NICOLAS SANCHEZ v. SEVERINA RIGOSG.R. No. L-25494. June 14, 1972SYLLABUS:1.CIVIL LAW; CONTRACTS; CONTRACT TO BUY AND SELL; OPTION WITHOUT CONSIDERATION; CASE AT BAR. Where both parties indicated in the instrument in the caption, as an "Option to Purchase," and under the provisions thereof, the defendant "agreed, promised and committed" herself to sell the land therein described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land, it is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy.2.ID.; ID.; ID.; ID.; ARTICLES 1354 AND 1479, NEW CIVIL CODE; APPLICABILITY. It should be noted that: Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers to "sales" in particular, and, more specifically, to "an accepted unilateral promise to buy or to sell."3.ID.; ID.; REQUISITE OF A UNILATERAL PROMISE IN ORDER TO BIND PROMISOR; BURDEN OF PROOF REST UPON PROMISEE. In order that a unilateral promise may be "binding" upon the promisor, Article 1479 requires the concurrence of a condition namely, that the promise be "supported by a consideration distinct from the price." Accordingly, the promisee cannot compel the promisor to comply with the promise, unless the former establishes the existence of said distinct consideration. In other words, the promisee has the burden of proving such consideration.4.ID.; ID.; WHERE A UNILATERAL PROMISE TO SELL GENERATED TO A BILATERAL CONTRACT OF PURCHASE AND SALE; ARTICLES 1324 AND 1479, NCC., NO DISTINCTION. This Court itself, in the case of Atkins, Kroll & Co., Inc. vs. Cua Hian Tek (102 Phil., 948), decided later than Southwestern Sugar & Molasses Co. vs. Atlantic & Pacific Co., 97 Phil., 249, saw no distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral promise to sell similar to the one sued upon was involved, treating such promise as an option which, although not binding as a contract in itself for lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon acceptance. In other words, since there may be no valid contract without a cause or consideration promisor is not bound by his promise and may, accordingly withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale.5.REMEDIAL LAW; PLEADINGS AND PRACTICE; JUDGMENT ON THE PLEADINGS; IMPLIED ADMISSION. Defendant explicitly averred in her answer, and pleaded as a special defense, the absence of said consideration for her promise to sell and, by joining in the petition for a judgment on the pleadings, plaintiff has impliedly admitted the truth of said averment in defendant's answer.6.STATUTORY CONSTRUCTION; INTERPRETATION OF PROVISIONS OF SAME LAW; CARDINAL RULE. The view that an option to sell can still be withdrawn, even if accepted, if the same is not supported by any consideration, has the advantage of avoiding a conflict between Article 1324 on the general principles on contracts and 1479 on sales of the Civil Code, in line with the cardinal rule of statutory construction that, in construing different provisions of one and the same law or code, such interpretation should be favored as will reconcile or harmonize said provisions and avoid a conflict between the same. Indeed, the presumption is that, in the process of drafting the Code, its author has maintained a consistent philosophy or position. Moreover, the decision in Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Co., supra, holding that Article 1324 is modified by Article 1479 of the Civil Code, in effect, considers the latter as an exception to the former, and exceptions are not favored, unless the intention to the contrary is clear, and it is not so, insofar as said two (2) articles are concerned. What is more, the reference, in both the second paragraph of Article 1479 and Article 1324, to an option or promise supported by or founded upon a consideration, strongly suggests that the two (2) provisions intended to enforce or implement the same principle.

ANTONIO, J., concurring opinion:1.CIVIL LAW; CONTRACTS; OPTION TO SELL; EFFECT OF ACCEPTANCE. I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co. (97 Phil., 249), which holds that an option to sell can still be withdrawn, even if accepted if the same is not supported by any consideration, and the reaffirmance of the doctrine in Atkins, Kroll & Co. Inc. vs. Cua Hian Tech (102 Phil., 948), holding that "an option implies . . . the legal obligation to keep the offer (to sell) open for the time specified"; that it could be withdrawn before acceptance, if there was no consideration for the option, but once the "offer to sell" is accepted, a bilateralpromise to sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser.2.ID.; ID.; ID.; OPTION WITHOUT CONSIDERATION IS A MERE OFFER TO SELL, NOT BINDING UNTIL ACCEPTED. If the option to sell is given without a consideration, it is a mere offer to sell, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale. The concurrence of both acts the offer and the acceptance could in such event generate a contract.3.ID.; ID.; ID.; WITHDRAWAL OF OFFER BEFORE ACCEPTANCE, OFFER IMPLIES AN OBLIGATION ON THE PART OF OFFEROR. While the law permits the offeror to withdraw the offer at any time before acceptance even before the period has expired, some writers hold the view, that the offeror can not exercise this right in an arbitrary or capricious manner. This is upon the principle that an offer implies an obligation on the part of the offeror to maintain it for such length of time as to permit the offeree to decide whether to accept or not, and therefore cannot arbitrarily revoke the offer without being liable for damages which the offeree may suffer. A contrary view would remove the stability and security of business transactions.4.ID.; ID.; ID.; A BILATERAL RECIPROCAL CONTRACT; CASE AT BAR. Where, as in the present case, the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of P1,510.00 before any withdrawal from the contract has been made by the Defendant (Severina Rigos)," and Rigos' offer to sell was accepted by Sanchez, before she could withdraw her offer, a bilateral reciprocal contract to sell and to buy was generated.

FACTS:1. On April 3, 1961 Nicolas Sanchez and Severina Rigos executed an instrument, entitled "Option to Purchase where Rigos "agreed, promised and committed . . . to sell" to Sanchez a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija (as described in TCT NT-12528) for the sum of P1,510.00 within two (2) years from said date.2. Such agreement was executed with the understanding that the said option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period.3. Several tenders of payment of sum of P1,510.00 was made by Sanchez within the said period but these were rejected by Mrs. Rigos.4. Hence, On March 12, 1963 Sanchez deposited said amount with the CFI of Nueva Ecija and commenced against Rigos an action for specific performance and damages.5. As a special defense, Rigos alleged 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"6. On February 28, 1964 Lower court rendered judgment in favour of Sanchez:a. Ordering Mrs. Rigos to accept the sum judicially consigned by him and to execute the requisite deed of conveyance.b. Also, sentenced Rigos to pay P200.00, as attorney's fees, and the costs.NOTES:A. Case revolves around the proper application of Article 1479 of our Civil Code:ART. 1479.A promise to buy and sell a determinate thing for a price certain is reciprocally demandable."An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the priceB. Plaintiffs arguments (Sanchez):a. by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option. HENCE, plaintiff maintains that the promise contained in the contract is "reciprocally demandable," pursuant to the first paragraph of said Article 1479C. Relying upon Article 1354 of our Civil Code, the LOWER COURT presumed the existence of said consideration, and this would seem to be the main factor that influenced its decision in favour of Sanchez.ISSUE:WON the promisor can withdraw an option to sell, after acceptance, if the option is not supported by any considerationHELD: Acceptance resulted in a perfected contract of sale.1. The option did not impose upon Sanchez the obligation to purchase defendant's property.2. The instrument Option to Purchase is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy (as understood by parties and obvious from the title of the instrument itself)3. Under the provisions thereof, the defendant "agreed, promised and committed" herself to sell the land therein described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land.4. NOTE THAT:a. Articles coverage:i. Art. 1354 - applies to contracts in generalii. Art. 1479 - refers to "sales" in particular, and, more specifically, to "an accepted unilateral promise to buy or to sell."b. In order that said unilateral promise may be "binding" upon the promisor, Article 1479 requires the concurrence of a condition that the promise be "supported by a consideration distinct from the price."c. The promisee cannot compel the promisor to comply with the promise, unless the former establishes the existence of said distinct consideration.d. Hence, promisee has the burden of proving such consideration (In here, Rigos has not even alleged the existence thereof in his complaint)5. Cited CONFLICTING Cases:Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co. "There is no question that under article 1479 of the new Civil Code 'an option to sell,' or 'a promise to buy or to sell,' as used in said article, to be valid must be 'supported by a consideration distinct from the price.' This is clearly inferred from the context of said article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported by a consideration. In other words, 'an accepted unilateral promise' can only have a binding effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted, if the same is not supported by any consideration. Here it is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the acceptance made of it by appellee.It is true that under article 1324 of the new Civil Code, the general rule regarding offer and acceptance is that, when the offerer gives to the offeree a certain period to accept, 'the offer may be withdrawn at any time before acceptance' except when the option is founded upon consideration, but this general rule 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 promise to sell to be valid must be supported by a consideration distinct from the price.We are net oblivious of the existence of American authorities which hold that an offer, once accepted, cannot be withdrawn, regardless of whether it is supported or not by a consideration. These authorities, we note, uphold the general rule applicable to offer and acceptance as contained in our new Civil Code. But we are prevented from applying them in view of the specific provision embodied in article 1479. While under the 'offer of option' in question appellant has assumed a clear obligation to sell its barge to appellee and the option has been exercised in accordance with its terms, and there appears to be no valid or justifiable reason for appellant to withdraw its offer, this Court cannot adopt a different attitude because the law on the matter is clear. Our imperative duty is to apply it unless modified by Congress."Atkins, Kroll and Co., Inc. v. Cua Hian Tek saw no distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral promise to sell similar to the one sued upon here was involved, treating such promise as an option which, although not binding as a contract in itself for lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon acceptance. Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to buy later. In this case however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was bilateral contract of sale.6. In other words, in accepted unilateral promise to sell, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale.a. This view has the advantage of avoiding a conflict between Articles 1324 on the general principles on contracts and 1479 on sales of the Civil Code, in line with the cardinal rule of statutory construction that, in construing different provisions of one and the same law or code, such interpretation should be favored as will reconcile or harmonize said provisions and avoid a conflict between the same. Indeed, the presumption is that, in the process of drafting the Code, its author has maintained a consistent philosophy or position.b. Moreover, the decision in Southwestern Sugar & MolassesCo. v. Atlantic Gulf & pacific Co., holding that Art. 1324 is modified by Art. 1479 of the Civil Code, in effect, considers the latter as an exception to the former, and exceptions are not favored, unless the intention to the contrary is clear, and it is not so, insofar as said two (2) articles are concerned. What is more, the reference, in both the second paragraph of Art. 1479 and Art. 1324, to an option or promise supported by or founded upon a consideration, strongly suggests that the two (2) provisions intended to enforce or implement the same principle.7. Upon mature deliberation, the Court is of the considered opinion that it should, as it hereby reiterates the doctrine laid down in the Atkins, Kroll & Co. case, and that, insofar all inconsistent therewith, the view adhered to in the South western Sugar & Molasses Co. case should be deemed abandoned or modified.8. In the present case, the trial court found that the plaintiff (Sanchez) had offered the sum of P1,510.00 before Rigos could withdraw her offer. Since Rigosoffer to sell was accepted by Sanchez, before she could withdraw her offer, a bilateral reciprocal contract to sell and to buy was generated.SEPARATE OPINION:ANTONIO, J., concurring:I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co. which holds that an option to sell can still be withdrawn, even if accepted, if the same is not supported by any consideration, and the reaffirmance of the doctrine in Atkins, Kroll & Co., Inc. vs. Cua Hian Tek, holding that "an option implies . . . the legal obligation to keep the offer (to sell) open for the time specified;" that it could be withdrawn before acceptance, if there was no consideration for the option, but once the "offer to sell" is accepted, a bilateral promise to sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser In other words, if the option is given without a consideration, it is a mere offer to sell, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale. The concurrence of both acts the offer and the acceptance could in such event generate a contract.While the law permits the offeror to withdraw the offer at any time before acceptance even before the period has expired, some writers hold the view, that the offeror can not exercise this right in an arbitrary or capricious manner. This is upon the principle that an offer implies an obligation on the part of the offeror to maintain it for such length of time as to permit the offeree to decide whether to accept or not, and therefore cannot arbitrarily revoke the offer without being liable for damages which the offeree may suffer. A contrary view would remove the stability and security of business transactions

DAUS vs. DE LEONFACTS: Respondents alleged that they are the owners of a parcel of land described as: No. 4786 of the Cadastral Survey of San Manuel situated in the Municipality of San Manuel, Bounded on the NW., by Lot No. 4785; and on the SE., by Lot Nos. 11094 & 11096; containing an area of Four Thousand Two Hundred Twelve (4,212) sq. m., more or less. Covered by Original Certificate of Title No. 22134 of the Land Records of Pangasinan which Hermoso de Leon inherited from his father Marcelino de Leon by virtue of a Deed of Extra-judicial Partition. Sometime in the early 1960s, respondents engaged the services of the late Atty. Florencio Juan to take care of the documents of the properties of his parents. Atty.Juan let them sign voluminous documents. After the death of Atty. Juan, some documents surfaced and most revealed that their properties had been conveyed by sale or quitclaim to Hermosos brothers and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances were ever intended by them. His signature in the Deed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon was forged. They discovered that the land in question was sold by Rodolfo de Leon to Aurora Alcantara. They demanded annulment of the document and reconveyance but defendants refused Aurora Alcantara-Daus that she bought the land in question in good faith and for value. [She]has been in continuous, public, peaceful, open possession over the same and has been appropriating the produce thereof without objection from anyone.ISSUE:1. Whether or not the Deed of Absolute Sale \ executed by Rodolfo de Leon over the land in question in favor of petitioner was perfected and binding upon the parties therein?2. Whether or not the possession of petitioner including her predecessor-in-interest Rodolfo de Leon over the land in question was in good faith?HELD:Petition has no merit.1. A contract of sale is consensual. It is perfected by mere consent, upon a meeting of the minds on the offer and the acceptance thereof based on subject matter, price of payment. At this stage, the sellers ownership of the thing sold is not an element in the perfection of the contract of sale .The contract, however, creates an obligation on the part of the seller to transfer ownership and to deliver the subject matter of the contract. It is during the delivery that the law requires the seller to have the right to transfer ownership of the thing sold. In general, a perfected contract of sale cannot be challenged on the ground of the sellers non-ownership of the thing sold at the time of the perfection of the contract.2. It is well-settled that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession. Neither can prescription be allowed against the hereditary successors of the registered owner, because they merely step into the shoes of the decedent and are merely the continuation of the personality of their predecessor in interest. Consequently, since a certificate of registration covers it, the disputed land cannot be acquired by prescription regardless of petitioners good faithHEIRS OF ARTURO REYES, represented by Evelyn R. San Buenaventura, petitioners, vs. ELENA SOCCO-BELTRAN, respondent.Nature:This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision1dated 31 January 2006 rendered by the Court of Appeals in CA-G.R. SP No. 87066, which affirmed the Decision2 dated 30 June 2003 of the Office of the President, in O.P. Case No. 02-A-007, approving the application of respondent Elena Socco-Beltran to purchase the subject property.Ruling of the Supreme Court:The instant Petition is DENIED.Facts of the case:The subject property in this case is a parcel of land allocated to the Spouses Marcelo Laquian and Constancia Socco (Spouses Laquian). When Marcelo died, the property was left to his wife Constancia. Upon Constancias subsequent death, she left the original parcel of land, along with her other property, with her heirs her siblings, namely: Filomena Eliza Socco, Isabel Socco de Hipolito, Miguel R. Socco, and Elena Socco-Beltran. The parcel of land was partitioned into three lotsLot No. 6-A, Lot No. 6-B, and Lot No. 6-C.The subject property, Lot No. 6-B, was adjudicated to respondent, but no title had been issued in her name.Elena Socco-Beltran filed an application for the purchase of Lot No. 6-B before the Department of Agrarian Reform (DAR), alleging that it was adjudicated in her favor in the extra-judicial settlement of Constancia Soccos estate. The heirs of the late Arturo Reyes, filed their protest to respondents petition before the DAR on the ground that the subject property was sold by respondents brother, Miguel R. Socco, in favor of their father, Arturo Reyes, as evidenced by the Contract to Sell, dated 5 September 1954 that for or in consideration of the sum of FIVE PESOS (P5.00) per square meter, he sell, convey and transfer by way of this conditional sale the said 400 sq.m. more or less unto Atty. Arturo C. Reyes, his heirs, administrator and assigns.Tolentino heirs averred that they took physical possession of the subject property in 1954 and had been uninterrupted in their possession of the said property since then.Petitioners sought remedy from the Office of the President by appealing the 9 November 2001 Decision of the DAR Secretary favoring Socco- Beltran.The Office of the President rendered its Decision denying petitioners appeal and affirming the DAR Secretarys Decision. They appealed to Ca and the CA subsequently affirmed the Decision of the Office of the President. Hence, this present Petition.Issue:Whether or not there was valid delivery by Miguel Socco to the heirs of Arturo Reyes that would enable the latter to acquire title to the said land.NOTE: Petitioners claim over the subject property is anchored on the Contract to Sell executed between Miguel Socco and Arturo Reyes on 5 September 1954. Petitioners additionally allege that they and their predecessor-in-interest, Arturo Reyes, have been in possession of the subject lot since 1954 for an uninterrupted period of more than 40 years.Held:The Court is