Lorenzo and Socorro Velasco v. CA and Magdalena Estate Inc.
[June 29,
1973] (digest)
Facts:
This is a suit for specific performance filed by Lorenzo Velasco against the
Magdalena Estate, Inc.
On Nov 29, 1962 the plaintiff and the defendant had entered into a CONTRACT
OF SALE of land (2,059 sq m) at for P100,000.00. the terms of payment were
as follows: down payment: P10,000.00 and P20,000.00 and the remaining
P70,000.00 would be paid in instalments, an equal monthly amortization will
be determined as soon as the P30,000.00 DP had been completed.
Plaintiff paid P10,000.00 on November 29, 1962. On Jan 8, 1964 he tendered
the payment of P20,000.00 however defendant refused to accept and refused
to execute a formal deed of sale.
Socorro Velasco is his sister-in-law and that he had requested her to make the
necessary contacts referring to the purchase of the property because he does
not understand English well.
The receipt states: "Earnest money for the purchase of Lot 15, Block 7, Psd-
6129, Area 2,059 square meters including improvements thereon —
P10,000.00." At the bottom of Exhibit A the following appears: "Agreed price:
P100,000.00, P30,000.00 down payment, bal. in 10 years."
On the other hand, defendant alleged that there was no contract of sale that
was perfected because the minds of the parties did not meet "in regard to the
manner of payment.” Contract is unenforceable under the Statute of Frauds.
The property was leased by Socorro Velasco and that the defendant indicated
its willingness to sell the property for P100,000.00, with the following terms
of payment: downpayment of P30,000.00, P20,000.00 of which was to be
paid on November 31, 1962 and the P70,000.00 including interest a 9% per
annum was to be paid on installments for a period of ten years at the rate of
P5,381.32 on June 30 and December of every year until the same shall have
been fully paid;
On November 29, 1962 Socorro Velasco offered to pay P10,000.00 as initial
payment instead of the agreed P20,000.00 but because the amount was short
of the alleged P20,000.00 the same was accepted merely as deposited and
upon request of Socorro Velasco the receipt was made in the name of her
brother-in-law the plaintiff herein;
Socorro Velasco failed to complete the down payment of P30,000.00 and
neither has she paid any installments on the balance of P70,000.00 up to the
present time;
On January 8, 1964 that Socorro Velasco tendered payment of P20,000.00,
which offer the defendant refused to accept because it had considered the
offer to sell rescinded on account of her failure to complete the down payment
on or before December 31, 1962.
Issue:
Whether the talks between the Magdalena Estate, Inc. and Lorenzo Velasco
ever ripened into a consummated sale?
Held: NO
Ratio:
The material averments contained in the petitioners' complaint disclose a lack
of complete "agreement in regard to the manner of payment" of the lot in
question. The complaint states pertinently:
That plaintiff and defendant further agreed that the total down payment shall
by P30,000.00, including the P10,000.00 partial payment mentioned in
paragraph 3 hereof, and that upon completion of the said down payment of
P30,000.00, the balance of P70,000.00 shall be said by the plaintiff to the
defendant in 10 years from November 29, 1962;
That the time within the full down payment of the P30,000.00 was to be
completed was not specified by the parties but the defendant was duly
compensated during the said time prior to completion of the down payment of
P30,000.00 by way of lease rentals on the house existing thereon which was
earlier leased by defendant to the plaintiff's sister-in-law, Socorro J. Velasco,
and which were duly paid to the defendant by checks drawn by plaintiff.
Petitioners admit that they still had to meet and agree on how and when the
down-payment and the installment payments were to be paid.
Such being the situation, it cannot be said that a definite and firm sales
agreement between the parties had been perfected over the lot in question.
Indeed, this Court has already ruled before that a definite agreement on the
manner of payment of the purchase price is an essential element in the
formation of a binding and enforceable contract of sale.
G.R. No. 186264 July 8, 2013
DR. LORNA C. FORMARAN, Petitioner, vs. DR. GLENDA B. ONG AND
SOLOMON S. ONG, Respondents.
Facts:
Formaran received by way of donation by his uncle and aunt, Sps. Melquiades
Barraca and Praxedes Casidsid a parcel of land situated in Nabas, Aklan.
From the time of donation until present, Formaran was in actual possession of
the land
Subsequent to the said donation, Ong and father, Melquiades Barraca
approached Formaran to borrow one-half of the land donated to her so the
Ong could obtain a loan from a bank to buy a dental chair. An absolute deed of
sale was executed without monetary consideration.
