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1. Limketkai Sons Milling v. CA [G.R. No. 118509. December 1, 1995.

]
Facts: On 14 May 1976, Philippine Remnants Co., Inc. constituted the Bank of the Philippine Islands (BPI) as
its trustee to manage, administer, and sell its real estate property. One such piece of property placed under
trust was the disputed lot, a 33,056-sq.ms. lot at Barrio Bagong Ilog, Pasig (TCT 493122). On 23 June 1988,
Pedro Revilla, Jr., a licensed real estate broker was given formal authority by BPI to sell the lot for P1,000.00
per sq.m. This arrangement was concurred in by the owners of the Philippine Remnants. Broker Revilla
contacted Alfonso Lim of Limketkai Sons Milling (LSM) who agreed to buy the land. On 8 July 1988, LSMs
officials and Revilla were given permission to enter and view the property they were buying (by Rolando V.
Aromin, BPI Assistant Vice-President). On 9 July 1988, Revilla formally informed BPI that he had procured a
buyer, LSM. On 11 July 1988, LSMs officials, Alfonso Lim and Albino Limketkai, went to BPI to confirm the
sale. They were entertained by Vice-President Merlin Albano and Asst. Vice-President Aromin. LSM asked that
the price of P1,000.00 per sq.m. be reduced to P900.00 while Albano stated the price to be P1,100.00. The
parties finally agreed that the lot would be sold at P1,000.00 per sq.m. to be paid in cash. Since the authority
to sell was on a first come, first served and non-exclusive basis, it may be mentioned at this juncture that
there is no dispute over LSMs being the first comer and the buyer to be first served. Notwithstanding the
final agreement to pay P1,000.00 per sq.m. on a cash basis, Alfonso Lim asked if it was possible to pay on
terms. The bank officials stated that there was no harm in trying to ask for payment on terms because in
previous transactions, the same had been allowed. It was the understanding, however, that should the term
payment be disapproved, then the price shall be paid in cash. It was Albano who dictated the terms under
which the installment payment may be approved, and acting thereon, Alfonso Lim, on the same date, 11 July
1988, wrote BPI through Merlin Albano embodying the payment initially of 10% and the remaining 90% within
a period of 90 days. 2 or 3 days later, LSM learned that its offer to pay on terms had been frozen. Alfonso
Lim went to BPI on 18 July 1988 and tendered the full payment of P33,056,000.00 to Albano. The payment
was refused because Albano stated that the authority to sell that particular piece of property in Pasig had
been withdrawn from his unit. The same check was tendered to BPI Vice-President Nelson Bona who also
refused to receive payment.
An action for specific performance with damages was thereupon filed on 25 August 1988 by LSM against BPI
with the RTC Pasig (Branch 151). In the course of the trial, BPI informed the trial court that it had sold the
property under litigation to National Book Store (NBS) on 14 July 1989. The complaint was thus amended to
include NBS. On 10 June 1991, the trial court rendered judgment in favor of LSM; holding that there was a
perfected contract between LSM and BPI, and thus declared the Deed of Sale involving the lot in Pasig in the
name of BPI and in favor of NBS as null and void; ordered the Register of Deeds of the Province of Rizal to
cancel the TCT which may have been issued in favor of NBS by virtue of the said deed; ordered BPI upon
receipt by it from LSM of the sum of P33,056,000,00 to execute a Deed of Sale in favor of the latter of the
said property at the price of P1,000.00 per sq.m. and in default thereof, the Clerk of Court is directed to
execute the deed dated 14 July 1989; ordered the Register of Deeds of Pasig, upon registration of the said
deed, whether executed by BPI or the Clerk of Court and payment of the corresponding fees and charges, to
cancel said TCT 493122 and to issue, in lieu thereof, another transfer certificate of title in the name of LSM;
ordered BPI and NBS to pay in solidum to LSM the sums of P10,000,000.00 as actual and consequential
damages and P150,000.00 as attorneys fees and litigation expenses, both with interest at 12% per annum
from date of judgment; on the cross-claim by the bank against NBS, ordered NBS to indemnify the bank of

