GARMA, CHERRY JOY D.

Philippine Supreme Court decisions on Law on Sales

Circa 2010-2015

1. SPOUSES JOSELINA ALCANTARA AND ANTONIO ALCANTARA, and

SPOUSES JOSEFINO RUBI AND ANNIE DISTOR- RUBI, Petitioners, - versus BRIGIDA L. NIDO, as attorney-in-fact of REVELEN N. SRIVASTAVA,
Respondent, G.R. No. 165133, April 19, 2010

FACTS: Revelen, who is respondents daughter and of legal age, is the owner
of an unregistered land with an area of 1,939 square meters located in
Cardona, Rizal. Sometime in March 1984, respondent accepted the offer of
petitioners to purchase a 200-square meter portion of Revelens lot (lot) at P200 per
square meter. Petitioners paid P3,000 as downpayment and the balance was
payable on installment. Petitioners constructed their houses in 1985. In 1986,
with respondents consent, petitioners occupied an additional 150 square meters
of the lot. By 1987, petitioners had already paid P17,5005 before petitioners
defaulted on their installment payments. On 11 May 1994, respondent, acting
as administrator and attorney-in-fact of Revelen, filed a complaint for recovery
of possession with damages and prayer for preliminary injunction against
petitioners with the RTC. The RTC stated that based on the evidence presented,
Revelen owns the lot and respondent was verbally authorized to sell 200 square
meters to petitioners. The RTC ruled that since respondents authority to sell the
land was not in writing, the sale was void under Article 18746 of the Civil Code.7
The RTC ruled that rescission is the proper remedy.
The appellate court also held that respondent, as Revelens agent, did not have a
written authority to enter into such contract of sale; hence, the contract entered
into between petitioners and respondent is void. A void contract creates no
rights or obligations or any juridical relations. Therefore, the void contract
cannot be the subject of rescission.14 Aggrieved by the appellate courts Decision,
petitioners elevated the case before this Court. Issues Petitioners raise the following
arguments: 1. The appellate court gravely erred in ruling that the contract entered
into by respondent, in representation of her daughter, and former defendant
Eduardo Rubi (deceased), is void; and 2. The appellate court erred in not ruling
that the petitioners are entitled to their counterclaims, particularly specific
performance.15 Ruling of the Court We deny the petition. Petitioners submit that the
sale of land by an agent who has no written authority is not void but merely

voidable given the spirit and intent of the law. Being only voidable, the
contract may be ratified, expressly or impliedly. Petitioners argue that since the
contract to sell was sufficiently established through respondents admission
during the pre-trial conference, the appellate court should have ruled on the matter
of the counterclaim for specific performance.

RULING: Agency; When the sale of a piece of land or any interest thereon
is through an agent; the authority of the latter shall be in writing; otherwise, the
sale shall be void. Thus the authority of an agent to execute a contract for the sale
of real estate must be conferred in writing and must give him specific authority,
either to conduct the general business of the principal or to execute a binding
contract containing terms and conditions which are in the contract he did execute. A
special power of attorney is necessary to enter into any contract by which the
ownership of an immovable is transmitted or acquired either gratuitously or for a
valuable consideration. The express mandate required by law to enable an
appointee of an agency (couched) in general terms to sell must be one that
expressly mentions a sale or that includes a sale as a necessary ingredient of the
act mentioned. For the principal to confer the right upon an agent to sell real estate,
a power of attorney must so express the powers of the agent in clear and
unmistakable language. When there is any reasonable doubt that the language so
used conveys such power, no such construction shall be given the document.

