1 BUENAVENTURA v CA
(Sale is consensual Beron)
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs as well as the defendants herein all surnamed Joaquin. The married Joaquin children are joined in this action by their respective spouses. Sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant parents in favor of their co-defendant children. Petitioners claim that there was no actual valid consideration for the deeds of sale over the properties in litis, that assuming that there was a consideration in the sums reflected in the questioned deeds, the properties are more than three-fold times more valuable than the measly sums appearing therein, that the purported sale of the properties in lites was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs of their legitime.
The trial court and the court of appeals ruled in favor of the respondents. The supreme court affirmed the decision of the lower courts.
Petitioners failed to show legal right to the properties. Petitioners' right to their parents' properties is merely inchoate or contingent and vests only upon their parents' death. While still living, the parents of the petitioners are free to dispose of their properties.
Petitioners also assert that the respondents did not actually paid the prices stated in the deed. The SC found such argument untenable. A contract of sale is not a real contract, but a consensual contract. as a consensual contract, a contract o sale becomes a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of the parties as the price, the contract of sale is valid, despite the manner of payment or even the breach of that manner of payment. If the real price is not stated in the contract, the contract should be reformed. If there is no meeting of minds of the parties as to price, because the price stipulated in the contract is simulated, then the contract is void.
2 ONG v CA
(Bilateral and Reciprocal Calinisan) Facts:
A) Ong and the Robles spouses entered into an “Agreement of Purchase and Sale” on 2 parcels of land in Quezon for the sum of P2M.
B) The parcels of land included a rice mill and a piggery.
C) A portion of the P2M debt was already paid. To answer for his balance, Ong issued 4 post dates checks. All bounced.
D) A portion of the of the debt was also supposed to be paid directly to BPI, the Robles’ bank, to answer for the Robles’ loan.
E) When the bank threatened to foreclose the mortgage, the Robles’ sold 3 transformers located on the lands. F) The Robles spouses now want to rescind the contract of sale.
G) RTC and CA set aside the “Agreement of Purchase and Sale” between Ong and the Robles spouses. Issue:
W/N the contract may be rescinded. Held:
A) The contract entered into was a Contract to Sell and not a contract of sale
B) What is applicable is Art 1191 and not 1383. In the former, rescission is a principal action which is based on breach, while in the latter, it is a subsidiary action.
C) Reciprocal obligations are those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other
D) There was no novation in this case. Novation is not presumed. E) Ong mere;y sought to be “reimbursed”. NO novation.
F) Payment of the purchase price is a positive suspensive condition
G) Ong’s failure to pay brought about a situation which prevented the obligation of the Robles spouses to convey title from acquiring an obligatory force.
3 BUENAVENTURA v CA
(Sale is Onerous Del Socorro)
Facts: Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The married Joaquin children are joined in this action by their respective spouses.
Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of Sale to their respondent father. Thus, petitioners ask the court to declare void certain Deeds of Sale of real property executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates of title issued in their names.
Petitioners also ask that assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale.
Issues:
1. Whether the Deeds of Sale are void for lack of consideration. 2. Whether the Deeds of Sale are void for gross inadequacy of price. Held:
1. No. The deeds of sale are not void for lack of consideration.
A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a contract of sale becomes a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. If there is no meeting of the minds of the parties as to the price, because the price stipulated in the contract is simulated, then the contract is void.
It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract.
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To prove simulation, petitioners presented Emma Joaquin Valdoz’s testimony stating that their father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed of sale without need for her payment of the purchase price. The trial court did not find the allegation of absolute simulation of price credible. Petitioners’ failure to prove absolute simulation of price is magnified by their lack of knowledge of their respondent siblings’ financial capacity to buy the questioned lots. On the other hand, the Deeds of Sale which petitioners presented as evidence plainly showed the cost of each lot sold. Not only did respondents’ minds meet as to the purchase price, but the real price was also stated in the Deeds of Sale. As of the filing of the complaint, respondent siblings have also fully paid the price to their respondent father.
2. No. the deeds of sale are not void for gross inadequacy of price.
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code w/c would invalidate, or even affect the Deeds of Sale. In this case, the lower court found that the lots were sold for a valid consideration, and that the defendant children actually paid the purchase price stipulated in their respective Deeds of Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is now conclusive upon the Supreme Court.
4 GAITE v FONACIER
(Commutative nature of sale Delgado)
Facts: Fonacier is the owner of 11 Iron Lode Mineral Claims in Camarines Norte. He appointed Gaite as Attorney-in-Fact giving him the authority to negotiate and enter into exploration contracts on royalty basis. Gaite assigned his rights to Larap Mining which he also owns. Gaite embarked upon the development and exploitation of the mines and was able to extract 24 metric tons. Fonacier revoked the authority given to Gaite for some reasons not stated. Gaite transferred the rights in the developed area in exchange of the amount 20 thousand pesos. Also, Gaite transferred the rights over the 24 metric tons in exchange of 75 thousand pesos. Fonacier gave 10 thousand pesos upon signing the agreement and the balance of 65 thousand pesos to be paid from the “first letter of covering the first shipment of iron ores and of the first amount derived from the local sale of iron ore made by the Larap Mines.” To secure the payment of the balance, Fonacier delivered surety bond but Gaite intimated that it’s not enough and required another. Fonacier
delivered another bond in the name of Far Eastern Surety. The bonds expired and no sale of ores happened. Gaite filed case for collection. Defense of Fonacier is that obligation is subject to condition.
Issue: W/N it is subject to a condition.
Held: No. The words express no contingency in the buyer’s obligation to pay. The balance “will be paid” out of the first letter of credit. There is no uncertainty that the payment will have to be made sooner or later. What is undetermined is the exact date at which it will be made.
A contract of sale is normally commutative and onerous: not does each one of the parties assume a
correlative obligation (the seller to deliver and transfer the ownership of the thing sold and the buyer to pay the price), but each party anticipates performance by the other from the very start. Assumin arguendo that there is doubt whether it is subject to a suspensive condition or a suspensive period, the scales favor of “the greatest reciprocity of interests”, since sale is essentially onerous. That greater reciprocity obtains if the buyer’s obligation is deemed to be actually existing, with only its maturity or demandability suspended.
5 ALCANTARA-DAUS v DE LEON
(Sale is title not mode Fernandez) Facts:
• Hermoso de Leon inherited from his father a certain piece of land by virtue of a deed of extra-judicial partition. • To arrange the documents for the properties of his parents, Hermoso engaged the services of Atty Juan
• After the death of Atty Juan, documents surfaced revealing that the properties has been conveyed to Hermoso’s brothers and sisters and, Juan and his sisters though Hermoso did not intend such.
