Cases on Sales (Nos. 8-14) By: Alman-Najar Namla 8. Luzon Brokerage v Maritime Building Compan (8!

SC"# $%&) FACTS: Myers corp sold land to Maritime. In the agreement, they agreed on an installment plan and that i Maritime missed a payment, the contract !ill "e ann#lled and the payments already made !ill "e or eited. Maritime ailed to pay so Myers ann#lled the contract and did not ret#rn payments. SC says Myers can do this "eca#se #nder contracts to sell, promisors, in case o ail#re o the other party to complete payment, can e$traj#dicially terminate the contract, re #se con%eyance, and retain installments already recei%ed, !here s#ch rights are pro%ided. In Manila, Myers o!ned & parcels o land !' impro%ements. Myers then entered into a contract called a ()eed o Conditional Sale* !ith Maritime B#ilding. o Myers sold the land or +,million. o They agreed on the manner o payment -instalment, initial payment #pon e$ec#tion o contract, interest rate. o In the contract it !as stip#lated that in case o ail#re o "#yer to pay any o the instalments, the contract !ill "e ann#lled at the option o the seller and all payments made "y the "#yer is or eited. /ater on, the stip#lated instalment o +,01 !ith 23interest !as amended to the +21 !ith 2.23 per ann#m. o Maritime paid the monthly instalments "#t ailed to pay the monthly instalment o March. 4+ o Maritime !rote to +res o Myers re5#esting or a moratori#m on the monthly payment o the instalments "eca#se the company !as #ndergoing inancial pro"lems. o Myers re #sed. o For the months o March, April, and May, Maritime ailed to pay and did not heed the demand o Myers. Myers !rote Maritime cancelling the ()eed o Conditional Sale* o Myers demanded ret#rn o possession o properties o 6eld Maritime lia"le or #se and occ#pation amo#nting to +,01 per month In the meantime, /#7on Bro1erage !as leasing the property rom Maritime. o Myers demanded rom /#7on the payment o monthly rentals o +,01 o Myers also demanded s#rrender o property. 8hile actions and crossclaims "et!een Myers and Maritime !ere happening, the contract "et!een Maritime and /#7on !as e$tended or 9 more years.

T#rns o#t, Maritime:s s#spension o its payments to Myers corp arose rom a pre%io#s e%ent: An a!ard o "ac1!ages made "y the Co#rt o Ind#strial ;elations in a%or o /#7on /a"or <nion -employees employed "y /#7on.. o F6 Myers !as a major stoc1holder o /#7on Bro1erage. F6 Myers promised to indemni y Schedler -!ho controlled Maritime. !hen Shedler p#rchased F6 Myers:s stoc1 in /#7on Bro1erage company. -This indemni ication is or the a!ard o "ac1!ages "y the CI;. o Schedler claims that a ter F6 Myers estates closed, he !as noti ied that the indemnity on the /a"or <nion case !ill not "e honored anymore. o And so, Schedler ad%ised Myers corp that Maritime is !ithholding payments to Myers corp in order to o set the lia"ility !hen Myers heirs ailed to honor the indemnity agreement. TC r#led Maritime in "reach o contract. ISS<=S: 6as there "een a "reach o contract> Can Myers e$traj#dicially terminate the contract> 6eld: ?es and ?es. Fail#re to pay monthly installments constit#te a "reach o contract. )e a#lt !as not made in good aith. The letter to Myers corp means that the non-payment o installments !as deli"erately made to coerce Myers crp into ans!ering or an alleged promise o the dead F6 Myers. 8hate%er o"ligation F6 Myers had ass#med is not an o"ligation o Myers corp. No proo that "oard o Nyers corp agreed to ass#me responsi"ility to de"ts o F6 Myers and heirs. Schaedler allo!ed the estate proceedings o F6 Myers to close !itho#t pro%iding lia"ility. By the "alance -o payment. in the )eed o Conditional Sale, Maritime !asattempting to "#rden the Myers corp !ith an #ncollecti"le de"t, since en orcement against F6 Myers estate !as already "arred. Maritime acted in "ad aith. Maritime:s contract !ith Myers is not the ordinary sale contemplated in NCC ,2@A -trans erring o!nership sim#ltaneo#sly !ith deli%ery.. The distinction "et!een contracts o sale and contract to sell !ith reser%ed title has "een recogni7ed "y this Co#rt in repeated decisions #pholding the po!er o promisors #nder contracts to sell in case o ail#re o the other party to complete payment, to e$traj#dicially terminate the operation

