LAW ON SALES

1. Formation of Contract of Sale(1475-1479)

Article 1475. The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts. (1450a)

Article 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate
contract of sale.
(2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of
the hammer, or in other customary manner. Until such announcement is made, any bidder
may retract his bid; and the auctioneer may withdraw the goods from the sale unless the
auction has been announced to be without reserve.
(3) A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise
provided by law or by stipulation.
(4) Where notice has not been given that a sale by auction is subject to a right to bid on
behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or induce
any person to bid at such sale on his behalf or for the auctioneer, to employ or induce any
person to bid at such sale on behalf of the seller or knowingly to take any bid from the seller
or any person employed by him. Any sale contravening this rule may be treated as fraudulent
by the buyer. (n)

Article 1477. The ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof. (n)

Article 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price. (n)

Article 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable.

1. Heirs of Fausto C. Ignacio vs. Home Bankers Savings and Trust Company, GR
177783, January 23, 2013, 689 SCRA 173

FACTS:

Petitioner, during his lifetime, mortgaged two parcels of land located in

Cabuyao, Laguna to respondent Home Bankers Savings and Trust Company
(Home Bankers), as security for the P500,000.00 loan. When Ignacio defaulted
in the payment of his loan obligation, Home Bankers proceeded to foreclose the
real estate mortgage where it was the highest bidder.

On February 8, 1983, the Certificate of Sale issued to Home Bankers. With the
failure of Ignacio to redeem the foreclosed properties within one year from such
LAW ON SALES

registration, the titles were consolidated in favor of Home Bankers. Despite the
lapse of the redemption period and consolidation of title in Home Bankers,
Ignacio offered to repurchase the properties. While Home Bankers considered
Ignacio’s offer to repurchase, there was no repurchase contract executed. Home
Bankers made several dispositions of the foreclosed properties already titled in
its name.

In a letter addressed to Home Bankers dated July 25, 1989, Ignacio expressed his
willingness to pay the amount of P600,000.00 in full, as balance of the
repurchase price, and requested Home Bankers to release to him the remaining
parcels of land. Home Bankers turned down his request. Then, Home Bankers
sold the properties to herein respondents. The RTC rendered judgment in favor
of Ignacio and found that Home Bankers deliberately disregarded petitioner’s
substantial payments on the total repurchase consideration.

Home Bankers appealed to the CA. The CA reversed the trial court and found
that Ignacio modified the terms of the offer contained in the March 22, 1984
letter of Home Bankers. There was also no written conformity by Home Bankers
officers to the amended conditions for repurchase which were unilaterally
inserted by Ignacio. Consequently, no contract of repurchase was perfected and
Home Bankers acted well within its rights when it sold the subject properties to
herein respondents.

ISSUE:

Whether a contract for the repurchase of the foreclosed properties was perfected
between petitioner and respondent bank.

RULING:

Court of Appeals decision is sustained.

Contracts are perfected by mere consent, which is manifested by the meeting of

the offer and the acceptance upon the thing and the cause which are to constitute
the contract. In Palattao v. Court of Appeals, G.R. No. 131726, the Court held
that if the acceptance of the offer was not absolute, such acceptance is
insufficient to generate consent that would perfect a contract. The acceptance
must be identical in all respects with that of the offer so as to produce consent or
meeting of the minds. Where a party sets a different purchase price than the
amount of the offer, such acceptance was qualified which can be at most
considered as a counter-offer; a perfected contract would have arisen only if the
other party had accepted this counter- offer.

While it is impossible to expect the acceptance to echo every nuance of the offer,
it is imperative that it assents to those points in the offer which, under the
operative facts of each contract, are not only material but motivating as well.
Anything short of that level of mutuality produces not a contract but a mere
counter-offer awaiting acceptance. More particularly on the matter of the
consideration of the contract, the offer and its acceptance must be unanimous
both on the rate of the payment and on its term. An acceptance of an offer which
LAW ON SALES

agrees to the rate but varies the term is ineffective. (Villanueva v. Philippine
National Bank, G.R. No. 154493)

In a letter dated March 22, 1984, Ignacio set a different repurchase price and also
modified the terms of payment, which even contained a unilateral condition for
payment of the balance (P600,000), that is, depending on petitioners’ financial
position. However, there was no evidence of any document or writing showing
the conformity of respondent banks officers to this counter-proposal.

A contract of sale is consensual in nature and is perfected upon mere meeting of

the minds. When there is merely an offer by one party without acceptance of the
other, there is no contract. When the contract of sale is not perfected, it cannot,
as an independent source of obligation, serve as a binding juridical relation
between the parties.

2. Virgilio S. David vs. Misamis occidental II Electric Cooperative, Inc., GR

194785, July 11, 2012, 676 SCRA 367

Facts:

Petitioner Virgilio S. David (David) was the owner or proprietor of VSD Electric
Sales, a company engaged in the business of supplying electrical hardware
including transformers for rural electric cooperatives like respondent Misamis
Occidental II Electric Cooperative, Inc. (MOELCI).

