Sampaguita Pictures

Sampaguita Pictures, Inc. vs. Jalwindor Manufacturers, Inc.


93 SCRA 420

October 1979

FACTS:

Both the plaintiff-appellant Sampaguita Pictures Inc. (Sampaguita) and

defendant-appellee Jalwindor Manufacturers Inc. (Jalwindor) were domestic

corporations duly organized under the Philippine laws. Sampaguita leased to

Capitol “300” Inc. (Capitol) the roof deck of its building with the agreement that

all permanent improvements Capitol will make on said property shall belong to

Sampaguita without any part on the latter to reimburse Capitol for the expenses

of said improvements. Shortly, Capitol purchased on credit from Jalwindor glass

and wooden jalousies, which the latter itself delivered and installed in the leased

premises, replacing the existing windows.

On June 1, 1964, Jalwindor filed with the CFI of Rizal, Quezon City an action for

collection of a sum of money with a petition for preliminary attachment against

Capitol for its failure to pay its purchases. Later, Jalwindor and Capitol submitted

to the trial court a Compromised Agreement wherein Capitol acknowledged its

indebtedness of P9,531.09, payable in monthly installments of at least P300.00 a

month beginning December 15,1964 and that all the materials that Capitol

purchased will be considered as security for such undertaking. Meanwhile,

Sampaguita filed a complaint for ejectment and for collection of a sum of money

against Capitol for the latter’s failure to pay rentals from March 1964 to April

1965, and the City Court of Quezon City ordered Capitol on June 8, 1965 to

vacate the premises and to pay Sampaguita.

On the other hand, Capitol likewise failed to comply with the terms of the

Compromise Agreement, and on July 31, 1966, the Sheriff of Quezon City made

levy on the glass and wooden jalousies. Sampaguita filed a third-party claim

alleging that it is the owner of said materials and not Capitol, but Jalwindor filed

an idemnity bond in favor of the Sheriff and the items were sold at public auction

on August 30, 1966, with Jalwindor as the highest bidder for P6,000.00.

Sampaguita filed with the CFI of Rizal, Quezon City an action to nullify the

Sheriff's sale and for an injunction to prevent Jalwindor from detaching the glass

and wooden jalousies. Jalwindor was ordered to maintain the status quo pending

final determination of the case, and on October 20, 1967, the lower court

dismissed the complaint and ordered Sampaguita to pay Jalwindor the amount of

P500.00 as attorney's fees.

ISSUE:

Was there a delivery made and, therefore, a transfer of ownership of the thing

sold?

COURT RULING:

The Supreme Court reversed the decision of the lower court declaring

Sampaguita as declared the lawful owner of the disputed glass and wooden

jalousies, permanently enjoining Jalwindor from detaching said items from the

roof deck of the Sampaguita Pictures Building, and ordered Jalwindor to pay

Sampaguita the sum of P1,000.00 for and as attorney's fees.

When a property levied upon by the sheriff pursuant to a writ of execution is

claimed by a third person in a sworn statement of ownership thereof, as

prescribed by the rules, an entirely different matter calling for a new adjudication

arises. The items in question were illegally levied upon since they do not belong

to the judgment debtor. The power of the Court in execution of judgment

extends only to properties unquestionably belonging to the judgment debtor. The

fact that Capitol failed to pay Jalwindor the purchase price of the items levied

upon did not prevent the transfer of ownership to Capitol and, later, to

Sampaguita by virtue of the agreement in their lease contract. Therefore, the

complaint of Sampaguita to nullify the Sheriff's sale is well founded, and should

prosper.

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93 SCRA 420

October 1979

FACTS:

Both the plaintiff-appellant Sampaguita Pictures Inc. (Sampaguita) and

defendant-appellee Jalwindor Manufacturers Inc. (Jalwindor) were domestic

corporations duly organized under the Philippine laws. Sampaguita leased to

Capitol “300” Inc. (Capitol) the roof deck of its building with the agreement that

all permanent improvements Capitol will make on said property shall belong to

Sampaguita without any part on the latter to reimburse Capitol for the expenses

of said improvements. Shortly, Capitol purchased on credit from Jalwindor glass

and wooden jalousies, which the latter itself delivered and installed in the leased

premises, replacing the existing windows.

On June 1, 1964, Jalwindor filed with the CFI of Rizal, Quezon City an action for

collection of a sum of money with a petition for preliminary attachment against

Capitol for its failure to pay its purchases. Later, Jalwindor and Capitol submitted

to the trial court a Compromised Agreement wherein Capitol acknowledged its

indebtedness of P9,531.09, payable in monthly installments of at least P300.00 a

month beginning December 15,1964 and that all the materials that Capitol

purchased will be considered as security for such undertaking. Meanwhile,

Sampaguita filed a complaint for ejectment and for collection of a sum of money

against Capitol for the latter’s failure to pay rentals from March 1964 to April

1965, and the City Court of Quezon City ordered Capitol on June 8, 1965 to

vacate the premises and to pay Sampaguita.

On the other hand, Capitol likewise failed to comply with the terms of the

Compromise Agreement, and on July 31, 1966, the Sheriff of Quezon City made

levy on the glass and wooden jalousies. Sampaguita filed a third-party claim

alleging that it is the owner of said materials and not Capitol, but Jalwindor filed

an idemnity bond in favor of the Sheriff and the items were sold at public auction

on August 30, 1966, with Jalwindor as the highest bidder for P6,000.00.

Sampaguita filed with the CFI of Rizal, Quezon City an action to nullify the

Sheriff's sale and for an injunction to prevent Jalwindor from detaching the glass

and wooden jalousies. Jalwindor was ordered to maintain the status quo pending

final determination of the case, and on October 20, 1967, the lower court

dismissed the complaint and ordered Sampaguita to pay Jalwindor the amount of

P500.00 as attorney's fees.

