CHAPTER 3 & 4

(Subject Matter & Price &

Other consideration)
G.R. No. 122544 January 28, 1999
DIZON vs. COURT OF APPEALS

FACTS:

1. CA rendered a decision against the private

respondents. It concluded that partial
payment accepted through an agent (Ms.
Dizon) was the operative act that gave rise
to a perfected contract of sale on the leased
premises.

2. CA dismissed the petition and ruled that the

petitioners have been shown, after all, to
have no right to eject private respondents
based on its previous decision which the
private respondent herein acquired the
rights of a vendee in a contract of sale, in
effect, recognizing the right of the private
respondent
to
possess
the
subject
premises.
Hence, these instant petitions.

Two cases were consolidated:

ISSUE:
1. Private respondent Overland Express Lines,
Inc. (lessee) entered into a 1-year Contract
of Lease with Option to Buy with petitioners
involving a parcel of land in Quezon City.
The lessee was given an option to purchase
said property at P3,000.00 square meter.
For failure of lessee to pay the increased
monthly rental, petitioners filed an action
for ejectment.

2. Petitioners filed with respondent Court of

Appeals (CA) a motion to remand the
records of the ejectment case to MTC for
execution of the judgment.

All petitions reached the CA which ruled on the

said cases respectively:

1. WON petitioners have a right to evict

private respondent from the subject
premises for non-payment of rentals.

2. WON the option within the stipulated oneyear period can still be exercised.

3. WON there was a perfected contract of sale.

HELD:
The Court GRANTED both petitions and REVERSED
and SET ASIDE the decision of CA.
On Issue No. 1

Yes.
Where the rentals are paid monthly, the lease,
even if verbal may be deemed to be on a monthly
basis, expiring at the end of every month pursuant
to Article 1687, in relation to Article 1673 of the
Civil Code. In such case, a demand to vacate is not
necessary for judicial action after the expiration of
every month.
When private respondent failed to pay the
increased rental per month, the petitioners had a
cause of action to institute an ejectment suit
against the former.
On Issue No. 2
No.
When the contract of lease expired without the
private respondent purchasing the property but
remained in possession thereof was an implicit
renewal of the contract of lease on a monthly
basis. Article 1670 of the New Civil Code revived
only those terms which are germane to the
lessee's right of continued enjoyment of the
property leased. Therefore, an implied new lease
does not ipso facto carry with it any implied revival
of private respondent's option to purchase the
leased premises.
Having failed to exercise the option within the
stipulated one-year period, private respondent
cannot enforce its option to purchase anymore.
On Issue No. 3
No.
Article 1475 of the New Civil Code provides that
contract of sale is perfected at the moment there is
a meeting of minds upon the thing which is the
object of the contract and upon the price. It bears
stressing that the absence of any of the essential
elements (consent, object, and price in money or
its equivalent) negates the existence of a
perfected contract of sale.
As provided in Article 1868 of the New Civil Code,
there was no showing that petitioners consented to
the act of Dizon nor authorized her to act on their
behalf with regard to her transaction with private
respondent.

Every person dealing with an agent is put upon

inquiry and must discover upon his peril the
authority of the agent. Being negligent in not
ascertaining the authority of Dizon, private
respondent cannot seek relief on the basis of a
supposed agency.
Consequently, the PHHC cancelled the award,
executed a deed of sale after its full payment and
issued the corresponding transfer certificate of title
to her.

G.R. No. 137290. July 31, 2000

SAN MIGUEL PROPERTIES PHILIPPINES, INC
vs. SPS. HUANG

FACTS:

Petitioner San Miguel Properties Philippines, Inc. is

a domestic corporation engaged in the purchase
and sale of real properties. Part of its inventory are
two parcels of land in Pasig City.
The said properties were offered for sale to Atty.
Dauz who was acting for respondent spouses. In a
letter, Atty. Dauz signified her clients interest in
purchasing the properties under the different
terms. However, petitioner refused the counteroffer.
Atty. Dauz wrote another letter proposing new
terms with an earnest deposit.
Petitioner, through its president and CEO, wrote
Atty. Dauz informing her that they are returning
earnest-deposit because the parties failed to agree
on the terms and conditions.
However, respondent spouses, through counsel,
wrote petitioner demanding the execution of a
deed of sale. Respondents attempted to return the
"earnest-deposit" but petitioner refused on the
ground that respondents option to purchase had
already expired.

Respondent spouses filed a complaint for specific

performance against petitioner before the RTC
which dismissed the same. They appealed to the
Court of Appeals which rendered a decision in their
favor.
Petitioner moved for
motion was denied.

reconsideration,

but

its

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.
While the parties already agreed on the object of
the sale and the purchase price, the fact remains
that they failed to arrive at mutually acceptable
terms of payment. The parties never got past the
negotiation stage of the contract of sale.

Hence, this petition.

ISSUE:

WON CA erred in finding that there was a perfected

contract of sale between the parties.