To solve its problem of power shortage affecting some areas within its coverage,
MOELCI expressed its intention to purchase a 10 MVA power transformer from
David. For this reason, its General Manager, Engr. Reynaldo Rada (Engr. Rada),
went to meet David in the latter's office in Quezon City. David agreed to supply
the power transformer provided that MOELCI would secure a board resolution
because the item would still have to be imported.

On June 8, 1992, Engr. Rada and Director Jose Jimenez (Jimenez), who was in-
charge of procurement, returned to Manila and presented to David the requested
board resolution which authorized the purchase of one 10 MVA power
transformer. In turn, David presented his proposal for the acquisition of said
transformer. This proposal was the same proposal that he would usually give to
his clients.

After the reading of the proposal and the discussion of terms, David instructed
his then secretary and bookkeeper, Ellen M. Wong, to type the names of Engr.
Rada and Jimenez at the end of the proposal. Both signed the document under
the word "conforme." The board resolution was thereafter attached to the
proposal.

As stated in the proposal, the subject transformer, together with the basic
accessories, was valued at P5,200,000.00. It was also stipulated therein that 50%
of the purchase price should be paid as down payment and the remaining balance
to be paid upon delivery. Freight handling insurance, customs duties, and
incidental expenses were for the account of the buyer.
LAW ON SALES

The Board Resolution, on the other hand, stated that the purchase of the said
transformer was to be financed through a loan from the National Electrification
Administration (NEA).

As there was no immediate action on the loan application, Engr. Rada returned to
Manila in early December 1992 and requested David to deliver the transformer
to them even without the required down payment. David granted the request
provided that MOELCI would pay interest at 24% per annum.

Engr. Rada acquiesced to the condition. On December 17, 1992, the goods were
shipped to Ozamiz City via William Lines. In the Bill of Lading, a sales invoice
was included which stated the agreed interest rate of 24% per annum. When no
payment was made after several months, Medina was constrained to send a
demand letter, dated September 15, 1993, which MOELCI duly received.

Subsequently, demand letters were sent to MOELCI demanding the payment of

the whole amount plus the balance of previous purchases of other electrical
hardware. On February 17, 1994, David filed a complaint for specific
performance with damages with the RTC.

Issues:

(1) Whether or not there was a perfected Contract of sale.

(2) Whether or not there was a delivery that consummated the contract.

Ruling:

An examination of the alleged contract to sell, "Exhibit A," despite its

unconventional form, would show that said document, with all the stipulations
therein and with the attendant circumstances surrounding it, was actually a
Contract of Sale.

First, there was meeting of minds as to the transfer of ownership of the subject
matter. The letter (Exhibit A), though appearing to be a mere price
quotation/proposal, was not what it seemed. It contained terms and conditions, so
that, by the fact that Jimenez, Chairman of the Committee on Management, and
Engr. Rada, General Manager of MOELCI, had signed their names under the
word "CONFORME," they, in effect, agreed with the terms and conditions with
respect to the purchase of the subject 10 MVA Power Transformer.

Second, the document specified a determinate subject matter which was one (1)
Unit of 10 MVA Power Transformer with corresponding KV Line Accessories.

And third, the document stated categorically the price certain in money which
was P5,200,000.00 for one unit of 10 MVA Power Transformer and
P2,169,500.00 for the KV Line Accessories.

In sum, since there was a meeting of the minds, there was consent on the part of
David to transfer ownership of the power transformer to MOELCI in exchange
for the price, thereby complying with the first element.
LAW ON SALES

Thus, the said document cannot just be considered a contract to sell but rather a
perfected contract of sale.

Now, the next question is, was there a delivery?

MOELCI, in denying that the power transformer was delivered to it, argued that
the Bill of Lading which David was relying upon was not conclusive. It argued
that although the bill of lading was stamped "Released," there was nothing in it
that indicated that said power transformer was indeed released to it or delivered
to its possession. For this reason, it is its position that it is not liable to pay the
purchase price of the 10 MVA power transformer.

This Court is unable to agree with the CA that there was no delivery of the items.

On the contrary, there was delivery and release.

To begin with, among the terms and conditions of the proposal to which
MOELCI agreed stated:

C&F Manila, freight, handling, insurance, custom duties and incidental expenses
shall be for the account of MOELCI II. On this score, it is clear that MOELCI
agreed that the power transformer would be delivered and that the freight,
handling, insurance, custom duties, and incidental expenses shall be shouldered
by it.

Thus, the delivery made by David to William Lines, Inc., as evidenced by the
Bill of Lading, was deemed to be a delivery to MOELCI. David was authorized
to send the power transformer to the buyer pursuant to their agreement. When
David sent the item through the carrier, it amounted to a delivery to MOELCI.

Furthermore, in the case of Behn, Meyer & Co. (Ltd.) v. Yangco, it was pointed
out that a specification in a contract relative to the payment of freight can be
taken to indicate the intention of the parties with regard to the place of delivery.

So that, if the buyer is to pay the freight, as in this case, it is reasonable to

suppose that the subject of the sale is transferred to the buyer at the point of
shipment. In other words, the title to the goods transfers to the buyer upon
shipment or delivery to the carrier.

