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Mapalo v. Mapalo [G.R. No. L-21489 and L-21628. May 19, 1966.

] En Banc, Bengzon JP (J): 10 concur Facts: Spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners of a1,635 sq.ms. residential land in Manaoag, Pangasinan (OCT 46503). The spouses-owners, out of love andaffection for Maximo Mapalo, brother of Miguel who was about to get married, decided to donate the easternhalf of the land to him. OCT 46503 was delivered. As a result, however, they were deceived into signing, on15 October 1936, a deed of absolute sale over the entire land in his favor. Their signature thereto wereprocured by fraud, i.e. they were made to believe by Maximo Mapalo and the attorney who acted as notarypublic who translated the document, that the same was a deed of donation in Maximos favor covering (the eastern half) of their land. Although the document of sale stated a consideration of P500, the spouses didnot receive anything of value for the land. The attorneys misbehavior was the subject of an investigation butits result does not appear on record. Following the execution of the document the spouses immediately built afence of permanent structure in the middle of their land segregating the eastern portion from its westernportion. Said fence still exists. The spouses have always been in continued possession over the western half ofthe land up to the present. Unknown to them, Maximo Mapalo, on 15 March 1938, registered the deed of salein his favor and obtained in his name TCT 12829 over the entire land. 13 years later, on 20 October 1951, hesold for P2,500.00 said entire land in favor Evaristo, Petronila, Pacifico and Miguel Narciso. The sale to theNarcisos was in turn registered on 5 November 1951 and TCT 11350 was issued for the whole land in theirnames. The Narcisos took possession only of the eastern portion of the land in 1951, after the sale in theirfavor was made.On 7 February 1952 the Narcisos filed suit in the CFI Pangasinan (Civil Case 11991) to be declared owners of the entire land; for possession of its western portion; for damages; and for rentals. It was brought against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb who had a house on the westernpart of the land with the consent of the spouses Mapalo and Quiba. The Mapalo spouses filed their answerwith a counterclaim on 17 March 1952, seeking cancellation of the TCT of the Narcisos as to the western halfof the land, on the grounds that their signatures to the deed of sale of 1936 were procured by fraud and that the Narcisos were buyers in bad faith. They asked for reconveyance to them of the western portion of the land and issuance of a TCT in their names as to said portion. In addition, the Mapalo spouses filed on 16 December 1957 their own complaint in the CFI Pangasinan (Civil Case U-133) against the the Narcisos and Maximo Mapalo. They asked that the deeds of sale of 1936 and of 1951 over the land in question declared null and void as to the western half of said land. Judge Amado Santiago of the CFI Pangasinan located in the municipality of Urdaneta the two cases jointly. Said court rendered judgment on 18 January 1961 dismissing the complaint in Civil Case 11991, declaring the deed as that of donation only over the eastern half portion of the land, and as null and void with respect to the western half portion thereof, declaring TCT 12829 issued to Maximo Mapalo as regards the western portion of the land null and void and without legal force as well as TCT 11350 subsequently issued to the Narcisos, ordering the Mapalo

spouses and the Narcisos to have the land subdivided by a competent land surveyor, the expenses of which to be borne out by the parties pro-rata, ordering the Register of Deed to issue in lieu of TCT 11350 two new titles upon completion of the subdivision plan (one in favor of the Mapalo spouses for the western portion, and one for the Narcisos covering the eastern half), and ordering Maximo Mapalo and the Narcisos to pay the costs. The Narcisos appealed to the Court of Appeals. In its decision on 28 May 1963, the Court of Appeals reversed the Judgment of the CFI, solely on the ground that the consent of the Mapalo spouses to the deed of sale of1936 having been obtained by fraud, the same was voidable, not void ab initio, and, therefore, the action to annul the same, within 4 years from notice of the fraud, had long prescribed. It reckoned said notice of the fraud from the date of registration of the sale on 15 March 1938. The CFI and the CA are therefore unanimous hat the spouses Mapalo and Quiba were definitely the victims of fraud. It was only on prescription that they lost in the Court of Appeals. From said decision of the Court of Appeals, the Mapalo spouses appealed to the Court. SC: Ocejo, Perez & Co. vs. Flores, 40 Phil. 921, is squarely applicable herein. In that case we ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. the inexistence of a contract is permanent and incurable and cannot be the subject of prescription. This court, however, cannot also give weight and credit on this theory of the Narcisos on the following reasons: Firstly, it has been positively shown by the undisputed testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso stayed for some days on the western side (the portion in question) of the above-described land until their house was removed in 1940 by the spouses Mapalo and Quiba; secondly, Pacifica Narciso admitted in his testimony in chief that when they bought the property, Miguel Mapalo was still in the premises in question (western part) which he is occupying and his house is still standing thereon; and thirdly, said Pacifico Narciso when presented as a rebuttal and sub-rebuttal witness categorically declared that before buying the land in question he went to the house of Miguel Mapalo and Candida Quiba and asked them if they will permit their elder brother Maximo to sell the property HELD: The Supreme Court reversed and set aside the decision of the Court of Appeals, and rendered anotheraffirming in toto the judgment of the CFI, with attorneys fees on appeal in favor of the Mapalo Spouses in the amount of P1,000.00, plus the costs, both against Maximo Mapalo and the Narcisos.

Ong v. Ong [G.R. No. L-67888. October 8, 1985.] First Division, Relova (J): 5 concur, 1 concur in result Facts: On 25 February 1976, Imelda Ong for and in consideration of P1 and other valuable considerations,

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executed in favor of Sandra Maruzzo, then a minor, a Quitclaim Deed whereby she transferred, released, assigned and forever quitclaimed to Sandra Maruzzo, her heirs and assigns, all her rights, title, interest and participation in 1/2 undivided portion of a parcel of land (Lot 10-B of the subdivision plan (LRC) Psd- 157841, a portion of lot 10 Block 18 of PSD-13288 LCR (GLRC) Record 2029, situated in Makati, containing 125 square meters. On 19 November 1980, Imelda Ong revoked the aforesaid Deed of Quitclaimand, thereafter, on 20 January 1982 donated the whole property to her son, Rex Ong Jimenez. On 20 June 1983, Sandra Maruzzo, through her guardian ad litem Alfredo Ong, filed with the RTC Makati an action against Imelda Ong, for the recovery of ownership/possession and nullification of the Deed of Donation over the portion belonging to her and for accounting. Imelda Ong claimed that the Quitclaim Deed is null and void inasmuch as it is equivalent to a Deed of Donation, acceptance of which by the donee is necessary to give it validity. Further, it is averred that the donee, Sandra Maruzzo, being a minor, had no legal personality and therefore incapable of accepting the donation. Upon admission of the documents involved, the parties filed their responsive memoranda and submitted the case for decision. On 12 December 1983, the trial court rendered judgment in favor of Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and, hence, there was a valid conveyance in favor of the latter. Imelda Ong appealed to the Intermediate Appellate Court. On 20 June 1984, IAC promulgated its Decision affirming the appealed judgment and held that the Quitclaim Deed is a conveyance of property with a valid cause or consideration; that the consideration is P1 which is clearly stated in the deed itself; that the apparent inadequacy is of no moment since it is the usual practice in deeds of conveyance to place a nominal amount although there is a more valuable consideration given. Hence, the petition for review on certiorari SC: On 15 March 1985, Sandra Maruzzo, through her guardian ad litem Alfredo Ong, filed an Omnibus Motion informing this Court that she has reached the age of majority as evidenced by her Birth Certificate and she prays that she be substituted as private respondent in place of her guardian ad litem. On 15 April 1985, the Court issued a resolution granting the same. A careful perusal of the subject deed reveals that the conveyance of the one- half () undivided portion of the above-described property was for and in consideration of the One (P 1.00) Peso and the other valuable considerations (emphasis supplied) paid by private respondent Sandra Maruzzo through her representative, Alfredo Ong, to petitioner Imelda Ong. Stated differently, the cause or consideration is not the One (P1.00) Peso alone but also the other valuable considerations One of the disputable presumptions is that there is a sufficient cause of the contract (Section 5, (r), Rule 131, Rules of Court). It is a legal presumption of sufficient cause or consideration supporting a contract even if such cause is not stated therein The execution of a deed purporting to convey ownership of a realty is in itself prima facie evidence of the existence

of a valuable consideration, the party alleging lack of consideration has the burden of proving such allegation. that the donation to an incapacitated donee does not need the acceptance by the lawful representative if said donation does not contain any condition. In simple and pure donation, the formal acceptance is not important for the donor requires no right to be protected and the donee neither undertakes to do anything nor assumes any obligation. The Quitclaim now in question does not impose any condition. The Supreme Court affirmed the appealed decision of the IAC, with costs against Imelda Ong.

Bagnas v. CA [G.R. No. 38498. August 10, 1989.] First Division, Narvasa (J): 4 concurring Facts: Hilario Mateum of Kawit, Cavite, died on 11 March 1964, single, without ascendants or descendants, and survived only by collateral relatives, of whom Isaac, Encarnacion, Silvestre, Maximina, and Sixto Bagtas, and Agatona Encarnacion, his first cousins, were the nearest. Mateum left no will, no debts, and an estate consisting of 29 parcels of land in Kawit and Imus, Cavite, 10 of which are involved in the case. On 3 April 1964, Rosa L. Retonil, Teofilo Encarnacion and Jose B. Nambayan, themselves collateral relatives of Mateum though more remote in degree, registered with the Registry of Deeds for the Province of Cavite 2 deeds of sale purportedly executed by Mateum in their favor covering 10 parcels of land. Both deeds were in Tagalog, save for the English descriptions of the lands conveyed under one of them; and each recited the reconsideration of the sale to be P1, services rendered and to be rendered for Mateums benefit. One deed was dated 6 February 1963 and covered 5 parcels of land, and the other was dated 4 March 1963, covering 5 other parcels, both, therefore, antedating Mateums death by more than a year. It is asserted by the Bagtas, et.al., but denied by Retonil, et.al., that said sales notwithstanding, Mateum continued in the possession of the lands purportedly conveyed until his death, that he remained the declared owner thereof and that the tax payments thereon continued to be paid in his name. Whatever the truth, however, is not crucial; what is not disputed is that on the strength of the deeds of sale, Retonil, et.al. were able to secure title in their favor over 3 of the 10 parcels of land conveyed thereby. On 22 May 1964, Bagtas et.al. commenced suit against Retonil, et.al. in the CFI Cavite, seeking annulment of the deeds of sale as fictitious, fraudulent or falsified, or, alternatively, as donations void for want of acceptance embodied in a public instrument. Claiming ownership pro indiviso of the lands subject of the deeds by virtue of being intestate heirs of Hilario Mateum, Bagtas, et. al. prayed for recovery of ownership and possession of said lands, accounting of the fruits thereof and damages. Although the complaint originally sought recovery of all the 29 parcels of land left by Mateum, at the pre-trial the parties agreed that the controversy be limited to the 10 parcels subject of the questioned sales, and the Trial Court ordered the exclusion of the 19 other parcels from the action. Of the 10 parcels which remained in litigation, 9 were assessed for purposes of taxation at values aggregating P10,500.00. The record does not disclose the assessed

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value of the tenth parcel, which has an area of 1,443 sq.ms. Retonil, et.al. denied the allegations. After Bagtas, et.al. had presented their evidence, Retonil, et.al. filed a motion for dismissal in effect, a demurrer to the evidence reasserting the defense set up in their answer that Bagtas, et.al., as mere collateral relatives of Hilario Mateum had no right to impugn the latters disposition of his properties by means of the questioned conveyances and submitting, additionally, that no evidence of fraud tainting said transfers had been presented. The Trial Court granted the motion to dismiss, holding on the authority of Armentia vs. Patriarca, that Bagtas, et.al., as mere collateral relatives, not forced heirs, of Hilario Mateum, could not legally question the disposition made by said deceased during his life time, regardless of whether, as a matter of objective reality, said dispositions were valid or not; and that Bagtas, et.al.s evidence of alleged fraud was insufficient, the fact that the deeds of sale each stated a consideration of only P1 not being in itself evidence of fraud or simulation. On appeal by Bagtas, et. al. to the Court of Appeals, that court affirmed, adverting with approval to the Trial Courts reliance on the Armentia ruling which, it would appear, both courts saw as denying, without exception, to collaterals, of a decedent, not forced heirs, the right to impugn the latters dispositions inter vivos of his property. SC: As the record clearly demonstrates, the respondents not only failed to offer any proof whatsoever, opting to rely on a demurrer to the petitioner's evidence and upon the thesis, which they have maintained all the way to this Court, that petitioners, being mere collateral relatives of the deceased transferor, were without right to the conveyances in question. In effect, they gambled their right to adduce evidence on a dismissal in the Trial Court and lost, it being the rule that when a dismissal thus obtained is reversed on appeal, the movant loses the right to present evidence in his behalf The Supreme Court reversed the appealed Decision of the Court of Appeals, and declared the questioned transfers void and of no force or effect. The Court ordered the annulment of such certificates of title Retonil, et.al. may have obtained over the properties subject of said transfers, and ordered them to return to Bagtas, et.al. possession of all the properties involved in the action, to account to the latter for the fruits thereof during the period of their possession, and to pay the costs. No damages, attorneys fees or litigation expenses were awarded, there being no evidence thereof before the Court.

mentioned, an order for the issuance of a second owner's duplicate) who sold it to Reyes who sold it to Abellas who sold it to Deseos. It appears that the first owners duplicate was neither lost nor found, Montinola used it to mortgage the land to PNB for 700. Then he sold it to Morales. Morales was advised by registry of deeds hat his TCT was cancelled and property sold to Reyes and then Abellas. Morales filed a petition for the annulment and cancellation of the second owner's copy of TCT. After due notice to Reyes and the Abellas, but not to the Deseos, said petition was granted on March 12, 1956. Unable to register, Deseos commenced, in the court aforementioned, the present action against Morales, for the annulment of the subsequent sale thereto by Montinola, and the registration of said deed of conveyance in their (Deseos) favor, alleging that the same enjoys preference over the sale to Morales, the Deseos having, prior thereto, bought lot No. 2488 in good faith and for value, and having been first in possession of said lot, likewise, in good faith. Upon the other hand, Morales claimed to have a better right upon the ground that it (Morales) had bought the property in good faith and for value, relying upon the first owner's duplicate copy of TCT CFI: IFO MORALES CA: IFO DESEO, to be the lawful and absolute owners of Lot No. 2489 Morales maintains that the sale by Montinola to Reyes and that later made by Reyes to the Abellas are "suspicious"; that, consequently, Reyes and the Abellas were not purchasers in good faith and for value; and that these two (2) premises, in turn, lead to the conclusion that both sales are "null and void." It is not unusual, however, in deeds of conveyance adhering to the Anglo-Saxon practice of stating that the consideration given is the sum of P1.00, although the actual consideration may have been much more. Moreover, assuming that said consideration of P1.00 is suspicious, this circumstance, alone, does not necessarily justify the inference that Reyes and the Abellas were not purchasers in good faith and for value. Neither does this inference warrant the conclusion that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the monetary consideration do not render a conveyance inexistent, for the assignor's liberality may be sufficient cause for a valid contract, whereas fraud or bad faith may render either rescissible or voidable although valid until annulled, a contract concerning an object certain, entered into with a cause and with the consent of the contracting parties, as in the case at bar. What is more, the aforementioned conveyance may not be annulled, in the case at bar, inasmuch as Reyes and the Abellas are not parties therein. HELD: CA AFFIRMED Republic v. Philippine Development Corp. [G.R. No. L-10141. January 31, 1958.] En Banc, Padilla (J): 10 concur

