Barter or Exchange

GREGORIO FULE vs. COURT OF APPEALS,

NINEVETCH CRUZ and JUAN BELARMINO
286 SCRA 698 (1998)
Contracts; Sale; A contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the contract
and upon the price.The Civil Code provides that contracts are
perfected by mere consent. From this moment, 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. A contract of sale is
perfected at the moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the price. Being
consensual, a contract of sale has the force of law between the
contracting parties and they are expected to abide in good faith by
their respective contractual commitments. Article 1358 of the Civil
Code which requires the embodiment of certain contracts in a public
instrument, is only for convenience, and registration of the
instrument only adversely affects third parties. Formal requirements
are, therefore, for the benefit of third parties. Non-compliance
therewith does not adversely affect the validity of the contract nor the
contractual rights and obligations of the parties thereunder
FACTS:

Fule, a banker and a jeweler, acquired a 10-hectare property

in Rizal (Tanay Property), which usedto be under the name of
Fr. Antonio Jacobe, who mortgaged it to Rural Bank of
Alaminos to secure a loan of P10,000. However, the mortgage
was foreclosed.
In 1984, Fule asked Dichoso and Mendoza to look for a buyer
of the Tanay property. They found one in the person of Cruz,
who owns a pair of diamond earrings.
Fule was interested to buy these earrings, but Cruz refused to
sell them to him for the price he offered.
Subsequently, negotiations for the barter between the earrings
and the property ensued. But it turned out that the
redemption period for the property has not yet expired.
Thus, Fule executed a deed of redemption on behalf of Fr.
Jacobe in the amount of P16,000, and on even date, Fr.
Jacobe sold the property to Fule for P75,000.
The Deed of Sale was notarized ahead of the Deed of

By: Airisa Molaer

Redemption.
Subsequently, a Deed of Sale over the earrings was executed
and when it was delivered, Fule contends that the earrings
were fake, even using a tester to prove such allegation.
Thereafter, they decided go to Dimayuga, a jeweler, to have
the earrings tested. After a glance, Dimayuga declared them
fake.
Fule filed a complaint with the RTC against Cruz and her
lawyer, Belarmino, praying that the contract of sale over the
Tanay property be declared null and void on the ground of
fraud and deceit.
RTC ruled in favor of Cruz and Belarmino.

ISSUE: Whether or not the Deed of Sale over the Tanay property is
valid.
HELD: Yes.
RATIO:

It is evident from the facts of the case that there was a

meeting of the minds between petitioner and Dr. Cruz.
As such, they are bound by the contract unless there are
reasons or circumstances that warrant its nullification.
The records, however, are bare of any evidence manifesting
that private respondents employed such insidious words or
machinations to entice petitioner into entering the contract of
barter.
Neither is there any evidence showing that Dr. Cruz induced
petitioner to sell his Tanay property or that she cajoled him to
take the earrings in exchange for said property.
On the contrary, Dr. Cruz did not initially accede to
petitioner's proposal to buy the said jewelry. Rather, it
appears that it was petitioner, through his agents, who led Dr.
Cruz to believe that the Tanay property was worth exchanging
for her jewelry as he represented that its value was
P400,000.00 or more than double that of the jewelry which
was valued only at P160,000.00.
If indeed petitioner's property was truly worth that much, it
was certainly contrary to the nature of a businessman banker
like him to have parted with his real estate for half its price.
In short, it was in fact petitioner who resorted to
machinations to convince Dr. Cruz to exchange her jewelry for
the Tanay property.
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Furthermore, petitioner was afforded the reasonable

opportunity required in Article 1584 of the Civil Code within
which to examine the jewelry as he in fact accepted them
when asked by Dr. Cruz if he was satisfied with the same. By
taking the jewelry outside the bank, petitioner executed an act
which was more consistent with his exercise of ownership
over it.
This gains credence when it is borne in mind that he himself
had earlier delivered the Tanay property to Dr. Cruz by
affixing his signature to the contract of sale.
That after two hours he later claimed that the jewelry was not
the one he intended in exchange for his Tanay property, could
not sever the juridical tie that now bound him and Dr. Cruz.
The nature and value of the thing he had taken preclude its
return after that supervening period within which anything
could have happened, not excluding the alteration of the
jewelry or its being switched with an inferior kind.

DELPHER TRADES CORPORATION and DELPHIN PACHECO vs.

INTERMEDIATE APPELLATE COURT and HYDRO PIPES
PHILIPPINES, INC.
G.R. L-69259
January 26, 1988
Contracts; Deed of Exchange between the Pachecos and Delpher
Trades Corporation cannot be considered a contract of sale because
there was not transfer of actual ownership to third party.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 right of first
refusal under the lease contract.

ISSUE: Whether or not the Deed of Exchange of the properties

executed by the Pachecos on the one hand and the Delpher
Trades Corporation on the other was meant to be a contract of
sale which, in effect, prejudiced the private respondents right
of first refusal over the leased property included in the deed
of exchange.
HELD: No.
RATIO:

FACTS:

Delfin Pacheco and his sister Pelagia Pacheco were the owners
of a real estate
Said co-owners leased to Construction Components
International, Inc. (lessee) the same property and providing
that during the existence or after the term of this lease the
lessor should he decide to sell the property leased shall first

By: Airisa Molaer

offer the same to the lessee and the latter has the priority to
buy under similar conditions
The lessee assigned its rights and obligations under the
contract of lease in favor of Hydro Pipes Philippines, Inc.
with the signed conformity and consent of the lessors
Both the contract of lease and the assignment of lease were
annotated at the back of the title
On January 3, 1976, a deed of exchange between lessors and
defendant Delpher Trades Corporation whereby the former
conveyed to the latter the leased property together with
another parcel of land for shares of stocks of defendant
Hydro filed an amended complaint for conveyance of Lot No.
1095 in its favor, on the ground that it was not given the first
option to buy the leased property pursuant to the proviso of
the lease agreement
The CFI ruled in favor of the plaintiff (Hydro)
The IAC affirmed the lower courts decision
Petitioners allege that the denial of the petition will work great
injustice to the petitioners, in that private respondent is
allowed to exercise its right of first refusal even if there is no
sale or transfer of actual ownership interests by petitioners
to third parties

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
Pachecos to a third party.
The Pacheco family merely changed their ownership from on
form to another.
The ownership remained in the same hands. Hence, the
private respondent has no basis for its claim of a right of first
refusal under the lease contract.
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