1-5. DORIS 6. Penalosa vs. Santos (G.R. No.

133749 August 23, 2001) FACTS: Severino Santos, registered owner of house and lot, sold it to Penalosa which was then occupied by Perez. On the basis of the conract to sell, Penalosa demaned Perez to vacate the property but the latter refused because of the subsisting contract of lease with Santos. Later, the court ordered Perez to vacate and surrender property to Penalosa as he was the new owner of said property.Then, Santos demanded Penalosa to vacate the property on the ground that the Penalosa did not pay the price agreed upon between them. ISSUE: Whether or not Penalosa is the new owner of the property? HELD: Yes. Ownership of the property has been transferred to petitioner. Ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. It is undisputed that the property was placed in the control and possession of petitioner when he came into material possession thereof after judgment in the ejectment case. Not only was the contract of sale perfected, but also actual delivery of the property effectively consummated the sale. 7. Heirs of Biona vs. CA (G.R. No. 105647 July 31, 2001) ISSUE: Whether or not the sale was valid? HELD: YES but with regard only to Soledads share (7/12). But since the daughters of Biona failed to assert their rights and allowed defendant Hilajos to occupy the land in peace for more than 30 years, they are now stopped due to laches. All the requisites for a valid contract of sale are present in the instant case. For a valuable consideration of P4,500.00, Soledad Biona agreed to sell and actually conveyed the subject property to private respondent. The fact that the deed of sale was not notarized does not render the agreement null and void and without any effect. The provision of Article 1358 of the Civil Code9 on the necessity of a public document is only for convenience, and not for validity or enforceability.10 The observance of which is only necessary to insure its efficacy, so that after the existence of said contract had been admitted, the party bound may be compelled to execute the proper document.11 Undeniably, a contract has been entered into by Soledad Biona and the private respondent. Regardless of its form, it was valid, binding and enforceable between the parties. Under Art. 1356 of the Civil Code, contracts shall be obligatory in whatever form they may have been entered into provided all the essential requisites for their necessary elements for a valid contract of sale were met when Soledad Biona agreed to sell and actually conveyed Lot 177 to defendant-appellant who paid the

amount of P4,500.00 therefore. The deed of sale (Exh. 2) is not made ineffective merely because it is not notarized or does not appear in a public document. 8. QUIROGA vs. PARSONS HARDWARE CO.| 38 Phil 501, G.R. No. L-11491, August 23, 1918 FACTS: Quiroga and J. Parsons, both merchants, entered into a contract, for the exclusive sale of "Quiroga" Beds in the Visayan Islands. It was agreed, amongothers, that Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J.Parsons, subject to some conditions provided in the contract. Likewise, it was agreed that. In compensation for the expenses of advertisement which, for the benefit of both contracting parties, Mr.Parsons may find himself obliged to make, Mr.Quiroga assumes the obligation to offer and give thepreference to Mr. Parsons in case anyone should apply for the exclusive agency for any island notcomprised with the Visayan group; and that, Mr. Parsons may sell, or establish branches of his agency forthe sale of "Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, andshall immediately report such action to Mr. Quiroga for his approval.Plaintiff filed a complaint, alleging that the defendant violated the following obligations: not to sell thebeds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conductthe agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for thesame; and to order the beds by the dozen and in no other manner. He alleged that the defendant washis agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. ISSUE: Whether or not the defendant, by reason of the contract hereinbefore transcribed, was an agent of the plaintiff for the sale of his beds. HELD: No. In order to classify a contract, due regard must be given to its essential clauses. In the contract inquestion, there was the obligation on the part of the plaintiff to supply the beds, and, on the part of thedefendant, to pay their price. These features exclude the legal conception of an agency or order to sellwhereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers tothe principal the price he obtains from the sale of the thing to a third person, and if he does not succeedin selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, onreceiving the beds, was necessarily obliged to pay their price within the term fixed, without any otherconsideration and regardless as to whether he had or had not sold the beds.In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by thecontract, the effect of its breach would only entitle the plaintiff to

