1. Gaite vs Fonacier 2 SCRA 830, 1961
FACTS: Isabelo Fonacier owner of 11 iron lode mineral claims or the Dawahan Group, appointed Fernando
Gaite through a deed of assignment as his attorney, to enter into a contract (any individual or juridical
person) for the exploration and development of the said mining claims on a royalty basis of not less than
P.50 per ton of ore.
Gaite in turn executed a general assignment conveying the development and exploitation of said mining
claims into the Larap Iron Mines, a single proprietorship owned solely by him, on the same royalty basis.
Gaite embarked upon the development and exploitation of the mining claims, including improvements,
and extracted approximately 24k metric tons of iron ore.
Fonacier revoked the authority he granted to Gaite to exploit and develop the mining claims, and Gaite
agreed to such, subject to certain conditions. A document was executed in which Gaite transferred all his
rights and interests on all the constructions and improvements, the right to use the name “Larap Iron
Mines” and, and all the records and documents relative to the mines, to Fonacier, for the consideration
of P20k, plus 10% of the royalties that Fonacier would receive from the mining claims.
In the same document, Gaite transferred all his rights and interests over the iron ore, in consideration of
P75k (P10k was paid upon the signing of the agreement) and the rest will be paid from the amount derived
of off the first shipment or sale of iron ores.
To secure the payment, Fonacier promised to execute a surety bond. In the subsequent year, Fonacier
failed to renew the bond.
Gaite filed a complaint before CFI of Manila for the payment of the remaining P65k, payment for damages
and attorney’s fees. CFI ruled in favor of Gaite. An appeal before the SC, against a CFI decision with an
aggregate amount of P200k+. Several motions were filed by both parties.
ISSUE: WON Fonacier has the obligation
CFI was correct in holding that the shipment or local sale of the iron ore is not a suspensive condition to
the payment of the balance of P65,000.00, but was only a suspensive period or term.
Obligations and Contracts; Conditional Obligations;
Efficacy subordinated to the happening of a future and uncertain event.
What characterizes a conditional obligation is the fact that its efficacy or obligatory force is subordinated
to the happening of a future and uncertain event; so that if the suspensive condition does not take place,
the parties would stand as if the conditional obligation had never existed.
Sales; Commutative and onerous nature of contract of sale;
Contingent character of obligation must clearly appear.
A contract of sale is normally commutative and onerous; not only does each of the parties assume a
correlative obligation, but each party anticipates performance by the other from the very start. Although
the obligation of one party can be lawfully subordinated to an uncertain event, so that the other
understands that he assumes the risk of receiving nothing for what he gives, it is not in the usual course
of business to do so; hence, the contingent character of the obligation must clearly appear.
How doubt in the intention of parties is resolved.
Sale is essentially onerous, and if there is doubt whether the parties intended a suspensive condition or a
suspensive period for the payment of the agreed price, the doubt shall be settled in favor of the greatest
reciprocity of interests, which will obtain if the buyer’s obligation is deemed to be actually existing, with
only its maturity postponed or deferred.
There was, consequently, no short-delivery in this case as would entitle appellants to the payment of
damages, nor could Gaite have been guilty of any fraud in making any misrepresentation to appellants as
to the total quantity of ore in the stockpiles of the mining claims in question, as charged by appellants,
since Gaite's estimate appears to be substantially correct.
CFI’s decision is affirmed.
2. Province of Cebu v. Heirs of Rufina Morales, GR 170115 Feb 19, 2008
FACTS:
Province of Cebu (POC) leased a 210 sq. lot to Rufina Morales which formed part of Lot No. 646-A of the
Banilad Estate. Then, POC donated several parcels of land to the City of Cebu. Among those was the
subject lot, divided into sub-lots, then a Transfer Certificate of Title (TCT) was issued.
Few years later, POC sold the subject lot along with other donated lots at a public auction to raise money
for infrastructure projects. The highest bidder was Hever Bascon but Morales had preferential rights for
being the actual occupant of the land, so he was allowed to match the highest bid. Morales won, paid the
required deposit as well as the partial payment.
