Arturo Abalos v. Galicano Macatangay

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 re-spondent 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 Macatan-gay, 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 pur-chase price. Esther, through her SPA, executed in favor of Macatangay, a con-tract 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 surren-der 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 re-spond under tge terms of the RMOA and the contract to sell

Held: The contract of sale, being essentially consensual, a contract of sale is per-fected at the moment there is a meeting of minds upon the thing which is the ob-ject 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 ex-ercised may a sale be perfected.

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 Cas-tro, found a prospetive buyer, Saint Agen Et Fils Limited (SAEFL) which is a foreign corporation represented by William Seitz. This was done despite the con-struction 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 ac-quisition 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 con-sistent with the documents adopted with the co founders. DYST made amend-ments 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.

ROMAN vs. GRIMALTG.R.No. 2412, April 11, 1906

Facts: UbPedro Roman, the owner of the schooner Sta. Maria and Andres Gri-malt 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 install-ments, 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 com-plied 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.

CIRILO PAREDES V. ESPINOL-23351

Facts: Appellant Cirilo Paredes had filed an action to compel defendant Jose Es-pino 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 de-fendsnt 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 re-sale of the property, and caused the plaintiff mental anguish and suffering, for which reason the complaint prayed for specific performance and damages. De-fendant 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 unen-forceable 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 trans-action. 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.

DIZON vs. CAG.R. No. 122544January 28, 2003

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 va-cate 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 par-ties, and it opined that the partial payment for the leased property which petition-ers 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 Pri-vate 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 Dizon’s 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 Dizon’s 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 enjoyment of the property. The option to purchase expired after the one year term granted in the contract.

TOYOTA SHAW, INC. vs. CAG.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 won’t 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 vehi-cle 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 Sosa’s 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 Toyota’s 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 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 en-

forceable 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 misrep-resent 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. CAG,R, No. L-109236, March 18, 1994

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 prop-erty 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 Respondent’s 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 ac-tion as the property is within the area for priority development, hence, their evic -tion 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 agree-ment 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 Arti-cle 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 con-tract to speak off.

CESAR RAET, ET. AL vs. CAG.R. No. 128016, September 17, 1998

Facts: Petitioners Cesar and Elvira Raet and Petitioners Rex and Edna Mitra ne-gotiated 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, Phil-Ville Develop-ment 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 Casidsid’s policy, and Sps. Mitra used that of Edna Lim’s. 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 re-main 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 esti-mates given by Gatus. The transaction of the parties, lacked the requisites essen-tial 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 fig-

ures 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 APPEALSDEC. 26, 1984

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 com-municated 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 spe-cific performance and damages and prayed for the cancellation of the deeds of sale.

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

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 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 perfor-

mance, subject to the law governing the form of contracts.” Art. 1181, NCC fur-ther 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 hap-pening of the event which constitutes the condition.” In the case at bar, there hav-ing 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.

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 satisfac-tion 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 ex-empting 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 So-liven is null and void.

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

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 encum-bered or alienated except in favor of the government itself or any of its institu -tions, 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 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 is-sued 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 ex-penses connected therewith.

CAVITE DEVELOPMENT BANK VS. CYRUS LIMFEBRUARY 1, 2000

Facts: On June 1983, Rodolfo Guansing obtained a loan from Cavite Develop-ment 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 prop-erty and paid 30,000.00 as Option Money thereof. Subsequently, Lim discovered the irregularity on the land’s 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 payment of Lolita Lim, though given as an “Option Money”, is nevertheless in-tended 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.

CONCHITA NOOL VS. COURT OF APPEALSJuly 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 Ana-cleto Nool, Conchita’s 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 repur-chase between Anacleto and Conchita Nool.

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 possi-ble. 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 Ba-coor, Cavite. Without Severina’s 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 alleg-ing that the land registration proceedings were fraudulently concealed by Domi-nador from her. Thereafter, Severina’s 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. Severina’s heirs and Dominador executed a deed of sale. The latter filed a motion with the trial court for Severina ’s heirs to deliver the owner’s copy of the certificate of title to them. Severina’s heirs opposed this by stressing that the certificate of title would only be surrendered upon Dominador ’s payment of the Php300K which was not yet complied with. Dominador admitted non-payment due to the fact that Severina’s 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 petitioner’s 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 inopera-tive. 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 cer-tificate of title covering the lots.

Clemento Jr. vs. LobregatG.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 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 perfor-mance 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 re-spondent; 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 re-spondent. The petitioner also declared in the said letter that even if the respon-dent 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?

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 re -spondent 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 be-cause 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 con-tract 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 ex-ecutory, 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 pay-ments made by the latter of the purchase price thereof.

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 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 pro-vided 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 cer-tain 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 op-tion, 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. Petitioner’s 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 respondent’s 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 imme-diately 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 respondent’s acceptance of herein petitioner's of-fer, a bilateral promise to sell and to buy ensued, and the respondent had immedi-ately assumed the obligations of a purchaser.

