IV.
PRICE
A. Meaning of Price;
Hernandez-Nievera v. Hernandez, 643
SCRA 646 (2011);
B. Requisites for valid Price
1. The Price Must Be Real - 1471 -
Art. 1471. If the price is simulated, the sale is
void, but the act may be shown to have been in
reality a donation, or some other act or contract.
Mapalo v. Mapalo, 17 SCRA 114 (1966);
Facts:
The spouses Miguel Mapalo and Candida Quiba
were the registered owners of a residential land
located in Pangasinan. (1,635 sq. m.)
The spouses donated the eastern half of the
land to Miguel’s brother – Maximo Mapalo who
was about to get married.
However, they were deceived into signing, on
October 15, 1936, a deed of absolute sale over
the entire land in Maximo’s favor. Their
signatures were procured by fraud because they
were made to believe by Maximo and the lawyer
who acted as notary public who "translated" the
document, that the same was a deed of
donation in Maximo's favor covering one-half of
their land. (It must be noted that the spouses
are illiterate farmers).
Although the document of sale stated a
consideration of Five Hundred (P500.00) Pesos,
the aforesaid spouses did not receive anything
of value for the land.
In 1938, Maximo Mapalo, without the consent of
the spouse, registered the sale in his favor.
After thirteen years (1951), he sold the land to
the Narcisos. (Evaristo, Petronila Pacifico and
Miguel) who thereafter registered the sale and
obtained a title in their favor.
In 1952, the Narcisos filed a complaint with the
CFI to be declared owners of the entire land, for
possession of its western portion; for damages;
and for rentals.
The Mapalo spouses filed a counterclaim
seeking cancellation of the the Narcisos’ titles as
to the western half of the land. They said that
their signatures to the deed of sale of 1936 was
procured by fraud and that the Narcisos were
buyers in bad faith.
They also filed another complaint wherein they
asked the court to declare deeds of sale of 1936
and of 1951 over the land in question be
declared null and void as to the western half of
said land.
CFI ruled in favor of the Mapalo spouses. Upon
appeal filed by Narcisos, CA reversed the lower
court’s ruling solely on the ground that the
consent of the Mapalo spouses to the deed of
sale of 1936 having been obtained by fraud, the
same was voidable, not void ab initio, and,
therefore, the action to annul the same, within
four years from notice of the fraud, had long
prescribed. (From March 15, 1938). Hence, this
appeal.
Issues:
1. WON the deed of sale executed in 1936 was
null and void. YES
2. WON the Narcisos were purchasers in good
faith. NO
Held:
1st issue: YES, the sale was void.
The Civil Code governs the transaction because
it was executed in 1936
Accordingly, since the deed of sale of 1936 is
governed by the Old Civil Code, it should be
asked whether its case is one wherein there is
no consideration, or one with a statement of a
false consideration. If the former, it is void and
inexistent; if the latter, only voidable, under the
Old Civil Code.
There is lack of consideration
As observed earlier, the deed of sale of 1936
stated that it had for its consideration Five
Hundred (P500.00) Pesos. In fact, however,
said consideration was totally absent. The
problem, therefore, is whether a deed which
states a consideration that in fact did not exist,
is a contract without consideration, and
therefore void ab initio, or a contract with a false
consideration, and therefore, at least under the
Old Civil Code, voidable.
When there is no consideration, the contract is
null and void
According to Manresa, what is meant by a
contract that states a false consideration is one
that has in fact a real consideration but the
same is not the one stated in the document.
In our view, therefore, the ruling of this Court in
Ocejo, Perez & Co. vs. Flores, 40 Phil. 921, is
squarely applicable herein. In that case we ruled
that a contract of purchase and sale is null and
void and produces no effect whatsoever where
the same is without cause or consideration in
that the purchase price which appears thereon
as paid has in fact never been paid by the
purchaser to the vendor.
2nd issue: No, they were no purchasers in good
faith.
Narcisos were not buyers in good faith
Aside from the fact that all the parties in these
cases are neighbors, except Maximo Mapalo the
foregoing facts are explicit enough and
sufficiently reveal that the Narcisos were aware
of the nature and extent of the interest of
Maximo Mapalo their vendor, over the above-
described land before and at the time the deed
of sale in their favor was executed.
