-50. Nietes v.
CA, 46 SCRA 654 [3] his reply stating that he did not violate any
-51. Vasquez v. CA (GR 83759, 12 July 1991)
-52. Ang Yu v. CA (GR 109125, 2 December
1994)
-53. Equitorial Realty Development v.
Mayfair Theater (GR 106063, 21 November
1996)
-54. Villonco v. Bormaheco (GR L-26872, 25
July 1975)
-55. Spouses Doromal v. CA (GR L-36083, 5
September 1975)
-56. Goldenrod v. CA (GR 126812, 24
November 1998)
-57. Dalion v. CA (GR 78903, 28 February
1990)
-58. Yuviengco v. Dacuycuy, 104 SCRA 668
(1981) [4]
-59. First Philippine International Bank v.
CA, 252 SCRA (1996) [5]
- 60. Vda. de Jomoc v. CA (GR 92871, 2
August 1991)
-61. Cuyugan v. Santos, 34 PHIL 100 (1916)
[6]
-62. Addison v. Felix (GR 12342, 3 August
1918)
-63. Danguilan v. IAC (GR L-69970, 28
November 1988)
-64. Pasagui v. Villablanco (GR L-21998, 10
November 1975)
65. Dy Jr. v. CA (GR 92989, 8 July 1991)
Aquilino Nietes v. Court of Appeals and Dr.
Pablo Garcia
G.R. No. L-32873 August 18, 1972
FACTS:
On October 19, 1959, said petitioner and
respondent Dr. Pablo C. Garcia entered into
a "Contract of Lease with Option to Buy."
Instead of paying the lessor in the manner
set forth in the contract, Nietes paid in
various amounts.
On or about July 31, 1964, Dr. Garcia's
counsel wrote to Nietes the letterrescinding
the contract. Nietes, thru his counsel, sent
terms of the contract and will exercise his
option to purchase the land and building.
On July 26, 1965, Nietes deposited with the
branch office of the Agro-Industrial Bank in
Angeles City checks amounting to
P84,860.50, as balance of the purchase price
of the property, but he withdrew said sum on
August 12, 1965, after the checks had been
cleared.
On August 2, 1965, he commenced the
present action, in the Court of First Instance
of Pampanga, for specific performance of
Dr. Garcia's alleged obligation to execute in
his favor a deed of absolute sale of the
leased property.
The Trial Court ruled in favor of the
Petitioner. Both parties appealed to the CA.
A Special Division of the CA rendered its
decision affirming that of the trial court,
except as regard to the attorney’s fees, which
were eliminated. The Special Division of the
CA set aside and reversed the appealed
decision of the trial court and dismissed the
complaint of Nietes upon the filing of the
motion for reconsideration of Dr. Garcia.
ISSUE:Whether the petitioner has can buy
the property.
HELD:
Yes. The contract does not say that Nietes
had to pay the stipulated price of P100,000
before exercising his option to buy the
property in question.In the case of an option
to buy, the creditor may validly and
effectively exercise his right by merely
advising the debtor of the former's decision
to buy and expressing his readiness to pay
the stipulated price, provided that the same
is available and actually delivered to the
debtor upon execution and delivery by him
of the corresponding deed of sale. Unless
and until the debtor shall have done this the
creditor is not and cannot be in default in the
discharge of his obligation to pay.
Nietes had validly and effectively exercised
his option to buy the property of Dr. Garcia,
at least, on December 13, 1962, when he
acknowledged receipt from Mrs. Nietes of
the sum of P2,200 then delivered by her "in
partial payment on the purchase of the
property" described in the "Contract of
Lease with Option to Buy"; that from the
aggregate sum of P29,957.00 paid to him up
to that time, the sum of P12,708.33 should
be deducted as rental for the period from
June 1960 to December 13, 1962, or roughly
thirty (30) months and a half, thereby
leaving a balance of P17,248.67, consisting
of P12,291.67, representing the rentals for
the unused period of the lease, plus
P4,957.00 paid in excess of said rental and
advanced solely on account of the purchase
price; that deducting said sum of P17,248.67
from the agreed price of P100,000.00, there
results a balance of P82,751.33 which
should be paid by Nietes to Dr. Garcia, upon
execution by the latter of the corresponding
deed of absolute sale of the property in
question, free from any lien or encumbrance
whatsoever, in favor of Nietes, and the
delivery to him of said deed of sale, as well
as of the owner's duplicate of the certificate
of title to said property; and that Dr. Garcia
should indemnify Nietes in the sum of
P2,500 as and for attorney's fees.
Thus modified, the decision of the Court of
First Instance of Pampanga is hereby
affirmed in all other respects, and that of the
Court of Appeals reversed.
Spouses Cipriano Vasquez and
ValerianaGayanelo v. Court of Appeals and
Spouses Martin Vallejera and Apolonia Olea
G.R. No. 83759 July 12, 1991
FACTS:
On January 15, 1975, the spouses
Vallejeraplaintiffs-spouses (respondents
herein) filed this action against the Spouses
Vasquez defendants-spouses (petitioners
herein) seeking to redeem Lot No. 1860 of
the HimamaylanCadastre which was
previously sold by respondents to petitioners
on September 21, 1964.
The said lot was registered in the name of
the respondents. On October 1959, the same
was leased by respondents to the petitioners
up to crop year 1966-67, which was
extended to crop year 1968-69. After the
execution of the lease, repondents took
possession of the lot, up to now and devoted
the same to the cultivation of sugar.
On September 21, 1964, the respondents
sold the lot to the petitioners under a Deed
of Sale for the amount of P9,000.00. The
Deed of Sale was duly ratified and
notarized. On the same day and along with
the execution of the Deed of Sale, a separate
instrument, denominated as Right to
Repurchase was executed by the parties
granting respondents the right to repurchase
the lot for P12,000.00, likewise duly ratified
and notarized. By virtue of the sale,
petitioners secured TCT No. T-58898 in
their name.
On January 2, 1969, respondents sold the
same lot to Benito Derrama, Jr., after
securing the petitioners' title, for the sum of
P12,000.00. Upon the protestations of
petitioners, assisted by counsel, the said
second sale was cancelled after the payment
of P12,000.00 by the petitioners to Derrama.
petitioners resisted this action for
redemption on the premise that the Right to
Repurchase is just an option to buy since it
is not embodied in the same document of
sale but in a separate document, and since
such option is not supported by a
consideration distinct from the price, said
deed for right to repurchase is not binding
upon them.
After trial, the court rendered judgment
against the petitioners, ordering them to
resell the lot of the HimamaylanCadastre to
the respondents for the repurchase price of
P24,000.00, which amount combines the
price paid for the first sale and the price paid
by defendants to Benito Derrama, Jr.
Petitioners moved for, but were denied
reconsideration.
ISSUE: Whether there is a sale with right to
repurchase between the parties.
HELD:
No. The nature of the transaction between
the parties is not a sale with right to
repurchase. Conventional redemption takes
place "when the vendor reserves the right to
repurchase the thing sold, with the
obligation to comply with the provisions of
Article 1616 and other stipulations which
may have been agreed upon. (Article 1601,
Civil Code).
In this case, there was no reservation made
by the vendor. Thus, it was more of an
option to buy or a mere promise on the part
of the vendee to resell the property to the
vendor.
The right of repurchase is not a right granted
the vendor by the vendee in a subsequent
instrument, but is a right reserved by the
vendor in the same instrument of sale as one
of the stipulations of the contract. Once the
instrument of absolute sale is executed, the
vendor can no longer reserve the right to
repurchase, and any right thereafter granted
the vendor by the vendee in a separate
instrument cannot be a right of repurchase
but some other right like the option to buy in
the instant case.
In the instant case, since the transaction
between the petitioners and private
respondents was not a sale with right to
repurchase, the private respondents cannot
avail of Article 1601 of the Civil Code
which provides for conventional redemption.
Ang Yu Asuncion, Arthur Go and Keh Tiong
v. Court of Appeals and Buen Realty
Development Corporation
G.R. No. 109125 December 2, 1994
FACTS:
On 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:
1. they are the tenants or lessees of
residential and commercial spaces
owned by Bobby Unijeng and others
located in Binondo, Manila, since
1935;
2. 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;
3. that during the negotiations, Bobby
Cu Unjieng offered a price of six
million while they made a counter
offer of P5-million; and
4. 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 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 appealfor insufficiency in form
and substance.
On November 15, 1990,while the case was
pending consideration by the Supreme
Court, the Cu Unjieng spouses executed a
Deed of Sale transferring the subject
property 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.
On August 30, 1991, the RTC ordered the
Cu Unjiengs to execute the necessary Deed
of Sale of the property in litigation in favor
of 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: Whether the right of first refusal is
deemed as a perfected contract of sale and
whether the filing of the writ of execution is
a proper remedy.
HELD:
No. 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 13199 of
the same Code.An option or an offer would
require, among other things, 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.
The final judgment in the case has merely
accorded a "right of first refusal" in favor of
petitioners. The consequence of such a
declaration entails no more than what has
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.
Equitorial Realty Development v. Mayfair
Theater
G.R. No. 106063 November 21, 1996
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 the option clause in
the contracts of lease is actually a right of
first refusal proviso.
HELD:
Yes. 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.
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.
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.
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
nudispactissedtraditionedominia rerum
transferantur.
There 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.”
Villonco Realty Company v. Bormaheco
G.R. No. L-26872 July 25, 1975
FACTS:
Francisco N. Cervantes and his wife,
Rosario P. Navarra-Cervantes, are the
owners of Lots 3, 15 and 16 located at 245
Buendia Avenue, Makati, Rizal with a total
area of 3,500 sq.ms. The lots were
mortgaged to the Development Bank of the
Philippines (DBP) as security for a loan of
P441,000. The mortgage debt was fully paid.
Cervantes is the president of Bormaheco,
Inc., a dealer and importer of industrial and
agricultural machinery. The entire three lots
are occupied by the building, machinery and
equipment of Bormaheco, Inc. and are
