ORTEGA VS LEONARDO
over said Lot I-B; that after defendant had acquired Lot I plaintiff regularly paid him the
SALE; PAROL CONTRACT OF SALE OF REALTY UNENFORCEABLE; DOCTRINE
OF PART PERFORMANCE. While, as a general rule, an oral agreement to sell a
piece of land is not provable, however, where there is partial performance of the sale
contract, the principle excluding evidence of parol contracts for the sale of realty will
not apply.
2. ID.; CIRCUMSTANCES INDICATING PARTIAL PERFORMANCE. Some
circumstance indicating partial performance of an oral contract of sale of realty are:
relinquishment of rights, continued possession, building of improvements, tender of
payment rendition of services, payment of taxes, surveying of the land at the vendees
expense, etc.
Well known is the general rule in the Statute of Frauds precluding enforcement of oral
contracts for the sale of land. Not so well known is the exception concerning partially
executed contracts 1 at least our jurisprudence offers few, if any, apposite
illustrations. This appeal exemplifies such exception.
Alleging partial performance, plaintiff sought to compel defendant to comply with their
oral contract of sale of a parcel of land. Upon a motion to dismiss, the Manila court of
first instance ordered dismissal following the above general rule.
Hence this appeal. It should be sustained if the allegations of the complaint which
the motion to dismiss admitted set out an instance of partial performance.
Stripped of non-essentials, the complaint averred that long before and until her house
had been completely destroyed during the liberation of the City of Manila, plaintiff
occupied a parcel of land, designated as Lot I, Block 3 etc. (hereinafter called Lot I)
located at San Andres Street, Malate, Manila; that after liberation she reoccupied it;
that when the administration and disposition of the said Lot I (together with other lots in
the Ana Sarmiento Estate) were assigned by the Government to the Rural Progress
Administration 2 plaintiff asserted her right thereto (as occupant) for purposes of
purchase; that defendant also asserted a similar right, alleging occupancy of a portion
of the land subsequent to plaintiffs; that during the investigation of such conflicting
interests, defendant asked plaintiff to desist from pressing her claim and definitely
promised that if and when he succeeded in getting title to Lot I, 3 he would sell to her a
portion thereof with an area of 55.60 square meters (particularly described) at the rate
of P25.00 per square meter, provided she paid for the surveying and subdivision of the
Lot, and provided further that after he acquired title, she could continue holding the lot
as tenant by paying a monthly rental of P10.00 until said portion shall have been
segregated and the purchase price fully paid; that plaintiff accepted defendants offer,
and desisted from further claiming Lot I; that defendant finally acquired title thereto;
that relying upon their agreement, plaintiff caused the survey and segregation of the
portion which defendant had promised to sell, incurring expenses therefor, said portion
being now designated as Lot I-B in a duly prepared and approved subdivision plan;
that in remodelling her sons house constructed on a lot adjoining Lot I she extended it
monthly rental of P10.00; that in July 1954, after the plans of subdivision and
segregation of the lot had been approved by the Bureau of Lands, plaintiff tendered to
defendant the purchase price which the latter refused to accept, without cause or
reason.
The court below explained in its order of dismissal:jgc:chanrobles.com.ph
"It is admitted by both parties that an oral agreement to sell a piece of land is not
enforceable. (Art. 1403, Civil Code, Section 21, Rule 123, Rules of Court.) Plaintiff,
however, argues that the contract in question, although verbal, was partially performed
because plaintiff desisted from claiming the portion of lot I in question due to the
promise of defendant to transfer said portion to her after the issuance of title to
defendant. The court thinks that even granting that plaintiff really desisted to claim not I
on oral promise to sell made by defendant, the oral promise to sell cannot be enforced.
The desistance to claim is not a part of the contract of sale of the land. Only in
essential part of the executory contract will, if it has already been performed, make the
verbal contract enforceable, payment of price being an essential part of the contract of
sale."cralaw virtua1aw library
If the above means that partial performance of a sale contract occurs only when part of
the purchase price is paid, it surely constitutes a defective statement of the law.
American jurisprudence in its title "Statute of Frauds" lists other acts of partial
performance, such as possession, the making of improvements, rendition of services,
payment of taxes, relinquishment of rights, etc.
Thus, it is stated that "The continuance in possession by a purchaser who is already in
possession may, in a proper case, be sufficiently referable to the parol contract of sale
to constitute a part performance thereof. There may be additional acts or peculiar
circumstances which sufficiently refer the possession to the contract. . . . Continued
possession under an oral contract of sale, by one already in possession as a tenant,
has been held a sufficient part performance, where, accompanied by other acts which
characterize the continued possession and refer it to the contract of purchase.
Especially is this true where the circumstances of the case include the making of
substantial, permanent, and valuable improvements." (49 American Jurisprudence
44).
It is also stated that "The making of valuable permanent improvements on the land by
the purchaser, in pursuance of the agreement and with the knowledge of the vendor,
has been said to be the strongest and most unequivocal act of part performance by
which a verbal contract to sell land is taken out of the statute of frauds, and is ordinarily
an important element in such part performance. . . . Possession by the purchaser
under a parol contract for the purchase of real property, together with his making
valuable and permanent improvements on the property which are referable exclusively
to the contract, in reliance on the contract, in the honest belief that he has a right to
make them, and with the knowledge and consent or acquiescence of the vendor, is
deemed a part performance of the contract. The entry into possession and the making
of the improvements are held on amount to such an alteration in the purchasers
position as will warrant the courts entering a degree of specific performance." (49
American Jurisprudence p. 755, 756.)
Again, it is stated that "A tender or offer of payment, declined by the vendor, has been
said to be equivalent to actual payment, for the purposes of determining whether or-not
there has been a part performance of the contract. This is apparently true where the
tender is by a purchaser who has made improvements. But the doctrine now generally
accepted, that not even the payment of the purchase price, without something more, . .
. is a sufficient part performance. (49 American Jurisprudence p. 772.)
And the relinquishment of rights or the compromise thereof has likewise been held to
constitute part performance. (See same title secs. 473, 474, 475.)
In the light of the above four paragraphs, it would appear that the complaint in this
case described several circumstance indicating partial performance: relinquishment of
rights 4 continued possession, building of improvements, tender of payment plus the
surveying of the lot at plaintiffs expense and the payment of rentals.
We shall not take time to discuss whether one or the other or any two or three of them
constituted sufficient performance to take the matter away from the operation of the
Statute of Frauds. Enough to hold that the combination of all of them amounted to
partial performance, and we do so line with the accepted basis of the doctrine, that it
would be a fraud upon the plaintiff if the defendant were permitted to oppose
performance of his part after he has allowed or induced the former to perform in
reliance upon the agreement. (See 49 American Jurisprudence p. 725.)
The paragraph immediately preceding will serve as our comment on the appellees
quotations from American Jurisprudence itself to the effect that "relinquishment" is not
part performance, and that neither "surveying the land" 5 nor tender of payment is
sufficient. The precedents hereinabove transcribed oppose or explain away or qualify
the appellees citations. And at the risk of being repetitious we say: granting that none
of the three circumstances indicated by him, (relinquishment, survey, tender) would
separately suffice, still the combination of the three with the others already mentioned,
amounts to more than enough.
Hence, as there was partial performance, the principle excluding parol contracts for the
sale of realty, does not apply.
The judgment will accordingly be reversed and the record remanded for further
proceedings. With costs against appellee.
CARBONNEL VS PONCIO
STATUTE OF FRAUDS; WHEN APPLICABLE; PART PERFORMANCE; ORAL
EVIDENCE ADMISSIBLE TO PROVE BOTH CONTRACT AND PART
PERFORMANCE. The Statute of Frauds is applicable only to executory contracts,
not to contracts that are totally or partially performed. The reason is simple. In
executory contracts there is a wide field for fraud because, unless they be in writing
there is no palpable evidence of the intention of the contracting parties. However, if a
contract has been totally or partially performed, the exclusion of parol evidence would
promote fraud or bad faith, for it would enable the defendant to keep the benefits
already derived by him from the transaction in litigation, and, at the same time, evade
the obligations, responsibilities or liabilities assumed or contracted by him thereby. So
that when the party concerned has pleaded partial performance, such party is entitled
to a reasonable chance to establish by parol evidence the truth of this allegation, as
well as the contract itself. "The recognition of the exceptional effect of part
performance in taking an oral contract out of the statute of frauds involves the principle
that oral evidence is admissible in such cases to prove both the contract and the part
performance of the contract" (49 Am. Jur. 927).
