GAITE V.

FONACIER
Facts:

Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the exploration and
development of mining claims. Gaile executed a deed of assignment in favor of a single proprietorship
owned by him. For some reasons, Fonacier revoked the agency, which was acceded to by Gaite, subject
to certain conditions, one of which being the transfer of ores extracted from the mineral claims for
P75,000, of which P10,000 has already been paid upon signing of the agreement and the balance to be
paid from the first letter of credit for the first local sale of the iron ores. To secure payment, Fonacier
delivered a surely agreement with Larap Mines and some of its stockholders, and another one with Far
Eastern Insurance. When the second surely agreement expired with no sale being made on the ores,
Gaile demanded the P65,000 balance. Defendants contended that the payment was subject to the
condition that the ores will be sold.

Issue:

1. Whether the sale is conditional or one with a period.

Ruling:

1. The shipment or local sale of the iron ore is not a condition precedent for suspensive) to the
payment of the balance of P65,000.00, but was only a suspensive period or term. 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.

A contract of sale is normally commutative and onerous: not only does each one of the parties
assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and
the buyer to pay the price), but each party anticipates performance by the other from the very
start. While in a sale 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 (as in the case of a sale of hopes or expectations, emptio spel), it is not in the usual course
of business to do so; hence, the contingent character of the obligation must clearly appear.
Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing
his right over the ore without getting paid for it or that Fonacier understood that Gaite assumed
any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of
the P65,000.00, and not only upon a bond by Fonacier, the Larap Mines & Smelting Co, and the
company's stockholders, but also on one by a surety company, and the fact that appellants did
put up such bonds indicates that they admitted the definite existence of their obligation to pay
the balance of P65,000.00.

The appellant has forfeited the right court below that the appellants have forfeited the right to
compel Gaite to wait for the sale of the ore before receiving payment of the balance of
P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else
replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on
December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the
unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted
when he executed the deed of sale of the ore to Fonacier.

Principle:
A contract of sale is normally commutative and onerous: not only does each one of the parties assume a
correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay
the price), but each party anticipates performance by the other from the very start. While in a sale 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 (as in the case of a sale of hopes or
expectations, emptio spel), it is not in the usual course of business to do so; hence, the contingent
character of the obligation must clearly appear.

Acap v. Court of Appeals

Facts:

Felixberto, an only son, inherited from his parents a lot. He executed a duly notarized document entitled
"Declaration of Heirship and Deed of Absolute Sale" in favor of Pido. When ownership was transferred,
Acap continued to be the tenant of a portion of the said land and religiously paid his leasehold rentals to
Pido. When Pido died intestate his surviving heirs executed a notarized Declaration of Heirship and Waiver
of Rights of the said lot to de los Reyes. De los Reyes informed Acap that, as the new owner, the lease
rentals should be paid to him. When petitioner refused and failed to pay any further lease rentals after
repeated demands, he filed a complaint for recovery of possession and damages. The lower court
rendered a decision in favor of private respondent which was eventually affirmed by the Court of Appeals
(CA). Hence, this present petition.

Issues:
1. Whether or not the subject Declaration of Heirship and Waiver of Rights is a recognized mode of
acquiring ownership by private respondent over the lot in question.
2. Whether or not the said document can be considered as Deed of Sale in favor of private
respondent of the lot in question.

Held:
The Court GRANTS the petition and SET ASIDE the decision of the CA.

1. No. Private respondent cannot conclusively claim ownership over the subject lot on the sole basis
of the waiver document. Under Article 712 of the Civil Code, the modes of acquiring ownership
are generally classified into 2 classes:

a. original mode (i.e., occupation, acquisitive prescription, law or intellectual creation) and
b. the derivative mode (ie., through succession, mortis causa, or tradition as a result of certain
contracts, such as sale, barter, donation, assignment or mutuum).

In a contract of sale, one of the contracting parties obligates himself to transfer the ownership of
and to deliver a determinate thing, and the other party to pay a price certain in money or its
equivalent. Whereas, a declaration of heirship and waiver of rights operates as a public
instrument when filled with the Registry of Deeds whereby the intestate heirs adjudicate and
divide the estate left by the decedent among themselves as they see fit. Hence, private
respondent, being then a stranger to the succession of Pido, cannot conclusively claim ownership
over the subject lot on the sole basis of the waiver which neither recites the elements of either a
sale, or a donation, or any other derivative mode of acquiring ownership.
 2. No. A notice of adverse claim was filed with the Registry of Deeds which contained the
Declaration of Heirship with Waiver of rights and was annotated at the back of the Original
Certificate of Title (OCT) to the land in question. This said notice, by its nature, does not however
prove private respondent's ownership over the tenanted lot The Court emphasized that while the
existence of said adverse claim was duly proven, there was no evidence whatsoever that a deed
of sale was executed between the parties transferring the rights in favor of private respondent.
An adverse claim cannot by itself be sufficient to cancel the OCT to the land and title the same in
private respondent's name.