Morales Devt v CA [G.R. No. L-26572 March 28, 1969] Petitioner Morales seeks to review on certiorari a decision of CA reversing CFI Respondents Deseo, brought an action to annul sale to Morales of a lot in Quezon and to secure the registration of a deed of conveyance of said lot in their favor Land used to belong to Montinola (Alleging that his owner's duplicate copy of said certificate had been lost, Montinola succeeded in securing, from the Court above

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Facts: On 6 May 1955, the Republic of the Philippines in representation of the Bureau of Prisons instituted against Macario Apostol and the Empire Insurance Co. a complaint with the CFI Manila (Civil Case 26166). The complaint alleges that Apostol submitted the highest bid in the amount of P450.00 per ton for the purchase of 100 tons of Palawan Almaciga from the Bureau of Prisons; that a contract therefor was drawn and by virtue of which, Apostol obtained goods from the Bureau of Prisons valued P15,878.59; that of said account, Apostol paid only P691.10 leaving a balance obligation of P15, 187.49. The complaint further avers that Apostol submitted the best bid with the Bureau of Prisons for the purchase of 3 million board feet of logs at P88.00 per 1,000 board feet; that a contract was executed between the Director of Prisons and Apostol pursuant to which contract Apostol obtained deliveries of logs valued at P65,830.00; and that Apostol failed to pay a balance account of P18,827.57. All told, the total demand set forth in complaint against Apostol is for P34,015.06 with legal interests thereon from 8 January 1952. The Empire Insurance Company was included in the complaint having executed a performance bond of P10,000.00 in favor of Apostol. In his answer, Apostol interposed payment as a defense and sought the dismissal of the complaint. On 19 July 1955, the Philippine Resources Development Corp. moved to intervene, appending to its motion, the complaint in intervention of even date. The complaint recites that for sometime prior to Apostols transactions the corporate had some goods deposited in a warehouse at 1201 Herran, Manila; that Apostol, then the president of the corporation but without the knowledge or consent of the stockholders thereof, disposed of said goods by delivering the same to the Bureau of Prisons in an attempt to settle his personal debts with the latter entity; that upon discovery of Apostols act, the corporation took steps to recover said goods by demanding from the Bureau of Prisons the return thereof; and that upon the refusal of the Bureau to return said goods, the corporation sought leave to intervene in Civil Case 26166. Judge (Magno Gatmaitan) denied the motion for intervention and thereby issued an order to this effect on 23 July 1955. A motion for the reconsideration of said order was filed by the corporation and the same was likewise denied on 18 August 1955. On 3 September 1955, the corporation filed a petition for a writ of certiorari with the Court of Appeals . On 12 December 1955 the Court of Appeals set aside the order denying the motion to intervene and ordered the trial court to admit the corporations complaint-inintervention, with costs against Macario Apostol. Phil Res Devt ardently claims that the reason behind its motion to intervene is the desire to protect its rights and interests over some materials purportedly belonging to it; that said material were unauthorizedly and illegally assigned and delivered to the Bureau of Prisons by petitioning corporation's president Macario Apostol in payment of the latter's personal accounts with the said entity; and that the Bureau of Prisons refused to return said materials despite petitioner's demands to do so. BUCOR, on the other hand, assert that the subject matter of the original litigation is a sum of money allegedly due to the Bureau of Prisons from Macario Apostol and not the

goods or the materials reportedly turned over by Apostol as payment of his private debts to the Bureau of Prisons and the recovery of which is sought by the petitioner; and that for this reason, petitioner has no legal interest in the very subject matter in litigation as to entitle it to intervene. CA: IFO Phi Res, it possesses a legal interest in the matter in litigation and that such interest is of an actual, material, direct and immediate nature as to entitle petitioner to intervene. On 9 January 1956 the Government filed a petition under Rule 46 to review the judgment rendered by the appellate court (CA-GR 15767-R) with the Supreme Court. The Government contends that the intervenor has no legal interest in the matter in litigation, because the action brought in the CFI Manila against Macario Apostol and the Empire Insurance Company (Civil Case 26166) is just for the collection from the defendant Apostol of a sum of money, the unpaid balance of the purchase price of logs and almaciga bought by him from the Bureau of Prisons, whereas the intervenor seeks to recover ownership and possession of G.I. sheets, black sheets, M.S. plates, round bars and G.I. pipes that it claims it owns an intervention which would change a personal action into one ad rem and would unduly delay the disposition of the case. Government argues that "Price . . . is always paid in terms of money and the supposed payment beeing in kind, it is no payment at all, "citing Article 1458 of the new Civil Code. However, the same Article provides that the purschaser may pay "a price certain in money or its equivalent," RE: Authority of counsel of Phil Res - As counsels authority to appeal for the respondent corporation was newer questioned in the Court of First Instance, it is to be pressumed that he was properly authorized to file the complaint in intervention and appeal for his client. Counsel as a stockholder and director of the respondent corporation may sue in its behalf and file the complaint in intervention in the proper court. The Supreme Court affirmed the judgment under review, without pronouncement as to costs.

Toyota Shaw v. CA [G.R. No. 116650. May 23, 1995.] First Division, Davide Jr (J): 3 concur, 1 on leave Facts: Sometime in June 1989, Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was then a sellersmarket and Sosa had difficulty finding a dealer with an available unit for sale. But upon contracting Toyota Shaw, Inc., he was told that there was an available unit. So on 14 June 1989, Sosa and his son, Gilbert, went to the Toyota Shaw Boulevard, Pasig, Metro Manila. They met Popong Bernardo, a sales representative of Toyota. Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989 because he, his family, and a balikbayan guest would use it on 18 June 1989 to go Marinduque, his home province, where he would celebrate his birthday on 19 June. He added that if he does not arrive in his hometown with the new car, he would become a laughing stock. Bernardo assured Sosa that a unit would be ready for pick up at 10:00 a.m. on 17 June

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1989. Bernardo then signed a document entitled Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc, stipulating that all necessary documents will be submitted to Toyota Shaw (Popong Bernardo) a week after, upon arrival of Mr. Sosa from the Province (Marinduque) where the unit will be used on the 19 June; that the downpayment of P100,000.00 will be paid by Mr. Sosa on 15 June 1989; and that the Toyota Shaw, Inc. will be released a yellow Lite Ace unit. It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B.A. Finance, and for this Gilbert, on behalf of his father, signed the documents of Toyota and B.A. Finance pertaining to the application for financing. The next day, Sosa and Gilbert went to Toyota to deliver the downpayment of P100,000.00. They met Bernardo who then accomplished a printed Vehicle Sales Proposal (VSP) 928, on which Gilbert signed under the subheading conforme. This document shows that the customers name is Mr. Luna Sosa with home address at 2316 Guijo Street, United Paraaque II; that the model series of the vehicle is a Lite Ace 1500 described as 4 Dr minibus; that payment is by installment, to be financed by B.A., with the initial cash outlay of P100,000.00 (downpayment: P53,148.00; insurance: P13,970.00; BLT registration fee: P1,067.00; CHMO fee: P2,715.00; Service fee: P500.00; and accessories: P29,000.00) and the balance to be financed is P274,137.00. The spaces provided for delivery terms were not filled-up. It also contains conditions of sales providing that the sale is subject to the availability of the unit, and that the stated price is subject to change without prior notice, and that the price prevailing and in effect at time of selling will apply. Rodrigo Quirante, the Sales Supervisor of Bernardo, checked and approved the VSP. On 17 June (9:30 a.m.), Bernardo called Gilbert to inform him that the vehicle would not be ready for pick up at 10:00 a.m. as previously agreed upon but at 2:00 p.m. that same day. At 2:00 p.m., Sosa and Gilbert met Bernardo at the latters office. According to Sosa, Bernardo informed them that the Lite Ace was being readied for delivery. After waiting for about an hour, Bernardo told them that the car could not be delivered because it was acquired by a more influential person. Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the disapproval of B.A. Finance of the credit financing application of Sosa. It further alleged that a particular unit had already been reversed and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused. After it became clear that the Lite Ace would not be delivered to him, Sosa asked that his downpayment be refunded. Toyota did so on the very same day by issuing a Far East Bank check for the full amount of P100,000.00, the receipt of which was shown by a check voucher of Toyota, which Sosa signed with the reservation, without prejudice to our future claims for damages. Thereafter, Sosa sent two letters to Toyota: one on 27 June 1989 demanding the refund, within 5 days from receipt, of the downpayment of P100,000.00 plus interest from the time he paid it and the payment of damages with a warning that in case of Toyotas failure to do so he would be constrained to take legal action; and the other on 4 November 1989 (signed by M.O. Caballes, Sosas counsel)

demanding P1M representing interest and damages, again, with a warning that legal action would be taken if payment was not made within 3 days. Toyotas counsel answered through as letter dated 27 November 1989 8 refusing to accede to the demands of Sosa. But even before the answer was made and received by Sosa, the latter filed on 20 November 1989 with the RTC Marinduque (Branch 38) a complaint against Toyota for damages under Articles 19 and 21 of the Civil Code in the total amount of P1,230,000.00. After trial on the issue agreed upon during the pre-trial session, the trial court rendered on 18 February 1992 a decision in favor of Sosa. It ruled that the Agreement between Mr. Sosa and Popong Bernardo, was a valid perfected and contract of sale between Sosa and Toyota which bound Toyota to deliver the vehicle to Sosa, and further agreed with Sosa that Toyota acted in bad faith in selling to another the unit already reserved for him; that Bernardo, as an authorized sales executive of Toyota Shaw, was the latters agent and thus bound Toyota Shaw; that Luna Sosa proved his social standing in the community and suffered besmirched reputation, wounded feelings and sleepless nights for which he ought to be compensated; and thus rendered judgment ordering Toyota Shaw to pay Sosa the sum of P75,000 as moral damages, P10,000 as exemplary damages, P30,000 as attorneys fees plus P2,000 lawyers transportation fare per trip in attending to the hearing of the case, P2,000 for Sosas transportation fare per trip in attending the hearing of the case, and to pay the cost of the suit. Dissatisfied with the trial courts judgment, Toyota appealed to the Court of Appeals (CA-GR CV 40043). In its decision promulgated on 29 July 1994, the Court of Appeals affirmed in toto the appealed decision. Hence the petition for review by certiorari by Toyota Shaw. SC: There was no perfected contract of sale. What is clear from the agreement signed by Sosa and Gilbert is not a contract of sale. No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefore a price certain appears therein. The provision on the down payment of PIOO,OOO.OO made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP executed the following day confirmed. Nothing was mentioned about the full purchase price and the manner the installments were to be paid. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to the manner of payment goes, into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property. Accordingly, in a sale on installment basis which is financed by a financing company, three parties are thus involved: the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment, the seller who assigns the notes or discounts them with a financing company, and the financing company which is subrogated in the place of the seller, as the creditor of the installment buyer

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The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury. HELD: The Supreme Court granted the petition, and dismissed the challenged decision of the Court of Appeals and that of Branch 38 of the Regional Trial Court of Marinduque, and the counterclaim therein; without pronouncement as to costs.

neither has she paid any installments on the balance of P70,000.00 up to the present time; that it was only on 8 January 1964 that Socorro Velasco tendered payment of P20,000.00, which offer Magdalena Estate refused to accept because it had considered the offer to sell rescinded on account of her failure to complete the down payment on or before 31 December 1962. On 3 November 1968, the CFI Quezon City rendered a decision, dismissing the complaint filed by Lorenzo and Socorro Velasco against the Magdalena Estate, Inc. for the purpose of compelling specific performance by Magdalena Estate of an alleged deed of sale of a parcel of residential land in favor of the Velascos. The basis for the dismissal of the complaint was that the alleged purchase and sale agreement was not perfected. On 18 November 1968, after the perfection of their appeal to the Court of Appeals, the Velascos received a notice from the said court requiring them to file their printed record on appeal within 60 days from receipt of said notice. This 60-day term was to expire on 17 January 1969. Allegedly on 15 January 1969, the Velascos allegedly sent to the CA and to counsel for Magdalena Estate, by registered mail allegedly deposited personally by its mailing clerk, one Juanito D. Quiachon, at the Makati Post Office, a Motion For Extension of Time To File Printed Record on Appeal. The extension of time was sought on the ground of mechanical failures of the printing machines, and the voluminous printing job now pending with the Vera Printing Press. On 10 February 1969, the Velascos filed their printed record on appeal in the CA. Thereafter, the Velascos received from Magdalena Estate a motion filed on 8 February 1969 praying for the dismissal of the appeal on the ground that the Velascos had failed to file their printed record on appeal on time. The CA, on 25 February 1969, denied the Magdalena Estates motion to dismiss, granted the Velascos motion for 30-day extension from 15 January 1969, and admitted the latters printed record on appeal. On 11 March 1969, Magdalena Estate prayed for a reconsideration of said resolution. The Velascos opposed the motion for reconsideration and submitted to the CA the registry receipts (0215 and 0216), both stamped 15 January 1969, which were issued by the receiving clerk of the registry section of the Makati Post Office covering the mails for the disputed motion for extension of time to file their printed record on appeal and the affidavit of its mailing clerk. After several other pleadings and manifestations relative to the motion for reconsideration and on 28vJune 1969, the CA promulgated a resolution granting the motion for reconsideration and ordered Atty. Patrocinio Corpuz (Velascos counsel) to show cause within 10 days from notice why he should not be suspended from the practice of his profession for deceit, falsehood and violation of his sworn duty to the Court, and directed the Provincial Fiscal of Rizal to conduct the necessary investigation against Juanito D. Quiachon of the Salonga, Ordoez, Yap, Sicat & Associates Law Office and Flaviano O. Malindog, a letter carrier at the Makati Post Office, and to file the appropriate criminal action against them (it appears that Malindog postmark the letters 15 January 1969 on 7 February 1969 at the request of Quiachon). On 5 September 1969, the CA promulgated another resolution, denying the motion for reconsideration of the Velascos but, at the same time, accepting as satisfactory the

