[05-01] Limketkai Sons Milling v.

CA (GR 118509, 1 December 1995)

Third Division, Melo (J): 4 concur
Facts: On 14 May 1976, Philippine Remnants Co., Inc. constituted the Bank of the Philippine
Islands (BPI) as its trustee to manage,
administer, and sell its real estate property. One such piece of property placed under trust was the
disputed lot, a 33,056-sq.ms. lot
at Barrio Bagong Ilog, Pasig (TCT 493122). On 23 June 1988, Pedro Revilla, Jr., a licensed real
estate broker was given formal
authority by BPI to sell the lot for P1,000.00 per sq.m. This arrangement was concurred in by the
owners of the Philippine
Remnants. Broker Revilla contacted Alfonso Lim of Limketkai Sons Milling (LSM) who agreed
to buy the land. On 8 July 1988,
LSMs officials and Revilla were given permission to enter and view the property they were
buying (by Rolando V. Aromin, BPI
Assistant Vice-President). On 9 July 1988, Revilla formally informed BPI that he had procured a
buyer, LSM. On 11 July 1988,
LSMs officials, Alfonso Lim and Albino Limketkai, went to BPI to confirm the sale. They were
entertained by Vice-President Merlin
Albano and Asst. Vice-President Aromin. LSM asked that the price of P1,000.00 per sq.m. be
reduced to P900.00 while Albano
stated the price to be P1,100.00. The parties finally agreed that the lot would be sold at P1,000.00
per sq.m. to be paid in cash.
Since the authority to sell was on a first come, first served and non-exclusive basis, it may be
mentioned at this juncture that there is
no dispute over LSMs being the first comer and the buyer to be first served. Notwithstanding the
final agreement to pay P1,000.00
per sq.m. on a cash basis, Alfonso Lim asked if it was possible to pay on terms. The bank
officials stated that there was no harm in
trying to ask for payment on terms because in previous transactions, the same had been allowed.
It was the understanding,
however, that should the term payment be disapproved, then the price shall be paid in cash. It
was Albano who dictated the terms
under which the installment payment may be approved, and acting thereon, Alfonso Lim, on the
same date, 11 July 1988, wrote BPI
through Merlin Albano embodying the payment initially of 10% and the remaining 90% within a
period of 90 days. 2 or 3 days later,
LSM learned that its offer to pay on terms had been frozen. Alfonso Lim went to BPI on 18 July
1988 and tendered the full payment
of P33,056,000.00 to Albano. The payment was refused because Albano stated that the authority
to sell that particular piece of
property in Pasig had been withdrawn from his unit. The same check was tendered to BPI VicePresident Nelson Bona who also
refused to receive payment.
An action for specific performance with damages was thereupon filed on 25 August 1988 by
LSM against BPI with the RTC Pasig

(Branch 151). In the course of the trial, BPI informed the trial court that it had sold the property
under litigation to National Book
Store (NBS) on 14 July 1989. The complaint was thus amended to include NBS. On 10 June
1991, the trial court rendered judgment
in favor of LSM; holding that there was a perfected contract between LSM and BPI, and thus
declared the Deed of Sale involving the
lot in Pasig in the name of BPI and in favor of NBS as null and void; ordered the Register of
Deeds of the Province of Rizal to cancel
the TCT which may have been issued in favor of NBS by virtue of the said deed; ordered BPI
upon receipt by it from LSM of the
sum of P33,056,000,00 to execute a Deed of Sale in favor of the latter of the said property at the
price of P1,000.00 per sq.m. and in
default thereof, the Clerk of Court is directed to execute the deed dated 14 July 1989; ordered the
Register of Deeds of Pasig, upon
registration of the said deed, whether executed by BPI or the Clerk of Court and payment of the
corresponding fees and charges, to
cancel said TCT 493122 and to issue, in lieu thereof, another transfer certificate of title in the
name of LSM; ordered BPI and NBS to
pay in solidum to LSM the sums of P10,000,000.00 as actual and consequential damages and
P150,000.00 as attorneys fees and
litigation expenses, both with interest at 12% per annum from date of judgment; on the crossclaim by the bank against NBS,
ordered NBS to indemnify the bank of whatever BPI shall have paid to LSM; dismissed the
counterclaim of both BPI and NBS
against LSM and the cross-claim of NBS against BPI; with costs against BPI and NBS.
Upon elevation of the case to the Court of Appeals, the decision of the trial court was reversed
and the complaint dismissed on 12
August 1994. It was held that no contract of sale was perfected because there was no
concurrence of the three requisites
enumerated in Article 1318 of the Civil Code. Hence, the petition.
The Supreme Court reversed and set aside the questioned judgment of the Court of Appeals, and
reinstated the 10 June 1991
judgment of Branch 151 of the RTC of The National Capital Judicial Region stationed in Pasig,
Metro Manila except for the award of
P10,000,000.00 damages, which was deleted.
[05-02] De la Cavada v. Diaz (GR L-11668, 1 April 1918)
First Division, Johnson (J): 5 concur
Facts: On 15 November 1912, Antonio Diaz and Antonio Enriquez de la Cavada entered into a
contract of option for the latter to
purchase the formers hacienda at Pitogo, within the period necessary for the approval and
issuance of a Torrens title thereto by the
Government for P30,000 in cash or P40,000 with 6% interest per annum within 6 years with due
security, i.e. the 100 hectares of
land in Pitogo, Tayabas; containing 20,000 coconut trees and 10,000 nipa-palm trees sold to
Enriquez for P70,000. Subsequently,