Of course, Article 1523 provides a mere presumption and in order to overcome

said presumption, MOELCI should have presented evidence to the contrary. The
burden of proof was shifted to MOELCI, who had to show that the rule under
Article 1523 was not applicable. In this regard however, MOELCI failed.

So that, if the buyer is to pay the freight, as in this case, it is reasonable to

suppose that the subject of the sale is transferred to the buyer at the point of
LAW ON SALES

shipment. In other words, the title to the goods transfers to the buyer upon
shipment or delivery to the carrier.

3. Starbright Sales Enterprises, Inc. vs. Philippines Realty Corporation, Msgr.

Domingo A. Cirilos, et. al ., GR 177936, January 18, 2012

Facts:

On April 17, 1988 Ramon Licup wrote Msgr. Domingo A. Cirilos, offering to
buy three contiguous parcels of land in Parañaque that The Holy See and
Philippine Realty Corporation (PRC) owned for P1,240.00 per square meter.
Licup accepted the responsibility for removing the illegal settlers on the land and
enclosed a check for P100,000.00 to "close the transaction."He undertook to pay
the balance of the purchase price upon presentation of the title for transfer and
once the property has been cleared of its occupants.

Msgr. Cirilos, representing The Holy See and PRC, signed his name on the
conforme portion of the letter and accepted the check. But the check could not be
encashed due to Licup's stop-order payment. Licup wrote Msgr. Cirilos on April
26, 1988, requesting that the titles to the land be instead transferred to petitioner
Starbright Sales Enterprises, Inc. (SSE). He enclosed a new check for the same
amount. SSE's representatives, Mr. and Mrs. Cu, did not sign the letter.

On November 29, 1988 Msgr. Cirilos wrote SSE, requesting it to remove the
occupants on the property and, should it decide not to do this, Msgr. Cirilos
would return to it the P100,000.00 that he received. On January 24, 1989 SSE
replied with an "updated proposal." It would be willing to comply with Msgr.
Cirilos' condition provided the purchase price is lowered to P1,150.00 per square
meter.

On January 26, 1989 Msgr. Cirilos wrote back, rejecting the "updated proposal."
He said that other buyers were willing to acquire the property on an "as is, where
is" basis at P1,400.00 per square meter. He gave SSE seven days within which
to buy the property at P1,400.00 per square meter, otherwise, Msgr. Cirilos
would take it that SSE has lost interest in the same. He enclosed a check for
P100,000.00 in his letter as refund of what he earlier received.

On February 4, 1989 SSE wrote Msgr. Cirilos that they already had a perfected
contract of sale in the April 17, 1988 letter which he signed and that,
consequently, he could no longer impose amendments such as the removal of the
informal settlers at the buyer's expense and the increase in the purchase price.

SSE claimed that it got no reply from Msgr. Cirilos and that the next thing they
knew, the land had been sold to Tropicana Properties on March 30, 1989. On
May 15, 1989 SSE demanded rescission of that sale. Meanwhile, on August 4,
1989 Tropicana Properties sold the three parcels of land to Standard Realty.
LAW ON SALES

Its demand for rescission unheeded, SSE filed a complaint for annulment of sale
and reconveyance with damages before the Regional Trial Court (RTC) of
Makati, Branch 61, against The Holy See, PRC, Msgr. Cirilos, and Tropicana
Properties.

SSE amended its complaint on February 24, 1992, impleading Standard Realty
as additional defendant. The Holy See sought dismissal of the case against it,
claiming that as a foreign government, it cannot be sued without its consent. The
RTC held otherwise the Court reversed the ruling of the RTC and ordered the
case against The Holy See dismissed.

SSE alleged that Licup's original letter of April 17, 1988 to Msgr. Cirilos
constituted a perfected contract. Licup even gave an earnest money of
P100,000.00 to "close the transaction." His offer to rid the land of its occupants
was a "mere gesture of accommodation if only to expedite the transfer of its
title." Further, SSE claimed that, in representing The Holy See and PRC, Msgr.
Cirilos acted in bad faith when he set the price of the property at P1,400.00 per
square meter when in truth, the property was sold to Tropicana Properties for
only P760.68 per square meter.

Msgr. Cirilos maintained, on the other hand, that based on their exchange of
letters, no contract of sale was perfected between SSE and the parties he
represented. And, only after the negotiations between them fell through did he
sell the land to Tropicana Properties.

RTC treated the April 17, 1988 letter between Licum and Msgr. Cirilos as a
perfected contract of sale between the parties. On appeal to the Court of Appeals
(CA), the latter rendered judgment on November 10, 2006, reversing the
Parañaque RTC decision. The CA held that no perfected contract can be gleaned
from the April 17, 1988 letter that SSE had relied on.

As to the P100,000.00 given to Msgr. Cirilos, the CA considered it an option

money that secured for SSE only the privilege to buy the property even if Licup
called it a "deposit."

Issues:

Whether CA erred in holding that no perfected contract of sale existed between

SSE and the land owners, represented by Msgr. Cirilos.

