CONDITION FOR PERFECTION OF CONTRACT V.

PERFORMACE OF AN OBLIGATION–
Whether or not the ejectment of the squatters by Respondent is a condition
precedent to the contract of sale such that the contract may be canceled

FACTS:
a) Petitioner’s Arguments (Lim, et al. – Win) - Appealed to SC the decision of CA
b) Respondent’s Arguments (CA and Luna – Lost) - Filed a case against Petitioner for cancellation of a contract
of sale of their land to Petitioner and to return the earnest money they received from Petitioner
Argued that the ejectment of the squatters by him on such land within 60 days is a condition precedent
to the contract of sale under par. 3 thereof. This condition precedent did not take place.
Thus, the contract should be cancelled
CA promulgated a decision in his favor

ISSUE:
Whether or not the ejectment of the squatters by Respondent is a condition precedent to the contract
of sale such that the contract may be canceled

RULING:
Conclusion:
The ejectment of the squatters by Respondent is a not condition precedent. The contract subsists.
Respondent is also ordered to pay the sum of P100,000.00 as moral damages and P50,000.00 as attorney's fees
to Petitioners. The appeal is granted
Rule:
Under Art. 1475 of the Civil Code, there is a perfected contract of sale if there is a meeting of the
minds on the subject and the price. A sale is a consensual contract requiring only the consent of the parties on
these two points.
Application:
In this case, the parties agreed on the subject the 1,013.6 square meter lot and on the purchase price
of P4,000,000.00. No particular form is required for the validity of their contract and, therefore, upon its
perfection, the parties can reciprocally demand performance of their respective obligations. Indeed, the earnest
money given is proof of the perfection of the contract.
Private respondent Luna contends that as condition of ejecting the squatters was not met, she no
longer has an obligation to proceed with the sale of her lot. This contention is erroneous. Private respondent
fails to distinguish between a condition imposed on the perfection of the contract and a condition imposed on
the performance of an obligation. Failure to comply with first condition results in the failure of a contract, while
failure to comply with the second condition only gives the other party the option either to refuse to proceed
with the sale or to waive the condition
There is already a perfected contract. The condition was imposed only on the performance of the
obligation. Hence, petitioners have the right to choose whether to demand the return of P200,000.00 which
they have paid as earnest money or to proceed with the sale. They have chosen to proceed with the
sale and private respondent cannot refuse to do so.
Conclusion:
Thus, the ejectment of the squatters by Respondent is a not condition precedent. The
contractsubsists. Respondent is also ordered to pay the sum of P100,000.00 as moral damages
andP50,000.00 as attorney's fees to Petitioners. The appeal is granted

Roman vs. grimalt

FACTS: Pedro Roman, the owner of the schooner Sta. Maria and Andres Grimalt had been negotiating for
several days for the purchase of the schooner. They agreed upon the sale of the vessel for the sum of P1500
payable on three installments, provided the title papers to the vessel were in proper form. The sale was not
perfected and the purchaser did not consent to the execution of the deed of transfer for the reason that the
title of the vessel was in the name of one Paulina Giron and not in the name of Pedro Roman. Roman promised
however, to perfect his title to the vessel but he failed to do so. The vessel was sunk in the bay in the afternoon
of June 25, 1904 during a severe storm and before the owner had complied with the condition exacted by the
proposed purchaser. On the 30th of June 1904, plaintiff demanded for the payment of the purchase price of
the vessel in the manner stipulated and defendant failed to pay.

ISSUE: Whether there was a perfected contract of sale and who will bear the loss.

HELD: There was no perfected contract of sale because the purchase of which had not been concluded. The
conversations had between the parties and the letter written by defendant to plaintiff did not establish a contract
sufficient in itself to create reciprocal rights between the parties.
If no contract of sale was actually executed by the parties the loss of the vessel must be borne by its owner and
not by the party who only intended to purchase it and who was unable to do so on account of failure on the
part of the owner to show proper title to the vessel and thus enable them to draw up contract of sale.