Enriquez informed Diaz of his conformity with the letter of option under the condition that he
shall send a surveyor to survey the said
property, and to apply to the Government for a Torrens title therefor, and, if the expenses
incurred for the same should not exceed
P1,000, he shall pay the P500 and you the other P500; Provided, however, that Diaz shall give
the surveyor all necessary
assistance during his stay at the hacienda; and that he shall pay the purchase price to you in
conformity with our letter of option of
this date, and after the Torrens title shall have been officially approved. Soon after the execution
of said contract, and in part
compliance with the terms thereof, Diaz presented 2 petitions in the Court of Land Registration
(13909 and 13919), each for the
purpose of obtaining the registration of a part of the Hacienda de Pitogo. Said petitions were
granted, and each parcel was
registered and a certificate of title was issued for each part under the Torrens system to Diaz.
Later, and pretending to comply with
the terms of said contract, Diaz offered to transfer to Enriquez one of said parcels only, which
was a part of said hacienda.
Enriquez refused to accept said certificate for a part only of said hacienda upon the ground that
it was only a part of the Hacienda
de Pitogo, and under the contract he was entitled to a transfer to him a all said hacienda.
Raised in the lower court, Diaz theorized that the contract of sale of said Hacienda de Pitogo
included only 100 hectares, more or
less, of said hacienda, and that offering to convey to Enriquez a portion of said hacienda, and
that by offering to convey to
Enriquez a portion of said hacienda composed of 100 hectares, more or less, he thereby
complied with the terms of the contract.
Enriquez theorized, on the other hand, that he had purchased all of said hacienda, and that the
same contained, at least, 100
hectares, more or less. The lower court sustained the contention of Enriquez, that the sale was a
sale of the Hacienda de Pitogo
and not a sale of a part of it. The Court ordered Diaz, within 30 days from the date upon which
this decision becomes final, convey
to Enriquez a good and sufficient title in fee simple to the Court of Land Registration, upon
payment or legal tender of payment by
Enriquez of the sum of P30,000 in cash, and upon Enriquez giving security approved by this
court for the payment within the term of
6 years from the date of the conveyance for the additional sum of P40,000 with interest at the
rate of 6% per annum. The Court
further ordered and adjudged that in the event of the failure of Diaz to execute the conveyance,
Enriquez has and recover judgment
against him, Diaz, for the sum of P20,000, with interest at the rate of 6% (6% per annum from
the date upon which the conveyance
should have been made). From the judgment, Diaz appealed.
The Supreme Court affirmed the judgment of the lower court, with costs.
[05-03] Carceller v. CA (GR 124791, 10 February 1999)

Second Division, Quisumbing (J): 4 concur

Facts: State Investment Houses, Inc. (SIHI), a quasi-banking financial institution, is the
registered owner of 2 parcels of land with a
total area of 9,774 sq.ms., including all the improvements thereon, located at Bulacao, Cebu City
(TCTs T-89152 and T-89153 of the
Registry of Deeds of Cebu City). SIHI was beset with financial problems and was experiencing
difficulty in meeting the claims of its
creditors. In order to reprogram the companys financial investment plan and facilitate its
rehabilitation and viability, SIHI had been
placed under the supervision and control of the Central Bank, was in dire need of liquidating its
assets in order to stay afloat
financially, and thus, was compelled to dispose some of its assets to generate sufficient funds to
augment its badly-depleted
financial resources. This then brought about the execution of the lease contract with option to
purchase between SIHI and Jose
Ramon Carceller. On 10 January 1985, Carceller and SIHI entered into a lease contract with
option to purchase over said 2 parcels
of land (P1.8 million: P360,000 as downpayment and 60 monthly installment with 24% interest
per annum on diminishing balance),
at a monthly rental of P10,000.00 for a period of 18 months, beginning on 1 August 1984 until
30 January 1986. On 7 January 1986,
or approximately 3 weeks before the expiration of the lease contract, SIHI notified Carceller of
the impending termination of the
lease agreement, and of the short period of time left within which he could still validly exercise
the option. It likewise requested
Carceller to advise them of his decision on the option, on or before 20 January 1986. In a letter
dated 15 January 1986, which was
received by SIHI on 29 January 1986, Carceller requested for a 6-month extension of the lease
contract, alleging that he needs
ample time to raise sufficient funds in order to exercise the option. To support his request,
Carceller averred that he had already
made a substantial investment on the property, and had been punctual in paying his monthly
rentals. On 14 February 1986, SIHI
notified Carceller that his request was disapproved. Nevertheless, it offered to lease the same
property to Carceller at the rate of
P30,000.00 a month, for a period of 1 year. It further informed Carceller of its decision to offer
for sale said leased property to the
general public. On 18 February 1986, Carceller notified SIHI of his decision to exercise the
option to purchase the property and at
the same time he made arrangements for the payment of the down payment thereon in the
amount of P360,000.00. On 20
February 1986, SIHI sent another letter to Carceller, reiterating its previous stand on the latters
offer, stressing that the period
within which the option should have been exercised had already lapsed. SIHI asked Carceller to
vacate the property within 10 days
from notice, and to pay rental and penalty due.

