SALES CASES LEABRES VS. CA Doctrine: A receipt is not a valid basis for a contract of sale.

Essential requisites of a contract of sale. Facts: Clara Tambunting de Legarda died testate on April 22, 1950. Among the properties left by the deceased is the Legarda Tambunting Subdivision located on Rizal Avenue Extension, City of Manila. Shortly after the death of said deceased, plaintiff Catalino Leabres bought, on a partial payment of Pl,000.00 a portion (No. VIII, Lot No. 1) of the Subdivision from surviving husband Vicente J. Legarda who acted as special administrator, the deed or receipt of said sale appearing to be dated May 2, 1950. On August 28, 1950, the Probate Court of Manila appointed Vicente Legarda as an administrator together with Pacifica Price and Augusto Tambunting over the testate estate of said Clara Tambunting and authorized through its order of November 21, 1951 the sale of the property. Vicente L. Legarda was relieved as a regular Administrator and the Philippine Trust Co. which took over as such administrator advertised the sale of the subdivision which includes the lot subject matter herein in various issues of the Manila Times and Daily Mirror. No adverse claim or interest over the subdivision or any portion thereof was ever presented by any person, and in the sale that followed, the Manotok Realty, Inc. emerged the successful bidder. By order of the Probate Court, the Philippine Trust Co. executed the Deed of Absolute Sale of the subdivision in favor of the Manotok Realty, Inc. which deed was judicially approved on March 20, 1959, and recorded immediately in the proper Register of Deeds which issued the corresponding Certificates of Title to the Manotok Realty, Inc., the defendant appellee herein. A complaint dated February 8, 1966, was filed by herein plaintiff, which seeks, among other things, for the quieting of title over the lot subject matter herein, for continuing possession thereof, and for damages.Leabres anchors his claim on the receipt dated May 2, 1950, which he claims as evidence of the sale of said lot in his favor. However, Catalino Leabres has not registered his supposed interest over the lot in the records of the Register of Deeds, nor did he present his claim for probate in the testate proceedings over the estate of the owner of said subdivision, in spite of the notices advertised in the papers. Both the RTC and CA dismissed the petitioners claim. Issue: Whether or not a receipt is a valid basis for a contract of sale. Held: An examination of the receipt reveals that the same can neither be regarded as a contract of sale or a promise to sell. There was merely an acknowledgment of the sum of One Thousand Pesos (P1,000.00). There was no agreement as to the total purchase price of the land nor to the monthly installment to be paid by the petitioner. The requisites of a valid Contract of Sale namely 1) consent or meeting of the minds of the parties; 2) determinate subject matter; 3) price certain in money or its equivalent-are lacking in said receipt and therefore the sale is not valid nor enforceable. Furthermore, it is a fact that Dona Clara Tambunting died on April 22, 1950. Her estate was thereafter under custodia legis of the Probate Court which appointed Don Vicente Legarda as Special Administrator on August 28, 1950. Don Vicente Legarda entered into said sale in his own personal-capacity and without court approval, consequently, said sale cannot bind the estate of Clara Tambunting. Petitioner should have submitted the receipt of alleged sale to the Probate Court for its approval of the transactions. Anent his possession of the land, petitioner cannot be deemed a possessor in good faith in view of the registration of the ownership of the land. To consider petitioner in good faith would be to put a premium on his own gross negligence. The Court resolved to DENY the petition for lack of merit and to AFFIRM the assailed judgment.