Sale of Land through an Agent Articles 1874 and 1878 of the Civil Code provide:
Art. 1874. When a sale of a piece of land or any interest therein is through an
agent, the authority of the latter shall be in writing; otherwise, the sale shall be
void. Art. 1878. Special powers of attorney are necessary in the following cases: x
x x (5) To enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration; x x x
Article 1874 of the Civil Code explicitly requires a written authority before an
agent can sell an immovable property. Based on a review of the records,
there is absolutely no proof of respondents written authority to sell the lot to
petitioners. In fact, during the pre-trial conference, petitioners admitted that at
the time of the negotiation for the sale of the lot, petitioners were of the belief
that respondent was the owner of lot.19 Petitioners only knew that Revelen
was the owner of the lot during the hearing of this case. Consequently, the sale
of the lot by respondent who did not have a written authority from Revelen is void.
A void contract produces no effect either against or in favor of anyone and cannot
be ratified.20 A special power of attorney is also necessary to enter into any
contract by which the ownership of an immovable is transmitted or acquired
for a valuable consideration. Without an authority in writing, respondent

cannot validly sell the lot to petitioners. Hence, any sale in favor of the
petitioners is void. Ou

2. SPOUSES CARMEN S. TONGSON and JOSE C. TONGSON, Petitioners, versus EMERGENCY PAWNSHOP BULA, Respondent, G.R. No. 167874 s.
January 15, 2010

Facts: In May 1992, Napala offered to purchase from the Spouses Tongson their
364-square meter parcel of land, situated in Davao City and covered by Transfer
Certificate of Title (TCT) No. 143020, for P3,000,000. Finding the offer acceptable,
the Spouses Tongson executed with Napala a Memorandum of Agreement[4] dated
8 May 1992.

On 2 December 1992, respondents lawyer Atty. Petronilo A. Raganas, Jr. prepared a

Deed of Absolute Sale[5] indicating the consideration as only P400,000. When
Carmen Tongson noticed that the consideration was very low, she [complained] and
called the attention of Napala but the latter told her not to worry as he would be the
one to pay for the taxes and she would receive the net amount of P3,000,000.[6]

To conform with the consideration stated in the Deed of Absolute Sale, the parties
executed another Memorandum of Agreement, which allegedly replaced the first
Memorandum of Agreement,[7] showing that the selling price of the land was only
P400,000.[8]

Upon signing the Deed of Absolute Sale, Napala paid P200,000 in cash to the
Spouses Tongson and issued a postdated Philippine National Bank (PNB) check in
the amount of P2,800,000,[9] representing the remaining balance of the purchase
price of the subject property. Thereafter, TCT No. 143020 was cancelled and TCT No.
T-186128 was issued in the name of EPBI.[10]

When presented for payment, the PNB check was dishonored for the reason Drawn
Against Insufficient Funds. Despite the Spouses Tongson's repeated demands to
either pay the full value of the check or to return the subject parcel of land, Napala
failed to do either. Left with no other recourse, the Spouses Tongson filed with the
Regional Trial Court, Branch 16, Davao City a Complaint for Annulment of Contract

and Damages with a Prayer for the Issuance of a Temporary Restraining Order and a
Writ of Preliminary Injunction.[11]

In their Answer, respondents countered that Napala had already delivered to the
Spouses Tongson the amount of P2,800,000 representing the face value of the PNB
check, as evidenced by a receipt issued by the Spouses Tongson. Respondents
pointed out that the Spouses Tongson never returned the PNB check claiming that it
was misplaced. Respondents asserted that the payment they made rendered the
filing of the complaint baseless.[12]

At the pre-trial, Napala admitted, among others, issuing the postdated PNB check in
the sum of P2,800,000.[13] The Spouses Tongson, on the other hand, admitted
issuing a receipt which showed that they received the PNB check from Napala.
Thereafter, trial ensued.

Issue: WHETHER THE CONTRACT OF SALE CAN BE ANNULLED BASED ON THE

FRAUD EMPLOYED BY NAPALA; and

Perfection of Contract; A contract is a meeting of the minds between two

persons, whereby one is bound to give something or to render some service to the
other. 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.

