SUBJECT MATTER OF SALE
Sugar quota allocations do not have existence independently of any
1. Yu Tek & Co. v, Gonzales GR L-9935 Feb.1, 1915
SALES; REQUISITES OF CONTRACT; CONSIDERATION. — A contract
of sale is not perfected until the parties have agreed upon the price
and the thing sold. A contract whereby a party obligates himself to
sell for a price a certain specified quantity of sugar of a given quality,
without designating any particular lot of sugar, is not perfected until
the quantity agreed upon has been selected and is capable of being
physically designated and distinguished from all other sugar.
ID.; ID.; LOSS OF THE THING DUE. — Until thus segregated or
appropriated, the vendee does not assume the risk of loss as
provided in article 1452 of the Civil Code.
Facts: A contract was executed between the herein parties, whereby
Mr. Basilio Gonzales acknowledges the receipt of P3,000 from Yu
Tek & Co., and that in consideration of which he obligates himself to
deliver to the latter 600 piculs of sugar of the first and second grade,
according to the result of polarization, within 3 months. There is a
stipulation providing for rescission with P1,200 penalty in case of
failure to deliver. No sugar was delivered, so plaintiff filed a case
praying for the judgment of P3,000 plus P1,200. P3,000 was
awarded, thus, both parties appealed.
Issues:
(1) Whether compliance of the obligation to deliver depends upon
the production in defendant’s plantation
(2) Whether there is a perfected sale
Held:
(1) There is not the slightest intimation in the contract that the sugar
was to be raised by the defendant. Parties are presumed to have
reduced to writing all the essential conditions of their contract.
While parol evidence is admissible in a variety of ways to explain the
meaning of written contracts, it cannot serve the purpose of
incorporating into the contract additional contemporaneous
conditions which are not mentioned at all in the writing, unless
there has been fraud or mistake. It may be true that defendant
owned a plantation and expected to raise the sugar himself, but he
did not limit his obligation to his own crop of sugar. Our conclusion
is that the condition which the defendant seeks to add to the
contract by parol evidence cannot be considered. The rights of the
parties must be determined by the writing itself.
(2) We conclude that the contract in the case at bar was merely an
executory agreement; a promise of sale and not a sale. At there was
no perfected sale, it is clear that articles 1452, 1096, and 1182 are
not applicable. The defendant having defaulted in his engagement,
the plaintiff is entitled to recover the P3,000 which it advanced to
the defendant, and this portion of the judgment appealed from
must therefore be affirmed.
2. Compana Gen. de Tabacos v. CA 185 SCRA 284 (1990)
(no syllabus/digests)
PORTION FROM RULING:
Again, being themselves engaged and possessed of no little
experience in the sugar industry, said Theo H. Davies & Co., Ltd., San
Carlos Planters' Association (and their own transferees) could not
but have known, when negotiations for their respective purchases of
the sugar quota in question commenced, that the sugar quota they
were dealing with had perforce to pertain to some specific sugar
plantation or farm, i.e., Plantation 30-15 of the Mindoro Mill District.
particular tract of land. They are essentially ancillary, not principal,
assets, necessarily annexed to a specific sugar plantation or land,
improvements "attaching to the land entitled thereto." 37 Hence,
the very first inquiry in any negotiation affecting sugar quotas
necessarily would have to do with the identification of the district,
plantation or land to which the quotas appertain. No transaction can
be had of sugar quotas in the abstract, without reference
whatsoever to any particular land. Indeed, any deed of conveyance
of sugar quota would unavoidably have to describe the sugar
plantation and district to which it refers or relates. There can be no
sale simply of sugar quota of a certain number of piculs without
specification of the land to which it relates. Such a sale would be
inconsistent with established usage, and would be void for want of a
determinate subject matter. 38 Theo H. Davies & Co., Ltd. and San
Carlos Planters' Association can not therefore plead ignorance of the
fact that the quota they were buying pertained to land belonging to
the sellers, Plantation No. 30-15 of the Mindoro Mill District.
Furthermore, Theo H. Davies & Co., Ltd. and San Carlos Planters'
Association were obviously of the belief that a mortgage or sale of a
sugar quota is void if "(a)pproval or sanction of the Sugar Quota
Administration . . . (is) lacking," this being in fact a proposition
TABACALERA lays before this Court, although it cites no particular
authority for it and has thus failed to convince this Court of its
validity. Be this as it may, it was with this proposition in mind that
Theo H. Davies &. Co. Ltd. and San Carlos Planters' Association
submitted the deed of conveyance in their favor of the sugar quota
in question, to the SQA, precisely to obtain the latter's approval of
that transaction. That approval, as already stated, was not given
until a year later. But long before that approval, they were clearly
and categorically informed that the sugar quota, subject of the sale
to them for which they were seeking approval by the SQA, was
already mortgaged to the RFC and then to the PNB. Since good faith
is obviously a state of the mind, and since — prior to the approval of
the conveyance to them of the sugar quota by the SQA, which
approval they thought to be essential for the validity of said
conveyance — they came to know of the earlier encumbrance
thereof to other parties, it is not possible for them without
contradicting themselves, to claim good faith in the transaction.
….
One final question remains to be resolved, that posed by
TABACALERA, to wit: if it reconveys the sugar quota acquired from
San Carlos Planters' Association, or pays its value, should not it be
reimbursed therefor by the latter, upon its implied and express
warranty against eviction? The answer will have to be in the
negative. They, vendor and vendee, are in pari delicto. At the time of
the transaction between them they were well aware of the
encumbrance on the property dealt with; they had the common
intention of negating the rights that they knew had earlier and
properly been acquired by the mortgagee of the property they were
treating of; they were both consequently acting in bad faith. The
object or purpose of their contract was "contrary to law, morals,
good customs, public order or public policy." 39 The law says that in
such a case, where "the unlawful or forbidden cause consists does
not constitute a criminal offense, . . . and the fault is on the part of
both contracting parties, neither may recover what he has given by
virtue of the contract, or demand the performance of the other's
undertaking." No relief can be granted to either party; the law will
leave them where they are.

3. Heirs of San Andres v. Rodriguez 337 SCRA 769 (2000)
SYLLABUS
1. CIVIL LAW; SPECIAL CONTRACTS; SALES; DEFINED;
ELEMENTS THEREOF. — Art. 1458 of the Civil ... As thus defined, the
essential elements ofsale are the following: a) Consent or
meeting of the minds, that is, consent to transfer ownership in
exchange for the price; b) Determinate subject matter; and, c) Price
certain in money or its equivalent.
2. ID.; ID.; ID.; ID.; ID.; PRESENT WHEN THE OBJECT OF SALE
IS CERTAIN AND DETERMINATE; CASE AT BAR. — Since the lot
subsequently sold to respondent is said to adjoin the "previously paid
lot" on three sides thereof, the subject lot is capable of being
determined without the need of any new contract. The fact that the
exact area of these adjoining residential lots is subject to the
result of a survey does not detract from the fact that they are
determinate or determinable. As the Court of Appeals explained:
Concomitantly, the object of the sale is certain and determinate.
Under Article 1460 of the New Civil Code, a thing sold is determinate
if at the time the contract is entered into, the thing is capable of being
determinate without necessity of a new or further agreement
between the parties… Thus, all of the essential elements of a
contract of sale are present... As Art. 1475 of the Civil Code provides:
The contract of sale is perfected at the moment there is a
meeting of minds upon the thing, which is the object of the contract,
and upon the price . . .
3. ID.; ID.; ID.; ABSOLUTE WHEN THERE IS NO
RESERVATION OF OWNERSHIP NOR STIPULATION PROVIDING FOR A
UNILATERAL RESCISSION BY EITHER PARTY; CASE AT BAR. — In Ang Yu
Asuncion v. Court ofAppeals, [238 SCRA 602, 612 (1994)] the Court
held: In Dignos v. Court of Appeals (158 SCRA 375), it was said that,
although denominated a "Deed of Conditional Sale," a sale is still
absolute where the contract is devoid of any proviso that title is
reserved or the right to unilaterally rescind is stipulated, e.g., until or
unless the price is paid. Ownership will then be transferred to the
buyer upon actual or constructive delivery (e.g., by the execution of a
public document) of the property sold. Where the condition is
imposed upon the perfection of the contract itself, the failure of the
condition would prevent such perfection. If the condition is imposed
on the obligation of a party, which is not fulfilled, the other party may
either waive the condition or refuse to proceed with the sale. (Art.
