Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |1 2B 2010-2011

PRINCIPLE/ DOCTRINE Contract of Sale That which where one o the contracting !arties o"ligates hi#sel to trans er the ownershi! o and to deliver a deter#inate thing$ and to !a% there a !rice certain in #one% or its e&uivalent' ((rt' 1)*+) ( contract o sale #a% either "e: 1' Absolute , one where the title to the !ro!ert% is not reserved to the vendor or i the vendor is not granted the right to rescind the contract "ased on the ul il#ent or non- ul il#ent$ as the case #a% "e$ o the !rescri"ed condition'

CASE TITLE Dignos vs. CA

CASE DETAILS Facts: The Dignos s!ouses owned a !arcel o land$ which was sold to !lainti a!!ellant -a"il or the su# o .2+$000 !a%a"le in two install#ents' /eanwhile$ the Dignos s!ouses sold the sa#e land to Ca"igas s!ouses' (s the Dignos s!ouses re used to acce!t the second !a%#ent and u!on discover% o the second sale$ -a"il "rought this suit' .etitioners contend that the Deed o Sale is a #ere contract to sell and not an a"solute sale0 that the sa#e is su"1ect to two !ositive conditions' 2t is urther contended that in said contract$ title or ownershi! over the !ro!ert% was e3!ressl% reserved in the vendor until the sus!ensive condition o ull and !unctual !a%#ent o the "alance o the !urchase !rice shall have "een #et' Thus$ there is no actual sale until ull !a%#ent is #ade' Issue: 456 the contract is a Deed o ("solute Sale or a Contract to Sell' Rulin : The contract is a Deed o ("solute Sale' ( Deed o Sale is a"solute in nature although deno#inated as a 7Deed o Conditional Sale8 where nowhere in the contract in &uestion is a !roviso or sti!ulation to the e ect that title to the !ro!ert% sold is reserved in the vendor until ull !a%#ent o the !urchase !rice$ nor is there a sti!ulation giving the vendor the right to unilaterall% rescind the contract the #o#ent the vendee ails to !a% within a i3ed !eriod'

2' Conditional , one where the vendor is

granted the right to unilaterall% rescind the contract !redicated on the ul il#ent or non- ul il#ent$ as the case #a% "e$ o the !rescri"ed condition' Ob!ect of Contract of Sale Thing #ust "e licit0 and 9aw ul$ i'e'$ within the co##erce o #an Things #a% "e licit: a' Per se (o its nature) "' Per accidens (#ade illegal "% !ossession o the law) The vendor #ust have a right to trans er the ownershi! thereo at the ti#e it is delivered' ((rt' 1)*:)

Artates Pojas vs. Urbi, Et. Al.

Facts: S!ouses (rtates and .o1as sought the annul#ent o the e3ecution o a ho#estead issued and dul% registered in their na#es' ( !u"lic sale was #ade to satis % a 1udg#ent against (rtates$ which a#ount was awarded to ;r"i or !h%sical in1uries' .lainti s!ouses alleged that said sale violated the !rovision o the .u"lic 9and 9aw e3e#!ting said !ro!ert% ro# e3ecution ro# an% de"t contracted within the ive-%ear !eriod ro# the date o the issuance o the !atent' Issue: 456 the e3ecution sale is valid' Rulin : The e3ecution sale is null and void' (s thus !rescri"ed "% law$ or a !eriod o ive %ears ro# the date o the govern#ent grant$ lands ac&uired "% ree or ho#estead !atent shall not onl% "e inca!a"le o "eing encu#"ered or alienated in avour o the govern#ent itsel or an% o its institutions or o dul% constituted "an<ing cor!orations$ "ut also$ the% shall not "e lia"le to the satis action o an% de"t contracted within the said !eriod$ whether or not the inde"tedness shall #ature during or a ter the !rohi"ited ti#e' This !rovision is #andator% and a sale #ade in violation thereo is null and void and !roduces no e ect' Though it #a% "e a li#itation on the right o ownershi! o the grantee$ the salutar% !ur!ose o the !rovision is to !reserve and <ee! or the ho#esteader or his a#il% the land given to hi# gratuitousl% "% the State$ so that "eing a !ro!ert% owner$ he #a% "eco#e and re#ain a contented and use ul #e#"er o

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |" 2B 2010-2011

Heirs of Enrique Zambales vs. CA

the societ%' Facts: The =a#"ales s!ouses were the ho#estead !atentees o a !arcel o land' Clai#ing that the 6in Ba% /ining Cor!' had re#oved silica sand ro# their land and destro%ed the !lants and other i#!rove#ents therein$ the% instituted a case clai#ing or da#ages' The =a#"ales s!ouses entered into a Co#!ro#ise (gree#ent with the Cor!oration0 "% virtue o which$ the dis!uted !ro!ert% was sold to one .re%sle%' Ten %ears a ter the Trial Court>s decision "ased on the Co#!ro#ise (gree#ent and nine %ears a ter the sale$ the =a#"ales s!ouses iled a civil case or annul#ent o the Deed o Sale with recover% o !ossession and ownershi! with da#ages$ contending that it was their law%er who !revailed u!on the# to sign the Co#!ro#ise (gree#ent0 that the% wer unschooled and did not understand the contents thereo ' Issue: 456 the Co#!ro#ise (gree#ent violates the alienation and encu#"rance o a ho#estead lot within ive %ears ro# the issuance o the !atent' Rulin : The sale is void' The law does not distinguish "etween e3ecutor and consu##ated sales' The "ilateral !ro#ise to "u% and sell the ho#estead lot at a !rice certain$ which was reci!rocall% de#anda"le$ was entered into within the ive-%ear !rohi"itor% !eriod and is there ore$ illegal and void' To all interests and !ur!oses$ there ore$ there was an actual e3ecutor% sale !er ected during the !eriod o !rohi"ition e3ce!t that it was reci!rocall% de#anda"le therea ter and the agenc% to sell to an% third !erson was de erred until a ter the e3!iration o the !rohi"itor% !eriod$ and the agenc% to sell #ade e ective onl% a ter the la!se o the said !eriod$ was #erel% a devise to circu#vent the !rohi"ition' The "ilateral !ro#ise to "u% and sell and the agenc% to sell entered into within ive %ears ro# the date o the ho#estead !atent was in violation o the .u"lic 9and 9aw$ although the e3ecuted sale was de erred until a ter the e3!iration o the ive-%ear !rohi"itor% !eriod' Facts: ( contract was entered into "% and "etween ?uiroga and .arsons or the e3clusive sale o ?uiroga "eds in the @isa%an 2slands' The tenor o said contract !rovides that ?uiroga shall urnish "eds o his #anu acture to .arsons or the latter>s esta"lish#ent in 2loilo$ and shall invoice the# at the sa#e !rice he i3ed or sales in /anila$ and in the invoices$ shall #a<e an allowance o a discount as co##ission on the sales0 and .arsons shall order the "eds "% the doAen$ whether o the sa#e or di erent st%les' .arsons urther "inds hi#sel to !a% ?uiroga or the "eds received within B0 da%s ro# the date o their shi!#ent$ and "inds hi#sel not to sell an% other <ind e3ce!t ?uiroga "eds' ?uiroga contends that .arsons violated the ollowing o"ligations: not to sell "eds at higher !rices than those o the invoices$ to have an o!en esta"lish#ent in 2loilo0 to conduct the agenc%$ to <ee! the "eds on !u"lic e3hi"ition$ and to !a% or the advertise#ent e3!enses or the sa#e$ and to order the "eds "% the doAen and in no other #anner' Ce urther alleged that .arsons was his agent or the sale in 2loilo$ and said o"ligations are i#!lied in a contract o co##ercial agenc%'

Contract of Sale #s$ A enc% to Sell Contract of Sale Bu%er !a%s the !rice' A enc% to Sell The agent delivers the !rice which he turn he got ro# his "u%er' The agent who is su!!osed to sell does not "eco#e the owner$ even i the !ro!ert% has "een delivered to hi#' The agent who sells assu#es no !ersonal lia"ilit% as long as he acts within his

Quiroga vs. Parsons Hard are Co.

