Toyota Shaw vs CA

Facts: Sosa wanted to purchase a Toyota Car. She met Bernardo, the sales representative of Toyota. Sosa
emphasized to the sales rep that she needed the car not later than 17 June 1989. They contracted an
agreement on the delivery of the unit and that the balance of the purchase price would be paid by credit
financing. The following day, Sosa delivered the downpayment and a Vehicle sales proposal was printed.
On the day of delivery, Bernardo called Sosa to inform him that the car could not be delivered. Toyota
contends, on the other hand, that the Lite Ace was not delivered to Sosa because of the disapproval by
B.A. Finance of the credit financing application of Sosa. Toyota then gave Sosa the option to purchase the
unit by paying the full purchase price in cash but Sosa refused. Sosa asked that his down payment be
refunded. Toyota did so on the very same day by issuing a Far East Bank check for the full amount, which
Sosa signed with the reservation, “without prejudice to our future claims for damages.” Thereafter, Sosa
sent two letters to Toyota. In the first letter, she demanded the refund of the down payment plus
interest from the time she paid it and for damages. Toyota refused to the demands of Sosa.
Issue: Whether or not there was a perfected contract of sale- NO
Ruling: What is clear from the agreement signed by Sosa and Gilbert is not a contract of sale. No
obligation on the part of Toyota to transfer ownership of the car to Sosa and no correlative obligation on
the part of Sosa to pay. The provision on the down payment of PIOO,OOO.OO made no specific reference
to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment
basis, as the VSP executed the following day. Nothing was mentioned about the full purchase price and
the manner the installments were to be paid. An agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes, into the price such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential
element of a binding agreement to sell personal property.

Lorenzo and Socorro Velasco v. CA and Magdalena Estate Inc.

Facts:
Suit for specific performance filed by Lorenzo Velasco against the Magdalena Estate, Inc.
Plaintiff’s Version
On Nov 29, 1962 the Lorenzo Velasco and Magdalena Estate had entered into a CONTRACT OF SALE of land
(2,059 sq m) at for P100,000.00.
Payment terms: down payment: P10,000.00 and P20,000.00; P70,000.00 would be paid in instalments;
equal monthly amortization will be determined as soon as the P30,000.00 DP had been
completed. Plaintiff paid P10,000.00 on November 29, 1962 (Exh. "A") On Jan 8, 1964 he tendered the
payment of P20,000.00 but the Madgdalena Estate refused to accept the second downpayment and
refused to execute a formal deed of sale. Socorro Velasco is his sister-in-law and that he had requested
her to make the necessary contacts referring to the purchase of the property because he does not
understand English well. The receipt of the first downpayment states: "Earnest money for the purchase of
Lot 15, Block 7, Psd-6129, Area 2,059 square meters including improvements thereon — P10,000.00." At
the bottom of Exhibit A the following appears: "Agreed price: P100,000.00, P30,000.00 down payment,
bal. in 10 years."
Defendant’s version:
No contract of sale was perfected because the minds of the parties did not meet "in regard to the manner
of payment.” Contract is unenforceable under the Statute of Frauds. The property was leased by Socorro
Velasco and that the defendant indicated its willingness to sell the property for P100,000.00: P30,000.00;
P20,000.00 of which was to be paid on November 31, 1962; P70,000.00 including interest a 9% per annum
was to be paid on installments for a period of ten years at the rate of P5,381.32 on June 30 and December
of every year until the same shall have been fully paid.
On November 29, 1962 Socorro Velasco offered to pay P10,000.00 as initial payment instead of the agreed
P20,000.00 but because the amount was short of the alleged P20,000.00 the same was accepted merely as
deposited and upon request of Socorro Velasco the receipt was made in the name of her brother-in-law
the plaintiff herein.
Socorro Velasco failed to complete the down payment of P30,000.00 and neither has she paid any
installments on the balance of P70,000.00 up to the present time. On January 8, 1964 that Socorro
Velasco tendered payment of P20,000.00, which offer Magdalena Estate refused to accept because it had
considered the offer to sell rescinded on account of her failure to complete the down payment on or
before December 31, 1962.
Issue: Whether the talks between the Magdalena Estate, Inc. and Lorenzo Velasco ever ripened into a
consummated sale? NO.

