties; (b) the false
appearance must have been intended by mutual agreement; and (c) the
purpose is to deceive third persons. None of these are present in the
assailed transaction.
Contracts are binding only upon the parties who execute them. Article 1311
of the Civil Code clearly covers this situation. In the present case Romualdo
had no knowledge of the sale, and thus, he was a stranger and not a party to
it. Even if curiously Romualdo, one of those included as buyer in the deed of
sale, was the one who questioned Gaudencias ownership in Civil Case B1094, Romana testified that Romualdo really had no knowledge of the
transaction and he was included as a buyer of the land only because he was
a brother.

Petitioners fault the Court of Appeals for not considering that at the time of
the sale in 1980, Gaudencia was already 94 years old; that she was already
weak; that she was living with private respondent Romana; and was
dependent upon the latter for her daily needs, such that under these
circumstances, fraud or undue influence was exercised by Romana to obtain
Gaudencia's consent to the sale. The rule on fraud is that it is never
presumed, but must be both alleged and proved. For a contract to be
annulled on the ground of fraud, it must be shown that the vendor never gave
consent to its execution. If a competent person has assented to a contract
freely and fairly, said person is bound. There also is a disputable
presumption, that private transactions have been fair and regular. Applied to
contracts, the presumption is in favor of validity and regularity. In this case,
the allegation of fraud was unsupported, and the presumption stands that the
contract Gaudencia entered into was fair and regular.
Petitioners also claim that since Gaudencia was old and senile, she was
incapable of independent and clear judgment. However, a person is not
incapacitated to contract merely because of advanced years or by reason of
physical infirmities. Only when such age or infirmities impair his mental
faculties to such extent as to prevent him from properly, intelligently, and
fairly protecting his property rights, is he considered incapacitated.
Petitioners show no proof that Gaudencia had lost control of her mental
faculties at the time of the sale. The notary public who interviewed her,
testified that when he talked to Gaudencia before preparing the deed of sale,
she answered correctly and he was convinced that Gaudencia was mentally
fit and knew what she was doing.
Petitioners seem to be unsure whether they are assailing the sale of Lot 115A-1 for being absolutely simulated or for inadequacy of the price. These two
grounds are irreconcilable. If there exists an actual consideration for transfer
evidenced by the alleged act of sale, no matter how inadequate it be, the
transaction could not be a simulated sale. No reversible error was thus
committed by the Court of Appeals in refusing to annul the questioned sale
for alleged inadequacy of the price
The Supreme Court denied the petition, and affirmed the assailed decision of
the Court of Appeals; with costs against petitioners
8. UY vs CA

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COMPILATION OF CASE DIGESTS

FACTS: William Uy and Rodel Roxas are agents authorized to sell 8 parcels
of land by the owners thereof. By virtue of such authority, they offered to sell
the lands, located in Tuba, Tadiangan, Benguet to National Housing Authority
(NHA) to be utilized and developed as a housing project. On 14 February
1989, the NHA Board passed Resolution 1632 approving the acquisition of
said lands, with an area of 31.8231 hectares, at the cost of P23.867 million,
pursuant to which the parties executed a series of Deeds of Absolute Sale
covering the subject lands. Of the 8 parcels of land, however, only 5 were
paid for by the NHA because of the report it received from the Land
Geosciences Bureau of the Department of Environment and Natural
Resources (DENR)that the remaining area is located at an active landslide
area and therefore, not suitable for development into a housing project.
On 22 November 1991, the NHA issued Resolution 2352 cancelling the sale
over the 3 parcels of land. The NHA, through Resolution 2394, subsequently
offered the amount of P1.225 million to the landowners as daos perjuicios.
On 9 March 1992, petitioners Uy and Roxas filed before the RTC Quezon
City a Complaint for Damages against NHA and its General Manager Robert
Balao. After trial, the RTC rendered a decision declaring the cancellation of
the contract to be justified. The trial court nevertheless awarded damages to
plaintiffs in the sum of P1.255 million, the same amount initially offered by
NHA to petitioners as damages.
Upon appeal by petitioners, the Court of Appeals reversed the decision of the
trial court and entered a new one dismissing the complaint. It held that since
there was sufficient justifiable basis in cancelling the sale, it saw no
reason for the award of damages. The Court of Appeals also noted that
petitioners were mere attorneys-in-fact and, therefore, not the real parties-ininterest in the action before the trial court. Their motion for reconsideration
having been denied, petitioners seek relief from the Supreme Court.
ISSUES: 1) Whether the petitioners are real parties in interest
2) Whether the cancellation is justified

HELD: 1) Section 2, Rule 3 of the Rules of Court requires that every action
must be prosecuted and defended in the name of the real party-in-interest.
The real party-in-interest is the party who stands to be benefited or injured by
the judgment or the party entitled to the avails of the suit. Interest, within the

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SALES under ATTY. PAOLO DIMAYUGA

