1-10 Case Digest Sales

CASE DIGESTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Fule vs. CA, [G.R. No. 112212] Gaite vs. Fonacier, [G.R. No. L-11827] Polytechnic University vs. CA, [G.R. No. 143513] Carrascos, Jr. vs. CA, [G.R. No. 123672] Vda. De Ape vs. CA, [G.R. No. 133638] Clarin vs. Rulona, [G.R. No. L-30786] Province of Cebu vs. Heirs of Rufina Morales, [G.R. No. 170] Hyatt Elevators vs. Cathedral Heights, [G.R. No. 173881] Doles vs. Angeles, [G.R. No. 149353] Montecillo vs. Reynes, [G.R. No.138018

1. Fule v. CA Facts: Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr. Cruz in exchange for P40,000 and a diamond earring owned by the latter. A deed of absolute sale was prepared by Atty. Belarmino, and on the same day Fule went to the bank with Dichoso and Mendoza, and Dr. Cruz arrived shortly thereafter. Dr. Cruz got the earrings from her safety deposit box and handed it to Fule who, when asked if those were alright, nodded and took the earrings. Two hours after, Fule complained that the earrings were fake. He files a complaint to declare the sale null and void on the ground of fraud and deceit. Issue: Whether the sale should be nullified on the ground of fraud Held: A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. Being consensual, a contract of sale has the force of law between the contracting parties and they are expected to abide in good faith by their respective contractual commitments. It is evident from the facts of the case that there was a meeting of the minds between petitioner and Dr. Cruz. As such, they are bound by the contract unless there are reasons or circumstances that warrant its nullification. Contracts that are voidable or annullable, even though there may have been no damage to the contracting parties are: (1) those where one of the parties is incapable of giving consent to a contract; and (2) those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. The records, however, are bare of any evidence manifesting that private respondents employed such insidious words or machinations to entice petitioner into entering the contract of barter. It was in fact petitioner who resorted to machinations to convince Dr. Cruz to exchange her jewelry for the Tanay property. Furthermore, petitioner was afforded the reasonable opportunity required in Article 1584 of the Civil Code within which to examine the jewelry as he in fact accepted them when asked by Dr. Cruz if he was satisfied with the same. By taking the jewelry outside

the bank, petitioner executed an act which was more consistent with his exercise of ownership over it. This gains credence when it is borne in mind that he himself had earlier delivered the Tanay property to Dr. Cruz by affixing his signature to the contract of sale. That after two hours he later claimed that the jewelry was not the one he intended in exchange for his Tanay property, could not sever the juridical tie that now bound him and Dr. Cruz. The nature and value of the thing he had taken preclude its return after that supervening period within which anything could have happened, not excluding the alteration of the jewelry or its being switched with an inferior kind. Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to Dr. Cruz and petitioner, respectively, upon the actual and constructive delivery thereof. Said contract of sale being absolute in nature, title passed to the vendee upon delivery of the thing sold since there was no stipulation in the contract that title to the property sold has been reserved in the seller until full payment of the price or that the vendor has the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. While it is true that the amount of P40,000.00 forming part of the consideration was still payable to petitioner, its nonpayment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and possession of the things exchanged considering the fact that their contract is silent as to when it becomes due and demandable.

2. 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. Gaite 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 surety agreement with Larap Mines and some of its stockholders, and another one with Far Eastern Insurance. When the second surety agreement expired with no sale being made on the ores, Gaite 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 (2) Whether there were insufficient tons of ores Held: (1) The shipment or local sale of the iron ore is not a condition precedent (or 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 spei), 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, an 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 have 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.

(2) The sale between the parties is a sale of a specific mass or iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such measurement.(see Art. 1480, second par., New Civil Code). The subject matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons contained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that the quantity delivered is less than the amount estimated by them.

