Professional Documents
Culture Documents
vs
CA
Facts:
The
parcel
of
land
in
dispute
in
this
case
is
a
lot
located
in
Hinigaran,
Negros
Occidental
and
owned
by
one
Cosme
Pido
by
virtue
of
a
Declaration
of
Heirship
and
Absolute
Sale
executed
by
Felixberto
Vasquez,
who
inherited
the
lot
from
spouses
Santiago
Vasquez
and
Lorenza
Oruma.
Since
1960,
a
certain
Teodoro
Acap,
herein
petitioner,
had
been
the
tenant
of
the
subject
lot
in
question.
He
had
also
been
a
tenant
of
the
lot
even
until
Pidos
death.
He
had
been
religiously
paying
rentals
to
Pidos
wife
Laurenciana
after
the
formers
death
in
1981.
Upon
Pidos
death
in
1981,
his
heirs
executed
a
notarized
document
entitled
Declaration
of
Heirship
and
Waiver
of
Rights
over
the
subject
lot.
The
document
was
signed
by
all
of
Pidos
heirs.
Upon
the
signing
of
that
document,
private
respondent
Ely
de
los
Reyes
filed
a
notice
of
adverse
claim
over
the
subject
property
with
the
Declaration
of
Heirship
and
Waiver
of
Rights
attached
to
it.
After
filing
the
notice,
private
respondent
went
to
Acap
to
tell
him
that
he
was
the
new
owner
of
the
subject
property.
The
two
parties
went
on
to
agree
that
Acap
would
pay
PR
10
cavans
of
palay
per
annum
as
the
lease
rental
over
the
subject
property.
After
one
year
of
complying
with
the
agreement,
petitioner
Acap
suddenly
refused
to
pay
the
cavans
of
palay
starting
in
1983.
This
prompted
PR
to
seek
the
assistance
of
the
Ministry
of
Agrarian
Reform,
who
organized
a
meeting
between
the
two
parties.
Petitioner
failed
to
attend
the
meeting
but
was
represented
by
his
wife,
who
told
the
MAR
that
they
did
not
recognize
private
respondents
ownership
over
the
subject
land.
Four
years
later,
PR
would
file
for
the
recovery
of
possession
over
the
subject
property
claiming
ownership
over
it
by
virtue
of
by
virtue
of
the
Declaration
of
Heirship
and
Waiver
of
Rights
signed
by
the
heirs
of
Cosme
Pido.
Petitioner
Acap
said
that
he
had
no
knowledge
about
the
transfer
of
ownership
to
PR
and
that
he
had
been
religiously
paying
rentals
to
Pidos
wife
Laurenciana
even
after
her
departure
for
abroad.
Both
the
lower
court
and
the
CA
rendered
a
decision
in
favor
of
PR
saying
that
the
Declaration
of
Heirship
and
Waiver
of
Rights,
although
not
registered,
was
prima
facie
evidence
of
a
transfer
of
ownership
from
the
heirs
of
Pido
to
PR
since
it
was
notarized.
Furthermore,
the
CA
also
said
that
Acap
was
estopped
from
denying
he
knew
of
PRs
ownership
over
the
subject
land
because
he
had
paid
rentals
to
PR
for
a
period
of
about
one
year
before
claiming
in
1983
that
he
did
not
recognize
such
ownership.
Issue:
WON
the
Declaration
of
Heirship
and
Waiver
of
Rights
effectively
transferred
ownership
to
PR
and
WON
such
a
document
can
be
considered
a
sale
in
favor
of
PR
Held:
No
The
court
said
that
an
asserted
right
or
claim
of
ownership
over
a
thing
arising
from
a
juridical
act
is
not
sufficient
to
give
rise
to
ownership
over
the
subject
lot.
That
right
must
be
accompanied
by
the
completion
of
certain
conditions
imposed
by
the
law.
Hence,
ownership
and
real
rights
are
acquired
only
pursuant
to
a
legal
mode
or
process.
While
title
is
the
juridical
justification,
mode
is
the
actual
process
of
transfer
of
ownership
over
a
thing.
There
are
two
modes
of
acquiring
ownership
under
Art.
712
of
the
Civil
Code.
The
first
one
is
the
original
mode,
which
is
through
occupation,
acquisitive
prescription,
law
or
intellectual
creation.
The
second
one
is
the
derivative
mode,
which
is
through
succession
mortis
causa
or
tradition
as
a
result
of
contracts
such
as
sale,
barter,
donation,
or
assignment.
The
SC,
in
this
case,
said
that
the
lower
courts
were
confused
in
equating
the
Declaration
of
Heirship
and
Waiver
of
Rights
to
that
of
a
deed
of
sale.
A
contract
of
sale
is
one
where
one
party
obligates
himself
to
transfer
ownership
and
to
deliver
a
determinate
thing
to
another.
On
the
other
hand,
the
Declaration
of
Heirship
and
Waiver
of
Rights
is
more
of
a
extrajudicial
settlement
under
Rule
74
of
the
ROC.
It
was
not
a
sale
of
hereditary
right
but
rather
a
waiver
of
such.
A
sale
of
hereditary
rights
presumes
the
existence
of
a
contract
of
sale
between
the
parties.
A
waiver
of
hereditary
rights
is
merely
a
mode
of
extinction
of
ownership
over
a
particular
thing
in
favor
of
co-heirs.
PR,
in
this
case,
was
a
stranger
to
the
succession
because
he
was
not
a
co-heir.
As
such,
he
cannot
claim
ownership
over
the
subject
land
by
virtue
of
a
waiver
of
hereditary
rights.
Furthermore,
the
notice
of
adverse
claim
filed
by
PR
is
also
not
conclusive
of
a
deed
of
sale
executed
by
the
heirs
of
Pido
because
the
claim
was
neither
identified
by
the
heirs
nor
was
it
registered
with
the
Registry
of
Deeds.
Neither
can
the
PR
claim
that
Acap
was
already
estopped
from
claiming
they
did
not
recognize
PRs
ownership
because,
as
the
Court
said,
they
must
have
only
believed
in
good
faith
that
ownership
was
transferred.
It
was
only
after
a
year
that
they
stopped
paying
rentals
to
PR
because
they
had
misgivings
over
PRs
ownership
over
the
subject
property.
Toyota
Shaw
vs
CA
Facts:
Respondent
Luna
Sosa,
some
time
in
1989,
wanted
to
buy
a
Toyota
Lite
Ace.
Upon
contacting
Toyota
Shaw
Inc.,
Sosa
was
informed
that
there
was
an
available
unit
for
purchase.
Sosa
would
go
to
Toyota
Shaw
where
he
met
Popong
Bernardo,
a
sales
representative
of
Toyota.
Sosa
told
Bernardo
that
he
needed
the
unit
not
later
than
June
17,
1989
because
he
needed
it
for
personal
and
family
affairs.
He
also
said
that,
if
he
did
not
arrive
in
his
hometown
of
Marinduque
with
the
new
car,
he
would
become
the
laughing
stock
of
the
town.
Bernardo
then
assured
Sosa
that
a
unit
will
be
available
by
10am
of
June
17.
After
which,
the
two
parties
signed
a
document
entitled
Agreements
Between
Mr.
Sosa
and
Popong
Bernardo.
The
agreements
states
that
all
necessary
documents
should
be
submitted
to
Toyota
a
week
after
Sosas
arrival
in
Marinduque,
that
the
downpayment
of
100k
will
be
paid
by
Sosa
on
June
15,
and
that
the
lite
ace
will
be
released
by
Toyota
Shaw
at
10am
of
June
17.
