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DIZON V CA
FACTS: Overland entered into a contract if lease with option to buy with Dizon. Dizon wanted to cancel the contract for nonpayment but Overland insists it has already made a partial payment for the option to buy with Alice Dizon. HELD: There was no valid payment because Alice Dizon was not authorized by the seller to accept any payment.
FULE V V CA
DOCTRINE: Sale us a consensual contract and he who alleges it must show its existence by competent proof. The elements of a contract of sale are consent, object and price in money or its equivalent. The absence of any of these essential elements negates the existence of a perfected contract. FACTS: There was a barter between Fule(owner of land) and Dr. Cruz(owner of emerald-cut diamond earrings). Fule was given time to inspect the jewelry, being a jeweller himself. When asked if the jewelry was okay, he said yes. He later complained that the earrings were fake and wants his land back. HELD: there can be no return of properties because the contract had already been perfected.
CELESTINO V COLLECTOR
DOCTRINE: A contract of sale is perfected at the moment there is a meeting of the minds upon the thing to which is the object of the contract and upon the price. FACTS: Celestino, maker of sash, doors and windows, claim that it should only be assessed 3% contractor’s tax because its work is based on special order, not the 7% tax for on sale of manufactured articles. HELD: Celestino cannot avail of the 3% tax because it does not only serve special customers only since any builder may order from them.
COMMISSIONER V ENGINEERING
QUIROGA V PARSONS
PUYAT V ARCO
DOCTRINE: A factory which habitually makes sash, windows and doors, and sells the goods to the public is a MANUFACTURER. The fact that the windows and doors are made by it only when customers place their orders and according to such form or combination as suit the fancy of the purchaser does not alter the nature of the establishment. FACTS: Eng’g is engaged in the design installation of central air conditioning system, pumping plants and steel fabrications. HELD: Eng’g is not a manufacturer but a contractor so it should not be assessed tax for manufactured goods. DOCTRINE:The distinction between a contract of sale and a contract for furnishing services, labor and materials is tested by the inquiry whether the thing transferred is one not in existence and which would never have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. S FACTS: There was a contract between Quiroga and Parsons so Parsons can sell Quiroga beds in Visayas. Quiroga claims that Parsons had violated certain obligations implied in agency. HELD: the contract was of purchase and sale and not a contract of agency. Parsons’ obligation was to pay the price for the beds whether are sold or not. DOCTRINE: In a contract of agency, the agent receives the thing to sell it and does not pay for the prince but delivers to the principal the price he obtains from the sale of a thing to a third person. If he does not succeed, then he returns the thing to the principal. FACTS: Puyat was the agent in Manila of Star Piano. Arco contracted with Puyat to purchase sound reproducing equipment.
Arco later learned that Puyat has a 25% discount with Star Piano and wants Puyat to return the equivalent amount of the discount to them. HELD: Arco is not entitled to the discount that Puyat enjoyed because Puyat was not an agent of Arco.
DAO HENG BANK V LAIGO
LUZON BROKERAGE V MARITIME
DIGNOS V CA
II. PARTIES TO A CONTRACT OF SALE
CALIMLIMCANULLAS V FORTUN
DOCTRINE: It is well-known that local dealers acting as agents of foreign manufacturers, aside from obtaining discount from principal, also adds to the price for local purchasers. If a purchaser later discovers that it is at the short end, he alone must bear the blame and contract cannot be rescinded. FACTS: Laigo obtained loan of 11M from Dao Heng Bank, Inc and pledged 3 mortgages as security. Laigo failed to settle the obligation and verbally offered to cede to Dao Heng one of the two mortgaged lots by way of dacion en pago. Dao Heng demanded payment and filed an application to foreclose all 3 mortgages. HELD: There was no dacion en pago because Dao Heng had not consented. DOCTRINE: Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale whereby property is alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation, hence, common consent of the parties is required in order to extinguish the obligation. FACTS:Myers and Maritime entered into a contract of Conditional Sale (Contract to Sell). Myers reserved the right to cancel contract in case of Maritime’s failure to pay installments. Maritime failed to pay, hence, Myers cancelled the contract. HELD: (as previously proven) contract to sell, not of sale. When payment was not made, contract of sale was not perfected. DOCTRINE: The distinction between contracts of sale and contract to sell with reserved title has been recognized by this Court in repeated decisions upholding the power of promisors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for, as in this case. FACTS: Dignos sold their land to Jabil payable in 2 instalment, w/ assumption of indebtedness. Jabil paid and it was acknowledge by the spouses in a deed. Later, Dignos spouses also sold the same land to Cabigas, a deed of absolute sale was executed. HELD: The property belongs to Jabil since when Dignos sold the land to Cabigas, the could not validly do so since they no longer were the owners. DOCTRINE: Difference between contract to sell and contract of sale: sell – reserves ownership subject to fulfilment of condition i.e. full payment, and ownership does not pass to the buyer despite delivery of the thing until said condition is fulfilled; sale – does not reserve ownership over the thing sold and ownership is transferred immediately upon actual or constructive delivery of the thing. FACTS:Fernando Canullas and Mercedes Calimlim-Canullas were married and begot 5 children. Fernando abandoned his family and lived with his concubine. Fernando sold the land as well as the house where his wife and children resided to Daguines for P2,000. Daguines initiated a complaint for quieting of title against Mercedes. DOCTRINE: The sale was contrary to law morals and public policy, and thus is null and void. The sale was subversive to the stability of the family, a basic social institution which public policy cherishes and protects. The prohibition of donations and sale
CRUZ V CA
between spouses apply to common-law relationships, otherwise, “the condition of those who incurred guilt would turn out to be better than those is legal union”. FACTS:Gloria Cruz and Romeo Suzara lived together as husband and wife without the benefit of marriage. Out of love and affection, Cruz executed a deed of absolute sale over her lot in favour of Suzara without any monetary consideration. Suzara subsequently mortgaged it and was it was foreclosed because he however failed to pay. Cruz paid the bank partially to restructure the loan in order to extend redemption period. Suzara redeemed the property and sold it to a 3 rd person DOCTRINE: While Art. 1490, which prohibits the husband and wife from selling property to each other, was extended to common-law relationships, Cruz can no longer seek reconveyance of the property when it has already been acquired by 3 rd person in good faith and for value. The real purpose of the Torrens system of registration is to quiet title to land and to put to a stop to any question of legality of the title except claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto. A purchaser is not required to explore further what the Torrens title on its face indicates in quest for hidden defect or inchoate right that may subsequently defeat his right thereto.
PHILIPPINE TRUST CO V ROLDAN
FACTS: When father died, Mariano, inherited 17 parcels of land from him. His stepmom Roldan, was appointed his guardian through guardianship proceedings. Roldan sold the land to her brother-in-law Ramos allegedly to invest the money in a house in Manila. The next day, Ramos executed in favor of Roldan a deed of conveyance covering the same 17 parcels. DOCTRINE:Roldan purchased her ward’s property through her brother-in-law. She planned to get them for herself, evident from the amount of time that lapsed between the two sales (8d). Only ONE DAY had passed from the time the guardianship court judicially confirmed the sale. From both legal and equitable standpoints, the sales cannot be sustained. The sales from Mariano, by Roldan, to Ramos, and then from Ramos to Mariano, are void for violation of 1459.
RUBIAS V BATILLER
FACTS: Francisco Militante claimed ownership over land to which he filed an application for registration of title. The application was opposed by the Director of Lands. Pending litigation, Militante sold the land to Domingo Rubias, his son-in-law and a lawyer by profession. Rubias declared the land for taxation purposes under various tax declarations and land taxes. DOCTRINE:Aside from acquiring nothing from Francisco Militante, since his application for registration was denied by the land registration court – as affirmed with finality by the CA. Assuming in arguendo that Militante had anything to sell, the deed of sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in the land registration case involving the very land in dispute was void. The purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491, paragraph (5) of the Civil Code
MACARIOLA V ASUNCION
FACTS:Judge Asuncion purchased a property from Dr. Galapon, who acquired the said property from the parties in a partition case previously handled by Judge Asuncion.
III. SUBJECT MATTER
MARTINEZ V CA
MELLIZA V CITY OF ILOILO
ATILANO V ATILANO
DOCTRINE:The prohibition in the NCC on acquisition of properties by judges covers only acquisitions taking place during the pendency of the litigation involving those properties. The case handled by Judge Asuncion had long been final. He didn’t buy the lot directly from the plaintiffs either. However, his acts invited suspicion of impropriety & distrust thus he was reminded to be discreet in his private/business affairs. FACTS: A parcel of land, ownership of w/c changed hands until it landed to spouses Martinez, was being contested by the municipality as a river and thus form part of public domain. The dispute was referred to the Committee of Rivers and Streams which conducted an investigation. The report submitted stated that Parcel No. 2 was not a public river but a private fishpond owned by the spouses. The municipal officials of Lubao refused to recognize the Subcommittee’s decision. DOCTRINE:Parcel No. 2 is a river of the public domain as evidenced by its technical description which states that it is bounded on all sides by rivers. Said parcel is a branch of the main river that has been covered with water since time immemorial and thus part of the public domain. It is incapable of private appropriation or acquisition by prescription. The spouses’ title does not include the river. Simple possession of a certificate of title under the Torrens system does not necessarily make the possessor a true owner of all the property described therein. The incontestable and indefeasible character of a Torrens certificate of title does not operate when the land covered is not capable of registration. FACTS:Melliza sold under a deed several tracts of land to the then Municipality of Iloilo, including lots 1214-C and 1214-D. The instrument of sale did not mention lot 1214-B, although it was contiguous to the other two lots, but stipulated that the area being sold shall include the area “needed for the construction of the city hall site, avenues and parks according to the Arellano plan.” The Arellano plan had long been in existence before the execution of the deed. DOCTRINE:The requirement 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. The requirement was deemed fulfilled under the contract of sale because it specifically referred to such other portions of the lots required by the “Arellano plan,” which had long been in existence and it specifically provided for the land areas needed for the city hall site. Therefore, at the time of the perfection of the contract, the exact area of the land needed, which was the subject matter of the sale, could be determined by simply referring to the Arellano plan, without the parties needing to draw-up a new contract, nor even to clarify matters or explain their intentions. FACTS:Eulogio Atilano II brought parcel of land from his brother Eulogio Atilano I. Heirs of E. Atilano II claim that upon resurvey of the subject land, it was discovered that the land sold to them designated as Lot No. 535-E was in fact Lot No. 535-A which was the one presently occupied by heirs of Atilano I. SO, Atilano II bought 535-E but is now occupying 535-A (1,808 square-meter) and Atilano II retained 535-A but is now occupying 535-E (2,612 square meters). Atilano II of course wants to get the other bigger parcel. DOCTRINE:When one sells or buys real property - a piece of land, for example - one sells or buys the 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. The real issue here is not adverse possession, but the real intention of the parties to that sale. The object of sale, as intended and understood by the parties, was that specific portion where the vendee was then already residing, where he reconstructed his house where his heirs continued to reside. : namely, lot No. 535-A; and that its designation as lot No. 535-E in the deed of sale was a simple mistake in the drafting of the document.
