HAHN v.

CA
G.R. No. 113074; January 22, 1997
Ponente: J. Mendoza
FACTS:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style "HahnManila". On the other hand, private respondent (BMW) is a nonresident foreign corporation
existing under the laws of the former Federal Republic of Germany, with principal office at
Munich, Germany.
On March 7, 1967, petitioner executed in favor of private respondent a "Deed of Assignment with
Special Power of Attorney. Per the agreement, the parties "continue[d] business relations as has
been usual in the past without a formal contract."
But on February 16, 1993, in a meeting with a BMW representative and the president of
Columbia Motors Corporation (CMC), Jose Alvarez, petitioner was informed that BMW was
arranging to grant the exclusive dealership of BMW cars and products to CMC, which had
expressed interest in acquiring the same.
On February 24, 1993, petitioner received confirmation of the information from BMW which, in a
letter, expressed dissatisfaction with various aspects of petitioner's business, mentioning among
other things, decline in sales, deteriorating services, and inadequate showroom and warehouse
facilities, and petitioner's alleged failure to comply with the standards for an exclusive BMW
dealer.
Nonetheless, BMW expressed willingness to continue business relations with the petitioner on the
basis of a "standard BMW importer" contract, otherwise, it said, if this was not acceptable to
petitioner, BMW would have no alternative but to terminate petitioner's exclusive dealership
effective June 30, 1993.
Because of Hahn's insistence on the former business relations, BMW withdrew on March 26,
1993 its offer of a "standard importer contract" and terminated the exclusive dealer relationship
effective June 30, 1993.
On April 29, 1993, BMW proposed that Hahn and CMC jointly import and distribute BMW cars and
parts.
Hahn found the proposal unacceptable. On May 14, 1993, he filed a complaint for specific
performance and damages against BMW to compel it to continue the exclusive dealership.
ISSUE:
Whether petitioner Alfred Hahn is the agent or distributor in the Philippines of private
respondent BMW
HELD:
Alfred Hahn is an agent of BMW.
The Supreme Court held that agency is shown when Hahn claimed he took orders for BMW cars
and transmits them to BMW. Then BMW fixes the down payment and pricing charges and will
notify Hahn of the scheduled production month for the orders, and reconfirm the orders by
signing and returning to Hahn the acceptance sheets.
The payment is made by the buyer directly to BMW. Title to cars purchased passed directly to the
buyer and Hahn never paid for the purchase price of BMW cars sold in the Philippines. Hahn was
credited with a commission equal to 14% of the purchase price upon the invoicing of a vehicle
order by BMW. Upon confirmation in writing that the vehicles had been registered in the
Philippines and serviced by him, Hahn received an additional 3% of the full purchase price. Hahn

performed after-sale services, including, warranty services. for which he received reimbursement
from BMW. All orders were on invoices and forms of BMW.
Moreover, the Court distinguished an agent from a broker. The court ruled that an agent receives
a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay
merely by bringing the buyer and the seller together, even if no sale is eventually made.
LEGARDA VS. SALDAA
G.R. No. L-26578, January 28, 1974
FACTS:
Saldaa had entered into two written contracts with Legarda, a subdivision owner, whereby
Legarda agreed to sell to him two of his lots for 1,500 per lot, payable over a span of 10 years on
120 monthly installments with 10% interest per annum. Saldaa paid for eight consecutive
years but did not make any further payments due to Legardas failure to make the necessary
improvement on the said lot which was promised by their representative, the said Mr. Cenon.
Saldaa already paid a total of Php3,582.06. The statement of account shows that Saldaa paid
Php1,682.28 of the principal and Php1,889.78 for the interest. It did not distinguish which of the
two said lots was paid. Petitioner, then, rescinded the contract based on the stipulation of the
contract that payments made by respondent shall be considered as rentals and any
improvements made shall be forfeited in favor of the petitioner. The lower court ruled sustaining
petitioners cancellation of contract. So respondent appealed and judgment was reversed in
favor of the respondent ordering petitioners to deliver to plaintiff one of the two lots at the choice
of the defendant and execute the deed of conveyance. Hence this petition.
ISSUE:
Was the cancellation of the sale of contract valid?
RULING:
No, even though it was stipulated that failure to complete the payment would result to the
cancellation of the contract, it was still not valid. As clearly shown in the statement of account,
Saldaa was able to pay one of the two said lots. Under Article 1234 of the New Civil Code, if
the obligation has been substantially performed in good faith, the obligor may recover as though
there had been a strict and complete fulfillment, less damages suffered by the obligee. Hence,
under the authority of Article 1234 of the New Civil Code, Saladaa is entitled to one of the two
lots of his choice and the interest paid shall be forfeited in favor of the petitioners.
PNB vs. PINEDA
G.R. No. L-46658 May 13, 1991
Facts:
The Arroyo Spouses obtained a loan of P580K from PNB to purchase 60% of the subscribed
capital stock, and thereby acquire the controlling interest of Tayabas Cement Company, Inc.
(TCC). As security for said loan, the spouses executed a real estate mortgage over a parcel of
land known as the La Vista property.
TCC filed with petitioner bank an application and agreement for the establishment of an 8 year
deferred letter of credit (L/C) for $7M in favor of Toyo Menka Kaisha to cover the importation of a
cement plant machinery and equipment. Upon approval of the application and opening of an L/C
by PNB in favor of Toyo Menka Kaisha for the account of TCC, the Arroyo spouses executed a
surety agreement. The imported cement plant machinery and equipment arrived from Japan and
were released to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha made
the corresponding drawings against the L/C as scheduled.

