Arturo Abalos v.

Galicano Macatangay
XYST CORPORATION V. DMC URBAN PROPERTIES DEVELOPMENT
INC.
GR No, 171968
Facts: DMC Urban Properties Development Inc. and Citibank N.A. Entered into
agreement whereby the former would take part in the construction of Citibank
Tower. The said agreement allocated in favour of DMC the 18th floor of the
building with the condition that DMC shall not transfer any portion of the floor
or rights or interests thereto prior to the completion of the building without the
written consent of Citibank NA. Later, DMC through intervenor Fe Aurora
Castro, found a prospetive buyer, Saint Agen Et Fils Limited (SAEFL) which is a
foreign corporation represented by William Seitz. This was done despite the
construction was not yet completed. In a letter dated September 14 , 1994
SAEFL accepted DMC's offer to sell. The letter included a property description
and terms of payment. In September 16, 1994 SAEFL sent a letter obliging DMC
to cause citibank N.A. To give its consent and enter into a contract to sell woth
SAEFL. Seitz was informed that the 18th floor was not available for foreign
acquisition and so XYST Corporation, a domestic corporation and where Seitz is
a director and shareholder was substituted. XYST then paid a reservation fee but
was later advised by DMC that the signing of the formal contract will not take
place since Citibank N.A, opted to excercise its right of first refusal. XYST and
DMC agreed that if Citibank N.A. Fails to pirchase the 18th floor om the agreed
date, the same should be sold to XYST. Citibank N.A did not excercise its right
of first refusal but it reminded DMC that the dale of the 18th floor must be
consistent with the documents adopted with the co founders. DYST made
amendments to the pro-forma contract and was allowed by DMC to directly
negotiate with Citibank to facilitate the transaction. But Citibank N.A, refused to
concur with the changes imposed by XYST hence DMC decided to call off the
deal and returned the reservation fee of P1,000,000 to XYST. A complaint was
filed.
Issue: Whether there is a perfected contract of sale between DMC and XYST
Held: No contract was perfected. XYST and DMC were still in negotiation stage
when the latter called off the deal.

Facts: Spouses Arturo and Esther Abalos are the registered owners of a parcel of
land with improvements locates at Azucena St., Makati City covered by Transfer
Certificate of Title of the Registry of Deeds. Arturo executed a Receipt and
Memorandum Agreement (RMOA) in favor of respondent, binding himself to
sell to respondent the subject property and not to offer the same to any other
party within 30days from date. Arturo acknowledged receipt of a check from
respondent in the amount of P5,000 representing earnest monet for the subject
property the amount of which would be deducted from the purchase price of
P1,3000,000. Further, the RMOA states that full payment would be effected as
soon as possession of the property shall have been turned over to respondent.
Subsequentlt, Arturo and Esther had a marital squabble at that time and
Macatangay, to protect his interest, made an annotation in the title of property.
He then sent a letter informing tyem of his readiness to pay the full amount of the
purchase price. Esther, through her SPA, executed in favor of Macatangay, a
contract to sell the property to the extent of her conjugal interest for the sum kf
P650,000 less the sum already received by her and Arturo. She agreed to
surrender the property to macatangay within 20days along with the deed of sale
upon full payment, while he promised to pay the balance of the purchase price of
P1, 290,000 after being placed in possession of the property.
Issue: Whether may petitioner may be compelled to convey the property to
respond under tge terms of the RMOA and the contract to sell
Held: The contract of sale, being essentially consensual, 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 of sale. On the other hand, an accepted unilateral promise
which specifies the thing to be solf and the price to be paid, when coupled with a
valuable consideration distinct and separate from the price, is what may oroperly
be termed a perfected contract of option. A perfected contract of option does not
result in the perfection or consummation of the sale; only when the option is
exercised may a sale be perfected.

ROMAN vs. GRIMALT

G.R.No. 2412, April 11, 1906
CIRILO PAREDES V. ESPINO
L-23351
Facts: Appellant Cirilo Paredes had filed an action to compel defendant Jose
Espino to execute a deed of sale and to pay for damages. The complaint alleged
that the defendant "had entered into a sale" to plaintiff of Lot. No. 67 of the
Puerto Princesa Cadastr at P4.00 per square meter and that the deal had been
closed by letter and telegram but the actual execution of the deed of sale and
payment of the price were deferred to the arrival of defendant of Puerto Princesa;
that the defendsnt upon arrival had refused to execute the deed of sale although
plaintiff was able and willing to to lay the price, and comtinued to refuse depite
written demands of plaintiff; that as a result, plaintiff had lost expected prifits
from a resale of the property, and caused the plaintiff mental anguish and
suffering, for which reason the complaint prayed for specific performance and
damages. Defendant filed a motion to dismiss upon the ground that the complaint
stated no cause of action andthe plaintiff's claim upon which the action was
founded unenforceable under the statute of frauds
Issue: Whether there is a perfected contract of sale through letter or telegram
Held: The letter and telegram constitute an adequate memorandum of the
transaction. They are signed by the defendant and all essential terms of the
contract are present and they satisfy the requirements of the statute of frauds.

Facts: UbPedro Roman, the owner of the schooner Sta. Maria and Andres
Grimalt had been negotiating for several days for the purchase of the schooner.
They agreed upon the sale of the vessel for the sum of P1500 payable on three
installments, provided the title papers to the vessel were in proper form. The sale
was not perfected and the purchaser did not consent to the execution of the deed
of transfer for the reason that the title of the vessel was in the name of one
Paulina Giron and not in the name of Pedro Roman. Roman promised however,
to perfect his title to the vessel but he failed to do so. The vessel was sunk in the
bay in the afternoon of June 25, 1904 during a severe storm and before the owner
had complied with the condition exacted by the proposed purchaser. On the 30th
of June 1904, plaintiff demanded for the payment of the purchase price of the
vessel in the manner stipulated and defendant failed to pay.
Issue: Whether there was a perfected contract of sale and who will bear the loss.
Held: There was no perfected contract of sale because the purchase of which had
not been concluded. The conversations had between the parties and the letter
written by defendant to plaintiff did not establish a contract sufficient in itself to
create reciprocal rights between the parties.
If no contract of sale was actually executed by the parties the loss of the vessel
must be borne by its owner and not by the party who only intended to purchase it
and who was unable to do so on account of failure on the part of the owner to
show proper title to the vessel and thus enable them to draw up contract of sale.

enjoyment of the property. The option to purchase expired after the one year term
granted in the contract.

DIZON vs. CA
G.R. No. 122544
January 28, 2003
TOYOTA SHAW, INC. vs. CA
G.R. No. L-116650
May 23, 1995
Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was difficult to find
a dealer with an available unit for sale, but upon contacting Toyota Shaw, he was
told that there was an available unit. Sosa, and his son, Gilbert went to the Toyota
office at Shaw Boulevard, Pasig, Metro Manila and met Popong Bernardo, who
was a sales representative of Toyota. Sosa informed Bernardo that the needed the
Lite Ace not later than June 17, 1989 because it is to be used by his family, and a
balikbayan guest, in going to Marinduque where he would be celebrating his
birthday on the 19th of June. He also told Bernardo that if he wont be arriving in
his hometown with a new car, he will become a laughing stock. Bernardo
assured Sosa that a unit will already be available for pick up on June 17, 1989, at
10:00 AM. Bernardo then signed a document which had the heading
Agreements Between Mr. Sosa and Popong Bernardo of Toyota Shaw, Inc.
Sosa and his son delivered the down payment of P100,000 the next day, and
Bernardo accomplished a printed Vehicle Sales Proposal No. 928 on which
Gilbert signed. Bernardo, on June 17, called Gilbert to inform him that the
vehicle was not available for pick up at 10:00 AM, but instead, it will be ready
by 2:00 PM. Sosa and Gilbert met Bernardo, and was informed that the Lite Ace
was being readied for delivery. Subsequently, Sosa was also informed that B.A.
Finance Corp. denied to finance his credit financing application. Sosa, upon it
being clear that the Lite Ace was not going to be delivered to him, demanded for
the refund of his down payment. Toyota refused to accede to Sosas demand, and
further alleged that they did not enter into a contract of sale with Sosa.
Issue: Whether or not the executed VSP, which was signed by the Toyotas sales
representative, a perfected contract of sale binding upon the parties.
Held: No. It is not a contract of sale. The provision on the down payment of
P100,000 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

Facts: Both cases are consolidated which involved Private Respondent, Overland
Express Lines, Inc. entering into a Contract of Lease with Option to Buy with
Petitioners which involved a 1, 755.80 square meter parcel land located at
MacArthur Highway and South H Street, Diliman, Quezon City. The term of
the lease was for one year, and the private respondent was granted an option to
purchase for the amount of P3,000.00 per square meter. Private Respondent
failed to pay the increased rental of P8,000 prompting Petitioners to file a case
for ejectment against them. The City Court ordered Private Respondents to
vacate the leased premises and to pay the sum of P624,000 which represented
rentals in arrears and as damages in the form of reasonable compensation for the
use and occupation of the premises during the period of illegal detainer. Private
Respondent alleged that there was a perfected contract of sale between the
parties, and it opined that the partial payment for the leased property which
petitioners accepted through Alice Dizon, for which an official receipt was issued
was the operative act that gave rise to a perfected contract of sale, and that for the
failure of the petitioners to deny receipt thereof, private respondent can therefore
assume that Alice Dizon, acting as agent of petitioners, was authorized by them
to receive the money in their behalf. The Court ruled otherwise, prompting
Private Respondents to file this suit.
Issue: Whether or not there was a perfected contract of sale.
Held: No. There was no perfected contract of sale between the parties. There
was no written proof of Alice Dizons authority to bind the Petitioners. First of
all, she was not even a co-owner of the property. Neither was she empowered by
the co-owners to act on their behalf. Furthermore, the Civil Code in Article 1874
provides that if a sale of a piece of land or any interest therein is through an
agent, the authority of the latter shall be in writing otherwise the sale shall be
void. It cannot be even said that Alice Dizons acceptance of money bound at
least the share of Fidela Dizo, who was supposed to be paid by the Petitioners.
The implied renewal of the contract of lease between the parties affected only
those terms and conditions which are germane to the lessees right of continued

confirmed. But, nothing was mentioned about the full purchase price and the
manner the installments are 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. Moreover, there was an absence of the meeting of
the minds between Sosa and Toyota, and Sosa did not even sign it. Futhermore,
Sosa was not dealing with Toyota but with Bernardo and that the latter did not
misrepresent that he had the authority to sell a Toyota Vehicle. The VSP was a
mere proposal and it created no demandable right in favor of Sosa for the
delivery of the vehicle to him.