More or less 30 years after the said deed of sale was executed, Ong filed a
complaint for unlawful detainer before the Municipal Circuit Trial Court of
Ibajay-Nabas, IBajay, Aklan against Formaran ordering the latter to vacate the
land sold to the former. The court rendered a decision in favor of Ong and
ordered Formaran to vacate the land in question.
Petitioner, Formaran filed an action for the annulment of the deed of absolute
sale against Respondent, Ong in the RTC of Kalibo, Aklan. And rendered a
decision in favor of Formaran.
Respondent coursed an appeal to the CA and CA reversed and set aside the
decision of the RTC and ordered petitioner to vacate the land.
Hence this present petiotion
Issue: WON the absolute deed of sale is valid
Held: NO
Ruling:
The Court believes and so holds that the subject Deed of Sale is indeed
simulated,2 as it is: (1) totally devoid of consideration; (2) it was executed on
August 12, 1967, less than two months from the time the subject land was
donated to petitioner on June 25, 1967 by no less than the parents of
respondent Glenda Ong; (3) on May 18, 1978, petitioner mortgaged the land
to the Aklan Development Bank for a ₱23,000.00 loan; (4) from the time of the
alleged sale, petitioner has been in actual possession of the subject land; (5)
the alleged sale was registered on May 25, 1991 or about twenty four (24)
years after execution; (6) respondent Glenda Ong never introduced any
improvement on the subject land; and (7) petitioner’s house stood on a part of
the subject land. These are facts and circumstances which may be considered
badges of bad faith that tip the balance in favor of petitioner.
"The amplitude of foregoing undisputed facts and circumstances clearly
shows that the sale of the land in question was purely simulated. It is void
from the very beginning (Article 1346, New Civil Code). If the sale was
legitimate, defendant Glenda should have immediately taken possession of the
land, declared in her name for taxation purposes, registered the sale, paid
realty taxes, introduced improvements therein and should not have allowed
plaintiff to mortgage the land. These omissions properly militated against
defendant Glenda’s submission that the sale was legitimate and the
consideration was paid.
While the Deed of Absolute Sale was notarized, it cannot justify the conclusion
that the sale is a true conveyance to which the parties are irrevocably and
undeniably bound. Although the notarization of Deed of Absolute Sale, vests in
its favor the presumption of regularity, it does not validate nor make binding
an instrument never intended, in the first place, to have any binding legal
effect upon the parties thereto (Suntay vs. Court of Appeals, G.R. No. 114950,
December 19, 1995; cited in Ruperto Viloria vs. Court of Appeals, et al., G.R.
No. 119974, June 30, 1999)."
G.R. No. 121559 June 18, 1998
XENTREX AUTOMOTIVE, INC., petitioner, vs. COURT OF APPEALS,
MACARTHUR M. SAMSON and GERTRUDES C. SAMSON, respondents.
FACTS:
Petitioner is a dealer of motor vehicles. On October 25, 1991, private
respondents went to petitioner to purchase a brand new car, a 1991 Nissan
Sentra Super Saloon A/T model, valued at P494,000.00. Private respondents
made an initial deposit of P50,000.00; petitioner issued the corresponding
official receipt (O.R. NO. 6504). The balance was to be paid thru bank
financing. Pending the processing of their application for financing, private
respondents paid an additional P200,000.00 to petitioner which was covered
by another receipt (O.R. NO. 6547). Eventually, due to the slow pace in the
processing of their application for financing, private respondents decided to
pay the remaining balance on November 6, 1991 by tendering a check in the
amount of P250,000.00. As it turned out however, to private respondents'
shock and disappointment, the car had already been sold to another buyer
without their knowledge, prompting them to send a demand letter to
petitioner asking the latter to comply with its obligation to deliver the car.
Their demand unheeded, private respondents (plaintiffs below) filed a suit for
breach of contract and damages before the Regional Trial Court of Dagupan
City, Branch 42. Denying any liability, petitioner (defendant below) alleged
that the complaint stated no cause of action. After trial, judgment was
rendered by the trial court in private respondents' favor. On appeal by
petitioner, the Court of Appeals affirmed the decision of the trial court. 2
ISSUE: WON THERE WAS A PERFECTED CONTRACT BETWEEN THE
PETITIONER AND THE RESPONDENT.