On
June
15,
Sosa
went
to
Toyota
to
pay
the
downpayment
of
100k
as
said
in
the
agreement.
He
and
Bernardo
then
accomplished
a
Vehicle
Sales
Proposal
(VSP).
Among
others,
the
VSP
stated
that
the
payment
for
the
Lite
Ace
is
by
installment
to
be
financed
by
BA
Finance.
On
June
17,
Bernardo
called
Sosa
to
tell
him
that
the
unit
will
not
be
available
by
10am
but
rather
on
2pm
of
the
same
day.
An
hour
after
2pm,
Bernardo
allegedly
told
Sosa
that
unit
could
not
be
delivered
because
it
was
given
to
another
buyer.
Toyota,
however,
said
that
they
could
not
deliver
the
unit
to
Sosa
because
BA
Finance
disapproved
the
financing
application
of
Sosa.
Toyota
also
said
that
they
offered
to
sell
the
unit
to
Sosa
at
the
full
purchase
price
only
to
be
refused
by
Sosa.
Sosa
asked
for
the
refund
of
the
downpayment,
which
was
returned
by
Toyota
promptly.
Sosa,
thereafter,
sent
two
letters
to
Toyota.
The
first
one
demanded
the
return
of
the
100k
downpayment
plus
interest.
The
second
one
demanded
that
Toyota
pay
Sosa
1
million
pesos
worth
of
damages
and
interest.
After
his
demands
fell
on
deaf
ears,
Sosa
filed
with
the
RTC
a
complaint
for
damages
against
Toyota
claiming
that
he
had
suffered
moral
damages
as
a
result
of
Toyotas
inability
to
comply
with
their
contract
of
sale.
Toyota
would
then
allege
that
there
was
no
perfected
sale
between
the
two
parties
and
that
Bernardo
had
no
authority
to
sign
the
Agreements
on
its
behalf.
Both
the
trial
court
and
the
CA
rendered
their
decisions
in
favor
of
Sosa
saying
that
the
Agreements
between
Sosa
and
Bernardo
constituted
a
perfected
contract
of
sale
between
the
two
parties.
Issue:
WON
there
was
a
perfected
contract
of
sale
between
Sosa
and
Toyota
Held:
No
According
to
Article
1458
of
the
Civil
Code,
a
contract
of
sale
is
one
where
a
contracting
party
obligates
himself
to
transfer
the
ownership
of
and
to
deliver
a
determinate
thing
to
the
other
party,
who
obligates
himself
to
pay
a
price
certain
in
money
or
its
equivalent.
Article
1475
also
provides
that
a
contract
of
sale
is
deemed
perfected
when
there
is
a
meeting
of
the
minds
upon
the
thing
which
is
the
object
of
the
contract
and
upon
the
price.
The
SC
said
that
the
Agreements
is
not
a
contract
of
sale
because
there
was
no
obligation
on
the
part
of
Toyota
to
transfer
ownership
of
a
determinate
thing
nor
was
there
an
obligation
on
the
part
of
Sosa
to
pay
a
price
certain
for
the
delivery
of
a
thing.
Though
the
Agreements
stated
that
Sosa
would
pay
100k
as
downpayment,
there
was
no
specific
reference
to
the
sale
of
a
vehicle.
There
was
no
definiteness
on
what
the
100k
was
for
and
nothing
was
mentioned
about
the
full
purchase
price
of
the
vehicle
and
the
manner
of
installment
it
was
to
be
paid.
The
Court
also
said
that
it
is
essential
that
there
be
a
definite
agreement
on
the
manner
of
payment
for
a
contract
of
sale
to
be
enforceable.
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.
Moreover,
the
Agreements
also
shows
that
there
was
an
absence
of
a
meeting
of
the
minds
between
Sosa
and
Toyota.
First
of
all,
Sosa
did
not
even
sign
the
document
and
he
was
also
well
aware
that
Bernardo,
the
one
who
singed
it,
was
only
a
mere
sales
representative
of
Toyota
and
had
no
authority
to
sell
any
vehicle
on
behalf
of
Toyota.
At
best,
the
Agreeements
may
only
be
considered
as
part
of
the
negotiation
stage
of
a
contract
of
sale.
The
three
stages
are
preparation,
perfection,
and
consummation.
In
this
case,
the
execution
of
the
VSP
was
the
second
stage
of
the
contract
of
sale.
However,
the
VSP
also
stated
that
the
balance
of
the
purchase
price
was
to
be
shouldered
by
BA
Finance
upon
approval
of
Sosas
application.
However,
since
BA
Finance
did
not
approve
of
Sosas
application,
there
was
no
meeting
of
the
minds
between
Toyota
and
Sosa
regarding
the
contract
of
sale
for
the
lite
ace.
At
best,
the
VSP
is
merely
a
proposal
which
was
aborted
because
of
BA
Finance
disapproval
of
Sosas
application
for
financing.
Polytechnic
University
of
the
Philippines
vs
CA
Facts:
The
National
Development
Corporation,
a
government
owned
and
controlled
corporation,
is
the
owner
of
a
ten-hectare
property
land,
which
is
the
disputed
lot
in
this
case.
In
1965,
Firestone
Ceramics
Inc.
leased
portion
of
the
NDC
compound
for
its
business
purposes.
The
term
of
the
lease
was
for
10
years
and
was
also
renewable
for
another
10
years.
Some
time
in
1978,
Firestone
wrote
NDC
requesting
for
an
extension
of
their
lease.
The
lease
was
granted
with
an
additional
condition
that
priority
should
be
given
to
the
lessee
Firestone
if
ever
NDC
were
to
decide
to
sell
the
properties
that
had
the
leased
portions
of
Firestone.
In
1988,
Firestone
then
informed
NDC
of
their
desire
to
extend
the
lease
for
another
10-year
period.
While
they
were
waiting
for
a
response
from
NDC,
it
came
to
the
knowledge
of
Firestone
that
NDC
had
plans
of
disposing
the
property
to
respondent
Polytechnic
University
of
the
Philippines
(PUP)
in
exchange
for
the
cancellation
of
NDCs
debt
to
the
national
government.
Because
of
this,
Firestone
served
notice
upon
NDC
to
inform
the
latter
of
its
desire
to
exercise
its
right
of
first
refusal.
Firestone,
subsequently,
instituted
an
action
for
specific
performance
to
compel
NDC
to
sell
the
subject
property
in
its
favor
prior
to
its
transfer
to
the
PUP.
In
support
of
this
was
a
letter
submitted
to
then
President
Corazon
Aquino
concerning
the
NDCs
plans
of
transferring
the
subject
property
to
the
PUP.
The
letter
also
expressly
recognized
the
existence
of
Firestones
right
of
first
refusal
over
the
subject
property.
PUP
would
intervene
in
the
case
on
the
ground
that
it
had
an
interest
over
the
litigation
as
purchaser
pendete
lite.
The
trial
court
accepted
the
PUPs
intervention
but
subsequently
ordered
the
sale
of
the
subject
property
to
Firestone
in
exercise
of
its
right
of
first
refusal.
The
CA
affirmed
such
decision.
PUP
moved
for
the
reconsideration
of
the
case
claiming
that
the
trial
court
unfairly
created
a
contract
to
sell
between
NDC
and
Firestone
by
ordering
the
NDC
to
allow
Firestone
to
exercise
its
right
of
first
refusal.
They
argued
that
the
order
of
the
court
cannot
substitute
for
the
consent
of
all
parties
in
determining
whether
a
contract
was
perfected
or
not.