ISSUE:

Was there a delivery made and, therefore, a transfer of ownership of the thing

sold?

COURT RULING:

The Supreme Court reversed the decision of the lower court declaring

Sampaguita as declared the lawful owner of the disputed glass and wooden

jalousies, permanently enjoining Jalwindor from detaching said items from the

roof deck of the Sampaguita Pictures Building, and ordered Jalwindor to pay

Sampaguita the sum of P1,000.00 for and as attorney's fees.

When a property levied upon by the sheriff pursuant to a writ of execution is

claimed by a third person in a sworn statement of ownership thereof, as

prescribed by the rules, an entirely different matter calling for a new adjudication

arises. The items in question were illegally levied upon since they do not belong

to the judgment debtor. The power of the Court in execution of judgment

extends only to properties unquestionably belonging to the judgment debtor. The

fact that Capitol failed to pay Jalwindor the purchase price of the items levied

upon did not prevent the transfer of ownership to Capitol and, later, to

Sampaguita by virtue of the agreement in their lease contract. Therefore, the

complaint of Sampaguita to nullify the Sheriff's sale is well founded, and should

prosper.

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SALONGA VS FARRALES 105 SCRA 359, 369 (1981)FACTS:The defendant Julia B. Farrales is the titled owner of a residential lot in Sta. Rita Olongapo City.Within the owned parcel of land by the defendant, the plaintiff, spouses Salonga are the lessees of the156 sq. meters of land where the latter erected a house and is paying rentals to the defendant.Sometimes before 1968, the plaintiff failed to pay rental and that as a result, the defendant filedan ejectment case for non-payment of rentals against the plaintiff. Thus, the defendant forced theplaintiff. The plaintiff then offered that they will just buy their occupied parcel of land instead of vacating the land and the house of strong materials, however, despite of the insistence of the plaintiff,the titled owner defendant refused to accept the offer, thus there is no contract of sale or sell in theaforesaid land was realized.The

plaintiff then, after a strict refusal from the defendant-owner to sell her land, filed forpetition for relief. The case was heard and elevated until the CA, praying for ordering to the defendantto sell her parcel of land where the house of the plaintiff was erected and that the plaintiff invoke theirright to be subjected under Section 6, (9) Article II of the new constitution, referring to the applicationof social justice which they contended that it delimits and regulated property rights and private gains.ISSUE:Was the contention of the plaintiff correct such that by invoking for the promotion of social justice, provided in article 6 (9) Article II of the constitution, they could gain their contention for relief and force the defendant to sell her land?RULING:No, the contention of social justice cannot be invoked by the plaintiff just gain relief and forcethe defendant to sell her land where the plaintiff's house was erected.Social Justice is said to be for promotion of economic development and proper equilibriumbetween the relationship of all units of the society. However Social Justice cannot be invoked totrample on the rights of property owners who under the constitution and laws are also entitled forprotection. Social justice is not intended to take away rights from a person and give them to anotherwho is not entitled thereto.In the case at bar, the plaintiff cannot force the defendant to sell her title by invoking equity and justice rather, the plaintiff 's may remove the improvements should the lessor refuse to reimburse, bythe lessee do not have the right to buy the land. The right of property of the defendant over her ownedland cannot be simply override by invoking social justice, since the right of property is also protectedby the state. Thus, judgment affirmed in favor of the defendant.----------------------------------------------------------------------

G.R. No. 125088: Lagrimas Boy v. Court of Appeals, Erlinda & Isagani Ramos14 April 2004, 427 SCRA 196

Constructive Delivery In 1984, Lagrimas needed money for her brother’s placement fee to go abroad. She then borrowed P15k from spouses Ramos. In 1986, Lagrimas executed a Deed of Absolute Sale with the Ramoses. Subject of the sale was Lagrimas’ 55.75 sq m land and the house erected there. Price agreed upon was P31k. Allegedly, Lagrimas’ debt is to be deducted, so the Ramoses are to pay P16k more. Lagrimas stayed in the property as the Ramoses were not yet in immediate need thereof. In 1988, Lagrimas went to Erlinda asking that they execute a Kasunduan. The Kasunduan states that the Ramoses still owe P16k to Lagrimas; that interest is to be deducted in favor of the Ramoses so that would leave a balance of P8.5k. The Kasunduan was notarized but upon signing, Erlinda changed her mind. She said she realized that they were actually able to pay P31k to Lagrimas when the Deed of Sale was executed. She advised the lawyer to change what she just signed. The lawyer said that the parties need to talk to each other first. Lagrimas promised the lawyer that she will be scrapping the Kasunduan.Later, the need for the Ramoses to occupy the land arose. They demanded Lagrimas to vacate the property. Lagrimas refused to do so. She invoked the Kasunduan. ISSUE: Whether or not the Kasunduan prevails over the Deed of Absolute Sale. HELD: No. A review of the Deed shows no indication that there was a balance left to be paid to Lagrimas. The contract is absolute. It has been established that Lagrimas sold the subject property to private respondents for the price of P31k, as evidenced by the Deed of Absolute Sale, the due execution of which was not controverted by Lagrimas. The contract is absolute in nature, without any provision that title to the property is reserved in Lagrimas until full payment of the purchase price. By the contract of sale, Lagrimas (as vendor), obligated herself to transfer the ownership of, and to deliver, the subject property to the Ramoses (as vendees) after they paid the price of P31k. Under Article 1477 of the Civil Code, the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.