PICHEL V ALONZO
FACTS:Alonzo was awarded a parcel of land by the Government as homestead, of course w/ prohibition from encumbrance. Alonzo sold to Pichel through a “deed of sale” all the fruits of the coconut trees which may be harvested in the land for the period 15 September 1968 to 1 January 1976, in consideration of P4,200.Alonzo filed an action for the annulment of a “Deed of Sale” because the contract actually is, for all legal intents and purposes, a contract of lease of the land itself; an encumbrance prohibited under RA 477. DOCTRINE:The document in question expresses a valid contract of sale. It has the essential elements of a contract of sale as defined under Article 1485 of the New Civil Code. The subject matter of the contract of sale in question are the fruits of the coconut trees on the land during the years from September 15, 1968 up to January 1, 1976, which subject matter is a determinate thing. Under Article 1461 of the New Civil Code, things having a potential existence may be the object of the contract of sale. Pending crops which have potential existence may be the subject matter of the sale.
YU TEK V GONZALES
IV. OBLIGATION OF SELLER TO TRANSFER OWNERSHIP
HERNAEZ V HERNAEZ
SIY CONG BIENG V HSBC
FACTS:A written contract was executed between Basilio Gonzalez and Yu Tek & Co for Gonzalez to provide Yu Tek with 600 piculs of sugar of the first and the second grade according to the result of the polarization within three months for a consideration of P3000. Yu Tek paid Gonzalez P3000 but the latter was not able to deliver the sugar because of the almost total failure of his crop. The contract of sale being valid, the loss of the thing must be borne by the buyer. DOCTRINE:A contract of sale is not perfected until the parties have agreed upon the price and the thing sold. There is a perfected sale with regard to the “thing” being sold when it had already been physically segregated from all other articles. In the case at bar, what was designated was the generic name “sugar”. There was no “appropriation” of any particular lot of sugar. Thus, the contract between Gonzalez and Yu Tek was merely an executory agreement; a promise of sale and not a sale. As there was no perfected sale, it is clear that articles 1452, 1096 and 1182 are not applicable. FACTS:Domingo Hernaez’s parents died. He sold his interests to the undivided estate of both parents to his son, Vicente. Notwithstanding that fact, and in connivance with Vicente, he executed a document of sale all his interest to his father’s estate and 1/18of his mother’s to Alejandro Montelibano. He also executed a document of sale, on the same day, to Jose Montelibano Uy-Cana, selling 4/18 of his interest in his mother’s estate. Jose Montelibano Uy-Cana then sold his interest to Alejandro. After that, Vicente sold his interest to his uncle Rosendo. DOCTRINE:Vicente is estopped from asserting his title as against either Montelibano or Uy-Cana, even though he had actually purchased all of his father’s interest. Where the true owner of property, for however short a time, holds out another, or, with knowledge of his own right, allows another to appear as the owner of or as having full power of disposition over the property, the same being in the latter’s actual possession, and innocent third parties are thus led into dealing with such apparent owner, they will be protected. FACTS:Ranft was given quedans as document of his title to bales of hemp he had purchased. However, without paying for the hemp yet, he offered the quedans as security for his preexisting debts to HSBC. He died without paying Siy for the hemp. Siy wanted to get the quedans from HSBC as these were not yet paid for. DOCTRINE:Siy is estopped from denying that the bank had a valid title to the quedans for the reason that Siy itself had voluntarily clothed Ranft with all the attributes of ownership. The bank, without knowing of the arrangement between the
JALBUENA V LIZARRAGA
SUN BROS. V VELASCO
parties, relied upon the apparent ownership in good faith FACTS:Salvador Lizarraga, as judgment creditor, caused the sheriff to levy upon an old sugar-mill as the property of Ildefonso Doronila, the judgment debtor and husband of Jalbuena. At the time of the levy Doronila stated to the sheriff that the mill belonged to him. DOCTRINE: Jalbuena is estopped. Where the true owner of property, for however short a time, holds out another, or, with knowledge of his own right, allows another to appear, as the owner of or as having full power of disposition over the property, the same being in the latter's actual possession, and innocent third parties are thus led into dealing with some [such] apparent owner, they will be protected. FACTS: Sun Bros delivered to Francisco Lopez an Admiral refrigerator. Lopez paid only the down payment of P500. Lopez sold the ref to Velasco. The following day, Velasco sold the ref to Co Kang Chiu, after displaying the ref at his store. Co Kang Chiu paid P985 in cash. The ref was delivered to Co Kang Chiu. Sun Bros filed a complaint for replevin. DOCTRINE:This is a case of an imperfect or void title ripening into a valid one, as a result of some intervening causes. The policy of the law from w/c we do not feel justified to deviate, has always been that where the rights & interests of a vendor comes into clash w/ that of an innocent buyer for value, the latter must be protected. Ruling this way would facilitate commercials on movable & give stability to business transactions. This rule is necessary in a country such as ours where free enterprise prevails, for buyers can’t be reasonably expected to look behind the title of every article when he buys at a store. The doctrine of caveat emptor is now rarely applied, and if it is mentioned it is more of an XPN that the GR
MASICLAT V CENTENO TAGATAC V JIMENEZ
DE GARCIA V CA
FACTS: DOCTRINE: FACTS:Tagatac was induced by fraud(pretending he had lots of money) to sell and deliver his car to Feist for which she was given a post-dated check. The check was dishonored and the car was subsequently sold from one person to another until it was displayed in a car exchange where it was discovered by the plaintiff. She brought an action to recover the car. DOCTRINE:Accdg to A559 CC, although possession of movable property acquired in good faith is equivalent to a title, one who has lost any movable or has been unlawfully deprived thereof, may nevertheless recover it from the person in possession of it. There was a valid transmission of ownership from Tagatac to Feist by virtue of the sale and delivery of the car to the swindler. The fraud and deceit practiced on her earmarked the sale as a voidable contract. As long as no action was taken for annulment, the contract remained binding. As the car was again sold to another, the title acquired by the subsequent purchaser was an indefeasible one, even as against the original owner. FACTS:A diamond ring was stolen from Guevara’s house. While she was talking to Garcia, an owner of a restaurant, she recognized the ring on the latter’s finger and asked how she acquired the same. Garcia averred that she bought it from her comadre. It was ascertained the ring was indeed Guevarra’s but despite written demands, Garcia refused to return the ring. DOCTRINE:The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the
EDCA PUBLISHING V SANTOS
possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.The title of the possessor is not that of ownership, but is merely a presumptive title sufficient to serve as a basis of acquisitive prescription. FACTS:An impostor(alias Jose Cruz) buys books from EDCA through telephone. EDCA delivers the books, is paid through personal check, and issues a sales invoice. Impostor sells books to Santos who buys in good faith. The check to EDCA bounces, EDCA discovers the fraud of the impostor, and seeks to recover ownership of the books from Santos. DOCTRINE:Ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing sold even if the purchase price has not yet been paid.There was a perfected contract of sale. De La Pena acquired ownership over the books which he could then validly transfer to the Leonor Santos. First sentence of Art 559 CC “the possession of movable property acquired in good faith is equivalent to a title”. Santos acquired possession of the movables (the books) in good faith, thus she has title to them as owner.
AZNAR V YAPDIANGCO
MAPALO V MAPALO
ONG V ONG
FACTS:To get purchase price for car, Marella said they had to go to his sister’s house to borrow money. Marella also requested the registration papers and copy of deed from Irineo, Santos’ son, on the pretext that he would show it to his lawyer. Irineo handed the documents to Marella. They alighted while an unidentified companion of De Dios stayed behind in the car. Once inside the house, Irineo was asked to wait in the sala while De Dios went inside a room. De Dios did not come out of the room. The car was also not there outside anymore. He inquired from a woman he saw for L. De Dios and he was told that no such name lived or was even known there. DOCTRINE:Article 559 of the Civil Code applies in this case, for under it, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also from third persons who may have acquired it in good faith from such finder, thief or robber. It establishes two exceptions to the general rule of irrevindicability, to wit, when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing as against the owner, who may recover it without paying any indemnity, except when the possessor acquired it in a public sale. FACTS:Illiterate spouses were tricked into signing a deed of donation of the eastern portion of the land to Maximo, the brother of the owner of the land. The document signed by the spouses was actually a deed of sale conveying the WHOLE property to Maximo. Maximo sold the whole lot to the Narcisos. DOCTRINE:A contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. The deed of sale is governed by the Old Civil Code. If it is w/o consideration, it is inexistent. If it is only w/ a false consideration, it is voidable. In this case, the consideration of P500 was totally absent. The inexistence of a contract is permanent and incurable and cannot be the subject of prescription. FACTS: Ong executed a quitclaim deed in favour of Maruzo(minor) transferring, releasing, assigning and forever quitclaimed ½ of parcel of land for a consideration of “1 peso and other valuable consideration”. HELD: The quitclaim was valid because the consideration was no one person alone but also other valuable considerations.
