Ang Yu Asuncion vs.

CA
Sunday, August 24, 2014

Facts:

July 29, 1987: An amended Complaint for Specific Performance was filed by
petitioners Ang Yu Asuncion and others against Bobby Cu Unjieng, Rose Cu Unjieng
and Jose Tan before RTC.
Petitioners (Ang Yu) alleged that:
- they are the tenants or lessees of residential and commercial spaces owned by Bobby
Unijeng and others located in Binondo, Manila (since 1935)
that on several occasions before October 9, 1986, the lessors informed the lessees
(petitioners) that they are offering to sell the premises and are giving them priority to
acquire the same;
- that during the negotiations, Bobby Cu Unjieng offered a price of P6-million while they
made a counter offer of P5-million;
- that they wrote them on October 24, 1986 asking that they specify the terms and
conditions of the offer to sell; that when plaintiffs did not receive any reply, they sent
another letter dated January 28, 1987 with the same request;
The RTC found that Cu Unjiengs offer to sell was never accepted by the
petitioners (Ang Yu) for the reason that they did not agree upon the terms and
conditions of the proposed sale, hence, there was no contract of sale at all. The Court
of Appeals affirmed the decision of the lower court. This decision was brought to the
Supreme Court by petition for review on certiorari which subsequently denied the
appeal on May 6, 1991 for insufficiency in form and substance. (Referring to the first
case filed by Ang Yu)

November 15, 1990: While the case was pending consideration by this Court, the
Cu Unjieng spouses executed a Deed of Sale transferring the subject petitioner to
petitioner Buen Realty and Development Corporation.

Petitioner Buen Realty and Development Corporation, as the new owner of the
subject property, wrote a letter to the lessees demanding that the latter vacate the
premises.

August 30, 1991: the RTC ordered the Cu Unjiengs to execute the necessary
Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh
Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of
petitioners right of first refusal and that a new Transfer Certificate of Title be issued in
favor of the buyer. The court also set aside the title issued to Buen Realty Corporation
for having been executed in bad faith. On September 22, 1991, the Judge issued a writ
of execution.

The CA reversed the RTC ruling.

Issue: WON Buen Realty can be bound by the writ of execution by virtue of the notice
of lis pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at
the time of the latters purchase of the property on 15 November 1991 from the Cu
Unjiengs. NO
Held:
Right of first refusal is not a perfected contract of sale under Article 1458 of the
Civil Code
In the law on sales, the so-called right of first refusal is an innovative juridical relation.
Needless to point out, it cannot be deemed a perfected contract of sale under Article
1458 of the Civil Code.
In a right of first refusal, while the object might be made determinate, the exercise of
the right, however, would be dependent not only on the grantors eventual intention to
enter into a binding juridical relation with another but also on terms, including the
price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so
described as merely belonging to a class of preparatory juridical relations governed not
by contracts (since the essential elements to establish the vinculum juris would still be
indefinite and inconclusive) but by, among other laws of general application, the
pertinent scattered provisions of the Civil Code on human conduct.
The proper action for violation of the right of first refysal is to file an action for
damages and NOT writ of execution
The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded
a right of first refusal in favor of petitioners (Ang Yu et. al). 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.
Unconditional mutual promise to buy vs. Accepted unilateral promise
An unconditional mutual promise to buy and sell, as long as the object is made
determinate and the price is fixed, can be obligatory on the parties, and compliance
therewith may accordingly be exacted.

An accepted unilateral promise which specifies the thing to be sold and the price to be
paid, when coupled with a valuable consideration distinct and separate from the price,
is what may properly be termed a perfected contract of option. This contract is legally
binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil
Code, viz:
Art. 1479. . . .
An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promissor if the promise is supported by a consideration distinct
from the price. (1451a)
Observe, however, that the option is not the contract of sale itself. The optionee has
the right, but not the obligation, to buy. Once the option is exercised timely, i.e., the
offer is accepted before a breach of the option, a bilateral promise to sell and to buy
ensues and both parties are then reciprocally bound to comply with their respective
undertakings.
Buen Realty cannot be ousted from the ownership and possession of the
property
Furthermore, whether private respondent Buen Realty Development Corporation, the
alleged purchaser of the property, has acted in good faith or bad faith and whether or
not it should, in any case, be considered bound to respect the registration of the lis
pendens in Civil Case No. 87-41058 are matters that must be independently addressed
in appropriate proceedings. Buen Realty, not having been impleaded in Civil Case No.
87-41058, cannot be held subject to the writ of execution issued by respondent Judge,
let alone ousted from the ownership and possession of the property, without first
being duly afforded its day in court.

7.