3. ESTATE OF MARGARITA D. CABACUNGAN, represented by LUZ LAIGO-ALI,

Petitioner, - versus- MARILOU LAIGO, PEDRO ROY LAIGO, STELLA BALAGOT
and SPOUSES MARIO B. CAMPOS AND JULIA S. CAMPOS, Respondents, G.R.
No. 175073, August 15, 2011

Manifest intention of the Parties in the Contract of Sale; A trust is the legal
relationship between one person having an equitable ownership of property and
another person owning the legal title to such property, the equitable ownership of
the former entitling him to the performance of certain duties and the exercise of
certain powers by the latter. Trusts are either express or implied. Express or direct
trusts are created by the direct and positive acts of the parties, by some writing or
deed, or will, or by oral declaration in words evincing an intention to create a trust.
Implied trusts also called trusts by operation of law, indirect trusts and involuntary
trusts arise by legal implication based on the presumed intention of the parties or
on equitable principles independent of the particular intention of the parties. They
are those which, without being expressed, are deducible from the nature of the
transaction as matters of intent or, independently of the particular intention of the
parties, as being inferred from the transaction by operation of law basically by
reason of equity.

4. RAYMUNDO S. DE LEON, Petitioner, vs. BENITA T. ONG. Respondent, G.R.

No. 170405. February 2, 2010

Resolutory condition subject in a contract of sale; In a contract of sale, the

seller conveys ownership of the property to the buyer upon the perfection of the
contract. The non-payment of the price is a negative resolutory condition. Contract
to sell is subject to a positive suspensive condition. The buyer does not acquire
ownership of the property until he fully pays the purchase price. In the present case,
the deed executed by the parties did not show that the owner intends to reserve
ownership of the properties. The terms and conditions affected only the manner of
payment and not the immediate transfer of ownership. It was clear that the owner
intended a sale because he unqualifiedly delivered and transferred ownership of the
properties to the respondent

5. RUBEN C. CORPUZ, represented by Attorney-in-Fact Wenifreda C.

Agullana, Petitioner, -versus- Sps. HILARION AGUSTIN and JUSTA AGUSTIN,
Respondents, G.R. No. 183822, January 18, 2012

Registration of the Deed of Sale; Section 50 of Act No. 496 (now Sec. 51 of P.D.
1529), provides that the registration of the deed is the operative act to bind or
affect the land insofar as third persons are concerned. But where the party has
knowledge of a prior existing interest which is unregistered at the time he acquired
a right to the same land, his knowledge of that prior unregistered interest has the

effect of registration as to him. The Torrens system cannot be used as a shield for
the commission of fraud

6. Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978,
July 31, 2013.

Agency; general power of attorney; an agency couched in general terms

comprises only acts of administration. The certification is a mere general power of
attorney which comprises all of Joy Trainings business. Article 1877 of the Civil
Code clearly states that [a]n agency couched in general terms comprises only acts
of administration, even if the principal should state that he withholds no power or
that the agent may execute such acts as he may consider appropriate, or even
though the agency should authorize a general and unlimited management.

7. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R.

No.182349, July 24, 2013.

Agency; special power of attorney; required for an agent to sell an

immovable property; authority must be in writing, otherwise sale is void. In
Alcantara v. Nido, the Court emphasized the requirement of an SPA before an agent
may sell an immovable property. In the said case, Revelen was the owner of the
subject land. Her mother, respondent Brigida Nido accepted the petitioners offer to
buy Revelens land at Two Hundred Pesos (P200.00) per sq m. However, Nido was
only authorized verbally by Revelen. Thus, the Court declared the sale of the said
land null and void under Articles 1874 and 1878 of the Civil Code.

8. Dr. Lorna C. Formaran v. Dr. Glenda B. Ong and Solomon S. Ong, G.R. No.
186264, July 8, 2013.

Contract; absolutely simulated contracts; void from the beginning. The Court is
in accord with the observation and findings of the (RTC, Kalibo, Aklan) thus: The
amplitude of foregoing undisputed facts and circumstances clearly shows that the

sale of the land in question was purely simulated. It is void from the very beginning
(Article 1346, New Civil Code). If the sale was legitimate, defendant Glenda should
have immediately taken possession of the land, declared in her name for taxation
purposes, registered the sale, paid realty taxes, introduced improvements therein
and should not have allowed plaintiff to mortgage the land. These omissions
properly militated against defendant Glendas submission that the sale was
legitimate and the consideration was paid.

9. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R.

No.182349, July 24, 2013.
Contract of sale; elements. A valid contract of sale requires: (a) a meeting of
minds of the parties to transfer ownership of the thing sold in exchange for a price;
(b) the subject matter, which must be a possible thing; and (c) the price certain in
money or its equivalent.

10. Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna,
G.R. No.172346, July 24, 2013.

Contract to sell; payment of the price; positive suspension condition; effect

of failure to pay. Clearly, the RTC arrived at the above-quoted conclusion based on
its mistaken premise that rescission is applicable to the case. Hence, its
determination of whether there was substantial breach. As may be recalled,
however, the CA, in its assailed Decision, found the contract between the parties as
a contract to sell, specifically of a real property on installment basis, and as such
categorically declared rescission to be not the proper remedy. This is considering
that in a contract to sell, payment of the price is a positive suspensive condition,
failure of which is not a breach of contract warranting rescission under Article 1191
of the Civil Code but rather just an event that prevents the supposed seller from
being bound to convey title to the supposed buyer. Also, and as correctly ruled by
the CA, Article 1191 cannot be applied to sales of real property on installment since
they are governed by the Maceda Law.

There being no breach to speak of in case of non-payment of the purchase price in a

contract to sell, as in this case, the RTCs factual finding that Lourdes was willing
and able to pay her obligation a conclusion arrived at in connection with the said
courts determination of whether the non-payment of the purchase price in

accordance with the terms of the contract was a substantial breach warranting
rescission therefore loses significance. The spouses Bonrostros reliance on the
said factual finding is thus misplaced. They cannot invoke their readiness and
willingness to pay their obligation on November 24, 1993 as an excuse from being
made liable for interest beyond the said date.

11. Philippine National Bank v. Sps. Bernard and Cresencia Maraon,

G.R.No. 189316, July 1, 2013.

Mortgage; mortgagee in good faith; right to have mortgage lien carried over
and annotated on the new certificate of title. The protection afforded to PNB as a
mortgagee in good faith refers to the right to have its mortgage lien carried over
and annotated on the new certificate of title issued to Spouses Maraon as so
adjudged by the RTC. Thereafter, to enforce such lien thru foreclosure proceedings
in case of non- payment of the secured debt, as PNB did so pursue. The principle,
however, is not the singular rule that governs real estate mortgages and
foreclosures attended by fraudulent transfers to the mortgagor.

12. Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No.
177050, July 1, 2013.

Act No. 3135; foreclosure sale; personal notice to the mortgagor in extrajudicial
foreclosure proceedings is necessary where there is a stipulation to this effect, and
failure to comply with the stipulated notice requirement is a contractual breach
sufficient to render the foreclosure sale null and void. It has been consistently held
that unless the parties stipulate, personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary because Section 3117 of Act 3135 only
requires the posting of the notice of sale in three public places and the publication
of that notice in a newspaper of general circulation.

13. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R.
No.182349, July 24, 2013.

Agency; apparent authority of an agent based on estoppel; concept. In

Woodchild Holdings, Inc. v. Roxas Electric and Construction Company, Inc. the Court
stated that persons dealing with an assumed agency, whether the assumed
agency be a general or special one, are bound at their peril, if they would hold the
principal liable, to ascertain not only the fact of agency but also the nature and
extent of authority, and in case either is controverted, the burden of proof is upon
them to establish it. In other words, when the petitioner relied only on the words of
respondent Alejandro without securing a copy of the SPA in favor of the latter, the
petitioner is bound by the risk accompanying such trust on the mere assurance of
Alejandro.

14. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No.
176043. January 15, 2014.

Contracts; buyer in good faith. It is settled that a party dealing with a registered
land does not have to inquire beyond the Certificate of Title in determining the true
owner thereof, and in guarding or protecting his interest, for all that he has to look
into and rely on are the entries in the Certificate of Title.

Inarguably, Opinion acted in good faith in dealing with the registered owners of the
properties. He relied on the titles presented to him, which were confirmed by the
Registry of Deeds to be authentic, issued in accordance with the law, and without
any liens or encumbrances.

15. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F.
Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios
Mojica, G.R. No. 193517, January 15, 2014.

