Sales Full Text Cases

G.R. No.
L-26872 July 25, 1975

VILLONCO REALTY COMPANY, plaintiff-appellee and EDITH PEREZ DE TAGLE, intervenorappellee,
vs.
BORMAHECO, INC., FRANCISCO N. CERVANTES and ROSARIO N. CERVANTES, defendantsappellants. Meer, Meer & Meer for plaintiff-appellee.
J. Villareal, Navarro and Associates for defendants-appellants.
P. P. Gallardo and Associates for intervenor-appellee.
AQUINO, J.:
This action was instituted by Villonco Realty Company against Bormaheco, Inc. and the spouses
Francisco N. Cervantes and Rosario N. Cervantes for the specific performance of a supposed
contract for the sale of land and the improvements thereon for one million four hundred thousand
pesos. Edith Perez de Tagle, as agent, intervened in order to recover her commission. The lower
court enforced the sale. Bormaheco, Inc. and the Cervantes spouses, as supposed vendors,
appealed.
This Court took cognizance of the appeal because the amount involved is more than P200,000 and
the appeal was perfected before Republic Act No. 5440 took effect on September 9, 1968. The facts
are as follows:
Francisco N. Cervantes and his wife, Rosario P. Navarra-Cervantes, are the owners of lots 3, 15 and
16 located at 245 Buendia Avenue, Makati, Rizal with a total area of three thousand five hundred
square meters (TCT Nos. 43530, 43531 and 43532, Exh. A, A-1 and A-2). The lots were mortgaged
to the Development Bank of the Phil (DBP) on April 21, 1959 as security for a loan of P441,000. The
mortgage debt was fully paid on July 10, 1969.
Cervantes is the president of Bormaheco, Inc., a dealer and importer of industrial and agricultural
machinery. The entire lots are occupied by the building, machinery and equipment of Bormaheco,
Inc. and are adjacent to the property of Villonco Realty Company situated at 219 Buendia Avenue.
In the early part of February, 1964 there were negotiations for the sale of the said lots and the
improvements thereon between Romeo Villonco of Villonco Realty Company "and Bormaheco, Inc.,
represented by its president, Francisco N. Cervantes, through the intervention of Edith Perez de
Tagle, a real estate broker".
In the course of the negotiations, the brothers Romeo Villonco and Teofilo Villonco conferred with
Cervantes in his office to discuss the price and terms of the sale. Later, Cervantes "went to see
Villonco for the same reason until some agreement" was arrived at. On a subsequent occasion,
SALES FULLTEXT. KAA Page | 1
Cervantes, accompanied by Edith Perez de Tagle, discussed again the terms of the sale with
Villonco.
During the negotiations, Villonco Realty Company assumed that the lots belonged to Bormaheco,
Inc. and that Cervantes was duly authorized to sell the same. Cervantes did not disclose to the
broker and to Villonco Realty Company that the lots were conjugal properties of himself and his wife
and that they were mortgaged to the DBP.
Bormaheco, Inc., through Cervantes, made a written offer dated February 12, 1964, to Romeo
Villonco for the sale of the property. The offer reads (Exh. B):
BORMAHECO, INC.
February 12,1964
Mr. Romeo
Villonco Villonco Building
Buendia Avenue
Makati, Rizal.
Dear Mr. Villonco:
This is with reference to our telephone conversation this noon on the matter of the
sale of our propertylocated at Buendia Avenue, with a total area of 3,500 sq. m.,
under the following conditions:
(1) That we are offering to sell to you the above property at the price
of P400.00 per square meter;
(2) That a deposit of P100,000.00 must be placed as earnest money
on the purchase of the above property which will become part
payment of the property in the event that the sale is consummated;
(3) That this sale is to be consummated only after I shall have also
consummated my purchase of another property located at Sta. Ana,
Manila;
(4) That if my negotiations with said property will not be
consummated by reason beyond my control, I will return to you your
deposit of P100,000 and the sale of my property to you will not also
be consummated; and
(5) That final negotiations on both properties can be definitely known
after 45 days.
If the above terms is (are) acceptable to your Board, please issue out the said
earnest money in favor of Bormaheco, Inc., and deliver the same thru the bearer,
Miss Edith Perez de Tagle.
Very truly yours,
SGD. FRANCISCO N.
CERVANTES
President
The property mentioned in Bormaheco's letter was the land of the National Shipyards & Steel
Corporation (Nassco), with an area of twenty thousand square meters, located at Punta, Sta. Ana,
Manila. At the bidding held on January 17, 1964 that land was awarded to Bormaheco, Inc., the
highest bidder, for the price of P552,000. The Nassco Board of Directors in its resolution of February
18, 1964 authorized the General Manager to sign the necessary contract (Exh. H).
On February 28, 1964, the Nassco Acting General Manager wrote a letter to the Economic
Coordinator, requesting approval of that resolution. The Acting Economic Coordinator approved the
resolution on March 24, 1964 (Exh. 1).
In the meanwhile, Bormaheco, Inc. and Villonco Realty Company continued their negotiations for the
sale of the Buendia Avenue property. Cervantes and Teofilo Villonco had a final conference on
February 27, 1964. As a result of that conference Villonco Realty Company, through Teofilo Villonco,
in its letter of March 4, 1964 made a revised counter- offer (Romeo Villonco's first counter-offer was
dated February 24, 1964, Exh. C) for the purchase of the property. The counter-offer was accepted
by Cervantes as shown in Exhibit D, which is quoted below:
VILLONCO REALTY COMPANY
V. R. C. Building
219 Buendia Avenue, Makati,
Rizal, Philippines
March 4, 1964
Mr. Francisco Cervantes.
Bormaheco, Inc.
245 Buendia Avenue
Makati, Rizal
Dear Mr. Cervantes:
In reference to the letter of Miss E. Perez de Tagle dated February 12th and 26, 1964
in respect to the terms and conditions on the purchase of your property located at
Buendia Ave., Makati, Rizal, with a total area of 3,500 sq. meters., we hereby revise
our offer, as follows:
1. That the price of the property shall be P400.00 per sq. m., including the
improvements thereon;
2. That a deposit of P100,000.00 shall be given to you as earnest money which will
become as part payment in the event the sale is consummated;
3. This sale shall be cancelled, only if your deal with another property in Sta. Ana
shall not be consummated and in such case, the P100,000-00 earnest money will be
returned to us with a 10% interest p.a. However, if our deal with you is finalized, said
P100,000.00 will become as part payment for the purchase of your property without
interest:
4. The manner of payment shall be as follows:
a. P100,000.00 earnest money and
650,000.00 as part of the down payment, or
P750,000.00 as total down payment
b. The balance is payable as follows:
P100,000.00 after 3 months
125,000.00 -do212,500.00 -doP650,000.00 Total
As regards to the other conditions which we have discussed during our last
conference on February 27, 1964, the same shall be finalized upon preparation of
the contract to sell.*
If the above terms and conditions are acceptable to you, kindly sign your conformity
hereunder. Enclosed is our check for ONE HUNDRED THOUSAND (P100,000.00)
PESOS, MBTC Check No. 448314, as earnest money.
Very truly yours,
VILLONCO REALTY
COMPANY
(Sgd.) TEOFILO
VILLONCO
CONFORME:
BORMAHECO, INC.
(Sgd.) FRANCISCO CERVANTES
That this sale shall be subject to favorable consummation of a property in Sta. Ana
we are negotiating.
(Sgd.) FRANCISCO CERVANTES

The check for P100,000 (Exh. E) mentioned in the foregoing letter-contract was delivered by Edith
Perez de Tagle to Bormaheco, Inc. on March 4, 1964 and was received by Cervantes. In the
voucher-receipt evidencing the delivery the broker indicated in her handwriting that the earnest
money was "subject to the terms and conditions embodied in Bormaheco's letter" of February 12 and
Villonco Realty Company's letter of March 4, 1964 (Exh. E-1; 14 tsn).
Then, unexpectedly, in a letter dated March 30, 1964, or twenty-six days after the signing of the
contract of sale, Exhibit D, Cervantes returned the earnest money, with interest amounting to
P694.24 (at ten percent per annum). Cervantes cited as an excuse the circumstance that "despite
the lapse of 45 days from February 12, 1964 there is no certainty yet" for the acquisition of the Punta
property (Exh. F; F-I and F-2). Villonco Realty Company refused to accept the letter and the checks
of Bormaheco, Inc. Cervantes sent them by registered mail. When he rescinded the contract, he was
already aware that the Punta lot had been awarded to Bormaheco, Inc. (25-26 tsn).
Edith Perez de Tagle, the broker, in a letter to Cervantes dated March 31, 1964 articulated her shock
and surprise at Bormaheco's turnabout. She reviewed the history of the deal and explained why
Romeo Villonco could not agree to the rescission of the sale (Exh. G).**
Cervantes in his letter of April 6, 1964, a reply to Miss Tagle's letter, alleged that the forty-five day
period had already expired and the sale to Bormaheco, Inc. of the Punta property had not been
consummated. Cervantes said that his letter was a "manifestation that we are no longer interested to
sell" the Buendia Avenue property to Villonco Realty Company (Annex I of Stipulation of Facts). The
latter was furnished with a copy of that letter.
In a letter dated April 7, 1964 Villonco Realty Company returned the two checks to Bormaheco, Inc.,
stating that the condition for the cancellation of the contract had not arisen and at the same time
announcing that an action for breach of contract would be filed against Bormaheco, Inc. (Annex G of
Stipulation of Facts).
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On that same date, April 7, 1964 Villonco Realty Company filed the complaint (dated April 6) for
specific performance against Bormaheco, Inc. Also on that same date, April 7, at eight-forty-five in
the morning, a notice oflis pendens was annotated on the titles of the said lots.
Bormaheco, Inc. in its answers dated May 5 and 25, 1964 pleaded the defense that the perfection of
the contract of sale was subject to the conditions (a) "that final acceptance or not shall be made after
45 days" (sic) and (b) that Bormaheco, Inc. "acquires the Sta. Ana property".
On June 2, 1964 or during the pendency of this case, the Nassco Acting General Manager wrote to
Bormaheco, Inc., advising it that the Board of Directors and the Economic Coordinator had approved
the sale of the Punta lot to Bormaheco, Inc. and requesting the latter to send its duly authorized
representative to the Nassco for the signing of the deed of sale (Exh. 1).
The deed of sale for the Punta land was executed on June 26, 1964. Bormaheco, Inc. was
represented by Cervantes (Exh. J. See Bormaheco, Inc. vs. Abanes, L-28087, July 31, 1973, 52
SCRA 73).
In view of the disclosure in Bormaheco's amended answer that the three lots were registered in the
names of the Cervantes spouses and not in the name of Bormaheco, Inc., Villonco Realty Company
on July 21, 1964 filed an amended complaint impleading the said spouses as defendants.
Bormaheco, Inc. and the Cervantes spouses filed separate answers.
As of January 15, 1965 Villonco Realty Company had paid to the Manufacturers' Bank & Trust
Company the sum of P8,712.25 as interests on the overdraft line of P100,000 and the sum of
P27.39 as interests daily on the same loan since January 16, 1965. (That overdraft line was later
settled by Villonco Realty Company on a date not mentioned in its manifestation of February 19,
1975).
Villonco Realty Company had obligated itself to pay the sum of P20,000 as attorney's fees to its
lawyers. It claimed that it was damaged in the sum of P10,000 a month from March 24, 1964 when
the award of the Punta lot to Bormaheco, Inc. was approved. On the other hand, Bormaheco, Inc.
claimed that it had sustained damages of P200,000 annually due to the notice of lis pendens which
had prevented it from constructing a multi-story building on the three lots. (Pars. 18 and 19,
Stipulation of Facts).
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Miss Tagle testified that for her services Bormaheco, Inc., through Cervantes, obligated itself to pay
her a three percent commission on the price of P1,400,000 or the amount of forty-two thousand
pesos (14 tsn).
After trial, the lower court rendered a decision ordering the Cervantes spouses to execute in favor of
Bormaheco, Inc. a deed of conveyance for the three lots in question and directing Bormaheco, Inc.
(a) to convey the same lots to Villonco Realty Company, (b) to pay the latter, as consequential
damages, the sum of P10,000 monthly from March 24, 1964 up to the consummation of the sale, (c)
to pay Edith Perez de Tagle the sum of P42,000 as broker's commission and (d) pay P20,000 as to
attorney's fees (Civil Case No. 8109).
Bormaheco, Inc. and the Cervantes spouses appealed. Their principal contentions are (a) that no
contract of sale was perfected because Cervantes made a supposedly qualified acceptance of the
revised offer contained in Exhibit D, which acceptance amounted to a counter-offer, and because the
condition that Bormaheco, inc. would acquire the Punta land within the forty-five-day period was not
fulfilled; (2) that Bormaheco, Inc. cannot be compelled to sell the land which belongs to the
Cervantes spouses and (3) that Francisco N. Cervantes did not bind the conjugal partnership and
his wife when, as president of Bormaheco, Inc., he entered into negotiations with Villonco Realty
Company regarding the said land.
We hold that the appeal, except as to the issue of damages, is devoid of merit.
"By the contract of sale one of the contracting parties obligates himself to transfer the ownership of
and to deliver a determining thing, and the other to pay therefor a price certain in money or its
equivalent. A contract of sale may be absolute or conditional" (Art. 1458, 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" (Art.
1475, Ibid.).
"Contracts are perfected by mere consent, and from that moment the parties are bound not only to
the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law" (Art. 1315, Civil Code).
"Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer" (Art. 1319, Civil Code). "An acceptance may be
express or implied" (Art. 1320, Civil Code).
Bormaheco's acceptance of Villonco Realty Company's offer to purchase the Buendia Avenue
property, as shown in Teofilo Villonco's letter dated March 4, 1964 (Exh. D), indubitably proves that
there was a meeting of minds upon the subject matter and consideration of the sale. Therefore, on
that date the sale was perfected. (Compare with McCullough vs. Aenlle & Co., 3 Phil. 285; Goyena
vs. Tambunting, 1 Phil. 490). Not only that Bormaheco's acceptance of the part payment of one
hundred ,thousand pesos shows that the sale was conditionally consummated or partly executed
subject to the purchase by Bormaheco, Inc. of the Punta property. The nonconsummation of that
purchase would be a negative resolutory condition (Taylor vs. Uy Tieng Piao, 43 Phil. 873).
On February 18, 1964 Bormaheco's bid for the Punta property was already accepted by the Nassco
which had authorized its General Manager to sign the corresponding deed of sale. What was
necessary only was the approval of the sale by the Economic Coordinator and a request for that
approval was already pending in the office of that functionary on March 4, 1964.
Bormaheco, Inc. and the Cervantes spouses contend that the sale was not perfected because
Cervantes allegedly qualified his acceptance of Villonco's revised offer and, therefore, his
acceptance amounted to a counter-offer which Villonco Realty Company should accept but no such
acceptance was ever transmitted to Bormaheco, Inc. which, therefore, could withdraw its offer.
That contention is not well-taken. It should be stressed that there is no evidence as to what changes
were made by Cervantes in Villonco's revised offer. And there is no evidence that Villonco Realty
Company did not assent to the supposed changes and that such assent was never made known to
Cervantes.
What the record reveals is that the broker, Miss Tagle, acted as intermediary between the parties. It
is safe to assume that the alleged changes or qualifications made by Cervantes were approved by
Villonco Realty Company and that such approval was duly communicated to Cervantes or
Bormaheco, Inc. by the broker as shown by the fact that Villonco Realty Company paid, and
Bormaheco, Inc. accepted, the sum of P100,000 as earnest money or down payment. That crucial
fact implies that Cervantes was aware that Villonco Realty Company had accepted the modifications
which he had made in Villonco's counter-offer. Had Villonco Realty Company not assented to those
insertions and annotations, then it would have stopped payment on its check for P100,000. The fact
that Villonco Realty Company allowed its check to be cashed by Bormaheco, Inc. signifies that the
company was in conformity with the changes made by Cervantes and that Bormaheco, Inc. was
aware of that conformity. Had those insertions not been binding, then Bormaheco, Inc. would not
have paid interest at the rate of ten percent per annum, on the earnest money of P100,000.
The truth is that the alleged changes or qualifications in the revised counter offer (Exh. D) are not
material or are mere clarifications of what the parties had previously agreed upon.
Thus, Cervantes' alleged insertion in his handwriting of the figure and the words "12th and" in
Villonco's counter-offer is the same as the statement found in the voucher-receipt for the earnest
money, which reads: "subject to the terms and conditions embodied in Bormaheco's letter of Feb. 12,
1964 and your letter of March 4, 1964" (Exh. E-1).
Cervantes allegedly crossed out the word "Nassco" in paragraph 3 of Villonco's revised counter-offer
and substituted for it the word "another" so that the original phrase, "Nassco's property in Sta. Ana",
was made to read as "another property in Sta. Ana". That change is trivial. What Cervantes did was
merely to adhere to the wording of paragraph 3 of Bormaheco's original offer (Exh. B) which
mentions "another property located at Sta. Ana." His obvious purpose was to avoid jeopardizing his
negotiation with the Nassco for the purchase of its Sta. Ana property by unduly publicizing it.
It is noteworthy that Cervantes, in his letter to the broker dated April 6, 1964 (Annex 1) or after the
Nassco property had been awarded to Bormaheco, Inc., alluded to the "Nassco property". At that
time, there was no more need of concealing from the public that Bormaheco, Inc. was interested in
the Nassco property.
Similarly, Cervantes' alleged insertion of the letters "PA" ( per annum) after the word "interest" in that
same paragraph 3 of the revised counter-offer (Exh. D) could not be categorized as a major
alteration of that counter-offer that prevented a meeting of the minds of the parties. It was
understood that the parties had contemplated a rate of ten percent per annum since ten percent a
month or semi-annually would be usurious.
Appellants Bormaheco, Inc. and Cervantes further contend that Cervantes, in clarifying in the
voucher for the earnest money of P100,000 that Bormaheco's acceptance thereof was subject to the
terms and conditions embodied in Bormaheco's letter of February 12, 1964 and your (Villonco's)
letter of March 4, 1964" made Bormaheco's acceptance "qualified and conditional".
That contention is not correct. There is no incompatibility between Bormaheco's offer of February 12,
1964 (Exh. B) and Villonco's counter-offer of March 4, 1964 (Exh. D). The revised counter-offer
merely amplified Bormaheco's original offer.
The controlling fact is that there was agreement between the parties on the subject matter, the price
and the mode of payment and that part of the price was paid. "Whenever earnest money is given in
a contract of sale, it shall be considered as part of the price and as proof of the perfection of the
contract" (Art. 1482, Civil Code).
"It is true that an acceptance may contain a request for certain changes in the terms of the offer and
yet be a binding acceptance. 'So long as it is clear that the meaning of the acceptance is positively
and unequivocally to accept the offer, whether such request is granted or not, a contract is formed.' "
(Stuart vs. Franklin Life Ins. Co., 165 Fed. 2nd 965, citing Sec. 79, Williston on Contracts).
Thus, it was held that the vendor's change in a phrase of the offer to purchase, which change does
not essentially change the terms of the offer, does not amount to a rejection of the offer and the
tender of a counter-offer (Stuart vs. Franklin Life Ins. Co., supra).
The instant case is not governed by the rulings laid down in Beaumont vs. Prieto, 41 Phil. 670, 985,
63 L. Ed. 770, and Zayco vs. Serra, 44 Phil. 326. In those two cases the acceptance radically altered
the offer and, consequently, there was no meeting of the minds of the parties.
Thus, in the Zayco case, Salvador Serra offered to sell to Lorenzo Zayco his sugar central for
P1,000,000 on condition that the price be paid in cash, or, if not paid in cash, the price would be
payable within three years provided security is given for the payment of the balance within three
years with interest. Zayco, instead of unconditionally accepting those terms, countered that he was
going to make a down payment of P100,000, that Serra's mortgage obligation to the Philippine
National Bank of P600,000 could be transferred to Zayco's account and that he (plaintiff) would give
a bond to secure the payment of the balance of the price. It was held that the acceptance was
conditional or was a counter-offer which had to be accepted by Serra. There was no such
acceptance. Serra revoked his offer. Hence, there was no perfected contract.
In the Beaumont case, Benito Valdes offered to sell to W Borck the Nagtahan Hacienda owned by
Benito Legarda, who had empowered Valdes to sell it. Borck was given three months from
December 4, 1911 to buy the hacienda for P307,000. On January 17, 1912 Borck wrote to Valdes,
offering to purchase the hacienda for P307,000 payable on May 1, 1912. No reply was made to that
letter. Borck wrote other letters modifying his proposal. Legarda refused to convey the property.
It was held that Borck's January 17th letter plainly departed from the terms of the offer as to the time
of payment and was a counter-offer which amounted to a rejection of Valdes' original offer. A
subsequent unconditional acceptance could not revive that offer.
The instant case is different from Laudico and Harden vs. Arias Rodriguez, 43 Phil. 270 where the
written offer to sell was revoked by the offer or before the offeree's acceptance came to the offeror's
knowledge.
Appellants' next contention is that the contract was not perfected because the condition that
Bormaheco, Inc. would acquire the Nassco land within forty-five days from February 12, 1964 or on
or before March 28, 1964 was not fulfilled. This contention is tied up with the following letter of
Bormaheco, Inc. (Exh. F):
BORMAHECO, INC.
March 30, 1964

Villonco Realty Company
V.R.C. Building
219 Buendia Ave.,
Makati, Rizal
Gentlemen:
We are returning herewith your earnest money together with interest thereon at 10%
per annum. Please be informed that despite the lapse of the 45 days from February
12, 1964 there is no certainty yet for us to acquire a substitute property, hence the
return of the earnest money as agreed upon.
Very truly yours,
SGD. FRANCISCO N.
CERVANTES
President
Encl.: P.N.B. Check No. 112994 J
P.N.B. Check No. 112996J
That contention is predicated on the erroneous assumption that Bormaheco, Inc. was to acquire the
Nassco land within forty-five days or on or before March 28, 1964.
The trial court ruled that the forty-five-day period was merely an estimate or a forecast of how long it
would take Bormaheco, Inc. to acquire the Nassco property and it was not "a condition or a deadline
set for the defendant corporation to decide whether or not to go through with the sale of its Buendia
property".
The record does not support the theory of Bormaheco, Inc. and the Cervantes spouses that the
forty-five-day period was the time within which (a) the Nassco property and two Pasong Tamo lots
should be acquired, (b) when Cervantes would secure his wife's consent to the sale of the three lots
and (c) when Bormaheco, Inc. had to decide what to do with the DBP encumbrance.
Cervantes in paragraph 3 of his offer of February 12, 1964 stated that the sale of the Buendia lots
would be consummated after he had consummated the purchase of the Nassco property. Then, in
paragraph 5 of the same offer he stated "that final negotiations on both properties can be definitely
known after forty-five days" (See Exh. B).
It is deducible from the tenor of those statements that the consummation of the sale of the Buendia
lots to Villonco Realty Company was conditioned on Bormaheco's acquisition of the Nassco land.
But it was not spelled out that such acquisition should be effected within forty-five days from
February 12, 1964. Had it been Cervantes' intention that the forty-five days would be the period
within which the Nassco land should be acquired by Bormaheco, then he would have specified that
period in paragraph 3 of his offer so that paragraph would read in this wise: "That this sale is to be
consummated only after I shall have consummated my purchase of another property located at Sta.
Ana, Manila within forty-five days from the date hereof ." He could have also specified that period in
his "conforme" to Villonco's counter-offer of March 4, 1964 (Exh. D) so that instead of merely stating
"that this sale shall be subject to favorable consummation of a property in Sta. Ana we are
negotiating" he could have said: "That this sale shall be subject to favorable consummation within
forty-five days from February 12, 1964 of a property in Sta. Ana we are negotiating".
No such specification was made. The term of forty-five days was not a part of the condition that the
Nassco property should be acquired. It is clear that the statement "that final negotiations on both
property can be definitely known after 45 days" does not and cannot mean that Bormaheco, Inc.
should acquire the Nassco property within forty-five days from February 12, 1964 as pretended by
Cervantes. It is simply a surmise that after forty-five days (in fact when the forty-five day period
should be computed is not clear) it would be known whether Bormaheco, Inc. would be able to
acquire the Nassco property and whether it would be able to sell the Buendia property. That
aforementioned paragraph 5 does not even specify how long after the forty-five days the outcome of
the final negotiations would be known.
It is interesting to note that in paragraph 6 of Bormaheco's answer to the amended complaint, which
answer was verified by Cervantes, it was alleged that Cervantes accepted Villonco's revised
counter-offer of March 4, 1964 subject to the condition that "the final negotiations (acceptance) will
have to be made by defendant within 45 daysfrom said acceptance" (31 Record on Appeal). If that
were so, then the consummation of Bormaheco's purchase of the Nassco property would be made
within forty-five days from March 4, 1964.
What makes Bormaheco's stand more confusing and untenable is that in its three answers it
invariably articulated the incoherent and vague affirmative defense that its acceptance of Villonco's
revised counter-offer was conditioned on the circumstance "that final acceptance or not shall be
made after 45 days" whatever that means. That affirmative defense is inconsistent with the other
aforequoted incoherent statement in its third answer that "the final negotiations (acceptance) will
have to be made by defendant within 45 days from said acceptance" (31 Record on Appeal).
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Thus, Bormaheco's three answers and paragraph 5 of his offer of February 12, 1964 do not sustain
at all its theory that the Nassco property should be acquired on or before March 28, 1964. Its
rescission or revocation of its acceptance cannot be anchored on that theory which, as articulated in
its pleadings, is quite equivocal and unclear.
It should be underscored that the condition that Bormaheco, Inc. should acquire the Nassco property
was fulfilled. As admitted by the appellants, the Nassco property was conveyed to Bormaheco, Inc.
on June 26, 1964. As early as January 17, 1964 the property was awarded to Bormaheco, Inc. as
the highest bidder. On February 18, 1964 the Nassco Board authorized its General Manager to sell
the property to Bormaheco, Inc. (Exh. H). The Economic Coordinator approved the award on March
24, 1964. It is reasonable to assume that had Cervantes been more assiduous in following up the
transaction, the Nassco property could have been transferred to Bormaheco, Inc. on or before March
28, 1964, the supposed last day of the forty-five-day period.
The appellants, in their fifth assignment of error, argue that Bormaheco, Inc. cannot be required to
sell the three lots in question because they are conjugal properties of the Cervantes spouses. They
aver that Cervantes in dealing with the Villonco brothers acted as president of Bormaheco, Inc. and
not in his individual capacity and, therefore, he did not bind the conjugal partnership nor Mrs.
Cervantes who was allegedly opposed to the sale.
Those arguments are not sustainable. It should be remembered that Cervantes, in rescinding the
contract of sale and in returning the earnest money, cited as an excuse the circumstance that there
was no certainty in Bormaheco's acquisition of the Nassco property (Exh. F and Annex 1). He did not
say that Mrs. Cervantes was opposed to the sale of the three lots. He did not tell Villonco Realty
Company that he could not bind the conjugal partnership. In truth, he concealed the fact that the
three lots were registered "in the name of FRANCISCO CERVANTES, Filipino, of legal age, married
to Rosario P. Navarro, as owner thereof in fee simple". He certainly led the Villonco brothers to
believe that as president of Bormaheco, Inc. he could dispose of the said lots. He inveigled the
Villoncos into believing that he had untrammelled control of Bormaheco, Inc., that Bormaheco, Inc.
owned the lots and that he was invested with adequate authority to sell the same.
Thus, in Bormaheco's offer of February 12, 1964, Cervantes first identified the three lots as
"our property" which "we are offering to sell ..." (Opening paragraph and par. 1 of Exh. B). Whether
the prounoun "we" refers to himself and his wife or to Bormaheco, Inc. is not clear. Then, in
paragraphs 3 and 4 of the offer, he used the first person and said: "I shall have consummated my
purchase" of the Nassco property; "... my negotiations with said property" and "I will return to you
your deposit". Those expressions conveyed the impression and generated the belief that the
Villoncos did not have to deal with Mrs. Cervantes nor with any other official of Bormaheco, Inc.
The pleadings disclose that Bormaheco, Inc. and Cervantes deliberately and studiously avoided
making the allegation that Cervantes was not authorized by his wife to sell the three lots or that he
acted merely as president of Bormaheco, Inc. That defense was not interposed so as not to place
Cervantes in the ridiculous position of having acted under false pretenses when he negotiated with
the Villoncos for the sale of the three lots.
Villonco Realty Company, in paragraph 2 of its original complaint, alleged that "on February 12,
1964, after some prior negotiations, the defendant (Bormaheco, Inc.) made a formal offer to sell to
the plaintiff the property of the said defendant situated at the abovenamed address along Buendia
Avenue, Makati, Rizal, under the terms of the letter-offer, a copy of which is hereto attached as
Annex A hereof", now Exhibit B (2 Record on Appeal).
That paragraph 2 was not, repeat, was not denied by Bormaheco, Inc. in its answer dated May 5,
1964. It did not traverse that paragraph 2. Hence, it was deemed admitted. However, it filed an
amended answer dated May 25, 1964 wherein it denied that it was the owner of the three lots. It
revealed that the three lots "belong and are registered in the names of the spouses Francisco N.
Cervantes and Rosario N. Cervantes."
The three answers of Bormaheco, Inc. contain the following affirmative defense:
13. That defendant's insistence to finally decide on the proposed sale of the land in
question after 45 days had not only for its purpose the determination of its acquisition
of the said Sta. Ana (Nassco) property during the said period, but also to negotiate
with the actual and registered owner of the parcels of land covered by T.C.T. Nos.
43530, 43531 and 43532 in question which plaintiff was fully aware that the same
were not in the name of the defendant (sic; Par. 18 of Answer to Amended
Complaint, 10, 18 and 34, Record on Appeal).
In that affirmative defense, Bormaheco, Inc. pretended that it needed forty- five days within which to
acquire the Nassco property and "to negotiate" with the registered owner of the three lots. The
absurdity of that pretension stands out in bold relief when it is borne in mind that the answers of
Bormaheco, Inc. were verified by Cervantes and that the registered owner of the three lots is
Cervantes himself. That affirmative defense means that Cervantes as president of Bormaheco, Inc.
needed forty-five days in order to "negotiate" with himself (Cervantes).
The incongruous stance of the Cervantes spouses is also patent in their answer to the amended
complaint. In that answer they disclaimed knowledge or information of certain allegations which were
well-known to Cervantes as president of Bormaheco, Inc. and which were admitted in Bormaheco's
three answers that were verified by Cervantes.
It is significant to note that Bormaheco, Inc. in its three answers, which were verified by Cervantes,
never pleaded as an affirmative defense that Mrs. Cervantes opposed the sale of the three lots or
that she did not authorize her husband to sell those lots. Likewise, it should be noted that in their
separate answer the Cervantes spouses never pleaded as a defense that Mrs. Cervantes was
opposed to the sale of three lots or that Cervantes could not bind the conjugal partnership. The
appellants were at first hesitant to make it appear that Cervantes had committed the skullduggery of
trying to sell property which he had no authority to alienate.
It was only during the trial on May 17, 1965 that Cervantes declared on the witness stand that his
wife was opposed to the sale of the three lots, a defense which, as already stated, was never
interposed in the three answers of Bormaheco, Inc. and in the separate answer of the Cervantes
spouses. That same viewpoint was adopted in defendants' motion for reconsideration dated
November 20, 1965.
But that defense must have been an afterthought or was evolved post litem motam since it was
never disclosed in Cervantes' letter of rescission and in his letter to Miss Tagle (Exh. F and Annex 1).
Moreover, Mrs. Cervantes did not testify at the trial to fortify that defense which had already been
waived for not having been pleaded (See sec. 2, Rule 9, Rules of Court).
Taking into account the situation of Cervantes vis-a-vis Bormaheco, Inc. and his wife and the fact
that the three lots were entirely occupied by Bormaheco's building, machinery and equipment and
were mortgaged to the DBP as security for its obligation, and considering that appellants' vague
affirmative defenses do not include Mrs. Cervantes' alleged opposition to the sale, the plea that
Cervantes had no authority to sell the lots strains the rivets of credibility (Cf. Papa and Delgado vs.
Montenegro, 54 Phil. 331; Riobo vs. Hontiveros, 21 Phil. 31).
"Obligations arising from contracts have the force of law between the contracting parties and should
be complied with in good faith" (Art. 1159, Civil Code). Inasmuch as the sale was perfected and even
partly executed, Bormaheco, Inc., and the Cervantes spouses, as a matter of justice and good faith,
are bound to comply with their contractual commitments.
Parenthetically, it may be observed that much misunderstanding could have been avoided had the
broker and the buyer taken the trouble of making some research in the Registry of Deeds and
availing themselves of the services of a competent lawyer in drafting the contract to sell.
Bormaheco, Inc. and the Cervantes spouses in their sixth assignment of error assail the trial court's
award to Villonco Realty Company of consequential damage amounting to ten thousand pesos
monthly from March 24, 1964 (when the Economic Coordinator approved the award of the Nassco
property to Bormaheco, Inc.) up to the consummation of the sale. The award was based on
paragraph 18 of the stipulation of facts wherein Villonco Realty Company "submits that the delay in
the consummation of the sale" has caused it to suffer the aforementioned damages.
The appellants contend that statement in the stipulation of facts simply means that Villonco Realty
Company speculates that it has suffered damages but it does not mean that the parties have agreed
that Villonco Realty Company is entitled to those damages.
Appellants' contention is correct. As rightly observed by their counsel, the damages in question were
not specifically pleaded and proven and were "clearly conjectural and speculative".
However, appellants' view in their seventh assignment of error that the trial court erred in ordering
Bormaheco, Inc. to pay Villonco Realty Company the sum of twenty thousand pesos as attorney's
fees is not tenable. Under the facts of the case, it is evident that Bormaheco, Inc. acted in gross and
evident bad faith in refusing to satisfy the valid and just demand of Villonco Realty Company for
specific performance. It compelled Villonco Realty Company to incure expenses to protect its
interest. Moreover, this is a case where it is just and equitable that the plaintiff should recover
attorney's fees (Art. 2208, Civil Code).
The appellants in their eighth assignment of error impugn the trial court's adjudication of forty-two
thousand pesos as three percent broker's commission to Miss Tagle. They allege that there is no
evidence that Bormaheco, Inc. engaged her services as a broker in the projected sale of the three
lots and the improvements thereon. That allegation is refuted by paragraph 3 of the stipulation of
facts and by the documentary evidence. It was stipulated that Miss Tagle intervened in the
negotiations for the sale of the three lots. Cervantes in his original offer of February 12, 1964
apprised Villonco Realty Company that the earnest money should be delivered to Miss Tagle, the
bearer of the letter-offer. See also Exhibit G and Annex I of the stipulation of facts.
We hold that the trial court did not err in adjudging that Bormaheco, Inc. should pay Miss Tagle her
three percent commission.
WHEREFORE, the trial court's decision is modified as follows:
1. Within ten (10) days from the date the defendants-appellants receive notice from the clerk of the
lower court that the records of this case have been received from this Court, the spouses Francisco
N. Cervantes and Rosario P. Navarra-Cervantes should execute a deed conveying to Bormaheco,
Inc. their three lots covered by Transfer Certificate of Title Nos. 43530, 43531 and 43532 of the
Registry of Deeds of Rizal.
2. Within five (5) days from the execution of such deed of conveyance, Bormaheco, Inc. should
execute in favor of Villonco Realty Company, V. R. C. Building, 219 Buendia Avenue, Makati, Rizal a
registerable deed of sale for the said three lots and all the improvements thereon, free from all lien
and encumbrances, at the price of four hundred pesos per square meter, deducting from the total
purchase price the sum of P100,000 previously paid by Villonco Realty Company to Bormaheco, Inc.
3. Upon the execution of such deed of sale, Villonco Realty Company is obligated to pay
Bormaheco, Inc. the balance of the price in the sum of one million three hundred thousand pesos
(P1,300,000).
4. Bormaheco, Inc. is ordered (a) to pay Villonco Realty Company twenty thousand pesos (P20,000)
as attorney's fees and (b) to pay Edith Perez de Tagle the sum of forty-two thousand pesos
(P42,000) as commission. Costs against the defendants-appellants.
SO ORDERED.
Makalintal, C.J, Castro. Fernando, Makasiar, Antonio, Esguerra, Muoz Palma, Concepcion Jr. and
Martin, JJ., concur.
Teehankee, J., is on leave.
Separate Opinions
BARREDO, J., concurring:

The comprehensive and well prepared opinion of Mr. Justice Aquino deserves concurrence and I do
not hesitate to accord my assent to it. The only purpose of the following lines is to express my
personal view regarding two basic points which I feel should be thoroughly emphasized.
1. I am not for giving the letter proposal of appellant Francisco Cervantes to Romeo Villonco of
February 12, 1964, Exhibit B, any decisive importance. To my mind, it has no more legal significance
than what is appears to be a mere unaccepted proposal. Accordingly, to my mind, paragraph (5)
thereof to the effect that "final negotiations on both properties can be definitely known after 45 days"
has no relevance in the disposition of this case, there being nothing in the record to show that the
same was accepted by appellee.
What to me is the actual contract between appellee and appellant Francisco Cervantes is the
counter-offer signed by Teofilo Villonco and addressed to the latter of March 4, 1964, Exhibit D,
which does not even make any reference to the above-mentioned proposal of Cervantes of February
12, 1964, even as it mentions specifically the letters of the agent, Miss E. Perez de Tagle, of
February 12 and 26, 1964. The last paragraph of said Exhibit D reads thus: "If the above terms and
conditions are acceptable to you, kindly sign your conformity hereunder. Enclosed is our check for
One Hundred Thousand (P100,000) Pesos, M.B.T.C. Cheek No. 448314, as earnest money." And it
is undisputed that Francisco Cervantes did affix his signature in the place indicated for his
conformity, albeit under the typewritten words, Bormaheco, Inc. It is also a fact that on the same
date, the stipulated P100,000 earnest money was received by Cervantes.
It is true that in the voucher-receipt evidencing the delivery of the earnest money, the agent, Miss
Tagle, indicated in her own handwriting that the same was "subject to the terms and conditions
embodied in Bormaheco's letter of February 12, 1974 and Villonco Realty Company's letter of March
4, 1974," but it is my considered opinion that such reservation cannot be understood as
comprehending reference to the above-quoted paragraph (5) of the proposal of February 12, for the
simple reason that since the parties had in fact continued negotiating after February 12 until the final
conference of February 27, Cervantes must be deemed as having intended his signing of his
conformity to the letter of March 4 to be the formalization of the "final negotiations" referred to in said
paragraph (5), thereby rendering said provision of no further consequence. It should be noted that,
to be sure, as said paragraph (5) was worded, the idea it conveyed was that Cervantes was just
making a mere tentative offer which he would finalize only after 45 days, and so, when he signed
Villonco's counter-offer of March 4 and accepted the P100,000 earnest money tendered therein, no
other significance could be given to such acts than that they were meant to finalize and perfect the
transaction in advance of the 45-day waiting period originally proposed by him. Indeed, in the
addendum written and signed by Cervantes himself (not by the agent) to the March 4 letter, all that
he stated was that "this sale shall be subject to favorable consummation of a property in Sta. Ana we
are negotiating", and this was none other than the Nassco property which the Nassco Board
authorized its manager on February 18, 1964 to sell to appellants who had won the award the day
before. In other words, when Cervantes signed the space for his conformity to the terms of that letter
of March 4, he already knew or must have known that the acquisition of the Nassco property was
already an impending certainty and must have cared less about what had become an unnecessary
waiting period, hence the omission of any mention thereof by him in his addendum.
My conclusion, therefore, is that said acts of Cervantes of signing his conformity to Villonco's
counter-offer of March 4 and accepting the P100,000 earnest money therein offered resulted in a
completely perfected contract of sale between the parties per Article 1482 of the Civil Code, needing
only the execution of the corresponding deed of sale for its consummation and subject solely to the
negative resolutory condition that the "sale shall be cancelled, only if your (Cervantes') deal with
another property in Sta. Ana (indisputably the Nassco transaction) shall not be consummated",
without stipulating anymore a period for such consummation, since evidently, with the sale thereof
having been authorized already by the Nassco Board on February 18, 1964, the Villoncos must have
been made to understand or they did understand that such consummation was inexorably
forthcoming. In fact, the Nassco Board already approved on March 3, 1964 not only the award but
the actual sale of the property to appellants, and the Economic Coordinator gave his sanction
thereto on March 24 following. Thus, as of March 3, one day before Cervantes accepted Villonco's
counter-offer, nothing more was left to formalize the transaction with Nassco except that approval of
the Economic Coordinator.
I cannot believe that Cervantes did not have up-to-date information of the progress of his
transactions with Nassco. Actually, from the legal standpoint, he was under obligation, if only in
consequence of his offer of February 12 and his continuous conversations and negotiations with the
Villoncos up to the signing of their agreement on March 4, to keep constant and close tract thereof in
order that he might be able to inform the parties he was dealing with of the real status thereof, the
finalization of the same being a material factor in the accomplishment of their common purpose.
Withal, equity would assume that he did what ought to have been done by him in taking ordinary
care of his concerns, which he is presumed to have taken, according to Section 5 (d) of rule 131.
Under these circumstances, I am amply persuaded that he must have been aware of the favorable
actuations of the Nassco authorities all the while that he was dealing with appellee up to March 4,
the day after the Nassco Board approved the sale. Accordingly, I hold that when he gave his
conformity to the counter-offer of the Villoncos of March 4, he was already fully confident his
transaction with Nassco would eventually materialize.
What is worse is that assuming that the 45-day period invoked by him could be considered in this
discussion, it would be inequitable to allow him to take advantage thereof in the light of the
circumstances extant in the record. It cannot be denied that, as already stated, the Economic
Coordinator approved the Nassco transaction on March 24, 1964. Anyone would know, and much
more so Cervantes who was directly interested therein and must have been anxiously and even
excitedly waiting for it, that that was the last requisite for the inevitable execution of the deed of sale
in his favor. One has to be very naive and it would be contrary to the ordinary course of human
experience and business practices for anyone to concede to appellants that when Cervantes wrote
his letter to Villonco Realty Company of March 30, 1964 stating that "despite the lapse of 45 days
from February 12, 1964, there is no certainty yet for us to acquire a substitute property", he did not
even have the slightest inkling of the favorable action of the Economic Coordinator of March 24. The
same or more may be said relative to his letter to Miss Tagle of as late as April 6, 1964 wherein he
alleged that the forty-five day period had already expired and the sale to Bormaheco, Inc. of the
Punta (Nassco) property had not been consummated as of then and that, therefore, his letter was a
"manifestation that we are no longer interested to sell" the Buendia property to the Villoncos.
I have no doubt whatsoever that the whole trouble here is that after Cervantes had already signed
his conformity and received earnest money on March 4, he had a change of heart, perhaps dictated
by reasons of better economic advantage, and banking on the idea, albeit erroneous, that he could
utilize paragraph (5) of his letter of February 12 as a escape door through which he could squeeze
out of the perfected contract with the Villoncos, he opted to actually back out and break with them
thru his letters of March 30 to them and of April 6 to the agent, Miss Tagle. The Court would certainly
be sanctioning a deliberate mala fide breach of a contract already definitely perfected were it to buy
the theory of non-perfection appellants are lamely pressing on Us. No amount of rationalization can
convince me that the Villoncos had agreed to any 45-day suspensive condition for the perfection of
the agreement, but even on the remote assumption that they did, I would hold as I do hold that the
purchase of the Nassco property by appellants was virtually consummated, from the viewpoint of the
spirit and intent of the contract here in question, on March 24, 1964, when the Economic Coordinator
approved the same and nothing else remained to be done to formalize it except the actual execution
of the deed of sale which in fact took place on June 26, 1964, hence, Cervantes had no more
excuse for further delaying compliance with his agreement with the Villoncos. In other words, for all
legal purposes, assuming hypothetically the plausibility of the theory of appellants about a 45-day
waiting period, the negative resolutory condition arising from said theory became inoperative four
days before said 45 days expired. After the approval of the sale by the Economic Coordinator, there
was nothing anymore that could impede the formal conveyance of the Nassco property to
appellants, other than their own desistance, and even that might have been legally controversial if
Nassco insisted otherwise. Reading all the communications exchanged between the parties, the
conclusion therefrom is inevitable that the 45-day period stipulation was inextricably tied up with
appellants' being able to acquire the Nassco property. In other words, Cervantes merely wanted to
be sure that they would get the Nassco property before proceeding with the sale of the Buendia
property. To construe the 45-day stipulation as giving Cervantes the absolute right to disregard the
Villoncos entirely until after the 45 days had expired is to render the whole of Cervantes' letter of
February 12 as totally meaningless, legally non-existent and as deceitfully farcical. Consequently,
the acquisition of the Nassco property having actually eventualized, it cannot lie in the lips of
Cervantes to claim that he may not be compelled to proceed with the transaction. To view the
situation otherwise is to condone resort to ambiguity as a means of deception and informality in
contractual obligations, which in my opinion is contrary to the elementary requirements of
candidness and honest dealing between responsible contracting parties, and in that sense offensive
to public policy.
2. The contention of appellants that inasmuch as in actual fact the Buendia property contemplated in
the contract is the conjugal property of Cervantes spouses and that since in dealing with the
Villoncos, Cervantes acted as President of Bormaheco, Inc., the appellee cannot have any right to
compel the conveyance to them thereof is in my view definitely puerile. It is predicated on duplicity
and smacks of utter bad faith.
I do not find in the evidence before Us adequate basis for accepting the suggestion that Francisco
Cervantes acted for and in behalf of Bormaheco, Inc. in his dealing with the Villoncos. The mere fact
that he signed his letter of February 12, 1964 over the title of President, there being no showing that
he was duly authorized to make the offer therein contained in the name of the corporation, did not
convert it into a corporate act. The language of the letter which is conspicuously sprinkled with the
pronoun I used by Cervantes to refer to himself rather than exclusively the pronoun we does not so
indicate. Besides, Cervantes is undisputably the registered owner with his wife of the property
therein mentioned, and being evidently conscious, as he ought to have been of this fact, he knew his
act would be ultra vires and void, if he were to act for the corporation. He was the manager of the
conjugal partnership and he knew it was only in that capacity that he could in good faith give validity
to his representation, assuming the conformity of his wife. Unless Cervantes wants Us to hold that
he deliberately negotiated with the Villoncos clothed in dubious garments of authority precisely to
afford him the opportunity to repudiate at his convenience any agreement they may enter into with
him. I am for holding as I do hold that Bormaheco, Inc. had nothing to do with the transaction here in
controversy. In any event, if Cervantes may held to have acted for Bormaheco, Inc., in spite of the
absence of evidence of any authority for him to do so, it must be because Bormaheco, Inc. is
Cervantes himself, and there being no proof to the contrary, the corporate shield of Bormaheco, Inc.
may be deemed pierced in order to prevent any further fraudulent implications in his actuations.
Moreover, it may be observed that the March 4 letter of Teofilo Villonco was not addressed to
Bormaheco, Inc. but to Francisco Cervantes and it does not even mention his being President of that
corporation.
Anent the requirement of consent of Mrs. Cervantes under Article 166 of the Civil Code, I consider
any defense along this line as unavailing to the appellants in this case. As very ably discussed in the
main opinion of Mr. Justice Aquino, the answer of the defendants, make no reference at all to any
lack of such consent. And considering that the subsequent testimony of Cervantes to the effect that
his wife opposed the transaction cannot cure such omission, if only because any husband in the
circumstances revealed in the record is estopped from setting up such a defense (cf Riobo vs.
Hontiveros, 21 Phil. 31; Papi vs. Montenegro, 54 Phil. 531; see Civil Law by Reyes & Puno, 1964 ed.
p. 192), and that from her silence in her answer in this respect Mrs. Cervantes may either be
presumed to have given her consent thereto or to have ratified the same (Montederamos vs.
Ynonoy, 56 Phil. 457; Castaeda vs. Samson, 43 Phil. 751), it is obvious that the belated invocation
of this defense now should be deemed in fact and in law as an unacceptable and ineffective
afterthought. Besides, it appearing that the sale of the Buendia property was purposely to enable the
spouses to acquire the Nassco property, I have grave doubts as to the application of Article 166 to
the sale here in dispute. I believe that the disposition by a husband prohibited by the Code unless
consented to by the wife refers to a transaction outrightly prejudicial to the partnership and cannot
comprehend a sale made precisely for its benefit and causing no loss thereto beyond the ordinary
risks of misjudgment of a manager acting in good faith.
IN VIEW OF THE FOREGOING, I would not even require the formality of the serial execution of
instruments by the Cervantes spouses and Bormaheco, Inc. In the view I have taken above, it would
be legally feasible for the sale to the Villonco Realty Property to be made directly by the spouses.
But I would not insist in the modification of the dispositive portion of the judgment, since the result
would be the same anyway.
Separate Opinions
BARREDO, J., concurring:
The comprehensive and well prepared opinion of Mr. Justice Aquino deserves concurrence and I do
not hesitate to accord my assent to it. The only purpose of the following lines is to express my
personal view regarding two basic points which I feel should be thoroughly emphasized.
1. I am not for giving the letter proposal of appellant Francisco Cervantes to Romeo Villonco of
February 12, 1964, Exhibit B, any decisive importance. To my mind, it has no more legal significance
than what is appears to be a mere unaccepted proposal. Accordingly, to my mind, paragraph (5)
thereof to the effect that "final negotiations on both properties can be definitely known after 45 days"
has no relevance in the disposition of this case, there being nothing in the record to show that the
same was accepted by appellee.
What to me is the actual contract between appellee and appellant Francisco Cervantes is the
counter-offer signed by Teofilo Villonco and addressed to the latter of March 4, 1964, Exhibit D,
which does not even make any reference to the above-mentioned proposal of Cervantes of February
12, 1964, even as it mentions specifically the letters of the agent, Miss E. Perez de Tagle, of
February 12 and 26, 1964. The last paragraph of said Exhibit D reads thus: "If the above terms and
conditions are acceptable to you, kindly sign your conformity hereunder. Enclosed is our check for
One Hundred Thousand (P100,000) Pesos, M.B.T.C. Cheek No. 448314, as earnest money." And it
is undisputed that Francisco Cervantes did affix his signature in the place indicated for his
conformity, albeit under the typewritten words, Bormaheco, Inc. It is also a fact that on the same
date, the stipulated P100,000 earnest money was received by Cervantes.
It is true that in the voucher-receipt evidencing the delivery of the earnest money, the agent, Miss
Tagle, indicated in her own handwriting that the same was "subject to the terms and conditions
embodied in Bormaheco's letter of February 12, 1974 and Villonco Realty Company's letter of March
4, 1974," but it is my considered opinion that such reservation cannot be understood as
comprehending reference to the above-quoted paragraph (5) of the proposal of February 12, for the
simple reason that since the parties had in fact continued negotiating after February 12 until the final
conference of February 27, Cervantes must be deemed as having intended his signing of his
conformity to the letter of March 4 to be the formalization of the "final negotiations" referred to in said
paragraph (5), thereby rendering said provision of no further consequence. It should be noted that,
to be sure, as said paragraph (5) was worded, the idea it conveyed was that Cervantes was just
making a mere tentative offer which he would finalize only after 45 days, and so, when he signed
Villonco's counter-offer of March 4 and accepted the P100,000 earnest money tendered therein, no
other significance could be given to such acts than that they were meant to finalize and perfect the
transaction in advance of the 45-day waiting period originally proposed by him. Indeed, in the
addendum written and signed by Cervantes himself (not by the agent) to the March 4 letter, all that
he stated was that "this sale shall be subject to favorable consummation of a property in Sta. Ana we
are negotiating", and this was none other than the Nassco property which the Nassco Board
authorized its manager on February 18, 1964 to sell to appellants who had won the award the day
before. In other words, when Cervantes signed the space for his conformity to the terms of that letter
of March 4, he already knew or must have known that the acquisition of the Nassco property was
already an impending certainty and must have cared less about what had become an unnecessary
waiting period, hence the omission of any mention thereof by him in his addendum.
My conclusion, therefore, is that said acts of Cervantes of signing his conformity to Villonco's
counter-offer of March 4 and accepting the P100,000 earnest money therein offered resulted in a
completely perfected contract of sale between the parties per Article 1482 of the Civil Code, needing
only the execution of the corresponding deed of sale for its consummation and subject solely to the
negative resolutory condition that the "sale shall be cancelled, only if your (Cervantes') deal with
another property in Sta. Ana (indisputably the Nassco transaction) shall not be consummated",
without stipulating anymore a period for such consummation, since evidently, with the sale thereof
having been authorized already by the Nassco Board on February 18, 1964, the Villoncos must have
been made to understand or they did understand that such consummation was inexorably
forthcoming. In fact, the Nassco Board already approved on March 3, 1964 not only the award but
the actual sale of the property to appellants, and the Economic Coordinator gave his sanction
thereto on March 24 following. Thus, as of March 3, one day before Cervantes accepted Villonco's
counter-offer, nothing more was left to formalize the transaction with Nassco except that approval of
the Economic Coordinator.
I cannot believe that Cervantes did not have up-to-date information of the progress of his
transactions with Nassco. Actually, from the legal standpoint, he was under obligation, if only in
consequence of his offer of February 12 and his continuous conversations and negotiations with the
Villoncos up to the signing of their agreement on March 4, to keep constant and close tract thereof in
order that he might be able to inform the parties he was dealing with of the real status thereof, the
finalization of the same being a material factor in the accomplishment of their common purpose.
Withal, equity would assume that he did what ought to have been done by him in taking ordinary
care of his concerns, which he is presumed to have taken, according to Section 5 (d) of rule 131.
Under these circumstances, I am amply persuaded that he must have been aware of the favorable
actuations of the Nassco authorities all the while that he was dealing with appellee up to March 4,
the day after the Nassco Board approved the sale. Accordingly, I hold that when he gave his
conformity to the counter-offer of the Villoncos of March 4, he was already fully confident his
transaction with Nassco would eventually materialize.
What is worse is that assuming that the 45-day period invoked by him could be considered in this
discussion, it would be inequitable to allow him to take advantage thereof in the light of the
circumstances extant in the record. It cannot be denied that, as already stated, the Economic
Coordinator approved the Nassco transaction on March 24, 1964. Anyone would know, and much
more so Cervantes who was directly interested therein and must have been anxiously and even
excitedly waiting for it, that that was the last requisite for the inevitable execution of the deed of sale
in his favor. One has to be very naive and it would be contrary to the ordinary course of human
experience and business practices for anyone to concede to appellants that when Cervantes wrote
his letter to Villonco Realty Company of March 30, 1964 stating that "despite the lapse of 45 days
from February 12, 1964, there is no certainty yet for us to acquire a substitute property", he did not
even have the slightest inkling of the favorable action of the Economic Coordinator of March 24. The
same or more may be said relative to his letter to Miss Tagle of as late as April 6, 1964 wherein he
alleged that the forty-five day period had already expired and the sale to Bormaheco, Inc. of the
Punta (Nassco) property had not been consummated as of then and that, therefore, his letter was a
"manifestation that we are no longer interested to sell" the Buendia property to the Villoncos.
I have no doubt whatsoever that the whole trouble here is that after Cervantes had already signed
his conformity and received earnest money on March 4, he had a change of heart, perhaps dictated
by reasons of better economic advantage, and banking on the idea, albeit erroneous, that he could
utilize paragraph (5) of his letter of February 12 as a escape door through which he could squeeze
out of the perfected contract with the Villoncos, he opted to actually back out and break with them
thru his letters of March 30 to them and of April 6 to the agent, Miss Tagle. The Court would certainly
be sanctioning a deliberate mala fide breach of a contract already definitely perfected were it to buy
the theory of non-perfection appellants are lamely pressing on Us. No amount of rationalization can
convince me that the Villoncos had agreed to any 45-day suspensive condition for the perfection of
the agreement, but even on the remote assumption that they did, I would hold as I do hold that the
purchase of the Nassco property by appellants was virtually consummated, from the viewpoint of the
spirit and intent of the contract here in question, on March 24, 1964, when the Economic Coordinator
approved the same and nothing else remained to be done to formalize it except the actual execution
of the deed of sale which in fact took place on June 26, 1964, hence, Cervantes had no more
excuse for further delaying compliance with his agreement with the Villoncos. In other words, for all
legal purposes, assuming hypothetically the plausibility of the theory of appellants about a 45-day
waiting period, the negative resolutory condition arising from said theory became inoperative four
days before said 45 days expired. After the approval of the sale by the Economic Coordinator, there
was nothing anymore that could impede the formal conveyance of the Nassco property to
appellants, other than their own desistance, and even that might have been legally controversial if
Nassco insisted otherwise. Reading all the communications exchanged between the parties, the
conclusion therefrom is inevitable that the 45-day period stipulation was inextricably tied up with
appellants' being able to acquire the Nassco property. In other words, Cervantes merely wanted to
be sure that they would get the Nassco property before proceeding with the sale of the Buendia
property. To construe the 45-day stipulation as giving Cervantes the absolute right to disregard the
Villoncos entirely until after the 45 days had expired is to render the whole of Cervantes' letter of
February 12 as totally meaningless, legally non-existent and as deceitfully farcical. Consequently,
the acquisition of the Nassco property having actually eventualized, it cannot lie in the lips of
Cervantes to claim that he may not be compelled to proceed with the transaction. To view the
situation otherwise is to condone resort to ambiguity as a means of deception and informality in
contractual obligations, which in my opinion is contrary to the elementary requirements of
candidness and honest dealing between responsible contracting parties, and in that sense offensive
to public policy.
2. The contention of appellants that inasmuch as in actual fact the Buendia property contemplated in
the contract is the conjugal property of Cervantes spouses and that since in dealing with the
Villoncos, Cervantes acted as President of Bormaheco, Inc., the appellee cannot have any right to
compel the conveyance to them thereof is in my view definitely puerile. It is predicated on duplicity
and smacks of utter bad faith.
I do not find in the evidence before Us adequate basis for accepting the suggestion that Francisco
Cervantes acted for and in behalf of Bormaheco, Inc. in his dealing with the Villoncos. The mere fact
that he signed his letter of February 12, 1964 over the title of President, there being no showing that
he was duly authorized to make the offer therein contained in the name of the corporation, did not
convert it into a corporate act. The language of the letter which is conspicuously sprinkled with the
pronoun I used by Cervantes to refer to himself rather than exclusively the pronoun we does not so
indicate. Besides, Cervantes is undisputably the registered owner with his wife of the property
therein mentioned, and being evidently conscious, as he ought to have been of this fact, he knew his
act would be ultra vires and void, if he were to act for the corporation. He was the manager of the
conjugal partnership and he knew it was only in that capacity that he could in good faith give validity
to his representation, assuming the conformity of his wife. Unless Cervantes wants Us to hold that
he deliberately negotiated with the Villoncos clothed in dubious garments of authority precisely to
afford him the opportunity to repudiate at his convenience any agreement they may enter into with
him. I am for holding as I do hold that Bormaheco, Inc. had nothing to do with the transaction here in
controversy. In any event, if Cervantes may held to have acted for Bormaheco, Inc., in spite of the
absence of evidence of any authority for him to do so, it must be because Bormaheco, Inc. is
Cervantes himself, and there being no proof to the contrary, the corporate shield of Bormaheco, Inc.
may be deemed pierced in order to prevent any further fraudulent implications in his actuations.
Moreover, it may be observed that the March 4 letter of Teofilo Villonco was not addressed to
Bormaheco, Inc. but to Francisco Cervantes and it does not even mention his being President of that
corporation.
Anent the requirement of consent of Mrs. Cervantes under Article 166 of the Civil Code, I consider
any defense along this line as unavailing to the appellants in this case. As very ably discussed in the
main opinion of Mr. Justice Aquino, the answer of the defendants, make no reference at all to any
lack of such consent. And considering that the subsequent testimony of Cervantes to the effect that
his wife opposed the transaction cannot cure such omission, if only because any husband in the
circumstances revealed in the record is estopped from setting up such a defense (cf Riobo vs.
Hontiveros, 21 Phil. 31; Papi vs. Montenegro, 54 Phil. 531; see Civil Law by Reyes & Puno, 1964 ed.
p. 192), and that from her silence in her answer in this respect Mrs. Cervantes may either be
presumed to have given her consent thereto or to have ratified the same (Montederamos vs.
Ynonoy, 56 Phil. 457; Castaeda vs. Samson, 43 Phil. 751), it is obvious that the belated invocation
of this defense now should be deemed in fact and in law as an unacceptable and ineffective
afterthought. Besides, it appearing that the sale of the Buendia property was purposely to enable the
spouses to acquire the Nassco property, I have grave doubts as to the application of Article 166 to
the sale here in dispute. I believe that the disposition by a husband prohibited by the Code unless
consented to by the wife refers to a transaction outrightly prejudicial to the partnership and cannot
comprehend a sale made precisely for its benefit and causing no loss thereto beyond the ordinary
risks of misjudgment of a manager acting in good faith.
IN VIEW OF THE FOREGOING, I would not even require the formality of the serial execution of
instruments by the Cervantes spouses and Bormaheco, Inc. In the view I have taken above, it would
be legally feasible for the sale to the Villonco Realty Property to be made directly by the spouses.
But I would not insist in the modification of the dispositive portion of the judgment, since the result
would be the same anyway.
Footnotes
* Underscoring supplied. Note that, according to the defendants, Cervantes inserted

"12th and" between the "February" and "26" in the second line of the foregoing letter,
that in paragraph 3 of the terms and conditions he crossed out "Nassco's" and wrote
"another" and that he inserted "pa" after "interest" (p. 7, defendants-appellants' brief).
There is no stipulation nor testimony on the alleged insertions.
**
"March 31,1964
Mr. Francisco Cervantes

President, BORMAHECO, INC.
245 Buendia Avenue
Makati, Rizal
Dear Mr. Cervantes:
As your official and authorized representative on the sale of your property located at
245 Buendia Avenue, Makati, Rizal, with a total area of 3,500 square meters, at
P400.00 per square meter or a total purchase cost of P1,400.000.00, in favor of Mr.
Romeo Villonco of Villonco Realty Co., I was surprised and shocked at the news of
your actions yesterday afternoon when you had a certain Mr. de Guzman bring to Mr.
Romeo Villonco, your letter dated March 30th, 1964, together with 2 checks. One for
P100.000.00 and another for P694.25 as 10% interest on the same.
If you will recall, this deal on selling your property started way back in October 1963
when you ordered me to negotiate for you certain properties to buy in order that you
could move to a bigger location than that at 245 Buendia Avenue which was
becoming too small for your needs.
You also authorized me to negotiate with my BUYERS, one of whom was the
Villonco Brothers who owned the adjacent property, on the sale of your property.
Plenty of conferences were held between you and me, and also between the
Villoncos and me on the said property, specially after your Formal Bidding of the
NASSCO PROPERTY, located at Punta. Sta. Ana, was made on January 17, 1964.
After this made (sic) was made, you called me and had me offer your property at 245
Buendia Avenue to the Villoncos. For this you made your formal offer as per your
letter dated February 12, 1964. And that after there were many personal conferences
made between you and the Villoncos either by phone and also personally at their
office in my presence.
After your Formal Offer of February 12, 1964, and the subsequent acceptance by the
Villoncos of your offer, and the payment of the EARNEST MONEY of P100,000.00
which you accepted on March 4, 1964 and signed CONFORME to the LETTER
CONTRACT of the same date, this deal become a close deal as the said Earnest
Money becomes a part of the down payment on the property.
The only stipulation mentioned in your Contractual Letter of March 4, 1964 which
followed your letter of February 12, 1964, was that the said sale becomes ineffective
only if the purchase of the property at Sta. Ana is not approved by the NASSCO or
the OEC. However, from all my follow up on the matter at the NASSCO and the
OEC, it appears that your bid on purchasing the said property at Sta. Ana has been
approved by the NASSCO BOARD on March 3, 1964, and subsequently approved
by the Office of the Economic Coordinator and signed by Mr. Adevoso on March
25,1964. This, therefore, removes the stipulation on your letter of Feb. 12, 1964 and
thus effecting the consummation of this deal.
Mr. Romeo Villonco has called me to his office and has returned to me your letter and
the checks, as he is not agreeable to a cancellation of this deal with them on the
purchase of your property at 245 Buendia Avenue, Makati, Rizal, for the following
reasons:
(1.) That this deal has been made after a Formal Written Offer from you after several
lengthy verbal conferences between you, and which terms have been agreed upon;
(2.) That after the Earnest Money had been received by you, I, as your official
representative have followed the matter and have kept them informed on the
progress of the deal with the NASSCO and the OEC, this being the only stipulation
on the consummation of the deal; and as such made it necessary that the Villoncos
mortgage several of their properties with the bank to have ready the Cash payment
required by you as per your Contractual Letter of March 4, 1964;
(3.) That in all big business firms, the presence of a large amount of spot cash is
always not present, thus it was necessary that the Villoncos raised this spot cash
which was one of your requirements for this sale;
(4.) That the Villoncos have put aside all other projects in favor of this deal, since the
same requires a large amount of cash, not only for the payment of the land, but also
for the cost of the new building to be erected; (5.) That the stipulation on the letters of
February 12, 1964 and March 4, 1964 wherein the approval and consequent
purchase of the lot at Sta. Ana, Manila has been removed by the approval of your bid
purchase of the property of the NASSCO, at Punta, Sta. Ana which has been
approved by the NASSCO BOARD on March 3, 1964 and the OEC on March 25,
1964;
For all the above reasons, Mr. Romeo Villonco will not agree to your backing out of
this deal or rescinding your Contractual Agreement with them for any other reason
whatsoever.
Trusting that you will see your way clear in all this, I am
G.R. No. 109125 December 2, 1994

ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners,
vs.
THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT

CORPORATION, respondents.
Antonio M. Albano for petitioners.
Umali, Soriano & Associates for private respondent.
VITUG, J.:
Assailed, in this petition for review, is the decision of the Court of Appeals, dated 04 December 1991,
in CA-G.R. SP No. 26345 setting aside and declaring without force and effect the orders of execution
of the trial court, dated 30 August 1991 and 27 September 1991, in Civil Case No. 87-41058.
The antecedents are recited in good detail by the appellate court thusly:
On July 29, 1987 a Second Amended Complaint for Specific Performance was filed
by Ang Yu Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng, Rose Cu
Unjieng and Jose Tan before the Regional Trial Court, Branch 31, Manila in Civil
Case No. 87-41058, alleging, among others, that plaintiffs are tenants or lessees of
residential and commercial spaces owned by defendants described as Nos. 630-638
Ongpin Street, Binondo, Manila; that they have occupied said spaces since 1935 and
have been religiously paying the rental and complying with all the conditions of the
lease contract; that on several occasions before October 9, 1986, defendants
informed plaintiffs that they are offering to sell the premises and are giving them
priority to acquire the same; that during the negotiations, Bobby Cu Unjieng offered a
price of P6-million while plaintiffs made a counter offer of P5-million; that plaintiffs
thereafter asked the defendants to put their offer in writing to which request
defendants acceded; that in reply to defendant's letter, plaintiffs wrote them on
October 24, 1986 asking that they specify the terms and conditions of the offer to
sell; that when plaintiffs did not receive any reply, they sent another letter dated
January 28, 1987 with the same request; that since defendants failed to specify the
terms and conditions of the offer to sell and because of information received that
defendants were about to sell the property, plaintiffs were compelled to file the
complaint to compel defendants to sell the property to them.
Defendants filed their answer denying the material allegations of the complaint and
interposing a special defense of lack of cause of action.
After the issues were joined, defendants filed a motion for summary judgment which
was granted by the lower court. The trial court found that defendants' offer to sell was
never accepted by the plaintiffs for the reason that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contract of sale at
all. Nonetheless, the lower court ruled that should the defendants subsequently offer
their property for sale at a price of P11-million or below, plaintiffs will have the right of
first refusal. Thus the dispositive portion of the decision states:
WHEREFORE, judgment is hereby rendered in favor of the
defendants and against the plaintiffs summarily dismissing the
complaint subject to the aforementioned condition that if the
defendants subsequently decide to offer their property for sale for a
purchase price of Eleven Million Pesos or lower, then the plaintiffs
has the option to purchase the property or of first refusal, otherwise,
defendants need not offer the property to the plaintiffs if the purchase
price is higher than Eleven Million Pesos.
SO ORDERED.
Aggrieved by the decision, plaintiffs appealed to this Court in
CA-G.R. CV No. 21123. In a decision promulgated on September 21, 1990 (penned
by Justice Segundino G. Chua and concurred in by Justices Vicente V. Mendoza and
Fernando A. Santiago), this Court affirmed with modification the lower court's
judgment, holding:
In resume, there was no meeting of the minds between the parties
concerning the sale of the property. Absent such requirement, the
claim for specific performance will not lie. Appellants' demand for
actual, moral and exemplary damages will likewise fail as there exists
no justifiable ground for its award. Summary judgment for defendants
was properly granted. Courts may render summary judgment when
there is no genuine issue as to any material fact and the moving party
is entitled to a judgment as a matter of law (Garcia vs. Court of
Appeals, 176 SCRA 815). All requisites obtaining, the decision of the
court a quois legally justifiable.
WHEREFORE, finding the appeal unmeritorious, the judgment
appealed from is hereby AFFIRMED, but subject to the following
modification: The court a quo in the aforestated decision gave the
plaintiffs-appellants the right of first refusal only if the property is sold
for a purchase price of Eleven Million pesos or lower; however,
considering the mercurial and uncertain forces in our market
economy today. We find no reason not to grant the same right of first
refusal to herein appellants in the event that the subject property is
sold for a price in excess of Eleven Million pesos. No pronouncement
as to costs.
SO ORDERED.
The decision of this Court was brought to the Supreme Court by petition for review
on certiorari. The Supreme Court denied the appeal on May 6, 1991 "for insufficiency
in form and substances" (Annex H, Petition).
On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by
this Court, the Cu Unjieng spouses executed a Deed of Sale (Annex D, Petition)
transferring the property in question to herein petitioner Buen Realty and
Development Corporation, subject to the following terms and conditions:
1. That for and in consideration of the sum of FIFTEEN MILLION
PESOS (P15,000,000.00), receipt of which in full is hereby
acknowledged, the VENDORS hereby sells, transfers and conveys
for and in favor of the VENDEE, his heirs, executors, administrators
or assigns, the above-described property with all the improvements
found therein including all the rights and interest in the said property
free from all liens and encumbrances of whatever nature, except the
pending ejectment proceeding;
2. That the VENDEE shall pay the Documentary Stamp Tax,
registration fees for the transfer of title in his favor and other
expenses incidental to the sale of above-described property including
capital gains tax and accrued real estate taxes.
As a consequence of the sale, TCT No. 105254/T-881 in the name of the Cu Unjieng
spouses was cancelled and, in lieu thereof, TCT No. 195816 was issued in the name
of petitioner on December 3, 1990.
On July 1, 1991, petitioner as the new owner of the subject property wrote a letter to
the lessees demanding that the latter vacate the premises.
On July 16, 1991, the lessees wrote a reply to petitioner stating that petitioner
brought the property subject to the notice of lis pendens regarding Civil Case No. 8741058 annotated on TCT No. 105254/T-881 in the name of the Cu Unjiengs.
The lessees filed a Motion for Execution dated August 27, 1991 of the Decision in
Civil Case No. 87-41058 as modified by the Court of Appeals in CA-G.R. CV No.
21123.
On August 30, 1991, respondent Judge issued an order (Annex A, Petition) quoted
as follows:
Presented before the Court is a Motion for Execution filed by plaintiff
represented by Atty. Antonio Albano. Both defendants Bobby Cu
Unjieng and Rose Cu Unjieng represented by Atty. Vicente Sison and
Atty. Anacleto Magno respectively were duly notified in today's
consideration of the motion as evidenced by the rubber stamp and

signatures upon the copy of the Motion for Execution.
The gist of the motion is that the Decision of the Court dated
September 21, 1990 as modified by the Court of Appeals in its
decision in CA G.R. CV-21123, and elevated to the Supreme Court
upon the petition for review and that the same was denied by the
highest tribunal in its resolution dated May 6, 1991 in G.R. No.
L-97276, had now become final and executory. As a consequence,
there was an Entry of Judgment by the Supreme Court as of June 6,
1991, stating that the aforesaid modified decision had already
become final and executory.
It is the observation of the Court that this property in dispute was the
subject of the Notice of Lis Pendens and that the modified decision of
this Court promulgated by the Court of Appeals which had become
final to the effect that should the defendants decide to offer the
property for sale for a price of P11 Million or lower, and considering
the mercurial and uncertain forces in our market economy today, the
same right of first refusal to herein plaintiffs/appellants in the event
that the subject property is sold for a price in excess of Eleven Million
pesos or more.
WHEREFORE, defendants are hereby ordered to execute the
necessary Deed of Sale of the property in litigation in favor of
plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the
consideration of P15 Million pesos in recognition of plaintiffs' right of
first refusal and that a new Transfer Certificate of Title be issued in
favor of the buyer.
All previous transactions involving the same property notwithstanding
the issuance of another title to Buen Realty Corporation, is hereby set
aside as having been executed in bad faith.
SO ORDERED.
On September 22, 1991 respondent Judge issued another order, the dispositive
portion of which reads:
WHEREFORE, let there be Writ of Execution issue in the aboveentitled case directing the Deputy Sheriff Ramon Enriquez of this
Court to implement said Writ of Execution ordering the defendants
among others to comply with the aforesaid Order of this Court within
a period of one (1) week from receipt of this Order and for defendants
to execute the necessary Deed of Sale of the property in litigation in
favor of the plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for
the consideration of P15,000,000.00 and ordering the Register of

Deeds of the City of Manila, to cancel and set aside the title already
issued in favor of Buen Realty Corporation which was previously
executed between the latter and defendants and to register the new
title in favor of the aforesaid plaintiffs Ang Yu Asuncion, Keh Tiong
and Arthur Go.
SO ORDERED.
On the same day, September 27, 1991 the corresponding writ of execution (Annex C,
Petition) was issued. 1
On 04 December 1991, the appellate court, on appeal to it by private respondent, set aside and
declared without force and effect the above questioned orders of the court a quo.
In this petition for review on certiorari, petitioners contend that Buen Realty can be held bound by the
writ of execution by virtue of the notice of lis pendens, carried over on TCT No. 195816 issued in the
name of Buen Realty, at the time of the latter's purchase of the property on 15 November 1991 from
the Cu Unjiengs.
We affirm the decision of the appellate court.
A not too recent development in real estate transactions is the adoption of such arrangements as the
right of first refusal, a purchase option and a contract to sell. For ready reference, we might point out
some fundamental precepts that may find some relevance to this discussion.
An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation
is constituted upon the concurrence of the essential elements thereof, viz: (a) The vinculum
juris or juridical tie which is the efficient cause established by the various sources of obligations (law,
contracts, quasi-contracts, delicts and quasi-delicts); (b) the object which is the prestation or
conduct; required to be observed (to give, to do or not to do); and (c) the subject-persons who,
viewed from the demandability of the obligation, are the active (obligee) and the passive (obligor)
subjects.
Among the sources of an obligation is a contract (Art. 1157, Civil Code), which is a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give something or to
render some service (Art. 1305, Civil Code). A contract undergoes various stages that include its
negotiation or preparation, its perfection and, finally, its consummation. Negotiation covers the
period from the time the prospective contracting parties indicate interest in the contract to the time
the contract is concluded (perfected). The perfection of the contract takes place upon the
concurrence of the essential elements thereof. A contract which is consensual as to perfection is so
established upon a mere meeting of minds, i.e., the concurrence of offer and acceptance, on the
object and on the cause thereof. A contract which requires, in addition to the above, the delivery of
the object of the agreement, as in a pledge or commodatum, is commonly referred to as
a real contract. In a solemn contract, compliance with certain formalities prescribed by law, such as
in a donation of real property, is essential in order to make the act valid, the prescribed form being
thereby an essential element thereof. The stage of consummation begins when the parties perform
their respective undertakings under the contract culminating in the extinguishment thereof.
Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding
juridical relation. In sales, particularly, to which the topic for discussion about the case at bench
belongs, the contract is perfected when a person, called the seller, obligates himself, for a price
certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over
which the latter agrees. Article 1458 of the Civil Code provides:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably the
ownership of the thing sold is retained until the fulfillment of a positive suspensive condition
(normally, the full payment of the purchase price), the breach of the condition will prevent the
obligation to convey title from acquiring an obligatory force. 2 In Dignos vs. Court of Appeals (158
SCRA 375), we have said that, although denominated a "Deed of Conditional Sale," a sale is still absolute
where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is
stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer upon
actual or constructive delivery (e.g., by the execution of a public document) of the property sold. Where
the condition is imposed upon the perfection of the contract itself, the failure of the condition would
prevent such perfection. 3 If the condition is imposed on the obligation of a party which is not fulfilled, the
other party may either waive the condition or refuse to proceed with the sale (Art. 1545, Civil Code). 4
An unconditional mutual promise to buy and sell, as long as the object is made determinate and the
price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be
exacted. 5
An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when
coupled with a valuable consideration distinct and separate from the price, is what may properly be
termed a perfected contract ofoption. This contract is legally binding, and in sales, it conforms with
the second paragraph of Article 1479 of the Civil Code, viz:
Art. 1479. . . .
An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promissor if the promise is supported by a consideration distinct
from the price. (1451a) 6
Observe, however, that the option is not the contract of sale itself. 7 The optionee has the right, but not
the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the
option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to
comply with their respective undertakings. 8
Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect

promise (policitacion) is merely an offer. Public advertisements or solicitations and the like are
ordinarily construed as mere invitations to make offers or only as proposals. These relations, until a
contract is perfected, are not considered binding commitments. Thus, at any time prior to the
perfection of the contract, either negotiating party may stop the negotiation. The offer, at this stage,
may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its
mailing and not necessarily when the offeree learns of the withdrawal (Laudico vs. Arias, 43 Phil.
270). Where a period is given to the offeree within which to accept the offer, the following rules
generally govern:
(1) If the period is not itself founded upon or supported by a consideration, the offeror is still free and
has the right to withdraw the offer before its acceptance, or, if an acceptance has been made, before
the offeror's coming to know of such fact, by communicating that withdrawal to the offeree (see Art.
1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102 Phil. 948, holding that this rule is
applicable to a unilateral promise to sell under Art. 1479, modifying the previous decision in South
Western Sugar vs. Atlantic Gulf, 97 Phil. 249; see also Art. 1319, Civil Code; Rural Bank of
Paraaque, Inc., vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA 368). The right to
withdraw, however, must not be exercised whimsically or arbitrarily; otherwise, it could give rise to a
damage claim under Article 19 of the Civil Code which ordains that "every person must, in the
exercise of his rights and in the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith."
(2) If the period has a separate consideration, a contract of "option" is deemed perfected, and it
would be a breach of that contract to withdraw the offer during the agreed period. The option,
however, is an independent contract by itself, and it is to be distinguished from the projected main
agreement (subject matter of the option) which is obviously yet to be concluded. If, in fact, the
optioner-offeror withdraws the offer before its acceptance (exercise of the option) by the optioneeofferee, the latter may not sue for specific performance on the proposed contract ("object" of the
option) since it has failed to reach its own stage of perfection. The optioner-offeror, however, renders
himself liable for damages for breach of the option. In these cases, care should be taken of the real
nature of theconsideration given, for if, in fact, it has been intended to be part of the consideration for
the main contract with a right of withdrawal on the part of the optionee, the main contract could be
deemed perfected; a similar instance would be an "earnest money" in a contract of sale that can
evidence its perfection (Art. 1482, Civil Code).
In the law on sales, the so-called "right of first refusal" is an innovative juridical relation. Needless to
point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.
Neither can the right of first refusal, understood in its normal concept, per se be brought within the
purview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an offer
under Article 1319 9 of the same Code. An option or an offer would require, among other things, 10 a clear
certainty on both the object and the cause or consideration of the envisioned contract. In a right of first
refusal, while the object might be made determinate, the exercise of the right, however, would be
dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another
but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at
best be so described as merely belonging to a class of preparatory juridical relations governed not by
contracts (since the essential elements to establish the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the
Civil Code on human conduct.
Even on the premise that such right of first refusal has been decreed under a final judgment, like
here, its breach cannot justify correspondingly an issuance of a writ of execution under a judgment
that merely recognizes its existence, nor would it sanction an action for specific performance without
thereby negating the indispensable element of consensuality in the perfection of contracts. 11 It is not
to say, however, that the right of first refusal would be inconsequential for, such as already intimated
above, an unjustified disregard thereof, given, for instance, the circumstances expressed in Article 19 12 of
the Civil Code, can warrant a recovery for damages.
The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a "right of
first refusal" in favor of petitioners. The consequence of such a declaration entails no more than what
has heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the
failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution
on the judgment, since there is none to execute, but an action for damages in a proper forum for the
purpose.
Furthermore, whether private respondent Buen Realty Development Corporation, the alleged
purchaser of the property, has acted in good faith or bad faith and whether or not it should, in any
case, be considered bound to respect the registration of the lis pendens in Civil Case No. 87-41058
are matters that must be independently addressed in appropriate proceedings. Buen Realty, not
having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution
issued by respondent Judge, let alone ousted from the ownership and possession of the property,
without first being duly afforded its day in court.
We are also unable to agree with petitioners that the Court of Appeals has erred in holding that the
writ of execution varies the terms of the judgment in Civil Case No. 87-41058, later affirmed in CAG.R. CV-21123. The Court of Appeals, in this regard, has observed:
Finally, the questioned writ of execution is in variance with the decision of the trial
court as modified by this Court. As already stated, there was nothing in said
decision 13 that decreed the execution of a deed of sale between the Cu Unjiengs and
respondent lessees, or the fixing of the price of the sale, or the cancellation of title in the
name of petitioner (Limpin vs. IAC, 147 SCRA 516; Pamantasan ng Lungsod ng Maynila
vs. IAC, 143 SCRA 311; De Guzman vs. CA, 137 SCRA 730; Pastor vs. CA, 122 SCRA
885).
It is likewise quite obvious to us that the decision in Civil Case No. 87-41058 could not have decreed
at the time the execution of any deed of sale between the Cu Unjiengs and petitioners.
WHEREFORE, we UPHOLD the Court of Appeals in ultimately setting aside the questioned Orders,
dated 30 August 1991 and 27 September 1991, of the court a quo. Costs against petitioners.
SO ORDERED.
[G.R. No. 133638. April 15, 2005]
PERPETUA VDA. DE APE, petitioner, vs. THE HONORABLE COURT

