CASE DIGESTS

1.

San Miguel Properties Philippines Inc. vs. Huang,

[G.R. No.137290]
2. Navarro vs. Sugar Producers, [G.R. No. L-12888]
3. Dizon vs. CA, [G.R. No. 122544]
4. Alcantara-Daus vs. De Leon, [G.R. No. 149750]
5. Equatorial Realty Development Inc. vs. Mayfair
Theater, [G.R. No. 106063]
6. Swedish Match et al vs. CA, [G.R. No. 128120]
7. Bugatti vs. CA, [G.R. No.138113]
8. Spouses Serrano vs. Cagulat, [G.R. No. 139173]
9. Ang Yu vs. Asuncion, [G.R. No. 109125]
10. Lim vs. San and Lo, [G.R. No.159723
11. Zamora vs. Office of the President, [G.R. No. 165724]

1.

San Miguel vs. Huang

Nature of the Case:

A petition for review for a decision of the Court of
Appeals which reversed the decision of the RTC dismissing the
complaint brought by the Huangs against San Miguel
Properties for enforcement of a contract of sale.
Facts:
San Miguel Properties offered two parcels of land for
sale and the offer was made to an agent of the respondents.
An earnest-deposit of P1 million was offered by the
respondents and was accepted by the petitioners authorized
officer subject to certain terms.
Petitioner, through its executive officer, wrote the
respondents lawyer that because ethe parties failed to agree
on the terms and conditions of the sale despite the extension
granted by the petitioner, the latter was returning the earnestdeposit.
The respondents demanded execution of a deed of
sale covering the properties and attempted to return the
earnest-deposit but petitioner refused on the ground that the
option to purchase had already expired.
A complaint for specific performance was filed against
the petitioner and the latter filed a motion to dismiss the
complaint because the alleged exclusive option of the
respondents lacked a consideration separate and distinct from
the purchase price and was thus unenforceable; the complaint
did not allege a cause of action because there was no
meeting of the mind between the parties and therefore the
contact of sale was not perfected.
The trial court granted the petitioners motion and
dismissed the action. The respondents filed a motion for
reconsideration but were denied by the trial court. The
respondents elevated the matter to the Court of Appeals and
the latter reversed the decision of the trial court and held that a
valid contract of sale had been complied with.
Petitioner filed a motion for reconsideration but was denied.

Issue:
WON there was a perfected contract of sale between
the parties
Ruling:
The decision of the appellate court was reversed and
the respondents complaint was dismissed.
Ratio Decidendi:
It is not the giving of earnest money , but the proof of
the concurrence of all the essential elements of the contract of
sale which establishes the existence of a perfected sale.
The P1 million earnest-deposit could not have been
given as earnest money because at the time when petitioner
accepted the terms of respondents offer, their contract had not
yet been perfected. This is evident from the following
conditions attached by respondents to their letter.
The first condition for an option period of 30 days
sufficiently shows that a sale was never perfected. As
petitioner correctly points out, acceptance of this condition did
not give rise to a perfected sale but merely to an option or an
accepted unilateral promise on the part of respondents to buy
the subject properties within 30 days from the date of
acceptance of the offer. Such option giving respondents the
exclusive right to buy the properties within the period agreed
upon is separate and distinct from the contract of sale which
the parties may enter. All that respondents had was just the
option to buy the properties which privilege was not, however,
exercised by them because there was a failure to agree on the
terms of payment. No contract of sale may thus be enforced by
respondents.
Even the option secured by respondents from
petitioner was fatally defective. Under the second paragraph of
Art. 1479, an accepted unilateral promise to buy or sell a
determinate thing for a price certain is binding upon the
promisor only if the promise is supported by a distinct
consideration. Consideration in an option contract may be
anything of value, unlike in sale where it must be the price
certain in money or its equivalent. There is no showing here of
any consideration for the option. Lacking any proof of such
consideration, the option is unenforceable.
Equally compelling as proof of the absence of a
perfected sale is the second condition that, during the option
period, the parties would negotiate the terms and conditions of
the purchase. The stages of a contract of sale are as follows:
(1) negotiation, covering the period from the time the
prospective contracting parties indicate interest in the contract
to the time the contract is perfected; (2) perfection, which takes
place upon the concurrence of the essential elements of the
sale which are the meeting of the minds of the parties as to the
object of the contract and upon the price; and
(3) consummation, which begins when the parties perform their
respective undertakings under the contract of sale, culminating
in the extinguishment thereof.

