performance.
Its conduct is governed by the law on human relations under
Ang Yu Asuncion et al. vs. Court of Appeals and Buen Realty Corp.
Topic: Sales; Contract of sale v. Contract to sell; remedies for violation of right
of first refusal
Facts: Petitioners Ang Yu Asuncion et. al. are lessees of residential and
commercial spaces owned by the Unjiengs. They have been leasing the property
and possessing it since 1935 and have been paying rentals.
In 1986, the Unjiengs informed Petitioners Ang Yu Asuncion that the property
was being sold and that Petitioners were being given priority to acquire them
(Right of First Refusal). They agreed on a price of P5M but they had not yet
agreed on the terms and conditions. Petitioners wrote to the Unjiengs twice,
asking them to specify the terms and conditions for the sale but received no
reply. Later, the petitioners found out that the property was already about to be
sold, thus they instituted this case for Specific Performance [of the right of first
refusal].
The Trial Court dismissed the case. The trial court also held that the Unjieng’s
offer to sell was never accepted by the Petitioners for the reason that they did not
agree upon the terms and conditions of the proposed sale, hence, there was no
contract of sale at all. Nonetheless, the lower court ruled that should the
defendants subsequently offer their property for sale at a price of P11-million or
below, plaintiffs will have the right of first refusal.
The Court of Appeals affirmed the decision of the Trial Court.
In the meantime, in 1990, the property was sold to De Buen Realty, Private
Respondent in this case. The title to the property was transferred into the name
of De Buen and demanded that the Petitioners vacate the premises.
Because of this, Petitioners filed a motion for execution of the CA judgement. At
first, CA directed the Sheriff to execute an order directing the Unjiengs to issue a
Deed of Sale in the Petitioner’s favour and nullified the sale to De Buen Realty.
But then, the CA reversed itself when the Private Respondents Appealed.
Issues:
1. Whether or not the Contract of Sale is perfected by the grant of a Right
of First Refusal.
2. Whether or not a Right of First Refusal may be enforced in an action for
Specific Performance.
Ruling:
1. No. A Right of First Refusal is not a Perfected Contract of Sale under Art.
1458 or an option under Par. 2 Art 1479 or an offer under Art. 1319. In a
Right of First Refusal, only the object of the contract is determinate. This
means that novinculum juris is created between the seller-offeror and the
buyer-offeree.
2. No. Since a contractual relationship does not exist between the parties, a
Right of First Refusal may not be enforced through an action for specific
Art. 19-21 of the Civil Code and not by contract law.
Therefore, the Supreme Court held that the CA could not have decreed at the
time the execution of any deed of sale between the Unjiengs and Petitioners.
Other Rules, Comments and Discussion:
This case is notable because it lays down the rules on options contracts and right
of first refusal as well as promises to buy and sell. First, the Supreme Court
discussed the stages of the formation of a sales contract, these are:
1. Negotiation – covers the period from the time the prospective
contracting parties indicate interest in the contract to the time the contract
is concluded (perfected).
2. Perfection – takes place upon the concurrence of the essential elements
thereof. In a sales contract this is governed by Art. 1458
3. Consummation – begins when the parties perform their respective
undertakings under the contract culminating in the extinguishment thereof
Until the contract is perfected (No. 2), it cannot, as an independent source of
obligation, serve as a binding juridical relation. A sales contract is perfected
when a person, called the seller, obligates himself, for a price certain, to deliver
and to transfer ownership of a thing or right to another, called the buyer, over
which the latter agrees (Art 1458).
Under Art. 1458, there is no perfection of a sale under a “Contract to Sell”. A
Contract to Sell is characterized as a conditional sale and the breach of the
suspensive condition will prevent the obligation to transfer title from acquiring
obligatory force.
Promises to Buy and Sell
Unconditional mutual promise to buy and sell – As long as the object is made
determinate and the price is fixed, can be obligatory on the parties, and
compliance therewith may accordingly be exacted. The Right of First Refusal
falls under this classification.
Accepted unilateral promise – If it specifies the thing to be sold and the price to
be paid and when coupled with a valuable consideration distinct and separate
from the price, is what may properly be termed a perfected contract of option.
This contract is legally binding. (Par. 2 Art. 1458) Note however, that the option
is a contract separate and distinct from the contract of sale. Once the option is
exercised before it is withdrawn, a bilateral promise to sell and to buy ensues
and both parties are then reciprocally bound to comply with their respective
undertakings.