The Court in previous cases laid down the rule that

the manner of payment of the purchase price is an
essential element before a valid and binding
contract of sale can exist. A disagreement on the
manner of payment is tantamount to a failure to
agree on the price.
Thus, 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.
G.R. No. 126376. November 20, 2003

HELD:

SPS BUENAVENTURA vs. COURT OF APPEALS

CAs decision is REVERSED and
complaint is DISMISSED.

respondents

There was no perfected contract of sale between

the parties. The Court holds that respondents did
not give the earnest money as provided by Art.
1482 of the Civil Code which provides that
"[w]henever earnest money is given in a contract
of sale, it shall be considered as part of the price
and as proof of the perfection of the contract."
The amount was thus given not as a part of the
purchase price and as proof of the perfection of the
contract of sale but only as a guarantee that
respondents would not back out of the sale.
Respondents in fact described the amount as an
"earnest-deposit."
Moreover, such option secured by respondents was
fatally defective because 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

FACTS:

Defendant spouses Leonardo and Feliciana are the

parents of plaintiffs and of defendants. The
married Joaquin children are joined in this action by
their respective spouses.
Sought to be declared null and void ab initio are
certain deeds of sale of real property executed by
defendant parents Leonardo Joaquin and Feliciana
Landrito in favor of their co-defendant children and
the corresponding certificates of title issued in
their names.
As averred by the plaintiffs, the said documents
are simulated on the basis it was the result of a
deliberate conspiracy designed to unjustly deprive

the rest of the compulsory heirs of their legitime.

The deeds do not reflect and express the true
intent of the parties as there was no valid
consideration, and if there was, the value of the
properties are three-fold times more than the sums
appearing therein. All of these were denied by the
defendants.
The RTC dismissed the case against the defendant
spouses on the ground that compulsory heirs have
the right to a legitime but such right is contingent
since said right commences only from the moment
of death of the decedent pursuant to Article 777 of
the Civil Code.

name of the real party-in-interest or the party who

would be benefitted or injured by the judgment, or
the party entitled to the avails of the suit.
As the appellate court stated, the petitioners right
to their parents properties is merely inchoate and
vests only upon their parents death. While still
living, the parents of petitioners are free to dispose
of their properties. While the sale of the lots
reduced the estate, cash of equivalent value
replaced the lots taken from the estate. Hence, the
sale of the lots to their siblings does not affect the
value of their parents estate.
On Issue No. 2

On appeal, the Court of Appeals affirmed the

decision of the trial court.
Hence, the instant petition.

ISSUES:

1. WON the petitioners have a legal interest over

the properties subject of the Deeds of Sale.
2. WON the Deeds of Sale are void for lack of
consideration.
3. WON the Deeds of Sale are void for gross
inadequacy of price.

No.
Article 1471 of the Civil Code states that if the
price in a contract of sale is simulated, the sale is
void. A contract of sale, as a consensual contract,
becomes a binding and valid contract upon the
meeting of the minds as to price. If there is no
meeting of the minds of the parties as to the price,
because the price stipulated in the contract is
simulated, then the contract is void.
In this case, petitioners failed to show that the
prices in the Deeds of Sale were absolutely
simulated. Not only did respondents minds meet
as to the purchase price, but the real price was
also stated in the Deeds of Sale. As of the filing of
the complaint, respondents have fully paid the
same to their respondent father.
On Issue No. 3
No.

HELD:
The Court find the petition without merit and
AFFIRM the decision of the CA in toto.

Articles 1355 of the Civil Code states that except in

cases specified by law, lesion or inadequacy of
cause shall not invalidate a contract, unless there
has been fraud, mistake or undue influence.

No.

Article 1470 of the Civil Code further provides that

gross inadequacy of price does not affect a
contract of sale, except as may indicate a defect in
the consent, or that the parties really intended a
donation or some other act or contract.

The petitioners are interested in the said properties

but failed to show any legal right to the
properties. An action must be prosecuted in the

Petitioners failed to prove any of the instances

mentioned in said articles which would invalidate,
or even affect, the Deeds of Sale. Indeed, there is

On Issue No. 1

no requirement that the price be equal to the exact

value of the subject matter of sale. All the
respondents believed that they received the
commutative value of what they gave.

G.R. No. L-116650 May 23, 1995

TOYOTA SHAW, INC. vs. COURT OF APPEALS
FACTS:
Mr. Sosa, the petitioner, with his son went to Toyota
Shaw, Inc. to purchase a Toyota Lite Ace. Mr. Sosa
emphasized to Toyotas sales representative that
he needed it on a certain date which the latter
agreed. Both then signed an agreement with
include the term that the balance of the purchase
price would be paid by credit financing.
When the downpayment was delivered, the sales
representative in return accomplished a printed
Vehicle Sales Proposal (VSP) on which his son
signed under the subheading CONFORME. The
manner of payment was indicated but the spaces
provided for "Delivery Terms" were not filled-up.
Condition of sales was also included which
condition the sale based on the availability of the
unit and that the stated price is subject to change
without prior notice.