BAGNAS V CA
MORALES V CA
REPUBLIC V PHIL RESOURCES
DOCTRINE: Apparent inadequacy in price is of no moment since it is the usual practice in deeds of conveyance to place a nominal amount although there is a more valuable consideration. FACTS:Hilario Mateum died without ascendants or descendants, and survived only by 2 sets of collateral relatives. 1 set claims that the lands were sold to them as depicted in a deed for the consideration of P1.00 and “services rendered, being rendered, and to be rendered for my benefit. DOCTRINE:Sale of land is VOID AB INITIO for having false and fictitious consideration (P1 in the deed compared to P10,500 as valued in the tax declaration), since no other true and lawful cause was shown. Upon the consideration alone that the apparent gross, not to say enormous, disproportion between: STIPULATED PRICE: P1.00 (in each deed) plus unspecified and unquantified services VALUE: At least P10,500.00 (based on assessments for tax purposes) FACTS:Montinola sold his lot to Reyes using a second owner’s duplicate of the TCT for only P1.00. Reyes, in turn, sold the lot to the Abellas again for P1.00. The Abellas subsequently sold it to the Deseo. Apparently, the first owner’s duplicate copy was not lost or was either found by Montinola, was used by him to sell the lot again to Morales Development. Morales claims to have a better right over the property because of the suspicious price paid for the sales. DOCTRINE:Where the contract of sale states that the consideration is P1.00, the consideration may have been much more, as the assignor’s liberality may be a sufficient cause for a valid contract. It is not unusual in deeds of conveyance adhering to the Anglo-Saxon practice of stating that the consideration given is the sum of P1.00 although the actual consideration may have much more. FACTS: The Republic of the Philippines, in representation of the Bureau of Prisons, instituted against Macario Apostol a civil complaint. PDRC moved to intervene. The complaint says that sometime prior to Apostol’s transactions the corporation had some goods deposited in a warehouse. Apostol, then the president of PDRC, but without the knowledge or consent of the stockholders thereof, disposed of said goods by delivering the same to the Bureau of Prisons in an attempt to settle his personal debts. DOCTRINE: PRDC has legal interest in the case because A1458 provides that the purchaser may pay “a price certain in money or its equivalent,” which means payment of the price need not be in money. Whether the goods claimed by PRDC belong to it and delivered to the Bureau of Prisons by Apostol in payment of his account is sufficient payment therefore, is for the court to pass upon and decide after hearing all the parties in the case.
TOYOTA SHAW V CA
***VILLANUEVA NOTES This case is not at all authority to say that under A1458, as it defines a contract of sale, the term “equivalent” of price can cover other than money or other media of exchange, since this case covers not the perfection stage of a contract of sale, but rather the consummation stage where the price agreed upon can be paid under the mutual arrangements agreed upon by the parties to the contract of sale, even by dation in payment, as is the case herein. FACTS: Luna wanted to buy Toyota Lite Ace, met w/ a sales rep ad emphasized that he needed the Lite Ace not later than June 17, 1989 because he, his family and a balikbayan guest would use it on June 18 to go to his home province where he would celebrate his birthday. He also intimated that if he does not arrive in his hometown with a new car, he would become a laughing
stock. Sales rep informed them that the vehicle was being readied for delivery but after about 1 hour, Bernardo told them that the car could not be delivered since “nasulot ang unit ng ibang malakas”.
VELASCO V CA
LIMSON V CA
SAN MIGUEL V HUANG
DOCTRINE: No obligation on Toyota’s part to transfer ownership of a determinate thing to Sosa and no correlative obligation on Sosa’s part to pay a price certain appears therein. Nothing was mentioned about the full purchase price and the manner the instalments were to be paid. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. A disagreement on the manner of payment is tantamount to a failure to agree on the price. FACTS: Velasco and Magdalena Estate entered into a contract of sale of a parcel of land. Stipulation in the contract says: “the balance of P70,000 shall be paid by the plaintiff to the defendant in 10 years from November 29, 1962. Xxx That the time within which the full down payment of the P30,000 was to be completed was not specified by the parties”. DOCTRINE: 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. Velascos admit that they and Magdalena still had to meet and agree on how and when the down payment and the installment payments were to be paid. No definite agreement on the manner of payment so no perfected contract since the terms of payment – still had to be mutually covenanted. FACTS: Agreeement between Limson and seller de Vera to buy parcel of land. Limson gave the sum of P20,000 to de Vera as "earnest money;" and de Vera signed a receipt giving her a 10-day option period to purchase the property. She agreed to pay the balance of purchase price so mortgage may be released. They were not able to do so bec of failure of de Vera to appear on meeting places. Limson later found out that de Vera sold to Sunvar the property. DOCTRINE: Earnest money and option money "Earnest money" and "option money" are not the same but distinguished thus; o Earnest money is part of the purchase price, while option money is the money given as a distinct consideration for an option contract; o Earnest money given only where there is already a sale, while option money applies to a sale not yet perfected; and, o When earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy, but may even forfeit it depending on the terms of the option. Not Earnest Money!! Nothing in the Receipt which indicates that the P20,000 was part of the purchase price. It was not shown that there was a perfected sale between the parties where earnest money was given. Finally, when Limson gave the "earnest money" the Receipt did not reveal that she was bound to pay the balance of the purchase price. FACTS: SMPPI was selling several lots in Pasig for P52M. Huang offered to buy the property, enclosing P1M representing “earnest-deposit money” subject to the conditions. They met several times to negotiate the payment terms but could not come to an agreement. SMPPI returned the P1M given as "earnest-deposit". Huang demanded that SMPPI execute a deed of sale covering the properties. DOCTRINE: Huang did not give the P1M as "earnest money" as provided by Art. 1482 of the Civil Code. They presented the
VI. FORMATION OF CONTRACT OF SALE
VILLONCO V BORMAHECO
TRADERS ROYAL BANK V CUISON LUMBER
XYST CORP V DMC URBAN PROPERTIES
ZAYCO V SERRA
DE LA CAVADA V DIAZ
amount merely as a deposit of what would eventually become the earnest money or down-payment should a contract of sale be made by them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the contract of sale but only as a guarantee that respondents would not back out of the sale. At the time when SMPPI accepted, their contract had not yet been perfected. FACTS: Sale of property was made subject to condition that Bormaheco will acquire the property in Sta. Ana. There was a series of negotiations between the parties. In the counter-offer of buyer Villonco, seller Bormaheco made certain changes – 1. Crossed out the word NASSCO and 2. Inserted the words “per annum” instead of p.a. DOCTRINE: An acceptance with contains changes in the offer but does not ESSENTIALLY change the terms of the offer does not constitute a counter-offer. So long as it is clear that the meaning of acceptance is positively and unequivocally to accept the offer. Changes made were so trivial, there being no incompatibility before and after the changes were made. FACTS: Cuison Lumber obtained loans w/ Traders Bank and offered a payment arrangement. The bank replied through a letter of its resolution to grant to grant repurchase to the foreclosed property. Cuison Lumber did not make an express acceptance. DOCTRINE: A contract is perfected from the moment there is a meeting of the offer and acceptance upon the thing and the cause that constitute the contract. The offer must be certain and the acceptance absolute and unqualified. The ascertainment whether there is a meeting of minds depends on the circumstances surrounding the case. In this case, the contract was perfected as evince by subsequent acts of the parties: Cuison Lumber paid continuously and even asked for extensions. FACTS: DMC was sold 18th floor by Citibank because it built the Citibank Tower, but sale was subject to conformity. DMC decided to sell the unit to XYST Corp but consent of Citibank must be obtained. Citibank gave pro-forma contract and XYST proposed amendments. DOCTRINE: A contract is perfected by mere consent. The essence of consent is the conformity of the parties on the terms of the contract that is, the acceptance by one of the offer made by the other. Acceptance must be absolute otherwise the same constitutes a counter-offer and has the effect of rejecting the offer. By introducing amendments, XYST introduced counter-offer w/c DMC did not agree. FACTS: Zayco and Serra executed a contract for an option to buy Palma Central for 1M but no stipulation was made as to how much the first payment would be and when it should be paid. Zayco wrote to Serra accepting the contract tendering P100,000 as his first payment before the option period expired. Zayco later learned that Serra had already sold the property to Whitaker and Concepcion. DOCTRINE: In order for an acceptance to have the effect of converting an offer to sell into a perfect contract, it must be plain and unconditional. It will not be so if it involves any new proposition for in that case, it will not be the acceptant’s conformity with the offer w/c is what gives rise to the birth of the contract. In this case, there was no concurrence of offer and acceptance. Serra’s offer did not state the amount of first payment. When Zayco accepted the offer, tendering the sum of P100,000 as first payment, his acceptance involved a proposal, not contained in the offer, that this precisely, and not any other, should be the amount of the first payment. FACTS: Antonio Diaz granted an option to Antonio Enriquez de la Cavada to purchase his hacienda at Pitogo. On the same day, De la Cavada accepted the offer, on condition that the property shall be surveyed and registered under the Torrens system, and that he would pay the price after the title has been approved. The counter-offer was accepted by Diaz.
SORIANO V BAUTISTA
CARCELLAR V CA
VILLAMOR V CA
SANCHEZ V RIGOS
DOCTRINE: An OPTIONAL CONTRACT is a privilege existing in one person, for which he had paid a consideration, which gives him the right to buy, for example, certain merchandise of certain specified property, from another person, if he chooses, at any time within the agreed period, at a fixed price. The contract of option is a separate and distinct contract from the contract which the parties may enter into upon the consummation of the option. A consideration for an optional contract is just as important as the consideration for any other kind of contract. FACTS: Bautista mortgage land to Soriano with an option for Soriano to purchase the land within the 2-year period of the mortgage. Within 2 years, Soriano informed Bautista of intent to purchase the land. Bautista refused to sell the land. DOCTRINE: Mortgagor's(Bautista’s) promise to sell is supported by the same consideration as that of the mortgage itself, which is distinct from that which would support the sale, an additional amount having been agreed upon to make up the entire price of P3, 900.00, should the option be exercised. The mortgagors' promise was in the nature of a continuing offer, non-withdrawable during a period of two years, which upon acceptance by the mortgagees gave rise to a perfected contract of purchase and sale. FACTS: Carceller and SIHI entered into a lease contract with option to purchase two parcels of land. 3 weeks before expiration of lease contract, SIHI notified Carcellar. Carcellar requested for six-month extension of the lease contract, alleging that he needs ample time to raise sufficient funds in order to exercise the option. SIHI replied that thes request was disapproved. Carceller notified SIHI of his decision to exercise the option to purchase the property. DOCTRINE: An option may be exercised validly even though in a way not in accord with that stated in the contract, if it would be consistent with the primary intent of the parties. The letter of Carceller to SIHI is fair notice of the intent to exercise the option, despite the request for the extension of the lease contract. FACTS: Reyes sold half of her land to Villamor. She also executed a “Deed of Option” in favor of Villamor for the remaining portion of the lot. Later however, Reyes offered to repurchase the lot in but it was refused by Villamor, who instead expressed their desire to purchase the remaining portion of the lot but the Reyeses ignored them. DOCTRINE: The option offered by Reyes had been accepted by the Villamor, the promises, in the same document. The acceptance of an offer to sell for a price certain created a bilateral contract to sell and buy and upon acceptance, the offeree, ipso facto assumes obligations of a vendee. Demandability may be exercised at any time after the execution of the deed. FACTS: Rigos gave Sanchez an option to purchase her property within 2 years and said option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Several tenders of payment were made by Sanchez within said period, but they were rejected by Mrs. Rigos. Rigos’ defense was that the contract between the parties "is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void".