• A deed of extra-judicial partition w/ quitclaim in favor of Rodolfo de Leon surfaced with Hermoso’s signature in it (which was actually forged)
• Rodolfo sold the land to Aurora Alcantara. Hermoso questions the sale.
• RTC ruled that Hermoso’s claim on the land is barred by laches since 18 years has passed since the land was sold. It also ruled that the deed of extra-judicial partition, being a notarial document, is presumed authentic. CA reversed. Issue:
Was the sale of the land to Alcantara valid? Held:
No. There was no valid delivery as Rodolfo is not the rightful owner of the land. A contract of sale is perfected by mere consent, upon meeting of the minds, on the offer and acceptance thereof based on subject matter, price and terms of payment.
At this stage, seller’s ownership of the land is not an element in the perfection of the contract. However, this contract creates an obligation on the part of the seller to transfer ownership and to deliver the subject matter of the contract. It
is during delivery that the law requires the seller to have the right to transfer ownership of the thing sold. It is through
delivery or tradition that the buyer acquires the real rights of ownership over the thing sold. At the time of delivery, Rodolfo was not the owner of the land, thus the consummation of the contract and the consequent transfer would, then, depend on whether he subsequently acquired ownership of the land in accordance with Art 1434 of the Civil Code.
But the extra-judicial partition was found to be forged hence there was no valid transfer of ownership—Rodolfo never became the owner of the land.
Possession in good faith and acquisition by virtue of prescription cannot be sustained if it is in derogation of the rights of the registered owner.
6 CELESTINO CO. & CO. VS. COLLECTOR OF INTERNAL REVENUE (Contract for Piece-of-work Legaspi)
Facts
• From 1946 to 1951 Celestino Co. (Oriential Sash Factory) paid 7% tax on gross receipts of its sash, door and window factory in accordance with the sec. 186 of the National Revenue Code imposing taxes on sales of manufactured articles.
• In 1952, it began to claim liability only to the contractors 3% tax under section 191. To support its contention, it presented duplicate copies of letters sketches of doors and windows and price quotations supposedly sent by the manager of the factory to customers who allegedly made special orders.
to the public. It also manufactures its products on a made to order basis.
• The Court of Tax Appeals held that Celestino & Co. is a manufacturer, as such art. 186 should be applies
• Celestino & Co. invokes Art. 1467 of NCC: in filling orders for windows and doors according to specifications, it did not sell but merely contracted for particular pieces of work
Issue
w/n Celestino & Co. is a contractor (sells it services) or a manufacturer (sells its products) Ruling
• Celestino & Co. is a manufacturer. He is liable under section 191 of the National Revenue Code • Celestino & Co. does nothing more than sell the goods that it mass produces or habitually makes.
• It is not true that Celestino & Co. serves special customers only or confines its services to them alone. It did not merely sell its services but also the materials ordinarily manufactured by it.
• 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 to the fancy of the purchasers does not alther the nature of the establishment.
• The orders by the customers were not shown to be special that would require extraordinary service from Celestino & Co. They were merely orders for work done in the ordinary course of the manufacturers business. It then cannot be said that Celestino & Co. contracts for a piece of work.
7 CIR VS. ENGINEERING EQUIPMENT AND SUPPLY COMPANY
(Contract of sale distinguished from a contract for a piece of work Lopez) Facts:
- Engineering Equipment and Supply Company (Engineering) is engaged in the design and installation of central type air conditioning systems.
- On the complaint of a Juan de la Cruz, CIR investigated Engineering for tax evasion.
- Engineering is assessed Php 740,587 as deficiency tax liabilities. They appealed to the Court of Tax Appeals. - CTA ruled that Engineering is exempt from deficiency manufacturer’s sales tax because they are contractors.
They were assessed with Php 174,141 as compensating tax and 25% surcharge. - Both Engineering and CIR appealed to the SC.
Issue:
- W/n Engineering is a contractor and thus, exempt from paying the deficiency manufacturer’s sales tax. Held:
- Engineering is a contractor. The company did not manufacture air conditioning units; instead, they imported them and used them in the systems they were installing. The supply of air conditioning units to the
company’s various customers was specially made for each customer and installed in his building upon his special order. Without the contract with a particular customer, Engineering won’t be delivering air
conditioning units. This is in accord with the test for a contract for a piece of work, which asks whether the thing transferred (in this case, aircons) is one not in existence and which never would have existed but for the order of the party desiring to acquire it. Engineering is a contractor since it renders service 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. - Being a contractor, Engineering is only subject to the contractor’s tax and not to the advance sales tax. They
should only be taxed for the use of imported goods and not the importation of goods because it has been proven that the air conditioning units were used for its construction business and were never resold. 8 ENGINEERING V CA
(Contract for a Piece of Work Mendiola)
Facts: Pursuant to a contract, Engineering undertook to fabricate, install, and furnish the air-conditioning in Almeda’s building along Makati for 120,000. It was finished in 1963.
The building was sold to and was occupied by NIDC. But the sale was rescinded in 1971. It was then when Almeda learned from the NIDC employees that the air-conditioning was defective.
Almeda filed a case for damages w/ CFI alleging that the air-con did not comply with the plans and specifications.
Engineering contended that the complaint must be dismissed because of the expiration of the 6-month prescriptive period set (pursuant to Art. 1566 and 1567) regarding the responsibility of the vendor for any hidden defects of the thing sold. Almeda, on the other hand, contends that it is a contract for a piece of work.
Held: The contract is a contract for a piece of work because it is not in the usual line of business of Engineering to manufacture air-conditioning systems to be sold off-the-shelf. Its business and field of expertise is the fabrication and installation of such systems as ordered by customers.
The 6-month prescriptive period is only applied to implied warranties. If there is an express warranty, the prescriptive period is one specified. In the absence of such period, the 4-year prescriptive period shall apply. Therefore, it would appear that the prescriptive period has lapsed in the case at bar.
However, the complaint is not really an enforcement of warranties against hidden defects but is one for breach of contract. There is proof that Engineering had failed to install items and parts and that some of the parts used were not in full accord with the contract specifications. Therefore, the prescriptive period is 10 years because there is a written contract. Since only 8 years has passed, the 10-year prescriptive period has not yet lapsed; therefore, the action is not barred.
9 QUIROGA VS. PARSONS HARDWARE CO. (Contract of Agency vs. Contract of Sale Rivas) FACTS
- a contract between Quiroga and Parson was executed wherein Parsons has the exclusive right to sell Quiroga beds in the Visayas Islands with the following stipulations:
o Parsons has to pay Quiroga within 60 days from the date of the shipment o A discount of 25% from the invoice price is Parson’s commission on sales o Parsons must order bed in dozens
o Parsons may sell or establish branches of his agency for the sale of Quiroga beds upon the approval of Quiroga.
