MEDRANO and IBAAN RURAL BANK vs.
COURT OF The evidence on record shows that the respondents were
APPEALS
G.R. No. 150678 February 18, 2005
Facts:
Bienvenido Medrano was the Vice-Chairman of Ibaan Rural
Bank. He asked Flor (a cousin), to look for a buyer of a
foreclosed asset of the bank (17-hectare mango plantation with
720 trees priced at P2.2M). Dominador Lee, a Makati
businessman was a client of respondent Pacita Borbon, a
licensed real estate broker. Borbon relayed to her business
associates and friends that she had a ready buyer for a mango
orchard. Flor then advised her that her cousin-in-law owned a
mango plantation which was up for sale. She told Flor to
confer with Medrano and to give them a written authority to
negotiate the sale of the property. Medrano issued the Letter of
Authority to Borbon and Antonio to negotiate with any
prospective buyer for the sale of the mango plantation. He
promised Borbon to pay a commission of 5% of the total
purchase price to be agreed upon by the buyer and seller.
An ocular inspection was held by Lee. Lee informed Antonio
that he already purchased the property and had made a down
payment ofP1M. The remaining balance of P1.2M was to be
paid upon the approval of the incorporation papers of the
corporation he was organizing by the SEC. According to
Antonio, Lee asked her if they had already received their
commission. She answered "no," and Lee expressed surprise
over this. Since the sale of the property was consummated, the
respondents asked from the petitioners their commission, or
5% of the purchase price. The petitioners refused to pay and
offered a measly sum of P5,000.00 each. Hence, the present
action.
Medrano’s defense: Borbon and Antonio did not perform any
act to consummate the sale. The petitioners pointed out that
the respondents (1) did not verify the real owner of the
property; (2) never saw the property in question; (3) never got
in touch with the registered owner of the property; and (4)
neither did they perform any act of assisting their buyer in
having the property inspected and verified.
Issue: WON the plaintiffs are entitled to any commission for
the sale of the subject property? YES
Held:
The respondents are indeed the procuring cause of the sale. If
not for the respondents, Lee would not have known about the
mango plantation being sold by the petitioners. The sale was
consummated. The bank had profited from such transaction. It
would certainly be iniquitous if the respondents would not be
rewarded their commission pursuant to the letter of authority.
“Procuring cause” = the proximate cause. The term
"procuring cause," in describing a broker’s activity, refers to a
cause originating a series of events which, without break in
their continuity, result in accomplishment of prime objective
of the employment of the broker – producing a purchaser
ready, willing and able to buy real estate on the owner’s terms.
instrumental in the sale of the property to Lee. Without their
intervention, no sale could have been consummated. They
were the ones who set the sale of the subject land in motion.
While the letter-authority issued in favor of the respondents
was non-exclusive, no evidence was adduced to show that
there were other persons, aside from the respondents, who
informed Lee about the property for sale. When there is a
close, proximate and causal connection between the broker’s
efforts and the principal’s sale of his property, the broker is
entitled to a commission.
In the absence of fraud, irregularity or illegality in its
execution, such letter-authority serves as a contract, and is
considered as the law between the parties. The clear
intention is to reward the respondents for procuring a buyer
for the property.
DELPHER TRADES CORPORATION vs. IAC
G.R. No. L-69259 January 26, 1988
Facts:
Delfin Pacheco and sister Pelagia were the owners of a parcel
of land in Polo (now Valenzuela). On April 3, 1974, they
leased to Construction Components International Inc. the
property and providing for a right of first refusal should it
decide to buy the said property.
Construction Components International, Inc. assigned its
rights and obligations under the contract of lease in favor of
Hydro Pipes Philippines, Inc. with the signed conformity and
consent of Delfin and Pelagia. In 1976, a deed of exchange
was executed between lessors Delfin and Pelagia Pacheco and
defendant Delpher Trades Corporation whereby the Pachecos
conveyed to the latter the leased property together with
another parcel of land also located in Malinta Estate,
Valenzuela for 2,500 shares of stock of defendant corporation
with a total value of P1.5M.
On the ground that it was not given the first option to buy the
leased property pursuant to the proviso in the lease agreement,
respondent Hydro Pipes Philippines, Inc., filed an amended
complaint for reconveyance of the lot.
Trivia lang: Delpher Trades Corp is owned by the Pacheco
Family, managed by the sons and daughters of Delfin and
Pelagia. Their primary defense is that there is no transfer of
ownership because the Pachecos remained in control of the
original co-owners. The transfer of ownership, if anything,
was merely in form but not in substance.