OF
APPEALS
and
GENOROSA
CAWIT
VDA.
DE
LUMAYNO, respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a petition for review on certiorari of the Decision[1] of the Court

of Appeals in CA-G.R. CV No. 45886 entitled, Generosa Cawit de Lumayno,
accompanied by her husband Braulio Lumayno v. Fortunato Ape, including his
wife Perpetua de Ape.
The pertinent facts are as follows:
Cleopas Ape was the registered owner of a parcel of land particularly
known as Lot No. 2319 of the Escalante Cadastre of Negros Occidental and
covered by Original Certificate of Title (OCT) No. RP 1379 (RP-154 [300]).
[2]
Upon Cleopas Apes death sometime in 1950, the property passed on to his
wife, Maria Ondoy, and their eleven (11) children, namely: Fortunato, Cornelio,
Bernalda, Bienvenido, Encarnacion, Loreta, Lourdes, Felicidad, Adela,
Dominador, and Angelina, all surnamed Ape.
On 15 March 1973, Generosa Cawit de Lumayno (private respondent
herein), joined by her husband, Braulio,[3] instituted a case for Specific
Performance of a Deed of Sale with Damages against Fortunato and his wife
Perpetua (petitioner herein) before the then Court of First Instance of Negros
Occidental. It was alleged in the complaint that on 11 April 1971, private
respondent and Fortunato entered into a contract of sale of land under which
for a consideration of P5,000.00, Fortunato agreed to sell his share in Lot No.
2319 to private respondent. The agreement was contained in a receipt
prepared by private respondents son-in-law, Andres Flores, at her behest.
Said receipt was attached to the complaint as Annex A thereof and later
marked as Exhibit G for private respondent. The receipt states:
April 11, 1971
TO WHOM IT MAY CONCERN:
This date received from Mrs. Generosa Cawit de Lumayno the sum of THIRTY
PESOS ONLY as Advance Payment of my share in Land Purchased, for FIVE
THOUSAND PESOS LOT #2319.
(Signed)
FORTUNATO APE
P30.00 WITNESS:
(Illegible) [4]
As private respondent wanted to register the claimed sale transaction, she
supposedly demanded that Fortunato execute the corresponding deed of sale
and to receive the balance of the consideration. However, Fortunato
unjustifiably refused to heed her demands. Private respondent, therefore,
prayed that Fortunato be ordered to execute and deliver to her a sufficient and
registrable deed of sale involving his one-eleventh (1/11) share or participation
in Lot No. 2319 of the Escalante Cadastre; to pay P5,000.00 in damages;
P500.00 reimbursement for litigation expenses as well as additional P500.00
for every appeal made; P2,000.00 for attorneys fees; and to pay the costs.[5]
Fortunato and petitioner denied the material allegations of the complaint
and claimed that Fortunato never sold his share in Lot No. 2319 to private
respondent and that his signature appearing on the purported receipt was
forged. By way of counterclaim, the defendants below maintained having
entered into a contract of lease with respondent involving Fortunatos portion
of Lot No. 2319. This purported lease contract commenced in 1960 and was
supposed to last until 1965 with an option for another five (5) years. The
annual lease rental was P100.00 which private respondent and her husband
allegedly paid on installment basis. Fortunato and petitioner also assailed
private respondent and her husbands continued possession of the rest of Lot
No. 2319 alleging that in the event they had acquired the shares of Fortunatos
co-owners by way of sale, he was invoking his right to redeem the same.
Finally, Fortunato and petitioner prayed that the lease contract between them
and respondent be ordered annulled; and that respondent be ordered to pay
them attorneys fees; moral damages; and exemplary damages.[6]
In their reply,[7] the private respondent and her husband alleged that they
had purchased from Fortunatos co-owners, as evidenced by various written
instruments,[8] their respective portions of Lot No. 2319. By virtue of these
sales, they insisted that Fortunato was no longer a co-owner of Lot No. 2319
thus, his right of redemption no longer existed.
Prior to the resolution of this case at the trial court level, Fortunato died
and was substituted in this action by his children named Salodada, Clarita,
Narciso, Romeo, Rodrigo, Marieta, Fortunato, Jr., and Salvador, all surnamed
Ape.[9]
During the trial, private respondent testified that she and her husband
acquired the various portions of Lot No. 2319 belonging to Fortunatos coowners. Thereafter, her husband caused the annotation of an adverse claim
on the certificate of title of Lot No. 2319.[10] The annotation states:
Entry No. 123539 Adverse claim filed by Braulio Lumayno. Notice of adverse claim
filed by Braulio Lumayno affecting the lot described in this title to the extent of
77511.93 square meters, more or less, the aggregate area of shares sold to him on the
basis of (alleged) sales in his possession. Doc. No. 157, Page No. 33, Book No. XI,
Series of 1967 of Alexander Cawit of Escalante, Neg. Occ. Date of instrument. June
22, 1967 at 8:30 a.m. (SGD) FEDENCIORRAZ, Actg. Register of Deeds. [11]
In addition, private respondent claimed that after the acquisition of those
shares, she and her husband had the whole Lot No. 2319 surveyed by a
certain Oscar Mascada who came up with a technical description of said piece
of land.[12] Significantly, private respondent alleged that Fortunato was present
when the survey was conducted.[13]
Also presented as evidence for private respondent were pictures taken of

some parts of Lot No. 2319 purportedly showing the land belonging to
Fortunato being bounded by a row of banana plants thereby separating it from
the rest of Lot No. 2319.[14]
As regards the circumstances surrounding the sale of Fortunatos portion
of the land, private respondent testified that Fortunato went to her store at the
time when their lease contract was about to expire. He allegedly demanded
the rental payment for his land but as she was no longer interested in
renewing their lease agreement, they agreed instead to enter into a contract
of sale which Fortunato acceded to provided private respondent bought his
portion of Lot No. 2319 for P5,000.00. Thereafter, she asked her son-in-law
Flores to prepare the aforementioned receipt. Flores read the document to
Fortunato and asked the latter whether he had any objection thereto.
Fortunato then went on to affix his signature on the receipt.
For her part, petitioner insisted that the entire Lot No. 2319 had not yet
been formally subdivided;[15] that on 11 April 1971 she and her husband went
to private respondents house to collect past rentals for their land then leased
by the former, however, they managed to collect only thirty pesos;[16] that
private respondent made her (petitioners) husband sign a receipt
acknowledging the receipt of said amount of money; [17] and that the contents of
said receipt were never explained to them.[18] She also stated in her testimony
that her husband was an illiterate and only learned how to write his name in
order to be employed in a sugar central. [19] As for private respondents
purchase of the shares owned by Fortunatos co-owners, petitioner maintained
that neither she nor her husband received any notice regarding those sales
transactions.[20] The testimony of petitioner was later on corroborated by her
daughter-in-law, Marietta Ape Dino.[21]
After due trial, the court a quo rendered a decision[22] dismissing both the
complaint and the counterclaim. The trial court likewise ordered that deeds or
documents representing the sales of the shares previously owned by
Fortunatos co-owners be registered and annotated on the existing certificate
of title of Lot No. 2319. According to the trial court, private respondent failed to
prove that she had actually paid the purchase price of P5,000.00 to Fortunato
and petitioner. Applying, therefore, the provision of Article 1350 of the Civil
Code,[23] the trial court concluded that private respondent did not have the right
to demand the delivery to her of the registrable deed of sale over Fortunatos
portion of the Lot No. 2319.
The trial court also rejected Fortunato and petitioners claim that they had
the right of redemption over the shares previously sold to private respondent
and the latters husband, reasoning as follows:
Defendants in their counterclaim invoke their right of legal redemption under Article
1623 of the New Civil Code in view of the alleged sale of the undivided portions of
the lot in question by their co-heirs and co-owners as claimed by the plaintiffs in their
complaint. They have been informed by the plaintiff about said sales upon the filing of
the complaint in the instant case as far back as March 14, 1973. Defendant themselves
presented as their very own exhibits copies of the respective deeds of sale or
conveyance by their said co-heirs and co-owners in favor of the plaintiffs or their
predecessors-in-interest way back on January 2, 1992 when they formally offered
their exhibits in the instant case; meaning, they themselves acquired possession of
said documentary exhibits even before they formally offered them in evidence. Under
Art. 1623 of the New Civil Code, defendants have only THIRTY (30) DAYS counted
from their actual knowledge of the exact terms and conditions of the deeds of sale or
conveyance of their co-heirs and co-owners share within which to exercise their right
of legal redemption.[24]
Within the reglementary period, both parties filed their respective notices
of appeal before the trial court with petitioner and her children taking
exception to the finding of the trial court that the period within which they could
invoke their right of redemption had already lapsed.[25] For her part, private
respondent raised as errors the trial courts ruling that there was no contract of
sale between herself and Fortunato and the dismissal of their complaint for
specific performance.[26]
The Court of Appeals, in the decision now assailed before us, reversed
and set aside the trial courts dismissal of the private respondents complaint
but upheld the portion of the court a quos decision ordering the dismissal of
petitioner and her childrens counterclaim. The dispositive portion of the
appellate courts decision reads:
WHEREFORE, the decision dated March 11, 1994, is hereby REVERSED and SET
ASIDE insofar as the dismissal of plaintiffs-appellants complaint is concerned, and
another one is entered ordering the defendant-appellant Fortunato Ape and/or his wife
Perpetua de Ape and successors-in-interest to execute in favor of plaintiff-appellant
Generosa Cawit de Lumayno a Deed of Absolute Sale involving the one-eleventh
(1/11) share or participation of Fortunato Ape in Lot No. 2319, Escalante Cadastre,
containing an area of 12,527.19 square meters, more or less, within (30) days from
finality of this decision, and in case of non-compliance with this Order, that the Clerk
of Court of said court is ordered to execute the deed on behalf of the vendor. The
decision is AFFIRMED insofar as the dismissal of defendants-appellants counterclaim
is concerned.
Without pronouncement as to costs.[27]
The Court of Appeals upheld private respondents position that Exhibit G
had all the earmarks of a valid contract of sale, thus:
Exhibit G is the best proof that the P5,000.00 representing the purchase price of the
1/11th share of Fortunato Ape was not paid by the vendee on April 11, 1971, and/or up
to the present, but that does not affect the binding force and effect of the document.
The vendee having paid the vendor an advance payment of the agreed purchase price
of the property, what the vendor can exact from the vendee is full payment upon his
execution of the final deed of sale. As is shown, the vendee precisely instituted this
action to compel the vendor Fortunato Ape to execute the final document, after she
was informed that he would execute the same upon arrival of his daughter Bala from
Mindanao, but afterwards failed to live up to his contractual obligation (TSN, pp. 1113, June 10, 1992).
It is not right for the trial court to expect plaintiff-appellant to pay the balance of the
purchase price before the final deed is executed, or for her to deposit the equivalent
amount in court in the form of consignation. Consignation comes into fore in the case
of a creditor to whom tender of payment has been made and refuses without just cause
to accept it (Arts. 1256 and 1252, N.C.C.; Querino vs. Pelarca, 29 SCRA 1). As
vendee, plaintiff-appellant Generosa Cawit de Lumayno does not fall within the
purview of a debtor.
We, therefore, find and so hold that the trial court should have found that exhibit G
bears all the earmarks of a private deed of sale which is valid, binding and enforceable
between the parties, and that as a consequence of the failure and refusal on the part of
the vendor Fortunato Ape to live up to his contractual obligation, he and/or his heirs
and successors-in-interest can be compelled to execute in favor of, and to deliver to
the vendee, plaintiff-appellant Generosa Cawit de Lumayno a registerable deed of
absolute sale involving his one-eleventh (1/11th) share or participation in Lot No.
2319, Escalante Cadastre, containing an area of 12,527.19 square meters, more or less,
within 30 days from finality of this decision, and, in case of non-compliance within
said period, this Court appoints the Clerk of Court of the trial court to execute on
behalf of the vendor the said document.[28]
The Court of Appeals, however, affirmed the trial courts ruling on the issue
of petitioner and her childrens right of redemption. It ruled that Fortunatos
receipt of the Second Owners Duplicate of OCT (RP) 1379 (RP-154 ([300]),
containing the adverse claim of private respondent and her husband,
constituted a sufficient compliance with the written notice requirement of
Article 1623 of the Civil Code and the period of redemption under this
provision had long lapsed.
Aggrieved by the decision of the appellate court, petitioner is now before
us raising, essentially, the following issues: whether Fortunato was furnished
with a written notice of sale of the shares of his co-owners as required by
Article 1623 of the Civil Code; and whether the receipt signed by Fortunato
proves the existence of a contract of sale between him and private
respondent.
In her memorandum, petitioner claimed that the Court of Appeals erred in
sustaining the court a quos pronouncement that she could no longer redeem
the portion of Lot No. 2319 already acquired by private respondent for no
written notice of said sales was furnished them. According to her, the Court of
Appeals unduly expanded the scope of the law by equating Fortunatos receipt
of Second Owners Duplicate of OCT (RP) 1379 (RP-154 ([300]) with the
written notice requirement of Article 1623. In addition, she argued that Exhibit
G could not possibly be a contract of sale of Fortunatos share in Lot No. 2319
as said document does not contain (a) definite agreement on the manner of
payment of the price.[29] Even assuming that Exhibit G is, indeed, a contract of
sale between private respondent and Fortunato, the latter did not have the
obligation to deliver to private respondent a registrable deed of sale in view of
private respondents own failure to pay the full purchase price of Fortunatos
portion of Lot No. 2319. Petitioner is also of the view that, at most, Exhibit G
merely contained a unilateral promise to sell which private respondent could
not enforce in the absence of a consideration distinct from the purchase price
of the land. Further, petitioner reiterated her claim that due to the illiteracy of
her husband, it was incumbent upon private respondent to show that the
contents of Exhibit G were fully explained to him. Finally, petitioner pointed out
that the Court of Appeals erred when it took into consideration the same
exhibit despite the fact that only its photocopy was presented before the court.
On the other hand, private respondent argued that the annotation on the
second owners certificate over Lot No. 2319 constituted constructive notice to
the whole world of private respondents claim over the majority of said parcel
of land. Relying on our decision in the case of Cabrera v. Villanueva,[30] private
respondent insisted that when Fortunato received a copy of the second
owners certificate, he became fully aware of the contracts of sale entered into
between his co-owners on one hand and private respondent and her
deceased husband on the other.
Private respondent also averred that although (Lot No. 2319) was not
actually partitioned in a survey after the death of Cleopas Ape, the land was
partitioned in a hantal-hantal manner by the heirs. Each took and possessed
specific portion or premises as his/her share in land, farmed their respective
portion or premises, and improved them, each heir limiting his/her
improvement within the portion or premises which were his/her respective
share.[31] Thus, when private respondent and her husband purchased the other
parts of Lot No. 2319, it was no longer undivided as petitioner claims.
The petition is partly meritorious.
Article 1623 of the Civil Code provides:
The right of legal pre-emption or redemption shall not be exercised except within
thirty days from the notice in writing by the prospective vendor, or by the vendor, as
the case may be. The deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given written notice
thereof to all possible redemptioners.
Despite the plain language of the law, this Court has, over the years, been
tasked to interpret the written notice requirement of the above-quoted
provision. In the case Butte v. Manuel Uy & Sons, Inc.,[32] we declared that
In considering whether or not the offer to redeem was timely, we think that the notice
given by the vendee (buyer) should not be taken into account. The text of Article 1623
clearly and expressly prescribes that the thirty days for making the redemption are to
be counted from notice in writing by the vendor. Under the old law (Civ. Code of
1889, Art. 1524), it was immaterial who gave the notice; so long as the redeeming coowner learned of the alienation in favor of the stranger, the redemption period began
to run. It is thus apparent that the Philippine legislature in Article 1623 deliberately
selected a particular method of giving notice, and that method must be deemed
exclusive. (39 Am. Jur., 237; Payne vs. State, 12 S.W. 2(d) 528). As ruled in Wampler
vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.] 275)
why these provisions were inserted in the statute we are not informed, but we may
assume until the contrary is shown, that a state of facts in respect thereto existed,
which warranted the legislature in so legislating.
The reasons for requiring that the notice should be given by the seller, and not by the
buyer, are easily divined. The seller of an undivided interest is in the best position to
know who are his co-owners that under the law must be notified of the sale. Also, the
notice by the seller removes all doubts as to fact of the sale, its perfection; and its
validity, the notice being a reaffirmation thereof, so that the party notified need not
entertain doubt that the seller may still contest the alienation. This assurance would
not exist if the notice should be given by the buyer.[33]
The interpretation was somehow modified in the case of De Conejero, et
al. v. Court of Appeals, et al.[34] wherein it was pointed out that Article 1623
does not prescribe a particular form of notice, nor any distinctive method for
notifying the redemptioner thus, as long as the redemptioner was notified in
writing of the sale and the particulars thereof, the redemption period starts to
run. This view was reiterated in Etcuban v. The Honorable Court of Appeals,
et al.,[35] Cabrera v. Villanueva,[36] Garcia, et al. v. Calaliman, et al., [37] Distrito, et
al. v. The Honorable Court of Appeals, et al., [38] and Mariano, et al. v. Hon.
Court of Appeals, et al.[39]
However, in the case of Salatandol v. Retes,[40] wherein the plaintiffs were
not furnished any written notice of sale or a copy thereof by the vendor, this
Court again referred to the principle enunciated in the case of Butte. As
observed by Justice Vicente Mendoza, such reversion is only sound, thus:
Art. 1623 of the Civil Code is clear in requiring that the written notification should
come from the vendor or prospective vendor, not from any other person. There is,
therefore, no room for construction. Indeed, the principal difference between Art.
1524 of the former Civil Code and Art. 1623 of the present one is that the former did
not specify who must give the notice, whereas the present one expressly says the
notice must be given by the vendor. Effect must be given to this change in statutory
language. [41]
In this case, the records are bereft of any indication that Fortunato was
given any written notice of prospective or consummated sale of the portions of
Lot No. 2319 by the vendors or would-be vendors. The thirty (30)-day
redemption period under the law, therefore, has not commenced to run.
Despite this, however, we still rule that petitioner could no longer invoke
her right to redeem from private respondent for the exercise of this right
presupposes the existence of a co-ownership at the time the conveyance is
made by a co-owner and when it is demanded by the other co-owner or coowners.[42] The regime of co-ownership exists when ownership of an undivided
thing or right belongs to different persons.[43] By the nature of a co-ownership,
a co-owner cannot point to specific portion of the property owned in common
as his own because his share therein remains intangible. [44] As legal
redemption is intended to minimize co-ownership,[45] once the property is
subdivided and distributed among the co-owners, the community ceases to
exist and there is no more reason to sustain any right of legal redemption.[46]
In this case, records reveal that although Lot No. 2319 has not yet been
formally subdivided, still, the particular portions belonging to the heirs of
Cleopas Ape had already been ascertained and they in fact took possession
of their respective parts. This can be deduced from the testimony of petitioner
herself, thus:
Q When the plaintiffs leased the share of your husband, were there any metes
and bounds?
A It was not formally subdivided. We have only a definite portion. (hantalhantal)
Q This hantal-hantal of your husband, was it also separate and distinct from
the hantal-hantal or the share of the brothers and sisters of your
husband?
A Well, this property in question is a common property.
Q To the north, whose share was that which is adjacent to your husbands
assumed partition?
A I do not know what [does] this north [mean].
COURT
(To Witness)
Q To the place from where the sun rises, whose share was that?
A The shares of Cornelia, Loreta, Encarnacion and Adela.
Q How could you determine their own shares?
A They were residing in their respective assumed portions.
Q How about determining their respective boundaries?
A It could be determined by stakes and partly a row of banana plantations
planted by my son-in-law.
Q Who is this son-in-law you mentioned?
A Narciso Ape.
ATTY. CAWIT
(Continuing)
Q You said that there were stakes to determine the hantal-hantal of your
husband and the hantal-hantal of the other heirs, did I get you right?
ATTY. TAN
Admitted, Your Honor.
ATTY. CAWIT
Q Mrs. Ape, in 1960, Cleopas Ape was already dead, is that correct?
A Certainly, since he died in 1950.
Q By the manifestation of your counsel that the entire land (13 hectares) of
your father-in-law, Cleopas Ape, was leased to Generosa Lumayno, is
this correct?
A No, it is only the assumed portion of my husband [which] was leased to
Generosa Lumayno.
Q For clarification, it was only the share of your husband [which] was leased
to Generosa Cawit Lumayno?
A Yes.[47]
ATTY. CAWIT
Q My question: is that portion which you said was leased by your husband to
the Lumayno[s] and which was included to the lease by your mother-inlaw to the Lumayno[s], when the Lumayno[s] returned your husband[s]
share, was that the same premises that your husband leased to the
Lumayno[s]?
A The same.
Q In re-possessing this portion of the land corresponding to the share of your
husband, did your husband demand that they should re-possess the land
from the Lumayno[s] or did the Lumayno[s] return them to your
husband voluntarily?
A They just returned to us without paying the rentals.
COURT
Q Was the return the result of your husbands request or just voluntarily they
returned it to your husband?
A No, sir, it was just returned voluntarily, and they abandoned the area but my
husband continued farming.[48]
Similarly telling of the partition is the stipulation of the parties during the
pre-trial wherein it was admitted that Lot No. 2319 had not been subdivided
nevertheless, Fortunato Ape had possessed a specific portion of the land
ostensibly corresponding to his share.[49]
From the foregoing, it is evident that the partition of Lot No. 2319 had
already been effected by the heirs of Cleopas Ape. Although the partition
might have been informal is of no moment for even an oral agreement of
partition is valid and binding upon the parties. [50] Likewise, the fact that the
respective shares of Cleopas Apes heirs are still embraced in one and the
same certificate of title and have not been technically apportioned does not
make said portions less determinable and identifiable from one another nor
does it, in any way, diminish the dominion of their respective owners.[51]
Turning now to the second issue of the existence of a contract of sale, we
rule that the records of this case betray the stance of private respondent that
Fortunato Ape entered into such an agreement with her.
A contract of sale is a consensual contract, thus, it is perfected by mere
consent of the parties. It is born from the moment there is a meeting of minds
upon the thing which is the object of the sale and upon the price. [52] Upon its
perfection, the parties may reciprocally demand performance, that is, the
vendee may compel the transfer of the ownership and to deliver the object of
the sale while the vendor may demand the vendee to pay the thing sold. [53] For
there to be a perfected contract of sale, however, the following elements must
be present: consent, object, and price in money or its equivalent. In the case
of Leonardo v. Court of Appeals, et al.,[54] we explained the element of consent,
to wit:
The essence of consent is the agreement of the parties on the terms of the contract, the
acceptance by one of the offer made by the other. It is the concurrence of the minds of
the parties on the object and the cause which constitutes the contract. The area of
agreement must extend to all points that the parties deem material or there is no
consent at all.
To be valid, consent must meet the following requisites: (a) it should be intelligent, or
with an exact notion of the matter to which it refers; (b) it should be free and (c) it
should be spontaneous. Intelligence in consent is vitiated by error; freedom by
violence, intimidation or undue influence; spontaneity by fraud. [55]
In this jurisdiction, the general rule is that he who alleges fraud or mistake
in a transaction must substantiate his allegation as the presumption is that a
person takes ordinary care for his concerns and that private dealings have
been entered into fairly and regularly.[56] The exception to this rule is provided
for under Article 1332 of the Civil Code which provides that [w]hen one of the
parties is unable to read, or if the contract is in a language not understood by
him, and mistake or fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to the former.
In this case, as private respondent is the one seeking to enforce the
claimed contract of sale, she bears the burden of proving that the terms of the
agreement were fully explained to Fortunato Ape who was an illiterate. This
she failed to do. While she claimed in her testimony that the contents of the
receipt were made clear to Fortunato, such allegation was debunked by
Andres Flores himself when the latter took the witness stand. According to
Flores:
ATTY. TAN
Q Mr. Witness, that receipt is in English, is it not?

A Yes, sir.
Q When you prepared that receipt, were you aware that Fortunato Ape doesnt
know how to read and write English?
A Yes, sir, I know.
Q Mr. Witness, you said you were present at the time of the signing of that
alleged receipt of P30.00, correct?
A Yes, sir.
Q Where, in what place was this receipt signed?
A At the store.
Q At the time of the signing of this receipt, were there other person[s] present
aside from you, your mother-in-law and Fortunato Ape?
A In the store, yes, sir.
Q When you signed that document of course you acted as witness upon
request of your mother-in-law?
A No, this portion, I was the one who prepared that document.
Q Without asking of (sic) your mother-in-law, you prepared that document or
it was your mother-in-law who requested you to prepare that document
and acted as witness?
A She requested me to prepare but does not instructed (sic) me to act as
witness. It was our opinion that whenever I prepared the document, I
signed it as a witness.
Q Did it not occur to you to ask other witness to act on the side of Fortunato
Ape who did not know how to read and write English?
A It occurred to me.
Q But you did not bother to request a person who is not related to your
mother-in-law, considering that Fortunato Ape did not know how to read
and write English?
A The one who represented Fortunato Ape doesnt know also how to read and
write English. One a maid.
Q You mentioned that there [was another] person inside the store, under your
previous statement, when the document was signed, there [was another]
person in the store aside from you, your mother-in-law and Fortunato
Ape, is not true?
A That is true, there is one person, but that person doesnt know how to
read also.
Q Of course, Mr. Witness, since it occurred to you that there was need for
other witness to sign that document for Fortunato Ape, is it not a fact that
the Municipal Building is very near your house?
A Quite (near).
Q But you could readily proceed to the Municipal Building and request one
who is knowledgeable in English to act as witness?
A I think there is no need for that small receipt. So I dont bother myself to go.
Q You did not consider that receipt very important because you said that small
receipt?
A Yes, I know.[57]
As can be gleaned from Floress testimony, while he was very much aware
of Fortunatos inability to read and write in the English language, he did not
bother to fully explain to the latter the substance of the receipt (Exhibit G). He
even dismissed the idea of asking somebody else to assist Fortunato
considering that a measly sum of thirty pesos was involved. Evidently, it did
not occur to Flores that the document he himself prepared pertains to the
transfer altogether of Fortunatos property to his mother-in-law. It is precisely in
situations such as this when the wisdom of Article 1332 of the Civil Code
readily becomes apparent which is to protect a party to a contract
disadvantaged by illiteracy, ignorance, mental weakness or some other
handicap.[58]
In sum, we hold that petitioner is no longer entitled to the right of
redemption under Article 1632 of the Civil Code as Lot No. 2319 had long
been partitioned among its co-owners. This Court likewise annuls the contract
of sale between Fortunato and private respondent on the ground of vitiated
consent.
WHEREFORE, premises considered, the decision dated 25 March 1998 of
the Court of Appeals is hereby REVERSED and SET ASIDE and the decision
dated 11 March 1994 of the Regional Trial Court, Branch 58, San Carlos City,
Negros Occidental, dismissing both the complaint and the counterclaim, is
hereby REINSTATED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
[G.R. No. 134219. June 08, 2005]
SPOUSES MARIO AND ELIZABETH TORCUATOR, petitioners, vs.

SPOUSES REMEGIO AND GLORIA BERNABE and SPOUSES
DIOSDADO and LOURDES SALVADOR, respondents.
DECISION
TINGA, J.:
In the instant Petition, spouses Mario and Elizabeth Torcuator assail

the Decision of the Court of Appeals in C.A.-G.R. CV No. 36427, which affirmed the
trial courts dismissal of their complaint for specific performance, and
its Resolution which denied their motion for reconsideration.
[1]
[2]
[3]
[4]
The facts as summarized by the Court of Appeals are as follows:
The subject of this action is Lot 17, Block 5 of the Ayala Alabang Village,
Muntinlupa, Metro-Manila, with an area of 569 square meters and covered by TCT
No. S-79773. The lower court found that the above parcel of land was purchased by
the spouses Diosdado and Lourdes Salvador (Salvadors, for short) from the
developers of Ayala Alabang subject, among others, to the following conditions:-It is part of the condition of buying a lot in Ayala Alabang Village (a) that the lot buyer
shall deposit with Ayala Corporation a cash bond (about P17,000.00 for the Salvadors)
which shall be refunded to him if he builds a residence thereon within two (2) years of
purchase, otherwise the deposit shall be forfeited, (b) architectural plans for any
improvement shall be approved by Ayala Corporation, and (c) no lot may be resold by
the buyer unless a residential house has been constructed thereon (Ayala Corporation
keeps the Torrens Title in their [sic] possession).
(p. 5, RTC Decision)
Evidences on record further reveal that on December 18, 1980, the Salvadors sold the
parcel of land to the spouses Remigio and Gloria Bernabe (Bernabes, for expediency).
Given the above restrictions, the Salvadors concomitantly executed a special power of
attorney authorizing the Bernabes to construct a residential house on the lot and to
transfer the title of the property in their names.
The Bernabes, on the other hand, without making any improvement, contracted to sell
the parcel of land to the spouses Mario and Elizabeth Torcuator (Torcuators, for
brevity) sometime in September of 1986. Then again, confronted by the Ayala
Alabang restrictions, the parties agreed to cause the sale between the Salvadors and
the Bernabes cancelled (Exhibit D), in favor of (a) a new deed of sale from the
Salvadors directly to the Torcuators; (b) a new Irrevocable Special Power of Attorney
(Exhibit F) executed by the Salvadors to the Torcuators in order for the latter to build
a house on the land in question; and (c) an Irrevocable Special Power of Attorney
(Exhibit E) from the Salvadors to the Bernabes authorizing the latter to sell, transfer
and convey, with power of substitution, the subject lot.
The Torcuators thereafter had the plans of their house prepared and offered to pay the
Bernabes for the land upon delivery of the sale contract. For one reason or another, the
deed of sale was never consummated nor was payment on the said sale ever effected.
Subseuqently, the Bernabes sold the subject land to Leonardo Angeles, a brother-inlaw (Exh. 7). The document however is not notarized. As a result, the Torcuators
commenced the instant action against the Bernabes and Salvadors for Specific
Performance or Rescission with Damages.
After trial, the court a quo rendered its decision, the decretal portion reads:-From all the foregoing disquisition, especially since the plaintiffs did not suffer any
real damage (by January, 1987 they could have purchased another lot in Ayala
Alabang, and the architectural plans they commissioned Arch. Selga to prepare could
then be used by the plaintiffs), the complaint filed by the plaintiff spouses is
dismissed. Since the plaintiff acted with sincerity and without delay in asserting what
they believed to be their prerogatives, i.e., without any malice or desire to take
advantage of another, the counter-claim interposed by the Bernabes against the
Torcuator spouses is similarly dismissed.
Makati, Metro-Manila, August 20, 1991.
[5]
The Court of Appeals dismissed the appeal, ruling that the sale between the
Bernabes and the Torcuators was tainted with serious irregularities and bad faith. The
appellate court agreed with the trial courts conclusion that the parties entered into the
contract with the intention of reneging on the stipulation disallowing the sale or transfer
of vacant lots in Ayala Alabang Village.
It also ruled that the parties deprived the government of taxes when they made it
appear that the property was sold directly by the Salvadors to the Torcuators. Since
there were actually two sales, i.e., the first sale between the Salvadors and the
Bernabes and the second between the Bernabes and Torcuators, taxes should have
been paid for both transfers.
[6]
The Court of Appeals denied

its Resolution dated June 15, 1998.
petitioners
motion
for
reconsideration
in
[7]
Petitioners then filed the instant petition, averring that the appellate court erred in
dismissing their appeal on the strength of issues which were neither pleaded nor
proved. The conditions allegedly imposed by Ayala Corporation on the sale of lots in
Ayala Alabang Village were: (a) that the lot-buyer shall deposit with Ayala Corporation a
cash bond (aboutP17,000.00 for the Salvadors) which shall be refunded to him if he
builds a residence thereon within two (2) years of purchase, otherwise the deposit shall
be forfeited; (b) architectural plans for any improvement shall be approved by Ayala
Corporation; and (c) no lot may be resold by the buyer unless a residential house has
been constructed thereon (Ayala Corporation keeps the Torrens title in their (sic)
possession.)
[8]
According to petitioners, the stipulation prohibiting the sale of vacant lots in Ayala
Alabang Village, adverted to by the appellate court in its decision as evidence that the
sale between the Bernabes and the Torcuators was tainted with serious irregularities,
was never presented or offered in evidence by any of the parties. Without such
stipulation having been presented, marked and offered in evidence, the trial court and
the appellate court should not have considered the same.
The appellate court allegedly also erred in declaring that the contract of sale subject
of the case is void, as it was intended to deprive the government of revenue since the
matter of taxes was not even mentioned in the appealed decision of the trial court.
Further, petitioners assert that the contract was a perfected contract of sale not a
mere contract to sell. The trial court thus erred in declaring that the contract was void
due only to petitioners failure to deliver the agreed consideration. Likewise, the fact that
the contract calls for the payment of the agreed purchase price in United States Dollars
does not result in the contract being void. The most that could be demanded, in
accordance with jurisprudence, is to pay the obligation in Philippine currency.
Petitioners also dispute the trial courts finding that they did not suffer any real
damage as a result of the transaction. On the contrary, they claim that respondents
refusal to transfer the property caused them actual and moral damages.
Respondents filed their Comment/Opposition (To the Petition for Certiorari) dated
November 4, 1998 countering that petitioners knew of the condition prohibiting the sale
of vacant lots in Ayala Alabang Village as the same was annotated on the title of the
property which was submitted and adopted by both parties as their evidence. The fact
that the agreement required petitioners to construct a house in the name of the
Salvadors shows that petitioners themselves knew of the condition and acknowledged
its validity.
[9]
As regards petitioners contention that the Court of Appeals should not have ruled on
the matter of taxes due the government, respondents assert that the appellate court has
the power to review the entire case to determine the validity of the judgment of the lower
court. Thus, it may review even matters which were not raised on appeal.
Respondents refer to the circumstances surrounding the transaction as proof that
the parties entered into a mere contract to sell and not a contract of sale. Allegedly, the
memorandum containing the agreement of the parties merely used the term offer. The
payment of the purchase price was ostensibly a condition sine qua non to the execution
of the deed of sale in favor of petitioners, especially since the Bernabes came to the
Philippines with the express purpose of selling the property and were leaving for the
United States as soon as they were paid. Moreover, petitioners were required to
construct a residential house on the property before it could be sold to them in
accordance with the condition imposed by Ayala Corporation.
Further, respondents maintain that the transaction was not consummated due to the
fault of petitioners who failed not only to prepare the necessary documentation but also
to pay the purchase price for the property. They also argue that the special power of
attorney executed by the Salvadors in favor of petitioners merely granted the latter the
right to construct a residential house on the property in the name of the Salvadors. The
original document was not even given to the Torcuators precisely because they have
not paid the purchase price.
Petitioners filed a Reply dated January 20, 1999 in reiteration of their arguments.
[10]
In the Resolution dated February 10, 1999, the parties were required to file their
respective memoranda. Accordingly, petitioners filed their Memorandum on April 19,
1999. On the other hand, in view of respondents disappearance without notice, the
Court resolved to dispense with their memorandum.
[11]
[12]
[13]
The trial court denied petitioners complaint on three (3) grounds, namely: (1) the
alleged nullity of the contract between the parties as it violated Ayala Corporations
condition that the construction of a house is a prerequisite to any sale of lots in Ayala
Alabang Village; (2) non-payment of the purchase price; and (3) the nullity of the
contract as it called for payment in United States Dollars. To these reasons, the Court of
Appeals added a fourth basis for denying petitioners appeal and that is the alleged
nullity of the agreement because it deprived the government of taxes.
An analysis of the facts obtaining in this case leads us to affirm the assailed
decisions although from a slightly different but related thrust.
Let us begin by characterizing the agreement entered into by the parties, i.e.,
whether the agreement is a contract to sell as the trial court ruled, or a contract of sale
as petitioners insist.
The differences between a contract to sell and a contract of sale are well-settled in
jurisprudence. As early as 1951, we held that in a contract of sale, title passes to the
buyer upon delivery of the thing sold, while in a contract to sell, ownership is reserved in
the seller and is not to pass until the full payment of the purchase price is made. In the
first case, non-payment of the price is a negative resolutory condition; in the second
case, full payment is a positive suspensive condition. Being contraries, their effect in law
cannot be identical. In the first case, the vendor has lost and cannot recover the
ownership of the land sold until and unless the contract of sale is itself resolved and set
aside. In the second case, however, the title remains in the vendor if the vendee does
not comply with the condition precedent of making payment at the time specified in the
contract.
[14]
In other words, in a contract to sell, ownership is retained by the seller and is not to
pass to the buyer until full payment of the price or the fulfillment of some other
conditions either of which is a future and uncertain event the non-happening of which is
not a breach, casual or serious, but simply an event that prevents the obligation of the
vendor to convey title from acquiring binding force.
[15]
We have carefully examined the agreement between the parties and are far from
persuaded that it was a contract of sale.
Firstly, the agreement imposed upon petitioners the obligation to fully pay the
agreed purchase price for the property. That ownership shall not pass to petitioners until
they have fully paid the price is implicit in the agreement. Notably, respondent Remigio
Bernabe testified, without objection on the part of petitioners, that he specifically
informed petitioners that the transaction should be completed, i.e., that he should
receive the full payment for the property, before he left for the United States on October
14, 1986.
[16]
Moreover, the deed of sale would have been issued only upon full payment of the
purchase price, among other things. Petitioner Mario Torcuator acknowledged this fact
when he testified that the deed of sale and original special power of attorney were only
to be delivered upon full payment of the purchase price.
[17]
As correctly observed by the trial court, the Salvadors did not execute a deed of
sale in favor of petitioners, and instead executed a special power of attorney authorizing
the Bernabes to sell the property on their behalf, in order to afford the latter a measure
of protection that would guarantee full payment of the purchase price before any deed
of sale in favor of petitioners was executed.
Remarkably, the records are bereft of any indication that petitioners ever attempted
to tender payment or consign the purchase price as required by law.
The Complaint filed by petitioners makes no mention at all of a tender of payment or
consignation having been made, much less that petitioners are willing and ready to pay
the purchase price. Petitioners averments to the effect that they have sufficient funds to
pay for the property and have even applied for a telegraphic transfer from their bank
account to the Bernabes bank account, uncoupled with actual tender and consignation,
are utterly self- serving.
[18]
The trial court correctly noted that petitioners should have consigned the amount
due in court instead of merely sending respondents a letter expressing interest to push
through with the transaction. Mere sending of a letter by the vendee expressing the
intention to pay without the accompanying payment is not considered a valid tender of
payment. Consignation of the amount due in court is essential in order to extinguish the
obligation to pay and oblige the vendor to convey title.
[19]
On this score, even assuming that the agreement was a contract of sale,
respondents may not be compelled to deliver the property and execute the deed of
absolute sale. In cases such as the one before us, which involve the performance of an
obligation and not merely the exercise of a privilege or right, payment may be effected
not by mere tender alone but by both tender and consignation. The rule is different in
cases which involve an exercise of a right or privilege, such as in an option contract,
legal redemption or sale with right to repurchase, wherein mere tender of payment
would be sufficient to preserve the right or privilege. Hence, absent a valid tender of
payment and consignation, petitioners are deemed to have failed to discharge their
obligation to pay.
[20]
Secondly, the parties clearly intended the construction of a residential house on the
property as another suspensive condition which had to be fulfilled. Ayala Corporation
retained title to the property and the Salvador spouses were precluded from selling it
unless a residence had been constructed thereon. The Ayala stipulation was a
pervasive, albeit unwritten, condition in light of which the transaction in this case was
negotiated. The parties undoubtedly understood that they had to contend with the Ayala
stipulation which is why they resorted to the execution of a special power of attorney
authorizing petitioners to construct a residential building on the property in the name of
the Salvadors. Had the agreement been a contract of sale as petitioners would impress
upon the Court, the special power of attorney would have been entirely unnecessary as
petitioners would have had the right to compel the Salvadors to transfer ownership to
them.
[21]
Thirdly, there was neither actual nor constructive delivery of the property to
petitioners. Apart from the fact that no public document evidencing the sale was
executed, which would have been considered equivalent to delivery, petitioners did not
take actual, physical possession of the property. The special power of attorney, which
petitioners count on as evidence that they took possession of the property, can by no
means be interpreted as delivery or conveyance of ownership over the property. Taken
by itself, in fact, the special power of attorney can be interpreted as tied up with any
number of property arrangements, such as a contract of lease or a joint venture. That is
why respondents, especially the Salvadors, never intended to deliver the title to
petitioners and conformably with that they executed only a special power of attorney.
Indeed, continuously looming large as an essentiality in their judgment to dispose of
their valuable property is the prior or contemporaneous receipt of the commensurate
price therefor.
This brings us to the application of the Statute of Frauds. Article 1403 of the Civil
Code provides:
Art. 1403. The following contracts are unenforceable unless they are ratified:
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum thereof, be in writing, and subscribed
by the party charged, or by his agent; evidence, therefore, of the agreement cannot be
received without the writing, or a secondary evidence of its contents:
(e) An agreement for the leasing for a longer period than one year, or for the sale of
real property or an interest therein;
....
The term Statute of Frauds is descriptive of statutes which require certain classes of
contracts, such as agreements for the sale of real property, to be in writing. It does not
deprive the parties the right to contract with respect to the matters therein involved, but
merely regulates the formalities of the contract necessary to render it enforceable. The
purpose of the statute is to prevent fraud and perjury in the enforcement of obligations
depending for their evidence on the unassisted memory of witnesses by requiring
certain enumerated contracts and transactions to be evidenced by a writing signed by
the party to be charged. The written note or memorandum, as contemplated by Article
1403 of the Civil Code, should embody the essentials of the contract.
[22]
[23]
In the instant case, petitioners present as written evidence of the agreement the
special power of attorney executed in their favor by the Salvadors and the summary of
agreement allegedly initialed by respondent Remigio Bernabe. These documents do
not suffice as notes or memoranda as contemplated by Article 1403 of the Civil Code.
[24]
The special power of attorney does not contain the essential elements of the
purported contract and, more tellingly, does not even refer to any agreement for the sale
of the property. In any case, it was rendered virtually inoperable as a consequence of
the Salvadors adamant refusal to part with their title to the property.
The summary of agreement, on the other hand, is fatally deficient in the
fundamentals and ambiguous in the rest of its terms. For one, it does not mention when
the alleged consideration should be paid and transfer of ownership effected. The
document does not even refer to a particular property as the object thereof. For another,
it is unclear whether the supposed purchase price is P600.00, P590.00
or P570.00/square meter. The other conditions, such as payment of documentary stamp
taxes, capital gains tax and other registration expenses, are likewise uncertain.
Conformably with Article 1405 of the Civil Code, however, respondents
acceptance of the agreement foisted by petitioners on them is deemed to have arisen
from their failure to object to the testimony of petitioner Mario Torcuator on the
matter and their cross-examination of said petitioner thereon.
[25]
[26]
[27]
Be that as it may, considering our ruling that the agreement was a contract to sell,
respondents were not obliged to convey title to the property before the happening of two
(2) suspensive conditions, namely: full payment of the purchase price and construction
of a residence on the property. They were acting perfectly within their right when they
considered the agreement cancelled after unsuccessfully demanding payment from
petitioners.
That said, the question of whether the transaction violated the Uniform Currency
Act, Republic Act No. 529, is already moot. The contract having been cancelled, any
resolution regarding the validity of the stipulation requiring payment of the purchase
price in foreign currency would not serve any further purpose.
Petitioners next insist that the condition requiring the construction of a house on any
residential lot located in Ayala Alabang Village before it can be sold was never
submitted in evidence and was never testified to by any of the witnesses presented
during the trial. Hence, the trial court and the Court of Appeals should not have used
this as basis for its denial of petitioners cause.
This assertion, however, is completely untrue. While the Formal Offer of
Evidence of petitioners, respondents Offer of Exhibits, and the Formal Offer of
Evidence (On Rebuttal) of petitioners make no mention of any stipulation prohibiting
the sale of vacant lots in Ayala Alabang Village, respondents maintain that petitioners
are fully aware of the prohibition as the conditions imposed by Ayala Corporation on the
sale of Ayala Alabang lots are inscribed on the title of the property which was submitted
in evidence by both parties.
[28]
[29]
[30]
Despite petitioners remonstration that the inscriptions on the title are hardly legible,
we are inclined to give credence to respondents account. It is quite implausible that a
lawyer such as petitioner Mario Torcuator would not take the precaution of checking the
original title of the property with the Registry of Deeds to ascertain whether there are
annotations therein that would prejudice his position.
[31]
More importantly, petitioner Mario Torcuator himself testified on the existence of the
condition prohibiting the sale of vacant lots in Ayala Alabang Village, viz:
ATTY. J. DE DIOS, JR.
Q -Mr. witness aside from this summary of agreement which has been marked as
Exhibit J do you still have a document relating to his transaction between you and
the defendant?
A -Yes, sir, as I indicated in my earlier testimony there was supposed to be a letter
addressed to Ayala Corporation which defendant Salvador should sign in order to
request Ayala to deliver to me the TCT covering the lot subject of the transaction.
Q -This letter that you are referring to do you still have a copy of that letter?
A -Yes, sir.
Q -I am showing to you a xerox copy of a letter addressed to Ayala Corporation and
signed by Diosdado and Lourdes Salvador, can you please explain to this Court
what is the relation of this document with what you are referring to executed by the
defendant Diosdado Salvador and Lourdes Salvador addressed to Ayala
Corporation?
A -This is the letter of Mr. Salvador, sir, signed in my presence.
Q -Can you tell the Court where is the original of this document?
A -All of the original copies of that letter are with the defendant Bernabe, sir.
Q -Can you tell the Court how did you come to have a xerox copy of this document?
A -Yes, because as soon as the copies of the documents for the transaction were
signed by Mrs. Salvador who was then in New York, they were sent by the
spouses to the daughter of Mr. Salvador who in turn told me that all the originals
are supposed to be delivered to Mr. Bernabe and I was given a xerox copy of the
same.
- And which for purpose of identification, your Honor, may we request that this letter
addressed to Ayala Corporation and signed by Diosdado Salvador and Lourdes
Salvador be marked as Exhibit K for the plaintiff, your Honor.
COURT
- Mark it.
...
- Mr. Witness, this letter appears to be, does it contain any date? Can you tell this
Court why this document does not contain the date?
ATTY. A. MAGNO
- Incompetent, your Honor, because he was not the one who made that document.
COURT
- Let him explain.