unconvinced.Petitioners cannot derive title to the subject property by virtue of the Contract to Sell. It was unmistakably stated in the Contract and made clear to both parties thereto that the vendor, Miguel R. Socco, was not yet the owner of the subject property and was merely expecting to inherit the same as his share as a co-heir of Constancias estate. It was also declared in the Contract itself that Miguel R. Soccos conveyance of the subject to the buyer, Arturo Reyes, was a conditional sale. It is, therefore, apparent that the sale of the subject property in favor of Arturo Reyes was conditioned upon the event that Miguel Socco would actually inherit and become the owner of the said property. Absent such occurrence, Miguel R. Socco never acquired ownership of the subject property which he could validly transfer to Arturo Reyes.Under Article 1459 of the Civil Code on contracts of sale, "The thing must be licit and the vendor must have a right to transfer ownership thereof at the time it is delivered." The law specifically requires that the vendor must have ownership of the property at the time it is delivered. Petitioners claim that the property was constructively delivered to them in 1954 by virtue of the Contract to Sell. However, as already pointed out by this Court, it was explicit in the Contract itself that, at the time it was executed, Miguel R. Socco was not yet the owner of the property and was only expecting to inherit it. Hence, there was no valid sale from which ownership of the subject property could have transferred from Miguel Socco to Arturo Reyes. Without acquiring ownership of the subject property, Arturo Reyes also could not have conveyed the same to his heirs, herein petitioners.Toyota Shaw Inc. vs. Court of Appeals, and Sosa244 SCRA 320 May 1995FACTS:Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the Toyota office at Shaw Boulevard, Pasig (petitioner Toyota) on June 14, 1989 where they met Popong Bernardo who was a sales representative of said branch. Sosa emphasized that he needed the car not later than June 17, 1989 because he, his family, and a balikbayan guest would be using it on June 18 to go home to Marinduque where he will celebrate his birthday on June 19. Bernardo assured Sosa that a unit would be ready for pick up on June 17 at 10:00 in the morning, and signed the "Agreements Between Mr. Sosa &Popong Bernardo of Toyota Shaw, Inc., a document which did not mention anything about the full purchase price and the manner the installments were to be paid. Sosa and Gilbert delivered the down payment of P100,000.00 on June 15, 1989 and Bernardo accomplished a printed Vehicle Sales Proposal (VSP) No. 928 which showed Sosas full name and home address, that payment is by "installment," to be financed by "B.A.," and that the "BALANCE TO BE FINANCED" is "P274,137.00", but the spaces provided for "Delivery Terms" were not filled-up.When June 17 came, however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa asked that his down payment be refunded and petitioner Toyota issued also on June 17 a Far East Bank check for the full amount of P100,000.00, the receipt of which was shown by a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice to our future claims for damages." Petitioner Toyota contended that the B.A. Finance disapproved Sosas the credit financing application and further alleged that a particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused.The trial court found that there was a valid perfected contract of sale between Sosa and Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed the said decision.ISSUE:Was there a perfected contract of sale between respondent Sosa and petitioner Toyota?COURT RULING:The Supreme Court granted Toyotas petition and dismissed Sosas complaint for damages because the document entitled Agreements Between Mr. Sosa &Popong Bernardo of Toyota Shaw, Inc., was not a perfected contract of sale, but merely an agreement between Mr. Sosa and Bernardo as private individuals and not between Mr. Sosa and Toyota as parties to a contract.There was no indication in the said document of any obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and neither was there a correlative obligation on the part of the latter to pay therefor a price certain. The provision on the downpayment of P100,000.00 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 VSP No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury.PERFECTO DY, JR. vs. COURT OF APPEALS, GELAC TRADING INC., and ANTONIO V. GONZALESG.R. No. 92989 July 8, 1991GUTIERREZ, JR., JFACTS:Wilfredo Dy purchased a truck and a farm tractor through financing extended by Libra Finance and Investment Corporation (Libra). Both truck and tractor were mortgaged to Libra as security for the loan.Perfecto Dy wanted to buy the tractor from his brother, Wilfredo Dy, so he wrote a letter to Libra requesting that he be allowed to purchase from his brother the said tractor and assume the mortgage debt of the latter. Libra approved the request.On September 4, 1979, Wilfredo Dy executed a deed of absolute sale in favor of the petitioner over the tractor in question. At this time, the subject tractor was in the possession of Libra due to Wilfredo Dy's failure to pay. Despite the offer of full payment by the Perfecto Dy to Libra for the tractor, the immediate release could not be effected because Wilfredo Dy had obtained financing not only for said tractor but also for a truck and Libra insisted on full payment for both.Perfecto Dy was able to convince his sister, Carol Dy-Seno, to purchase the truck so that full payment could be made for both. A check was issued in favor of Libra, thus settling in full the indebtedness of Wilfredo Dy with the financing firm. Payment having been effected through an out-of-town check, Libra insisted that it be cleared first before Libra could release the chattels in question.Meanwhile, a civil case entitled "Gelac Trading, Inc. v. Wilfredo Dy", a collection case to recover the sum of P12,269.80 was pending in another court.On December 27, 1979, the provincial sheriff was able to seize and levy on the tractor which was in the premises of Libra through a writ of execution. The tractor was subsequently sold at public auction where Gelac Trading was the lone bidder. Later, Gelac sold the tractor to one of its stockholders, Antonio Gonzales.It was only when the check was cleared on January 17, 1980 that the Perfecto Dy learned about GELAC having already taken custody of the subject tractor. So he filed an action to recover the subject tractor against GELAC Trading.RTC rendered judgment in favor of the petitioner. Court of Appeals reversed it and held that the tractor in question still belonged to Wilfredo Dy when it was seized and levied by the sheriff by virtue of the alias writ of execution issued in the civil case.ISSUE:Whether or not Wilfredo Dy was still the owner of the tractor in question when it was obtained through the writ of execution.HELD:NO. The sale of the subject tractor was consummated upon the execution of the public instrument on September 4, 1979. At this time constructive delivery was already effected. Hence, the subject tractor was no longer owned by Wilfredo Dy when it was levied upon by the sheriff in December 27, 1979. It is well settled that only properties unquestionably owned by the judgment debtor and which are not exempt by law from execution should be levied upon or sought to be levied upon. For the power of the court in the execution of its judgment extends only over properties belonging to the judgment debtor.Article 1496 of the Civil Code states that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501 or in any other manner signing an agreement that the possession is transferred from the vendor to the vendee. Actual delivery of the subject tractor could not be made. However, there was constructive delivery already upon the execution of the public instrument pursuant to Article 1498 and upon the consent or agreement of the parties when the thing sold cannot be immediately transferred to the possession of the vendee. (Art. 1499)The payment of the check was actually intended to extinguish the mortgage obligation so that the tractor could be released to the petitioner. The clearing or encashment of the check which produced the effect of payment determined the full payment of the money obligation and the release of the chattel mortgage. It was not determinative of the consummation of the sale. The contention, therefore, that the consummation of the sale depended upon the encashment of the check is untenable.SANCHEZ v RAMOSFacts:This is an action for the recovery of a piece of land described in the second paragraph of the complaint. The land in question is in the defendant's possession and formerly belonged to Ciriaco Fernandez. Ciriaco Fernandez sold the land to spouses Marcelino Gomez and Narcisa Sanchez under pacto de retro for the period of one year. Gomez and Sanchez never took material possession of the land. The period for repurchase elapsed without the vendor making use of it. Ciriaco Fernandez again sold the same land, by means of a private document, to Roque Ramos who immediately took material possession thereof.The trial court applied Art 1473 of the CC and declared preferable the sale executed to the defendant and absolved him from the complaint.ISSUE: What kind of possession does Art 1473 refer?Who has the material possession of a parcel of real property?HELD:Possession is acquired by the material occupancy of the thing or right possessed, or by the fact that the latter is subjected to the action of our will, or by the appropriate acts and legal formalities established for acquiring possession (art. 438, Civil Code.). By a simple reasoning, it appears that, because the law does not mention to which of these kinds of possession the article refers, it must be understood that it refers to all of these kinds. The proposition that this article, according to its letter, refers to the material possession and excludes the symbolic does not seem to be founded upon a solid ground.Article 1473 is more in consonance with the principles of justice. The execution of a public instrument is equivalent to the delivery of the realty sold (art. 1462, Civil Code) and its possession by the vendee (art. 438). Under these conditions the sale is considered consummated and completely transfers to the vendee all of the vendor's rights of ownership including his real right over the thing. The vendee by virtue of this sale has acquired everything and nothing, absolutely nothing, is left to