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CARLO BUSMENTE
1. SOUTHWESTERN SUGAR vs ATLANTIC
GULF & PACIFIC COMPANY
FACTS:
In 1953, AG granted an option to
Southwestern to buy its barge no. 10
for the sum of Php 30,000 to be
exercised within period of 90 days. Two
months later, it informed AG that it
wants to exercise its option and that it
requested to be notified as soon as the
barge was available. The next day, AG
replied that their understanding was
that the offer of option is to be a cash
transaction and to be effected at the
time the lighter is available. On June
1953, it reiterated the unavailability of
the barge. With this SW presented an
action to compel AG to sell the barge in
line with the option, and deposited with
the court a check amounting to Php
30,000. AG later withdrew its offer of
option
AG: Option was merely granted as a
favor. Offer null and void due to lack of
consideration.
SW: Notified of their acceptance before
withdrawal of offer, thus the
withdrawal was ineffective.
TC: Granted SWs petition, specific
performance.
ISSUE: WoN the offer to sell is binding
against AG;
HELD: No
An accepted unilateral promise
can only have a binding effect if
supported by a consideration,
which means offer can be
ATTY.
withdrawn even if accepted if
not supported by such.
Withdrawal notwithstanding
the acceptance made by SW.
1324 must be interpreted with
1479; the latter applies in a
promise to buy and sell,
specifically.
Decision reversed.
2. ATKINS, KROLL INC VS CUA HIAN TEK
FACTS:
On September 1951, the petitioner sent
a letter to respondent offering to sell
sardines. However, because of its
failure to deliver one thousand cartons
alleged to be purchased by CHT, the
petitioner was sued in the CFI of
Manila. Both the CFI and CA found that
CHT accepted the offer unconditionally
and delivered its letter of acceptance
on the same month. But due to the
shortage of the catch of sardines, ATK
failed to deliver the commodities it had
promised to deliver.
ATK: It was merely a promise to sell a
determinate thing. Its acceptance gave
rise to an option only, which lacking
consideration had no obligatory force.
CTH: Acceptance was timely made.
ISSUE: WoN ATKs promise is binding;
HELD:
The assumption of ATK is a
mistake, because a bilateral
contract to sell and to buy was
created upon acceptance.
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CTH accepted the offer as he instituted a complaint against the bank

was willing to procure an
import license.
In unilateral promise, the
holder of the option is not
bound to buy after his
acceptance of the option and
before he exercises his right to
buy. But in this case, a bilateral
promise to buy and sell already
ensued, the respondent already
assuming the obligation of a
purchaser.
Bilateral contract of sale.
Petitioner already has
knowledge of the acceptance.
3. SPS TRINIDAD VS IAC
FACTS: in 1970, petitioners executed a
real estate mortgage in favor of
respondent as security for a loan.
However, the spouses failed to pay
upon due. The bank applied for
extrajudicial foreclosure of the
property, with the bank as the highest
bidder. A certificate of sale was
executed by the sheriff and the same
was registered. The certificate was also
furnished to the petitioners with the
notice that the redemption period shall
be two years from the registration. No
redemption was made and thus, a final
deed of sale was issued.
on the ground that they were granted
an extension of time to redeem the
property. The lower court granted their
petition.
TRINIDAD: agreement to extend period,
when their means permit them to do
so.
ISSUE: WoN Trinidad can repurchase
the property;
HELD: PETITION DISMISSED.
The date of expiry of the right
to redeem becomes functus
officio on the date of its expiry
and its exercise after expiration
is not redemption but
repurchase.
Repurchase of forecolosed
property after redemption
imposes no obligation;
purchaser may or may not sell
and no law may compel him to
do so.
Assuming that there was
agreement, there has to be an
concurrence of its board.
The promise to resell is not
even binding as it is not
supported by any
consideration.

