Bible Baptist Church vs.

Court of Appeals and option money are not the same but
Civil Law; Contracts; Sales; Option distinguished thus: (a) earnest money is part of the
Contract; Consideration is defined as the why of the purchase price, while option money is the money
contracts, the essential reason which moves the given as a distinct consideration for an option
contracting parties to enter into the contract; By the contract; (b) earnest money is given only where
very nature of an option contract, the same is an there is already a sale, while option money applies
erroneous contract for which the consideration must to a sale not yet perfected; and, (c) when earnest
be something of value although its kind may vary. money is given, the buyer is bound to pay the
In Villamor v. Court of Appeals, this Court defined balance, while when the would-be buyer gives option
consideration as the why of the contracts, the money, he is not required to buy, but may even
essential reason which moves the contracting parties forfeit it depending on the terms of the option
to enter into the contract. This definition illustrates Same; Same; In the interpretation of contracts, the
that the consideration contemplated to support an ascertainment of the intention of the contracting
option contract need not be monetary. Actual cash parties is to be discharged by looking to the words
need not be exchanged for the option. However, by they used to project that intention in their contract,
the very nature of an option contract, as defined in all the words, not just a particular word or two, and
Article 1479, the same is an onerous contract for words in context, not words standing alone.In the
which the consideration must be something of value, interpretation of contracts, the ascertainment of the
although its kind may vary. intention of the contracting parties is to be
Same; Same; Same; Same; An option contract discharged by looking to the words they used to
needs to be supported by a separate consideration; project that intention in their contract, all the
When a consideration for an option contract is not words, not just a particular word or two, and words
monetary, said consideration must be clearly in context, not words standing alone. The
specified as such in the option contract or clause. above Receipt readily shows that respondent spouses
To summarize the rules, an option contract needs to and petitioner only entered into a contract of option.
be supported by a separate consideration. The
consideration need not be monetary but could San Miguel Properties Philippines, Inc. vs. Huang
consist of other things or undertakings. However, if Civil Law; Property; Sales; Amount given not as a
the consideration is not monetary, these must be part of the purchase price and as proof of the
things or undertakings of value, in view of the perfection of the contract of sale but only as a
onerous nature of the contract of option. guarantee that respondents would not back out of the
Furthermore, when a consideration for an option sale.With regard to the alleged payment and
contract is not monetary, said consideration must be acceptance of earnest money, the Court holds that
clearly specified as such in the option contract or respondents did not give the P1 million as earnest
clause. money as provided by Art. 1482 of the Civil Code.
They presented the amount merely as a deposit of
Limson vs. Court of Appeals what would eventually become the earnest money or
Civil Law; Contracts; Sales; An option is not of downpayment should a contract of sale be made by
itself a purchase, but merely secures the privilege to them. The amount was thus given not as a part of
buy; Until acceptance, it is not, properly speaking, a the purchase price and as proof of the perfection of
contract, and does not vest, transfer, or agree to the contract of sale but only as a guarantee that
transfer, any title to, or any interest or right in the respondents would not back out of the sale.
subject matter, but is merely a contract by which the Respondents in fact described the amount as an
owner of the property gives the optionee the right or earnest-deposit.
privilege of accepting the offer and buying the Same; Same; Same; Option giving respondents
property on certain terms.An option is not of itself the exclusive right to buy the properties within the
a purchase, but merely secures the privilege to buy. period agreed upon is separate and distinct from the
It is not a sale of property but a sale of the right to contract of sale which the parties may enter.The
purchase. It is simply a contract by which the owner first condition for an option period of 30 days
of property agrees with another person that he shall sufficiently shows that a sale was never perfected.
have the right to buy his property at a fixed price As petitioner correctly points out, acceptance of this
within a certain time. He does not sell his land; he condition did not give rise to a perfected sale but
does not then agree to sell it; but he does sell merely to an option or an accepted unilateral
something, i.e., the right or privilege to buy at the promise on the part of respondents to buy the
election or option of the other party. Its subject properties within 30 days from the date of
distinguishing characteristic is that it imposes no acceptance of the offer. Such option giving
binding obligation on the person holding the option, respondents the exclusive right to buy the properties
aside from the consideration for the offer. Until within the period agreed upon is separate and
acceptance, it is not, properly speaking, a contract, distinct from the contract of sale which the parties
and does not vest, transfer, or agree to transfer, any may enter. All that respondents had was just the
title to, or any interest or right in the subject option to buy the properties which privilege was not,
matter, but is merely a contract by which the owner however, exercised by them because there was a
of the property gives the optionee the right or failure to agree on the terms of payment. No
privilege of accepting the offer and buying the contract of sale may thus be enforced by
property on certain terms. respondents.
