SALES CASE LIST 1 – JULY 1, 2014

Dignos vs. Court of Appeals

Dignos owned a lot which was sold to Jabil on June 1965 payable in two installment with an assumption of indebtedness with First Insular Bank in the sum of 12000 which was paid to Digno and the next installment to be payed on September of the same year.

On November 1965, Dignos sold the same property to Cabigas. A deed of sale was executed and registered with the Register of Deed.

As Dignos refused the payment of second installment from Jabil, and after the knowledge by the latter of the sale to Cabigas, Jabil filed the instant case.

CFI Cebu rendered a decision voiding the sale of Dignos to Cabigas and awarding the sale to Jabil. CA affirmed the decision.

SC: Dignos reiterated that the sale is conditional and not absolute, such the same is subject to suspensive condition of payment in two installment.

A sale is absolute although denominated as contract of conditional sale where no where in the contract is a stipulation to effect that the title of the property is reserved to vendor until full payment, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract upon non-fulfillment of obligation. The present case presents the same situation.

Valid elements of the contract of sale: 1. consent or meetings of the mind, 2. determinate subject matter, 3. price certain in money or its equivalent.

Dignos claimed that when they sold the property to Cabigas the previous contract has been already rescinded. It is undisputed that Dignos never notified Jabil of the rescission nor they filed in court an action to rescind such. SC AFFIRMED in toto the CA decision.

Artates vs. Urbi

FACTS:A homestead patent was issued to appellants Lino Artates and Manuela Pojas on September 23, 1952. It was sold at a public auction to Marcela Soliven by the Provincial Sheriff of Cagayan to satisfy a judgment against Lino Artates by the Justice of the Peace of Calanlugan, Cagayan for physical inj uries inflicted by him upon Daniel Urbi on October 21, 1955. The appellants Artates and Pojas alleged that the sale violated the provision of

Public Land Law exempting said property from execution for any “debt contracted within 5 years from date of the issuance of the patent.

Appellants prayed that the execution sale of the land to the defendant Urbi, as well as the deed of sale executed by the latter in favor of the defendant Soliven be declared null and void.

ISSUE:Whether or not the purchaser Marcela Soliven has acquired an absolute ownership or title in fee over the land.

HELD:No. The execution sale being null and void, the possession of the land should be returned to the owners, the herein appellants. There would even no need to order appellee Urbi to execute a deed of reconveyance thereof to the owners. It appears that what was issued here to the judgment creditor or purchaser was only the sheriff’s provisional certificate, under which he derived no definite title or right until the period made, or issuance of a final deed or certificate of sale. In other words, the purchaser herein has not acquired an absolute ownership or title in fee over the land that would necessitate a deed of reconveyance to revert ownership to appellant spouses.

Heirs of Enrique Zambales vs. CA

FACTSThe Zambales spouses were the homestead patentees of a parcel of land in the Municipality of Del Pilar, Roxas, Palawan. Claiming that the Nin Bay Mining Corporation (Corporation, for short) had removed silica sand from their land and destroyed the plants and others improvements thereon, the Zambaleses instituted, on November 10, 1958 a Civil Case No. 316 before the CFI of Palawan claiming damages in the total sum of P48,000.00.

On October 29, 1959, the Zambaleses, duly assisted by their counsel and the Corporation, entered into a Compromise Agreement where the corporation agreed to pay the petitioners a rental of twenty pesos (P20.00) from September 9, 1955 to September 30, 1960 or a total rental price of P1,784.74. Respondent also agreed to purchase and pay for the aforesaid property at the fixed selling rice of P500.00 per hectare or a total purchase price of P8,923.70.

On September 10, 1960, the Corporation sold the disputed property to Joaquin B. Preysler for the sum of P8,923.70 fixed in the Compromise Agreement. On October 18, 1960, the Secretary of Agriculture and Natural Resources approved the sale to Preysler of the subject property.

