Topacio vs Court of Appeals – The spouses De Villa (parents-in-law of Topacio) were t he former owners of a lot in QC. It was previously mortgaged to Ayala Investment and Development Corp to secure an obligation of P500k. For failure to pay, the mortgage was foreclosed and consequently, BPI acquired the property as highest bidder. Topacio wanted to buy the property. He made an offer for P900k, but was asked to – improve it. Together, they arrived at P1.25M as the purchase price, with 30% downpayment and the balance payable in cash upon execution of the Deed of Sale. Topacio paid the initial payment of P375k. – BPI wrote to Topacio and informed – him that he had until January 4, 1986 to pay the balance of P875k. P. asked for extensions. BPI agreed to extend up to June 30. – Topacio was unable to meet the deadline, so BPI wrote a letter to Topacio, where BPI declared himself free to sell the property to other buyers and that Topacio could claim his initial payment of P375k. – Topacio merely asked for more extensions. While BPI kept telling Topacio that he could claim the P375k back (in the form of a cashier’s check), Topacio declined. But BPI mailed the check to him. The check remained with Topacio, uncashed. – BPI then told Topacio that the property would be sold for P1.6M instead, so Topacio reminded him of the original agreement (P1.25M), but BPI refused. – RTC: In favor of Topacio, finding that there is a perfected contract of sale which is still enforceable because BPI did not rescind either by judicial or notarial rescission. CA: Reversed. The contract is a contract to sell, not a contract of sale. – Issue: Contract to sell or contract of sale? Held: Contract of sale. The payment by Topacio of P375k was the operative act t hat gave rise to a perfect – contract of sale. It is considered earnest money (something of value to show that the buyer was really in earnest, and given to the seller to bind the bargain). It is considered part of the purchase price and proof of the perfection of the contract. The parties agreed on the object (house and lot in White Plains), and the price and – the manner of payment. Nowhere in the transaction indicates that BPI reserved its title on the property, – nor did it provide for any a utomatic rescission in case of default. So when Topacio failed to pay the balance of P875k despite several extensions, BPI could not validly rescind the contract w/o complying with the provision of Art 1592 or Art 1191 on notarial or judicial rescission respectively.
Equatorial Realty Development vs Mayfair Theater Carmelo owned a parcel of land in Manila. He leased it to Mayfair for a term of 20 years, for use as a motion picture theater. Two years later, Carmelo leased to Mayfair another portion of his property, also for 20 years. Both contracts have the stipulation: “That if the lessor should desire to sell the leased ○ premises, the lessee shall be given 30 days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the lessee, the lessor is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof.
–
Mr. Pascal (of Carmelo) informed Yang (Mayfai r’s president) that he wanted to sell the entire property, and that a certain Araneta was offering to buy the whole property for $1.2M. Pascal asked Yang if he was willing to buy the property for P6-7M.
–
Mayfair informed Carmelo that they wanted to purchase the entire property and reminded them of the stipulation in the lease, but Carmelo ignored the letter.
–
– Carmelo then sold its entire property to Equatorial for P11.3M. – Mayfair filed an action for specific performance and annulment of the leased premises to Equatorial. ○ Carmelo and Equatorial claimed: that it had informed Mayfair of its desire but that Mayfair had said it was only interested in buying the area under lease, which was impossible since the property was not a condominium, and that the option to purchase invoked by Mayfair is null and void for lack of consideration. consideration. ○ RTC: Dismissed Mayfair’s complaint. It reasoned that the option in the contract of lease was not supported by a separate consideration, and without a consideration, the option is not binding on Carmelo to sell the property to Mayfair. Cited Art 1479. Mayfair cannot compel Carmelo to comply with the promise unless Mayfair establishes the existence of a distinct consideration. Also, Art 1354 (Although the cause is not stated in the contract, it is presumed that it exists and is lawful unless the debtor proves the contrary), and consideration cannot be presumed, because when it comes to an option it is governed particularly by Art 1479, whereby the promissee has the burden of proving the
existence of consideration. (This was the doctrine in the case of Sanchez.) ○ CA: The stipulation is a right of first r efusal and not an option contract, which was the real intention of the parties. The stipulation is certain as to the object (the sale of the leased premises) but the price for which the object is ot be sold is n ot stated, so it isn’t an option contract. Also said that the right of first refusal was limited to the leased promises and not the entire property itself. Issue: Is the stipulation a right of first refusal or option contract? Held: Right of first refusal. The deed of option or the option clause in a contract, in order to be valid and enforceable, must, among other things, indicate the definite price at which the person granting the option is willing to sell. Cited case of Ang Yu Asuncion: An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on the parties. An accepted unlitateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfect contract of option, and this contract is legally binding. The provision is a right of first refusal, and as such, the requirement of a separate consideration has no applicability. An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price, and it is a separate and distinct contract from that which the parties may enter into, and it must be supported by consideration. However, here the right of first refusal is an integral part of the contracts of lease.