Offers with a Period
Where a period is given to the offeree within which to accept the offer, the
following rules generally govern:
1. If the period is not itself founded upon or supported by a consideration
– Offeror may withdraw offer at any time before its acceptance (or
knowledge of its acceptance). However, the right to withdraw must not be
 exercised whimsically or arbitrarily otherwise it can give rise to damages
under Art. 19 of the New Civil Code
2. If period is founded on a separate consideration – This is
a perfected contract of option. Withdrawal of the offer within the period of
the option is deemed a breach of the contract of option (not the sale). “If, in
fact, the optioner-offeror withdraws the offer before its acceptance (exercise
of the option) by the optionee-offeree, the latter may not sue for specific
performance on the proposed contract (“object” of the option) since it has
failed to reach its own stage of perfection. The optioner-offeror, however,
renders himself liable for damages for breach of the option.”
3. Earnest money – This is not an offer with a period. Earnest money is
distinguished from the option contract if the consideration given will be
considered as a part of the purchase price of the object of the sale. Earnest
money is evidence of a perfected contract of sale. (Art. 1482)
Right of First Refusal
This is “an innovative juridical relation” because it is neither a perfected contract
of sale under Art. 1458 nor an option contract under par. 2 Art 1479. The object
might be made determinate, the exercise of the right, however, is dependent on
the offeror’s eventual intention to enter into a binding juridical relation with
another but also on terms and conditions such as price. There is no juridical tie
or vinculum juris.
Breach of the right cannot justify correspondingly an issuance of a writ of
execution under a court judgement that recognizes its existence, such as in Ang
Yu Asuncion. An action for Specific Performance is not allowed under a Right of
First Refusal because doing so would negate the indispensable element of
consensuality in the perfection of contracts.
This right is not inconsequential because it gives right to an action for damages
under Art. 19.
Other Acts that Won’t Bind
Public advertisements or solicitations – Construed as mere invitations to make
offers and/or proposals.
JUAN P. CABRERA vs. HENRY YSAAC
FACTS: Henry Ysaac is one of the co-owners of a parcel of land covered by OCT
No. 506 with an area of 5,517 square meters. He leased out a portion of the
property to several lessees including Juan Cabrera who leased a 95-square meter
portion of the land. In need of money, Henry offered to sell the 95 sq. meter lot
but Juan demurred because the lot was too small for his needs since there was
no parking space for his vehicle. To deal with Juan’s need, Henry expanded his
offer to include two adjoining lands which was then leased by two families but
warned that the sale could only proceed if the two families would agree. The deal
was almost closed with the agreed price of P 250/sq.m but Juan stated that he
could only pay the full price after his retirement. Henry agreed but demanded
for an initial payment of P1, 500.00 which Juan paid.
ISSUE: Whether or not there was a valid contract of sale between petitioner and
respondent.
RULING: We find that there was no contract of sale. It was null
ab initio. As defined by the Civil Code, “[a] contract is a meeting of minds between
two persons whereby one binds himself, with respect to the other, to give
something or to render some service.” For there to be a valid contract, there must
be consent of the contracting parties, an object certain which is the subject matter
of the contract, and cause of the obligation which is established. Sale is a special
contract. The seller obligates himself to deliver a determinate thing and to transfer
its ownership to the buyer. In turn, the buyer pays for a price certain in money or
its equivalent.77 A “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.”78
The seller and buyer must agree as to the certain thing that will be subject of the
sale as well as the price in which the thing will be sold. The thing to be sold is the
object of the contract, while the price is the cause or consideration. The object of
the sales contract between petitioner and respondent was a definite portion of a
co-owned parcel of land. At the time of the alleged sale between petitioner and
respondent, the entire property was still held in common. This is evidenced
by the original certificate of title, which was under the names of Matilde Ysaac,
Priscilla Ysaac, Walter Ysaac, respondent Henry Ysaac, Elizabeth Ysaac, Norma
Ysaac, Luis Ysaac, Jr., George Ysaac, Franklin Ysaac, Marison Ysaac, Helen Ysaac,
Erlinda Ysaac, and Maridel Ysaac. The rules allow respondent to sell his undivided
interest in the coownership. However, this was not the object of the sale between
him and petitioner. The object of the sale was a definite portion. Even if it was
respondent who was benefiting from the fruits of the lease contract to petitioner,
respondent has “no right to sell or alienate a concrete, specific or determinate part
of the thing owned in common, because his right over the thing is represented by
quota or ideal portion without any physical adjudication.”
SPOUSES ROQUE vs. AGUADO
FACTS: On July 21, 1977, petitioners-spouses Roque and the original owners of
the then unregistered Lot 18089 – namely, Rivero, et al. executed the 1977 Deed
of Conditional Sale over a 1,231-sq. m. portion of Lot 18089 for a consideration of
P30,775.00. The parties agreed that Sps. Roque shall make an initial payment of
P15,387.50 upon signing, while the remaining balance of the purchase price shall
be payable upon the registration of Lot 18089, as well as the segregation and the
concomitant issuance of a separate title over the subject portion in their names.
After the deed’s execution, Sps. Roque took possession and introduced
improvements on the subject portion which they utilized as a balut factory.
