Cruz vs. Fernando

477 SCRA 173 Civil Law Law on Sale Manner of Payment Essential in a Contract of Sale

In 1983, Cruz executed aKasunduanwith the Gloriosos for the consideration of the rear portion of a 223 sq m lot. TheKasunduanprovides that the lot will be sold at a P40 per sq m. That the portion of the lot to be sold is the rear portion of it. That upon selling, the Cruz will transfer their house from the front portion to the rear portion of the land once it is bought. That they will have a right of way from the front portion going to the back end of the lot. The Cruz never gave anything to the Gloriosos for there was an alleged failure to have the land surveyed. Due to non payment, the Gloriosos instead sold the whole lot (back and rear portion) to the Fernandos.

In 1994, after repeated demands, the Fernandos filed a case in court for accion publiciana demanding the Cruz to vacate the lot and to pay a rental of P500.00. The RTC ruled in favor of the Fernandos. The CA affirmed the RTC ruling.

ISSUE:Whether or not what transpired between the Cruzes and the Gloriosos was a contract of sale.

HELD:No. The absence of a specific manner of payment in the terms and conditions of the contract makes it a contract to sell. Ownership was never transferred to the Cruzes. This is because the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale. Also, the Cruzes never transferred their house from the front portion to the rear portion of the lot. It was evident in the contract that they will transfer the house to the rear portion once they were able to buy it.

The SC also ruled that the Fernandos were not buyers in bad faith. There was no consummated sale between the Cruzes and the Gloriosos. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer.

ALONSO vs.CEBU COUNTRY CLUB, INC.,

G.R. No. 130876

December 5, 2003

FACTS:The Supreme Court rendered a decision declaring that neither Tomas N. Alonso nor his son Francisco M. Alonso or the latters heirs are the lawful owners of the lot in dispute. Neither has the respondent Cebu Country Club, Inc. been able to establish a clear title over the contested estate. The reconstitution of a title is simply the re-issuance of a lost duplicate certificate of title in its original form and condition. It does not determine or resolve the ownership of the land covered by the lost or destroyed title. A reconstituted title, like the original certificate of title, by itself does not vest ownership of the land or estate covered thereby.

It declared that the subject lotlegally belongs to the Government of the Philippines.Wherefore, the petition for review was denied.

Petitioners and respondent filed separate motions for reconsideration, each assailing a different aspect of the decision.

ISSUE:Petitioners, in their MR vigorously argue that:

1. the majority decision unduly deprives petitioners of their property without due process of law and in a manner shocking to good conscience;

2. in invalidating the sale to the late Tomas Alonso, theponenciaunfairly deviated from established doctrine, using as basis factual findings either unsupported by the evidence or contradicted by the appellate courts findings of fact;

3. the core issues of fraud and want of jurisdiction afflicting the reconstitution of respondent Cebu Country Clubs title were not squarely and frontally met, to the prejudice and damage of the petitioners; and

4. the dissenting opinion deserves a second hard look as it presents a more balanced, sober, factually accurate, and juridically precise approach to the critical issues of this case, including prescription and laches.

Respondents, in their MR staunchly assails the decision insofar as it declared that that the subject land legally belongs to the Government of the Republic of the Philippines. Moreover:

1. The Torrens Certificate of Title of respondent, covering subject lot cannot be collaterally attacked and nullified in this case at bar.

HELD:IN VIEW THEREOF, weDENY with finalitythe separate motions for reconsideration of the petitioners and respondent.

Tomas Alonso had caused the reconstitution of his title on a Lot which is adjacent to the disputed property, and yet petitioners failed to show that Tomas Alonso exerted the same effort to reconstitute his alleged title to the subject property. As successors-in-interest, petitioners merely stepped into the shoes of Tomas Alonso. They cannot claim a right greater than that of their predecessor.

Moreover, it cannot be over-accentuated that Tomas Alonso, petitioners predecessor-in-interest, never asserted any claim of ownership over the disputed property during his lifetime. When he was alive, Tomas Alonso did not exert any effort to have the title of the disputed property reconstituted in his name or seek recovery thereof from the respondent which was in possession since 1931

1. Section 18 of Act No. 1120 or the Friar Lands Actunequivocally provides:

No lease or sale made by the Chief of the Bureau of Public Lands (now the Director of Lands) under the provisions of this Act shall be valid until approved by the Secretary of the Interior (now, the Secretary of Natural Resources).

