!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !

"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
CnA1Lk S: ICkMA1ICN CI
CCN1kAC1 CI SALL

I. Stages In 1he L|fe Cf Sa|e
1. o||c|tac|on - negoLlaLlon and bargalnlng.
2. erfect|on - momenL when Lhere ls meeLlng of Lhe mlnds on
Lhe sub[ecL maLLer and prlce
3. Consummat|on - parLles perform Lhelr respecLlve obllgaLlons

II. o||c|tac|on Stage (Art|c|e 1479)

Art|c|e 1479.
A prom|se to buy and se|| a determ|nate th|ng for a pr|ce certa|n |s
rec|proca||y demandab|e.

An accepted un||atera| prom|se to buy or to se|| a determ|nate th|ng
for a pr|ce certa|n |s b|nd|ng upon the prom|sor |f the prom|se |s
supported by a cons|derat|on d|st|nct from the pr|ce. (14S1a)

Scope: negoLlaLlon covers Lhe perlod from Lhe Llme Lhe
prospecLlve conLracLlng parLles lndlcaLe lnLeresL ln Lhe conLracL
Lo Lhe Llme Lhe conLracL ls concluded/perfecLed.
Genera| ku|e: 8efore Lhe negoLlaLlon ls concluded by
accepLance, Lhere ls freedom Lo conLracL." An owner of
properLy ls free Lo offer Lhe sub[ecL properLy for sale Lo any
lnLeresLed person. 1here ls sLlll no obllgaLlon beLween Lhe
poLenLlal buyer and poLenLlal seller.
o Lxcept|on: opLlon conLracL.
o lollcltotloo sLage covers Lhe docLrlne of freedom of
conLracL" whlch slgnlfles or lmplles Lhe rlghL Lo choose
wlLh whom Lo conLracL. A properLy owner ls free Lo
offer hls properLy for sale Lo any lnLeresLed person, and
ls noL duLy bound Lo sell Lhe same Lo Lhe occupanL
Lhereof, absenL any prlor agreemenL vesLlng Lhe
occupanLs Lhe rlghL of flrsL prlorlLy Lo buy. x!"#$%& ()
*&+,- &. /00$"%12 345 6*7/ 385 94:::;)
A negoLlaLlon ls formally lnlLlaLed by an offer, whlch, however,
musL be cerLaln. AL any Llme prlor Lo Lhe perfecLlon of Lhe
conLracL, elLher negoLlaLlng parLy may sLop Lhe negoLlaLlon. AL
Lhls sLage, Lhe offer may be wlLhdrawn, Lhe wlLhdrawal ls
effecLlve lmmedlaLely afLer lLs manlfesLaLlon. 1o converL Lhe
offer lnLo a conLracL, Lhe accepLance musL be absoluLe and musL
noL quallfy Lhe Lerms of Lhe offer, lL musL be plaln, unequlvocal,
uncondlLlonal and wlLhouL varlance of any sorL from Lhe
proposal. <"=>%" <$-"% *&=-">=$, *&,0) () ?@A, B44 6*7/ CCC
9DEE5;.
1


<"=>%" <$-"% *&=-">=$, *&,0) () ?F>%>00>=$ @"->&="% A"=G

Iacts: n8 foreclosed Lhe morLgage MMCC consLlLuLed ln lLs favor. n8
won Lhe publlc aucLlon. MMCC requesLed for an exLenslon of Lhe 1-year
redempLlon perlod, whlch n8 re[ecLed. A speclal asseLs deparLmenL of
n8 lssued Lo peLlLloner a sLaLemenL of accounL lndlcaLlng bld prlce and
lnLeresL (abouL hp 1.3 mllllon), MMCC Lhen remlLLed hp 723,000 as

1
Novotto v. llootets uev. 8ook, 327 SC8A 362 (2007).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
deposlL for repurchase". n8 offered Lo MMCC Lo buy back Lhe
properLy for hp 2.66 mllllon. MMCC lnslsLs LhaL lL had already accepLed
Lhe offer of Lhe n8 deparLmenL of hp 1.3 mllllon, and lL had deposlLed
Lhe money as earnesL money (down paymenL). 1he amounL of hp 2.6
mllllon ls a unllaLeral lncrease by n8 of Lhe purchase prlce.

Issue: WheLher or noL Lhere was already a perfecLed conLracL of sale
when MMCC gave deposlL afLer Lhe deparLmenL lssued sLaLemenL of
accounL.

ne|d: nC. 1he exchanges were counLer offers and so Lhe conLracL never
moved beyond Lhe negoLlaLlon sLage. lL was sLlpulaLed by Lhe parLles
LhaL n8 wlll accepL Lhe deposlL on Lhe condlLlon LhaL Lhe purchase
prlce ls sLlll sub[ecL Lo Lhe approval of Lhe n8 board." 1hus, Lhere was
no deflnlLe prlce.

Doctr|ne:

o An unaccepLed unllaLeral promlse (offer Lo buy or Lo
sell) prlor Lo accepLance, does noL glve rlse Lo any
obllgaLlon or rlghL. H7",&I+$ () <",I+$J2 3K L)!)
4:44)
Where Lhe offer ls glven wlLh a sLaLed Llme for lLs accepLance,
Lhe offer ls LermlnaLed aL Lhe explraLlon of LhaL Llme. HM>%%$N"1
() *&+,- &. /00$"%12 C:: 6*7/ DK5 9DEE5;)
1he LeLLer of lnLenL Lo 8uy and Sell ls [usL LhaL - a
manlfesLaLlon of Sea loods CorporaLlon's (SlC) lnLenLlon Lo sell
Lhe properLy and unlLed Musllm and ChrlsLlan urban oor
AssoclaLlon, lnc. (uMCuAl) lnLenLlon Lo acqulre Lhe same -
whlch ls nelLher a conLracL Lo sell nor a condlLlonal conLracL of
sale. <+1%>O "=P *F,>1->"= Q,#"= ?&&, /11&R>"->&=2 S=R) ()
A7T*UM V$($%&0O$=- *&,0)2 B:C 6*7/ KDC 9DEE:;.

<+1%>O "=P *F,>1->"= Q,#"= ?&&, /11&R>"->&=2 S=R) () A7T*UM
V$($%&0O$=- *&,0)

Iacts: MCuAl enLered lnLo negoLlaLlon wlLh Seafood CorporaLlon (SlC)
for Lhe purchase of laLLer's land. MCuAl execuLed a LeLLer of lnLenL Lo
8uy and SlC a LeLLer of lnLenL Lo Sell Lo faclllLaLe Lhe former's loan
appllcaLlon. 1he sale dldn'L happen because hereln buyer wasn'L able Lo
obLaln a loan, even when lL was glven an exLenslon of 3 monLhs Lo
procure lL. LvenLually, SlC sold Lhe loL Lo 88?C-v. MCuAl alleged LhaL
Lhe sale vlolaLed lLs subslsLlng agreemenL wlLh SlC whlch gave lL a
preferred rlghL Lo purchase Lhe loL.

Issue: WheLher or noL Lhe leLLers of lnLenL creaLed a bllaLeral conLracL
wlLhln Lhe meanlng of ArLlcle 1479

ne|d: nC. A mere lnLenLlon or plan Lo do someLhlng does noL glve rlse
Lo an obllgaLlon, nor blnd a parLy Lo do or glve. lL was noL an offer, buL
merely an expresslon of Lhe lnLenLlon Lo enLer ln Lo Lhe conLracL. lL does
noL conLaln a commlLmenL Lo enLer lnLo Lhe conLracL. ln facL, SlC's
enLerlng lnLo a conLracL was condlLloned upon MCuAl's ablllLy Lo ralse
Lhe funds.

Doctr|ne:

A. Cpt|on Contract
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1. Def|n|t|on And Lssence Cf Cpt|on Contract
An opLlon ls a preparaLory conLracL ln whlch one parLy granLs Lo
Lhe oLher, for a flxed perlod and under speclfled condlLlons, Lhe
power Lo declde, wheLher or noL Lo enLer lnLo a prlnclpal
conLracL. lL blnds Lhe parLy who has glven Lhe opLlon, noL Lo
enLer lnLo Lhe prlnclpal conLracL wlLh any oLher person durlng
Lhe perlod deslgnaLed, and, wlLhln LhaL perlod, Lo enLer lnLo
such conLracL wlLh Lhe one Lo whom Lhe opLlon was granLed, lf
Lhe laLLer should declde Lo use Lhe opLlon. lL ls a separaLe
agreemenL dlsLlncL from Lhe conLracL of sale whlch Lhe parLles
may enLer lnLo upon Lhe consummaLlon of Lhe opLlon. *",R$%%$,
() *&+,- &. /00$"%12 3ED 6*7/ K48 94:::;.
1


*",R$%%", () *&+,- &. /00$"%1

Iacts: SlPl (landowner) enLered lnLo lease conLracL wlLh Carcellar wlLh
opLlon Lo purchase wlLhln a cerLaln perlod, exerclsed by a wrlLLen noLlce
Lo SlPl. nearlng LermlnaLlon, Carceller wroLe expresslng hls lnLenL Lo
exerclse Lhe opLlon, buL requesLed for an exLenslon Lo ralse funds,
whlch SlPl re[ecLed. Carceller sLlll laLer expressed lnLenLlon Lo exerclse
opLlon Lo purchase afLer Lhe perlod explred, whlch SlPl denled because
perlod had lapsed. Carceller flles acLlon for speclflc performance.

Issue: WheLher or noL Carceller should be allowed Lo exerclse opLlon
glven Lhe delay ln glvlng Lhe requlred noLlce


1
lofottezo v. Mocboco, 333 SC8A 643 (2000), 8oot v. cA, 337 SC8A 846 (2001),
Abolos v. Mocotooqoy, It., 439 SC8A 649 (2004), vospoez v. Ayolo cotp., 443
SC8A 231 (2004), oloqlo v. Apeles, 376 SC8A 361 (2009).
ne|d: ?LS. Carceller's leLLer Lo SlPl showed lnLenL Lo exerclse opLlon Lo
purchase desplLe Lhe requesL for Lhe exLenslon. CranLlng Lhe opLlon ls
conslsLenL wlLh Lhe lnLenLlon of Lhe parLles. 1he delay was noL
subsLanLlal or fundamenLal as Lo amounL Lo a breach LhaL would defeaL
Lhe lnLenLlon of Lhe parLles when Lhey enLered lnLo Lhe conLracL. Pls
flrsL leLLer and hls formal exerclse were wlLhln reasonable Llme frame

Doctr|ne:

An opLlon lmposes no blndlng obllgaLlon on Lhe person holdlng
Lhe opLlon aslde from Lhe conslderaLlon for Lhe offer. unLll
accepLed, lL ls noL LreaLed as a sale. W"X"N () Y"R1&=2 CD5 6*7/
D8D 9DEEC;)
2


W"X"N () *&+,- &. /00$"%1

Iacts: Lacsons are owners of a land, LenanLed by farmer Llllers who had
landholdlngs Lhereon. 1he farmers execuLed a deed of asslgnmenL ln
favor of 1ayag sLaLlng LhaL Lhey would asslgn Lhelr landholdlngs for
hp30/sq. meLer payable when legal lmpedlmenLs Lo Lhe sale of Lhe
properLy no longer exlsLed and lf Lhe Lacsons declde Lo sell Lhe
properLy. When 1ayag called for a meeLlng Lo dlscuss Lhelr agreemenL,
Lhe farmers expressed Lhey would noL aLLend and LhaL Lhey were golng
Lo sell Lhelr landholdlngs Lo Lhe Lacsons. 1ayag clalms LhaL Lhey had no
rlghL Lo deal dlrecLly wlLh Lhe Lacsons, whlle Lhelr conLracLs wlLh hlm

2
AJelfo ltopettles, loc. v. cA, 240 SC8A 363 (1993), kllosboyoo, loc. v. Mototo,
246 SC8A 340 (1993), 5oo Mlqoel ltopettles lblllpploes, loc. v. noooq, 336
SC8A 737 (2000), llmsoo v. cA, 337 SC8A 209 (2001).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
were valld and exlsLlng.

Issue: WheLher or noL Lhe deeds of asslgnmenL were opLlon conLracLs.

ne|d: nC. 1he paymenL of Lhe purchase prlce was condlLloned on Lhe
dlsappearance of any legal lmpedlmenLs ln sale of Lhe properLy and on
Lhe Lacsons acLually selllng lL-Lhere was no showlng LhaL Lhey ever
agreed Lo sell Lhelr properLy. 1here was no opLlon conLracL here
because ln an opLlon conLracL, Lhe one glvlng ls only bound Lo hold Lhe
land ln case Lhe opLlonee decldes Lhe recelve Lhe lands aL hls elecLlon.
Pere, Lhe farmers dld noL [usL glve 1ayag an opLlon, Lhey gave hlm an
excluslve rlghL Lo buy Lhe properLy. 1hey cannoL legally do Lhls because
Lhey are noL Lhe reglsLered owners of Lhe land. 1hey had no rlghL Lo
enLer lnLo Lhose conLracLs wlLh 1ayag wlLhouL Lhe knowledge of Lhe
Lacsons.

Doctr|ne:

An opLlon ls a conLlnulng offer or an unaccepLed offer whlch
musL be cerLaln. lL ls dlsLlncL from Lhe conLracL of sale, buL as
soon as Lhe offer ls accepLed, Lhe conLracL of sale ls perfecLed.
/P$%." ?,&0$,->$12 S=R) () *&+,- &. /00$"%12 DCE 6*7/ B5B
94::B;)
o 1he lndlvldual glvlng Lhe opLlon does noL sell hls land,
buL raLher Lhe rlghL Lo prlvllege Lo buy aL Lhe elecLlon or
opLlon of Lhe oLher parLy.
1enanLs, noL belng Lhe reglsLered owners, cannoL granL an
opLlon on Lhe land, much less any excluslve rlghL" Lo buy Lhe
properLy under Lhe LaLln saylng oem Jot pooJ ooo bobet."
HW"X"N () Y"R1&=2 CD5 6*7/ D8D 9DEEC;)

2. L|ements Cf A Va||d Cpt|on Contract
a. ConsenL
b. Sub[ecL MaLLer - Lhe rlghL Lo choose wheLher or noL Lo
buy a deLermlnaLe/deLermlnable ob[ecL for a prlce
cerLaln (lncludlng manner of paymenL).
c. ConslderaLlon whlch ls anyLhlng of value and ls separaLe
and dlsLlncL from Lhe purchase prlce
!usL llke ln a sale, Lhe opLlon conLracL wlll only be perfecLed lf
Lhe parLles agree on Lhe speclflc ob[ecL (l.e. Lhe rlghL lLself, and
Lhe condlLlons) and Lhe prlce and manner of paymenL of Lhe
conslderaLlon

3. Contract Cf Sa|e v. Cpt|on Contract

CCN1kAC1 CI SALL C1ICN CCN1kAC1
Cnerous, requlres a separaLe conslderaLlon. Lack of conslderaLlon
makes Lhe conLracL vold.
ConslderaLlon musL be money or
lLs equlvalenL, or essenLlally a
valuable conslderaLlon.
ConslderaLlon may be anyLhlng of
value, even lf lL's noL money.
Consensual ConLracL
8llaLeral ConLracL unllaLeral ConLracL
Sub[ecL maLLer ls a Lhlng Lo be
glven
Sub[ecL maLLer ls Lhe rlghL Lo
choose Lo purchase or noL
resLaLlon: 1o Clve resLaLlon: 1o uo or noL uo
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Covered by SLaLuLe of lrauds noL Covered by SLaLuLe of lrauds

lL ls a unllaLeral promlse Lo sell a deLermlnaLe Lhlng. lL only blnds
Lhe opLloner - even when Lhe opLlonee has noL pald a separaLe
conslderaLlon - wlLh Lhe followlng obllgaLlons:
1. noL Lo offer Lo any Lhlrd parLy Lhe sale of Lhe ob[ecL
2. noL Lo wlLhdraw Lhe offer durlng Lhe agreed perlod
3. 1o enLer lnLo a conLracL of sale when Lhe opLlon holder,
lf he uses Lhe opLlon (l.e. accepLs Lhe offer) wlLhln Lhe
speclfled perlod.
1he Lhree obllgaLlons are obllgaLlons Lo do. 1herefore, a breach
of Lhe opLlon conLracL wlll only be acLlonable for damages, noL
speclflc performance.
o When Lhe offer ls accepLed, Lhe obllgaLlons become
obllgaLlons Lo glve, slnce Lhe conLracL of sale ls already
perfecLed.
1he sub[ecL maLLer of an opLlon conLracL ls Lhe opLlon Lo
purchase a deLermlnaLe Lhlng. ln oLher words, lL ls Lhe sub[ecL
maLLer ls Lhe rlghL Lo choose Lo buy or noL.
o !usL llke ln a sale, Lhe opLlon conLracL wlll only be
perfecLed lf Lhe parLles agree on Lhe speclflc ob[ecL (l.e.
Lhe rlghL lLself, and Lhe condlLlons) and Lhe prlce and
manner of paymenL of Lhe conslderaLlon.
An opLlon conLracL ls noL covered by Lhe SLaLuLe of lrauds.
1herefore, lL can be proved by parol evldence and ls enforceable
even lf noL wrlLLen.

4. Mean|ng Cf "Separate Cons|derat|on" (Art|c|es 1479 and 1324)

Art|c|e 1324.
When the offerer has a||owed the offeree a certa|n per|od to accept,
the offer may be w|thdrawn at any t|me before acceptance by
commun|cat|ng such w|thdrawa|, except when the opt|on |s founded
upon a cons|derat|on, as someth|ng pa|d or prom|sed. (n)

An opLlon conLracL ls an offer and a preparaLory conLracL Lo LhaL
of sale. 1hls presupposes LhaL Lhere ls already a purchase prlce
on Lhe sub[ecL maLLer of Lhe sale whlch was agreed upon by Lhe
parLles. As long as Lhe conslderaLlon for Lhe opLlon conLracL ls
dlsLlncL and noL lncluded ln Lhe purchase prlce, lL ls consldered
separaLe conslderaLlon".
Genera| ku|e: An opLlon wlLhouL separaLe conslderaLlon ls vold
as a conLracL. ConslderaLlon ln an opLlon conLracL may be
anyLhlng of value, noL necessarlly money or lLs equlvalenL. As
long as Lhe conslderaLlon for Lhe opLlon conLracL ls dlsLlncL and
noL lncluded ln Lhe purchase prlce, lL ls consldered separaLe
conslderaLlon".
o Lxcept|on: An opLlon may be lncluded wlLhln anoLher
valld conLracL, such as a lease or morLgage. lL wlll be
blndlng even lf lL does noL have a separaLe
conslderaLlon. lL ls a sLlpulaLlon wlLhln Lhe conLracL
whlch acLs llke an opLlon conLracL.
A unllaLeral promlse Lo sell, ln order Lo be blndlng upon Lhe
promlssor, musL be for a prlce cerLaln and supporLed by a
conslderaLlon separaLe from such prlce. H6"%"O$ () *&+,- &.
/00$"%12 D3: 6*7/ 3B5 94::B;)
4


1
IMA noose, loc. v. 5to. Moolco loJosttlol ooJ uev. cotp., 300 SC8A 326 (2006).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1he separaLe conslderaLlon" ln an opLlon may be anyLhlng of
value, unllke ln sale where lL musL be Lhe prlce cerLaln ln money
or lLs equlvalenL. M>%%"O&, () *&+,- &. /00$"%12 DED 6*7/ 5EK
94::4;.
1


M>%%"O&, () *&+,- &. /00$"%1

Iacts: vlllamor purchased from 8eyes one half of a plece of land for
more Lhan Lhe markeL value. 1hey Lhen execuLed a ueed of CpLlon
sLaLlng LhaL Lhe reason only why vlllamor boughL Lhe half ln Lhe flrsL
place ls because 8eyes granLed hlm excluslve rlghL Lo buy Lhe oLher half
whenever Lhe need would arlse for elLher parLy. 8eyes soughL Lo
repurchase Lhe half already boughL by vlllamor buL Lhe laLLer refused.

Issue: WheLher or noL Lhe ueed of CpLlon was valld

ne|d: ?LS. 1he conslderaLlon for Lhe CpLlon was Lhe dlfference ln Lhe
hlgher purchase prlce of Lhe land compared Lo lLs acLual markeL value.
ConslderaLlon maybe anyLhlng of value. 1he opLlon here was Lhe
conslderaLlon for Lhe vlllamors buylng Lhe flrsL half of Lhe land. Slnce
Lhey expressed Lhelr lnLenLlon Lo exerclse Lhe opLlon (whlch ls an offer),
a valld conLracL was perfecLed.

Doctr|ne: 1he CourL ruled LhaL Lhe separaLe conslderaLlon for Lhe opLlon
Lo buy Lhe oLher half was Lhe dlfference beLween Lhe markeL value and
Lhe 70 prlce pald.