Velasco v. CA [G.R. No. L-31018. June 29, 1973.] First Division, Castro (J):3 concur, 1 concurs with reservation, 2 dissents, 1 concurring with a dissent, 1 took no part Facts: A suit for specific performance filed by Lorenzo Velasco against the Magdalena Estate (Civil Case7761) on the allegation that on 29 November 1962, Velasco and the Magdalena Estate had entered into a contract of sale by virtue of which Magdalena Estate offered to sell Velasco, to which the latter agreed to buy, a parcel of land with an area of 2,059 sq.ms. (Lot 15, Block 7, Psd-6129,) located at No. 39 corner 6th Street and Pacific Avenue, New Manila, Quezon City, for the total purchase price of P100,000.00. Velasco alleged that he was to give a down payment of P10,000.00 to be followed by P20,000.00 and the balance of P70,000.00 would be paid in installments, the equal monthly amortization of which was to be determined as soon as the P30,000.00 down payment had been completed. He further alleged that he paid the downpayment on 29 November 1962 (Receipt 207848) and that when on 8 January 1964 he tendered to the payment of the additional P20,000.00 to complete the P30,000.00, Magdalena Estate refused to accept and that eventually it likewise refused to execute a formal deed of sale obviously agreed upon. Velasco demanded P25,000.00 exemplary damages, P2,000.00 actual damages and P7,000.00 attorneys fees. Magdalena Estate denied that it has had any direct-dealings, much less, contractual relations with the Lorenzo Velasco regarding the property in question, and contends that the alleged contract described in the document attached to the complaint is entirely unenforceable under the Statute of Frauds; that the truth of the matter is that a portion of the property in question was being leased by a certain Socorro Velasco who, on 29 November 1962, went to the office of Magdalena Estate indicated her desire to purchase the lot; that the latter indicated its willingness to sell the property to her at the price of P100,000.00 under the condition that a down payment of P30,000.00 be made, P20,000.00 of which was to be paid on 31 November 1962, and that the balance of P70,000.00 including interest at 9% per annum was to be paid on installments for a period of 10 years at the rate of P5,381.32 on June 30 and December of every year until the same shall have been fully paid; that on 29 November 1962, Socorro Velasco offered to pay P10,000.00 as initial payment instead of the agreed P20,000.00 but because the amount was short of the alleged P20,000.00 the same was accepted merely as deposit and upon request of Socorro Velasco the receipt was made in the name of her brother-in-law ,Lorenzo Velasco; that Socorro Velasco failed to complete the down payment of P30,000.00 and

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explanation of Atty. Corpuz why he should not be suspended from the practice of the legal profession. On 20 September 1969, the First Assistant Fiscal of Rizal notified the Court of Appeals that he had found a prima facie case against Malindog and would file the corresponding information for falsification of public documents against him, but dismissed the complaint against Quiachon for lack of sufficient evidence. A petition for certiorari and mandamus was filed by the Velascos against the resolution of the Court of Appeals dated 28 June 1969 in CA-GR 42376, which ordered the dismissal of the appeal interposed by them from a decision of the CFI Quezon City on the ground that they had failed seasonably to file their printed record on appeal. No contract of sale perfected because the minds of the parties did not meet in regard to themanner of payment No contract of sale was perfected because the minds of the parties did not meet in regard to themanner of payment. The material averments contained in Velascos complaint themselves disclose a lack of complete agreement in regard to the manner of payment of the lot in question. The complaint states pertinently that plaintiff and defendant further agreed that the total down payment shall be P30,000.00, including the P10,000.00 partial payment mentioned in paragraph 3 hereof, and that upon completion of the said down payment of P30,000.00, the balance of P70,000.00 shall be paid by the plaintiff to the defendant in 10 years from November 29, 1962; and that the time within which the full down payment of the P30,000.00 was to be completed was not specified by the parties but the defendant was duly compensated during the said time prior to completion of the down payment of P30,000.00 by way of lease rentals on the house existing thereon which was earlier leased by defendant to the plaintiffs sister-in-law, Socorro J. Velasco, and which were duly paid to the defendant by checks drawn by plaintiff. The Velascos themselves admit that they and Magdalena Estate still had to meet and agree on how and when the down payment and the installment payments were to be paid. Such being the situation, it cannot be said that a definite and firm sales agreement between the parties had been perfected over the lot in question. Definite agreement on the matter of payment of purchase price an essential element to form binding and enforceable contract of sale A definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding and enforceable contract of sale. In the present case, the Velascos delivered to Magdalena Estate the sum of P10,000 as part of the down payment that they had to pay cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties under article 1482of the new Civil Code, as the Velascos themselves admit that some essential matter (the terms of payment) still had to be mutually covenanted. HELD The Supreme Court denied the instant petition; without pronouncement as to costs.

Facts: Lordes Ong Limso filed a complaint before trial Ct alleging that in July 1978, respondent sps De Vera through agent Sanchez offered to sell to her a land (48,260sq m) in Paranaque; she agreed to buy the property at the price of P34.00 per square meter and gave the sum of P20,000.00 to respondent spouses as "earnest money;" that respondent spouses signed a receipt therefor and gave her a 10-day option period to purchase the property; that respondent Lorenzo de Vera then informed her that the subject property was mortgaged to Emilio Ramos and Isidro Ramos; that respondent Lorenzo de Vera asked her to pay the balance of the purchase price to enable him and his wife to settle their obligation with the Ramoses Limson agreed to meet twice with Ramoses and De Veras but the latter failed to appear and no transaction was formalized on the supposed 2nd meetng she was willing to pay the balance but the De Veras failed to pay the back taxes. She gave L. De Vera 3 checks for settlement of back taxes. Amt is considered part of purchase price Limson was surprised to learn that the property was under nego for sale with SUNVAR. she filed on the same day an Affidavit of Adverse Claim with the Office of the Registry of Deeds of Makati, Metro Manila, which was annotated on TCT No. S-72946. She also claimed that on the same day she informed respondent Cuenca (SUNVAR) of her "contract" to purchase the property The Deed of Sale between respondent spouses and respondent SUNVAR was executed on 15 September 1978 and TCT No. S-72377 was issued in favor of the latter on 26 September 1978 with the Adverse Claim of petitioner annotated thereon. Petitioner claimed that when respondent spouses sold the property in dispute to SUNVAR, her valid and legal right to purchase it was ignored if not violated. Moreover, she maintained that SUNVAR was in bad faith as it knew of her "contract" to purchase the subject property from respondent spouses. RTC: IFO Limson It ordered (a) the annulment and rescission of the Deed of Absolute Sale executed on 15 September 1978 by respondent spouses in favor of respondent SUNVAR among others CA: It ordered (a) the Register of Deeds of Makati City to lift the Adverse Claim and such other encumbrances petitioner might have filed or caused to be annotated on TCT MR Denied ISSUE: the nature of the contract entered into between petitioner Lourdes Ong Limson on one hand, and respondent spouses Lorenzo de Vera and Asuncion Santos-de Vera on the other. SC: A scrutiny of the facts as well as the evidence of the parties overwhelmingly leads to the conclusion that the agreement between the parties was a contract of option and not a contract to sell. An option, as used in the law of sales, is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It is also sometimes called an "unaccepted offer." An option is not of itself a purchase, but merely secures the privilege to buy. It is not a sale of

Limson v. CA [G.R. No. 135929. April 20, 2001]

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property but a sale of the right to purchase. ts distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside from the consideration for the offer. Until acceptance, it is not, properly speaking, a contract, and does not vest, transfer, or agree to transfer, any title to, or any interest or right in the subject matter, but is merely a contract by which the owner of the property gives the optionee the right or privilege of accepting the offer and buying the property on certain terms On the other hand, a contract, like a contract to sell, involves the meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service, Contracts, in general, are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute The Receipt hat contains the contract between petitioner and respondent spouses provides Received from Lourdes Limson the sum of Twenty Thousand Pesos (P20,000.00) under Check No. 22391 dated July 31, 1978 as earnest money with option to purchase a parcel of land owned by Lorenzo de Vera located at Barrio San Dionisio, Municipality of Paraaque, Province of Rizal with an area of forty eight thousand two hundred sixty square meters more or less at the price of Thirty Four Pesos (P34.00 cash subject to the condition and stipulation that have been agreed upon by the buyer and me which will form part of the receipt. Should the transaction of the property not materialize not on the fault of the buyer, I obligate myself to return the full amount of P20,000.00 earnest money with option to buy or forfeit on the fault of the buyer. I guarantee to notify the buyer Lourdes Limson or her representative and get her conformity should I sell or encumber this property to a third person. This option to buy is good within ten (10) days until the absolute deed of sale is finally signed by the parties or the failure of the buyer to comply with the terms of the option to buy as herein attached. The above Receipt readily shows that respondent spouses and petitioner only entered into a contract of option; a contract by which respondent spouses agreed with petitioner that the latter shall have the right to buy the formers property at a fixed price of P34.00 per square meter within ten (10) days from 31 July 1978. Respondent spouses did not sell their property; they did not also agree to sell it; but they sold something, i.e., the privilege to buy at the election or option of petitioner. The agreement imposed no binding obligation on petitioner, aside from the consideration for the offer. The consideration of P20,000.00 paid by petitioner to respondent spouses was referred to as "earnest money." However, a careful examination of the words used indicates that the money is not earnest money but option money. "Earnest money" and "option money" are not the same but distinguished thus: (a) earnest money is part of the purchase price, while option money is the money given as a distinct consideration for an option contract; (b) earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; and, (c) when earnest money is given, the buyer is bound to pay the balance, while when the wouldbe buyer gives option money, he is not required to buy

the agreement between respondent spouses and petitioner was an "option contract" or what is sometimes called an "unaccepted offer." the commencement of negotiations between respondent spouses and respondent SUNVAR clearly manifested that their offer to sell subject property to petitioner was no longer exclusive to her Re; telegram - The telegram only showed that respondent spouses were willing to give petitioner a chance to buy subject property even if it was no longer exclusive. HELD: AFFIRMED with MODIFICATION

San Miguel v Huang [G.R. No. 137290. July 31, 2000] Facts: San Mig, in its inventory has 2 parcels in Pasig Properties were offered for 52M to Atty Dauz who was acting for Huangs as undisclosed principals. Atty Dauz signified her clients interest in purchasing the prop: 500k as earnest money and balance in 8mos but San Mig refused the counter-offer Atty Dauz wrote proposing another term for purchase: 1M earnest money Sobrecarey (VP for real estate) indicated conformity with the offer and affixed his signature. For Sale sign was removed Atty Dauz and Sobrecarey commenced negotiations. Sobrecarey informed Atty Dauz that San Mig was willing to sell on a 90 day term. Atty Dauz countered with 6 mos Parties met again and Sobrecarey informed Atty Dauz that San Mig had not acted on the counter offer. Atty Dauz now proposed 4 mo pd. This was granted San Miguel pres and CEO Gonzales wrote Atty Dauz informing her that bec the parties failed to agree on the term and conditions of the sale, it was returning the 1M given as earnest money Huangs demanded the execution of deed of sale.huangs attempted to return the earnest money but San Mig refused on the ground that their option to purchase expired Huangs filed a complaint for specific performance against petitioner before the Regional Trial Court RTC: RULED OFP San Mig CA: IFO HUANGS all the requisites of a perfected contract of sale had been complied with as the offer made on March 29, 1994, in connection with which the earnest money in the amount of P1 million was tendered by respondents, had already been accepted by petitioner. The court cited Art. 1482 of the Civil Code which provides that "[w]henever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract." The fact the parties had not agreed on the mode of payment did not affect the contract as such is not an essential element for its validity. In addition, the court found that Sobrecarey had authority to act in behalf of petitioner for the sale of the properties

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SC; In the present case, the P1 million "earnest-deposit" could not have been given as earnest money as contemplated in Art. 1482 because, at the time when petitioner accepted the terms of respondents offer of March 29, 1994, their contract had not yet been perfected. This is evident from the following conditions attached by respondents to their letter, to wit: (1) that they be given the exclusive option to purchase the property within 30 days from acceptance of the offer; (2) that during the option period, the parties would negotiate the terms and conditions of the purchase; and (3) petitioner would secure the necessary approvals while respondents would handle the documentation. The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. 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. 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 They never got past the negotiation stage Re; manner of payment - rule that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale. Thus, 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. HELD: CA Reversed

Villonco Realty vs. Bormaheco Inc. [G.R. No. L26872. July 25, 1975.] En Banc, Aquino (J): 9 concur, 1 on leave

Facts: Francisco N. Cervantes and his wife, Rosario P. Navarra-Cervantes, are the owners of Lots 3, 15 and16 located at 245 Buendia Avenue, Makati, Rizal with a total area of 3,500 sq.ms. (TCTs 43530, 43531 and43532). The lots were mortgaged to the Development Bank of the Philippines (DBP) on 21 April 1959 as security for a loan of P441,000. The mortgage debt was fully paid on 10 July 1969. Cervantes is the president of Bormaheco, Inc., a dealer and importer of industrial and agricultural machinery. The entire three lots are occupied by the building, machinery and equipment of Bormaheco, Inc. and are adjacent to the property of Villonco Realty Company situated at 219 Buendia Avenue. [Negotiations] In the early part of February 1964 there were negotiations for the sale of the said lots and the improvements thereon between Romeo Villonco of Villonco Realty Company and Bormaheco, Inc., represented by its president, Francisco N. Cervantes, through the intervention of Edith Perez de Tagle, a real estate-broker. In the course of the negotiations, the brothers Romeo and Teofilo Villonco conferred with Cervantes in his office to discuss the price and terms of the sale. Later, Cervantes went to see Villonco for the same reason until some agreement was arrived at. On a subsequent occasion, Cervantes, accompanied by Edith Perez de Tagle, discussed again the terms of the sale with Villonco. During the negotiations, Villonco Realty Company assumed that the lots belonged to Bormaheco and that Cervantes was duly authorized to sell the same. Cervantes did not disclose to the broker and to Villonco Realty that the lots were conjugal properties of himself and his wife and that they were mortgaged to the DBP. Bormaheco, through Cervantes, made a written offer dated 12 February 1964, to Romeo Villonco for the sale of the property (stipulating price at P400/sq.m., deposit of P100,000 in earnest money, consummation pending Bormahecos purchase of property in Sta. Ana Manila, the final negotiations on both properties known after 45 days). The property mentioned in Bormahecos letter was the land of the National Shipyards & Steel Corporation (Nassco), with an area of 20,000 sq.ms., located at Punta, Sta. Ana, Manila. At the bidding held on 17 January 1964 that land was awarded to Bormaheco, the highest bidder, for the price of P552,000. The Nassco Board of Directors in its resolution of 18 February 1964 authorized the General Manager to sign the necessary contract. On 28 February 1964, the Nassco Acting General Manager wrote a letter to the Economic Coordinator, requesting approval of that resolution. The Acting Economic Coordinator approved the resolution on 24 March 1964. Meanwhile, Bormaheco and Villonco Realty continued their negotiations for the sale of the Buendia Avenue property. Cervantes and Teofilo Villonco had a final conference on 27 February 1964. As a result of that conference Villonco Realty, in its letter of 4 March 1964 made a revised counter-offer (Romeo Villoncos first counter-offer was dated 24 February 1964) for the purchase of the property. [Perfection] The counter-offer was accepted by Cervantes (stipulating interest of 10% of the amount tendered in case the Sta. Ana purchase does not push through, downpayment at P650,000 and the balance payable every 3 months in 4 payments [P100,000, P125,000, P212,500, and P212,500]). Enclosed to it was a MBTC Check worth P100,000 as earnest money. The check for P100,000 was delivered by Perez de Tagle to Bormaheco on 4 March 1964 and was received by Cervantes. In the voucher-receipt evidencing the delivery the broker indicated in her handwriting that the earnest money was subject to the terms and

