G.R. No. 149353 June 26, 2006 JOCELYN B. DOLES,Petitioner, vs. MA. AURA TINA ANGELES,Respondent.FACTS: Ma. Aura Tina Angeles (respondent) filed with the RTC a complaint for Specific Performance with Damages against Jocelyn B. Doles (petitioner). Respondent alleged that petitioner was indebted to the former in the concept of a personal loan amounting to P405,430.00 representing the principal amount and interest; by virtue of a "Deed of Absolute Sale", petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as well as the improvements thereon, with an area of 42 square meters, covered by Transfer Certificate of Title No. 382532, and located at a subdivision project known as Camella Townhomes Sorrente in Bacoor, Cavite, in order to satisfy her personal loan with respondent. Petitioner, then defendant, while admitting some allegations in the Complaint, denied that she borrowed money from respondent, and averred that, she referred her friends to respondent whom she knew to be engaged in the business of lending money in exchange for personal checks through her capitalist Arsenio Pua. She alleged that her friends, namely, Zenaida Romulo, Theresa Moratin, Julia Inocencio, Virginia Jacob, and Elizabeth Tomelden, borrowed money from respondent and issued personal checks in payment of the loan; that the checks bounced for insufficiency of funds; that despite her efforts to assist respondent to collect from the borrowers, she could no longer locate them; that, because of this, respondent became furious and threatened petitioner that if the accounts were not settled, a criminal case will be filed against her.ISSUE:Is the respondent an agent of Arsenio Pua, the principal financier, on one hand; and the petitioner to the debtors, on the other?RULING:Yes. The Court has affirmed that, under Article 1868 of the Civil Code, the basis of agency is representation. The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or circumstantial evidence. The question is ultimately one of intention. Agency may even be implied from the words and conduct of the parties and the circumstances of the particular case. Though the fact or extent of authority of the agents may not, as a general rule, be established from the declarations of the agents alone, if one professes to act as agent for another, she may be estopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is engaged.COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALSG.R. No. 115349 April 18, 1997

Facts:

ADMU Institute of Philippine Culture is engaged in social science studies of Philippine society and culture. Occasionally, it accepts sponsorships for its research activities from international organizations, private foundations and government agencies.

On July 1983, CIR sent a demand letter assessing the sum of P174,043.97 for alleged deficiency contractors tax. Accdg to CIR, ADMU falls under the purview of independent contractor pursuant to Sec 205 of Tax Code and is also subject to 3% contractors tax under Sec 205 of the same code. (Independent Contractor means any person whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees.)

Issue:1) WON ADMU is an independent contractor hence liable for tax? NO.2) WON the acceptance of research projects by the IPC of ADMU a contract of sale or a contract for a piece of work? NEITHER.

Held:

1. Hence, to impose the three percent contractors tax on Ateneos Institute of Philippine Culture, it should be sufficiently proven that the private respondent is indeed selling its services for a fee in pursuit of an independent business.

2) Records do not show that Ateneos IPC in fact contracted to sell its research services for a fee. In the first place, the petitioner has presented no evidence to prove its bare contention that, indeed, contracts for sale of services were ever entered into by the private respondent. Funds received by the Ateneo de Manila University are technically not a fee. They may however fall as gifts or donations which are tax-exempt. Another fact that supports this contention is that for about 30 years, IPC had continuously operated at a loss, which means that sponsored funds are less than actual expenses for its research projects.

In fact, private respondent is mandated by law to undertake research activities to maintain its university status. In fact, the research activities being carried out by the IPC is focused not on business or profit but on social sciences studies of Philippine society and culture. Since it can only finance a limited number of IPCs research projects, private respondent occasionally accepts sponsorship for unfunded IPC research projects from international organizations, private foundations and governmental agencies. However, such sponsorships are subject to private respondents terms and conditions, among which are, that the research is confined to topics consistent with the private respondents academic agenda; that no proprietary or commercial purpose research is done; and that private respondent retains not only the absolute right to publish but also the ownership of the results of the research conducted by the IPC.

SALE vs. CONTRACT FOR PIECE OF WORK

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. By its very nature, a contract of sale requires a transfer of ownership. In the case of a contract for a piece of work, the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. If the contractor agrees to produce the work from materials furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. Whether the contract be one of sale or one for a piece of work, a transfer of ownership is involved and a party necessarily walks away with an object. In this case, there was no sale either of objects or services because there was no transfer of ownership over the research data obtained or the results of research projects undertaken by the Institute of Philippine Culture.

Heirs of Escanlar, et.al. v. CA [G.R. No. 119777. October 23, 1997.]Holgado, et. al. v. CA [G.R. No. 120690. October 23, 1997.]