the vendor. From this moment the vendor is a stranger to the thing sold like any other who has never been its owner. As the thing is considered delivered, the vendor has no longer the obligation of even delivering it. If he continues taking material possession of it, it is simply on account of vendee's tolerance and, in this sense, his possession is vendor's possession. And if the latter should have to ask him for the delivery of this material possession; it would not be by virtue of the sale, because this has been already consummated and has produced all its effects, but by virtue of the vendee's ownership, in the same way as said vendee could require of another person although same were not the vendor. This means that after the sale of a realty by means of a public instrument, the vendor, who resells it to another, does not transmit anything to the second vendee and if the latter, by virtue of this second sale, takes material possession of the thing, he does it as mere detainer, and it would be unjust to protect this detention against the rights to the thing lawfully acquired by the first vendee.The possession mentioned in article 1473 (for determining who has better right when the same piece of land has been sold several times by the same vendor) includes not only the material but also the symbolic possession, which is acquired by the execution of a public instrument.From the foregoing it follows that the plaintiff was the first to take possession of the land, and consequently the sale executed to him is preferable.The judgment appealed from is REVERSED. Plaintiff is declared owner of the land in question; and the defendant is ordered to deliver the possession of the land to the plaintiff.DOCTRINE: RULES ON DOUBLE SALE : (Separate opinion, Street, J-dissenting) (ART. 1544)Three distinct criteria for determining who has the better right when the same piece of real property is sold by the same vendor, to two different persons, which are: First, priority of registration; secondly, in default of registration, the taking of possession in good faith by the purchaser, and thirdly, in default of both the preceding factors, mere priority of title.PURPOSE: prevent fraud upon the innocent second purchaser. (to protect the second purchaser, the authors of the Civil Code saw fit to state two conditions either of which, when fulfilled, gives the second purchaser the better right, namely, priority of registration and priority in the acquisition of possession. These tests must both be understood to relate to acts extrinsic to the contracts, or documents of sale, under which the rival purchasers pretend to have acquired title. Otherwise the whole purpose of the article is defeated.)When a question is made between two person claiming the same land under documents executed by the same vendor, and the right has to be determined by the fact of registration, we here have recourse to a test which is extrinsic to the original act of executing the document and incapable of occultation. Likewise, when the right is to be determined by the other test, namely, the taking of possession by one or the other of the vendees, reference must be had to the taking of material possession as an act extrinsic to the execution of the contract, or document of sale, under which possession was taken.The question as to who has the material possession of a parcel of real property can usually be ascertained by inspection or inquiry among person living in the neighborhood, and although the information thus obtained is less certain and absolute than that which would be revealed by the registration of title; nevertheless there is a presumption of ownership from the fact of possession, and a purchaser who, relying on the evidence supplied by his eyes, pays his money to one who is believed to be the true owner and takes the material possession from him, should be protected as against any prior purchaser except the one who may have registered his title. This was without doubt the intention of the codifiers. Otherwise the third paragraph of article 1473 would have been so drawn as to read as follows:Should it not be recorded, the property shall belong to the person whose purchase is proved by a public instrument, and if neither sale be thus proved , to the person who first took possession of it in good faith, or, in default of possession, to the person who presents the oldest title, provided there is good faith.[In other words, if the codifiers had intended to create a preferential right based upon the fact that a contract of sale is executed in the form of a public instrument, this would have been enumerated among the criteria expressed in article 1473, as giving the better right.The omission of the authors of the Code of take this course in framing that article is significant; and it was doubtless due to a perception of the fact that the form in which a contract happens to be executed affords no proper test when the question is between one who claims under that contract and one who claims under another contract of later date executed by the same vendor. The court, by the decision made in this case has, we submit, amended article 1473 by inserting therein a provision antagonistic to the spirit of that article and destructive of its purpose.]JACOBUS BERNHARD HULST v. PR BUILDERS INC. (G.R. No. 156364)FACTS:The Petitioner and his spouse, both Dutch Nationals, entered into a Contract to Sell with PR Builders, Inc. to purchase a 210-sq m residential unit in the respondent's townhouse project in Batanagas. When PR Builder's failed to comply with their verbal promise to complete the project, the spouses Hulst filed a complaint for recession of contract with interest, damages and attorney's fees before the Housing and Land Regulatory Board (HLURB), which then was granted. A Writ of Execution was then addressed to the Ex-Officio Sheriff of the RTC of Tanauan, Batangas, but upon the complaint of the respondent, the levy was set aside, leaving only the respondent's personal properties to be levied first. The Sheriff set a public auction of the said levied properties, however, the respondent filed a motion to quash Writ of levy on the ground that the sheriff made an over levy since the aggregate appraised value of the properties at P6,500 per sq m is P83,616,000. Instead of resolving the objection of the respondent's regarding the auction, the Sheriff proceeded with the auction since there was no restraining order from the HLURB. The 15 parcels of land was then awarded to Holly Properties Realty at a bid of P5,450,653. On the same day, the Sheriff remitted the legal fees and submitted to contracts of sale to HLURB, however, he then received orders to suspend proceedings on the auction for the reason that the market value of the properties was not fair. There was disparity between the appraised value and the value made by the petitioner and the Sheriff, which should've been looked into by the Sheriff before making the sale. While an inadequacy in price is not a ground to annul such sale, the court is justified to such intervention where the price shocks the conscience.ISSUE:1. Whether or not the Sheriff erred in the value that was attached to the properties during the auction and as well as disregarding the objection made by the respondent's?2. Whether or not the market value of the said property was inadequate?2. Whether or not the spouses Hulst's request for damages is actionable?HELD:1. No. According to the Rules of Court, the value of the property levied is not required to be exactly the same as the judgment debt. In the levy of property, the Sheriff does not determine the exact valuation of the levied property. The Sheriff is left to his own judgment. He should be allowed a reasonable margin between the value of the property levied upon and the amount of the execution; the fact that the Sheriff levies upon a little more than is necessary to satisfy the execution does not render his actions improper.In the absence of a restraining order, no error can be imputed to the Sheriff in proceeding with the auction sale despite the pending motion to quash the levy filed by the respondents with the HLURB. Sheriffs, as officers charged with the task of the enforcement and/or implementation of judgments, must act with considerable dispatch so as not to unduly delay the administration of justice. It is not within the jurisdiction of the Sheriff to consider and resolve respondent's objection to the continuation of the conduct of the auction sale. The Sheriff has no authority, on his own, to suspend the auction sale. His duty being ministerial, he has no discretion to postpone the conduct of the auction sale.2. No. The HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied property. The Appraisal report, that was submitted, was based on the projected value of the townhouse project after it shall have been fully developed, that is, on the assumption that the residential units appraised had already been built. Since it is undisputed that the townhouse project did not push through, the projected value did not become a reality. Thus, the appraisal value cannot be equated with the fair market value.3. No. Under Article 12, Sec.7 of the 1987 Constitution, foreign nationals, the spouses Hulst, are disqualified form owning real property. However, under article 1414 of the Civil Code, one who repudiates the agreement and demands his money before the illegal act has taken place is entitled torecover. Petitioner is therefore entitled to recover what he has paid, although the basis of his claim for rescission, which was granted by the HLURB, was not the fact that he is not allowed to acquire private land under the Philippine Constitution. But petitioner is entitled to the recovery only of the amount of P3,187,500.00, representing the purchase price paid to respondent. No damages may be recovered on the basis of a void contract; being nonexistent, the agreement produces no juridical tie between the parties involved. Further, petitioner is not entitled to actual as well as interests thereon, moral and exemplary damages and attorney's fees.INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES, INC., petitioner, vs. LPJ ENTERPRISES, INC., respondent.Facts:LPJ enterprises had a contract to supply 300,000 cement bags to Atlas Consolidated Mining and Development Corporation (Atlas) delivered in the common use, kraft paper bags. In 1970, the Vice-president of Industrial Textile Manufacturing Company of the Philippines (ITMCP) asked the President of LPJ if he would like to be part of an experiment to