CHUA v CA
FACTS: Valdes-Choy is the owner of the subject matter, when she advertised the
property for sale. Chua responded to the advertisement, and met up with ValdesChoy. They agreed for the purchase price of P10,800,000, to be paid on July 15,
1989. This was evidenced by an earnest money for P100,000, which was put on a
receipt, stating that the money will be forfeited upon failure to pay on the dat
stipulated. On July 13, Valdes-Choy executed two deeds of absolute sale, first,
pertaining to the house and lot, valued at P8,000,000, and second, pertaining to the
movable properties therein. The next day, Chua issued a check worth P485,000 for

the purpose paying the capital gains tax. The value was deducted from the balance,
with an outstanding value of P10,295,000 (additional P80,000 for the documentary
stamp tax). Chua also showed a check worth P10,215,00 to Valdes-Choy, however,
he demanded that the TCT should first be transferred to his name before paying the
check. Out of anger, Valdes-Choy tore the deed of absolute sale. On the reckoning
date, Valdes-Choy tried to make a compromise with Chua, but she did not get any
response. Two days later, Chua filed an action for specific performance, which the
trial court dismissed. A week later, he filed another action for specific performance,
where the court ruled in favor of him. On appeal, CA reversed.
iSSUE: 1.

Whether the agreement was a contract of sale or contract to sell 2.

Whether registration is needed to transfer ownership

RULING: It is a contract to sell. First, when the agreement was made, the earnest
money is forfeited in favor of Valdes-Choy who may then sell the land to other
interested parties. This is the nature of reserving the ownership of the property,
subject to the full payment of the purchase price. Second, absent of a formal deed
of conveyance of the property in favor of the buyer shows that there was no
intention to transfer ownership immediately. The non-fulfillment of the suspensive
condition, which is payment of the full purchase price prevents the obligation to sell
from arising, where the owner retains the ownership over the property. Art 1482
speaks of earnest money as an evidence of a perfected contract of sale. However, in
this case, the earnest money was paid in part consideration of a contract to sell,
and therefore, art 1482 does not apply. Delivery is effected upon execution of the
sale in a public instrument. However, registration is not needed in order to complete
the deed of sale. Delivery is what transfers ownership, and not registration in the
Registry of Property. Registration is only necessary to bind third persons; it is not a
mode of acquiring ownership.

San Miguel
Facts: San Miguel Properties 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.
Petitioner, through its executive officer, wrote the respondents lawyer that because ethe
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 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 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 petitioners 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.
Petitioner filed a motion for reconsideration but was denied.
Issue: WON there was a perfected contract of sale between the parties
Ruling:

The decision of the appellate court was reversed and the respondents

complaint was dismissed.

Ratio Decidendi:

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. 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 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.
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.

Abalos
Arturo and Esther Abalos were husband and wife. They own a parcel of land in Makati. On
June 2, 1988, Arturo, armed with a purported Special Power of Attorney, executed a Receipt
and Memorandum of Agreement in favor of Galicano Macatangay, Jr. in which Arturo
acknowledged he received a P5k check from Galicano as earnest money to be deducted
from the purchase price and that Arturo binds himself to sell the land to Galicano within 30
days from receipt of the P5k. The purchase price agreed upon was P1.3 M. However, the
P5k check was dishonored due to insufficiency.
Apparently however, Esther and Arturo were having a rocky relationship. Esther executed a
SPA in favor of her sister and that she is selling her share in the conjugal property to
Galicano. It was alleged that that the RMOA is not valid for Esthers signature was not
affixed thereto. And that Esther never executed a SPA in favor of Arturo. Galicano informed
the couple that he has prepared a check to cover the remainder of the amount that needs to
be paid for the land. He demanded that the land be delivered to him. But the spouses failed
to deliver the land. Galicano sued the spouses.
ISSUE: Whether or not there was a contract of sale between Arturo and Galicano. Whether
or not the subsequent agreement between Galicano and Esther is binding and that it cured
the defect of the earlier contract between Arturo and Galicano.
HELD: No. No matter how the RMOA is looked upon, the same cannot be valid. At best, the
agreement between Arturo and Galicano is a mere grant of privilege to purchase to
Galicano. The promise to sell is not binding to Arturo for there was actually no consideration
distinct from the price. Be it noted that the parties considered the P5k as an earnest money
to be deducted from the purchase price.
Assuming arguendo that it was a bilateral promise to buy and sell, the same is still not
binding for Galicano failed to render a payment of legal tender. A check is not a legal tender.
Still assuming arguendo, that the P5k was an earnest money which supposedly perfected a
contract of sale, the RMOA is still not valid for Esthers signature was not affixed. The
property is conjugal and under the Family Code, the spouses consents are required.
Further, the earnest money here is not actually the earnest money contemplated under
Article 1482 under the Civil Code.
The subsequent agreement between Esther and Galicano did not ratify the earlier
transaction between Arturo and Galicano. A void contract can never be ratified.

