Dignos v.

CA
GR No. 59266, 29 February 1988
Bidin, J

Doctrine:
1. Sale; Elements (1458)
2. Ownership is transferred by delivery of the thing sold
(1477)

Facts:
In July 1965, Dignos spouses sold a parcel of land to Jabil for the sum of
P28,000.00, payable in two installments, with an assumption of indebtedness with
the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and
acknowledged by the vendors in the deed of sale executed in favor of Jabil.

In November 1965, the Dignos spouses sold the same land in favor of Cabigas
spouses, who were then US citizens for the price of P35,000.00. A deed of absolute
sale was executed by the Dignos spouses in favor of the Cabigas spouses, and which
was registered in the Office of the Register of Deeds.

As the Dignos spouses refused to accept from Jabil the balance of the
purchase price of the land, and as Jabil discovered the second sale made by the
Dignos to the Cabigas spouses, Jabil brought the present suit.

Issue:
Whether the contract is one of absolute sale or a contract to sell

Ruling:
A deed of sale is absolute in nature although denominated as a Deed of Conditional
Sale where nowhere in the contract in question is a proviso or stipulation to the
effect that title to the property sold is reserved in the vendor until full payment of
the purchase price, nor is there a stipulation giving the vendor the right to
unilaterally rescind the contract the moment the vendee fails to pay within a fixed
period.

It is evident that when petitioners sold said land to the Cabigas spouses, they were
no longer owners of the same and the sale is null and void.

Tan v. Benolirao
GR No. 153820, 16 October 2009
Brion, J.

Facts:
Co-owners executed a Deed of Conditional Sale over the property in favor of Tan for
the price of P1,378,000.00.
Tan failed to pay and asked for another extension, which the vendors again granted.
Notwithstanding this second extension, Tan failed to pay the remaining balance.

The vendors thus wrote him a letter demanding payment of the balance of the
purchase price within 􏰀ve (5) days from notice; otherwise, they would declare the
rescission of the conditional sale and the forfeiture of his down payment based on
the terms of the contract.

Tan alleged that there was a novation of the Deed of Conditional Sale done without
his consent since the annotation on the title created an encumbrance over the
property. Tan prayed for the refund of the down payment and the rescission of the
contract.

Issue:
WON the contract entered into between Tan and Benolirao is a contract of sale and
may be rescinded

Ruling:
The contract is a mere contract to sell. The very essence of a contract of sale is the
transfer of ownership in exchange for a price paid or promised. In contrast, a
contract to sell is defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the property despite delivery thereof to
the prospective buyer, binds himself to sell the property exclusively to the
prospective buyer upon fulfillment of the condition agreed.

Contract to sell is not rescinded but terminated. In a contract to sell, title remains
with the vendor and does not pass on to the vendee until the purchase price is paid
in full. Thus, in a contract to sell, the payment of the purchase price is a positive
suspensive condition. Failure to pay the price agreed upon is not a mere breach,
casual or serious, but a situation that prevents the obligation of the vendor to
convey title from acquiring an obligatory force.

Artates v. Urbi (PUBLIC SALE OF HOMESTEAD)

GR No. L-29421, 30 January 1971
Reyes, J.B.L., J.

Doctrine:

Facts:
A public sale was made to satisfy a judgment against Lino Artates in the amount of
P1,476.35, and awarded to Daniel Urbi in a civil case filed against the former for
physical injuries he inflicted upon Urbi on 21 October 1955. In the execution sale,
the property was sold to the judgment creditor.

Plaintiff spouses prayed that the public sale of the land to Urbi be declared null and
void on the ground that the sale of the homestead to satisfy an indebtedness of
Artates violated the provision of the Public Land Law exempting said property from
execution for any debt contracted within five years from date of the issuance of the
patent; that latter, with the intention of defrauding the plaintiffs, executed on 26
June 1961 a deed for the sale of the same parcel of land to defendant Soliven, a
minor, supposedly for the sum of P2,676.35.

Spouses Artates and Pojas sought the annulment of the execution of a homestead
issued and duly registered in their names. A public sale was made to satisfy a
judgment against Artates, which amount was awarded to Urbi for physical injuries.
Plaintiff spouses alleged that said sale violated the provision of the Public Land Law
exempting said property from execution from any debt contracted within the five-
year period from the date of the issuance of the patent.