o the contract, re #se con%eyance and retain the s#ms or installments already recei%ed, !here s#ch rights are e$pressly pro%ided or, as in this case. '. (ignos v C# (1&8 SC"# $)&) FACTS: In B#ly ,@C2, herein petitioners Sil%estre T. )ignos and Isa"ela /#m#ngsod de )ignos -spo#ses )ignos. sold their parcel o land in Dpon, /ap#E/ap# to herein pri%ate respondent Antonio Ba"il or the s#m o +AF,000 paya"le or t!o installments, !ith an ass#mption o inde"tedness !ith the First Ins#lar Ban1 o Ce"# in the s#m o +,A,000 and the ne$t installment o +9,000 to "e paid in Septem"er ,@C2. In No%em"er ,@C2, the spo#ses )ignos sold the same parcel o land or +&2,000 to de endants /#ciano Ca"igas and Bo%ita /. de Ca"igas -spo#ses Ca"igas. !ho !ere then <S citi7ens, and e$ec#ted in their a%or an A"sol#te )eed o Sale d#ly registered in the D ice o the ;egister o )eeds. <pon disco%ery o the And sale o the s#"ject land, Ba"il iled the case at "ar in the CFI o Ce"# !hich rendered its )ecision in A#g#st ,@G2 declaring the And sale to the spo#ses Ca"igas n#ll and %oid a" initio and the ,st sale to Ba"il not rescinded. The CFI o Ce"# also ordered Ba"il to pay the remaining +,C,000 to the spo#ses )ignos and to reim"#rse the spo#ses Ca"igas a reasona"le amo#nt corresponding the e$penses in the constr#ction o hollo! "loc1 ences in the said parcel o land. The spo#ses )ignos !ere also ordered to ret#rn the +&2,000 to the spo#ses Ca"igas. Both Ba"il and the spo#ses )ignos appealed to the Co#rt o Appeals, !hich a irmed in B#ly ,@F, the CFI o Ce"#:s )ecision e$cept or the part o Ba"il paying the e$penses o the spo#ses Ca"igas or "#ilding a ence. The spo#ses )ignos contested that the contract "et!een them and Ba"il !as merely a contract to sell and not a deed o sale. ISS<=: Is the contract "et!een the parties a contract o sale or a contract to sell> CD<;T ;</INH: The S#preme Co#rt a irmed the )ecision o the Co#rt o Appeals saying stated that all the elements o a %alid contract o sale are present in the doc#ment and that the spo#ses )ignos had no right to sell the land in 5#estion "eca#se an act#al deli%ery o its possession has already "een made in a%or o Ba"il as early as March ,@C2. It !as also o#nd that the spo#ses )ignos ne%er noti ied Ba"il "y notarial act that they !ere rescinding the contract, and neither did they ile a s#it in co#rt to rescind the sale. There is no sho!ing that Ba"il properly a#thori7ed a certain Cipriano Amistad to tell petitioners that he !as already !ai%ing his rights to the land in 5#estion.