Pertinent provision of the 1977 Deed of Conditional Sale: DEED OF
CONDITIONAL SALE OF REAL PROPERTY, KNOW ALL MEN BY THESE
PRESENTS:
That for and in consideration of the sum of THIRTY THOUSAND SEVEN
HUNDRED SEVENTY FIVE PESOS (P30,775.00), Philippine Currency, payable
in the manner hereinbelow specified, the VENDORS do hereby sell, transfer and
convey unto the VENDEE, or their heirs, executors, administrators, or assignors,
that unsegregated portion of the above lot, x x x.
That the aforesaid amount shall be paid in two installments, the first installment
which is in the amount of __________ (P15,387.50) and the balance in the
amount of __________ (P15,387.50), shall be paid as soon as the described
portion of the property shall have been registered under the Land Registration Act
and a Certificate of Title issued accordingly;
That as soon as the total amount of the property has been paid and the Certificate
of Title has been issued, an absolute deed of sale shall be executed accordingly;
On August 12, 1991, Sabug, Jr, applied for a free patent over the entire Lot 18089
and was eventually issued OCT No. M-59558 in his name on October 21, 1991. On
June 24, 1993, Sabug, Jr. and Rivero, in her personal capacity and in
representation of Rivero, et al., executed the 1993 Joint Affidavit, acknowledging
that the subject portion belongs to Sps. Roque and expressed their willingness to
segregate the same from the entire area of Lot 18089.
On December 8, 1999, however, Sabug, Jr., through the 1999 Deed of Absolute
Sale, sold Lot 18089 to Aguado for P2,500,000.00, who, in turn, caused the
cancellation of OCT No. M-5955 and the issuance of TCT No. M-96692 dated
December 17, 199911 in her name.
Thereafter, Aguado obtained an P8,000,000.00 loan from the Land Bank secured
by a mortgage over Lot 18089. When she failed to pay her loan obligation, Land
Bank commenced extra-judicial foreclosure proceedings and eventually tendered
the highest bid in the auction sale. Upon Aguado’s failure to redeem the subject
property, Land Bank consolidated its ownership, and TCT No. M-11589513 was
issued in its name on July 21, 2003.
On June 16, 2003, Sps. Roque filed a complaint for
reconveyance, annulment of sale, deed of real estate mortgage, foreclosure, and
certificate of sale, and damages before the RTC.
ISSUE: Whether or not the 1977 Deed of Conditional Sale is a conditional
contract of sale or a contract to sell.
Ruling: It is a CONTRACT TO SELL. The Court held that where the seller
promises to execute a deed of absolute sale upon the completion by the buyer of
the payment of the purchase price, the contract is only a contract to sell even if
their agreement is denominated as a Deed of Conditional Sale, as in this case. This
treatment stems from the legal characterization of a contract to sell, that is,
a bilateral contract whereby the prospective seller, while expressly reserving the
ownership of the subject property despite delivery thereof to the prospective
buyer, binds himself to sell the subject property exclusively to the prospective
buyer upon fulfillment of the condition agreed upon, such as, the full payment of
the purchase price. Elsewise stated, in a contract to sell, ownership is retained by
the vendor and is not to pass to the vendee until full payment of the purchase
price.
In contracts to sell the obligation of the seller to sell becomes demandable only
upon the happening of the suspensive condition, that is, the full payment of the
purchase price by the buyer. It is only upon the existence of the contract of sale
that the seller becomes obligated to transfer the ownership of the thing sold to the
buyer. Prior to the existence of the contract of sale, the seller is not obligated to
transfer the ownership to the buyer, even if there is a contract to sell between
them.
Final installment not paid thus no perfected contract of sale
Here, it is undisputed that Sps. Roque have not paid the final installment
of the purchase price. As such, the condition which would have triggered the
parties’ obligation to enter into and thereby perfect a contract of sale in order to
effectively transfer the ownership of the subject portion from the sellers (i.e.,
Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been fulfilled.
Consequently, the latter cannot validly claim ownership over the subject portion
even if they had made an initial payment and even took possession of the same.
Conditional contract of sale and contract to sell in relation to double
sale
It is essential to distinguish between a contract to sell and a conditional contract
of sale specially in cases where the subject property is sold by the owner not to the
party the seller contracted with, but to a third person, as in the case at bench.
In a contract to sell, there being no previous sale of the property, a
third person buying such property despite the fulfillment of the
suspensive condition such as the full payment of the purchase price,
for instance, cannot be deemed a buyer in bad faith and the
prospective buyer cannot seek the relief of reconveyance of the
property.
There is no double sale in such case. Title to the property will transfer to the buyer
after registration because there is no defect in the owner-seller’s title per se, but
the latter, of course, may be sued for damages by the intending
buyer. The action for reconveyance shall fail.