PAMECA Wood Treatment Plant Inc. vs Court of Appeals

Facts: PAMECA Wood Treatment Plant, Inc. (PAMECA) obtained a loan from respondent Bank. By virtue of this loan, petitioner PAMECA, through its Presi-dent, 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 fore-closed properties. On Thereafter, respondent bank filed a complaint for the col-lection 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 ap-plied 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 con-clusion 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.

DEVELOPMENT BANK OF THE PHILIPPINES vs. COURT OF AP-PEALS 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 se-cure the loan, ERHC mortgaged its personal and real properties to DBP.On 18 March 1981, DBP approved a restructuring of ERHC’s loan subject to certain conditions. On 25 August 1981, DBP allegedly cancelled the restructuring agree-ment for ERHC’s 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, alleg-ing 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, Sher-iffs 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 pro-ceeded.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 Sep-tember 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 post-pone 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 proper-ties. Subsequently, ERHC filed a Supplemental Complaint. ERHC alleged that the foreclosure was void mainly because (1) DBP failed to comply with the pro-cedural 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. Meanwhile, acting on ERHC’s application for the issuance of a writ of prelimi-nary 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 corpo-ration held on July 10, 1986;The Court of Appeals, which consolidated the ap-peals, affirmed the decision of the trial court.

Issue: Whether DBP complied with the posting and publication requirements un-der applicable laws for a valid foreclosure.

Held: No, The Court held recently in Ouano v. Court of Appeals22 that republi-cation 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 jurisdic-tional 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. How-ever, 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 infor-mation 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 par -ticular 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.

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 agree-ment 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 uti-lized by the City of Cebu. Pursuant thereto, Lot No. 646-A-3 was returned to pe-titioner and registered in its name under TCT No. 104310.Morales died on Feb-ruary 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 prop-erty against petitioner, They also consigned with the court the amount of P13,450.00 representing the balance of the purchase price which petitioner al-legedly 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.

Held: Yes, The appellate court correctly ruled that petitioner, as successor-in-in-terest 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 peti-tioner 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 respon-dents effectively transferred ownership of the lot to the latter. This is true not-withstanding 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 ques-tioned 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 re-quirements for a valid public auction sale were complied with.A sale by public auction is perfected when the auctioneer announces its perfec-tion 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.

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, situ-ated 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 above-mentioned, 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 let-ters 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 ac-cepted the terms of said offer and requested of Valdes to be allowed to inspect the prop-erty, titles and other documents pertaining to the property, and offered to pay to the de-fendant, 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 in-strument of conveyance thereof in his favor and that the plaintiff, on account of said re-fusal 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 pur-chase given him in document Exhibit E by the defendant Valdes, of the Nagtajan Ha-cienda, 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 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 re -lated 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' pro-posal, 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 of-fered to buy the lot from the appellant company with the help of Mary E. Ventu-ranza. 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 hap-pened 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, plain-tiff 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 Ben-jamin 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, be-tween 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 purpose of the said suit is to annul and set aside the contract to sell ex-ecuted 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 con-dition that the promise be "supported by a consideration distinct from the price. The petitioner, Florencia Cronies, has not established the existence of a consider-ation 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 mort-gage. 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 ex-tension 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 presi-dent 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 of-fer; 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 ex-tension of that period was granted to petitioners.

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

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 deliv-ered 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 par-ties.

RURAL BANK OF PARARAQUE, INC., petitioner, vs. ISIDRA REMO-LADO and COURT OF APPEALS, respondents.

G.R. No. L-62051March 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 Parañaque, Inc. as security for a loan of P15,000. She paid the loan. On April 17, 1971 she mort-gaged 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 state-ment 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 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 Oc-tober 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 as-

sumed that the bank's commitment to resell the property was accepted by Remo-lado, that option was not supported by a consideration distinct from the price. Lacking such consideration, the option is void. Contrary to her promise, Remo-lado did not repurchase the property on October 31. Five days later, or on No-vember 5, Remolado and her daughter delivered P33,000 rash to the bank's assis-tant 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 recon-vey 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 pay-ment 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

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 repur-chase. 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 Re-molado 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.

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, Ne-gros 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 clarifica-tions 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 domes-tic 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 commit-ted 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 pur-chase 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 com-modity —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 con-cerned 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 in-formed 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, 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 lit -igation.

In view of Article 1479 of the New Civil Code, the trial court dismissed the ac-tion. His motion for reconsideration having been denied, plain plaintiff inter-posed 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 op-tion, the unilateral promise to sell that was accepted by plaintiff five minutes be-fore the deadline — noon of September 24, 1956This acceptance, without consid-eration, 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 con-nection 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 circum-stance, 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 with-drawing 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.