- According to Quiroga, several provisions of the Contract of Agency was violated by Parsons. - RTC: no contract of agency between Quiroga nd Parsons.
ISSUE:
- W/N Parsons is a purchaser or an agent of Quiroga HELD:
- purchaser RATIO:
- since stipulated in the contract that Quiroga was to furnish Parsons with the beds which the latter might order, at the price stipulated, and that Parsons was to pay the price in the manner stipulated, within 60 days from the date of shipment – CONTRACT OF SALE
- In a Contract of Sale, there was the obligation on the part of Quiroga to supply the beds, and, on the part of Parsons, to pay their price
- In a CONTRACT OF AGENCY, the 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 does not succeed in selling it, he returns it to the principal.
- There was not a single clause ion the contract which conveys the idea of an agency – ‘commission on sale’ means discount of the prices, ‘agency’ expresses that Parsons was the only one that could sell Quiroga beds in Visayas, the rest of the stipulation are compatible with the contract of sale.
10 PUYAT V ARCO AMUSEMENT (Agency to Sell Sarenas) Facts:
• There was a previous case of Arco vs. Puyat
• Teatro Arco was engaged in the business of operating cinematographs. It later changed its name to Arco Amusement Co.
• Puyat is the exclusive agents in the Philippines for the Starr Piano Co. of Richmond, Indiana, USA.
• Arco wanted to equip its cinematograph with sound reproducing devices, so it approached Puyat. They agreed that Arco will pay Puyat the amount of the equipment, plus 10% commission and all other expenses. The price was $1700 and this was duly paid by Arco plus the commission.
• Later on another sale was made between the two for another set of equipment for the price of $1600.
• 3 years later, in connection with a civil case that the Puyat’s were facing, Arco learned that the equipment they purchased from Puyat were overpriced. They sought for reimbursement but failed, and so the case of Arco vs. Puyat
• TC: contract between Arco and Puyat was one of outright purchase and sale
• Appelate Court: the relation between them was that of agent and principal, Puyat was sentenced to pay the alleged overpayments in the sum of $1335.52 plus legal interest. Even if it was one of purchase and sale, Puyat is guilty of fraud in concealing the true price
Issue:
• W/N the contract between the parties was one of purchase and sale and not one of agency Held:
• Yes, it is one of purchase and sale because:
o The contract is the law between the parties. Arco has accepted the price for the equipment.
o The 10% commission that Puyat was to receive does not necessarily make the petitioner an agent as this provision is only an additional price which the respondent bound itself to pay.
o Puyat could not be an agent of Arco because it is known that Puyat is the agent of Starr Piano in the Philippines.
11 KER & CO V LINGAD (Agency to Sell Beron) FACTS:
Petitioner Ker would have us revers a decision of the CTA, holding it liable as a commercial broker uhder sec 194(t) of the NIRC. It was shown that pettioner was assessed by then Commissioner of Internal Revenue tax as the commercial broker's percentage tax, surhcarge and compromise penalty. There was request on the part of petitioner for the cancellation of such assessment, which request was tunred down.
Such liability arose from a contract of petitioner with the United States Rubber Intl. US Rubber shall from time to time consign to the petitioner products under the terms of this agreement in suh quantities as in the judgement of US Rubber. All goods on consignment shall remain the property of US Rubber utntil sold Ker.
In the contract it was stipulated that the agreement does not constitute Ker the agent or legal representative of US Rubber for any purpose whatsoever.
ISSUE:
Whether the relatioship thus created is one of vendor and vendee or of broker and principal... HELD:
Though there was a denial in the agreement that the petitioner is in no way an agent nor legal representative of US Rubber, the SC holds that the relationship is one of agency. That the petititoner is by contractual stipulation an agent of US Rubber is borne out by the facts that petititoner can dispose of the products of US Rubber only to certain persons or entities and within stipulated limits, unless excepted by the contract or by US Rubber and that upon termination of the Agreement, all the goods held on consignment shall be held by petititoner for the account of the rubber company.
If the transfer of title puts the transferee in the altitude or position of an owner and makes him liable to the trnasferor as a debtor for the agreed price, and not merely as an agent who must account for the prodeeds of the resale, the transaction is a sale; while the essence of an agency to sell is the delivery to an agent, not as his property, but as the property of the principal who remains the owner.
12 LO V KJS ECO-FORMWORK SYSTEM PHIL., INC. (Agency to Sell Calinisan)
Facts:
A) KJS Eco-Framework (KJS)is engaged in the sale of steel scaffoldings.
B) Sonny Lo, doing business under the name San’s Enterprises, is a building contractor. C) Lo ordered scaffolding equipment from KJS to be paid on installment.
D) Lo was only able to pay 2 of the 10 installment payments.
E) Lo executed a “Deed of Assignment”, whereby he assigned to respondent his receivables from the Jomero Realty Corporation (JRC).
F) JRC refused to pay KJS since Lo also owed him money.
G) Lo refuses to pay KJS since allegedly, his obligation is already extinguished when they executed the Deed of Assignment.
Issue:
W/N Lo’s obligation is already extinguished. Held:
A) No. SC upheld the CA.
a. Lo failed to comply with his warranty under the Deed.
b. The object of the deed did not exist at the time of the transaction, rendering it void pursuant to Art 1409
c. Lo violated the terms of the Deed of Assignment when he failed to execute and do all acts and deeds as shall be necessary to effectually enable the respondent to recover the collectibles
B) assignment ≈ sale; dation ≈ sale
C) It may well be that the assignment of credit, which is in the nature of a sale of personal property, produced the effects of a dation in payment which may extinguish the obligation. However, as in any other contract of sale, the vendor or assignor is bound by certain warranties.
a. Art 1628: The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale, unless it should have been sold as doubtful; but not for the solvency of the debtor, UNLESS it has been so expressly stipulated or unless the insolvency was prior to the sale and of common knowledge.
D) Lo, as vendor or assignor, is bound to warrant the existence and legality of the credit at the time of the sale or assignment. He should make good his warranty.
E) By warranting the existence of the credit, Lo should be deemed to have ensured the performance thereof in case the sake is later found to be inexistent. He should be held liable to pay to KJS the amount of his indebtedness.
13 PHILIPPINE LAWIN BUS, CO. V CA (Dacion en Pago Delgado)
Facts:
Advance Credit Corporation, a lending investor, extended a loan to Philippine Lawin Bus Company in the amount of P8 million payable within one year evidenced by a promissory note. To secure the loan, Lawin paid P1.8 million so the lender extended another loan worth P2 million evidenced by another PN. Lawin failed to pay the lender prompting for the foreclosure of the buses and proceeds of P2 million credited to the account of Lawin. Since the balance of P16 million is unpaid, lender filed suit in court to compel Lawin to pay. Lawin opposed through an injunction claiming that foreclosure is a violation of its agreement with the lender on how to pay the balance. RTC favored Lawin saying obligation is extinguished. CA reversed.