1545, Civil Code) Thus, in one case, when the sellers declared in a
"Receipt of Down Payment" that they received an amount as
purchase price for a house and lot without any reservation of title
until full payment of the entire purchase price, the implication was
that they sold their property. In People's Industrial and Commercial
Corporation v. Court of Appeals, [281 SCRA 206 (1997)] it was stated:
A deed of sale is considered absolute in nature where there is neither
a stipulation in the deed that title to the property sold is reserved in
the seller until full payment of the price, nor one giving the vendor
the right to unilaterally resolve the contract the moment the buyer
fails to pay within a fixed period. Applying these principles to this
case, it cannot be gainsaid that the contract of sale between the
parties is absolute, not conditional. There is no
reservation of ownership nor a stipulation providing for a unilateral
rescission by either party. In fact, the sale was consummated upon
the delivery of the lot to respondent. Thus, Art. 1477 provides that
the ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof. The stipulation that
the "payment of the full consideration based on a survey shall be due
and payable in five (5) years from the execution of a formal
deed of sale" is not a condition which affects the efficacy of the
contract of sale. It merely provides the manner by which the full
consideration is to be computed and the time within which the same
is to be paid. But it does not affect in any manner the effectivity of the
contract. Consequently, the contention that the absence of a formal
deed of sale stipulated in the receipt prevents the happening of a sale
has no merit.
SCRA SYNOPSIS
Juan San Andres was the registered owner of Lot 1914-B-2
situated in Liboton, Naga City. On September 28, 1964, he sold a
portion thereof, consisting of 345 square meters to respondent
Vicente Rodriguezfor P2,415.00. A Deed of Sale evidenced the sale.
Upon the death of Juan San Andres on May 5, 1985,
Ramon San Andres was appointed judicial administrator of the
decedent's estate. A sketch plan of the 345-square meter lot sold to
respondent was prepared and from there it was found that
respondent had enlarged the area, which he purchased, by 509
square meters. Accordingly, the judicial administrator sent a letter to
respondent demanding that the latter vacate the portion allegedly
encroached by him. Thereafter, the judicial administrator brought an
action, in behalf of the estate of Juan San Andres, for
recovery ofpossession of the 509-square meter lot. Respondent
alleged that apart from the 345-square meter lot which had been sold
to him by Juan San Andres, the latter likewise sold to him the
following day the remaining portion of the lot consisting of 509
square meters, with both parties treating the two lots as one whole
parcel with a total area of 854 square meters. As proof of the sale to
him of 509 square meters, respondent attached to his answer a
receipt signed by the late Juan San Andres. Respondent also attached
to his answer a letter of judicial administrator
Ramon San Andres asking payment of the balance of the purchase
price. On September 20, 1994, the trial court rendered judgment in
favor of petitioner. It ruled that there was no contract of sale to
speak of for lack of a valid object because there was no sufficient
indication in the receipt presented to identify the property
subject of the sale, hence, the need to execute a new contract.
Respondent appealed to the Court of Appeals (CA). The CA reversed
the decision of the trial court. The appellate court held that the
object of the contract was determinable, and that there was
conditional sale with the balance of the purchase price payable within
five years from the execution of the deed of sale. Hence, this petition.
The Supreme Court ruled that since the lot subsequently
sold to respondent was said to adjoin the "previously paid lot" on
three sides thereof, the subject lot was capable of being determined
without the need of any new contract. Thus, all of the essential
elements of a contract of sale were present, i.e. that there was a
meeting of the minds between the parties, by virtue of which the late
Juan San Andres undertook to transfer ownership of and to deliver a
determinate thing for a price certain in money. The perfected
contract of sale was confirmed by the former administrator of the
estate, who wrote a letter to respondent asking P300.00 as partial
payment for the subject lot. It cannot be gainsaid that the
contract of sale between the parties was absolute, not conditional.
There was no reservation of ownership nor a stipulation providing for
a unilateral rescission by either party. The decision of the
Court of Appeals was affirmed with the modification that respondent
was ordered to reimburse petitioners for the expenses of the survey.
 4. Pichel v. Alonzo GR L-36902 Jan. 30, 1982
SYLLABUS
ID.; ID.; SALE; ESSENTIAL ELEMENTS; FUTURE CROPS, VALID SUBJECT
MATTER; CASE AT BAR. — The document in question expresses a
valid contract of sale. It has the essential elements of a contract of
sale as defined under Article 1458 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. And in Sibal vs.
Valdez, 50 Phil. 512, pending crops which have potential existence
may be the subject matter of sale.
ID.; CONTRACTS; SALE; DISTINGUISHED FROM CONTRACT OF LEASE.
— The essential difference between a contract of sale and lease of
things is that the delivery of the thing sold transfers ownership,
while in lease no such transfer of ownership results as the rights of
the lease are limited to the use and enjoyment of the thing leased.
ID.; ID.; ID.; ID.; DOCUMENT IN CASE AT BAR CANNOT BE
CONSTRUED AS A LEASE CONTRACT. — The contract was clearly a
"sale of the coconut fruits." The vendor sold, transferred and
conveyed "by way of absolute sale, all the coconut fruits of his land,"
thereby divesting himself of all ownership or dominion over the
fruits during the seven-year period. The possession and enjoyment
of the coconut trees cannot be said to be the possession and
enjoyment of the land itself because these rights are distinct and
separate from each other, the first pertaining to the accessory or
improvements (coconut trees) while the second, to the principal
(the land). A transfer of the accessory or improvement is not a
transfer of the principal. It is the other way around, the accessory
follows the principal. Hence, the sale of the nuts cannot be
interpreted nor construed to be a lease of the trees, much less
extended further to include the lease of the land itself.
CIVIL LAW; CONTRACTS; RECEIPT OF CONSIDERATION PRECLUDES
SELLER TO IMPUGN CONTRACT. — The respondent-grantee, after
having received the consideration for the sale of his coconut fruits,
can not be allowed to impugn the validity of contracts he entered
into, to the prejudice of petitioner who contracted in good faith and
for consideration.
SYNOPSIS
Respondent was awarded a parcel of land by the government under
Republic Act No. 477. The award was cancelled by the Board of
Liquidators on January 27, 1965, but no reversion proceedings were
thereafter instituted, as in fact, respondent's right to the land was
reinstated in 1972. On August 14, 1968, however, respondent and
his wife, in consideration of P4,200.00, had executed a Deed of Sale
in favor of petitioner of all the fruits which may be harvested from
the coconut trees in the said land for the period covering September
15, 1968 to January 1, 1976. After reinstatement of respondent's
right to the land in 1972, he filed an action to annul the Deed of
Sale. The lower court, construing the contract in question as a
contract of lease of the land itself, held, that the contract was null
and void for being violative of Section 8, Republic Act No. 477, which
prohibits the alienation or encumbrance of the land or the
improvement thereon within the period prescribed therein.
On review, the Supreme Court, after clarifying the matter that
respondent has not been divested of whatever rights he may have
over the property granted to him by virtue of Republic Act No. 477
after cancellation of the award by the Board of Liquidators since no
reversion proceedings have been instituted by the State, ruled that
it was error for the lower court to construe or interpret the subject
Deed of Sale since a perusal of the deed fails to disclose any
ambiguity or absurdity in its provisions; that there is no doubt that
the real intention of the contracting parties is of the fruits of the
coconut trees and not the lease of the land itself; and that the
prohibition against the alienation or encumbrance of the land
and/or improvements therein awarded pursuant to Republic Act No.
477 does not include alienation or encumbrance of natural and/or
industrial fruits derived therefrom.
Judgment reversed.
5. EDCA Publishing v. Santos 184 SCRA 614 (1990)
DOCTRINE/S:
 Art. 559 WHEN PERSON MAY BE DEEMED TO HAVE BEEN
UNLAWFULLY DEPRIVED OF MOVABLE PROPERTY;
EXCEPTION – EDCA was not unlawfully deprived. There
was valid voluntary sale in which it was negligent.
FACTS: The movable property in this case consists of books, which
were bought from EDCA by an impostor who sold it to SANTOS. EDCA
Publishing sold to a person identifying himself as Professor Jose Cruz
who placed an order by telephone with the former for 406 books,
payable on delivery. EDCA prepared the corresponding invoice and
delivered the books as ordered, for which Cruz issued a personal
check. On October 7, 1981, Cruz then sold the 120 of the books to
Leonor Santos who asked for verification, and was then showed the
invoice for the books.
