sales and lease - doctrines

8/9/2019 Sales and Lease - Doctrines

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Midterms Cases

1. Dignos vs. CA-A deed of sale is absolute in nature although denominated as a "Deed ofConditional Sale" where nowhere in the contract in question is a proviso or stipulation to the effectthat title to the property sold is reserved in the vendor until full payment of the purchase price noris there a stipulation giving the vendor the right to unilaterally rescind the contract the moment thevendee fails to pay within a fi!ed period. #he contract is what the law defines it to be not what itis called by the parties.

$. Artates vs. Urbi-A sale of homestead land in satisfaction of a debt contracted before thee!piration of five years is null and void. %hether it be viewed as an e!emption or as a conditionattached to the grant to encourage people to settle and cultivate public land the immunity inquestion is in consonance with the definite public policy underlying these grants which is to"preserve and &eep in the family of the homesteader that portion of public land which the Statehas given to him" so he may have a place to live with his family and become a happy citi'en anda useful member of society and the e!emption should not be given restrictive application.

(. Heirs of Enrique Zambales vs. CA-#he bilateral promise to buy and sell the homestead lotat a price certain which was reciprocally demandable was entered into within the five)year

prohibitory period and is therefore illegal and void. *urther the agency to sell the homestead lotto a third party was coupled with an interest inasmuch as a bilateral contract was dependent on itand was not revocable at will by any of the parties. #o all intents and purposes therefore therewas an actual executory sale erfected during the period of prohibition e!cept that it wasreciprocally demandable thereafter and the agency to sell to any third party was deferred untilafter the e!piration of the prohibitory period. !"e la# does not distinguis" bet#een executoryand consummated sales.#he"rentals" were ostensibly to be paid during the five)year prohibitoryperiod and the agency to sell made effective only after the lapse of the said period was merely adevise to circumvent the prohibition.

+. $uiroga vs. %arsons-A contract is what the law defines it to be and not what it is called bythe contracting parties. #here was the obligation on the part of the plaintiff to supply the bedsand on the part of the defendant to pay their price. #hese features e!clude the legal conception

of an agency or order to sell whereby t"e agent received t"e t"ing to sell it& and does not ayits rice& but delivers to t"e rincial t"e rice "e obtains from t"e sale of t"e t"ing to at"ird erson and if he does not succeed in selling it he returns it. ,y virtue of the contractbetween the plaintiff and the defendant the latter on receiving the beds was necessarily obligedto pay their price within the term fi!ed without any other consideration and regardless as towhether he had or had not sold the beds.

-. C'(C)E!E A**)E*A!E+& ,nc. vs. C!A- A specialty contractor is one whose operationspertain to construction wor& requiring special s&ill and involves the use of speciali'ed buildingtrades or crafts. #he manufacture of concrete and cement mi! do not involve the foregoingrequirements as to put it within such special category. #he habituality of the production of goodsfor the general public characteri'es the business of petitioner

. %E'%E/+ H'ME+,!E 0 H'U+,(* C')%')A!,'( vs. CA- %hen a lot was conditionally

or contingently awarded and the proposed consolidation of the subdivision plan is sub/ect to theapproval by a board such as the city council in the case such withdrawal of the same is withinthe rights of the directors of the board.#he contract of sale is perfected at the moment there is ameeting of minds upon the thing which is the ob/ect of the contract and upon the price. *rom thatmoment the parties may reciprocally demand performance sub/ect to the law governing the formof contracts.

0. !oyota +"a# v. CA- A definite agreement on the manner of payment of the price is anessential element in the formation of a binding and enforceable contract of sale. #his is sobecause the agreement as to the manner of payment goes into the price such that a


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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 personalproperty.

. +'U!H1E+!E)( +U*A) A(D M'A++E+ C'M%A(2 vs. A!A(!,C *U3- 2t is truethat under article 1($+ of the new Civil Code the general rule regarding offer and acceptance isthat when the offerer gives to the offeree a certain period to accept "the offer may be withdrawn

at any time before acceptance" e!cept when the option is founded upon consideration but thisgeneral rule must be interpreted as modified by the provision of article 1+03 above referred towhich applies to "a promise to buy and sell" specifically. As already stated this rule requires that apromise to sell to be valid must be supported by a consideration distinct from the price.

