Compiled Case Digest 2 for Sales

Sibal v. Valdez Facts: On 1923, Macondray & Co., Inc. bought 8 parcels of land at the auction held by the sheriff of the Province of Tarlac. On the same year, Leon Sibal, the judgment debtor, paid Macondray 2000php as the redemption price of said parcels of land, without specifying the particular parcels to which it was to apply. On 1924, Emilio J. Valdez bought parcels of land, where the sugar cane in question is planted, at the auction held by the sheriff of Province of Tarlac. He bought all of Macondray's rights and interest in the eight parcels of land it acquired. He also paid Macondray another 2000php for the redemption price Sibal paid. Sibal alleged two causes of action (1) that Valdez has refused to accept Sibal's offer to redeem the sugar cane the latter planted and (2) that Valdez has harvested and attempted to further harvest palay that belongs to Sibal. So Sibal prayed for a writ of injuction against Valdez to prevent the latter from possessing the subject property and from further possessing or harvesting the sugar cane and palay in said parcels of land. He also prayed to order Valdez to consent with the redemption of the sugar cane. However, Valdez argued that the sugar cane is his personal property and cannot be subject to redemption.

SC decided that since the Sibal, in good faith, planted the palay in said parcels he is entitled to half of it. Pichel v. Alonzo Facts: Prudencio Alonzo was awarded a parcel of land by the PHHC. He leased it to Sua. The board of liquidators cancelled the award to Alonzo on Jan 27, 1965 because the land was leased to someone, which is not allowed by RA 477. It was later reinstated in 1972. Alonzo executed a deed of sale for the coconut fruits (from Sept 15, 1968 to Jan 1, 1976) of the parcel of land awarded to him by PHHC by reason of RA 477. He executed this in favor of Luis Pichel in exchange for payment amounting to 4,200.00. According to RA 477, the grantee is prohibited to sell, lease or encumber the land and the improvements therein within 10 years from the issuance of the title, if he does, the transfer shall be considered null and void. The trial court held that the deed of sale was a contract of lease of the land itself and that it is null and void by virtue of RA 477. It ordered Alonzo to pay back the 4,200 that Pichel paid. Issue:

Issue:

1. 2.

WON the sugar cane in question is a personal property? WON the sugar cane in question is subject to sale? Held:

Held:

1.

2.

Yes, sugar cane is classified under personal property so it cannot be subject of redemption. Art. 334 of the Civil Code provides that trees, plants, and ungathered products, while they are annexed to the land are real property. However, it has been modified by the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. Yes, a man may sell something which he potentially but not actually possesses. It is valid to sell a thing, which though not yet actually in existence, is reasonably certain to come into existence as the natural increment or usual incident of something already in existence, provided that the thing can be specified and identified. The thing sold must also belong to the vendor to begin with. The buyer's title to the thing will vest upon its existence. Moreover, crops, whether growing or standing in the field ready to be harvested, when produced by annual cultivation, are not part of the realty. They can be sold.

Note: The immovability of growing crops are "only in abstract and without reference to rights on or to the crop acquired by others than the owners of the property to which the crop is attached" but jurisprudence recognizes the possible mobilization of the growing crop." (Point is crops can be immovable first but then they mature and become movable.)

1.

WON Alonzo has the right to execute such deed of sale considering that the award was, at the time, cancelled by the Board of Liquidators?

2.

WON the Deed of sale is the prohibited encumbrance contemplated in RA 477?

1.

Yes. Cancellation of the award granted pursuant to RA 477 does not automatically divest the awardee of his rights to the land. No immediate reversion to the state. There should be an appropriate proceeding for reversion.

2.

No.

a. b.

c.

d.

The terms of the contract are controlling when there is no ambiguity. No need to resort to statutory construction; It is for the SALE of the FRUITS of the land and not lease of the land. The subject matter of the sale is the fruits of the land. Possession and use of Fruits is different from possession and use of land. Different rights. The first one is of the accessories, the second of the principal. Right over the accessories does not vest right over principal. The accessory merely follows the principal and not vice versa. A valid sale may be made of a thing, which, though not yet in existence, is reasonably certain to come into existence as natural increment of something in existence and the title will vest on the buyer when it comes into existence. These are called things of “potential existence”. A lease is where one party binds himself to give to another the enjoyment or use of a thing for a price certain for a period which may be definite or indefinite and a sale is one where there is transfer of ownership upon delivery.

e.

The purpose of the law is fulfilled, not violated when the fruits are sold. The grantee can be self sufficient and not fully reliant on the government.

2.

Manansala v. CA Facts:

1.

2.

