CHAPTER 1: NATURE AND FORM OF THE CONTRACT

TEN FORTY REALTY AND DEVELOPMENT CORP., Represented by its President,

VERONICA G. LORENZANA vs. MARINA CRUZ
G.R. No. 151212. September 10, 2003
PANGANIBAN, J
Case of double sale
SALES, BUYER ACQUIRES THE THING UPON ITS DELIVERY; PETITIONER DID NOT GAIN
CONTROL AND POSSESSION OF PROPERTY IN CASE AT BAR. In a contract of sale, the
buyer acquires the thing sold only upon its delivery "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." With respect to incorporeal property, Article 1498 lays down the
general rule: the execution of a public instrument shall be equivalent to the delivery of the thing
that is the object of the contract if, from the deed, the contrary does not appear or cannot be
clearly inferred. However, ownership is transferred not by contract but by tradition or delivery.
Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is a conclusive
presumption of delivery of possession of a piece of real estate. This Court has held that the
execution of a public instrument gives rise only to a prima facie presumption of delivery. Such
presumption is destroyed when the delivery is not effected because of a legal impediment. . . In
the case at bar it is undisputed that petitioner did not occupy the property from the time it was
allegedly sold to it on December 5, 1996 or at any time thereafter. S
DOUBLE SALE OF IMMOVABLE PROPERTY; ORDER OF PREFERENCE; CASE AT BAR.
The ownership of immovable property sold to two different buyers at different times is governed
by Article 1544 of the Civil Code. . . Galino allegedly sold the property in question to petitioner
on December 5, 1996 and, subsequently, to respondent on April 24, 1998. Petitioner thus
argues that being the first buyer, it has a better right to own the realty. However, it has not
been able to establish that its Deed of Sale was recorded in the Registry of Deeds of Olongapo
City. Its claim of an unattested and unverified notation on its Deed of Absolute Sale is not
equivalent to registration. It admits that, indeed, the sale has not been recorded in the Registry
of Deeds. In the absence of the required inscription, the law gives preferential right to the buyer
who in good faith is first in possession. . . Earlier, we ruled that the subject property had not
been delivered to petitioner; hence, it did not acquire possession either materially or
symbolically. As between the two buyers, therefore, respondent was first in actual possession of
the property.
CHAPTER 2: CAPACITY TO BUY OR SELL
SOUTHWESTERN SUGAR AND MOLASSES COMPANY vs. ATLANTIC GULF & PACIFIC
COMPANY
G.R. No. L-7382. June 29, 1955
BAUTISTA ANGELO, J p:
CONTRACTS; OFFER AND ACCEPTANCE; RULE ON WITHDRAWAL OF OFFER. While it
is true that under article 1324 of the new Civil Code, the general rule regarding offer and
acceptance is that, when the offer or gives to the offeree a certain period to accept, "the offer
may be withdrawn at any time before acceptance" except when the option is founded upon

consideration this general rule must be interpreted as modified by the provision of article 1479
which applies to "a promise to buy and sell" specifically. This rule requires that a promise to sell
to be valid must be supported by a consideration distinct from the price, which means that the
option can still be withdrawn, even if accepted, if the same is not supported by any
consideration.
Atty Busmente: - Applies para 2 of 1479, which is re Option Contract. For para 2 of 1479 to be
valid there must be a consideration distinct from the price. Corollary: option to sell can be
withdrawn even if accepted as long as theres no consideration.
- What was accepted was merely the unilateral promise
ATKINS, KROLL & CO., INC. vs. B. CUA HIAN TEK
G.R. No. L-9871. January 31, 1958
BENGZON, J
SALES; OFFER TO SELL A DETERMINATE THING FOR A PRICE CERTAIN; ACCEPTANCE
OF OFFER; EFFECT OF; LIABILITY OF THE OFFEROR AND OFFEREE. The acceptance
of an offer to sell a determinate thing for a price certain creates a bilateral contract to sell and to
but the offeree, upon acceptance, ipso facto assumes the obligations of a purchaser. On the
other hand, the offeror would be liable for damages if he fails to deliver the thing he had offered
for sale.
OPTION WITHOUT CONSIDERATION. If an option is given without, it is mere offer of
contract of sale, which is not binding until accepted. If, however, acceptance is made before a
withdrawal, it constitute a binding contract of sale, even though the option was not supported by
a sufficient consideration.
Atty Busmente: - Applies para 1 of 1479, offer cannot be withdrawn after acceptance even
without consideration distinct from the price as a bilateral contract is created already
- what was accepted was the sale itself
NICOLAS SANCHEZ vs. SEVERINA RIGOS
G.R. No. L-25494. June 14, 1972
CONCEPCION, J
WHERE A UNILATERAL PROMISE TO SELL GENERATED TO A BILATERAL CONTRACT OF
PURCHASE AND SALE; ARTICLES 1324 AND 1479, NCC.,NO DISTINCTION.
- saw no distinction between Articles 1324 and 1479 of the Civil Code and applied the former
where a unilateral promise to sell similar to the one sued upon was involved, treating such
promise as an option which, although not binding as a contract in itself for lack of a separate
consideration, nevertheless generated a bilateral contract of purchase and sale upon
acceptance. In other words, since there may be no valid contract without a cause or
consideration promisor is not bound by his promise and may, accordingly withdraw it. Pending
notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell
which, if accepted, results in a perfected contract of sale.
A BILATERAL RECIPROCAL CONTRACT; CASE AT BAR. Where, as in the present case,
the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of P1,510.00
before any withdrawal from the contract has been made by the Defendant (Severina Rigos),"

