BENOS vs.

LAWILAO Case Digest

SPOUSES JAIME BENOS v. SPOUSES GREGORIO LAWILAO G.R. No. 172259, December 5, 2006 FACTS: On February 11,1999, petitioner-spouses Benos and respondent Lawilao executed a Pacto de Retro Sale where Benos sold their lot and the building erected thereon for P300,000, one-half of which to be paid in cash to the Benos and the other half to be paid to the bank to pay off the loans of the Benos which was secured by the same lot and building. Under the contract, Benos could redeem the property within 18 months from the date of execution by returning the contract price, otherwise, the sale would become irrevocable. After paying the P150,000, Lawilao took possession of the property, restructured it twicw, eventually the loan become due and demandable. On August 14, 2000, a son of Benos and Lawilao paid the bankl but the bank refused. Lawilao filed for consignation against the bank and deposited the amount of P159,000.00. RTC declared Lawilao of the ownership of the subject property, which was affirmed by the Court of Appeals. ISSUE: Whether or not the contract of Pacto de Retro Sale be rescinded by the petitioner RULING: In the instant case, records show that Lawilao filed the petition for consignation against the bank in Civil Case without notifying the Benos. Hence, Lawilao failed to prove their offer to pay the balance, even before the filing of the consignation case. Lawilao never notified the Benos. Thus, as far as the Benos are concerned, there was no full and complete payment of the contract price which gives them the right to rescind. Petition is granted. Court of Appeals decision is reversed and set aside, that the Pacto de Retro Sale is rescinded and petitioner are ordered to return the amount of P150,000 to respondents.

Guzman, Bocaling & Co. vs. Bonnevie Facts: A 600 sqm parcel of land with two buildings belonging to the Intestate Estate of Jose Reynoso was leased to Raoul and Christopher Bonnevie by the administratix Africa Valdez for a period of one year at a rate of 4K a month starting Aug. 1976.In the contract of lease, there is a stipulation that in case the lessor desires or decides to sell the leased property, the lessees shall be given a first priority to purchase the same, all things and considerations being equal. y In Nov. 1976, administratix notified the resp by registered mail that she is selling the premises for 600K less a mortgage loanand giving them 30 days from receipt to exercise their right of first priority. If they would not exercise, she expects them tovacate the prop in March 1977. y

In Jan 1977, she sent a letter notifying them that in their failure to exercise their right, she has already sold the property. Thisis the only letter that the Bonnevies received. They informed agent that they are willing to make negotiations and that theyrefuse the termination of the lease.In March 1977, property formally sold to Guzman, Bocaling & Corp for 400K and the balance of this amount shall bepaid when the Bonnevies have already vacated the premises.Administratix demanded that they vacate the premises and pay the rentals for four months.They had a Compromise Agreement that the Bonnevies shall vacate the premises not later than Oct. 1979 but this wasset aside.The Bonnevies filed an action for annulment of the sale between REynoso and the GBC and ancellation of the transfer certificate. They also asked that Reynoso be required to sell the property to them under the same terms and conditions agreedupon the Contract of sale. issue: WON the Bonnevies can file for an action for annulment of the sale between Reynoso and the GBC considering that they are thirdparties to the contract. Held: Yes. The Contract of Sale was not voidable but rescissible.Under Art 1380 to 1381 (3) of the CC, a contract otherwise valid may nonetheless be subsequently rescinded by reasonof injury to third persons, like creditors. The status of creditors could be validly accorded the Bonnevies for they hadsubstantial interest that were prejudiced by the sale of the subject property to the petitioner without recognizing their right of first priority under the Contract of Lease.Tolentino: rescission is a remdy granted by law to the contracting parties and even to third persons, to secure reparationfor damages caused to them by a contract, even if this should be valid, by means of the resotoration of things to their condition at the moment prior to the celebration of said contract.It is a relief allowed for the protection of one of the contracting parties and even third persons from all injury anddamage the contract may cause, or to protect some incompatible and preferred right created by the contract.Rescission implies a contract which, even if initially valid, produces a lesion or pecuniary damage to someone thatjustifies its invalidation for reasons of equity.GBC cannot be buyers in good faith bec they had knowledge of the lease of the premise. They were negligent in notinquiring about the terms of the Lease Contract

EQUATORIAL REALTY V. MAYFAIR (November 21, 1996)

FACTS: Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-storey building to respondent Mayfair Theater Inc. They entered a contract which provides that if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive option to purchase the same. Carmelo informed Mayfair that it will sell the property to Equatorial. Mayfair made known its interest to buy the property but only to the extent of the leased premises.

Notwithstanding Mayfairs intention, Carmelo sold the property to Equatorial. ISSUE: WON the sale of the property to Equatorial is valid. HELD: The sale of the property should be rescinded because Mayfair has the right of first refusal. Both Equatorial and Carmelo are in bad faith because they knew of the stipulation in the contract regarding the right of first refusal. The stipulation is a not an option contract but a right of first refusal and as such the requirement of a separate consideration for the option, has no applicability in the instant case. The consideration is built in the reciprocal obligation of the parties. In reciprocal contract, the obligation or promise of each party is the consideration for that of the other. (Promise to lease in return of the right to first refusal) With regard to the impossibility of performance, only Carmelo can be blamed for not including the entire property in the right of first refusal. Court held that Mayfair may not have the option to buy the property. Not only the leased area but the entire property.

