15 Sales Case Digests

ayehramz ayehramz

Fule vs CA et.al, G.R. No. 112212. March 2, 1998

I. This petition for review on certiorari questions the affirmance by the CA of the decision of

the RTC, dismissing the complaint that prayed for the nullification of a contract of sale of a

10-hectare property in consideration of the amount of P40, 000.00 and a 2.5 carat emerald-

cut diamond.

II. Fule is a banker, petitioner vs CA, Dr. Cruz, buyer and Belarmino, lawyer.

III. Fule convinced and sold a parcel of land to Dr. Cruz in consideration of a diamond ring.

Atty. Belarmino, prepared the Deed of Absolute Sale which the parties signed. But 2 hours

after the delivery of the diamond ring, even though was given the opportunity to examine

tthe same, Fule alleged that the diamond ring was fake.

Fule filed a case to annul the sale for being null and void on the grounds of fraud and deceit

at RTC, but ruled in favor of respondents. CA affirmed its ruling.

IV.

V. ISSUE: Whether or Not the sale is valid.

VI. RULING:

a. YES. It is valid.

b. A contract of sale is perfected at the moment there is a meeting of the minds

upon the thing which is the object of the contract and upon the price. Being consensual,

a contract of sale has the force of law between the contracting parties and they are

expected to abide in good faith by their respective contractual commitments. It is

evident from the facts of the case that there was a meeting of the minds between

petitioner and Dr. Cruz. As such, they are bound by the contract unless there are

reasons or circumstances that warrant its nullification.

There is fraud when, through the insidious words or machinations of one of

the contracting parties, the other is induced to enter into a contract which, without them,

he would not have agreed to. No evidence that respondents did it. He was given the

opportunity to examine it. It was in fact petitioner who resorted to machinations to

convince Dr. Cruz to exchange her jewelry for the Tanay property.

Thus, the SC affirmed in toto, the ruling of RTC and CA.

Gaite vs Fornacier, G.R. No. L-11827 July 31, 1961

I. This appeal comes to SC directly from the Court of First Instance because the claims involved aggregate more than P200, 000.00.

II. Gaite, is the attorney-in-fact of defendant Fornacier, owner of mining claims.

III. Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the

exploration and development of mining claims. Gaite executed a deed of assignment in

favor of a single proprietorship owned by him. For some reasons, Fonacier revoked the

agency, which was acceded to by Gaite, subject to certain conditions, one of which being

the transfer of ores extracted from the mineral claims for P75,000, of which P10,000 has

already been paid upon signing of the agreement and the balance to be paid from the first

letter of credit for the first local sale of the iron ores.

To secure payment, Fonacier delivered a surety agreement with Larap Mines and some

of its stockholders, and another one with Far Eastern Insurance. When the second surety

agreement expired with no sale being made on the ores, Gaite demanded the P65,000

balance. He also filed a case at RTC who ruled in his favor and was affirmed by the CA.

IV.

V. ISSUE: Whether the sale is conditional or one with a period.

VI. RULING:

a. NO.

b. The shipment or local sale of the iron ore is not a suspensive condition to the

payment of the balance of P65, 000.00, but was only a suspensive period or term.

What characterizes a conditional obligation is the fact that its efficacy or

obligatory force is subordinated to the happening of a future and uncertain event; so

that if the suspensive condition does not take place, the parties would stand as if the

conditional obligation had never existed.

A contract of sale is normally commutative and onerous: not only does each

one of the parties assume a correlative obligation (the seller to deliver and transfer

ownership of the thing sold and the buyer to pay the price), but each party anticipates

performance by the other from the very start.

The contract may be aleatory but no proof for it. It was countered by the fact

that Gaite insisted a bond to guarantee payment. And the fact that appellants did put

up such bonds indicates that they admitted the definite existence of their obligation to

pay the balance. Thus, the decision of RTC and CA was affirmed in toto.

Petitioner Respondent

The trial court and appellate court erred

in not declaring the contract of sale as

null and void on the grounds of fraud.

The sale is valid. It has all the requisites

of a valid contract of sale.

The sale is consummated after the actual

delivery of the ring.

Petitioner is in bad faith in annulling the

sale.

Plaintiff Defendant

The payment become due and

demandable when the defendants

failed to renew the surety bond

underwritten by the Far Eastern Surety

and Insurance Co., Inc.