TCC, however, failed to remit and/or pay the corresponding amount covered by the drawings.
Thus, pursuant to the trust receipt agreement, PNB notified TCC of its intention to repossess the
imported machinery and equipment for failure of TCC to settle its obligations under the L/C. PNB
foreclosed the real estate mortgages executed by the spouses Arroyo in TCCs favor. PNB
contends that the sale of La Vista was made to satisfy not only the amount owed by the spouses
on their personal loan but also the amount of expenses owed by said spouses as sureties of TCC.
The Arroyos oppose the foreclosure, contending primarily that repossession of the imported
machinery and equipment by PNB amounted to dacion en pago that extinguished their obligation
as surety to TCC.
Issue:
WON the repossession of the machinery was tantamount to a dacion en pago that absolved
Arroyo spouses as surety? NO.
Held:
There was no dacion en pago. Dation in payment takes place when property is alienated to the
creditor in satisfaction of a debt in money and the same is governed by sales. Dation in payment
is the delivery and transmission of ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of the obligation. The repossession of the machinery and
equipment in question was merely to secure the payment of TCCs loan obligation and not for the
purpose of transferring ownership thereof to PNB in satisfaction of said loan. Thus, no dacion en
pago was ever accomplished.
PNB took possession of the imported cement plant machinery and equipment pursuant to the
trust receipt agreement executed by and between PNB and TCC giving the former the unqualified
right to the possession and disposal of all property shipped under the Letter of Credit until such
time as all the liabilities and obligations under said letter had been discharged. PNBs possession
of the subject machinery and equipment being precisely as a form of security for the advances
given to TCC under the Letter of Credit, said possession by itself cannot be considered payment
of the loan secured thereby. Payment would legally result only after PNB had foreclosed on said
securities, sold the same and applied the proceeds thereof to TCCs loan obligation. Mere
possession does not amount to foreclosure for foreclosure denotes the procedure adopted by the
mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself.
The transfer of ownership to extinguish a pre-existing obligation is the essence in dation in
payment, therefore it is not a consensual contract, but a real contract and novates the original
debt relationship into a consummated sale.
PNB VS PINEDA
197 SCRA 1
FACTS:
In 1963, the Arroyo Spouses, obtained a loan of P580,000.00 from petitioner bank to
purchase 60% of the subscribed capital stock and thereby acquire the controlling interest of
private respondent Tayabas Cement Company, Inc. (TCC). As security for said loan, the spouses
Arroyo executed a real estate mortgage over a parcel of land known as the La Vista property.
TCC filed with petitioner bank an application and agreement for the establishment of an
eight (8) year deferred letter of credit (L/C) for $7,000,000.00 in favor of Toyo Menka Kaisha, Ltd.
of Tokyo, Japan, to cover the importation of a cement plant machinery and equipment. Upon
approval of said application, the Arroyo spouses executed a Surety Agreement dated August 5,
1964 3 and Covenant dated August 6, 1964 to secure the loan.