Issue: WON the Deed of Exchange of the properties executed
by the Pachecos and the Delpher Trades Corporation on the
other was meant to be a contract of sale which, in effect,
prejudiced the Hydro Phil's right of first refusal over the
leased property included in the "deed of exchange"? NO
Held:
By their ownership of the 2,500 no par shares of stock, the
Pachecos have control of the corporation. Their equity capital
is 55% as against 45% of the other stockholders, who also
belong to the same family group. In effect, the Delpher Trades
Corporation is a business conduit of the Pachecos. What they
really did was to invest their properties and change the nature
of their ownership from unincorporated to incorporated form
by organizing Delpher Trades Corporation to take control of
their properties and at the same time save on inheritance taxes.

The "Deed of Exchange" of property between the Pachecos

and Delpher Trades Corporation cannot be considered a
contract of sale. There was no transfer of actual ownership
interests by the Pachecos to a third party. The Pacheco
family merely changed their ownership from one form to
another. The ownership remained in the same hands. Hence,
the private respondent has no basis for its claim of a light of
first refusal under the lease contract.

TOYOTA SHAW, INC. vs. COURT OF APPEALS
G.R. No. L-116650 May 23, 1995
Facts:
Sometime in June of 1989, Luna L. Sosa wanted to purchase a
Toyota Lite Ace. It was then a seller's market and Sosa had
difficulty finding a dealer with an available unit for sale. But
upon contacting Toyota Shaw, Inc., he was told that there was
an available unit. So on 14 June 1989, Sosa and his son,
Gilbert, went to the Toyota office at Shaw. There they met
Popong Bernardo, a sales representative of Toyota.
Sosa emphasized to Bernardo that he needed the Lite Ace not
later than 17 June 1989 because he, his family, and
a balikbayan guest would use it on 18 June 1989 to go to
Marinduque, his home province, where he would celebrate his
birthday on the 19th of June. He added that if he does not
arrive in his hometown with the new car, he would become a
"laughing stock." Bernardo assured Sosa that a unit would be
ready for pick up at 10AM on 17 June 1989. Bernardo then
signed the "Agreements Between Mr. Sosa & Popong
Bernardo of Toyota Shaw, Inc." P100 thousand was the
downpayment, but the purchase price was not mentioned in
the contract. It was also agreed upon by the parties that the
balance of the purchase price would be paid by credit
financing through B.A. Finance.
Toyota contends, however, that the Lite Ace was not delivered
to Sosa because of the disapproval by B.A. Finance of the
credit financing application of Sosa. It further alleged that a
particular unit had already been reserved and earmarked for
Sosa but could not be released due to the uncertainty of
payment of the balance of the purchase price. Toyota then
gave Sosa the option to purchase the unit by paying the full
purchase price in cash but Sosa refused. The financing
corporation seemed to have not approved Sosa’s application.
Issue: WON there was a perfected contract of sale? NO
Held:
Exhibit "A" or the “Agreement” is NOT a perfected
contract of sale.
Nothing was mentioned about the full purchase price and the
manner the installments were to be paid. A definite agreement
on the manner of payment of the price is an essential element
in the formation of a binding and enforceable contract of sale.
This is so because the agreement as to the manner of payment
goes into the price such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price.
Definiteness as to the price is an essential element of a binding
agreement to sell personal property.
Exhibit "A" shows the absence of a meeting of minds between
Toyota and Sosa. For one thing, Sosa did not even sign it. He
was not dealing with Toyota but with Popong Bernardo.
Bernardo was only a sales representative of Toyota and hence
a mere agent of the latter.
Exhibit "A" may be considered as part of the initial phase of
the generation or negotiation stage of a contract of sale.
Accordingly, in a sale on installment basis which is financed
by a financing company, three parties are thus involved: the
buyer who executes a note or notes for the unpaid balance of
the price of the thing purchased on installment, the seller who
assigns the notes or discounts them with a financing company,
and the financing company which is subrogated in the place of
the seller, as the creditor of the installment buyer. Since B.A.
Finance did not approve Sosa's application, there was then no
meeting of minds on the sale on installment basis.
The Vehicle Sales Proposal was a mere proposal which was
aborted in lieu of subsequent events. It follows that the VSP
created no demandable right in favor of Sosa for the delivery
of the vehicle to him, and its non-delivery did not cause any
legally indemnifiable injury.
ROMERO vs. COURT OF APPEALS
G.R. No. 107207 November 23, 1995
Facts:
Romero, a civil engineer, was engaged in the business of
production, manufacture and exportation of perlite filter aids,
permalite insulation and processed perlite ore. In 1988, he
decided to put up a central warehouse in Metro Manila.
Flores and his wife offered a parcel of land measuring 1,952
square meters. The lot was covered in a TCT in the name of
private respondent Enriqueta Chua vda. de Ongsiong.
Petitioner visited the property and, except for the presence of
squatters in the area, he found the place suitable for a central
warehouse. Flores called on petitioner with a proposal that
should he advance the amount of P50,000.00 which could be
used in taking up an ejectment case against the squatters,
private respondent would agree to sell the property for only
P800/square meter. Romero agreed. Later, a "Deed of
Conditional Sale" was executed between Flores and Ongsiong.