Ruling: The material averments contained in the petitioners' complaint disclose a lack of complete
"agreement in regard to the manner of payment" of the lot in question. The complaint states pertinently:
That plaintiff and defendant further agreed that the total down payment shall by P30,000.00, including
the P10,000.00 partial payment mentioned in paragraph 3 hereof, and that upon completion of the said
down payment of P30,000.00, the balance of P70,000.00 shall be said by the plaintiff to the defendant in
10 years from November 29, 1962.
That the time within the full down payment of the P30,000.00 was to be completed was not specified by
the parties but the defendant was duly compensated during the said time prior to completion of the down
payment of P30,000.00 by way of lease rentals on the house existing thereon which was earlier leased by
defendant to the plaintiff's sister-in-law, Socorro J. Velasco, and which were duly paid to the defendant
by checks drawn by plaintiff.
Petitioners admit that they still had to meet and agree on how and when the down-payment and the
installment payments were to be paid. There was no perfection of a definite and firm sales agreement
between the parties over the lot in question. Indeed, this Court has already ruled before that a definite
agreement on the manner of payment of the purchase price is an essential element in the formation of a
binding and enforceable contract of sale.
The fact that the petitioners delivered to the respondent the sum of P10,000 cannot be considered as
sufficient proof of the perfection of any purchase and sale agreement between the parties herein under
article 1482 of the new Civil Code, as the petitioners themselves admit that some essential matter — the
terms of payment — still had to be mutually covenanted.
Limson vs. CA
Petitioner Lourdes Ong Limson filed a complaint against respondent spouses Lorenzo De Vera and Asuncion
Santos-de Vera. Petitioner contended that through the respondent spouses’ agent, Marcosa Sanchez,
there was an offer to sell to petitioner a parcel of land.
On July 31, 1978, she agreed to buy the property for the price of 34Php/sq. m. and gave a sum of
20,000Php as ‘earnest money’. Respondent spouses signed a receipt thereof and gave petitioner a 10-day
(Aug. 10) option to purchase the property. Respondent Lorenzo (husband) then informed her that the
property was mortgaged to (Ramoses) Emilio Ramos and Isidro Ramos. Lorenzo asked her to pay the
purchase price to enable him to settle their obligation to Ramoses.
On Aug. 5, 1978, Petitioner agreed to meet with respondent spouses and Ramoses in ROD to consummate
transaction but respondent spouses and Ramoses failed to appear.
On Aug. 11, 1978, she claimed she was already willing and ready to pay but transaction did not push
through since respondent spouses did not pay the back taxes of the property.
On Aug. 23, 1978, Limson gave 3 checks to respondent spouses for the settlement of the back taxes and
payment of quitclaims for tenants of land. The amount was considered part of the purchase price and was
signed by the respondent spouses.
That on Sept. 5, she was surprised to learn from the agent of the respondent spouses that the property
was subject to negotiation of a sale with another corporation, SUNVAR represented by Tomas Cuenca.
On Sept. 15, Limson discovered that the respondent spouses bought the property from the Ramoses 8
years ago, but the TCT was only issued to them on that day. Hence, she filed for an Affidavit of Adverse
Claim at the RDO also claiming that she informed the agent of the corporation of her contract to purchase
the property. The deed of sale was executed on the same day between respondent spouses and SUNVAR
and the TCT was issued in favor of the corporation with the annotation of the adverse claim on Sept. 26.
Limson alleged that when it was sold to SUNVAR, her legal right was ignored, if not, violated. That
SUNVAR was in bad faith because it knew of her ‘contract’ with the respondent spouses. That the new
titles be annulled and cancelled and the contract between her and the respondent spouses be executed.
Respondent spouses alleged that there was no sufficient cause, petitioner was not a party in interest, that
option to buy property had expired, that she had no legal capacity to sue.
SUNVAR allege that petitioner had no cause of action and is not a party in interest. Assuming that she was
a party in interest, she could only be entitled to the return of any amount received by respondent
spouses. Petitioner had already lost her option to buy the property for failure to comply with the
agreement. Moreover, that at the time of execution of the DOAS, they had no knowledge of her interest
or claim over the property. That the knowledge had only come upon when they were furnished a copy of
the new title and her adverse claim was annotated. They also filed a cross-claim against respondent
spouses of bad faith for not disclosing the claim of the petitioner. They prayed for reimbursement of all
amounts in the event the court should annul the DOS.
To answer for the cross-claim, respondent spouses allege that they contracted with SUNVAR after the
expiration of the option period given to the petitioner, maintaining good faith. That SUNVAR verified the
title in ROD before the DOAS. That the cross-claim was barred by a waiver executed by SUNVAR.
Ruling of the Trial Court – Petition is meritorious.
Annulment and rescission of the DOAS between respondents, cancellation of titles to SUNVAR’s favor,
restoration of title under the name of respondent spouses, Execution of DOS in favor of petitioner. Ruling
of CA on appeal – Reversed. Delete Adverse claim and any annotations on the titled ensued by the
petitioner.
Issue: Whether or not a contract to sell was perfected
Ruling: It was a contract of option and not a contract to sell. An option in the law of sales is a continuing
offer or contract by which the owner stipulates with another that the latter shall have the right to buy
the property at a fixed price within a time certain, or in compliance with certain conditions. ‘Unaccepted
offer’. It is not a purchase but merely secures the privilege to buy. It is a sale of the right to purchase. It
imposes no binding obligation on the person holding the option, aside from consideration for the offer.
Until acceptance, it is not a contract, does not vest, transfer or agree to transfer any title, interest or
right but merely a contract giving the option the right / privilege of accepting the offer and buying the
property on certain terms.
(CTS involves meeting of the minds between two persons whereby one binds himself with respect to the
other, to give or render some service. They are perfected by consent by the meeting of the offer and
acceptance upon thing and cause to constitute contract. Thus, the offer must be certain and acceptance
absolute.)
Kahit yun yung goal!!!!!!
The receipt provides “P20,000.00 dated July 31, 1978 as earnest money with option to purchase a parcel
of land subject to the condition and stipulation that have been agreed upon by the buyer and me which
will form part of the receipt. Should the transaction of the property not materialize not on the fault of
the buyer, I obligate myself to return the full amount of P20,000.00 earnest money with option to buy or
forfeit on the fault of the buyer. I guarantee to notify the buyer Lourdes Limson or her representative and
get her conformity should I sell or encumber this property to a third person. This option to buy is good
within ten (10) days until the absolute deed of sale is finally signed by the parties or the failure of the
buyer to comply with the terms of the option to buy as herein attached.”
The receipt readily showed that the contract only entered into a contract of option. Respondent spouses
did not sell their property.
The consideration of 20,000Php paid was referred to as ‘earnest money’ however, examining the
words used indicates it is an option money. That earnest money is part of the purchase price while
option money is given as a distinct consideration for an option contract. That earnest money is given
when there is already sale and option money is when the buyer is bound to pay balance. In option money,
the would-be buyer gives option money but he is not required to buy the property.
The rule is except when a formal acceptance is not required, acceptance must be clearly made and
evidenced by some acts / conducts. However, there is nothing in the conducts of petitioner that present
determination to accept the offer to buy within the 10-day option period. The only opportunity was on
Aug. 5 when she agreed to meet with respondents and Ramoses. But whether that showed acceptance of
offer is hazy and very dubious. On the last day of the option period, no affirmative or clear manifestation
was made by the petitioner (Aug. 10). Thus, on Aug. 11, the option period expired.
On Sept. 14, when respondent spouses sent a telegram to petitioner demanding full payment of the
purchase price simply demonstrated an inclination to give her preference to buy subject property. These
instances did not indicate that the petitioner had exclusive right to purchase.
Moreover, the argument that there was extension of option period when they extended the authority of
their agent is of no moment because extension of contract of agency does not operate to extend option
period.
Assuming that all the instances / meetings were in the 10-day option period, the presence of the
petitioner was not enough as she was not even prepared to pay the purchase price in cash as agreed. Even
without the presence of the Ramoses, petitioner could have easily made necessary payment in cash as the
price of the property was already set. The option period having expired and acceptance was not
effectively made by petitioner, the purchase of subject property by SUNVAR was perfectly valid and
entered into in good faith.

