SALES CASES
It was in fact petitioner who
BARTER vs Contract of sale
Fule v. CA
Facts:
Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr.
Cruz in exchange for P40,000 and a diamond earring owned by the latter. A
deed of absolute sale was prepared by Atty. Belarmino, and on the same day
Fule went to the bank with Dichoso and Mendoza, and Dr. Cruz arrived shortly
thereafter. Dr. Cruz got the earrings from her safety deposit box and handed it
to Fule who, when asked if those were alright, nodded and took the earrings.
Two hours after, Fule complained that the earrings were fake. He files a
complaint to declare the sale null and void on the ground of fraud and deceit.
Issue:
Whether the sale should be nullified on the ground of fraud
Held:
A contract of sale is perfected at the moment there is a meeting of the minds
upon the thing which is the object of the contract and upon the price. Being
consensual, a contract of sale has the force of law between the contracting
parties and they are expected to abide in good faith by their respective
contractual commitments. It is evident from the facts of the case that there was
a meeting of the minds between petitioner and Dr. Cruz. As such, they are
bound by the contract unless there are reasons or circumstances that warrant
its nullification.
Contracts that are voidable or annullable, even though there may have been no
damage to the contracting parties are: (1) those where one of the parties is
incapable of giving consent to a contract; and (2) those where the consent is
vitiated by mistake, violence, intimidation, undue influence or fraud. The
records, however, are bare of any evidence manifesting that private
respondents employed such insidious words or machinations to entice
petitioner into entering the contract of barter.
resorted to machinations to convince Dr. Cruz to exchange her jewelry for the
Tanay property.
Furthermore, petitioner was afforded the reasonable opportunity required in
Article 1584 of the Civil Code within which to examine the jewelry as he in fact
accepted them when asked by Dr. Cruz if he was satisfied with the same. By
taking the jewelry outside the bank, petitioner executed an act which was more
consistent with his exercise of ownership over it. This gains credence when it is
borne in mind that he himself had earlier delivered the Tanay property to Dr.
Cruz by affixing his signature to the contract of sale. That after two hours he
later claimed that the jewelry was not the one he intended in exchange for his
Tanay property, could not sever the juridical tie that now bound him and Dr.
Cruz. The nature and value of the thing he had taken preclude its return after
that supervening period within which anything could have happened, not
excluding the alteration of the jewelry or its being switched with an inferior
kind.
Ownership over the parcel of land and the pair of emerald-cut diamond
earrings had been transferred to Dr. Cruz and petitioner, respectively, upon the
actual and constructive delivery thereof. Said contract of sale being absolute in
nature, title passed to the vendee upon delivery of the thing sold since there
was no stipulation in the contract that title to the property sold has been
reserved in the seller until full payment of the price or that the vendor has the
right to unilaterally resolve the contract the moment the buyer fails to pay
within a fixed period.
While it is true that the amount of P40,000.00 forming part of the consideration
was still payable to petitioner, its nonpayment by Dr. Cruz is not a sufficient
cause to invalidate the contract or bar the transfer of ownership and possession
of the things exchanged considering the fact that their contract is silent as to
when it becomes due and demandable.
LEASE VS Contact of sale
FILINVEST CREDIT CORPORATION vs. COURT OF APPEALS G.R. No.
82508 September 29, 1989