POC filed an action for reversion of donation against the City of Cebu before the CFI and reached a
compromise agreement that COC must return the donated lots except those already utilized by the city.
Thus, the subject lot was returned to POC, registered under a TCT.
Morales died during the pendency the civil case (action for reversion), the outstanding payments (balance)
remained unpaid. 14 years later, Morales’ niece asked for the reconveyance of the subject lot from
governors of Cebu, no response. Heirs filed an action for specific performance and reconveyance against
POC before the RTC, and consigned P13.4k for the balance of purchase, for it was refused by POC. One
niece died.
Heirs claimed that the award granted by COC at the PA to Morales was valid, that confusion of where to
pay was the cause of non-payment. POC failed to present evidence, it was deemed to have waived such
right. RTC ruled in favor of the Heirs. POC filed a petition assailing the decision of CA when it affirmed the
RTC’s decision (in toto). Petition under Rule 45.
ISSUE: WON Morales acquired the subject lot through a sale by public auction.
RULING: Yes.
POC, as successor-in-interest of the City of Cebu, must respect the contract of sale entered by the City
since it was the official owner of the subject lot (through donation), and was erroneously returned to POC
under the compromise judgment. The award is a perfected contract of sale between Morales and the
COC, while partial payment of the purchase price and actual occupation of the property by Morales and
respondents effectively transferred ownership of the lot to Morales. Non-payment of the remaining
balance is immaterial.
When COC awarded the lot to Morales, it is assumed that she met all qualifications to match the highest
bid. The subject lot was auctioned for more than four decades and was never questioned. Thus, all
requirements for a valid public auction sale were complied with.
Sales; Public Auctions;
A sale by public auction is perfected “when the auctioneer announces its perfection by the fall of the
hammer or in other customary manner” and it does not matter that another was allowed to match the
bid of the highest bidder at the said auction sale. —
A sale by public auction is perfected “when the auctioneer announces its perfection by the fall of the
hammer or in other customary manner.” It does not matter that Morales merely matched the bid of the
highest bidder at the said auction sale. The contract of sale was nevertheless perfected as to Morales,
since she merely stepped into the shoes of the highest bidder.
A contract of sale is a consensual contract and 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. —
There was a meeting of minds between the City of Cebu and Morales as to the lot sold and its price, such
that each party could reciprocally demand performance of the contract from the other. A contract of sale
is a consensual contract and 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. The elements of a valid
contract of sale under Article 1458 of the Civil Code are: (1) consent or meeting of the minds; (2)
determinate subject matter; and (3) price certain in money or its equivalent. All these elements were
present in the transaction between the City of Cebu and Morales.
Failure to pay the balance of the purchase price does not render the sale inexistent or invalid, but
merely gives rise to a right in favor of the vendor to either demand specific performance or rescission
of the contract of sale. —
Petitioner erroneously contends that the failure of Morales to pay the balance of the purchase price is
evidence that there was really no contract of sale over the lot between Morales and the City of Cebu. On
the contrary, the fact that there was an agreed price for the lot proves that a contract of sale was indeed
perfected between the parties. Failure to pay the balance of the purchase price did not render the sale
inexistent or invalid, but merely gave rise to a right in favor of the vendor to either demand specific
performance or rescission of the contract of sale. It did not abolish the contract of sale or result in its
automatic invalidation.
Stages of a Contract of Sale
The stages of a contract of sale are as follows: (1) negotiation, covering the period from the time the
prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2)
perfection, which takes place upon the concurrence of the essential elements of the sale which are the
meeting of the minds of the parties as to the object of the contract and upon the price; and (3)
consummation, which begins when the parties perform their respective undertakings under the contract
of sale, culminating in the extinguishment thereof. In this case, respondents’ predecessor had
undoubtedly commenced performing her obligation by making a down payment on the purchase price.