DECISION
CONCEPCION, J.:
The issue in this case is whether the Statute of Frauds is applicable thereto.
Plaintiff Rosario Carbonnel alleges, in her second amended complaint, filed with the
Court of First Instance of Rizal, that, on January 27, 1955, she purchased from
defendant Jos Poncio, at P9.50 a square meter, a parcel of land of about 195 square
meters, more or less, located in San Juan del Monte, Rizal, known as Lot No. 13-B of
subdivision plan Psd-19567, and more particularly described in Transfer Certificate of
Title No. 5040 (now No. 37842), excluding the improvements thereon; that plaintiff paid
P247.26 on account of the price and assumed Poncios obligation with the Republic
Savings Bank amounting to P1,177.48, with the understanding that the balance would
be payable upon execution of the corresponding deed of conveyance; that one of the
conditions of the sale was that Poncio would continue staying in said land for one year,
as stated in a document signed by him (and later marked as Exhibit A), a translation of
which was attached to the said complaint; that Poncio refuses to execute the
corresponding deed of sale, despite repeated demands; that plaintiff has thereby
suffered damages in the sum of P5,000, aside from attorneys fees amounting to
P1,000; that Poncio has conveyed the same property to defendants Ramn R. Infante
and Emma L. Infante, who knew of the first sale to plaintiff; and that the Infantes had
thereby caused damages to plaintiff in the sum of P5,000.
Plaintiff prayed, therefore, that she be declared owner of the land in question; that the
sale to the Infantes be annulled; that Poncio be required to execute the corresponding
deed of conveyance in plaintiffs favor; that the Register of Deeds of Rizal be directed
to issue the corresponding title in plaintiffs name; and that defendants be sentenced to
pay damages.
Defendants moved to dismiss said complaint upon the ground that plaintiffs claim is
unenforceable under the Statute of Frauds, and that said pleading does not state facts
sufficient to constitute a cause of action. The motion was denied, "without prejudice to
considering, when this case is decided on the merits, whether the same falls under the
Statute of Frauds."cralaw virtua1aw library
Thereafter, the Infantes filed an answer denying most of the allegations of said
complaint and alleged, by way of special defense, that they purchased the land in
question in good faith, for value, and without knowledge of the alleged sale to plaintiff;
and that plaintiffs claim is unenforceable under the Statute of Frauds. They, likewise,
set up oounterclaims for damages.
In his answer, Poncio denied specifically some allegations of said complaint and
alleged that he had no knowledge sufficient to form a belief as to the truth of the other
averments therein. By way of special defenses, he alleged that he had consistently
turned down several offers, made by plaintiff, to buy the land in question, at P15 a
square meter, for he believes that it is worth not less than P20 a square meter; that
Mrs. Infante, likewise, tried to buy the land at P15 a square meter; that, on or about
January 27, 1955, Poncio was advised by plaintiff that should she decide to buy the
property at P20 a square meter, she would allow him to remain in the property for one
year; that plaintiff then induced Poncio to sign a document, copy of which is probably
the one appended to the second amended complaint; that Poncio signed it "relying
upon the statement of the plaintiff that the document was a permit for him to remain in
the premises in the event that defendant decided to sell the property to the plaintiff at
P20 a square meter" ; that on January 30, 1955, Mrs. Infante improved her offer and
he agreed to sell the land and its improvements to her for P3,535; that Poncio has not
lost "his mind," to sell his property, worth at least P4,000, for the paltry sum of
P1,177.48, the amount of his obligation to the Republic Savings Bank; and that
plaintiffs action is barred by the Statute of Frauds. Poncio similarly set up a
counterclaim for damages.
As, the case came up for trial, on February 23, 1956, plaintiff introduced the testimony
of one Constancio Meonada, who said that he is janitor of the Sto. Domingo Church
and a high school, as well as auto-mechanic, graduate; that he has been and still is a
paying boarder in plaintiffs house; that Poncio is his townmate, both being from
Mahatao, Batanes; that, after making a rough draft, based upon data furnished by
plaintiff, he typed Exhibit A, which is in the Batanes dialect; that, thereafter, Poncio
came to plaintiffs house, where he was shown Exhibit A; that after the witness had
read its contents to Poncio and given him a copy thereof, Poncio signed Exhibit A and
so did the plaintiff; that Meonada likewise signed at the foot of Exhibit A, as attesting
witness; and that translated freely into English, Exhibit A, reads as
follows:jgc:chanrobles.com.ph
"From this date, January 27, Jos Poncio may stay in this lot that I bought from him
until one year without payment. After that one year and he cannot find any place where
to transfer his house, he can also stay in this lot and he will pay according to
agreement." (t.s.n., p. 4.)
Then, taking the witness stand, plaintiff testified that she has known Poncio since
childhood, he being related to her mother; that Poncios lot adjoins her lot, in San Juan,
Rizal; that one day Poncio told her that he wanted to sell his property; that, after both
had agreed on its price, he said that his lot is mortgaged to the Republic Savings Bank;
and that, at noon time, on the same day, he came back stating that both would "go to
the bank to pay the balance in arrears." At this juncture, defense counsel moved to
strike out the statement of the witness, invoking, in support of the motion, the Statute
of Frauds. After an extended discussion, the parties agreed to submit memoranda and
the hearing was suspended. Later on, the lower court issued an order dismissing
plaintiffs complaint, without costs, upon the ground that her cause of action is
unenforceable under the Statute of Frauds. The counterclaims were, also, dismissed.
Hence, this appeal by plaintiff.
We are of the opinion and so hold that the appeal is well taken. It is well settled in this
jurisdiction that the Statute of Frauds is applicable only to executory contracts
(Facturan v. Sabanal, 81 Phil., 512), not to contracts that are totally or partially
performed (Almirol, Et Al., v. Monserrat, 48 Phil., 67, 70; Robles v. Lizarraga
Hermanos, 50 Phil., 387; Diana v. Macalibo, 74 Phil., 70).
"Subject to a rule to the contrary followed in a few jurisdictions, it is the accepted view
that part performance of a parol contract for the sale of real estate has the effect,
subject to certain conditions concerning the nature and extent of the acts constituting
performance and the right to equitable relief generally, of taking such contract from the
operation of the statute of frauds, so that chancery may decree its specific
performance or grant other equitable relief. It is well settled in Great Britain and in this
country, with the exception of a few states, that a sufficient part performance by the
purchaser under a parol contract for the sale of real estate removes the contract from
the operation of the statute of frauds." (49 Am. Jur. 722-723.)
In the words of former Chief Justice Moran: "The reason is simple. In executory
contracts there is a wide field for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The statute has precisely
been enacted to prevent fraud." (Comments on the Rules of Court, by Moran, Vol. III
[1957 ed. ], p. 178.) However, if a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would enable the
defendant to keep the benefits already derived by him from the transaction in litigation,
and, at the same time, evade the obligations, responsibilities or liabilities assumed or
contracted by him thereby.

For obvious reasons, it is not enough for a party to allege partial performance in order
to hold that there has been such performance and to render a decision declaring that
the Statute of Frauds is inapplicable. But neither is such party required to establish
such partial performance by documentary proof before he could have the opportunity
to introduce oral testimony on the transaction. Indeed, such oral testimony would
usually be unnecessary if there were documents proving partial performance. Thus,
the rejection of any and all testimonial evidence on partial performance, would nullify
the rule that the Statute of Frauds is inapplicable to contracts which have been partly
executed, and lead to the very evils that the statute seeks to prevent.