Same; Same; Same; Earnest money Same; Same; Same; Option secured by
distinguished from option money.Earnest money respondents from petitioner was fatally
defective; Consideration in an option contract may be Olaguer vs. Purugganan, Jr.
anything of value, unlike in sale where it must be the Same; Same; Same; The prohibition against agents
price certain in money or its equivalent.Even the purchasing property in their hands for sale or
option secured by respondents from petitioner was management is, however, clearly, not absolute.It is,
fatally defective. Under the second paragraph of Art. indeed, a familiar and universally recognized
1479, an accepted unilateral promise to buy or sell a doctrine that a person who undertakes to act as
determinate thing for a price certain is binding upon agent for another cannot be permitted to deal in the
the promisor only if the promise is supported by a agency matter on his own account and for his own
distinct consideration. Consideration in an option benefit without the consent of his principal, freely
contract may be anything of value, unlike in sale given, with full knowledge of every detail known to
where it must be the price certain in money or its the agent which might affect the transaction. The
equivalent. There is no showing here of any prohibition against agents purchasing property in
consideration for the option. Lacking any proof of their hands for sale or management is, however,
such consideration, the option is unenforceable. clearly, not absolute. It does not apply where the
Same; Same; Same; The manner of payment of principal consents to the sale of the property in the
the purchase price is an essential element before a hands of the agent or administrator.
valid and binding contract of sale can exist.The
appellate court opined that the failure to agree on Valencia vs. Cabanting
the terms of payment was no bar to the perfection of Attorneys; Property; Art. 1491 prohibits sale to
the sale because Art. 1475 only requires agreement counsel of a property pending litigation; Case at
by the parties as to the price of the object. This is bar.Art. 1491, prohibiting the sale to the counsel
error. In Navarro v. Sugar Producers Cooperative concerned, applies only while the litigation is
Marketing Association, Inc., we laid down the rule pending. (Director of Lands vs. Adaba, 88 SCRA 513;
that the manner of payment of the purchase price is Hernandez vs. Villanueva, 40 Phil. 775). In the case
an essential element before a valid and binding at bar, while it is true that Atty. Arsenio Fer
contract of sale can exist. Although the Civil Code Cabanting purchased the lot after finality of
does not expressly state that the minds of the judgment, there was still a pending certiorari
parties must also meet on the terms or manner of proceeding. A thing is said to be in litigation not
payment of the price, the same is needed, otherwise only if there is some contest or litigation over it in
there is no sale. As held in Toyota Shaw, Inc. v. court, but also from the moment that it becomes
Court of Appeals, agreement on the manner of subject to the judicial action of the judge. (Gan
payment goes into the price such that a Tingco vs. Pabinguit, 35 Phil. 81). Logic dictates, in
disagreement on the manner of payment is certiorari proceedings, that the appellate court may
tantamount to a failure to agree on the price. either grant or dismiss the petition. Hence, it is not
Same; Same; Same; It is not the giving of earnest safe to conclude, for purposes under Art. 1491 that
money, but the proof of the concurrence of all the the litigation has terminated when the judgment of
essential elements of the contract of sale which the trial court become final while a certiorari
establishes the existence of a perfected sale.It is not connected therewith is still in progress. Thus,
the giving of earnest money, but the proof of the purchase of the property by Atty. Cabanting in this
concurrence of all the essential elements of the case constitutes malpractice in violation of Art. 1491
contract of sale which establishes the existence of a and the Canons of Professional Ethics. Clearly, this
perfected sale malpractice is a ground for suspension.

Matabuena vs. Cervantes Ramos vs. Ngaseo

Civil law; Donations; Donation between Article 1491 (5) of the Civil Code prohibiting lawyers
common-law spouses void.While Art. 133 of the from acquiring either by purchase or assignment the
Civil Code considers as void a donation between the property or rights involved which are the object of the
spouses during the marriage, policy considerations litigation in which they intervene by virtue of their
of the most exigent character as well as the dictates profession applies only if the sale or assignment of
of morality require that the same prohibition should the property takes place during the pendency of the
apply to a common-law relationship. litigation involving the clients property.Under
Same; Same; Reason for the rule.If the policy of Article 1491(5) of the Civil Code, lawyers are
the law is, in the language of the opinion of the then prohibited from acquiring either by purchase or
Justice J.B.L. Reyes of that Court, to prohibit assignment the property or rights involved which
donations in favor of the other consort and his are the object of the litigation in which they
descendants because of fear of undue and improper intervene by virtue of their profession. The
pressure and influence upon the donor, a prejudice prohibition on purchase is all embracing to include
deeply rooted in our ancient law. Moreover, as not only sales to private individuals but also public
already pointed out by Ulpian (in his lib. 32 ad or judicial sales. The rationale advanced for the
Sabinum, fr. 1), it would not be just that such prohibition is that public policy disallows the
donations should subsist, lest the condition of those transactions in view of the fiduciary relationship
who incurred guilt should turn out to be better. So involved, i.e., the relation of trust and confidence
long as marriage remains the cornerstone of our and the peculiar control exercised by these persons.
family law, reason and morality alike demand that It is founded on public policy because, by virtue of
the disabilities attached to marriage should likewise his office, an attorney may easily take advantage of
attach to concubinage. the credulity and ignorance of his client and unduly
enrich himself at the expense of his client. However,
the said prohibition applies only if the sale or
assignment of the property takes place during the
pendency of the litigation involving the clients
property. Consequently, where the property is
acquired after the termination of the case, no
violation of paragraph 5, Article 1491 of the Civil
Code attaches.