PUP
also
said
that
there
was
no
consideration
paid
by
Firestone
for
the
right
of
first
refusal.
As
such,
the
stipulation
should
be
voided.
On
the
other
hand,
the
NDC
also
averred
that
since
both
the
NDC
and
the
PUP
were
government
entities,
the
transaction
cannot
be
legally
called
a
sale
because
ownership
still
rested
with
the
government
even
after
transferring
the
property
from
NCD
to
PUP.
Issue:
WON
Firestone
could
exercise
its
right
of
first
refusal
and
WON
the
transfer
of
the
properties
from
NDC
to
PUP
is
a
sale
Held:
As
to
whether
or
not
the
transfer
from
NDC
to
PUP
constitutes
a
sale,
the
court
said
yes.
It
cannot
be
said
that
there
was
only
one
party
to
the
transaction
upon
the
transfer
of
the
properties
by
the
NDC
to
PUP.
Both
the
NDC
and
PUP
have
separate
and
distinct
charters
to
counter
the
claim
that
it
was
merely
the
government
that
was
involved
in
the
transaction.
Being
GOCCs,
both
the
NDC
and
the
PUP
have
distinct
legal
personalities
of
their
own
and
that
the
transaction
between
these
two
entities
constitutes
a
transaction
between
two
different
personalities.
Furthermore,
all
three
essential
requisites
of
a
sale
is
present
in
this
case.
First,
Memorandum
Order
No
214
explicitly
stated
that
both
parties
consented
to
the
sale
of
the
subject
property.
Second,
the
memorandum
also
stated
that
the
subject
properties
were
the
definite
subject
matter
of
the
sale.
And
third
what
constituted
as
the
consideration
of
the
sale
was
the
cancellation
of
NDCs
outstanding
debt
to
the
government.
With
all
those
stated,
the
SC
came
to
the
conclusion
that
there
was
not
a
mere
transfer
of
the
properties
from
one
government
entity
to
another
but
there
was
actually
a
sale
that
involved
the
subject
property
for
a
consideration.
Furthermore,
the
PUPs
subsequent
actions
belie
the
NDCs
claim
that
there
was
only
a
mere
transfer.
First,
when
the
PUP
acquired
the
properties,
it
itself
posted
notices
within
the
property
to
advise
the
residents
to
vacate
it.
Second,
when
it
intervened,
PUP
admitted
that
it
purchased
the
property
when
it
claimed
that
it
was
a
purchaser
pendeted
lite.
On
whether
or
not
Firestone
should
be
allowed
to
exercise
its
right
of
first
refusal,
the
SC
said
that
there
was
a
consideration
paid
for
the
right
of
first
refusal
because
such
a
stipulation
was
part
and
parcel
of
the
lease.
As
such,
whatever
the
consideration
was
for
the
lease
contract
was
also
the
consideration
for
the
right
of
first
refusal.
Given
that,
the
NDC
should
have
first
allowed
Firestone
to
exercise
its
right.
Only
when
Firestone
was
not
amenable
to
the
purchase
price
should
the
NDC
have
sold
the
property
to
PUP.
Manila
Container
vs
PNB
Facts:
Petitioner
Manila
Container
was
the
owner
of
the
parcel
of
land
subject
of
the
case
at
bar.
They
would
later
execute
a
REM
over
the
subject
property
as
security
for
a
900k
loan
from
respondent
PNB.
On
March
1981,
petitioner
would
again
secure
another
loan
from
PNB
by
still
using
the
subject
property
as
security
for
the
loan.
About
a
year
later,
PNB
sought
for
the
extrajudicial
foreclosure
of
the
REM
and
sought
to
have
the
subject
property
sold
at
public
auction
to
answer
for
petitioners
outstanding
balance.
PNB
was
the
highest
bidder
and
was
declared
the
winner
of
the
public
auction.
On
August
1983,
petitioner
wrote
PNB
requesting
for
an
extension
of
time
to
redeem
the
property.
A
year
later,
they
reiterated
their
request
for
a
one-year
extension
to
redeem
the
subject
parcel
of
land
on
a
installment
basis.
They
were
then
informed
that
the
bank,
as
a
matter
of
policy,
did
not
accept
partial
redemption.
Since
the
petitioners
could
not
redeem
the
property
in
time,
the
parcel
of
land
was
consolidated
in
the
name
of
PNB.
In
the
meantime,
the
Special
Assets
Management
Department
(SAMD)
of
PNB
prepared
a
detailed
statement
of
account
of
petitioners
outstanding
obligation,
which
amounted
to
about
1.5
million
pesos.
When
told
of
the
amount,
petitioner
remitted
725k
to
PNB
as
a
deposit
to
repurchase.
SAMD
also
recommended
the
same
amount
to
the
PNB
Board
of
Directors
only
for
them
to
inform
the
petitioners
that
they
were
rejecting
the
recommended
amount
of
about
1.5
million
and
offered
the
property
at
about
2.6
million.
They
also
told
petitioners
that
if
they
would
not
act
on
the
proposal,
the
725k
would
be
returned
to
them.
Instead
of
accepting
the
2.6
million
offer
to
redeem
the
property,
petitioner
reiterated
to
PNB
that
it
had
already
accepted
the
1.5
million
offer
made
by
the
SAMD.
Hence
the
725k
deposit
they
made.
PNB
would
later
inform
petitioners
that
it
had
decreased
the
redemption
price
to
about
1.9
million
pesos
minus
the
725k
deposit
already
made.
However,
petitioner
still
maintained
that
they
had
already
accepted
the
1.5
milion
offer.
PNB
rejected
the
offer.
Petitioner
then
filed
a
complaint
against
PNB
for
specific
performance
claiming
that
there
was
already
a
perfected
sale
when
they
accepted
the
1.5
million
offer
to
redeem
by
PNBs
SAMD.
In
its
answer,
PNB
said
that
there
was
no
contract
of
sale
perfected
between
it
and
petitioner.
While
the
case
was
pending,
petitioner
again
offered
to
purchase
the
property
at
3.5
million
only
to
be
rejected
by
PNB.
The
trial
court
then
rendered
a
decision
saying
that
there
was
no
perfected
contract
of
sale
between
the
parties
and
that,
because
of
this,
petitioners
had
no
cause
of
action
for
specific
performance.
The
CA
affirmed
the
decision.
Petitioner
now
claims
that
they
had
already
accepted
the
1.5
million
offer
made
by
the
SAMD.
Upon
their
acceptance,
they
deposited
the
725k
as
partial
payment.
Petitioner
also
averred
that
when
the
SAMD
accepted
their
deposit,
they
also
accepted
the
offer
to
repurchase
at
1.5
million.
Because
of
that,
they
aver
that
respondent
PNB
could
no
longer
unilaterally
withdraw
the
offer
to
sell
the
property
at
1.5
million
since
they
were
was
already
an
acceptance
on
the
part
of
petitioner
and
that
the
725k
represented
earnest
money
as
contemplated
under
Article
1482
of
the
Civil
Code.
PNB
now
contends
that
the
parties
never
graduated
from
the
negotiation
stage
as
there
was
no
definite
agreement
regarding
the
repurchase
price.
They
insist
that
what
transpired
were
merely
exchanges
of
counter-proposals
regarding
the
redemption
price.
Since
there
was
no
agreement,
PNB
insists
that
there
was
no
perfected
contract.
They
also
said
that
the
SAMDs
statement
of
account
cannot
be
considered
as
a
counter-offer
because
it
was
merely
a
recital
of
petitioners
obligation
to
PNB
and
it
had
no
capacity
to
bind
PNB
since
only
the
Board
of
Directors
had
the
authority
to
do
so.