"The true basis of the doctrine of part performance according to the overwhelming
weight of authority, is that it would be a fraud upon the plaintiff if the defendant were
permitted to escape performance of his part of the oral agreement after he has
permitted the plaintiff to perform in reliance upon the agreement. The oral contract is
enforced in harmony with the principle that courts of equity will not allow the statute of
frauds to be used as an instrument of fraud. In other words, the doctrine of part
performance was established for the same purpose for which the statute of frauds itself
was enacted, namely, for the prevention of fraud, and arose from the necessity of
preventing the statute from becoming an agent of fraud for it could not have been the
intention of the statute to enable any party to commit a fraud with impunity." (49 Am.
Jur., 725-726; Italics supplied.)
When the party concerned has pleaded partial performance, such party is entitled to a
reasonable chance to establish by parol evidence the truth of this allegation, as well as
the contract itself. "The recognition of the exceptional effect of part performance in
taking an oral contract out of the statute of frauds involves the principle that oral
evidence is admissible in such cases to prove both the contract and the part
performance of the contract" (49 Am. Jur., 927).
Upon submission of the case for decision on the merits, the Court should determine
whether said allegation is true, bearing in mind that parol evidence is easier to concoct
and more likely to be colored or inaccurate than documentary evidence. If the evidence
of record fails to prove clearly that there has been partial performance, then the Court
should apply the Statute of Frauds, if the cause of action involved falls within the
purview thereof. If the Court is, however, convinced that the obligation in question has
been partly executed and that the allegation of partial performance was not resorted to
as a devise to circumvent the Statute, then the same should not be applied.
Apart from the foregoing, there are in the case at bar several circumstances indicating
that plaintiffs claim might not be entirely devoid of factual basis. Thus, for instance,
Poncio admitted in his answer that plaintiff had offered several times to purchase his
land.
Again, there is Exhibit A, as document signed by the defendant. It is in the Batanes
dialect, which, according to plaintiffs uncontradicted evidence, is the one spoken by
Poncio, he being a native of said region. Exhibit A states that Poncio would stay in the
land sold by him to plaintiff for one year, from January 27, 1955, free of charge, and
that, if he cannot find a place where to transfer his house thereon, he may remain in
said lot under such terms as may be agreed upon. Incidentally, the allegation in
Poncios answer to the effect that he signed Exhibit A under the belief that it "was a
permit for him to remain in the premises in the event" that "he decided to sell the
property" to the plaintiff at P20 a sq. m." is, on its face, somewhat difficult to believe.
Indeed, if he had not decided as yet to sell the land to plaintiff, who, had never
increased her offer of P15 a square meter, there was no reason for Poncio to get said
permit from her. Upon the other hand, if plaintiff intended to mislead Poncio, she would
have caused Exhibit A to be drafted, probably in English, instead of taking the trouble
of seeing to it that it was written precisely in his native dialect, the Batanes. Moreover,
Poncios signature on Exhibit A suggests that he is neither illiterate nor so ignorant as
to sign a document without reading its contents, apart from the fact that Meonada had
read Exhibit A to him and given him a copy thereof, before he signed thereon,
according to Meonadas uncontradicted testimony.
Then, also, defendants say in their brief:jgc:chanrobles.com.ph
"The only allegation in plaintiffs complaint that bears any relation to her claim that
there has been partial performance of the supposed contract of sale, is the notation of
the sum of P247.26 in the bank book of defendant Jos Poncio. The noting or jotting
down of the sum of P247.26 in the bank book of Jos Poncio does not prove the fact
that said amount was the purchase price of the property in question. For all we knew,
the sum of P247.26 which plaintiff claims to have paid to the Republic Savings Bank
for the account of the defendant, assuming that the money paid to the Republic
Savings Bank came from the plaintiff, was the result of some usurious loan or
accommodation, rather than earnest money or part payment of the land. Neither is a
competent or satisfactory evidence to prove the conveyance of the land in question the
fact that the bank book account of Jos Poncio happens to be in the possession of the
plaintiff." (Defendants-Appellees brief, pp. 25-26.)
How shall we know why Poncios bank deposit book is in plaintiffs possession, or
whether there is any relation between the P247.26 entry therein and the partial
payment of P247.26 allegedly made by plaintiff to Poncio on account of the price of his
land, if we do not allow the plaintiff to explain it on the witness stand? Without
expressing any opinion on the merits of plaintiffs claim, it is clear, therefore, that she is
entitled, legally as well as from the viewpoint of equity, to an opportunity to introduce
parol evidence in support of the allegations of her second amended complaint.
Wherefore, the order appealed from is hereby set aside, and let this case be remanded
to the lower court for further proceedings not inconsistent with this decision, with the
costs of this instance against defendants-appellees. It is so ordered.
BABAO VS PEREZ
1. STATUTES OF FRAUDS; CONTRACTS WHICH ARE NOT TO BE PERFORMED
WITHIN ONE YEAR; PARTIAL PERFORMANCE BY ONE PARTY, EFFECT OF.
Contracts which by their terms are not to be performed within one year may be taken
out of the Statute of Frauds through performance by one party thereto. In order,
however through performance of the contract may take the case out of the operation of
the statute, it must appear clear that the full performance has been made by one party
within one year, as otherwise the statute would apply.
This is an action to recover one-half () of a parcel of land containing an area of 156
hectares situated in San Juan, Batangas, plus the value of the produce gathered
thereon from August, 1947 until actual recovery and in the alternative, to recover the
sum of P47,000 representing reimbursement of the amount of useful and necessary
expenses incurred to clear and improve the aforesaid land.
Plaintiff is the judicial administrator of the estate of the late Santiago Babao while
defendant Florencio Perez is the judicial administrator of the estate of the late
Celestina Perez. The other defendants are purchasers and actual owners of portions
of the land which is sought to be recovered in the present litigation.
The complaint alleges that Celestina Perez was in her lifetime the owner of the parcel
of land in question which was not registered either under Act 496 or under the Spanish
Mortgage Law; that sometime in 1924 when the deceased Santiago Babao married
Maria Cleofe Perez, niece of Celestina Perez, the latter and the former entered into a
verbal agreement whereby Santiago Babao bound himself to improve the land by
levelling and clearing all the forest trees standing thereon and planting in lieu thereof
coconuts, rice, corn and other crops such as bananas and bamboo trees, and to act at
the same time as administrator thereof during the lifetime of Celestina Perez, all
expenses for labor and materials to be at his cost, in consideration of which Celestina
in turn bound herself to convey to Santiago Babao or his wife 1/2 of the land, together
with all the improvements thereon upon her death; that pursuant to said verbal
agreement, Santiago Babao in 1924 left his job as administrator of the Llana Estate in
San Juan, Batangas for which he was receiving a salary of P150 a month, and started
levelling and clearing the land having planted in an area of 50 hectares 5,000 coconuts
trees, and rice and corn in another area of 70 hectares, leaving out only about 50
hectares unimproved, all of which having been administered by him from 1924 to 1946;
that for clearing and improving the portions of land above-mentioned, he incurred
expenses amounting to P7,400 which added to his salary as administrator from 1924
to 1946 at the rate of P150 a month amounting to P39,600, makes a total of P47,000;
that in violation of the aforesaid verbal agreement, Celestina Perez, acting through
Leovigildo Perez, to whom she extended a power of attorney to sell, sold few days
before she died about 127 1/2 hectares of the land in question in consequence of
which Santiago Babao was deprived of the possession and administration thereof from
1945; that said sales were fictitious and were made in clear violation of the oral
agreement made between Celestina Perez and Santiago Babao and as such the same
are null and void; that Celestina Perez died on August 24, 1947 as a result of which
intestate proceedings were instituted for the settlement of her estate and one Florencio
Perez was named as judicial administrator; that Santiago Babao died on January 6,
1948 and as a consequence intestate proceedings were instituted for the settlement of
his estate and Bienvenido Babao was appointed judicial administrator; and that in the
event the estate of Santiago Babao failed to recover the 1/2 portion of the land herein
litigated, said estate would suffer an irreparable damage of not less than P366,700
representing fruits which it has failed to receive during the last 20 years. Wherefore,
plaintiff prayed for the conveyance of 1/2 portion of the land in question and for
annulment of the sales of the portion thereof for having been made fictitiously, and in
the alternative, for judgment in plaintiffs favor for the sum of P47,000 representing the
amount of useful and necessary expenses incurred by Santiago Babao in improving
the land in line with the oral agreement.