adjacent to the property of Villonco Realty
Company situated at 219 Buendia Avenue.
There were negotiations for the sale of the
said lots and the improvements thereon
between Romeo Villonco of Villonco Realty
Company “and Bormaheco, Inc., represented
by its president, Francisco N. Cervantes,
through the intervention of Edith Perez de
Tagle, a real estate-broker”. In the course of
the negotiations, the brothers Romeo and
Teofilo Villonco conferred with Cervantes in
his office to discuss the price and terms of
the sale. Later, Cervantes went to see
Villonco for the same reason until some
agreement was arrived at.
On a subsequent occasion, Cervantes,
accompanied by Edith Perez de Tagle,
discussed again the terms of the sale with
Villonco. During the negotiations, Villonco
Realty Company assumed that the lots
belonged to Bormaheco and that Cervantes
was duly authorized to sell the same.
Cervantes did not disclose to the broker and
to Villonco Realty that the lots were
conjugal properties of himself and his wife
and that they were mortgaged to the DBP.
Bormaheco, through Cervantes, made a
written offer to Romeo Villonco for the sale
of the property. The property mentioned in
Bormaheco’s letter was the land of the
National Shipyards & Steel Corporation
(Nassco). At the bidding that land was
awarded to Bormaheco, the highest bidder.
The Nassco Board of Directors in its
resolution authorized the General Manager
to sign the necessary contract. The Nassco
Acting General Manager wrote a letter to the
Economic Coordinator, requesting approval
of that resolution. The Acting Economic
Coordinator approved the resolution.
Meanwhile, Bormaheco and Villonco Realty
continued their negotiations for the sale of
the Buendia Avenue property. Cervantes and
Teofilo Villonco had a final conference and
as a result of that conference, Villonco
Realty, in its letter made a revised counter-
offer (Romeo Villonco’s first counter-offer)
for the purchase of the property.
The counter-offer was accepted by
Cervantes. Enclosed to it was a MBTC
Check as earnest money. The check was
delivered by Perez de Tagle to Bormaheco
and was received by Cervantes. In the
voucher-receipt evidencing the delivery the
broker indicated in her handwriting that the
earnest money was subject to the terms and
conditions embodied in Bormaheco’s letter
and Villonco Realty Company’s letter.
Unexpectedly, Cervantes returned the
earnest money, with interest. Cervantes cited
as an excuse the circumstance that despite
the lapse of 45 days there is no certainty yet
for the acquisition of the Punta property.
Villonco Realty Company refused to accept
the letter and the checks of Bormaheco.
Cervantes sent them by registered mail.
When he rescinded the contract, he was
already aware that the Punta lot had been
awarded to Bormaheco.
Edith Perez de Tagle, the broker, articulated
her shock and surprise at Bormaheco’s
turnabout. Cervantes in his letter of 6 April
1964, a reply to Miss Tagle’s letter, alleged
that the 45 day period had already expired
and the sale to Bormaheco, Inc. of the Punta
property had not been consummated.
Cervantes said that his letter was a
“manifestation that we are no longer
interested to sell” the Buendia Avenue
property to Villonco Realty. The latter was
furnished with a copy of that letter.
In a letter, Villonco Realty Company
returned the two checks to Bormaheco, Inc.,
stating that the condition for the cancellation
of the contract had not arisen and at the
same time announcing that an action for
breach of contract would be filed against
Bormaheco. On that same date, Villonco
Realty filed the complaint for specific
performance against Bormaheco. A notice of
lis pendens was annotated on the titles of the
said lots.
ISSUE: Whether there is a perfected
contract of Sales
HELD:
YES. There was a perfected contract of sale.
The alleged changes made in the counter-
offer are immaterial and are mere
clarifications. The changes of the words
“Sta. Ana property” to another property as
well as the insertion of the number “12” in
the date, and the words “per annum” in the
interest are trivial. There is no
incompatibility in the offer and counter-
offer. Cervantes assented to the interest and
he, in fact, paid the same. Also, earnest
money constitutes proof of the perfection of
the contract of sale and forms part of the
consideration. The condition regarding the
acquisition of the Sta. Ana property was
likewise fulfilled; there is thus no ground for
the refusal of Cervantes to consummate the
sale.
Spouses Doromal v. Court of Appeals and
Filomena Javellana
G.R. No. L-36083 September 5, 1975
FACTS:
A parcel of land in Iloilo were co-owned by
seven (7) siblings all surnamed Horilleno.
Five (5) of the siblings gave an SPA to their
niece Mary Jimenez, who succeeded her
father as a co-owner, for the sale of the land
to father and son Doromal. One of the co-
owner, herein petitioner, Filomena Javellana
however did not gave her consent to the sale
even though her siblings executed an SPA
for her signature. The co-owners went on
with the sale of 6/7 part of the land and a
new title for the Doromals were issued.
Respondent offered to repurchase the land
for 30K as stated in the deed of sale but
petitioners declined invoking lapse in time
for the right of repurchase. Petitioner also
contend that the 30K price was only placed
in the deed of sale to minimize payment of
fees and taxes and as such, respondent
should pay the real price paid which was
P115, 250.
ISSUE: Whether the period to repurchase of
petitioner has already lapsed.
HELD:
No. The period of repurchase has not yet
lapsed because the respondent was not
notified of the sale. The 30-day period for
the right of repurchase starts only after
actual notice not only of a perfected sale but
of actual execution and delivery of the deed
of sale.
The letter sent to the respondent by the other
co-owners cannot be considered as actual
notice because the letter was only to inform
her of the intention to sell the property but
not its actual sale. As such, the 30-day
period has not yet commenced and the
respondent can still exercise his right to
repurchase.
The respondent should also pay only the
30K stipulated in the deed of sale because a
redemptioner’s right is to be subrogated by
the same terms and conditions stipulated in
the contract.
Goldenrod, Inc. v. Court of Appeals, Pio
Barreto and Sons, Inc.,
G.R. No. 126812 November 24, 1998
FACTS:
Barretto owned parcels of land which were
mortgaged to UCPB. Barretto failed to pay;
the properties were foreclosed. Goldenrod
made an offer to Barretto that it would buy
the properties and pay off the remaining
balance of Barretto’s loan with UCPB. It
paid Barretto 1 million pesos as part of the
purchase price. The remaining balance
would be paid once Barretto had
consolidated the titles. On the date that
Goldenrod was supposed to pay, Goldenrod
asked for an extension. UCPB agreed. When
the extension date arrived, Goldenrod asked
for another extension. UCPB refused.
Barretto successfully consolidated the titles.
Goldenrod informed Barretto that it would
not be able to push through with their
agreement. It asked Barretto to return the 1
million pesos. Barretto did not give in to
Goldenrod’s rescission. Instead, it sold the
property that was part of their agreement to
Asiaworld.
ISSUE: Whether Goldenrod should be paid
back its payment.
HELD:
Yes. Art. 1385 of the Civil Code provides
that rescission creates the obligation to
return the things which were the object of
the contract together with the fruits and
interest. The vendor is therefore obliged to
return the purchase price paid to him by the
buyer if the latter rescinds the sale, or when
the transaction was called off and the subject
property had already been sold to a third
person, as what obtained in this case.
Barretto is obliged to pay Goldenrod back
because 1) Goldenrod decided to rescind the
sale; 2) the transaction was called off and; 3)
the property was sold to a third person. By
virtue of the extrajudicial rescission of the
contract to sell by Goldenrod, without
opposition from Barretto, who in turn sold it
to a third person, Barretto had the obligation
to return the 1 million pesos plus legal
interest from the date it received the notice
of rescission.
Spouses Dalion v. Court of Appeals and
Ruperto Sabesaje, Jr.
G.R. No. 78903 February 28, 1990
FACTS:
A land in Southern Leyte was declared in the
name of Segundo Dalion. Sabesaje sued to
recover ownership of the land based on a
private deed of absolute sale, allegedly
executed by Dalion.
The spouses denied the claims of Sabesaje
and claims that his signature in the
document was forged.
Spouses Dalion admitted of administering
five parcels of land in Southern Leyte,
which belonged to Leonardo Sabesaje,
grandfather of the respondent. The spouses
Dalion never received their agreed 10% and
15% commission on the sales of copra and
abaca.
ISSUE: Whether the contract of sale is valid.
HELD:
Yes. The authenticity of the signature of
Dalion was proven by the testimony of
several witnesses including the person who
made the deed of sale. Dalion never
presented any evidence or witness to prove
his claim of forgery.
Dallion’s claim that the sale is invalid
because it was not made in a public
document is misplaced. The provision of
Art. 1358 on the necessity of a public
document is only for convenience, not for
validity or enforceability. 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. Sale is perfected
upon meeting of the minds of both parties.
Suga Sotto Yuvienco, Britania Sotto, and
Marcelino Sotto v. Hon. Auxencio Dacuycuy
et al
G.R. No. L-55048 May 27, 1981
FACTS:
Petitioners own a property in Tacloban City
which they intend to sell for 6.5M. They
gave the respondents the right to purchase
the property. Respondents replied that they
agree to buy the property and they will
negotiate for details. Petitioner sent another
telegram informing respondents that their
proposal is accepted and a contract will be
prepared.
Atty. Pedro Gamboa arrived bringing a
contact with an altered mode of payment
which says that the balance payment should
be paid within 30 days instead of the former
90 days. (Original terms: P2M payment
upon execution and P4.5M after 90 days)
ISSUE: Whether there is a valid contract of
sale between the parties.
HELD:
No. The contract of sale between parties was
not perfected because both parties are still
under negotiation. Thus, there was no
meeting of the minds. Atty. Gamboa even
went to the respondents to negotiate for the
sale. Even though there was an agreement
on the terms of payment, there was no
absolute acceptance because respondents
still insisted on further details.
With regard to the alleged violation of terms
of payment, there was no written document
to prove that the respondents agreed to pay
not in cash but in instalment. In sale of real
property, payment of instalment must be in
requisite of a note under the statute of
frauds.

