Acap v.

CA

Facts:

Oruma sold his land to Cosme Pido, which was rented by petitioner Teodoro Acap.

When Cosme died, his heirs executed a “Declaration of Heirship and Waiver of Rights” in
favor of private respondent Edy delos Reyes.

Edy informed Acap of his claim over the land, and the latter paid the rental to him in 1982.
However in subsequent years, Acap refused to pay the rental, which prompted Edy to file a
complaint for the recovery of possession and damages.

Acap now avers that he continues to recognize Pido as the owner of the land, and that he will
pay the accumulated rentals to Pido’s widow upon her return from abroad.

Issues:

(1) Whether the said document can be considered a deed of sale in favor of
private respondent

NO. Under article 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and the other party to
pay a price certain in money or its equivalent. 

Upon the other hand, a declaration of heirship and waiver of rights operates as a public
instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate and
divide the estate left by the decedent among themselves as they see fit.

However, Acap, being then a stranger to the succession of Cosme Pido, cannot conclusively
claim ownership over the subject lot on the sole basis of the waiver document which neither
recites the elements of either a sale, or a donation, or any other derivative mode of acquiring
ownership.

while the transaction between Pido's heirs and private respondent may be binding on both
parties, the right of petitioner as a registered tenant to the land cannot be perfunctorily
forfeited on a mere allegation of private respondent's ownership without the corresponding
proof thereof.

THE HEIRS OF PIDO ONLY RELINQUISHED THEIR RIGHTS UPON THE SAID LAND
BUT THAT DOES NOT BY ITSELF SERVE AS A SALE OR A TRANSFER OF RIGHT TO EDY

That right or title must be completed by fulfilling certain conditions imposed by law. Hence,
ownership and real rights are acquired only pursuant to a legal mode or process. 

(2) Whether the “Declaration of Heirship and Waiver of Rights” is a recognized

mode of acquiring ownership by private respondent.

No. Declaration of Heirship and Waiver of Rights is a mode of extinction of ownership

where there is an abdication or intentional relinquishment of a known right with knowledge of
its existence with the intention to relinquish it, in favor of other persons who are co-heirs in
the succession.

Acap, being then a stranger to the succession of Cosme Pido, cannot conclusively claim
ownership over the subject lot on the sole basis of the waiver document which neither recites
the elements of either a sale, or a donation, or any other derivative mode of acquiring
ownership.
TOYOTA SHAW v CA

Sosa and Bernardo, a sales representative of Toyota, contracted an agreement that the latter
will deliver the unit/car and that Sosa will pay a down payment and the balance of the
purchase price would be paid by credit financing. 

The following day, Sosa delivered the down payment however Bernardo informed him that
the car could not be delivered because of the disapproval by B.A. Finance of the credit
financing application of Sosa.

Sosa was able to get his down payment back, However, she demanded not only the refund of
the down payment but also interest from the time she paid it and for damages. Toyota refused
to the demands of Sosa.

ISSUE: WON a contract of sale between SOSA and BERNARDO was perfected.

HELD: NO

The agreement signed by Sosa and Gilbert is not a contract of sale. No obligation on the part
of Toyota to transfer ownership of the car to Sosa and no correlative obligation on the part of
Sosa to pay but rather, it only refers to the down payment and sale on installment basis.

Also, the full purchase price and the manner the installments were to paid are not mentioned.
An agreement on the manner of payment of the price is an essential element in the formation
of a binding and enforceable contract of sale. This is because without a price certain or an
agreement on the manner of payment is tantamount to a failure to agree which is another
essential element for a valid sales contract.

The essential elements of contract are:

1.) Consent or meeting of the minds

2) Determinate subject matter

3) Price certain in money or its equivalent

Without the concurrence of the above mentioned elements, a valid contract of sale cannot
exist.
 PUP vs CA
Polytechnic University of the Philippines (PUP) vs CA and Firestone Ceramics Inc.; National
Development Corporation (NDC) vs Firestone Ceramics Inc. (2 cases)
Bellosillo, J (2001) kam

DOCTRINES:
 What is a sale?
- A contract of sale, as defined in the Civil Code, is a contract where one of the parties
obligates himself to transfer the ownership of and to deliver a determinate thing to
the other or others who shall pay therefore a sum certain in money or its equivalent.
It is therefore a general requisite for the existence of a valid and enforceable
contract of sale that it be mutually obligatory, i.e., there should be a concurrence of
the promise of the vendor to sell a determinate thing and the promise of the vendee
to receive and pay for the property so delivered and transferred. The Civil Code
provision is, in effect, a “catchall” provision which effectively brings within its grasp
a whole gamut of transfers whereby ownership of a thing is ceded for a
consideration.
-
 Elements of a sale: 1. Consent; 2. Determinate subject matter; and 3. Consideration

 Right of first refusal

- It is elementary that a party to a contract cannot unilaterally withdraw a right of first
refusal that stands upon valuable consideration.
- Where the stipulation for a right of first refusal is part and parcel of the contract of
lease, the consideration for the lease is the same as that for the option
- When a lease contract contains a right of first refusal, the lessor is under a legal
duty to the lessee not to sell to anybody at any price until after he has made an
offer to sell to the latter at a certain price and the lessee has failed to accept it.
- A right of first refusal is neither “amorphous nor merely preparatory” and can be
enforced and executed according to its terms.

