Essential characteristics of sales

articles

1. NICHAEL M. MADRIA
JD II / Law 207- Sales


A contract of sale is a contract or agreement wherein one party (seller/vendor) obligates himself to deliver and
transfer something to the other party (buyer/vendee/purchaser), who, on his part, obligates himself to pay the
price.

The common characteristics of contracts of sale are:
 Consensual - wherein mere consent is sufficient to perfect such contract.


Alfonso Quijada vs CA, Regalado Mondejar (299 SCRA 695)

Facts:
· Petitioners are heirs of the late Trinidad Quijada. Trinidad inherited a 2 hectare land. April 5,1956, Trininad
along with her siblings, executed a DEED OF DONATION in favor of the Municipality of Talacogon,
with condition that the land shall be used exclusively as part of the campus of the PROPOSED Provincial High
School in Talacogon.
· Despite the donation, Trininad still has possession of the land and sold 1 hectare to Regalado.
Subsequently, Trinidad sold the remaining 1 hectare to Regalado but this time verbally, no Deed of Sale but it
evidenced by receipts of payment.
· Regalado sold portions of the land to respondents.
· The Municipality was not able to finish the school thus returning the ownership of the property to the
donors.
· July 5,1988. Petitioners (heirs) filed against the respondents stating that their late mother did sell the
property. If it was true that she (Trinidad) sold the property, it would be null and void since it was already
donated to the Municipality thus the ownership is with the Municipality.
· RTC ruled in favor of the heirs, ruling that Trinidad had no capacity to sell because the ownership of the
land was already with the Municipality. CA reversed.

Issue: W/ON the sale is valid


Held: Yes. When the property was donated to the Municipality, the ownership was transferred to them but
wait there’s more, there was a condition. A RESOLUTORY CONDITION, though it was not stated in the
condition on how long the condition was, it was evident that the Municipality had intended to build the school.
Again, though not stated how long, the Municipality still gave back the property to the donors thus the
ownership was transferred. Making the sale valid since ownership was returned.

2.  Bilateral - wherein both parties are mutually bound to each other; the seller delivers the thing sold, while
the buyer pays the price.

Cortez vs. Court of Appeals, G.R. No. 126083, July 12, 2006

Facts: For the purchase price of 3.7M, Villa Esperanza Development Corporation (vendee) and Antonio Cortes
(vendor) entered into a contract of sale over the lots located at Baclaran, Parañaque, Metro Manila. The
Corporation advanced to Cortes the total sum of P1,213,000.00. In September 1983, the parties executed a
deed of absolute sale on the following terms: The Corporation shall advance 2.2 M as down payment, and
Cortes shall likewise deliver the TCT for the 3 lots. The balance of 1.5M shall be payable within a year from the
date of the execution. The Corporation filed the instant case for specific performance seeking to compel Cortes
to deliver the TCTs and the original copy of the Deed of Absolute Sale. According to the Corporation, despite
its readiness and ability to pay the purchase price, Cortes refused delivery of the sought documents. It prayed
for damages, attorney’s fees and litigation expenses. Cortes claimed that the owner’s duplicate copy of the
three TCTs were surrendered to the Corporation and it is the latter which refused to pay in full the agreed
down payment. RTC rendered a decision rescinding the sale and directed Cortes to return to the Corporation
the amount of P1,213,000.00, plus interest. CA reversed the decision and directed Cortes to execute a Deed of
Absolute Sale conveying the properties and to deliver the same to the Corporation together with the TCTs,
simultaneous with the Corporation’s payment of the balance of the purchase price of P2,487,000.00.

Issue: WON Cortes delivered the TCTs and the original Deed to the Corporation?

