Lu vs. IAC G.R.70149, Jan. 30, 1989

University of Mindanao - College of Legal Education
SALES
Case Name Lu vs. IAC G.R.70149 , Jan. 30, 1989
Docket Number | G.R. No. 70149 January 30, 1989

Date
Ponente PARAS, J.
Petitioners EUSEBIO C. LU
Respondents THE INTERMEDIATE APPELLATE COURT, HEIRS OF SANTIAGO

BUSTOS and JOSEFINA ALBERTO
Case summary  The owner Alberto leased his property to Lu.

(Maximum of 5  There was a prior lessee on the disputed property named Bustos
sentences)  Then came another lessee named Lu who was contracted by
Alberto; thereafter, the lease contract of Bustos to Alberto expired
without being ejected
 The lessor Alberto gave preferential right to Lu which the RTC ruled
in favor of Lu but subsequently reversed by CA.
Doctrine Article 1475. The contract of sale is perfected at the moment there is a

meeting of minds upon the thing which is the object of the contract and
upon the price.
From that moment, the parties may reciprocally demand performance,

subject to the provisions of the law governing the form of contracts.
(1450a)
Trigger No sale between BUSTOS and ALBERTO could

words/Phrase
have been perfected since the condition
precedent and accepted by BUSTOS for the sale of
the property failed to materialize.
The alleged sale in favor of Bustos as evidenced

by the written note and receipt were executed
very much later than the Contract Lease
Agreement in favor of Lu.
Relevant Facts
 Defendant Josefina Alberto was the owner of a parcel of land

containing an area of 1,760 square meters situated at Barrio
Carmen, Resales, Pangasinan, as evidenced by TCT No.
45787 (13622-P) of the land records of Pangasinan.
 In the version of the plaintiff, the whole lot covered by TCT

No. 74567 was leased some twenty five (25) years ago to
several tenants, each covering a definite portion of said lot,
among whom is the plaintiff (SANTIAGO BUSTOS) who has
been occupying that disputed portion of 102 square meters.
 On February 3, 1967, defendant Alberto leased the entire

1,760 square meters to her co-defendant Lu by virtue of a
'Contract of Lease Agreement'
 The lease agreement contains the following salient

provisions; “the lease was to extend for a period of 25
years commencing on February 2, (Exhibit 'l, Lu'); the
annual rental was fixed at P12,000.00 the rental for
the first year having been advanced by the lessee all
buildings and/or improvements introduced by the
lessee shall automatically belong to the lessor without
the obligation of reimbursing the amounts spent for
said building or improvement
 The period of one year mentioned in par. 5 of the Contract

of Lease Agreement (Exhibit 'l-Lu) expired without the
tenants on the leased property being ejected because they
refused to vacate the respective portions of the property
occupied by them.
 On July 12, 1967, Alberto granted to Lu 'the sole disposition
in matters relating to tenants of the apartment to be
constructed as well as the authority to collect rentals
thereon
 On June 8, 1968, Alberto wrote plaintiff Bustos the following

note:
" Mr. Santiago Bustos,
Kailangan ko ang tulong mo pahiramin mo ako ng

P2,000 dos mil pesos, aawasin sa bayad ng lote na
binibili mo sa akin dian sa Carmen.”
 Believing that the obligation to eject the tenants within one

(1) year, which had already expired, was transferred to Lu
by virtue of the certification dated July 12, 1967 (Exhibit '1-
Pabalan'), Alberto filed an action for Rescission of Contract
and Damages against Lu on August 16, 1968,
 On September 3, 1968, defendant Lu executed an adverse

claim
 In said compromise agreement, the defendant Lu agreed to

sell, and the plaintiff Bustos agreed to buy portions of the
property subject of the litigation
 A day before the submission in court of said Compromise

