Atkins Kroll & Co. vs.

Cu Hian Tek
102 Phil 984
January 1958

FACTS:

On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian
Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at
$8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural 48/15 oz. talls at $6.25 per carton,
and (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with
all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said
offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities
due to the shortage of catch of sardines by the packers in California.

Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his
favor. Upon Atkins’ appeal, the Court of Appeals affirmed said decision but reduced the damages to
P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of
sale but only an option to buy, which was not enforceable for lack of consideration because it is
provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the
promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was
a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23.

Was there a contract of sale between the parties or only a unilateral promise to buy?

COURT RULING:

The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument
assumed that only a unilateral promise arose when the respondent accepted the offer, which is
incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance.

Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for
their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm
offer for the sale" and that "the undersigned buyer has immediately filed an application for import
license.” After accepting the promise and before he exercises his option, the holder of the option is
not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's
offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the
obligations of a purchaser.

EQUATORIAL REALTY DEVELOPMENT, INC., vs.

MAYFAIR THEATER, INC.
Posted on September 21, 2013 by winnieclaire
Standard
[G.R. No. 133879. November 21, 2001.]

FACTS:

 Mayfair Theater, Inc. was a lessee of portions of a building owned by Carmelo & Bauermann, Inc. Their
lease contracts of 20 years (1. which covered a portion of the second floor and mezzanine of a two-storey
building with about 1,610 square meters of floor area, which respondent used as a movie house known as
 Maxim Theater 2. two store spaces on the ground floor and the mezzanine, with a combined floor area of
about 300 square meters also used as a movie house “Miramar Theater”)
 Lease contracts contained a provision granting Mayfair a right of first refusal to purchase the subject
properties.
 However, before the contracts ended, the subject properties were sold for P11,300 by Carmelo to Equatorial
Realty Development, Inc.
 This prompted Mayfair to file a case for the annulment of the Deed of Absolute Sale between Carmelo and
Equatorial, specific performance and damages.
 In 1996, the Court ruled in favor of Mayfair.
 Barely five months after Mayfair had submitted its Motion for Execution, Equatorial filed an action for
collection of sum of money against Mayfair claiming payment of rentals or reasonable compensation for the
defendant’s use of the subject premises after its lease contracts had expired.
 Maxim Theater contract expired on May 31, 1987, while the Lease Contract covering the premises occupied
by Miramar Theater lapsed on March 31, 1989.
 The lower court debunked the claim of Equatorial for unpaid back rentals, holding that the rescission of the
Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual propriety
rights, even in expectancy.
 It further ruled that the Court categorically stated that the Deed of Absolute Sale had been rescinded
subjecting the present complaint to res judicata.
 Hence, Equatorial filed the present petition.

ISSUE: whether Equatorial was the owner of the subject property and could thus enjoy the fruits or rentals therefrom

HELD: NO.

CIVIL LAW; PROPERTY; CIVIL FRUIT OF OWNERSHIP; RENTALS. — Rent is a civil fruit that belongs to the owner
of the property producing it by right of accession. Consequently and ordinarily, the rentals that fell due from the time
of the perfection of the sale to petitioner until its rescission by final judgment should belong to the owner of the
property during that period.

SALES; OWNERSHIP OF THE THING SOLD IS TRANSFERRED, NOT BY CONTRACT ALONE, BUT BY
TRADITION OR DELIVERY. — By a contract of sale, “one of the contracting parties obligates himself to transfer
ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its
equivalent.” Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him
“in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee.” This right is transferred, not by contract alone, but by
tradition or delivery. Non nudis pactis sed traditione dominia rerum transferantur.

THERE IS DELIVERY WHEN THE THING SOLD IS PLACED UNDER THE CONTROL AND POSSESSION OF THE
VENDEE. — [T]here is said to be delivery if and when the thing sold “is placed in the control and possession of the
vendee.” Thus, it has been held that while the execution of a public instrument of sale is recognized by law as
equivalent to the delivery of the thing sold, such constructive or symbolic delivery, being merely presumptive, is
deemed negated by the failure of the vendee to take actual possession of the land sold. Delivery has been described
as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which
one party parts with the title to and the possession of the property, and the other acquires the right to and the
possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title;
it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of
delivery contemplate “the absolute giving up of the control and custody of the property on the part of the vendor, and
the assumption of the same by the vendee.”

