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2. Quijada v.

CA upon the actual or constructive delivery of the


thing sold. A perfected contract of sale cannot
Facts: be challenged on the ground of non-ownership
on the part of the seller at the time of its
perfection; hence, the sale is still valid.
On April 5, 1956, Trinidad Quijada and her
sisters executed a deed of conditional donation
in favor of the Municipality of Talacogon, the The consummation, however, of the perfected
condition being that the land shall be used contract is another matter. It occurs upon the
exclusively for the construction of a provincial constructive or actual delivery of the subject
high school. Trinidad remained in possession of matter to the buyer when the seller or her
the land. On July 29, 1962, Trinidad sold the successors-in-interest subsequently acquires
land to respondent Regalado Mondejar. In ownership thereof. Such circumstance
1980, the heirs of Trinidad, herein petitioners, happened in this case when petitioners who
filed a complaint for forcible entry against the are Trinidad Quijada's heirs and successors-in-
respondent. In 1987, the proposed campus did interest became the owners of the subject
not materialize, and the Sangguniang Bayan property upon the reversion of the ownership
enacted a resolution donating back the land to of the land to them. Consequently, ownership
the donor. In the meantime, respondent is transferred to respondent Mondejar and
Mondejar conveyed portions of the land to the those who claim their right from him. Article
other respondents. On July 5, 1988, petitioners 1434 of the New Civil Code supports the ruling
filed a complaint for quieting of title, recovery that the seller's "title passes by operation of
of possession and ownership of the land. law to the buyer." This rule applies not only
when the subject matter of the contract of sale
is goods, but also to other kinds of property,
Issue:
including real property.

