Ventura vs. Heirs of Sps. Endaya, G.R. No. 190016 [Case Digest]

 

Ventura vs. Heirs of Sps. Endaya,

G.R. No. 190016,    October 2, 2013

Perlas-Bernabe, J.  Second Division

Case Digest

Facts:

            On June 29, 1981, Dolores Ventura (Dolores) entered into a Contract to Sell with spouses Eustacio and Trinidad Endaya for the purchase of two parcels of land, situated in Marian Road II, Marian Park (now Barangay San Martin de Porres), Parañaque City, Metro Manila.

            The contract to sell provides that the purchase price of ₱347,760.00shall be paid by Dolores in the following manner: (a) down payment of ₱103,284.00 upon execution of the contract; and (b) the balance of ₱244,476.00 within a 15-year period (payment period), plus 12% interest per annum (p.a.) on the outstanding balance and 12% interest p.a. on arrearages. It further provides that all payments made shall be applied in the following order: first, to the reimbursement of real estate taxes and other charges; second, to the interest accrued to the date of payment; third, to the amortization of the principal obligation; and fourth, to the payment of any other accessory obligation subsequently incurred by the owner in favor of the buyer. It likewise imposed upon Dolores the obligation to pay the real property taxes over the subject properties, or to reimburse Sps. Endaya for any tax payments made by them, plus 1% interest per month. Upon full payment of the stipulated consideration, Sps. Endaya undertook to execute a final deed of sale and transfer ownership over the same in favor of Dolores.

            Meanwhile, Dolores was placed in possession of the subject properties and allowed to erect a building thereon. However, on April 10, 1992, before the payment period expired, Dolores passed away.

            On November 28, 1996, Dolores’ children, Frederick Ventura, Marites Ventura-Roxas, and Philip Ventura (petitioners), filed before the RTC a Complaint and, thereafter, an Amended Complaint for specific performance, seeking to compel Sps. Endaya to execute a deed of sale over the subject properties. In this regard, they averred that due to the close friendship between their parents and Sps. Endaya, the latter did not require the then widowed Dolores to pay the down payment stated in the contract to sell and, instead, allowed her to pay amounts as her means would permit. The payments were made in cash as well as in kind, and the same were recorded by respondent Trinidad herself in a passbook given to Dolores to evidence the receipt of said payments. As of June 15, 1996, the total payments made by Dolores and petitioners amounted to ₱952,152.00, which is more than the agreed purchase price of ₱347,760.00, including the 12% interest p.a. thereon computed on the outstanding balance.

            However, when petitioners demanded the execution of the corresponding deed of sale, Sps. Endaya refused. For their part, Sps. Endaya filed their Answer,19 admitting the execution and genuineness of the contract to sell and the passbook. However, they countered that Dolores did not pay the stipulated down payment and remitted only a total of 22 installments. After her death in1992, petitioners no longer remitted any installment. Sps. Endaya also averred that prior to Dolores' death, the parties agreed to a restructuring of the contract to sell whereby Dolores agreed to give a "bonus" of ₱265,673.93 and to pay interest at the increased rate of 24% p.a. on the outstanding balance. They further claimed that in April 1996, when the balance of the purchase price stood at ₱1,699,671.69, a final restructuring of the contract to sell was agreed with petitioners, fixing the obligation at ₱3,000,000.00. Thereafter, the latter paid a total of ₱380,000.00 on two separate occasions, leaving a balance of ₱2,620,000.00. In any event, Sps. Endaya pointed out that the automatic cancellation clause under the foregoing contract rendered the same cancelled as early as 1981 with Dolores’ failure to make a down payment and to faithfully pay the installments; hence, petitioners’ complaint for specific performance must fail. In addition, Sps. Endaya interposed a counterclaim for the alleged unpaid balance of ₱2,620,000.00, plus damages, attorney's fees and costs of suit.

            In their Reply with Answer to Counterclaim, petitioners denied the existence of any restructuring of the contract to sell, invoking the Dead Man's Statute and the Statute of Frauds. In turn, Sps. Endaya filed a Rejoinder, challenging the inapplicability of the foregoing principles since the case was not filed against an estate or an administrator of an estate, and in view of the partial performance of the contract to sell.

            RTC found that petitioners were able to prove by a preponderance of evidence the fact of full payment of the purchase price for the subject properties. CA reversed and set aside the RTC ruling. It found that petitioners were not able to show that they fully complied with their obligations under the contract to sell. It observed that aside from the payment of the purchase price and 12% interest p.a. on the outstanding balance, the contract to sell imposed upon petitioners the obligations to pay 12% interest p.a. on the arrears and to reimburse Sps. Endaya the amount of the pertinent real estate taxes due on the subject properties, which the former, however, totally disregarded as shown in their summary of payments.