Facts: Spouses Guillermo Nombre and Victoriana Cari-an died without issue in 1924 and 1938, respectively. Nombres heirsinclude his nephews and grandnephews. Victoriana Cari-an was succeeded by her late brothers son, Gregorio Cari-an. The latter was declared as Victorianas heir in the estate proceedings for Nombre and his wife (Special Proceeding 7-7279). After Gregorio died in 1971, his wife, Generosa Martinez, and children, Rodolfo, Carmen, Leonardo and Fredisminda Cari-an, were also adjudged as heirs by representation to Victorianas estate. Leonardo Cari-an passed away, leaving his widow, Nelly Chua vda. De Cari-an and minor son Leonell, as his heirs.2 parcels of land, denominated as Lot 1616 and 1617 of the Kabankalan Cadastre with an area of 29,350 sq.ms. and 460,948 sq.ms., respectively, formed part of the estate of Nombre and Cari-an. On 15 September 1978, Gregorio Cari-ans heirs executed the Deed of Sale of Rights, Interests and Participation in favor of Pedro Escanlar and Francisco Holgado portion pro-indiviso of Lot 1616 and 1617 of the Kabankalan Cadastre, pertaining to the portion pro-indiviso of the late Victoriana Cari-an in consideration of P275,000 to be paid to the heirs except the share of the minor Leonell Cari-an, which shall be deposited with the Municipal Treasurer of Himamaylan, Negros Occidental; pursuant to the order of the CFI Negros Occidental (Branch VI)Hiimamaylan; said contract of sale being effective only upon the approval of said CFI in Himamaylan. Escanlar and Holgado, the vendees, were concurrently the lessees of the lots referred to. They stipulated that the balance of the purchase price (P225,000.00) shall be paid on or before May 1979 in a Deed of Agreement executed by the parties on the same day confirming and affirming the Deed of Sale of 15 September 1978; that pending complete payment thereof, the vendees are not to assign, sell, lease, nor mortgage the rights, interests and participation over said land; and that in the event the vendees fail and/or omit to pay the balance of said purchase price on 31 May 1979 and the cancellation of said Contract of Sale is made thereby, the sum of P50,000.00 shall be deemed as damages thereof to vendors. Escanlar and Holgado were unable to pay the Cari-an heirs individual shares, amounting to P55,000.00 each, by the due date. However, said heirs received at least 12 installments fromthem after May 1979. Rodolfo Cari-an was fully paid by 21 June 1979. Generosa Martinez, Carmen Cari-an and Fredisminda Carian were likewise fully compensated for their individual shares, per receipts given in evidence. The minor Leonells share was

HEIRS OF SANDEJAS VS. LINAG.R. No. 141634, February 5, 2001

Facts: On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition in the lower court praying that letters of administration be issued in his favor for the settlement of the estate of his wife, REMEDIOS R. SANDEJAS. Letters of Administration were issued by the lower court appointing Eliodoro as administrator.On November 19, 1981, the 4th floor of Manila City Hall was burned and among the records burned were the records of the Court where Sandejas filed his petition.On April 19, 1983, an Omnibus Pleading for motion to intervene and petition-in-intervention was filed by Alex A. Lina alleging that Sandejas, in his capacity as seller, obligated to sell to Lina 4 parcels of land.Eliodoro died sometime in November 1984 in Canada His counsel is still waiting for official word on the fact of the death of the administrator. He also alleged that the matter of the claim of Alex becomes a money claim to be filed in Eliodoros estate. the lower court issued an order directing the other heirs of Sandejas to move for the appointment of a new administrator within 15 days from receipt of the order.On January 1986, Alex filed a Motion for his appointment as a new administrator of the Intestate Estate of Remedios R. Sandejas on the following reasons: that Alex has not received any motion for the appointment of an administrator in place of Eliodoro; that his appointment would be beneficial to the heirs; that he is willing to give away his being an administrator as long as the heirs has found one. The heirs chose Sixto Sandejas as new administrator. They were reasoning out that it was only at a later date that Sixto accepted the appointment. The lower court substituted Alex Lina with Sixto Sandejas as administrator.On November 1993, Alex filed an Omnibus Motion to approve the deed of conditional sale executed between Alex A. Lina and Elidioro and to compel the heirs to execute a deed of absolute sale in favor of Alex. The lower court granted Alexs motion.Overturning the RTC ruling, the CA held that the contract between Eliodoro Sandejas Sr. and respondent was merely a contract to sell, not a perfected contract of sale. It ruled that the ownership of the four lots was to remain in the intestate estate of Remedios until the approval of the sale was obtained from the settlement court.