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conditions embodied in Bormahecos letter of February 12 and Villonco Realty Companys letter of 4 March 1964. [Rescission] Unexpectedly, in a letter dated 30 March 1964, Cervantes returned the earnest of 4 March 1964. [Rescission] Unexpectedly, in a letter dated 30 March 1964, Cervantes returned the earnest money, with interest amounting to P694.24 (at 10% per annum). Cervantes cited as an excuse the circumstance that despite the lapse of 45 days from 12 February 1964 there is no certainty yet for the acquisition of the Punta property. Villonco Realty Company refused to accept the letter and the checks of Bormaheco. Cervantes sent them by registered mail. When he rescinded the contract, he was already aware that the Punta lot had been awarded to Bormaheco. Edith Perez de Tagle, the broker, in a letter to Cervantes dated 31 March 1964 articulated her shock and surprise at Bormahecos turnabout. Cervantes in his letter of 6 April 1964, a reply to Miss Tagles letter, alleged that the 45 day period had already expired and the sale to Bormaheco, Inc. of the Punta property had not been consummated. Cervantes said that his letter was a manifestation that we are no longer interested to sell the Buendia Avenue property to Villonco Realty. The latter was furnished with a copy of that letter. In a letter dated 7 April 1964 Villonco Realty Company returned the two checks to Bormaheco, Inc., stating that the condition for the cancellation of the contract had not arisen and at the same time announcing that an action for breach of contract would be filed against Bormaheco. On that same date, 7 April 1964 Villonco Realty filed the complaint (dated April 6) for specific performance against Bormaheco. A notice of lis pendens was annotated on the titles of the said lots. Bormaheco in its answers dated 5 May and 25 May 1964 pleaded the defense that the perfection of the contract of sale was subject to the conditions that final acceptance or not shall be made after 45 days and that Bormaheco acquires the Sta. Ana property. On 2 June 1964 or during the pendency of this case, the Nassco Acting General Manager wrote to Bormaheco, Inc., advising it that the Board of Directors and the Economic Coordinator had approved the sale of the Punta lot to Bormaheco and requesting the latter to send its duly authorized representative to the Nassco for the signing of the deed of sale. The deed of sale for the Punta land was executed on 26 June 1964. Bormaheco was represented by Cervantes In view of the disclosure in Bormahecos amended answer that the 3 lots were registered in the names of the Cervantes spouses and not in the name of Bormaheco, Villonco Realty on 21 July 1964 filed an amended complaint impleading the said spouses as defendants. Bormaheco and the Cervantes spouses filed separate answers. As of 15 January 1965 Villonco Realty had paid to the Manufacturers Bank & Trust Company the sum of P8,712.25 as interests on the overdraft line of P100,000 and the sum of P27.39 as interests daily on the same loan since 16 January 1965. (That overdraft line was later settled by Villonco Realty on a date not mentioned in its manifestation of 19 February 1975). Villonco Realty had obligated itself to pay the sum of P20,000 as attorneys fees to its lawyers. It claimed that it was damaged in the sum of P10,000 a month from 24 March 1964 when the award of the Punta lot to Bormaheco was approved. On the other hand, Bormaheco claimed that it had sustained

damages of P200,000 annually due to the notice of lis pendens which had prevented it from constructing a multistory building on the 3 lots. Miss Tagle testified that for her services Bormaheco, through Cervantes, obligated itself to pay her a 3% commission on the price of P1,400,000 or the amount of P42,000. After trial, the lower court rendered a decision ordering the Cervantes spouses to execute in favor of Bormaheco a deed of conveyance for the 3 lots and directing Bormaheco to convey the same lots to Villonco Realty, to pay the latter, as consequential damages, the sum of P10,000 monthly from 24 March 1964 up to the consummation of the sale, to pay Edith Perez de Tagle the sum of P42,000 as brokers commission and to pay P20,000 as attorneys fees Bormaheco, Inc. and the Cervantes spouses appealed. The Supreme Court took cognizance of the appeal because the amount involved is more than P200,000 and the appeal was perfected before RA 5440 took effect on 9 September 1968. The Supreme court modified the trial courts decision by ordering the spouses Cervantes, within 10 days from the date they receive notice from the clerk of the lower court that the records of the case have been received from the Supreme Court, to execute a deed conveying to Bormaheco their 3 lots covered by TCT 43530, 43531 and 43532 of the Registry of Deeds of Rizal; ordering Bormaheco, within 5 days from the execution of such deed of conveyance, to execute in favor of Villonco Realty a registerable deed of sale for the said 3 lots and all the improvements thereon, free from all lien and encumbrances, at the price of P400 per sq.m., deducting from the total purchase price the sum of P100,000 previously paid by Villonco Realty Company to Bormaheco, Inc.; and obligating Villonco Realty, upon the execution of such deed of sale, to pay Bormaheco the balance of the price in the sum of P1,300,000; and ordering Bormaheco to pay Villonco Realty P20,000 as attorneys fees and to pay Edith Perez de Tagle the sum of P42,000 as commission; with costs against Villonco Realty. 1. Contract of sale By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determining thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional (Art. 1458, Civil Code). 2. Perfection of a contract of sale; Present case The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts (Art. 1475, Ibid.). In the present case, Bormahecos acceptance of Villonco Realtys offer to purchase the Buendia Avenue property, as shown in Teofilo Villoncos letter dated 4 March 1964 indubitably proves that there was a meeting of minds upon the subject matter and consideration of the sale. Therefore, on that date the sale was perfected. 3. Perfection of contracts; Effect

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Contracts are perfected by mere consent, and from that moment the parties are bound not only to themfulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law (Art. 1315, Civil Code). 4. Consent: Offer, counter-offer, acceptance Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer (Art. 1319, Civil Code). An acceptance may be express or implied (Art. 1320, Civil Code). 5. Present contract conditionally consummated or partly executed Bormahecos acceptance of the part payment of P100,000 shows that the sale was conditionally consummated or partly executed subject to the purchase by Bormaheco, Inc. of the Punta property. The nonconsummation of that purchase would be a negative resolutory condition 6. Borhamecos bid already accepted by Nassco On 18 February 1964 Bormahecos bid for the Punta property as already accepted by the Nassco which had authorized its General Manager to sign the corresponding deed of sale. What was necessary only was the approval of the sale by the Economic Coordinator and a request for that approval was already pending in the office of that functionary on 4 March 1964. 7. Revised counter offer not material but are merely clarifications of what was agreed upon There is no evidence as to what changes were made by Cervantes in Villoncos revised offer, and there is no evidence that Villonco Realty did not assent to the supposed changes and that such assent was never made known to Cervantes. The alleged changes or qualifications made by Cervantes were approved by Villonco Realty and that such approval was duly communicated to Cervantes or Bormaheco by the broker as shown by the fact that Villonco Realty paid, and Bormaheco accepted, the sum of P100,000 as earnest money or down payment. That crucial fact implies that Cervantes was aware that Villonco Realty had accepted the modifications which he had made in Villoncos counter-offer. Had Villonco Realty not asserted to those insertions and annotations, then it would have stopped payment on its check for P100,000. The fact that Villonco Realty allowed its check to be cashed by Bormaheco signifies that the company was in conformity with the changes made by Cervantes and that Bormaheco was aware of that conformity. Had those insertions not been binding, then Bormaheco would not have paid interest at the rate of 10% per annum on the earnest money of P100,000. The truth is that the alleged changes or qualifications in the revised counter-offer are not material or are mere clarifications of what the parties had previously agreed upon. 8. Amendment of another instead of Nassco in paragraph 3 of counter-offer is trivial Cervantes allegedly crossed out the word Nassco in paragraph 3 of Villoncos revised counter-offer and substituted for it the word another so that the original phrase Nasscos property in Sta. Ana, was made to read as another property in Sta. Ana. That change is trivial. What Cervantes did was merely to adhere to the wording

of paragraph 3 of Bormahecos original offer which mentions another property located at Sta. Ana His obvious purpose was to avoid jeopardizing his negotiation with the Nassco for the purchase of its Sta. Ana property by unduly publicizing it. It is noteworthy that Cervantes, in his letter to the broker dated 6 April 1964 or after the Nassco property had been awarded to Bormaheco alluded to the Nassco property. At that time, there was no more need of concealing from the public that Bormaheco was interested in the Nassco property. 9. Insertion of letters PA not a major alteration, alternative contemplation to be monthly or semiannually would be usurious Cervantes alleged insertion of the letters PA (per annum) after the word interest in that same paragraph 3 of the revised counter-offer could not be categorized as a major alteration of that counter-offer that prevented a meeting of the minds of the parties. It was understood that the parties had contemplated a rate of 10% per annum since 10% a month or semi-annually would be usurious. 10. Revised counter-offer merely amplifies original offer; acceptance is not qualified and conditional The stipulation subject to the terms and conditions embodied in Bormahecos letter of February 12, 1964 and your (Villoncos) letter of March 4, 1964" does not make Bormahecos acceptance qualified and conditional. There is no incompatibility between Bormahecos offer of February 12, 1964 and Villoncos counter-offer of March 4, 1964 (Exh. D). The revised counter-offer merely amplified Bormahecos original offer. 11. Payment of earnest money proof of perfection of contract The controlling fact is that there was agreement between the parties on the subject matter, the price and the mode of payment and that part of the price was paid. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract (Art. 1482,Civil Code). 12. Non-essential changes in terms does not reject offer nor tender a counter offer It is true that an acceptance may contain a request for certain changes in the terms of the offer and yet be a binding acceptance. So long as it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer, whether such request is granted or not, a contract is formed. . Thus, it was held that the vendors change in a phrase of the offer to purchase, which change does not essentially change the terms of the offer, does not amount to a rejection of the offer, and the tender of a counter-offer 13. Beaumont vs. Prieto and Zayco vs. Serra do not apply In the Zayco case, Salvador Serra offered to sell to Lorenzo Zayco his sugar central for P1,000,000 on condition that the price be paid in cash, or, if not paid in cash, the price would be payable within 3 years provided security is given for the payment of the balance within three years with interest. Zayco, instead of unconditionally accepting those terms, countered that he was going to make a down payment of P100,000, that Serras mortgage obligation to the PNB of P600,000 could be transferred to Zaycos account and that he (plaintiff)

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would give a bond to secure the payment of the balance of the price. It was held that the acceptance was conditional or was a counter-offer which had to be accepted by Serra. There was no such acceptance. Serra revoked his offer. Hence, there was no perfected contract. In the Beaumont case, Benito Valdes offered to sell to W Borck the Nagtahan Hacienda owned by Benito Legarda, who had empowered Valdes to sell it. Borck was given three months from December 4, 1911 to buy the hacienda for P307,000. On 17 January 1912 Borck wrote to Valdes, offering to purchase the hacienda for P307,000 payable on 1 May 1912. No reply was made to that letter. Borck wrote other letters modifying his proposal. Legarda refused to convey the property. It was held that Borcks January 17th letter plainly departed from the terms of the offer as to the time of payment and was a counter-offer which amounted to a rejection of Valdes original offer. A subsequent unconditional acceptance could not revive that offer. 16. Laudico and Harden vs. Arias Rodriguez does not apply The present case is different from Laudico and Harden vs. Arias Rodriguez, 43 Phil. 270 where thewritten offer to sell was revoked by the offeror before the offerees acceptance came to the offerors knowledge. 17. 45-day period merrely an estimate and forecast, not a condition or deadline set for corporation to decide to pursue transaction The 45-day period was merely an estimate or a forecast of how long it would take Bormaheco to acquire the Nassco property and it was not a condition or a deadline set for the defendant corporation to decide whether or not to go through with the sale of its Buendia property. The statement that final negotiations on both property can be definitely known after 45 days does not and cannot mean that Bormaheco should acquire the Nassco property within 45 days from 12 February 1964 as pretended by Cervantes. It is simply a surmise that after 45 days (in fact when the 45 day period should be computed is not clear) it would be known whether Bormaheco would be able to acquire the Nassco property and whether it would be able to sell the Buendia property. Paragraph 5 does not even specify how long after the 45 days the outcome of the final negotiations would be known. Still, the condition that Bormaheco should acquire the Nassco property was fulfilled. Assuming that had Cervantes been more assiduous in following up the transaction, the Nassco property could have been transferred to Bormaheco by 28 March 1964, the supposed last day of the 45-day period. 18. Cervantes misled parties as to ownership of the lots; Opposition of wife was not raised during rescission Cervantes, in rescinding the contract of sale and in returning the earnest money, cited as an excuse the circumstance that there was no certainty in Bormahecos acquisition of the Nassco property. He did not say that Mrs. Cervantes was opposed to the sale of the three lots. He did not tell Villonco Realty that he could not bind the conjugal partnership. In truth, he concealed the fact that the three lots were registered in the name of Francisco Cervantes, Filipino, of legal age, married to Rosario P. Navarra, as owner thereof in fee simple. He certainly led the Villonco brothers to believe that as president of Bormaheco he could dispose of the said lots. He inveigled the Villoncos into believing that he had untrammelled control of Bormaheco, that Bormaheco owned the lots and

that he was invested with adequate authority to sell the same. The pleadings disclose that Bormaheco and Cervantes deliberately and studiously avoided making the allegation that Cervantes was not authorized by his wife to sell the 3 lots or that he acted merely as president of Bormaheco. That defense was not interposed so as not to place Cervantes in the ridiculous position of having acted under false pretenses when he negotiated with the Villoncos for the sale of the 3 lots. Bormaheco in its 3 answers, which were verified by Cervantes, never pleaded as an affirmative defense that Mrs. Cervantes opposed the sale of the 3 lots or that she did not authorize her husband to sell those lots. Likewise, it should he noted that in their separate answer the Cervantes spouses never pleaded as a defense that Mrs. Cervantes was opposed to the sale of 3 lots or that Cervantes could not bind the conjugal partnership. The appellants were at first hesitant to make it appear that Cervantes had committed the skullduggery of trying to sell property which he had no authority to alienate. 19. Defense waived for not having pleaded The defense, that Mrs. Cervantes opposed to the sale, must have been an afterthought or was evolved post litem motam since it was never disclosed in Cervantes letter of rescission and in his letter to Miss Tagle. Moreover, Mrs. Cervantes did not testify at the trial to fortify that defense which had already been waived for not having been pleaded (See sec. 2, Rule 9, Rules of Court). 20. Plea that Cervantes has no authority to sell the lots strain the rives of credibility Taking into account the situation of Cervantes vis-a-vis Bormaheco, Inc. and his wife and the fact that the three lots were entirely occupied by Bormahecos building, machinery and equipment and were mortgaged to the DBP as security for its obligation, and considering that appellants vague affirmative defenses do not include Mrs. Cervantes alleged opposition to the sale, the plea that Cervantes had no authority to sell the lots strains the rivets of credibility 21. Contract is the law between parties Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith (Art. 1159, Civil Code). Inasmuch as the sale was perfected and even partly executed, Bormaheco, Inc. and the Cervantes spouses, as a matter of justice and good faith, are bound to comply with their contractual commitments. 22. The necessity of a lawyer in drafting contract to sell Much misunderstanding could have been avoided had the broker and the buyer taken the trouble of making some research in the Registry of Deeds and availing themselves of the services of a competent lawyer in drafting the contract to sell. 23. Damages not specifically pleaded and proven Stipulation of facts simply means that Villonco Realty Company speculates that it has suffered damages but it does not mean that the parties have agreed that Villonco Realty Company is entitled to those damages. The damages in question were not specifically pleaded and proven and were clearly conjectural and speculative.