In the present case, the parties never got past the

negotiation stage. The alleged indubitable evidence of a
perfected sale cited by the appellate court was nothing more
than offers and counter-offers which did not amount to any final
arrangement containing the essential elements of a contract of
sale. While the parties already agreed on the real properties
which were the objects of the sale and on the purchase price,
the fact remains that they failed to arrive at mutually
acceptable terms of payment, despite the 45-day extension
given by petitioner.

3.

Regina Dizon et al v. CA

FACTS:
Overland Express Lines, Inc. entered into a Contract
of Lease with Option to Buy with petitioners involving a
1,755.80 square meter parcel of land situated at corner
MacArthur Highway and South H Street, Diliman, Quezon
City. The term of the lease was for 1 year commencing from
May 16,1974 up to May 15, 1975. During this period, Overland
Express Lines was granted an option to purchase for
the amount of P3,000.00 per square meter. Thereafter, the
lease shall be on a per month basis with a monthly rental of
P3,000.00.
For failure of Overland Express Lines to pay the
increased rental of P8,000.00 per month effective June 1976,
petitioners filed an action for ejectment against it. The lower
court rendered judgment ordering Overland Express Lines to
vacate the leased premises and to pay the sum of
P624,000.00representing rentals in arrears and/or as damages
in the form of reasonable compensation for the use and
occupation of the premises during the period of illegal detainer
from June 1976 to November1982 at the monthly rental of
P8,000.00, less payments made, plus 12% interest per annum
from November 18, 1976, the date of filing of the complaint,
until fully paid, the sum of P8,000.00 a month starting
December 1982, until Overland Express Lines fully vacates the
premises, and to payP20,000.00 as and by way of attorneys
fees.

wherein ownership over the leased property shall not pass

to the Overland Express Lines until it has fully paid the
purchase price. Since Overland Express Lines did not consign
to the court the balance of the purchase price and continued to
occupy the subject premises, it had the obligation to pay the
amount of P1,700.00 in monthly rentals until full payment of the
purchase price.

In an attempt to resurrect the lapsed option, Overland

Express Lines gave P300,000.00 to petitioners(thru Alice A.
Dizon) on the erroneous presumption that the said amount
tendered would constitute a perfected contract of sale pursuant
to the contract of lease with option to buy. There was no valid
consent by the petitioners (as co-owners of the leased
premises) on the supposed sale entered into by Alice A. Dizon,
as petitioners alleged agent, and Overland Express Lines. The
basis for agency is representation and a person dealing with
an agent is put upon inquiry and must discover upon his peril
the authority of the agent. As provided in Article 1868 of the
New Civil Code, there was no showing that petitioners
consented to the act of Alice A. Dizon nor authorized her to act
on
their
behalf with
regard
to her
transaction
with private respondent. The
most prudent
thing private
respondent should have done was to ascertain the extent of
the authority of Alice A. Dizon. Being negligent in this regard,
private respondent cannot seek relief on the basis of a
supposed agency.

Every person
dealing with an agent is put upon inquiry
and must discover upon his peril the authority of the agent. If
he does not make such inquiry, he is chargeable with
knowledge of the agents authority, and his ignorance of that
authority will not be any excuse. Persons dealing with an
assumed agency, whether the assumed agency be a general
or special one, are bound at their peril, if they would hold the
principal, to ascertain not only the fact of the agency but also
the nature and extent of the authority, and in case either is
controverted, the burden of proof is upon them to establish it.