Facts:
Spouses Sy Bang were engaged in the sale of gravel produced from
crushed rocks and used for construction purposes. In order to increase their
production, they looked for a rock crusher which Rizal Consolidated
Corporation then had for sale. A brother of Sy Bang, went to inspect the
machine at the Rizal Consolidated’s plant site. Apparently satisfied with the
machine, the private respondents signified their intent to purchase the same.
Since he does not have the financing capability, Sy Bang applied for
financial assistance from Filinvest Credit Corporation. Filinvest agreed to
extend financial aid on the following conditions: (1) that the machinery be
purchased in the petitioner’s name; (2) that it be leased with option to
purchase upon the termination of the lease period; and (3) that Sy Bang
execute a real estate mortgage as security for the amount advanced by
Filinvest. A contract of lease of machinery (with option to purchase) was
entered into by the parties whereby they to lease from the petitioner the rock
crusher for two years. The contract likewise stipulated that at the end of the
two-year period, the machine would be owned by Sy Bang.
3 months from the date of delivery, Sy Bang claiming that they had only
tested the machine that month, sent a letter-complaint to the petitioner,
alleging that contrary to the 20 to 40 tons per hour capacity of the machine
as stated in the lease contract, the machine could only process 5 tons of
rocks and stones per hour. They then demanded that the petitioner make
good the stipulation in the lease contract. Sy Bang stopped payment on the
remaining checks they had issued to the petitioner.
As a consequence of the non-payment, Filinvest extrajudicially foreclosed
the real estate mortgage.
Issue:
WON the real transaction was lease or sale? SALE ON INSTALLMENTS.
Held:
The real intention of the parties should prevail. The nomenclature of the
agreement cannot change its true essence, i.e., a sale on installments. It is
basic that a contract is what the law defines it and the parties intend it to be,
not what it is called by the parties. It is apparent here that the intent of the
parties to the subject contract is for the so-called rentals to be the installment
payments. Upon the completion of the payments, then the rock crusher,
subject matter of the contract, would become the property of the private
respondents. This form of agreement has been criticized as a lease only in
name.
Sellers desirous of making conditional sales of their goods, but who do not
wish openly to make a bargain in that form, for one reason or another, have
frequently resorted to the device of making contracts in the form of leases
either with options to the buyer to purchase for a small consideration at the
end of term, provided the so-called rent has been duly paid, or with
stipulations that if the rent throughout the term is paid, title shall thereupon
vest in the lessee. It is obvious that such transactions are leases only in
name. The so-called rent must necessarily be regarded as payment of the
price in installments since the due payment of the agreed amount results, by
the terms of bargain, in the transfer of title to the lessee.
Indubitably, the device contract of lease with option to buy is at times
resorted to as a means to circumvent Article 1484, particularly paragraph (3)
thereof.Through the set-up, the vendor, by retaining ownership over the
property in the guise of being the lessor, retains, likewise, the right to
repossess the same, without going through the process of foreclosure, in the
event the vendee-lessee defaults in the payment of the installments. There
arises therefore no need to constitute a chattel mortgage over the movable
sold. More important, the vendor, after repossessing the property and, in
effect, canceling the contract of sale, gets to keep all the installments-cum-
rentals already paid.
Even if there was a contract of sale, Filinvest is still not liable because Sy
Bang is presumed to be more knowledgeable, if not experts, on the
machinery subject of the contract, they should not therefore be heard now to
complain of any alleged deficiency of the said machinery. It was Sy Bang
who was negligent, not Filinvest. Further, Sy Bang is precluded to complain
because he signed a Waiver of Warranty.
Philippine Nacional Bank v Pineda G.R. No. L-46658 13 May 1991
MARCH 15, 2014LEAVE A COMMENT
Dation in payment is the delivery and transmission of ownership of a thing by the
debtor to the creditor as an accepted equivalent of the performance of the
obligation. As aforesaid, the repossession of the machinery and equipment in
question was merely to secure the payment of TCC’s loan obligation and not for
the purpose of transferring ownership thereof to PNB in satisfaction of said loan.
Thus, no dacion en pago was ever accomplished.
Facts: In 1963, Ignacio Arroyo, married to Lourdes Tuason Arroyo (the Arroyo
Spouses), obtained a loan of P580,000.00 from petitioner bank to purchase 60% of
the subscribed capital stock, and thereby acquire the controlling interest of private
respondent Tayabas Cement Company, Inc. (TCC). 2 As security for said loan, the
spouses Arroyo executed a real estate mortgage over a parcel of land covered by
Transfer Certificate of Title No. 55323 of the Register of Deeds of Quezon City
known as the La Vista property. Thereafter, TCC filed with petitioner bank an
application and agreement for the establishment of an eight (8) year deferred letter
of credit (L/C) for $7,000,000.00 in favor of Toyo Menka Kaisha, Ltd. of Tokyo,
Japan, to cover the importation of a cement plant machinery and equipment.
The imported cement plant machinery and equipment arrived from Japan and were
released to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha,
Ltd. made the corresponding drawings against the L/C as scheduled. TCC, however,
failed to remit and/or pay the corresponding amount covered by the drawings. Thus,
on May 19, 1968, pursuant to the trust receipt agreement, In the meantime, the
personal accounts of the spouses Arroyo, which included another loan of
P160,000.00 secured by a real estate mortgage over parcels of agricultural land
known as Hacienda Bacon located in Isabela, Negros Occidental, had likewise
become due. The spouses Arroyo having failed to satisfy their obligations with PNB,
the latter decided to foreclose the real estate mortgages executed by the spouses
Arroyo in its favor.
Issue: Whether or not the subsequent agreement extinguished the criminal and civil
liability of Pineda
Held: PNB’s possession of the subject machinery and equipment being precisely as
a form of security for the advances given to private respondent under the Letter of
Credit, said possession by itself cannot be considered payment of the loan secured
thereby; payment would legally result only after PNB has foreclosed on said
securities and sold the same, and applied the proceeds thereof to private
respondents’ loan obligation.—We rule for the petitioner PNB. It must be
remembered that PNB took possession of the imported cement plant machinery and
equipment pursuant to the trust receipt agreement executed by and between PNB
and TCC giving the former the unqualified right to the possession and disposal of all
property shipped under the Letter of Credit until such time as all the liabilities and
obligations under said Letter had been discharged. In the case of Vintola vs. Insular
Bank of Asia and America wherein.
The foregoing submission overlooks the nature and mercantile usage of the
transaction involved. A letter of credit-trust receipt arrangement is endowed with its
own distinctive features and characteristics. Under that set-up, a bank extends a loan
covered by the Letter of Credit, with the trust receipt as a security for the loan. In
other words, the transaction involves a loan feature represented by the letter of
credit, and a security feature which is in the covering trust receipt. Where there is
no such transfer of ownership in favor of the creditor, there is no dation in
payment.either can said repossession amount to dacion en pago. Dation in payment
takes place when property is alienated to the creditor in satisfaction of a debt in
money and the same is governed by sales. Dation in payment is the delivery and
transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation. As aforesaid, the repossession of the
machinery and equipment in question was merely to secure the payment of TCC’s
loan obligation and not for the purpose of transferring ownership thereof to PNB in
satisfaction of said loan. Thus, no dacion en pago was ever accomplished.
DELA CAVADA VS DIAZ
G.R. No. L-11668 April 1, 1918
ANTONIO ENRIQUEZ DE LA CAVADA, plaintiff-appellee,
vs.
ANTONIO DIAZ, defendant-appellant.
FACTS: On the 15th day of November 1912, the defendant and the plaintiff
entered into a “contract of option” whereby defendant-appellant Antonio Diaz
granted the option to the plaintiff-appellee Antonio Enriquez dela Cavada to
purchase his hacienda in Tayabas within the period necessary for the approval
and issuance of a Torrens title. In the same instrument he obligated himself to
sell said hacienda for P70 thousand pesos. The plaintiff on the other hand has for example, certain merchandise of certain specified property, from another