Principle:

● The Court held that an asserted right or claim to ownership, or a real right over a thing arising
from a juridical act, is not per se sufficient to give rise to ownership over the thing; that right or
title must be completed by fulfilling certain conditions imposed by law: “Hence, ownership and
real rights are acquired only pursuant to a legal mode or process. While title (such as sale) is the
juridical justification, mode (like delivery) is the actual process of acquisition or transfer of
ownership over a thing.”
● Acap held that the “Declaration of Heirship and Waiver of Rights” executed by the heirs waiving
their inheritance rights in favor of a non-heir cannot be deemed a proper mode to affect title to
the land involved because waiver of inheritance right can only be done in favor of another heir;
whereas, it could not also be considered a sale contract because the document did not provide
for the element of price, which is required for a valid sale under Article 1458 of the Civil Code.

Dizon vs. Court of Appeals

GR No. 122544, January 28, 1999
Facts:

Fidela Dizon leased her property to Overland Express with option to buy the leased property within one
year. If Overland would not exercise the option to buy, the lease would be renewed but for an increased
rental payment.

One month after the lease expired, Overland remained in possession of the property but did not pay the
increased rentals. Instead, it exercised the option to buy and gave its partial payment of the purchase
price to Alice Dizon.

However, Fidela Dizon filed and won an ejectment suit against Overland.

Overland filed a counter suit for specific performance on the basis of their exercise of the option to buy
which already resulted to a contract of sale.

Issue:
1. Will the complaint for specific performance prosper? Whether or not there is a perfected contract
of sale between the parties.

Held:

1. No. The contract of sale 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, parties reciprocally
demand performance. Thus, the elements of a contract are consent, object, and price in money
or its equivalent. It bears stressing that the absence of any these elements negates the existence
 of a perfected contract of sale. Sale is a consensual contract who alleges it must show its
existence by competent proof. Respondent gave 300,000 to petitioners on the erroneous
presumption that he said amount perfected a contract of sale pursuant to the contract of lease
with option to buy. There was no valid consent by the petitioners on the supposed sale entered
by Dizon, as petitioner’s agent. As provided in New civil code, there was no showing that
petitioners consented to the act of Dizon nor authorized her to act on their behalf. Respondent
should have done was ascertain the extent of authority of Dizon. Respondent cannot seek relief
on the supposed agency. Wherefore, petitioners are ordered to refund to respondent the amount
of 300,000 which they received through Dizon.

Principle:

Dizon v. Court of Appeals holds that all three elements of consent, subject matter and consideration
must be present for a valid sale to exist; and that in a situation where any of the elements is not
present, “[t]there was no perfected contract of sale,” and that “the absence of any of these essential
elements negates the existence of a perfected contract of sale,” rather than using the technical term
void.

De Santos v. City of Manila

G.R. No. L-21677, June 29, 1972
Facts:
1. A Contract of Exchange was executed between City of Manila and Arellano University. Five parcels
of land of City of Manila, 2,400 sq. meters in exchange for 3 parcels of land of Arellano University.
2. The parcels of land of Arellano were needed for the Azcarraga Extension.
3. Antonio de Santos went forward and asked that such contract be declared null and void because
he has a claim over Lot 1. In his claim, he also asked that be given the right to preemption and
redemption.
4. The predecessor in interest of de Santos is Lopez. Lopez' land, lot 4 was a subject of
expropriation because of the Legarda widening. Lopez be requested that he be given the estero
adjoining Lot 4 instead. The request was however held in abeyance when the Legarda widening
project was stopped.
5. The lower court ruled in favor of the City of Manila. The same was affirmed by CA.

Issue:
Whether or not de Santos has the right to preemption or redemption.

Ruling:

De Santos has no right to pre emption or redemption since it is only an exchange / barter. the right of
legal redemption granted by law to an adjoining owner of an urban land, covers only “resale” and does
not cover exchanges of properties.

There is no element under Article 1622 that was proven by de Santos. He did not acquire any right to Lot
1 when Lopez sold him Lot 4, at most he only acquired the right to the latters claim.

Principle:

When the contract is one of barter, the adjoining owner of the properties bartered has no right to
pre-emption or redemption.
Celestino Co. v. Collector of Internal Revenue
G.R. No. L-8506, August 31, 1956

Facts:
Celestino is the owner of Oriental Sash Factory. It paid 7% on the gross sales of their sales. In 1952, they
began to pay only 3% Lax. Petitioner claims that it does not manufacture ready-made doors, sash and
windows for the public, but only upon special orders from the customers, hence, it is not engaged in
manufacturing under Sec 186, but only in sales of services covered by sec 191. Having failed to convince
BIR, petitioner went to the Court of Tax Appeal where it also failed. CTA, in its decision, holds that the
"petitioner has chosen for its tradename and has offered itself to the public as a "Factory", which means
it is out to do business, in its chosen lines on a big scale. As a general rule, sash factories receive orders
for doors and windows of special design only in particular cases but the bulk of their sales is derived from
a ready-made doors and windows of standard sizes for the average home.