ISSUE:
WON Overland Express Lines actually paid the allege
d P300,000.00 to Fidela Dizon, asrepresentative
(agent)
of petitioners in consideration of the option
HELD:
No. CA opined that the payment by Overland Express
Lines of P300,000.00 as partial payment for the leased
property, which petitioners accepted (through Alice A. Dizon)
and for which an official receipt was issued, was the operative
act that gave rise to a perfected contract of sale, and that for
failure of petitioners to deny receipt thereof, Overland Express
Lines can therefore assume that Alice A. Dizon, acting as
agent of petitioners, was authorized by them to receive the
money in their behalf.CA went further by stating that in fact,
what was entered into was a conditional contract of sale

4.

ALCANTARA-DAUS v. SPOUSES DE LEON

FACTS:
Spouses De Leon are the owners of a parcel of land
situated in the Municipality of San Manuel, Pangasinan with an
area of Four Thousand Two Hundred Twelve square meters
more or less. Respondent Hermoso De Leon inherited the said
lot from his father Marcelino De Leon by virtue of a Deed of
Extra-Judicial Partition. Said lot is covered by Original
Certificate of Title No. 22134 of the Land Records of
Pangasinan.
Sometime 1960s, Spouses De Leon engaged the
services of the late Atty. Florencio Juan to take care of the
documents of their properties. They were asked to sign

voluminous documents by the latter. After the death of Atty.

Juan, some documents surfaced and most revealed that their
properties had been conveyed by sale or quitclaim to
Hermosos brothers and sisters, to Atty. Juan and his sisters,
when in truth and in fact, no such conveyances were ever
intended by them. Furthermore, respondent found out that his
signature in the Deed of Extra-judicial Partition with Quitclaim
made in favor of Rodolfo de Leon was forged. They discovered
that the land in question was sold by Rodolfo de Leon to
Aurora Alcantara
Spouses De Leon demanded the annulment of the
document and re-conveyance but defendants refused.
Petitioner, Aurora Alcantara-Daus averred that she bought the
land in question in good faith and for value on December 1975
and that she has been in continuous, public, peaceful, open
possession over the same and has been appropriating the
produce thereof without objection from anyone.
The RTC of Urdaneta, Pangasinan rendered its
Decision in favor of herein petitioner. It ruled that respondents
claim was barred by laches, because more than 18 years had
passed since the land was sold. It further ruled that since it
was a notarial document, the Deed of Extrajudicial Partition in
favor of Rodolfo de Leon was presumptively authentic.

ISSUES:

Whether or not the Deed of Absolute executed by Rodolfo

De Leon over the land in question in favor of petitioner
was perfected and binding upon the parties therein?

Whether or not the evidentiary weight of the Deed of

Extrajudicial Partition with Quitclaim, executed by
respondent Hermoso de Leon, Perlita de Leon and Carlota
de Leon in favor of Rodolfo de Leon was overcome by
more than a preponderance of evidence of respondents?

HELD:

resolve the issue of the authenticity and the due execution of

the Extrajudicial Partition and Quitclaim in his favor.

Second Issue:
NO. As a general rule, the due execution and
authenticity of a document must be reasonably established
before it may be admitted in evidence. Notarial documents,
however, may be presented in evidence without further proof of
their authenticity, since the certificate of acknowledgment is
prima facie evidence of the execution of the instrument or
document involved. To contradict facts in a notarial document
and the presumption of regularity in its favor, the evidence
must be clear, convincing and more than merely preponderant.
The CA ruled that the signature of Hermoso De Leon
on the Extrajudicial Partition and Quitclaim was
forged. However, this factual finding is in conflict with that of
the RTC. While normally this Court does not review factual
issues, this rule does not apply when there is a conflict
between the holdings of the CA and those of the trial court, as
in the present case.
After poring over the records, the SC finds no reason
to reverse the factual finding of the appellate court. A
comparison of the genuine signatures of Hermoso De
Leon with his purported signature on the Deed of Extrajudicial
Partition with Quitclaim will readily reveal that the latter is a
forgery. As aptly held by the CA, such variance cannot be
attributed to the age or the mechanical acts of the person
signing.

5.

