MEDRANO and IBAAN RURAL BANK vs. COURT OF APPEALSG.R. No. 150678 February 18, 2005

Facts:

Bienvenido Medrano was the Vice-Chairman of Ibaan Rural Bank. He asked Flor (a cousin), to look for a buyer of a foreclosed asset of the bank (17-hectare mango plantation with 720 trees priced at P2.2M). Dominador Lee, a Makati businessman was a client of respondent Pacita Borbon, a licensed real estate broker. Borbon relayed to her business associates and friends that she had a ready buyer for a mango orchard. Flor then advised her that her cousin-in-law owned a mango plantation which was up for sale. She told Flor to confer with Medrano and to give them a written authority to negotiate the sale of the property. Medrano issued the Letter of Authority to Borbon and Antonio to negotiate with any prospective buyer for the sale of the mango plantation. He promised Borbon to pay a commission of 5% of the total purchase price to be agreed upon by the buyer and seller.

An ocular inspection was held by Lee. Lee informed Antonio that he already purchased the property and had made a down payment ofP1M. The remaining balance of P1.2M was to be paid upon the approval of the incorporation papers of the corporation he was organizing by the SEC. According to Antonio, Lee asked her if they had already received their commission. She answered "no," and Lee expressed surprise over this. Since the sale of the property was consummated, the respondents asked from the petitioners their commission, or 5% of the purchase price. The petitioners refused to pay and offered a measly sum of P5,000.00 each. Hence, the present action.

Medrano’s defense: Borbon and Antonio did not perform any act to consummate the sale. The petitioners pointed out that the respondents (1) did not verify the real owner of the property; (2) never saw the property in question; (3) never got in touch with the registered owner of the property; and (4) neither did they perform any act of assisting their buyer in having the property inspected and verified.

Issue: WON the plaintiffs are entitled to any commission for the sale of the subject property? YES

Held:

The respondents are indeed the procuring cause of the sale. If not for the respondents, Lee would not have known about the mango plantation being sold by the petitioners. The sale was consummated. The bank had profited from such transaction. It would certainly be iniquitous if the respondents would not be rewarded their commission pursuant to the letter of authority.

“Procuring cause” = the proximate cause. The term "procuring cause," in describing a broker’s activity, refers to a cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker – producing a purchaser ready, willing and able to buy real estate on the owner’s terms.

The evidence on record shows that the respondents were instrumental in the sale of the property to Lee. Without their intervention, no sale could have been consummated. They were the ones who set the sale of the subject land in motion. While the letter-authority issued in favor of the respondents was non-exclusive, no evidence was adduced to show that there were other persons, aside from the respondents, who informed Lee about the property for sale. When there is a close, proximate and causal connection between the broker’s efforts and the principal’s sale of his property, the broker is entitled to a commission.

In the absence of fraud, irregularity or illegality in its execution, such letter-authority serves as a contract, and is considered as the law between the parties. The clear intention is to reward the respondents for procuring a buyer for the property.

DELPHER TRADES CORPORATION vs. IACG.R. No. L-69259 January 26, 1988

Facts:

Delfin Pacheco and sister Pelagia were the owners of a parcel of land in Polo (now Valenzuela). On April 3, 1974, they leased to Construction Components International Inc. the property and providing for a right of first refusal should it decide to buy the said property.

Construction Components International, Inc. assigned its rights and obligations under the contract of lease in favor of Hydro Pipes Philippines, Inc. with the signed conformity and consent of Delfin and Pelagia. In 1976, a deed of exchange was executed between lessors Delfin and Pelagia Pacheco and defendant Delpher Trades Corporation whereby the Pachecos conveyed to the latter the leased property together with another parcel of land also located in Malinta Estate, Valenzuela for 2,500 shares of stock of defendant corporation with a total value of P1.5M.

On the ground that it was not given the first option to buy the leased property pursuant to the proviso in the lease agreement, respondent Hydro Pipes Philippines, Inc., filed an amended complaint for reconveyance of the lot.

Trivia lang: Delpher Trades Corp is owned by the Pacheco Family, managed by the sons and daughters of Delfin and Pelagia. Their primary defense is that there is no transfer of ownership because the Pachecos remained in control of the original co-owners. The transfer of ownership, if anything, was merely in form but not in substance.

