1.

Addison

The Code imposes upon the vendor the obligation to deliver the thing sold.
The thing is considered to be delivered when it is placed "in the hands and
possession of the vendee." (Civ. Code, art. 1462.) It is true that the same
article declares that the execution of a public instruments is equivalent to the
delivery of the thing which is the object of the contract, but, in order that this
symbolic delivery may produce the effect of tradition, it is necessary that the
vendor shall have had such control over the thing sold that, at the moment of
the sale, its material delivery could have been made. It is not enough to
confer upon the purchaser the ownership and the right of possession. The
thing sold must be placed in his control. When there is no impediment
whatever to prevent the thing sold passing into the tenancy of the purchaser
by the sole will of the vendor, symbolic delivery through the execution of a
public instrument is sufficient. But if, notwithstanding the execution of the
instrument, the purchaser cannot have the enjoyment and material tenancy
of the thing and make use of it himself or through another in his name,
because such tenancy and enjoyment are opposed by the interposition of
another will, then fiction yields to reality the delivery has not been
effected.
2.

Sampaguita

When the glass and wooden jalousies in question were delivered and
installed in the leased premises, Capitol became the owner thereof.
Ownership is not transferred by perfection of the contract but by delivery,
either actual or constructive. This is true even if the purchase has been
made on credit, as in the case at bar. Payment of the purchase price is not
essential to the transfer of ownership as long as the property sold has been
delivered. Ownership is acquired from the moment the thing sold was
delivered to vendee, as when it is placed in his control and possession. (
3.

Sanchez

(2) In order that said unilateral promise may be "binding upon the promisor,
Article 1479 requires the concurrence of a condition, namely, that the
promise be "supported by a consideration distinct from the price."
Accordingly, the promisee can not compel the promisor to comply with the
promise, unless the former establishes the existence of said distinct
consideration. In other words, the promisee has the burden of proving such

consideration. Plaintiff herein has not even alleged the existence thereof in
his complaint.
Furthermore, an option is unilateral: a promise to sell at the price fixed
whenever the offeree should decide to exercise his option within the
specified time. After accepting the promise and before he exercises his
option, the holder of the option is not bound to buy. He is free either to buy
or not to buy later. In this case, however, upon accepting herein petitioner's
offer a bilateral promise to sell and to buy ensued, and the respondent ipso
facto assumed the obligation of a purchaser. He did not just get the right
subsequently to buy or not to buy. It was not a mere option then; it was a
bilateral contract of sale.
Furthermore, an option is unilateral: a promise to sell at the price fixed
whenever the offeree should decide to exercise his option within the
specified time. After accepting the promise and before he exercises his
option, the holder of the option is not bound to buy. He is free either to buy
or not to buy later. In this case, however, upon accepting herein petitioner's
offer a bilateral promise to sell and to buy ensued, and the respondent ipso
facto assumed the obligation of a purchaser. He did not just get the right
subsequently to buy or not to buy. It was not a mere option then; it was a
bilateral contract of sale.
4.

Sps. Natino

All that was shown by way of compliance was the deposit made with the
Clerk of Court of the sum of P4,000.00. This deposit is a belated and last
ditch attempt to exercise a right that had long expired. It was made only on
December 12, 1979, or after the redemption period of two (2) years from
January 29, 1977 when the sheriffs certificate of sale was registered and
after sheriff's final sale which was registered on November 14, 1979. And, it
is clear that the late deposit was utilized to defeat the bank's vested right
which it sought to enforce by its petition for a writ of possession. The lower
court correctly ruled against any validity to it.
The right to redeem becomes functus officio on the date of its expiry, and its
exercise after the period is not really one of redemption but a repurchase.
Distinction must be made because redemption is by force of law; the
purchaser at public auction is bound to accept redemption. Repurchase
however of foreclosed property, after redemption period, imposes no such

obligation. After expiry, the purchaser may or may not re-sell the property
but no law will compel him to do so, And, he is not bound by the bid price; it
is entirely within his discretion to set a higher price, for after all, the property
already belongs to him as owner.
5.