Zayco v. Serra 44 Phil 326 (1923

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date upon which this decision becomes final, convey to Enriquez a good and sufficient title in fee simple to the Court of Land Registration, upon payment or legal tender of payment by Enriquez of the sum of P30,000 in cash, and upon Enriquez giving security approved by this court for the payment within the term of 6 years from the date of the conveyance for the additional sum of P40,000 with interest at the rate of 6% per annum. The Court further ordered and adjudged that in the event of the failure of Diaz to execute the conveyance, Enriquez has and recover judgment against him, Diaz, for the sum of P20,000, with interest at the rate of 6% (6% per annum from the date upon which the conveyance should have been made). From the judgment, Diaz appealed. De la Cavada v. Diaz [G.R. No. L-11668. April 1, 1918.] First Division, Johnson (J): 5 concurring Facts: On 15 November 1912, Antonio Diaz and Antonio Enriquez de la Cavada entered into a contract of option for the latter to purchase the formers hacienda at Pitogo, within the period necessary for the approval and issuance of a Torrens title thereto by the Government for P30,000 in cash or P40,000 with 6% interest per annum within 6 years with due security, i.e. the 100 hectares of land in Pitogo, Tayabas; containing 20,000 coconut trees and 10,000 nipa-palm trees sold to Enriquez for P70,000. Subsequently, Enriquez informed Diaz of his conformity with the letter of option under the condition that he shall send a surveyor to survey the said property, and to apply to the Government for a Torrens title therefor, and, if the expenses incurred for the same should not exceed P1,000, he shall pay the P500 and you the other P500; Provided, however, that Diaz shall give the surveyor all necessary assistance during his stay at the hacienda; and that he shall pay the purchase price to you in conformity with our letter of option of this date, and after the Torrens title shall have been officially approved. Soon after the execution of said contract, and in part compliance with the terms thereof, Diaz presented 2 petitions in the Court of Land Registration (13909 and 13919), each for the purpose of obtaining the registration of a part of the Hacienda de Pitogo. Said petitions were granted, and each parcel was registered and a certificate of title was issued for each part under the Torrens system to Diaz. Later, and pretending to comply with the terms of said contract, Diaz offered to transfer to Enriquez one of said parcels only, which was a part of said hacienda. Enriquez refused to accept said certificate for a part only of said hacienda upon the ground that it was only a part of the Hacienda de Pitogo, and under the contract he was entitled to a transfer to him all said hacienda. Raised in the lower court, Diaz theorized that the contract of sale of said Hacienda de Pitogo included only 100 hectares, more or less, of said hacienda, and that offering to convey to Enriquez a portion of said hacienda, and that by offering to convey to Enriquez a portion of said hacienda composed of 100 hectares, more or less, he thereby complied with the terms of the contract. Enriquez theorized, on the other hand, that he had purchased all of said hacienda, and that the same contained, at least, 100 hectares, more or less. The lower court sustained the contention of Enriquez, that the sale was a sale of the Hacienda de Pitogo and not a sale of a part of it. The Court ordered Diaz, within 30 days from the The Supreme Court affirmed the judgment of the lower court, with costs. 1. Agreement between parties in civil litigation valid On 21 November 1914, the parties agreed (with reference to the method of presenting their proof) that each of the litigating parties shall present his evidence before Don Felipe Canillas, assistant clerk of the CFI Manila, who, for such purpose, should be appointed commissioner; that said commissioner shall set a day and hour for the presentation of the evidence, both oral and documentary, and in the stenographic notes shall have record entered of all objections made to the evidence by either party, in order that they may afterwards be decided by the court; that the transcription of the stenographic notes, containing the record of the evidence taken, shall be paid for in equal shares by both parties; and that at the close of the taking of the evidence, each of the parties shall file his brief in respect to such evidence, whereupon the case as it then stands shall be submitted to the decision of the court. Said agreement was approved by the lower court. There is nothing in the law nor in public policy which prohibits the parties in a civil litigation from making an agreement on the method of presentation of their proofs. While the law concedes to parties litigant, generally, the right to have their proof taken in the presence of the judge, such a right is a renounceable one. In a civil action the parties litigant have a right to agree, outside of the court, upon the facts in litigation. Under certain conditions the parties litigant have a right to take the depositions of witnesses and submit the sworn statements in that form to the court. The proof, as it was submitted to the court in the present case, by virtue of said agreement, was, in effect, in the form of a deposition of the various witnesses presented. Having agreed to the method of taking the proof, and the same having been taking in compliance with said agreement, it is now too late, there being no law to the contrary, for them to deny and repudiate the effect of their agreement. (Biunas vs. \ Not only is there no law prohibiting the parties from entering into an agreement to submit their proof to the court in civil actions, but it may be a method highly convenient, not only to the parties, but to busy courts. The judgment of the lower court, therefore, should not be modified or reversed. 2. Contract offered in evidence, and not objected to; thus, was properly presented The contract was offered in evidence and admitted as proof without objection. Said contract was, therefore, properly presented to the court as proof. Not only was the contract before the court by reason of its having been presented in evidence, but that Diaz himself made said contract an integral part of his pleadings. Diaz admitted

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the execution and delivery of the contract, and alleged that he made an effort to comply with its terms. His only defense is that he sold to Enriquez a part of the hacienda only and that he offered, in compliance with the terms of the contract, to convey to Enriquez all of the land which he had promised to sell. 3. Inadequacy of consideration raised for the first time on appeal With reference to the objection that there was no consideration for said contract it may be said (a) that the contract was for the sale of a definite parcel of land: (b) that it was reduced to writing; (c) that Diaz promised to convey to Enriquez said parcel of land; (d) that Enriquez promised to pay therefor the sum of P70,000 in the manner prescribed in said contract; (e) that Diaz admitted the execution and delivery of the contract and alleged that he made an effort to comply with the same and requested Enriquez to comply with his part of the contract; and (f) that no defense or prevention was made in the lower court that there was no consideration for his contract. Having admitted the execution and delivery of the contract, having admitted an attempt to comply with its terms, and having failed in the court below to raise any question whatsoever concerning the inadequacy of consideration, it is rather late, in the face of said admissions, to raise that question for the first time in the Supreme Court. 4. A promise made in accordance with forms required by law may be a good consideration for a another partys promise A promise made by one party, if made in accordance with the forms required by the law, may be a good consideration (causa) for a promise made by another party. (Art. 1274, Civil Code.) The consideration (causa) need not pass from one to the other at the time the contract is entered into. For example, A promises to sell a certain parcel of land to B for the sum of P70,000. If A, by virtue of the promise of B to P70,000, promises to sell said parcel of land to B for said sum, then the contract is complete, provided they have complied with the forms required by the law. A cannot enforce a compliance with the contract and require B to pay said sum until he has complied with his part of the contract. 5. Contract not an optional contract in its ordinary meaning, but an absolute promise to sell a land for a fixed price upon definite condition The contract was not an optional contract as that phrase in generally used. It is clearly an absolute promise to sell a definite parcel of land for a fixed price upon definite conditions. Diaz promised to convey to Enriquez the land in question as soon as the same was registered under the Torrens system, and Enriquez promised to pay to Diaz the sum of P70,000, under the condition named, upon the happening of that event. 6. Contract of option distinguished from present contract The contract was not what is generally known as a contract of option. It differs very essentially from a contract of option. An optional contract is a privilege existing in one person, for which he had paid a consideration, which gives him the right to buy, for example, certain merchandise of certain specified property, from another person, if he chooses, at any time within the agreed period, at a fixed price. The contract of option is a separate and distinct contract from the

contract which the parties may enter into upon the consummation of the option. A consideration for an optional contract is just as important as the consideration for any other kind of contract. If there was no consideration for the contract of option, then it cannot be enforced any more than any other contract where no consideration exists. To illustrate, A and B the sum of P100,000 for the option of buying his property within the period of 30 days. While it is true that the conditions upon which A promises to buy the property at the end of the period mentioned are usually fixed in the option, the consideration from the consideration of the contract with reference to which the option exists. A contract of option is a contract by virtue of the terms of which the parties thereto promise and obligate themselves to enter into another contract at a future time, upon the happening of certain events, or the fulfillment of certain conditions. 7. Laying the foundation for action damages When Diaz alleged that he had complied with his part of the contract and demanded that Enriquez should immediately comply with his part of the same, he evident was laying the foundation for an action damages, the nullification or a specific compliance with contract. 8. Contract made with Enriquez, and not Rosenstock Upon the face of the contract, the contract was made by Diaz with Enriquez. Not having raised the contention, that the contract was made with Rosenstock, Elser & Co. and not with Enriquez, in the lower court, and having admitted the execution and delivery of the contract in question with the plaintiff, Diaz admission is conclusive upon that question and need not be further discussed. 9. Action not premature; Payment simultaneous with delivery of deed of conveyance but not need not be made until deed of conveyance is offered The action was not premature. The contention that Enriquez had not paid nor offered to pay the price agreed upon, under the conditions named, for the land in question was not raised in the lower court, which fact, ordinarily, would be a sufficient answer to the contention of the appellant. Still, Diaz could not demand the payment until he had offered the deeds of conveyance, in accordance with the terms of the contract, as he did not offer to comply with the terms of his contract. He offered to comply partially with the terms of the contract, but not fully. While the payment must be simultaneous with the delivery of the deeds of conveyance, the payment need not be made until deed of conveyance is offered. Enriquez stood ready and willing to perform his part of the contract immediately upon on the part of Diaz. (Arts. 1258 and 1451 of Civil Code.) 10. Enriquez stood ready to comply It cannot be said that Diaz was not obligated to sell the Hacienda de Pitogo to Enriquez due to Enriquez alleged nonfulfillment, renunciation, abandonment and negligence, as such question was not presented to the lower court. Still, the record shows that Enriquez, at all times, insisted upon a compliancewith the terms of the contract on the part of Diaz, standing ready to comply with his part of the same. Enriquez was constantly insisting upon compliance with the terms of the contract, to wit, a conveyance to him of the Hacienda de Pitogo by Diaz. Naturally, he refused, under the contract, to accept a conveyance of a part only be said hacienda.

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11. No modification due to Enriquez claim for damages The only proof upon the question of damages suffered by Enriquez for the noncompliance with the terms of the contract in question on the part of Diaz is that Enriquez, in contemplation of the compliance with the terms of the contract on the part of Diaz, entered into a contract with a third party to sell the said hacienda at a profit of P30,000. That proof is not disputed. No attempt was made in the lower court to deny that fact. The proof shows that the person with whom Enriquez had entered into a conditional sale of the land in question had made a deposit for the purpose of guaranteeing the final consummation of the that contract. By reason of the failure of Diaz to comply with the contract here in question, Diaz was obliged to return the sum deposited by said third party with a promise to pay damages. The record does not show why Enriquez did not ask for damages in the sum of P30,000, but asked for a judgment only in the sum of P20,000. Considering the fact that he neither asked for a judgment for more than P20,000 nor appealed from the judgment of the lower court, Enriquez request to modify the judgment of the lower court cannot be granted. 12. Subsequent sale of land to third person not an excuse for compliance of terms of contracts or to answer for damages The mere fact that Diaz had sold a part of the hacienda to other person, is no sufficient reason for not requiring a strict compliance with the terms of his contract with Enriquez, or to answer in damages for his failure. (Arts. 1101 and 1251 of the Civil Code.)

On 13 July 1987, after conciliation proceedings in the barangay level failed, the Villamors filed a complaint for specific performance against the Reyes before the RTC Caloocan City (Branch 121, Civil Case C-12942). On 26 July 1989, judgment was rendered by the trial court in favor of the Villamor spouses, ordering the Reyeses to sell the land to the Villamors, to pay the the latter the sum of P3,000 as attorneys fees, and to pay the cost of suit. The court dismissed the counterclaim for lack of merit Not satisfied with the decision of the trial court, the Reyes spouses appealed to the Court of Appeals (CA-GR CV 24176). On 12 February 1991, the Court of Appeals rendered a decision reversing the decision of the trialncourt and dismissing the complaint. The reversal of the trial courts decision was premised on the finding of respondent court that the Deed of Option is void for lack of consideration. The Villamor spouses brought thebpetition for review on certiorari before the Supreme Court. The Supreme Court denied the petition, affirmed the decision of the appellate court for reasons cited in the decision, and dismissed the complaint in Civil Case C12942 on the ground of prescription and laches. 1. Consideration defined As expressed in Gonzales v. Trinidad (67 Phil. 682), consideration is the why of the contracts, the essential reason which moves the contracting parties to enter into the contract. In the present case, the cause or the impelling reason on the part of private respondent in executing the deed of option as appearing in the deed itself is the Villamors having agreed to buy the 300 sq. m. portion of Reyes spouses land at P70.00 per sq. m. which was greatly higher than the actual reasonable prevailing price. This cause or consideration is clear from the deed which stated that the only reason why the spouses-vendees Julio Villamor and Marina V Villamor agreed to buy the said one-half portion at the above stated price of about P70.00 per square meter, is because I, and my husband Roberto Reyes, have agreed to sell and convey to them the remaining one-half portion still owned by me . . . It must be noted that in 1969 the Villamor spouses bought an adjacent lot from the brother of Macaria Labing-isa for only P18.00 per square meter, such fact not being rebutted by Macaria. thus, expressed in terms of money, the consideration for the deed of option is the difference between the purchase price of the 300 sq. m. portion of the lot in 1971 (P70.00 per sq. m.) and the prevailing reasonable price of the same lot in 1971. Whatever it is, (P25.00 or P18.00) though not specifically stated in the deed of option, was ascertainable. Villamors allegedly paying P52.00 per square meter for the option may, as opined by the appellate court, be improbable but improbabilities does not invalidate a contract freely entered into by the parties. 2. Option contract defined An optional contract is a privilege existing in one person, for which he had paid a consideration and which gives him the right to buy, for example, certain merchandise or certain specified property, from another person, if he chooses, at any time within the agreed period at a fixed price (Enriquez de la Cavada v. Diaz, 37 Phil. 982) 3. Deed of option unique; grants option to sell to both the Villamors and the Reyeses

Carcellar v. CA 302 SCRA 718 (1999)

Villamor vs. CA [G.R. No. 97332. October 10, 1991.] First Division, Medialdea (J): 2 concur, 1 took no part Facts: Macaria Labingisa Reyes was the owner of a 600square meter lot located at Baesa, Caloocan City (TCT [18431] 18938, Register of Deeds of Rizal). In July 1971, Macaria sold a portion of 300 sq. ms. of the lot to the Spouses Julio and Marina Villamor for the total amount of P21,000.00. Earlier, Macaria borrowed P2,000.00 from the spouses which amount was deducted from the total purchase price of the 300 sq. m. lot sold. The portion sold to the Villamor spouses is now covered by TCT 39935 while the remaining portion which is still in the name of Macaria Labingisa- is covered by TCT 39934. On 11 November 1971, Macaria executed a Deed of option in favor of Villamor in which the remaining 300 sq. m. portion (TCT No. 39934) of the lot would be sold to Villamor under the conditions stated therein. According to Macaria, when her husband, Roberto Reyes, retired in 1984, they offered to repurchase the lot sold by them to the Villamor spouses but Marina Villamor refused and reminded them instead that the Deed of Option in fact gave them the option to purchase the remaining portion of the lot. The Villamors, on the other hand, claimed that they had expressed their desire to purchase the remaining 300 sq. m. portion of the lot but the Reyes had been ignoringthem.