The bank filed a petition for writ of 4. SERRA vs RCBC

possession which the latter opposed on
the ground that they have consigned
the redemption money. The court
rejected this and proceeded with the
execution of the writ. The petitioner
FACTS:
Frederico Serra entered into a Contract
of Lease with an option to buy with
RCBC involving an unregistered parcel
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of land in Masbate. In the contract, it
was agreed that the lessee shall have
the option to purchase the land within a
period of 10 years after signing the
contract. They also undertook to
register the property under Torrens.
Another stipulation was if the lessee
fails to exercise its option, all of the
improvements in the property shall
inure to the benefit of the lessor after
the termination of the contract.
In pursuant to their agreement,
respondent bank registered the same
under the Torrens system. In 1984,
when the bank decided to exercise its
option, they were informed that the
owner was no longer selling the
property. A complaint was specific
performance was filed by RCBC.
SERRA: Option was not supported by
consideration
CFI: Granted petition; deed of sale to be
executed;
ISSUE: WoN the option to sell can be
withdrawn;
HELD: LEASE CONTRACT VALID AND
ENFORCEABLE
In a unilateral promise to sell,
when the debtor fails to
withdraw the offer before its
acceptance by the promise, it
ensues to be a bilateral contract
to sell and buy. There was
already meeting of the minds.
May reciprocally demand
performance.
ATTY. CARLO BUSMENTE
Consideration was the transfer
of the building on the property
to petitioner should respondent
bank fail to exercise its option.
5. ROMAN VS GRIMALT
FACTS:
In 1904, both parties verbally agreed
upon the sale of the schooner Santa
Marina. The defendant agreed to
purchase the schooner and offered to
pay it in three installments. He further
added that if the terms were accepted
by the plaintiff, the sale would be
effective the following day.
In the same month, plaintiff accepted
the plan of payment and from that day,
the vessel is already in his disposal.
When the contract was already
perfected and the vessel was readied
for delivery, the vessel sunk due to a
severe storm. A demand for payment
was made.
GRIMALT: Vessel was made to appear
to be seaworthy; he accepted the sale
subject to the condition that the title
would be satisfactory; after notarization
the title was insufficient to prove
ownership; plaintiff made promises to
perfect his title.
ISSUE: Who should bear the loss?
HELD: SELLER
A sale is only binding upon
agreement to the object and
the price even though neither
was delivered;
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Ownership is not transmitted
until the property is actually
delivered and take purchaser
has taken possession of it;
The sale was not perfected
since defendant did not consent
to the imperfect title of the
vessel;
Absence of COS means that the
loss should be bourne by the
seller and not the intended
buyer
The vessel already sunk even
before the seller was able to
comply with the buyers
condition
Buyer under no obligation to
pay
6. EQUITORIAL REALTY DEVELOPMENT VS
MAYFAIR THEATER INC.
FACTS:
Carmelo and Bauermann Inc entered into a
contract of lease with Mayfair theater over a
parcel of land with two 2-storey buildings in
Claro M. Recto Ave in 1967. With a term of 20
years, a building was constructed on the leased
property a movie house also known as Maxim
Theater.
Two years later, they entered into another lease
contract for twenty years. Mayfair put up
another movie house known as Miramar
Theater.
Paragraph 8 of the contract states that should
the lessor decide to sell the property, the lessee
shall be given a 30-day exclusive option to
purchase the same. Also, in the event that the
leased premises is sold to a third person other
ATTY. CARLO BUSMENTE
than the lessee, the lessor is bound and
obligated to stipulate in the DOS that the
purchaser shall recognize the lease and be
bound to all its terms.
In 1974, Mr. Pascal (Carmelo) informed Mr.
Yang (Mayfair) through telephone of his desire
to sell the property. He told him that another
party was offering to buy it in US dollars.
Mr. Yang replied through a letter but Carmelo
did no response. Another letter was sent
expressing interest not only in the entire
property but as well as its improvements.
Subsequently, the property was sold, including
the theaters, to Equitorial by a virtue of a DOAS.
Mayfair instituted an action for specific
performance and annulment of sale.
CARMELO/EQUITORIAL: option to purchase
invoked by Mayfair is null and void for lack of
consideration; impossibility of performance
since the leased premises could not be sold
separately from other portions of the land and
building
ISSUE: WoN Mayfair can petition to annul the
sale;
HELD:
The plaintiff cannot compel defendant
Carmelo to comply with the promise
unless the former establishes the
existence of a distinct consideration.
Promisee has the burden of proving
consideration.
The presumption of a lawful cause only
applies to contracts in general, while
the second paragraph of 1479 applies
to an accepted unilateral promise to
buy or sell.
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1479 requires the existence of a
consideration.
1479 contemplates an offer. An offer
should be certain in its object, price and
other essential terms in a contract. In
the case at bar, the stipulation is not an
option in the context of 1324 and 1479.
It does not specify the price.
What was given to Mayfair is a right to
first refusal. There is an implicit
obligation of Carmelo to offer to sell the
leased premises to give the other a
reasonable opportunity to accept or
reject the offer. Carmelo should have
first offered the sale to Mayfair before
offering it to the other parties, or if
Carmelo should receive any offer from
other persons, he should give Mayfair a
the opportunity to match that offer.
Right of first refusal is a part of the
consideration in a contract of lease.
An offer to sell requires consideration in
the sense that the vendor sells the
option, right or privilege to buy at the
option or election of the other party.
If the period is not supported by a
consideration, the seller may withdraw
the offer before acceptance or after
acceptance, as long as it is not yet to his
knowledge.
Breach of an option contract does not
give rise to an action for specific
performance but rather, on damages.
Carmelo initially recognized the right of
first refusal when it abandoned
negotiations with Mayfair.
ATTY. CARLO BUSMENTE
Equitorial is a buyer in bad faith, being
aware of the lease contract stipulation
Thus the contract of sale is rescissible.
The right of first refusal should include
all improvements therein. The
boundaries of the property should be
the ones offered in the right of first
refusal.
Mayfair may only exercise its right to
first refusal only if the sale is first set
aside or rescinded.
7. NORKIS DISTRIBUTORS VS CA
FACTS: Petitioner was the distributor of
Yamaha motorcycles in Negros
Occidental in Bacolod City. Private
respondent Nepales purchased a brand
new Yamaha motorcycle at the price of
Php 7.5k payable by means of Letter of
Guaranty from the DBP. Credit was
accepted and chattel mortgage was
executed over the motorcycle as
security. A sales invoice was issued but
Norkis remained to be in possession of
the motorcycle.
The vehicle was delivered to Julian
Nepales who presented himself as the
agent of defendant. Alberto and Julian
presented the unit to DBPs unit
appraiser. However, the motorcycle
met an accident which showed up that
a certain Zacarias Payba was driving it.
The motorcycle was a total wreck when
it was restored to Norkis possession.
The credit was released by DBP but
Norkis failed to deliver the motorcycle.
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Nepales filed for specific performance

to compel delivery.

NORKIS: The motorcycle having been

delivered, the loss should be bourne by
Nepales; there was constructive
delivery through the sales invoice, the
registration of the vehicle and its official
receipt.

ISSUE: Who should bear the loss?

HELD:
The question on WoN there
was already transfer of
ownership at the time is was
destroyed must first be
resolved;
Issuance of a sales invoice is
does not prove transfer of
ownership.
It is necessary that the act of
delivery must carry with it the
intention to transfer ownership.
Norkis did not intend to
transfer the property but
rather, to facilitate the
execution of the chattel
mortgage in favor of DBP for
the release of the loan
The thing sold must be placed
in the control of the vendee
Thing sold at the sellers risk
until ownership is passed to the
buyer.