The "u%er a ter the deliver% "eco#es the owner'

The seller warrants'

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |& 2B 2010-2011

authorit% and in the na#e o the !rinci!al' The "u%er$ as general The agent can return rule$ cannot return the o"1ect in case he the o"1ect sold' is una"le to sell the sa#e to a third !erson' The "u%er can deal The agent in dealing with the thing sold as with the thing he !leases "eing the received$ #ust act owner' and is "ound according to the instructions o his !rinci!al' Contract of Sale #s$ Contract for a Piece of 'or( Rules To Deter)ine if Sale/Piece of 'or(: Sale , i ordered in the ordinar% course o "usiness' Piece of work , i #anu actured es!eciall% or the custo#er and u!on his s!ecial order$ and not or the general #ar<et' Sale the thing trans erred is one which would have e3isted and would have "een the su"1ect o sale to so#e other !erson$ even i the order had not "een given the !ri#ar% o"1ective o the contract is sale o the #anu actured ite#0 it is a sale o goods even though the ite# is #anu actured "% la"or urnished "% the seller and u!on !revious order o the custo#er governa"le "% the statute o rauds Contract For Piece Of 'or( the thing trans erred is not in e3istence and would never have e3isted "ut or the order o the !art% desiring to ac&uire it the services do#inate the contract even though there is a sale o goods involved

Issue: 456 .arsons$ "% reason o the contract$ was a !urchaser or an agent o ?uiroga' Rulin : The contract entered into "% the !arties is one o a !urchase and sale' 2n the contract in &uestion$ what was essential$ as constituting the cause and su"1ect #atter$ is that ?uiroga was to urnish .arsons with "eds which the latter #ight order$ at the !rice sti!ulated$ and that .arsons was to !a% the !rice in the #anner sti!ulated' These eatures e3clude the legal conce!tion o an (genc% or 5rder to Sell$ where"% the #andator% or agent received the thing to sell it$ and does not !a% its !rice$ "ut delivers to the !rinci!al the !rice he o"tains ro# the sale o the thing to a third !erson$ and i he does not succeed in selling it$ he returns it'

Con!rete Aggregates vs. C"A

Facts: Concrete (ggregates 2nc' is a do#estic cor!oration which !rocesses roc< aggregates #ined "% it ro# !rivate lands and !roduce read%-#i3ed concrete and !lant-#i3ed hot as!halt' ;!on the investigation conducted "% the CT($ the !eitioner is lia"le to !a% ta3es which the latter dis!utes' .etitioner contends that it is a contractor su"1ect onl% to the DE contractorFs ta3 under Section 1:1 o the 1:B+ 6ational 2nternal Revenue Code and not a manufacturer su"1ect to the GE sales ta3 under Section 1+B o the sa#e Code' Issue: 456 the !etitioner is a contractor or a #anu acturer' Rulin : Concrete (ggregates 2nc' is a #anu acturer' .etitionerFs raw #aterials are !rocessed under a !rescri"ed or#ula and there"% changed "% #eans o #achiner% into a inished !roduct$ altering their &ualit%$ trans or#ing the# into #ar<eta"le state or !re!aring the# or an% o the s!eci ic uses o industr%' A contract to )a(e is a contract of sale if t*e article is alread% substantiall% in e+istence at t*e ti)e of t*e order and )erel% re,uires so)e alteration- )odification or ada.tation to t*e bu%er/s 0is*es or .ur.oses$ A contract for t*e sale of an article 0*ic* t*e #endor in t*e ordinar% course of *is business )anufactures or .rocures for t*e eneral )ar(et- 0*et*er t*e sa)e is on *and at t*e ti)e or not is a contract for t*e sale of oods$ CONTRACTOR H one who underta<es to do a s!eci ic 1o" or !iece o wor< or other !ersons$ using his own #eans and #ethods HTR;I TIST: renders service in the or# o inde!endent occu!ation$ re!resenting the will o his e#!lo%er onl% as to the result o his wor<

not within the statute o rauds

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |1 2B 2010-2011

Perfection Of Contract of Sale Jeneral Rule: The contract o sale is !er ected the #o#ent there is a #eeting o #inds u!on the thing which is the o"1ect o the contract and u!on the !rice'((rt'1)G*) I3ce!tion: 4hen the sale is su"1ect to a sus!ensive condition "% virtue o law or sti!ulation' 2n C56D2T256(9 5B92J(T256S the ac&uisition o rights$ as well as the e3tinguish#ent or loss o those alread% ac&uired$ shall de!end u!on the ha!!ening o the event which constitutes the condition' ((rt' 11+1) Rules 1' 4hen the o er is acce!ted without conditions or &uali ications$ the sale is !er ected' 2' 2 the acce!tance is with conditions or &uali ications$ the sale is not !er ected or such is e&uivalent to a counter-o er' KThe acce!tance #ust "e certain$ a"solute and co#!lete'

Peo#les Homesite and Housing Cor#. vs. C"A

Facts: The .CCC "oard o directors !assed Resolution 6o' *1D awarding to S!ouses /endoAa the Consolidation Su"division .lan on 9ot ) subject to the approval of the Quezon City Council. The cit% council disa!!roved the said !ro!osed !lan' Cowever a!!roval was #ade "% the said council u!on su"#ission o a revised !lan reducing the land area' 9ater on$ .CCC "oard o directors !assed another resolution withdrawing the tentative award to the /endoAa -s!ouses who never !aid the !rice o the lot nor #ade the 20E initial de!osit' The s!ouses contend that there was a !er ected sale o 9ot ) thus the% can en orce against the .CCC an action or s!eci ic !er or#ance' Issue: 456 there was a !er ected contract o sale' Rulin : There was no !er ected contract o sale o 9ot )' 2t was conditionall% or contingentl% awarded to the /endoAas su"1ect to the a!!roval "% the cit% council o the !ro!osed consolidation su"division !lan and the a!!roval o the award "% the valuation co##ittee and higher authorities' 4hen the !lan with the area o 9ot ) reduced to 2$B0+'G s&uare #eters was a!!roved$ the /endoAas should have #ani ested in writing their acce!tance o the award or the !urchase o 9ot ) 1ust to show that the% were still interested in its !urchase although the area was reduced and to o"viate all% dou"t on the #atter' The% did not do so' The .CCC "oard o directors acted within its rights in withdrawing the tentative award' 4e cannot sa% there was a #eeting o #inds on the !urchase o 9ot )' Facts: Sosa wanted to !urchase a To%ota 9ite (ce' u!on contacting To%ota Shaw$ 2nc'$ he was told that there was an availa"le unit' Sosa and his son$ Jil"ert$ went to the To%ota and #et Bernardo$ a sales re!resentative o To%ota' The !arties agreed that the car shall "e delivered on -une 1G$ 1:+: and that the "alance o the !urchase !rice would "e !aid "% credit inancing through B'(' Linance' The% acco#!lished a !rinted @ehicle Sales .ro!osal (@S.) which shows that the custo#erFs na#e$ ho#e address $ the #odel series o the vehicle$ the install#ent #ode o !a%#ent with the initial cash outla% down' 5n the date o the deliver%$ the vehicle was not delivered' To%ota alleged that no sale was entered into "etween it and Sosa' Issue: 456 the stnadard @S. woul d re!resent a contract o sale "etween the !arties' Rulin : 6either logic nor recourse to oneFs i#agination can lead to the conclusion that @S. is a perfected contract of sale' 2t is not a contract o sale$ thus no o"ligation on the !art o To%ota to trans er ownershi! o a deter#inate thing to Sosa and no correlative o"ligation on the !art o the latter to !a% there or a !rice certain a!!ears therein' A definite a ree)ent on t*e )anner of .a%)ent of t*e .rice is an essential ele)ent in t*e for)ation of a bindin and enforceable contract of sale$ T*is is so because t*e a ree)ent as to t*e )anner of .a%)ent oes into t*e .rice suc* t*at a disa ree)ent on t*e )anner of .a%)ent is tanta)ount to a failure to a ree on t*e .rice$ Definiteness as to t*e .rice is an essential ele)ent of a bindin a ree)ent to sell .ersonal .ro.ert%$ The @S. was a #ere proposal which was a"orted in lieu o su"se&uent

"o$ota %&a , 'n!. vs. CA

Lor and o er to "e valid$ it #ust "e

certaindefinite and intentional((rt'1D1:) 4hen the sale is su"1ect to a sus!ensive condition: ro# the )o)ent t*e condition is fulfilled$

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |2 2B 2010-2011

(im)et)ai %ons *illing, 'n!. vs. CA

events' 2t ollows that the @S. created no de#anda"le right in avor o Sosa or the deliver% o the vehicle to hi#$ and its non-deliver% did not cause an% legall% inde#ni ia"le in1ur%' Facts: .hili!!ine Re#nants Co'$ 2nc' constituted B.2 as its trustee to #anage$ ad#inister$ and sell its real estate !ro!ert%' B.2 gave Revilla the or#al authorit%$ to sell the lot or .1$000'00 !er s&uare #eter' Revilla contacted 9i#<et<ai Son>s /illing who agreed to "u% the land' There were negotiatons on the !rice and the ter# o !a%#ent "etween B.2 and the 9i#<et<ai until agree#ent has "een reached' B.2 later on re used the !a%#ent tendered "% the !etitioner and sold the !ro!ert% to 6BS instead' Issue: 456 there was a #eeting o #ind "etween 9i#<et<ai and B.2' Rulin : There was a !er ected contract o sale "etween 9i#<et<ai and B.2' The negotiation or !re!aration stage started with the authorit% given "% .hili!!ine Re#nants to B.2 to sell the lot$ ollowed "% (a) the authorit% given "% B.2 and con ir#ed "% .hili!!ine Re#nants to "ro<er Revilla to sell the !ro!ert%$ (") the o er to sell to 9i#<et<ai$ (c) the ins!ection o the !ro!ert% and inall% (d) the negotiations with (ro#in and (l"ano at the B.2 o ices' The !er ection o the contract too< !lace when (ro#in and (l"ano$ acting or B.2$ agreed to sell and (l onso 9i# with (l"ino 9i#<et<ai$ acting or !etitioner 9i#<et<ai$ agreed to "u% the dis!uted lot at .1$000'00 !er s&uare #eter' (side ro# this there was the earlier agree#ent "etween !etitioner and the authoriAed "ro<er' There was a concurrence o o er and acce!tance$ on the o"1ect$ and on the cause thereo ' Consent is )anifested b% t*e )eetin of t*e offer and t*e acce.tance u.on t*e t*in and t*e cause 0*ic* are to constitute t*e contract$ T*e offer )ust be certain and t*e acce.tance absolute$ %o long as it is !lear t&at t&e meaning of t&e a!!e#tan!e is #ositivel$ and unequivo!all$ to a!!e#t t&e offer, &et&er su!& request is granted or not, a !ontra!t is formed. Facts: 5n /arch 2)$ 1:*D$ (tlantic granted Southwestern an o!tion !eriod to "u% the or#ers "arge' 5n /a% 11 o the sa#e %ear$ Southwestern Co#!an% co##unicated its acce!tance o the o!tion to (tlantic' The latter re!lied that their understanding was that the Mo er o o!tionM is to "e a cash transaction and to "e e ected Mat the ti#e the lighter is availa"le'M 5n -une 2*$ (tlantic advised the Southwestern Co#!an% that the "arge could not "e turned over to the latter co#!an%' 5n -une 2G$ 1:*D$ the Southwestern Co#!an% iled this action to co#!el (tlantic to sell the "arge in line with the o!tion$ de!ositing with the court a chec< covering the a#ount$ "ut said chec< was later withdrawn with the a!!roval o the court' 5n -une 2:$ the (tlantic withdrew its Mo er o o!tionM with due notices to Southwestern Co#!an%' The (tlantic contended that the o!tion to sell it #ade to Southwestern Co#!an% is null and void "ecause said o!tion to sell is not su!!orted "% an% consideration'