That the obligation sued upon by Gaite

was subject to a condition, that up to the

time of the filing of the complaint, no sale

of the iron ore had been made, hence the

condition had not yet been fulfilled; and

that consequently, the obligation was not

yet due and demandable.

ayehramz ayehramz

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES, petitioner,

vs. COURT OF APPEALS and FIRESTONE CERAMICS, INC., respondents.

I. Petition for review the decision of RTC and CA.

II. Petioner is the creditor of NDC and respondent is the lessee of NDC.

III. The National Development Corp. (NDC) owned the NDC Compound, a portion of which

was leased to Firestone Ceramics, which built several warehouses and facilities therein.

Since business between NDC and Firestone went smooth, the lease was twice renewed

this time conferring upon Firestone a right of first refusal should NDC decide to dispose of

the property.

Also, under the contract, Firestone was obliged to introduce considerable

improvements thereon. Eventually though, Memo Order No. 214 was issued ordering the

transfer of NDC Compound to the government in consideration of the cancellation of NDCs

P57M debt. Pursuant thereto, NDC transferred the property to Polytechnic University (PUP).

Firestone sued for specific performance invoking its right of first refusal, and sought to enjoin

NDC and PUP from proceeding with the sale.

IV.

V. ISSUE: Whether or not there was a sale.

VI. RULING:

a. Yes. There was a perfected sale.

b. The argument of PUP and NDC was untenable. GOCCs have personalities

separate and distinct from the government. Sale brings within its grasp the whole

gamut of transfers where ownership of a thing is ceded for consideration. Further,

judging from the conduct of the parties in this case, all the elements of a valid sale

attend. Consent is manifested by the Memo Order No. 214, the cancellation of liabilities

constituted consideration; the subject matter was of course the property subject of the

dispute.

Since a sale was involved, the right of first refusal in favor of Firestone must

be respected. It forms an integral part of the lease and is supported by consideration

Firestone having made substantial investments therein. Only when Firestone fails to

exercise such right may the sale to PUP proceed.

Polytechnic University of the Philippines was ordered to reconvey the property

to FIRESTONE CERAMICS, INC., in the exercise of its right of first refusal upon

payment of the purchase price thereof.

FERNANDO CARRASCOSO, JR., Petitioner, vs. CA, LAURO LEVISTE, Respondents

I. Petition for review the decision of CA which reversed the decision of RTC.

II. Petioner was the vendee and Respondents as vendor.

III. El Dorado Plantation Inc, through board member Lauro Leviste, executed a Deed of Sale

with Carrascoso. The subject of the sale was an 1825 hectare of land with a price of P1.8M.

Carrascoso paid a total of 500k as downpayment and the balance will be paid in installment

basis. Leviste also assured that there were no tenants hence the land does not fall under

the Land Reform Code.

Carrascoso defaulted from his obligation. Leviste then sent him letters to make good his

end of the contract otherwise he will be litigated. Without Carrascoso satisfying his debt,

respondent filed an action for rescission against Carrascoso. The RTC ruled in favor of

Carrascoso. CA reversed the RTC ruling.

IV.


He had not paid his remaining obligation

in view of the extensions of time to comply

therewith granted him by El Dorado,

therefore his not in default.

The CA erred in not declaring that the

action for rescission was prematurely

filed.

That Petioner was in default in not paying

his obligation in accordance with the

term stipulated in the contract of sale.

V. ISSUE: Whether or not the contract can be rescinded?

VI. RULING:

a. YES.

b. A contract of sale is a reciprocal obligation. Reciprocal obligations are those which arise

from the same cause, and in which each party is a debtor and a creditor of the other,

such that the obligation of one is dependent upon the obligation of the other. They are

to be performed simultaneously such that the performance of one is conditioned upon

the simultaneous fulfillment of the other.

Article 1191 of the Civil Code provides:

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of

the obligors should not comply with what is incumbent upon him.

In view of the Article thereof, Respondents has the power to rescind the contract of sale

due to non-performance of the obligations of the Petioner in contract.

The exercise of the power to rescind extinguishes the obligatory relation as if it had

never been created, the extinction having a retroactive effect. The rescission is

equivalent to invalidating and unmaking the juridical tie, leaving things in their status

before the celebration of the contract. Thus, SC ordered mutual restitution to both

parties.


Aver that there was no sale involved

since ownership of the property

remained with the governmentboth

companies being GOCCs.