On. December 6, 1969, or ten (10) years after the Trial Court’s Decision based on the Compromise Agreement, and nine (9) years after the sale to Preysler, the Zambaleses filed Civil Case No. 678 before the Court of First Instance of Palawan for “Annulment of a Deed of Sale with Recovery of Possession and Ownership with Damages”, contending that the land was acquired and registered in the latter’s name through fraud and deceit.

After trial, the lower Court rendered judgment in favor of the Zambaleses. On appeal by the Corporation, the Court of Appeals reversed the Trial Court, after finding that the alleged fraud or misrepresentation in the execution of the Compromise Agreement had not been substantiated by evidence.

ISSUEWhether or not the execution of the Compromise Agreement dated October 29, 1959 and the the subsequent Deed of Sale, dated 10 September 1960 is valid

HELDAlthough we find that the Zambaleses were not misled into signing the Compromise Agreement, we hold that there has been violation of the Public Land Act. The evidence on record shows that the land in question was awarded to the Zambaleses as a homestead on September 6, 1955. The sale of a homestead lot within the five-year prohibitory period is illegal and void. The law does not distinguish between executory and consummated sales.

The bilateral promise to buy and sell the homestead lot at a price certain, which was reciprocally demandable, was entered into within the five-year prohibitory period and is therefore, illegal and void. Further, the agency to sell the homestead lot to a third party was coupled with an interest inasmuch as a bilateral contract was dependent on it and was not revocable at will by any of the parties. For all intents and purposes, therefore, there was an actual executory sale perfected during the period of prohibition except that it was reciprocally demandable thereafter and the agency to sell to any third party was deferred until after the expiration of the prohibitory period. That “rentals” were ostensibly to be paid during the five-year prohibitory period, and the agency to sell made effective only after the lapse of the said period, was merely a devise to circumvent the prohibition.

The approval of the sale by the Secretary of Agriculture and Natural Resources after the lapse of five years from the date of the patent would neither legalize the sale. The homestead in question should be returned to the Zambaleses, petitioners herein, who are, in turn, bound to restore to the Corporation the sum of P8,923.70 as the price thereof.

Quiroga vs. Parsons

FACTS:On January 24, 1911, herein plaintiff-appellant AndressQuiroga and J. Parsons, both merchants, enteredinto a contract, for the exclusive sale of "Quiroga" Beds in the Visayan Islands. It was agreed, amongothers, that Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J.Parsons, subject to some conditions provided in the contract. Likewise, it was agreed that. Incompensation for the expenses of advertisement which, for the benefit of both contracting parties, Mr.Parsons may find himself obliged to make, Mr.Quiroga assumes the obligation to offer and give thepreference to Mr. Parsons in case anyone should apply for the exclusive agency for any island notcomprised with the Visayan group; and that, Mr. Parsons may sell, or establish branches of his agency forthe sale of "Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, andshall immediately report such action to Mr. Quiroga for his approval.Plaintiff filed a complaint, alleging that the defendant violated the following obligations: not to sell thebeds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conductthe agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for thesame; and to order the beds by the dozen and in no other manner. He alleged that the defendant washis agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency.

ISSUE:Whether or not the defendant, by reason of the contract hereinbefore transcribed, was an agent of theplaintiff for the sale of his beds.

HELD:No. In order to classify a contract, due regard must be given to its essential clauses. In the contract inquestion, there was the obligation on the part of the plaintiff to supply the beds, and, on the part of thedefendant, to pay their price. These features exclude the legal conception of an agency or order to sellwhereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers tothe principal the price he obtains from the sale of the thing to a third person, and if he does not succeedin selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, onreceiving the beds, was necessarily obliged to pay their price within the term fixed, without any otherconsideration and regardless as to whether he had or had not sold the beds.In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by thecontract, the effect of its breach would only entitle the plaintiff to disregard the orders which thedefendant might place under other conditions; but if the plaintiff consents to fill them, he waives his rightand cannot complain for having acted thus at his own free will.

