1. Fule v.

CA
Facts:
Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr. Cruz in exchange
for P40,000 and a diamond earring owned by the latter. A deed of absolute sale was prepared by Atty.
Belarmino, and on the same day Fule went to the bank with Dichoso and Mendoza, and Dr. Cruz arrived
shortly thereafter. Dr. Cruz got the earrings from her safety deposit box and handed it to Fule who, when
asked if those were alright, nodded and took the earrings. Two hours after, Fule complained that the
earrings were fake. He files a complaint to declare the sale null and void on the ground of fraud and
deceit.
Issue:
Whether the sale should be nullified on the ground of fraud
Held:
A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which
is the object of the contract and upon the price. Being consensual, a contract of sale has the force of law
between the contracting parties and they are expected to abide in good faith by their respective
contractual commitments. It is evident from the facts of the case that there was a meeting of the minds
between petitioner and Dr. Cruz. As such, they are bound by the contract unless there are reasons or
circumstances that warrant its nullification.

Contracts that are voidable or annullable, even though there may have been no damage to the
contracting parties are: (1) those where one of the parties is incapable of giving consent to a contract; and
(2) those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. The
records, however, are bare of any evidence manifesting that private respondents employed such insidious
words or machinations to entice petitioner into entering the contract of barter. It was in fact petitioner who
resorted to machinations to convince Dr. Cruz to exchange her jewelry for the Tanay property.
Furthermore, petitioner was afforded the reasonable opportunity required in Article 1584 of the
Civil Code within which to examine the jewelry as he in fact accepted them when asked by Dr. Cruz if he
was satisfied with the same. By taking the jewelry outside the bank, petitioner executed an act which was
more consistent with his exercise of ownership over it. This gains credence when it is borne in mind that
he himself had earlier delivered the Tanay property to Dr. Cruz by affixing his signature to the contract of
sale. That after two hours he later claimed that the jewelry was not the one he intended in exchange for
his Tanay property, could not sever the juridical tie that now bound him and Dr. Cruz. The nature and
value of the thing he had taken preclude its return after that supervening period within which anything
could have happened, not excluding the alteration of the jewelry or its being switched with an inferior kind.
Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to
Dr. Cruz and petitioner, respectively, upon the actual and constructive delivery thereof. Said contract of
sale being absolute in nature, title passed to the vendee upon delivery of the thing sold since there was
no stipulation in the contract that title to the property sold has been reserved in the seller until full payment
of the price or that the vendor has the right to unilaterally resolve the contract the moment the buyer fails
to pay within a fixed period.

While it is true that the amount of P40,000.00 forming part of the consideration was still payable to
petitioner, its nonpayment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer
of ownership and possession of the things exchanged considering the fact that their contract is silent as to
when it becomes due and demandable.

2.

Gaite v. Fonacier

Facts:
Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the exploration and
development of mining claims. Gaite executed a deed of assignment in favor of a single proprietorship
owned by him. For some reasons, Fonacier revoked the agency, which was acceded to by Gaite, subject
to certain conditions, one of which being the transfer of ores extracted from the mineral claims for
P75,000, of which P10,000 has already been paid upon signing of the agreement and the balance to be
paid from the first letter of credit for the first local sale of the iron ores. To secure payment, Fonacier
delivered a surety agreement with Larap Mines and some of its stockholders, and another one with Far
Eastern Insurance. When the second surety agreement expired with no sale being made on the ores,
Gaite demanded the P65,000 balance. Defendants contended that the payment was subject to the
condition that the ores will be sold.
Issue:
(1) Whether the sale is conditional or one with a period
(2) Whether there were insufficient tons of ores
Held:
(1) The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the
payment of the balance of P65,000.00, but was only a suspensive period or term. What characterizes a
conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its
demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive
condition does not take place, the parties would stand as if the conditional obligation had never existed.
A contract of sale is normally commutative and onerous: not only does each one of the parties assume a
correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay
the price),but each party anticipates performance by the other from the very start. While in a sale the
obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands
that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or
expectations,emptio spei), it is not in the usual course of business to do so; hence, the contingent
character of the obligation must clearly appear. Nothing is found in the record to evidence that Gaite
desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that
Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a
bond a to guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines &
Smelting Co., and the company's stockholders, but also on one by a surety company; and the fact that
appellants did put up such bonds indicates that they admitted the definite existence of their obligation to
pay the balance of P65,000.00.

The appellant have forfeited the right court below that the appellants have forfeited the right to compel
Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of
their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent
guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially
reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite
considered essential and upon which he had insisted when he executed the deed of sale of the ore to
Fonacier.
(2) The sale between the parties is a sale of a specific mass or iron ore because no provision was made
in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor
was the price of P75,000,00 agreed upon by the parties based upon any such measurement.(see Art.
1480, second par., New Civil Code). The subject matter of the sale is, therefore, a determinate object, the
mass, and not the actual number of units or tons contained therein, so that all that was required of the
seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that
the quantity delivered is less than the amount estimated by them.