There was a perfected sale. Therefore

a violation of its right of first refusal

incorporated in the contract between

NDC.

ayehramz ayehramz

PERPETUA VDA. DE APE, Petitioner, vs CA and GENOROSA CAWIT VDA. DE LUMAYNO,

Respondents. G.R. No. 133638 April 15, 2005

I. Petition for review the decision of CA which reversed the decision of RTC.

II. Petioner was heirs of the late owner of a land in questioned and respondent is a buyer.

III. Cleopas Ape died and left a parcel of land (Lot 2319) to his 11 children. The children never

formally divided the property amongst themselves, whereby each just occupied a certain

portion and developed each.

On the other hand, the spouses Lumayno were interested in the land so they started

buying the portion of land that each of the heirs occupied. One of the children, Fortunato

who is a no read no write, entered into a contract of sale with Lumayno with a consideration

of P5, 000.00. She paid in advance P30.00. Fortunato was given a receipt prepared by

Lumaynos son in law (Andres Flores). Flores also acted as witness. Lumayno also

executed sales transactions with Fortunatos siblings separately.

Lumayno compelled Fortunato to make the delivery to her of the registrable deed of

sale over Fortunatos portion of the Lot. Fortunato assailed the validity of the contract of

sale. He also invoked his right to redeem (as a co-owner) the portions of land sold by his

siblings to Lumayno.

IV.


That his consent was vitiated being no

read no write and without being fully

explained the contents of the contract.

That he fully explained the contract

evidenced by the acceptance of the

receipt by petitioner.

V. ISSUE: Whether or not the contract of sale is valid.

VI. RULING:

a. No.

b. For there to be a perfected contract of sale, however, the following elements must be

present: consent, object, and price in money or its equivalent.

For consent to be valid, it must meet the following requisites:

A.it should be intelligent, or with an exact notion of the matter to which it refers;

B.it should be free and

C.it should be spontaneous.

Intelligence in consent is vitiated by error; freedom by violence, intimidation or

undue influence; spontaneity by fraud. Fortunato was a no read no write person. It

was incumbent for the other party to prove that details of the contract was fully

explained to Fortunato before Fortunato signed the receipt.

Lumayno claimed that she explained fully the receipt to Fortunato, but Flores

testimony belies it. Flores said there was another witness but the other was a maid who

also lacked education. Further, Flores himself was not aware that the receipt was to

transfer the ownership of Fortunatos land to her mom-in-law. It merely occurred to him

to explain the details of the receipt but he never did.

Thus, the contract of sale is not valid. Respondent doesnt have any right to

demand the delivery of the land. Petition was granted and affirmed the decision of RTC.

OLEGARIO B. CLARIN, Petitioner, v. ALBERTO L. RULONA and THE HONORABLE COURT OF

APPEALS, Respondents. G.R. No. L-30786. February 20, 1984

I. This is a petition for review on certiorari of the decision of the Court of Appeals which

affirmed the finding of the trial court that there was a perfected contract of sale between the

petitioner and the respondent.

II. Clarin was owner of lot and Rulona was the buyer.

III. Clarin was the owner of a 10 hectare land in Carmen, Bohol. The same was said to be his

share from the other co-owners. In 1959, he executed a Contract of Sale with Rulona as

he was selling his 10 hectare land. It was agreed that the purchase price would be

P2500.00. Down payment would be P1000.00 and the remaining balance would be paid

monthly at P100.00 per month. Rulona paid the down payment as well as the 1st installment

but then later on Clarin returned the P1100.00 against Rulonas will. Clarin said he could

not convince the other co-owners about the selling of his share. Clarin also said there was

no perfected sale between him and Rulona as he said that the sale was subject to the

condition that the other co-owners should give their consent to the sale.

Rulona filed an action for specific performance which was favored by RTC and affirmed by

CA.

IV.


That there was no perfected sale

because the sale he projected was

subject to a condition which is the

approval of its co-owners.

There was a perfected sale. The

condition of which was fulfilled by paying

the initial payment.

V. ISSUE: Whether or not there was a perfected sale.

VI. RULING:

a. Yes.

b. There was a perfected contract of sale between the parties and that such contract was

already partially executed when the petitioner received the initial payment

No error in the lower courts holding that a contract of sale was perfected

between the petitioner and the respondent and that the sale did not depend on a

condition that the petitioners co-owners would have to agree to the sale. The latter

finding is strengthened by the fact that although the petitioner has been stressing that

he made it clear to the respondent that the consent of his sisters as co-owners was

necessary in order for the sale to push through, his letter to respondent stated another

reason, hence that argument cannot be given merit.

