Doctrine of Sales CASES -

Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

CASE 1.

2.

Dignos v. CA

 Tan v. Benorilao Benorilao

3.

Artates v. Urbi

4.

Heirs of Zambales v. CA

5.

Quiroga v. Parsons

6.

Concrete Aggregate v. CTA

7.

People’s Homesite v. CA

DOCTRINE Absolute vs. Conditional Sale. Even if the contract purports as a “Deed of Conditional Sale,” if from the nature of the agreement is absolute and there shows no stipulation reserving the title of property on the vendors nor does it give them the right to unilaterally rescind them upon non-payment of the balance thereof within the fixed period makes it absolute. Elements of a valid contract of sale: (1) Consent or meeting of minds; (2) determinate subject matter; and (3) price certain in money or its e quivalent. quivalent. Conditional Sale vs. Contract to Sell. The Sell. The Deed of Conditional Conditional Sale, as termed by the parties, states that "in case, BUYER has complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale". The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised, but where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell, even if it is denominated as a Deed of Conditional Sale. Contract to sell – is a bilateral contract, whereby the seller reserving the ownership binds himself to sell prospectively to the prospective buyer. Homestead patents are not valid objects of sale.Art sale. Art 1459. The vendor must have the right to transfer ownership at the time of the pe rfection of the contract. The act of sale was done in contravention of the Homestead Patent Law. The Law. The heirs had had promised to to sell the land before the end of the contract, and then sells it upon termination of the prohibition. Contract of agency vs. Contract of sale. (Art. 1466) Due regard must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, stipulated, and that the defendant was to pay the price in the manner stipulated. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price , but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. Contact to make v. Contract for a piece of work. (Art. 1467) A contract to make is contract of sale, if the article is already in existence and requires only some alterations alterations and modifications. modifications. They are only prevented by the nature of the rocks, which would only prompt them to produce upon a request of a customer. However, the habituality of the production for the general public makes it a manufacturer rather than a contractor, a contract to make rather than a contract for a piece of work. Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand  performance, subject subject to the law governing the form of contracts. There contracts. There was no perfected sale of Lot 4 because because the said lot was conditionally or contingently

Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

8.

9.

 Toyota Shaw v. CA, Sosa

Sampaguita Pictures v. Jalwindor Manufacturers

10. Southwestern Sugar v. Atlantic Gulf

11. Atkins, Kroll v. Cua Hian Tek General Rule: 1324. When the offerer has allowed the offeree a period to accept, such offer maybe withdrawn any time before the offeree accepts. Exception: 1479, paragraph 2. Such is founded upon consideration as something paid or promised.

12. Natino v. IAC

13. Serra v. CA  The withdrawal came AFTER the acceptance. In this case, the contract becomes a bilateral contract to sell and buy.

awarded to the Mendozas subject to the approval by the Court council of the proposed consolidation subdivision plan and the approval of the award by the valuation committee and higher authorities. The PHHC Board Of Directors acted within its rights in withdrawing the tentative award. An agreement with no terms as to payment is not a contract of sale . “Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc.,” was not a perfected contract of sale, but merely an agreement between Mr. Sosa and Bernardo as private individuals and not between Mr. Sosa and Toyota as parties to a contract. There was no meeting of the minds as to the settlements of payment, therefore it is merely an agreement and not a contract of sale. There was no indication of any obligation on the part of Toyota to deliver a determinate thing to Sosa neither was there a correlative obligation on the latter to pay a price certain.  The down payment of P100,000 made no reference to a sale of a determinate vehicle. Ownership is obtained upon actual or constructive delivery. Capitol became the owner of the jalousies, although there was failure on the part of them to pay the purchase price in full, because the requisites of a contract are present. (1477)

Third party claims. When a third person in a sworn statemtn of ownership claims, it is an entirely different matter. The agreement between Capitol and Sampaguita Pictures clearly stated that whatever purchase Capitol has made will be owned by the former. Offer of option, when not supported by any consideration has no binding effect and may be withdrawn anytime, notwithstanding the acceptance made previously by the offeree. Option contract. (1479, par 2) Art 1324 is modified by Art. 147 9. The former is the general rule while the latter is an exception. If the option is given without a consideration, it is a mere and valid offer of a contract of sale, which is not binding until accepted, abandoning the ruling in the Southwestern Sugar and Molasses Co. CONTRARY RULING. The commitment by a bank to resell a property within a specified period, although accepted, or a promise of extension of redemption of sold property by a third is not the promise contemplated in Art 1479, as it is not founded upon consideration and it is distinct from the p urchase price. Contracts of adhesion  where in one party stipulates and the other merely affixes his signature is as binding as any other ordinary contract because in reality, he is free to reject it. The price of two hundred ten pesos per square meter is considered price certain albeit grossly inadequate (1470). What prevails is the intention of the contracting parties. 1324. When the offerer has allowed the offeree a period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when it is founded upon consideration. This is supported by Art 1479. In a unilateral promise to sell, where the debtor fails to withdraw the promise before the acceptance of a creditor, the transaction becomes a bilateral contract to sell and to buy, because upon acceptance by the creditor of the offer to sell by the debtor, there is already

Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

a meeting of the minds of the parties as to the thing which is determinate and the price which is certain.