Agreement, Alberto, for a consideration of P125,000.00,
executed in favor of Lu a 'Deed of Absolute Sale' (Exhibit '8-
Lu') covering the properties described in the aforementioned
titles in favor of Lu
 The sale in favor of Lu was registered with the Office of the
Register of Deeds on February 2, 1972,
 On August 6, 1973, Santiago Bustos filed a complaint seeking

to annul the Deed of Sale in favor of Lu executed by Alberto
and to compel her to execute a Deed of Sale in plaintiffs
(Bustos) favor over that portion of the questioned parcel of
land consisting of 102 square meters covered by TCT No.
74567, upon payment of the balance in the amount of Eight
Thousand (P8,000.00) Pesos by Bustos to Alberto.
 The trial court rendered a decision confirming the ownership of

defendant Lu over the property identified as Lot No. 6 of the
Consolidated Subdivision Plan
 Assailing the decision of the lower court, plaintiff Santiago

Bustos appealed to the Intermediate Appellate Court which
rendered a decision directing the Register of Deeds of
Pangasinan to cancel any and all titles in the names of the
defendants over the property in question, and issue a new one
in lieu thereof in the name of Santiago Bustos upon
presentation of proof of payment by him to the Albertos of the
aforesaid amount of P8,000.00. The sale of the disputed
property in favor of Eusebio C. Lu is hereby declared null and
void.
Ratio Decidendi
Whether or not Respondent BUSTOS was not able to

there is a show how petitioner LU lost his
perfection of the
contract of sale priority right in favor of respondent.
between Alberto
and Bustos No sale between BUSTOS and
ALBERTO could have been perfected
ANS. NO since the condition precedent and
accepted by BUSTOS for the sale of
the property failed to materialize.
ALBERTO's consent to sell was

predicated on the rescission of LUs
right to buy.
In other words, when the compromise

agreement between LU and ALBERTO
was submitted to the court in Civil
Case No. 74305, and approved by it
and when correspondingly, the sale to
LU was executed by ALBERTO
pursuant to the compromise, there
was no legal impediment present to
block the validity of its execution.
The alleged sale in favor of Bustos as

evidenced by the written note and
receipt were executed very much later
than the Contract Lease Agreement in
favor of Lu.
Having given the priority right to

purchase the disputed lot to Lu in
1967 in a duly notarized document, it
would appear unnatural for Alberto to
sell the same property to Bustos one
year later while the preferential right
to Lu to purchase still exist.
Hence, no perfection takes place
Ruling
WHEREFORE, finding merit in the appeal of petitioner, the
assailed decision is hereby REVERSED and the decision of the
then Court of First Instance of Pangasinan in Civil Case No. 144-
R, dated December 23, 1974 is hereby REINSTATED.
Separate Opinions
Notes

Lu vs. IAC G.R.70149, Jan. 30, 1989

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University of Mindanao - College of Legal Education

Case Name Lu vs. IAC G.R.70149 , Jan. 30, 1989

Docket Number | G.R. No. 70149 January 30, 1989

Respondents THE INTERMEDIATE APPELLATE COURT, HEIRS OF SANTIAGO

Case summary  The owner Alberto leased his property to Lu.

Doctrine Article 1475. The contract of sale is perfected at the moment there is a

From that moment, the parties may reciprocally demand performance,

Trigger No sale between BUSTOS and ALBERTO could

The alleged sale in favor of Bustos as evidenced

 Defendant Josefina Alberto was the owner of a parcel of land

 In the version of the plaintiff, the whole lot covered by TCT

 On February 3, 1967, defendant Alberto leased the entire

 The lease agreement contains the following salient

 The period of one year mentioned in par. 5 of the Contract

 On June 8, 1968, Alberto wrote plaintiff Bustos the following

" Mr. Santiago Bustos,

Kailangan ko ang tulong mo pahiramin mo ako ng

 Believing that the obligation to eject the tenants within one

 On September 3, 1968, defendant Lu executed an adverse

 In said compromise agreement, the defendant Lu agreed to

 A day before the submission in court of said Compromise

 On August 6, 1973, Santiago Bustos filed a complaint seeking

 The trial court rendered a decision confirming the ownership of

 Assailing the decision of the lower court, plaintiff Santiago

Whether or not Respondent BUSTOS was not able to

ALBERTO's consent to sell was

In other words, when the compromise

The alleged sale in favor of Bustos as

Having given the priority right to

Hence, no perfection takes place

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