3. Polytechnic University of the Philippines vs Court of Appeals

Facts:
Petitioner National Development Corp., a government owned and controlled corporation, had in its
disposal a 10 hectares property. Sometime in May 1965, private respondent Firestone Corporation
manifested its desire to lease a portion of it for ceramic manufacturing business. On August 24, 1965,
both parties entered into a contract of lease for a term of 10 years renewable for another 10 years. Prior
to the expiration of the aforementioned contract, Firestone wrote NDC requesting for an extension of their
lease agreement. It was renewed with an express grant to Firestone of the first option to purchase the
leased premise in the event that it was decided "to dispose and sell the properties including the lot..."
Cognizant of the impending expiration of the leased agreement, Firestone informed NDC through letters
and calls that it was renewing its lease. No answer was given. Firestone's predicament worsened when it
learned of NDC's supposed plans to dispose the subject property in favor of petitioner Polytechnic
University of the Philippines. PUP referred to Memorandum Order No. 214 issued by then President
Aquino ordering the transfer of the whole NDC compound to the National Government. The order of
conveyance would automatically result in the cancellation of NDC's total obligation in favor of the National
Government.
Firestone instituted an action for specific performance to compel NDC to sell the leased property in its
favor.
Issue:
1. Whether or not there is a valid sale between NDC and PUP.

Ruling
A contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself to
transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore
a sum certain in money or its equivalent. It is therefore a general requisite for the existence of a valid and
enforceable contract of sale that it be mutually obligatory, i.e., there should be a concurrence of the
promise of the vendor to sell a determinate thing and the promise of the vendee to receive and pay for the
property so delivered and transferred. The Civil Code provision is, in effect, a "catch-all" provision which
effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a
consideration.
All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the
"disposition" and "transfer" of the property from NDC to PUP - consent of the parties, determinate subject
matter, and consideration therefor.
Consent to the sale is obvious from the prefatory clauses of Memorandum Order No. 214 which explicitly
states the acquiescence of the parties to the sale of the property. Furthermore, the cancellation of NDC's
liabilities in favor of the National Government constituted the "consideration" for the sale.

4. Carrascoso, Jr. v. Court of Appeals and Lauro Leviste

Contract to Sell vs Contract of Sale

Facts:
In March 1972, El Dorado Plantation Inc, through board member Lauro Leviste,
executed a Deed of Sale with Carrascoso. The subject of the sale was a 1825 hectare of land. It
was agreed that Carrascoso is to pay P1.8M. P290K would be paid by Carrascoso to PNB to
settle the mortgage placed on the said land. P210k would be paid directly to Leviste. The
balance of P1.3M plus 10% interest would be paid over the next 3 years at P519k every 25th of
March. Leviste also assured that there were no tenants hence the land does not fall under the
Land Reform Code. Leviste allowed Carrascoso to mortgage the land which the latter did.

Carrascoso obtained a total of P1.07M as mortgage and he used the same to pay the
down payment agreed upon in the contract. Carrascoso defaulted from his obligation which was
supposed to be settled on March 25, 1975. Leviste then sent him letters to make good his end
of the contract otherwise he will be litigated.

In 1977, Carrascoso executed a Buy and Sell Contract with PLDT. The subject of the
sale was the same land sold to Carrascoso by Leviste but it was only the 1000 sq m portion
thereof. The land is to be sold at P3M. Part of the terms and conditions agreed upon was that
Carrascoso is to remove all tenants from the land within one year. He is also given a 6 month
extension in case hell need one. Thereafter, PLDT will notify Carrascoso if whether or not PLDt
will finalize the sale. PLDT gained possession of the land.

El Dorado filed a civil case against Carrascoso. PLDT intervened averring that it was a
buyer in good faith. The RTC ruled in favor of Carrascoso. CA reversed the RTC ruling.
Issue:
What is the nature of each contract?
Held:
The contract executed between El Dorado and Carrascoso was a contract of sale. It was
perfected by their meeting of the minds and was consummated by the delivery of the property to
Carrascoso. However, El Dorado has the right to rescind the contract by reason of Carrascosos
failure to perform his obligation.

A contract of sale is a reciprocal obligation.The seller obligates itself to transfer the

ownership of and deliver a determinate thing, and the buyer obligates itself to pay therefor a
price certain in money or its equivalent. The non-payment of the price by the buyer is a
resolutory condition which extinguishes the transaction that for a time existed, and discharges
the obligations created thereunder. Such failure to pay the price in the manner prescribed by the
contract of sale entitles the unpaid seller to sue for collection or to rescind the contract.

The contract between Carrascoso and PLDT is a contract to sell. This is evidenced by
the terms and conditions that they have agreed upon that after fulfillment of Carrascosos
obligation PLDT has to notify Carrascoso of its decision whether or not to finalize the sale.

Carrascoso also averred that there was a breach on El Dorados part when it comes to
warranty. Carrascoso claimed that there were tenants on the land and he spent about P2.9M
relocating them. The SC ruled that Carrascoso merely had a bare claim without additional proof
to support it. Requisites of Express warranty in a Contract of Sale
the express warranty must be an affirmation of fact or any promise by the seller relating to
the subject matter of the sale;

 the natural tendency of such affirmation or promise is to induce the buyer to purchase the
thing; and
the buyer purchases the thing relying on such affirmation or promise thereon

5. Vda. De Ape vs. CA

Elements of a Contract of Sale Consent Vitiated

FACTS:
Cleopas Ape died in 1950 and left a parcel of land (Lot 2319) to his 11 children. The
children never formally divided the property amongst themselves except throughhantalhantal whereby each just occupied a certain portion and developed each.

