Sales Digests Cases 1 - 20

CONEJOS LAYLO AMPONG PILAPIL SY GARCIA CHIONGSON LAW
1. Villonco Realty Company and Edith Perez Tagle vs. Bormaheco (Rocky)
*President of a Corporation does not inform that buyer that the land is conjugal
July 25, 1975—Aquino
Facts:
1. Villonco filed against Bormaheco for the specific performance of a supposed contract for the sale of land and its
improvements.
2. Cervantes spouses are the owners of 3 lots.
3. Francis Cervantes did not disclose to Villonco that the lots were conjugal property.
4. Francisco Cervantes is also the president of Bormaheco
5. February 1964- start of negotiations for the sale of the lots
6. February 12, 1964- A written offer was made for the sale of the property
7. February 27, 1964- a counter offer was made which included:
a. a check of 100,000 pesos as earnest money.
8. March 4, 1964- Villonco made a revised counter-offer for the purchase of the property and the counter offer was accepted
as shown in exhibit D (the letter)
9. March 30, 1964- Cervantes returned the earnest money with interest and said that despite the lapse of 45 days from
February 12, 1964 there is no certainty yet for the acquisition of the property in Punta.
10. Villonco refused to accept the letter and the money.
11. Thus the filing for the petition for specific performance.
12. Bormaheco in its defense that the perfection of the contract of sale was subject to the conditions of:
a. final acceptance or not shall be made after 45 days

b. Bormaheco acquires the Sta. Ana Property.
9. Lower Court rendered the ff decision that Cervantes spouses to execute in favor of Bormaheco
a. The lands
b. Damages
10. Spouses and Bormaheco appealed with the defense that:
a. No contract of sale was perfected because Cervantes made a supposed qualified acceptance of the revised offer
(counter offer) and because the condition that Bormaheco would acquire the Punta land within 45 days was not
fulfilled.
b. Bormaheco cannot be compelled to sell the land which belongs to the spouses Cervantes
c. Francisco Cervantes did not bind the conjugal partnership and his wife when he as president entered into
negotiations with Villonco.
Issues:
1. Is Bormaheco correct that there was no perfected contract because it had sent a counter offer for Villonco to approve wherein
which Villonco did not send a timely reply within 45 days? Held: No
2. Is the 45 day period wherein which Bormaheco would acquire the Nassco property a condition that must be met in order for it
to acquire the other properties? Held: No
3. Can Francisco hide behind the defense that the property was conjugal in nature thus it could not have been executed in favor
of Villonco because Miss. Cervantes did not give her approval? Held: No
Decision: The petition is granted

Ruling:
Issue 1:
1. Bormaheco’s acceptance of Villonco’s offer to purchase the Buendia Avenue property (Exhibit D) proves that there was a
meeting of the minds upon the subject matter and consideration of the sale.
2. Not only Bormaheco’s acceptance of the part payment of 100,000 pesos shows that the sale was conditionally
consummated or partly executed subject to the purchase by Bormaheco Inc. of the Punta property.
3. There was no such counter offer because there is no evidence as to what changes were made by Cervantes
4. The broker, Miss Tagle, acted as intermediary between the parties. Thus it is safe to assume that the alleged changes made
by Cervantes were approved by Villonco because of the fact that Villonco paid Bormaheco 100,000 pesos and it was
accepted but later returned.
© CLAPS GC [DLSU Law 1st Batch Block 1] Corporation Law (Bonilla) Page 1
Issue 2:
1. The 45 day period was an estimate or a forecast of how long it would take Bormaheco to acquire the Nassco property
and it was not a condition or a deadline set for the defendant corporation to decide whether or not to go through with the
sale of its Buendia Property.
2. It does not even specify how long after the 45 days the outcome of the final negotiations would be known.
Issue 3:
1. Francisco concealed the fact that the 3 lots were registered in the spouses name and not Bormaheco. Thus Villonco
presumed that Francisco, acting as president, could dispose of the lots.
2. This is proven by the fact that in the offering on Feb 12, 1964, Cervantes states in Par 3 and 4 of the letter the ff:
a. “I shall have consummated my purchase…”
b. “My negotiations with said property…”
3. These expressions conveyed the belief that the Villonco’s did not have to deal with Mrs. Cervantes anymore.
4. Basically, he cannot invoke the defense of it being conjugal property because he purposely withheld that information.
2. Ang Yu Asuncion, Arthur Go and Keh Tiong vs. CA and Buen Realty Development Corporation (Alps)
December 2, 1994 - Vitug *basic: writ of execution is unaivalable when contract on w/c it’s hinged is inexistent
Facts:
1. Plaintiffs Ang Yu Asuncion and Keh Tiong, et al.,(or Asuncion et al.) filed a complaint against Bobby Cu Unjieng, Rose Cu
Unjieng and Jose Tan (or Cu Unjiengs) alleging that:
a) plaintiffs Asuncion et al. are tenants of spaces owned by Cu Unjiengs;
b) on several occasions Cu Unjiengs informed Asuncion et al. that they are offering to sell the premises and are giving them priority
to acquire the same;
c) Cu Unjieng offered a price of P6M while Asuncion et al. made a counter offer of P5M and then Asuncion et al. asked the Cu
Unjiengs to put their offer in writing to which request Cu Unjiengs acceded;
d) Asuncion et al. wrote Cu Unjiengs asking that they specify the terms and conditions of the offer to sell, which but Cu Unjiengs
failed to do so
e) because of information received that Cu Unjiengs were about to sell the property, Asuncion et al. were compelled to file the
complaint to compel Cu Unjiengs to sell the property to them.
2. The trial court found that the defendants Cu Unjiengs’ offer to sell was never accepted by the plaintiffs because the parties did
not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. It nonetheless ruled
that should Cu Unjiengs subsequently offer their property for sale at a price of P11M or below, Asuncion et al. will have the
right of first refusal.
3. Asuncion et al. appealed (CA-G.R. CV No. 21123). CA affirmed with modification the lower court's judgment, holding that:
a) there was no meeting of the minds between the parties concerning the sale of the property. Absent such requirement, the claim
for specific performance will not lie.
b) the same right of first refusal is granted to Asuncion et al. in the event that the subject property is sold for a price in excess of
P11-M.
4. While CA-G.R. CV No. 21123 was pending consideration, the Cu Unjiengs executed a Deed of Sale transferring the subject
property to Buen Realty and Development Corporation (Buen Realty). A certificate of title was issued to Buen Realty’s name.
5. Buen Realty as the new owner of the property wrote Asuncion et al demanding that they vacate the premises.
6. Asuncion et al. replied stating that Buen Realty bought the property subject to the notice of lis pendens and filed a Motion for
Execution of the decision in CA-G.R. CV No. 21123.
7. The Judge ordered the Cu Unjiengs to execute the Deed of Sale of the property in favor of plaintiffs Asuncion et al. for P15M
pesos in recognition of plaintiffs' right of first refusal and that a new TCT be issued in their favour.
a) It also held that all previous transactions involving the issuance of another title to Buen Realty is set aside as having been
executed in bad faith.
8. Buen Realty appealed to the CA. CA reversed the Judge’s Order.
Issue: Was there a perfected contract of sale between the Cu Unjiengs and Asuncion et al that will entitle the latter to a writ of
execution as their right of first refusal was allegedly breached?
Held: No. There was no meeting of the minds between the parties concerning the sale of the property. Thus, the motion for
execution will not prosper as action for specific performance will not lie.
Decision: CA ruling affirmed.
Ruling:
1. The right of first refusal cannot be deemed a perfected contract of sale under Article 1458 of the CC.
2. In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be
dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another but also on
terms, including the price, that obviously are yet to be later firmed up.
 Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations
governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite
and inconclusive)
3. The breach of the right of first refusal, as has been decreed under a final judgment (in CA-G.R. CV No. 21123) cannot justify
an issuance of a writ of execution under a judgment that merely recognizes its existence, nor would it sanction an action
for specific performance without thereby negating the indispensable element of consensuality in the perfection of
contracts.
4. The final judgment in that case has merely accorded a "right of first refusal" in favor of Asuncion et al.
5. There was nothing in that said decision that decreed the execution of a deed of sale between the Cu Unjiengs and Asuncion
etal, or the fixing of the price of the sale, or the cancellation of title in the name of Asuncion et al.
6. If Asuncion et al are aggrieved by the failure of Cu Unjiengs to honor the right of first refusal, the remedy is not a writ of
execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose.
7. Additionally, whether Buen Realty acted in good faith or bad faith and whether or not it should, in any case, be considered
bound to respect the registration of the lis pendens are matters that must be independently addressed in appropriate
proceedings.
 Buen Realty, not having been impleaded in Civil Case No. 87-41058 (which was later modified - CA-G.R. CV No.
21123), cannot be held subject to the writ of execution issued, let alone ousted from the ownership and possession
of the property, without first being duly afforded its day in court.
9. Thus: the lower court order that the Cu Unjiengs execute the Deed of Sale of the property in favor of Asuncion et al. for
P15M pesos in recognition of the latter’s right of first refusal and that the TCT issued in Buen Realty’s name is invalidated is
SET ASIDE.
3.
4. Toruator v. Bernabe
June 8, 2005 – Tinga
Facts:
1. Spouses Salvador (Salvadors) purchased a parcel of land from Ayala Alabang subject to conditions
a. No lot may be resold by the buyer unless a residential house has been constructed thereon (Ayala Corporation
keeps the Torrens Title in their [sic] possession).
2. December 18, 1980 - the Salvadors sold the parcel of land to the spouses Bernabe (Bernabes). Given the above restrictions.
a. Salvadors executed a special power of attorney authorizing the Bernabes to construct a residential house on the lot
and to transfer the title of the property in their names.
3. September 1986 - The Bernabes, without making any improvement, contracted to sell the parcel of land to the spouses
Mario and Elizabeth Torcuator (Torcuators)
a. Confronted by the Ayala Alabang restrictions, the parties agreed to cause the sale between the Salvadors and the
Bernabes cancelled, in favor of
i. a new deed of sale from the Salvadors directly to the Torcuators;
ii. a new Irrevocable Special Power of Attorney executed by the Salvadors to the Torcuators in order for the
latter to build a house on the land in question; and
iii. an Irrevocable Special Power of Attorney from the Salvadors to the Bernabes authorizing the latter to sell,
transfer and convey, with power of substitution, the subject lot.
4. The Torcuators had the plans of their house prepared and offered to pay the Bernabes for the land upon delivery of the sale
contract. For one reason or another, the deed of sale was never consummated nor was payment on the said sale ever
effected.
5. Bernabes sold the subject land to another person.
a. The document however is not notarized.
i. As a result, the Torcuators commenced the instant action against the Bernabes and Salvadors for Specific
Performance or Rescission with Damages.
6. Torcuators:
7. Contract was a perfected contract of sale not a mere contract to sell.
8. Bernabe & Salvador:
a. Transaction was not consummated due to the fault of petitioners who failed not only to prepare the necessary
documentation but also to pay the purchase price for the property.
b. Special power of attorney executed by the Salvadors in favor of petitioners merely granted the latter the right to
construct a residential house on the property in the name of the Salvadors.
Issue: Did the parties enter into a contract of sale of a contract to sell?
Held: The parties entered into a CONTRACT TO SELL.
Ruling:
Contract of Sale Contract to Sell

