DIZON VS.
CA
FACTS:
1. On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee)
entered into a Contract of Lease with Option to Buy with petitioners 1 (lessors)
involving a 1,755.80 square meter parcel of land situated at corner MacArthur
Highway and South "H" Street, Diliman, Quezon City.
2. The term of the lease was for one (1) year commencing from May 16, 1974 up
to May 15, 1975. During this period, private respondent was granted an option to
purchase for the amount of P3,000.00 per square meter.
3. Thereafter, the lease shall be on a per month basis with a monthly rental of
P3,000.00.
4. Due to the failure of the private respodent to pay the increased rental of
P8,000.00 per month effective June 1976, petitioners filed an action for ejectment
before the MTC of Quezon City.
5. the City Court rendered judgment ordering private respondent to vacate the
leased premises and to pay sum of money to the petitioner.
6. Private respondent filed a certiorari praying for the issuance of a restraining
order enjoining the enforcement of said judgment and dismissal of the case for
lack of jurisdiction of the City Court.
7. After the denial of the private respondent's action before the IAC, private
respondent filed before the Regional Trial Court (RTC) of Quezon City (Civil Case
No. Q-45541) an action for Specific Performance and Fixing of Period for Obligation.
8. It sought to compel the execution of a deed of sale pursuant to the option to
purchase and the receipt of the partial payment, and to fix the period to pay the
balance.
9. Private Respondent also filed other actions however, dismissed.
10. As a consequence of private respondent's motion for reconsideration, the
preliminary injunction was reinstated, thereby restraining the execution of the City
Court's judgment on the ejectment case.
11. The two cases were thereafter consolidated before the RTC of Quezon City who
dimissed the private respondent's complaint and denied the private respondent's
MR.
12. However, On appeal, respondent court concluded that there was a perfected
contract of sale between the parties on the leased premises and that pursuant to
the option to buy agreement, private respondent had acquired the rights of a
vendee in a contract of sale.
13. It opined that the partial payment for the property which petitioners accepted
through Alice A. Dizon was the operative act the gave rise to a perfected contract
of sale.
14. CA further stated that what was entered into was a "conditional contract of
sale" wherein ownership over the leased property shall not pass to the private
respondent until it has fully paid the purchase price.
15. Upon denial of the motion for partial reconsideration by respondent Court,
herein petitioner elevated the case before the Supreme Court. Hence, this petition.
16. The other case is filed by petitioners is a motion to remand the records of the
ejectment case to MTC for the execution of judgment however dismissed by the
CA.
17. The cases were consolidated by the SC.
ISSUE:
W/N there is a perfected contract of sale between the petitioner and private
respondent.
RULING:
1. No. There was no perfected contract of sale between petitioners and private
respondent.
2. The SC ruled that under Article 1475 of the New Civil Code, "the contract of sale
is perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing
the form of contracts."
3. the elements of a contract of sale are consent, object, and price in money or its
equivalent and the absence of any of these essential elements negates the
existence of a perfected contract of sale. Sale is a consensual contract and he who
alleges it must show its existence by competent proof.
4. In the case at bar, There was no valid consent by the petitioners (as co-owners
of the leased premises) on the supposed sale entered into by Alice A. Dizon, as
petitioners' alleged agent, and private respondent.
5. As provided in Article 1868 of the New Civil Code, 27 there was no showing that
petitioners consented to the act of Alice A. Dizon nor authorized her to act on their
behalf with regard to her transaction with private respondent.
6. As further discussed by the SC, Petitioners have established a right to evict
private respondent from the subject premises for non-payment of rentals. The term
of the Contract of Lease with Option to Buy was for a period of one (1) year during
which the private respondent was given an option to purchase said property at
P3,000.00 per square meter. After the expiration thereof, the lease was for
P3,000.00 per month.
7. Admittedly, no definite period beyond the one-year term of lease was agreed
upon by petitioners and private respondent. However, since the rent was paid on
a monthly basis, the period of lease is considered to be from month to month in
accordance with Article 1687 of the New Civil Code.