On the other hand, the spouses Lumayno were interested in the land so they started
buying the portion of land that each of the heirs occupied. On 11 Apr 1973, one ofthe
children, Fortunato, entered into a contract of sale with Lumayno. In exchange of his lot,
Lumayno agreed to pay P5,000.00. She paid in advance P30.00. Fortunato was given a receipt
prepared by Lumaynos son in law (Andres Flores). Flores also acted as witness. Lumayno also
executed sales transactions with Fortunatos siblings separately.

In 1973, Lumayno compelled Fortunato to make the the delivery to her of the registrable
deed of sale over Fortunatos portion of the Lot No. 2319. Fortunatoassailed the validity of the
contract of sale. He also invoked his right to redeem (as a co-owner) the portions of land sold by
his siblings to Lumayno. Fortunato died during the pendency of the case.

ISSUE:
Whether or not there was a valid contract of sale?

HELD:
No. Fortunato was a no read no write person. It was incumbent for the the other party
to prove that details of the contract was fully explained to Fortunatobefore Fortunato signed the
receipt.

A contract of sale is a consensual contract, thus, it is perfected by mere consent of the

parties. It is born from the moment there is a meeting of minds upon the thing which is the
object of the sale and upon the price. Upon its perfection, the parties may reciprocally demand
performance, that is, the vendee may compel the transfer of the ownership and to deliver the
object of the sale while the vendor may demand the vendee to pay the thing sold. For there to
be a perfected contract of sale, however, the following elements must be present: consent,
object, and price in money or its equivalent.

For consent to be valid, it must meet the following requisites:

it should be intelligent, or with an exact notion of the matter to which it refers;
it should be free and
it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence,
intimidation or undue influence; spontaneity by fraud.
Lumayno claimed that she explained fully the receipt to Fortunato, but Flores testimony belies
it. Flores said there was another witness but the other was a maid who also lacked education.
Further, Flores himself was not aware that the receipt was to transfer the ownership
of Fortunatos land to her mom-in-law. It merely occurred to him to explain the details of the
receipt but he never did.
6. Clarin vs Rulona
Civil Law Law on Sales Perfected Contract of Sale
Facts:
Olegario Clarin was the owner of a 10-hectare land in Carmen, Bohol. The same was
said to be his share from the other co-owners. In 1959, he executed a Contract of Sale with
Alberto Rulona. It was agreed that the purchase price would be P2,500.00. Downpayment
would be P1,000.00 and the remaining balance would be paid monthly at P100.00 per month.
Rulona paid the downpayment as well as the 1stinstallment but then later on Clarin returned the
P1,100.00 against Rulonas will. Clarin said he could not convince the other co-owners about
the selling of his share. Clarin also said there was no perfected sale between him and Rulona
as he said that the sale was subject to the condition that the other co-owners should give their
consent to the sale.

ISSUE:
Whether or not there was a perfected contract of sale.

HELD:

Yes there is. During trial there were 3 documents shown. Exhibit A shows that upon
payment of P800.00 by Rulona, a survey of the land was authorized. Exhibit B shows that
P200.00, part of the down payment was paid to Clarin and that the 1stinstallment of P100.00
was also made. Though these exhibits are not the Contract of Sale, they show that there was a
contract of sale between Rulona and Clarin.

Construing Exhibits A and B together, it can be seen that the Clarin agreed to sell and
Rulona agreed to buy a definite object, that is, 10 hectares of land which is part and parcel of
Lot 20 PLD No. 4, owned in common by the Clarin and his sisters although the boundaries of
the 10 hectares would be delineated at a later date. The parties also agreed on a definite price
which is P2,500.00. Exhibit B further shows that Clarin has received from Rulona as initial
payment, the amount of P800.00. Hence, it cannot be denied that there was a perfected
contract of sale between the parties and that such contract was already partially executed when
the petitioner received the initial payment of P800.00. The latters acceptance of the payment
clearly showed his consent to the contract thereby precluding him from rejecting its binding
effect.
Further, Clarins letter to Rulona marked Exhibit C stated;
My dear Mr. Rulona:
Replying to your letter of recent date, I deeply regret to inform you that my daughter, Alice, who
is now in Manila, could not be convinced by me to sell the land in question, that is, the ten (10)
hectares of land referred to in our tentative agreement. It is for this reason that I hereby
authorize the bearer, Mr. Paciano Parmisano, to return to you in person the sum of One
Thousand and One Hundred (P1,100.00) Pesos which you have paid in advance for the
proposed sale of the land in question.