The Narcisos were purchaser-in-value but not
purchasers in good faith
What was the necessity, purpose and reason of
Pacifico Narciso in still going to the spouses
Mapalo and asked them to permit their brother
Maximo to dispose of the above-described land?
To this question it is safe to state that this act
of Pacifico Narciso is a conclusive manifestation
that they (the Narcisos) did not only have prior
knowledge of the ownership of said spouses
over the western half portion in question but
that they also have recognized said ownership.
It also conclusively shows their prior knowledge
of the want of dominion on the part of their
vendor Maximo Mapalo over the whole land and
also of the flaw of his title thereto. Under this
situation, the Narcisos may be considered
purchasers in value but certainly not as
purchasers in good faith.
Ong v. Ong 19 SCRA 133 (1985);
Facts:
On February 25, 1976 Imelda Ong, for and in
consideration of One (P1.00) Peso and other
valuable considerations, executed in favor of
private respondent Sandra Maruzzo, then a
minor, a Quitclaim Deed whereby she
transferred, released, assigned and forever
quit-claimed to Sandra Maruzzo, her heirs and
assigns, all her rights, title, interest and
participation in the ONE-HALF (½) undivided
portion of the parcel of land.
On November 19, 1980, Imelda Ong revoked
the aforesaid Deed of Quitclaim and, thereafter,
on January 20, 1982 donated the whole
property described above to her son, Rex Ong-
Jimenez.
Sandra Maruzzo, through her guardian (ad
litem) Alfredo Ong, filed with the Regional Trial
Court of Makati, Metro Manila an action against
petitioners, for the recovery of
ownership/possession and nullification of the
Deed of Donation over the portion belonging to
her and for Accounting.
Petitioners claimed that the Quitclaim Deed is
null and void inasmuch as it is equivalent to a
Deed of Donation, acceptance of which by the
donee is necessary to give it validity. Further, it
is averred that the donee, Sandra Maruzzo,
being a minor, had no legal personality and
therefore incapable of accepting the donation.
The trial court rendered judgment in favor of
respondent Maruzzo and held that the Quitclaim
Deed is equivalent to a Deed of Sale and, hence,
there was a valid conveyance in favor of the
latter.
Petitioners appealed to the respondent
Intermediate Appellate Court. They reiterated
their argument below and, in addition,
contended that the One (P1.00) Peso
consideration is not a consideration at all to
sustain the ruling that the Deed of Quitclaim is
equivalent to a sale.
Respondent Intermediate Appellate Court
promulgated its Decision affirming the appealed
judgment and held that the Quitclaim Deed is a
conveyance of property with a valid cause or
consideration; that the consideration is the One
(P1.00) Peso which is clearly stated in the deed
itself; that the apparent inadequacy is of no
moment since it is the usual practice in deeds of
conveyance to place a nominal amount although
there is a more valuable consideration given.
Issue:
Whether a Quitclaim Deed is equivalent to a
Deed of Sale
Held:
A careful perusal of the subject deed reveals
that the conveyance of the one- half (½)
undivided portion of the above-described
property was for and in consideration of the One
(P 1.00) Peso and the other valuable
considerations (emphasis supplied) paid by
private respondent Sandra Maruzzo through her
representative, Alfredo Ong, to petitioner
Imelda Ong. Stated differently, the cause or
consideration is not the One (P1.00) Peso alone
but also the other valuable considerations.
The execution of a deed purporting to convey
ownership of a realty is in itself prima facie
evidence of the existence of a valuable
consideration, the party alleging lack of
consideration has the burden of proving such
allegation.
Even granting that the Quitclaim deed in
question is a donation, Article 741 of the Civil
Code provides that the requirement of the
acceptance of the donation in favor of minor by
parents of legal representatives applies only to
onerous and conditional donations where the
donation may have to assume certain charges
or burdens (Article 726, Civil Code).
The donation to an incapacitated donee does not
need the acceptance by the lawful
representative if said donation does not contain
any condition. In simple and pure donation, the
formal acceptance is not important for the donor
requires no right to be protected and the donee
neither undertakes to do anything nor assumes
any obligation. The Quitclaim now in question
does not impose any condition.