Article 1134 5 1&"1 .ro#ise to "u% and sell vs' acce!ted unilateral !ro#ise to "u% or to sell: ( unilateral !ro#ise to sell$ to "e "inding$ #ust "e su!!orted "% a consideration distinct ro# a !rice$ which #eans that the o!tion can still "e withdrawn$ even i acce!ted $ i the sa#e is not su!!orted "% a consideration

%out& estern %ugar + *olasses Co. vs. Atlanti! ,ulf + Pa!ifi! Com#an$ -une ./00

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |6 2B 2010-2011

Issue: 4hether or not the o!tion to sell #ade to Southwestern Co#!an% is null and void "ecause said o!tion to sell is not su!!orted "% an% consideration' Rulin : The Su!re#e Court reversed the trial court>s decision a!!l%ing (rticle 1)G: o the new Civil Code' The Court reiterated that Man acce!ted unilateral !ro#iseM can onl% have a "inding e ect i su!!orted "% a consideration$ which #eans that the o!tion can still "e withdrawn$ even i acce!ted$ i said o!tion is not su!!orted "% an% consideration' The o!tion that (tlantic had !rovided was without consideration$ hence$ can "e withdrawn notwithstanding Southwestern Co#!an%>s acce!tance o said o!tion' Facts: 5n Se!te#"er 1D$ 1:*1$ (t<ins Nroll O Co' ((t<ins) sent a letter to Cu Cian Te< (Cian Te<) o ering to sell sardines with corres!onding &uantit%' Cian Te< unconditionall% acce!ted the said o er through a letter$ "ut (t<ins ailed to deliver the co##odities due to the shortage o catch o sardines "% the !ac<ers in Cali ornia' Cian Te<$ iled an action or da#ages in the CL2 o /anila which granted the sa#e in his avor' ;!on (t<ins> a!!eal$ the Court o (!!eals a ir#ed said decision' Issue: 456 there was a contract o sale "etween the !arties or onl% a unilateral !ro#ise to "u% Rulin : The Su!re#e Court held that there was a contract o sale "etween the !arties' .etitioner>s argu#ent assu#ed that onl% a unilateral !ro#ise arose when the res!ondent acce!ted the o er$ which is incorrect "ecause a "ilateral contract to sell and to "u% was created u!on res!ondent>s acce!tance' ( ter acce!ting the !ro#ise and "e ore he e3ercises his o!tion$ the holder o the o!tion is not "ound to "u%' 2n this case at "ar$ however$ u!on res!ondent>s acce!tance o herein !etitionerFs o er$ a "ilateral !ro#ise to sell and to "u% ensued$ and the res!ondent had i##ediatel% assu#ed the o"ligations o a !urchaser' Facts: 2n an instru#ent entitled M5!tion to .urchase$M e3ecuted on (!ril D$ 1:B1$ Severina Rigos Magreed$ !ro#ised and co##itted ''' to sellM to !lainti -a!!ellee 6icolas SancheA or the su# o .1$*10'00 within two (2) %ears ro# said date$ a !arcel o land situated in 6ueva Ici1a' 2t was agreed that said o!tion shall "e dee#ed Mter#inated and ela!sed$M i 7SancheA shall ail to e3ercise his right to "u% the !ro!ert%M within the sti!ulated !eriod' 5n /arch 12$ 1:BD$ SancheA de!osited the su# o .1$*10'00 with the CL2 o 6ueva Ici1a and iled an action or s!eci ic !er or#ance and da#ages against Rigos or the latter>s re usal to acce!t several tenders o !a%#ent that SancheA #ade to !urchase the su"1ect land'

The acce!tance o an o er to sell a deter#inate thing or a !rice certain creates a "ilateral contract to sell and to "u%' The o eree$ u!on acce!tance$ i!so acto aac&uires the o"ligation as the !urchaser' The o eror would "e lia"le or da#ages i he ails to deliver the thing he had o ered or sale'

At)ins 1roll + Co. vs. Cu Hian "e)

2n order that unilateral !ro#ise #a% "e "inding u!on the !ro#isor$ (rticle 1)G: re&uires that the !ro#ise "e su!!orted "% a consideration distinct ro# the !rice'

%an!&e2 vs. 3igos

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |3 2B 2010-2011

Issue: 456 there was a contract to "u% and sell "etween the !arties or onl% a unilateral !ro#ise to sell Rulin : The Su!re#e Court a ir#ed the lower court>s decision' The instru#ent e3ecuted in 1:B1 is not a Mcontract to "u% and sell$M "ut #erel% granted !lainti an Mo!tionM to "u%$ as indicated "% its own title M5!tion to .urchase'M The lower court relied u!on (rticle 1D*) o the Civil Code when it !resu#ed the e3istence o said consideration$ "ut the said (rticle onl% a!!lies to contracts in general' Cowever$ it is not (rticle 1D*) "ut the (rticle 1)G: o the sa#e Code which is controlling in the case at "ar "ecause the latter>s 2nd !aragra!h re ers to MsalesM in !articular$ and$ #ore s!eci icall%$ to Man acce!ted unilateral !ro#ise to "u% or to sell'M Since there #a% "e no valid contract without a cause or consideration$ the !ro#isor is not "ound "% his !ro#ise and #a%$ accordingl%$ withdraw it' .ending notice o its withdrawal$ his acce!ted !ro#ise !arta<es$ however$ o the nature o an o er to sell which$ i acce!ted$ results in a !er ected contract o sale' Facts: 5n 12 5cto"er 1:G0$ !etitioners e3ecuted a real estate #ortgage in avor o res!ondent "an<' .etitioners ailed to !a% the loan on due date' The "an< a!!lied or the e3tra1udicial oreclosure o the #ortgage' (t the oreclosure sale$ the res!ondent "an< was the highest and winning "idder' ( certi icate o sale was e3ecuted in its avor "% the sheri and the sa#e was registered with the 5 ice o the Register o Deeds' The certi icate o sale e3!ressl% !rovided that the rede#!tion !eriod shall "e two %ears ro# the registration thereo ' 6o rede#!tion was #ade "% !etitioners within the two-%ear !eriod and the sheri issued a Linal Deed o Sale' Issue: 456 the !etitioners were given an e3tension o the !eriod o rede#!tion' Rulin : 4e ind the !etition to "e devoid o #erit' The atte#!ts to redee# the !ro!ert% were done a ter the e3!iration o the rede#!tion !eriod and that no e3tension o that !eriod was granted to !etitioners' Iven i the .resident and /anager o the "an< is to "e understood to have !ro#ised to allow the !etitioners to "u% the !ro!ert% at an% ti#e the% have the #one%$ the Ban< was not "ound "% the !ro#ise not onl% "ecause it was not a!!roved or rati ied "% the Board o Directors "ut also "ecause$ and #ore decisivel%$ it was a !ro#ise unsu!!orted "% a consideration distinct ro# the re!urchase !rice' The second !aragra!h o (rticle 1)G: o the Civil Code e3!ressl% !rovides: (n acce!ted unilateral !ro#ise to "u% or to sell a deter#inate thing or a !rice certain is "inding u!on the !ro#issor% i the !ro#ise is su!!orted "% a consideration distinct ro# the !rice' 4CIRIL5RI$ the instant !etition is D2S/2SSID$ with costs against the .etitioners' Facts: 2n "etween the 1Dth to the 2Dd o -une$ 1:0)$ !etitioner .edro Ro#an$ the owner$ and res!ondent (ndres Jri#alt$ the !urchaser$ ver"all% agreed u!on the sale o the schooner Santa /arina' 2n his letter on -une 2D$ Jri#alt agreed to

( co##it#ent "% the "an< to resell the !ro!ert% within a s!eci ied !eriod$ although acce!ted "% the !art% in whose avor it was #ade$ is considered an o!tion not su!!orted "% consideration distinct ro# the !rice$ and there ore$ not "inding u!on the !ro#issor