Moreover,
it
was
merely
a
recommendation
that
needed
the
approval
of
PNBs
Board
of
Directors.
The
725k
deposit
could
not
be
considered
as
earnest
money
as
well
because,
as
PNB
stated,
they
merely
accepted
the
deposit
as
part
of
the
repurchase
price
pending
the
approval
of
the
Board
of
Directors
on
the
SAMDs
recommendation.
Since
a
condition
was
imposed,
there
was
no
absolute
acceptance
of
the
offer.
Issue:
WON
there
was
a
perfected
contract
of
sale
between
the
parties
Held:
No
A
contract
of
sale
is
consensual
in
nature
and
is
perfected
upon
the
meeting
of
the
minds.
When
an
offer
is
made
without
the
acceptance
of
the
other
party,
there
is
no
perfected
contract
of
sale.
There
are
also
three
stages
to
a
contract:
1.
Negotiation,
2.
Perfection,
and
3.
Consummation.
At
the
negotiation
stage,
an
offer
definite
must
be
made.
The
offer
may
be
withdrawn
at
any
time
before
it
is
accepted.
Once
accepted,
a
contract
is
perfected
and
the
acceptance
must
be
made
unequivocally
and
unconditionally.
A
qualified
acceptance
is
but
a
mere
counter
offer
which
must
also
be
accepted
by
the
other
party
for
a
perfected
contract
to
arise.
As
the
facts
shows,
petitioner
was
given
a
statement
of
account
by
the
SAMD
after
they
reiterated
their
offer
to
redeem
the
subject
property.
However,
the
amount
given
by
the
SAMD
cannot
constitute
as
an
unqualified
acceptance
to
petitioners
offer
to
repurchase
because
it
was
merely
a
computation
of
petitioners
obligation
to
PNB.
Moreover,
there
was
also
no
evidence
that
the
SAMD
had
the
authority
to
accept
the
offer
to
repurchase
the
property
absent
a
resolution
by
the
Board
of
Directors.
A
corporation
can
only
transact
business
through
its
Board
of
Directors
and
its
agents
and
officers
authorized
by
a
board
resolution.
In
this
case,
it
appeared
that
the
computation
made
by
the
SAMD
was
but
a
mere
recommendation
that
needed
the
approval
of
the
Board
of
Directors.
By
setting
the
purchase
price
at
2.6
million,
the
Board
effectively
rejected
the
SAMDs
recommendation
and
it
constituted
a
counter-offer
made
to
petitioners.
And
since
petitioners
did
not
accept
the
counter
offer,
there
was
no
perfected
contract
of
sale.
It
cannot
also
be
said
that
the
725k
deposit
was
earnest
money
because,
as
the
facts
showed,
the
deposit
was
merely
made
to
be
deducted
from
the
repurchase
price
pending
the
Board
of
Directors
approval
of
what
the
purchase
price
was.
Therefore,
it
was
merely
a
deposit
to
be
applied
to
the
purchase
price
pending
the
Boards
decision
on
the
matter.
Velarde
vs
CA
Facts:
Defendant
David
Raymundo
and
petitioners
Avelina
Velarde
executed
a
Deed
of
Sale
with
Assumption
of
Mortgage
wherein
Raymundo
sold
a
parcel
of
land
located
in
Dasmarinas
Village,
Makati,
to
Velarde.
The
conditions
of
the
sale
stated
that
Velarde
would
assume
payment
of
the
1.8
million
loan
that
Raymundo
secured
by
mortgaging
the
subject
parcel
of
land
with
the
BPI.
And
while
Velardes
application
for
the
assumption
of
mortgage
obligations
on
the
property
is
not
yet
approved
by
BPI,
Velarde
would
pay
the
mortgage
obligations
on
the
subject
property
in
the
name
of
Raymundo.
The
Deed
of
Sale
with
Assumption
of
Mortgage
also
included
a
clause
that
said
that
if
ever
Velarde
were
to
violate
any
of
the
terms
and
conditions
of
the
Deed
of
Real
Estate
Mortgage,
her
downpayment
of
800k
and
all
the
payments
made
to
BPI
shall
be
forfeited
in
favor
of
Raymundo
as
liquidated
damages,
that
Raymundo
shall
resume
ownership
and
possession
over
the
subject
property,
and
that
the
Deed
of
Sale
with
Assumption
of
Mortgage
shall
be
deemed
automatically
cancelled.
Pursuant
to
the
agreement,
Velarde
religiously
paid
BPI
the
monthly
interests
on
the
loan
by
the
mortgage
for
three
straight
months.
However,
Velarde
was
informed
that
BPI
did
not
approve
the
Application
for
Assumption
of
Mortgage.
Because
of
that,
they
refused
to
make
further
payments.
Thru
counsel,
Raymundo
told
Velarde
that
their
failure
to
pay
the
outstanding
balance
with
BPI
constituted
non-performance
of
their
obligation.
On
the
other
hand,
Velarde
wrote
back
to
Raymundo
a
month
after
stopping
their
payments.
In
the
letter,
Velarde
said
that
she
was
willing
to
pay
the
balance
in
cash
provided
that
Raymundo
comply
with
certain
conditions
namely:
the
deliver
of
the
property
to
Velarde,
the
release
of
the
title
and
mortgage
from
BPI
and
to
make
the
title
free
from
any
liens
and
encumberances,
and
to
execute
a
deed
of
absolute
sale
over
the
subject
property
in
favor
of
Velarde.
Raymundo,
on
the
other
hand,
promptly
sent
a
notice
to
Velarde
telling
the
latter
that
he
was
unilaterally
rescinding
the
contract
for
Velardes
failure
to
comply
with
the
terms
and
conditions
of
the
Deed.
Consequently,
Velarde
filed
for
specific
performance
against
Raymundo.
The
lower
court
and
the
CA
rendered
a
decision
in
favor
of
Raymundo.
Velarde
now
claims
that
they
did
not
breach
the
contract
by
failing
to
pay
Raymundos
mortgage
obligation
considering
that
their
application
to
assume
the
obligation
had
been
denied
by
BPI.
And
since
such
application
was
denied,
Velarde
claims
that
the
obligation
to
pay
the
mortgage
befell
upon
Raymundo
again.
They
also
claim
that
the
unilateral
rescission
made
by
Raymundo
was
not
justified
because
they
had
expressed
their
willingness
to
pay
the
balance
of
the
purchase
price
a
month
after
they
were
stopped
paying
the
mortgage.
They
said
that
it
was
not
a
substantial
breach
and
that
it
should
not
have
warranted
the
automatic
rescission
of
the
deed
Issue:
WON
Velarde
breached
the
terms
and
conditions
of
the
Deed
of
Sale
with
Assumption
of
Mortgage
and
WON
such
a
breach
warrants
the
rescission
of
the
deed
Held:
Yes
to
both
According
to
the
agreement
executed
by
the
parties,
petitioner
Velarde
should
have
paid
the
balance
of
the
purchase
price
upon
BPIs
disapproval
of
their
application
for
assumption
of
mortgage.
However,
instead
of
paying
the
purchase
price,
Velarde
altogether
stopped
payments
to
BPI
for
one
month.
It
was
only
after
a
month
when
she
expressed
her
willingness
to
pay
the
purchase
price
but
with
additional
conditions
that
were
not
agreed
upon
in
the
original
Deed.