ID.; NOT PRESENT IN CASE AT BAR. — [T]heoretically, a rescissible contract is valid until rescinded. However, this
general principle is not decisive to the issue of whether Equatorial ever acquired the right to collect rentals. What is
decisive is the civil law rule that ownership is acquired, not by mere agreement, but by tradition or delivery. Under the
factual environment of this controversy as found by this Court in the mother case, Equatorial was never put in actual
and effective control or possession of the property because of Mayfair’s timely objection.

ID.; EXECUTION OF CONTRACT OF SALE AS FORM OF CONSTRUCTIVE DELIVERY HOLDS TRUE ONLY
WHEN THERE IS NO IMPEDIMENT THAT MAY PREVENT THE PASSING OF THE PROPERTY FROM THE
VENDOR TO THE VENDEE. — From the peculiar facts of this case, it is clear that petitioner never took actual control
and possession of the property sold, in view of respondent’s timely objection to the sale and the continued actual
possession of the property. The objection took the form of a court action impugning the sale which, as we know, was
rescinded by a judgment rendered by this Court in the mother case. It has been held that the execution of a contract
of sale as a form of constructive delivery is a legal fiction. It holds true only when there is no impediment that may
prevent the passing of the property from the hands of the vendor into those of the vendee. When there is such
impediment, “fiction yields to reality — the delivery has not been effected.” Hence, respondent’s opposition to the
transfer of the property by way of sale to Equatorial was a legally sufficient impediment that effectively prevented the
passing of the property into the latter’s hands.

ID.; EXECUTION OF PUBLIC INSTRUMENT GIVES RISE ONLY TO A PRIMA FACIE PRESUMPTION OF
DELIVERY. — The execution of a public instrument gives rise, . . . only to a prima facie presumption of delivery. Such
presumption is destroyed when the instrument itself expresses or implies that delivery was not intended; or when by
other means it is shown that such delivery was not effected, because a third person was actually in possession of the
thing. In the latter case, the sale cannot be considered consummated.

Serra vs. Court of Appeals, and RCBC

229 SCRA 60

January 1994

FACTS:

Petitioner Federico Serra, who is the owner of a 374 square meter parcel of land located at Masbate,
Masbate, and private respondent Rizal Commercial Banking Corporation (RCBC) entered into a "Contract
of Lease with Option to Buy" in May 25, 1975 which provided that Serra will lease the subject land to
RCBC for a period of 25 years from June 1, 1975 to June 1, 2000, that the RCBC has the option to
purchase the same at P210.00 per square meter within a period of 10 years from May 25, 1975, the date
of the signing of the Contract, and that Serra will have to register said land under the Torrens System to
the Register of Deeds of Province of Masbate within the same 10-year option period. Pursuant to said
contract, RCBC constructed improvements on the subject land to house its branch office, while the
petitioner had the property, within 3 years from 1975, duly registered with OCT No. 0-232 under the
Torrens System. Later, petitioner alleged that as soon as he had the property registered, he kept on
pursuing the branch manager for the sale of the lot as per their agreement, but it was not until
September 4, 1984, that RCBC decided to exercise the option.

RCBC informed petitioner, through a letter, of its intention to buy the property at the agreed price of
not greater than P210.00 per square meter or a total of P78,430.00, but petitioner replied that he is no
longer selling the property. RCBC then filed an action for specific performance and damages against
Serra in March 1985 alleging that during the negotiations it made clear to petitioner that it intends to
stay permanently on property once its branch office is opened unless the exigencies of the business
requires otherwise.

Although finding that the contract was valid, the lower court ruled that the option to buy is
unenforceable because it lacked a consideration distinct from the price and RCBC did not exercise its
option within the reasonable time. Upon motion for reconsideration, however, the lower court reversed
itself on the 2nd issue, declared the contract as valid, and ordered Serra to deliver the proper deed of
sale to RCBC. The Court of Appeals likewise affirmed said decision.