Ruling:

The Court believes that the April 17, 1988 letter between Licup and Msgr.
Cirilos, the representative of the property's owners, constituted a perfected
contract. When Msgr. Cirilos affixed his signature on that letter, he expressed
his conformity to the terms of Licup's offer appearing on it. There was meeting
of the minds as to the object and consideration of the contract.

But when Licup ordered a stop-payment on his deposit and proposed in his April
26, 1988 letter to Msgr. Cirilos that the property be instead transferred to SSE, a
LAW ON SALES

subjective novation took place. A subjective novation results through

substitution of the person of the debtor or through subrogation of a third person
to the rights of the creditor. To accomplish a subjective novation through change
in the person of the debtor, the old debtor needs to be expressly released from the
obligation and the third person or new debtor needs to assume his place in the
relation.

The proposed substitution of Licup by SSE opened the negotiation stage for a
new contract of sale as between SSE and the owners. The succeeding exchange
of letters between Mr. Stephen Cu, SSE's representative, and Msgr. Cirilos
attests to an unfinished negotiation.

Msgr. Cirilos referred to his discussion with SSE regarding the purchase as a
"pending transaction." Cu, on the other hand, regarded SSE's first letter to Msgr.
Cirilos as an "updated proposal." This proposal took up two issues: which party
would undertake to evict the occupants on the property and how much must the
consideration be for the property. These are clear indications that there was no
meeting of the minds between the parties. As it turned out, the parties reached
no consensus regarding these issues, thus producing no perfected sale between
them.

Parenthetically, Msgr. Cirilos did not act in bad faith when he sold the property
to Tropicana even if it was for a lesser consideration. More than a month had
passed since the last communication between the parties on February 4, 1989. It
is not improbable for prospective buyers to offer to buy the property during that
time.

The P100,000.00 that was given to Msgr. Cirilos as "deposit" cannot be

considered as earnest money. Where the parties merely exchanged offers and
counter-offers, no contract is perfected since they did not yet give their consent
to such offers. Earnest money applies to a perfected sale.

SSE cannot revert to the original terms stated in Licup's letter to Msgr. Cirilos
dated April 17, 1988 since it was not privy to such contract. The parties to it
were Licup and Msgr. Cirilos. Under the principle of relativity of contracts,
contracts can only bind the parties who entered into it. It cannot favor or
prejudice a third person. Petitioner SSE cannot, therefore, impose the terms
Licup stated in his April 17, 1988 letter upon the owners.

Principles:

Novation serves two functions - one is to extinguish an existing obligation, the

other to substitute a new one in its place - requiring concurrence of four
requisites: 1) a previous valid obligation; 2) an agreement of all parties
concerned to a new contract; 3) the... extinguishment of the old obligation; and
4) the birth of a valid new obligation.
LAW ON SALES

4. DBP vs. Ben P. Medrano and Privatization management Office, GR 167004,

February 7, 2011, 641 SCRA 559

FACTS:

Respondent Ben Medrano was the President and General Manager of Paragon
Paper Industries, Inc. (Paragon) wherein he owned 37,681 shares. Sometime in
1980, petitioner DBP sought to consolidate its ownership in Paragon. In one of
the meetings of the Paragon Executive Committee, the Chairman Jose B. de
Ocampo, instructed Medrano, as President and General Manager of Paragon, to
contact or sound off the minority stockholders. Medrano testified that all,
including himself, agreed to sell, and all took steps to have their shares
surrendered to DBP for payment.

DBP, through Jose de Ocampo, who was also a member of its Board of
Governors, also offered Medrano a commission of P185,010.00 if the latter
could persuade all the other Paragon minority stockholders to sell their shares.
Since Medrano was able to convince only two stockholders, his commission was
reduced to P155,455.00.

Thereafter, Medrano demanded that DBP pay the value of his shares, which he
had already turned over, and his P155,455.00 commission. When DBP did not
heed his demand, Medrano filed a complaint for specific performance and
damages against DBP. While under Article 1545 of the Civil Code, DBP had the
right not to proceed with the agreement upon Medrano’s failure to comply with
the conditions, DBP was deemed to have waived the performance of the
conditions when it chose to retain Medrano’s shares and later transfer them to the
APT.

ISSUE:

Did the CA erred in applying Article 1545 of the Civil Code?

HELD:

As a rule, a contract is perfected upon the meeting of the minds of the two
parties. Under Article 1475 of the Civil Code, a contract of sale is perfected the
moment there is a meeting of the minds on the thing which is the object of the
contract and on the price.

The present case does not fall under this article because there is no perfected
contract of sale to speak of. Medrano’s failure to comply with the conditions set
forth by DBP prevented the perfection of the contract of sale. Hence, Medrano
and DBP remained as prospective-seller and prospective-buyer and not parties to
a contract of sale.
LAW ON SALES

This notwithstanding, however, the Court still did not agree with DBP’s
argument that since there is no perfected contract of sale, DBP should not be
ordered to pay Medrano any amount.