On 28 February 1986, Carceller filed a complaint for specific performance and damages against
SIHI before the RTC Cebu City, to
compel the latter to honor its commitment and execute the corresponding deed of sale. After trial,
the court a quo promulgated its
decision dated 1 April 1991, ordering SIHI to execute a deed of sale in favor of Carceller, the
price of which is P1,800,000 in a single
payment and to pay attorneys fee of P20,000; without any award of damages.
Not satisfied with the judgment, SIHI elevated the case to the Court of Appeals by way of a
petition for review. On 21 September
1995, the appellate court rendered its decision, affirming the trial courts judgment, but modified
the basis for assessing the
purchase price. While respondent court affirmed appellees option to buy the property, it added
that, the purchase price must be
based on the prevailing market price of real property in Bulacao, Cebu City.
Baffled by the modification made by the appellate court, both parties filed a motion for
reconsideration and/or clarification, with
Carcller, on one hand, praying that the prevailing market price be the value of the property in
February 1986, the time when the sale
would have been consummated. SIHI, on the other hand, prayed that the market price of the
property be based on the prevailing
price index at least 10 years later, that is, 1996. The appellate court conducted further hearings to
clarify the matter, but no
agreement was reached by the parties. Thus, on 25 April 1996, the appellate court promulgated
the assailed resolution, which
denied both parties motions, and directed the trial court to conduct further hearings to ascertain
the prevailing market value of real
properties in Bulacao, Cebu City and fix the value of the property subject of the controversy.
Hence, the petition for review.
The Supreme Court affirmed the decision of the appellate court, insofar as it affirms the
judgment of the trial court in granting
Carceller the opportunity to exercise the option to purchase the property. It held that the purchase
price should be based on the fair
market value of real property in Bulacao, Cebu City, as of February 1986, when the contract
would have been consummated;
ordered Carceller to pay SIHI legal interest on the said purchase price beginning February 1986
up to the time it is actually paid, as
well as the taxes due on said property, considering that Carceller has enjoyed the beneficial use
of said property; and remanded the
case to the RTC Cebu, Branch 5, for further proceedings to determine promptly the fair market
value of the property; with costs
against SIHI.
[05-04] Adelfa Properties vs. CA (GR 111238, 25 January 1995)
Second Division, Regalado (J): 3 concur
Facts: Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and Dominador
Jimenez, were the registered coowners

of a parcel of land consisting of 17,710 sq. ms (TCT 309773) situated in Barrio Culasi, Las
Pinas, Metro Manila. On 28 July
1988, Jose and Dominador Jimenez sold their share consisting of 1/2 of said parcel of land,
specifically the eastern portion thereof,
to Adelfa Properties pursuant to a Kasulatan sa Bilihan ng Lupa. Subsequently, a
Confirmatory Extrajudicial Partition Agreement
was executed by the Jimenezes, wherein the eastern portion of the subject lot, with an area of
8,855 sq. ms. was adjudicated to
Jose and Dominador Jimenez, while the western portion was allocated to Rosario and Salud
Jimenez. Thereafter, Adelfa Properties
expressed interest in buying the western portion of the property from Rosario and Salud.
Accordingly, on 25 November 1989, an
Exclusive Option to Purchase was executed between the parties, with the condition that the
selling price shall be P2,856,150, that
the option money of P50,000 shall be credited as partial payment upon the consummation of
sale, that the balance is to be paid on
or before 30 November 1989, and that in case of default by Adelfa Properties to pay the balance,
the option is cancelled and 50% of
the option money shall be forfeited and the other 50% refunded upon the sale of the property to a
third party, and that all expenses
including capital gains tax, cost of documentary stamps are for the account of the vendors and
the expenses for the registration of
the deed of sale for the account of Adelfa properties. Considering, however, that the owners
copy of the certificate of title issued to
Salud Jimenez had been lost, a petition for the re-issuance of a new owners copy of said
certificate of title was filed in court through
Atty. Bayani L. Bernardo. Eventually, a new owners copy of the certificate of title was issued
but it remained in the possession of
Atty. Bernardo until he turned it over to Adelfa Properties, Inc.
Before Adelfa Properties could make payment, it received summons on 29 November 1989,
together with a copy of a complaint filed
by the nephews and nieces of Rosario and Salud against the latter, Jose and Dominador Jimenez,
and Adelfa Properties in the RTC
Makati (Civil Case 89-5541), for annulment of the deed of sale in favor of Household
Corporation and recovery of ownership of the
property covered by TCT 309773. As a consequence, in a letter dated 29 November 1989, Adelfa
Properties informed Rosario and
Salud that it would hold payment of the full purchase price and suggested that the latter settle the
case with their nephews and
nieces, adding that if possible, although 30 November 1989 is a holiday, we will be waiting for
you and said plaintiffs at our office up
to 7:00 p.m. Another letter of the same tenor and of even date was sent by Adelfa Properties to
Jose and Dominador Jimenez.
Salud Jimenez refused to heed the suggestion of Adelfa Properties and attributed the suspension
of payment of the purchase price

to lack of word of honor. On 7 December 1989, Adelfa Properties caused to be annotated on

