C.

Formalities of the Contract

General Rule: Form not Important
Dalion v. CA (1990)
Sabasaje alleges that Dalion executed a private document of absolute sale of a parcel of land for his favor. A contract of sale is a consensual contract, which means that the sale is perfected by mere consent. No
Dalion, however denied the fact of sale, contending that the document sued upon is fictitious, his signature particular form is required for its validity. Upon perfection of the contract, the parties may reciprocally
thereon, a forgery; and that subject land is conjugal property, which he and his wife acquired in 1960. demand performance. The necessity of a public document is only for convenience, not for validity or
Dalion still impugns the validity of the sale on the ground that the same is embodied in a private document, enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be
and did not thus convey title or right to the lot in question since “acts and contracts which have for their embodied in a public instrument.
object the creation, transmission, modification or extinction of real rights over immovable property must
appear in a public instrument”

Held: The sale is valid.

Secuya v. De Selma (2000)
Parcel of land occupied by the Secuyas are within that purchased by de Selma. Secuyas filed an action to
quiet title against de Selma, claiming that they inherited land and possessed it for a long time in the concept
of an owner. Basis for their claim: 1938 “Agreement of Partition” between Maxima Caballero and Paciencia
Saballeno (following a homestead patent grant), from whom their predecessor-ininterest (Dalmacio) bought
the lot. It was executed in a private document but was not presented in court since it was lost. They,
however, presented a document showing that Paciencia’s heir, Ramon, ratified the sale. Basis for de
Selma’s claim: valid TCT as proof of ownership.
While a sale of a piece of land appearing in a private deed is binding between the parties, it cannot be
considered binding on third persons, if it is not embodied in a public instrument and recorded in the Registry
of Property. In this case, there was no public document evidencing the sale and private writing was lost,
thus, sale not binding on third party de Selma. Document of Ramon’s ratification has no value since it was
not proven that he was Pacencia’s heir.