%#ouses 4atino vs. 'AC

'7O 8EARS T7E RIS9 OF LOSS :Art 11;< 5 11;2=

3oman vs. ,rimalt

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |; 2B 2010-2011

1'

5"1ect lost "e ore !er ection P seller "ears it

Reason: There was no contract$

or there was no cause or consideration' Being the owner$ the seller "ears the loss'

2'

5"1ect lost a ter deliver% to the "u%er P "u%ers "ears it Res !erit do#ino , the owner "ears the loss Thing is lost at the ti#e o the !er ection P contracts is void and none3istent 2 the o"1ect is lost a ter !er ection "ut "e ore deliver% P "u%er "ears the loss as an e3ce!tion to the rule o res !erit do#ino Reason: (rt' 1)+0 !ars' 1O2 clearl% states that in1uries "etween !er ection and deliver% shall "e governed "% (rt' 12B2'

D'

"u% the vessel and o ered to !a% in three install#ents o .*00 each on -ul% 1*$ Se!te#"er 1*$ and 6ove#"er 1*$ !rovided the title !a!ers to the vessel were in !ro!er or#' The title o the vessel$ however$ was in the na#e o one .aulina Jiron and not in the na#e o Ro#an as the alleged owner' Ro#an !ro#ised to !er ect his title to the vessel$ "ut ailed so the !a!ers he !resented did not show that he was the owner o the vessel' 5n -une 2*$ 1:0)$ the vessel san< in the /anila har"or during a severe stor#$ even "e ore Ro#an was a"le to !roduce or Jri#alt the !ro!er !a!ers showing that the or#er was in act the owner o the vessel in &uestion and not .aulina Jiron' (s a result$ Jri#alt re used to !a% the !urchase !rice when Ro#an #ade a de#and on -une D0$ 1:0)' 5n -ul% 2$ 1:0)$ Ro#an iled this co#!laint in the CL2 o /anila$ which ound that the !arties had not arrived at a de inite understanding$ and later dis#issed said co#!laint' Issue: 4ho should "ear the ris< o lossQ Rulin : The Su!re#e Court a ir#ed the decision o the lower court and declared Ro#an as the one who should "ear the ris< o lost "ecause there was no actual contract o sale' 2 no contract o sale was actuall% e3ecuted "% the !arties$ the loss o the vessel #ust "e "orne "% its owner and not "% a !art% who onl% intended to !urchase it and who was una"le to do so on account o ailure on the !art o the owner to show !ro!er title to the vessel and thus ena"le the# to draw u! the contract o sale' Jri#alt was under no o"ligation to !a% the !rice o the vessel$ the !urchase o which had not "een concluded' The conversations "etween the !arties and the letter Jri#alt had written to Ro#an did not esta"lish a contract su icient in itsel to create reci!rocal rights "etween the !arties' Facts: .etitioner 6or<is Distri"utors$ 2nc' (6or<is or "revit%)$ is the distri"utor o Ra#aha #otorc%cles in 6egros 5ccidental with o ice in Bacolod Cit% with (velino 9a"a1o as its Branch /anager' 5n Se!te#"er 20$ 1:G:$ !rivate res!ondent (l"erto 6e!ales "ought ro# the 6or<is-Bacolod "ranch a "rand new Ra#aha 4onder"i<e #otorc%cle /odel R92DS with Ingine 6o' 92-D2:)01N Lra#e 6o' 692-0D2:)01$ Color /aroon$ then dis!la%ed in the 6or<is showroo#' The !rice o .G$*00'00 was !a%a"le "% #eans o a 9etter o Juarant% ro# the Develo!#ent Ban< o the .hili!!ines (DB.)$ Na"an<alan Branch$ which 6or<isF Branch /anager 9a"a1o agreed to acce!t' Cence$ credit was e3tended to 6e!ales or the !rice o the #otorc%cle !a%a"le "% DB. u!on release o his #otorc%cle loan' (s securit% or the loan$ 6e!ales would e3ecute a chattel #ortgage on the #otorc%cle in avor o DB.' Branch /anager 9a"a1o issued 6or<is Sales 2nvoice 6o' 0120 (I3h'1) showing that the contract o sale o the #otorc%cle had "een !er ected' 6e!ales signed the sales invoice to signi % his con or#it% with the ter#s o the sale' 2n the #eanti#e$ however$ the #otorc%cle re#ained in 6or<isF !ossession'5n 6ove#"er B$ 1:G:$ the #otorc%cle was registered in the 9and Trans!ortation Co##ission in the na#e o (l"erto 6e!ales' Issue: 4ho should "ear the loss o the #otorc%cleQ

)'

4or)is Distributors, 'n.! vs. CA

Sales

Reviewer:

Case

Digests

(Dean

Sundiang) |4 2B 2010-2011

PRO>ISE TO 8?@ AND SELL #s$ ACCEPTED ?NILATERAL PRO>ISE TO 8?@ OR TO SELL :ART$ 1134 and 1&"1= 9inds of Pro)ises Treated in Art$ 1134 1' (n acce!ted unilateral !ro#ise to sell in which the !ro#ise (acce!tor) elects to "u%0 2' (n acce!ted unilateral !ro#ise to "u% which the !ro#ise (acce!tor) elects to sell0 and D' ( "ilateral !ro#ise to "u% and sell reci!rocall% acce!ted in which either o the !arties chooses to e3acts ul il#ent' Effect of ?nacce.ted ?nilateral Pro)ise 6o 1udicial e ect o legal "ond' Such unacce!ted i#!er ect !ro#ise or o er is called .olicitation' O.tion ( !rivilege e3isting in one !erson or

%erra vs .CA

Rulin : 65RN2S$ the seller' The issuance o a sales invoice does not !rove trans er o ownershi! o the thing sold to the "u%er' (n invoice is nothing #ore than a detailed state#ent o the nature$ &uantit% and cost o the thing sold and has "een considered not a "ill o sale' 2n all or#s o deliver%$ it is necessar% that the act o deliver% whether constructive or actual$ "e cou!led with the intention o delivering the thing' The act$ without the intention$ is insu icient' 4hen the #otorc%cle was registered "% 6or<is in the na#e o !rivate res!ondent$ 6or<is did not intend %et to trans er the title or ownershi! to 6e!ales$ "ut onl% to acilitate the e3ecution o a chattel #ortgage in avor o the DB. or the release o the "u%erFs #otorc%cle loan' The 9etter o Juarantee issued "% the DB.$ reveals that the e3ecution in its avor o a chattel #ortgage over the !urchased vehicle is a !re-re&uisite or the a!!roval o the "u%erFs loan' 2 6or<is would not accede to that arrange#ent$ DB. would not a!!rove !rivate res!ondentFs loan a!!lication and$ conse&uentl%$ there would "e no sale' 2n other words$ the critical actor in the di erent #odes o e ecting deliver%$ which gives legal e ect to the act$ is the actual intention o the vendor to deliver$ and its acce!tance "% the vendee' 4ithout that intention$ there is no tradition' (rticle 1):B o the Civil Code which !rovides that Min the a"sence o an e3!ress assu#!tion o ris< "% the "u%er$ the things sold re#ain at sellerFs ris< until the ownershi! thereo is trans erred to the "u%er$M is a!!lica"le to this case$ or there was neither an actual nor constructive deliver% o the thing sold$ hence$ the ris< o loss should "e "orne "% the seller$ 6or<is$ which was still the owner and !ossessor o the #otorc%cle when it was wrec<ed' This is in accordance with the well-<nown doctrine o res perit domino' Facts: .etitioner is the owner o a DG) s&uare #eter !arcel o land located at ?ueAon St'$ /as"ate$ /as"ate' So#eti#e in 1:G*$ res!ondent "an<$ in its desire to !ut u! a "ranch in /as"ate$ /as"ate$ negotiated with !etitioner or the !urchase o the then unregistered !ro!ert%' ( contract o 9I(SI 42TC 5.T256 T5 B;R was instead orged "% the !arties' The oregoing agree#ent was su"scri"ed "e ore 6otar% .u"lic Ro#eo L' 6atividad' .ursuant to said contract$ a "uilding and other i#!rove#ents were constructed on the land which housed the "ranch o ice o RCBC in /as"ate$ /as"ate' 4ithin three %ears ro# the signing o the contract$ !etitioner co#!lied with his !art o the agree#ent "% having the !ro!ert% registered and !laced under the T5RRI6S SRSTI/$ or which 5riginal Certi icate o Title 6o' 0-2D2 was issued "% the Register o Deeds o the .rovince o /as"ate' .etitioner alleges that as soon as he had the !ro!ert% registered$ he <e!t on !ursuing the #anager o the "ranch to e ect the sale o the lot as !er their agree#ent' 2t was not until Se!te#"er )$ 1:+)$ however$ when the res!ondent "an< decided to e3ercise its o!tion and in or#ed !etitioner$ through a letter$ o its intention to "u% the !ro!ert% at the agreed !rice o not greater than .210'00 !er s&uare #eter or a total o .G+$)D0'00' But #uch to the sur!rise o the res!ondent$ !etitioner re!lied that he is no longer selling the !ro!ert%' Issue: 456 the contract 7lease with o!tion to "u%8 is valid'

