Name Philippine Free Press, Inc. vs Court of Appeals, G.R. No.

132864, October 24,

2005
Facts In 1973, Marcos’ representatives offered number of times to buy the Philippine
Free Press, Inc. owned by Teodoro Locsin Sr. Teodoro refused to sell the PFP, Inc and
stated that it was not for sale. In the middle of 1973, Brig. General Hans Menzi
contacted Teodoro concerning the sale of PFP, Inc. Meeting was held in the building of
the PFP, Inc. and Gen. Hans reiterated the offer to buy the property once again,
asserting that President Ferdinand Marcos cannot be denied. Teodoro then made a
counteroffer that he will sell everything but that he will be allowed to keep the name of
PFP, Inc. With this, when Gen. Hans contacted Teodoro, Gen. Hans said that Marcos
was amenable to the counteroffer made and is offering the purchase price of
P5,750,000. In August 1973, Teodoro accepted P1,000,000 from Gen. Hans served as
downpayment of the sale. In October 1973, Gen. Hans paid the balance of the purchase
price and the parties executed 2 notarized deeds of sale of the property in dispute.
Teodoro then used the proceeds of the sale to pay the separation pays of the
employees and to buy out the shares of the minority stockholders of the company. In
February 1987, PFP, Inc. filed a complaint for Annulment of Sale on the grounds of
vitiated consent and gross inadequacy of the purchase price. The trial court dismissed
petitioner’s complaint for annulment of sales for lack of merit. On [respondent]
counterclaim, the court finds for [respondent] and against [petitioner] for the recovery of
attorney’s fees already paid for at P1,945,395.98, plus a further P316,405.00 remaining
due and payable. The case elevated to the Court of Appeals. The CA affirmed with
modification the appealed decision of the trial court, the modification consisting of the
deletion of the award of attorney’s fees to private respondent.
Issue Does the gross inadequacy of the purchase price indicate vitiation of consent to
the contract of sale which would make the sale voidable?
Decision The Supreme Court ruled, NO. Gross inadequacy of the purchase price does
not, as a matter of civil law, per se affect a contract of sale. Article 1470 of the Civil
Code says, “Gross inadequacy of price does not affect a contract of sale, except as it
may indicate a defect in the consent, or that the parties really intended a donation or
some other act or contract”. Following this provision, petitioner must first prove “a defect
in the consent”, failing which its case for annulment contract of sale on ground gross
inadequacy of price must fall. The categorical conclusion of the Court of Appeals,
confirmatory of that of the trial court, is that the price paid for the Free Press’ office
building, and other physical assets is not unreasonable to justify the nullification of the
sale. This factual determination, predicated as it were on offered evidence, notably
petitioner’s Balance Sheet as of November 30, 1972 (Exh. 13), must be accorded great
weight if not finality. (Balance Sheet indicates that the net book value of the Properties
was actually only P994,723.66.)