CIR vs. Arnoldus Carpentry Doctrine: Contract of Sale vs Contract for a Piece of Work Facts: Arnoldus Carpentry Shop, Inc. is a domestic corporation which has been in existence since 1960 which has for its purpose the preparing, processing, buying, selling, exporting, importing, manufacturing, trading and dealing in cabinet shop products, wood and metal home and office furniture, cabinets, doors, windows, etc., including their component parts and materials, of any and all nature and description. The company kept samples or models of its woodwork on display from where its customers may refer to when placing their orders. On March 1979, the examiners from BIR who conducted an investigation on the companys tax liabilities reported that subject corporation should be considered a contractor and not a manufacturer since the corporation renders service in the course of an independent occupation representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished. Hence, in the computation of the percentage tax, the 3% contractors tax should be imposed instead of the 7% manufacturers tax. However, responded company holds that the carpentry shop is a manufacturer and therefore entitled to tax exemption on its gross export sales under Section 202 (e) of the National Internal Revenue Code. CIR rendered its decision classifying the respondent as contractor which was in turn reversed by the CTA. Hence, this appeal. Issue: Whether or not the Court of Tax Appeals erred in holding that private respondent is a manufacturer and not a contractor. Held: The Supreme Court holds that the private respondent is a manufacturer as defined in the Tax Code and not a contractor under Section 205(e) of the Tax Code. Petitioner CIR wants to impress upon this Court that under Article 1467, the true test of whether or not the contract is a piece of work (and thus classifying private respondent as a contractor) or a contract of sale (which would classify private respondent as a manufacturer) is the mere existence of the product at the time of the perfection of the contract such that if the thing already exists, the contract is of sale, if not, it is work. This is not the test followed in this jurisdiction. Based on Art. 1467, what determines whether the contract is one of work or of sale is whether the thing has been manufactured specially for the customer and upon his special order. Thus, if the thing is specially done at the order of another, this is a contract for a piece of work. If, on the other hand, the thing is manufactured or procured for the general market in the ordinary course of ones business, it is a contract of sale. The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. The one who has ready for the sale to the general public finished furniture is a manufacturer, and the mere fact that he did not have on hand a particular piece or pieces of furniture ordered does not make him a contractor only. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. The facts show that the company had a ready stock of its shop products for sale to its foreign and local buyers. As a matter of fact, the purchase orders from its foreign buyers showed that they ordered by referring to the models designated by petitioner. Even purchases by local buyers for television cabinets were by orders for existing models except only for some adjustments in sizes and accessories utilized. The Court finds itself in agreement with CTA and as the CTA did not err in holding that private

respondent is a manufacturer, then private respondent is entitled to the tax exemption under See. 202 (d) and (e) now Sec. 167 (d) and (e)] of the Tax Code. Quiroga vs. Parsons Doctrine: Contract of Agency to Sell vs Contract of Sale Facts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an agent of the former. The contract stipulates that Don Andres Quiroga, here in petitioner, grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds. Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. With the exception of the obligation on the part of the defendant to order the beds by the dozen and in no other manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself to a determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds. Issue: Whether the contract is a contract of agency or of sale. Held: In order to classify a contract, due attention must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. Payment was to be made at the end of sixty days, or before, at the plaintiffs request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds. In respect to the defendants obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for having acted thus at his own free will. For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law. Gonzalo Puyat & Sons vs. Arco Amusement FACTS: Arco Amusement was engaged in the business of operating cinematopgraphs. Gonzalo Puyat & Sons Inc(GPS) was the exclusive agent in the Philippines for the Starr Piano Company. Desiring to equip its cinematograph with sound reproducing devices, Arco approached GPS, through its president, GIl