Meanwhile, EDCA having become suspicious over a second order
placed by Cruz even before clearing of his first check, made inquiries
with the De la Salle College where he had claimed to be a dean and
was informed that there was no such person in its employ. Further
verification revealed that Cruz had no more account or deposit with
the Philippine Amanah Bank, against which he had drawn the
payment check. EDCA then went to the police, which set a trap and
arrested Cruz. Investigation disclosed his real name as Tomas de la
Peña and his sale of 120 of the books he had ordered from EDCA to
the private respondents.
ISSUE: Whether or not EDCA PUBLISHINGAND DISTRIBUTING CORP
was unlawfully deprived of the property?
HELD: NO. Santos was a good faith buyer after taking steps to verify
the identity of the seller. When she was showed the invoice, she
reasonably believed that he was a legitimate seller. With regard to
unlawful deprivation, EDCA was not unlawfully deprived of the
property by mere failure of consideration. There was already a
perfected contract of sale. Proof was even substantiated when EDCA
gave the invoice as proof of payment upon delivery of the books. This
did not amount to unlawful taking, because by the delivery of EDCA
to Cruz, ownership of the books already transferred to him.
It would certainly be unfair now to make the SANTOSES bear the
prejudice sustained by EDCA as a result of its own negligence. We
cannot see the justice in transferring EDCA's loss to the
SANTOSES who had acted in good faith, and with proper care, when
they bought the books from Cruz.
6. Tagatac v. Jimenez (cited in EDCA case)
 7. Quijada v. CA 299 SCRA 695 (1998)

THE BUYER; CASE AT BAR. — The consummation, however, of the

SYLLABUS:
ID.; SALE; A CONSENSUAL CONTRACT PERFECTED BY MERE
CONSENT; OWNERSHIP BY THE SELLER OF THE THING SOLD IS NOT
AN ELEMENT OF PERFECTION. — Sale, being a consensual contract,
is perfecting by mere consent, which is manifested the moment there
is a meeting of the minds as to the offer and acceptance thereof on
three (3) elements; subject matter, price and terms of payment of the
price. Ownership by the seller on the thing sold at the time of the
perfection of the contract of sale is not an element for its perfection.
What the law requires is that the seller has the right to transfer
ownership at the time the thing sold is delivered. Perfection per
se does not transfer ownership which occurs upon the actual or
constructive delivery of the thing sold. A perfected contract of sale
cannot be challenged on the ground of non-ownership on the
part of the seller at the time of its perfection: hence, the sale is still
valid.
perfected contract is another matter. It occurs upon the constructive
or actual delivery of the subject matter to the buyer when the
seller of her successors-in-interest subsequently acquires ownership
thereof. Such circumstance happened in this case when petitioners —
who are Trinidad Quijada's heirs and successors-in-interest —
became the owners of the subject property upon the reversion of the
ownership of the land to them. Consequently, ownership is
transferred to respondent Mondejar and those who claim their right
from him. Article 1434 of the New Civil Code supports the ruling that
the seller's "title passes by operation oflaw to the buyer." This rule
applies not only when the subject matter of the contract of sale is
goods, but also to other kinds of property, including real property.

ID.; ID,; CONSUMMATION THEREOF OCCURS UPON THE

CONSTRUCTIVE OR ACTUAL DELIVERY OF THE SUBJECT MATTER TO
 8. Sumaya, et al. v. IAC Sept. 2, 1991

SYLLABUS:

ID.; SUCCESSION; RESERVA TRONCAL; OBLIGATION

OF THE RESERVOR. — The obligation to reserve rests upon the
reservor, Consuelo Joaquin vda. de Balantakbo as provided in
Article 891 of the New Civil Code on reserva troncal. Consistent
with the rule in reserva viudal where the person obliged to
reserve (the widowed spouse) had the obligation to annotate in
the Registry of Property the reservable character of the
property, in reserva troncal, the reservor (the ascendant who
inherited from a descendant property which the latter inherited
from another ascendant) has the duty to reserve and therefore,
the duty to annotate also.
3. ID.; ID.; ID.; RESERVABLE CHARACTER OF THE REAL
PROPERTY MUST BE ANNOTATED IN THE REGISTRY OF
PROPERTY. — The jurisprudential rule requiring annotation in
the Registry of Property of the right reserved in real property
subject of reserva viudal insofar as it is applied to reserva
troncal stays despite the abolition of reserva viudal in the New
Civil Code. This rule is consistent with the rule provided in the
second paragraph of Section 51 of P.D. 1529, which provides
that; "The act of registration shall be the operative act to convey
or affect the land insofar as third persons are concerned . . . ."
4. ID.; ID.; ID.; ACTION FOR RECOVERY OF RESERVED
PROPERTY; PRESCRIPTIVE PERIOD. — The cause of action of the
reservees did not commence upon the death of the propositus
Raul Balantakbo on June 13, 1952 but upon the death of the
reservor Consuelo Vda. de Balantakbo on June 3, 1968. Relatives
within the third degree in whose favor the right (or property) is
reserved have no title of ownership or of fee simple over the
reserved property during the lifetime of the reservor. Only when
the reservor should die before the reservees will the latter
acquire the reserved property, thus creating a fee simple, and
only then will they take their place in the succession of the
descendant of whom they are relatives with in the third degree
(See Velayo Bernardo v. Siojo, G.R. No. 36078, March 11, 1933,
58 Phil. 89). The reserva is extinguished upon the death of the
reservor, as it then becomes a right of full ownership on the part
of the reservatarios, who can bring a reivindicatory suit therefor.
Nonetheless, this right if not exercised within the time for
recovery may prescribe in ten (10) years under the old Code of
Civil Procedure (see Carillo v. De Paz, G.R. No. L-22601, October
28, 1966, 18 SCRA 467, 473) or in thirty years under Article 1141
of the New Civil Code.
 9. Pajunar vs. CA
ID.; ID.; PERSON CONSIDERED POSSESSOR IN GOOD FAITH —
Respondents are not possessors in good faith, as a possessor in good
faith is one not aware that there exists in his title or
mode of acquisition any flaw which invalidates it. Furthermore,
failure of a party to exercise precaution to acquaint himself with the
defects in the title of his vendor precludes him claiming possession
in good faith
ID.; ID.; PRESCRIPTIVE PERIODS FOR POSSESSOR IN GOOD FAITH
AND POSSESSOR IN BAD FAITH, NOT APPLICABLE IN CASE AT BAR;
OWNER MAY RECOVER MOVABLE THAT HAS BEEN LOST OR
ILLEGALLY TAKEN WITHOUT REIMBURSEMENT. — The duty to make
a closer inquiry into the certificate of registration of the female
carabao which was the subject of the barter, defendant Mauro Eluna
should have performed but did not. Thus, his being in bad faith, in
acquiring the carabao from his vendor, Aurelio Enopia. Thus, as has
been stressed by this Court: "A purchaser cannot close his eyes to
facts which should put a reasonable man upon his guard, and then
claim that he acted in good faith under the belief that there was no
defect in the title of the vendor. His mere refusal to believe that
such defect exists, or his willful closing of the eyes to the
possibility of the existence of a defect in his vendor's title will not
make him an innocent purchaser for value, if it afterwards develops
that the title was in fact defective and it appears that he had such
noticeof the defect would have led to its discovery had he acted
with the measure of precaution which may reasonably be
required of a prudent man in a like situation." (Leung Lee v. Strong,
37 Phil. 644). It is clear from the foregoing that possession in good
faith for four (4) years is not applicable, neither can possession in
bad faith of eight (8) years benefit respondents, for when the
owner of a movable has lost or has been illegally deprived of his
property he can recover the same without need to reimburse the
possessor, as provided in Art. 559 of the Civil Code. Neither can Art.
716 of the Civil Code apply, for this article evidently refers to a
possessor in good faith.
Facts: Initial case for recovery of personal property with writ of
replevinfiled by Arthur and Invencia Pajunat with the RTC. RTC
dismissedand CA affirmed.
1969: Respondents Mauro and Teofila Eluna bartered a 3-year
oldmale cow for a 1-year old female carabao in the
possession of Enopia; carabao had the brand “ART” in front and
hind legs. Maurodid not or could not register the transfer to him.