San Miguel Properties Phils., Inc. VS. Spouses Alfredo And Grace Huang

Nature of the Case: A petition for review for a decision of the Court of Appeals which reversed the
decision of the RTC dismissing the complaint brought by the Huangs against San Miguel Properties for
enforcement of a contract of sale

Facts: San Miguel Properties offered two parcels of land for sale and the offer was made to an agent of
the spouses Huang. An “earnest-deposit” of P1 million was offered by the spouses and was accepted by
the petitioner’s authorized officer subject to certain terms.

San Miguel, through its executive officer, wrote the respondent’s lawyer that because the parties failed
to agree on the terms and conditions of the sale despite the extension granted by the petitioner, the
latter was returning the “earnest-deposit”.
The spouses demanded execution of a deed of sale covering the properties and attempted to return the
“earnest-deposit” but San Miguel 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 the complaint because the alleged “exclusive option” of the respondents lacked a consideration
separate and distinct from the purchase price and was thus unenforceable; the complaint did not allege a
cause of action because there was no “meeting of the mind” between the parties and therefore the
contact of sale was not perfected.

The trial court granted the petitioner’s motion and dismissed the action. The respondents filed a motion
for reconsideration but were denied by the trial court. 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.

San Miguel filed a motion for reconsideration but was denied.

Issue: WON there was a perfected contract of sale between the parties- NO.

Ruling: Dismissed. The decision of the appellate court was reversed and the respondents’ complaint was
dismissed.

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 of the
acceptance of the offer offer, their contract had not yet been perfected. This is evident from the
following conditions attached by respondents to their letter.
The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. As
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 spouses 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.

Even the option secured by respondents from petitioner was fatally defective. Under the second
paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing for a price
certain is binding upon the promisor only if the promise is supported by a distinct consideration.
Consideration in an option contract may be anything of value, unlike in sale where it must be the price
certain in money or its equivalent. There is no showing here of any consideration for the option. Lacking
any proof of such consideration, the option is unenforceable.

Equally compelling as proof of the absence of a perfected sale is the second condition that, during the
option period, the parties would negotiate the terms and conditions of the purchase. The stages of a
contract of sale are as follows: (1) negotiation, covering the period from the time the prospective
contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection,
which takes place upon the concurrence of the essential elements of the sale which are the meeting of
the minds of the parties as to the object of the contract and upon the price; and (3) consummation,
which begins when the parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment thereof.
In the present case, the parties never got past the negotiation stage. The alleged “indubitable evidence”
of a perfected sale cited by the appellate court was nothing more than offers and counter-offers which
did not amount to any final arrangement containing the essential elements of a contract of sale. While
the parties already agreed on the real properties which were the objects of the sale and on the purchase
price, the fact remains that they failed to arrive at mutually acceptable terms of payment, despite the
45-day extension given by petitioner

VILLONCO REALTY V. BORMAHECO (July 25, 1975)

FACTS: Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a parcel of land and its
improvements located in Buendia, Makati. Bormaheco made the terms and condition for the sale and
Villonco returned it with some modifications. The sale is for P400 per square meter but it is only to be
consummated after Bormaheco shall have also consummated purchase of a property in Sta. Ana, Manila.
Bormaheco won the bidding for the Sta.Ana land and subsequently bought the property. Villonco issued a
check to Bormaheco amounting to P100,000 as earnest money. 26 days after signing the contract of sale,
Bormaheco returned the P100,000 to Villonco with 10% interest for the reason that they are not sure yet if
they will acquire the Sta.Ana property.
Villonco rejected the return of the check and demanded for specific performance.
ISSUE: WON Bormaheco is bound to perform the contract with Villonco.
HELD: The contract is already consummated when Bormaheco accepted the offer by Villonco. The
acceptance can be proven when Bormaheco accepted the check from Villonco and then returned it with
10% interest as stipulated in the terms made by Villonco.
On the other hand, the fact that Villonco did not object when Bormaheco encashed the check is a proof
that it accepted the offer of Bormaheco.
Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as
proof of the perfection of the contract" (Art. 1482, Civil Code)