disregard the orders which thedefendant might place under other conditions; but if the plaintiff consents to fill them, he waives his rightand cannot complain for having acted thus at his own free will. 9. San Miguel Properties vs. Huang (G.R. No. 137290) It is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale. Was it an earnest deposit? NO. At the time when petitioner accepted the terms of respondents offer of March 29, 1994, their contract had not yet been perfected. It does not satisfy Article 1482. The stages of a contract of sale are as follows: (1) negotiation, (2) perfection, and (3) consummation. The alleged indubitable evidence of a perfected sale cited by the appellate court was nothing more than offers and counter-offers which did not amount to any final arrangement containing the essential elements of a contract of sale. While the parties already agreed on the real properties which were the objects of the sale and on the purchase price, the fact remains that they failed to arrive at mutually acceptable terms of payment, despite the 45-day extension given by petitioner. There was also failure to agree on the manner of payment. The manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale. Agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. 10. Pilipinas Shell vs. Gobonseng (G.R. No. 163562) A contract of sale, being consensual in nature, becomes valid and binding upon the meeting of the minds of the parties as to the object and the price. If there is a meeting of the minds, the contract is valid despite the manner of payment, or even if the manner of payment was breached. In fine, it is not the act of payment of the contract price that determines the validity of a contract of sale. The manner of payment and the payment itself of the agreed price have nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure of a party to effect payment of the contract price results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract.

Is Pilipinas Shell liable for rentals from 1982 to 1991? No. The gasoline station was dealer-owned, run by Julio Tan Pastor himself. respondent himself does not dispute the fact that he never demanded rental payments from Tan Pastor from 1982 to 1991. It was only after the criminal case for bouncing checks was dismissed that he claimed entitlement to rentals. Prior thereto, he never demanded for any rental payment, much less instituted any action to enforce the same. What is more, respondent and Tan Pastor had already executed an Agreement whereunder they declared that they had no more further claims against each other, and waived, abandoned, relinquished, any such claim or claims. Hence, he is now stopped from asking for rent. 11. DORIS 12. DORIS 13. Spouses Firme vs. Bukal Enterprises and Development Corp. [GR 146608, 23 October 2003] Facts: Spouses Firme are the registered owners of a parcel of land located on Dahlia Avenue, Fairview Park, Quezon City. Renato de Castro, the vice president of Bukal Enterprises and Development Corporation authorized his friend, Teodoro Aviles, a broker, to negotiate with Spouses Firme for the purchase of the Property. Later, Bukal Enterprises filed a complaint for specific performance and damages with the trial court, alleging that Spouses Firme reneged on their agreement to sell the Property. The complaint asked the trial court to order the Spouses Firme to execute the deed of sale and to deliver the title to the Property to Bukal Enterprises upon payment of the agreed purchase price. The trial court dimissed the case and ordered Bukal Enterprises to pay Spouses Firme because there was no perfected contract of sale as Bukal Enterprises failed to establish that Spouses Firme gave their consent to the sale of the Property; and that Aviles had no valid authority to bind Bukal Enterprises in the sale transaction. Bukal Enterprises appealed to the Court of Appeals, which reversed and set aside the decision of the trial court. The appellate court ordered the Spouses Firme to execute the Deed of Absolute Sale transferring the ownership of the subject property to Bukal Enterprises immediately upon receipt of the purchase price of P3,224,000.00 and to perform all such acts necessary and proper to effect the transfer of the property covered by TCT 264243 to Bulak Enterprises; and directed Bukal Enterprises to deliver the payment of the purchase price of the property within 60 days from the finality of the judgment. The Court of Appeals held that the lack of a board resolution authorizing Aviles to act on behalf of Bukal Enterprises in the purchase of the Property was cured by ratification; inasmuch as Bukal Enterprises ratified the purchase when it filed the complaint for the enforcement of the sale. The spouses Firme filed the petition for review on certiorari before the Supreme Court.