14. Roman v. Grimalt

15. Equatorial Dev’t v. Mayfair Theater

Ruling: Option to buy now with the Mayfair Theater, and he must pay 11 million pesos as the price agreed upon Equatorial and Carmelo.

16. Norkis v. CA

17. Southern Motors v. Moscoso

18. Pascual v. Universal Motors Corp Appellant Universal Motors argues that Article 1484 is not applicable to the case at bar because there is no evidence on record that the purchase by PDP Trans. of the 5 trucks was payable in instalments and that the PDP  Trans. had failed to pay two or more instalments. Universal Motors also contends that what Article 1484 prohibits is for the vendor to recover from the purchaser the unpaid balance of the price after he has foreclosed the chattel mortgage on the thing sold, but not a recourse against the security put up by a third party.

In the present case, the consideration is e ven more onerous on the part of the lessee since it entails transferring the improvements on the property to petitioner, should respondent bank fail to exercise its option within period stipulated. When there has been no contract, the rules in 1480 and 1504 cannot be applied . Thus, the risk of loss is borne only by the owner under the doctrine, res perit domino and not a party who only intended to purchase it. 1459 –  the vendor must have the right to transfer ownership at the time of the perfection of the sale. In the case at bar, having been recorded under the name of Paulina Giron and no showing that Roman was acting as her agent, Roman had no right to sell it. Right of first refusal when contract lease is for a period of 20 years or more, because it becomes a vested right. And any third person must respect such right. Not a buyer in good faith, violation of a right of first refusal — VALID but RESCISSIBLE. Delivery is not effected when there is a legal impediment (1498). Not having been the owner, petitioner cannot be entitled to the civil fruits of ownership like rentals of the thing sold. In this case, Equatorial was demanding a sum of money for rent against Mayfair. It may only be  just WHEN EQUATORIAL HAD BEEN THE OWNER. In the absence of an express assumption of risk by the buyer, the things sold remain at seller's risk  until the ownership thereof is transferred to the buyer," is applicable in the case at bar for there was neither an actual nor constructive delivery of the thing sold. The conflict between the provisions of Articles 1480 and 1506 were resolved, that when the thing sold and is pending delivery, and the loss was due to a fortuitous event, that BUYER bears the loss and SELLER has a right to recover. Article 1484; Recto Law; Foreclosure v. Attachment. When a writ of attachment has been issued, the creditor  — specific performance can institute the first remedy  because the attachment is not an incident to the civil action. And the proceeds of the attachment does not proceed yet to the creditor, but stays with the Court until final judgment and there seems to be no source for the payment of the debt. Guaranties; If there are two mortgages, the f oreclosure of one bars the foreclosure of the other.  The Supreme Court concluded to the contrary to appellant’s contention, saying that the first issue was whether or not the sale was one on installments. The lower court found that it was, and that there was failure to pay two or more installments, a finding which is not subject to review by the Supreme Court.  The next contention is that what article 1484 withholds from the vendor is “the right to recover any deficiency from the purchaser after the foreclosure of the chattel mortgage,” and not a “recourse to the additional security put up by a third party to guarantee the purchaser's performance of his obligation.” But the Supreme Court to sustain this argument of the appellant would be to indirectly subvert and public policy overturn the protection given by Article 1484.

Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

19. Filinvest Credit Corp v. CA

Lease or sale on instalments, Recto Law must still apply;  The real intention of the parties “Rent -to- own” sales—  should prevail. Upon the completion of the payments, the rock crusher, subject matter of the contract, would become the property of the private respondents. This form of agreement has been criticized as a lease only in name. 1485 —  the vendor, by retaining ownership over the property in the guise of being the lessor, retains, likewise, the right to repossess the same, without going through the process of foreclosure, in the event the vendee-lessee defaults in the payment of the installments. There arises therefore no need to constitute a chattel mortgage over the movable sold. More important, the vendor, after repossessing the property and, in effect, cancelling the contract of sale, gets to keep all the installments-cum-rentals already paid.

20. Sps. Ridad v. FILINVEST Ford Sedan CM- Foreclosed Franchise  –  was foreclosed as well, because the first foreclosure did not satisfy the debt; and subsequently sold to a third person.

21. Sps. Dela Cruz v. CA Case at bar: Petitioner contends that there has been a consummation of a remedy when they chose foreclosure, and they have nothing left to do but implement it.

22. Agustin v. CA  Through writ of replevin: upon repossession, the latter discovered that the vehicle was no longer i n running condition and that several parts were missing which private respondent replaced. The vehicle was then foreclosed and sold at public auction. Expenses for transportation from Cagayan to Manila, repairs and execution orders. Petitioner contends that it is in contravention of 1484, because it had already chosen foreclosure, and now aiming for specific performance.

