1.) Mapalo v. Mapalo [G.R. No. L-21489 and L-21628. May 19, 1966.

] En Banc

FACTS:
Spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners of a 1,635 sq.ms. residential land in
Manaoag, Pangasinan (OCT 46503). The spouses-owners, out of love and affection for Maximo Mapalo, brother of Miguel who was
about to get married, decided to donate the eastern half of the land to him. OCT 46503 was delivered. As a result, however, they were
deceived into signing, on 15 October 1936, a deed of absolute sale over the entire land in his favor. Their signature thereto were
procured by fraud, i.e. they were made to believe by Maximo Mapalo and the attorney who acted as notary public who translated the
document, that the same was a deed of donation in Maximos favor covering 12 (the eastern half) of their land. Although the document
of sale stated a consideration of P500, the spouses did not receive anything of value for the land. The attorneys misbehavior was the
subject of an investigation but its result does not appear on record. Following the execution of the document the spouses immediately
built a fence of permanent structure in the middle of their land segregating the eastern portion from its western portion. Said fence still
exists. The spouses have always been in continued possession over the western half of the land up to the present. Unknown to them,
Maximo Mapalo, on 15 March 1938, registered the deed of sale in his favor and obtained in his name TCT 12829 over the entire land.
13 years later, on 20 October 1951, he sold for P2,500.00 said entire land in favor Evaristo, Petronila, Pacifico and Miguel Narciso. The
sale to the Narcisos was in turn registered on 5 November 1951 and TCT 11350 was issued for the whole land in their names. The
Narcisos took possession only of the eastern portion of the land in 1951, after the sale in their favor was made.

On 7 February 1952 the Narcisos filed suit in the CFI Pangasinan (Civil Case 11991) to be declared owners of the entire land; for
possession of its western portion; for damages; and for rentals. It was brought against the Mapalo spouses as well as against Floro
Guieb and Rosalia Mapalo Guieb who had a house on the western part of the land with the consent of the spouses Mapalo and Quiba.
The Mapalo spouses filed their answer with a counterclaim on 17 March 1952, seeking cancellation of the TCT of the Narcisos as to the
western half of the land, on the grounds that their signatures to the deed of sale of 1936 were procured by fraud and that the Narcisos
were buyers in bad faith. They asked for reconveyance to them of the western portion of the land and issuance of a TCT in their names
as to said portion. In addition, the Mapalo spouses filed on 16 December 1957 their own complaint in the CFI Pangasinan (Civil Case
U-133) against the the Narcisos and Maximo Mapalo. They asked that the deeds of sale of 1936 and of 1951 over the land in question
declared null and void as to the western half of said land.

Judge Amado Santiago of the CFI Pangasinan located in the municipality of Urdaneta the two cases jointly. Said court rendered
judgment on 18 January 1961:
1.) dismissing the complaint in Civil Case 11991 (Complaint of Narcisos);
2.) declaring the deed as that of donation only over the eastern half portion of the land; and
3.) as null and void with respect to the western half portion thereof, declaring TCT 12829 issued to Maximo Mapalo as regards the
western portion of the land null and void and without legal force as well as TCT 11350 subsequently issued to the Narcisos, ordering
the Mapalo spouses and the Narcisos to have the land subdivided by a competent land surveyor, the expenses of which to be borne
out by the parties pro-rata, ordering the Register of Deed to issue in lieu of TCT 11350 two new titles upon completion of the
subdivision plan (one in favor of the Mapalo spouses for the western portion, and one for the Narcisos covering the eastern half), and
ordering Maximo Mapalo and the Narcisos to pay the costs.

The Narcisos appealed to the Court of Appeals. In its decision on 28 May 1963, the Court of Appeals reversed the Judgment of the CFI,
solely on the ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been obtained by fraud, the same was
voidable, not void ab initio, and, therefore, the action to annul the same, within 4 years from notice of the fraud, had long prescribed. It
reckoned said notice of the fraud from the date of registration of the sale on 15 March 1938. The CFI and the CA are therefore
unanimous that the spouses Mapalo and Quiba were definitely the victims of fraud. It was only on prescription that they lost in the Court
of Appeals. From said decision of the Court of Appeals, the Mapalo spouses appealed to the Court.

ISSUE: WON the said sale to Maximo is void or merely voidable.
WON the Narcisos were buyer in bad faith.

HELD:
The Supreme Court reversed and set aside the decision of the Court of Appeals, and rendered another affirming in toto the judgment of
the CFI, with attorneys fees on appeal in favor of the Mapalo Spouses in the amount of P1,000.00, plus the costs, both against Maximo
Mapalo and the Narcisos.

Contract; Requisites
Under the Civil Code, either old or the new, for a contract to exist at all, three essential requisites must concur: (1) consent; (2) object,
and (3) cause or consideration.

Eastern half donated; Finding of the lower court as to the donation not assailed and thus is final
As regards the eastern portion of the land, the Mapalo spouses are not claiming the same, it being their stand that they had donated
and freely given said half of their land to Maximo Mapalo. And since they did not appeal from the decision of the trial court finding that
there was a valid and effective donation of the eastern portion of their land in favor of Maximo Mapalo, the same pronouncement has
become final as to them, rendering it no longer proper herein to examine the existence, validity or efficacy of said donation as to said
eastern portion.

Contracts without a cause void


Under the Civil Code, be it the old or the new, is that contracts without a cause or consideration produce no effect whatsoever.

Old Civil Code; Contracts with false consideration voidable; Prescription of voidable contracts
Under the Old Civil Code, the statement of a false consideration renders the contract voidable, unless it is proven that it i s supported by
another real and licit consideration. And it is further provided by the Old Civil Code that the action for annulment of a contract on the
ground of falsity of consideration shall last 4years, the term to run from the date of the consummation of the contract.

Only a disturbed man would contract without cause; False cause vitiates consent and annuls contract (Sanchez Roman)
The inspection of cause in the contract is necessary, and that without it they are null; it can only be conceived that a dist urbed man
would, in his reason, contract without cause. For the same reason of the necessity of inspection of cause in the contract, it is precise
that such is real and not supposed, as it pretends or appears. The falsification of the cause vitiates the consent and annuls the contract,
that is, not only as a doctrine undoubtedly of scientific law, but also of old laws of Castile, that in multitude of laws that declare it.

No consideration does not mean false consideration for Article 1276 to be applied
Where there was in fact no consideration, the statement of one in the deed will not suffice to bring it under the rule of Article 1276 of the
Old Civil Code as stating a false consideration.

Oceio Perez v. Flores applies; Contract null and void if without cause or consideration
The ruling of the Court in Ocejo Perez & Co. vs. Flores (40 Phil. 921), is squarely applicable herein. In that case, it was ruled that a
contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in
that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor.

Void contract incurable and cannot be subject of prescription
The inexistence of a contract is permanent and incurable and cannot be the subject of prescription. The nonexistence is perpetual and
irreplaceable not being able to be object of confirmation nor prescription. As held in Eugenio vs. Perdido (97 Phil. 41, 42-43 [1932]), it
was stated that under the existing classification, such contract would be inexistent and the action or defense for declaration of such
inexistence does not prescribe. (Art. 1410, New Civil Code.) While it is true that this is a new provision of the New Civil Code, it is
nevertheless a principle recognized since Tipton vs. Velasco (6 Phil. 67) that mere a lapse of time cannot give efficacy to contracts that
are null and void.

Narcisos not purchasers in good faith
It has been positively shown by the undisputed testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso stayed f or some
days on the western side of the land until their house was removed in 1940 by the spouses Mapalo. Also, Pacifico Narciso admi tted in
his testimony that when they bought the property, Miguel Mapalo was still in the premises in question (western part) which he is
occupying and his house is still standing thereon. Moreover, Pacifico Narciso when presented as a rebuttal and sub-rebuttal witness
categorically declared that before buying the land in question he went to the house of spouses Mapalo and asked t hem if they will
permit Maximo Mapalo to sell the property. Further, as the parties in the cases are neighbors (except Maximo Mapalo), it is clear that
the Narcisos were aware of the extent of the interest of Maximo Mapalo over the land before and after the execution of the deed of sale.
Under the situation, thus, the Narcisos may be considered in value but certainly not as purchasers in good faith.

Bad faith justifies award of attorneys fees
In view of the Narcisos bad faith under the circumstances we deem it just and equitable to award, in the Mapalo spouses favor,
attorneys fees on appeal, in the amount of P1,000.00 as prayed for in the counterclaim.
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2.) Ong v. Ong [G.R. No. L-67888. October 8, 1985] First Division

FACTS:
On 25 February 1976, Imelda Ong for and in consideration of P1 and other valuable considerations, executed in favor of Sandra
Maruzzo, then a minor, a Quitclaim Deed whereby she transferred, released, assigned and forever quitclaimed to Sandra Maruzzo, her
heirs and assigns, all her rights, title, interest and participation in 1/2 undivided portion of a parcel of land (Lot 10-B of the subdivision
plan (LRC) Psd- 157841, a portion of lot 10 Block 18 of PSD-13288 LCR (GLRC) Record 2029, situated in Makati, containing 125
square meters. On 19 November 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim and, thereafter, on 20 January 1982
donated the whole property to her son, Rex Ong Jimenez.

On 20 June 1983, Sandra Maruzzo, through her guardian ad litem Alfredo Ong, filed with the RTC Makati an action against Imelda
Ong, for the recovery of ownership/possession and nullification of the Deed of Donation over the portion belonging to her and for
accounting. Imelda Ong claimed that the Quitclaim Deed is null and void inasmuch as it is equivalent to a Deed of Donation,
acceptance of which by the donee is necessary to give it validity. Further, it is averred that the donee, Sandra Maruzzo, being a minor,
had no legal personality and therefore incapable of accepting the donation. Upon admission of the documents involved, the parties filed
their responsive memoranda and submitted the case for decision. On 12 December 1983, the trial court rendered judgment in favor of
Maruzzo and held that the Quitclaim Deed is equivalent to a Deed of Sale and, hence, there was a valid conveyance in favor of the
latter.

Imelda Ong appealed to the Intermediate Appellate Court. On 20 June 1984, IAC promulgated its Decision affirming the appealed
judgment and held that the Quitclaim Deed is a conveyance of property with a valid cause or consideration; that the consideration is P1
which is clearly stated in the deed itself; that the apparent inadequacy is of no moment since it is the usual practice in deeds of


conveyance to place a nominal amount although there is a more valuable consideration given. Hence, the petition for review on
certiorari.

ISSUE: WON the quitclaim deed is considered sale or mere donation.

HELD:
On 15 March 1985, Sandra Maruzzo, through her guardian ad litem Alfredo Ong, filed an Omnibus Motion informing this Court that she
has reached the age of majority as evidenced by her Birth Certificate and she prays that she be substituted as private respondent in
place of her guardian ad litem. On 15 April 1985, the Court issued a resolution granting the same.

The Supreme Court affirmed the appealed decision of the IAC, with costs against Imelda Ong.

Consideration or cause is not P1 alone but also other valuable considerations
The subject deed reveals that the conveyance of the 1/2 undivided portion of the property was for and in consideration of P1 and the
other valuable considerations paid by Sandra Maruzzo, through her representative, Alfredo Ong, to petitioner Imelda Ong. Stated
differently, the cause or consideration is not P1 alone but also the other valuable considerations.

Cause not stated in contract is presumed existing unless proven to the contrary; Execution of deed a prima facie evidence of existence
of valuable consideration
Although the cause is not stated in the contract it is presumed that it is existing unless the debtor proves the contrary (Article 1354 of
the Civil Code). One of the disputable presumptions is that there is a sufficient cause of the contract (Section 5, (r), Rule 131, Rules of
Court). It is a legal presumption of sufficient cause or consideration supporting a contract even if such cause is not stated therein
(Article 1354, New Civil Code) This presumption cannot be overcome by a simple assertion of lack of consideration especially when the
contract itself states that consideration was given, and the same has been reduced into a public instrument with all due formalities and
solemnities. To overcome the presumption of consideration the alleged lack of consideration must be shown by preponderance of
evidence in a proper action. (Samanilla vs. Cajucom, et al., 107 Phil. 432). The execution of a deed purporting to convey ownership of a
realty is in itself prima facie evidence of the existence of a valuable consideration, the party alleging lack of considerati on has the
burden of proving such allegation. (Caballero, et al. vs. Caballero, et al., (CA), 45 O.G. 2536).

Acceptance by legal representatives of minor applies to onerous and conditional donations
Granting that the Quitclaim deed is a donation, Article 741 of the Civil Code provides that the requirement of the acceptance of the
donation in favor of minor by parents of legal representatives applies only to onerous and conditional donations where the donation may
have to assume certain charges or burdens (Article 726, Civil Code). The acceptance by a legal guardian of a simple or pure donation
does not seem to be necessary (Perez vs. Calingo, CA-40 O.G. 53). Thus, Supreme Court ruled in Kapunan vs. Casilan and CA (109
Phil. 889) that the donation to an incapacitated donee does not need the acceptance by the lawful representative if said donation does
not contain any condition. In simple and pure donation, the formal acceptance is not important for the donor requires no right to be
protected and the donee neither undertakes to do anything nor assumes any obligation. The Quitclaim in question does not impose any
condition.
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3.) Bagnas v. CA [G.R. No. 38498. August 10, 1989] First Division

FACTS:
Hilario Mateum of Kawit, Cavite, died on 11 March 1964, single, without ascendants or descendants, and survived only by collateral
relatives, of whom Isaac, Encarnacion, Silvestre, Maximina, and Sixto Bagnas, and Agatona Encarnacion, his first cousins, were the
nearest. Mateum left no will, no debts, and an estate consisting of 29 parcels of land in Kawit and Imus, Cavite, 10 of which are
involved in the case.

On 3 April 1964, Rosa L. Retonil, Teofilo Encarnacion and Jose B. Nambayan, themselves collateral relatives of Mateum though more
remote in degree, registered with the Registry of Deeds for the Province of Cavite 2 deeds of sale purportedly executed by Mateum in
their favor covering 10 parcels of land. Both deeds were in Tagalog, save for the English descriptions of the lands conveyed under one
of them; and each recited the reconsideration of the sale to be P1, services rendered and to be rendered for Mateums benefit . One
deed was dated 6 February 1963 and covered 5 parcels of land, and the other was dated 4 March 1963, covering 5 other parcels, both,
therefore, antedating Mateums death by more than a year.

It is asserted by the Bagnas, et.al., but denied by Retonil, et.al., that said sales notwithstanding, Mateum continued in the possession
of the lands purportedly conveyed until his death, that he remained the declared owner thereof and that the tax payments thereon
continued to be paid in his name. Whatever the truth, however, is not crucial; what is not disputed is that on the strength of the deeds of
sale, Retonil, et.al. were able to secure title in their favor over 3 of the 10 parcels of land conveyed thereby.

On 22 May 1964, Bagnas et.al. commenced suit against Retonil, et.al. in the CFI Cavite, seeking annulment of the deeds of sal e as
fictitious, fraudulent or falsified, or, alternatively, as donations void for want of acceptance embodied in a public instrument. Claiming
ownership pro indiviso of the lands subject of the deeds by virtue of being intestate heirs of Hilario Mateum, Bagnas, et. al. prayed for
recovery of ownership and possession of said lands, accounting of the fruits thereof and damages. Although the complaint originally
sought recovery of all the 29 parcels of land left by Mateum, at the pre-trial the parties agreed that the controversy be limited to the 10
parcels subject of the questioned sales, and the Trial Court ordered the exclusion of the 19 other parcels from the action. Of the 10
parcels which remained in litigation, 9 were assessed for purposes of taxation at values aggregating P10,500.00. The record does not


disclose the assessed value of the tenth parcel, which has an area of 1,443 sq.ms. Retonil, et.al. denied the allegations. After Bagnas,
et.al. had presented their evidence, Retonil, et.al. filed a motion for dismissal in effect, a demurrer to the evidence reasserting the
defense set up in their answer that Bagnas, et.al., as mere collateral relatives of Hilario Mateum had no right to impugn the latters
disposition of his properties by means of the questioned conveyances and submitting, additionally, that no evidence of fraud tainting
said transfers had been presented. The Trial Court granted the motion to dismiss, holding on the authority of Armentia vs. Patriarca,
that Bagnas, et.al., as mere collateral relatives, not forced heirs, of Hilario Mateum, could not legally question the disposition made by
said deceased during his life time, regardless of whether, as a matter of objective reality, said dispositions were valid or not; and that
Bagnas, et.al.s evidence of alleged fraud was insufficient, the fact that the deeds of sale each stated a consideration of only P1 not
being in itself evidence of fraud or simulation.

On appeal by Bagnas, et. al. to the Court of Appeals, that court affirmed, adverting with approval to the Trial Courts reliance on the
Armentia ruling which, it would appear, both courts saw as denying, without exception, to collaterals, of a decedent, not forced heirs,
the right to impugn the latters dispositions inter vivos of his property.

ISSUE: WON the sale is void for want of consideration.

HELD:
Upon the consideration alone that the apparent gross, not to say enormous, disproportion between the stipulated price (in each deed)
of P l.00 plus unspecified and unquantified services and the undisputably valuable real estate allegedly sold worth at least P10,500.00
going only by assessments for tax purposes which, it is well-known, are notoriously low indicators of actual value plainly and
unquestionably demonstrates that they state a false and fictitious consideration, and no other true and lawful cause having been shown,
the Court finds both said deeds, insofar as they purport to be sales, not merely voidable, but void ab initio. Neither can the validity of
said conveyances be defended on the theory that their true causa is the liberality of the transferor and they may be considered in reality
donations because the law also prescribes that donations of immovable property, to be valid, must be made and accepted in a public
instrument, and it is not denied by the respondents that there has been no such acceptance which they claim is not required. The
transfers in question being void, it follows as a necessary consequence and conformably to the concurring opinion in Armentia, with
which the Court fully agrees, that the properties purportedly conveyed remained part of the estate of Hilario Mateum, said transfers
notwithstanding, recoverable by his intestate heirs, the petitioners herein, whose status as such is not challenged.