First Philippine International Bank And
Mercurio Rivera v. Court Of Appeals, Carlos
Ejercito
G.R. No. 115849. January 24, 1996
FACTS:
Producers Bank (now called First Philippine
International Bank), which has been under
conservatorship since 1984, is the owner of
6 parcels of land. The Bank had an
agreement with Demetrio Demetria and Jose
Janolo for the two to purchase the parcels of
land for a purchase price of P5.5 million
pesos. The said agreement was made by
Demetria and Janolo with the Bank’s
manager, Mercurio Rivera. Later however,
the Bank, through its conservator, Leonida
Encarnacion, sought the repudiation of the
agreement as it alleged that Rivera was not
authorized to enter into such an agreement,
hence there was no valid contract of sale.
Subsequently, Demetria and Janolo sued
Producers Bank. The regional trial court
ruled in favor of Demetria et al. The Bank
filed an appeal with the Court of Appeals.
Meanwhile, Henry Co, who holds 80%
shares of stocks with the said Bank, filed a
motion for intervention with the trial court.
The trial court denied the motion since the
trial has been concluded already and the case
is now pending appeal. Subsequently, Co,
assisted by ACCRA law office, filed a
separate civil case against Carlos Ejercito as
successor-in-interest (assignee) of Demetria
and Janolo seeking to have the purported
contract of sale be declared unenforceable
against the Bank. Ejercito et al argued that
the second case constitutes forum shopping.
ISSUE: Whether or not there is forum
shopping.
HELD:
Yes. There is forum shopping because there
is identity of interest and parties between the
first case and the second case. There is
identity of interest because both cases
sought to have the agreement, which
involves the same property, be declared
unenforceable as against the Bank. There is
identity of parties even though the first case
is in the name of the bank as defendant, and
the second case is in the name of Henry Co
as plaintiff. There is still forum shopping
here because Henry Co essentially
represents the bank. Both cases aim to have
the bank escape liability from the agreement
it entered into with Demetria et al.
The Supreme Court also discussed that to
combat forum shopping, which originated as
a concept in international law, the principle
of forum non conveniens was developed.
The doctrine of forum non conveniens
provides that a court, in conflicts of law
cases, may refuse impositions on its
jurisdiction where it is not the most
“convenient” or available forum and the
parties are not precluded from seeking
remedies elsewhere.
Maria P. Vda. De Jomoc, Et al. V. The Court
of Appeals, Regional Trial Court of Misamis
Oriental
G.R. No. 92860 August 2, 1991
FACTS:
A parcel of land in CDO owned by late
Pantaleon Jomoc was fictitiously sold to
third persons in which the last transferee are
the spouses Mariano and Maria So. Maria
Vda de Jomoc filed suit to recover the
property and won.
While pending appeal, Vda de Jomoc
executed executed a Deed of Extrajudicial
Settlement and Sale of Land with private
respondent for P300,000.00. The document
was not yet signed by all the parties nor
notarized but in the meantime, Maura So
had made partial payments amounting to
P49,000.00.
So demanded from the heirs of Jomoc for
the execution of final deed of conveyance
but the latter did no comply. As such, So
filed a civil case and a notice of lis pendens
were placed in the title of the land.
On the same date, the heirs of Jomoc
executed another extra-judicial settlement
with absolute sale in favor of intervenors
Lim Leong Kang and Lim Pue claiming that
they believe that So already backed-out from
the agreement.
ISSUE: Whether the sale is enforceable.
HELD:
Since petitioners admit the existence of the
extra-judicial settlement, the court finds that
there was meeting of the minds between the
parties and hence, there is a valid contract
that has been partly executed.
The contract of sale of real property even if
not complete in form, so long as the
essential requisites of consent of the
contracting parties, object, and cause of the
obligation concur and they were clearly
established to be present, is valid and
effective as between the parties. Public
document is only needed to bind third
persons.
The payment made by So is a clear proof of
her intention to acquire the property and the
petitioners cannot claim about the
respondent backing out. The sale to the
intervenors Lim cannot be recognized
because when they bought the property,
there was already a notice of lis pendens and
the sale cannot be said to be in good faith.
Eutiquiano Ciyugan v. Isidoro Santos
G.R. No. 10265 March 3, 1916
FACTS:
Eutiquiyano Cuyugan filed an action to
compel Santos to enforce his right to
repurchase in the deed of sale entered into
by his late mother, Guillerma, with the
defendant. Allegedly, a deed of sale of the
subject land was entered into by Guillerma,
and Santos with a right to repurchase the
land in a stipulated period of time, although
this deed of sale is executed as a security for
a loan that Guillerma have with Santos. In
the deed of sale, it further stated that
Guillerma shall continue to have possession
of the land, and pay an annual rental of Php
420 per annum which is the amount equal to
the loan’s interest. That after sometime,
Guillerma paid 1,000 pesos on the loan,
which then reduced the amount of the annual
rental from 400 to 320 php. When Guillerma
died, Santos sent Cuyugan a notice to
comply with the 420 php rental, which was
agreed upon prior to the payment of
1000php or he will eject Cuyugan from the
land. Cuyugan then offered to pay the
balance that his mother owes Santos by
virtue of the right to repurchase agreed upon
on the deed of sale, but Santos refused to do
so.
ISSUE: Whether there is a valid sale.
HELD:
No. The Supreme Court held that what
should be given force is the intention of the
parties, and not the provisions of the
instrument on its face. Under the provisions
of contracts, for a valid contract to exist,
there should be:
1) consent
2) cause
3) consideration.
Thus, in the present case, what is consented
by both parties is that this deed of sale is
only in consideration for a loan, or by a
nature of a contract of mortgage. Moreover,
by way of evidence it was established by the
court that the parties indeed treat such as a
contract of loan rather than a deed of sale
when Santos, when given by Guillerma 1000
php in favor of such contract, lowered the
payment of the rental from 400-320 php.
Since the agreement was the 400 be equal to
the interest per annum, when the loan was
reduced, the interest as well reduced. This
transaction proved that the treatment and the
intention of the parties was indeed as a
security for the loan, and not as a deed of
sale appearing before the face of the
contract.
A. A. Addison, v. Marciana Felix and
Balbino Tioco
G.R. No. L-12342 August 3, 1918
FACTS:
Four (4) parcels of land as describe in a
public instrument was subject of a contract
of sale between the petitioner and the
defendant. Defendant paid 3000 upon the
execution of deeds and promised to pay
2000 on July 15, 1914 and another 5000
(30) days after the issuance of her certificate
of title
The contract was stipulated as follows:
That the defendant is to pay P10 within ten
years for trees in bearing and P5 for trees not
in bearing with the condition that it will not
exceed the amount of P85,000.
That the purchaser shall deliver 25% of the
value of the products "from the moment she
takes possession of them until the Torrens
certificate of title be issued in her favor."
Further stipulated was that "within one year
from the date of the certificate of title in
favor of Marciana Felix, this latter may
rescind the present contract of purchase and
sale, in which case Marciana Felix shall be
obliged to return to me, A. A. Addison, the
net value of all the products of the four
parcels sold, and I shall obliged to return to
her, Marciana Felix, all the sums that she
may have paid me, together with interest at
the rate of 10 per cent per annum."
In 1915, Addison filed a suit to compel the
defendant to pay him the P2000 with interest
as in the accordance of the terms of the
contract. However, in a form of special
defense, Felix alleges that the petitioner
failed to do his obligation of the contract by
failing to deliver the parcels of land. That
out of the 4 parcels of land only 2 of it
where delivered and that 2/3 of the other
half were in the possession of a third person.
She then filed for a declaration of the
rescission of the contract, whereby she
prayed that petitioner return her P3000 plus
interest and indemnity.
ISSUE: Whether delivery of the public
instrument is equivalent to the delivery of
the subject matter of the sale.
HELD:
No. The Code imposes upon the vendor the
obligation to deliver the thing sold. The
thing is considered to be delivered when it is
placed "in the hands and possession of the
vendee." (Civ. Code, art. 1462.) It is true
that the same article declares that the
execution of a public instruments is
equivalent to the delivery of the thing which
is the object of the contract, but, in order that
this symbolic delivery may produce the
effect of tradition, it is necessary that the
vendor shall have had such control over the
thing sold that, at the moment of the sale, its
material delivery could have been made. It is
not enough to confer upon the purchaser the
ownership and the right of possession. The
thing sold must be placed in his control.
When there is no impediment whatever to
prevent the thing sold passing into the
tenancy of the purchaser by the sole will of
the vendor, symbolic delivery through the
execution of a public instrument is
sufficient. But if, notwithstanding the
execution of the instrument, the purchaser
cannot have the enjoyment and material
tenancy of the thing and make use of it
himself or through another in his name,
because such tenancy and enjoyment are
opposed by the interposition of another will,
then fiction yields to reality — the delivery
has not been effected.
The execution of a public instrument is
sufficient for the purposes of the
abandonment made by the vendor; but it is
not always sufficient to permit of the
apprehension of the thing by the purchaser.
It is evident, then, in the case at bar, that the
mere execution of the instrument was not a
fulfillment of the vendors' obligation to
deliver the thing sold, and that from such
non-fulfillment arises the purchaser's right to