Although as a co-owner, the petitioner cannot dispose of a specific portion of

the land, but when personal rights is involved, his share shall be bound by the effect

of the sale as provided in Article 493 of the civil code.

Petition was dismissed for lack of merit.

ayehramz ayehramz

PROVINCE OF CEBU, petitioner, vs. HEIRS OF RUFINA MORALES, respondents.

G.R. No. 170115, February 19, 2000

I. This is a petition for review on certiorari of the Decision of the CA which affirmed in toto the

Decision of RTC for specific performance and reconveyance of property.

II. Petitioner is owner of disputed land and respondents is the buyer-lessee of the land.

III. Province of Cebu leased in favor of Rufina Morales a 210-square meter lot. Petitioner

donated the lot occupied by Morales to the City of Cebu. The city, then, sold the subject lot

at public auction. The highest bidder for the said lot was Hever Bascon but Morales was

allowed to match the highest bid since she had a preferential right to the lot as actual

occupant thereof. Morales thus paid the required deposit and partial payment for the lot.

Later, the subject lot was returned to petitioner and registered in its name. Morales

died and apart from the deposit and down payment, she was not able to make any other

payments on the balance of the purchase price for the lot. Now the surviving heirs of

Morales are asking for the formal conveyance of subject lot, in accordance with the award

earlier made by the City of Cebu. They also consigned with the court the amount

representing the balance of the purchase price which petitioner allegedly refused to accept.

RTC ruled in favor respondents which was affirmed by CA.

IV.


The CA erred in finding that with partial payment made by Morales, the sale was in effect closed for all legal purposes and that the transaction was perfected and consummated.

That the respondent now in default in payment for the purchase price.

That the award at public auction of the lot to Morales was a valid and binding contract entered into by the City of Cebu.

That they could not pay the balance of the purchase price during the pendency of said case due to confusion as to whom and where payment should be made

V. ISSUES: 1. Whether or not the respondent can still tender payment for the purchase price?

2. Whether or not the contract of sale is consummated.

VI. RULING: 1. YES. Article 1592 of the Civil Code pertinently provides that In the sale of

immovable property, even though it may have been stipulated that upon failure to pay the

price at the time agreed upon the rescission of the contract shall take place, the vendee

may pay, even after the expiration of the period, as long as no demand for rescission of

the contract has been made upon him either judicially or by notarial act. After the

demand, the court may not grant him a new term.

Thus, respondents could still tender payment of the full purchase price as no demand

for rescission had been made upon them, either judicially or through notarial act. While it

is true that it took a long time for respondents to bring suit for specific performance and

consign the balance of the purchase price, it is equally true that petitioner or its

predecessor did not take any action to have the contract of sale rescinded.

2. The contract of sale between the City of Cebu and Morales was also partially

consummated. The latter had paid down payment for the lot in accordance with the terms

of the bid award. Moreover, the consignation of the balance of the purchase price before

the trial court thus operated as full payment, which resulted in the extinguishment of

respondents obligation under the contract of sale. Hence, the contract of sale is

consummated.

Petition was denied and affirmed the decision of CA.

SAN MIGUEL PROPERTIES PHILIPPINES, INC., petitioner, vs. SPOUSES HUANG, respondents.

G.R. No. 137290, July 31, 2000

I. This is a petition for review of the decision of the CA which reversed the decision of the RTC

dismissing the complaint brought by respondents against petitioner for enforcement of a

contract of sale.

II. Petitioner is engaged in purchase and sell of real properties and respondent is the buyer.

III. Petitioner offered two parcels of land for sale and the offer was made to an agent of the

respondents. An earnest-deposit of P1 million was offered by the respondents and was

accepted by the petitioners authorized officer subject to certain terms that is refundable

upon failure to agree on the terms and conditions of sale within 30 days. Petitioner returned

the P1M upon failure to agree on the terms and conditions of the sale despite the extension

granted by the petitioner.

The respondents demanded execution of a deed of sale covering the properties and

attempted to return the earnest-deposit but petitioner refused on the ground that the option

to purchase had already expired. A complaint for specific performance was filed against

the petitioner and the latter filed a motion to dismiss which the trial court granted. The

respondents elevated the matter to the Court of Appeals and the latter reversed the decision

of the trial court and held that a valid contract of sale had been complied with.