Puyat, and an employee named Santos. After some negotiations, it was agreed between the parties that GPS would order sound reproducing equipment from Starr Piano Company and that Arco would pay GPS, in addition to the price of the equipment, a 10% commission, plus all expenses such as freight, insurance, etc. When GPS inquired Starr Piano the price(without discount) of the equipment, the latter quoted such at $1,700 FOB Indiana. Being agreeable to the price (plus 10%commission plus all other expenses), Arco formally authorized the order. The following year, both parties agreed for another order of sound reproducing equipment on the same terms as the first at $1,600 plus 10% plus all other expenses. Three years later, Arco discovered that the prices quoted to them by GPS with regard to their first 2ordersmentioned were not the net prices, but rather the list price, and that it had obtained a discount from Starr Piano. Moreover, Arco alleged that the equipment were overpriced. Thus, being its agent, GPS had to reimburse the excess amount it received from Arco. ISSUE: W/N there was a contract of agency, not of sale HELD: NO.T he letters containing Arco's acceptance of the prices for the equipment are clear intheir terms and admit no other interpretation that the prices are fixed and determinate. While the letters state that GPS was to receive a 10% commission, this does not necessarily mean that it is an agent of Arco, as this provision is only an additional price which it bound itself to pay, and which stipulation is not incompatible with the contract of sale. It is GPS that is the exclusive agent of Starr Piano in the Philippines, not the agent of Arco. it is out of the ordinary for one to be the agent of both the seller and the buyer. The facts and circumstances show that Arco entered into a contract of sale with GPS, the exclusive agent of Starr Piano. As such, it is not duty bound to reveal the private arrangement it had with Starr Piano relative to the 25% discount.Thus, GPS is not bound to reimburse Arco for any difference between the cost price and the sales price, which represents the profit realized by GPS out of the transaction Dignos vs. CA FACTS: The spouses Silvestre and Isabel Dignos were owners of a parcel of land in Opon, Lapu-Lapu City. On June 7, 1965, appellants, herein petitioners Dignos spouses sold the said parcel of land to respondent Atilano J. Jabil for the sum of P28,000.00, payable in two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and acknowledged by the vendors in the deed of sale executed in favor of plaintiff-appellant, and the next installment in the sum of P4,000.00 to be paid on or before September 15, 1965. On November 25, 1965 the Dignos spouses sold the same land in favor of defendants spouses, Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses, and which was registered in the Office of the Register of Deeds pursuant to the provisions of Act No. 3344. As the Dignos spouses refused to accept from plaintiff-appellant the balance of the purchase price of the land, and as plaintiff- appellant discovered the second sale made by defendants-appellants to the Cabigas spouses, plaintiff-appellant brought the present suit. ISSUE: 1 . Whether or not there was an absolute contract of sale. 2. Whether or not the contract of sale was already rescinded when the Dignos spouses sold the land to Cabigas HELD: I. Yes. That a deed of sale is absolute in nature although denominated as a Deed of Conditional Sale where nowhere in the contract in question is a proviso or stipulation to the effect that title to the property sold

is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. A careful examination of the contract shows that there is no such stipulation reserving the title of the property on the vendors nor does it give them the right to unilaterally rescind the contract upon nonpayment of the balance thereof within a fixed period. On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present. While it may be conceded that there was no constructive delivery of the land sold in the case at bar, as subject Deed of Sale is a private instrument, it is beyond question that there was actual delivery thereof. As found by the trial court, the Dignos spouses delivered the possession of the land in question to Jabil as early as March 27,1965 so that the latter constructed thereon Sallys Beach Resort also known as Jabils Beach Resort in March, 1965; Mactan White Beach Resort on January 15, J 966 and Bevirlyns Beach Resort on September 1, 1965. Such facts were admitted by petitioner spouses. 2. No. The contract of sale being absolute in nature is governed by Article 1592 of the Civil Code. It is undisputed that petitioners never notified private respondents Jabil by notarial act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale. There is no showing that Amistad was properly authorized by Jabil to make such extra-judicial rescission for the latter who, on the contrary, vigorously denied having sent Amistad to tell petitioners that he was already waiving his rights to the land in question. Under Article 1358 of the Civil Code, it is required that acts and contracts which have for their object extinguishment of real rights over immovable property must appear in a public document. Petitioners laid considerable emphasis on the fact that private respondent Jabil had no money on the stipulated date of payment on September 15,1965 and was able to raise the necessary amount only by mid-October 1965. It has been ruled, however, that where time is not of the essence of the agreement, a slight delay on the part of one party in the performance of his obligation is not a sufficient ground for the rescission of the agreement. Considering that private respondent has only a balance of P4,OOO.00 and was delayed in payment only for one month, equity and justice mandate as in the aforecited case that Jabil be given an additional period within which to complete payment of the purchase price.