demand, as she has demanded, the rescission
of the sale and the return of the price. (Civ.
Code, arts. 1506 and 1124.)
Inasmuch as the rescission is made by virtue
of the provisions of law and not by
contractual agreement, it is not the
conventional but the legal interest that is
demandable.
Felix Danguilan v. Intermediate Appellate
Court, Apolonia Melad, assisted by her
husband, Jose Tagacay
G.R. No. L-69970 November 28, 1988
Two lots were owned by Domingo Melad.
The lots are claimed by both Felix Daguilan
and Apolonia Melad (and her husband Jose
Tagacay). On 29 January 1962, Apolonia
Melad filed a complaint against Daguilan in
the then CFI Cagayan for recovery of a farm
lot and a residential lot which she claimed
she had purchased from Domingo Melad in
1943 and were now being unlawfully
withheld by Daguilan. In his answer,
Daguilan denied the allegation and averred
that he was the owner of the said lots of
which he had been in open, continuous and
adverse possession, having acquired them
from Domingo Melad in 1941 and 1943.
The case was dismissed for failure to
prosecute but was refiled in 1967. At the
trial, Melad presented a deed of sale dated 4
December 1943, purportedly signed by
Domingo Melad and duly notarized, which
conveyed the said properties to her for the
sum of P80.00. She said the amount was
earned by her mother as a worker at the
Tabacalera factory. She claimed to be the
illegitimate daughter of Domingo Melad,
with whom she and her mother were living
when he died in 1945. She moved out of the
farm only when in 1946 Felix Danguilan
approached her and asked permission to
cultivate the land and to stay therein. She
had agreed on condition that he would
deliver part of the harvest from the farm to
her, which he did from that year to 1958.
The deliveries having stopped, she then
consulted the municipal judge who advised
her to file the complaint against Danguilan.
Melad’s mother, her only other witness,
corroborated this testimony. Daguilan
testified that he was the husband of Isidra
Melad, Domingo’s niece, whom Domingo
Melad and his wife Juana Malupang had
taken into their home as their ward as they
had no children of their own. He and his
wife lived with the couple in their house on
the residential lot and helped Domingo with
the cultivation of the farm. Domingo Melad
signed in 1941 a private instrument in which
he gave Daguilan the farm and in 1943
another private instrument in which he also
gave him the residential lot, on the
understanding that the latter would take care
of the grantor and would bury him upon his
death. Danguilan presented three other
witnesses to corroborate his statements and
to prove that he had been living in the land
since his marriage to Isidra and had
remained in possession thereof after
Domingo Melad’s death in 1945. Two of
said witnesses declared that neither the
plaintiff nor her mother lived in the land
with Domingo Melad. The trial court
believed Daguilan and rendered a decision
based mainly on the issue of possession.
ISSUE: Whether there was delivery in favor
of respondent in alleged sale.
HELD:
No. No constructive delivery allowed if
property is in actual and adverse possession
of a third person. In our jurisdiction, it is a
fundamental and elementary principle that
ownership does not pass be mere stipulation
but only by delivery and the execution of a
public document does not constitute
sufficient delivery where the property
involved is in the actual and adverse
possession of third persons.
Therefore, in our Civil Code it is a
fundamental principle in all matters of
contracts and a well- known doctrine of law
that "non mudis pactis sed traditione
dominia rerum transferuntur". In conformity
with said doctrine as established in
paragraph 2 of article 609 of said code, that
"the ownership and other property rights are
acquired and transmitted by law, by gift, by
testate or intestate succession, and, in
consequence of certain contracts, by
tradition".
In accordance with such disposition and
provisions the delivery of a thing constitutes
a necessary and indispensable requisite for
the purpose of acquiring the ownership of
the same by virtue of a contract.
One who is in possession is presumed to be
the owner. In this case, there no dispute that
it is Danguilan and not Melad who is in
actual possession of the litigated properties.
And even if the claim of petitioner and
respondent are weak, judgment must be in
favor of the Danguilan for one who is in
possession is presumed to be the owner, and
cannot be obliged to show or prove a better
right.
Calixto Pasagui and Fausta Mosar v. Ester T.
Villablanca, Zosimo Villablanca, Eustaquia
Bocar and Catalina Bocar
G.R. No. L-21998 November 10, 1975
FACTS:
On 4 February 1963, Calixto Pasagui and
Fausta Mosar filed a complaint with the CFI
Tacloban City, alleging that on 15 November
1962, for and in consideration of P2,800,
they bought from Eustaquia Bocar and
Catalina Bocar a parcel of agricultural land
with an area of 2.6814 hectares, situated in
Hamindangon, Pastrana, Leyte; that the
corresponding document of sale was
executed, notarized on the same date, and
recorded in the Registry of Deeds of
Tacloban, Leyte on 16 November 1962; that
during the first week of February 1963,
spouses Ester T. Villablanca and Zosimo
Villablanca, “illegally and without any right,
whatsoever, took possession of the property
harvesting coconuts from the coconut
plantation thereon, thus depriving Pasaqui
and Mosar of its possession; that despite
demands made by Pasagui and Mosar upon
the Villablancas “to surrender to them the
property and its possession” the latter failed
or refused to return said parcel of land to the
former, causing them damage; and that
Eustaquia and Catalina Bocar, vendors of
the property, are included defendants in the
complaint by virtue of the warranty clause
contained in the document of sale.
ISSUE: Whether public instrument amounts
to delivery.
HELD:
The execution of the deed of absolute sale in
a public instrument is equivalent to delivery
of the land subject of the sale. This
presumptive delivery only holds true when
there is no impediment that may prevent the
passing of the property from the hands of the
vendor into those of the vendee. It can be
negated by the reality that the vendees
actually failed to obtain material possession
of the land subject of the sale. In the present
case, Pasagui and Mosar had not acquired
physical possession of the land since its
purchase on 12 November 1962. As a matter
of fact, their purpose in filing the complaint
in Civil Case 3285 is precisely to “get the
possession of the property.”
Perfecto Dy, Jr. v. Court Of Appeals, Gelac
Trading Inc., and Antonio V. Gonzales
G.R. No. 92989 July 8, 1991
FACTS:
Wilfredo Dy purchased a truck and a farm
tractor through LIBRA which was also
mortgaged with the latter, as a security to the
loan.
Petitioner, expresses his desire to purchase
his brother’s tractor in a letter to LIBRA
which also includes his intention to shoulder
its mortgage. LIBRA approved the request.
At the time that Wilfredo Dy executed a
deed of absolute sale in favor of petitioner,
the tractor and truck were in the possession
of LIBRA for his failure to pay the
amortization.
When petitioner finally fulfilled its
obligation to pay the tractor, LIBRA would
only release the same only if he would also
pay for the truck. In order to fulfil LIBRA’s
condition, petitioner convinced his sister to
pay for the remaining truck, to which she
released a check amounting to P22,000.
LIBRA however, insisted that the check
must be first cleared before it delivers the
truck and tractor.
Meanwhile, another case penned “GELAC
Trading Inc vs. Wilfredo Dy” was pending
in Cebu as a case to recover for a sum of
money (P12,269.80). By a writ of execution
the court in Cebu ordered to seize and levy
the tractor which was in the premise of
LIBRA, it was sold in a public auction to
which it was purchased by GELAC. The
latter then sold the tractor to Antonio
Gonzales.
ISSUE: Whether the ownership of the farm
tractor had already passed to petitioner when
said tractor was levied on by the sheriff
pursuant to an alias writ of execution issued
in another case in favor of GELAC.
HELD:
Yes. The mortgagor who gave the property
as security under a chattel mortgage did not
part with the ownership over the same. He
had the right to sell it although he was under
the obligation to secure the written consent
of the mortgagee or he lays himself open to
criminal prosecution under the provision of
Article 319 par. 2 of the Revised Penal
Code. And even if no consent was obtained
from the mortgagee, the validity of the sale
would still not be affected.
There is no reason why Wifredo Dy, as the
chattel mortgagor cannot sell the subject
tractor. There is no dispute that the consent
of Libra Finance was obtained in the instant
case. Libra allowed the petitioner to
purchase the tractor and assume the
mortgage debt of his brother. The sale
between the brothers was therefore valid and
binding as between them and to the
mortgagee, as well.
Article 1496 of the Civil Code states that the
ownership of the thing sold is acquired by
the vendee from the moment it is delivered
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. We agree with the petitioner that
Articles 1498 and 1499 are applicable in the
case at bar.
In the instant case, actual delivery of the
subject tractor could not be made. However,
there was constructive delivery already upon
the execution of the public instrument
pursuant to Article 1498 and upon the
consent or agreement of the parties when the
thing sold cannot be immediately transferred
to the possession of the vendee (Article
1499).
The payment of the check was actually
intended to extinguish the mortgage
obligation so that the tractor could be
released to the petitioner. It was never
intended nor could it be considered as
payment of the purchase price because the
relationship between Libra and the petitioner
is not one of sale but still a mortgage. The
clearing or encashment of the check which
produced the effect of payment determined
the full payment of the money obligation
and the release of the chattel mortgage. It
was not determinative of the consummation
of the sale. The transaction between the
brothers is distinct and apart from the
transaction between Libra and the petitioner.
The contention, therefore, that the
consummation of the sale depended upon
the encashment of the check is untenable.
 2. When Deviation Allowed -

