Fule v. Court of Appeals, et al.

Doctrine
G.R. No. 112212, March 2, 1998
A contract of sale is perfected by mere consent, that is, upon a meeting of the
Facts minds as to the object and the price. Once perfected, the contract has the force
of law between the parties, and they are bound to fulfill their obligations in
Gregorio Fule, a banker and jeweler, sought to nullify a contract of sale involving a
good faith. Formal requirements are for the benefit of third parties and do not
10-hectare property in Tanay, Rizal, and a pair of diamond earrings. Fule, acting as
affect the validity of the contract as between the parties.
corporate secretary of a bank, facilitated the sale of the property to Dr. Ninevetch
Cruz, who also owned the earrings Fule wanted to buy. After negotiations, Fule Disposition
and Dr. Cruz agreed to exchange the property for the earrings and a sum of
The petition was denied, and the decision of the Court of Appeals was affirmed.
money. Fule later claimed the earrings were fake and sought to nullify the
Fule was ordered to pay the balance of the purchase price, and damages were
contract, but the lower court and the Court of Appeals found the contract valid
awarded to the defendants.
and Fule’s consent not vitiated. Damages were awarded to the defendants due to
Fule’s bad faith and unfounded suit. Key Excerpts
Issue  “The Civil Code provides that contracts are perfected by mere consent.
From this moment, the parties are bound not only to the fulfillment of
Whether the contract of sale between Fule and Dr. Cruz was validly perfected
what has been expressly stipulated but also to all the consequences
and binding upon the parties.
which, according to their nature, may be in keeping with good faith, usage
Ruling and law. A contract of sale is perfected at the moment there is a meeting
of the minds upon the thing which is the object of the contract and upon
Yes, the contract of sale was validly perfected and binding.
the price. Being consensual, a contract of sale has the force of law
Ratio Decidendi between the contracting parties and they are expected to abide in good
faith by their respective contractual commitments.”
The Supreme Court held that a contract of sale is perfected at the moment there — Fule v. Court of Appeals, G.R. No. 112212 (1998)
is a meeting of the minds upon the object and the price. The Civil Code provides
that contracts are perfected by mere consent, and from that moment, the parties
are bound to fulfill what has been expressly stipulated and all consequences in
Case Digest: Ignacio, et al. v. Home Bankers Savings and Trust Company, et al.,
keeping with good faith, usage, and law. The Court found that both parties had
G.R. No. 177783, January 23, 2013
fully performed their respective obligations under the contract, and Fule was
estopped from questioning its validity after having accepted and examined the
jewelry and after the lapse of a considerable period. The Court also noted that
Facts:
formal requirements, such as the execution of a public instrument, are for the
benefit of third parties and do not affect the validity of the contract between the  Fausto C. Ignacio mortgaged two parcels of land to Home Savings Bank
parties themselves. The contract could not be voided absent any legal ground for and Trust Company (predecessor of Home Bankers Savings and Trust
nullification. Company) as security for a loan.

 Upon default, the bank foreclosed and acquired title to the properties.
  Ignacio offered to repurchase the foreclosed properties.  Receipts issued to Ignacio were payments related to sales to third parties,
not proof of a repurchase contract.
 The bank sent a letter dated March 22, 1984, offering terms for
repurchase: total price P950,000 with downpayment and installment  The bank, as a corporation, can only be bound by acts of its Board of
schedule. Directors or duly authorized agents; no such authorization was shown for
the alleged verbal agreement.
 Ignacio modified the terms unilaterally, lowering the price and changing
payment terms, and alleged a verbal agreement was reached.  The absence of formal written acceptance and issuance of titles to Ignacio
further negated the existence of a perfected contract.
 Ignacio made payments and managed subdivision expenses, claiming a
perfected repurchase contract.  The bank’s sale of the properties to third parties was valid, and the
intervenors were innocent purchasers for value without notice of Ignacio’s
 The bank sold portions of the property to third parties without Ignacio’s
claim.
consent.
Disposition:
 Ignacio filed suit for specific performance and damages, seeking
reconveyance after payment of the balance. The petition for review on certiorari was denied, and the Court of Appeals’
decision reversing the trial court was affirmed.
Issue:

Whether a perfected contract of repurchase existed between Ignacio and Home

Bankers Savings and Trust Company. Legal Principles:

Ruling:  Contract perfection requires absolute acceptance of the offer without

qualifications or counter-offers.
The Supreme Court affirmed the Court of Appeals’ decision that no perfected
contract of repurchase existed.  Qualified acceptance is a counter-offer and rejects the original offer.