Mapalo vs. Mapalo FACTS: Miguel and Candida Mapalo were illiterate farmers and owned a parcel of land. Since Maximo Mapalo was to be married, they donated to him the eastern half of the land. Maximo, however, deceived them by making them sign an instrument donating the entire lot. There was a consideration for P5,000 stated in the deed, but the spouses never received anything. Miguel built a fence to divide the lot and continued to occupy the western part. Maximo then registered the entire lot and 13 year after, sold the same to the Narcisos who took possession only of the eastern half. Later on, the Narcisos sought to be declared owners ofthe entire land; the spouses claimed that the sale to the Narcisos was void for lack of consideration. The CA declared that the sale was merely voidable and the action by the spouses was barred by prescription, beingfiled after 4 years from the discovery of the fraud. ISSUE: W/N there was a valid contract of sale HELD: Consideration was totally absent; the P5,000price stipulated was never received/delivered to the spouses. Thus, the sale to the Narcisos was VOID ab initio for want of consideration. The inexistence of the contract is permanent and cannot be the subject of prescription. The Narcisos are also in bad faith they had knowledge of the true nature and extent of Maximos right over the land. Villanueva vs. CA Doctrine: meeting of the minds as to price is essential Facts: This is a petition assailing the decision of the CA dismissing the appeal of the petitioners. CA rendered that there was no contract of sale. - In 1985, Gamaliel Villanueva (tenant) of a unit in the 3-door apartment building owned by defendantsspouses (now private respondents) Jose Dela Cruz and Leonila dela Cruz located at Project 8, Quezon City. About February of 1986, Dela Cruz offered said parcel of land with the 3-door apartment building for sale and plaintiffs, son and mother, showed interest in the property. Because said property was in arrears(overdue) in the payment of the realty taxes, dela Cruz approached Irene Villanueva and asked for a certain amount to pay for the taxes so that the property would be cleared of any incumbrance. Irene Villanueva gave P10,000.00 on two occasions. It was agreed by them that said P10,000.00 would form part of the sale price of P550,000.00. Dela Cruz went to plaintiff Irene Villanueva bringing with him Mr. Ben Sabio, a tenant of one of the units in the 3-door apartment building and requested Villanueva to allow said Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which the plaintiffs consented, so that they would just purchase the other half portion and would be paying only P265,000.00, they having already given an amount of P10,000.00 used for paying the realty taxes in arrears. Accordingly the property was subdivided and two (2) separate titles were secured by defendants Dela Cruz. Mr. Ben Sabio immediately made payments by installments. March 1987 Dela Cruz executed in favor of their co-defendants, the spouses Guido Pili and Felicitas Pili, a Deed of Assignment of the other one-half portion of the parcel of land wherein plaintiff Gamaliel Villanuevas apartment unit is situated, purportedly as full payment and satisfaction of an indebtedness obtained from defendants Pili. The Transfer Certificate of Title No. 356040 was issued in the name of defendants Pili on the same day. The plaintiffs came to know of such assignment and transfer and issuance of a new certificate of title in favor of defendants Pili. Plaintiff Gamaliel Villanueva complained to the barangay captain of Bahay Turo, Quezon City, on the ground that there was already an agreement between defendants Dela Cruz and themselves that said portion of the parcel of land owned by defendants Dela Cruz would be sold to him. As there was no settlement arrived at, the plaintiffs elevated their complaint to this Court through the instant action. RTC rendered its decision in favor of Dela Cruz. CA affirmed. ISSUE: WON there was a perfected sale between Villanueva and Dela Cruz.