COMPILED BY atorni2be AUSL

meaning of the rule, means material interest, an interest in the issue and to
be affected by the decree, as distinguished from mere interest in the question
involved, or a mere incidental interest. Cases construing the real party-ininterest provision can be more easily understood if it is borne in mind that the
true meaning of real party-in-interest may be summarized as follows: An
action shall be prosecuted in the name of the party who, by the substantive
law, has the right sought to be enforced.
Where the action is brought by an attorney-in-fact of a land owner in his
name, (as in our present action) and not in the name of his principal, the
action was properly dismissed because the rule is that every action must be
prosecuted in the name of the real parties-in-interest (Section 2, Rule 3,
Rules of Court)
Petitioners claim that they lodged the complaint not in behalf of their
principals but in their own name as agents directly damaged by the
termination of the contract. Petitioners in this case purportedly brought the
action for damages in their own name and in their own behalf. An action shall
be prosecuted in the name of the party who, by the substantive law, has the
right sought to be enforced. Petitioners are not parties to the contract of sale
between their principals and NHA. They are mere agents of the owners of
the land subject of the sale. As agents, they only render some service or do
something in representation or on behalf of their principals. The rendering of
such service did not make them parties to the contracts of sale executed in
behalf of the latter. Since a contract may be violated only by the parties
thereto as against each other, the real parties-in-interest, either as plaintiff or
defendant, in an action upon that contract must, generally, either be parties
to said contract. Petitioners have not shown that they are assignees of their
principals to the subject contracts. While they alleged that they made
advances and that they suffered loss of commissions, they have not
established any agreement granting them "the right to receive payment and
out of the proceeds to reimburse [themselves] for advances and
commissions before turning the balance over to the principal[s]."
2) The right of rescission or, more accurately, resolution, of a party to an
obligation under Article 1191 is predicated on a breach of faith by the other
party that violates the reciprocity between them. The power to rescind,
therefore, is given to the injured party. Article 1191 states that the power to
rescind obligations is implied in reciprocal ones, in case one of the obligors

COMPILATION OF CASE DIGESTS

should not comply with what is incumbent upon him. The injured party may
choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after
he has chosen fulfillment, if the latter should become impossible. In the
present case, the NHA did not rescind the contract. Indeed, it did not have
the right to do so for the other parties to the contract, the vendors, did not
commit any breach, much less a substantial breach, of their obligation. Their
obligation was merely to deliver the parcels of land to the NHA, an obligation
that they fulfilled. The NHA did not suffer any injury by the performance
thereof
The cancellation was not a rescission under Article 1191. Rather, the
cancellation was based on the negation of the cause arising from the
realization that the lands, which were the object of the sale, were not suitable
for housing. Cause is the essential reason which moves the contracting
parties to enter into it. In other words, the cause is the immediate, direct and
proximate reason which justifies the creation of an obligation through the will
of the contracting parties. Cause, which is the essential reason for the
contract, should be distinguished from motive, which is the particular reason
of a contracting party which does not affect the other party. Ordinarily, a
party's motives for entering into the contract do not affect the contract.
However, when the motive predetermines the cause, the motive may be
regarded as the cause. In this case, it is clear, and petitioners do not dispute,
that NHA would not have entered into the contract were the lands not
suitable for housing. In other words, the quality of the land was an implied
condition for the NHA to enter into the contract. On the part of the NHA,
therefore, the motive was the cause for its being a party to the sale. We hold
that the NHA was justified in canceling the contract. The realization of the
mistake as regards the quality of the land resulted in the negation of the
motive/cause thus rendering the contract inexistent.
The Supreme Court denied the petition

them sign an instrument donating the entire lot. There was a consideration
for P5,000 stated in the deed, but the spouses never received anything.
Miguel built a fence to divide the lot and continued to occupy the western
part. Maximo then registered the entire lot and 13 year after, sold the same to
the Narcisos who took possession only of the eastern half. Later on, the
Narcisos sought to be declared owners of the entire land; the spouses
claimed that the sale to the Narcisos was void for lack of consideration. The
CA declared that the sale was merely voidable and the action by the spouses
was barred by prescription, being filed after 4 years from the discovery of the
fraud.
ISSUE: W/N there was a valid contract of sale
HELD: Consideration was totally absent; the P5,000 price stipulated was
never received/delivered to the spouses. Thus, the sale to the Narcisos was
VOID ab initio for want of consideration. The inexistence of the contract is
permanent and cannot be the subject of prescription. The Narcisos are also
in bad faiththey had knowledge of the true nature and extent of Maximos
right over the land.