8. Having failed to exercise the option within the stipulated one year period, private
respondent cannot enforce its option to purchase anymore.
9. In this case, there was a contract of lease for one (1) year with option to
purchase. The contract of lease expired without the private respondent, as lessee,
purchasing the property but remained in possession thereof.
10. an implied new lease does not ipso facto carry with it any implied revival of
private respondent's option to purchase (as lessee thereof) the leased premises.
The provision entitling the lessee the option to purchase the leased premises is not
deemed incorporated in the impliedly renewed contract because it is alien to the
possession of the lessee.
11. Private respondent's right to exercise the option to purchase expired with the
termination of the original contract of lease for one year.
12. WHEREFORE, in view of the foregoing, both petitions are GRANTED.
FORMARAN VS ONG
FACTS:
1. Herein petitioner owns parcel of land which donated intervivos to her by her
aunt and uncle. 1/2 of the parcel of land is the subject property of this case.
2. In 1967, defendant Glenda and her father, Melquiades Barraca came to her
residence asking for help. They were borrowing one-half of land donated to her so
that defendant Glenda could obtain a loan from the bank to buy a dental chair.
They proposed that she signs an alleged sale over the said portion of land.
3. Petitioner signed the prepared Deed of Absolute sale covering the land in
question in this case without any money involved.
4. A month thereafter, plaintiff inquired from her uncle, Melquiades Barracca if they
have obtained the loan.
5. The latter informed her that they did not push through with the loan because
the bank's interest therefore was high. With her uncle's answer, plaintiff inquired
about the deed of sales.
6. Her uncle replied that they crampled (kinumos) the Deed of Absolute Sale ( and
threw it away. Knowing that Exhibit C was already thrown away, plaintiff did not
bother anymore about the document she thought that there was no more
transaction. Besides, she is also in actual possession of the land and have even
mortgaged the same.
7. In May 30, 1996, a case for unlawful detainer was filed against herein petitioner
where for the first time, she learned that the DOAS was not thrown away and that
the land is already declared for taxation purposes in the name of herein defendant.
8. Defendant claimed that there was money involved affecting the sale of the land
in her favor. The sale was not to enable her to buy a dental chair for she had
already one at the time. Besides, the cost of a dental chair in 1967 was only
P2,000.00 which she can readily afford.
9. Petitioner filed on action for annulment of the Deed of Sale (Civil Case No. 5398)
against respondents before the Regional Trial Court (RTC), of Kalibo, Aklan, Branch
5 which rendered a Decision in favor of petitioner and against the respondent by
declaring the Deed of Absolute Sale null and void for being an absolutely simulated
contract.
10. Respondents coursed an appeal to the Court of Appeals (CA). The CA, on
August 30, 2007, reversed and set aside the Decision of the trial court.
11. Hence, herein petition.
ISSUE: W/N the Deed of Sale is valid.
RULING:
1. NO, SC ruled that the subject Deed of Sale is indeed simulated.
2. (1) totally devoid of consideration; (2) it was executed on August 12, 1967, less
than two months from the time the subject land was donated to petitioner on June
25, 1967 by no less than the parents of respondent Glenda Ong; (3) on May 18,
1978, petitioner mortgaged the land to the Aklan Development Bank for a
P23,000.00 loan; (4) from the time of the alleged sale, petitioner has been in actual
possession of the subject land; (5) the alleged sale was registered on May 25, 1991
or about twenty four (24) years after execution; (6) respondent Glenda Ong never
introduced any improvement on the subject land; and (7) petitioner's house stood
on a part of the subject land. These are facts and circumstances which may be
considered badges of bad faith that tip the balance in favor of petitioner.
2. If the sale was legitimate, defendant Glenda should have immediately taken
possession of the land, declared in her name for taxation purposes, registered the
sale, paid realty taxes, introduced improvements therein and should not have
allowed plaintiff to mortgage the land. These omissions properly militated against
defendant Glenda's submission that the sale was legitimate and the consideration
was paid.
