BENOS Case, Case digest in sales

7/27/2019 BENOS Case, Case digest in sales

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In Jan 1977, she sent a letter notifying them that in their failure to exercise their right,she has already sold the property. Thisis the only letter that the Bonnevies received.They informed agent that they are willing to make negotiations and that theyrefuse thetermination of the lease.In March 1977, property formally sold to Guzman, Bocaling &Corp for 400K and the balance of this amount shall bepaid when the Bonnevies

have already vacated the premises.Administratix demanded that they vacate thepremises and pay the rentals for four months.They had a Compromise Agreement thatthe Bonnevies shall vacate the premises not later than Oct. 1979 but this wassetaside.The Bonnevies filed an action for annulment of the sale between REynosoand the GBC and ancellation of the transfer certificate. They also asked that Reynosobe required to sell the property to them under the same terms and conditionsagreedupon the Contract of sale.

issue:WON the Bonnevies can file for an action for annulment of the sale between Reynosoand the GBC considering that they are thirdparties to the contract.

Held:Yes. The Contract of Sale was not voidable but rescissible.Under Art 1380 to 1381 (3) of theCC, a contract otherwise valid may nonetheless be subsequently rescinded by reasonofinjury to third persons, like creditors. The status of creditors could be validly accordedthe Bonnevies for they hadsubstantial interest that were prejudiced by the sale of thesubject property to the petitioner without recognizing their right of first priority under theContract of Lease.Tolentino: rescission is a remdy granted by law to the contractingparties and even to third persons, to secure reparationfor damages caused to them by acontract, even if this should be valid, by means of the resotoration of things to their condition at themoment prior to the celebration of said contract.It is a relief allowed for the protection ofone of the contracting parties and even third persons from all injury anddamage thecontract may cause, or to protect some incompatible and preferred right created bythe contract.Rescission implies a contract which, even if initially valid, produces a lesionor pecuniary damage to someone thatjustifies its invalidation for reasons of equity.GBCcannot be buyers in good faith bec they had knowledge of the lease of the premise.They were negligent in notinquiring about the terms of the Lease Contract

EQUATORIAL REALTY V. MAYFAIR (November 21, 1996)

FACTS:Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-storey building to respondent

Mayfair Theater Inc.They entered a contract which provides that if the LESSOR should desire to sell the leased premises, the

LESSEE shall be given 30-days exclusive option to purchase the same. Carmelo informed Mayfair that it will sell the property to Equatorial. Mayfair made known its interest to buy

the property but only to the extent of the leased premises.


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Notwithstanding Mayfairs intention, Carmelo sold the property to Equatorial.ISSUE:WON the sale of the property to Equatorial is valid.HELD:The sale of the property should be rescinded because Mayfair has the right of first refusal. Both

Equatorial and Carmelo are in bad faith because they knew of the stipulation in the contract regarding the

right of first refusal.The stipulation is a not an option contract but a right of first refusal and as such the requirement of a

separate consideration for the option, has no applicability in the instant case. The consideration is built in

the reciprocal obligation of the parties.In reciprocal contract, the obligation or promise of each party is the consideration for that of the other.

(Promise to lease in return of the right to first refusal)

With regard to the impossibility of performance, only Carmelo can be blamed for not including the entire

property in the right of first refusal. Court held that Mayfair may not have the option to buy the property.

Not only the leased area but the entire property.

Corporate Law Case Digest, Sales

Case Digest: Manila Metal Container

Corp. v. PNB (2006)

THURSDAY, JUNE 23, 2011 STACYNO COMMENTSG.R. No. 166862December 20, 2006

Lessons Applicable:Doctrine of Centralized Management: Powers of Board of Directors (Corporate Law)

Doctrine of Centralized Management (Corporate Law)

Price (Sales)

Earnest Money (Sales)

FACTS:

Manila Metal Corp. executed a real estate mortgage (TCT. 32098) as a security foritsloan from

PNB amounting to 900,000 php, later on 1,000,000 php and 653,000 php


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Aug. 5, 1982 PNB filed a petition for extrajudicial foreclosure for the property to besoldat a public auction 911,532.21 php (outstanding as of June 30) + interest +attorney's fees