IV.

Petitioner Respondents

The earnest deposit which petitioner accepted, merely resulted in an option contract, but it was unenforceable for lack of a distinct consideration.

The absence of agreement as to the mode of payment was fatal to the perfection of the contract of sale

The respondents argues in the contrary.

V. ISSUE: WON there was a perfected contract of sale between the parties.

VI. RULING:

a. NO.

b. It is not the giving of earnest money, but the proof of the concurrence of all the essential

elements of the contract of sale which establishes the existence of a perfected sale.

The P1 million earnest-deposit could not have been given as earnest money because

at the time when petitioner accepted the terms of respondents offer, their contract had

not yet been perfected.

The parties never got past the negotiation stage because the first condition

for an option period of 30 days sufficiently shows that a sale was never perfected.

Petitioner correctly points out, acceptance of this condition did not give rise to a

perfected sale but merely to an option or an accepted unilateral promise on the part of

respondents to buy the subject properties within 30 days from the date of acceptance

of the offer. Such option giving respondents the exclusive right to buy the properties

within the period agreed upon is separate and distinct from the contract of sale which

the parties may enter. All that respondents had was just the option to buy the properties

which privilege was not, however, exercised by them because there was a failure to

agree on the terms of payment. No contract of sale may thus be enforced by

respondents. Thus, SC reversed the ruling of CA and affirmed the RTC.

ayehramz ayehramz

REGINA P. DIZON, et.al, petitioners, vs. COURT OF APPEALS and OVERLAND EXPRESS LINES,

INC., respondents. G.R. No. 122544 January 28, 1999

I. Petition seeking to set aside and annul the decisions and resolutions of respondent CA.

II. Petitioners are the lessor and Respondent is the lessee of a parcel of land.

III. Overland Express Lines, Inc. entered into a 1 year Contract of Lease with Option to Buy

with petitioners involving a parcel of land.

After lapsed of the 1 year, respondents did not purchase the property, and for failure of

Overland Express Lines to pay the increased rental petitioners filed an action for ejectment

against it. The lower court rendered judgment ordering Overland Express Lines to vacate

the leased premises and to pay damages.

Respondent filed an action sought to compel the execution of a deed of sale pursuant

to the option to purchase and the receipt of the partial payment by alleged agent and to fix

the period to pay the balance. RTC denied the motion but on appeal, the CA 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 and the acceptance of the partial payment by an

alleged agent of the petitioners, private respondent had acquired the rights of a vendee in

a contract of sale.

IV.

Petitioner Respondents

The option to buy already extinguished upon the lapse of the one year.

They did not give the alleged agent the authority to accept payment from respondents.

The option to buy still subsist because the property is still in their possession after the lapsed of 1 year.

The contract of sale was perfected upon acceptance of the payment by petitioners agent.

V. ISSUE: WON the option to buy is still enforceable.

WON there was a perfected sale.

VI. RULING:

1. No. Having failed to exercise the option within the stipulated one-year period, private

respondent cannot enforce its option to purchase anymore.

The fact that the property remained in possession of the respondent constitute implicit

renewal of the contract of lease on a monthly basis. But, only those terms which are

germane to the lessee's right of continued enjoyment of the property leased are revived.

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.

2. NO. There was no valid consent by the petitioners on the supposed sale entered into by petitioners' alleged agent, and private respondent. The basis for agency is

representation and a person dealing with an agent is put upon inquiry and must

discover upon his peril the authority of the agent. There was no showing that

petitioners consented to the act the agent nor authorized her to act on their behalf. The

most prudent thing private respondent should have done was to ascertain the extent of

the authority of the agent. Being negligent in this regard, private respondent cannot

seek relief on the basis of a supposed agency.

Therefore, the petition was granted.

AURORA ALCANTARA-DAUS, Petitioner, vs. Spouses HERMOSO and SOCORRO DE LEON, Respondents. G.R. No. 149750, June 16, 2003

I. Petition for Review under Rule 45, seeking to set aside the decision & resolution of the CA. II. Petioner is the buyer of the lot allegedly owned by respondents. III. Respondents are the registered owners of a parcel of land by inheritance from his father.

