Topic I - Basic Concepts PDF

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Ace Food Inc. v Micro Pacific Technologies 712 SCRA 679 - Baroro 1Heirs of Gaite v. Plaza 640 SCRA 576 - Bulagas 2Dantis v. Maghinang, 695 SCRA 599 - Deximo 3San Lorenzo v. CA 449 S 99 - Estrada 4Cortes v. CA 494 S 570 - Feliciano 4Congregation of the Religious of the Virgin Mary v. Orola 553 S 578 ...

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Ace Food Inc. v Micro Pacific Technologies 712 SCRA 679 - Baroro

1

Heirs of Gaite v. Plaza 640 SCRA 576 - Bulagas

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Dantis v. Maghinang, 695 SCRA 599 - Deximo

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San Lorenzo v. CA 449 S 99 - Estrada

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Cortes v. CA 494 S 570 - Feliciano

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Congregation of the Religious of the Virgin Mary v. Orola 553 S 578 - Hernando

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Dino v. CA 359 SCRA 91 - Lorenzo

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CIR v. Engineering Equipment & Supply Company 64 SCRA 590 - Pagayatan

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De Leon v. Ong 611 SCRA 381 - Reyes

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Sps. Orden v. Sps. Aurea August 20, 2008 - Yabut

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Carraascoso v. CA 477 SCRA 666 - Baroro

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Demafilis v. CA 538 SCRA 305 - Bulagas

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Topic I - Basic Concepts Ace Food Inc. v Micro Pacific Technologies 712 SCRA 679 - Baroro 1- BASIC CONCEPTS ACE FOODS, INC., petitioner, vs. MICRO PACIFIC TECHNOLOGIES CO., LTD., respondent.

December 11, 2013

G.R. No. 200602

PERLAS-BERNABE, J.

Summary MTCL sent to ACE Foods a letter-proposal for the delivery and sale of Cisco Routers and Frame Relay products. ACE Foods accepted MTCL’s proposal and accordingly issued Purchase Order for the subject product. Thereafter, MTCL delivered the said products to ACE Foods. After the delivery and installation of the products, ACE Foods lodged a Complaint against MTCL before the RTC, praying that the latter pull out the products since MTCL breached its "after delivery services" obligations to it. MTCL, in its Answer, denied the allegations of ACE Foods and prayed that ACE Foods be compelled to pay the purchase price, as well as damages related to the transaction. RTC observed that the agreement between ACE Foods and MTCL is in the nature of a contract to sell. CA reversed and set aside the RTC’s ruling, and found that the agreement between the parties is in the nature of a contract of sale. The SC ruled that the parties have agreed to a contract of sale and not to a contract to sell. Bearing in mind its consensual nature, a contract of sale had been perfected at the precise moment ACE Foods, as evinced by its act of sending MTCL the Purchase Order, accepted the latter’s proposal to sell the subject products in consideration of the purchase price of P646,464.00. From that point in time, the reciprocal obligations of the parties already arose and consequently may be demanded. Relevant Provisions/Concepts/Doctrines ●

The real nature of a contract may be determined from the express terms of the written agreement and from the contemporaneous and subsequent acts of the contracting parties.

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A contract of sale is classified as a consensual contract, which means that the sale is perfected by mere consent. Novation is never presumed, and the animus novandi, whether totally or partially, must appear by express agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken. FACTS