Issue: What is the settlement courts jurisdiction?

Held:Court approval is required in any disposition of the decedents estate per Rule 89 of the Rules of Court. One can sell their rights, interests or participation in the property under administration. A stipulation requiring court approval does not affect the validity and the effectivity of the sale as regards the selling heirs. It merely implies that the property may be taken out of custodia legis, but only with the courts permission.Section 8 of Rule 89 allows this action to proceed. The factual differences have no bearing on the intestate courts jurisdiction over the approval of the subject conditional sale. Probate jurisdiction covers all matters relating to the settlement of estates (Rules 74 & 86-91) and the probate of wills (Rules 75-77) of deceased persons, including the appointment and the removal of administrators and executors (Rules 78-85). It also extends to matters incidental and collateral to the exercise of a probate courts recognized powers such as selling, mortgaging or otherwise encumbering realty belonging to the estate. Indeed, the rules on this point are intended to settle the estate in a speedy manner, so that the benefits that may flow from such settlement may be immediately enjoyed by the heirs and the beneficiaries.In the present case, the Motion was meant to settle the decedents obligation to Alex; hence, that obligation clearly falls under the jurisdiction of the settlement court. To require respondent to file a separate action on whether petitioners should convey the title to Eliodoro Sr.s share of the disputed realty will unnecessarily prolong the settlement of the intestate estates of the deceased spouses.

NABUS vs. PACSON , G.R. No. 161318, November 25, 2009FACTS:

The spouses Bate and Julie Nabus were the owners of parcels of land with a total area of 1,665 square meters, situatedin Pico, La Trinidad, Benguet, duly registered in their names under TCT No. T-9697 of the Register of Deeds of theProvince of Benguet. The property was mortgaged by the Spouses Nabus to the Philippine National Bank (PNB), LaTrinidad Branch, to secure a loan in the amount of P30,000.00. On February 19, 1977, the Spouses Nabus executed a Deed of Conditional Sale

covering 1,000 square meters of the1,665 square meters of land in favor of respondents Spouses Pacson for a consideration of P170,000.00, which was duly notarized on February 21, 1977. Pursuant to the Deed of Conditional Sale, respondents paid PNB the amount of P12,038.86 on February 22, 19776 andP20,744.30 on July 17, 19787 for the full payment of the loan.

On December 24, 1977, before the payment of the balance of the mortgage amount with PNB, Bate Nabus died. OnAugust 17, 1978, his surviving spouse, Julie Nabus, and their minor daughter, Michelle Nabus, executed a Deed of Extra Judicial Settlement over the registered land covered by TCT No. 9697. On the basis of the said document, TCTNo. T- 177188 was issued on February 17, 1984 in the names of Julie Nabus and Michelle Nabus.

Meanwhile, respondents continued paying their balance, not in installments of P2,000.00 as agreed upon, but invarious, often small amounts ranging from as low as P10.009 to as high as P15,566.00,10 spanning a period of almost seven years, from March 9, 197711 to January 17, 1984.12 There was a total of 364 receipts of payment. The receipts showed that the total sum paid by respondents to theSpouses Nabus was P112,455.16,14 leaving a balance of P57,544.84. During the last week of January 1984, Julie Nabus, accompanied by her second husband, approached Joaquin Pacsonto ask for the full payment of the lot. Joaquin Pacson agreed to pay, but told her to return after four days as hisdaughter, Catalina Pacson, would have to go over the numerous receipts to determine the balance to be paid. WhenJulie Nabus returned after four days, Joaquin sent her and his daughter, Catalina, to Atty. Elizabeth Rillera for theexecution of the deed of absolute sale. Since Julie was a widow with a minor daughter, Atty. Rillera required JulieNabus to return in four days with the necessary documents, such as the deed of extrajudicial settlement, the transfercertificate of title in the names of Julie Nabus and minor Michelle Nabus, and the guardianship papers of Michelle.However, Julie Nabus did not return. Getting suspicious, Catalina Pacson went to the Register of Deeds of the Province of Benguet and asked for a copy of the title of the land. She found that it was still in the name of Julie and Michelle Nabus. After a week, Catalina Pacson heard a rumor that the lot was already sold to petitioner Betty Tolero. On March 28, 2008, respondents Joaquin and Julia Pacson filed with the Regional Trial Court of La Trinidad, Benguet (trial court) a Complaint for Annulment of Deeds, with damages and prayer for the issuance of a writ of preliminaryinjunction. Julie and Michelle Nabus alleged that respondent Joaquin Pacson did not proceed with the conditional sale of thesubject property when he learned that there was a pending case over the whole property. Joaquin proposed that hewould rather lease the property with a monthly rental of P2,000.00 and apply the sum ofP13,000.00 as rentals, sincethe amount was already paid to the bank and could no longer be withdrawn. Hence, he did not affix his signature tothe second page of a copy of the Deed of Conditional Sale.26 Julie Nabus alleged that in March 1994, due to her owneconomic needs and those of her minor daughter, she sold the property to Betty Tolero, with authority from the court. Betty Tolero put up the defense that she was a purchaser in good faith and for value. She testified that it was JulieNabus who went to her house and offered to sell the property consisting of two lots with a combined area of 1,000square meters. She consulted Atty. Aurelio de Peralta before she agreed to buy the property. She and Julie Nabusbrought to Atty. De Peralta the pertinent papers such as TCT No. T-17718 in the names of Julie and Michelle Nabus,the guardianship papers of Michelle Nabus and the blueprint copy of the survey plan showing the two lots. Afterexamining the documents and finding that the title was clean, Atty. De Peralta gave her the go-signal to buy theproperty.ISSUES:1.Whether or not the Deed of Conditional Sale was converted into a contract of lease.2. Whether the Deed of Conditional Sale was a contract to sell or a contract of sale.RULING:1. The Deed of Conditional Sale entered into by the Spouses Pacson and the Spouses Nabus was not converted into acontract of lease. The 364 receipts issued to the Spouses Pacson contained either the phrase "as partial payment of lot located in Km. 4" or "cash vale" or "cash vale (partial payment of lot located in Km. 4)," evidencing sale under thecontract and not the lease of the property. Further, as found by the trial court, Joaquin Pacsons non -signing of the second page of a carbon copy of the Deed of Conditional Sale was through sheer inadvertence, since the originalcontract and the other copies of the contract were all signed by Joaquin Pacson and the other parties to the contract.2. The Court holds that the contract entered into by the Spouses Nabus and respondents was a contract to sell, not acontract of sale.