Sometime 1960s, respondents engaged the services of a lawyer to take care of the documents of their properties. After the death of the lawyer, some documents revealed that their properties had been conveyed by sale or quitclaim to Hermosos brothers and sisters when in truth and in fact, no such conveyances were ever intended by them. Furthermore, respondent found out that his signature in the Deed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon was forged and the land was sold by the latter to Petitioner.

Spouses De Leon demanded the annulment of the document and re-conveyance but defendants refused. The RTC rendered its Decision in favor of herein petitioner but the CA reversed its decision in favor of the herein respondents.

IV.


The contract of sale having been perfected was binding upon the parties.

That her possession of the land in 18 years is in good faith and that, consequently, she has acquired ownership thereof by virtue of prescription.

Respondents contends the contrary.

V. ISSUE: WON upon the perfection of the contract of sale, ownership is transferred.

WON petitioner being a possessor in good faith can be acquired ownership by prescription.

VI. RULING: 1. NO. Even after the contract of sale has been perfected between the parties, its

consummation by delivery is yet another matter. It is through tradition or delivery that the buyer acquires the real right of ownership over the thing sold. The sellers ownership of the thing sold is not an element in the perfection of the contract of sale. However, the consummation of the contract and the consequent transfer of ownership would depend on whether the seller subsequently acquired ownership of the thing sold. In this case, undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the owner of the land he delivered to petitioner. Thus, ownership of it cannot be transferred to petitioner.

2. It is well-settled that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession.

Neither can prescription be allowed against the hereditary successors of the registered owner, because they merely step into the shoes of the decedent and are merely the continuation of the personality of their predecessor in interest. Consequently, since a certificate of registration covers it, the disputed land cannot be acquired by prescription regardless of petitioners good faith.

ayehramz ayehramz

EQUATORIAL REALTY DEVELOPMENT, INC. & CARMELO & BAUERMANN, INC., petitioners, vs. MAYFAIR THEATER, INC., respondent. , G.R. No. 106063 November 21, 1996

I. Petition for review of the decision of the CA which reversed the decision RTC, in dismissing

the complaint for specific performance with damages and annulment of contract. II. Petitioners are the parties entered into a contract of sale and respondent is the lessee of

the property in dispute. III. Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-storey building to

respondent Mayfair Theater Inc. They entered a contract which expressly provides, That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive option to purchase the same.

Carmelo informed Mayfair that it will sell the property to Equatorial. Mayfair made known its interest to buy the property but only to the extent of the leased premises. Notwithstanding Mayfairs intention, Carmelo sold the property to Equatorial. Mayfair filed an action for specific performance and annulment of the sale but RTC ruled in favor of the petitioner. On appeal, the CA reversed the ruling of the RTC.

IV.

Petitioners Respondent

That the option to purchase invoked by Mayfair is null and void for lack of consideration.

That the petitioner violates the right of first refusal which is expressly provided in the contract.

V. ISSUE: WON the clause which provides the respondent the option to purchase is an

option contract or a right of first refusal?

VI. RULING:

a. It is a right of first refusal. b. An option is a contract granting a privilege to buy or sell within an agreed time and at a

determined price. It is a separate and distinct contract from that which the parties may enter into upon the consummation of the option. It must be supported by consideration. In the instant case, the right of first refusal is an integral part of the contracts of lease. The consideration is built into the reciprocal obligations of the parties.

The right of first refusal is incorporated into the contracts of lease for the benefit of the lessee which wanted to be assured that it shall be given the first crack or the first option to buy the property at the price which the seller is willing to accept. The consideration for the lease includes the consideration for the right of first refusal.

Mayfair is in effect stating that it consents to lease the premises and to pay the price agreed upon provided the lessor also consents that, should it sell the leased property, then, Mayfair shall be given the right to match the offered purchase price and to buy the property at that price.

The contract of sale between Equatorial and Carmelo is characterized by bad faith, since it was knowingly entered into in violation of the rights of and to the prejudice of Mayfair. Thus, the sale was rescinded and SC ordered that Mayfair in the exercise of its right of first refusal be allowed to purchase the property at a certain price.

Petition denied.

HYATT ELEVATORS and ESCALATORS CORPORATION, Petitioner, vs. CATHEDRAL HEIGHTS

BUILDING COMPLEX ASSOCIATION, INC., Respondent. G.R. No. 173881, December 1, 2010

I. Petition for review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the

Decision and Resolution of the Court of Appeals.