Bad faith and inadequacy of the monetary
consideration do not render a conveyance
inexistent, for the assignor’s liberality may be
sufficient cause for a valid contract (Article
1350, Civil Code), whereas fraud or bad faith
may render either rescissible or voidable,
although valid until annulled, a contract
concerning an object certain entered into with a
cause and with the consent of the contracting
parties, as in the case at bar.”
WHEREFORE. the appealed decision of the
Intermediate Appellate Court should be, as it is
hereby AFFIRMED, with costs against herein
petitioners.
Bagnas v. CA, 176 SCRA 159 (1989);
Facts:
Hilario Mateum died on March 11, 1964, single,
without ascendants or descendants, and
survived only by petitioners who are his
collateral relatives. He left no will, no debts, and
an estate consisting of 29 parcels of land in
Kawit and Imus, 10 of which are involved in this
controversy. On April 3, 1964, respondents who
are also collateral relatives of the deceased, but
more remote, registered 2 deeds of sale
purportedly executed by Mateum in their favor.
The considerations were P1.00 and “services
rendered, being rendered, and to be rendered
for my benefit”. On the strength of the deeds,
respondents were able to secure title over the
10 parcels of land. On May 22, 1964, petitioners
commenced a suit against respondents, seeking
annulment of the deeds of sale a fictitious,
fraudulent or falsified or, alternatively, as
donations void for want of acceptance in public
instrument. Respondents contend that the sales
were made for valuable considerations, and
attacked the legal standing of the petitioners as
being mere collateral heirs.
Issues:
(1) Whether petitioners have the legal standing
to sue
(2) Whether the sale is void for want of
consideration
Held:
(1) The law as it is now no longer deems
contracts with a false cause, or which are
absolutely simulated or fictitious, merely
voidable, but declares them void, i.e., inexistent
("nulo") unless it is shown that they are
supported by another true and lawful cause or
consideration. A logical consequence of that
change is the juridical status of contracts
without, or with a false, cause is that
conveyances of property affected with such a
vice cannot operate to divest and transfer
ownership, even if unimpugned. If afterwards
the transferor dies the property descends to his
heirs, and without regard to the manner in
which they are called to the succession, said
heirs may bring an action to recover the
property from the purported transferee. As
pointed out, such an action is not founded on
fraud, but on the premise that the property
never leaves the estate of the transferor and is
transmitted upon his death to heirs, who would
labor under no incapacity to maintain the action
from the mere fact that they may be only
collateral relatives and bound neither principally
or subsidiarily under the deed or contract of
conveyance.
(2) Upon the consideration alone that the
apparent gross, not to say enormous,
disproportion between the stipulated price (in
each deed) of P l.00 plus unspecified and
unquantified services and the undisputably
valuable real estate allegedly sold worth at least
P10,500.00 going only by assessments for tax
purposes which, it is well-known, are
notoriously low indicators of actual value plainly
and unquestionably demonstrates that they
state a false and fictitious consideration, and no
other true and lawful cause having been shown,
the Court finds both said deeds, insofar as they
purport to be sales, not merely voidable, but
void ab initio. Neither can the validity of said
conveyances be defended on the theory that
their true causa is the liberality of the transferor
and they may be considered in reality donations
because the law also prescribes that donations
of immovable property, to be valid, must be
made and accepted in a public instrument, and
it is not denied by the respondents that there
has been no such acceptance which they claim
is not required. The transfers in question being
void, it follows as a necessary consequence and
conformably to the concurring opinion in
Armentia, with which the Court fully agrees,
that the properties purportedly conveyed
remained part of the estate of Hilario Mateum,
said transfers notwithstanding, recoverable by
his intestate heirs, the petitioners herein, whose
status as such is not challenged.
Mate v. CA, 290 SCRA 463 (1998);
Facts:
On October 6, 1986, Josefina “Josie” Rey and
private respondent Tan went to the residence of
petitioner in Tacloban City. Josie solicited his
help to stave her off her prosecution by
respondent for violation of B. P. 22. Josie asked
petitioner to cede to respondent his 3 lots. Josie
explained to him that he was in no danger of
losing his property as they will be redeemed by
her own funds. After a long discussion,
petitioner agreed to execute a fictitious deed of
sale with right to repurchase after 6 months.