In addition, Article 1498 of the Civil Code provides that when the sale is made through a public instrument, as in this case, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. In this case, the Deed of Absolute Sale does not contain any stipulation against the constructive delivery of the property to private respondents. In the absence of stipulation to the contrary, the ownership of the property sold passes to the vendee upon the actual or constructive delivery thereof. The Deed of Absolute Sale, therefore, supports private respondents’ right of material possession over the subject property.-------------------------------------------------------------------------

Labagala vs. SantiagoSales Case DigestsUST Faculty of Civil Law Page 112A SY 2009-2010December 4, 2001 GR No. 132305Second DivisionPonente: Quisumbing, J.Facts: Jose T. Santiago owned a parcel of land.Alleging that Jose had fraudulently registered itin his name alone, his sisters Nicolasa andAmanda Santiago (respondents), sued Jose forrecovery of 2/3 share of the property. On April20, 1981, the trial court in that case decided infavor of the sisters, recognizing their right ofownership over portions of the property. Josedied intestate. Thereafter, the respondents filedan action before the Regional Trial Court ofManila seeking to recover Jose’s 1/3 share overthe property.Respondents claim that Jose’s share in theproperty ipso jure belongs to them because theyare the only legal heirs of their brother, who diedintestate and without issue. They allege that it ishighly improbable for petitioner to have paid thesupposed consideration of P150,000 for the saleof the subject property because petitioner wasunemployed and without any visible means oflivelihood at the time of the alleged sale.Petitioner Labagala, on the other hand, claimsthat she is the daughter of Jose and argued thatthe purported sale of the property was in fact adonation to her.The RTC held that while there was indeed noconsideration for the deed of sale executed byJose in favor of petitioner, but said deedconstitutes a valid donation.On appeal, the Court of Appeals reversed thedecision of the RTCIssue: Whether the purported deed of sale wasvalidHeld: There is no valid sale.Clearly, there is no valid sale in this case. Jose

did not have the right to transfer ownership ofthe entire property to petitioner since 2/3 thereofbelonged to his sisters. Petitioner could not havegiven her consent to the contract, being a minorat the time. Consent of the contracting parties isamong the essential requisites of a contract,including one of sale, absent which there can beno valid contract. Moreover, petitioner admittedlydid not pay any centavo for the property, whichmakes the sale void. Article 1471 of the CivilCode provides:If the price is simulated, the sale is void, but theact may be shown to have been in reality adonation, or some other act or contract.--------------------------------------------

Villanueva vs CAG.R. No. 107624Subject: SalesDoctrine: meeting of the minds as to price is essentialFacts:This is a petition assailing the decision of the CA dismissing the appeal of the petitioners. CA rendered that there was no contract of sale.- In 1985, Gamaliel Villanueva (tenant) of a unit in the 3-door apartment building owned by defendants-spouses (now private respondents) Jose Dela Cruz and Leonila dela Cruz located at Project 8, Quezon City.- About February of 1986, Dela Cruz offered said parcel of land with the 3-door apartment building for sale and plaintiffs, son and mother, showed interest in the property.- Because said property was in arrears(overdue) in the payment of the realty taxes, dela Cruz approached Irene Villanueva and asked for a certain amount to pay for the taxes so that the property would be cleared of any incumbrance.- Irene Villanueva gave P10,000.00 on two occasions. It was agreed by them that said P10,000.00 would form part of the sale price of P550,000.00.- Dela Cruz went to plaintiff Irene Villanueva bringing with him Mr. Ben Sabio, a tenant of one of the units in the 3-door apartment building and requested Villanueva to allow said Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which the plaintiffs consented, so that they would just purchase the other half portion and would be paying only P265,000.00, they having already — given an amount of P10,000.00 used for paying the realty taxes in arrears.- Accordingly the property was subdivided and two (2) separate titles were secured by defendants Dela Cruz. Mr. Ben Sabio immediately made payments by installments.- March 1987 Dela Cruz executed in favor of their co-defendants, the spouses Guido Pili and Felicitas Pili, a Deed of Assignment of the other one-half portion of the parcel of land wherein plaintiff Gamaliel Villanueva’s apartment unit is situated, purportedly as full payment and satisfaction of an indebtedness

obtained from defendants Pili.- the Transfer Certificate of Title No. 356040 was issued in the name of defendants Pili on the same day.- The plaintiffs came to know of such assignment and transfer and issuance of a new certificate of title in favor of defendants Pili.- plaintiff Gamaliel Villanueva complained to the barangay captain of Bahay Turo, Quezon City, on the ground that there was already an agreement between defendants Dela Cruz and themselves that said portion of the parcel of land owned by defendants Dela Cruz would be sold to him. As there was no settlement arrived at, the plaintiffs elevated their complaint to this Court through the instant action.- RTC rendered its decision in favor of Dela Cruz. CA affirmed.ISSUE: WON there was a perfected sale between Villanueva and Dela Cruz.

HELD:- Petitioners contend that private respondents’ counsel admitted that “P10,000 is partial or advance payment of the property.” Necessarily then, there must have been an agreement as to price, hence, a perfected sale. They cite Article 1482 of the Civil Code which provides that “(w)henever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract.”- Private respondents contradict this claim with the argument that “(w)hat was clearly agreed (upon) between petitioners and respondents Dela Cruz was that the P10,000.00 primarily intended as payment for realty tax was going to form part of the consideration of the sale if and when the transaction would finally be consummated.” Private respondents insist that there “was no clear agreement as to the true amount of consideration.”- Dela Cruz’ testimony during the cross-examination firmly negated any price agreement with petitioners because he and his wife quoted the price of P575,000.00 and did not agree to reduce it to P550,000.00 as claimed by petitioner.- Villanueva on cross-examination: “After the Deed of Sale relative to the purchase of the property was prepared, Mr. dela Cruz came to me and told me that he talked with one of the tenants and he offered to buy the portion he was occupying if I will agree and I will cause the partition of the property between us.” Villanueva said that he agreed and that the price 550,000 was to be divided into two. (Sabio and Villanueva) *The contract which the appellant is referring to was not presented to the court and the appellant did not use all effort to produce the said contract.- SC: “The price of the leased land not having been fixed, the essential elements which give life to the contract were lacking. It follows that the lessee cannot compel the lessor to sell the leased land to him. The price must be certain, it must be real, not fictitious. A contract of sale is not void for uncertainty when the price, though not directly stated in terms of pesos and centavos, can be made