3. Polytechnic University of the Philippines vs Court of Appeals and Firestone Ceramics National Development Corporation vs Firestone Ceramics Inc. [GR No. 143513 and 143590. November 14, 2001] Facts: Petitioner National Development Corp., a government owned and controlled corporation, had in its disposal a 10 hectares property. Sometime in May 1965, private respondent Firestone Corporation manifested its desire to lease a portion of it for ceramic manufacturing business. On August 24, 1965, both parties entered into a contract of lease for a term of 10 years renewable for another 10 years. Prior to the expiration of the aforementioned contract, Firestone wrote NDC requesting for an extension of their lease agreement. It was renewed with an express grant to Firestone of the first option to purchase the leased premise in the event that it was decided "to dispose and sell the properties including the lot..." Cognizant of the impending expiration of the leased agreement, Firestone informed NDC through letters and calls that it was renewing its lease. No answer was given. Firestone's predicament worsened when it learned of NDC's supposed plans to dispose the subject property in favor of petitioner Polytechnic University of the Philippines. PUP referred to Memorandum Order No. 214 issued by then President Aquino ordering the transfer of the whole NDC compound to the National Government. The order of conveyance would automatically result in the cancellation of NDC's total obligation in favor of the National Government. Firestone instituted an action for specific performance to compel NDC to sell the leased property in its favor. Issue: 1. Whether or not there is a valid sale between NDC and PUP. Ruling:

A contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore a sum certain in money or its equivalent. It is therefore a general requisite for the existence of a valid and enforceable contract of sale that it be mutually obligatory, i.e., there should be a concurrence of the promise of the vendor to sell a determinate thing and the promise of the vendee to receive and pay for the property so delivered and transferred. The Civil Code provision is, in effect, a "catch-all" provision which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration. All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the "disposition" and "transfer" of the property from NDC to PUP - consent of the parties, determinate subject matter, and consideration therefor. Consent to the sale is obvious from the prefatory clauses of Memorandum Order No. 214 which explicitly states the acquiescence of the parties to the sale of the property. Furthermore, the cancellation of NDC's liabilities in favor of the National Government constituted the "consideration" for the sale.

3. G.R. No. 143513 November 14, 2001 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES, petitioner,vs. COURT OF APPEALS and FIRESTONE CERAMICS, INC., respondents.x-G.R. No. 143590 November 14, 2001NATIONAL DEVELOPMENT CORPORATION, petitioner,vs. FIRESTONE CERAMICS, INC., respondents. BELLOSILLO, J Facts: National Development Corporation (NDC) and Firestone Ceramics Inc. Entered into a contract of lease covering the part of the property to be used as manufacturing plant for ten years. Three and a half years later Firestone entered into a second contract of lease covering the four-unit pre-fabricated reparation steel warehouse. The parties then signed a similar contract concerning six-unit pre-fabricated steel warehouse to be expired in two years. Prior to its expiration, Firestone requested NDC for an extension of their lease agreement which was granted by NDC subject to several conditions such as in the event NDC wanted to dispose it priority should be given to the lessee. The lessor-lessee relationship between the two was smooth until Firestone informed NDC that it was extending its lease over the property. NDC sold the subject property to Polytechnic University of the Philippines despite the notice of desire to purchase the property in the exercise of its contractual sent by Firestone

Issue: Whether or not the the contract of sale between NDC and PUP was valid? Held: No. Though all the elements of a valid sale were attendant in the disposition and transfer of property from NDC to PUP namely consent of the contracting parties, price or consideration and determinate subject matter, the sale is invalid because it violated the right of first refusal of Firestone which was one of the conditions under their lease contract granted by NDC 4. G.R. No. 123672: Fernando Carrascoso, Jr. v. Court of Appeals and Lauro Leviste December 14, 2005. 477 scra 666 Contract to Sell vs Contract of Sale In March 1972, El Dorado Plantation Inc, through board member Lauro Leviste, executed a Deed of Sale with Carrascoso. The subject of the sale was a 1825 hectare of land. It was agreed that Carrascoso is to pay P1.8M. P290K would be paid by Carrascoso to PNB to settle the mortgage placed on the said land. P210k would be paid directly to Leviste. The balance of P1.3M plus 10% interest would be paid over the next 3 years at P519k every 25 th of March. Leviste also assured that there were no tenants hence the land does not fall under the Land Reform Code. Leviste allowed Carrascoso to mortgage the land which the latter did. Carrascoso obtained a total of P1.07M as mortgage and he used the same to pay the downpayment agreed upon in the contract. Carrascoso defaulted from his obligation which was supposed to be settled on March 25, 1975. Leviste then sent him letters to make good his end of the contract otherwise he will be litigated. In 1977, Carrascoso executed a Buy and Sell Contract with PLDT. The subject of the sale was the same land sold to Carrascoso by Leviste but it was only the 1000 sq m portion thereof. The land is to be sold at P3M. Part of the terms and conditions agreed upon was that Carrascoso is to remove all tenants from the land within one year. He is also given a 6 month extension incase he’ll need one. Thereafter, PLDT will notify Carrascoso if whether or not PLDt will finalize the sale. PLDT gained possession of the land. El Dorado filed a civil case against Carrascoso. PLDT intervened averring that it was a buyer in good faith. The RTC ruled in favor of Carrascoso. CA reversed the RTC ruling. ISSUE: What is the nature of each contract? HELD: The contract executed between El Dorado and Carrascoso was a contract of sale. It was perfected by their meeting of the minds and was consummated by the delivery of the property toCarrascoso. However, El Dorado has the right to rescind the contract by reason of Carrascoso’s failure to perform his obligation. A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the owner shipof and deliver a determinate thing, and the buyer obligates itself to pay therefor a price certain in money or its equivalent.