Concrete Aggregates Inc. vs CTA

Petitioner, a domestic corporation duly existing under the laws of the Philippines, has an aggregate plant at Montalban, Rizal which processes rock aggregates mined by it from private lands, and maintains and operates a plant at Longos, Quezon City for the production of ready-mixed concrete and plant-mixed hot asphalt. Sometime in 1968, the agents of respondent Commission on Internal Revenue (CIR) conducted an investigation of petitioner's tax liabilities, and assessed and demanded payment from petitioner the amount of P244,002.76 as sales and ad valorem taxes for the first semester of 1968, inclusive of surcharges. 

Instead of paying, the petitioner appealed to respondent CTA. The said Court concluded that petitioner is a manufacturer subject to the 7% sales tax under the Section Section 186 of the 1968 National Internal Revenue Code, and ordered it to pay what the respondent CIR demands, plus interest at the rate of 14% per centum from January 1, 1973 up to the date of full payment thereof pursuant to Section 183 (now 193) of the same Code. Petitioner contends, however, that it is a contractor within the meaning of Section 191 under the same Code, that its business falls under "other construction work contractors" or "other independent contractors", and that it produced asphalt and concrete mix only upon previous orders. 

ISSUE: 

Is the petitioner a contractor subject to the 3% contractor's tax under Section 191 or a manufacturer subject to the 7% sales tax under Section 186? 

COURT RULING: 

The Supreme Court affirmed respondent CTA’s decision and declared that petitioner is a manufacturer as defined by Section 194(x), now Section 187(x), of the Tax Code. It reiterated the respondent CTA’s finding that petitioner was formed and organized primarily as a manufacturer; that it has an aggregate plant at Montalban, Rizal, which processes rock aggregates mined by it from private lands; it operates a concrete batching plant at Longos, Quezon City where the specified aggregates from its plant at Montalban are mixed with sand and cement, after which water is added and the concrete mixture is sold and delivered to customers; and at its plant site at Longos, Quezon City, petitioner has also an asphalt mixing machinery where bituminous asphalt mix is manufactured. 

People’s Homesite and housing corporation vs. CA

FACTS: 

In February 1960, herein petitioner People’s Homesite & Housing

Corporation (PHHC) passed a resolution, subject to the approval of the Court Court Council of the PHHC’s consolidation subdivision plan, awarding Lot 4 with an area of 4,182.2 square meters located at Diliman, Court City to respondents Rizalino and Adelaida Mendoza (spouses Mendoza) at a price of twenty-one pesos (P21.00) per square meter. The Court Court Council disapproved the consolidation subdivision plan in August 1960 but approved in February 1964 its revised version where Lot 4 was reduced to an area of 2,608.7 square meters. Then in October 1965, the PHHC withdrew the tentative award of Lot 4 to the spouses Mendoza for the latter’s failure neither to pay its price nor to make a 20% initial deposit, and re-awarded said lot jointly and in equal shares to Miguela Sto. Domingo, Enrique Esteban, Virgilio Pinzon, Leonardo Redublo and Jose Fernandez, all of whom made the initial deposit. The subdivision of Lot 4 into five lots was later approved by the Court council and the Bureau of Lands. 

The spouses Mendoza asked for reconsideration and for the withdrawal of the said 2nd award to Sto. Domingo and four others, and at the same time filed an action for specific performance plus damages. The trial court sustained the award but the Court of Appeals reversed the said decision, declared void the re-award to Sto. Domingo and four others, and ordered the PHHC to sell Lot 4 with an area of 2,608.7 square meters at P21.00 per square meter to spouses Mendoza. 

ISSUE: 

Was there a perfected sale of Lot 4, with its reduced area, between the parties? 

COURT RULING: 

The Supreme Court found that there was no perfected sale of Lot 4 because the said lot was conditionally or contingently awarded to the Mendozas subject to the approval by the Court council of the proposed consolidation subdivision plan and the approval of the award by the valuation committee and higher authorities. 