The reasons given by the Clarin cannot operate against the validity of the contract in question. A
contract is valid even though one of the parties entered into it against his better judgment.
7. Cebu vs Heirs of Morales
Facts:
Province of Cebu leased in favor of Rufina Morales a 210-square meter lot. Petitioner
donated the lot occupied by Morales to the City of Cebu. The city, then, sold the subject lot at
public auction. The highest bidder for the said lot was Hever Bascon but Morales was allowed to
match the highest bid since she had a preferential right to the lot as actual occupant thereof.
Morales thus paid the required deposit and partial payment for the lot. Later, the subject lot was
returned to petitioner and registered in its name. Morales died and apart from the deposit and
down payment, she was not able to make any other payments on the balance of the purchase
price for the lot. Now the surviving heirs of Morales are asking for the formal conveyance of

subject lot, in accordance with the award earlier made by the City of Cebu. They also consigned
with the court the amount representing the balance of the purchase price which petitioner
allegedly refused to accept.
Issue:
Can respondents still tender payment of the full purchase price? Yes
Held:
Article 1592 of the Civil Code pertinently provides that
In the sale of immovable property, even though it may have been stipulated that upon failure to
pay the price at the time agreed upon the rescission of the contract shall of right take place, the
vendee may pay, even after the expiration of the period,
as long as no demand for rescission of the contract has been made upon him either judicially or
by notarial act
. After the demand, the court may not grant him a new term. Thus, respondents could still tender
payment of the full purchase price as no demand for rescission had been made upon them,
either judicially or through notarial act. While it is true that it took a long time for respondents to
bring suit for specific performance and consign the balance of the purchase price, it is equally
true that petitioner or its predecessor did not take any action to have the contract of sale
rescinded. Article 1592 allows the vendee to pay as long as no demand for rescission has been
made.

The consignation of the balance of the purchase price before the trial court thus operated as full
payment, which resulted in the extinguishment of respondents obligation under the contract of
sale.
8. Jocelyn B. Doles vs. Ma. Aura Tina Angeles
Facts:
Petitioner executed a Deed of Absolute Sale ceding a parcel of land in favor of
respondent to satisfy the alleged indebtedness of the former in the amount of P405,430.00.
Since the said land was mortgaged to the National Home Mortgage Finance Corporation, they
further agreed that respondent assume the remaining balance of the loan. Learning that the
petitioner still has arrearages, respondent demanded that the arrearages be paid first. Petitioner
did not heed, thus a case was filed by the respondent.
In answer, the petitioner alleged that sale was void for lack of consideration and that she
was not indebted to the respondent as she only referred her friends to respondent whom she
knew to be engaged in the business of lending money in exchange for personal checks through

her capitalist Arsenio Pua. Further petitioner contended that since the respondent is also an
agent, she does not have the capacity to sue her.
It is an admitted fact by both petitioner and defendant, based on their testimonies, that
respondent knew that the money will be used by the friends of the petitioner; that the
respondent was merely representing Arsenio Pua; and that before the supposed friends of the
petitioner defaulted in payment, each issued their personal checks in the name of Arsenio Pua
for the payment of their debt.

Issue:
Whether or not petitioner and respondent were acting on their personal capacity or as
mere agents.

Ruling:
The question whether an agency has been created is ordinarily a question which may be
established in the same was as any other fact, either by direct or circumstantial evidence.
Agency may be implied from the words and conduct of the parties and the circumstances of the
particular case. Though the fact or extent of authority of the agents may not, as a general rule,
be established from the declarations of the agents alone, if one frofessed to act as agent for
another, she may be stopped to deny her agency both as against the asserted principal and the
third persons interested in the transaction in which he or she is engaged.

In this case, petitioner knew that the financier of the respondent is Pua, and respondent knew
that the borrowers are friends of petitioner. It is sufficient that petitioner disclosed to respondent
that the former was acting in behalf of her principals, her friends. For an agency to arise, it is not
necessary that the principal personally encounter the third person with whom the agent
interacts.

Here, both petitioner and respondent have undeniably disclosed to each other that they are
representing someone else and so both of them are estopped to deny the same.

That both parties acted as mere agents is shown by the undisputed fact that the friends of the
petitioner issued checks in payment of the loan in the name of Arsenio Pua.

9. San Miguel vs. Huang

Nature of the Case:

A petition for review for a decision of the Court of Appeals which reversed the decision of
the RTC dismissing the complaint brought by the Huangs against San Miguel Properties for
enforcement of a contract of sale.

Facts:
San Miguel Properties offered two parcels of land for sale and the offer was made to an
agent of the respondents. An earnest-deposit of P1 million was offered by the respondents and
was accepted by the petitioners authorized officer subject to certain terms.
Petitioner, through its executive officer, wrote the respondents lawyer that because ethe
parties failed to agree on the terms and conditions of the sale despite the extension granted by
the petitioner, the latter was returning the earnest-deposit.
The respondents demanded execution of a deed of sale covering the properties and
attempted to return the earnest-deposit but petitioner refused on the ground that the option to
purchase had already expired.
A complaint for specific performance was filed against the petitioner and the latter filed a
motion to dismiss the complaint because the alleged exclusive option of the respondents
lacked a consideration separate and distinct from the purchase price and was thus
unenforceable; the complaint did not allege a cause of action because there was no meeting of
the mind between the parties and therefore the contact of sale was not perfected.
The trial court granted the petitioners motion and dismissed the action. The respondents
filed a motion for reconsideration but were denied by the trial court. The respondents elevated
the matter to the Court of Appeals and the latter reversed the decision of the trial court and held
that a valid contract of sale had been complied with.
Petitioner filed a motion for reconsideration but was denied.