Purchase price = P1,561,600.00; Downpayment = P50K;
Balance = to be paid 45 days after the removal of all the
squatters; upon full payment, Ongsiong shall execute deed of
absolute sale in favour of Romero.
Ongsiong sought to return the P50,000.00 she received from
petitioner since, she said, she could not "get rid of the
squatters" on the lot. She opted to rescind the sale in view of
her failure to get rid of the squatters. Regional Trial Court of
Makati rendered decision holding that private respondent had
no right to rescind the contract since it was she who "violated
her obligation to eject the squatters from the subject property"
and that petitioner, being the injured party, was the party who
could, under Article 1191 of the Civil Code, rescind the
agreement.
Issue: WON there was a perfected contract of sale? YES
Held:
A sale is at once perfected when a person (the seller) obligates
himself, for a price certain, to deliver and to transfer
ownership of a specified thing or right to another (the buyer)
over which the latter agrees. (BILATERAL and
RECIPROCAL CHARACTERISTIC OF SALE)
In determining the real character of the contract, the title given
to it by the parties is not as much significant as its substance.
For example, a deed of sale, although denominated as a deed
of conditional sale, may be treated as absolute in nature, if title
to the property sold is not reserved in the vendor or if the
vendor is not granted the right to unilaterally rescind the
contract predicated on the fulfillment or non-fulfillment, as the
case may be, of the prescribed condition.
From the moment the contract is perfected, the parties are
bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and
law. Under the agreement, private respondent is obligated to
evict the squatters on the property. The ejectment of the
squatters is a condition the operative act of which sets into
motion the period of compliance by petitioner of his own
obligation, i.e., to pay the balance of the purchase price.
Private respondent's failure "to remove the squatters from the
property" within the stipulated period gives petitioner the right
to either refuse to proceed with the agreement or waive that
condition in consonance with Article 1545 of the Civil Code.
This option clearly belongs to petitioner and not to private
respondent.
There was no potestative condition on the part of Ongsiong
but a "mixed" condition "dependent not on the will of the
vendor alone but also of third persons like the squatters and
government agencies and personnel concerned."
SANTOS vs. COURT OF APPEALS
G.R. No. 120820. August 1, 2000
Facts:
Spouses Santos owned the house and lot in Better Living
Subdivision, Paranaque, Metro Manila. The land together
with the house, was mortgaged with the Rural Bank of
Salinas, Inc., to secure a loan of P150K. The bank sent
Rosalinda Santos a letter demanding payment of P16K in
unpaid interest and other charges. Since the Santos couple had
no funds, Rosalinda offered to sell the house and lot to
Carmen Caseda. After inspecting the real property, Carmen
and her husband agreed.
Carmen and Rosalinda signed a document, involving the sale
of the house – P350K as full amount, P54K as downpayment.
Among other condition set is that Caseda will pay the balance
of the mortgage in the bank, real estate taxes and the electric
and water bills.
The Casedas complied with the bank mortgage and the bills.
The Santoses, seeing that the Casedas lacked the means to pay
the remaining installments and/or amortization of the loan,
repossessed the property. The Santoses then collected the
rentals from the tenants. Carmen approached petitioners and
offered to pay the balance of the purchase price for the house
and lot. The parties, however, could not agree, and the deal
could not push through because the Santoses wanted a higher
price.
Carmen is now praying that the Santoses execute the final
deed of conveyance over the property.
Issue: WON there was a perfected contract of sale? NO
Held:
A contract is what the law defines it to be, taking into
consideration its essential elements, and not what the
contracting parties call it. Article 1458 expressly obliges the
vendor to transfer ownership of the thing sold as an essential
element of a contract of sale. This is because the transfer of
ownership in exchange for a price paid or promised is the very
essence of a contract of sale.
There was no transfer of ownership simultaneously with the
delivery of the property purportedly sold. The records clearly
show that, notwithstanding the fact that the Casedas first took
then lost possession of the disputed house and lot, the title to
the property has remained always in the name of Rosalinda
Santos. Although the parties had agreed that the Casedas
would assume the mortgage, all amortization payments made
by Carmen Caseda to the bank were in the name of Rosalinda
Santos. The foregoing circumstances categorically and clearly
show that no valid transfer of ownership was made by the
Santoses to the Casedas. Absent this essential element, their
agreement cannot be deemed a contract of sale.
It was a contract to sell. Ownership is reserved by the vendor
and is not to pass until full payment of the purchase
price. This we find fully applicable and understandable in this
case, given that the property involved is a titled realty under
mortgage to a bank and would require notarial and other
formalities of law before transfer thereof could be validly
effected.
The CA cannot order rescission. If the vendor should eject
the vendee for failure to meet the condition precedent, he
is enforcing the contract and not rescinding it. When the
petitioners in the instant case repossessed the disputed house
and lot for failure of private respondents to pay the purchase
price in full, they were merely enforcing the contract and not
rescinding it.