whatever BPI shall have paid to LSM; dismissed the counterclaim of both BPI and NBS against LSM and the
cross-claim of NBS against BPI; with costs against BPI and NBS.
Upon elevation of the case to the Court of Appeals, the decision of the trial court was reversed and the
complaint dismissed on 12 August 1994. It was held that no contract of sale was perfected because there
was no concurrence of the three requisites enumerated in Article 1318 of the Civil Code. Hence, the petition.
The Supreme Court reversed and set aside the questioned judgment of the Court of Appeals, and reinstated
the 10 June 1991 judgment of Branch 151 of the RTC of The National Capital Judicial Region stationed in
Pasig, Metro Manila except for the award of P10,000,000.00 damages, which was deleted.
2. Ang Yu Asuncion, et.al. vs. CA [G.R. No. 109125. December 2, 1994.]
Facts: On 29 July 1987 a Second Amended Complaint for Specific Performance was filed by Ann Yu Asuncion,
Arthur Go, and Keh Tiong against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before the RTC Manila
(Branch 31, Civil Case 87-41058) alleging, among others, that the former are tenants or lessees of residential
and commercial spaces owned by the latter described as 630-638 Ongpin Street, Binondo, Manila; that they
have occupied said spaces since 1935 and have been religiously paying the rental and complying with all the
conditions of the lease contract; that on several occasions before 9 October 1986, the latter informed the
former that they are offering to sell the premises and are giving them priority to acquire the same; that during
the negotiations, Bobby Cu Unjieng offered a price of P6-million while Ang Yu Asuncion, et.al. (plaintiffs) made
a counter offer of P5-million; that plaintiffs thereafter asked Bobby Cu Unjieng, Rose Cu Unjueng and Jose
Tan (defendants) to put their offer in writing to which request defendants acceded; that in reply to defendants
letter, plaintiffs wrote them on 24 October 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 28 January 1987 with the
same request; that since defendants failed to specify the terms and conditions of the offer to sell and because
of information received that defendants were about to sell the property, plaintiffs were compelled to file the
complaint to compel defendants to sell the property to them. After the issues were joined, defendants filed a
motion for summary judgment which was granted by the lower court. The trial court found that defendants
offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms
and conditions of the proposed sale, hence, there was no contract of sale at all. Nonetheless, the lower court
ruled that should the defendants subsequently offer their property for sale at a price of P11 million or below,
plaintiffs will have the right of first refusal.
Aggrieved by the decision, plaintiffs appealed to the Court of Appeals (CA-GR CV 21123). In a decision
promulgated on 21 September 1990 (penned by Justice Segundino G. Chua and concurred in by Justices
Vicente V. Mendoza and Fernando A. Santiago), the appellate court affirmed with modification the lower
courts judgment, holding that there was no meeting of the minds between the parties concerning the sale of
the property and thus, the claim for specific performance will not lie. The appellate did not grant the appellants
the right of first refusal in the event the subject property is sold for a price in excess of P11 million.
The decision of the appellate court was brought to the Supreme Court by petition for review on certiorari. The
Supreme Court denied the appeal on 6 May 1991 for insufficiency in form and substances.

On 15 November 1990, while CA-GR CV 21123 was pending consideration by the appellate court, the Cu
Unjieng spouses executed a Deed of Sale transferring the property in question to Buen Realty and
Development Corporation for P15 million. As a consequence of the sale, TCT 105254/T-881 in the name of
the Cu Unjieng spouses was cancelled and, in lieu thereof, TCT 195816 was issued in the name of Buen Realty
on 3 December 1990. On 1 July 1991, Buen Realty as the new owner of the subject property wrote a letter
to the lessees demanding that the latter vacate the premises. On 16 July 1991, the lessees wrote a reply to
Buen Realty stating that petitioner brought the property subject to the notice of lis pendens regarding Civil
Case 87-41058 annotated on TCT 105254/T-881 in the name of the Cu Unjiengs.
The lessees filed a Motion for Execution dated 27 August 1991 of the Decision in Civil Case 87-41058 as
modified by the Court of Appeals in CA-GR CV 21123. On 30 August 1991, the Judge issued an order ordering
Cu Unkieng to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu
Asuncion, Keh Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of the latters
right of first refusal and that a new TCT be issued in favor of the buyer, and thus, setting aside all previous
transactions involving the same property notwithstanding the issuance of another title to Buen Realty
Corporation, which was said to have been executed in bad faith. On 22 September 1991, the Judge issue
another order directing the Deputy Sheriff to implement the Writ of Execution ordering the defendants among
others to comply with the Order of the Court within a period of 1 week from receipt of this Order and for
defendants to execute the necessary Deed of Sale of the property in litigation in favor of the plaintiffs Ang Yu
Asuncion, Keh Tiong and Arthur Go for the consideration of P15,000,000.00 and ordering the Register of
Deeds of the City of Manila, to cancel and set aside the title already issued in favor of Buen Realty Corporation
which was previously executed between the latter and defendants and to register the new title in favor of the
aforesaid plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go. On the same day, the corresponding writ of
execution was issued.
On 4 December 1991, the appellate court, on appeal to it by Buen Realty (CA-GR SP 26345), set aside and
declared without force and effect the questioned orders of the court a quo. Hence, the petition for certiorari.
The Supreme Court upheld the decision of the Court of Appeals in ultimately setting aside the questioned
Orders, dated 30 August 1991 and 27 September 1991, of the court a quo; with costs against Ang Yu Asuncion,
et. al.
3. De la Cavada v. Diaz [G.R. No. L-11668. April 1, 1918.]
Facts: On 15 November 1912, Antonio Diaz and Antonio Enriquez de la Cavada entered into a contract of
option for the latter to purchase the formers hacienda at Pitogo, within the period necessary for the approval
and issuance of a Torrens title thereto by the Government for P30,000 in cash or P40,000 with 6% interest
per annum within 6 years with due security, i.e. the 100 hectares of land in Pitogo, Tayabas; containing
20,000 coconut trees and 10,000 nipa-palm trees sold to Enriquez for P70,000. Subsequently, Enriquez
informed Diaz of his conformity with the letter of option under the condition that he shall send a surveyor to
survey the said property, and to apply to the Government for a Torrens title therefor, and, if the expenses
incurred for the same should not exceed P1,000, he shall pay the P500 and you the other P500; Provided,
however, that Diaz shall give the surveyor all necessary assistance during his stay at the hacienda; and that
he shall pay the purchase price to you in conformity with our letter of option of this date, and after the Torrens