agreed to buy said property at the agreed purchase price. person, if he chooses, at any time within the agreed period, at a fixed price. The

Soon after the execution of said contract, and in part compliance with the terms contract of option is a separate and distinct contract from the contract which

thereof, the defendant obtained the registration of a part of the “Hacienda de the parties may enter into upon the consummation of the option. A

Pitogo” for which he was given certificates of title. Later, and pretending to consideration for an optional contract is just as important as the consideration

comply with the terms of said contract, the defendant offered to transfer to the for any other kind of contract. If there was no consideration for the contract of

plaintiff one of said parcels only, which was a part of said “hacienda.” The option, then it cannot be entered any more than any other contract where no

plaintiff refused to accept said certificate for a part only of said “hacienda” upon consideration exists. To illustrate, A offers B the sum of P100,000 for the option

the ground (a) that it was only a part of the “Hacienda de Pitogo,” and (b) under of buying his property within the period of 30 days. While it is true that the

the contract he was entitled to a transfer to him all said “hacienda.” conditions upon which A promises to buy the property at the end of the period

mentioned are usually fixed in the option, the consideration for the option is an

The trial court ruled for the plaintiff hence this petition. entirely different consideration from the consideration of the contract with

reference to which the option exists. A contract of option is a contract by virtue

ISSUE: W/N there was a perfected contract of sale of the terms of which the parties thereto promise and obligate themselves to
HELD: YES. The subject contract was not, in fact, an “optional contract” as that enter into contract at a future time, upon the happening of certain events, or the

phrase is generally used. Reading the said contract from its four corners it is fulfillment of certain conditions.

clearly as absolute promise to sell a definite parcel of land for a fixed price upon

definite conditions. The defendant promised to convey to the plaintiff the land

in question as soon as the same was registered under the Torrens system, and

the plaintiff promised to pay to the defendant the sum of P70,000, under the

conditions named, upon the happening of that event. The contract was not, in

fact, what is generally known as a “contract of option.” It differs very essentially

from a contract of option. An optional contract is a privilege existing in one

person, for which he had paid a consideration, which gives him the right to buy,