Issue: Whether there was a perfected contract between the Spouses Firme and Bukal Enterprises, the latter allegedly being represented by Aviles. Held: There was no consent on the part of the Spouses Firme. Consent is an essential element for the existence of a contract, and where it is wanting, the contract is non-existent. The essence of consent is the conformity of the parties on the terms of the contract, the acceptance by one of the offer made by the other. The Spouses Firme flatly rejected the offer of Aviles to buy the Property on behalf of Bukal Enterprises. There was therefore no concurrence of the offer and the acceptance on the subject matter, consideration and terms of payment as would result in a perfected contract of sale. Further, there was no approval from the Board of Directors of Bukal Enterprises as would finalize any transaction with the Spouses Firme. Aviles did not have the proper authority to negotiate for Bukal Enterprises. Aviles testified that his friend, De Castro, had asked him to negotiate with the Spouses Firme to buy the Property. De Castro, as Bukal Enterprises vice president, testified that he authorized Aviles to buy the Property. However, there is no Board Resolution authorizing Aviles to negotiate and purchase the Property on behalf of Bukal Enterprises. It is the board of directors or trustees which exercises almost all the corporate powers in a corporation. Under Sections 23 and 36 of the Corporation Code, the power to purchase real property is vested in the board of directors or trustees. While a corporation may appoint agents to negotiate for the purchase of real property needed by the corporation, the final say will have to be with the board, whose approval will finalize the transaction. A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when authorized by a board resolution or its bylaws. Aviles, who negotiated the purchase of the Property, is neither an officer of Bukal Enterprises nor a member of the Board of Directors of Bukal Enterprises. There is no Board Resolution authorizing Aviles to negotiate and purchase the Property for Bukal Enterprises. There is also no evidence to prove that Bukal Enterprises approved whatever transaction Aviles made with the Spouses Firme. In fact, the president of Bukal Enterprises did not sign any of the deeds of sale presented to the Spouses Firme. Even De Castro admitted that he had never met the Spouses Firme. Considering all these circumstances, it is highly improbable for Aviles to finalize any contract of sale with the Spouses Firme. Furthermore, the Court notes that in the Complaint filed by Bukal Enterprises with the trial court, Aviles signed the verification and certification of non-forum shopping. The verification and certification of non-forum shopping was not accompanied by proof that Bukal Enterprises authorized Aviles to file the complaint on behalf of Bukal Enterprises. The power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors. The purpose of verification is to secure an assurance that the allegations in the pleading

are true and correct and that it is filed in good faith. True, this requirement is procedural and not jurisdictional. However, the trial court should have ordered the correction of the complaint since Aviles was neither an officer of Bukal Enterprises nor authorized by its Board of Directors to act on behalf of Bukal Enterprises. 14. DORIS 15. same as No. 3 16. G.R. No. 156437. March 1, 2004 NATIONAL HOUSING AUTHORITY vs. GRACE BAPTIST CHURCH and COURT OF APPEALS FACTS: On June 13, 1986, Respondent Grace Baptist Church wrote a letter to NHA manifesting their intent to purchase Lot 4 and 17 of the General Mariano Alvarez Resettlement Project in Cavite. The latter granted request hence respondent entered into possession of the lots and introduced improvements thereon. On February 22, 1991, NHA passed a resolution approving the sale of the subject lots to respondent Church for 700 per square meter, a total of P430,500. respondents were duly informed. On April 8, 1991, respondent church tendered a check amounting to P55,350 contending that this was the agreed price. NHA avers stating that the price now (1991) is different from before (1986). The trial court rendered a decision in favour of NHA stating that there was no contract of sale, ordering to return the said lots to NHA and to pay NHA rent of 200 pesos from the time it took possession of the lot. Respondent Church appealed to the CA which affirms the decision of RTC regarding no contract of sale but modifying it by ordering NHA to exec ute the sale of the said lots to Church for 700 per square, with 6% interest per annum from March 1991. Petitioner NHA filed a motion for reconsideration which was denied. Hence this petition for review on certiorari ISSUE: WON NHA can be compelled to sell the lots under market value? HELD: No, because the contract has not been perfected.