March 1980: Arthur Pajunar learned that the carabao
was in thepossession of Mauro. He claims that he is the original
owner of thecarabao which got lost in 1974.
Arthur demanded the return of the carabao and the delivery of its2
offsprings.
Mauro refused to do so despite repeated demands and
filed theinitial case.
Petitioner contends: Mauro failed to establish his ownership
overthe mestisa carabao found in his possession. Failure
of Mauro tor e g i s t e r i n h i s
n a m e s a i d c a r a b a o , c o n s t i t u t e s a f l a w i n h i s owners
hip as required by law.
Respondent claims: he has been in possession of the carabao
form o r e t h a n 1 0 y e a r s , b y w i r t u e
o f b a r t e r w i t h E n o p i a i n 1 9 6 9 . Hence, he acquired
ownership by prescription under NCC 1132.
Issue: WON the transfer to Mauro of the carabao by barter was
valid.
Held/Ratio:
No. Although the animal was branded “ART” at the time she was
acquiredby Mauro, said respondent did not or could not register the
transfer to himin accordance with Sec. 529 of the Revised
Administrative Code, whichrequires
registration
in order for a transfer to be valid. Mauro was notable to
comply with this requirement. They are
not possessors in goodfaith
as a possessor in good faith is one not aware of that there exists
inhis title or mode of acquisition any flaw that invalidates it.
The duty to make a close inquiry into the certificate of registration of
thecarabao should have been performed by Mauro but he
failed to do so. Thus, proving, he was in bad faith when he
acquired the said carabao fromEnopia. The possession in good
faith for 4 years is NOT applicable, neither canpossession
in bad faithof 8 years benefit respondent, for when the ownerof a
movable has lost or has been illegally deprived of his property, he
canrecover the same without need to reimburse the possessor (NCC
559).
Art. 716 cannot apply since it evidently refers to a
possessor inbad faith.
Dispositive: Decision reversed and set-aside.
PRICE
10. Tan Tiah v. Yu 67 Phil. 739
PURCHASE AND SALE; PROMISE TO BUY OR SELL; PRICE CERTAIN.
— Article 1446 of the Civil Code provides that "By the contract of
purchase and sale one of the contracting parties binds himself to
deliver a determinate thing and the other to pay a certain price
therefor in money or in something representing the same."
According to article 1451, "a promise to sell or buy, when there is
an agreement as to the thing and the price, entitles the contracting
parties reciprocally to demand the fulfillment of the contract." And
article 1447 of the same Code provides that in order that the price
may be considered certain, it, shall be sufficient that it be 90 in
relation to some certain thing, or that its determination be left to
the judgment of some particular person, and should the latter be
unable or unwilling to fix the price, the contract shall be
inoperative. And according to article 1449 of the same Code, the
designation of the price can never be left to the determination of
one of the contracting parties.
ID.; ID.; ID. — The price of the leased land not having been fixed
and the lessor not having bound himself to sell it, the essential
elements which give life to the contract are lacking. It follows that
the lessee cannot compel the lessor to sell the leased land to him.
DIGEST:
On May 14, 1923 petitioner and respondent entered into a contract
of lease in the fifth clause of whichprovides: "5th. That upon
termination of the period of this contract, namely, ten years, the
lessor shallhave theoption to buy the building or
improvement which the lessee may have built upon the
lots,reimbursing the latter ninety per cent (90%) of the original net
cost of the construction; but should thelessor be unable or unwilling
to buy said building or improvement, theincome or rent derived
therefromshall be equallydivided between said lessor and lessee,
and the latter shall no longer have the obligation to pay the rent
agreed upon for the lots in the second paragraph of this contract;
provided, however, that the present contract, with the modification
just mentioned, with respect to the income from the buildingand the
rent from the lot, shall continue in force until the lessor buys the
building or improvement or thelessee buys the land."whether
plaintiff, as lessee, has a right to compel defendant, as lessor, to sell
to him the land on which hebuilt his house in accordance with said
contract.
According to article 1451, "a promise to sell or buy, when there is an
agreement as to the thing and theprice, entitles the contracting
parties reciprocally to demand the fulfillment of the contract." And
article1447 of the same Code provides that in order that the price
may be consideredcertain, it, shall besufficient that it be 90 in
relation to some certain thing, or that its determination beleft to the
judgment ofsome particular person, and should the latter be unable
or unwilling to fix the price, the contract shall be inoperative. And
according to article 1449 of the same Code, the designation of the
price can never be left to the determination of one of the
contracting parties.
The price of the leased land not having been fixed and the lessor not
having bound himself to sell it, the essential elements which give life
to the contract arelacking. It follows that the lesseecannot
compel thelessor to sell the leased land to him.
11. Toyota Shaw Inc. v. CA 244 SCRA 320 (1995)
CIVIL LAW; SPECIAL CONTRACTS; SALES; CONTRACT OF SALE;
ELEMENT OF DEFINITENESS OF PRICE FOR PERFECTION THEREOF;
NOT PRESENT IN CASE AT BAR. — Article 1458 of the Civil Code
defines a contract ofsale and Article 1475 specifically provides when
it is deemed perfected. It is not a contract of sale. No obligation on
the part of Toyota to transfer ownership of a determinate thing to
Sosa and no correlative obligation on the part of the latter to pay
therefor a price certain appears therein. The provision on the
downpayment of P100,000.00 made no specific reference to a
sale of a vehicle. If it was intended for a contractof sale, it could only
refer to a sale on installment basis, as the VSP executed the
following day confirmed. But nothing was mentioned about the full
purchase price and the manner the installments were to be paid.
This Court had already ruled that 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. Definiteness as to the
price is an essential element of a binding agreement to sell personal
property.
ID.; ID.; ID.; ID.; ELEMENT OF MEETING OF MINDS; NOT
ESTABLISHED IN CASE AT BAR. — Exhibit "A" shows the absence of a
meeting of minds between Toyota and Sosa. For one thing, Sosa did
not even sign it. For another, Sosa was well aware from its title,
written in bold letters, viz., AGREEMENTS BETWEEN MR SOSA &
POPONG BERNARDO OF TOYOTA SHAW, INC. that he was not
dealing with Toyota but with Popong Bernardo and that the latter
did not misrepresent that he had the authority to sell
any Toyota vehicle. He knew that Bernardo was only a sales
representative of Toyota and hence a mere agent of the latter. It was
incumbent upon Sosa to act with ordinary prudence and reasonable
diligence to know the extent of Bernardo's authority as an agent in
respect of contracts to sell Toyota's vehicles. A person dealing with
an agent is put upon inquiry and must discover upon his peril the
authority of the agent. Financing companies are defined in Section
3(a) of R.A. No. 5980, as amended by P.D. No. 1454 and P.D. No.
1793, as "corporations or partnerships, except those regulated by
the Central Bank of the Philippines, the Insurance Commission and
the Cooperatives Administration Office, which are primarily
organized for the purpose of extending credit facilities to consumers
and to industrial, commercial, or agricultural enterprises, either by
discounting or factoring commercial papers or accounts receivables,
or by buying and selling contracts, leases, chattel mortgages, or
other evidence of indebtedness, or by leasing of motor vehicles,
heavy equipment and industrial machinery, business and office
machines and equipment, appliances and other movable property.
Accordingly, in a sale on installment basis which is financed by a
financing company, three parties are thus involved: the buyer who
executes a note or notes for the unpaid balance of the price of the
thing purchased on installment, the seller who assigns the
notes of discounts them with a financing company, and the financing
company which is subrogated in the place of the seller, as the
creditor of the installment buyer. Since B.A. Finance did not approve
Sosa's application, there was then no meeting of minds on the sale
on installment basis. We are inclined to believe Toyota's version that
B.A. Finance disapproved Sosa's application for which reason it
suggested to Sosa that he pay the full purchase price. When the
latter refused, Toyota cancelled the VSP and returned to him his
P100,000.00. Sosa's version that the VSP was cancelled because,
according to Bernardo, the vehicle was delivered to another who
was "mas malakas" does not inspire belief and was obviously a
delayed afterthought. It is claimed that Bernardo said, "Pasensiya
kayo, nasulot ang unit ng ibang malakas," while the Sosas had
already been waiting for an hour for the delivery of the vehicle in
the afternoon of 17 June 1989. However, in paragraph 7 of his
complaint, Sosa solemnly states: On June 17, 1989 at around 9:30
o'clock in the morning, defendant's sales representative, Mr. Popong
Bernardo, called plaintiff's house and informed the plaintiff's son
that the vehicle will not be ready for pick-up at 10:00 a.m. of June
17, 1989 but at 2:00 p.m. of that day instead. Plaintiff and his son
went to defendant's office on June 17, 1989 at 2:00 p.m. in order to
pick-up the vehicle but the defendant, for reasons known only to its
representatives, refused and/or failed to release the vehicle to the
plaintiff. Plaintiff demanded for an explanation, but nothing was
given; . . . The VSP was a mere proposal which was aborted in
lieu of subsequent events. It follows that the VSP created no
demandable right in favor of Sosa for the delivery of the vehicle to
him, and its non-delivery did not cause any legally indemnifiable
injury.