NORKIS DISTRIBUTORS, INC. vs. COURT OF APPEALS 193 SCRA 694, G.R. No. 91029 February 7,1991 GRINO-AQUINO, J.: FACTS: Petitioner Norkis Distributors, Inc. is the distributor of Yamaha motorcycles in Negros Occidental. On September 20, 1979, private respondent Alberto Nepales bought trom the Norkis Bacolod branch a brand new Yamaha Wonderbike motorcycle Model YL2DX. The price of P7,500.00 was payable by means of a Letter of Guaranty from the DBP, which Norkis agreed to accept. Credit was extended to Nepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan. As security for the loan, Nepales would execute a chattel mortgage on the motorcycle in favor of DBP. Petitioner issued a sales invoice which Nepales signed in conformity with the terms of the sale. In the meantime, however, the motorcycle remained in Norkis' possession. On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales, allegedly the agent of Alberto Nepales. The motorcycle met an accident on February 3, 1980 at Binalbagan, Negros Occidental. An investigation conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the accident. The unit was a total wreck was returned. 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. When Norkis could not deliver, he filed an action for specific performance with damages against Norkis in the RTC of Negros Occidental. He alleged that Norkis failed to deliver the motorcycle which he purchased, thereby causing him damages. Norkis answered that the motorcycle had already been delivered to private respondent before the accident, hence, the risk of loss or damage had to be borne by him as owner of the unit. ISSUE: Whether or not there has been a transfer of ownership of the motorcycle to Alberto Nepales HELD: No. The issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. An invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has been considered not a bill of sale. In all forms of delivery, it is necessary that the act of delivery whether constructive or actual, be coupled with the intention of delivering the thing. The act, without the intention, is insufficient.When the motorcycle was registered by Norkis in the name of private respondent, Norkis did not intend yet to transfer the title or ownership to Nepales, but only to facilitate the execution of a chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan. The Letter of Guarantee issued by the DBP reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a prerequisite for the approval of the buyer's loan. If Norkis would not accede to that arrangement, DBP would not approve private respondent's loan application and, consequently, there would be no sale.
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 to this case, for there was neither an actual nor constructive delivery of the thing sold, hence, the risk of loss should be borne by the seller, Norkis, which was still the owner and possessor of the motorcycle when it was wrecked. This is in accordance with the well known doctrine of res perit domino.
BOSTON BANK OF THE PHILIPPINES, (formerly BANK OF COMMERCE), vs. PERLA P. MANALO and CARLOS MANALO, JR. G. R. No. 158149, February 9, 2006 CALLEJO, SR., J. FACTS: Xavierville Estate, Inc. (XEI) sold to The Overseas Bank of Manila (OBM) some residential lots in Xavierville subdivision. Nevertheless, XEI continued selling the residential lots in the subdivision as agent of OBM.Carlos Manalo, Jr. proposed to XEI, through its President Emerito Ramos, to purchase two lots in the Xavierville subdivision and offered as part of the downpayment the P34,887.66 Ramos owed him. XEI, through Ramos, agreed. In a letter dated August 22, 1972 to Perla Manalo, Ramos confirmed the reservation of the lots. In the letter he also pegged the price of the lots at P348,060 with a 20% down payment of the purchase price amounting to P69,612.00 (less the P34,887.66 owing from Ramos), payable as soon as XEI resumes its selling operations; the corresponding Contract of Conditional Sale would then be signed on or before the same date. Perla Manalo conformed to the letter agreement. Thereafter, the spouses constructed a house on the property. The spouses were notified of XEI’s resumption of selling operations. However, they did not pay the balance of the downpayment because XEI failed to prepare a contract of conditional sale and transmit the same to them. XEI also billed them for unpaid interests which they also refused to pay. XEI turned over its selling operations to OBM. Subsequently, Commercial Bank of Manila (CBM) acquired the Xavierville Estate from OBM. CBM requested Perla Manalo to stop any on-going construction on the property since it (CBM) was the owner of the lot and she had no permission for such construction. Perla informed them that her husband had a contract with OBM, through XEI, to purchase the property. She promised to send CBM the documents. However, she failed to do so. Thus, CBM filed a complaint for unlawful detainer against the spouses. But later on, CBM moved to withdraw its complaint because of the issues raised. In the meantime, CBM was renamed the Boston