Republic v. Florendo

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA) THROUGH ITS DIRECTOR GENERAL, LILIA B. DE LIMA, PETITIONER, VS. ANTONIO AND LILI FLORENDO,* RESPONDENTS.

[G.R. No. 166866, March 27, 2008]

CORONA, J.:

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 petitioner’s 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.

Sanchez v. Mapalad

Manuel Luis Sanches vs Mapalad Realty Corporation

[GR No. 148516, December 27, 2007]

Reyes, J.:

Facts:

Respondent Mapalad was the registered owner of 4 parcels of land located along Roxas Boulevard, Baclaran, Paranaque. On March 21, 1986, shortly after EDSA revolution, Jose Campos executed an affidavit admitting that Mapaladd was one of the companies held  in trust for former President Marcos. Campos turned over, all assets, properties, records and documents pertaining to Mapalad to the new administration led by President Corazon Aquino. PCSS issued writs of sequestration for Mapalad and all its properties. Rolando Josef, appointed Vice President/Treasurer and GM of Mapalad, discovered for that there was 4 TCTs missing. Josef inquired about it and discovered Felicito Manalili, Mapalad’s former director and general manager took them. On November 16, 1992, Nordelak Development Corporation filed a notice of adverse claim over the subject properties based on deed of sale purportedly executed by Miguel Magsaysay in his capacity as President and board chairman of Mapalad. A. Magsaysay Inc., a corporation controlled by Miguel Magsaysay, acquired ownership of all the shares of stock of Mapalad however was terminated after selling all his shares to Novo Properties on December 3, 1982.

Mapalad commenced the present action for annulment of deed of sale and reconveyance of title with damages against Nordelak. During the pendency of the case, Nordelak sold the subject property to a certain Manuel Luis Sanchez, now petitioner.

Issue:

Whether or not there is a valid sale between Mapalad and Nordelak.

Ruling:

A contract is defined as a juridical convention manifested in legal forms, by virtue of which one or more persons bind themselves in favour of another, to give, to do or not to do. The essential requisites of a valid contract of sale are (a) consent of the contracting parties, (b) object certain, and (c) cause of obligation. Consent may be given only by a person with legal capacity to give consent. In the case of juridical person such as corporation like Mapalad, consent may only be granted through its officers who have been duly authorized by its board of directors.

In the present case, consent was purportedly given by Miguel Magsaysay, the person who signed for and in behalf of Mapalad in the deed of absolute sale. However, during the trial, he admitted to be no longer connected with Mapalad because he already divested all his interests in said corporation as early as 1982. Even assuming, for the sake of argument, the signatures were genuine, it would still be voidable for lack of authority resulting in his capacity to give consent on the part of Mapalad.

Manila Metal v. PNB

Manila Metal Container Corporation vs Philippine National Bank

[GR No. 166862, December 20, 2006]

Callejo, Sr., J.:

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 petitioner’s 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 SAMD’s 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.

Coronel v. CA

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for herself and on behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS MABANAG, petitioners, vs. THE COURT OF APPEALS, CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact, respondents.

[GR No. 103577, October 7, 1996]

MELO, J.:

Facts:

On January 19, 1985, Romulo Coronel, et al., executed a document entitled “Receipt of Down Payment” in favour of Ramona Patricia Alcaraz for P50,000.00 down payment for the total amount of P 1.24M price for an inherited house and lot, promising to execute a deed of absolute sale for said property as soon as such has been transferred in their name. The balance of P1.19M is due upon the execution of said deeds. On the same date, Concepcion Alcaraz, mother of Ramona, paid the down payment of P50,000.00. On February 6, 1985, the property originally registered in the name of Coronel’s father was transferred in their names. However, on February 18, 1985, the Coronels sold the property to Catalina Mabanag for P1,580,000.00 after the latter has paid for P30,000.00. For this reason, Coronels cancelled and rescinded the contract with Alcaraz by depositing the downpayment in the bank in trust for Alcaraz.

Alcaraz filed for specific performance against Coronels and caused the annotation of a notice of lis pendens.

Issue:

Whether or not the legal significance of the document entitled “Receipt of Down payment” constitute as a Contract of Sale or Contract to Sell.

Ruling:

The “Receipt of Down Payment” in the case at bar is a Contract of sale.