The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction that for a time existed, and discharges the obligations created there under. Such failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for collection or to rescind the contract. The contract between Carrascoso and PLDT is a contract to sell. This is evidenced by the terms and conditions that they have agreed upon that after fulfillment of Carrascoso’s obligation PLDT has “to notify Carrascoso of its decision whether or not to finalize the sale.”Carrascoso also averred that there was a breach on El Dorado’s part when it comes to warranty. Carrascoso claimed that there were tenants on the land and he spent about P2.9Mrelocating them. The SC ruled that Carrascoso merely had a bare claim without additional proof to support it Requisites of Express warranty in a Contract of Sale (1) the express warranty must be an affirmation of fact or any promise by the seller relating tothe subject matter of the sale; (2) the natural tendency of such affirmation or promise is to induce the buyer to purchase thething; and 3) the buyer purchases the thing relying on such affirmation or promise thereon 5.

Vda. De Ape vs. CA, [G.R. No. 133638]

456 SCRA 193 – Civil Law – Law on Sales – Elements of a Contract of Sale – Consent Vitiated FACTS: Cleopas Ape died in 1950 and left a parcel of land (Lot 2319) to his 11 children. The children never formally divided the property amongst themselves except through hantal-hantal whereby each just occupied a certain portion and developed each. On the other hand, the spouses Lumayno were interested in the land so they started buying the portion of land that each of the heirs occupied. On 11 Apr 1973, one of the children, Fortunato, entered into a contract of sale with Lumayno. In exchange of his lot, Lumayno agreed to pay P5,000.00. She paid in advance P30.00. Fortunato was given a receipt prepared by Lumayno’s son in law (Andres Flores). Flores also acted as witness. Lumayno also executed sales transactions with Fortunato’s siblings separately. In 1973, Lumayno compelled Fortunato to make the the delivery to her of the registrable deed of sale over Fortunato’s portion of the Lot No. 2319. Fortunato assailed the validity of the contract of sale. He also invoked his right to redeem (as a co-owner) the portions of land sold by his siblings to Lumayno. Fortunato died during the pendency of the case. ISSUE: Whether or not there was a valid contract of sale?