ZAYCO v. SERRA
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been entered into in the place where the
offer was made.
Art. 1325. Unless it appears otherwise, business advertisements of things for sale are not definite offers,
but mere invitations to make an offer.
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.
FACTS:
Nov. 7, 1918 - Lorenzo Zayco who had a property and Salvador Serra who owned Palma Central entered
into a contract, the pertinent clauses of which state that:
Serra shall give Zayco an option to buy Palma Central for P1M. When the purchase of Palma Central is
made and Zayco cannot pay the whole price in cash, he has to pay the first half in cash and half paid in 3
years. Provided that the Zayco gives a security or bond that satisfies the party of the first part. The
option of the party to buy or become a partner of Serra expires on June 30,1919. If its sold or a
partnership with another is formed, Zayco shall have preference to make such a sale or become a
partner over any other persons desiring to purchase the central or enter into a partnership.
June 28, 1919- Zayco through attorney accepted the contract and partly paid using a cash order from
BPI Iloilo for P100,000. Notice was also given to Serra in the letter that PNB agreed to transfer his long
term loan of P600,000 to the account of Zayco to hold him responsible for all the amounts had and
received due to the loan.
 Serra was to be completely removed from responsibility
 Ready to give the bond required by the contract b
 Demanded Serra to execute the deed of sale
Serra knew about it and answered June 30, 1919. But on July 15, Serra wrote that the option contract
of Nov. 7 was cancelled.
July 30, 1919 – Zayco brought action for specific performance vs. Serra to compel him to execute the
deed of sale, convey Palma Central, and pay P500,000 damages. Jan. 23, 1920 amended complaint that
after Nov. 7 contract and before June 28, 1919, a stipulation was made by them that the sum to be paid
in cash of total price was P100,000.
 Re first complaint: Serra said contract of Nov. 7, 1918 did not specify the part of the price that was
to be paid in cash and the part that was to be paid not exceeding 3 years
 After amendment: Serra alleged there was no such stipulation that specified how much he needed to
pay.
March 19, 1920- SUPPLEMENTAL COMPLAINT cus Serra sold Palma Central to certain people for P1.5M on
the terms of the said contract. Prayed that Zayco be declared entitled to buy on the same terms as the
sale to 3rd parties.
Held: Nov. 7, 1918 contract: Zayco had the right to (1) buy Palma Central until June 30, 1919, and (2)
have preference, after that date, over any other purchaser making the same terms.
While it is true that the contract did not state any consideration on the part of Serra, it is presumed that
there is a consideration in all contracts (Art. 1277, CC). Consideration can be proved and there is
evidence in this case.

1. As to the validity and consideration of the contract

The Palma Central was competing with the Bearin Central of Lizarraga Hermanos and both were wooing
Zayco who owned an estate between them that grows sugar cane. Lizarraga offered to remit his P40K
debt, and Serra offered 60% of the sugar milled from his canes in Palma instead of usual 55%. He chose
Palma.
  Contract was valid. These events + contract evidence of consideration. The consideration was Zayco
waiving possible benefits from Bearin and his support/loyalty to Palma Central was a prestation
of a thing or service which benefited Serra.
 Initial agreement was at least an offer to sell which Zayco accepted before it was unknowingly
withdrawn and sold it to someone else. Serra KNEW he accepted the offer before withdrawing it.
2. As to the effect of Zayco’s acceptance
However, Zayco’s acceptance in his letter to support Serra’s Palma Central did not perfect the contract
because for acceptance to have effect, it must be plain and unconditional because if not it’s a new
proposal. The November contract stipulated that a part of the price of P1M that could be paid in
installments, was to be paid in cash. But the amount was undetermined. The 100k given was merely a
proposal since the amount was not clearly specified. But the amount was not accepted by Serra.The
contract should have had: (a) Zayco’s acceptance of the terms, and (b) Serra accepting the 100k.
 Other allegations of Zayco like the stipulation of 100k, that he agreed to assume the P600k debt of
Serra with PNB, were not alleged in the complaint or presented as evidence in court.
ACCEPTANCE OF ZAYCO NOT ENOUGH TO PERFECT THE CONTRACT AND SERRA IS NOT COMPELLED TO
EXECUTE THE SALE.
DISPO: Affirmed judgement.
ANTONIO ENRIQUEZ DE LA CAVADA vs ANTONIO DIAZ
FACTS: Parties entered into a “contract of option” which involves a hacienda at Pitogo consisting of 100
and odd hectares, owned by Diaz. The said contract stipulated how the price of the property will be paid;
for which the petitioner herein may pay him either the sum of thirty thousand pesos (P30,000), Philippine
currency, in cash, or within the period of six (6) years, beginning with the date of the purchase, the sum
of forty thousand pesos (P40,000), Philippine currency, at six per cent interest per annum.
After the execution of the contract, Diaz filed a petition with the Court of Land Registration in order to
obtain the registration of a part of the hacienda, which was granted.
Later, and pretending to comply with the terms of said contract, Diaz offered to transfer to the Dela
Cavada certificate of one of said parcels only, which was a part of said "hacienda." Dela Cavada refused to
accept said certificate for a part only of said "hacienda" upon the ground (a) that it was only a part of the
"Hacienda de Pitogo," and (b) under the contract (Exhibits A and B) he was entitled to a transfer to him all
said "hacienda."
The theory of the Diaz is that the contract of sale of said "Hacienda de Pitogo" included only 100 hectares,
more or less, of said "hacienda," and that by offering to convey to the Dela Cavada a portion of said
"hacienda" composed of "100 hectares, more or less," he thereby complied with the terms of the contract.
Lower Court ruled in favor of Dela Cavada.
ISSUE: Whether or not the defendant was obliged to convey to the plaintiff all of said "hacienda."
HELD: A promise made by one party, if made in accordance with the forms required by the law, may be a
good consideration (causa) for a promise made by another party. (Art. 1274, Civil Code.) In other words,
the consideration (causa) need not pass from one to the other at the time the contract is entered into.
The said contract (Exhibits A and B) was not, in fact, an "optional contract" as that phrase is generally
used. Reading the said contract from its four corners it is clearly as absolute promise to sell a definite
parcel of land for a fixed price upon definite conditions. The Diaz promised to convey to Dela Cavada the
land in question as soon as the same was registered under the Torrens system, and Dela Cavada promised
to pay to Diaz the sum of P70,000, under the conditions named, upon the happening of that event. The
contract was not, in fact, what is generally known as a "contract of option."
An optional contract is a privilege existing in one person, for which he had paid a consideration, which
gives him the right to buy from another person, if he chooses, at any time within the agreed period, at a
fixed price. The contract of option is a separate and distinct contract from the contract which the parties
may enter into upon the consummation of the option.
A contract of option is a contract by virtue of the terms of which the parties thereto promise and obligate
themselves to enter into contract at a future time, upon the happening of certain events, or the
fulfillment of certain conditions.