ACE Foods is a domestic company involved in the wholesale and retail trade and distribution of consumer products, while MTCL is involved in the supply of hardware and equipment for computers. MTCL sent a letter-proposal for the supply and sale of the subject items to be installed at the various offices of ACE Foods. ACE Foods accepted the proposal by MTCL and accordingly issued Purchase Order. MTCL subsequently delivered the said items to ACE Foods, as reflected in the Invoice Receipt. The fine print of the invoice states that 'MICROPACIFIC TECHNOLOGIES CO., LTD. retains the right to sell the property until complete compliance with the above conditions and payment of the price' (stipulation of the title reservation). The subject items were then assembled and configured at ACE Foods' premises after delivery. Instead of paying the purchase price, ACE Foods sent a letter to MTCL stating that it was returning the subject products to MTCL through its sales representative, Mr. Mark Anteola, who agreed to withdraw the said products but had not yet done so. ACE Foods lodged a complaint against MTCL before the RTC demanding that the latter to remove the subject products from its premises as MTCL violated its "after delivery services" obligations to it. ACE Foods also claimed that the MTCL products delivered were defective and not working which MTCL counterclaimed that it has duly complied with its obligations and that the products are delivered in good condition. MTCL, however, reported that there was actually no agreement on the supposed "after delivery services." The RTC released a judgment ordering MTCL to remove the subject products from the premises of ACE Foods and to pay actual damages and attorneys ' fees. However, the CA reversed and set aside the RTC’s ruling, ordering ACE Foods to pay MTCL the amount of purchase price, legal interest and attorney’s fees. ISSUE Whether or not ACE Foods should pay MTCL the purchase price for the subject products RULING YES. A contract of sale is classified as a consensual contract, which means that the sale is perfected by mere consent. No particular form is required for its validity. Upon perfection of the contract, the parties may reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold. In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the 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. In this case, the Court concurs with the CA that the parties have agreed to a contract of sale and not to a contract to sell as adjudged by the RTC. In view of its consensual nature, the contract of sale was finalized at the precise moment when ACE Foods, as evidenced by its act of sending the Purchase Order to MTCL, approved the latter's proposal to sell the subject matter, taking into account the purchase price of 646,464.00. From that point in time, the reciprocal obligations of the parties already arose and consequently may be demanded. Article 1475 of the Civil Code makes this clear: Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

Thus, in the absence of any reasonable indication that the conditions on the reservation of title were actually decided, the Court must regard the same as a mere unilateral imposition on the part of MTCL which has no bearing on the essence of the original agreement of the parties as a contract of sale. Perforce, the responsibilities resulting from, inter alia, the duty of ACE Foods to pay the purchase price as well as to recognize the delivery of the products remains enforceable and subsisting. Wherefore, the petition is DENIED. Additional Notes

Heirs of Gaite v. Plaza 640 SCRA 576 - Bulagas [TOPIC FROM OUTLINE] HEIRS OF RAMON C. GAITE, CYNTHIA GOROSTIZA GAITE and RHOGEN BUILDERS, petitioners, vs. THE PLAZA, INC. and FGU INSURANCE CORPORATION, respondents G.R. No. 177685. January 26, 2011

January 26, 2011

G.R. No. 177685

VILLARAMA, JR., J.

Summary The Plaza entered into a contract with Rhogen Builders for the construction of a restaurant in Greenbelt. Plaza paid downpayment. However, the construction was ordered to stop due to violations of the National Building Code. The permit for construction was revoked. Later, Plaza filed a complaint against Rhogen and Gaite for breach of contract. RTC ruled in favor of Plaza. CA affirmed. Supreme Court denied petition of Heirs of Gaite. It found that, in this reciprocal obligation, Rhogen had no right to terminate the contract based on Plaza’s nonpayment since Rhogen was already at fault for non-compliance of the laws and Plaza’s payment is dependent upon the completion of the construction. Relevant Provisions/Concepts/Doctrines

Reciprocal obligations are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other.—Reciprocal obligations are those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other. Quantum meruit means that in an action for work and labor, payment shall be made in such amount as the plaintiff reasonably deserves. —Under the principle of quantum meruit, a contractor is allowed to recover the reasonable value of the thing or services rendered despite the lack of a written contract, in order to avoid unjust enrichment. Quantum meruit means that in an action for work and labor, payment shall be made in such amount as the plaintiff reasonably deserves. To deny payment for a building almost completed and already occupied would be to permit unjust enrichment at the expense of the contractor.