Thus, petitioners claim of ownership must fail in the absence of positive evidence showing the approval of the Secretary of Interior. Approval of the Secretary of the Interior cannot simply be presumed or inferred from certain acts since the law is explicit in its mandate. This is the settled rule.

2. It must be emphasized that in civil cases, the burden of proof to be established by preponderance of evidence is on the plaintiff who is asserting the affirmative of an issue. Inasmuch as petitioners pray for the Declaration of Nullity and Non-Existence of Deed/Title, Cancellation of Certificates of Title and Recovery of Property against the respondent, they had the burden to establish their claims of ownership of the subject property which they failed to do in this case.

3. While we held that the issue of the validity of respondents title is factual which cannot be reviewed on appeal, nevertheless, we have answered each ground raised by petitioner in assailing respondents title.Needless to stress, mere allegations of fraud are not enough.Fraud is never presumed but must be proved by clear and convincing evidence,mere preponderance of evidence not even being adequate.

It must be borne in mind that the disputed property is part of the Friar Lands over which the Government holds title and are not public lands but private or patrimonial property of the Governmentand can be alienated only upon proper compliance with the requirements of Act No. 1120 or the Friar Lands Act.

Sections 11, 12 and 18 of Act No. 1120 provide:

SECTION 11. Should any person who is the actual and bona fide settler upon and occupant of any portion of said lands . . . desire to purchase the land so occupied by him, he shall be entitled to do so at the actual cost thereof to the Government, and shall be allowed ten years from the date of purchase within which to pay for the same in equal annual installments, if he so desires, all deferred payments to bear interest at the rate of four per centum per annum on all deferred payments.

SECTION 12. When the cost thereof shall have been thus ascertained the Chief of the Bureau of Public Lands shall give the said settler and occupant a certificate which shall set forth in detail that the Government has agreed to sell to such settler and occupant the amount of land so held by him, at the prize so fixed, payable as provided in this Act . . . and that upon the payment of the final installment together with all accrued interest the Government will convey to such settler and occupant the said land so held by him by proper instrument of conveyance, which shall be issued and become effective in the manner provided in section one hundred and twenty-two of the Land Registration Act.

SECTION 18. No lease or sale made by the Chief of the Bureau of Public Lands under the provisions of this Act shall be valid until approved by the Secretary of the Interior.

It was thus primordial for the respondent to prove its acquisition of its title by clear and convincing evidence in view of the nature of the land. In fact, it is essential for both respondent and petitioners to establish that it had become private property. Both parties failed to do so.

On the part of respondent, it failed to shed light on how its predecessor in interest, United Services Country Club, Inc., acquired its title. Surprisingly, there is not even one evidence to show when and how its predecessor in interest, United Services Country Club, Inc., acquired the property from anybody.

Respondent relies solely on its reconstituted title which, by itself, does not determine or resolve the ownership of the land covered by the lost or destroyed title.The reconstitution of a title is simply the re-issuance of a lost duplicate certificate of title in its original form and condition. It does not determine or resolve the ownership of the land covered by the lost or destroyed title. A reconstituted title, like the original certificate of title, by itself does not vest ownership of the land or estate covered thereby.

a.Furthermore, the declaration in the Courts judgment that the subject property belongs to the Government is not an offshoot of a collateral attack on respondents title. The validity of the reconstitution of title to the land in question was directly in dispute, and the proceedings before the trial court was in the nature of a direct attack on the legality of respondents title.

Neither may the rewards of prescription be successfully invoked by respondent, as it is aniron-clad dictum that prescription can never lie against the Government.Since respondent failed to present the paper trail of the propertys conversion to private property, the lengthy possession and occupation of the disputed land by respondent cannot be counted in its favor, as the subject property being a friar land, remained part of the patrimonial property of the Government. Possession of patrimonial property of the Government, whether spanning decades or centuries, can notipso factoripen into ownership

