11 San Miguel Properties Inc v Huang - Stages in the Life of a Contract of Sale

http://sc.judiciary.gov.ph/jurisprudence/2000/july2000/137290.htm
Digest
FACTS: San Miguel Properties is engaged in the purchase and sale of real
properties, of which include two parcels of land. These properties were offered for
sale. Such offer was made to Atty. Dauz on behalf of Sps. Huang. Atty. Dauz wrote
San Miguel informing the respondents interest to buy the property and enclosed
therein a check (P1,000,000.00) as earnest deposit subject to certain conditions, to
wit: (1) that they be given the exclusive option to purchase the property within 30
days from acceptance of the offer; (2) that during the option period, the parties
would negotiate the terms and conditions of the purchase; and (3) petitioner would
secure the necessary approvals while respondents would handle the documentation.
Sobrecarey, San Miguel Properties VP indicated his conformity to the offer; signed
the letter; and accepted the earnest deposit. By agreement of the parties, they
agreed that respondents will be given 6 months within which to pay. Upon failure of
respondents to pay despite the extension of time given, petitioner through its Pres
& CEO Gonzales, wrote Atty. Dauz, that they are returning the earnest deposit.
Respondent spouses through counsel, wrote petitioner demanding the execution of
a deed of conveyance in their favor. They attempted to return the earnest deposit
but were refused by San Miguel. Respondent spouses filed a complaint for specific
performance. Trial court, upon motion, dismissed the complaint, which was reversed
by the CA.
ISSUE: Whether or not all the essential elements existed for a perfected sale.
RULING: No, hence, there was no perfected contract of sale. In the present case, it
is not the giving of earnest money, but the proof of the concurrence of all the
essential elements of the contract of sale which establishes the existence of a
perfected sale. In Navarro v. Sugar producers Cooperative Marketing Association
Inc., we laid down the rule that the manner of payment of the purchase price is an
essential element before a valid and binding contract of sale can exist. Although the
Civil Code does not expressly state that the minds of the parties must also meet on
the terms of payment of the price, the same is needed, otherwise there is no sale.
As held in Toyota Shaw Inc. c. Court of Appeals, agreement on the manner of
payment goes into the price such that a disagreement on the manner of the
payment is tantamount to a failure to agree on the price. WHEREFORE, the decision
of the Court of Appeals is REVERSED and respondents complaint is DISMISSED.

12 Navarro v Sugar Producers Cooperative Marketing Assoc Inc

http://www.lawphil.net/judjuris/juri1961/apr1961/gr_l-12888_1961.html
Digest
we laid down the rule that the manner of payment of the purchase price is an
essential element before a valid and binding contract of sale can exist. Although the
Civil Code does not expressly state that the minds of the parties must also meet on
the terms of payment of the price, the same is needed, otherwise there is no sale.

13 Dizon v CA
http://sc.judiciary.gov.ph/jurisprudence/2003/jan2003/122544.htm
Digest
Dizon

vs.

CA

(G.R.

No.

122544.

January

28,

1999)

Was there a perfected contract of sale when Alice Dizon, agent of the lessor, accepted the
P300k representing the partial payment of the property? NO.
Under Article 1475 of the New Civil Code, 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. Thus, the elements of a contract of
sale are consent, object, and price in money or its equivalent. It bears stressing that the
absence of any of these essential elements negates the existence of a perfected contract of
sale. Sale is a consensual contract and he who alleges it must show its existence by
competent proof.
There was no valid consent by the petitioners (as co-owners of the leased premises) on the
supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and private
respondent. The basis for agency is representation and a person dealing with an agent is put
upon inquiry and must discover upon his peril the authority of the agent.[26] As provided in
Article 1868 of the New Civil Code,there was no showing that petitioners consented to the
act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction
with private respondent. The most prudent thing private respondent should have done was
to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard,
private respondent cannot seek relief on the basis of a supposed agency.
Every person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of
the agents authority, and his ignorance of that authority will not be any excuse.