Sun brothers vs. perez

Facts:
action brought by the plaintiff to recover from defendant the sum of P1,404.00, the price of one Admiral Air
Conditioner... under a conditional sale... agreement entered into by and between them on December 6, 1958
Defendant answered that the air-conditioner in question was... delivered to him and installed in the office of
the defendant... on December 14, 1959... but that said air-conditioner was totally destroyed by fire
Defendant further claimed... that the machine was destroyed by force majeure, not by the defendant's fault
and/or negligence and, therefore, he is not liable under the conditional sale... defendant, after making down
payment of P274.00 to the plaintiff, did not pay any of the monthly installments of P78.00 thereafter, leaving a
balance of P1,404.00 in favor of the plaintiff
The conditional sale executed by the plaintiff and defendant contained the following stipulation:
"2. Title to said property shall vest in the Buyer only upon full payment of the entire account, as herein provided,
and only upon complete performance of all the other conditions herein specified;
"3. The Buyer shall kteep said property in good condition and properly protected against the elements, at his/its
address above-stated, and undertakes that if said property or any part thereof be lost, damaged, or destroyed
for any cause, he shall suffer such loss, or repair... such damage, it being distinctly understood and agreed that
said property remains at Buyer's risk after delivery;"... defendant... rgues that... the property sold shall vest in
the buyer only upon full payment of the price, the loss of the air conditioner should be for the exclusive account
of the vendor
Issues:
whether loss by fire... extinguishes the obligation of the defendant to pay to the plaintiff the subsequent
installments of the initial payment;"
Ruling:
The Court of First Instanc... rendered judgment condemning the defendant to pay the plaintiff the amount
demanded in the complaint... defendant has appealed
We believe that the agreement making the buyer responsible for any loss whatever, fortuitous or otherwise,
whatsoever even if the title to the property remains in the vendor, is neither contrary to law, nor to morals or
public policy. We have held such stipulation to be legal... in the case of government vs. Amechazurra
"The weight, of authority supports the rule that where, goods are sold and delivered to the vendee under an
agreement that the title is to reraairt in the vendor until payment, the loss or destruction of the property while
in the possession of the vendee before payment,... without his fault, does not relieve him from the obligation
to pay the price, and he, therefore, suffers the loss.
There are several bases for this rule. First is the... absolute and unconditional nature of the vendee's promise to
pay for the goods. The promise, is nowise dependent upon the transfer of the absolute title. Second is the fact
that the vendor has fully performed his contract and has nothing further to do except receive payment, and...
the vendee received what he bargained for when he obtained the right of possession and use of the goods and
the right to acquire title upon-making full payment of the price. A third basis advanced for the rule is the policy
of providing, an incentive to care properly for the... goods, they being exclusively under the control and
dominion at the vendee."
We, therefore, agree with the trial court that the loss by fire or fortuitous event was expressly agreed in the
contract to be borne by the buyer and this express agreement is not contrary to law but sanctioned by it as well
as by the demands of sound public policy. The... judgment of the court below is affirmed

Ang yu Asuncion vs. ca

Facts:
§ July 29, 1987: An amended Complaint for Specific Performance was filed by petitioners Ang Yu
Asuncion and others against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before RTC.
§ Petitioners (Ang Yu) alleged that:
- they are the tenants or lessees of residential and commercial spaces owned by Bobby Unijeng and others
located in Binondo, Manila (since 1935)
that on several occasions before October 9, 1986, the lessors informed the lessees (petitioners) 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 they made a counter offer
of P5-million;
- that they 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;
§ The RTC found that Cu Unjiengs’ offer to sell was never accepted by the petitioners (Ang Yu) for the
reason that they did not agree upon the terms and conditions of the proposed sale, hence, there was no
contract of sale at all. The Court of Appeals affirmed the decision of the lower court. This decision was
brought to the Supreme Court by petition for review on certiorari which subsequently denied the appeal
on May 6, 1991 “for insufficiency in form and substance”. (Referring to the first case filed by Ang Yu)
§ November 15, 1990: While the case was pending consideration by this Court, the Cu Unjieng spouses
executed a Deed of Sale transferring the subject petitioner to petitioner Buen Realty and Development
Corporation.
§ Petitioner Buen Realty and Development Corporation, as the new owner of the subject property, wrote
a letter to the lessees demanding that the latter vacate the premises.
§ August 30, 1991: the RTC ordered the Cu Unjiengs 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 petitioners’ right of first refusal and that a new Transfer Certificate
of Title be issued in favor of the buyer. The court also set aside the title issued to Buen Realty Corporation
for having been executed in bad faith. On September 22, 1991, the Judge issued a writ of execution.
 § The CA reversed the RTC ruling.

Issue: WON Buen Realty can be 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. NO

Held:

Right of first refusal is not a perfected contract of sale under Article 1458 of the 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.

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.

The proper action for violation of the right of first refysal is to file an action for damages and NOT
writ of execution
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 (Ang Yu et. al). 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.

Unconditional mutual promise to buy vs. Accepted unilateral promise

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
promissor 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.

Buen Realty cannot be ousted from the ownership and possession of the property
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.

Equatorial vs. mayfair

EQUATORIAL V. MAYFAIR- Sale of Land

While 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 is merely presumptive. It is nullified by the failure of the vendee to take actual possession of the land sold.

FACTS:

Carmelo & Bauermann, Inc. owned a land, together with two 2-storey buildings at Claro M. Recto Avenue,
Manila, and covered by TCT No. 18529.

On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. fpr 20 years. The lease
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 Maxim Theater.

Two years later, on March 31, 1969, Mayfair entered into a second Lease with Carmelo for another portion of
the latter’s property this time, a part of the second floor of the two-storey building, and two store spaces on
the ground floor. In that space, Mayfair put up another movie house known as Miramar Theater. The Contract
of Lease was likewise for a period of 20 years.