1
ue lo covoJo v. uloz, 37 hll. 982 (1918), 5oo Mlqoel ltopettles lblllpploes,
loc. v. noooq, 336 SC8A 737 (2000)

o ln reclprocal conLracLs llke lease, Lhe obllgaLlon or
promlse of each parLy ls Lhe conslderaLlon for LhaL of
Lhe oLher. (ArLlcle 1330) MP") V$ Z+>,>=& () ?"%",R"2 D:
6*7/ 4 94:5:;
o 1he monLhly lnLeresL pald by Lhe spouses on Lhe
foreclosed properLy durlng Lhe one-year perlod granLed
Lo Lhem by Lhe bank was consldered as Lhe separaLe
conslderaLlon Lo hold Lhe opLlon conLracL valld) V>["OR&
() *&+,- &. /00$"%12 CCE 6*7/ 4:E 9DEEC;
o 1he opLlon Lo buy lncluded ln a morLgage was deemed a
valld sLlpulaLlon slnce lL ls supporLed by Lhe same
conslderaLlon of Lhe morLgage, whlch ls lLself dlsLlncL
from LhaL of Lhe sale. H6&,>"=& () A"+->1-"2 5 6*7/ :C5
94:5D;)
AlLhough no conslderaLlon ls expressly menLloned ln an opLlon
conLracL, lL ls presumed LhaL lL exlsLs and may be proved, and
once proven, Lhe opLlon ls blndlng) H<&=->=&%" () *&[+"=NR&2
K8 ?F>%) C84 94:CK;)

S. No Separate Cons|derat|on: Vo|d As Cpt|on, Va||d As A Certa|n
Cffer. 6"=RF$J () 7>N&12 CB 6*7/ 358 94:KD;.
2


6"=RF$J () 7>N&1

Iacts: An CpLlon Lo urchase was execuLed where 8lgos would sell a

2
/..>,O>=N Atklos, ktoll & co., loc. v. coo, 102 hll. 948 (1938), L($,-+,=>=N
5ootbwesteto 5oqot Molosses co. v. Atlootlc Colf & loclflc co., 97 hll. 249
(1933).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
plece of land Lo Sanchez upon Lhe exerclse of Lhe opLlon wlLhln 2 years.
Sanchez made several Lenders of paymenL Lo 8lgos, whlch laLLer
re[ecLed. Sanchez Lhen deposlLed Lhe amounL wlLh Lhe Cll and
commenced sulL for speclflc performance agalnsL 8lgos. LaLLer asserLs
LhaL lL was noL a valld conLracL for absence of conslderaLlon.

Issue: WheLher or noL Lhere ls a valld opLlon conLracL

ne|d: nC. Seller cannoL revoke an offer lf Lhe opLlon Lo buy had a
separaLe conslderaLlon. lf Lhe opLlon ls glven wlLhouL a conslderaLlon, lL
ls a mere offer of a conLracL of sale, whlch ls noL blndlng unLll accepLed.
lf, however, accepLance ls made before a wlLhdrawal, lL consLlLuLes a
blndlng conLracL of sale, even Lhough Lhe opLlon was noL supporLed by a
sufflclenL conslderaLlon. Accordlngly, Lhe promlsee cannoL compel Lhe
promlsor Lo comply wlLh Lhe promlse, unless Lhe former esLabllshes Lhe
exlsLence of sald dlsLlncL conslderaLlon. ln oLher words, Lhe promlsee
has Lhe burden of provlng such conslderaLlon. lalnLlff hereln has noL
even alleged Lhe exlsLence Lhereof ln hls complalnL.

CCN1kCLLING DCC1kINL: 6"=RF$J () 7>N&12 CB 6*7/ 358
94:KD;) WlLhouL separaLe conslderaLlon, an opLlon conLracL ls
vold as a conLracL buL would sLlll be a valld offer. lf Lhe opLlon ls
exerclsed before lL ls wlLhdrawn, lL ls equlvalenL Lo an offer
belng accepLed. 1hus, a valld and blndlng sale would be
perfecLed.
o 1he burden of proof Lo show LhaL Lhe opLlon conLracL
has a separaLe conslderaLlon ls wlLh Lhe parLy seeklng Lo
show lL. ArLlcle 1334, whlch presumes LhaL
conslderaLlon exlsLs, cannoL apply slnce Art|c|e 1479,
Lhe more speclflc provlslon, requlres such separaLe
conslderaLlon for an opLlon Lo be valld.
8U1 LA1LL: 1here have been rullngs by Lhe SC whlch Lend Lo
dlverge from Lhe Sanchez docLrlne. Powever, Sanchez ls sLlll Lhe
conLrolllng docLrlne slnce lL has yeL Lo be expressly abandoned
by Lhe CourL) <&=->%%" () *&+,- &. /00$"%12 454 67/ 45K2 4K3
94:88;\ @"->=& () S/*2 4:K 6*7/ 3D3 94::4;\ T"> ]" 6>= W,"P>=N
() *&+,- &. /00$"%12 DE: 6*7/ K53 94::4;\ V>"O"=-$ () *&+,- &.
/00$"%12 DE5 6*7/ BD 94::D;

6. 1here Must 8e Acceptance Cf Cpt|on Cffer. M"JI+$J () */2 4::
6*7/ 4ED 94::4;.

M"1I+$J () *&+,- &. /00$"%1

Iacts: valle[era sold land Lo vasquez who Lhen secured 1ransfer
CerLlflcaLe of 1lLle. A separaLe lnsLrumenL LogeLher wlLh Lhe deed of
sale, a 8lghL Lo 8epurchase was execuLed by Lhem ln favor of valle[era.
LaLer, vasquez reslsLed Lhls acLlon for redempLlon on Lhe premlse LhaL
8lghL Lo 8epurchase ls [usL an opLlon Lo buy slnce lL ls noL embodled ln
Lhe same documenL of sale buL ln a separaLe documenL, and such opLlon
ls noL supporLed by a conslderaLlon dlsLlncL from Lhe prlce, Lhe deed for
rlghL Lo repurchase ls noL blndlng upon Lhem.

Issue: WheLher or noL Lhe rlghL of repurchase gave rlse Lo a valld
conLracL of sale.

ne|d: nC. 1he rlghL Lo repurchase was noL supporLed by a separaLe
conslderaLlon. 1hus, for lL Lo be blndlng on vasquez, lL musL have been
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
shown LhaL valle[era accepLed Lhe offer Lhereln before lL was wlLhdrawn
by vasquez. none was made, Lhe vendor a reLro musL make acLual and
slmulLaneous Lender of paymenL and conslgnaLlon. Mere expresslons of
readlness or wllllngness Lo repurchase are lnsufflclenL. 1he rlghL of
repurchase ls noL a rlghL granLed Lhe vendor by Lhe vendee ln a
subsequenL lnsLrumenL, buL ls a rlghL reserved by Lhe vendor ln Lhe
same lnsLrumenL of sale as one of Lhe sLlpulaLlons of Lhe conLracL.

Doctr|ne: lL was held ln M"JI+$J () *&+,- &. /00$"%12 4:: 6*7/ 4ED
94::4; LhaL for Lhe Sanchez docLrlne Lo apply Lhe opLlon musL be
accepLed and Lhe accepLance musL be communlcaLed Lo Lhe offeror.
1hls emphaslzes Lhe polnL LhaL an opLlon conLracL ls a dlsLlncL conLracL.

Classroom example: S ls selllng 8 a condomlnlum unlL. Pe Lells 8
LhaL he can pay 30,000 as reservaLlon fee whlch wlll enLlLle hlm
Lo a perlod of 1 monLh Lo Lhlnk abouL Lhe purchase. lf he
accepLs, Lhe 30,000 wlll be deducLed from Lhe purchase prlce.
1hls ls noL an opLlon conLracL because Lhe 30,000 ls noL a
separaLe conslderaLlon buL ls acLually parL of Lhe purchase prlce.
WhaL we have ls an lnnomlnaLe conLracL (do uL faclas). 8reach
of Lhe conLracL wlll enLlLle 8 Lo damages only. 1he lnnomlnaLe
conLracL lnvolves a presLaLlon Lo do, Lhus, speclflc performance
ls noL avallable.

7. roper Lxerc|se Cf Cpt|on Contract.
1he opLlonee may exerclse hls rlghL by merely advlslng Lhe
offeror of Lhe declslon Lo buy and expresslng hls readlness Lo
pay, provlded LhaL he ls acLually able Lo pay. AcLual paymenL ls
noL necessary Lo exerclse Lhe opLlon. @>$-$1 () */, 46 6*7/ 5BC
94:KD;)

@>$-$1 () *&+,- &. /00$"%1

Iacts: Carcla (owner and lessor) enLered lnLo a ConLracL of Lease wlLh
CpLlon Lo 8uy a school wlLh nleLes (lessee). Lessee ls granLed an opLlon
Lo buy Lhe land wlLhln Lhe perlod of Lhe conLracL of lease. LaLer, Carcla
expressed hls lnLenLlon Lo resclnd Lhe conLracL due Lo poor malnLenance
of Lhe bulldlng. ln hls reply, nleLes expressed lnenLlon Lo exerclse Lhe
opLlon Lo buy. ln Lhe speclflc performance case flled agalnsL Carcla, he
asserLs LhaL Lhe full purchase prlce musL flrsL be pald before Lhe opLlon
could be exerclsed.

Issue: WheLher or noL Carcla's asserLlon ls correcL.

ne|d: nC. ln Lhe case of an opLlon Lo buy, Lhe credlLor may valldly and
effecLlvely exerclse hls rlghL by merely advlslng Lhe debLor of Lhe
former's (1) declslon Lo buy and (2) hls readlness Lo pay Lhe sLlpulaLed
prlce, provlded LhaL Lhe same ls avallable and acLually dellvered Lo Lhe
debLor upon execuLlon and dellvery by hlm of Lhe correspondlng deed
of sale. ln oLher words, noLlce of Lhe credlLor's declslon Lo exerclse hls
opLlon Lo buy need noL be coupled wlLh acLual paymenL of Lhe prlce, so
long as Lhls ls dellvered Lo Lhe owner of Lhe properLy upon performance
of hls parL of Lhe agreemenL.

Doctr|ne:

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
roper exerclse of an opLlon glves rlse Lo Lhe reclprocal
obllgaLlons of sale H^$>,1 &. Y+>1 A"R+1 () *&+,- &. /00$"%12 3K4
6*7/ D:B 9DEE4;2
1
whlch musL be enforced wlLh Len (10) years
as provlded under ArLlcle 1144. HV>J&= () *&+,- &. /00$"%12 3ED
6*7/ D88 94:::;.
o 1he refusal by Lhe offeror Lo comply wlLh Lhe demand
by Lhe offeree wlLh Lhe exerclse of hls opLlon may be
enforced by speclflc performance.
o Lxerclse of Lhe opLlon ls accepLance of Lhe offer whlch
perfecLs Lhe conLracL of sale. 1hus, Lhe obllgaLlons Lo do
become obllgaLlons Lo glve.
8epeaLed Lenders of paymenL, whlch were refused by Lhe
opLloner for no reason, consLlLuLe evldence of a valld exerclse of
Lhe opLlon. 6"=RF$J () 7>N&12 CB 6*7/ 358 94:KD;.

8. Cpt|on Not Deemed art Cf kenewa| of Lease. An opLlon
aLLached Lo a lease when noL exerclsed wlLhln Lhe opLlon perlod
ls exLlngulshed and cannoL be deemed Lo have been lncluded ln
Lhe lmplled renewal (toclto tecooJoccloo) of Lhe lease. HV>J&= ()
*/2 3ED 6*7/ D88 94:::;)
under Lhe prlnclple of toclto tecooJoccloo, a lease ls lmplledly
renewed lf Lhe Lerm of Lhe orlglnal conLracL of lease has
explred, Lhe lessor has noL ordered Lhe lessee Lo vacaLe, and 13
days has passed wlLhouL Lhe acqulescence of Lhe lessor.
2


1
llmsoo v. coott of Appeols, 337 SC8A 209 (2001).
2
Samelo v. ManoLok Servlces, lnc., C.8. no. 170309 (noL ln Lhe book)
Cnly Lhe essenLlal sLlpulaLlons ln Lhe lease are deemed
renewed. An opLlon Lo purchase whlch ls sLlpulaLed ln a lease ls
noL essenLlal Lo Lhe lease. 1hus, Lhey lL ls noL renewed.

9. er|od Cf Lxerc|se Cf Cpt|on. lf Lhe opLlon conLracL does noL
speclfy Lhe perlod ln whlch Lhe opLlon can be exerclsed, lL
cannoL be presumed LhaL lL can be exerclsed lndeflnlLely.
AcLlons upon wrlLLen conLracLs musL be broughL wlLhln 10
years. AfLerwards, lL prescrlbes.
1here musL be vlrLual" exerclse of opLlon wlLh Lhe opLlon
perlod. noLlce wlLhln Lhe opLlon perlod of clear lnLenLlon Lo
purchase Lhe properLy, even wlLh a requesL for leeway or
exLenslon of Lhe perlod ln order Lo ralse money Lo buy Lhe
properLy, ls a valld and subsLanLlal exerclse of Lhe opLlon.
*",R$%%$, () *&+,- &. /00$"%1, 302 SCkA 718 (1999).

Summary Cf ku|es When er|od |s Granted to rom|see
/=N T+ /1+=R>&= () *&+,- &. /00$"%12 D38 6*7/ 5ED 94::C; summarlzed
Lhe appllcable rules:
1. lf Lhe perlod ls noL supporLed by a separaLe conslderaLlon, Lhe
offeror can sLlll wlLhdraw Lhe offer before lL ls accepLed, or
before he learns of an accepLance made by Lhe offeree.
2. 1he rlghL Lo wlLhdraw musL noL be done whlmslcally or
arblLrarlly, oLherwlse, Lhe oLher parLy may sue for damages
under Art|c|e 19. lf Lhere ls a separaLe conslderaLlon, an opLlon
conLracL ls perfecLed, and wlLhdrawal of Lhe opLlon wlLhln Lhe
perlod ls a breach of Lhe conLracL.
3. 1he opLlon conLracL ls an lndependenL conLracL by lLself. lf lL ls
wlLhdrawn, Lhere ls a breach whlch can be Lhe basls of an acLlon
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
for damages. Speclflc performance ls noL avallable.
4. 1he naLure of Lhe conslderaLlon musL be Laken lnLo accounL. lf
Lhe conslderaLlon was ln facL parL of Lhe purchase prlce, Lhen
Lhere ls no opLlon conLracL, buL a perfecLed conLracL of sale.

/=N T+ /1+=R>&= () *&+,- &. /00$"%12 D38 6*7/ 5ED 94::C; ruled LhaL
Lhe separaLe conslderaLlon merely guaranLees LhaL wlLhln Lhe opLlon
perlod, before Lhe opLloner wlLhdraws Lhe offer, an accepLance by Lhe
opLlonee would glve rlse Lo a valld sale. 1hls, ln effecL, ls slmllar Lo Lhe
docLrlne ln 5oocbez v. klqos whlch consldered an opLlon whlch dld noL
have separaLe conslderaLlon.
1he effecL ls LhaL as far as Lhe opLlonee ls concerned, wheLher
or noL he glves a separaLe conslderaLlon, hls rlghL can be
defeaLed slmply by Lhe opLloner's wlLhdrawal. Pe ls Lherefore
noL assured LhaL a sale wlll be perfecLed.
ALL. SanLlago: Lhe more loglcal acLlon ln case of a breach of an
opLlon conLracL ls speclflc performance. 8uL, Lhe reasonlng ln
Aoq o (l.e you can'L compel speclflc performance for
presLaLlons Lo do) ls also loglcal.
CLv: says Lhls does noL provlde for a commerclally sound
docLrlne because lL emasculaLes Lhe effecLlveness of an opLlon
supporLed by a separaLe conslderaLlon. 1here ls no lncenLlve or
moLlvaLlon for Lhe opLlonee Lo glve, and Lhe opLloner Lo
demand a separaLe conslderaLlon.

8. k|ght Cf I|rst kefusa|
1. Def|n|t|on: A promlse on Lhe parL of Lhe owner LhaL lf he
decldes Lo sell Lhe properLy ln Lhe fuLure, he would flrsL
negoLlaLe lLs sale Lo Lhe promlsee.
A rlghL of flrsL refusal cannoL be Lhe sub[ecL of speclflc
performance, buL breach would allow a recovery of damages.
H!+$,,$,& () T_>N&2 :5 ?F>%) 3K 94:BC;)

2. 8as|c Concepts In 1he k|ght Cf I|rst kefusa|
8lghLs of flrsL refusal only consLlLuLe lnnovaLlve [urldlcal
relaLlons", buL do noL rlse Lo Lhe level of conLracLual
commlLmenL slnce wlLh Lhe absence of agreemenL on prlce
cerLaln, Lhey are noL sub[ecL Lo conLracLual enforcemenL. /=N
T+ /1+=R>&= () *&+,- &. /00$"%12 D38 6*7/ 5ED 94::C;.

/=N T+ /1+=R>&= () *&+,- &. /00$"%1

Iacts: Ang ?u and oLhers were LenanLs and lessees of commerclal spaces
owned by Cngpln. Cn several occaslons, Cngpln lnformed Ang ?u LhaL
he ls offerlng Lo sell Lhe premlses and ls glvlng Lhem prlorlLy Lo acqulre
Lhe same. negoLlaLlons were had and counLer offers were glven by boLh
parLles. Ang ?u flled for speclflc performance Lo compel Cngpln Lo sell
Lhe properLy when he found ouL LhaL Lhe laLLer was abouL Lo sell Lhe
properLy. endlng resoluLlon of Lhe case, Cngpln sold Lhe properLy Lo
anoLher.

Issue: WheLher or noL Lhere was a perfecLed sale.

ne|d: nC. ln a rlghL of flrsL refusal, whlle Lhe ob[ecL mlghL be made
deLermlnaLe, Lhe exerclse of Lhe rlghL, would depend noL only on Lhe
vendor's lnLenLlon Lo sell buL also on Lerms, lncludlng Lhe prlce, LhaL are
yeL Lo be flrmed up. lLs breach cannoL [usLlfy an lssuance of a wrlL of
execuLlon under a [udgmenL or sancLlon an acLlon for speclflc
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
performance wlLhouL negaLlng consensuallLy ln Lhe perfecLlon of
conLracLs. 1he proper remedy ls an acLlon for damages.

Doctr|ne:

ln a rlghL of flrsL refusal, whlle Lhe ob[ecL mlghL be made
deLermlnaLe, Lhe exerclse of Lhe rlghL would be dependenL noL
only on Lhe granLor's evenLual lnLenLlon Lo enLer lnLo a blndlng
[urldlcal relaLlon wlLh anoLher buL also on Lerms, lncludlng Lhe
prlce, LhaL are yeL Lo be flrmed up. . . Lhe offer" may be
wlLhdrawn anyLlme by communlcaLlng Lhe wlLhdrawal Lo Lhe
oLher parLy. M"1I+$J () /X"%" *&,0)2 CC3 6*7/ D34 9DEEC;.

M"1I+$J () /X"%" *&,0)

Iacts: vasquez spouses own shares of sLocks wlLh CondulL CorporaLlon.
CondulL's maln asseL was a 49.9 hecLare land ln Ayala Alabang,
MunLlnlupa. Spouses enLer lnLo a MCA wlLh Ayala where Lhe laLLer
commlLLed Lo develop sald lands lncludlng Lhe 4 parcels of land Lo be
sold Lo peLlLloner spouses. ar. 3.13 of MCA sLaLes LhaL Ayala agrees Lo
granL Lhe spouses "a flrsL opLlon Lo purchase four developed loLs nexL Lo
Lhe 8eLalned Area" aL Lhe prevalllng markeL prlce aL Lhe Llme of Lhe
purchase."

Issue: WheLher or noL Lhe sLlpulaLlon ls a rlghL of flrsL refusal or an
opLlon conLracL. ! lL was a rlghL of flrsL refusal.

ne|d: Whlle Lhe ob[ecL may be deLermlnaLe, Lhe exerclse of Lhe rlghL
would depend noL only on Lhe granLor's evenLual lnLenLlon Lo sell buL
also on Lerms, lncludlng prlce, LhaL are yeL Lo be flrmed up. lL was noL an
opLlon conLracL because Lhere was no separaLe conslderaLlon.

Applled Lo Lhe lnsLanL case, paragraph 3.13 ls obvlously a mere rlghL of
flrsL refusal and noL an opLlon conLracL. AlLhough Lhe paragraph has a
deflnlLe ob[ecL, l.e., Lhe sale of sub[ecL loLs, Lhe perlod wlLhln whlch Lhey
wlll be offered for sale Lo peLlLloners and, necessarlly, Lhe prlce for
whlch Lhe sub[ecL loLs wlll be sold are noL speclfled.