The Church despite knowledge that its intended contract of sale with the NHA had not been perfected proceeded to introduce improvements on the land. On the other hand, NHA knowingly granted the Church temporary use of the subject properties and did not prevent the Church from making improvements thereon. Thus the Church and NHA, who both acted in bad faith shall be treated as if they were both in good faith. In this connection Art 448 provides: the owner of the land in which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land and if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree, on case of disagreement, court shall fix. 17. CORTES vs. Court of Appeals 494 SCRA 570 (Art. 1169) Facts: For the purchase price of 3.7M, Villa Esperanza Development Corporation (vendee) and Antonio Cortes (vendor) entered into a contract of sale over the lots located at Baclaran, Paraaque, Metro Manila. The Corporation advanced to Cortes the total sum of P1,213,000.00. In September 1983, the parties executed a deed of absolute sale on the following terms: The Corporation shall advance 2.2 M as downpayment, and Cortes shall likewise deliver the TCT for the 3 lots. The balance of 1.5M shall be payable within a year from the date of the execution. The Corporation filed the instant case for specific performance seeking to compel Cortes to deliver the TCTs and the original copy of the Deed of Absolute Sale. According to the Corporation, despite its readiness and ability to pay the purchase price, Cortes refused delivery of the sought documents. It prayed for damages, attorneys fees and litigation expenses. Cortes claimed that the owners duplicate copy of the three TCTs were surrendered to the Corporation and it is the latter which refused to pay in full the agreed down payment. RTC rendered a decision rescinding the sale and directed Cortes to return to the Corporation the amount of P1,213,000.00, plus interest. CA reversed the decision and directed Cortes to execute a Deed of Absolute Sale conveying the properties and to deliver the same to the Corporation together with the TCTs, simultaneous with the Corporations payment of the balance of the purchase price of P2,487,000.00. Issue: WON Cortes delivered the TCTs and the original Deed to the Corporation? NO.

WON there is delay in the performance of the parties obligation that would justify the rescission of the contract of sale? THERE IS DELAY IN BOTH PARTIES (compensation morae) Held: Cortes avers that he delivered the TCTs through the brokers son. He further avers that the brokers son delivered it to the broker, who in turn delivered them to the Corporation. Marcosa Sanchezs unrebutted testimony is that, she did not receive the TCTs. She also denied knowledge of delivery thereof to her son, Manny. What further strengthened the findings of the Court of Appeals that Cortes did not surrender the subject documents was the offer of Cortes counsel at the pre -trial to deliver the TCTs and the Deed of Absolute Sale if the Corporation will pay the balance of the down payment. Indeed, if the said documents were already in the hands of the Corporation, there was no need for Cortes counsel to make such offer. Considering that their obligation was reciprocal, performance thereof must be simultaneous. The mutual inaction of Cortes and the Corporation therefore gave rise to a compensation morae or default on the part of both parties because neither has completed their part in their reciprocal obligation. Cortes is yet to deliver the original copy of the notarized Deed and the TCTs, while the Corporation is yet to pay in full the agreed down payment of P2,200,000.00. This mutual delay of the parties cancels out the effects of default, such that it is as if no one is guilty of delay. Under Article 1169 of the Civil Code, from the moment one of the parties fulfills his obligation, delay by the other begins. Since Cortes did not perform his part, the provision of the contract requiring the Corporation to pay in full the down payment never acquired obligatory force. 18. ALMOCERA vs. ONG FACTS: Plaintiff Johnny Ong tried to acquire from the defendants a "townhome" described as Unit No. 4 of Atrium Townhomes in Cebu City. As reflected in a Contract to Sell, the selling price of the unit was P3,400,000.00 pesos, for a lot area of eighty-eight (88) square meters with a three-storey building. Out of the purchase price, plaintiff was able to pay the amount of P1,060,000.00. Prior to the full payment of this amount, plaintiff claims that defendants Andre Almocera and First Builders fraudulently concealed the fact that before and at the time of the perfection of the aforesaid contract to sell, the property was already mortgaged to and encumbered with the Land Bank of the Philippines (LBP). In addition, the construction of the house has long been delayed and