title shall have been officially approved. Soon after the execution of said contract, and in part compliance with
the terms thereof, Diaz presented 2 petitions in the Court of Land Registration (13909 and 13919), each for
the purpose of obtaining the registration of a part of the Hacienda de Pitogo. Said petitions were granted,
and each parcel was registered and a certificate of title was issued for each part under the Torrens system to
Diaz. Later, and pretending to comply with the terms of said contract, Diaz offered to transfer to Enriquez one
of said parcels only, which was a part of said hacienda. Enriquez refused to accept said certificate for a part
only of said hacienda upon the ground that it was only a part of the Hacienda de Pitogo, and under the
contract he was entitled to a transfer to him a all said hacienda.
Raised in the lower court, Diaz theorized that the contract of sale of said Hacienda de Pitogo included only
100 hectares, more or less, of said hacienda, and that offering to convey to Enriquez a portion of said
hacienda, and that by offering to convey to Enriquez a portion of said hacienda composed of 100 hectares,
more or less, he thereby complied with the terms of the contract. Enriquez theorized, on the other hand,
that he had purchased all of said hacienda, and that the same contained, at least, 100 hectares, more or
less. The lower court sustained the contention of Enriquez, that the sale was a sale of the Hacienda de
Pitogo and not a sale of a part of it. The Court ordered Diaz, within 30 days from the date upon which this
decision becomes final, convey to Enriquez a good and sufficient title in fee simple to the Court of Land
Registration, upon payment or legal tender of payment by Enriquez of the sum of P30,000 in cash, and upon
Enriquez giving security approved by this court for the payment within the term of 6 years from the date of
the conveyance for the additional sum of P40,000 with interest at the rate of 6% per annum. The Court
further ordered and adjudged that in the event of the failure of Diaz to execute the conveyance, Enriquez has
and recover judgment against him, Diaz, for the sum of P20,000, with interest at the rate of 6% (6% per
annum from the date upon which the conveyance should have been made). From the judgment, Diaz
appealed.
The Supreme Court affirmed the judgment of the lower court, with costs.
4. Carceller vs. Court of Appeals (302 SCRA 718)

5. Adelfa Properties vs. CA [G.R. No. 111238. January 25, 1995.]


Facts: Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and Dominador Jimenez, were the
registered co-owners of a parcel of land consisting of 17,710 sq. ms (TCT 309773) situated in Barrio Culasi,
Las Pias, Metro Manila. On 28 July 1988, Jose and Dominador Jimenez sold their share consisting of 1/2 of
said parcel of land, specifically the eastern portion thereof, to Adelfa Properties pursuant to a Kasulatan sa
Bilihan ng Lupa. Subsequently, a Confirmatory Extrajudicial Partition Agreement was executed by the
Jimenezes, wherein the eastern portion of the subject lot, with an area of 8,855 sq. ms. was adjudicated to
Jose and Dominador Jimenez, while the western portion was allocated to Rosario and Salud Jimenez.
Thereafter, Adelfa Properties expressed interest in buying the western portion of the property from Rosario
and Salud. Accordingly, on 25 November 1989, an Exclusive Option to Purchase was executed between the
parties, with the condition that the selling price shall be P2,856,150, that the option money of P50,000 shall
be credited as partial payment upon the consummation of sale, that the balance is to be paid on or before 30