CABLING vs. LUMAPAS
F a c t s : Petitioner Cabling was the highest bidder in an extrajudicial
foreclosure sale over a property situated in Sta. Rita, Olongapo City. The Final
Deed of Sale was issued by the Sheriff of Olongapo City and the title to the
property was duly transferred to the petitioner after more than one year
therefrom.
Petitioner Cabling filed an Application for the Issuance of a Writ of Possession
with the RTC. Petitioner’s application was granted and the RTC subsequently
issued a Writ of Possession and Notice to Vacate. Respondent Lumapas, however,
filed a Motion for Intervention as a third party in actual possession of the
foreclosed property. She claimed that the property had previously been sold to
herby Aida Ibabao, the property’s registered owner and the judgment
debtor/mortgagor in the extrajudicial foreclosure sale, pursuant to a Deed of
Conditional Sale. The RTC issued an order holding in abeyance the
implementation of the petitioner’s writ of possession until after the resolution of
the respondent’s motion. Thereafter, the RTC rendered the assailed decision
stating that "an ex-parte writ of possession issued pursuant to Act No. 355, as
amended, cannot be enforced against a third person who is in actual possession
of the foreclosed property and who is not in privity with the debtor/mortgagor."
On appeal, the CA dismissed the petition and affirmed in toto the RTC’s assailed
orders holding that the obligation of the trial court to issue a writ of possession
ceases to be ministerial once it appears that there is a third party in possession of
the property claiming a right adverse to that of the debtor/mortgagor and where
such third party exists, the trial court should conduct a hearing to determine the
nature of his adverse possession. Hence, this petition.
Issue: Whether respondent may be considered as having an adverse title against
petitioner, thus warranting the abeyance of the implementation of the writ of
possession.
Ruling: No. In the present case, the respondent cannot be said to possess the
subject property by adverse title or right as her possession is merely premised on
the alleged conditional sale of the property to her by the judgment
debtor/mortgagor. The execution of a contract of conditional sale does not
immediately transfer title to the property to be sold from seller to buyer. In such
contract, ownership or title to the property is retained by the seller until the
fulfillment of a positive suspensive condition which is normally the payment of
the purchase price in the manner agreed upon. Here, the Deed of Conditional Sale
between the respondent (buyer) and the subject property’s registered owner
(seller) expressly reserved to the latter ownership over the property until full
payment of the purchase price, despite the delivery of the subject property to the
respondent. It appears from the records that no deed of absolute sale over the
subject property has been executed in the respondent's favor. Thus, the
respondent's possession from the time the subject property was "delivered" to her
by the seller cannot be claimed as possession in the concept of an owner, as the
ownership and title to the subject property still then remained with the seller until
the title to the property was transferred to the petitioner in March
2009. As a rule, in the extrajudicial foreclosure of real estate mortgages under A
ct No. 3135 (asamended), the writ of possession issues as a matter of course,
without need of a bond or of a separate and independent action, after the lapse of
the period of redemption, and after the consolidation of ownership and the
issuance of a new TCT in the purchaser’s name. An exemption is that the
possession of the property shall be given to the purchaser or last redemption or
unless a third party is actually holding the property in a capacity adverse to the
judgment obligor. In order for the respondent not to be ousted by the ex parte
issuance of a writ of possession, her possession of the property must be adverse
in that she must prove a right independent of and even superior to that of the
judgment debtor/mortgagor.
OLIVAREZ REALTY CORPORATION and DR. PABLO R.
OLIVAREZ, vs. BENJAMIN CASTILLO,
Benjamin Castillo was the registered owner of a parcel of land located
in Laurel, Batangas, covered by Transfer Certificate of Title No. T-
19972. The Philippine Tourism Authorityallegedly claimed ownership
of the same parcel of land based on Transfer Certificate of Title No. T-
18493. On April 5, 2000, Castillo and Olivarez Realty Corporation,
represented by Dr. Pablo R. Olivarez, entered into a contract of
conditional sale over the property. Under the deed of conditional sale,
Castillo agreed to sell his property to Olivarez Realty Corporation
for P19,080,490.00 and Olivarez Realty Corporation assumes the
responsibility of taking necessary legal action thru Court to have the
claim/title TCT T-18493 of Philippine Tourism Authority over the
above-described property be nullified and voided with the full
assistance of Castillo.
On September 2, 2004, Castillo filed a complaint for action for
rescission against Olivarez Realty Corporation and Dr . Olivarez with
the Regional Trial Court of Tanauan City,Batangas. Castillo alleged
that Dr. Olivarez convinced him into selling his property to Olivarez
Realty Corporation on the representation that the corporation shall be
responsible in clearing the pro perty of the tenants and in paying them
disturbance compensation. However, the corporation only paid
2,500,000.00 of the purchase price and failed to comply the terms of
the conditional sale. Despite demand, Olivarez Realty Corporation
refused to fully pay the purchase price.
