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CA
FACTS:
Private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of Lease
with Option to Buy with petitioners / lessors involving a parcel of land.
The term of the lease was for one year (May 16, 1974 - May 15, 1975). During this period,
private respondent was granted an option to purchase. Thereafter, the lease shall be on
a per month basis.
For failure of private respondent to pay the increased rent per month effective June 1976,
petitioners filed an action for ejectment.
The QC MeTC ordered the private respondent to vacate the leased premises and to pay
an amount representing rentals in arrears and/or as damages in the form of reasonable
compensation for the use and occupation of the premises during the period of illegal
detainer from June 1976 to the time of judgement.
Private respondent filed a certiorari petition with the IAC praying for the issuance of a
restraining order enjoining the enforcement of said judgment and dismissal of the case for
lack of jurisdiction of the City Court. The motion for reconsideration was denied.
On appeal, respondent Court of Appeals rendered a decision upholding the jurisdiction of
the City Court of Quezon City in the ejectment case, concluding that there was a perfected
contract of sale between the parties on the leased premises and that pursuant to the option
to buy agreement, private respondent had acquired the rights of a vendee in a contract of
sale. It opined that the payment by private respondent of P300,000.00 on June 20, 1975
as partial payment for the leased property, which petitioners accepted (through Alice A.
Dizon) and for which an official receipt was issued, was the operative act that gave rise to
a perfected contract of sale, and that for failure of petitioners to deny receipt thereof,
private respondent can therefore assume that Alice A. Dizon, acting as agent of
petitioners, was authorized by them to receive the money in their behalf. The Court of
Appeals went further by stating that in fact, what was entered into was a "conditional
contract of sale" wherein ownership over the leased property shall not pass to the private
respondent until it has fully paid the purchase price.
ISSUE:
1. WON the petitioners have established a right to evict the private respondent for non
payment of rentals after the one year contract of lease.
2. WON the respondents can enforce its option to purchase after the expiration of the one
year contract of lease.
3. WON there is a perfected contract between the petitioners and the respondents.
HELD:
1. YES. Petitioners have established a right to evict private respondent from the subject
premises for non-payment of rentals. The term of the Contract of Lease with Option to Buy
was for a period of one year (May 1974 to May 1975) during which the private respondent
was given an option to purchase said property. After the expiration thereof, the lease was
on a monthly basis. No definite period beyond the one-year term of lease was agreed
upon by petitioners and private respondent. However, since the rent was paid on a
monthly basis, the period of lease is considered to be from month to month. In such case,
a demand to vacate is not even necessary for judicial action after the expiration of every
month.
2. NO. Having failed to exercise the option within the stipulated one-year period, private
respondent cannot enforce its option to purchase anymore. There was an implicit renewal
of the contract of lease on a monthly basis. The other terms of the original contract of
lease which are revived in the implied new lease under Article 1670 of the Civil Code are
only those terms which are germane to the lessee's right of continued enjoyment of the
property leased. Therefore, an implied new lease does not ipso facto carry with it any
implied revival of private respondent's option to purchase (as lessee thereof) the leased
premises. Moreover, even assuming arguendo that the right to exercise the option still
subsists at the time private respondent tendered the amount on June 1975, the suit for
specific performance to enforce the option to purchase was filed only on October 1985 or
more than ten years after accrual of the cause of action as provided under Article 1144 of
the New Civil Code.
3. NO. There was no perfected contract of sale between petitioners and private respondent.
In an attempt to resurrect the lapsed option, private respondent gave P300,000.00 to
petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount
tendered would constitute a perfected contract of sale pursuant to the contract of lease
with option to buy. There was no valid consent by the petitioners (as co-owners of the
leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners'
alleged agent, and private respondent. As provided in Article 1868 of the New Civil Code,
27 there was no showing that petitioners consented to the act of Alice A. Dizon nor
authorized her to act on their behalf with regard to her transaction with private respondent.