VIRGINIA PAGCO vs. CA

G,R, No. L-109236, March 18, 1994
CESAR RAET, ET. AL vs. CA
G.R. No. 128016, September 17, 1998
Facts: Petitioners Cesar and Elvira Raet and Petitioners Rex and Edna Mitra
negotiated with Amparo Gatus concerning the possibility of buying the rights of
the latter to certain units at the Las Villas de Sto Nino Subdivision in
Meyacauayan, Bulacan. Such subdivision was developed by Respondent, PhilVille Development and Housing Corporation primarily for parties qualified to
obtain loans from the GSIS. The spouses Raet and the spouses Mitra paid Gatus
the total amount of P40,000 and P35,000 for which they were issued receipts by
Gatus in her own name. The Spouses Raet and Mitra applied with PVDHC for
purchase of units in the subdivision. Since they were not GSIS members, the
looked for members who could act as accommodation parties by allowing them
to use their policies. Sps. Raet used Ernesto Casidsids policy, and Sps. Mitra
used that of Edna Lims. Sps, Raet paid P32, 653 while the Sps. Mitra paid
P27,000 to PVDHC on understanding that such amounts will be credited to
purchase prices of the units. The spouses Raet and Mitra were given units to
occupy for the meantime. The GSIS disapproved the loan applications of the
spouses and were advised by PVDHC to seek other sources of financing while
being allowed to remain in the premises. Due to the failure of the petitioners to
raise money, PVDHC filed ejectment cases against them. The spouses Mitra and
Raet also filed complaints against PVDHC and Amparo Gatus.
Issue: Whether or not there were perfected contracts of sale between petitioners
and private respondent PVDHC over the subject units.
Held: No. The parties had not reached any agreement with regard to the sale of
the units in question. The records do not show the total costs of the units and the
payment schemes therefor. The figures referred to by Petitioners were mere

Facts:Private Respondent Peter Quimson is the owner of a parcel of land situated

at San Isidro Street, Singalong, Manila with an area of 1000 square meters and
covered by TCT no. 173114. Eleven occupants were in possession of the
property with their respective residential houses built thereon, among whom are
herein Petitioners. Private Respondent had earlier negotiated with Petitioners for
the latter to buy the portions they occupy for P980.00 but petitioners backed off
because they wanted P850.00. He then informed the lessees to pay their back
rentals and to remove their houses because he needed the property for his own
use and that of the immediate member of his family. Petitioners failed to heed
Private Respondents demand, so a complaint for ejectment was filed. Petitioners
and other defendants filed their answer denying that there were negotiations for
them to buy the property and alleged that private respondent has no cause of
action as the property is within the area for priority development, hence, their
eviction is prohibited under P.D. 2016.
Issue: Whether or not there was a perfected contract of sale between the parties.
Held: No. A contract of sale is perfected from the time there exists an
agreement upon the thing which is the object of the contract and upon the price.
The price fixed by Quimson was P980.00 per square meter but the occupants
were willing only to pay P850.00. Clearly, therefore, there was no agreement
reached between the parties as to the price of the lot in question. As no price was
agreed upon, there can be no perfected contract of sale within the contemplation
of Article 1475 of the Civil Code. There was indeed a negotiation for the offer to
sell but it fell through because of the refusal of the petitioners to talk further.
Finally, even if there was a perfected contract of sale, it can be implied that there
was subsequently a mutual withdrawal from the contract, therefore there was no
contract to speak off.

so. Art. 1475, NCC states that 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 law governing the form of contracts. Art. 1181,
NCC further states that In conditional obligations, the acquisition of the rights,
as well as the extinguishment or loss of those already acquired, shall depend
upon the happening of the event which constitutes the condition. In the case at
bar, there having been no concurrence as to the offer and acceptance between
PHHC and the Mendoza spouses, the contract of sale never perfected, hence, the
re-awarding and subsequent sale of the lot to Sto. Domingo, et. al is valid.

estimates given by Gatus. The transaction of the parties, lacked the requisites
essential for the perfection of contracts. Furthermore, petitioners dealt with
Gatus, but Gatus was not the agent of PVDHC. PVDHC also had no knowledge
of the figures Gatus gave to petitioners as estimates. At any rate, PVDHC was to
enter into agreements with petitioners only upon the approval of the GSIS loans
which was denied. Moreover, there are no written contracts to evidence the
alleged sales. If Petitioners and PVDHC entered into contracts involving the
units, it is strange that contracts of such importance have not been reduced to
writing. There was no contract of sale there being no meeting of the minds
especially on the price thereof. There was only a proposed contract to sell which
did not even ripen into a perfect contract due to the inability of the spouses to
secure approval of the GSIS loan.

PEOPLE HOMESITE VS COURT OF APPEALS

DEC. 26, 1984
ARTATES AND POJAS VS URBI ET AL.
January 30, 1971
Facts: On September 1952, a homestead was granted and registered under the
names of spouses Artates and Pojas. On Oct. 1955 however, the court ordered the
execution sale of the said homestead in favor of Daniel Urbi for the satisfaction
of Artates indebtedness for the physical injuries that he inflicted upon Urbi. Urbi
subsequently sold the homestead to a Crisanto Soliven, a minor, hence, the
spouses Artates and Pojas sought annulment of the execution of the homestead
and its subsequent sale on the ground that it violated the Public Land Law
exempting said property from execution for any debt contracted within 5 years
from the issuance of the patent and that the contract of sale between Urbi and
Soliven is null and void.

Facts: On Feb. 1960, People Homesite and Housing Corporation (PHHC) passed
Resolution No. 513 which grants Lot 4 of its Consolidated Subdivision Plan
(CSP) to Mendoza spouses with a condition that it is subject to the approval of
the Quezon City Council and the PHHC Valuation Committee. The Quezon City
Council initially disapproved the CSP on 1961 and such disapproval was
communicated to Mendoza spouses through registered mail. On 1964 however,
the City Council approved a revised plan reducing the area of lot 4. The
Mendoza spouses failed to pay for the 20% initial deposit or down payment for
the lot so it was recalled by the PHHC and was granted instead to Sto. Domingo,
et al. The awardees made the initial deposit hence, the corresponding deeds of
sale were executed in their favor. Mendoza spouses filed a complaint in the court
for specific performance and damages and prayed for the cancellation of the
deeds of sale.

Issue: Whether or not there is a perfected contract of sale between Urbi and
Soliven.

Issue: Whether or not there was a perfected contract of sale of Lot 4 with the
reduced area to Mendoza spouses which they can enforce against the PHHC by
an action for specific performance.

Held: No, there was no perfected contract of sale for the reason that the sale is
null and void being in violation of Sec. 118 of the Public Land Law. Under said
provision, for a period of 5 years from the date of the government grant, lands
acquired by free or homestead patent shall not only be incapable of being
encumbered or alienated except in favor of the government itself or any of its
institutions, but also, they shall not be liable to the satisfaction of any debt
contracted within the said period. This provision is mandatory and intended to

Held: There was no perfected contract of sale with regard to Mendoza spouses.
The award of Lot 4 to them was conditional and was initially disapproved by the
City Council. The Mendozas were sufficiently informed of such disapproval.
However on 1964, when the lot area was reduced and approved by the City
Council, the Mendozas should have manifested in writing their acceptance of the
award just to show that they were still interested in the purchase. They did not do

payment of Lolita Lim, though given as an Option Money, is nevertheless

intended as an earnest money or part of the purchase price as evidenced by their
agreement. Therefore, what existed is a contract of sale and not a mere option
contract. An option contract is separate from and only preparatory to a contract
of sale, which, if perfected, does not result in the perfection or consummation of
the sale. Only when the option is exercised may a sale be perfected. The act of
CDB in accepting the offer of Lim concludes the perfection of the contract.

preserve and keep for the homesteader or his family, the land given to him
gratuitously by the State, so that being a property owner, he may become and
remain a contented and useful member of our society. In the case at bar, the land
in question was issued on Sept. 1952 to Artates spouses and was sold at public
auction on March 1956 which in no doubt, is within the 5 year prohibition
period. Furthermore, the sale is simulated and is only intended to place the
property beyond the reach of the judgment debtor. The execution sale being null
and void, the contract of sale never perfected and the possession of the land
should be returned to the owners without prejudice to their continuing obligation
to pay the judgment debt and expenses connected therewith.

CAVITE DEVELOPMENT BANK VS. CYRUS LIM

FEBRUARY 1, 2000
CONCHITA NOOL VS. COURT OF APPEALS
July 24, 1997
Facts: Conchita Nool obtained a loan from the DBP which was secured by a real
estate mortgage of 2 parcels of land. She failed to pay the loan at maturity and as
a result, DBP foreclosed the mortgaged properties. Conchita Nool likewise failed
to redeem the lands within the 1-year redemption period so DBP contacted
Anacleto Nool, Conchitas brother to redeem the properties. Anacleto did so and
the titles on the lands were later on transferred to him. As part of their agreement,
Anacleto agreed to buy from Conchita the 2 parcels of land under controversy,
with another undertaking that the plaintiffs can redeem said lands, at anytime
they have the necessary amount. Conchita asked Anacleto to return the same but
was refused by the latter, impelling them to come to court for relief in order to
redeem the properties subject to their agreement.
Issue: Whether or not there is a valid and perfected contract of sale and
repurchase between Anacleto and Conchita Nool.

Facts: On June 1983, Rodolfo Guansing obtained a loan from Cavite

Development Bank (CDB) in the amount of 90,000.00 which was secured by a
mortgage on his parcel of land located in Quezon City. Guansing failed to pay
the loan at maturity and as a consequence thereof, the mortgage was foreclosed.
The TCT was issued in the name of CDB. On June 1988, Lolita Lim purchased
the property and paid 30,000.00 as Option Money thereof. Subsequently, Lim
discovered the irregularity on the lands title. It was found out that the title was
not under the name of the mortgagor, Rodolfo Guansing but of his father,
Perfecto Guansing. Hence, Lim filed for an action for specific performance and
damages against CDB.
Issue: Whether or not there was a perfected contract of sale between CDB and
Lolita Lim in order to warrant the action for specific performance and damages
against the petitioners.
Held: Yes, there was a perfected contract of sale. Art. 1475, NCC provides that
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.The 30,000.00