 

Issue:

            Whether or not respondents should execute a deed of sale over the subject properties in favor of petitioners.

 

Held:

            No; a thorough review of the records reveals no sufficient reason to warrant the reversal of the CA’s August 18, 2006 Decision dismissing petitioners' complaint for specific performance which sought to enforce the contract to sell and to compel respondents to execute a deed of sale over the subject properties.

            A contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the latter upon his fulfillment of the conditions agreed upon, i.e., the full payment of the purchase price and/or compliance with the other obligations stated in the contract to sell. Given its contingent nature, the failure of the prospective buyer to make full payment and/or abide by his commitments stated in the contract to sell prevents the obligation of the prospective seller to execute the corresponding deed of sale to effect the transfer of ownership to the buyer from arising.

            To note, while the quality of contingency inheres in a contract to sell, the same should not be confused with a conditional contract of sale. In a contract to sell, the fulfillment of the suspensive condition will not automatically transfer ownership to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. On the other hand, in a conditional contract of sale, the fulfillment of the suspensive condition renders the sale absolute and the previous delivery of the property has the effect of automatically transferring the seller’s ownership or title to the property to the buyer.

            Keeping with these principles, the Court finds that respondents had no obligation to petitioners to execute a deed of sale over the subject properties. As aptly pointed out by the CA, aside from the payment of the purchase price and 12% interest p.a. on the outstanding balance, the contract to sell likewise imposed upon petitioners the obligation to pay the real property taxes over the subject properties as well as 12% interest p.a. on the arrears. However, the summary of payments as well as the statement of account submitted by petitioners clearly show that only the payments corresponding to the principal obligation and the 12% interest p.a. on the outstanding balance were considered in arriving at the amount of ₱952,152.00. The Court has examined the petition as well as petitioners' memorandum and found no justifiable reason for the said omission. Hence, the reasonable conclusion would therefore be that petitioners indeed failed to comply with all their obligations under the contract to sell and, as such, have no right to enforce the same.

Cabrera vs. Ysaac, G.R. No. 166790, November 19, 2014 Leonen, J. [Case Digest]

Cabrera vs. Ysaac,

G.R. No. 166790, November 19, 2014

Leonen, J.

Case Digest

Facts:

            The heirs of Luis and Matilde Ysaac co-owned a 5,517-square-meter parcel of land located in Sabang, Naga City, covered by Original Certificate of Title (OCT) No. 506. One of the co-owners is respondent, Henry Ysaac.

            Henry Ysaac leased out portions of the property to several lessees. Juan Cabrera, one of the lessees, leased a 95-square-meter portion of the land beginning in 1986. On May 6, 1990, Henry Ysaac needed money and offered to sell the 95-square-meter piece of land to Juan Cabrera. He told Henry Ysaac that the land was too small for his needs because there was no parking space for his vehicle.

            In order to address Juan Cabrera’s concerns, Henry Ysaac expanded his offer to include the two adjoining lands that Henry Ysaac was then leasing to the Borbe family and the Espiritu family. Those three parcels of land have a combined area of 439-square-meters. However, Henry Ysaac warned Juan Cabrera that the sale for those two parcels could only proceed if the two families agree to it.

            Juan Cabrera accepted the new offer. Henry Ysaac and Juan Cabrera settled on the price of ₱250.00 per square meter, but Juan Cabrera stated that he could only pay in full after his retirement on June 15, 1992.8 Henry Ysaac agreed but demanded for an initial payment of ₱1,500.00, which Juan Cabrera paid.

            According to Juan Cabrera, Henry Ysaac informed him that the Borbe family and the Espiritu family were no longer interested in purchasing the properties they were leasing. Since Mamerta Espiritu of the Espiritu family initially considered purchasing the property and had made an initial deposit for it, Juan Cabrera agreed to reimbursethis earlier payment. On June 9, 1990, Juan Cabrera paid the amount of ₱6,100.00. Henry Ysaac issued a receipt for this amount. ₱3,100.00 of the amount paid was reimbursed to Mamerta Espiritu and, in turn, she gaveJuan Cabrera the receipts issued to her by Henry Ysaac.

            On June 15, 1992, Juan Cabrera tried to pay the balance of the purchase price to Henry Ysaac. However,at that time, Henry Ysaac was in the United States. The only person in Henry Ysaac’s residence was his wife. The wife refused to accept Juan Cabrera’s payment.