1%. Lo v *+S ,C--.orm/orks S stem 01il.2 3n4. (41$ SC"# 185) FACTS: I /o, doing "#siness #nder the name San:s =nterprises, ordered sca olding e5#ipments rom JBS !orth +290,9A2.F0. /o paid a do!npayment o +,20,000 and the "alance !as to "e paid in ,0 monthly installments. I JBS deli%ered the sca oldings to /o, !ho paid the irst t!o installments. 6o!e%er, his "#siness enco#ntered inancial di ic#lties and he !as #na"le to settle his o"ligation despite oral and !ritten demands. I /o and JBS e$ec#ted a )eed o Assignment, !here"y /o assigned to JBS his recei%a"les in the amo#nt o +&&2,9CA.,9 rom Bomero ;ealty Corporation. The agreement also stip#lated: (The ASSIHND; #rther agrees and stip#lates as a oresaid that the said ASSIHND;, his heirs, e$ec#tors, administrators, or assigns, shall and !ill at times herea ter, at the re5#est o said ASSIHN==, its s#ccessors or assigns, at his cost and e$pense, e$ec#te and do all s#ch #rther acts and deeds as shall "e reasona"ly necessary to e ect#ally ena"le said ASSIHN== to reco%er !hate%er collecti"les said ASSIHND; has in accordance !ith the tr#e intent and meaning o these presents.* I 8hen JBS tried to collect the said credit rom Bomero, it re #sed to honor the )eed o Assignment "eca#se it claimed that /o !as also inde"ted to it. JBS sent a letter to /o demanding payment "#t he re #sed claiming that his o"ligation had "een e$ting#ished !hen they e$ec#ted the )eed o Assignment. I JBS iled an action or reco%ery o a s#m o money against /o !ith the ;TC, !hich dismissed the complaint on the gro#nd that the assignment o credit e$ting#ished the o"ligation. 6o!e%er, the CA held that the )eed o Assignment did not e$ting#ish theo"ligation o /o. ISS<=: 8'N the )eed o Assignment e$ting#ished /o:s o"ligation. ND, he ailed to comply !ith his !arranty. 6=/): I In dacion en pago,, as a special mode o payment, the de"tor o ers another thing to the creditor !ho accepts it as e5#i%alent o payment o an o#tstanding de"t. The #nderta1ing really parta1es in one sense o the nat#re o sale E the creditor is really "#ying the thing or property o the de"tor, payment or !hich is to "e charged against the de"tor:s de"t. I The assignment o credit, !hich is in the nat#re o a sale o personal property, prod#ced the e ects o a dation in payment, !hich may e$ting#ish the o"ligation. 6o!e%er, as in any other contract o sale, the %endor or assignor is "o#nd "y certain !arranties. +aragraph , o Article ,CAF o the Ci%il Code pro%ides: The %endor in good aith shall "e responsi"le or the e$istence and legality o the credit at the time o the sale, #nless it sho#ld ha%e "een sold as do#"t #lK "#t not or the sol%ency o the de"tor, #nless it has "een so e$pressly stip#lated or #nless the insol%ency !as prior to the sale and o common 1no!ledge. I /o, as assignor, is "o#nd to !arrant the e$istence and legality o the credit at the time o

the sale or assignment. 8hen Bomero claimed that it !as no longer inde"ted to /o since the latter also had an #npaid o"ligation to it, it essentially meant that its o"ligation to /o has "een e$ting#ished "y compensation. As a res#lt, JBS alleged the non-e$istence o the credit and asserted its claim to /o:s !arranty #nder the assignment. /o !as there ore re5#ired to ma1e good its !arranty and pay the o"ligation. I F#rthermore, /o "reached his o"ligation #nder the )eed o Assignment as he did not (e$ec#te and do all s#ch #rther acts and deeds as shall "e reasona"ly necessary to e ect#ally ena"le said ASSIHN== to reco%er !hate%er collecti"les said ASSIHND; has in accordance !ith the tr#e intent and meaning o these presents.* By !arranting the e$istence o the credit, /o sho#ld ha%e ens#red its per ormance in case it is o#nd to "e ine$istent. 6e sho#ld "e held lia"le to pay to JBS the amo#nt o his inde"tedness