FACTS:
NDC owns NDC compound.

Firestone Ceramics Inc. lease a portion of the property for its ceramic manufacturing business.

NDC and FIRESTONE entered into a contract of lease covering a portion of the property for a term of
10 years, renewable for another ten.

Prior to the expiration of the lease contract, Firestone wrote NDC requesting for an extension of
their lease agreement. It was renewed with an express grant to Firestone of the first option to
purchase the leased premise in the event that it was decided "to dispose and sell the properties
including the lot..."

Cognizant of the impending expiration of the leased agreement, Firestone informed NDC through
letters and calls that it was renewing its lease. The rest of its communications remained
unacknowledged. 

There were rumors of NDC's supposed plans to dispose of the subject property in favor of petitioner
PUP.

So, FIRESTONE served notice on NDC conveying its desire to purchase the property in the exercise of
its contractual right of first refusal. (first option to purchase)

FIRESTONE instituted an action for specific performance to compel NDC to sell the leased property in
its favor. It was pre-empting the impending sale of the NDC compound to petitioner PUP in violation
of its leasehold rights. It also prayed for issuance of a writ of preliminary injunction to enjoin NDC
from disposing of the property.
PUP argued Memorandum Order No. 214 issued by then President Aquino ordering the transfer of the
whole NDC compound to the National Government, which in turn would convey the aforementioned
property in favor of PUP at acquisition cost.

ISSUES [HELD]:
1. WON there was a valid sale between PUP and NDC? [YES]
2. WON FIRESTONE can rightfully invoke its right of first refusal? [YES]

RATIO:

1. The lower courts were right that that the conveyance of the property from NDC to PUP was one of
absolute sale, for a valuable consideration.

A contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself
to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay
therefore a sum certain in money or its equivalent. 

It is therefore a general requisite for the existence of a valid and enforceable contract of sale that it be
mutually obligatory, i.e., there should be a concurrence of the promise of the vendor to sell a
determinate thing and the promise of the vendee to receive and pay for the property so delivered and
transferred.

The preponderance of evidence shows that NDC sold to PUP the whole NDC compound,
including the leased premises, without the knowledge much less consent of private respondent
FIRESTONE which had a valid and existing right of first refusal.

All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the
"disposition" and "transfer" of the property from NDC to PUP – (1) consent of the parties (manifested
in Memo No. 214), (2) determinate subject matter (property subject of the dispute), and (3)
consideration (cancellation of liabilities) therefor.

The cancellation of NDC's liabilities in favor of the National Government in the amount of P
57,193,201.64 constituted the "consideration" for the sale. As correctly observed by the Court of
Appeals-

2. YES. Such right was expressly stated by NDC and FIRESTONE in par. XV of their third contract,
as found, was interrelated to and inseparable from their first should the LESSOR desire to sell
the leased premises during the term of this Agreement, or any extension thereof, the LESSOR
shall first give to the LESSEE, which shall have the  right of first option to purchase the leased
premises subject to mutual agreement of both parties.

In the instant case, the right of first refusal is an integral and indivisible part of the contract of
lease and is inseparable from the whole contract. The consideration for the right is built into the
reciprocal obligations of the parties. Thus, it is not correct for petitioners to insist that there was no
consideration paid by FIRESTONE to entitle it to the exercise of the right, inasmuch as the stipulation
is part and parcel of the contract of lease making the consideration for the lease the same as that for the
option.

It is a settled principle in civil law that when a lease contract contains a right of first refusal, the lessor
is under a legal duty to the lessee not to sell to anybody at any price until after he has made an offer to
sell to the latter at a certain price and the lessee has failed to accept it. The lessee has a right that the
lessor's first offer shall be in his favor.

The option in this case was incorporated in the contracts of lease by NDC for the benefit of
FIRESTONE which, in view of the total amount of its investments in the property, wanted to be
assured that it would be given the first opportunity to buy the property at a price for which it would be
offered. Consistent with their agreement, it was then implicit for NDC to have first offered the leased
premises of 2.60 hectares to FIRESTONE
It now becomes apropos to ask whether the courts a quo  were correct in fixing the proper
consideration of the sale at P1,500.00 per square meter. In contracts of sale, the basis of the right of
first refusal must be the current offer of the seller to sell or the offer to purchase of the prospective
buyer. Only after the lessee-grantee fails to exercise its right under the same terms and within the
period contemplated can the owner validly offer to sell the property to a third person, again, under the
same terms as offered to the grantee.  Emphatically, we held that "(a right of first priority) should
be enforced according to the law on contracts instead of the panoramic and indefinite rule on
human relations.

Section 10. No law impairing the obligation of contracts shall be passed.

SAN MIGUEL PROPERTIES PHILS., INC. v SPOUSES ALFREDO and GRACE

HUANG, G. R. No. 137290, 31 July 2000
posted in land titles and deeds cases by katcobing
Mendoza, J. delivered the decision of the Court.

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 petitioner’s authorized officer subject
to certain terms.

Petitioner, through its executive officer, wrote the respondent’s lawyer that because
the 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:   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

(2) 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.