ATTY. MAGNO
- Yes, your Honor.
- Because, your Honor, there is a requirement by Ayala Corporation that no lot
or property may be transferred until there is a complete building or
structure built on the lot and so what I was supposed to get only from
Mr. Salvador, aside from the deed of absolute sale, is merely a special
power of attorney to authorize me to construct my house in the lot and
upon completion of the house that is the time that I would be allowed
by Ayala Corporation to transfer the property in my name. Therefore, the
letter requesting Ayala Corporation to release the title in the name of Mr.
Salvador to was deliberately undated because it would be only dated when I
completed the house.[32] [Emphasis supplied]
The fact that petitioners agreed to construct a residential house on the property in
the name of the Salvadors further proves that they knew that a direct sale to them of a
vacant lot would contravene the condition imposed by Ayala Corporation on the original
buyers of lots in Ayala Alabang Village. Hence, they agreed on the elaborate plan
whereby the Salvador spouses, in whose names the property was registered, would
execute a special power of attorney in favor of petitioners authorizing the latter to
construct a residential house on the property in the name of the Salvadors. The records
even indicate that the documents to effectuate this plan were prepared by petitioner
Mario Torcuator himself.
In his testimony, for instance, petitioner Mario Torcuator stated that: [B]ased on our
discussion, your Honor, from the P600 per square meter price, we agreed upon, they
agreed to give me a rebate of 5% in the form of discount because there was a problem
in the documentation which I tried to solve which are the papers in favor of Bernabe
missing. I suggested to Mr. Bernabe that we prepare a new set of document which will
be signed by Mr. Salvador as the previous owner and because of that I will be getting in
effect a 5% discount as my commission.
[33]
This was confirmed by respondent Remigio Bernabe:

Q - Now, where there any documents presented to you during that
occasion?
A - Yes, sir.
Q - By whom?
A - Mr. Torcuator prepared some documents for me to sign.
Q - And do you recall what was that documents?
A - Yes, sir. Mr. Torcuator prepared a documents for cancellation
of the deed of sale of Mr. Salvador to Remigio Bernabe, and cancellation
also of the irrevocable power of attorney of Salvador to Bernabe, and power
of attorney of Salvador authorizing Remigio Bernabe to sell the property and
power of attorney of Salvador given to Mr. Torcuator.[34]
Petitioners therefore cannot feign ignorance of the condition imposed by Ayala

Corporation.
We do not agree, however, with the trial court and appellate courts ruling that the
transaction between the parties was void for being contrary to good customs and
morals.
[35]
In order to declare the agreement void for being contrary to good customs and
morals, it must first be shown that the object, cause or purpose thereof contravenes the
generally accepted principles of morality which have received some kind of social and
practical confirmation.
[36]
We are not inclined to rule that the transaction in this case offended good customs
and morals. It should be emphasized that the proscription imposed by Ayala
Corporation was on the resale of the property without a residential house having been
constructed thereon. The condition did not require that the original lot buyer should
himself construct a residential house on the property, only that the original buyer may
not resell a vacant lot. In view of our finding that the agreement between the parties was
a mere contract to sell, no violation of the condition may be inferred from the transaction
as no transfer of ownership was made. In fact, the agreement in this case that
petitioners will construct a residential house on the property in the name of the
Salvadors (who retained ownership of the property until the fulfillment of the twin
conditions of payment and construction of a residence) was actually in compliance with
or obeisance to the condition.
Finally, the issue of whether the agreement violated the law as it deprived the
government of capital gains tax is wholly irrelevant. Capital gains taxes, after all, are
only imposed on gains presumed to have been realized from sales, exchanges or
dispositions of property. Having declared that the contract to sell in this case was
aborted by petitioners failure to comply with the twin suspensive conditions of full
payment and construction of a residence, the obligation to pay taxes never arose.
Hence, any error the appellate court may have committed when it passed upon the
issue of taxes despite the fact that no evidence on the matter was pleaded, adduced or
proved is rather innocuous and does not warrant reversal of the decisions under review.
WHEREFORE, the instant petition is DENIED. Costs against petitioners.
SO ORDERED.
Austria-Martinez, (Acting Chairman), Callejo, Sr., and Chico-Nazario, JJ., concur.
Puno, (Chairman), on official leave.
[G.R. No. 103577. October 7, 1996]
ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A.

CORONEL, ANNABELLE C. GONZALES (for herself and on
behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A.
CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS

MABANAG, petitioners, vs.
THE
COURT
OF
APPEALS,
CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ,
assisted by GLORIA F. NOEL as attorney-in-fact, respondents.
DECISION
MELO, J.:
The petition before us has its roots in a complaint for specific performance
to compel herein petitioners (except the last named, Catalina Balais
Mabanag) to consummate the sale of a parcel of land with its improvements
located along Roosevelt Avenue in Quezon City entered into by the parties
sometime in January 1985 for the price of P1,240,000.00.
The undisputed facts of the case were summarized by respondent court in
this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter
referred to as Coronels) executed a document entitled Receipt of Down Payment
(Exh. A) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as
Ramona) which is reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 - Total amount
50,000.00 - Down payment
-----------------------------------------P1,190,000.00 - Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of
Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT
No. 119627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased father,
Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the
down payment above-stated.
On our presentation of the TCT already in or name, We will immediately execute the
deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall
immediately pay the balance of theP1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon
execution of the document aforestated;
2. The Coronels will cause the transfer in their names of the title of the property
registered in the name of their deceased father upon receipt of the Fifty Thousand
(P50,000.00) Pesos down payment;
3. Upon the transfer in their names of the subject property, the Coronels will execute
the deed of absolute sale in favor of Ramona and the latter will pay the former the
whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz
(hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of
Fifty Thousand (P50,000.00) Pesos (Exh. B, Exh. 2).
On February 6, 1985, the property originally registered in the name of the Coronels
father was transferred in their names under TCT No. 327043 (Exh. D; Exh 4)
On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to
intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One
Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid
Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C)
For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona
by depositing the down payment paid by Concepcion in the bank in trust for Ramona
Patricia Alcaraz.
On February 22, 1985, Concepcion, et. al., filed a complaint for a specific
performance against the Coronels and caused the annotation of a notice of lis
pendens at the back of TCT No. 327403 (Exh. E; Exh. 5).
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering
the same property with the Registry of Deeds of Quezon City (Exh. F; Exh. 6).
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject
property in favor of Catalina (Exh. G; Exh. 7).
On June 5, 1985, a new title over the subject property was issued in the name of
Catalina under TCT No. 351582 (Exh. H; Exh. 8).
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court (Branch 83,
RTC, Quezon City) the parties agreed to submit the case for decision solely
on the basis of documentary exhibits.Thus, plaintiffs therein (now private
respondents) proffered their documentary evidence accordingly marked as
Exhibits A through J, inclusive of their corresponding submarkings. Adopting
these same exhibits as their own, then defendants (now petitioners)
accordingly offered and marked them as Exhibits 1 through 10, likewise
inclusive of their corresponding submarkings.Upon motion of the parties, the
trial court gave them thirty (30) days within which to simultaneously submit
their respective memoranda, and an additional 15 days within which to submit
their corresponding comment or reply thereto, after which, the case would be
deemed submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge
Reynaldo Roura, who was then temporarily detailed to preside over Branch 82
of the RTC of Quezon City. OnMarch 1, 1989, judgment was handed down by
Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon
City branch, disposing as follows:
WHEREFORE, judgment for specific performance is hereby rendered ordering
defendant to execute in favor of plaintiffs a deed of absolute sale covering that parcel
of land embraced in and covered by Transfer Certificate of Title No. 327403 (now
TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the
improvements existing thereon free from all liens and encumbrances, and once
accomplished, to immediately deliver the said document of sale to plaintiffs and upon
receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of the
purchase price amounting toP1,190,000.00 in cash. Transfer Certificate of Title No.
331582 of the Registry of Deeds for Quezon City in the name of intervenor is hereby
canceled and declared to be without force and effect. Defendants and intervenor and
all other persons claiming under them are hereby ordered to vacate the subject
property and deliver possession thereof to plaintiffs. Plaintiffs claim for damages and
attorneys fees, as well as the counterclaims of defendants and intervenors are hereby
dismissed.
No pronouncement as to costs.
So Ordered.
Macabebe, Pampanga for Quezon City, March 1, 1989.
(Rollo, p. 106)
A motion for reconsideration was filed by petitioners before the new
presiding judge of the Quezon City RTC but the same was denied by Judge
Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision and to render
anew decision by the undersigned Presiding Judge should be denied for the following
reasons: (1) The instant case became submitted for decision as of April 14, 1988 when
the parties terminated the presentation of their respective documentary evidence and
when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that they
were allowed to file memoranda at some future date did not change the fact that the
hearing of the case was terminated before Judge Roura and therefore the same should
be submitted to him for decision; (2) When the defendants and intervenor did not
object to the authority of Judge Reynaldo Roura to decide the case prior to the
rendition of the decision, when they met for the first time before the undersigned
Presiding Judge at the hearing of a pending incident in Civil Case No. Q-46145 on
November 11, 1988, they were deemed to have acquiesced thereto and they are now
estopped from questioning said authority of Judge Roura after they received the
decision in question which happens to be adverse to them; (3) While it is true that
Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he
was in all respects the Presiding Judge with full authority to act on any pending
incident submitted before this Court during his incumbency. When he returned to his
Official Station at Macabebe, Pampanga, he did not lose his authority to decide or
resolve cases submitted to him for decision or resolution because he continued as
Judge of the Regional Trial Court and is of co-equal rank with the undersigned
Presiding Judge. The standing rule and supported by jurisprudence is that a Judge to
whom a case is submitted for decision has the authority to decide the case
notwithstanding his transfer to another branch or region of the same court (Sec. 9,
Rule 135, Rule of Court).
Coming now to the twin prayer for reconsideration of the Decision dated March 1,
1989 rendered in the instant case, resolution of which now pertains to the undersigned
Presiding Judge, after a meticulous examination of the documentary evidence
presented by the parties, she is convinced that the Decision of March 1, 1989 is
supported by evidence and, therefore, should not be disturbed.
IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul
Decision and Render Anew Decision by the Incumbent Presiding Judge dated March
20, 1989 is hereby DENIED.
SO ORDERED.
Quezon City, Philippines, July 12, 1989.
(Rollo, pp. 108-109)
Petitioners thereupon interposed an appeal, but on December 16, 1991,
the Court of Appeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.)
rendered its decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last
pleading, private respondents Reply Memorandum, was filed on September
15, 1993. The case was, however, re-raffled to undersigned ponente only
on August 28, 1996, due to the voluntary inhibition of the Justice to whom the
case was last assigned.
While we deem it necessary to introduce certain refinements in the

disquisition of respondent court in the affirmance of the trial courts decision,
we definitely find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the resolution of
the other issues in the case at bar is the precise determination of the legal
significance of the document entitled Receipt of Down Payment which was
offered in evidence by both parties. There is no dispute as to the fact that the
said document embodied the binding contract between Ramona Patricia
Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other,
pertaining to a particular house and lot covered by TCT No. 119627, as
defined in Article 1305 of the Civil Code of the Philippines which reads as
follows:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
While, it is the position of private respondents that the Receipt of Down
Payment embodied a perfected contract of sale, which perforce, they seek to
enforce by means of an action for specific performance, petitioners on their
part insist that what the document signified was a mere executory contract to
sell, subject to certain suspensive conditions, and because of the absence of
Ramona P. Alcaraz, who left for the United States of America, said contract
could not possibly ripen into a contract of absolute sale.
Plainly, such variance in the contending parties contention is brought
about by the way each interprets the terms and/or conditions set forth in said
private instrument. Withal, based on whatever relevant and admissible
evidence may be available on record, this Court, as were the courts below, is
now called upon to adjudge what the real intent of the parties was at the time
the said document was executed.
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
Sale, by its very nature, is a consensual contract because it is perfected

by mere consent. The essential elements of a contract of sale are the
following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a
Contract of Sale because the first essential element is lacking. In a contract to
sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or
consent to transfer ownership of the property subject of the contract to sell
until the happening of an event, which for present purposes we shall take as
the full payment of the purchase price. What the seller agrees or obliges
himself to do is to fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him. In other words the full
payment of the purchase price partakes of a suspensive condition, the nonfulfillment of which prevents the obligation to sell from arising and thus,
ownership is retained by the prospective seller without further remedies by the
prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had
occasion to rule:
Hence, We hold that the contract between the petitioner and the respondent was a
contract to sell where the ownership or title is retained by the seller and is not to pass
until the full payment of the price, such payment being a positive suspensive condition
and failure of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding force.
Stated positively, upon the fulfillment of the suspensive condition which is
the full payment of the purchase price, the prospective sellers obligation to sell
the subject property by entering into a contract of sale with the prospective
buyer becomes demandable as provided in Article 1479 of the Civil Code
which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promissor of the promise is supported by a consideration distinct
from the price.
A contract to sell may thus be defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the subject
property despite delivery thereof to the prospective buyer, binds himself to sell
the said property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as
a conditional contract of sale where the seller may likewise reserve title to the
property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is
present, although it is conditioned upon the happening of a contingent event
which may or may not occur. If the suspensive condition is not fulfilled, the
perfection of the contract of sale is completely abated (cf. Homesite and
Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the
suspensive condition is fulfilled, the contract of sale is thereby perfected, such
that if there had already been previous delivery of the property subject of the
sale to the buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which
is the full payment of the purchase price, ownership will not automatically
transfer to the buyer although the property may have been previously
delivered to him. The prospective seller still has to convey title to the
prospective buyer by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person, as in
the case at bench. In a contract to sell, there being no previous sale of the
property, a third person buying such property despite the fulfillment of the
suspensive condition such as the full payment of the purchase price, for
instance, cannot be deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There is no double
sale in such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-sellers title per se, but the
latter, of course, may be sued for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely affect
the sellers title thereto. In fact, if there had been previous delivery of the
subject property, the sellers ownership or title to the property is automatically
transferred to the buyer such that, the seller will no longer have any title to
transfer to any third person. Applying Article 1544 of the Civil Code, such
second buyer of the property who may have had actual or constructive
knowledge of such defect in the sellers title, or at least was charged with the
obligation to discover such defect, cannot be a registrant in good faith. Such
second buyer cannot defeat the first buyers title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property subject
of the sale.
With the above postulates as guidelines, we now proceed to the task of
deciphering the real nature of the contract entered into by petitioners and
private respondents.
It is a canon in the interpretation of contracts that the words used therein
should be given their natural and ordinary meaning unless a technical
meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586
[1992]). Thus, when petitioners declared in the said Receipt of Down Payment
that they -Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of
Fifty Thousand Pesos purchase price of our inherited house and lot, covered by
TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.
without any reservation of title until full payment of the entire purchase price,
the natural and ordinary idea conveyed is that they sold their property.
When the Receipt of Down payment is considered in its entirety, it

becomes more manifest that there was a clear intent on the part of petitioners
to transfer title to the buyer, but since the transfer certificate of title was still in
the name of petitioners father, they could not fully effect such transfer
although the buyer was then willing and able to immediately pay the purchase
price. Therefore, petitioners-sellers undertook upon receipt of the down
payment from private respondent Ramona P. Alcaraz, to cause the issuance
of a new certificate of title in their names from that of their father, after which,
they promised to present said title, now in their names, to the latter and to
execute the deed of absolute sale whereupon, the latter shall, in turn, pay the
entire balance of the purchase price.
The agreement could not have been a contract to sell because the sellers
herein made no express reservation of ownership or title to the subject parcel
of land. Furthermore, the circumstance which prevented the parties from
entering into an absolute contract of sale pertained to the sellers themselves
(the certificate of title was not in their names) and not the full payment of the
purchase price. Under the established facts and circumstances of the case,
the Court may safely presume that, had the certificate of title been in the
names of petitioners-sellers at that time, there would have been no reason
why an absolute contract of sale could not have been executed and
consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not
merely promise to sell the property to private respondent upon the fulfillment
of the suspensive condition. On the contrary, having already agreed to sell the
subject property, they undertook to have the certificate of title change to their
names and immediately thereafter, to execute the written deed of absolute
sale.
Thus, the parties did not merely enter into a contract to sell where the
sellers, after compliance by the buyer with certain terms and conditions,
promised to sell the property to the latter.What may be perceived from the
respective undertakings of the parties to the contract is that petitioners had
already agreed to sell the house and lot they inherited from their father,
completely willing to transfer ownership of the subject house and lot to the
buyer if the documents were then in order. It just so happened, however, that
the transfer certificate of title was then still in the name of their father. It was
more expedient to first effect the change in the certificate of title so as to bear
their names. That is why they undertook to cause the issuance of a new
transfer of the certificate of title in their names upon receipt of the down
payment in the amount of P50,000.00. As soon as the new certificate of title is
issued in their names, petitioners were committed to immediately execute the
deed of absolute sale. Only then will the obligation of the buyer to pay the
remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly
entered into so as to protect the seller against a buyer who intends to buy the
property in installment by withholding ownership over the property until the
buyer effects full payment therefor, in the contract entered into in the case at
bar, the sellers were the ones who were unable to enter into a contract of
absolute sale by reason of the fact that the certificate of title to the property
was still in the name of their father. It was the sellers in this case who, as it
were, had the impediment which prevented, so to speak, the execution of an
contract of absolute sale.
What is clearly established by the plain language of the subject document
is that when the said Receipt of Down Payment was prepared and signed by
petitioners Romulo A. Coronel,et. al., the parties had agreed to a conditional
contract of sale, consummation of which is subject only to the successful
transfer of the certificate of title from the name of petitioners father,
Constancio P. Coronel, to their names.
The Court significantly notes that this suspensive condition was, in fact,
fulfilled on February 6, 1985 (Exh. D; Exh. 4). Thus, on said date, the
conditional contract of sale between petitioners and private respondent
Ramona P. Alcaraz became obligatory, the only act required for the
consummation thereof being the delivery of the property by means of the
execution of the deed of absolute sale in a public instrument, which petitioners
unequivocally committed themselves to do as evidenced by the Receipt of
Down Payment.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly
applies to the case at bench. Thus,
Art. 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.
Art. 1181. In conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the happening of
the event which constitutes the condition.
Since the condition contemplated by the parties which is the issuance of a
certificate of title in petitioners names was fulfilled on February 6, 1985, the
respective obligations of the parties under the contract of sale became
mutually demandable, that is, petitioners, as sellers, were obliged to present
the transfer certificate of title already in their names to private respondent
Ramona P. Alcaraz, the buyer, and to immediately execute the deed of
absolute sale, while the buyer on her part, was obliged to forthwith pay the
balance of the purchase price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their
petition, petitioners conclusively admitted that:
3. The petitioners-sellers Coronel bound themselves to effect the transfer in our names
from our deceased father Constancio P. Coronel, the transfer certificate of title
immediately upon receipt of the downpayment above-stated". The sale was still
subject to this suspensive condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of sale
subject to a suspensive condition. Only, they contend, continuing in the same
paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first transferring the
title to the property under their names, there could be no perfected contract of
sale. (Emphasis supplied.)
(Ibid.)
not aware that they have set their own trap for themselves, for Article 1186 of
the Civil Code expressly provides that:
Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment.
Besides, it should be stressed and emphasized that what is more
controlling than these mere hypothetical arguments is the fact that
the condition herein referred to was actually and indisputably fulfilled on
February 6, 1985, when a new title was issued in the names of petitioners as
evidenced by TCT No. 327403 (Exh. D; Exh. 4).
The inevitable conclusion is that on January 19, 1985, as evidenced by the
document denominated as Receipt of Down Payment (Exh. A; Exh. 1), the
parties entered into a contract of sale subject to the suspensive condition that
the sellers shall effect the issuance of new certificate title from that of their
fathers name to their names and that, on February 6, 1985, this condition was
fulfilled (Exh. D; Exh. 4).
We, therefore, hold that, in accordance with Article 1187 which pertinently
provides Art. 1187. The effects of conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the obligation . . .
In obligations to do or not to do, the courts shall determine, in each case, the
retroactive effect of the condition that has been complied with.
the rights and obligations of the parties with respect to the perfected contract
of sale became mutually due and demandable as of the time of fulfillment or
occurrence of the suspensive condition on February 6, 1985. As of that point
in time, reciprocal obligations of both seller and buyer arose.
Petitioners also argue there could been no perfected contract on January
19, 1985 because they were then not yet the absolute owners of the inherited
property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring

ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights
and obligations to the extent and value of the inheritance of a person are transmitted
through his death to another or others by his will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the
decedent Constancio P. Coronel are compulsory heirs who were called to
succession by operation of law.Thus, at the point their father drew his last
breath, petitioners stepped into his shoes insofar as the subject property is
concerned, such that any rights or obligations pertaining thereto became
binding and enforceable upon them. It is expressly provided that rights to the
succession are transmitted from the moment of death of the decedent (Article
777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners claim that succession may not be declared
unless the creditors have been paid is rendered moot by the fact that they
were able to effect the transfer of the title to the property from the decedents
name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack
of capacity to enter into an agreement at that time and they cannot be allowed
to now take a posture contrary to that which they took when they entered into
the agreement with private respondent Ramona P. Alcaraz. The Civil Code
expressly states that:
Art. 1431. Through estoppel an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person
relying thereon.
Having represented themselves as the true owners of the subject property at
the time of sale, petitioners cannot claim now that they were not yet the
absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected
contract of sale between them and Ramona P. Alcaraz, the latter breach her
reciprocal obligation when she rendered impossible the consummation thereof

by going to the United States of America, without leaving her address,
telephone number, and Special Power of Attorney (Paragraphs 14 and 15,
Answer with Compulsory Counterclaim to the Amended Complaint, p. 2;
Rollo, p. 43), for which reason, so petitioners conclude, they were correct in
unilaterally rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the
contract of sale in the instant case. We note that these supposed grounds for
petitioners rescission, are mere allegations found only in their responsive
pleadings, which by express provision of the rules, are deemed controverted
even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
Court). The records are absolutely bereft of any supporting evidence to
substantiate petitioners allegations. We have stressed time and again that
allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong,
110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere
allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United States
of America on February 6, 1985, we cannot justify petitioners-sellers act of
unilaterally and extrajudicially rescinding the contract of sale, there being no
express stipulation authorizing the sellers to extrajudicially rescind the
contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda.
De Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of
Ramona P. Alcaraz because although the evidence on record shows that the
sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been
dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted for and
in behalf of her daughter, if not also in her own behalf. Indeed, the down
payment was made by Concepcion D. Alcaraz with her own personal Check
(Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence
showing that petitioners ever questioned Concepcions authority to represent
Ramona P. Alcaraz when they accepted her personal check. Neither did they
raise any objection as regards payment being effected by a third
person. Accordingly, as far as petitioners are concerned, the physical absence
of Ramona P. Alcaraz is not a ground to rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default,

insofar as her obligation to pay the full purchase price is
concerned. Petitioners who are precluded from setting up the defense of the
physical absence of Ramona P. Alcaraz as above-explained offered no proof
whatsoever to show that they actually presented the new transfer certificate of
title in their names and signified their willingness and readiness to execute the
deed of absolute sale in accordance with their agreement. Ramonas
corresponding obligation to pay the balance of the purchase price in the
amount of P1,190,000.00 (as buyer) never became due and demandable and,
therefore, she cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving
reciprocal obligations may be considered in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time
the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation.
xxx
In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon
him. From the moment one of the parties fulfill his obligation, delay by the other
begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of sale
between petitioners and respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina B.
Mabanag, gave rise to a case of double sale where Article 1544 of the Civil
Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof to the person who presents
the oldest title, provided there is good faith.
The record of the case shows that the Deed of Absolute Sale dated April
25, 1985 as proof of the second contract of sale was registered with the
Registry of Deeds of Quezon City giving rise to the issuance of a new
certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus,
the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to
pass to the buyer, the exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b) should there be no
inscription by either of the two buyers, when the second buyer, in good faith,
acquires possession of the property ahead of the first buyer. Unless, the
second buyer satisfies these requirements, title or ownership will not transfer
to him to the prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the
subject, now a distinguished member of the Court, Justice Jose C. Vitug,
explains:
The governing principle is prius tempore, potior jure (first in time, stronger in
right). Knowledge by the first buyer of the second sale cannot defeat the first buyers
rights except when the second buyer first registers in good faith the second sale
(Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second
buyer of the first sale defeats his rights even if he is first to register, since knowledge
taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No.
58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129
SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second
paragraph, that the second realty buyer must act in good faith in registering his deed
of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R.
No. 95843, 02 September 1992).
(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioners point out that the notice of lis pendens in the case at bar was
annotated on the title of the subject property only on February 22, 1985,
whereas, the second sale between petitioners Coronels and petitioner
Mabanag was supposedly perfected prior thereto or on February 18,
1985. The idea conveyed is that at the time petitioner Mabanag, the second
buyer, bought the property under a clean title, she was unaware of any
adverse claim or previous sale, for which reason she is a buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not
whether or not the second buyer in good faith but whether or not said second
buyer registers such second sale in good faith, that is, without knowledge of
any defect in the title of the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag
could not have in good faith, registered the sale entered into on February 18,
1985 because as early as February 22, 1985, a notice of lis pendens had
been annotated on the transfer certificate of title in the names of petitioners,
whereas petitioner Mabanag registered the said sale sometime in April,
1985. At the time of registration, therefore, petitioner Mabanag knew that the
same property had already been previously sold to private respondents, or, at
least, she was charged with knowledge that a previous buyer is claiming title
to the same property. Petitioner Mabanag cannot close her eyes to the defect
in petitioners title to the property at the time of the registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers the sale after he has acquired knowledge that
there was a previous sale of the same property to a third party or that another person
claims said property in a previous sale, the registration will constitute a registration in
bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349
[1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43
Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and
Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between
petitioners and Catalina B. Mabanag on February 18, 1985, was correctly

upheld by both the courts below.
Although there may be ample indications that there was in fact an agency
between Ramona as principal and Concepcion, her mother, as agent insofar
as the subject contract of sale is concerned, the issue of whether or not
Concepcion was also acting in her own behalf as a co-buyer is not squarely
raised in the instant petition, nor in such assumption disputed between mother
and daughter. Thus, We will not touch this issue and no longer disturb the
lower courts ruling on this point.
WHEREFORE, premises considered, the instant petition is hereby
DISMISSED and the appealed judgment AFFIRMED.
SO ORDERED.
[G.R. No. 122544. January 28, 1999]

REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA,
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.
[G.R. No. 124741. January 28, 1999]
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA,
ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND
A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners,
vs. COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and
OVERLAND EXPRESS LINES, INC., respondents.
DECISION
MARTINEZ, J.:
Two consolidated petitions were filed before us seeking to set aside and annul the decisions
and resolutions of respondent Court of Appeals. What seemed to be a simple ejectment suit was
juxtaposed with procedural intricacies which finally found its way to this Court.
G. R. NO. 122544:
On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee) entered into a
Contract of Lease with Option to Buy with petitioners [1] (lessors) involving a 1,755.80 square
meter parcel of land situated at corner MacArthur Highway and South "H" Street, Diliman,
Quezon City. The term of the lease was for one (1) year commencing from May 16, 1974 up to
May 15, 1975. During this period, private respondent was granted an option to purchase for the
amount of P3,000.00 per square meter. 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 (Civil Case No. VIII-29155) on November
10, 1976 before the then City Court (now Metropolitan Trial Court) of Quezon City, Branch
VIII. On November 22, 1982, the City Court rendered judgment [2] ordering private respondent to
vacate the leased premises and to pay the sum of P624,000.00 representing rentals in arrears
and/or as damages in the form of reasonable compensation for the use and occupation of the
premises during the period of illegal detainer from June 1976 to November 1982 at the monthly
rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976,
the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting
December 1982, until private respondent fully vacates the premises, and to pay P20,000.00 as
and by way of attorney's fees.
Private respondent filed a certiorari petition praying for the issuance of a restraining order
enjoining the enforcement of said judgment and dismissal of the case for lack of jurisdiction of
the City Court.
On September 26, 1984, the then Intermediate Appellate Court [3] (now Court of Appeals)
rendered a decision[4] stating that:
"x x x, the alleged question of whether petitioner was granted an extension

of the option to buy the property; whether such option, if any, extended the
lease or whether petitioner actually paid the alleged P300,000.00 to Fidela
Dizon, as representative of private respondents in consideration of the option
and, whether petitioner thereafter offered to pay the balance of the supposed
purchase price, are all merely incidental and do not remove the unlawful
detainer case from the jurisdiction of respondent court. In consonance with the
ruling in the case of Teodoro, Jr. vs. Mirasol (supra), the above matters may be
raised and decided in the unlawful detainer suit as, to rule otherwise, would be
a violation of the principle prohibiting multiplicity of suits. (Original Records,
pp. 38-39)."
The motion for reconsideration was denied. On review, this Court dismissed the petition in a
resolution dated June 19, 1985 and likewise denied private respondent's subsequent motion for
reconsideration in a resolution dated September 9, 1985.[5]
On October 7, 1985, private respondent filed before the Regional Trial Court (RTC) of
Quezon City (Civil Case No. Q-45541) 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. It sought to compel the execution of a deed of sale pursuant
to the option to purchase and the receipt of the partial payment, and to fix the period to pay the
balance. In an Order dated October 25, 1985, the trial court denied the issuance of a writ of
preliminary injunction on the ground that the decision of the then City Court for the ejectment of
the private respondent, having been affirmed by the then Intermediate Appellate Court and the
Supreme Court, has become final and executory.
Unable to secure an injunction, private respondent also filed before the RTC of Quezon City,
Branch 102 (Civil Case No. Q-46487) on November 15, 1985 a complaint for Annulment of and
Relief from Judgment with injunction and damages. In its decision[6] dated May 12, 1986, the
trial court dismissed the complaint for annulment on the ground of res judicata, and the writ of
preliminary injunction previously issued was dissolved. It also ordered private respondent to
pay P3,000.00 as attorney's fees. As a consequence of private respondent's motion for
reconsideration, the preliminary injunction was reinstated, thereby restraining the execution of
the City Court's judgment on the ejectment case.
The two cases were thereafter consolidated before the RTC of Quezon City, Branch 77. On
April 28, 1989, a decision[7] was rendered dismissing private respondent's complaint in Civil Case
No. Q-45541 (specific performance case) and denying its motion for reconsideration in Civil
Case No. 46487 (annulment of the ejectment case). The motion for reconsideration of said
decision was likewise denied.
On appeal,[8] respondent Court of Appeals rendered a decision[9] 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. It opined
that the payment by private respondent of P300,000.00 on June 20, 1975 as partial payment for
the leased property, which petitioners accepted (through Alice A. Dizon) and for which an
official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and
that for failure of petitioners to deny receipt thereof, private respondent can therefore 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. Since private respondent did not
consign to the court the balance of the purchase price and continued to occupy the subject
premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full
payment of the purchase price. The dispositive portion of said decision reads:
"WHEREFORE, the appealed decision in Case No. 46487 is

AFFIRMED. The appealed decision in Case No. 45541 is, on the other hand,
ANNULLED and SET ASIDE. The defendants-appellees are ordered to
execute the deed of absolute sale of the property in question, free from any lien
or encumbrance whatsoever, in favor of the plaintiff-appellant, and to deliver to
the latter the said deed of sale, as well as the owner's duplicate of the certificate
of title to said property upon payment of the balance of the purchase price by
the plaintiff-appellant. The plaintiff-appellant is ordered to payP1,700.00 per
month from June 1976, plus 6% interest per annum, until payment of the
balance of the purchase price, as previously agreed upon by the parties.
SO ORDERED."
Upon denial of the motion for partial reconsideration (Civil Case No. Q-45541) by
respondent
Court
of
Appeals,[10] petitioners
elevated
the
case via petition
for certiorari questioning the authority of Alice A. Dizon as agent of petitioners in receiving
private respondent's partial payment amounting to P300,000.00 pursuant to the Contract of Lease
with Option to Buy. Petitioners also assail the propriety of private respondent's exercise of the
option when it tendered the said amount on June 20, 1975 which purportedly resulted in a
perfected contract of sale.
G. R. NO. 124741:
Petitioners filed with respondent Court of Appeals a motion to remand the records of Civil
Case No. 38-29155 (ejectment case) to the Metropolitan Trial Court (MTC), then City Court of
Quezon City, Branch 38, for execution of the judgment[11] dated November 22, 1982 which was
granted in a resolution dated June 29, 1992. Private respondent filed a motion to reconsider said
resolution which was denied.
Aggrieved, private respondent filed a petition for certiorari, prohibition with preliminary
injunction and/or restraining order with this Court (G.R. Nos. 106750-51) which was dismissed
in a resolution dated September 16, 1992 on the ground that the same was a refiled case
previously dismissed for lack of merit. On November 26, 1992, entry of judgment was issued by
this Court.
On July 14, 1993, petitioners filed an urgent ex-parte motion for execution of the decision in
Civil Case No. 38-29155 with the MTC of Quezon City, Branch 38. On September 13, 1993, the
trial court ordered the issuance of a third alias writ of execution. In denying private respondent's
motion for reconsideration, it ordered the immediate implementation of the third writ of
execution without delay.
On December 22, 1993, private respondent filed with the Regional Trial Court (RTC) of
Quezon City, Branch 104 a petition for certiorari and prohibition with preliminary
injunction/restraining order (SP. PROC. No. 93-18722) challenging the enforceability and
validity of the MTC judgment as well as the order for its execution.
On January 11, 1994, RTC of Quezon City, Branch 104 issued an order [12] granting the
issuance of a writ of preliminary injunction upon private respondent's posting of an injunction
bond of P50,000.00.
Assailing the aforequoted order after denial of their motion for partial reconsideration,
petitioners filed a petition[13] for certiorari and prohibition with a prayer for a temporary
restraining order and/or preliminary injunction with the Court of Appeals. In its decision,[14] the
Court of Appeals dismissed the petition and ruled that:
"The avowed purpose of this petition is to enjoin the public respondent

from restraining the ejectment of the private respondent. To grant the
petition would be to allow the ejectment of the private respondent. We
cannot do that now in view of the decision of this Court in CA-G.R. CV
Nos. 25153-54. Petitioners' alleged right to eject private respondent has
been demonstrated to be without basis in the said civil case. The petitioners
have been shown, after all, to have no right to eject private respondents.
WHEREFORE, the petition is DENIED due course and is accordingly
DISMISSED.
SO ORDERED."[15]
Petitioners' motion for reconsideration was denied in a resolution [16] by the Court of Appeals
stating that:
"This court in its decision in CA-G.R. CV Nos. 25153-54 declared that the
plaintiff-appellant (private respondent herein) acquired the rights of a vendee in
a contract of sale, in effect, recognizing the right of the private respondent to
possess the subject premises. Considering said decision, we should not allow
ejectment; to do so would disturb the status quo of the parties since the
petitioners are not in possession of the subject property. It would be unfair and
unjust to deprive the private respondent of its possession of the subject property
after its rights have been established in a subsequent ruling.
WHEREFORE, the motion for reconsideration is DENIED for lack of merit.
SO ORDERED."[17]
Hence, this instant petition.
We find both petitions impressed with merit.
First. Petitioners have established a right to evict private respondent from the subject
premises for non-payment of rentals. The term of the Contract of Lease with Option to Buy was
for a period of one (1) year (May 16, 1974 to May 15, 1975) during which the private respondent
was given an option to purchase said property at P3,000.00 per square meter. After the expiration
thereof, the lease was forP3,000.00 per month.
Admittedly, no definite period beyond the one-year term of lease was agreed upon by
petitioners and private respondent. However, since the rent was paid on a monthly basis, the
period of lease is considered to be from month to month in accordance with Article 1687 of the
New Civil Code.[18] Where the rentals are paid monthly, the lease, even if verbal may be deemed
to be on a monthly basis, expiring at the end of every month pursuant to Article 1687, in relation
to Article 1673 of the Civil Code. [19] In such case, a demand to vacate is not even necessary for
judicial action after the expiration of every month.[20]
When private respondent failed to pay the increased rental of P8,000.00 per month in June
1976, the petitioners had a cause of action to institute an ejectment suit against the former with
the then City Court. In this regard, the City Court (now MTC) had exclusive jurisdiction over the
ejectment suit. The filing by private respondent of a suit with the Regional Trial Court
for specific performance to enforce the option to purchase did not divest the then City Court of
its jurisdiction to take cognizance over the ejectment case. Of note is the fact that the decision of
the City Court was affirmed by both the Intermediate Appellate Court and this Court.
Second. Having failed to exercise the option within the stipulated one-year period, private
respondent cannot enforce its option to purchase anymore. Moreover, even
assuming arguendo that the right to exercise the option still subsists at the time private
respondent tendered the amount on June 20, 1975, the suit for specific performance to enforce
the option to purchase was filed only on October 7, 1985 or more than ten (10) years after
accrual of the cause of action as provided under Article 1144 of the New Civil Code.[21]
In this case, there was a contract of lease for one (1) year with option to purchase. The
contract of lease expired without the private respondent, as lessee, purchasing the property but
remained in possession thereof. Hence, there was an implicit renewal of the contract of lease on a
monthly basis. The other terms of the original contract of lease which are revived in the implied
new lease under Article 1670 of the New Civil Code[22] are only those terms which are germane to
the lessees right of continued enjoyment of the property leased. [23] Therefore, an implied new
lease does not ipso facto carry with it any implied revival of private respondent's option to
purchase (as lessee thereof) the leased premises. The provision entitling the lessee the option to
purchase the leased premises is not deemed incorporated in the impliedly renewed contract
because it is alien to the possession of the lessee. Private respondents right to exercise the option
to purchase expired with the termination of the original contract of lease for one year. The
rationale of this Court is that:
This is a reasonable construction of the provision, which is based on the presumption

that when the lessor allows the lessee to continue enjoying possession of the property
for fifteen days after the expiration of the contract he is willing that such enjoyment
shall be for the entire period corresponding to the rent which is customarily paid in
this case up to the end of the month because the rent was paid monthly.Necessarily, if
the presumed will of the parties refers to the enjoyment of possession the presumption
covers the other terms of the contract related to such possession, such as the amount
of rental, the date when it must be paid, the care of the property, the responsibility for
repairs, etc. But no such presumption may be indulged in with respect to special
agreements which by nature are foreign to the right of occupancy or enjoyment
inherent in a contract of lease.[24]
Third. There was no perfected contract of sale between petitioners and private
respondent. Private respondent argued that it delivered the check of P300,000.00 to Alice A.
Dizon who acted as agent of petitioners pursuant to the supposed authority given by petitioner
Fidela Dizon, the payee thereof. Private respondent further contended that petitioners filing of
the ejectment case against it based on the contract of lease with option to buy holds petitioners in
estoppel to question the authority of petitioner Fidela Dizon. It insisted that the payment
of P300,000.00 as partial payment of the purchase price constituted a valid exercise of the option
to buy.
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.[25]
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.[26] As provided in Article 1868
of the New Civil Code,[27] 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.
In Bacaltos Coal Mines vs. Court of Appeals,[28] we explained the rule in dealing with an
agent:
Every person dealing with an agent is put upon inquiry and must discover upon his
peril the authority of the agent. If he does not make such inquiry, he is chargeable with
knowledge of the agents authority, and his ignorance of that authority will not be any
excuse. Persons dealing with an assumed agent, whether the assumed agency be a
general or special one, are bound at their peril, if they would hold the principal, to
ascertain not only the fact of the agency but also the nature and extent of the authority,
and in case either is controverted, the burden of proof is upon them to establish it.
For the long years that private respondent was able to thwart the execution of the ejectment
suit rendered in favor of petitioners, we now write finis to this controversy and shun further delay
so as to ensure that this case would really attain finality.
WHEREFORE, in view of the foregoing, both petitions are GRANTED. The decision
dated March 29, 1994 and the resolution dated October 19, 1995 in CA-G.R. CV No. 25153-54,
as well as the decision dated December 11, 1995 and the resolution dated April 23, 1997 in CAG.R. SP No. 33113 of the Court of Appeals are hereby REVERSED and SET ASIDE.
Let the records of this case be remanded to the trial court for immediate execution of the
judgment dated November 22, 1982 in Civil Case No. VIII-29155 of the then City Court (now
Metropolitan Trial Court) of Quezon City, Branch VIII as affirmed in the decision dated
September 26, 1984 of the then Intermediate Appellate Court (now Court of Appeals) and in the
resolution dated June 19, 1985 of this Court.
However, 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.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Melo, Kapunan and Pardo, JJ., concur.
G.R. No. 166862
December 20, 2006
MANILA METAL CONTAINER CORPORATION, petitioner,