Whether the sale between Trinidad and


Regalado is valid considering the capacity of 3. JOVAN LAND vs. COURT OF APPEALS and
the vendor to execute the contract in view of
the conditional deed of donation
EUGENIO QUESADA, INC.G.R. No. 125531.
February12, 1997
Held: Facts:
Petitioner Jovan Land, Inc. is a corporation enga
The donor may have an inchoate interest in the ged in the real estate business. Its President
donated property during the time that and Chairman of the Board of
ownership of the land has not reverted to her. Directors is one Joseph Sy. Private respondentE
Such inchoate interest may be the subject of
contracts including a contract of sale. In this ugenio Quesada is the owner of the Q Building l
case, however, what the donor sold was the ocated at the corner of Mayhaligue Streetand Ri
land itself which she no longer owns. It would zal Avenue, Sta. Cruz, Manila. Petitioner
have been different if the donor-seller sold her learned that private respondent was sellingthe
interests over the property under the deed of
donation which is subject to the possibility of
aforesaid property, Thus, petitioner
reversion of ownership arising from the non- through Joseph Sy made a written oer for
fulfillment of the resolutory condition. P10.25million.
This rst oer was not accepted by Conrado
Sale, being a consensual contract, is perfected Quesada, the General Manger of privaterespon
by mere consent, which is manifested the dent. Joseph Sy send a second written oer for
moment there is a meeting of the minds as to
the offer and acceptance thereof on three (3) the same price but inclusive of an
elements: subject matter, price and terms of undertaking to pay the documentary stamp tax,
payment of the price. Ownership by the seller transfer tax, registration fees and notarial
on the thing sold at the time of the perfection charges. Check for one million pesos drawn
of the contract of sale is not an element for its
perfection. What the law requires is that the
against the Philippine Commercial and
seller has the right to transfer ownership at the Industrial Bank (PCIB) was enclosed therewith
time the thing sold is delivered. Perfection per as earnest money.
se does not transfer ownership which occurs
This second oer, with earnestmoney, was b determinate subject matter;
again rejected byConrado Quesada. c. price certain in money or its equivalent.
Until the contract ofsale is perfected, it cannot,
Undaunted, Joseph Sy, sent a third written oer as an independent source of obligation, serve as
for twelve million pesos with a similar check for binding juridicalrelation between the parties.A
one million pesos as earnest money.Annotated punctilious examination of the receipt reveals
on this third letter-oer that the same can neither be regarded as acontr
was the phrase Received original, 9-4-89 act of sale nor a promise to sell. Such an annota
beside whichappears tion by Conrado Quesada amounts toneither
the signature of Conrado Quesada. On the basis a written nor an implied acceptance of the oer
of this annotation which petitioner of Joseph Sy.
insists is the proof that It is merely a memorandum of the receipt by
there already exists a valid, the former of the latter's oer.
perfected agreement to sell the
Mayhaligue property, petititoner led with the That it is a fundamental principle that before a
trial court, a complaint for specic performance contract of sale be valid, the following must be
and collection of su of money with damages. present: 1. consent or meeting of the minds; 2.
determinate subject matter; and, 3. price
Petitioner contends that the said annotation is certain in money or its eqivalent. That until
evidence to show that there was already contract of sale is perfected, it cannot, as an
a perfected agreement to sell as respondent ca independent source of obligation, serve as a
n besaid to have accepted petitioners binding juridical relation between the parties.
payment in the form of a check In the case at bar, petitioner anchors its
which was enclosed in thethird letter. arguments on the third letter-offer, however,
the court ruled that there is nothing written or
Issue: documentary to show that such offer was
Whether or not there was already accepted by private respondent and such
a perfected contract of sale? annotation in the letter is just a mere
memorandum of the receipt. The requisites of a
Ruling : valid contract of sale are lacking in the said
No. Art. 1157 of the Civil Code states receipt and therefore, the sale is not valid.
that, a contract is a meeting of minds between
two persons where by on binds himself,
with respect to the other,
4. SAN MIGUEL PROPERTIES PHILS., INC.
to give something or torender some service.
v SPOUSES ALFREDO and GRACE HUANG,
A contract undergoes various states that
G. R. No. 137290, 31 July 2000
include its negotiation orpreparations, its
perfection and, nally, its consummation.
Negotiation covers the period from
the time the prospective contracting parties indi Nature of the Case: A petition for review
cate interest in the contract to the time the for a decision of the Court of Appeals which
contract is concluded.
reversed the decision of the RTC dismissing
The perfection of the contract takes place upon
the complaint brought by the Huangs
the concurrence of theessential elements there
of. Moreover, it is a fundamental principle that against San Miguel Properties for
before a contract ofsale can be valid, the followi enforcement of a contract of sale.
ng elements must be present:
a. consent or meeting of the minds;
Facts: San Miguel Properties offered two held that a valid contract of sale had been
parcels of land for sale and the offer was complied with.
made to an agent of the respondents. An
earnest-deposit of P1 million was offered Petitioner filed a motion for reconsideration
by the respondents and was accepted by but was denied.
the petitioners authorized officer subject to
certain terms.