A Contract of Sale as defined by Article 1458 of the Civil Code is whereby one obligates himself to transfer ownership and to deliver a determinate thing, and the other to pay thereof a price certain in money or its equivalent. Sale, by its very nature, is a consensual contract because it is perfected by mere consent.  The essential elements of a contract of sale are the following:

a)      Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;

b)      Determinate subject matter; and

c)      Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking.  In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. When the “Receipt of Down payment” is considered in its entirety, it becomes more manifest that there was a clear intent on the part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the name of petitioner’s father, they could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price.  Therefore, petitioners-sellers undertook upon receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the issuance of a new certificate of title in their names from that of their father, after which, they promised to present said title, now in their names, to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase price. Furthermore, the agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title to the subject parcel of land. 

STARBRIGHT SALES ENTERPRISES, INC., PETITIONER, VS. PHILIPPINE REALTY CORPORATION

STARBRIGHT SALES ENTERPRISES, INC., PETITIONER, VS. PHILIPPINE REALTY CORPORATION, MSGR. DOMINGO A. CIRILOS, TROPICANA PROPERTIES AND DEVELOPMENT CORPORATION AND STANDARD REALTY CORPORATION, RESPONDENTS.

[G.R. No. 177936, January 18, 2012]

ABAD, J.:

Facts:

On April 17, 1988 Ramon Licup wrote Msgr. Domingo A. Cirilos, offering to buy three contiguous parcels of land in Parañaque that The Holy See and Philippine Realty Corporation (PRC) owned for P1,240.00 per square meter. Licup accepted the responsibility for removing the illegal settlers on the land and enclosed a check for P100,000.00 to "close the transaction.” He undertook to pay the balance of the purchase price upon presentation of the title for transfer and once the property has been cleared of its occupants. Msgr. Cirilos, representing The Holy See and PRC, signed his name on the conforme portion of the letter and accepted the check. But the check could not be encashed due to Licup's stop-order payment.  Licup wrote Msgr. Cirilos on April 26, 1988, requesting that the titles to the land be instead transferred to petitioner Starbright Sales Enterprises, Inc. (SSE).  He enclosed a new check for the same amount. SSE's representatives, Mr. and Mrs. Cu, did not sign the letter.

On November 29, 1988 Msgr. Cirilos wrote SSE, requesting it to remove the occupants on the property and, should it decide not to do this, Msgr. Cirilos would return to it the P100,000.00 that he received.  On January 24, 1989 SSE replied with an "updated proposal.” It would be willing to comply with Msgr. Cirilos' condition provided the purchase price is lowered to P1,150.00 per square meter.

On January 26, 1989 Msgr. Cirilos wrote back, rejecting the "updated proposal." He said that other buyers were willing to acquire the property on an "as is, where is" basis at P1,400.00 per square meter.  He gave SSE seven days within which to buy the property at P1,400.00 per square meter, otherwise, Msgr. Cirilos would take it that SSE has lost interest in the same. He enclosed a check for P100,000.00 in his letter as refund of what he earlier received. The property was eventually sold to Tropicana Properties and then sold Standard Realty.

Issue:

Whether or not there is a perfected contract existing between SSE and land owners, represented by Msgr. Cirilos.

Ruling:

Three elements are needed to create a perfected contract: 1) the consent of the contracting parties; (2) an object certain which is the subject matter of the contract; and (3) the cause of the obligation which is established. Under the law on sales, a contract of sale is perfected when the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to the buyer, over which the latter agrees. From that moment, the parties may demand reciprocal performance.

The Court believes that the letter between Licup and Msgr. Cirilos, the representative of the property's owners, constituted a perfected contract.  However, when Licup ordered to stop his deposit and instead transferred the property to SSE, a novation took place. Novation serves two functions - one is to extinguish an existing obligation, the other to substitute a new one in its place - requiring concurrence of four requisites: 1) a previous valid obligation; 2) an agreement of all parties concerned to a new contract; 3) the extinguishment of the old obligation; and 4) the birth of a valid new obligation. In the given case, it was noted that the signatures present during Licup and Msgr. Cirilos agreement are not present in the letter of agreement between SSE and Msgr. Cirilos.  SSE cannot revert to the original terms stated in Licup's letter to Msgr. Cirilos since it was not privy to such contract.  The parties to it were Licup and Msgr. Cirilos.  Under the principle of relativity of contracts, contracts can only bind the parties who entered into it.

Polytechnic University of the Philippines vs Court of Appeals

Polytechnic University of the Philippines vs Court of Appeals and Firestone Ceramics

National Development Corporation vs Firestone Ceramics Inc.

