CONCEPT OF CONTRACT OF SALE.
1. Trial Court decided that there was no payment by buyer of
delivery of lumber was not duly proved because counter-receipts
issued by buyer merely certified to receipt of certain statement on
claims for the lumber allegedly delivered.
Facts:
2. To secure payment of the balance of the purchase price of
iron ore, buyer executed a surety bond in favor of seller, the buyer,
however, claiming that such payment was subject to a suspensive
condition — the sale of the iron ore by buyer.
Facts:
S filed a complaint for collection of a sum of money against B for
lumber purchased on credit and received by B. B denied all the
material allegations of the complaint. The trial court rendered
judgment in favor of S. On appeal, the Court of Appeals reversed
the judgment on the ground that the delivery of the lumber to B
was not duly proved.
B, owner of a mining claim, appointed S as attorney in-fact to
enter into a contract with any individual or juridical person for
the exploration and development of said claim on a royalty basis.
S himself embarked upon the exploitation of the claim.
S asserts that the case having been tried and decided by the trial
court on the issue of whether or not there was payment by B of
the lumber covered by invoices of S and counter-receipts issued
by B, it is alone on this issue that the Court of Appeals should
have decided the case and not on the issue of whether or not
there was delivery of the lumber in question. The Court of
Appeals found that the counter-receipts merely certified the fact
of having received from S certain statements on claims for
lumber allegedly delivered.
Issue: Did the Court of Appeals decide the case on a new issue
not raised in the pleadings before the lower court?
Held: No. The issue of delivery is no issue at all. For delivery and
payment in a contract of sale, or for that matter in quasicontracts, are so interrelated and intertwined with each other
that without delivery of the goods there is no corresponding
obligation to pay. The two complement each other. (see Art.
1458, par. 1.) It is clear that the two elements cannot be
dissociated, for the contract of purchase and sale is, essentially,
a bilateral contract, as it gives rise to reciprocal obligations.
Subsequently, B revoked the authority granted by him to S who
assented thereto subject to certain conditions. As a result, a
document was executed wherein S transferred to B, all of S’s
rights and interests over the “24 tons of iron ore, more or less”
that S had already extracted from the mineral claims in
consideration of the sum of P75,000.00, P10,000.00 of which
was paid upon the signing of the agreement, and “the balance
of P65,000.00 will be paid from and out of the first letter of
credit covering the first shipment of iron ores and of the first
amount derived from the local sale of iron ore” from said claims.
To secure the payment of the balance, B executed in favor of S
a surety bond. No sale of approximately 24,000 tons of iron ore
had been made nor had the balance of P65,000.00 been paid to
S.
Issue: Is the shipment or local sale of the iron ore a condition
precedent (or suspensive condition) to the payment of the
balance, or only a suspensive period or term?
Held:
(1) Obligation of B one with a term. — The words of the
contract express no contingency in the buyer’s
obligation to pay. There is no uncertainty that the
payment will have to be made sooner or later; what is
undetermined is merely the exact date at which it will be
made. By the very terms of the contract, therefore, the
existence of the obligation to pay is recognized; only its
maturity or demandability is deferred. Furthermore, to
subordinate B’s obligation to the sale or shipment of the
ore as a condition precedent would be tantamount to
leaving the payment at his discretion (Art. 1182.), for the
sale or shipment could not be made unless he took steps
to sell the ore
(2) (2) A contract of sale is normally commutative and
onerous. — In a contract of sale, not only does each one
of the parties assume a correlative obligation, but each
party anticipates performance by the other from the
very start.
Nothing is found in the record to evidence that S desired
or assumed to run the risk of losing his right over the ore
without getting paid for it, or that B understood that S
assumed any such risk. This is proved by the fact that S
insisted on a bond to guarantee the payment of the
P65,000.00 and the fact that B did put such bond,
indicated that he admitted the definite existence of his
obligation to pay the balance of P65,000.00. The only
rational view that can be taken is that the sale of the ore
to B was a sale on credit, and not an aleatory contract,
where the transferor, S, would assume the risk of not
being paid at all by B.
ESSENTIAL REQUISITES OF A CONTRACT OF SALE.