Reasoning:  Corporations act through their Board of Directors or authorized agents;

unauthorized verbal agreements are not binding.
 A contract is perfected by the meeting of minds, requiring an offer and an
absolute acceptance without qualifications or modifications (Article 1319,  Receipts alone do not prove a perfected contract if they relate to other
Civil Code). transactions.

 Ignacio’s acceptance was qualified by changing the price and payment  Innocent purchasers for value without notice are protected.
terms, constituting a counter-offer, which requires acceptance by the
other party to be binding.

 There was no evidence that the bank’s officers accepted Ignacio’s counter-
offer. Case Digest: Serrano, et al. v. Caguiat, G.R. No. 139173, February 28, 2007
Facts:  The Court distinguished between a contract of sale (ownership passes
upon delivery) and a contract to sell (ownership passes only upon full
Spouses Onnie and Amparo Herrera (petitioners) owned a lot in Las Piñas, Metro
payment).
Manila. Godofredo Caguiat (respondent) offered to buy the lot at P1,500 per
square meter and paid P100,000 as partial payment. The petitioners issued a  The receipt explicitly stated that the balance was to be paid by a certain
receipt acknowledging the partial payment and stating that Caguiat promised to date and that the final deed of sale would be executed then, indicating a
pay the balance on or before March 23, 1990, and that a final deed of sale would suspensive condition.
be executed on that date.
 The absence of a formal deed of sale and retention of the title by
Caguiat, through counsel, informed petitioners of his readiness to pay the balance petitioners supported the conclusion of a contract to sell.
and requested preparation of the final deed of sale. Petitioners canceled the
transaction, returned the P100,000, and refused to execute the deed of sale.
Caguiat filed a complaint for specific performance and damages. Key Points:

 Earnest money in a contract to sell does not prove perfection of sale until
full payment.
Issue:
 A contract to sell is conditional; ownership transfer depends on fulfillment
Whether the receipt for partial payment constituted a perfected contract of sale
of the suspensive condition.
or a contract to sell, and whether Caguiat could compel the petitioners to transfer
ownership of the property.  The vendor may rescind the contract if the buyer fails to pay within the
agreed period.

Ruling:
Disposition:
The Supreme Court ruled that the document was a contract to sell, not a contract
of sale. Ownership remained with the petitioners until full payment was made. The Supreme Court reversed the Court of Appeals decision and dismissed
Since the suspensive condition (full payment by March 23, 1990) was not fulfilled, Caguiat’s complaint for specific performance and damages.
the petitioners were not obligated to transfer ownership. Therefore, Caguiat could
not compel the transfer.
Case Digest: Manila Metal Container Corporation v. Philippine National Bank

Legal Basis: G.R. No. 166862, December 20, 2006

 Article 1482, Civil Code: Earnest money given in a contract of sale is part
of the price and proof of perfection of the contract. Facts

Manila Metal Container Corporation (MMCC) obtained loans from Philippine

National Bank (PNB) secured by a real estate mortgage over a property. PNB
foreclosed extrajudicially and sold the property at public auction, with PNB as the Legal Basis
winning bidder. MMCC sought to repurchase the property, paying P725,000.00 as
 Article 1318, New Civil Code: Requisites of a contract (consent, object
a deposit, claiming it was earnest money proving a perfected contract of sale at
certain, cause).
P1,574,560.47. PNB later demanded a higher price and refused to recognize the
deposit as earnest money. MMCC filed suit for specific performance and damages,  Article 1482, New Civil Code: Earnest money as proof of contract
alleging a perfected contract of sale. perfection.

 Jurisprudence on contract formation and counter-offers.

