Sps.
Bernal continued paying the installments even if the vehicle remained
SALES (Digest)
1.
2. UNION MOTOR CORPORATION vs. COURT OF APPEALS, JARDINE-MANILA
FINANCE, SPOUSES BERNAL
FACTS
On Sep. 14, 1979, respondent Sps. Bernal purchased from Union Motor
Corporation (UMC) 1 Cimarron Jeepney for P37,758 to be paid in
installments. For this, Sps. Bernal executed a promissory note and a deed of
chattel mortgage in favor of UMC. Meanwhile, UMC entered into a contract
of assignment of the promissory note and chattel mortgage with respondent
Jardine-Manila Finance (JMF). Through Sosmeña, an agent of UMC, the Sps.
Bernal would pay the amount of the promissory note to JMF being the
assignee of UMC.
To effectuate the sale as well as the assignment, Sps. Bernal were required to
sign a notice of assignment, a deed of assignment, a sales invoice, a
registration certificate, an affidavit, and a disclosure statement. The ps.
Bernal were obliged to sign for the reason that, according to Sosmeña, it was
requirement of UMC and JMCF for the Sps. Bernal to accomplish all
documents in order to have their application approved. Upon the Sps.
Bernal’s tender of downpayment of P10,037, and UMC’s acceptance of the
same, UMC approved the sale. Although the Sps. Bernal have not yet
physically possessed the vehicle, Sosmeña required them to sign the receipt
as a condition for the delivery of the vehicle.
undelivered inasmuch as JMF promised to deliver. Sps. Bernal paid a total of
P7,507 before they discontinued paying on account of non-delivery of the
vehicle. According to Sps. Bernal, the reason why the vehicle was not
delivered was due to the fact that Sosmeña allegedly took the vehicle in his
personal capacity.
On Sep. 11, 1981, JMF filed a complaint for a sum of money against Sps.
Bernal before the CFI Manila. The case was later transferred to RTC Makati,
the complaint was amended to include UMC as alternative defendant, the
reason that if Sps. Bernal’s reason for non-payment was UMC’s failure to
deliver, UMC should pay. Sps. Bernal filed an answer with cross-claim against
UMC and counterclaim against JMF.
RTC: (1) JNF to pay Sps. Bernal P7,507 plus legal interest
(2) UMC to pay Sps. Bernal the downpayment of P10,037 plus interest
(3) UMC to pay JNF P23,238 plus interest and attorney’s fees
(4) UMC to pay Sps. Bernal 20,000 as moral damages, 10,000 as
atty.’s fee
CA: Affirmed the RTC’s decision
ISSUE WON there has been a delivery, physical or constructive, of the
vehicle – NO
Sps. Bernal did not come into possession of the vehicle that was supposed to
be delivered to them by UMC. The registration certificate, receipt and sales
invoice that they signed were explained during the hearing. According to
testimonial evidence, the said documents were signed as a part of the
processing and for the approval of their application to buy the vehicle.
Without such signed documents, no sale, much less delivery, of the vehicle
could be made. The documents were not therefore an acknowledgement of
the physical acquisition of the vehicle but merely a requirement of UMC so
that the vehicle would be delivered to them.
The SC has held that the issuance of a sales invoice does not prove transfer of
ownership to the buyer; an invoice is nothing more than a detailed statement
of the nature, quantity, and cost of the thing sold and has been considered
not a bill of sale.
The registration certificate signed does not conclusively prove that
constructive delivery was made or that ownership has been transferred to
Sps.Bernal. Like the receipt and the invoice, the signing of the registration
certificate was qualified by the fact that it was a requirement for the sale to
be approved. In all forms of delivery, it is necessary that the act of delivery,
actual or constructive, should be couple with the intention of the delivering
the thing. Without such intention, there is no delivery. The critical factor in
the different modes of effecting delivery which gives legal effect to the act, is
the actual intention of the vendor to deliver, and its acceptance by the
vendee.
In Addision vs. Felix, the SC held that in order that symbolic delivery may
produce the effect of tradition, it is necessary that the vendor shall have had
control over the thing sold, that, at the moment of the sale, its material
delivery could have been made. It is not enough to confer ownership and the
right of possession. The thing sold must be placed in the vendee’s control.
When there is no impediment to prevent the thing sold passing into the
tenancy of the purchaser by the sole will of the vendor, symbolic delivery
through the execution of a public instrument is sufficient. But if, despite the
execution of instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it himself or through another
in his name, because such tenancy and enjoyment are opposed by the
interposition of another will, then fiction yields to reality – the delivery has
not been effected.