Doctr|ne:

o A rlghL of flrsL refusal ls noL a conLracL. lL ls noL a sale,
nor an opLlon conLracL. Whlle lL has a deflnlLe sub[ecL
maLLer, Lhere ls no agreemenL as Lo Lhe prlce or Lhe
manner of paymenL. lurLhermore, Lhe exerclse of Lhe
rlghL would be dependenL upon Lhe granLor's evenLual
lnLenLlon Lo sell Lhe land.
A rlghL of flrsL refusal clause slmply means LhaL should Lhe lessor
declde Lo sell Lhe leased properLy durlng Lhe Lerm of Lhe lease,
such sale should flrsL be offered Lo Lhe lessee, ooJ tbe setles of
oeqotlotloos tbot ttoosplte betweeo tbe lessot ooJ tbe lessee oo
tbe bosls of socb ptefeteoce ls JeemeJ o compllooce of socb
cloose eveo wbeo oo flool potcbose oqteemeot ls petfecteJ
betweeo tbe pottles. 1he lessor was Lhen aL llberLy Lo offer Lhe
sale Lo a Lhlrd parLy who pald a hlgher prlce, and Lhere ls no
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
vlolaLlon of Lhe rlghL of Lhe lessee. 7>(>$," `>%>0>="2 S=() () *&+,-
&. /00$"%12 38E 6*7/ DCB 9DEED;.
1


7>(>$," `>%>0>=" () *&+,- &. /00$"%1

Iacts: !uan L. 8eyes leased hls land along LuSA, CC Lo 8lvlera llllplna
lnc. 1he conLracL of lease was for 10 years renewable. ar. 11 ln Lhe
lease conLalned LhaL Lhe lessee shall have Lhe rlghL of flrsL refusal should
Lhe lessee declded Lo sell Lhe properLy durlng Lhe Lerm of Lhe lease. 1he
sald loL was also sub[ecL Lo a 8LAL LS1A1L MC81CACL wlLh rudenLlal
8ank. 8eyes was noL able Lo pay for Lhe lnsLallmenL and rudenLlal 8ank
foreclosed Lhe properLy wlLh a 1 year redempLlon perlod. 8eyes declded
Lo sell Lhe properLy. 8eyes offered Lo sell for 3,000 per square meLer
buL 8lvlera Lhrough lLs presldenL only offered 3,300. 7 monLhs laLer
8lvlera offered 4000 and 8eyes now wanLs 6000. 8lvlera Lhen offers
3000 pesos saylng lL would be pald fully ln 60 days, LhaL Lhe offer ls
whaL we feel should be Lhe markeL prlce of your properLy" and Lhey
8eyes should declde ln 13 days. 8eyes replled LhaL you have
unforLunaLely falled Lo Lake advanLage of your rlghL of flrsL refusal.
8eyes Lhen offered Lo sell Lhe properLy Lo Cypress ConsLrucLlon
Company who pald 3300. 8eyes dld noL lnform 8lvlera of Lhe 3,300
offer. 8lvlera flled a sulL Lo have Lhe LlLle Lransferred ln hls name afLer lL
has pald Lhe 3300 pald by Cypress. 81C and CourL of Appeals ruled LhaL
8lvlera losL lLs rlghL of flrsL refusal.
Issue: WheLher or noL 8lvlera's rlghL of flrsL refusal was vlolaLed by
8eyes' sale of Lhe properLy Lo Cypress.

1
lolytecbolc uolvetslty v. cA, 368 SC8A 691 (2001), vllleqos v. cA, 499 SC8A 276
(2006).

ne|d: nC. 8lvlera sLrongly exhlblLed a "Lake-lL or leave-lL" aLLlLude ln lLs
negoLlaLlons wlLh 8eyes. lL quoLed lLs "flxed and flnal" prlce as 3,000
and noL any peso more. 8lvlera cannoL now be heard LhaL had lL been
lnformed of Lhe offer of 3,300 of Cypress, lL would have maLched sald
prlce. lLs sLubborn approach ln lLs negoLlaLlons wlLh 8eyes showed
crysLal-clear LhaL Lhere was never any need Lo dlsclose such lnformaLlon
and dolng so would be [usL a fuLlle efforL on Lhe parL of 8eyes. 8eyes
was under no obllgaLlon Lo dlsclose Lhe same.

Doctr|ne:

3. now 1o Comp|y W|th 1he k|ght Cf I|rst kefusa| When 1he
Se||er Dec|des 1o Se||
a. 1he seller musL flrsL offer Lo sell Lhe properLy Lo Lhe
granLee of Lhe opLlon.
b. 1he negoLlaLlons abouL Lhe sale beLween Lhe seller and
Lhe granLee would be deemed compllance wlLh Lhe
rlghL, even lf Lhere ls no flnal prlce agreed upon.
c. lf no prlce ls agreed upon, Lhe seller can Lhen offer Lo
sell Lo oLher parLles wlLh Lhe same Lerms as Lhose
offered Lo Lhe granLee.
d. lf Lhe seller and Lhe Lhlrd parLy negoLlaLe and agree
upon dlfferenL Lerms, Lhe seller musL flrsL offer Lhese
new Lerms agaln Lo Lhe granLee.
e. lf Lhe granLee agaln re[ecLs Lhe new Lerms, Lhe seller can
proceed wlLh Lhe sale of Lhe properLy Lo Lhe Lhlrd parLy

4. Act|on If 1he k|ght 1o I|rst kefusa| Is 8reached
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
CCN1kCLLING DCC1kINL: 8lghL of flrsL refusal conLalned ln a
lease, when breached by promlssor allows enforcemenL by Lhe
promlsee by way of resclsslon of Lhe sale enLered lnLo wlLh Lhe
Lhlrd parLy, pursuanL Lo ArLlcles 1381(3) and 1383 of Clvll Code.
H!+JO"=2 A&R"%>=N a *&) () A&==$(>$2 DE5 6*7/ 558 94::D;\
bI+"-&,>"% 7$"%-X V$()2 S=R) () <"X.">, WF$"-$,2 S=R)2 D5C 6*7/
C83 94::5;\
4
?","="I+$ ]>=N1 b=-$,0,>1$12 S=R) () */2 D58 6*7/
KDK2 KC4 94::K;)

bI+"-&,>"% 7$"%-X V$() S=R) () <"X.">, WF$"-$, S=R)

Iacts: 1wo conLracLs of lease beLween Carmelo and Mayfalr provlded
LhaL lf Lhe LLSSC8 should deslre Lo sell Lhe leased premlses, Lhe LLSSLL
shall be glven 30 days excluslve opLlon Lo purchase Lhe same." Carmelo
lnlLlally offered Lo sell Lhe leased properLy Lo Mayfalr for slx Lo seven
mllllon pesos. Mayfalr lndlcaLed lnLeresL ln purchaslng Lhe properLy
Lhough lL lnvoked Lhe 30-day perlod. noLhlng was heard LhereafLer from
Carmelo. lour years laLer, Lhe laLLer sold lLs enLlre 8ecLo Avenue
properLy, lncludlng Lhe leased premlses, Lo LquaLorlal for 11,300,000
wlLhouL lnformlng Mayfalr. Mayfalr flled an acLlon for speclflc
performance Lo have Lhe properLy sold Lo lL and Lo annul Lhe sale Lo
LquaLorlal.


1
koseocot uev. cotp. v. lopoloq, 334 SC8A 119 (2001), coocoloJo v. cA, 367
SC8A 164 (2001), lolytecbolc uolvetslty v. cA, 368 SC8A 691 (2001), klvleto
llllploo, lov. v. coott of Appeols, 380 SC8A 243 (2002), loctotlve keolty ooJ uev.
cotp. v. 8etoobe, It., 392 SC8A 679 (2002), vllleqos v. coott of Appeols, 499
SC8A 276 (2006), lolytecbolc uolvetslty of tbe lblllpploes v. ColJeo notlzoo
keolty cotp., 613 SC8A 478 (2010).
Issues:
1. WheLher or noL Lhere was a rlghL of flrsL refusal. ! ?LS
2. WheLher or noL Lhe sale Lo LquaLorlal was valld. ! ?LS, buL
such conLracL of sale ls resclsslble.

ne|d: Carmelo vlolaLed Lhe rlghL of flrsL refusal when wlLhouL affordlng
lLs negoLlaLlons wlLh Mayfalr Lhe full process Lo rlpen Lo a deflnlLe offer
and a posslble accepLance wlLhln Lhe "30-day excluslve opLlon" Llme.
LquaLorlal ls a buyer ln bad falLh because lL had noLlce and full
knowledge of Mayfalr's rlghLs. Pence, Lhe sale Lo LquaLorlal ls
resclsslble.

Doctr|ne:

?","="I+$ ]>=N1 () *&+,- &. /00$"%1

Iacts! #$%$&'($ )*(+, +'-.% /$01+&2 )3 &$(, *.'1. *+0+ &+$2+, %) #.4$5
!"# %"&' ())*+'&, "*) -*+"%) %# .&& /"*'+ 0*'+1 .&& /"*'+ 0*'+ %"&'
!""#$%&' )*& +#$*)" ), -!+!.!/0& 1#%$2 3*#4* #%)+,'04&' "#$%#5#4!%)
lmprovemenLs on Lhe premlses. lL was sLlpul!"#$ &' "(# )#!*# !+,##-#'"
!"#!$ &'( )#*+ ,- *#.+$ !"+ .+**,/ *"#.. "#0+ !"+ ,1!',( ,/ 1/',/'!2 !, 342
!"# %&'( )*+)#*!'#%,- .&!&/'0&1 '0 2'+/&!'+0 +3 !"# %&'( %!')4/&!'+01 %+/(
!"# %&! !& '()*+,-& .&/ .01# *0%%0&,2 3(/(4(5+# 60,7 !"#, ,&!0.0#- "#/ &.
Lh! #$!%&'( )'! *++!,*%-!./ '%, -'! .0-1 $!&023!/!,( )'! -'!2 044!$!,
!"# %&! !& '()(*(+,# -./0 1&) 1.1!##/ 2.%%.&/3 !"# %(!!#) )#1,4#5 6%(.2./0
LhaL Lhe offer was rldlculous." CaLallna LhereafLer sold lL agaln Lo
8aymundo for nlne mllllon. 1he lower courL! #$!%$!!&# '(& )*%+,-$.' */
!"#"$"%&' )*+, -."*/*+, 01"0 2"0".*+" 1"3 4&540"+0*"..6 -7/8.*'3 9*01
her obllgaLlon Lo offer Lhe sald loL Lo Lhe former.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

Issues:
1. WheLher Lhe complalnL alleglng breach of Lhe conLracLual rlghL
of flrsL opLlon or prlorlLy Lo buy" sLaLes a valld cause of acLlon.
! ?LS.
2. WheLher or noL Lhe granLee of such rlghL ls enLlLled Lo be
offered Lhe same Lerms and condlLlons as Lhose glven Lo a Lhlrd
parLy who evenLually boughL such properLles ! ?LS.

ne|d: 1he Supreme CourL held LhaL ln order Lo have full compllance
wlLh Lhe conLracLual rlghL granLlng peLlLloner Lhe flrsL opLlon Lo
purchase, Lhe sale of Lhe properLles for Lhe amounL of 9 mllllon, Lhe
prlce for whlch Lhey were flnally sold Lo respondenL 8aymundo, should
have llkewlse been flrsL offered Lo peLlLloner. Cnly lf Lhe peLlLloner
falled Lo exerclse Lhelr rlghL of flrsL prlorlLy could SanLos LhereafLer
lawfully sell Lhe sub[ecL properLy Lo oLhers, and only under Lhe same
Lerms and condlLlons prevlously offered Lo Lhe peLlLloner. 1he basls of
Lhe rlghL of Lhe flrsL refusal musL be Lhe currenL offer Lo sell of Lhe seller
or offer Lo purchase of any prospecLlve buyer

Doctr|ne:

1he buyer of a real properLy who knew LhaL such properLy was
sub[ecL Lo Lhe rlghL of flrsL refusal cannoL clalm good falLh.
o Where Lhe rlghL of flrsL refusal clause found ln a valld
lease conLracL was vlolaLed and Lhe properLy was sold
Lo a buyer who was aware of Lhe exlsLence of such rlghL,
Lhe resulLlng conLracL ls resclsslble by Lhe person ln
whose favor Lhe rlghL of flrsL refusal was glven.
lf Lhe promlse ls breached, an acLlon for speclflc performance ls
noL allowed, buL acLlon for damages ls allowed. !"#$$#$% '(
!"#$%& () *+#,- ./ 01(234

S. k|ght Cf I|rst kefusa| Lmbod|ed In A Lease Agreement
lf Lhe rlghL of flrsL refusal ls lncluded ln a lease, Lhere need noL
be a separaLe conslderaLlon for Lhe rlghL slnce lL ls already parL
and parcel of Lhe enLlre conLracL of lease. 1he conslderaLlon for
Lhe lease ls Lhe conslderaLlon for Lhe rlghL of flrsL refusal.
bI+"-&,>"% 7$"%-X V$()2 S=R) () <"X.">, WF$"-$,2 S=R)2 D5C 6*7/
C83 94::5;
o 1he enforceablllLy of Lhe rlghL of flrsL refusal ls based on
Lhe obllgaLory force of Lhe lease conLracL.
o lf Lhe rlghL ls vlolaLed by Lhe granLor who sold Lhe
properLy Lo anoLher, Lhe resulLlng conLracL ls resclsslble
by Lhe granLee of Lhe rlghL.
1he bI+"-&,>"% 7$"%-X V$()2 S=R) () <"X.">, WF$"-$,2 S=R)2 D5C
6*7/ C83 94::5; rullng would only apply Lo rlghLs of flrsL refusal
aLLached Lo a valld prlnclpal conLracL. lf Lhey are consLlLuLed as
separaLe conLracLs, Lhe rullng ln /=N T+ /1+=R>&= () *&+,- &.
/00$"%12 D38 6*7/ 5ED 94::C; would apply.
o verbal granLs of Lhe rlghL of flrsL refusal are
unenforceable slnce such rlghL musL be embodled ln a
wrlLLen conLracL. 6$= ?& bG <",G$->=N *&,0) ()
<",->=$J2 3DB 6*7/ D4E 9DEEE;
When a lease conLracL conLalns a rlghL of flrsL refusal, Lhe lessor
has Lhe legal duLy Lo Lhe lessee noL Lo sell Lhe leased properLy Lo
anyone aL any prlce unLll afLer Lhe lessor made an offer Lo sell
Lhe properLy Lo Lhe lessee and Lhe lessee has falled Lo accepL lL.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Cnly afLer Lhe lessee has falled Lo exerclse hls rlghL of flrsL
prlorlLy could Lhe lessor sell Lhe properLy Lo oLher buyers under
Lhe same Lerms and condlLlons offered Lo Lhe lessee, or under
Lerms and condlLlons more favorable Lo Lhe lessor. ?&%X-$RF=>R
Q=>($,1>-X &. -F$ ?F>%>00>=$1 () !&%P$= ^&,>J&= 7$"%-X *&,0)2
54B 6*7/ CK8 9DE4E;)
A rlghL of flrsL refusal ln a lease ln favor of Lhe lessee cannoL be
avalled of by Lhe sublessee. H6"PFc"=> () *&+,- &. /00$"%12 D84
6*7/ KB 94::K;)

6. k|ght Cf I|rst kefusa| v. Cpt|on Contract
A rlghL of flrsL refusal ls a conLracLual granL, noL of Lhe sale of a
properLy, buL of Lhe flrsL prlorlLy Lo buy Lhe properLy ln Lhe
evenL Lhe owner sells Lhe same. As dlsLlngulshed from an opLlon
conLracL, ln a rlghL of flrsL refusal, whole Lhe ob[ecL mlghL be
made deLermlnaLe, Lhe exerclse of Lhe rlghL of flrsL refusal
would be dependenL noL only on Lhe owner's evenLual lnLenLlon
Lo enLer lnLo a blndlng [urldlcal relaLlon wlLh anoLher buL also on
Lerms, lncludlng Lhe prlce, LhaL are yeL Lo be flrmed up.
?&%X-$RF=>R Q=>($,1>-X &. -F$ ?F>%>00>=$1 () !&%P$= ^&,>J&=
7$"%-X *&,0)2 54B 6*7/ CK8 9DE4E;)
Slmllar Lo an opLlon conLracL, Lhe rlghL of flrsL refusal lncluded ln
a lease ls noL renewed even ln LaclLa reconducclon. V>J&= ()
*&+,- &. /00$"%12 3:5 6*7/ 4BD 9DEE3;

!"#$#%&' )#*+",-& #- .$+,#- /#-+"0*+% 1,%-!-v|s k|ght of I|rst kefusa|

A. A|ternat|ve Doctr|ne of Lnforceab|||ty of k|ghts of I|rst kefusa|
!usLlce vlLug, ln hls declslon ln Aoq o Asoocloo and ln hls
dlssenL ln poototlol keolty sald LhaL a rlghL of flrsL refusal ls noL
a conLracL.
o ln hls vlew, breach would resulL ln damages pursuanL Lo
ArLlcle 19.
CLv poslLs LhaL a rlghL of flrsL refusal over a deLermlnaLe sub[ecL
maLLer and supporLed by a separaLe conslderaLlon would glve
rlse Lo an lnnomlnaLe conLracL (Jo ot foclos).
o 1hls would allow Lhe remedy of reclsslon whlch would
Lhen glve rlse Lo damages lf lL ls breached. (noLe: ArLlcle
19 would noL be Lhe basls for damages.)

8. Lnforceab|||ty of Cpt|on k|ghts Shou|d be at ar w|th, |f not at a
n|gher Leve| 1han, k|ghts of I|rst kefusa|
ln llghL of Lhe rullngs ln poototlol keolty and !"#"$"%&' )*+,-,
lL seems LhaL rlghLs of flrsL refusal aLLached Lo prlnclpal
conLracLs have greaLer legal enforceablllLy Lhan opLlon conLracLs
whlch are supporLed by separaLe conslderaLlon.
CLv's proposed beLLer rule:
o lf Lhe opLlon ls supporLed by a separaLe conslderaLlon,
Lhe opLlonee shall have Lhe rlghL Lo exerclse Lhe opLlon
anyLlme durlng Lhe perlod, and LhaL would glve rlse Lo a
valld sale.
o 1he opLloner, on Lhe oLher hand, cannoL wlLhdraw Lhe
offer durlng Lhe opLlon perlod, and any aLLempL Lo
wlLhdraw wlll be vold.
o lf a Lhlrd parLy boughL Lhe properLy ln bad falLh (l.e. he
knew Lhe exlsLence of Lhe opLlon ln favor of Lhe
opLlonee), Lhe opLlonee can go afLer Lhe opLloner and
Lhe Lhlrd-parLy buyer ln an acLlon for speclflc
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
performance.
o lf a Lhlrd parLy boughL Lhe properLy ln good falLh and for
value, Lhe opLlonee may sue Lhe opLloner for recovery
of damages for breach of conLracL of sale.

C. Mutua| rom|ses to 8uy and Se|| (Art|c|e 1479): "W,+$ *&=-,"R- -&
6$%%"
MuLual promlses Lo buy and sell a cerLaln Lhlng for a cerLaln
prlce glves each of Lhe conLracLlng parLles a rlghL Lo demand
from Lhe oLher Lhe fulflllmenL of Lhe obllgaLlon) HA&,,&O$& ()
`,"=R&2 B ?F>%) C: 94:EB;)
Lven ln Lhls case Lhe cerLalnLy of Lhe prlce musL also exlsL,
oLherwlse, Lhere ls no valld and enforceable conLracL Lo sell.
HW"= W>"F () T+ d&1$2 5K ?F>%) K3: 94:3:;)
An accepLed bllaLeral promlse Lo buy and sell ls ln a sense
slmllar Lo, buL noL exacLly Lhe same, as a perfecLed conLracL of
sale because Lhere ls already a meeLlng of mlnds upon Lhe Lhlng
whlch ls Lhe ob[ecL of Lhe conLracL and upon Lhe prlce.
1
8uL a
conLracL of sale ls consummaLed only upon dellvery and
paymenL, whereas ln a bllaLeral promlse Lo buy and sell glves
Lhe conLracLlng parLles rlghLs lo petsooom, such LhaL each has
Lhe rlghL Lo demand from Lhe oLher Lhe fulflllmenL of Lhelr
respecLlve underLaklngs. <"R>&= () !+>"=>2 DDB 6*7/ 4ED
94::3;.
2



1
l 8ooco Nocloool llllploo v. Ab 5loq, 69 hll. 611 (1940), Moooel v. koJtlqoez,
109 hll. 1 (1960).
2
8ottomeo v. ltooco, 3 hll. 49 (1903), vlllomot v. cA, 202 SC8A 607 (1991),
cotooel v. cA, 263 SC8A 13 (1996).
<"R>&= () d+PN$ !+>"=>

Iacts: eLlLloners and prlvaLe respondenL enLered lnLo a conLracL Lo sell
where peLlLloners was Lo sell Lwo loLs Lo prlvaLe respondenLs for
1,730,000. eLlLloners surrendered Lhe physlcal possesslon of Lhe 2
loLs Lo prlvaLe respondenL who prompLly bullL an edlflce worLh
800,000. Powever, Lhe sale falled Lo maLerlallze. eLlLloners flled a
complalnL for unlawful deLalner agalnsL prlvaLe respondenL whlle
prlvaLe respondenL flled a complalnL for reformaLlon of Lhe conLracL Lo
sell.