develop plastic cement bags in which the latter agreed because ITMCP is a sister corporation of Atlas. They tested fifty (50) cement bags in the factory of LPJs cement supplier Luzon Cement Corporation but were unsuccessful. They tested another batch to the same result. On the third try, the cement dust seepage was finally substantially reduced. After another successful test with Atlas, LPJ finally agreed to the use of the plastic cement bags by ordering 115,800 in four purchases in January, February, March and April of 1971, totaling P101,500. ITMCP made delivery in the same months. LPJ made three payments but still left a balance of P84,200. No other payments were made. ITCMP sent demand letters to LPJ but still no payment was made. A collection suit was filed. On the trial on merits, LPJ admitted its liability to the initial 53,800 bags but denied liability for the subsequent purchases saying that the bags posed serious health hazards by continuous seepage of dust even with adopted safety measures. The trial court favored ITMCP and ordered LPJ to pay the balance plus interest and attorneys fees. LPJ appealed where the Appellate court upheld them removing any liability with costs against petitioner.Issue:Is LPJ liable in paying the unused plastic cement bags to ITMCP?Ruling:Yes.Both sides invoke article 1502 of the Civil code (sale or return/sale on approval), this cannot apply to the case. The provision in the Uniform Sales Act and the Uniform Commercial Code from which Article 1502 was taken, clearly requires an express written agreement to make a sales contract either a "sale or return" or a "sale on approval". Parol or extrinsic testimony could not be admitted for the purpose of showing that an invoice or bill of sale that was complete in every aspect and purporting to embody a sale without condition or restriction constituted a contract of sale or return. If the purchaser desired to incorporate a stipulation securing to him the right of return, he should have done so at the time the contract was made. On the other hand, the buyer cannot accept part and reject the rest of the goods since this falls outside the normal intent of the parties in the "on approval" situation. Therefore, the transaction between respondent and petitioner constituted an absolute sale. Accordingly, respondent is liable for the plastic bags delivered to it by petitioner. Decision of the the trial court reinstated.RIVIERA FILIPINA, INC., petitioner, vs. COURT OF APPEALS, JUAN L. REYES, (now deceased), substituted by his heirs, namely, Estefania B. Reyes, Juanita R. de la Rosa, Juan B. Reyes, Jr. and Fidel B. Reyes, PHILIPPINE CYPRESS CONSTRUCTION & DEVELOPMENT CORPORATION, CORNHILL TRADING CORPORATION AND URBAN DEVELOPMENT BANK,respondents.FACTS:Before us is a petition for review on certiorari of the Decision of the Court of Appeals dated June 6, 1994 in CA-G.R. CV No. 26513 affirming the Decision dated March 20, 1990 of the Regional Trial Court of Quezon City, Branch 89 dismissing Civil Case No. Q-89-3371.On August 31, 1989, Riviera Filipina, Inc. (Riviera) instituted a suit to compel the defendants therein Juan L. Reyes, now deceased, Philippine Cypress Construction & Development Corporation (Cypress), Cornhill Trading Corporation (Cornhill) and Urban Development Bank to transfer the title covering a 1,018 square meter parcel of land located along EDSA, Quezon City for alleged violation of Rivieras right of first refusal.It appears that on November 23, 1982, respondent Juan L. Reyes (Reyes, for brevity) executed a Contract of Lease with Riviera. The ten-year (10) renewable lease of Riviera involved a 1,018 square meter parcel of land located along Edsa, Quezon City, covered and described in Transfer Certificate of Title No. 186326 of the Registry of Deeds of Quezon City in the name of Juan L. Reyes.The said parcel of land was subject of a Real Estate Mortgage executed by Reyes in favor of Prudential Bank. Since the loan with Prudential Bank remained unpaid upon maturity, the mortgagee bank extrajudicially foreclosed the mortgage thereon. At the public auction sale, the mortgagee bank emerged as the highest bidder. The redemption period was set to expire on March 7, 1989. Realizing that he could not possibly raise in time the money needed to redeem the subject property, Reyes decided to sell the same.Since paragraph 11 of the lease contract expressly provided that the LESSEE shall have the right of first refusal should the LESSOR decide to sell the property during the term of the lease. Reyes offered to sell the subject property to Riviera, through its President Vicente C. Angeles, for Five Thousand Pesos (P5,000.00) per square meter but Angeles bargained to lower the price to Three thousand Pesos per square meter. A consensus was not met between the two with regard to the price.Seven months later, Angeles offered to purchase the property at Four Thousand Pesos per square meter but Reyes refused the offer, insisting that the price is now Six Thousand Pesos per square meter since the value of the area had appreciated in view of the plans of Araneta to develop the vicinity.In a letter dated November 2, 1988, Atty. Irineo S. Juan, acting as counsel for Reyes, informed Riviera that Reyes was selling the subject property for Six Thousand Pesos (P6,000.00) per square meter, net of capital gains and transfer taxes, registration fees, notarial fees and all other attendant charges. He further stated therein that:In this connection, conformably to the provisions stipulated in Paragraph/Item No. 11 of your CONTRACT OF LEASE (Doc. No. 365, Page No. 63, Book No. X, Series of 1982, of the Notarial Registry of Notary Public Leovillo S. Agustin), notice is served upon your goodselves for you to exercise the right of first refusal in the sale of said property, forwhich purpose you are hereby given a period of ten (10) days from your receipt hereof within which to thus purchase the same under the terms and conditions aforestated, and failing which you shall be deemed to have thereby waived such pre-emptive right and my client shall thereafter be absolutely free to sell the subject property to interested buyers.To answer the foregoing letter and confirm their telephone conversation on the matter, Riviera sent a letter dated November 22, 1988 to Atty. Juan, counsel for Reyes, expressing Rivieras interest to purchase the subject property and that Riviera is already negotiating with Reyes which will take a couple of days to formalize. Riviera increased its offer to Five Thousand Pesos per square meter but Reyes did not accept. Angeles asked Reyes until the end of November 1988 for Rivieras Final decision.In a letter dated December 2, 1988, Angeles wrote Reyes confirming Rivieras intent to purchase the subject property for the fixed and final price of Five Thousand Pesos (P5,000.00) per square meter, complete payment within sixty (60) to ninety (90) days which offer is what we feel should be the market price of your property. Angeles asked that the decision of Reyes and his written reply to the offer be given within fifteen (15) days since there are also other properties being offered to them at the moment.In response to the foregoing letter, Atty. Juan sent a letter to Riviera dated December 5, 1988 informing Riviera that Rivieras offer is not acceptable to his client. He further expressed, let it be made clear that, much as it is the earnest desire of my client to really give you the preference to purchase the subject property, you have unfortunately failed to take advantage of such opportunity and thus lost your right of first refusal in sale of said property.On December 4, 1988, Reyes confided to Rolando P. Traballo his predicament about the nearing expiry date of the redemption period of the foreclosed mortgaged property with Prudential Bank the money for which he could not raise on time thereby offering the subject property to him for Six Thousand Pesos (P6,000.00) per square meter. Traballo expressed interest in buying the said property. They met the next day at which time Traballo bargained for Five Thousand Three Hundred Pesos (P5,300.00) per square meter. After considering the reasons cited by Traballo for his quoted price, Reyes accepted the same However, since Traballo did not have the amount with which to pay Reyes, he told the latter that he will look for a partner for that purpose. Reyes told Traballo that he had already afforded Riviera its right of first refusal but they cannot agree because Rivieras final offer was for Five Thousand Pesos (P5,000.00) per square meter.Apprehensive of the impending expiration in March 1989 of the redemption period of the foreclosed mortgaged property with Prudential Bank and the deal between Reyes and Traballo was not yet formally concluded, Reyes decided to approach anew Riviera. For this purpose, he requested Atty. Estanislao Alinea to approach Angeles and find out if the latter was still interested in buying the subject property and ask him to raise his offer for the purchase of the said property a little higher. As instructed, Atty. Alinea met with Angeles and asked the latter to increase his offer of Five Thousand Pesos (P5,000.00) per square meter but Angeles said that his offer is still the same.Following the meeting, Angeles sent a letter dated February 4, 1989 to Reyes, through Atty. Alinea, that his offer is Five Thousand Pesos (P5,000.00) per square meter payment of which would be fifty percent (50%) down within thirty (30) days upon submission of certain documents in three (3) days, the balance payable in five (5) years in equal monthly installments at twelve percent (12%) interest in diminishing balance. With the terms of this second offer, Angeles admittedly downgraded the previous offer of Riviera on December 2, 1988. Atty. Alinea conveyed to Reyes Rivieras offer of Five Thousand Pesos (P5,000.00) per square meterbut Reyes did not agree. Consequently, Atty. Alinea contacted again Angeles and asked him if he can increase his price. Angeles, however, said he cannot add anymore.Sometime in February 1989, Cypress and its partner in the venture, Cornhill Trading Corporation, were able to come up with the amount sufficient to cover the redemption money, with which Reyes paid to the Prudential Bank to redeem the subject property. A Deed of Absolute Sale covering the subject property was executed by Reyes in favor of Cypress and Cornhill for the consideration of Five Million Three Hundred Ninety Five Thousand Four Hundred Pesos (P5,395,400.00). On the same date, Cypress and Cornhill mortgaged the subject