Issue:
WON there was a perfected contract of sale between the parties
Ruling:
The decision of the appellate court was reversed and the respondents complaint was
dismissed.
Ratio Decidendi:

It is not the giving of earnest money , but the proof of the concurrence of all the essential
elements of the contract of sale which establishes the existence of a perfected sale.
The P1 million earnest-deposit could not have been given as earnest money because
at the time when petitioner accepted the terms of respondents offer, their contract had not yet
been perfected. This is evident from the following conditions attached by respondents to their
letter.
The first condition for an option period of 30 days sufficiently shows that a sale was
never perfected. As petitioner correctly points out, acceptance of this condition did not give rise
to a perfected sale but merely to an option or an accepted unilateral promise on the part of
respondents to buy the subject properties within 30 days from the date of acceptance of the
offer. Such option giving respondents the exclusive right to buy the properties within the period
agreed upon is separate and distinct from the contract of sale which the parties may enter. All
that respondents had was just the option to buy the properties which privilege was not, however,
exercised by them because there was a failure to agree on the terms of payment. No contract of
sale may thus be enforced by respondents.
Even the option secured by respondents from petitioner was fatally defective. Under the
second paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing
for a price certain is binding upon the promisor only if the promise is supported by a distinct
consideration. Consideration in an option contract may be anything of value, unlike in sale
where it must be the price certain in money or its equivalent. There is no showing here of any
consideration for the option. Lacking any proof of such consideration, the option is
unenforceable.
Equally compelling as proof of the absence of a perfected sale is the second condition
that, during the option period, the parties would negotiate the terms and conditions of the
purchase. The stages of a contract of sale are as follows: (1) negotiation, covering the period
from the time the prospective contracting parties indicate interest in the contract to the time the
contract is perfected; (2) perfection, which takes place upon the concurrence of the essential
elements of the sale which are the meeting of the minds of the parties as to the object of the
contract and upon the price; and (3) consummation, which begins when the parties perform their
respective undertakings under the contract of sale, culminating in the extinguishment thereof.
In the present case, the parties never got past the negotiation stage. The alleged
indubitable evidence of a perfected sale cited by the appellate court was nothing more than
offers and counter-offers which did not amount to any final arrangement containing the essential
elements of a contract of sale. While the parties already agreed on the real properties which
were the objects of the sale and on the purchase price, the fact remains that they failed to arrive
at mutually acceptable terms of payment, despite the 45-day extension given by petitioner.

10. Regina Dizon et al v. CA

FACTS:
Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with
petitioners involving a 1,755.80 square meter parcel of land situated at corner MacArthur
Highway and South H Street, Diliman, Quezon City. The term of the lease was for 1 year
commencing from May 16,1974 up to May 15, 1975. During this period, Overland Express Lines
was granted an option to purchase for the amount of P3,000.00 per
square meter. Thereafter, the lease shall be on a per month basis with a monthly rental of
P3,000.00.
For failure of Overland Express Lines to pay the increased rental of P8,000.00 per
month effective June 1976, petitioners filed an action for ejectment against it. The lower court
rendered judgment ordering Overland Express Lines to vacate the leased premises and to pay
the sum of P624,000.00representing rentals in arrears and/or as damages in the form of
reasonable compensation for the use and occupation of the premises during the period of illegal
detainer from June 1976 to November1982 at the monthly rental of P8,000.00, less payments
made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint,
until fully paid, the sum of P8,000.00 a month starting December 1982, until Overland Express
Lines fully vacates the premises, and to payP20,000.00 as and by way of attorneys fees.
ISSUE:
WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, asr
epresentative (agent) of petitioners in consideration of the option
HELD:
No. CA opined that the payment by Overland Express Lines of P300,000.00 as partial
payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for
which an official receipt was issued, was the operative act that gave rise to a perfected contract
of sale, and that for failure of petitioners to deny receipt thereof, Overland Express Lines can
therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to
receive the money in their behalf.CA went further by stating that in fact, what was entered into
was a conditional contract of sale wherein ownership over the leased property shall not pass
to the Overland Express Lines until it has fully paid the purchase price. Since Overland Express
Lines did not consign to the court the balance of the purchase price and continued to occupy
the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals
until full payment of the purchase price.

In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00
to petitioners(thru Alice A. Dizon) on the erroneous presumption that the said amount tendered
would constitute a perfected contract of sale pursuant to the contract of lease with option to buy.
There was no valid consent by the petitioners (as co-owners of the leased premises) on the

supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and Overland
Express Lines. The basis for agency is representation and a person dealing with an agent is put
upon inquiry and must discover upon his peril the authority of the agent. As provided in Article
1868 of the New Civil Code, there was no showing that petitioners consented to the act of Alice
A. Dizon nor authorized her to act on their behalf with regard to her transaction
with private respondent. The most prudent thing private respondent should have done was to
ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private
respondent cannot seek relief on the basis of a supposed agency.