B. PERFECTION; Villonco v. Bormacheco, 65 SCRA 352

(1975);

3. Sale by Auction - (Arts. 1476, 1403

(2)(d) & 1326);

4. Earnest Money - (Art. 1482) –

Spouses Doromal, Sr. v. CA, 66 SCRA

575(1975);

Serrano v. Caguiat, 517 SCRA 57;

5. Place of Perfection (Art. 1319);

Arts. 1325 & 1326;

Art. 1325. Unless it appears otherwise, business

advertisements of things for sale are not definite
offers, but mere invitations to make an offer. (n)

Art. 1326. Advertisements for bidders are

simply invitations to make proposals, and the
advertiser is not bound to accept the highest or
lowest bidder, unless the contrary appears.

Fule v. CA, 286 SCRA 685 (1998);

1. Perfection - (Arts. 1475);

-50. Nietes v. CA, 46 SCRA 654 [3]
-51. Vasquez v. CA (GR 83759, 12 July 1991)
-52. Ang Yu v. CA (GR 109125, 2 December
1994)
-53. Equitorial Realty Development v.
Mayfair Theater (GR 106063, 21 November
1996)
-54. Villonco v. Bormaheco (GR L-26872, 25
July 1975)
-55. Spouses Doromal v. CA (GR L-36083, 5
September 1975)
-56. Goldenrod v. CA (GR 126812, 24
November 1998)
-57. Dalion v. CA (GR 78903, 28 February
1990)
-58. Yuviengco v. Dacuycuy, 104 SCRA 668
(1981) [4]
-59. First Philippine International Bank v.
CA, 252 SCRA (1996) [5]
- 60. Vda. de Jomoc v. CA (GR 92871, 2
August 1991)
-61. Cuyugan v. Santos, 34 PHIL 100 (1916)
[6]
-62. Addison v. Felix (GR 12342, 3 August
1918)
-63. Danguilan v. IAC (GR L-69970, 28
November 1988)
-64. Pasagui v. Villablanco (GR L-21998, 10
November 1975)
65. Dy Jr. v. CA (GR 92989, 8 July 1991)
Aquilino Nietes v. Court of Appeals and Dr.
Pablo Garcia
G.R. No. L-32873 August 18, 1972
FACTS:
On October 19, 1959, said petitioner and
respondent Dr. Pablo C. Garcia entered into
a "Contract of Lease with Option to Buy."
Instead of paying the lessor in the manner
set forth in the contract, Nietes paid in
various amounts.
On or about July 31, 1964, Dr. Garcia's
counsel wrote to Nietes the letterrescinding
the contract. Nietes, thru his counsel, sent
his reply stating that he did not violate any
terms of the contract and will exercise his
option to purchase the land and building.
On July 26, 1965, Nietes deposited with the
branch office of the Agro-Industrial Bank in
Angeles City checks amounting to
P84,860.50, as balance of the purchase price
of the property, but he withdrew said sum on
August 12, 1965, after the checks had been
cleared.
On August 2, 1965, he commenced the
present action, in the Court of First Instance
of Pampanga, for specific performance of
Dr. Garcia's alleged obligation to execute in
his favor a deed of absolute sale of the
leased property.
The Trial Court ruled in favor of the
Petitioner. Both parties appealed to the CA.
A Special Division of the CA rendered its
decision affirming that of the trial court,
except as regard to the attorney’s fees, which
were eliminated. The Special Division of the
CA set aside and reversed the appealed
decision of the trial court and dismissed the
complaint of Nietes upon the filing of the
motion for reconsideration of Dr. Garcia.
ISSUE:Whether the petitioner has can buy
the property.
HELD:
Yes. The contract does not say that Nietes
had to pay the stipulated price of P100,000
before exercising his option to buy the
property in question.In the case of an option
to buy, the creditor may validly and
effectively exercise his right by merely
advising the debtor of the former's decision
to buy and expressing his readiness to pay
the stipulated price, provided that the same
is available and actually delivered to the
debtor upon execution and delivery by him
of the corresponding deed of sale. Unless
and until the debtor shall have done this the
creditor is not and cannot be in default in the
discharge of his obligation to pay.
Nietes had validly and effectively exercised
his option to buy the property of Dr. Garcia,
at least, on December 13, 1962, when he
acknowledged receipt from Mrs. Nietes of
the sum of P2,200 then delivered by her "in
partial payment on the purchase of the
property" described in the "Contract of
Lease with Option to Buy"; that from the
aggregate sum of P29,957.00 paid to him up
to that time, the sum of P12,708.33 should
be deducted as rental for the period from
June 1960 to December 13, 1962, or roughly
thirty (30) months and a half, thereby
leaving a balance of P17,248.67, consisting
of P12,291.67, representing the rentals for
the unused period of the lease, plus
P4,957.00 paid in excess of said rental and
advanced solely on account of the purchase
price; that deducting said sum of P17,248.67
from the agreed price of P100,000.00, there
results a balance of P82,751.33 which
should be paid by Nietes to Dr. Garcia, upon
execution by the latter of the corresponding
deed of absolute sale of the property in
question, free from any lien or encumbrance
whatsoever, in favor of Nietes, and the
delivery to him of said deed of sale, as well
as of the owner's duplicate of the certificate
of title to said property; and that Dr. Garcia
should indemnify Nietes in the sum of
P2,500 as and for attorney's fees.
Thus modified, the decision of the Court of
First Instance of Pampanga is hereby
affirmed in all other respects, and that of the
Court of Appeals reversed.
Spouses Cipriano Vasquez and
ValerianaGayanelo v. Court of Appeals and
Spouses Martin Vallejera and Apolonia Olea
G.R. No. 83759 July 12, 1991
FACTS:
On January 15, 1975, the spouses
Vallejeraplaintiffs-spouses (respondents
herein) filed this action against the Spouses
Vasquez defendants-spouses (petitioners
herein) seeking to redeem Lot No. 1860 of
the HimamaylanCadastre which was
previously sold by respondents to petitioners
on September 21, 1964.
The said lot was registered in the name of
the respondents. On October 1959, the same
was leased by respondents to the petitioners
up to crop year 1966-67, which was
extended to crop year 1968-69. After the
execution of the lease, repondents took
possession of the lot, up to now and devoted
the same to the cultivation of sugar.
On September 21, 1964, the respondents
sold the lot to the petitioners under a Deed
of Sale for the amount of P9,000.00. The
Deed of Sale was duly ratified and
notarized. On the same day and along with
the execution of the Deed of Sale, a separate
instrument, denominated as Right to
Repurchase was executed by the parties
granting respondents the right to repurchase
the lot for P12,000.00, likewise duly ratified
and notarized. By virtue of the sale,
petitioners secured TCT No. T-58898 in
their name.
On January 2, 1969, respondents sold the
same lot to Benito Derrama, Jr., after
securing the petitioners' title, for the sum of
P12,000.00. Upon the protestations of
petitioners, assisted by counsel, the said
second sale was cancelled after the payment
of P12,000.00 by the petitioners to Derrama.
petitioners resisted this action for
redemption on the premise that the Right to
Repurchase is just an option to buy since it
is not embodied in the same document of
sale but in a separate document, and since
such option is not supported by a
consideration distinct from the price, said
deed for right to repurchase is not binding
upon them.
After trial, the court rendered judgment
against the petitioners, ordering them to
resell the lot of the HimamaylanCadastre to
the respondents for the repurchase price of
P24,000.00, which amount combines the
price paid for the first sale and the price paid
by defendants to Benito Derrama, Jr.
Petitioners moved for, but were denied
reconsideration.
ISSUE: Whether there is a sale with right to
repurchase between the parties.
HELD:
No. The nature of the transaction between
the parties is not a sale with right to
repurchase. Conventional redemption takes
place "when the vendor reserves the right to
repurchase the thing sold, with the
obligation to comply with the provisions of
Article 1616 and other stipulations which
may have been agreed upon. (Article 1601,
Civil Code).
In this case, there was no reservation made
by the vendor. Thus, it was more of an
option to buy or a mere promise on the part
of the vendee to resell the property to the
vendor.
The right of repurchase is not a right granted
the vendor by the vendee in a subsequent
instrument, but is a right reserved by the
vendor in the same instrument of sale as one
of the stipulations of the contract. Once the
instrument of absolute sale is executed, the
vendor can no longer reserve the right to
repurchase, and any right thereafter granted
the vendor by the vendee in a separate
instrument cannot be a right of repurchase
but some other right like the option to buy in
the instant case.
In the instant case, since the transaction
between the petitioners and private
respondents was not a sale with right to
repurchase, the private respondents cannot
avail of Article 1601 of the Civil Code
which provides for conventional redemption.
Ang Yu Asuncion, Arthur Go and Keh Tiong
v. Court of Appeals and Buen Realty
Development Corporation
G.R. No. 109125 December 2, 1994
FACTS:
On 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:
5. they are the tenants or lessees of
residential and commercial spaces
owned by Bobby Unijeng and others
located in Binondo, Manila, since
1935;
6. 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;
7. that during the negotiations, Bobby
Cu Unjieng offered a price of six
million while they made a counter
offer of P5-million; and
8. 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 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 appealfor insufficiency in form
and substance.
On November 15, 1990,while the case was
pending consideration by the Supreme
Court, the Cu Unjieng spouses executed a
Deed of Sale transferring the subject
property 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.
On August 30, 1991, the RTC ordered the
Cu Unjiengs to execute the necessary Deed
of Sale of the property in litigation in favor
of 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: Whether the right of first refusal is
deemed as a perfected contract of sale and
whether the filing of the writ of execution is
a proper remedy.
HELD:
No. 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 13199 of
the same Code.An option or an offer would
require, among other things, 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.
The final judgment in the case has merely
accorded a "right of first refusal" in favor of
petitioners. The consequence of such a
declaration entails no more than what has
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.
Equitorial Realty Development v. Mayfair
Theater
G.R. No. 106063 November 21, 1996
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 the option clause in
the contracts of lease is actually a right of
first refusal proviso.
HELD:
Yes. 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.
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.
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.
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
nudispactissedtraditionedominia rerum
transferantur.
There 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.”
Villonco Realty Company v. Bormaheco
G.R. No. L-26872 July 25, 1975
FACTS:
Francisco N. Cervantes and his wife,
Rosario P. Navarra-Cervantes, are the
owners of Lots 3, 15 and 16 located at 245
Buendia Avenue, Makati, Rizal with a total
area of 3,500 sq.ms. The lots were