Unfortunately, however, she was not able to complete the payments due to legal complications between
petitioner and the city.
3. Balatbat vs CA, 261 SCRA 128, 1996
FACTS:
Aurelio Roque filed a complaint for partition against Corazon Roque, et al., before the then CFI Instance
of Manila. RTC ruled in favor of Aurelio Roque, that subject lot was acquired by Aurelio and his wife during
their conjugal union and the on it house was built during their marital union. They bore 4 children
(defendants in the case). Mesina died, Aurelio is entitled to ½ of the house and lot. The 4 children and
Aurelio (plaintiff) are entitled to the other ½ of the, by 1/5 division.
Aurelio sold his 6/10 share to spouses Repuyan evidenced by a Deed of Absolute Sale (DAS).
Aurora Repuyan caused the annotation of her affidavit of adverse claim on the said TCT. That the 6/10
portion was worth P50k, P5k DP and the remaining will be paid after the partition of properties.
Roque filed for a Rescission of Contract against spouses Repuyan before the CFI of Manila for failure to
pay the balance. The complaint is grounded on spouses Repuyan's failure to pay the balance of P45k of
the purchase price. spouses Repuyan filed their answer with counterclaim.
In the meantime, in the partition case (earlier) RTC found that the P100k purchase price is reasonable and
fair. DAS was executed between Roque and the 4 children (Clara Roque is married to a Balatbat). Balatbat
filed a motion for the issuance of possession before the CFI granted (became RTC in 1980).
Balatbat filed a motion to intervene in the Rescission case, granted but Balatbat failed to file her complaint
in intervention. RTC dismissed the complaint.
In 1987, Balatbat filed a notice of lis pendens in the Partition case before the Register of Deeds of Manila.
Balatbat and her husband, filed a complaint for delivery of the owners duplicate copy of the TCT (where
1/5 was divided to the 4 children and Aurelio) before the RTC against the spouses Repuyan.
RTC dismissed for lack of cause of action, Spouses Balatbat had no rights to demand relied, in a
counterclaim, court ordered them to pay P10k (Attorney’s fees) and P5k for costs of litigation, and pay
the cost of the suit.
Balatbat filed an appeal before the CA. CA affirmed, AF and COL are deleted. Clara Balatbat filed a petition
for review under Rule 45 to set aside the CA’s decision affirming the RTC’s decision, with mod. MOR
denied.
ISSUE: WON the sale made to spouses Repuyan was merely executory and not consummated.
WON there was a double sale (Art. 1544)
WON Balatbat was buyer in good faith and for value.
RULING: The sale to the spouses Repuyan was valid and consummated, even though there was no delivery
and the consideration (price) was not fully paid.
RTC declared dismissed Roque’s complaint for rescission and held that the Sale was valid, since there was
no appeal, the decision was final and executory. Although Balatbat filed a motion for intervention, but
was not but did not file her complaint in intervention.
In the terms and conditions of the DAS, the 45k balance is payable only "after the property covered by
has been partitioned and subdivided, and title issued in the name of the BUYER", that is why Roque cannot
demand the rest of the payment.
Devoid of any stipulation that "ownership in the thing shall not pass to the purchaser until he has fully
paid the price", ownership in thing shall pass from the vendor to the vendee upon actual or constructive
delivery of the thing sold even if the purchase price has not yet been fully paid.
The failure of the buyer to pay the rest of the balance does not, in law, cause the ownership to revest.
Unless the bilateral agreement of the Contract of Sale is first rescinded or resolved pursuant to Art. 1191
of the Civil Code. Non-payment of the of the full price only creates a right (for the vendor) to demand the
fulfillment of the obligation or to rescind the contract.
The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the
seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the
New Civil Code. —
Devoid of any stipulation that “ownership in the thing shall not pass to the purchaser until he has fully
paid the price,” ownership in the thing shall pass from the vendor to the vendee upon actual or
constructive delivery of the thing “sold even if the purchase price has not yet been fully paid. The failure
of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless
the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code.