HELD:
The Court GRANTED the petition, REVERSED and
SET ASIDE the decisions of the CA and RTC. The
complaint was DISMISSED.
The Court ruled that it is not a contract of sale and
there is no perfected contract of sale.
Civil Code defines a contract of sale as follows:
Art. 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 to pay
therefor a price certain in money or its
equivalent.
A contract of sale may be absolute or
conditional.
When it is deemed perfected:
Art. 1475. The contract of sale is perfected
at the moment there is a meeting of minds
upon the thing which is the object of the
contract and upon the price.
From that moment, the parties may
reciprocally demand performance, subject
to the provisions of the law governing the
form of contracts.

On the date agreed, the car was not delivered. And

so, Mr. Sosa asked that his downpayment be
refunded which Toyota did so on the very same
day. Despite this, he sent letters to Toyota
demanding an amount representing interest and
damages.

The VSP was a mere proposal which was aborted in

lieu of subsequent events. As such, there was no
obligation on the part of Toyota to transfer
ownership to Mr. Sosa. It follows that the VSP
created no demandable right in favor of Mr. Sosa
for the delivery of the vehicle to him.

When Toyota did not acceded to his demand, Mr.

Sosa then filed a complaint in RTC against the
company for damages. The court rendered a
decision his favor. It ruled that the agreement
signed was a valid perfected contract of sale which
bound Toyota to deliver the vehicle to him.

The Court stressed that a definite agreement on

the manner of payment of the price is an essential
element in the formation of a binding and
enforceable contract of sale. A disagreement on
the manner of payment is tantamount to a failure
to agree on the price.

Dissatisfied, Toyota appealed to the Court of

Appeals. However, it affirmed in toto the appealed
decision.

However, in this case, the agreement shows the

absence of a meeting of minds between the parties
because of the fact that Mr. Sosa did not even sign
it. Also, nothing was mentioned about the full
purchase price and the manner the installments
were to be paid.

Hence, this instant petition.

ISSUE:
WON the agreement executed a perfected contract
of sale.

G.R. No. 115101 March 2, 1998

MANANZALA vs.COURT OF APPEALS

FACTS:

the Civil Code, which provides that things having a

potential existence may be the object of a contract
of sale. Consequently, the court ordered petitioner
to transfer ownership of the land to private
respondent.
Hence this petition.

Petitioner Fidela Mananzala is the registered owner

of a parcel of land in Quezon City. Petitioner had
been in actual possession of the land by virtue of a
conditional sale made in her favor by the Philippine
Homesite and Housing Corporation (PHHC), now
the National Housing Authority (NHA). However,
the PHHC awarded the land to Mercado spouses.
The petitioner contested the award in court which,
in return, ruled in her favor. Consequently, the
PHHC cancelled the award, executed a deed of sale
after its full payment and issued the corresponding
transfer certificate of title to her.

ISSUES:
1. WON the CA erred in relying on the
presumption of regularity accorded to
notarial documents.
2. WON the CA erred in validating the contract
between petitioner and private respondent.
HELD:
The decision of the Court of Appeals is AFFIRMED.
On Issue No. 1

On the other hand, private respondent Aranez

brought an action against petitioner to enforce a
deed of sale covering the same lot allegedly
entered into between them. Indicated therein is
the transfer of title to private respondent within 30
days after full payment of the purchase price by
petitioner to the PHHC.
Petitioner denied the sale. She contended that the
deed was a forgery and that her signature was
secured through fraud. She further averred that
the deed of sale was void because it was made
before the actual award of the land to her and that
it was made in violation of the prohibition in the
rules and regulations of the PHHC against the
subsequent disposition of the land within one year
of the issuance of the title.
The trial court dismissed the complaint.
On appeal, the Court of Appeals reversed the lower
courts decision. It held that there was a meeting
of the minds between the parties as evidenced by
the signature of the petitioner on the deed of sale
which the NBI found to be genuine. The
notarization of the deed gave rise to the
presumption of its regularity. It further held that
petitioner could validly sell the land even before
the actual award to her pursuant to Art. 1461 of

No.
The decision of the appellate court shows that the
court also took into account the evidence of the
parties. The trial court itself arrived at the same
conclusion of the NBI as to the genuiness and due
execution of the deed. In the absence of very clear
evidence to the contrary, this Court will not revise.
On Issue No. 2
No.
The appellate court, in reversing the trial court,
simply considered the issues raised by the trial
court's decision, namely, whether petitioner's
signature on the deed was a forgery, whether there
was a meeting of the minds of the parties, and
whether there could be a sale of future property.
The question whether the sale was void because it
was made within the one-year period of prohibition
to petitioner as awardee was never briefed. Hence,
petitioner waived this ground and cannot urge it as
ground for reversing CAs decision.