A contract of sale is defined in Article 1458 of the Civil Code, thus: Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer theownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or itsequivalent. A contract of sale may be absolute or conditional.

Unfortunately for the Spouses Pacson, since the Deed of Conditional Sale executed in their favor was merely acontract to sell, the obligation of the seller to sell becomes demandable only upon the happening of thesuspensive condition. The full payment of the purchase price is the positive suspensive condition, the failureof which is not a breach of contract, but simply an event that prevented the obligation of the vendor to conveytitle from acquiring binding force. Thus, for its non-fulfilment, there is no contract to speak of, the obligorhaving failed to perform the suspensive condition which enforces a juridical relation. With this circumstance,there can be no rescission or fulfilment of an obligation that is still non-existent, the suspensive condition not having occurred as yet. Emphasis should be made that the breach contemplated in Article 1191 of the NewCivil Code is the obligors failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation.

Since the contract to sell was without force and effect, Julie Nabus validly conveyed the subject property toanother buyer, petitioner Betty Tolero, through a contract of absolute sale, and on the strength thereof, newtransfer certificates of title over the subject property were duly issued to Tolero. The Spouses Pacson, however, have the right to the reimbursement of their payments to the Nabuses, and areentitled to the award of nominal damages. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 44941, datedNovember 28, 2003, is REVERSED and SET ASIDE. Judgment is hereby rendered upholding the validity of thesale of the subject property made by petitioners Julie Nabus and Michelle Nabus in favor of petitioner BettyTolero, as well as the validity of Transfer Certificates of Title Nos. T-18650 and T-18651 issued in the name of Betty Tolero. Petitioners Julie Nabus and Michelle Nabus are ordered to reimburse respondents spousesJoaquin and Julia Pacson the sum of One Hundred Twelve Thousand Four Hundred Fifty-Five Pesos andSixteen Centavos (P112,455.16), and to pay Joaquin and Julia Pacson nominal damages in the amount of TenThousand Pesos (P10,000.00), with annual interest of twelve percent (12%) until full payment of theamounts due to Joaquin and Julia Pacson.

LIMKETKAI SONS MILLING, INC., petitioner, G.R. No. 118509vs. March 29, 1996 COURT OF APPEALS, ET. AL., respondents. FACTS:Phil.Remnants Co. constituted BPI to manage, administer and sell its real property located in Pasig, Metro Manila.BPI gave authority to real estate broker Pedro Revilla Jr. to sell the lot for P1000 per square meter.Revilla contacted Alfonso Lim of petitioner company who agreed to buy the land and thereafter was allowed to view the land.Lim and Alfonso LImketkai went to BPI to confirm the sale and both finally agreed that the land would be sold for P1000 per square meter. Notwithstanding the agreement, Alfonso asked BPI if it was possible to pay in terms provided that in case the term is disapproved, the price shall be paid in cash.Two or three days later, petitioner learned that its offer to pay on terms had been frozen. Alfonso Lim went to BPI on July 18, 1988 and tendered the full payment of P33,056,000.00 to Albano. The payment was refused because Albano stated that the authority to sell that particular piece of property in Pasig had been withdrawn from his unitAn action for specific performance with damages was thereupon filed on August 25, 1988 by petitioner against BPI. In the course of the trial, BPI informed the trial court that it had sold the property under litigation to NBS

ISSUE:WON there was a perfected contract of sale between Limketkai Co. and BPI.