Held: No valid sale

Exception: When Form not Important
Form Important for Enforceability
Statute of Frauds
Ortega v. Leonardo (1958)
The plaintiff and defendant, who had a conflicting claim on a parcel of land, came to an agreement that the
defendant would desist from pressing her claim under an agreement that once the plaintiff obtains a title
thereto, the latter would sell a specified portion thereof to the former at a stipulated price. Once the plaintiff
had obtained title to the land, he refused to comply with the agreement, despite the fact that the defendant
had already caused a survey and segregation of the portion of the land they agreed upon, and in fact
extended a portion of the son’s house into the segregated portion. Plaintiff had even refused tender of the
purchase price by the defendant.
Held: Sale is valid. It is not only partial payment of the purchase price that is the only manner of partial
performance to take the contract out of the coverage of the Statute of Frauds.
It recognized other modes which constitute partial performance, such as possession,
the making of improvements, rendition of services, payment of taxes, relinquishment of rights, etc. Although
tender of payment by itself would not be considered partial performance, but accompanied by other acts
such as building of improvements, the same may be considered as partial performance.
For partial performance to constitute as an exception to the Statute of Fraud, its must by itself pertain to the
subject matter or to the price of the purported sale, and must involve an act or “complicity” on the party
sought to be changed. These requisites are essential because partial performance must amount to
estoppel against the party sought to be charged. This is in accordance with the provision of Article 1405
which states that contracts covered by the Statute of Frauds “are ratified . . . by the acceptance of benefits
under them
Paredes v. Espino (1968)
Paredes (buyer) and Espino (seller) entered into a contract of sale by means of communication through
letters and telegrams. Actual execution of deed of absolute sale was to take place once Espino arrives in
Palawan. However, Espino refused to execute the deed of absolute sale.
Held: Sale is valid (if the letters are proven to be authentic).
Claudel v. CA (1991)
When Cecilio died, his children and his siblings fought over a parcel of land owned by him. His children had
previously partitioned the lot among themselves while his siblings are contesting that their parents bought
the land from Cecilio, but the transaction was merely verbal. To support their claim, they presented a
subdivision plan of the lot.
Held: Alleged oral sale between Cecilio and his parents is unenforceable.
Form Important for Validity
Sale of Realty through an Agent
City-Lite Realty Corp v. CA (2000)
FP Holdings advertised their intent to sell a piece of land naming Roy of Metro Drug as contact person.
City Lite as a purchaser negotiated with Roy where they reached an agreement as to the terms and
conditions for the purchase of the land. FP Holdings refused to execute deed of sale.
Held: A sale of a piece of land through a broker (agent) without written authority is void.
IV. SUBJECT MATTER OF THE SALE
A. Requisites
Must be Existing, Future, or Contingent
Emptio Rei Speratae/Emptio Spei
Pichel v. Alonzo (1982)
The Alonzos sold to Pichel all the fruits of the coconut trees from 1968-1976 which may be harvested in a
land currently being leased by Ramon Sua, in consideration of a certain amount (P4, 200). The land
containing the coconuts was obtained as a grant from the government. It was agreed that part of the
consideration of the sale, money will be given to the lessee to release such land. Pending any payment will into existence as the natural increment or usual incident of something already in existence, and then
entail the inability to harvest any fruits.
A letter between parties suffices as a written note which makes a verbal agreement outside the operation of
the Statute of Frauds. The letters contained all the essential elements of the contract and such also
constituted offer and acceptance. Validity of the letters should be questioned in the proper proceedings.
A contract of sale of land can be made orally. However, the rule of thumb is that a sale of land, once
consummated, is valid regardless of the form it may have been entered into. Nowhere does law or
jurisprudence prescribe that the contract of sale be put in writing before such contract can validly cede or
transmit rights over a certain real property between the parties themselves.
HOWEVER, in the event that a third party, as in this case, disputes the ownership of the property, the
person against whom that claim is brought cannot present any proof of such sale has no means to enforce
the contract. Thus, the Statute of Frauds protects the parties in a contract of sale of real property so that no
such contract is enforceable unless certain requisites (partial performance/note/memorandum), for
purposes of proof, are met. The existence of the contract of sale made by Cecilio with his siblings cannot
be proved.
There was no perfected contract of sale because Roy was merely a broker of FP Holdings; he was not
even an agent. As such, for his dealings to be valid, he needed a written authority in the form of an SPA
from FPH. He had none. Thus, his agreement with City Lite had no legal effect.