Issue

Whether there was a perfected contract of sale between MMCC and PNB, and Conclusion
whether the P725,000.00 deposit constituted earnest money proving such
contract. The Court affirmed the dismissal of MMCC’s complaint, holding that no contract
of sale was perfected, and the deposit was not earnest money. PNB was not
bound to sell the property at the price MMCC claimed.
Ruling

The Supreme Court ruled that there was no perfected contract of sale between Case Digest: Oesmer, et al. v. Paraiso Development Corporation
MMCC and PNB. The P725,000.00 paid was a deposit to repurchase, not earnest
money, and did not prove the perfection of a contract of sale. The Court G.R. No. 157493, February 5, 2007
emphasized that:

 A contract of sale requires a meeting of the minds on the essential Facts

elements: consent, object certain, and cause (price).
The Oesmer siblings, heirs and co-owners of two parcels of agricultural land in
 The parties failed to agree on the price; PNB’s acceptance was qualified Cavite, entered into a Contract to Sell with Paraiso Development Corporation. Six
and amounted to a counter-offer. of the siblings signed the contract, while two did not. The contract included a
 The Special Assets Management Department (SAMD) had no authority to payment of P100,000.00 described as "option money." Later, the petitioners
bind PNB without Board approval. sought to rescind the contract and return the money, claiming lack of written
authority for their brother Ernesto to sell their shares and that the contract was
 MMCC’s failure to accept PNB’s counter-offer and pay the balance within not binding on them. The trial court ruled in favor of the respondent corporation,
the prescribed period meant no contract was perfected. declaring the contract valid only as to Ernesto’s share. The Court of Appeals
modified this, holding the contract valid and binding as to the six signatories’
 Earnest money under Article 1482 of the Civil Code is part of the price and
shares. Petitioners elevated the case to the Supreme Court.
proof of contract perfection, which was not the case here.

Issue
Whether the P100,000.00 payment described as "option money" in the Contract  Distinction between earnest money and option money: Earnest money is
to Sell constitutes earnest money (part of the purchase price) or option money (a part of the purchase price and binds the buyer to pay the balance; option
distinct consideration for an option contract), and whether the Contract to Sell is money is a separate consideration for an option contract and may be
binding on the petitioners. forfeited.

 Contracts are perfected by consent; signatures on the contract indicate

acceptance and binding effect.
Ruling

The Supreme Court affirmed the Court of Appeals decision, ruling that:
Conclusion
1. The P100,000.00, although called "option money," is actually earnest
money, which is part of the purchase price, not a separate consideration The P100,000.00 payment is earnest money, part of the purchase price, making
for an option contract. the Contract to Sell valid and binding on the six petitioners who signed it. Their
signatures constituted direct consent to sell their shares, and the contract is
2. The Contract to Sell is valid and binding on the six petitioners who signed
enforceable despite the absence of a written agency authority or respondent’s
it, despite the absence of a written authority conferring agency to
signature on the contract.
Ernesto, because they personally signed the contract, thus directly selling
their shares.

3. The contract is not a unilateral promise to sell but a valid Contract to Sell, Case Digest: Leoquinco v. The Postal Savings Bank, et al.
supported by partial performance (payment and acceptance of the
G.R. No. 23630, August 25, 1925
P100,000.00).

4. The petitioners’ arguments that they did not understand the contract or
that their consent was conditional were rejected. The contract was in Facts
simple language, and their signatures indicated consent.
Tiburcio Leoquinco participated in a public auction held by the Postal Savings
5. Under Article 493 of the Civil Code, co-owners may alienate their Bank for the sale of a parcel of land in Navotas, Rizal. He was the highest bidder,
undivided shares without the consent of all co-owners. offering P27,000. However, the Postal Savings Bank’s board of directors rejected
his bid despite his readiness to pay and requested execution of the deed of sale.
The bank had expressly reserved the right to reject any and all bids in the board
Legal Basis resolution authorizing the sale and in the public notice of the auction.