11. 0aragas v 6eirs o7 (ominador Bala4ano (5%%&) (4!8 SC"# )1)) FACTS: Hregorio and /oren7a Balacano o!ned /ots ,,G2-= and ,,G-F. Spo#ses Balacano had & children, namely )omingo, Catalino, and Al redo. /oren7a died d#ring )ec. ,,, ,@@,, !hile Hregorio died on B#ly AF, ,@@C. +rior to Hregorio:s death, he !as admitted in 4eteran:s Heneral 6ospital in N#e%a 4i7caya, and later trans erred to 4eteran:s Memorial 6ospital in LC, #ntil he died. It !as alleged that Hregorio, "arely a !ee1 prior to his death, sold the A lots to spo#ses ;#dy and Cora7on +aragas. The said sale appeared in a deed o a"sol#te sale notari7ed "y Atty. )e H#7man. The spo#ses +aragas then sold a portion o one o the lots to Catalino. )omingo:s children iled a complaint or the ann#lment o the sale against Catalino and the spo#ses +aragas. )omingo:s children arg#e that: ,. Hrand ather Hregorio !as serio#sly ill at the time o the e$ec#tion o the deed o sale. A. Hregorio:s consent !as %itiated. &. That the lots orm part o the conj#gal partnership properties o Hregorio and /oren7a. Spo#ses +aragas mo%ed to dismiss the complaint, arg#ing that ,. +lainti s do not ha%e a ca#se o action and ha%e no legal gro#nd or the ann#lment o the deed o sale. A. Hregorio and +aragas already agreed on the sale o the /ots, that the e$ec#tion o the )eed o Sale !as merely a con irmation o the said agreement. ;TC: declared the deed o sale n#ll and %oid, and the lots !ere C+ properties. Hro#nds: ,. Hregorio !as ill A. )eed o sale !as improperly notari7ed. &. Atty. )e H#7man e$planations regarding the erroneo#s entries on the act#al place and date o e$ec#tion o the deed o sale !ere j#sti ications or a lie. -6e testi ied that the deed !as only a (con irmation* o a pre%io#s agreement "et. Hregorio and +aragas.. 9. ;#dy +aragas re #sed or ailed to testi y a"o#t the signing o the deed o sale. CA: a irmed, !ith modi ications: lots !ere estate o Hregorio ISS<=: I. 8'N the )eed o Sale is n#ll and %oid. 6=/): I. )==) DF SA/= N<// AN) 4DI) ,. Hregorio, died d#e to complications ca#sed "y cirrhosis o the li%er, had "een ighting the said disease or a month. A. )#e to his condition, there are serio#s do#"ts at to !hether he co#ld read, or #lly #nderstood the contents o the deed o sale. &. There are no concl#si%e e%idence that sho! that the e%idence o the deed !ere s# iciently e$plained to Hregorio "e ore he a i$ed his signat#re.

9. Art. A9 o the NCC pro%ides that in all contract#al, property or other relations, !hen one o the parties is at a disad%antage on acco#nt o his moral dependence, ignorance, indigence, mental !ea1ness, tender age or other handicap, the co#rts m#st "e %igilant or his protection. 15. Calimlim-Canullas v .ortun (1'84) 15' s4ra !)& FACTS: +etitioner Mercedes Calimlim-Can#llas and Fernando Can#llas !ere married in ,@CA and had 2 children. They li%ed in a ho#se on the residential lot in 5#estion. A ter Fernando:s ather died in ,@C2, Fernando inherited the said land. In ,@GF, Fernando a"andoned his amily and li%ed !ith pri%ate respondent Cora7on )ag#ines. Both !ere con%icted o conc#"inage "y the CFI. In ,@F0, Fernando sold the said land to )ag#ines. In the doc#ment o sale, Fernando descri"ed the ho#se as (also inherited "y me rom my deceased parents.* <na"le to ta1e possession o the lot and ho#se, )ag#ines iled a complaint against Mercedes. Mercedes ho!e%er, claimed that the sale is n#ll and %oid or reason that the said ho#se and land !ere conj#gal properties and she had not gi%en her consent to the sale. CFI: declared )ag#ines as the la! #l o!ner o the ho#se and lot. ISS<=: I. 8'N the constr#ction o a conj#gal ho#se on the e$cl#si%e property o the h#s"and ga%e the land the character o conj#gal property. II. 8'N the sale o the lot together !ith the ho#se and impro%ements !as %alid 6=/): I. /AN) CDNB<HA/ +;D+=;T? ,. NCC pro%ides that ("#ildings constr#cted at the e$pense o the partnership d#ring marriage on land "elonging to one o the spo#ses also pertain to the partnership, "#t the %al#e o the land shall "e reim"#rsed to the spo#se !ho o!ns the same. A. There ore, "oth the land and the ho#se "elonged to the conj#gal partnership, "#t the cp is inde"ted to the h#s"and or the %al#e o the land. &. 6#s"and:s po!er to alienate conj#gal property m#st "e !ith !i e:s consent. 9. Mercedes did not consent to the sale. II. SA/= N<// AN) 4DI). ,. Sale !as contrary morals and p#"lic policy. A. Sale !as made "y a h#s"and in a%or o a conc#"ine a ter he had a"andoned his amily and le t the conj#gal home. &. NCC pro%ides that contracts !hose ca#se, o"ject, or p#rpose is contrary to la!, morals, good c#stoms, p#"lic order, or p#"lic policy are %oid and ine$istent rom the

%ery "eginning.