It was not proper for DBP to hold on to Medrano’s shares of stock after it
became obvious that he will not be able to comply with the conditions for the
contract of sale. From that point onwards, the prudent and fair thing to do for
DBP was to return Medrano’s shares because DBP had no just or legal ground to
retain them. Equitable considerations militate against DBP’s claimed right over
the subject shares.

5. Sps. Tongson, et.al. vs. Emergency pawnshop Bula, Inc. et. al 734 SCRA 76

FACTS:

Napala offered to purchase the land of Spouses Tongson for P3,000,000. The
petitioners find the offer acceptable executed with Napala a Memorandum of
Agreement. Upon signing of the Deed of Absolute Sale Napala paid P200,000
in cash to petitioners and issued a postdated PNB check for the payment of the
remaining amount. However, the check bounces because of insufficient fund,
despite the petitioners repeated demand that it be paid in full or return the land,
Napala failed to do both now the petitioners filed an action against Napala.

ISSUE:

Whether or not the contract of sale can be annulled based on the fraud employed
by Napala.

RULING:

A valid contract requires the concurrence of the following essential elements:

(1) consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price; (2) determinate subject matter; and (3) price certain in
money or its equivalent.

In the case, there is no dispute as regards the presence of the two requisites for a
valid sales contract, namely, (1) a determinate subject matter and (2) a price
certain in money. The problem now lie with the existence of the remaining
element, which is consent of the contracting parties, specifically, the consent of
the Spouses Tongson to sell the property to Napala.

The Supreme Court found no causal fraud in this case to justify the annulment
of the contract of sale between the parties. It is clear from the records that the
Spouses Tongson agreed to sell their property to Napala who offered to pay
₱3,000,000 as purchase price therefor. Contrary to the Spouses Tongson’s belief
that the fraud employed by Napala was “already operational at the time of the
perfection of the contract of sale,” the misrepresentation by Napala that the
postdated PNB check would bounce on its maturity hardly equates to dolo
causante.
LAW ON SALES

However, while no causal fraud attended the execution of the sales contract, the
fraud surfaced when Napala issued the worthless check to the Spouses Tongson,
which is definitely not during the negotiation and perfection stages of the sale.
Rather, the fraud existed in the consummation stage of the sale when the parties
are in the process of performing their respective obligations under the perfected
contract of sale.

Article 1191 of the Civil Code provides:

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.

The injured party may choose between the fulfillment and the rescission of the
obligation, with payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.

Article 1385 of the Civil Code provides the effects of rescission, viz:

Rescission creates the obligation to return the things which were the object of
the contract, together with their fruits, and the price with its interest;
consequently, it can be carried out only when he who demands rescission can
return whatever he may be obliged to restore.

Neither shall rescission take place when the things which are the object of the
contract are legally in the possession of third persons who did not act in bad
faith.

Napala's claims that rescission is not proper and that he should be given more
time to pay for the unpaid remaining balance of P2,800,000 cannot be
countenanced. Having acted fraudulently in performing his obligation, Napala is
not entitled to more time to pay the remaining balance of P2,800,000, and
thereby erase the default or breach that he had deliberately incurred.[27] To do
otherwise would be to sanction a deliberate and reiterated infringement of the
contractual obligations incurred by Napala, an attitude repugnant to the stability
and obligatory force of contracts.

6. ECE Realty and Development Inc., v. Rachel Mandap, GR 196182, September 1,

2014, 734 SCRA 76

FACTS:

The petitioner is a corporation engaged in building condominium units. The

petitioner started its construction at Pasay City. However, in their advertisement
it provides that it is situated in Makati City. The respondent in belief that the
condo unit was in Makati City agreed to buy a unit by paying reservation fee,
down payment and monthly installments. In their Contract to Sell it indicated
therein that the condo unit was in Pasay City.
LAW ON SALES

More than two years after the execution of the contract, respondent demanding
the return of her payment on the ground that the unit was built in Pasay not in
Makati.

ISSUE:

Whether petitioner was guilty of fraud and if so, whether such fraud is sufficient
ground to nullify its contract with respondent.

RULING:

First, the fraud must be dolo causante or it must be fraud in obtaining the consent
of the party. This is referred to as causal fraud. The deceit must be serious. The
fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent
person into error; that which cannot deceive a prudent person cannot be a ground
for nullity. The circumstances of each case should be considered, taking into
account the personal conditions of the victim. Second, the fraud must be proven
by clear and convincing evidence and not merely by preponderance thereof.

In the present case, the Supreme Court finds that petitioner is guilty of false
representation of a fact. This is evidenced by its printed advertisements
indicating that its subject condominium project is located in Makati City when,
in fact, it is in Pasay City. However, insofar as the present case is concerned, the
Court agrees with the Housing and Land Use Arbiter, the HLURB Board of
Commissioners, and the Office of the President, that the misrepresentation made
by petitioner in its advertisements does not constitute causal fraud which would
have been a valid basis in annulling the Contract to Sell between petitioner and
respondent.

