digest sales 2.doc

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Escueta vs. Lim (G.R. No. 137162 January 24,2007)

Was there a perfected contract of sale betweenVirginia (agent of Patricia Llamas, who is the agent ofpetitioner Rubio)? YES.

[A]ll the elements of a valid contract of sale underArticle 1458 of the Civil Code are present, such as: (1)

consent or meeting of the minds; (2) determinatesubject matter; and (3) price certain in money or itsequivalent.26 Ignacio Rubio, the Baloloys, and theirco-heirs sold their hereditary shares for a price certainto which respondent agreed to buy and pay for thesubject properties. The offer and the acceptance areconcurrent, since the minds of the contracting partiesmeet in the terms of the agreement.

In fact, earnest money has been given by respondent.[I]t shall be considered as part of the price and asproof of the perfection of the contract.28 It constitutesan advance payment to be deducted from the totalprice.29Article 1477 of the same Code also states that [t]he

ownership of the thing sold shall be transferred to thevendee upon actual or constructive deliverythereof.30 In the present case, there is actual deliveryas manifested by acts simultaneous with andsubsequent to the contract of sale when respondentnot only took possession of the subject properties butalso allowed their use as parking terminal for jeepneysand buses. Moreover, the execution itself of thecontract of sale is constructive delivery.

Consequently, Ignacio Rubio could no longer sell thesubject properties to Corazon Escueta, after havingsold them to respondent. [I]n a contract of sale, thevendor loses ownership over the property and cannot

recover it until and unless the contract is resolved orrescinded x x x.

On the authority of Virginia as sub-agent: Byauthorizing Virginia Lim to sell the subject properties,Patricia merely acted within the limits of the authoritygiven by her father, but she will have to beresponsible for the acts of the sub-agent, amongwhich is precisely the sale of the subject properties infavor of respondent

ROBERTS v PAPIO

FACTS:

The Spouses Papio were the owners of a 274sq m residential lot located in Makati. In order tosecure a59k loan from the Amparo Investments Corp,they executed a real estate mortgage on the property.Upon Papios failure to pay the loan, the corporationfiled a petition for the extrajudicial foreclosure of themortgage.* Since the couple needed money to redeemthe property and to prevent the foreclosure of the realestate mortgage, they executed a Deed of AbsoluteSale over the property in favor of Martin Papios

cousin,Amelia Roberts.* Of the 95k purchase price, 59kwas paid to the Amparo Investments Corp, while the26k difference was retained by the spouses. As soon asthe spouses had settled their obligation, thecorporation returned the owners duplicate TCT whichwas then delivered to Amelia Roberts.

* The parties (A. Roberts as lessor and MartinPapio as lessee) executed a 2-year contract of leaseThe contract was subject to renewal or extension for alike period at the option of the lessor, the lesseewaiving thereby the benefits of an implied new leaseThe lessee was obliged to pay monthly rentals of 800to be deposited in the lessors account.

* A new TCT was issued in the name of AmeliaRoberts as owner. Martin Papio paid the rentals andthereafter for another year. He then failed to payrentals, but he and his family nevertheless remained inpossession of the property for almost 13 years.* ARoberts reminded Papio that he failed to pay monthlyrentals amounting to a total liability of 410k.Shedemanded that Papio vacate the property within15days from receipt of the letter in case he failed tosettle the amount.* A. Roberts filed a complaint founlawful detainer and damages against Martin Papio

ISSUE:W/N THE DEED OF ABSOLUTE SALE AND

CONTRACT OF LEASE EXECUTED BY THE PARTIES IS ANEQUITABLE MORTGAGE OVER THE PROPERTY

RULING:NO. An equitable mortgage is one that

although lacking in some formality, form or words, orother requisites demanded by a statute, neverthelessreveals the intention of the parties to charge a reaproperty as security for a debt and contain nothingimpossible or contrary to law. A contract between theparties is an equitable mortgage if the followingrequisites are present: a. the parties entered into acontract denominated as a contract of sale and b. the

intention was to secure an existing debt by way ofmortgage. The decisive factor is the intention of theparties.In an equitable mortgage, the mortgagoretains ownership over the property but subject toforeclosure and sale at public auction upon failure ofthe mortgagor to pay his obligation.In contrast, in apacto de retro sale, ownership of the property sold isimmediately transferred to the vendee a retro subjectonly to the right of the vendor a retro to repurchasethe property upon compliance with legal requirementsfor the repurchase. The failure of the vendor a retro toexercise the right to repurchase within the agreed timevests upon the vendee a retro, by operation of lawabsolute title over the property.One repurchases only

what one has previously sold.The right to repurchasepresupposes a valid contract of sale between sameparties. By insisting that he had repurchased theproperty, Papio thereby admitted that the deed oabsolute sale executed by him and Roberts was in factand in law a deed of absolute sale and not an equitablemortgage; he had acquired ownership over theproperty based on said deed.Respondent, is thusestopped from asserting that the contract under thedeed of absolute sale is an equitable mortgage unlessthere is an allegation and evidence of palpable mistake

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on the part of respondent, or a fraud on the part ofRoberts.