FACTS

The Plaza, through its president, Jose C. Reyes, entered into a contract with Rhogen Builders, represented by Ramon C. Gaite, for the construction of a restaurant building in Greenbelt, Makati for the price of PhP7,600,00.00. To secure Rhogen's compliance with its obligation, Gaite and FGU Insurance corporation executed a surety bond in favor of the Plaza. Subsequently, Gaite was ordered by Engineer Gonzales to stop construction due to violations of the National Building Code. This was referred to the Plaza's Project Manager, Tayzon. Later, the permit for the construction of the restaurant was revoked for non-compliance with the National Building Code. Gaite Requested that they fix the problem with cooperation from the Plaza but the Reyes, on behalf of the Plaza, said that it was not their responsibility to help Rhogen after its failure to comply with the construction requirements. Because Reyes would neither cooperate with Rhogen to fix the problem nor compensate Rhogen for the percentage of work done, Gaite informed the Plaza that he would be terminating their contract based on the Contractor's Right to Stop Work or Terminate Contracts as provided for in their agreement. The Plaza filed a case against Gaite and FGU for breach of contract, sum of money and damages and also a separate case for nullification of the project development contract. The RTC ruled in favor of the Plaza saying that instead of rectifying the violations,Rhogen continued with the construction work thereby causing more damage. The trial court pointed out that Rhogen is not only expected to be aware of standard requirements and pertinent regulations on construction work, but also expressly bound itself under the General Construction Contract to comply with all the laws, city and municipal ordinances and all government regulations. Having failed to complete the project within the stipulated period and comply with its obligations, Rhogen was thus declared guilty of breaching the Construction Contract and is liable for damages under Articles 1170 and 1167 of the Civil Code. The CA affirmed the RTC decision saying that the Plaza cannot now be demanded to comply with its obligation under the contract since Rhogen has already failed to comply with its own contractual obligation. Thus, The Plaza had every reason not to pay the progress billing as a result of Rhogens inability to perform its obligations under the contract. Further, the stoppage and revocation orders were issued on account of Rhogens own violations involving the construction as found by the local building official. Clearly,Rhogen cannot blame The Plaza for its own failure to comply with its contractual obligations. The CA stressed that Rhogen obliged itself to comply with "all the laws, city and municipal ordinances and all government regulations insofar as they are binding upon or affect the parties to the contract, the work or those engaged thereon. ISSUE Whether or not there were valid and legal grounds for Rhogen to terminate the contract pursuant to Article 1191 of the Civil Code and its agreement with the Plaza - NO

RULING Reciprocal obligations are those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other. Respondent The Plaza predicated its action on Article 1191 of the Civil Code, which provides for the remedy of "rescission" or more properly resolution, a principal action based on breach of faith by the other party who violates the reciprocity between them. The breach contemplated in the provision is the obligors failure to comply with an existing obligation. Thus, the power to rescind is given only to the injured party. The injured party is the party who has faithfully fulfilled his obligation or is ready and willing to perform his obligation. The construction contract between Rhogen and The Plaza provides for reciprocal obligations whereby the latters obligation to pay the contract price or progress billing is conditioned on the former's performance of its undertaking to complete the works within the stipulated period and in accordance with approved plans and other specifications by the owner. Pursuant to its contractual obligation, The Plaza furnished materials and paid the agreed down payment. It also exercised the option of furnishing and delivering construction materials at the jobsite pursuant to Article III of the Construction Contract. However, just two months after commencement of the project, construction works were ordered stopped by the local building official and the building permit subsequently revoked on account of several violations of the National Building Code and other regulations of the municipal authorities.

Since Rhogen had already breached its contractual obligation by not complying with the National Building Code, it had no right to terminate the contract based on the Plaza's refusal to compensate it for the percentage of work done. Additional Notes

Dantis v. Maghinang, 695 SCRA 599 - Deximo [TOPIC FROM OUTLINE] Rogelio Dantis v Julio Maghinang Jr.

