Professional Documents
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79. Rudolf Lietz, Inc. vs CA, Agapito Buriol, Tiziana Turatello, Paola Sani (Jal) 19 Dec 2005 Tinga *land leased to Italians and subsequently sold; area less than what was in the contract Facts: 1. Agapito Buriol owned a parcel of unregistered land in Palawan. 2. On 15 Aug 1986, Buriol entered into a lease agreement with Flavia Turatello, Tiziana Turatello, and Paola Sani, all Italians, involving 1 hectare of the property. Lease agreement was for 25 years, renewable for another 25 years. 3. The Italians then took possession of the land after paying a downpayment of 10,000. The lease agreement was reduced into writing in Jan 1987. 4. On 17 Nov 1986, Buriol sold the land to Rudolf Lietz, Inc. for 30,000. The Deed of Absolute Sale states that the land measured 5 hectares, more or less. It also described the boundaries of the land. 5. Lietz later discovered that Buriol owned only 4 hectares, with 1 more covered by the lease agreement. Hence, only 3 hectares were actually delivered. 6. Lietz then filed a complaint for Annulment of Lease with Recovery of Possession against Buriol and the Italians. He alleged that Buriol sold to him the lot in evident bad faith and malice knowing that he owned only 4 hectares, not 5. 7. The trial court dismissed the complaint and the counterclaim of the Italians for damages. 8. The CA affirmed the dismissal. It held that under Article 1542, Lietz is no longer entitled to a reduction in price. 9. Lietz appeals. He contends that he is entitled to reduction under Article 1539. Issue: Is Lietz entitled to a reduction in the purchase price of the lot because of the reduced area of the property delivered to him? Held: No. Under Article 1542, there shall be no reduction in the purchase price even if the area delivered is less than that stated in the contract. Decision: Affirmed. Ruling: 1. Article 1539 governs a sale of immovable by the unit, that is, at a stated price per unit area. In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. 2. In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. 3. A vendee of land, when sold in gross or with the description more or less with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of more or less or similar words in designating quantity covers only a reasonable excess or deficiency. 4. What really defines a piece of ground is not the area mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. 5. In this case, the sale is one made for a lump sum. The Deed of Absolute Sale shows that the parties agreed on the purchase price on a predetermined area of 5 hectares within the specified boundaries and not based on a particular rate per area. 6. In accordance with Article 1542, there shall be no reduction in the purchase price even if the area delivered to Lietz is less than that stated in the contract. The area within the boundaries as stated in the contract shall control over the area agreed upon. 7. Lietz had an ocular inspection prior to the perfection of the contract. Thus, he gained a fair estimate of the area of the property sold to him. Also, his subscription to the Deed of Absolute Sale indicates his assent to the correct description of the boundaries of the property. Law: Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules: If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated. x x x
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Issue/Held: 1. Main Issue: Is the place of delivery in New York? No. The place of deliver was in Manila. 2. Whether the petitioner Behn, Meyer & Co. (Company) were able to prove performance on its part of the conditions provided in the contract? No. The petitioner Company failed to prove that it complied with the warranty. Decision: Trial Court decision is AFFIRMED. Costs vs. Behn, Meyer & Co. (Ltd.) Ruling: Issue 1: The place of delivery was in Manila and not in New York 1. How to determine the place of delivery: This is a question of fact. If there is no specification in the contract: If the contract be silent as to the person or mode by which the goods are to be sent, delivery by the vendor to a common carrier, in the usual and ordinary course of business, transfers the property to the vendee. If there is a specification regarding to the payment of freight: This may indicate the intention of the parties in regard to the place of delivery i. If the buyer is to pay the freight, it is reasonable to suppose that petitioner does so because the goods become his at the point of shipment. ii. If the seller is to pay the freight, the duty of the seller is to have the goods transported to their ultimate destination and that title to property does not pass until the goods have reached their destination. 2. Meaning of C.I.F found in British Contracts: CIF- stands for Cost, Insurance and Freight Meaning: the price fixed covers not only the cost of the goods, but the expense of freight and insurance to be paid by the seller. Case at bar: The contract included C.I.F which was followed by Manila Meaning: i. There is no inference is permissible that a seller was bound to deliver at the point of destination. ii. C.I.F Manila must mean that the contract price, covering costs, insurance, and freight, signifies that delivery was made at Manila. iii. The place of delivery was NOT in New York but it was in Manila d Reason: The petitioner company would not have gone to the trouble of making fruitless attempts to substitute goods for the merchandise named in the contract, but would have permitted the entire loss of the shipment to fall upon the defendant Yangco iv. SC said that goods were not shipped nor consigned from New York to plaintiff. The bill of lading was for goods received from Neuss Hesslein & Co. the documents evidencing said shipment and symbolizing the property were sent by Neuss Hesslein & Co. to the Bank of the Philippine Islands with a draft upon Behn, Meyer & Co. and with instructions to deliver the same, and thus transfer the property to Behn, Meyer & Co. when and if Behn, Meyer & Co. should pay the draft. v. SC concluded that the place of delivery was Manila and plaintiff has not legally excused default in delivery of the specified merchandise at that place. 3. Meaning of F.O.B found in mercantile contracts of American Origin: FOB stands for Free on Board Meaning: The seller shall bear all expenses until the goods are delivered where they
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5. Note: The use of C.I.F and F.O.B merely make rules of PRESUMPTION. Thus, one may still give proof