 Article 1874, Civil Code: Written authority required for an agent to sell
land.
Issue
 Article 493, Civil Code: Co-owners may alienate their undivided shares
Whether the Postal Savings Bank could reject the highest bid at a public auction
independently.
despite the bidder’s readiness to pay.
 Case Digest: Dalion, et al. v. Court of Appeals, et al., G.R. No. 78903, February
28, 1990
Ruling

The Supreme Court ruled that the Postal Savings Bank had the right to reject any
and all bids as expressly reserved in the auction terms. The appellant voluntarily Facts:
submitted to these terms by participating in the auction. Therefore, the bank’s
Petitioners Sps. Segundo Dalion and Epifania Sabesaje-Dalion were sued by
rejection of the bid was lawful, and the appellant had no cause of action to
respondent Ruperto Sabesaje, Jr. to recover ownership of a parcel of land based
compel the execution of the deed of sale or to claim damages.
on a private document of absolute sale dated July 1, 1965. Petitioners denied
the sale, claiming the document was fictitious and the signature forged. They
asserted the land was conjugal property acquired in 1960 from Saturnina
Reasoning
Sabesaje. The trial court ruled in favor of Sabesaje, ordering the delivery of the
 The owner of property offered for sale at auction may prescribe the land and execution of a formal deed of conveyance. The Court of Appeals
manner, conditions, and terms of sale. affirmed the decision. Petitioners elevated the case to the Supreme Court.

 When these terms are reasonable and made known to the buyer, they
are binding.
Issue:
 The appellant admitted the reservation of the right to reject bids in the
Whether a contract of sale of real property must be embodied in a public
auction notice and board resolution.
document to be valid and enforceable.
 By participating, the appellant accepted these conditions.

 The bank exercised its reserved right to reject the bid, which is legally
Ruling:
permissible.
The Supreme Court denied the petition and affirmed the Court of Appeals
 The appellant cannot compel the bank to accept his bid or execute a
ruling.
deed of sale against the bank’s consent.

Reasoning:
Disposition
1. Validity of Private Document Sale: The Court held that a contract of sale
The Court affirmed the dismissal of the complaint with costs against the
is consensual and perfected by mere consent; no particular form is
appellant.
required for its validity. Thus, a private document of sale is valid and
binding between the parties upon perfection of the contract.

2. Proof of Authenticity: The authenticity of the private document was

sufficiently proven by witnesses who saw the execution and by
 comparison of signatures. Mere denial of signature or claim of forgery annotated and to declare her the sole owner. The trial court ruled in favor of the
without evidence is insufficient. heirs, declaring the deed of sale defective for lack of technical description and
unregistered, thus invalid. The Court of Appeals reversed, upholding the validity
3. Public Document Requirement: Article 1358 of the Civil Code requires a
of the deed of sale.
public document for the creation, transmission, modification, or
extinction of real rights over immovable property only for convenience,
not for validity or enforceability. The absence of a public document does
Issue
not invalidate the contract.
Whether the deed of sale of real property must contain a technical description
4. Effect of Public Document: While the contract may be valid in private
of the property and be registered to be valid and effective in transferring
form, the execution of a public document is necessary for the transfer of
ownership.
ownership and constructive delivery of the property.

5. Proper Action: The suit for recovery of ownership based on the

perfected contract of sale was proper to compel execution of the formal Ruling
deed of sale.
The Supreme Court affirmed the Court of Appeals decision, holding that:

1. A deed of sale of real property need not contain a technical description

Disposition: of the property to be valid. The essential requisites are consent,
determinate subject matter, and a certain price as required by Article
The petition was denied, and the decision of the Court of Appeals upholding the
1458 of the Civil Code.
trial court ruling was affirmed.
2. The form prescribed in Section 127 of Act No. 496 (Property Registration
Decree) is only a suggested form and not mandatory for the validity of
Case Digest: Naranja, et al. v. Court of Appeals, et al., G.R. No. 160132, April 17, the contract.
2009
3. Registration of the deed of sale is necessary only to bind third parties
and for purposes of public notice, but the absence of registration does
not invalidate the contract between the parties.
Facts
4. The petitioners failed to prove that Roque’s consent was vitiated by
Roque Naranja, the registered owner of two parcels of land, executed a Deed of
undue influence or that the deed was simulated or without
Sale on August 21, 1981, selling Lot No. 4 and his one-third share in Lot No. 2 to
consideration.
his half-sister Lucilia P. Belardo. The deed was notarized but was not registered
immediately due to Belardo’s lack of funds for registration fees. Later, Roque 5. The notarized deed of sale carries the presumption of regularity and due
executed a second deed of sale in favor of Margarita Dema-ala to secure a loan. execution, which can only be overcome by strong and convincing
Roque died in 1983. The heirs of Roque executed an extrajudicial settlement evidence.
adjudicating the properties among themselves and had one title cancelled and
reissued in their names. Belardo filed a petition to have the deed of sale
 6. Since the properties were sold by Roque during his lifetime, they no Adelia Borras for P15,000.00, with the buyers assuming the DBP loan and
longer formed part of his estate and could not be included in the paying the balance in cash.
extrajudicial settlement among heirs.
 Armando and Adelia paid the loan, received the owner's duplicate copy of
the title, tax declarations, and took possession of the land.

Legal Basis  Years later, Godofredo and Carmen sold portions of the land to other
buyers (Subsequent Buyers) despite the prior sale to the Borrases.
 Article 1458, Civil Code (Requisites of a valid contract of sale)
 The Subsequent Buyers obtained transfer certificates of title. Armando
 Section 127, Act No. 496 (Property Registration Decree) – form is
and Adelia filed a complaint for specific performance and reconveyance,
suggestive, not mandatory
alleging the second sale was invalid.
 Presumption of regularity of notarized documents

 Doctrine on undue influence requiring clear and convincing evidence

Issues

1. Whether the oral contract of sale between the Alfredos and the Borrases
Conclusion is valid and enforceable despite the lack of a written contract.

The deed of sale executed by Roque Naranja in favor of Lucilia Belardo was valid 2. Whether the action to enforce the oral contract is barred by prescription
and effective despite the absence of a technical description and late registration. or laches.
The heirs’ extrajudicial settlement over the properties was void as the
3. Whether the Subsequent Buyers are innocent purchasers for value and
properties had already been sold. The Court denied the petition and affirmed
their titles valid.
the Court of Appeals decision.
4. Whether attorney’s fees and treble costs should be awarded to the
Borrases.
Case Digest: Spouses Alfredo vs. Spouses Borras

G.R. No. 144225, June 17, 2003

Ruling

 The oral contract of sale was perfected and valid. The parties consented
Facts to the sale with a definite object and price. The sale was consummated by
delivery of possession and payment of the purchase price, including the
 Godofredo and Carmen Alfredo were the registered owners of an 81,524 DBP loan.
sq.m. parcel of land in Bataan, covered by Original Certificate of Title No.
284.  The receipt dated March 11, 1970, issued by Carmen, served as a
sufficient memorandum to satisfy the Statute of Frauds, which applies
 They mortgaged the land to the Development Bank of the Philippines
(DBP) for P7,000.00. To pay this debt, they sold the land to Armando and
 only to executory contracts. The contract was fully performed, thus oral  Article 1456, Civil Code: Property acquired by fraud creates an implied
evidence was admissible. trust obligating reconveyance to the true owner.

 The sale was not void despite Carmen’s lack of husband’s consent because  Article 1144, Civil Code: Ten-year prescriptive period for actions based on
under the Civil Code (pre-Family Code), such contracts are voidable, not obligations created by law (including implied trusts).
void. Godofredo ratified the sale by introducing the Borrases as owners
 Doctrine on constructive notice: Registration of adverse claim charges
and allowing possession for 24 years.
subsequent buyers with notice, negating good faith.
 The failure to secure approval from the Secretary of Agriculture and
 Award of attorney’s fees: Just and equitable under Article 2208(2) of the
Natural Resources for the sale within 25 years from the issuance of the
Civil Code due to unjustified refusal to comply with valid demand.
homestead title did not void the sale. Such approval is ministerial and may
be ratified later.