Title passes to the buyer upon delivery of the thing sold Ownership is reserved in the seller and is not to pass
until the full payment of the purchase price is made
Non-payment of the price is a negative resolutory Full payment is a positive suspensive condition
condition
The vendor has lost and cannot recover the ownership Title remains in the vendor if the vendee does not
of the land sold until and unless the contract of sale is comply with the condition precedent of making
itself resolved and set aside payment at the time specified in the contract
1. In this case, that Salvador instead of issuing a deed of sale issue a special power of attorney.
a. They issue the SPA so that the buyer would be able to construct the house hence, allowing them to transfer the
title in the other’s name.
b. The deed of sale was to be issued upon full payment of purchase price among other things.
c. Only after full payment will the title transfer to the other party.
2. The parties clearly intended the construction of the house on the property as another suspensive condition which had to be
fulfilled.
a. Had the agreement been a contract of ale the petitioners would impress upon the court the SPA would have been
unnecessary as the petitioners would have had the right to compel the salvdors to transfer ownership to them.
3. There was neither actual nor constructive delivery to the petitioners.
4. Two reasons why there cannot be rescission nor specific performance.
a. No contract of sale in the first place meaning no obligation arises until the conditions of full payment and building
the house.
b. Statute of frauds make it unenforceable
i. Sale of land has to be in a public instrument… in this case no documents to show that sale was
consummated.
5. Gaite-vs- Fonacier (Diana)

July 31, 1961; P: Reyes, JBL *Sale of Iron Ores
Facts:
1. Isabelo Fonacier(respondent) is the owner of the Dawahan Group (11 iron load mineral claims) located in Camarines Norte
2. On Sept 29 1952, Fonacier executed a “Deed of Assignment”, whereij he authorized Fernando Gaite, as his true and lawful
attorney-in-fact, to enter into a contract with any person for the exploration and development of the Dawahan Mining
Claims on a royalty basis.
3. On March 19,1954, Gaite executed a General Assignment, which conveyed the development and exploitation of said claims
to Larap Iron Mines ( Gaite’s solely owned business)
 Gaite started developing and exploiting the mining claims. He claimed and estimated to have extracted
approximately 24,000 metric tons of iron ore
4. Later on, Fonacier decided to revoke the authority granted to Gaite. Gaite agreed, but under certain conditions
5. On Dec 8, 1954, Gaite transferred all his rights and interests over the “24,0000 tons of iron ore, more or less”, together
with the improvements he made in the said mining claims and even the use of his business name for the consideration
amounting to P75,000.
 The P10,000 was paid at the signing of the agreement.
 The parties agreed that the P65,000 balance “will be paid from and out of the first letter of credit covering the
1st shipment of iron ores and of the 1st amount derived from the local sale of iron ore made by the Larap Mines
& Smelting Co.”
 THIS WILL BE THE CONTRACT OF SALE IN THIS CASE
6. On Dec 8, 1954, Fonacier also executed a surety bond for P65,000 in favor of Gaite. This was presented to Gaite together
with a “Revocation of Power of Attorney and Contract”.
 However, Gaite refused to sign said contract until Fonacier secures another surety bond issued by a bonding
company, with the same amount
7. So, Fonacier secured another bond from Far Eastern Surety and Isurance Co,
 Note, however, that its liability was subject to certain conditions:
o Actual Sale of Iron Ore must be made by Larap Iron Mines
o Its expiration date will be on Dec 8, 1955 (One year after)
8. After the attachment of the 2 bonds, Gaite signed the revocation contract.
9. On Dec 8,1955, the bond expired. At that time, Larap has not sold any amount of the iron ores.
10. Fonacier refused to pay the balance on the ground that the obligation was not yet due and demandable
11. And so, Gaite filed a complaint against Fonacier with the CFI-Manila
 The lower court ruled in favor of Gaite on the grounds that:
o The obligation to pay the balance was one WITH A TERM
o The giving of the security was a condition precedent to Gaite’s giving of credit
o Failure to maintain the security made the obligation due and demandable
Issue:
1. Is the sale of iron ore by Larap Mines a condition precedent to the payment of the P65,000 balance to Gaite?
2. Given that the obligation is one with suspensive term, do Fonacier and his sureties have the right to insist that they will pay
after the sale of ore has been made?
Held:
1. No. The sale of said iron ore was only a suspensive period/term and not a condition. The payment does not depend upon
the sale. The payment HAS TO BE MADE.
2. No. They don’t have the right to make use of the said term because of their failure to secure the guaranty he has promised,
which is the additional bond (since it already expired).
Decision:
Decision Affirmed
Ruling:
1.) There are several factors that would prove the parties intended the sale of iron ores to be merely a PERIOD and NOT A
CONDITION for the payment:
a. It is clear in the agreement that the “balance of P65,000 WILL BE PAID..”
b. The nature of a contract of sale is normally commutative and onerous
 Each party assumes a correlative obligation
 Each party anticipates the performance of the other from the start
o Except: if the other party agrees to assume the risk of receiving nothing. HOWEVER, for this, THE
CONTINGENT CHARACTER OF THE OBLIGATION MUST CLEARLY APPEAR.
 Observation:
- Gaite never assumed the risk of receiving nothing for the ores. In fact, he even want a strong assurance that the
balance will eventually paid, as seen from his request for an additional bond.
- Fonacier knows that the obligation has to be paid so he agreed to get another bond
c. As a rule, payment cannot be left to the will of the debtor . To construe the obligation to be conditional will put the
fulfilment of the obligation solely dependent on the will of Fonacier (whether he will sell the ore or not).
d. The rule of “greater reciprocity of interests” (follow this in case of doubts regarding onerous contracts, Art.1378-Civil
Code)
- It will be for a greater reciprocity of interest if we construe that Fonacier’s obligation exists
2.) As discussed in OBLICON, the debtor loses the right to make use of the period when: (a) he does not furnish the creditor the
guaranties and securities which he has promised; (b) when by his own acts, he has impaired such guaranties after their
establishment (Art. 1198, Civil Code)
Other Matters:
The court has ruled that the sale here is a sale of a specific mass of fungible goods. Under such case, all the seller has to do is
to deliver in good faith all of the ore found in one mass and not exactly the 24,000 tons. This is clear under the stipulations “24,000
tons of iron ore, more or less”. Moreover, the estimate of 24,000 was not that far from the mining expert’s official estimate.
6. Concepcion Ainza vs. Spouses Antonio and Eugenia Padua (Jal)
30 Jun 2005 – Ynares-Santiago *mother bought land from daughter but no deed of sale was issued
Facts:
1. Spouses Antonio and Eugenia Padua owned a 216.40 sq.m. lot with an unfinished residential house.
2. In April 1987, Concepcion (Eugenia’s mother) bought ½ of an undivided portion of the land from Eugenia for ₱100,000.
3. No Deed of Absolute Sale was executed but cash payment was received by Eugenia and was evidenced by a receipt.
Ownership was transferred to Concepcion through physical delivery to her other daughter, Natividad, who occupied said land.
4. In 1994, Eugenia and Antonio caused the subdivision of the property and 3 TCTs were issued in their names.
5. Antonio claimed that Eugenia only allowed Natividad and her husband to occupy the land temporarily but when requested to
vacate, Natividad refused and claimed that her mother owned the property.
6. Thus, on 1 Apr 1999, Antonio filed an ejectment suit. Concepcion filed a countersuit on 4 May 1999 for partition of real
property and annulment of titles with damages.
7. During trial, Antonio claimed that Eugenia admitted that Concepcion offered to buy ⅓ of the property and gave her amounts
over several years totalling ₱100,000 by 1987.
8. The trial court ruled in favor of Concepcion. It ruled that the sale was consummated when both contracting parties complied
with their respective obligations. It ordered the subdivision of the property in equal shares with ½ to be awarded to
Concepcion.
9. The CA reversed the decision and held that since the property is conjugal under the Family Code, the written consent of
Antonio must be obtained for the sale to be valid. Thus, the sale was null and void. It ordered the return of the ₱100,000 to
Concepcion.
Issue: Was there a perfected contract of sale between Eugenia and Concepcion?
Held: Yes. A contract of sale is perfected by mere consent.
Decision: Reversed. RTC decision is reinstated.
Ruling:
1. A contract of sale is perfected by mere consent, upon a meeting of the minds on the offer and the acceptance thereof based on
subject matter, price, and terms of payment.
2. There was a perfected contract of sale. Eugenia offered to sell a portion of the property to Concepcion who accepted the offer
and agreed to pay ₱100,000.
3. The contract of sale was consummated when both parties fully complied with their obligations. Eugenia delivered the
property and Concepcion paid the price.
On the adherence to the Statute of Frauds