to a contrary intention The INTENT (to be ascertained by all the circumstances) should be considered. Example: The court ruled that a sale was complete on shipment, though the contract was for goods, "F.O.B. Manila," the place of destination the other terms of the contract showing the intention to transfer the property Issue 2: The Petitioner Company failed to comply with its warranty 1. Effect of failure to comply with Warranty: When the material promise of the seller to the buyer has not been complied with, the buyer may rescind the contract of sale because of a breach in substantial particulars going to the essence of the contract. 2. Basis: Article 1451 of the Civil Code The vendee can demand fulfillment of the contract, and this being shown to be impossible, is relieved of his obligation. 3. Case at bar: Petitioner Company failed to prove performance on its part of the conditions precedent in the contract. There was sufficient ground for rescission. Thus, the defendant Yangco is not liable. 85. Bislig Bay Lumber Co. vs Collector of Internal Revenue (Jal) 28 Jan 1961 Padilla *logs sold for Japan; ownership transferred in the Philippines Facts: 1. The Collector of Internal Revenue assessed Bislig Bay Lumber deficiency sales tax for the following: a) sales of logs to buyers in Japan from 14 Jun 1951 to 19 Jun 1953 b) sales of lumber to buyers in Manila and Cebu from Q1 1951 to Q4 1954 2. Bislig Bay Lumber requested reconsideration of the assessment on the ground that with respect to the logs sold to buyers in Japan, the title to the logs passed outside of the Philippines, hence such sales were not subject to tax. 3. The CIR denied the request. 4. Bislig Bay lumber then filed a petition for review in the Court of Tax Appeals. 5. CTA affirmed the assessment on the deficiency sales tax on sale of logs to buyers in Japan. It found that the transfer of ownership happened in Manila since the logs were shipped F.O.B. or C.&I. Issue: Did delivery of the logs to buyers in Japan take place in Manila under F.O.B. (free on board) shipping terms? Held: Yes. Freight was paid by the buyers, thus, transfer of ownership took place in Manila. Decision: Affirmed. Ruling: 1. Ownership in the logs passed in the Philippines from the seller to the foreign buyers because the freight charges were paid by the buyers, the shipments were insured by the buyers, and the bills of lading and other shipping documents were indorsed in blank by the seller and presented for collection to a local bank where the foreign buyers opened irrevocable letters of credit. 2. The Court upheld the legality of the assessments for sales tax in two similar cases: a) Misamis Lumber vs CIR: Misamis Lumber shipped lumber and logs for export on board foreign merchant vessels purchased by foreign buyers established abroad. Shipment was F.O.B., Misamis Lumber defraying all expenses incurred from the sawmills to the loading on board the vesses; the buyers paying in Manila all freight, insurance charges, and price. b) Western Mindanao Lumber vs CTA: Facts were similar to Misamis Lumber but loading was made in
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1. Defendants are the partnership Litton & Co, and George Litton. They sell office supplies from the United States. 2. The defendants were contracted to supply (1) Padlocks and (2) office supplies for the upcoming April 23, 1946 elections. 3. They were tasked to deliver all of the above by April 8. 4. Their contract with the Republic included a stipulation that The stipulated delivery period shall not be exceeded. 5. The items were insured by Central Surety Co with bonds. 6. The defendants notified the Republic through mail that it is understood that [the government] will give a letter certifying that the padlocks are urgently needed and that the export license can be secured without delay. 7. The defendants did not deliver everything on time. 8. The defendants asked for an extension which was granted, but nevertheless, they still failed to deliver the items on time. 9. The Republic was forced to buy the remaining equipment from another supplier at a higher cost because they still lacked some supplies for the elections. It is now filing a case of damages against the defendants for their failure to deliver the goods on time for the elections. 10. The defendants claim they are not liable because it was necessary for the republic to furnish the export license in order to quicken the delivery of the items to meet the date. Issue: Was it a condition precedent for the Republic to first provide the export license before the defendants could meet the strict deadline they had agreed upon? Held: No, the intent of the contract, was to furnish the demanded supplies before the elections, regardless if there was an export license or not (which was strictly provided for in the contracts stipulation [fact #4]) Decision: The petition is granted. Ruling:
1. The contract has a section called Important Conditions, which carries the stipulation that The
stipulated delivery period shall not be exceeded. This makes defendants liable in all eventualities. 2. The letter wrote by the defendants only shows that they merely expected the Republic to give a certification. It was never considered a condition precedent. 3. Although the Republic granted some effort in granting the U.S. authorities of the necessary export
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5. Decision of SC: (The SC only provided the requisites of express trust. Since warranty was not a
major topic in this case I got this from the Notes part of the decision) Where the complaint is one for DAMAGES arising from a BREACH of a written contract and NOT a suit to enforce warranties against hidden effects, the governing law is Art. 1715 of the Civil Code. Art. 1715. The contract shall execute the work in such a manner that it has the qualities agreed upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use. Should the work be not of such quality, the employer may require that the contractor remove the defect or execute another work. If the contract fails or refuses to comply with this obligation, the employer may have the defect removed or another work executed, at the contractor's cost. BUT, since Art. 1715 of the Civil Code does not provide a specific prescriptive period, the general law on prescription, Art. 1144 will apply. Art. 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.