Issue:
Whether there was a dacion en pago between the parties pon the surrender of the transfer of the mortgaged buses to the respondent.
Held:
No. Receipts executed by the respondent’s representative do not indicate that lender adhered and agreed that the delivery of the buses of the petitioner would result in extinguishing the obligation. Aside from that the receipts show that two buses were delivered to the respondents for the purpose of selling it. The petitioner Lawin deemed lender as an agent hence negating the existence of dacion en pago since it requires the transfer of ownership, complete, and absolute.
14 MEDINA v CIR
(Sale between spouses Del Socorro) Facts:
In 1944, petitioner Antonio Medina married Antonia Rodriguez. Before 1946, the spouses had neither property nor business of their own. Later, however, petitioner, acquired forest concessions. From 1946 to 1948, the logs cut and removed by the petitioner from his concessions were sold to different persons in Manila through his agent, Mariano Osorio.
In 1949, Antonia R. Medina, petitioner's wife, started to engage in business as a lumber dealer, and up to around 1952, petitioner sold to her almost all the logs produced in one of his forest concession. Mrs. Medina, in turn, sold in Manila the logs bought from her husband through the same agent, Mariano Osorio. The proceeds were, upon instructions from petitioner, either received by Osorio for petitioner or deposited by said agent in petitioner's current account with the bank.
On the thesis that the sales made by petitioner to his wife were null and void pursuant to the provisions of Art. 1490 of the Civil Code, the Collector considered the sales made by Mrs. Medina as the petitioner's original sales taxable under the NIRC and, therefore, imposed a tax assessment on petitioner.
Petitioner protested the assessment, and in 1954,revealed for the first time the existence of an alleged premarital agreement of complete separation of properties between him and his wife, and contending that the assessment for the years 1946 to 1952 had already prescribed.
Whether or not the sales by the petitioner to his wife could be considered as his original taxable sales under the NIRC. Held: Yes. They are taxable. Aside from the fact that the record of the alleged pre-nuptial agreement were non-existent, the SC determined that at the time of their marriage, the spouses had no properties to have warranted them to execute a pre-nuptial agreement for a complete separation of property, the Court considered the sales between the spouses void as to be in violation of Art. 1490, and considered the sales by the wife to the public as the first and original sales subject to the sales tax.
15 CALIMLIM-CANULLAS V FORTUN (Sale between spouses Fernandez) Facts:
• Mercedes Calimlim-Canullas and Fernando Canullas are married and lives on the residential land in question. • Fernando abandoned his family and lived with Corazon Daguines.
• Fernando, then, sold subject property with the house to Daguines.
• Unable to take possession of the lot and house, Daguines filed a complaint for quieting of title and damages against Mercedes.
• Mercedes claims that the sale of Fernando to Daguines is null and void for said property is built with conjugal funds.
• CFI declared the sale valid where Daguines is entitled to the land and ½ of the house. Upon reconsideration, the court said the sale of the land is valid but not the house for such is conjugal.
Issue:
Whether or not the construction of a conjugal house on the exclusive property of the husband ipso facto gave the land the character of conjugal property.
Whether or not the sale of the lot together with the house and improvements thereon was valid under the surrounding circumstances.
Held:
By virtue of Art 158 of the Civil Code, both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land. The spouse owning the lot, in this case, Fernando, becomes a creditor of the conjugal partnership for the value of the lot, which value would be reimbursed at the liquidation of the conjugal partnership. The conversion from paraphernal to conjugal assets should be deemed to retroact to the time the conjugal buildings (the house) were first constructed thereon. The properties being conjugal, the consent of the wife is needed for the validity of the sale.
The contract of sale is null and void for being contrary to morals and public policy. Sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and children lived. That sale was subversive of the stability of the family, a basic social institution that public policy protects. Moreover, the law prohibits the spouses from selling property to each other subject to certain exceptions. And these prohibitions apply to a couple living as husband and wife without the benefit of marriage.
16 RUBIAS v BATILLER
(Status of such contracts Legaspi)
Case
Suit to recover the ownership and possession of certain portions of lots which Rubias bought from his father-in-law Francisco Militante
Facts
• Before the war with Japan, Militante file with CFI and application for the registration of title of the land, the records of the case were lost so Militante filed a petition for reconstitution which was dismissed
• Militante appealed and pending the appeal, Militante sold the subject land to Rubias. This was recorded in the Register of Deeds. However, the application for registration was again dismissed.
• According to Batiller, Rubias has no cause of action since they are in actual, open and continuous possession of the lot since time immemorial; Rubias was also the counsel on record of Militante
Issue
w/n the contract of sale was void because it was made when Rubias was Militante’s counsel in the land registration case
Ruling
• Rubias cannot have any claim on the land which Militante allegedly owned since the latter’s application was denied by the CA. Militante had no authority to dispose the things sold.
• Assuming that Militante acquired the property, Rubias claim still fails. The sale between him and Militante was prohibited by law.
• Purchase by lawyer of property in litigation from his client is void and produces no legal effect.
• Nullity of such contracts cannot be cured by ratification since the prohibition is grounded in public policy. • Nullity of such contracts is differentiated from that purchased by guardians, agents and administrators which can
be cured by ratification.
17 PHILIPPINE TRUST COMPANY VS. SOCORRO ROLDAN, ET. AL. (Guardians, Agents & Administrators Lopez)
Facts:
- Socorro Roldan becomes guardian of her step-son Mariano Bernardo, who acquired 17 parcels of land from his deceased father, Marcelo.
- Socorro sells the land to Fidel Ramos who subsequently resells the same lands to Socorro. The latter then sells 4 parcels of the 17 to Emilio Cruz.
- Phil. Trust Co. questioned the 2 sales in the RTC which rule in favor of Socorro but granted Mariano right to repurchase the land. RTC issued its decision upon a decision of the SC saying that for Art. 1459 to apply, collusion must be established between the guardian and the buyer of the lots. This ruling was affirmed by the CA.
Issue:
- W/n Socorro had a right to sell the lands. Held:
SC reverses the ruling of RTC and CA. Art, 14591 is applicable in this case. Although collusion was not established
clearly between Socorro and Fidel Ramos, the circumstances in the case dictate the application of Art. 1459. Fidel Ramos is the brother-in-law of Socorro and the two sales were effected within a week of each other.
18 FABILLO v IAC
(Attorneys; Contingency Fee Arrangements Mendiola) Facts:
In her last will, Justina Fabillio bequeathed to her brother, Florencio, a house and lot. Florencio filed for a petition for the probate of the will. The court approved the partition. Two years later, Florencio sought the assistance of Atty. Murillo to recover the property. They agreed that Florencio shall give to Atty. 40% of the money value of the property as a contingent fee in case of success; and that in case the house and lot is just occupied by Florencio, the lawyer shall have the option of either occupying or leasing to any party 40% of the house and lot.