Here, the act of signing the registration certificate was not intended to
transfer ownership of the vehicle as UMC still needed the same for the
approval of the financing contract with JMF.
Inasmuch as there was neither physical nor constructive delivery of a
determinate thing, the thing sold remained at the seller’s risk. UMC should
therefore bear the loss of the vehicle after Sosmeña allegedly stole the same.
UMC’s reliance on the Chattel Mortgage Contract does not help its assertion
that ownership has been transferred since there was neither delivery nor
transfer of possession. Consequently, this contract has no legal effect
inasmuch as the Sps. Bernal are not the absolute owners thereof, ownership
of the mortgagor being an essential requirement of a valid mortgage
contract.
Lastly, Sps. Bernal presented sufficient evidence to prove that Sosmeña took
delivery and possession of the vehicle in his personal capacity as shown by a
document on which he personally acknowledged the receipt of the
registration certificate from JMF. Also, it was proven that Sps. Bernal went
several times to UMC to demand the vehicle.
DISPOSITIVE CA is AFFIRMED with MODIFICATION, moral damages is
deleted
3. Philippine Virginia Tobacco Administration v Judge Prudential. Sevilla filed an injunction for the release of funds with Prudential
in the sala of Judge Delos Santos. Judge Delos Santos issued the injunction
Delos Santos G.R. No. L-27829 August 19, 1988
order and in a subsequent petition, ordered the funds of the letter of credit
Doctrine: An irrevocable letter of credit cannot, during its lifetime, be
released to Sevilla.
cancelled or modified without the express permission of the beneficiary.
Issue: Whether or not Judge Sevilla acted with grave abuse of discretion in
Facts: Timoteo Sevilla, proprietor and General Manager of the Philippine
releasing the funds to the applicant of the letter of credit.
Associated Resources (PAR) was awarded in a public bidding the right to
import Virginia leaf tobacco. Subsequently, the Philippine Virginia Tobacco Held: Judge Delos Santos violated the irrevocability of the letter of credit
Administration (PVTA) and Sevilla entered into a contract for the importation issued by respondent Bank in favor of petitioner. An irrevocable letter of
of 85 million kilos of Virginia leaf tobacco and a counterpart exportation of credit cannot, during its lifetime, be cancelled or modified Without the
2.53 million kilos of tobacco and 5.1 million kilos of farmer’s and tobacco at express permission of the beneficiary. Consequently, if the finding the trial on
P3.00 a kilo. In accordance with their contract Sevilla purchased from PVZTA the merits is that respondent Sevilla has ailieged unpaid balance due the
and exported 2,101.470 kilos of tobacco, paying the PVTA the sum of petitioner, such unpaid obligation would be unsecured.
P2,482,938.50 and leaving a balance of P3,713,908.91. Before respondent
Sevilla could import the counterpart blending Virginia tobacco, amounting to 4. Sun Brothers vs. Velasco (54 O.G. 5143)
525,560 kilos, Republic Act No. 4155 was passed and took effect on June 20, 1
964, authorizing the PVTA to grant import privileges at the ratio of 4 to 1 Sun Brothers vs. Jose Velasco (54 OG 5143)
instead of 9 to 1 and to dispose of all its tobacco stock at the best price L-17085-R, January 13, 1958
available.
Angeles, J.:
Because of the prevailing export or world market price under which Sevilla
will be exporting at a loss, the agreement was further amended to require Facts:
Sevilla would open an irrevocable letter of credit with the Prudential Bank
Sun Brothers & company delivered to Lopez an Admiral refrigerator under a
and Trust Co. (Prudential) in favor of the PVTA to secure the payment of said
“Conditional Sale Agreement”. Out of the P1,700 purchase price, only P500
balance, drawable upon the release from the Bureau of Customs of the
imported Virginia blending tobacco. While Sevilla was trying to negotiate the was paid as downpayment.
reduction of the procurement cost of the 2,101.479 kilos of PVTA tobacco
already exported which attempt was denied by PVTA and also by the Office of
the President. PVTA attempted to collect from the letter of Credit with
Inter alia, they stipulated that Lopez shall not remove the refrigerator from
his address nor part possession therewith without the express written
consent of Sun brothers. In violation thereof, Sun Brothers may rescind the
sale, recover possession and the amounts paid shall be forfeited. The
refrigerator shall remain the absolute property of Sun Brothers until Lopez
has fully paid the purchase price.
Lopez sold the refrigerator to JV Trading (owned by Jose Velasco) without
knowledge of Sun brothers for P850, misrepresented himself as Jose Lim and
executed a document stating that he is the absolute owner. Thereafter,
Velasco displayed the refrigerator in his store abd Co Kang Chui bought it for
P985.