1he parLles enLered lnLo a compromlse agreemenL where prlvaLe
respondenLs were glven 3 monLhs Lo ralse 2,060,000 and upon
securlng Lhe amounL, peLlLloners were Lo execuLe a deed of sale for Lhe
2 loLs. 1he Lrlal courL approved Lhls compromlse. AfLer prlvaLe
respondenL secured a loan from 8l, lL wroLe leLLers Lo peLlLloner for Lhe
laLLer Lo execuLe a conLracL Lo sell. Cn Lhe oLher hand, peLlLloners flled a
moLlon for execuLlon of [udgmenL alleglng LhaL afLer a lapse of 3
monLhs, prlvaLe respondenL have falled Lo seLLle Lhelr obllgaLlons wlLh
peLlLloners. 8espondenL [udge ruled ln favor of respondenLs. Pence, Lhe
presenL peLlLlon.

Issue: WheLher or noL respondenL !udge may compel Maclon Lo execuLe
a conLracL Lo sell ln favor of uela vlda lnsLlLuLe.

ne|d: ?LS. 1he courL looked lnLo Lhe conLemporaneous and subsequenL
acLs of Lhe parLles and deLermlned Lhelr real lnLenLlons. A revlew of Lhe
facLs reveal LhaL even prlor Lo Lhe slgnlng of Lhe compromlse agreemenL
and Lhe flllng of Clvll Case no. 392 before Lhe Lrlal courL, Lhe parLles had
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
already enLered lnLo a conLracL Lo sell. ln conLracLs Lo sell, paymenL ls a
poslLlve suspenslve condlLlon, fallure of whlch does noL consLlLuLe a
breach buL an evenL LhaL prevenLs Lhe obllgaLlon of Lhe vendor Lo
convey LlLle from maLerlallzlng, ln accordance wlLh ArLlcle 1184 of Lhe
Clvll Code.

Doctr|ne:

1he cause of acLlon under a muLual promlse Lo buy and sell ls 10
years. HM>%%"O&, () *&+,- &. /00$"%12 DED 6*7/ 5EK 94::4;)

Contract of Sa|e Mutua| rom|se to 8uy and Se||
An accepLed bllaLeral promlse Lo buy and sell ls ln a sense slmllar Lo, buL
noL exacLly Lhe same, as a perfecLed conLracL of sale because Lhere ls
already a meeLlng of mlnds upon Lhe Lhlng whlch ls Lhe ob[ecL of Lhe
conLracL and upon Lhe prlce.
ConsummaLed only
upon dellvery and
paymenL
Clves Lhe conLracLlng parLles rlghLs ln personam,
such LhaL each has Lhe rlghL Lo demand from Lhe
oLher Lhe fulflllmenL of Lhelr respecLlve
underLaklngs.

An uncondlLlonal muLual promlse Lo buy and sell ls enforceable
by an acLlon for speclflc performance.

III. erfect|on Stage (Art|c|es 147S, 1319, 132S and 1326)

Art|c|e 147S.
1he contract of sa|e |s perfected at the moment there |s a meet|ng of
m|nds upon the th|ng wh|ch |s the ob[ect of the contract and upon
the pr|ce.

Irom that moment, the part|es may rec|proca||y demand
performance, sub[ect to the prov|s|ons of the |aw govern|ng the form
of contracts. (14S0a)

Art|c|e 1319.
Consent |s man|fested by the meet|ng of the offer and the acceptance
upon the th|ng and the cause wh|ch are to const|tute the contract.
1he offer must be certa|n and the acceptance abso|ute. A qua||f|ed
acceptance const|tutes a counter-offer.

Acceptance made by |etter or te|egram does not b|nd the offerer
except from the t|me |t came to h|s know|edge. 1he contract, |n such
a case, |s presumed to have been entered |nto |n the p|ace where the
offer was made. (1262a)

Art|c|e 132S.
Un|ess |t appears otherw|se, bus|ness advert|sements of th|ngs for
sa|e are not def|n|te offers, but mere |nv|tat|ons to make an offer. (n)

Art|c|e 1326.
Advert|sements for b|dders are s|mp|y |nv|tat|ons to make proposa|s,
and the advert|ser |s not bound to accept the h|ghest or |owest
b|dder, un|ess the contrary appears. (n)

Sale ls perfecLed aL Lhe momenL Lhere ls a meeLlng of mlnds
upon Lhe Lhlng whlch ls Lhe ob[ecL of Lhe conLracL and upon Lhe
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
prlce. lrom LhaL momenL, Lhe parLles may reclprocally demand
performance sub[ecL Lo Lhe law governlng Lhe form of conLracLs.
H<",=$%$N& () A"=R& `>%>0>=& 6"(>=N1 "=P <&,-N"N$ A"=G2 C8E
6*7/ 3:: 9DEE5;)
4

MuLual consenL belng a sLaLe of mlnd, lLs exlsLence may only be
lnferred from Lhe confluence of Lwo acLs of Lhe parLles: an offer
cerLaln as Lo Lhe ob[ecL of Lhe conLracL and lLs conslderaLlon,
and an accepLance of Lhe offer whlch ls absoluLe ln LhaL lL refers
Lo Lhe exacL ob[ecL and conslderaLlon embodled ln sald offer.
HM>%%"=+$(" () ?@A2 B4E 6*7/ DKB 9DEE5;)
D


A. kequ|s|te Ior erfect|on: Mutua| Consent Lv|denced 8y:
1. Cffer Must 8e Certa|n. An offer ls cerLaln when lL conLalns: (1) A
descrlpLlon of Lhe sub[ecL maLLer whlch ls a posslble Lhlng," llclL
and deLermlnaLe or aL leasL deLermlnable, and (2) a prlce whlch
ls real, ln money or lLs equlvalenL, cerLaln or aL leasL
ascerLalnable. 1he Lerms of paymenL musL also be lncluded.
o lf a maLerlal elemenL of a conLemplaLed conLracL ls lefL
for fuLure negoLlaLlons, Lhe same ls Loo lndeflnlLe Lo be
enforceable. lor a conLracL Lo be enforceable, lLs Lerms
musL be cerLaln and expllclL, noL vague or lndeflnlLe)
HA&1-&= A"=G &. -F$ ?F>%) () <"="%&2 C8D 6*7/ 4E8
9DEE5;)
o So long as Lhere ls any uncerLalnLy or lndeflnlLeness, or
fuLure negoLlaLlons or conslderaLlon yeL Lo be had

1
volJez v. coott of Appeols, 439 SC8A 33 (2004), 8los v. Aoqeles-notollo, 439
SC8A 273 (2004), Alozo v. loJoo, 462 SC8A 614 (2003), ctoz v. letoooJo, 477
SC8A 173 (2003).
2
Moteoo, It. v. ltlvote Moooqemeot Offlce, 307 SC8A 63 (2006).
beLween Lhe parLles, Lhere ls no conLracL aL all.
H<&,$=&2 d,) () ?,>("-$ <"="N$O$=- L..>R$2 BEK 6*7/
53 9DEE5;)

2. Abso|ute Acceptance Cf A Certa|n Cffer
o 1he essence of consenL ls Lhe conformlLy of Lhe parLles
on Lhe Lerms of Lhe conLracL, LhaL ls, Lhe accepLance by
one of Lhe offer made by Lhe oLher. Powever, Lhe
accepLance musL be absoluLe, oLherwlse, Lhe same
consLlLuLes a counLer-offer and has Lhe effecL of
re[ecLlng Lhe offer. eT6W *&,0) () V<* Q,#"= ?,&0$,->$1
V$()2 S=R)2 B:C 6*7/ B:8 9DEE:;)

8. Abso|ute Acceptance Cf A Certa|n Cffer (Art|c|e 147S)
under ArLlcle 1319, Lhe accepLance of an offer musL Lherefore
be unquallfled and absoluLe. ln oLher words, lL musL be ldenLlcal
ln all respecLs wlLh LhaL of Lhe offer so as Lo produce consenL or
meeLlng of Lhe mlnds. 1hls was noL Lhe case hereln conslderlng
LhaL peLlLloner's accepLance of Lhe offer was quallfled, whlch
amounLs Lo a re[ecLlon of Lhe orlglnal offer. Y>OG$-G"> 6&=1
<>%%>=N2 S=R) () *&+,- &. /00$"%12 DBB 6*7/ 5D5 94::5;)
o 1he accepLance musL be plaln and uncondlLlonal, and lL
wlll noL be so lf lL lnvolves any new proposlLlon. f"XR& ()
6$,,"2 CC ?F>% 3D5 94:D3;
o AccepLance musL be ln Lhe exacL Lerms ln whlch Lhey
are made. Any modlflcaLlon annuls Lhe offer. A$+O&=-
() ?,>$-&2 C4 ?F>%) 5KE 94:45;
1he momenL a parLy accepLs Lhe offer uncondlLlonally, Lhe
conLracL of sale ls perfecLed. lf Lhe seller subsequenLly requesLs
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
for a hlgher prlce, buL no agreemenL ls reached, Lhe flrsL sale ls
sLlll valld and ls noL novaLed. Q,"R" () *&+,- &. /00$"%12 DK8
6*7/ KED
A quallfled accepLance or one LhaL lnvolves a new proposal
consLlLuLes a counLer-offer and a re[ecLlon of Lhe orlglnal offer.
1he accepLance musL be ldenLlcal ln all respecLs wlLh LhaL of Lhe
offer so as Lo produce consenL or meeLlng of mlnds. <"=>%"
<$-"% *&=-">=$, *&,0) () ?@A, B44 6*7/ CCC 9DEE5;)
1

No Abso|ute Acceptance |n the fo||ow|ng:
o laclng Lhe word noLed" and slgnlng such noLe aL Lhe
boLLom of Lhe wrlLLen offer cannoL be consldered an
accepLance LhaL would glve rlse Lo a valld conLracL of
sale) HVA? () L=N2 C5E 6*7/ 4KE 9DEEB;)
o lf Lhe Lerm Lo negoLlaLe" ls lncluded ln Lhe accepLance
leLLer, Lhere ls sLlll no absoluLe accepLance. T+(>$=R& ()
V"R+XR+X2 4EC 6*7/ 558 94:84;
o lf a parLy accepLs buL wlLh a requesL LhaL paymenL
Lerms be modlfled, Lhere ls no absoluLe accepLance.
Y>OG$-G"> 6&=1 <>%%>=N2 S=R) () *&+,- &. /00$"%12 DBB
6*7/ 5D5 94::5;
o A documenL cannoL consLlLuLe a sale even when lL
provldes for a downpaymenL slnce Lhe provlslon on Lhe
downpaymenL made no speclflc reference Lo a sale of a
vehlcle. ueflnlLeness as Lo Lhe prlce ls an essenLlal
elemenL of a blndlng agreemenL Lo sell personal
properLy. W&X&-" 6F"c2 S=R) () *&+,- &. /00$"%12 DCC
6*7/ 3DE 94::B;

1
8eoomoot v. ltleto, 41 hll. 670 (1916), 2oyco v. Serra, 44 hll. 326 (1923).

1. Acceptance May 8e Lxpress Cr Imp||ed
AccepLance may be evldenced by some acL or conducL,
communlcaLed Lo Lhe offeror, elLher ln a formal or an lnformal
manner, LhaL clearly manlfesL Lhe lnLenLlon or deLermlnaLlon Lo
accepL Lhe offer Lo buy or sell.
AccepLance on Lhe parL of Lhe buyer was manlfesLed Lhrough
acLs such as paymenL of Lhe purchase prlce, declaraLlon of Lhe
properLy for Lax purposes, and paymenL of real esLaLe Laxes.
!&O$J () *&+,- &. /00$"%12 3CE 6*7/ KDE 9DEEE;
8y afflxlng Lhelr slgnaLures as wlLnesses, Lhe co-owners
accepLed Lhe Lerms of Lhe conLracL. L$1O$, () ?",">1&
V$($%&0O$=- *&,0)2 B4C 6*7/ DD8 9DEEK;

2. Acceptance 8y Letter Cr 1e|egram
uoes noL blnd Lhe offeror excepL from Lhe Llme lL came Lo hls
knowledge. 1herefore, mere malllng or sendlng Lhe accepLance
ls noL enough. 1he offeror may sLlll wlLhdraw before he learns
of Lhe accepLance.

3. Acceptance Sub[ect 1o A Suspens|ve Cond|t|on
If sa|e sub[ect to suspens|ve cond|t|on: no perfecLed sale of a
loL where Lhe award Lhereof was expressly made sub[ecL Lo
approval by Lhe hlgher auLhorlLles and Lhere evenLually was no
accepLance manlfesLed by Lhe supposed awardee. H?$&0%$g1
^&O$1>-$ a ^&+1>=N *&,0) () */2 433 6*7/ KKK 94:8C;)

C. When "Dev|at|on" A||owed:
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
lL ls Lrue LhaL an accepLance may conLaln a requesL for cerLaln
changes ln Lhe Lerms of Lhe offer and yeL be a blndlng
accepLance, so long as lL ls clear LhaL Lhe meanlng of Lhe
accepLance ls poslLlvely and unequlvocally Lo accepL Lhe offer,
wheLher such requesL ls granLed or noL, a conLracL ls formed.
1he vendor's change ln a phrase of Lhe offer Lo purchase, whlch
change does noL essenLlally change Lhe Lerms of Lhe offer, does
noL amounL Lo a re[ecLlon of Lhe offer and Lhe Lender or a
counLer-offer. M>%%&=R& () A&,O"F$R&2 5B 6*7/ 3BD 94:KB;)
4


M>%%&=R& () A&,O"F$R&

Iacts: CervanLes (8ormaheco) owns a loL ln 8uendla. lL offered Lo sell
Lhe loL Lo vlllaconco who owns a loL ad[acenL Lo Lhe loL of Lhe laLLer wlLh
Lhe followlng condlLlons, (a) 100k as earnesL money whlch wlll become
parL of Lhe paymenL lf loL ln SLa. Ana ls purchased (b) lf Lhe sald properLy
ls noL purchased, Lhe money wlll be reLurned and Lhe sale wlll noL be
consummaLed, whlch wlll be known 43 days afLer negoLlaLlon. vlllonco
senL a counLer-offer LhaL Lhe 100k wlll have an lnLeresL of 10 per
annum. 1he check was dellvered by de 1agle Lo 8romaheco, whlch was
recelved by CervanLes. 1he voucher-recelpL evldenclng dellvery had Lhe
phrase sub[ecL Lo Lhe Lerms and condlLlons embodled ln 8ormaheco's
leLLer". LaLer, CervanLes reLurned Lhe earnesL money and reasoned LhaL
he acqulred Lhe properLy beyond Lhe 43 days perlod.

Issue: WheLher or noL Lhere was a perfecLed sale.

1
keltetoteJ lo llmketkol 5oos Mlllloq, loc. v. coott of Appeols, 230 SC8A 323
(1993), #+- ,$($,1$P >= DBB 6*7/

ne|d: ?LS. "Whenever earnesL money ls glven ln a conLracL of sale, lL
shall be consldered as parL of Lhe prlce and as proof of Lhe perfecLlon of
Lhe conLracL" (ArLlcle 1482, Clvll Code). 1he conLracL was already
consummaLed aL Lhe Llme respondenL accepLed Lhe check. ln facL, he
accepLed Lhe earnesL money, and furLhermore reLurned Lhe 100k wlLh
10 lnLeresL whlch serves as proof of Lhe accepLance. 1he alleged
changes or quallflcaLlons ln Lhe revlsed counLer-offer are noL maLerlal or
are mere clarlflcaLlons of whaL Lhe parLles had prevlously agreed upon.

Doctr|ne:

D. Sa|e 8y Auct|on (Art|c|es 1476, 1403(2)(d), 1326)

Art|c|e 1476.
In the case of a sa|e by auct|on:

(1) Where goods are put up for sa|e by auct|on |n |ots, each |ot |s the
sub[ect of a separate contract of sa|e.

(2) A sa|e by auct|on |s perfected when the auct|oneer announces |ts
perfect|on by the fa|| of the hammer, or |n other customary manner.
Unt|| such announcement |s made, any b|dder may retract h|s b|d, and
the auct|oneer may w|thdraw the goods from the sa|e un|ess the
auct|on has been announced to be w|thout reserve.

(3) A r|ght to b|d may be reserved express|y by or on beha|f of the
se||er, un|ess otherw|se prov|ded by |aw or by st|pu|at|on.

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
(4) Where not|ce has not been g|ven that a sa|e by auct|on |s sub[ect to
a r|ght to b|d on beha|f of the se||er, |t sha|| not be |awfu| for the se||er
to b|d h|mse|f or to emp|oy or |nduce any person to b|d at such sa|e on
h|s beha|f or for the auct|oneer, to emp|oy or |nduce any person to b|d
at such sa|e on beha|f of the se||er or know|ng|y to take any b|d from
the se||er or any person emp|oyed by h|m. Any sa|e contraven|ng th|s
ru|e may be treated as fraudu|ent by the buyer. (n)

Art|c|e 1403.
1he fo||ow|ng contracts are unenforceab|e, un|ess they are rat|f|ed:

(1) 1hose entered |nto |n the name of another person by one who has
been g|ven no author|ty or |ega| representat|on, or who has acted
beyond h|s powers,

(2) 1hose that do not comp|y w|th the Statute of Irauds as set forth |n
th|s number. In the fo||ow|ng cases an agreement hereafter made sha||
be unenforceab|e by act|on, un|ess the same, or some note or
memorandum, thereof, be |n wr|t|ng, and subscr|bed by the party
charged, or by h|s agent, ev|dence, therefore, of the agreement cannot
be rece|ved w|thout the wr|t|ng, or a secondary ev|dence of |ts
contents:

(a) An agreement that by |ts terms |s not to be performed
w|th|n a year from the mak|ng thereof,

(b) A spec|a| prom|se to answer for the debt, defau|t, or
m|scarr|age of another,

(c) An agreement made |n cons|derat|on of marr|age, other
than a mutua| prom|se to marry,

(d) An agreement for the sa|e of goods, chatte|s or th|ngs |n
act|on, at a pr|ce not |ess than f|ve hundred pesos, un|ess the
buyer accept and rece|ve part of such goods and chatte|s, or
the ev|dences, or some of them, of such th|ngs |n act|on or pay
at the t|me some part of the purchase money, but when a sa|e
|s made by auct|on and entry |s made by the auct|oneer |n h|s
sa|es book, at the t|me of the sa|e, of the amount and k|nd of
property so|d, terms of sa|e, pr|ce, names of the purchasers
and person on whose account the sa|e |s made, |t |s a suff|c|ent
memorandum,

(e) An agreement for the |eas|ng for a |onger per|od than one
year, or for the sa|e of rea| property or of an |nterest there|n,

(f) A representat|on as to the cred|t of a th|rd person.

(3) 1hose where both part|es are |ncapab|e of g|v|ng consent to a
contract.

1he Lerms and condlLlons provlded by Lhe owner of properLy Lo
be sold aL aucLlon are blndlng upon all bldders, wheLher Lhey
knew of such condlLlons or noL) HY$&I+>=R& () ?&1-"% 6"(>=N1
A"=G2 CK ?F>%) KKD 94:DB;)
An aucLlon sale ls perfecLed by Lhe fall of Lhe hammer or ln
oLher cusLomary manner and lL does noL maLLer LhaL anoLher
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
was allowed Lo maLch Lhe bld of Lhe hlghesL bldder) H?,&(>=R$
&. *$#+ () ^$>,1 &. 7+.>=" <&,"%$12 BC5 6*7/ 34B 9DEE8;)
o unLll such announcemenL ls made, any bldder may
reLracL hls bld, and Lhe aucLloneer may wlLhdraw Lhe
goods from Lhe sale, unless Lhe aucLlon has been
announced Lo be wlLhouL reserve.
Genera| ku|e: 1he seller and Lhe aucLloneer cannoL bld elLher by
Lhemselves or by an agenL.
o Lxcept|on: When Lhe seller reserves such rlghL. ln such
case, Lhere musL be noLlce.