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The deed of option entered into by the parties in the present case had unique features. The first part covered the statement on the sale of the 300 sq. m. portion of the lot to Spouses Villamor at the price of P70 per sq. m. which was higher than the actual reasonable prevailing value of the lands in that place at that time (of sale). The second part stated that the only reason why the Villamor spouses agreed to buy the said lot at a much higher price is because the vendor (Reyes) also agreed to sell to the Villamors the other half-portion of 300 square meters of the land. Had the deed stopped there, there would be no dispute that the deed is really an ordinary deed of option granting the Villamors the option to buy the remaining 300 sq. m.-half portion of the lot in consideration for their having agreed to buy the other half of the land for a much higher price. But, the deed of option went on and stated that the sale of the other half would be made whenever the need of such sale arises, either on our (Reyes) part or on the part of the Spouses Julio Villamor and Marina V. Villamor. It was not only the Villamors who were granted an option to buy for which they paid a consideration. The Reyes as well were granted an option to sell should the need for such sale on their part arise. 4. Offer and Acceptance In the present case, the option offered by the Reyeses had been accepted by the Villamors, the promises, in the same document. The acceptance of an offer to sell for a price certain created a bilateral contract to sell and buy and upon acceptance, the offered, ipso facto assumes obligations of a vendee 5. Perfection of contract of sale; Demandability A contract of sale is, under Article 1475 of the Civil Code, perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Since there was, between the parties, a meeting of minds upon the object and the price, there was already a perfected contract of sale. What was, however, left to be done was for either party to demand from the other their respective undertakings under the contract. In Sanchez v. Rigos, No. L-25494, June 14, 1972, 45 SCRA 368, 376, it was held that since there may be no valid contract without a cause of consideration, the promisor is not bound by his promise and may, accordingly withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. In the present case, demandability may be exercised at any time after the execution of the deed. The Reyeses may compel the Villamors to pay for the property or that the latter may compel the former to deliver the property. 6. Deed of Option does not provide for period for both parties to demand performance of undertaking, renders contract ineffective The Deed of Option did not provide for the period within which the parties may demand theperformance of their respective undertakings in the instrument. The parties could not have contemplated that the delivery of the property and the payment thereof could be made indefinitely and render uncertain the status of the land. The failure of either parties to demand performance of the obligation of the other for an unreasonable length of time renders the contract ineffective.

7. Prescription of actions upon written contracts Under Article 1144 (1) of the Civil Code, actions upon a written contract must be brought within 10 years. The Deed of Option was executed on 11 November 1971. The acceptance, as already mentioned, was also accepted in the same instrument. The complaint in this case was filed by the Villamors on 13 July 1987, 17 years from the time of the execution of the contract. Hence, the right of action had prescribed. There were allegations by the Villamors that they demanded from the Reyeses as early as 1984 the enforcement of their rights under the contract. Still, it was beyond the 10 year period prescribed by the Civil Code. (See also Santos vs. Genayo, L-31854, 9 September 1982, 116 SCRA 431: bar by laches) 8. Court in exercise of its equity jurisdiction It is of judicial notice that the price of real estate in Metro Manila is continuously on the rise. To allow the petitioner to demand the delivery of the property subject 13 years or 17 years after the execution of the deed at the price of only P70 per sq. m. is inequitous. For reasons also of equity and in consideration of the fact that the Reyeses have no other decent place to live, the Court, in the exercise of its equity jurisdiction is not inclined to grant Villamors prayer.

Soriano, et. al. v. Bautista, et. al. [G.R. No. L-15752. December 29, 1962.] Bautista, et. al. v. Soriano, et. al. [G.R. No. L-17457. December 29, 1962.] En Banc, Makalintal (J): 9 concur Facts: Spouses Basilio Bautista and Sofia de Rosas are the absolute and registered owners of a parcel of land, situated in Teresa, Rizal (OCT 3905, Register of Deeds of Rizal). On 30 May 1956, the said spouses for and in consideration on the sum of P1,800, signed a document entitled Kasulatan Ng Sanglaan in favor of Ruperto Soriano and Olimpia de Jesus. Simultaneously with the signing of the deed, the spouses Bautista and de Rosas transferred the possession of the said land to Soriano and de Jesus who have been and are still in possession of the said property and have since that date been and are cultivating the said land and have enjoyed and are still enjoying the produce thereof to the exclusion of all other persons. Sometimes after 30 May 1956, the spouses Bautista and de Rosas received from Soriano and de Jesus, the sum of P450.00 pursuant to the conditions agreed upon in the document for which no receipt was issued and which was returned by the spouses sometime on 31 May 1958. On 13 May 1958, a certain Atty. Angel O. Ver wrote a letter to the spouses Bautista informing the said spouses that his clients Soriano and de Jesus have decided to buy the parcel of land in question pursuant to paragraph 5 of the document in question (That it has likewise been agreed that if the financial condition of the mortgagees will permit, they may purchase said land absolutely on any date within the two-year term of this mortgage at the agreed price of P3,900.00.). The spouses in spite of the receipt of the letter refused to comply with the demand contained therein. On 31 May 1958, Soriano and de Jesus filed before the Trial Court Civil Case 5023, praying that they be

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allowed to consign or deposit with the Clerk of Court the sum of P1,650.00 as the balance of the purchase price of the parcel of land in question. After due hearing, judgment be rendered ordering Bautista and de Rosas to execute an absolute deed of sale of the said property in their favor, plus damages. On 9 June 1958, spouses Bautista and de Rosas filed a complaint against Soriano and de Jesus, which case after hearing was dismissed for lack of jurisdiction. On 5 August 1959, the spouses Bautista and de Rosas again filed a case in the CFI against Soriano and de Jesus asking the Court to order Soriano and de Jesus to accept the payment of the principal obligation and release the mortgage and to make an accounting of the harvest for the two harvest seasons (1956-1957). The two cases, were by agreement of the parties assigned to one branch so that they can be tried jointly. On 10 March 1959, the CFI Rizal, after a joint trial of both cases, ordered Bautista and de Rosas to execute a deed of sale covering the property in question in favor of Soriano and de Jesus upon payment by the latter of P1,650.00 which is the balance of the price agreed upon, i.e. P3,900.00, and the amount previously received by way of loan by the said spouses from Soriano and de Jesus,to pay the sum of P500.00 by way of attorneys fees, and to pay the costs. The Supreme Court affirmed the judgment appealed from, with costs. 1. Mortgagors right to redeem defeasible due to stipulation on option to buy While the transaction is undoubtedly a mortgage and contains the customary stipulation concerning redemption, it carries the added special provision, which renders the mortgagors right to redeem defeasible atthe election of the mortgagees. There is nothing illegal or immoral in this. It is simply an option to buy, sanctioned by Article 1479 of the Civil Code, which states: A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. 2. Promise to sell supported by same consideration of the mortgage, which is distinct from whichwould support the sale; Continuing offer In the present case, the mortgagors promise to sell is supported by the same consideration as that of the mortgage itself, which is distinct from that which would support the sale, an additional amount having been agreed upon, to make up the entire price of P3,900.00, should the option be exercised. The mortgagors promise was in the nature of a continuing offer, non-withdrawable during a period of two years, which upon acceptance by the mortgagees gave rise to a perfected contract of purchase and sale. 3. Inigo vs. CA case affirms right of appellees for specific performance for the execution of deed of sale In the case of Iigo vs. Court of Appeals (96 Phil., 37; 50 O.G. 11 5281), it was held that a stipulation in a contract of mortgage to sell the property to the mortgagee does not bind the same but creates only a personal obligation on the part of the mortgagor. The citation, confirms the position of the appellees, who are not enforcing any real

right to the disputed land but are rather seeking to obtain specific performance of a personal obligation, namely, the execution of a deed of sale for the price agreed upon, the corresponding amount to cover which was duly deposited in court upon the filing of the complaint. 4. Tender ineffective as preemptive right to purchase by other party has been exercised The tender of the sum of P1,800 to redeem the mortgage by Bautista and de Rosas was ineffective for other purpose intended. Such tender must have been made after the option to purchase had been exercised by Soriano and de Jesus (Civil Case 99 was filed on 9 June 1958, only to be dismissed for lack of jurisdiction). Bautistas and de Rosas offer to redeem could be defeated by Sorianos and de Jesus preemptive right to purchase within the period of 2 years from 30 May 1956. Such right was availed of and Bautista and de Rosas were accordingly notified by letter dated 13 May 1958, which was received by them on the following May 22. Offer and acceptance converged and gave rise to a perfected and binding contract of purchase and sale.

Adelfa Properties vs. CA [G.R. No. 111238. January 25, 1995.] Second Division, Regalado (J): 3 concurring Facts: Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and Dominador Jimenez, were the registered co-owners of a parcel of land consisting of 17,710 sq. ms (TCT 309773) situated in Barrio Culasi, Las Pias, Metro Manila. On 28 July 1988, Jose and Dominador Jimenez sold their share consisting of 1/2 of said parcel of land, specifically the eastern portion thereof, to Adelfa Properties pursuant to a Kasulatan sa Bilihan ng Lupa. Subsequently, a Confirmatory Extrajudicial Partition Agreement was executed by the Jimenezes, wherein the eastern portion of the subject lot, with an area of 8,855 sq. ms. was adjudicated to Jose and Dominador Jimenez, while the western portion was allocated to Rosario and Salud Jimenez. Thereafter, Adelfa Properties expressed interest in buying the western portion of the property from Rosario and Salud. Accordingly, on 25 November 1989, an Exclusive Option to Purchase was executed between the parties, with the condition that the selling price shall be P2,856,150, that the option money of P50,000 shall be credited as partial payment upon the consummation of sale, that the balance is to be paid on or before 30 November 1989, and that in case of default by Adelfa Properties to pay the balance, the option is cancelled and 50% of the option money shall be forfeited and the other 50% refunded upon the sale of the property to a third party, and that all expenses including capital gains tax, cost of documentary stamps are for the account of the vendors and the expenses for the registration of the deed of sale for the account of Adelfa properties. Considering, however, that the owners copy of the certificate of title issued to Salud Jimenez had been lost, a petition for the re-issuance of a new owners copy of said certificate of title was filed in court through Atty.Bayani L. Bernardo. Eventually, a new owners copy of the certificate of title was issued but it remained in the possession of Atty. Bernardo until he turned it over to Adelfa Properties, Inc. Before Adelfa Properties could make payment, it received summons on 29 November 1989, together with a copy of

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a complaint filed by the nephews and nieces of Rosario and Salud against the latter, Jose and Dominador Jimenez, and Adelfa Properties in the RTC Makati (Civil Case 89-5541), for annulment of the deed of sale in favor of Household Corporation and recovery of ownership of the property covered by TCT 309773. As a consequence, in a letter dated 29 November 1989, Adelfa Properties informed Rosario and Salud that it would hold payment of the full purchase price and suggested that the latter settle the case with their nephews and nieces, adding that if possible, although 30 November 1989 is a holiday, we will be waiting for you and said plaintiffs at our office up to 7:00 p.m. Another letter of the same tenor and of even date was sent by Adelfa Properties to Jose and Dominador Jimenez. Salud Jimenez refused to heed the suggestion of Adelfa Properties and attributed the suspension of payment of the purchase price to lack of word of honor. On 7 December 1989, Adelfa Properties caused to be annotated on the title of the lot its option contract with Salud and Rosario, and its contract of sale with Jose and Dominador Jimenez, as Entry No. 1437-4 and entry No. 1438-4, respectively. On 14 December 1989, Rosario and Salud sent Francisca Jimenez to see Atty. Bernardo, in his capacity as Adelfa Properties counsel, and to inform the latter that they were cancelling the transaction. In turn, Atty. Bernardo offered to pay the purchase price provided that P500,000.00 be deducted therefrom for the settlement of the civil case. This was rejected by Rosario and Salud. On 22 December 1989, Atty. Bernardo wrote Rosario and Salud on the same matter but this time reducing the amount from P500,000.00 to P300,000.00, and this was also rejected by the latter. On 23 February 1990, the RTC dismissed Civil Case 89-5541. On 28 February 1990, Adelfa Properties caused to be annotated anew on TCT 309773 the exclusive option to purchase as Entry 4442-4.On the same day, 28 February 1990, Rosario and Salud executed a Deed of Conditional Sale in favor of Emylene Chua over the same parcel of land for P3,029,250.00, of which P1,500,000.00 was paid to the former on said date, with the balance to be paid upon the transfer of title to the specified 1/2 portion. On 16 April 1990, Atty. Bernardo wrote Rosario and Salud informing the latter that in view of the dismissal of the case against them, Adelfa Properties was willing to pay the purchase price, and he requested that the corresponding deed of absolute sale be executed. This was ignored by Rosario and Salud. On 27 July 1990, Jimenez counsel sent a letter to Adelfa Properties enclosing therein a check for P25,000.00 representing the refund of 50% of the option money paid under the exclusive option to purchase. Rosario and Salud then requested Adelfa Properties to return the owners duplicate copy of the certificate of title of Salud Jimenez. Adelfa Properties failed to surrender the certificate of title. Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for annulment of contract with damages, praying, among others, that the exclusive option to purchase be declared null and void; that Adelfa Properties be ordered to return the owners duplicate certificate of title; and that the annotation of the option contract on TCT 309773 be cancelled. Emylene Chua, the subsequent purchaser of the lot, filed a complaint in intervention. On 5 September 1991, the trial court rendered judgment holding that the agreement entered