certain by reference to existing invoices identified in the agreement. In this respect, the contract of sale is perfected. The price must be certain, otherwise there is no true consent between the parties. There can be no sale without a price.- In the instant case, however, what is dramatically clear from the evidence is that there was no meeting of mind as to the price, expressly or impliedly, directly or indirectly.- Sale is a consensual contract. He who alleges it must show its existence by competent proof. Here, the very essential element of price has not been proven.- Lastly, petitioners’ claim that they are ready to pay private respondents is immaterial and irrelevant as the latter cannot be forced to accept such payment, there being no perfected contract of sale in the first place.

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- BUENAVENTURA vs. CA [2003] PETITIONERS: Sps Bernardo Buenaventura & Consolacion Joaquin; Sps Juanito

Edra & Nora Joaquin; Sps Rufino Valdoz & Emma Joaquin; and Natividad Joaquin.

RESPONDENTS: Court of Appeals; Sps Leonardo Joaquin & Feliciano Landrito; Sps Fidel Joaquin & Conchita Bernardo; Sps Tomas Joaquin & Soledad Alcoran; Sps Artemio Joaquin & Socorro Angeles; Sps Alexander Mendoza & Clarita Joaquin; Sps Telesforo Carreon & Felicitas Joaquin; Sps Danilo Valdoz & Fe Joaquin; and sps Gavino Joaquin & Lea Asis.

Facts:

Sps Leonardo Joaquin & Feliciano Landrito are the parents of petitioners. Petitioners assail the sale of several lands by their parents to their other siblings (see p. 265 for complete list of sales made) for being void ab initio based on the ff grounds:1. no actual valid consideration2. properties are more than 3x more valuable than the measly purchase price (purchase

price was grossly inadequate)3. deeds of sale do not reflect & express the true intent of the parties4. deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs of

their legitime. Defense of the respondents:

1. no cause of action, requisite standing & interest2. sales were w/sufficient considerations & made by their parents voluntarily in good

faith & w/full knowledge of the consequences3. certificates of title were issued w/factual & legal basis.

Trial court dismissed the case WRT Gavino Joaquin & Lea Asis. Ruled in favor of the respondents & dismissed the complaint. 1. The rt of the compulsory heirs to a legitime is contingent & it only commences from

the moment of the death of the decedent (CC Art. 777). The value of the property left at the death of the testator is the basis for determining the legitime (Art. 908). Plaintiffs cannot claim an impairment of their legitime since their parents are still alive.

2. Deeds of Sale were executed for valuable consideration. CA affirmed Trial Court decision. In addition to the grounds stated by the trial court,

CA also mentioned that:

1. While still alive, parents are free to dispose of their properties provided such is not done in fraud of creditors.

2. Petitioners are not parties in interest since they’re not parties to the deeds of sale nor are they creditors of their parents.

Issues & Ratio:

1. WON petitioners have a legal interest over the properties subject of the Deeds of Sale. – NO.

The complaint betrays their motive for filing the case. They are interested in obtaining the properties by hereditary succession but they have failed to show any legal right to these properties.

Real party-in-interest is one who is either benefited or injured by the judgment of the party entitled to the avails of the suit. This includes parties to the agreement or are bound either principally/subsidiarily. Parties must have a present substantial interest & not merely expectancy/future contingent subordinate or consequential interest.

In this case, the petitioners only have an inchoate rt w/c vests only upon the death of their parents. Besides, sale of the lots to their siblings does not affect the value of their parents’ estate since the lots are replaced with cash of equivalent value.

2. WON the deeds of sale are void for lack of consideration. – NO. A contract of sale is not a real contract but a consensual contract. It’s binding & valid

upon the meeting of the minds as to the price regardless of the manner of payment or breach of such. It’s still valid even if the real price is not stated in the contract, making it subject to reformation. But if the price is simulated, there is no meeting of the minds, thus the contract is void (CC Art. 1471).

Act of payment of the price does not determine the validity of a contract of sale. Failure to pay the consideration is different from lack of consideration. The former results in a rt to demand fulfillment or cancellation of the contract while the latter prevents the existence of a valid contract.

Petitioners failed to show that the prices in the deeds of sale were simulated. They don’t even know the financial capacity of their siblings to buy these lots. Respondents’ minds met as to the purchase price w/c was stated in the deeds of sale & the buyer siblings have paid the price to their parents.

3. WON the Deeds of Sale are void for gross inadequacy of the price. – NO. CC Art. 1355: Except in cases specified by law, lesion/ INADEQUACY OF CAUSE shall

not invalidate a contract, unless there has been fraud, mistake or undue influence. CC Art. 1470: Gross inadequacy of price doesn’t affect a contract of sale, except as may

indicate a defect in the consent or that the parties really intended a donation or some other act or contract.

Petitioners failed to prove any instance in the aforementioned provisions that would invalidate the deeds of sale. There is no requirement that the price be equal to the exact value of the property on sale. It only matters that all respondents believed that they received the commutative value of what they gave.