Being a notarized document, it had in its favor the presumption of regularity, and
to overcome the same, there must be evidence that is clear, convincing and more
than merely preponderant; otherwise, the document should be upheld. Mandap
failed to overcome this presumption.

7. Helen E. Cabling vs Joselin Tan Lumapas, GR 196950, June 18, 2014, 726
SCRA 628

Facts:

The petitioner was the highest bidder in an extrajudicial foreclosure sale over a
216-square meter property covered by Transfer Certificate of Title (TCT) No. T-
14852. The Final Deed of Sale was issued by the Sheriff and the title to the
property was duly transferred to the petitioner.

The petitioner filed an Application for the Issuance of a Writ of Possession with
the RTC. The RTC issued an order granting the petitioner's application, and
subsequently issued a Writ of Possession and Notice to Vacate.

Respondent Joselin Tan Lumapas, through counsel, filed a Motion for Leave of
Court for Intervention as Party Defendant (with Urgent Motion to Hold in
LAW ON SALES

Abeyance Implementation of Writ of Possession) and an Answer in Intervention,

as a third party in actual possession of the foreclosed property. She claimed that
the property had previously been sold to her by Aida Ibabao, the property's
registered owner and the judgment debtor/mortgagor in the extrajudicial
foreclosure sale, pursuant to a Deed of Conditional Sale.

The RTC issued an order holding in abeyance the implementation of the

petitioner's writ of possession until after the resolution of the respondent's
motion. The following day, the RTC denied the respondent's motion for
intervention. The respondent promptly filed a motion for reconsideration.

On July 14, 2009, the RTC issued the 1st assailed order granting the respondent's
motion for reconsideration. In a decision dated May 12, 2011, the CA dismissed
the petitioner's Rule 65 petition and affirmed in toto the RTC's assailed orders.

While recognizing the respondent's actual possession of the subject property, the
petitioner contends that such possession is not adverse to that of the judgment
debtor/mortgagor. Neither is possession in the concept of an owner because in a
conditional sale, ownership is retained by the seller until the fulfillment of a
positive suspensive condition, that is, the full payment of the purchase price.

Issues:

The petitioner argues that the present case is not an exception to the ministerial
issuance of a writ of possession.

Ruling:

We find merit in the petitioner's arguments.

The well-settled rule is that in the extrajudicial foreclosure of real estate

mortgages under Act No. 3135 (as amended), the issuance of a writ of possession
is ministerial upon the court after the foreclosure sale and during the redemption
period when the court may issue the order for a writ of possession upon the mere
filing of an ex parte motion and the approval of the corresponding bond.

The writ of possession also issues as a matter of course, without need of a bond
or of a separate and independent action, after the lapse of the period of
redemption, and after the consolidation of ownership and the issuance of a new
TCT in the purchaser's name.

There is, however, an exception to the rule.

Under Section 33, Rule 39 of the Rules of Court, which is made applicable to
extrajudicial foreclosures of real estate mortgages, the possession of the property
shall be given to the purchaser or last redemptioner unless a third party is
actually holding the property in a capacity adverse to the judgment obligor.
Thus, the court's obligation to issue an ex parte writ of possession in favor of the
purchaser in an extrajudicial foreclosure sale ceases to be ministerial when there
LAW ON SALES

is a third party in possession of the property claiming a right adverse to that of

the judgment debtor/mortgagor.

We emphasize that the exception provided under Section 33, Rule 39 of the
Rules of Court contemplates a situation in which a third party holds the property
by adverse title or right, such as that of a co-owner, tenant or usufructuary, who
possesses the property in his own right, and is not merely the successor or
transferee of the right of possession of another co-owner or the owner of the
property.

In the present case, the respondent cannot be said to possess the subject property
by adverse title or right as her possession is merely premised on the alleged
conditional sale of the property to her by the judgment debtor/mortgagor.

The execution of a contract of conditional sale does not immediately transfer title
to the property to be sold from seller to buyer. In such contract, ownership or
title to the property is retained by the seller until the fulfillment of a positive
suspensive condition which is normally the payment of the purchase price in the
manner agreed upon.

In the present case, the Deed of Conditional Sale between the respondent (buyer)
and the subject property's registered owner (seller) expressly reserved to the
latter ownership over the property until full payment of the purchase price,
despite the delivery of the subject property to the respondent.

In order for the respondent not to be ousted by the ex parte issuance of a writ of
possession, her possession of the property must be adverse in that she must prove
a right independent of and even superior to that of the judgment
debtor/mortgagor.

Under these circumstances, the general rule, and not the exception, applies.

8. Obligation to Preserve the Object of the Sale(1480)

Article 1480. Any injury to or benefit from the thing sold, after the contract has
been perfected, from the moment of the perfection of the contract to the time of
delivery, shall be governed by articles 1163 to 1165, and 1262.

This rule shall apply to the sale of fungible things, made independently and for a
single price, or without consideration of their weight, number, or measure.