The Supreme Court reversed the appealed Decision of the Court of Appeals, and declared the questioned transfers void and of no
force or effect. The Court ordered the annulment of such certificates of title Retonil, et.al. may have obtained over the properties subject
of said transfers, and ordered them to return to Bagnas, et.al. possession of all the properties involved in the action, to account to the
latter for the fruits thereof during the period of their possession, and to pay the costs. No damages, attorneys fees or lit igation
expenses were awarded, there being no evidence thereof before the Court.
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4.) Mate v. CA [G.R. Nos. 120724-25. May 21, 1998] Second Division

FACTS:
On 6 October 1986 Josefina R. Rey and Inocencio Tan went to the residence of Fernando Mate at Tacloban City. Josie who is a cousin
of Mates wife solicited his help to stave off her and her familys prosecution by Tan for violation of BP 22 on account of the rubber
checks that she, her mother, sister and brother issued to Tan amounting to P4,432,067.00. She requested Mate to cede to Tan his 3
lots in Tacloban City in order to placate him. On hearing Josies proposal, he immediately rejected it as he owed Tan nothing and he
was under no obligation to convey to him his properties. Furthermore, his lots were not for sale. Josie explained to him that he was in
no danger of losing his properties as he will merely execute a simulated document transferring them to Tan but they will be redeemed
by her with her own funds. After a long discussion, he agreed to execute a fictitious deed of sale with right to repurchase covering his 3
lots, subject to the conditions that the amount to be stated in the document is P1,400,000.00 with interest thereon at 5% a month; the
properties will be repurchased within 6 months or on or before 4 April 1987; although it would appear in the document that Mate is the
vendor, it is Josie who will provide the money for the redemption of the properties with her own funds; and the titles to the properties will
be delivered to Tan but the sale will not be registered in the Register of Deeds and annotated on the tit les. Josie, to assure Mate that
she will redeem the properties, issued him 2 BPI checks both postdated 15 December 1986. One check was for P1,400,000.00
supposedly for the selling price and the other was for P420,000.00 corresponding to the interests for 6 months. Immediately thereafter
Mate prepared the Deed of Sale with Right to Repurchase and after it has been signed and notarized, it was given to Tan toget her with
the titles of the properties and the latter did not register the transaction in the Register of Deeds as agreed upon. On 14 January 1987,
Mate deposited the check for P1,400,000.00 in his account at the UCPB and the other check for P420,000.00 in his account at
MetroBank preparatory to the redemption of his properties. Both of them were dishonored by the drawee bank for having been drawn
against a closed account. Realizing that he was swindled, he sent Josie a telegram about her checks and when she failed to respond,
he went to Manila to look for her but she could not be found.

Mate returned to Tacloban City and filed Criminal Cases 8310 and 8312 against her for violation of BP 22 but the cases were l ater
archived as the accused (Josie) could not be found as she went into hiding. To protect his interest, he filed Civil Case 7396 of the RTC
Leyte (Branch VII, Mate vs. Rey and Tan) for Annulment of Contract with Damages. Josie was declared in default and the case
proceeded against Tan. But during the trial the RTC court asked Tan to file an action for consolidation of ownership of the properties
subject of the sale and pursuant thereto he filed Civil Case 7587 that was consolidated with the case he filed earlier which were later
decided jointly by the trial court in favor of Tan and was subsequently appealed to the Court of Appeals. The appellate court, on 29
August 1994 (CA-GR CV 28225-26), affirmed the decision with modification that Mate is ordered to pay Tan the sum of P140,000 for


and as attorneys fees; with costs against Mate. Thereupon, Mate filed a motion to reconsider the decision but it was denied. Hence, the
petition for review.

ISSUE: WON the sale is void for want of consideration.

HELD:
The Supreme Court affirmed the decision of the Court of Appeals dated 29 August 1994, and denied due course to the petition f or
review for lack of merit.

It is plain that consideration existed at the time of the execution of the deed of sale with right of repurchase. It is not only appellant's
kindness to Josefina, being his cousin, but also his receipt of P420,000.00 from her which impelled him to execute such contract.
Furthermore, while petitioner did not receive the P1.4 Million purchase prices from respondent Tan, he had in his possession a
postdated check of Josie Rey in an equivalent amount precisely to repurchase the two lots on or before the sixth month.

Unfortunately, the two checks issued by Josie Rey were worthless. Both were dishonored upon presentment by petitioner with the
drawee banks. However, there is absolutely no basis for petitioner to file a complaint against private respondent Tan and Josie Rey to
annul the pacto de retro sale on the ground of lack of consideration, invoking his failure to encash the two checks. Petitioner's cause of
action was to file criminal actions against Josie Rey under B.P. 22, which he did. The filing of the criminal cases was a tacit admission
by petitioner that there was a consideration of the pacto de retro sale.
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5.) Spouses Ladanga v. CA [G.R. No. L-55999. August 24, 1984] Second Division

FACTS:
Clemencia A. Aseneta, a spinster who retired as division superintendent of public schools at 65 in 1961, had a nephew named
Bernardo S. Aseneta, the child of her sister Gloria, and a niece named Salvacion, the daughter of her sister Flora. She legally adopted
Bernardo in 1961. On a single date, 6 April 1974, she then 78 years old) signed 9 deeds of sale in favor of Salvacion, for various real
properties. One deed of sale concerned the said Paco property (166 sq. m. lot located at 1238 Sison Street Paco Manila and
administered by the Ladanga spouses, Agustin and Salvacion) which purportedly was sold to Salvacion for P26,000. The total price
involved in the 9 deeds of sale and in the 10th sale executed on 8 November 1974 was P92,200. The deed of sale for the Paco
property was signed in the office of the Quezon City registry of deeds.

In May 1975, Bernardo, as guardian of Clemencia, filed an action for reconveyance of the Paco property, accounting of the rentals and
damages, with the CFI Manila. Clemencia was not mentally incompetent but she was placed under guardianship because she was an
easy prey for exploitation and deceit. Clemencia testified and denied having received even one centavo of the price of P26,000),
much less the P92,000. This testimony was corroborated by Soledad L. Maninang, 69, a dentist with whom Clemencia had lived for
more than 30 years in Kamuning, Quezon City. The notary public stated that he did not see Salvacion hand any money to Clemencia
for the purported sale when the deed was signed in the registry of deeds. The trial court declared void the sale of the Paco property.

Clemencia died on 21 May 1977 at the age of 80. She allegedly bequeathed her properties in a holographic will dated 23 November
1973 to Doctor Maninang. In that will she disinherited Bernardo. The will was presented for probate. The testate case was consolidated
with the intestate proceeding filed by Bernardo in the sala of Judge Ricardo L. Pronove at Pasig, Rizal. He dismissed the testate case.
He appointed Bernardo as administrator in the intestate case.

On appeal, the Court of Appeals affirmed the decision of the CFI, ordered the register of deeds to issue a new title to Clemencia, and
ordered the spouses to pay Clemencias estate P21,000 as moral and exemplary damages and attorneys fees and to render to
Bernardo an accounting of the rentals of the property from 6 April 1974. The spouses appealed to the Supreme Court.

ISSUE: WON the sale is void for lack of consideration.

HELD:
The Supreme Court affirmed the judgment of the Appellate Court with the modification that the adjudication for moral and exemplary
damages is discarded; Without costs.

The Ladanga spouses contend that the Appellate Court disregarded the rule on burden of proof. This contention is devoid of merit
because Clemencia herself testified that the price of P26,000 was not paid to her. The burden of the evidence shifted to the Ladanga
spouses. They were not able to prove the payment of that amount. The sale was fictitious. A contract of sale is void and produces no
effect whatsoever where the price, which appears therein as paid, has in fact never been paid by the purchaser to the vendor. It was
not shown that Clemencia intended to donate the Paco property to the Ladangas. Her testimony and the notary's testimony destroyed
any presumption that the sale was fair and regular and for a true consideration.

A contract of sale is void and produces no effect whatsoever where the price, which appears therein as paid, has in fact never been
paid by the purchaser to the vendor. Such a sale is inexistent and cannot be considered consummated. It was not shown that
Clemencia intended to donate the Paco property to the Ladangas. Her testimony and the notary's testimony destroyed any presumption
that the sale was fair and regular and for a true consideration.
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6.) Balatbat v. CA [G.R. No. 109410. August 28, 1996] Second Division

FACTS:
On 15 June 1977, Aurelio A. Roque filed a complaint for partition against his children Corazon, Feliciano, Severa and Osmundo Roque,
and Alberto de los Santos before the CFI Manila (Branch IX, Civil Case 109032). The Roque children were declared in default and
Aurelio presented evidence ex-parte. On 29 March 1979, the trial court rendered a decision in favor of Aurelio; holding that Aurelio and
his wife Maria Mesina acquired the lot (TCT 51330) during their conjugal union, as well as the house that was constructed thereon; that
when Maria Mesina died on 28 August 1966, leaving no debt, Aurelio (as surviving spouse) was entitled to 12 share pro-indiviso of the
conjugal property (i.e. house and lot) and that Aurelio and his 4 children were entitled to 1/5 share pro-indiviso each of the 12 share
pro-indiviso forming the estate of Maria Mesina; ordering the partition of the properties; and dismissing Aurelios claim for moral,
exemplary and actual damages and attorneys fees; without pronouncement as to costs. On 2 June 1979, the decision became final
and executory; with the corresponding entry of judgment made 29 March 1979. On 5 October 1979, the Register of Deeds of Manila
issued TCT 135671 (with Aurelio Roque having 6/10 share; and the Roque children with 1/10 share each).

On 1 April 1980, Aurelio sold his 6/10 share in TCT 135671 to spouses Aurora Tuazon-Repuyan and Jose Repuyan as evidenced by a
Deed of Absolute Sale. On 21 July 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse claim on the TCT
135671, claiming that she bought 6/10 portion of the property from Aurelio Roque for the amount of P50,000.00 with a downpayment of
P5,000.00 and the balance of P45,000.00 to be paid after the partition and subdivision of the property. On 20 August 1980, Aurelio
Roque filed a complaint for Rescission of Contract against spouses Repuyan before the then CFI Manila (Branch IV, Civil Case
134131). The complaint is grounded on spouses Repuyans failure to pay the balance of P45,000.00 of the purchase price. On 5
September 1980, spouses Repuyan filed their answer with counterclaim.

In the meantime, the trial court issued an order in Civil Case 109032 (Partition case) dated 2 February 1982, ordering the Deputy Clerk
of the court to sign the deed of absolute sale for and in behalf of Roque children pursuant to Section 10, Rule 39 of the Rules of Court,
in order to effect the partition of the property involved in the case (P100,000 purchase price for the 84 sq. ms. In Callejon Sulu, Sta.
Cruz, Manila is reasonable and fair; and that opportunities have been given to the children to sign the deed voluntarily). A deed of
absolute sale was executed on 4 February 1982 between Aurelio, Corazon, Feliciano, Severa and Osmundo Roque and Clara Balatbat,
married to Alejandro Balatbat. On 14 April 1982, Clara Balatbat filed a motion for the issuance of a writ of possession which was
granted by the trial court on 14 September 1982 subject, however, to valid rights and interest of third persons over the same portion
thereof, other than vendor or any other person or persons privy to or claiming any rights or interest under it. The corresponding writ of
possession was issued on 20 September 1982.

On 20 May 1982, Clara Balatbat filed a motion to intervene in Civil Case 134131 which was granted as per courts resolution of 21
October 1982. However, Clara Balatbat failed to file her complaint in intervention. On 15 April 1986, the trial court rendered a decision
dismissing the complaint, and declaring the Deed of Absolute Sale dated 1 April 1980 as valid and enforceabl e and Aurelio is, as he is
hereby ordered, to partition and subdivide the land covered by TCT 135671, and to aggregate therefrom a portion equivalent to 6/10
thereof, and cause the same to be titled in the name of spouses Repuyan, and after which, the latter to pay Aurelio the sum of
P45,000.00. Considering further that the spouses suffered damages since they were forced to litigate unnecessarily, by way of their
counterclaim, Aurelio is hereby ordered to pay the spouses the sum of P15,000.00 as moral damages, attorneys fees in the amount of
P5,000.00; with costs against Aurelio.

On 3 March 1987, Balatbat filed a notice of lis pendens in Civil Case 109032 before the Register of Deeds of Manila.
On 9 December 1988, Balatbat and her husband filed a complaint for delivery of the owners duplicate copy of TCT 135671 before the
RTC Manila (Branch 24, Civil Case 88-47176) against Jose and Aurora Repuyan. On 27 January 1989, spouses Repuyan filed their
answer with affirmative defenses and compulsory counterclaim. The Repuyans and the Balatbats submitted their memoranda on 13
November 1989 and 23 November 1989, respectively. On 2 August 1990, the RTC Manila rendered a decision dismissing the
complaint, finding that the Balatbats were not able to establish their cause of action against the Repuyans and have no right to the
reliefs demanded in the complaint, and ordering Balatbat to pay the Repuyans the amount of P10,000 as attorneys fees, P5,000 as
costs of litigation, and to pay the costs of the suit.

Dissatisfied, Balatbat filed an appeal before the Court of Appeals (CA-GR CV 29994) which rendered decision on 12 August 1992,
affirming the judgment appealed from with modification deleting the awards of P10,000 for attomeys fees and P5,000 as costs of
litigation. On 22 March 1993, the Court of Appeals denied Balatbats motion for reconsideration. Hence, the petition for review pursuant
to Rule 45 of the Revised Rules of Court.

ISSUE: 1) that the alleged sale in favor of the private respondents Repuyan was merely executory;
(2) that there is no double sale;
(3) that petitioner is a buyer in good faith and for value; and

HELD:
1.) April 1, 1980 sale consummated, valid and enforceable
The sale dated 1 April 1980 in favor the Repuyan spouses is consummated, hence, valid and enforceable; not merely executory for the
reason that there was no delivery of the subject property and that consideration/price was not fully paid. In a decision dated 15 April
1986 of the RTC Manila (Branch IV, Civil Case 134131), the Court dismissed Aurelio complaint for rescission of the deed of sale and
declared that the sale dated 1 April 1980, as valid and enforceable. No appeal having been made, the decision became final and
executory. It must be noted that Balatbat filed a motion for intervention in that case but did not file her complaint in intervention.



1 April 1980 Deed of Sale devoid of stipulation withholding ownership of thing until full payment; Ownership pass upon delivery of thing
sold even if purchase price not fully paid
The terms and conditions of the Deed of Sale dated 1 April 1980, the P45,000.00 balance is payable only after the property covered
by TCT 135671 has been partitioned and subdivided, and title issued in the name of the buyer hence, the vendor cannot demand
payment of the balance unless and until the property has been subdivided and titled in the name of the Repuyan spouses. Devoi d of
any stipulation that ownership in the thing shall not pass to the purchaser until he has fully paid the price, ownership in the thing shall
pass from the vendor to the vendee upon actual or constructive delivery of the thing sold even if the purchase price has not yet been
fully paid.

Non-payment in a contract of sale merely creates right to demand fulfillment of obligation or rescission of contract; Article 1191
The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless the bilateral contract
of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code. Non-payment only creates a right to demand the
fulfillment of the obligation or to rescind the contract.
With respect to the non-delivery of the possession of the subject property to the private respondent, suffice it to say that ownership of
the thing sold is acquired only from the time of delivery thereof, either actual or constructive. 28

Ownership of a thing sold acquired from time of actual or constructive delivery; Possession of public instrument of the land accords
buyer rights of ownership

Article 1498 of the Civil Code provides that when the sale is made through a public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot be
inferred. The execution of the public instrument, without actual delivery of the thing, transfers the ownership from the vendor to the
vendee, who may thereafter exercise the rights of an owner over the same. It is not necessary that vendee be physically present at
every square inch of the land bought by him, possession of the public instrument of the land is sufficient to accord him the rights of
ownership. Thus, delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real) or by
embodying the sale in a public instrument (constructive). In the present case, vendor Roque delivered the owners certificate of title to
the Repuyan spouses.

Necessity of public document merely for convenience, and not for validity or enforceability of a contract of sale
The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or enforceabili ty. It is not a
requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument.

Contract of sale consensual, perfected by mere consent of the parties; Non-payment does not render sale null and void for lack of
consideration
A contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of the thing bought or payment of the
price is not necessary for the perfection of the contract; and failure of the vendee to pay the price after the execution of the contract
does not make the sale null and void for lack of consideration but results at most in default on the part of the vendee, for which the
vendor may exercise his legal remedies.

2.) Present case is a double sale
The present case is a case of double sale contemplated under Article 1544 of the New Civil Code. In the present case, Aurelio Roque
sold 6/10 portion of his share in TCT 135671 to the Repuyan spouses on 1 April 1980. Subsequently, the same lot was sold agai n by
vendor Aurelio Roque (6/10) and his children (4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of
Court, on 4 February 1982.

Article 1544; Double sale
Article 1544 of the New Civil Code provides that if the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be
movable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession and i n the
absence thereof, to the person who present the oldest title, provided there is good faith. Article 1544 of the Civil Code provides that in
case of double sale of an immovable property, ownership shall be transferred (1) to the person acquiring it who in good faith first
recorded it in 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, provided there is good faith.

Ownership vests in person who acquired the immovable property in good faith and who first recorded i t in the Registry of Property;
Annotation of adverse claim sufficient
In an instance of a double sale of an immovable property, the ownership shall vests in the person acquiring it who in good faith first
recorded it in the Registry of Property. In the present case, the Repuyan spouses caused the annotation of an adverse claim on the title
of the subject property denominated as Entry 5627/T-135671 on 21 July 1980. The annotation of the adverse claim on TCT 135671 in
the Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world. Balatbat, on the other hand,
filed a notice of lis pendens only on 2 February 1982. Accordingly, the Repuyan spouses who first caused the annotation of the adverse
claim in good faith shall have a better right over Balatbat.

3.) Balatbat not a buyer in good faith


Balatbat cannot be considered as a buyer in good faith. In the complaint for rescission filed by Aurelio Roque on 20 August 1980,
Balatbat filed a motion for intervention on 20 May 1982 but did not file her complaint in intervention, hence, the decision was rendered
adversely against her. If Balatbat did investigate before buying the land on 4 February 1982, she should have known that there was a
pending case and an annotation of adverse claim was made in the title of the property before the Register of Deeds and she could have
discovered that the subject property was already sold to the Repuyan spouses.