HELD:There was already a perfected contract of sale because both parties already agreed to the sale of P1000/sq.m. Even if Lim tried to negotiate for a payment in terms, it is clear that if it be disapproved, the payment will be made in cash.The perfection of the contract took place when Aromin and Albano, acting for BPI, agreed to sell and Alfonso Lim with Albino Limketkai, acting for petitioner Limketkai, agreed to buy the disputed lot at P1,000.00 per square meter. Aside from this there was the earlier agreement between petitioner and the authorized broker. There was a concurrence of offer and acceptance, on the object, and on the cause thereof.

The phases that a contract goes through may be summarized as follows:a. preparation, conception or generation, which is the period of negotiation and bargaining, ending at the moment of agreement of the parties;b. perfection or birth of the contract, which is the moment when the parties come to agree on the terms of the contract; andc. consummation or death, which is the fulfillment or performance of the terms agreed upon in the contract

Limketkai Sons Milling vs CA & BPI (1995 & 1996)FACTS:

Philippine Remnants was the owner of a piece of land which it then entrusted to BPI. Pedro Revilla was authorized by BPI to sell the lot for PHP1000/sqm. Revilla contacted Alfonso Lim who agreed to buy the land. Alfonso Lim and Albino Limketkai went to BPI and were entertained by VP Albano and Asst. VP Aromin. BPI set the price at 1,100 while Limketkai haggled to 900. They subsequently agreed on Php1,000 on cash basis. Alfonso Lim asked if it was possible to pay on terms and BPI officials said there was no harm in trying to ask for payment in terms but if disapproved, the price would have to be paid in cash. Limketkai paid the initial 10% with the remaining 90% to follow. Two or three days later, Alfonso Lim found out that their offer had been frozen and then went to BPI to tender full payment of 33M to Albano but was refused by both Albano & Bona.

Issue: W/N there was a perfected contract of saleHeld:1995 decision

> Perfection of the contract took place when Aromin and Albano, acting for BPI, agreed to sell and Alfonso Lim & Albino Limketkai, agreed to buy the lot at Php1000/sqm. A consensual contract is perfected upon mere meeting of the minds and although the deed of sale had yet to be notarized, it does not mean that no contract was perfected.

1996 decision

> Consent is manifested by the meeting of the offer and acceptance upon the thing, and the cause which are to constitute the contract. The offer must be certain and aceptance absolute. Limketkais acceptance was qualified and therefore, was actually a counter offer.

Manila Metal Container Corporation vs Philippine National Bank[GR No. 166862, December 20, 2006]

Facts:Petitioner was the owner of 8,015 square meters of parcel of land located in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank, petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation. On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction. After due notice and publication, the property was sold at public action where respondent PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an extension of time to redeem/repurchase the property. Some PNB personnel informed that as a matter of policy, the bank does not accept partial redemption. Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 and issued a new title in favor of PNB.Meanwhile, the Special Asset Management Department (SAMD) had prepared a statement of account of petitioners obligation. It also recommended the management of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB rejected the offer and recommendation of SAMD. It instead suggested to petitioner to purchase the property for P2,660,000.00, in its minimum market value. Petitioner declared that it had already agreed to SAMDs offer to purchase for P1,574,560.47 and deposited a P725,000.00.Issue:Whether or not petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the property for respondent.

Ruling:The SC affirmed the ruling of the appellate court that there was no perfected contact of sale between the parties.A contract is meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Under 1818 of the Civil Code, there is no contract unless the following requisites concur:1. Consent of the contracting parties;2. Objection certain which is the subject matter of the contract;3. Cause of the obligation which is established.Contract is perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and causes which are to constitute the contract. Once perfected, the bind between other contracting parties and the obligations arising therefrom have the form of law between the parties and should be complied in good faith. The absence of any essential element will negate the existence of a perfected contract of sale.