ISSUE:

Was there a valid contract of lease with option to buy between the parties? Was there a consideration
distinct from the price to support the option given to RCBC?

COURT RULING:

The Supreme Court affirmed the appellate court’s decision. A contract of adhesion is one wherein a
party, usually a corporation, prepares the stipulations in the contract, while the other party merely
affixes his signature or his "adhesion" thereto. These types of contracts are as binding as ordinary
contracts because in reality, the party who adheres to the contract is free to reject it entirely.

In the case at bar, the Supreme Court did not find the situation to be inequitable because petitioner is a
highly educated man, who, at the time of the trial was already a CPA-Lawyer, and when he entered into
the contract, was already a CPA, holding a respectable position with the Metropolitan Manila
Commission. It is evident that a man of his stature should have been more cautious in transactions he
enters into, particularly where it concerns valuable properties. Also, in the present case, the
consideration is even more onerous on the part of the lessee since it entails transferring of the building
and/or improvements on the property to petitioner, should respondent bank fail to exercise its option
within the period stipulated.

SALES | B2015CASES
Limson vs. CA

April 20, 2011Bellosillo, J.Ramirez, J.

SUMMARY:
Spouses de Vera offered to sell the property to Limson. She agreed to
buy and paid 20k “earnest money”, the receipt issued for the said payment
states that
she has the option to buy within 10 days. The spouses executed a Deed of
Sale oversaid property to SUNVAR. Limson assails the sale as violative of her
right to purchase.Court said that there was only a option contract and not contract to
sell bet. Limsonand spouses. 20k was not earnest money but option money.
DOCTRINE:
"Earnest money" and "option money" are not the same but
distinguishedthus: (a) earnest money is part of the purchase price, while
option money is themoney given as a distinct consideration for an option
contract; (b) earnest money isgiven 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 thebalance, while when the
would-be buyer gives option money, he is not required tobuy but may even
forfeit it depending on the terms of the option.
SELLER
Spouses de Vera (Lorenzoand Asuncion)
SUBJECTPROPERTY:
Parcel of Land inParanaque
BUYER
Option contract
–
Limson

Deed of Sale - SUNVAR

DOCUMENT:
Option contract embodied in the receipt for payment.
FACTS:

Spouses offered to sell to Lourdes Limson the subject land through

theiragent Marcosa Sanchez

July 31, 1978

–
she agreed to buy the property and gave them 20Kas
‘earnest money’, respondent signed a receipt and gave her 10
-day optionperiod to buy the property

Lorenzo de Vera informed her tha the property was mortgaged to

theRamoses and asked her to pay the balance of the purchase price to
settlethe obligation with the latter
August 5,1978
–
she agreed to meet with respondents and Ramoses toconsummate
transaction but Asuncion and the Ramoses did not appear

Aug. 11
–
she claimed that she was willing to pay but transaction did not materialize
because of unpaid back taxes on the property

Aug. 23- she gave respondents checks to pay the said taxes which
wasconsidered as part of the purchase price.

Sept. 5. 1978
–
she learned that the property is subject to negotiationbetween the spouses
and SUNVAR Realty Development Corp.

Filed an Affidavit of Adverse Clain which was annotated to the title

Sept. 15
–
Deed of Sale executed between spouses and SUNVAR

Sept. 26- title issued to SUNVAR with the annotation of adverse claim

ACTION AND PRAYER:

Annulment of Deed of Sale in favor of SANVAR and cancellation of title

Execution of Deed of Sale between her and respondents

Allegations

Petitioner

RespondentsAnswer

SUNVAR’s answer

Respondent’s answer to
SUNVAR

Property soldin violation of her legal right to purchase.

SUNVARbuyer in badfaith.

No cause of action becauseoption to buyhad longexpired

Did not know of theadverse claim.

Cross-claim against respondents for badfaith

When they negotiated w/SUNVAR, option period of petitioner expired.