In
a
contract
of
sale,
the
seller
obligates
himself
to
transfer
the
ownership
of
a
determinate
thing
while
the
buyer
obligates
himself
to
pay
a
price
certain
in
money
or
its
equivalent.
In
this
case,
Raymundo
had
already
performed
their
obligation
by
executing
the
original
Deed
of
Sale
with
Assumption
of
Mortgage
in
favor
of
Velarde.
Physical
delivery
of
the
subject
matter
is
not
required
and
the
execution
of
the
deed
was
already
substantial
compliance
of
delivery.
On
the
other
hand,
Velarde
failed
to
perform
their
end
of
the
contract
of
sale.
Instead
of
paying
the
purchase
price
like
they
had
agreed
upon
in
the
deed,
Velarde
only
agreed
on
doing
so
with
additional
conditions
that
were
not
present
when
they
executed
the
deed.
Regarding
the
issue
on
rescission,
the
Court
said
that
it
was
only
right
under
Article
1191
of
the
Civil
Code
that
respondents
Raymundo
rescind
the
Deed
of
Sale.
Although
Velarde
had
later
expressed
her
willingness
to
comply
with
the
obligation,
it
was
only
after
a
month
that
she
decided
to
do
so
and
it
was
with
additional
conditions
and
obligations
on
the
part
of
Raymundo.
Given
that
there
was
a
substantial
breach
on
the
part
of
Velarde
and
given
that
the
contract
is
a
reciprocal
one,
it
was
only
right
for
Raymundo
to
rescind
the
contract
and
to
effect
mutual
restitution
between
the
parties.
San
Miguel
Properties
vs
Sps.
Huang
Facts:
Herein
petitioner
San
Miguel
Properties
own
two
parcels
of
land,
which
were
the
subject
properties
in
the
case
at
bar.
These
properties
were
offered
for
sale
for
about
52
million
pesos
in
cash.
The
offer
to
sell
the
properties
were
made
to
a
certain
Atty.
Dauz
representing
herein
respondents.
The
first
terms
offered
by
respondents
was
that
they
would
pay
500k
in
earnest
money
and
would
pay
the
balance
in
eight
monthly
installments.
Such
an
offer
was
declined.
Dauz
then
proposed
a
new
scheme
wherein
respondents
would
pay
1
million
pesos
in
earnest
money
subject
to
the
condition
that
they
would
be
given
30
days
to
purchase
the
properties
and
that,
during
the
said
period,
both
petitioner
and
respondents
would
negotiate
on
a
payment
scheme
suitable
for
both
parties.
During
the
meeting
of
parties,
petitioner
first
offered
to
sell
the
property
at
a
90-day
scheme.
Respondents
countered
by
saying
they
were
willing
to
buy
it
in
a
six-month
period.
After
petitioner
failed
to
act
on
their
counter
offer,
respondents
then
offered
to
buy
the
properties
at
a
four-month
amortization
period.
Petitioner
failed
to
act
upon
the
offer
again
and
respondent
then
asked
for
a
45-day
extension
to
exercise
their
option
to
buy
the
property.
Though
the
45-day
extension
was
granted,
no
payment
scheme
was
agreed
upon.
Petitioner
wrote
respondent
telling
them
that
they
had
failed
to
agree
upon
the
terms
and
conditions
of
the
sale
and
that
they
were
returning
the
1
million
peso
deposit
previously
made
by
the
respondents.
Respondents
then
demanded
that
petitioner
execute
a
deed
of
sale
covering
the
subject
properties.
They
would
also
later
on
file
a
complaint
for
specific
performance
against
the
petitioner.
The
trial
court
would
dismiss
the
complaint
but
the
CA
would
render
a
decision
favoring
the
respondents
saying
that
there
was
a
perfected
contract
of
sale
in
connection
with
which
the
earnest
money
of
1
million
pesos
had
already
been
accepted
by
petitioners
and
that
the
fact
that
the
parties
failed
to
agree
upon
a
mode
of
payment
does
not
affect
the
contract
because
it
is
not
an
essential
element.
Petitioner
now
contends
that
there
was
no
perfected
contract
because
the
offer
accepted
by
petitioner
merely
resulted
into
an
option
contract
that
respondents
failed
to
exercise
and
was
albeit
unenforceable
due
to
the
absence
of
a
consideration.
They
also
argue
that
the
absence
of
a
mode
of
payment
was
fatal
to
the
perfection
of
the
contract
of
sale.
Issue:
WON
there
was
a
perfected
contract
of
sale
Held:
No.
The
SC
held
that
the
CA
erred
in
holding
that
there
was
a
contract
of
sale
by
relying
on
the
earnest
money
given
and
on
documentary
evidence
showing
that
there
was
a
perfected
contract
of
sale
between
the
parties.
According
to
the
Court,
the
1
million
pesos
is
not
the
earnest
money
contemplated
under
Article
1482
but
rather
it
was
just
a
deposit
that
would
have
been
earnest
money
had
a
mode
of
payment
been
agreed
upon
by
the
parties.
However,
no
contract
of
sale
was
ever
perfected
in
the
30-day
period
originally
agreed
upon.
Such
acceptance
of
the
30-day
period
also
did
not
constitute
as
a
perfected
contract
of
sale
because
the
option
to
buy
given
to
the
respondents
is
separate
and
distinct
from
the
possible
contract
of
sale
that
the
parties
could
have
entered
into.
Furthermore,
the
lack
of
a
consideration
for
the
option
period
is
also
fatal
to
the
cause
of
respondents.
According
to
Article
1479,
an
accepted
unilateral
promise
to
buy
or
sell
a
determinate
thing
is
binding
upon
the
promisor
only
when
the
promise
is
supported
by
a
distinct
consideration.
In
this
case,
there
was
no
consideration
given
for
the
30-day
option
period
granted
to
the
respondents.
Moreover,
what
is
even
more
fatal
to
the
cause
of
the
respondents
was
that,
during
the
30-day
period
of
negotiation,
there
was
no
meeting
of
the
minds
between
the
two
parties.
In
the
three
stages
of
a
contract
of
sale,
they
never
even
got
past
the
negotiation
stage
because
no
terms
of
payment
were
ever
agreed
upon.
Finally,
it
was
wrong
for
the
CA
to
say
that
the
absence
of
a
mode
of
payment
does
not
affect
the
perfection
of
a
contract
of
sale.
It
was
held
in
Navarro
vs
Sugar
Producers
Cooperative
that
the
manner
of
payment
of
purchase
price
is
an
essential
element
before
a
valid
and
binding
contract
of
sale
can
exist
despite
the
fact
that
the
Civil
Code
does
not
mention
such.
Quijada
vs
CA
Facts:
The
petitioners
in
this
case
are
the
children
of
the
late
Trinidad
Corvera
Vda.
De
Quijada,
who
inherited
two
parcels
of
land
from
the
late
Pedro
Corvera.
Trinidad
and
her
siblings
executed
a
conditional
deed
of
donation
over
the
subject
properties
in
favor
of
the
Municipality
of
Talacogon
on
the
condition
that
the
parcels
of
land
shall
be
used
exclusively
for
the
campus
of
the
proposed
provincial
high
school.
Despite
the
donation,
Trinidad
remained
in
possession
of
the
parcel
of
land.
Despite
the
donation,
Trinidad
later
sold
a
hectare
of
the
property
to
Regalado
Mondejar.
In
1980,
the
petitioners
in
the
case
at
bar
filed
for
a
forcible
entry
case
against
Mondejar.
However,
the
complaint
was
dismissed
for
failure
to
prosecute.