Every person dealing with an agent is put upon inquiry

and must discover upon his peril the authority of the agent. If he does not make such inquiry, he
is chargeable with knowledge of the agents authority, and his ignorance of that authority will not
be any excuse. Persons dealing with an assumed agency, whether the assumed agency be a
general or special one, are bound at their peril, if they would hold the principal, to ascertain not
only the fact of the agency but also the nature and extent of the authority, and in case either is
controverted, the burden of proof is upon them to establish it.

11. ALCANTARA-DAUS v. SPOUSES DE LEON

FACTS:
Spouses De Leon are the owners of a parcel of land situated in the Municipality of San
Manuel, Pangasinan with an area of Four Thousand Two Hundred Twelve square meters more
or less. Respondent Hermoso De Leon inherited the said lot from his father Marcelino De Leon
by virtue of a Deed of Extra-Judicial Partition. Said lot is covered by Original Certificate of Title
No. 22134 of the Land Records of Pangasinan.
Sometime 1960s, Spouses De Leon engaged the services of the late Atty. Florencio
Juan to take care of the documents of their properties. They were asked to sign voluminous
documents by the latter. After the death of Atty. Juan, some documents surfaced and most
revealed that their properties had been conveyed by sale or quitclaim to Hermosos brothers
and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances were
ever intended by them. Furthermore, respondent found out that his signature in the Deed of
Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon was forged. They
discovered that the land in question was sold by Rodolfo de Leon to Aurora Alcantara
Spouses De Leon demanded the annulment of the document and re-conveyance but
defendants refused. Petitioner, Aurora Alcantara-Daus averred that she bought the land in
question in good faith and for value on December 1975 and that she has been in continuous,
public, peaceful, open possession over the same and has been appropriating the produce
thereof without objection from anyone.

The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein petitioner. It
ruled that respondents claim was barred by laches, because more than 18 years had passed
since the land was sold. It further ruled that since it was a notarial document, the Deed of
Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.

ISSUES:
Whether or not the Deed of Absolute executed by Rodolfo De Leon over the land in question
in favor of petitioner was perfected and binding upon the parties therein?
Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim,
executed by respondent Hermoso de Leon, Perlita de Leon and Carlota de Leon in favor of
Rodolfo de Leon was overcome by more than a preponderance of evidence of respondents?
HELD:
First Issue:
NO. It is during the delivery that the law requires the seller to have the right to transfer
ownership of the thing sold. In general, a perfected contract of sale cannot be challenged on the
ground of the sellers non-ownership of the thing sold at the time of the perfection of the
contract.
Further, even after the contract of sale has been perfected between the parties, its
consummation by delivery is yet another matter. It is through tradition or delivery that the buyer
acquires the real right of ownership over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the owner of
the land he delivered to petitioner. Thus, the consummation of the contract and the consequent
transfer of ownership would depend on whether he subsequently acquired ownership of the land
in accordance with Article 1434 of the Civil Code. Therefore, we need to resolve the issue of the
authenticity and the due execution of the Extrajudicial Partition and Quitclaim in his favor.

Second Issue:
NO. As a general rule, the due execution and authenticity of a document must be
reasonably established before it may be admitted in evidence. Notarial documents, however,
may be presented in evidence without further proof of their authenticity, since the certificate of
acknowledgment is prima facie evidence of the execution of the instrument or document
involved. To contradict facts in a notarial document and the presumption of regularity in its favor,
the evidence must be clear, convincing and more than merely preponderant.

The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition and
Quitclaim was forged. However, this factual finding is in conflict with that of the RTC. While
normally this Court does not review factual issues, this rule does not apply when there is a
conflict between the holdings of the CA and those of the trial court, as in the present case.
After poring over the records, the SC finds no reason to reverse the factual finding of the
appellate court. A comparison of the genuine signatures of Hermoso De Leon with his
purported signature on the Deed of Extrajudicial Partition with Quitclaim will readily reveal that
the latter is a forgery. As aptly held by the CA, such variance cannot be attributed to the age or
the mechanical acts of the person signing.

12. Equatorial Realty Development vs Mayfair Theater

Facts:
Carmelo owned a parcel of land in Manila. He leased it to Mayfair for a term of 20 years, for use as a
motion picture theater. Two years later, Carmelo leased to Mayfair another portion of his property,
also for 20 years.
Both contracts have the stipulation: That if the lessor should desire to sell the leased premises,
the lessee shall be given 30 days exclusive option to purchase the same. In the event, however,
that the leased premises is sold to someone other than the lessee, the lessor is bound and
obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the
purchaser shall recognize this lease and be bound by all the terms and conditions thereof.
Mr. Pascal (of Carmelo) informed Yang (Mayfairs president) that he wanted to sell the entire property,
and that a certain Araneta was offering to buy the whole property for $1.2M. Pascal asked Yang if he
was willing to buy the property for P6-7M.
Mayfair informed Carmelo that they wanted to purchase the entire property and reminded them of the
stipulation in the lease, but Carmelo ignored the letter.
Carmelo then sold its entire property to Equatorial for P11.3M.
Mayfair filed an action for specific performance and annulment of the leased premises to Equatorial.
Carmelo and Equatorial claimed: that it had informed Mayfair of its desire but that Mayfair had
said it was only interested in buying the area under lease, which was impossible since the
property was not a condominium, and that the option to purchase invoked by Mayfair is null and
void for lack of consideration.
RTC: Dismissed Mayfairs complaint. It reasoned that the option in the contract of lease was not
supported by a separate consideration, and without a consideration, the option is not binding on
Carmelo to sell the property to Mayfair. Cited Art 1479. Mayfair cannot compel Carmelo to comply
with the promise unless Mayfair establishes the existence of a distinct consideration. Also, Art
1354 (Although the cause is not stated in the contract, it is presumed that it exists and is lawful
unless the debtor proves the contrary), and consideration cannot be presumed, because when it
comes to an option it is governed particularly by Art 1479, whereby the promissee has the burden
of proving the existence of consideration. (This was the doctrine in the case of Sanchez.)
CA: The stipulation is a right of first refusal and not an option contract, which was the real
intention of the parties. The stipulation is certain as to the object (the sale of the leased premises)
but the price for which the object is ot be sold is not stated, so it isnt an option contract. Also said
that the right of first refusal was limited to the leased promises and not the entire property itself.
Issue:
Is the stipulation a right of first refusal or option contract?