REYNALDO C. TOLENTINO, intervenor,
vs.
PHILIPPINE NATIONAL BANK, respondent,
DMCI-PROJECT DEVELOPERS, INC., intervenor.
DECISION
CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CAG.R. No. 46153 which affirmed the decision2 of the Regional Trial Court (RTC), Branch 71, Pasig
City, in Civil Case No. 58551, and its Resolution3 denying the motion for reconsideration filed by
petitioner Manila Metal Container Corporation (MMCC).
The Antecedents
Petitioner was the owner of a 8,015 square meter parcel of land located in Mandaluyong (now a
City), Metro Manila. The property was covered by Transfer Certificate of Title (TCT) No. 332098 of
the Registry of Deeds of Rizal. To secure a P900,000.00 loan it had obtained from respondent
Philippine National Bank (PNB), petitioner executed a real estate mortgage over the lot. Respondent
PNB later granted petitioner a new credit accommodation ofP1,000,000.00; and, on November 16,
1973, petitioner executed an Amendment4 of Real Estate Mortgage over its property. On March 31,
1981, petitioner secured another loan of P653,000.00 from respondent PNB, payable in quarterly
installments of P32,650.00, plus interests and other charges.5
On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate
mortgage and sought to have the property sold at public auction for P911,532.21, petitioner's
outstanding obligation to respondent PNB as of June 30, 1982, 6 plus interests and attorney's fees.
After due notice and publication, the property was sold at public auction on September 28, 1982
where respondent PNB was declared the winning bidder for P1,000,000.00. The Certificate of
Sale7 issued in its favor was registered with the Office of the Register of Deeds of Rizal, and was
annotated at the dorsal portion of the title on February 17, 1983. Thus, the period to redeem the
property was to expire on February 17, 1984.
Petitioner sent a letter dated August 25, 1983 to respondent PNB, requesting that it be granted an
extension of time to redeem/repurchase the property.8 In its reply dated August 30, 1983, respondent
PNB informed petitioner that the request had been referred to its Pasay City Branch for appropriate
action and recommendation.9
In a letter10 dated February 10, 1984, petitioner reiterated its request for a one year extension from
February 17, 1984 within which to redeem/repurchase the property on installment basis. It reiterated
its request to repurchase the property on installment.11 Meanwhile, some PNB Pasay City Branch
personnel informed petitioner that as a matter of policy, the bank does not accept "partial
redemption."12
Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 on
June 1, 1984, and issued a new title in favor of respondent PNB.13 Petitioner's offers had not yet
been acted upon by respondent PNB.
Meanwhile, the Special Assets Management Department (SAMD) had prepared a statement of
account, and as of June 25, 1984 petitioner's obligation amounted to P1,574,560.47. This included
the bid price of P1,056,924.50, interest, advances of insurance premiums, advances on realty taxes,
registration expenses, miscellaneous expenses and publication cost. 14 When apprised of the
statement of account, petitioner remitted P725,000.00 to respondent PNB as "deposit to
repurchase," and Official Receipt No. 978191 was issued to it.15
In the meantime, the SAMD recommended to the management of respondent PNB that petitioner be
allowed to repurchase the property for P1,574,560.00. In a letter dated November 14, 1984, the PNB
management informed petitioner that it was rejecting the offer and the recommendation of the
SAMD. It was suggested that petitioner purchase the property for P2,660,000.00, its minimum
market value. Respondent PNB gave petitioner until December 15, 1984 to act on the proposal;
otherwise, its P725,000.00 deposit would be returned and the property would be sold to other
interested buyers.16
Petitioner, however, did not agree to respondent PNB's proposal. Instead, it wrote another letter
dated December 12, 1984 requesting for a reconsideration. Respondent PNB replied in a letter
dated December 28, 1984, wherein it reiterated its proposal that petitioner purchase the property
for P2,660,000.00. PNB again informed petitioner that it would return the deposit should petitioner
desire to withdraw its offer to purchase the property.17 On February 25, 1985, petitioner, through
counsel, requested that PNB reconsider its letter dated December 28, 1984. Petitioner declared that
it had already agreed to the SAMD's offer to purchase the property for P1,574,560.47, and that was
why it had paid P725,000.00. Petitioner warned respondent PNB that it would seek judicial recourse
should PNB insist on the position.18
On June 4, 1985, respondent PNB informed petitioner that the PNB Board of Directors had accepted
petitioner's offer to purchase the property, but for P1,931,389.53 in cash less the P725,000.00
already deposited with it.19 On page two of the letter was a space above the typewritten name of
petitioner's President, Pablo Gabriel, where he was to affix his signature. However, Pablo Gabriel did
not conform to the letter but merely indicated therein that he had received it. 20 Petitioner did not
respond, so PNB requested petitioner in a letter dated June 30, 1988 to submit an amended offer to
repurchase.
Petitioner rejected respondent's proposal in a letter dated July 14, 1988. It maintained that
respondent PNB had agreed to sell the property for P1,574,560.47, and that since its P725,000.00
downpayment had been accepted, respondent PNB was proscribed from increasing the purchase
price of the property.21 Petitioner averred that it had a net balance payable in the amount
of P643,452.34. Respondent PNB, however, rejected petitioner's offer to pay the balance
of P643,452.34 in a letter dated August 1, 1989.22
On August 28, 1989, petitioner filed a complaint against respondent PNB for "Annulment of
Mortgage and Mortgage Foreclosure, Delivery of Title, or Specific Performance with Damages." To
support its cause of action for specific performance, it alleged the following:
34. As early as June 25, 1984, PNB had accepted the down payment from Manila Metal in
the substantial amount of P725,000.00 for the redemption/repurchase price
of P1,574,560.47 as approved by its SMAD and considering the reliance made by Manila
Metal and the long time that has elapsed, the approval of the higher management of the
Bank to confirm the agreement of its SMAD is clearly a potestative condition which cannot
legally prejudice Manila Metal which has acted and relied on the approval of SMAD. The
Bank cannot take advantage of a condition which is entirely dependent upon its own will after
accepting and benefiting from the substantial payment made by Manila Metal.
35. PNB approved the repurchase price of P1,574,560.47 for which it accepted P725,000.00
from Manila Metal. PNB cannot take advantage of its own delay and long inaction in
demanding a higher amount based on unilateral computation of interest rate without the
consent of Manila Metal.
Petitioner later filed an amended complaint and supported its claim for damages with the following
arguments:
36. That in order to protect itself against the wrongful and malicious acts of the defendant
Bank, plaintiff is constrained to engage the services of counsel at an agreed fee
of P50,000.00 and to incur litigation expenses of at least P30,000.00, which the defendant
PNB should be condemned to pay the plaintiff Manila Metal.
37. That by reason of the wrongful and malicious actuations of defendant PNB, plaintiff
Manila Metal suffered besmirched reputation for which defendant PNB is liable for moral
damages of at least P50,000.00.
38. That for the wrongful and malicious act of defendant PNB which are highly reprehensible,
exemplary damages should be awarded in favor of the plaintiff by way of example or
correction for the public good of at least P30,000.00.23
Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus:
a) Declaring the Amended Real Estate Mortgage (Annex "A") null and void and without any
legal force and effect.
b) Declaring defendant's acts of extra-judicially foreclosing the mortgage over plaintiff's
property and setting it for auction sale null and void.
c) Ordering the defendant Register of Deeds to cancel the new title issued in the name of
PNB (TCT NO. 43792) covering the property described in paragraph 4 of the Complaint, to
reinstate TCT No. 37025 in the name of Manila Metal and to cancel the annotation of the
mortgage in question at the back of the TCT No.37025 described in paragraph 4 of this
Complaint.
d) Ordering the defendant PNB to return and/or deliver physical possession of the TCT
No. 37025 described in paragraph 4 of this Complaint to the plaintiff Manila Metal.
e) Ordering the defendant PNB to pay the plaintiff Manila Metal's actual damages, moral and
exemplary damages in the aggregate amount of not less than P80,000.00 as may be
warranted by the evidence and fixed by this Honorable Court in the exercise of its sound
discretion, and attorney's fees of P50,000.00 and litigation expenses of at least P30,000.00
as may be proved during the trial, and costs of suit.
Plaintiff likewise prays for such further reliefs which may be deemed just and equitable in the
premises.24
In its Answer to the complaint, respondent PNB averred, as a special and affirmative defense, that it
had acquired ownership over the property after the period to redeem had elapsed. It claimed that no
contract of sale was perfected between it and petitioner after the period to redeem the property had
expired.
During pre-trial, the parties agreed to submit the case for decision, based on their stipulation of
facts.25 The parties agreed to limit the issues to the following:
1. Whether or not the June 4, 1985 letter of the defendant approving/accepting plaintiff's offer
to purchase the property is still valid and legally enforceable.
2. Whether or not the plaintiff has waived its right to purchase the property when it failed to
conform with the conditions set forth by the defendant in its letter dated June 4, 1985.
3. Whether or not there is a perfected contract of sale between the parties. 26
While the case was pending, respondent PNB demanded, on September 20, 1989, that petitioner
vacate the property within 15 days from notice,27 but petitioners refused to do so.
On March 18, 1993, petitioner offered to repurchase the property for P3,500,000.00.28 The offer was
however rejected by respondent PNB, in a letter dated April 13, 1993. According to it, the prevailing
market value of the property was approximately P30,000,000.00, and as a matter of policy, it could
not sell the property for less than its market value. 29 On June 21, 1993, petitioner offered to purchase
the property for P4,250,000.00 in cash.30 The offer was again rejected by respondent PNB on
September 13, 1993.31
On May 31, 1994, the trial court rendered judgment dismissing the amended complaint and
respondent PNB's counterclaim. It ordered respondent PNB to refund the P725,000.00 deposit
petitioner had made.32 The trial court ruled that there was no perfected contract of sale between the
parties; hence, petitioner had no cause of action for specific performance against respondent. The
trial court declared that respondent had rejected petitioner's offer to repurchase the property.
Petitioner, in turn, rejected the terms and conditions contained in the June 4, 1985 letter of the
SAMD. While petitioner had offered to repurchase the property per its letter of July 14, 1988, the
amount ofP643,422.34 was way below the P1,206,389.53 which respondent PNB had demanded. It
further declared that theP725,000.00 remitted by petitioner to respondent PNB on June 4, 1985 was
a "deposit," and not a downpayment or earnest money.
On appeal to the CA, petitioner made the following allegations:
I
THE LOWER COURT ERRED IN RULING THAT DEFENDANT-APPELLEE'S LETTER
DATED 4 JUNE 1985 APPROVING/ACCEPTING PLAINTIFF-APPELLANT'S OFFER TO
PURCHASE THE SUBJECT PROPERTY IS NOT VALID AND ENFORCEABLE.
II
THE LOWER COURT ERRED IN RULING THAT THERE WAS NO PERFECTED
CONTRACT OF SALE BETWEEN PLAINTIFF-APPELLANT AND DEFENDANT-APPELLEE.
III
THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLLANT WAIVED ITS
RIGHT TO PURCHASE THE SUBJECT PROPERTY WHEN IT FAILED TO CONFORM
WITH CONDITIONS SET FORTH BY DEFENDANT-APPELLEE IN ITS LETTER DATED 4
JUNE 1985.
IV
THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT IT WAS THE
DEFENDANT-APPELLEE WHICH RENDERED IT DIFFICULT IF NOT IMPOSSIBLE FOR
PLAINTIFF-APPELLANT TO COMPLETE THE BALANCE OF THEIR PURCHASE PRICE.
V
THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT THERE WAS NO
VALID RESCISSION OR CANCELLATION OF SUBJECT CONTRACT OF REPURCHASE.
VI
THE LOWER COURT ERRED IN DECLARING THAT PLAINTIFF FAILED AND REFUSED
TO SUBMIT THE AMENDED REPURCHASE OFFER.
VII
THE LOWER COURT ERRED IN DISMISSING THE AMENDED COMPLAINT OF
PLAINTIFF-APPELLANT.
VIII
THE LOWER COURT ERRED IN NOT AWARDING PLAINTIFF-APPELLANT ACTUAL,
MORAL AND EXEMPLARY DAMAGES, ATTOTRNEY'S FEES AND LITIGATION
EXPENSES.33
Meanwhile, on June 17, 1993, petitioner's Board of Directors approved Resolution No. 3-004, where
it waived, assigned and transferred its rights over the property covered by TCT No. 33099 and TCT
No. 37025 in favor of Bayani Gabriel, one of its Directors.34 Thereafter, Bayani Gabriel executed a
Deed of Assignment over 51% of the ownership and management of the property in favor of
Reynaldo Tolentino, who later moved for leave to intervene as plaintiff-appellant. On July 14, 1993,
the CA issued a resolution granting the motion,35 and likewise granted the motion of Reynaldo
Tolentino substituting petitioner MMCC, as plaintiff-appellant, and his motion to withdraw as
intervenor.36
The CA rendered judgment on May 11, 2000 affirming the decision of the RTC.37 It declared that
petitioner obviously never agreed to the selling price proposed by respondent PNB (P1,931,389.53)
since petitioner had kept on insisting that the selling price should be lowered to P1,574,560.47.
Clearly therefore, there was no meeting of the minds between the parties as to the price or
consideration of the sale.
The CA ratiocinated that petitioner's original offer to purchase the subject property had not been
accepted by respondent PNB. In fact, it made a counter-offer through its June 4, 1985 letter
specifically on the selling price; petitioner did not agree to the counter-offer; and the negotiations did
not prosper. Moreover, petitioner did not pay the balance of the purchase price within the sixty-day
period set in the June 4, 1985 letter of respondent PNB. Consequently, there was no perfected
contract of sale, and as such, there was no contract to rescind.
According to the appellate court, the claim for damages and the counterclaim were correctly
dismissed by the court a quo for no evidence was presented to support it. Respondent PNB's letter
dated June 30, 1988 cannot revive the failed negotiations between the parties. Respondent PNB
merely asked petitioner to submit an amended offer to repurchase. While petitioner reiterated its
request for a lower selling price and that the balance of the repurchase be reduced, however,
respondent rejected the proposal in a letter dated August 1, 1989.
Petitioner filed a motion for reconsideration, which the CA likewise denied.
Thus, petitioner filed the instant petition for review on certiorari, alleging that:
I. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT
THERE IS NO PERFECTED CONTRACT OF SALE BETWEEN THE PETITIONER AND
RESPONDENT.
II. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT
THE AMOUNT OF PHP725,000.00 PAID BY THE PETITIONER IS NOT AN EARNEST
MONEY.
III. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT
THE FAILURE OF THE PETITIONER-APPELLANT TO SIGNIFY ITS CONFORMITY TO
THE TERMS CONTAINED IN PNB'S JUNE 4, 1985 LETTER MEANS THAT THERE WAS
NO VALID AND LEGALLY ENFORCEABLE CONTRACT OF SALE BETWEEN THE
PARTIES.
IV. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW THAT NON-PAYMENT
OF THE PETITIONER-APPELLANT OF THE BALANCE OF THE OFFERED PRICE IN THE
LETTER OF PNB DATED JUNE 4, 1985, WITHIN SIXTY (60) DAYS FROM NOTICE OF
APPROVAL CONSTITUTES NO VALID AND LEGALLY ENFORCEABLE CONTRACT OF
SALE BETWEEN THE PARTIES.
V. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT HELD THAT THE LETTERS
OF PETITIONER-APPELLANT DATED MARCH 18, 1993 AND JUNE 21, 1993, OFFERING
TO BUY THE SUBJECT PROPERTY AT DIFFERENT AMOUNT WERE PROOF THAT
THERE IS NO PERFECTED CONTRACT OF SALE.38
The threshold issue is whether or not petitioner and respondent PNB had entered into a perfected
contract for petitioner to repurchase the property from respondent.
Petitioner maintains that it had accepted respondent's offer made through the SAMD, to sell the
property forP1,574,560.00. When the acceptance was made in its letter dated June 25, 1984; it then
deposited P725,000.00 with the SAMD as partial payment, evidenced by Receipt No. 978194 which
respondent had issued. Petitioner avers that the SAMD's acceptance of the deposit amounted to an
acceptance of its offer to repurchase. Moreover, as gleaned from the letter of SAMD dated June 4,
1985, the PNB Board of Directors had approved petitioner's offer to purchase the property. It claims
that this was the suspensive condition, the fulfillment of which gave rise to the contract. Respondent
could no longer unilaterally withdraw its offer to sell the property for P1,574,560.47, since the
acceptance of the offer resulted in a perfected contract of sale; it was obliged to remit to respondent
the balance of the original purchase price of P1,574,560.47, while respondent was obliged to
transfer ownership and deliver the property to petitioner, conformably with Article 1159 of the New
Civil Code.
Petitioner posits that respondent was proscribed from increasing the interest rate after it had
accepted respondent's offer to sell the property for P1,574,560.00. Consequently, respondent could
no longer validly make a counter-offer of P1,931,789.88 for the purchase of the property. It likewise
maintains that, although the P725,000.00 was considered as "deposit for the repurchase of the
property" in the receipt issued by the SAMD, the amount constitutes earnest money as contemplated
in Article 1482 of the New Civil Code. Petitioner cites the rulings of this Court in Villonco v.
Bormaheco39 and Topacio v. Court of Appeals.40
Petitioner avers that its failure to append its conformity to the June 4, 1984 letter of respondent and
its failure to pay the balance of the price as fixed by respondent within the 60-day period from notice
was to protest respondent's breach of its obligation to petitioner. It did not amount to a rejection of
respondent's offer to sell the property since respondent was merely seeking to enforce its right to
pay the balance of P1,570,564.47. In any event, respondent had the option either to accept the
balance of the offered price or to cause the rescission of the contract.
Petitioner's letters dated March 18, 1993 and June 21, 1993 to respondent during the pendency of
the case in the RTC were merely to compromise the pending lawsuit, they did not constitute
separate offers to repurchase the property. Such offer to compromise should not be taken against it,
in accordance with Section 27, Rule 130 of the Revised Rules of Court.
For its part, respondent contends that the parties never graduated from the "negotiation stage" as
they could not agree on the amount of the repurchase price of the property. All that transpired was
an exchange of proposals and counter-proposals, nothing more. It insists that a definite agreement
on the amount and manner of payment of the price are essential elements in the formation of a
binding and enforceable contract of sale. There was no such agreement in this case. Primarily, the
concept of "suspensive condition" signifies a future and uncertain event upon the fulfillment of which
the obligation becomes effective. It clearly presupposes the existence of a valid and binding
agreement, the effectivity of which is subordinated to its fulfillment. Since there is no perfected
contract in the first place, there is no basis for the application of the principles governing "suspensive
conditions."
According to respondent, the Statement of Account prepared by SAMD as of June 25, 1984 cannot
be classified as a counter-offer; it is simply a recital of its total monetary claims against petitioner.
Moreover, the amount stated therein could not likewise be considered as the counter-offer since as
admitted by petitioner, it was only recommendation which was subject to approval of the PNB Board
of Directors.
Neither can the receipt by the SAMD of P725,000.00 be regarded as evidence of a perfected sale
contract. As gleaned from the parties' Stipulation of Facts during the proceedings in the court a quo,
the amount is merely an acknowledgment of the receipt of P725,000.00 as deposit to repurchase the
property. The deposit of P725,000.00 was accepted by respondent on the condition that the
purchase price would still be approved by its Board of Directors. Respondent maintains that its
acceptance of the amount was qualified by that condition, thus not absolute. Pending such approval,
it cannot be legally claimed that respondent is already bound by any contract of sale with petitioner.
According to respondent, petitioner knew that the SAMD has no capacity to bind respondent and
that its authority is limited to administering, managing and preserving the properties and other
special assets of PNB. The SAMD does not have the power to sell, encumber, dispose of, or
otherwise alienate the assets, since the power to do so must emanate from its Board of Directors.
The SAMD was not authorized by respondent's Board to enter into contracts of sale with third
persons involving corporate assets. There is absolutely nothing on record that respondent
authorized the SAMD, or made it appear to petitioner that it represented itself as having such
authority.
Respondent reiterates that SAMD had informed petitioner that its offer to repurchase had been
approved by the Board subject to the condition, among others, "that the selling price shall be the
total bank's claim as of documentation date x x x payable in cash (P725,000.00 already deposited)
within 60 days from notice of approval." A new Statement of Account was attached therein indicating
the total bank's claim to be P1,931,389.53 less deposit of P725,000.00, or P1,206,389.00.
Furthermore, while respondent's Board of Directors accepted petitioner's offer to repurchase the
property, the acceptance was qualified, in that it required a higher sale price and subject to specified
terms and conditions enumerated therein. This qualified acceptance was in effect a counter-offer,
necessitating petitioner's acceptance in return.
The Ruling of the Court
The ruling of the appellate court that there was no perfected contract of sale between the parties on
June 4, 1985 is correct.
A contract is a meeting of minds between two persons whereby one binds himself, with respect to
the other, to give something or to render some service.41 Under Article 1318 of the New Civil Code,
there is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Contracts are perfected by mere consent which is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract. 42 Once perfected, they
bind other contracting parties and the obligations arising therefrom have the form of law between the
parties and should be complied with in good faith. The parties are bound not only to the fulfillment of
what has been expressly stipulated but also to the consequences which, according to their nature,
may be in keeping with good faith, usage and law.43
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of
and deliver a determinate thing, and the other to pay therefor a price certain in money or its
equivalent.44 The absence of any of the essential elements will negate the existence of a perfected
contract of sale. As the Court ruled in Boston Bank of the Philippines v. Manalo:45
A definite agreement as to the price is an essential element of a binding agreement to sell
personal or real property because it seriously affects the rights and obligations of the parties.
Price is an essential element in the formation of a binding and enforceable contract of sale.
The fixing of the price can never be left to the decision of one of the contracting parties. But a
price fixed by one of the contracting parties, if accepted by the other, gives rise to a
perfected sale.46
A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When
there is merely an offer by one party without acceptance of the other, there is no contract. 47 When the
contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties.48
In San Miguel Properties Philippines, Inc. v. Huang,49 the Court ruled that the stages of a contract of
sale are as follows: (1) negotiation, covering the period from the time the prospective contracting
parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which
takes place upon the concurrence of the essential elements of the sale which are the meeting of the
minds of the parties as to the object of the contract and upon the price; and (3) consummation,
which begins when the parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment thereof.
A negotiation is formally initiated by an offer, which, however, must be certain. 50 At any time prior to
the perfection of the contract, either negotiating party may stop the negotiation. At this stage, the
offer may be withdrawn; the withdrawal is effective immediately after its manifestation. To convert the
offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional and without variance of any sort from the proposal.
In Adelfa Properties, Inc. v. Court of Appeals,51 the Court ruled that:
x x x The rule is that except where a formal acceptance is so required, although the
acceptance must be affirmatively and clearly made and must be evidenced by some acts or
conduct communicated to the offeror, it may be shown by acts, conduct, or words of the
accepting party that clearly manifest a present intention or determination to accept the offer
to buy or sell. Thus, acceptance may be shown by the acts, conduct, or words of a party
recognizing the existence of the contract of sale. 52
A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a
rejection of the original offer. A counter-offer is considered in law, a rejection of the original offer and
an attempt to end the negotiation between the parties on a different basis. 53 Consequently, when
something is desired which is not exactly what is proposed in the offer, such acceptance is not
sufficient to guarantee consent because any modification or variation from the terms of the offer
annuls the offer.54 The acceptance must be identical in all respects with that of the offer so as to
produce consent or meeting of the minds.
In this case, petitioner had until February 17, 1984 within which to redeem the property. However,
since it lacked the resources, it requested for more time to redeem/repurchase the property under
such terms and conditions agreed upon by the parties.55 The request, which was made through a
letter dated August 25, 1983, was referred to the respondent's main branch for appropriate
action.56 Before respondent could act on the request, petitioner again wrote respondent as follows:
1. Upon approval of our request, we will pay your goodselves ONE HUNDRED & FIFTY
THOUSAND PESOS (P150,000.00);
2. Within six months from date of approval of our request, we will pay another FOUR
HUNDRED FIFTY THOUSAND PESOS (P450,000.00); and
3. The remaining balance together with the interest and other expenses that will be incurred
will be paid within the last six months of the one year grave period requested for.57
When the petitioner was told that respondent did not allow "partial redemption,"58 it sent a letter to
respondent's President reiterating its offer to purchase the property.59 There was no response to
petitioner's letters dated February 10 and 15, 1984.
The statement of account prepared by the SAMD stating that the net claim of respondent as of June
25, 1984 wasP1,574,560.47 cannot be considered an unqualified acceptance to petitioner's offer to
purchase the property. The statement is but a computation of the amount which petitioner was
obliged to pay in case respondent would later agree to sell the property, including interests,
advances on insurance premium, advances on realty taxes, publication cost, registration expenses
and miscellaneous expenses.
There is no evidence that the SAMD was authorized by respondent's Board of Directors to accept
petitioner's offer and sell the property for P1,574,560.47. Any acceptance by the SAMD of
petitioner's offer would not bind respondent. As this Court ruled in AF Realty Development, Inc. vs.
Diesehuan Freight Services, Inc.:60
Section 23 of the Corporation Code expressly provides that the corporate powers of all
corporations shall be exercised by the board of directors. Just as a natural person may
authorize another to do certain acts in his behalf, so may the board of directors of a
corporation validly delegate some of its functions to individual officers or agents appointed by
it. Thus, contracts or acts of a corporation must be made either by the board of directors or
by a corporate agent duly authorized by the board. Absent such valid
delegation/authorization, the rule is that the declarations of an individual director relating to
the affairs of the corporation, but not in the course of, or connected with the performance of
authorized duties of such director, are held not binding on the corporation.
Thus, a corporation can only execute its powers and transact its business through its Board of
Directors and through its officers and agents when authorized by a board resolution or its by-laws. 61
It appears that the SAMD had prepared a recommendation for respondent to accept petitioner's offer
to repurchase the property even beyond the one-year period; it recommended that petitioner be
allowed to redeem the property and pay P1,574,560.00 as the purchase price. Respondent later
approved the recommendation that the property be sold to petitioner. But instead of
the P1,574,560.47 recommended by the SAMD and to which petitioner had previously conformed,
respondent set the purchase price at P2,660,000.00. In fine, respondent's acceptance of petitioner's
offer was qualified, hence can be at most considered as a counter-offer. If petitioner had accepted
this counter-offer, a perfected contract of sale would have arisen; as it turns out, however, petitioner
merely sought to have the counter-offer reconsidered. This request for reconsideration would later
be rejected by respondent.
We do not agree with petitioner's contention that the P725,000.00 it had remitted to respondent was
"earnest money" which could be considered as proof of the perfection of a contract of sale under
Article 1482 of the New Civil Code. The provision reads:
ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as
part of the price and as proof of the perfection of the contract.
This contention is likewise negated by the stipulation of facts which the parties entered into in the
trial court:
8. On June 8, 1984, the Special Assets Management Department (SAMD) of PNB prepared
an updated Statement of Account showing MMCC's total liability to PNB as of June 25, 1984
to be P1,574,560.47 and recommended this amount as the repurchase price of the subject
property.
9. On June 25, 1984, MMCC paid P725,000.00 to PNB as deposit to repurchase the
property. The deposit of P725,000 was accepted by PNB on the condition that the
purchase price is still subject to the approval of the PNB Board.62
Thus, the P725,000.00 was merely a deposit to be applied as part of the purchase price of the
property, in the event that respondent would approve the recommendation of SAMD for respondent
to accept petitioner's offer to purchase the property for P1,574,560.47. Unless and until the
respondent accepted the offer on these terms, no perfected contract of sale would arise. Absent
proof of the concurrence of all the essential elements of a contract of sale, the giving of earnest
money cannot establish the existence of a perfected contract of sale. 63
It appears that, per its letter to petitioner dated June 4, 1985, the respondent had decided to accept
the offer to purchase the property for P1,931,389.53. However, this amounted to an amendment of
respondent's qualified acceptance, or an amended counter-offer, because while the respondent
lowered the purchase price, it still declared that its acceptance was subject to the following terms
and conditions:
1. That the selling price shall be the total Bank's claim as of documentation date (pls. see
attached statement of account as of 5-31-85), payable in cash (P725,000.00 already
deposited) within sixty (60) days from notice of approval;
2. The Bank sells only whatever rights, interests and participation it may have in the property
and you are charged with full knowledge of the nature and extent of said rights, interests and
participation and waive your right to warranty against eviction.
3. All taxes and other government imposts due or to become due on the property, as well as
expenses including costs of documents and science stamps, transfer fees, etc., to be
incurred in connection with the execution and registration of all covering documents shall be
borne by you;
4. That you shall undertake at your own expense and account the ejectment of the
occupants of the property subject of the sale, if there are any;
5. That upon your failure to pay the balance of the purchase price within sixty (60) days from
receipt of advice accepting your offer, your deposit shall be forfeited and the Bank is
thenceforth authorized to sell the property to other interested parties.
6. That the sale shall be subject to such other terms and conditions that the Legal
Department may impose to protect the interest of the Bank.64
It appears that although respondent requested petitioner to conform to its amended counter-offer,
petitioner refused and instead requested respondent to reconsider its amended counter-offer.
Petitioner's request was ultimately rejected and respondent offered to refund its P725,000.00
deposit.
In sum, then, there was no perfected contract of sale between petitioner and respondent over the
subject property.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED.
The assailed decision is AFFIRMED. Costs against petitioner Manila Metal Container Corporation.
SO ORDERED.
G.R. No. 95771 March 19, 1993

LAWRENCE BOWE and CIRILO ARBOLARIO, petitioners,
vs.
HONORABLE COURT OF APPEALS, and TEODORO R. GARCIA, represented by his son,
SERAFIN M. GARCIA, respondents.
Mario O. Leyco for petitioners.
Ricardo J.M. Rivera Law Office for private respondent.
CAMPOS, JR., J.:

This is a petition for review on certiorari seeking the reversal of the Decision * of December 18, 1989
and the Resolution ** of October 23, 1990 of the respondent Court of Appeals in CA-G.R. CV No.
17201, entitled "TEODORO R. GARCIA, represented by his son, SERAFIN GARCIA v. LAWRENCE
BOWE, ET AL." affirming the decision" of the Regional Trial Court of Olongapo City dated December
17, 1987 in Civil Case No. 451-0-84 for termination of a lease contract with damages and
reimbursement of rents.
As gathered from the records, the facts of the case are as follows:
On June 27, 1979, private respondent (plaintiff below) Teodoro Garcia's wife Luz Garcia, now
deceased, as owner and lessor of a two (2) storey, 6-door apartment building located at No. 2-B Leo
St., Lower Kalaklan, Olongapo City entered into a contract of lease 1 covering the same property with
Laura Arbolario (now deceased, substituted by her son by previous marriage Lawrence Bowe), 2 for a
period of five (5) years starting September 1, 1979 to terminate on September 1, 1984. 3 It was stipulated,
among others, that herein petitioners can sublease the premises and collect rentals therefrom and shall
start to pay private respondent the amount of P30,000.00 as yearly rental after the indebtedness of
private respondent to petitioners in the amount of P75,000.00 is fully and completely paid by private
respondent to the petitioners out of the rental received by the latter on said property. 4
Sometime in October of 1982, during the efficacy of the contract of lease, Teodoro Garcia and his
son, Serafin Garcia, verbally agreed to sell the disputed house and lot to the spouses Cirilo and
Laura Arbolario for a consideration of P220,000.00. 5
Pursuant to said agreement, the first of the downpayments was made on August 18, 1982 6 for
P2,600.00. Said receipt was signed by Serafin Garcia in the presence of the petitioners. 7 Succeeding
payments were also made in installment and private respondents admittedly received the total amount of
P66,000.00 8 and it was agreed that the balance will be paid by the petitioners to private respondent upon
the latter's (Teodoro Garcia) return to the Philippines when he could execute the deed of absolute
sale. 9 After the petitioners' last payment on December 22, 1983 private respondent wrote them a letter
informing them that the deal is off 10 and after the expiration of the lease contract on September 1, 1984,
private respondent's son Serafin went to petitioners and offered an accounting of the amounts of money
they have paid (to compute them as rentals) but the petitioners refused, claiming that they already own
the property. 11
Hence, Teodoro Garcia, represented by his son, Serafin Garcia filed a complaint against Laura
Arbolario, joined by her husband Cirilo (Carlos) Arbolario before the RTC of Olongapo docketed as
Civil Case No. 451-0-84, alleging that the conditions on said contract of lease have been fully
satisfied; that petitioner's unjust refusal to vacate the premises after September 1, 1984 has caused
actual damages by way of rental from September 2, 1984 up to the time petitioners shall have
relinquished the premises; and that defendant's violation of their contractual obligation caused
exemplary and moral damages, attorney's fees plus incidental expenses for litigation; and thus
prayed for: the termination of the contract of lease as of September 1, 1984; petitioners to reimburse
private respondent of all rents received from said 6-door apartment from September 2, 1984 up to
the time she shall vacate the premises by virtue of judgment; and petitioners to pay attorney's fee of
P10,000.00, miscellaneous expenses of P2,000.00 and moral and exemplary damages. 12
Petitioners' admit the existence of the contract of lease and assert in defense that in 1982 private
respondent agreed to sell to them the house and lot subject of the contract of lease for P220,000.00;
that pursuant to said agreement, private respondent or through his children received from petitioners
down payments in the total amount of P66,600.00 and it was agreed that the balance will be paid by
petitioners to private respondent as soon as the latter returned to the Philippines when he could
execute the deed of absolute sale; that petitioners collected rental from tenants thereon and made
considerable improvements and repairs on the apartment; that they have a perfect right not to
vacate the premises being owners thereof by virtue of the sale; and as counterclaim, petitioners
allege that despite the agreement to sell, private respondent refused to accept petitioners' offer and
tender of the payment of the additional amount of P153,400.00 which petitioners are willing and able
to pay at any time or upon order of the court; and thus praying that the case be dismissed.
After hearing the lower court rendered its decision dated December 17, 1987, the dispositive portion
of which reads:
WHEREFORE, from the FOREGOING considerations, this Court hereby renders
judgment as follows:
1) Pronouncing the termination of the written and implied Contract of
Lease between plaintiff and the defendants;
2) Directing the defendants to vacate the apartment building and land
located at No. 2-B Leo Street, (formerly Indiana Street) Lower
Kalaklan, Olongapo City, and surrender the same to the plaintiffowner;
3) Directing the defendants to pay the amount of P6,900.00
representing the balance of the unpaid rentals from September 1979
to September 1984;
4) Directing the defendants to pay plaintiff annual rentals from
September 1, 1984 to September 1, 1987, which this Court holds as
an implied renewal of their written Contract of Lease at the same
yearly rental of P30,000.00 or a total of P90,000.00 and thereafter to
pay the amount of P2,500.00 every month from October 1, 1987 up
to the time that defendants shall vacate the premises;
5) Directing the defendants to pay the plaintiff the amount of
P8,000.00 by way of attorney's fees and costs; and
6) All other contending claims of the parties are hereby

DISMISSED. 13
Petitioners appealed the decision of the lower court to the respondent Court of Appeals which
affirmed in full 14 the said decision.
Hence, this petition.
Petitioners assign the following errors:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING AND IN FINDING
NO REVERSIBLE ERROR IN THE APPEALED DECISION OF THE TRIAL COURT A
QUO BECAUSE:
A. IT ERRED IN FINDING THAT THE CONTRACT OF SALE WAS NEVER
CONSUMMATED.
B. IT ERRED IN FINDING THAT THE CONTRACT OF SALE WAS RESCINDED.
C. IT ERRED IN PLACING UNDUE EMPHASIS ON NOVATION OF THE
CONTRACT OF LEASE WHEN THE SAME HAS BEEN SUPPLANTED AND/OR
ABANDONED.
D. IT ERRED IN NOT DISMISSING THE CASE AS AN EJECTMENT CASE
EXCLUSIVELY COGNIZABLE BY THE INFERIOR COURT, HENCE, THIS
HONORABLE COURT OF APPEALS HAS NO APPELLATE JURISDICTION OVER
THE PRESENT CASE.
The main issue to be resolved is whether or not the contract of lease has been supplanted and/or
abandoned.
Petitioners contend that the contract of lease between them and private respondent was already
supplanted and/or abandoned in 1982 when their contract of sale, although admittedly verbal, was
perfected and partially performed. Consequently, their relationship as lessor and lessee was
terminated effectively and ipso facto upon such perfection of their contract of sale. To bolster their
contention, petitioners introduced several receipts, Exhibits 1-6, as evidence of their payment in
installments.
Private respondent, on the other hand, counters that the contract was not one "of sale" but a mere
"contract to sell", or at most, a conditional contract of sale.
The petition is devoid of merit.
Indeed a contract of sale is perfected by mere consent. 15 It is not enough to state, however, that the
contract of sale, being consensual, became effective between petitioners and private respondent as of
1982. Such fact is beyond dispute. What is crucial at this point is to ascertain those undertakings which
the parties have consented in order to determine the nature of their agreement.
According to Lim vs. Court Appeals: 16

. . . A distinction must be made between a contract of sale in which title passes to the
buyer upon delivery of the thing sold and a contract to sell . . . where by agreement
the ownership is reserved in the seller and is not to pass until the full payment of the
purchase price is made. In the first case, non-payment of the price is a negative
resolutory condition; in the second case, full payment is a positive suspensive
condition. Being contraries, their effect in law cannot be identical. In the first case,
the vendor has lost and cannot recover the ownership of the land sold until and
unless the contract of sale is itself resolved and set aside. In the second case,
however, the title remains in the vendor if the vendee does not comply with the
condition precedent of making payment at the time specified in the contract.
Inevitably, the foregoing distinctions lead to a finding that the verbal agreement between petitioners
and private respondent was only a contract to sell, not a contract of sale.
A careful examination of the receipts, 17 presented by the petitioners shows that only Exhibits "2", "4"
and "5" have direct bearing on the agreement of the petitioners and private respondent regarding the
disputed properties. Those exhibits reveal that the amounts contained therein are either "downpayments",
"deductible from apartment sale" or "an advanced payment of unconsummated sale". Those are the only
terms contained in the said exhibits. Nothing more.
Prescinding therefrom, there was no immediate transfer of title to petitioners to speak of as would
have happened if there had been a sale at the outset. 18 Clearly the absence of formal deed of
conveyance strongly indicates that the parties did not intend immediate transfer of title, but only a transfer
after full payment of the price. 19
It is unlikely that if the contract were an absolute sale, the petitioners would not have insisted that the
same be reduced to writing despite several opportunities to do so. Another thing is that at the time
petitioners were delivering the unpaid balance which was allegedly rejected by private respondent,
they simply asked private respondent (Teodoro Garcia) to give back the amounts that had been
given as advance payment. 20 This simply goes against the grain of their argument that they are already
the owners of the disputed properties. Hence, as payment of the consideration was a positive suspensive
condition, title to the subject property never passed to the petitioners.
This Court's ruling in Lim v. Court of Appeals, 21 is worth quoting:
It is true that the contract to sell imposes reciprocal obligations and so cannot be
terminated unilaterally by either party. Judicial rescission is required under Article
1191 of the Civil Code. However, this rule is not absolute. We have held that in
proper cases, a party may take it upon itself to consider the contract rescinded and
act accordingly albeit subject to judicial confirmation, which may or may not be given.
It is true that the rescinding party takes a risk that its action may not be approved by
the court. But as we said in University of the Philippines v. De los Angeles [35 SCRA
102 (1970)]:
xxx xxx xxx
. . . But the law definitely does not require that the contracting party
who believes itself injured must first file suit and wait for a judgment
before taking extrajudicial steps to protect its interest. Other-wise, the
party injured by the other's breach will have to passively sit and watch
its damages accumulate during the pendency of the suit until final
judgment of rescission is rendered when the law itself requires that
he should exercise due diligence to minimize its own damages.
It is also contended by petitioners that the suit initiated by herein private respondent denominated,
as termination of lease with damages and reimbursement of rents, was actually a suit for unlawful
detainer. Hence, the Regional Trial Court has no jurisdiction to entertain the same.
This contention is also bereft of merit.
There is no question that the original lease contract between the parties was only for five (5) years
nonetheless petitioners continued occupying the leased premises beyond that date and it was only
sometime in October 1984, that Serafin Garcia went to see petitioners for accounting purposes
regarding the advance payment made by the latter and informing them at the same that a case will
be filed against them. 22 There is no evidence on record that petitioners were served with notice to
vacate. This Court will have to determine whether such continued occupancy was with or without the
implied acquiescence of private respondent.
An implied new lease or tacita reconduccion will set in if it is shown that: (a) the term of the original
contract of lease has expired; (b) the lessor has not given the lessee a notice to vacate; and (c) the
lessee continued enjoying the thing leased for fifteen days with the acquiescence of the lessor. This
acquiescence may be inferred from this failure to serve a notice to quit. 23
In the instant case, there is an implied renewal of the lease contract. As aforementioned, no talks
have been held between the lessor and the lessees concerning the renewal of the lease. By the
inaction of the lessor, there can be no inference that he intends to discontinue it. In such a case, no
less than an express notice to vacate must be made within the statutory 15-day period. Not only was
there an absence of notice to vacate but there were also no communications that transpired between
the parties regarding the lease. The earliest communication that has been shown was in October,
1984, definitely way beyond the 15-day statutory period required by law.
Considering that there was an implied renewal of lease, there is no unlawful detainer to speak of.
The filing of the termination of contract was, therefore, appropriate and clearly the Regional Trial
Court has jurisdiction over the case since it is an action involving the title to or possession of real
property or any interest therein. 24
WHEREFORE, the petition is DENIED. The decision and resolution of the respondent Court of
Appeals dated December 18, 1989 and October 23, 1990 respectively, are AFFIRMED.
Costs against petitioners.
SO ORDERED.
G.R. No. 107207 November 23, 1995