NICOLAS SANCHEZ vs. SEVERINA RIGOSG.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 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 judg-ment 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 deter-minate thing for a price certain is reciprocally demandable. An accepted unilat-eral 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 considera-tion, "defendant agreed and committed to sell" and "the plaintiff agreed and com-mitted 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 demand-able," pursuant to the first paragraph of said Article 1479. Although defendant had really "agreed, promised and committed" herself to sell the land to the plain-tiff, 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 con-tract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land.

Furthermore, an option is unilateral: a promise to sell at the price fixed when-ever 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 pur-chaser. 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 ac-cepted, 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.

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 op-tion to plaintiff Southwestern Sugar & Molasses Co. to buy its barge for 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 pur-chase 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 accep-tance 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 cer-tain 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 uni-lateral 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 op-tion is without consideration. It can, therefore, be withdrawn notwithstanding the acceptance made of it by appellee.

It is true that under Article 1324 of the New Civil Code, the general rule regard-ing 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" ex-cept 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 consid-eration distinct from the price.

While under the "offer of option" in question, appellant has assumed a clear obli-gation to sell its barge to appellee and the option has been exercised in accor -dance 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 be-cause the la on the matter is clear. Our imperative duty is to apply it unless modi-fied 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.

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 Ange-les 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 re-ceipts. 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 ac-counts of former students. Garcia’s 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 pur-chase 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 in-tention 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 doesn’t provide such stipulation and as such, the provision of recip-rocal obligations in obligations and contracts should prevail. Notice of the credi-tor's decision to exercise his option to buy need not be coupled with actual pay-ment 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"

Mas vs Lanuza

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

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 Hilario ’s heirs should permit, the ap-pellants, on their part, expressly acknowledging the right and title of Hilario, de-ceased, to the possession and ownership of said property, and, among other stipu-lations, 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 posses-sion 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 discov-ered 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 defendant’s 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 pe-riod, 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.) 

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

Barretto vs. Sta MarinaWHOLE ARTICLE

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 plain-tiff'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 com-mittee charged with the duty of ascertaining the cash value of this share (partici -pacion) 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 in-cluded 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 busi-ness 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 con-summated (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 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 let-ter 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 im-posed 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 com-plaint 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, stand-ing alone, would not prevent recovery in this action.

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 Biotechnol-ogy 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 or-der and downpayment for the office and laboratory furniture for the project.Padolina also requested for copies of the shop drawings and a sample con-tract[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 par-tial 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 do-nate sums of money to UP for the construction of buildings, installation of labo-ratory 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 con-tinue to support the activities of the RESEARCH COMPLEX.Navasero promised to submit the contract for the installation of laboratory furni-ture 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 fur-niture. 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 ac-tion against it because it was merely the donee/beneficiary of the laboratory fur-niture 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 be-tween PHILAB and the FEMF. The petitioner furthermore asserts that no con-tract 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 apply-ing the law on contracts between the respondent and the FEMF. It, likewise, at-tests 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 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 respon-dent.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 bind-ing 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 peti -tioner, 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 be-tween 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 per-tinent 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 consid-ered 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.

Villanco Realty vs. Bormaheco65 SCRA 352

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 consum-mated after respondent shall have also consummated purchase of a property in Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land and subse-quently bought the property.Villonco issued a check to Bormaheco amounting to P100,000 as earnest money. 26 days after signing the contract of sale, Borma-heco 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 re-turn 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.On the other hand, the fact that Villonco did not object when Bormahecoen-cashed 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).

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 de-termined 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 Lorenzo’s 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, as he doesn’t 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 & install-ments were to be paid. Therefore, it cannot be said that a definite & firm sales agree -ment 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 bind-ing & 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

FACTS: A parcel of land in Iloilo were co-owned by 7 siblings all surnamed Ho-rilleno. 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. Peti-tioner also contend that the 30K price was only placed in the deed of sale to min-imize 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.

Held: Period of repurchase has not yet lapsed because the respondent was not no-tified 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 com-menced and the respondent can still exercise his right to repurchase.

The respondent should also pay only the 30K stipulated in the deed of sale be-cause a redemptioner’s right is to be subrogated by the same terms and conditions stipulated in the contract.

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 un-able 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 contract and or-dered 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 au-thority for claiming double the amount paid out by him. In this article it is de-clared 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 pro-vision 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 Ra-mon 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 An-tonio Azores inherited the same.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 un-divided 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 ap-pealed 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 ap-pellants in fact did not know that the appellee was a minor on the date of the con-tract, 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 un-businesslike 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 ap-pellee informing the appellants of his minority constituted an effective disaffir-mance 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 no-tice 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 Au-gust 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 ap-pearing 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 ad-vised 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 af-fidavit, whereby he ratified the deed of sale, is of no moment. He 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 ap-plied 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 exe-cuted by the minors on 17 May 1910. The Law in force on this last-mentioned date was not Las Siete Partidas, 1 which was the in force at the time the cases de-cided 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 exe-cuted 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 reason-ing 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 exe-cuted by a minor is null and void for lack of consent and produces no legal ef -fect, 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 cor-rect 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 be-came of age sometime in September 1934.