3.

4.

5. 6.

Fidela Manansala is the registered owner of a parcel of land in QC. She has been in possession of the land since 1955 by virtue of conditional sale made in her favour by PHHC (now NHA). In 1960, however, the PHHC awarded the land to the spouses Mercado who took possession of the land also in that year. Manansala was able to successfully retrieve the land from the Mercado spouses by claiming precedence not only in actual possession but also in the application for its purchase. In 1984, Manansala paid the full price of the land and thereafter a deed of sale was executed in her favour in 1985. Aranez brought this action for specific performance against Manansala to enforce a deed of sale covering the same lot entered into by her and Manansala in 1960. The contract stipulated that the land shall be transferred to Aranez within 30 days after full payment of the purchase price by Manansala to the PHHC. The deed was notarized by Atty. Lopez who was also her counsel against the Mercado spouses. Manansala denies selling the land; alleging further that the deed was a forgery and that her signature was secured through fraud. She also averred that the selling of the land was void because it was made in violation of the prohibition of the PHHC against subsequent disposition of the land within one year after the issuance of the title. The RTC held the signature to be genuine but there was no perfected contract since there was no intention to sell the land and because at the time of the sale, the petitioner was not yet the owner thereof. The CA reversed the decision holding that there was meeting of the minds between the party evidence by the signature of the petitioner in the deed of sale which the NBI found to be genuine. Further, the CA held that the sale was valid in accordance with ART 1461of the Civil Code which provides that things having potential existence may be the object of a contract of sale.

Issues:

1. 2.

W/N the CA erred in validating a contract in violation of law and public policy? W/N the challenged notarial document, apart from being contrary to law and public policy, does not serve the presumption of regularity?

Held:

1.

No, there was no evidence that the sale of the lot was made in violation of any rules of the PHHC. Further, this contention although raised in the trial court was not pursued by Manansala. In her appeal to the CA, she also never argued this

point as she simply considered the issues raised by the RTC. Hence this point is considered waived and can’t be urged as a ground to reverse the decision of the CA. (Conclusion of fact by a trial judge --- as affirmed by the CA--- is conclusive upon the SC.) The signature was found out to be genuine as per the report of the NBI. Further, Manasala’s claim that her signature on the deed had been procured through fraud is contradicted by her allegation that the signature on the deed was not hers.

Pio Sian Melliza v. City of Iloilo, University of the Philippines and the Court of Appeals Facts: Juliana Melliza owned Lot 2, Lot 5 and Lot 1214. She donated a part of Lot 1214 to the Municipality of Iloilo to serve as the municipal hall. The donation was revoked by the parties since the area donated was found inadequate to meet the requirements of the municipality development plan called the Arellano Plan. Lot 1214 was divided by into several lots, namely: 1214-A, 1214-B, 1214-C and 1214-D. (See illustration below for reference) Juliana executed an instrument which states that she assigns and transfers certain parts of Lot 1214 to the Municipal Govt of Iloilo. Juliana sold her remaining interest in Lot 1214 to Remedios Sian Villanueva who in turn transferred her rights to said portion of land to petitioner Pio Sian Melliza. The City of Iloilo donated the city hall site together with the building thereon to UP Iloilo, which consisted of Lots Nos 1214-B, 1214-C and 1214-D. Pio Sian Melliza asked city authorities for payment of value of Lot 1214-B. No recovery was obtained because the City did not have funds. Pio Sian Melliza filed in the CFI of Manila an action for recovery of Lot 1214-B or its value against Iloilo City and UP. Defendants answered claiming that Lot 1214-B was included in the public instrument executed by Juliana Melliza in favor of Iloilo municipality. Pio Sian Melliza claims that the public instrument is clear that only 1214-C and 1214-D is included and that the 2nd paragraph of said instrument was only to better identify the lots sold. Petitioner further claims that to hold that 1214-B is included in the sale would render the contract invalid because the law requires as an essential element of sale a “determinate” object. CFI: dismissed the complaint, saying that instrument by Juliana included Lot 1214B. CA: affirmed CFI decision, and that the portion sold by Juliana necessarily included whatever was needed for construction of avenues, parks, city hall site. Issues:

1. 2.

W/N the conveyance by Juliana Melliza to Iloilo municipality included Lot 1214-B? W/N the description of other lots in the 2nd paragraph of the instrument would be legally insufficient, because the object would not be determinate as required by law (SALES issue)

Held:

1.

2.