Issue:
Whether Co Kang Chiu, an innocent buyer from a store, has a better right as
owner than Sun Brothers, a conditional vendor
Held:
Co Kang Chiu has a better right than Sun Brothers.
Article 1505 of the Civil Code provides:
“Art. 1505. Subject to the provisions of this Title, where goods are sold by a
person who is not the owner thereof, and who does not sell them under
authority or with the consent of the owner, the buyer acquires no better title
to the goods than the seller had, unless the owner if the goods is by his
conduct precluded from denying the seller’s authority to sell.
“Nothing in this Title, however, shall affect:
(1) The provisions of any factors’ acts, recording laws, or any other provision
of law enabling the apparent owner of goods to dispose of them as if he
were the true owner thereof;
…
(3) Purchases made in a merchant’s store, or in fairs, or markets, …”
The lower court committed error when it applied the 1st paragraph of Article
1505. It is true that Francisco Lopez, the conditional vendee, never had any
title to the refrigerator in question, because the stipulation between him and
the conditional vendor, Sun Brothers, is that title shall vest in the vendee
upon payment in full of the purchase price, and Lopez has not fully paid such
price. When Lopez, who has not tile to the refrigerator, sold it to Jose
Velasco, the latter did not acquire any better right than what Lopez had ---
which is practically nothing. We do not agree with the court a quo that
Velasco was a purchaser in good faith and for value for the reason that Lopez,
being a private person who is not engaged in the business of selling
refrigerators, Velasco must be reasonably expected to have inquired from
Lopez whether or not the refrigerator he was selling has been paid in full. In
this, Velasco has been negligent.
Also, since Co Kang Chui purchased the refrigerator from JV Trading, a
merchant store and displayed thereat, the 3rd paragraph of Art. 1505 applies,
from which Co Kang Chui should be declared as having acquired a valid title to
the refrigerator, although his predecessors in interest did not have any right
of ownership over it. This is a case of imperfect or void title ripening into a
valid one, as a result of some intervening causes. The policy of the law which
we do not feel justified to deviate, has always been that where the rights and
interests of a vendor comes into clash with that of an innocent buyer for
value, the latter must be protected.
The rule embodied in Article 1505 (3) protecting innocent third parties who
have made purchases at merchants’ stores in good faith and for value
appears to us to be a wise and necessary rule not only to facilitate
commercial sales on movables but to give stability to business transactions.
This rule is necessary in a country such as ours where free enterprise prevails,
for buyers cannot be reasonably expected to look behind the title of every
article when he buys at a store. The doctrine of caveat emptor [the buyer
alone is responsible for checking the quality and suitability of goods before a
purchase is made] is now rarely applied, and if it is ever mentioned, it is more
of an exception rather than the general rule.
Upon the whole, we are persuaded to believe that Co Kang Chui who is now is
possession of the refrigerator should be adjudged the owner thereof, because
he bought it at a merchant’s store in good faith and for value.
5. AZNAR v. YAPDIANGCO- Stolen Goods
True owner has a better right than a buyer in good faith to possession of a
stolen good.
FACTS:
Teodoro Santos advertised the sale of his FORD FAIRLANE 500 in a
newspaper. On L. De Dios went to the house of Teodoro and talked to his son
Ireneo Santos and said that his uncle Vicente Marella is interested in buying
the said car.
The next day, Ireneo went to the house of Marella and they agreed to the
price of P14,700 on the understanding that it will be paid after the car has
been registered in the latter’s name.
A deed of sale was executed and the registration was changed to the name of
Marella. Ireneo went to Marella to get the payment and deliver the car who
informed him that he is P2,000 short of the money and that they need to go
to his sister to get it. Ireneo, together with De Dios and an unidentified man
went to a house.
Once inside, De Dios asked Ireneo to wait in the sale. After waiting in vain, he
went down and discovered that the car was gone.
Marella was able to sell the car to plaintiff-appellant Jose Aznar and while
attending to registration, the car was seized by Phil. Constabulary due to the
report of the incident.
ISSUE:
Between the two parties, who has the better right?
HELD:
Teodoro Santos has the better right. Marella did not have any title to the
property under litigation because the same was never delivered to him. He
may have the contract but he never acquired valid title. Although the keys to
the car may have been given to the unidentified companion, it may be done
only because that companion took them to the place where the sister of
Marella was supposed to live. The car was evidently stolen and that the buyer
did not acquire any valid title thereto.