14 Alcantara-Dauis v de Leon
http://sc.judiciary.gov.ph/jurisprudence/2003/jun2003/149750.htm
Digest

Facts:
Respondents alleged that they are the owners of a parcel of land described as: No.
4786 of the Cadastral Survey of San Manuel situated in the Municipality of San
Manuel, Bounded on the NW., by Lot No. 4785; and on the SE., by Lot Nos. 11094 &
11096; containing an area of Four Thousand Two Hundred Twelve (4,212) sq. m.,
more or less. Covered by Original Certificate of Title No. 22134 of the Land Records
of Pangasinan which Hermoso de Leon inherited from his father Marcelino de Leon
by virtue of a Deed of Extra-judicial Partition. Sometime in the early 1960s,
respondents engaged the services of thelate Atty. Florencio Juan to take care of the
documents of the properties of his parents. Atty. Juan let them sign voluminous
documents. After the death of Atty. Juan, some documents surfaced and most
revealed that their properties had been conveyed by sale or quitclaim to
Hermosos brothers and sisters, to Atty. Juan and his sisters, when in truth and in
fact, no such conveyances were ever intended by them. His signature in the Deed of
Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon was forged.
They discovered that the land in question was sold by Rodolfo de Leon to Aurora
Alcantara. They demanded annulment of the document and reconveyance but
defendants refused
Issue:
1. Whether or not the Deed of Absolute Sale executed by Rodolfo de Leon over the
land in question in favor of petitioner was perfected and binding upon the parties
therein?

2. Whether or not the possession of petitioner including her predecessor-in-interest

Rodolfo de Leon over the land in question was in good faith?

Ruling: Petition has no merit.

1. A contract of sale is consensual. It is perfected by mere consent,]upon a meeting
of the minds on the offer and the acceptance thereof based on subject matter, price
and terms

2. It is during the delivery that the law requires the seller to have the right to
transfer ownership of the thing sold.of payment. the seller s ownership of the thing
sold is not an element in the perfection of the contract of sale. the disputed land
cannot be acquired by prescription regardless of petitioner s good faith. . since a
certificate of registration covers it. a perfected contract of sale cannot be
challenged on the ground of the seller s non-ownership of the thing sold at the time

of the perfection of the contract. At this stage. It is well-settled that no title to

registered land in derogation of that of the registered owner shall be acquired by
prescription or adverse possession. however. Neither can prescription be allowed
against the hereditary successors of the registered owner. creates an obligation on
the part of the seller to transfer ownership and to deliver the subject matter of the
contract. The contract. In general. because they merely step into the shoes of the
decedent and are merely the continuation of the personality of their predecessor in
interest consequently.

15 Equatorial Realty Dev Inc v Mayfair Theater Inc

http://www.lawphil.net/judjuris/juri1996/nov1996/gr_106063_1996.html
Digest
FACTS:

Mayfair Theater, Inc. was a lessee of portions of a building owned by Carmelo & Bauermann, Inc. Their

lease contracts of 20 years (1. which covered a portion of the second floor and mezzanine of a two-storey
building with about 1,610 square meters of floor area, which respondent used as a movie house known as
Maxim Theater 2. two store spaces on the ground floor and the mezzanine, with a combined floor area of
about 300 square meters also used as a movie house Miramar Theater)
Lease contracts contained a provision granting Mayfair a right of first refusal to purchase the subject

properties.
However, before the contracts ended, the subject properties were sold for P11,300 by Carmelo to Equatorial

Realty Development, Inc.

This prompted Mayfair to file a case for the annulment of the Deed of Absolute Sale between Carmelo and

Equatorial, specific performance and damages.

In 1996, the Court ruled in favor of Mayfair.

Barely five months after Mayfair had submitted its Motion for Execution, Equatorial filed an action for

collection of sum of money against Mayfair claiming payment of rentals or reasonable compensation for the
defendants use of the subject premises after its lease contracts had expired.
Maxim Theater contract expired on May 31, 1987, while the Lease Contract covering the premises occupied

by Miramar Theater lapsed on March 31, 1989.

The lower court debunked the claim of Equatorial for unpaid back rentals, holding that the rescission of the

Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual propriety rights,
even in expectancy.
It further ruled that the Court categorically stated that the Deed of Absolute Sale had been rescinded

subjecting the present complaint to res judicata.

Hence, Equatorial filed the present petition.

ISSUE: whether Equatorial was the owner of the subject property and could thus enjoy the fruits or rentals therefrom
HELD: NO.