SUNVAR checked the titlebefore the sale

RTC RULING:
Favored the Petitioner1)

Annulment and cancellation of the deed of sale and title in favor

of SUNVAR2)

Respondent spouses to execute deed of sale in favor of petitioner

uponpayment of the balance
CA RULING:
Completely reversed RTC1)

Ordered Register of Deeds to lift Adverse Claim annotation on the title2)

Petitioner to pay damages to SUNVAR and respondent spouses

PETITION:
Motion for Reco in CA denied

Petition for Review on Certiorari seeking to reverse CA decision

ARGUMENTS OF BUYER:
Perfected contract to sell bet. Her and respondents
ARGUMENTS OF SELLER:
What was perfected was mere option
ISSUE:
WON there was a perfected contract to sell between petitioner
andrespondents

Matabuena v. Cervantes
G.R. No. L-28771 (March 31, 1971)

FACTS:
Felix Matabuena cohabitated with Respondent. During this period, Felix Matabuena donated to
Respondent a parcel of land. Later the two were married. After the death of Felix Matabuena, his
sister, Petitioner, sought the nullification of the donation citing Art.133 of the Civil Code
“Every donation between the spouses during the marriage shall be void.”
The trial court ruled that this case was not covered by the prohibition because the donation was made
at the time the deceased and Respondent were not yet married and were simply cohabitating.

ISSUE:
W/N the prohibition applies to donations between live-in partners.

HELD:
Yes. It is a fundamental principle in statutory construction that what is within the spirit of the law is as
much a part of the law as what is written. Since the reason
for the ban on donations between spouses during the marriage is to prevent the possibility of
undue influence and improper pressure being exerted by one spouse on the other, there is no reason
why this prohibition shall not apply also to common-
law relationships.The court, however, said that the lack of the donation made by the deceased
to Respondent does not necessarily mean that the Petitioner will have exclusive rights to the
disputed property because the relationship between Felix and Respondent were legitimated by
marriage.
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MERCADO VS5 ESPIRITU

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37 Phil 215 – Civil Law – Obligations and Contracts – Parties to a Contract – Liability of a Minor

Margarita Espiritu was the owner of a 48 hectare land. In 1897, she died and the land was left to her
husband (Wenceslao Mercado) and her children, Domingo Mercado, Josefa Mercado and 3 other
siblings.

Apparently however, during the lifetime of Margarita in 1894, she executed a deed of sale transferring
about 71% of her land (covering 15 cavanes of seeds) to her brother Luis Espiritu (father of Jose Espiritu)
for P2,000.00. After her death, Wenceslao had a hard time making ends meet for his family and so he
took out a loan from Luis in the amount of P375.00. The loan was secured by the remainder of the lot.
Later, that loan was increased to P600.00.

In May 1910, Luis entered into a notarized agreement with Domingo and Josefa whereby the two, while
purporting to be of legal age, acknowledged the sale and the loan previously entered into by their
parents with Luis. In the same agreement, the siblings agreed that for and in consideration of the
amount of P400.00, they are transferring the remainder 29% (covering 6 cavanes of seeds) to Luis.

But later, the siblings contested the said agreement. Luis later died and he was substituted by Jose. It is
the contention of Domingo et al that the agreement is void because they were only minors, 19 and 18
years of age respectively, when the contract was entered into in May 1910 (21 being the age of minority
at that time).

ISSUE: Whether or not the agreement between Luis and Domingo et al in May 1910 is valid despite the
minority of the latter party.

HELD: Yes. In the first place, their minority of Domingo and Josefa was not proven with certainty
because of the loss of official records (got burned down). However, even assuming that they were
indeed minors, they are bound by their declaration in the notarized document where they presented
themselves to be of legal age. Domingo claimed he was 23 years old in the said document. The Supreme
Court declared: the sale of real estate, made by minors who pretend to be of legal age, when in fact they
are not, is valid, and they will not be permitted to excuse themselves from the fulfillment of the
obligations contracted by them, or to have them annulled in pursuance of the provisions of Law.

Further, there was no showing that the said notarized document was attended by any violence,
intimidation, fraud, or deceit.