DOCTRINE: SC harmonized articles 14791 and 13242 of the Civil Code to rule that if a promise to sell or is unsupported by a distinct consideration, the promisor is not bound by his promise and may, accordingly, withdraw it; but, pending notice of the withdrawal of his offer, his promise partakes of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. EQUITORIAL REALTY V MAYFAIR
FACTS: Carmelo leased its property to Mayfair whereby Mayfair constructed thereon the Maxim & Miramar Theatres. Par8 of the lease contract provided that the Mayfair will be given 30 days exclusive option to purchase the property should Carmelo desire to sell it. Mayfair’s negotiations w/ Carmelo didn’t ripen into a sale. Carmelo sold the properties to Equatorial. DOCTRINE: Par. 8 is not an option clause or option contract but a contract of a right of first refusal by virtue of Art. 1479. The right of first refusal is an integral part of the contracts of lease. The consideration is built into the reciprocal obligations of the parties. The Ang Yu decision may apply if the contract is limited to the buying and selling of the real property. However, the obligation of Carmelo to first offer the property to Mayfair is embodied in a contract. It should be enforced according to the law on contracts instead of the panoramic and indefinite rule on human relations. The sale of the subject real property by Carmelo to Equatorial must be rescinded since Mayfair was prejudiced by the sale to Equatorial w/o Carmelo conferring to Mayfair every opportunity to negotiate within the 30-day stipulated period.
PARANAQUE KINGS V CA
Vitug, dissenting: a right of first refusal as a simple juridical relation. It lacks the force of law sufficient to compel compliance per se or to establish a creditor-debtor or obligee-obligor relation between the parties. If a right of first refusal cannot even be properly classed as an offer or as an option, certainly, and with much greater reason, it cannot be the equivalent of, nor be given the same legal effect as, a duly perfected contract. No rescission! FACTS: Santos and Paranaque Kings entered into a lease contract. Contract says “ in case of sale, LESSEE shall have the first option or priority to buy the properties subject of the lease”. Santos sold the lots to Raymundo for 5M. It was also offered to Paranaque for P15M and given ten days to make good the offer which it rejected, calling the price ridiculous. Paranaque offered to buy the property for 5M. DOCTRINE: The basis of the right of refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer and only when the optionee fails to exercise his right can the same be sold to third persons under the same terms as offered the optionee. Paranaque has right of first refusal to the same price offered to Raymundo.
ANG YU ASUNCION
Sales Lady says: There was bad faith in Raymundo’s part. The remedy is specific performance because all the elements of a valid contract of sale between Paranaque and Santos are already present – the price was already determined to be 5K. The right of first refusal has already ripen into a contract FACTS: Tenants of residential and commercial spaces owned by Cu Unjieng were granted priority to acquire the properties they
A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price 2 When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon consideration, as something paid or promised 1
ROSENCOR V INQUING
were renting. During the negotiations, Cu Unjieng offered a price of P6-million while tenants made a counter offer of P5million. They asked the Cu Unjiengs to put their offer in writing. The latter failed to specify the terms and conditions of the offer and the tenants also received information that Cu Unjieng was about to sell the properties. DOCTRINE: Even if a party is aggrieved by the failure to honor the right of first refusal, its breach cannot justify correspondingly an issuance of a writ of execution, nor would it sanction an action for specific performance without thereby negating the indispensable element of consensuality in the perfection of contracts. (HINDI TALAGA DAPAT SPECIFIC PERFORMANCE!!!) The remedy is an action for damages for abuse of rights. Right of First Refusal an innovative juridical relation WHAT IT IS NOT: o NOT perfected contract of sale under Article 1458. o NOT option under the second paragraph of Article 1479 o NOT an offer under Article 1319 In RoFR, the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantor’s eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct (e.g. A19). FACTS: The lessees were given a right of first refusal by the owner, but it was made orally and not in writing. The representative of the owner sent them an offer to buy the property for 2M. They counter-offered 1M. Later, they found out that the property had already been sold by the owner to Rosencor. They wanted the contract of sale to be annulled in order for them to exercise their right of first refusal. DOCTRINE: A contract of sale entered into in violation of a right of first refusal of another person, while valid, is rescissible. However, in order for the doctrine to apply, it must be shown that the vendees acted in bad faith as they were aware or should have been aware of the right of first refusal granted to another person by the vendors therein. Yet, in this case, the right was given orally. A right of first refusal need not be written to be enforceable and may be proven by oral evidence. However,
FORMALITIES OF THE CONTRACT
DALION V CA
SECUYA V VDA. DE SELMA
PAREDES V ESPINO
it makes it difficult to prove that the buyer was aware of such right. Constructive notice cannot apply since even the lease contract was oral. There must be clear and convincing proof that Rosencor was made aware of the said right of first refusal before they can be guilty of bad faith. ∞ Remedy of the lessees for the violation of RoFR: action for damages for the unjustified disregard of their right. FACTS: A private document of absolute sale was executed between Sabesaje and Dalion. Sabesaje denied the fact of the sale contending that the document sued upon is fictitious since his signature there was forged. DOCTRINE: Article 13583 provision on the necessity of a public document is only for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument. A contract of sale is a consensual contract. No particular form is required for its validity. FACTS: The original owner of a 10,750sqm lot bound herself to transfer 1/3 of it to Sabellona thru an Agreement of Partition. Sabellona then sold 3,000sqm of the 1/3 portion to the Secuyas in a private document. The 1/3 lot, however, was never actually transferred. Instead, parts of the original 10,750 lot, including the portion bought by the Secuyas, was sold to Selma. HELD: There was no property to partition. Thus, the Agreement of Partition is actually an express trust. However, it was repudiated when the land was sold to another. (as a result, Sabellona could not validly sell the property). Even if the trust subsists, the Secuyas cannot prove their claim over it. The private document through which they acquired the 3,000 sqm lot was lost. DOCTRINE: While a sale of a piece of land appearing in a private deed is binding between the parties, it cannot be considered binding on third persons, if it is not embodied in a public instrument and recorded in the Registry of Property. FACTS: Espino and Paredes agreed about the sale of a lot, the evidence of which is letters only without any written contract. It was agreed that only upon Espino’s arrival at Puerto Princesa will the price be paid and the deed of sale executed. But Espino refused to execute the deed upon his arrival despite Paredes’ demand and willingness to pay. Paredes sought specific performance. HELD: The SC ruled that the contract between the two does not fall under the Statute of Frauds by virtue of the existence of the letters, which constitute sufficient memorandum, embodying the essential terms of the contract. DOCTRINE: Statute of Frauds does not require the contract itself to be in writing. Article 1403, par. (2) is clear that a written note or memorandum, embodying the essentials of the contract and signed by party charged, or his agent, suffices to make the
The following must appear in a public document: (1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by articles 1403, No. 2, and 1405; (2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains; (3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; (4) The cession of actions or rights proceeding from an act appearing in a public document. All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by articles, 1403, No. 2 and 1405. (1280a)
BARETTO V MANILA
INIGO V ESTATE OF MALOTO
CITY LITE V CA
VII. TRANSFER OF OWNERSHIP
verbal agreement enforceable, taking it out of the operation of the statute. FACTS: Barretto allegedly had an oral contract w/ Manila Railroad whereby the company would buy his house. Barretto made a deed of sale, but when he delivered and presented it to the company, the latter refused to buy. Barretto brings specific performance suit. HELD: The contract of sale is unenforceable because delivery of a deed of sale w/o intent to part w/ the title until paid is not constructive delivery or performance. The contract is not partially performed to take it out of the context of the Statute of Frauds. By Manila Railroad’s objection to the introduction of parol evidence to prove the oral contract of sale, said contract cannot be proven or enforced. DOCTRINE: If a contract is not partially performed, it is still within the context of the Stature of Frauds. Partial performance must be coupled with intent to perform. FACTS: Inigo (Buyer) & Maloto(seller) had a verbal contract of sale of a property for w/c buyer paid the purchase price. The contract & the receipt of the purchase price were not reduced into writing. Upon death of seller, her heirs inherited the property. Buyer demands the execution of a deed of sale. HELD: The Statute of Frauds doesn’t bar the sale of real property in the case at bar because it has been partially performed (executed already, not executory). DOCTRINE: Under Art. 1403(2)(e), a verbal contract for the sale of real property is unenforceable, unless ratified as it offends the Statute of Frauds. However, this only applies to executory contracts & not to those either totally or partially performed. Oral evidence of the alleged consummated sale is not forbidden by the Statute of Frauds. F.P. Holdings(owner) offered for sale to the general public its land thru its broker Meldin Roy of Metro Drug. Roy sent a sales brochure to Atty. Gelacio Mamaril, a practicing lawyer and registered real estate broker who in turn passed on these documents to City-Lite Realty Corporation. City-Lite conveyed its interest to buy in a letter to Metro Drug after and all correspondence to Metro Drug. When they met in person, City-Lite and Roy reached an agreement. For some reason or another and despite demand, F.P Holdings refused to execute the corresponding deed of sale in favor of City-Lite. HELD: There was NO perfected contract of sale between City-Lite and F.P. Holdings because the broker had no authority to sell the property because authorization was only to find buyers.
KUENZLE V MACKE
DOCTRINE: Article 1874 of the CC provides: “When the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.” For lack of written authority to sell, sale should be as it is declared null and void. FACTS: HELD:
LUZON BROKERAGE V MARITIME
DOCTRINE: FACTS:Myers and Maritime entered into a contract of Conditional Sale (Contract to Sell). Myers reserved the right to cancel contract in case of Maritime’s failure to pay installments. Maritime failed to pay, hence, Myers cancelled the contract. HELD: (as previously proven) contract to sell, not of sale. When payment was not made, contract of sale was not perfected.
BEAN V CADWALLADER
DOCTRINE: A contract to sell, payment is only a positive suspensive condition, the failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. To argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale, where nonpayment is a resolutory condition, which is not the case. There is power of promisors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for. FACTS: Where the goods were ready for delivery at the time and place agreed upon, the mere fact that the buyer, by reason of the improper equipment of the vessel, was unable to take the goods aboard the vessel, cannot relieve the latter for responsibility under the contract. George Case and BW Cadwallader had a contract for the sale of certain types of logs. Case bound himself to deliver said pieces of wood to the BW Cadwallader alongside the latter's ship at Basilan. Case was able to deliver the logs on time in the port of Basilan. However, despite repeated attempts to load the logs, they were not loaded. CAdwallader wants the contract rescinded. HELD: Case had already complied with his obligation to deliver the logs since he had already delivered the logs alongside the vessel.