owners copy of the certificate of title to them. Severinas heirs opposed this by
stressing that the certificate of title would only be surrendered upon Dominadors
payment of the Php300K which was not yet complied with. Dominador admitted
non-payment due to the fact that Severinas heirs have not presented proof of
ownership over the untitled parcel of land which was actually declared in the
name of a third party, Emilio Eugenio.
Issue: Whether or not respondent shall be compelled to pay the Php 300K despite
petitioners proof of lack of ownership?
Held: True, in contracts of sale, the vendor need not possess title to the thing sold
at the perfection of the contract. However, the vendor must possess title and must
be able to transfer title at the time of delivery. In a contract of sale, title only
passes to the vendee upon full payment of the stipulated consideration, or upon
delivery of the thing sold. Under the facts of the case, Severinas heirs are not in a
position to transfer title. Without passing on the question of who actually owned
the land covered by LRC Psu -1312, we note that there is no proof of ownership
in favor of Severinas heirs. In fact, it is a certain Emiliano Eugenio, who holds a
tax declaration over the said land in his name. Though tax declarations do not
prove ownership of the property of the declarant, tax declarations and receipts
can be strong evidence of ownership of land when accompanied by possession
for a period sufficient for prescription.Severinas heirs have nothing to counter
this document.
Therefore, to insist that Dominador, et al. pay the price under such circumstances
would result in Severinas heirs unjust enrichment. If the sellers cannot deliver the
object of the sale to the buyers, such contract may be deemed to be
inoperative. By analogy, such a contract may fall under Article 1405, No. 5 of the
Civil Code which are considered void and inexistent from the beginning. Hence,
the non-payment of the three hundred thousand pesos (P300,000.00) is not a
valid justification for refusal to deliver the certificate of title. Besides, we note
that the certificate of title covers Lots 1 and 2 of LRC Psu-1313, which were
fully paid for by Dominador, et al. Therefore, Severinas heirs are bound to
deliver the certificate of title covering the lots.
Clemento Jr. vs. Lobregat
G.R. No. 137845. September 9, 2004
Facts: The Spouses Nilus and Teresita Sacramento were the owners of a parcel of
land which they mortgaged with the Social Security System as security for their
housing loan. The spouses executed a deed of sale with Assumption of Mortgage
in favor of Maria Linda Clemeno and her husband Angel C. Clemeno, Jr., with
the conformity of SSS. The Register of Deeds issued TCT over the property in
the name of the vendees, who, in turn, executed a Real Estate Mortgage Contract
over the property in favor of the SSS to secure the payment of the amount of the

Held: No. The contract of sale and repurchase are not valid for the reason that the
sellers were no longer the owners of the property at the time it is delivered.
Nemo dat quod non habet states the principle that no one can give what he does
not have. In the case at bar, sellers can no longer deliver the object of the sale to
the buyers, as the buyers themselves have already acquired title and delivery
thereof from the rightful owner, which is DBP. Furthermore, Art. 1459 of the
Civil Code provides that the vendor must the right to transfer the ownership
thereof at the time it is delivered. Here, delivery of ownership is no longer
possible. It has become impossible. The contract of sale being void, the
subsequent contract of repurchase is likewise void. As petitioners sold nothing, it
follows that they can also repurchase nothing. Nothing sold, nothing to
repurchase.

Heirs of San Miguel vs. Court of Appeals

Facts: Severina San Miguel originally claimed a parcel of land situated in
Bacoor, Cavite. Without Severinas knowledge, Dominador managed to cause the
subdivision of the land into 3 lots. The latter filed a petition in the RTC, as a land
registration court to issue title over Lots 1 and 2 which the Land Registration
Commission issued. Severina filed a petition for the review of the decision
alleging that the land registration proceedings were fraudulently concealed by
Dominador from her. Thereafter, Severinas heirs decided not to pursue the writs
of possession and demolition and entered into a compromise with Dominador,
which was to sell the subject lots to the latter for Php1.5M with the delivery of
the Transfer of Certificate Title conditioned upon the purchase of another lot
which was not yet titled. Severinas heirs and Dominador executed a deed of sale.
The latter filed a motion with the trial court for Severinas heirs to deliver the

balance of the loan. However, per the records of the SSS Loans Department, the
vendors (the Spouses Sacramento) remained to be the debtors.
Respondent Romeo R. Lobregat, filed a Complaint against the petitioners, the
Spouses Clemeno, and Nilus Sacramento for breach of contract, specific
performance with damages. The petitioners, for their part, filed a Complaint
against the respondent for recovery of possession of property with damages.
Angel Clemeno, Jr., relatives by consanguinity, entered into a verbal contract of
sale over the property covered. The respondents counsel wrote petitioner
Clemeno, Jr., informing the latter that he (the respondent) had already paid the
purchase price of the property and that he was ready to pay the balance thereof.
He demanded that petitioner Clemeno, Jr. execute a deed of absolute sale over
the property and deliver the title thereto in his name upon his receipt of the
amount. Petitioner Clemeno, Jr. stated that he never sold the property to the
respondent; that he merely tolerated the respondents possession of the property
for one year or until 1987, after which the latter offered to buy the property,
which offer was rejected; and that he instead consented to lease the property to
the respondent. The petitioner also declared in the said letter that even if the
respondent wanted to buy the property, the same was unenforceable as there was
no document executed by them to evince the sale.
Issue: Whether or not there was a contract of sale?

Atkins, Kroll & Co,m Inc. vs Cua Hian Tek

Facts: Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951,
offering cartons of Luneta brand Sardines subject to reply by September 23,
1951. HianTek unconditionally accepted the said offer through a letter delivered

Held: We find and so hold that the contract between the parties was a perfected
verbal contract of sale, not a contract to sell over the subject property, with the
petitioner as vendor and the respondent as vendee. Conformably to Article 1477
of the New Civil Code, the ownership of the property was transferred to the
respondent upon such delivery. The petitioners cannot re-acquire ownership and
recover possession thereof unless the contract is rescinded in accordance with
law. The failure of the respondent to complete the payment of the purchase price
of the property within the stipulated period merely accorded the petitioners the
option to rescind the contract of sale as provided for in Article 1592 of the New
Civil Code. The contract entered into by the parties was not a contract to sell
because there was no agreement for the petitioners to retain ownership over the
property until after the respondent shall have paid the purchase price in full, nor
an agreement reserving to the petitioners the right to unilaterally resolve the
contract upon the buyers failure to pay within a fixed period. Unlike in a contract
of sale, the payment of the price is a positive suspensive condition in a contract
to sell, failure of which is not a breach but an event that prevents the obligation
of the vendor to convey the title from becoming effective. The contract of sale of
the parties is enforceable notwithstanding the fact that it was an oral agreement
and not reduced in writing. This is so because the provision applies only to
executory, and not to completed, executed or partially executed contracts.In this
case, the contract of sale had been partially executed by the parties, with the
transfer of the possession of the property to the respondent and the partial
payments made by the latter of the purchase price thereof.

on September 21, 1951, but Atkins failed to deliver the commodities due to the
shortage of catch of sardines by the packers in California.
HianTek, therefore, filed an action for damages in the CFI of Manila which
granted the same in his favor.
Atkins herein contends that there was no such contract of sale but only an option
to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an
accepted unilatateral 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. Atkins also insisted that the offer was a
mere offer of option, because the "firm offer" was a continuing offer to sell until
September 23.
Issue: Whether or not there was a contract to sell?
Held: Yes, The Supreme Court held that there was a contract of sale between the
parties. Petitioners argument assumed that only a unilateral promise arose when
the respondent accepted the offer, which is incorrect because a bilateral contract
to sell and to buy was created upon respondents acceptance. Had B. Cua Hian
Tek backed out after accepting, by refusing to get the sardines and /or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he
accepted "the firm offer for the sale" and that "the undersigned buyer has
immediately filed an application for import license. After accepting the promise
and before he exercises his option, the holder of the option is not bound to buy.
In this case at bar, however, upon respondents acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had
immediately assumed the obligations of a purchaser.

PAMECA Wood Treatment Plant Inc. vs Court of Appeals

DEVELOPMENT BANK OF THE PHILIPPINES vs. COURT OF
APPEALS and EMERALD RESORT HOTEL CORPORATION
G.R. No. 125838
June 10, 2003
Facts: Private respondent Emerald Resort Hotel Corporation obtained a loan
from petitioner Development Bank of the Philippines. DBP released the loan of
P3,500,000.00 in three installments: P2,000,000.00 on 27 September 1975,
P1,000,000.00 on 14 June 1976 and P500,000.00 on 14 September 1976. To
secure the loan, ERHC mortgaged its personal and real properties to DBP.On 18
March 1981, DBP approved a restructuring of ERHCs loan subject to certain
conditions. On 25 August 1981, DBP allegedly cancelled the restructuring
agreement for ERHCs failure to comply with some of the material conditions of
the agreement.
ERHC delivered to DBP three stock certificates of ERHC.On 5 June 1986,
alleging that ERHC failed to pay its loan, DBP filed with the Office of the
Sheriff, Regional Trial Court of Iriga City, an Application for Extra-judicial
Foreclosure of Real Estate and Chattel Mortgages.
Deputy Provincial Sheriffs Abel Ramos and Ruperto Galeon issued the required
notices of public auction sale of the personal and real properties. However,
Sheriffs Ramos and Galeon failed to execute the corresponding certificates of
posting of the notices. On 10 July 1986, the auction sale of the personal
properties proceeded.
The Office of the Sheriff scheduled on 12 August 1986 the public auction sale of
the real properties. The Bicol Tribune published on 18 July 1986, 25 July 1986
and 1 August 1986 the notice of auction sale of the real properties. However, the
Office of the Sheriff postponed the auction sale on 12 August 1986 to 11
September 1986 at the request of ERHC. DBP did not republish the notice of the
rescheduled auction sale because DBP and ERHC signed an agreement to
postpone the 12 August 1986 auction sale.6 ERHC, however, disputes the
authority of Jaime Nuevas who signed the agreement for ERHC.ERHC informed
DBP of its intention to lease the foreclosed properties.
On 22 December 1986, ERHC filed with the Regional Trial Court of Iriga City a
complaint for annulment of the foreclosure sale of the personal and real
properties. Subsequently, ERHC filed a Supplemental Complaint. ERHC alleged
that the foreclosure was void mainly because (1) DBP failed to comply with the
procedural requirements prescribed by law; and (2) the foreclosure was
premature. ERHC maintained that the loan was not yet due and demandable
because the DBP had restructured the loan.
DBP moved to dismiss the complaint because it stated no cause of action and
ERHC had waived the alleged procedural defenses. The trial court denied the
motion to dismiss.

Facts: PAMECA Wood Treatment Plant, Inc. (PAMECA) obtained a loan from
respondent Bank. By virtue of this loan, petitioner PAMECA, through its
President, petitioner Herminio C. Teves, executed a promissory note for the said
amount, promising to pay the loan by installment. As security for the said loan, a
chattel mortgage was also executed over PAMECAs properties in Dumaguete
City, consisting of inventories, furniture and equipment, to cover the whole value
of the loan.
Upon PAMECAs failure to pay, respondent bank extrajudicially foreclosed the
chattel mortgage, and, as sole bidder in the public auction, purchased the
foreclosed properties. On Thereafter, respondent bank filed a complaint for the
collection of the balance against petitioner PAMECA and private petitioners
herein, as solidary debtors with PAMECA under the promissory note. Pameca
argues that Public auction sale were tainted with fraud. Claims the chattels were
bought by DBP as sole bidder in only 1/6 of themarket value, hence
unconscionable and inequitable, and so it is null and void and that NCC 1484 and
2115 should be applied by analogy reading the spirit of the law, and taking into
consideration that thecontract of loan was a contract of adhesion.
Issue: Whether or not the public auction was tainted with fraud?
Held: No, The mere fact that DBP was the sole bidder does not warrant the
conclusion that the transaction was attended with fraud. Fraud is a serious
allegation that requires full and convincing evidence, and may not be inferred
from the lonecircumstance that it was only DBP that bid. The sparseness of
evidence leaves the SC no discretion but to uphold thepresumption of regularity
in the conduct of the public sale.

