Marvin could communicate his withdrawal thereof? Discuss the legal consequences.
A: A contract to construct the house of Carlos is
perfected. Contracts are perfected by mere consent manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Under Article 1315 of the Civil Code, Carlos and Marvin are bound to fulfill what has been expressly stipulated and all consequences thereof. Under Article 1167, if Marvin would refuse to construct the house, Carlos is entitled to have the construction be done by a third person at the expense of Marvin. Marvin in that case will be liable for damages under Article 1170.
KINDS OF CONTRACTS
Q: Distinguish briefly but clearly between Inexistent contracts and annullable contracts. (2004)
A: INEXISTENT CONTRACTS are considered as not
having been entered into and, therefore, void ob initio. They do not create any obligation and cannot be ratified or validated, as there is no agreement to ratify or validate. On the other hand, ANNULLABLE or VOIDABLE CONTRACTS are valid until invalidated by the court but may be ratified. In inexistent contracts, one or more requisites of a valid contract are absent. In anullable contracts, all the elements of a contract are present except that the consent of one of the contracting parties was vitiated or one of them has no capacity to give consent.
TRUST
Q: Mr. A, a businessman, put several real estate properties under the name of his eldest son X because at that time, X was the only one of legal age among his four children. He told his son he was to hold those assets for his siblings until they become adults themselves. X then got married. After 5 years, Mr. A asked X to transfer the titles over three properties to his three siblings, leaving two properties for himself. To A’s surprise, X said that he can no longer be made to transfer the properties to his siblings because more than 5 years have passed since the titles were registered in his name. Do you agree? Explain. (2015)
A: NO, the transfer of the properties in the name of X was
without cause or consideration and it was made for the purpose of holding these properties in trust for the siblings of X. If the transfer was by virtue of a sale, the same is void for lack of cause or consideration. Hence, the action to declare the sale void is imprescriptible (Heirs of
Ureta vs. Ureta, G.R. No. 165748 September 14, 2011).
SALES
DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
Q: Jackie, 16, inherited a townhouse. Because she wanted to study in an exclusive school, she sold her townhouse by signing a Deed of Sale and turning over possession of the same to the buyer. When the buyer discovered she was still a minor, she promised to execute another Deed of Sale when she turns 18. When Jackie turned 25 and was already working, she
wanted to annul the sale and return the buyer's money to recover her townhouse. Was the sale contract void, voidable or valid? Can Jackie still recover the property? Explain. (2015)
A: The contract of sale was voidable on the ground that
Jackie is incapable of giving consent at the time of the execution of the sale(Art. 1390 and Art. 1327). Jackie can no longer recover the townhouse unit because if a contract is voidable on the ground of minority, the action to annul it must be filed within four (4) years from attainment of the age of majority. Since Jackie was already 25 years old, the action has clearly prescribed because she should have filed it before she reached the age of 22 (Art. 1391).
Q: Z, a gambler, wagered and lost P2 Million in baccarat, a card game. He was pressured into signing a Deed of Absolute Sale in favor of the winner covering a parcel of land with improvements worth P20 Million. One month later, the supposed vendee of the property demanded that he and his family vacate the property subject of the deed of sale. Was the deed of sale valid? What can Z do? (2015)
A: The sale is valid. Being pressured to sign the deed of
sale is not equivalent to vitiation of consent under Art.
1390(2). Mere pressure cannot constitute intimidation
because for intimidation to arise, the party must be compelled by a reasonable or well- grounded fear of an imminent & grave danger upon person & property of himself, spouse, ascendants or descendants. It also cannot constitute undue influence or when a person takes improper advantage of his power over will of another depriving latter of reasonable freedom of choice because there was no indication that the winner has moral ascendency or power over Z. However, Z can recover his losses from the winner because the law provides that no action can be maintained by the winner for the collection of what he has won in any game of chance. But any loser in a game of chance may recover his loss from the winner, with legal interests from the time he paid the amount lost (Art. 2014).
Q: Mr. and Mrs. X migrated to the US with all their children. As they had no intention of coming back, they offered their house and lot for sale to their neighbors, Mr. and Mrs. A (the buyers) who agreed to buy the property for 128 Million. Because Mr. and Mrs. A needed to obtain a loan from a bank first, and since the sellers were in a hurry to migrate, the latter told the buyers that they could already occupy the house, renovate it as it was already in a state of disrepair, and pay only when their loan is approved and released. While waiting for the loan approval, the buyers spent Pl Million in repairing the house. A month later, a person carrying an authenticated special power of attorney from the sellers demanded that the buyers either immediately pay for the property in full now or vacate it and pay damages for having made improvements on the property without a sale having been perfected. Can the buyers be made to immediately vacate on the ground that the sale was not perfected? Explain briefly. (2015)
A: NO, the buyers cannot be made to vacate on the ground
that the sale was not perfected for the fact of the matter is that a contract of sale is consensual and is perfected by mere consent (Art. 1315). In this case, there was an agreement to deliver a determinate thing for a price
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certain in money. When the owners made an offer to sell their property to Mr. and Mrs. A and the latter accepted the offer, there was already a meeting of the minds between the parties resulting in the perfection of the contract of sale.