property to Urban Development Bank for Three Million Pesos (P3,000,000.00). Thereafter, Riviera sought from Reyes, Cypress and Cornhill a resale of the subject property to it claiming that its right of first refusal under the lease contract was violated. After several unsuccessful attempts, Riviera filed the suit to compel Reyes, Cypress, Cornhill and Urban Development Bank to transfer the disputed title to the land in favor of Riviera upon its payment of the price paid by Cypress and Cornhill.ISSUE: Whether or not Rivieras Right of First Refusal was violated?HELD:It ruled that the defendants therein did not violate Rivieras right of first refusal. this Court takes note that since the beginning of the negotiation between the plaintiff and defendant Reyes for the purchase of the property, in question, the plaintiff was firm and steadfast in its position, expressed in writing by its President Vicente Angeles, that it was not willing to buy the said property higher than P5,000.00, per square meter, which was far lower than the asking price of defendant Reyes for P6,000.00, per square meter, undoubtedly, because, in its perception, it would be difficult for other parties to buy the property, at a higher price than what it was offering, since it is in occupation of the property, as lessee, the term of which was to expire after about four (4) years more.On the other hand, it was obvious, upon the basis of the last ditch effort of defendant Reyes, thru his nephew, Atty. Alinea, to have the plaintiff buy the property, in question, that he was willing to sell the said property at a price less than P6,000.00 and a little higher than P5,000.00, per square meter, precisely, because Atty. Alinea, in behalf of his uncle, defendant Reyes, sought plaintiffs Angeles and asked him to raise his price a little higher, indicating thereby the willingness of defendant Reyes to sell said property at less than his offer of P6,000.00, per square meter. This being the case, it can hardly be validly said by the plaintiff that he was deprived of his right of first refusal to buy the subject property at a price of P5,300.00, per square meter which is the amount defendants Cypress/Cornhill bought the said property from defendant Reyes. For, it was again given such an opportunity to exercise its right of first refusal by defendant Reyes had it only signified its willingness to increase a little higher its purchase price above P5,000.00, per square meter, when its President, Angeles, was asked by Atty. Alinea to do so, instead of adamantly sticking to its offer of only P5,000.00 per square meter, by reason of which, therefore, the plaintiff had lost, for the second time, its right of first refusal, even if defendant Reyes did not expressly offer to sell to it the subject land at P5,300.00, per square meter, considering that by the plea of Atty. Alinea, in behalf of defendant Reyes, for it to increase its price a little, the plaintiff is to be considered as having forfeited again its right of first refusal, it having refused to budged from its regid (sic) offer to buy the subject property at no more than P5,000.00, per square meter.As such, this Court holds that it was no longer necessary for the defendant Reyes to expressly and categorically offer to the plaintiff the subject property at P5,300.00, per square meter, in order that he can comply with his obligation to give first refusal to the plaintiff as stipulated in the Contract of Lease, the plaintiff having had already lost its right of first refusal, at the first instance, by refusing to buy the said property at P6,000.00, per square meter, which was the asking price of defendant Reyes, since to do so wouldbe a useless ceremony and would only be an exercise in futility, considering the firm and unbending position of the plaintiff, which defendant Reyes already knew, that the plaintiff, at any event, was not amenable to increasing its price at over P5,000.00, per square meter.Dissatisfied with the decision of the trial court, both parties appealed to the Court of Appeals. However, the appellate court, through its Special Seventh Division, rendered a Decision dated June 6, 1994 which affirmed the decision of the trial court in its entirety.Riviera posits the view that its right of first refusal was totally disregarded or violated by Reyes by the latters sale of the subject property to Cypress and Cornhill. It contends that the right of first refusal principally amounts to a right to match in the sense that it needs another offer for the right to be exercised.The concept and interpretation of the right of first refusal and the consequences of a breach thereof evolved in Philippine juristic sphere only within the last decade. It all started in 1992 with Guzman, Bocaling & Co. v. Bonnevie where the Court held that a lease with a proviso granting the lessee the right of first priority:all things and conditions being equal meant that there should be identity of the terms and conditions to be offered to the lessee and all other prospective buyers, with the lessee to enjoy the right of first priority.Subsequently in 1994, in the case of Ang Yu Asuncion v. Court of Appeals the Court en banc departed from the doctrine laid down in Guzman, Bocaling & Co. v. Bonnevie and refused to rescind a contract of sale which violated the right of first refusal. The Court held that:the so-called right of first refusal cannot be deemed a perfected contract of sale under Article 1458 of the New Civil Code and, as such, a breach thereof decreed under a final judgment does not entitle the aggrieved party to a writ of execution of the judgment but to an action for damages in a proper forum for the purpose.In the 1996 case of Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., the Court en banc reverted back to the doctrine in Guzman Bocaling & Co. v. Bonnevie stating that rescission is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause or to protect some incompatible and preferred right by the contract.Thereafter in 1997, in Paraaque Kings Enterprises, Inc. v. Court of Appeals, the Court affirmed the nature of and the concomitant rights and obligations of parties under a right of first refusal. The Court, summarizing the rulings in Guzman, Bocaling & Co. v. Bonnevie and Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., held that:in order to have full compliance with the contractual right granting petitioner the first option to purchase, the sale of the properties for the price for which they were finally sold to a third person should have likewise been first offered to the former. Further, there should be identity of terms and conditions to be offered to the buyer holding a right of first refusal if such right is not to be rendered illusory. Lastly, the basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer.Thus, the prevailing doctrine is that a right of first refusal means identity of terms and conditions to be offered to the lessee and all other prospective buyers and a contract of sale entered into in violation of a right of first refusal of another person, while valid, is rescissible.However, we must remember that general propositions do not decide specific cases. Rather, laws are interpreted in the context of the peculiar factual situation of each proceeding. Each case has its own flesh and blood and cannot be ruled upon on the basis of isolated clinical classroom principles. Analysis and construction should not be limited to the words used in the contract, as they may not accurately reflect the parties true intent.In the case at bar, the Court finds relevant and significant the cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration and in case of doubt, their contemporaneous and subsequent acts shall be principally considered. Where the parties to a contract have given it a practical construction by their conduct as by acts in partial performance, such construction may be considered by the court in construing the contract, determining its meaning and ascertaining the mutual intention of the parties at the time for contracting. The parties practical construction of their contract has been characterized as a clue or index to, or as evidence of, their intention or meaning and as an important, significant, convincing, persuasive, or influential factor in determining the proper construction of the contract. An examination of the attendant particulars of the case do not persuade us to uphold Rivieras view. It can clearly be discerned from Rivieras letters dated December 2, 1988 and February 4, 1989 that Riviera was so intractable in its position and took obvious advantage of the knowledge of the time element in its negotiations with Reyes as the redemption period of the subject foreclosed property drew near. Riviera strongly exhibited a take-it or leave-it attitude in its negotiations with Reyes. It quoted its fixed and final price as Five Thousand Pesos (P5,000.00) and not any peso more. It voiced out that it had other properties to consider so Reyes should decide and make known its decision within fifteen days.The instant petition is hereby DENIED, and the Decision of the Court of Appeals dated June 6, 1994 in CA-G.R. CV No. 26513 is AFFIRMED. No pronouncement as to costs.Martinez vs. CA G.R. No. 123547 May 21, 2001FACTS:Sometime in February 1981, private respondents Godofredo De la Paz and his sister Manuela De la Paz, married to Maximo Hipolito, entered into an oral contract with petitioner Rev. Fr. Dante Martinez, then Assistant parish priest of Cabanatuan City, for the sale of Lot No. 1337-A-3 at the Villa Fe Subdivision in Cabanatuan City for the sum of P15,000.00. At the time of the sale, the lot was still registered in the name of Claudia De la Paz, mother of private respondents, although the latter had already sold it to private respondent Manuela de la Paz by virtue of a Deed of Absolute Sale dated May 26, 1976. It was agreed that petitioner would give a downpayment of P3,000.00 to private respondents De la Paz and that the balance would be payable by installment. After giving the P3,000.00 downpayment, petitioner started the construction of a house on the lot after securing a building permit with the written consent of the then registered owner, Claudia de la Paz. Petitioner likewise began paying the real estate taxes on said property. Since then, petitioner and his family have maintained their residence there. On January 31, 1983, petitioner completed payment of the lot for which private respondents De la Paz executed two documents. However, private respondents De la Paz never delivered the