Sept. 2, 1982:PNB won the public auction at 1,000,000 php

Feb. 17, 1983: Certificate of Sale was issued and registered at the Registry of Deedsandwas annotated at the dorsal portion of the title (Redeemable until Feb 17,1983)

Petitioner requested 1 year extension until Feb 17,1984 but was rejected byPNB saying it is their policy not to accept partial redemption

Jun. 1,1984: Since petitioner failed to redeem, TCT. 32098 was cancelled and a newtitlewas issued in favor of PNB

Meanwhile, Special Assets Management Department (SAMD) had prepared astatement

of account as of Jun 25,1984 amounting to 1,574,560.47 php (bid price +interest +advances of insurance premiums + advances on relaty taxes + reg. exp.+misc. exp +

piblication cost)

Petitioner deposited 725,000 php as deposit to repurchase and was issued an O.R.

PNB management rejected the recommendation of SAMD and demanded that petitionerpay the markt value of 2,660,000 php.

Jun 24, 1984:PNB informed petitioner that its B.O.D had agreed to accept its offerto purchase but at 1,931,389.53 less the 725,000 php.

PNBPresident did not conform to the letter but merely indicated that he hasreceived it.

Petitioner rejected this since PNB has already accepted its downpayment so itcan nolonger increase the price

Issue:-Has there been a breach of contract?-Can Myers extrajudicially terminate the contract?

Held:-Yes.-YesRatio:

Failure to pay monthly installments constitute a breach of contract. Default was notmade in good faith.


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The letter to Myers corp means that the non-payment of installments was deliberatelymade to coerce Myers crp into answering for an allegedpromise of the dead FH Myers.

Whatever obligation FH Myers had assumed is not an obligation of Myers corp. No proof

that board of Nyers corp agreed to assumeresponsibility to debts of FH Myers and heirs.

Schaedler allowed the estate proceedings of FH Myers to close without providingliability.

By the balance (of payment) in the Deed of Conditional Sale, Maritime wasattempting toburden the Myers corp with an uncollectible debt,since enforcement against FH Myersestate was already barred.

Maritime acted in bad faith.

Maritimes contract with Myers is not the ordinary sale contemplated in NCC 1592(transferring ownership simultaneously with delivery).

The distinction between contracts of sale and contract to sell with reserved title has beenrecognized by this Court in repeateddecisions

upholding the power of promisors under contracts to sell in case of failure of the otherparty to complete payment, to extrajudiciallyterminate the operation of the contract,refuse conveyance and retain the sums or installments already received, where suchrights areexpressly provided for, as in this case

Coronel v. CAFacts:

The case arose from a complaint for specific performance filed by privaterespondent Alcaraz against petitioners to consummate the sale of a parcel ofland in Quezon City.

On January 19, 1985, petitioners executed a Receipt of Down Payment ofP50,000 in favor of plaintiff Ramona Alcaraz, binding themselves to transferthe ownership of the land in their name from their deceased father, afterwhichthe balance of P1,190,000 shall be paid in full by Alcaraz. On February 6,1985, the property was transferred to petitioners. On February 18, 1985,petitioners sold the property to Mabanag. For this reason, Concepcion,Ramonas mother, filed an action for specific performance.

Issue:


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Whether the contract between petitioners and private respondent was that of aconditional sale or a mere contract to sell

Held:

Sale, by its very nature, is a consensual contract because it is perfected bymere consent. The essential elements of a contract of sale are the following: a)Consent or meeting of the minds, that is, consent to transfer ownership inexchange for the price; b) Determinate subject matter; and c) Price certain inmoney or its equivalent.

Under this definition, a Contract to Sell may not be considered as aContract ofSale because the first essential element is lacking. In a contract tosell, the prospective seller explicity reserves the transfer of title to theprospective buyer, meaning, the prospective seller does not as yet agree or

consent to transfer ownership of the property subject of the contract to selluntil the happening of an event, which for present purposes we shall take asthe full payment of the purchase price. What the seller agrees or obligeshimself to do is to fulfill his promise to sell the subject property when theentire amount of the purchase price is delivered to him. In other words the fullpayment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus,ownership is retained by the prospective seller without further remedies bythe prospective buyer. A contract to sell may thus be defined as a bilateralcontract whereby the prospective seller, while expressly reserving the

ownership of the subject property despite delivery thereof to the prospectivebuyer, binds himself to sell the said property exclusively to the prospectivebuyer upon fulfillment of the condition agreed upon, that is, full payment ofthe purchase price.