Under Article 1461 of the New Civil Code, things having a potential existence may be the object of the
contract of sale. Pending crop which may have potential existence may be the subject matter of sale. A
valid sale may be made of a thing, which though not yet actually in existence, is reasonably certain to come
belonging to the vendor, and the title will vest in the buyer the moment the thing comes into existence.
Held: The contract was clearly a "sale of the coconut fruits" and not a lease of the land and trees.
Subject to a Resolutory Condition
Arsenal v. IAC (1986)
Palaos sold his 4 hectares of his Homestead Land to Suralta within the 5-year prohibition period in a
notarized deed of sale. Then, Palaos sold the 3 remaining hectares of his land to Arsenal, but the deed of
sale covered WHOLE LOT (including Suralta’s 4 hectares). When Suralta tried to register his deed, it was
refused for being within the 5-year prohibition period, but to cure the defect, he made Palaos sign a new
contract covering his 4 hectares. However, when Suralta saw Arsenal’s deed of sale for the first time, he
saw that the sale covered the whole lot.
Held: Palaos’ sale to Suralta is void from the beginning for having been sold within the prohibitive period.
Must be Licit
Martinez v. CA (1974)
Montemayor owned a parcel of land, which passed on to his heirs, which was then sold to Garcia. Garcia
tried to repair the dike of the said property but he was barred by the Mayor. He then registered the property
and sold the same to De Dios and eventually the property found its way to the hands of the spouses
Martinez. The Martinezes wanted to repair the dike of the creek of the property but they were stopped by
municipal officials. The case was referred to the committee on rivers and streams which decided that the
creek forms part of the spouses’ registrable property.
Held: Subject is property is part of the public domain.
Must be Determinate or Determinable
Melliza v. City of Iloilo (1968)
Juliana Melizza owned a parcel of lot. She donated parcels 1214-C, 1214-D, and “those lots needed by
Iloilo for the construction of Iloilo City Government...according to the Arellano plan” to the Municipality of
Iloilo for the construction of a city hall. After a few years, the said donated lot supposedly for the city hall
was donated to UP Iloilo. The remaining divisions of lot 1214 were sold to Villanueva who then sold it to Pio
Melizza. Pio claims the recovery of parcel 1214-B which was possessed by UP.
Held: Subject property is determinable, according to the Arellano plan.
Atilano v. Atilano (1969)
Atilano I bought land which he subdivided into five parcels. He retained parcel A, sold parcel E to Atilano II,
and sold the rest to third parties. However, later, the heirs of Atilano II found out that the land they were
occupying which they thought was parcel E was actually parcel A. The heirs of Atilano II wanted to
Things of this nature are said to have a potential existence. A man may sell property of which he is
potentially and not actually possessed. The thing sold, however, must be specific and identified. They must
be also owned at the time by the vendor. This is an example of Emptio Rei Speratae
The subsequent contract does not validate the sale because a void contract may not be confirmed or
ratified by a subsequent act – also, there is no new consideration, thus it produces no effect and cannot be
binding. Thus, the original owner owns the lot. The finding of bad faith, while it does not validate a void
contract, still serves as a fundamental barrier to the ownership of the Arsenals over the 4 hectares because
their ownership would amount to unjust enrichment. Even though he is equally guilty, the 4 hectares of land
will revert back to Suralta, subject to be escheated by the state because in cases where the homestead has
been the subject of void conveyances, the law still regards the original owner as the rightful owner subject
to escheat proceedings by the State.
The properties are parts of the public domain intended for public use and are outside the commerce of
men. It is not subject to private appropriation. The Land Registration Court has no jurisdiction over
nonregistrable properties such as public navigable rivers which are part of public domain. Ergo, it cannot
validly adjudge a favorable registration in favor of the Martinezes.
The donation to Iloilo includes parcel 1214-B. The exact area of the land needed which was the subject
matter of the sale could be determined by simply referring to the Arellano plan, without the parties needing
to draw-up a new contract, nor even to clarify matters or explain their intentions. 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.
When one sells or buys real property - a piece of land, for example one sells or buys the property as he
sees it, in its actual setting and by its physical metes and bounds, and not by the mere lot number assigned
to it in the certificate of title. The mistake did not vitiate the consent of the parties, or affect the validity and
exchange parcels with the heirs of Atilano I because the real parcel E has a bigger area. The heirs of binding effect of the contract between them. The proper remedy is to reform the instruments to reflect the
Atilano I refused because they already built improvements on the land. correct parcel of land.