Facts:

First Issue:
NO. It is during the delivery that the law requires the
seller to have the right to transfer ownership of the thing
sold. In general, a perfected contract of sale cannot be
challenged on the ground of the sellers non-ownership of the
thing sold at the time of the perfection of the contract.
Further, even after the contract of sale has been
perfected between the parties, its consummation by delivery is
yet another matter. It is through tradition or delivery that the
buyer acquires the real right of ownership over the thing sold.
Undisputed is the fact that at the time of the sale,
Rodolfo De Leon was not the owner of the land he delivered to
petitioner. Thus, the consummation of the contract and the
consequent transfer of ownership would depend on whether he
subsequently acquired ownership of the land in accordance
with Article 1434 of the Civil Code. Therefore, we need to

Equatorial Realty Development vs Mayfair

Theater

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 lessor is 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 ot 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.
Cited case of Ang Yu Asuncion: An unconditional
mutual promise to buy and sell, as long as the object is made
determinate and the price is fixed, can be obligatory on the
parties. An accepted unlitateral promise which specifies the
thing to be sold and the price to be paid, when coupled with a
valuable consideration distinct and separate from the price, is
what may properly be termed a perfect contract of option, and
this contract is legally binding.
The provision is a right of first refusal, and as such,
the requirement of a separate consideration has no
applicability. An option is a contract granting a privilege to buy
or sell within an agreed time and at a determined price, and it
is a separate and distinct contract from that which the parties
may enter into, and it must be supported by consideration.
However, here the right of first refusal is an integral part of the
contracts of lease.

There was a consideration for that right of refusal. The

consideration is built into the reciprocal obligations of the
parties. The consideration for the lease includes the
consideration for the right of first refusal. Mayfair is in effect
stating that it consents to lease the premises and to pay the
price agreed upon, provided that the lessor should give it the
right of first refusal.
Carmelo actually acknowledged that Mayfair had the
right of first refusal, because it informed Mayfair that it intended
to sell the properties. The contract between Carmelo and
Equatorial was entered into in bad faith. Since Mayfair has a
right of first refusal, it can exercise the right only if the
fraudulent sale is first set aside or rescinded.
Deed of sale between Carmelo and Equatorial is rescinded.
Carmelo is to return the purchase price to Equatorial, and
Equatorial is ordered to return ownership of the land to
Carmelo.
Carmelo is ordered to allow Mayfair to buy the lots for P11.3M.

EMILIO BUGATTI, petitioner,

vs. COURT OF
APPEALS and SPOUSES BEN BAGUILAT and
MARIA BAGUILAT, respondents.
FACTS
In the complaint, respondents alleged that they are the
owners of a parcel of land situated in Lagawa, Ifugao
and that sometime in December, 1987, petitioner
offered to lease their land. According to respondents,
they discussed the terms and conditions of the lease
with petitioner. It was agreed by petitioner and
respondents that the aforesaid terms and conditions
should be included in a written contract of lease to be
prepared by petitioner and presented to respondents
for their approval. However, even before preparing the
contract of lease, petitioner occupied respondents
land and began construction on January 18, 1988.
Immediately objecting to the construction, respondent
Maria Baguilat demanded that the contract of lease
should first be signed. Sometime in March, 1988,
petitioner finally presented the lease contract to
respondents but it did not contain the terms and
conditions previously agreed upon. Then petitioner
revised the same, presented to respondents, contained
counter-proposals. Respondents refused to accede to
such counter-proposals. Despite the fact that no
contract was signed by the parties, petitioner
continued to occupy respondents land.
ISSUE
WON a contract of lease had been perfected
RULING

The court held that no contract of lease was perfected

between the parties since the element of consent was
missing. The drafting of the contract - a task entrusted
to petitioner - was deemed by respondents as a
condition precedent to the perfection of the lease
contract and consequently, to any construction activity
upon their land. Although petitioner submitted two
drafts, they did not contain the terms and conditions
spoken of by the parties during their negotiations and
were accordingly rejected by respondents. However,
despite the absence of a perfected contract and in
total disregard of respondents repeated objections,
petitioner occupied respondents land and commenced
construction thereon, making him a builder in bad
faith.