The court ruled in Boston Bank of the Philippines vs Manalo:A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.In the case at bar, the parties to the contract is between Manila Metal Container Corporation and Philippine National Bank and not to Special Asset Management Department. Since the price offered by PNB was not accepted, there is no contract. Hence it cannot serve as a binding juridical relation between the parties.Onapal Philippines Commodities, Inc. v. Court of Appeals and Susan ChuaFACTS-In April 1983, Susan Chua entered into a Trading Contract with Onapal Philippines Commodities, Inc., a commission merchant/broker licensed to engage in commodity futures trading in Cebu, through the companys Account Executive Elizabeth Diaz.-Every time a customer enters into a trading transaction with Onapal, the latter communicates the trading order by telex to its principal, Frankwell Enterprises of Hongkong. A Confirmation of Contract and Balance Sheet is issued upon consummation of a transaction, either buying or selling commodity futures. An order is transmitted to Manila from Cebu, then to Hongkong and finally to Japan.-Susan Chua invested P500,000.00 upon Diazs advice that the business is profitable and that Chua can withdraw her money anytime. A Trading Contract was executed without Susan Chuas awareness of the risks involved.-Another P300,000.00 was invested by Susan Chua upon Diazs advice to pay the difference in prices, lest she lose her original deposit of P500,000.00.-Susan Chua attempted to withdraw her money but to no avail after Diaz told her that she could not get out because some accounts are hanging on the transactions.-In asserting withdrawal, Susan Chua said that she realized that speculating in prices and her paying the difference between gains and losses without actual delivery of goods to be gambling. She was not aware of the risks and she wanted to discontinue.-She was given only P470,000.00 out of the P800,000.00, thus this action for recovery of the P330,000.00 balance.ISSUE/S-Whether or not the transactions violated the rules in commodity futures contracts thereby rendering the Trading Contract null and void and entitling Susan Chua to the recovery of her losses.HELD-YES. The Trading Contract executed between Susan Chua and Onapal purports to be for the delivery of goods with the intention that the difference between the price stipulated and the exchange or market price at the time of the pretended delivery shall be paid by the loser to the winner. -This is simple speculation, gambling or wagering on prices within a given time; it is not buying and selling and is illegal as against public policy.-The Court is convinced that the parties never really intended to make or accept delivery of any commodity being traded because all of Onapals customers were mere speculators who merely forecast the rise or fall in the market of the commodity. -The Trading Contract bears all the indicia of a valid trading contract reflecting as it did that the seller or the buyer may elect to make or demand delivery of goods agreed to be bought and sold. -However, the implementation thereof deviates from the true import of the agreement as when no such delivery, actual or constructive, of the commodity of goods is made, and there was only a payment and receipt of the difference in prices (the margin) at the time of delivery from that prevailing at the time the sale is made.-The following circumstances, rather irregular, would further reveal that Susan Chua is justly entitled to a refund:oThere is no evidence that orders of Chua were actually transmitted to Hongkong and Tokyo.oThere was no arrangement with the Central Bank for Onapals remittance of its customers money abroad.oThe money is in fact only kept in a separate account in a local bank.oOnapal failed to prove that Chuas orders and money were transmitted abroad.DOCTRINE-A contract for the sale or purchase of goods/commodity to be delivered at future time, if entered into without the intention of having any goods/commodity pass from one party to another, but with an understanding that at the appointed time, the purchaser is merely to receive or pay the difference between the contract and the market prices (the so-called margin), is a transaction which the law will not sanction, for being illegal.-Commodity futures contract an agreement to buy or sell a specified quantity and grade of a commodity at a future date at a price established at the floor of the exchange.-Futures commission merchant/broker a corporation or partnership, which must be registered and licensed, engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of the contract market and that, in connection with such solicitation or acceptance of orders, accepts any money, securities or property to margin, guarantee or secure any trade of contract that results or may result therefrom.

Perpetua Vda De Ape vs CA (GR No. 133638, 15 April 2005 456 SCRA 193 Civil Law Law on Sales Elements of a Contract of Sale Consent Vitiated

Cleopas Ape died in 1950 and left a parcel of land (Lot 2319) to his 11 children. The children never formally divided the property amongst themselves except through hantal-hantal whereby each just occupied a certain portion and developed each.

On the other hand, the spouses Lumayno were interested in the land so they started buying the portion of land that each of the heirs occupied. On 11 Apr 1973, one of the children, Fortunato, entered into a contract of sale with Lumayno. In exchange of his lot, Lumayno agreed to pay P5,000.00. She paid in advance P30.00. Fortunato was given a receipt prepared by Lumaynos son in law (Andres Flores). Flores also acted as witness. Lumayno also executed sales transactions with Fortunatos siblings separately.