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 1< 2B 2010-2011

which he has !aid a consideration$ which gives hi# a right to "u% and sell ro#Tto another !erson$ i he chooses$ at an% ti#e$ within the agreed !eriod at a i3ed !rice$ or under$ or in co#!liance with certain ter#s and conditions' (n o!tion without consideration P @52D (e ect is the sa#e as i there is no o!tion'

O.tion Contract ( contract #ade to <ee! an o er o!en or a s!eci ied !eriod$ so that the o er cannot "e revo<ed "% the o eror during that !eriod' 5!tion is valid "ecause it is su!!orted "% a consideration' Cere$ the "u%er cannot "e co#!elled to "u%' Acce.ted ?nilateral Pro)ise to Sell Since there #a% "e no valid contract without cause or consideration$ the !ro#issor% is not "ound "% his !ro#ise and #a%$ accordingl%$ withdraw it' 2 acce!tance is #ade "e ore withdrawal$ it constitutes a "inding contract o sale although the o!tion is given without consideration' 8ilateral Pro)ise to 8u% AND Sell Reci!rocall% de#anda"le Cence$ it re&uires no consideration distinct ro# the !rice'

Rulin : RIS' The contract 7lease with o!tion to "u%8 is valid $ e ective and en orcea"le$ the !rice "eing certain and that there was consideration distinct ro# the !rice to su!!ort the o!tion given to lessee' (rticle 1D2) o the Civil Code !rovides that when an o eror has allowed the o eree a certain !eriod to acce!t$ the o er #a%"e withdrawn at an%ti#e "e ore acce!tance "% co##unicating such withdrawal$ e3ce!t when the o!tion is ounded u!on consideration$ as so#ething !aid or !ro#ised' 5n the other hand$ (rticle 1)G: o the Code !rovides that an acce!ted unilateral !ro#ise to "u% and sell a deter#inate thing for a price certain is "inding u!on the !ro#isor i the !ro#ise is supported by a consideration distinct from the price' 2n a unilateral !ro#ise to sell$ where the de"tor ails to withdraw the !ro#ise "e ore the acce!tance "% the creditor$ the transaction "eco#es a "ilateral contract to sell and to "u%$ "ecause u!on acce!tance "% the creditor o the o er to sell "% the de"tor$ there is alread% a #eeting o the #inds o the !arties as to the thing which is deter#inate and the !rice which is certain' 2n which case$ the !arties #a% then reci!rocall% de#and !er or#ance' -uris!rudence has taught us that an o!tional contract is a !rivilege e3isting onl% in one !art% U the "u%er' Lor a se!arate consideration !aid$ he is given the right to decide to !urchase or not$ a certain #erchandise or !ro!ert%$ at an% ti#e within the agreed !eriod$ at a i3ed !rice' This "eing his !rerogative$ he #a% not "e co#!elled to e3ercise the o!tion to "u% "e ore the ti#e e3!ires' 2n the !resent case$ the consideration is even #ore onerous on the !art o the lessee since it entails trans erring o the "uilding andTor i#!rove#ents on the !ro!ert% to !etitioner$ should res!ondent "an< ail to e3ercise its o!tion within the !eriod sti!ulated' The "ugging &uestion then is whether the !rice Mnot greater than T45 C;6DRID .IS5SM is certain or de inite' ( !rice is considered certain i it is so with re erence to another thing certain or when the deter#ination thereo is le t to the 1udg#ent o a s!eci ied !erson or !ersons' (nd generall%$ gross inade&uac% o !rice does not a ect a contract o sale' Contracts are to "e construed according to the sense and #eaning o the ter#s which the !arties the#selves have used' 2n the !resent dis!ute$ there is evidence to show that the intention o the !arties is to !eg the !rice at .210 !er s&uare #eter' /oreover$ "% his su"se&uent acts o having the land titled under the Torrens S%ste#$ and in !ursuing the "an< #anager to e ect the sale i##ediatel%$ #eans that he understood !er ectl% the ter#s o the contract' Ce even had the sa#e !ro!ert% #ortgaged to the res!ondent "an< so#eti#e in 1:G:$ without the slightest hint o wanting to a"andon his o er to sell the !ro!ert% at the agreed !rice o .210 !er s&uare #eter' Facts: 5n -une B$ 1:*G$ !lainti -a!!ellee Southern /otors$ 2nc' sold to de endant-a!!ellant (ngel /oscoso one Chevrolet truc<$ on install#ent "asis$ or .B$))*'00' ;!on #a<ing a down !a%#ent$ the de endant e3ecuted a !ro#issor% note or the su# o .)$:1*'00$ re!resenting the un!aid "alance o the !urchase !rice)$ to secure the !a%#ent o which$ a chattel #ortgage was constituted on

RECTO LA' :Art$ 11;1 and 11;2= Re)edies of t*e Seller 1' I3act ul il#ent o the o"ligation should the "u%er ail to !a% an% instal#ent0

%out&ern *otors vs. *os!oso

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 11 2B 2010-2011

2'

D'

Cancel the sale$ should the "u%er>s ailure to !a% cover two or #ore instal#ents0 Loreclose the chattel #ortgage on the thing sold$ i one has "een constituted$ should the "u%er>s ailure to !a% cover two or #ore instal#ents'

the truc< in avor o the !lainti ' 5 said account o .)$:1*'00$ the de endant had !aid a total o .**0'00$ o which .110'00 was a!!lied to the interest u! to (ugust 1*$ 1:*G$ and .)00'00 to the !rinci!al$ thus leaving an un!aid "alance o .)$)G*'00' The de endant ailed to !a% D install#ents on the "alance o the !urchase !rice' 5n 6ove#"er )$ 1:*G$ the !lainti iled a co#!laint against the de endant$ to recover the un!aid "alance o the !ro#issor% note' ;!on !lainti Fs !etition$ e#"odied in the co#!laint$ a writ o attach#ent was issued "% the lower court on the !ro!erties 5 the de endant' .ursuant thereto$ the said Chevrolet truc<$ and a house and lot "elonging to de endant$ were attached "% the Sheri o San -ose$ (nti&ue$ where de endant was residing on 6ove#"er 2*$ 1:*G$ and said truc< was "rought to the !lainti Fs co#!ound in 2loilo Cit%$ or sa e <ee!ing' Issue: 456 the re#ed% chosen "% a!!ellee is the oreclosure o the truc< or a s!eci ic !er or#ance o the de endant>s o"ligation' Rulin : /ani estl%$ the a!!ellee had chosen the irst re#ed% (s!eci ic !er or#ance)' The co#!laint is an ordinar% civil action or recover% o the re#aining un!aid "alance due on the !ro#issor% note' The !lainti had not ado!ted the !rocedure or #ethods outlined "% Sec' 1) o the Chattel /ortgage 9aw "ut those !rescri"ed or ordinar% civil actions$ under the Rules o Court' Cad a!!ellee elected the oreclosure$ it would not have instituted this case in court0 it would not have caused the chattel to "e attached under Rule *:$ and had it sold at !u"lic auction$ in the #anner !rescri"ed "% Rule D:' That the herein a!!ellee did not intend to oreclose the #ortgage truc<$ is urther evinced "% the act that it had also attached the house and lot o the a!!ellant at San -ose$ (nti&ue' (s the !lainti has chosen to e3act the ul ill#ent o the de endantFs o"ligation$ the or#er #a% en orce e3ecution o the 1udg#ent rendered in its avor on the !ersonal and real !ro!ert% o the latter not e3e#!t ro# e3ecution su icient to satis % the 1udg#ent' That !art o the 1udg#ent against the !ro!erties o the de endant e3ce!t the #ortgaged truc< and discharging the writ o attach#ent on his other !ro!erties is erroneous' 4e !erceive nothing unlaw ul or irregular in a!!elleeFs act o attaching the #ortgaged truc< itsel ' Since herein a!!ellee has chosen to e3act the ul ill#ent o the a!!ellantFs o"ligation$ it #a% en orce e3ecution o the 1udg#ent that #a% "e avora"l% rendered hereon$ on all !ersonal and real !ro!erties o the latter not e3e#!t ro# e3ecution su icient to satis % such 1udg#ent' 2t should "e noted that a house and lot at San -ose$ (nti&ue were also attached' 6o one can success ull% contest that the attach#ent was #erel% an incident to an ordinar% civil action' (Sections 1 O 11$ Rule *:0 Sec' 1B$ Rule D:)'

Article 11;1 o the Civil Code !rovides or the re#edies o a seller in contracts o sale o !ersonal !ro!ert% "% install#ents$ and incor!orates the !rovisions o Act No$ 11""(no0n as t*e 'nstallment %ales (a or t&e 3e!to (a - which then a#ended (rticle 1)*) o the Civil Code o 1++:' RATIONALE The o"1ect o Recto 9aw was to re#ed% the a"uses co##itted in connection with the oreclosure o chattel #ortgages and was #eant to !revent #ortgagees ro# seiAing the #ortgaged !ro!ert%$ "u%ing it at oreclosure sale or a low !rice and then "ringing suit against the #ortgagor or a de icienc% 1udg#ent' ;nder (rticle 1)+) o the 6ew Civil Code: In a contract of sale of personal property the price of which is payable in installments, the vendor may e ercise 3E*ED'E% stated above. The re#edies have "een recogniAed as alternative$ not cu#ulative$ in that the e3ercise o one would also "ar the e3ercise o the others' The% cannot also "e !ursued si#ultaneousl%' 2 the seller should oreclose on the #ortgage constituted on the thing sold$ he shall have no urther action against the !urchaser to recover an% un!aid "alance o the !rice' (n% agree#ent to the contrar% shall "e void' The !rovisions o Recto 9aw are a!!lica"le to inancing transactions derived or arising ro#