SPOUSES VILLAMOR, vs. CA AND SPOUSES MACARIA LABINGISA REYES AND ROBERTO REYES

FACTS: Reyes was the owner of a lot located at Caloocan City, as evidenced by TCT of the Register of
Deeds of Rizal. Reyes sold a portion of the lot (300sqm) to the Spouses Villamor. Earlier, Reyes borrowed
money from the spouses which amount was deducted from the total purchase price of the lot sold. The
portion sold to the Villamor spouses is now covered by a different TCT while the remaining portion which
is still in the name of Reyes is covered by a different TCT. Reyes executed a "Deed of Option" in favor of
Villamor in which the remaining portion of the lot would be sold to Villamor under the certain conditions.

According to Macaria Reyes, when her husband, Roberto Reyes, retired, they offered to repurchase the lot
sold by them to the Villamor spouses but Marina Villamor refused and reminded them instead that the
Deed of Option in fact gave them the option to purchase the remaining portion of the lot.

The Villamors, on the other hand, claimed that they had expressed their desire to purchase the remaining
portion of the lot but the Reyes had been ignoring them. Thus, after conciliation proceedings in the
barangay level failed, they filed a complaint for specific performance against the Reyes.

Judgment was rendered by the trial court in favor of the Villamor spouses.

The Court of Appeals rendered a decision reversing the decision of the trial court and dismissing the
complaint. The reversal of the trial court's decision was premised on the finding of respondent court that
the Deed of Option is void for lack of consideration.

The Villamor spouses brought the instant petition for review on certiorari.

ISSUE: Whether the ‘kind’ of Deed of Option in this case was valid

Ruling: The court a quo, rule that the Deed of Option was a valid written agreement between the parties.
The law provides that when the terms of an agreement have been reduced to writing it is to be
considered as containing all such terms, and therefore, there can be, between the parties and their
successors in interest no evidence of their terms of the agreement, other than the contents of the
writing. ... (Section 7 Rule 130 Revised Rules of Court)

A sale must be for a price certain (Art. 1458). The respondent appellate court failed to give due
consideration to the evidence which shows that the Villamor spouses bought an adjacent lot from the
brother of Macaria Reyes for only P18.00 per square meter which the respondents Reyes did not rebut.
Thus, expressed in terms of money, the consideration for the deed of option is the difference between
the purchase price of the portion of the lot in 1971 (P70.00 per sq.m.) and the prevailing reasonable price
of the same lot in 1971. Whatever it is, (P25.00 or P18.00) though not specifically stated in the deed of
option, was ascertainable. Villamors allegedly paying P52.00 per square meter for the option may, as
opined by the appellate court, be improbable but improbabilities do not invalidate a contract freely
entered into by the parties.

The "deed of option" entered into by the parties in this case had unique features. Ordinarily, an optional
contract is a privilege existing in one person, for which he had paid a consideration and which gives him
the right to buy, for example, certain merchandise or certain specified property, from another person, if
he chooses, at any time within the agreed period at a fixed price. The first part of the deed covered the
statement on the sale of the 300 square meter portion of the lot to Spouses Villamor at the price of
P70.00 per square meter "which was higher than the actual reasonable prevailing value of the lands in
that place at that time (of sale)." The second part stated that the only reason why the Villamor spouses
agreed to buy the said lot at a much higher price is because the vendor (Reyes) also agreed to sell to the
Villamors the other half-portion of 300 square meters of the land. Had the deed stopped there, there
would be no dispute that the deed is really an ordinary deed of option granting the Villamors the option
to buy the remaining 300 square meter-half portion of the lot in consideration for their having agreed to
buy the other half of the land for a much higher price. But, the "deed of option" went on and stated that
the sale of the other half would be made "whenever the need of such sale arises, either on our (Reyes)
part or on the part of the Spouses Villamor. It appears that while the option to buy was granted to the
Villamors, the Reyes were likewise granted an option to sell. In other words, it was not only the Villamors
who were granted an option to buy for which they paid a consideration. The Reyes as well were granted
an option to sell should the need for such sale on their part arise.

The option offered by Reyes had been accepted by the Villamors, the promise, in the same document.
The acceptance of an offer to sell for a price certain created a bilateral contract to sell and buy and upon
acceptance, the offer, ipso facto assumes obligations of a vendee. Demandabilitiy may be exercised at
any time after the execution of the deed.

Since there may be no valid contract without a cause of consideration, the promisory is not bound by his
promise and may, accordingly withdraw it. Pending notice of its withdrawal, his accepted promise
partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of
sale.

A contract of sale is, under Article 1475 of the Civil Code, "perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From that moment, the
parties may reciprocally demand perform of contracts." Since there was, between the parties, a meeting
of minds upon the object and the price, there was already a perfected contract of sale. What was,
however, left to be done was for either party to demand from the other their respective undertakings
under the contract. It may be demanded at any time either by the private respondents, who may compel
the petitioners to pay for the property or the petitioners, who may compel the private respondents to
deliver the property.
However, the Deed of Option did not provide for the period within which the parties may demand the
performance of their respective undertakings in the instrument. The parties could not have contemplated
that the delivery of the property and the payment thereof could be made indefinitely and render
uncertain the status of the land. The failure of either parties to demand performance of the obligation of
the other for an unreasonable length of time renders the contract ineffective.