InZamora Realty Dev. Corp. v. Office of thePresident, et al., G.R. No. 165724, November 2, 2006,there was purchase of a subdivision property. Thebuyer notified the seller that it was suspendingpayment due to its failure to develop, hence, the sellersewed a notice of cancellation by notarial act. Thebuyer assailed the cancellation which was affirmed upto the CA.

Before the SC, it raised the issue of whetherthe buyer violated the contract when he suspended thepayment of the monthly amortizations due to theincomplete development. It wasHeld: No, there was no violation. Under PD 957, theseller is obliged to develop the subdivision, otherwise,the buyer has the right to suspend payment and theonly requirement under the law is to give due notice tothe owner or developer of the buyers intention tosuspend payment.

The contention that the written notice wasbelatedly sent is not correct since there was a verbalnotice to suspend payment.

The law does not specifically provide the formof notice to be given to the owner/developer.Considering the purpose of the law and the evil soughtto be prevented, a verbal notice of the intention tosuspend remittance of payment is sufficient. Such aholding is consistent with the ruling in Francel RealtyCorp. v. Sycip, G.R. No. 154684, September 8, 2005,469 SCRA 424, where the requirement of an HLURBclearance under Section 23, Rule VI of the RulesImplementing P.D. No. 957 before the buyer of asubdivision lot or a home could lawfully withholdmonthly payments was declared void. It was explained:

x x x To require clearance fromthe HLURB before stopping paymentwould not be in keeping with the intent

of the law to protect innocent buyer oflots or homes from schemingsubdivision developers. To give fulleffect to such intent, it would be fittingto treat the right to stop payment to beimmediately effective upon giving duenotice to the owner or developer orupon filing a complaint before theHLURB against the erring developer.Such course of action would be withoutprejudice to the subsequentdetermination of its propriety andconsequences, should the suspensionof payment subsequently be found

improper. (Tamayo v. Huang, G.R. No.164136, January 25, 2006, 480 SCRA156; Francel Realty Corp. v. Sycip).

PURPOSE OF PD 957. P.D. No. 957 was enacted with no other end inview than to provide a protective mantle over helplesscitizens who may fall prey to the manipulations andmachinations of unscrupulous subdivision andcondominium sellers. (Eugenio v. Drilon, 322 Phil. 112(1996)). It was issued in the wake of numerous reportsthat many real estate subdivision owners, developers,

operators and/or seller have reneged on theirepresentations and obligations to provide andmaintain properly subdivision roads, drainagesewerage, water systems, lighting systems, and otherbasic requirements for the health and safety of homeand lot buyers. (Casa Filipina Realty Corp. v. Office ofthe Pres., 311 Phil. 170 (1995)).

The buyer justly withheld the payment oamortization of the subject lot, and sellers unilateracancellation of the contract to sell cannot be sustainedConsequently, the contract to sell still subsisted.

Case Name: Estelita Villamar vs. Balbino Mangaoil

G.R. No.: G.R. No. 188661

Date: April 11, 2012

Petitioner: Estelita Villamar

Respondent: Balbino Mangaoil

FACTS:

The petitioner Villamar, the registered owner othe property, entered into an agreement with therespondent Mangaoil to purchase and sale a parcel ofland. The terms in their agreement includes the downpayment of P 185,000 pesos, which will be for thepayment of a loan secured from the Rural Bank oCauayan so that it will be withdrawn and released fromthe bank and that a deed of absolute sale will beexecuted in favor of the respondent Mangaoil whichwas complied by the parties.

Consequently, the respondent Mangaoiinformed the petitioner that he will withdraw from theagreement for the land was not yet free fromincumbrances as there were still tenants who were not

willing to vacate the land without giving them back theamount that they mortgaged the land. Also, thepetitioner failed and refused, despite repeateddemands, to hand over the Certificate of Title. Thenthe respondent Mangaoil demanded the refund of thedown payment that he had secured with the petitionerand filed a complaint with the RTC to rescind thecontract of sale. In the response of the petitioner, sheaverred that she had already complied with theobligations and caused the release of the mortgagedland and the delivery of the Certificate of Title will befacilitated by a certain Atty. Pedro C. Antonio. Therespondent insisted that he can rescind the contractfor the petitioner had failed to deliver the Certificate ofTitle.