HELD: - Petitioners contend that private respondents counsel admitted that P10,000 is partial or advance payment of the property. Necessarily then, there must have been an agreement as to price, hence, a perfected sale. They cite Article 1482 of the Civil Code which provides that (w)henever 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. - Private respondents contradict this claim with the argument that (w)hat was clearly agreed (upon) between petitioners and respondents Dela Cruz was that the P10,000.00 primarily intended as payment for realty tax was going to form part of the consideration of the sale if and when the transaction would finally be consummated. Private respondents insist that there was no clear agreement as to the true amount of consideration. - Dela Cruz testimony during the cross-examination firmly negated any price agreement with petitioners because he and his wife quoted the price of P575,000.00 and did not agree to reduce it to P550,000.00 as claimed by petitioner. - Villanueva on cross-examination: After the Deed of Sale relative to the purchase of the property was prepared, Mr. dela Cruz came to me and told me that he talked with one of the tenants and he offered to buy the portion he was occupying if I will agree and I will cause the partition of the property between us. Villanueva said that he agreed and that the price 550,000 was to be divided into two. (Sabio and Villanueva) *The contract which the appellant is referring to was not presented to the court and the appellant did not use all effort to produce the said contract. - SC: The price of the leased land not having been fixed, the essential elements which give life to the contract were lacking. It follows that the lessee cannot compel the lessor to sell the leased land to him. The price must be certain, it must be real, not fictitious. A contract of sale is not void for uncertainty when the price, though not directly stated in terms of pesos and centavos, can be made certain by reference to existing invoices identified in the agreement. In this respect, the contract of sale is perfected. The price must be certain, otherwise there is no true consent between the parties. There can be no sale without a price. - In the instant case, however, what is dramatically clear from the evidence is that there was no meeting of mind as to the price, expressly or impliedly, directly or indirectly. - Sale is a consensual contract. He who alleges it must show its existence by competent proof. Here, the very essential element of price has not been proven. - Lastly, petitioners claim that they are ready to pay private respondents is immaterial and irrelevant as the latter cannot be forced to accept such payment, there being no perfected contract of sale in the first place. Adelfa Properties vs. CA Facts: Private respondents and their brothers, Jose and Dominador Jimenez, were the registered coowners of a parcel of land. Jose and Dominador Jimenez sold their share consisting of one-half of said parcel of land to Adelfa Properties. Subsequently, a "Confirmatory Extrajudicial Partition Agreement" 4 was executed by the Jimenezes, wherein the eastern portion of the subject lot was adjudicated to Jose and Dominador Jimenez, while the western portion was allocated to herein privaterespondents. An "Exclusive Option to Purchase" was executed between Adelfa Properties and private respondents, under certain conditions. Before petitioner could make payment it received summons for annulment of the deed of sale in favor of Household Corporation and recovery of ownership. As a consequence, Adelfa informed PR that it would hold payment of the full purchase priceand suggested that PR settle the case with their nephews and nieces. Respondent Salud Jimenez refused to heed the suggestion of petitioner and attributed the suspension of payment of the purchase price to "lack of word of honor."