In
1987,
the
Sangguniang
Bayan
of
the
Municipality
of
Talacogon
enacted
a
resolution
returning
the
parcels
of
land
over
to
the
donors,
herein
petitioners,
for
the
failure
of
the
high
school
to
materialize.
In
the
meantime,
Mondejar
had
already
sold
portions
of
the
property
to
respondents
Bautista,
Goloran,
and
Guden.
The
petitioners
in
this
case
later
filed
the
present
action
against
respondents
claiming
that
their
mother
never
sold
the
properties
to
Mondejar
and,
at
the
time
of
the
supposed
sale,
the
parcels
of
land
were
under
the
ownership
of
the
Municipality
of
Talacogon.
Hence,
they
claim
that
there
was
no
valid
sale
to
Mondejar.
Issue:
WON
there
was
a
valid
sale
of
the
parcels
of
land
to
Mondejar
Held:
Yes
The
donation
made
by
Trinidad
and
her
siblings
was
subject
to
the
resolutory
condition
that
the
Municipality
had
to
erect
a
provincial
high
school
on
the
parcels
of
land
donated.
Notwithstanding
the
condition
imposed
upon
them,
the
Municipality
was
already
the
owners
of
the
parcels
of
land
when
they
made
their
acceptance
known
to
the
donors.
Thus,
at
the
time
of
the
supposed
sale
made
by
Trinidad
to
Mondejar,
the
Municipality
owned
the
parcels
of
land.
So
long
as
the
resolutory
condition
subsists
and
is
capable
of
fulfillment,
the
donation
remained
effective
and
the
donee
remained
the
owner
of
the
property.
However,
by
virtue
of
the
resolution
of
the
Municipality
saying
they
could
not
comply
with
the
condition
imposed
upon
them,
the
ownership
over
the
parcels
of
land
were
reverted
back
to
the
donors
because
of
the
donees
failure
to
fulfill
the
resolutory
condition.
In
the
meantime
while
the
resolutory
condition
was
not
yet
fulfilled,
the
donor
of
the
parcels
of
land
had
an
inchoate
right
over
the
properties
in
question.
In
this
case,
Trinidad
sold
the
parcels
of
land,
which
she
did
not
own,
to
Mondejar.
However,
although
Trinidad
did
not
own
the
parcels
of
land
at
the
time
of
the
sale
to
Mondejar,
ownership
is
not
an
essential
requisite
for
the
perfection
of
a
contract
of
sale.
Sale,
being
consensual
is
perfected
only
by
mere
consent
as
to
the
elements
required
by
law.
The
law
only
requires
three
elements
namely
subject
matter,
price,
and
terms
of
the
payment.
What
the
law
merely
requires
is
that
the
seller
has
the
right
to
transfer
ownership
at
the
time
the
thing
sold
is
delivered.
Hence,
the
sale
is
still
valid
because
it
is
not
the
perfection
stage
that
transfers
ownership
but
rather
it
is
when
the
thing
sold
is
actually
or
constructively
delivered.
In
this
case,
the
consummation
of
the
contract
of
sale
happened
upon
the
reversion
of
the
ownership
of
the
parcels
of
land
when
the
Municipality
failed
to
comply
with
their
resolutory
condition.
Consequently,
Mondejar
and
those
who
claim
right
from
him
immediately
became
the
owner
of
the
subject
properties
upon
the
reversion
of
ownership
over
to
the
petitioners
since,
according
to
Article
1434
of
the
Civil
Code,
title
passes
by
operation
of
law
to
the
buyers.
Laforteza
vs
Machuca
Facts:
In
the
exercise
of
the
authority
of
Special
Power
Of
Attorney,
on
January
20,
1989,
the
heirs
of
the
late
Francisco
Q.
Laforteza
represented
by
Roberto
Z.
Laforteza
and
Gonzalo
Z.
Laforteza,
Jr.
entered
into
a
Memorandum
of
Agreement
(Contract
to
Sell)
with
the
plaintiff
over
the
subject
property
for
the
sum
of
SIX
HUNDRED
THIRTY
THOUSAND
PESOS
(P630,000.00)
payable
as
follows:
(a)
P30,000.00
as
earnest
money,
to
be
forfeited
in
favor
of
the
defendants
if
the
sale
is
not
effected
due
to
the
fault
of
the
plaintiff;
(b)
P600,000.00
upon
issuance
of
the
new
certificate
of
title
in
the
name
of
the
late
Francisco
Q.
Laforteza
and
upon
execution
of
an
extra-judicial
settlement
of
the
decedent's
estate
with
sale
in
favor
of
the
plaintiff
(Par.
2,
Exh.
"E",
record,
pp.
335-336).
Significantly,
the
fourth
paragraph
of
the
Memorandum
of
Agreement
(Contract
to
Sell)
dated
January
20,
1989
(Exh.
"E",
supra.)
contained
a
provision
as
follows:
.
.
.
.
Upon
issuance
by
the
proper
Court
of
the
new
title,
the
BUYER-LESSEE
shall
be
notified
in
writing
and
said
BUYER-LESSEE
shall
have
thirty
(30)
days
to
produce
the
balance
of
P600,000.00
which
shall
be
paid
to
the
SELLER-LESSORS
upon
the
execution
of
the
Extrajudicial
Settlement
with
sale.
On
January
20,
1989,
plaintiff
paid
the
earnest
money
of
THIRTY
THOUSAND
PESOS
(P30,000.00),
plus
rentals
for
the
subject
property
.
On
September
18,
1998
3,
defendant
heirs,
through
their
counsel
wrote
a
letter
to
the
plaintiff
furnishing
the
latter
a
copy
of
the
reconstituted
title
to
the
subject
property,
advising
him
that
he
had
thirty
(3)
days
to
produce
the
balance
of
P600,000.00
under
the
Memorandum
of
Agreement
which
plaintiff
received
on
the
same
date.
On
October
18,
1989,
plaintiff
sent
the
defendant
heirs
a
letter
requesting
for
an
extension
of
the
THIRTY
(30)
DAYS
deadline
up
to
November
15,
1989
within
which
to
produce
the
balance
of
P600,000.00.
Defendant
Roberto
Z.
Laforteza,
assisted
by
his
counsel
Atty.
Romeo
L.
Gutierrez,
signed
his
conformity
to
the
plaintiff's
letter
request.
The
extension,
however,
does
not
appear
to
have
been
approved
by
Gonzalo
Z.
Laforteza,
the
second
attorney-in-fact
as
his
conformity
does
not
appear
to
have
been
secured.
On
November
15,
1989,
plaintiff
informed
the
defendant
heirs,
through
defendant
Roberto
Z.
Laforteza,
that
he
already
had
the
balance
of
P600,000.00
covered
by
United
Coconut
Planters
Bank
Manager's
Check
dated
November
15,
1989
.
However,
the
defendants,
refused
to
accept
the
balance
.Defendant
Roberto
Z.
Laforteza
had
told
him
that
the
subject
property
was
no
longer
for
sale
.
On
November
20,
defendants
informed
plaintiff
that
they
were
canceling
the
Memorandum
of
Agreement
(Contract
to
Sell)
in
view
of
the
plaintiff's
failure
to
comply
with
his
contractual
obligations.
Thereafter,
plaintiff
reiterated
his
request
to
tender
payment
of
the
balance
of
P600,000.00.
Defendants,
however,
insisted
on
the
rescission
of
the
Memorandum
of
Agreement.
Thereafter,
plaintiff
filed
the
instant
action
for
specific
performance.