Defendants denied plaintiffs claim that a verbal agreement was entered into between
Celestina Perez and Santiago Babao relative to the clearing, improving and
administering the land belonging to the former having an area of 156 hectares, as well
as the other claim that Santiago Babao had actually cleared and improved a great
portion thereof at a cost of around P7,400. They alleged that in 1924 and for many
years prior thereto, the land in question had already been cleared and cultivated for
agricultural purposes with an exception of a portion of 50 hectares; that said land was
cleared and cultivated due partly to the effort made by Celestinas husband, Esteban
de Villa, her overseers and tenants, and partly to the "trusco" system employed by
them whereby persons were allowed to clear the land and plant thereon and from the
harvest were compensated according to a graduated scale of division varying from
year to year; that the coconut trees, banana plants and bamboo trees now standing
thereon were planted not by Santiago Babao nor at his expense but by the tenants of
the spouses Esteban de Villa and Celestina Perez who were duly compensated
according to the "trusco" system; that although Santiago Babao and Maria Cleofe
Perez were married in 1924, the former did not have anything to do with the land in
question for Esteban de Villa was then still living and actively managed the same with
the help of his overseer and tenants until he died in 1930; that it was only in that year
when Santiago Babao began administering the land in the capacity of a nephew of
Celestina until 1935 when Celestina, disgusted with the conduct of Santiago, left the
company of Santiago and his wife and went to live with her nephew Bernardo Perez
until her death in 1947; that since then Celestina Perez prohibited Santiago from
interfering with the administration of the land and designated another person in his
place, and for the work he did from 1930 to 1935, he was more than compensated
because the proceeds of the harvests during said years were all given to him and his
wife and Celestina was given only what was barely sufficient for her maintenance.
Defendants also alleged that the sales made by Celestina Perez through her attorney-
in-fact Leovigildo Perez of several portions of the land were not fictitious as alleged but
were made with full knowledge and authority of Celestina who executed in favor of
Leovigildo Perez a power of attorney under the authority of a notary public in the
presence of Santiago Babao himself who did not interpose any objection to the this is an action not only for specific performance but also for damages."
execution of said power of attorney and, therefore, said sales are real, valid and Consequently, the court held that the Statute of Frauds cannot be invoked for the
genuine, having been executed in accordance with law. Defendants prayed that the reason that "performance by one party of his part of the contract takes the case out of
complaint be dismissed with costs, after awarding to them moral damages in the the statute." And pursuant to such ruling, when the case was tried on the merits, the
amount that the court may deem proper to fix. court overruled all objections of counsel for appellants to the introduction of oral
testimony to prove the alleged verbal agreement.
After hearing, the court rendered judgment the dispositive part of which
reads:jgc:chanrobles.com.ph The important question then to be determined is whether or not the alleged verbal
agreement falls within the prohibition of the Statute of Frauds.
"WHEREFORE, judgment is rendered in favor of the plaintiff and against the
defendants, This statute, formerly incorporated as Section 21 of Rule 123 of our Rules of Court, is
now found in Article 1403 of the new Civil Code, which provides, in so far as pertinent
(1) Declaring the sales of Lupang Parang by and between the defendants, fraudulent to this case, as follows:jgc:chanrobles.com.ph
and fictitious, null and void;
"In the following cases an agreement hereafter made shall be unenforceable by action
(2) Ordering defendant Florencio Perez as administrator of the testate estate of the unless the same, or some note or memorandum thereof, be in writing, and subscribed
deceased Celestina Perez, to pay plaintiff the sum of P3,786.66 annually from August by the party charged, or by his agent, evidence therefore, of the agreement cannot be
25, 1947 until delivery of the land to the latter, with interest thereon at the rate of 6 per received without the writing, or secondary evidence of its contents;
cent per annum from the date of the filing of the complaint;
"(a) An agreement that by its terms is not to be performed within a year from the
(3) Divesting the title of defendants over 1/2 of Lupang Parang both in quantity and making thereof.
quality and vesting title thereover in plaintiff pursuant to section 10 of Rule 39. To carry
out this judgment, the Clerk of Court is hereby appointed representative of this Court to x x x
designate a disinterested surveyor for the necessary survey and division, the expenses
therefor to be defrayed half and half by plaintiff and Florencio Perez;
"(e) An agreement . . . for the sale of real property or of an interest therein."cralaw
(4) Ordering defendants to surrender the possession of the half adjudicated and vested virtua1aw library
in favor of the plaintiff after the same has been designated under the preceeding
paragraph; and Appellants contend that the alleged verbal agreement falls under paragraphs (a) and
(e) above-quoted because the same may be considered as an agreement which by its
(5) To pay the costs."cralaw virtua1aw library terms is not to be performed within one year from the making thereof, or one which
involves a sale of real property or of an interest therein. If this premise is correct,
Defendants in due time took the case on appeal to the Court of Appeals where the appellants contend, then the trial court erred in allowing the introduction of parole
parties submitted their respective briefs within the reglementary period, and thereafter evidence to prove the alleged agreement over the vigorous objection of counsel
the court rendered judgment reversing in toto the decision appealed from and for Appellants.
dismissing the case without pronouncement as to costs. But when its attention was
called, thru a proper motion, that that court acted without jurisdiction because the That the alleged verbal agreement is one which by its terms is not to be performed
amount involved was more than P50,000, the court in a resolution entered on August within one year is very apparent from the allegations of the complaint. Thus, it is
14, 1954 set aside its decision and forwarded the case to us to have the case therein alleged that the agreement was allegedly made in 1924 and by its terms
remanded to the Court of Appeals proved futile. Santiago Babao bound himself (1) to improve all the 156 hectares of forest lands by
levelling and clearing all the forest trees and planting thereon coconuts, rice, corn and
While this case was pending in the lower court, counsel for appellants filed a motion to other crops such as bananas and bamboo trees, and (2) to act at the same time as
dismiss on the ground, among others, that the alleged verbal agreement between administrator of said land and improvements during the lifetime of Celestina Perez.
Santiago Babao and Celestina Perez was unenforceable under the Statute of Frauds. And in consideration of such undertaking, Celestina Perez "bound herself to give and
The trial court denied this motion on the ground that it appears from the complaint "that deliver, either to Santiago Babao or his wife Cleofe Perez, one-half (1/2) of the whole
Santiago fully complied with his part of the oral contract between the parties and that area of said land as improved with all the improvements thereon upon her death." It is
also alleged in the complaint that Celestina Perez died on August 24, 1947, or 23
years after the making of the alleged agreement, while Santiago Babao died on
January 6, 1948. From the above terms, therefore, it is not difficult to see that the
undertaking assumed by Santiago Babao which was to clear, level and plant to
coconut trees and other plants 156 hectares of forest land could not be accomplished
in one year. In fact, the alleged improvements were supposedly accomplished during
the lifetime of Celestina, which lasted over a period of 23 years, and even then not all
was cleared and planted but only a portion thereof. Another part of his undertaking is
that he is to administer the land during the lifetime of Celestina, and as we have
already said, her death occurred 23 years after the agreement.
But the trial court expressed the view that the statute does not apply because it
assumed that Santiago Babao fully complied with his part of the oral contract between
the parties, and in its opinion "performance by one party of his part of the contract
takes the case out of the statute." Even if this assumption were correct, still we find
one flaw in its logic which fully nullifies it for it fails to consider that in order that a
partial performance of the contract may take the case out of the operation of the
statute, it must appear clear that the full performance has been made by one party
within one year, as otherwise the statute would apply. Thus, the rule on this point is
well stated in Corpus Juris in the following wise: "Contracts which by their terms are
not to be performed within one year, may be taken out of the statute through
performance by one party thereto. All that is required in such case is complete
performance within the year by one party, however many years may have to elapse
before the agreement is performed by the other party. But nothing less than full
performance by one party will suffice, and it has been held that, if anything remains to
be done after the expiration of the year besides the mere payment of money, the
statute will apply." 1 (Italics supplied). It is not therefore correct to state that Santiago
Babao has fully complied with his part within the year from the alleged contract in
question.