            On September 21, 1994, Henry Ysaac’s counsel, Atty. Luis Ruben General, wrote a letter addressed to Atty. Leoncio Clemente, Juan Cabrera’s counsel.16 Atty. General informed Atty. Clemente that his client is formally rescinding the contract of sale because Juan Cabrera failed to pay the balance of the purchase price of the land between May 1990 and May 1992. The letter also stated that Juan Cabrera’s initial payment of ₱1,500.00 and the subsequent payment of ₱6,100.00 were going to be applied as payment for overdue rent of the parcel of land Juan Cabrera was leasing from Henry Ysaac. The letter also denied the allegation of Juan Cabrera that Henry Ysaac agreed to shoulder the costs of the resurveying of the property. Juan Cabrera, together with his uncle, Delfin Cabrera, went to Henry Ysaac’s house on September 16, 1995 to settle the matter.19 Henry Ysaac told Juan Cabrera that he could no longer sell the property because the new administrator of the property was his brother, Franklin Ysaac.

            Due to Juan Cabrera’s inability to enforce the contract of sale between him and Henry Ysaac, he decided to file a civil case for specific performance on September 20, 1995. Juan Cabrera prayed for the execution of a formal deed of sale and for the transfer of the title of the property in his name. He tendered the sum of ₱69,650.00 to the clerk of court as payment of the remaining balance of the original sale price.

            Regional Trial Court of Naga City ruled that the contract of sale between Juan Cabrera and Henry Ysaac was duly rescinded when the former failed to pay the balance of the purchase price in the period agreed upon. CA ruled that the contract of sale between Juan Cabrera and Henry Ysaac was not validly rescinded. For the rescission to be valid under Article 1592 of the Civil Code, it should have been done through a judicial or notarial act and not merely through a letter. However, due to the sale of the entire property of the Ysaac family in favor of the local government of Naga City, the Court of Appeals ruled that the verbal contract between Juan Cabrera and Henry Ysaac cannot be subject to the remedy of specific performance. The local government of Naga City was an innocent purchaser for value, and following the rules on double sales, it had a preferential right since the sale it entered into was in a public instrument, while the one with Juan Cabrera was only made orally.

 

Issue:

            Whether there was no valid contract of sale between petitioner and respondent.

 

Held:

            No; unless all the co-owners have agreed to partition their property, none of them may sell a definite portion of the land. The co-owner may only sell his or her proportionate interest in the co-ownership. A contract of sale which purports to sell a specific or definite portion of unpartitioned land is null and void ab initio.

            The object of a valid sales contract must be owned by the seller. If the seller is not the owner, the seller must be authorized by the owner to sell the object.

            Specific rules attach when the seller co-owns the object of the contract. Sale of a portion of the property is considered an alteration of the thing owned in common. Under the Civil Code, such disposition requires the unanimous consent of the other co-owners. However, the rules also allow a co-owner to alienate his or her part in the co-ownership.

            These two rules are reconciled through jurisprudence.

If the alienation precedes the partition, the co-owner cannot sell a definite portion of the land without consent from his or her co-owners. He or she could only sell the undivided interest of the co-owned property. As summarized in Lopez v. Ilustre, "if he is the owner of an undivided half of a tract of land, he has a right to sell and convey an undivided half, but he has no right to divide the lot into two parts, and convey the whole of one part by metes and bounds."

Hence, prior to partition, a sale of a definite portion of common property requires the consent of all co-owners because it operates to partition the land with respect to the co-owner selling his or her share. The co-owner or seller is already marking which portion should redound to his or her autonomous ownership upon future partition.

The object of the sales contract between petitioner and respondent was a definite portion of a co-owned parcel of land. At the time of the alleged sale between petitioner and respondent, the entire property was still held in common. This is evidenced by the original certificate of title, which was under the names of Matilde Ysaac, Priscilla Ysaac, Walter Ysaac, respondent Henry Ysaac, Elizabeth Ysaac, Norma Ysaac, Luis Ysaac, Jr., George Ysaac, Franklin Ysaac, Marison Ysaac, Helen Ysaac, Erlinda Ysaac, and Maridel Ysaac.

We rule that petitioner is entitled to the return of the amount of money because he paid it as consideration for ownership of the land. Since the ownership of the land could not be transferred to him, the money he paid for that purpose must be returned to him. Otherwise, respondent will be unjustly enriched.

Respondent’s claim for rent in arrears is a separate cause of action from this case. For petitioner’s earnestmoney payment to be considered payment for his rent liabilities, the rules of compensation under Article 1279 of the Civil Code must be followed.

Sales Reviewer for Finals

 

Law on Sales

 

1.       Is a Deed of Sale where the stated consideration had not in fact been paid valid?

 

No. A Deed of Sale where the stated consideration had not in fact been paid is not valid.

 

There can be no doubt that the contract of sale lacked the essential element of consideration. It is a well-entrenched rule that where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration. Moreover, Art. 1471 of the Civil Code, which provides that "if the price is simulated, the sale is void," also applies to the instant case, since the price purportedly paid as indicated in the contract of sale was simulated for no payment was actually made.