April 10, 2013

G.R. No. 191696

Mendoza, J.

Summary

Relevant Provisions/Concepts/Doctrines

FACTS ●

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The case started when Rogelio Dantis (Petitioner) filed a complaint for quieting of title against Julio Maghinang Jr. (respondent) before the RTC. He argued that he was the registered owner of the subject property, having it acquired through the extrajudicial partition of the estate of Emilio (petitioner’s father) and that he had been paying the realty taxes on the said property. He further contends that the respondent occupied and built a house on a portion of the subject property and that after his demands to vacate the same was left unheeded, the acts of respondent created a cloud of doubt over his title and right of possession of the subject property. On the other hand, the respondent denied the material allegations of the complaint. He argued that he was the owner of the said portion of the subject property since he succeeded Maghinang, Sr. (respondent’s father) after the latter’s death. He mentioned that the Emilio sold the said portion to the Maghinang, Sr. He presented two evidence: (1) affidavit executed by Ignacio (grandfather of the petitioner), attesting that there was indeed a sale made by the Emilio to the Maghinang, Sr. (Exhibit 3); and (2) an undated handwritten receipt of initial down payment made by Maghinang Sr. to Emilio (Exhibit 4). The RTC ruled in favor of the petitioner. The trial court did not give any probative value on the documentary evidence presented by the respondent. Upon appeal, the CA reversed the decision of the lower court. It ruled that the receipt (Exhibit 4) was an indubitable proof of the sale of the portion of the subject property between Emilio and Maghinang, Sr. Hence, this petition. ISSUE

W/N there is a perfected contract of sale between Emilio (petitioner’s father) and Maghinang, Sr. (respondent’s father) over the said portion of the subject property. (No)

RULING ●

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The Court first explained that since the petitioner was able to establish a prima facie case that he was the real owner, the burden of evidence now shifts to the respondent to prove that his father bought the said portion of the subject property from Emilio. The Court held that the respondent failed to discharge such burden. Both Exhibit 3 and 4 cannot prevail over the array of documentary and testimonial evidence that were adduced by the petitioner. Exhibit 3, affidavit of Ignacio, is hearsay evidence and cannot be accorded any evidentiary weight. Furthermore, Exhibit 4 is inadmissible since its only a secondary evidence being a mere photocopy. The Court held that, even assuming that Exhibit 4 is admissible, said document cannot establish that there was indeed a perfected contract of sale between Emilio and Maghinang, Sr. The Court first explained what a contract of sale is, by the contract of sale, one of the contracting parties obligates himself to transfer the ownership of, and to deliver, a determinate thing, and the other to pay therefore a price certain in money or its equivalent. The essential elements of a contract of sale are: (1) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (2) determine subject matter; and (3) price certain in money or its equivalent. The absence of any of the elements negates the existence of a perfected contract of sale. In this case, the respondent wants to prove the said sale by using the Exhibit 4 (receipt), according to the Court such evidence is only corroborative evidence of the sale. It only alleges but does not prove the existence of a verbal agreement. Because of this, the first element was not satisfied by the respondent. Furthermore, the said document does not show a determinate subject matter. It does not provide a description of the property subject of the sale, including its metes and bounds, as well its total area. The Court also held that the said document does not categorically declare the price certain in money. There was also no mode of payment of the purchase price and the period for its payment. Even if the parties agreed with the object of sale and on the purchase price but did not agree on how and when the down payment and installment is going to be made, there is no contract of sale.

Additional Notes

San Lorenzo v. CA 449 S 99 - Estrada III.

Contract of Sale vis-à-vis Contract to Sell

SAN LORENZO DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA LU, respondents

January 21, 2005

G.R. No. 124242

TINGA, J.

Summary

Relevant Provisions/Concepts/Doctrines In a contract of sale, title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by

agreement the ownership is reserved in the vendor and is...