Vales vs. Villa: Courts cannot be guardians of people who are not legally incompetent. Courts operate not because a person has been defeated/overcome by another, but because he has been defeated or overcome ILEGALLY. There should be a violation of the law, commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation & remedy it.

HOLDING: CA affirmed.

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Sps. Bernardo Buenaventura andConsolacion Joaquin vs. Court of AppealsNovember 20, 2003 GR No. 126376First DivisionPonente: Carpio, J.Facts: Defendant spouses Leonardo Joaquinand Feliciana Landrito are the parents ofplaintiffs Consolacion, Nora, Emma andNatividad as well as of defendants Fidel, Tomas,Artemio, Clarita, Felicitas, Fe, and Gavino, allsurnamed Joaquin. Leonardo and Felicianaexecuted several deeds of sale in favour of theirco-defendant children.Petitioners then filed an action the Regional TrialCourt (RTC) of Makati seeking to declare as nulland void ab initio the deeds of sale executed byLeonardo and Feliciana claiming that: (1) herewas no actual valid consideration for the deedsof sale, (2) assuming that there wasconsideration in the sums reflected in thequestioned deeds, the properties are more thanthree-fold times more valuable than the measlysums appearing therein, and (3) the deeds ofsale do not reflect and express the true intent ofthe partiesDefendants, on the other hand aver (1) that thesales were with sufficient considerations andmade by defendants parents voluntarily, in goodfaith, and with full knowledge of theconsequences of their deeds of sale; and (2)that the certificates of title were issued withsufficient factual and legal basis.The RTC dismissed the case, declaring that thedeeds of sale were all executed for valuableconsideration.On appeal, the Court of Appeals affirmed thedecision of the RTC.Issues:(1) Whether there the deeds of sale arevoid for lack of consideration(2) Whether the deeds of sale are void forgross inadequacy of priceHeld: The petition is without merit.(1) A contract of sale is not a real contract, but aconsensual contract. As a consensual contract,a contract of sale becomes a binding and validcontract upon the meeting of the minds as toprice. If there is a meeting of the minds of the

parties as to the price, the contract of sale isvalid, despite the manner of payment, or eventhe breach of that manner of payment. If the realprice is not stated in the contract, then thecontract of sale is valid but subject toreformation. If there is no meeting of the mindsof the parties as to the price, because the pricestipulated in the contract is simulated, then thecontract is void. Article 1471 of the Civil Codestates that if the price in a contract of sale issimulated, the sale is void.It is not the act of payment of price thatdetermines the validity of a contract of sale.Payment of the price has nothing to do with theperfection of the contract. Payment of the pricegoes into the performance of the contract.Failure to pay the consideration is different fromlack of consideration. The former results in aright to demand the fulfillment or cancellation ofthe obligation under an existing valid contractwhile the latter prevents the existence of a validcontract.Petitioners failed to show that the prices in theDeeds of Sale were absolutely simulated. Toprove simulation, petitioners presented EmmaJoaquin Valdozs testimony stating that theirfather, respondent Leonardo Joaquin, told herthat he would transfer a lot to her through adeed of sale without need for her payment of thepurchase price. The trial court did not find theallegation of absolute simulation of pricecredible. Petitioners failure to prove absolutesimulation of price is magnified by their lack ofknowledge of their respondent siblings financialcapacity to buy the questioned lots. On the otherhand, the Deeds of Sale which petitionerspresented as evidence plainly showed the costof each lot sold. Not only did respondents’ mindsmeet as to the purchase price, but the real pricewas also stated in the Deeds of Sale. As of thefiling of the complaint, respondent siblings havealso fully paid the price to their respondentfather.(2) Articles 1355 of the Civil Code states:Art. 1355. Except in cases specified by law,lesion or inadequacy of cause shall notinvalidate a contract, unless there has beenfraud, mistake or undue influence.Article 1470 of the Civil Code further provides:Art. 1470. Gross inadequacy of price doesnot affect a contract of sale, except as maySales Case DigestsUST Faculty of Civil Law Page 102A SY 2009-2010

indicate a defect in the consent, or that theparties really intended a donation or some otheract or contract.Petitioners failed to prove any of the instancesmentioned in Articles 1355 and 1470 of the CivilCode which would invalidate, or even affect, theDeeds of Sale. Indeed, there is no requirementthat the price be equal to the exact value of thesubject matter of sale. All the respondentsbelieved that they received the commutativevalue of what they gave.-------------------------------------------------

Right of First RefusalLITONJUA vs. L & R CORPORATIONG.R. No. 130722, December 9, 1999Facts: Petitioner-spouses Litonjua obtained a loan from L & R Corporation. It wasstipulated in the contract of mortgage which secured the loan that (1) the mortgagor shallnot sell the mortgaged property without the prior written consent of mortgagee; and (2) thatthe mortgagee shall be given priority should the mortgagor decide to sell the mortgagedproperty.Spouses Litonjuas failed to pay the loan. L & R then foreclosed the mortgagedproperty. But when respondent tried to register the certificate of sale for the auction sale, itlearned that Petitioners Litonjua had already sold the mortgaged property to PhilippineWhite House Auto Supply (PWHAS) without its the prior written consent and withoutallowing it to exercise the first option to buy the property. L & R consolidated title to theproperty when it refused to accept the redemption price offered by PWHAS. Thereafter, acomplaint for Quieting of Title and Annulment of Title was filed by the spouses Litonjua andPWHAS against respondents.The lower court dismissed the case. The Court of Appeals, however, reversed thedecision and held that (1) the stipulation in the mortgage contract requiring prior writtenconsent of the mortgagee before the mortgagor can sell is valid; and (2) the sale betweenthe Litonjuas and PWHAS must be rescinded because it violated L & R’s right of first refusal.Issue: Is rescission available in case of violation of the Right of First Refusal?Held: The right of first refusal has long been recognized as valid in our jurisdiction. Theconsideration for the loan-mortgage includes the consideration for the right of first refusal.CIVIL LAW 21RED NOTES 2001-2002The case of Guzman, Bocaling & Co v. Bonnevie is instructive on this point – “Under Article

1380 to 1381(3) of the Civil Code, a contract otherwise valid may nonetheless besubsequently rescinded by reason of injury to third persons, like creditors. The status ofcreditors could be validly accorded the Bonnevies for they had substantial interests thatwere prejudiced by the sale of the subject property to the petitioner without recognizing theirright of first priority under the contract of lease.”