Non-payment only creates a right to demand the fulfillment of the obligation or to rescind the contract.
When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear
or cannot be inferred. —
With respect to the nondelivery of the possession of the subject property to the private respondent,
suffice it to say that ownership of the thing sold is acquired only from the time of delivery thereof, either
actual or constructive. Article 1498 of the Civil Code provides that—when the sale is made through a
public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object
of the contract, if from the deed the contrary does not appear or cannot be inferred. The execution of the
public instrument, without actual delivery of the thing, transfers the ownership from the vendor to the
vendee, who may thereafter exercise the rights of an owner over the same.
The provision of Article 1358 on the necessity of a public document is only for convenience, not for
validity or enforceability. —
In the instant case, vendor Roque delivered the owner’s certificate of title to herein private respondent.
It is not necessary that vendee be physically present at every square inch of the land bought by him,
possession of the public instrument of the land is sufficient to accord him the rights of ownership. Thus,
delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real)
or by embodying the sale in a public instrument (constructive). The provision of Article 1358 on the
necessity of a public document is only for convenience, not for validity or enforceability. It is not a
requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public
instrument.
A contract of sale being consensual, it is perfected by the mere consent of the parties. —
A contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of “the
thing bought or payment of the price is not necessary for the perfection of the contract; and failure of the
vendee to pay the price after the execution of the contract does not make the sale null and void for lack
of consideration but results at most in default on the part of the vendee, for which the vendor may
exercise his legal remedies.
Double Sales;
Persons to whom ownership of an immovable property shall be transferred in case of double sale. —
Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership
shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of
Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default
thereof, to the person who presents the oldest title, provided there is good faith.
The annotation of the adverse claim on TCT No. 135671 in the Registry of Property is sufficient compliance
as mandated by law and serves notice to the whole world. —
This is an instance of a double sale of an immovable property hence, the ownership shall vest in the person
acquiring it who in good faith first recorded it in the Registry of Property. Evidently, private respondents
Repuyans caused the annotation of an adverse claim on the title of the subject property denominated as
Entry No. 5627/T135671 on July 21, 1980. The annotation of the adverse claim on TCT No. 135671 in the
Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world.
As between two purchasers, the one who has registered the sale in his favor, has a preferred right over the
other who has not registered his title even if the latter is in actual possession of the immovable property.
—
As between two purchasers, the one who has registered the sale in his favor, has a preferred right over
the other who has not registered his title even if the latter is in actual possession of the immovable
property. Further, even in default of the first registrant or first in possession, private respondents have
presented the oldest title. Thus, private respondents who acquired the subject property in good faith and
for valuable consideration established a superior right as against the petitioner.
4. San Lorenzo Development Corp vs CA GR 124242 Jan 21, 2005
FACTS: The Spouses Lu sold the two parcels of land to Pablo Babasanta, for P15/sqm. Babasanta made a
downpayment of P50k, evidenced by a recipt issued by Pacita, and several payments worth P200k were
also paid.
(Through a letter) Babasanta demanded the execution of the Deed of Sale, so he could pay the full
payment of the purchase price because he heard that the spouses have sold the property to another
without his knowledge and consent.
Pacita Lu acknolldged the agreement between them but when the payment for th epurhcase price was
due, Babsanta requested for a reduction of price, Pacita refused so Babsanta backed out of the sale. Then
Pacita returned the P50k to him, through Eugenio Oya.
Babasanta filed a complaint for specific performance and damages before the RTC, alleging that the two
parcels of land were sold to him worth P15/sqm, and allegedly being denined to execute the final DAS
upon repeated demands.
(Answer) Spouses Lu alleged that Pacita obtained loans from Babasanta wotrht P50k and they agreed
without the consent of Miguel Lu, to verbally agreed to transform the loan into a Contract to Sell, with
the P50k as the downpayment, and the rest will be paid in a definite date. Babasanta allegedly failed to
pay the total purchase price and only paid a total of P200 despite repeated demands, because Babasanta
requeted for a reduction for a reduction of price from 15 to P12/sqm, to which the spouses refused to
grant. Babasanta rescinded the contract and declared or the the original transaction, so the spouses could
just pay him back P200k.
