B.

PERFECTION;

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);

2. When Deviation Allowed -

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);

-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:
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.