The RTC dismissed the civil case, and PR executed a Deed of Conditional Sale in favor of Emylene Chua over the same parcel of land. Thus, Adelfa demanded refund of the 50% dp it has paid, but PR demanded the return of the certificate of title. Adelfa failed to return the certificate, so PR filed for annulment of the contract. RTC: agreement was an option contract, suspension of payment was a counter-offer,which was rejected. Exclusive Option to Purchase contract was cancelled (basically ruled infavor of PR) CA: affirmed ISSUE : I. W/N the "Exclusive Option to Purchase" executed Adelfa Properties, Inc. and private respondents is an option contract. HELD: I. CONTRACT TO SELL, NOT OPTION CONTRACT NOR CONTRACT OF SALE 1.The distinction between the two is important for in contract of sale, the title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective.2.There are two features which convince us that the parties never intended to transfer ownership to petitioner except upon the full payment of the purchase price. Firstly, theexclusive option to purchase, although it provided for automatic rescission of thecontract and partial forfeiture of the amount already paid in case of default, does not mention that petitioner is obliged to return possession or ownership of the property asa consequence of nonpayment.3.Secondly, it has not been shown there was delivery of the property, actual orconstructive, m ade to herein petitioner. The exclusive option to purchase is notcontained in a public instrument the execution of which would have been considered equivalent to delivery Atkins Kroll & Co. vs. Cua Hian Tek Facts: Petitioner sent a letter to respondent dated September 13, 1951 offering the latter certain goods with their respective prices until September 23. Respondent accepted the offer unconditionally and delivered the letter of acceptance on September 21, 1951. However, petitioner failed to deliver the commodities it had offered due to shortage of catch of sardines. Due to this failure, respondent sued petitioner. Petitioner was ordered by the CFI of Manila to pay damages. On appeal, the Court of Appeals upheld the ruling of the trial court with some modifications. Petitioner however argued that upon the acceptance of the offer, it became an accepted unilateral promise to sell a determinate thing for price certain. Hence, for petitioner, there was no contract of sale but merely an option to buy which, though timely accepted, was not enforceable for lack of a separate consideration. Issue: Whether there is a perfected contract of sale in the case at bar? Held: Yes, a contract of sale was perfected in this case. The assumption that only a unilateral promise was created upon the acceptance of the offer is incorrect. A bilateral contract to sell and to buy was created upon acceptance. In addition, the option, though not supported by an independent consideration, obligates the offeror to keep the offer open up to specified time, in this case September 23, 1951. Moreover, while it is true that an option not supported by a separate consideration can be withdrawn by the offeror, this can be done only before acceptance and such withdrawal should be communicated with the offeree as provided for by Art. 1324. The Supreme Court affirmed the decision of the Court of Appeals.

Sanchez vs. Rigos FACTS: Sanchez and Rigos executed an Option to Purchase where Rigos agreed, promised, and committed to sell to Sanchez a parcel of land in Nueva Ecija forP1,510. In spite of the repeated tenders made by Sanchez, Rigos refused to sell the same. Thus, Sanchez consigned the amounts and filed a case for specific performance. Rigos alleged that the contract between them was a unilateral promise to sell, which is not supported by any consideration, hence, it is not binding. ISSUE: W/N there was a valid option contract HELD: NO. The promisee (Sanchez) cannot compel the promissor (Rigos) to comply with the promise unless the former can establish that the promise was for a consideration. The burden of proof to establish the existence of the consideration lies with Sanchez. Therefore, there was no valid option contract in this case. However, an option without consideration is a mere offer, which is not binding until accepted. But from the moment it is accepted before it is withdrawn, a valid contract of sale arises. In this case, even though there was no option contract, there was nevertheless an offer and acceptance enough to constitute a valid contract of sale. Ang Yu Asuncion vs. Ca FACTS: The Unijeng spouses owned certain residential and commercial spaces leased by Ang Yu. They offered to sell the said units to Ang Yu on several occasions and for P6M. Ang Yu made a counter offer for P5M. The Unijeng spouses asked Ang Yu to specify his terms in writing but the latter failed to do so. They failed to arrive at any definite agreement. When Ang Yu discovered that the spouses were planning to sell the property to others, he sued them for specific performance. While the case was pending, the spouses sold the units to Buen Realty for P15M. ISSUE: W/N there was a