Issue:

Whether the petitioner company provides special services or is engaged in manufacturing.

Ruling:

The Oriental Sash Factory is engaged in manufacturing.

The company habitually makes sash, windows and doors as it has been represented to the public. The
fact that windows and doors are made by it only when customers place their orders, does not alter the
nature of the establishment, for it is obvious that it only accepted such orders as called for the
employment of such material moulding, frames, panels-as it ordinarily manufactured or was in a position
habitually to manufacture. The Oriental Sash Factory does nothing more than sell the goods that it
mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and
combining them in such forms as its customers may desire.

Principle:

A factory which habitually makes sash, windows and doors, and sells the goods to the public is a
manufacturer. The fact that the windows and doors are made by it only when customers place their
orders and according to such form or combination as suit the fancy of the purchasers does not alter the
nature of the establishment.

Commissioner on Internal Revenue vs Engineering Equipment

G.R. No. L-27044, June 30, 1975
Facts:

Engineering Equipment and Supply Co. (Engineering for short), a domestic corporation, is an engineering
and machinery firm. As operator of an integrated engineering shop, it is engaged, among others, in the
design and installation of central type air conditioning system, pumping plants and steel fabrications.

On July 27, 1956, one Juan de la Cruz, wrote the then Collector, now Commissioner, of Internal Revenue
denouncing Engineering for tax evasion by misdeclaring its imported articles and failing to pay the correct
percentage taxes due thereon in connivance with its foreign suppliers. Engineering was likewise
denounced to the Central Bank (CB) for alleged fraud in obtaining its dollar allocations. Acting on these
denunciations, a raid and search was conducted by a joint team of Central Bank, (CB), National Bureau of
Investigation (NBI) and Bureau of Internal Revenue (BIR) agents on September 27, 1956, on which
occasion voluminous records of the firm were seized and confiscated.
On September 30, 1957, revenue examiners Quesada and Catudan reported and recommended to the
then Collector, now Commissioner, of Internal Revenue that Engineering be assessed for P480,912.01 as
deficiency advance sales tax on the theory that it misdeclared its importation of air conditioning units and
parts and accessories thereof which are subject to tax under Section 185(m) of the Tax Code.

On March 3, 1959, the Commissioner assessed against, and demanded upon, Engineering payment of the
increased amount and suggested that P10,000 be paid as compromise in extrajudicial settlement of
Engineering's penal liability for violation of the Tax Code. The firm, however, contested the tax
assessment and requested that it be furnished with the details and particulars of the Commissioner's
assessment Engineering appealed to the Court of Tax Appeals. CTA rendered a decision in favor of
Engineering, declared exempt from the deficiency manufacturers sales tax covering the period from June
1, 1948. to September 2, 1956. However, petitioner is ordered to pay respondent, or his duly authorized
collection agent, the sum of P174,141.62 as compensating tax and 25% surcharge for the period from
1953 to September 1956. With costs against petitioner.

Issue:

Whether or not Engineering is a manufacturer of air conditioning units under Section 185(m), supra, in
relation to Sections 183(b) and 194 of the Code, or a contractor under Section 191 of the same Code.

Ruling:

Contractor. The distinction between a contract of sale and one for work, labor and materials is tested by
the inquiry whether the thing transferred is one not in existence and which never would have existed but
for the order of the party desiring to acquire it, or a thing which would have existed and has been the
subject of sale to some other persons even if the order had not been given. The word "contractor" has
come to be used with special reference to a person who, in the pursuit of the independent business,
undertakes to do a specific job or piece of work for other persons, using his own means and methods
without submitting himself to control as to the petty details. The true test of a contractor, would seem to
be that he renders service in the course of an independent occupation, representing the will of his
employer only as to the result of his work, and not as to the means by which it is accomplished.

Engineering, in a nutshell, fabricates, assembles, supplies and installs in the buildings of its various
customers the central type air conditioning system; prepares the plans and specifications there for which
are distinct and different from each other; the air conditioning units and spare parts or accessories
thereof used by petitioner are not the window type of air conditioner which are manufactured, assembled
and produced locally for sale to the general market; and the imported air conditioning units and spare
parts or accessories thereof are supplied and installed by petitioner upon previous orders of its customers
conformably with their needs and requirements.

Principle:

The inquiry is whether the thing transferred is one not in existence and which never would have existed
but for the order of the party desiring to acquire it, or a thing which would have existed and been the
subject of sale to some other person, even if the order had not been given.

Quiroga v. Parsons Hardware

G.R. No. L-11491, August 23, 1918

Facts:
On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an "agent" of the
former. The contract stipulates that Don Andres Quiroga, here in petitioner, grants exclusive rights to sell
his beds in the Visayan region to J. Parsons. The contract only stipulates that J. Parsons should pay
Quiroga within 6 months upon the delivery of beds.

Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell the beds
at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the
agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same;
and to order the beds by the dozen and in no other manner. With the exception of the obligation on the
part of the defendant to order the beds by the dozen and in no other manner, none of the obligations
imputed to the defendant in the two causes of action are expressly set forth in the contract. But the
plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said
obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself
to determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a
purchaser or an agent of the plaintiff for the sale of his beds.

Issue:

Whether the contract is a contract of agency or of sale.

Ruling:

In order to classify a contract, due attention must be given to its essential clauses. In the contract in
question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to
furnish the defendant with the beds which the latter might order, at the price stipulated, and that the
defendant was to pay the price in the manner stipulated. Payment was to be made at the end of sixty
days, or before, at the plaintiff's request, or in cash, if the defendant so preferred, and in these last two
cases an additional discount was to be allowed for prompt payment. These are precisely the essential
features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply
the beds, and, on the part of the defendant, to pay their price. These features exclude the legal
conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and
does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a
third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the
plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price
within the term fixed, without any other consideration and regardless as to whether he had or had not
sold the beds.

In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by the
contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the
defendant might place under other conditions, but if the plaintiff consents to fill them, he waives his right
and cannot complain for having acted thus at his own free will.

For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the
defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a
cause of action are not imposed upon the defendant, either by agreement or by law.

Principle:

An agent is not obliged to pay the price if there was no sale. The agent only returns the unsold
merchandise to the principal. When the purported agent is required to pay the price in the time fixed
without regard to whether he had sold or not the merchandise, the contract is not an agency to sell but a
contract of sale.
 Gonzalo Puyat & Sons, Inc. v. Arco Amusement Company
G.R. No. L-47538, June 20, 1941

Facts:
Respondent is engaged in operating cinematographs, while petitioner is acting as an agent for Starr Piano
Company of Richmond. Respondent negotiated with petitioner and agreed that petitioner would order
sound reproducing equipment on its behalf, and respondent would pay 10% commission and
out-of-pocket expenses in addition to the selling price. Transactions for 2 orders transpired. After 3 years,
respondent discovered that that price quoted to them by petitioner was not the net price but the list
price. They sought to obtain reimbursement from the petitioner, and failing on this, filed the instant case.

Issue:

Whether the contract between petitioner and respondent is that of agency where agent is bound to
indemnify the principal for damages, or a mere contract of sales.

Ruling:

The letters, by which the respondent accepted the prices for the sound reproducing equipment subject of
its contract with the petitioner, are clear in their terms and admit no other interpretation that the
respondent in question at the prices indicated which are fixed and determinate. The respondent admitted
in its complaint filed with the Court of First Instance of Manila that the petitioner agreed to sell to it the
first sound reproducing equipment and machinery.

We agree with the trial judge that "whatever unforeseen events might have taken place unfavorable to
the defendant (petitioner), such as change in prices, mistake in their quotation, loss of the goods not
covered by insurance or failure of the Starr Piano Company to properly fill the orders as per
specifications, the plaintiff (respondent) might still legally hold the defendant (petitioner) to the prices
fixed of $1,700 and $1,600." This is incompatible with the pretended relation of agency between the
petitioner and the respondent, because in agency, the agent is exempted from all liability in the discharge
of his commission provided he acts in accordance with the instructions received from his principal (section
254, Code of Commerce), and the principal must indemnify the agent for all damages which the latter
may incur in carrying out the agency without fault or imprudence on his part (article 1729, Civil Code).

While the letters state that the petitioner was to receive ten per cent (10%) commission, this does not
necessarily make the petitioner an agent of the respondent, as this provision is only an additional price
which the respondent bound itself to pay, and which stipulation is not incompatible with the contract of
purchase and sale.

In the second place, to hold the petitioner an agent of the respondent in the purchase of equipment and
machinery from the Starr Piano Company of Richmond, Indiana, is incompatible with the admitted fact
that the petitioner is the exclusive agent of the same company in the Philippines. It is out of the ordinary
for one to be the agent of both the vendor and the purchaser. The facts and circumstances indicated do
not point to anything but plain ordinary transaction where the respondent enters into a contract of
purchase and sale with the petitioner, the latter as exclusive agent of the Starr Piano Company in the
United States.
It follows that the petitioner as vendor is not bound to reimburse the respondent as vendee for any
difference between the cost price and the sales price which represents the profit realized by the vendor
out of the transaction. This is the very essence of commerce without which merchants or middleman
would not exist.

Principle:
The contract is the law between the parties and should include all the
things they are supposed to have been agreed upon. What does not
appear on the face of the contract should be regarded merely as
"dealers" or "traders talk", which can not bind either party.

Mamerta Vda. De Jayme V. Court Of Appeal GR No. 128669

Facts: Graciano and Mamerta Jayme owned Lot 2700 in Mandaue City, Cebu,
covering 2,568 sq.m. On January 8, 1973, they leased half of it to George Neri,
president of Airland Motors Corporation (now Cebu Asiancars Inc.), for 20 years.

In 1974, a Special Power of Attorney was given to George Neri, who used the lot to
secure a P300,000 loan from the General Bank and Trust Company, fully repaid by
August 14, 1977.