Deed of Sale they promised to petitioner.In the meantime, in a Deed of. Absolute Sale with Right to Repurchase dated October 28, 1981 (Exh. 10),11private respondents De la Paz sold three lots with right to repurchase the same within one year to private respondents spouses Reynaldo and Susan Veneracion for the sum of P150,000.00. One of the lots sold was the lot previously sold to petitioner.12Before the expiration of the one year period, private respondent Godofredo De la Paz informed private respondent Reynaldo Veneracion that he was selling the three lots to another person for P200,000.00. Indeed, private respondent Veneracion received a call from a Mr. Tecson verifying if he had the titles to the properties, as private respondents De la Paz were offering to sell the two lots along Maharlika Highway to him (Mr. Tecson) for P180,000.00 The offer included the lot purchased by petitioner in February, 1981. Private respondent Veneracion offered to purchase the same two lots from the De la razes for the same amount, The offer was accepted by private respondents De la Paz. Accordingly, on June 2, 1983, a Deed of Absolute Sale was executed over the two lots Sometime in January, 1984, private respondent Reynaldo Veneracion asked a certain Renato Reyes, petitioner's neighbor, who the owner of the building erected on the subject lot was. Reyes told him that it was Feliza Martinez, petitioner's mother, who was in possession of the property. Reynaldo Veneracion told private respondent Godofredo about the matter and was assured that Godofredo would talk to Feliza. Based on that assurance, private respondents Veneracion registered the lots with the Register of Deeds of Cabanatuan on March 5, 1984. The lot in dispute was registered under TCT No. T-44612.Petitioner discovered that the lot he was occupying with his family had been sold to the spouses Veneracion after receiving a letter, (Exh. P/Exh. 6-Veneracion) from private respondent Reynaldo Veneracion on March 19, 1986, claiming ownership of the land and demanding that they vacate. Petitioner, in turn, demanded through counsel the execution of the deed of sale from private respondents De la Paz and informed Reynaldo Veneracion that he was the owner of the property as he had previously purchased the same from private respondents De la Paz.As a consequence, on May 12, 1986, private respondent Reynaldo Veneracion brought an action for ejectmentISSUE:Whether or not private respondents Veneracion are buyers in good faith of the lot in dispute as to make them the absolute owners thereof in accordance with Art. 1544 of the Civil Code on double sale of immovable property.HELD:The supreme court ruled in negative.This case, however, involves double sale and, on this matter, Art. 1544 of the Civil Code provides that where immovable property is the subject of a double sale, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it to the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title.26 The requirement of the law, where title to the property is recorded in the Register of Deeds, is two-fold: acquisition in good faith and recording in good faith. To be entitled to priority, the second purchaser must not only prove prior recording of his title but that he acted in good faith, i.e., without knowledge or notice of a prior sale to another. The presence of good faith should be ascertained from the circumstances surrounding the purchase of the land.27With regard to the first sale to private respondents Veneracion, private respondent Reynaldo Veneracion testified that on October 10, 1981, 18 days before the execution of the first Deed of Sale with Right to Repurchase, he inspected the premises and found it vacant.28 However, this is belied by the testimony of Engr. Felix D. Minor, then building inspector of the Department of Public Works and Highways, that he conducted on October 6, 1981 an ocular inspection of the lot in dispute in the performance of his duties as a building inspector to monitor the progress of the construction of the building subject of the building permit issued in favor of petitioner on April 23, 1981, and that he found it 100 % completed (Exh. V).29 In the absence of contrary evidence, he is to be presumed to have regularly performed his official duty.30 Thus, as early as October, 1981, private respondents Veneracion already knew that there was construction being made on the property they purchased.With regard to the second sale, which is the true contract of sale between the parties, it should be noted that this Court in several cases,35 has ruled that a purchaser who is aware of facts which should put a reasonable man upon his guard cannot turn a blind eye and later claim that he acted in good faith. Private respondent Reynaldo himself admitted during the pre-trial conference in the MTC in Civil Case No. 9523 (for ejectment) that petitioner was already in possession of the property in dispute at the time the second Deed of Sale was executed on June 1, 1983 and registered on March 4, 1984. He, therefore, knew that there were already occupants on the property as early as 1981. The fact that there are persons, other than the vendors, in actual possession of the disputed lot should have put private respondents on inquiry as to the nature of petitioner's right over the property. But he never talked to petitioner to verify the nature of his right. He merely relied on the assurance of private respondent Godofredo De la Paz, who was not even the owner of the lot in question, that he would take care of the matter. This does not meet the standard of good faith.Sigaya vs. Mayuga, G.R. No. 143254 August 18, 2005FACTS:Dionisia Alorsabes owned a three hectare land in Dao, Capiz. In 1934, she sold a portion of the lot to Juanito Fuentes while the remainder was inherited by her children Paz Dela Cruz, Rosela Dela Cruz, and Consorcia Arroja (an adopted child), and a grandson, Francisco Abas, in representation of his deceased mother Margarita Dela Cruz. These four heirs executed an Extra-Judicial Settlement with Sale dated February 4, 1964 wherein Consorcia sold her share with an area of 6,694 square meters to spouses Balleriano Mayuga. On April 1, 1977, Paz also sold her share to Honorato de los Santos. Later, another document entitled Extra-Judicial Partition with Deed of Sale dated November 2, 1972 was uncovered wherein the heirs of Dionisia purportedly adjudicated Lot 3603 among themselves and sold their shares to Francisco. On January 9, 1978, Francisco executed a Deed of Sale over Lot 3603 in favor of Teodulfo Sigaya. Thus, the title over Lot 3603 was cancelled and a new one was issued in the name of Teodulfo, predecessor-in-interest of the petitioners herein.1On October 14, 1986, the petitioners, who are the widow and children of Teodulfo, filed Civil Case for recovery of possession and praying that respondents be ordered to vacate Lot 3603, and turn over the same to petitioners;Petitioners argue that: Teodulfo, their predecessor-in-interest, purchased the subject property from Francisco, who was in possession of the Original Certificate of Title (OCT) No. RO-5841 (17205), in the name of Dionisia and of the Extra-Judicial Partition with Deed of Sale, relying on these instruments and after inspecting the land and seeing that nobody occupied the same, Teodulfo bought the land and had the title subsequently issued in his namePetitioners, in their Memorandum, further aver that: Teodulfo is a purchaser in good faith having relied on OCT No. RO-5841 (17205) in the name of Dionisia and the Extra-Judicial Partition with Deed of Sale which shows that Francisco is the absolute owner of the lot; four years had elapsed from the date that the OCT was reconstituted and the time Teodulfo bought the property from Francisco and yet none of the respondents had registered their right in the property; the Extra-Judicial Settlement of Lot 3603 of the Cadastral Survey of Dao, Capiz with Sale, on which respondents base their claims, was never registered with the Registry of Deeds; not having been registered, this will not affect the right of third persons who had no knowledge thereof;ISSUE:Whether a person dealing with a registered land can safely rely on the correctness of the Certificate of Title issued therefor.16HELD:(1) This Court has held that the burden of proving the status of a purchaser in good faith lies upon one who asserts that status and this onus probandi cannot be discharged my mere invocation of the legal presumption of good faith. In this case, the Court finds that petitioners have failed to discharge such burden.A purchaser in good faith is one who buys property without notice that some other person has a right to or interest in such property and pays its fair price before he has notice of the adverseclaims and interest of another person in the same property. The honesty of intention which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry.Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto.34However, this rule shall not apply when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation.35In this case, preponderance of evidence shows that respondents had been in actual possession of their respective portions even prior to 1960. Rolly Daniel, which the trial court considered as a credible witness, testified that not only were respondents in actual possession of their respective portions prior to 1960, he even accompanied Francisco and Teodulfo to the different houses of respondents sometime between 1976 to 1978 as Teodulfo was going to buy the portion of Francisco. This Court cannot give credence therefore to the claim of petitioners that Teodulfo found no occupants in the property.A purchaser cannot simply close his eyes to facts which should put a reasonable man on his guard and then claim that he acted in good faith under the belief that there was no defect in the title of his vendor. His mere refusal to believe that such defect exists or his willful closing of his eyes to the possibility of the existence of a defect in his vendors title will not make him an innocent purchaser for value if it later develops that the title was in fact defective, and it appears that he would have notice of the defect had he acted with that measure of precaution which may reasonably be required of a prudent man in a similar situation.