Issue:
WoN the execution sale is valid

Ruling:
The execution sale is null and void. As thus prescribed by law, for a period of five
years from the date of the government grant, lands acquired by free or homestead
patent shall not only be incapable of being encumbered or alienated in favour of the
government itself or any of its institutions or of duly constituted banking
corporations, but also, they shall not be liable to the satisfaction of any debt
contracted within the said period, whether or not the indebtedness shall mature
during or after the prohibited time. This provision is mandatory and a sale made in
violation thereof is null and void and produces no effect.

Heirs of Enrique Zambales v. CA

GR No. L-154070. 28 February 1983
Melencio-Herrera, J:

Doctrine:

Facts:

The Zambales spouses were the homestead patentees of a parcel of land subject of
the controversy. Claiming that the Nin Bay Mining Corp. had removed silica sand
from their land and destroyed the plants and other improvements therein, they
instituted a case claiming for damages. The Zambales spouses entered into a
Compromise Agreement with the Corporation; by virtue of which, the disputed
property was sold to one Preysley. Ten years after the Trial Court’s decision based
on the Compromise Agreement and nine years after the sale, the Zambales spouses
filed a civil case for annulment of the Deed of Sale with recovery of possession and
ownership with damages, contending that it was their lawyer who prevailed upon
them to sign the Compromise Agreement; that they were unschooled and did not
understand the contents thereof.
Issue:
WoN the Compromise Agreement violates the alienation and encumbrance of a
homestead lot within five years from the issuance of the patent

Ruling:
The sale is void The law does not distinguish between executor and consummated
sales. The bilateral promise to buy and sell the homestead lot at a price certain,
which was reciprocally demandable, was entered into within the five-year
prohibitory period and is therefore, illegal and void.

The bilateral promise to buy and sell and the agency to sell entered into within five
years from the date of the homestead patent was in violation of the Public Land Law,
although the executed sale was deferred until after the expiration of the five-year
prohibitory period.

Concrete Aggregates, Inc. v. Court of Tax Appeals

GR No. 55793, 18 May 1990
Regalado, J.

Doctrine:

Facts:
Concrete Aggregates, Inc. is a domestic corporation duly organized and existing
under the laws of the Philippines, with business address at Longos, Quezon City. It
has an aggregate plant at Montalban, Rizal which processes rock aggregates mined
by it from private lands. It advances the theory that is produced asphalt and
concrete mix only upon previous orders, which may be proved by its system of
requiring the filling of job orders where the customers specify the construction
requirements, and that without such order, it would not do so considering the highly
perishable nature of the asphalt and concrete mix. Thus, it adopts the view that if
the article subject of the sale is one which is not ready for delivery, as it is yet to be
manufactured according to the order, the seller thereof is a contractor.

CIR assessed and demanded payment from CAI of the amount of P244,002.76 as
sales and ad valorem taxes for the first semester of 1968, inclusive of surcharges.

Issue:
WoN the petitioner is a contractor subject to the 3% contractor’s tax or a
manufacturer subject to the 7% sales tax

WoN CAI passed the test of a contractor under Article 1467 of the Civil Code

Ruling:
CAI is a manufacturer. Its raw materials are processed under a prescribed formula
and thereby changed by means of machinery into a finished product, altering their
quality, transforming them into marketable state or preparing them for any of the
specific uses of industry. Thus, the raw materials become a distinct class of
merchandise or finished products for the purpose of their sales or distribution to
others and not for his own use or consumption.

CAI now only manufactures the finished articles but also sells or distributes them to
others.

A contract for the sale of an article which the vendor in the ordinary course of his
business manufactures or procures for the general market, whether the same is on
hand at the time or not is a contract for the sale of goods.

CAI insists that it would produce asphalt or concrete mix only upon previous job
orders otherwise it would not do so. It does not and will not carry in stock cement
and asphalt mix. But the reason is obvious. What practically prevents the petitioner
from mass production and storage is the nature of its products, that is they easily
harden due to temperature change and water and cement reaction. Stated
differently, it is self-evident that it is due to the highly perishable nature of aspalt
and concrete mix, as petitioner itself argues, that makes impossible for them to be
carried in stock because they cool and harden with time, and once hardened, they
become useless.

It is clear, however, that petitioner does nothing more than sell the articles that it
habitually manufactures. It stocks raw materials, ready at any time, for the
manufacture of asphalt and/or concrete mix.