Issue: WON the Deed of Exchange of the properties executed by the Pachecos and the Delpher Trades Corporation on the other was meant to be a contract of sale which, in effect, prejudiced the Hydro Phil's right of first refusal over the leased property included in the "deed of exchange"? NO

Held:

By their ownership of the 2,500 no par shares of stock, the Pachecos have control of the corporation. Their equity capital is 55% as against 45% of the other stockholders, who also belong to the same family group. In effect, the Delpher Trades Corporation is a business conduit of the Pachecos. What they really did was to invest their properties and change the nature of their ownership from unincorporated to incorporated form by organizing Delpher Trades Corporation to take control of their properties and at the same time save on inheritance taxes.

The "Deed of Exchange" of property between the Pachecos and Delpher Trades Corporation cannot be considered a contract of sale. There was no transfer of actual ownership interests by the Pachecos to a third party. The Pacheco family merely changed their ownership from one form to another. The ownership remained in the same hands. Hence, the private respondent has no basis for its claim of a light of first refusal under the lease contract.

TOYOTA SHAW, INC. vs. COURT OF APPEALSG.R. No. L-116650 May 23, 1995

Facts:

Sometime in June of 1989, Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was then a seller's market and Sosa had difficulty finding a dealer with an available unit for sale. But upon contacting Toyota Shaw, Inc., he was told that there was an available unit. So on 14 June 1989, Sosa and his son, Gilbert, went to the Toyota office at Shaw. There they met Popong Bernardo, a sales representative of Toyota.

Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989 because he, his family, and a balikbayan guest would use it on 18 June 1989 to go to Marinduque, his home province, where he would celebrate his birthday on the 19th of June. He added that if he does not arrive in his hometown with the new car, he would become a "laughing stock." Bernardo assured Sosa that a unit would be ready for pick up at 10AM on 17 June 1989. Bernardo then signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." P100 thousand was the downpayment, but the purchase price was not mentioned in the contract. It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B.A. Finance.

Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the disapproval by B.A. Finance of the credit financing application of Sosa. It further alleged that a particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused. The financing corporation seemed to have not approved Sosa’s application.

Issue: WON there was a perfected contract of sale? NO

Held:

Exhibit "A" or the “Agreement” is NOT a perfected contract of sale.

Nothing was mentioned about the full purchase price and the manner the installments were to be paid. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale.  This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property.

Exhibit "A" shows the absence of a meeting of minds between Toyota and Sosa. For one thing, Sosa did not even sign it. He was not dealing with Toyota but with Popong Bernardo. Bernardo was only a sales representative of Toyota and hence a mere agent of the latter.

Exhibit "A" may be considered as part of the initial phase of the generation or negotiation stage of a contract of sale. Accordingly, in a sale on installment basis which is financed by a financing company, three parties are thus involved: the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment, the seller who assigns the notes or discounts them with a financing company, and the financing company which is subrogated in the place of the seller, as the creditor of the installment buyer.  Since B.A. Finance did not approve Sosa's application, there was then no meeting of minds on the sale on installment basis.

The Vehicle Sales Proposal was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury.

ROMERO vs. COURT OF APPEALSG.R. No. 107207 November 23, 1995

Facts:

Romero, a civil engineer, was engaged in the business of production, manufacture and exportation of perlite filter aids, permalite insulation and processed perlite ore. In 1988, he decided to put up a central warehouse in Metro Manila.

Flores and his wife offered a parcel of land measuring 1,952 square meters. The lot was covered in a TCT in the name of private respondent Enriqueta Chua vda. de Ongsiong. Petitioner visited the property and, except for the presence of squatters in the area, he found the place suitable for a central warehouse. Flores called on petitioner with a proposal that should he advance the amount of P50,000.00 which could be used in taking up an ejectment case against the squatters, private respondent would agree to sell the property for only P800/square meter. Romero agreed. Later, a "Deed of Conditional Sale" was executed between Flores and Ongsiong.