Yao ka sin

We have the pleasure to submit hereby our firm offer to you under the
following quotations, terms, and conditions, to wit:
1). Commodity Prime White Cement
2). Price At your option: a) P24.30 per 94 lbs. bag net, FOB Cebu
City; and b) P23.30 per 94 lbs. bag net, FOB Asturias Cebu.
3). Quality As fully specified in certificate No. 224-73 by Bureau of
Public Works, Republic of the Philippines.
4). Quantity Forty-five Thousand (45,000) bags at 94 lbs. net per bag
withdrawable in guaranteed monthly quantity of Fifteen Thousand
(15,000) bags minimum effective from June, 1973 to August 1973.
5). Delivery Schedule Shipment be made within four (4) days upon
receipt of your shipping instruction.

granted the option to renew this contract under the same price, terms
and conditions.
Please countersign on the space provided for below as your
acknowledgement and confirmation of the above transaction. Thank
You.
On 12 September 1973, Henry Yao sent a letter (Exhibit "G") to PWCC
calling the latter's attention to the statement of delivery dated 24 August
1973, particularly the price change from P23.30 to P24.30 per 94 lbs. bag
net FOB Asturias, Cebu. 11
On 2 November 1973, YKS sent a telegram (Exhibit "C") 12 to PWCC
insisting on the full compliance with the terms of Exhibit "A" and informing
the latter that it is exercising the option therein stipulated.
On 3 November 1973, YKS sent to PWCC a letter (Exhibit "D") as a followup to the 2 November 1973 telegram, but this was returned to sender as
unclaimed. 13
As of 7 December 1973, PWCC had delivered only 9,775 bags of white
cement.
On 9 February 1974, YKS wrote PWCC a letter (Exhibit "H") requesting, for
the last time, compliance by the latter with its obligation under
Exhibit "A". 14

6). Bag/Container a) All be made of Standard Kraft (water resistant

paper, 4 ply, with bursting strength of 220 pounds, and b) Breakage
allowance additional four percent (4%) over the quantity of each
shipment.

On 27 February 1974, PWCC sent an answer (Exhibit "7") to the

aforementioned letter of 9 February 1974; PWCC reiterated the
unenforceability of Exhibit "A". 15

7). Terms of Payment Down payment of PESOS: TWO HUNDRED

FORTY THREE THOUSAND (P243,000.00) payable on the signing of
this contract and the balance to be paid upon presentation of
corresponding shipping documents.

On 4 March 1974, YKS filed with the then Court of First Instance of Leyte a
complaint for Specific Performance with Damages against PWCC. The
complaint 16 was based on Exhibit "A" and was docketed as Civil Case No.
5064.

It is understood that in the event of a delay in our shipment, you hold the
option to discount any price differential resulting from a lower market
price vis-a-vis the contract price. In addition, grant (sic) you the option to
extend this contract until the complete delivery of Forty Five Thousand
(45,000) bags of 94 lbs. each is made by us. You are also hereby

While there can be no question that Mr. Maglana was an officer the
President and Chairman of private respondent corporation at the time he
signed Exhibit "A", the above provisions of said private respondent's ByLaws do not in any way confer upon the President the authority to enter into
contracts for the corporation independently, of the Board of Directors. That

power is exclusively lodged in the latter. Nevertheless, to expedite or

facilitate the execution of the contract, only the President and not all the
members of the Board, or so much thereof as are required for the act
shall sign it for the corporation. This is the import of the words through the
president in Exhibit "8-A" and the clear intent of the power of the chairman
"to execute and sign for and in behalf of the corporation all contracts and
agreements which the corporation may enter into" in Exhibit "I-1". Both
powers presuppose a prior act of the corporation exercised through the
Board of Directors. No greater power can be implied from such express, but
limited, delegated authority. Neither can it be logically claimed that any
power greater than that expressly conferred is inherent in Mr. Maglana's
position as president and chairman of the corporation.
Although there is authority "that if the president is given general control and
supervision over the affairs of the corporation, it will be presumed that he
has authority to make contract and do acts within the course of its ordinary
53
business," We find such inapplicable in this case. We note that the private
corporation has a general manager who, under its By-Laws has, inter alia,
the following powers: "(a) to have the active and direct management of the
business and operation of the corporation, conducting the same accordingly
to the order, directives or resolutions of the Board of Directors or of the
president." It goes without saying then that Mr. Maglana did not have a direct
and active and in the management of the business and operations of the
corporation. Besides, no evidence was adduced to show that Mr. Maglana
had, in the past, entered into contracts similar to that of Exhibit "A" either
with the petitioner or with other parties.
It was incumbent upon the petitioner to prove that indeed the private
respondent had clothed Mr. Maglana with the apparent power to execute
Exhibit "A" or any similar contract. This could have been easily done by
evidence of similar acts executed either in its favor or in favor of other
parties. Petitioner miserably failed to do that. Upon the other hand, private
respondent's evidence overwhelmingly shows that no contract can be signed
by the president without first being approved by the Board of Directors; such
approval may only be given after the contract passes through, at least, the
comptroller, who is the NIDC representative, and the legal counsel.
6.