CIVIL LAW; PROPERTY; CIVIL FRUIT OF OWNERSHIP; RENTALS. Rent is a civil fruit that belongs to the owner
of the property producing it by right of accession. Consequently and ordinarily, the rentals that fell due from the time of
the perfection of the sale to petitioner until its rescission by final judgment should belong to the owner of the property
during that period.
SALES; OWNERSHIP OF THE THING SOLD IS TRANSFERRED, NOT BY CONTRACT ALONE, BUT BY
TRADITION OR DELIVERY. By a contract of sale, one of the contracting parties obligates himself to transfer
ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its
equivalent. Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him
in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee. This right is transferred, not by contract alone, but by
tradition or delivery. Non nudis pactis sed traditione dominia rerum transferantur.
THERE IS DELIVERY WHEN THE THING SOLD IS PLACED UNDER THE CONTROL AND POSSESSION OF THE
VENDEE. [T]here is said to be delivery if and when the thing sold is placed in the control and possession of the
vendee. Thus, it has been held that while the execution of a public instrument of sale is recognized by law as
equivalent to the delivery of the thing sold, such constructive or symbolic delivery, being merely presumptive, is
deemed negated by the failure of the vendee to take actual possession of the land sold. Delivery has been described
as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which
one party parts with the title to and the possession of the property, and the other acquires the right to and the
possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title;
it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of
delivery contemplate the absolute giving up of the control and custody of the property on the part of the vendor, and
the assumption of the same by the vendee.
ID.; NOT PRESENT IN CASE AT BAR. [T]heoretically, a rescissible contract is valid until rescinded. However, this
general principle is not decisive to the issue of whether Equatorial ever acquired the right to collect rentals. What is
decisive is the civil law rule that ownership is acquired, not by mere agreement, but by tradition or delivery. Under the
factual environment of this controversy as found by this Court in the mother case, Equatorial was never put in actual
and effective control or possession of the property because of Mayfairs timely objection.
ID.; EXECUTION OF CONTRACT OF SALE AS FORM OF CONSTRUCTIVE DELIVERY HOLDS TRUE ONLY
WHEN THERE IS NO IMPEDIMENT THAT MAY PREVENT THE PASSING OF THE PROPERTY FROM THE
VENDOR TO THE VENDEE. From the peculiar facts of this case, it is clear that petitioner never took actual control
and possession of the property sold, in view of respondents timely objection to the sale and the continued actual
possession of the property. The objection took the form of a court action impugning the sale which, as we know, was
rescinded by a judgment rendered by this Court in the mother case. It has been held that the execution of a contract
of sale as a form of constructive delivery is a legal fiction. It holds true only when there is no impediment that may
prevent the passing of the property from the hands of the vendor into those of the vendee. When there is such
impediment, fiction yields to reality the delivery has not been effected. Hence, respondents opposition to the
transfer of the property by way of sale to Equatorial was a legally sufficient impediment that effectively prevented the
passing of the property into the latters hands.
ID.; EXECUTION OF PUBLIC INSTRUMENT GIVES RISE ONLY TO A PRIMA FACIE PRESUMPTION OF
DELIVERY. The execution of a public instrument gives rise, . . . only to a prima facie presumption of delivery. Such
presumption is destroyed when the instrument itself expresses or implies that delivery was not intended; or when by
other means it is shown that such delivery was not effected, because a third person was actually in possession of the
thing. In the latter case, the sale cannot be considered consummated.

ID.; OBLIGATIONS AND CONTRACTS; RESCISSIBLE CONTRACTS; NOT ONLY THE LAND AND BUILDING
SOLD SHALL BE RETURNED TO THE SELLER BUT ALSO THE RENTAL PAYMENTS PAID, IF ANY. [T]he point
may be raised that under Article 1164 of the Civil Code, Equatorial as buyer acquired a right to the fruits of the thing
sold from the time the obligation to deliver the property to petitioner arose. That time arose upon the perfection of the
Contract of Sale on July 30, 1978, from which moment the laws provide that the parties to a sale may reciprocally
demand performance. Does this mean that despite the judgment rescinding the sale, the right to the fruits belonged
to, and remained enforceable by, Equatorial? Article 1385 of the Civil Code answers this question in the negative,
because [r]escission creates the obligation to return the things which were the object of the contract, together with
their fruits, and the price with its interest; . . . . Not only the land and building sold, but also the rental payments paid,
if any, had to be returned by the buyer.
ID.; SALES; CONTRACT OF SALE; RENTAL PAYMENTS MADE SHOULD NOT BE CONSTRUED AS A
RECOGNITION OF THE BUYER AS NEW ORDER BUT MERELY TO AVOID IMMINENT EVICTION; CASE AT BAR.
The fact that Mayfair paid rentals to Equatorial during the litigation should not be interpreted to mean either actual
delivery or ipso facto recognition of Equatorials title. The CA Records of the mother case show that Equatorial as
alleged buyer of the disputed properties and as alleged successor-in-interest of Carmelos rights as lessor
submitted two ejectment suits against Mayfair. Filed in the Metropolitan Trial Court of Manila, the first was docketed as
Civil Case No. 121570 on July 9, 1987; and the second, as Civil Case No. 131944 on May 28, 1990. Mayfair
eventually won them both. However, to be able to maintain physical possession of the premises while awaiting the
outcome of the mother case, it had no choice but to pay the rentals. The rental payments made by Mayfair should not
be construed as a recognition of Equatorial as the new owner. They were made merely to avoid imminent eviction.
STATUTORY CONSTRUCTION; GENERAL PROPOSITIONS DO NOT DECIDE SPECIFIC CASES. As pointed
out by Justice Holmes, general propositions do not decide specific cases. Rather, laws are interpreted in the context
of the peculiar factual situation of each case. Each case has its own flesh and blood and cannot be decided on the
basis of isolated clinical classroom principles.
CIVIL LAW; SALES; VALID FROM INCEPTION BUT JUDICIALLY RESCINDED BEFORE IT COULD BE
CONSUMMATED; CASE AT BAR. [T]he sale to Equatorial may have been valid from inception, but it was judicially
rescinded before it could be consummated. Petitioner never acquired ownership, not because the sale was void, as
erroneously claimed by the trial court, but because the sale was not consummated by a legally effective delivery of
the property sold.
ID.; ID.; BUYER IN BAD FAITH; NOT ENTITLED TO ANY BENEFIT; ENTITLED SOLELY TO THE RETURN OF THE
PURCHASE PRICE; MUST BEAR ANY LOSS. [A]ssuming for the sake of argument that there was valid delivery,
petitioner is not entitled to any benefits from the rescinded Deed of Absolute Sale because of its bad faith. This
being the law of the mother case decided in 1996, it may no longer be changed because it has long become final and
executory. . . . Thus, petitioner was and still is entitled solely to the return of the purchase price it paid to Carmelo; no
more, no less. This Court has firmly ruled in the mother case that neither of them is entitled to any consideration of
equity, as both took unconscientious advantage of Mayfair. In the mother case, this Court categorically denied the
payment of interest, a fruit of ownership. By the same token, rentals, another fruit of ownership, cannot be granted
without mocking this Courts en banc Decision, which has long become final. Petitioners claim of reasonable
compensation for respondents use and occupation of the subject property from the time the lease expired cannot be
countenanced. If it suffered any loss, petitioner must bear it in silence, since it had wrought that loss upon itself.
Otherwise, bad faith would be rewarded instead of punished.
ID.; ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. Suffice it to say that, clearly, our ruling in the mother case bars
petitioner from claiming back rentals from respondent. Although the court a quo erred when it declared void from