OCEJO V INTERNATIONAL BANK CEBU WINLAND V ONG SIAO HUA
AVILES V ARCEGA
Actual manual delivery of an article sold is not essential to the passing of the title thereto (art 1450, Civil Code) unless made so by the terms of the contract or by an understanding of the parties. The parties to the contract may agree when and on what conditions the property in the subject of the contract was passed to the prospective owner. FACTS: HELD: DOCTRINE: FACTS: Ong Siao Hua bought a condo unit from Cebu Winland. No written document was executed for the sale.When construction finished, Winland turned possession of the properties over to Ong. Ong noticed that in the Deeds, the stated floor area of his units were smaller than what he bought. He conducted a verification survey and it was found that the total area of the units was actually much smaller. He demanded a refund of the total value corresponding to the lacking floor area. HELD: Ong Siao has already acquired ownership of the condo unit. DOCTRINE: Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both form sof delivery contemplate ‘the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee. FACTS: HELD: DOCTRINE:
PHIL SUBURBAN V AUDITOR GENERAL SARMIENTO V LESACA
FLORENDO V FOZ
MASALLO V CESAR
ASSET PRIVATIZATION V TJ ENTERPRISES
BOARD OF LIQUIDATORS V FLORO
ABUAN V GARCIA
FACTS: HELD: DOCTRINE: FACTS: HELD: DOCTRINE: FACTS: Foz executed a contract, retified by notary, selling his property to Florendo. Florendo already made a partial payment, the remaining balance was agreed to be paid when they see each other in Vugan during thye next month. When Florendo tendered payment for remaining balance, Foz refused to receive and repudiated the contract. HELD: Foz can be compelled to deliver the property to Florendo. DOCTRINE: When a sale is made by means of a public document, the execution of it shall b equivalent to delivery of the thing – formal delivery de jure. FACTS: HELD: DOCTRINE: FACTS: APT had certain premises (where machinery & equipment were stored) leased to Creative Lines. APT sold some of the machinery & equipment therein to TJ Enterprises. TJ wasn’t able to haul the machinery & equipment from the premises because of APT’s refusal. HELD: There was no constructive delivery upon the execution of the deed or issuance of the gate pass because it was not APT that had actual possession of the property. The phrase as-is where-is basis pertains solely to the physical condition of the thing sold, not to its legal situation. Creative Lines’ refusal to haul the machinery isn’t a fortuitous event. DOCTRINE: As a general rule, execution of a deed of sale is equivalent to the delivery of the object if from the deed the contrary doesn’t appear or can’t clearly be inferred. For movables, delivery may consist in delivery of the keys of the place or depository where it is stored or kept. The thing must be place in control of the object in order for execution of a deed to effect tradition (but it’s only a presumption) except when the delivery isn’t effected because of a legal impediment. BAVIERA CITATION In a contract for the salvage of surplus property, the employer assigned all its rights and title to all surplus property salvaged by the contractor at a price of P90 per long ton, payment to be made monthly, on the basis of recovery reports of sunken surplus property salvaged during the preceding month, the Court held that it was a case of tradition longa manu and ownership passed as soon as the property was salvaged. FACTS: Abuan acquired homestead which passed on to his legal heirs upon his death. August 7, 1953 - Legal heirs sold land to Garcia by a Deed of Absolute Sale (public instrument). Legal heirs filed action to recover land due to fraud and contract being executed without consideration – which was eventually settled amicably on February 28, 1955. Garcia paid P500 on that day and promised to pay P1500 more (on or before April 30, 1955).
HELD: The period to repurchase has already prescribed.
BAUTISTA V SIOSON
DOCTRINE: There was DELIVERY BREVI MANU or TRADITIO BREVI MANU permissible under A1499 and A1501. Intention to give possession and ownership was gleaned from the fact that in the 2nd deed (which was a private deed NOT construed as constructive delivery): There is no stipulation reserving ownership The fact that the agreement was entered into in consideration of plaintiff’s/ legal heir’s desistence, as in fact they desisted, from prosecuting their reivindicatory action, LEAVING PROPERTY IN THE HANDS OF GARCIA, as owner thereof. FACTS: HELD:
BEHN MEYER V YANGCO
DOCTRINE: FACTS: HELD:
GENERAL FOOD V NACOCO
DOCTRINE: FACTS: HELD:
CARBONELL V CA
DOCTRINE: FACTS: 2 buyers offered to buy the seller’s land w/ assumption of mortgage The price proposal of Buyer 1 was accepted and memorandum was made allowing the seller to occupy the land for 1 year and to lease it thereafter. When Buyer 1 went to the Seller w/ the deed, Seller told him that he already gave the lot to Buyer 2. Buyer 2 presented a memorandum wherein the Seller obligated himself to sell the lot to him, as well as a deed of sale. Buyer 2 had the sale registered 4 days after the 1st sale was registered. HELD: Buyer 1 was in good faith – at the time of their negotiations & the perfection of the sale, there was no 2nd sale yet to speak of. The circumstances show that Buyer 2 was in bad faith. The 1st sale was properly perfected & consummated; Seller retained possession of her house as a lessee. Although the memorandum between Buyer 1 & Seller wasn’t in the form required by the Statute of Frauds, it was still proof of a partially performed sale. The assumption of the mortgage & the lease of the house formed part of the consideration of the sale. Other issues involve BPS. DOCTRINE: Court reiterated Art. 1544 on Double Sales4. Good faith of the buyer of the realty is essential in registering his deed
“If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.” 4
CHENG V GONZALES
LEUNG YEE V FL MACHINERY
of sale (a.k.a. anterior registration) to merit the protection in Art. 1544, per 2nd par. of the said article.5 If there’s no inscription (registration), what is decisive is prior possession in good faith. FACTS: HELD: DOCTRINE: Compania executed two mortgages on the same building. Both were foreclosed. 1 st buyer bought the lot through a deed of sale (public instrument but not registered) and was I possession of the building ever since. 2 nd buyer/ mortgagee had the sale to him (by a public auction) registered despite his knowledge of the 1st sale and the 1st buyer’s possession. Court said first buyer should be declared the owner because the 2 nd buyer made the inscription in bad faith. 1st buyer was in possession first in good faith DOCTRINE: GOOD FAITH: Test: Good faith, or the lack of it, is in its last analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, the Court is necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined. It is: "the honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a person on inquiry," "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs." (Wilder v Gilman) BAD FAITH:
RIVERA V ONG CHE
One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. FACTS: Lichauco Brothers offered for sale certain old machinery and boilers which were deposited in a yard. Rivera allegedly purchased some of the materials through an agent, but failed to take possession of the property. Ong Che bought the property from Lichauco brothers and immediately took possession. Rivera sued Ong Che in order to recover the articles. HELD: Ong Che has a better right of ownership. He was a purchaser in food faith who immediately took possession of the property. Under article 1473(now 1544) of the Civil Code, Ong Che has a better title than the first purchaser, who has never had possession at all. DOCTRINE: Two different agents of the same owner successively negotiated sales to two different purchasers, and under 1473 of the Civil Code, the second purchaser having acquired possession first must be declared the true owner. Ong Che, was a
DBP vs. Mangawang, et al., 11 SCRA 405; Soriano, et al. vs. Magale, et al., 8 SCRA 489
CARUMBA V CA
HANOPOL V PILAPIL
DAGUPAN V MACAM
VIII. RISK OF LOSS
purchaser of these articles in good faith. He acquired possession by virtue of his purchase. He, undoubtedly has, under article 1473 of the Civil Code, a better title than the first purchaser, who has never had possession at all. FACTS: HELD: DOCTRINE: FACTS: Hanopol claims ownership of the land through a seies of purchases in a private document and a CFI decision in a reivindicatory case. Pilapil asserts his title to the property through a duly notarized deed of sale executed in his favour. HELD: PILAPIL wns the land. DOCTRINE: Better right is much more than the mere prior deed of sale in favor of the 1 st vendee. It is the prescriptive right that had supervened or other facts and circumstances exist which, in addition to his deed of sale, the 1 st vendee can be said to have better right than the 2nd purchaser. FACTS: A parcel of unregistered land was sold to Macam. He did not register the sale. After this, the certificate of title was issued over the land. Then, the original owner was made a judgment creditor in a separate case. The sheriff levied upon the land and was sold in a public sale. The buyer was able to consolidate ownership and register the sale. On the issue of who has a better right to the land, it was HELD: The first buyer is the owner. The rules on registered and unregistered land cannot be applied because the situation obtaining here does not fall strictly within the ambit of any of the two rules. Instead, we apply ROC – the buyer in a public sale steps into the shoes of the judgment debtor. Since the judgment debtor had previously sold the land to Macam, the buyer in the public sale had nothing to step into.
QUIMSON V ROSETE
DOCTRINE: In case of conveyance of registered real estate, the registration of the deed of sale is the operative act that gives validity to the transfer. Sec 35, Rule 39 of the ROC, to the effect that upon the execution and delivery of the final certificate of sale in favor of the purchaser of land sold in an execution sale, such purchaser “shall be substituted to and acquire all the right, title, interest and claim of the judgment debtor to the property as of the time of the levy”. FACTS: HELD:
SANCHEZ V RAMOS
DOCTRINE: FACTS: HELD:
ROMAN V GRIMALT
DOCTRINE: FACTS: Roman (owner) and Grimalt (buyer) verbally agreed upon the sale of the schooner Santa Marina. Grimalt agreed to buy it at 3 equal installments provided the title papers were in proper form. However, the title of the vessel was not in Roman’s name. Roman promised to perfect his title to the vessel but failed. The vessel sank in the Manila harbor during a storm – this was before Roman was able to produce the proper papers showing ownership of the vessel. Grimalt refused to pay upon Roman’s demand.
HELD: Roman should bear the risk of loss because there was no sale yet. If no contract of sale was executed by the parties, the loss must be borne by its owner & not by a party who only intended to purchase it and who was unable to do so due to the failure by the owner to show proper title to it and thus enable them to draw up the contract of sale. Grimalt was not obliged to pay the price of the vessel, the purchase of which had not been concluded. The conversations bet the parties did not establish a contract sufficient in itself to create reciprocal rights bet the parties.