II. Petitioner and respondent are parties in a service agreement.

III. Petitioner entered into an "Agreement to Service Elevators" (Service Agreement) with

respondent, where petitioner was contracted to maintain four passenger elevators installed

in respondent's building. Under the Service Agreement, respondent shall pay for the

additional charges incurred in connection with the repair and supply of parts.

Petitioner claims that during a certain period it had incurred expenses in the

maintenance and repair of the four elevators as itemized in a statement of account.

Petitioner demanded from respondent the payment of the aforesaid amount but respondent,

however, refused to pay the amount.

Petitioner filed with the RTC a Complaint for sum of money against respondent. RTC

ruled in favor of petitioner but on appeal Ca reversed its decision.


Due to the perfected contract of sale, respondent are liable for the payment of spare parts installed in the elevators at its hospital under the service agreement.

There was no perfected contract of sale.

That the repairs were not authorized because petitioner had failed to secure purchase orders relating to the supposed parts prior to the repairs.

IV. ISSUE: WON there is a perfected contract of sale.

V. RULING:

a. NO.

b. Aside from the absence of consent, there was no perfected contract of sale because

there was no meeting of minds upon the price. As the law provides, the fixing of

the price can never be left to the discretion of one of the contracting parties.

In this case, the absence of agreement as to the price is evidenced by the lack

of purchase orders issued by respondents where the quantity, quality and price of the

spare parts needed for the repair of the elevators are stated. It was only Hyatt who

determined the price, without the acceptance or conformity of respondents.

The Service Agreement did not give petitioner the unbridled license to

purchase and install any spare parts and demand, after the lapse of a considerable

length of time, payment of these prices from respondent according to its own dictated

price.

Petition was denied and the ruling of the CA was affirmed.

ayehramz ayehramz

DOLES, Petitioner, vs. ANGELES, Respondent. G.R. No. 149353 June 26, 2006

I. Petition for Review on Certiorari under Rule 45 of the Rules of Court questioning the

Decision of the Court of Appeals which reversed the Decision of the Regional Trial Court.

II. Doles acted as agent of her friends and respondent acted as agent the principal financier.

III. Respondent acted as agent of the principal financier, executed a Deed of Absolute Sale to

a parcel of land allegedly owned by the petitioner, to satisfy the loans obtained by her friends

who borrowed money through the representation of the latter.

Respondent filed with the RTC a complaint for Specific Performance with Damages

against petitioner. RTC ruled in favor of the petitioner but on appeal the CA reversed its

decision.

IV.


The Deed of Absolute Sale was not valid due to lack of cause or consideration.

Shes just acted as agent to the borrowers, thus, her property cannot be conveyed to satisfy their debts.

Petitioner was the borrower and, in turn, would "re-lend" the amount borrowed from the respondent to her friends.

The Deed of Absolute Sale was supported by a valid consideration, which is the sum of money petitioner owed respondent

V. ISSUE: WON the Deed of Absolute Sale is supported by a valid consideration.

VI. RULING:

a. NO.

b. Both parties acted as mere agents is shown by the undisputed fact that the friends of

petitioner issued checks in payment of the loan in the name of principal financier. If it

is true that petitioner was "re-lending", then the checks should have been drawn in her

name and not directly paid to the principal financier.

In view of the two agency relationships, petitioner and respondent are not privy

to the contract of loan between their principals. Since the sale is predicated on that

loan, then the sale is void for lack of consideration.

Since Petitioner is merely the agent or representative of the alleged debtors,

then she is not a party to the loan; and that the Deed of Sale executed between her

and the respondent in their own names, which was predicated on that pre-existing debt,

is void for lack of consideration.

Petition was granted and SC reversed the CAs decision.

RIDO MONTECILLO, petitioner, vs. IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA ABUCAY, respondents G.R. No. 138018, July 26, 2002

I. Petition for Review on Certiorari assailing the Court of Appeals decision and order. II. Petitioner is the buyer and respondent is the owner. III. Reynes, being illiterate, signed by affixing her thumb-mark on the Deed of Sale executed

by Montecillo involving a parcel of land. Montecillo promised to pay the agreed P47,000.00 purchase price within one month from the signing of the Deed of Sale.

Montecillo failed to pay the purchase price after the lapse of the one-month period, prompting Reynes to demand from Montecillo the return of the Deed of Sale. Since Montecillo refused to return the Deed of Sale, Reynes executed a document unilaterally revoking the sale and gave a copy of the document to Montecillo.