3. A!4,(+& 4)' and C'.& ,(C. vs. CUA H,A( !E4- 2f the option is given without aconsideration it is a mere offer of a contract of sale which is not binding until accepted. 2fhowever acceptance is made before a withdrawal it constitutes a binding contract of sale&even t"oug" t"e otion #as not suorted by a sufficient consideration.5

14. +A(CHEZ vs. ),*'+- 5ven supposing that petitioner granted an option which is notbinding for lac& of consideration the authorities hold that6 2f the option is given without a

consideration it is a mere offer of a contract of sale which is not binding until accepted. 2fhowever acceptance is made before a withdrawal it constitutes a binding contract of sale eventhough the option was not supported by a sufficient consideration

11. (A!,(' vs. ,AC- A commitment by the ban& to resell a property within a specified periodalthough accepted by the party in whose favor it was made is considered an option notsupported by consideration distinct from the price and therefore not binding upon the promissor.

1$. +E))A vs. CA- 2n a unilateral promise to sell where the debtor fails to withdraw the promisebefore the acceptance by the creditor the transaction becomes a bilateral contract to sell and tobuy because upon acceptance by the creditor of the offer to sell by the debtor there is already ameeting of the minds of the parties as to the thing which is determinate and the price which iscertain. 2n which case the parties may then reciprocally demand performance. 7n the otherhand Article 1+03 of the Code provides that an accepted unilateral promise to buy and sell adeterminate thing for a price certain is binding upon the promisor if the promise is supported by aconsideration distinct from the price. 2n the present case the consideration is even more onerouson the part of the lessee since it entails transferring of the building and8or improvements on theproperty to petitioner should respondent ban& fail to e!ercise its option within the periodstipulated.

An optional contract is a privilege e!isting only in one party the buyer. *or a separateconsideration paid he is given the right to decide to purchase or not a certain merchandise orproperty at anytime within the agreed period at a fi!ed price. #his being his prerogative he maynot be compelled to e!ercise the option to buy before the time e!pires.

1(. )'MA( vs. *),MA!- A sale shall be considered perfected and binding as betweenvendor and vendee when they have agreed as to the thing which is the ob/ect of the contract and

as to the price even though neither has been actually delivered. #he sale of the schooner wasnot perfected and the purchaser did not consent to the e!ecution of the deed of transfer for thereason that the title of the vessel was in the name of one 9aulina :iron and not in the name of9laintiff. 9laintiff promised to perfect his title to the vessel but he failed to do so. 2f no contract ofsale was actually e!ecuted by the parties the loss of the vessel must be borne by its owner.

1+. (')4,+ D,+!),6U!')+& ,(C. vs. CA- #he issuance of a sales invoice does not provetransfer of ownership of the thing sold to the buyer. An invoice is nothing more than a detailed


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statement of the nature quantity and cost of the thing sold and has been considered a bill of sale.2n all forms of delivery it is necessary that the act of delivery whether constructive or actual becouple with intention of delivering the thing

1-. +'U!HE)( M'!')+& ,(C.& vs. M'+C'+'- 2n sales on installements where the actioninstituted is for specific performance and the mortgaged property is subsequently attached andsold the sale thereof does not amount to a foreclosure of the mortgage hence the seller)creditoris entitled to deficiency /udgment.

1. %A+CUA vs. U(,7E)+A M'!')+ C')%.- #o sustain defendant;s argument is tooverloo& the fact that if the guarantor should be compelled to pay the balance of the purchaseprice the guarantor will in turn be entitled to recover what she has paid from the debtor)vendee so that ultimately it will be the vendee who will be made to bear thepayment of the balance of the price despite the earlier foreclosure of the chattel mortgage givenby him. #hus the protection given by Article 1++ would be indirectly subverted and public policyoverturned.