L. Larnest Money (Art|c|e 1482)

Art|c|e 1482.
Whenever earnest money |s g|ven |n a contract of sa|e, |t sha|| be
cons|dered as part of the pr|ce and as proof of the perfect|on of the
contract. (14S4a)

1. Larnest Money In A Contract Cf Sa|e
ArLlcle 1482 glves a presumpLlon. 1hls prevalls only ln Lhe
absence of conLrary or rebuLLal evldence. ?@A () *&+,- &.
/00$"%12 D5D 6*7/ C5C 94::5;
LarnesL money glven by Lhe buyer shall be consldered as parL of
Lhe prlce and as proof of Lhe perfecLlon of Lhe conLracL. lL
consLlLuLes an advance paymenL Lo be deducLed from Lhe LoLal
prlce. Hb1R+$-" () Y>O2 B4D 6*7/ C44 9DEEK;)
Whenever earnesL money ls glven ln a conLracL of sale, lL shall
be consldered as parL of Lhe prlce and as proof of Lhe perfecLlon
of Lhe conLracL. 8uL when Lhere ls no conLracL of sale because
Lhe parLles never wenL pass Lhe negoLlaLlon sLage, or more
accuraLely, have noL reached Lhe perfecLlon sLage wlLh Lhe
presenL of Lhe Lhree essenLlal elemenLs of Lhe conLracL of sale,
Lhe concepL of earnesL money ls cerLalnly lnappllcable. 1he
earnesL money forms parL of Lhe conslderaLlon only lf Lhe sale ls
consummaLed upon full paymenL of Lhe purchase prlce. Pence,
Lhere musL flrsL be a perfecLed conLracL of sale before we can
speak of earnesL money. H!6S6 () Y&0$J2 B:D 6*7/ CB5 9DEE:;)
4

AbsenL proof of Lhe concurrence of all Lhe essenLlal elemenLs of
a conLracL of sale, Lhe glvlng of earnesL money cannoL esLabllsh
Lhe exlsLence of a perfecLed conLracL of sale. 1he presumpLlon ls
based on Lhe facL LhaL Lhere ls a valld sale. 1he glvlng of earnesL
money does noL esLabllsh Lhe exlsLence of a perfecLed sale. lL ls
sLlll Lhe concurrence of Lhe essenLlal elemenLs of sale whlch
perfecLs Lhe conLracL. <"=>%" <$-"% *&=-">=$, *&,0) () ?@A,
S11 SCkA 444 (2006).
2

When Lhere ls no provlslon for forfelLure of earnesL money ln
Lhe evenL Lhe sale falls Lo maLerlallze, Lhen wlLh Lhe resclsslon lL
becomes lncumbenL upon seller Lo reLurn Lhe earnesL money as
legal consequence of muLual resLlLuLlon. H!&%P$=,&P2 S=R) ()
*&+,- &. /00$"%12 D:: 6*7/ 4C4 94::8;)
o LxcepL lf expressly sLlpulaLed, Lhe seller cannoL keep Lhe
earnesL money Lo answer for damages susLalned ln Lhe
evenL LhaL Lhe sale falls due Lo Lhe faulL of Lhe buyer.

1
\51 cotp. uMc utboo ltopettles uev., loc., 394 SC8A 398 (2009).
2
llmjoco v. cA, 37 SC8A 663 (1971), vlllooco v. 8otmobeco, 63 SC8A 332
(1973), 5pooses uotomol, 5t. v. cA, 66 SC8A 373 (1973), lN8 v. cA, 262 SC8A
464 (1996), 5oo Mlqoel ltopettles lblllpploes, loc. v. noooq, 336 SC8A 737
(2000), llotloom lloos lbll. loc. v. cocoeco, 488 SC8A 136 (2006).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o lf Lhe sale ls resclnded, Lhe seller musL reLurn Lhe
earnesL money. 8esclsslon creaLes Lhe obllgaLlon Lo
reLurn Lhe Lhlngs whlch were Lhe ob[ecL of Lhe conLracL,
LogeLher wlLh Lhelr frulLs and lnLeresL.

2. Larnest Money In A Contract 1o Se||
ArLlcle 1482 does noL apply when earnesL money glven ln a
conLracL Lo sell H6$,,"=& () *"N+>"-2 B4K 6*7/ BK 9DEEK;2
especlally where by sLlpulaLlon Lhe buyer has Lhe rlghL Lo walk
away from Lhe LransacLlon, wlLh no obllgaLlon Lo pay Lhe
balance, alLhough he wlll forfelL Lhe earnesL money. H*F+" ()
*&+,- &. /00$"%12 CE4 6*7/ BC 9DEE3;)
4

o 1he money glven ln a conLracL Lo sell ls noL earnesL
money buL as parL of Lhe conslderaLlon Lo Lhe seller's
promlse Lo reserve Lhe sub[ecL properLy for Lhe buyer.
?@A () *&+,- &. /00$"%12 D5D 6*7/ C5C 94::5;

3. Larnest Money In A Cond|t|ona| Contract Cf Sa|e
ln a condlLlonal conLracL of sale, Lhe accepLance of earnesL
money would prove LhaL Lhe sale ls condlLlonally consummaLed
or parLy execuLed. M>%%&=R& () A&,O"F$R&2 5B 6*7/ 3BD 94:KB;)

4. Vary|ng 1reatments Cf Larnest Money
1he LreaLmenL of earnesL money ln ArLlcle 1482 ls Lhe preferred
concepL under Lhe law.
Powever, Lhere ls noLhlng whlch prevenLs Lhe parLles from
LreaLlng Lhe earnesL money dlfferenLly.

1
5oo Mlqoel ltopettles lblllpploes, loc. v. noooq, 336 SC8A 737 (2000).
o lor example, Lhe parLles LreaLed Lhe earnesL money as a
guaranLee LhaL Lhe buyer would noL back ouL from Lhe
sale. 1hls was Lhe concepL of earnesL money ln Lhe old
Clvll Code. 60&+1$1 V&,&O"% () *&+,- &. /00$"%12 55
6*7/ BKB 94:KB;

I. D|fference 8etween Larnest Money And Cpt|on Money. L$1O$, ()
?",">1& V$() *&,0)2 B4C 6*7/ DD8 9DEEK;.

L$1O$, () ?",">1& V$($%&0O$=- *&)

Iacts: eLlLloners are slbllngs and co-owners of Lwo parcels of land ln
CavlLe. LrnesLo, meL wlLh 8espondenL uC and slgned a ConLracL Lo Sell.
A 100,000 check, payable Lo LrnesLo, was glven as opLlon money.
SomeLlme LhereafLer, 4 oLher also slgned Lhe ConLracL Lo Sell.
eLlLloners Lhen wroLe a leLLer Lo uC Lo resclnd Lhe conLracL.

Issue: WheLher or noL Lhe sale ls valld on Lhe peLlLloners who slgned Lhe
conLracL

ne|d: ?LS. 1he oLher flve peLlLloners (excludlng LrnesLo) personally
afflxed Lhelr slgnaLures Lhereon. 1herefore, a wrlLLen auLhorlLy ls no
longer necessary ln order Lo sell Lhelr shares because, by afflxlng Lhelr
slgnaLures on Lhe ConLracL Lo Sell, Lhey were noL selllng Lhelr shares
Lhrough an agenL buL, raLher, Lhey were selllng dlrecLly and ln Lhelr own
rlghL. 6/8 of Lhe properLy ls sold.

1he courL also had Lhe occaslon of dlsLlngulshlng earnesL money and
opLlon money, (a) earnesL money ls parL of Lhe purchase prlce, whlle
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
opLlon money ls Lhe money glven as a dlsLlncL conslderaLlon for an
opLlon conLracL, (b) earnesL money ls glven only where Lhere ls already a
sale, whlle opLlon money applles Lo a sale noL yeL perfecLed, and (c)
when earnesL money ls glven, Lhe buyer ls bound Lo pay Lhe balance,
whlle when Lhe would-be buyer glves opLlon money, he ls noL requlred
Lo buy, buL may even forfelL lL dependlng on Lhe Lerms of Lhe opLlon

Doctr|ne:

Larnest Money Cpt|on Money
arL of Lhe purchase prlce ulsLlncL conslderaLlon for an
opLlon conLracL
Clven only where Lhere ls already
a sale
Applles Lo a sale noL yeL perfecLed
1hey buyer ls bound Lo pay Lhe
balance
1hey buyer ls noL requlred Lo buy.

ALLy. SanLlago: 1here ls no opLlon conLracL aL all lf Lhere ls no
dlsLlncL conslderaLlon for Lhe conLracL. 8aLher, a slLuaLlon where
Lhe money glven ls supposed Lo be credlLed Lo Lhe purchase
prlce lf Lhe sale pushes Lhrough C8 forfelLed lf Lhe sale does noL
push Lhrough, ls a hybrld of ArLlcle 1842. As such, Lhe arLlcle ls
noL sLrlcLly appllcable.

G. Sa|e Deemed erfected Where Cffer Was Made (Art|c|e 1319)
1he sale's place of perfecLlon ls where Lhe meeLlng of Lhe mlnds
as Lo Lhe deLermlnaLe sub[ecL maLLer and prlce occurs.
ln case of accepLance by Lelegram or leLLer, Lhe presumpLlon ls
LhaL Lhe conLracL was perfecLed ln Lhe place where Lhe offer
was made.

n. Lffect Cf kesc|ss|on Cn Larnest Money kece|ved
LxcepL lf expressly sLlpulaLed, Lhe seller cannoL keep Lhe earnesL
money Lo answer for damages susLalned ln Lhe evenL LhaL Lhe
sale falls due Lo Lhe faulL of Lhe buyer. !&%P$=,&P2 S=R () *&+,-
&. /00$"%12 D:: 6*7/ 4C4 94::8;)
lf Lhe sale ls resclnded, Lhe seller musL reLurn Lhe earnesL
money. 8esclsslon creaLes Lhe obllgaLlon Lo reLurn Lhe Lhlngs
whlch were Lhe ob[ecL of Lhe conLracL, LogeLher wlLh Lhelr frulLs
and lnLeresL.

I. |ace Cf erfect|on
1he sale's place of perfecLlon ls where Lhe meeLlng of Lhe mlnds
as Lo Lhe deLermlnaLe sub[ecL maLLer and prlce occurs.
ln case of accepLance by Lelegram or leLLer, Lhe presumpLlon ls
LhaL Lhe conLracL was perfecLed ln Lhe place where Lhe offer
was made.

I. Lxpenses Cf Lxecut|on And keg|strat|on
1he seller has Lo answer for Lhe followlng expenses:
1. LxecuLlon and reglsLraLlon of Lhe sale
2. uLLlng Lhe goods lnLo a dellverable sLaLe
3. WlLhholdlng Laxes due on Lhe sale

k. erformance Shou|d Not Affect erfect|on
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1he ablllLy of Lhe parLles Lo perform Lhe conLracL (afLer
perfecLlon) does noL affecL Lhe perfecLlon of Lhe conLracL.
Lxample:
o ln 6RF+#"RG () *&+,- &. /00$"%12 DDK 6*7/ K4: 94::3;2
Lhe CourL ruled LhaL Lhere was already a perfecLed sale
even when Lhe requlred leLLer of credlL (whlch was Lhe
means of paymenL agreed upon) had noL been opened
by Lhe buyer.
non-paymenL of Lhe prlce does noL render vold nor reverse Lhe
effecLs of Lhe perfecLlon of Lhe conLracL of sale. lL only creaLes a
rlghL Lo demand fulflllmenL of Lhe obllgaLlon or Lo resclnd Lhe
conLracL. A"%"-#"- () *&+,- &. /00$"%12 D54 6*7/ 4D8 94::5;
When Lhe seller ls noL Lhe owner boLh aL Lhe Llme of perfecLlon
and dellvery, lL ls slmllar Lo an lmposslble servlce" under ArLlcle
1409(3). 1hus, Lhe conLracL ls vold. @&&% () *&+,- &. /00$"%12
DK5 6*7/ 4C: 94::K;
o 8U1 CLv says LhaL Lhe comparlson Lo an lmposslble
servlce ls erroneous because Lhe obllgaLlons are Lo
glve," noL Lo do."

IV. Iorma| kequ|rements Cf Sa|es (Art|c|es 13S7, 13S8, 1406 and 1483)

Art|c|e 13S7.
If the |aw requ|res a document or other spec|a| form, as |n the acts and
contracts enumerated |n the fo||ow|ng art|c|e, the contract|ng part|es
may compe| each other to observe that form, once the contract has
been perfected. 1h|s r|ght may be exerc|sed s|mu|taneous|y w|th the
act|on upon the contract. (1279a)

Art|c|e 13S8.
1he fo||ow|ng must appear |n a pub||c document:

(1) Acts and contracts wh|ch have for the|r ob[ect the creat|on,
transm|ss|on, mod|f|cat|on or ext|ngu|shment of rea| r|ghts over
|mmovab|e property, sa|es of rea| property or of an |nterest there|n
are governed by art|c|es 1403, No. 2, and 140S,

(2) 1he cess|on, repud|at|on or renunc|at|on of hered|tary r|ghts or of
those of the con[uga| partnersh|p of ga|ns,

(3) 1he power to adm|n|ster property, or any other power wh|ch has
for |ts ob[ect an act appear|ng or wh|ch shou|d appear |n a pub||c
document, or shou|d pre[ud|ce a th|rd person,

(4) 1he cess|on of act|ons or r|ghts proceed|ng from an act appear|ng |n
a pub||c document.

A|| other contracts where the amount |nvo|ved exceeds f|ve hundred
pesos must appear |n wr|t|ng, even a pr|vate one. 8ut sa|es of goods,
chatte|s or th|ngs |n act|on are governed by art|c|es, 1403, No. 2 and
140S. (1280a)

Art|c|e 1406.
When a contract |s enforceab|e under the Statute of Irauds, and a
pub||c document |s necessary for |ts reg|strat|on |n the keg|stry of
Deeds, the part|es may ava|| themse|ves of the r|ght under Art|c|e
13S7.

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Art|c|e 1483.
Sub[ect to the prov|s|ons of the Statute of Irauds and of any other
app||cab|e statute, a contract of sa|e may be made |n wr|t|ng, or by
word of mouth, or part|y |n wr|t|ng and part|y by word of mouth, or
may be |nferred from the conduct of the part|es. (n)

A. Iorm Not Important for Va||d|ty of Sa|e
Genera| ku|e: Sale, belng a consensual conLracL, no parLlcular
form ls requlred for lLs valldlLy.
8emember: unenforceable conLracLs are sLlll valld, so Lhe facL
LhaL Lhe sale over land was noL reglsLered does noL affecL Lhe
valldlLy of Lhe sale. Agaln, reglsLraLlon ls only for Lhe purpose of
greaLer efflcacy and blndlng Lhlrd persons. Q=>($,1"% 6+N",
<>%%>=N *&,0) () ^$>,1 &. /=N$% W$($12 38: 6*7/ D45 9DEED;
o 1he requlremenL ln Lhe SLaLuLe of lrauds LhaL sale of
real esLaLe should be embodled ln a publlc documenL ls
only for Lhe purpose of blndlng Lhlrd parLles.
o Sale of land under prlvaLe lnsLrumenL ls valld. !"%%", ()
^+1">=2 DE 6*7/ 485 94:5K;)
4

o ArLlcles 1337 and 1338, ln relaLlon Lo ArLlcle 1403(2),
requlre LhaL Lhe sale of real properLy musL be ln wrlLlng
for lL Lo be enforceable, lL need noL be noLarlzed for
Lhere ls noLhlng ln Lhose provlslons whlch requlre LhaL lL
musL be execuLed ln a publlc documenL Lo be valld.
H<",->=$J () */2 3B8 6*7/ 38 9DEE4;\
2
buL boLh lLs due
execuLlon and lLs auLhenLlclLy musL be proven, pursuanL

1
l. ltoteto Coyeoo v. 1ombootloq, 1 hll. 490 (1902).
2
nelts of 8looo v. cA, 362 SC8A 29 (2001), 1be stote of leJto c. Coozoles v.
1be nelts of Motcos letez, 603 SC8A 47 (2009).
Lo Sec. 20, 8ule 132 of Lhe 8ules of CourL. HW>N=& ()
/I+>=&2 CCC 6*7/ 54 9DEE3;)
o AlLhough Lhe conveyance of land ls noL made ln a publlc
documenL, lL does noL affecL Lhe valldlLy of such
conveyance. ArLlcle 1338 of Lhe Clvll Code does noL
requlre Lhe accompllshmenL of Lhe acLs or conLracLs ln a
publlc lnsLrumenL ln order Lo valldaLe Lhe acL or
conLracL buL only Lo lnsure lLs efflcacy. WF$ b1-"-$ &.
?$P,& *) !&=J"%$1 () WF$>, ^>$,1 &. <",R&1 ?$,$J2 5EB
6*7/ CK 9DEE:;)

1. Cther ku||ngs on Deeds of Sa|e:
Seller may agree Lo a deed of absoluLe sale before full paymenL
of Lhe purchase prlce. H?"= ?"R>.>R S=P+1-,>"% 6"%$1 *&)2 S=R) ()
*/2 C8D 6*7/ 45C 9DEE5;)
Assumlng LhaL Lhe buyers falled Lo pay Lhe full prlce sLaLed ln
Lhe ueed of Sale, such parLlal fallure would noL render Lhe sale
vold. A,"(&U!+$,,$,& () A,"(&2 C5B 6*7/ DCC 9DEEB;)
1haL marlLal consenL was execuLed prlor Lo Lhe ueed of
AbsoluLe Sale does noL lndlcaLe LhaL lL ls a phoney. ?"= ?"R>.>R
S=P+1-,>"% 6"%$1 *&)2 S=R) () */2 C8D 6*7/ 45C 9DEE5;)
A ueed of Sale when acknowledged before a noLary publlc,
en[oys Lhe presumpLlon of regularlLy and due execuLlon. 1o
overLhrow LhaL presumpLlon, sufflclenL, clear and convlnclng
evldence ls requlred, oLherwlse Lhe documenL should be
upheld. HA,"(&U!+$,,$,& () A,"(&2 C5B 6*7/ DCC 9DEEB;)
3


3
osoo v. Atcloqo, 449 SC8A 438 (2003), uoloo 8ook v. Ooq, 491 SC8A 381
(2006), 1opotoc v. lopoellooo vJo. ue MeoJe, 312 SC8A 97 (2007), Alfoto v.
coott of Appeols, 319 SC8A 270 (2007), 5ootos v. lomboo, 319 SC8A 408
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
noLarlzaLlon of ueeds of Sale by one who was noL a noLary
publlc does noL affecL Lhe valldlLy Lhereof, sald documenLs were
merely converLed lnLo prlvaLe documenLs) H7)`) @"(",,& a *&)
S=R) () M">%&R$12 354 6*7/ 43: 9DEE4;)
noLarlzaLlon of a deed of sale does noL guaranLee lLs valldlLy nor
ls lL concluslve of Lhe Lrue agreemenL of Lhe parLles LhereLo,
because lL ls noL Lhe funcLlon of Lhe noLary publlc Lo valldaLe an
lnsLrumenL LhaL was never lnLended by Lhe parLles Lo have any
blndlng legal effecL. H6"%&=N" () *&=R$0R>&=2 CKE 6*7/ D:4
9DEEB;)
4

8uyer's lmmedlaLe Laklng of possesslon of sub[ecL properLy
corroboraLes Lhe LruLhfulness and auLhenLlclLy of Lhe deed of
sale. H/%R&1 () S/*2 45D 6*7/ 8D3 94:88;) Conversely, Lhe seller's
conLlnued possesslon of Lhe properLy makes dublous Lhe
conLracL of sale beLween Lhem. H6"=-&1 () 6"=-&12 355 6*7/
3:B 9DEE4;)
D

Any subsLanLlal dlfference beLween Lhe Lerms of Lhe ConLracL Lo
Sell and Lhe concomlLanL ueed of AbsoluLe Sale (such as
dlfference ln sub[ecL maLLer, and dlfference ln prlce and/or Lhe
Lerms Lhereof), does noL make Lhe LransacLlon beLween Lhe
seller and Lhe buyer vold, for lL ls Lrulsm LhaL Lhe execuLlon of
Lhe ueed of AbsoluLe Sale effecLlvely rendered Lhe prevlous
ConLracL Lo Sell lneffecLlve and cancelled [Lhrough Lhe process
of novaLlon]. HY+O#,$1 () W"%#,"P2 d,)2 B45 6*7/ BKB 9DEEK;)

(2007), leJtooo v. nelts of 8eoeJlcto leJtooo, 339 SC8A 401 (2007), Ollvotes v.
5otmleoto, 334 SC8A 384 (2008).
1
Nozoteoo v. cA, 343 SC8A 637 (2000), 5ootos v. nelts of Iose l. Motlooo, 344
SC8A 284 (2000)
2
uomloqo v. cA, 367 SC8A 368 (2001).