The imported cement plant machinery and equipment arrived from Japan and were
released to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha, Ltd. made
the corresponding drawings against the L/C as scheduled, but TCC failed to remit and/or pay the
corresponding amount covered by the drawings. Thus, pursuant to the agreement, PNB
repossessed the imported machinery and equipment for failure of TCC to settle its obligations
under the L/C.
On July 18, 1975, PNB filed a petition for extra-judicial foreclosure of the real estate
mortgage over the La Vista property as well as the mortgaged properties located at Isabela,
Negros Occidental and covered by OCT No. RT 1615.
At the auction sale, PNB was the highest bidder with a bid price of P1,000,001.00. However,
when said property was about to be awarded to PNB, the representative of the mortgagorspouses objected and demanded from the PNB the difference between the bid price of
P1,000,001.00 and the indebtedness of P499,060.25 of the Arroyo spouses on their personal
account. It was the contention of the spouses Arroyo's representative that the foreclosure
proceedings referred only to the personal account of the mortgagor spouses without reference to
the account of TCC.
ISSUE:
Was TCC's liability extinguished by the repossession of PNB of the imported cement plant
machinery and equipment?
HELD:
No. PNB's possession of the subject machinery and equipment being precisely as a form
of security for the advances given to TCC under the Letter of Credit, said possession by itself
cannot be considered payment of the secured loan. Payment would legally result only after PNB
had foreclosed on said securities, sold the same, and applied the proceeds thereof to TCC's loan
obligation. Mere possession does not amount to foreclosure for foreclosure denotes the
procedure adopted by the mortgagee to terminate the rights of the mortgagor on the property
and includes the sale itself.
Neither can said repossession amount to dacion en pago. Dation in payment takes place when
property is alienated to the creditor in satisfaction of a debt in money and the same is governed
by sales. Dation in payment is the delivery and transmission of ownership of a thing by the
debtor to the creditor as an accepted equivalent of the performance of the obligation. As
aforesaid, the repossession of the machinery and equipment in question was merely to secure
the payment of TCC's loan obligation and not for the purpose of transferring ownership thereof to
PNB in satisfaction of said loan. Thus, no dacion en pago was ever accomplished.

REPUBLIC v. PHILIPPINE RESOURCES DEVELOPMENT CORPORATION

G.R. No. L-10141 January 31, 1958
Padilla, J.
Doctrine:
Article 1458 provides that the purchaser may pay a price certain in money or its equivalent, which means that
the price need not be in money.
Facts:
The Bureau of Prisons instituted a complaint against Macario Apostol for the latters failure to pay the unpaid
balance for logs purchased. Apostol, who was then the president of the respondent corporation, delivered
goods belonging to the corporation and without the knowledge or consent of the stockholders thereof, to the
Bureau of Prisons in an attempt to settle his personal debts with the latter entity. The corporation demanded
the Bureau of Prisons for the return of the goods. Upon the refusal of the Bureau, the corporation filed a motion
to intervene.
Issue:
Whether or not price is limited only to be paid in money

Held:
No. Article 1458 provides that the purchaser may pay a price certain in money or its equivalent, which means
that they meant of the price need not be in money. In this case, the materials have been assessed and
evaluated and their price equivalent in terms of money have been determined and that said materials for
whatever price they have been assigned were considered as tokens of payment.
REPUBLIC v PHIL. RESOURCES DEV. CORP.
FACTS: The Republic brought an action against Apostol for the collection of sums owing to it for his purchase
of Palawan Almaciga and other logs. His total debt amounted to some P34,000. PRDC intervened claiming that
Apostol, as President of the company, without prior authority, took goods (steel sheets, pipes, bars, etc) from
PRDC warehouse and appropriated them to settle his personal debts in favor of the government. The Republic
opposed the intervention of PRDC, arguing that price is always paid in money and that payment in kind is no
payment at all; hence, money and not the goods of PRDC are under dispute.
ISSUE: W/N payment in kind is equivalent to price paid in money
HELD: YES. Price may be paid in money or ITS EQUIVALENTin this case, the goods. Payment need not be
in the form of money. The prices for the goods have, in fact, been assessed and determined. PRDC thus has a
substantial interest in the case and must be permitted to interveneits goods paid out without authority being
under dispute in this case