In their answer, Olivarez Realty Corporation and Dr. Olivarez
admitted that the corporation only paid P2,500,000.00 of the
purchase price. In their defense, defendants alleged that Castillo
failed to "fully assist" the corporation in filing an action against the
Philippine Tourism Authority. Neither did Castillo clear the property
of the tenants within six months from the signing of the deed of
conditional sale.
On March 8, 2006, Castillo filed a motion for summary judgment
and/or judgment on the pleadings. He argued that Olivarez Realty
Corporation and Dr. Olivarez "substantially admitted the material
allegations of his complaint." Should judgment on the pleadings be
improper, Castillo argued that summary judgment may still be
rendered as there is no genuine issue as to any material fact.
The trial court found that Olivarez Realty Corporation and Dr.
Olivarez’s answer "substantially admitted the material allegations of
Castillo’s complaint and did not raise any genuine issue as to any
material fact." Olivarez Realty Corporation and Dr. Olivarez appealed
to the Court of Appeals which affirmed in toto the trial
court’s decision. Hence, this petition for review on certiorari.
ISSUE: Is summary judgment rendered the Regional Trial Cour t
correct?
RULING:
The summary judgment is correct. An issue of material fact exists
if the answer or responsive pleading filed specifically denies the
material allegations of fact set forth in the complaint or pleading. If
the issue of fact "requires the presentation of evidence, it is a genuine
issue of fact." However, if the issue "could be resolved judiciously by
plain resort" to the pleadings, affidavits, depositions, and other
paperson file, the issue of fact raised is sham, and the trial court may
resolve the action through summary judgment.
A summary judgment is usually distinguished from a judgment on the
pleadings. Under Rule 34 of the 1997 Rules of Civil Procedure, trial
may likewise be dispensed with and a case decided through judgment
on the pleadings if the answer filed fails to tender an issue or
otherwise admits the material allegations of the claimant’s pleading.
Judgment on the pleadings is proper when the answer filed fails to
tender any issue, or otherwise admits the material allegation s in the
complaint. On the other hand, in a summary judgment, the
answer filed tenders issues as specific denials and affirmativedefenses
are pleaded, but the issues raised are sham, fictitious, or otherwise
not genuine.
In this case, Olivarez Realty Corp oration admitted that it did not fully
pay the purchase price as agreed upon in the deed of conditional sale.
As to why it withheld payments from Castillo, it set up the
following affirmative defenses: First, Castillo did not file a case to
void the Philippine Tourism Authority’s title to the property; second,
Castillo did not clear the land of the tenants; third, Castillo allegedly
sold the property to a third person, and the subsequent sale is
currently being litigated beforea Quezon City court.
Considering that Olivarez Realty Corporation and Dr. Olivarez’s
answer tendered an issue, Castillo properly availed himself of a
motion for summary judgment. However, the issues tendered by
Olivarez Realty Corporation and Dr. Olivarez’s answer are not genuine
issues of material fact. These are issues that can be resolved
judiciously by plain resort to the pleadings, affidavits, depositions,
and other papers on file; otherwise, these issues are sham, fictitious,
or patently unsubstantial.
Castillo’s alleged failure to "fully assist" the corporation in filing the
case is not a defense. As the trial court said, "how can Castillo assist
the corporation when the latter did not filethe action in the first
place?"
Neither can Olivarez Realty Corporation argue that it ref used to fully
pay the purchase price due to the Philippine Tourism Authority’s
adverse claim on the property. The corporation knew of this adverse
claim when it entered into a contract of conditional sale. It even
obligated itself under the deed of conditi onal sale to sue the Philippine
Tourism Authority. This defense, therefore, is sham.
As demonstrated, there are no genuine issues of material fact in this
case. These are issues that can be resolved judiciously by plain resort
to the pleadings, affidavits, depositions, and other papers on file. As
the trial court found, Olivarez Realty Corporation illegally withheld
payments of the purchase price. The trial court did not err in
rendering summary judgment.
ALBERT R. PADILLA VS. SPOUSES FLORESCO PAREDES and
ADELINA PAREDES, and THE HONORABLE COURT OF APPEALS
FACTS: On October 20, 1988, petitioner Albert R. Padilla and private
respondents Floresco and Adelina Paredes entered into a contract to sell involving
a parcel of land in San Juan, La Union. At that time, the land was untitled although
private respondents were paying taxes thereon. Under the contract, petitioner
undertook to secure title to the property in private respondents' names. Of the
P312,840.00 purchase price, petitioner was to pay a downpayment of P50,000.00
upon signing of the contract, and the balance was to be paid within ten days from
the issuance of a court order directing issuance of a decree of registration for the
property.
On December 27, 1989, the court ordered the issuance of a decree of land
registration for the subject property. The property was titled in the name of
private respondent Adelina Paredes. Private respondents then demanded
payment of the balance of the purchase price.