November 1989, and that in case of default by Adelfa Properties to pay the balance, the option is cancelled
and 50% of the option money shall be forfeited and the other 50% refunded upon the sale of the property to
a third party, and that all expenses including capital gains tax, cost of documentary stamps are for the account
of the vendors and the expenses for the registration of the deed of sale for the account of Adelfa properties.
Considering, however, that the owners copy of the certificate of title issued to Salud Jimenez had been lost,
a petition for the re-issuance of a new owners copy of said certificate of title was filed in court through Atty.
Bayani L. Bernardo. Eventually, a new owners copy of the certificate of title was issued but it remained in the
possession of Atty. Bernardo until he turned it over to Adelfa Properties, Inc.
Before Adelfa Properties could make payment, it received summons on 29 November 1989, together with a
copy of a complaint filed by the nephews and nieces of Rosario and Salud against the latter, Jose and
Dominador Jimenez, and Adelfa Properties in the RTC Makati (Civil Case 89-5541), for annulment of the deed
of sale in favor of Household Corporation and recovery of ownership of the property covered by TCT 309773.
As a consequence, in a letter dated 29 November 1989, Adelfa Properties informed Rosario and Salud that it
would hold payment of the full purchase price and suggested that the latter settle the case with their nephews
and nieces, adding that if possible, although 30 November 1989 is a holiday, we will be waiting for you and
said plaintiffs at our office up to 7:00 p.m. Another letter of the same tenor and of even date was sent by
Adelfa Properties to Jose and Dominador Jimenez. Salud Jimenez refused to heed the suggestion of Adelfa
Properties and attributed the suspension of payment of the purchase price to lack of word of honor. On 7
December 1989, Adelfa Properties caused to be annotated on the title of the lot its option contract with Salud
and Rosario, and its contract of sale with Jose and Dominador Jimenez, as Entry No. 1437-4 and entry No.
1438-4, respectively. On 14 December 1989, Rosario and Salud sent Francisca Jimenez to see Atty. Bernardo,
in his capacity as Adelfa Properties counsel, and to inform the latter that they were cancelling the transaction.
In turn, Atty. Bernardo offered to pay the purchase price provided that P500,000.00 be deducted therefrom
for the settlement of the civil case. This was rejected by Rosario and Salud. On 22 December 1989, Atty.
Bernardo wrote Rosario and Salud on the same matter but this time reducing the amount from P500,000.00
to P300,000.00, and this was also rejected by the latter. On 23 February 1990, the RTC dismissed Civil Case
89-5541.
On 28 February 1990, Adelfa Properties caused to be annotated anew on TCT 309773 the exclusive option to
purchase as Entry 4442-4.On the same day, 28 February 1990, Rosario and Salud executed a Deed of
Conditional Sale in favor of Emylene Chua over the same parcel of land for P3,029,250.00, of which
P1,500,000.00 was paid to the former on said date, with the balance to be paid upon the transfer of title to
the specified 1/2 portion. On 16 April 1990, Atty. Bernardo wrote Rosario and Salud informing the latter that
in view of the dismissal of the case against them, Adelfa Properties was willing to pay the purchase price, and
he requested that the corresponding deed of absolute sale be executed. This was ignored by Rosario and
Salud. On 27 July 1990, Jimenez counsel sent a letter to Adelfa Properties enclosing therein a check for
P25,000.00 representing the refund of 50% of the option money paid under the exclusive option to purchase.
Rosario and Salud then requested Adelfa Properties to return the owners duplicate copy of the certificate of
title of Salud Jimenez. Adelfa Properties failed to surrender the certificate of title.
Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for annulment of contract
with damages, praying, among others, that the exclusive option to purchase be declared null and void; that
Adelfa Properties be ordered to return the owners duplicate certificate of title; and that the annotation of the