The court dismissed the case when Fabillio entered into a compromise agreement wherein Fabillio was declared as the lawful owner of the property. However, Fabillio denied Atty. of benefit over the property. Atty. filed a case for him to be declared owner of 40% of the property. Fabillio averred that the 40% was unconscionable taking into consideration the length of the proceedings.
The trial court ruled that the contingent fee is not violative of Art. 1491. It declared Murillo as owner of 40 of the property.
Issue: was the contract for services violative of Art 1491 paragraph (5)? Held:
The contract of services did not violate Art. 1491. The payment of the contingent fee is not covered by the provision because the fee is not paid during the pendency of the litigation but only after judgment has been made. No.13 of the Canons of professional ethics impliedly sanctions these contingent fees.
Clearly, the 40% pertains to the value of the property. However, as regards the 40% share when Fabillio just occupies the property, it is ambiguous. Ambiguous as it is, it must be ruled against Murillo because he was the one who drafted the contract.
Murillo is only entitled to 30k of attorney’s fees (taking into consideration the length of the services.) 19 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES VS. CA
(Subject Matter of Sale Rivas) Facts:
- NDC, a GOCC, owns a 10 hectare property in Manila.
Footnote sa Phil Trust case:
1 Hindi ko alam kung ito pa rin yung article sa bagong Civil Code basta it prohibits the guardian from purchasing either in
- Lease contract with Firestone covering 2.6 hectares of the land was made o For 10 years renewable for another 10 years
o Allowed Firestone to construct warehouse and improvements on plant - 2nd contract of lease was entered involving steel warehouse in Davao
- an extension on both lease was requested by Firestone
- a 3rd lease contract was executed with an express stipulation granting Firestone the first option to purchase
the leased premises in the event that NDC decides to sell land
- 10 year lease contract was about to expire and Firestone asked NDC for an extension - NDC did not acknowledge the request
- Firestone heard rumors that NDC planned to sell property to PUP
- Case for an action for specific performance was filed to compel NDC to sell land to Firestone - RTC: 2.6 portion of the land belongs to Firestone and the remaining to PUP
- CA: upheld decision of RTC Issue:
- W/N Firestone can invoke its right of first refusal Held:
- Yes! NDC cannot unilaterally rescind a right of first refusal that stand upon valuable consideration
- PUP’s contention that its being a ‘poor mans university’ is untenable. Paramount interest in education does not destroy the sanctity of a binding contract obligation
- Contract of Sale, as defined in the Civil Code is a ‘catch all provision’ which effectively bring within its grasp a whole gamut of transfers whereby ownership is ceded for a consideration
- There is a perfected sale of the land between NDC and PUP. But right if first refusal of Firestone must be honored
- A contract with a right of first refusal, lessor is under a legal duty to the lessee not to sell to anybody at any price until after he has made an offer to sell to the latter at a certain price and lessee failed to accept it - Only if Firestone failed to exercise its right of first refusal will NDC be lawfully allowed to sell land to PUP 20 MELLIZA V. CITY OF ILOILO
(Determinate or Determinable Subject Matter Sarenas) Facts:
• Juliana Melliza owned 3 parcels of land in Iloilo. One lot, lot 1214 was 29,073 sq.km
• She donated to the Municipality of Iloilo 9k sq.km of lot 1214. But the donation was later revoked by the parties because the land was inadequate for the development plan of the municipality, “Arellano Plan”. • Lot 1214 was later on divided. Juliana later on sold some of the lots (instrument was in Spanish, que pasa?)
to Iloilo for the purpose of the “Arellano Plan”.
• The remaining were sold to Remedios San Villanueva who transferred it to Pio San Melliza.
• The TCT that petitioner held had the annotation pertaining to the previous donation made by Juliana to Iloilo (without mention of any revocation)
• Iloilo City (successor of Municipality of Iloilo) donated the city hall site with the building to UP Iloilo. The donated property included some parts of Lot 1214.
• UP fenced property. Petitioner asked for payment of the value of the lot but Iloilo did not pay (no money daw). UP acquired TCT over the lots in contention
• Petitioner filed for recover or compensation for its value against Iloilo City and UP • Iloilo CFI: Juliana sold properties to Iloilo which meant that Iloilo was free to give to UP Issue:
• W/N the conveyance of Juliana to Iloilo included the lot being claimed by petitioner Held:
• The instrument was for the sale of properties to Iloilo for the purpose of the “Arellano Plan” without stating the specific lots to be sold.
• The requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the contract is entered into, the object of the sale is capable of being determinate without the necessity of a new or further agreement between the parties.
• Sale is valid. Petitioner’s contentions denied. 21 LONDRES VS. CA
(Determinate or Determinable Beron) Facts:
This case involves 2 parcels of land, namely, lots 1320 and 1333. Paulina Arcenas originally owned these parcels of land. After Paulina's death, ownership passed to Filomena Vidal, her daughter. The surivivng children of Filomena now claim ownership over the 2 lots.
On the other hand, privare respondent Consolacion Alovera claims that the said lots have been sold to her thru an absolute sale executed by Filomena.
Petitioners claim that the absolute sale was tampered. The cadastral lot number of the 2nd lot was altered to read lot 1333 when it was originally written as lot 2034. They further claim that the Records Management and Archives Office kept an unaltered copy which shows that the objects of the sale were lots 1320 and 2034.
Issue:
Who owns the lots? Held:
The SC ruled in favor of Consolacion Alovera and declared that the sale was valid.
The SC affirmed the decision of the lower courts finding that it was Filomena who erased "lot 2034" in the deed of sale and changed it to "lot 13333". The copies of the document in cusotdy of the notary public were not correspondingly corrected. Consequently, the copies kept by the records management archives still referred to "lot 2034".
The descrition appearing in the absolute sale pertains to lot 1333 and not to lot 2034. The description states that the lot sold is located in Brgy. Baybay, Roxas City. Lot 1333 is situated in Brgy. Baybay while lot 2034 is situated in Brgy. Culasi.
Lot 2034 was previously owned by Jose Alatavas and there is no convincing evidence showing that this lot was ever owned by Paulina nor by Filomena, therefore, it can never be a proper subject of the sale.
Proof of conveyance of ownership is the fact that form the time of sale, or after more than 30 yrs, private respondents have been in possession of lots 1320 and 1333.
22 YU TEK & CO. V GONZALES
(Generic things as object of sale Calinisan) Facts:
A) Gonzales obliged himself, via a contract, to sell 600 piculs of 1st and 2nd class sugar to Yu Tek.