Both leases contained a clause giving Mayfair a right of first refusal to purchase the subject properties. Sadly,
on July 30, 1978 - within the 20-year-lease term -- the subject properties were sold by Carmelo to Equatorial
Realty Development, Inc. for eleven million smackers, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the Regional
Trial Court of Manila for the recission of the Deed of Absolute Sale between Carmelo and Equatorial, specific
performance, and damages. RTC decided for Carmelo and Equatorial. Tsk tsk.
CA reversed and ruled for Mayfair. The SC denied a petition questioning the CA decision. What happened is
that the contract did get rescinded, Equatorial got its money back and asserted that Mayfair have the right to
purchase the lots for 11 million bucks.
Decision became final and executory, so Mayfair deposited with the clerk the 11M (less 847grand withholding)
payment for the properties (Carmelo somehow disappeared).
Meanwhile, on Sept 18, 1997, barely five months after Mayfair submitted its Motion for Execution, Equatorial
demanded from Mayfair backrentals and reasonable compensation for the Mayfair’s continued use of the
subject premises after its lease contracts expired. Remember that Mayfair was still occupying the premises
during all this hullabaloo.

ISSUE:

Whether or not Equatorial was the owner of the subject property and could thus enjoy the fruits and rentals.

HELD:NO.

Nor right of ownership was transferred from Carmelo to Equatorial since there was failure to deliver the
property to the buyer. Compound this with the fact that the sale was even rescinded.

The court went on to assert that rent is a civil fruit that belonged to the owner of the property producing it by
right of accession. Hence, 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.

We remember from SALES that in 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. There is delivery if and when the thing sold “is placed in the control and possession of
the vendee.”

While 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 is merely presumptive. It is nullified by the failure of the vendee to
take actual possession of the land sold.
For property to be delivered, we need two things. Delivery of property or title, and transfer of control or
custody to the buyer.
Possession was never acquired by the petitioner. It therefore had no rights to rent.

G.R. No. 121559 June 18, 1998 XENTREX AUTOMOTIVE, INC., petitioner, vs. COURT OF APPEALS,
MACARTHUR M. SAMSON and GERTRUDES C. SAMSON, respondents.

FACTS: Petitioner is a dealer of motor vehicles. On October 25, 1991, private respondents went to petitioner
to purchase a brand new car, a 1991 Nissan Sentra Super Saloon A/T model, valued at P494,000.00. Private
respondents made an initial deposit of P50,000.00; petitioner issued the corresponding official receipt (O.R.
NO. 6504). The balance was to be paid thru bank financing. Pending the processing of their application for
financing, private respondents paid an additional P200,000.00 to petitioner which was covered by another
receipt (O.R. NO. 6547). Eventually, due to the slow pace in the processing of their application for financing,
private respondents decided to pay the remaining balance on November 6, 1991 by tendering a check in the
amount of P250,000.00. As it turned out however, to private respondents' shock and disappointment, the car
had already been sold to another buyer without their knowledge, prompting them to send a demand letter to
petitioner asking the latter to comply with its obligation to deliver the car. Their demand unheeded, private
respondents (plaintiffs below) filed a suit for breach of contract and damages before the Regional Trial Court
of Dagupan City, Branch 42. Denying any liability, petitioner (defendant below) alleged that the complaint
stated no cause of action. After trial, judgment was rendered by the trial court in private respondents' favor.
On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court . 2

ISSUE: WON THERE WAS A PERFECTED CONTRACT BETWEEN THE PETITIONER AND THE
RESPONDENT.

HELD: YES
RULING: Petitioner argues that there was no perfected contract of sale between the parties due to private
respondents' failure to comply with their obligation to pay the purchase price of the car in full. Thus, petitioner
assert that it has no obligation to deliver the car to

Undoubtedly, there was a perfected contract of sale between the petitioner and private respondents as
confirmed by the trial court when it found that "[b] y accepting a deposit of P50,000.00 and by pulling out a
unit of Philippine Nissan 1.6 cc Sentry Automatic (Flamingo red), defendant obliged itself to sell to plaintiffs a
determinate thing for a price certain in money which was P494,000.00". 4

Trial Court decided in favor of Sabesaje and ordered the Dalions to deliver the parcel of land in a public
document. CA affirmed.

Resultingly, petition committed a breach of contract when it allowed the unit in question to be sold to another
buyer to the prejudice of private respondents.

Held:

The Court of Appeals gave complete accord to the aforementioned findings and affirmed the same in its,
decision. 5 In this regard, it must be emphasized that the prevailing rule is that the findings of fact of the trial
court, particularly when affirmed by the Court of Appeals, are binding upon this Court. 6
Nevertheless, We sustain the award of moral damages considering private respondent Macarthur Samson's
testimony that he suffered from shock and embarrassment as a result of petitioner's failure to comply with its
obligation.