HELD: No. Fortunato was a “no read no write” person. It was incumbent for the the other party to prove that details of the contract was fully explained to Fortunato before Fortunato signed the receipt. A contract of sale is a consensual contract, thus, it is perfected by mere consent of the parties. It is born from the moment there is a meeting of minds upon the thing which is the object of the sale and upon the price. Upon its perfection, the parties may reciprocally demand performance, that is, the vendee may compel the transfer of the ownership and to deliver the object of the sale while the vendor may demand the vendee to pay the thing sold. For there to be a perfected contract of sale, however, the following elements must be present: consent, object, and price in money or its equivalent. For consent to be valid, it must meet the following requisites: (a) it should be intelligent, or with an exact notion of the matter to which it refers; (b) it should be free and (c) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; spontaneity by fraud. Lumayno claimed that she explained fully the receipt to Fortunato, but Flores’ testimony belies it. Flores said there was another witness but the other was a maid who also lacked education. Further, Flores himself was not aware that the receipt was “to transfer the ownership of Fortunato’s land to her mom-in-law”. It merely occurred to him to explain the details of the receipt but he never did. 6. Clarin vs Rulona Civil Law – Law on Sales – Perfected Contract of Sale Facts: Olegario Clarin was the owner of a 10-hectare land in Carmen, Bohol. The same was said to be his share from the other co-owners. In 1959, he executed a Contract of Sale with Alberto Rulona. It was agreed that the purchase price would be P2,500.00. Downpayment would be P1,000.00 and the remaining balance would be paid monthly at P100.00 per month. Rulona paid the downpayment as well as the 1stinstallment but then later on Clarin returned the P1,100.00 against Rulona’s will. Clarin said he could not convince the other coowners about the selling of his share. Clarin also said there was no perfected sale between him and Rulona as he said that the sale was subject to the condition that the other co-owners should give their consent to the sale. ISSUE: Whether or not there was a perfected contract of sale. HELD: Yes there is. During trial there were 3 documents shown. Exhibit A shows that upon payment of P800.00

by Rulona, a survey of the land was authorized. Exhibit B shows that P200.00, part of the down payment was paid to Clarin and that the 1stinstallment of P100.00 was also made. Though these exhibits are not the Contract of Sale, they show that there was a contract of sale between Rulona and Clarin. Construing Exhibits A and B together, it can be seen that the Clarin agreed to sell and Rulona agreed to buy a definite object, that is, 10 hectares of land which is part and parcel of Lot 20 PLD No. 4, owned in common by the Clarin and his sisters although the boundaries of the 10 hectares would be delineated at a later date. The parties also agreed on a definite price which is P2,500.00. Exhibit B further shows that Clarin has received from Rulona as initial payment, the amount of P800.00. Hence, it cannot be denied that there was a perfected contract of sale between the parties and that such contract was already partially executed when the petitioner received the initial payment of P800.00. The latter’s acceptance of the payment clearly showed his consent to the contract thereby precluding him from rejecting its binding effect. Further, Clarin’s letter to Rulona marked Exhibit C stated; “My dear Mr. Rulona: Replying to your letter of recent date, I deeply regret to inform you that my daughter, Alice, who is now in Manila, could not be convinced by me to sell the land in question, that is, the ten (10) hectares of land referred to in our tentative agreement. It is for this reason that I hereby authorize the bearer, Mr. Paciano Parmisano, to return to you in person the sum of One Thousand and One Hundred (P1,100.00) Pesos which you have paid in advance for the proposed sale of the land in question.” The reasons given by the Clarin cannot operate against the validity of the contract in question. A contract is valid even though one of the parties entered into it against his better judgment.

7. Province of Cebu vs. Heirs of Rufina Morales, [G.R. No. 170 Facts: Province of Cebu leased in favor of Rufina Morales a 210-square meter lot. Petitioner donated the lot occupied by Morales to the City of Cebu. The city, then, sold the subject lot at public auction. The highest bidder for the said lot was Hever Bascon but Morales

was allowed to match the highest bid since she had a preferential right to the lot as actual occupant thereof. Morales thus paid the required deposit and partial payment for the lot. Later, the subject lot was returned to petitioner and registered in its name. Morales died and apart from the deposit and down payment, she was not able to make any other payments on the balance of the purchase price for the lot. Now the surviving heirs of Morales are asking for the formal conveyance of subject lot, in accordance with the award earlier made by the City of Cebu. They also consigned with the court the amount representing the balance of the purchase price which petitioner allegedly refused to accept.

Issue: Can respondents still tender payment of the full purchase price? Yes Held: Article 1592 of the Civil Code pertinently provides that “In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by notarial act . After the demand, the court may not grant him a new term. Thus, respondents could still tender payment of the full purchase price as no demand for rescission had been made upon them, either judicially or through notarial act. While it is true that it took a long time for respondents to bring suit for specific performance and consign the balance of the purchase price, it is equally true that petitioner or its predecessor did not take any action to have the contract of sale rescinded. Article 1592 allows the vendee to pay as long as no demand for rescission has been made. The consignation of the balance of the purchase price before the trial court thus operated as full payment, which resulted in the extinguishment of respondents’ obligation under the contract of sale.