HELD: YES
RULING:
Petitioner argues that there was no perfected contract of sale between the
parties due to private respondents' failure to comply with their obligation to
pay the purchase price of the car in full. Thus, petitioner assert that it has no
obligation to deliver the car to private respondents and therefore could not be
held liable for breach of contract and damages
Undoubtedly, there was a perfected contract of sale between the petitioner
and private respondents as confirmed by the trial court when it found that
"[b] y accepting a deposit of P50,000.00 and by pulling out a unit of Philippine
Nissan 1.6 cc Sentry Automatic (Flamingo red), defendant obliged itself to sell
to plaintiffs a determinate thing for a price certain in money which was
P494,000.00". 4
Resultingly, petition committed a breach of contract when it allowed the unit
in question to be sold to another buyer to the prejudice of private
respondents.
The Court of Appeals gave complete accord to the aforementioned findings
and affirmed the same in its, decision. 5 In this regard, it must be emphasized
that the prevailing rule is that the findings of fact of the trial court, particularly
when affirmed by the Court of Appeals, are binding upon this Court. 6
Nevertheless, We sustain the award of moral damages considering private
respondent Macarthur Samson's testimony that he suffered from shock and
embarrassment as a result of petitioner's failure to comply with its obligation.
Spouses Dalion v. CA
GR. No. 78903 February 28,1990
Facts:
A land in Southern Leyte was declared in the name of Segundo Dalion.
Sabesaje sued to recover ownership this land based on a private document of
absolute sale, allegedly executed by Segundo Dalion.
Dalion, however, denied the sale, saying that:
 The document was fictitious
 His signature was a forgery, and
 That the land is conjugal property, which he and his wife acquired
in 1960 from Saturnina Sabesaje as evidenced by the "Escritura de
Venta Absoluta."
The spouses denied the claims of Sabesaje that after executing a deed of sale
over the parcel of land, they had pleaded with Sabesaje to be allowed to
administer the land because Dalion did not have livelihood.
Spouses Dalion admitted, however, administering 5 parcels of land in
Southern Leyte, which belonged to Leonardo Sabesaje, grandfather of
Sabesaje, who died in 1956.
The Dalions never received their agreed 10% and 15% commission on the
sales of copra and abaca. Sabesaje's suit, they say, was intended merely to
harass and forestall Dalion's threat to sue for these unpaid commissions.
Trial Court decided in favor of Sabesaje and ordered the Dalions to deliver the
parcel of land in a public document. CA affirmed.
Issues:
1. Was the contract of sale valid?
2. Is a public document needed for transfer of ownership?
Held:
1. Yes. People who witnessed the execution of the deed positively testified on
its authenticity. They stated that it had been executed and signed by the
signatories. A contract of sale is a consensual contract, which means that the
sale is perfected by mere consent. No particular form is required for its
validity. Upon perfection of the contract, the parties may reciprocally demand
performance (NCC 1475, NCC), i.e., the vendee may compel transfer of
ownership of the object of the sale, and the vendor may require the vendee to
pay the thing sold (NCC 1458).
2. No. The provision of NCC 1358 of NCC on the necessity of a public document
is only for convenience, not for validity or enforceability. The trial court thus
rightly and legally ordered Dalion to deliver to Sabesaje the parcel of land and
to execute corresponding formal deed of conveyance in a public document.
Under NCC 1498, when the sale is made through a public instrument, the
execution is equivalent to the delivery of the thing. Delivery may either be
actual (real) or constructive. Thus delivery of a parcel of land may be done by
placing the vendee in control and possession of the land (real) or by
embodying the sale in a public instrument (constructive).
Limson v. Court of Appeals
GR No. 135929, April 20, 2001
Topic in Sales: Earnest Money v. Option Money - Art. 1482
FACTS:
This is a Petition for Review on Certiorari to review, reverse and set aside
the Decision of the Court of Appeals which reversed the Decision of the
Regional Trial Court. The petitioner likewise assails the Resolution of the
appellate court denying petitioner's Motion for Reconsideration.
Petitioner Lourdes Ong Limson and respondent spouses Lorenzo de Vera and
Asuncion Santos-de Vera agreed that petitioner would buy a parcel of land
owned by respondents. On 31 July 1978, petitioner paid P20,000 as "earnest
money"; respondents signed a receipt and gave her a 10-day option period to
purchase the property.
The parties agreed to meet on August 5 and August 11, but failed to
consummate the sale because the respondent spouses did not appear.
Petitioner soon learned that subject propery was also under negotiation with
respondent spouses and with Sunvar Realty Development Corporation
(SUNVAR). On 15 September 1978, Limson filed an affidavit of Adverse
Claim with the Office of the Registry of Deeds and informed SUNVAR. TCT N0.
S-72377 was issued on 26 September 1978 in favor of SUNVAR with
the adverse Claim of petitioner annotated thereon.