4. The verbal contract of sale did not violate the Statute of Frauds. When a verbal contract has been consummated, its
enforceability will not be barred by the Statute of Frauds. Oral evidence will be admitted to prove the agreement.
5. Here, the sale was proved by a receipt signed by Eugenia and Antonio’s testimony that his wife admitted to him that she sold
the property.
On the validity of the sale

6. Since the property was sold in April 1987 prior to the effectivity of the Family Code, the Civil Code should be applied.
7. Citing the case of Felipe vs. Heirs of Aldon, the consent of both Eugenia and Antonio is necessary for the sale of the conjugal
property to be valid. Hence in the absence of Antonio’s consent, the sale is voidable.
8. However, since the contract of sale was an oral contract, the action to annul prescribes within six years. The land was sold in
Apr 1987 thus Antonio should have asked the courts to annul the sale on or before Apr 1993.
9. Even if the 10-year prescriptive period under Art. 173 (CC) should apply, Antonio is still barred from instituting an action to annul
the sale since more than 10 years had already passed.
10. Since no action was filed by Antonio, his right to seek its annulment has extinguished by prescription.
7. E. C. McCullough & Co. vs S.M. Berger (Chip)

September 26, 1922 – Johns *501 bales of tobacco arrive at New York in not-so-good condition.
Facts:
1. S.M. Berger (Berger or defendant) met E.C. McCullough (McCullough or plaintiff) in Manila and told him that he made a
shipment of 501 bales of tobacco consigned to S. Lowenthal & Sons, who refused to honor the bank draft (refused to pay for it)
was on its way to New York. Berger then asked McCullough if he was willing to take the order provided it was “perfectly
sound”. McCullough agreed, and at his request Berger then made and signed the contract.
2. The contract had a stipulation that said that Berger guarantees the arrival of the tobacco in good condition, subject to
conditions arising after its departure from Manila, which will be covered by insurance. McCullough then cabled his New York
office to pay the draft.
3. The tobacco arrived in two shipments, the first was 213 bales on April 26, and the second was 288 on May 18, 1918. They were
placed in warehouses upon arrival.
4. Soon after, the tobacco was inspected by McCullough and his buyers. It was soon discovered that the tobacco was “musty”
(apparently it had a funky smell, due to the fact that it was the “unmildewed” part of tobacco that was taken from mildewed
bales). Due to this defect, not all of the bales were purchased by the prospective buyers, and this caused some loss to
McCullough.
5. McCullough still paid for the whole order though, but he cabled Berger to inform him of the fact that the defects would cause
some loss. A correspondence ensued between them, which led to Berger sending a letter to the Philippine National Bank in
New York that he was taking back the whole order of tobacco due to McCullough’s complaint. He was going to pay back the
whole draft but would only do so if the entire order was returned.
6. When the bank was able to relay this information to McCullough, he then gave it a complete history of the transaction.
McCullough did this because he wanted to explain why he can’t return all of the bales. He offered to return only the bales
that were unsold.
7. This offer was relayed to Berger, who replied that his original offer would not be modified. The bank then informed Berger
that McCullough planned to sell the remaining bales at auction, and to sue him for the balance of the purchase price.
8. McCullough did sell the tobacco, but only at a great loss. The trial court ruled against Berger, hence this case.
Issue 1: Was the contract an executed sale?
Held: No. It is an executor contract owing to the fact that the sale would not be complete until the arrival of the goods “in good
condition” in New York.
Issue 2: Was the notification of defects made in time?
Held: Yes. The trial court found that there was no reason to rule that the efforts of McCullough to inform Berger of the defects were
untimely.
Decision: The judgment is AFFIRMED with no costs.
Ruling:
1. First, the court did away with the citations made by the defense of articles 336 and 342 of the Code of Commerce, This is
because the sale was not completed in the first place. Whatever rules would apply are irrelevant to a contract which was not
consummated in the first place.
2. Even if the contract says “the shipment of 501 bales of tobacco sold you”, it still does not mean that the delivery was not a
condition precedent to the transaction. Although the word “sold” is used, the transaction is not complete until its delivery
(which makes it a real contract).
3. This is an example of an executory contract where the seller merely promises to transfer the property at some future time, or
the agreement contemplates the performance of some act or condition necessary to complete the transfer. It is different
from an executed contract where the property passes at once from the seller to the buyer.
4. While certain terms and expressions standing alone import an executed or executory contract, they are by no means conclusive.
They must be construed with reference to the other provisions of the contract and in accordance to the real intention of the
parties.
5. A mere recital that the article is “sold” does not make the contract executed; and in the same way, a recital that the seller
“agrees to sell” is not conclusive that the title was not intended to pass immediately.
6. McCullough here acted in good faith. He waited for the bales to arrive, then he inspected them and found that they were
defective. He promptly informed Berger about it (although that was already more than 30 days from the transaction).
7. By the time Berger made the offer to take back all the tobacco, McCullough had already sold some of it. This could not be taken
against McCullough because Berger entered into the transaction with full knowledge that McCullough intended to profit from it.
8. Dichoso vs. Roxas (Rocky)

* Two parties were promised the chance to purchase several properties from the same buyer
July 31, 1962 ---Purisima
Facts:
1. Roxas is the owner of the lands in question.

2. There are two parties that supposedly purchased the same property.
3. December 13, 1954- Roxas sold to appellants (Dichoso et al) a parcel of unregistered coconut land subject to the condition
that the vendor could repurchase it within 5 year but not earlier than 3 years from the date of sale.
4. Borja and Alanguilan wished to buy the same property and gave Roxas money to be considered as down payment on the
purchase price. They would later repurchase the property from Dichoso et all after December 13, 1954 but within the 5
years stipulated above.
5. Borja and Alanguilan sent Roxas a check in full payment consideration for the deed of absolute sale and thereafter informed
appellants of their readiness to repurchase the property.
6. Roxas sent them back the check and told them to endorse the same to Dichoso et all.
7. Dichoso et all sent additional sums to Roxas in order to purchase the property.
8. Appellees made representation s to appellants and Roxas that they were ready to make the repurchase but later filed the
case of specific performance because of the failure of ROxas to execute the deed of absolute sale and deed of resale.
9. Appellees filed a reply in which they alleged that when they offered to repurchase the property from appellants, on
behalf of Roxas, appellants (Dichoso) had not become absolute and exclusive owners of the property in question; that
after the offer to repurchase made on Dec 13, 1957, Dichoso became possessors in bad faith and were in duty bound to
account for the fruits of the property.
10. The pertinent portions appealed from the CA are that Roxas solder her rights to the land in controversy to two different
parties:
a. First- July 5, 1957 in favor of Dichoso and Hernandez.
b. Second- December 8, 1957 in favor of Borja and Alanguilan.
11. It is important to note that both sales are evidenced only by private documents.
Issue: Did Roxas execute a deed of absolute sale to both parties?
Held: No
Decision: The petition is granted
Ruling:
1. The court is of the opinion that the document in favor of the plaintiffs being of an earlier date than the document in favor of
the defendants shall prevail in accordance with par 3 of Art 1544:
2. “Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and,
in the absence thereof, to the person who presents the oldest title, provided there is good faith.”
3. While it may be true that defendants were in possession of the land in controversy and that at the time Roxas executed the
deed of sale in favor of the plaintiffs, such possession was merely that of a vendee a retro and not a vendee in an absolute
sale.
4. It has also been said that an earlier instrument, be it a sale or a mortgage, shall prevail over a later one, and the registration
of any one of them is immaterial.
5. The lower court failed to give due weight to the private document of absolute sale executed by Roxas in favor of appellants
on December 8, 1957—in effect superseding the pacto de retro sale.
6. After December 8, 1957, appellants’ rights were no longer based on the superseded pacto de retro sale but on the deed of
absolute sale which was a perfectly valid contract as between the parties.
7. There is also no evidence that the appellants were aware of their agreement with Roxas.
8. The lower court made an error in considering Exhibit 1, which was executed on July 5, 1957 as a deed of sale of the ladn in
question because:
a. The phraseology shows that the contract between the parties was a mere promise to sell on the part of Roxas
because she promised to execute a deed of absolute sale upon appellees complaining payment to her of the total
sum of 2,000.00 pesos of which the 850 pesos to be paid to the appellants for the repurchase of the property
would be an integral part.
b. At that date all that Roxas could sell in relation to the property was her right to repurchase the same from
appellants. It could not possibly give rise to the case of one and the same property having been sold to two
different purchases.
9. Luzon Brokerage Co, Inc –vs- Maritime Building Co, Inc and Myers Building Co. (Diana)
Jan 31, 1972; P: Reyes, JBL
*Conditional Sale: If you can’t pay, seller has right(if stipulated) to recover possession of propery
Facts:
1. Myers Building Co. Inc owns 3 parcels of lot in Manila
2. On April 30, 1949, Myers entered into a Deed of Conditional Sale of said lots in favor of Maritime Building Co. (then Bary
Building Co).
 Price: P1Million; P50,000 down payment
 Balance: P950,000; payable at P10,000 monthly, with 5% interest
o Later decreased to P5,000 per month, 5 ½ %interest
 Stipulation in case of failure to pay: (a) Contract shall be annulled at the vendor’s option. (b) All payments
already made shall be forfeited. (c) Vendor shall have right to reenter and take possession of said property.
3. Maritime paid the instalments until Feb 1961
 Maritime subleased the lots to Luzon Brokerage (Petitioner)
4. George Schedler, VP of Maritime, requested for a moratorium on the monthly payments until Dec 1961 since they are
experiencing some difficulties
 Myers denied the request for moratorium
5. Maritime failed to pay for March, April, May 1961. So, Myers sent a demand letter to Maritime, but it was returned
unclaimed.
6. Myers sent a letter to Maritime. Here, Myers advised the “Cancellation of the Deed of Conditional Sale”, demanded the
return the possession of the properties to the former, and asked for monthly rentals.
7. Myers also demanded the monthly rentals from Luzon Brokerage and the surrender of said property.
8. Luzon Brokerage filed an action for interpleader against Maritime because it found itself in payment to the wrong party.
- After this, Myers filed a cross claim against Maritime
9. In the case proceedings, Maritime contended that Myers can’t cancel the conditional sale because according to the former:
- F.H. Myers, the former majority stockholder of Luzon Brokerage, has promised to indemnify Schedler, the controller of
Maritime, for the backwages the latter has agreed to pay the Luzon Union. The backwages amounted to P 325,000.
- Schedler chose to stop paying the balance of the sale because he allegedly wants to preserve his funds and assets for
paying the labour claims (Potential liability- not yet paid)
- Note that FM Myers has already died
10. The court found Maritime to be in breach of contract and Myers is entitled to terminate their contract and to collect the
rentals from Luzon Brokerage.
Issue:
1. Was there a breach of contract on the part of Maritime when it decided to stop paying the monthly payments to Myers as
means to collect from the alleged promise of the deceased FM Myers?
2. Given that Maritime has defaulted in payment, is entitled under the law to still pay Myers?
Held:
1. Yes. The refusal to pay is clearly a breach of Maritime’s obligation to Myers.
2. No. This is because the seller here, Myers, has already chosen to rescind the contract when it filed a cross claim against
Maritime.
Decision:
-Decision Affimed-
Ruling:
1) The refusal to pay is clearly a breach of Maritime’s obligation to Myers.
- In fact, it was found that the said refusal was made in order to coerce Myers to answer for FM Myers alleged promise
to pay for the awards in the past labour dispute.
- There is no valid reason for Maritime to stop fulfilling its monthly obligation to Myers because FM Myers is a person
different from the Myers Company.
- If ever, the claims should have been made against FM Myers Estate. However, they failed to do so before the closing of
the estate proceedings.
Clearly, what Maritime committed was a BREACH OF CONTRACT TAINTED WITH FRAUD OR MALICE
- They attempted to burden Myers Corporation with a debt they were unable to collect from FM Myers.
Result: Maritime not entitled to ask the court for time extension for the payment
2) The seller here, Myers, has already chosen to rescind the contract when it filed a cross claim against Maritime. Take note
that the nature of such rescission is different from that of the ordinary sale because what we have here is a Contract to Sell
o the nature of rescission here entitles to seller to no longer obligate oneself from parting with his property upon the
buyer’s failure to fulfil the conditions of the agreement
o Manila Racing Club-vs- Manila Jockey Club:
Powers of Promisors under Contracts to Sell When other party fails to complete payment
 extrajudicially terminate the operation of the contract
 refuse conveyance
 retain the sums or installments already received, where such rights are expressly provided for, as in
the case at bar."
10. Spouses Ricardo and Ferma Portic vs. Cristobal (Alps)