Josie gave petitioner 2 post-dated checks to be
used in redeeming the property. However, the
checks were both dishonoured. Realizing that he
was swindled, he sent a telegram to Josie, and
looked for her in Manila, but she was nowhere
to be found. Petitioner filed a criminal case
against Josie for violation of B. P. 22, but the
case was archived since Josie could not be
located. Petitioner filed a case for annulment of
contract with damages against Josie and
respondent. Josie was declared in default and
the case proceeded against respondent. Both
the trial court and the Court of Appeals upheld
the validity of the sale.
Issue:
Whether the sale was null and void for want of
consideration
Held:
It is plain that consideration existed at the time
of the execution of the deed of sale with right of
repurchase. It is not only appellant's kindness
to Josefina, being his cousin, but also his receipt
of P420,000.00 from her which impelled him to
execute such contract. Furthermore, while
petitioner did not receive the P1.4 Million
purchase prices from respondent Tan, he had in
his possession a postdated check of Josie Rey in
an equivalent amount precisely to repurchase
the two lots on or before the sixth month.
Unfortunately, the two checks issued by Josie
Rey were worthless. Both were dishonored upon
presentment by petitioner with the drawee
banks. However, there is absolutely no basis for
petitioner to file a complaint against private
respondent Tan and Josie Rey to annul the pacto
de retro sale on the ground of lack of
consideration, invoking his failure to encash the
two checks. Petitioner's cause of action was to
file criminal actions against Josie Rey under B.P.
22, which he did. The filing of the criminal cases
was a tacit admission by petitioner that there
was a consideration of the pacto de retro sale.
Alino v. Heirs of Lorenzo, 556 SCRA 139;
Facts:
1. Petitioners as heirs of Lorenzo Yap filed an
action against Ramon Yap and co-respondent
for the reconveyance of land, with buildings and
improvement on it. They alleged that the said
property was held in trust by Ramon and that it
was their father Lorenzo who purchased the said
land and constructed the apartment building on
it. However, alleging that since at that time,
Lorenzo was still a Chinese citizen, hence
prohibited from owning land, he caused it to be
registered in the name of respondent Ramon.
2. The said property was sold by Ramon to his
co-respondent which caused the petitioners to
file this action.
3. The lower court ruled in favor of the
respondents or the ownership of Ramon. This
was affirmed by the Court of Appeals. Hence
this petition.
Issue: Whether or not a trust was constituted
between Lorenzo and Ramon
RULING: No, and even it there was an implied
trust, it could not have been valid as it was in
contravention of applicable laws. There is a
basic distinction between implied and express
trusts. Express trusts cannot be proved by
parole evidence. Even then, in order to establish
the existence of an implied trust in real property
by parole evidence, the prove should be as fully
convincing as the facts as if the acts giving rise
to the trust obligation are proven by an
authentic document. The petitioners' evidence
was insufficient to prove clearly that a trust was
constituted between their father and Ramon.
a) Simulated price;
Land Bank of the Phils. v. Poblete, 691
SCRA 613;
On October 1997, respondent Poblete obtained
a loan worth P300k from Kapantay Multi-
Purpose. She mortgaged her Lot No.29 located
in Buenavista, Sablayan, Occidental Mindoro,
under OCT No. P-12026. Kapantay, in turn,
used OCT No. P-12026 as collateral under its
Loan Account No. 97-OC-013 with Land Bank-
Sablayan Branch.
After a year, Poblete instructed her son-in-law
Domingo Balen to look for a buyer for the Lot
No. 29 in order to pay her loan and he referred
Angelito Joseph Maniego. Both parties agreed
that the lot shall amount to P 900k but in order
to reduce taxes they will execute a P 300k
agreed price appearing in the Deed of Absolute
Sale dated November 9, 1998. In the Deed,
Poblete specifically described herself as a
widow. Balen, then, delivered the Deed to
Maniego. Instead of paying the price, Maniego
promised in an affidavit dated November 19,
1998 stating that the said amount will be
deposited to her Land Bank Savings Account but
he failed to do so.