Held:
Right of first refusal.
The deed of option or the option clause in a contract, in order to be valid and enforceable, must,
among other things, indicate the definite price at which the person granting the option is willing to sell.
Cited case of Ang Yu Asuncion: An unconditional mutual promise to buy and sell, as long as the
object is made determinate and the price is fixed, can be obligatory on the parties. An accepted unlitateral
promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable
consideration distinct and separate from the price, is what may properly be termed a perfect contract of
option, and this contract is legally binding.
The provision is a right of first refusal, and as such, the requirement of a separate consideration
has no applicability. An option is a contract granting a privilege to buy or sell within an agreed time and at
a determined price, and it is a separate and distinct contract from that which the parties may enter into,
and it must be supported by consideration. However, here the right of first refusal is an integral part of the
contracts of lease.
There was a consideration for that right of refusal. The consideration is built into the reciprocal
obligations of the parties. The consideration for the lease includes the consideration for the right of first
refusal. Mayfair is in effect stating that it consents to lease the premises and to pay the price agreed
upon, provided that the lessor should give it the right of first refusal.
Carmelo actually acknowledged that Mayfair had the right of first refusal, because it informed
Mayfair that it intended to sell the properties. The contract between Carmelo and Equatorial was entered
into in bad faith. Since Mayfair has a right of first refusal, it can exercise the right only if the fraudulent
sale is first set aside or rescinded.

Deed of sale between Carmelo and Equatorial is rescinded. Carmelo is to return the purchase price to
Equatorial, and Equatorial is ordered to return ownership of the land to Carmelo.
Carmelo is ordered to allow Mayfair to buy the lots for P11.3M.

13. SPOUSES SERRANO, ET. AL. v. CAGUIAT

FACTS:
Spouses Serrano agreed to sell in favor of respondent Caguiat a parcel of land at
1,500.00 per square meter. Caguiat partially paid petitioners 100, 000.00 as evidenced by a
receipt issued by petitioners indicating therein respondents promise to pay the remaining
balance. Respondent, after making known his readiness to pay the balance, requested from
petitioners the preparation of the necessary Deed of Sale. When petitioners cancelled the
transaction and intended to return to Caguiat his partial payment, respondent filed a complaint
for specific performance and damages. The trial court relying on Article 1482 of the Civil Code

ruled that the payment of 100, 000.00 being an earnest money signified the perfection of the
contract of sale. The Court of Appeals denied petitioners motion for reconsideration in
affirmation of the lower courts decision.
ISSUE:
Whether or not the partial payment constitutes an earnest money as manifested in
Article 1482 of the Civil Code
HELD:
No. Article 1482 applies only to earnest money given in a contract of sale. It was
apparent that the earnest money in the case at bar was given in lieu of a contract to sell. Unlike
in a contract of sale, the ownership of the parcel of land was retained by the Spouses Serrano
and shall only be passed to Caguiat upon full payment of the purchase price as evidenced by
the receipt. Relatively, no Deed of Sale has been executed as proof of the intention of the
parties to immediately transfer the ownership of the parcel of land. Spouses Serrano also
retained ownership of the certificate of title of the lot, thereby indicating no actual or constructive
delivery of the ownership of the property. Finally, should the transaction pushed through,
Caguiats payment of the remaining balance would have been a suspensive condition since the
transfer of ownership was subordinated to the happening of a future and uncertain event.