Subsequently, Reynes signed a Deed of Sale transferring to the Abucay Spouses the entire Mabolo Lot but upon registration they received information that the Register of Deeds of Cebu City issued Certificate of Title on the parcel of land in the name of Montecillo.

Respondents filed a case to the RTC which decided in their favor and affirmed by the CA which revoked the certificate of title of Montecillo.

IV.


Montecillo claimed that the consideration for the sale Lot was the amount he paid to creditor for the mortgage debt of Jayag whose house stood in a portion of the lot.

There is only non-payment of the consideration within the period agreed upon for payment merely gives Reynes a right to ask for specific performance, or for annulment of the obligation to sell the lot.

The mortgage on the house, being a chattel mortgage, could not be interpreted in any way as an encumbrance on the Lot.

For lack of consideration there was no meeting of minds, therefore the contract of sale is null and void.

V. ISSUE: WON the Deed of Sale is valid.

VI. RULING:

a. NO.

b. The deed of sale is null and void ab initio for lack of consideration though the deed of

sale states that the purchase price has been paid but in fact has never been paid.

Montecillo failed to adduce any evidence showing that Reynes had agreed, verbally or

in writing, that the price should be paid to Jayags creditor. Thus, Monticellos payment

to Jayags creditor is not the payment that would extinguish Monticellos obligation to

Reynes under the Deed of Sale.

This is not merely a case of failure to pay the purchase price, what we have

here is a purported contract that lacks a cause - one of the three essential requisites of

a valid contract. Failure to pay the consideration is different from lack of

consideration. The former results in a right to demand the fulfillment or cancellation of

the obligation under an existing valid contract while the latter prevents the existence of

a valid contract.

Disagreement to the manner of payment prevented the existence of a valid

contract because of lack of consent. In summary, Montecillos Deed of Sale is null and void ab initio not only for lack of consideration, but also for lack of consent.

Petition Denied.

ayehramz ayehramz

R. F. NAVARRO, plaintiff-appellant, vs. SUGAR PRODUCERS COOPERATIVE MARKETING ASSOCIATION INC., defendant-appellee. G.R. No. L-12888, April 29, 1961

I. An appeal directly to SC from the order of the CFI in dismissing the complaint for lack of

cause of action. II. Plaintiff is the offeree and defendant is the offeror. III. On September 19th, 1956, defendant formally offered to plaintiff the sale of metric tons of

molasses, giving him up to noon of September 24th, 1956. Plaintiff accepted the offer. Three days after the acceptance of the offer, belatedly and abruptly advised plaintiff of

its desire add certain additional conditions to be incorporated in the formal contract of purchase and sale. It peremptorily gave plaintiff up to noon again of October 26th, 1956, within which to decide upon his acceptance of said additional conditions with the warning that if he failed to do so, it would feel free to advise its planters concerned that they could negotiate their molasses with other parties.

On the 5th of October 1986, the plaintiff made a counter offer. On the very same day and evidently without even any attempt to consider the matter further, the defendant bluntly informed plaintiff that it would not continue with the sale of the molasses in question to plaintiff and that it felt free to offer the same to any other interested buyer.

Plaintiff filed a case in the CFI which dismissed his complaint. IV.

Plaintiff Defendant

Claims that the defendants breached their option contract and therefore be liable for damages.

Contends that the option became binding on the defendant when plaintiff gave notice of its acceptance, the offer can no longer be withdrawn and, in any event, such withdrawal is ineffective because there had already arisen an existing bilateral contract which can be enforced.

Contends that the complaint states no cause of action because defendant's promise to sell, although accepted by the plaintiff, is not supported by any consideration distinct from the price and, under Article 1479 of the New Civil Code, is not binding.

V. ISSUE: WON the option to buy is valid and binding.

VI. RULING: a. NO. b. There is no question that under Article 1479 of the New Civil Code "an option to sell"

or a "promise to buy or to sell", as used in said article, to be valid must be "supported by a consideration distinct from the price". This is clearly inferred from the context of said article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding effect if supported by a consideration. Here, it is not disputed that the option is without consideration. It can, therefore, be withdrawn notwithstanding the acceptance made of it by appellee.

SC rules that since the herein defendant's promise to sell is not supported by any consideration distinct from the price, said promise is invalid and enforceable. Plaintiff's complaint does not, hence state a cause of action.

The complaint is dismissed.

Documents

15 Sales Case Digests