ONG V. ONG

BAGNAS v CA
FACTS: Hilario died with no will and was survived only by collateral relatives.
Bagnas (et al) were the nearest kin. Retonil (et al) were also relatives but to a
farther extent. They claimed ownership over 10 lots from the estate of Hilario
presenting notarized and registered Deeds of Sale (in Tagalog) where the
consideration for the lands was P1 and services rendered, being rendered,
and to be rendered. Bagnas argued that the sales were fictitious, while
Retonil claimed to have done many things for Hilariosuch as nursing him
on his deathbed.
ISSUE: W/N there was a valid contract of sale

MAPALO v MAPALO
FACTS: Miguel and Candida Mapalo were illiterate farmers and owned a
parcel of land. Since Maximo Mapalo was to be married, they donated to him
the eastern half of the land. Maximo, however, deceived them by making

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COMPILED BY atorni2be AUSL

HELD: NO. At the onset, if a contract has no consideration, it is not merely

voidable, but VOIDand even collateral heirs may assail the contract. In this
case, there was no consideration. Price must be in money or its equivalent;
services are not the equivalent of money insofar as the requirement of price
is concerned. A contract is not one for sale if the consideration consists of

COMPILATION OF CASE DIGESTS

services. Not only are they vague, they are unknown and not susceptible of
determination without a new agreement between the parties.

MATE

sums owing to it for his purchase of Palawan Almaciga and other logs. His
total debt amounted to some P34,000. PRDC intervened claiming that
Apostol, as President of the company, without prior authority, took goods
(steel sheets, pipes, bars, etc) from PRDC warehouse and appropriated
them to settle his personal debts in favor of the government. The Republic
opposed the intervention of PRDC, arguing that price is always paid in
money and that payment in kind is no payment at all; hence, money and not
the goods of PRDC are under dispute.

LADANGA

ISSUE: W/N payment in kind is equivalent to price paid in money

BALATBAT

HELD: YES. Price may be paid in money or ITS EQUIVALENTin this case,
the goods. Payment need not be in the form of money. The prices for the
goods have, in fact, been assessed and determined. PRDC thus has a
substantial interest in the case and must be permitted to interveneits goods
paid out without authority being under dispute in this case.

BAGNAS

HEIRS OF PEDRO ESCANLAR v CA

FACTS: The Heirs of Cari-an executed a Deed of Sale of Rights, Interests,
and Participation over a parcel of undivided land in favor of the Heirs of
Escanlar. It was stipulated that the contract shall become effective only upon
approval of the CFI of Negros Occidental.

TORRES

TOYOTA SHAW INC v CA

The Heirs of Escanlar failed to pay the balance of the purchase price, but the
Heirs of Cari-an never demanded payment and continued to accept belated
payments. They later on sold their interests over the same land to the Chuas
and assailed the validity of the Deed of Sale they executed with the Heirs of
Escanlar. The lower courts annulled the contract for not having the approval
of the court as stipulated.
ISSUE: W/N the Deed of Sale to the Heirs of Escanlar is valid
HELD: YES. There is a distinction between the validity and effectivity. Only
the effectivity was made subject to the condition. So long as all the requisites
(consent, subject matter, and price) are present, as in this case, the contract
is already perfected. Nonetheless, the intent of the parties clearly manifests
their intention to give efficacy to the contract. In fact, the vendors continued
to accept payments. That being the case, the sale in favor of the Heirs of
Escanlar must be preferred as it is a valid and subsisting one.

REPUBLIC v PHIL. RESOURCES DEV. CORP.

FACTS: The Republic brought an action against Apostol for the collection of

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SALES under ATTY. PAOLO DIMAYUGA

COMPILED BY atorni2be AUSL

FACTS: Luna Sosa wanted to buy a Toyota Lite Ace. He went to Toyota
Shaw where he met Popong Bernardo, a sales rep. Sosa explained that he
needed the Lite Ace by June 17, otherwise, he would become a laughing
stock. Bernardo guaranteed that the vehicle would be delivered. They
executed a document entitled Agreements between Sosa & Popong
Bernardo of Toyota Shaw where a P100K downpayment was stipulated and
that the Lite Ace would be available at a given date. When the day of
reckoning arrived, the Lite Ace was unavailablethe explanation of Bernardo
being nasulot ng ibang malakas. However , according to T oyota, the true
reason was that BA Finance, which was supposed to answer for the balance
of the purchase price, did not approve Sosas application. Toyota also
returned the downpayment. Thus, Sosa sued for damages amounting to
P1.2M due to his humiliation, hurt feelings, sleepless nights, and so on.
ISSUE: W/N there was a perfected contract of sale
HELD: NO. Toyota Shaw should NOT be held liable for damages because
there was no perfected contract of sale in the first place. There was no
agreement as to the price and the manner of paymentwhich are both
essential to the perfection of the sale. It was also clear that Bernardo signed
the document in his personal capacity and it was up to Sosa to inquire as to

COMPILATION OF CASE DIGESTS

the extent of the formers capacity. Sosa did not even sign it. It was nothing
but a mere proposal, which did not mature into a perfected contract of sale in
lieu of the subsequent events. In fact, it made no specific reference to the
sale of a vehicle. No obligations could thus arise therefrom. Sosa has no one
else to blame but himself for his humiliation for bragging about something he

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SALES under ATTY. PAOLO DIMAYUGA

COMPILED BY atorni2be AUSL

does not own yet.