option contract on TCT 309773 be cancelled. Emylene Chua, the subsequent purchaser of the lot, filed a
complaint in intervention. On 5 September 1991, the trial court rendered judgment holding that the agreement
entered into by the parties was merely an option contract, and declaring that the suspension of payment by
Adelfa Properties constituted a counter-offer which, therefore, was tantamount to a rejection of the option.
It likewise ruled that Adelfa Properties could not validly suspend payment in favor of Rosario and Salud on
the ground that the vindicatory action filed by the latters kin did not involve the western portion of the land
covered by the contract between the parties, but the eastern portion thereof which was the subject of the
sale between Adelfa Properties and the brothers Jose and Dominador Jimenez. The trial court then directed
the cancellation of the exclusive option to purchase, declared the sale to intervenor Emylene Chua as valid
and binding, and ordered Adelfa Properties to pay damages and attorneys fees to Rosario and Salud, with
costs.
On appeal, the Court of appeals affirmed in toto the decision of the court a quo (CA-GR 34767) and held that
the failure of petitioner to pay the purchase price within the period agreed upon was tantamount to an election
by petitioner not to buy the property; that the suspension of payment constituted an imposition of a condition
which was actually a counter-offer amounting to a rejection of the option; and that Article 1590 of the Civil
Code on suspension of payments applies only to a contract of sale or a contract to sell, but not to an option
contract which it opined was the nature of the document subject of the case at bar. Said appellate court
similarly upheld the validity of the deed of conditional sale executed by Rosario and Salud in favor of intervenor
Emylene Chua. Hence, the petition for review on certiorari.
The Supreme Court affirmed the assailed judgment of the Court of Appeals in CA-GR CV 34767, with
modificatory premises.
6. Villamor vs. CA [G.R. No. 97332. October 10, 1991.]
Facts: Macaria Labingisa Reyes was the owner of a 600-square meter lot located at Baesa, Caloocan City (TCT
[18431] 18938, Register of Deeds of Rizal). In July 1971, Macaria sold a portion of 300 sq. ms. of the lot to
the Spouses Julio and Marina Villamor for the total amount of P21,000.00. Earlier, Macaria borrowed P2,000.00
from the spouses which amount was deducted from the total purchase price of the 300 sq. m. lot sold. The
portion sold to the Villamor spouses is now covered by TCT 39935 while the remaining portion which is still
in the name of Macaria Labingisa- is covered by TCT 39934. On 11 November 1971, Macaria executed a Deed
of option in favor of Villamor in which the remaining 300 sq. m. portion (TCT No. 39934) of the lot would be
sold to Villamor under the conditions stated therein. According to Macaria, when her husband, Roberto Reyes,
retired in 1984, they offered to repurchase the lot sold by them to the Villamor spouses but Marina Villamor
refused and reminded them instead that the Deed of Option in fact gave them the option to purchase the
remaining portion of the lot. The Villamors, on the other hand, claimed that they had expressed their desire
to purchase the remaining 300 sq. m. portion of the lot but the Reyes had been ignoring them.
On 13 July 1987, after conciliation proceedings in the barangay level failed, the Villamors filed a complaint for
specific performance against the Reyes before the RTC Caloocan City (Branch 121, Civil Case C-12942). On
26 July 1989, judgment was rendered by the trial court in favor of the Villamor spouses, ordering the Reyeses
to sell the land to the Villamors, to pay the the latter the sum of P3,000 as attorneys fees, and to pay the
cost of suit. The court dismissed the counterclaim for lack of merit.

Not satisfied with the decision of the trial court, the Reyes spouses appealed to the Court of Appeals (CA-GR
CV 24176). On 12 February 1991, the Court of Appeals rendered a decision reversing the decision of the trial
court and dismissing the complaint. The reversal of the trial courts decision was premised on the finding of
respondent court that the Deed of Option is void for lack of consideration. The Villamor spouses brought the
petition for review on certiorari before the Supreme Court.
The Supreme Court denied the petition, affirmed the decision of the appellate court for reasons cited in the
decision, and dismissed the complaint in Civil Case C-12942 on the ground of prescription and laches.
7. Soriano, et. al. v. Bautista, et. al. [G.R. No. L-15752. December 29, 1962.]
Facts: Spouses Basilio Bautista and Sofia de Rosas are the absolute and registered owners of a parcel of land,
situated in Teresa, Rizal (OCT 3905, Register of Deeds of Rizal). On 30 May 1956, the said spouses for and
in consideration on the sum of P1,800, signed a document entitled Kasulatan Ng Sanglaan in favor of
Ruperto Soriano and Olimpia de Jesus. Simultaneously with the signing of the deed, the spouses Bautista and
de Rosas transferred the possession of the said land to Soriano and de Jesus who have been and are still in
possession of the said property and have since that date been and are cultivating the said land and have
enjoyed and are still enjoying the produce thereof to the exclusion of all other persons. Sometimes after 30
May 1956, the spouses Bautista and de Rosas received from Soriano and de Jesus, the sum of P450.00
pursuant to the conditions agreed upon in the document for which no receipt was issued and which was
returned by the spouses sometime on 31 May 1958. On 13 May 1958, a certain Atty. Angel O. Ver wrote a
letter to the spouses Bautista informing the said spouses that his clients Soriano and de Jesus have decided
to buy the parcel of land in question pursuant to paragraph 5 of the document in question (That it has
likewise been agreed that if the financial condition of the mortgagees will permit, they may purchase said
land absolutely on any date within the two-year term of this mortgage at the agreed price of P3,900.00.).
The spouses in spite of the receipt of the letter refused to comply with the demand contained therein.
On 31 May 1958, Soriano and de Jesus filed before the Trial Court Civil Case 5023, praying that they be
allowed to consign or deposit with the Clerk of Court the sum of P1,650.00 as the balance of the purchase
price of the parcel of land in question. After due hearing, judgment be rendered ordering Bautista and de
Rosas to execute an absolute deed of sale of the said property in their favor, plus damages.
On 9 June 1958, spouses Bautista and de Rosas filed a complaint against Soriano and de Jesus, which case
after hearing was dismissed for lack of jurisdiction. On 5 August 1959, the spouses Bautista and de Rosas
again filed a case in the CFI against Soriano and de Jesus asking the Court to order Soriano and de Jesus to
accept the payment of the principal obligation and release the mortgage and to make an accounting of the
harvest for the two harvest seasons (1956-1957). The two cases, were by agreement of the parties assigned
to one branch so that they can be tried jointly. On 10 March 1959, the CFI Rizal, after a joint trial of both
cases, ordered Bautista and de Rosas to execute a deed of sale covering the property in question in favor of
Soriano and de Jesus upon payment by the latter of P1,650.00 which is the balance of the price agreed upon,
i.e. P3,900.00, and the amount previously received by way of loan by the said spouses from Soriano and de
Jesus, to pay the sum of P500.00 by way of attorneys fees, and to pay the costs.
The Supreme Court affirmed the judgment appealed from, with costs.