Petitioner then made several payments to private respondents, some even before
the court issued an order for the issuance of a decree of registration and they also
offered to pay the land through a check. Still, petitioner failed to pay the full
purchase price even after the expiration of the period set. In a letter dated
February 14, 1990, private respondents, through counsel, demanded payment of
the remaining balance, with interest and attorney's fees, within five days from
receipt of the letter. Otherwise, private respondents stated they would consider
the contract rescinded.
On February 28, 1990, petitioner made a payment of P100,000.00 to private
respondents, still insufficient to cover the full purchase price. Shortly thereafter,
in a letter dated April 17, 1990 private respondents offered to sell to petitioner
one-half of the property for all the payments the latter had made, instead of
rescinding the contract. If petitioner did not agree with the proposal, private
respondents said they would take steps to enforce the automatic rescission of the
contract. Petitioner did not accept private respondents' proposal. Instead, in a
letter dated May 2, 1990, he offered to pay the balance in full for the entire
property, plus interest and attorney's fees. Private respondents refused the offer.
On May 14, 1990, petitioner instituted an action for specific performance against
private respondents, alleging that he had already substantially complied with his
obligation under the contract to sell. He also averred that he had already spent
P190,000.00 in obtaining title to the property, subdividing it, and improving its
right-of-way. The lower court decided in favor of the petitioners stating that the
breach committed was only casual and slight but the Court of Appeals reversed
the ruling and favored respondents’ rescission of the contract to sell.
ISSUE: Whether or not the payment made by petitioner is one which is
contemplated on the contract.
RULING: Petitioner’s offer to pay is clearly not the payment contemplated in the
contract. While he might have tendered payment through a check, this is not
considered payment until the check is encashed. Besides, a mere tender of
payment is not sufficient. Consignation is essential to extinguish petitioner's
obligation to pay the purchase price.
The Supreme Court also affirmed the decision of the Court of Appeals where the
respondents have the right to rescind the contract on the ground that there is
failure on the part of the petitioners to pay the balance within ten days upon the
conveyance of the Court of the Title of Land to respondents. Thus, private
respondents are under no obligation, and may not be compelled, to convey title to
petitioner and receive the full purchase price.
Penalosa vs Santos
Facts: Penalosa entered into 2 contracts of sale with Santos. The contract is a
conditional contract of sale. According to the stipulations of the contract,
Penalosa would have to evict the illegal settlers in the lot afterwhich, the sale will
be formalised. However, Penalosa failed to pay the purchase price. Santos
contends that the contracts are absolutely simulated and therefore, void.
Issue: Whether or not the contract of sale was absolutely simulated for want of
consideration
Ruling: No, the contract of sale was not simulated. The contracts were perfected
and the entire requirement for the perfection of a contract of sale were satisfied.
The meeting of the minds of Santos and Penalosa perfected the contract despite
the failure of Penalosa to pay the purchase price.
HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S.
TRIA, petitioners, vs. VICENTE RODRIGUEZ, respondent.
G.R. No. 135634 May 31, 2000
Facts:
Juan andres was the owner of the lot situated in liboton, naga city. The
sale was evidenced by a deed of sale. Upon the death of juan andres, ramon san
andres was appointed as administrator of the estate, and hired geodetic engineer.
Jose panero prepared a consolidated plan of the estate and also prepared a sketch
plan of the lot sold to respondent. It was found out that respondent had enlarged
the area which he purchased from juan. The administrator sent a letter to the
respoindent to vacate the said portion in which the latter refused to do.
Respondent alleged that apart from the original lot, which had been sold to him,
the latter likewise sold to him the following day the remaining portion of the lot.
He alleged that the payment for such would be affected in 5 years from the
eecution of the formal deed of sale after a survey is conducted. He also alleged that
under the consent of juan, he took possession of the same and introduced
improvements thereon.
Respondent deposited in court the balance of the purchase price amounting to
P7,035.00 for the aforesaid 509-square meter lot.
On September 20, 1994, the trial court rendered judgment in favor of petitioner.
It ruled that there was no contract of sale to speak of for lack of a valid object
because there was no sufficient indication to identify the property subject of the
sale, hence, the need to execute a new contract.
Respondent appealed to the Court of Appeals, which on April 21, 1998 rendered a
decision reversing the decision of the trial court. The appellate court held that the
object of the contract was determinable, and that there was a conditional sale with
the balance of the purchase price payable within five years from the execution of
the deed of sale.
Issue: whether or not there was a valid sale.
Held:
Civil Code provides that By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a determinate thing,
and the other to pay therefor a price certain in money or its equivalent. A contract
of sale may be absolute or conditional. As thus defined, the essential elements of
sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price;
b) Determinate subject matter; and,
c) Price certain in money or its equivalent. 12
As shown in the receipt, dated September 29, 1964, the late Juan San Andres
received P500.00 from respondent as "advance payment for the residential lot
adjoining his previously paid lot on three sides excepting on the frontage; the
agreed purchase price was P15.00 per square meter; and the full amount of the
purchase price was to be based on the results of a survey and would be due and
payable in five (5) years from the execution of a deed of sale.