The
lower
court
rendered
judgment
in
favor
of
the
Alonzo
Machuca
and
against
the
defendant
heirs
of
the
late
Francisco
Q.
Laforteza,.
Petitioners
appealed
to
the
Court
of
Appeals,
CA:
This
affirmed
with
the
decision
of
the
lower
court.
Hence
this
petition
wherein
the
petitioners
raise
the
issues:
Issue:
Whether
or
not
the
MOA
is
an
OPTION
CONTRACT,
CONTRACT
TO
SELL
or
a
CONTRACT
OF
SALE.
WON
the
six-month
period
during
which
the
respondent
would
be
in
possession
of
the
property
as
lessee
was
a
period
within
which
to
exercise
an
option.
Held:
In
the
case
at
bench,
there
was
a
perfected
agreement
between
the
petitioners
and
the
respondent
whereby
the
petitioners
obligated
themselves
to
transfer
the
ownership
of
and
deliver
the
house
and
lot
located
at
7757
Sherwood
St.,
Marcelo
Green
Village,
Paraaque
and
the
respondent
to
pay
the
price
amounting
to
six
hundred
thousand
pesos
(P600,000.00).
All
the
elements
of
a
contract
of
sale
were
thus
present.The
elements
of
a
valid
contract
of
sale
under
Article
1458
of
the
Civil
Code
are
(1)
consent
or
meeting
of
the
minds;
(2)
determinate
subject
matter
and
(3)
price
certain
money
or
its
equivalent.
Even
assuming
for
the
sake
of
argument
that
the
petitioners
were
ready
to
comply
with
their
obligation
(and
Machuca
cannot),
the
Court
found
that
rescission
of
the
contract
will
still
not
prosper.
The
rescission
of
a
sale
of
an
immovable
property
is
specifically
governed
by
Article
1592
of
the
New
Civil
Code,
which
reads:
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
of
right
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
a
notarial
act.
After
the
demand,
the
court
may
not
grant
him
a
new
term.
It
is
not
disputed
that
the
petitioners
did
not
make
a
judicial
or
notarial
demand
for
rescission.
As
to
the
issue
WON
the
six-month
period
during
which
the
respondent
would
be
in
possession
of
the
property
as
lessee
was
a
period
within
which
to
exercise
an
option,
The
Court
held
that
the
six-month
period,
during
which
the
respondent
would
be
in
possession
of
the
property
as
lessee,
was
clearly
not
a
period
within
which
to
exercise
an
option.
An
option
is
a
contract
granting
a
privilege
to
buy
or
sell
within
an
agreed
time
and
at
a
determined
price.
An
option
contract
is
a
separate
and
distinct
contract
from
that
which
the
parties
may
enter
into
upon
the
consummation
of
the
option.
An
option
must
be
supported
by
consideration.
An
option
contract
is
governed
by
the
second
paragraph
of
Article
1479
of
the
Civil
Code,
which
reads:
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.
In
the
present
case,
the
six-month
period
merely
delayed
the
demandability
of
the
contract
of
sale
and
did
not
determine
its
perfection
for
after
the
expiration
of
the
six-month
period,
there
was
an
absolute
obligation
on
the
part
of
the
petitioners
and
the
respondent
to
comply
with
the
terms
of
the
sale.
Vda.
De
Ape
vs
CA
Facts:
Cleopas
Ape
died
in
1950
and
left
a
parcel
of
land
(Lot
2319)
to
his
11
children.
The
children
never
formally
divided
the
property
amongst
themselves
except
through
hantal-hantal
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.
On
11
Apr
1973,
one
of
the
children,
Fortunato,
entered
into
a
contract
of
sale
with
Lumayno.
In
exchange
of
his
lot,
Lumayno
agreed
to
pay
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.
In
1973,
Lumayno
compelled
Fortunato
to
make
the
the
delivery
to
her
of
the
registrable
deed
of
sale
over
Fortunatos
portion
of
the
Lot
No.
2319.
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.
Fortunato
died
during
the
pendency
of
the
case.
Issue:
WON
there
was
a
valid
contract
of
sale
Held:
No.
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.
A
contract
of
sale
is
a
consensual
contract,
thus,
it
is
perfected
by
mere
consent
of
the
parties.
It
is
born
from
the
moment
there
is
a
meeting
of
minds
upon
the
thing
which
is
the
object
of
the
sale
and
upon
the
price.
Upon
its
perfection,
the
parties
may
reciprocally
demand
performance,
that
is,
the
vendee
may
compel
the
transfer
of
the
ownership
and
to
deliver
the
object
of
the
sale
while
the
vendor
may
demand
the
vendee
to
pay
the
thing
sold.
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.
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.
Villanueva
vs
PNB
Facts:
The
Special
Assets
Management
Department
(SAMD)
of
the
Philippine
National
Bank
(PNB)
issued
an
advertisement
for
the
sale
of
certain
PNB
properties
in
Calumpang,
General
Santos
City,
including
Lots
17
and
19
with
advertised
floor
prices
of
P1,409,000.00
and
P2,268,000.00
respectively.
Villanueva
offered
to
purchase
the
lots
for
P3,677,000.00.
He
also
manifested
that
he
was
depositing
P400,000.00
to
show
his
good
faith
but
with
the
understanding
that
said
amount
may
be
treated
as
part
of
the
payment
of
the
purchase
price
only
when
his
offer
is
accepted
by
PNB.
PNB
forwarded
the
letter
of
Villanueva
to
Ramon
Guevara,
Vice
President,
SAMD.
Guevara
informed
Villanueva
that
only
Lot
No.
19
is
available
and
that
the
asking
price
therefor
is
P2,883,300.00.
Guevara
also
said
that
if
the
price
was
acceptable
to
Villanueva,
the
latter
should
submit
an
offer
to
purchase
and
that
the
sale
was
still
subject
to
the
approval
of
the
Board
of
Directors.
Instead
of
submitting
a
revised
offer,
Villanueva
merely
inserted
at
the
bottom
of
Guevaras
letter
a
note
that
proposed
a
two-year
amortization
offer.
Villanueva
paid
P200,000.00
to
PNB
which
the
latter
issued
a
receipt
to
acknowledge
receipt
of
the
"partial
payment
deposit
on
offer
to
purchase."
Thereafter,
however,
Guevara
wrote
Villanueva
that
SAMD
is
deferring
negotiations
with
him
over
said
property
and
returning
his
deposit
of
P580,000.00.
Undaunted,
Villanueva
attempted
to
deliver
postdated
checks
covering
the
balance
of
the
purchase
price
but
PNB
refused
the
same.
Thus
Villanueva
filed
a
Complaint
for
specific
performance
which
the
RTC
granted
anchoring
its
judgment
on
the
finding
that
there
existed
a
perfected
contract
of
sale
between
PNB
and
Villanueva.
PNB
appealed
to
the
CA
which
reversed
and
set
aside
the
decision,
stating
that
in
the
case
at
bench,
consent,
in
respect
to
the
price
and
manner
of
its
payment,
is
lacking.
Issue:
WON
there
was
a
perfected
contract
of
sale
between
Villanueva
and
PNB
Held:
No
Contracts
of
sale
are
perfected
by
mutual
consent
whereby
the
seller
obligates
himself,
for
a
price
certain,
to
deliver
and
transfer
ownership
of
a
specified
thing
or
right
to
the
buyer
over
which
the
latter
agrees.
Mutual
consent
being
a
state
of
mind,
its
existence
may
only
be
inferred
from
the
confluence
of
two
acts
of
the
parties:
an
offer
certain
as
to
the
object
of
the
contract
and
its
consideration,
and
an
acceptance
of
the
offer
which
is
absolute
in
that
it
refers
to
the
exact
object
and
consideration
embodied
in
said
offer.