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EFFECT ON A PERFECTED CONTRACT OF SALE & LOSS OF THE THINGSOLDG . R . N o. 1 1 7 1 87 J u l y 2 0 , 2 0 01

UNION MOTOR CORPORATION,petitioner-appellant,vs.T H E C O U R T O F A P P E A L S , J A R D I N E - M A N I L A F I N A N C E , I N C . , S P O U S E S ALBIATO BERNAL andMILAGROS BERNAL,respondents-appelles.Ponente: De Leon Jr.Facts:Bernal spouses purchased from (petitioner) Union Motor Corporation one CimarronJeepney to be paid in installments and executed a promissory note and a deed of chattel mor tgage in favor o f the pe t i t ioner , and en te red in to a cont rac t o f ass ignment o f the promissory note and chattel mortgage with Jardine-Manila Finance, Inc through ManuelSosmeña , an agent o f the pe t i t ioner , a l though the respondent spouses have no t ye t phys ica l ly possessed the veh ic le , Sosmeña requi red them to s ign the rece ip t as ac o n d i t i o n f o r t h e d e l i v e r y o f t h e ve h i c l e . Spouses continued paying the installments even if the subject motor vehicle remainedundelivered inasmuch as Jardine-Manila Finance, Inc. promised to deliver the subject jeepney. The respondent spouses have paid a total of worth of installments before theydiscontinued paying on account of non-delivery of the subject motor vehicle, the reasonwhy the vehicle was not delivered was due to the fact that Sosmeña allegedly took thesubject motor vehicle in his personal capacity.J a r d i n e - M a n i l a F i n a n c e , I n c . , f i l e d a c o m p l a i n t f o r a s u m o f m o n e y , a g a i n s t t h e respondent Berna l spouses before the then Cour t o f F i r s t Ins tance of Mani la .Thecomplaint was amended and transferred to the Regional Trial Court of Makati to include petitioner Union Motor Corporation as alternative defendant, after the petitioner filed itsanswer, the respondent spouses filed their amended answer with cross-claim against theformer and counterclaim against Jardine-Manila Finance, Inc. The respondent spouses presented witnesses in support of their defense and counterclaim against the plaintiff andcross-claim against the petitioner.The trial court deemed the presentation of the saidwitness as having been waived by the petitioner.Trial court rendered a decision ordering petitioner to pay the spouses. Not satisfied the petitioner interposed an appeal before the Court of Appeals while the respondent spousesappealed to hold the petitioner solidarily liable with Jardine-Manila Finance, Inc.Theappellate court denied both appeals and affirmed the trial court’s decision. Hence this petition

Issue1: Whether there has been a delivery, physical or constructive, of the subject motor vehicle.Issue 2: Whether spouses must bear the risk of the loss of the thing sold.Held 1: NO to both. The respondent Bernal spouses should bear the loss thereof in accordancewith Article 1504 that when the ownership of goods is transferred to the buyer, the goodsare at the buyer’s risk. But Bernal spouses never came into possession of the subjectmotor vehicle. It is but appropriate that they be reimbursed by the petitioner of the initial payment which they made. The court ruled in favor of the respondent Bernal spouses.Undisputed is the fact that the respondent Bernal spouses did not come into possession of the subject Cimarron jeepney that was supposed to be delivered to them by the petitioner.The registration certificate, receipt and sales invoice that the respondent Bernal spousessigned were signed as a part of the processing and for the approval of their application to buy the sub jec t motor veh ic le . Wi thout such s igned documents , no sa le , much lessdelivery, of the subject jeepney could be made. The documents were not therefore anacknowledgment by respondent spouses of the physical acquisition of the subject motor vehicle but merely a requirement of delivery.Issuance of a sales invoice does not provetransfer of ownership of the thing sold to the buyer; an invoice is nothing more thana detailed statement of the nature, quantity and cost of the thing sold and has beenconsidered not a bill of sale.The thing is considered to be delivered when it is placed in the hands and possession of the vendee . (Civ i l Code , Ar t . 1462) . I t i s t rue tha t the same a r t i c le dec la res tha t the execution of a public instrument is equivalent to the delivery of the thing which is theobject of the contract, but,in order that this symbolic delivery may produce the effect, it i s necessary tha t the vendor sha l l have had contro l over the th ing so ld tha t , a t the moment of the sale, its material delivery could have been made. It is not enough to confer upon the purchaser the ownership and the right of possession. The thing sold must be placed in his control.When there is no impediment whatever to prevent the thing sold pass ing in to the tenancy of the purchaser by the so le wi l l o f the vendor , symbol icd e l i v e r y t h r o u g h t h e e x e c u t i o n o f a p u b l i c i n s t r u m en t i s s u f f i c i e n t . B u t i f , n o t w i t h s t a n d i n g t h e e x e c u t i o n o f t h e i n s t r u m e n t , t h e pu r c h a s e r c a n n o t h a v e t h e en joyment and mater ia l t enancy o f the th ing and make use o f i t h imse l f or througha n o t h e r i n h i s n a m e , b e c a u s e s u c h t e n a n c y a n d e n j o y me n t a r e o p p o s e d b y t h e interposition of another will, then the delivery has not been effected .Held 2:Inasmuch as there was neither physical nor constructive delivery of a determinate thing,(in this case, the subject motor vehicle) the thing sold remained at the sellers risk.The pe t i t ioner should there fore bear the loss o f the sub jec t motor vehic le a f te r Sosmeaallegedly stole the same.Decision AFFIRMED-------------------------------------------