Issue: WON there was a perfected contract
of sale between the parties
Petitioner, through its executive officer,
wrote the respondents lawyer that because
Ruling: The decision of the appellate
ethe parties failed to agree on the terms
court was reversed and the respondents
and conditions of the sale despite the
complaint was dismissed.
extension granted by the petitioner, the
latter was returning the earnest-deposit.
Ratio Decidendi: It is not the giving of
earnest money , but the proof of the
The respondents demanded execution of a
concurrence of all the essential elements of
deed of sale covering the properties and
the contract of sale which establishes the
attempted to return the earnest-deposit
existence of a perfected sale.
but petitioner refused on the ground that
the option to purchase had already expired.
The P1 million earnest-deposit could not
have been given as earnest money because
A complaint for specific performance was
at the time when petitioner accepted the
filed against the petitioner and the latter
terms of respondents offer, their contract
filed a motion to dismiss the complaint
had not yet been perfected. This is evident
because the alleged exclusive option of
from the following conditions attached by
the respondents lacked a consideration
respondents to their letter.
separate and distinct from the purchase
The first condition for an option period of
price and was thus unenforceable; the
30 days sufficiently shows that a sale was
complaint did not allege a cause of action
never perfected. As petitioner correctly
because there was no meeting of the mind
points out, acceptance of this condition did
between the parties and therefore the
not give rise to a perfected sale but merely
contact of sale was not perfected.
to an option or an accepted unilateral
promise on the part of respondents to buy
The trial court granted the petitioners the subject properties within 30 days from
motion and dismissed the action. The the date of acceptance of the offer. Such
respondents filed a motion for option giving respondents the exclusive
reconsideration but were denied by the trial right to buy the properties within the period
court. The respondents elevated the matter agreed upon is separate and distinct from
to the Court of Appeals and the latter the contract of sale which the parties may
reversed the decision of the trial court and enter. All that respondents had was just the
option to buy the properties which privilege
was not, however, exercised by them cited by the appellate court was nothing
because there was a failure to agree on the more than offers and counter-offers which
terms of payment. No contract of sale may did not amount to any final arrangement
thus be enforced by respondents. containing the essential elements of a
contract of sale. While the parties already
Even the option secured by respondents agreed on the real properties which were
from petitioner was fatally defective. Under the objects of the sale and on the purchase
the second paragraph of Art. 1479, an price, the fact remains that they failed to
accepted unilateral promise to buy or sell a arrive at mutually acceptable terms of
determinate thing for a price certain is payment, despite the 45-day extension
binding upon the promisor only if the given by petitioner.
promise is supported by a distinct
consideration. Consideration in an option
contract may be anything of value, unlike in 5. Fule v. CA
sale where it must be the price certain in
Facts:
money or its equivalent. There is no
showing here of any consideration for the Gregorio Fule, a banker and a jeweller, offered
option. Lacking any proof of such to sell his parcel of land to Dr. Cruz in
consideration, the option is unenforceable. exchange for P40,000 and a diamond earring
owned by the latter. A deed of absolute sale
was prepared by Atty. Belarmino, and on the
Equally compelling as proof of the absence same day Fule went to the bank with Dichoso
of a perfected sale is the second condition and Mendoza, and Dr. Cruz arrived shortly
thereafter. Dr. Cruz got the earrings from her
that, during the option period, the parties
safety deposit box and handed it to Fule who,
would negotiate the terms and conditions of
when asked if those were alright, nodded and
the purchase. The stages of a contract of took the earrings. Two hours after, Fule
sale are as follows: (1) negotiation, covering complained that the earrings were fake. He
the period from the time the prospective files a complaint to declare the sale null and
void on the ground of fraud and deceit.
contracting parties indicate interest in the
contract to the time the contract is Issue:
perfected; (2) perfection, which takes place
Whether the sale should be nullified on the
upon the concurrence of the essential
ground of fraud
elements of the sale which are the meeting
of the minds of the parties as to the object Held:
of the contract and upon the price; and A contract of sale is perfected at the moment
(3) consummation, which begins when the there is a meeting of the minds upon the thing
parties perform their respective which is the object of the contract and upon
undertakings under the contract of sale, the price. Being consensual, a contract of sale
has the force of law between the contracting
culminating in the extinguishment thereof.
parties and they are expected to abide in good
In the present case, the parties never got faith by their respective contractual
past the negotiation stage. The alleged commitments. It is evident from the facts of
indubitable evidence of a perfected sale the case that there was a meeting of the minds
between petitioner and Dr. Cruz. As such, they
are bound by the contract unless there are until full payment of the price or that the
reasons or circumstances that warrant its vendor has the right to unilaterally resolve the
nullification. contract the moment the buyer fails to pay
within a fixed period.