NORKIS V CA
SUN BROS. PEREZ
DOCTRINE: Ownership is not considered transmitted until the property is actually delivered and the purchaser has taken possession of the value and paid the price agreed upon, in which case the sale is considered perfected. Art 1452 6 of the old Civil Code re injury or benefit of the thing sold after a perfect contract, and Arts 10967 and 11828 re obligation to deliver a specific thing & extinction of such obligation due to loss or destruction do not apply if no contract was perfected in the first place. FACTS: Nepales bought from Norkis a Yamaha Wonderbike, but Norkis retained possession. Norkis issued a Sales Invoice showing that the contract of sale had been perfected signed by Nepales. The motorcycle was registered in the Land Transportation Commission in the name of Alberto Nepales.Norkis delivered the bike to Julian Nepales(3 rd person) without authority from buyer Napales. The bike was completely destroyed in an accident. HELD: Ownership was not transferred to Nepales since there was no delivery. The invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold not necessarily coupled with the intention of the delivery of the thing. Registration was only to facilitate the execution of a chattel mortgage in favor of DBP for the release of the motorcycle loan. HELD: Article 1496 provides “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.” Norkis was still the owner and possessor of the motorcycle when it was wrecked. This is in accordance with the well-known doctrine of res perit domino. FACTS: Sun Bros and Perez entered into a conditional sale agreement involving an Admiral Air Conditioner. The agreement specifically states that Perez assumes responsibility for any loss. Aircon was delivered to Perez, notwithstanding non-payment of price, and was totally destroyed by fire. HELD: Perez bears the risk of loss. Sun Bros can recover payment.
Now Art. 1480 Any injury to or benefit from the thing sold, after the contract has been perfected, from the moment of perfection of the contract to the time of delivery, shall be governed by (Arts 1163 to 1165 and 1262) 6
Now Arts. 1165 When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery. 7
Now Art 1262 An obligation w/c consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed w/o the fault of the debtor, and before he has incurred in delay (par. 1) 8
LAWYER’S COOP V TABORA
SONG FO V ORIA
DOCTRINE: An agreement making the buyer responsible for any loss whatsoever, fortuitous or otherwise, even if the title to the property remains in the vendor, is neither contrary to law, nor to morals or public policy. FACTS: Atty. Tabora bought from the Lawyers Cooperative Publishing Company one complete set of American Jurisprudence. Tabora made a partial payment of the purchase price. The books were duly delivered and received. In the midnight of that same day, a big fire broke at the law office and library of Tabora The books were burned. HELD: although Lawyers’ agreed that the ownership of the books shall remain with it until the purchase price shall have been fully paid, but such stipulation cannot make it liable in case of loss not only because such was agreed merely to secure the performance by the buyer of his obligation. In the very contract it was expressly agreed that the "loss or damage to the books after delivery to the buyer shall be borne by the buyer." DOCTRINE: Any such stipulation that any damage shall be borne by buyer after delivery is sanctioned by Article 1504 of the Civil Code, which in part provides: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery. FACTS:Song Fo sold a launch to Oria. The launch was delivered to Oria in Manila, but was shipwrecked and became a total loss while en route to Oria's place of business in Samar. No part of the purchase price has ever been paid. HELD: Oria, who had exclusive control of the operation of the vessel, sent the launcgh from Manila to Samar, well knowing that it had not yet been insured: and that Song Fo & Co. had no power to interfere, or to keep her in port pending their application for insurance. DOCTRINE: Party who has exclusive control of property bears the risk of loss.
IX. DOCUMENTS OF TITLE
XI. PERFORMANCE OF CONTRACT
SIY CONG BIEN V HSBC
SMITH BELL V MATTI
Supra of Quedans(warehouse receipts DOCTRINE: The quedans were issued in the name of Siy Cong Bien duly endorsed in blank, and thus negotiable in form. It follows that on the delivery of the quedans to HSBC they were no longer the property of the endorser unless he liquidated his debt with the bank. It is a representation that the one to whom the possession of the receipt has been so intrusted has the title to the goods. If the owner of the goods permits another to have the possession or custody of negotiable warehouse receipts running to the order of the latter, or to /bearer, it is a representation of title upon which bona fide purchasers for value are entitled to rely, despite breaches of trust or violations of agreement on the part of the apparent owner. FACTS: Smith Bell and Sotelo entered into contracts whereby Smith, Bell & Co. obligated itself to sell, and Sotelo to purchase: 2 steel tanks for Php. 21,000, to be shipped from New York and delivered at Manila within 4 months; 2 expellers at Php. 25,000 each, to be shipped from San Francisco in the month of September, 1918 or asap; and 2 electric motors Php. 2,000 each. Stipulaiton as to delivery is as follows--”Approximate delivery within 90 days. This is not guaranteed”. All the equipment arrived later than the date specified. HELD: the obligation was complied with in time since the obligation was conditional, subject to contingencies – the rigid measures imposed after World War 1. ISSUES/ HELD:
Should the vendor be paid? - Was the obligation complied with in time? YES DOCTRINE: when the time of delivery is not fixed in the contract, time is regarded as unessential. In such cases, the delivery must be made within a reasonable time. The question as to what is a reasonable time for the delivery of the goods by the seller is to be determined by the circumstances attending the particular transaction. Reasonable time does not mean immediately or that the seller must stop all his other work and devote himself to that particular order. But the seller must nevertheless act with all reasonable diligence or without unreasonable delay. SOLER V CHESKY
FACTS: Soler entered into a contract of sale with Wm. H. Anderson and Co. for the purchase of certain oil machinery subject to contingencies. Soler sold to Chelsey all his rights without any condition and even guaranteed that the equipment was “on its way”. The shipment was delayed so Chelsey wanted the contract rescinded. HELD: Soler was in delay since time was an essential element of the contract. Chelsey gave his consent to the contract because he expected the machinery to arrive within a short time- the time reasonably necessary for such machinery to reach Manila from America. DOCTRINE: He who contracts and assumes an obligation is presumed to know the circumstances under which said obligation can be complied with. Although there was no specific time specified for the arrival of the machinery, the guaranty was tantamount to saying that under normal condition they would arrive in a short period of time (like 3 mos in the case of the expellers).
REPUBLIC V LITTON
AZARRAGA V GAY
FACTS: RP Gov’t enters into contracts of sale w/ Litton for padlocks and other goods to be used for the April 23, 1946 elections. The agreements stipulated that delivery was to be made on or before March 1, 1946. Goods were to be shipped from US to RP. Only a small part of the goods arrived before or on schedule. The rest were either delivered after. HELD: Facts show that contract was not conditioned on any RP Gov’t obligation to procure export license and shipping priority from US Gov’t. It was expressly made clear that delivery was to be made on or before March 1, as it was also made clear that the goods were to be used for the April 23 elections. It is preposterous to suppose that delivery after the elections would ever be contemplated. DOCTRINE: If a party assumes liability in all eventuality, it cannot invoke force majeure as a defense. FACTS: Azarraga sold two parcels of land to Gay for the lump sum of P47,000 to be paid as provided in the contract. They agreed upon the sale of 2 parcels of land, the first containing 102 hectares, 67 ares, and 32 centares, and the second, 98 hectares, more or less, for the lump sum of P47,000 payable, partly in cash and partly in installments. Said 2 parcels are defined by means of the boundaries given in the contract. Gay refused to pay the full price, alleging that the 2 nd parcel with an area of 98 hectares according to the deed of sale, had only 70 hectares, and therefore asked for a reduction of the price. Azarraga refused to grant the request, and brought suit against the Buyer to recover the whole price agreed upon. HELD: price cannot be reduced bec all land contained within boundaries were delivered to Gay. DOCTRINE: Interpretation of Art 1471: “In case of the sale of real estate for a lump sum and not at the rate of a specified price for each unit of measure, there shall be no increase or decrease of the price even if the area be found to be more or less than that stated in the contract. The same rule shall apply when two or more estates are sold for a single price; but, if in addition to a statement of the boundaries, which is indispensable in every conveyance of real estate, the area of the estate should be designated in the contract, the vendor shall be obliged to deliver all that is included with such boundaries, even should it exceed the area specified
in the contract; and, should he not be able to do so, he shall suffer a reduction of the price in proportion to what is lacking of the area, unless the contract be annulled by reason of the vendee's refusal to accept anything other than that which was stipulated. “ 1st par of 1471: deals w/ the situation (a) wherein everything included w/in the boundaries has been delivered. Rule: WON the object of sale be 1 realty for a lump sum, or 2+ for a single price also a lump sum, and, consequently, not for X price per unit of measure or number, there shall be no increase or decrease in the price even if the area be found to be more or less than that stated in the contract. Why? Because the consideration in the contract is the determinate object & not the number of units that it contains. It is determinate because it is dealt w/ as a single realty so long as they are sold for a single price constituting a lump sum and not for X price per unit.
CEBU WINLAND V ONG SIAO HUA
LA FUERZA V CA
2nd par of 1471: WON the object of the sale be 1 realty for a lump sum, or 2+ for a single price also a lump sum, and, consequently not at X price per each unit of measuring or number, the seller shall be bound to deliver everything that is included within the boundaries stated, although it may exceed the area or number expressed in the contract. In case he cannot deliver it, the buyer shall have the right either to reduce the price proportionately to what is lacking of the area or number, or to rescind the contract at his option. If everything w/in the stipulated boundaries isn’t delivered, the determinate object w/c was the consideration is not delivered, thus the power to nullify it. But it may be said that although he hasn’t received the object accdg to the stipulated terms, it is in his power to carry the contract into effect w/ the just decrease in price. FACTS: Ong Siao Hua bought a condo unit from Cebu Winland. No written document was executed for the sale.When construction finished, Winland turned possession of the properties over to Ong. Ong noticed that in the Deeds, the stated floor area of his units were smaller that what he bought. He conducted a verification survey and it was found that the total area of the units was actually much smaller. He demanded a refund of the total value corresponding to the lacking floor area. HELD: Refund because the sale not lump sum but made at the rate of a certain price for a square area. DOCTRINE: In Article 1539, if the area actually delivered is less than the stipulated, the buyer can either choose to oblige the seller to deliver the remaining area or demand for the proportionate reduction of the purchase price if delivery is not possible. He (and he alone) may also rescind the contract if the inferior value exceeds one-tenth. If the buyer would not have bought the property had he known of its smaller or inferior quality however, he may rescind (regardless of the one-tenth rule). FACTS: Associated constructed a conveyor system for La Fuerza’s wine factory. When the construction was finished, to La Fuerza’s dismay, the conveyor system did not met its expectation because: several bottles collided with each other, some bottles jumped off the conveyor belt and were broken, causing considerable damage and the flow of the system was so sluggish. La Fuerza refused to pay the balance of the conveyor system’s purchase price. HELD: La Fuerza’s action for rescission has already prescribed. Action for rescission based in hidden faults or defects must be filed within 6 months after delivery. La Fuerza’s action was filed after 10 months. DOCTRINE: Pursuant to A1566 and A 1567, if the thing sold has hidden faults or defects the vendor shall be responsible and the vendee “may elect between withdrawing from the contract and demanding a proportional reduction of the price, with damages in either case." but the action therefor — in the language of Art. 1571 — "shall be barred after six months, from the delivery of the thing sold." The period of four (4) years, provided in Art. 1389 of said Code, for "the action to claim rescission," applies to contracts, in general, and must yields, in the instant case, to said Art. 1571, which refers to sales in particular.
