RESUMEN DE POLÍTICAS CONTABLES SIGNIFICATIVAS

Article 1458 of the Civil Code, in defi ning the obligation of the buyer, provides that he must pay the price certain in money or its equivalent. It had been proposed, though not resolved, in

Bagnas v. Court of Appeals,50 _{that Article 1458 “requires that} ‘equivalent’ be something representative of money, e.g., a check or draft, citing Manresa,51 _{to the effect that services are not the} equivalent of money insofar as said requirement is concerned and that a contract is not a true sale where the price consists of services or prestations.”52

Nevertheless, even Article 1468 of the Civil Code recognizes that if the consideration of the contract consists partly in money, and partly in another thing, the transaction can still be considered a contract of sale when this is the manifest intention of the parties. This shows that the consideration for a valid contract of sale can be the price and other additional consideration.

In Republic v. Phil. Resources Development,53 _Apostol, allegedly acting for the Philippine Resources Development Corp. (PRDC), contracted with the Bureau of Prison for the purchase of 100 tons of designated logs, but only a small payment of the purchase price was made. In lieu of the balance of the purchase price, he caused to be delivered goods of the PRDC to the

48_{40 Phil. 921 (1920).}

49_{Ibid, at pp. 941-942, but quoted from syllabus at p. 921.} 50_{176 SCRA 159 (1989).}

51_{Vol. 8, 3rd ed., pp. 59-60.} 52_{176 SCRA 159, 166 (1989).} 53_{102 Phil. 960 (1958).}

Bureau of Prison as payment for the outstanding price. One of the issues resolved in the case was whether PRDC had the right to intervene in the sales transaction executed between Apostol and the Bureau of Prisons and in the suit brought by the Government to enforce such sale.

The Government asserted that the subject matter of its litiga- tion with Apostol was a sum of money allegedly due to the Bureau of Prison from Apostol and not the goods reportedly turned over by Apostol in payment of his private debt to the Bureau of Prison and the recovery of which was sought by PRDC; and for this reason, PRDC had no legal interest in the very subject matter in litigation as to entitle it to intervene. The Government argued that the goods which belonged to PRDC were not connected with the sale because “Price ... is always paid in terms of money and the supposed payment being in kind, it is no payment at all.”54

The Court held that the Government’s contentions were untenable, ruling that Article 1458 provides that the purchaser may pay “a price certain in money or its equivalent,” which means payment of the price need not be in money. Whether the goods claimed by PRDC belong to it and delivered to the Bureau of Prison by Apostol in payment of his account is suffi cient payment therefor, is for the court to pass upon and decide after hearing all the parties in the case. PRDC therefore had a positive right to intervene in the case because should the trial court credit Apostol with the value price of the materials delivered by him, certainly PRDC would be affected adversely if its claim of ownership to such goods were upheld.

Republic is not at all authority to say that under Article 1458,

as it defi nes a contract of sale, the term “equivalent” of price can cover other than money or other media of exchange, since

Republic covers not the perfection stage of a contract of sale,

but rather the consummation stage where the price agreed upon (which ideally should be in money or its equivalent) can be paid under the mutual arrangements agreed upon by the parties to the contract of sale, even by dation in payment, as was the case in Republic.

Torres v. Court of Appeals,55 _{held that when the covering} contract for the sale of a parcel of land clearly provides that the consideration for the sale was the expectation of profi ts from the subdivision project, it constituted valid cause or consideration to validate the sale and delivery of the land.

In Polytechnic University of the Philippines v. Court of

Appeals,56 _{it was held that the cancellation of liabilities of the} seller constitute valid consideration for sale.

In all, the requisite that the price must be in money or its equivalent is one that has not been held steadfast by the Supreme Court as determinative of the validity of a sale. This shows the essence of sale is the existence of the obligation of the seller to transfer ownership and delivery possession of the subject matter, whereas the price, although an essential element of a valid contract, being essentially a generic obligation, may be subject to variations.