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 1" 2B 2010-2011

sales o #ova"les on install#ents$ even i the underl%ing contract at issue is a loan "ecause the !ro#issor% note has "een assigned or negotiated "% the original seller' Ta(e NOTE: In Filin#est #s$ CA Lilinvest was held not lia"le or the de ect onl% "% virtue o the waiver o warrant% against de ect sti!ulated in the contract' 8?T: 2 not or the waiver$ Lilinvest though a inancing institution$ is not i##une ro# an% recourse "% the !rivate res!ondents' The act that the roc< crusher was !urchased ro# RiAal Consolidated Cor!oration in the na#e and with the unds o the Lilinvest !roves "e%ond dou"t that the ownershi! thereo was e ectivel% trans erred to it' 2t is !recisel% this ownershi! which ena"led the !etitioner to enter into the MContract o 9ease o /achiner% and I&ui!#entM The device contract o lease with o!tion to "u% is at ti#es resorted to as a #eans to circu#vent (rticle 1)+)$ !articularl% !aragra!h (D) thereo ' Through the set-u!$ the vendor$ "% retaining ownershi! over the !ro!ert% in the guise o "eing the lessor$ retains$ li<ewise$ the right to re!ossess the sa#e$ without going through the !rocess o oreclosure$ in the event the vendeelessee de aults in the !a%#ent o the install#ents There arises there ore no need to constitute a chattel #ortgage over the #ova"le sold' /ore i#!ortant$ the vendor$ a ter re!ossessing the !ro!ert% and$ in e ect$ canceling the contract o sale$ gets to <ee! all the install#ents-cu#rentals alread% !aid' 2t is thus or these reasons that (rticle 1)+* o the new Civil Code !rovides that: Article 11;2$ !he precedin" article shall be applied to 5ilinvest Credit vs. CA Pas!ual + (eonila "orres vs. Universal *otors

The #ortgage creditor #a% recover 1udg#ent on the #ortgage de"t and cause an e3ecution on the #ortgaged !ro!ert% and #a% cause an attach#ent to "e issued and levied on such !ro!ert%$ u!on "eginning his civil action' Facts: S!ouses Torres e3ecuted a real estate #ortgage on two !arcel o land to secure the !a%#ent o the inde"tedness o .D. Transit$ 2nc' or the !urchase o ive (*) /ercedes BenA truc<s ro# ;niversal /otors Cor!' Se!arate deeds o chattel #ortgages on the /ercedeA BenA units were also e3ecuted "% .D. Transit in avor o ;/C .D. Transit 2nc' was a"le to !a% a su# o .:2$:B)':1$ leaving "alance o .B+$B)1'B: including interest due as o Le"ruar% +$ 1:B* 5n /arch 1:$ 1:B*$ ;niversal /otors Cor!oration iled a co#!laint against .D. Transit$ and it was a"le to re!ossess all the units sold, includin" the five #$% units "uaranteed by the subject real estate mort"a"e $ and to oreclose all the chattel #ortgages constituted thereon$ resulting in the sale o the truc<s at !u"lic auction' S!ouses 9orenAo .ascual and 9eonila Torres iled an action in the CL2 ?ueAon Cit% or the cancellation o the #ortgage' ( 1udg#ent was rendered in their avor' ;/C contends (on a!!eal) that what (rticle 1)+) withholds ro# the vendor is the right to recover an% de icienc% ro# the !urchaser a ter the oreclosure o the chattel #ortgage and not a recourse to the additional securit% !ut u! "% a third !art% to guarantee the !urchaserFs !er or#ance o his o"ligation Issue: 456 ;/C correct in its contentionsQ Rulin : NO$ i the guarantor should "e co#!elled to !a% the "alance o the !urchase !rice$ the guarantor will in turn "e entitled to recover what she has !aid ro# the de"tor vendee ((rt' 20BB$ Civil Code)0 so that ulti#atel%$ it will "e the vendee who will "e #ade to "ear the !a%#ent o the "alance o the !rice$ des!ite the earlier oreclosure o the chattel #ortgage given "% hi#' Thus$ the !rotection given "% (rticle 1)+) would "e indirectl% su"verted$ and !u"lic !olic% overturned'M Facts: S!ouses Tan sells gravel !roduced ro# crushed roc<s used or construction !ur!oses' 4anting to increase !roduction$ the% as<ed /r' Ru"en /ercurio to loo< or a #ore e icient roc< crusher and were re erred to RiAal Consolidated Cor!oration which then had or sale one such #achiner%' ( ter ins!ection o said #achiner%$ cou!le decided to "u% the sa#e and a!!lied or inancial assistance ro# Lilinvest Credit Cor!oration on the conditions that: that the #achiner% "e !urchased in the !etitionerFs na#e0 that it "e leased (with o!tion to !urchase u!on the ter#ination o the lease !eriod) to the !rivate res!ondents0 and that the !rivate res!ondents e3ecute a real estate #ortgage in avor o the !etitioner as securit% or the a#ount advanced "% the latter'

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 1& 2B 2010-2011

contracts purportin" to be leases of personal property with option to buy$ when the lessor has de!rived the lessee o !ossession or en1o%#ent o the thing' Caveat em#tor or 6bu$er be are6 Co##on sense dictates that a "u%er ins!ects a !roduct "e ore !urchasing it and does not return it or de ects discovered later on$ !articularl% i the return o the !roduct is not covered "% or sti!ulated in a contract or warrant%'

( contract o lease o #achiner% (with o!tion to !urchase) was entered into "% the !arties sti!ulating that at the end o the two-%ear !eriod$ the #achine would "e owned "% the s!ouses' The latter e3ecuted a real estate #ortgage over two !arcels o land issued in avor Lilinvest and issues chec< or .1*0$**0'00$ as initial rental (or guarant% de!osit)$ and twent%- our (2)) !ostdated chec<s corres!onding to the 2) #onthl% rentals' Three #onths a ter the deliver% o the #achiner%$ the cou!le clai#ing that the% had onl% tested the #achine that #onth$ sent a letter-co#!laint to the Lilinvest$ alleging that contrar% to the 20 to )0 tons !er hour ca!acit% o the #achine as stated in the lease contract$ the #achine could onl% !rocess * tons o roc<s and stones !er hour and re used to !a%' (s a conse&uence o the non-!a%#ent o the rentals on the roc< crusher as the% ell due des!ite the re!eated written de#ands$ Lilinvest e trajudicially oreclosed the real estate #ortgage' To thwart the i#!ending auction o their !ro!erties$ S!ouses -ose S% Bang and 2lu#inada Tan iled "e ore the RTC (?C) a co#!laint against Lilinvest$ as<ed or the rescission o the contract o lease$ annull#ent o the real estate #ortgage' ( 1udg#ent was rendered in their avor' 5n a!!eal$ the !etitioner (Lilinvest) reasserts that the cause o action should "e directed against RiAal Consolidated Cor!oration$ the original owner-seller o the su"1ect roc< crusher$ or Je#ini /otors Sales which served as a conduit acilitator o the !urchase o the said #achine' The !etitioner argues that it is a inancing institution engaged in &uasi-"an<ing activities$ !ri#aril% the lending o #one% to entre!reneurs such as the !rivate res!ondents and the general !u"lic$ "ut certainl% not the leasing or selling o heav% #achineries li<e the su"1ect roc< crusher' The !etitioner denies "eing the seller o the roc< crusher and onl% ad#its having inanced its ac&uisition "% the !rivate res!ondents' Lurther$ the !etitioner a"solves itsel o an% lia"ilit% arising out o the lease contract it signed with the !rivate res!ondents due to the waiver of warranty made by the latter' Issue: 456 Lilinvest is i##uned ro# lia"ilit% arising ro# the de ect o the #achiner%Q Rulin : @ES$ The s!ouses has inde!endentl% ins!ected and veri ied the leased !ro!ert% and has selected and received the sa#e ro# the Dealer o his own choosing in good order and e3cellent running and o!erating condition and on the "asis o such veri ication$ etc' the 9ISSII has agreed to enter into this Contract' 5ne o the sti!ulations in the contract the% entered into with the !etitioner is an e press waiver of warranties in favor of the latter. B% so signing the agree#ent$ the !rivate res!ondents a"solved the !etitioner ro# an% lia"ilit% arising ro# an% de ect or de icienc% o the #achiner% the% "ought'

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 11 2B 2010-2011

Art$ 1143$ The thing sold shall "e understood as delivered$ when it is !laced in the control and !ossession o the vendee' (1)B2a) Art$ 114;$ 4hen the sale is #ade through a !u"lic instru#ent$ the e3ecution thereo shall "e e&uivalent to the deliver% o the thing which is the o"1ect o the contract$ i ro# the deed the contrar% does not a!!ear or cannot clearl% "e in erred' 4ith regard to #ova"le !ro!ert%$ its deliver% #a% also "e #ade "% the deliver% o the <e%s o the !lace or de!ositor% where it is stored or <e!t' (1)BDa) Art$ 1144$ The deliver% o #ova"le !ro!ert% #a% li<ewise "e #ade "% the #ere consent or agree#ent o the contracting !arties$ i the thing sold cannot "e trans erred to the !ossession o the vendee at the ti#e o the sale$ or i the latter alread% had it in his !ossession or an% other reason' (1)BDa)