 

Consideration and consent are essential elements in a contract of sale. Where a party’s consent to a contract of sale is vitiated or where there is lack of consideration due to a simulated price, the contract is null and void ab initio. [Heirs of Intac vs CA, G.R. No. 173211]

 

 

 

2.       Distinguish between emptio res speratae and emptio spei.

 

Emptio Rei Speratae is refers to the sale of thing having potential existence; while Emptio Spei refers to the sale of mere hope or expectancy.  As to uncertainty; Emptio Rei Speratae is uncertain with regard to quantity & quality; on the other hand Emptio Spei is uncertain with regards to the existence of the thing.  In Emptio Rei Speratae the contract deals with future thing; whereas in Emptio Spei, the contract deals with present thing-hope or expectancy.

 

In Emptio Rei Speratae, the sale is valid only if the expected thing will exist. So that if the condition is not fulfilled, if the thing does not come into existence, the contract cannot have the effect for lack of an essential requisite [Rabuya, 2017].  In Emptio Spei, the sale is valid even though expected thing does not come into existence as long as the hope itself validly existed [Art. 1461 NCC].

 

 

 

3.       Calvin Klein is an American resident in Manila, about to leave on a vacation, sold his car to Ralph for U.S. $2,000.00, the payment to be made 10 days after delivery to Tommy, a third party depository agreed upon, who shall deliver the car to Ralph upon receipt by Tommy of the purchase price. It was stipulated that ownership is retained by Calvin Klein until delivery of the car to Tommy. Five days after the delivery of the car to Tommy, it was destroyed in a fire which gutted the house of Tommy without the fault of either Tommy or Ralph. Is Ralph still legally obligated to pay the purchase price?

 

Yes.  Ralph is still legally obligated to pay the purchase price.

 

        The Supreme Court in the case of Song Fo & Co. v. Oria gives the following Doctrin: "If the object is lost after perfection but before delivery. Here the buyer bears the loss, as exception to the rule of res perit domino."  The implication in the case of Roman v. Grimalt, supra, is clear. Had the sale been perfected, the buyer would have borne the loss, that is, he would still have had to pay for the object even if no delivery had been made.

Art. 1480 (pars. 1 and 2) clearly, states that injuries between perfection and delivery shall be governed by Art. 1262, among others. And Art. 1262 in turn says that “an obligation which consists in the delivery of a determinate thing shall be extinguished if itshould be lost or destroyed without the fault of the debtor, and before he has incurred in delay.” (This means that the obligation of the seller to deliver is extinguished, but the obligation to pay is not extinguished.) [Paras, 2016].

 

Hence, even the Car has not yet been delivered to Ralph, but the contract of sale had already perfected; therefore Ralph is still legally obligated to pay the purchase price of the said car even if no delivery had been made.

 

 

 

4.       Briefly discuss the Recto Law.

 

Installment Sales Law; commonly known as the “RECTO LAW”. It is embodied in Art. 1484 of the NCC, which provides for the remedies of a seller in the contracts of sale of personal property by installments.

 

This law covers contracts of sale of personal property by installment (Act No. 4122). It is also applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing [PCI Leasing and Finance Inc. v. Giraffe- X Creative Imaging, Inc., G.R. No.142618].

 

Recto Law applies only to sale payable in installments and not to a sale where there is an initial payment and the balance is payable in the future, because such is a straight sale, not a sale by installments.

 

 

 

5.       Briefly discuss the Maceda Law.

 

Realty Installment Buyer Act; commonly known as the “MACEDA LAW.” It is embodied in R.A. 6552 which provides for certain protection to particular buyers of real estate payable on installments. The law declares as "public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

 

The law involves the sale of immovables on installment (Maceda Law, RA 6552).

(1) Coverage: Residential Real Estate (Villanueva, 2009).

(2) Excluded:

a. Industrial lots;

b. Commercial buildings (and commercial lots by implication);

c. Sale to tenants under agrarian laws; and

d. Sale of lands payable in straight terms (Sec. 3, RA 6552).

 

 

 

 

6.       When is the seller of goods deemed to be an unpaid seller?

 

One is considered as unpaid seller when:

(1) The whole of the price has not been paid or tendered; or

(2) A bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise (NCC, Art. 1525)

(3) It includes an agent of the seller to whom the bill of lading has been indorsed, or consignor or agent who has himself paid, or is directly responsible for the price, or any other person who is in the position of a seller (Pineda, 2010).

 

Unpaid seller is a person specially disqualified by law to enter into contracts of sale.