8. Dizon vs. Court of Appeals (302 SCRA 288)

9. Sanchez vs. Rigos [G.R. No. L-25494. June 14, 1972.]


Facts: On 3 April 1961, Nicolas Sanchez and Severina Rigos executed an instrument, entitled Option to
Purchase, whereby Mrs. Rigos agreed, promised and committed . . . to sell to Sanchez, for the sum of
P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of
Nueva Ecija, and more particularly described in TCT NT-12528 of said province, within two (2) years from
said date with the understanding that said option shall be deemed terminated and elapsed, if Sanchez shall
fail to exercise his right to buy the property within the stipulated period. Inasmuch as several tenders of
payment of the sum of P1,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on 12
March 1963, the former deposited said amount with the CFI Nueva Ecija and commenced against the latter
the present action, for specific performance and damages. On 11 February 1964, after the filing of defendants
answer, both parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings.
Accordingly, on 28 February 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to
accept the sum judicially consigned by him and to execute, in his favor, the requisite deed of conveyance.
Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorneys fees, and the costs. Hence, the appeal by
Mrs. Rigos to the Court of Appeals, which case was the certified by the latter court to the Supreme Court upon
the ground that it involves a question purely of law.
The Supreme Court affirmed the decision appealed from, with costs against Severina Rigos.
10. Montilla vs. CA [G.R. No. L-47968. May 9, 1988.]
Facts: On 27 April 1972, Emilio Aragon Jr. filed an action before the CFI Iloilo to compel Lina Montilla to
comply with a verbal contract to sell to him a piece of land situated at Poblacion, Iloilo City, known as Lot 4
of the Consolidated Subdivision plan (LRC) Psc-11605. In his complaint, Aragon claimed that in the last week
of June 1969, Montilla had orally offered to sell the lot to him at a price of P57,650.00 (at the rate of P50 per
sq. m.), the price being payable at any time within a 3-year period from June, 1969 provided that Aragon
constructed on the lot a house of strong materials and paid a nominal monthly rental in the meantime; but
despite Aragons acceptance of the offer, fulfillment by him of the specified conditions, and his seasonable
tender of the purchase price, Montilla had refused to comply with her obligation. In her answer Montilla
categorically denied ever having entered into such an agreement, and set up the affirmative defenses of (1)
unenforceability of the alleged agreement under the Statute of Frauds; and (2) failure of the complaint to
state a cause of action, no allegation having been made therein of any consideration for the promise to sell
distinct and separate from the price, as required by Article 1479 of the Civil Code. At Montillas instance, a
preliminary hearing was had on her affirmative defenses in accordance with Section 6, Rule 16 of the Rules
of Court, as if a motion to dismiss had been filed. By Order dated 5 December 1972, the Court denied the
implicit motion to dismiss. After trial, the Court rendered judgment on 22 August 1974 sentencing Montilla to
execute the requisite deed of conveyance of Lot 4, covered by TCT T-29976 in favor of Aragon upon full

