EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs.

THE
SPOUSES LEONOR and GERARDOSANTOS, doing business under the
name and style of "SANTOS BOOKSTORE," and THE COURTOF
APPEALS,
respondents.184 SCRA 614 / G.R. No. 80298, April 26, 1990 1st Divis
ion
FACTS:
A person identifying himself as Professor Jose Cruz placed an order by teleph
one with thepetitioner company for 406 books, payable on delivery. Herein
petitioner prepared and delivered the same together with an invoice. In turn
Cruz issued a personal check covering the purchase price of P8,995.65. Cruz
then sold 120 of the books to private respondent Leonor Santos who, after
verifying the seller's ownership from the invoice he showed her, paid him
P1,700.00. Petitioner made an inquiry with the De la Salle College where
Cruz had claimed to be a dean. Petitioner was informed that there was no
such person in its employ. It was found out that Cruz had no more account or
deposit with the Philippine Amanah Bank, against which he had drawn the
payment check. With the aid of policemen Cruz was trapped. His real name is
Tomas de la Pea. It was found out that 120of the books he had ordered
from EDCA were sold to the private respondents. Petioner and the police
went to Santos store and seized the subject books. The private respondents
sued for recovery of the books after demand for their return was rejected by
EDCA. The Municipal Trial Court ruled in favour of private respondents, which
was sustained by the Regional Trial Court. The Court of Appeals affirmed the
same. Hence, this petition. The petitioner argues that it was, because the
impostor acquired no title to the books that he could have validly transferred
to the private respondents. Its reason is that as the payment check bounced
for lack of funds, there was a failure of consideration that nullified the
contract of sale between it and Cruz.
ISSUE:
Whether or not petitioner has been unlawfully deprived of the books because the check
issued by dela Pena in payment therefore which was dishonored.
HELD:
The contract of sale is consensual and is perfected once agreement is reached between
the parties on the subject matter and the consideration. According to the Civil
Code:
ART. 1475. 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.

ART. 1477. The ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof.
ART. 1478. The parties may stipulate that ownership in the thing shall
not pass to the purchaser until he has fully paid the price.

EQUATORIAL vs. MAYFAIRG.R. No. 106063November 21, 1996

FACTS:
-Petitioners are Carmelo & Bauermann, Inc (owner/seller/lessor) Equatorial
Realty Development, Inc(buyer)
-Respondent is Mayfair Theater, Inc (lessee)
-Carmelo owned a parcel of land with two 2-storey buildings (covered by 4
land titles) at Recto
-In 1967, 2 portions of the property (covered by 2 titles) was leased to
Mayfair for 20 years
-In 1978, Carmelo sold the entire Recto property to Equatorial for
P11,300,000
-Mayfair petitioned for annulment of the sale on the ground that it was
violative of Paragraph 8 of the Contract of lease between respondent and
Carmelo, 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.
-The Trial court ruled in favor of herein petitioners on the ground
that Paragraph 8 was interpreted as an option contract
-Mayfair appealed and the CA reversed the decision of the Trial court saying
that Paragraph 8 should be interpreted as a right of first refusal and not an
option contract
ISSUES:
1. Whether Paragraph 8 constitutes an option contract clause or a right of
first refusal
2. WON sale of property to Equatorial is valid
HELD:
SC ruled in favor of Mayfair ordering recission of the deed of sale and
granting him right of first refusal to buy the property at P11,300,000. The
issues were held as follows:
1. RIGHT OF FIRST REFUSAL
The SC agreed with the CAs ruling that Paragraph 8 cannot
constitute anoption clause (covered in Article 1324 & 1479 of the Civil

Code) for the lack of definite purchasing price in the

agreement. Furthermore, the SC ruled that the stipulation in question was
created to manifest a reciprocal obligation to guard the interest of
Mayfair in case of sale of the property: (1) to give him the option to
purchase the property or (2) to ensure that purchaser of the property shall
recognize the lease agreement earlier made. As such, Paragraph 8
is considered a right of first refusal.
2. NO
Both Carmelo and Equatorial acted in bad faith for entering into
Contract of Sale knowing that Paragraph 8 (right of first refusal) was
agreed upon in the Contract of Lease and that Mayfair (another party) was
interested in the property in question