In October 1977, Asiancars used Lot 2700 as collateral for a P6,000,000 loan from
Metropolitan Bank and Trust Company (MBTC). MBTC later foreclosed the
mortgage, winning it at a public auction in 1981 for P1,067,344.35.

This led to Graciano's heirs filing a civil complaint in 1982 for annulment against
Asiancars, its officers, incorporators, and MBTC. Later in 1999, Mamerta Jayme
passed away. The RTC affirmed the case, and both petitioners and MBTC appealed
to the Court of Appeals, which upheld the RTC's decision. The Court of Appeals
denied the petitioners' motion for reconsideration.

Issue: Whether or not the dacion en pago by Asiancars in favor of MBTC is valid

and binding despite the stipulation in the lease contract that ownership of the
building will vest on the Jaymes at the termination of the lease.

Ruling: Yes. The Court of Appeals was right in considering MBTC as an innocent
purchaser in this case. MBTC was unaware of the lease contract's specific provision.
While the lease was recorded on Lot 2700's title, MBTC was only expected to know
about the lease itself, not the clause about transferring building ownership to the
Jaymes upon lease termination. No encumbrance notes were on the title. Despite
the lease agreement violation by the Jaymes and Asiancars, MBTC's rights were not
affected by Asiancars' undisclosed actions. Therefore, the Court of Appeals correctly
upheld the legitimacy and binding nature of the building's transfer to MBTC.
Principle: Dacion en pago is the delivery and transmission of ownership of a thing

by the debtor to the creditor as an accepted equivalent of the performance of

the obligation. It is a special mode of payment where the debtor offers

another thing to the creditor who accepts it as equivalent of payment of an

outstanding debt.
SSS v. Atlantic Gulf and Pacific Company of Manila GR No. 175952

Facts: In the year 2000, AG&P informed the SSS about their overdue premiums and
loan payments totaling P7.3 Million, proposing to pay by the end of the year with
penalty condonation. They intended to settle the debt by transferring their Baguio
City property, appraised at P80.0 Million, through dacion en pago. There were
discussions about carving out a portion of the property to cover the debt, but AG&P
opposed this.

AG&P later offered part of a different property in Batangas. The SSS eventually
approved AG&P's plan in April 2001, for an amount of P29,261,902.45 as of March 31,
2001. However, delays and discrepancies arose, causing AG&P to consistently follow
up on the progress.

By February 28, 2003, the approved Deed of Assignment was sent back to AG&P,
but the obligation had increased to P40,846,610.64 due to additional charges. AG&P
and SEMIRARA expressed their willingness to settle for the original amount, but the
SSS demanded extra payment.

Initially, the trial court granted SSS's motion to dismiss, prompting the private
respondents to appeal. The Court of Appeals overturned the trial court's decision,
stating that the issue revolved around enforcing the property transfer as per SSS
Resolution No. 270.

SSS sought reconsideration of the appellate court's decision but was denied. In the
current legal proceedings, SSS argues for the jurisdiction of the Social Security
Commission under Section 5 (a) of Republic Act No. 8282.

Issue: Whether or not the Social Security Commission has jurisdiction over
controversy from the non- implementation of a dacion en pago agreed upon by the
parties.

Ruling: No. the Court's ruling in Singson v. Isabela Sawmill provides guidance as
follows:

In determining whether an action is one the subject matter of

which is not capable of pecuniary estimation this Court has adopted

the criterion of first ascertaining the nature of the principal action or

 remedy sought. If it is primarily for the recovery of a sum of money,

the claim is considered capable of pecuniary estimation, and whether

jurisdiction in the municipal courts or in the courts of first instance

would depend on the amount of the claim. However, where the basic

issue is something other than the right to recover a sum of money,

where the money claim is purely incidental to, or a consequence of,

the principal relief sought, this Court has considered such actions as

cases where the subject of the litigation may not be estimated in

terms of money, and are cognizable exclusively by courts of first

instance (now Regional Trial Courts).

The Court finds the decision of the Court of Appeals in accordance with law and
jurisprudence.

Principle: Dacion en pago is the delivery and transmission of ownership of a thing

by the debtor to the creditor as an accepted equivalent of the performance of the
obligation. It is a special mode of payment where the debtor offers another thing to
the creditor who accepts it as equivalent of payment of an outstanding debt.
Spouses Pen vs Spouses Julian GR No. 160408

Facts: In 1986, the Julians obtained loans from Adelaida Pen, secured by a property
mortgage. Repayment issues led to foreclosure proceedings. Linda Julian proposed
using the mortgaged property as payment, but it was eventually transferred to
appellants.

Efforts to repurchase the property by Linda were unsuccessful. The Julians claimed
they signed an incomplete "Absolute Deed of Sale" alongside the mortgage, raising
concerns about the consideration of the sale.