Held: Cortes avers that he delivered the TCT’s through the broker’s son. He further avers that the broker’s son
delivered it to the broker, who in turn delivered them to the Corporation. Marcosa Sanchez’s unrebutted
testimony is that, she did not receive the TCTs. She also denied knowledge of delivery thereof to her son,
Manny. What further strengthened the findings of the Court of Appeals that Cortes did not surrender the
subject documents was the offer of Cortes’ counsel at the pre-trial to deliver the TCTs and the Deed of Absolute
Sale if the Corporation will pay the balance of the down payment. Indeed, if the said documents were already
in the hands of the Corporation, there was no need for Cortes’ counsel to make such offer. Considering that
their obligation was reciprocal, performance thereof must be simultaneous. The mutual inaction of Cortes and
the Corporation therefore gave rise to a compensation morae or default on the part of both parties because
neither has completed their part in their reciprocal obligation. Cortes is yet to deliver the original copy of the
notarized Deed and the TCTs, while the Corporation is yet to pay in full the agreed down payment of
P2,200,000.00. This mutual delay of the parties cancels out the effects of default, such that it is as if no one is
guilty of delay.
Under Article 1169 of the Civil Code, from the moment one of the parties fulfills his obligation, delay
by the other begins. Since Cortes did not perform his par t, the provision
of the contract requiring the Corporation to pay in full the down payment never acquired obligatory force.

3.  Onerous - wherein one party performs his obligation with the expectation that the other party will
perform his obligation in return.

Gaite vs. Fonacier, G.R. No. L-11827, July 31,1961

Fact:
Defendant decided to revoke the authority granted by him to Plaintiff to exploit and develop the mining claims,
and plaintiff assented thereto subject to certain conditions. As a result, a document was executed wherein
Plaintiff transferred to Defendant, for the consideration of P20,000.00, plus 10% of the royalties that Defendant
would receive from the mining claims, all his rights and interests on all the roads, improvements, and facilities
in or outside said claims, the right to use the business name “Larap Iron Mines” and its goodwill, and all the
records and documents relative to the mines. In the same document, plaintiff transferred to Defendant all his
rights and interests over the iron ore, in consideration of the sum of P75,000.00, P10,000.00 of which was paid
upon the signing of the agreement, and the balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00) will be paid
from and out of the first letter of credit covering the first shipment of iron ores and of the first amount derived
from the local sale of iron ore. To secure the payment of the said balance of P65,000.00, Defendant promised
to execute in favor of Plaintiff a surety bond, and pursuant to the promise. In the subsequent year, Defendant
failed to renew the bond to sureties. Plaintiff, the latter filed the present complaint against them in the Court
of First Instance of Manila (Civil Case No. 29310) for the payment of the P65,000.00 balance of the price of the
ore, consequential damages, and attorney’s fees.
Issue:
Whether the obligation of defendants and his sureties to pay Plaintiff become due and demandable when the
former failed to renew the surety bond?
Held:
Yes, the obligation becomes demandable. The provision in the contract was not a condition but a only a
suspensive period or term to the payment of the balance of P65,000.00. What characterizes a conditional
obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) 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. That the parties to the
contract did not intend any such state of things to prevail. There is no uncertainty that the payment will have
to be made sooner or later; what is undetermined is merely the exact date at which it will be made. By the very
terms of the contract, therefore, the existence of the obligation to pay is recognized; only its maturity or
demandability is deferred. The defendant lose the right of the period when it failed to renew the surety
according to ART. 1198 of the Civil Code.


 Cummutative - wherein the thing sold is considered the equivalent of the price sold; except in the case
of aleatory contract such as the sale of hope.

Spouses Buenaventura v. Court of Appeals G.R. No. 126376. November 20, 2003

FACTS:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora,
Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all
surnamed JOAQUIN. The married Joaquin children are joined in this action by their respective spouses. Sought
to be declared null and void ab initio are certain deeds of sale covering 6 parcels of land executed by defendant
parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding

4. certificates of title issued in their names. In seeking the declaration of nullity of the aforesaid deeds of sale
and certificates of title, plaintiffs, in their complaint, aver that the purported sale of the properties in litis was
the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs
herein) of their legitime.
ISSUE:
Whether Petitioners have a legal interest over the properties subject of the Deeds of Sale
RULING:
Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As the appellate
court stated, petitioners’ right to their parents’ properties is merely inchoate and vests only upon their parents’
death. While still living, the parents of petitioners are free to dispose of their properties. In
their overzealousness to safeguard their future legitime, petitioners forget that theoretically, the sale of the
lots to their siblings does not affect the value of their parents’ estate. While the sale of the lots reduced the
estate, cash of equivalent value replaced the lots taken from the estate.