YES. According to the SC, the public instrument describes four parcels of land, Lot 2, Lot 5, Lot 1214-C and Lot 1214-D and further describes not only those but also lots needed for the construction of the city hall site, avenues, parks, according to the Arellano Plan. If the parties merely intended to cover the specified lots, there would have been no need for the 2nd paragraph which describes other portions of land contiguous to the four lots needed for the said Arellano Plan. NO. 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 made determinate without the necessity of a new or further agreement between the parties. (Art 1460 NCC.) The specific mention of some lots plus the statement that the lots object of the sale are the ones needed for the Arellano Plan sufficiently provides a basis, as of the time of the execution of the contract, for rendering determinate said lots without the need of a new and further agreement of the parties.

The SC also noted that Pio Sian Melliza is the notary public of the public instrument executed by Juliana. As such, he was aware of its terms. Said instrument was also registered with the Register of Deeds and such registration was annotated at the back of the Title Certificate of Juliana. From these facts, Pio Sian Melliza knew of the terms or is chargeable with knowledge of them and should have raised the proper objections with Iloilo City and UP’s possession of Lot 1214-B. He is barred by the principles of civil law, as well as laches, estoppel and equity.

In the same year of subdivision, deed of sale covering LOT 535-E was executed in the name of his brother, Eulogio Atilano II for P150.00 The other three lots was sold as well. The only one left for Atilano I was presumably covered by the title to LOT 535-A. Atilano I died and title was passed to Ladislao Atilano, the defendant. After the death of the wife of Atilano II, he and his children obtained title as to lot 535-E and became co- owners. Years later, in order to end the co-ownership and to properly subdivide the said lot, they had the lot resurveyed. It was here that they discovered that the lot they were occupying was identified as LOT 535-A and not LOT 535-E referred to in the deed of sale. The heirs of Atilano II filed the present action in the Court of First Instance alleging that they offered to surrender the possession of lot A and demanded in return the possession of lot E. The defendants refused to exchange. Their insistence on getting the possession of lot E is understandable for the said lot has greater area compared to lot A they were occupying. (lot E = 2612 m2, lot A=1808 m2) The defendants argue that:

1. 2. 3.

Reference to lot E in the Deed of Sale is an involuntary error; Intention of the parties to the sale covers lot A; and

1214 A

Lot 1214-B

1214 B

Lot 1214-C

The trial court ruled in favour of the plaintiffs on the sole ground that the lot E was registered under Land Registration Act. They cannot acquire the property through prescription.

Lot 1214-D

Issue: W/N the object of the sale is lot 535-E thus, allowing such exchange of possession?

Lot 1214

Since 1916, Atilano I had been in possession. He even bought adjoining lot to increase area.

Held: No. **For reference, this is how Lot 1214 was divided:

1.

Atilano vs. Atilano (May 21, 1969) Petitioners, plaintiffs- appelees: Heirs of Atilano II Respondents, defendants- appellants: Ladislao Atilano and Gregorio Atilano Facts: In, 1916 Eulogio Atilano I purchased a lot (Lot no. 535) of the municipality of Zamboanga. The lot was thereafter subdivided into 5 parts (LOT 535-A, LOT 535-B, LOT 535-C, LOT 535-D, LOT 535-E).

2.

When one sells or buys real property, one sells or buys property as he sees it, in its actual setting and by its physical metes and bounds and not by the mere lot number assigned to it in the certificate of title.

a.

Atilano II constructed his resident therein even before sale in his favour identified as lot A.

b.

Atilano I on the other hand had his house on lot E and even purchased adjoining lot.

The real issue is not adverse possession but the intention of the parties at the time of sale.

3.

From the facts and circumstances, the object of the sale as intended by the parties is lot A where Atilano II resided , reconstructed his house at the end of the war and where the heirs continued to reside thereafter.

4.

The designation of lot E in the deed of sale was a simple mistake in the drafting. The mistake did not vitiate the consent of the parties nor affected the validity and binding effect of the contract.

5.

Reformation of the instrument is no longer needed for the parties have already retained possession in conformity with the real intention of the parties.

6. All they should do is to execute mutual deeds of conveyance. ____________________________________________________________________________ Shorter narration of facts:

1.

Atilano I subdivided his lot into 5 parts. He thereafter sold the 4 parts. What was left for him was presumably covered by title to lot 535-A.

2.

The sale with his brother, Atilano II, is the subject of the case. The deed of sale executed covered lot 535-E. Years later, when Atilano II and his children had the lot E resurveyed, they discovered that the lot was identified as lot 535-A.

3. 4. 5.

Thus, the they offered to surrender the possession of lot A in exchange of the lot E occupied by Ladislao Atilano, successor of Atilano I after he died. (Apparently, lot A has greater area than lot B). However, Ladislao refused. Thus, the heirs of Atilano I filed a complaint before the CFI. The defendants argue that:

a. b. c.