Same; Same; Mere demand for delivery of the
litigated property does not cause the transfer of
ownership, hence, not a prohibited transaction
within the contemplation of Article 1491.In the
instant case, there was no actual acquisition of the
property in litigation since the respondent only
made a written demand for its delivery which the
complainant refused to comply. Mere demand for
delivery of the litigated property does not cause the
transfer of ownership, hence, not a prohibited
transaction within the contemplation of Article
1491. Even assuming arguendo that such demand
for delivery is unethical, respondents act does not
fall within the purview of Article 1491. The letter of
demand dated January 29, 2003 was made long
after the judgment in Civil Case No. SCC-2128
became final and executory on January 18, 2002.
Philippine Suburban Development Corporation vs. Auditor
General Duran vs. Intermediate Appellate Court
Sales; Passage of title by delivery although purchase Civil Law; Land Titles; Mortgages; Public
price of subject of sale not fully paid.The vendor Documents, Presumption of regularity of public
had actually placed the vendee in possession and documents; Fraudulent and forged document of sale
control over the thing sold, even before the date of may become the root of a valid title if the certificate
the sale. The condition that the vendor should first of title had already been transferred from the name
register the deed of sale and secure a new title in the of the true owner to the name indicated in the
name of the vendee before the latter shall pay the forger.With respect to the issue as to whether the
balance of the purchase price did not preclude the signature of petitioner Circe S. Duran in the Deed of
transmission of ownership. In the absence of an Sale is a forgery or not, respondent appellate court
express stipulation to the contrary , the pay ment of held the same to be genuine because there is the
the purchase price of the goods is not a condition presumption of regularity in the case of a public
precedent to the transfer of title to the buy er, but document and the fact that Circe has not been able
title passes by the delivery of the goods. to satisfactorily prove that she was in the United
Same; Delivery; Actual or constructive States at the time the deed was executed in 1963.
delivery; Sale of real property made in a public Her return in 1966 does not prove she was not here
instrument.Under the civil law, delivery also in 1963, and that she did not leave shortly after
(tradition) as a mode of transmission of ownership 1963. She should have presented her old passport,
may be actual (real tradition) or constructive not her new one. But even if the signatures were a
(constructive tradition). When the sale of real forgery, and the sale would be regarded as void, still
property is made in a public instrument, the it is Our opinion that the Deed of Mortgage is
execution thereof is equivalent to the delivery of the VALID, with respect to the mortgagees, the
thing object of the contract, if from the deed the defendants-appellants. While it is true that under
contrary does not appear or cannot clearly be Art. 2085 of the Civil Code, it is essential that the
inferred. mortgagor be the absolute owner of the property
Same; Same; Symbolic delivery of real property mortgaged, and while as between the daughter and
subject of sale made in a public instrument; the mother, it was the daughter who still owned the
Circumstances constitutive of symbolic delivery. lots, STILL insofar as innocent third persons are
There is sy mbolic delivery of the property subject of concerned the owner was already the mother (Fe S.
the sale by the execution of the public instrument, Duran) inasmuch as she had already become
unless from the express terms of the instrument, or the registered owner (Transfer Certificates of Title
by clear inference therefrom, this was not the Nos. 2418 and 2419). The mortgagee had the right to
intention of the parties. Such would be the case rely upon what appeared in the certificate of title,
when a certain date is fixed for the purchaser to and did not have to inquire further. If the rule were
take possession of the property subject of the convey otherwise, the efficacy and conclusiveness of Torrens
ance, or where, in case of sale by installments, it is Certificate of Titles would be futile and nugatory.