VIRGILIO R. ROMERO, petitioner,
vs.
HON. COURT OF APPEALS and ENRIQUETA CHUA VDA. DE ONGSIONG, respondents.
VITUG, J.:
The parties pose this question: May the vendor demand the rescission of a contract for the sale of a
parcel of land for a cause traceable to his own failure to have the squatters on the subject property
evicted within the contractually-stipulated period?
Petitioner Virgilio R. Romero, a civil engineer, was engaged in the business of production,
manufacture and exportation of perlite filter aids, permalite insulation and processed perlite ore. In
1988, petitioner and his foreign partners decided to put up a central warehouse in Metro Manila on a
land area of approximately 2,000 square meters. The project was made known to several freelance
real estate brokers.
A day or so after the announcement, Alfonso Flores and his wife, accompanied by a broker, offered a
parcel of land measuring 1,952 square meters. Located in Barangay San Dionisio, Paraaque,
Metro Manila, the lot was covered by TCT No. 361402 in the name of private respondent Enriqueta
Chua vda. de Ongsiong. Petitioner visited the property and, except for the presence of squatters in
the area, he found the place suitable for a central warehouse.
Later, the Flores spouses called on petitioner with a proposal that should he advance the amount of
P50,000.00 which could be used in taking up an ejectment case against the squatters, private
respondent would agree to sell the property for only P800.00 per square meter. Petitioner expressed
his concurrence. On 09 June 1988, a contract, denominated "Deed of Conditional Sale," was
executed between petitioner and private respondent. The simply-drawn contract read:
DEED OF CONDITIONAL SALE
KNOW ALL MEN BY THESE PRESENTS:
This Contract, made and executed in the Municipality of Makati, Philippines this 9th
day of June, 1988 by and between:
ENRIQUETA CHUA VDA. DE ONGSIONG, of legal age, widow,
Filipino and residing at 105 Simoun St., Quezon City, Metro Manila,
hereinafter referred to as the VENDOR;
-andVIRGILIO R. ROMERO, married to Severina L. Lat, of Legal age,
Filipino, and residing at 110 San Miguel St., Plainview Subd.,
Mandaluyong Metro Manila, hereinafter referred to as the VENDEE:
W I T N E S S E T H : That
WHEREAS, the VENDOR is the owner of One (1) parcel of land with a total area of
ONE THOUSAND NINE HUNDRED FIFTY TWO (1,952) SQUARE METERS, more
or less, located in Barrio San Dionisio, Municipality of Paraaque, Province of Rizal,
covered by TCT No. 361402 issued by the Registry of Deeds of Pasig and more
particularly described as follows:
xxx xxx xxx
WHEREAS, the VENDEE, for (sic) has offered to buy a parcel of land and the
VENDOR has accepted the offer, subject to the terms and conditions hereinafter
stipulated:
NOW, THEREFORE, for and in consideration of the sum of ONE MILLION FIVE
HUNDRED SIXTY ONE THOUSAND SIX HUNDRED PESOS (P1,561,600.00)
ONLY, Philippine Currency, payable by VENDEE to in to (sic) manner set forth, the
VENDOR agrees to sell to the VENDEE, their heirs, successors, administrators,
executors, assign, all her rights, titles and interest in and to the property mentioned in
the FIRST WHEREAS CLAUSE, subject to the following terms and conditions:
1. That the sum of FIFTY THOUSAND PESOS (P50,000.00) ONLY
Philippine Currency, is to be paid upon signing and execution of this
instrument.
2. The balance of the purchase price in the amount of ONE MILLION
FIVE HUNDRED ELEVEN THOUSAND SIX HUNDRED PESOS
(P1,511,600.00) ONLY shall be paid 45 days after the removal of all
squatters from the above described property.
3. Upon full payment of the overall purchase price as aforesaid,
VENDOR without necessity of demand shall immediately sign,
execute, acknowledged (sic) and deliver the corresponding deed of
absolute sale in favor of the VENDEE free from all liens and
encumbrances and all Real Estate taxes are all paid and updated.
It is hereby agreed, covenanted and stipulated by and between the parties hereto
that if after 60 days from the date of the signing of this contract the VENDOR shall
not be able to remove the squatters from the property being purchased, the
downpayment made by the buyer shall be returned/reimbursed by the VENDOR to
the VENDEE.
That in the event that the VENDEE shall not be able to pay the VENDOR the balance
of the purchase price of ONE MILLION FIVE HUNDRED ELEVEN THOUSAND SIX
HUNDRED PESOS (P1,511,600.00) ONLY after 45 days from written notification to
the VENDEE of the removal of the squatters from the property being purchased, the
FIFTY THOUSAND PESOS (P50,000.00) previously paid as downpayment shall be
forfeited in favor of the VENDOR.
Expenses for the registration such as registration fees, documentary stamp, transfer
fee, assurances and such other fees and expenses as may be necessary to transfer
the title to the name of the VENDEE shall be for the account of the VENDEE while
capital gains tax shall be paid by the VENDOR.
IN WITNESS WHEREOF, the parties hereunto signed those (sic) presents in the City
of Makati MM, Philippines on this 9th day of June, 1988.
(Sgd.) (Sgd.)
VIRGILIO R. ROMERO ENRIQUETA CHUA VDA.
DE ONGSIONG
Vendee Vendor
SIGNED IN THE PRESENCE OF:
(Sgd.) (Sgd.)
Rowena C. Ongsiong Jack M. Cruz 1
Alfonso Flores, in behalf of private respondent, forthwith received and acknowledged a
check for P50,000.002 from petitioner. 3
Pursuant to the agreement, private respondent filed a complaint for ejectment (Civil Case No. 7579)
against Melchor Musa and 29 other squatter families with the Metropolitan Trial Court of Paraaque.
A few months later, or on 21 February 1989, judgment was rendered ordering the defendants to
vacate the premises. The decision was handed down beyond the 60-day period (expiring 09 August
1988) stipulated in the contract. The writ of execution of the judgment was issued, still later, on 30
March 1989.
In a letter, dated 07 April 1989, private respondent sought to return the P50,000.00 she received
from petitioner since, she said, she could not "get rid of the squatters" on the lot. Atty. Sergio A.F.
Apostol, counsel for petitioner, in his reply of 17 April 1989, refused the tender and stated:.
Our client believes that with the exercise of reasonable diligence considering the
favorable decision rendered by the Court and the writ of execution issued pursuant
thereto, it is now possible to eject the squatters from the premises of the subject
property, for which reason, he proposes that he shall take it upon himself to eject the
squatters, provided, that expenses which shall be incurred by reason thereof shall be
chargeable to the purchase price of the land. 4
Meanwhile, the Presidential Commission for the Urban Poor ("PCUD"), through its Regional Director
for Luzon, Farley O. Viloria, asked the Metropolitan Trial Court of Paraaque for a grace period of 45
days from 21 April 1989 within which to relocate and transfer the squatter families. Acting favorably
on the request, the court suspended the enforcement of the writ of execution accordingly.
On 08 June 1989, Atty. Apostol reminded private respondent on the expiry of the 45-day grace
period and his client's willingness to "underwrite the expenses for the execution of the judgment and
ejectment of the occupants." 5
In his letter of 19 June 1989, Atty. Joaquin Yuseco, Jr., counsel for private respondent, advised Atty.
Apostol that the Deed of Conditional Sale had been rendered null and void by virtue of his client's
failure to evict the squatters from the premises within the agreed 60-day period. He added that
private respondent had "decided to retain the property." 6
On 23 June 1989, Atty. Apostol wrote back to explain:
The contract of sale between the parties was perfected from the very moment that
there was a meeting of the minds of the parties upon the subject lot and the price in
the amount of P1,561,600.00. Moreover, the contract had already been partially
fulfilled and executed upon receipt of the downpayment of your client. Ms. Ongsiong
is precluded from rejecting its binding effects relying upon her inability to eject the
squatters from the premises of subject property during the agreed period. Suffice it to
state that, the provision of the Deed of Conditional Sale do not grant her the option or
prerogative to rescind the contract and to retain the property should she fail to
comply with the obligation she has assumed under the contract. In fact, a perusal of
the terms and conditions of the contract clearly shows that the right to rescind the
contract and to demand the return/reimbursement of the downpayment is granted to
our client for his protection.
Instead, however, of availing himself of the power to rescind the contract and
demand the return, reimbursement of the downpayment, our client had opted to take
it upon himself to eject the squatters from the premises. Precisely, we refer you to
our letters addressed to your client dated April 17, 1989 and June 8, 1989.
Moreover, it is basic under the law on contracts that the power to rescind is given to
the injured party. Undoubtedly, under the circumstances, our client is the injured
party.
Furthermore, your client has not complied with her obligation under their contract in
good faith. It is undeniable that Ms. Ongsiong deliberately refused to exert efforts to
eject the squatters from the premises of the subject property and her decision to
retain the property was brought about by the sudden increase in the value of realties
in the surrounding areas.
Please consider this letter as a tender of payment to your client and a demand to
execute the absolute Deed of Sale. 7
A few days later (or on 27 June 1989), private respondent, prompted by petitioner's continued refusal
to accept the return of the P50,000.00 advance payment, filed with the Regional Trial Court of
Makati, Branch 133, Civil Case No. 89-4394 for rescission of the deed of "conditional" sale, plus
damages, and for the consignation of P50,000.00 cash.
Meanwhile, on 25 August 1989, the Metropolitan Trial Court issued an alias writ of execution in Civil
Case No. 7579 on motion of private respondent but the squatters apparently still stayed on.
Back to Civil Case No. 89-4394, on 26 June 1990, the Regional Trial Court of Makati 8 rendered
decision holding that private respondent had no right to rescind the contract since it was she who
"violated her obligation to eject the squatters from the subject property" and that petitioner, being the
injured party, was the party who could, under Article 1191 of the Civil Code, rescind the agreement. The
court ruled that the provisions in the contract relating to (a) the return/reimbursement of the P50,000.00 if
the vendor were to fail in her obligation to free the property from squatters within the stipulated period or
(b), upon the other hand, the sum's forfeiture by the vendor if the vendee were to fail in paying the agreed
purchase price, amounted to "penalty clauses". The court added:
This Court is not convinced of the ground relied upon by the plaintiff in seeking the
rescission, namely: (1) he (sic) is afraid of the squatters; and (2) she has spent so
much to eject them from the premises (p. 6, tsn, ses. Jan. 3, 1990). Militating against
her profession of good faith is plaintiffs conduct which is not in accord with the rules
of fair play and justice. Notably, she caused the issuance of an alias writ of execution
on August 25, 1989 (Exh. 6) in the ejectment suit which was almost two months after
she filed the complaint before this Court on June 27, 1989. If she were really afraid of
the squatters, then she should not have pursued the issuance of an alias writ of
execution. Besides, she did not even report to the police the alleged phone threats
from the squatters. To the mind of the Court, the so-called squatter factor is simply
factuitous (sic). 9
The lower court, accordingly, dismissed the complaint and ordered, instead, private
respondent to eject or cause the ejectment of the squatters from the property and to execute
the absolute deed of conveyance upon payment of the full purchase price by petitioner.
Private respondent appealed to the Court of Appeals. On 29 May 1992, the appellate court rendered
its decision. 10It opined that the contract entered into by the parties was subject to a resolutory
condition, i.e., the ejectment of the squatters from the land, the non-occurrence of which resulted in the
failure of the object of the contract; that private respondent substantially complied with her obligation to
evict the squatters; that it was petitioner who was not ready to pay the purchase price and fulfill his part of
the contract, and that the provision requiring a mandatory return/reimbursement of the P50,000.00 in case
private respondent would fail to eject the squatters within the 60-day period was not a penal clause. Thus,
it concluded.
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE, and a
new one entered declaring the contract of conditional sale dated June 9, 1988
cancelled and ordering the defendant-appellee to accept the return of the
downpayment in the amount of P50,000.00 which was deposited in the court below.
No pronouncement as to costs. 11
Failing to obtain a reconsideration, petitioner filed this petition for review on certiorari raising issues
that, in fine, center on the nature of the contract adverted to and the P50,000.00 remittance made by
petitioner.
A perfected contract of sale may either be absolute or conditional 12 depending on whether the
agreement is devoid of, or subject to, any condition imposed on the passing of title of the thing to be
conveyed or on the obligation of a party thereto. When ownership is retained until the fulfillment of a
positive condition the breach of the condition will simply prevent the duty to convey title from acquiring
an obligatory force. If the condition is imposed on an obligation of a party which is not complied with,
the other party may either refuse to proceed or waive said condition (Art. 1545, Civil Code). Where, of
course, the condition is imposed upon the perfection of the contract itself, the failure of such condition
would prevent the juridical relation itself from coming into existence. 13
In determining the real character of the contract, the title given to it by the parties is not as much
significant as its substance. For example, a deed of sale, although denominated as a deed of
conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved in
the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated
on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition. 14
The term "condition" in the context of a perfected contract of sale pertains, in reality, to the
compliance by one party of an undertaking the fulfillment of which would beckon, in turn, the
demandability of the reciprocal prestation of the other party. The reciprocal obligations referred to
would normally be, in the case of vendee, the payment of the agreed purchase price and, in the case
of the vendor, the fulfillment of certain express warranties (which, in the case at bench is the timely
eviction of the squatters on the property).
It would be futile to challenge the agreement here in question as not being a duly perfected contract.
A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver
and to transfer ownership of a specified thing or right to another (the buyer) over which the latter
agrees. 15
The object of the sale, in the case before us, was specifically identified to be a 1,952-square meter
lot in San Dionisio, Paraaque, Rizal, covered by Transfer Certificate of Title No. 361402 of the
Registry of Deeds for Pasig and therein technically described. The purchase price was fixed at
P1,561,600.00, of which P50,000.00 was to be paid upon the execution of the document of sale and
the balance of P1,511,600.00 payable "45 days after the removal of all squatters from the above
described property."
From the moment the contract is perfected, the parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all the consequences which, according to their nature, may
be in keeping with good faith, usage and law. Under the agreement, private respondent is obligated
to evict the squatters on the property. The ejectment of the squatters is a condition the operative act
of which sets into motion the period of compliance by petitioner of his own obligation, i.e., to pay the
balance of the purchase price. Private respondent's failure "to remove the squatters from the
property" within the stipulated period gives petitioner the right to either refuse to proceed with the
agreement or waive that condition in consonance with Article 1545 of the Civil Code. 16 This option
clearly belongs to petitioner and not to private respondent.
We share the opinion of the appellate court that the undertaking required of private respondent does
not constitute a "potestative condition dependent solely on his will" that might, otherwise, be void in
accordance with Article 1182 of the Civil Code 17 but a "mixed" condition "dependent not on the will of
the vendor alone but also of third persons like the squatters and government agencies and personnel
concerned." 18 We must hasten to add, however, that where the so-called "potestative condition" is
imposed not on the birth of the obligation but on its fulfillment, only the obligation is avoided, leaving
unaffected the obligation itself. 19
In contracts of sale particularly, Article 1545 of the Civil Code, aforementioned, allows the obligee to
choose between proceeding with the agreement or waiving the performance of the condition. It is
this provision which is the pertinent rule in the case at bench. Here, evidently, petitioner has waived
the performance of the condition imposed on private respondent to free the property from
squatters. 20
In any case, private respondent's action for rescission is not warranted. She is not the injured
party. 21 The right of resolution of a party to an obligation under Article 1191 of the Civil Code is predicated
on a breach of faith by the other party that violates the reciprocity between them. 22 It is private respondent
who has failed in her obligation under the contract. Petitioner did not breach the agreement. He has
agreed, in fact, to shoulder the expenses of the execution of the judgment in the ejectment case and to
make arrangements with the sheriff to effect such execution. In his letter of 23 June 1989, counsel for
petitioner has tendered payment and demanded forthwith the execution of the deed of absolute sale.
Parenthetically, this offer to pay, having been made prior to the demand for rescission, assuming for the
sake of argument that such a demand is proper under Article 1592 23 of the Civil Code, would likewise
suffice to defeat private respondent's prerogative to rescind thereunder.
There is no need to still belabor the question of whether the P50,000.00 advance payment is
reimbursable to petitioner or forfeitable by private respondent, since, on the basis of our foregoing
conclusions, the matter has ceased to be an issue. Suffice it to say that petitioner having opted to
proceed with the sale, neither may petitioner demand its reimbursement from private respondent nor
may private respondent subject it to forfeiture.
WHEREFORE, the questioned decision of the Court of Appeals is hereby REVERSED AND SET
ASIDE, and another is entered ordering petitioner to pay private respondent the balance of the
purchase price and the latter to execute the deed of absolute sale in favor of petitioner. No costs.
SO ORDERED.
[G.R. No. 119178. June 20, 1997]
LINA LIM LAO, petitioner, vs. COURT OF APPEALS and PEOPLE OF

THE PHILIPPINES, respondents.
DECISION
PANGANIBAN, J.:
May an employee who, as part of her regular duties, signs blank corporate
checks -- with the name of the payee and the amount drawn to be filled later
by another signatory -- and, therefore, does so without actual knowledge of
whether such checks are funded, be held criminally liable for violation of Batas
Pambansa Bilang 22 (B.P. 22), when checks so signed are dishonored due to
insufficiency of funds? Does a notice of dishonor sent to the main office of the
corporation constitute a valid notice to the said employee who holds office in a
separate branch and who had no actual knowledge thereof? In other words, is
constructive knowledge of the corporation, but not of the signatory-employee,
sufficient?
These are the questions raised in the petition filed on March 21, 1995
assailing the Decision of Respondent Court of Appeals promulgated on
December 9, 1994 in CA-G.R. CR No. 14240 dismissing the appeal of
petitioner and affirming the decision dated September 26, 1990 in Criminal
Case Nos. 84-26967 to 84-26969 of the Regional Trial Court of Manila,
Branch 33. The dispositive portion of the said RTC decision affirmed by the
respondent appellate court reads:
[1]
[2]
[3]
WHEREFORE, after a careful consideration of the evidence presented by the

prosecution and that of the defense, the Court renders judgment as follows:
In Criminal Case No. 84-26969 where no evidence was presented by the prosecution
notwithstanding the fact that there was an agreement that the cases be tried jointly and
also the fact that the accused Lina Lim Lao was already arraigned, for failure of the
prosecution to adduce evidence against the accused, the Court hereby declares her
innocent of the crime charged and she is hereby acquitted with cost de oficio.
For Criminal Case No. 84-26967, the Court finds the accused Lina Lim Lao guilty
beyond reasonable doubt of the crime charged and is hereby sentenced to suffer the
penalty of ONE (1) YEAR imprisonment and to pay a fine of P150,000.00 without
subsidiary imprisonment in case of insolvency.
For Criminal Case No. 84-26968, the Court finds the accused Lina Lim Lao guilty
beyond reasonable doubt of the crime charged and is hereby sentenced to suffer the
penalty of ONE (1) YEAR imprisonment and to pay a fine of P150,000.00 without
subsidiary imprisonment in case of of (sic) insolvency.
For the two cases the accused is ordered to pay the cost of suit.
The cash bond put up by the accused for her provisional liberty in Criminal Case No.
84-26969 where she is declared acquitted is hereby ordered cancelled (sic).
With reference to the accused Teodulo Asprec who has remained at large, in order that
the cases as against him may not remain pending in the docket for an indefinite
period, let the same be archived without prejudice to its subsequent prosecution as
soon as said accused is finally apprehended.
Let a warrant issue for the arrest of the accused Teodulo Asprec which warrant need
not be returned to this Court until the accused is finally arrested.
SO ORDERED.
The Facts
Version of the Prosecution
The facts are not disputed. We thus lift them from the assailed Decision,
as follows:
Appellant (and now Petitioner Lina Lim Lao) was a junior officer of Premiere
Investment House (Premiere) in its Binondo Branch. As such officer, she was
authorized to sign checks for and in behalf of the corporation (TSN, August 16, 1990,
p. 6). In the course of the business, she met complainant Father Artelijo Pelijo, the
provincial treasurer of the Society of the Divine Word through Mrs. Rosemarie
Lachenal, a trader for Premiere. Father Palijo was authorized to invest donations to
the society and had been investing the societys money with Premiere (TSN, June 23,
1987, pp. 5, 9-10). Father Palijo had invested a total of P514,484.04, as evidenced by
the Confirmation of Sale No. 82-6994 (Exh A) dated July 8, 1993. Father Palijo was
also issued Traders Royal Bank (TRB) checks in payment of interest, as follows:
Check Date Amount
299961 Oct. 7, 1993 (sic) P150,000.00 (Exh. B)
299962 Oct. 7, 1983 P150,000.00 (Exh. C)
323835 Oct. 7, 1983 P 26,010.73
All the checks were issued in favor of Artelijo A. Palijo and signed by appellant
(herein petitioner) and Teodulo Asprec, who was the head of operations. Further
evidence of the transaction was the acknowledgment of postdated checks dated July 8,
1983 (Exh . D) and the cash disbursement voucher (Exh. F, TSN, supra, at pp. 11-16).
When Father Palijo presented the checks for encashment, the same were dishonored for the
reason Drawn Against Insufficient Funds (DAIF). Father Palijo immediately made demands on
premiere to pay him the necessary amounts. He first went to the Binondo Branch but was
referred to the Cubao Main Branch where he was able to talk with the President, Mr. Cario. For
his efforts, he was paid P5,000.00. Since no other payments followed, Father Palijo wrote
Premiere a formal letter of demand. Subsequently, Premiere was placed under receivership
(TSN, supra, at pp. 16-19).
[4]
Thereafter, on January 24, 1984, Private Complainant Palijo filed an

affidavit-complaint against Petitioner Lina Lim Lao and Teodulo Asprec for
violation of B.P. 22. After preliminary investigation, three Informations
[5]
charging Lao and Asprec with the offense defined in the first paragraph of
Section 1, B.P. 22 were filed by Assistant Fiscal Felix S. Caballes before the
trial court on May 11, 1984, worded as follows:
[6]
1. In Criminal Case No. 84-26967:
That on or about October 7, 1983 in the City of Manila, Philippines, the said accused
did then and there wilfully and unlawfully draw and issue to Artelijo A. Palijo to apply
on account or for value a Traders Royal Bank Check No. 299962 for P150,000.00
payable to Fr. Artelijo A. Palijo dated October 7, 1983 well knowing that at the time
of issue he/she did not have sufficient funds in or credit with the drawee bank for full
payment of the said check upon its presentment as in fact the said check, when
presented within ninety (90) days from the date thereof, was dishonored by the drawee
bank for the reason:Insufficient Funds; that despite notice of such dishonor, said
accused failed to pay said Artelijo A. Palijo the amount of the said check or to make
arrangement for full payment of the same within five (5) banking days from receipt of
said notice.
CONTRARY TO LAW.
2. In Criminal Case No. 84-26968:
That on or about October 7, 1983 in the City of Manila, Philippines, the said accused
did then and there wilfully and unlawfully draw and issue to Artelijo A. Palijo to apply
on account or for value a Traders Royal Bank Check No. 299961 for P150,000.00
payable to Fr. Artelijo A. Palijo dated October 7, 83 well knowing that at the time of
issue he/she did not have sufficient funds in or credit with the drawee bank for full
payment of the said check upon its presentment as in fact the said check, when
presented within ninety (90) days from the date thereof, was dishonored by the drawee
bank for the reason:Insuficient Funds; that despite notice of such dishonor, said
accused failed to pay said Artelijo A. Palijo the amount of the said check or to make
arrangement for full payment of the same within five (5) banking days from receipt of
said notice.
CONTRARY TO LAW.
3. And finally in Criminal Case No. 84-26969:
That on or about July 8, 1983 in the City of Manila, Philippines, the said accused did
then and there wilfully and unlawfully draw and issue to Artelijo A. Palijo to apply on
account for value a Traders Royal Bank Check No. 323835 for P26,010.03 payable to
Fr. Artelijo A. Palijo dated October 7, 1983 well knowing that at the time of issue
he/she did not have sufficient funds in or credit with the drawee bank for full payment
of the said check upon its presentment as in fact the said check, when presented within
ninety (90) days from the date thereof, was dishonored by the drawee bank for the
reason: Insufficient Funds; that despite notice of such dishonor, said accused failed to
pay said Artelijo A. Palijo the amount of the said check or to make arrangement for
full payment of the same within five (5) banking days from receipt of said notice.
CONTRARY TO LAW.
Upon being arraigned, petitioner assisted by counsel pleaded not
guilty. Asprec was not arrested; he has remained at large since the trial, and
even now on appeal.
After due trial, the Regional Trial Court convicted Petitioner Lina Lim Lao
in Criminal Case Nos. 84-26967 and 84-26968 but acquitted her in Criminal
Case No. 84-26969. On appeal, the Court of Appeals affirmed the decision of
the trial court.
[7]
Version of the Defense

Petitioner aptly summarized her version of the facts of the case thus:
Petitioner Lina Lim Lao was, in 1983, an employee of Premiere Financing
Corporation (hereinafter referred to as the Corporation), a corporation engaged in
investment management, with principal business office at Miami, Cubao, Quezon
City. She was a junior officer at the corporation who was, however, assigned not at its
main branch but at the corporations extension office in (Binondo) Manila. (Ocampo,
T.S.N., 16 August 1990, p. 14)
In the regular course of her duties as a junior officer, she was required to co-sign
checks drawn against the account of the corporation. The other co-signor was her head
of office, Mr. Teodulo Asprec. Since part of her duties required her to be mostly in the
field and out of the office, it was normal procedure for her to sign the checks in blank,
that is, without the names of the payees, the amounts and the dates of maturity. It was
likewise Mr. Asprec, as head of office, who alone decided to whom the checks were to
be ultimately issued and delivered. (Lao, T.S.N., 28 September 1989, pp. 9-11, 17,
19.)
In signing the checks as part of her duties as junior officer of the corporation,
petitioner had no knowledge of the actual funds available in the corporate
account. (Lao, T.S.N., 28 September 1989, p. 21) The power, duty and responsibility
of monitoring and assessing the balances against the checks issued, and funding the
checks thus issued, devolved on the corporations Treasury Department in its main
office in Cubao, Quezon City, headed then by the Treasurer, Ms. Veronilyn
Ocampo. (Ocampo, T.S.N., 19 July 1990, p. 4; Lao, T.S.N., 28 September 1989, pp.
21-23) All bank statements regarding the corporate checking account were likewise
sent to the main branch in Cubao, Quezon City, and not in Binondo, Manila, where
petitioner was holding office. (Ocampo, T.S.N., 19 July 1990, p. 24; Marqueses,
T.S.N., 22 November 1988, p. 8)
The foregoing circumstances attended the issuance of the checks subject of the instant
prosecution.
The checks were issued to guarantee payment of investments placed by private
complainant Palijo with Premiere Financing Corporation. In his transactions with the
corporation, private complainant dealtexclusively with one Rosemarie Lachenal, a
trader connected with the corporation, and he never knew nor in any way dealt with
petitioner Lina Lim Lao at any time before or during the issuance of the delivery of
the checks. (Palijo, T.S.N., 23 June 1987, pp. 28-29, 32-34; Lao, T.S.N., 15 May
1990, p. 6; Ocampo, T.S.N., p. 5) Petitioner Lina Lim Lao was not in any way
involved in the transaction which led to the issuance of the checks.
When the checks were co-signed by petitioner, they were signed in advance and in
blank, delivered to the Head of Operations, Mr. Teodulo Asprec, who subsequently
filled in the names of the payee, the amounts and the corresponding dates of
maturity. After Mr. Asprec signed the checks, they were delivered to private
complainant Palijo. (Lao, T.S.N., 28 September 1989, pp. 8-11, 17, 19; note also that
the trial court in its decision fully accepted the testimony of petitioner [Decision of
the Regional Trial Court, p. 12], and that the Court of Appeals affirmed said
decision in toto)
Petitioner Lina Lim Lao was not in any way involved in the completion, and the
subsequent delivery of the check to private complainant Palijo.
At the time petitioner signed the checks, she had no knowledge of the sufficiency or
insufficiency of the funds of the corporate account. (Lao, T.S.N., 28 September 1989,
p. 21) It was not within her powers, duties or responsibilities to monitor and assess the
balances against the issuance; much less was it within her (duties and responsibilities)
to make sure that the checks were funded. Premiere Financing Corporation had a
Treasury Department headed by a Treasurer, Ms. Veronilyn Ocampo, which alone had
access to information as to account balances and which alone was responsible for
funding the issued checks. (Ocampo, T.S.N., 19 July 1990, p. 4; Lao, T.S.N., 28
September 1990, p. 23) All statements of account were sent to the Treasury
Department located at the main office in Cubao, Quezon City.Petitioner was holding
office at the extension in Binondo Manila. (Lao, T.S.N., 28 September 1989, p. 2425) Petitioner Lina Lim Lao did not have knowledge of the insufficiency of the funds
in the corporate account against which the checks were drawn.
When the checks were subsequently dishonored, private complainant sent a notice of
said dishonor to Premier Financing Corporation at its head office in Cubao, Quezon
City. (Please refer to Exh. E; Palijo, T.S.N., 23 June 1987, p. 51) Private
complainant did not send notice of dishonor to petitioner. (Palijo, T.S.N., 24 July
1987, p. 10) He did not follow up his investment with petitioner. (Id.) Private
complainant never contacted, never informed, and never talked with, petitioner after
the checks had bounced. (Id., at p. 29) Petitioner never had notice of the dishonor of
the checks subject of the instant prosecution.
The Treasurer of Premiere Financing Corporation, Ms. Veronilyn Ocampo testified
that it was the head office in Cubao, Quezon City, which received notice of dishonor
of the bounced checks. (Ocampo, T.S.N., 19 July 1990, pp. 7-8) The dishonor of the
check came in the wake of the assassination of the late Sen. Benigno Aquino, as a
consequence of which event a majority of the corporations clients pre-terminated their
investments. A period of extreme illiquidity and financial distress followed, which
ultimately led to the corporations being placed under receivership by the Securities
and Exchange Commission. (Ocampo, T.S.N., 16 August 1990, p. 8, 19; Lao, T.S.N.,
28 September 1989, pp. 25-26; Please refer also to Exhibit 1, the order of
receivership issued by the Securities and Exchange Commission) Despite the
Treasury Departments and (Ms. Ocampos) knowledge of the dishonor of the checks,
however, the main office in Cubao, Quezon City never informed petitioner Lina Lim
Lao or anybody in the Binondo office for that matter. (Ocampo, T.S.N., 16 August
1990, pp. 9-10) In her testimony, she justified her omission by saying that the checks
were actually the responsibility of the main office (Ocampo, T.S.N., 19 July 1990, p.
6) and that, at that time of panic withdrawals and massive pre-termination of clients
investments, it was futile to inform the Binondo office since the main office was
strapped for cash and in deep financial distress. (Id., at pp. 7-9) Moreover, the
confusion which came in the wake of the Aquino assassination and the consequent
panic withdrawals caused them to lose direct communication with the Binondo
office. (Ocampo, T.S.N., 16 August 1990, p. 9-10)
As a result of the financial crisis and distress, the Securities and Exchange
Commission placed Premier Financing Corporation under receivership, appointing a
rehabilitation receiver for the purpose of settling claims against the corporation. (Exh.
1) As he himself admits, private complainant filed a claim for the payment of the
bounced check before and even after the corporation had been placed under
receivership. (Palijo, T.S.N., 24 July 1987, p. 10-17) A check was prepared by the
receiver in favor of the private complainant but the same was not claimed by
him. (Lao, T.S.N., 15 May 1990, p. 18)
Private complainant then filed the instant criminal action. On 26 September 1990, the
Regional Trial Court of Manila, Branch 33, rendered a decision convicting petitioner,
and sentencing the latter to suffer the aggregate penalty of two (2) years and to pay a
fine in the total amount of P300,000.00. On appeal, the Court of Appeals affirmed said
decision. Hence, this petition for review.
[8]
The Issue
In the main, petitioner contends that the public respondent committed a
reversible error in concluding that lack of actual knowledge of insufficiency of
funds was not a defense in a prosecution for violation of B.P. 22. Additionally,
the petitioner argues that the notice of dishonor sent to the main office of the
corporation, and not to petitioner herself who holds office in that corporations
branch office, does not constitute the notice mandated in Section 2 of BP 22;
thus, there can be no prima facie presumption that she had knowledge of the
insufficiency of funds.
The Courts Ruling

The petition is meritorious.
Strict Interpretation of Penal Statutes
It is well-settled in this jurisdiction that penal statutes are strictly construed
against the state and liberally for the accused, so much so that the scope of a
penal statute cannot be extended by good intention, implication, or even
equity consideration. Thus, for Petitioner Lina Lim Laos acts to be penalized
under the Bouncing Checks Law or B.P. 22, they must come clearly within
both the spirit and the letter of the statute.
[9]
The salient portions of B.P. 22 read:

SECTION 1. Checks without sufficient funds. -- Any person who makes or draws and
issues any check to apply on account or for value, knowing at the time of issue that he
does not have sufficient funds in or credit with the drawee bank for the payment of
such check in full upon its presentment, which check is subsequently dishonored by
the drawee bank for insufficiency of funds or credit or would have been dishonored
for the same reason had not the drawer, without any valid reason, ordered the bank to
stop payment, shall be punished by imprisonment of not less than thirty days but not
more than one (1) year or by a fine of not less than but not more than double the
amount of the check which fine shall in no case exceed Two hundred thousand pesos,
or both such fine and imprisonment at the discretion of the court.
The same penalty shall be imposed upon any person who having sufficient funds in or
credit with the drawee bank when he makes or draws and issues a check, shall fail to
keep sufficient funds or to maintain a credit or to cover the full amount of the check if
presented within a period of ninety (90) days from the date appearing thereon, for
which reason it is dishonored by the drawee bank.
Where the check is drawn by a corporation, company or entity, the person or persons
who actually signed the check in behalf of such drawer shall be liable under this Act.
SECTION 2. Evidence of knowledge of insufficient funds. -- The making, drawing and
issuance of a check payment of which is refused by the drawee because of insufficient
funds in or credit with such bank, when presented within ninety (90) days from the
date of the check, shall be prima facie evidence of knowledge of such insufficiency of
funds or credit unless such maker or drawer pays the holder thereof the amount due
thereon, or makes arrangements for payment in full by the drawee of such check
within five (5) banking days after receiving notice that such check has not been paid
by the drawee.
This Court listed the elements of the offense penalized under B.P. 22, as
follows: (1) the making, drawing and issuance of any check to apply to
account or for value; (2) the knowledge of the maker, drawer or issuer that at
the time of issue he does not have sufficient funds in or credit with the drawee
bank for the payment of such check in full upon its presentment; and (3)
subsequent dishonor of the check by the drawee bank for insufficiency of
funds or credit or dishonor for the same reason had not the drawer, without
any valid cause, ordered the bank to stop payment.
[10]
Justice Luis B. Reyes, an eminent authority in criminal law, also

enumerated the elements of the offense defined in the first paragraph of
Section 1 of B.P. 22, thus:
1. That a person makes or draws and issues any check.
2. That the check is made or drawn and issued to apply on account or for value.
3. That the person who makes or draws and issues the check knows at the time of
issue that he does not have sufficient funds in or credit with the drawee bank for the
payment of such check in fullupon its presentment.
4. That the check is subsequently dishonored by the drawee bank for insufficiency of
funds or credit, or would have been dishonored for the same reason had not the
drawer, without any valid reason, ordered the bank to stop payment.[11]
Crux of the Petition

Petitioner raised as defense before the Court of Appeals her lack of actual
knowledge of the insufficiency of funds at the time of the issuance of the
checks, and lack of personal notice of dishonor to her. The respondent
appellate court, however, affirmed the RTC decision, reasoning that the
makers knowledge of the insufficiency of funds is legally presumed from the
dishonor of his checks for insufficiency of funds. (People vs. Laggui, 171
SCRA 305; Nieras vs. Hon. Auxencio C. Dacuycuy, 181 SCRA 1) The Court
of Appeals also stated that her alleged lack of knowledge or intent to issue a
bum check would not exculpate her from any responsibility under B.P. Blg. 22,
since the act of making and issuing a worthless check is amalum prohibitum.
In the words of the Solicitor General, (s)uch alleged lack of knowledge is not
material for petitioners liability under B.P.Blg. 22.
[12]
[13]
[14]
Lack of Actual Knowledge of Insufficiency of Funds

Knowledge of insufficiency of funds or credit in the drawee bank for the
payment of a check upon its presentment is an essential element of the
offense. There is a prima faciepresumption of the existence of this element
from the fact of drawing, issuing or making a check, the payment of which was
subsequently refused for insufficiency of funds. It is important to stress,
however, that this is not a conclusive presumption that forecloses or precludes
the presentation of evidence to the contrary.
[15]
In the present case, the fact alone that petitioner was a signatory to the
checks that were subsequently dishonored merely engenders the prima
facie presumption that she knew of the insufficiency of funds, but it does not
render her automatically guilty under B.P. 22. The prosecution has a duty to
prove all the elements of the crime, including the acts that give rise to
theprima facie presumption; petitioner, on the other hand, has a right to rebut
the prima facie presumption. Therefore, if such knowledge of insufficiency of
funds is proven to be actuallyabsent or non-existent, the accused should not
be held liable for the offense defined under the first paragraph of Section 1 of
B.P. 22. Although the offense charged is a malum prohibitum, the prosecution
is not thereby excused from its responsibility of proving beyond reasonable
doubt all the elements of the offense, one of which is knowledge of the
insufficiency of funds.
[16]
After a thorough review of the case at bar, the Court finds that Petitioner
Lina Lim Lao did not have actual knowledge of the insufficiency of funds in the
corporate accounts at the time she affixed her signature to the checks
involved in this case, at the time the same were issued, and even at the time
the checks were subsequently dishonored by the drawee bank.
The scope of petitioners duties and responsibilities did not encompass the
funding of the corporations checks; her duties were limited to the marketing
department of the Binondo branch. Under the organizational structure of
Premiere Financing Corporation, funding of checks was the sole responsibility
of the Treasury Department. Veronilyn Ocampo, former Treasurer of
Premiere, testified thus:
[17]
Q Will you please tell us whose (sic) responsible for the funding of checks in Premiere?
A The one in charge is the Treasury Division up to the Treasury Disbursement and then
they give it directly to Jose Cabacan, President of Premiere.[18]
Furthermore, the Regional Trial Court itself found that, since Petitioner
Lina Lim Lao was often out in the field taking charge of the marketing
department of the Binondo branch, she signed the checks in blank as to name
of the payee and the amount to be drawn, and without knowledge of the
transaction for which they were issued. As a matter of company practice, her
signature was required in addition to that of Teodulo Asprec, who alone placed
the name of the payee and the amount to be drawn thereon. This is clear from
her testimony:
[19]
q x x x Will you please or will you be able to tell us the condition of this check when you
signed this or when you first saw this check?
Witness
a I signed the check in blank. There were no payee. No amount, no date, sir.
q Why did you sign this check in blank when there was no payee, no amount and no
date?
a It is in order to facilitate the transaction, sir.
xxxxxxxxx
COURT
(to witness)
q Is that your practice?
Witness
a Procedure, Your Honor.
COURT
That is quiet (sic) unusual. That is why I am asking that last question if that is a
practice of your office.
a As a co-signer, I sign first, sir.
q So the check cannot be encashed without your signature, co-signature?
a Yes, sir.
Atty. Gonzales
(to witness)
q Now, you said that you sign first, after you sign, who signs the check?
a Mr. Teodoro Asprec, sir.
q Is this Teodoro Asprec the same Teodoro Asprec, one of the accused in all these
cases?
a Yes, sir.
q Now, in the distribution or issuance of checks which according to you, as a co-signee,
you sign. Who determines to whom to issue or to whom to pay the check after
Teodoro Asprec signs the check?
Witness
a He is the one.
Atty. Gonzales
q Mr. Asprec is the one in-charge in . . . are you telling the Honorable Court that it was
Teodoro Asprec who determines to whom to issue the check? Does he do that all
the time?
Court
q Does he all the time?
(to witness)
a Yes, Your Honor.
q So the check can be negotiated? So, the check can be good only upon his
signing? Without his signing or signature the check cannot be good?
a Yes, Your Honor.
Atty. Gonzales
(to witness)
q You made reference to a transaction which according to you, you signed this check in
order to facilitate the transaction . . . I withdraw that question. I will reform.
COURT
(for clarification to witness)
Witness may answer.
q Only to facilitate your business transaction, so you signed the other checks?
Witness
a Yes, Your Honor.
q So that when ever there is a transaction all is needed . . . all that is needed is for the
other co-signee to sign?
a Yes, Your Honor.
COURT
(To counsel)
Proceed.
Atty. Gonzales
(to witness)
q Why is it necessary for you to sign?
a Because most of the time I am out in the field in the afternoon, so, in order to
facilitate the transaction I sign so if I am not around they can issue the check.[20]
Petitioner did not have any knowledge either of the identity of the payee or
the transaction which gave rise to the issuance of the checks. It was her cosignatory, Teodulo Asprec, who alone filled in the blanks, completed and
issued the checks. That Petitioner Lina Lim Lao did not have any knowledge
or connection with the checks payee, Artelijo Palijo, is clearly evident even
from the latters testimony, viz.:
ATTY. GONZALES:
Q When did you come to know the accused Lina Lim Lao?
A I cannot remember the exact date because in their office Binondo, -COURT: (before witness could finish)
Q More or less?
A It must have been late 1983.
ATTY. GONZALES:
Q And that must or that was after the transactions involving alleged checks marked in
evidence as Exhibits B and C?
A After the transactions.
Q And that was also before the transaction involving that confirmation of sale marked
in evidence as Exhibit A?
A It was also.
Q And so you came to know the accused Lina Lim Lao when all those transactions
were already consummated?
A Yes, sir.
Q And there has never been any occasion where you transacted with accused Lina
Lim Lao, is that correct?
A None, sir, there was no occasion.
Q And your coming to know Lina Lim Lao the accused in these cases was by chance
when you happened to drop by in the office at Binondo of the Premier Finance
Corporation, is that what you mean?
A Yes, sir.
Q You indicated to the Court that you were introduced to the accused Lina Lim Lao, is
that correct?
A I was introduced.
xxxxxxxxx
Q After that plain introduction there was nothing which transpired between you and the
accused Lina Lim Lao?
A There was none.[21]
Since Petitioner Lina Lim Lao signed the checks without knowledge of the
insufficiency of funds, knowledge she was not expected or obliged to possess
under the organizational structure of the corporation, she may not be held
liable under B.P. 22. For in the final analysis, penal statutes such as B.P. 22
must be construed with such strictness as to carefully safeguard the rights of
the defendant x x x. The element of knowledge of insufficiency of funds
having been proven to be absent, petitioner is therefore entitled to an
acquittal.
[22]
This position finds support in Dingle vs. Intermediate Appellate

Court where we stressed that knowledge of insufficiency of funds at the time
of the issuance of the check was an essential requisite for the offense
penalized under B.P. 22. In that case, the spouses Paz and Nestor Dingle
owned a family business known as PMD Enterprises. Nestor transacted the
sale of 400 tons of silica sand to the buyer Ernesto Ang who paid for the
same. Nestor failed to deliver. Thus, he issued to Ernesto two checks, signed
by him and his wife as authorized signatories for PMD Enterprises, to
represent the value of the undelivered silica sand. These checks were
dishonored for having been drawn against insufficient funds. Nestor thereafter
issued to Ernesto another check, signed by him and his wife Paz, which was
likewise subsequently dishonored. No payment was ever made; hence, the
spouses were charged with a violation of B.P. 22 before the trial court which
[23]
found them both guilty. Paz appealed the judgment to the then Intermediate
Appellate Court which modified the same by reducing the penalty of
imprisonment to thirty days. Not satisfied, Paz filed an appeal to this Court
insisting on her innocence and contending that she did not incur any criminal
liability under B.P. 22 because she had no knowledge of the dishonor of the
checks issued by her husband and, for that matter, even the transaction of her
husband with Ang. The Court ruled in Dingle as follows:
The Solicitor General in his Memorandum recommended that petitioner be acquitted
of the instant charge because from the testimony of the sole prosecution witness
Ernesto Ang, it was established that he dealt exclusively with Nestor Dingle. Nowhere
in his testimony is the name of Paz Dingle ever mentioned in connection with the
transaction and with the issuance of the check. In fact, Ang categorically stated that it
was Nestor Dingle who received his two (2) letters of demand. This lends credence to
the testimony of Paz Dingle that she signed the questioned checks in blank together
with her husband without any knowledge of its issuance, much less of the transaction
and the fact of dishonor.
In the case of Florentino Lozano vs. Hon. Martinez, promulgated December 18, 1986,
it was held that an essential element of the offense is knowledge on the part of the
maker or drawer of the check of the insufficiency of his funds.
WHEREFORE, on reasonable doubt, the assailed decision of the Intermediate
Appellate Court (now the Court of Appeals) is hereby SET ASIDE and a new one is
hereby rendered ACQUITTING petitioner on reasonable doubt."
[24]
In rejecting the defense of herein petitioner and ruling that knowledge of

the insufficiency of funds is legally presumed from the dishonor of the checks
for insufficiency of funds,Respondent Court of Appeals cited People vs.
Laggui and Nierras vs. Dacuycuy. These, however, are inapplicable
here. The accused in both cases issued personal -- not corporate -- checks
and did not aver lack of knowledge of insufficiency of funds or absence of
personal notice of the checks dishonor. Furthermore, in People vs.
Laggui the Court ruled mainly on the adequacy of an information which
alleged lack of knowledge of insufficiency of funds at the time the check was
issued and not at the time of its presentment. On the other hand, the Court
inNierras vs. Dacuycuy held mainly that an accused may be charged under
[25]
[26]
[27]
[28]
B.P. 22 and Article 315 of the Revised Penal Code for the same act of issuing
a bouncing check.
The statement in the two cases -- that mere issuance of a dishonored
check gives rise to the presumption of knowledge on the part of the drawer
that he issued the same without funds -- does not support the CA Decision. As
observed earlier, there is here only a prima facie presumption which does not
preclude the presentation of contrary evidence. On the contrary,People vs.
Laggui clearly spells out as an element of the offense the fact that the drawer
must have knowledge of the insufficiency of funds in, or of credit with, the
drawee bank for the payment of the same in full on presentment; hence, it
even supports the petitioners position.
Lack of Adequate Notice of Dishonor
There is another equally cogent reason for the acquittal of the
accused. There can be no prima facie evidence of knowledge of insufficiency
of funds in the instant case because no notice of dishonor was actually sent to
or received by the petitioner.
The notice of dishonor may be sent by the offended party or the drawee
bank. The trial court itself found absent a personal notice of dishonor to
Petitioner Lina Lim Lao by the drawee bank based on the unrebutted
testimony of Ocampo (t)hat the checks bounced when presented with the
drawee bank but she did not inform anymore the Binondo branch and Lina
Lim Lao as there was no need to inform them as the corporation was in
distress. The Court of Appeals affirmed this factual finding. Pursuant to
prevailing jurisprudence, this finding is binding on this Court.
[29]
[30]
Indeed, this factual matter is borne by the records. The records show that
the notice of dishonor was addressed to Premiere Financing Corporation and
sent to its main office in Cubao, Quezon City. Furthermore, the same had not
been transmitted to Premieres Binondo Office where petitioner had been
holding office.
Likewise no notice of dishonor from the offended party was actually sent to
or received by Petitioner Lao. Her testimony on this point is as follows:
Atty. Gonzales
q Will you please tell us if Father Artelejo Palejo (sic) ever notified you of the bouncing
of the check or the two (2) checks marked as Exhibit B or C for the prosecution?
Witness
a No, sir.
q What do you mean no, sir?
a I was never given a notice. I was never given notice from Father Palejo (sic).
COURT
(to witness)
q Notice of what?
a Of the bouncing check, Your Honor.[31]
Because no notice of dishonor was actually sent to and received by the

petitioner, the prima facie presumption that she knew about the insufficiency
of funds cannot apply. Section 2 of B.P. 22 clearly provides that this
presumption arises not from the mere fact of drawing, making and issuing a
bum check; there must also be a showing that, within five banking days from
receipt of the notice of dishonor, such maker or drawer failed to pay the holder
of the check the amount due thereon or to make arrangement for its payment
in full by the drawee of such check.
It has been observed that the State, under this statute, actually offers the
violator a compromise by allowing him to perform some act which operates to
preempt the criminal action, and if he opts to perform it the action is
abated. This was also compared to certain laws allowing illegal possessors
of firearms a certain period of time to surrender the illegally possessed
firearms to the Government, without incurring any criminal liability. In this
light, the full payment of the amount appearing in the check within five banking
days from notice of dishonor is a complete defense. The absence of a notice
of dishonor necessarily deprives an accused an opportunity to preclude a
criminal prosecution. Accordingly, procedural due process clearly enjoins that
[32]
[33]
[34]
a notice of dishonor be actually served on petitioner. Petitioner has a right to

demand -- and the basic postulates of fairness require -- that the notice of
dishonor be actually sent to and received by her to afford her the opportunity
to avert prosecution under B.P. 22.
In this light, the postulate of Respondent Court of Appeals that (d)emand
on the Corporation constitutes demand on appellant (herein petitioner), is
erroneous. Premiere has no obligation to forward the notice addressed to it to
the employee concerned, especially because the corporation itself incurs no
criminal liability under B.P. 22 for the issuance of a bouncing
check. Responsibility under B.P. 22 is personal to the accused; hence,
personal knowledge of the notice of dishonor is necessary. Consequently,
constructive notice to the corporation is not enough to satisfy due
process. Moreover, it is petitioner, as an officer of the corporation, who is the
latters agent for purposes of receiving notices and other documents, and not
the other way around. It is but axiomatic that notice to the corporation, which
has a personality distinct and separate from the petitioner, does not constitute
notice to the latter.
[35]
Epilogue
In granting this appeal, the Court is not unaware of B.P. 22s intent to
inculcate public respect for and trust in checks which, although not legal
tender, are deemed convenient substitutes for currency. B.P. 22 was intended
by the legislature to enhance commercial and financial transactions in the
Philippines by penalizing makers and issuers of worthless checks. The public
interest behind B.P. 22 is thus clearly palpable from its intended purpose.
[36]
At the same time, this Court deeply cherishes and is in fact bound by duty
to protect our peoples constitutional rights to due process and to be presumed
innocent until the contrary is proven. These rights must be read into any
interpretation and application of B.P. 22. Verily, the public policy to uphold civil
liberties embodied in the Bill of Rights necessarily outweighs the public policy
to build confidence in the issuance of checks. The first is a basic human right
while the second is only proprietary in nature. Important to remember also is
B.P. 22s requirements that the check issuer must know at the time of issue
that he does not have sufficient funds in or credit with the drawee bank and
[37]
[38]
that he must receive notice that such check has not been paid by the
drawee. Hence, B.P. 22 must not be applied in a manner which contravenes
an accuseds constitutional and statutory rights.
There is also a social justice dimension in this case. Lina Lim Lao is only a
minor employee who had nothing to do with the issuance, funding and
delivery of checks. Why she was required by her employer to countersign
checks escapes us. Her signature is completely unnecessary for it serves no
fathomable purpose at all in protecting the employer from unauthorized
disbursements. Because of the pendency of this case, Lina Lim Lao stood in
jeopardy -- for over a decade -- of losing her liberty and suffering the
wrenching pain and loneliness of imprisonment, not to mention the stigma of
prosecution on her career and family life as a young mother, as well as the
expenses, effort and aches in defending her innocence.Upon the other hand,
the senior official -- Teodulo Asprec -- who appears responsible for the
issuance, funding and delivery of the worthless checks has escaped criminal
prosecution simply because he could not be located by the authorities. The
case against him has been archived while the awesome prosecutory might of
the government and the knuckled ire of the private complainant were all
focused on poor petitioner. Thus, this Court exhorts the prosecutors and the
police authorities concerned to exert their best to arrest and prosecute Asprec
so that justice in its pristine essence can be achieved in all fairness to the
complainant, Fr. Artelijo Palijo, and the People of the Philippines. By this
Decision, the Court enjoins the Secretary of Justice and the Secretary of
Interior and Local Government to see that essential justice is done and the
real culprit(s) duly-prosecuted and punished.
WHEREFORE, the questioned Decision of the Court of Appeals affirming
that of the Regional Trial Court, is hereby REVERSED and SET
ASIDE. Petitioner Lina Lim Lao isACQUITTED. The Clerk of Court is
hereby ORDERED to furnish the Secretary of Justice and the Secretary of
Interior and Local Government with copies of this Decision. No costs.
SO ORDERED.
[G.R. No. 131679. February 1, 2000]

CAVITE DEVELOPMENT BANK and FAR EAST BANK AND TRUST
COMPANY, petitioners, vs. SPOUSES CYRUS LIM and LOLITA CHAN LIM
and COURT OF APPEALS, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals in C.A. GR CV No. 42315 and the order dated December 9, 1997
denying petitioners motion for reconsideration.
[1]
The following facts are not in dispute.