The Supreme Court dismissed the petition for review for lack of merit; without pronouncement as to costs.
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7.) Heirs of Escanlar, et.al. v. CA [G.R. No. 119777. October 23, 1997]
Holgado, et. al. v. CA [G.R. No. 120690. October 23, 1997.] Third division

FACTS:
Spouses Guillermo Nombre and Victoriana Cari-an died without issue In1924 and 1938, respectively. Nombres heirs include his
nephews and grandnephews. Victoriana Cari-an was succeeded by her late brothers son, Gregorio Cari-an. The latter was declared as
Victorianas heir in the estate proceedings for Nombre and his wife (Special Proceeding 7-7279). After Gregorio died in 1971, his wife,
Generosa Martinez, and children, Rodolfo, Carmen, Leonardo and Fredisminda Cari-an, were also adjudged as heirs by representation
to Victorianas estate. Leonardo Cari-an passed away, leaving his widow, Nelly Chua vda. de Cari-an and minor son Leonell, as his
heirs.

After Gregorios death in 1971, his wife, Generosa Martinez and children (Rodolfo, Carmen, Leonardo and Fredisminda) were adj udged
as heirs by representation to Victorianas estate. Leonardo passed away, leaving his widow, Nelly Chua vda. de Cari-an and minor
Leonell as his heirs
2 parcels of land, denominated by Lot 1616 and 1617, formed part of the estate of Guillermo Nombre and Victoriana Cari -an. In 1978,
Gregorios heirs executed a deed of sale of rights, interests and participation in favor of Pedro Escanlar and Francisco Holgado over the
undivided share of Victoriana for P275,000 to be paid to the heirs, except the share of the minor Leonell Cari -an which shall be
deposited to the Municipal Treasurer. Said contract of sale will be effective only upon approval of CFI

Escanlar and Holgado, the vendees, were concurrently the lessees of the subject property. In a deed of agreement executed by both
parties confirming and affirming the contract of sale, they stipulated the following:
a. That the balance of the purchase price (P225,000) shall be paid on or before May 1979
b. Pending complete payment thereof, the vendees shall not assign, sell, lease or mortgage the rights, interests and participation
thereof
c. In the event of nonpayment of the balance of said purchase price, the sum of P50,000 (down payment) shall be deemed as
damages.

Escanlar and Holgado were unable to pay the individual shares of the Cari-an heirs, amounting to P55,000 each, on the due date.
However, said heirs received at least 12 installment payments from Escanlar and Holgado after May 1979. Rodolfo was fully paid by
June 1979, Generosa Martinez, Carmen and Fredisminda were likewise fully compensated for their individual shares. The minors
share was deposited with the RTC in September 1982. Being former lessees, Escanlar and Holgado continued in possession of Lots
1616 and Lots 1617. Interestingly, they continued to pay rent based on their lease contract. Subsequently, Escanlar and Holgado
sought to intervene in the probate proceedings of Guillermo and Victoriana as buyers of Victorianas share. In 1982, the probate court
approved the motion filed by the heirs of Guillermo and Victoriana to sell their respective shares in the estate.

Thereafter, the Cari-ans, sold their shares in 8 parcels of land including lots 1616 and 1617 to spouses Chua for P1.85 million. The
Cari-ans instituted a case for cancellation of sale against Escanlar and Holgado alleging the latters failure to pay the balance of the
purchase price on the stipulated date and that they only received a total of P132,551 in cash and goods. Escanlar and Holgado averred
that the Cari-ans, having been paid, had no right to resell the subject lots and that the spouses Chua were purchasers in bad faith. The
trial court held in favor of the heirs of Cari-an citing that the sale between the Cari-ans and Escanlar is void as it was not approved by
the probate court which was required in the deed of sale.

Escanlar and Holgado raised the case to the Court of Appeals (CA-GR CV 39975). The appellate court affirmed the decision of the trial
court on 17 February 1995 and held that the questioned deed of sale of rights, interests and participation is a contract to sell because it
shall become effective only upon approval by the probate court and upon full payment of the purchase price. Their motion for
reconsideration was denied by the appellate court on 3 April 1995.

CA affirmed the same and cited that the questioned deed of sale of rights is a contract to sell because it shall become effective only
upon approval by the probate court and upon full payment of the purchase price. Hence, the consolidated petitions for review.

ISSUE: WON the non-happening of the event affects the validity of the contracts.

HELD:

No, the non-happening of a condition only affects the effectivity and not the validity of the contract.



Under Art 1318 Civil Code, the essential requisites of a contract are: consent of the contracting parties; object certain which is the
subject matter of the contract and cause of the obligation which is established. Absent one of the above, no contract can arise.
Conversely, where all are present, the result is a valid contract. However, some parties introduce various kinds of restricti ons or
modalities, the lack of which will not, however, affect the validity of the contract.

In the instant case, the Deed of Sale, complying as it does with the essential requisites, is a valid one. However, it did not bear the
stamp of approval of the court. The contracts validity was not affected for in the words of the stipulation, this Contract of Sale of
rights, interests and participations shall become effective only upon the approval by the Honorable Court In other words, only the
effectivity and not the validity of the contract is affected.

CONTRACT TO SELL VS. CONTRACT OF SALE
In contracts to sell, ownership is retained by the seller and is not to pass until the full payment of the price. Such payment is a positive
suspensive condition, the failure of which is not a breach of contract but simply an event that prevented the obligation of the vendor to
convey title from acquiring binding force. To illustrate, although a deed of conditional sale is denominated as such, absent a proviso that
title to the property sold is reserved in the vendor until full payment of the purchase price nor a stipulation giving the vendor the right to
unilaterally rescind the contract the moment the vendee fails to pay within a fixed period, by its nature, it shall be declared a deed of
absolute sale.

In a contract of sale, the non-payment of the price is a resolutory condition which extinguishes the transaction that, for a time, existed
and discharges the obligations created thereunder. The remedy of an unpaid seller in a contract of sale is to seek either specific
performance or rescission.

In the case at bar, the sale of rights, interests and participation as to portion pro indiviso of the 2 subject lots is a contract of sale for
the reasons that (1) the sellers did not reserve unto themselves the ownership of the property until full payment of the unpaid balance
of P225,000.00; (2) there is no stipulation giving the sellers the right to unilaterally rescind the contract the moment the buyer fails to
pay within the fixed period.

The Supreme Court granted the petitions; reversed and set aside the decision of the Court of Appeals under review; remanded the
case to the RTC Negros Occidental (Branch 61) for Escanlar and Holgado and the Cari- ans or their successors-in-interest to determine
exactly which 12 portion of Lots 1616 and 1617 will be owned by each party, at the option of Escanlar and Holgado; and directed the
trial court to order the issuance of the corresponding certificates of title in the name of the respective parties and to resolve the matter of
rental payments of the land not delivered to the Chua spouses subject to the rates specified by the Court with legal interest from date of
demand.
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8.) Republic v. Philippine Development Corp. [G.R. No. L-10141. January 31, 1958] En Banc

FACTS:
On 6 May 1955, the Republic of the Philippines in representation of the Bureau of Prisons instituted against Macario Apostol and the
Empire Insurance Co. a complaint with the CFI Manila (Civil Case 26166). The complaint alleges that Apostol submitted the highest bid
in the amount of P450.00 per ton for the purchase of 100 tons of Palawan Almaciga from the Bureau of Prisons; that a contract therefor
was drawn and by virtue of which, Apostol obtained goods from the Bureau of Prisons valued P15,878.59; that of said account, Apostol
paid only P691.10 leaving a balance obligation of P15, 187.49. The complaint further avers that Apostol submitted the best bid with the
Bureau of Prisons for the purchase of 3 million board feet of logs at P88.00 per 1,000 board feet; that a contract was execut ed between
the Director of Prisons and Apostol pursuant to which contract Apostol obtained deliveries of logs valued at P65,830.00; and that
Apostol failed to pay a balance account of P18,827.57. All told, the total demand set forth in complaint against Apostol is for P34,015.06
with legal interests thereon from 8 January 1952. The Empire Insurance Company was included in the complaint having executed a
performance bond of P10,000.00 in favor of Apostol.

In his answer, Apostol interposed payment as a defense and sought the dismissal of the complaint. On 19 July 1955, the Philippine
Resources Development Corp. moved to intervene, appending to its motion, the complaint in intervention of even date. The complaint
recites that for sometime prior to Apostols transactions the corporate had some goods deposited in a warehouse at 1201 Herran,
Manila; that Apostol, then the president of the corporation but without the knowledge or consent of the stockholders thereof, disposed of
said goods by delivering the same to the Bureau of Prisons in an attempt to settle his personal debts with the latter entity; that upon
discovery of Apostols act, the corporation took steps to recover said goods by demanding from the Bureau of Prisons the return
thereof; and that upon the refusal of the Bureau to return said goods, the corporation sought leave to intervene in Civil Case 26166. The
Judge (Magno Gatmaitan) denied the motion for intervention and thereby issued an order to this effect on 23 July 1955. A moti on for
the reconsideration of said order was filed by the corporation and the same was likewise denied on 18 August 1955.

On 3 September 1955, the corporation filed a petition for a writ of certiorari with the Court of Appeals by. On 12 December 1955 the
Court of Appeals set aside the order denying the motion to intervene and ordered the trial court to admit the corporations complaint-in-
intervention, with costs against Macario Apostol. On 9 January 1956 the Government filed a petition under Rule 46 to review t he
judgment rendered by the appellate court (CA-GR 15767-R) with the Supreme Court raising the issue.

ISSUE: WON price is limited only to be paid in money

HELD:


Article 1458 admits purchaser may pay a price certain in money or its equivalent
The Government argues that Price is always paid in terms of money and the supposed payment being in kind, it is no payment at all,
citing article 1458 of the new Civil Code. However, the same article provides that the purchaser may pay a price certain in money or its
equivalent, which means that payment of the price need not be in money. Whether the G.I. sheets, black sheets, M.S. plates, round
bars and G.I. pipes claimed by the corporation to belong to it and delivered to the Bureau of Prisons by Apostol in payment of his
account is sufficient payment therefor, is for the Court to pass upon and decide after hearing all the parties in the case. Should the trial
court hold that it is as to credit Apostol with the value or price of the materials delivered by him, certainly the corporati on would be
affected adversely if its claim of ownership of such sheets, plates, bars and pipes is true.

The Government contends that the intervenor has no legal interest in the matter in litigation, because the action brought in the CFI
Manila against Macario Apostol and the Empire Insurance Company (Civil Case 26166) is just for the collection from the defendant
Apostol of a sum of money, the unpaid balance of the purchase price of logs and almaciga bought by him from the Bureau of Pri sons,
whereas the intervenor seeks to recover ownership and possession of G.I. sheets, black sheets, M.S. plates, round bars and G.I. pipes
that it claims it owns an intervention which would change a personal action into one ad rem and would unduly delay the disposition of
the case.

The Supreme Court affirmed the judgment under review, without pronouncement as to costs.
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9.) Torres v. CA [G.R. No. 134559. December 9, 1999] Third Division

FACTS:
Sisters Antonia Torres and Emeteria Baring entered into a joint venture agreement with Manuel Torres for the development of a
parcel of land into a subdivision. Pursuant to the contract, they executed a Deed of Sale covering the said parcel of land in favor of
Manuel, who then had it registered in his name. By mortgaging the property, Manuel obtained from Equitable Bank a loan of P40,000
which, under the Joint Venture Agreement, was to be used for the development of the subdivision. All 3 of them also agreed to share
the proceeds from the sale of the subdivided lots. The project did not push through, and the land was subsequently foreclosed by the
bank. Antonia and Emeteria alleged that the project failed because of Manuels lack of funds or means and skills. They add that
Manuel used the loan not for the development of the subdivision, but in furtherance of his own company, Universal Umbrella Company.
On the other hand, Manuel alleged that he used the loan to implement the Agreement. With the said amount, he was able to effect the
survey and the subdivision of the lots. He secured the Lapu Lapu City Councils approval of the subdivision project which he advertised
in a local newspaper. He also caused the construction of roads, curbs and gutters. Likewise, he entered into a contract with an
engineering firm for the building of 60 low-cost housing units and actually even set up a model house on one of the subdivision lots. He
did all of these for a total expense of P85,000. He further claimed that the subdivision project failed because Antonia and Emeteria and
their relatives had separately caused the annotations of adverse claims on the title to the land, which eventually scared away
prospective buyers. Despite his requests, Antonia and Emeteria refused to cause the clearing of the claims, thereby forcing him to give
up on the project.

Antonia and Emeteria filed a criminal case for estafa against Manuel and his wife, who were however acquitted. Thereafter, they filed
the present civil case which, upon Manuels motion, was later dismissed by the trial court in an Order dated 6 September 1982. On
appeal, however, the appellate court remanded the case for further proceedings. Thereafter, the RTC Cebu City (Civil Case R-21208)
issued its assailed Decision, which was affirmed by the CA on 5 March 1998 (CA-GR CV 42378). Reconsideration was denied by the
Court of Appeals through its Resolution of 5 March 1998. Hence, the petition for review on certiorari.

ISSUE:

HELD:

The Joint Venture Agreement clearly states that the consideration for the sale was the expectation of profits from the subdivision
project. Its first stipulation states that Antonia and Emeteria did not actually receive payment for the parcel of land sold to Manuel. Thus,
it cannot be contended that the Joint Venture Agreement is void under Article 1422 of the Civil Code, because it is the direct result of an
earlier illegal contract, which was for the sale of the land without valid consideration.

The Supreme Court denied the petition and affirmed the challenged decision; with costs against Antonia and Emeteria.
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10.) Toyota Shaw v. CA [G.R. No. 116650. May 23, 1995] First Division

FACTS:
Sometime in June 1989, Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was then a sellers market and Sosa had difficul ty
finding a dealer with an available unit for sale. But upon contracting Toyota Shaw, Inc., he was told that there was an avail able unit. So
on 14 June 1989, Sosa and his son, Gilbert, went to the Toyota Shaw Boulevard, Pasig, Metro Manila. They met Popong Bernardo, a
sales representative of Toyota. Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989 because he, his
family, and a balikbayan guest would use it on 18 June 1989 to go Marinduque, his home province, where he would celebrate his
birthday on 19 June. He added that if he does not arrive in his hometown with the new car, he would become a laughing stock.
Bernardo assured Sosa that a unit would be ready for pick up at 10:00 a.m. on 17 June 1989. Bernardo then signed a document
entitled Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc, stipulating that all necessary documents will be


submitted to Toyota Shaw (Popong Bernardo) a week after, upon arrival of Mr. Sosa from the Province (Marinduque) where the unit will
be used on the 19 June; that the downpayment of P100,000.00 will be paid by Mr. Sosa on 15 June 1989; and that the Toyota Shaw,
Inc. will be released a yellow Lite Ace unit. It was also agreed upon by the parties that the balance of the purchase price would be paid
by credit financing through B.A. Finance, and for this Gilbert, on behalf of his father, signed the documents of Toyota and B.A. Finance
pertaining to the application for financing. The next day, Sosa and Gilbert went to Toyota to deliver the downpayment of P100,000.00.
They met Bernardo who then accomplished a printed Vehicle Sales Proposal (VSP) 928, on which Gilbert signed under the subheading
conforme. This document shows that the customers name is Mr. Luna Sosa with home address at 2316 Guijo Street, United
Paraaque II; that the model series of the vehicle is a Lite Ace 1500 described as 4 Dr minibus; that payment is by installment, to
be financed by B.A., with the initial cash outlay of P100,000.00 (downpayment: P53,148.00; insurance: P13,970.00; BLT registration
fee: P1,067.00; CHMO fee: P2,715.00; Service fee: P500.00; and accessories: P29,000.00) and the balance to be financed is
P274,137.00. The spaces provided for delivery terms were not filled-up. It also contains conditions of sales providing that the sale is
subject to the availability of the unit, and that the stated price is subject to change without prior notice, and that the price prevailing and
in effect at time of selling will apply. Rodrigo Quirante, the Sales Supervisor of Bernardo, checked and approved the VSP.

On 17 June (9:30 a.m.), Bernardo called Gilbert to inform him that the vehicle would not be ready for pick up at 10:00 a.m. as previously
agreed upon but at 2:00 p.m. that same day. At 2:00 p.m., Sosa and Gilbert met Bernardo at the latters office. According to Sosa,
Bernardo informed them that the Lite Ace was being readied for delivery. After waiting for about an hour, Bernardo told them that the
car could not be delivered because it was acquired by a more influential person. Toyota contends, however, that the Lite Ace was not
delivered to Sosa because of the disapproval of B.A. Finance of the credit financing application of Sosa. It further alleged that a
particular unit had already been reversed 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. After it became clear that the Lite Ace would not be delivered to him, Sosa asked that his downpayment be refunded. Toyota
did so on the very same day by issuing 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. Thereafter,
Sosa sent two letters to Toyota: one on 27 June 1989 demanding the refund, within 5 days from receipt, of the downpayment of
P100,000.00 plus interest from the time he paid it and the payment of damages with a warning that in case of Toyotas failure to do so
he would be constrained to take legal action; and the other on 4 November 1989 (signed by M.O. Caballes, Sosas counsel) demanding
P1M representing interest and damages, again, with a warning that legal action would be taken if payment was not made within 3 days.
Toyotas counsel answered through as letter dated 27 November 1989 8 refusing to accede to the demands of Sosa.

But even before the answer was made and received by Sosa, the latter filed on 20 November 1989 with the RTC Marinduque (Branch
38) a complaint against Toyota for damages under Articles 19 and 21 of the Civil Code in the total amount of P1,230,000.00. After trial
on the issue agreed upon during the pre-trial session, the trial court rendered on 18 February 1992 a decision in favor of Sosa. It ruled
that the Agreement between Mr. Sosa and Popong Bernardo, was a valid perfected and contract of sale between Sosa and Toyota
which bound Toyota to deliver the vehicle to Sosa, and further agreed with Sosa that Toyota acted in bad faith in selling to another the
unit already reserved for him; that Bernardo, as an authorized sales executive of Toyota Shaw, was the latters agent and thus bound
Toyota Shaw; that Luna Sosa proved his social standing in the community and suffered besmirched reputation, wounded feelings and
sleepless nights for which he ought to be compensated; and thus rendered judgment ordering Toyota Shaw to pay Sosa the sum of
P75,000 as moral damages, P10,000 as exemplary damages, P30,000 as attorneys fees plus P2,000 lawyers transportation fare per
trip in attending to the hearing of the case, P2,000 for Sosas transportation fare per trip in attending the hearing of the case, and to pay
the cost of the suit.