into by the parties was merely an option contract, and declaring that the suspension of payment by Adelfa Properties constituted a counter-offer which, therefore, was tantamount to a rejection of the option. It likewise ruled that Adelfa Properties could not validly suspend payment in favor of Rosario and Salud on the ground that the vindicatory action filed by the latters kin did not involve the western portion of the land covered by the contract between the parties, but the eastern portion thereof which was the subject of the sale between Adelfa Properties and the brothers Jose and Dominador Jimenez. The trial court then directed the cancellation of the exclusive option to purchase, declared the sale to intervenor Emylene Chua as valid and binding, and ordered Adelfa Properties to pay damages and attorneys fees to Rosario and Salud, with costs. On appeal, the Court of appeals affirmed in toto the decision of the court a quo (CA-GR 34767) and held that the failure of petitioner to pay the purchase price within the period agreed upon was tantamount to an election by petitioner not to buy the property; that the suspension of payment constituted an imposition of a condition which was actually a counter-offer amounting to a rejection of the option; and that Article 1590 of the Civil Code on suspension of payments applies only to a contract of sale or a contract to sell, but not to an option contract which it opined was the nature of the document subject of the case at bar. Said appellate court similarly upheld the validity of the deed of conditional sale executed by Rosario and Salud in favor of intervenor Emylene Chua. Hence, the petition for review on certiorari. The Supreme Court affirmed the assailed judgment of the Court of Appeals in CA-GR CV 34767, with modificatory premises. 1. Agreement between parties a contract to sell and not an option contract or a contract of sale The alleged option contract is a contract to sell, rather than a contract of sale. The distinction between the two is important for in contract of sale, the title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. Thus, a deed of sale is considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved in the seller until the full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. 2. Intent not to transfer ownership need not be expressed The parties never intended to transfer ownership to Adelfa Properties to completion of payment of the purchase price, this is inferred by the fact that the exclusive option to purchase, although it provided for automatic rescission of the contract and partial forfeiture of the amount already paid in case of default, does not mention that Adelfa Properties is obliged to return possession or

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ownership of the property as a consequence of nonpayment. There is no stipulation anent reversion or reconveyance of the property in the event that petitioner does not comply with its obligation. With the absence of such a stipulation, it may legally be inferred that there was an implied agreement that ownership shall not pass to the purchaser until he had fully paid the price. Article 1478 of the Civil Code does not require that such a stipulation be expressly made. Consequently, an implied stipulation to that effect is considered valid and binding and enforceable between the parties. A contract which contains this kind of stipulation is considered a contract to sell. Moreover, that the parties really intended to execute a contract to sell is bolstered by the fact that the deed of absolute sale would have been issued only upon the payment of the balance of the purchase price, as may be gleaned from Adelfa Properties letter dated 16 April 1990 wherein it informed the vendors that it is now ready and willing to pay you simultaneously with the execution of the corresponding deed of absolute sale. 3. No actual or constructive delivery of property to indicate contract of sale; Circumstances negate presumption of possession of title is to be understood as delivery It has not been shown that there was delivery of the property, actual or constructive, made. The exclusive option to purchase is not contained in a public instrument the execution of which would have been considered equivalent to delivery. Neither did Adelfa Properties take actual, physical possession of the property at any given time. It is true that after the reconstitution of the certificate of title, it remained in the possession of Atty. Bayani L. Bernardo, Adelfas counsel. Normally, under the law, such possession by the vendee is to be understood as a delivery. However, Rosario and Salud explained that there was really no intention on their part to deliver the title to Adelfa Properties with the purpose of transferring ownership to it. They claim that Atty. Bernardo had possession of the title only because he was their counsel in the petition for reconstitution. The court found no reason not to believe said explanation, aside from the fact that such contention was never refuted or contradicted by Adelfa Properties. 4. Perfected contract to sell The controverted document should legally be considered as a perfected contract to sell, and not strictly an option contract. 5. Contract interpreted to ascertain intent of parties; Title not controlling if text shows otherwise The important task in contract interpretation is always the ascertainment of the intention of the contracting parties and that task is to be discharged by looking to the words they used to project that intention in their contract, all the words not just a particular word or two, and words in context not words standing alone. Moreover, judging from the subsequent acts of the parties which will hereinafter be discussed, it is undeniable that the intention of the parties was to enter into a contract to sell. In addition, the title of a contract does not necessarily determine its true nature. Hence, the fact that the document under discussion is entitled Exclusive Option to Purchase is not controlling where the text thereof shows that it is a contract to sell. 6. Option defined

As used in the law on sales, an option is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It is also sometimes called an unaccepted offer. An option is not of itself a purchase, but merely secures the privilege to buy. It is not a sale of property but a sale of the right to purchase. It is simply a contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. He does not sell his land; he does not then agree to sell it; but he does sell something, that is, the right or privilege to buy at the election or option of the other party. Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside from the consideration for the offer. Until acceptance, it is not, properly speaking, a contract, and does not vest, transfer, or agree to transfer, any title to, or any interest or right in the subject matter, but is merely a contract by which the owner of property gives the optionee the right or privilege of accepting the offer and buying the property on certain terms. 7. Contract defined A contract, like a contract to sell, involves a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Contracts, in general, are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. 8. Distinction between an option and a contract of sale The distinction between an option and a contract of sale is that an option is an unaccepted offer. It states the terms and conditions on which the owner is willing to sell his land, if the holder elects to accept them within the time limited. If the holder does so elect, he must give notice to the other party, and the accepted offer thereupon becomes a valid and binding contract. If an acceptance is not made within the time fixed, the owner is no longer bound by his offer, and the option is at an end. A contract of sale, on the other hand, fixes definitely the relative rights and obligations of both parties at the time of its execution. The offer and the acceptance are concurrent, since the minds of the contracting parties meet in the terms of the agreement. 9. Acceptance; formal or informal Except where a formal acceptance is so required, although the acceptance must be affirmatively and clearly made and must be evidenced by some acts or conduct communicated to the offeror, it may be made either in a formal or an informal manner, and may be shown by acts, conduct, or words of the accepting party that clearly manifest a present intention or determination to accept the offer to buy or sell. Thus, acceptance may be shown by the acts, conduct, or words of a party recognizing the existence of the contract of sale. In the present case, a perusal of the contract involved, as well as the oral and documentary evidence presented by the parties, readily shows that there is indeed a concurrence of Adelfas offer to buy and the Jimenezes acceptance thereof.

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10. Contract clear, only performance of obligations required of parties The offer to buy a specific piece of land was definite and certain, while the acceptance thereof was absolute and without any condition or qualification. The agreement as to the object, the price of the property, and the terms of payment was clear and well-defined. No other significance could be given to such acts that than that they were meant to finalize and perfect the transaction. The parties even went beyond the basic requirements of the law by stipulating that all expenses including the corresponding capital gains tax, cost of documentary stamps are for the account of the vendors, and expenses for the registration of the deed of sale in the Registry of Deeds are for the account of Adelfa Properties, Inc. Hence, there was nothing left to be doneexcept the performance of the respective obligations of the parties. 11. No counter-offer The offer of Adelfa Properties to deduct P500,000.00, (later reduced to P300,000.00) from the purchase price for the settlement of the civil case was not a counteroffer. There already existed a perfected contract between the parties at the time the alleged counter-offer was made. Thus, any new offer by a party becomes binding only when it is accepted by the other. In the case of the Jimenezes, they actually refused to concur in said offer of petitioner, by reason of which the original terms of the contract continued to be enforceable. At any rate, the same cannot be considered a counter-offer for the simple reason that Adelfa Properties sole purpose was to settle the civil case in order that it could already comply with its obligation. In fact, it was even indicative of a desire by Adelfa Properties to immediately comply therewith, except that it was being prevented from doing so because of the filing of the civil case which, it believed in good faith, rendered compliance improbable at that time. In addition, no inference can be drawn from that suggestion given by Adelfa Properties that it was totally abandoning the original contract. 12. Test to determine contract as a contract of sale or purchase or mere option The test in determining whether a contract is a contract of sale or purchase or a mere option is whether or not the agreement could be specifically enforced. There is no doubt that Adelfas obligation to pay the purchase price is specific, definite and certain, and consequently binding and enforceable. Had the Jimenezes chosen to enforce the contract, they could have specifically compelled Adelfa to pay the balance of P2,806,150.00. This is distinctly made manifest in the contract itself as an integral stipulation, compliance with which could legally and definitely be demanded from petitioner as a consequence. 13. Option agreement An agreement is only an option when no obligation rests on the party to make any payment except such as may be agreed on between the parties as consideration to support the option until he has made up his mind within the time specified. An option, and not a contract to purchase, is effected by an agreement to sell real estate for payments to be made within specified time and providing for forfeiture of money paid upon failure to make payment, where the purchaser does not agree to purchase, to make payment, or to bind himself in any way

other than the forfeiture of the payments made. This is not a case where no right is as yet created nor an obligation declared, as where something further remains to be done before the buyer and seller obligate themselves. 14. Contract not an option contract; Balance While there is jurisprudence to the effect that a contract which provides that the initial payment shall be totally forfeited in case of default in payment is to be considered as an option contract, the contract executed between the parties is an option contract, for the reason that the parties were already contemplating the payment of the balance of the purchase price, and were not merely quoting an agreed value for the property. The term balance, connotes a remainder or something remaining from the original total sum already agreed upon. 15. When earnest money given in a contract of sale Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. It constitutes an advance payment and must, therefore, be deducted from the total price. Also, earnest money is given by the buyer to the seller to bind the bargain. 16. Distinctions between earnest and option money There are clear distinctions between earnest money and option money, viz.: (a) earnest money is part of the purchase price, while option money is the money given as a distinct consideration for an option contract; (b) earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; and (c) when earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy 17. Article 1590, New Civil Code Article 1590 of the Civil Code provides Should the vendee be disturbed in the possession or ownership of the thing acquired, or should he have reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend the payment of the price until the vendor has caused the disturbance or danger to cease, unless the latter gives security for the return of the price in a proper case, or it has been stipulated that, notwithstanding any such contingency, the vendee shall be bound to make the payment. A mere act of trespass shall not authorize the suspension of the payment of the price. As the agreement between the parties was not an option contract but a perfected contract to sell; and therefore, Article 1590 would properly apply. 18. Adelfa Properties justified in suspending payment of balance by reason of vindicatory action filed against it In Civil Case 89-5541, it is easily discernible that, although the complaint prayed for the annulment only of the contract of sale executed between Adelfa Properties and the Jimenez brothers, the same likewise prayed for the recovery of therein Jimenez share in that parcel of land specifically covered by TCT 309773. In other words, the Jimenezes were claiming to be co-owners of the entire parcel of land described in TCT 309773, and not only of a portion thereof nor did their claim pertain exclusively to the eastern half adjudicated to the Jimenez brothers. Therefore, Adelfa Properties was justified in suspending payment of the

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balance of the purchase price by reason of the aforesaid vindicatory action filed against it. The assurance made by the Jimenezes that Adelfa Properties did not have to worry about the case because it was pure and simple harassment is not the kind of guaranty contemplated under the exceptive clause in Article 1590 wherein the vendor is bound to make payment even with the existence of a vindicatory action if the vendee should give a security for the return of the price. 19. Jimenezes may no longer be compelled to sell and deliver subject property Be that as it may, and the validity of the suspension of payment notwithstanding, the Jimenezes may no longer be compelled to sell and deliver the subject property to Adelfa Properties for two reasons, that is, Adelfas failure to duly effect the consignation of the purchase price after the disturbance had ceased; and, secondarily, the fact that the contract to sell had been validly rescinded by the Jimenezes. 20. Tender and consignation required in discharge of obligation (eg. Contract to sell); Different in cases involving exercise of right or privilege The mere sending of a letter by the vendee expressing the intention to pay, without the accompanying payment, is not considered a valid tender of payment. Besides, a mere tender of payment is not sufficient to compel the Jimenezes to deliver the property and execute the deed of absolute sale. It is consignation which is essential in order to extinguish Adelfa Properties obligation to pay the balance of the purchase price. The rule is different in case of an option contract or in legal redemption or in a sale with right to repurchase, wherein consignation is not necessary because these cases involve an exercise of a right or privilege (to buy, redeem or repurchase) rather than the discharge of an obligation, hence tender of payment would be sufficient to preserve the right or privilege. This is because the provisions on consignation are not applicable when there is no obligation to pay. A contract to sell involves the performance of an obligation, not merely the exercise of a privilege or a right. Consequently, performance or payment may be effected not by tender of payment alone but by both tender and consignation. 21. Adelfa no longer had right to suspend payment after dismissal of civil case against it Adelfa Properties no longer had the right to suspend payment after the disturbance ceased with the dismissal of the civil case filed against it. Necessarily, therefore, its obligation to pay the balance again arose and resumed after it received notice of such dismissal. Unfortunately, Adelfa failed to seasonably make payment, as in fact it has failed to do so up to the present time, or even to deposit the money with the trial court when this case was originally filed therein. 22. Rescission in a contract to sell Article 1592 of the Civil Code which requires rescission either by judicial action or notarial act is not applicable to a contract to sell. Furthermore, judicial action for rescission of a contract is not necessary where the contract provides for automatic rescission in case of breach, as in the contract involved in the present controversy. By Adelfas failure to comply with its obligation, the Jimenezes elected to resort to and did announce the rescission of the contract through its letter

to Adelfa dated 27 July 1990. That written notice of rescission is deemed sufficient under the circumstances. 23. Resolution of reciprocal contracts may be made extrajudicially, unless impugned in court It was held in University of the Philippines vs. De los Angeles, etc. that the right to rescind is not absolute, being ever subject to scrutiny and review by the proper court. However, this rule applies to a situation where the extrajudicial rescission is contested by the defaulting party. In other words, resolution of reciprocal contracts may be made extrajudicially unless successfully impugned in court. If the debtor impugns the declaration, it shall be subject to judicial determination. Otherwise, if said party does not oppose it, the extrajudicial rescission shall have legal effect. In the present case, although Adelfa Properties was duly furnished and did receive a written notice of rescission which specified the grounds therefore, it failed to reply thereto or protest against it. Its silence thereon suggests an admission of the veracity and validity of Jimenezes claim. 24. Adelfa estopped Furthermore, the initiative of instituting suit was transferred from the rescinder to the defaulter by virtue of the automatic rescission clause in the contract. But then, aside from the lackadaisical manner with which Adelfa Properties treated the Jimenezes letter of cancellation, it utterly failed to seriously seek redress from the court for the enforcement of its alleged rights under the contract. If the Jimenezes had not taken the initiative of filing Civil Case 7532, evidently Adelfa had no intention to take any legal action to compel specific performance from the former. By such cavalier disregard, it has been effectively estopped from seeking the affirmative relief it desires but which it had theretofore disdained.