Dignos vs. Court of Appeals, and Jabil

Dignos vs. Court of Appeals, and Jabil158 SCRA 378February 1988

FACTS:In July 1965, herein petitioners Silvestre T. Dignos and Isabela Lumungsod de Dignos (spouses Dignos) sold their parcel of land in Opon, LapuLapu to herein private respondent Antonio Jabil for the sum of P28,000 payable for two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000 and the next installment of P4,000 to be paid in September 1965. In November 1965, the spouses Dignos sold the same parcel of land for P35,000 to defendants Luciano Cabigas and Jovita L. de Cabigas (spouses Cabigas) who were then US citizens, and executed in their favor an Absolute Deed of Sale duly registered in the Office of the Register of Deeds.Upon discovery of the 2nd sale of the subject land, Jabil filed the case at bar in the CFI of Cebu which rendered its Decision in August 1975 declaring the 2nd sale to the spouses Cabigas null and void ab initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also ordered Jabil to pay the remaining P16,000 to the spouses Dignos and to reimburse the spouses Cabigas a reasonable amount corresponding the expenses in the construction of hollow block fences in the said parcel of land. The spouses Dignos were also ordered to return the P35,000 to the spouses Cabigas.Both Jabil and the spouses Dignos appealed to the Court of Appeals, which affirmed in July 1981 the CFI of Cebus Decision except for the part of Jabil paying the expenses of the spouses Cabigas for building a fence. The spouses Dignos contested that the contract between them and Jabil was merely a contract to sell and not a deed of sale.ISSUE:Is the contract between the parties a contract of sale or a contract to sell?COURT RULING:The Supreme Court affirmed the Decision of the Court of Appeals saying stated that all the elements of a valid contract of sale are present in the document and that the spouses Dignos had no right to sell the land in question because an actual delivery of its possession has already been made in favor of Jabil as early as March 1965. It was also found that the spouses Dignos never notified Jabil by notarial act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale. There is no showing that Jabil properly authorized a certain Cipriano Amistad to tell petitioners that he was already waiving his rights to the land in question.

CIR vs Arnoldus CarpentryShop

BynutshellgirlPosted inDigest: Sales,Lawschool Taggeddigest,law school,sales 1 Comment

CIR vs Arnoldus Carpentry ShopGR No. 71122

Subject:SalesDoctrine:Contract of Sale vs Contract for a Piece of Work

Facts:Arnoldus Carpentry Shop, Inc. is a domestic corporation which has been in existence since 1960 which has for its purpose the preparing, processing, buying, selling, exporting, importing, manufacturing, trading and dealing in cabinet shop products, wood and metal home and office furniture, cabinets, doors, windows, etc., including their component parts and materials, of any and all nature and description. The company kept samples or models of its woodwork on display from where its customers may refer to when placing their orders.On March 1979, the examiners from BIR who conducted an investigation on the companys tax liabilities reported that subject corporation should be considered a contractor and not a manufacturer since the corporation renders service in the course of an independent occupation representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished. Hence, in the computation of the percentage tax, the 3% contractors tax should be imposed instead of the 7% manufacturers tax. However, responded company holds that the carpentry shop is a manufacturer and therefore entitled to tax exemption on its gross export sales under Section 202 (e) of the National Internal Revenue Code. CIR rendered its decision classifying the respondent as contractor which was in turn reversed by the CTA. Hence, this appeal.

Issue: Whether or not the Court of Tax Appeals erred in holding that private respondent is a manufacturer and not a contractor.

Held:The Supreme Court holds that the private respondent is a manufacturer as defined in the Tax Code and not a contractor under Section 205(e) of the Tax Code.Petitioner CIR wants to impress upon this Court that under Article 1467, the true test of whether or not the contract is a piece of work (and thus classifying private respondent as a contractor) or a contract of sale (which would classify private respondent as a manufacturer) is the mere existence of the product at the time of the perfection of the contract such that if the thing already exists, the contract is of sale, if not, it is work. This is not the test followed in this jurisdiction. Based on Art. 1467, what determines whether the contract is one of work or of sale is whether the thing has been manufactured specially for the customer and upon his special order. Thus, if the thing is specially done at the order of another, this is a contract for a piece of work. If, on the other hand, the thing is manufactured or procured for the general market in the ordinary course of ones business, it is a contract of sale. The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. The one who has ready for the sale to the general public finished furniture is a manufacturer, and the mere fact that he did not have on hand a particular piece or pieces of furniture ordered does not make him a contractor only.A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. The facts show that the company had a ready stock of its shop products for sale to its foreign and local buyers. As a matter of fact, the purchase orders from its foreign buyers showed that they ordered by referring to the models designated by petitioner. Even purchases by local buyers for television cabinets were by orders for existing models except only for some adjustments in sizes and accessories utilized.The Court finds itself in agreement with CTA and as the CTA did not err in holding that private respondent is a manufacturer, then private respondent is entitled to the tax exemption under See. 202 (d) and (e) now Sec. 167 (d) and (e)] of the Tax Code.

CARCELLER V. CA (February 10, 1999)

FACTS:

Respondent State Investment Houses Inc. has a parcel of land inCebuCityleased to petitioner Jose Ramon Caceller with an option to purchase valid until the expiration of the lease contract.

