A contract is a meeting of the minds between two persons, whereby one is bound to give something or to render some service to the other.
A valid contract requires the concurrence of the following essential elements: (1) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (2) determinate subject matter; and (3) price certain in money or its equivalent.
In the present case, there is no question that the subject matter of the sale is the 364-square meter Davao lot owned by the Spouses Tongson and the selling price agreed upon by the parties is P3,000,000. Thus, there is no dispute as regards the presence of the two requisites for a valid sales contract, namely, (1) a determinate subject matter and (2) a price certain in money.
The problem lies with the existence of the remaining element, which is consent of the contracting parties, specifically, the consent of the Spouses Tongson to sell the property to Napala. Claiming that their consent was vitiated, the Spouses Tongson point out that Napalas fraudulent representations of sufficient funds to pay for the property induced them into signing the contract of sale. Such fraud, according to the Spouses Tongson, renders the contract of sale void.
FACTS:
Danilo Napala purchase a 364 sq.m. parcel of land from Sps. Tongson in Davao City for ₱3M. As payment, Napala paid ₱200,000 in cash to the Sps.Tongson and issued a postdated PNB check in the amount of ₱2.8M for the remaining balance of the subject property.
Whether the Contract of Sale can be annulled based on the fraud employed by Napala.
Respondents failure to render payment clearly showed he committed a substantial breach of his reciprocal obligation, entitling the Sps. Tiongson to the rescission of the sales contract.
The problem lies with the existence of the remaining element, which is consent of the contracting parties, specifically, the consent of the Spouses Tongson to sell the property to Napala. Claiming that their consent was vitiated, the Spouses Tongson point out that Napalas fraudulent representations of sufficient funds to pay for the property induced them into signing the contract of sale. Such fraud, according to the Spouses Tongson, renders the contract of sale void.
FACTS:
Danilo Napala purchase a 364 sq.m. parcel of land from Sps. Tongson in Davao City for ₱3M. As payment, Napala paid ₱200,000 in cash to the Sps.Tongson and issued a postdated PNB check in the amount of ₱2.8M for the remaining balance of the subject property.
However, when presented for payment, the PNB check was dishonored for the reason “Drawn Against Insufficient Funds.” Despite the repeated demands to Napala to either pay the full value of the check or to return the subject parcel of land, the latter failed to do either. Left with no other recourse, the Spouses Tongson filed for Annulment of Contract and Damages to RTC.
RTC and CA ruled in favor of Sps. Tiongson finding that Napala employed fraud when he misrepresented that the PNB check he issued would be properly funded at its maturity.
ISSUE:
Whether the Contract of Sale can be annulled based on the fraud employed by Napala.
HELD:
There is fraud in general sense, which involves a false representation of a fact, that the post-dated
check issued would be sufficiently funded at its maturity. The fraud surfaced not during the negotiation and perfection stages of the sale but rather it existed in the consummation stage of the sale when the parties are in the process of performing their respective obligations under the perfected contract of sale.
Respondents failure to render payment clearly showed he committed a substantial breach of his reciprocal obligation, entitling the Sps. Tiongson to the rescission of the sales contract.
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