(2)Petitioners also argue that the rule on double sale of real property should apply in this case, and since they are the first to register the sale in good faith, they are entitled to be awarded ownership thereof.The Court disagrees. Apart from the fact that Teodulfo is not a purchaser in good faith, the law on double sales as provided in Art. 1544 of the Civil Code38 contemplates a situation where a single vendor sold one and the same immovable property to two or more buyers. For the rule to apply, it is necessary that the conveyance must have been made by a party who has an existing right in the thing and the power to dispose it. The rule cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold.39 In this case, respondents derive their right over their respective portions either through inheritance or sale from Dionisia while petitioners invoke their right from the sale of the land from Francisco. Clearly, the law on double sales does not apply here.LLOYD'S ENTERPRISES AND CREDIT CORPORATION, PETITIONERSVSSPS. FERDINAND AND PERSEVERANDA DOLLETON, RESPONDENTS[G.R. No. 171373, June 18, 2008]FACTS:Spouses Dolleton, were the registered owners of a parcel of land covered by TCT No. 153554 with a four-door apartment building being leased to various tenants. Respondents mortgaged the property to a certain Santos to secure a loan in the amount of P100,000.00. Upon payment of the loan on 15 August 1994, Santos executed a release and cancellation of the mortgage. The same was annotated on the TCT. On 15 September 1994, TCT No. 153554 in the name of respondents was cancelled and a new TCT No. 197220 was issued in the name of Gagan on the basis of a Deed of Absolute Sale dated 5 August 1994 whereby respondents purportedly sold to Gagan the subject property for the sum of P120,000.00. On 19 September 1994, Gagan and Gueverra mortgaged said property with TCT No. 197220 to petitioner LECC for second loan of P542,928.00 and was annotated on said Title. However, Gagan and Guevarra failed to pay the loan upon maturity. Thus, petitioner foreclosed mortgaged property being the highest bidder and was not redeemed within the one-year period. Hence, ownership was consolidated in favor of petitioner and was issue a new TCT No. 210363 cancelling TCT No. 197220. Petitioner then sent notices to the apartment tenants on the transfer of ownership and rentals were not remitted to respondents anymore, prompting the latter to cause the annotation of an adverse claim on TCT No. 210363. Respondents prayed among others for the restoration of TCT No. 153554 and nullification of the Deed of Absolute Sale, and the extrajudicial foreclosure proceedings. They denied having executed the Deed of Absolute Sale and alleged that they had merely offered to sell to Gagan the subject property for P900,000.00 on installment basis so that they could pay their loan obligation to Santos. After Gagan had initially paid P200,000.00, they entrusted the owner's copy of TCT No. 153554 to him. Gagan was unable to pay the balance of the purchase price, rather she caused the fraudulent cancellation of TCT No. 153554 and the issuance of TCT No. 197220 in her name, and of eventually using TCT No. 197220 to secure the loans obtained from petitioner.Respondents also faulted petitioner for failing to make adequate inquiries on the true ownership of the property considering the suspicious circumstances surrounding Gagan's and Guevarra's request for loan immediately after the issuance of the new certificate of title. The RTC declared the Deed of Absolute Sale between Gagan and Dolleton as spurious and directed the reconveyance of the property to the true and genuine owners, the spouses Dolleton. CA affirmed RTCs decision.ISSUE:WON Petitioner is a Mortgagee and Buyer in Good FaithRULING:The Court affirmed the reconveyance of the property to respondents Dolleton as petitioner is not a mortgagee in good faith, hence, foreclosure was not valid. Petitioner failed to verify the actual condition of the property, particularly as to who is in actual possession and if the premises are leased to third persons, who is receiving the rental payments therefore.Appellant LECC merely submitted in evidence forms for credit investigation on the borrower's capacity topay, there is no showing that they actually inspected the property offered as collateral. Had precautionary measure been taken, the lending company's representatives would have easily discovered that the four (4)-door apartment in the premises being mortgaged is rented by tenants and they could have been provided with information that plaintiffs-appellees are still the present lessors/owners thereof.Moreover, the circumstance that the certificate of title covering the property offered as security was newly issued should have put petitioner on guard and prompted it to conduct an investigation surrounding the transfer of the property to defendant Gagan. Had it inquired further, petitioner would have discovered that the property was sold for an unconscionably low consideration of only P120,000.00 when it could have fetched as high as P900,000.00. A purchaser cannot close his eyes to facts which should put a reasonable man on his guard and claim that he acted in good faith under the belief that there was no defect in the title of the vendor. Petitioner is engaged in the business of extending credit to the public and is, thus, expected to exercise due diligence in dealing with properties offered as security. The failure of respondent to take such precautionary steps is considered negligence on its part and would thereby preclude the defense of good faith.SAN LORENZO DEVELOPMENT CORPORATION,petitioner,vs.COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU andPACITA ZAVALLA LU,respondentsG.R. No. 124242 January 21, 2005Facts:Respondent Spouses Lu purportedly sold two parcels of land to respondent Babasanta, for the price of P15.00 per square meter. Babasanta made a down payment of P50, 000.00. Consequently, Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his favor so that he could effect full payment of the purchase price. In response, Pacita wrote a letter to Babasanta wherein she reminded the latter that when the balance of the purchase price became due, he requested for a reduction of the price and when she refused, Babasanta backed out of the sale. Herein petitioner SLDC filed a motion for intervention alleging that it had legal interest in the subject matter under litigation because the two parcels of land involved had been sold to it in a deed of absolute sale with mortgage. It alleged that it was a buyer in good faith and had therefore a better right over the property in litigation. Respondent Babasanta, however, argued that SLDC could not have acquired ownership of the property because it failed to comply with the requirement of registration of the sale in good faith. He emphasized that at the time the SLDC registered the sale in its favor, there was already a notice of lis pendens annotated on the titles of the property. Hence, petitioners registration of the sale did not confer upon it any right.ISSUE: Won the registration of the sale after the annotation of the notice of lis pendens obliterate the effects of delivery and possession in good faith which admittedly had occurred prior to SLDCs knowledge of the transaction in favor of respondent Babasanta.Held:No. The respondent Spouses executed the Option to Buy in favor of petitioner. After petitioner had paid more than of the agreed purchase price, the Spouses subsequently executed a Deed of absolute sale in favor of SLDC. At the time both deed were executed, SLDC had no knowledge of the prior transaction of the Spouses with Bababsanta. Simply stated, from the time of the first deed up to the moment of transfer and delivery of possession of the lands to SLDC, it had acted in good faith and the subsequent annotation of lis pendens has no effect at all on the consummated sale between SLDC and the Spouses LU. The court rules that SLDC qualifies as a buyer in good faith since there is no evidence in the records that it had knowledge of the prior transaction in favor or Babasanta. At the time of the sale of the property to SLDC, the vendors were still the registered owner of the property and were in fact in possession of the lands.De Leon vs. OngGR. 170405, February 2, 2010FACTS: On March 10, 1993, (petitioner) Raymundo De Leon sold 3 parcels of land to (respondent) Benita Ong. The properties were mortgaged to Real Savings and Loan Association Inc (RSLAI). The parties executed a notarized deed of absolute sale with assumption of mortgage. In the deed of mortgage, the parties stipulated that Petitioner will execute a deed of assumption of mortgage in favor of Respondent after full payment of P415,000 and they also agreed that respondent will assume payment of mortgage of P684,500. Respondent then subsequently gave Petitioner P415,000 as partial payment. Petitioner, in turn, handed the keys to Respondent and Petitioner wrote a letter to inform RSLAI that the mortgage will be assumed by Respondent. Thereafter, Respondent took repairs and made improvements in the properties.Subsequently, Respondent learned that the same properties were sold to Viloria after March 10, 1993 and changed the locks, rendering the keys given to her useless. Respondent proceeded to RSLAI but she was informed that the mortgage has been fully paid and that the titles have been given to Viloria. Respondent then filed a complaint for specific performance and declaration of nullity of the second sale and damages. Petitioner contended that respondent does not have a cause of action against him because the sale was subject to a suspensive condition which requires the approval of RSLAI of the mortgage. Petitioner reiterated that they only entered into a contract to sell.RTC dismissed the case. CA, on appeal, upheld the sale to Respondent and nullified the sale to Viloria. Petitioner moved for an MR to the SC.ISSUE: Whether the parties entered into a contract of sale or contract to sellHELD: Contract of Sale.RATIO: In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. The non-payment of the price is a negative resolutory condition. Contract to sell is subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price.In this case, the deed executed by the parties did not show that the owner (petitioner) intends to reserve ownership of the properties. The terms and conditions affected only the manner of payment and not the immediate transfer of ownership. Clearly, petitioner intended a sale because he unqualifiedly delivered and transferred ownership of properties to the respondent.*NOTE: There was also a minor issue whether there was a void second dale or a Double Sale. To which the SC held that there was a Double Sale because the properties were sold validly on two separa