April 22, 2005 – Panganiban *land (PROPERTY) reg’d in Cristobal’s name doesn’t already make her the owner
Facts:
1. Spouses Clodualdo Alcantara and Candelaria Edrosalam (spouses Alcantara) were the original registered owners of a parcel of
land with three-door apartment.
2. The spouses sold the subject property in favor of petitioner spouses Portic with the condition that the latter shall assume the
mortgage executed over the subject property by spouses Alcantara in favor of the SSS.
3. Spouses Portic defaulted in the payment of the monthly amortizations due on the mortgage. SSS foreclosed the mortgage and
sold the property at public auction with the SSS as the highest bidder.
4. Before the expiration of the redemption period, spouses Portic sold the property in favor of respondent Cristobal.
5. Among others, the parties agreed that Cristobal shall pay a down payment and the balance shall be paid later on.
6. The parties further agreed that in case Cristobal should fail to comply with the conditions, the sale shall be considered void and
Portic spouses shall reimburse Cristobal of whatever amount already paid.
7. Portic and Cristobal executed a ‘Deed of Sale with Assumption of Mortgage’ whereby Portic sold the property to Cristobal
consideration of P80,000K, P45K thereof shall be paid to SSS.
8. Spouses Alcantara, the original owners of the subject property, sold the property to Cristobal.
9. Cristobal] executed a ‘Deed of Mortgage’ whereby she constituted a mortgage over the subject property to secure a P150,000K
indebtedness Portic spouses.
10. Cristobal paid the indebtedness due over the property to SSS.
11. The TCT in the names of spouses Alcantara was cancelled and in lieu thereof, another was issued in the name of Cristobal.
12. Portic spouses demanded from Cristobal alleged unpaid balance (of P55K) Cristobal refused to pay.
13. Portic spouses filed a case against Cristobal to remove the cloud created by the issuance of a TCT in the latter’s favor.
14. Portic spouses claimed that:
A) they sold the subject property to Cristobal on the condition that Cristobal shall pay the balance and that in case of failure to
pay, the sale shall be considered void and Portic spouses shall reimburse Cristobal of the amounts already paid;
B) Cristobal failed to fully pay the purchase price within the period;
C) On account of this failure, the sale of the property by Portic spouses to Cristobal is void;
D) In spite of this failure, Cristobal required Portic spouses to sign a lease contract over the apartment which Portic spouses
occupy;
E) Cristobal should be required to reconvey back the title to the subject property to Portic spouses.
15. Cristibal on her part claimed that:
a) her title over the property is already indefeasible;
b) the true agreement of the parties is that embodied in the Deed of Absolute Sale with Assumption of Mortgage;
c) she had fully paid the purchase price;
d) she is the true owner of the property; and that Portic spouses’ claim is already barred by laches.
16. RTC ruled in Portic spouses’ favor and ordered the quieting of title or removal of cloud over Portic spouses’ parcel of land and the
apartment and ordered Cristobal to reconvey in favor of the Portic spouses the land.
17. CA held that the action for the quieting of title could not prosper, because Cristobal’s title to the property was amply supported
by evidence. Nonetheless, CA ordered Cristobal to pay Portic spouses the remaining balance of the purchase price.
18. On appeal, the parties contend-
a) Portic spouses:
- the action they filed in the RTC was for the quieting of title. Cristobal’s demand that they (Portics) desist from entering into new
lease agreements with the tenants of the property allegedly attests to the fact of their possession of the subject premises.
- Further, they point to the existence a case for unlawful detainer that Cristobal filed against them, as further proof of that fact.
Being in continuous possession of the property, they argue that their action for the quieting of title has not prescribed.
b) Cristobal:
- the action the Portics filed in the RTC as one for the enforcement of the MOA. Being based on a written instrument, such action
has already prescribed.
- Portics could not have been in continuous possession of the subject property because, under a duly notarized lease agreement,
they have been paying her a monthly rental fee.
Main Issue: What is the nature of the agreement between the Portic spouses and Cristobal?
Held: The agreement is a contract to sell, not a contract of sale. Ownership is retained by the vendors, the Portics; it will not be
passed to the vendee, the Cristobals, until the full payment of the purchase price.
Decision: CA ruling reversed.
Ruling:
On the nature of the agreement: Contract to sell
1. The contract is a contract to sell, not a contract of sale. Ownership is retained by the vendors, the Portics; it will not be passed to
the vendee, Cristobal, until the full payment of the purchase price.
2. Such payment is a positive suspensive condition, and failure to comply with it is not a breach of obligation; it is merely an event
that prevents the effectivity of the obligation of the vendor to convey the title.
3. In short, until the full price is paid, the vendor retains ownership.
On the irrelevant issue of ownership:
1. Cristobal’s claim cannot be sustained. The transfer of ownership of the premises in her favor was subject to the suspensive
condition stipulated in the MOA that while the balance has not yet been fully paid the vendors (Portics) shall retain the
ownership of parcel of land.
2. The mere issuance of the TCT in favor of Cristobal did not vest ownership in her. Neither did it validate the alleged absolute
purchase of the lot.
3. Registration does not vest but merely serves as evidence of title.
4. Under the CC, mere registration is not enough to acquire a new title. Good faith must concur. Cristobal has not yet fully paid the
purchase price. Hence, as long as it remains unpaid, she cannot feign good faith. She is also precluded from asserting ownership
against the Portics.
11. Heirs of Jesus Mascunana vs CA, Aquilino Barte, and Spouses Layumas (Chip)
June 23, 2005 – Callejo *Heirs of deceased seller wants to take back the property
Facts:
1. Jesus Mascunana eventually became the owner of a 741 sqm parcel of land in Negros Occidental, which he purchased from the
Wuthrichs. He then sold a 469 sqm portion of it to Diosdado Sumilhig August 12, 1961.
2. The deed of absolute sale said, among others, that the purchase price of P1000 shall be paid by the vendee as soon as some
portions of the lot (124) shall have been surveyed and all papers related to the issuance of a separate TCT in the vendee’s
name have been prepared.
3. The survey was made, and the subdivision plan was finished. The portion supposedly belonging to Sumilhig was then identified
as Lot No. 124-B. Meanwhile, Jesus Mascunana died intestate. He was survived by his heirs who filed this petition.
4. On April 24, 1968, Sumilhig sold his lot to Corazon Layumas, wife of Judge Rodolfo Layumas. They purchased it without
knowing that the TCT was still registered in the name of Jesus Mascunana.
5. The Layumases then subdivided it into two lots, one in their names, and another in Jesus Mascunana’s name. They occupied the
lot for a time, even allowing the Church to build a chapel on part of it. Aquilino Barte was also allowed by the couple to use the
lot and he stayed on a portion of it to ward off squatters.
6. In 1985, the heirs of Mascunana wrote the Layumases, offering to buy back the land for $1000. The couple refused, and the
heirs filed a complaint for recovery of possession the next year. They averred that Barte secretly entered their lot, fenced the
area, and built a house on it without their consent.
7. Barte anwered that he secured the permission of the Layumases, that the heirs were stopped because they allowed the
occupation and even the construction of a chapel. He also underscored the fact that they offered to buy back the property
from the spouses. The spouses intervened and pretty much reiterated Barte’s arguments.
8. The trial court ruled for Barte and the spouses Layumas. The heirs appealed to the CA, and it affirmed the lower court, hence
this case.
Issue: Was the sale made by Jesus Mascunana to Diosdado Sumilhig a contract to sell or a contract of sale?
Held: It was a contract of sale. This is because the contract did not possess any stipulations that would make it a contract to sell.
Decision: Petition DENIED. Decision affirmed.
Ruling:
1. The heirs claim that since the sale between their father and Sumilhig was a contract to sell, then the latter was not able to
acquire any rights over the lot, due to the fact that a person can sell only sell what he owns or is authorized to sell. They further
contend that the transaction was subject to a suspensive condition.
2. The court did away with all these arguments one by one, starting with that regarding the nature of the sale between
Mascunana and Sumilhig. They put emphasis on the fact that the purchase, with a price of P1000, was also subject to the
fulfillment of these suspensive conditions: a survey of the property, its subdivision, and the acquisition of a Torrens title. They
contend that the payment was not made so the obligation to execute a final deed of sale never arose.
3. The court said that the above contention was neither supported by the facts nor by the law. The records show that there was an
unequivocal recognition of Sumilhig’s ownership of the lot both during Mascunana’s lifetime and after his death. This can be
shown by the fact that the heirs wrote a letter to the spouses Layumas regarding the buyback of the property. Iwas only after
the spouses refused the offer that the heirs obtained a title to their father’s name.
4. The contract itself shows that it is one of sale and not a contract to sell. BY the mere fact that delivery is required does not
mean that the contract cannot be of absolute sale.
5. In a previous case (Dignos vs CA) the court even said that although denominated as a “Conditional Sale” a contract would still
be absolute if it is devoid of any proviso which reserves the right to unilaterally rescind the contract or that title is reserved.
6. The “condition” being argued by the petitioners is not one which makes the contract a conditional sale. It does not prevent
the efficacy of the sale. It merely provides the manner of paying the purchase price.
7. The provision present in this case is a resolutory condition which extinguishes the obligation upon non-payment or non-
performance or breach. This condition is characteristic of a contract of sale.
12. Winifreda Ursal vs CA, Rural Bank of Larena (Siquijor), Sps. Jesus and Cristita Moneset (Jal)
14 Oct 2005 – Austria-Martinez *landowner executes Contract to Sell with someone but sells it to two others
Facts:
1. Spouses Jesus and Cristita Moneset own a 333 sq.m. house and lot.
2. On 9 Jan 1985, they executed a Contract to Sell Lot & House in favor of Winifreda Ursal for ₱130,000 with the following terms:
a) Winifreda will tender downpayment of ₱50,000
b) Balance of ₱80,000 to be paid in monthly installments of ₱3,000
c) If she defaults to pay 6 monthly installments, the agreement is cancelled. The Monesets will return the downpayment and
reimburse the value of the improvements made
d) Upon receipt of downpayment, Winifreda can already take possession of the property
e) On the date of the final payment, the Monesets shall execute a Deed of Absolute Sale
3. Winifreda paid the downpayment and immediately took possession of the property. She built a concrete fence and artesian
well, planted fruit-brearing trees and flowering plants all amounting to ₱50,000.
4. After paying 6 monthly installments (Aug 1985), Winifreda stopped paying due to the Monesets’ failure to deliver to her the
TCT as agreed upon.
5. On 5 Nov 1985, the Monesets executed an absolute deed of sale in favor of Dr. Rafael Canora, Jr. for ₱14,000, without the
knowledge of Winifreda.
6. On 15 Sep 1986, the Monesets executed another sale with pacto de retro with Restituto Bundalo. On the same day, Bundalo
executed a real estate mortgage on the property on behalf of the Monesets with the Rural Bank of Larena. The REM and the
SPOA were annotated on the TCT.
7. The Rural Bank foreclosed the mortgage on 27 Jan 1988 for the failure of the Monesets to pay the loan.
8. On 30 Sep 1989, Winifreda filed an action for declaration of non-effectivity of mortgage and damages against the Monesets,
Bundalo, and the Bank.
9. The Monesets answered that it was Winifreda who breached the agreement by not paying the monthly installments. The Bank
claimed that the TCT was in the name of the Monesets and did not show any legal infirmity.
10. The trial court ruled in favor of Winifreda. It held:
a) that the first to violate the conditions of the contract were the Monesets and their acts of selling again the same property to
several people were clearly fraudulent
b) that the REM was valid and the Bank was not under any obligation to look beyond the title
c) ordered the Bank to give Winifreda the preferential right to redeem the property
d) ordered the Bank and Monesets to pay damages to Winifreda
11. The CA affirmed the decision.
Issue: Is Winifreda the true owner of the property by virtue of the Contract to Sell?
Held: No. In a contract to sell, ownership remains with the vendor until the vendee pays the full purchase price.
Decision: Affirmed. CA’s order to give preferential right to redeem to Winifreda is deleted.
Ruling:
2. Winifreda never acquired ownership over the property under the Contract to Sell and her rights were limited to demand for
specific performance from the Monesets.
3. A contract to sell is a bilateral contract whereby the prospective seller, while reserving the ownership of the property despite
delivery to the buyer, binds himself to sell the said property exclusively to the buyer upon fulfillment of the condition agreed
upon, that is, full payment of the purchase price.
4. In such contract, the prospective seller expressly reserves the TCT to the prospective buyer, until the happening of an event,
which in this case is the full payment of the purchase price.
5. In contracts to sell, the obligation of the seller to sell becomes demandable only upon the happening of the suspensive
condition (full payment of the price).
6. In this case, since it is a contract to sell, the ownership of the property remained with the Monesets even though they breached
the contract.
On why Winifreda cannot have a preferential right to redeem the property