Ang Yu Asuncion

Negotiation covers the period from the time the prospective contracting
parties indicate interest in the contract to the time the contract is concluded
(perfected). The perfection of the contract takes place upon the concurrence
of the essential elements thereof. A contract which is consensual as to
perfection is so established upon a mere meeting of minds, i.e., the
concurrence of offer and acceptance, on the object and on the cause
thereof. A contract which requires, in addition to the above, the delivery of
the object of the agreement, as in a pledge or commodatum, is commonly
referred to as a real contract. In a solemn contract, compliance with certain
formalities prescribed by law, such as in a donation of real property, is
essential in order to make the act valid, the prescribed form being thereby an
essential element thereof. The stage of consummation begins when the
parties perform their respective undertakings under the contract culminating
in the extinguishment thereof.
(1) If the period is not itself founded upon or supported by a consideration,
the offeror is still free and has the right to withdraw the offer before its
acceptance, or, if an acceptance has been made, before the offeror's coming
to know of such fact, by communicating that withdrawal to the offeree (see
Art. 1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102 Phil. 948,
holding that this rule is applicable to a unilateral promise to sell under Art.
1479, modifying the previous decision in South Western Sugar vs. Atlantic
Gulf, 97 Phil. 249; see also Art. 1319, Civil Code; Rural Bank of Paraaque,
Inc., vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA 368). The
right to withdraw, however, must not be exercised whimsically or arbitrarily;
otherwise, it could give rise to a damage claim under Article 19 of the Civil
Code which ordains that "every person must, in the exercise of his rights and
in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith."
(2) If the period has a separate consideration, a contract of "option" is
deemed perfected, and it would be a breach of that contract to withdraw the
offer during the agreed period. The option, however, is an independent
contract by itself, and it is to be distinguished from the projected main
agreement (subject matter of the option) which is obviously yet to be
concluded. If, in fact, the optioner-offeror withdraws the offer before its
acceptance (exercise of the option) by the optionee-offeree, the latter may
not sue for specific performance on the proposed contract ("object" of the
option) since it has failed to reach its own stage of perfection. The optionerofferor, however, renders himself liable for damages for breach of the option.
In these cases, care should be taken of the real nature of the consideration
given, for if, in fact, it has been intended to be part of the consideration for

the main contract with a right of withdrawal on the part of the optionee, the
main contract could be deemed perfected; a similar instance would be an
"earnest money" in a contract of sale that can evidence its perfection (Art.
1482, Civil Code).
In the law on sales, the so-called "right of first refusal" is an innovative
juridical relation. Needless to point out, it cannot be deemed a perfected
contract of sale under Article 1458 of the Civil Code. Neither can the right of
first refusal, understood in its normal concept, per se be brought within the
purview of an option under the second paragraph of Article 1479,
aforequoted, or possibly of an offer under Article 1319 9 of the same Code.
An option or an offer would require, among other things, 10 a clear certainty
on both the object and the cause or consideration of the envisioned contract.
In a right of first refusal, while the object might be made determinate, the
exercise of the right, however, would be dependent not only on the grantor's
eventual intention to enter into a binding juridical relation with another but
also on terms, including the price, that obviously are yet to be later firmed
up. Prior thereto, it can at best be so described as merely belonging to a
class of preparatory juridical relations governed not by contracts (since the
essential elements to establish the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general application, the pertinent
scattered provisions of the Civil Code on human conduct.
7.