3. WHEREFORE, the petition is GRANTED.
LUZON BROKERAGE CO., INC., plaintiff-appellee, vs. MARITIME BUILDING CO.,
INC., and MYERS BUILDING CO., INC., defendants, MARITIME BUILDING CO.,
INC., defendant-appellant.
FACTS:
1. Defendant Myers Building Co., Inc., owner of three parcels of land in the City of
Manila, together with the improvements thereon, entered into a contract entitled
'Deed of Conditional Sale' in favor of Bary Building Co., Inc., later known as
Maritime Building Co., Inc., whereby the former sold the same to the latter for 1M.
P50,000.00 of this price was paid upon the execution of the said contract and the
parties agreed that the balance of P950,000.00 was to be paid in monthly
installments at the rate of P10,000.00 with interest of 5% per annum until the
same was fully paid.
2. In Par. (O), they agreed that in case of failure on the part of the vendee to pay
any of the installments due and payable, the contract shall be annulled at the
option of the vendor and all payments already made by vendee shall be forfeited
and the vendor shall have the right to reenter the property and take possession
thereof.
3. The monthly installments under the contract was regularly paid by the Bary
Building Co., Inc. and/or the Maritime Co., Inc. until the end of February, 1961.
4. It failed to pay the monthly installment corresponding to the month of March,
1961, for which the Vice-President, George Schedler, of the Maritime Building Co.,
Inc., wrote a letter to the President of Myers, Mr. C. Parsons, requesting for a
moratorium on the monthly payment of the installments until the end of the year
1961, for the reason that the said company was encountering difficulties in
connection with the operation of the warehouse business.
5. However, Mr. C. Parsons, in behalf of the Myers Estate, answered that the
monthly payments due were not payable to the Myers Estate but to the Myers
Building Co., Inc., and that the Board of Directors of the Myers Co., Inc., refused
to grant the request for moratorium for suspension of payments under any
condition.
6. Maritime Building Co., Inc. failed to pay the monthly installments corresponding
to the months of March, April and May, 1961. The myers Building Co. Inc. made
demand for the payment of the installments however to no avail.
7. The Myers Building Co., Inc. then wrote the Maritime Building Co., Inc. letter
advising it of the cancellation of the Deed of Conditional Sale entered into between
them and demanding the return of the possession of the properties and holding
the Maritime Building Co., Inc. liable for use and occupation of the said properties
at P10,000.00 monthly.
8. The Myers Co. Inc. demanded upon the Luzon Brokerage Co., Inc. to whom the
Maritime Building Co., Inc. leased the properties.
9. The Luzon Brokerage Co., Inc. then found itself in a payment to the wrong party,
filed this action for interpleader against the Maritime Building Co., Inc.
10. the Myers Building Co., Inc. in its answer filed a crossclaim against the Maritime
Building Co., Inc. praying for the confirmation of its right to cancel the said
contract.
11. On the other hand, the Maritime Building Co., Inc. filed his answer with
crossclaim contending (1) that the Myers Building Co., Inc. cannot cancel the
contract entered into by them for the conditional sale of the properties in question
extra judicially and (2) that it had not failed to pay the monthly installments due
under the contract and, therefore, is not guilty of having violated the same.
12. The trial court held that Maritime, by its failure to pay, committed a breach of
the sale contract and that Myers Company, from and after the breach, became
entitled to terminate the contract, to forfeit the installments paid, as well as to
repossess, and collect the rentals of, the building from its lessee, Luzon Brokerage
Co., in view of the terms of the conditional contract of sale. This decision was in
accordance with the stipulation in the contract between Maritime and Myers.
ISSUE:

W/N there has been no breach of contract by Maritime
W/N appellee Myers was not entitled to rescind or resolve the contract without
recoursing to judicial process.