[GR No. 143513 and 143590. November 14, 2001]

Bellosilo, J.:

Facts:

Petitioner National Development Corp., a government owned and controlled corporation, had in its disposal a 10 hectares property. Sometime in May 1965, private respondent Firestone Corporation manifested its desire to lease a portion of it for ceramic manufacturing business. On August 24, 1965, both parties entered into a contract of lease for a term of 10 years renewable for another 10 years. Prior to the expiration of the aforementioned contract, Firestone wrote NDC requesting for an extension of their lease agreement. It was renewed with an express grant to Firestone of the first option to purchase the leased premise in the event that it was decided "to dispose and sell the properties including the lot..."

Cognizant of the impending expiration of the leased agreement, Firestone informed NDC through letters and calls that it was renewing its lease. No answer was given. Firestone's predicament worsened when it learned of NDC's supposed plans to dispose the subject property in favor of petitioner Polytechnic University of the Philippines. PUP referred to Memorandum Order No. 214 issued by then President Aquino ordering the transfer of the whole NDC compound to the National Government. The order of conveyance would automatically result in the cancellation of NDC's total obligation in favor of the National Government.

Firestone instituted an action for specific performance to compel NDC to sell the leased property in its favor.

Issue:

1. Whether or not there is a valid sale between NDC and PUP.

Ruling
A contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore a sum certain in money or its equivalent. It is therefore a general requisite for the existence of a valid and enforceable contract of sale that it be mutually obligatory, i.e., there should be a concurrence of the promise of the vendor to sell a determinate thing and the promise of the vendee to receive and pay for the property so delivered and transferred.  The Civil Code provision is, in effect, a "catch-all" provision which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration.

All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the "disposition" and "transfer" of the property from NDC to PUP - consent of the parties, determinate subject matter, and consideration therefor.

Consent to the sale is obvious from the prefatory clauses of Memorandum Order No. 214 which explicitly states the acquiescence of the parties to the sale of the property. Furthermore, the cancellation of NDC's liabilities in favor of the National Government constituted the "consideration" for the sale.

CA-Agro Industrial Devt Corp vs CA 219 SCRA 426

Facts:

On July 3, 1979, petitioner (through its President- Sergio Aguirre) and the Spouses Ramon and Paula Pugao entered into an agreement whereby the former purchase two parcel of lands from the latter. It was paid of downpayment while the balance was covered by there postdated checks. Among the terms and conditions embodied in the agreement were the titles shall be transferred to the petitioner upon full payment of the price and the owner's copies of the certificate of titles shall be deposited in a safety deposit box of any bank. Petitioner and the Pugaos then rented Safety Deposit box of private respondent Security Bank and Trust Company.

Thereafter, a certain Margarita Ramos offered to buy from the petitioner. Mrs Ramos demand the execution of a deed of sale which necessarily entailed the production of the certificate of titles. In view thereof, Aguirre, accompanied by the Pugaos, then proceed to the respondent Bank to open the safety deposit box and get the certificate of titles. However, when opened in the presence of the Bank's representative, the box yielded no such certificate. Because of the delay in the reconstitution of the title, Mrs Ramos withdrew her earlier offer to purchase.

Hence this petition.

Issue:

Whether or not the contract of rent between a commercial bank and another party for the use of safety deposit box can be considered alike to a lessor-lessee relationship.

Ruling:

The petitioner is correct in making the contention that the contract for the rent of the deposit box is not a ordinary contract of lease as defined in Article 1643 of the Civil Code. However, the Court do not really subscribe to its view that the same is a contract of deposit that is to be strictly governed by the provisions in Civil Code on Deposit; the contract in the case at bar is a special kind of deposit. It cannot be characterized as an ordinary contract of lease under Article 1643 because the full and absolute possession and control of the safety deposit box was not given to the joint renters- the petitioner and the Pugaos. The guard key of the box remained with the respondent bank; without this key, neither of the renters could open the box. On the other hand, the respondent bank could not likewise open the box without the renter's key. The Court further assailed that the petitioner is correct in applying American Jurisprudence. Herein, the prevailing view is that the relation between the a bank renting out safe deposits boxes and its customer with respect to the contents of the box is that of a bail or/ and bailee, the bailment being for hire and mutual benefits. That prevailing rule has been adopted in Section 72 of the General Banking Act.

Section 72. In addition to the operations specifically authorized elsewhere in this Act, banking institutions other that building and loan associations may perform the following services:

(a) Receive in custody funds, document and valuable objects and rents safety deposits taxes for the safeguard of such effects.

xxx xxx xxx

The bank shall perform the services permitted under subsections (a) (b) and (c) of this section as depositories or as agents.