Bank of the Philippines. Then, the spouses filed a complaint for specific performance and damages against the bank before the RTC. The spouses alleged that they had always been ready and willing to pay the installments on the lots sold to them but no contract was forthcoming. The spouses further alleged that upon their partial payment of the downpayment, they were entitled to the execution and delivery of a Deed of Absolute Sale covering the subject lots. During the trial, the spouses adduced in evidence the separate Contracts of Conditional Sale executed between XEI and 3 other buyers to prove that XEI continued selling residential lots in the subdivision as agent of OBM after the latter had acquired the said lots. The trial court ordered the petitioner to execute a Deed of Absolute Sale in favor of the spouses upon the payment of the spouses of the balance of the purchase price. It ruled that under the August 22, 1972 letter agreement of XEI and the spouses, the parties had a "complete contract to sell" over the lots, and that they had already partially consummated the same. The Court of Appeals sustained the ruling of the RTC, but declared that the balance of the purchase price of the property was payable in fixed amounts on a monthly basis for 120 months, based on the deeds of conditional sale executed by XEI in favor of other lot buyers. Boston Bank filed a Motion for the Reconsideration of the decision alleging that there was no perfected contract to sell the two lots, as there was no agreement between XEI and the respondents on the manner of payment as well as the other terms and conditions of the sale. Boston Bank also asserts that there is no factual basis for the CA ruling that the terms and conditions relating to the payment of the balance of the purchase price of the property (as agreed upon by XEI and other lot buyers in the same subdivision) were also applicable to the contract entered into between the petitioner and the respondents. CA denied the MR. ISSUES: 2.) Whether or not there was a perfected contract to sell the property
HELD 2.) NO. In a contract to sell property by installments, it is not enough that the parties agree on the price as well as the amount of downpayment. The parties must, likewise, agree on the manner of payment of the balance of the purchase price and on the other terms and conditions relative to the sale. Even if the buyer makes a downpayment or portion thereof, such payment cannot be considered as sufficient proof of the perfection of any purchase and sale between the parties. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and the price. 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. We have meticulously reviewed the records, including Ramos’ February 8, 1972 and August 22, 1972 letters to respondents and find that said parties confined themselves to agreeing on the price of the property (P348,060.00), the 20% downpayment of the purchase price (P69,612.00), and credited respondents for the P34,887.00 owing from Ramos as part of the 20% downpayment. Based on these two letters, the determination of the terms of payment of the P278,448.00 had yet to be agreed upon on or before December 31, 1972, or even afterwards, when the parties sign the contract of conditional sale. So long as an essential element entering into the proposed obligation of either of the parties remains to be determined by an agreement which they are to make, the contract is incomplete and unenforceable.
DELTA Development and Management Services, Inc. vs. Angeles Catherine Enriquez and Luzon Development Bank G.R. No. 168666 January 12, 2011 FACTS Ricardo De Leon and his spouse obtained a loan of 4, 000, 000 from Luzon Development Bank (LDB) to develop Delta Development and Management Services, Inc. (DELTA) Homes I. They executed a real estate mortgage over several of their property, including Lot 4 owned by Ricardo. Later, the mortgage was amended by increasing the loan to 8, 000, 000. The Real Estate Mortgage and the amendment were annotated on TCT No. T 637183. DELTA executed a Contract to Sell with Angeles Catherine Enriquez (Enriquez) over Lot no. 4 for 614, 950. He made a downpayment of 114, 590. The Contract to Sell provides that the failure to pay 3 successive monthly installments, gives the owner the power to consider the Contract to Sell as void. Paid installments are forfeited in favor of the owner as liquidated damages and to cover documentation expenses. DELTA defaulted on its loan to LDB. DELTA satisfied the loan by dation in payment. It signed a deed of assignment over several properties, including Lot no. 4. The dation in payment was not annotated on the TCT of Lot no. 4. Enriquez filed a complaint against DELTA with the Housing and Land Use Regulatory Board (HLURB) for violating the terms of its License to sell by: 1.) selling houses below the price prescribed by BP 220. 2.) failing to get clearance for the mortgage from the HLURB Enriquez sought a full refund of 301, 063 that she had already paid to DELTA plus damages and administrative fines against the LDB and DELTA.
