Province of Cebu vs.
Heirs of Rufina Morales because no contract of purchase and sale was
Facts:
In 1961, petitioner Province of Cebu
leased in favour of Rufina Morales a 210-sq.m. lot
which formed part of Lot No. 646-A of the Banilad
Estate. This lot was among those donated by the
Province of Cebu to the City of Cebu, in which it
was divided into sub-lots and the area occupied
by Morales was thereafter denominated as Lot
No. 646-A-3.
In 1965, the City of Cebu sold the donated
lots at public auction in order to raise money for
the infrastructure projects.
Morales, being the actual occupant to the
subject lot has the preferential right thereof so
she was allowed to match the highest bid.
Morales paid the required deposit and partial
payment for the lot but she was not able to make
any other payments on the balance of the
purchase price for the lot, until she died.
In the meantime, the Province of Cebu
filed an action for reversion of donation against
the City of Cebu and consequently, they entered
into a compromise agreement in which it provides
that the donated lots be returned to the Province
of Cebu except those that have already been
utilized by the City of Cebu.
One of the nieces of Morales wrote to then
Cebu Governor Eduardo Gullas asking for the
formal conveyance of the subject lot in
accordance with the award earlier made by the
City of Cebu. The request remained unheeded
thus, the heirs of Morales filed an action for
specific performance and reconveyance of
property against the Province of Cebu and they
also consigned with the court the amount of
P13,450 representing the balance of the
purchase price which the Province of Cebu
allegedly refuse to accept.
The Heirs of Morales averred that the
award at public auction of the lot to Morales was
a valid and binding contract entered into by the
City of Cebu and that the lot was inadvertently
returned to the Province of Cebu under the
compromise judgment. They alleged that they
could not pay the balance of the purchase price
during the pendency of the said case due to
confusion as to whom and where payment should
be made.
It was also contended by the Province of
Cebu that there is no perfected contract of sale
executed by the parties.
Issue:
W/N there was a valid sale of the subject
property by virtue of the auction sale?
Held:
YES, there was a valid sale of the subject
property by virtue of the auction sale.
The stages of a contract of sale are as
follows:
1. Negotiation, which covers the period from
the time the prospective contracting
parties indicate interest in the contract to
the time the contract is perfect;
2. Perfection, which takes place upon the
concurrence of the essential elements of
the sale;
3. Consummation, which begins when the
parties perform their respective
undertakings under the contract of sale,
culminating in the extinguishment thereof.
In this case, Morales had undoubtedly
commenced performing her obligation by making
a down payment on the purchase price but it was
not completed due to legal complications between
the Province of Cebu and the City of Cebu.
The Court held that the award is
tantamount to a perfected contract of sale
between Morales and the City of Cebu.
A contract of sale is a consensual contract
and is perfected at the moment there is a meeting
of minds upon the thing which is the object of the
contract and upon the price. Under Article 1458 of
the Civil Code, the elements of a valid contract of
sale are as follows:
1. Consent or meeting of the minds
2. Determinate subject matter
3. Price certain in money or its equivalent
In this case, all these elements were
present in the transaction between the City of
Cebu and Morales. A sale by public auction is
perfected when the auctioneer announces its
perfection by the fall of the hammer or in other
customary manner.
The City of Cebu was the owner of the lot
when it awarded the same to Morales, who later
became its owner before the same was
erroneously returned to the Province of Cebu
under the compromise judgment. The award is
tantamount to a perfected contract of sale
between Morales and the City of Cebu, while
partial payment of the purchase price and actual
occupation of the property by Morales effectively
transferred ownership of the lot to them.
This is true notwithstanding the failure of
Morales to pay the balance of the purchase price.
Failure to pay the balance of the purchase price
did not render the sale inexistent or invalid, but
merely gave rise to a right in favour of the vendor
to either demand specific performance or
rescission of the contract of sale.
In this regard, Article 1592 of the Civil
Code provides that in the sale of immovable
property, even though it may have been
stipulated that upon failure to pay the price at the
time agreed upon the rescission of the contract
shall of right take place, the vendee may pay,
even after the expiration of the period, as long as
no demand for rescission of the contract has
been made upon him either judicially or by
notarial act.
In this case, the heirs of Morales could still
tender payment of the full purchase price as no
demand for rescission had been made upon
them, either judicially or through notarial act. The
consignation of the balance of the purchase price
before the trial court thus operated as full
payment, which resulted in the extinguishment of
their obligation under the contract of sale.
---
With respect the contention, as previously
stated, a contract of sale is a consensual contract
that is perfected upon a meeting of minds as to
the object of the contract and its price. Subject to
the provisions of the Statute of Frauds, a formal
document is not necessary for the sale
transaction to acquire binding effect. For as long
as the essential elements of a contract of sale are
proved to exist in a given transaction, the contract
is deemed perfected regardless of the absence of
a formal deed evidencing the same.
…………………………………………………………
LIGUEZ vs. CA
The Court of Appeals held that the deed of
donation was inoperative, null and void because (1)
Lopez, who was the husband of Maria Ngo, had no
right to donate the conjugal property to Conchita
Liguez, who at that time was a minor; and that the (2)
donation was tainted with illegal cause or
consideration. Accordingly, the donation was made in
view of the desire of Salvador Lopez to have sexual
relations with Conchita Liguez.
Conchita Liguez argued that under Article
1274 of the Civil Code of 1889, which was the
governing law in 1948 when the donation was
executed, in contracts of pure beneficence the
consideration is the liberality of the donor, and that
liberality per se can never be illegal since it is neither
against the law, morals or public policy.
Issue: W/N the said donation was predicated upon an
illicit causa?
Held:
In the present case, it is scarcely disputable that Lopez
would not have conveyed the property in question had
he known that appellant would refuse to cohabit with
him; so that the cohabitation was an implied condition
to the donation, and being unlawful, necessarily tainted
the donation itself.
Google translate:
Can the woman as owner have the donations canceled
even during the marriage? This is, in sum, the
question, reduced to determining whether the different
nature between the acts for consideration and the acts
for profit, and their special and diverse circumstances,
may motivate a different solution as for the time when
the woman has to claim and obtain the nullity of the
act; question that does not leave to be very interesting.
The Code, despite the variation it has introduced in the
1851 project, putting as the second paragraph of
article 1.413, or as a limitation of disposals or
obligations for consideration, which was a general
limitation of all the acts of the husband, shows,
however, that it has not varied from criterion and that
for him donations must in all be equated with any other
illegal or fraudulent act of onerous nature, when saying
in art. 1,419: "It will also be brought up in the inventory
of the society- the amount of donations and disposals
that should be considered illegal or fraudulent, with
subject to art. 1,413. ' (Article 1.415 should also be
cited, which is the one that talks about donations.)
"In summary: the husband can only donate the joint
assets within the limits set in art. 1,415. However, only
the woman or her heirs can claim against the validity of
the donation, since only in their interest establishes the
prohibition. The woman or her heirs, to be able to
annul the act, have to suffer real damage,
understanding that there is not until, so much so that,
terminated by any caused by the community of
property, and after its liquidation, the donation cannot
be attributed to having any concept of the husband,
nor obtain in consequence the wife the due
compensation. The Donationi therefore legally has a
conditional effectiveness, and in harmony with this
character, they must fix the effects of the same in
relation to the acquirers and third-party holders,
having, in its case, taking into account the provisions of
the Mortgage law. To prevent any harm, the woman
may, during marriage immediately upon the act, record
its existence before the Courts and request measures
of Caution, as already said. To avoid this in the future,
and when circumstances require, You can urge the
declaration of prodigality.