DIGESTAdelfa Properties vs. CA [G.R. No. 111238. January 25, 1995.]Second Division, Regalado (J): 3 concur

PARTIES: Roasrio and Salud Jimenez – SellerAdelfa Properties – BuyerSubject:: western portion of a parcel of land 8855 sq. ms. Covered by TCT 309773 situated in BarrioCulasi, Las Pinas, Metro Manila Facts:Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and Dominador Jimenez, werethe registered co-owners of a parcel of land consisting of 17,710 sq. ms (TCT 309773) situated in BarrioCulasi, Las Piñas, Metro Manila. On 28 July 1988, Jose and Dominador Jimenez sold their share consistingof 1/2 of said parcel of land, specifically the eastern portion thereof, to Adelfa Properties pursuant to a“Kasulatan sa Bilihan ng Lupa.” Subsequently, a “Confirmatory Extrajudicial Partition Agreement” wasexecuted by the Jimenezes, wherein the eastern portion of the subject lot, with an area of 8,855 sq. ms. wasadjudicated to Jose and Dominador Jimenez, while the western portion was allocated to Rosario and SaludJimenez.Thereafter, Adelfa Properties expressed interest in buying the western portion of the property from Rosarioand Salud. Accordingly, on 25 November 1989, an “Exclusive Option to Purchase” was executed betweenthe parties, with the condition that the selling price shall be P2,856,150, that the option money of P50,000shall be credited as partial payment upon the consummation of sale, that the balance is to be paid on or before 30 November 1989, and that in case of default by Adelfa Properties to pay the balance, the option iscancelled and 50% of the option money shall be forfeited and the other 50% refunded upon the sale of the property to a third party.Before Adelfa Properties could make payment, it received summons on 29 November 1989, together with acopy of a complaint filed by the nephews and nieces of Rosario and Salud against the latter, Jose andDominador Jimenez, and Adelfa Properties in the RTC Makati (Civil Case 89-5541), for annulment of thedeed of sale in favor of Household Corporation and recovery of ownership of the property covered by TCT309773.As a consequence, in a letter dated 29 November 1989, Adelfa Properties informed Rosario and Salud thatit would hold payment of the full purchase price and suggested that the latter settle the case with their nephews and nieces. . Salud Jimenez refused to heed the suggestion of Adelfa Properties and attributed thesuspension of payment of the purchase price to “lack of word of honor . On 14 December 1989, Rosario and Salud sent Francisca Jimenez to see Atty. Bernardo, in his capacity asAdelfa Properties’ counsel, and to inform the latter that they were cancelling the transaction. In turn, Atty.Bernardo offered to pay the purchase price provided that P500,000.00 be deducted therefrom for thesettlement of the civil case. This was rejected by Rosario and Salud. On 22 December 1989, Atty. Bernardowrote Rosario and Salud on the same matter but this time reducing the amount from P500,000.00 toP300,000.00, and this was also rejected by the latter. On 23 February 1990, the RTC dismissed Civil Case89-5541.On 16 April 1990, Atty. Bernardo wrote Rosario and Salud informing the latter that in view of thedismissal of the case against them, Adelfa Properties was willing to pay the purchase price, and herequested that the corresponding deed of absolute sale be executed. This was ignored by Rosario and Salud.On 27 July 1990, Jimenez’ counsel sent a letter to Adelfa Properties enclosing therein a check for P25,000.00 representing the refund of 50% of the option money paid under the exclusive option to purchase. Rosario and Salud then requested Adelfa Properties to return the owner’s duplicate copy of thecertificate of title of Salud Jimenez. Adelfa Properties failed to surrender the certificate of title.Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for annulment of contract with damages, praying, among others, that the exclusive option to purchase be declared null andvoid; that Adelfa Properties be ordered to return the owner’s duplicate certificate of title; and that theannotation of the option contract on TCT 309773 be cancelled.RTC:On 5 September 1991, the trial court rendered judgment holding that the agreement entered into bythe parties was merely anoption contract, and declaring that the suspension of payment by AdelfaProperties constituted a counter-offer which, therefore, was tantamount to a rejection of the option. Itlikewise ruled that Adelfa Properties could not validly suspend payment in favor of Rosario and Salud onthe ground that the vindicatory action filed by the latter’s kin did not involve the western portion of the landcovered by the contract between the parties, but the eastern portion thereof which was the subject of thesale between Adelfa Properties