Reference to lot E in the Deed of Sale is an involuntary error Intention of the parties to the sale covers lot A Since 1916, Atilano I had been in possession. He even bought adjoining lot to increase area.

Yu Tek & Co v. Basilio Gonzales Facts: Yu Tek and Co obliged Mr. Basilio Gonzales to deliver 600 piculs of sugar of the 1st and 2nd grade. For this service, he will receive compensation of P3, 000, as evidence in a receipt. He will deliver the 600 piculs of sugar at any place in Santa Rosa. The service contract also has a 3-month period stipulation. The contract also states that Mr. Gonzales shall return the P3, 000 and give P1,200 by way of indemnity in case the contract is rescinded. Mr. Gonzales failed to deliver. He was also unable to return the P3000 and payP1200 indemnity. For his defense, Mr. Gonzales contends that the contract was limited to sugar he might raise upon his own plantation; that the contract represented a perfected sale; and that by failure of his crop he was relieved from complying with his undertaking by the loss of the thing due (i.e dry season in his hacienda, he could not produce and deliver any sugar). Issue: Whether or not there was perfected contract of sale?

Held: No, there is no perfected contract of sale. The SC ruled that there is a perfected sale with regard to the “thing” whenever the article of sale has been physically segregated from all the other articles. In the case at bar, there was no “appropriation” of any particular lot of sugar. Thus, there was only an executor agreement and a promise of a sale. It is clear that Art. 1452, 1096 and 1182 are not applicable. Yu Tek and Co is entitled to receive P3,000. Ratio: Requisites of a contract, consideration. 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 a 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 the other sugar. National Grains Authority and William Cabal v. IAC and Leon Soriano Facts: In 1979, private respondent Leon Soriano offered to sell palay grains to the NFA (National Food Authority, which was previously called the National Grains Authority), through one of its provincial managers, William Cabal. Private respondent Soriano eventually submitted to the NFA several documents required for the sale of palay. In the Farmer's Information Sheet, the maximum number of cavans of palay that Soriano may sell to the NFA was indicated – 2640 cavans. A day after submitting the required documents, Soriano delivered 630 cavans of palay to the NFA warehouse. The palay delivered during these two days were not rebagged, classified and weighed. Soriano demanded payment of the 630 cavans of palay. However, Cabal wrote to Soriano stating that NFA cannot legally accept the said delivery because a certain Napoleon Callangan certified that Soriano is not a bona fide farmer. Asserting that there was no valid contract of sale, Cabal advised Soriano to withdraw from the NFA warehouse the 630 cavans previously delivered. Instead of withdrawing the 630 cavans of palay, private respondent insisted that the palay grains delivered be paid. He then filed a complaint for performance and/or collection of money with damages against the NFA and Mr. Cabal. Both the RTC and the Intermediate Appellate Court decided in favor of respondent Soriano.

Soriano specific William private

Issue: W/N there was a contract of sale in the case at bar? Held: YES, there was a contract of sale. In the case at bar, when the NFA 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. Sale is a consensual contract wherein the mutual consent of the parties shall lead to the perfection of the contract.

Regarding the validity of the subject matter of the contract, the fact that the exact number of cavans of palay to be delivered was not specified does not affect the perfection of the contract. Because Article 1349 states that: “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. The reason why NFA initially refused acceptance of the 630 cavans of palay delivered by Soriano is that NFA alleges that Soriano is not a bona fide farmer. The trial court and the appellate court found that Soriano was a bona fide farmer and therefore, he was qualified to sell palay grains to NFA.

Held: Yes.

1.

Contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

2.

Article 1319 of the Civil Code states: "Consent is manifested by the meeting of the offer and acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter offer." The facts indicate that consent on both sides has been manifested.

3. 4. 5.

Johannes Schuback & Sons Phil. Trading Corp. v. CA Facts:

1. 2. 3.

In 1981, SJ industrial contacted with Schuback to purchase bus spare parts from Germany. SJ Industrial also gave a list of bus spare parts that it would like to purchase. Schuback then communicated with its German office to provide an estimate of costs.

4.

After this, Shuback provided SJ Industrial its formal offer, containing a list of prices, item number, quantity, part number and description to SJ industrial.

5.

SJ Industrial then informed Schuback of its desire to purchase and submitted a purchase order containing the item number, part number and description.

6.

It also promised to follow up in the purchase order the quantity of units it would like to purchase.

7.