Addison vs. 5eli7

Facts: B% a !u"lic instru#ent (ddison sold to /arciana Leli3$ our !arcels o land$ descri"ed in the instru#ent' Leli3 !aid$ at the ti#e o the e3ecution o the deed$ the su# o .D$000 on account o the !urchase !rice$ and "ound hersel to !a% the re#ainder in install#ents' 2t was urther sti!ulated that the !urchaser was to deliver to the vendor 2* !er centu# o the value o the !roducts that she #ight o"tain ro# the our !arcels M ro# the #o#ent she ta<es !ossession o the# until the Torrens certi icate o title "e issued in her avor'M 2t was also covenanted that Mwithin one %ear ro# the date o the certi icate o title in avor o /arciana Leli3$ (ddison #a% rescind the !resent contract o !urchase and sale' 9ater on$ (ddison iled suit in Court o Lirst 2nstance o /anila to co#!el /arciana Leli3 to #a<e !a%#ent o the irst install#ent and o the interest in arrears' The de endant answered the co#!laint and alleged "% wa% o s!ecial de ense that the !lainti had a"solutel% ailed to deliver to the de endant the lands that were the su"1ect #atter o the sale$ notwithstanding the de#ands #ade u!on hi# or this !ur!ose' The evidence adduced shows that a ter e3ecution o the deed o the sale (ddison$ at the re&uest o Leli3$ went to 9ucena$ acco#!anied "% a re!resentative o the latter$ or the !ur!ose o designating and delivering the lands sold' Ce was a"le to designate onl% two o the our !arcels$ and #ore than two-thirds o these two were ound to "e in the !ossession o one -uan @illa uerte$ who clai#ed to "e the owner o the !arts so occu!ied "% hi#' Issue: 456 there was deliver% o the land sold' Rulin : NO$ The record shows that the !lainti did not deliver the thing sold' 4ith res!ect to two o the !arcels o land$ he was not even a"le to show the# to the !urchaser0 and as regards the other two$ #ore than two-thirds o their area was in the hostile and adverse !ossession o a third !erson' The Code i#!oses u!on the vendor the o"ligation to deliver the thing sold' The thing is considered to "e delivered when it is !laced Min the hands and !ossession o the vendee'M (Civ' Code$ art' 1)B2') 2t is true that the sa#e article declares that the e3ecution o a !u"lic instru#ents is e&uivalent to the deliver% o the thing which is the o"1ect o the contract$ "ut$ in order that this s%#"olic deliver% #a% !roduce the e ect o tradition$ it is necessar% that the vendor shall have had such control over the thing sold that$ at the #o#ent o the sale$ its #aterial deliver% could have "een #ade' 2t is not enough to con er u!on the !urchaser the ownership and the ri"ht o !ossession' The thing sold #ust "e !laced in his control' 4hen there is no i#!edi#ent whatever to !revent the thing sold !assing into the tenanc% o the !urchaser "% the sole will o the vendor$ s%#"olic deliver% through the e3ecution o a !u"lic instru#ent is su icient' But i $ notwithstanding the e3ecution o the instru#ent$ the !urchaser cannot have the en1o%#ent and #aterial tenanc% o the thing and #a<e use o it hi#sel or through another in his na#e$ "ecause such tenanc% and en1o%#ent

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 12 2B 2010-2011

are o!!osed "% the inter!osition o another will$ then iction %ields to realit% U the deliver% has not "een e ected' Art$ 1133$ The ownershi! o the thing sold shall "e trans erred to the vendee u!on the actual or constructive deliver% thereo ' (n) %am#aguita Pi!tures vs. -al indor Facts: Sa#!aguita leased to Ca!itol 7D008 2nc' the roo dec< o its "uilding with the agree#ent that all !er#anent i#!rove#ents Ca!itol will #a<e on said !ro!ert% shall "elong to Sa#!aguita without an% !art on the latter to rei#"urse Ca!itol or the e3!enses o said i#!rove#ents' Shortl%$ Ca!itol !urchased on credit ro# -alwindor glass and wooden 1alousies$ which the latter itsel delivered and installed in the leased !re#ises$ re!lacing the e3isting windows ' -alwindor iled with the CL2 o RiAal$ ?ueAon Cit% an action or collection o a su# o #one% with a !etition or !reli#inar% attach#ent against Ca!itol or its ailure to !a% its !urchases' 9ater$ -alwindor and Ca!itol su"#itted to the trial court a Co#!ro#ised (gree#ent wherein Ca!itol ac<nowledged its inde"tedness and that all the #aterials that Ca!itol !urchased will "e considered as securit% or such underta<ing' /eanwhile$ Sa#!aguita iled a co#!laint or e1ect#ent and or collection o a su# o #one% against Ca!itol or the latter>s ailure to !a% rentals and the Cit% Court o ?ueAon Cit% ordered Ca!itol to vacate the !re#ises and to !a% Sa#!aguita' 5n the other hand$ Ca!itol li<ewise ailed to co#!l% with the ter#s o the Co#!ro#ise (gree#ent$ and a lev% was #ade on the glass and wooden 1alousies' Sa#!aguita iled a third-!art% clai# alleging that it is the owner o said #aterials and not Ca!itol$ "ut -alwindor iled an ide#nit% "ond in avor o the Sheri and the ite#s were sold at !u"lic auction$ with -alwindor as the highest "idder ' Sa#!aguita iled with the CL2 o RiAal$ ?ueAon Cit% an action to nulli % the Sheri Fs sale and or an in1unction to !revent -alwindor ro# detaching the glass and wooden 1alousies' Issue: 456 there was a deliver% #ade and$ there ore$ a trans er o ownershi! o the thing soldQ Rulin : @ES' 4hen the glass and wooden 1ealousies were delivered and installed in the lease !re#ises$ Ca!itol "eca#e the owner thereo ' 5wnershi! is not trans erred "% !er ection o the contract "ut "% deliver%$ either actual or constructive' Ca!itol entered into a lease contract with Sa#!aguita$ and the latter "eca#e the owner o the ite#s #entioned "% virtue o the contract agree#ent' 4hen lev% was #ade on the ite#s$ Ca!itol ( the 1udg#ent de"tor) was no longer the owner thereo ' Facts: S!ouses Liestan #ortgaged their land to DB. as securit% or a loan' ;!on ailure to !a%$ the land was oreclosed an' DB. ac&uired lot as highest "idder' 5ne %ear rede#!tion !eriod having e3!ired$ DB. title over the land was consolidated' Issue: 456 DB. is !rohi"ited to ac&uire the !ro!ert% under (rt' 1):1(2)Q

Article 1141 .ar' 2 thereo 0 (gents cannot ac&uire the !ro!ert% whose ad#inistration or sale #a% have "een intrusted to the#$ unless the consent o the !rinci!al has "een given' The rule$ however$ does not a!!l% to #ortgagee !urchasing the #ortgaged !ro!ert% at a !u"lic

5iestan vs. CA

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 16 2B 2010-2011

sale'

Article 12<6 5 224 5wner has the right to recover the !ro!ert% which he is unlaw ull% de!rived o ' &nlawful deprivation is not li#ited to !ro!erties stolen' 2t enco#!asses situations where there has "een invalid trans#ission o ownershi!'