On August 1999, Maniego paid Kapantay’s Loan
Account for P448,202.08 and on subsequent
year he applied for a loan worth P1M from Land
Bank using OCT No. P-12026 as a collateral with
a condition that the title must be first
transferred on his name. On August 14, 2000,
the Registry of Deeds issued TCT No. T-20151
in Maniego’s name pursuant to a Deed of
Absolute Sale with the signatures of Mrs.
Poblete and her husband dated August 11, 2000
and Maniego successfully availed the Credit Line
Agreement for P1M and a Real Estate Mortgage
over TCT No. T-20151 on August 15, 2000. On
November 2002, Land Bank filed an Application
for an Extra-judicial Foreclosure against the said
Mortgage stating that Maniego failed to pay his
loan.
Poblete filed a complaint for nullification of the
Deed of Sale dated August 11, 2000 and TCT
No. T-20151, Reconveyance of the Title and
Damages with a Prayer for Temporary
Restraining Order and/or Issuance of Writ of
Preliminary Injunction against Maniego,
Landbank and the Register of Deeds. The
judgment of RTC, affirmed by the CA upon
appeal, favors the plaintiff Poblete. Hence, this
petition.
ISSUE: WON the CA erred in upholding the
finding of the trial court declaring the TCT No.
T-20151 as null and void.
Held :
The petition is meritorious.
It is well-entrenched rule, as applied, by the CA,
that a forged or fraudulent deed is a nullity and
conveys no title. Moreover, where the deed of
sale states that the purchase price has been
paid but in fact has never been, the deed is void
ab initio for lack of consideration. Since the
deed, is void, the title is also void. Since the land
title has been declared void by final judgment,
the Real Estate Mortgage over it is also void.
It is essential that the mortgagor be the
absolute owner of the mortgage; otherwise, the
mortgage is void. The doctrine ―the mortgagee
in good faith as a rule does not apply to banks
which are required to observe a higher standard
of diligence. A bank cannot assume that, simply
because the title offered as security is on its
face, free of any encumbrances or lien, it is
relieved of the responsibility of taking further
steps to verify the title and inspect the
properties to be mortgage.
The records do not even show that Land Bank
investigated and inspected the actual
occupants. Land Bank merely mentioned
Maniego’s loan application upon his
presentation of OCT No. P-12026, which was
still under the name of Poblete. Land Bank even
ignored the fact that Kapantay previously used
Poblete’s title as collateral in its loan account
with Land Bank.
Furthermore, only one day after Maniego
obtained TCT No. P-20151 under his name, Land
Bank and Maniego executed a Credit Line
Agreement and Real Mortgage. It appears that
Maniego’s loan was already completely
processed while the collateral was still in the
name of Poblete. Where said mortgagee acted
with haste in granting the mortgage loan and
did not ascertain the ownership of the land
being mortgaged, it cannot be considered
innocent mortgagee.
The pari delicto rule provides ―when two
parties are equally at fault, the law leaves them
as they are and denies recovery by either one
of them. This court adopt the decisions of RTC
and CA that only Maniego is at fault. Finally, on
the issue of estoppels and laches, such question
were not raised before the trial court. It is
settled that an issue which are neither alleged
in the complaint nor raised during the trial
cannot be raised for the time on appeal.
The issue on the nullity of Maniego’s title had
already been foreclosed when this Court denied
Maniego’s petition for review in the Resolution
dated 13 July 2011, which became final and
executory on 19 January 2012. It is settled that
a decision that has acquired finality becomes
immutable and unalterable and may no longer
be modified in any respect, even if the
modification is meant to correct erroneous
conclusions of fact or law and whether it will be
made by the court that rendered it or by the
highest court of the land. This is without
prejudice, however, to the right of Maniego to
recover from Poblete what he paid to Kapantay
for the account of Poblete, otherwise there will
be unjust enrichment by Poblete.
b) False consideration - 1353 and
1354;
Art. 1353. The statement of a false cause in
contracts shall render them void, if it should not
be proved that they were founded upon another
cause which is true and lawful. (1276)
Art. 1354. Although the cause is not stated in
the contract, it is presumed that it exists and is
lawful, unless the debtor proves the contrary.