the title of the lot its option contract
with Salud and Rosario, and its contract of sale with Jose and Dominador Jimenez, as Entry No.
1437-4 and entry No. 1438-4,
respectively. On 14 December 1989, Rosario and Salud sent Francisca Jimenez to see Atty.
Bernardo, in his capacity as Adelfa
Properties counsel, and to inform the latter that they were cancelling the transaction. In turn,
Atty. Bernardo offered to pay the
purchase price provided that P500,000.00 be deducted therefrom for the settlement of the civil
case. This was rejected by Rosario
and Salud. On 22 December 1989, Atty. Bernardo wrote Rosario and Salud on the same matter
but this time reducing the amount
from P500,000.00 to P300,000.00, and this was also rejected by the latter. On 23 February 1990,
the RTC dismissed Civil Case 895541.
On 28 February 1990, Adelfa Properties caused to be annotated anew on TCT 309773 the
exclusive option to purchase as Entry
4442-4.On the same day, 28 February 1990, Rosario and Salud executed a Deed of Conditional
Sale in favor of Emylene Chua over
the same parcel of land for P3,029,250.00, of which P1,500,000.00 was paid to the former on
said date, with the balance to be paid
upon the transfer of title to the specified 1/2 portion. On 16 April 1990, Atty. Bernardo wrote
Rosario and Salud informing the latter
that in view of the dismissal of the case against them, Adelfa Properties was willing to pay the
purchase price, and he requested that
the corresponding deed of absolute sale be executed. This was ignored by Rosario and Salud. On
27 July 1990, Jimenez counsel
sent a letter to Adelfa Properties enclosing therein a check for P25,000.00 representing the refund
of 50% of the option money paid
under the exclusive option to purchase. Rosario and Salud then requested Adelfa Properties to
return the owners duplicate copy of
the certificate of title of Salud Jimenez. Adelfa Properties failed to surrender the certificate of
title.
Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for
annulment of contract with damages,
praying, among others, that the exclusive option to purchase be declared null and void; that
Adelfa Properties be ordered to return
the owners duplicate certificate of title; and that the annotation of the option contract on TCT
309773 be cancelled. Emylene Chua,
the subsequent purchaser of the lot, filed a complaint in intervention. On 5 September 1991, the
trial court rendered judgment
holding that the agreement entered into by the parties was merely an option contract, and
declaring that the suspension of payment
by Adelfa Properties constituted a counter-offer which, therefore, was tantamount to a rejection
of the option. It likewise ruled that

Adelfa Properties could not validly suspend payment in favor of Rosario and Salud on the
ground that the vindicatory action filed by
the latters kin did not involve the western portion of the land covered by the contract between
the parties, but the eastern portion
thereof which was the subject of the sale between Adelfa Properties and the brothers Jose and
Dominador Jimenez. The trial court
then directed the cancellation of the exclusive option to purchase, declared the sale to intervenor
Emylene Chua as valid and
binding, and ordered Adelfa Properties to pay damages and attorneys fees to Rosario and Salud,
with costs.
On appeal, the Court of appeals affirmed in toto the decision of the court a quo (CA-GR 34767)
and held that the failure of petitioner
to pay the purchase price within the period agreed upon was tantamount to an election by
petitioner not to buy the property; that the
suspension of payment constituted an imposition of a condition which was actually a counteroffer amounting to a rejection of the
option; and that Article 1590 of the Civil Code on suspension of payments applies only to a
contract of sale or a contract to sell, but
not to an option contract which it opined was the nature of the document subject of the case at
bar. Said appellate court similarly
upheld the validity of the deed of conditional sale executed by Rosario and Salud in favor of
intervenor Emylene Chua. Hence, the
petition for review on certiorari.
The Supreme Court affirmed the assailed judgment of the Court of Appeals in CA-GR CV
34767, with modificatory premises.
[05-05] Villamor vs. CA (GR 97332, 10 October 1991)
First Division, Medialdea (J): 2 concur, 1 took no part
Facts: Macaria Labingisa Reyes was the owner of a 600-square meter lot located at Baesa,
Caloocan City (TCT [18431] 18938,
Register of Deeds of Rizal). In July 1971, Macaria sold a portion of 300 sq. ms. of the lot to the
Spouses Julio and Marina Villamor
for the total amount of P21,000.00. Earlier, Macaria borrowed P2,000.00 from the spouses which
amount was deducted from the
total purchase price of the 300 sq. m. lot sold. The portion sold to the Villamor spouses is now
covered by TCT 39935 while the
remaining portion which is still in the name of Macaria Labingisa- is covered by TCT 39934. On
11 November 1971, Macaria
executed a Deed of option in favor of Villamor in which the remaining 300 sq. m. portion
(TCT No. 39934) of the lot would be sold
to Villamor under the conditions stated therein. According to Macaria, when her husband,
Roberto Reyes, retired in 1984, they
offered to repurchase the lot sold by them to the Villamor spouses but Marina Villamor refused
and reminded them instead that the
Deed of Option in fact gave them the option to purchase the remaining portion of the lot. The
Villamors, on the other hand, claimed