payment by him to Montilla of the total consideration thereof in the aggregate sum of P57,650.00; to pay to
Montilla P2,000.00 as attorneys fees, and to pay the costs.
The decision was affirmed by the Court of Appeals. The latters adjudgment has, in turn, been duly brought
up to the Supreme Court by Montilla, on appeal by certiorari under Rule 45 of the Rules of Court.
The Supreme Court reversed and set aside the Decision of the Court of Appeals dated 18 January 1978 and
that of the CFI dated 22 August 1974 thereby affirmed, and entered a new one dismissing Aragons complaint,
with costs against him.
11. Yao Ka Sin Trading vs. Court of Appeals (209 SCRA 763)
12. Nietes vs. Court of Appeals (46 SCRA 654)

13. Vasquez vs. CA [G.R. No. 83759. July 12, 1991.]


Facts: On 21 September 1964, Vallejera and Olea sold the lot to Vasquez and Gayaleno 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 the Vallejera and Olea the right to repurchase the lot for P12,000.00, said
document was likewise duly ratified and notarized. By virtue of the sale, the Vasquez and Gayaleno secured
TCT T-58898 in their name. On 2 January 1969, Vallejera and Olea sold the same lot to Benito Derrama, Jr.,
after securing Vasquez and Gayalenos title, for the sum of P12,000.00. Upon the protestations of Vasquez
and Gayaleno, assisted by counsel, the said second sale was cancelled after the payment of P12,000.00 by
Vasquez and Gayaleno to Derrama.
On 15 January 1975, Spouses Martin Vallejera and Apolonia Olea filed an action against Spouses Cirpriano
Vasquez and Valeriana Gayaleno seeking to redeem Lot 1860 of the Himamaylan Cadastre which was
previously sold by the former to the latter on 21 September 1964. Said lot was registered in the name of
Vallejera and Olea. On October 1959, the same was leased by them to Vasquez and Gayalleno up to crop
year 1966-67, which was extended to crop year 1968-69. After the execution of the lease, Vasquez and
Gayaleno took possession of the lot, up to now and devoted the same to the cultivation of sugar. Vasquez
and Gayeleno resisted the 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 RTC Himamaylan, Negros Occidental (6th Judicial Region, Branch 56, Civil
Case 839) rendered judgment against Vasquez and Gayeleno, ordering them to resell lot 1860 of the
Himamaylan Cadastre to Vallejera and Olea for the repurchase price of P24,000.00, which amount combines
the price paid for the first sale and the price paid by the former to Benito Derrama, Jr. Vallejera and Gayeleno
moved for, but were denied reconsideration. Excepting thereto, they appealed.

The Court of Appeals affirmed the decision of the RTC Himamaylan, Negros Occidental in Civil Case 839. In
addition, the appellate court ordered Vasquez and Gayeleno to pay the amount of P5,000.00 as necessary
and useful expenses in accordance with Article 1616 of the Civil Code. Hence, the petition.
The Supreme Court granted the petition, reversed and set aside the questioned decision and resolution of the
Court of Appeals , and dismissed the complaint in Civil Case 839 of the then CFI Negros Occidental 12th
Judicial District Branch 6; without costs.
14. Equatorial Realty vs. Mayfair Theater [G.R. No. 106063. November 21, 1996.]
Facts: Carmelo & Bauermann Inc. (Carmelo) owned a parcel of land, together with two 2-storey buildings
constructed thereon located at Claro M Recto Avenue, Manila (TCT 18529, Register of Deeds of Manila). On
1 June 1967, Carmelo entered into a contract of lease with Mayfair Theater for the latters lease of a portion
of Carmelos property, i.e. a portion of the 2/F of the two-storey building with floor area of 1610 sq.ms. and
the second floor and mezzanine of the two-storey building situated at CM Recto Avenue, Manila with a floor
area of 150 sq.ms. for use by Mayfair as a motion picture theater and for a term of 20 years. Mayfair thereafter
constructed on the leased property a movie house known as Maxim Theatre. On 31 March 1969, Mayfair
entered into a second contract of lease with Carmelo for the lease of another portion of Carmelos property,
i.e. a portion of the 2/F of the two-storey building with floor area of 1064 sq.ms. and two store spaces at the
ground floor and mezzanine of the two-storey building situated at CM Recto Avenue, Manila with a floor area
of 300 sq.ms. and bearing street numbers 1871 and 1875 for similar use as a movie theater and for a similar
term of 20 years. Mayfair put up another movie house known as Miramar Theatre on this leased property.
Both contracts of lease provide identically worded paragraph 8, which reads That if the LESSOR should desire
to sell the leased premises, the lessee shall be given 30-days exclusive option to purchase the same. In the
event, however, that the leased premises is sold to someone other than the Lessee, the lessor is bound and
obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser
shall recognize this lease and be bound by all the terms and conditions thereof. Sometime in August 1974,
Mr. Henry Pascal of Carmelo informed Mr. Henry Yang, President of Mayfair, through a telephone conversation
that Carmelo was desirous of selling the entire Claro M. Recto property. Mr. Pascal told Mr. Yang that a certain
Jose Araneta was offering to buy the whole property for US$1,200,000, and Mr. Pascal asked Mr. Yang if the
latter was willing to buy the property for P6 million to P7 million. Mr. Yang replied that he would let Mr. Pascal
know of his decision. On 23 August 1974, Mayfair replied through a letter confirming the correspondence
between Pascual and Yang and reiterating paragraph 8 of the two contracts of lease. Carmelo did no reply to
this letter. On 18 September 1974, Mayfair sent another letter to Carmelo purporting to express interest in
acquiring not only the leased premises but the entire building and other improvements if the price is
reasonable. However, both Carmelo and Equatorial questioned the authenticity of the second letter. Four
years later, on 30 July 1978, Carmelo sold its entire CM. Recto Avenue land and building, which included the
leased premises housing the Maxim and Miramar theatres, to Equatorial by virtue of a Deed of Absolute
Sale, for the total sum of P1,300,000.
In September 1978, Mayfair instituted the action for specific performance and annulment of the sale of the
leased premises to Equatorial. In its Answer, Carmelo alleged as special and affirmative defense that it had
informed Mayfair of its desire to sell the entire CM. Recto Avenue property and offered the same to Mayfair,
but the latter answered that it was interested only in buying the areas under lease, which was impossible