1. The perfected contract to sell imposed on Winifreda the obligation to pay the balance of the purchase price.
2. Since she did not even attempt to make the proper consignation of the amounts due, the obligation of the Monesets to
transfer ownership never acquired obligatory force.
3. Thus, Winifreda did not aquire ownership over the property as she did not pay in full the equal price of the contract to sell.
4. Her rights were limited to asking for specific performance which is no longer feasible since the property has long been sold to
another when a Deed of Absolute Sale was executed in favor of Dr. Canora.
Concept:
Contract to Sell Absolute Sale
Ownership Reserved by the vendor and is not to pass to Title to the property passes to the vendee upon
the vendee until full payment delivery of the thing sold
Recovery of ownership Title is retained by the vendor until full Vendor loses ownership and cannot recover
payment of the price unless the contract is resolved or rescinded
Full payment Positive suspensive condition Negative resolutory condition
Contract to Sell Conditional Sale

Fulfillment of suspensive Ownership will not automatically transfer; Renders the sale absolute; the seller’s
condition (full payment) vendor still has to enter into a contract of ownership of the property is automatically
absolute sale transferred to the buyer
13. Carrascoso, Jr. vs. Court of Appeals (Garsha) –really long case. Sorry 
Dec. 14, 2005 – Carpio-Morales, J. * Carrascoso failed to pay full purchase price when it sold a portion of property
to PLDT (discussion of conditional contract of sale, contract to sell, contract of sale)
Facts:
1. El Dorado Plantation was the registered owner of a parcel of land (with TCT No. 93) in Occidental Mindoro
2. El Dorado’s Board of Directors (BOD) passed a RESOLUTION authorizing its president Feliciano Leviste to negotiate the SALE
of the PROPERTY and SIGN all documents and contracts.
3. El Dorado (via Leviste) SOLD the property to petitioner Carrascoso.
ª Provisions of the Deed of Sale provided that petitioner Carrascoso should pay the FULL purchase price on March
23, 1975
ª Leviste assured that there are NO TENANTS in the said property and it does not apply to Land Reform Code.
4. (Impt!) El Dorado’s Board of Directors (BOD) passed a Resolution
ª This states that El Dorado interposes NO OBJECTION to the property being mortgage by petitioner Carrascoso to
any bank AS LONG AS THE BALANCE on the Deed of Sale shall be recognized by the petitioner (he will pay for the
balance due on the property sold)
5. Carrascoso and his wife executed a Real Estate Mortgage over the property (sold by El Dorado) in favor of Home Savings
Bank to secure a loan of P 1m
6. Petitioner Carrascoso failed to pay the full purchase price by March 23, 1975 (See #3)
7. Petitioner Carrascoso executed an Agreement to Buy and Sell (Buy and Sell Contract) with PLDT to sell 1,000 hectares of
petitioner’s property for P 3m.
ª Agreement to Buy and Sell was NOT registered and annotated in the TCT No. T-6055 of petitioner Carasscoso.
ª Carrascoso was asked to relocate the “tenants”/squatters in the said property
8. Lauro, BOD member of El Dorado, told the Board that petitioner Carrasscoso failted to pay P 1.3 m for the property
9. Leviste, president of El Dorado, sent a Letter to petitioner Carasscoso
ª Inform him of his failure to pay the balance of the purchase price
ª El Dorado was seeking to RESCIND the Deed of Sale of Real Property with petitioner Carrascoso.
10. Lauro and El Dorado filed a complaint for RESCISION with Damages before CFI-Occidental Mindoro
11. Petitioner Carrascoso and PLDT forged a Deed of Absolute Sale
ª After PLDT gained possession of the land, it conveyed the 1, 000 hectare portion of its property to PLDT
Agricultural Corporation (PLDTAC)
12. When El Dorado filed a civil case against Carrascoso, PLDT intervened averring that it was a buyer in good faith.
13. Decision of RTC:
ª Decided in favor of Carrascoso
ª Dismissed complaint because it was PREMATURE
14. Decision of CA:
ª Reversed the decision of RTC
ª Ordered Petitioner Carrascoso return the possession of portion of land + net fruits of land to El Dorado
ª Ordered PLDTAC to return 1000 hectrate farm to El Dorado
15.
Issue:
1. What is the nature of the contract between El Dorado and Carrascoso?
2. WON the Agreement to Buy and Sell between PLDT and petitioner Carrascoso is a CONDITIONAL contract of sale?
3. WON the period for Petitioner Carrascoso to fully pay purchase price was suspended because of El Dorado’s non-objection
to mortgage the property?
Held:
1. The contract is a contract of SALE which is a reciprocal obligation. Failure to pay the price entitles the unpaid seller (El
Dorado) the right to sue for the collection of payment OR rescission of contract
2. No, The contract between petitioner Carrascoso and PLDT is a contract to SELL.
3. No, even if El Dorado did not object to the mortgage of the property does not mean that the period for petitioner
Carrascoso to pay purchase price was suspended.
4.
Decision: Petitions are DENIED. Decision of CA is AFFIRMED
ª Deed of sale between El Dorado and Carrascoso is RESCINDED.
ª 1,000 hectare portion of the property should be turned over by PLDT to El Dorado.
ª El Dorado may choose whether to appropriate the improvements (made by PLDT) or ask PLDT to pay the price of land.
ª PLDT shall pay reasonable compensation to El Dorado for occupying 1000 hectare property.
Ruling:
On the issue that the contract involved between El Dorado and Petitioner Carrasocoso is a Contract of Sale which implies
reciprocal obligation for both buyer and seller
1. The contract is a contract of SALE which is a reciprocal obligation. Failure to pay the price entitles the unpaid seller (El
Dorado) the right to sue for the collection of payment OR rescission of contract
2. It was perfected by their meeting of the minds and was consummated by the delivery of the property to Carrascoso.
However, El Dorado has the right to rescind the contract by reason of Carrascoso’s failure to perform his obligation.
3. The seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer obligates itself to paa
price certain in money or its equivalent.
4. The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction that for a time
existed, and discharges the obligations created.
ª Such failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for
collection or to rescind the contract.
On the issue that the contract between PLDT and petitioner Carrascoso is a contract to sell
1. This is evidenced by the terms and conditions that they have agreed upon that after fulfillment of Carrascoso’s obligation
PLDT has “to notify Carrascoso of its decision whether or not to finalize the sale.”
2. Agreement to Sell between PLDT and Carrascoso is merely a PREPARATORY contract in the nature of a contract to sell.
3. It is a contract to sell because, the parties had to stuipulate in the Agreement to Buy and Sell that Carrascoso shall not sell,
cede, assign and/or transfer the parcel of land which is a typical characteristic of a contract to sell.
On the issue that even if El Dorado did not object to the mortgage of the property does not mean that the period for petitioner
Carrascoso to pay purchase price was suspended.
1. Seller El Dorado already performed its obligation through executing the Deed of Sale BUT petitioner Carrascoso FAILED to
perform his obligation in paying the FULL contract price
2. Resolution of El Dorado stating that it does not object Carrascoso’s mortgaging of the property DID NOT have EFFECT of
suspending the period to FULLY pay the purchase price.