stipulated that until the last installment is made, Thus the rule is simple: the fraudulent and forged
the title to the property should remain with the document of sale may become the root of a valid title
vendor, or when the vendor reserves the right to use if the certificate has already been transferred from
and enjoy the property until the gathering of the the name of the true owner to the name indicated by
pending crops, or where the vendor has no control the forger (See De la Cruz v. Fabie, 35 Phil. 144;
over the thing sold at the mo ment of the sale, and, Blondeau, et al. v. Nano et al., 61 Phil. 625; Fule et
therefore, its material delivery could not have been al. v. Legare et al., 7 SCRA 351; see also Sec. 55 of
made. Act No. 496, the Land Registration Act). The fact
that at the time of the foreclosure sale proceedings
Edu vs. Gomez (1970-72) the mortgagees may have already
Civil Law; Mortgages; Property; Purchaser in good known of the plaintiffs claim is immaterial. What is
faith of a chattel or movable property, entitled to be important is that at the time the mortgage was
respected in his possession as if he were a true owner, executed, the mortgagees in good faith actually
and cannot be required to surrender possession believed Fe S. Duran to be the owner, as evidenced
thereof until a competent court rules otherwise. by the registration of the property in the name of
There is no merit in the petition considering that the said Fe S. Duran (pp. 146-147, Rollo).
acquirer or the purchaser in good faith of a chattel Same; Same; Same; Same; Same; Same; Good
or movable property is entitled to be respected and faith, concept of; Proof of good faith; Reliance on
protected in his possession as if he were the true certificate of title sufficient, even if the sale was void,
owner thereof until a competent court rules as the functionings of the Torrens system of
otherwise. In the meantime, as the true owner, the registration is involved.Guided by previous
possessor in good faith cannot be compelled to decisions of this Court, good faith consists in the
surrender possession nor to be required to institute possessors belief that the person from whom he
an action for the recovery of the chattel, whether or received the thing was the owner of the same and
not an indemnity bond is issued in his favor. The could convey his title (Arriola vs. Gomez dela Serna,
filing of an information charging that the chattel 14 Phil. 627). Good faith, while it is always to be
was illegally obtained through estafa from its true presumed in the absence of proof to the contrary,
owner by the transferor of the bona fide possessor requires a well-founded belief that the person from
does not warrant disturbing the possession of the whom title was received was himself the owner of
chattel against the will of the possessor. the land, with the right to convey it (Santiago vs.
Cruz, 19 Phil. 148). There is good faith where there have intervened in the foreclosure suit but they did
is an honest intention to abstain from taking any not. They kept silent until almost the last moment
unconscientious advantage from another (Fule vs. when they finally decided shortly before the sheriffs
Legare, 7 SCRA 351). Otherwise stated, good faith is sale, to file a third-party claim. Clearly, the
the opposite of fraud and it refers to the state of plaintiffs can be faulted for their estoppel by laches.
mind which is manifested by the acts of the
individual concerned. In the case at bar, private
respondents, in good faith relied on the certificate of
title in the name of Fe S. Duran and as aptly stated
by respondent appellate court [e]ven on the
supposition that the sale was void, the general rule
that the direct result of a previous illegal contract
cannot be valid (on the theory that the spring cannot
rise higher than its source) cannot apply here for We
are confronted with the functionings of the Torrens
System of Registration. The doctrine to follow is
simple enough: a fraudulent or forged document of
sale may become the ROOT of a valid title if the
certificate of title has already been transferred from
the name of the true owner to the name of the forger
or the name indicated by the forger.
Same; Same; Same; Where innocent third
persons like mortgagees relying on the certificate of
title acquire rights over the property, their rights
cannot be disregarded.Thus, where innocent third
persons relying on the correctness of the certificate
of title issued, acquire rights over the property, the
court cannot disregard such rights and order the
total cancellation of the certificate for that would
impair public confidence in the certificate of title;
otherwise everyone dealing with property registered
under the torrens system would have to inquire in
every instance as to whether the title had been
regularly or irregularly issued by the court. Indeed,
this is con
trary to the evident purpose of the law. Every person
dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor
and the law will in no way oblige him to go behind
the certificate to determine the condition of the
property. Stated differently, an innocent purchaser
for value relying on a torrens title issued is
protected. A mortgagee has the right to rely on what
appears in the certificate of title and, in the absence
of anything to excite suspicion, he is under no
obligation to look beyond the certificate and
investigate the title of the mortgagor appearing on
the face of said certificate
Same; Same; Same; Estoppel by laches; Failure of
petitioners in not promptly bringing a suit to
question the deed of sale of the properties because the
signature of the vendee was allegedly a forgery, fatal
to their cause.Likewise, We take note of the
finding and observation of respondent appellate
court in that petitioners were guilty of estoppel by
laches in not bringing the case to court within a
reasonable period. Antero Gaspar, husband of Circe,
was in the Philippines in 1964 to construct the
apartment on the disputed lots. This was testified to
by Circe herself (tsn., p. 41, Nov. 27, 1973). In the
process of construction, specifically in the matter of
obtaining a building permit, he could have
discovered that the deed of sale sought to be set
aside had been executed on May 13, 1963 (the
building permit needed an application by the
apparent owner of the land, namely, Circes mother,
Fe S. Duran). And then again both plaintiffs could