SJ Industrial eventually submitted the quantity of units it would like to purchase, along with the inscription “this will serve as our initial purchase order”.

8. 9.

Schuback then ordered the parts from its German Office.

10.

After some time, Schuback reminded SJ of its obligation to open a letter of credit, SJ responded by stating that it I encountering difficulties in doing so.

11. 12.

Schuback issued an invoice so that SJ Industrial can apply for a letter of credit in favour of Shuback.

Schuback then wrote again, demanding that SJ either open a letter of credit and proceed with the order or pay the cancellation fee. SJ Industrial failed to do either. Schuback sued for damages.

Issue: W/N there was a perfected contract of sale?

The act of SJ Industrial in informing Schuback of its desire to purchase after receiving a formal offer constitutes a meeting of the minds. The inscription “this will serve as our initial purchase order” proves further the acceptance of the offer. The Trial Court is correct in stating that there was a perfected contract of sale. It erred however, when it said that the perfection only occurred when the quantity to be purchased was submitted by SJ Industrial.

6.

Perfection occurred when the initial purchase order was issued even if the quantity to be purchased was not yet available as quantity is not a material to perfection.

7. 8.

What is of importance is the meeting of the minds as to the object and cause.

9.

Schuback, in its dealings with SJ Industrial, did not incorporate any provision declaring their contract of sale without effect until after the fulfillment of the act of opening a letterof credit.

The omission to open a letter of credit does not prevent the perfection of the contract between the parties, for the opening of the letter of credit is not to be deemed a suspensive condition.

Nool v. CA Facts: Two (2) parcels of land are in dispute and litigated upon here. The plaintiff spouses, Conchita Nool and Gaudencio Almojera, now the appellants, seek recovery of the aforementioned parcels of land from the defendants, Anacleto Nool (Conchita’s younger brother) and Emilia Nebre, now the appellees. Conchita and her husband bought the two parcels of land from her two brothers Victorino Nool (1 hectare) and Francisco Nool (3 hectares). As they were in dire need of money, they obtained a loan from the Ilagan Branch of the DBP, in Ilagan, Isabela, secured by a real estate mortgage on said parcels of land, which were still registered in the names of Victorino Nool and Francisco Nool, at the time, and for the failure of plaintiffs to pay the said loan, including interest and surcharges, totaling P56,000.00, the mortgage was foreclosed. The one year redemption period for the foreclosed parcels of land was from March 16, 1982 to March 15, 1983 but the mortgagor’s right of redemption was not exercised by the plaintiff spouses.

Because they were unable to redeem the property, Conchita asked her brother Anacleto Nool to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the two (2) parcels of land in question were transferred to Anacleto Nool. Defendant Anacleto having been made to believe, then, that his sister, Conchita, still had the right to redeem the said properties had agreement with Conchita to purchase the two (2) parcels of land for a total price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, plaintiffs (Conchita) were to regain possession of the two (2) hectares of land, which amounts defendants (Anacleto) failed to pay, and the same day the said arrangement was made; another covenant was entered into by the parties, whereby Anacleto agreed to return to Conchita the lands in question, at anytime the latter have the necessary amount (the repurchase agreement); that Conchita asked the Anacleto to return the same but despite the intervention of the Barangay Captain of their place, Anacleto refused to return the said parcels of land to Conchita. Anacleto theorized that they acquired the lands in question from the Development Bank of the Philippines, through negotiated sale, and were misled by Conchita when defendant Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to redeem the same. Issues and Held:

1.

Was the sale of Conchita to Anacleto valid? NO. At the time Conchita offered to Anacleto the purchase of the parcels of land she no longer had ownership of them as they were already foreclosed and she did not exercise the mortgagor’s right to redeem them within a year. DBP was already the absolute owner of the parcels of the land at that time, thus Conchita had no object to sell. The sale was UTTERLY VOID AND INEXISTENT.

2.

Does Conchita have a right to enforce the repurchase agreement? NO. One “repurchases” only what one has previously sold. In other words, the right to repurchase presupposes a valid contract of sale between the same parties. Undisputedly, respondents (Anacleto) acquired title to the property from DBP and not from petitioners (Conchita).

Note: If this is hard to understand try reading the actual case kasi mas magulo. Basta in short, Conchita was selling to her brother Anacleto land that she no longer owns because she was beyond the 1 year redemption period and had no chance to redeem her land from DBP. And because Anacleto was made to believe that Conchita still had the right to redeem the properties from DBP he agreed to her offer of selling him the land. Kumbaga maloko din to si Conchita na binebenta nya pa kay Anacleto ang lupa na nabili na mismo ni Anacleto sa DBP.