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Difference between Conditional Contract of Sale and Contract to Sell Conditional Contract of Sale If the suspensive condition is fulfilled, the
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Sales (Uribe)
Reciprocal Obligations (Art. 1191 of CC) Basis of Right to Rescind Contract by INNOCENT party: Art. 1191 of CC Obligation of one (debtor or creditor) is dependent upon the obligation of the other These are performed SIMULTANEOUSLY Effect of Rescinding the Contract: The exercise of power to rescind extinguishes the obligatory relation as if it had NEVER created, the extinction having a retroactive effect. Invalidating and unmaking the juridical tie which would leave things in their status BEFORE the celebration of contract Where a contract is rescinded it is the duty of the Court to require both parties to surrender that which they may have respectively received and to place each other as far as practicable in his original situation. The exercise of the power to rescind extinguished the obligatory relation as if it had never been created, the extinction having a retroactive effect Requisites in order to have Express Warranty in a Contract of Sale: 1. Express warranty must be an affirmation of fact/promise by the seller relating to the subject matter of the sale 2. The natural tendency of such affirmation or promise is to INDUCE the buyer to purchase the thing 3. The buyer purchases the thing relying on such affirmation or promise. Law: 1. Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between: a) Fulfillment of obligation + damages OR b) Rescission of the obligation + damages He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124) 88. Philippine Manufacturing Corporation v. Go Jocco January 21, 1926 - Ostrad Facts: 1. PhilMan entered a contract of sale with Go Jocco 2. PhilMan bought Oil from Go Jocco with the intention of shipping it to New York 3. 1st testing: Mason the Chemist and Secretary of Phiman went to Go Joccos Store and took samples of the oil for testing NO COMPLAINTS 4. 2nd testing: before the payment of the oil Mason again went to the store and tested the oil (as agreed) NO COMPLAINTS 5. The Oil Tanks were then paid for and delivered 6. In the ship another test was conducted IT WAS CONTAMINATED 7. When it reached New York it was rejected
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92. Mendoza-vs-Caparros (~Diana) Jan 30, 1954; P:Pablo * Sellers can be impleaded as a defendant when buyer files in a case for re-conveyance of the title of property the former bought Facts: (Please note that the original decision was in Spanish) 1. On June 1921, Agapito Ferreras sold his 2 parcels of lot to Paulino Pelejo 2. On February 1932, Paulino sold these lots to the Mendoza spouses. **take not of the condition: "to defend against claims now and forever just for the person filing." 3. The Mendoza spouses died 4. On August 1933, Mendozas children extra-judicially partitioned their properties. Pedro Mendoza got the subject lots. 5. On March 1935, Agapito obtained the Original TCTS of the lands (or at least retained title to it) 6. On April 1951, Agapitos heirs extra-judicially partitioned the same lots. The lots went to Justina Caparros and her 2 daughters, Socorro and Policornia. 7. Pedro Mendoza filed a complaint for the conveyance of the title to his name. He argued that that lost were recorded incorrectly. Here, Pedro wished that: "in case cancellation or re-conveyance is impossible, the Defendants (including Paulino) or any of them should be required to pay him the purchase price paid by his predecessor-in-interest." The court ruled in his favor and ordered the transfer of title in his name. The Caparros were ordered to pay for the expenses of the suit, but Paulino was not ordered to do so 8. Paulino later filed a motion for reconsideration. He wants the court to grant P500.00 in his favor (the fee he had to pay for his lawyer in said case) He based his motion on Art. 2208 of the Civil Code "In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: . . . (4) In case of a clearly unfounded civil action or proceeding against the plaintiff;" Issue: Did Pedro have a valid legal basis to implead Paulino, who sold the lots to the formers parents, when he sued the Caparroses for conveyance of title? Held: Yes. The law and the stipulation between the parties show that sellers have a responsibility (for reparation) to their buyers in case of eviction. Hence, the case was clearly NOT an unfounded civil action against Paulino. Decision: -Judgment AffirmedRuling: Pedro is justified for impleading Paulino in the case as a co-defendant of the Caparroses. 1) Sellers have the responsibility to their buyers in case of eviction: By Express Stipulation of the Parties Condition: "to defend against claims now and forever just for the person filing." By Express Provision of the Law (even if theres no condition) Art. 1548, New Civil Code Application to the Case Paulino, as the seller, guarantees to the buyer that he will be responsible, even in the ff cases: a. in case of eviction, or
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