CHING VS GOYANGCO
Facts:

Joseph Goyanko and Epifania dela Cruz were married. During the marriage, they acquire a certain
property in Cebu. In 1993, Joseph executed a deed of sale over the property in favor of his common-
law-wife Maria B. Ching. After Joseph's death, his children with Epifania discovered the sale. They
thus filed with the Regional Trial Court of Cebu City a complaint for recovery of property
and damages against Ching, praying for the nullification of the deed of sale and of the TCT and the
issuance of a new one in favor of their father Goyanko.

Issue:

Was the sale made by Joseph Goyanko in favor of his common-law wife valid?

Held:

No. The proscription against sale of property between spouses applies even to common law
relationships.

Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purposes is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from the
very beginning.

Article 1352 also provides that: “Contracts without cause, or with unlawful cause, produce no effect
whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public order, or public
policy.”

Additionally, the law emphatically prohibits the spouses from selling property to each other subject to
certain exceptions. Similarly, donations between spouses during marriage are prohibited. And this is
so because if transfers or conveyancesbetween spouses were allowed during marriage, that would
destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent
the exercise of undue influence by one spouse over the other, as well as to protect the institution of
marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband
and wife without benefit of marriage, otherwise, “the condition of those who incurred guilt would turn
out to be better than those in legal union.”

Rubias vs Batiller (1973)

Facts:
-

Francisco Militante claimed that he owned aparcel of land located in Iloilo. He filed with theCFI of Iloilo
an application for the registrationof title of the land. This was opposed by theDirector of Lands, the
Director of Forestry, andother oppositors. The case was docked as aland case, and after trial the court
dismissedthe application for registration. Militanteappealed to the Court of Appeals.

Pending that appeal, he sold to Rubias (hisson-in-law and a lawyer) the land.

The CA rendered a decision, dismissing theapplication for registration.

Rubias filed a Forcible Entry and Detainer caseagainst Batiller.

In that case, the court held that Rubias has nocause of action because the property in disputewhich
Rubias allegedly bought from Militantewas the subject matter of a land case, in whichcase Rubias was
the counsel on record of Militante himself. It thus falls under Article1491 of the Civil Code. (Hence, this
appeal.)

Issue: Whether the sale of the land is prohibitedunder Article 1491.Held: YES

. Ar

ticle 1491 says that “The following

persons cannot acquire any purchase, even at a publicor judicial auction, either in person or through the

mediation of another…. (5) Justices, judges,

prosecuting attorneys, clerks of superior and inferiorcourts, and other officers and employees
connectedwith the administration of justice, the property andrights in litigation or levied upon an
execution beforethe court within whose jurisdiction or territory theyexercise their respective functions;
this prohibitionincludes the act of acquiring by assignment and shallapply to lawyesr, with respect to the
property andrights which may be the object of any litigation inwhich they may take part by virtue of
their

profession.” The present case clearly falls under this,

especially since the case was still pending appeal whenthe sale was made.

Issue: Legal effect of a sale falling under Article1491?Held: NULL AND VOID.CANNOT BE RATIFIED.

Manresa considered such prohibitedacquisitions (which fell under the Spanish Civil Code)as merely
voidable because the Spanish Code did notrecognize nullity. But our Civil Code does recognize the

absolute nullity of contracts “whose cause, object or

purpose is contract to law, morals, good customs,

public order or public policy” or which are “expresslyprohibited or declared void by law” and declares
suchcontracts “inexistent and void from the beginning.” The

nullity of such prohibited contracts is definite andpermanent, and cannot be cured by ratification.The
public interest and public policy remainparamount and do not permit of compromise orratification. In
this aspect, the permanentdisqualification of public and judicial officers andlawyers grounded on

public policy

differs from the firstthree cases of guardians agents and administrators(under Art 1491). As to their
transactions, it has been

opined that they may be “ratified” by means of and in “the form of a new contract, in which case its
validity

shall be determined only by the circumstances at thetime of execution of s

uch new contract.” In those

cases, the object which was illegal at the time of thefirst contract may have already become lawful at
thetime of the ratification or second contract, or theintent, or the service which was impossible.
Theratification or second contract would then be valid fromits execution; however, it does not retroact
to the dateof the first contract.Decision affirmed.

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