Petitioner's contention is without merit. There is no dispute that respondent
purchased a portion of Lot 1914-B-2 consisting of 345 square meters. This portion
is located in the middle of Lot 1914-B-2, which has a total area of 854 square
meters, and is clearly what was referred to in the receipt as the "previously paid
lot." Since the lot subsequently sold to respondent is said to adjoin the "previously
paid lot" on three sides thereof, the subject lot is capable of being determined
without the need of any new contract. The fact that the exact area of these
adjoining residential lots is subject to the result of a survey does not detract from
the fact that they are determinate or determinable. As the Court of Appeals
explained: 15
Concomitantly, the object of the sale is certain and determinate. Under Article
1460 of the New Civil Code, a thing sold is determinate if at the time the contract
is entered into, the thing is capable of being determinate without necessity of a
new or further agreement between the parties. Here, this definition finds
realization.
Thus, all of the essential elements of a contract of sale are present, i.e., that there
was a meeting of the minds between the parties, by virtue of which the late Juan
San Andres undertook to transfer ownership of and to deliver a determinate thing
for a price certain in money. As Art. 1475 of the Civil Code provides:
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. . . .That the
contract of sale is perfected was confirmed by the former administrator of the
estates, Ramon San Andres, who wrote a letter to respondent on March 30, 1966
asking for P300.00 as partial payment for the subject lot. As the Court of Appeals
observed:
Without any doubt, the receipt profoundly speaks of a meeting of the mind
between San Andres and Rodriguez for the sale. Evidently, this is a perfected
contract of sale on a deferred payment of the purchase price. All the pre-requisite
elements for a valid purchase transaction are present.
There is a need, however, to clarify what the Court of Appeals said is a conditional
contract of sale. Apparently, the appellate court considered as a "condition" the
stipulation of the parties that the full consideration, based on a survey of the lot,
would be due and payable within five (5) years from the execution of a formal deed
of sale. It is evident from the stipulations in the receipt that the vendor Juan San
Andres sold the residential lot in question to respondent and undertook to
transfer the ownership thereof to respondent without any qualification,
reservation or condition.
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 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.
Applying these principles to this case, it cannot be gainsaid that the contract of
sale between the parties is absolute, not conditional. There is no reservation of
ownership nor a stipulation providing for a unilateral rescission by either party.
In fact, the sale was consummated upon the delivery of the lot to respondent. 20
Thus, Art. 1477 provides that the ownership of the thing sold shall be transferred
to the vendee upon the actual or constructive delivery thereof.
The stipulation that the "payment of the full consideration based on a survey shall
be due and payable in five (5) years from the execution of a formal deed of sale" is
not a condition which affects the efficacy of the contract of sale. It merely provides
the manner by which the full consideration is to be computed and the time within
which the same is to be paid. But it does not affect in any manner the effectivity of
the contract. Consequently, the contention that the absence of a formal deed of
sale stipulated in the receipt prevents the happening of a sale has no merit.
The claim of petitioners that the price of P7,035.00 is iniquitous is untenable. The
amount is based on the agreement of the parties as evidenced by the receipt (Exh.
2). Time and again, we have stressed the rule that a contract is the law between
the parties, and courts have no choice but to enforce such contract so long as they
are not contrary to law, morals, good customs or public policy. Otherwise, court
would be interfering with the freedom of contract of the parties. Simply put, courts
cannot stipulate for the parties nor amend the latter's agreement, for to do so
would be to alter the real intentions of the contracting parties when the contrary
function of courts is to give force and effect to the intentions of the parties.
The decision of the Court of Appeals is AFFIRMED with the modification that
respondent is ORDERED to reimburse petitioners for the expenses of the survey.
Heirs of Arturo Reyes v. Socco-Beltran,
Facts: Elena Socco-Beltran (Socco) filed an application for Lot No. 6-B, alleging
that it was adjudicated in her favor in the extra-judicial settlement of Constancia
Socco’s estate, before the Department of Agrarian Reform (DAR). The heirs of
Arturo Reyes opposed the application on the ground that Lot No. 6-B was sold
by Miguel R. Socco, brother of Socco, in favor of their father, Atty. Arturo Reyes,
as evidenced by the Contract to Sell.
Issue: Whether or not petitioners have a better right to the subject property
over the respondent’s?