Buenaventura vs. CA
Tuesday, July 1, 2014
Facts:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs
Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita,
Felicitas, Fe, and Gavino, all surnamed JOAQUIN. (Note: So there are two sets of children here.)
Sought to be declared null and void ab initio are certain deeds of sale of real property executed
by Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the
corresponding certificates of title issued in their names.
The plaintiffs in this case sought for the declaration of nullity of the six deeds of sale and
certificates of title in favor of the defendants.
They alleged that certain deed of sale were null and void ab initio because they are simulated.
They said that: a. Firstly, there was no actual valid consideration for the deeds of sale xxx over
the properties in litis; b. Secondly, assuming that there was consideration in the sums reflected
in the questioned deeds, the properties are more than three-fold times more valuable than the
measly sums appearing therein; c. Thirdly, the deeds of sale do not reflect and express the true
intent of the parties (vendors and vendees); and d. Fourthly, the purported sale of the properties
in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of the
compulsory heirs (plaintiffs herein) of their legitime.
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them
as well as the requisite standing and interest to assail their titles over the properties in litis; (2)
that the sales were with sufficient considerations and made by defendants parents voluntarily, in
good faith, and with full knowledge of the consequences of their deeds of sale; and (3) that the
certificates of title were issued with sufficient factual and legal basis.
RTC ruled in favor of the defendants (respondents in this case) and dismissed the complaint.
Upon appeal, the CA upheld RTCs ruling.
Issues:
1. Whether the Deeds of Sale are void for lack of consideration. NO
2. Whether the Deeds of Sale are void for gross inadequacy of price. NO
Held:
1st issue: There was a consideration.
If there is a meeting of the minds of the parties as to the price, the contract of sale is valid,
despite the manner of payment, or even the breach of that manner of payment. If the real price
is not stated in the contract, then the contract of sale is valid but subject to reformation. If there

is no meeting of the minds of the parties as to the price, because the price stipulated in the
contract is simulated, then the contract is void. Article 1471 of the Civil Code states that if the
price in a contract of sale is simulated, the sale is void.
It is not the act of payment of price that determines the validity of a contract of sale.
Payment of the price has nothing to do with the perfection of the contract. Payment of the price
goes into the performance of the contract. Failure to pay the consideration is different from lack
of consideration. The former results in a right to demand the fulfillment or cancellation of the
obligation under an existing valid contract while the latter prevents the existence of a valid
contract.
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated.
To prove simulation, petitioners presented Emma Joaquin Valdozs testimony stating that their
father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed
of sale without need for her payment of the purchase price. The trial court did not find the
allegation of absolute simulation of price credible.
Petitioners failure to prove absolute simulation of price is magnified by their lack of knowledge
of their respondent siblings financial capacity to buy the questioned lots. On the other hand, the
Deeds of Sale which petitioners presented as evidence plainly showed the cost of each lot sold.
Not only did respondents minds meet as to the purchase price, but the real price was also stated
in the Deeds of Sale. As of the filing of the complaint, respondent siblings have also fully paid
the price to their respondent father.
2nd issue: The general rule is that inadequacy of consideration shall not invalidate a contract.
Articles 1355 of the Civil Code states:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a
contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied)
Article 1470 of the Civil Code further provides:
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a
defect in the consent, or that the parties really intended a donation or some other act or
contract. (Emphasis supplied)
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil
Code which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement
that the price be equal to the exact value of the subject matter of sale. All the respondents
believed that they received the commutative value of what they gave.
Ruling: In the instant case, the trial court found that the lots were sold for a valid consideration,
and that the defendant children actually paid the purchase price stipulated in their respective
Deeds of Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding
that is now conclusive upon us. WHEREFORE, we AFFIRM the decision of the Court of Appeals in
toto.

BUENAVENTURA v CA
FACTS: Joaquin spouses sold 6 subdivision lots to some of their 9 children evidenced by
corresponding Deeds of Sale. The other children, interested in protecting their inheritance,
sought to have the deeds of sale declared null and void for prejudicing their legitimes, lack of
consideration, and gross inadequacy of price.
ISSUE: W/N the contract of sale is valid
HELD: YES. At the onset, their rights to the legitimes are merely inchoate and vest only upon the
death of their parents; thus they have no legal interest thereof. Payment of the price has nothing

to do with the perfection of the contract of sale; it was perfected by mere consent. Failure to pay
consideration cannot be equated with lack of consideration, which prevents the existence of a
valid contract. The former only results in the right to demand payment or rescission. There was
already a meeting of the minds as to the price which was reflected in the Deed of Saleand that
was sufficient. In fact, evidence suggests that the purchase process have indeed been paid. The
sales are thus valid. Gross inadequacy of price does NOT affect the validity of sale, unless it
indicates either (1) a vice of consent or (2) that the parties intended a donation or some other
contract. No evidence suggests such circumstances. The price need not be the exact value of the
property. In fact, all the parties to the sale believed that they received the commutative value of
what they paid for.