3. There was NO PROOF that Carrasocos was given verbal extensions to pay the balance of the purchase price.
Other issues:
On the issue the El Dorado was not given notice of the Agreement to Buy and Sell between the Carasscoso and PLDT:
ª There is inadequate proof to affirm the argument of Carrascoso that he notified the members of the Board (El
Dorado) about his intention to sell 1,000 hectare of property to PLDT.
Concept:
Difference between a Contract of Sale and Contract to Sell:
Contract of Sale Contract to Sell

Title is TRANSFERED to the VENDEE upon DELIVERY of the Ownership is TRANSFERRED upon FULL PAYMENT OF THE
thing sold PURCHASE PRICE (and NOT upon delivery of the property)
Vendor has LOST and CANNOT recover ownership until the Title is RETAINED by VENDOR until FULL PAYMENT of the price
contract is RESOLVED/RESCINDED (positive suspensive condition). Failure to pay is NOT breach
BUT it prevents the obligation of the vendor to convey the title
from being effective.
Difference between Conditional Contract of Sale and Contract to Sell
Conditional Contract of Sale Contract to Sell

 If the suspensive condition is fulfilled, the contract of  If the suspensive condition is fulfilled, ownership will
sale is perfect such that if there had already been NOT AUTOMATICALLY transfer to the buyer even if
previous delivery of the property subject of the sale to the property has been previously delivered to him.
the buyer, ownership AUTOMATICALLY transfers to  Seller still have to CONVEY title to the prospective
the BUYER by operation of law buyer by entering into a contract of absolute sale
 No need for seller to perform further acts
Reciprocal Obligations (Art. 1191 of CC)

ª Basis of Right to Rescind Contract by INNOCENT party: Art. 1191 of CC
ª Obligation of one (debtor or creditor) is dependent upon the obligation of the other
ª These are performed SIMULTANEOUSLY
Effect of Rescinding the Contract:

ª The exercise of power to rescind extinguishes the obligatory relation as if it had NEVER created, the extinction having a
retroactive effect.
ª Invalidating and unmaking the juridical tie which would leave things in their status BEFORE the celebration of contract
ª Where a contract is rescinded it is the duty of the Court to require both parties to surrender that which they may have
respectively received and to place each other as far as practicable in his original situation. The exercise of the power to
rescind extinguished the obligatory relation as if it had never been created, the extinction having a retroactive effect
Requisites in order to have Express Warranty in a Contract of Sale:

1. Express warranty must be an affirmation of fact/promise by the seller relating to the subject matter of the sale
2. The natural tendency of such affirmation or promise is to INDUCE the buyer to purchase the thing
3. The buyer purchases the thing relying on such affirmation or promise.
Law:
1. Art. 1191.
ª The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with
what is incumbent upon him.
ª The injured party may choose between:
a) Fulfillment of obligation + damages OR
b) Rescission of the obligation + damages
ª He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
ª The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is
understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage Law. (1124)
14. Sacobia Hills (Sacobia) v. Ty

September 20, 2005 - Ynares
Facts:
1. Sacobia Hills Developing Corporation, was developing a country club (golf course, club house and the ussual) called True
North.
2. Feb 1997 - Ty informed sacobia that it was interested in being a stock holder, and paid a reservation fee of 180K
3. May and July 1997, Sacobia informed the shareholders that the goldf course would be playable on Oct, 1999
4. Sept 1997, Sacobia approved the purchase application and membership of TY for P600,000 and subject ot the following
terms and conditions.
a. Approval of an application to purchase golf/country club shares is subjected to the full payment of the total
purchase price. Should the buyer opt for the deferred payment scheme, approval is subject to our receipt of a
down payment of at least 30% and the balance payable in installments over a maximum of eleven (11) months
from the date of application, and covered by postdated cheques.
b. Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail to settle your
obligation within fifteen (15) days from due date, or failure to cover the value of the postdated cheques upon their
maturity, or your failure to issue the required postdated cheques. In which case, we shall reserve the right to offer
the said shares to other interested parties. This also means forfeiture of 50% of the total amount you have already
paid.
c. We will undertake to execute the corresponding sales documents/Deed of Absolute Sale covering the reserved
shares upon full payment of the total purchase price. The Certificate of Membership shall be issued thereafter.
5. Jan 1998, Ty wanted to rescind the contract and ask for aa refund because True North never seemed to finish.
6. Mar, 1998, Sacobia replied saying that it was going to be finished by the end of 1998, nd the cycle wnet on again and again.
7. Sacobia then asked Ty to pay for his 190K remaining balance, but Ty refused to pay and said that he wanted to rescind the
contract.
8. Sacobia refused to rescind the contract because they had a no refund policy an advised Ty to sell it to another instead.
9. Ty filed a case for rescission
Issue: Was the contract a contract of sale, hence capable of rescission?
Held: No, the contract was a CONTRACT TO SELL.
Ruling:
1. Ty was never able to pay the FULL amount of the shares, hence ownership has not yet transferred to him  it is a contract
to sell because Ty’s ownership is subject to fullpayment.
2. In the terms and conditions of the contract it was evident that Sacobia inended to retain ownership of the share until full
payments is made.
a. Approval of an application to purchase golf/country club shares is subjected to the full payment of the total
purchase price.
b. Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail to settle your
obligation within fifteen (15) days from due date, or failure to cover the value of the postdated cheques upon
their maturity, or your failure to issue the required postdated cheques.
c. We will undertake to execute the corresponding sales documents/Deed of Absolute Sale covering the reserved
shares upon full payment of the total purchase price. The Certificate of Membership shall be issued thereafter.
3. Clearly, the approval of the application hinges upon the full payment of the total price.
4. Sacobia explicitly reserved the rights to retain the title over the share pending full satisfaction of the purchase price.
a. In fact, Sacobia can sell the share to another if the agreement was cancelled.
5. Hence, TY has no right to complain that True North was never going to finish and Sacobia was in delay… (because he is not a
share holder)
6. 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.
7. It is one where the happening of the event gives rise to an obligation.
8. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having failed to perform the suspensive
condition which enforces a juridical relation.
9. “In fact with this circumstance, there can be no rescission of an obligation that is still non-existent, the suspensive
condition not having occurred as yet. Emphasis should be made that the breach contemplated in Article 1191 of the New
Civil Code is the obligor's failure to comply with an obligation already extant, not a failure of a condition to render
binding that obligation.”
15. Keppel Bank Philippines vs. Philip Adao (Rocky)