since the property was not a condominium; and that the option to purchase invoked by Mayfair is null and
void for lack of consideration. Equatorial, in its Answer, pleaded as special and affirmative defense that the
option is void for lack of consideration and is unenforceable by reason of its impossibility of performance
because the leased premises could not be sold separately from the other portions of the land and building. It
counterclaimed for cancellation of the contracts of lease, and for increase of rentals in view of alleged
supervening extraordinary devaluation of the currency. Equatorial likewise cross-claimed against codefendant
Carmelo for indemnification in respect of Mayfairs claims. After assessing the evidence, the court rendered
decision dismissing the complaint with costs against Mayfair; ordering Mayfair to pay Carmelo & Bauermann
P40,000.00 by way of attorneyss fees on its counterclaim; and ordering Mayfair to pay Equatorial Realty
P35,000.00 per month as reasonable compensation for the use of areas not covered by the contracts of lease
from 31 July 1979 until Mayfair vacates said areas plus legal interest from 31 July 1978; P70,000.00 per month
as reasonable compensation for the use of the premises covered by the contracts of lease dated (1 June 1967
from 1 June 1987 until Mayfair vacates the premises plus legal interest from 1 June 1987; P55,000.00 per
month as reasonable compensation for the use of the premises covered by the contract of lease dated 31
March 1969 from 30 March 1989 until Mayfair vacates the premises plus legal interest from 30 March 1989;
and P40,000.00 as attorneys fees; and dismissing Equatorials crossclaim against Carmelo & Bauermann. The
trial court adjudged the identically worded paragraph 8 found in both lease contracts to be an option clause
which however cannot be deemed to be binding on Carmelo because of lack of distinct consideration therefor.
Mayfair taking exception to the decision of the trial court, appealed to the Court of Appeals. The appellate
court reversed the trial court and rendered judgment reversing and setting aside the appealed Decision;
directing Mayfair to pay and return to Equatorial the amount of P11,300,000.00 within 15 days from notice of
this Decision, and ordering Equatorial to accept such payment; directing Equatorial, upon payment of the sum
of P11,300,000, to execute the deeds and documents necessary for the issuance and transfer of ownership
to Mayfair of the lot registered under TCT 17350, 118612, 60936, and 52571; and should Mayfair be unable
to pay the amount as adjudged, declaring the Deed of Absolute Sale between Carmelo and Equatorial as
valid and binding upon an the parties. Hence, the petition for review.
The Supreme Court denied the petition for review of the decision of the Court of Appeals (23 June 1992, in
CA-GR CV 32918), declaring the Deed of Absolute Sale between Equatorial and Carmelo as deemed rescinded;
ordering Carmelo to return to Equatorial the purchase price; directing Equatorial to execute the deeds and
documents necessary to return ownership to Carmelo of the disputed lots; and ordering Carmelo to allow
Mayfair to buy the lots for P11,300,000.