Corporate Law Case Digest, Sales Case Digest: Manila Metal Container Corp. v. PNB (2006) THURSDAY, JUNE 23, 2011 STACYNO COMMENTS G.R. No. 166862December 20, 2006 Lessons Applicable: Doctrine of Centralized Management: Powers of Board of Directors (Corporate Law) Doctrine of Centralized Management (Corporate Law) Price (Sales) Earnest Money (Sales)

FACTS:

Manila Metal Corp. executed a real estate mortgage (TCT. 32098) as a security for itsloan from PNB amounting to 900,000 php, later on 1,000,000 php and 653,000 php

Aug. 5, 1982 PNB filed a petition for extrajudicial foreclosure for the property to besold at a public auction 911,532.21 php (outstanding as of June 30) + interest +attorney's fees

Sept. 2, 1982:PNB won the public auction at 1,000,000 php Feb. 17, 1983: Certificate of Sale was issued and registered at the Registry of Deedsand was annotated at the dorsal portion of the title (Redeemable until Feb 17,1983) Petitioner requested 1 year extension until Feb 17,1984 but was rejected by PNB saying it is their policy not to accept partial redemption Jun. 1,1984: Since petitioner failed to redeem, TCT. 32098 was cancelled and a newtitle was issued in favor of PNB Meanwhile, Special Assets Management Department (SAMD) had prepared astatement of account as of Jun 25,1984 amounting to 1,574,560.47 php (bid price +interest + advances of insurance premiums + advances on relaty taxes + reg. exp.+misc. exp + piblication cost)

Petitioner deposited 725,000 php as deposit to repurchase and was issued an O.R. PNB management rejected the recommendation of SAMD and demanded that petitioner pay the markt value of 2,660,000 php. Jun 24, 1984:PNB informed petitioner that its B.O.D had agreed to accept its offer to purchase but at 1,931,389.53 less the 725,000 php. PNB President did not conform to the letter but merely indicated that he hasreceived it.

Petitioner rejected this since PNB has already accepted its downpayment so itcan no longer increase the price

Issue: -Has there been a breach of contract? -Can Myers extrajudicially terminate the contract? Held: -Yes. -Yes
Ratio: Failure to pay monthly installments constitute a breach of contract. Default was not made in good faith.

The letter to Myers corp means that the non-payment of installments was deliberately made to coerce Myers crp into answering for an allegedpromise of the dead FH Myers. Whatever obligation FH Myers had assumed is not an obligation of Myers corp. No proof that board of Nyers corp agreed to assumeresponsibility to debts of FH Myers and heirs. Schaedler allowed the estate proceedings of FH Myers to close without providing liability. By the balance (of payment) in the Deed of Conditional Sale, Maritime wasattempting to burden the Myers corp with an uncollectible debt,since enforcement against FH Myers estate was already barred. Maritime acted in bad faith. Maritimes contract with Myers is not the ordinary sale contemplated in NCC 1592 (transferring ownership simultaneously with delivery). The distinction between contracts of sale and contract to sell with reserved title has been recognized by this Court in repeateddecisions upholding the power of promisors under contracts to sell in case of failure of the other party to complete payment, to extrajudiciallyterminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights areexpressly provided for, as in this case

Coronel v. CA
Facts: The case arose from a complaint for specific performance filed by private respondent Alcaraz against petitioners to consummate the sale of a parcel of land in Quezon City. On January 19, 1985, petitioners executed a Receipt of Down Payment of P50,000 in favor of plaintiff Ramona Alcaraz, binding themselves to transfer the ownership of the land in their name from their deceased father, afterwhich the balance of P1,190,000 shall be paid in full by Alcaraz. On February 6, 1985, the property was transferred to petitioners. On February 18, 1985, petitioners sold the property to Mabanag. For this reason, Concepcion, Ramonas mother, filed an action for specific performance. Issue:

Whether the contract between petitioners and private respondent was that of a conditional sale or a mere contract to sell Held: 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 explicity 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. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition, the nonfulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated. However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the

purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller's title per se, but the latter, of course, may be used for damages by the intending buyer. In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller's title thereto. In fact, if there had been previous delivery of the subject property, the seller's ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Such second buyer of the property who may have had actual or constructive knowledge of such defect in the seller's title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer's title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale. 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. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price. Under the established facts and circumstances of the case, the Court may safely presume that, had the certificate of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been executed and consummated right there and then. What is clearly established by the plain language of the subject document is that when the said "Receipt of Down Payment" was prepared and signed by petitioners Romeo A. Coronel, et al., the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful

transfer of the certificate of title from the name of petitioners' father, Constancio P. Coronel, to their names. The provision on double sale presumes title or ownership to pass to the first buyer, the exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by either of the two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of the first buyer. In a case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold. If a vendee in a double sale registers that sale after he has acquired knowledge that there was a previous sale of the same property to a third party or that another person claims said property in a pervious sale, the registration will constitute a registration in bad faith and will not confer upon him any right.