"When, in an oral contract which, by its terms, is not to be performed within one year
from the execution thereof, one of the contracting parties has complied within the year
with the obligations imposed on him by said contract, the other party cannot avoid the
fulfillment of those incumbent on him under the same contract by invoking the statute
of frauds because the latter aims to prevent and not to protect fraud." (Shoemaker v.
La Tondea, Inc. 68 Phil., 24.)
"The broad view is that the statute of Frauds applies only to agreements not to be
performed on either side within a year from the making thereof. Agreements to be fully
performed on one side within the year are taken out of the operation of the statute."
(National Bank v. Philippine Vegetable Oil Co., 49 Phil., 857, 858.)
Assuming arguendo that the agreement in question falls also under paragraph (a) of
Article 1403 of the new Civil Code, i. e., it is a contract or agreement for the sale of real
property or of an interest therein, it cannot also be contended that that provision does
not apply to the present case for the reason that there was part performance on the
part of one of the parties. In this connection, it must be noted that this statute is one
based on equity. It is based on equitable estoppel or estoppel by conduct. It operates
only under certain specified conditions and when adequate relief at law is unavailable
(49 Am. Jur., Statute of Frauds, Section 422, p. 727). And one of the requisites that
need be present is that the agreement relied on must be certain, definite, clear,
unambiguous and unequivocal in its terms before the statute may operate. Thus, the
rule on this matter is as follows:jgc:chanrobles.com.ph
"The contract must be fully made and completed in every respect except for the writing
required by the statute, in order to be enforceable on the ground of part performance.
The parol agreement relied on must be certain, definite, clear, unambiguous, and
unequivocal in its terms, particularly where the agreement is between parent and child,
and be clearly established by the evidence. The requisite of clearness and definiteness
extends to both the terms and the subject matter of the contract. Also, the oral contract
must be fair, reasonable, and just in its provisions for equity to enforce it on the ground
of part performance. If it would be inequitable to enforce the oral agreement, or if its
specific enforcement would be harsh or oppressive upon the defendant, equity will
withhold its aid. Clearly, the doctrine of part performance taking an oral contract out of
the statute of frauds does not apply so as to support a suit for specific performance
where both the equities and the statute support the defendants case." (49 Am. Jur., p.
729.)
The alleged agreement is far from complying with the above requirement for, according
to the complaint, Santiago Babao bound himself to convert a big parcel of forest land
of 156 hectares into a veritable farm planted to coconuts, rice, corn and other crops
such as bananas and bamboo trees and to act as administrator of said farm during the
lifetime of Celestina Perez, while the latter in turn bound herself to give either to
Santiago or his wife 1/2, of the land as improved with all the improvements thereon
upon her death. This agreement is indeed vague and ambiguous for it does not specify
how many hectares was to be planted to coconuts, how many to rice and corn, and
what portion to bananas and bamboo trees. And as counsel for appellants puts it, "as
the alleged contract stands, if Santiago Babao should plant one-half hectares to
coconuts, one-half to rice, and another half hectare to corn, and the rest to bananas
and bamboo trees, he would be entitled to receive one-half of 156 hectares, or 78
hectares, of land for his services. That certainly would be unfair and unheard of; no
sane property owner would enter into such contract. It costs much more time, money,
and labor to plant coconut trees than to plant bananas and bamboo trees; and it also
costs less to convert forest land to rice and corn land than to convert it into a coconut
plantation. On the part of Celestina Perez, her promise is also incapable of execution.
How could she give and deliver one-half of the land upon her death?"
The terms of the alleged contract would appear more vague if we consider the
testimony of Carlos Orense who claimed to have been present at the time the alleged
agreement was made between Celestina Perez and Santiago Babao for apparently the
same does not run along the same line as the one claimed by appellee. This is what
Orense said: "You, Santiago, leave the Llana estate and attend to this lupang parang.
Have it cleared and planted to coconuts, for that land will eventually fall in your hands"
(as translated from Tagalog), which runs counter with the claim of appellee. The
agreement being vague and ambiguous, the doctrine of part performance cannot
therefore be invoked to take this case out of the operation of the statue.
"Obviously, there can be no part performance until there is a definite and complete
agreement between the parties. In order to warrant the specific enforcement of a parol
contract for the sale of land, on the ground of part performance, all the essential terms
of the contract must be established by competent proof, and shown to be definite,
certain, clear, and unambiguous.
"And this clearness and definiteness must extend to both the terms and the subject-
matter of the contract.
"The rule that a court will not specifically enforce a contract for the sale of land unless
its terms have been definitely understood and agreed upon by the parties, and
established by the evidence, is especially applicable to oral contracts sought to be
enforce on the ground of part performance. An oral contract, to be enforced on this
ground, must at least have that degree of certainty which is required of written
contracts sought to be specifically enforced.
"The parol contract must be sufficiently clear and definite to render the precise acts
which are to be performed thereunder clearly ascertainable. Its terms must be so clear
and complete as to allow no reasonable doubt respecting its enforcement according to
the understanding of the parties." (101 A. L. R., pp. 950-951)
"In this jurisdiction, as in the United States, the existence of an oral agreement or
understanding such as that alleged in the complaint in the case at bar cannot be
maintained on vague, uncertain, and indefinite testimony, against the reasonable
presumption that prudent men who enter into such contracts will execute them in
writing, and comply with the formalities prescribed by law for the creation of a valid
mortgage. But where the evidence as to the existence of such an understanding or
agreement is clear, convincing, and satisfactory, the same broad principles of equity
operate in this jurisdiction as in the United States to compel the parties to live up to the
terms of their contract." (Cuyugan v. Santos, 34 Phil., 100, 101.)
There is another flaw that we find in the decision of the court a quo. During the trial of
this case, counsel for appellants objected the admission of the testimony of plaintiff
Bernardo Babao and that of his mother Cleofe Perez as to what occurred between
Celestina Perez and Santiago Babao with regard to the agreement on the ground that
their testimony was prohibited by section 26 (c) of Rule 123 of the Rules of Court. This
rule prohibits parties or assignors of parties to a case, or persons in whose behalf a
case is prosecuted, against an executor or administrator of a deceased person upon a
claim or demand against the estate of such deceased person from testifying as to any
matter of fact occurring before the death of such deceased person. But the trial court
overruled the opposition saying that said rule did not apply where the complaint
against the estate of a deceased person alleges fraud, citing the case of Ong Chua v.
Carr, 53 Phil., 980. Here again the court is in error because if in that case the witness
was allowed to testify it was because the existence of fraud was first established by
sufficient and competent evidence. Here, however, the alleged fraud is predicated
upon the existence of the agreement itself which violates the rule of petitio principii.
Evidently, the fraud to exist must be established by evidence aliunde and not by the
same evidence which is to sought to be prevented. The infringement of the rule is
evident.
". . . The reason for this rule is that if death has closed the lips of one party, the policy
of the law is to close the lips of the other. Another reason is that the temptation to
falsehood and concealment in such cases is considered too great to allow the
surviving party to testify in his own behalf. Accordingly, the incompetency applies
whether the deceased died before or after the commencement of the action against
him, if at the time the testimony was given he was dead and cannot disprove it, since
the reason for the prohibition, which is to discourage perjury, exists in both instances."
(Moran, Comments on the Rules of Court, Vol. 3, 1952 Ed., p. 234.)
Having reached the conclusion that all the parol evidence of appellee was submitted in
violation of the Statute of Frauds, or of the rule which prohibits testimony against
deceased persons, we find unnecessary to discuss the other issues raised in
appellants brief.
Wherefore, the decision appealed from is reversed, and the case is dismissed, with
costs against appellee.
CABAGUE VS AUXILIO
According to the Rules of Court parol evidence is not admissible to prove an
agreement made upon the consideration of marriage other than a mutual promise to
marry.1 This litigation calls for application of that rule.
In the justice of the peace court of Basud, Camarines Norte, Felipe Cabague and his
son Geronimo sued the defendant Matias Auxilio and his daughter Socorro to recover
damages resulting from defendants' refusal to carry out the previously agreed marriage
between Socorro and Geronimo.