PRINCIPLES:
1. Where the rentals are paid monthly, the lease, even if verbal may be deemed to be on a
monthly basis, expiring at the end of every month pursuant to Article 1687, in relation to
Article 1673 of the Civil Code.
2. Under Article 1475 of the New Civil Code, "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." Thus, the elements of a contract
of sale are consent, object, and price in money or its equivalent. The absence of any of
these essential elements negates the existence of a perfected contract of sale. Sale is a
consensual contract and he who alleges it must show its existence by competent proof.
FORMARAN v. ONG
FACTS:
Petitioner claims that the land in question is part of the land donated to her by her uncle
and aunt. As owner thereof, she declared the land for taxation purposes.
Respondent and her father, Melquiades Barraca came to her residence asking for help.
They were borrowing one-half of land donated to her so that defendant Glenda could
obtain a loan from the bank to buy a dental chair. They proposed that she signs an alleged
sale over the said portion of land.
Acceding to their request, she signed a prepared Deed of Absolute Sale which they
brought along with them , covering the land in question without any money involved.
A month thereafter, petitioner inquired from her uncle, Melquiades Barracca, if they have
obtained the loan. The latter informed her that they did not push through with the loan
because the bank’s interest was high. With her uncle’s answer, plaintiff inquired about the
Deed of Absolute Sale. Her uncle replied that they crampled the deed and threw it away.
Following the donation, plaintiff immediately took possession of the land.
Respondent filed a complaint for unlawful detainer against the Petitioner before the MCTC,
which was decided on in favor of the Respondent; ordering the Petitioner to vacate the
land in question.
Petitioner filed on action for annulment of the Deed of Sale against respondents before
the RTC of Kalibo, which was ruled in favor of petitioner and against the respondent by
declaring the Deed of Absolute Sale null and void for being an absolutely simulated
contract and for want of consideration; declaring the petitioner as the lawful owner entitled
to the possession of the land.
Respondents coursed an appeal to the CA. The CA, on August 30, 2007, reversed and
set aside the Decision of the trial court and ordered petitioner to vacate the land in question
and restore the same to respondents.
ISSUE: WON the subject Deed of Sale is simulated.
HELD: YES. The Court held that the subject Deed of Sale is indeed simulated, as it is:
(1) totally devoid of consideration;
(2) it was executed on August 12, 1967, less than two months from the time the subject land was
donated to petitioner on June 25, 1967 by no less than the parents of respondent Glenda Ong;
(3) on May 18, 1978, petitioner mortgaged the land to the Aklan Development Bank for a
₱23,000.00 loan;
(4) from the time of the alleged sale, petitioner has been in actual possession of the subject land;
(5) the alleged sale was registered on May 25, 1991 or about twenty four (24) years after
execution;
(6) respondent Glenda Ong never introduced any improvement on the subject land; and
(7) petitioner’s house stood on a part of the subject land. These are facts and circumstances
which may be considered badges of bad faith that tip the balance in favor of petitioner.
DIGNOS v. CA
FACTS:
The Dignos spouses were owners of a parcel of land in Opon, Lapu-Lapu City.
Appellant-petitioners Dignos spouses sold the said parcel of land to plaintiff-appellant,
respondent Atilano J. Jabil, for the sum of P28,000.00, payable in two installments, with
an assumption of indebtedness with the First Insular Bank of Cebu in the sum of
P12,000.00, which was paid and acknowledged by the vendors in the deed of sale
executed in favor of plaintiff-appellant, and the next installment in the sum of P4,000.00 to
be paid on or before September 15, 1965.
The Dignos spouses sold the same land in favor of defendants spouses, Luciano Cabigas
and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed
of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses,
and which was registered in the Office of the Register of Deeds.
As the Dignos spouses refused to accept from plaintiff-appellant the balance of the
purchase price of the land, and as plaintiff- appellant discovered the second sale made by
defendants-appellants to the Cabigas spouses, plaintiff-appellant brought the present suit.