remains unfinished. On March 13, 1999, Lot 4-a covered by TCT No. 148818, covering the unit was advertised in a local tabloid for public auction for foreclosure of mortgage. It is the assertion of the plaintiff that had it not for the fraudulent concealment of the mortgage and encumbrance by defendants, he would have not entered into the contract to sell. On the other hand, defendants assert that on March 20, 1995, First Builders Multipurpose Coop. Inc., borrowed money in the amount of P500,000.00 from Tommy Ong, plaintiff's brother. This amount was used to finance the documentation requirements of the LBP for the funding of the Atrium Town Homes. This loan will be applied in payment of one (1) town house unit which Tommy Ong may eventually purchase from the project. When the project was under way, Tommy Ong wanted to buy another townhouse for his brother, Johnny Ong, plaintiff herein, which then, the amount of P150,000.00 was given as additional partial payment. However, the particular unit was not yet identified. It was only on January 10, 1997 that Tommy Ong identified Unit No. 4 plaintiff's chosen unit and again tendered P350,000.00 as his third partial payment. When the contract to sell for Unit 4 was being drafted, Tommy Ong requested that another contract to sell covering Unit 5 be made so as to give Johnny Ong another option to choose whichever unit he might decide to have. When the construction was already in full blast, defendants were informed by Tommy Ong that their final choice was Unit 5. It was only upon knowing that the defendants will be selling Unit 4 to some other persons for P4million that plaintiff changed his choice from Unit 5 to Unit 4. In trying to recover the amount he paid as down payment for the townhouse unit, respondent Johnny Ong filed a complaint for Damages before the RTC of Cebu City, against defendants Andre T. Almocera and FBMC alleging that defendants were guilty of fraudulent concealment and breach of contract when they sold to him a townhouse unit without divulging that the same, at the time of the perfection of their contract, was already mortgaged with the Land Bank of the Philippines (LBP), with the latter causing the foreclosure of the mortgage and the eventual sale of the townhouse unit to a third person. In their Answer, defendants denied liability claiming that the foreclosure of the mortgage on the townhouse unit was caused by the failure of complainant Johnny Ong to pay the balance of the price of said townhouse unit. The trial court ruled against defendants for not acting in good faith and for not complying with their obligations under their contract with respondent. The Court of Appeals ruled that the defendants incurred delay when they failed to deliver the townhouse unit to the respondent within six months from the signing of the contract to sell. It agreed with the finding of the trial court that the nonpayment of the balance of P2.4M by respondent to defendants was proper in light of such delay and the fact that the property subject of the case was foreclosed and auctioned. It added that the trial court did not err in giving credence to

respondent's assertion that had he known beforehand that the unit was used as collateral with the LBP, he would not have proceeded in buying the townhouse. Like the trial court, the Court of Appeals gave no weight to defendants' argument that had respondent paid the balance of the purchase price of the townhouse, the mortgage could have been released. ISSUE: HELD: It cannot be disputed that the contract entered into by the parties was a contract to sell. The contract was denominated as such and it contained the provision that the unit shall be conveyed by way of an Absolute Deed of Sale, together with the attendant documents of Ownership the Transfer Certificate of Title and Certificate of Occupancy and that the balance of the contract price shall be paid upon the completion and delivery of the unit, as well as the acceptance thereof by respondent. All these clearly indicate that ownership of the townhouse has not passed to respondent. A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price. A distinction must be made between a contract of sale in which title passes to the buyer upon delivery of the thing sold and a contract to sell . . . where by agreement the ownership is reserved in the seller and is not to pass until the full payment of the purchase price is made. In the first case, non-payment of the price is a negative resolutory condition; in the second case, full payment is a positive suspensive condition. Being contraries, their effect in law cannot be identical. In the first case, the vendor has lost and cannot recover the ownership of the land sold until and unless the contract of sale is itself resolved and set aside. In the second case, however, the title remains in the vendor if the vendee does not comply with the condition precedent of making payment at the time specified in the contract." In other words, in a contract to sell, ownership is retained by the seller and is not to pass to the buyer until full payment of the price. 19. Gaite vs. Fonacier (G.R. No. L-11827 July 31, 1961) The only rational view that can be taken is that the sale of the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was intended merely to fix the future date of the payment. A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party

anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course of business to do so; hence, the contingent character of the obligation must clearly appear. Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the companys stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance of P65,000.00. Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive condition or a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation would incline the scales in favor of the greater reciprocity of interests, since sale is essentially onerous. The Civil Code of the Philippines, Article 1378, paragraph 1, in fine, provides: If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests. There can be no question that greater reciprocity obtains if the buyer obligation is deemed to be actually existing, with only its maturity (due date) postponed or deferred, that if such obligation were viewed as non-existent or not binding until the ore was sold. 20. Buenaventura vs. CA FACTS: Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. Sought to be declared null and void ab initio, are certain deeds of sale of real property executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates of title issued in their names. Herein petitioners alleged that the sale of the subject properties impaired their legitime and that there was no actual valid consideration for the deeds of sale, and even assuming that there was indeed consideration, the price was grossly inadequate. The trial court ruled in favor of the respondents and dismissed the complaint. The trial court ruled that petitioners had no valid cause of action against respondents since there can be no legitime to speak of prior to the death of their parents. On appeal, the Court of Appeals affirmed the decision of the trial court. The appellate

court ruled that petitioners have no legal capacity to challenge the validity of the subject deeds since they are not parties thereto and are not principally or subsidiarily bound thereby. ISSUE: WON there was a valid Contract of Sale between defendant spouses and the defendant children. HELD: A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a contract of sale becomes a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. If there is no meeting of the minds of the parties as to the price, because the price stipulated in the contract is simulated, then the contract is void. Article 1471 of the Civil Code states that if the price in a contract of sale is simulated, the sale is void. It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract. Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. All the respondents believed that they received the commutative value of what they gave. 21. PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION vs. DE LOS ANGELES Facts : Timoteo Sevilla, proprietor and General Manager of the Philippine Associated Resources (PAR) together with two other entities, namely, the Nationwide AgroIndustrial Development Corp. and the Consolidated Agro-Producers Inc. were awarded in a public bidding the right to import Virginia leaf tobacco at a rate of one (1) kilo of imported tobacco for every nine (9) kilos of leaf tobacco actually exported. Subsequently, the other two entities assigned their rights to PVTA and respondent remained the only private entity accorded the privilege. The contract entered into between the petitioner and respondent Sevilla was for the importation of Virginia leaf tobacco and a counterpart exportation. In accordance with their contract, Sevilla purchased from petitioner and actually

exported 2,101.470 kilos of tobacco. Before Sevilla could import the counterpart blending Virginia tobacco, Republic Act No. 4155 was passed authorizing the PVTA to grant import privileges at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its tobacco stock at the best price available. Thus the subject contract which was already amended because of the prevailing export or world market price under which respondent will be exporting at a loss, was further amended to grant respondent the privileges under aforesaid law, subject to the following conditions: (1) that those already purchased, and exported, the purchase price of about P3.00 a kilo was maintained; (2) that the unpaid balance was to be liquidated by paying PVTA the sum of P4.00 for every kilo of imported Virginia blending tobacco and; (3) that respondent Sevilla would open an irrevocable letter of credit with the Prudential Bank and Trust Co. in favor of the PVTA to secure the payment of said balance, drawable upon the release from the Bureau of Customs of the imported Virginia blending tobacco. While respondent was trying to negotiate the reduction of the procurement cost of the tobacco already exported which attempt was denied by petitioner and also by the Office of the President, petitioner prepared two drafts to be drawn against said letter of credit for amounts which have already become due and demandable. Respondent then filed a complaint for damages with preliminary injunction against the petitioner. A writ of preliminary injunction was issued by respondent judge enjoining petitioner from drawing against the letter of credit. On motion of respondent, Sevilla, the lower court dismissed the complaint and lifted the writ of preliminary injunction but petitioner's motion for reconsideration was granted. Sevilla filed an urgent motion for reconsideration but pending the resolution of respondent's motion and without notice to the petitioner, respondent judge issued an order directing the Prudential Bank & Trust Co. to make the questioned release of funds from the Letter of Credit. Before petitioner could file a motion for reconsideration of said order, respondent Sevilla was able to secure the releaseof P300,000.00 and the rest of the amount. PVTA contends that respondent Judge acted without or in excess of jurisdiction or with grave abuse of discretion because the letter of credit issued by respondent bank is irrevocable Issue: Whether or not the judge can order a decision that will modify or cancel an irrevocable letter of credit without the permission of the beneficiary Ruling: Respondent Judge violated the irrevocability of the letter of credit issued by respondent Bank in favor of petitioner. An irrevocable letter of credit during its lifetime cannot be cancelled or modified without the express permission of the beneficiary.