1$. Cruz v C# (415 SC"# $14) 14. "u8ias v Batiller (1')$) (&1 SC"# 15%)

FACTS: E Francisco Militante claimed that he o!ned a parcel o land located in Iloilo. 6e iled !iththe CFI o Iloilo an application or the registration o title o the land. This !as opposed "y the )irector o /ands, the )irector o Forestry, and other oppositors. The case !as doc1ed as a land case, and a ter trial the co#rt dismissed the application or registration. Militante appealed to the Co#rt o Appeals. E +ending that appeal, he sold to ;#"ias -his son-in-la! and a la!yer. the land. E The CA rendered a decision, dismissing the application or registration. E ;#"ias iled a Forci"le =ntry and )etainer case against Batiller. E In that case, the co#rt held that ;#"ias has no ca#se o action "eca#se the property in disp#te !hich ;#"ias allegedly "o#ght rom Militante !as the s#"ject matter o a land case, in !hich case ;#"ias !as the co#nsel on record o Militante himsel . It th#s alls #nder Article ,9@, o the Ci%il Code. -6ence, this appeal.. Iss#e: 8hether the sale o the land is prohi"ited #nder Article ,9@,. 6eld: ?=S. Article ,9@, says that (The ollo!ing persons cannot ac5#ire any p#rchase, e%en at a p#"lic or j#dicial a#ction, either in person or thro#gh the mediation o anotherM. -2. B#stices, j#dges, prosec#ting attorneys, cler1s o s#perior and in erior co#rts, and other o icers and employees connected !ith the administration o j#stice, the property and rights in litigation or le%ied #pon an e$ec#tion "e ore the co#rt !ithin !hose j#risdiction or territory they e$ercise their respecti%e #nctionsK this prohi"ition incl#des the act o ac5#iring "y assignment and shall apply to la!yers, !ith respect to the property and rights !hich may "e the o"ject o any litigation in !hich they may ta1e part "y %irt#e o their pro ession.* The present case clearly alls #nder this, especially since the case !as still pending appeal !hen the sale !as made . ISS<=: /egal e ect o a sale alling #nder Article ,9@,> 6=/): N<// AN) 4DI). CANNDT B= ;ATIFI=). Manresa considered s#ch prohi"ited ac5#isitions -!hich ell #nder the Spanish Ci%il Code.as merely %oida"le "eca#se the Spanish Code did not recogni7e n#llity. B#t o#r Ci%il Code does recogni7e the a"sol#te n#llity o contracts (!hose ca#se, o"ject or p#rpose is contract to la!, morals, good c#stoms, p#"lic order or p#"lic policy* or !hich are (e$pressly prohi"ited or declared %oid "y la!* and declares s#ch contracts (ine$istent and %oid rom the "eginning.* The n#llity o s#ch prohi"ited contracts is de inite and permanent, and cannot "e c#red "y rati ication. The p#"lic interest and p#"lic policy remain paramo#nt and do not permit o compromise or rati ication. In this aspect, the permanent dis5#ali ication o p#"lic and j#dicial o icers and la!yers gro#nded on p#"lic policy di ers rom the irst three cases o g#ardians agents and administrators -#nder Art ,9@,.. As to their transactions, it has "een opined that they may "e (rati ied* "y means o

and in (the orm o a ne! contract, in !hich case its %alidity shall "e determined only "y the circ#mstances at the time o e$ec#tion o s#ch ne! contract.* In those cases, the o"ject !hich !as illegal at the time o the irst contract may ha%e already "ecome la! #l at the time o the rati ication or second contract, or the intent, or the ser%ice !hich !as impossi"le. The rati ication or second contract !o#ld then "e %alid rom its e$ec#tionK ho!e%er, it does not retroact to the date o the irst contract. )ecision a irmed.