ID.; ID.; ID.; ID.; STAGES THEREOF; CASE AT BAR. — At the most,
Exhibit "A" may be considered as part of the initial phase of the
generation or negotiation stage of a contract of sale. There are three
stages in the contract of sale, namely: (a) preparation, conception,
or generation, which is the period of negotiation and bargaining,
ending at the moment of agreement of the parties; (b) perfection or
birth of the contract, which is the moment when the parties come to
agree on the terms of the contract; and (c) consummation or death,
which is the fulfillment or performance of the terms agreed upon in
the contract. The second phase of the generation or negotiation
stage in this case was the execution of the VSP. It must be
emphasized that thereunder, the downpayment of the purchase
price was P53,148.00 while the balance to be paid on installment
should be financed by B.A. Finance Corporation. It is, of course, to
be assumed that B.A. Finance Corp. was acceptable to Toyota,
otherwise it should not have mentioned B.A. Finance in the VSP.
12. Navarra v. Planters Bank GR 172674; July 12, 2007
Facts:
• Spouses Jorge and Carmelita Navarra obtained loan of 1.2 M from
Planters Bank.
• They mortagaged 5 LOTS for security. Couple failed to pay, so the
bank foreclosed on the mortgage and sold it for more than 1.3 M.
Bank was highest bidder. 1 year redemption expired w/o it having
been redeemed by couple.
• RRRC Development Corporation on the other hand, a real estate
company owned by the parents of Carmelita, obtained a loan with
the same bank. They also mortgaged a certain property as security.
They also failed to pay and the mortgaged assets was foreclosed.
BUT they were able to negotiate with the bank by way of concession
• Eventually, the foreclosed properties of RRRC were sold to third
persons whose payments were directly made to the Bank, were in
excess by P300,000.00 for the redemption price.
• In July 1985 - Back to the spouses, Jorge sent a letter to the bank
proposing to repurchase the said 5 LOTS previously foreclosed.
• In response, Planters Bank, thru its Vice-President wrote back
Navarra via a letter agreeing to the request and telling him to see
the Head of the bank’s Acquired Assets Unit for the details of the
transaction so that they may work on the necessary documentation.
• In August 1985 - Jorge went to see the Head with a letter
requesting that the excess payment ofP300,000.00 in connection
with the redemption made by the RRRC be applied as down
payment for the Navarras’ repurchase of their foreclosed properties
but because the amount of P300,000.00 was sourced from a
different transaction between RRRC and Planters Bank and involved
different debtors, the Bank required Navarra to submit a board
resolution from RRRC authorizing him to negotiate for and its behalf
and empowering him to use the amount
• In Jan 1987 - Planters Bank sent a letter to Jorge Navarra informing
him that it could not proceed with the documentation of the
proposed repurchase of the foreclosed properties on account of his
non- compliance with the Bank’s request for the submission of the
needed board resolution of RRRC. Navarra claimed having already
delivered copies of the required board resolution to the Bank. The
Bank, however, did not receive said copies.
• In June 1987 - Navarras filed their complaint for Specific
Performance against bank. Planters Bank asserted however that
there was no perfected contract of sale because the terms and
conditions for the repurchase have not yet been agreed upon
• Sep 1988 – Planters bank sold the properties to Gatchalian Realty
• RTC ruled for the Navarra spouses and said there was perfected
Contract of Sal.
• The CA reversed the trial court ruling.
Issue: WON there was perfected Contract of Sale
Ruling: NO. SC upheld the CA decision.
Navarras assert that the following exchange of correspondence
between them and Planters Bank constitutes the offer and
acceptance. The July 1985 letter being the offer from Navarra and
the Aug 1985 letter-reply from the Bank the acceptance. BUT SUCH
WERE NOT “CERTAIN OFFER” and “ABSOLUTE ACCEPTANCE”.
While the foregoing letters indicate the amount of P300,000.00 as
down payment, they are, however, completely silent as to how the
succeeding installment payments shall be made. At most, the letters
merely acknowledge that the down payment of P300,000.00 was
agreed upon by the parties. However, this fact cannot lead to the
conclusion that a contract of sale had been perfected. Quite
recently, this Court held that before a valid and binding contract of
sale can exist, the manner of payment of the purchase price must
first be established since the agreement on 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.
Navarras’ letter/offer failed to specify a definite amount of the
purchase price for the sale/repurchase of the subject properties. It
merely stated that the "purchase price will be based on the
redemption value plus accrued interest at the prevailing rate up to
the date of the sales contract." The ambiguity of this statement only
bolsters the uncertainty of the Navarras’ so-called "offer" for it
leaves much rooms for such questions.
Also not clear insofar as concerned the exact number of years that
will comprise the long-term payment scheme. As we see it, the
absence of a stipulated period within which the repurchase price
shall be paid all the more adds to the indefiniteness of the Navarras’
offer.
Further, the tenor of Planters Bank’s letter-reply negates the
contention of the Navarras that the Bank fully accepted their offer.
The letter specifically stated that there is a need to negotiate on the
other details of the transaction before the sale may be formalized.
Such statement in the Bank’s letter clearly manifests lack of
agreement between the parties as to the terms of the purported
contract of sale/repurchase, particularly the mode of payment of
the purchase price and the period for its payment. The law requires
acceptance to be absolute and unqualified.
13. Torres vs. CA ; Dec 9, 1999
FACTS: Sisters Antonia Torres and Emeteria Baring, herein
petitioners, entered into a "joint venture agreement" with
Respondent Manuel Torres for the development of a parcel of land
into a subdivision.
They executed a Deed of Sale covering the said parcel of land in
favor of Manuel, who then had it registered in his name and
obtained from Equitable Bank a loan of P40,000 which, under the
Joint Venture Agreement, was to be used for the development of
the subdivision through mortgage of said property.
All three of them also agreed to share the proceeds from the sale of
the subdivided lots. The project failed and the property was
foreclosed. Petitioner alleged that it was due to Manuel’s ’s lack of
funds or means and skills. And also alleged that the latter
misappropriate the amount loaned to his own company.
On the other hand, respondent alleged that he used the loan to
implement the Agreement, which incurred P85,000 expenses. And
further avers that failure of project was due to petitioners and their
relatives had separately caused the annotations of adverse claims on
the title to the land, which eventually scared away prospective
buyers, forcing him to give up on the project.
Subsequently, petitioners filed a criminal case for estafa against
respondent and his wife, but were acquitted. They filed a civil case,
but was dismissed by trial court and affirmed by Court of Appeals.
Hence, this petition.
ISSUE: 1. Whether the petitioners have formed partnership with the
respondent and if they do, whether or not it was void. 2. Whether or
not respondent shall be held liable to the failure of the project.
HELD:
1. A reading of the terms embodied in the Agreement indubitably
shows the existence of a partnership pursuant to Article 1767 of the
Civil Code, which provides: “By the contract of partnership two or
more persons bind themselves to contribute money, property, or
industry to a common fund, with the intention of dividing the profits
among themselves.”
Under the Agreement, petitioners would contribute property to the
partnership in the form of land which was to be developed into a
subdivision; while respondent would give, in addition to his industry,
the amount needed for general expenses and other costs.
Furthermore, the income from the said project would be divided
according to the stipulated percentage. There is manifestation of
intent to form partnership.
It should be stressed that the parties implemented the contract.
Thus, petitioners transferred the title to the land to facilitate its use
in the name of the respondent. On the other hand, respondent
caused the subject land to be mortgaged, the proceeds of which
were used for the survey and the subdivision of the land. As noted
earlier, he developed the roads, the curbs and the gutters of the
subdivision and entered into a contract to construct low-cost
housing units on the property.