The complaint alleged, in short: (a) that defendants promised such marriage to
plaintiffs, provided the latter would improve the defendants' house in Basud and spend
for the wedding feast and the needs of the bride; (b) that relying upon such promises
plaintiffs made the improvement and spent P700; and (c) that without cause
defendants refused to honor their pledged word.
The defendants moved to dismiss, arguing that the contract was oral, unenforceable
under the rule of evidence hereinbefore mentioned. And the court dismissed the case.
On appeal to the Court of First Instance, the plaintiffs reproduced their complaint and
defendants reiterated their motion to dismiss. From an order of dismissal this appeal
was perfected in due time and form.
It should be observed preliminarily that, under the former rules of procedure, when the
complaint did not state whether the contract sued on was in writing or not, the statute
of frauds could be no ground for demurrer. Under the new Rules "defendant may now
present a motion to dismiss on the ground that the contract was not in writing, even if
such fact is not apparent on the face of the complaint. The fact may be proved by him."
(Moran Rules of Court 2d ed. p. 139 Vol. I.)
There is no question here that the transaction was not in writing. The only issue is
whether it may be proved in court.
The understanding between the plaintiffs on one side and the defendants on the other,
really involves two kinds of agreement. One, the agreement between Felipe Cabague
and the defendants in consideration of the marriage of Socorro and Geronimo.
Another, the agreement between the two lovers, as "a mutual promise to marry". For
breach of that mutual promise to marry, Geronimo may sue Socorro for damages. This
is such action, and evidence of such mutual promise is admissible. 2 However Felipe
Cabague's action may not prosper, because it is to enforce an agreement in
consideration of marriage. Evidently as to Felipe Cabague and Matias Auxilio this
action could not be maintained on the theory of "mutual promise to marry". 3 Neither
may it be regarded as action by Felipe against Socorro "on a mutual promise to
marry."
Consequently, we declare that Geronimo may continue his action against Socorro for
such damages as may have resulted from her failure to carry out their mutual
matrimonial promises.
Wherefore this expediente will be returned to the lower court for further proceedings in
accordance with this opinion. So ordered.
YUVIVIENCO VS DACUYCUUY
Petition for certiorari and prohibition to declare void for being in grave abuse of
discretion the orders of respondent judge dated November 2, 1978 and August 29,
1980, in Civil Case No. 5759 of the Court of First Instance of Leyte, which denied the
motion filed by petitioners to dismiss the complaint of private respondents for specific
performance of an alleged agreement of sale of real property, the said motion being
based on the grounds that the respondents' complaint states no cause of action and/or
that the claim alleged therein is unenforceable under the Statute of Frauds.
Finding initially prima facie merit in the petition, We required respondents to answer
and We issued a temporary restraining order on October 7, 1980 enjoining the
execution of the questioned orders.
In essence, the theory of petitioners is that while it is true that they did express
willingness to sell to private respondents the subject property for P6,500,000 provided
the latter made known their own decision to buy it not later than July 31, 1978, the
respondents' reply that they were agreeable was not absolute, so much so that when
ultimately petitioners' representative went to Cebu City with a prepared and duly
signed contract for the purpose of perfecting and consummating the transaction,
respondents and said representative found variance between the terms of payment
stipulated in the prepared document and what respondents had in mind, hence the
bankdraft which respondents were delivering to petit loners' representative was
returned and the document remained unsigned by respondents. Hence the action
below for specific performance.
To be more specific, the parties do not dispute that on July 12, 1978, petitioners, thru a
certain Pedro C. Gamboa, sent to respondents the following letter:
Mr. Yao King Ong
Life Bakery
Tacloban City
Dear Mr. Yao: 1wph1.t
This refers to the Sotto property (land and building) situated at Tacloban City. My
clients are willing to sell them at a total price of P6,500,000.00.
While there are other parties who are interested to buy the property, I am giving you
and the other occupants the preference, but such priority has to be exercised within a
given number of days as I do not want to lose the opportunity if you are not
interested. I am therefore gluing you and the rest of the occupants until July 31, 1978
within it which to decide whether you want to buy the property. If I do not hear from you
by July 31, I will offer or close the deal with the other interested buyer.
Thank you so much for the hospitality extended to me during my last trip to Tacloban,
and I hope to hear from you very soon.
Reacting to the foregoing letter, the following telegram was sent by "Yao King Ong &
tenants" to Atty. Pedro Gamboa in Cebu City:
Atty. Pedro Gamboa
Room 314, Maria Cristina Bldg.
Osmea Boulevard, Cebu City
Reurlet dated July 12 inform Dra. Yuvienco we agree to buy property proceed
Tacloban to negotiate details 1wph1.t
Likewise uncontroverted is the fact that under date of July 27, 1978, Atty. Gamboa
wired Yao King Ong in Tacloban City as follows:
NLT
YAO KING ONG
LIFE BAKERY
TACLOBAN CITY
PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING WITH CONTRACT
PREPARE PAYMENT BANK DRAFT
Now, Paragraph 10 of the complaint below of respondents alleges: 1wph1.t
10. That on August 1, 1978, defendant Pedro Gamboa arrived Tacloban City bringing
with him the prepared contract to purchase and to sell referred to in his telegram dated
July 27, 1978 (Annex 'D' hereof) for the purpose of closing the transactions referred to
in paragraphs 8 and 9 hereof, however, to the complete surprise of plaintiffs, the
defendant (except def. Tacloban City Ice Plant, Inc.) without giving notice to plaintiffs,
changed the mode of payment with respect to the balance of P4,500,000.00 by
imposing upon plaintiffs to pay same amount within thirty (30) days from execution of
the contract instead of the former term of ninety (90) days as stated in paragraph 8
hereof. (Pp. 10-11, Record.)
Additionally and to reenforce their position, respondents alleged further in their
complaint: 1wph1.t
8. That on July 12, 1978, defendants (except defendant Tacloban City Ice Plant, Inc.)
finally sent a telegram letter to plaintiffs- tenants, through same Mr. Yao King Ong,
notifying them that defendants are willing to sell the properties (lands and building) at a
total price of P6,500,000.00, which herein plaintiffs-tenants have agreed to buy the
said properties for said price; a copy of which letter is hereto attached as integral part
hereof and marked as Annex 'C', and plaintiffs accepted the offer through a telegram
dated July 25, 1978, sent to defendants (through defendant Pedro C. Gamboa), a copy
of which telegram is hereto attached as integral part hereof and marked as Annex C-1
and as a consequence hereof. plaintiffs except plaintiff Tacloban - merchants' Realty
Development Corporation) and defendants (except defendant Tacloban City Ice Plant.
Inc.) agreed to the following terms and conditions respecting the payment of said
purchase price, to wit: 1wph1.t
P2,000,000.00 to be paid in full on the date of the execution of the contract; and the
balance of P4,500,000.00 shall be fully paid within ninety (90) days thereafter;
9. That on July 27, 1978, defendants sent a telegram to plaintiff- tenants, through the
latter's representative Mr. Yao King Ong, reiterating their acceptance to the agreement
referred to in the next preceding paragraph hereof and notifying plaintiffs-tenants to
prepare payment by bank drafts; which the latter readily complied with; a copy of which
telegram is hereto attached as integral part hereof and marked as Annex "D"; (Pp 49-
50, Record.)
It was on the basis of the foregoing facts and allegations that herein petitioners filed
their motion to dismiss alleging as main grounds: 1wph1.t
I. That plaintiff, TACLOBAN MERCHANTS' REALTY DEVELOPMENT
CORPORATION, amended complaint, does not state a cause of action and the claim
on which the action is founded is likewise unenforceable under the provisions of the
Statute of Frauds.
II. That as to the rest of the plaintiffs, their amended complaint does not state a cause
of action and the claim on which the action is founded is likewise unenforceable under
the provisions of the Statute of Frauds. (Page 81, Record.)