14. Ang Yu Asuncion vs Court of Appeals

Ang Yu Asuncion and Keh Tiong leased, for more than 50 years and religiously paying the rent,
residential and commercial spaces in Binondo, owned by the Cu Unjiengs and Jose Tan. On several
occasions, the lessors informed Ang Yu that they are offering to sell the premises and are giving them
priority.
Ang Yu asked the lessors to put their offer in writing, which they said they would but they never
actually put it in writing. Ang Yu filed the case, claiming that the Cu Unjiengs failed to specify the
terms and conditions of the offer to sell and that information was received that they were about to sell
the property, so Ang Yu wants to compel the lessors to sell the property to them.
** RTC: The Cu Unjiengs offer to sell was never accepted by Ang Yu, for the reason that the
parties didnt agree upon the terms, but nevertheless, should the Cu Unjiengs offer their property
for sale at a price of P11M or lower, Ang Yu will have the right of first refusal.
CA: Affirmed with modification. There will still be a right of first refusal whether the price is lower
or above P11M.
The Cu Unjieng spouses executed a deed of sale, selling the property to Buen Realty, for P15M.
Buen Realty filed a case asking Ang Yu to vacate, but Ang Yu claimed that Buen bought the land
while it was under lis pendens.
RTC: Buen Realtys title is set aside as having been executed in bad faith. Cu Unjieng spouses
ordered to sell the property to Ang Yu for P15M.
CA: Reversed. Order to sell is without effect.
Issue:

Are the Cu Unjiengs bound to sell the property to Ang Yu and co.?
Held:
NO. The stages of a contract of sale are negotiation, perfection, and consummation. Until the
contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical
relation.
A negotiation is formally initiated by an offer. An imperfect promise (politacion) is merely an offer.
Thus, at any time prior to the perfection of the contract, either negotiating party may stop the negotiation,
and the offer may be withdrawn.
If a period is given to the offeree within which to accept the offer, the following rules
govern:
1. If the period is not founded upon or supported by a consideration, the offeror is still free and
has the right to withdraw the offer before its acceptance.
2. If the period has a separate consideration, a contract of option is deemed perfected and it
would be a breach of that contract to withdraw the offer during the agreed period. However,
that option is an independent contract by itself, and it is to be distinguished from the projected
main agreement (subject matter of the option) which is obviously yet to be concluded. If the
optioner-offeror withdraws the offer before its acceptance (exercise of the option) by the
optionee-offeree, the latter may not sue for specific performance on the proposed contract
(object of the option) since it has failed to reach its own stage of perfection. The optionerofferor, however, renders himself liable for damages for breach of the option.
Here, the first decisions (**) only granted a right of first refusal. In a right of first refusal, while the
object might be made determinate, the exercise of the right, however, would be dependent not only on the
grantors eventual intention to enter into a binding juridical relation with another, but also on terms,
including the price, that obviously are yet to be firmed up. Prior thereto, it can at best be so described as
merely belonging to a class of preparatory juridical relations governed not by contracts. The breach of
right of first refusal cannot justify corresponding an issuance of a writ of execution under a judgment, nor
would it sanction an action for specific performance without negating the indispensable element of
consensuality.
If Ang Yu is aggrieved by the failure to honor the right of first refusal, the remedy is not a writ of
execution on the judgment, but an action for damages.

(2)Ang Yu Asuncion vs. CA (1994)

FACTS:
Ang Yu Asuncion, et al., (plaintiffs) are tenants/lessees of residential and commercial spaces owned
by the Cu Unjieng.
The Cu Unjiengs informed the plaintiffs that they are offering to sell the said premises and are giving
them priority.
During the negotiations, the Cu Unjiengs offered a price of P6M, but the plaintiffs counter offered
P5M.
Plaintiffs then asked the Cu Unjiengs to put their offer in writing, which the latter agreed.

 Plaintiffs then asked that the terms and conditions of the offer to sell be specified, but the Cu Unjiengs
did not reply.
Thus, plaintiffs filed a complaint to compel the Cu Unjiengs to sell the property to them.
RTC: offer to sell was never accepted, bec. parties never agreed on the terms and conditions of the
proposed sale. However, the court held that the plaintiffs had a right of first refusal in case the
property was to be sold at a price lower than P11M.
CA: affirmed the decision of RTC, with modications on that, due to the economy today, right of first
refusal should also be made available to plaintiffs if the price is in excess of P11M.
Later, the Cu Unjiengs executed a Deed of Sale in favor of Buen Realty and Development
Corporation (defendant), transferring the property to the latter for P15M.
Plaintiffs filed a Motion of Execution praying that the CA ruling be implemented.
RTC: granted the said motion, ordered defendant to execute the Deed of Sale in favor of plaintiffs, in
recognition of their right of first refusal.
CA: set aside the said order of the lower court.
ISSUE: I. W/N plaintiffs right of first refusal be recognized and the property should be sold in their favor.

HELD: I. NO
1. Until the contract is perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation.
2. A contract is perfected when a person (seller), obligates himself, for a price certain, to deliver
and to transfer ownership of a thing or right to another (buyer).
3. In the law on sales, the so-called right of first refusal is an innovative juridical relation.
4. It cannot be deemed a perfected contract of sale under the NCC.
5. An option or an offer would require, among other things, a clear certainty on both the object
and the cause or consideration of the envisioned contract.
6. In a right of first refusal, while the object might be made determinate, the exercise of right,
however, would be dependent not only on the grantors eventual intention to enter into a
binding juridical relation with another but also on terms, including the price, that obviously are
yet to be later firmed up.
7. It can be best so described as merely not by contracts buy by, among other laws of general
application, the pertinent scattered provisions of the NCC on human conduct.
8. The remedy of plaintiffs is not a writ of execution on the judgment, since there is none to
execute, but an action for damages in a proper forum for the purpose.