The RTC and the CA dismissed the complaintsfor upon the deed of absolute sale, there was already avalid and constructive delivery.

ISSUE: 1) Whether or not the failure of delivery of theCertificate of Title will constitute rescission of thecontract?

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2) Whether or not the execution of the deed of sale ofreal property is equivalent to a valid and constructivedelivery?

HELD:

1) No, the Court held that the failure of thepetitioner to comply with the obligation to deliver tothe respondent the possession of the property and thecertificate of the title.

Based on Article 1191 of the New Civil Code ofthe Philippines, it is clear that the power to rescindobligations is implied in reciprocal ones, in case one ofthe obligors should not comply with what is incumbentupon him. The respondent cannot be deprived of hisright to demand for rescission in view of thepetitioners failure to abide with item nos. 2 and 3 ofthe agreement. This remains true notwithstanding theabsence of express stipulations in the agreementindicating the consequences of breaches which theparties may commit. To hold otherwise would renderArticle 1191 of the NCC as useless.

2) The execution of the deed of absolute sale

does not constitute a constructive delivery for this casefalls under to the exception since a mere presumptionand not conclusive delivery was created as therespondent failed to take material possession of thesubject property. A person who does not have actualpossession of the thing sold cannot transferconstructive possession by the execution and deliveryof a public instrument. Thus, the respondent canrescind the contract.

The petition was denied and the petitioner isbound return the down payment plus interest to therespondent.

Contracts; perfection For a contract to be perfected,

three elements are needed to create a perfectedcontract: 1) the consent of the contracting parties; (2)an object certain which is the subject matter of thecontract; and (3) the cause of the obligation which isestablished. Under the law on sales, a contract of saleis perfected when the seller, obligates himself, for aprice certain, to deliver and to transfer ownership of athing or right to the buyer, over which the latteragrees. From that moment, the parties may demandreciprocal performance. Starbright Sales Eterprises,Inc. vs. Philippine Realty Corporation, Msgr. DomingoA. Cirilos, et al., G.R. No. 177936. January 18, 2012.

CASE NAME: The Roman Catholic Church vs.Regino Pante

G.R. No.: G.R. No. 174118

Date: April 11, 2012

Petitioner: The Roman Catholic Church,represented by the Archbishop of Caceres

Respondent: Regino Pante

FACTS:

The Roman Catholic Church, represented bythe Archbishop of Caceres sold a 32-square meter lotto the respondent Regino Pante, who in the belief othe Church as an actual occupant of the lot. Termsfixed at a purchase price of P 11,200, a down payment

P 1,120 and a balance payable in three yearsSubsequently, the Church sold a lot to the spousesRubi, which included the lot that was previously sold tothe respondent Pante. Then, the spouses Rubi erecteda fence along the lot, including the lot of Pante, whichblocked the access of Pante from their family home tothe municipal road. Pante instituted an action beforethe RTC to annul the sale between the Church andspouses Rubi.

The Church contended that Pantemisrepresented that they were the actual occupant of

the said lot. Also, the sale was a mistake that wouldconstitute a voidable contract because Pante madethem believe that he was a qualified occupant andPante was aware that they sell lots only to thoseoccupants and residents. Pante averred that they wereusing it as passageway from his family home to theroad, which signifies that he is really using the actuallot.

The RTC ruled in favor to the Church, for it wasa misrepresentation of Pante and he delayed in thepayment of the lot for he only consigned the balancewith the RTC after the church refused to accept the

payments.

Then, the respondent Pante appealed to theappellate court, which reversed the decision of the RTCand granted the annulment of the sale. Thus, a petitionby the Church was brought before the certiorari.

ISSUE: Whether or not the sale was a voidablecontract?

HELD:

No, the Supreme Court ruled that there wereno misrepresentation made that would vitiate theconsent and render the contract as voidable. Asconsent as one of the essential requisites of a validcontract and such consent should be free, voluntary,willful and a reasonable understanding of the variousobligations that the parties have assumed fo

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themselves. However if consent is given throughmistake, violence, intimidation, undue influence andfraud, it would render a contract voidable. On Article1331 of the Civil Code, mistake could only render acontract voidable if the following requisites concur: 1.the mistake must be either with regard to the identityor with regard to the qualification of one of thecontracting parties; and 2. the identity or qualificationmust have been the principal consideration for thecelebration of the contract.

In this case, there is no mistake as to thequalifications as to the policy of the Church on sellingonly for those who are occupants and residents, forneither Pante nor spouses Rubi would qualify asresidents of the said 32-square meter lot, as none ofthem had occupied or resided on the lot. The lot is apassageway for the respondent Pante, thus it isconsidered as his RIGHT OF WAY.