B) Gonzales received payment, in the amount of P3T. C) Gonzales did not fulfill his obligation to deliver sugar. D) Yu Tek then sues.
E) Gonzales claims force majeure, since he was not able to produce any sugar at this plantation. Issue:
W/N Gonzales is liable on his obligation. Held:
A) Gonzales is liable.
B) No specific lot of sugar segregated or designated to make subject matter specific, therefore generic. C) There was no stipulation that the sugar was to be obtained exclusively from the crop.
D) Since it was generic, there is no risk of it being lost.
E) Contract was NOT A PERFECTED SALE, but a PROMISE TO SELL.
F) A contract of sale is not perfected until the parties have agreed upon the price and the thing sold. A contract whereby a party obligates himself to sell for a price certain specified quantity of sugar of a given quality, without designating any particular lot of sugar, is not perfected until the quantity agreed upon has been selected and is capable of being physically designated and distinguished from all other sugar.
23 NATIONAL GRAINS AUTHORITY VS. IAC
(Quantity of Subject Matter not Essential for Perfection Delgado)
Facts: National Grains Authority (later National Food Authority) is a government agency which buys palay grains from qualified farmer. Leon Soriano offered to sell palay grains to the agency. After undergoing the regular application process, he was given a quota (maximum) of 2,640 cavans of palay. On August 23 and 24, 1979, Soriano delivered
630 cavans which were not bagged, classified and weighed. When Soriano demanded payment for the delivered palay, he was informed by the Provincial Manager William Cabal that his payment was held in abeyance because there was an investigation concerning him because of allegations that he is not a bona fide farmer and gets the palay from another person. Soriano filed case for specific performance. RTC favored him and was affirmed by the IAC. Hence, this petition with National Grains Authority arguing that there was no sale but only an offer by Soriano because it was not accepted by the agency as evidenced of not rebagging, classifying and weighing it.
Issue: W/N there was a sale?
Held: The petition is not impressed with merit.
Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay therefore a price certain in money or its equivalent. A contract, on the other hand, is a meeting of minds between two (2) persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil Code of the Philippines). The essential requisites of contracts are: (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 (Art. 1318, Civil Code of the Philippines.
In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a meeting of the minds between the parties. The object of the contract, being the palay grains produced in Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans. 24 JOHANNES SCHUBACK VS. CA
(Quantity of Subject Matter not Essential for Perfection Del Socorro) Facts:
- respondent Ramos San Jose(buyer), doing business under the name Philippine SJ Industry Trading, wanted to purchase bus spare parts from seller Johannes Schuback (seller)
- buyer sent to seller a list of parts he wanted to buy; seller sent a letter to buyer enclosing its offer on the items listed by buyer
- Dec. 17, 1981: seller submitted its formal offer containing the item number, quantity, part number, description, unit price and total to buyer
- Dec. 24, 1981, buyer informed seller of his desire to avail of the prices of the parts at that time and enclosed its Purchase Order dated Dec 14 1981 w/c contained the item number, part number and description
- buyer promised to submit the quantity per unit he wanted to order on December 28 or 29 ( a week after confirming the purchase on the price )
- Dec. 29, buyer submitted the quantities to buyer
- buyer purchased the items promising seller to open a letter of credit in favor of the latter
- buyer failed to open letter of credit; hence, seller charged buyer for cancellation fees, storage and interest charges - buyer demanded reimbursement from seller
- buyer: he did not make any valid Purchase Order and that there was no definite contract between him and seller - RTC: favored seller
- CA: reversed RTC; there was no perfection of contract since there was no meeting of the minds as to the price between the last week of December 1981 and the first week of January 1982
Issue: whether or not a contract of sale has been perfected between the parties; if so, when was it perfected? Held:
- a binding contract of sale exited between the parties upon the issuance of the purchase order, and not upon the confirmation of the buyer of the quantities covered by the order
- the offer by seller was manifested on Dec 17, 1981 when seller submitted its proposal containing the item number, quantity, part number, description, the unit price and total to buyer. On December 24, 1981, buyer informed seller of his desire to avail of the prices of the parts at that time and simultaneously enclosed its Purchase Order dated Dec 14, 1981
- at this stage, a meeting of the minds between buyer and seller has occurred, the object of the contract being the spare parts and the consideration, the price stated in seller's offer dated Dec 17, 1981 and accepted by the buyer on Dec 24, 1981.
- although said purchase order did not contain the quantity he wanted to order, buyer made good his promise to communicate the same on December 29, 1981
- at this stage, buyer was already in the process of executing the agreement previously reached between the parties.
- although the SC agrees w/ the RTC that there was a perfected contract of sale, it differs as to the date
- perfection took place, not on Dec 29, 1981, but rather on Dec 24, 1981. Although the quantity to be ordered was made determinate only on Dec 29, 1981, quantity is immaterial in the perfection of a sales contract
- what is imp’t is the meeting of the minds as to the object and cause - as of December 24, 1981, these essential elements had already concurred
- the omission of buyer in opening a letter of credit in favor of seller does not prevent the perfection of the contract between the parties, for the opening of a letter of credit is not to be deemed a suspensive condition
- the opening of a letter of credit in favor of a buyer is only a mode of payment
- not among the essential requirements of a contract of sale, the absence of any of which will prevent the perfection of the contract from taking place
25 NOEL v CA
(Seller’s Obligation to Transfer Ownership at the Time of Delivery Fernandez) Facts:
• Gregorio and Hilaria Nanaman have a number of properties. One of which is a 34.7 ha land. Virgilio, son of Gregorio by another woman, lived with them.
• When Gregorio died, Virgilio and Hilaria managed the properties. • The 34.7 ha land was later sold to Celeste. This sale was duly registered.
• When Hilaria died, intestate proceedings concerning the spouses’ estate were instituted. Juan Nanaman, brother of Gregorio, was appointed as special administrator, and was later replaced by Edilberto Noel. • Celeste and heirs of spouses executed an amicable settlement where the former agreed to relinquish his
rights over ½ of the subject land. But this was later declared void when some of the heirs, who did not sign, questioned the agreement.
• Noel was then ordered to recover the land from Celeste. An action for reversion for title was made. Trial court declared that action has prescribed. CA ordered Celeste to return ½ of the land to the heirs plus rentals. MR-affirmed trial court decision based on laches
Issue:
Can the property be recovered from Celeste? Held:
Only ½. The transaction between Celeste and Hilaria (with Vrgilio) was indeed a sale and not just a mortgage. However, Hilaria can only alienate ½ of the land—this being her undivided share of the land. As for the other half, Hilaria was just a trustee for the benefit of who may be legally entitled to it. In sale, it is essential that the seller is the owner of the property he is selling. As to Virgilio, he is not qualified as an heir of Gregorio since he is an illegitimate child (the Civil Code then). The acts of Virgilio can just be considered as acts that helped Hilaria manage the conjugal property.