While it is true that the amount of P40,000.00


Contracts that are voidable or annullable, even forming part of the consideration was still
though there may have been no damage to the payable to petitioner, its nonpayment by Dr.
contracting parties are: (1) those where one of Cruz is not a sufficient cause to invalidate the
the parties is incapable of giving consent to a contract or bar the transfer of ownership and
contract; and (2) those where the consent is possession of the things exchanged considering
vitiated by mistake, violence, intimidation, the fact that their contract is silent as to when
undue influence or fraud. The records, it becomes due and demandable.
however, are bare of any evidence manifesting
that private respondents employed such
insidious words or machinations to entice
petitioner into entering the contract of barter.
It was in fact petitioner who resorted to
machinations to convince Dr. Cruz to exchange
her jewelry for the Tanay property.

Furthermore, petitioner was afforded the


10. Coronel v. CA
reasonable opportunity required in Article 1584
of the Civil Code within which to examine the Facts:
jewelry as he in fact accepted them when
asked by Dr. Cruz if he was satisfied with the The case arose from a complaint for specific
same. By taking the jewelry outside the bank, performance filed by private respondent
petitioner executed an act which was more Alcaraz against petitioners to consummate the
consistent with his exercise of ownership over sale of a parcel of land in Quezon City.
it. This gains credence when it is borne in mind
that he himself had earlier delivered the Tanay On January 19, 1985, petitioners executed a
property to Dr. Cruz by affixing his signature to Receipt of Down Payment of P50,000 in favor
the contract of sale. That after two hours he of plaintiff Ramona Alcaraz, binding themselves
later claimed that the jewelry was not the one to transfer the ownership of the land in their
he intended in exchange for his Tanay name from their deceased father, afterwhich
property, could not sever the juridical tie that the balance of P1,190,000 shall be paid in full
now bound him and Dr. Cruz. The nature and by Alcaraz. On February 6, 1985, the property
value of the thing he had taken preclude its was transferred to petitioners. On February 18,
return after that supervening period within 1985, petitioners sold the property to
which anything could have happened, not Mabanag. For this reason, Concepcion,
excluding the alteration of the jewelry or its Ramonas mother, filed an action for specific
being switched with an inferior kind. performance.

Ownership over the parcel of land and the pair Issue:


of emerald-cut diamond earrings had been
Whether the contract between petitioners and
transferred to Dr. Cruz and petitioner,
private respondent was that of a conditional
respectively, upon the actual and constructive
sale or a mere contract to sell
delivery thereof. Said contract of sale being
absolute in nature, title passed to the vendee
Held:
upon delivery of the thing sold since there was
no stipulation in the contract that title to the Sale, by its very nature, is a consensual
property sold has been reserved in the seller contract because it is perfected by mere
consent. The essential elements of a contract property subject of the sale to the buyer,
of sale are the following: a) Consent or ownership thereto automatically transfers to
meeting of the minds, that is, consent to the buyer by operation of law without any
transfer ownership in exchange for the price; further act having to be performed by the
b) Determinate subject matter; and c) Price seller. In a contract to sell, upon the fulfillment
certain in money or its equivalent. of the suspensive condition which is the full
payment of the purchase price, ownership will
Under this definition, a Contract to Sell may not automatically transfer to the buyer
not be considered as a Contract of Sale although the property may have been
because the first essential element is lacking. previously delivered to him. The prospective
In a contract to sell, the prospective seller seller still has to convey title to the prospective
explicity reserves the transfer of title to the buyer by entering into a contract of absolute
prospective buyer, meaning, the prospective sale.
seller does not as yet agree or consent to
transfer ownership of the property subject of It is essential to distinguish between a contract
the contract to sell until the happening of an to sell and a conditional contract of sale
event, which for present purposes we shall specially in cases where the subject property is
take as the full payment of the purchase price. sold by the owner not to the party the seller
What the seller agrees or obliges himself to do contracted with, but to a third person, as in the