Q: Spouses Biong and Linda wanted to sell their house. They found a prospective buyer, Ray. Linda negotiated with Ray for the sale of the property. They agreed on a fair price of P2 Million. Ray sent Linda a letter confirming his intention to buy the property. Later, another couple, Bernie and Elena, offered a similar house at a lower price of P1.5 Million. But Ray insisted on buying the house of Biong and Linda for sentimental reasons. Ray prepared a deed of sale to be signed by the couple and a manager's check for P2 Million. After receiving the P2 Million, Biong signed the deed of sale. However, Linda was not able to sign it because she was abroad. On her return, she refused to sign the document saying she changed her mind. Linda filed suit for nullification of the deed of sale and for moral and exemplary damages against Ray. (2006)
a. Will the suit prosper? Explain.
A: NO, the suit will not prosper. The contract of sale
was perfected when Linda and Ray agreed on the object of the sale and the price (Art. 1475). The consent of Linda has already been given, as shown by her agreement to the price of the sale. There is therefore consent on her part as the consent need not be given in any specific form. Hence, her consent may be given by implication, especially since she was aware of, and participated in the sale of the property (Pelayo v. CA, G.R. No. 141323,
June 8, 2005). Her action for moral and exemplary
damages will also not prosper because the case does not fall under any of those mentioned in Art. 2219 and 2232
b. Does Ray have any cause of action against Biong and Linda? Can he also recover damages from the spouses? Explain.
A: Considering that the contract has already been
perfected and taken out of the operation of the statute of frauds, Ray can compel Linda and Biong to observe the form required by law in order for the property to be registered in the name of Ray which can be filed together with the action for the recovery of house (Art. 1357). In the alternative, he can recover the amount of Two million pesos (P2,000,000.00) that he paid. Otherwise, it would result in solutio indebiti or unjust enrichment. Ray can recover moral damages on the ground that the action filed by Linda is clearly an unfounded civil suit which falls under malicious prosecution (Ponce v. Legaspi, G.R. No.
79184, May 6, 1992).
Q: Jude owned a building which he had leased to several tenants. Without informing his tenants, Jude sold the building to Ildefonso. Thereafter, the latter notified all the tenants that he is the new owner of the building. Ildefonso ordered the tenants to vacate the premises within thirty (30) days from notice because he had other plans for the building. The tenants refused to vacate, insisting that they will only do so when the term of their lease shall have expired. Is Ildefonso bound to respect the lease contracts between Jude and his tenants? Explain your answer. (2009)
A: YES, Ildefonso must respect the lease contracts
between Jude and his tenants. While it is true that the said lease contracts were not registered and annotated on the title to the property, Ildefonso is still not an innocent purchaser for value. He ought to know the existence of the lease because the building was already occupied by the tenants at the time he bought it. Applying the principle of caveat emptor, he should have checked and known the status of the occupants of their right to occupy the building before buying it.
PARTIES TO A CONTRACT OF SALE
Q: Rica petitioned for the annulment of her ten-year old marriage to Richard. Richard hired Atty. Cruz to represent him in the proceedings. In payment for Atty. Cruz's acceptance and legal fees, Richard conveyed to Atty. Cruz a parcel of land in Taguig that he recently purchased with his lotto winnings. The transfer documents were duly signed and Atty. Cruz immediately took possession by fencing off the property's entire perimeter. Desperately needing money to pay for his mounting legal fees and his other needs and despite the transfer to Atty. Cruz, Richard offered the same parcel of land for sale to the spouses Garcia. After inspection of the land, the spouses considered it a good investment and purchased it from Richard. Immediately after the sale, the spouses Garcia commenced the construction of a three-story building over the land, but they were prevented from doing this by Atty. Cruz who claimed he has a better right in light of the prior conveyance in his favor.
Is Atty. Cruz's claim correct? (2013)
A: NO, Atty. Cruz is not correct. At first glance, it may
appear that Atty. Cruz is the one who has a better right because he first took possession of the property. However, a lawyer is prohibited under Art. 1491 of the Civil Code from acquiring the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. While the suit is for annulment of marriage and it may be argued that the land itself is not the object of the litigation, the annulment of marriage, if granted, will carry with it the liquidation of the absolute community or conjugal partnership of the spouses as the case may be (Art. 50 in relation to Art. 43,
FC). Richard purchased the land with his lotto winnings
during the pendency of the suit for annulment and on the assumption that the parties are governed by the regime of absolute community or conjugal partnership, winnings from gambling or betting will form part thereof. Also, since the land is part of the absolute community or conjugal partnership of Richard and Rica, it may not be sold or alienated without the consent of the latter and any disposition or encumbrance of the property of the community or conjugal property without the consent of the other spouse is void (Art. 96 and Art. 124, FC).
PRICE
Q: Explain the nature of an option contract. (2002) A: An option contract is one granting a privilege to buy or
sell within an agreed time and at a determined price. It must be supported by a consideration distinct from the price (Art. 1479 and 1482).