1. Supposed sale was evidenced by a receipt acknowledging receipt
of P1,000.00.
Facts:
B bought on a partial payment of P1,000.00, evidenced by a
receipt, a portion of a subdivision from S, administrator of the
testate estate of his deceased spouse. Subsequently, S was
authorized by the court to sell the subdivision. In the meantime,
PT Co. became the new administrator. It sold the lot to another
which sale was judicially approved.
B files a complaint which seeks, among other things, for the
quieting of title over the lot in question.
Issue: Was there a valid and enforceable sale to B?
Held:
No. An examination of the receipt reveals that the same can
neither be regarded as a contract of sale nor a promise to sell.
There was merely an acknowledgment of the sum P1,000.00.
There was no agreement as to the total purchase price of the
land nor to the monthly installments to be paid by B. The
requisites for a valid contract of sale are lacking.
2. Buyer did not sign draft of Contract to Sell because it covered
seven (7) lots instead of six (6), but sent to seller five (5) checks as
down payment which the seller did not encash.
Facts:
B Company and S, subdivision developer, agreed to enter into a
new Contract to Sell whereby S will sell seven (7) lots at
P423,250.00 with a down payment of P42,325.00 and the
balance payable in 48 monthly installments of P7,395.94. The
draft of the Contract to Sell prepared by S was sent to B
Company but B’s president did not sign it although he sent five
(5) checks covering the down payment totalling P27,542.72. S
received the checks but did not encash it because B’s president
did not sign the draft contract, the reason given by the latter was
that the draft covered seven (7) lots instead of six (6).
Since no written contract was signed, S sued B to recover
possession of the lots still occupied by the latter.
Issue:
(1) May the unsigned draft be deemed to embody the
agreement between the parties?
(2) May the receipt of the five (5) checks by S serve to produce
the effect of tender of down payment by B?
Held:
(1) Based on the facts, the parties had not arrived at a definite
agreement. The only agreement they arrived at was the
price indicated in the draft contract. The number of lots to
be sold was a material component of the Contract to Sell.
Without an agreement on the matter, the parties may not
in any way be considered as having arrived at a contract
under the law.
(2) Moreover, since the five (5) checks were not encashed, B
should have deposited the corresponding amount of the
said checks as well as the installments agreed upon. A
contract to sell, as in this case, involves the performance
of an obligation, not merely the exercise of a privilege or a
right. Consequently, performance or payment may be
effected not by tender of payment alone but by both
tender and consignation. It is consignation which is
essential to extinguish B’s obligation to pay the balance of
the purchase price. (see Arts. 1256-1258.) B did not even
bother to tender and make consignation of the
installments or to amend the contract to reflect the true
intention of the parties as regards the number of lots to be
sold.
Transfer of title to property for a price, essence of sale.
Spouses exchanged their properties for no par shares of a
corporation as a result of which they gained control of the
corporation
Facts:
Spouses H & W, stockholders of DT Corporation, conveyed to said
DT a parcel of land leased to E, in exchange for 2,500 shares of
stock equivalent to 55% majority in the corporation. E questioned
the transaction on the ground that it was not given the first option
to buy the leased property pursuant to the proviso in the lease
agreement
Issue:
Is the “deed of exchange” a contract of sale which, in effect,
prejudiced E’s right of first refusal over the leased property?
Held:
No. In effect, DT Corporation is a business conduit of H and
W. What they really did was to invest their properties and
change the nature of their ownership from
unincorporated to incorporated form by organizing DT to
take control of their properties and at the same time save
on inheritance taxes. The deed of exchange cannot be
considered a contract of sale. There was no transfer of
actual ownership interests by H and W to a third party.
They merely changed their ownership from one form to
another. The ownership remained in the same hands.
Hence, E has no basis for its claim of a right of first refusal
under the lease contract.
(2) Where transfer of ownership not intended by the parties. — A
contract for the sale or purchase of goods/commodity to be
delivered at a 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, is illegal. Such contract falls under the
definition of what is called “futures” in which the parties merely
gamble on the rise or fall in prices and is declared null and void by
law