is to fulfill his promise to sell the subject case at bench. In a contract to sell, there being
property when the entire amount of the no previous sale of the property, a third person
purchase price is delivered to him. In other buying such property despite the fulfillment of
words the full payment of the purchase price the suspensive condition such as the full
partakes of a suspensive condition, the non- payment of the purchase price, for instance,
fulfillment of which prevents the obligation to cannot be deemed a buyer in bad faith and the
sell from arising and thus, ownership is prospective buyer cannot seek the relief of
retained by the prospective seller without reconveyance of the property. There is no
further remedies by the prospective buyer. A double sale in such case. Title to the property
contract to sell may thus be defined as a will transfer to the buyer after registration
bilateral contract whereby the prospective because there is no defect in the owner-seller's
seller, while expressly reserving the ownership title per se, but the latter, of course, may be
of the subject property despite delivery thereof used for damages by the intending buyer.
to the prospective buyer, binds himself to sell
the said property exclusively to the prospective In a conditional contract of sale, however,
buyer upon fulfillment of the condition agreed upon the fulfillment of the suspensive
upon, that is, full payment of the purchase condition, the sale becomes absolute and this
price. will definitely affect the seller's title thereto. In
fact, if there had been previous delivery of the
A contract to sell may not even be considered subject property, the seller's ownership or title
as a conditional contract of sale where the to the property is automatically transferred to
seller may likewise reserve title to the property the buyer such that, the seller will no longer
subject of the sale until the fulfillment of a have any title to transfer to any third person.
suspensive condition, because in a conditional Such second buyer of the property who may
contract of sale, the first element of consent is have had actual or constructive knowledge of
present, although it is conditioned upon the such defect in the seller's title, or at least was
happening of a contingent event which may or charged with the obligation to discover such
may not occur. If the suspensive condition is defect, cannot be a registrant in good faith.
not fulfilled, the perfection of the contract of Such second buyer cannot defeat the first
sale is completely abated. However, if the buyer's title. In case a title is issued to the
suspensive condition is fulfilled, the contract of second buyer, the first buyer may seek
sale is thereby perfected, such that if there reconveyance of the property subject of the
had already been previous delivery of the sale.
The agreement could not have been a contract pervious sale, the registration will constitute a
to sell because the sellers herein made no registration in bad faith and will not confer
express reservation of ownership or title to the upon him any right.
subject parcel of land. Furthermore, the
circumstance which prevented the parties from
entering into an absolute contract of sale
12. Romero v. CA
pertained to the sellers themselves (the
certificate of title was not in their names) and
Facts:
not the full payment of the purchase price.
Under the established facts and circumstances Private respondent entered into a Conditional
of the case, the Court may safely presume Deed of Sale with petitioner over a parcel of
that, had the certificate of title been in the land in Paranaque, the latter advancing
names of petitioners-sellers at that time, there P50,000 for the eviction of squatters therein.
would have been no reason why an absolute An ejectment suit was then filed by the private
contract of sale could not have been executed respondent against the squatters. Although
and consummated right there and then. successful, private respondent sought the
return of the downpayment she received
because she could not get rid of the
squatters.
What is clearly established by the plain
language of the subject document is that when
Issue:
the said "Receipt of Down Payment" was
prepared and signed by petitioners Romeo A. May the vendor demand the rescission of a
Coronel, et al., the parties had agreed to a contract for the sale of a parcel of land for a
conditional contract of sale, consummation of cause traceable to his own failure to have the
which is subject only to the successful transfer squatters on the subject property evicted
of the certificate of title from the name of within the contractually-stipulated period?
petitioners' father, Constancio P. Coronel, to
their names. Held:

The provision on double sale presumes title or A perfected contract of sale may either be
ownership to pass to the first buyer, the absolute or conditionaldepending on whether
exceptions being: (a) when the second buyer, the agreement is devoid of, or subject to, any
in good faith, registers the sale ahead of the condition imposed on the passing of title of the
first buyer, and (b) should there be no thing to be conveyed or on the obligation of a
inscription by either of the two buyers, when party thereto. When ownership is retained until
the second buyer, in good faith, acquires the fulfillment of a positive condition the
possession of the property ahead of the first breach of the condition will simply prevent the
buyer. Unless, the second buyer satisfies these duty to convey title from acquiring
requirements, title or ownership will not an obligatory force. If the condition is imposed
transfer to him to the prejudice of the first on anobligation of a party which is not
buyer. In a case of double sale, what finds complied with, the other partymay either
relevance and materiality is not whether or not refuse to proceed or waive said condition.
the second buyer was a buyer in good faith but Where, of course, the condition is imposed
whether or not said second buyer registers upon the perfection of the contract itself, the
such second sale in good faith, that is, without failure of such condition would prevent the
knowledge of any defect in the title of the juridical relation itself from coming into
property sold. If a vendee in a double sale existence.
registers that sale after he has acquired
knowledge that there was a previous sale of In determining the real character of the
the same property to a third party or that contract, the title given to it by the parties is
another person claims said property in a not as much significant as its substance. For
example, a deed of sale, although private respondent to free the property from
denominated as a deed of conditional sale, squatters.
may be treated as absolute in nature, if title to
the property sold is not reserved in the vendor The right of resolution of a party to an
or if the vendor is not granted the right to obligation is predicated on a breach of faith by
unilaterally rescind the contract predicated on the other party that violates the reciprocity
the fulfillment or non-fulfillment, as the case between them. It is private respondent who
may be, of the prescribed condition. The term has failed in her obligation under the contract.
"condition" in the context of Petitioner did not breach the agreement. He
aperfected contract of sale pertains, in reality, has agreed, in fact, to shoulder the expenses
to the compliance by one party of an of the execution of the judgment in the
undertaking the fulfillment of which would ejectment case and to make arrangements
beckon, in turn, the demandability of the with the sheriff to effect such execution.
reciprocal prestation of the other party. The
reciprocal obligations referred to would
normally be, in the case of vendee, the
14. Ong v. CA
payment of the agreed purchase price and, in
the case of the vendor, the fulfillment of Facts:
certain express warranties (which, in the case
at bench is the timely eviction of the squatters Petitioner Jaime Ong, on the one hand, and
on the property). respondent spouses Miguel K. Robles and
Alejandra Robles, on the other hand, executed
It would be futile to challenge the agreement an "Agreement of Purchase and Sale"
here in question as not being a duly perfected respecting two parcels of land situated at
contract. A sale is at once perfected when a Barrio Puri, San Antonio, Quezon. On May 15,
person (the seller) obligates himself, for a 1983, petitioner Ong took possession of the
price certain, to deliver and to transfer subject parcels of land together with the
ownership of a specified thing or right to piggery, building, ricemill, residential house
another (the buyer) over which the latter and other improvements thereon.
agrees. From the moment the contract is
perfected, the parties are bound not only to For failure of the vendee to pay the price as
the fulfillment of what has been expressly agreed upon, a complaint for rescission of
stipulated but also to all the consequences contract and recovery of properties with
which, according to their nature, may be in damages. Later, while the case was still
keeping with good faith, usage and law. Under pending with the trial court, petitioner
the agreement, private respondent is obligated introduced major improvements on the subject
to evict the squatters on the property. Private properties. These prompted the respondent
respondent's failure "to remove the squatters spouses to ask for a writ of preliminary
from the property" within the stipulated period injunction. The trial court granted the
gives petitioner the right to either refuse to application and enjoined petitioner from
proceed with the agreement or waive that introducing improvements on the properties
condition in consonance with Article 1545 of except for repairs. Eventually, the trial court
the Civil Code. This option clearly belongs to ordered the rescission of the contract.
petitioner and not to private respondent.
Issues:
In contracts of sale particularly, Article 1545 of
the Civil Code allows the obligee to choose (1) whether the contract entered into by the
between proceeding with the agreement or parties may be validly rescinded under Article
waiving the performance of the condition. 1191 of the New Civil Code
Here, evidently, petitioner has waived the
performance of the condition imposed on
(2) whether the parties had novated their parties or by implication derived from an
original contract as to the time and manner of irreconcilable incompatibility between the old
payment and the new obligation. In order for novation
to take place, the concurrence of the following
Held: requisites is indispensable: (1) there must be a
previous valid obligation; (2) there must be an
Article 1191 of the New Civil Code refers to
agreement of the parties concerned to a new
rescission applicable to reciprocal obligations.
contract; (3) there must be the extinguishment
Reciprocal obligations are those which arise
of the old contract; and (4) there must be the
from the same cause, and in which each party
validity of the new contract. The aforesaid
is a debtor and a creditor of the other, such
requisites are not found in the case at bench.
that the obligation of one is dependent upon
The subsequent acts of the parties hardly
the obligation of the other. They are to be
demonstrate their intent to dissolve the old
performed simultaneously such that the
obligation as a consideration for the
performance of one is conditioned upon the
emergence of the new one.
simultaneous fulfillment of the other.

A careful reading of the parties' "Agreement of


Purchase and Sale" shows that it is in the
nature of a contract to sell, as distinguished
from a contract of sale. In a contract of sale,
the title to the property passes to the vendee
upon the delivery of the thing sold; while in a
contract to sell, ownership is, by agreement,
reserved in the vendor and is not to pass to
the vendee until full payment of the purchase
price. 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 convey title
from acquiring an obligatory force. The non-
fulfillment of the condition of full payment
rendered the contract to sell ineffective and
without force and effect. It must be stressed
that the breach contemplated in Article 1191 of
the New Civil Code is the obligor's failure to
comply with an obligation. Failure to pay, in
this instance, is not even a breach but merely
an event which prevents the vendor's
obligation to convey title from acquiring
binding force. Hence, the agreement of the
parties in the case at bench may be set aside,
but not because of a breach on the part of
petitioner for failure to complete payment of
the purchase price. Rather, his failure to do so
brought about a situation which prevented the
obligation of respondent spouses to convey
title from acquiring an obligatory force.

Novation is never presumed, it must be proven


as a fact either by express stipulation of the