*guy with a contract to sell who could not prove full payment.
October 19, 2005—Quisumbing
Facts:
1. PMRDC transferred to Keppel Bank, several properties by way of dacion en pago.
2. Keppel Bank found out that respondent Adao was occupting one of the properties town houses.
3. Respondent Adao refused to leave the properties and offered to purchase the unit he was living in.
4. He states that he has long been occupying the unit by virtue of a contract to sell dated February 7, 1995 between him and
PMRDC and he believes that Keppel Bank should honor this because it is merely a successor in interest to the properties.
5. The RTC and CA ruled against petitioner because they believed that it was not a possessor in good faith because it did not
exercise the due diligence required of a bank and that banks are required to exercise more care and prudence than private
individuals in dealing even with registered properties for their business is affected with public interest.
Issue: Does Respondent Adao have the right to possess the property because of the contract to sell which had existed with the
previous owner of the corporation?
Held:
1. No
Decision: The petition is granted.

Ruling:
1. The contract to sell does not by itself give Adao the right to possess the property because in a contract to sell there is yet no
actual sale nor any transfer of title, until and unless, full payment is made.
2. The payment of the purchase price is a positive suspensive condition, the failure of which is not a breach but that which
prevents the obligation of the vendor to convey title from acquiring an obligatory force.
3. Adao failed to discharge the burden of proving payment thus cannot now claim ownership over the property.
16. Spouses Alfredo and Rosella Edrada vs Spouses Eduardo and Carmencita Ramos (Jal)
31 Aug 2005 - Tinga *alleged sale of fishing vessels thru an untitled document
Facts:
1. Spouses Ramos are the owners of two fishing vessels: Lady Lalaine and Lady Theresa.
2. On 1 Apr 1993, the Ramoses and the Edradas executed an untitled handwritten document:
This is to acknowledge that Fishing Vessles “Lady Lalaine” and “Lady Theresa” owned by Eduardo Ramos are now in my
possession and received in good running and serviceable order. As such, the vessels are now my responsibility.
Documents pertaining to the sale and agreement of payments between me and the owner of the vessel to follow.
The agreed price for the vessel is ₱900,000.
(Sgd.) Eduardo Ramos (seller) Alfredo Edrada (purchaser)

3. Upon signing of the document, the Edradas delivered 4 postdated checks totaling ₱140,000 to the Ramoses. The first 3 checks
were honored but the last check amounting to ₱100,000 was dishonored because of a “stop payment” order.
4. On 3 Jun 1996, the Ramoses filed an action for specific performance with damages praying that the Edradas be obliged to
execute the necessary deed of sale and to pay the balance of the purchase price.
5. The Edradas answered that the document merely embodies an agreement brought about by the loans they extended to the
Ramoses. However, they cancelled the agreement after spending a hefty sum for the repair of the vessels.
6. The trial court ruled in favor of the Ramoses. It considered the document as a perfected contract of sale.
7. The CA affirmed the decision.
Issue: Is there a perfected contract of sale as evidenced by the untitled handwritten document?
Held: No. There was no agreement on the transfer of ownership and manner of payment in the document.
Decision: Reversed.
Ruling:
4. The document reveals that there is no perfected contract of sale. There is no equivocal agreement to transfer ownership of
the vessel, but a mere commitment that documents pertaining to the sale and agreement of payments are to follow.
5. The documents which would formalize the transfer of ownership and contain the terms of payment have yet to be executed.
In fact, no such document was executed and no such terms were stipulated upon.
6. Before a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established, as
such stands as essential to the validity of the sale.
7. The absence of a stipulated period by which the purchase price should be paid indicates that at the time of the filing of the
complaint, the obligation to pay was not yet due and demandable.
8. In order that the Ramoses could have a valid cause of action, it is essential that there must have been a stipulated period within
which the payment would have become due and demandable. Carmencita Ramos testified that the balance shall be paid on 30
Jun 1996 but they filed the complaint on 3 Jun 1996.
On the nature of the document

1. It is neither a contract to sell.
2. A contract is perfected when there is concurrence of the wills of the contracting parties with respect to the object and the cause
of the contract. In this case, the agreement merely acknowledges that a purchase price had been agreed on by the parties.
3. There was no mutual promise to buy on the part of the Edradas and to sell on the part of the Ramoses.
4. At most, this agreement bares only their intention to enter into either a contract to sell or a contract of sale.
Concept:
Contract of Sale – an agreement whereby one of the contracting parties obligates himself to transfer the ownership of and deliver a
determinate thing, and the other to pay therefore a price certain in money or its equivalent.
17. H. E. Heacock Company v. Buntal Manufacturing Company, de NIEVA (Alps)

September 26, 1938– Diaz *machineries for hire but under the contract of sale on
installments taken back by vendors
Facts:
1. There is a document which HE (plaintiff) and the first 2 defendants executed….
2. Pertinent clauses in the document are the ff:
a) That the owner hereby leases unto the hirer and the hirer hereby hires from the owner some machines…
b) hirer agrees with the owner to pay the owner the hire monthly
c) In consideration of the sum of P160 to be paid by the hirer, the owner hereby grants to the hirer the option to purchase,
while the present lease is in force and effect, the property made the subject of this agreement, at the purchase price of P860.
d) In the event of the exercise of said option, the hirer shall be entitled to a credit on the purchase price xxx
e) however, that the said chattel shall remain the property of the owner until after the complete exercise of such option,
f) and the payment in full of the purchase price agreed upon, and, until such time the hirer shall not have any property right in
said chattel or be deemed to have purchased or obligated to purchase the same
g) Should the hirer not exercise the option herein granted, the amount paid by him for said option under this paragraph shall
become forfeited to the owner.
3. The lower court held that it was one of lease and thereafter decided that since defendants failed to pay HE the rents which
they had bound themselves to pay, they should deliver to HE the said sum with costs. This it resolved despite upon HE’s
demand, Buntal et al had to return to it the said machines.
4. Said acts of Buntal et al constituted compliance with the prayer in HE’s complaint that one of these things, and not both at the
same time, be done: "The delivery of said personal property, and if delivery cannot be effected then judgment for the rents in
arrears."
5. Buntal et al chose to make delivery.
6. Buntal et al then appealed and said that the lower court erred in not holding that the contract entered into between the parties
was one of purchase and sale on installments and that once the same was rescinded by HE upon its taking the machine which
is the subject matter thereof, it lost all right to recover from them the balance of its price.
Issue: Is the document which plaintiff and the first two defendants executed a contract for the lease of an adding and calculating
machine therein described, with option to purchase by defendants; or is it, on the contrary, a contract of purchase and sale on
installments in which said defendants were vendees and plaintiff, vendor?
Held: It is contract of purchase and sale on installments.
Decision: lower court ruling reversed.
Ruling:
1. The italicized clauses in the document (quoted above), show that the contract it is not really a contract of lease but of purchase
and sale on installments.
2. It is true that in the contract it is often stated that plaintiff leased the machine to defendants, giving them the option to buy it
upon their paying it the sum of P860 and crediting them with so much as they might be able to pay as rents at the above rate of
P35 a month.
3. It should be noted, however, that in the clause aforementioned, it is clearly stated that defendant paid the sum of P160 on
account of the price of the machine. This payment shows that the real contract between the parties was that of purchase and
sale on installments and not a lease.
4. In spite of any effort to prove the contrary, the aforesaid amount of P160 can not be understood to constitute payment in
advance of the rents agreed upon for there is nothing in the contract to indicate that it was and because, according to the
contract itself, the rents could not be more nor less than P35 a month, payable monthly.
5. Following the theory of plaintiff and in accordance with the sound principles of accounting, the amount of P160 can not be
considered as payment of rents in advance; otherwise we would reach the conclusion that defendants, without being bound to
do so and in violation of the terms of the contract, paid plaintiff rents not monthly but from day to day inasmuch as said sum
corresponds to four months and twenty days.
6. Moreover, the fact that the price of the machine was fixed in the contract makes the latter not a lease but a purchase and sale
because in contracts of lease, as distinguished from those of purchase and sale, it is plain redundancy to fix or make any
mention of the price of the thing given in lease (article 1445, 1543, Civil Code).
7. Accordingly, the act of plaintiff HE in requiring, as it did, the return of the machine in question, receiving and accepting the
same thereafter from defendants when the latter voluntarily returned it, shows that plaintiff not only consented to, but
desired the rescission of the contract it had entered with defendants.
8. In conclusion: the contract is that of purchase and sale on installments; that said contract was rescinded without objection on
the part of defendants.
9. Conclusion: the document isrescinded, and the judgment appealed from is reversed.
18. Andres Quiroga vs Parsons Hardware Co. (Chip)