 

 

 

7.       What are the remedies of the unpaid seller?

 

Remedies of an Unpaid Seller are the following:

                (A) Ordinary Remedies

[a] Action for Price (NCC, Art. 1595) exercised when ownership has passed to buyer; price is payable on a day certain; or goods cannot readily be resold for reasonable price and Art. 1596 of NCC is inapplicable.

[b] Action for Damages – In case of wrongful neglect or refusal by the buyer to accept or pay for the thing sold.

                (B) Special Remedies [NCC, Art. 1596]

[a] Possessory Lien (NCC, Art. 1527) – seller not bound to deliver the object of the contract of sale if buyer has not paid him the price. This remedy presupposes that the sale is on credit.

[b] Stoppage in Transitu (NCC, Art. 1530)

[c] Special Right to Resell the Goods (NCC, Art. 1533)

[d] Special Right to Rescind (NCC, Art. 1597)

 

 

 

8.       Victoria sold a piece of unregistered land to Yves who immediately took possession and improved the same while registration proceedings under the Torrens System was still pending. The Deed of Sale was not registered. A month later, the Original Certificate of Title was issued in the name of Victoria, “free from all liens and encumbrances.” Subsequently, the same land was sold at public auction to satisfy a debt of Victoria to Sherrie , the judgment creditor. The notice of levy, the certificate of final sale were registered. Sherrie sold her rights to the property to Kate who then sued Yves in order that she be declared the owner of the property. Who has the better right to the land, Yves or Kate? Give reasons.

 

Kate has better right to the land.

 

Although Yves already took possession and made improvements of the land; such possession does not vest her with ownership to the said land. It is also submitted that the contract of sale between Yves and Victoria was already perfected and the ownership of the land was transferred by her [Yves’] possession to the said land; but nevertheless, Yves did not able to register the same in the Register of Deeds as provided by law in P.D. 1529, Sec. 52; which states that “every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.”  Such failure to register the land on the part of Yves is fatal on her side.

 

Registration is the operative act which gives validity to the transfer or creates a lien upon the land. A certificate of title serves as an evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein (Spouses Vilbar v. Opinion, G.R. No. 176043). Hence, the registration made by Sherrie gives her the indefeasible and incontrovertible title to the property.

 

As to Kate as an innocent purchaser of value of the said subject land; she is not required by the law or the court to go beyond what appears on the face of the title.  All persons dealing with a property covered by Torrens certificate of title are not required to go beyond what appears on the face of the title. Where there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may defeat his right thereto (Chua v. Soriano, GR.No. 150066)

 

 

 

 

9.       In a case where the buyer failed to pay the price of a real property in accordance with a contract to sell, what law governs in case of cancellation of the contract?

 

In a case where the buyer failed to pay the price of a real property in accordance with a contract to sell; the law which governs in case of cancellation of the contract is governed by Republic Act No. 655219 or the Maceda Law.

 

If the buyer fails to pay the installments [of a real property] due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act [Sps Bonrostro vs Sps Luna, 2013].

 

 

 

 

10.   Monique offered to sell a set of furniture to B for P15,000. Dolce immediately accepted the offer. However, unknown to both parties, the residence of Monique was gutted by a fire of accidental origin 2 hours before Monique made the offer to Dolce. All of the effects of Monique including the furniture were destroyed by the fire. Monique now demands payment of the P15,000 on the ground that the sale was perfected. Can Dolce be compelled to pay? Reasons.

 

No. Dolce cannot be compelled to pay.

 

There is in fact no valid contract of sale for at the moment of presumed perfection (acceptance of Dolce to the offer), there was no more subject matter (the furniture having been destroyed two hours before Monique made the offer to Dolce). Monique, as owner, bears the loss of the car.

 

The elements of a contract of sale are:

[a] consent

[b] determinate subject matter

[c] consideration

 

In this case; since there is wanting of the determinate subject matter due to its loss before the offer was made by the seller (Monique), hence the contract of sale has not perfected.

 

 

 

11.   Victor, Jo and Issey are owners of an undivided parcel of land. They sold it to Valentino jointly and in the same contract, with a right to repurchase. Victor tried to repurchase the entire parcel of land, but Valentino refused to accede Victor’s demand. Is Valentino’s refusal justified? Reasons.

 

No. Valentino’s refusal is unjustified.

 

Under the New Civil Code, in Art. 1620 provides that “a co-owner of a thing may exercise the right of redemption in case the shares of all the other-co-owners or of any of them, are sold to a third person.”

 

Victor is entitled to exercise the right of legal redemption is clear because being the co-owner he has an ideal and aliquot share of the said undivided parcel of land.  And there contract specially provides with a right to repurchase.  Such contract is vending upon the parties.  And the law is clear that anyone of the co-owner may exercise the right of redemption.