8.

9.

SPOUSES SERRANO, ET. AL. v. CAGUIAT

FACTS:
Spouses Serrano agreed to sell in favor of respondent
Caguiat a parcel of land at 1,500.00 per square meter.
Caguiat partially paid petitioners 100, 000.00 as evidenced
by a receipt issued by petitioners indicating therein
respondents promise to pay the remaining balance.
Respondent, after making known his readiness to pay the
balance, requested from petitioners the preparation of the
necessary Deed of Sale. When petitioners cancelled the
transaction and intended to return to Caguiat his partial
payment, respondent filed a complaint for specific performance
and damages. The trial court relying on Article 1482 of the Civil
Code ruled that the payment of 100, 000.00 being an earnest
money signified the perfection of the contract of sale. The
Court of Appeals denied petitioners motion for reconsideration
in affirmation of the lower courts decision.
ISSUE:
Whether or not the partial payment constitutes an
earnest money as manifested in Article 1482 of the Civil Code
HELD:
No. Article 1482 applies only to earnest money given
in a contract of sale. It was apparent that the earnest money in
the case at bar was given in lieu of a contract to sell. Unlike in
a contract of sale, the ownership of the parcel of land was
retained by the Spouses Serrano and shall only be passed to
Caguiat upon full payment of the purchase price as evidenced
by the receipt. Relatively, no Deed of Sale has been executed
as proof of the intention of the parties to immediately transfer
the ownership of the parcel of land. Spouses Serrano also
retained ownership of the certificate of title of the lot, thereby
indicating no actual or constructive delivery of the ownership of
the property. Finally, should the transaction pushed through,
Caguiats payment of the remaining balance would have been
a suspensive condition since the transfer of ownership was
subordinated to the happening of a future and uncertain event.

Ang Yu Asuncion vs Court of Appeals

Ang Yu Asuncion and Keh Tiong leased, for more than 50

years and religiously paying the rent, residential and
commercial spaces in Binondo, owned by the Cu Unjiengs
and Jose Tan. On several occasions, the lessors informed
Ang Yu that they are offering to sell the premises and are
giving them priority.
Ang Yu asked the lessors to put their offer in writing, which
they said they would but they never actually put it in
writing. Ang Yu filed the case, claiming that the Cu
Unjiengs failed to specify the terms and conditions of the
offer to sell and that information was received that they
were about to sell the property, so Ang Yu wants to compel
the lessors to sell the property to them.
** RTC: The Cu Unjiengs offer to sell was never
accepted by Ang Yu, for the reason that the parties
didnt agree upon the terms, but nevertheless, should
the Cu Unjiengs offer their property for sale at a price
of P11M or lower, Ang Yu will have the right of first
refusal.
CA: Affirmed with modification. There will still be a
right of first refusal whether the price is lower or
above P11M.
The Cu Unjieng spouses executed a deed of sale, selling
the property to Buen Realty, for P15M. Buen Realty filed a
case asking Ang Yu to vacate, but Ang Yu claimed that
Buen bought the land while it was under lis pendens.
RTC: Buen Realtys title is set aside as having been
executed in bad faith. Cu Unjieng spouses ordered to
sell the property to Ang Yu for P15M.
CA: Reversed. Order to sell is without effect.

Issue:
Are the Cu Unjiengs bound to sell the property to Ang
Yu and co.?
Held:
NO. The stages of a contract of sale are negotiation,
perfection, and consummation. Until the contract is perfected, it
cannot, as an independent source of obligation, serve as a
binding juridical relation.
A negotiation is formally initiated by an offer. An
imperfect promise (politacion) is merely an offer. Thus, at any
time prior to the perfection of the contract, either negotiating
party may stop the negotiation, and the offer may be
withdrawn.
If a period is given to the offeree within which to
accept the offer, the following rules govern:
1.

2.