that they had expressed their desire to purchase the remaining 300 sq. m. portion of the lot but
the Reyes had been ignoring them.
On 13 July 1987, after conciliation proceedings in the barangay level failed, the Villamors filed a
complaint for specific performance
against the Reyes before the RTC Caloocan City (Branch 121, Civil Case C-12942). On 26 July
1989, judgment was rendered by
the trial court in favor of the Villamor spouses, ordering the Reyeses to sell the land to the
Villamors, to pay the the latter the sum of
P3,000 as attorneys fees, and to pay the cost of suit. The court dismissed the counterclaim for
lack of merit.
Not satisfied with the decision of the trial court, the Reyes spouses appealed to the Court of
Appeals (CA-GR CV 24176). On 12
February 1991, the Court of Appeals rendered a decision reversing the decision of the trial court
and dismissing the complaint. The
reversal of the trial courts decision was premised on the finding of respondent court that the
Deed of Option is void for lack of
consideration. The Villamor spouses brought the petition for review on certiorari before the
Supreme Court.
The Supreme Court denied the petition, affirmed the decision of the appellate court for reasons
cited in the decision, and dismissed
the complaint in Civil Case C-12942 on the ground of prescription and laches.
[05-06] Soriano, et. al. v. Bautista, et. al. (GR L-15752, 29 December 1962)
Bautista, et. al. v. Soriano, et. al. [G.R. No. L-17457. December 29, 1962.]
En Banc, Makalintal (J): 9 concur
Facts: Spouses Basilio Bautista and Sofia de Rosas are the absolute and registered owners of a
parcel of land, situated in Teresa,
Rizal (OCT 3905, Register of Deeds of Rizal). On 30 May 1956, the said spouses for and in
consideration on the sum of P1,800,
signed a document entitled Kasulatan Ng Sanglaan in favor of Ruperto Soriano and Olimpia de
Jesus. Simultaneously with the
signing of the deed, the spouses Bautista and de Rosas transferred the possession of the said land
to Soriano and de Jesus who
have been and are still in possession of the said property and have since that date been and are
cultivating the said land and have
enjoyed and are still enjoying the produce thereof to the exclusion of all other persons.
Sometimes after 30 May 1956, the spouses
Bautista and de Rosas received from Soriano and de Jesus, the sum of P450.00 pursuant to the
conditions agreed upon in the
document for which no receipt was issued and which was returned by the spouses sometime on
31 May 1958. On 13 May 1958, a
certain Atty. Angel O. Ver wrote a letter to the spouses Bautista informing the said spouses that
his clients Soriano and de Jesus
have decided to buy the parcel of land in question pursuant to paragraph 5 of the document in
question (That it has likewise been
agreed that if the financial condition of the mortgagees will permit, they may purchase said land
absolutely on any date within the

two-year term of this mortgage at the agreed price of P3,900.00.). The spouses in spite of the
receipt of the letter refused to comply
with the demand contained therein.
On 31 May 1958, Soriano and de Jesus filed before the Trial Court Civil Case 5023, praying that
they be allowed to consign or
deposit with the Clerk of Court the sum of P1,650.00 as the balance of the purchase price of the
parcel of land in question. After due
hearing, judgment be rendered ordering Bautista and de Rosas to execute an absolute deed of
sale of the said property in their
favor, plus damages.
On 9 June 1958, spouses Bautista and de Rosas filed a complaint against Soriano and de Jesus,
which case after hearing was
dismissed for lack of jurisdiction. On 5 August 1959, the spouses Bautista and de Rosas again
filed a case in the CFI against
Soriano and de Jesus asking the Court to order Soriano and de Jesus to accept the payment of the
principal obligation and release
the mortgage and to make an accounting of the harvest for the two harvest seasons (1956-1957).
The two cases, were by
agreement of the parties assigned to one branch so that they can be tried jointly. On 10 March
1959, the CFI Rizal, after a joint trial
of both cases, ordered Bautista and de Rosas to execute a deed of sale covering the property in
question in favor of Soriano and de
Jesus upon payment by the latter of P1,650.00 which is the balance of the price agreed upon, i.e.
[05-08] Sanchez vs. Rigos (GR L-25494, 14 June 1972)
En Banc, Concepcion (J): 7 concur, 1 took no part, 1 concurs in separate opinion
Facts: On 3 April 1961, Nicolas Sanchez and Severina Rigos executed an instrument, entitled
Option to Purchase, whereby Mrs.
Rigos agreed, promised and committed . . . to sell to Sanchez, for the sum of P1,510.00, a
parcel of land situated in the barrios of
Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly
described in TCT NT-12528 of said
province, within two (2) years from said date with the understanding that said option shall be
deemed terminated and elapsed, if
Sanchez shall fail to exercise his right to buy the property within the stipulated period.
Inasmuch as several tenders of payment of
the sum of P1,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on 12
March 1963, the former deposited
said amount with the CFI Nueva Ecija and commenced against the latter the present action, for
specific performance and damages.
On 11 February 1964, after the filing of defendants answer, both parties, assisted by their
respective counsel, jointly moved for a
judgment on the pleadings. Accordingly, on 28 February 1964, the lower court rendered
judgment for Sanchez, ordering Mrs. Rigos
to accept the sum judicially consigned by him and to execute, in his favor, the requisite deed of
conveyance. Mrs. Rigos was,