A contract to sell may not even be considered as a conditional contract of salewhere the seller may likewise reserve title to the property subject of the saleuntil the fulfillment of a suspensive condition, because in a conditionalcontract of sale, the first element of consent is present, although it isconditioned upon the happening of a contingent event which may or may not

occur. If the suspensive condition is not fulfilled, the perfection of the contractof sale is completely abated. However, if the suspensive condition is fulfilled,the contract of sale is thereby perfected, such that if there had already beenprevious delivery of the property subject of the sale to the buyer, ownershipthereto automatically transfers to the buyer by operation of law without anyfurther act having to be performed by the seller. In a contract to sell, upon thefulfillment of the suspensive condition which is the full payment of the


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purchase price, ownership will not automatically transfer to the buyeralthough the property may have been previously delivered to him. Theprospective seller still has to convey title to the prospective buyer by enteringinto a contract of absolute sale.

It is essential to distinguish between a contract to sell and a conditionalcontract of sale specially in cases where the subject property is sold by theowner not to the party the seller contracted with, but to a third person, as inthe case at bench. In a contract to sell, there being no previous sale of theproperty, a third person buying such property despite the fulfillment of thesuspensive condition such as the full payment of the purchase price, forinstance, cannot be deemed a buyer in bad faith and the prospective buyercannot seek the relief of reconveyance of the property. There is no double salein such case. Title to the property will transfer to the buyer after registrationbecause there is no defect in the owner-seller's title per se, but the latter, of

course, may be used for damages by the intending buyer.In a conditional contract of sale, however, upon the fulfillment of thesuspensive condition, the sale becomes absolute and this will definitely affectthe seller's title thereto. In fact, if there had been previous delivery of thesubject property, the seller's ownership or title to the property is automaticallytransferred to the buyer such that, the seller will no longer have any title totransfer to any third person. Such second buyer of the property who may havehad actual or constructive knowledge of such defect in the seller's title, or atleast was charged with the obligation to discover such defect, cannot be aregistrant in good faith. Such second buyer cannot defeat the first buyer's title.

In case a title is issued to the second buyer, the first buyer may seekreconveyance of the property subject of the sale.The agreement could not have been a contract to sell because the sellersherein made no express reservation of ownership or title to the subject parcelof land. Furthermore, the circumstance which prevented the parties fromentering into an absolute contract of sale pertained to the sellers themselves(the certificate of title was not in their names) and not the full payment of thepurchase price. Under the established facts and circumstances of the case, theCourt may safely presume that, had the certificate of title been in the names ofpetitioners-sellers at that time, there would have been no reason why an

absolute contract of sale could not have been executed and consummated rightthere and then.

What is clearly established by the plain language of the subject document isthat when the said "Receipt of Down Payment" was prepared and signed bypetitioners Romeo A. Coronel, et al., the parties had agreed to a conditionalcontract of sale, consummation of which is subject only to the successful


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transfer of the certificate of title from the name of petitioners' father,Constancio P. Coronel, to their names.

The provision on double sale presumes title or ownership to pass to the firstbuyer, the exceptions being: (a) when the second buyer, in good faith, registers

the sale ahead of the first buyer, and (b) should there be no inscription byeither of the two buyers, when the second buyer, in good faith, acquirespossession of the property ahead of the first buyer. Unless, the second buyersatisfies these requirements, title or ownership will not transfer to him to theprejudice of the first buyer. In a case of double sale, what finds relevance andmateriality is not whether or not the second buyer was a buyer in good faithbut whether or not said second buyer registers such second sale in good faith,that is, without knowledge of any defect in the title of the property sold. If avendee in a double sale registers that sale after he has acquired knowledge thatthere was a previous sale of the same property to a third party or that another

person claims said property in a pervious sale, the registration will constitute aregistration in bad faith and will not confer upon him any right.

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BENOS Case, Case digest in sales