10. 3,,(7E+! C)ED,! C')%')A!,'( vs.CA- The device contract of lease with option tobuy is at times resorted to as a means to circumvent Article 1484 particularly paragraph


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$4. 3,E+!A( vs. CA- #he prohibition mandated by par. 2n a consolidation case where the property was sub/ected to twodifferent sales one with pacto de retro which was unregistered and an absolute sale which wasregistered and the possession of the property is with the vendee of the latter sale who were notincluded as party)defendant in the case. ustice and equity demand that said vendees inpossession of property should be heard first before ad/udication of the ownership of the property.2n other words it would be more in &eeping with substantial /ustice if the controversy between theparties to be resolved on the merits rather than on a procedural technicality in the light of thee!press mandate of the ?ules that they be "liberally construed in order to promote their ob/ectand to assist the parties in obtaining /ust speedy and ine!pensive determination of every actionand proceeding."

(. (uguid vs. CAEAlthough the second sale was made by the heirs of the deceased the saidheirs are deemed the /udicial continuation of the personality of the decedent. 5ssentiallytherefore the first and second sales were made by the same person as envisioned under Article1-++ of the Civil Code. #he disputed property being immovable property the ownership shouldbelong to the vendee who in good faith first recorded it in the ?egistry of 9roperty pursuant to thesame article. :ood faith is deemed to be present


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+. 7aldes vs. CAE #he rule is clear that a prior right is accorded to the vendee who firstrecorded his right in good faith over an immovable property. An annotation of an adverse claimmade prior to a deed of assignment establishes a superior right over the property and it waseffectively a notice to the whole world. #his is equivalent to registration in good faith which Article1-++ provides.

-. !a?edo vs. CA>%hen two deeds of sale for an inherited property which were e!ecuted afterthe death of the decedent and after a deed of e!tra)/udicial settlement. And which said deeds ofsale where made on different dates the ownership would vest in the deed which was registeredeven if the other deed is e!ecuted earlier. #he same rule applies even if actual possession is inthe vendee of the deed e!ecuted earlier.

. )adio#ealt" 3inance Co. vs. %alileo>Article 1-++ is not applicable to land not registeredunder Act no. +3. Fnder Act. o. ((++ registration of instruments affecting registered lands iswithout pre/udice to a third party with a better right. Gere registration of a sale in one@s favor doesnot give him any right over the land if the vendor was not anymore the owner of the land havingpreviously sold the same to somebody else even if the earlier sale was unrecorded.

Article 1-++ cannot be invo&ed to benefit the purchaser at the e!ecution sale though thelatter was a buyer in good faith and even if this second sale was registered. #his is because thepurchaser of the unregistered land at a sheriff@s e!ecution sale only steps into the shoes of the

/udgment debtor and merely acquires the latter;s interest in the property sold as of the time theproperty was levied upon.

0. Daguan !rading Co. vs. Macam>#he subsequent registration of the land is a technicalitythat could not cancel and render of no effect the previous unregistered sale and conveyance oftitle and ownership in favor of the first buyer especially when the first buyer too& possession ofthe land conveyed as owner thereof and introduced considerable improvements thereon.

. Cru= vs. Cabana>2n order that the provisions of Article 1-++ of the new Civil Code may beinvo&ed it is necessary that the conveyance must have been made by a party who has ane!isting right in the thing and the power to dispose of it. 2t cannot be set up by a secondpurchaser who comes into possession of the property that has already been acquired by the firstpurchaser in full dominion this not withstanding that the second purchaser records his title in the

public registry if the registration be done in bad faith the philosophy underlying this rule beingthat the public records cannot be covered into instruments of fraud and oppression by one whosecures an inscription therein in bad faith. A purchaser who has &nowledge of fact which wouldput him upon inquiry and investigation as to possible defects of the title of the vendor and fails toma&e such inquiry and investigation cannot claim that he is a purchaser in good faith.