and Rigos' offer to sell was accepted by Sanchez, before she could withdraw her offer, a
bilateral reciprocal contract to sell and to buy was generated.
Justice Antonio: CIVIL LAW; CONTRACTS; OPTION TO SELL; EFFECT OF ACCEPTANCE.
I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar &
Molasses Co. vs. Atlantic Gulf and Pacific Co. (97 Phil., 249), which holds that an option to sell
can still be withdrawn, even if accepted if the same is not supported by any consideration, and
the reaffirmance of the doctrine in Atkins, Kroll & Co. Inc. vs. Cua Hian Tech (102 Phil., 948),
holding that "an option implies . . . the legal obligation to keep the offer (to sell) open for the time
specified"; that it could be withdrawn before acceptance, if there was no consideration for the
option, but once the "offer to sell" is accepted, a bilateral promise to sell and to buy ensues, and
the offeree ipso facto assumes the obligations of a purchaser.
SPS NATINO vs. IAC
G.R. No. 73573. May 23, 1991
DAVIDE, JR., J
CONTRACTS; SALE; OPTION OR PROMISE, UNSUPPORTED BY CONSIDERATION
DISTINCT FROM PURCHASE PRICE NOT BINDING UPON PROMISOR. The Bank was not
bound by the promise made by Mrs. Brodeth not only because it was not approved or ratified by
the Board of Directors but also because, and more decisively, it was a promise unsupported by
a consideration distinct from the re-purchase price. The second paragraph of Article 1479 of the
Civil Code expressly provides: . . ."An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon the PROMISSOR if the promise is
supported by a consideration distinct from the price." Thus in Rural Bank of Paraaque Inc. vs.
Remolado, et al., a commitment by the bank to resell a property, within a specified period,
although accepted by the party in whose favor it was made, was considered an option not
supported by a consideration distinct from the price and, therefore, not binding upon the
PROMISSOR. Pursuant to Southwestern Sugar and Molasses Co. vs. Atlantic Gulf and Pacific
Company, it was void.
FEDERICO SERRA vs. CA AND RIZAL COMMERCIAL BANKING CORPORATION
G.R. No. 103338. January 4, 1994
NOCON, J
Article 1324 of the Civil Code provides that when an offeror has allowed the offeree a certain
period to accept, the offer may be withdrawn at anytime before acceptance by communicating
such withdrawal, except when the option is founded upon consideration, as something paid or
promised. On the other hand, Article 1479 of the Code provides that an accepted unilateral
promise to buy and 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. In a unilateral promise to sell,
where the debtor fails to withdraw the promise before the acceptance by the creditor, the
transaction becomes a bilateral contract to sell and to buy, because upon acceptance by the
creditor of the offer to sell by the debtor, there is already a meeting of the minds of the parties as
to the thing which is determinate and the price which is certain. In which case, the parties may
then reciprocally demand performance. Jurisprudence has taught us that an optional
contract is a privilege existing only in one party the buyer. For a separate consideration paid,
he is given the right to decide to purchase or not, a certain merchandise or property, at any time

within the agreed period, at a fixed price. This being his prerogative, he may not be compelled
to exercise the option to buy before the time expires.
SC interpreted the "the consideration for the lessor's obligation to sell the leased premises to
the lessee, should he choose to exercise his option to purchase the same, is the obligation of
the lessee to sell to the lessor the building and/or improvements constructed and/or made by
the former, if he fails to exercise his option to buy said premises."
-Hence is considered an option contract as theres a separate and distinct consideration aside
from the price.
PEDRO ROMAN vs. ANDRES GRIMALT
G.R. No. 2412. April 11, 1906
TORRES, J
Where no valid contract of sale exists it create no mutual rights or obligations by between the
allege. The disapperance or loss of property which the owner intended or attempted to sell can
only interest the owner, who should suffer the loss, and not a third party who has acquired no
rights nor incurred any liability with respect thereto.
If no contract of sale was actually executed by the parties the loss of the vessel must be borne
by its owner and not by the party who only intended to purchase it.
EQUATORIAL REALTY DEVELOPMENT, INC, vs. MAYFAIR THEATER, INC
G.R. No. 136221. May 12, 2000
PARDO, J
Main Doctrine 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 Mayfairs 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 respondents 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, respondents 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 latters 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.

ID.; SALES; CONTRACT OF SALE; RENTAL PAYMENTS MADE SHOULD NOT BE

CONSTRUED AS A RECOGNITION OF THE BUYER AS NEW ORDER BUT MERELY TO
AVOID IMMINENT EVICTION; CASE AT BAR. The fact that Mayfair paid rentals to Equatorial
during the litigation should not be interpreted to mean either actual delivery or ipso facto
recognition of Equatorials title. The CA Records of the mother case show that Equatorial as
alleged buyer of the disputed properties and as alleged successor-in-interest of Carmelos rights

as lessor submitted two ejectment suits against Mayfair. Filed in the Metropolitan Trial Court
of Manila, the first was docketed as Civil Case No. 121570 on July 9, 1987; and the second, as
Civil Case No. 131944 on May 28, 1990. Mayfair eventually won them both. However, to be able
to maintain physical possession of the premises while awaiting the outcome of the mother case,
it had no choice but to pay the rentals. The rental payments made by Mayfair should not be
construed as a recognition of Equatorial as the new owner. They were made merely to avoid
imminent eviction.
ANTONIO LAYUG vs. INTERMEDIATE APPELLATE COURT and RODRIGO GABUYA
G.R. No. 75364. November 23, 1988
NARVASA, J
SALES OF REAL ESTATE ON INSTALLMENT. Republic Act 6552 governs sales of real
estate on installments. It recognizes the vendor's right to cancel such contracts upon failure of
the vendee to comply with the terms of the sale, but at the same time gives the buyer, subject to
conditions provided by law, a one month grace period for every year of installment payment
made and if the contract is cancelled, a refund of cash surrender value.