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]
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:   accepted unilateral promise on the part of respondents to buy
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 petitioner’s authorized
officer subject to certain terms.
Petitioner, through its executive officer, wrote the
respondent’s lawyer that because ethe parties failed to agree
on the terms and conditions of the sale despite the extension
granted by the petitioner, the latter was returning the “earnest-
deposit”.
The respondents demanded execution of a deed of
sale covering the properties and attempted to return the
“earnest-deposit” but petitioner refused on the ground that the
option to purchase had already expired.
A complaint for specific performance was filed against
the petitioner and the latter filed a motion to dismiss the
complaint because the alleged “exclusive option” of the
respondents lacked a consideration separate and distinct from
the purchase price and was thus unenforceable; the complaint
did not allege a cause of action because there was no
“meeting of the mind” between the parties and therefore the
contact of sale was not perfected.
The trial court granted the petitioner’s 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:   In the present case, the parties never got past the
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
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.
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 attorney’s
fees.
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”
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 agent’s 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.
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
Hermoso’s 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:
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 seller’s 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
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. Equatorial Realty Development vs Mayfair
Theater
Facts:
 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 (Mayfair’s
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 price agreed upon, provided that the lessor should give it the
invoked by Mayfair is null and void for lack of right of first refusal.
consideration.
 RTC: Dismissed Mayfair’s complaint. It reasoned that Carmelo actually acknowledged that Mayfair had the
the option in the contract of lease was not supported right of first refusal, because it informed Mayfair that it intended
by a separate consideration, and without a
to sell the properties. The contract between Carmelo and
consideration, the option is not binding on Carmelo to
sell the property to Mayfair. Cited Art 1479. Mayfair Equatorial was entered into in bad faith. Since Mayfair has a
cannot compel Carmelo to comply with the promise right of first refusal, it can exercise the right only if the
unless Mayfair establishes the existence of a distinct fraudulent sale is first set aside or rescinded.
consideration. Also, Art 1354 (Although the cause is
not stated in the contract, it is presumed that it exists Deed of sale between Carmelo and Equatorial is rescinded.
and is lawful unless the debtor proves the contrary), Carmelo is to return the purchase price to Equatorial, and
and consideration cannot be presumed, because Equatorial is ordered to return ownership of the land to
when it comes to an option it is governed particularly
by Art 1479, whereby the promissee has the burden Carmelo.
of proving the existence of consideration. (This was
the doctrine in the case of Sanchez.) Carmelo is ordered to allow Mayfair to buy the lots for P11.3M.
 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 isn’t 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