Should fungible things be sold for a price fixed according to weight, number, or
measure, the risk shall not be imputed to the vendee until they have been
weighed, counted, or measured and delivered, unless the latter has incurred in
delay. (1452a)

2. Sale by Sample or by Description (1481)

Article 1481. In the contract of sale of goods by description or by sample, the contract may be
rescinded if the bulk of the goods delivered do not correspond with the description or the sample,
LAW ON SALES

and if the contract be by sample as well as description, it is not sufficient that the bulk of goods
correspond with the sample if they do not also correspond with the description.

1. Teresita B. Mendoza vs. Beth David, GR 14757, October 22, 2004, 441
SCRA 172

FACTS:

Petitioner ordered 3 sets of furniture and issued specifications to respondent for

P185,650.00. A down payment of 85,650 pesos has been paid. Upon delivery,
petitioner rejected it because of inferior material and quality and thereby asked
for a refund. Respondent ignored it and demanded for the balance of
P100,000.00. He reclaimed the said furniture. Respondent David retrieved the
said furniture due to non-payment of the balance. Thus, petitioner’s complaint
herein stands: the CA, who dismissed her case, erred since the transaction was
by description or by sample (who avers that the said delivered materials were
supposed to match bulk goods.)

ISSUE:

Whether or not the transaction between the parties was that of a sale by
description or by sample.

RULING:

Neither. The court clarified that:

In a sale by sample, the standard of quality a small quantity is exhibited by the

seller as a fair specimen of the bulk, which is not present and there is no
opportunity to inspect or examine the same.

In a sale by description, a seller’s description of the goods which is made part of

the basis of the transaction creates a warranty that the goods will conform to that
description.

In the present case, the sale was not considered by sample because it does not
constitute an agreement to correspond with a certain pattern. There is no
agreement to replicate the goods in respondent David’s furniture store. It is also
not by description because it would require the seller to be the one who would
give the description. In this case it was the buyer. Clearly, this is a “made to
order” sale.

Petitioner Teresita B. Mendoza is ordered to pay respondent Beth David the

amount of P55,850 with interest at 6% per annum from 17 April 1997 until
finality of this Decision and 12% per annum thereafter until full payment. Beth
David is ordered to deliver to Teresita B. Mendoza the three sets of furniture
Mendoza ordered upon her payment of the balance of the purchase price with
interest.
LAW ON SALES

3. Earnest Money (1482)

Article 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of
the price and as proof of the perfection of the contract.
4. Form for a Contract of Sale (1983)
Article 1983. The thing deposited shall be returned with all its products, accessories and accessions.
Should the deposit consist of money, the provisions relative to agents in article 1896 shall be applied
to the depositary.

1.Lagrimas de Jesus Zamora v. Sps. Miranda, et. Al, 687 SCRA 13

Petitioner is the widow of the late Fernando Zamora, the son of Alberto Zamora.
Respondent Beatriz Miranda is the cousin of Alberto Zamora, while respondent
Rose Marie Miranda-Guanio is the daughter of respondent Beatriz Miranda.

Respondent Beatriz Miranda was the registered owner a parcel of land, with an
area of more or less 5,090 square meters, covered by Transfer Certificate of
Title (TCT) No. 1594 of the Register of Deeds for the City of Davao.

According to petitioner, her father-in-law, Alberto Zamora, through an

encargado, Eduardo Cecilio, was in possession of the property in question. In
1952, she (petitioner) was designated by Alberto Zamora as his assistant on land
matters. The property in question was turned over to her and she was introduced
to Eduardo Cecilio. After the year 1952, Alberto Zamora told her that the
property in question was owned by respondent Beatriz Miranda whose family
was permanently residing in Manila.

Petitioner allegedly contacted respondent Beatriz Miranda, and petitioner was

given a calling card and was told to see her (Beatriz). In October 1972,
petitioner claimed that she went to the residence of respondent Beatriz Miranda
in Quezon City. While there, they talked about the property in question and
respondent Beatriz Miranda drew a sketch depicting the location of the property.
Thereafter, petitioner alleged that respondent Beatriz Miranda sold to her the
said property for the sum of P50,000.00. An acknowledgment of the receipt of
the amount of P50,000.00 was prepared, and respondent Beatriz Miranda
allegedly signed the same. The receipt was dated October 23, 1972. In the
sketch, and acknowledgment of the receipt of P50,000.00, marked as Exhibit
"B," there is a notation "Documents for Agdao Property follows." This notation
referred to the property in Agdao, which was the subject of negotiation.
Petitioner prepared the document relative to the Agdao property.

Petitioner rented out portions of the property in question. The tenants reported to
her that there were two men who went to the property in question. After
sometime, she (petitioner) learned that the occupants of the property in question
were being harassed and were told to vacate. She (petitioner) went to Manila
and confronted respondent Beatriz Miranda, and told her that she would file a
case in court.
LAW ON SALES

Petitioner prayed that the Court render judgment nullifying the deed of sale
between respondents Beatriz Miranda and Ang involving the property covered
by TCT No. T-1594; declaring petitioner to be the owner of the parcel of land
covered by TCT No. T-1594 and ordering respondent Beatriz Miranda to
execute the corresponding deed of sale in her favor; and ordering respondents,
except the Registrar of Deeds, to pay her (petitioner) damages, including
litigation expenses and attorney's fees.

