PART 2 OF SALES & LEASE Prof. M.I.P.

Romero

1. Sections 1489 to 1492 (relate to Secs, 1327, 1390 NCC; Art. 87, 124, 194 Family Code)

Ching v. Goyanko, Jr. 506 SCRA 735 (2006)

As the conveyance in question was made by Goyangko in favor of his common-law-wife-herein petitioner, it was null and void. The proscription against sale of property between spouses applies even to common law relationships. Additionally, the law emphatically prohibits the spouses from selling property to each other subject to certain exceptions. Similarly, donations between spouses during marriage are prohibited. And this is so because if transfers or conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other, as well as to protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal union." Those provisions are dictated by public interest and their criterion must be imposed upon the will of the parties. . . . Petitioner's argument that a trust relationship was created between Goyanko as trustee and her as beneficiary as provided in Articles 1448 and 1450 of the Civil Code does not persuade.

Cook v. McMicking 27 Phil. 10 (1914)

The position taken by appellants is untenable. They are not in a position to challenge the validity of the transfer, if it may be called such. They bore absolutely no relation to the parties to the transfer at the time it occurred and had no rights or interest inchoate, present, remote, or otherwise, in the property in question at the time the transfer occurred. Although certain transfers from husband to wife or from wife to husband are prohibited in the article referred to, such prohibition can be taken advantage of only by persons who bear such a relation to the parties making the transfer or to the property itself that such transfer interferes with their

rights or interests. Unless such a relationship appears the transfer cannot be attacked. Although transfers from husband to wife or from wife to husband are prohibited, under certain circumstances, by article 1458 of the Civil Code, the prohibition can be taken advantage of only by persons who bear such a relation to the parties making the transfer or to the property itself that such transfer interferes with their rights or interests. Fornilda v. Br. 164 Pasig RTC 166 SCRA 281 (1988) A lawyer is prohibited from acquiring either by purchase or assignment the property or rights involved which are the object of the litigation in which they intervene by virtue of their profession. The prohibition on purchase is all embracing to include not only sales to private individuals but also public or judicial sales. The rationale advanced for the prohibition is that public policy disallows the transactions in view of the fiduciary relationship involved i.e., the relation of trust and confidence and the peculiar control exercised by these persons. Considering that the mortgage contract, entered into in contravention of Article 1491 of the Civil Code, supra, is expressly prohibited by law, the same must be held inexistent and void ab initio. Being a void contract, the action or defense for the declaration of its inexistence is imprescriptible. The defect of a void or inexistent contract is permanent. Mere lapse of time cannot give it efficacy. Neither can the right to set up the defense of illegality be waived Lao v. Genato 137 SCRA 77 (1985)
The sale was made. But of all people, to his very son Sotero Dionisio III and for the grossly low price of only P75,000.00. That sale was indubitably shown to be fictitious, it clearly appearing that Dionisio III has no income whatsoever. In fact, he is still a dependent of his father, administrator Dionisio, Jr. On top of that, not a single centavo of the P75,000.00 stated consideration was ever accounted for nor reported by Dionisio, Jr. to the probate court. Neither did he submit said transaction as mandated by the order authorizing him to sell, to the probate court for its approval and just so its validity and fairness may be passed upon and resolved. It was only upon the filing by one of the heirs, Florida A. Nuqui, of the "Motion for Annulment/Revocation of Deeds of Absolute Sale" questioning the genuineness and validity of the transactions, that Dionisio, Jr. was compelled to admit that the actual consideration for the sale made by him was P200,000.00. This sale is one of the illegal and irregular transactions that was confirmed and legalized by His HONOR's

approval of the assailed Amicable Settlement. No doubt, respondent Judge's questioned approval violates Article 1409 of the New Civil Code and cannot work to confirm nor serve to ratify a fictitious contract which is non-existent and void from the very beginning. The fact that practically all the heirs are parties-signatories to the said Compromise Agreement is of no moment. Their assent to such an illegal scheme does not legalize the same nor does it impose any obligation upon respondent Judge to approve the same to the prejudice not only of the creditors of the estate, and the government by the non-payment of the correct amount of taxes legally due from the estate

Maharlika Broadcasting v. Tagle 142 SCRA 553 (1986)

The sale was against public policy. First of all, the GSIS head office was stopped from claiming that they did not give the impression to Maharlika that they were accepting the proposal for a compromise agreement. The act of the general manager is binding on GSIS. Second, Article 1491 (4) of the CC provides that public officers and employees are prohibited from purchasing the property of the state or any GOCC or institution, the administration of which has been entrusted to them cannot purchase, even at public or judicial auction, either in person or through the mediation of another. The SC held that as an employee of the GSIS, Edilberto Tagle and his wife are disqualified from bidding on the property belonging to the GSIS because it gives the impression that there was politics involved in the sale. It is not necessary that actual fraud be shown, for a contract which tends to injure the public service is void although the parties entered into it honestly and proceeded under it in good faith.

2. Secs. 1459 1474 Manotok Realty v. CA 149 SCRA 372 (1987) There is nothing in the records that will show that Don Vicente Legarda was the administrator of the paraphernal properties of Dona Clara Tambunting during the lifetime of the latter. Thus, it cannot be said that the sale which was entered into by the private respondent and Don Vicente Legarda had its inception before the death of Dona Clara Tambunting and was entered into by the former for and on behalf of the latter, but was only consummated after her death. Don Vicente Legarda, therefore, could not have validly disposed of the lot in dispute as a continuing administrator of the paraphernal properties of Dona Clara Tambunting. It is also undisputed that the probate court appointed Don

Vicente Legarda as administrator of the estate only on August 28, 1950, more than three months after the questioned sale had taken place. Therefore, the sale between Don Vicente Legarda and the private respondent is void ab initio, the former being neither an owner nor administrator of the subject property. Such being the case, the sale cannot be the subject of the ratification by the Philippine Trust Company or the probate court Martin v. Reyes 91 Phil. 666 Property or goods which at the time of the sale are not owned by the seller but which thereafter are to be acquired by him, cannot be the subject of an executed sale but may be the subject of a contract for the future sale and delivery thereof, even though the acquisition of the goods depends upon a contingency which may or may not happen. In such case, the vendor assumes the risk of acquiring the title and making the conveyance, or responding in damages for the vendee's loss of his bargain. The object of the contract, being the palay grains produced in Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349 of the New Civil Code provides: "... The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans.