The parties purchased an Interbank Manager’s Check worth P200k, evidence that Pacita was able to pay
the balance of her loan.
Babasanta filed an amended complaint prating for a writ of injunction and TRO, to restrain the transfer or
conveyance by the Spouses Lu to another buyer.
Petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for Intervention before the RTC,
alleging that it had legal interest in the subject matter of the case, the subject parcels of land were to
them in a DAS with Mortgage, that it was a buyer in good faith and for value. That it was unaware of
complications, Babasanta.
RTC upheld the sale of property to SLDC.
Babasanta appealed the RTC decision before the CA. Spouses Lu also appealed contending that the
Contract to Sell with Babasanta was novated when Babasanta abandoned the verbal Contract of Sale and
declared that the original loan transaction just be carried out. And that since Miguel Lu did not consent to
the sale of the conjugal property, the verbal contract should be void.
CA did not uphold the decision of RTC. Spouses Lu withdrew from contesting CA’s decision. CA denied
SLDC’s MOR.
ISSUE: Who has the better right over the two parcels of land subject of the instant case in view of the
successive transactions executed by the Spouses Lu. (SLDC)
RULING: Petition is granted. CA’s decision is reversed.
The agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale.The
ownership is reserved in the vendor and is not transferred until the full payment of the price. The title is
retained by the vendor until the full payment of the price (payment is a positive suspensive condition),
and failure to pay is not a breach but an event that prevents the vendor to convey title from its
effectiveness.
While there is no stipulation that the seller reserves the ownership of the property until full payment of
the price which is a distinguishing feature of a contract to sell, the subsequent acts of Spouses Lu convince
the court that they never intended to transfer ownership to Babasanta, except upon full payment of the
purchase price.
SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had
knowledge of the prior transaction in favor of Babasanta. A purchaser in good faith is one who buys
property of another without notice that some other person has a right to, or interest in, such property
and pays a full and fair price for the same at the time of such purchase, or before he has notice of the
claim or interest of some other person in the property.
Distinction between a contract to sell and a contract of sale. —
In a contract of sale, title passes to the vendee upon the delivery of the thing sold; whereas in a contract
to sell, by agreement the ownership is reserved in the vendor and is not to pass until the full payment of
the price.
In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is
resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment
of the price, such payment being a positive suspensive condition and failure of which is not a breach but
an event that prevents the obligation of the vendor to convey title from becoming effective.
Being a consensual contract, a sale is perfected by mere consent and from that moment, the parties
may reciprocally demand performance; Essential elements of a contract of sale. —
Sale, being a consensual contract, is perfected by mere consent and from that moment, the parties may
reciprocally demand performance. The essential elements of a contract of sale, (1) consent or meeting of
the minds, that is, to transfer ownership in exchange for the price; (2) object certain which is the subject
matter of the contract; (3) cause of the obligation which is established.
Perfection of a contract of sale should not, however, be confused with its consummation; Sale by itself
does not transfer or affect ownership; the most that sale does is to create the obligation to transfer
ownership. —
The perfection of a contract of sale should not, however, be confused with its consummation. In relation
to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a title.
A mode is the legal means by which dominion or ownership is created, transferred or destroyed, but title
is only the legal basis by which to affect dominion or ownership. Under Article 712 of the Civil Code,
“ownership and other real rights over property are acquired and transmitted by law, by donation, by
testate and intestate succession, and in consequence of certain contracts, by tradition.” Contracts only
constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the
mode of accomplishing the same. Therefore, sale by itself does not transfer or affect ownership; the most
that sale does is to create the obligation to transfer ownership. It is tradition or delivery, as a consequence
of sale, that actually transfers ownership.