Laches does not apply as the administrator immediately filed an action to recover possession and ownership of the property. The ten-year prescriptive period has not lapse either. Celeste is ordered to return one-half of the land and pay rentals for the occupation of the same portion from the year he occupied such until it is returned.
26 NOOL v CA
(Seller’s Obligation to Transfer Ownership at the Time of Delivery Legaspi) Facts
• Conchita Nool bought from her brothers 2 parcels of land.
• When they were in need of money they mortgaged the 2 parcels with The Development Bank of the Phils. • The mortgage was foreclosed
• Within the period of redemption, Conchita contracted Anacleto Nool to redeem the parcels of land. Another contract was entered giving Conchita the right to repurchase.
• The right to redeem was not exercised by Conchita within the 1 year period. But Anacleto was able to buy from DBP who was then the absolute owner of the lands.
• Since Anacleto failed to pay the total of the agreed purchase price, Conchita asked for the parcels of land. • Anacleto refused on the ground that they acquired the lands from DBP and he was misled by Conchita when he
Issue
w/n the 2 contracts (contract of sale and right to repurchase) are valid Ruling
• The contract of sale was void
• While the civil code allows a sale of future goods, this is not applicable to the case at bar.
• The sellers can no longer deliver the object of the sale to the buyers as the buyers themselves have already acquired title and delivery thereof from the rightful owner. The contract may be deemed inoperative since it contemplated of an impossible service
• Since the contract of sale was inoperative, so is the right of repurchase. A void contract cannot give rise to a valid contract. Conchita cannot redeem the lands from Anacleto base on the 2 contracts.
27 MAPALO VS. MAPALO (Price must be real Lopez) Facts:
- Miguel Mapalo and his wife, Candida Quiba, were illiterate farmers. Out of love and affection, they resolved to donate the eastern half of their land to Miguel’s brother, Maximo, who was about to get married.
- They were deceived by Maximo and a notary public into signing an absolute deed of sale over the entire lot by pretending that the documents the spouses were signing was a deed of donation. The deed of sale contained a consideration of Php 500, which was never paid.
- Maximo, after proper registration, sells the entire land to the Narciso’s. The Narciso’s files a suit in CFI to be declared the owners of the entire lot.
- Miguel files a counterclaim and a separate case to annul the deeds of sale involved in this case.
- CFI rules for Miguel Mapalo annulling the deeds of sale. The CA, on the other hand, says that the spouses gave their consent to the sale but said consent is defective for being induced by fraud. Because of this, the CA held that the deeds of sale are not void but are merely voidable. They further held that the action to annul the deeds of sale has already prescribed, thus they dismiss the complaint.
Issue:
- W/n the deeds of sale are void or voidable.
- W/n the action of the spouses has already prescribed. Held:
- SC acknowledged that the object of the contract of sale is present – land. They also acknowledged that there was consent in this case and that it was merely defective. The SC, though, took notice of the fact that there was no consideration in this case. Maximo was alleging that there was merely a fraudulent consideration (because of the stipulation in the first deed of sale) and that the contract was still voidable. The SC, though, pointed out that the stipulated consideration was not actually paid. This brings about a contract of sale where the price is simulated which is considered void by Art. 1471 (hindi na-mention yung article sa case).
- Since the contract is void ab initio, then the action does not prescribe because the inexistence thereof is permanent and incurable. Judgment of CFI is reinstated.
28 ONG v ONG
(Price must be real Mendiola)
Facts: Imelda Ong, in consideration for Php 1 and other valuable considerations, executed a Quitclaim Deed in favor of Maruzzo who was a minor. In the Quitclaim Deed, Imelda Ong transferred all her rights, title, and interest in the ½ undivided portion of a parcel of land. However, Imelda Ong revoked the Deed and donated the whole property to her son.
Maruzzo, through Atty. Alfredo Ong, filed a case for the recovery of the land that she allegedly bought and the nullification of the deed of donation in favor of Imelda’s son. Imelda counters by saying that the Quitclaim deed was void inasmuch as it is equivalent to a deed of donation, acceptance of which is required by Maruzzo, which she could have not given due to her incapacity as a minor. Furthermore, Imelda argues that the consideration of Php 1 is no consideration at all to sustain that the deed of quitclaim is a deed of Sale. The trial court ruled that the Quitclaim deed is a Deed of Sale and that Maruzzo is the rightful owner. The CA affirmed the judgment of the TC by saying that the inadequacy of the consideration is of no moment since it is the usual practice in deeds of conveyance to place a nominal amount although there is more valuable consideration given.
Issue: Was there a contract of sale?
Held: Although the cause is not stated in the contract, it is presumed that it exists unless the debtor proves the contrary. To overcome this presumption of consideration, the alleged lack of consideration must be shown by preponderance of evidence.
Even granting that the deed is a donation, Art. 741 of the Civil Code provides that the requirement of acceptance applies only to onerous and conditional donations where the donation may have to assume certain charges of burdens.
Bad faith and inadequacy of consideration do not render a conveyance inexistent for the conveyor’s liberality may be sufficient cause for a valid contract.
29 BAGNAS VS. CA
(Price must be real Rivas) Facts:
- Parties to this case are the heirs of Hilario Mateum, single and survived only by collateral relatives
- Mateum left no will, no debts, and an estate of 25 parcels of land 10 of which are being contested in this case - Private respondents registered to the Registry of Deeds 2 deeds of sale said to be executed by Mateum in
their favor, transferring 10 parcels of land in their favor
- The consideration stated in the deeds of sale is “ halagang ISANG PISO, salaping Pilipino, at mga
naipaglingkod, ipinaglilingkod sa aking kapanganakan” --- the value of each land was assessed to be 10,500 - On the strength of the deeds of sale, respondents were able t secure title over 3 of the 10 parcels of land - Bagtas, petitioners, asked the court to cancel the deeds of sale for they are fictitious, fraudulent or falsified or
alternatively as donations
- Respondents denied that sale was fictitious. The main consideration of the sale is the good things done by the respondents in his last illness.
- RTC and CA: decided in favor of the respondents Issue:
- W/N the deeds of sale were void or inexistent ab initio or merely voidable Held:
- Void ab initio!
- Contract that has no causa or consideration, or the causa is false or fictitious, the property allegedly conveyed never really leaves the patrimony of the transferor, and upon the latter’s death without testament, such property would pass to the transferor’s heirs intestate and recoverable by them or by the administrator of the transferor’s estate.