In 1973, Lumayno compelled Fortunato to make the the delivery to her of the registrable deed of sale over Fortunatos portion of the Lot No. 2319. Fortunato assailed the validity of the contract of sale. He also invoked his right to redeem (as a co-owner) the portions of land sold by his siblings to Lumayno. Fortunato died during the pendency of the case.

ISSUE: Whether or not there was a valid contract of sale?

HELD: No. Fortunato was a no read no write person. It was incumbent for the the other party to prove that details of the contract was fully explained to Fortunato before Fortunato signed the receipt.

A contract of sale is a consensual contract, thus, it is perfected by mere consent of the parties. It is born from the moment there is a meeting of minds upon the thing which is the object of the sale and upon the price. Upon its perfection, the parties may reciprocally demand performance, that is, the vendee may compel the transfer of the ownership and to deliver the object of the sale while the vendor may demand the vendee to pay the thing sold. For there to be a perfected contract of sale, however, the following elements must be present: consent, object, and price in money or its equivalent.

For consent to be valid, it must meet the following requisites:

(a) it should be intelligent, or with an exact notion of the matter to which it refers;

(b) it should be free and

(c) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; spontaneity by fraud.

Lumayno claimed that she explained fully the receipt to Fortunato, but Flores testimony belies it. Flores said there was another witness but the other was a maid who also lacked education. Further, Flores himself was not aware that the receipt was to transfer the ownership of Fortunatos land to her mom-in-law. It merely occurred to him to explain the details of the receipt but he never did.

REPUBLIC V. FLORENDO

Facts:Petitioner Republic of the Philippines is represented in this case by the Philippine Economic Zone Authority (PEZA), a government corporation created under RA 7916, as amended.

On April 14, 1991, the Export Processing Zone Authority, (PEZA), predecessor of PEZA, filed a complaint for the expropriation of seven parcels of land located at Barrio Ibo, Lapu-Lapu City, Cebu, owned by respondents. The purpose of the expropriation was to establish and develop an export processing zone or a part thereof on those real properties. After trial on the merits, the RTC rendered a decision ordering the expropriation of the seven parcels of land and payment of just compensation of P1,500 per sq. m. with 12% interest per annum from the time petitioner took possession. During the pendency of petitioners appeal for the correctness of valuation, both parties reached an amicable settlement and agreed for the payment as fixed by RTC; as well as presentation by respondents of clean titles of all the subject properties before payment by petitioner.Accordingly, the parties executed a deed of absolute sale dated June 25, 2001 which set out the terms and conditions of their settlement, the transfer of ownership from respondents to petitioner and the execution by the parties of the corresponding deed of absolute sale for the remaining six lots as soon as respondents could settle or clear the encumbrances or other problems affecting them. Petitioner prepared a joint motion to dismiss the expropriation case but respondent Antonio Florendo refused to sign because there were still three lots which had not yet been paid. Respondents could not clear these properties of their encumbrances and liens as there were pending cases filed by third party claimants over them. Instead, they proposed that a partial compromise agreement be executed to cover the four lots that had already been sold and transferred to PEZA. Petitioner, however, found the proposal unacceptable and contrary to their compromise agreement.

Issue:Whether or not there was a perfected compromise agreement between the parties.