Also, records show that the Parish Priest wasaware that Parte was not an actual occupant and stillhe allowed the sale to Pante. So, the Church cannot byany means contend that the Church was misled by theact of Pante, that there was vitiation of consent on thesaid sale.

In Article 1390 of the Civil Code declares thatvoidable contracts are binding, unless annulled by aproper court action. From the time the sale to Pantewas made and up until it sold the subject property tothe spouses Rubi, the Church made no move to rejectthe contract with Pante; it did not even return thedown payment he paid. The Churchs bad faith inselling the lot to Rubi without annulling its contractwith Pante negates its claim for damages.

There was no vitiation of consent; therefore,

the contract between the Church and Pante standsvalid and existing. The delay of Pante in paying the fullprice could not nullify the contract, since it was acontract of sale (as correctly observed by the CA). Inthe terms of the contract, it did not stipulate that theChurch will retain ownership until full payment of theprice. The right to repurchase given to the Church ifever Pante fails to pay within the grace period providedwould have been unnecessary had ownership notalready passed to Pante.

Prior registration of the subject property does not byitself confer ownership or a better right over theproperty. Article 1544 requires that before the secondbuyer can obtain priority over the first, he must showthat he acted in good faith throughout (i.e., inignorance of the first sale and of the first buyersrights) from the time of acquisition until the title istransferred to him by registration or failing registration,by delivery of possession. (Uraca vs. CA, 344 Phil 253;Consolidated Rural Bank (Cagayan Valley) Inc. vs. CA,et al, G.R. No. 132161, January 17, 2005).

Malayan Realty Inc v. Uy Han YongFacts:Malayan Realty here is the owner of an apartment unitleased to Uy Han over a monthly rental fee. Such rentafee is increased yearly.

o Malayan sent Uy a written notice informing himthat the lease contract would no longer berenewed or extended upon its expiration andasked him to vacate and turn over thepossession of the property.o Uy refused to vacate said property promptingMalayan to file before the MTC a complaint foejectment. The trial court dismissed the complaint of Malayanand on appeal, the RTC extended the lease contract fora period of 5 years. In the CA, Malayan Realty alleges that there was anerror on the part of the RTC to grant the extensionperiod seeing as Uy did not plead for this in his appealHence, the CA modified the RTC ruling and reduced theextension period to a year. Unsatisfied with this decision, he appealed to the SC

Issue:

Whether or not the Ca erred in shortening the periodto a year.

Ratio: In this case, the lease period was not agreed uponby the parties and rentals were paid monthly andrespondent has been occupying said property since1958. The power of the courts to grant a graceperiod is potestative or discretionary dependingon the particular circumstance of the case. Alonger term may be granted when equities comeinto play and may be deemed where it appearsalways with due deference to the parties' freedom tocontract. In this case, the petitioner has already beendeprived of his property for so long as it was shownthat he was unable to have full use and enjoyment ofthe considerable portion of his property. Suchmilitates against further deprivation by fixing aperiod of extension. However, the court finds that the increase of rentafees per annum was just and fair and is a reasonablevaluation of the compensation due petitioner for theuse and occupation of the property from the expirationof the contract of the lease until the turn over by therespondent. In conclusion, the respondent was to vacatethe premises immediately without period forextension and was to pay the increased monthly

rental fees to the petitioner.

21.CONSOLIDATED RURAL BANK INC v CAFACTS: The Madrid Brothers owned a parcel of landwhich was later subdivided. Rizal Madrid sold his shareto Gamaio and Dayag; the other brothers offered noobjection. The sale was not registered under theTorrens System. Gamaio and Dayag sold the southern

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half to Teodoro, and the northern half to Hernandez,who thereafter donated the same to his daughter.Theyall maintained possession of the properties. Lateron,the brothers all sold their shared to Marquezwhofurther subdivided the same, registered the lands,andmortgaged portions thereof to Consolidated Bankand Bank of Cauayan. For failure to settle his debt, CBforeclosed the property. The successors-in-interest ofGamiao and Dayag sought reconveyance. CBinterposedthat the mortgage must be respected.

ISSUE: Who has a better title, Marquez or thesuccessors-in-interest of Gamiao and Dayag

HELD: The successors-in-interest of Gamiao andDayag.While Marquez was the 1st to register the landsunder the Torrens System, Art. 1544 does not apply asthe double-multiple sales were not done by the singlevendorin this case by the brothers on the one sideand Gamiao and Dayag on the other. That being thecase,the simple rule on priority in time, priority in rightwould apply. As such, the successors-in-interest ofGamiao and Dayag would have a better right as thesale in their favor came ahead of time. Further,Marquez was not in good faith. He knew that the

property was being claimed by other parties who werein possession thereof instead, he willfully closed hiseyes to the possibility of the flaws

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digest sales 2.doc