PROVINCE OF CEBU vs HEIRS OF RUFINA MORALES

Facts: On September 27, 1961, petitioner Province of Cebu leased in favor of
Rufina Morales a 210-square meter lot which formed part of Lot No. 646-A of
the Banilad Estate. Petitioner donated several parcels of land to the City of Cebu.
Among those donated was Lot No. 646-A which the City of Cebu divided into
sub-lots. The area occupied by Morales was thereafter denominated as Lot No.
646-A-3, for which Transfer Certificate of Title (TCT) No. 30883 was issued in
favor of the City of Cebu.
On July 19, 1965, the city sold Lot No. 646-A-3 as well as the other donated lots
at public auction. The highest bidder for Lot No. 646-A-3 was Hever Bascon but
Morales was allowed to match the highest bid since she had a preferential right
to the lot as actual occupant thereof. Morales thus paid the required deposit and
partial payment for the lot.
Petitioner filed an action for reversion of donation against the City of Cebu. On
May 7, 1974, petitioner and the City of Cebu entered into a compromise
agreement which the court approved on July 17, 1974.The agreement provided
for the return of the donated lots to petitioner except those that have already been
utilized by the City of Cebu. Pursuant thereto, Lot No. 646-A-3 was returned to
petitioner and registered in its name under TCT No. 104310.Morales died on
February 20, 1969 during the pendency of Civil Case No. 238-BC.Apart from the
deposit and down payment, she was not able to make any other payments on the
balance of the purchase price for the lot.
respondents filed an action for specific performance and reconveyance of
property against petitioner, They also consigned with the court the amount of
P13,450.00 representing the balance of the purchase price which petitioner
allegedly refused to accept.
Respondents averred that the award at public auction of the lot to Morales was a
valid and binding contract entered into by the City of Cebu and that the lot was
inadvertently returned to petitioner under the compromise judgment. The trail
court rendered a decision that the Court is convinced that there was already a
consummated sale between the City of Cebu and Rufina Morales. There was the
offer to sell in that public auction sale. It was accepted by Rufina Morales with
her bid and was granted the award for which she paid the agreed downpayment.
Issue: Whether or not the sale of the lot in public action valid.

Meanwhile, acting on ERHCs application for the issuance of a writ of

preliminary injunction, the trial court granted the writ on 20 August 1990.
Accordingly, the trial court enjoined DBP from enforcing the legal effects of the
foreclosure of both the chattel and real estate mortgages.
The trial court rendered a Decision8 dated 28 January 1992 declaring as null and
void the foreclosure and auction sale of the personal properties of plaintiff
corporation held on July 10, 1986;The Court of Appeals, which consolidated the
appeals, affirmed the decision of the trial court.
Issue: Whether DBP complied with the posting and publication requirements
under applicable laws for a valid foreclosure.
Held: No, The Court held recently in Ouano v. Court of Appeals22 that
republication in the manner prescribed by Act No. 3135 is necessary for the
validity of a postponed extrajudicial foreclosure sale. Another publication is
required in case the auction sale is rescheduled, and the absence of such
republication invalidates the foreclosure sale. The Court also ruled in Ouano that
the parties have no right to waive the publication requirement in Act No. 3135.
Publication, therefore, is required to give the foreclosure sale a reasonably wide
publicity such that those interested might attend the public sale. To allow the
parties to waive this jurisdictional requirement would result in converting into a
private sale what ought to be a public auction.
The last paragraph of the prescribed notice of sale allows the holding of a
rescheduled auction sale without reposting or republication of the notice.
However, the rescheduled auction sale will only be valid if the rescheduled date
of auction is clearly specified in the prior notice of sale. The absence of this
information in the prior notice of sale will render the rescheduled auction sale
void for lack of reposting or republication. If the notice of auction sale contains
this particular information, whether or not the parties agreed to such rescheduled
date, there is no more need for the reposting or republication of the notice of the
rescheduled
auction
sale.
In the instant case, there is no information in the notice of auction sale of any
date of a rescheduled auction sale. Even if such information were stated in the
notice of sale, the reposting and republication of the notice of sale would still be
necessary because Circular No. 7-2002 took effect only on 22 April 2002. There
were no such guidelines in effect during the questioned foreclosure.
Clearly, DBP failed to comply with the publication requirement under Act No.
3135. There was no publication of the notice of the rescheduled auction sale of
the real properties. Therefore, the extrajudicial foreclosure of the real estate
mortgage is void.

Beaumont vs Prieto
Facts: Negotiations having been had, prior to December 4, 1911, between W. Borck and
Benito Valdes, relative to the purchase, at first, of a part of the Nagtajan Hacienda,
situated in the district of Sampaloc of this city of Manila and belonging to Benito
Legarda, and later on, of the entire hacienda, said Benito Valdes, on the date abovementioned, addressed to said Borck a letter giving W. Borck an option for three months
to buy the property. Subsequent to the said date, W. Borck addressed to Benito Valdes
several letters relative to the purchase and sale of the hacienda, and as he did not obtain
what he expected or believe he was entitled to obtain from Valdes, he filed the complaint
that originated these proceedings, which was amended on the 10th of the following
month, April, by bringing his action not only against Benito Valdes but also against
Benito Legarda, referred to in the letter mentioned. The defendant Benito Valdez gave to
the plaintiff the document written and signed by him stating that on January 19, 1912,
while the offer or option mentioned in said document still stood, the plaintiff in writing
accepted the terms of said offer and requested of Valdes to be allowed to inspect the
property, titles and other documents pertaining to the property, and offered to pay to the
defendant, immediately and in cash as soon as a reasonable examination could be made
of said property titles and other documents. It was also alleged that, in spite of the
frequent demands made by the plaintiff, the defendants had persistently refused to deliver
to him the property titles and other documents relative to said property and to execute
any instrument of conveyance thereof in his favor and that the plaintiff, on account of
said refusal on the part of the defendant Valdes, based on instructions from the defendant
Legarda, had suffered damages.
Issue: Whether the agreement between the parties constitutes a mere offer to sell or an
actual contract of option.
Held: The plaintiff Borck accepted the offer of sale made to hmi, or the option of
purchase given him in document Exhibit E by the defendant Valdes, of the Nagtajan
Hacienda, for the assessed valuation of the same, but his acceptance was not in
accordance with the condition with regard to the payment of the price of the property.
The plaintiff Borck made the offer to pay the said price, in the first of them, within the
period of five months from December 14, 1911; in the second, within the period of three
months from the same date, and, finally, in the other two documents, within an indefinite
period which could as well be ten days as twenty or thirty or more, counting from the

Held: Yes, The appellate court correctly ruled that petitioner, as successor-ininterest of the City of Cebu, is bound to respect the contract of sale entered into
by the latter pertaining to Lot No. 646-A-3. The City of Cebu was the owner of
the lot when it awarded the same to respondents predecessor-in-interest, Morales,
who later became its owner before the same was erroneously returned to
petitioner under the compromise judgment. The award is tantamount to a
perfected contract of sale between Morales and the City of Cebu, while partial
payment of the purchase price and actual occupation of the property by Morales
and respondents effectively transferred ownership of the lot to the latter. This is
true notwithstanding the failure of Morales and respondents to pay the balance of
the purchase price.
Petitioner can no longer assail the award of the lot to Morales on the ground that
she had no right to match the highest bid during the public auction. Whether
Morales, as actual occupant and/or lessee of the lot, was qualified and had the
right to match the highest bid is a foregone matter that could have been
questioned when the award was made. When the City of Cebu awarded the lot to
Morales, it is assumed that she met all qualifications to match the highest bid.
The subject lot was auctioned in 1965 or more than four decades ago and was
never questioned. Thus, it is safe to assume, as the appellate court did, that all
requirements for a valid public auction sale were complied with.
A sale by public auction is perfected when the auctioneer announces its
perfection by the fall of the hammer or in other customary manner. It does not
matter that Morales merely matched the bid of the highest bidder at the said
auction sale. The contract of sale was nevertheless perfected as to Morales, since
she merely stepped into the shoes of the highest bidder.

purpose of the said suit is to annul and set aside the contract to sell executed by
and between appellant company and appellant Ramirez.
Issue: Whether or not petitioner has better right to purchase the subj property
than appellant Ramirez.
Held: NO. The act of the petitioner in taking delivery of her letter at the entry
section of the Manila post office without waiting for said letter to be delivered to
her in due course of mail is a violation of the "first come first served" condition
imposed by the respondent J. M. Tuason & Co. Inc., acting through Gregorio
Araneta Inc. In order that a unilateral promise may be binding upon the promisor,
Article 1479, Civil Code of the Philippines, requires the concurrence of the
condition that the promise be "supported by a consideration distinct from the
price. The petitioner, Florencia Cronies, has not established the existence of a
consideration distinct from the price of the lot in question.The petitioner cannot
claim that she had accepted the promise before it was withdrawn because, as
stated above, she had violated the condition of "first, come, first served
Natino vs Intermediate Appellate Court
Facts: On 12 October 1970 petitioners executed a real estate mortgage in favor of
respondent bank as security for a loan of P2,000.00. Petitioners failed to pay the
loan on due date. The bank applied for the extrajudicial foreclosure of the
mortgage. At the foreclosure sale on 11 December 1974 the respondent bank was
the highest and winning bidder with a bid of P2,945.11. Since no redemption was
made by petitioners within the two-year period, which expired on 29 January
1977, the sheriff issued a Final Deed of Sale on 15 February 1977. Petitioners,
however, claimed that they were granted by respondent bank an extension of the
redemption period; but the latter denied it. In their complaint petitioners alleged
that the final deed of sale was prematurely issued since they were granted an
extension of time to redeem the property.
Issue: Whether or not the final deed of sale was prematurely issued.
Held: It seems clear from testimony elicited on cross-examination of the
president and manager of the bank that the latter offered to re-sell the property
for P30,000.00 but after the petition for a writ of possession had already been
filed, and well after expiry of the period to redeem. Appellants failed to accept
the offer; they deposited only P4,000.00. There was therefore no meeting of the
minds, and accordingly, appellants may no longer be heard. the attempts to
redeem the property were done after the expiration of the redemption period and
that no extension of that period was granted to petitioners.

date when the muniments of title relative to the said hacienda should have been placed at
his disposal to be inspected and he should have found them satisfactory and, in
consequence thereof, the deed of conveyance should have been executed in his favor by
the defendant Valdes.
There was no concurrence of the offer and the acceptance as to one of the conditions
related to the cause of the contract, to wit, the form in which the payment should be
made. The expression of Borck's will was not in accordance with all the terms of Valdes'
proposal, or, what amounts to the same thing, the latter's promise was not accepted by the
former in the specific terms, in which it was made, and finally, the acceptance of the said
proposal on Borck's part was not unequivocal and without variance of any sort between it
and the proposal.