Purchase price = P1,561,600.00; Downpayment = P50K; Balance = to be paid 45 days after the removal of all the squatters; upon full payment, Ongsiong shall execute deed of absolute sale in favour of Romero.

Ongsiong sought to return the P50,000.00 she received from petitioner since, she said, she could not "get rid of the squatters" on the lot. She opted to rescind the sale in view of her failure to get rid of the squatters. Regional Trial Court of Makati  rendered decision holding that private respondent had no right to rescind the contract since it was she who "violated her obligation to eject the squatters from the subject property" and that petitioner, being the injured party, was the party who could, under Article 1191 of the Civil Code, rescind the agreement.

Issue: WON there was a perfected contract of sale? YES

Held:

A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver and to transfer ownership of a specified thing or right to another (the buyer) over which the latter agrees. (BILATERAL and RECIPROCAL CHARACTERISTIC OF SALE)

In determining the real character of the contract, the title given to it by the parties is not as much significant as its substance. For example, a deed of sale, although denominated as a deed of conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved in the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition.

From the moment the contract is perfected, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. Under the agreement, private respondent is obligated to evict the squatters on the property. The ejectment of the squatters is a condition the operative act of which sets into motion the period of compliance by petitioner of his own obligation, i.e., to pay the balance of the purchase price. Private respondent's failure "to remove the squatters from the property" within the stipulated period gives petitioner the right to either refuse to proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil Code.  This option clearly belongs to petitioner and not to private respondent.

There was no potestative condition on the part of Ongsiong but a "mixed" condition "dependent not on the will of the vendor alone but also of third persons like the squatters and government agencies and personnel concerned."

SANTOS vs. COURT OF APPEALSG.R. No. 120820.  August 1, 2000

Facts:

Spouses Santos owned the house and lot in Better Living Subdivision, Paranaque, Metro Manila.   The land together with the house, was mortgaged with the Rural Bank of Salinas, Inc., to secure a loan of P150K. The bank sent Rosalinda Santos a letter demanding payment of P16K in unpaid interest and other charges.  Since the Santos couple had no funds, Rosalinda offered to sell the house and lot to Carmen Caseda.  After inspecting the real property, Carmen and her husband agreed.

Carmen and Rosalinda signed a document, involving the sale of the house – P350K as full amount, P54K as downpayment. Among other condition set is that Caseda will pay the balance of the mortgage in the bank, real estate taxes and the electric and water bills.

The Casedas complied with the bank mortgage and the bills. The Santoses, seeing that the Casedas lacked the means to pay the remaining installments and/or amortization of the loan, repossessed the property.  The Santoses then collected the rentals from the tenants. Carmen approached petitioners and offered to pay the balance of the purchase price for the house and lot.  The parties, however, could not agree, and the deal could not push through because the Santoses wanted a higher price.

Carmen is now praying that the Santoses execute the final deed of conveyance over the property.

Issue: WON there was a perfected contract of sale? NO

Held:

A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. Article 1458 expressly obliges the vendor to transfer ownership of the thing sold as an essential element of a contract of sale.  This is because the transfer of ownership in exchange for a price paid or promised is the very essence of a contract of sale.

There was no transfer of ownership simultaneously with the delivery of the property purportedly sold. The records clearly show that, notwithstanding the fact that the Casedas first took then lost possession of the disputed house and lot, the title to the property has remained always in the name of Rosalinda Santos. Although the parties had agreed that the Casedas would assume the mortgage, all amortization payments made by Carmen Caseda to the bank were in the name of Rosalinda Santos. The foregoing circumstances categorically and clearly show that no valid transfer of ownership was made by the Santoses to the Casedas.   Absent this essential element, their agreement cannot be deemed a contract of sale.

It was a contract to sell. Ownership is reserved by the vendor and is not to pass until full payment of the purchase price.  This we find fully applicable and understandable in this case, given that the property involved is a titled realty under mortgage to a bank and would require notarial and other formalities of law before transfer thereof could be validly effected.

The CA cannot order rescission. If the vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not rescinding it.  When the petitioners in the instant case repossessed the disputed house and lot for failure of private respondents to pay the purchase price in full, they were merely enforcing the contract and not rescinding it.