23. Fiestan v. CA

When there is a waiver of warranty, parties who signed it are precluded to complain about the quality, when it appears that they are equipped with knowledge of the product they’re dealing with.  — when the vendor elects one of the Act 3135; Recto Law  remedies, he can no longer avail of the other, because it would be unjust to auction a property at a low price and then not absolve the debtor of the debt.  Even when the mortgage did not satisfy the debt, the vendor could no longer demand specific performance. He has to content himself with the proceeds of the auction of chattel. To allow such would be a circumvention of the law which 1484 prohibits and it would be contrary to public policy. It can’t do indirectly what the law prohibits directly. If the vendor chooses foreclosure, and then desisted (because the foreclosure has not commenced or delay of submission was not by his fault), it is only right and just to choose another remedy. It was ruled that no foreclosure materialized because foreclosure is (1) by possession of chattel by the sheriff or (2) Sale at a public auction Where the mortgagor plainly refuses to deliver the chattel subject of the mortgage upon his failure to pay two or more installments, or if he conceals the chattel to place it beyond the reach of the mortgagee, what then is the mortgagee expected to do? It logically follows as a matter of common sense, that the necessary expenses incurred in the prosecution by the mortgagee of the action for replevin so that he can regain possession of the chattel, should be borne by the mortgagor. Recoverable expenses would, in our view, include expenses properly incurred in effecting seizure of the   fees in prosecuting the chattel and reasonable attorney ’s action for replevin. Relative incapacity to sell by an agent; SPA makes a person an agent, a seller — Supreme Court reiterated that the formalities of a levy, which the Provincial Sheriff of Ilocos Sur allegedly failed to comply with, are not basic requirements before an extra-judicially foreclosed property can be sold at public auction. The spouses Fiestan insisted that what prevails over the case are  — Agents) and Article 1491, par. 2 (Incapacity to buy  Article 1409, par. 7 (those prohibited by law) which prohibits agents from acquiring by purchase, even at a public or judicial auction either in person or through the mediation of another, the property whose administration or sale may have been

Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

entrusted to them unless the consent of the principal has been given.

24. Bordon II v. Servicewide Specialist

25. Dizon v. Suntay

Even in the absence of statutory provision, there is authority to hold that a mortgagee, and in this case the DBP, may purchase at a sale under his mortgage to protect his own interest or to avoid a loss to himself by a sale to a third person at a price below the mortgage debt. Recovery of money includes the purchase price and expenses incurred in effecting the seizure of the chattel and attorney’ fees.  The mere fact that the vendor secures possession of the unpaid articles through an attachment does not necessarily mean that it would resort to a foreclosure of the mortgage. Art 559, NCC  –  The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable property or has been unlawfully deprived thereof , may recover it from any person in possession of the same. 559 –   Sale sanctioned by Statutory authority (of competent jurisdiction sells a thing on a public sale, owner may recover it, if in bad faith, cannot.) 1505 –   Sale sanctioned by judicial authority Where one of the two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed .

26. EDCA Publishing v. Sps. Santos

Case at bar was not a sale but merely a pledge, therefore, Art 559 is proper. The sale between EDCA and Cruz is not voidable because there is a perfected contract of sale (1475) and there is transfer by delivery (1477). There is only a breach of contract (want of consideration), giving a right to demand Cruz specific performance. Nonetheless, it should not affect those who have contracted in good faith. EDCA lost its right against Sps. Santos.

27. Layug v. IAC

Non-payment only creates a right to demand payment or rescind contract of criminal prosecution of bouncing checks, but delivery, even when here is nonpayment, TRANSFERS OWNERSHIP. Maceda Law, RA 6652 —F   ailure to pay the amount of instalment plus interest, buyer should be given 30 day grace period (one month for every paid), otherwise, rescission will take place; and refund of cash surrender value (50% of total payments made)

28. Power Commercial and Insdustrial Corp v. CA

Requisites of rights of a seller in Maceda Law: (1) notice that needs to be notarized (2) surrender of cash value, min.: 50%, max: 90% Delivery remains as an indispensable requisite as our laws does not admit the doctrine of transfer of property by mere consent: It must be actual or constructive (1497-1501) (keyword: control not possession)

Notwithstanding the presence of illegal occupants, transfer of ownership can still be effected through the execution of the deed of conveyance.

When here is no impediment whatever to permit the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through public instrument is sufficient. When the deed of conveyance does not stipulate t hat the vendees could not exercise control over the said

Kira Jorgio / 2L / 2017-2018 / Atty. Busmente

29. Addison v. Felix & Tioco 30.  Ten Forty Realty v. Cruz

property, delivery can still be effected through the mere execution of the deed. Symbolic delivery is mere legal fiction which must yield into reality. Execution of Deed of Sale; Not sufficient as delivery  . Ownership is transferred not by contract but by tradition or delivery. DOS is not a conclusive presumption of delivery of possession of a piece of real estate. The execution of a public instrument gives rise only to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is not effected, because of a legal impediment. Such constructive or symbolic delivery, being merely presumptive, was deemed negated by the failure of the vendee to take actual possession of the land sold.