If the period is not founded upon or supported by

a consideration, the offeror is still free and has
the right to withdraw the offer before its
acceptance.
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. However, that
option 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 the optionerofferor 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 optioner-offeror, however, renders
himself liable for damages for breach of the
option.
Here, the first decisions (**) only granted a right of
first refusal. In a right of first refusal, while the object might be
made determinate, the exercise of the right, however, would be
dependent not only on the grantors eventual intention to enter
into a binding juridical relation with another, but also on terms,
including the price, that obviously are yet to be 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. The breach of right of first refusal cannot justify
corresponding an issuance of a writ of execution under a
judgment, nor would it sanction an action for specific
performance without negating the indispensable element of
consensuality.

ISSUE: I. W/N plaintiffs right of first refusal be recognized and

the property should be sold in their favor.

HELD: I. NO
1.
2.

3.
4.
5.

6.

If Ang Yu is aggrieved by the failure to honor the right

of first refusal, the remedy is not a writ of execution on the
judgment, but an action for damages.
(2)Ang Yu Asuncion vs. CA (1994)

7.

FACTS:

Ang Yu Asuncion, et al., (plaintiffs) are tenants/lessees of

residential and commercial spaces owned by the Cu
Unjieng.
The Cu Unjiengs informed the plaintiffs that they are
offering to sell the said premises and are giving them
priority.
During the negotiations, the Cu Unjiengs offered a price of
P6M, but the plaintiffs counter offered P5M.
Plaintiffs then asked the Cu Unjiengs to put their offer in
writing, which the latter agreed.
Plaintiffs then asked that the terms and conditions of the
offer to sell be specified, but the Cu Unjiengs did not reply.
Thus, plaintiffs filed a complaint to compel the Cu Unjiengs
to sell the property to them.
RTC: offer to sell was never accepted, bec. parties never
agreed on the terms and conditions of the proposed sale.
However, the court held that the plaintiffs had a right of
first refusal in case the property was to be sold at a price
lower than P11M.
CA: affirmed the decision of RTC, with modications on
that, due to the economy today, right of first refusal should
also be made available to plaintiffs if the price is in excess
of P11M.
Later, the Cu Unjiengs executed a Deed of Sale in favor of
Buen Realty and Development Corporation (defendant),
transferring the property to the latter for P15M.
Plaintiffs filed a Motion of Execution praying that the CA
ruling be implemented.
RTC: granted the said motion, ordered defendant to
execute the Deed of Sale in favor of plaintiffs, in
recognition of their right of first refusal.
CA: set aside the said order of the lower court.

8.

Until the contract is perfected, it cannot, as an

independent source of obligation, serve as a
binding juridical relation.
A contract is perfected when a person (seller),
obligates himself, for a price certain, to deliver
and to transfer ownership of a thing or right to
another (buyer).
In the law on sales, the so-called right of first
refusal is an innovative juridical relation.
It cannot be deemed a perfected contract of sale
under the NCC.
An option or an offer would require, among other
things, 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 right, however,
would be dependent not only on the grantors
eventual intention to enter into a binding juridical
relation with another but also on terms, including
the price, that obviously are yet to be later firmed
up.
It can be best so described as merely not by
contracts buy by, among other laws of general
application, the pertinent scattered provisions of
the NCC on human conduct.
The remedy of plaintiffs is not a writ of execution
on the judgment, since there is none to execute,
but an action for damages in a proper forum for
the purpose.

ANTONIO S. LIM, JR., represented by

attorney-in-fact, PAZ S. LIM, petitioner,
VICTOR K. SAN and ELINDO LO, respondents.

his
vs.