August 23, 1918 – Avancena *Don Andres tries to pass off a contract of sale as one of agency
Facts:
1. Andres Quiroga and J Parsons entered into a contract which involved the Quiroga’s furnishing of beds to Parsons in Iloilo for a
discounted price. However, the contract used terms such as “sales”, “commission”, etc.
2. Quiroga then later filed a complaint against J Parsons for allegedly violating the contract in the following ways: he did not
order by the dozen; he did not open an establishment in Iloilo; he did not conduct the agency himself; he did not keep the
beds in public exhibition; he did not pay for advertisements; and that he did not try to sell the beds.
3. The trial court ruled for Parsons, hence this case.
Issue: Was the contract one for agency to sell?
Held: No. It was only one for purchase and sale, and nothing else.
Decision: Decision AFFIRMED, with costs against Quiroga.
Ruling:
1. The court first noted the fact that the allegations made by Quiroga do not have any basis in the contract, except for the one
which required Parson to order by the dozen. On this score alone, there will be no basis to rule that the contract was one for
agency.
2. The court went on to discuss the merits of the case anyway, and began by identifying the essential clauses of a contract (cause,
subject matter). This is because by doing so, the real purpose and nature of the contract would become apparent.
3. In this contract, the cause was the acquisition of the Quiroga beds and their purchase price, with the things acquired being
the subject matter themselves. There was a discount of 20 to 25 percent, payment was to be made at the end of 60 days, with
an option for prompt payment. These features all show a contract of purchase and sale.
4. The obligation of the plaintiff was to supply the beds, while the defendant had the obligation to pay their price. This excludes
the legal conception of an agency, which includes the following: an order to sell what the agent receives; no payment by the
agent for the price; delivery to the principal of the price obtained from the third party who bought it; and return in case of
inability to sell.
5. Since the above requirements of an agency to sell are absent, then this is not an agency to sell. Furthermore, since the
stipulation are not against the nature of a contract of purchase and sale, it follows that this is a contract of purchase and sale.
6. The presentation of witnesses also does not help Quiroga, for it was soon found that the testimony of the witness was false. But
even if the witness was telling the truth, that he did draft the contract, it still would not matter. A contract is what the law
defines it to be, and not what it is called by the parties.
19. Ker & Co. vs Jose Lingad, as Acting Commissioner of Internal Revenue (Jal)
30 Apr 1971 - Fernando *firm taxed with brokerage tax for being an agent of US Rubber
Facts:
1. A contract was entered into by Ker & Co. with the United States Rubber International (USRI). Ker & Co. is referred to as the
Distributor and USRI as the Company.
2. Under contract, Ker & Co. would distribute products for consumption in Cebu, Bohol, Mindanao etc. except in Davao.
3. There was a stipulation in the contract which states “The Company shall from time to time consign to the Distributor and the
Distributor will receive, accept and/or hold upon consignment the products specified… All goods on consignment shall remain
the property of the Company until sold by the Distributor to the purchaser, but all sales made by the Distributor shall be in his
name…”
4. Ker & Co., as Distributor, is allowed a discount of ten percent on the net amount of sales of merchandise made under such
agreement.
5. Ker & Co. was then assessed by the Commissioner of Internal Revenue the sum of ₱20,272.33 as the commercial broker’s
percentage tax for the period 1 Jul 1949 to 31 Dec 1953. Ker & Co. requested for the cancellation of the assessment but was
turned down.
6. As a result, it filed a petition for review with the Court of Tax Appeals.
7. The CTA held that Ker & Co. is taxable as a commercial broker. It held that Ker & Co. is an agent of USRI.
Issue: Is Ker & Co. an agent of US Rubber International under a contract of agency to sell?
Held: Yes. Ownership of the goods remained with US Rubber International under the contract.
Decision: Affirmed.
Ruling:
1. The essence of an agency to sell is the delivery to an agent, not as his property, but as the property of the principal, who
remains the owner and has the right to control sales, fix the price, and terms, demand and receive proceeds less the agent’s
commission upon sales made.
2. CIR vs Constantino: Since the company retained ownership of the goods, even as it delivered possession unto the dealer for
resale to customers, the price and terms of which were subject to the company’s control, the relationship between the
company and the dealer is one of agency.
3. The terms of the contract were clear as to lead to no other conclusion than that the control by the US Rubber International over
the goods in question is pervasive (general). The relationship was not one of seller and purchaser.
20. Del Monte Philippine, Inc vs. Aragones (Garsha)

June 23, 2005– Carpio-Morales, J. *Agreement to manufacture concrete blocks (manufactured specially for
MEGA-WAFF and upon respondent Aragones’ special order, and not for the
general market it’s a contract for a piece of work.
Facts:
1. Petitioner Del Monte Phil. Inc. (DMPI) entered into an Agreement with MEGA-WAFF (represented by Edilberto Garcia as
managing principal) for supply and installation of modular pavement
2. To source its supply of concrete blocks to be installed on the pavement, MEGA-WAFF (Contractor) entered into a “Supply
Agreement” with Dynablock Enterprises (Supplier) which is represented by respondent Aragones.
ª MEGA-WAFF asked Respondent Aragones that concrete blocks should be hexagonal shaped. But it later directed
Dynablock (c/o respondent Aragones) to fabricate machines for S-shaped blocks
3. Deadline for Petitioner DMPI and MEGA-WAFF to finish installation of pavement of warehouse was not met.
ª MEGA-WAFF was penalized but respondent Aragones asked petitioner DMPI to be more lenient with dadline.
4. Respondent Aragones FAILED to collect from MEGA-WAFF the full payment of the concrete blocks.
ª MEGA-WAFF asked Aragones to secure COURT ORDER which is important for it to release full payment
5. Respondent Aragones’ reiterated its request to petitioner DMPI for direct payment (for concrete blocks)
ª Petitioner DMPI said that they’re willing to pay only based on actual accomplishment and amount due to Aragones
6. Petitioner DMPI released to MEGA-WAFF a check for former’s balance of obligation to MEGA-WAFF
7. Respondent Aragones filed a complaint for sum of money with damages
8. Argument of MEGA-WAFF
ª Aragones DEFAULTED in his obligation under the supply agreement
9. Decision of Trial Court
ª Decided in favor of respondent Aragones
ª MEGA-WAFF and Petitioner DMPI are jointly and severally liable to pay respondent Aragones for the cost of the
paving blocks construction materials
10. Decision of CA:
ª Affirmed decision of TC
ª Supply Agreement was in the nature of a CONTACT FOR A PIECE of work.
ª Reason why it’s a piece of work: Modular paving blocks are NOT what it keeps on hand and sells to everyone. It is
modified that it will be “S” in shape.
11. Motion for reconsideration was DENIED. Hence, this appeal.
12. Arguments of Petitioner DMPI
ª Apply the nature of the object test, the concrete block to be produced by respondent Aragones is a contract of
sale.
ª Supply agreement was between respondent Aragones and MEGA-WAFF and petitioner DMPI is nota privy to this.
Thus, petitioner cannot be held innocent.
Issue:
1. WON the contract for the supply of the concrete paving blocks was not a sale but one for a piece of work?
Held:
1. Yes, the contract for the supply agreement is a piece of work because it pertains to a special order which is not
manufactured for general use.
Decision: Petition is DENIED. Decision of CA is AFFIRMED.
Ruling:
On the issue that the contract for the supply of the concrete paving blocks is a piece of work and NOT a contract of sale:
1. If goods are to be manufacture specially for the customer and upon his special order, and not for the general market, it is a
contract for a piece of work.
2. Case at bar:
ª Aside from the fact that petitioner DMPI is liable to Respondent Aragones for the unpaid price of the concrete
paying blocks owed by MEGA-WAFF, the Supply Agreement is full of specifications, terms and conditions showing
that it was for a PIECE OF WORK.
ª The machines respondent Aragones was obliged to fabricate were those for casting the concrete blocks specified
by Garcia.
ª Respondent did not have those kinds of machines in his usual business. Hence, it’s a SPECIAL ORDER for an
exclusive use of MEGA-WAFF
Concept:
Difference between contract of sale and contract for work

Contract for Sale Contract for Work
Thing is manufactured or procured for the general market in Thing has been manufactured specially for the customer and
the ordinary course of one’s business upon his special order;
If the article ordered by the purchaser is exactly such as the

seller makes and keeps on hand for sale to ANYONE, and such
change/modification of it is made at purchaser’s request.
Law:
1. Art. 1467.
ª A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business
manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of
sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for
the general market, it is a contract for a piece of work.

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CONEJOS LAYLO AMPONG PILAPIL SY GARCIA CHIONGSON LAW

a. final acceptance or not shall be made after 45 days

Decision: The petition is granted

Contract of Sale Contract to Sell

5. Gaite-vs- Fonacier (Diana)

On the adherence to the Statute of Frauds

On the validity of the sale

7. E. C. McCullough & Co. vs S.M. Berger (Chip)

8. Dichoso vs. Roxas (Rocky)

1. Roxas is the owner of the lands in question.

10. Spouses Ricardo and Ferma Portic vs. Cristobal (Alps)

On why Winifreda cannot have a preferential right to redeem the property

Contract to Sell Conditional Sale

Contract of Sale Contract to Sell

Difference between Conditional Contract of Sale and Contract to Sell

Conditional Contract of Sale Contract to Sell

Reciprocal Obligations (Art. 1191 of CC)

Effect of Rescinding the Contract:

Requisites in order to have Express Warranty in a Contract of Sale:

14. Sacobia Hills (Sacobia) v. Ty

15. Keppel Bank Philippines vs. Philip Adao (Rocky)

Decision: The petition is granted.

(Sgd.) Eduardo Ramos (seller) Alfredo Edrada (purchaser)

On the nature of the document

17. H. E. Heacock Company v. Buntal Manufacturing Company, de NIEVA (Alps)

18. Andres Quiroga vs Parsons Hardware Co. (Chip)

20. Del Monte Philippine, Inc vs. Aragones (Garsha)

Difference between contract of sale and contract for work

If the article ordered by the purchaser is exactly such as the

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