(1277)
c) Non-payment of price –
Macasaet v. R. Transport Corp., 535 SCRA
503 (2007);
FACTS:
On 3 January 1996, a Complaint for Recovery of
Possession and Damages was filed by R.
Transport Corporation against Alexander
Macasaet at the Regional Trial Court (RTC) of
Makati, Branch 147. The complaint stated that
R. Transport was a holder of Certificates of
Public Convenience (CPC) to operate a public
utility bus service within Metro Manila and the
provinces whereas New Mindoro Transport
Classic (NMTC), operates a transportation
company in Oriental Mindoro.
On 11 October 1995, R. Transport and Macasaet
entered into a "Deed of Sale with Assumption of
Mortgage" (deed of sale) over four (4)
passenger buses where Macasaet agreed to pay
the consideration of twelve million pesos
(P12,000,000.00) and assume the existing
mortgage obligation on the said buses in favor
of Phil. Hino Sales Corporation.
R. Transport delivered to Macasaet two (2)
passenger buses.
However, despite repeated demands, Macasaet
failed to pay the stipulated purchase price. This
impelled R. Transport to file a complaint seeking
the issuance of a writ of replevin, praying for
judgment declaring R. Transport as the lawful
owner and possessor of the passenger buses
and regulating Macasaet to remit the amount of
P660,000.00 representing the income
generated by the two buses from 16 October
1995 to 2 January 1996.
On 8 October 1995, "Special Trip Contract" was
entered into by the parties. This contract
stipulated that R. Transport would lease the four
buses subject of the deed of sale to Macasaet
for the sum of P10,000.00 a day per bus or a
total of P280,000.00 for the duration of one
week, from 15-22 October 1995. Respondent's
finance officer testified that the purpose of the
contract was to support the delivery of the first
two buses pending formal execution of the deed
of sale.
On 8 January 1996, on R. Transport's motion,
the trial court issued a writ of seizure ordering
the sheriff to take possession of the two buses
in NMTC subject to R. Transport's filing of a bond
in the amount of P12,000,000.00. The sheriff
recovered the two buses and delivered them to
R. Transport on 16 January 1996.
The petitioner defended that he had paid
respondent the full consideration of
P12,000,000.00 and had agreed to assume the
mortgage obligation in favor of Phil. Hino Sales
Corporation. He also claimed ownership over
the four passenger buses, including the two
buses already delivered to him. He further
contended that he had already remitted
P120,000.00 to respondent as partial payment
of the mortgage obligation. Petitioner admitted
that he had been earning at least P7,000.00 per
day on each of the buses. For his counterclaim,
he demanded for the return of the bus units
seized and the immediate delivery of the other
two units, as well as for payment of damages.
ISSUE:
Whether the provision stated in Section 34 of
Rule 132 of the Rules of Court (“the court shall
consider no evidence which has not been
formally offered”) applicable in the case at bar?
Ruling:
The petition filed was denied. However, the
petitioner is demanded to pay respondent
damages in the form of reasonable rentals in the
amount of P1,460,000.00 with interest at 12%
per annum from the finality of this decision, with
a lien thereon corresponding to the additional
filing fees adverted to above.
The court declared that the non-perfection of
the deed of sale precluded petitioner from
possessing the buses. In accordance with Article
1318 of the New Civil Code, the requisites of a
contract are as follows: (1) consent of the
contracting parties; (2) object certain which is
the subject matter of the contract; and (3)
cause of the obligation which is established.
Thus, contracts, other than real 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. Once perfected, they
bind other contracting parties and the
obligations that arise have the force of law
between the parties and should be complied
with in good faith. The parties are bound not
only to the fulfillment of what has been
expressly stipulated but also to the
consequences which, according to their nature,
may be in keeping with good faith, usage and
law.
The Court of Appeals relied on the text of the
deed of sale which adverts to payment of the
purchase price, the non-payment of the
purchase price was no longer an issue.