Di2on vs. %unta$

Rulin : NO$ The !rohi"ition does not a!!l% in the instant case where the sale in dis!ute was #ade !ursuant to a s!ecial !ower inserted in or attached to the real estate under (ct 6o' D1D* as a#ended' (s s!ecial statute$ (ct D1D* !revails over !rovisions o Civil Code as general statute' /oreover$ even in the a"sence o such !rovision$ the #ortgagee #a% still !urchase the su"1ect !ro!ert% to !rotect his interest' Facts: Res!ondent Sunta% delivered a dia#ond ring to certain Clarita Sison or the latter to sell it on co##ission' Ti#e la!ses and there was no return o the ring nor the !urchase !rice' De#and was #ade and later Sison was ound out to have !ledged it to !etitioner DiAon' Sunta% therea ter iled or the recover% o the thing' 9ower and a!!ellate courts ound in her avor under (rt **: as owner thereo ' Cence this !etition' Issue: /a% Sunta% still recover !ossession o the thing !ledgedQ Rulin : @ES$ Sunta% #a% recover the dia#ond ring ro# the !awnsho! with which another !erson has !ledged it without authorit% to do so' (rt **: a!!lies and the de ense that the !awnsho! ac&uired !ossession o the ring without notice o an% de ect in the title o the !ledge is unavailing' Since the thing was !ledged "% a !ledgor having no authorit% to do so$ the real owner is not sto!!ed ro# !ursuing an action against the !awnsho! or the recover% o the !ossession o the thing' .etitioner is engaged in the "usiness where !resu#a"l% ordinar% !rudence would #ani est itsel to ascertain whether or not the individual o ering 1ewelr% "% wa% o !ledge is entitled to do so' 6o such !recaution was e3ercised "% !etitioner' Ce$ there ore$ has onl% hi#sel to "la#e or the i3 he is now' Facts: ( !erson identi %ing hi#sel as -oe CruA !laced an order "% tele!hone with IDC( .u"lishing O Distri"uting Co' or )0B "oo<s !a%a"le on deliver%' Boo<s were delivered or which CruA issued a !ersonal chec< as !a%#ent' CruA was later ound out to "e an i#!ostor and the chec< issued was dishonored a ter its !resentation or !a%#ent' IDC($ a ter <nowing that the said "oo<s were su"se&uentl% sold to 9eonor Santos$ as<ed hel! o the !olice to seiAe the "oo<s without warrant clai#ing it was unlaw ull% de!rived o the "oo<s' Issue: 456 IDC( was unlaw ull% de!rived o the "oo<s since the chec< issued was dishonoredQ Rulin : NO$ 6on-!a%#ent onl% creates a right to de#and !a%#ent or to rescind the contract$ or to cri#inal !rosecution in case o "ouncing chec<s' ;nless otherwise sti!ulated$ deliver% o the thing sold will e ectivel% trans er ownershi! to the "u%er who can in turn trans er it to another' 2t would certainl% "e un air now to #a<e !rivate res!ondent "ear the !re1udice sustained "% IDC( as a result o its own negligence' The Court cannot see the 1ustice in trans erring IDC(>s loss to the Santoses who had acted in good aith$ and with !ro!er case$ when the% "ought the "oo<s ro# CruA' FACTS: -ose .oncio #ortgaged his lot to Re!u"lic Savings Ban< or .1$*00' /eanwhile$ .oncio sold his #ortgaged lot to Rosario Car"onell in a VSale with (ssu#!tion o /ortgage>- with the !urchase !rice would co#e the #one% to "e !aid to the "an<' "oth went to "an< to !a% the arrears on #ortgage' .oncio was

Article 12<6 5 224 The non-!a%#ent o "oo<s sold a ter the chec< given as !a%#ent thereo was dishonored does not a#ount to unlaw ul de!rivation'

EDCA Publis&ing vs. %antos

Double Sale Rules o !re erence in case o dou"le sale: 1' .ersonal .ro!ert%- !ossessor in good aith

Carbonell vs. CA

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 13 2B 2010-2011

2'

Real .ro!ert%- in the ollowing order: Registrant in good aith0 .ossessor in good aith0 .erson with the oldest title in good aith

allowed to live on the lot !rovided it will !a% rents' Therea ter$ .oncio sold the lot to I##a 2n ante who i##ediatel% too< !ossession o the lot and "uilt i#!rove#ents thereon' 2n or#ed that the sale to 2n ante was not registered$ Car"onell registered her adverse clai# on Le" +$ 1:**' Lour da%s a ter$ a deed o sale in avor o 2n ante was registered' Issue: 4ho has a "etter right on the &uestion lotQ Rulin : CAR8ONELL$ 2n case o dou"le sale o i##ova"le !ro!ert%$ art 1*))$ 2nd !ar directs that ownershi! should "e recogniAed in avor o one who in good aith irst recorded his right' ("sent such inscri!tion$ what is decisive is !rior !ossession in good aith' 4hen Car"onell "ought the land$ she was the onl% "u%er thereo and the title was still in .oncios na#e solel% encu#"ered "% "an< #ortgage dul% annotated thereon' Cence Car"onell>s !rior !urchase o the land was #ade in good aith' Such good aith did not cease a ter .oncio told her o the 2nd sale since Car"onell atte#!ted to tal< to 2n ate "ut the latter did not acco##odate her' Car"onell then registered her adverse clai#' The recording o the adverse clai# should "e dee#ed to have "een done in good aith and should co#!ro#ise 2n ante>s "ad aith when she registered her deed o sale our da%s later'

'(!)* Jood aith> is alwa%s an ele#ent'

Double Sale Rules as to Preference of O0ners*i. in case of a Double Sale 1' 2 the !ro!ert% sold is #ova"le$ the ownershi! shall "e ac&uired "% the vendee who irst ta<es !ossession in good aith' 2' 2 the !ro!ert% sold is i##ova"le$ the ownershi! shall "elong$ in the ollowing order stated: a' The vendee who irst registers the sale in good aith in the Registr% o Deeds has a !re erred right over another vendee who has not registered his title even i the latter is in actual !ossession o the i##ova"le !ro!ert%' Reason: Registration is the o!erative act to conve% or a ect the land inso ar as third !ersons are concerned' "' 2n the a"sence o registration$ the vendee who irst ta<es !ossession

"anedo vs. CA

Facts: 9aAaro Tanedo e3ecuted a deed o a"solute sale in avor o his eldest "rother$ Ricardo Tanedo and the latter>s wi e where he conve%ed his uture inheritance ro# his !arents' 9ater$ Ricardo discovered that the land in litigation was sold to 9aAaro>s children through another deed o sale which was recorded in the Register o Deeds0 the heirs o 9aAaro wanted to have the rescission o the deeds in avor o Ricardo' Issue: 456 the second sale and the act o registration are valid' Rulin : Res' 2n addition$ a!!l%ing 1*)) o the 6CC$ the !etitioners (heirs o 9aAaro) also have a "etter right over the land$ "ecause under the said !rovision$ ownershi! shall "elong to the "u%er who in good aith registers it irst it in the Registr% o .ro!ert%'

3adio ealt& 5inan!e Com#an$ vs. Palileo

Facts: S!ouses Castro sold a !arcel o unregistered land evidenced in a notariAed deed o a"solute sale to .alileo' .alielo through his #other !er or#ed acts o ownershi!0 a!!ellee on the other hand continuousl% !aid the real estate ta3es on said land' ( 1udg#ent in a civil case against Castro resulted to a sale o the land at a !u"lic auction and Radiowealth "ought it' The !eriod o rede#!tion e3!ired and the sale was later registered' Issue: 456 the rule in 1*)) o the 6CC is a!!lica"le to the ;6RIJ2STIRID 9(6D'

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 1; 2B 2010-2011

c'

in good aith0 and 2n the a"sence o "oth registration and !ossession$ the vendee who !resents the oldest title (who irst "rought the !ro!ert% in good aith'

7eld: 6o' (!!l% Sec' D*$ Rule D: o the Revised Rules o Court instead' The Court e3!lained that the !urchaser o an unregistered land in a sheri >s e3ecution sale onl% ste!s in the shoes o the 1udg#ent de"tor' %#ouses ,abriel vs. *abanta Facts: /a"anta s!ouses were the registered owners o two lots' The% #ortgaged the said !ro!erties to DB. as collateral' 9ater$ the s!ouses sold the land to Susana Soriano (7Deed o sale o !arcels o land with assu#!tion o #ortgage) with a right to re!urchase0 the% ailed to "u% it "ac<' Susana e3ecuted a docu#ent entitled MCancellation o ContractM where"% she trans erred to (le1andro all her rights over the two lots' (le1andro and his son (l redo cultivated the lots' Cowever$ when the% were read% to !a% the entire loan$ the% ound that Tan>s daughter alread% "ought the land' Issue: 456 the Tan-Re%es is in good aith when she "ought and registered the land' Rulin : 6o' Jood aith is so#ething internal0 hence$ we #ust rel% on the conduct and outward acts o Tan-Re%es' Jood aith #ust concur with registration' Consolidated 3ural 8an) va. CA Facts: The /adrid "rothers were the registered owners o a lot' 2t was su"divided' RiAal /adrid sold !art o his share to (le1a Ja#iao and Lelisa Da%ag "% virtue o a Deed o Sale. The sale was not registered0 however$ Ja#iao and Da%ag declared the !ro!ert% or ta3ation !ur!oses' ( !art o the land was sold to CernandeA and dela CruA and the heirs o the latter continued !ossession' The /adrid "rothers sold the sa#e land to /ar&ueA' The sale was registered' /ar&ueA #ortgaged the land0 these were registered' The land was oreclosed and was sold to Cali3to' The heirs o dela CruA iled a case or reconve%ance' Issue: 456 1*)) would a!!l%' 7eld: 6o$ 1*)) cannot "e invo<ed where two !ersons #ade the sale' (!!l% the !rinci!le o !rior te#!ore$ !otior 1ure' The Ceirs have a su!erior right' Hano#ol va. Pila#il Facts: Cano!ol clai#s ownershi! over the land "% virtue o a series o !urchases "% #eans o !rivate docu#ents ro# the Sia!os' .ila!il asserts his right on the strength o a dul% notariAed deed e3ecuted "% the owners e3ecuted in his avor and registered under (ct' 6o' DD))' Issue: 456 the registration o the second sale in Cano!ol>s rights as the irst vendee' avor o .ila!il a ects

7eld: Res' The "etter right re erred to in (ct 6o' DD)) is #ore than a #ere !rior deed' 2t involves acts and circu#stances which co#"ined$ would #a<e it clear

Sales

Reviewer:

Case

Digests

(Dean

S u n d i a n g ) | 14 2B 2010-2011

that the irst "u%er has a "etter right than the second !urchaser' There see#s to "e no clear evidence o Cano!ol>s !ossession o the land' Cano!ol cannot have a "etter right than .ila!il who$ according to the Trial Court was not a !urchaser in "ad aith'