Respondent’s actions clearly belie petitioners’ contention that he
made no contribution to the partnership. Under Article 1767 of the
Civil Code, a partner may contribute not only money or property,
but also industry.
Further, under Art. 1773, A contract of partnership is void, whenever
immovable property is contributed thereto, if an inventory of said
property is not made, signed by the parties, and attached to the
public instrument.” This was intended primarily to protect third
persons“the execution of a public instrument would be useless if
there is no inventory of the property contributed, because without
its designation and description, they cannot be subject to inscription
in the Registry of Property, and their contribution cannot prejudice
third persons. This will result in fraud to those who contract with the
partnership in the belief [in] the efficacy of the guaranty in which
the immovables may consist. Thus, the contract is declared void by
the law when no such inventory is made.” The case at bar does not
involve third parties who may be prejudiced.
2. The Court of Appeals held that petitioners’ acts were not the
cause of the failure of the project. But it also ruled that neither was
respondent responsible therefor. In imputing the blame solely to
him, petitioners failed to give any reason why we should disregard
the factual findings of the appellate court relieving him of fault.
Verily, factual issues cannot be resolved in a petition for review
under Rule 45, as in this case. Petitioners have not alleged, not to
say shown, that their Petition constitutes one of the exceptions to
this doctrine. Accordingly, we find no reversible error in the CA's
ruling that petitioners are not entitled to damages.
***INADEQUACY OF PRICE IN VOLUNTARY SALES***
14. Ong v. Ong 139 SCRA 133 (1985)
When PRICE is FALSE; Art. 1354
Facts: On February 25, 1976, Imelda Ong, for and in consideration of
P1.00 and other valuable considerations, executed a quitclaim over
a parcel of land in Makati in favor of Sandra Maruzzo, then a minor.
On November 19, 1980, Imelda revoked the quitclaim and donated
the property to her son Rex. On June 20, 1983, Sandra, through her
guardial ad litem Alfredo Ong, filed an action to recover the land and
to declare the donation to Rex null and void. In their responsive
pleading, petitioners claimed that the quitclaim is equivalent to a
donation which requires acceptance by the donee, and since Sandra
was a minor, there was no valid acceptance. The trial court ruled
that the quitclaim is equivalent to a sale. The Intermediate Appellate
Court affirmed the decision.
Issue: Whether the quitclaim is equivalent to a deed of sale or to a
deed of donation
Held: The execution of a deed purporting to convey ownership of a
realty is in itself prima facie evidence of the existence of a valuable
consideration, the party alleging lack of consideration has the
burden of proving such allegation. Even granting that the Quitclaim
deed in question is a donation, Article 741 of the Civil Code provides
that the requirement of the acceptance of the donation in favor of
minor by parents of legal representatives applies only to onerous
and conditional donations where the donation may have to assume
certain charges or burdens. Donation to an incapacitated donee
does not need the acceptance by the lawful representative if said
donation does not contain any condition. In simple and pure
donation, the formal acceptance is not important for the donor
requires no right to be protected and the donee neither undertakes
to do anything nor assumes any obligation. The Quitclaim now in
question does not impose any condition.
15. Aguilar v. Rubiato 40 Phil. 570 (1919)
CONTRACTS; NULLITY; FRAUD; INADEQUACY OF PRICE. — Where
the inadequacy of the price in an agreement is so great that the
mind revolts at it and is such as a reasonable man would neither
directly nor indirectly be likely to consent to, a strong reason exists
for annuling a contract.
ID.; ID.; ID.; ID. — R, the owner of land valued at P26,000, was
induced through the connivance of two or three other men to sign
the second page of a power of attorney in favor of one of them, G,
which purported to authorize G to sell the property with right of
repurchase for a sum not to exceed P1,000. G sold the property to
A for P800 under a pacto de retro. R having failed to pay the rent,
A endeavors to obtain possession of the land. Held: That the so-
called power of attorney was a sham document, and that R is only
liable for the loan which he received.
Facts: Rubiato was the owner of parcels of land and was desirous of
obtaining a loan. He thereafter signed a power of attorney in favor
of a certain Vila to secure a loan and to execute any writing for the
mortgage of land. Vila pursuant to the power of attorney then sold
the land to Aguilar, with the right of repurchase within one year and
Rubiato was to remain in possession of the land as lessee. One year
expired and Aguilar filed a case to consolidate ownership over the
lands.
Issue: Whether the contract was of sale or loan.
Held: It was a contract of loan. In addition to the evidence, there is
one very cogent reason which impels us to the conclusion that
Rubiato is only responsible to the plaintiff for a loan. It is — that
the inadequacy of the price which Vila obtained for the eight
parcels of land belonging to Rubiato is so great that the minds
revolts at it. Xxx The members of this court after most particular
and cautious consideration, having in view all the facts and all the
naturals tendencies of mankind, consider that Rubiato is only
responsible to the plaintiff for the loan of P800.
16. PNB v. Gonzales 45 Phil. 693
SYLLABUS
WHEN SALE SHOULD NOT BE SET ASIDE. — In the absence of fraud,
collusion, accident, mutual mistake, breach of trust or misconduct
by the purchaser, it is not a matter of discretion with the trial court
to rescind the sale of real property which it has once confirmed.
WHAT SHOWING SHOULD BE MADE. — Where a sale has been
fairly and regularly made and confirmed by the trial court, it should
not be set aside for inadequacy of price alone without a proper
showing that in the event a resale was made the property would
sell at an increased price.
WHEN INADEQUACY OF PRICE ALONE IS NOT SUFFICIENT. — In the
absence of other evidence of its unfairness, a judicial sale of real
property will not be set aside for inadequacy of price alone, unless
the inadequacy of price alone, unless the inadequacy be so great
as to shock the conscience of the court.
STATEMENT
November 23, 1921, the Philippine National Bank
commenced a suit against Manuel Ernesto Gonzalez to
foreclose a real mortgage made to secure a promissory note for
P15,000. March 17, 1922, the plaintiff bank filed an amended
complaint against the same defendant, in which the original
was reproduced, to foreclose a second mortgage for P15,000
upon the same land described in the original complaint. The
defendant was duly served in both proceeding with both the
original and amended complaints, and made defaults in both
cases. On April 21, 1922, the bank filed a motion for default.
August 8, 1922, the court declared the defendant in default,
and set the case for hearing on August 23, 1922, at which time
the bank appeared and presented proofs of all the facts alleged
in its original and amended complaints. August 28, 1922, the
court rendered judgment in favor of the bank and against the
defendant, requiring him within three months from that date to
pay the plaintiff the amount of the two mortgage in question,
with the interest and costs, and that in default thereof,
execution should be issued for the sale of the property to
satisfy the judgment. December 7, 1922, and for want of any
payment, the plaintiff moved the court for an execution, and on
January 11, 1923, an execution was issued for the sale of the
real property described in the mortgages to satisfy the amount
of the judgment. On August 28, 1922, the total of the judgment
in the first cause of action, including the interest, was
P17,313.59, and in the second mortgage, on the same date, it
was P17,755.
The property advertised for sale was evidenced by
Torrens Certificate of Title and described in Exhibit A, B and C,
of which Exhibit A contains 3,657,703 square meters, Exhibit B
1,335,505 square meters and Exhibit C 263,765 square meters.
Pursuant to the execution the property was duly advertised for
sale, and that described in Exhibit B and C was sold to Saturnino
Lopez, the appellant here, for P15,000, that being the highest
bid, and he being the highest bidder.
February 16, 1923, the sheriff filed a motion to
confirm the sale to Lopez, which was set down for hearing on
March 9, 1923, and due notice was given to all the parties in
interest. At a hearing on that date, the court made an order
duly confirming the sale.
April 5, 1923, the defendant Gonzalez, through his
then attorney, filed the following motion:
"Comes now the defendant and to
the Honorable Court respectfully shows that he
applies for a reconsideration of the order
entered in this case under date of March 9,
1923, confirming the sale at public auction
made by the deputy provincial sheriff Mr. Jose
V. Lopez in favor of Mr. Saturnino Lopez of the
two parcels of land included in certificate of
title No. 5136 of the property of the defendant
and judgment debtor Mr. Manuel Ernesto
Gonzalez. This motion is based on the following
ground:
"That said order is not in accordance
with law."