2. Va|ue of 8us|ness Iorms to rove Sa|e
8uslness forms, e.q., order sllp, dellvery charge lnvolce and Lhe
llke, whlch are lssued by Lhe seller ln Lhe ordlnary course of Lhe
buslness are noL always fully accompllshed Lo conLaln all Lhe
necessary lnformaLlon descrlblng ln deLall Lhe whole buslness
LransacLlon-more ofLen Lhan noL Lhey are accompllshed
perfuncLorlly wlLhouL proper regard Lo any legal repercusslon
for such neglecL such LhaL desplLe Lhelr belng ofLen lncompleLe,
sald buslness forms are commonly recognlzed ln ordlnary
commerclal LransacLlons as valld beLween Lhe parLles and aL Lhe
very leasL Lhey serve as an acknowledgmenL LhaL a buslness
LransacLlon has ln facL Lransplred. 8y Lhemselves, Lhey are
lnadequaLe Lo esLabllsh Lhe case for Lhe vendor. 1helr probaLlve
value musL be evaluaLed ln con[uncLlon wlLh oLher evldence.
HV&="-& *) *,+J W,"P>=N *&,0) () */2 3CK 6*7/ 43 9DEEE;)
1hese documenLs are noL mere scraps of paper berefL of
probaLlve value buL vlLal pleces of evldence of commerclal
LransacLlons. 1hey are wrlLLen memorlals of Lhe deLalls of Lhe
consummaLlon of conLracLs. HY"N&= () ^&&($= *&O"%R&
S=P+1-,>$12 S=R)2 3C: 6*7/ 353 9DEE4;)

8. When Iorm Important |n Sa|e
Genera| ku|e: lorm does noL affecL valldlLy of sale.
o Lxcept|ons:
1. ower Lo sell a plece of land by an agenL musL be ln
wrlLlng, oLherwlse, Lhe sale wlll be vold.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
2. Sale of large caLLle musL be ln wrlLlng, oLherwlse Lhe
sale would be vold. lL musL also be reglsLered wlLh Lhe
munlclpal Lreasurer ln order Lo be valld.
3. Sale of land by non-Musllm hlll Lrlbe culLural mlnorlLles
all LhroughouL Lhe hlllpplnes" ls vold lf noL approved
by Lhe naLlonal Commlsslon on lndlgenous eoples
(nCl).

1. 1o 8|nd 1h|rd art|es
ArLlcle 1338 whlch requlres Lhe embodlmenL of cerLaln
conLracLs ln a publlc lnsLrumenL ls only for convenlence, and
reglsLraLlon of Lhe lnsLrumenL only adversely affecLs Lhlrd
parLles. lormal requlremenLs are, Lherefore, for Lhe beneflL of
Lhlrd parLles, and non-compllance LherewlLh does noL adversely
affecL Lhe valldlLy of Lhe conLracL nor Lhe conLracLual rlghLs and
obllgaLlons of Lhe parLles Lhereunder. `+%$ () */, D85 6*7/ 5:8
94::8;,
1
V"%>&= () */2 48D 6*7/ 8KD 94::E;.
2


`+%$ () *&+,- &. /00$"%1

Iacts: A land owned by lr. !acobe was foreclosed and puL up for publlc
aucLlon by 8ural 8ank. lule, Lhe bank's corporaLe secreLary, soughL a
buyer for Lhe land. Pls 2 agenLs recommended ura. Cruz. AL LhaL Llme
lule was lnLeresLed ln a palr of dlamond earrlngs LhaL Cruz had buL Lhe
laLLer re[ecLed all hls moneLary offers for lL. When he offered Lhe land Lo

1
uolvetsol kobloo 5oqot Mlllloq cotp. v. nelts of Aoqel 1eves, 389 SC8A 316
(2002).
2
llmketkol 5oos Mlllloq, loc. v. cA, 230 SC8A 323 (1993), Aqoseo v. cA, 323
SC8A 304 (2000).
ura. Cruz, she showed lnLeresL ln Lradlng so he redeemed Lhe properLy
ln lr. !acobe's name and execuLed a deed of sale Lo geL lL ln hls own
name. lule represenLed Lhe land Lo be acLually worLh 200,000 so Lhey
agreed LhaL lL would be Lraded for Lhe earrlngs, belng worLh 160,000,
plus 40,000, Lhls noLwlLhsLandlng LhaL Lhe conslderaLlon ln Lhelr deed
of sale says Lhe land ls only worLh 80,000. When lule had slgned Lhe
deed dellverlng" Lhe land Lo ura. Cruz, Lhey wenL Lo Lhe bank Lo
reLrleve Lhe earrlngs. upon a qulck glance, Cruz showed saLlsfacLlon aL
Lhe earrlngs and lefL wlLh Lhem. 2 hours laLer however, he wenL back
and clalmed LhaL Lhe earrlngs were fake. A sulL was broughL Lo vold Lhelr
conLracL of sale. 8oughL Lhe 81C and CourL of Appeals upheld Lhe sale
and awarded damages ln favor of respondenLs, hence Lhls appeal.
Issue: WheLher or noL Lhere was a valld conLracL of sale or barLer.

ne|d: ?LS. 1he Supreme CourL also ruled LhaL Lhelr conLracL of barLer,
whlch Look Lhe form of a sale, was compleLe by mere meeLlng of Lhe
mlnds and so legally blndlng on Lhem, especlally slnce Lhere was already
dellvery Lo boLh parLles of Lhelr respecLlve ob[ecLs and boLh had
accepLed Lhem - lule especlally, by hls acL ln leavlng Lhe bank wlLh Lhe
[ewelry. uamages were also proper slnce lule broughL sulL knowlng
hlmself Lo be gullLy and negllgenL ln noL boLherlng Lo lnspecL Lhe [ewelry
before leavlng wlLh lL, he should have known beLLer slnce he hlmself ls a
banker and a [eweler.

Doctr|ne:

V"%>&= () *&+,- &. /00$"%1

Iacts: Sabesa[e sued Lo recover ownershlp of land LhaL was sold Lo hlm
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
by uallon. uallon denles Lhe sale, and clalms LhaL Sabesa[e ls only
preempLlng uallon's LhreaL Lo sue for unpald commlsslon on sales of
copra and abaca LhaL peLlLloner spouses earned when Lhey were
admlnlsLerlng 3 parcels of land for Leonardo Sabesa[e.

Issue: WheLher or noL Lhe sale was valld desplLe Lhe fallure Lo embody lL
ln a publlc documenL

ne|d: ?LS. ArLlcle 1338 sLaLes LhaL acLs and conLracLs whlch have for
Lhelr ob[ecL Lhe creaLlon, Lransmlsslon, modlflcaLlon or exLlncLlon of real
rlghLs over lmmovable properLy musL appear ln a publlc lnsLrumenL" ls
only for convenlence, noL for valldlLy or enforceablllLy. lL ls noL a
requlremenL for Lhe valldlLy of a conLracL of sale of a parcel of land LhaL
Lhls be embodled ln a publlc lnsLrumenL.

A conLracL of sale ls a consensual conLracL, whlch means LhaL Lhe sale ls
perfecLed by mere consenL. no parLlcular form ls requlred for lLs
valldlLy. 1he Supreme CourL ruled LhaL Lhe auLhenLlclLy of Lhe sale has
been proved accordlngly slnce wlLnesses poslLlvely LesLlfled Lo Lhe
auLhenLlclLy of Lhe sale, and Lhe slgnaLure Lhereon was proved Lo be
auLhenLlc. 1he CourL also ruled LhaL execuLlon of Lhe sale ln a publlc
documenL ls noL a faLal defecL as a conLracL of sale ls consensual.

Doctr|ne:

ArLlcle 1338 of Lhe Clvll Code whlch requlres Lhe embodlmenL of
cerLaln conLracLs ln a publlc lnsLrumenL, ln only for convenlence,
and reglsLraLlon of Lhe lnsLrumenL only adversely affecLs Lhlrd
parLles, and non-compllance LherewlLh does noL adversely
affecL Lhe valldlLy of Lhe conLracL or Lhe conLracLual rlghLs and
obllgaLlons of Lhe parLles Lhereunder. Hb1-,$%%$, () T1O"$%2 B84
6*7/ DCK 9DEE:;)
4

Whlle sale of land appearlng ln a prlvaLe deed ls blndlng
beLween Lhe parLles, lL cannoL be consldered blndlng on Lhlrd
persons, lf lL ls noL embodled ln a publlc lnsLrumenL and
recorded ln Lhe 8eglsLry of ueeds. 6$R+X" () MP") V$ 6$%O"2
3D5 6*7/ DCC 9DEEE;.
2


6$R+X" () MP") V$ 6$%O"

Iacts: !"# %&'(#) *+ )&,- ./01#(2 *+ 2"3. (&.# 3. & %*'23*, *+ *'343,&) 5*2
!"#$% '() *+,*)+-. /01 ,+2324055. +)321-)+)6 746)+ 0 *0-)4- 2117)6 -,
!"#$%" '"("))*+, -."/ .* '"+$0,/ 12+$34 5*+ )$6*7$%*8 95* *37*+*. $37,
an agreemenL of parLlLlon ln 1938 wlLh aclencla Sabellona, whereby
she bound herself Lo Lransfer one-Lhlrd (1/3) of LoL 3679 ln favor of
aclencla. An acLlon for quleLlng of LlLle was flled by peLlLloners agalnsL
prlvaLe respondenL. Secuya alleged LhaL aclencla Look possesslon and
occupaLlon of LhaL one-Lhlrd porLlon of LoL 3679 ad[udlcaLed Lo her.
LaLer, she sold Lhe Lhree Lhousand square meLer porLlon Lhereof Lo
ualmaclo Secuya (predecessor-ln-lnLeresL of peLlLloners) ln 1933.
8espondenL clalmed LhaL she ls Lhe reglsLered owner of LoL 3679, havlng
boughL Lhe land someLlme ln lebruary 1973 from Cesarla Caballero and
has been ln possesslon of Lhe same slnce Lhen.


1
uolvetsol kobloo 5oqot Mlllloq cotp. v. nelts of Aoqel 1eves, 389 SC8A 316
(2002).
2
1olosoo v. 1oyoq, 336 SC8A 263 (2001), 5ootos v. Mooollll, 476 SC8A 679
(2003).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Issue: WheLher or noL Lhe sale Lo ualmaclo Secuya was valld.

ne|d: nC. 1here was no evldence of Lhe sale. eLlLloners lnslsL LhaL
aclencla sold Lhe dlspuLed properLy Lo ualmaclo Secuya on CcLober 20,
1933, and LhaL Lhe sale was embodled ln a prlvaLe documenL. Powever,
such documenL, whlch would have been Lhe besL evldence of Lhe
LransacLlon, was never presenLed ln courL, allegedly because lL had been
losL. Whlle a sale of a plece of land appearlng ln a prlvaLe deed ls
blndlng beLween Lhe parLles, lL cannoL be consldered blndlng on Lhlrd
persons, lf lL ls noL embodled ln a publlc lnsLrumenL and recorded ln Lhe
8eglsLry of roperLy.

Whlle peLlLloners alleged LhaL respondenL was aware of peLlLloners'
possesslon of Lhe dlspuLed properLles, Lhus, regardlng her as noL a
purchaser ln good falLh who ls enLlLled Lo Lhe proLecLlon of Lhe 1orrens
sysLem, Cesarla Caballero, assured respondenL LhaL peLlLloners were
[usL LenanLs on Lhe sald loL. rlvaLe respondenL cannoL be faulLed for
bellevlng Lhls represenLaLlon, conslderlng LhaL peLlLloners' clalm was noL
noLed ln Lhe cerLlflcaLe of Lhe LlLle coverlng LoL no. 3679. Moreover,
prlvaLe respondenL's LlLle ls amply supporLed by clear evldence, whlle
peLlLloners' clalm ls barren of proof.

Doctr|ne:

2. Ior Lnforceab|||ty 8etween the art|es: Statute of Irauds
(Art|c|es 1403 and 140S)

Art|c|e 140S.
Contracts |nfr|ng|ng the Statute of Irauds, referred to |n No. 2 of
art|c|e 1403, are rat|f|ed by the fa||ure to ob[ect to the presentat|on of
ora| ev|dence to prove the same, or by the acceptance of benef|t under
them.

1he Lerm SLaLuLe of lrauds" ls descrlpLlve of Lhe sLaLuLes whlch
requlre cerLaln classes of conLracLs, such as agreemenLs for Lhe
sale of real properLy, Lo be ln wrlLlng, Lhe purpose belng Lo
prevenL fraud and per[ury ln Lhe enforcemenL of obllgaLlons
dependlng for Lhelr evldence on Lhe unasslsLed memory of
wlLnesses by requlrlng cerLaln enumeraLed conLracLs and
LransacLlons Lo be evldenced by a wrlLlng slgned by Lhe parLy Lo
be charged. 6F&$O"G$, () Y" W&=P$_"2 58 ?F>%) DC 94:3:;)
o ALLy. SanLlago: 1he parLles cannoL and should noL
merely rely on Lhelr memory for cerLaln LransacLlons.
Nature And urpose Cf Statute Cf Irauds - 1o prevenL fraud
and per[ury ln Lhe enforcemenL of obllgaLlons. 1he wrlLLen noLe
musL emobody Lhe essenLlals of Lhe conLracL. W&,R+"-&, ()
A$,="#$2 CB: 6*7/ C3: 9DEEB).
resupposes Va||d Contract Cf Sa|e - 1he appllcaLlon of Lhe
SLaLuLe of lrauds presupposes Lhe exlsLence of a perfecLed
conLracL." When Lhe records show LhaL Lhere was no perfecLed
conLracL of sale, Lhere ls no basls for Lhe appllcaLlon of Lhe
SLaLuLe of lrauds. H`>,O$ () A+G"% b=-$,0,>1$1 "=P V$() *&,0)2
C4C 6*7/ 4:E 9DEE3;)
4

Coverage
a. Sa|e of kea| roperty - A sale of realLy cannoL be
proven by means of wlLnesses, buL musL necessarlly be

1
koseocot uevelopmeot cotp. v. lopoloq, 334 SC8A 119 (2001).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
evldenced by a wrlLLen lnsLrumenL, duly subscrlbed by
Lhe parLy charged, or by secondary evldence of Lhe
conLenLs of such documenL. no oLher evldence can be
recelved excepL Lhe documenLary evldence referred Lo.
H!&,&10$ () S%"X"-2 D: ?F>%) D4 94:4C;.
1


Sa|es Coverage |n Statute of Irauds
1he followlng klnds of sale are unenforceable lf noL embodled ln
a wrlLLen documenL: (1-300-8)
1. A sale whlch ls noL Lo be performed wlLhln one year.
2. AgreemenL for Lhe sale of goods, chaLLel or Lhlngs ln
acLlon noL less Lhan 300.
3. Sale of real properLy.
Lvldence of Lhe agreemenL musL be ln wrlLlng.

Lxcept|ons to Coverage of Statue of Irauds |n Sa|es Contracts
1he followlng are exempLed from Lhe SLaLuLe of lrauds and are
Lhus enforceable: (M-CL)
1. 1here ls a noLe or memorandum ln wrlLlng and
subscrlbed by Lhe parLy charged or hls agenL
2. When Lhere has been parLlal consummaLlon/parLlal
performance
3. lallure Lo ob[ecL Lo Lhe presenLaLlon of evldence allunde
(meanlng: from anoLher place) as Lo Lhe exlsLence of a
conLracL
4. Sales effecLed Lhrough elecLronlc commerce.


1
Albo vJo. ue koy v. coott of Appeols, 314 SC8A 36 (1999).
b. Agency to Se|| or to 8uy - As conLrasLed from sale, an
agency Lo sell does noL belong Lo any of Lhe Lhree
caLegorles of conLracLs covered by ArLlcles 1337 and
1338 and noL one enumeraLed under Lhe SLaLuLes of
lrauds ln ArLlcle 1403. HY>O () *&+,- &. /00$"%12 DBC
6*7/ 4KE 94::5;)
D

c. k|ghts of I|rst kefusa| - A rlghL of flrsL refusal" ls noL
covered by Lhe sLaLuLe of frauds. lurLhermore, ArLlcle
1403(2)(e) of Clvll Code presupposes Lhe exlsLence of a
perfecLed, albelL unwrlLLen, conLracL of sale, a rlghL of
flrsL refusal, such as Lhe one lnvolved ln Lhe lnsLanL
case, ls noL by any means a perfecLed conLracL of sale of
real properLy. H7&1$=R&, V$() *&,0) () S=I+>=N2 3BC
6*7/ 44: 9DEE4;.
d. Lqu|tab|e Mortgage - SLaLuLe does noL sLand ln Lhe way
of LreaLlng an absoluLe deed as a morLgage, when such
was Lhe parLles' lnLenLlon, alLhough Lhe agreemenL for
redempLlon or defeasance ls proved by parol evldence.
H*+X+N"= () 6"=-&12 3C ?F>%) 4EE 94:45;.
3

e. k|ght to kepurchase - 1he deed of sale and Lhe verbal
agreemenL allowlng Lhe rlghL of repurchase should be
consldered as an lnLegral whole, Lhe deed of sale ls lLself
Lhe noLe or memorandum evldenclng Lhe conLracL.
H<"R-"= *$#+ S=-$,="->&="% />,0&,- /+-F&,>-X () *&+,-
&. /00$"%12 D53 6*7/ K35 94::5;)
Memorandum. T+(>$=NR& () V"R+XR+X2 4EC 6*7/ 558 94:84;

2
1otcootot v. 8etoobe, 439 SC8A 439 (2003).
3
kosoles v. 5obo, 408 SC8A 664 (2003), Aysoo, It. v. lotoqos, 337 SC8A 30
(2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

T+(>$=NR& () V"R+XR+X

Iacts: eLlLloners own a properLy ln 1acloban ClLy whlch Lhey lnLend Lo
sell for 6.3M. 1hey gave Lhe respondenLs Lhe rlghL Lo purchase Lhe
properLy wlLhln !uly 31, 1978. 8espondenLs replled LhaL Lhey agree Lo
buy Lhe properLy and Lhey wlll negoLlaLe for deLalls, as soon as
peLlLloners send Lhelr represenLaLlve ln 1acloban. eLlLloner senL
anoLher Lelegram lnformlng respondenLs LhaL Lhelr proposal ls accepLed
and a conLracL wlll be prepared.

eLlLloners' lawyer, Mr. Camboa, arrlved brlnglng a conLacL changlng
Lhe mode of paymenL. lL now sLaLed LhaL Lhe balance paymenL should
be pald wlLhln 30 days lnsLead of Lhe former 90 days orlglnally agreed
upon. (1he orlglnal Lerms was 2M paymenL upon execuLlon of conLracL,
and Lhen 4.3M afLer 90 days)

Issue: WheLher or noL Lhere was a perfecLed conLracL of sale.

ne|d: nC. 1he Supreme CourL consldered Lhe correcL [urldlcal
slgnlflcance of Lhe Lelegram of respondenLs lnsLrucLlng ALLy. Camboa Lo
"proceed Lo 1acloban LonegoLlaLe deLalls." lL emphaslzes Lhe word
"negoLlaLe" advlsedly because Lo CourL's mlnd lL ls Lhe keyword LhaL
negaLes and makes lL legally lmposslble Lo hold LhaL respondenLs'
accepLance of peLlLloners' offer, assumlng LhaL lL was a "cerLaln" offer
lndeed, was Lhe "absoluLe" one LhaL ArLlcle 1319. aymenL on
lnsLallmenLs ls enLlrely dlfferenL from cash paymenL. 1he manner of
paymenL ls an essenLlal requlslLe ln a conLracL of sale. 1he alLeraLlon ln
Lhe Lerms of paymenL clearly showed Lhere was no meeLlng of Lhe
mlnds yeL Lo perfecL a conLracL of sale.

ln any sale of real properLy on lnsLallmenLs, Lhe SLaLuLe of lrauds read
LogeLher wlLh Lhe perfecLlon requlremenLs of ArLlcle 1473 of Lhe Clvll
Code musL be undersLood and applled ln Lhe sense LhaL Lhe ldea of
paymenL on lnsLallmenLs musL be ln Lhe requlslLe of a noLe or
memorandum Lhereln conLemplaLed. under Lhe SLaLuLe of lrauds, Lhe
conLenLs of Lhe noLe or memorandum, wheLher ln one wrlLlng or ln
separaLe ones merely lndlcaLlve for an adequaLe undersLandlng of all
Lhe essenLlal elemenLs of Lhe enLlre agreemenL, may be sald Lo be Lhe
conLracL lLself, excepL as Lo Lhe form.

Doctr|ne:

o under ArLlcle 1403, an excepLlon Lo Lhe unenforceablllLy
of conLracLs pursuanL Lo Lhe SLaLuLe of lrauds ls Lhe
exlsLence of a wrlLLen noLe or memorandum evldenclng
Lhe conLracL. 1he memorandum may be found ln
several wrlLlngs, noL necessarlly ln one documenL. 1he
memorandum or memoranda ls/are wrlLLen evldence
LhaL such a conLracL was enLered lnLo. 1he exlsLence of
a wrlLLen conLracL of Lhe sale ls noL necessary so long as
Lhe agreemenL Lo sell real properLy ls evldenced by a
wrlLLen noLe or memorandum, embodylng Lhe
essenLlals of Lhe conLracL and slgned by Lhe parLy
charged or hls agenL. Y>OG$-G"> 6&=1 <>%%>=N2 S=R) () */2
DBE 6*7/ BD3 94::B).
o 8U1: 1he memoranda musL be slgned by Lhe parLy
soughL Lo be charged, and musL clearly provlde a deed
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
of sale caLegorlcally conveylng Lhe sub[ecL properLy.
Y>OG$-G"> 6&=1 <>%%>=N2 S=R) () */2 DBB 6*7/ 5 94::5;\
D54 6*7/ C5C 94::5).