With commendable knowledgeability and industry, respondent judge ruled negatively
on the motion to dismiss, discoursing at length on the personality as real party-in-
interest of respondent corporation, while passing lightly, however, on what to Us are
the more substantial and decisive issues of whether or not the complaint sufficiently
states a cause of action and whether or not the claim alleged therein is unenforceable
under the Statute of Frauds, by holding thus: 1wph1.t
The second ground of the motion to dismiss is that plaintiffs' claim is unenforceable
under the Statute of Frauds. The defendants argued against this motion and asked the
court to reject the objection for the simple reason that the contract of sale sued upon in
this case is supported by letters and telegrams annexed to the complaint and other
papers which will be presented during the trial. This contention of the defendants is not
well taken. The plaintiffs having alleged that the contract is backed up by letters and
telegrams, and the same being a sufficient memorandum, the complaint states a cause
of action and they should be given a day in court and allowed to substantiate their
allegations (Paredes vs. Espino, 22 SCRA 1000).
To take a contract for the sale of land out of the Statute of Frauds a mere note or
memorandum in writing subscribed by the vendor or his agent containing the name of
the parties and a summary statement of the terms of the sale either expressly or by
reference to something else is all that is required. The statute does not require a formal
contract drawn up with technical exactness for the language of Par. 2 of Art. 1403 of
the Philippine Civil Code is' ... an agreement ... or some note or memorandum thereof,'
thus recognizing a difference between the contract itself and the written evidence
which the statute requires (Berg vs. Magdalena Estate, Inc., 92 Phil. 110; Ill Moran,
Comments on the Rules of Court, 1952 ed. p. 187). See also Bautista's Monograph on
the Statute of Frauds in 21 SCRA p. 250. (Pp. 110-111, Record)
Our first task then is to dwell on the issue of whether or not in the light of the foregoing
circumstances, the complaint in controversy states sufficiently a cause of action. This
issue necessarily entails the determination of whether or not the plaintiffs have alleged
facts adequately showing the existence of a perfected contract of sale between herein
petitioners and the occupant represented by respondent Yao King Ong.
In this respect, the governing legal provision is, of course, Article 1319 of the Civil
Code which provides:1wph1.t
ART. 1319. Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are constitute the contract. The offer must be
certain the acceptance absolute. A qualified acceptance constitute a counter-offer.
Acceptance made by letter or telegram does not bind offerer except from the time it
came to his knowledge. The contract, in a case, is presumed to have been entered into
in the place where the offer was made.
simply says "we agree to buy property". It does not necessarily connote acceptance of
the price but instead suggests that the details were to be subject of negotiation.
Respondents now maintain that what the telegram refers to as "details" to be
"negotiated" are mere "accidental elements", not the essential elements of the
contract. They even invite attention to the fact that they have alleged in their complaint
(Par. 6) that it was as early as "in the month of October, 1977 (that) negotiations
between plaintiffs and defendants for the purchase and sale (in question) were
made, thus resulting to offers of same defendants and counter-offer of plaintiffs". But to
Our mind such alleged facts precisely indicate the failure of any meeting of the minds
of the parties, and it is only from the letter and telegrams above-quoted that one can
determine whether or not such meeting of the minds did materialize. As We see it,
what such allegations bring out in bold relief is that it was precisely because of their
past failure to arrive at an agreement that petitioners had to put an end to the
uncertainty by writing the letter of July 12, 1978. On the other hand, that respondents
were all the time agreeable to buy the property may be conceded, but what impresses
Us is that instead of "absolutely" accepting the "certain" offer if there was one of
the petitioners, they still insisted on further negotiation of details. For anyone to read in
the telegram of Yao that they accepted the price of P6,500,000.00 would be an
inference not necessarily warranted by the words "we agree to buy" and "proceed
Tacloban to negotiate details". If indeed the details being left by them for further
negotiations were merely accidental or formal ones, what need was there to say in the
telegram that they had still "to negotiate (such) details", when, being unessential per
their contention, they could have been just easily clarified and agreed upon when Atty.
Gamboa would reach Tacloban?

In the instant case, We can lay aside, for the moment, petitioners' contention that the
letter of July 12, 1978 of Atty. Pedro C. Gamboa to respondents Yao King Ong and his
companions constitute an offer that is "certain", although the petitioners claim that it
was a mere expression of willingness to sell the subject property and not a direct offer
of sale to said respondents. What We consider as more important and truly decisive is
what is the correct juridical significance of the telegram of respondents instructing Atty.
Gamboa to "proceed to Tacloban to negotiate details." We underline the word
"negotiate" advisedly because to Our mind it is the key word that negates and makes it
legally impossible for Us to hold that respondents' acceptance of petitioners' offer,
assuming that it was a "certain" offer indeed, was the "absolute" one that Article 1319
above-quoted requires.
Dictionally, the implication of "to negotiate" is practically the opposite of the Idea that
an agreement has been reached. Webster's Third International Dictionary, Vol. II (G. &
C. Merriam Co., 1971 Philippine copyright) gives the meaning of negotiate as "to
communicate or confer with another so as to arrive at the settlement of some matter;
meet with another so as to arrive through discussion at some kind of agreement or
compromise about something; to arrange for or bring about through conference or
discussion; work at or arrive at or settle upon by meetings and agreements or
compromises ". Importantly, it must be borne in mind that Yao King Ong's telegram
Anent the telegram of Atty. Gamboa of July 27, 1978, also quoted earlier above, We
gather that it was in answer to the telegram of Yao. Considering that Yao was in
Tacloban then while Atty. Gamboa was in Cebu, it is difficult to surmise that there was
any communication of any kind between them during the intervening period, and none
such is alleged anyway by respondents. Accordingly, the claim of respondents in
paragraph 8 of their complaint below that there was an agreement of a down payment
of P2 M, with the balance of P4.5M to be paid within 90 days afterwards is rather
improbable to imagine to have actually happened.
Respondents maintain that under existing jurisprudence relative to a motion to dismiss
on the ground of failure of the complaint to state a cause of action, the movant-
defendant is deemed to admit the factual allegations of the complaint, hence,
petitioners cannot deny, for purposes of their motion, that such terms of payment had
indeed been agreed upon.
While such is the rule, those allegations do not detract from the fact that under Article
1319 of the Civil Code above-quoted, and judged in the light of the telegram-reply of
Yao to Atty. Gamboa's letter of July 12, 1978, there was not an absolute acceptance,
hence from that point of view, petitioners' contention that the complaint of respondents
state no cause of action is correct.
Nonetheless, the alleged subsequent agreement about the P2 M down and P4.5 M in
90 days may at best be deemed as a distinct cause of action. And placed against the
insistence of petitioners, as demonstrated in the two deeds of sale taken by Atty.
Gamboa to Tacloban, Annexes 9 and 10 of the answer of herein respondents, that
there was no agreement about 90 days, an issue of fact arose, which could warrant a
trial in order for the trial court to determine whether or not there was such an
agreement about the balance being payable in 90 days instead of the 30 days
stipulated in Annexes 9 and 10 above-referred to. Our conclusion, therefore, is that
although there was no perfected contract of sale in the light of the letter of Atty.
Gamboa of July 12, 1978 and the letter-reply thereto of Yao; it being doubtful whether
or not, under Article 1319 of the Civil Code, the said letter may be deemed as an offer
to sell that is "certain", and more, the Yao telegram is far from being an "absolute"
acceptance under said article, still there appears to be a cause of action alleged in
Paragraphs 8 to 12 of the respondents' complaint, considering it is alleged therein that
subsequent to the telegram of Yao, it was agreed that the petitioners would sell the
property to respondents for P6.5 M, by paving P2 M down and the balance in 90 days
and which agreement was allegedly violated when in the deeds prepared by Atty.
Gamboa and taken to Tacloban, only 30 days were given to respondents.
But the foregoing conclusion is not enough to carry the day for respondents. It only
brings Us to the question of whether or not the claim for specific performance of
respondents is enforceable under the Statute of Frauds. In this respect, We man, view
the situation at hand from two angles, namely, (1) that the allegations contained in
paragraphs 8 to 12 of respondents' complaint should be taken together with the
documents already aforementioned and (2) that the said allegations constitute a
separate and distinct cause of action. We hold that either way We view the situation,
the conclusion is inescapable e that the claim of respondents that petitioners have
unjustifiably refused to proceed with the sale to them of the property v in question is
unenforceable under the Statute of Frauds.