Cronico vs JM Tuason & Co., Inc.

Facts: Appellant J. M. Tuason & Co. Inc. was the registered owner of Lot No. 22,
Block 461, Sta. Mesa Heights Subdivision. Plaintiff Florencia Cronico offered to
buy the lot from the appellant company with the help of Mary E. Venturanza. In
the first week of March, 1962, defendant-appellant Claudio Ramirez also learned
that the lot in question was being sold by the appellant company. On March 20,
1962, the appellant company sent separate reply letters to prospective buyers
including plaintiff Cronies and defendant-appellant Ramirez. It so happened that
plaintiff Cronico went to the appellant company's office on March 21, 1962, and
she was informed that the reply letter of the appellant company to prospective
buyers of the same lot had been mailed. With this information, plaintiff Cronies
and Mary E. Venturanza went to the post office in Manila and she was able to get
the letter at about 3:30 in the afternoon of the same date. After she got the letter,
plaintiff Cronies and Mary E. Venturanza went directly to the office of Gregorio
Araneta Inc., Escolta, Manila, and presented the letter to Benjamin Bautista,
Head of the Real Estate Department of said company. He advised plaintiff
Cronies that it is Gregorio Araneta II who would decide whose offer to buy may
be accepts after the appellant company receives the registry return cards attached
to the registered letters sent to the offerors. On March 22, 1962, between 10:00
and 11:00 a.m., appellant Ramirez received from the post office at San Francisco
del Monte, Quezon City, the reply letter of the appellant company. On April 2,
1962, the J. M. Tuason & Co. Inc., and Claudio R. Ramirez executed a contract
to sell whereby the appellant company agreed to sell to appellant Ramirez the lot
in question for a total price of P167,896.00 subject to the terms and conditions
therein set forth. On April 28,1962, plaintiff Florencia Cronico lodged in the
Court of First Instance of Rizal (Quezon City Branch) a complaint against the
defendants-appellants J. M. Tuason & Co., Inc. and Claudio Ramirez. The main

Atkins, Kroll & Co., Inc. vs Cua Hian Tek

RURAL BANK OF PARARAQUE, INC., petitioner, vs. ISIDRA
REMOLADO and COURT OF APPEALS, respondents.
G.R. No. L-62051
March 18, 1985
Facts: Isidra Remolado, 64, a widow, and resident of Makati, Rizal, owned a lot
with an area of 308 square meters, with a bungalow thereon, which was leased to
Beatriz Cabagnot. In 1966 she mortgaged it to the Rural Bank of Paraaque, Inc.
as security for a loan of P15,000. She paid the loan. On April 17, 1971 she
mortgaged it again to the bank. She eventually secured loans totaling P18,000.
The loans become overdue. The bank foreclosed the mortgage on July 21, 1972
and bought the property at the foreclosure sale for P22,192.70. The one-year
period of redemption was to expire on August 21, 1973. The bank advised
Remolado that she had until August 23 to redeem the property. The bank gave
her a statement showing that she should pay P25,491.96 for the redemption of
the property on August 23. No redemption was made on that date.
The bank consolidated its ownership over the property---Remolado's title was
cancelled. A new title, TCT No. 418737, was issued to the bank. On September
24, 1973, the bank gave Remolado up to ten o'clock in the morning of October

Facts: For its failure to deliver one thousand cartons of sardines, which it had
sold to B. Cua Hian Tek, petitioner was sued, and after trial was ordered by the
Manila court of first instance to Pay damages, which on appeal was reduced by
the Court of Appeals to P3,240.15 representing unrealized profits.
It was shown that B. Cua Hian Tek accepted the offer unconditionally and
delivered his letter of acceptance Exh. B on September 21, 1951. However, due
to shortage of catch of sardines by the packers in California, Atkins Kroll & Co.,
failed to deliver the commodities it had offered for sale.
Issue: Whether or not there was a contract of sale.
Held: 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 later. In this
case, however, upon accepting herein petitioner's offer a bilateral promise to sell
and to buy ensued, and the respondent ipso facto assumed the obligations 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. We must therefore hold,
as the lower courts have held that there was a contract of sale between the
parties.

31, 1973, or 37 days, within which to repurchase (not redeem since the period of
redemption had expired) the property. The bank did not specify the price. On
October 26, 1973 Remolado and her daughter, Patrocinio Gomez, promised to
pay the bank P33,000 on October 31 for the repurchase of the property. Exhibits
1-1 and X do not evidence any perfected repurchase agreemi6nt. Even if it is
assumed that the bank's commitment to resell the property was accepted by
Remolado, that option was not supported by a consideration distinct from the
price. Lacking such consideration, the option is void. Contrary to her promise,
Remolado did not repurchase the property on October 31. Five days later, or on
November 5, Remolado and her daughter delivered P33,000 rash to the bank's
assistant manager as repurchase price. The amount was returned to them the next
day. At that time, the bank was no longer willing to allow the repurchase.
On that day, November 6, Remolado filed an action to compel the bank to
reconvey the property to her for P25,491.96 plus interest and other charges and
to pay P35,000 as damages. The repurchase price was not consigned. A notice of
lis pendens was registered. The bank sold the property to Pilar Aysip for P50,000.
A new title was issued to Aysip with an annotation of lis pendens.
The trial court ordered the bank to return the property to Remolado upon
payment of the redemption price of P25,491.96 plus interest and other bank
charges and to pay her P15,000 as damages. The Appellate Court affirmed the
judgment. The bank appealed to this Court. It contends that Remolado had no
more right of redemption and, therefore, no cause of action against the bank.
Issue: Whether or not Remolado still had the right of redemption or repurchase
over the property
R. F. NAVARRO, doing business under the firm name of R.F. NAVARRO &
COMPANY vs. SUGAR PRODUCERS COOPERATIVE MARKETING
ASSOCIATION INC.
G.R. No. L-12888
April 29, 1961
FACTS: On September 19th, 1956, defendant formally offered to plaintiff the
sale from 15,000 to 20,000 metric tons of molasses, 1st-degrees gravity, 60%
sugar by invert, at P50.00 per metric ton, ex-warehouse San Carlos and Bais,
Negros Occidental, giving him up to noon of September 24th, 1956 within which
to accept the offer, with the admonition that upon its failure to hear from him by
then, the defendant shall feel free to negotiate the sale with other possible buyers.
Promptly at five minutes before noon of September 24th, 1956, plaintiff formally
accepted the offer of sale tendered by the defendant by informing the latter in
writing that he binds himself to purchase from the preferred 20,000 metric tons
of molasses in question for P50.00 per metric ton, and the day after September
21st, 1956, plaintiff upon the request of defendant, made the following

Held: No, we hold that the trial court and the Appellate Court erred in ordering
the reconveyance of the property. There was no binding agreement for its
repurchase. Even on the assumption that the bank should be bound by its
commitment to allow repurchase on or before October 31, 1973, still Remolado
had no cause of action because she did not repurchase the property on that date.
There may be a moral obligation, often regarded as an equitable consideration
(meaning compassion), but if there is no enforceable legal duty, the action must
fail although the disadvantaged party deserves commiseration or sympathy. In
the instant case, the bank acted within its legal rights when it refused to give
Remolado any extension to repurchase after October 31, 1973. It had given her
about two years to liquidate her obligation. She failed to do so.
WHEREFORE, the Appellate Court's judgment is reversed and set aside.

plaintiff prayed that judgment be rendered ordering defendant to comply with

and perform its contractual obligations, pursuant to its agreement with plaintiff
of September 19 and 24, 1956 and in case of failure to do so, to pay plaintiff any
and all damages he may suffer by reason of such non-compliance, plus moral
damages and to pay plaintiff reasonable attorney's fees and actual costs of the
litigation.
In view of Article 1479 of the New Civil Code, the trial court dismissed the
action. His motion for reconsideration having been denied, plain plaintiff
interposed this appeal.
Issue: Whether or not there was a unilateral promise to buy and sell
Held: No, this contention is not borne out by the facts alleged in the complaint.
In the first place, as noted by the trial court in its order denying plaintiff's motion
for reconsideration, plaintiff himself, in paragraph 6 of his complaint, referred to
the transaction as an "option" which he exercised on September 24, 1956. Then
again, in his memorandum in lieu of oral argument, he expressly agreed that the
offer made by defendant and described in paragraph 2 of plaintiff's complaint is,
In option, a unilateral promise to sell. And, undoubtedly, this is the offer, the
option, the unilateral promise to sell that was accepted by plaintiff five minutes
before the deadline noon of September 24, 1956This acceptance, without
consideration, did not create an enforceable obligation on the part of the
defendant. The offer as well as the acceptance, did not contemplate nor produce
an immediately binding and enforceable contract of sale. Both lack a most
essential element the manner of payment of the purchase price.
In fact, it was only after the exercise of the option or acceptance of the unilateral
promise to sell that the terms of payment were first discussed. This was in
connection with the clarification of plaintiff's acceptance which was transmitted
to defendant on September 25, 1956Plaintiff's offer of a domestic letter of credit
was not accepted by defendant who insisted on a cash payment of 50% of the
purchase value, upon signing of a contract. Plaintiff, on the other hand, agreed to
accede to this provided the price is reduced from P50.00 per metric ton to
7132.00 Defendant rejected defendant's alternative counter-offer. In the
circumstance, there was no complete meeting of the minds of the parties
necessary for the perfection of a contract of sale. Consequently, appellee was
justified in withdrawing its offer to sell the molasses in question
WHEREFORE, finding no reversible error in the order appealed from, the same
is hereby affirmed, with cost against the plaintiff-appellant. So ordered.