 

 

 

12.   Jimmy sold his house and lot to Christian and gave Christian until May 2019 to pay the balance of the purchase price. After Christian failed to pay the installments due, Jimmy made no judicial demand for rescission of the contract nor did he execute any notarial act demanding the same as required under Art. 1592 of the NCC. Christian still made payments even after the May 2019 deadline, which Jimmy accepted. Could Jimmy exercise his right to rescind the sale?

 

No, Jimmy cannot exercise his right to rescind the sale

 

Article 1592 of the New Civil Code provides that “In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.”

 

In the case at bar, Jimmy did not make judicial demand for rescission of the contract nor did he execute any notarial act demanding the same as required under Art. 1592 of the NCC; hence he cannot rescind the contract.  In the case also; Christian was not yet in “delay” for the payment because the grace period given by Jimmy for Christian to make for the payment of the balance was May 2019; and Christian made the payment of the said month.

 

If there is no “delay” on the part of Christian; hence there is no right to demand incumbent upon Jimmy. Hence, Jimmy cannot exercise his right to rescind the sale.

 

 

 

13.   How is a contract of sale extinguished?

 

A contract of sale is extinguished by:

(1) Same causes as how an obligation is extinguished, namely:

a. Payment or performance;

b. Loss of the thing due;

c. Condonation or remission of the debt;

d. Confusion or merger of the rights of creditor and debtor;

e. Compensation;

f. Novation;

g. Annulment;

h. Rescission;

i. Fulfilment of resolutory condition; or

j. Prescription

(2) Conventional Redemption

(3) Legal redemption

                Redemption is a mode of extinguishment wherein the seller has the right to redeem or repurchase the thing sold upon return of the price paid.

 

 

 

14.   When is a contract of sale perfected? When is there a transmission of ownership of the thing sold?

 

A contract of sale is perfected by mere consent, manifested by the meeting of the minds as to the offer and acceptance on the subject matter, price and terms of payment.

 

There is transmission of ownership of the thing sold when such thing is delivered to the vendee [Asset Privatization Trust vs T.J. Enterprises, G.R. No. 177195]. The thing shall be understood as delivered when it is placed in the control and possession of the vendee.

Amado vs Salvador [G.R. No. 171401] Case Digest

 

Amado vs Salvador

G.R. No. 171401

 

Subtopic:

Manner of Payment of Price ESSENTIAL

 

Facts:

Petitioners are the heirs of the late Judge Amado, who was the owner of a parcel of land situated at Barangay Burgos, Rodriguez, Rizal, with an area of 5,928 square meters. The property subject of the present controversy is a portion thereof, consisting of 1,106 square meters and registered under Original Certificate of Title (OCT) in the name of Judge Amado.

Salvador alleges that in or around September 1979, Judge Amado agreed to sell to him the subject property for P60.00 per square meter, or in the total sum of P66,360.00, payable in cash or construction materials which would be delivered to Judge Amado. Salvador though failed to state the terms of payment, such as the period within which the payment was supposed to be completed, or how much of the payment should be made in cash.  Thereafter, Judge Amado allowed Salvador to take possession of the subject property and to build thereon a residential structure, office, warehouse, perimeter fence and a deep well pump.

Salvador claims that by October 1980, he had already given Judge Amado total cash advances of P30,310.93 and delivered construction materials amounting to P36,904.45, the total of which exceeded the agreed price for the subject property.

Petitioner contended that Judge Amado let Salvador use the subject property, upon the request of the latter's father and grandfather, who were Judge Amado's friends. The petitioners maintain that the cash advances and the various construction materials were received by Judge Amado from Salvador in connection with a loan agreement, and not as payment for the sale of the subject property.  Petitioners offered in evidence a loan agreement wherein Salvador and Judge Amado and their respective spouses appeared as co-borrowers with Capitol City Development Bank as lender. The property belonging to Judge Amado was used as collateral, while Salvador undertook the obligation to construct a perimeter fence over Judge Amado's land.

Petitioners assert that when Salvador's business folded up, he failed to pay his share of the monthly amortization of the loan with the bank.  Judge Amado paid the loan to prevent the foreclosure of his mortgaged property. Judge Amado filed an ejectment suit against Salvador before the Municipal Trial Court (MTC) of Rodriguez, Rizal.  MTC dismissed the ejectment suit on the ground of lack of jurisdiction because of Salvador's claim of ownership over the subject property.  RTC affirmed the decision of MTC.

Salvador filed before the RTC an action for specific performance with damages against the petitioners.  As evidence that the sale of the subject property was perfected between Judge Amado and himself, Salvador presented a note written by Judge Amado.

