Krisandra Ann D. Malaluan JD 2 Spouses Serrano and Herrera vs. Caguilat G. R. No. 139173.

February 28, 2007

Sales July 27, 2011

Facts: Petitioners are the owners of a parcel of lot which they agreed to sell to the respondent. Petitioners then issued a Receipt for Partial Payment upon the receipt of PhP 100,000.00, also contained therein is the agreement to execute a deed of absolute sale upon full payment of the purchase price on a stipulated date. After the stipulated date, though respondent manifested his intent to pay the balance, petitioners cancelled the transaction and returned the PhP 100,000.00 to the respondent. Issue: Whether the document entitled "Receipt for Partial Payment" signed by both parties earlier mentioned is a contract to sell or a contract of sale. Whether the PhP 100,000.00 is an earnest money, as defined in Article 1482. Held: The "Receipt for Partial Payment" shows that the true agreement between the parties is a contract to sell. First, ownership over the property was retained by petitioners and was not to pass to respondent until full payment of the purchase price. Second, the agreement between the parties was not embodied in a deed of sale. The absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price. Third, petitioners retained possession of the certificate of title of the lot. In a contract to sell, ownership is retained by the seller and is not to pass to the buyer until full payment of the price. No. Article 1482 speaks ofearnest money given in a contract of sale. In this case, the earnest money was given in a contract to sell. The earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price. Now, since the earnest money was given in a contract to sell, Article 1482, which speaks of a contract of sale, does not apply.

Krisandra Ann D. Malaluan JD 2

Sales July 27, 2011

PNB vs. Spouses Agustin and Rocamora G. R. No. 164549. September 18, 2009 Facts: Spouses Agustin obtained a load from the petitioner bank. To secure the loan, the respondent spouses executed a real estate and chattel mortgage. In both the promissory note and the mortgage agreements, there exists an escalation clause which allowed PNB to increase the interest rate at anytime without notice. The spouses failed to pay the instalments due them, so the PNB foreclosed the properties subject of the mortgage agreement. The proceeds, however, was insufficient according to PNB. In its computation, the balance was computed at a new interest rate which is double the agreed interest rate of the parties. Also, the bank delayed the institution of the foreclosure proceeding contrary to the PD 385 which mandates government financial institutions to immediately foreclose securities. Issue: Whether of not petitioner bank is entitled to a deficiency judgement. Held: No. PNB was not able to prove the basis for the deficiency judgment it seeks. The right of the mortgagee to pursue the debtor arises only when the proceeds of the foreclosure sale are ascertained to be insufficient to cover the obligation and the other costs at the time of the sale. Thus, the amount of the obligation prior to foreclosure and the proceeds of the foreclosure are material in a claim for deficiency. Creditors cannot unilaterally increase the interest rates; it is contrary to the principle of mutuality of contracts. Any increase in the rate of interest made pursuant to an escalation clause must be the result of an agreement between the parties. The minds of all the parties must meet on the proposed modification as this modification affects an important aspect of the agreement. Thus, any change must be mutually agreed upon, otherwise, the change carries no binding effect. For the Court to grant the PNBs deficiency claim would be to award it for its delay and its undisputed disregard of PD 385. Krisandra Ann D. Malaluan JD 2 PCI Leasing and Finance, Inc. vs. Spouses Dai G. R. No. 148980. September 21, 2007 Sales July 27, 2011

Facts: Respondent spouses obtained a loan from petitioner bank which they used to partly finance their purchase of a vessel. They executed a promissory note and chattel mortgage of the vessel to secure their obligation. Upon the default in payment of the monthly instalments, respondents surrendered the possession of the vessel and its certificate of registration before filing the complaint. Before the pre-trial of the case, petitioner had foreclosed the mortgage and bought the vessel at public auction. Only issues on the recovery of damages were discussed during the trial of the case. The decision of the trial court, which dismissed both parties claim for damages, had become final and executory since no appeal was filed by either party. A year and a half after the decision, petitioners filed a case for recovery of deficiency judgement. Issue: Whether or not petitioner bank is entitled to a deficiency judgment. Held: No. Petitioner is barred from recovering deficiency judgement by res judicata. According to the Court of Appeals, respondents invocation of Article 1484 (c), which provides Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendees failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void, does not apply to the present case. The above-mentioned provision applies only to to a case of sale of [personal] property payable in installments which is secured by a chattel mortgage between the vendor and the vendee over the thing sold. Nevertheless, the petitioner is still barred from recovering because of res judicata. Section 47 of Rule 39 of the present Rules of Court provides: In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity Krisandra Ann D. Malaluan Sales JD 2 July 27, 2011 Magna Financial vs. Colarina G.R. No. 158635. December 9, 2005 Facts: Respondent bought a Multicab from petitioner. To secure the obligation, respondent executed a promissory note and a

chattel mortgage of the vehicle in favor of the petitioner. Respondent then defaulted in payment. Petitioner filed a complaint for foreclosure of chattel mortgage with replevin. A writ of replevin was issued and the vehicle was turned over to Magna financial. The trial court and RTC decided in favor of petitioner and ordered respondent to pay the unpaid balance and foreclose the chattel mortgage. The Court of Appeals reversed the decision. Issue: WON MFS can avail of the two remedies, payment of unpaid balance and foreclosure of chattel mortgage? Held: No. Petitioner, having elected the foreclosure of chattel mortgage, is not entitled to be paid the balance even though it did not actually foreclose the chattel mortgage. Article 1484, paragraph 3, provides that if the vendor has availed himself of the right to foreclose the chattel mortgage, he shall have no further action against the purchaser to recover any unpaid balance of the purchase price. Any agreement to the contrary shall be void. In other words, in all proceedings for the foreclosure of chattel mortgages executed on chattels which have been sold on the installment plan, the mortgagee is limited to the property included in the mortgage. The petitioners prayer contains two remedies, payment of unpaid balance and foreclosure of chattel mortgage. Such a scheme is not only irregular but is a flagrant circumvention of the prohibition of the law. By praying for the foreclosure of the chattel, Magna Financial Services Group, Inc. renounced whatever claim it may have under the promissory note.