Dissatisfied with the trial courts judgment, Toyota appealed to the Court of Appeals (CA-GR CV 40043). In its decision promulgated on
29 July 1994, the Court of Appeals affirmed in toto the appealed decision. Hence the petition for review by certiorari by Toyota Shaw.

ISSUE: WON there was a valid and perfected contract between Toyota and Sosa.

HELD:
There are two kinds of contract of sale as provided by Article 1458 of the Civil Code defines a contract of sale as 1.) By the contract of
the sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing; and 2.) the other
to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional.

Article 1475 of the Civil Code specifically provides when the contract of sale is deemed perfected, i.e. The contract of sale is perfected
at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the
parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

The Agreements between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc. executed on 4 June 1989, is not a contract of sale. No
obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the
latter to pay therefor a price certain appears therein. The provision on the downpayment of P100,000.00 made no specific reference to
a sale, it could only refer to a sale on installment basis, as the VSP executed the following day confirmed. But nothing was mentioned
about the full purchase price and the manner the installments were to be paid. Neither logic nor recourse to ones imagination can lead
to the conclusion that such agreement is a perfected contract of sale.

The Agreements between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc. shows the absence of a meeting of minds between
Toyota and Sosa. Sosa did not even sign it. Further, Sosa was well aware from its title, written in bold letters, and thus knew that he


was not dealing with Toyota but with Popong Bernardo and that the latter did not misrepresent that he had the authority to sell any
Toyota vehicle.

Sosa knew that Bernardo was only a sales representative of Toyota and hence a mere agent of the latter. It was incumbent upon Sosa
to act with ordinary prudence and reasonable diligence to know the extent of Bernardos authority as an agent in respect of contracts to
sell Toyotas vehicles. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.

There are three stages in the contract of sale, namely (a) preparation, conception, or generation, which is the period of negotiation and
bargaining, ending at the moment of agreement of the parties; (b) perfection of birth of the contract, which is the moment when the
parties come to agree on the terms of the contract; and (c) consummation or death, which is the fulfillment or performance of the terms
agreed upon in the contract. In the present case, the Agreements between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc. may be
considered as part of the initial phase of the generation of negotiation stage of a contract sale. The second phase of the generation or
negotiation stage was the execution of the VSP (the downpayment of the purchase price was P53,148.00 while the balance to be paid
on installment should be financed by B.A. Finance. It is assumed that B.A Finance was acceptable to Toyota).

The Supreme Court granted the petition, and dismissed the challenged decision of the Court of Appeals and that of Branch 38 of the
Regional Trial Court of Marinduque, and the counterclaim therein; without pronouncement as to costs.
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11.) Velasco v. CA [G.R. No. L-31018. June 29, 1973] First Division

FACTS:
This is a petition for certiorari and mandamus filed by Lorenzo Velasco and Socorro J. Velasco (hereinafter referred to as the
petitioners) against the resolution of the Court of Appeals dated June 28, 1969 in CA-G.R. 42376, which ordered the dismissal of the
appeal interposed by the petitioners from a decision of the Court of First Instance of Quezon City on the ground that they had failed
seasonably to file their printed record on appeal.

Under date of November 3, 1968, the Court of First Instance of Quezon City, after hearing on the merits, rendered a decision in civil
case 7761, dismissing the complaint filed by the petitioners against the Magdalena Estate, Inc. (hereinafter referred to as the
respondent) for the purpose of compelling specific performance by the respondent of an alleged deed of sale of a parcel of residential
land in favor of the petitioners. The basis for the dismissal of the complaint was that the alleged purchase and sale agreement "was not
perfected".

On November 18, 1968, after the perfection of their appeal to the Court of Appeals, the petitioners received a notice from the said court
requiring them to file their printed record on appeal within sixty (60) days from receipt of said notice. This 60-day term was to expire on
January 17, 1969.

Allegedly under date of January 15, 1969, the petitioners allegedly sent to the Court of Appeals and to counsel for the respondent, by
registered mail allegedly deposited personally by its mailing clerk, one Juanito D. Quiachon, at the Makati Post Office, a "Motion For
Extension of Time To File Printed Record on Appeal." The extension of time was sought on the ground "of mechanical failures of the
printing machines, and the voluminous printing jobs now pending with the Vera Printing Press. ..."

On February 10, 1969, the petitioners filed their printed record on appeal in the Court of Appeals. Thereafter, the petitioners received
from the respondent a motion filed on February 8, 1969 praying for the dismissal of the appeal on the ground that the petitioners had
failed to file their printed record on appeal on time. Acting on the said motion to dismiss the appeal, the Court of Appeals, on February
25, 1969, issued the following resolution:

Upon consideration of the motion of counsel for defendant-appellee praying on the grounds therein stated that the appeal be dismissed
in accordance with Rules of Court, and of the opposition thereto filed by counsel for plaintiff-appellants, the Court RESOLVED to DENY
the said motion to dismiss.

Upon consideration of the registry-mailed motion of counsel for plaintiffs appellants praying on the grounds therein stated for an
extension of 30 days from January 15, 1969 within which to file the printed record on appeal, the Court RESOLVED to GRANT the sai d
motion and the printed record on appeal which has already been filed is ADMITTED.

On March 11, 1969, the respondent prayed for a reconsideration of the above-mentioned resolution, averring that the Court of Appeals
had been misled bythe petitioners' "deceitful allegation that they filed the printed record on appeal within the reglementary period,"
because according to a certification issued by the postmaster of Makati, Rizal, the records of the said post office failed to reveal that on
January 15, 1969 the date when their motion for extension of time to file the printed record on appeal was supposedly mailed by the
petitioners there was any letter deposited there by the petitioners' counsel. The petitioners opposed the motion for reconsideration.
They submitted to the appellate court the registry receipts (numbered 0215 and 0216), both stampled January 15, 1969, which were
issued by the receiving clerk of the registry section of the Makati Post Office covering the mails for the disputed motion for extension of
time to file their printed record on appeal and the affidavit of its mailing clerk Juanito D. Quiachon, to prove that thei r motion for
extension was timely filed and served on the Court of Appeals and the respondent, respectively. After several other pleadings and
manifestations were filed by the parties relative to the issue raised by the respondent's above-mentioned motion for reconsideration, the
Court of Appeals promulgated on June 28, 1969, its questioned resolution, the dispositive portion of which reads as follows:



WHEREFORE, the motion for reconsideration filed on March 11, 1969 is granted and appeal interposed by plaintiff-appellants from the
judgment of the court below is hereby dismissed for their failure to file their printed Record on Appeal within the period authorized by
this Court. Atty. Patrocino R. Corpuz [counsel of the petitioner] is required to show cause within ten (10) days from notice why he
should not be suspended from the practice of his necessary investigation against Juanito D. Quiachon of the Salonga, Ordoez, Yap,
Sicat & Associates Law Office, Suite 319 337 Rufino Building, Ayala Avenue, Makati Post Office, to file the appropriate criminal action
against them as may be warranted in the premises, and to report to this Court within thirty (30) days the action he has taken thereon.

The foregoing desposition was based on the following findings of the Court of Appeals:

An examination of the Rollo of this case, particularly the letter envelope on page 26 thereof, reveals that on January 15, 1969, plaintiffs
supposedly mailed via registered mail from the Post Office of Makati, Rizal their motion for extension of 30 days from that date to file
their printed Record on Appeal, under registered letter No. 0216. However, in an official certification, the Postmaster of Makati states
that the records of his office disclose: (a) that there were no registered letters Nos. 0215 and 0216 from the Salonga, Ordoez, Yap,
Sicat & Associates addressed to Atty. Abraham F. Sarmiento, 202 Magdalena Building, Espaa Ext., Quezon City, and to the Court of
Appeals, Manila, respectively, that were posted in the Post Office of Makati, Rizal, on January 15, 1969; (b) that there is a registered
letter numbered 215 but that the same was posted on January 3, 1969 by Enriqueta Amada of 7 Angel, Pasillo F-2, Cartimar, Pasay
City, as sender, and Giral Amasan of Barrio Cabuniga-an, Sto. Nio, Samar, as addressee; and that there is also a registered letter
numbered 216; but that the same was likewise posted on January 3, 1969 with E.B.A. Construction of 1049 Belbar Building,
Metropolitan, Pasong Tamo, Makati, as sender, and Pres. R. Nakaya of the United Pacific Trading Co., Ltd., 79, 6 Chamo, Nakatu,
Yokohari, Japan, as addressee; (c) that on January 15, 1969, the registered letters posted at the Makati Post Office were numbered
consecutively from 1001-2225, inclusive, and none of these letters was addressed to Atty. Abraham F. Sarmiento of to the Court of
Appeals; (d) that in Registry Bill Book No. 30 for Quezon City as well as that Manila, corresponding to February 7, 1969, there are
entries covering registered letters Nos. 0215 and 0216 for dispatch to Quezon City and Manila, respectively; however, such registry
book for February 7, 1969 shows no letters with such numbers posted on the said date.

The Acting Postmaster of the Commercial Center Post Office of Makati, Rizal, further certifies that "Registry Receipts Nos. 0215 and
0216 addressed to Atty. Abraham F. Sarmiento of the Magdalena Estate, Quezon City and the Honorable Court of Appeals,
respectively, does not appear in our Registry Record Book which was allegedly posted at this office on January 15, 1969."

From the foregoing, it is immediately apparent that the motion for extension of time to file their Record on Appeal supposedl y mailed by
the plaintiffs on January 15, 1969 was not really mailed on that date but evidently on a date much later than January 15, 1969. This is
further confirmed by the affidavit of Flaviano Malindog, a letter carrier of the Makati Post Office, which defendant attached as Annex 1
to its supplemental reply to plaintiffs' opposition to the motion for reconsideration. In his said affidavit, Malindog swore among others:

'That on February 7, 1969, between 12:00 o'clock noon and 1:00 o'clock in the afternoon, JUANITO D. QUIACHON approached me at
the Makati Post Office and talked to me about certain letters which his employer had asked him to mail and that I should help him do
something about the matter; but I asked him what they were all about, and he told me that they were letters for the Court of Appeals
and for Atty. Abraham Sarmiento and that his purpose was to show that they were posted on January 15, 1969; that I inquired further,
and he said that the letters were not so important and that his only concern was to have them post maker January 15, 1969;

'That believing the word of JUANITO D. QUIACHON that the letters were not really important I agreed to his request; whereupon, I got
two (2) registry receipts from an old registry receipt booklet which is no longer being used and I numbered them 0215 for the letter
addressed to Atty. Abraham Sarmiento in Quezon City and 0216 for the letter addressed to the Court of Appeals, Manila; that I placed
the same numbering on the respective envelopes containing the letters; and that I also post maker them January 15, 1969;

'That to the best of my recollection I wrote the correct date of posting, February 7, 1969, on the back of one or both of the registry
receipts above mentioned;

'That the correct date of posting, February 7, 1969 also appears in the Registry Bill Books for Quezon City and Manila where I entered
the subject registered letters;

Of course, plaintiff's counsel denies the sworn statement of Malindog and even presented the counter-affidavit of one of his clerk by the
name of Juanito D. Quiachon. But between Malindog, whose sworn statement is manifestly a declaration against interest since he can
be criminally prosecuted for falsification on the basis thereof, and that of Quiachon, whose statement is self-serving, we are very much
inclined to give greater weight and credit to the former. Besides, plaintiffs have not refuted the facts disclosed in the two (2) official
certifications above mentioned by the Postmakers of Makati, Rizal. These two (2) certifications alone, even without to move t his Court
to reconsider its resolution of February 25, 1969 and order the dismissal of this appeal.

On September 5, 1969, after the rendition of the foregoing resolution, the Court of Appeals promulgated another, denying the motion for
reconsideration of the petitioner, but, at the same time, accepting as satisfactory the explanation of Atty. Patrocino R. Corpuz why he
should not be suspended from the practice of the legal profession.

On September 20, 1969, the First Assistant Fiscal of Rizal notified the Court of Appeals that he had found a prima facie case against
Flaviano C. Malindog and would file the corresponding information for falsification of public documents against him. The said fiscal,
however, dismissed the complaint against Quiachon for lack of sufficient evidence. The information subsequently filed against Malindog
by the first Assistance Fiscal of Rizal reads as follow:



That on or about the 7th day of February 1969, in the municipality of Makati, province of Rizal, and a place within the jurisdiction of this
Honorable Court, the above-named accused, conspiring and confederating together and mutually helping and aiding with John Doe,
whose true identity and present whereabout is still unknown, did then and there willfully, unlawfully and feloniously falsify two registry
receipts which are public documents by reason of the fact that said registry receipts are printed in accordance with the standard forms
prescribed by the Bureau of Posts, committed as follows: the above-named accused John Doe, on the date above-mentioned
approached and induced the accused Malindog, a letter-carrier at the Makati Post Office, to postmark on Abraham Sarmiento in
Quezon City, and the other to the Court of Appeals, Manila, and the accused Malindog, acceding to the inducement of, and in
conspiracy with, his co-accused John Doe, did then and there willfully and feloniously falsify said registry receipts of the Makati Post
Office on January 15, 1969, thereby making it appear that the said sealed envelopes addressed to Atty. Sarmiento and the Court of
Appeals were actually posted, and causing it to appear that the Postmaster of Makati participated therein by posting said mail matters
on January 15, 1969, when in truth and in fact he did not so participate.

The petitioner contend that in promulgating its questioned resolution, the Court of Appeals acted without or in excess of jurisdiction, or
with such whimsical and grave abuse of discretion as to amount to lack of jurisdiction, because (a) it declared that the moti on for
extension of time to file the printed record on appeal was not mailed on January 15, 1969, when, in fact, it was mailed on the record on
appeal was filed only on February 10, 1969, beyond the time authorized by the appellate court, when the truth is that the sai d date of
filing was within the 30-day extension granted by it; (c) the adverse conclusion of the appellate court are not supported by the records of
the case, because the said court ignored the affidavit of the mailing clerk of the petitioners' counsel, the registry receipt s and
postmarked envelopes (citing Henning v. Western Equipment, 62 Phil. 579, and Caltex Phil., Inc. v. Katipunan Labor Union, 52 O.G.
6209), and, instead, chose to rely upon the affidavit of the mail carrier Malindog, which affidavit was prepared by counsel f or the
respondent at the affiant himself so declared at the preliminary investigation at the Fiscal's office which absolved the petitioners'
counsel mailing clerk Quiachon from any criminal liability; (d) section 1, Rule 50 of the Rules of Court, which enumerates the grounds
upon which the Court of Appeals may dismiss an appeal, does not include as a ground the failure to file a printed record on appeal; (e)
the said section does not state either that the mismailing of a motion to extend the time to file the printed record on appeal, assuming
this to be the case, may be a basis for the dismissal of the appeal; (f) the Court of Appeals has no jurisdiction to revoke the extention of
time to file the printed record on appeal it had granted to the petitioners based on a ground not specified in secti on 1, Rule 50 of the
Rules of Court; and (g) the objection to an appeal may be waived as when the appellee has allowed the record on appeal to be printed
and approved (citing Moran, Vol. II, p. 519).

Some of the objections raised by the petitioners to the questioned resolution of the Court of Appeals are obviously matters involving the
correct construction of our rules of procedure and, consequently, are proper subjects of an appeal by way of certiorari under Rule 45 of
the Rules of Court, rather than a special civil action for certiorari under Rule 65. The petitioners, however, have correctly appreciated
the nature of its objections and have asked this Court to treat the instant petition as an appeal by way of certiorari under Rule 45 "in the
event ... that this Honorable Supreme Court should deem that an appeal is an adequate remedy ..." The nature of the case at bar
permits, in our view, a disquisition of both types of assignments.

We do not share the view of the petitioners that the Court of Appeals acted without or in excess of jurisdiction or gravely abused its
discretion in promulgating the questioned resolution.

While it is true that stamped on the registry receipts 0215 and 0215 as well as on the envelopes covering the mails in questi on is the
date "January 15, 1969," this, by itself, does not establish an unrebuttable presumption of the fact of date of mailing. Henning and
Caltex, cited by the petitioners, are not in point because the specific adjective issue resolved in those cases was whether or not the
date of mailing a pleading is to be considered as the date of its filing. The issue in the case at bar is whether or not the motion of the
petitioners for extension of time to file the printed record on appeal was, in point of fact, mailed (and, therefore, filed) on January 15,
1969.

In resolving this issue in favor of the respondent, this Court finds, after a careful study and appraisal of the pleadings, admissions and
denials respectively adduced and made by the parties, that the Court of Appeals did not gravely abuse its discretion and did not act
without or in excess of its jurisdiction. We share the view of the appellate court that the certifications issued by the two postmasters of
Makati, Rizal and the sworn declaration of the mail carrier Malindog describing how the said registry receipts came to be issued, are
worthy of belief. It will be observed that the said certifications explain clearly and in detail how it was improbable that the petitioners'
counsel in the ordinary course of official business, while Malindog's sworn statement, which constitutes a very grave admission against
his own interest, provides ample basis for a finding that where official duty was not performed it was at the behest of a person
interested in the petitioners' side of the action below. That at the preliminary investigation at the Fiscal's office, Malindog failed to
identify Quiachon as the person who induced him to issue falsified receipts, contrary to what he declared in his affidavit, i s of no
moment since the findings of the inquest fiscal as reflected in the information for falsification filed against Malindog indicate that
someone did induce Malindog to make and issue false registry receipts to the counsel for the petitioners.