Under Article 1144 (1) of the Civil Code, actions upon written contract must be brought within ten (10)
years. The Deed of Option was executed on November 11, 1971. The acceptance, as already mentioned,
was also accepted in the same instrument. The complaint in this case was filed by the petitioners 17 years
from the time of the execution of the contract. Hence, the right of action had prescribed.

It is of judicial notice that the price of real estate in Metro Manila is continuously on the rise. To allow
the Villamors to demand the delivery of the property 17 years after the execution of the deed at the price
of only P70.00 per square meter is inequitous. For reasons also of equity and in consideration of the fact
that the Reyes have no other decent place to live, the Court, in the exercise of its equity jurisdiction is
not inclined to grant petitioners' prayer.

Petition is DENIED. The decision of respondent a ppellate court is AFFIRMED.

SORIANO V. BAUTISTA 6 SCRA 946

FACTS: Spouses Bautista are the absolute and registered owners of a parcel of land. In May 30, 1956, the
said spouses entered into an agreement entitled Kasulatan ng Sanglaan (mortgage) in favor of spouses
Soriano for the amount of P1,800. Simultaneously with the signing of the deed, the spouses Bautista
transferred the possession of the subject property to spouses Soriano. The spouses Soriano have, since
that date, been in possession of the property and are still enjoying the produce thereof to the exclusion
of all other persons.
Sometime after May 1956, the spouses Bautista received from spouses Soriano the sum of P450 pursuant
to the conditions agreed upon in the document. However, no receipt was issued. The said amount was
returned by the spouses Bautista. In May 13, 1958, a certain Atty. Ver informed the spouses Bautista
that the spouses Soriano have decided to purchase the subject property pursuant to par. 5 of the
document which states that “…the mortgagees may purchase the said land absolutely within the 2-
year term of the mortgage for P3,900.” Despite the receipt of the letter, the spouses Bautista refused
to comply with Soriano’s demand
As such, spouses Soriano filed a case, praying that they be allowed to consign or deposit with the Clerk of
Court the sum of P1,650 as the balance of the purchase price of the land in question The trial court held
in favor of Soriano and ordered Bautista to execute a deed of absolute sale over the said property in favor
of Soriano.
Subsequently spouses Bautista filed a case against Soriano, asking the court to order Soriano to
accept the payment of the principal obligation and release the mortgage and to make an accounting
the harvest for the 2 harvest seasons (1956-1957). CFI held in Soriano’s favor and ordered the
execution of the deed of sale in their favour. Bautista argued that as mortgagors, they cannot be
deprived of the right to redeem the mortgaged property, as such right is inherent in and inseparable
from a mortgage.
ISSUE: WON spouses Bautista are entitled to redemption of subject property
HELD: No. While the transaction is undoubtedly a mortgage and contains the customary stipulation
concerning redemption, it carries the added special provision which renders the mortgagor’s right to
redeem defeasible at the election of the mortgagees. There is nothing illegal or immoral in this as this is
allowed under Art 1479 NCC which states: “A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing
for a price certain is binding upon the promissor if the promise supported by a consideration apart from
the price.”
In the case at bar, the mortgagor’s promise is supported by the same consideration as that of the
mortgage itself, which is distinct from the consideration in sale should the option be exercised. The
mortgagor’s promise was in the nature of a continuing offer, non-withdrawable during a period of 2 years,
which upon acceptance by the mortgagees gave rise to a perfected contract of sale.
TENDER INEFFECTIVE AS PREEMPTIVE RIGHT TO PURCHASE BY OTHER PARTY HAS BEEN EXERCISED
The tender of P1,800 to redeem the mortgage by spouses Bautista was ineffective for the purpose
intended. Such tender must have been made after the option to purchase had been exercised by spouses
Soriano. Bautista’s offer to redeem could be defeated by Soriano’s preemptive right to purchase within
the period of 2 years from May 30, 1956. Such right was availed of and spouses Bautista were accordingly
notified by Soriano. Offer and acceptance converged and gave rise to a perfected and binding contract of
purchase and sale.
Adelfa Properties vs. CA
FACTS: Private respondents and their brothers Jose and Dominador Jimenez were registered owners of a
parcel of land in Las Piñas. Jose and Dominador sold their share (1/2 parcel of land) pursuant to
“KasulatansaBilihan ng Lupa” to petitioner, Adelfa Properties. Eastern portion belonged to them while
western portion belonged to Rosario and Salud. Adelfa Properties (now owners of eastern portion)
expressed interest in buying the western portion by executing “Exclusive Option to Purchase”
with ₱50,000.00 as option money. Before petitioner could make payment, it received summons that the
nephews and nieces of private respondents filed an annulment of deed of sale. As a result, petitioner
withheld payment of full purchase price. Salud attributed the suspension of payment to “lack of word of
honor.” Francisca Jimenez was sent to see the counsel of petitioner to inform him that they were
cancelling the transactions. Subsequently, a Deed of Conditional Sale was executed in favor of Emylene
Chua. Private respondents’ counsel sent ₱25,000.00 refund of the option money. According to the RTC,
agreement entered into was merely an option contract and the suspension of payment by petitioner is a
counter-offer which is tantamount to a rejection of option. Thus, the sale to Chua was valid. CA ruled
that failure of petitioner to pay the purchase price in the period agreed upon was tantamount to election
not to buy such land.
ISSUE: Is the agreement between Adelfa Properties and private respondents strictly an option contract?
HELD: The contract between the parties is a contract to sell and not an option contract nor a contract of
sale. Two features which convince that parties never intended to transfer ownership except upon full
payment of purchase price: (1) the exclusive option to purchase does not mention that petitioner is
obliged to return possession or ownership of property as consequence of non-payment; and (2) no
delivery, actual or constructive, was made to petitioner; option to purchase was not included in a public
instrument which would have effect of delivery. Neither did petitioner take actual, physical possession of
the property at any given time. With this regard, there was an implied agreement that ownership shall
not pass to the purchaser until he had fully paid the price. Also, the alleged option money was actually
earnest money since the amount was not distinct from the cause or consideration for the sale of the
property, but was itself a part thereof.