Although the buyers were not able to register the absolute deed of sale they areconsidered to be the first ones to register in good faith their right over the property. As their failureto register the deed of absolute sale was because the owner@s duplicate certificate was in thehands of the ban& where the property was mortgaged. Bi&ewise a buyer who succeeded inregistering the later sale in his favor was made in bad faith when he &new and he was informed ofthe prior sale in favor of respondents)spouses. Such "&nowledge of a prior transfer of a registeredproperty by a subsequent purchaser ma&es him a purchaser in bad faith and his &nowledge ofsuch transfer vitiates his title acquired by virtue of the latter instrument of conveyance which

creates no right as against the first purchaser."

3. Caram v. aureta>7ne who purchases real estate with &nowledge of a defect or lac& of titlein his vendor can not claim that he has acquired title thereto in good faith as against the trueowner of the land or of an interest therein and the same rule must be applied to one who has&nowledge of facts which should have put him upon such inquiry and investigation as might benecessary to acquaint him with the defects in the title of his vendor.

))#he fact that the second contract is not void under Article 1+43 andthat Article 1-++ does not declare void a deed of sale registered in bad faith does not mean thatsaid contract is not void. Article 1-++ specifically provides who shall be the owner in case of


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double sales. #o give full effect to this provision the status of the two contracts must bedetermined and clarified. 7ne contract must be declared valid so that one vendor may e!erciseall the rights of an owner. %hile the other contract must be declared void to cut)off all rights whichmay arise from said contract.

14. David vs. 6andin>#he issue of good faith or bad faith of the buyer in case of double salesis only relevant where the sub/ect of the sale is a registered land and the purchaser is buying thesame from the registered owner whose title to the land is clean which incidentally is not in thecase at bar where the sub/ect properties where e!tra)/udicially partitioned. 7ne who purchasesan unregistered land should have been diligent regarding the true ownership of the propertiesthey bought. #hey should not have merely relied on the ta! declaration shown to them by theseller.

11. Mole vs ,AC>2t is generally held that in the sale of a designated and specific article sold assecondhand there is no implied warranty as to its quality or fitness for the purpose intended atleast where it is sub/ect to inspection at the time of the sale. 7n the other hand there is alsoauthority to the effect that in a sale of a secondhand articles there may be under somecircumstances an implied warranty of fitness for the ordinary purpose of the article sold or for theparticular purpose of the buyer. An e!press warranty such as the certification in this case of the

A1 condition of the machine would ma&e the seller liable.

A redhibitory defect must be an imperfection or defect of such nature as toengender a certain degree of importance. An imperfection or defect of little consequence does notcome within the category of being redhibitory. #herefore a machine requiring ma/or repairs beforeit could be used is a redhibitory defect which warrants rescission of the contract.

1$. E(*,(EE),(* 0 MACH,(E)2 C')%. vs. CAE%here an action is one for breach ordamages and not for the enforcement of the warranties against hidden defects Article 101- oncontract for piece of wor& applies. However inasmuch as this provision does not contain aspecific prescriptive period the general law on prescription which is Article 11++ of the CivilCode will apply. Said provision states that actions upon a written contract" prescribe in tenyears.

1(. De eon v. +alvador>Having acquired /urisdiction over the case and rendered /udgment

that had become final and e!ecutory a court retained /urisdiction over its /udgment to thee!clusion of all other co)ordinate courts for its e!ecution. 5!ecution of its /udgment having beencarried out by the sheriff with the levy and sale of the /udgment debtor@s properties the /udgmentdebtor could not in the guise of a new and separate second action as& another court of co)ordinate /urisdiction to interfere by in/unction with e!ecution proceedings to set them aside and toorder the holding of a new e!ecution sale. #he action should be brought in the first court.

1+. )amos vs. CA>#he following undisputed circumstances prove that a Conditional Sale wasan equitable mortgage6


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Article 140 contemplates a contentious proceeding wherein the vendor a retro must benamed respondent in the caption and title of the petition for consolidation of ownership and dulysummoned and heard. An order granting the vendee;s petition for consolidation of ownershipwithout the vendor a retro being named as respondent summoned and heard is a patent nullityfor want of /urisdiction of the court over the person of the latter.