Ruling: The Court ruled that the petitioner’s could not derive title of Lot No. 6-B
because Miguel R. Socco was not yet the owner of the said lot and was only
expecting to inherit the same. The contract was a conditional sale, conditioned
upon the event Miguel Socco would actually inherit and become the owner of the
said property. The Court, relying on Article 1459 of the Civil Code on contracts of
sale, said that, “The thing must be licit and the vendor must have the right to
transfer the ownership thereof at the time it is delivered.” The law specifically
requires that the vendor must have ownership of the property at the time of it is
delivered. Hence, there was no valid sale from which ownership of the property
could have transferred from Miguel Socco to Arturo Reyes, since, at the time of
the execution, the former was not yet the owner of the same and was only
expecting to inherit it. Furthermore, Arturo Reyes, not having acquired ownership
of the property, could not have conveyed the same to his heirs.
Heirs of Amparo del Rosario vs. Santos 565 SCRA 1 (2008)
FACTS: Amparo del Rosario filed a complaint against the spouses Andres F.
Santos and Aurora O. Santos, for specific performance and damages allegedly for
failure of the latter to execute the Deed of Confirmation of Sale of an undivided
20,000 square meters of land, in Tanay, Rizal, in malicious breach of a Deed of
Sale. Amparo died and was substituted by the heirs named in her will. Andres also
died and was substituted by his heir. The Deed of Sale is drafted as: Andres Santos,
xxx for and in consideration of 2,000, do hereby sells, conveys, and transfers unto
Amparo del Rosario, xxx that certain 20k sq. m. The parties agree that the vendor
shall execute a Deed of Confirmation of Deed of Sale in favour of the vendee as
soon as the title has been released and the subdivision plan of said lot 1 has been
approved by the Land Registration Commissioner. Plaintiff claimed fulfillment of
conditions for the execution of the Deed of Confirmation of Sale. Defendants do
not contest the words and figures in said deed except in the acknowledgment
portion thereof where certain words were allegedly cancelled and changed
without their knowledge and consent and where, apparently, they appeared
before Notary Public Florencio Landrito when, in fact, they claimed that they did
not.
ISSUE: Whether or not the existence of an alleged false notarization of the deed
of sale is material
RULING: No. As correctly pointed out by the court a quo, the alleged false
notarization of the deed of sale is of no consequence. For a sale of real property or
of an interest therein to be enforceable under the Statute of Frauds, it is enough
that it be in writing. It need not be notarized. But the vendee may avail of the right
under Article 1357 of the New Civil Code to compel the vendor to observe the form
required by law in order that the instrument may be registered in the Registry of
Deeds. Hence, the due execution and genuineness of the deed of sale are not really
in issue in this case. Accordingly, assigned error I is without merit.
While it is true, as appellants argue, that Article 1306 of the New Civil Code
provides that "the contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided that they are not
contrary to law, morals, good customs, public order, or public policy" and that
consequently, appellants and appellee could freely enter into an agreement
imposing as conditions thereof the following: that appellee secure the written
conformity of Erlinda Cortez and that she render an accounting of all collections
from her, said conditions may not be proved as they are not embodied in the deed
of sale.
The only conditions imposed for the execution of the Deed of Confirmation of Sale
by appellants in favor of appellee are the release of the title and the approval of
the subdivision plan. Thus, appellants may not now introduce other conditions
allegedly agreed upon by them because when they reduced their agreement to
writing, it is presumed that "they have made the writing the only repository and
memorial of truth, and whatever is not found in the writing must be understood
to have been waived and abandoned."

By the terms of the Deed of Sale itself, which We find genuine and not infirmed,
appellants declared themselves to be owners of one-half (1/2) interest thereof. But
in order to avoid appellee's claim, they now contend that Plan Psu-206650 where
said Lot I appears is in the exclusive name of Teofilo Custodio as the sole and
exclusive owner thereof and that the deed of assignment of one-half (1/2) interest
thereof executed by said Teofilo Custodio in their favor is strictly personal
between them. Notwithstanding the lack of any title to the said lot by appellants
at the time of the execution of the deed of sale in favor of appellee, the said sale
may be valid as there can be a sale of an expected thing, in accordance with Art.
1461, New Civil Code

Javier vs. CA and Leonardo Tiro

Art. 1181, Suspensive Condition

Facts: Petitioner and private respondent entered into an agreement into which
Petitioner bound himself to transfer his rights (shares of stocks) on Timber wealth
Corp to private respondent. That for and in consideration of the transfer of rights,
Petitioner undertake to pay Private Respondent subject to the condition that the
application of Private Respondent for an additional area for forest concession be
approved by Bureau of Forestry. Private Respondent did not obtain the approval

Issue: W/N an agreement may be nullified for non-performance of the

conditions stipulated therein

Ruling: When a contract is subject to a suspensive condition, its birth and

effectivity can take place only if and when the event which constitutes the
condition happens or is fulfilled. If the suspensive condition does not take place,
the parties would stand as if the conditional obligation had never existed.

Art. 1461 of the Civil Code, the efficacy of the sale of a mere hope or expectancy is
deemed subject to the condition that the thing will come into existence