It was set down for hearing on April 7, 1923, and
notice was duly given. April 16, 1923, the court rendered a
decision in which he found as a fact that all the necessary
requisites for the notice of sale had been duly complied with
but that it appeared that the value of the land, which was sold
to the appellant, was P45,940, for which he did only P15,000,
and on account of this difference in value for taxation purposes
and the value for which the land was sold the court set aside
the confirmation and ordered a resale "thereby giving the
aforesaid defendant a greater opportunity in order that he may
obtain a better price, if possible, from the sale of the aforesaid
lands." From the order, Lopez appeals, assigning as error that
"the trial court erred in setting aside, without good cause
having been shown, the prior order confirming the judicial sale,
and ordering the resale of the land in question."
((((NO DIGEST)))))
17. De Leon v. Salvador GR 30871 Dec. 28, 1970
Doctrine: PRICE ON FORCED SALES DISTINGUISHED FROM PRICE ON ORDINARY
SALES:
In ordinary sales, by reasons of equity, a transaction may be
invalidated on the ground of inadequacy of price.
In forced sales, as when a sale is made at a public auction,
the owner has the right to redeem. When there is a right to
redeem, inadequacy of price is immaterial because judgment
debtor canbetter acquire the property or also sell his right to
redeem and thus recover the loss he claims to have suffered by
reason of the price obtained from the auction sale.
Facts: Eusebio Bernabe’s (judgment debtor) properties were
garnished and sold in an auction sale to satisfy a
judgment in a civil case for damages, ordered by the court of Judge
Fernando Cruz, in favor of EnriqueDe Leon. The highest bidder for
the total sum of P30,194.00 was Aurora de Leon, sister of judgment
creditor and herein petitioner. Bernabe was given a redemption
period of 1 year commencing from thetime of the auction sale,
however, instead of redeeming his properties, he filed a case to
annul theauction sale on the ground of gross inadequacy of price
and for the ordering of a new auction sale. Heclaimed that his
properties, taken together, can cost around P400,000.00. This
second case was assignedto the court of Judge Serafin Salvador who
issued a writ of injunction against respondents andsummarily
granted the motions of Bernabe. Hence, Aurora files this case
questioning the jurisdiction ofJudge Salvador to issue such orders.
Issue: Can the auction sale be annulled on the ground of inadequacy
of price?
Held: NO.
In ordinary sales, by reasons of equity, a transaction may be
invalidated on the ground ofinadequacy of price. In forced sales, as
when a sale is made at a public auction, the owner has theright to
redeem. When there is a right to redeem, inadequacy of price is
immaterial because judgmentdebtor can better acquire the property
or also sell his right to redeem and thus recover the loss heclaims to
have suffered by reason of the price obtained from the auction sale.
***ABSOLUTE AND RELATIVE SIMULATION OF CONTRACT***
18. Heirs of Ureta v. Heirs of Ureta Sept. 14, 2011
Facts: In his lifetime, Alfonso Ureta (Alfonso) begot 14 children,
namely, Policronio, Liberato, Narciso, Prudencia, Vicente, Francisco,
Inocensio, Roque, Adela, Wenefreda, Merlinda, Benedicto, Jorge,
and Andres. The children of Policronio (Heirs of Policronio), are...
opposed to the rest of Alfonso's children and their descendants
(Heirs of Alfonso).
Alfonso was financially well-off during his lifetime. He owned several
fishpens, a fishpond, a sari-sari store, a passenger jeep, and was
engaged in the buying and selling of copra. Policronio, the eldest,
was the only child of Alfonso who failed to finish schooling and
instead... worked on his father's lands.
Sometime in October 1969, Alfonso and four of his children, namely,
Policronio, Liberato, Prudencia, and Francisco, met at the house of
Liberato. Francisco, who was then a municipal judge, suggested that
in order to reduce the inheritance taxes, their father should make
it... appear that he had sold some of his lands to his children.
Accordingly, Alfonso executed four (4) Deeds of Sale covering
several parcels of land in favor of Policronio,[4] Liberato,[5]
Prudencia,[6] and his... common-law wife, Valeriana Dela Cruz.[7]
The Deed of Sale executed on October 25, 1969, in favor of
Policronio, covered six parcels of land, which are the properties in
dispute in this case.
Since the sales were only made for taxation purposes and no
monetary consideration was given, Alfonso continued to own,
possess and enjoy the lands and their produce.
Policronio died on November 22, 1974. Except for the said portion of
parcel 5, neither Policronio nor his heirs ever took possession of the
subject lands.
On April 19, 1989, Alfonso's heirs executed a Deed of Extra-Judicial
Partition
Conrado, Policronio's eldest son,... representing the Heirs of
Policronio, signed the Deed of Extra-Judicial Partition in behalf of his
co-heirs.
After their father's death, the Heirs of Policronio found tax
declarations in his name covering the six parcels of land. On June 15,
1995, they obtained a copy of the Deed of Sale executed on October
25, 1969 by Alfonso in favor of Policronio.
Not long after, on July 30, 1995, the Heirs of Policronio allegedly
learned about the Deed of Extra-Judicial Partition involving Alfonso's
estate when it was published in the July 19, 1995 issue of the Aklan
Reporter.
Believing that the six parcels of land belonged to their late father,
and as such, excluded from the Deed of Extra-Judicial Partition, the
Heirs of Policronio sought to amicably settle the matter with the
Heirs of Alfonso. Earnest efforts proving futile, the Heirs of
Policronio... filed a Complaint for Declaration of Ownership,
Recovery of Possession, Annulment of Documents, Partition, and
Damages[9] against the Heirs of Alfonso before the RTC on
November 17, 1995
On April 26, 2001, the RTC dismissed the Complaint of the Heirs of
Policronio and ruled in favor of the Heirs of Alfonso in a decision
The RTC found that the Heirs of Alfonso clearly established that the
Deed of Sale was null and void.
The RTC further found that there was no money involved in the sale.
Even granting that there was, as claimed by the Heirs of Policronio,
?2,000.00 for six parcels of land, the amount was grossly inadequat
Aggrieved, the Heirs of Policronio appealed before the CA,...
Aggrieved, the Heirs of Policronio appealed before the CA, which
rendered a decision on April 20, 2004, the dispositive portion of
which reads as follows:
WHEREFORE, the appeal is PARTIALLY GRANTED. The appealed
Decision, dated 26 April 2001, rendered by Hon. Judge Dean R. Telan
of the Regional Trial Court of Kalibo, Aklan, Branch 9, is hereby
AFFIRMED with MODIFICATION:
1.) The Deed of Sale in favor of Policronio Ureta, Sr., dated 25
October 1969, covering six (6) parcels of land is hereby declared
VOID for being ABSOLUTELY SIMULATED;
2.) The Deed of Extra-Judicial Partition, dated 19 April 1989, is
ANNULLED;
3.) The claim for actual and exemplary damages are DISMISSED for
lack of factual and legal basis.
The case is hereby REMANDED to the court of origin for the proper
partition of ALFONSO URETA'S Estate in accordance with Rule 69 of
the 1997 Rules of Civil Procedure. No costs at this instance.
SO ORDERED.
Issues:
(1) whether or not the Deed... of Sale was valid;
(2) whether or not the Deed of Extra-Judicial Partition was valid; and
Ruling:
Validity of the Deed of Sale
Two veritable legal presumptions bear on the validity of the Deed of
Sale: (1) that there was sufficient consideration for the contract; and
(2) that it was the result of a fair and regular private transaction.
First, the Deed of Sale was not the result of a fair and regular private
transaction because it was absolutely simulated.
The Heirs of Policronio posited that his loyal services to his father
and his being the eldest among Alfonso's children, might have
prompted the old man to sell the subject lands to him at a very low
price as an advance inheritance.
They explained that Policronio's failure to... take possession of the
subject lands and to claim their produce manifests a Filipino family
practice wherein a child would take possession and enjoy the fruits
of the land sold by a parent only after the latter's death.
They contended that Policronio's failure to take actual possession of
the lands did not prove that he was not the owner as he was...
merely exercising his right to dispose of them.
The Court disagrees.
The Court finds no cogent reason to deviate from the finding of the
CA that the Deed of Sale is null and void for being absolutely
simulated. The Civil Code provides:
Art. 1345. Simulation of a contract may be absolute or relative. The
former takes place when the parties do not intend to be bound at
all; the latter, when the parties conceal their true agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third person and is
not intended for any purpose contrary to law, morals, good customs,
public order or public policy binds the parties to their real...
agreement.