DELA CRUZ V LEGASPI
BARENG V CA
LAFORTEZA V MACHUCA
LUZON BROKERAGE V MARITIME
FACTS: de la Cruz purchased from Legaspi a parcel of land. However, de la Cruz was not able to pay the purchase price of P450. Legaspi claims that the contract was null and void for lack of consideration. HELD: contract was valid because there was consideration –P450. Non-payment does not void contract. DOCTRINE: Subsequent non-payment of the price at the time agreed upon did not convert the contract into one without cause or consideration: a nudum pactum. In the sale of real property, even though it may have been stipulated that in default of the price within the time agreed upon, the resolution of the contract shall take place ipso facto, the vendee may pay even after the expiration of the period, at any time before demand has been made upon him either by suit or by notarial act. After such demand has been made the judge cannot grant him further time. (Art. 1504 Civil Code.). FACTS: Bareng purchased from Alegria cinematographic equipment installed at the Pioneer Theater. Ruiz informed Bareng that he was a co-owner of the equipment and told him to suspend payments because he was not agreeable to the sale. Alegria and Ruiz subsequently reached a compromise in the case. Alegria then sued Bareng for the unpaid balance. HELD; the suspension of payment was justified only at the time before the compromise between Alegria and Ruiz. From the time Alegria and Ruiz reached this settlement, there was no longer any danger of threat to Bareng's ownership and full enjoyment of the equipment. DOCTRINE: When the disturbance feared of had already ceased, the buyer who suspended payment should immediately resume payment. Otherwise, the buyer would incur delay and would become liable for interest. FACTS: Laforteza sold to Machuca a parcel of land. The Memorandum of Agreement stated that Machuca would pay the price within 30 days from the reconstruction of the title. Machuca asked for an extension but was denied by Laforteza. Machuca informed the Lafortezas that he already has the balance but Laforteza refused to accept it. HELD: failure to pay the balance within the period allowed does not void the MOA. The contract had already been perfected. Subsequent non-payment will not void it. DOCTRINE: Failure to comply with a condition imposed upon the perfection of the contract results in the failure of a contract. Failure to comply with a condition imposed on the performance of the obligation only gives the other party the option either to refuse to proceed with the sale or to waive the condition. In addition, the heirs were not ready with the reconstituted title within the specified period. In reciprocal obligations, neither party incurs delays both are not ready to comply. FACTS:Myers and Maritime entered into a contract of Conditional Sale (Contract to Sell). Myers reserved the right to cancel contract in case of Maritime’s failure to pay installments. Maritime failed to pay, hence, Myers cancelled the contract. HELD: (as previously proven) contract to sell, not of sale. When payment was not made, contract of sale was not perfected. DOCTRINE: A contract to sell, payment is only a positive suspensive condition, the failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. To argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale, where nonpayment is a resolutory condition, which is not the case. There is power of promisors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for.
VALARAO V CA
ACTIVE REALTY V DAROYA
FACTS: Under a deed of conditional sale, between Valarao and Arellano, Valarao may automatically rescind the contract if Seller pays to pay 3 successive monthly installments or 1 year lump sum payment. Arellano wasn’t able to pay for 2 months so she tendered payment of the 2 months together w/ the payment for the 3rd month. Valarao refused to accept the payment per order of the Sellers. Buyer filed a consignation case but Seller made a “rescission letter”. HELD:The contract cannot be rescinded. Valarao was not justified in refusing Arellano’s tender of payment. DOCTRINE: Article 1592 applies only to contracts of sale, and not to contracts to sell or conditional sales where title passes to the vendee only upon full payment of the purchase price. Furthermore, in order to enforce the automatic forfeiture clause in a deed of conditional sale, the vendors have the burden of proving a contractual breach on the part of the vendee. Relevant In any case, rescission and forfeiture of payments can’t be effected because under the Maceda Law, a Buyer has a 1month grace period for every year of installments paid. (In this case, Arellano had 3 months from Dec 31, 1990) FACTS: In a contract to sell, Daroya, a contract worker in the Middle East, agreed to buy from Active Realty a lot in its subdivision. Daroya for 3 months amortizations prompting the Corp to sent a notice of cancellation of their contract to take effect 30 days from receipt of the letter. Active cancelled the contract and forfeited all previous payments. Daroya filed a complaint for specific performances and damages. HELD: There was no valid rescission because there was no compliance to the Maceda Law of notarized notice of cancellation and refund of cash surrender value.
DOCTRINE: twin requirements for a valid and effective cancellation under the law – a notarized notice of cancellation and cash surrender value refund. The Maceda law seeks to redress the acute house problem in the country that has prompted thousands of middle and lower class buyers of houses, lots and condominium units to enter into all sorts of contracts with private housing developers involving installment schemes. XII. WARRANTIES
SONGCO V SELLNER
FACTS: Sellner bought Songco’s sugar cane as so he can use the right of way. Songco estimated to him that the field would produce 3,000 piculs of the sugar. Sellner requested Songco to guarantee the quantity but Songco did not. The crop turned out to be only 2,017 piculs. HELD: Songco’s representation can only be considered matter of opinion as the cane was still standing in the field, and the quantity of the sugar it would produce could not be known with certainty until it should be harvested and milled. Sellner could judge with his own eyes as to the character of the cane, and it is shown that he measured the fields and ascertained that they contained 96 1/2 hectares. DOCTRINE: A misinterpretation upon a mere matter of opinion is not an actionable deceit, nor is it a sufficient ground for avoiding a contract as fraudulent. The law allows considerable latitude to seller's statements, or dealer's talk; and experience teaches that it is exceedingly risky to accept it at its face value. The refusal of the seller to warrant his estimate should have admonished the purchaser that that estimate was put forth as a mere opinion. A man who relies upon such an affirmation made
GOCHANGCO V DEAN
PMC V GOJUCO
ANG V CA
XIII. BREACH OF CONTYRACT
LEVY HERMANOS V GERVACIO
by a person whose interest might so readily prompt him to exaggerate the value of his property does so at his peril 9, and must take the consequences of his own imprudence. FACTS: Gochangco and Dean agreed to exchange their properties, Gochangco exchanging his Pasay Estate land w/ Dean exchanging his Masbate land. Dean declared that the Masbate land had more than 6K coconut trees growing on it but it turned out the trees were less than 6k. HELD: The allegation of false & fraudulent representations as to the existence of the 6K coconut trees wasn’t proven. It doesn’t appear that Dean deliberately violated the truth in stating his belief that there were such a number of coconut trees on said lands. It was shown that Gochangco viewed the lands and himself estimated that there were more than 6,000 coconut trees thereon. DOCTRINE: If seller does not appear to have violated the truth when he stated a belief, then there is no fraud. Also, if he is given a chance to inspect the property, then there is no false representation. FACTS: Go Jocco sold 500 tons of coconut oil PMMC . Go Jocco guaranteed jthat the oil was 5& f.f.a. PMC was able to examine the oild’s quality. They then sold the oil to Portsmouth. The contract had an express warranty, not only regarding 5% ffa but also against impurities. When Portsmouth received it, the oil had impurities. Held: Go Jocco is not liable to PMC because their contract did not contain an express warranty against impurities aside from the stipulation that not more than 5 per cent of free fatty acid would be allowed. There was also no implied warranty since PMC was able to fully examine the oils. DOCTRINE: An intention to deceive or mislead the purchaser of merchandise to his prejudice is an essential element of fraud. FACTS: Soledad and Ang entered a “car-swapping scheme”. Ang, being engaged in buy and sell of cars, sold the Mitsubishi GSR to Bugash and before it was registered under his name a writ of replevin was issued on the Mitsubishi GSR. Ang paid the mortgagee the balance amount and sought to recover from Soledad but failed. MTCC dismissed the case on prescription. RTC affirmed but granted Ang recovery based on equity. CA reversed. HELD: action has already prescribed. DOCTRINE: In declaring that he owned and had clean title to the vehicle, Soledad gave an implied warranty of title. In pledging that he "will defend the same from all claims or any claim whatsoever [and] will save the vendee from any suit by the government of the Republic of the Philippines," Soledad gave a warranty against eviction. Action prescribed. The prescriptive period to file a breach thereof is six months after the delivery of the vehicle, following Art. 1571. FACTS: Levy Hermanos, Inc., sold to Lazaro Blas Gervacio, a Packard car. Gervacio made an initial payment and executed a promissory note for the balance of P2,400 and mortgage the car to secure the payment of the note. Gervacio failed to pay the note at its maturity, and Levy Hermanos foreclosed the mortgage. The car was sold at public auction, at which Levy Hermanos was the highest bidder for P800. Thus, there was still a remaining balance of P1,600. Levy Hermanos filed a complaint for the HELD: Gervacio should still pay because Recto law does not apply there being only one payment. DOCTRINE: Article 1454-A applies only to contracts of sale of personal property in installment where there is failure to pay 2 or
Caveat Emptor – buyer beware
BORBON V SERVICEWIDE
MANILA TRADING V REYES
CRUZ V FILIPINAS
more installments. If sale is not one on installments, but on straight term, in which the balance, after payment of the initial sum, should be paid in its totality at the time specified in the promissory note, 1454-A does not apply. Rationale for 1454-A: possible miscalculation of ability to pay Aim of the law are sales where the price is payable in several installments, for it is in these cases that partial payments consist in relatively small amounts, constituting thus a great temptation for improvident purchasers to buy beyond their means. There is no such temptation where the price is to be paid in cash, or partly in cash and partly in one term since partial payments are not so small as to place purchasers off their guard and delude them to a miscalculation of their ability to pay. FACTS: Borbons bought an Isuzu Crew Cab from Pangasinan Auto Mart under a promissory note. Pangasinan Auto Mart assigned the note & chattel mortgage to Filinvest Credit Corporation, then to Servicewide. The Borbons failed to comply with their obligation to pay the installment . An action for replevin was instituted to foreclose the vehicle, which the TC granted along with liquidated damages and attorney’s fees. HELD: The award of liquidated damages is not proper bec “all unpaid balance” pertains to ALL other claims on the promissory note. DOCTRINE: The remedies under A1484 are not cumulative but alternative and exclusive. The argument is aptly made. The phrase "any unpaid balance" can only mean the deficiency judgment to which the mortgagee may be entitled to when the proceeds from the auction sale are insufficient to cover the "full amount of the secured obligations which . . . include interest on the principal, attorney's fees, expenses of collection, and the costs." The legislative intent is not to merely limit the proscription of any further action to the "unpaid balance of the principal" but to all other claims that may be likewise be called in for in the accompanying promissory note against the buyer-mortgagor or his guarantor, including costs and attorney's fees. FACTS: E.M. Reyes executed a chattel mortgage on an automobile as security for the payment of P400 in favor of Manila Trading. Reyes failed to pay some of the instalments. This failure prompted Manila Trading to proceed with the foreclosure of its chattel mortgage. The automobile was sold for P200 at a public auction and Reyes still had an unpaid balance. Manila Trading instituted an action for the recovery of it and questions constitutionality of Art 4122(Recto Law). HELD: Recto law is constitutional. DOCTRINE: The controlling purpose of Act No. 4122 is revealed to be to close the door to abuses committed in connection with the foreclosure of chattel mortgages when sales were payable in installments. The Legislature may change judicial methods and remedies for the enforcement of contracts, as it has done by the enactment of Act No. 4122, without unduly interfering with the obligation of the contracts, without sanctioning class legislation, and without a denial of the equal protection of the laws. FACTS: Cruz bought 1 unit Isuzu Diesel Bus from Filipinas and executed a promissory note. A chattel mortgage was also executed over the bus to secure the indebtedness. Since no down payment was made by Cruz, Filipinas required, and Cruz agreed to give, an additional security – a Second Mortgage over a parcel of land. Cruz defaulted on his payments. Filipinas then foreclosed the chattel mortgage on the bus. However, the proceeds of the sale were not enough so they wanted to foreclose on the second security. HELD: Filipinas cannot foreclose the 2nd security because it is barred by 1484.