clarifications of his agreement to purchase the said molasses, (1) 20,000

metric tons of Philippine molasses, 185-degrees specific gravity, 60% sugar by
invert; (2) Price P50.00 Philippine currency, per metric ton ex-warehouse; (3)
shipments to be in quantities of 3,000 or more metric tons every each shipment
during the month of February, March, April and May until the whole amount has
been completely shipped; and (4)payment shall be by irrevocable, divisible and
assignable domestic letter of credit to be opened in a local bank in defendant's
favor;
On the same day plaintiff made the foregoing clarifications of
his acceptance of the sale, the defendant hurried advised plaintiff that it
committed a typographical error indicating the specific gravity of the molasses at
185-degrees which should be only 85-degrees, the latter being the high for
molasses at 60% sugar by invert, and requesting plain that the "specific gravity"
be amended accordingly, which correction and amendment plaintiff readily
agreed to and accepted: That there was no single word, effort or hint that the
defendant's offer, accepted by the plaintiff, was qualified in any way whatsoever;
That on September 24th, 1956, relying upon the consummation and perfection of
the purchase and sale of 20,000 metric tons of molasses in question as indicated
above, plaintiff through his business associate here in Manila (J.D. QUIRINO)
continued negotiations for the resale of said molasses to foreign buyers of said
conunodity by immediately communicating the availability of said commodity
through letters, cablegrams a long-distance calls to the latter's business contacts
in U.S.A., a Japan, and ultimately disposing and reselling the said molasses for
forward deliveries in accordance with plaintiff's agreement with the defendant;
On September 28th, 1956, three days after an agreement had been consummated
on the price, quantity and quality of said molasses and the manner of payment
thereof, the defendant, belatedly and abruptly advised plaintiff of its desire add
certain additional conditions to be incorporated in the formal contract of
purchase and sale then under preparation by it for signature, which were
never even mentioned nor hinted at in its original offer or proposal, on the
untenable pretext that they were 'standard conditions' on all contracts for the sale
said commodity peremptorily giving plaintiff up to noon again of October
26th, 1956, within which to decide upon his acceptance of said additional
conditions with the warning that if he failed to do so, it would feel free to advise
its planters concerned that they could negotiate their molasses with other parties;
On the very same day defendant simply and rudely turned down
the foregoing friendly gesture of the plaintiff caused by the additional conditions
demanded by the defendant in its letter of September 28, 1956 and bluntly
informed plaintiff that in view of his non-acceptance of said conditions it would
not continue with the sale of the molasses in question to plaintiff and that it felt
free to offer the same to any other interested buyer. Claiming breach of contract,

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 Pl,510.00, made by
Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the
former deposited said amount with the Court of First Instance of Nueva Ecija and
commenced against the latter the present action, for specific performance and
damages.
Alleging, as special defense, that the contract between the parties "is a unilateral
promise to sell, and the same being unsupported by any valuable consideration,
by force of the New Civil Code, is null and void" on February 11, 1964, both
parties, assisted by their respective counsel, jointly moved for a judgment on the
pleadings. Accordingly, on February 28, 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 attorney's fees, and other
costs. Hence, this appeal by Mrs. Rigos.
Issue: Whether or not there was a unilateral promise to buy and sell
Held: This case admittedly hinges on the proper application of Article 1479 of
our Civil Code, which provides: ART. 1479. 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.
In his complaint, plaintiff alleges that, by virtue of the option under
consideration, "defendant agreed and committed to sell" and "the plaintiff agreed
and committed to buy" the land described in the option, copy of which was
annexed to said pleading as Annex A thereof and is quoted on the margin. 1
Hence, plaintiff maintains that the promise contained in the contract is
"reciprocally demandable," pursuant to the first paragraph of said Article 1479.
Although defendant had really "agreed, promised and committed" herself to sell
the land to the plaintiff, it is not true that the latter had, in turn, "agreed and
committed himself" to buy said property.
The option did not impose upon plaintiff the obligation to purchase defendant's
property. Annex A is not a "contract to buy and sell." It merely granted plaintiff
an "option" to buy. And both parties so understood it, as indicated by the caption,
"Option to Purchase," given by them to said instrument. Under the provisions
thereof, the defendant "agreed, promised and committed" herself to sell the land
therein described to the plaintiff for P1,510.00, but there is nothing in the
contract to indicate that her aforementioned agreement, promise and undertaking

NICOLAS SANCHEZ vs. SEVERINA RIGOS

G.R. No. L-25494
June 14, 1972
Facts: On April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos
executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos
"agreed, promised and committed ... to sell" to Sanchez 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 Transfer Certificate
of Title No. NT-12528 of said province, within two (2) years from said date with

P30,000.00 to be exercised within ninety days. On May 11, 1953, Atlantic Gulf
wrote Southwestern Sugar that it was exercising its option and that it be notified
as soon as the barge was available. On May 12, 1953, Atlantic Gulf replied that
their understanding was that the "offer of option" is to be cash transaction and to
be effected at the time the barge was available. On June 25, 1953, Atlantic Gulf
informed Southwestern Sugar that the damage action could not be turned over to
the latter. On June 27, 1953, Southwestern Sugar instituted an action for specific
performance in line with the accepted option, depositing with the Court the
purchase price of 30,000.00. Atlantic Gulf, relying upon Article 1479 of the New
Civil Code, contended that the option was not valid because it was not supported
by any consideration apart from the price. Southwestern Sugar contended that the
option became binding on Atlantic Gulf when plaintiff gave notice of its
acceptance during the option period citing as its authority Article 1324 of the
New Civil Code which provides that 'when the offer or 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 a consideration, as something paid or promised."
Issue: Whether or not the promise to sell was valid
Held: No, the promise to sell was not valid because it was not supported by a
consideration distinct from the price. There is no question 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. Here, it is not disputed that the
option is without consideration. It can, therefore, be withdrawn notwithstanding
the acceptance made of it by appellee.

is supported by a consideration "distinct from the price" stipulated for the sale of
the land.
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
this case, however, upon accepting herein petitioner's offer a bilateral promise to
sell and to buy ensued, and the respondent 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 a bilateral contract of sale.
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. 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.
WHEREFORE, the decision appealed from is hereby affirmed, with costs against
defendant-appellant Severina Rigos. It is so ordered.

It is true that under Article 1324 of the New Civil Code, the general rule
regarding offer and acceptance is that, when the offer or gives to the offeree a
certain period to accept, "the offer may be withdrawn at any time before
acceptance" except when the option is founded upon consideration, but this
general provision must be interpreted as modified by the provision of Article
1479 above referred to, which applies to "a promise to buy and sell" specifically.
As already stated, this rule requires that a premise to sell to be valid must be
supported by a consideration distinct from the price.
While under the "offer of option" in question, appellant has assumed a clear
obligation to sell its barge to appellee and the option has been exercised in
accordance with its terms, and there appears to be no valid or justifiable reason
for the appellant to withdraw its offer, this Court cannot adopt a different attitude

Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Co.
51 O.G. 3447
Facts: On March 24, 1953, defendant Atlantic Gulf & Pacific Co. granted an
option to plaintiff Southwestern Sugar & Molasses Co. to buy its barge for

Nietes vs CA
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 P3000 September 4, 1961 as per advance pay for the school and he
also paid Garcia P2200 on Dec.16, 1962 for partial payment on the purchase of
the property, both were acknowledged by Garcia through the issuance of receipts.
Garcia decided to rescind the contract on the grounds that Nietes: (1) had not
maintained the building in good condition, (2) had not been using the original
name of the school-thereby extinguishing its existence in the eyes of the public
and injuring its prestige, (3) no inventory has been made of all properties of the
school, (4) had not collected or much less helped in the collection of back
accounts of former students. Garcias lawyers reminded Nietes that the foregoing
obligations had been one, if not, the principal moving factors which had induced
the lessor in agreeing with the terms embodied in the contract of lease, without
which fulfillment, said contract could not have come into existence.
Nietes also deposited 84K to a bank corresponding to the balance for the
purchase of the property.
Issue: Whether or not Nietes can avail of his option to buy the property.
Held: Nietes can avail of the option to buy because he already expressed 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 obligations and contracts 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"

because the la on the matter is clear. Our imperative duty is to apply it unless
modified by Congress."
WHEREFORE, the Court sustains, as it hereby sustain the defendant's motion to
dismiss and hereby declares plaintiff's complaint dismissed, without costs.
SO ORDERED.

Neither the plaintiff nor defendants have proven title to the property in question,
but that the plaintiff administrator is entitled to possession thereof; thus modified
the judgment should be affir

Mas vs Lanuza

Barretto vs. Sta Marina

WHOLE ARTICLE

Facts: Judgment was rendered in favor of Jose Mas for the possession of a
certain lot of land described in Tondo, Manila, and declared said lot to be the
property of the estate of which the plaintiff is administrator

The material facts upon which our disposition of this appeal necessarily turns are
set out at length in our opinion in the case of Barretto vs. Santa Marina, decided
December 2, 1913 (26 Phil rep., 200). This court having ruled against the
plaintiff's contention in the former case, he now sets up a claim for interest at the
legal rate upon the amount of the purchase price of his share (participacion) in
the business from the 1st day of July, 1909, to the 22d day of November, 1910,
the day upon which it was turned over to him.
The finding of facts, and the reasoning upon which we based our rulings in the
former case, are manifestly conclusive in the present case as to the plaintiff's
claim of a right to interest from the first of July, 1909, to the third of May, 1910.
In the former case we held that the sale of plaintiff's share (participacion) in the
tobacco factory was consummated on the latter date; that the valuation set upon
his share (participacion) in business was determined as of that day by the
committee charged with the duty of ascertaining the cash value of this share
(participacion) in order to determine the exact amount which the parties had
agreed upon as the purchase price to be paid therefor; and that the committee had
included that the plaintiff's share of the profits of the business down to the third
of May, 1910, in their estimate of the value of his share (participacion) in the
business of that date.
These rulings were made after a review of the same record which is now relied
upon by the plaintiff in support of his claim of interest upon the amount fixed by
the committee as the true value of his share (participacion) in the business. We
find nothing in the record of the contention of counsel in this regard which would
justify or necessitate a modification or reversal of the conclusions reached by us
in our former opinion.
Plaintiff's share (participacion) in the business having been sold on the 3rd day of
May, 1910, for a stipulated price, that is to say, for its value on that day as fixed
by the valuation committee, it is very clear that he is not entitled to interest on
the amount fixed by the committee, prior to the date on which the sale was
consummated (3rd of may, 1910).
So also plaintiff's contention that he should be allowed interest on the amount of
the purchase price from the date of the sale, May 3, 1910, down to the day upon
which the money was actually turned over to him, November 22, 1910, cannot be
sustained. Under the express terms of the agreement for the sale on May 3, 1910,
the plaintiff agreed to accept, and the defendant to pay, the amount which the
committee should find to be the true value of plaintiff's share (participacion) in

Mas submitted in evidence an agreement signed by the Lanuzas and Hilario that
one Francisca Hilario gave the Lanuzas permission to enter upon the land in
question, and to occupy it for such time as Hilarios heirs should permit, the
appellants, on their part, expressly acknowledging the right and title of Hilario,
deceased, to the possession and ownership of said property, and, among other
stipulations, binding themselves to close the opening in the wall which divided
the said lot from their own, should any question ever arise over the title thereto.
Plaintiff also introduced in evidence that the lot in question was the property of
the said Francisco Hilario, and that Timoteo Lanuza had been treating with her
for the purchase thereof.
The defendants admit the execution of the agreement, and that they took
possession of the lot but they allege that they entered into it under the mistaken
belief that Francisca Hilario was in fact the owner of the property and that they
discovered later that she held the property merely as administratrix for the true
owner. On December 7, 1982 they loaned the true owner, Lao-Jico, 200 pesos,
and took from him an agreement in writing whereby he promised to sell them the
said property for 500 pesos, an agreement which was never consummated
however,
because
he
died
a
short
time
thereafter.
The defendants offered in evidence and certain other documents which tended to
show that the title to said property was in Lao-Jico.
Held: Trial Court refused to admit these documents in evidence because of the
defendants own showing that the agreement to sell did not pass title or dominion
over the property, and only gave the defendants a right to demand the fulfillment
of the terms thereof, should it appear that the title was in fact in Lao-Jico.
No weight can be given to the defendants claim to title by prescription, for even
if it were admitted that they had been in possession for the full prescriptive
period, they took possession by virtue of the express permission of the deceased
Francisca Hilario, and continued in possession by virtue of said permission until
January 15, 1900, as appears from the above-mentioned certified copy of the
statement under oath of one of the defendants, Timoteo Lanuza. (Art. 447, Civil
Code.)