National Grains Authority v. IAC 171 SCRA 131 (1989)

Acabal v. Acabal

454 SCRA 555 Absent any evidence of the fair market value of a land as of the time of its sale, it cannot be concluded that the price at which it was sold was inadequate. Inadequacy of price must be proven because mere speculation or conjecture has no place in our judicial system. Even, however, on the assumption that the price of P10,000.00 was below the fair market value of the property in 1990, mere inadequacy of the price per se will not rule out the transaction as one of sale. For the price must be grossly inadequate or shocking to the conscience such that the mind revolts at it and

such that a reasonable man would neither directly nor indirectly be likely to consent to it. McCullough v. Aenille (1909) 13 Phil 258 A written agreement by which one party buys and the other sells at a price which, although not specified in dollars and cents, can be made certain by reference to certain invoices then in existence and clearly identified by the agreement, is a completed contract of sale. Where the agreement between the parties is that the buyer is to take all the tobacco in a certain building and to pay therefor the price named, the obligation resulting is absolute, and in no wise depends upon the quality of the tobacco or its value, and statements in an inventory subsequently drawn as to the quality of the tobacco do not affect the rights and obligations of the parties. Barreto v. Sta. Maria (1913) 26 Phil 200 The whole contract must be interpreted or read together in order to arrive at its true meaning. Certain stipulations cannot be segregated and then made to control, neither do particular words and phrases necessarily determine the character of the contract. The legal effect of the contract is not to be determined alone by any particular provision disconnected from all other, but in the ruling intention of the parties as gathered from all the language they have used and from their contemporaneous and subsequent acts. It is necessary to a perfected sale that the parties agree upon the thing sold and that the price be fixed, it being sufficient for the latter purpose that the price be left to the judgment of a specified person. Askay v. Cosalan (1924) 46 Phil 179 Fraud must be both alleged and proved. Gross inadequacy of the consideration naturally suggests fraud and is some evidence thereof, so that it may be sufficient to show it when taken in connection with other circumstances, such as ignorance or the fact that one of the parties has an advantage over the other. The fact that the bargain was hard one, coupled with mere inadequacy of price when both parties are in a position to form an independent judgment concerning the transaction, is not a sufficient ground for the cancellation of a contract. That the plaintiff has not established by preponderance of the evidence the allegations in his complaint to the effect that the

sale of the Pet Kel Mineral Claim was accomplished trough fraud and deceit on the part of the defendant. Aguilar v. Rubiato (1919) 40 Phil 570 Where the inadequacy of the price in an agreement is so great that the mind revolts at it and is such as a reasonable man would neither directly nor indirectly be likely to consent to, a strong reason exists for annuling a contract. R, the owner of land valued at P26,000, was induced through the connivance of two or three other men to sign the second page of a power of attorney in favor of one of them, G, which purported to authorize G to sell the property with right of repurchase for a sum not to exceed P1,000. G sold the property to A for P800 under a pacto de retro. R having failed to pay the rent, A endeavors to obtain possession of the land. Held: That the so-called power of attorney was a sham document, and that R is only liable for the loan which he received. New Sampaguita Builders v. PNB 479 Phil 453 (2004) The unilateral determination and imposition of increased rates is violative of the principle of mutuality of contracts ordained in Article 1308of the Civil Code. One-sided impositions do not have the force of law between the parties, because such impositions are not based on the parties essential equality Although escalation clauses are valid in maintaining fiscal stability and retaining the value of money on long-term contracts, giving respondent an unbridled right to adjust the interest independently and upwardly would completely take away from petitioners the right to assent to an important modification in their agreement and would also negate the element of mutuality in their contracts. The clause cited earlier made the fulfilment of the contracts dependent exclusively upon the uncontrolled will of respondent and was therefore void. Besides, the pro forma promissory notes have the character of a contract d adhsion, where the parties do not bargain on equal footing, the weaker partys [the debtors]participation being reduced to the alternative to take it or leave it Dir. Of Lands v. Abarca 61 Phil 70 (1934) In dismissing the claim of Sarenas and Braganza, the lower court held that the sale by the sheriff of the property in question in favor of said claimants was null and void, because it was not made in accordance with the requirements of the law, and also because the amount of P877.25 paid by Sarenas

and Braganza was absolutely inadequate. A judicial sale of real property will be set aside when the price is so inadequate as to shock the conscience of the court. Lequin v. Vizconde (2009) 603 SCRA 407 It is a well-entrenched rule that where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration. Moreover, Article 1471 of the Civil Code, provides that if the price is simulated, the sale is void, which applies to the instant case, since the price purportedly paid as indicated in the contract of sale was simulated for no payment was actually made A simulated transfer of property made without consideration and with intent to hinder, delay, or defraud the creditors of the grantor constitutes no obstacle to the levy of legal process of any sort directed against the grantor. In such case no independent action to rescind or annul the transfer is necessary. A simulated contract lacks some of the elements necessary to make any contract whatever and may be treated as non-existent for all purposes.

De Belen v. Insular Coll. Of Customs 46 Phil 241 (1924)