DOCTRINE: Should the vendee or purchaser of a personal property default in the payment of two or more of the agreed installments, the vendor or seller has the option to avail of any one of these three remedies – either to exact fulfillment by the purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal property, if one was constituted. These remedies have been recognized as alternative, not cumulative, that the exercise of one would bar the exercise of the others. It has also been established that the foreclosure and actual sale of a mortgaged chattel bars further recovery by the vendor of any balance on the purchaser’s outstanding obligation.
TAJANLANGIT V SOUTHERN MOTORS
NONATO V IAC
DELTA MOTOR V NUI KIM
To sustain Far East’s argument about proceeding against a third person is to overlook the fact that if the guarantor should be compelled to pay the balance of the purchase price, the guarantor will in turn be entitled to recover what she has paid from the debtor. Ultimately, it will be the debtor-vendee who will be made to bear the payment of the balance of the price, despite the earlier foreclosure of the chattel mortgage against him. The protection given by Art 1484 would be indirectly subverted. FACTS: Tajanlangit bought goods, which were subjected to a chattel mortgage, from Souther Motors. They paid thru promissory notes, promising to pay in installment. They defaulted. Sheriff levied, pursuant to an earlier court decision for collection for the unpaid notes. The proceeds were insufficient to cover the purchase price so another writ of execution was obtained. Tajanlangits seek to annul the writ saying its obligation was already satisfied by the first execution. HELD: The first execution was for the collection of the unpaid obligation under the promissory notes, and not under a foreclosure under the chatter mortgage, Southern Motors can still levy Tajanlangits’ other properties. DOCTRINE: The vendor had a right to select among the three remedies established in Article 1484. In choosing to sue on the note, it was not thereby limited to the proceeds of the sale, on execution, of the mortgaged good. The vendor can still collect because the option chosen was not to foreclosure. FACTS: Spouses Nonato bought a car on instalment, secured by promissory note and chattel mortgage over said car in favour of vendor. For their failure to pay two or more instalments, the car was repossessed by vendor’s assignee (IFC). Despite repossession, IFC demanded payment of the balance of the price of the car. HELD: Art 1484 CC is applicable in this case (sale of goods on instalment). The remedies there, (1) performance, (2) cancellation, (3) foreclosure of chattel mortgage if any, are alternative, not cumulative; the exercise of one would bar the exercise of the others. DOCTRINE: Should the vendee or purchaser of a personal property default in the payment of two or more of the agreed installments, the vendor or seller has the option to avail of any of these three remedies-either to exact fulfillment by the purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal property, if one was constituted. These remedies are alternative, not cumulative; the exercise of one would bar the exercise of the others. YOU CANNOT HAVE YOUR CAKE AND EAT IT TOO! FACTS: Niu Kim Duan and Chan Fue Eng purchased from Delta Motor 3 units of ‘DAIKIN’ air-conditioner all valued at P19,350.00. Buyers executed a promissory note and failed to pay at least 2 monthly installments. Delta Motors prayed for the issuance of a writ of replevin, which the Court granted after Delta Motors posted the requisite bond. Delta is claiming for the remaining balance. HELD: Delta is not entitled to the balance of the aircons that it successfully repossessed. It sought judicial declaration that it had validly rescinded the Deed of Conditional Sale and thus chose the 2nd remedy of Article 1484 in seeking enforcement of its
contract with Buyers
NORTHERN MOTORS V SAPINOSO
LEGARDA V SALDANA
CASA FILIPINA V OP
DOCTRINE: The seller in a sale of personal property payable in installments may exercise one of 3 remedies, namely, (1) exact fulfillment of obligation if Buyer fails to pay; (2) cancel sale upon Buyer’s failure to pay 2+ instalments 3) foreclose the chattel mortgage, if any, upon the Buyer’s failure to pay 2+ instalments. The 3 remedies are alternative and NOT cumulative. “It cannot have its cake and eat it too.” FACTS: Sapinoso bought from Northern Motors an Opel Kadett car and to secure payment thereof, he executed a chattel mortgage over the same car. He failed to pay some instalments but several payments were made. Northern filed a case against Sapisono, claiming it was availing of its option of extrajudicial foreclosure and prayed for the issuance of a writ of replevin, which is the first step toward foreclosure, upon its filing of the bond. After the commencement of the action but before filing his answer, Sapisono made 2 payments. HELD: Northern need not give back the 2 payments of Sapisano. It is true that replevin is the first step towards foreclosure. However, since there was no foreclosure yet, then Northern has not yet chosen a relief. DOCTRINE: There is no reason why a mortgagee should be barred from receiving payments before the actual foreclosure, tendered voluntarily by the debtor-mortgagor who admits his indebtedness. FACTS: Saldaña bought 2 lots from Hermanos and Legarda’s subdivision. After 8 years (95 out of 120 monthly installments) of faithful compliance on due payments, Saldaña stopped payments leaving a balance from the purchase price. Saldaña wrote Hermanos saying he can’t build on the lot because of Hermanos’ failure to introduce improvements such as roads. Hermanos cancelled the contract, arguing that it is a contract to sell, since Saldaña failed to pay remaining installments. HELD: Since the payment was already more than the price of one lot, deliver that lot of Saldañaand Hermanos retain the other lot., another to be retained by Hermanos. Interest payments forfeited in favor of Hermanos. DOCTRINE: A1234 of CC: 'If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee,'" and in the interest of justice and equity. FACTS: Dennis and Rebecca Sevilla agreed to purchase from Casa Filipina Realty Corporation (CFRC) a parcel of land in CFRC’s subdivision. The Sevilla spouses failed to pay the amortizations on time. They then wrote a letter to CFRC regarding the absence of any improvement in the subdivision, the claim of a bank against the lot and requested a refund of all installment payments made on account of the contract. HELD: Sevillas are entitled to a refund pursuant to Sec 23 of PD 957 becase notice was already given notice regarding, among other things, the nondevelopment of the subdivision, and demanded for refund. Section 23 does not require that a notice be given first before a demand for refund can be made. The notice and the demand can be made in the same letter or communication. DOCTRINE: P.D. 957 was issued in the wake of numerous reports that many real estate subdivision developers and/or sellers "have reneged on their representations and obligations to provide and maintain properly subdivisions" for the health and safety of home and lot buyer's. It was designed to stem the tide of "fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles to buyers or titles free from liens and encumbrances."
MCLAUGHLIN V CA
Should the notice requirement provided for in Sec. 23 be construed as required to be given before a buyer desists from further paying amortizations, the intent of the law to protect subdivision lot buyers will tend to be defeated. FACTS: Mclaughlin and Flores entered into a contract of conditional sale of real property with the stipulated purchase price payable on installments. Flores defaulted in the payment of the installments, so Mclaughlin filed a complaint for the rescission of the deed of conditional sale. However, the suit was eventually compromised, with Flores agreeing on a scheduled payment of the balance of the purchase price. Such compromise agreement also provided that in case of failure of the buyer to comply with the terms of payment, all payments previously made shall be forfeited in favor of the Mclaughlin as liquidated damages. Flores still failed to pay on the dates provided in the compromise agreement, so Mclaughlin refused to accept further payment and eventually filed a motion for the writ of execution for the rescission of the contract. HELD: McLaughlin cannot rescind the contract and forfeit all the installments since Mclaughlin could cancel the contract only 30 days after the notice of cancellation. Since the tender of payment of the balance of the purchase price was made within the 30 day period, this prevented the cancellation of the contract. DOCTRINE: (from Villanueva) McLaughlin provides two basic doctrines applicable said law: 1. The law seems to require rescission and cancellation to be both by notarial act, McLaughlin would hold notarial act as merely applicable to rescission, whereas “notice of cancellation” need not be by notarial act. 2. McLaughlin would hold that even after the expiration of the grace period provided by the Law, the buyer still can prevent rescission or cancellation of the contract w/in the 30-day pd when rescission or cancellation is to take effect. McLaughlin thus provides for two grace periods: 1. The one provided for expressly by the Law, which is a min of 60 days 2. The period before the rescission or cancellation actually takes effect.