UP vs Philab
Facts: In the year 1979, UP decided to construct an integrated system of research
organization known as the Research Complex. As part of the project, laboratory
equipment and furniture were purchased for the National Institute of
Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Banos. The
Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund the
acquisition of the laboratory furniture, including the fabrication thereof.
Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH to
contact a corporation to accomplish the project. On July 23, 1982, Dr. Padolina,
the Executive Deputy Director of BIOTECH, arranged for Philippine Laboratory
Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver the
same to BIOTECH for the BIOTECH Building Project, for the account of the
FEMF. Lirio directed Padolina to give the go-signal to PHILAB to proceed with
the fabrication of the laboratory furniture, and requested Padolina to forward the
contract of the project to FEMF for its approval.
In 1982, Padolina wrote Lirio and requested for the issuance of the purchase
order and downpayment for the office and laboratory furniture for the project.
Padolina also requested for copies of the shop drawings and a sample
contract[5]for the project, but PHILAB failed to forward any sample contract.
PHILAB made partial deliveries of office and laboratory furniture to BIOTECH
after having been duly inspected by their representatives and FEMF Executive
Assistant Lirio.
On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment for
the laboratory furniture for the BIOTECH project and FEMF made another
partial payment of P800,000 to PHILAB.
UP, through Chancellor Javier and Gapud from FEMP executed a Memorandum
of Agreement (MOA) in which FEMF agreed to grant financial support and
donate sums of money to UP for the construction of buildings, installation of
laboratory and other capitalization for the project, not to exceed P29,000,000.00.
The MOA, additionally states that: (1)the foundation shall acquire and donate to
the UNIVERSITY the site for the RESEARCH COMPLEX, (2) donate or cause
to be donated to the UNIVERSITY the sum of P29,000,000.00, and (3) shall
continue to support the activities of the RESEARCH COMPLEX.

the business as of that day. Under the agreement the defendant neither expressly
nor impliedly obligated himself to pay interest on that amount pending the report
of the committee. The only contractual obligation assumed by him was that he
would pay the amount fixed by the committee in cash immediately upon the
making of the award by the committee, and in accordance with its terms.
The committee's report is dated November 14, 1910, and it appears that promptly
upon the submission of this report, the amount awarded the plaintiff
(P280,025.16) was paid over by the defendant to the plaintiff in cash; and the
letter of counsel for plaintiff dated November 17, 1910, tendering a formal deed
of sale of plaintiff's share (participacion) in the business and making demand for
the purchase price as fixed by the committee, read together with the formal deed
of sale executed November 22, 1910, with its acknowledgment of the receipt of
the purchase price, leaves no room for doubt that at that time the parties
understood and accepted the purchase price therein set forth as full payment of
plaintiff's share (participacion) in the business in exact conformity with the
conditions imposed in the agreement consummated to May 3, 1910.
The right to interest arises either by virtue of a contract or by way of damages for
delay or failure (demora) to pay the principal on which interest is demanded, at
the time when the debtor is obligated to make such payment. In the case at bar
where was no contract, express or implied, for the payment of interest pending
the award of the committee appointed to value the property sold on May 3, 1910,
and there was no delay in the punctual compliance with defendant's obligation to
make immediate payment, in cash, of the amount of the award, upon the filing of
the report of the committee.
We conclude that the judgment entered in the court below dismissing the
complaint in this case sine die should be affirmed, with the costs of this instance
against the appellant. So ordered.
The plaintiff argued that if the agreement of May 3, 1910, was a perfected sale he
cannot recover any profits after that date; while on the other hand the defendant
concedes that if said agreement was only a promise to sell in the future it,
standing alone, would not prevent recovery in this action.

money equivalent to P29,000,000, and not the laboratory equipment supplied by

it to the petitioner. The respondent submits that the petitioner, being the recipient
of the laboratory furniture, should not enrich itself at the expense of the
respondent.
It bears stressing that the respondents cause of action is one for sum of money
predicated on the alleged promise of the petitioner to pay for the purchase price
of the furniture, which, despite demands, the petitioner failed to do. However, the
respondent failed to prove that the petitioner ever obliged itself to pay for the
laboratory furniture supplied by it. Hence, the respondent is not entitled to its
claim against the petitioner.
There is no dispute that the respondent is not privy to the MOA executed by the
petitioner and FEMF; hence, it is not bound by the said agreement. Contracts
take effect only between the parties and their assigns. A contract cannot be
binding upon and cannot be enforced against one who is not a party to it, even if
he is aware of such contract and has acted with knowledge thereof. Likewise
admitted by the parties, is the fact that there was no written contract executed by
the petitioner, the respondent and FEMF relating to the fabrication and delivery
of office and laboratory furniture to the BIOTECH.
Based on the records, an implied-in-fact contract of sale was entered into
between the respondent and FEMF. A contract implied in fact is one implied
from facts and circumstances showing a mutual intention to contract. It arises
where the intention of the parties is not expressed, but an agreement in fact
creating an obligation. It is a contract, the existence and terms of which are
manifested by conduct and not by direct or explicit words between parties but is
to be deduced from conduct of the parties, language used, or things done by
them, or other pertinent circumstances attending the transaction. To create
contracts implied in fact, circumstances must warrant inference that one expected
compensation and the other to pay. An implied-in-fact contract requires the
parties intent to enter into a contract; it is a true contract. The conduct of the
parties is to be viewed as a reasonable man would view it, to determine the
existence or not of an implied-in-fact contract. The totality of the acts/conducts
of the parties must be considered to determine their intention. An implied-in-fact
contract will not arise unless the meeting of minds is indicated by some
intelligent conduct, act or sign.
Judgement is reversed.

Navasero promised to submit the contract for the installation of laboratory

furniture to BIOTECH but failed to do so. BIOTECH reminded Navasero but
instead PHILAB submitted to BIOTECH an accomplishment report on the
project and requested payment thereon. By May 1983, PHILAB had completed
78% of the project, amounting to P2,288,573.74 out of the total cost
of P2,934,068.90. The FEMF had already paid forty percent (40%) of the total
cost of the project. Padolina wrote Lirio and furnished him the progress billing
from PHILAB.[10] FEMF made another partial payment, in check,
ofP836,119.52 representing the already delivered laboratory and office furniture
after the requisite inspection and verification thereof by representatives from the
BIOTECH, FEMF, and PHILAB.
FEMF failed to pay the bill and PHILAB reiterated its request for payment
through a letter however, there was no response from the FEMF. Philab appealed
for the payment of its bill even on installment basis. Navasero wrote BIOTECH
requesting for its much-needed assistance for the payment of the balance already
due plus interest of P295,234.55 for its fabrication and supply of laboratory
furniture.
PHILAB asked Cory Aquino for help to secure the payment of the amount due
from the FEMF. It was referred to then Budget Minister Romulo and referred the
same to UP President Edgardo Angara on June 9, 1986. Raul P. de Guzman, the
Chancellor of UP Los Baos, wrote then Chairman of the (PCGG) Jovito Salonga,
submitting PHILABs claim to be officially entered as accounts payable as soon
as the assets of FEMF were liquidated by the PCGG. Chancellor De Guzman
wrote Navasero requesting for a copy of the contract executed between PHILAB
and FEMF.
Exasperated, PHILAB filed a complaint for sum of money and damages against
UP and the latter denied liability and alleged that PHILAB had no cause of action
against it because it was merely the donee/beneficiary of the laboratory furniture
in the BIOTECH; and that the FEMF, which funded the project, was liable to the
PHILAB for the purchase price of the laboratory furniture. UP specifically
denied obliging itself to pay for the laboratory furniture supplied by PHILAB.
Case was dismissed by lack of merit.
Held:
Petitioner argues that the CA overlooked the evidentiary effect and substance of
the corresponding letters and communications which support the statements of
the witnesses showing affirmatively that an implied contract of sale existed
between PHILAB and the FEMF. The petitioner furthermore asserts that no
contract existed between it and the respondent as it could not have entered into
any agreement without the requisite public bidding and a formal written contract.
The respondent, on the other hand, submits that the CA did not err in not
applying the law on contracts between the respondent and the FEMF. It, likewise,
attests that it was never privy to the MOA entered into between the petitioner and
the FEMF. The respondent adds that what the FEMF donated was a sum of

On the other hand, the fact that Villonco did not object when
Bormahecoencashed the check is a proof that it accepted the offer of Bormaheco.
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).

Villanco Realty vs. Bormaheco

65 SCRA 352
Velasco vs CA
Facts: Lorenzo Velasco& Magdalena Estate, Inc. entered into a contract of sale
involving a lot in New Manila for 100K.The agreement was that Lorenzo would
give a down payment of 10K (as evidenced by a receipt) to be followed by 20K
(time w/in which to make full down payment was not specified) and the balance
of 70K would be paid in installments, the equal monthly amortization to be
determined as soon as the 30K had been paid. Lorenzo paid the 10K but when he
tendered payment for 20K, Magdalena refused to accept & refused to execute a
formal deed of sale. Velasco filed a complaint for damages. Magdalena denied
having any dealings/contractual relations w/ Lorenzo. It contends that a portion
of the property was being leased by Lorenzos sister-in-law, Socorro Velasco who
went to their office & they agreed to the sale of the property (30K down
payment, 70K on installments+9% interest). Since Socorro was only able to
pay10K, it was merely accepted as deposit & on her request, the receipt was
made in the name of Lorenzo. Socorro failed to complete the down payment &
neither has she paid the 70K. It was only 2 years after that she tendered payment
for 20K & by then, Magdalena considered their offer to sell rescinded.
According to Lorenzo, he had requested Socorro to make the necessary contracts
& he had authorized her to make negotiations w/ Magdalena on her own name,

Facts: Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a

parcel of land and its improvements located in Buendia, Makati.Bormaheco
made the terms and condition for the sale and Villonco returned it with some
modifications.The sale is for P400 per square meter but it is only to be
consummated after respondent shall have also consummated purchase of a
property in Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land
and subsequently bought the property.Villonco issued a check to Bormaheco
amounting to P100,000 as earnest money. 26 days after signing the contract of
sale, Bormaheco returned the P100,000 to Villonco with 10% interest for the
reason that they are not sure yet if they will acquire the Sta.Ana
property.Villonco rejected the return of the check and demanded for specific
performance.
Issue: WON Bormaheco is bound to perform the contract with Villonco.
Held: The contract is already consummated when Bormaheco accepted the offer
by Villonco. The acceptance can be proven when Bormaheco accepted the check
from Villonco and then returned it with 10% interest as stipulated in the terms
made by Villonco.