Petitioners Cavite Development Bank (CDB) and Far East Bank and Trust
Company (FEBTC) are banking institutions duly organized and existing under
Philippine laws. On or about June 15, 1983, a certain Rodolfo Guansing
obtained a loan in the amount of P90,000.00 from CDB, to secure which he
mortgaged a parcel of land situated at No. 63 Calavite Street, La Loma,
Quezon City and covered by TCT No. 300809 registered in his name. As
Guansing defaulted in the payment of his loan, CDB foreclosed the mortgage.
At the foreclosure sale held on March 15, 1984, the mortgaged property was
sold to CDB as the highest bidder. Guansing failed to redeem, and on March
2, 1987, CDB consolidated title to the property in its name. TCT No. 300809 in
the name of Guansing was cancelled and, in lieu thereof, TCT No. 355588
was issued in the name of CDB.
On June 16, 1988, private respondent Lolita Chan Lim, assisted by a broker
named Remedios Gatpandan, offered to purchase the property from CDB.
The written Offer to Purchase, signed by Lim and Gatpandan, states in part:
We hereby offer to purchase your property at #63 Calavite and
Retiro Sts., La Loma, Quezon City for P300,000.00 under the
following terms and conditions:
(1) 10% Option Money;

(2) Balance payable in cash;
(3) Provided that the property shall be cleared of
illegal occupants or tenants. Scjuris
Pursuant to the foregoing terms and conditions of the offer, Lim paid CDB
P30,000.00 as Option Money, for which she was issued Official Receipt No.
3160, dated June 17, 1988, by CDB. However, after some time following up
the sale, Lim discovered that the subject property was originally registered in
the name of Perfecto Guansing, father of mortgagor Rodolfo Guansing, under
TCT No. 91148. Rodolfo succeeded in having the property registered in his
name under TCT No. 300809, the same title he mortgaged to CDB and from
which the latters title (TCT No. 355588) was derived. It appears, however, that
the father, Perfecto, instituted Civil Case No. Q-39732 in the Regional Trial
Court, Branch 83, Quezon City, for the cancellation of his sons title. On March
23, 1984, the trial court rendered a decision restoring Perfectos previous title
(TCT No. 91148) and cancelling TCT No. 300809 on the ground that the latter
was fraudulently secured by Rodolfo. This decision has since become final
and executory.
[2]
Aggrieved by what she considered a serious misrepresentation by CDB and

its mother-company, FEBTC, on their ability to sell the subject property, Lim,
joined by her husband, filed on August 29, 1989 an action for specific
performance and damages against petitioners in the Regional Trial Court,
Branch 96, Quezon City, where it was docketed as Civil Case No. Q-89-2863.
On April 20, 1990, the complaint was amended by impleading the Register of
Deeds of Quezon City as an additional defendant.
On March 10, 1993, the trial court rendered a decision in favor of the Lim
spouses. It ruled that: (1) there was a perfected contract of sale between Lim
and CDB, contrary to the latters contention that the written offer to purchase
and the payment of P30,000.00 were merely pre-conditions to the sale and
still subject to the approval of FEBTC; (2) performance by CDB of its
obligation under the perfected contract of sale had become impossible on
account of the 1984 decision in Civil Case No. Q-39732 cancelling the title in
the name of mortgagor Rodolfo Guansing; (3) CDB and FEBTC were not
exempt from liability despite the impossibility of performance, because they
could not credibly disclaim knowledge of the cancellation of Rodolfo
Guansings title without admitting their failure to discharge their duties to the
public as reputable banking institutions; and (4) CDB and FEBTC are liable for
damages for the prejudice caused against the Lims. Based on the foregoing
findings, the trial court ordered CDB and FEBTC to pay private respondents,
jointly and severally, the amount of P30,000.00 plus interest at the legal rate
computed from June 17, 1988 until full payment. It also ordered petitioners to
pay private respondents, jointly and severally, the amounts of P250,000.00 as
moral damages, P50,000.00 as exemplary damages, P30,000.00 as attorneys
fees, and the costs of the suit.
[3]
[4]
Petitioners brought the matter to the Court of Appeals, which, on October 14,
1997, affirmed in toto the decision of the Regional Trial Court. Petitioners
moved for reconsideration, but their motion was denied by the appellate court
on December 9, 1997. Hence, this petition. Petitioners contend that - Jjlex
1. The Honorable Court of Appeals erred when it held that
petitioners CDB and FEBTC were aware of the decision dated
March 23, 1984 of the Regional Trial Court of Quezon City in Civil
Case No. Q-39732.
2. The Honorable Court of Appeals erred in ordering petitioners to
pay interest on the deposit of THIRTY THOUSAND PESOS
(P30,000.00) by applying Article 2209 of the New Civil Code.
3. The Honorable Court of Appeals erred in ordering petitioners to
pay moral damages, exemplary damages, attorneys fees and
costs of suit.
I.
At the outset, it is necessary to determine the legal relation, if any, of the

parties.
Petitioners deny that a contract of sale was ever perfected between them and
private respondent Lolita Chan Lim. They contend that Lims letter-offer clearly
states that the sum of P30,000.00 was given as option money, not as earnest
money. They thus conclude that the contract between CDB and Lim was
merely an option contract, not a contract of sale.
[5]
The contention has no merit. Contracts are not defined by the parties thereto
but by principles of law. In determining the nature of a contract, the courts are
not bound by the name or title given to it by the contracting parties. In the
case at bar, the sum of P30,000.00, although denominated in the offer to
purchase as "option money," is actually in the nature of earnest money or
down payment when considered with the other terms of the offer. In Carceler
v. Court of Appeals, we explained the nature of an option contract, viz. [6]
[7]
[8]
An option contract is a preparatory contract in which one party

grants to the other, for a fixed period and under specified
conditions, the power to decide, whether or not to enter into a
principal contract, it binds the party who has given the option not
to enter into the principal contract with any other person during
the period designated, and within that period, to enter into such
contract with the one to whom the option was granted, if the latter
should decide to use the option. It is a separate agreement
distinct from the contract to which the parties may enter upon the
consummation of the option. Newmiso
An option contract is therefore a contract separate from and preparatory to a
contract of sale which, if perfected, does not result in the perfection or
consummation of the sale. Only when the option is exercised may a sale be
perfected.
In this case, however, after the payment of the 10% option money, the Offer to
Purchase provides for the payment only of the balance of the purchase price,
implying that the "option money" forms part of the purchase price. This is
precisely the result of paying earnest money under Art. 1482 of the Civil Code.
It is clear then that the parties in this case actually entered into a contract of
sale, partially consummated as to the payment of the price. Moreover, the
following findings of the trial court based on the testimony of the witnesses
establish that CDB accepted Lims offer to purchase:
It is further to be noted that CDB and FEBTC already considered

plaintiffs offer as good and no longer subject to a final approval. In
his testimony for the defendants on February 13, 1992, FEBTCs
Leomar Guzman stated that he was then in the Acquired Assets
Department of FEBTC wherein plaintiffs offer to purchase was
endorsed thereto by Myoresco Abadilla, CDBs senior vicepresident, with a recommendation that the necessary petition for
writ of possession be filed in the proper court; that the
recommendation was in accord with one of the conditions of the
offer, i.e., the clearing of the property of illegal occupants or
tenants (tsn, p. 12); that, in compliance with the request, a petition
for writ of possession was thereafter filed on July 22, 1988 (Exhs.
1 and 1-A); that the offer met the requirements of the banks; and
that no rejection of the offer was thereafter relayed to the plaintiffs
(p. 17); which was not a normal procedure, and neither did the
banks return the amount of P30,000.00 to the plaintiffs.
[9]
Given CDBs acceptance of Lims offer to purchase, it appears that a contract

of sale was perfected and, indeed, partially executed because of the partial
payment of the purchase price. There is, however, a serious legal obstacle to
such sale, rendering it impossible for CDB to perform its obligation as seller to
deliver and transfer ownership of the property. Acctmis
Nemo dat quod non habet, as an ancient Latin maxim says. One cannot give
what one does not have. In applying this precept to a contract of sale, a
distinction must be kept in mind between the "perfection" and "consummation"
stages of the contract.
A 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. It is,
therefore, not required that, at the perfection stage, the seller be the owner of
the thing sold or even that such subject matter of the sale exists at that point
in time. Thus, under Art. 1434 of the Civil Code, when a person sells or
alienates a thing which, at that time, was not his, but later acquires title
thereto, such title passes by operation of law to the buyer or grantee. This is
the same principle behind the sale of "future goods" under Art. 1462 of the
Civil Code. However, under Art. 1459, at the time of delivery or consummation
[10]
[11]
stage of the sale, it is required that the seller be the owner of the thing sold.
Otherwise, he will not be able to comply with his obligation to transfer
ownership to the buyer. It is at the consummation stage where the principle
of nemo dat quod non habetapplies.
In Dignos v. Court of Appeals, the subject contract of sale was held void as
the sellers of the subject land were no longer the owners of the same because
of a prior sale. Again, in Nool v. Court of Appeals, we ruled that a contract
of repurchase, in which the seller does not have any title to the property sold,
is invalid:
[12]
[13]
[14]
We cannot sustain petitioners view. Article 1370 of the Civil Code

is applicable only to valid and enforceable contracts. The Regional
Trial Court and the Court of Appeals ruled that the principal
contract of sale contained in Exhibit C and the auxiliary contract of
repurchase in Exhibit D are both void. This conclusion of the two
lower courts appears to find support in Dignos v. Court of Appeals,
where the Court held:
"Be that as it may, it is evident that when petitioners
sold said land to the Cabigas spouses, they were no
longer owners of the same and the sale is null and
void."
In the present case, it is clear that the sellers no longer had any
title to the parcels of land at the time of sale. Since Exhibit D, the
alleged contract of repurchase, was dependent on the validity of
Exhibit C, it is itself void. A void contract cannot give rise to a valid
one. Verily, Article 1422 of the Civil Code provides that (a) contract
which is the direct result of a previous illegal contract, is also void
and inexistent."
We should however add that Dignos did not cite its basis for ruling
that a "sale is null and void" where the sellers "were no longer the
owners" of the property. Such a situation (where the sellers were
no longer owners) does not appear to be one of the void contracts
enumerated in Article 1409 of the Civil Code. Moreover, the Civil
Code itself recognizes a sale where the goods are to be acquired

x x x by the seller after the perfection of the contract of sale,
clearly implying that a sale is possible even if the seller was not
the owner at the time of sale, provided he acquires title to the
property later on. Misact
In the present case, however, it is likewise clear that the sellers
can no longer deliver the object of the sale to the buyers, as the
buyers themselves have already acquired title and delivery
thereof from the rightful owner, the DBP. Thus, such contract may
be deemed to be inoperative and may thus fall, by analogy, under
item No. 5 of Article 1409 of the Civil Code: Those which
contemplate an impossible service. Article 1459 of the Civil Code
provides that "the vendor must have a right to transfer the
ownership thereof [subject of the sale] at the time it is delivered."
Here, delivery of ownership is no longer possible. It has become
impossible.
[15]
In this case, the sale by CDB to Lim of the property mortgaged in 1983 by
Rodolfo Guansing must, therefore, be deemed a nullity for CDB did not have a
valid title to the said property. To be sure, CDB never acquired a valid title to
the property because the foreclosure sale, by virtue of which the property had
been awarded to CDB as highest bidder, is likewise void since the mortgagor
was not the owner of the property foreclosed.
A foreclosure sale, though essentially a "forced sale," is still a sale in
accordance with Art. 1458 of the Civil Code, under which the mortgagor in
default, the forced seller, becomes obliged to transfer the ownership of the
thing sold to the highest bidder who, in turn, is obliged to pay therefor the bid
price in money or its equivalent. Being a sale, the rule that the seller must be
the owner of the thing sold also applies in a foreclosure sale. This is the
reason Art. 2085 of the Civil Code, in providing for the essential requisites of
the contract of mortgage and pledge, requires, among other things, that the
mortgagor or pledgor be the absolute owner of the thing pledged or
mortgaged, in anticipation of a possible foreclosure sale should the mortgagor
default in the payment of the loan.
[16]
There is, however, a situation where, despite the fact that the mortgagor is not
the owner of the mortgaged property, his title being fraudulent, the mortgage
contract and any foreclosure sale arising therefrom are given effect by reason
of public policy. This is the doctrine of "the mortgagee in good faith" based on
the rule that all persons dealing with property covered by a Torrens Certificate
of Title, as buyers or mortgagees, are not required to go beyond what appears
on the face of the title. The public interest in upholding the indefeasibility of a
certificate of title, as evidence of the lawful ownership of the land or of any
encumbrance thereon, protects a buyer or mortgagee who, in good faith,
relied upon what appears on the face of the certificate of title. Sdjad
[17]
This principle is cited by petitioners in claiming that, as a mortgagee bank, it is

not required to make a detailed investigation of the history of the title of the
property given as security before accepting a mortgage.
We are not convinced, however, that under the circumstances of this case,
CDB can be considered a mortgagee in good faith. While petitioners are not
expected to conduct an exhaustive investigation on the history of the
mortgagors title, they cannot be excused from the duty of exercising the due
diligence required of banking institutions. In Tomas v. Tomas, we noted that it
is standard practice for banks, before approving a loan, to send
representatives to the premises of the land offered as collateral and to
investigate who are the real owners thereof, noting that banks are expected to
exercise more care and prudence than private individuals in their dealings,
even those involving registered lands, for their business is affected with public
interest. We held thus:
[18]
We, indeed, find more weight and vigor in a doctrine which

recognizes a better right for the innocent original registered owner
who obtained his certificate of title through perfectly legal and
regular proceedings, than one who obtains his certificate from a
totally void one, as to prevail over judicial pronouncements to the
effect that one dealing with a registered land, such as a
purchaser, is under no obligation to look beyond the certificate of
title of the vendor, for in the latter case, good faith has yet to be
established by the vendee or transferee, being the most essential
condition, coupled with valuable consideration, to entitle him to
respect for his newly acquired title even as against the holder of
an earlier and perfectly valid title. There might be circumstances
apparent on the face of the certificate of title which could excite
suspicion as to prompt inquiry, such as when the transfer is not by
virtue of a voluntary act of the original registered owner, as in the
instant case, where it was by means of a self-executed deed of
extra-judicial settlement, a fact which should be noted on the face
of Eusebia Tomas certificate of title. Failing to make such inquiry
would hardly be consistent with any pretense of good faith, which
the appellant bank invokes to claim the right to be protected as a
mortgagee, and for the reversal of the judgment rendered against
it by the lower court.
[19]
In this case, there is no evidence that CDB observed its duty of diligence in
ascertaining the validity of Rodolfo Guansings title. It appears that Rodolfo
Guansing obtained his fraudulent title by executing an Extra-Judicial
Settlement of the Estate With Waiver where he made it appear that he and
Perfecto Guansing were the only surviving heirs entitled to the property, and
that Perfecto had waived all his rights thereto. This self-executed deed should
have placed CDB on guard against any possible defect in or question as to
the mortgagors title. Moreover, the alleged ocular inspection report by CDBs
representative was never formally offered in evidence. Indeed, petitioners
admit that they are aware that the subject land was being occupied by
persons other than Rodolfo Guansing and that said persons, who are the
heirs of Perfecto Guansing, contest the title of Rodolfo. Sppedsc
[20]
[21]
II.
The sale by CDB to Lim being void, the question now arises as to who, if any,
among the parties was at fault for the nullity of the contract. Both the trial court
and the appellate court found petitioners guilty of fraud, because on June 16,
1988, when Lim was asked by CDB to pay the 10% option money, CDB
already knew that it was no longer the owner of the said property, its title
having been cancelled. Petitioners contend that: (1) such finding of the
appellate court is founded entirely on speculation and conjecture; (2) neither
CDB nor FEBTC was a party in the case where the mortgagors title was
cancelled; (3) CDB is not privy to any problem among the Guansings; and (4)
[22]
the final decision cancelling the mortgagors title was not annotated in the
latters title.
As a rule, only questions of law may be raised in a petition for review, except
in circumstances where questions of fact may be properly raised. Here, while
petitioners raise these factual issues, they have not sufficiently shown that the
instant case falls under any of the exceptions to the above rule. We are thus
bound by the findings of fact of the appellate court. In any case, we are
convinced of petitioners negligence in approving the mortgage application of
Rodolfo Guansing.
[23]
III.
We now come to the civil effects of the void contract of sale between the
parties. Article 1412(2) of the Civil Code provides:
If the act in which the unlawful or forbidden cause consists does
not constitute a criminal offense, the following rules shall be
observed:
....
(2).......When only one of the contracting parties is at
fault, he cannot recover what he has given by reason
of the contract, or ask for the fulfillment of what has
been promised him. The other, who is not at fault,
may demand the return of what he has given without
any obligation to comply with his promise.
Private respondents are thus entitled to recover the P30,000.00 option money
paid by them. Moreover, since the filing of the action for damages against
petitioners amounted to a demand by respondents for the return of their
money, interest thereon at the legal rate should be computed from August 29,
1989, the date of filing of Civil Case No. Q-89-2863, not June 17, 1988, when
petitioners accepted the payment. This is in accord with our ruling in Castillo
v. Abalayan that in case of a void sale, the seller has no right whatsoever to
keep the money paid by virtue thereof and should refund it, with interest at the
legal rate, computed from the date of filing of the complaint until fully paid.
[24]
Indeed, Art. 1412(2) which provides that the non-guilty party "may demand the
return of what he has given" clearly implies that without such prior demand,
the obligation to return what was given does not become legally
demandable. Sccalr
Considering CDBs negligence, we sustain the award of moral damages on the
basis of Arts. 21 and 2219 of the Civil Code and our ruling in Tan v. Court of
Appeals that moral damages may be recovered even if a banks negligence
is not attended with malice and bad faith. We find, however, that the sum of
P250,000.00 awarded by the trial court is excessive. Moral damages are only
intended to alleviate the moral suffering undergone by private respondents,
not to enrich them at the expense of the petitioners. Accordingly, the award
of moral damages must be reduced to P50,000.00.
[25]
[26]
Likewise, the award of P50,000.00 as exemplary damages, although justified

under Art. 2232 of the Civil Code, is excessive and should be reduced to
P30,000.00. The award of P30,000.00 attorneys fees based on Art. 2208,
pars. 1, 2, 5 and 11 of the Civil Code should similarly be reduced to
P20,000.00.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the
MODIFICATION as to the award of damages as above stated.
SO ORDERED.2/29/00 2:19 PM
[G.R. No. 126376. November 20, 2003]
SPOUSES BERNARDO BUENAVENTURA and CONSOLACION

JOAQUIN, SPOUSES JUANITO EDRA and NORA JOAQUIN,
SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and
NATIVIDAD JOAQUIN, petitioners, vs. COURT OF APPEALS,
SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO,
SPOUSES FIDEL JOAQUIN and CONCHITA BERNARDO,
SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN,
SPOUSES ARTEMIO JOAQUIN and SOCORRO ANGELES,

SPOUSES ALEXANDER MENDOZA and CLARITA JOAQUIN,
SPOUSES TELESFORO CARREON and FELICITAS JOAQUIN,
SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES
GAVINO JOAQUIN and LEA ASIS, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari to annul the Decision dated 26
June 1996 of the Court of Appeals in CA-G.R. CV No. 41996. The Court of
Appeals affirmed the Decision dated 18 February 1993 rendered by Branch
65 of the Regional Trial Court of Makati (trial court) in Civil Case No. 895174. The trial court dismissed the case after it found that the parties
executed the Deeds of Sale for valid consideration and that the plaintiffs did
not have a cause of action against the defendants.
[1]
[2]
[3]
The Facts
The Court of Appeals summarized the facts of the case as follows:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of
plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel,
Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The
married Joaquin children are joined in this action by their respective spouses.
Sought to be declared null and void ab initio are certain deeds of sale of real property
executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of
their co-defendant children and the corresponding certificates of title issued in their
names, to wit:
1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd-256395
executed on 11 July 1978, in favor of defendant Felicitas Joaquin, for a
consideration of P6,000.00 (Exh. C), pursuant to which TCT No. [36113/T-172] was
issued in her name (Exh. C-1);
2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd-256394
executed on 7 June 1979, in favor of defendant Clarita Joaquin, for a consideration
of P1[2],000.00 (Exh. D), pursuant to which TCT No. S-109772 was issued in her
name (Exh. D-1);
3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd-256394
executed on 12 May 1988, in favor of defendant spouses Fidel Joaquin and
Conchita Bernardo, for a consideration of P54,[3]00.00 (Exh. E), pursuant to which
TCT No. 155329 was issued to them (Exh. E-1);
4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd-256394
executed on 12 May 1988, in favor of defendant spouses Artemio Joaquin and
Socorro Angeles, for a consideration of P[54,3]00.00 (Exh. F), pursuant to which
TCT No. 155330 was issued to them (Exh. F-1); and
5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan (LRC) Psd256395 executed on 9 September 1988, in favor of Tomas Joaquin, for a
consideration of P20,000.00 (Exh. G), pursuant to which TCT No. 157203 was
issued in her name (Exh. G-1).
[6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd-256395
executed on 7 October 1988, in favor of Gavino Joaquin, for a consideration
of P25,000.00 (Exh. K), pursuant to which TCT No. 157779 was issued in his name
(Exh. K-1).]
In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of
title, plaintiffs, in their complaint, aver:
- XXThe deeds of sale, Annexes C, D, E, F, and G, [and K] are simulated as they are, are
NULL AND VOID AB INITIO because
a) Firstly, there was no actual valid consideration for the deeds of sale xxx
over the properties in litis;
b) Secondly, assuming that there was consideration in the sums reflected in
the questioned deeds, the properties are more than three-fold times more
valuable than the measly sums appearing therein;
c) Thirdly, the deeds of sale do not reflect and express the true intent of the
parties (vendors and vendees); and
d) Fourthly, the purported sale of the properties in litis was the result of a
deliberate conspiracy designed to unjustly deprive the rest of the
compulsory heirs (plaintiffs herein) of their legitime.
- XXI Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos.
36113/T-172, S-109772, 155329, 155330, 157203 [and 157779] issued by the
Registrar of Deeds over the properties in litisxxx are NULL AND VOID AB INITIO.
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action
against them as well as the requisite standing and interest to assail their titles over the
properties in litis; (2) that the sales were with sufficient considerations and made by
defendants parents voluntarily, in good faith, and with full knowledge of the
consequences of their deeds of sale; and (3) that the certificates of title were issued
with sufficient factual and legal basis. (Emphasis in the original)
[4]
The Ruling of the Trial Court

Before the trial, the trial court ordered the dismissal of the case against
defendant spouses Gavino Joaquin and Lea Asis. Instead of filing an Answer
with their co-defendants, Gavino Joaquin and Lea Asis filed a Motion to
Dismiss. In granting the dismissal to Gavino Joaquin and Lea Asis, the trial
court noted that compulsory heirs have the right to a legitime but such right is
contingent since said right commences only from the moment of death of the
decedent pursuant to Article 777 of the Civil Code of the Philippines.
[5]
[6]
[7]
After trial, the trial court ruled in favor of the defendants and dismissed the
complaint. The trial court stated:
In the first place, the testimony of the defendants, particularly that of the xxx father
will show that the Deeds of Sale were all executed for valuable consideration. This
assertion must prevail over the negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause of action
against defendants since there can be no legitime to speak of prior to the death of their
parents. The court finds this contention tenable. In determining the legitime, the value
of the property left at the death of the testator shall be considered (Art. 908 of the New
Civil Code). Hence, the legitime of a compulsory heir is computed as of the time of
the death of the decedent. Plaintiffs therefore cannot claim an impairment of their
legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that should bind families together, the
counterclaim is likewise DISMISSED.
No costs.
SO ORDERED.
[8]
The Ruling of the Court of Appeals

The Court of Appeals affirmed the decision of the trial court. The appellate
court ruled:
To the mind of the Court, appellants are skirting the real and decisive issue in this
case, which is, whether xxx they have a cause of action against appellees.
Upon this point, there is no question that plaintiffs-appellants, like their defendant
brothers and sisters, are compulsory heirs of defendant spouses, Leonardo Joaquin and
Feliciana Landrito, who are their parents. However, their right to the properties of
their defendant parents, as compulsory heirs, is merely inchoate and vests only upon
the latters death. While still alive, defendant parents are free to dispose of their
properties, provided that such dispositions are not made in fraud of creditors.
Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither
do they claim to be creditors of their defendant parents. Consequently, they cannot be
considered as real parties in interest to assail the validity of said deeds either for gross
inadequacy or lack of consideration or for failure to express the true intent of the
parties. In point is the ruling of the Supreme Court in Velarde, et al. vs. Paez, et al.,
101 SCRA 376, thus:
The plaintiffs are not parties to the alleged deed of sale and are not principally or
subsidiarily bound thereby; hence, they have no legal capacity to challenge their
validity.
Plaintiffs-appellants anchor their action on the supposed impairment of their legitime

by the dispositions made by their defendant parents in favor of their defendant
brothers and sisters. But, as correctly held by the court a quo, the legitime of a
compulsory heir is computed as of the time of the death of the decedent. Plaintiffs
therefore cannot claim an impairment of their legitime while their parents live.
With this posture taken by the Court, consideration of the errors assigned by plaintiffsappellants is inconsequential.
WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against
plaintiffs-appellants.
SO ORDERED.
[9]
Hence, the instant petition.

Issues
Petitioners assign the following as errors of the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE
IN QUESTION HAD NO VALID CONSIDERATION.
2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING
THAT THERE WAS A CONSIDERATION, THE SAME IS GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS
OF SALE DO NOT EXPRESS THE TRUE INTENT OF THE PARTIES.
4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE
WAS PART AND PARCEL OF A CONSPIRACY AIMED AT UNJUSTLY DEPRIVING
THE REST OF THE CHILDREN OF THE SPOUSES LEONARDO JOAQUIN AND
FELICIANA LANDRITO OF THEIR INTEREST OVER THE SUBJECT
PROPERTIES.
5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONERS HAVE
A GOOD, SUFFICIENT AND VALID CAUSE OF ACTION AGAINST THE PRIVATE
RESPONDENTS.[10]
The Ruling of the Court
We find the petition without merit.

We will discuss petitioners legal interest over the properties subject of the
Deeds of Sale before discussing the issues on the purported lack of
consideration and gross inadequacy of the prices of the Deeds of Sale.
Whether Petitioners have a legal interest
over the properties subject of the Deeds of Sale
Petitioners Complaint betrays their motive for filing this case. In their
Complaint, petitioners asserted that the purported sale of the properties in
litis was the result of a deliberate conspiracy designed to unjustly deprive the
rest of the compulsory heirs (plaintiffs herein) of their legitime. Petitioners
strategy was to have the Deeds of Sale declared void so that ownership of the
lots would eventually revert to their respondent parents. If their parents die still
owning the lots, petitioners and their respondent siblings will then co-own their
parents estate by hereditary succession.
[11]
It is evident from the records that petitioners are interested in the

properties subject of the Deeds of Sale, but they have failed to show any legal
right to the properties. The trial and appellate courts should have dismissed
the action for this reason alone. An action must be prosecuted in the name of
the real party-in-interest.
[12]
[T]he question as to real party-in-interest is whether he is the party who would be

benefitted or injured by the judgment, or the party entitled to the avails of the suit.
xxx
In actions for the annulment of contracts, such as this action, the real parties are those
who are parties to the agreement or are bound either principally or subsidiarily or are
prejudiced in their rights with respect to one of the contracting parties and can show
the detriment which would positively result to them from the contract even though
they did not intervene in it (Ibaez v. Hongkong & Shanghai Bank, 22 Phil. 572
[1912]) xxx.
These are parties with a present substantial interest, as distinguished from a mere
expectancy or future, contingent, subordinate, or consequential interest. The phrase
present substantial interest more concretely is meant such interest of a party in the
subject matter of the action as will entitle him, under the substantive law, to recover if
the evidence is sufficient, or that he has the legal title to demand and the defendant
will be protected in a payment to or recovery by him.
[13]
Petitioners do not have any legal interest over the properties subject of the
Deeds of Sale. As the appellate court stated, petitioners right to their parents
properties is merely inchoate and vests only upon their parents death. While
still living, the parents of petitioners are free to dispose of their properties. In
their overzealousness to safeguard their future legitime, petitioners forget that
theoretically, the sale of the lots to their siblings does not affect the value of
their parents estate. While the sale of the lots reduced the estate, cash of
equivalent value replaced the lots taken from the estate.
Whether the Deeds of Sale are void
for lack of consideration
Petitioners assert that their respondent siblings did not actually pay the
prices stated in the Deeds of Sale to their respondent father. Thus, petitioners
ask the court to declare the Deeds of Sale void.
A contract of sale is not a real contract, but a consensual contract. As a
consensual contract, a contract of sale becomes a binding and valid contract
upon the meeting of the minds as to price. If there is a meeting of the minds of
the parties as to the price, the contract of sale is valid, despite the manner of
payment, or even the breach of that manner of payment. If the real price is not
stated in the contract, then the contract of sale is valid but subject to
reformation. If there is no meeting of the minds of the parties as to the price,
because the price stipulated in the contract is simulated, then the contract is
void. Article 1471 of the Civil Code states that if the price in a contract of sale
is simulated, the sale is void.
[14]
It is not the act of payment of price that determines the validity of a

contract of sale. Payment of the price has nothing to do with the perfection of
the contract. Payment of the price goes into the performance of the
contract. Failure to pay the consideration is different from lack of
consideration. The former results in a right to demand the fulfillment or
cancellation of the obligation under an existing valid contract while the latter
prevents the existence of a valid contract.
[15]
Petitioners failed to show that the prices in the Deeds of Sale were
absolutely simulated. To prove simulation, petitioners presented Emma
Joaquin Valdozs testimony stating that their father, respondent Leonardo
Joaquin, told her that he would transfer a lot to her through a deed of sale
without need for her payment of the purchase price. The trial court did not
find the allegation of absolute simulation of price credible. Petitioners failure to
prove absolute simulation of price is magnified by their lack of knowledge of
their respondent siblings financial capacity to buy the questioned lots. On the
other hand, the Deeds of Sale which petitioners presented as evidence plainly
showed the cost of each lot sold. Not only did respondents minds meet as to
the purchase price, but the real price was also stated in the Deeds of Sale. As
of the filing of the complaint, respondent siblings have also fully paid the price
to their respondent father.
[16]
[17]
[18]
Whether the Deeds of Sale are void

for gross inadequacy of price
Petitioners ask that assuming that there is consideration, the same is
grossly inadequate as to invalidate the Deeds of Sale.
Articles 1355 of the Civil Code states:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not
invalidate a contract, unless there has been fraud, mistake or undue
influence. (Emphasis supplied)
Article 1470 of the Civil Code further provides:
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as
may indicate a defect in the consent, or that the parties really intended a donation or
some other act or contract. (Emphasis supplied)
Petitioners failed to prove any of the instances mentioned in Articles 1355

and 1470 of the Civil Code which would invalidate, or even affect, the Deeds
of Sale. Indeed, there is no requirement that the price be equal to the exact
value of the subject matter of sale. All the respondents believed that they
received the commutative value of what they gave. As we stated inVales v.
Villa:
[19]
Courts cannot follow one every step of his life and extricate him from bad bargains,
protect him from unwise investments, relieve him from one-sided contracts, or annul
the effects of foolish acts. Courts cannot constitute themselves guardians of persons
who are not legally incompetent. Courts operate not because one person has been
defeated or overcome by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make ridiculous contracts, use
miserable judgment, and lose money by them indeed, all they have in the world; but
not for that alone can the law intervene and restore. There must be, in addition,
a violation of the law, the commission of what the law knows as an actionable wrong,
before the courts are authorized to lay hold of the situation and remedy it. (Emphasis
in the original)
Moreover, the factual findings of the appellate court are conclusive on the
parties and carry greater weight when they coincide with the factual findings of
the trial court. This Court will not weigh the evidence all over again unless
there has been a showing that the findings of the lower court are totally devoid
of support or are clearly erroneous so as to constitute serious abuse of
discretion. In the instant case, the trial court found that the lots were sold for
a valid consideration, and that the defendant children actually paid the
purchase price stipulated in their respective Deeds of Sale. Actual payment of
the purchase price by the buyer to the seller is a factual finding that is now
conclusive upon us.
[20]
WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.

SO ORDERED.
[G.R. No. 111743. October 8, 1999]

VISITACION GABELO, ERLINDA ABELLA, PETRA PEREZ, ERLINDA
TRAQUENA,
BEN
CARDINAL,
EDUARDO
TRAQUENA,
LEOPOLDO TRAQUENA, MARIFE TUBALAS, ULYSIS MATEO,
JOCELYN FERNANDEZ, ALFONSO PLACIDO, LEONARDO
TRAQUENA,
SUSAN
RENDON
AND
MATEO
TRINIDAD, petitioners, vs. COURT OF APPEALS, URSULA
MAGLENTE, CONSOLACION BERJA, MERCEDITA FERRER,
THELMA ABELLA, ANTONIO NGO, and PHILIPPINE REALTY
CORPORATION, respondents.
DECISION
PURISIMA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, of
the decision of the Court of Appeals, dated April 29, 1993, in CA-G.R. CV No. 33178, affirming
the decision of the Regional Trial Court of Manila, Branch 38, in Civil Case No. 89-48057,
entitled Philippine Realty Corporation vs. Ursula Maglente, et al., declaring the defendants
(herein respondents) as the rightful party to purchase the land under controversy, and ordering
the plaintiff, Philippine Realty Corporation (PRC, for brevity), to execute the corresponding
Contract of Sale/Contract to Sell in favor of the defendants aforenamed.
The antecedent facts culminating in the filing of the present petition are as follows:
On January 15, 1986, Philippine Realty Corporation, owner of a parcel of land at 400 Solana
Street, Intramuros, Manila, with an area of 675.80 square meters, and covered by Transfer
Certificate of Title No. 43989, entered into a Contract of Lease thereover with the herein private
respondent, Ursula Maglente. The lease was for a period of three (3) years at a monthly rental
of P3,000.00 during the first year,P3,189.78 per month in the second year and P3,374.00 monthly
for the third year. The lease contract stipulated:
12. That the LESSOR shall have the right to sell any part of the entire leased land for
any amount or consideration it deems convenient, subject to the condition, however,
that the LESSEE shall be notified about it sixty (60) days in advance; that the
LESSEE shall be given the first priority to buy it; and in the event that the LESSEE
cannot afford to buy, the final buyer shall respect this lease for the duration of the
same, except in cases of exproriation.
It also prohibited the lessee to cede, transfer, mortgage, sublease or in any manner encumber the
whole or part of the leased land and its improvements or its rights as LESSEE of the leased land,
without the previous consent in writing of the LESSOR contained in a public instrument.
However, after the execution of the lease agreement, respondent Maglente started leasing
portions of the leased area to the herein petitioners, Visitacion Gabelo, Erlinda Abella, Petra
Perez, Erlinda Traquena, Ben Cardinal, Eduardo Traquena, Leopoldo Traquena, Marife Tubalas,
Ulysis Mateo, Jocelyn Fernandez, Alfonso Placido, Leonardo Traquena, Susan Rendon and
Mateo Trinidad, who erected their respective houses thereon.
On March 9, 1987, when the lease contract was about to expire, the Philippine Realty
Corporation, through its Junior Trust and Property Officers, Mr. Leandro Buguis and Mr.
Florentino B. Rosario, sent a written offer to sell subject properties to respondent Ursula
Maglente. The said letter stated:
We wish to inform you that the Archdiocese of Manila has now decided to open for
sale the properties it own (sic) in the District of Intramuros, Manila. However, before
we acccept offers from other parties we are of course giving the first priority to our
tenants or lessees of Intramuros lots.
Responding to such written offer, Maglente wrote a letter, dated February 2, 1988, to the
Roman Catholic Archbishop of Manila manifesting an intention to exercise her right of first
priority to purchase the property as stipulated in the lease contract.
On February 15, 1988, a Memorandum on the offer of Maglente to purchase the property
was prepared and presented to Msgr. Domingo Cirilos, president of Philippine Realty
Corporation, at the offered price of P1,800.00 per square meter or for a total amount
of P1,216,440.00, with a downpayment of P100,000.00; the balance of the purchase price
payable within ten (10) years with interest at the rate of eighteen (18%) percent per
annum. Msgr. Cirilos found the offer acceptable and approved the same.
On May 11, 1988, Maglente gave a partial downpayment of P25,000.00 and
additional P25,000.00 on May 20, 1988. In a letter, dated January 28, 1989, Maglente informed
the said corporation that there were other persons who were her co-buyers, actually occupying
the premises, namely: Consolacion Berja, Mercedita Ferrer, Thelma Abella and Antonio Ngo
within their respective areas of 100, 50, 60 and 400 square meters.
On January 30, 1989 Maglente paid her back rentals of P60,642.16 and P50,000.00 more, to
complete her downpayment of P100,000.00.
On February 1989, Philippine Realty Corporation (PRC) received copy of a letter sent by the
herein petitioners to the Archbishop of Manila, Jaime Cardinal Sin, expressing their desire to
purchase the portions of subject property on which they have been staying for a long time. And
so, PRC met with the petitioners who apprised the corporation of their being actual occupants of
the leased premises and of the impending demolition of their houses which Maglente threatened
to cause. Petitioners then asked PRC to prevent the demolition of their houses which might result
in trouble and violence.
On February 23, 1989, in order to resolve which group has the right to purchase subject
property as between the petitioners/sublessees of Maglente, and respondent Maglente, and her
co-buyers, PRC brought a Complaint in Interpleader against the herein petitioners and private
respondents, docketed as Civil Case No. 89-48057 before Branch 38 of the Regional Trial Court
of Manila.
On March 11, 1991, after trial on the merits, the lower court of origin rendered judgment in
favor of respondent Maglente and her group, disposing thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the defendants Ursula Maglente, Consolacion Berja, Mercedita Ferrer, Thelma
Abella and Antonio Ngo as the rightful party to purchase the land in controversy; and
2. Ordering plaintiff Philippine Realty Corporation to execute the corresponding contract of
sale/contract to sell in favor of the defendants aforementioned in accordance with this
Decision within thirty (30) days from notice thereof.
Dissatisfied with the aforesaid decision below, the Gabelo group (petitioners here) appealed
to the Court of Appeals, which affirmed the disposition of the trial court appealed from.
Undaunted, petitioners found their way to this Court via the present petition, assigning as
sole error the ruling of the Court of Appeals upholding the right of the private respondents,
Consolacion Berja and Antonio Ngo, to purchase subject property.
Petitioners theorize that they are tenants of Ursula Maglente on the land in dispute, which
they are occupying, and as such actual occupants they have the preferential right to purchase the
portions of land respectively occupied by them; that the private respondents, Thelma Abella and
Antonio Ngo, have never been occupants of the contested lot, and that, as defined in the Pre-trial
Order[1] issued below, the issue for resolution should have been limited to whether or not Berja
and Ngo actually occupied the premises in question because occupation thereon is the basis of
the right to purchase subject area.
Petitioners contention is untenable. There is no legal basis for the assertion by petitioners
that as actual occupants of the said property, they have the right of first priority to purchase the
same.
As regards the freedom of contract, it signifies or implies the right to choose with whom to
contract. PRC is thus free to offer its subject property for sale to any interested person. It is not
duty bound to sell the same to the petitioners simply because the latter were in actual occupation
of the property absent any prior agreement vesting in them as occupants the right of first priority
to buy, as in the case of respondent Maglente. As a matter of fact, because it (PRC) contracted
only with respondent Maglente, it could even evict the petitioners from the premises occupied by
them considering that the sublease contract between petitioners and Maglente was inked without
the prior consent in writing of PRC, as required under the lease contract. Thus, although the
other private respondents were not parties to the lease contract between PRC and Maglente, the
former could freely enter into a contract with them.
So also, the contract of sale having been perfected, the parties thereto are already bound
thereby and petitioners can no longer assert their right to buy. It is well-settled that a contract of
sale is perfected the moment there is a meeting of the minds of the contracting parties upon the
thing which is the object of the contract and upon the price. [2] From the time a party accepts the
other partys offer to sell within the stipulated period without qualification, a contract of sale is
deemed perfected.[3]
In the case under consideration, the contract of sale was already perfected - PRC offered the
subject lot for sale to respondent Maglente and her group through its Junior Trust and Property
Officers.Respondent Maglente and her group accepted such offer through a letter addressed to
the Roman Catholic Archbishop of Manila, dated February 2, 1988, manifesting their intention to
purchase the property as provided for under the lease contract. Thus, there was already an offer
and acceptance giving rise to a valid contract. As a matter of fact, respondents have already
completed payment of their downpayment of P100,000.00. Therefore, as borne by evidence on
record, the requisites under Article 1318 of the Civil Code[4] for a perfected contract have been
met.
Anent petitioners submission that the sale has not been perfected because the parties have
not affixed their signatures thereto, suffice it to state that under the law, the meeting of the minds
between the parties gives rise to a binding contract although they have not affixed their
signatures to its written form.[5]
WHEREFORE, the petition is hereby DENIED for lack of merit and the decision of the
Court of Appeals in CA-G.R. CV No. 33178 AFFIRMED. No pronouncement as to costs.
SO ORDERED.
[G.R. No. 149750. June 16, 2003]
AURORA ALCANTARA-DAUS, petitioner, vs. Spouses HERMOSO and

SOCORRO DE LEON, respondents.
DECISION
PANGANIBAN, J.:
While a contract of sale is perfected by mere consent, ownership of the

thing sold is acquired only upon its delivery to the buyer. Upon the perfection
of the sale, the seller assumes the obligation to transfer ownership and to
deliver the thing sold, but the real right of ownership is transferred only by
tradition or delivery thereof to the buyer.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court,
seeking to set aside the February 9, 2001 Decision and the August 31, 2001
Resolution of the Court of Appeals (CA) in CA-GR CV No. 47587. The
dispositive portion of the assailed Decision reads as follows:
[1]
[2]
WHEREFORE, premises considered, the decision of the trial court is

hereby REVERSED, and judgment rendered:
1. Declaring null and void and of no effect, the [D]eed of [A]bsolute [S]ale dated
December 6, 1975, the [D]eed of [E]xtra-judicial [P]artition and [Q]uitclaim dated
July 1, 1985, and T.C.T. No. T-31262;
2. Declaring T.C.T. No. 42238 as valid and binding;
3. Eliminating the award of P5,000.00 each to be paid to defendants-appellees.[3]
The assailed Resolution denied petitioners Motion for Reconsideration.