This Court held in Bello vs. Fernando 1 that the right to appeal is nota natural right nor a part of due process; it is merely a statutory
privilege, and may be exercised only in the manner provided by law. In this connection, the Rule of Court expressly makes it the duty of
an appellant to file a printed record on appeal with the Court of Appeals within sixty (60) record on appeal approved by the trial court
has already been received by the said court. Thus, section 5 of Rule 46 states:

Sec. 5. Duty of appellant upon receipt of notice. It shall be the duty of the appellant within fifteen (15) days from the date of the
notice referred to in the preceding section, to pay the clerk of the Court of Appeals the fee for the docketing of the appeal , and within


sixty (60) days from such notice to submit to the court forty (40) printed copies of the record on appeal, together with proof of service of
fifteen (15) printed copies thereof upon the appelee.

As the petitioners failed to comply with the above-mentioned duty which the Rules of Court enjoins, and considering that, as found by
the Court of Appeals, there was a deliberate effort on their part to mislead the said Court in grating them an extension of t ime within
which to file their printed record on appeal, it stands to reason that the appellate court cannot be said to have abused its discretion or to
have acted without or in excess of its jurisdiction in ordering the dismissal of their appeal.

Our jurisprudence is replete with cases in which this Court dismissed an appeal on grounds not mentioned specifically in Section 1,
Rule 50 of the Rules of Court. (See, for example, De la Cruz vs. Blanco, 73 Phil. 596 (1942); Government of the Philippines vs. Court of
Appeals, 108 Phil. 86 (1960); Ferinion vs. Sta. Romana, L-25521, February 28, 1966, 16 SCRA 370, 375).

It will likewise be noted that inasmuch as the petitioners' motion for extension of the period to file the printed record on appeal was
belated filed, then, it is as though the same were non-existent, since as this Court has already stated in Baquiran vs. Court of Appeals,
2 "The motion for extension of the period for filing pleadings and papers in court must be made before the expiration of the period to be
extended." The soundness of this dictum in matters of procedure is self-evident. For, were the doctrine otherwise, the uncertainties that
would follow when litigants are left to determine and redetermine for themselves whether to seek further redress in court forthwith or
take their own sweet time will result in litigations becoming more unreable than the very grievances they are intended to redness.

The argument raised by the petitioner that the objection to an appeal maybe waived, as when the appellee allows the record on
appeal to be printed and approved is likewise not meritorious considering that the respondent did file a motion in the Court of
Appeals on February 8, 1969 praying for the dismissal of the below of the petitioners had not yet filed their record on appeal and,
therefore, must be considered to have abandoned their appeal.

In further assailing the questioned resolution of the Court of Appeals, the petitioners also point out that on the merits the equities of the
instant case are in their favor. A reading of the record, however, persuades us that the judgment a quo is substantially correct and
morally just.

The appealed decision of the court a quo narrates both the alleged and proven facts of the dispute between the petitioners and the
respondent, as follows:

This is a suit for specific performance filed by Lorenzo Velasco against the Magdalena Estate, Inc. on the allegation that on November
29, 1962 the plaintiff and the defendant had entered into a contract of sale (Annex A of the complaint) by virtue of which the defendant
offered to sell the plaintiff and the plaintiff in turn agreed to buy a parcel of land with an area of 2,059 square meters more particularly
described as Lot 15, Block 7, Psd-6129, located at No. 39 corner 6th Street and Pacific Avenue, New Manila, this City, for the total
purchase price of P100,000.00.

It is alleged by the plaintiff that the agreement was that the plaintiff was to give a down payment of P10,000.00 to be followed by
P20,000.00 and the balance of P70,000.00 would be paid in installments, the equal monthly amortization of which was to be
determined as soon as the P30,000.00 down payment had been completed. It is further alleged that the plaintiff paid down payment of
P10,000.00 on November 29, 1962 as per receipt No. 207848 (Exh. "A")and that when on January 8, 1964 he tendered t o the
defendant the payment of the additional P20,000.00 to complete the P30,000.00 the defendant refused to accept and that eventually it
likewise refused to execute a formal deed of sale obviously agreed upon. The plaintiff demands P25,000.00 exemplary damages,
P2,000.00 actual damages and P7,000.00 attorney's fees.

The defendant, in its Answer, denies that it has had any direct dealings, much less, contractual relations with the plaintiff regarding the
property in question, and contends that the alleged contract described in the document attached to the complaint as Annex A is entirely
unenforceable under the Statute of Frauds; that the truth of the matter is that a portion of the property in question was being leased by a
certain Socorro Velasco who, on November 29, 1962, went to the office of the defendant indicated her desire to purchase the lot; that
the defendant indicated its willingness to sell the property to her at the price of P100,000.00 under the condition that a down payment of
P30,000.00 be made, P20,000.00 of which was to be paid on November 31, 1962, and that the balance of P70,000.00 including interest
a 9% per annum was to be paid on installments for a period of ten years at the rate of P5,381.32 on June 30 and December of every
year until the same shall have been fully paid; that on November 29, 1962 Socorro Velasco offered to pay P10,000.00 as initial
payment instead of the agreed P20,000.00 but because the amount was short of the alleged P20,000.00 the same was accepted
merely as deposited and upon request of Socorro Velasco the receipt was made in the name of her brother-in-law the plaintiff herein;
that Socorro Velasco failed to complete the down payment of P30,000.00 and neither has she paid any installments on the balance of
P70,000.00 up to the present time; that it was only on January 8, 1964 that Socorro Velasco tendered payment of P20,000.00, which
offer the defendant refused to accept because it had considered the offer to sell rescinded on account of her failure to complete the
down payment on or before December 31, 1962.

The lone witness for the plaintiff is Lorenzo Velasco, who exhibits the receipt, Exhibits A, issued in his favor by the Magdalena Estate,
Inc., in the sum of P10,000.00 dated November 29, 1962. He also identifies a letter (Exh. B)of the Magdalena Estate, Inc. addressed to
him and his reply thereto. He testifies that Socorro Velasco is his sister-in-law and that he had requested her to make the necessary
contacts with defendant referring to the purchase of the property in question. Because he does not understand English well, he had
authorized her to negotiate with the defendant in her whenever she went to the office of the defendant, and as a matter of fact, the
receipt for the P10,000.00 down payment was issued in his favor. The plaintiff also depends on Exhibit A to prove that there was a


perfected follows: "Earnest money for the purchase of Lot 15, Block 7, Psd-6129, Area 2,059 square meters including improvements
thereon P10,000.00." At the bottom of Exhibit A the following appears: "Agreed price: P100,000.00, P30,000.00 down payment, bal.
in 10 years."

To prove that the Magdalena Estate, Inc. had been dealing all along with him and not with his sister-in-law and that the Magdalena
Estate, Inc. knew very well that he was the person interested in the lot in question and not his sister-in-law, the plaintiff offers in
evidence five checks all drawn by him in favor of Magdalena Estate, Inc. for payment of the lease of the property. ....

There does not seem to be any dispute regarding the fact that the Velasco family was leasing this property from the Magdalena Estate,
Inc. since December 29, 1961; that the Velasco family sometime in 1962 offered to purchase the lot as a result of which Lorenzo
Velasco thru Socorro Velasco made the P10,000.00 deposit or, in the language of the defendant 'earnest money or down payment' as
evidenced by Exhibit A. The only matter that remains to be decided is whether the talks between the Magdalena Estate, Inc. and
Lorenzo Velasco either directly or thru his sister-in-law Socorro Velasco ever ripened into a consummated sale. It is the position of the
defendant (1) that the sale was never consummated and (2) that the contract is unenforceable under the Statute of Frauds.

The court a quo agreed with the respondent's (defendant therein) contention that no contract of sale was perfected because the minds
of the parties did not meet "in regard to the manner of payment." The court a quo appraisal of this aspect of the action below is correct.
The material averments contained in the petitioners' complaint themselves disclose a lack of complete "agreement in regard to the
manner of payment" of the lot in question. The complaint states pertinently:

4. That plaintiff and defendant further agreed that the total down payment shall by P30,000.00, including the P10,000.00 partial
payment mentioned in paragraph 3 hereof, and that upon completion of the said down payment of P30,000.00, the balance of
P70,000.00 shall be said by the plaintiff to the defendant in 10 years from November 29, 1962;

5. That the time within the full down payment of the P30,000.00 was to be completed was not specified by the parties but the
defendant was duly compensated during the said time prior to completion of the down payment of P30,000.00 by way of lease rentals
on the house existing thereon which was earlier leased by defendant to the plaintiff's sister-in-law, Socorro J. Velasco, and which were
duly paid to the defendant by checks drawn by plaintiff.

It is not difficult to glean from the aforequoted averments that the petitioners themselves admit that they and the respondent still had to
meet and agree on how and when the down-payment and the installment payments were to be paid. Such being the situation, it cannot,
therefore, be said that a definite and firm sales agreement between the parties had been perfected over the lot in question. Indeed, this
Court has already ruled before that a definite agreement on the manner of payment of the purchase price is an essential element in the
formation of a binding and unforceable contract of sale. 3 The fact, therefore, that the petitioners delivered to the respondent the sum of
P10,000 as part of the down-payment that they had to pay cannot be considered as sufficient proof of the perfection of any purchase
and sale agreement between the parties herein under article 1482 of the new Civil Code, as the petitioners themselves admit that some
essential matter the terms of payment still had to be mutually covenanted.
ACCORDINGLY, the instant petitioner is hereby denied. No pronouncement as to costs.
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12.) Limketkai Sons Milling v. CA [G.R. No. 118509. December 1, 1995] Third Division

FACTS:
On 14 May 1976, Philippine Remnants Co., Inc. constituted the Bank of the Philippine Islands (BPI) as its trustee to manage,
administer, and sell its real estate property. One such piece of property placed under trust was the disputed lot, a 33,056-sq.ms. lot at
Barrio Bagong Ilog, Pasig (TCT 493122). On 23 June 1988, Pedro Revilla, Jr., a licensed real estate broker was given formal authority
by BPI to sell the lot for P1,000.00 per sq.m. This arrangement was concurred in by the owners of the Philippine Remnants. Broker
Revilla contacted Alfonso Lim of Limketkai Sons Milling (LSM) who agreed to buy the land. On 8 July 1988, LSMs officials and Revilla
were given permission to enter and view the property they were buying (by Rolando V. Aromin, BPI Assistant Vice-President). On 9
July 1988, Revilla formally informed BPI that he had procured a buyer, LSM. On 11 July 1988, LSMs officials, Alfonso Lim and Albino
Limketkai, went to BPI to confirm the sale. They were entertained by Vice-President Merlin Albano and Asst. Vice-President Aromin.
LSM asked that the price of P1,000.00 per sq.m. be reduced to P900.00 while Albano stated the price to be P1,100.00. The part ies
finally agreed that the lot would be sold at P1,000.00 per sq.m. to be paid in cash. Since the authority to sell was on a first come, first
served and non-exclusive basis, it may be mentioned at this juncture that there is no dispute over LSMs being the first comer and the
buyer to be first served. Notwithstanding the final agreement to pay P1,000.00 per sq.m. on a cash basis, Alfonso Lim asked if it was
possible to pay on terms. The bank officials stated that there was no harm in trying to ask for payment on terms because in previous
transactions, the same had been allowed. It was the understanding, however, that should the term payment be disapproved, then the
price shall be paid in cash. It was Albano who dictated the terms under which the installment payment may be approved, and acting
thereon, Alfonso Lim, on the same date, 11 July 1988, wrote BPI through Merlin Albano embodying the payment initially of 10% and the
remaining 90% within a period of 90 days. 2 or 3 days later, LSM learned that its offer to pay on terms had been frozen. Alfonso Lim
went to BPI on 18 July 1988 and tendered the full payment of P33,056,000.00 to Albano. The payment was refused because Albano
stated that the authority to sell that particular piece of property in Pasig had been withdrawn from his unit. The same check was
tendered to BPI Vice-President Nelson Bona who also refused to receive payment.

An action for specific performance with damages was thereupon filed on 25 August 1988 by LSM against BPI with the RTC Pasig
(Branch 151). In the course of the trial, BPI informed the trial court that it had sold the property under litigation to National Book Store
(NBS) on 14 July 1989. The complaint was thus amended to include NBS. On 10 June 1991, the trial court rendered judgment in f avor


of LSM; holding that there was a perfected contract between LSM and BPI, and thus declared the Deed of Sale involving the lot in
Pasig in the name of BPI and in favor of NBS as null and void; ordered the Register of Deeds of the Province of Rizal to cancel the TCT
which may have been issued in favor of NBS by virtue of the said deed; ordered BPI upon receipt by it from LSM of the sum of
P33,056,000,00 to execute a Deed of Sale in favor of the latter of the said property at the price of P1,000.00 per sq.m. and in default
thereof, the Clerk of Court is directed to execute the deed dated 14 July 1989; ordered the Register of Deeds of Pasig, upon registration
of the said deed, whether executed by BPI or the Clerk of Court and payment of the corresponding fees and charges, to cancel said
TCT 493122 and to issue, in lieu thereof, another transfer certificate of title in the name of LSM; ordered BPI and NBS to pay in solidum
to LSM the sums of P10,000,000.00 as actual and consequential damages and P150,000.00 as attorneys fees and litigation expenses,
both with interest at 12% per annum from date of judgment; on the cross-claim by the bank against NBS, ordered NBS to indemnify the
bank of whatever BPI shall have paid to LSM; dismissed the counterclaim of both BPI and NBS against LSM and the cross-claim of
NBS against BPI; with costs against BPI and NBS.

Upon elevation of the case to the Court of Appeals, the decision of the trial court was reversed and the complaint dismissed on 12
August 1994. It was held that no contract of sale was perfected because there was no concurrence of the three requisites enumerated
in Article 1318 of the Civil Code. Hence, the petition.

ISSUE: WON there was a sale perfected.

HELD:
The fact that the deed of sale still had to be signed and notarized does not mean that no contract had already been perfected. A sale of
land is valid regardless of the form it may have been entered into. The requisite form under Article 1458 of the Civil Code i s merely for
greater efficacy or convenience and the failure to comply does not affect the validity and binding effect of the act between parties.
Therefore, such contract that was made constituted fraud and is covered by the statute of frauds. BPI should be held liable and can be
sued for damages.

BPI as trustee of the property of Philippine Remnant Co. authorized a licensed broker, Pedro Revilla, to sell the lot for P1,000.00 per
sq.m. Philippine Remnants confirmed the authority to sell of Revilla and the price at which he may sell the lot. LSM and Revi lla agreed
on the former buying the property. BPI Assistant Vice-President Rolando V. Aromin allowed the broker and the buyer to inspect the
property. BPI was formally informed about the broker having procured a buyer. At the start of the transactions, Revilla by hi mself
already had full authority to sell the disputed lot. The note dated 23 June 1988 states, this will serve as your authority to sell on an as
is, where is basis the property located at Pasig Blvd., Bagong Ilog. Thus, the authority given to Revilla was to sell and not merely to
look for a buyer. Revilla testified that at the time he perfected the agreement to sell the litigated property, he was acting for and in behalf
of the BPI as if he were the Bank itself. This notwithstanding and to firm up the sale of the land, Revilla saw it fit to bring BPI officials
into the transaction.

The alleged lack of authority of the bank officials acting in behalf of BPI is not sustained by the record. If BPI could give the authority to
sell to a licensed broker, there is no reason to doubt the authority to sell of the two BPI Vice-Presidents whose precise job in the Bank
was to manage and administer real estate property. Rolando Aromin was BPI Assistant Vice-President and Trust Officer. He directly
supervised the BPI Real Property Management Unit. He had been in the Real Estate Division since 1985 and was the head supervising
officer of real estate matters. He had been with the BPI Trust Department since 1968 and had been involved in the handling of
properties of beneficial owners since 1975. He was in charge of Torrens titles, lease contracts, problems of tenants, insurance policies,
installment receivables, management fees, quitclaims, and other matters involving real estate transactions. His immediate superior,
Vice-President Merlin Albano had been with the Real Estate Division for only 1 week but he was present and joined in the discussions
with LSM. There is nothing to show that Alfonso Lim and Albino Limketkai knew Aromin before the incident. Revilla brought the brothers
directly to Aromin upon entering the BPI premises. Aromin acted in a perfectly natural manner on the transaction before him with not
the slightest indication that he was acting ultra vires. This shows that BPI held Aromin out to the public as the officer routinely handling
real estate transactions and, as Trust Officer, entering into contracts to sell trust properties. Further, it must be noted that the authority
to buy and sell this particular trust property was later withdrawn from Trust Officer Aromin and his enti re unit. If Aromin did not have any
authority to act as alleged, there was no need to withdraw authority which he never possessed. Everything in the record points to the
full authority of Aromin to bind the bank, except for the self-serving memoranda or letters later produced by BPI that Aromin was an
inefficient and undesirable officer and who, in fact, was dismissed after he testified in this case. But, of course, Aromins alleged
inefficiency is not proof that he was not fully clothed with authority to bind BPI.