likewise, sentenced to pay P200.00, as attorneys fees, and the costs. Hence, the appeal by Mrs.
Rigos to the Court of Appeals,
which case was the certified by the latter court to the Supreme Court upon the ground that it
involves a question purely of law.
The Supreme Court affirmed the decision appealed from, with costs against Severina Rigos.
previously received by way of loan by the said spouses from Soriano and de Jesus, to pay the
sum of P500.00 by way of attorneys
fees, and to pay the costs.
The Supreme Court affirmed the judgment appealed from, with costs.
[05-09] Montilla vs. CA (GR L-47968, 9 May 1988)
First Division, Narvasa (J): 3 concur
Facts: On 27 April 1972, Emilio Aragon Jr. filed an action before the CFI Iloilo to compel Lina
Montilla to comply with a verbal
contract to sell to him a piece of land situated at Poblacion, Iloilo City, known as Lot 4 of the
Consolidated Subdivision plan (LRC)
Psc-11605. In his complaint, Aragon claimed that in the last week of June 1969, Montilla had
orally offered to sell the lot to him at a
price of P57,650.00 (at the rate of P50 per sq. m.), the price being payable at any time within a 3year period from June, 1969
provided that Aragon constructed on the lot a house of strong materials and paid a nominal
monthly rental in the meantime; but
despite Aragons acceptance of the offer, fulfillment by him of the specified conditions, and his
seasonable tender of the purchase
price, Montilla had refused to comply with her obligation. In her answer Montilla categorically
denied ever having entered into such
an agreement, and set up the affirmative defenses of (1) unenforceability of the alleged
agreement under the Statute of Frauds; and
(2) failure of the complaint to state a cause of action, no allegation having been made therein of
any consideration for the promise to
sell distinct and separate from the price, as required by Article 1479 of the Civil Code. At
Montillas instance, a preliminary hearing
was had on her affirmative defenses in accordance with Section 6, Rule 16 of the Rules of Court,
as if a motion to dismiss had
been filed. By Order dated 5 December 1972, the Court denied the implicit motion to dismiss.
After trial, the Court rendered
judgment on 22 August 1974 sentencing Montilla to execute the requisite deed of conveyance
of Lot 4, covered by TCT T-29976 in
favor of Aragon upon full payment by him to Montilla of the total consideration thereof in the
aggregate sum of P57,650.00; to pay to
Montilla P2,000.00 as attorneys fees, and to pay the costs.
The decision was affirmed by the Court of Appeals. The latters adjudgment has, in turn, been
duly brought up to the Supreme Court
by Montilla, on appeal by certiorari under Rule 45 of the Rules of Court.
The Supreme Court reversed and set aside the Decision of the Court of Appeals dated 18 January
1978 and that of the CFI dated

22 August 1974 thereby affirmed, and entered a new one dismissing Aragons complaint, with
costs against him.
[05-12] Vasquez vs. CA (GR 83759, 12 July 1991)
Third Division, Gutierrez Jr. (J): 4 concur
Facts: On 21 September 1964, Vallejera and Olea sold the lot to Vasquez and Gayaleno under a
Deed of Sale for the amount of
P9,000.00. The Deed of Sale was duly ratified and notarized. On the same day and along with the
execution of the Deed of Sale, a
separate instrument, denominated as Right to Repurchase, was executed by the parties granting
the Vallejera and Olea the right to
repurchase the lot for P12,000.00, said document was likewise duly ratified and notarized. By
virtue of the sale, the Vasquez and
Gayaleno secured TCT T-58898 in their name. On 2 January 1969, Vallejera and Olea sold the
same lot to Benito Derrama, Jr.,
after securing Vasquez and Gayalenos title, for the sum of P12,000.00. Upon the protestations of
Vasquez and Gayaleno, assisted
by counsel, the said second sale was cancelled after the payment of P12,000.00 by Vasquez and
Gayaleno to Derrama.
On 15 January 1975, Spouses Martin Vallejera and Apolonia Olea filed an action against Spouses
Cirpriano Vasquez and Valeriana
Gayaleno seeking to redeem Lot 1860 of the Himamaylan Cadastre which was previously sold
by the former to the latter on 21
September 1964. Said lot was registered in the name of Vallejera and Olea. On October 1959, the
same was leased by them to
Vasquez and Gayalleno up to crop year 1966-67, which was extended to crop year 1968-69.
After the execution of the lease,
Vasquez and Gayaleno took possession of the lot, up to now and devoted the same to the
cultivation of sugar. Vasquez and
Gayeleno resisted the action for redemption on the premise that the Right to Repurchase is just
an option to buy since it is not
embodied in the same document of sale but in a separate document, and since such option is not
supported by a consideration
distinct from the price, said deed for right to repurchase is not binding upon them. After trial, the
RTC Himamaylan, Negros
Occidental (6th Judicial Region, Branch 56, Civil Case 839) rendered judgment against Vasquez
and Gayeleno, ordering them to
resell lot 1860 of the Himamaylan Cadastre to Vallejera and Olea for the repurchase price of
P24,000.00, which amount combines
the price paid for the first sale and the price paid by the former to Benito Derrama, Jr. Vallejera
and Gayeleno moved for, but were
denied reconsideration. Excepting thereto, they appealed.
The Court of Appeals affirmed the decision of the RTC Himamaylan, Negros Occidental in Civil
Case 839. In addition, the appellate
court ordered Vasquez and Gayeleno to pay the amount of P5,000.00 as necessary and useful
expenses in accordance with Article

1616 of the Civil Code. Hence, the petition.