and the brothers Jose and Dominador Jimenez. The trial court then directedthe cancellation of the exclusive option to purchase.On appeal,RTC:the Court of appeals affirmed in toto the decision of the court a quo. That Article 1590 of the CivilCode on suspension of payments applies only to a contract of sale or a contract to sell, but not to an optioncontract which it opined was the nature of the document subject of the case at bar.Hence, the petition for review on certiorari.Adelfa properties posits that the contract is a Contract of Sale and not an Option Contract or Contract toSell, making the suspension of payment applicable in the case.ISSUE:Whether or not the contract is a Contract of Sale , Option Contract or Contract to Sell.SC:The Supreme Court affirmed the assailed judgment of the Court of Appeals in CA-GR CV 34767, withmodificatory premises.Agreement between parties a contract to sell and not an option contract or a contract of saleThe alleged option contract is acontract to sell, rather than a contract of sale. The distinction between thetwo is important for in contract of sale, the title passes to the vendee upon the delivery of the thing sold;whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass untilthe full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership untiland unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the price Thus, a deed of sale is considered absolute in nature where there isneither a stipulation in the deed that title to the property sold is reserved in the seller until the full paymentof 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.That the parties really intended to execute a contract to sell is bolstered by the fact that the deed of absolutesale would have been issued only upon the payment of the balance of the purchase price, as may be gleanedfrom Adelfa Properties’ letter dated 16 April 1990 wherein it informed the vendors that it “is now readyand willing to pay you simultaneously with the execution of the corresponding deed of absolute sale.”Contract interpreted to ascertain intent of parties; Title not controlling if text shows otherwiseThe important task in contract interpretation is always the ascertainment of the intention of the contracting parties and that task is to be discharged by looking to the words they used to project that intention in their contract, all the words not just a particular word or two, and words in context not words standing alone.Moreover, judging from the subsequent acts of the parties which will hereinafter be discussed, it isundeniable that the intention of the parties was to enter into a contract to sell. In addition, the title of acontract does not necessarily determine its true nature. Hence, the fact that the document under discussionis entitled “Exclusive Option to Purchase” is not controlling where the text thereof shows that it is acontract to sell..Test to determine contract as a “contract of sale or purchase” or mere “option”The test in determining whether a contract is a “contract of sale or purchase” or a mere “option” is whether or not the agreement could be specifically enforced. There is no doubt that Adelfa’s obligation to pay the purchase price is specific, definite and certain, and consequently binding and enforceable. Had theJimenezes chosen to enforce the contract, they could have specifically compelled Adelfa to pay the balanceof P2,806,150.00. This is distinctly made manifest in the contract itself as an integral stipulation,compliance with which could legally and definitely be demanded from petitioner as a consequence.Adelfa Properties justified in suspending payment of balance by reason of vindicatory action filedagainst itIn Civil Case 89-5541, it is easily discernible that, although the complaint prayed for the annulment only of the contract of sale executed between Adelfa Properties and the Jimenez brothers, the same likewise prayedfor the recovery of therein Jimenez’ share in that parcel of land specifically covered by TCT 309773. Inother words, the Jimenezes were claiming to be co-owners of the entire parcel of

land described in TCT309773, and not only of a portion thereof nor did their claim pertain exclusively to the eastern half adjudicated to the Jimenez brothers. Therefore, Adelfa Properties was justified in suspending payment of the balance of the purchase price by reason of the aforesaid vindicatory action filed against it. Theassurance made by the Jimenezes that Adelfa Properties did not have to worry about the case because itwas pure and simple harassment is not the kind of guaranty contemplated under the exceptive clause inArticle 1590 wherein the vendor is bound to make payment even with the existence of a vindicatory actionif the vendee should give a security for the return of the price.Jimenezes may no longer be compelled to sell and deliver subject propertyBe that as it may, and the validity of the suspension of payment notwithstanding, the Jimenezes may nolonger be compelled to sell and deliver the subject property to Adelfa Properties for two reasons, that is,Adelfa’s failure to duly effect the consignation of the purchase price after the disturbance had ceased; and,secondarily, the fact that the contract to sell had been validly rescinded by the Jimenezes.Rescission in a contract to sellArticle 1592 of the Civil Code which requires rescission either by judicial action or notarial act is notapplicable to a contract to sell. Furthermore, judicial action for rescission of a contract is not necessarywhere the contract provides for automatic rescission in case of breach, as in the contract involved in the present controversy. By Adelfa’s failure to comply with its obligation, the Jimenezes elected to resort toand did announce the rescission of the contract through its letter to Adelfa dated 27 July 1990. That writtennotice of rescission is deemed sufficient under the circumstances.WHEREFORE, on the foregoing modificatory premises, and considering that the same result has beenreached by respondent Court of Appeals with respect to the relief awarded to private respondents by thecourt a quo which we find to be correct, its assailed judgment in CA-G.R. CV No. 34767 is herebyAFFIRMED------------------------------

ANG YU ASUNCION VS. COURT OF APPEALS

238 SCRA 602

FACTS:

On July 29, 1987, a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng and Jose Tan before the Regional Trial Court of Manila.

The plaintiffs were tenants or lessees of residential and commercial spaces owned by defendants in Binondo, Manila. On several conditions defendants informed the plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. During negotiations, Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter of offer of P5-million. Plaintiff thereafter asked the defendants to put their offer in writing to which the defendants acceded. In reply to defendants’ letter, plaintiffs wrote, asking that they specify the terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, they sent another letter with the same request.Since defendants failed to specify the terms and conditions of the offer to sell and because of information received that the defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them.

The court dismissed the complaint on the ground that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contact of sale at all.

On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale transferring the property in question to Buen Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. In its reply, it stated that Buen Realty and Development Corporation brought the property subject to the notice of lis pendens.

ISSUE:

Can Buen Realty be bound by the writ of execution by virtue of the notice of lis pendens?

RULING:

No.An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation is upon the concurrence of the essential elements thereof, viz:

(a) the vinculum juris or juridical tie which is the efficient cause established by the various sources of obligations; (b) the object which is the prestation or conduct, required to observed; and (c) the subject-persons who, viewed demandability of the obligation are the active (oblige) and the passive (obligor) subjects.

Among the sources of an obligation is a contract (Art. 1157), which is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its consummation.

Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In sales, particularly, to which the case at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees.

The registration of lis pendens must be independently addressed in appropriate proceedings.Therefore, Buen Realty cannot be held subject to the writ of execution issued by the respondent Judge, let alone ousted from the ownership and possession of the property, without first being duly afforded its day in court.

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