A dispute arose over Linda's offer to pay P150,000, and she found the property had
been transferred without her knowledge. In 1994, the Julians filed a lawsuit for
Cancellation of Sale, Title, Recovery of Possession, and Damages. The trial court
ruled in their favor, asserting lack of consideration due to simultaneous execution
with the mortgage. The Court of Appeals upheld this decision, also highlighting the
prohibited pactum commissorium principle.

Issue: Whether or not the CA erred in ruling against the validity of the deed of sale

Ruling: No. The Court upholds the decision of the Court of Appeals (CA) and adopts
its findings regarding the invalidity of the deed of sale.

Article 2088 of the Civil Code explicitly prohibits creditors from appropriating or
disposing of pledged or mortgaged items, with any contrary stipulation being null
and void. The key components for the presence of pactum commissorium are: (a)
the existence of a pledge or mortgage involving property as security for a principal
obligation, and (b) a stipulation allowing automatic appropriation by the creditor if
the debtor fails to meet the principal obligation within the specified timeframe.

The first element was fulfilled in this case, as the respondents' property was
mortgaged to Adelaida by Linda as collateral for the debt. The second element was
implied from Linda's simultaneous signing of both the blank deed of sale and the
real estate mortgage. The swift transfer of property upon Linda's default, along with
the transfer not being structured as a valid dacion en pago, confirmed the nature of
the transaction as pactum commissorium.
Principle: For Pactum commissorium to be present, two elements must be met:

(a) A property must be pledged or mortgaged as security for the principal

obligation, and (b) There must be a stipulation allowing the creditor to
automatically appropriate the pledged or mortgaged property if the debtor fails to
pay the principal obligation within the agreed period.

In a sale, the contract is perfected at the moment when the seller obligates herself
to deliver and to transfer ownership of a thing or right to

the buyer for a price certain, as to which the latter agrees.

Spouses Betran v. Spouses Cangayda GR No. 225033

Facts: In August 1989, the respondents agreed to sell a disputed property to the
petitioners for P35,000. The petitioners made partial payments totaling P29,690, but
they didn't pay the remaining P5,310 despite repeated demands. An Amicable
Settlement was signed in August 1992, but the petitioners still didn't pay within the
specified timeframe. In January 2009, after 17 years, respondents demanded the
petitioners to vacate the property within 30 days, which was ignored. A complaint
for possession and damages was filed by respondents in March 2009. Petitioners
claimed they tried to pay later but were refused and asked for an extra P50,000. The
RTC initially ruled for respondents, ordering petitioners to vacate a portion of the
property. After a failed Motion for Reconsideration, petitioners appealed to the CA,
introducing the argument that the sale falls under the Maceda Law (R.A. No. 6552)
for the first time. However, the CA dismissed the appeal, stating that raising this
argument at this stage would violate due process and fair play.

Issue: Whether the CA erred when it affirmed the RTC Decision characterizing the
oral agreement between the parties as a contract to sell.

Ruling: Yes. Article 1458 of the Civil Code defines a contract of sale as an agreement
where one party commits to transferring ownership and delivering a specific item,
while the other party agrees to pay a definite sum of money or its equivalent. The
difference between a contract of sale and a contract to sell lies in when ownership
transfers: in a sale, ownership transfers upon delivery of the item, while in a contract
to sell, ownership remains with the seller until full payment is made. In a sale, the
seller cannot reclaim ownership unless the contract is rescinded, whereas in a
contract to sell, ownership is retained by the seller until full payment.

Considering these distinctions, the court concludes that the verbal agreement
between the parties constitutes a contract of sale, not a contract to sell. The
commitment made in Clause 6 of the Amicable Settlement by respondent
Apolonio, Jr. is to formalize the oral agreement into a written contract upon
payment of the outstanding balance by the petitioners. The eventual execution of a
formal deed of sale doesn't invalidate the prior formation of the oral contract of sale,
which had already occurred when the parties agreed on the item and its price.

Principle: In a contract of sale, ownership of a thing sold shall pass to the buyer
upon actual or constructive delivery thereof in the absence of any stipulation to the
contrary. Reference to Articles 1477 and 1478 of the Civil Code is in order:

Article 1477. The ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.

Article 1478. The parties may stipulate that ownership in the thing shall not
pass to the purchaser until he has fully paid the price.

Ventura v. Heirs of Spouses Endaya GR No. 190016

Facts: In 1981, Dolores Ventura entered a Contract to Sell with spouses Eustacio and
Trinidad Endaya to purchase two parcels of land. The contract stated a purchase
price of P347,760.00, to be paid as a downpayment and a balance over 15 years with
12% interest. Dolores was also responsible for real estate taxes and charges, and her
payments would be allocated to various obligations.

Dolores passed away in 1992, and her children later filed a lawsuit in 1996 seeking to
compel the Endayas to execute a deed of sale for the properties. By June 1996,
payments made by Dolores and her children exceeded the purchase price,
including interest. However, the Endayas refused to execute the deed of sale.

The trial court ruled in favor of the children in 2000, finding that the purchase price
had been fully paid, and ordered the deed of sale to be executed. The Endayas
appealed to the Court of Appeals (CA), which reversed the decision in 2006, stating
that the children had not fulfilled all obligations according to the contract.