Respondent presented strong evidence that
petitioner did not pay the purchase price, and
that paved the way for the issuance of a writ of
replevin. Petitioner did not challenge the finding
of the trial court before the Court of Appeals and
this Court. He did not also controvert the non-
consummation of the assumption of mortgage
at any level of the proceedings.
The result of the the rescission of the contract
of sale is the recovery of possession of the
object thereof. Thus, petitioner’s possession
over the passenger buses became unlawful
when upon demand for return, he wrongfully
retained possession over the same.
2. The Price Must Be in Money or Its
Equivalent - 1458, 1468;
Art. 1458. By the contract of sale one of the
contracting parties obligates himself to transfer
the ownership and to deliver a determinate
thing, and the other to pay therefor a price
certain in money or its equivalent.
A contract of sale may be absolute or
conditional.
Art. 1468. If the consideration of the contract
consists partly in money, and partly in another
thing, the transaction shall be characterized by
the manifest intention of the parties. If such
intention does not clearly appear, it shall be
considered a barter if the value of the thing
given as a part of the consideration exceeds the
amount of the money or its equivalent;
otherwise, it is a sale.
3. The Price Must be Certain or
Ascertainable at the Time of Perfection –
1469;
Art. 1469. In order that the price may be
considered certain, it shall be sufficient that it
be so with reference to another thing certain, or
that the determination thereof be left to the
judgment of a special person or persons.
Should such person or persons be unable or
unwilling to fix it, the contract shall be
inefficacious, unless the parties subsequently
agree upon the price.
If the third person or persons acted in bad faith
or by mistake, the courts may fix the price.
Where such third person or persons are
prevented from fixing the price or terms by fault
of the seller or the buyer, the party not in fault
may have such remedies against the party in
fault as are allowed the seller or the buyer, as
the case may be.
C. Manner of Payment of Price must be
Agreed Upon;
Velasco v. CA, 51 SCRA 439 (1973);
FACTS:
Petitioner: On November 29, 1962 parties
entered into contract of sale of land for
P100,000. The payment terms would be a down
payment of P10,000 and 20,000 and the
P70,000 is payable in installment. Petitioner
then paid the P10,000 down payment on
November 29, 1962. On January 8, 1964 he
paid the remaining 20,000 but the respondent
refused to accept and execute a deed of sale.
Respondent: No contract of sale was perfected
because the minds of the parties did not meet.
The property was leased by Socorro Velasco and
the defendant indicated willingness in selling the
property for 100,000 under the terms of
P30,000 down payment, 20,000 of which to be
paid on November 30, 1962 and the remaining
70,000 is payable in 10 years with 9% interest
per annum. On November 29, 1962 Socorro
paid 10,000, short of the alleged 20,000 agreed
down payment. However, said payment was
accepted. On January 8, 1964 Socorro tendered
the 20,000 down payment but defendant
refused to accept because the latter considered
the contract rescinded on the account the
former’s failure to complete the down payment
on or before December 31, 1962.
ISSUE:
WON a contracted sale was perfected between
the parties.
HELD:
No. The minds of the parties did not meet “in
regard to the manner of payment.” It is not
difficult to glean from the aforequoted
averments that the petitioners themselves
admit that they and the respondent still had to
meet and agree on how and when the down-
payment and the installment payments were to
be paid. Such being the situation, it cannot,
therefore, be said that a definite and firm sales
agreement between the parties had been
perfected over the lot in question. Indeed, this
Court has already ruled before that a definite
agreement on the manner of payment of the
purchase price is an essential element in the
formation of a binding and enforceable contract
of sale.3 The fact, therefore, that the petitioners
delivered to the respondent the sum of P10,000
as part of the down-payment that they had to
pay cannot be considered as sufficient proof of
the perfection of any purchase and sale
agreement between the parties herein under
article 1482 of the new Civil Code, as the
petitioners themselves admit that some
essential matter — the terms of payment — still
had to be mutually covenanted.
San Miguel Properties Philippines v.
Huang, 336 SCRA 737 (2000);
Nature of the Case: A petition for review for
a decision of the Court of Appeals which
reversed the decision of the RTC dismissing the
complaint brought by the Huangs against San
Miguel Properties for enforcement of a contract
of sale.