Sales; proof capacity of seller; difference when there is a special power of

attorney and when there is none.The strength of the buyers inquiry on the sellers
capacity or legal authority to sell depends on the proof of capacity of the seller. If
the proof of capacity consists of a special power of attorney duly notarized, mere
inspection of the face of such public document already constitutes sufficient inquiry.
If no such special power of attorney is provided or there is one but there appears to

be flaws in its notarial acknowledgment, mere inspection of the document will not
do; the buyer must show that his investigation went beyond the document and into
the circumstances of its execution.

16. Development Bank of the Philippines (DBP) v. Guaria Agricultural and

Realty Development Corporation, G.R. No. 160758, January 15, 2014.

Foreclosure; premature foreclosure; order of restoration of possession and

payment of reasonable rentals. Having found and pronounced that the extrajudicial
foreclosure by DBP was premature, and that the ensuing foreclosure sale was void
and ineffectual, the Court affirms the order for the restoration of possession to
Guarifia Corporation and the payment of reasonable rentals for the use of the
resort. The CA properly held that the premature and invalid foreclosure had unjustly
dispossessed Guarifia Corporation of its properties. Consequently, the restoration of
possession and the payment of reasonable rentals were in accordance with Article
561 of the Civil Code, which expressly states that one who recovers, according to
law, possession unjustly lost shall be deemed for all purposes which may redound to
his benefit to have enjoyed it without interruption.

17. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F.
Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios
Mojica, G.R. No. 193517, January 15, 2014.
Sales; sale of a piece of land or any interest therein is through an agent;
authority of the agent shall be in writing; otherwise, the sale shall be void. The due
execution and authenticity of the subject SPA are of great significance in
determining the validity of the sale entered into by Victorino and Ramon since the
latter only claims to be the agent of the purported seller (i.e., respondent). Article
1874 of the Civil Code provides that [w]hen a sale of a piece of land or any interest
therein is through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void. In other words, if the subject SPA was not proven to be duly
executed and authentic, then it cannot be said that the foregoing requirement had
been complied with; hence, the sale would be void.

18. Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128,
February 19, 2014.

Contract of sale; obligations of the parties; there is nothing in the decision of

the HLURB, as affirmed by the OP and the CA, which shows that the petitioner is
being ordered to assume the obligation of any of the respondents.In a contract of
sale, the parties obligations are plain and simple. The law obliges the vendor to
transfer the ownership of and to deliver the thing that is the object of sale. On the
other hand, the principal obligation of a vendee is to pay the full purchase price at
the agreed time.

19. Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128,
February 19, 2014.
Contract to sell; ownership; right to mortgage the property by the owner. Note
that at the time PEPI mortgaged the property to the petitioner, the prevailing
contract between respondents PEPI and Dee was still the Contract to Sell, as Dee
was yet to fully pay the purchase price of the property. On this point, PEPI was
acting fully well within its right when it mortgaged the property to the petitioner, for
in a contract to sell, ownership is retained by the seller and is not to pass until full
payment of the purchase price. In other words, at the time of the mortgage, PEPI
was still the owner of the property. Thus, in China Banking Corporation v. Spouses
Lozada the Court affirmed the right of the owner/developer to mortgage the
property subject of development, to wit: [P.D.] No. 957 cannot totally prevent the
owner or developer from mortgaging the subdivision lot or condominium unit when
the title thereto still resides in the owner or developer awaiting the full payment of
the purchase price by the installment buyer.
20. Bignay EX-IM Philippines, Inc. v. Union Bank of the Philippines / Union
Bank of the Philippines v. Bignay EX-IM Philippines, Inc., G.R. No. 171590 &
G.R. No. 171598, February 12, 2014.

Sale; warranties of sellers. Indeed, this Court is convinced from an examination

of the evidence and by the concurring opinions of the courts below that Bignay
purchased the property without knowledge of the pending Civil Case No. Q-52702.
Union Bank is therefore answerable for its express undertaking under the December
20, 1989 deed of sale to defend its title to the Parcel/s of Land with improvement
thereon against the claims of any person whatsoever. By this warranty, Union
Bank represented to Bignay that it had title to the property, and by assuming the
obligation to defend such title, it promised to do so at least in good faith and with
sufficient prudence, if not to the best of its abilities.