The Supreme Court reversed and set aside the questioned judgment of the Court of Appeals, and reinstated the 10 June 1991
judgment of Branch 151 of the RTC of The National Capital Judicial Region stationed in Pasig, Metro Manila except for the award of
P10,000,000.00 damages, which was deleted.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
G.R. No. 109125 December 2, 1994
ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners, vs. CA and BUEN REALTY DEVELOPMENT CO., respondents.
Assailed, in this petition for review, is the decision of the Court of Appeals, dated 04 December 1991, in CA-G.R. SP No. 26345 setting
aside and declaring without force and effect the orders of execution of the trial court, dated 30 August 1991 and 27 September 1991, in
Civil Case No. 87-41058.
The antecedents are recited in good detail by the appellate court thusly:


On July 29, 1987 a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion and Keh
Tiong, et al., against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before the Regional Trial Court, Branch 31,
Manila in Civil Case No. 87-41058, alleging, among others, that plaintiffs are tenants or lessees of residential and
commercial spaces owned by defendants described as Nos. 630-638 Ongpin Street, Binondo, Manila; that they have
occupied said spaces since 1935 and have been religiously paying the rental and complying with all the conditions of
the lease contract; that on several occasions before October 9, 1986, defendants informed plaintiffs that they are
offering to sell the premises and are giving them priority to acquire the same; that during the negotiations, Bobby Cu
Unjieng offered a price of P6-million while plaintiffs made a counter offer of P5-million; that plaintiffs thereafter asked
the defendants to put their offer in writing to which request defendants acceded; that in reply to defendant's letter,
plaintiffs wrote them on October 24, 1986 asking that they specify the terms and conditions of the offer to sell; that
when plaintiffs did not receive any reply, they sent another letter dated January 28, 1987 with the same request; that
since defendants failed to specify the terms and conditions of the offer to sell and because of information received
that defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to
sell the property to them.
Defendants filed their answer denying the material allegations of the complaint and interposing a special defense of
lack of cause of action.
After the issues were joined, defendants filed a motion for summary judgment which was granted by the lower court.
The trial court found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties
did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all.
Nonetheless, the lower court ruled that should the defendants subsequently offer their property for sale at a price of
P11-million or below, plaintiffs will have the right of first refusal. Thus the dispositive portion of the decision states:
WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiffs
summarily dismissing the complaint subject to the aforementioned condition that if the defendants
subsequently decide to offer their property for sale for a purchase price of Eleven Million Pesos or
lower, then the plaintiffs has the option to purchase the property or of first refusal, otherwise,
defendants need not offer the property to the plaintiffs if the purchase price is higher than Eleven
Million Pesos.
SO ORDERED.
Aggrieved by the decision, plaintiffs appealed to this Court in
CA-G.R. CV No. 21123. In a decision promulgated on September 21, 1990 (penned by Justice Segundino G. Chua
and concurred in by Justices Vicente V. Mendoza and Fernando A. Santiago), this Court affirmed with modification
the lower court's judgment, holding:
In resume, there was no meeting of the minds between the parties concerning the sale of the
property. Absent such requirement, the claim for specific performance will not lie. Appellants'
demand for actual, moral and exemplary damages will likewise fail as there exists no justifiable
ground for its award. Summary judgment for defendants was properly granted. Courts may render
summary judgment when there is no genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law (Garcia vs. Court of Appeals, 176 SCRA 815). All
requisites obtaining, the decision of the court a quo is legally justifiable.
WHEREFORE, finding the appeal unmeritorious, the judgment appealed from is hereby
AFFIRMED, but subject to the following modification: The court a quo in the aforestated decision
gave the plaintiffs-appellants the right of first refusal only if the property is sold for a purchase price
of Eleven Million pesos or lower; however, considering the mercurial and uncertain forces in our
market economy today. We find no reason not to grant the same right of first refusal to herein
appellants in the event that the subject property is sold for a price in excess of Eleven Million
pesos. No pronouncement as to costs.
SO ORDERED.
The decision of this Court was brought to the Supreme Court by petition for review on certiorari. The Supreme Court
denied the appeal on May 6, 1991 "for insufficiency in form and substances" (Annex H, Petition).
On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by this Court, the Cu Unjieng
spouses executed a Deed of Sale (Annex D, Petition) transferring the property in question to herein petitioner Buen
Realty and Development Corporation, subject to the following terms and conditions:


1. That for and in consideration of the sum of FIFTEEN MILLION PESOS (P15,000,000.00), receipt
of which in full is hereby acknowledged, the VENDORS hereby sells, transfers and conveys for and
in favor of the VENDEE, his heirs, executors, administrators or assigns, the above-described
property with all the improvements found therein including all the rights and interest in the said
property free from all liens and encumbrances of whatever nature, except the pending ejectment
proceeding;
2. That the VENDEE shall pay the Documentary Stamp Tax, registration fees for the transfer of title
in his favor and other expenses incidental to the sale of above-described property including capital
gains tax and accrued real estate taxes.
As a consequence of the sale, TCT No. 105254/T-881 in the name of the Cu Unjieng spouses was cancelled and, in
lieu thereof, TCT No. 195816 was issued in the name of petitioner on December 3, 1990.
On July 1, 1991, petitioner as the new owner of the subject property wrote a letter to the lessees demanding that the
latter vacate the premises.
On July 16, 1991, the lessees wrote a reply to petitioner stating that petitioner brought the property subject to the
notice of lis pendens regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu
Unjiengs.
The lessees filed a Motion for Execution dated August 27, 1991 of the Decision in Civil Case No. 87-41058 as
modified by the Court of Appeals in CA-G.R. CV No. 21123.
On August 30, 1991, respondent Judge issued an order (Annex A, Petition) quoted as follows:
Presented before the Court is a Motion for Execution filed by plaintiff represented by Atty. Antonio
Albano. Both defendants Bobby Cu Unjieng and Rose Cu Unjieng represented by Atty. Vicente
Sison and Atty. Anacleto Magno respectively were duly notified in today's consideration of the
motion as evidenced by the rubber stamp and signatures upon the copy of the Motion for
Execution.
The gist of the motion is that the Decision of the Court dated September 21, 1990 as modified by
the Court of Appeals in its decision in CA G.R. CV-21123, and elevated to the Supreme Court upon
the petition for review and that the same was denied by the highest tribunal in its resolution dated
May 6, 1991 in G.R. No.
L-97276, had now become final and executory. As a consequence, there was an Entry of Judgment
by the Supreme Court as of June 6, 1991, stating that the aforesaid modified decision had already
become final and executory.
It is the observation of the Court that this property in dispute was the subject of the Notice of Lis
Pendens and that the modified decision of this Court promulgated by the Court of Appeals which
had become final to the effect that should the defendants decide to offer the property for sale for a
price of P11 Million or lower, and considering the mercurial and uncertain forces in our market
economy today, the same right of first refusal to herein plaintiffs/appellants in the event that the
subject property is sold for a price in excess of Eleven Million pesos or more.
WHEREFORE, defendants are hereby ordered to execute the necessary Deed of Sale of the
property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the
consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a new
Transfer Certificate of Title be issued in favor of the buyer.
All previous transactions involving the same property notwithstanding the issuance of another title
to Buen Realty Corporation, is hereby set aside as having been executed in bad faith.
SO ORDERED.
On September 22, 1991 respondent Judge issued another order, the dispositive portion of which reads:
WHEREFORE, let there be Writ of Execution issue in the above-entitled case directing the Deputy
Sheriff Ramon Enriquez of this Court to implement said Writ of Execution ordering the defendants
among others to comply with the aforesaid Order of this Court within a period of one (1) week from


receipt of this Order and for defendants to execute the necessary Deed of Sale of the property in
litigation in favor of the plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration
of P15,000,000.00 and ordering the Register of Deeds of the City of Manila, to cancel and set aside
the title already issued in favor of Buen Realty Corporation which was previously executed between
the latter and defendants and to register the new title in favor of the aforesaid plaintiffs Ang Yu
Asuncion, Keh Tiong and Arthur Go.
SO ORDERED.
On the same day, September 27, 1991 the corresponding writ of execution (Annex C, Petition) was issued.
1

On 04 December 1991, the appellate court, on appeal to it by private respondent, set aside and declared without force and effect the
above questioned orders of the court a quo.
In this petition for review on certiorari, petitioners contend that Buen Realty can be held bound by the writ of execution by virtue of the
notice of lis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the time of the latter's purchase of the
property on 15 November 1991 from the Cu Unjiengs.
We affirm the decision of the appellate court.
A not too recent development in real estate transactions is the adoption of such arrangements as the right of first refusal, a purchase
option and a contract to sell. For ready reference, we might point out some fundamental precepts that may find some relevance to this
discussion.
An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation is constituted upon the
concurrence of the essential elements thereof, viz: (a) The vinculum juris or juridical tie which is the efficient cause established by the
various sources of obligations (law, contracts, quasi-contracts, delicts and quasi-delicts); (b) the object which is the prestation or
conduct; required to be observed (to give, to do or not to do); and (c) the subject-persons who, viewed from the demandability of the
obligation, are the active (obligee) and the passive (obligor) subjects.
Among the sources of an obligation is a contract (Art. 1157, Civil Code), which is a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil Code). A contract undergoes
various stages that include its negotiation or preparation, its perfection and, finally, its consummation. Negotiation covers the period
from the time the prospective contracting parties indicate interest in the contract to the time the contract is concluded (perfected). The
perfection of the contract takes place upon the concurrence of the essential elements thereof. A contract which is consensual as to
perfection is so established upon a mere meeting of minds, i.e., the concurrence of offer and acceptance, on the object and on the
cause thereof. A contract which requires, in addition to the above, the delivery of the object of the agreement, as in a pledge or
commodatum, is commonly referred to as a real contract. In a solemn contract, compliance with certain formalities prescribed by law,
such as in a donation of real property, is essential in order to make the act valid, the prescribed form being thereby an essential
element thereof. The stage of consummation begins when the parties perform their respective undertakings under the contract
culminating in the extinguishment thereof.
Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In sales,
particularly, to which the topic for discussion about the case at bench belongs, the contract is perfected when a person, cal led the
seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over
which the latter agrees. Article 1458 of the Civil Code provides:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably the ownership of the thing sold is retained
until the fulfillment of a positive suspensive condition (normally, the full payment of the purchase price), the breach of the condition will
prevent the obligation to convey title from acquiring an obligatory force.
2
In Dignos vs. Court of Appeals (158 SCRA 375), we have said
that, although denominated a "Deed of Conditional Sale," a sale is still absolute where the contract is devoid of any proviso that title is
reserved or the right to unilaterally rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the
buyer upon actual or constructive delivery (e.g., by the execution of a public document) of the property sold. Where the condition is
imposed upon the perfection of the contract itself, the failure of the condition would prevent such perfection.
3
If the condition is imposed
on the obligation of a party which is not fulfilled, the other party may either waive the condition or refuse to proceed with the sale (Art.
1545, Civil Code).
4



An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on
the parties, and compliance therewith may accordingly be exacted.
5

An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable
consideration distinct and separate from the price, is what may properly be termed a perfected contract of option. This contract is legally
binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil Code, viz:
Art. 1479. . . .
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if
the promise is supported by a consideration distinct from the price. (1451a)
6

Observe, however, that the option is not the contract of sale itself.
7
The optionee has the right, but not the obligation, to buy. Once the
option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral promise to sell and to buy ensues and both
parties are then reciprocally bound to comply with their respective undertakings.
8

Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect promise (policitacion) is merely an offer. Public
advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. These
relations, until a contract is perfected, are not considered binding commitments. Thus, at any time prior to the perfection of the contract,
either negotiating party may stop the negotiation. The offer, at this stage, may be withdrawn; the withdrawal is effective immediately
after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal (Laudico vs. Arias, 43 Phil.
270). Where a period is given to the offeree within which to accept the offer, the following rules generally govern:
(1) If the period is not itself founded upon or supported by a consideration, the offeror is still free and has the right to withdraw the offer
before its acceptance, or, if an acceptance has been made, before the offeror's coming to know of such fact, by communicating that
withdrawal to the offeree (see Art. 1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102 Phil. 948, holding that this rule is
applicable to a unilateral promise to sell under Art. 1479, modifying the previous decision in South Western Sugar vs. Atlantic Gulf, 97
Phil. 249; see also Art. 1319, Civil Code; Rural Bank of Paraaque, Inc., vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA
368). The right to withdraw, however, must not be exercised whimsically or arbitrarily; otherwise, it could give rise to a damage claim
under Article 19 of the Civil Code which ordains that "every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith."
(2) If the period has a separate consideration, a contract of "option" is deemed perfected, and it would be a breach of that contract to
withdraw the offer during the agreed period. The option, however, is an independent contract by itself, and it is to be distinguished from
the projected main agreement (subject matter of the option) which is obviously yet to be concluded. If, in fact, the optioner-offeror
withdraws the offer before its acceptance (exercise of the option) by the optionee-offeree, the latter may not sue for specific
performance on the proposed contract ("object" of the option) since it has failed to reach its own stage of perfection. The optioner-
offeror, however, renders himself liable for damages for breach of the option. In these cases, care should be taken of the real nature of
the consideration given, for if, in fact, it has been intended to be part of the consideration for the main contract with a right of withdrawal
on the part of the optionee, the main contract could be deemed perfected; a similar instance would be an "earnest money" in a contract
of sale that can evidence its perfection (Art. 1482, Civil Code).
In the law on sales, the so-called "right of first refusal" is an innovative juridical relation. Needless to point out, it cannot be deemed a
perfected contract of sale under Article 1458 of the Civil Code. Neither can the right of first refusal, understood in its normal concept,
per se be brought within the purview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an offer under
Article 1319
9
of the same Code. An option or an offer would require, among other things,
10
a clear certainty on both the object and the
cause or consideration of the envisioned contract. In a right of first refusal, while the object might be made determinate, the exercise of
the right, however, would be dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another
but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely
belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum
juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the
Civil Code on human conduct.
Even on the premise that such right of first refusal has been decreed under a final judgment, like here, its breach cannot justify
correspondingly an issuance of a writ of execution under a judgment that merely recognizes its existence, nor would it sanction an
action for specific performance without thereby negating the indispensable element of consensuality in the perfection of contracts.
11
It is
not to say, however, that the right of first refusal would be inconsequential for, such as already intimated above, an unjustified disregard
thereof, given, for instance, the circumstances expressed in Article 19
12
of the Civil Code, can warrant a recovery for damages.
The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a "right of first refusal" in favor of petitioners.
The consequence of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here so conveyed to us,
petitioners are aggrieved by the failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution on
the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose.


Furthermore, whether private respondent Buen Realty Development Corporation, the alleged purchaser of the property, has acted in
good faith or bad faith and whether or not it should, in any case, be considered bound to respect the registration of the lis pendens in
Civil Case No. 87-41058 are matters that must be independently addressed in appropriate proceedings. Buen Realty, not having been
impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution issued by respondent Judge, let alone ousted
from the ownership and possession of the property, without first being duly afforded its day in court.
We are also unable to agree with petitioners that the Court of Appeals has erred in holding that the writ of execution varies the terms of
the judgment in Civil Case No. 87-41058, later affirmed in CA-G.R. CV-21123. The Court of Appeals, in this regard, has observed:
Finally, the questioned writ of execution is in variance with the decision of the trial court as modified by this Court. As
already stated, there was nothing in said decision
13
that decreed the execution of a deed of sale between the
Cu Unjiengs and respondent lessees, or the fixing of the price of the sale, or the cancellation of title in the
name of petitioner (Limpin vs. IAC, 147 SCRA 516; Pamantasan ng Lungsod ng Maynila vs. IAC, 143
SCRA 311; De Guzman vs. CA, 137 SCRA 730; Pastor vs. CA, 122 SCRA 885).
It is likewise quite obvious to us that the decision in Civil Case No. 87-41058 could not have decreed at the time the execution of any
deed of sale between the Cu Unjiengs and petitioners.
WHEREFORE, we UPHOLD the Court of Appeals in ultimately setting aside the questioned Orders, dated 30 August 1991 and 27
September 1991, of the court a quo.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------
G.R. No. 106063 November 21, 1996 [E]
EQUATORIAL REALTY DEVELOPMENT, INC. & CARMELO & BAUERMANN, INC., petitioners, vs. MAYFAIR THEATER, INC.,
respondent
Before us is a petition for review of the decision
1
of the Court of
Appeals
2
involving questions in the resolution of which the respondent appellate court analyzed and interpreted particular
provisions of our laws on contracts and sales. In its assailed decision, the respondent court reversed the trial court
3
which, in
dismissing the complaint for specific performance with damages and annulment of contract,
4
found the option clause in the
lease contracts entered into by private respondent Mayfair Theater, Inc. (hereafter, Mayfair) and petitioner Carmelo &
Bauermann, Inc. (hereafter, Carmelo) to be impossible of performance and unsupported by a consideration and the
subsequent sale of the subject property to petitioner Equatorial Realty Development, Inc. (hereafter, Equatorial) to have been
made without any breach of or prejudice to, the said lease contracts.
5

We reproduce below the facts as narrated by the respondent court, which narration, we note, is almost verbatim the basis of
the statement of facts as rendered by the petitioners in their pleadings:
Carmelo owned a parcel of land, together with two 2-storey buildings constructed thereon located at Claro M Recto
Avenue, Manila, and covered by TCT No. 18529 issued in its name by the Register of Deeds of Manila.
On June 1, 1967 Carmelo entered into a contract of lease with Mayfair for the latter's lease of a portion of Carmelo's
property particularly described, to wit:
A PORTION OF THE SECOND FLOOR of the two-storey building, situated at C.M. Recto Avenue,
Manila, with a floor area of 1,610 square meters.
THE SECOND FLOOR AND MEZZANINE of the two-storey building, situated at C.M. Recto
Avenue, Manila, with a floor area of 150 square meters.
for use by Mayfair as a motion picture theater and for a term of twenty (20) years. Mayfair thereafter constructed on
the leased property a movie house known as "Maxim Theatre."
Two years later, on March 31, 1969, Mayfair entered into a second contract of lease with Carmelo for the lease of
another portion of Carmelo's property, to wit:
A PORTION OF THE SECOND FLOOR of the two-storey building, situated at C.M. Recto Avenue,
Manila, with a floor area of 1,064 square meters.
THE TWO (2) STORE SPACES AT THE GROUND FLOOR and MEZZANINE of the two-storey
building situated at C.M. Recto Avenue, Manila, with a floor area of 300 square meters and bearing
street numbers 1871 and 1875,


for similar use as a movie theater and for a similar term of twenty (20) years. Mayfair put up another movie house
known as "Miramar Theatre" on this leased property.
Both contracts of lease provides (sic) identically worded paragraph 8, which reads:
That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days
exclusive option to purchase the same.
In the event, however, that the leased premises is sold to someone other than the LESSEE, the
LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of
Sale hereof that the purchaser shall recognize this lease and be bound by all the terms and
conditions thereof.
Sometime in August 1974, Mr. Henry Pascal of Carmelo informed Mr. Henry Yang, President of Mayfair, through a
telephone conversation that Carmelo was desirous of selling the entire Claro M. Recto property. Mr. Pascal told Mr.
Yang that a certain Jose Araneta was offering to buy the whole property for US Dollars 1,200,000, and Mr. Pascal
asked Mr. Yang if the latter was willing to buy the property for Six to Seven Million Pesos.
Mr. Yang replied that he would let Mr. Pascal know of his decision. On August 23, 1974, Mayfair replied through a
letter stating as follows:
It appears that on August 19, 1974 your Mr. Henry Pascal informed our client's Mr. Henry Yang
through the telephone that your company desires to sell your above-mentioned C.M. Recto Avenue
property.
Under your company's two lease contracts with our client, it is uniformly provided:
8. That if the LESSOR should desire to sell the leased premises the LESSEE shall be given 30-
days exclusive option to purchase the same. In the event, however, that the leased premises is
sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it is (sic)
herebinds (sic) and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall
recognize this lease and be bound by all the terms and conditions hereof (sic).
Carmelo did not reply to this letter.
On September 18, 1974, Mayfair sent another letter to Carmelo purporting to express interest in acquiring not only
the leased premises but "the entire building and other improvements if the price is reasonable. However, both
Carmelo and Equatorial questioned the authenticity of the second letter.
Four years later, on July 30, 1978, Carmelo sold its entire C.M. Recto Avenue land and building, which included the
leased premises housing the "Maxim" and "Miramar" theatres, to Equatorial by virtue of a Deed of Absolute Sale, for
the total sum of P11,300,000.00.
In September 1978, Mayfair instituted the action a quo for specific performance and annulment of the sale of the
leased premises to Equatorial. In its Answer, Carmelo alleged as special and affirmative defense (a) that it had
informed Mayfair of its desire to sell the entire C.M. Recto Avenue property and offered the same to Mayfair, but the
latter answered that it was interested only in buying the areas under lease, which was impossible since the property
was not a condominium; and (b) that the option to purchase invoked by Mayfair is null and void for lack of
consideration. Equatorial, in its Answer, pleaded as special and affirmative defense that the option is void for lack of
consideration (sic) and is unenforceable by reason of its impossibility of performance because the leased premises
could not be sold separately from the other portions of the land and building. It counterclaimed for cancellation of the
contracts of lease, and for increase of rentals in view of alleged supervening extraordinary devaluation of the
currency. Equatorial likewise cross-claimed against co-defendant Carmelo for indemnification in respect of Mayfair's
claims.
During the pre-trial conference held on January 23, 1979, the parties stipulated on the following:
1. That there was a deed of sale of the contested premises by the defendant Carmelo . . . in favor
of defendant Equatorial . . .;