The RTC dismissed Salvador's complaint. The trial court observed that it was not indicated in the documentary evidence presented by Salvador that the money and construction materials were intended as payment for the subject property. In reversing the decision of the RTC of San Mateo, the Court of Appeals found that Salvador paid for the subject land with cash advances and construction materials, since petitioners failed to present any evidence showing that the construction materials Salvador delivered to Judge Amado had been paid for.  It construed as adequate proof of the sale the handwritten note of Judge Amado wherein the latter promised to sign an unidentified deed after the subdivision of an unnamed property, in light of Ismael Angeles' testimony that Judge Amado had promised to sign a deed of sale over the subject property in favor of Salvador.

 

Issue:

Whether or not there was a perfected contract of sale of the subject property.

 

Held:

No.

 

Ratio:

Consent is essential for the existence of a contract, and where it is absent, the contract is non-existent.  Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous. Moreover, 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.This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price or consideration.

In the present case, Salvador fails to allege the manner of payment of the purchase price on which the parties should have agreed.  No period was set within which the payment must be made.  Of the purchase price of P66,360.00, which the parties purportedly agreed upon, the amount which should be paid in cash and the amount for construction materials was not determined.  This means that the parties had no exact notion of the consideration for the contract to which they supposedly gave their consent. Thus, such failure is fatal to Salvador's claim that a sale had been agreed upon by the parties.

Moreno vs Private Management Office [G.R. No. 159373] Case Digest

 

Moreno vs Private Management Office

G.R. No. 159373

Subtopic:

Price must be certain or ascertainable at perfection

 

Facts:

The subject-matter of this complaint is the J. Moreno Building (formerly known as the North Davao Mining Building) or more specifically, the 2nd, 3rd, 4th, 5th and 6th floors of the building. Plaintiff is the owner of the Ground Floor, the 7th Floor and the Penthouse of the J. Moreno Building and the lot on which it stands. Defendant is the owner of the 2nd, 3rd, 4th, 5th and 6th floors of the building, the subject-matter of this suit.

The defendant called for a conference for the purpose of discussing plaintiff's right of first refusal over the floors of the building owned by defendant. At said meeting, defendant informed plaintiff that the proposed purchase price for said floors was TWENTY[-]ONE MILLION PESOS (P21,000,000.00). Defendant, informed plaintiff thru Atty. Jose Feria, Jr., that the Board of Trustees (BOT) of APT "is in agreement that Mr. Jose Moreno, Jr. has the right of first refusal" and requested plaintiff to deposit 10% of the "suggested indicative price" of P21.0 million on or before February 26, 1993.

Plaintiff paid the P2.1 million on February 26, 1993. Then on March 12, 1993, defendant wrote plaintiff that its Legal Department has questioned the basis for the computation of the indicative price for the said floors. Defendant wrote plaintiff that the APT BOT has "tentatively agreed on a settlement price of P42,274,702.17" for the said floors.

The trial court ruled in favor of petitioner Moreno. CA reversed the decision of RTC.

 

Issue:

Whether or not there was a perfected contract of sale over the said floors for the amount of P21.0 million, which will give rise to a right on the part of the plaintiff to demand that the said floors be sold to him for said amount

 

Held:

No.

 

Ratio:

A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. To reach that moment of perfection, the parties must agree on the same thing in the same sense, so that their minds meet as to all the terms. They must have a distinct intention common to both and without doubt or difference; until all understand alike, there can be no assent, and therefore no contract. The minds of parties must meet at every point; nothing can be left open for further arrangement. So long as there is any uncertainty or indefiniteness, or future negotiations or considerations to be had between the parties, there is not a completed contract, and in fact, there is no contract at all.

Contract formation undergoes three distinct stages preparation or negotiation, perfection or birth, and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. The perfection or birth of the contract takes place when the parties agree upon all the essential elements thereof. The last stage is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon, culminating in its extinguishment. Once there is concurrence of the offer and acceptance of the object and cause, the stage of negotiation is finished. This situation does not obtain in the case at bar. The letter of February 22, 1993 and the surrounding circumstances clearly show that the parties are not past the stage of negotiation, hence there could not have been a perfected contract of sale.

Republic vs Philippine Resources Development Corp [GR. No. L-10141] Case Digest

  

Republic vs Philippine Resources Development Corp

GR. No. L-10141

G-one T. Paisones

Palawan Almaciga tree

Image from: Business Diary Philippines

 

Subtopic:

Price must be in money or its equivalent

 

Facts:

Republic of the Philippines in representation of the Bureau of Prisons instituted against Macario Apostol and the Empire Insurance Co. a complaint in CFI Manila alleging that defendant Apostol submitted the highest bid in the amount of P450.00 per ton for the purchase of 100 tons of Palawan Almaciga from the Bureau of Prisons; that a contract therefor was drawn; Apostol obtained goods from the Bureau of Prisons valued P15,878.59; yet, Apostol paid only P691.10 leaving a balance obligation of P15,187.49. The complaint further avers, as second cause of action, that Apostol submitted the best bid with the Bureau of Prisons for the purchase of three million board feet of logs at P88.00 per 1,000 board feet; that a contract was executed between the Director of Prisons and Apostol pursuant to which contract Apostol obtained deliveries of logs valued at P65,830.00; and that Apostol failed to pay a balance account of P18,827.57.