19. Phil. Banking Corp. v. Dy GR 183774; Nov. 14, 2012
Facts: The spouses Delgado entered into an agreement with a
certain Cecilia Tan for the purchase of the former’s property by the
latter to be paid in installment, or from time to time, until the Sps.
Delgado are ready to execute a deed of sale and transfer the title to
Tan upon full payment. Tan however later on found out that the
property had already been transferred to the name of the Dys and
had been mortgaged to Philbank. Tan filed an action for specific
performance and annulment of the title of the Dys. The Delgados
contend that there was no perfected sale between them and Tan as
she did not agree on the selling price and that the sale and transfer
of the property of the Dys was fictitious and was only made in order
for the Dys to enable the Delgados to mortgage the property and
obtain a loan from PhilBank. The Delgados contend that PhilBank is
not a mortgagee in good faith as it was aware of the fictitious nature
of the sale of the porerty. While PHilBank avers that they are a
mortgagee in good faith and should not be held liable to any of the
parties for damages. Tan subsequently abandoned her claim on the
property and the sale between the Dys and Delgados have been
rules as void which has become final and executory.
Issue: Is PhilBank a mortgagee in good faith?
Ruling: A finding of negligence must always be contextualized in line
with the attendant circumstances of a particular case. As aptly held
in Philippine National Bank v. Heirs of Estanislao Militar, "the
diligence with which the law requires the individual or a corporation
at all times to govern a particular conduct varies with the nature of
the situation in which one is placed, and the importance of the act
which is to be performed." Thus, without diminishing the time-
honored principle that nothing short of extraordinary diligence is
required of banks whose business is impressed with public interest,
Philbank's inconsequential oversight should not and cannot serve as
a bastion for fraud and deceit. To be sure, fraud comprises "anything
calculated to deceive, including all acts, omissions, and concealment
involving a breach of legal duty or equitable duty, trust, or
confidence justly reposed, resulting in damage to another, or by
which an undue and unconscientious advantage is taken of
another." In this light, the Dys' and Sps. Delgado's deliberate
simulation of the sale intended to obtain loan proceeds from and to
prejudice Philbank clearly constitutes fraudulent conduct. As such,
Sps. Delgado cannot now be allowed to deny the validity of the
mortgage executed by the Dys in favor of Philbank as to hold
otherwise would effectively sanction their blatant bad faith to
Philbank's detriment. As the Dys and Delgados conspired together to
induce PhilBank in mortgaging the property through fraud, PHilBank
cannot be considered as negligent or a mortgagee in bad faith.
20. Barretto vs. Sta. Maria
CONTRACTS; INTERPRETATION. — The whole contract must be
interpreted or read together in order to arrive at its true meaning.
Certain stipulations cannot be segregated and then made to
control, neither do particular words and phrases necessarily
determine the character of the contract. The legal effect of the
contract is not to be determined alone by any particular provision
disconnected from all other, but in the ruling intention of the
parties as gathered from all the language they have used and from
their contemporaneous and subsequent acts.
SALES; REQUISITES OF PERFECTED SALE. — It is necessary to a
perfected sale that the parties agree upon the thing sold and that
the price be fixed, it being sufficient for the latter purpose that the
price be left to the judgment of a specified person. (Articles 1450
and 1447, Civil Code.)
ID.; ID.; FACTS IN THIS CASE. — Plaintiff executed a document
whereby he agreed to transfer to the defendant "the whole of the
right, title, and interest" he had in a joint stock association, at the
same time agreeing that the ascertainment of the price of his share
should depend unreservedly upon the appraisement made by
three appraisers of the total value of the association's property.
The appraisers occupied about six months in making the
appraisement and in their report there was no indication that any
attempt had been made to segregate accumulated profits from
other assets of the association. Plaintiff had participated in the last
distribution of profits made by the association prior to the time he
accepted payment for his share. Upon the completion of the
defendant's report plaintiff executed a document whereby he
acknowledged receipt of the price arrived at by the appraisers, and
further stated that he relinquished from that date all intervention,
claim, right or action that he had in said business. Held, That
plaintiff sold his share of the accumulated profits.
FACTS: The La Insular cigar and cigarette factory is a joint account
association with a nominal capital of P865,000, the plaintiff's share
is P20,000, or 4/173 of the whole. The plaintiff's attorneys wrote
the defendant's local representative a letter offering to sell
plaintiff's share in the factory. The result of the correspondence
between the parties and their representatives was that Exhibit G
was duly executed on May 3, 1910. In accordance with the terms
of this exhibit a committee of appraisers was appointed to
ascertain and fix the actual value of La Insular. The committee
rendered its report on November 14, 1910, fixing the net value at
P4,428,194.44. Subsequently to the execution of Exhibit J, demand
was made by the plaintiff upon the defendant for his share of the
profits from June 30, 1909, to November 22, 1910. This demand
was refused and thereupon this action was instituted to recover
said profits. The plaintiff argued that if the agreement of May 3,
1910, was a perfected sale he cannot recover any profits after that
date; while on the other hand the defendant concedes that if said but the possession of that interest was also then transferred to the
agreement was only a promise to sell in the future it, standing defendant. (Art. 1462, Civil Code; Uy Piaoco vs. McMicking, 10 Phil.
alone, would not prevent recovery in this action. Rep., 286.)
ISSUE: Whether the agreement made by the parties on May 3, 1910
was a perfected contract of sale.
HELD: YES, it was a perfected contract of sale. Article 1450 of the
Civil Code reads: "The sale shall be perfected between vendor and
vendee and shall be binding on both of them, if they have agreed
upon the thing which is the object of the contract and upon the
price, even when neither has been delivered." This is
supplemented by Article 1447 of the Code which reads as follows:
"In order that the price may be considered fixed, it shall be
sufficient that it be fixed with regard to another determine thing
also specific, or that the determination of the same be left to the
judgment of a specified person." The contract of May 3, 1910,
provides that:"Whereas the respective contracting parties have
agreed, the one to sell and the other to buy the whole of the right,
title and interest of the said Antonio Maria Barretto in and to the
said joint account association, including not only the individual
participation of the said party of the second part standing on the
books of the association in the name of Antonio M. Barretto, but
also one-half of the share in the business which stands on the books
in the name of Barretto & Company constituting a total nominal
share of P54,700 Philippine currency in the total nominal capital of
P865,000 Philippine currency” Under article 1450, supra there are
two indispensable requisites in a perfected sale: (1) There must be
an agreement upon the things which is the object of the contract;
and (2) the contracting parties must agree upon the price. The
object of the contract in the case at bar was the whole of the
plaintiff's right, title, and interest in La Insular. This whole was
4/173 of the entire net value of the business. The parties agreed
that the price should be 4/173 of the total net value. The fixing of
such net value was unreservedly left to the judgment of the
appraisers. As to the thing and the price the minds of the
contracting parties met, and all questions relating thereto were
settled. Nothing was left unfinished in so far as the contracting
parties were concerned. Neither party could withdraw from the
contract without the consent of the other. The result is that the two
essential requisites necessary to constitute a perfected sale were
present. We find that the parties did not only agree "the one to sell
and the other to buy" and that "one will immediately sell and the
other will immediately buy" the whole of the plaintiff's interest but
that they were unable to agree "as to the true present value of the
said interest;" they did agree, however, upon the method of fixing
and determining such value by appointing appraisers for this
purpose. It was the duty of the appraisers to hear the respective
claims of the one and the other party relative to the value and
assets of the business, "and in accordance with the proof adduced
relative to said values to fix and determine the same for the
purposes of the purchase and sale above mentioned." They did not
say for the purpose of a sale to be made in the future. Is the
language, "for the purposes of the purchase and sale above
mentioned" any the less significant or controlling than that relied
upon by the plaintiff found in the first and fifth paragraph? When
the parties used this language they had in mind the purchase and
sale which they had just made. According to the ordinary and well-
understood use of the words "purchase" and "sale" they mean, in
the absence of any expression to limit their significance, a
transmutation of property from one party to another in
consideration of some price or recompense in value; a transmission
of property by a voluntary act or agreement, founded on a valuable
consideration; divesting the title out of the vendor and vesting it in
the vendee. Again, not only was the title of the plaintiff's interest
vested in the defendant on the execution of the contract of May 3