22. Pelayo vs Perez FACTS: David Pelayo sold two parcels of agricultural land located in Panabo to Melki Perez on January 1988. The sale is evidenced by a Deed of Absolute Sale. Loreza Pelayo, wife of David, and another one whose signature is illegible witnessed the execution of the deed. Mrs. Pelayo signed only the third space in the space provided for the witnesses. Perez asked Loreza to sign on the first and second pages but the latter refused. As a result, Mr. Perez instituted an action for specific performance. Perez countered that the lots were given to him by defendant Pelayo in consideration of his services as his attorney-in-fact to make the necessary representation and negotiation with the illegal occupants-defendants in the ejectment suit. Defendant Pelayo said that the deed was without the consent of Mrs. Perez and invoked Article166 of the Civil Code to support his argument. Issue: Did Mrs. Pelayo expressed his consent in the deed of sale executed by Mr. Pelayo? HELD: The Supreme Court said that the petitioner expressed her consent to the Deed of Absolute Sale when she fixed her signature on the document. The consent need not be expressed. It can be implied. In the present case, although it appears on the face of the deed of sale that Lorenza signed only as an instrumental witness, circumstances leading to the execution of said document point to the fact that Lorenza was fully aware of the sale of their conjugal property and consented to the sale. Moreover, under Article 173, in relation to Article 166, both of the New Civil Code, which was still in effect on January 11, 1988 when the deed in question was executed, the lack of marital consent to the disposition of conjugal property does not make the contract void ab initio but merely voidable. Said provisions of law provide: Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal property without the wife s consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same. Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or

her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband. Hence, it has been held that the contract is valid until the court annuls the same and only upon an action brought by the wife whose consent was not obtained. The petition of Mr. and Mrs. Pelayo was denied. 23. SANCHEZ VS RIGOS| 45 SCRA 368 G.R. No. L-25494| FACTS: On April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos executed an-instrument entitled Option to Purchase, whereby Rigos agreed, promised _and committed to sell to Sanchez at the sum P1,510.00 a parcel of land situated in San Jose, Nueva Ecija, described in TCT No. NT-12528, 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 PI,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the CFI of Nueva Ecija and commenced against the latter the present action, for specific performance and damages. After the filing of defendants answer admitting some allegations of the complaint, denying other allegations thereof, and alleging, as special defense, that the contract between the parties is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void on February 11, 1964, both parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings. Accordingly, on February 28, 1964, the lower court rendered judgment for anchez, 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 attorneys fees, and other costs. Hence, this appeal by Mrs. Rigos. ISSUE: Whether or not Rigos should accept the payment and execute the deed of conveyance. HELD: Yes. Article 1479 of the Civil Code provides that 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 price. 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 June 14, 1972

buy. He is free either to buy or not to buy later. In this case, however, upon accepting herein petitioners offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale. If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale, even though the option was not supported by a sufficient consideration. 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 or an offer to sell which, if accepted, results in a perfected contract of sale.