mortgaged to the Development Bank of the
Philippines (DBP) as security for a loan of
P441,000. The mortgage debt was fully paid.
Cervantes is the president of Bormaheco,
Inc., a dealer and importer of industrial and
agricultural machinery. The entire three lots
are occupied by the building, machinery and
equipment of Bormaheco, Inc. and are
adjacent to the property of Villonco Realty
Company situated at 219 Buendia Avenue.
There were negotiations for the sale of the
said lots and the improvements thereon
between Romeo Villonco of Villonco Realty
Company “and Bormaheco, Inc., represented
by its president, Francisco N. Cervantes,
through the intervention of Edith Perez de
Tagle, a real estate-broker”. In the course of
the negotiations, the brothers Romeo and
Teofilo Villonco conferred with Cervantes in
his office to discuss the price and terms of
the sale. Later, Cervantes went to see
Villonco for the same reason until some
agreement was arrived at.
On a subsequent occasion, Cervantes,
accompanied by Edith Perez de Tagle,
discussed again the terms of the sale with
Villonco. During the negotiations, Villonco
Realty Company assumed that the lots
belonged to Bormaheco and that Cervantes
was duly authorized to sell the same.
Cervantes did not disclose to the broker and
to Villonco Realty that the lots were
conjugal properties of himself and his wife
and that they were mortgaged to the DBP.
Bormaheco, through Cervantes, made a
written offer to Romeo Villonco for the sale
of the property. The property mentioned in
Bormaheco’s letter was the land of the
National Shipyards & Steel Corporation
(Nassco). At the bidding that land was
awarded to Bormaheco, the highest bidder.
The Nassco Board of Directors in its
resolution authorized the General Manager
to sign the necessary contract. The Nassco
Acting General Manager wrote a letter to the
Economic Coordinator, requesting approval
of that resolution. The Acting Economic
Coordinator approved the resolution.
Meanwhile, Bormaheco and Villonco Realty
continued their negotiations for the sale of
the Buendia Avenue property. Cervantes and
Teofilo Villonco had a final conference and
as a result of that conference, Villonco
Realty, in its letter made a revised counter-
offer (Romeo Villonco’s first counter-offer)
for the purchase of the property.
The counter-offer was accepted by
Cervantes. Enclosed to it was a MBTC
Check as earnest money. The check was
delivered by Perez de Tagle to Bormaheco
and was received by Cervantes. In the
voucher-receipt evidencing the delivery the
broker indicated in her handwriting that the
earnest money was subject to the terms and
conditions embodied in Bormaheco’s letter
and Villonco Realty Company’s letter.
Unexpectedly, Cervantes returned the
earnest money, with interest. Cervantes cited
as an excuse the circumstance that despite
the lapse of 45 days there is no certainty yet
for the acquisition of the Punta property.
Villonco Realty Company refused to accept
the letter and the checks of Bormaheco.
Cervantes sent them by registered mail.
When he rescinded the contract, he was
already aware that the Punta lot had been
awarded to Bormaheco.
Edith Perez de Tagle, the broker, articulated
her shock and surprise at Bormaheco’s
turnabout. Cervantes in his letter of 6 April
1964, a reply to Miss Tagle’s letter, alleged
that the 45 day period had already expired
and the sale to Bormaheco, Inc. of the Punta
property had not been consummated.
Cervantes said that his letter was a
“manifestation that we are no longer
interested to sell” the Buendia Avenue
property to Villonco Realty. The latter was
furnished with a copy of that letter.
In a letter, Villonco Realty Company
returned the two checks to Bormaheco, Inc.,
stating that the condition for the cancellation
of the contract had not arisen and at the
same time announcing that an action for
breach of contract would be filed against
Bormaheco. On that same date, Villonco
Realty filed the complaint for specific
performance against Bormaheco. A notice of
lis pendens was annotated on the titles of the
said lots.
ISSUE: Whether there is a perfected
contract of Sales
HELD:
YES. There was a perfected contract of sale.
The alleged changes made in the counter-
offer are immaterial and are mere
clarifications. The changes of the words
“Sta. Ana property” to another property as
well as the insertion of the number “12” in
the date, and the words “per annum” in the
interest are trivial. There is no
incompatibility in the offer and counter-
offer. Cervantes assented to the interest and
he, in fact, paid the same. Also, earnest
money constitutes proof of the perfection of
the contract of sale and forms part of the
consideration. The condition regarding the
acquisition of the Sta. Ana property was
likewise fulfilled; there is thus no ground for
the refusal of Cervantes to consummate the
sale.
Spouses Doromal v. Court of Appeals and
Filomena Javellana
G.R. No. L-36083 September 5, 1975
FACTS:
A parcel of land in Iloilo were co-owned by
seven (7) siblings all surnamed Horilleno.
Five (5) of the siblings gave an SPA to their
niece Mary Jimenez, who succeeded her
father as a co-owner, for the sale of the land
to father and son Doromal. One of the co-
owner, herein petitioner, Filomena Javellana
however did not gave her consent to the sale
even though her siblings executed an SPA
for her signature. The co-owners went on
with the sale of 6/7 part of the land and a
new title for the Doromals were issued.
Respondent offered to repurchase the land
for 30K as stated in the deed of sale but
petitioners declined invoking lapse in time
for the right of repurchase. Petitioner also
contend that the 30K price was only placed
in the deed of sale to minimize payment of
fees and taxes and as such, respondent
should pay the real price paid which was
P115, 250.
ISSUE: Whether the period to repurchase of
petitioner has already lapsed.
HELD:
No. The period of repurchase has not yet
lapsed because the respondent was not
notified of the sale. The 30-day period for
the right of repurchase starts only after
actual notice not only of a perfected sale but
of actual execution and delivery of the deed
of sale.
The letter sent to the respondent by the other
co-owners cannot be considered as actual
notice because the letter was only to inform
her of the intention to sell the property but
not its actual sale. As such, the 30-day
period has not yet commenced and the
respondent can still exercise his right to
repurchase.
The respondent should also pay only the
30K stipulated in the deed of sale because a
redemptioner’s right is to be subrogated by
the same terms and conditions stipulated in
the contract.
Goldenrod, Inc. v. Court of Appeals, Pio
Barreto and Sons, Inc.,
G.R. No. 126812 November 24, 1998
FACTS:
Barretto owned parcels of land which were
mortgaged to UCPB. Barretto failed to pay;
the properties were foreclosed. Goldenrod
made an offer to Barretto that it would buy
the properties and pay off the remaining
balance of Barretto’s loan with UCPB. It
paid Barretto 1 million pesos as part of the
purchase price. The remaining balance
would be paid once Barretto had
consolidated the titles. On the date that
Goldenrod was supposed to pay, Goldenrod
asked for an extension. UCPB agreed. When
the extension date arrived, Goldenrod asked
for another extension. UCPB refused.
Barretto successfully consolidated the titles.
Goldenrod informed Barretto that it would
not be able to push through with their
agreement. It asked Barretto to return the 1
million pesos. Barretto did not give in to
Goldenrod’s rescission. Instead, it sold the
property that was part of their agreement to
Asiaworld.
ISSUE: Whether Goldenrod should be paid
back its payment.
HELD:
Yes. Art. 1385 of the Civil Code provides
that rescission creates the obligation to
return the things which were the object of
the contract together with the fruits and
interest. The vendor is therefore obliged to
return the purchase price paid to him by the
buyer if the latter rescinds the sale, or when
the transaction was called off and the subject
property had already been sold to a third
person, as what obtained in this case.
Barretto is obliged to pay Goldenrod back
because 1) Goldenrod decided to rescind the
sale; 2) the transaction was called off and; 3)
the property was sold to a third person. By
virtue of the extrajudicial rescission of the
contract to sell by Goldenrod, without
opposition from Barretto, who in turn sold it
to a third person, Barretto had the obligation
to return the 1 million pesos plus legal
interest from the date it received the notice
of rescission.
Spouses Dalion v. Court of Appeals and
Ruperto Sabesaje, Jr.
G.R. No. 78903 February 28, 1990
FACTS:
A land in Southern Leyte was declared in the
name of Segundo Dalion. Sabesaje sued to
recover ownership of the land based on a
private deed of absolute sale, allegedly
executed by Dalion.
The spouses denied the claims of Sabesaje
and claims that his signature in the
document was forged.
Spouses Dalion admitted of administering
five parcels of land in Southern Leyte,
which belonged to Leonardo Sabesaje,
grandfather of the respondent. The spouses
Dalion never received their agreed 10% and
15% commission on the sales of copra and
abaca.
ISSUE: Whether the contract of sale is valid.
HELD:
Yes. The authenticity of the signature of
Dalion was proven by the testimony of
several witnesses including the person who
made the deed of sale. Dalion never
presented any evidence or witness to prove
his claim of forgery.
Dallion’s claim that the sale is invalid
because it was not made in a public
document is misplaced. The provision of
Art. 1358 on the necessity of a public
document is only for convenience, not for
validity or enforceability. 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. Sale is perfected
upon meeting of the minds of both parties.
Suga Sotto Yuvienco, Britania Sotto, and
Marcelino Sotto v. Hon. Auxencio Dacuycuy
et al
G.R. No. L-55048 May 27, 1981
FACTS:
Petitioners own a property in Tacloban City
which they intend to sell for 6.5M. They
gave the respondents the right to purchase
the property. Respondents replied that they
agree to buy the property and they will
negotiate for details. Petitioner sent another
telegram informing respondents that their
proposal is accepted and a contract will be
prepared.
Atty. Pedro Gamboa arrived bringing a
contact with an altered mode of payment
which says that the balance payment should
be paid within 30 days instead of the former
90 days. (Original terms: P2M payment
upon execution and P4.5M after 90 days)
ISSUE: Whether there is a valid contract of
sale between the parties.
HELD:
No. The contract of sale between parties was
not perfected because both parties are still
under negotiation. Thus, there was no
meeting of the minds. Atty. Gamboa even
went to the respondents to negotiate for the
sale. Even though there was an agreement
on the terms of payment, there was no
absolute acceptance because respondents
still insisted on further details.
With regard to the alleged violation of terms
of payment, there was no written document
to prove that the respondents agreed to pay
not in cash but in instalment. In sale of real
property, payment of instalment must be in
requisite of a note under the statute of
frauds.