GOLDENROD V CA G.R. NO. 126812

Facts:
Barretto owned parcels of land which were mortgaged to UCPB. Barretto failed to pay; the properties
were foreclosed. Goldenrod made an offer to Barretto that it would buy the properties and pay off the
remaining balance of Barrettos loan with UCPB. It paid Barretto 1 million pesos as part of the purchase
price. The remaining balance would be paid once Barretto had consolidated the titles. On the date that
Goldenrod was supposed to pay, Goldenrod asked for an extension. UCPB agreed. When the extension
date arrived, Goldenrod asked for another extension. UCPB refused. Barretto successfully consolidated
the titles. Goldenrod informed Barretto that it would not be able to push through with their agreement. It
asked Barretto to return the 1 million pesos. Barretto did not give in to Goldenrods rescission. Instead, it
sold the property that was part of their agreement to Asiaworld.
Issue:
Should Goldenrod be paid back the 1 million pesos?
Held:
Yes. Rescission creates the obligation to return the things which were the object of the contract together
with the fruits and interest. Barretto is obliged to pay Goldenrod back because 1) Goldenrod decided to
rescind the sale; 2) the transaction was called off and; 3) the property was sold to a third person. By virtue
of the extrajudicial rescission of the contract to sell by Goldenrod, without opposition from Barretto, who in
turn sold it to a third person, Barretto had the obligation to return the 1 million pesos plus legal interest
from the date it received the notice of rescission.

Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.

G.R. No. 133879, November 21, 2001
Panganiban, J.
Doctrine: Rent is a civil fruit that belongs to the owner of the property producing it by right of
accession.

Facts: Carmelo & Bauermann, Inc. (Camelo ) used to own a parcel of land with two 2-storey
buildings constructed thereon, located at Claro M. Recto Avenue, Manila, which it leased to Mayfair
Theater Inc. (Mayfair) for a period of 20 years. The Contract of Lease contained a provision
granting Mayfair a right of first refusal to purchase the subject properties. However, on July 30, 1978
within the 20-year-lease term the subject properties were sold by Carmelo to Equatorial Realty
Development, Inc. (Equatorial) for the total sum of P11,300,000, without first offering to Mayfair.
Mayfair filed a Complaint before the RTC of Manila for (a) the annulment of the Deed of Absolute
Sale between Carmelo and Equatorial, (b) specific performance, and (c) damages. The lower court
rendered a Decision in favor of Carmelo and Equatorial but the CA reversed such decision rescinding
the sale and ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00.
Mayfair bought the property. However, Equatorial filed an action for the collection of a sum of
money against Mayfair, claiming payment of rentals or reasonable compensation for Mayfairs use of
the subject premises after its lease contracts had expired. Equatorial alleged that representing itself
as the owner of the subject premises by reason of the Contract of Sale; it claimed rentals arising from
Mayfairs occupation thereof. The trial court dismissed the Complaint holding that the rescission of
the Deed of Absolute Sale did not confer on Equatorial any vested or residual proprietary rights.
Issue: Whether Equatorial is entitled to back rentals.
Held: No. In the case, there was no right of ownership transferred from Carmelo to Equatorial in
view of a patent failure to deliver the property to the buyer. By a contract of sale, one of the
contracting parties obligates himself to transfer ownership of and to deliver a determinate thing and
the other to pay therefor a price certain in money or its equivalent. Ownership of the thing sold is a
real right,[ which the buyer acquires only upon delivery of the thing to him in any of the ways
specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession
is transferred from the vendor to the vendee. This right is transferred, not by contract alone, but by
tradition or delivery. And there is said to be delivery if and when the thing sold is placed in the
control and possession of the vendee. From the peculiar facts of this case, it is clear that petitioner
never took actual control and possession of the property sold, in view of respondents timely
objection to the sale and the continued actual possession of the property. While the execution of a
public instrument of sale is recognized by law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery, being merely presumptive, is deemed negated by the failure of the
vendee to take actual possession of the land sold. In the case, Mayfairs opposition to the transfer of
the property by way of sale to Equatorial was a legally sufficient impediment that effectively
prevented the passing of the property into the latters hands. Rent is a civil fruit that belongs to the
owner of the property producing it by right of accession. Consequently and ordinarily, the rentals

that fell due from the time of the perfection of the sale to petitioner until its rescission by final
judgment should belong to the owner of the property during that period. Not having been the owner,
Equatorial cannot be entitled to the civil fruits of ownership like rentals of the thing sold.