2. That in both contracts of lease there appear (sic) the stipulation granting the plaintiff exclusive
option to purchase the leased premises should the lessor desire to sell the same (admitted subject
to the contention that the stipulation is null and void);
3. That the two buildings erected on this land are not of the condominium plan;
4. That the amounts stipulated and mentioned in paragraphs 3 (a) and (b) of the contracts of lease
constitute the consideration for the plaintiff's occupancy of the leased premises, subject of the
same contracts of lease, Exhibits A and B;
xxx xxx xxx
6. That there was no consideration specified in the option to buy embodied in the contract;
7. That Carmelo & Bauermann owned the land and the two buildings erected thereon;
8. That the leased premises constitute only the portions actually occupied by the theaters; and
9. That what was sold by Carmelo & Bauermann to defendant Equatorial Realty is the land and the
two buildings erected thereon.
xxx xxx xxx
After assessing the evidence, the court a quo rendered the appealed decision, the decretal portion of which reads as
follows:
WHEREFORE, judgment is hereby rendered:
(1) Dismissing the complaint with costs against the plaintiff;
(2) Ordering plaintiff to pay defendant Carmelo & Bauermann P40,000.00 by way of attorney's fees
on its counterclaim;
(3) Ordering plaintiff to pay defendant Equatorial Realty P35,000.00 per month as reasonable
compensation for the use of areas not covered by the contract (sic) of lease from July 31, 1979
until plaintiff vacates said area (sic) plus legal interest from July 31, 1978; P70,000 00 per month as
reasonable compensation for the use of the premises covered by the contracts (sic) of lease dated
(June 1, 1967 from June 1, 1987 until plaintiff vacates the premises plus legal interest from June 1,
1987; P55,000.00 per month as reasonable compensation for the use of the premises covered by
the contract of lease dated March 31, 1969 from March 30, 1989 until plaintiff vacates the premises
plus legal interest from March 30, 1989; and P40,000.00 as attorney's fees;
(4) Dismissing defendant Equatorial's crossclaim against defendant Carmelo & Bauermann.
The contracts of lease dated June 1, 1967 and March 31, 1969 are declared expired and all
persons claiming rights under these contracts are directed to vacate the premises.
6

The trial court adjudged the identically worded paragraph 8 found in both aforecited lease contracts to be an option clause
which however cannot be deemed to be binding on Carmelo because of lack of distinct consideration therefor.
The court a quo ratiocinated:
Significantly, during the pre-trial, it was admitted by the parties that the option in the contract of lease is not supported
by a separate consideration. Without a consideration, the option is therefore not binding on defendant Carmelo &
Bauermann to sell the C.M. Recto property to the former. The option invoked by the plaintiff appears in the contracts
of lease . . . in effect there is no option, on the ground that there is no consideration. Article 1352 of the Civil Code,
provides:
Contracts without cause or with unlawful cause, produce no effect whatever. The cause is unlawful
if it is contrary to law, morals, good custom, public order or public policy.


Contracts therefore without consideration produce no effect whatsoever. Article 1324 provides:
When the offeror has allowed the offeree a certain period to accept, the offer may be withdrawn at
any time before acceptance by communicating such withdrawal, except when the option is founded
upon consideration, as something paid or promised.
in relation with Article 1479 of the same Code:
A promise to buy and sell a determine thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determine thing for a price certain is binding upon
the promissor if the promise is supported by a consideration distinct from the price.
The plaintiff cannot compel defendant Carmelo to comply with the promise unless the former establishes the
existence of a distinct consideration. In other words, the promisee has the burden of proving the consideration. The
consideration cannot be presumed as in Article 1354:
Although the cause is not stated in the contract, it is presumed that it exists and is lawful unless the
debtor proves the contrary.
where consideration is legally presumed to exists. Article 1354 applies to contracts in general, whereas when it
comes to an option it is governed particularly and more specifically by Article 1479 whereby the promisee has the
burden of proving the existence of consideration distinct from the price. Thus, in the case of Sanchez vs. Rigor, 45
SCRA 368, 372-373, the Court said:
(1) 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. In other words, Article 1479 is controlling in the case at bar.
(2) In order that said unilateral promise may be binding upon the promissor, 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 promissor 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. Plaintiff herein has not even alleged the existence thereof in
his complaint.
7

It follows that plaintiff cannot compel defendant Carmelo & Bauermann to sell the C.M. Recto property to the former.
Mayfair taking exception to the decision of the trial court, the battleground shifted to the respondent Court of Appeals.
Respondent appellate court reversed the court a quo and rendered judgment:
1. Reversing and setting aside the appealed Decision;
2. Directing the plaintiff-appellant Mayfair Theater Inc. to pay and return to Equatorial the amount of P11,300,000.00
within fifteen (15) days from notice of this Decision, and ordering Equatorial Realty Development, Inc. to accept such
payment;
3. Upon payment of the sum of P11,300,000, directing Equatorial Realty Development, Inc. to execute the deeds and
documents necessary for the issuance and transfer of ownership to Mayfair of the lot registered under TCT Nos.
17350, 118612, 60936, and 52571; and
4. Should plaintiff-appellant Mayfair Theater, Inc. be unable to pay the amount as adjudged, declaring the Deed of
Absolute Sale between the defendants-appellants Carmelo & Bauermann, Inc. and Equatorial Realty Development,
Inc. as valid and binding upon all the parties.
8

Rereading the law on the matter of sales and option contracts, respondent Court of Appeals differentiated between Article
1324 and Article 1479 of the Civil Code, analyzed their application to the facts of this case, and concluded that since
paragraph 8 of the two lease contracts does not state a fixed price for the purchase of the leased premises, which is an


essential element for a contract of sale to be perfected, what paragraph 8 is, must be a right of first refusal and not an option
contract. It explicated:
Firstly, the court a quo misapplied the provisions of Articles 1324 and 1479, second paragraph, of the Civil Code.
Article 1324 speaks of an "offer" made by an offeror which the offeree may or may not accept within a certain period.
Under this article, the offer may be withdrawn by the offeror before the expiration of the period and while the offeree
has not yet accepted the offer. However, the offer cannot be withdrawn by the offeror within the period if a
consideration has been promised or given by the offeree in exchange for the privilege of being given that period
within which to accept the offer. The consideration is distinct from the price which is part of the offer. The contract that
arises is known as option. In the case of Beaumont vs. Prieto, 41 Phil. 670, the Supreme court, citing Bouvier,
defined an option as follows: "A contract by virtue of which A, in consideration of the payment of a certain sum to B,
acquires the privilege of buying from or selling to B, certain securities or properties within a limited time at a specified
price," (pp. 686-7).
Article 1479, second paragraph, on the other hand, contemplates of an "accepted unilateral promise to buy or to sell
a determinate thing for a price within (which) is binding upon the promisee if the promise is supported by a
consideration distinct from the price." That "unilateral promise to buy or to sell a determinate thing for a price certain"
is called an offer. An "offer", in laws, is a proposal to enter into a contract (Rosenstock vs. Burke, 46 Phil. 217). To
constitute a legal offer, the proposal must be certain as to the object, the price and other essential terms of the
contract (Art. 1319, Civil Code).
Based on the foregoing discussion, it is evident that the provision granting Mayfair "30-days exclusive option to
purchase" the leased premises is NOT AN OPTION in the context of Arts. 1324 and 1479, second paragraph, of the
Civil Code. Although the provision is certain as to the object (the sale of the leased premises) the price for which the
object is to be sold is not stated in the provision Otherwise stated, the questioned stipulation is not by itself, an
"option" or the "offer to sell" because the clause does not specify the price for the subject property.
Although the provision giving Mayfair "30-days exclusive option to purchase" cannot be legally categorized as an
option, it is, nevertheless, a valid and binding stipulation. What the trial court failed to appreciate was the intention of
the parties behind the questioned proviso.
xxx xxx xxx
The provision in question is not of the pro-forma type customarily found in a contract of lease. Even appellees have
recognized that the stipulation was incorporated in the two Contracts of Lease at the initiative and behest of Mayfair.
Evidently, the stipulation was intended to benefit and protect Mayfair in its rights as lessee in case Carmelo should
decide, during the term of the lease, to sell the leased property. This intention of the parties is achieved in two ways
in accordance with the stipulation. The first is by giving Mayfair "30-days exclusive option to purchase" the leased
property. The second is, in case Mayfair would opt not to purchase the leased property, "that the purchaser (the new
owner of the leased property) shall recognize the lease and be bound by all the terms and conditions thereof."
In other words, paragraph 8 of the two Contracts of lease, particularly the stipulation giving Mayfair "30-days
exclusive option to purchase the (leased premises)," was meant to provide Mayfair the opportunity to purchase and
acquire the leased property in the event that Carmelo should decide to dispose of the property. In order to realize this
intention, the implicit obligation of Carmelo once it had decided to sell the leased property, was not only to notify
Mayfair of such decision to sell the property, but, more importantly, to make an offer to sell the leased premises to
Mayfair, giving the latter a fair and reasonable opportunity to accept or reject the offer, before offering to sell or selling
the leased property to third parties. The right vested in Mayfair is analogous to the right of first refusal, which means
that Carmelo should have offered the sale of the leased premises to Mayfair before offering it to other parties, or, if
Carmelo should receive any offer from third parties to purchase the leased premises, then Carmelo must first give
Mayfair the opportunity to match that offer.
In fact, Mr. Pascal understood the provision as giving Mayfair a right of first refusal when he made the telephone call
to Mr. Yang in 1974. Mr. Pascal thus testified:
Q Can you tell this Honorable Court how you made the offer to Mr. Henry Yang
by telephone?
A I have an offer from another party to buy the property and having the offer we
decided to make an offer to Henry Yang on a first-refusal basis. (TSN November
8, 1983, p. 12.).


and on cross-examination:
Q When you called Mr. Yang on August 1974 can you remember exactly what
you have told him in connection with that matter, Mr. Pascal?
A More or less, I told him that I received an offer from another party to buy the
property and I was offering him first choice of the enter property. (TSN,
November 29, 1983, p. 18).
We rule, therefore, that the foregoing interpretation best renders effectual the intention of the parties.
9

Besides the ruling that paragraph 8 vests in Mayfair the right of first refusal as to which the requirement of distinct
consideration indispensable in an option contract, has no application, respondent appellate court also addressed the claim of
Carmelo and Equatorial that assuming arguendo that the option is valid and effective, it is impossible of performance because
it covered only the leased premises and not the entire Claro M. Recto property, while Carmelo's offer to sell pertained to the
entire property in question. The Court of Appeals ruled as to this issue in this wise:
We are not persuaded by the contentions of the defendants-appellees. It is to be noted that the Deed of Absolute
Sale between Carmelo and Equatorial covering the whole Claro M. Recto property, made reference to four titles: TCT
Nos. 17350, 118612, 60936 and 52571. Based on the information submitted by Mayfair in its appellant's Brief (pp. 5
and 46) which has not been controverted by the appellees, and which We, therefore, take judicial notice of the two
theaters stand on the parcels of land covered by TCT No. 17350 with an area of 622.10 sq. m and TCT No. 118612
with an area of 2,100.10 sq. m. The existence of four separate parcels of land covering the whole Recto property
demonstrates the legal and physical possibility that each parcel of land, together with the buildings and improvements
thereof, could have been sold independently of the other parcels.
At the time both parties executed the contracts, they were aware of the physical and structural conditions of the
buildings on which the theaters were to be constructed in relation to the remainder of the whole Recto property. The
peculiar language of the stipulation would tend to limit Mayfair's right under paragraph 8 of the Contract of Lease to
the acquisition of the leased areas only. Indeed, what is being contemplated by the questioned stipulation is a
departure from the customary situation wherein the buildings and improvements are included in and form part of the
sale of the subjacent land. Although this situation is not common, especially considering the non-condominium nature
of the buildings, the sale would be valid and capable of being performed. A sale limited to the leased premises only, if
hypothetically assumed, would have brought into operation the provisions of co-ownership under which Mayfair would
have become the exclusive owner of the leased premises and at the same time a co-owner with Carmelo of the
subjacent land in proportion to Mayfair's interest over the premises sold to it.
10

Carmelo and Equatorial now comes before us questioning the correctness and legal basis for the decision of respondent Court
of Appeals on the basis of the following assigned errors:
I
THE COURT OF APPEALS GRAVELY ERRED IN CONCLUDING THAT THE OPTION CLAUSE IN THE
CONTRACTS OF LEASE IS ACTUALLY A RIGHT OF FIRST REFUSAL PROVISO. IN DOING SO THE COURT OF
APPEALS DISREGARDED THE CONTRACTS OF LEASE WHICH CLEARLY AND UNEQUIVOCALLY PROVIDE
FOR AN OPTION, AND THE ADMISSION OF THE PARTIES OF SUCH OPTION IN THEIR STIPULATION OF
FACTS.
II
WHETHER AN OPTION OR RIGHT OF FIRST REFUSAL, THE COURT OF APPEALS ERRED IN DIRECTING
EQUATORIAL TO EXECUTE A DEED OF SALE EIGHTEEN (18) YEARS AFTER MAYFAIR FAILED TO EXERCISE
ITS OPTION (OR, EVEN ITS RIGHT OF FIRST REFUSAL ASSUMING IT WAS ONE) WHEN THE CONTRACTS
LIMITED THE EXERCISE OF SUCH OPTION TO 30 DAYS FROM NOTICE.
III
THE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT DIRECTED IMPLEMENTATION OF ITS DECISION
EVEN BEFORE ITS FINALITY, AND WHEN IT GRANTED MAYFAIR A RELIEF THAT WAS NOT EVEN PRAYED
FOR IN THE COMPLAINT.
IV


THE COURT OF APPEALS VIOLATED ITS OWN INTERNAL RULES IN THE ASSIGNMENT OF APPEALED
CASES WHEN IT ALLOWED THE SAME DIVISION XII, PARTICULARLY JUSTICE MANUEL HERRERA, TO
RESOLVE ALL THE MOTIONS IN THE "COMPLETION PROCESS" AND TO STILL RESOLVE THE MERITS OF
THE CASE IN THE "DECISION STAGE".
11


We shall first dispose of the fourth assigned error respecting alleged irregularities in the raffle of this case in the Court of
Appeals. Suffice it to say that in our Resolution,
12
dated December 9, 1992, we already took note of this matter and set out the
proper applicable procedure to be the following:
On September 20, 1992, counsel for petitioner Equatorial Realty Development, Inc. wrote a letter-complaint to this
Court alleging certain irregularities and infractions committed by certain lawyers, and Justices of the Court of Appeals
and of this Court in connection with case CA-G.R. CV No. 32918 (now G.R. No. 106063). This partakes of the nature
of an administrative complaint for misconduct against members of the judiciary. While the letter-complaint arose as
an incident in case CA-G.R. CV No. 32918 (now G.R. No. 106063), the disposition thereof should be separate and
independent from Case G.R. No. 106063. However, for purposes of receiving the requisite pleadings necessary in
disposing of the administrative complaint, this Division shall continue to have control of the case. Upon completion
thereof, the same shall be referred to the Court En Banc for proper disposition.
13

This court having ruled the procedural irregularities raised in the fourth assigned error of Carmelo and Equatorial, to be an
independent and separate subject for an administrative complaint based on misconduct by the lawyers and justices implicated
therein, it is the correct, prudent and consistent course of action not to pre-empt the administrative proceedings to be
undertaken respecting the said irregularities. Certainly, a discussion thereupon by us in this case would entail a finding on the
merits as to the real nature of the questioned procedures and the true intentions and motives of the players therein.
In essence, our task is two-fold: (1) to define the true nature, scope and efficacy of paragraph 8 stipulated in the two contracts
of lease between Carmelo and Mayfair in the face of conflicting findings by the trial court and the Court of Appeals; and (2) to
determine the rights and obligations of Carmelo and Mayfair, as well as Equatorial, in the aftermath of the sale by Carmelo of
the entire Claro M. Recto property to Equatorial.
Both contracts of lease in question provide the identically worded paragraph 8, which reads:
That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive option to
purchase the same.
In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound
and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall
recognize this lease and be bound by all the terms and conditions thereof.
14

We agree with the respondent Court of Appeals that the aforecited contractual stipulation provides for a right of first refusal in
favor of Mayfair. It is not an option clause or an option contract. It is a contract of a right of first refusal.
As early as 1916, in the case of Beaumont vs. Prieto,
15
unequivocal was our characterization of an option contract as one
necessarily involving the choice granted to another for a distinct and separate consideration as to whether or not to purchase a
determinate thing at a predetermined fixed price.
It is unquestionable that, by means of the document Exhibit E, to wit, the letter of December 4, 1911, quoted at the
beginning of this decision, the defendant Valdes granted to the plaintiff Borck the right to purchase the Nagtajan
Hacienda belonging to Benito Legarda, during the period of three months and for its assessed valuation, a grant
which necessarily implied the offer or obligation on the part of the defendant Valdes to sell to Borck the said hacienda
during the period and for the price mentioned . . . There was, therefore, a meeting of minds on the part of the one and
the other, with regard to the stipulations made in the said document. But it is not shown that there was any cause or
consideration for that agreement, and this omission is a bar which precludes our holding that the stipulati ons
contained in Exhibit E is a contract of option, for, . . . there can be no contract without the requisite, among others, of
the cause for the obligation to be established.
In his Law Dictionary, edition of 1897, Bouvier defines an option as a contract, in the following language:
A contract by virtue of which A, in consideration of the payment of a certain sum to B, acquires the
privilege of buying from, or selling to B, certain securities or properties within a limited time at a
specified price. (Story vs. Salamon, 71 N.Y., 420.)