Ruling:The compromise agreement the parties executed was in the form of a contract of sale. The elements of a valid contract of sale are: (a) consent or meeting of the minds; (b) determinate subject matter and (c) price certain in money or its equivalent. All the elements are present here. The parties agreed on the sale of a determinate object and the price certain. The contention of the respondent that there was no meeting of mind because the condition relating to the delivery of clean titles was not fulfilled is wrong. The delivery of clean titles was not a condition imposed on the perfection of the contract of sale but a condition imposed on petitioner's obligation to pay the purchase price of these lots. As ruled in the case of Jardine Davies Inc. vs CA, the court distinguished between a condition imposed on the perfection of a contract and a condition imposed merely on the performance of an obligation. While failure to comply with the first condition results in the failure of a contract, non-compliance with the second merely gives the other party options and/or remedies to protect its interest.Topic:Contract to sell Art. 1478Case: Sacobia Hills Devt Corp. v. Ty, 470 SCRA 395, September 20, 2005Prepared by:Leny IgnalagaFacts: Petitioner Sacobia Hills Development Corporation (Sacobia) is the developer of True North Golf and Country Club which boasts of amenities that include a golf course, clubhouse, sports complex andseveral vacation villas. Respondent Allan U. Ty wrote to Sacobia a letter expressing his intention to acquireone Class A share of True North and accordingly paid the reservation fee of P180,000.00 as evidenced byPCI Bank Check No. 0038053. Sacobia assured its prospective shareholders that the development of True North was proceeding on schedule; that the golf course would be playable by October 1999; that theEnvironmental Clearance Certificate (ECC) by the Department of Environment and Natural Resources(DENR) as well as the Permit to Sell from the Securities and Exchange Commission (SEC) should have been released by October 1997; and that their registration deposits remained intact in an escrow account.Sacobia then approved the purchase application and membership of Ty for P600,000.00, subject to certainterms and conditions. The notice of approval provided the following:Terms and Conditions1. Approval of an application to purchase golf/country club shares is subjected to the full payment of the total purchase price. Should the buyer opt for the deferred payment scheme, approval is subject to our receipt of a down payment of at least 30% and the balance payable in installments over a maximum of eleven (11) months from the date of application, and covered by postdated cheques.2. Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail tosettle your obligation within fifteen (15) days from due date, or failure to cover the value of the postdatedcheques upon their maturity, or your failure to issue the required postdated cheques. In which case, weshall reserve the right to offer the said shares to other interested parties. This also means forfeiture of 50%of the total amount you have already paid.3. We will undertake to execute the corresponding sales documents/ Deed of Absolute Sale coveringthe reserved shares upon full payment of the total purchase price. The Certificate of Membership shall beissued thereafter.However, on January 12, 1998, Ty notified Sacobia that he is rescinding the contract and sought refund of the payments already made due to the latters failure to complete the project on time as Promised (supposedly October 1997). Sacobia wrote him a letter, stating that the DENR had issued the requiredECC only on March 5, 1998, and that the golf course would be ready for use by end of 1998( in fact aheadof promised date which is October 1999). Sacobia again wrote the respondent advising him that the 18-holegolf course would be fully operational by summer of 1999. Sacobia also sought to collect from respondent the latters outstanding balance of P190,909.08 which was covered by five (5) post dated checks. However,Ty notified Sacobia that he had stopped payment on the five (5) post dated checks and reiterated hisdemand for the refund of his payments which amounted to P409,090.92. Sacobia denied his request thusTy filed a complaint for rescission and damages.

Issue: Whether or not respondent Ty can rescind the contract and demand for damages from Sacobia Hillsfor breach of contractHeld: No, Ty cannot rescind the contract and demand for damages from Sacobia Hills for breach of contract because the contract to sell between them has not yet been perfected for failure by Ty to pay the full purchase price. The Supreme Court ruled as follows:1. The terms of the agreement between Sacobia and Ty can be deduced, not on a formal document like adeed of sale, but from a series of correspondence and acts signifying the parties intention to enter into acontract. The absence of a formal deed of conveyance is a strong indication that Sacobia did not intend totransfer title until respondent shall have completely complied with his correlative obligation of paying thecontact price.2. In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to conveytitle from acquiring an obligatory force. It is one where the happening of the event gives rise to anobligation. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having failed to perform the suspensive condition which enforces a juridical relation. In fact with this circumstance, therecan be no rescission of an obligation that is still non-existent, the suspensive condition not having occurredas yet. Emphasis should be made that the breach contemplated in Article 1191 of the New Civil Code is theobligors failure to comply with an obligation already extant, not a failure of a condition to render bindingthat obligation.3. Ty did not pay the full purchase price which is his obligation under the contract to sell, therefore, itcannot be said that Sacobia breached its obligation. No obligations arose on its part because respondentsnon-fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected.Indeed, there can be no rescission under Article 1191of the Civil Code because until the happening of thecondition, i.e. full payment of the contr act price, Sacobias obligation to deliver the title and object of thesale is not yet extant. A non-existent obligation cannot be subject of rescission. Article 1191 speaks of obligations already existing, which may be rescinded in case one of the obligors fails to comply with whatis incumbent upon him.4. In the present case, respondents failure to fulfill this suspensive condition prevented the perfection of the contract to sell. With an ineffective contract, Ty had not acquired the status of a shareholder butremained, at most, a prospective investor. In the absence of a juridical tie between the parties, Ty cannotclaim the rights and privileges accorded to Sacobias full-fledged members and shareowners, including thefull enjoyment of the amenities being offered. Unfortunately for Ty, he cannot avail of rescission asenvisioned by Article 1191 of the Civil Code. However, he can withdraw his investment subject to therestrictions under the terms and conditions pertinent to a reneging investor.5. Tys complaint for rescission of contract and damages in Civil Case No. 01-99696 is dismissed Heis ordered to pay to Sacobia Hills Development Corporation the amount of Pesos: One Hundred NinetyThousand Nine Hundred Nine and Eight Centavos (P190,909.08) without interest within thirty (30) daysfrom finality of this decision; otherwise, fifty percent (50%) of his total payments shall be forfeited.