3weeks before the expiration of the contract, petitioner made a request to the respondent for the extension of the lease contact so he can have an ample time to raise enough funds to avail of the option of sale.

Respondent denied the request and a month after the expiration of the contract, petitioner made known his intention to buy the property.

Respondent reiterated the provisions in the contract and asked the petitioner to leave the property, which will now be offered to the general public for a higher price.

ISSUE:

WON can still exercise his option of sale even after the time to do such has already lapsed.

HELD:

The contract must be interpreted together with the intention of the parties. The letter of the plaintiff to the respondent requesting for an extension is sufficient proof of his intent to avail of the option of sale.

In contractual relations, the law allows the parties reasonable leeway on the terms of their agreement, which is the law between them. When petitioner made his intention to buy known to the buyer one month after the expiration of contract is within a reasonable time- frame.

Petitioner may buy the property but not anymore to the price stated in the contract. As such, respondent may increase the price of the land but only to a reasonable and fair market value.

An option is a preparatory contract in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, whether or not to enter into a principal contract. It binds the party who has given the option, not to enter into the principal contract with any other person during the period designated, and, within that period, to enter into such contract with the one to whom the option was granted, if the latter should decide to use the option. It is a separate agreement distinct from the contract which the parties may enter into upon the consummation of the option.

Tuazon vs. Suarez Digest

G.R. No. 168325 : December 8, 2010ROBERTO D. TUAZON, Petitioner, v. LOURDES Q. DEL ROSARIO-SUAREZ, CATALINA R. SUAREZ-DE LEON, WILFREDO DE LEON, MIGUEL LUIS S. DE LEON, ROMMEL LEE S. DE LEON, and GUILLERMA L. SANDICO-SILVA, as attorney-in-fact of the defendants, exceptLourdesQ. Del Rosario-Suarez, Respondents.DELCASTILLO,J.:FACTS:Respondent Lourdes Q. Del Rosario-Suarez was the owner of a parcel of land. Petitioner Roberto D. Tuazon andLourdesexecuted a Contract of Leaseover the parcel of land for a period of three years.During the effectivity of the lease,Lourdessent a letterto Roberto where she offered to sell to the latter subject parcel of land.She gave him two years from January 2, 1995 to decide on the said offer. On June 19, 1997, or more than four months after the expiration of the Contract of Lease, Lourdes sold subject parcel of land to her only child, Catalina Suarez-De Leon, her son-in-law Wilfredo De Leon, and her two grandsons, Miguel Luis S. De Leon and Rommel S. De Leon as evidenced by a Deed of Absolute Saleexecuted by the parties.The new owners through their attorney-in-fact, Guillerma S. Silva, notified Roberto to vacate the premises.Roberto refused hence, the De Leons filed a complaint for Unlawful Detainer before the MeTCagainsthim.TheMeTC rendered a Decisionordering Roberto to vacate the property for non-payment of rentals and expiration of the contract. While the ejectment case was on appeal, Roberto filed with the RTC a Complaintfor Annulment of Deed of Absolute Sale, Reconveyance, Damages and Application for Preliminary Injunction againstLourdesand the De Leons.On November 13, 2000, Roberto filed a Notice ofLisPendenswith the Registry of Deeds of Quezon City. The RTC rendered a Decision declaring the Deed of Absolute Sale made byLourdesin favor of the De Leons as valid and binding.On appeal, the CA affirmed the Decision of the RTC.ISSUE: Whether or notLourdesviolatedRobertos right to buy the subject property under the principle of right of first refusal by not giving him notice and the opportunity to buy the property under the same terms and conditions.HELD: Court of Appeals decision is affirmed.CIVIL LAW: contract of a right of first refusal v. option contractAn option contract is entirely different and distinct from a right of first refusal in that in the former, the option granted to the offeree is for afixedperiodand at adeterminedprice.Lacking these two essential requisites, what is involved is only a right of first refusal.It is clear from the provision of Article 1324 that there is a great difference between the effect of an option which is without a consideration from one which is founded upon a consideration. If the option is without any consideration, the offeror may withdraw his offer by communicating such withdrawal to the offeree at anytime before acceptance; if it is founded upon a consideration, the offeror cannot withdraw his offer before the lapse of the period agreed upon. The second paragraph of Article 1479 declares that an accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.In this case, it is undisputed that Roberto did not accept the terms stated in the letter ofLourdesas he negotiated for a much lower price. Robertos act of negotiating for a much lower price was a counter-offer and is therefore not an acceptance of the offer ofLourdes.Article 1319 of the Civil Code provides:Consentis manifested by the meeting of the offer and theacceptanceupon the thing and the cause which are to constitute the contract. The offer must be certain and theacceptance absolute. Aqualifiedacceptanceconstitutesa counter-offer.The counter-offer of Roberto for a much lower price was not accepted byLourdes. There is therefore no contract that was perfected between them with regard to the sale of subject property.Roberto, thus, does not have any right to demand that the property be sold to him at the price for which it was sold to the De Leons neither does he have the right to demand that said sale to the De Leons be annulled.Moreover, even if the offer ofLourdeswas accepted by Roberto, still the former is not bound thereby because of the absence of a consideration distinct and separate from the price.The argument of Roberto that the separate consideration was the liberality on the part ofLourdescannotstand.A perusal of the letter-offer ofLourdeswould show that what drove her to offer the property to Roberto was her immediate need for funds as she was already very old.Offering the property to Roberto was not an act of liberality on the part of Lourdes but was a simple matter of convenience and practicality as he was the one most likely to buy the property at that time as he was then leasing the same.The petition for review on certiorari is DENIED.