Sanchez vs. Rigos [G.R. No. L-25494. June 14, 1972.] En Banc, Concepcion (J): 7 concur, 1 took no part, 1 concurs in separate opinion Facts: On 3 April 1961, Nicolas Sanchez and Severina Rigos executed an instrument, entitled Option to Purchase, whereby Mrs. Rigos agreed, promised and committed . . . to sell to Sanchez, for the sum of P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly described in TCT NT-12528 of said province, within two (2) years from said date with the understanding that said option shall be deemed terminated and elapsed, if Sanchez shall fail to exercise his right to buy the property within the stipulated period. Inasmuch as several tenders of payment of the sum of P1,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on 12 March 1963, the former deposited said amount with the CFI Nueva Ecija and commenced against the latter the present action, for specific performance and damages. On 11 February 1964, after the filing of defendants answer, both parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings. Accordingly, on 28 February 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum judicially consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorneys fees, and the

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costs. Hence, the appeal by Mrs. Rigos to the Court of Appeals, which case was the certified by the latter court to the Supreme Court upon the ground that it involves a question purely of law. The Supreme Court affirmed the decision appealed from, with costs against Severina Rigos. 1. Option to purchase not a contract to buy and sell The option did not impose upon Sanchez the obligation to purchase Rigos property. The contract denominated as Option to Purchase is not a contract to buy and sell, it merely granted Sanchez an option to buy, and both parties so understood it, as indicated by the caption given by them to said instrument. Under the provisions thereof, Rigos agreed, promised and committed herself to sell the land therein described to Sanchez for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration distinct from the price stipulated for the sale of the land. 2. Article 1354 applicable to contracts in general, Article 1479 refers to sales in particular Relying upon Article 1354 of the Civil Code, which provides that when the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon consideration, as something paid or promised, the lower court presumed the existence of a consideration distinct from the price. It must be noted however that Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers to sales in particular, and, more specifically, to an accepted unilateral promise to buy or to sell. In other words, Article 1479 is controlling in the present case. Article 1479 provides that A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. 3. Article 1479 imposes condition for a unilateral promise to be binding; Burden of proof In order that a unilateral promise may be binding upon the promisor, Article 1479 requires the concurrence of a condition, namely, that the promise be supported by a consideration distinct from the price. Accordingly, the promisee can not compel the promisor to comply with the promise, unless the former establishes the existence of said distinct consideration. In other words, the promisee has the burden of proving such consideration. In the present case, Sanchez has not even alleged the existence thereof in his complaint. 4. Implied admission of the truth of the other partys averment if party joins in the petition for a judgment based on the pleadings without introducing evidence In the case of Bauermann v. Casas (14 March 1908), it was held that one who prays for judgment on the pleadings without offering proof as to the truth of hie own allegations, and without giving the opposing party an opportunity to introduce evidence, must be understood to admit the truth of all the material and relevant allegations of the opposing party, and to rest his motion for judgment on those allegations taken together with such of his own as are admitted in the pleading. This view was reiterated

in Evangelista V. De la Rosa and Mercys Incorporated v. Herminia Verde. In the present case, Rigos explicitly averred in her answer, and pleaded as a special defense, the absence of said consideration for her promise to sell and, by joining in the petition for a judgment on the pleadings, Sanchez has impliedly admitted the truth of said averment in Rigos answer. 5. Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co. case The Court in the Southwestern Sugar case held that under article 1479 of the new Civil Code an option to sell, or a promise to buy or to sell, as used in said article, to be valid must be supported by a consideration distinct from the price. This is clearly inferred from the context of said article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported by a consideration. In other words, an accepted unilateral promise can only have a binding effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted, if the same is not supported by any consideration. Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the acceptance made of it by appellee. The Court held that the general rule regarding offer and acceptance under Article 1324 must be interpreted as modified by the provision of article 1479, which applies to a promise to buy and sell specifically. In short, the rule requires that a promise to sell to be valid must be supported by a consideration distinct from the price. 6. Atkins, Kroll and Co. v. Cua Hian Tek In the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, decided later than Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., the Court saw no distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral promise to sell similar to the one sued upon here was involved, treating such promise as an option which, although not binding as a contract in itself for lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon acceptance. 7. Option is unilateral Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to buy later. In the present case, however, upon accepting Rigos offer a bilateral promise to sell and to buy ensued, and Sanchez ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was bilateral contract of sale. 8. Option without consideration is a mere offer of a contract of sale, which is not binding until accepted If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale, even though the option was not supported by a sufficient consideration. It can be taken for granted that the option contract was not valid for lack of consideration. But it was, at least, an offer to sell, which was accepted by latter, and of the acceptance the offerer had knowledge before said offer was withdrawn. The concurrence of both acts the offer and the acceptance could at all events have

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generated a contract, if none there was before (arts. 1254 and 1262 of the Civil Code; Zayco vs. Serra, 44 Phil. 331.) In other words, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. 9. Proper construction of conflicting provisions of the same law; Harmonize to implement the same principle rather than to create exceptions In line with the cardinal rule of statutory construction that, in construing different provisions of one and the same law or code, such interpretation should be favored as will reconcile or harmonize said provisions and avoid a conflict between the same. Indeed, the presumption is that, in the process of drafting the Code, its author has maintained a consistent philosophy or position. Moreover, the decision in Southwestern Sugar & Molasses Co. v. Atlantic Gulf & pacific Co., holding that Art. 1324 (on the general principles on contracts) is modified by Art. 1479 (on sales) of the Civil Code, in effect, considers the latter as an exception to the former, and exceptions are not favored, unless the intention to the contrary is clear, and it is not so, insofar as said 2 articles are concerned. What is more, the reference, in both the second paragraph of Art. 1479 and Art. 1324, to an option or promise supported by or founded upon a consideration, strongly suggests that the 2 provisions intended to enforce or implement the same principle. 10. Atkins, Kroll & Co. case modifies or abandons Southwestern Sugar case insofar as to inconsistencies Upon mature deliberation, the Court is of the considered opinion that it should, as it hereby reiterates the doctrine laid down in the Atkins, Kroll & Co. case, and that, insofar all inconsistent therewith, the view adhered to in the South western Sugar & Molasses Co. case should be deemed abandoned or modified.

Nietes can avail of the option to buy because he already express his intention to buy the property before the termination of the contract. The contention of the respondent that the full price of the property should first be paid before the option could be exercised is of no merit. The contract doesnt provide such stipulation and as such, the provision of reciprocal obligations in oblicon should prevail. Notice of the creditor's decision to exercise his option to buy need not be coupled with actual payment of the price, so long as this is delivered to the owner of the property upon performance of his part of the agreement. Nietes had validly and effectively exercised his option to buy the property of Dr. Garcia, at least, on December 13, 1962, when he acknowledged receipt from Mrs. Nietes of the sum of P2,200 then delivered by her "in partial payment on the purchase of the property" described in the "Contract of Lease with Option to Buy"

Vasquez vs. CA [G.R. No. 83759. July 12, 1991.] Third Division, Gutierrez Jr. (J): 4 concur Facts: On 21 September 1964, Vallejera and Olea sold the lot to Vasquez and Gayaleno under a Deed of Sale for the amount of P9,000.00. The Deed of Sale was duly ratified and notarized. On the same day and along with the execution of the Deed of Sale, a separate instrument, denominated as Right to Repurchase, was executed by the parties granting the Vallejera and Olea the right to repurchase the lot for P12,000.00, said document was likewise duly ratified and notarized. By virtue of the sale, the Vasquez and Gayaleno secured TCT T-58898 in their name. On 2 January 1969, Vallejera and Olea sold the same lot to Benito Derrama, Jr., after securing Vasquez and Gayalenos title, for the sum of P12,000.00. Upon the protestations of Vasquez and Gayaleno, assisted by counsel, the said second sale was cancelled after the payment of P12,000.00 by Vasquez and Gayaleno to Derrama On 15 January 1975, Spouses Martin Vallejera and Apolonia Olea filed an action against Spouses Cirpriano Vasquez and Valeriana Gayaleno seeking to redeem Lot 1860 of the Himamaylan Cadastre which was previously sold by the former to the latter on 21 September 1964. Said lot was registered in the name of Vallejera and Olea. On October 1959, the same was leased by them to Vasquez and Gayalleno up to crop year 1966-67, which was extended to crop year 1968-69. After the execution of the lease, Vasquez and Gayaleno took possession of the lot, up to now and devoted the same to the cultivation of sugar. Vasquez and Gayeleno resisted the action for redemption on the premise that the Right to Repurchase is just an option to buy since it is not embodied in the same document of sale but in a separate document, and since such option is not supported by a consideration distinct from the price, said deed for right to repurchase is not binding upon them. After trial, the RTC Himamaylan, Negros Occidental (6th Judicial Region, Branch 56, Civil Case 839) rendered judgment against Vasquez and Gayeleno, ordering them to resell lot 1860 of the Himamaylan Cadastre to Vallejera and Olea for the repurchase price of P24,000.00, which amount combines the price paid for the first sale and the price paid by the former to Benito Derrama, Jr. Vallejera and Gayeleno moved for,

NIETES V. CA (August 18, 1972) FACTS: Petitioner Aquilino Nietes and respondent Dr.Pablo Garcia entered a Contract of Lease and Option to Buy where the latter agreed to lease his Angeles Educational Institute to the former. The rent is set to P5000 per year up to 5 years and that the LESSOR agrees to give the LESSEE an option to buy the land and the school building, for P100,000 within the period of the Contract of Lease. Nietes paid Garcia P2200 on Dec.16, 1962 for partial payment on the purchase of the property. Through their lawyers, Garcia decided to rescind the contract while Nietes expresses his intention to buy the property. Nietes also deposited 84K to a bank corresponding to the balance for the purchase of the property. ISSUE: WON Nietes can aval of his option to buy the property. HELD:

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but were denied reconsideration. Excepting thereto, they appealed. The Court of Appeals affirmed the decision of the RTC Himamaylan, Negros Occidental in Civil Case 839. In addition, the appellate court ordered Vasquez and Gayeleno to pay the amount of P5,000.00 as necessary and useful expenses in accordance with Article 1616 of the Civil Code. Hence, the petition. The Supreme Court granted the petition, reversed and set aside the questioned decision and resolution of the Court of Appeals , and dismissed the complaint in Civil Case 839 of the then CFI Negros Occidental 12th Judicial District Branch 6; without costs. 1. Right of repurchase not supported by a consideration distinct from the price; Burden of proof In the present case, it is clear that the right to repurchase was not supported by a consideration distinct from the price. The rule is that the promisee has the burden of proving such consideration. Unfortunately, the promises (Vallejera) in the right to repurchase failed to prove such consideration. They did not even allege the existence thereof in their complaint. (See Sanchez v. Rigos supra). 2. Application of Sanchez vs. Rigos case In order that the Sanchez case can be applied, the evidence must show that the Vallejera and Olea accepted the right to repurchase. The record, however, does not show that they accepted the Right to Repurchase the land in question. 3. Annotation and registration of right to repurchase not an acceptance but for the purpose of Sales, 2003 ( 256 ) Haystacks (Berne Guerrero) binding purchasers of such registered land The annotation and registration of the right to repurchase at the back of the certificate of title of Vasquez and Gayeleno can not be considered as acceptance of the right to repurchase. Annotation at the back of the certificate of title of registered land is for the purpose of binding purchasers of such registered land. In the case of Bel Air Village Association, Inc. v. Dionisio (174 SCRA 589 [1989]), citing Tanchoco v. Aquino (154 SCRA 1 [1987]), and Constantino v. Espiritu (45 SCRA 557 [1972]), it was ruled that purchasers of a registered land are bound by the annotations found at the back of the certificate of title covering the subject parcel of land. In effect, the annotation of the right to repurchase found at the back of the certificate of title over the subject parcel of land of Vasquez and Gayeleno only served as notice of the existence of such unilateral promise of Vasquez and Gayeleno to resell the same to Vallejera and Olea. This, however, can not be equated with acceptance of such right to repurchase repurchase Neither can the signature of Vasquez and Gayeleno in the document called right to repurchase signify acceptance of the right to repurchase, as Vallejera and Olea did not sign the offer. Acceptance should be made by the promisee and not the promisors. It would be absurd to require the promisor of an option to buy to accept his own offer instead of the promisee to whom the option to buy is given.

4. Actions of Vallejera and Olea cannot be considered as acceptance; Sending of letters without tender of redemption price falls short of requirement to repurchase The actions of the private respondents (a) filing a complaint to compel re-sale and their demands for resale prior to filing of the complaint cannot be considered acceptance. As stated in Vda. de Zulueta v. Octaviano (121 SCRA 314 [1983]), mere sending of letters by the vendor expressing his desire to repurchase the property without accompanying tender of the redemption price fell short of the requirements of law. (Lee v. Court of Appeals, 68 SCRA 197 [1972]). Neither did a judicial consignation of the repurchase price made within the agreed period. 5. Contract of sale with right of repurchase In a contract of sale with a right of repurchase, the redemptioner who may offer to make the repurchase on the option date of redemption should deposit the full amount in court . . . (Rumbaoa v. Arzaga, 84 Phil. 812 [1949]). 6. Right of vendor a retro to repurchase To effectively exercise the right to repurchase the vendor a retro must make an actual and simultaneous tender of payment or consignation. (Catangcatang v. Legayada, 84 SCRA 51 [1978]). 7. Refusal to sell parcel of land a withdrawal of the option to buy The ineffectual acceptance of the option to buy validated the vendors refusal to sell the parcel which can be considered as a withdrawal of the option to buy. 8. Conventional redemption, when occurs Conventional redemption takes place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon. (Article 1601, Civil Code). 9. Right of repurchase not granted in a subsequent document but in the same instrument of sale As held in Villarica v. Court of Appeals (26 SCRA 189 [1968]), The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. Once the instrument of absolute sale is executed, the vendor can no longer reserve the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but some other right like the option to buy. 10. Applicability of the Zulueta case as to the transaction being not a option to repurchase but an option to buy As in the present case, the option to repurchase involved in the Zulueta case was executed in a separate document but on the same date that the deed of definite sale was executed. While it is true that the Court in the Zulueta case found Zulueta guilty of laches, this, however, was not the primary reason why the Court disallowed the redemption of the property by Zulueta. It is clear from the decision that the ruling in the Zulueta case was based mainly on the finding that the transaction between Zulueta and Octaviano was not a sale with right to repurchase and that the option to repurchase was but an option to buy or a mere promise on

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the part of Octaviano to resell the property to Zulueta. In the present case, since the transaction between the petitioners and private respondents was not a sale with right to repurchase, the private respondents cannot avail of Article 1601 of the Civil Code which provides for conventional redemption.

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