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, 1975.1âwphi1.nêt