- Law now no longer deems contracts with a false cause, or which are absolutely simulated or fictitious, merely voidable, but declares them void
- A price of P1.00 for the sale of thing worth 10,500 is so insignificant as to amount to no price at all. While not requiring that for the validity of a sale that the price be adequate, prescribes that the price must be real, not fictitious.
- The true price, which is essential to the validity of sale, means existent, real and effective price, that which does not consist in an insignificant amount.
- Art 1458 states that sale be for a “price certain in money or its equivalent” requires that “equivalent” be something representative of money to the effect that services are not equivalent of money insofar as said requirement is concerned and that a contract is not a true sale where the price consists of services or prestations
- Services mentioned in the questioned deeds of sale are not only vague and uncertain but are unknown and not susceptible of determination without the necessity of a new agreement between the parties
30 MATE v CA
(Price must be real Sarenas) Facts:
• Josefina Rey (Josie) and Inocencio Tan went to the house of Fernando Mate, Mate’s wife is the cousin of Josie. The visit was for the purpose of Josie asking the help of Mate. Josie had previously issued BP22 checks to Tan and is now owing him P4,432,067.
• Josie is requesting that Mate cede to Tan 3 lots in Tacloban to cover the debt. Naturally, Mate did not agree to the request.
• Josie reassured Mate that what they will be entering into is merely a simulated sale and that Josie will be redeeming the lots with her own money. Mate later on agreed to the fictitious sale.
• 2 BPI postdated checks were issued by Josie to Mate covering the purchase price of the properties. When Mate deposited said checks, they were dishonored for being withdrawn against a closed account. Mate tried to look for Josie but was unable to locate her.
• To protect his property, Mate filed a civil case against Josie and Tan for annulment of contract with damages. • Josie was declared in default. Tan won.
• Mate’s contention: sale is null and void for lack of consideration because no money changed hands when he signed the deed and the checks representing payment have been dishonored
Issue:
• W/N the deed of sale is valid Held:
• The deed of sale is valid. There was a consideration. There was a P1.4M check (to buy back the property) and the P420K check representing interest.
• Although the checks were dishonored, it cannot be invoked as want of consideration. The filing of BP22 cases against Josie and Tan was a tacit admission by Mate that there indeed was consideration
• When Josie’s checks bounced, what Mate could have done was to redeem his properties with his own money and then go after Josie.
• Between two innocent parties, the one who made it possible for the wrong to be done should be the one bearing the resulting loss. It was Mate himself who drafted the contracts.
• Greedy lang daw kasi si Mate. Moral of the story, don’t be greedy to the point of being stupid. 31 REPUBLIC V PHIL RESOURCES DEV
(Must be in money or equivalent Beron) Facts:
Defendant Apostol submitted the highest bid for purchase of 100 tons of Palawasn Almaciga and logs. Deliveries were made but Apostol failed to pay . Acomplaint then was filed against Apostol.
Phil REsources seek to intervene in this civil case claiming that it has some goods deposited in a warehouse which goods were used by Apostol to settle his personal debts to Bureau of Prisons. Phil Resources demanded the return of the goods, but bureau refused.
The lower court denied motion for intervention. Issue:
W/n respondent Phil Resources can intervene or has legal interest to intervene... Held:
YES. It intends to protect its interest and rights over some materials purportedly belonging to it. The assertion that the subject matter of original litigation is a sum of money and not the goods, and therefore respondent has no legal interest to intervene is without merit.
The materials have been assessed and they have been assigned by Apostol as payment of his debts with the Bureau of Prisons.
Government argues that "price = paid in terms of money and the supposed payment being in kind, it is no payment at all"
The law provides for money or its 'equivalent'. Equivalent therefore need not be in money. 32 VELASCO v CA
(Manner of Payment Essential Calinisan) Facts:
A) This case is about a specific performance suit filed by Velasco against the Magdalena Estate, alleging that there had been a perfected contract of sale whereby the defendant agreed to sell a parcel of land for P100T.
B) Plaintiff Velasco is the lesee of the parcel of land.
C) Velasco claims that they agreed that there was a downpayment of P10T, to be followed by P20T, and that the balance of P70T would be paid in installments, the
amortization of which would be agreed upon once the initial P30T was paid.
E) Defendant claimed that Soccoro Velasco offered to buy the property, and the defendant indicated his willingness to sell the lot fpr P30T downpayment, and P70T to be paid on installments for 10 years at 9% interest per annum on June and December of every year until fully paid.
F) Velasco only gave him P10T of the agreed downpayment, but since it wasn't enough, it was merely accepted as a deposit, a receipt was made in favor of her brother-in-law, no installments have been paid.
Issue:
W/N a contract of sale was perfected. Held:
A) No contract of sale was perfected since there was no meeting of the minds with respect to the manner of payment. B) The time within which the downpayment and installments were to be completed was not specified
C) 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.
D) The fact that P10T had been given does not mean that the contract was perfected, since both parties agreed that there were still essentiual matters that
had to be agreed upon.
33 GABELO v CA
(Formation of a Contract of Sale Delgado)
Facts: Philippine Realty Corporation owns a land in Intramuros with an area of 675 square meters. It was leased to Maglente for 3 years. Lessee was given Right of First Refusal. The lease contract also prohibits encumbrance without the lessor’s assent. Maglente leased it to Gabelo, at. al. without the knowledge of the owner. Maglente was informed that the land will be sold and the latter manifested to exercise his priority to buy the land. Maglente paid downpayment of P100,000 for the entire amount of P1.2M. Petitioners were informed of the sale and that they were advised to vacate the premises. They filed case with the argument that they have a better right to the land because they were occupants. They added that the co-buyers of Maglente never occupied the land. RTC frowned upon their arguments and ordered the execution of the contract to sell/contract of sale. CA affirmed.
Issue: W/N the PRC can sell this to non-occupants other than Maglente.
Held: Yes. PRC is free to sell the land to whoever is interested. The mere fact that the petitioners are actual occupants cannot compel PRC to enter into a contract with them. The contract of sale having been perfected by the meeting of the minds of the buyers and the sellers binds them and they could no longer assert their claim. The argument that the parties didn’t affix their signature is of no moment since there have been meeting of the minds and that is enough to constitute a valid contract.
34 CARCELLER v CA
(option contract Lloyd) Facts:
- SIHI owned 2 parcels of land in Cebu City
- Carceller and SIHI entered into a lease contract w/ option to purchase within the lease period (18 months)
- 3 wks before expiration of lease contract (Jan. 30), SIHI notified Carceller of the impending termination of lease, the period wherein the option could be exercised
- Jan.15 - Carceller requested for extension of 6 months, as he needed more time to raise the funds - SIHI denied request, but offered to lease the property for a yr
- Feb. 18 - Carceller notified SIHI of its decision to exercise the option and made arrangements for downpayment - SIHI denied as period already lapsed; asked Carceller to leave property