Held: No exchange of land will be made.

B. Particular Kinds
Generic Things
Yu Tek & Co v. Gonzales (1915)
Gonzales promised to deliver to Yu Tek & Co 600 piculs of sugar in exchange of P3,000. Gonzales failed to The contract did not provide that he will obtain the sugar from his own hacienda. Ergo, he may get the
deliver, and he was obliged to return the P3,000 and pay P1,200 as indemnity for damages as provided for sugar from the market or raise it himself. There was no "appropriation" of any particular lot of sugar. Neither
by their contract. Gonzales argued that the sugar he is supposed to deliver will be coming from his own party could point to any specific quantity of sugar and say: "This is the article which was the subject of our
hacienda which was destroyed by the dry weather. contract." Therefore, what they agreed upon was a generic thing.

Held: Gonzales is still obliged to deliver the sugar.

Future Goods
Undivided Interest/Share
Yturalde v. CA (1972)
Yturalde and wife Margarita owned a parcel of land. Yturalde died, so his widow married his brother. The Margarita could not sell the entire lot because she had no right to do so. What she sold was only her “rights,
new couple executed a deed of sale with right to repurchase the land in favor of Rebollo. They failed to interests, and participation” in the lot. The lot was conjugal property of Yturalde and Margarita, so what she
repurchase the property, so Rebollo filed a petition to consolidate his ownership over the land, to compel disposed of under the pacto de retro sale was only her conjugal share and her successional right as
one of Yturalde and Margarita’s sons to surrender the OCT, and to have the improvements made by Yturalde’s heir.
Yturalde’s heirs removed on the land.

Held: The petition for consolidation of ownership cannot not be granted.

Gaite v. Fonacier (1961)
Gaite used to be the Attorney-in-fact of Fonacier, previously authorized to enter into agreements for the This is a sale of a specific mass of fungible goods for a lump sum or single price. 24,000 metric tons is an
mining business of Fonacier. For unknown reasons, Fonacier sold his mining business to Gaite. Certain estimate. Neither of the parties actually measured the iron ore so they estimated by taking the volume in
surety bonds were obtained to secure the sale. Thereafter, Fonacier wanted get P65, 000 in exchange of cubic meters and multiplying by estimated weight per ton of each per cubic meter. There was no provision
the more or less 24,000 tons of iron ore he sold to Gaite. The sureties failed to pay. Fonacier filed a in the contract for the measurement or weighing of ore so the subject matter of sale is a determinate object.
collection case. Gaite counterclaimed that Gaite did not deliver the 24,000 tons of ore and should be liable
for the short delivery.