First Philippine International Bank And
Mercurio Rivera v. Court Of Appeals, Carlos
Ejercito
G.R. No. 115849. January 24, 1996
FACTS:
Producers Bank (now called First Philippine
International Bank), which has been under
conservatorship since 1984, is the owner of
6 parcels of land. The Bank had an
agreement with Demetrio Demetria and Jose
Janolo for the two to purchase the parcels of
land for a purchase price of P5.5 million
pesos. The said agreement was made by
Demetria and Janolo with the Bank’s
manager, Mercurio Rivera. Later however,
the Bank, through its conservator, Leonida
Encarnacion, sought the repudiation of the
agreement as it alleged that Rivera was not
authorized to enter into such an agreement,
hence there was no valid contract of sale.
Subsequently, Demetria and Janolo sued
Producers Bank. The regional trial court
ruled in favor of Demetria et al. The Bank
filed an appeal with the Court of Appeals.
Meanwhile, Henry Co, who holds 80%
shares of stocks with the said Bank, filed a
motion for intervention with the trial court.
The trial court denied the motion since the
trial has been concluded already and the case
is now pending appeal. Subsequently, Co,
assisted by ACCRA law office, filed a
separate civil case against Carlos Ejercito as
successor-in-interest (assignee) of Demetria
and Janolo seeking to have the purported
contract of sale be declared unenforceable
against the Bank. Ejercito et al argued that
the second case constitutes forum shopping.
ISSUE: Whether or not there is forum
shopping.
HELD:
Yes. There is forum shopping because there
is identity of interest and parties between the
first case and the second case. There is
identity of interest because both cases
sought to have the agreement, which
involves the same property, be declared
unenforceable as against the Bank. There is
identity of parties even though the first case
is in the name of the bank as defendant, and
the second case is in the name of Henry Co
as plaintiff. There is still forum shopping
here because Henry Co essentially
represents the bank. Both cases aim to have
the bank escape liability from the agreement
it entered into with Demetria et al.
The Supreme Court also discussed that to
combat forum shopping, which originated as
a concept in international law, the principle
of forum non conveniens was developed.
The doctrine of forum non conveniens
provides that a court, in conflicts of law
cases, may refuse impositions on its
jurisdiction where it is not the most
“convenient” or available forum and the
parties are not precluded from seeking
remedies elsewhere.
Maria P. Vda. De Jomoc, Et al. V. The Court
of Appeals, Regional Trial Court of Misamis
Oriental
G.R. No. 92860 August 2, 1991
FACTS:
A parcel of land in CDO owned by late
Pantaleon Jomoc was fictitiously sold to
third persons in which the last transferee are
the spouses Mariano and Maria So. Maria
Vda de Jomoc filed suit to recover the
property and won.
While pending appeal, Vda de Jomoc
executed executed a Deed of Extrajudicial
Settlement and Sale of Land with private
respondent for P300,000.00. The document
was not yet signed by all the parties nor
notarized but in the meantime, Maura So
had made partial payments amounting to
P49,000.00.
So demanded from the heirs of Jomoc for
the execution of final deed of conveyance
but the latter did no comply. As such, So
filed a civil case and a notice of lis pendens
were placed in the title of the land.
On the same date, the heirs of Jomoc
executed another extra-judicial settlement
with absolute sale in favor of intervenors
Lim Leong Kang and Lim Pue claiming that
they believe that So already backed-out from
the agreement.
ISSUE: Whether the sale is enforceable.
HELD:
Since petitioners admit the existence of the
extra-judicial settlement, the court finds that
there was meeting of the minds between the
parties and hence, there is a valid contract
that has been partly executed.
The contract of sale of real property even if
not complete in form, so long as the
essential requisites of consent of the
contracting parties, object, and cause of the
obligation concur and they were clearly
established to be present, is valid and
effective as between the parties. Public
document is only needed to bind third
persons.
The payment made by So is a clear proof of
her intention to acquire the property and the
petitioners cannot claim about the
respondent backing out. The sale to the
intervenors Lim cannot be recognized
because when they bought the property,
there was already a notice of lis pendens and
the sale cannot be said to be in good faith.
Eutiquiano Ciyugan v. Isidoro Santos
G.R. No. 10265 March 3, 1916
FACTS:
Eutiquiyano Cuyugan filed an action to
compel Santos to enforce his right to
repurchase in the deed of sale entered into
by his late mother, Guillerma, with the
defendant. Allegedly, a deed of sale of the
subject land was entered into by Guillerma,
and Santos with a right to repurchase the
land in a stipulated period of time, although
this deed of sale is executed as a security for
a loan that Guillerma have with Santos. In
the deed of sale, it further stated that
Guillerma shall continue to have possession
of the land, and pay an annual rental of Php
420 per annum which is the amount equal to
the loan’s interest. That after sometime,
Guillerma paid 1,000 pesos on the loan,
which then reduced the amount of the annual
rental from 400 to 320 php. When Guillerma
died, Santos sent Cuyugan a notice to
comply with the 420 php rental, which was
agreed upon prior to the payment of
1000php or he will eject Cuyugan from the
land. Cuyugan then offered to pay the
balance that his mother owes Santos by
virtue of the right to repurchase agreed upon
on the deed of sale, but Santos refused to do
so.
ISSUE: Whether there is a valid sale.
HELD:
No. The Supreme Court held that what
should be given force is the intention of the
parties, and not the provisions of the
instrument on its face. Under the provisions
of contracts, for a valid contract to exist,
there should be:
1) consent
2) cause
3) consideration.
Thus, in the present case, what is consented
by both parties is that this deed of sale is
only in consideration for a loan, or by a
nature of a contract of mortgage. Moreover,
by way of evidence it was established by the
court that the parties indeed treat such as a
contract of loan rather than a deed of sale
when Santos, when given by Guillerma 1000
php in favor of such contract, lowered the
payment of the rental from 400-320 php.
Since the agreement was the 400 be equal to
the interest per annum, when the loan was
reduced, the interest as well reduced. This
transaction proved that the treatment and the
intention of the parties was indeed as a
security for the loan, and not as a deed of
sale appearing before the face of the
contract.
A. A. Addison, v. Marciana Felix and
Balbino Tioco
G.R. No. L-12342 August 3, 1918
FACTS:
Four (4) parcels of land as describe in a
public instrument was subject of a contract
of sale between the petitioner and the
defendant. Defendant paid 3000 upon the
execution of deeds and promised to pay
2000 on July 15, 1914 and another 5000
(30) days after the issuance of her certificate
of title
The contract was stipulated as follows:
That the defendant is to pay P10 within ten
years for trees in bearing and P5 for trees not
in bearing with the condition that it will not
exceed the amount of P85,000.
That the purchaser shall deliver 25% of the
value of the products "from the moment she
takes possession of them until the Torrens
certificate of title be issued in her favor."
Further stipulated was that "within one year
from the date of the certificate of title in
favor of Marciana Felix, this latter may
rescind the present contract of purchase and
sale, in which case Marciana Felix shall be
obliged to return to me, A. A. Addison, the
net value of all the products of the four
parcels sold, and I shall obliged to return to
her, Marciana Felix, all the sums that she
may have paid me, together with interest at
the rate of 10 per cent per annum."
In 1915, Addison filed a suit to compel the
defendant to pay him the P2000 with interest
as in the accordance of the terms of the
contract. However, in a form of special
defense, Felix alleges that the petitioner
failed to do his obligation of the contract by
failing to deliver the parcels of land. That
out of the 4 parcels of land only 2 of it
where delivered and that 2/3 of the other
half were in the possession of a third person.
She then filed for a declaration of the
rescission of the contract, whereby she
prayed that petitioner return her P3000 plus
interest and indemnity.
ISSUE: Whether delivery of the public
instrument is equivalent to the delivery of
the subject matter of the sale.
HELD:
No. The Code imposes upon the vendor the
obligation to deliver the thing sold. The
thing is considered to be delivered when it is
placed "in the hands and possession of the
vendee." (Civ. Code, art. 1462.) It is true
that the same article declares that the
execution of a public instruments is
equivalent to the delivery of the thing which
is the object of the contract, but, in order that
this symbolic delivery may produce the
effect of tradition, it is necessary that the
vendor shall have had such control over the
thing sold that, at the moment of the sale, its
material delivery could have been made. It is
not enough to confer upon the purchaser the
ownership and the right of possession. The
thing sold must be placed in his control.
When there is no impediment whatever to
prevent the thing sold passing into the
tenancy of the purchaser by the sole will of
the vendor, symbolic delivery through the
execution of a public instrument is
sufficient. But if, notwithstanding the
execution of the instrument, the purchaser
cannot have the enjoyment and material
tenancy of the thing and make use of it
himself or through another in his name,
because such tenancy and enjoyment are
opposed by the interposition of another will,
then fiction yields to reality — the delivery
has not been effected.
The execution of a public instrument is
sufficient for the purposes of the
abandonment made by the vendor; but it is
not always sufficient to permit of the
apprehension of the thing by the purchaser.
It is evident, then, in the case at bar, that the
mere execution of the instrument was not a
fulfillment of the vendors' obligation to
deliver the thing sold, and that from such
non-fulfillment arises the purchaser's right to