Y>OG$-G"> () *&+,- &. /00$"%1

Iacts: 8l as LrusLee of 8C, auLhorlzed edro 8evllla Lo sell a loL ln
8arrlo 8agong Pog, aslg. 8l v Albano, AssL. v Aromln and LlmkeLkal
had negoLlaLlons and evenLually seLLled on hp 1000/sq meLer. Llm
asked lf Lhey could pay on Lerms and so v Albano dlcLaLed Lhe Lerms of
paymenL. AbouL 3 days laLer, LlmkeLkal learned LhaL lLs offer Lo pay on
Lerms has been frozen. Llm wenL Lo 8l Lo Lender full paymenL of hp
33, 036, 000.00 Lo v Albano buL Lhe laLLer refused paymenL and sald
hls auLhorlLy Lo sell Lhe land had been wlLhdrawn. LlmkeLkal flled a case
Lo agalnsL 8l for speclflc performance.

Issues
1. WheLher or noL Lhere was a perfecLed conLracL of sale beLween
LlmkeLkal and 8l ! ?LS
2. WheLher or noL Lhe evldence admlLLed by Lhe Lrlal courL ln
rullng for Lhe perfecLlon of Lhe sale ls admlsslble, glven LhaL ln a
sale of real properLy, Lhe SLaLuLe of lrauds ls appllcable? !?LS
3. WheLher or noL Lhe sale Lo n8S durlng Lhe pendency of Lhe Lrlal
ln Lhe 81C was effecLed ln good falLh ! nC
ne|d
1. Contract of sa|e perfected. v and AssL. v have auLhorlLy Lo
sell slnce Lhelr prlmary responslblllLles were Lo manage and
admlnlsLer real esLaLe properLy. AssL. v Aromln LesLlfled LhaL
Lhere was already a perfecLed conLracL of sale. When Lhey meL,
Lalked and agreed LhaL Lhe loL would be sold Lo LlmkeLkal aL hp
1000/sq. meLer and on Lerms dlcLaLed by Albano, Lhe sale was
perfecLed.
2. Statute of Irauds. 1ransacLlon was ouLslde Lhe amblL of Lhe Sol,
Lhere ls Lhe exlsLence of a wrlLLen noLe or memorandum, Lhe
AuLhorlzaLlon LeLLers and leLLer from LlmkeLkal conflrmlng Lhe
sale. 8espondenLs cross-examlned Lhe wlLnesses aL lengLh
regardlng Lhe conLracL, prlce, Lender of paymenL, eLc.
3. N8S not a purchaser |n good fa|th. 1hey lgnored Lhe lls peoJeos
annoLaLed on Lhe LlLle.

Y>OG$-G"> () *&+,- &. /00$"%1 9<7;

1. No contract of sa|e perfected. eLlLloners fall Lo esLabllsh any
deflnlLe agreemenL or meeLlng of Lhe mlnd as regards Lhe prlce
or Lerm of paymenL. eLlLloner's accepLance of Lhe offer was
quallfled, whlch amounLs Lo a re[ecLlon of Lhe orlglnal offer.

2. Statute of Irauds. eLlLloner clalms as proof of perfecLed
conLracL of sale beLween lL and respondenL 8l were noL
subscrlbed by Lhe parLy charged, l.e. 8l, Lhus dld noL consLlLuLe
Lhe memoranda or noLes LhaL Lhe law speaks of.

o lor Lhe memorandum Lo Lake Lhe sale ouL of Lhe
coverage of Lhe SLaLuLe of lrauds, lL musL conLaln all
Lhe essenLlal Lerms of Lhe conLracL" of sale. HW&,R+"-&,
() A$,="#$2 CB: 6*7/ C3: 9DEEB;2
1
even when scaLLered

1
loteJes v. sploo, 22 SC8A 1000 (1968).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
lnLo varlous correspondences whlch can be broughL
LogeLher H*>-X &. *$#+ () ^$>,1 &. *"=P>P& 7+#>2 3E5
6*7/ CE8 94:::;)
1

" 1he manner of paymenL musL also be lncluded
ln Lhe memorandum. T+(>$=R& () V"R+XR+X2
4EC 6*7/ 558 94:84;
" 8uL Lhe CourL has held LhaL ln sales of real
properLy, Lhe sLaLuLe of frauds wlll noL apply lf
Lhere has already been parLlal paymenL even lf
Lhe memorandum evldenclng Lhe sale dld noL
menLlon paymenL by lnsLallmenL. V"(>P ()
W>&=N1&=2 343 6*7/ 53 94:::;)
o Lxcept|on: L|ectron|c Documents under the L-
Commerce Act (k.A. 8792)
" 1he maln polnL of Lhls enLlre secLlon ln Lhe book
ls Lhls: elecLronlc documenLs are glven Lhe same
legal recognlLlon as paper documenLs. 1hus,
Lhey are admlsslble as evldence ln courL.
" ln assesslng Lhe evldenLlal welghL of an
elecLronlc daLa message or elecLronlc
documenL, Lhe rellablllLy of Lhe manner ln whlch
lL was generaLed, sLored or communlcaLed, Lhe
rellablllLy of Lhe manner ln whlch lLs orlglnaLor
was ldenLlfled ls glven regard
art|a| Lxecut|on (Art|c|e 140S) L,-$N" () Y$&=",P&2 4E3 ?F>%)
8KE 94:B8;\ *%"+P$% () *&+,- &. /00$"%12 4:: 6*7/ 443 94::4;)

1
8etq v. MoqJoleoo stote, loc., 92 hll. 110 (1932), llmketkol 5oos Mlllloq, loc.
v. cA, 230 SC8A 323 (1993), lltst lblllpploe lotl 8ook v. cA, 232 SC8A 239
(1996).

L,-$N" () Y$&=",P&

Iacts: CrLega occupled a parcel of land. AfLer Lhe llberaLlon, Lhe
governmenL asslgned Lhe loL Lo Lhe 8ural rogress Admln. She asserLed
her rlghL LhereLo, buL was dlspuLed by Leonardo. CrLega and Leonardo
agreed Lo a compromlse. 1he agreemenL was for CrLega Lo deslsL from
presslng her clalm, and Leonardo, upon geLLlng Lhe loL, would sell Lo her
a porLlon Lhereof provlded she pald for Lhe surveylng of Lhe loL. lf he
acqulred LlLle, she could sLay as LenanL. CrLega Lhus deslsLed from her
clalm, pald for Lhe surveylng of Lhe loL and Lhe preparaLlon of Lhe plan,
and regularly pald hlm a monLhly renLal. When she remodeled her son's
house beslde Lhe loL, lL exLended over Lhe sub[ecL loL. When Leonardo
acqulred LlLle, he refused Lo sell Lhe porLlon agreed upon. Pe clalms LhaL
Lhe conLracL ls unenforceable based on Lhe SLaLuLe of lrauds.

Issue: WheLher or noL Lhe conLracL ls unenforceable.

ne|d: nC. 1he conLracL ls enforceable because Lhere was parLlal
performance. CrLega made subsLanLlal lmprovemenLs on Lhe loL,
deslsLed from her clalm, conLlnued possesslon, and pald for Lhe
surveylng, and also pald Lhe renLals. All Lhese puL LogeLher amounL Lo
parLlal performance, whlch Lakes Lhe verbal agreemenL ouL of Lhe
operaLlon of Lhe SLaLuLe of lrauds.

Doctr|ne: arLlal paymenL of Lhe purchase prlce ls noL Lhe only manner
of parLlal performance. CLher modes of parLlal performance lnclude:
ossesslon
Maklng of lmprovemenLs o 8endlLlon of servlces
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
aymenL of Laxes
8ellnqulshmenL of rlghLs

*%"+P$% () *&+,- &. /00$"%1

Iacts: Ceclllo Claudel acqulred a loL from Lhe 8ureau of Lands. Pe
occupled Lhe same, declared lL ln hls name and duLlfully pald hls Laxes.
AfLer hls deaLh, hls helrs and slbllngs conLesLed each oLher clalmlng
ownershlp Lhereof. lL was hls helrs who were ln possesslon of Lhe
properLy. 1hey parLlLloned lL amongsL Lhemselves, reglsLered each
porLlon under Lhe 1orrens SysLem, and each pald Lhelr respecLlve Laxes.
1he slbllngs flled a case for cancellaLlon of LlLles and reconveyance
argulng LhaL Lhere was a verbal sale beLween Ceclllo and Lhelr parenLs
over Lhe loL. As evldence, Lhey presenLed a subdlvlslon plan.

Issue: WheLher or noL Lhere was a valld sale.

ne|d: nC. 1he general rule ls LhaL a sale once consummaLed ls valld
regardless of lLs form, however, provlng LhaL Lhe sale ls valld and
exlsLlng ls a dlfferenL maLLer. Powever, ln Lhe evenL LhaL a 3
rd
parLy
dlspuLes Lhe ownershlp, Lhere ls no such proof ln supporL of Lhe
ownershlp. As such, lL cannoL pre[udlce Lhlrd persons, such as Lhe helrs
ln Lhls case. Also, Lhe helrs had a rlghL Lo rely upon Lhelr 1orrens LlLles,
whlch, as opposed Lo Lhe subdlvlslon plans, are deflnlLely more credlble.

Doctr|ne:

o kequ|s|tes of part|a| performance:
l. MusL perLaln Lo Lhe sub[ecL maLLer or Lhe prlce
of Lhe sale
ll. MusL lnvolve an acL or compllclLy" on Lhe parLy
soughL Lo be charged
o Def|n|t|on: arLlal performance ls noL llmlLed Lo Lhe
glvlng of money. ConLracLs covered by Lhe SLaLuLe of
lrauds are raLlfled by accepLance of beneflLs under
Lhem. (ArLlcle 1403)
" arLlal performance musL amounL Lo esLoppel
agalnsL Lhe parLy soughL Lo be charged.
" arLlal performance of a sale of real properLy
wlll Lake lL ouL of Lhe SLaLuLe of lrauds even lf
Lhe formal requlremenLs (l.e. lL musL be ln
wrlLlng) are noL complled wlLh, as long as Lhe
essenLlal requlslLes of sale are presenL. MP") P$
d&O&R () *&+,- &. /00$"%1 DEE 6*7/ KC 94::4;)
" Sale of real properLy whlch are noL ln wrlLlng
buL are parLlally execuLed sLlll do noL blnd Lhlrd
parLles. ln addlLlon, under our 1orrens sysLem,
execuLlon of a publlc documenL ls noL enough Lo
blnd Lhlrd persons. 8eglsLraLlon wlLh Lhe
8eglsLry of ueeds ls Lhe operaLlve acL. 6$R+X" ()
MP") V$ 6$%O"2 3D5 6*7/ DCC 9DEEE;.
o 8U1: uellvery of Lhe deed Lo buyer's agenL, wlLh no
lnLenLlon Lo parL wlLh Lhe LlLle unLll Lhe purchase prlce ls
pald, does noL Lake Lhe case ouL of Lhe SLaLuLe of
lrauds. HA",$--& () <"=>%" 7">%,&"P *&)2 C5 ?F>%) :5C
94:DC).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o 1he SLaLuLe of lrauds only applles Lo execuLory
conLracLs. 1he SLaLuLe of lrauds does noL apply Lo
conLracLs elLher parLlally or LoLally performed. ln
addlLlon, a conLracL LhaL vlolaLes Lhe SLaLuLe of lrauds ls
raLlfled by Lhe accepLance of beneflLs under Lhe
conLracL, such as Lhe accepLance of Lhe purchase prlce
and uslng Lhe proceeds Lo pay ouLsLandlng loans.
/%.,$P& () A&,,"12 CEC 6*7/ 4CB 9DEE3;.
1


60&+1$1 /%.,$P& () 60&+1$1 A&,,"1

Iacts: Codofredo & Carmen morLgaged Lhelr land Lo Lhe u8 for
7,000.00. 1o pay Lhelr debL, Lhey sold Lhe land Lo Armando & Adella for
13,000.00, Lhe laLLer also assumed Lo pay Lhe loan. Carmen lssued
Armando & Adella a recelpL for Lhe sale. 1hey also dellvered Lo Armando
& Adella Lhe Crlglnal CerL. of 1lLle, Lax declaraLlons, and Lax recelpLs.
1hey also lnLroduced Armando & Adella Lo Lhe naLanawans, Lhe LenanLs
of Lhe sald properLy as Lhe new lessors. 1hey LhereafLer Look possesslon
of Lhe sald land. LaLer Lhey found ouL LhaL Codofredo & Carmen sold Lhe
land agaln Lo oLher buyers by securlng dupllcaLe coples of Lhe CC1s
upon peLlLlon w/ Lhe courL. 1hus, Lhey flled a case enLlLled Speclflc
erformance. Codofredo & Carmen clalm LhaL Lhe sale, noL belng ln
wrlLlng, ls unenforceable under Lhe SLaLuLe of lrauds.

Issue:

1
vJo. Je Iomoc v. cA, 200 SC8A 74 (1991), 5ollvo v. 1be lotestote stote of
Motcelo M. vlllolbo, 417 SC8A 277 (2003), Alozo v. loJoo, 462 SC8A 614
(2003), ue lo ceoo v. 8tlooes, 308 SC8A 62 (2006), ooezo v. coott of Appeols,
372 SC8A 413 (2008).
1. WheLher or noL sale of land ln favor of 8orras ls valld even lf
orally enLered. ! ?LS
2. WheLher or noL SLaLuLe of lrauds ls appllcable ! nC

ne|d: 1he SLaLuLe of lrauds ln appllcable only Lo execuLory conLracLs,
noL Lhose LhaL have already been parLlally or compleLely consummaLed.
ln Lhls case Lhe sale of Lhe land Lo Armando & Adella had already been
consummaLed. 1he ownershlp over Lhe land was also Lransferred Lo
Armando & Adella when Lhey were lnLroduced Lo Lhe naLanawans and
Look possesslon Lhereof. 1herefore, when Codofredo & Carmen sold Lhe
land Lo Lhe oLher buyers, lL was no longer Lhelrs Lo sell. 1he SLaLuLe of
lrauds llkewlse does noL apply conslderlng LhaL Codofredo & Carmen
had already derlved Lhe beneflLs from Lhe sale - such as Lhe money Lo
pay for Lhe loan. 1he recelpL also sufflces Lo consLlLuLe Lhe
memorandum" requlred by Lhe SLaLuLe of lrauds

Doctr|ne:

o Lffect Cf art|a| Lxecut|on Cn 1h|rd art|es: Sale of real
properLy whlch are noL ln wrlLlng buL are parLlally
execuLed sLlll do noL blnd Lhlrd parLles.
" lormal requlremenLs are for Lhe beneflL of Lhlrd
parLles. non-compllance does noL affecL Lhe
valldlLy of Lhe conLracL. `+%$ () *&+,- &.
/00$"%12 D85 6*7/ 5:8 94::8;
" lf a Lhlrd parLy dlspuLes Lhe ownershlp of Lhe
properLy, Lhe person agalnsL whom LhaL clalm ls
broughL cannoL presenL any proof of such sale
and hence, has no means Lo enforce Lhe
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
conLracL. 1hus, Lhe SLaLuLe of lrauds ls for Lhe
beneflL of Lhe parLles ln Lhe sale. *%"+P$% ()
*&+,- &. /00$"%1 94:: 6*7/ 443;
1hls *%"+P$% () *&+,- &. /00$"%12 4::
6*7/ 443 94::4; conflrms Lhe varlance
ln prlnclples lnvolvlng movables and
lmmovables. ArLlcle 1403 LreaLs parLlal
execuLlon as appllcable only Lo goods
and chaLLel."
lor movables, mere possesslon ls
enough Lo glve a presumpLlon of
ownershlp (ArLlcle 339). lor
lmmovables, a 1orrens LlLle ls needed.
noLe Lhe dlfference ln Lhe rullng of
*%"+P$% () *&+,- &. /00$"%12 4:: 6*7/
443 94::4; and MP") P$ d&O&R () *&+,-
&. /00$"%1 DEE 6*7/ KC 94::4;) 1he
contro|||ng doctr|ne ls LhaL of MP") P$
d&O&R () *&+,- &. /00$"%1 DEE 6*7/ KC
94::4;. parLlal performance ln sales of
real properLy Lakes lL ouL of Lhe SLaLuLe
of lrauds. Powever, lL ls sLlll Lhe
reglsLraLlon ln Lhe 8eglsLry of ueeds
whlch wlll blnd Lhlrd parLles.
*%"+P$% () *&+,- &. /00$"%12 4:: 6*7/
443 94::4; shows Lhe effecL of havlng a
sale of real properLy whlch lsn'L reduced
Lo wrlLlng. 1hus, lL emphaslzes Lhe
lmporLance of Lhe SLaLuLe of lrauds.
(*%"+P$% () *&+,- &. /00$"%12 4:: 6*7/
443 94::4; was declded based on
prescrlpLlon, noL accordlng Lo Lhe
SLaLuLe of lrauds.)
" 8ellance on LesLlmony of wlLnesses as
secondary evldence Lo prove a sale of real
properLy wlll noL prosper because such a sale
musL be evldenced by a wrlLLen lnsLrumenL
when lL lnvolves 3
rd
parLles. /%#" MP") V$ 7"H ()
*&+,- &. /00$"%12 34C 6*7/ 352 BCUBB 94:::;)
" Y&=P,$1 () *&+,- &. /00$"%12 3:C 6*7/ 433
9DEED; summarlzed Lhe rullngs on Lhe maLLer:
ArLlcle 1338 ls only for convenlence
8eglsLraLlon of Lhe lnsLrumenL ls
needed only Lo adversely affecL Lhlrd
parLles
non-compllance wlLh formal
requlremenLs does noL affecL valldlLy
" ln Lhe 1orrens sysLem, execuLlon of a publlc
documenL ls noL enough Lo blnd Lhlrd persons.
8eglsLraLlon wlLh Lhe 8eglsLry of ueeds ls Lhe
operaLlve acL. 6$R+X" () MP") V$ 6$%O"2 3D5
6*7/ DCC 9DEEE;)
Wa|ver - (ArLlcle 1403) Cross-examlnaLlon on Lhe conLracL ls
deemed a walver of Lhe defense of Lhe SLaLuLe. H/#,$=>R" ()
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
!&=P"2 3C ?F>%) K3: 94:45;\ W"%&1>N () MP") V$ @>$#"2 C3 6*7/
CKD 94:KD).
1

o When a parLy falls Lo ob[ecL durlng Lrlal Lo Lhe
presenLaLlon of oral evldence Lo prove Lhe conLracL, he
ls deemed Lo have walved Lhe defecLs of Lhe conLracL.
1hus, Lhe conLracL wlll be enforceable. (ArLlcle 1403)
o When Lhe purporLed buyer's exhlblLs falled Lo esLabllsh
Lhe perfecLlon of Lhe conLracL of sale, oral LesLlmony
cannoL Lake Lhelr place wlLhouL vlolaLlng Lhe parol
evldence rule. lL was Lherefore lrregular for Lhe Lrlal
courL Lo have admlLLed ln evldence LesLlmony Lo prove
Lhe exlsLence of a conLracL of sale of a real properLy
beLween Lhe parLles, desplLe Lhe perslsLenL ob[ecLlon
made by Lhe purporLed seller's counsel as early as Lhe
flrsL scheduled hearlng, even when cross-examlnaLlon
was made on Lhe basls of Lhe wlLnesses' affldavlL-form
LesLlmony. Y>OG$-G"> 6&=1 <>%%>=N2 S=R) () */2 DBB 6*7/
5 94::5;\ D54 6*7/ C5C 94::5;)
ku||ngs Cn kece|pts And Cther Documentary Lv|dence Cf Sa|e
o Slnce a conLracL of sale ls perfecLed by mere consenL,
Lhen when Lhe dealer of moLor vehlcles accepLs a
deposlL of 30,0000 and pulls ouL a unlL from Lhe
assembler for LhaL purpose, lL was ln breach of conLracL
when lL sold Lhe car subsequenLly Lo anoLher buyer.
He$=-,$H /+-&O&->($2 S=R) () *&+,- &. /00$"%12 D:4
6*7/ 55 94::8;.