Norkis Distributors Inc. vs. Court of Appeals, and Nepales

Norkis Distributors Inc. vs. Court of Appeals, and Nepales193 SCRA 694February 1991

FACTS:On September 20, 1979, private respondent Alberto Nepales bought from the Norkis Distributors, Inc. (Norkis) in its Bacolod branch a brand new Yamaha Wonderbike motorcycle Model YL2DX with Engine No.L2-329401K Frame No.NL2-0329401, color maroon, which was then on display in the Norkis showroom. The Branch Manager Avelino Labajo agreed to accept the P7,500.00 price payable by means of a Letter of Guaranty from the Development Bank of the Philippines (DBP), Kabankalan. Hence, credit was extended to Nepales, and as security for the loan, he executed a chattel mortgage on the motorcycle in favor of DBP. Labajo issued the Norkis Sales Invoice No. 0120 perfecting the contract of sale, and Nepales signed the same to conform to the terms of the sale, while the unit remained in Norkis' possession. On November 6, 1979, it was registered under Alberto Nepales name in the Land Transportation Commission.On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto Nepales but the latter denies it. The record shows, however, that Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator Ernesto Arriesta at the DBP offices in Kabankalan, Negros Occidental Branch. On February 3, 1980, the motorcycle met an accident at Binalbagan, Negros Occidental while being driven by a certain Zacarias Payba. The unit was a total wreck, was returned, and stored inside Norkis' warehouse.On March 20, 1980, DBP released the proceeds of private respondent's motorcycle loan to Norkis in the total sum of P7,500. As the price of the motorcycle later increased to P7,828 in March, 1980, Nepales paid the difference of P328 and demanded the delivery of the motorcycle. Norkis failed to deliver the unit, and Nepales filed an action for specific performance with damages in the RTC of Himamaylan, Negros Occidental. Norkis answered that the motorcycle had already been delivered to private respondent before the accident, hence, he should bear the risk of loss or damage as owner of the unit. The lower court ruled in favor of Nepales, and the Court of Appeals affirmed the decision but deleted the award of damages "in the amount of P50.00 a day from February 3, 1980 until payment of the present value of the damaged vehicle." Norkis concedes that there was no "actual" delivery of the vehicle, but insists that there was constructive delivery of the unit upon the issuance of the sales invoice, upon the registration of the unit in Nepales name, and upon the issuance of the official receipt.ISSUE:Who should bear the risk of loss?COURT RULING:Affirming the decision of the Court of Appeals, the Supreme Court reiterated that Article 1496 of the Civil Code which provides that "in the absence of an express assumption of risk by the buyer, the things sold remain at seller's risk until the ownership thereof is transferred to the buyer," is applicable in the case at bar for there was neither an actual nor constructive delivery of the thing sold.The Court of Appeals correctly ruled that the purpose of the execution of the sales invoice dated September 20, 1979 and the registration of the vehicle in the name of Alberto Nepales with the Land Registration Commission was not to transfer the ownership and dominion over the motorcycle to him, but only to comply with the requirements of the DBP for processing private respondent's motorcycle loan. The circumstances in the case itself more than amply rebut the disputable presumption of delivery upon which Norkis anchors its defense to Nepales' action.