Held: Period of repurchase has not yet lapsed because the respondent was not
notified of the sale. The 30-day period for the right of repurchase starts only after
actual notice not only of a perfected sale but of actual execution and delivery of
the deed of sale.
The letter sent to the respondent by the other co-owners cannot be considered as
actual notice because the letter was only to inform her of the intention to sell the
property but not its actual sale. As such, the 30-day period has not yet
commenced and the respondent can still exercise his right to repurchase.
The respondent should also pay only the 30K stipulated in the deed of sale
because a redemptioners right is to be subrogated by the same terms and
conditions stipulated in the contract.

as he doesnt understand English. He also uses as evidence the receipt to prove

that there already had been a perfected contract to sell as the annotations therein
indicated that earnest money for 10K had been received & also the agreed price
(100K, 30K dp&bal in 10 yrs) appears thereon. To further prove that it was w/
him & not w/ Socorro that Magdalena dealt with, he showed 5 checks drawn by
him for payment of the lease of the property.
Issue:
W/N there was a consummated sale? NO
Held: The minds of the parties did not meet in regard to the matter of payment. It
is admitted
that they still had to meet and agree on how & when the down payment &
installments
were to be paid. Therefore, it cannot be said that a definite & firm sales
agreement
between the parties had been perfected. The definite agreement on the manner of
payment of the purchase price is an essential element in the formation of a
binding & enforceable contract of sale.The fact that Velasco delivered to
Magdalena the sum of 10K as part of the down payment that they had to be pay
cannot be considered as sufficient proof of the perfection of any purchase & sale
agreement between the parties under Art 1428, NCC.

SPS DOROMAL VS CA
SALAS RODRIGUEZ VS LEUTERIO
Facts: On September 24, 1920, the parties to this action entered into a contract by
which the defendant agreed to sell, and the plaintiff to buy, seven thousand
square meters of land in the barrio of Tuliahan, municipality of Caloocan, Rizal,
for the consideration of P5,600, which was paid by the plaintiff in the act of
transfer. At the time of this sale the particular lots contemplated as the subject of
the sale had not been segregated, but the seller agreed to establish the lots with a
special frontage on a principal thoroughfare as soon as the streets should be laid
out in a projected new subdivision of the city. As time passed the seller was
unable to comply with this part of the agreement and was therefore unable to
place the purchaser in possession. The present action was accordingly instituted
by the purchaser in the Court of First Instance of the Province of Rizal for the
resolution (in the complaint improperly denominated rescission) of the contract
and a return of double the amount delivered to the defendant as the purchase
price of the land. The trial court decreed a rescission (properly resolution) of the

FACTS: A parcel of land in Iloilo were co-owned by 7 siblings all surnamed

Horilleno. 5 of the siblings gave a SPA to their niece Mary Jimenez, who
succeeded her father as a co-owner, for the sale of the land to father and son
Doromal. One of the co-owner, herein petitioner, Filomena Javellana however
did not gave her consent to the sale even though her siblings executed a SPA for
her signature. The co-owners went on with the sale of 6/7 part of the land and a
new title for the Doromals were issued.
Respondent offered to repurchase the land for 30K as stated in the deed of sale
but petitioners declined invoking lapse in time for the right of repurchase.
Petitioner also contend that the 30K price was only placed in the deed of sale to
minimize payment of fees and taxes and as such, respondent should pay the real
price paid which was P115, 250.
Issue: WON the period to repurchase of petitioner has already lapsed.

On August 8, 1940, an action was instituted by Ramon Alcantara in the Court of

First Instance of Laguna for the annulment of the deed of sale as regards his
undivided share in the two parcels of land. Said action was against Sia Suan and
her husband Gaw Chiao, Antonio, Azores, Damaso Alcantara and Rufino
Alcantara. the latter two being, respectively, the brother and father of Ramon
Alcantara appealed to the Court of Appealed which reversed the decision of the
trial court, on the ground that the deed of sale is not binding against Ramon
Alcantara in view of his minority on the date of its execution. From this
judgment Sia Suan and Gaw Chiao have come to us on appeal by certiorari.
Issue: Whether or not the contract of sale between the parties valid?
Held: The circumstance that, about one month after the date of the conveyance,
the appellee informed the appellants of his minority, is of no moment, because
appellee's previous misrepresentation had already estopped him from disavowing
the contract. Said belated information merely leads to the inference that the
appellants in fact did not know that the appellee was a minor on the date of the
contract, and somewhat emphasizes appellee's had faith, when it is borne in mind
that no sooner had he given said information than he ratified his deed of sale
upon receiving from the appellants the sum of P500.
Counsel for the appellees argues that the appellants could not have been misled
as to the real age of the appellee because they were free to make the necessary
investigation. The suggestion, while perhaps practicable, is conspicuously
unbusinesslike and beside the point, because the findings of the Court of Appeals
do not show that the appellants knew or could suspected appellee's minority.
The Court of Appeals seems to be of the opinion that the letter written by the
appellee informing the appellants of his minority constituted an effective
disaffirmance of the sale, and that although the choice to disaffirm will not by
itself avoid the contract until the courts adjudge the agreement to be invalid, said
notice shielded the appellee from laches and consequent estoppel. This position
is untenable since the effect of estoppel in proper cases is unaffected by the
promptness with which a notice to disaffirm is made.
PADILLA, J., concurring:
I concur in the result not upon the grounds stated in the majority opinion but for
the following reasons: The deed of sale executed by Ramon Alcantara on 3
August 1931 conveying to Sia Suan five parcels of land is null and void insofar
as the interest, share, or participation of Ramon Alcantara in two parcels of land
is concerned, because on the date of sale he was 17 years, 10 months and 22 days
old only. Consent being one of the essential requisites for the execution of a valid
contract, a minor, such as Ramon Alcantara was, could not give his consent
thereof. The only misrepresentation as to his age, if any, was the statement
appearing in the instrument that he was of age. On 27 August 1931, or 24 days
after the deed was executed, Gaw Chiao, the husband of the vendee Sia Suan,
was advised by Atty. Francisco Alfonso of the fact that his client Ramon
Alcantara was a minor. The fact that the latter, for and in consideration of P500,
executed an affidavit, whereby he ratified the deed of sale, is of no moment. He

contract and ordered the defense to return to the plaintiff the amount received, or
the sum of P5,600, with legal interest from the date of the filing of the complaint.
From this judgment the plaintiff appealed.
Issue: W/N the plaintiff is entitled to recover double the amount paid out by him
as the purchase price of the land
Held: Article 1454 of the Civil Code is relied upon by plaintiff-appellant as
authority for claiming double the amount paid out by him. In this article it is
declared that when earnest money or pledge is given to bind a contract of
purchase and sale, the contract may be rescinded if the vendee should be willing
to forfeit the earnest money or pledge or the vendor to return double the amount.
This provision is clearly not pertinent to the case, for the reason that where the
purchase price is paid in whole or in part, the payment cannot be considered to
be either earnest money or pledge. In this connection the commentator Manresa
observes that the delivery of part of the purchase should not be understood as
constituting earnest money unless it be shown that such was the intention of the
parties.

Mercado vs. Mercado (NO DIGEST)

SIA SUAN and GAW CHIAO vs.RAMON ALCANTARA

Facts: On August 3, 1931, a deed of sale was executed by Rufino Alcantara and
his sons Damaso Alcantara and Ramon Alcantara conveying to Sia Suan five
parcels of land. Ramon Alcantara was then 17 years, 10 months and 22 days old.
On August 27, 1931, Gaw Chiao (husband of Sia Suan) received a letter from
Francisco Alfonso, attorney of Ramon Alcantara, informing Gaw Chiao that
Ramon Alcantara was a minor and accordingly disavowing the contract. After
being contacted by Gaw Chiao, however, Ramon Alcantara executed an affidavit
in the office of Jose Gomez, attorney of Gaw Chiao, wherein Ramon Alcantara
ratified the deed of sale. Sia Suan sold one of the lots to Nicolas Azores from
whom Antonio Azores inherited the same.

produces no legal effect, how could such a minor be bound by misrepresentation

about his age? If he could not be bound by a direct act, such as the execution of a
deed of sale, how could he be bound by an indirect act, such as misrepresentation
as to his age? The rule laid down in Young vs. Tecson, 39 O. G. 953, in my
opinion, is the correct one.
Nevertheless, as the action in this case was brought on 8 August 1940, the same
was barred, because it was not brought within four (4) years after the minor had
become of age, pursuant to article 1301 of the Civil Code. Ramon Alcantara
became of age sometime in September 1934.

was still minor. The majority opinion invokes the rule laid down in the case of
Mercado et al. vs. Espiritu, 37 Phil., 215. The rule laid down by this Court in that
case is based on three judgments rendered by the Supreme Court of Spain on 27
April 1960, 11 July 1868, and 1 March 1875. In these decisions the Supreme
Court of Spain applied Law 6, Title 19, of the 6th Partida which expressly
provides:
The contract of sale involved in the case of Mercado vs. Espiritu, supra, was
executed by the minors on 17 May 1910. The Law in force on this lastmentioned date was not Las Siete Partidas, 1 which was the in force at the time
the cases decided by the Supreme Court of Spain referred to, but the Civil Code
which took effect in the Philippines on 8 December 1889. As already stated, the
Civil Code requires the consent of both parties for the valid execution of a
contract (art. 1261, Civil Code). As a minor cannot give his consent, the contract
made or executed by him has no validity and legal effect. There is no provision
in the Civil Code similar to that of Law 6, Title 19, of the 6th Partida which is
equivalent to the common law principle of estoppel. If there be an express
provision in the Civil Code similar law 6, Title 19, of the 6th Partida, I would
agree to the reasoning of the majority. The absence of such provision in the Civil
Code is fatal to the validity of the contract executed by a minor. It would be
illogical to uphold the validity of a contract on the ground of estoppel, because if
the contract executed by a minor is null and void for lack of consent and