While
it
is
impossible
to
expect
the
acceptance
to
echo
every
nuance
of
the
offer,
it
is
imperative
that
it
assents
to
those
points
in
the
offer
which,
under
the
operative
facts
of
each
contract,
are
not
only
material
but
motivating
as
well.
Anything
short
of
that
level
of
mutuality
produces
not
a
contract
but
a
mere
counter-offer
awaiting
acceptance.
More
particularly
on
the
matter
of
the
consideration
of
the
contract,
the
offer
and
its
acceptance
must
be
unanimous
both
on
the
rate
of
the
payment
and
on
its
term.
An
acceptance
of
an
offer
which
agrees
to
the
rate
but
varies
the
term
is
ineffective.
Tracing
the
transactions
and
letters
between
Villanueva
and
PNB,
it
can
be
said
that
there
was
no
perfected
contract
of
sale
between
the
parties.
The
first
letter
of
PNB
stating
that
only
Lot
19
was
available
was
certainly
not
an
acceptance
but
a
mere
counter-offer.
Further,
such
counter-offer
imposed
two
more
conditions
that
Villanueva
submit
a
revised
offer
to
purchase
based
on
the
new
price
and
that
such
sale
of
property
be
approved
by
the
Board
of
Directors.
However,
Villanuevas
reply
to
said
counter-offer
was
not
an
acceptance
but
a
further
counter-offer
since
he
qualified
his
acceptance
proposing
a
two-year
payment.
Moreover,
Villanuevas
contention
that
the
repudiation
was
belated
since
PNB
already
agreed
to
his
counter-offer
when
it
accepted
his
downpayment,
the
Court
ruled
that
acceptance
of
Villanuevas
payments
did
not
amount
to
an
implied
acceptance
of
his
last
counter-offer.
PNB-GenSan
Branch
had
no
authority
to
bind
PNB
to
a
contract
of
Sale
with
Villanueva.
Neither
did
SAMD
have
authority
to
bind
PNB.
Both
clearly
stated
that
whatever
is
offered
will
be
subject
to
approval
of
PNBs
higher
authorities.
In
sum,
the
amounts
paid
by
petitioner
were
not
in
the
nature
of
downpayment
or
earnest
money
but
were
mere
deposits
or
proof
of
his
interest
in
the
purchase
of
Lot
No.
19.
Acceptance
of
said
amounts
by
respondent
does
not
presuppose
perfection
of
any
contract.
Cortes
vs
CA
Facts:
For
the
purchase
price
of
3.7M,
Villa
Esperanza
Development
Corporation
and
Antonio
Cortes
entered
into
a
contract
of
sale
over
the
lots
located
at
Baclaran,
Paraaque,
Metro
Manila.
The
Corporation
advanced
to
Cortes
the
total
sum
of
P1,213,000.00.
Later,
in
September
1983,
the
parties
executed
a
deed
of
absolute
sale
on
the
terms
that
the
Corporation
shall
advance
2.2
million
as
downpayment
and
that
Cortes
shall
deliver
the
TCT
for
the
three
subject
lots.
The
Corporation
filed
the
instant
case
for
specific
performance
seeking
to
compel
Cortes
to
deliver
the
TCTs
and
the
original
copy
of
the
Deed
of
Absolute
Sale.
According
to
the
Corporation,
despite
its
readiness
and
ability
to
pay
the
purchase
price,
Cortes
refused
delivery
of
the
sought
documents.
Cortes
claimed
that
the
owners
duplicate
copy
of
the
three
TCTs
were
surrendered
to
the
Corporation
and
it
is
the
latter
which
refused
to
pay
in
full
the
agreed
down
payment.
RTC
rendered
a
decision
rescinding
the
sale
and
directed
Cortes
to
return
to
the
Corporation
the
amount
of
P1,213,000.00,
plus
interest.
CA
reversed
the
decision
and
directed
Cortes
to
execute
a
Deed
of
Absolute
Sale
conveying
the
properties
and
to
deliver
the
same
to
the
Corporation
together
with
the
TCTs,
simultaneous
with
the
Corporations
payment
of
the
balance
of
the
purchase
price
of
P2,487,000.00.
Issue:
WON
there
was
delay
in
the
performance
of
the
parties
obligation
that
would
warrant
a
rescission
Held:
There
is
no
doubt
that
the
contract
of
sale
in
question
gave
rise
to
a
reciprocal
obligation
of
the
parties.
Reciprocal
obligations
are
those
which
arise
from
the
same
cause,
and
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,
so
that
the
performance
of
one
is
conditioned
upon
the
simultaneous
fulfillment
of
the
other.
In
the
present
case,
the
Deed
of
Sale
contained
a
stipulation
that
the
Corporation
shall
pay
in
full
the
downpayment
upon
execution
of
the
contract.
However,
based
on
Cortes
admission,
he
agreed
that
the
Corporations
full
payment
of
the
downpayment
would
depend
upon
the
delivery
of
the
TCTs
of
the
three
subject
lots.
As
such,
the
corresponding
reciprocal
obligation
of
the
Corporations
payment
was
the
transfer
of
titles
by
Cortes.
His
obligation
is
not
only
to
affix
the
signature
in
the
Deed,
but
to
set
into
motion
the
process
that
would
facilitate
transfer
of
title
of
the
lots.
As
correctly
found
by
the
CA,
Cortes
never
surrendered
said
documents
to
the
Corporation.
Cortes
avers
that
he
delivered
the
TCTs
through
the
brokers
son.
He
further
avers
that
the
brokers
son
delivered
it
to
the
broker,
who
in
turn
delivered
them
to
the
Corporation.
However,
Marcosa
Sanchezs
unrebutted
testimony
is
that,
she
did
not
receive
the
TCTs.
She
also
denied
knowledge
of
delivery
thereof
to
her
son,
Manny.
What
further
strengthened
the
findings
of
the
Court
of
Appeals
that
Cortes
did
not
surrender
the
subject
documents
was
the
offer
of
Cortes
counsel
at
the
pre-trial
to
deliver
the
TCTs
and
the
Deed
of
Absolute
Sale
if
the
Corporation
will
pay
the
balance
of
the
down
payment.
Indeed,
if
the
said
documents
were
already
in
the
hands
of
the
Corporation,
there
was
no
need
for
Cortes
counsel
to
make
such
offer.
Considering
that
their
obligation
was
reciprocal,
performance
thereof
must
be
simultaneous.
The
mutual
inaction
of
Cortes
and
the
Corporation
therefore
gave
rise
to
a
compensation
morae
or
default
on
the
part
of
both
parties
because
neither
has
completed
their
part
in
their
reciprocal
obligation.
Cortes
is
yet
to
deliver
the
original
copy
of
the
notarized
Deed
and
the
TCTs,
while
the
Corporation
is
yet
to
pay
in
full
the
agreed
down
payment
of
P2,200,000.00.
This
mutual
delay
of
the
parties
cancels
out
the
effects
of
default,
such
that
it
is
as
if
no
one
is
guilty
of
delay.
Additionally,
under
Article
1169
of
the
Civil
Code,
from
the
moment
one
of
the
parties
fulfills
his
obligation,
delay
by
the
other
begins.
Since
Cortes
did
not
perform
his
part,
the
provision
of
the
contract
requiring
the
Corporation
to
pay
in
full
the
down
payment
never
acquired
obligatory
force.