The Supreme Court granted the petition, reversed and set aside the questioned decision and
resolution of the Court of Appeals ,
and dismissed the complaint in Civil Case 839 of the then CFI Negros Occidental 12th Judicial
District Branch 6; without costs.
[05-13] Ang Yu Asuncion, et.al. vs. CA (GR 109125, 2 December 1994)
En Banc, Vitug (J): 11 concur, 1 took no part, 1 on leave
Facts: On 29 July 1987 a Second Amended Complaint for Specific Performance was filed by
Ann Yu Asuncion, Arthur Go, and Keh
Tiong against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before the RTC Manila (Branch
31, Civil Case 87-41058) alleging,
among others, that the former are tenants or lessees of residential and commercial spaces owned
by the latter described as 630638 Ongpin Street, Binondo, Manila; that they have occupied said spaces since 1935 and have
been religiously paying the rental
and complying with all the conditions of the lease contract; that on several occasions before 9
October 1986, the latter informed the
former that they are offering to sell the premises and are giving them priority to acquire the
same; that during the negotiations,
Bobby Cu Unjieng offered a price of P6-million while Ang Yu Asuncion, et.al. (plaintiffs) made
a counter offer of P5-million; that
plaintiffs thereafter asked Bobby Cu Unjieng, Rose Cu Unjueng and Jose Tan (defendants) to put
their offer in writing to which
request defendants acceded; that in reply to defendants letter, plaintiffs wrote them on 24
October 1986 asking that they specify the
terms and conditions of the offer to sell; that when plaintiffs did not receive any reply, they sent
another letter dated 28 January 1987
with the same request; that since defendants failed to specify the terms and conditions of the
offer to sell and because of information
received that defendants were about to sell the property, plaintiffs were compelled to file the
complaint to compel defendants to sell
the property to them. After the issues were joined, defendants filed a motion for summary
judgment which was granted by the lower
court. The trial court found that defendants offer to sell was never accepted by the plaintiffs for
the reason that the parties did not
agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at
all. Nonetheless, the lower court
ruled that should the defendants subsequently offer their property for sale at a price of P11
million or below, plaintiffs will have the
right of first refusal.
Aggrieved by the decision, plaintiffs appealed to the Court of Appeals (CA-GR CV 21123). In a
decision promulgated on 21
September 1990 (penned by Justice Segundino G. Chua and concurred in by Justices Vicente V.
Mendoza and Fernando A.

Santiago), the appellate court affirmed with modification the lower courts judgment, holding
that there was no meeting of the minds
between the parties concerning the sale of the property and thus, the claim for specific
performance will not lie. The appellate did
not grant the appellants the right of first refusal in the event the subject property is sold for a
price in excess of P11 million.
The decision of the appellate court was brought to the Supreme Court by petition for review on
certiorari. The Supreme Court denied
the appeal on 6 May 1991 for insufficiency in form and substances.
On 15 November 1990, while CA-GR CV 21123 was pending consideration by the appellate
court, the Cu Unjieng spouses
executed a Deed of Sale transferring the property in question to Buen Realty and Development
Corporation for P15 million. As a
consequence of the sale, TCT 105254/T-881 in the name of the Cu Unjieng spouses was
cancelled and, in lieu thereof, TCT
195816 was issued in the name of Buen Realty on 3 December 1990. On 1 July 1991, Buen
Realty as the new owner of the subject
property wrote a letter to the lessees demanding that the latter vacate the premises. On 16 July
1991, the lessees wrote a reply to
Buen Realty stating that petitioner brought the property subject to the notice of lis pendens
regarding Civil Case 87-41058 annotated
on TCT 105254/T-881 in the name of the Cu Unjiengs.
The lessees filed a Motion for Execution dated 27 August 1991 of the Decision in Civil Case 8741058 as modified by the Court of
Appeals in CA-GR CV 21123. On 30 August 1991, the Judge issued an order ordering Cu
Unkieng to execute the necessary Deed
of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur
Go for the consideration of P15
Million pesos in recognition of the latters right of first refusal and that a new TCT be issued in
favor of the buyer, and thus, setting
aside all previous transactions involving the same property notwithstanding the issuance of
another title to Buen Realty Corporation,
which was said to have been executed in bad faith. On 22 September 1991, the Judge issue
another order directing the Deputy
Sheriff to implement the Writ of Execution ordering the defendants among others to comply with
the Order of the Court within a
period of 1 week from receipt of this Order and for defendants to execute the necessary Deed of
Sale of the property in litigation in
favor of the plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of
P15,000,000.00 and ordering the Register
of Deeds of the City of Manila, to cancel and set aside the title already issued in favor of Buen
Realty Corporation which was
previously executed between the latter and defendants and to register the new title in favor of the
aforesaid plaintiffs Ang Yu
Asuncion, Keh Tiong and Arthur Go. On the same day, the corresponding writ of execution was
issued.