Sanchez vs. Rigos

FACTS: Sanchez and Rigos executed an instrument entitled “Option to Purchase”. Rigos rejected several
tenders of payments made within the stipulated period. Sanchez filed an action for specific performance
with damages contending that Rigos agreed and committed to sell the land and the plaintiff agreed and
committed to buy it in the option. Rigos rebutted that the contract between them was only a unilateral
promise to sell and unsupported by valuable consideration distinct from the price, and null and void.
ISSUE: WON there is a perfected contract of sale between parties?
HELD: YES. Under the Civil Code, there is no valid contract without a cause or consideration, the promisor
is not bound by his promise and may withdraw it. However, pending the notice of its withdrawal, his
accepted promise is in the nature of an offer to sell which if accepted results in a perfected contract of
sale. In this case, the contract between parties became a perfected contract of sale upon acceptance of
Rigos of the offer within the stipulated period even though he was only initially granted an option to buy.
NIETES V. CA
FACTS: Petitioner AquilinoNietes and respondent Dr.Pablo Garcia entered a “Contract of Lease and
Option to Buy” where the latter agreed to lease his Angeles Educational Institute to the former. The rent
is set to P5000 per year up to 5 years and that the LESSOR agrees to give the LESSEE an option to buy the
land and the school building, for P100,000 within the period of the Contract of Lease.
Nietes paid Garcia P2200 on Dec.16, 1962 for partial payment on the purchase of the property. Through
their lawyers, Garcia decided to rescind the contract while Nietes expresses his intention to buy the
property. Nietes also deposited 84K to a bank corresponding to the balance for the purchase of the
property.
ISSUE: WON Nietes can aval of his option to buy the property.
HELD: Nietes can avail of the option to buy because he already express his intention to buy the property
before the termination of the contract. The contention of the respondent that the full price of the
property should first be paid before the option could be exercised is of no merit.
The contract doesn’t provide such stipulation and as such, the provision of reciprocal obligations in
oblicon should prevail. Notice of the creditor's decision to exercise his option to buy need not be coupled
with actual payment of the price, so long as this is delivered to the owner of the property upon
performance of his part of the agreement.
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"

Equatorial Realty Dev’t, Inc. vs. Mayfair Theater, Inc.