Issue: Whether or not a Contract to Sell conveys ownership over the Lot Held: The Supreme Court held that a contract to sell does not transfer ownership.A contract to sell is one where the prospective seller reserves the transfer of title to the prospective buyer until the happening of an event, such as full payment of the purchase price. What the seller obliges himself to do is to sell the subject property
only when the entire amount of the purchase price has already been delivered to him. In this case, Enriquez has not fully paid the purchase price of the Lot. She does not own the Lot. Therefore, DELTA's transfer of ownership over the lot to LDB is valid. However, LDB is bound to respect the contract to sell with Enriquez. PD 957 provides thata contracts to sell registered by the seller with the Register of Deeds is binding on third persons. While this particular contract was not registed with the Register of Deeds by DELTA, this does not prejudice Enriquez or extinguish LDB's obligation to respect the Contract to Sell. LDB cannot claim to be an innocent purchaser as the Lot was clearly marked to be a part of the subdivision project of Delta. While the general rule is that persons dealing with registered property can rely on just the certificate of title, banks are covered by a special rule. Banks should know that there is a risk in this dealing with this type of business because they might be covered by existing contracts to sell Finally, as to the effect of the dation in payment on the loan. While the lot would have no value to the Bank if it is delivered to Enriquez, the intent of the parties show that the dation was meant to extinguish the obligation fully, not just t o the extent of the value of the thing delivered.
THE HEIRS OF NICOLAS S. CABIGAS, NAMELY: LOLITA ZABATE CABIGAS, ANECITA C. CANQUE, DIOSCORO CABIGAS, FIDEL CABIGAS, AND RUFINO CABIGAS, PETITIONERS, VS. MELBA L. LIMBACO, LINDA L. LOGARTA, RAMON C. LOGARTA, HENRY D. SEE, FREDDIE S. GO, BENEDICT Y. QUE, AWG DEVELOPMENT CORPORATION, PETROSA DEVELOPMENT CORPORATION, AND UNIVERSITY OF CEBU BANILAD, INC., RESPONDENTS. THE FACTS On February 4, 2003, the petitioners filed a complaint for the annulment of titles of various parcels of land registered in the names of Melba Limbaco, Linda Logarta, Ramon Logarta, Eugenio Amores, New Ventures Realty Corporation, Henry See, Freddie Go, Benedict Que, AWG Development Corporation ( AWG), Petrosa Development Corporation (Petrosa), and University of Cebu Banilad, Inc. (UCB) with the Regional Trial Court (RTC ) of Cebu City, docketed as Civil Case No. 28585. The complaint alleged that petitioner Lolita Cabigas and her late husband, Nicolas Cabigas, purchased two lots (Lot No. 742 [4] and Lot No. 953 [5]) from Salvador Cobarde on January 15, 1980. Cobarde in turn had purchased these lots from Ines Ouano [6] on February 5, 1948. Notwithstanding the sale between Ouano and Cobarde, and because the two lots remained registered in her name, [7] Ouano was able to sell these same lots to the National Airports Corporation on November
25, 1952 for its airport expansion project. The National Airports Corporation promptly had the titles of these properties registered in its name. When the airport expansion project fell through, respondents Melba Limbaco, Ramon Logarta, and Linda Logarta, the legal heirs of Ouano, succeeded in reclaiming title to the two lots through an action for reconveyance filed with the lower court; [8] the titles over these lots were thereafter registered in their names. [9] They then subdivided the two lots [10] and sold them to New Ventures Realty Corporation, Eugenio Amores, Henry See, Freddie Go, Benedict Que, Petrosa, and AWG. AWG, in turn, sold one of the parcels of land to UCB. All the buyers registered the titles over their respective lots in their names. After the respondents had filed their individual Answers, respondents Henry See, Freddie Go and Benedict Que filed a motion to set the case for hearing on special affirmative defenses on July 8, 2004. On the other hand, respondents AWG, Petrosa, and UCB filed a motion for summary judgment on April 13, 2005, admitting as true the facts stated in the petitioners' complaint, but claiming that the petitioners had no legal right to the properties in question. On August 23, 2005, the RTC issued a resolution, [11] granting the motion for summary judgment filed by AWG, Petrosa and UCB, and dismissing the petitioners' complaint. According to the RTC, while the petitioners alleged bad faith and malice on the part of Ouano when she sold the same properties to the National Airports Corporation, they never alleged bad faith on the part of the buyer, the National Airports Corporation. ISSUE Whether the heirs of Ouano acted with good faith in recovering the properties from the National Airports Corporation; and c) Whether the subsequent buyers of the properties acted with good faith in purchasing the properties from the heirs of Ouano. HELD A purchaser in good faith is one who buys the property of another without notice that some other person has a right to or interest in such property, and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person. [21] It is a wellsettled rule that a purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for
value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.