demand, as she has demanded, the rescission
of the sale and the return of the price. (Civ.
Code, arts. 1506 and 1124.)
Inasmuch as the rescission is made by virtue
of the provisions of law and not by
contractual agreement, it is not the
conventional but the legal interest that is
demandable.
Felix Danguilan v. Intermediate Appellate
Court, Apolonia Melad, assisted by her
husband, Jose Tagacay
G.R. No. L-69970 November 28, 1988
Two lots were owned by Domingo Melad.
The lots are claimed by both Felix Daguilan
and Apolonia Melad (and her husband Jose
Tagacay). On 29 January 1962, Apolonia
Melad filed a complaint against Daguilan in
the then CFI Cagayan for recovery of a farm
lot and a residential lot which she claimed
she had purchased from Domingo Melad in
1943 and were now being unlawfully
withheld by Daguilan. In his answer,
Daguilan denied the allegation and averred
that he was the owner of the said lots of
which he had been in open, continuous and
adverse possession, having acquired them
from Domingo Melad in 1941 and 1943.
The case was dismissed for failure to
prosecute but was refiled in 1967. At the
trial, Melad presented a deed of sale dated 4
December 1943, purportedly signed by
Domingo Melad and duly notarized, which
conveyed the said properties to her for the
sum of P80.00. She said the amount was
earned by her mother as a worker at the
Tabacalera factory. She claimed to be the
illegitimate daughter of Domingo Melad,
with whom she and her mother were living
when he died in 1945. She moved out of the
farm only when in 1946 Felix Danguilan
approached her and asked permission to
cultivate the land and to stay therein. She
had agreed on condition that he would
deliver part of the harvest from the farm to
her, which he did from that year to 1958.
The deliveries having stopped, she then
consulted the municipal judge who advised
her to file the complaint against Danguilan.
Melad’s mother, her only other witness,
corroborated this testimony. Daguilan
testified that he was the husband of Isidra
Melad, Domingo’s niece, whom Domingo
Melad and his wife Juana Malupang had
taken into their home as their ward as they
had no children of their own. He and his
wife lived with the couple in their house on
the residential lot and helped Domingo with
the cultivation of the farm. Domingo Melad
signed in 1941 a private instrument in which
he gave Daguilan the farm and in 1943
another private instrument in which he also
gave him the residential lot, on the
understanding that the latter would take care
of the grantor and would bury him upon his
death. Danguilan presented three other
witnesses to corroborate his statements and
to prove that he had been living in the land
since his marriage to Isidra and had
remained in possession thereof after
Domingo Melad’s death in 1945. Two of
said witnesses declared that neither the
plaintiff nor her mother lived in the land
with Domingo Melad. The trial court
believed Daguilan and rendered a decision
based mainly on the issue of possession.
ISSUE: Whether there was delivery in favor
of respondent in alleged sale.
HELD:
No. No constructive delivery allowed if
property is in actual and adverse possession
of a third person. In our jurisdiction, it is a
fundamental and elementary principle that
ownership does not pass be mere stipulation
but only by delivery and the execution of a
public document does not constitute
sufficient delivery where the property
involved is in the actual and adverse
possession of third persons.
Therefore, in our Civil Code it is a
fundamental principle in all matters of
contracts and a well- known doctrine of law
that "non mudis pactis sed traditione
dominia rerum transferuntur". In conformity
with said doctrine as established in
paragraph 2 of article 609 of said code, that
"the ownership and other property rights are
acquired and transmitted by law, by gift, by
testate or intestate succession, and, in
consequence of certain contracts, by
tradition".
In accordance with such disposition and
provisions the delivery of a thing constitutes
a necessary and indispensable requisite for
the purpose of acquiring the ownership of
the same by virtue of a contract.
One who is in possession is presumed to be
the owner. In this case, there no dispute that
it is Danguilan and not Melad who is in
actual possession of the litigated properties.
And even if the claim of petitioner and
respondent are weak, judgment must be in
favor of the Danguilan for one who is in
possession is presumed to be the owner, and
cannot be obliged to show or prove a better
right.
Calixto Pasagui and Fausta Mosar v. Ester T.
Villablanca, Zosimo Villablanca, Eustaquia
Bocar and Catalina Bocar
G.R. No. L-21998 November 10, 1975
FACTS:
On 4 February 1963, Calixto Pasagui and
Fausta Mosar filed a complaint with the CFI
Tacloban City, alleging that on 15 November
1962, for and in consideration of P2,800,
they bought from Eustaquia Bocar and
Catalina Bocar a parcel of agricultural land
with an area of 2.6814 hectares, situated in
Hamindangon, Pastrana, Leyte; that the
corresponding document of sale was
executed, notarized on the same date, and
recorded in the Registry of Deeds of
Tacloban, Leyte on 16 November 1962; that
during the first week of February 1963,
spouses Ester T. Villablanca and Zosimo
Villablanca, “illegally and without any right,
whatsoever, took possession of the property
harvesting coconuts from the coconut
plantation thereon, thus depriving Pasaqui
and Mosar of its possession; that despite
demands made by Pasagui and Mosar upon
the Villablancas “to surrender to them the
property and its possession” the latter failed
or refused to return said parcel of land to the
former, causing them damage; and that
Eustaquia and Catalina Bocar, vendors of
the property, are included defendants in the
complaint by virtue of the warranty clause
contained in the document of sale.
ISSUE: Whether public instrument amounts
to delivery.
HELD:
The execution of the deed of absolute sale in
a public instrument is equivalent to delivery
of the land subject of the sale. This
presumptive delivery only holds true when
there is no impediment that may prevent the
passing of the property from the hands of the
vendor into those of the vendee. It can be
negated by the reality that the vendees
actually failed to obtain material possession
of the land subject of the sale. In the present
case, Pasagui and Mosar had not acquired
physical possession of the land since its
purchase on 12 November 1962. As a matter
of fact, their purpose in filing the complaint
in Civil Case 3285 is precisely to “get the
possession of the property.”
Perfecto Dy, Jr. v. Court Of Appeals, Gelac
Trading Inc., and Antonio V. Gonzales
G.R. No. 92989 July 8, 1991
FACTS:
Wilfredo Dy purchased a truck and a farm
tractor through LIBRA which was also
mortgaged with the latter, as a security to the
loan.
Petitioner, expresses his desire to purchase
his brother’s tractor in a letter to LIBRA
which also includes his intention to shoulder
its mortgage. LIBRA approved the request.
At the time that Wilfredo Dy executed a
deed of absolute sale in favor of petitioner,
the tractor and truck were in the possession
of LIBRA for his failure to pay the
amortization.
When petitioner finally fulfilled its
obligation to pay the tractor, LIBRA would
only release the same only if he would also
pay for the truck. In order to fulfil LIBRA’s
condition, petitioner convinced his sister to
pay for the remaining truck, to which she
released a check amounting to P22,000.
LIBRA however, insisted that the check
must be first cleared before it delivers the
truck and tractor.
Meanwhile, another case penned “GELAC
Trading Inc vs. Wilfredo Dy” was pending
in Cebu as a case to recover for a sum of
money (P12,269.80). By a writ of execution
the court in Cebu ordered to seize and levy
the tractor which was in the premise of
LIBRA, it was sold in a public auction to
which it was purchased by GELAC. The
latter then sold the tractor to Antonio
Gonzales.
ISSUE: Whether the ownership of the farm
tractor had already passed to petitioner when
said tractor was levied on by the sheriff
pursuant to an alias writ of execution issued
in another case in favor of GELAC.
HELD:
Yes. The mortgagor who gave the property
as security under a chattel mortgage did not
part with the ownership over the same. He
had the right to sell it although he was under
the obligation to secure the written consent
of the mortgagee or he lays himself open to
criminal prosecution under the provision of
Article 319 par. 2 of the Revised Penal
Code. And even if no consent was obtained
from the mortgagee, the validity of the sale
would still not be affected.
There is no reason why Wifredo Dy, as the
chattel mortgagor cannot sell the subject
tractor. There is no dispute that the consent
of Libra Finance was obtained in the instant
case. Libra allowed the petitioner to
purchase the tractor and assume the
mortgage debt of his brother. The sale
between the brothers was therefore valid and
binding as between them and to the
mortgagee, as well.
Article 1496 of the Civil Code states that the
ownership of the thing sold is acquired by
the vendee from the moment it is delivered
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. We agree with the petitioner that
Articles 1498 and 1499 are applicable in the
case at bar.
In the instant case, actual delivery of the
subject tractor could not be made. However,
there was constructive delivery already upon
the execution of the public instrument
pursuant to Article 1498 and upon the
consent or agreement of the parties when the
thing sold cannot be immediately transferred
to the possession of the vendee (Article
1499).
The payment of the check was actually
intended to extinguish the mortgage
obligation so that the tractor could be
released to the petitioner. It was never
intended nor could it be considered as
payment of the purchase price because the
relationship between Libra and the petitioner
is not one of sale but still a mortgage. The
clearing or encashment of the check which
produced the effect of payment determined
the full payment of the money obligation
and the release of the chattel mortgage. It
was not determinative of the consummation
of the sale. The transaction between the
brothers is distinct and apart from the
transaction between Libra and the petitioner.
The contention, therefore, that the
consummation of the sale depended upon
the encashment of the check is untenable.