Krisandra Ann D. Malaluan JD 2 ORDUA vs. FUENTEBELLA G. R. No. 176841. June 29, 2010

Sales July 27, 2011

Facts: Petitioners bought a parcel of land from the original owner. However, they did not execute any deed of sale. The heirs of the buyers, Ordua, continued paying the heirs of the original owners. One of the successors of the original owner sold the land to another which in turn sold the lot to the respondents. Respondents alleged that the petitioners should comply with the statute of frauds to acquire the property. Petitioners, on the other hand, allege that they have been in possession of the subject parcel of lot since 1979.

Issue: Whether or not the Statute of Frauds is applicable to partially executed contracts. Held: No. The Statute of Frauds, in context, provides that a contract for the sale of real property or of an interest therein shall be unenforceable unless the sale or some note or memorandum thereof is in writing and subscribed by the party or his agent. However, where the verbal contract of sale has been partially executed through the partial payments made by one party duly received by the vendor, as in the present case, the contract is taken out of the scope of the Statute. Lest it be overlooked, a contract that infringes the Statute of Frauds is ratified by the acceptance of benefits under the contract. Evidently, Gabriel, Jr., as his father earlier, had benefited from the partial payments made by the petitioners. Thus, neither Gabriel Jr. nor the other respondents successive purchasers of subject lotscould plausibly set up the Statute of Frauds to thwart petitioners efforts towards establishing their lawful right over the subject lot and removing any cloud in their title. As it were, petitioners need only to pay the outstanding balance of the purchase price and that would complete the execution of the oral sale.

Krisandra Ann D. Malaluan JD 2 MAKATI SPORTS CLUB INC vs. CHENG G. R. No. 178523. June 16, 2010

Sales July 27, 2011

Facts: The Makati Sports Club Inc (MSCI) BOD adopted a resolution authorizing the sale of 19 unissued shares at a floor price of Php 400,000.00 and PhP 450,000.00 per share for Class A and B, respectively on October 1994. Come July 7, 1995, Hodreal expressed his interest to buy a share. For this purpose, he sent a letter requesting to be waitlisted. On November 1995, McFoods acquired shares of MSCI at PhP 1,800,000 through Urban Bank. Stock certificate was then issued to it. After a month, McFoods advised its offer to resell. Hodreal paid McFoods PhP 1,400,000.00 on two separate dates. Cheng, the Treasurer and Director of MSCI, advised the sale by McFoods to Hodreal of the share evidenced by a certificate. In 1997, an investigation showed that Cheng profited from the transaction because of her knowledge of such. MSCI sought judgment that would order respondents to pay the sum of PhP 1,000,000.00 representing the

amount allegedly defrauded, together with interest and damages. RTC dismissed the case, which was further affirmed by CA. Issue: Whether or not petitioner MSCI was defrauded by Cheng's collaboration with Mc Foods. Held: No. First, there was no evidence on record that the Membership Committee acted on Hodreal's letter. Also, the purchase price of PhP 1,800,000.00 is PhP1,400,000.00 more than the floor price is not detrimental. Upon payment and the execution of the Deed of Absolute Sale, it had the right to demand the delivery of the stock certificate in its name. The right of a transferee to have stocks transferred to its name is an inherent right flowing from its ownership of the stocks. Furthermore, MSCI failed to repurchase Mc Foods Class "A" share within the 30 day pre-emptive period. Lastly, there is no proof that Cheng personally profited from the transaction.

Krisandra Ann D. Malaluan JD 2 VASQUEZ vs. AYALA CORPORATION G. R. No. 149734. November 19, 2004

Sales July 27, 2011

Facts: Petitioner owned the Conduit Development Inc. In 1981, petitioner entered into a MOA with AYALA wherein the latter bought Conduit from the former. AYALA committed to develop Conduits lands including 4 parcels of land adjacent to Vasquez retained land. Be it noted that these parcels of land were in the 3rd phase of AYALAs development plan. In 1990, AYALA was able to develop the said lots after some slump, and some litigation between Conduits former contractor (GP construction) and GPs subcontractor (Lancer Builders). AYALA then offered to sell the 4 parcels of land to the petitioner at PhP 6,500.00 per square meter, which was the market price in 1990. Vasquez refused the offer. Petitioner contended that the purchase price should be PhP 460.00 per squaremeter, which was the market price in 1984 (time of purchase). AYALA then lowered the purchase price to P5,000.00per square meter but petitioner refused again. Instead, he made a counter offer to buy the lots at P2,000.00 per square meter. This time, AYALA refused. Issue: Whether or not the provision in the MOA is an option contract or right of first refusal.

Held: The said paragraph is a mere right of first refusal. Although the paragraph has a definite object, i.e., the sale of the 4 lots, the period within which they will be offered for sale to Vasquez and, necessarily, the price for which the subject lots will be sold are not specified. The phrase at the prevailing market price at the time of the purchase connotes that there is no definite period within which AYALA is bound to reserve the subject lots for Vasquez to exercise his privilege to purchase. Neither is there a fixed or determinable price at which the subject lots will be offered for sale. The price is considered certain if it may be determined with reference to another thing certain or if the determination thereof is left to the judgment of a specified person or persons.