On 4 December 1991, the appellate court, on appeal to it by Buen Realty (CA-GR SP 26345), set
aside and declared without force
and effect the questioned orders of the court a quo. Hence, the petition for certiorari.
The Supreme Court upheld the decision of the Court of Appeals in ultimately setting aside the
questioned Orders, dated 30 August
1991 and 27 September 1991, of the court a quo; with costs against Ang Yu Asuncion, et. al.
[05-14] Equatorial Realty vs. Mayfair Theater (GR 106063, 21 November 1996)
En Banc, Hermosisima Jr. (J): 13 concur, 1 took no part
Facts: Carmelo & Bauermann Inc. (Carmelo) owned a parcel of land, together with two 2-storey
buildings constructed thereon
located at Claro M Recto Avenue, Manila (TCT 18529, Register of Deeds of Manila). On 1 June
1967, Carmelo entered into a
contract of lease with Mayfair Theater for the latters lease of a portion of Carmelos property,
i.e. a portion of the 2/F of the twostorey
building with floor area of 1610 sq.ms. and the second floor and mezzanine of the two-storey
building situated at CM Recto
Avenue, Manila with a floor area of 150 sq.ms. for use by Mayfair as a motion picture theater
and for a term of 20 years. Mayfair
thereafter constructed on the leased property a movie house known as Maxim Theatre. On 31
March 1969, Mayfair entered into a
second contract of lease with Carmelo for the lease of another portion of Carmelos property, i.e.
a portion of the 2/F of the twostorey
building with floor area of 1064 sq.ms. and two store spaces at the ground floor and mezzanine
of the two-storey building
situated at CM Recto Avenue, Manila with a floor area of 300 sq.ms. and bearing street numbers
1871 and 1875 for similar use as a
movie theater and for a similar term of 20 years. Mayfair put up another movie house known as
Miramar Theatre on this leased
property. Both contracts of lease provide identically worded paragraph 8, which reads 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. Sometime in August 1974, Mr. Henry Pascal of Carmelo informed Mr. Henry Yang,
President of Mayfair, through a
telephone conversation that Carmelo was desirous of selling the entire Claro M. Recto property.
Mr. Pascal told Mr. Yang that a
certain Jose Araneta was offering to buy the whole property for US$1,200,000, and Mr. Pascal
asked Mr. Yang if the latter was
willing to buy the property for P6 million to P7 million. Mr. Yang replied that he would let Mr.
Pascal know of his decision. On 23
August 1974, Mayfair replied through a letter confirming the correspondence between Pascual
and Yang and reiterating paragraph

8 of the two contracts of lease. Carmelo did no reply to this letter. On 18 September 1974,
Mayfair sent another letter to Carmelo
purporting to express interest in acquiring not only the leased premises but the entire building
and other improvements if the price is
reasonable. However, both Carmelo and Equatorial questioned the authenticity of the second
letter. Four years later, on 30 July
1978, Carmelo sold its entire CM. Recto Avenue land and building, which included the leased
premises housing the Maxim and
Miramar theatres, to Equatorial by virtue of a Deed of Absolute Sale, for the total sum of
P1,300,000.
In September 1978, Mayfair instituted the action for specific performance and annulment of the
sale of the leased premises to
Equatorial. In its Answer, Carmelo alleged as special and affirmative defense that it had informed
Mayfair of its desire to sell the
entire CM. Recto Avenue property and offered the same to Mayfair, but the latter answered that it
was interested only in buying the
areas under lease, which was impossible since the property was not a condominium; and that the
option to purchase invoked by
Mayfair is null and void for lack of consideration. Equatorial, in its Answer, pleaded as special
and affirmative defense that the option
is void for lack of consideration and is unenforceable by reason of its impossibility of
performance because the leased premises
could not be sold separately from the other portions of the land and building. It counterclaimed
for cancellation of the contracts of
lease, and for increase of rentals in view of alleged supervening extraordinary devaluation of the
currency. Equatorial likewise crossclaimed
against codefendant Carmelo for indemnification in respect of Mayfairs claims. After assessing
the evidence, the court
rendered decision dismissing the complaint with costs against Mayfair; ordering Mayfair to pay
Carmelo & Bauermann P40,000.00
by way of attorneyss fees on its counterclaim; and ordering Mayfair to pay Equatorial Realty
P35,000.00 per month as reasonable
compensation for the use of areas not covered by the contracts of lease from 31 July 1979 until
Mayfair vacates said areas plus
legal interest from 31 July 1978; P70,000.00 per month as reasonable compensation for the use
of the premises covered by the
contracts of lease dated (1 June 1967 from 1 June 1987 until Mayfair vacates the premises plus
legal interest from 1 June 1987;
P55,000.00 per month as reasonable compensation for the use of the premises covered by the
contract of lease dated 31 March
1969 from 30 March 1989 until Mayfair vacates the premises plus legal interest from 30 March
1989; and P40,000.00 as attorneys
fees; and dismissing Equatorials crossclaim against Carmelo & Bauermann. The trial court
adjudged the identically worded
paragraph 8 found in both lease contracts to be an option clause which however cannot be
deemed to be binding on Carmelo

because of lack of distinct consideration therefor.

Mayfair taking exception to the decision of the trial court, appealed to the Court of Appeals. The
appellate court reversed the trial
court and rendered judgment reversing and setting aside the appealed Decision; directing
Mayfair to pay and return to Equatorial
the amount of P11,300,000.00 within 15 days from notice of this Decision, and ordering
Equatorial to accept such payment; directing
Equatorial, upon payment of the sum of P11,300,000, to execute the deeds and documents
necessary for the issuance and transfer
of ownership to Mayfair of the lot registered under TCT 17350, 118612, 60936, and 52571; and
should Mayfair be unable to pay the
amount as adjudged, declaring the Deed of Absolute Sale between Carmelo and Equatorial as
valid and binding upon an the
parties. Hence, the petition for review.
The Supreme Court denied the petition for review of the decision of the Court of Appeals (23
June 1992, in CA-GR CV 32918),
declaring the Deed of Absolute Sale between Equatorial and Carmelo as deemed rescinded;
ordering Carmelo to return to
Equatorial the purchase price; directing Equatorial to execute the deeds and documents necessary
to return ownership to Carmelo
of the disputed lots; and ordering Carmelo to allow Mayfair to buy the lots for P11,300,000.