1-. 3')E+ vs. +'E #he new civil code shall not be applicable to a 9acto De retro Salee!ecuted before it was enacted hence the old civil code governs. 2t is provided in Article 1-437ld Civil Code that if the vendor does not comply with the provisions of Article 1-1 2t was not abandoning the necessity under Article 14 of the Civil Code ofwritten notification to commence the running of the (4)day period of redemption. However as amatter of e!ception and due to the peculiar circumstances of the case where the co)heirs onlybrought an action for redemption of hereditary right sold by another co)heir only after 1( yearsafter having actual &nowledge thereof by their actuations when the co)heirs lived with thepurchaser in the same lot they are deemed to have lost their right to redeem. #he spirit of the

law which is to ma&e sure that the redemptioners are duly notified is served notwithstanding theabsence of written notice because there was actual &nowledge among them.

%hile the general rule is that to charge a party with laches in the assertion of analleged right it is essential that he should have &nowledge of the facts upon which he bases hisclaim yet if the circumstances were such as should have induced inquiry and the means ofascertaining the truth were readily available upon inquiry but the party neglects to make it, hewill be chargeable with laches the same as if he had &nown the facts.

10. ee C"uy )ealty v. CAEA formal offer to redeem accompanied by a bona fide tender ofredemption price is not essential where the right to redeem is e!ercised through a /udicial actionwithin the redemption period and simultaneously depositing the redemption price. #he filing of theaction itself within the period of redemption is equivalent to a formal offer to redeem.

%hat is condition precedent to a valid e!ercise of the right of legal redemption is either

the formal tender with the consignation or the filing of a complaint in court. %hat is paramount isthe availment of the fi!ed and definite periods within which to e!ercise the right of legalredemption.

EA+E

1. *UZMA(& 6'CA,(* 0 C'. vs. 6'((E7,EE2t is not necessary to secure approval by theprobate court of the Contract of Bease because it did not involve an alienation of real property ofthe estate nor did the term of the lease e!ceed one year. 7nly if the stipulations were enforced inthe Contract of Bease which provided for the lessee@s right of first priority to purchase the propertyand when "all things and conditions being equal is when it is necessary for the administratri! tosecure such approval by the probate court.

#here should be identity of the terms and conditions to be offered to the lesses and all other

prospective buyers with the lessees to en/oy the right of first priority when there is a stipulationthat all things and conditions being equal. 2t only meant that a good bargain is necessary suchthat no inequity with regards to the purchase price offered to the prospective buyers as comparedto the lessee having the right of first priority

$.2A% vs. C)UZ>2n the absence of notice or demand to vacate the lease contract on a month)to)month basis continues to be in force in favor of the lessee and cannot be deemed to havee!pired as of the end of the month automatically. 2t must also be shown that the lessee effectivelyrelinquished his leasehold rights over the premises in view of the failure of negotiations for thesale of the goodwill. Clearly the transfer of the leasehold rights is conditional in nature and has


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no force and effect if the condition is not complied with.

(. CU!A),' vs. CA>Fnder the ?ental Baw non)payment of rentals is a sufficient ground fore/ectment but the arrears must be for at least ( months. Corollarily acceptance of rentals inarrears does not constitute waiver of default in payment of rentals and would be a ground todismiss an action for e/ectment.

) #he need by the lessor of the leased premises is a valid ground for e/ectment. #hus ifan abode can be used for limited business purposes we see no reason why it cannot be used asan abode for persons rendering services usually necessary or desirable for the maintenance anden/oyment of a home and who personally minister to the personal comfort and convenience of themembers of the houses.

+. E*A) MA(A*EME(! 0 )EA!2 C')%. vs. CAEBease agreements with no specifiedperiod but in which rentals are paid monthly are considered to be on a month)to)month basis.#hey are for a definite period and e!pire after the last day of any given thirty)day period uponproper demand and notice by the lessor to vacate even if the lease agreement was verbal innature.

-. U(,!ED )EA!2 C')%. vs. CA>%hen the lease agreement refers to a dwelling unit or

land is for a definite period the lessor has a right to /udicially e/ect the lessee from the leasedpremises as e!ception to Section + 9D o. $4 which suspends the application of Article 10(

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