FACTS: Carmelo and Bauermann, Inc. leased its parcel of land with two-storey building to Mayfair
Theater, Inc. Carmelo informed Mayfair that they intend to sell the entire property. Mayfair replied that
they were interested to buy the entire property if the price is reasonable.
However, Carmelo sold the entire property to Equatorial. Mayfair filed an action for specific performance
and annulment of the sale because it violated their exclusive option to purchase the property for 30 days
as stipulated in the lease contract. Carmelo contended that it informed Mayfair their desire to sell the
property and the option to purchase by Mayfair is null and void for lack of consideration.
ISSUE:
1. WON the option to purchase in the leased contract is an option contract or a right of first refusal?
2. WON the sale of the property to Equatorial is valid
HELD:
1. RIGHT OF FIRST REFUSAL. Under the law, an option is a contract granting a privilege to buy and sell
within an agreed period of time for a determined price and must be supported by consideration distinct
from the price. Whereas, right of first refusal is part of the entire contract of lease. In this case, the
right of first refusal is an integral part of the lease contract between Carmelo and Mayfair and no
separate consideration shall be needed to be binding.
2. The sale is rescissible. Both Carmelo and Equatorial acted in bad faith knowing that a
right of first refusal was agreed upon in the lease contract and Mayfair was an
interested buyer of the property.
Parañaque Kings Enterprises, Inc. vs Court of Appeals
Facts: Defendant Catalina Santos is the owner of 8 parcels of land located in Parañaque. Frederick Chua
leased the property of defendant and assigned all rights and interest and participation in the leased
property to Lee Ching Bing by deed of assignment. Lee Ching Bing also assigned all his rights and interest
in the leased property to Parañaque Kings Enterprises, Inc. All of these contracts/deeds were registered.
Paragraph 9 of the assigned leased (sic) contract provides among others that:
9. That in case the properties subject of the lease agreement are sold or encumbered, Lessors shall
impose as a condition that the buyer or mortgagee thereof shall recognize and be bound by all the terms
and conditions of this lease agreement and shall respect this Contract of Lease as if they are the LESSORS
thereof and in case of sale, LESSEE shall have the first option or priority to buy the properties subject of
the lease;
Defendant Santos sold the eight parcels of land subject of the lease to Defendant David Raymundo, for a
consideration of P5Million, in contravention of the contract of lease, for the first option or priority to buy
was not offered by defendant Santos to the plaintiff. Santos, realizing the error, she had it reconveyed to
her for the same consideration of P5Million and subsequently the property was offered for sale to plaintiff
for the sum of P15Million, however the period of 10 days to make good of the offer expired. Another deed
of sale was executed by Santos in favor of Raymundo for consideration of P9Million. Hence, the petitioner
filed a complaint before the RTC.
RTC dismissed the complaint for lack of a valid cause of action. It ratiocinated that Santos complied with
the lease agreement by offering the properties for sale to the plaintiff and there was a definite refusal on
the part of the plaintiff to accept the offer. CA affirmed in toto.
Issue: Whether or not there is valid cause of action
Ruling: Yes. The principal legal question, as stated earlier, is whether the complaint filed by herein
petitioner in the lower court states a valid cause of action. Since such question assumes the facts alleged
in the complaint as true, it follows that the determination thereof is one of law, and not of facts. There is
a question of law in a given case when the doubt or difference arises as to what the law is on a certain
state of facts, and there is a question of fact when the doubt or difference arises as to the truth or the
falsehood of alleged facts.
A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the
named defendant to respect or not to violate such right, and (3) an act or omission on the part of such
defendant violative of the right of plaintiff or constituting a breach of the obligation of defendant to the
plaintiff for which the latter may maintain an action for recovery of damages.
A careful examination of the complaint reveals that it sufficiently alleges an actionable contractual
breach on the part of private respondents. Under paragraph 9 of the contract of lease between
respondent Santos and petitioner, the latter was granted the first option or priority to purchase the
leased properties in case Santos decided to sell. If Santos never decided to sell at all, there can never be
a breach, much less an enforcement of such right. But on September 21, 1988, Santos sold said properties
to Respondent Raymundo without first offering these to petitioner. Santos indeed realized her error, since
she repurchased the properties after petitioner complained. Thereafter, she offered to sell the properties
to petitioner for P15 million, which petitioner, however, rejected because of the ridiculous price. But
Santos again appeared to have violated the same provision of the lease contract when she finally resold
the properties to respondent Raymundo for only P9 million without first offering them to petitioner at
such price. Whether there was actual breach which entitled petitioner to damages and/or other just or
equitable relief, is a question which can better be resolved after trial on the merits where each party can
present evidence to prove their respective allegations and defenses.
The decision of the RTC and CA are reversed and set aside. The case is remanded to the RTC for further
proceedings.
Ang Yu Asuncion Vs. Court Of Appeals
Facts: Petitioners filed a complaint against Unjiengs, before the Regional Trial Court alleging that
Unjiengs informed Petitioners that they are offering to sell the premises and are giving them priority to
acquire the same; that during the negotiations, Unjiengs offered a price of P6-million while Petitioners
made a counter offer of P5-million; that Petitioners thereafter asked the Unjiengs to put their offer in
writing to which request defendants acceded; that in reply to Unjiengs letter, plaintiffs asked to specify
the terms and conditions of the offer to sell; that when Petitioners did not receive any reply, they sent
another letter; that since defendants failed to specify the terms and conditions of the offer to sell and
because of information received that defendants were about to sell the property, Petitioners were
compelled to file the complaint to compel Unjiengs to sell the property to them.
Judgment was rendered in favor of the Unjiengs and against the Petitioners summarily dismissing the
complaint subject to the aforementioned condition that if the defendants subsequently decide to offer
their property for sale for a purchase price of Eleven Million Pesos or lower, then the Petitioners has the
option to purchase the property or of first refusal, otherwise, defendants need not offer the property to
the Petitioners if the purchase price is higher than Eleven Million Pesos. While the case was pending
consideration by the SC, the Unjieng spouses executed a Deed of Sale to the Private Defendant. Private
Defendant wrote a letter to the Petitioners demanding that the latter vacate the premises.
Petitioners replied to petitioner stating that petitioner brought the property subject to the notice of
lispendens regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu
Unjiengs. The Petitioners filed a Motion for Execution to the RTC who ordered defendants to execute the
necessary Deed of Sale of the property in litigation in favor of the Petitioners for the consideration of
P15,000,000.00 and ordering the Register of Deeds of the City of Manila, to cancel and set aside the title
already issued in favor of Private Defendant. The appellate court, on appeal to it by Private Defendant,
set aside and declared without force and effect the above questioned orders of the court a quo. Hence
this case.
Issue: Whether the plaintiff can compel defendants to execute the necessary Deed of Sale of the property
in litigation in favor of the plaintiffs who has a right of first refusal?
Held: NO, The final judgment in in favor to the plaintiff was merely a “right of first refusal”. The
consequence of such a declaration entails no more than what has heretofore 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.

ROSENCOR V. INQUING
FACTS: Respondents are tenants of a two-storey residential apartment in Tomas Morato QC. The lease was
not covered by any contract. Lessees were verbally given by the lessors the pre-emptive right to
purchase the property in case of sale. The original lessors died and their heir also promised the lessees
the same pre-emptive right to purchase. The new lessors represented by Eufrocina de Leon demanded the
lessees to vacate the property because the building will allegedly be demolished but after the lessees
declined, she sent them a letter offering to sell the property for 2M. Lessees made a counter offer of 1M
but no reply was made by the lessors.
De leon subsequently informed the lessees that the property was already sold to Rosencor. Lessees
claimed that they were deceived because the property was already sold to Rosencor before it was offered
to them. They offered to reimburse the payment to the lessors but the offer was declined as hence, this
petition.
ISSUE: WON the lessors should recognize the pre-emptive right of the lessees even if it was only given
verbally.
HELD: The right of first refusal is not covered by the Statute of Frauds. The application of such statute
presupposes the existence of a perfected contact which is no applicable in this case. As such, a right of
first refusal need not be written to be enforceable and can be proved by oral evidence. Lessees have
proven that the lessors admit the right of first refusal given to them when the property was offered to
them by 2M.
The prevailing doctrine is that a contract of sale entered in violation of right of first refusal is rescissible.
However, this doctrine cannot be applied here because the vendees (Rosencor) is in good faith. Under
Art.1358, recission cannot take place when things which are the object of sale is legally in possession of
third person who did not act in bad faith.
Rosencor could not have acted in bad faith because they are not aware of the right of first refusal given
verbally. Respondents should instead file for damages.