From vol. 6, page 5001, of the work "Words and Phrases," citing the case of Ide vs. Leiser (24 Pac., 695; 10 Mont., 5;
24 Am. St. Rep., 17) the following quotation has been taken:
An agreement in writing to give a person the option to purchase lands within a given time at a
named price is neither a sale nor an agreement to sell. It is simply a contract by which the owner of
property agrees with another person that he shall have the right to buy his property at a fixed price
within a certain time. He does not sell his land; he does not then agree to sell it; but he does sell
something; that is, the right or privilege to buy at the election or option of the other party. The
second party gets in praesenti, not lands, nor an agreement that he shall have lands, but he does
get something of value; that is, the right to call for and receive lands if he elects. The owner parts
with his right to sell his lands, except to the second party, for a limited period. The second party
receives this right, or, rather, from his point of view, he receives the right to elect to buy.
But the two definitions above cited refer to the contract of option, or, what amounts to the same thing, to the case
where there was cause or consideration for the obligation, the subject of the agreement made by the parties; while in
the case at bar there was no such cause or consideration.
16
(Emphasis ours.)
The rule so early established in this jurisdiction is that the deed of option or the option clause in a contract, in order to be valid
and enforceable, must, among other things, indicate the definite price at which the person granting the option, is willing to sell.
Notably, in one case we held that the lessee loses his right to buy the leased property for a named price per square meter upon failure
to make the purchase within the time specified;
17
in one other case we freed the landowner from her promise to sell her land if the
prospective buyer could raise P4,500.00 in three weeks because such option was not supported by a distinct consideration;
18
in the
same vein in yet one other case, we also invalidated an instrument entitled, "Option to Purchase" a parcel of land for the sum of
P1,510.00 because of lack of consideration;
19
and as an exception to the doctrine enumerated in the two preceding cases, in another
case, we ruled that the option to buy the leased premises for P12,000.00 as stipulated in the lease contract, is not without consideration
for in reciprocal contracts, like lease, the obligation or promise of each party is the consideration for that of the other.
20
In all these
cases, the selling price of the object thereof is always predetermined and specified in the option clause in the contract or in the separate
deed of option. We elucidated, thus, in the very recent case of Ang Yu Asuncion vs. Court of Appeals
21
that:
. . . In sales, particularly, to which the topic for discussion about the case at bench belongs, the contract is perfected
when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing
or right to another, called the buyer, over which the latter agrees. Article 1458 of the Civil Code provides:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional.
When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably the ownership of the
thing sold in retained until the fulfillment of a positive suspensive condition (normally, the full payment of the purchase
price), the breach of the condition will prevent the obligation to convey title from acquiring an obligatory force. . . .
An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can
be obligatory on the parties, and compliance therewith may accordingly be exacted.
An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a
valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of
option. This contract is legally binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil
Code, viz:
Art. 1479. . . .
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. (1451a).
Observe, however, that the option is not the contract of sale itself. The optionee has the right, but not the obligation,
to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral
promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective
undertakings.


Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect promise (policitacion) is merely an
offer. Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or
only as proposals. These relations, until a contract is perfected, are not considered binding commitments. Thus, at
any time prior to the perfection of the contract, either negotiating party may stop the negotiation. The offer, at this
stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and
not necessarily when the offeree learns of the withdrawal (Laudico vs. Arias, 43 Phil. 270). Where a period is given to
the offeree within which to accept the offer, the following rules generally govern:
(1) If the period is not itself founded upon or supported by a consideration, the offeror is still free and has the right to
withdraw the offer before its acceptance, or if an acceptance has been made, before the offeror's coming to know of
such fact, by communicating that withdrawal to the offeree (see Art. 1324, Civil Code; see also Atkins, Kroll & Co. vs.
Cua, 102 Phil. 948, holding that this rule is applicable to a unilateral promise to sell under Art. 1479, modifying the
previous decision in South Western Sugar vs. Atlantic Gulf, 97 Phil. 249; see also Art. 1319, Civil Code; Rural Bank
of Paraaque, Inc. vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA 368). The right to withdraw,
however, must not be exercised whimsically or arbitrarily; otherwise, it could give rise to a damage claim under Article
19 of the Civil Code which ordains that "every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith."
(2) If the period has a separate consideration, a contract of "option" deemed perfected, and it would be a breach of
that contract to withdraw the offer during the agreed period. The option, however, is an independent contract by itself;
and it is to be distinguished from the projected main agreement (subject matter of the option) which is obviously yet to
be concluded. If, in fact, the optioner-offeror withdraws the offer before its acceptance (exercise of the option) by the
optionee-offeree, the latter may not sue for specific performance on the proposed contract ("object" of the option)
since it has failed to reach its own stage of perfection. The optioner-offeror, however, renders himself liable for
damages for breach of the opinion. . .
In the light of the foregoing disquisition and in view of the wording of the questioned provision in the two lease contracts
involved in the instant case, we so hold that no option to purchase in contemplation of the second paragraph of Article 1479 of
the Civil Code, has been granted to Mayfair under the said lease contracts.
Respondent Court of Appeals correctly ruled that the said paragraph 8 grants the right of first refusal to Mayfair and is not an
option contract. It also correctly reasoned that as such, the requirement of a separate consideration for the option, has no
applicability in the instant case.
There is nothing in the identical Paragraphs "8" of the June 1, 1967 and March 31, 1969 contracts which would bring them into
the ambit of the usual offer or option requiring an independent consideration.
An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price. It is a separate and
distinct contract from that which the parties may enter into upon the consummation of the option. It must be supported by
consideration.
22
In the instant case, the right of first refusal is an integral part of the contracts of lease. The consideration is
built into the reciprocal obligations of the parties.
To rule that a contractual stipulation such as that found in paragraph 8 of the contracts is governed by Article 1324 on
withdrawal of the offer or Article 1479 on promise to buy and sell would render in effectual or "inutile" the provisions on right of
first refusal so commonly inserted in leases of real estate nowadays. The Court of Appeals is correct in stating that Paragraph
8 was incorporated into the contracts of lease for the benefit of Mayfair which wanted to be assured that it shall be given the
first crack or the first option to buy the property at the price which Carmelo is willing to accept. It is not also correct to say that
there is no consideration in an agreement of right of first refusal. The stipulation is part and parcel of the entire contract of
lease. The consideration for the lease includes the consideration for the right of first refusal. Thus, Mayfair is in effect stating
that it consents to lease the premises and to pay the price agreed upon provided the lessor also consents that, should it sel l
the leased property, then, Mayfair shall be given the right to match the offered purchase price and to buy the property at that
price. As stated in Vda. De Quirino vs. Palarca,
23
in reciprocal contract, the obligation or promise of each party is the
consideration for that of the other.
The respondent Court of Appeals was correct in ascertaining the true nature of the aforecited paragraph 8 to be that of a
contractual grant of the right of first refusal to Mayfair.
We shall now determine the consequential rights, obligations and liabilities of Carmelo, Mayfair and Equatorial.
The different facts and circumstances in this case call for an amplification of the precedent in Ang Yu Asuncion vs. Court of
Appeals.
24

First and foremost is that the petitioners acted in bad faith to render Paragraph 8 "inutile".


What Carmelo and Mayfair agreed to, by executing the two lease contracts, was that Mayfair will have the right of first refusal
in the event Carmelo sells the leased premises. It is undisputed that Carmelo did recognize this right of Mayfair, for it informed
the latter of its intention to sell the said property in 1974. There was an exchange of letters evidencing the offer and counter-
offers made by both parties. Carmelo, however, did not pursue the exercise to its logical end. While it initially recognized
Mayfair's right of first refusal, Carmelo violated such right when without affording its negotiations with Mayfair the full process
to ripen to at least an interface of a definite offer and a possible corresponding acceptance within the "30-day exclusive option"
time granted Mayfair, Carmelo abandoned negotiations, kept a low profile for some time, and then sold, without prior notice to
Mayfair, the entire Claro M Recto property to Equatorial.
Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question rescissible. We agree with
respondent Appellate Court that the records bear out the fact that Equatorial was aware of the lease contracts because its
lawyers had, prior to the sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser in good
faith, and, therefore, rescission lies.
. . . Contract of Sale was not voidable but rescissible. Under Article 1380 to 1381(3) of the Civil Code, a contract
otherwise valid may nonetheless be subsequently rescinded by reason of injury to third persons, like creditors. The
status of creditors could be validly accorded the Bonnevies for they had substantial interests that were prejudiced by
the sale of the subject property to the petitioner without recognizing their right of first priority under the Contract of
Lease.
According to Tolentino, rescission is a remedy granted by law to the contracting parties and even to third persons, to
secure reparation for damages caused to them by a contract, even if this should be valid, by means of the restoration
of things to their condition at the moment prior to the celebration of said contract. It 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 preferent right created by the contract. Rescission implies a contract
which, even if initially valid, produces a lesion or pecuniary damage to someone that justifies its invalidation for
reasons of equity.
It is true that the acquisition by a third person of the property subject of the contract is an obstacle to the action for its
rescission where it is shown that such third person is in lawful possession of the subject of the contract and that he
did not act in bad faith. However, this rule is not applicable in the case before us because the petitioner is not
considered a third party in relation to the Contract of Sale nor may its possession of the subject property be regarded
as acquired lawfully and in good faith.
Indeed, Guzman, Bocaling and Co. was the vendee in the Contract of Sale. Moreover, the petitioner cannot be
deemed a purchaser in good faith for the record shows that it categorically admitted it was aware of the lease in favor
of the Bonnevies, who were actually occupying the subject property at the time it was sold to it. Although the Contract
of Lease was not annotated on the transfer certificate of title in the name of the late Jose Reynoso and Africa
Reynoso, the petitioner cannot deny actual knowledge of such lease which was equivalent to and indeed more
binding than presumed notice by registration.
A purchaser in good faith and for value is one who buys the property of another without notice that some other person
has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or
before he has notice of the claim or interest of some other person in the property. Good faith connotes an honest
intention to abstain from taking unconscientious advantage of another. Tested by these principles, the petitioner
cannot tenably claim to be a buyer in good faith as it had notice of the lease of the property by the Bonnevies and
such knowledge should have cautioned it to look deeper into the agreement to determine if it involved stipulations
that would prejudice its own interests.
The petitioner insists that it was not aware of the right of first priority granted by the Contract of Lease. Assuming this
to be true, we nevertheless agree with the observation of the respondent court that:
If Guzman-Bocaling failed to inquire about the terms of the Lease Contract, which includes Par. 20
on priority right given to the Bonnevies, it had only itself to blame. Having known that the property it
was buying was under lease, it behooved it as a prudent person to have required Reynoso or the
broker to show to it the Contract of Lease in which Par. 20 is contained.
25

Petitioners assert the alleged impossibility of performance because the entire property is indivisible property. It was petitioner
Carmelo which fixed the limits of the property it was leasing out. Common sense and fairness dictate that instead of nullifyi ng
the agreement on that basis, the stipulation should be given effect by including the indivisible appurtenances in the sale of the
dominant portion under the right of first refusal. A valid and legal contract where the ascendant or the more important of the
two parties is the landowner should be given effect, if possible, instead of being nullified on a selfish pretext posited by the
owner. Following the arguments of petitioners and the participation of the owner in the attempt to strip Mayfair of its rights, the


right of first refusal should include not only the property specified in the contracts of lease but also the appurtenant portions
sold to Equatorial which are claimed by petitioners to be indivisible. Carmelo acted in bad faith when it sold the entire property
to Equatorial without informing Mayfair, a clear violation of Mayfair's rights. While there was a series of exchanges of letters
evidencing the offer and counter-offers between the parties, Carmelo abandoned the negotiations without giving Mayfair full
opportunity to negotiate within the 30-day period.
Accordingly, even as it recognizes the right of first refusal, this Court should also order that Mayfair be authorized to exercise
its right of first refusal under the contract to include the entirety of the indivisible property. The boundaries of the property sold
should be the boundaries of the offer under the right of first refusal. As to the remedy to enforce Mayfair's right, the Court
disagrees to a certain extent with the concluding part of the dissenting opinion of Justice Vitug. The doctrine enunciated in Ang
Yu Asuncion vs. Court of Appeals should be modified, if not amplified under the peculiar facts of this case.
As also earlier emphasized, the contract of sale between Equatorial and Carmelo is characterized by bad faith, since it was
knowingly entered into in violation of the rights of and to the prejudice of Mayfair. In fact, as correctly observed by the Court of
Appeals, Equatorial admitted that its lawyers had studied the contract of lease prior to the sale. Equatorial's knowledge of the
stipulations therein should have cautioned it to look further into the agreement to determine if it involved stipulations that would
prejudice its own interests.
Since Mayfair has a right of first refusal, it can exercise the right only if the fraudulent sale is first set aside or resci nded. All of
these matters are now before us and so there should be no piecemeal determination of this case and leave festering sores to
deteriorate into endless litigation. The facts of the case and considerations of justice and equity require that we order
rescission here and now. 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.
26
The sale of the subject real property by Carmelo to Equatorial should now be rescinded considering that Mayfair,
which had substantial interest over the subject property, was prejudiced by the sale of the subject property to Equatorial
without Carmelo conferring to Mayfair every opportunity to negotiate within the 30-day stipulated period.
27

This Court has always been against multiplicity of suits where all remedies according to the facts and the law can be included.
Since Carmelo sold the property for P11,300,000.00 to Equatorial, the price at which Mayfair could have purchased the
property is, therefore, fixed. It can neither be more nor less. There is no dispute over it. The damages which Mayfair suffered
are in terms of actual injury and lost opportunities. The fairest solution would be to allow Mayfair to exercise its right of first
refusal at the price which it was entitled to accept or reject which is P11,300,000.00. This is clear from the records.
To follow an alternative solution that Carmelo and Mayfair may resume negotiations for the sale to the latter of the disputed
property would be unjust and unkind to Mayfair because it is once more compelled to litigate to enforce its right. It is not proper
to give it an empty or vacuous victory in this case. From the viewpoint of Carmelo, it is like asking a fish if it would accept the
choice of being thrown back into the river. Why should Carmelo be rewarded for and allowed to profit from, its wrongdoing?
Prices of real estate have skyrocketed. After having sold the property for P11,300,000.00, why should it be given another
chance to sell it at an increased price?
Under the Ang Yu Asuncion vs. Court of Appeals decision, the Court stated that there was nothing to execute because a
contract over the right of first refusal belongs to a class of preparatory juridical relations governed not by the law on contracts
but by the codal provisions on human relations. This may apply here if the contract is limited to the buying and selling of the
real property. However, the obligation of Carmelo to first offer the property to Mayfair is embodied in a contract. It is Paragraph
8 on the right of first refusal which created the obligation. It should be enforced according to the law on contracts instead of the
panoramic and indefinite rule on human relations. The latter remedy encourages multiplicity of suits. There is something to
execute and that is for Carmelo to comply with its obligation to the property under the right of the first refusal according to the
terms at which they should have been offered then to Mayfair, at the price when that offer should have been made. Also,
Mayfair has to accept the offer. This juridical relation is not amorphous nor is it merely preparatory. Paragraphs 8 of the two
leases can be executed according to their terms.
On the question of interest payments on the principal amount of P11,300,000.00, it must be borne in mind that both Carmelo
and Equatorial acted in bad faith. Carmelo knowingly and deliberately broke a contract entered into with Mayfair. It sold the
property to Equatorial with purpose and intend to withhold any notice or knowledge of the sale coming to the attention of
Mayfair. All the circumstances point to a calculated and contrived plan of non-compliance with the agreement of first refusal.
On the part of Equatorial, it cannot be a buyer in good faith because it bought the property with notice and full knowledge that
Mayfair had a right to or interest in the property superior to its own. Carmelo and Equatorial took unconscientious advantage of
Mayfair.
Neither may Carmelo and Equatorial avail of considerations based on equity which might warrant the grant of interests. The
vendor received as payment from the vendee what, at the time, was a full and fair price for the property. It has used the
P11,300,000.00 all these years earning income or interest from the amount. Equatorial, on the other hand, has received rents


and otherwise profited from the use of the property turned over to it by Carmelo. In fact, during all the years that this
controversy was being litigated, Mayfair paid rentals regularly to the buyer who had an inferior right to purchase the property.
Mayfair is under no obligation to pay any interests arising from this judgment to either Carmelo or Equatorial.
WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June 23, 1992, in CA-G.R. CV No. 32918,
is HEREBY DENIED. The Deed of Absolute Sale between petitioners Equatorial Realty Development, Inc. and Carmelo &
Bauermann, Inc. is hereby deemed rescinded; petitioner Carmelo & Bauermann is ordered to return to petitioner Equatorial
Realty Development the purchase price. The latter is directed to execute the deeds and documents necessary to return
ownership to Carmelo and Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to
buy the aforesaid lots for P11,300,000.00.