 The action was not barred by prescription or laches. The Borrases filed Summary
suit promptly after discovering the subsequent sale and loss of
possession. The prescriptive period for reconveyance based on implied The Supreme Court upheld the validity and enforceability of the oral contract of
trust is ten years from issuance of the title to the Subsequent Buyers. sale between the Alfredos and the Borrases despite the absence of a formal
written contract, due to full performance and ratification. The subsequent sale to
 The Subsequent Buyers were not innocent purchasers for value because other buyers was nullified because they had constructive notice of the prior sale.
they had constructive notice of the adverse claim registered by the The Borrases were entitled to reconveyance of the property, attorney’s fees, and
Borrases before their purchase and registration. Their titles are therefore treble costs. The case clarifies the application of the Statute of Frauds, ratification
not indefeasible. of voidable contracts, and the protection of buyers with constructive notice in
land transactions.
 Attorney’s fees and treble costs were properly awarded due to the bad
faith and fraudulent acts of the Alfredos and Subsequent Buyers.

Case Digest: Recio v. Heirs of Aguedo, G.R. No. 182349, July 24, 2013
Legal Basis

 Statute of Frauds: Requires written contract for sale of real property but Facts
does not apply to executed contracts or those partially or fully performed.
 Nena Recio leased a parcel of land from the Altamiranos, heirs of Aguedo
 Civil Code Articles 161 and 173: Sale by one spouse without consent of Altamirano.
the other is voidable, not void; ratification binds the conjugal partnership.
 An oral contract of sale was made between Reman Recio (Nena’s son) and
 Public Land Act (Commonwealth Act No. 141), Section 118: Approval of Alejandro Altamirano, one of the co-heirs.
Secretary of Agriculture required for alienation within 25 years but is
ministerial and may be ratified.  Partial payments were made by Reman Recio to Alejandro, who
acknowledged receipt.
  Alejandro purported to represent the other co-heirs in the sale, but no  A co-owner may sell his undivided share without the consent of other co-
written special power of attorney (SPA) was presented. owners.

 The property was later sold by the Altamiranos to the Spouses Lajarca,  The sale to the Spouses Lajarca is valid only as to the shares of the other
who obtained a new Transfer Certificate of Title (TCT). co-owners.

 Reman Recio filed a complaint for specific performance and annulment of  The petitioner cannot rely on apparent authority or estoppel because
the sale to the Lajarcas. there was no evidence that the other co-owners clothed Alejandro with
authority before the sale.
 The trial court ruled in favor of Reman Recio, declaring the sale to the
Lajarcas void and ordering the Altamiranos to execute a deed of sale to  The petitioner’s reliance on the notice of lis pendens and subsequent
Reman Recio. transactions is insufficient to prove Alejandro’s authority.

 The Court of Appeals (CA) modified the decision, ruling that Alejandro’s
sale was valid only for his aliquot share, and the sale to the Lajarcas was
Legal Basis
valid for the other co-owners’ shares.
 Article 1874, Civil Code: Sale of immovable property through an agent
 The Supreme Court affirmed the CA decision.
requires written authority; otherwise, the sale is void.

 Article 1878, Civil Code: Special powers of attorney are necessary to enter
Issue into contracts transferring ownership of immovable property.

Whether the oral contract of sale between Reman Recio and Alejandro Altamirano  Principle of co-ownership: A co-owner may dispose of his undivided
is valid as to the entire property or only as to Alejandro’s undivided share, share without consent of other co-owners.
considering the formal requirements for sale of immovable property and
 Apparent authority: Requires acts or conduct of the principal known to
authority to represent co-owners.
the third party before the transaction, which is absent here.

Ruling
Disposition
 The oral contract of sale between Reman Recio and Alejandro Altamirano
 The Supreme Court denied the petition.
is valid only as to Alejandro’s undivided share.
 The CA decision was affirmed, holding the sale valid only as to Alejandro’s
 Under Articles 1874 and 1878 of the Civil Code, the authority of an agent
share.
to sell immovable property must be in writing; otherwise, the sale is void.
 The sale to the Spouses Lajarca is valid only as to the other co-owners’
 Alejandro lacked a written special power of attorney from the other co-
shares.
owners authorizing him to sell the entire property.
 Reman Recio is declared co-owner of Alejandro’s share.
 The balance of the purchase price remains unpaid and must be settled
accordingly.