When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved in 1964, the spouses Court should have manifested in writing their acceptance of the award for the purchase of Lot 4 just to show that they were still interested in its purchase although the area was reduced. Article 1475 of the Civil Court says “[t]he contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the law governing the form of contracts.” Indeed, there was a no meeting of the minds between the parties on the purchase of Lot 4 with an area of 2,608.7 square meters at P21 a square meter and the PHHC board of directors acted within its rights in withdrawing the tentative award. 

Toyota Shaw Inc. CA

FACTS:Private respondent Luna L. Sosa wanted to purchase a Toyota Lite Ace. With his his son, Gilbert, he went to the Toyota office at Shaw Boulevard, Pasig and met Popong Bernardo, a sales representative of Toyota. Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989. Bernardo assured him that a unit would be ready for pick up at 10:00 a.m. on that date. They contracted an agreement on the delivery of the unit and that the balance of the purchase price would be paid by credit financing through B.A. Finance. The next day, Sosa and Gilbert delivered the downpayment and met Bernardo who then accomplished a printed Vehicle Sales Proposal (VSP) in which the amount was filled-up but the spaces provided for “Delivery Terms” were not filled-up. However, on 17 June 1989, at 9:30 am, Bernardo called Gilbert to inform him that the car could not be delivered because “nasulot ang unit ng ibang malakas.”

Toyota contends, on the other hand, that the Lite Ace was not delivered to Sosa because of the disapproval by B.A. Finance of the credit financing application of Sosa. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused. Sosa asked that his down payment be refunded. Toyota did so on the very same day by issuing a Far East Bank check for the full amount, which Sosa signed with the reservation, “without prejudice to our future claims for damages.” Thereafter, Sosa sent two letters to Toyota. In the first letter, he demanded the refund of the down payment plus interest from the time he paid it. The second, he demanded one million pesos representing interest and damages, both with a warning that legal action would be taken if payment not paid. Toyota’s refused to accede to the demands of Sosa. The latter filed with RTC a complaint against Toyota for damages under Articles 19 and 21 of the Civil Code. In its answer to the complaint, Toyota alleged that no sale was entered into between it and Sosa, that Bernardo had no authority to sign for and in its behalf. It alleged that the VSP did not state the date of delivery.

ISSUE:Whether or not there was a perfected contract of sale.HELD:There was no perfected contract of sale.What is clear from the agreement signed by Sosa and Gilbert is not a contract of sale. No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefore a price certain appears therein. The provision on the down payment of PIOO,OOO.OO made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP executed the following day con finned. Nothing was mentioned about the full purchase price and the manner the

installments were to be paid. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to the manner of payment goes, into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property.

Addison vs. Felix

By a public instrument, plaintiff Addison sold to the defendant Marciana Felix and husband Balbino Tioco, 4 parcels of land. Defendants paid, at the time of the execution of the deed, the sum of P3,000.00 on account of the purchase price, and bound herself to pay the remainder in installments. It was further stipulated that the purchaser was to deliver to the vendor 25 per centum of the value of the products that she might obtain from the 4 parcels “from the moment she takes possession of them until the Torrens certificate of title be issued in her favor.” It was likewise covenanted that “within I year from the date of the certificate of title in favor of Felix, she may rescind the contract of sale in which she shall be obliged to return to Addison the net value of all the products of the 4 parcels sold, and Addison shall be obliged to return to her all the sums that she may have paid, together with interest at the rate of I 0 percent per annum.

However, Addison was able to designate only 2 of the 4 parcels and more than two-thirds of these two were found to be in the possession of one Juan Villafuerte, who claimed to be the owner of the parts so occupied by him.

Addison filed suit in CFI to compel Felix to make payment of the first installment, in accordance with the terms of the contract and of the interest at the stipulated rate. Defendant answered and alleged that the plaintiff had failed to deliver the lands that were the subject matter of the sale.