In 2009, the children filed a petition to the Court, seeking to overturn the CA's
decision and reinstate the trial court's ruling. They argued that they were unaware
of their lawyer's death, preventing them from filing a timely motion for
reconsideration. They also claimed to have fulfilled the payment obligations within
the specified period.

Issue: Whether or not respondents should execute a deed of sale over the subject
properties in favor of petitioners.

Ruling: No. The Court finds that respondents had no obligation to petitioners to
execute a deed of sale over the subject properties. As aptly pointed out by the CA,
aside from the payment of the purchase price and 12% interest p.a. on the
outstanding balance, the contract to sell likewise imposed upon petitioners the
obligation to pay the real property taxes over the subject properties as well as 12%
interest p.a. on the arrears. However, the summary of payments as well as the
statement of account submitted by petitioners clearly show that only the
payments corresponding to the principal obligation and the 12% interest p.a. on the
outstanding balance were considered in arriving at the amount of P952,152.00.

Hence, the reasonable conclusion would therefore be that petitioners indeed failed
to comply with all their obligations under the contract to sell and, as such, have no
right to enforce the same.

Principle:In a contract to sell, the fulfillment of the suspensive condition will not
automatically transfer ownership to the buyer although the property may have
been previously delivered to him. The prospective seller still has to convey title to
the prospective buyer by entering into a contract of absolute sale. On the other
hand, in a conditional contract of sale, the fulfillment of the suspensive condition
renders the sale absolute and the previous delivery of the property has the effect of
automatically transferring the seller's ownership or title to the property to the
buyer.
Spouses Roque v. Aguado GR No. 193787

Facts: On July 21, 1977, Jose C. Roque and Beatriz dela Cruz Roque, along with the
original owners (Velia R. Rivero, Magdalena Aguilar, Angela Gonzales, and others),
executed a Conditional Deed of Sale for a part of Lot 18089, valuing P30,775. An
initial payment of P15,387.50 was agreed upon, with the remainder due upon Lot
18089's registration and issuance of a separate title.

Fructuoso Sabug, Jr., former Treasurer of the NCCP, applied for a patent for Lot
18089 in 1991, leading to OCT No. M-5955. In 1993, Sabug, Jr. and Rivero executed a
Joint Affidavit. In 1999, Sabug, Jr. sold Lot 18089 to Ma. Pamela P. Aguado for
P2,500,000. Aguado got a loan secured by the land, leading to foreclosure by Land
Bank. After default, Land Bank became the owner and got TCT No. M-115895 in
2003.

In 2003, Sps. Roque filed a complaint seeking ownership over their portion. The RTC
dismissed their claim in 2008. The Court of Appeals upheld this decision in 2010.

Issue: Whether or not the CA erred in not ordering the reconveyance of the subject
portion in Sps. Roque's favor.

Ruling: No. The Court finds that the stipulation in the contract shows that the 1977
Deed of Conditional Sale is actually in the nature of a contract to sell and not one of
sale contrary to Sps. Roque's belief. It has been consistently ruled that where the
seller promises to execute a deed of absolute sale upon the completion by the
buyer of the payment of the purchase price, the contract is only a contract to sell
even if their agreement is denominated as a Deed of Conditional Sale, as in this
case. A bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the subject property despite delivery thereof to the prospective
buyer, binds himself to sell the subject property exclusively to the prospective

buyer upon fulfillment of the condition agreed upon, such as, the full payment of
the purchase price. In a contract to sell, ownership is retained by the vendor and is
not to pass to the vendee until full payment of the purchase price. Here, it is
undisputed that Sps. Roque has not paid the final installment of the purchase price.
As such, the condition which would have triggered the parties' obligation to enter
into and thereby perfect a contract of sale in order to effectively transfer the
ownership of the subject portion from the sellers (i.e. , Rivero et al.) to the buyers
(Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter
cannot validly claim ownership over the subject portion even if they had made an
initial payment and even took possession of the same.
Principle: In the case of Ursal v. CA, In contracts to sell the obligation of the seller to
sell becomes demandable only upon the happening of the suspensive condition,
that is, the full payment of the purchase price by the buyer. It is only upon the
existence of the contract of sale that the seller becomes obligated to transfer the
ownership of the thing sold to the buyer. Prior to the existence of the contract of
sale, the seller is not obligated to transfer the ownership to the buyer, even if there
is a contract to sell between them.
Ramos v. Sarao GR No. 149756

Facts:On February 21, 1991, Spouses Jonas Ramos and Myrna Ramos entered into a
contract with Susana S. Sarao for their conjugal house and lot. This contract, titled
"DEED OF SALE UNDER PACTO DE RETRO," granted the Ramos spouses the option
to repurchase the property within six months for P1,310,430 plus a 4.5 percent
monthly interest. Failure to pay the interest or repurchase within the stipulated
period would result in an absolute sale.