perfected contract of sale between Unijeng and Ang Yu HELD: NO. There was no perfected contract of sale yet since there was yet any meeting of the minds. Thus, there is no ground for specific performance. During the negotiation stage, any party may withdraw the offer madeespecially if it was not supported by any consideration. An Option Contract of a Right of First Refusal is separate and distinct from the actual contract of salewhich is the basis for specific performance. The remedy available to Any Yu, in case the withdrawal was made capriciously and arbitrarily, would be to sue on the basis of abuse of right. In case there was an option contract, timely acceptance would create an obligation to sell on the part of the vendor; but no such circumstance attends in this case. Abalos vs. Macatangay FACTS: Arturo and Esther Abalos are 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 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. The P5k check was dishonored due to insufficiency. Apparently, Esther and Arturo have 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. Taking 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. Taking 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. Equatorial Realty Dev vs. Mayfair Theater Inc. Carmelo owned a parcel of land in Manila. He leased it to Mayfair for a term of 20 years, for use as a motion picture theater. Two years later, Carmelo leased to Mayfair another portion of his property, also for 20 years. Both contracts have the stipulation: That if the lessor should desire to sell the leased premises, the lessee shall be given 30 days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the lessee, the lessoris bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. Mr. Pascal (of Carmelo) informed Yang (Mayfairs president) that he wanted to sell the entire property, and that a certain Araneta was offering to buy the whole property for $1.2M. Pascal asked Yang if he was willing to buy the property for P6-7M. Mayfair informed Carmelo that they wanted to purchase the entire property and reminded them of the stipulation in the lease, but Carmelo ignored the letter. Carmelo then sold its entire property to Equatorial for P11.3M. Mayfair filed an action for specific performance and annulment of the leased premises to Equatorial. Carmelo and Equatorial claimed: that it had informed Mayfair of its desire but that Mayfair had said it was only interested in buying the area under lease, which was impossible since the property was not a condominium, and that the option to purchase invoked by Mayfair is null and void for lack of consideration. RTC: Dismissed Mayfairs complaint. It reasoned that the option in the contract of lease was not supported by a separate consideration, and without a consideration, the option is not binding on Carmelo to sell the property to Mayfair. Cited Art 1479. Mayfair cannot compel Carmelo to comply with the promise unless Mayfair establishes the existence of a distinct consideration. Also, Art 1354 (Although the cause is not stated in the contract, it is presumed that it exists and is lawful unless the debtor proves the contrary), and consideration cannot be presumed, because when it comes to an option it is governed particularly by Art 1479,whereby the promissee has the burden of proving the existence of consideration. (This was the doctrine in the case of Sanchez.) CA: The stipulation is a right of first refusal and not an option contract, which was the real intention of the parties. The stipulation is certain as to the object (the sale of the leased premises) but the price for which the object is to be sold is not stated, so it isnt an option contract. Also said that the right of first refusal was limited to the leased promises and not the entire property itself. Issue: Is the stipulation a right of first refusal or option contract? Held: Right of first refusal.

The deed of option or the option clause in a contract, in order to be valid and enforceable, must, among other things, indicate the definite price at which the person granting the option is willing to sell. Riviera Filipina Inc vs. CA FACTS: In 1982, Reyes executed a 10-year (renewable)Contract of Lease with Rivera Filipina over a parcel of land in EDSA. Under such contract, the lessee is given aright of first refusal should the lessor decide to sell the property during the terms of the lease .Such property was subject of a mortgage executed by Reyes in favor of Prudential Bank. Since Reyes failed to pay the loan with the bank, it foreclosed the mortgage and it emerged as the highest bidder in the auction sale. Realizing that he could not redeem the property, Reyes decided to sell it and offered it to Riviera Filipina forP5,000/sqm. However, it bargained for P3,500/sqm. Reyes rejected such offer. After 7 months, it again bargained for P4,000/sqm, which again was rejected by Reyes who asked for P6,000/sqm price. After 2 months, it again bargained for P5,000/sqm, but since Reyes insisted on P6,000/sqm price, he rejected Riviera's offer. Nearing the expiry of the redemption period, Reyes and Traballo (his friend) agreed that the latter would buy the same for P5,300. But such deal was not yet formally concluded and negotiations with Riviera Filipina once again transpired but to no avail. In 1989, Cypress and Cornhill Trading were able to come up with the amount sufficient to cover the redemption money, with which Reyes paid to Prudential Bank to redeem the property. Subsequently, a Deed of Absolute Sale was executed in favor of Cypress and Cornhill for P5.4M. Cypress and Cornhill mortgaged the property in favor of Urban Dev. Bank for P3M.Riviera Filipina filed a suit against Reyes, Cypress and Cornhill on the ground that they violated its right of first refusal under the lease contract. RTC ruled in favor of Reyes, Cypress, and Cornhill. On appeal, CA affirmed the decision of the RTC. ISSUE: W/N Riviera Filipina lost its right of first refusal HELD: YES. As clearly shown by the records and transcripts of the case, the actions of the parties to the contract of lease, Reyes and Riviera, shaped their understanding and interpretation of the lease provision "right of first refusal" to mean simply that should the lessor Reyes decide to sell the leased property during the term of the lease, such sale should first be offered to the lessee Riviera. And that is what exactly ensued between Reyes and Riviera, a series of negotiations on the price per square meter of the subject property with neither party, especially Riviera, unwilling to budge from his offer, as evidenced by the exchange of letters between the two contenders. It can clearly be discerned from Rivieras letters that Riviera was so intractable in its position and took obvious advantage of the knowledge of the time element in its negotiations with Reyes as the redemption period of the subject foreclosed property drew near. Riviera strongly exhibited a "take-it or leave-it" attitude in its negotiations with Reyes. It quoted its "fixed and final" price as Five Thousand Pesos(P5,000.00) and not any peso more. It voiced out that it had other properties to consider so Reyes should decide and make known its decision "within fifteen days."Riviera even downgraded its offer when Reyes offered anew the property to it, such that whatever amount Reyes initially receives from Riviera would absolutely be in sufficient to pay off the redemption price of the subject property. Naturally, Reyes had to disagree with Rivieras highly disadvantageous offer. Nary a howl of protest or shout of defiance spewed forth from Rivieras lips, as it were, but a seemingly whimper of acceptance when the counsel of Reyes strongly expressed in a letter dated December 5, 1989 that Riviera had lost its right of first refusal. Riviera cannot now be heard that had it been informed of the offer of Five Thousand Three Hundred Pesos (P5,300.00)of Cypress and Cornhill it would have matched said price. Its stubborn approach in its negotiations with Reyes showed crystal-clear that there was never any need to disclose such information and doing so would be just a futile effort on the part of Reyes. Reyes was under no obligation to disclose the same. Pursuant to Article 1339 of the New Civil Code, silence or concealment, by itself, does not constitute fraud, unless there is a special duty to disclose certain facts, or unless according to good faith and the usages of commerce the communication should be made. The general

rule is applicable in the case at bar since Riviera failed to convincingly show that either of the exceptions are relevant to the case at bar. Rubias vs. Batiller FACTS: Militante claimed ownership over a parcel of land and applied for the registration of the same with the CFI; his counsel was his son-in-law, Atty. Rubias. His claim was dismissed by the trial court, thus he appealed. Pending appeal, he sold the lot to Atty. Rubias for P2,000. Batiller, on the other hand, claimed to have inherited the same lot from his ancestors who have been in open, public, peaceful, and actual possession thereof under a claim of title. Atty. Rubias filed an ejectment suit against Batiller who assailed the validity of the sale to Rubias. Given the dismissal of Militantes application, he had thus no right over the said land that he may have validly transferred to Atty.Rubias. ISSUE: W/N the sale to Atty. Rubias is valid HELD: NO. Even assuming he had title thereto, the saleof the lot to Atty. Rubias would be null and void for being expressly prohibited by the Civil Code. Lawyers cannot acquire by purchase the property or rights under litigation over which they take part by virtue of their profession. The same rule applies to judges, clerks of court, and other judicial officers with respect to the same. The purchase in violation of the above provision is not merely voidable as Atty. Rubias contends; it is VOID and INEXISTENT from the very beginning. The right toset up the defense of its illegality cannot be waivedand, unlike cases involving agents, guardians, or administrators with respect to the properties under their charge, it is not susceptible to compromise or ratification. It is likewise contrary to public policy