Petitioner claimed that the Deed of Sale should be annuled, that TCT No. S-
72377 be canceled and ownership be restored to respondent spouses, and
that a Deed of Sale be executed in favor of her.
The Regional Trial Court rendered its Decision in favor of petitioner. On
appeal, the Court of Appeals completely reversed the decision of the trial
court. Petitioner timely filed a Motion for Reconsideration which was denied
by the Court of Appeals on 19 October 1998. Hence, this petition.
ISSUES:
(1) Whether or not there was a perfected contract to sell between petitioner
and respondent spouses.
(2) Whether or not the P20,000 paid by Limson represented "earnest
money".
RULING:
(1) No, there was no perfected contract to sell. A scrutiny of the facts as well
as the evidence of the parties overwhelmingly leads to the conclusion that the
agreement between the parties was a contract of option and not a contract to
sell.
An option, as used in the law of sales, is a continuing offer or contract by
which the owner sitpulates with another that the latter shall have the right to
buy the property at a fixed price within a time certain, or under, or in
compliance with, certain terms and conditions, or which gives to the owner of
the property the right to sell or demand a sale. It is also sometimes called an
"unaccepted offer." An option is not itself a purchase, but merely secures the
privilege to buy.8 It is not a sale of property but a sale of right to purchase. 9 It
is simply a contract by which the owner of property agrees with another
person that he shall have the right to buy his property at a fixed price within a
certain time. He does not sell his land; he does not then agree to sell it; but he
does not sell something, i.e., the right or privilege to buy at the election or
option of the other party.10 Its distinguishing characteristic is that it imposes
no binding obligation on the person holding the option, aside from the
consideration for the offer. Until acceptance, it is not, properly speaking, a
contract, and does not vest, transfer, or agree to transfer, any title to, or any
interest or right in the subject matter, but is merely a contract by which the
owner of the property gives the optionee the right or privilege of accepting
the offer and buying the property on certain terms.11
On the other hand, a contract, like a contract to sell, involves the meeting of
minds between two persons whereby one binds himself, with respect to the
other, to give something or to render some service. 12 Contracts, in general, are
perfected by mere consent,13 which is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute.1
(2) No, the money paid by petitioner was not earnest money but option
money. "Earnest money" and "option money" are not the same but
distinguished thus; (a) earnest money is part of the purchase price, while
option money is the money given as a distinct consideration for an option
contract; (b) earnest money given only where there is already a sale, while
option money applies to a sale not yet perfected; and, (c) when earnest money
is given, the buyer is bound to pay the balance, while when the would-be
buyer gives option money, he is not required to buy, 18 but may even forfeit it
depending on the terms of the option.
There is nothing in the Receipt which indicates that the P20,000.00 was part
of the purchase price. Moreover, it was not shown that there was a perfected
sale between the parties where earnest money was given. Finally, when
petitioner gave the "earnest money" the Receipt did not reveal that she was
bound to pay the balance of the purchase price. In fact, she could even forfeit
the money given if the terms of the option were not met. Thus, the P20,000.00
could only be money given as consideration for the option contract. Finally,
the Receipt provided for a period within which the option to buy was to be
exercised, i.e., "within ten (10) days" from 31 July 1978.
On or before 10 August 1978, the last day of the option period, no affirmative
or clear manifestation was made by petitioner to accept the offer. Certainly,
there was no concurrence of private respondent spouses’ offer and
petitioner’s acceptance thereof within the option period. Consequently, there
was no perfected contract to sell between the parties.
On 11 August 1978 the option period expired and the exclusive right of
petitioner to buy the property of respondent spouses
ceased.WHEREFORE, the petition is DENIED. The decision of the Court of
Appeals ordering the Register of Deeds of Makati City to lift the adverse claim
and such other encumbrances petitioners Lourdes Ong Limson may have filed
or caused to be annotated on TCT No. S-75377 is AFFIRMED, with
the MODIFICATION that the award of nominal and exemplary damages as
well as attorney’s fees is DELETED.
SAN MIGUEL PROPERTIES PHILS., INC. v SPOUSES ALFREDO and GRACE
HUANG, G. R. No. 137290, 31 July 2000
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 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 While the parties already agreed on the real properties which were the
respondents filed a motion for reconsideration but were denied by the trial objects of the sale and on the purchase price, the fact remains that they failed
court. The respondents elevated the matter to the Court of Appeals and the to arrive at mutually acceptable terms of payment, despite the 45-day
latter reversed the decision of the trial court and held that a valid contract of extension given by petitioner.
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.