Facts: San Miguel Properties offered two
parcels of land for sale and the offer was made
to an agent of the respondents. An “earnest-
deposit” of P1 million was offered by the
respondents and was accepted by the
petitioner’s authorized officer subject to certain
terms.
Petitioner, through its executive officer, wrote
the respondent’s lawyer that because ethe
parties failed to agree on the terms and
conditions of the sale despite the extension
granted by the petitioner, the latter was
returning the “earnest-deposit”.
The respondents demanded execution of a deed
of sale covering the properties and attempted to
return the “earnest-deposit” but petitioner
refused on the ground that the option to
purchase had already expired.
A complaint for specific performance was filed
against the petitioner and the latter filed a
motion to dismiss the complaint because the
alleged “exclusive option” of the respondents
lacked a consideration separate and distinct
from the purchase price and was thus
unenforceable; the complaint did not allege a
cause of action because there was no “meeting
of the mind” between the parties and therefore
the contact of sale was not perfected.
The trial court granted the petitioner’s motion
and dismissed the action. The respondents filed
a motion for reconsideration but were denied by
the trial court. The respondents elevated the
matter to the Court of Appeals and the latter
reversed the decision of the trial court and held
that a valid contract of sale had been complied
with.
Petitioner filed a motion for reconsideration but
was denied.
Issue: WON there was a perfected contract of
sale between the parties
Ruling: The decision of the appellate
court was reversed and the respondents’
complaint was dismissed.
Ratio Decidendi: It is not the giving of
earnest money , but the proof of the
concurrence of all the essential elements of the
contract of sale which establishes the existence
of a perfected sale.
The P1 million “earnest-deposit” could not have
been given as earnest money because at the
time when petitioner accepted the terms of
respondents’ offer, their contract had not yet
been perfected. This is evident from the
following conditions attached by respondents to
their letter.
The first condition for an option period of 30
days sufficiently shows that a sale was never
perfected. As petitioner correctly points out,
acceptance of this condition did not give rise to
a perfected sale but merely to an option or an
accepted unilateral promise on the part of
respondents to buy the subject properties within
30 days from the date of acceptance of the
offer. Such option giving respondents the
exclusive right to buy the properties within the
period agreed upon is separate and distinct from
the contract of sale which the parties may enter.
All that respondents had was just the option to
buy the properties which privilege was not,
however, exercised by them because there was
a failure to agree on the terms of payment. No
contract of sale may thus be enforced by
respondents.
Even the option secured by respondents from
petitioner was fatally defective. Under the
second paragraph of Art. 1479, an accepted
unilateral promise to buy or sell a determinate
thing for a price certain is binding upon the
promisor only if the promise is supported by a
distinct consideration. Consideration in an
option contract may be anything of value, unlike
in sale where it must be the price certain in
money or its equivalent. There is no showing
here of any consideration for the option. Lacking
any proof of such consideration, the option is
unenforceable.
Equally compelling as proof of the absence of a
perfected sale is the second condition that,
during the option period, the parties would
negotiate the terms and conditions of the
purchase. 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 the present case, the parties never got past
the negotiation stage. The alleged “indubitable
evidence” of a perfected sale cited by the
appellate court was nothing more than offers
and counter-offers which did not amount to any
final arrangement containing the essential
elements of a contract of sale. While the parties
already agreed on the real properties which
were the objects of the sale and on the purchase
price, the fact remains that they failed to arrive
at mutually acceptable terms of payment,
despite the 45-day extension given by
petitioner.
Co v. CA, 286 SCRA 76 (1998);
Amado v. Salvador, 540 SCRA 161;
Navarra v. Planters Development Bank,
527 SCRA 562.
D. How Price Determined
1. By Third Person – 1469
2. By the Courts – 1469
3. By reference to a definite day,
particular exchange or market – 1472
4. By reference to another thing
certain
5. But never by one party to the
contract - 1473, 1182
6. Effect of unascertainability - 1474

E. Gross Inadequacy of Price -1355, 1386,

1470 and 1602.
F. Judicial Sale
G. Rescissible Contracts of Sale - 1380 &
1381
H. Sales With Right to Purchase – 1602 and
1604