Held: There is no short delivery.

Things in Litigation
Atkins Kroll & Co v. Domingo (1924)
When Domingo died, his son, Santiago, sold his interest in the land with all improvements thereon to Ong The notice of lis pendens lost its efficacy after he failed to get his claim recognized in segregation
Kong who then sold it to Atkins Kroll. Santiago, who was in possession of the property even when Atkins proceedings. A notice of lis pendens is meant to charge the stranger with notice of the particular litigation
acquired his interest, refused to admit Atkins’ claim as co-owner. Atkins filed a petition to recover
possession of land. Santiago opposed and claims to have exclusive ownership of the buildings on the land
by virtue of a case he filed to segregate improvements on the property from the land and that he since he
filed a notice of lis pendens in the register of deeds setting his claim of ownership of the improvements, it
affects 3rd persons of his claim
Held: The improvements weren’t exclusively owned by Santiago.
Laroza v. Guia (1985)
Laroza and Uti acquired property from Francisco Guia. Long before Laroza and Uti had acquired subject
property, a notice of lis pendens had already been registered with the Office of the Register of Deeds
affecting the property. Thereafter, Donald Guia surveyed the land, claiming that the said land was the
subject matter of a case which was decided in his favor, final and executory. Laroza and Uti filed an action
to quiet title.
Held: The land is owned by Donald Guia.
Things Subject to Conditions
Arsenal v. IAC, supra
V. PRICE OR CONSIDERATION
A. Must be Real
Adequacy of Price
Bagnas v. CA (1989)
Hilario Mateum of Kawit, Cavite, died without ascendants or descendants, and survived only by collateral
relatives. Mateum left no will, no debts, and an estate consisting of twenty-nine parcels of land. Mateum
was purported to have sold the 10 parcels of land for P1.00 and “services rendered, being rendered and to
be rendered for my benefit”. Petitioners commenced suit in CFI Cavite, seeking annulment of the deeds of
sale as fictitious, fraudulent or falsified, or, alternatively, as donations void for want of acceptance embodied The causa cannot be because of liberality - donations of immovable must be made and accepted in a public
in a public instrument.
Held: Contract is VOID.
Vda de Gordon v. CA (1981)
referred to in the notice. If the notice is effective, the stranger who acquires the property affected by the lis
pendens takes subject to the eventuality of the litigation. But when the adverse right fails in such litigation,
the lis pendens becomes innocuous.
Lis pendens is a notice of pending litigation; a warning to the whole world that one who buys the property
so annotated does so at his own risk. Notwithstanding, appellants bought the land from Francisco. Having
purchased the property with notice of lis pendens, Laroza and Uti took the risk of losing it in case the
decision in the said civil case, as what actually happened, is adverse to their predecessor-in-interest,
Francisco Guia.
The filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to
therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of
the suit. The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of
which is to keep the subject matter of the litigation within the power of the Court until the judgment or
decree shall have been entered; otherwise, by successive alienations pending the litigation, its judgement
or decree shall be rendered abortive and impossible of execution.
Contracts with a false cause, or which are absolutely simulated or fictitious are void and not only voidable if
they have no other true and lawful cause. Court finds price so low that they amount to a false and fictitious
consideration. No other true and lawful cause having been shown, the Court finds both deeds of sale void.
instrument to be valid, which is absent in this case. Sale being void, the petitioners, even as collateral
relatives, can question it. Respondents should have presented proof of the character and value of the
“services”. Burden of proof was shifted to respondents when it was shown that consideration amounted to
no price at all- no proof shown that the “services” were valuable consideration.
The taxes on two parcels of land owned by Restituta vda. de Gordon remained unpaid which lead
to the public sale of the said parcels of land. Duazo acquired the parcels of land at a price of P10, 500
representing the tax, penalty and costs. The combined assessed value of the two parcels of land is
P16,800 while the house was assessed at P45,580 in 1961. Gordon now assails the validity of the public
sale made in favor of Duazo.
Held: The sale to Duazo is valid and the price is valid.
False Consideration
Ong v. Ong (1985)
Imelda Ong conveyed a Makati property through a quitclaim deed in favor of Sandra Maruzzo, a minor, in
exchange of P1.00 and other valuable considerations. Subsequently, she revoked the said quitclaim and
donated the same property to her son Rex. Maruzzo, through her guardian Afredo Ong, wanted to recover
her property. Imelda argues that the quitclaim was void because Sandra was a minor then and she can’t
accept donations. The RTC said the quitclaim is equivalent to a sale. In the CA, Imelda argues that the
consideration is not a valid consideration. The CA ruled in favor of Sandra.
Held: The consideration is valid.
Ladanga v. CA (1984)
A 79 yr. old spinster named Clemencia signed 9 deeds of sale in favor of her niece, Salvacion and her
hubby, Ladanga, for P92,000. Bernardo, as guardian of Clemencia, filed a case to declare the sale void as
to the Paco property for the non-payment of the P26k purchase price. On the witness stand, Clemencia
denied having received even one centavo of the price of P26,000 and when the deed of sale was signed in
the registry of deeds, the notary testified that he didn’t see Salvacion give any money to Clemencia.
Held: There was no valid sale.
Absence of Consideration
Buenaventura v. CA (2003)
Petitioners sought to declare null and void ab initio certain Deeds of Sale executed by their parents in favor
of their other siblings. They allege that such sale would impair their legitime because the price was grossly
inadequate and that there was no valid consideration.
Held: Sale is valid. Petitioners do not have a legal interest over the properties subject to the deeds of sale.
Mere inadequacy of the price alone is not sufficient ground to annul the public sale. While in ordinary sales
for reasons of equity a transaction may be invalidated on the ground of inadequacy of price, or when such
inadequacy shocks one's conscience as to justify the courts to interfere, such does not follow when the law
gives to the owner the right to redeem, as when a sale is made at public auction upon the theory that the
lesser the price the easier it is for the owner to effect the redemption. And so it was aptly said: When there
is the right to redeem, inadequacy of price should not be material because the judgment debtor may
reacquire the property or also sell his right to redeem and thus recover the loss he claims to have suffered
by reason of the price obtained at the auction sale.
The execution of a deed purporting to convey ownership of realty is in itself prima facie evidence of the
existence of a valuable consideration, the party alleging lack of consideration has the burden of proving
such allegation. Inadequacy is of no moment since it is common practice to place nominal amount but
actually there is more consideration given. Cause is presumed in a contract. The party alleging lack of
consideration has the burden of proving such allegation. Bad faith and inadequacy of the monetary
consideration do not render a conveyance inexistent, for the assignor's liberality may be sufficient cause for
a valid contract (Article 1350, Civil Code), whereas fraud or bad faith may render either rescissible or
voidable, although valid until annulled, a contract concerning an object certain entered into with a cause
and with the consent of the contracting parties.
Clemencia’s testimony and the notary’s testimony destroyed any presumption that the sale was fair and
regular and for a true consideration. Also, the inadequacy of price cannot be considered as a donation or
some other contract absent any showing of intention on Clemencia’s part to donate it. A contract of sale is
void and produces no effect whatsoever where the price, which appears therein as paid, has in fact never
been paid by the purchaser to the vendor. The sale is inexistent and cannot be considered consummated.
First, petitioner's rights over said properties are merely inchoate. While still living, their parents are free to
dispose of their properties.
Second, payment of the price has nothing to do with the perfection of the contract. Failure to pay the
consideration different from lack of consideration. The former results in a right to demand the fulfillment or
cancellation of the obligation under an existing valid contract while the latter prevents the existence of a
valid contract. Here, the lots were sold for a valid consideration and defendant children actually paid the
purchase price stipulated in the Deed of Sale.
Province of Cebu v. Heirs of Morales (2008)
Petitioner, Province of Cebu, donated some land to City of Cebu. Rufina Morales, who leased one of the
subject lands, eventually bought it from City of Cebu. Apart from the deposit and downpayment, she was
not able to make other payments on the balance of the purchase price. Thereafter, Province of Cebu and
City of Cebu entered into a compromise agreement wherein the lands donated were returned to the former.
Held: Sale between Morales and City of Cebu is valid. Province of Cebu cannot take back said property.
The award during the auction was tantamount to a perfected contract of sale between Morales and City of
Cebu. Sale by auctioni f perfected when the auctioneer announces its perfection by the fall of the hammer
or other customary manner. Moreover, failure to pay the balance is not a proof that there was no valid
contract of sale over the lot. The fact that there was an agreed price for the lot proves that a contract of sale
was indeed perfected between the parties.