Philippine Resources Development Corporation moved to intervene, appending to its motion. The complaint recites that for sometime prior to Apostol's transactions the corporate had some goods deposited in a warehouse at Herran, Manila; that Apostol, then the president of the corporation 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 with the latter entity; that upon discovery of Apostol's act, the corporation took steps to recover said goods by demanding from the Bureau of Prisons the return thereof; and that upon the refusal of the Bureau to return said goods.

CFI denied the admission of the complaint-in-intervention filed by herein respondent. Court of Appeals set aside the order denying the motion to intervene and ordered the respondent court to admit the herein respondent corporation's complaint-in-intervention.

Respondents, assert that the subject matter of the original litigation is a sum of money allegedly due to the Bureau of Prisons from Macario Apostol and not the goods or materials reportedly turned over by Apostol in payment of his private debts to the Bureau of Prisons and the recovery of which is sought by the petitioner; and that for this reason, petitioner has no legal interest in the very subject matter in litigation as to entitle it to intervene.

 

Issue:

Whether or not the materials (G.I. sheets, black sheets, M.S. plates, round bars and G.I. pipes) can be made as payment.

 

Held:

Yes.

 

Ratio:

The same article (Art. 1458 NCC) provides that the purchaser may pay "a price certain in money or its equivalent" which means that payment of the price need not be in money. Whether the G.I. sheets, black sheets, M.S. plates, round bars and G.I. pipes claimed by the respondent corporation to belong to it and delivered to the Bureau of Prisons by Macario Apostol in payment of his account is sufficient payment therefor, is for the Court to pass upon and decide after hearing all the parties in the case. Should the trial court hold that it is as to credit Apostol with the value or price of the materials delivered by him, certainly the herein respondent corporation would be affected adversely if its claim of ownership of such sheets, plates, bars and pipes is true.

Vda. de Catindig vs Roque [GR. No. L-25777] Case Digest

 Vda. de Catindig vs Roque

GR. No. L-25777

 

Subtopic:

Price must be real

 

Facts:

The subject property in this case is the fishpond known as Lot No. 4626 of the Malolos Cadastre, has an area of more than thirteen hectares. The co-owners of the fishpond leased it to Mrs. Catindig for a term of ten years counted from October 1, 1941 for a total rental of six thousand pesos. After the termination of the lease on September 30, 1951, Mrs. Catindig remained in possession of the fishpond because she was negotiating with the co-owners for the purchase thereof. She wanted to buy it for P52,000. On October 18, 1960 German Ramirez, one of the co-owners, executed a deed wherein he sold his 2/16 share to Mrs. Catindig for P6,500. The sale was annotated on the title on October 19, 1960.  Two weeks later, Pedro Villanueva, one of the co-owners, learned of the sale executed by German Ramirez.  That sale retroacted to April 13, 1950.

On November 18, 1960 the respondents filed this action against Mrs. Catindig to compel her to allow them to redeem the portion sold by German Ramirez.

The Court of Appeals found that: “The consideration of P52,000 was not paid by Mrs. Catindig to the co-owners because she was not able to obtain a loan, the proceeds of which would have been used to pay the co-owners who had executed simulated sales of their shares, as shown in the private documents. Because Mrs. Catindig did not pay the price of P52,000, the projected sale, "which was in truth a simulated one so as to enable her just to mortgage the property in order to secure the necessary amount with which to pay the consideration" was void ab initio.  There was no notarized deed of sale because Mrs. Catindig did not pay the price to the co-owners except German Ramirez.”

 

Issue:

Whether or not CA erred in holding that the sale of  fishpond to Catindig is void for nonpayment of the price.

 

Held:

No.

 

Ratio:

A contract of sale is void and produces no effect whatsoever where the price, which appears thereon as paid, has in fact never been paid by the purchaser to the vendor. Such a sale is non-existent (Borromeo vs. Borromeo, 98 Phil. 432) or cannot be considered consummated (Cruzado vs. Bustos and Escaler, 34 Phil. 17).

The foregoing discussion disposes of whatever legal issues were raised by appellant Catindig which are interwoven with her factual contentions, including the issue as to whether she is entitled to demand the execution of a notarized deed of sale for the 14/16 proindiviso portion of the fishpond.  She is not entitled because, as already held, the alleged sales in her favor are void.