SIHI

In Tuason, Jr., etc. vs. De Asis,i[22] this Court opined that in a contract
of lease, if the lessor makes an offer to the lessee to purchase the
property on or before the termination of the lease, and the lessee fails to
accept or make the purchase on time, the lessee losses the right to buy
the property later on the terms and conditions set in the offer. Thus, on
one hand, petitioner herein could not insist on buying the said property
based on the price agreed upon in the lease agreement, even if his
option to purchase it is recognized. On the other hand, SIHI could not
take advantage of the situation to increase the selling price of said
property by nearly 90% of the original price. Such leap in the price
quoted would show an opportunistic intent to exploit the situation as
SIHI knew for a fact that petitioner badly needed the property for his
business and that he could afford to pay such higher amount after
having secured an P8 Million loan from the TRC. If the courts were to
allow SIHI to take advantage of the situation, the result would have
been an injustice to petitioner, because SIHI would be unjustly enriched
at his expense. Courts of law, being also courts of equity, may not
countenance such grossly unfair results without doing violence to its
solemn obligation to administer fair and equal justice for all.

WHEREFORE, the appealed decision of respondent court, insofar as it

affirms the judgment of the trial court in granting petitioner the opportunity to
exercise the option to purchase the subject property, is hereby AFFIRMED.
However the purchase price should be based on the fair market value of real
property in Bulacao, Cebu City, as of February 1986, when the contract
would have been consummated. Further, petitioner is hereby ordered to pay
private respondent SIHI legal interest on the said purchase price beginning
February 1986 up to the time it is actually paid, as well as the taxes due on
said property, considering that petitioner have enjoyed the beneficial use of
said property.
An option is a preparatory contract in which one party grants to the other, for
a fixed period and under specified conditions, the power to decide, whether
or not to enter into a principal contract. It binds the party who has given the
option, not to enter into the principal contract with any other person during
the period designated, and, within that period, to enter into such contract
with the one to whom the option was granted, if the latter should decide to
use the option.ii[15] It is a separate agreement distinct from the contract
which the parties may enter into upon the consummation of the option.iii[16]
Considering the circumstances in this case, we find no reason to disturb the
findings of respondent court, that petitioners letter to SIHI, dated January 15,
1986, was fair notice to the latter of the formers intent to exercise the option,
despite the request for the extension of the lease contract. As stated in said
letter to SIHI, petitioner was requesting for an extension (of the contract) for
six months to allow us to generate sufficient funds in order to exercise our
option to buy the subject property.iv[17] The analysis by the Court of
Appeals of the evidence on record and the process by which it arrived at its
findings on the basis thereof, impel this Courts assent to said findings. They
are consistent with the parties primary intent, as hereafter discussed, when
they executed the lease contract. As respondent court ruled:
We hold that the appellee [herein petitioner] acted with honesty and good
faith. Verily, We are in accord with the trial court that he should be allowed to
exercise his option to purchase the lease property. In fact, SIHI will not be
prejudiced. A contrary ruling, however, will definitely cause damage to the
appellee, it appearing that he has introduced considerable improvements on
the property and has borrowed huge loan from the Technology Resources
Center.17a
The contracting parties primary intent in entering into said lease contract
with option to purchase confirms, in our view, the correctness of respondent
courts ruling. Analysis and construction, however, should not be limited to

the words used in the contract, as they may not accurately reflect the parties
true intent. The reasonableness of the result obtained, after said analysis,
ought likewise to be carefully considered.

8. Roman
A sale shall be considered perfected and binding as between vendor and
vendee when they have agreed as to the thing which is the object of the
contract and as to the price, even though neither has been actually
delivered. (Art. 1450 of the Civil Code.)chanrobles virtual law library
Ownership is not considered transmitted until the property is actually
delivered and the purchaser has taken possession of the value and paid the
price agreed upon, in which case the sale is considered
perfected.chanroblesvirtualawlibrary chanrobles virtual law library
When the sale is made by means of a public instrument the execution
thereof shall be equivalent to the delivery of the thing which is the object of
the contract.
The sale of the schooner was not perfected and the purchaser did not
consent to the execution of the deed of transfer for the reason that the title of
the vessel was in the name of one Paulina Giron and not in the name of
Pedro Roman, the alleged owner. Roman promised, however, to perfect his
title to the vessel, but he failed to do so. The papers presented by him did
not show that he was the owner of the vessel.chanroblesvirtualawlibrary
chanrobles virtual law library
99. Norkis

Article 1496 of the Civil Code which provides that "in the absence of an
express assumption of risk by the buyer, the things sold remain at seller's
risk until the ownership thereof is transferred to the buyer," is applicable to
this case, for there was neither an actual nor constructive delivery of the
thing sold, hence, the risk of loss should be borne by the seller, Norkis,
which was still the owner and possessor of the motorcycle when it was
wrecked. This is in accordance with the well-known doctrine of res perit
domino.