After due trial, the CFI of Cebu rendered its decision, which ruled among others that the
Court “declares the deed of sale executed on November 25, 1965 by defendant Isabela
L. de Dignos in favor of defendant Luciano Cabigas, a citizen of the United States of
America, null and void ab initio, and the deed of sale executed by defendants Silvestre T.
Dignos and Isabela Lumungsod de Dignos not rescinded. Consequently, the plaintiff
Atilano G. Jabil is hereby ordered to pay the sum of Sixteen Thousand Pesos (P16,000.00)
to the defendants-spouses upon the execution of the Deed of absolute Sale of Lot No.
3453, Opon Cadastre and when the decision of this case becomes final and executory.”
Tthe plaintiff (respondent herein) and defendants-spouses (petitioners herein) appealed
to the Court of Appeals, which affirmed the decision of the lower court except as to the
portion ordering Jabil to pay for the expenses incurred by the Cabigas spouses for the
building of a fence upon the land in question.
A motion for reconsideration of said decision was filed by the defendants- appellants-
petitioners Dignos spouses but a resolution was issued by the Court of Appeals denying
the motion for lack of merit.
ISSUE:
1. WON subject contract is a deed of absolute sale, despite it being entitled as a “Deed of
Conditional Sale”.
2. WON petitioner spouses Dignos can rescind the sale due to the delay in payment by
respondent Jabil.
HELD:
1. It has been held that a deed of sale is absolute in nature although denominated as a "Deed
of Conditional Sale" where nowhere in the contract in question is a proviso or stipulation
to the effect that title to the property sold is reserved in the vendor until full payment of the
purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind
the contract the moment the vendee fails to pay within a fixed period. A careful
examination of the contract shows that there is no such stipulation reserving the title of
the property on the vendors nor does it give them the right to unilaterally rescind the
contract upon non-payment of the balance thereof within a fixed period. On the contrary,
all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present,
such as: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price
certain in money or its equivalent. In addition, Article 1477 of the same Code provides that
"The ownership of the thing sold shall be transferred to the vendee upon actual or
constructive delivery thereof." While it may be conceded that there was no constructive
delivery of the land sold in the case at bar, as subject Deed of Sale is a private instrument,
it is beyond question that there was actual delivery thereof. As found by the trial court, the
Dignos spouses delivered the possession of the land in question to Jabil as early as March
27,1965 so that the latter constructed thereon Sally's Beach Resort also known as Jabil's
Beach Resort in March, 1965; Mactan White Beach Resort on January 15,1966 and
Bevirlyn's Beach Resort on September 1, 1965. Such facts were admitted by petitioner
spouses.
2. The contract of sale being absolute in nature is governed by Article 1592 of the Civil Code.
It is undisputed that petitioners never notified private respondents Jabil by notarial act that
they were rescinding the contract, and neither did they file a suit in court to rescind the
sale. The most that they were able to show is a letter of Cipriano Amistad who, claiming
to be an emissary of Jabil, informed the Dignos spouses not to go to the house of Jabil
because the latter had no money and further advised petitioners to sell the land in litigation
to another party. There is no showing that Amistad was properly authorized by Jabil to
make such extrajudicial rescission for the latter who, on the contrary, vigorously denied
having sent Amistad to tell petitioners that he was already waiving his rights to the land in
question. Under Article 1358 of the Civil Code, it is required that acts and contracts which
have for their object the extinguishment of real rights over immovable property must
appear in a public document. Petitioners laid considerable emphasis on the fact that
private respondent Jabil had no money on the stipulated date of payment on September
15,1965 and was able to raise the necessary amount only by mid-October 1965. It has
been ruled, however, that "where time is not of the essence of the agreement, a slight
delay on the part of one party in the performance of his obligation is not a sufficient ground
for the rescission of the agreement". Considering that private respondent has only a
balance of P4,000.00 and was delayed in payment only for one month, equity and justice
mandate as in the aforecited case that Jabil be given an additional period within which to
complete payment of the purchase price.
PRINCIPLES:
The rule is that it is not the title of the contract, but its express terms or stipulations that
determine the kind of contract entered into by the parties.