RULING:
1. YES, The failure or refusal of appellant Maritime to pay the P5,000 monthly
installments corresponding to the months of March, April and May, 1961 constitute
a breach of contract with Myers.
2. the SC further stated that, contrary to appellant Maritime's averments, the
default was not made in good faith.
3. The text of the letter to Myers (Exhibit "11", Maritime), heretofore quoted, leaves
no doubt that the non-payment of the installments was the result of a deliberate
course of action on the part of appellant, designed to coerce the appellee Myers.
4. Under the circumstances, the action of Maritime in suspending payments to
Myers Corporation was a breach of contract tainted with fraud or malice.
5. Maritime having acted in bad faith, it was not entitled to ask the court to give it
further time to make payment and thereby erase the default or breach that it had
deliberately incurred.
6. , appellant overlooks that its contract with appellee Myers is not the ordinary
sale envisaged by Article 1592, transferring ownership simultaneously with the
delivery of the real property sold, but one in which the vendor retained ownership
of the immovable object of the sale, merely undertaking to convey it provided the
buyer strictly complied with the terms of the contract.
7. In suing to recover possession of the building from Maritime, appellee Myers is
not after the resolution or setting aside of the contract and the restoration of the
parties to the status quo ante, as contemplated by Article 1592, but precisely
enforcing the provisions of the agreement that it is no longer obligated to part with
the ownership or possession of the property because Maritime failed to comply with
the specified condition precedent, which is to pay the installments as they fell due.
8. The distinction between contracts of sale and contracts to sell with reserved title
has been recognized by this Court in repeated decisions 2 upholding the power of
promisors under contracts to sell in case of failure of the other party to complete
payment, to extrajudicially terminate the operation of the contract, refuse
conveyance and retain the sums or installments already received, where such
rights are expressly provided for, as in the case at bar.
SILVESTRE DIGNOS and ISABEL LUMUNGSOD, petitioners, vs. HON. COURT OF
APPEALS and ATILANO G. JABIL, respondents.
FACTS:
1. The Dignos spouses were owners of a parcel of land, known as Lot No. 3453, of
the cadastral survey of Opon, Lapu-Lapu City.
2. appellants (petitioners) Dignos spouses sold the said parcel of land to plaintiff-
appellant (respondent Atilano J. Jabil) for the sum of P28,000.00, payable in two
installments, with an assumption of indebtedness with the First Insular Bank of
Cebu in the sum of P12,000.00, which was paid and acknowledged by the vendors
in the deed of sale (Exh. C) executed in favor of plaintiff-appellant, and the next
installment in the sum of P4,000.00 to be paid on or before September 15, 1965
3. "On November 25, 1965, the Dignos spouses sold the same land in favor of
defendants spouses, Luciano Cabigas and Jovita L. De Cabigas, who were then U.S.
citizens, for the price of P35,000.00. A deed of absolute sale (Exh. J, also marked
Exh. 3) was executed by the Dignos spouses in favor of the Cabigas spouses, and
which was registered in the Office of the Register of Deeds pursuant to the
provisions of Act No. 3344.
3. As the Dignos spouses refused to accept from plaintiff-appellant the balance of
the purchase price of the land, and as plaintiff- appellant discovered the second
sale made by defendants-appellants to the Cabigas spouses, plaintiff-appellant
brought the present suit.
4. CFI declares the deed of sale executed on November 25, 1965 by defendant
Isabela L. de Dignos in favor of defendant Luciano Cabigas null and void ab initio,
and the deed of sale executed by defendants Silvestre T. Dignos and Isabela
Lumungsod de Dignos not rescinded.
5. Case was brought to CA who affirmed the decision of the lower court except as
to the portion ordering Jabil to pay for the expenses incurred by the Cabigas
spouses for the building of a fence upon the land in question.
6. Dignos filed MR but denied thus the case was brought to the SC
ISSUE: Whether or not subject contract is a deed of absolute sale or a contract to
sell.