REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D.

BLAZA, ESTER ABAD

DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON, and
JOSE A. DIZON, JR., petitioners,
vs.
COURT OF APPEALS and OVERLAND EXPRESS LINES, INC., respondents.
FACTS: Private respondent Overland Express Lines, Inc entered into a Contract of Lease
with Option to Buy with petitioners. Private respondent paid P300,000.00 to Alice A. Dizon as
partial payment for the leased property. Thereafter, the lease shall be on a per month basis
with a monthly rental of P3,000.00. For failure of private respondent to pay the increased
rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment.
Trial court ruled against private respondent. Private respondent filed a petition for Certiorari
for lack of jurisdiction.
On review, the Court dismissed the petition in a resolution and likewise denied private
respondent's subsequent motion for reconsideration.
Private respondent filed before the RTC an action for Specific Performance and Fixing of
Period for Obligation with prayer for the issuance of a restraining order pending hearing on
the prayer for a writ of preliminary injunction. (Barred by Res Judicata, writ of preliminary
injunction dissolved). Subsequently, private respondent filed before the RTC a complaint
for Annulment of and Relief from Judgment with injunction and damages. The motion for
reconsideration of said decision was likewise denied.
On appeal, respondent Court of Appeals rendered a decision upholding the jurisdiction of the
City Court of Quezon City in the ejectment case. It also concluded that there was a perfected
contract of sale between the parties on the leased premises and that pursuant to the option
to buy agreement, private respondent had acquired the rights of a vendee in a contract of
sale. Moreover, CA ruled that private respondent can assume that Alice A. Dizon, acting as
agent of petitioners, was authorized by them to receive the money in their behalf. The Court
of Appeals went further by stating that in fact, what was entered into was a "conditional
contract of sale" wherein ownership over the leased property shall not pass to the private
respondent until it has fully paid the purchase price. Hence, CA tasked the Private
respondents to pay the remaining balance.
ISSUE: Whether there is a perfected contract of sale on the premise that Alice Dizon, acting
as an alleged agent received the payment from the private respondents
RULING: NO. There was no perfected contract of sale between petitioners and private
respondent. Under Article 1475 of the New Civil Code, "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." Thus, the elements of a
contract of sale are consent, object, and price in money or its equivalent. It bears stressing
that the absence of any of these essential elements negates the existence of a perfected
contract of sale. Sale is a consensual contract and he who alleges it must show its existence
by competent proof.
In an attempt to resurrect the lapsed option, private respondent gave P300,000.00 to
petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount
tendered would constitute a perfected contract of sale pursuant to the contract of lease with
option to buy. There was no valid consent by the petitioners (as co-owners of the leased
premises) on the supposed sale entered into by Alice A. Dizon, as petitioners' alleged agent,
and private respondent. The basis for agency is representation and a person dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the agent. As

provided in Article 1868 of the New Civil Code, there was no showing that petitioners
consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to
her transaction with private respondent. The most prudent thing private respondent should
have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in
this regard, private respondent cannot seek relief on the basis of a supposed agency.
WHEREFORE, the Court of Appeals are hereby REVERSED and SET ASIDE. Petitioners are
ordered to REFUND to private respondent the amount of P300,000.00 which they received
through Alice A. Dizon on June 20, 1975.1wphi1.nt