The signifi cance of the use of the term “price to be in money or its equivalent” is for the law to demonstrate the ideal example of the onerous nature of sales, that it must be supported by a “valuable consideration.” Money being the highest form or representation of commercial value in society, removes any doubt that of what is “valuable consideration” and functions merely as the model of prestation, cause or consideration that would promote the onerous nature of the contract of sale. There is little doubt, therefore that other forms of cause or consideration which are “valuable” would support a valid contract of sale.

a. Adequacy of Price to Make It “Real”; Concept of “Valuable Consideration”

Ong v. Ong,57 _{considered the validity of a sale of real} property where the consideration stated in the deed was “One Peso (51.00) and the other valuable considerations.”

The Court held that since no evidence was adduced to show that the consideration stated in the deed was not paid or was

55_{320 SCRA 428 (1999).} 56_{368 SCRA 691 (2001).} 57_{139 SCRA 133 (1985).}

simulated, it is presumed to exist under Article 1354 of the Civil Code.58 _{It held that the statement in the deed of the consideration} of 51.00 is not unusual in “deeds of conveyance adhering to the Anglo-Saxon practice of stating a nominal consideration, although the actual consideration may have been much more. Moreover, even assuming that said consideration of 51.00 was suspicious, such circumstance alone, does not necessarily justify the inference [that the buyers] were not purchasers in good faith or for value.” In any event, the Court held “that the apparent inadequacy is of no moment since it is the usual practice in deeds of conveyance to place a nominal amount although there

is a more valuable consideration given.”59

The essence of the Ong ruling is that in our jurisdiction, it is possible for parties to a sale to agree on an adequate consideration, and though they will state a false or nominal consideration in their covering deed, it would not affect the validity of the contract of sale, provided that valuable consideration was in fact agreed upon. In effect through Ong, Philippine jurisprudence has not accepted the Anglo-Saxon concept that “any” consideration is enough to support a contract; and what prevails in Philippine jurisdiction is that for consideration to support an onerous contract, such as a contract of sale, it would have to be “valuable consideration” under the Roman Law concept.

The ruling was affi rmed in Bagnas v. Court of Appeals,60 which covered a sale of real property where the consideration stated in the covering deed was “the sum of ONE PESO (51.00), Philippine Currency, and services rendered, being rendered and to be rendered for my [seller’s] benefi t.” In that case, the Court noted that the gross disproportion between the consideration stipulated and the value of the property, would show that the price stated was “a false and fi ctitious consideration, and no other true and lawful cause having been shown, the Court fi nds both said deeds, insofar as they purport to be sales, not merely voidable,

58_{Article 1354 provides: “Although the cause is not stated in the contract, it is} presumed that it exists and is lawful, unless the debtor proves the contrary.”

59_{Ibid, at p. 136.} 60_{176 SCRA 159 (1989).}

but void ab initio.”61 _{Therefore, even though a consideration is} real in the sense that it was agreed upon and there is every intention of the parties to pay and receive such price, it would still be considered fi ctious and render the sale void if it is a mere nominal price.

Bagnas should not be interpreted to mean that although

the parties agreed that services was agreed upon to be part of the consideration, the fact that no service was rendered would make the contract “void,” since the non-performance of the service agreed upon does not go into the validity of the contract but actually grants to the seller or his successors-in-interests the right to rescind the contract for breach thereof. The essence of the ruling in Bagnas was that evidence was adduced to indicate that there was no real intention to pay any indicated valuable consideration.

In Arimas v. Arimas,62 _{the controversy was on the real} terms of the sale of a hacienda. Two documentary evidence were adduced: one was the deed of sale and another document purporting to be a supplement which contained part of the consideration to which the seller consented to sell his hacienda. The seller averred that when buyer fi rst came to him with the fi rst document, he refused to sign it at fi rst because the consideration was too small. The seller fi nally signed it when they agreed on further considerations which were embodied in the supplement (the second document).

The Court held that the consideration appearing in the supplement must have been part of the consideration for the sale of the hacienda, since both the original deed and the supplement were signed by the parties. It is not normal human behavior for parties to a contract of sale to execute a deed of sale without a settled consideration and later agree on a further consideration. The consideration is generally agreed upon as a whole even if it consists of several parts, and even if it is contained in one or more instruments; otherwise there would be no price certain.

61_{Ibid, at pp. 166-167.} 62_{55 O.G. 8682 (1959).}

There would be no meeting of minds as to the consideration; and the contract of sale could not be perfected.