1
llmketkol 5oos Mlllloq, loc. v. cA, 230 SC8A 323 (1993), locoolloo v. cA, 262
SC8A 486 (1996).
o A sales lnvolce ls a commerclal documenL-commerclal
documenLs or papers are Lhose used by merchanLs or
buslnessmen Lo promoLe or faclllLaLe Lrade or credlL
LransacLlons-Lhey are noL mere scraps of paper berefL
of probaLlve value, buL vlLal pleces of evldence of
commerclal LransacLlons, wrlLLen memorlals of Lhe
deLalls of Lhe consummaLlon of conLracLs. 6$">&%
?$-,&%$+O *&,0) () /+-&R&,0 !,&+02 B5: 6*7/ 38K
9DEE8;.
o Sales lnvolces are noL evldence of paymenL of Lhe prlce,
buL evldence of Lhe recelpL of Lhe goods, slnce Lhe besL
evldence Lo prove paymenL ls Lhe offlclal recelpL. b% L,&
b=N,"($,1 *&,0) () *&+,- &. /00$"%12 BC5 6*7/ CD
9DEE8).
o A recelpL whlch ls merely an acknowledgmenL of Lhe
sum recelved, wlLhouL any lndlcaLlon Lhereln of Lhe
LoLal purchase prlce of Lhe land or of Lhe monLhly
lnsLallmenLs Lo be pald, cannoL be Lhe basls of valld sale.
HY$"#,$1 () */2 4C5 6*7/ 4B8 94:85;.
2

o ln lLself, Lhe absence of recelpLs, or any proof of
conslderaLlon, would noL be concluslve of Lhe
lnexlsLence of a sale slnce conslderaLlon ls always
presumed. HW>N=& () /I+>=&2 CCC 6*7/ 54 9DEE3;.
o 8ecelpLs proves paymenL whlch Lakes Lhe sale ouL of Lhe
SLaLuLe of lrauds. W&X&-" 6F"c2 S=R) () *&+,- &.
/00$"%12 DCC 6*7/ 3DE 94::B;)


2
llmsoo v. cA, 337 SC8A 209 (2001).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
W&X&-" 6F"c () *&+,- &. /00$"%1

Iacts: Luna Sosa wanLed Lo buy a 1oyoLa LlLe Ace. Pe wenL Lo 1oyoLa
Shaw where he meL opong 8ernardo, a sales rep. Sosa explalned LhaL
he needed Lhe LlLe Ace by !une 17, oLherwlse, he would become a
laughlng sLock. 8ernardo guaranLeed LhaL Lhe vehlcle would be
dellvered. 1hey execuLed a documenL enLlLled AgreemenLs beLween
Sosa & opong 8ernardo of 1oyoLa Shaw" where a 100k downpaymenL
was sLlpulaLed and LhaL Lhe LlLe Ace would be avallable aL a glven daLe.
When Lhe day of reckonlng arrlved, Lhe LlLe Ace was unavallable - Lhe
explanaLlon of 8ernardo belng nasuloL ng lbang malakas." Powever,
accordlng Lo 1oyoLa, Lhe Lrue reason was LhaL 8A llnance, whlch was
supposed Lo answer for Lhe balance of Lhe purchase prlce, dld noL
approve Sosa's appllcaLlon. 1oyoLa also reLurned Lhe downpaymenL.
1hus, Sosa sued for damages amounLlng Lo 1.2M due Lo hls
humlllaLlon, hurL feellngs, sleepless nlghLs, and so on.

Issue: WheLher or noL Lhere was a perfecLed conLracL of sale.

ne|d: nC. 1here was no agreemenL as Lo Lhe prlce and Lhe manner of
paymenL, whlch are boLh essenLlal Lo Lhe perfecLlon of Lhe sale

Doctr|ne:

3. Ior Va||d|ty: Sa|e Cf kea|ty 1hrough Agent, Author|ty Must 8e
In Wr|t|ng (Art|c|e 1874)

Art|c|e 1874.
When a sa|e of a p|ece of |and or any |nterest there|n |s through an
agent, the author|ty of the |atter sha|| be |n wr|t|ng, otherw|se, the
sa|e sha|| be vo|d. (n)

When sale of a plece of land or any lnLeresL Lhereln ls Lhrough
an agenL, Lhe auLhorlLy of Lhe laLLer shall be ln wrlLlng (speclal
power of aLLorney), otbetwlse, tbe sole sboll be volJ,
1
even
when:
o AgenL ls Lhe son of Lhe owner. An oral sale enLered lnLo
by Lhe son for Lhe real properLy of hls faLher ls vold.
HV$%&1 7$X$1 () */2 343 6*7/ 53D 94:::;
o 1here ls parLlal paymenL of Lhe prlce recelved by Lhe
supposed agenL. HV>J&= () */2 3:5 6*7/ 4BC 9DEE3;)
D

o ln Lhe case of a corporaLe owner of realLy. Llkewlse, Lhe
agenL of a corporaLlon musL have a wrlLLen auLhorlLy Lo
sell a plece of land, oLherwlse, lL wlll be vold. 8ecelpL of
parL of Lhe purchase prlce by Lhe agenL wlll noL valldaLe
Lhe sale. H*>-XUY>-$ 7$"%-X *&,0) () */2 3DB 6*7/ 38B
9DEEE;)
3

Powever, Lhe agenL's wrlLLen auLhorlLy alone wlll noL exempL
Lhe sale from Lhe SLaLuLe of lrauds. 1he ueed of Sale lLself musL
be ln wrlLlng and reglsLered ln order Lo be enforceable and
blndlng Lo 3rd persons. W&,R+"-&, () A$,="#$2 CB: 6*7/ C3:
9DEEB;
When ConLracL Lo Sell was slgned by Lhe co-owners Lhemselves
as wlLnesses, Lhe wrlLLen auLhorlLy for Lhelr agenL mandaLed

1
Alcoototo v. NlJo, 618 SC8A 333 (2010), compet keolty cotp. v. lojo-keyes,
632 SC8A 400 (2010).
2
lltme v. 8okol otetptlses ooJ uev. cotp., 414 SC8A 190 (2003).
3
lloeJo v. cA, 376 SC8A 222 (2002).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
under ArLlcle 1874 of Lhe Clvll Code ls no longer requlred.
HL$1O$, () ?",">1& V$() *&,0)2 B4C 6*7/ DD82 D3K 9DEEK;)

4. Sa|e Cf Large Catt|e (Art|c|e 1S81, Sect|on S29, kev|sed
Adm|n|strat|ve Code)

Art|c|e 1S81.
1he form of sa|e of |arge catt|e sha|| be governed by spec|a| |aws. (n)

kLVISLD ADMINIS1kA1IVL CCDL
Sect|on S29. keg|strat|on necessary to va||d|ty of transfer.
No transfer of |arge catt|e sha|| be va||d un|ess the same |s reg|stered
and a cert|f|cate of transfer obta|ned as here|n prov|ded, but |arge
catt|e under two years of age may be reg|stered and branded grat|s for
the purpose of effect|ng a va||d transfer, |f the reg|strat|on and
transfer are made at the same t|me.

S. Sa|es Lffected as L|ectron|c Commerce (k.A. No. 8792)
1he maln polnL of Lhls enLlre secLlon ln Lhe book ls Lhls:
elecLronlc documenLs are glven Lhe same legal recognlLlon as
paper documenLs. 1hus, Lhey are admlsslble as evldence ln
courL.
ln assesslng Lhe evldenLlal welghL of an elecLronlc daLa message
or elecLronlc documenL, Lhe rellablllLy of Lhe manner ln whlch lL
was generaLed, sLored or communlcaLed, Lhe rellablllLy of Lhe
manner ln whlch lLs orlglnaLor was ldenLlfled ls glven regard.

6. Iorm |n Lqu|tab|e Mortgage C|a|ms
1he SLaLuLe of lrauds does noL sLand ln Lhe way of LreaLlng an
absoluLe deed of sale as a morLgage, when such was Lhe
lnLenLlon of Lhe parLles. *+X+N"= () 6"=-&12 3C ?F>%) 4EE 94:45;
A conLracL should be consLrued as a morLgage or a loan lnsLead
of a pocto Je tetto sale when lLs Lerms are amblguous or Lhe
clrcumsLances surroundlng lLs execuLlon or lLs performance are
lncompaLlble wlLh a sale. arol evldence becomes admlsslble Lo
prove LhaL Lhe lnsLrumenL was lnLended Lo be a securlLy for a
loan. Y"0"- () 7&1",>&2 34D 6*7/ B3: 94:::;
An equlLable morLgage ls noL dlfferenL from a real esLaLe
morLgage, and Lhe llen creaLed Lhereby oughL noL Lo be
defeaLed by requlrlng compllance wlLh Lhe formallLles necessary
Lo Lhe valldlLy of a volunLary real esLaLe morLgage. 7&1"%$1 ()
6+#"2 CE8 6*7/ 55C 9DEE3;

7. Iorm |n "Sa|es on keturn or Approva|" (Art|c|e 1S02)

Art|c|e 1S02.
When goods are de||vered to the buyer "on sa|e or return" to g|ve the
buyer an opt|on to return the goods |nstead of pay|ng the pr|ce, the
ownersh|p passes to the buyer on de||very, but he may revest the
ownersh|p |n the se||er by return|ng or tender|ng the goods w|th|n the
t|me f|xed |n the contract, or, |f no t|me has been f|xed, w|th|n a
reasonab|e t|me. (n)

When goods are de||vered to the buyer on approva| or on tr|a| or on
sat|sfact|on, or other s|m||ar terms, the ownersh|p there|n passes to
the buyer:

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
(1) When he s|gn|f|es h|s approva| or acceptance to the se||er or does
any other act adopt|ng the transact|on,

(2) If he does not s|gn|fy h|s approva| or acceptance to the se||er, but
reta|ns the goods w|thout g|v|ng not|ce of re[ect|on, then |f a t|me has
been f|xed for the return of the goods, on the exp|rat|on of such t|me,
and, |f no t|me has been f|xed, on the exp|rat|on of a reasonab|e t|me.
What |s a reasonab|e t|me |s a quest|on of fact. (n)

1he CourL has held LhaL Lhe condlLlons ln ArLlcle 1302 wlll only
apply lf Lhere ls an express sLlpulaLlon LhaL Lhe sale ls elLher a
sale on reLurn" or a sale on approval." S=P+1-,>"% W$H->%$
<"=+."R-+,>=N *&O0"=X &. -F$ ?F>%)2 S=R) () b=-$,0,>1$12 S=R)2
D4K 6*7/ 3DD 94::3;
arol evldence wlll noL be admlLLed Lo prove LhaL a sale was a
sale on reLurn" or sale on approval."
1he buyer cannoL accepL parL of Lhe goods and re[ecL Lhe resL.

8. k|ght of I|rst kefusa| Must 8e Conta|ned |n Wr|tten Contract
verbal granLs of such rlghL are noL enforceable. ln effecL, Lhls ls
an addlLlon Lo Lhe SLaLuLe of lrauds. 6$= ?& bG <",G$->=N *&,0)
() <",->=$J2 3DB 6*7/ D4E 9DEEE;

V. S|mu|ated Sa|es
SlmulaLlon" ! declaraLlon of a flcLlLlous wlll, made by
agreemenL of Lhe parLles, ln order Lo produce, for Lhe purposes
of decepLlon, Lhe appearance of a [urldlcal acL whlch does noL
exlsL or ls dlfferenL from whaL was really execuLed. Y&X&%" ()
*&+,- &. /00$"%12 3D5 6*7/ D8B 9DEEE;
o When a sale ls absoluLely slmulaLed, lL ls always
compleLely vold and non-exlsLenL.
o When a sale ls relaLlvely slmulaLed, Lhere ls anoLher
lnLenL. As such, lL ls valld and sub[ecL Lo reformaLlon.
lf Lhe parLles enLer lnLo a sale Lo whlch Lhey dld noL lnLend Lo be
legally bound, Lhe conLracL ls vold and noL suscepLlble Lo
raLlflcaLlon. 7&1",>& () *&+,- &. /00$"%12 34E 6*7/ C5C 94:::;
o ln slmulaLed conLracLs, Lhe parLles do noL lnLend Lo be
bound by Lhe conLracL and Lhe apparenL conLracL ls noL
really deslred or lnLended Lo produce legal effecL.
CharacLerlsLlc of slmulaLlon ls LhaL Lhe apparenL conLracL ls noL
really deslred or lnLended Lo produce legal effecL or ln any way
alLer Lhe parLles' [urldlcal slLuaLlon, or LhaL Lhe parLles have no
lnLenLlon Lo be bound by Lhe conLracL. 1he requlslLes are: (a) an
ouLward declaraLlon of wlll dlfferenL from Lhe wlll of Lhe parLles,
(b) false appearance musL have been lnLended by muLual
agreemenL, and (c) purpose ls Lo decelve Lhlrd persons) H<"=>%"
A"=G>=N *&,0) () 6>%($,>&2 C55 6*7/ C38 9DEEB;)
4


A. kequ|s|tes Cf S|mu|ated Sa|es
1. An ouLward declaraLlon of wlll dlfferenL from Lhe wlll of Lhe
parLles,
2. lalse appearance musL have been lnLended by muLual
agreemenL, and
3. urpose ls Lo decelve Lhlrd persons. <"=>%" A"=G>=N *&,0) ()
6>%($,>& (466 SCkA 438)


1
kosotlo v. cA, 310 SC8A 464 (1999), loyolo v. cA, 326 SC8A 283 (2000), o 8oo
Cooo v. Ooq, 367 SC8A 339 (2001), loyooqoyooq v. cA, 430 SC8A 210 (2004).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
8. 8adges And Non-badges Cf S|mu|at|on
non-paymenL of Lhe sLlpulaLed conslderaLlon, absence of any
aLLempL by Lhe buyers Lo asserL Lhelr alleged rlghLs over Lhe
sub[ecL properLy) HM>%%".%&, () */2 D8E 6*7/ D:K 94::K;)
4

lallure of alleged buyers Lo collecL renLals from alleged seller.
H6"=->"N& () */2 DK8 6*7/ :8 94::K;\ buL noL when Lhere
appears a leglLlmaLe lessor-lessee relaLlonshlp beLween Lhe
vendee and Lhe vendor. HQ=>&= A"=G () L=N2 C:4 6*7/ B84
9DEE5;)
AlLhough Lhe agreemenL dld noL provlde for Lhe absoluLe
Lransfer ownershlp of Lhe land Lo buyer, LhaL dld noL amounL Lo
slmulaLlon, slnce dellvery of cerLlflcaLe of ownershlp and
execuLlon of deed of absoluLe sale were expressly sLlpulaLed as
suspenslve condlLlons, whlch gave rlse Lo Lhe correspondlng
obllgaLlon on parL of buyer Lo pay Lhe lasL lnsLallmenLs.
HM>%%".%&, () */2 D8E 6*7/ D:K 94::K;)
When slgnaLure on a deed of sale ls a forgery. `>P$% () *&+,- &.
/00$"%12 BB: 6*7/ 485 9DEE8;.
2
8uL bare asserLlons LhaL Lhe
slgnaLure appearlng on Lhe ueeds of Sale ls noL LhaL of her
husband ls noL enough Lo allege slmulaLlon, slnce forgery ls noL
presumed, lL musL be proven by clear, poslLlve and convlnclng
evldence) H7)`) @"(",,& a *&) () M">%&R$12 354 6*7/ 43:
9DEE4;)
SlmulaLlon of conLracL and gross lnadequacy of prlce are dlsLlncL
legal concepLs, wlLh dlfferenL effecLs - Lhe concepL of a
slmulaLed sale ls lncompaLlble wlLh lnadequacy of prlce. When

1
5ollJstote Moltl-ltoJocts cotp. v. cotleozo-vlllovetJe, 339 SC8A 197 (2008).
2
kofloe v. 8otqos, 377 SC8A 264, 272-273 (2009).
Lhe parLles Lo an alleged conLracL do noL really lnLend Lo be
bound by lL, Lhe conLracL ls slmulaLed and vold. Cross
lnadequacy of prlce by lLself wlll noL resulL ln a vold conLracL,
and lL does noL even affecL Lhe valldlLy of a conLracL of sale,
unless lL slgnlfles a defecL ln Lhe consenL or LhaL Lhe parLles
acLually lnLended a donaLlon or some oLher conLracL. HA,"(&U
!+$,,$,& () A,"(&2 C5B 6*7/ DCC 9DEEB;)

C. When Mot|ve Nu|||f|es 1he Sa|e
Genera| ku|e: MoLlve does noL nulllfy a sale
o Lxcept|on: When moLlve predeLermlnes cause, lL may
be regarded as Lhe cause (e.g. when Lhere was a
mlsLake ln Lhe quallLy of land, Lhe moLlve/cause was
negaLed. And Lhus Lhe conLracL was lnexlsLenL.)
ln sale, conslderaLlon ls, as a rule, dlfferenL from Lhe moLlve of
parLles, and when Lhe prlmary moLlve ls lllegal, such as when
Lhe sale was execuLed over a land Lo lllegally frusLraLe a person's
rlghL Lo lnherlLance and Lo avold paymenL of esLaLe Lax, Lhe sale
ls vold because lllegal moLlve predeLermlned purpose of Lhe
conLracL) HL%$N",>& () */2 D38 6*7/ :5 94::C;)
3

Cause v. MoLlve
o Cause ! LssenLlal reason whlch moves parLles Lo enLer
lnLo Lhe conLracL and ls Lhe lmmedlaLe, dlrecL and
proxlmaLe reason" Lo creaLe Lhe obllgaLlon (e.g. cause
of vendor Lo sell Lhe land ls Lo obLaln Lhe prlce, and for
Lhe vendee, Lhe acqulslLlon of Lhe land.)

3
uy v. cA, 314 SC8A 69, 81 (1999).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o MoLlve ! arLlcular reason of a conLracLlng parLy whlch
does noL affecL Lhe oLher parLy (e.g. MoLlve of Lhe
vendor ls Lo use Lhe lands for houslng)
Where Lhe parLles Lo a conLracL of sale agreed Lo a
conslderaLlon, buL Lhe amounL reflecLed ln Lhe flnal ueed of Sale
was lower, Lhelr moLlvaLlon belng Lo pay lower Laxes on Lhe
LransacLlon, Lhe conLracL of sale remalns valld and enforceable
upon Lhe Lerms of Lhe real conslderaLlon. AlLhough lllegal, Lhe
moLlves nelLher deLermlne nor Lake Lhe place of Lhe
conslderaLlon) H^$>,1 &. 60&+1$1 A"%>-$ () Y>O2 CC5 6*7/ BC
9DEEC;)
An acLlon or defense for Lhe declaraLlon of Lhe lnexlsLence of a
conLracL ls lmprescrlpLlble. Cn Lhe oLher hand, an acLlon Lo
resclnd ls founded upon and presupposes Lhe exlsLence of a
conLracL. A conLracL whlch ls null and vold ls no conLracL aL all
and hence could noL be Lhe sub[ecL of resclsslon. H*"O0&1 ()
?"1-,"="2 5E8 6*7/ BB 9DEE:;)

D. kemed|es A||owed When Sa|e S|mu|ated
When a conLracL of sale ls vold, Lhe rlghL Lo seL up lLs nulllLy or
non-exlsLence ls avallable Lo Lhlrd persons whose lnLeresLs are
dlrecLly affecLed Lhereby. Llkewlse, Lhe remedy of occloo
poollooo ls avallable when Lhe sub[ecL maLLer ls a conveyance,
oLherwlse valld, underLaken ln fraud of credlLors. H<"=>%"
A"=G>=N *&,0) () 6>%($,>&2 C55 6*7/ C38 9DEEB;)
1he resclssory acLlon Lo seL aslde conLracLs ln fraud of credlLors
ls occloo poollooo, essenLlally a subsldlary remedy accorded
under ArLlcle 1383 whlch Lhe parLy sufferlng damage can avall
of only when he has no oLher legal means Lo obLaln reparaLlon
for Lhe same. ln such acLlon, lL musL be shown LhaL boLh
conLracLlng parLles have acLed mallclously so as Lo pre[udlce Lhe
credlLors who were prevenLed from collecLlng Lhelr clalms.
8esclsslon lf generally unavalllng should a Lhlrd person, acLlng ln
good falLh, ls ln lawful possesslon of Lhe properLy slnce he ls
proLecL by law agalnsL a sulL for resclsslon by Lhe reglsLraLlon of
Lhe Lransfer Lo hlm ln Lhe reglsLry. HQ=>&= A"=G () L=N2 C:4
6*7/ B84 9DEE5;

L. Lffect When Sa|e Dec|ared Vo|d
1he acLlon for Lhe declaraLlon of Lhe conLracL's nulllLy ls
lmprescrlpLlble-an acLlon for reconveyance of properLy on a
vold conLracL of sale does noL prescrlbe. `>%Ub1-"-$ !&%. "=P
V$()2 S=R) () @"(",,&2 BD5 6*7/ B4 9DEEK;)
ossessor ls enLlLled Lo keep Lhe frulLs durlng Lhe perlod for
whlch Lhe buyer held Lhe properLy ln good falLh. HVA? () */2
345 6*7/ 5BE 94:::;)
1hen resLoraLlon of whaL has been glven ls ln order, slnce Lhe
relaLlonshlp beLween parLles ln any conLracL even lf
subsequenLly volded musL always be characLerlzed and
puncLuaLed by good falLh and falr deallng. HV$ %&1 7$X$1 () */2
343 6*7/ 53D 94:::;\ H^$>,1 &. SN="R>" /N+>%",U7$X$1 ()
<>[",$12 C4E 6*7/ :K 9DEE3;)
Allen who purchases land ln Lhe name of hls llllplna lover, has
no sLandlng Lo seek legal remedles Lo elLher recover Lhe
properLy or Lhe purchase prlce pald, slnce Lhe LransacLlon ls vold
ob loltlo for belng ln vlolaLlon of Lhe consLlLuLlonal prohlblLlon.
H`,$=J$% () *"->-&2 CE5 6*7/ BB 9DEE3;)