FACTS
Petitioner alleged the following:

That plaintiff is an owner of a parcel of land

situated at Bajada, Davao City
a fourteen (14) doors commercial building was
constructed thereon, and that defendant is
paying an annual lease of ONE HUNDRED
THOUSAND (P100,000.00) PESOS to the
plaintiff.
On May 29, 1991, the defendant taking undue
advantage of the depressed mental state of
plaintiffs Attorney-in-Fact, brought about by
the demise of her late husband, Dr. Antonio A.
Lim Sr., caused some papers for her to sign,
which later turn out to be an Absolute Deed of
Sale
The same was obtained through fraud and
trickery employed by the defendant and that

she never appeared before the Notary Public,

who notarized the said deed
That no consideration was ever paid, much less
received by the plaintiff or by his Attorney-inFact. Simply put, the Deed of Absolute Sale was
void ab initio for "lack of consideration" and for
"lack of a valid consent";
After the signing of the afore cited Deed of
Sale with its attendant legal flaws and
infirmities, plaintiffs Title was transferred in
the name of the defendant, Victor K. San

obligation to complete the development of the

subdivision project. The owner/developer nevertheless
made several demands for him to pay the monthly
amortizations, which the latter ignored, insisting that
he would suspend payment until the completion of the
subdivision project.
ISSUE
Whether respondent violated the contract to sell by his
failure to pay the monthly amortizations

ISSUE

RULING

WON a Deed of Sale was valid

No. The contract entered into between petitioner and

respondent is a contract to sell a subdivision lot. It
bears stressing that a contract to sell is a bilateral
contract, whereby the prospective seller, while
expressly reserving the ownership of the subject
property despite delivery thereof to the prospective
buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment of
the condition agreed upon, that is, full payment of the
purchase price. In a contract to sell, the payment of the
purchase price is a positive suspensive condition, the
failure of which is not a breach, casual or serious, but a
situation that prevents the obligation of the vendor to
convey title from acquiring an obligatory force. Thus,
for its non-fulfillment, there will be no contract to speak
of, the obligor having failed to perform the suspensive
condition which enforces a juridical relation.

RULING
YES. Court of Appeals affirmed the judgment of the trial
court in toto. Contrary to the allegations of the
petitioner that the consent of his attorney-in-fact to the
deed of sale was vitiated, a perusal of the records of
this case showed that the petitioner failed to establish
that violence, intimidation and undue influence vitiated
the consent of Paz S. Lim to the deed of sale pertaining
to the subject property. While it is true that upon the
death of her husband, Dr. Antonio T. Lim, Sr., on May
18, 1990, Paz S. Lim returned to the Philippines and
subsequently stayed at the house of the respondent,
such fact per se is not sufficient to establish that the
latter employed intimidation, violence or undue
influence upon the former. Defect or lack of valid
consent, in order to make the contract voidable, must
be established by full, clear and convincing evidence,
and not merely by a preponderance thereof.
ZAMORA
REALTY
and
DEVELOPMENT
CORPORATION
and/or
ERNESTO
ZAMORA,
Petitioners, vs. OFFICE OF THE PRESIDENT OF
THE PHILIPPINES and EDILBERTO C. GALLARDO,
Respondents.
FACTS
On October 8, 1985, respondent Edilberto C. Gallardo
entered into a contract to sell with Amlac Development
Corporation (Amlac). The property subject of the
contract is Lot 1, Block 3 of Amlac-Ville Subdivision.
Under the contract, Gallardo was to pay a
downpayment of P26,058.00, upon execution, the
balance to be paid in installments of P1,987.50 until
full settlement of the purchase price of P130,290.00.
Gallardo delivered the downpayment upon the signing
of the contract, and several months later, on March 11,
1987, the initial installment. Gallardo later informed
the owner/developer of his intention to stop further
payments due to the latters non-compliance with its

On May 31, 2004, the CA sustained the validity of

respondent Gallardos suspension of payments, and
ruled that it was in accordance with Sections 20 and 23
of Presidential Decree (P.D.) No. 957. The CA stated
that the development of the subdivision was still
ongoing as of 1992, way beyond 1985 when it was first
registered, and that such delay justified the buyers act
of suspending payment. The CA, likewise, gave weight
to Gallardos letter to Amlac-Ville Subdivision, dated
November 5, 1991, where he stated that after March
11, 1987, he was stopping payment of his amortization
due to non- development of the project. Thus,
respondent justly withheld the payment of amortization
of the subject lot, and petitioners unilateral
cancellation of the contract to sell cannot be sustained.
Consequently, the contract to sell between it and
respondent subsists.