 Principal - wherein the existence and validity of such contract does not depend on another contract.

SAN LORENZO DEVELOPMENT CORPORATION VS. CA
G.R. NO. 124242, January 21, 2005

FACTS:
On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo Babasanta.
The latter made a down payment of fifty thousand pesos (P50,000.00) as evidenced by a memorandum receipt
issued by Pacita Lu of the same date. Several other payments totaling two hundred thousand pesos
(P200,000.00) were made by Babasanta. He demanded the execution of a Final Deed of Sale in his favor so he
may effect full payment of the purchase price; however, the spouses declined to push through with the
sale. They claimed that when he requested for a discount and they refused, he rescinded the agreement. Thus,
Babasanta filed a case for Specific Performance.
On the other hand, San Lorenzo Development Corporation (SLDC) alleged that on 3 May 1989, the two parcels
of land involved, namely Lot 1764-A and 1764-B, had been sold to it in a Deed of Absolute Sale with Mortgage.
It alleged that it was a buyer in good faith and for value and therefore it had a better right over the property in
litigation.

ISSUE:
Who between SLDC and Babasanta has a better right over the two parcels of land?

RULING:
An analysis of the facts obtaining in this case, as well as the evidence presented by the parties, irresistibly leads
to the conclusion that the agreement between Babasanta and the Spouses Lu is a contract to sell and not a
contract of sale.
The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos (P50,000.00)
from Babasanta as partial payment of 3.6 hectares of farm lot. 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 the parties convince us that the Spouses Lu never intended to transfer
ownership to Babasanta except upon full payment of the purchase price.
Babasanta’s letter dated 22 May 1989 was quite telling. He stated therein that despite his repeated requests
for the execution of the final deed of sale in his favor so that he could effect full payment of the price, Pacita
Lu allegedly refused to do so. In effect, Babasanta himself recognized that ownership of the property would
not be transferred to him until such time as he shall have effected full payment of the price. Doubtlessly, the
receipt signed by Pacita Lu should legally be considered as a perfected contract to sell.

5. The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of the purchase price.
There being an obligation to pay the price, Babasanta should have made the proper tender of payment and
consignation of the price in court as required by law. Glaringly absent from the records is any indication that
Babasanta even attempted to make the proper consignation of the amounts due, thus, the obligation on the
part of the sellers to convey title never acquired obligatory force.
There was no double sale in this case because the contract in favor of Babasanta was a mere contract to sell;
hence, Art. 1544 is not applicable. There was neither actual nor constructive delivery as his title is based on a
mere receipt. Based on this alone, the right of SLDC must be preferred.



 Nominate - wherein the Civil Code gives special designation to such contract in 'Title VI: Sales'.

Equatorial Realty vs. Mayfair Theater, Inc. G.R. No. 133879, November 21, 2001

FACTS:
Carmelo and Bauermann, Inc. leased its parcel of land with two-storey building to Mayfair Theater,
Inc. Carmelo informed Mayfair that they intend to sell the entire property. Mayfair replied that they were
interested to buy the entire property if the price is reasonable. However, Carmelo sold the entire property
to Equatorial. Mayfair filed an action for specific performance and annulment of the sale because it
violated their exclusive option to purchase the property for 30 days as stipulated in the lease contract.
Carmelo contended that it informed Mayfair their desire to sell the property and the option to purchase
by Mayfair is null and void for lack of consideration.
ISSUE:
1. WON the option to purchase in the leased contract is an option contract or a right of first refusal?
2. WON the sale of the property to Equatorial is valid?
HELD:
1. RIGHT OF FIRST REFUSAL. Under the law, an option is a contract granting a privilege to buy and
sell within an agreed period of time for a determined price and must be supported by
consideration distinct from the price. Whereas, right of first refusal is part of the entire contract
of lease. In this case, the right of first refusal is an integral part of the lease contract between
Carmelo and Mayfair and no separate consideration shall be needed to be binding.
2. The sale is rescissible. Both Carmelo and Equatorial acted in bad faith knowing that a right of first
refusal was agreed upon in the lease contract and Mayfair was an interested buyer of the
property.