Respondent Rose Marie Miranda-Guanio declared that before the year 1941, her
mother, respondent Beatriz Miranda, was a resident of Davao City. Her mother
left Davao City in 1942 and resided in Manila, and she went to Davao City for
vacation only. Her mother owned the property in question. When her mother
(Beatriz) left Davao City, she did not appoint anyone to administer or take care
of her property. She (Rose Marie) disputed the claim of petitioner that the latter
visited her mother in 1972. She alleged that on June 26, 1972, she gave birth to
her first child and that she and her mother, Beatriz, took care of her child. She
declared that the signature on the receipt dated October 23, 1972 was not the
signature of her mother, Beatriz Miranda. She identified the genuine signatures
of her mother (Beatriz) which were reflected on the Voter's Affidavit (Exhibits
"1" - "24"); the 1973 Residence Certificate (Exhibits "3"-"20"); the 1980
Residence Certificate (Exhibits "4"-"21"); the 1981 Residence Certificate
(Exhibits "5"-"22"); the 1974 expired passport (Exhibits "6"-"17"). She also
alleged that because of this case she suffered damages and incurred expenses of
litigation.

Mr. Arcadio Ramos, Chief Document Examiner and Chief, Questioned

Documents Division of the National Bureau of Investigation (NBI), Manila,
prepared two reports with the following findings and conclusions as to whether
the signature was forged: The questioned and the sample signatures "Beatriz H.
Miranda" were NOT WRITTEN by one and the same person.

ISSUE:

Whether the Court of Appeals erred in affirming the decision of the trial court,
dismissing the complaint for specific performance, annulment of sale and
certificate of title and damages.

RULING:

As stated by the trial court, petitioner principally prays that she be declared the
owner of the subject property; that respondent Beatriz Miranda be ordered to
execute a deed of sale in her (petitioner's) favor; and that the sale of the subject
property in favor of respondents Ang be nullified.

The sole evidence relied upon by petitioner to prove her claim of ownership
over the subject property is the receipt dated October 23, 1972 which states
receipt of the amount of fifty thousand (P50,000) pesos from Lagrimas Zamora
as payment for the property at Carmelite, Bajada, Davao City.
LAW ON SALES

Article 1358 of the Civil Code provides that acts and contracts which have for
their object the transmission of real rights over immovable property or the sale
of real property must appear in a public document. If the law requires a
document or other special form, the contracting parties may compel each other
to observe that form, once the contract has been perfected.

In Fule v. Court of Appeals, the Court held that Article 1358 of the Civil Code,
which requires the embodiment of certain contracts in a public instrument, is
only for convenience, and registration of the instrument only adversely affects
third parties. Formal requirements are, therefore, for the benefit of third parties.
Non-compliance therewith does not adversely affect the validity of the contract
nor the contractual rights and obligations of the parties thereunder.

However, the Court sustains the decision of the Court of Appeals.

The receipt dated October 23, 1972 cannot prove ownership over the subject
property as respondent Beatriz Miranda's signature on the receipt, as vendor, has
been found to be forged by the NBI handwriting expert, the trial court and the
Court of Appeals. It is a settled rule that the factual findings of the Court of
Appeals affirming those of the trial court are final and conclusive and may not
be reviewed on appeal, except under any of the following circumstances: (1) the
conclusion is grounded on speculations, surmises or conjectures; (2) the
inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse
of discretion; (4) the judgment is based on a misapprehension of facts; (5) the
findings of fact are conflicting; (6) there is no citation of specific evidence on
which the factual findings are based; (7) the finding of absence of facts is
contradicted by the presence of evidence on record; (8) the findings of the CA
are contrary to those of the trial court; (9) the CA manifestly overlooked certain
relevant and undisputed facts that, if properly considered, would justify a
different conclusion; (10) the findings of the CA are beyond the issues of the
case; and (11) such findings are contrary to the admissions of both parties.

Considering that the aforementioned exceptions are not present in this case, the
factual finding of the Court of Appeals that the signature of respondent Beatriz
Miranda on the receipt dated October 23, 1972 is forged is final and conclusive
upon this Court. Consequently, the complaint of petitioner has no leg to stand
on and was properly dismissed by the trial court.

5. Recto Law: Sale of Movables on Instrallment (1484-1486)

Article 1484. In a contract of sale of personal property the price of which is payable in installments,
the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's
failure to pay cover two or more installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.
(1454-A-a)
LAW ON SALES

Article 1485. The preceding article shall be applied to contracts purporting to be leases of personal
property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of
the thing. (1454-A-a)
Article 1486. In the case referred to in the two preceding articles, a stipulation that the installments or
rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same may not be
unconscionable under the circumstances. (n)
6. Who shall bear the expenses for the Execution and Registration of the Sale (1487)
Article 1487. The expenses for the execution and registration of the sale shall be borne by the vendor,
unless there is a stipulation to the contrary. (1455a)
7. Expropriation of Property (1488)
Article 1488. The expropriation of property for public use is governed by special laws.