inception the Deed of Absolute Sale between Carmelo and petitioner, our foregoing discussion supports the grant of
the Motion to Dismiss on the ground that our prior judgment in GR No. 106063 has already resolved the issue of back
rentals. On the basis of the evidence presented during the hearing of Mayfairs Motion to Dismiss, the trial court found
that the issue of ownership of the subject property has been decided by this Court in favor of Mayfair. . . . Hence, the
trial court decided the Motion to Dismiss on the basis of res judicata, even if it erred in interpreting the meaning of
rescinded as equivalent to void. In short, it ruled on the ground raised; namely, bar by prior judgment. By granting
the Motion, it disposed correctly, even if its legal reason for nullifying the sale was wrong.

16 Swedish Match v CA
http://sc.judiciary.gov.ph/jurisprudence/2004/oct2004/128120.htm
Digest
When definite agreement on manner of payment essential? As a consensual
contract, a contract of sale becomes a binding and valid contract upon the meeting
of the minds of the parties as to the price, despite the manner of payment, or even
the breach of that manner of payment. It is not the act of payment of price that
determines the validity of a contract of sale.

17 Bugatti v CA
http://sc.judiciary.gov.ph/jurisprudence/2000/oct2000/138113.htm
Digest

18 Sps Serrano v Caguiat

http://www.lawphil.net/judjuris/juri2007/feb2007/gr_139173_2007.html
Digest

19 Ang Yu v Asuncion
Digest
ANG YU ASUNCION vs. COURT OF APPEALS
FACTS: Petitioner Ang Yu Asuncion and Keh Tiong leased a property of respondents
Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan in Binondo Manila. Respondents

informed plaintiffs that they are offering to sell the premises and are giving them
priority to acquire the same. Respondents offered 6 million for the property but
petitioners offered 5 miliion. Respondents accepted and asked petitioners to put in
writing the terms and conditions but the latter never provided such. When
defendants were about to sell the property, plaintiffs were compelled to file the
complaint to compel defendants to sell the property to them. Court recognizes the
right of first refusal of the petitioner. Notwithstanding the courts decision,
respondent sold the property to Buen Realty and Development Corporation.
ISSUE: Whether or not the petitioners can demand specific performance to the
respondents to sell to them the property.

RULING: No, petitioners never accepted the offer when they refused to make the
terms and condition of the sale. As such, respondents have the right to sell the
property to other parties. Even if 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. The petitioners have been granted off in the first
place is just a mere right of first refusal. 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.

20 Lim vs San and Lo

http://sc.judiciary.gov.ph/jurisprudence/2004/sep2004/159723.htm
Digest