[4]
The Facts
The antecedents of the case were summarized by the Regional Trial Court
(RTC) and adopted by the CA as follows:
This is a [C]omplaint for annulment of documents and title, ownership, possession,
injunction, preliminary injunction, restraining order and damages.
[Respondents] alleged in their [C]omplaint that they are the owners of a parcel of land
hereunder described as follows, to wit:
A parcel of land (Lot No. 4786 of the Cadastral Survey of San Manuel) situated in the
Municipality of San Manuel, Bounded on the NW., by Lot No. 4785; and on the SE.,
by Lot Nos. 11094 & 11096; containing an area of Four Thousand Two Hundred
Twelve (4,212) sq. m., more or less. Covered by Original Certificate of Title No.
22134 of the Land Records of Pangasinan.
which [Respondent] Hermoso de Leon inherited from his father Marcelino de Leon by
virtue of a [D]eed of [E]xtra-judicial [P]artition. Sometime in the early 1960s,
[respondents] engaged the services of the late Atty. Florencio Juan to take care of the
documents of the properties of his parents. Atty. Juan let them sign voluminous
documents. After the death of Atty. Juan, some documents surfaced and most revealed
that their properties had been conveyed by sale or quitclaim to [Respondent]
Hermosos brothers and sisters, to Atty. Juan and his sisters, when in truth and in fact,
no such conveyances were ever intended by them. His signature in the [D]eed of
[E]xtra-judicial [P]artition with [Q]uitclaim made in favor of x x x Rodolfo de Leon
was forged. They discovered that the land in question was sold by x x x Rodolfo de
Leon to [Petitioner] Aurora Alcantara. They demanded annulment of the document
and reconveyance but defendants refused x x x.
xxxxxxxxx
[Petitioner] Aurora Alcantara-Daus [averred] that she bought the land in question in
good faith and for value on December 6, 1975. [She] has been in continuous, public,
peaceful, open possession over the same and has been appropriating the produce
thereof without objection from anyone.
[5]
On August 23, 1994, the RTC (Branch 48) of Urdaneta,

Pangasinan rendered its Decision in favor of herein petitioner. It ruled that
respondents claim was barred by laches, because more than 18 years had
[6]
[7]
passed since the land was sold. It further ruled that since it was a notarial
document, the Deed of Extrajudicial Partition in favor of Rodolfo de Leon was
presumptively authentic.
Ruling of the Court of Appeals
In reversing the RTC, the CA held that laches did not bar respondents
from pursuing their claim. Notwithstanding the delay, laches is a doctrine in
equity and may not be invoked to resist the enforcement of a legal right.
The appellate court also held that since Rodolfo de Leon was not the
owner of the land at the time of the sale, he could not transfer any land rights
to petitioner. It further declared that the signature of Hermoso de Leon on the
Deed of Extrajudicial Partition and Quitclaim -- upon which petitioner bases
her claim -- was a forgery. It added that under the above circumstances,
petitioner could not be said to be a buyer in good faith.
Hence, this Petition.
[8]
The Issues
Petitioner raises the following issues for our consideration:
1. Whether or not the Deed of Absolute Sale dated December 6, 1975 executed by
Rodolfo de Leon (deceased) over the land in question in favor of petitioner was
perfected and binding upon the parties therein?
2. Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with
Quitclaim, executed by [R]espondent Hermoso de Leon, Perlita de Leon and Carlota
de Leon in favor of Rodolfo de Leon was overcome by more than [a] preponderance
of evidence of respondents?
3. Whether or not the possession of petitioner including her predecessor-in-interest
Rodolfo de Leon over the land in question was in good faith?
4. And whether or not the instant case initiated and filed by respondents on February
24, 1993 before the trial court has prescribed and respondents are guilty of laches?
[9]
The Courts Ruling

The Petition has no merit.
First Issue:
Validity of the Deed of Absolute Sale
Petitioner argues that, having been perfected, the Contract of Sale
executed on December 6, 1975 was thus binding upon the parties thereto.
A contract of sale is consensual. It is perfected by mere consent, upon a
meeting of the minds on the offer and the acceptance thereof based on
subject matter, price and terms of payment. At this stage, the sellers
ownership of the thing sold is not an element in the perfection of the contract
of sale.
[10]
[11]
[12]
The contract, however, creates an obligation on the part of the seller to

transfer ownership and to deliver the subject matter of the contract. It is
during the delivery that the law requires the seller to have the right to transfer
ownership of the thing sold. In general, a perfected contract of sale cannot
be challenged on the ground of the sellers non-ownership of the thing sold at
the time of the perfection of the contract.
[13]
[14]
[15]
Further, even after the contract of sale has been perfected between the
parties, its consummation by delivery is yet another matter. It is through
tradition or delivery that the buyer acquires the real right of ownership over the
thing sold.
[16]
Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not
the owner of the land he delivered to petitioner. Thus, the consummation of
the contract and the consequent transfer of ownership would depend on
whether he subsequently acquired ownership of the land in accordance with
Article 1434 of the Civil Code. Therefore, we need to resolve the issue of the
authenticity and the due execution of the Extrajudicial Partition and Quitclaim
in his favor.
[17]
Second Issue:
Authenticity of the Extrajudicial Partition

Petitioner contends that the Extrajudicial Partition and Quitclaim is
authentic, because it was notarized and executed in accordance with law. She
claims that there is no clear and convincing evidence to set aside the
presumption of regularity in the issuance of such public document. We
disagree.
As a general rule, the due execution and authenticity of a document must
be reasonably established before it may be admitted in evidence. Notarial
documents, however, may be presented in evidence without further proof of
their authenticity, since the certificate of acknowledgment is prima facie
evidence of the execution of the instrument or document involved. To
contradict facts in a notarial document and the presumption of regularity in its
favor, the evidence must be clear, convincing and more than merely
preponderant.
[18]
[19]
[20]
The CA ruled that the signature of Hermoso de Leon on the Extrajudicial

Partition and Quitclaim was forged. However, this factual finding is in conflict
with that of the RTC. While normally this Court does not review factual issues,
this rule does not apply when there is a conflict between the holdings of the
CA and those of the trial court, as in the present case.
[21]
[22]
After poring over the records, we find no reason to reverse the factual
finding of the appellate court. A comparison of the genuine signatures of
Hermoso de Leon with his purported signature on the Deed of Extrajudicial
Partition with Quitclaim will readily reveal that the latter is a forgery. As aptly
held by the CA, such variance cannot be attributed to the age or the
mechanical acts of the person signing.
[23]
[24]
[25]
Without the corroborative testimony of the attesting witnesses, the lone

account of the notary regarding the due execution of the Deed is insufficient to
sustain the authenticity of this document. He can hardly be expected to
dispute the authenticity of the very Deed he notarized. For this reason, his
testimony was -- as it should be --minutely scrutinized by the appellate court,
and was found wanting.
[26]
Third Issue:
Possession in Good Faith
Petitioner claims that her possession of the land is in good faith and that,
consequently, she has acquired ownership thereof by virtue of
prescription. We are not persuaded.
It is well-settled that no title to registered land in derogation of that of the
registered owner shall be acquired by prescription or adverse possession.
Neither can prescription be allowed against the hereditary successors of the
registered owner, because they merely step into the shoes of the decedent
and are merely the continuation of the personality of their predecessor in
interest. Consequently, since a certificate of registration covers it, the
disputed land cannot be acquired by prescription regardless of petitioners
good faith.
[27]
[28]
[29]
Fourth Issue:
Prescription of Action and Laches
Petitioner also argues that the right to recover ownership has prescribed,
and that respondents are guilty of laches. Again, we disagree.
Article 1141 of the New Civil Code provides that real actions over
immovable properties prescribe after thirty years. This period for filing an
action is interrupted when a complaint is filed in court. Rodolfo de Leon
alleged that the land had been allocated to him by his brother Hermoso de
Leon in March 1963, but that the Deed of Extrajudicial Partition assigning the
contested land to the latter was executed only on September 16, 1963. In
any case, the Complaint to recover the land from petitioner was filed on
February 24, 1993, which was within the 30-year prescriptive period.
[30]
[31]
[32]
[33]
On the claim of laches, we find no reason to reverse the ruling of the

CA. Laches is based upon equity and the public policy of discouraging stale
claims. Since laches is an equitable doctrine, its application is controlled by
equitable considerations. It cannot be used to defeat justice or to perpetuate
fraud and injustice. Thus, the assertion of laches to thwart the claim of
[34]
[35]
[36]
respondents is foreclosed, because the Deed upon which petitioner bases her
claim is a forgery.
WHEREFORE,
the
Petition
is DENIED and
Decision AFFIRMED. Costs against petitioner.
the
assailed
SO ORDERED.
[G.R. No. 142013. October 15, 2002]
BIAN
STEEL CORPORATION, petitioner, vs. HON.

APPEALS,
MYLENE
C.
GARCIA
and
GARCIA, respondents.
COURT
MYLA
OF
C.
[G.R. No. 148430. October 15, 2002]
MYLENE C. GARCIA and MYLA C. GARCIA, petitioners, vs. HON.

ENRICO A. LANZANAS, Presiding Judge, RTC, Branch 7, Manila
and RUFO J. BERNARDO, Sheriff-In-Charge, for the Ex-Officio
Sheriff of Manila, respondents.
DECISION
CORONA, J.:
Before us are two consolidated petitions: (1) G.R. No. 142013, a special
civil action for certiorari and mandamus seeking to annul and set aside the
Resolutions of the Court of Appeals dated October 21, 1999 and January 31,
2000, denying petitioner Bian Steel Corporations motion for intervention and
motion for reconsideration, and (2) G.R. No. 148430, seeking to set aside the
decision and resolution of the Court of Appeals dated February 10, 2000 and
May 31, 2001, respectively, dismissing the petition of petitioners Mylene C.
Garcia and Myla C. Garcia for violating the rules on forum-shopping.
[1]
[2]
Stripped of the non-essentials, the facts of the case are as follows:

On July 22, 1998, Bian Steel Corporation (BSC) filed with the Regional
Trial Court of Manila a complaint against Joenas Metal Corporation and
spouses Ng Ley Huat and Leticia Dy Ng (the spouses Ng) for collection of a
sum of money with damages, docketed as Civil Case No. 98-89831.
On July 24, 1998, the trial court issued a Writ of Preliminary Attachment
after BSC filed an attachment bond. Pursuant thereto, on July 27, 1998, the
sheriff of Branch 7 of the RTC of Manila, Manuelito P. Viloria, levied on the
property registered in the names of the spouses Ng and covered by TCT No.
11387 of the Registry of Deeds of Quezon City. This property under
preliminary attachment was in fact mortgaged to the Far East Bank and Trust
Company (FEBTC), now Bank of the Philippine Islands (BPI), and consisted
of a 268-square-meter lot located at 14 Tulip Road, Gardenville Town and
Country Homes, Congressional Avenue, Project 8, Quezon City.
[3]
On August 5, 1998, a sheriffs return was filed by Viloria, stating that, as of

that date, summons was not served upon the defendant spouses Ng because
they could not be located. BSC caused the filing of a motion to serve the
summons by publication which was granted. Summons by publication
thereafter ensued.
In the meantime, defendant-spouses Ng sold the property to petitioners (in
G.R. No. 148430) Mylene and Myla Garcia by means of a deed of sale dated
June 29, 1998. Said transaction was registered only about a month-and-a-half
later, on August 12, 1998, after the mortgagee FEBTC gave its approval to the
sale. On August 19, 1998, TCT No. 11387 in the name of the spouses Ng was
cancelled and, in lieu thereof, TCT No. 194226 in the names of Mylene and
Myla Garcia was issued. The annotation of the preliminary attachment made
earlier on July 27, 1998 by sheriff Viloria on the old title, TCT No. 11387, was
transferred to TCT No. 194226.
On August 28, 1998, the Garcias filed a complaint-in-intervention in Civil
Case No. 98-89831 pending at Branch 7 of the Manila RTC, alleging that they
were the registered owners of the property covered by TCT No. 194226 which
was the subject of BSCs writ of preliminary attachment. Said complaint-inintervention was denied by the trial court for lack of merit.
On April 14, 1999, the trial court rendered judgment by default in favor of
BSC, the dispositive portion of which was:
WHEREFORE, decision is hereby rendered in favor of plaintiff Bian Steel
Corporation, and against defendants Joenas Metal Corporation, Ng Ley Huat and
Leticia Dy Ng, ordering the latter to jointly and severally:
1. pay the plaintiff the amount of FIVE MILLION EIGHT HUNDRED FIFTY SIX
THOUSAND PESOS (P5,856,000.00) as actual damages;
2. pay the plaintiff the amount of ONE MILLION PESOS (P1,000,000.00) as and for
consequential damages;
3. pay the plaintiff the amount equivalent to 25% of the total amount due the plaintiff
from the defendant as and for attorneys fees; and
4. to pay the costs of suit.
SO ORDERED.
[4]
On June 14, 1999, a Notice of Sale of Execution on Real Property was

issued by respondent sheriff Rufo J. Bernardo. It scheduled the public auction
of the property on July 7, 1999.
Meanwhile, on February 18, 1999, in view of the dismissal of their
complaint-in-intervention, the Garcias filed an action against BSC, sheriff
Manuelito P. Viloria, the Register of Deeds of Quezon City and FEBTC (now
BPI) for cancellation of the notice of levy annotated on TCT No. 194226
before Branch 98 of the Regional Trial Court of Quezon City, docketed as
Civil Case No. 99-36804. The Garcias claimed that they were the registered
owners of the property in dispute, having acquired the same on June 29, 1998
by means of a deed of sale with assumption of mortgage from spouses Ng
Ley Huat and Leticia Dy Ng.
[5]
In said case in the Quezon City RTC, the Garcias were able to secure a
temporary restraining order enjoining sheriff Rufo J. Bernardo or any person
acting in his behalf from continuing with the public auction sale of the subject
property initially scheduled on July 7, 1999. This TRO was disregarded by the
Manila RTC.
Acting on the ex-parte manifestation with motion to proceed with the
execution sale filed by BSC, Judge Enrico Lanzanas of Branch 7, RTC,
Manila affirmed, on July 8, 1999, his previous order and directed the public
auction of the attached property, unless otherwise enjoined by the Court of
Appeals or this Court. Thereafter, the public auction was rescheduled from
July 7, 1999 to August 6, 1999.
On August 4, 1999, the Garcias filed another case with the Court of
Appeals for the issuance of a writ of preliminary injunction with prayer for
temporary restraining order which sought to perpetually enjoin Judge
Lanzanas and sheriff Bernardo from proceeding with the public auction on
August 6, 1999. Their petition did not implead BSC as private respondent.
In a resolution dated August 5, 1999, the Third Division of the Court of
Appeals temporarily restrained public respondents Judge Lanzanas and
Bernardo from proceeding with the public auction of the subject
property. Hence, the scheduled public sale on August 6, 1999 did not
transpire. This prompted petitioner BSC to file a motion for intervention on
August 16, 1999, praying that it be allowed to intervene and be heard in the
case as private respondent, and to comment and oppose the petition filed by
the Garcias. Likewise, said motion sought to oppose the prayer for preliminary
injunction with urgent request for the issuance of the temporary restraining
order.
[6]
On October 21, 1999, the First Division of the Court of Appeals, in its
resolution, denied BSCs motion for intervention on the ground that its rights
could be protected in a separate proceeding, particularly in the cancellation
case filed by the Garcias. BSC's motion for reconsideration was likewise
denied on January 31, 2000. Thus, on March 13, 2000, BSC filed with this
Court a special civil action for certiorari and mandamus, docketed as G.R. No.
142013, seeking to annul and set aside the Resolutions of the Court of
Appeals dated October 21, 1999 and January 31, 2000. BSC is invoking the
following issues:
[7]
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION IN DENYING PETITIONERS MOTION FOR INTERVENTION
FOR BEING IMPROPER AS INTERVENORS RIGHTS MAY BE PROTECTED IN
A SEPARATE PROCEEDING IN CIVIL CASE NO. 99-36804 OF THE RTC,
BRANCH 98, QUEZON CITY, FOR CANCELLATION OF THE NOTICE OF
LEVY ANNOTATED ON TCT NO. 194226.
II
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN
HOLDING THAT TO ENTERTAIN PETITIONERS INTERVENTION WOULD
NECESSARY (SIC) PRE-EMPT THE ADJUDICATION OF ISSUES IN CIVIL
CASE NO. 99-36804 BECAUSE EVIDENCE AND COUNTER-EVIDENCE WILL
BE PRODUCED BY THE PARTIES IN THE INJUNCTION SUIT, AND THIS
WILL UNDULY DELAY OR PREJUDICE THE ADJUDICATION OF THE
RIGHTS OF THE PRINCIPAL PARTIES.
III
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN
RULING THAT THE ALLOWANCE OR DISALLOWANCE OF A MOTION TO
INTERVENE IS ADDRESSED TO THE SOUND DISCRETION OF THE COURT,
OVERLOOKING THE FACT THAT IN THE INSTANT CASE, THE APPELLATE
COURT DID NOT EXERCISE WISELY ITS SOUND DISCRETION WHEN IT
DENIED PETITIONERS MOTION FOR INTERVENTION.
Similarly, the Fifteenth Division of the Court of Appeals, in its
decision dated February 10, 2000, dismissed the petition of the Garcias for
violating the rules on forum-shopping. It denied their motion for
reconsideration on May 31, 2001.
[8]
The Garcias thus filed with this Court a petition for review on certiorari,
docketed as G.R. No. 148430, seeking to set aside the February 10, 2000
decision of the Court of Appeals as well as its resolution dated May 31, 2001
denying their motion for reconsideration, raising the following errors:
I
WHETHER OR NOT PETITIONERS WERE GUILTY OF VIOLATING THE

RULES ON FORUM-SHOPPING.
II
WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A

WRIT OF INJUNCTION.
Subsequently, G.R. No. 142013 and G.R. No. 148430 were consolidated
pursuant to this Court's Resolution dated February 27, 2002.
In the meantime, on August 4, 2001, the Garcias were again served by the
sheriff of the Manila RTC with a notice of sale of execution of the disputed
property scheduled for August 7, 2001. Because no TRO was issued by this
Court, the public auction ordered by the Manila RTC was held as scheduled
and the property was awarded to BSC as the highest bidder.
On August 15, 2001, a little too late, this Court issued the TRO sought by
the Garcias in a resolution which partially stated that:
[9]
Acting on the Petitioners Urgent Motion for the Issuance of a temporary restraining
order and/or writ of preliminary injunction dated August 6, 2001, praying that public
respondents be enjoined from proceeding with the conduct of the public auction sale
involving Petitioners property, registered under TCT No. 194226 of the Registry of
Deeds of Quezon City, the Court Resolved to ISSUE the TEMPORARY
RESTRAINING ORDER prayed for, effective immediately until further orders from
this Court.
[10]
A year after the public auction, on August 6, 2002, the Garcias, fearful of
the impending consolidation of title in favor of BSC, filed before this Court an
urgent ex-parte motion for the issuance of an order maintaining the status quo
ante. They wanted to prevent the consolidation of the title and possession by
BSC until such time as the rights and interests of both sets of petitioners in the
two cases before us shall have been determined and finally resolved.
Acting on the said motion, on August 9, 2002, the Court resolved to grant
the motion and directed the parties to maintain the status quo as of August 6,
2002.
[11]
Going over the merits of the petitions, the Court deems it essential to
resolve two pivotal issues: (1) who, between BSC and the Garcias, has a
better right to the disputed property, and (2) whether the Garcias violated the
rule against forum- shopping.
It should be noted that, at the time of the attachment of the property on
July 27, 1998, the spouses Ng were still the registered owners of said
property. It should also be observed that the preliminary attachment in favor of
petitioner BSC was annotated and recorded in the Registry of Deeds of
Quezon City on July 27, 1998 in accordance with the provisions of the
Property Registration Decree (PD 1529). This annotation produced all the
effects which the law gives to its registration or inscription.
[12]
This Court has always held that attachment is a proceeding in rem. It is

against the particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property which
ripens into a judgment against the res when the order of sale is made. Such a
proceeding in effect means that the property attached is an indebted thing and
a virtual condemnation of it to pay the owners debt. This doctrine was
validated by this Court in the more recent case of Republic vs. Saludares :
[13]
[14]
xxx.
The law does not provide the length of time an attachment lien shall continue after the
rendition of the judgment, and it must therefore necessarily continue until the debt is
paid, or sale is had under execution issued on the judgment, or until the judgment is
satisfied, or the attachment discharged or vacated in some manner provided by
law. Thus, if the property attached is subsequently sold, the purchaser of the
attached property acquires it subject to an attachment legally and validly levied
thereon.
xxx.
In the instant case, the records reveal that the levy on attachment covering
the subject property was annotated on TCT No. 11387 on July 27, 1998. The
deed of sale executed on June 29, 1998 in favor of the Garcias was approved
by FEBTC only on August 12, 1998 which was also the date when the sale
was registered. From the foregoing, it can be seen that, when the Garcias
purchased the property in question, it was already under a duly registered
preliminary attachment. In other words, there was already notice to said
purchasers (and the whole world) of the impending acquisition by BSC, as the
judgment creditor, of a legal lien on the title of the Ng spouses as judgment
debtors in case BSC won its case in the Manila RTC.
The Garcias claim they acquired the subject property by means of a deed
of sale with assumption of mortgage dated June 29, 1998, meaning, they
purchased the property ahead of the inscription of the levy on attachment
thereon on July 27, 1998. But, even if consensual, not all contracts of sale
became automatically and immediately effective. In Ramos vs. Court of
Appeals we held:
[15]
[16]
In sales with assumption of mortgage, the assumption of mortgage is a condition

precedent to the sellers consent and therefore, without approval of the mortgagee,
the sale is not perfected.
Apart therefrom, notwithstanding the approval of the sale by mortgagee
FEBTC (BPI), there was yet another step the Garcias had to take and it was
the registration of the sale from the Ngs to them. Insofar as third persons are
concerned, what validly transfers or conveys a person's interest in real
property is the registration of the deed.
[17]
Thus, when the Garcias bought the property on June 29, 1998, it was, at
that point, no more than a private transaction between them and the Ngs. It
needed to be registered before it could become binding on all third
parties, including BSC. It turned out that the Garcias registered it only on
August 12, 1998, after FEBTC (now BPI) approved the sale. It was too late by
then because, on July 27, 1998, the levy in favor of BSC, pursuant to the
preliminary attachment ordered by the Manila RTC, had already been
annotated on the original title on file with the Registry of Deeds. This
registration of levy (or notice, in laymans language) now became binding on
the whole world, including the Garcias. The rights which had already accrued
in favor of BSC by virtue of the levy on attachment over the property were
never adversely affected by the unregistered transfer from the spouses Ng to
the Garcias.
We sympathize with the Garcias but, had they only bothered to check first
with the Register of Deeds of Quezon City before buying the property as a
prudent buyer would have done they would have seen the warning about
BSCs superior rights over it. This alone should have been sufficient reason for
them to back out of the deal.
It is doctrinal that a levy on attachment, duly registered, has preference
over a prior unregistered sale and, even if the prior unregistered sale is
subsequently registered before the sale on execution but after the levy is
made, the validity of the execution sale should be upheld because it retroacts
to the date of levy. The priority enjoyed by the levy on attachment extends,
with full force and effect, to the buyer at the auction sale conducted by virtue
of such levy. The sale between the spouses Ng and the Garcias was
undoubtedly a valid transaction between them. However, in view of the prior
levy on attachment on the same property, the Garcias took the property
subject to the attachment. The Garcias, in buying registered land, stood
exactly in the shoes of their vendors, the Ngs, and their title ipso facto became
subject to the incidents or results of the pending litigation between the Ngs
and BSC.
[18]
[19]
Even the alleged lack of actual and personal knowledge of the existence
of the levy on attachment over the subject property by the Garcias cannot be
sustained by this Court on the ground that one who deals with registered land
is charged with notice of the burdens on the property which are duly noted on
the certificate of title. On this specific point, we are concerned not with actual
or personal knowledge but constructive notice through registration in the
Registry of Deeds. Otherwise stated, what we should follow is the annotation
(or lack thereof) on the original title on file with the Registry of Deeds, not on
the duplicate title in the hands of the private parties.
When a conveyance has been properly recorded, such record is

constructive notice of its contents and all interests, legal and equitable,
included therein. Under the rule on notice, it is presumed that the purchaser
has examined every instrument on record affecting the title. Such presumption
is irrefutable and cannot be overcome by any claim of innocence or good
faith.Therefore, such presumption cannot be defeated by proof of lack of
knowledge of what the public record contains any more than one may be
permitted to show that he was ignorant of the provisions of the law. The rule
that all persons must take notice of the facts which the public record contains
is a rule of law. The rule must be absolute. Any variation would lead to
endless confusion and useless litigation. Otherwise, the very purpose and
object of the law requiring public registration would be for naught.
[20]
Pertinent to the matter at hand is Article 1544 of the New Civil Code which
provides:
If the same thing should have been sold to different vendees, x x x should it be
immovable property, the ownership shall belong to the person acquiring it who
in good faith first recorded it in the Registry of Property. x x x
Because of the principle of constructive notice to the whole world, one who
deals with registered property which is the subject of an annotated levy on
attachment cannot invoke the rights of a purchaser in good faith. As between
two purchasers, the one who registers the sale in his favor has a preferred
right over the other who has not registered his title even if the latter is in actual
possession of the immovable property. And, as between two purchasers who
both registered the respective sales in their favor, the one who registered his
sale ahead of the other would have better rights than the other who registered
later.
[21]
Applying said provision of the law and settled jurisprudence to the instant
case, when the disputed property was consequently sold on execution to
BSC, this auction sale retroacted to the date of inscription of BSC's notice of
attachment on July 27, 1998. The earlier registration thus gave BSC superior
and preferential rights over the attached property as against the Garcias who
registered their purchase of the property at a later date. Notably, the Garcias
were not purchasers for value in view of the fact that they acquired the
[22]
property in payment of the loan earlier obtained from them by the Spouses
Ng.
[23]
All told, the purchaser of a property subject to an attachment legally and

validly levied thereon is merely subrogated to the rights of the vendor and
acquires the property subject to the rights of the attachment creditor. An
attaching creditor who registers the order of attachment and the sale by public
auction of the property to him as the highest bidder acquires a superior title to
the property as against a vendee who previously bought the same property
from the registered owner but who failed to register his deed of sale.
[24]
Petitioners Garcias failed to show that BSC acted in bad faith which would
have impelled this Court to rule otherwise.
The foregoing considerations show that the Garcias are not entitled to the
issuance of a writ of preliminary injunction from this Court. For the issuance of
the writ to be proper, it must be shown that the invasion of the right sought to
be protected is material and substantial, that the right of the Garcias is clear
and unmistakable and that there is an urgent and paramount necessity for the
writ to prevent serious damage. Such requirements are all wanting in the
case at bar. Thus, in view of the clear and unmistakable absence of any legal
basis for the issuance thereof, the same must be denied.
[25]
On the second question whether the Garcias violated the rule against
forum-shopping we answer in the affirmative.
The Court of Appeals, in dismissing the Garcias' petition on the ground of
forum-shopping, explained:
A party is guilty of forum-shopping where he repetitively availed of several judicial
remedies in different courts, simultaneously or successively, all substantially founded
on the same transactions and the same essential facts and circumstances, and all
raising substantially the same issues either pending in, or already resolved adversely
by some other court (Gatmaytan vs. Court of Appeals, 267 SCRA 487).
The test to determine whether a party violated the rule against forum-shopping is
where the elements of litis pendentia are present or where a final judgment in one case
will amount to res judicata in another (Solid Homes, Inc. vs. Court of Appeals, 271
SCRA 157).
What is truly important to consider in determining whether forum-shopping exists or
not is the vexation caused the courts and parties-litigants by a party who asks different
courts and/or administrative agencies to rule on the same or related causes and/or
grant the same or substantially the same reliefs, in the process creating possibility of
conflicting decisions being rendered by the different fora upon the same issues
(Golangco vs. Court of Appeals, 283 SCRA 493).
The above jurisprudence instructs us the various indicia of forum-shopping. The more
important of these are: when the final judgment in one case will amount to res judicata
in another, or where the cases filed are substantially founded on the same transactions
and the same essential facts and circumstances, or raising substantially the same
issues, or more importantly, where there exists the possibility of conflicting decisions
being rendered by different fora upon the same issues.
If we take a look closely on the instant Petition for Injunction, forum-shopping is
evident. In Civil Case No. 99-36804 raffled to Branch 98 of RTC- Quezon City,
petitioners therein prayed for the cancellation of the notice of levy in their title. They
are claiming that the controverted property is owned by them such that the respondent
therein has no right to levy on their property, petitioners not being the respondents
debtor. In the present petition, petitioners seek that the scheduled auction sale of the
same property be perpetually enjoined, claiming that the property is owned by them
and that the same is erroneously made to answer for liability not owing by
them. Ultimately, the two actions involve the same essential facts and circumstances,
and are raising the same issues.
x x x The propriety of the issuance of injunction would depend on the finding that the
petitioners have a clear legal right over the property - a right in esse or the existence
of a right to be protected. Thus, this court must make a categorical finding of
fact. This very same issue of fact who as between the two contending parties have a
better right to the property is the very issue presented before the RTC of Quezon City.
Clearly therefore, this Court and that of RTC Quezon City are called upon to decide
on the same issues based on the same essential facts and circumstances. Hence, the
possibility of these two courts rendering or coming up with different or conflicting
decisions is very much real. Needless to say, the decision in one case would constitute
res judicata in the other. The instant petition for injunction obviously violates the rule
on forum-shopping.
We agree with the Court of Appeals.
As clearly demonstrated, the willful attempt by the Garcias to obtain a
preliminary injunction in another court (the Court of Appeals) after they filed a
case seeking the same relief from the original court (the Quezon City RTC)
constitutes grave abuse of the judicial process. Such contemptuous act is
penalized by the summary dismissal of both actions as mandated by
paragraph 17 of the Interim Rules and Guidelines issued by this Court on
January 11, 1983 and Supreme Court Circular No. 28-91, to wit:
xxx
SUBJECT: ADDITIONAL REQUISITES FOR PETITIONS FILED WITH THE
SUPREME COURT AND THE COURT OF APPEALS TO PREVENT FORUMSHOPPING OR MULTIPLE FILING OF PETITIONS AND COMPLAINTS.
The attention of the Court has been called to the filing of multiple petitions and
complaints involving the same issues in the Supreme Court, the Court of Appeals or
different Divisions thereof, or any other tribunal or agency, with the result that said
tribunals or agency have to resolve the same issues.
x x x.
3. Penalties.
(a) Any violation of this Circular shall be a cause for the summary dismissal of the
multiple petition or complaint;
x x x.
In Bugnay Construction & Development Corporation vs. Laron, we
declared:
[26]
Forum-shopping, an act of malpractice, is proscribed and condemned as trifling with

the courts and abusing their processes. It is improper conduct that degrades the
administration of justice. The rule has been formalized in Paragraph 17 of the Interim
Rules and Guidelines issued by this Court of January 11, 1983, in connection with the
implementation of the Judiciary Reorganization Act x x x. The Rule ordains that (a)
violation of the rule shall constitute a contempt of court and shall be a cause for the
summary dismissal of both petitions, without prejudice to the taking of appropriate
action against the counsel or party concerned.
The rule against forum-shopping has been further strengthened by the
issuance of Supreme Court Administrative Circular No. 04-94. Said circular
formally established the rule that the deliberate filing of multiple complaints to
obtain favorable action constitutes forum-shopping and shall be a ground for
summary dismissal thereof.
Accordingly, the Garcias cannot pursue simultaneous remedies in two
different fora. This is a practice which degrades the judicial process, messes
up the orderly rules of procedure and is vexatious and unfair to the other party
in the case.
We rule therefore that the execution sale in favor of BSC was superior to
the sale of the same property by the Ngs to the Garcias on August 12,
1998. The right of petitioner BSC to the ownership and possession of the
property, the surrender of the owner's duplicate copy of TCT No. 194226
covering the subject property for inscription of the certificate of sale, the
cancellation of TCT No. 194226 and the issuance of a new title in favor of
BSC, is affirmed without prejudice to the right of the Garcias to seek
reimbursement from the spouses Ng.
In view of our disposition of the first issue resulting in the denial of the
Garcias petition, the petition of BSC praying that it be allowed to intervene
therein has been rendered moot. The Court thus finds it unnecessary to
discuss it.
WHEREFORE, the petitions are DENIED. The Resolution dated August 9,
2002 issued by this Court directing the parties to maintain the status quo as of
August 6, 2002 is hereby lifted and set aside. The Registry of Deeds of
Quezon City is hereby ordered to cancel TCT No. 194226 in the names of
Myla and Mylene Garcia and issue a new title in favor of BSC without further
delay.
SO ORDERED.
G.R. No. 156437
March 1, 2004
NATIONAL HOUSING AUTHORITY, petitioner,

vs.
GRACE BAPTIST CHURCH and the COURT OF APPEALS, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review under Rule 45 of the Rules of Court, seeking to reverse the Decision of
the Court of Appeals dated February 26, 2001,1 and its Resolution dated November 8, 2002,2 which
modified the decision of the Regional Trial Court of Quezon City, Branch 90, dated February 25,
1997.3
On June 13, 1986, respondent Grace Baptist Church (hereinafter, the Church) wrote a letter to
petitioner National Housing Authority (NHA), manifesting its interest in acquiring Lots 4 and 17 of the
General Mariano Alvarez Resettlement Project in Cavite.4 In its letter-reply dated July 9, 1986,
petitioner informed respondent:
In reference to your request letter dated 13 June 1986, regarding your application for Lots 4
and 17, Block C-3-CL, we are glad to inform you that your request was granted and you may
now visit our Project Office at General Mariano Alvarez for processing of your application to
purchase said lots.
We hereby advise you also that prior to approval of such application and in accordance with our
existing policies and guidelines, your other accounts with us shall be maintained in good standing. 5
Respondent entered into possession of the lots and introduced improvements thereon. 6
On February 22, 1991, the NHAs Board of Directors passed Resolution No. 2126, approving the
sale of the subject lots to respondent Church at the price of P700.00 per square meter, or a total
price of P430,500.00.7 The Church was duly informed of this Resolution through a letter sent by the
NHA.8
On April 8, 1991, the Church tendered to the NHA a managers check in the amount of P55,350.00,
purportedly in full payment of the subject properties. 9 The Church insisted that this was the price
quoted to them by the NHA Field Office, as shown by an unsigned piece of paper with a handwritten
computation scribbled thereon.10Petitioner NHA returned the check, stating that the amount was
insufficient considering that the price of the properties have changed. The Church made several
demands on the NHA to accept their tender of payment, but the latter refused. Thus, the Church
instituted a complaint for specific performance and damages against the NHA with the Regional Trial
Court of Quezon City,11 where it was docketed as Civil Case No. Q-91-9148.
On February 25, 1997, the trial court rendered its decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Ordering the defendant to reimburse to the plaintiff the amount of P4,290.00
representing the overpayment made for Lots 1, 2, 3, 18, 19 and 20;
2. Declaring that there was no perfected contract of sale with respect to Lots 4 and
17 and ordering the plaintiff to return possession of the property to the defendant and
to pay the latter reasonable rental for the use of the property at P200.00 per month
computed from the time it took possession thereof until finally vacated. Costs against
defendant.
SO ORDERED.12
On appeal, the Court of Appeals, affirmed the trial courts finding that there was indeed no contract of
sale between the parties. However, petitioner was ordered to execute the sale of the lots to Grace
Baptist Church at the price of P700.00 per square meter, with 6% interest per annum from March
1991. The dispositive portion of the Court of Appeals decision, dated February 26, 2001, reads:
WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that
defendant-appellee NHA is hereby ordered to sell to plaintiff-appellant Grace Baptist Church
Lots 4 and 17 at the price of P700.00 per square meter, or a total cost P430,000.00 with 6%
interest per annum from March, 1991 until full payment in cash.
SO ORDERED.13
The appellate court ruled that the NHAs Resolution No. 2126, which earlier approved the sale of the
subject lots to Grace Baptist Church at the price of P700.00 per square meter, has not been revoked
at any time and was therefore still in effect. As a result, the NHA was estopped from fixing a different
price for the subject properties. Considering further that the Church had been occupying the subject
lots and even introduced improvements thereon, the Court of Appeals ruled that, in the interest of
equity, it should be allowed to purchase the subject properties.14
Petitioner NHA filed a Motion for Reconsideration which was denied in a Resolution dated November
8, 2002. Hence, the instant petition for review on the sole issue of: Can the NHA be compelled to sell
the subject lots to Grace Baptist Church in the absence of any perfected contract of sale between
the parties?
Petitioner submits that the Court cannot compel it to sell the subject property to Grace Baptist
Church without violating its freedom to contract.15 Moreover, it contends that equity should be applied
only in the absence of any law governing the relationship between the parties, and that the law on
sales and the law on contracts in general apply to the present case. 16
We find merit in petitioners submission.
Petitioner NHA is not estopped from selling the subject lots at a price equal to their fair market value,
even if it failed to expressly revoke Resolution No. 2126. It is, after all, hornbook law that the
principle of estoppel does not operate against the Government for the act of its agents, 17 or, as in this
case, their inaction.
On the application of equity, it appears that the crux of the controversy involves the characterization
of equity in the context of contract law. Preliminarily, we reiterate that this Court, while aware of its
equity jurisdiction, is first and foremost, a court of law. While equity might tilt on the side of one party,
the same cannot be enforced so as to overrule positive provisions of law in favor of the other.18 Thus,
before we can pass upon the propriety of an application of equitable principles in the case at bar, we
must first determine whether or not positive provisions of law govern.
It is a fundamental rule that contracts, once perfected, bind both contracting parties, and obligations
arising therefrom have the force of law between the parties and should be complied with in good
faith.19 However, it must be understood that contracts are not the only source of law that govern the
rights and obligations between the parties. More specifically, no contractual stipulation may
contradict law, morals, good customs, public order or public policy.20 Verily, the mere inexistence of a
contract, which would ordinarily serve as the law between the parties, does not automatically
authorize disposing of a controversy based on equitable principles alone. Notwithstanding the
absence of a perfected contract between the parties, their relationship may be governed byother
existing laws which provide for their reciprocal rights and obligations.
It must be remembered that contracts in which the Government is a party are subject to the same
rules of contract law which govern the validity and sufficiency of contract between individuals. All the
essential elements and characteristics of a contract in general must be present in order to create a
binding and enforceable Government contract.21
It appearing that there is no dispute that this case involves an unperfected contract, the Civil Law
principles governing contracts should apply. In Vda. de Urbano v. Government Service Insurance
System,22 it was ruled that a qualified acceptance constitutes a counter-offer as expressly stated by
Article 1319 of the Civil Code. In said case, petitioners offered to redeem mortgaged property and
requested for an extension of the period of redemption. However, the offer was not accepted by the
GSIS. Instead, it made a counter-offer, which petitioners did not accept. Petitioners again offer to pay
the redemption price on staggered basis. In deciding said case, it was held that when there is
absolutely no acceptance of an offer or if the offer is expressly rejected, there is no meeting of the
minds. Since petitioners offer was denied twice by GSIS, it was held that there was clearly no
meeting of the minds and, thus, no perfected contract. All that is established was a counter-offer.23
In the case at bar, the offer of the NHA to sell the subject property, as embodied in Resolution No.
2126, was similarly not accepted by the respondent.24 Thus, the alleged contract involved in this
case should be more accurately denominated as inexistent. There being no concurrence of the offer
and acceptance, it did not pass the stage of generation to the point of perfection. 25 As such, it is
without force and effect from the very beginning or from its incipiency, as if it had never been entered
into, and hence, cannot be validated either by lapse of time or ratification. 26 Equity can not give
validity to a void contract,27 and this rule should apply with equal force to inexistent contracts.
We note from the records, however, that the Church, despite knowledge that its intended contract of
sale with the NHA had not been perfected, proceeded to introduce improvements on the disputed
land. On the other hand, the NHA knowingly granted the Church temporary use of the subject
properties and did not prevent the Church from making improvements thereon. Thus, the Church
and the NHA, who both acted in bad faith, shall be treated as if they were both in good faith. 28 In this
connection, Article 448 of the Civil Code provides:
The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to
pay the price of the land, and the one who sowed, the proper rent. However, the builder or
planter cannot be obliged to buy the land and if its value is considerably more than that of
the building or trees. In such case, he shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof.
Pursuant to our ruling in Depra v. Dumlao,29 there is a need to remand this case to the trial court,
which shall conduct the appropriate proceedings to assess the respective values of the
improvements and of the land, as well as the amounts of reasonable rentals and indemnity, fix the
terms of the lease if the parties so agree, and to determine other matters necessary for the proper
application of Article 448, in relation to Articles 546 and 548, of the Civil Code.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The Court of Appeals Decision
dated February 26, 2001 and Resolution dated November 8, 2002 are REVERSED and SET ASIDE.
The Decision of the Regional Trial Court of Quezon City-Branch 90, dated February 25, 1997, is
REINSTATED. This case is REMANDED to the Regional Trial Court of Quezon City, Branch 90, for
further proceedings consistent with Articles 448 and 546 of the Civil Code.
No costs.
SO ORDERED.

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G.R. No.

L-26872 July 25, 1975

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(Sgd.) FRANCISCO CERVANTES

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March 30, 1964

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BARREDO, J., concurring:

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* Underscoring supplied. Note that, according to the defendants, Cervantes inserted

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Mr. Francisco Cervantes

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G.R. No. 109125 December 2, 1994

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THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT

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consideration of the motion as evidenced by the rubber stamp and

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the consideration of P15,000,000.00 and ordering the Register of

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Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect

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[G.R. No. 133638. April 15, 2005]

PERPETUA VDA. DE APE, petitioner, vs. THE HONORABLE COURT

Before Us is a petition for review on certiorari of the Decision[1] of the Court

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Also presented as evidence for private respondent were pictures taken of

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Q Mr. Witness, that receipt is in English, is it not?

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[G.R. No. 134219. June 08, 2005]

SPOUSES MARIO AND ELIZABETH TORCUATOR, petitioners, vs.

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In the instant Petition, spouses Mario and Elizabeth Torcuator assail

The facts as summarized by the Court of Appeals are as follows:

The Court of Appeals denied