On July 30, 1991, Myrna Ramos attempted to redeem the property by tendering
P1,633,034.20, which Sarao refused. Myrna filed a Complaint for redemption, and
Sarao filed a Petition for ownership consolidation. The cases were consolidated and
tried together.

The RTC ruled in favor of Sarao, finding the contract to be a legitimate pacto de
retro sale rather than a mortgage. The court determined that Myrna Ramos had not
properly exercised her repurchase right, invalidating her consignation of checks as
repurchase payment. The Court of Appeals upheld the RTC's decision, stating that
Myrna Ramos did not deposit the correct repurchase price and didn't follow the
required notice of consignation.

Issue: Whether the parties intended the contract to be a bona fide pacto de retro
sale or an equitable mortgage.

Ruling: This Court has consistently decreed that the nomenclature used by the
contracting parties to describe a contract does not determine its nature. Even if a
contract is denominated as a pacto de retro, the owner of the property may still
disprove it by means of parol evidence, provided that the nature of the agreement
is placed in issue by the pleadings filed with the trial court. There is no single
conclusive test to determine whether a deed absolute on its face is really a simple
loan accommodation secured by a mortgage.

Furthermore, a contract purporting to be a pacto de retro is construed as an

equitable mortgage when the terms of the document and the surrounding
circumstances so require. The law discourages the use of a pacto de retro, because
this scheme is frequently used to circumvent a contract known as a pactum
commissorium. The Court has frequently noted that a pacto de retro is used to
conceal a contract of loan secured by a mortgage. Such construction is consistent
with the doctrine that the law favors the least transmission of rights.

Jurisprudence has consistently declared that the presence of even just one of the
circumstances set forth in the foregoing Civil Code provision suffices to convert a
contract to an equitable mortgage.
Principle: In a pacto de retro, ownership of the property sold is immediately
transferred to the vendee a retro, subject only to the repurchase by the vendor a
retro within the stipulated period. The vendor a retro's failure to exercise the right
of repurchase within the agreed time vests upon the vendee a retro, by operation of
law, absolute title to the property. Such title is not impaired even if the vendee a
retro fails to consolidate title under Article 1607 of the Civil Code.

On the other hand, an equitable mortgage is a contract that although lacking the
formality, the form or words, or other requisites demanded by a statute
nevertheless reveals the intention of the parties to burden a piece or pieces of real
property as security for a debt. The essential requisites of such a contract are as
follows: (1) the parties enter into what appears to be a contract of sale, but (2) their
intention is to secure an existing debt by way of a mortgage. The nonpayment of
the debt when due gives the mortgagee the right to foreclose the mortgage, sell
the property, and apply the proceeds of the sale to the satisfaction of the loan
obligation.
Lo v. KJS Eco Formwork System Phil. GR No. 149420

Facts:In February 1990, the petitioner ordered scaffolding equipment from the
respondent for P540,425.80 and paid P150,000.00 upfront. He was to settle the
remaining balance in ten monthly installments. After paying the first two
installments, his business faced financial issues, causing him to default on his
obligation despite demands.

On October 11, 1990, they signed a Deed of Assignment, where the petitioner
transferred his receivables of P335,462.14 from Jomero Realty Corporation to the
respondent. Yet, Jomero Realty Corporation declined to honor the assignment due
to the petitioner's outstanding debt to them.

Despite a demand letter sent on November 26, 1990, the petitioner insisted his
obligation was cleared by the Deed of Assignment. In January 1991, the respondent
filed a recovery of money action against the petitioner in the Regional Trial Court
(RTC). In August 1994, the RTC dismissed the complaint, stating the credit
assignment extinguished the obligation.

The respondent appealed to the Court of Appeals, which, on April 19, 2001, reversed
the RTC's decision.

Issue: Whether or not the Court of Appeals committed a grave error in declaring
the Deed of Assignment as null and void.

Ruling: No. According to Article 1628 of the Civil Code, a vendor or assignor has
certain responsibilities and warranties. Specifically, the first paragraph states that a
vendor in good faith is accountable for the existence and legality of the credit at the
time of the sale, unless it was sold as doubtful. However, the vendor is not
responsible for the debtor's solvency unless explicitly agreed upon or if the
insolvency was widely known before the sale.

In the case at bar, the petitioner, as the vendor or assignor, is obligated to ensure
the existence and legality of the credit when making the sale or assignment. When
Jomero Realty Corporation asserted that they were no longer indebted to the
petitioner due to the latter's unpaid obligation to them, it implied that their
obligation to the petitioner was extinguished through compensation. This
essentially means that respondent challenged the existence of the credit and
demanded petitioner's warranty under the assignment. Thus, it was the petitioner's
duty to fulfill the warranty and settle the obligation.

Principle: An assignment of credit is an agreement by virtue of which the owner

of a credit, known as the assignor, by a legal cause, such as sale, dacion en

pago, exchange or donation, and without the consent of the debtor, transfers

his credit and accessory rights to another, known as the assignee, who

acquires the power to enforce it to the same extent as the assignor could

enforce it against the debtor.