ISSUES:1. Whether or not the delivery had been effected by reason of the issuance of the Torrens Certificate of title, notwithstanding the fact that the thing sold was not subject to the control of the vendor.2. Whether or not the purchaser can rescind the contract.HELD:1. No. The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels of land, he was not even able to show them to the purchaser; and as regards the other two, more than two-thirds of their area was in the hostile and adverse possession of a third person.The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to be delivered when it is placed “in the hands and possession of the vendee.” It is true that the same article declares that the execution of a public instrument is equivalent to the delivery of the thing

which is the object of the contract, but, in order that this symbolic delivery may produce the effect of tradition, I t is necessary that the vendor shall have control over the thing sold that, at the moment of sale, it 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 passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of the public instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because such tenancy and enjoyment are opposed by the interposition of another will, then fiction yields to reality – the delivery has not been effected.

2. Yes. It is evident in the case at bar, that the mere execution of the instrument was not a fulfillment of the vendor’s obligation to deliver the thing sold, and that from such non-fulfillment arises the purchaser’s right to demand, as she has demanded, the rescission of the sale and the return of the price.

Sampaguita Pictures vs, Jaleindor Manufacturers

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.

Ten Forty Realty & Devt Corp vs. Cruz

FACTS:

• Petitioner filed an ejectment complaint against Marina Cruz(respondent) before the MTC. Petitioner alleges that the land indispute was purchased

from Barbara Galino on December 1996, andthat said land was again sold to respondent on April 1998;

• On the other hand, respondent answer with counterclaim that never was there an occasion when petitioner occupied a portion of the premises. In addition, respondent alleges that said land was a public land (respondent filed a miscellaneous sales application with the Community Environment and Natural Resources Office) and the action for ejectment cannot succeed where it appears that respondent had been in possession of the property prior to the petitioner;

• On October 2000, MTC ordered respondent to vacate the land and surrender to petitioner possession thereof. On appeal, the RTC reversed the decision. CA sustained the trial court’s decision.

ISSUE/S:

Whether or not petitioner should be declared the rightful owner of the property.

HELD:

No. Respondent is the true owner of the land.1) The action filed by the petitioner, which was an action for “unlawful detainer”, is improper. As the bare allegation of petitioner’s tolerance of respondent’s occupation of the premises has not been proven, the possession should be deemed illegal from the beginning. Thus, the CA correctly ruled that the ejectment case should have been for forcible entry. However, the action had already prescribed because the complaint was filed on May 12, 1999 – a month after the last day forfiling;2) The subject property had not been delivered to petitioner; hence, it did not acquire possession either materially or symbolically. As between the two buyers, therefore, respondent was first in actual possession of the property.

 As regards the question of whether there was good faith in the second buyer. Petitioner has not proven that respondent was aware that her mode of acquiring the property was defective at the time she acquired it from Galino. At the time, the property — which was public land –had not been registered in the name of Galino; thus, respondent relied on the tax declarations thereon. As shown, the former’s name appeared on the tax declarations for the property until its sale to the latter in 1998. Galino was in fact occupying the realty when respondent took over possession. Thus, there was no circumstance that could have placed the latter upon inquiry or required her to further investigate petitioner’s right of ownership.

DOCTRINE/S:

Execution of Deed of Sale; Not sufficient as delivery. Ownership is transferred not by contract but by tradition or delivery. Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is  a conclusive presumption of delivery of possession of a piece of real estate. The execution of a public instrument gives rise only to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is not effected, because of a legal impediment. Such constructive or symbolic delivery, being merely presumptive, was deemed negated by the failure of the vendee to take actual possession of the land sold. Disqualification from Ownership of Alienable Public Land.

Private corporations are disqualified from acquiring lands of the public domain, as provided under Section 3 of Article XII of the Constitution. While corporations cannot acquire land of the public domain, they can however acquire private land. However, petitioner has not presented proof that, at the time it purchased the property from Galino, the property had ceased to be of the public domain and was already private land. The established rule is that alienable and disposable land of the public domain held and occupied by a possessor — personally or through predecessors-in-interest, openly, continuously, and exclusively for 30 years — is ipso jure converted to private property by the mere lapse of time.

RULING:

The Supreme Court DENIED the petition.