It is nowhere alleged in said paragraphs 8 to 12 of the complaint that there is any
writing or memorandum, much less a duly signed agreement to the effect that the price
of P6,500,000 fixed by petitioners for the real property herein involved was agreed to
be paid not in cash but in installments as alleged by respondents. The only
documented indication of the non-wholly-cash payment extant in the record is that
stipulated in Annexes 9 and 10 above-referred to, the deeds already signed by the
petitioners and taken to Tacloban by Atty. Gamboa for the signatures of the
respondents. In other words, the 90-day term for the balance of P4.5 M insisted upon
by respondents choices not appear in any note, writing or memorandum signed by
either the petitioners or any of them, not even by Atty. Gamboa. Hence, looking at the
pose of respondents that there was a perfected agreement of purchase and sale
between them and petitioners under which they would pay in installments of P2 M
down and P4.5 M within ninety 90) days afterwards it is evident that such oral contract
involving the "sale of real property" comes squarely under the Statute of Frauds
(Article 1403, No. 2(e), Civil Code.)
On the other score of considering the supposed agreement of paying installments as
partly supported by the letter and t telegram earlier quoted herein, His Honor declared
with well studied ratiocination, albeit legally inaccurate, that: 1wph1.t
The next issue relate to the State of Frauds. It is contended that plaintiffs' action for
specific performance to compel the defendants to execute a good and sufficient
conveyance of the property in question (Sotto land and building) is unenforceable
because there is no other note memorandum or writing except annexes "C", "C-l" and
"D", which by themselves did not give birth to a contract to sell. The argument is not
well founded. The rules of pleading limit the statement of the cause of action only to
such operative facts as give rise to the right of action of the plaintiff to obtain relief
against the wrongdoer. The details of probative matter or particulars of evidence,
statements of law, inferences and arguments need not be stated. Thus, Sec. 1 of Rule
8 provides that 'every pleading shall contain in a methodical and logical form, a plain
concise and direct statement of the ultimate facts on which the party pleading relies for
his claim or defense, as the case may be, omitting the statement of mere evidentiary
facts.' Exhibits need not be attached. The contract of sale sued upon in this case is
supported by letters and telegrams annexed to the complaint and plaintiffs have
announced that they will present additional evidences during the trial to prove their
cause of action. The plaintiffs having alleged that the contract is backed up by letters
and telegrams, and the same being sufficient memorandum, the complaint states a
cause of action and they should be given their day in court and allowed to substantiate
their allegations (Parades vs. Espino, 22 SCRA 1000). (Pp 165-166, Record.)
The foregoing disquisition of respondent judge misses at least two (2) juridical
substantive aspects of the Statute of Frauds insofar as sale of real property is
concerned. First, His Honor assumed that the requirement of perfection of such kind of
contract under Article 1475 of the Civil Code which provides that "(t)he contract of sale
is perfected at the moment there is a meeting of the minds upon the thing which is the
object of the contract and upon the price", the Statute would no longer apply as long as
the total price or consideration is mentioned in some note or memorandum and there is
no need of any indication of the manner in which such total price is to be paid.
We cannot agree. In the reality of the economic world and the exacting demands of
business interests monetary in character, payment on installments or staggered
payment of the total price is entirely a different matter from cash payment, considering
the unpredictable trends in the sudden fluctuation of the rate of interest. In other words,
it is indisputable that the value of money - varies from day to day, hence the
indispensability of providing in any sale of the terms of payment when not expressly or
impliedly intended to be in cash.
Thus, We hold that in any sale of real property on installments, the Statute of Frauds
read together with the perfection requirements of Article 1475 of the Civil Code must
be understood and applied in the sense that the idea of payment on installments must
be in the requisite of a note or memorandum therein contemplated. Stated otherwise,
the inessential elements" mentioned in the case of Parades vs. Espino, 22 SCRA
1000, relied upon by respondent judge must be deemed to include the requirement just
discussed when it comes to installment sales. There is nothing in the monograph re
the Statute of Frauds appearing in 21 SCRA 250 also cited by His Honor indicative of
any contrary view to this ruling of Ours, for the essence and thrust of the said
monograph refers only to the form of the note or memorandum which would comply
with the Statute, and no doubt, while such note or memorandum need not be in one
single document or writing and it can be in just sufficiently implicit tenor, imperatively
the separate notes must, when put together', contain all the requisites of a perfected
contract of sale. To put it the other way, under the Statute of Frauds, the contents of
the note or memorandum, whether in one writing or in separate ones merely indicative
for an adequate understanding of all the essential elements of the entire agreement,
may be said to be the contract itself, except as to the form.
Secondly, We are of the considered opinion that under the rules on proper pleading,
the ruling of the trial court that, even if the allegation of the existence of a sale of real
property in a complaint is challenged as barred from enforceability by the Statute of
Frauds, the plaintiff may simply say there are documents, notes or memoranda without
either quoting them in or annexing them to the complaint, as if holding an ace in the
sleeves is not correct. To go directly to the point, for Us to sanction such a procedure
is to tolerate and even encourage undue delay in litigation, for the simple reason that
to await the stage of trial for the showing or presentation of the requisite documentary
proof when it already exists and is asked to be produced by the adverse party would
amount to unnecessarily postponing, with the concomitant waste of time and the
prolongation of the proceedings, something that can immediately be evidenced and
thereby determinable with decisiveness and precision by the court without further
delay.
In this connection, Moran observes that unlike when the ground of dismissal alleged is
failure of the complaint to state a cause of action, a motion to dismiss invoking the
Statute of Frauds may be filed even if the absence of compliance does not appear an
the face of the complaint. Such absence may be the subject of proof in the motion
stage of the proceedings. (Moran, Comment on the Rules of Court, Vol. 1, p. 494,
1979 ed.) It follows then that when such a motion is filed and all the documents
available to movant are before the court, and they are insufficient to comply with the
Statute, it becomes incumbent upon the plaintiff, for the reasons of policy We have just'
indicated regarding speedy administration of justice, to bring out what note or
memorandum still exists in his possession in order to enable the court to expeditiously
determine then and there the need for further proceedings. In other words, it would be
inimical to the public interests in speedy justice for plaintiff to play hide and seek at his
own convenience, particularly, when, as is quite apparent as in the instant case that
chances are that there are no more writings, notes or memoranda of the installment
agreement alleged by respondents. We cannot divine any reason why any such
document would be withheld if they existed, except the unpermissible desire of the
respondents to force the petitioners to undergo the ordeals, time, effort and expenses
of a futile trial.
In the foregoing premises, We find no alternative than to render judgment in favor of
petitioners in this certiorari and prohibition case. If at all, appeal could be available if
the petitioners subjected themselves to the trial ruled to be held by the trial court. We
foresee even at this point, on the basis of what is both extant and implicit in the
records, that no different result can be probable. We consider it as sufficiently a grave
abuse of discretion warranting the special civil actions herein the failure of respondent
judge to properly apply the laws on perfection of contracts in relation to the Statute of
Frauds and the pertinent rules of pleading and practice, as We have discussed above.
ACCORDINGLY, the impugned orders of respondent judge of November 2, 1978 and
August 29, 1980 are hereby set aside and private respondents' amended complaint,
Annex A of the petition, is hereby ordered dismissed and the restraining order
heretofore issued by this Court on October 7, 1980 is declared permanent. Costs
against respondents
BISAYA LAND VS SANCHEZ
This is a petition for certiorari to review the decision * of respondent Intermediate
Appellate Court, dated 25 April 1986, in AC-G.R. No. CV-01300 which affirmed the
decision ** of the Regional Trial Court, 7th Judicial Region, Branch XII, Cebu City,
dated 14 February 1983, in Civil Case No. R-18830 which was a suit for Specific
Performance with Preliminary Injunction and Damages.
Petitioner Bisaya Land Transportation Company, Inc. (BISTRANCO, for short) has
been engaged in the shipping business, operating several passenger-cargo vessels,
and among the ports of call of these vessels has been Butuan City. As early as 1954,
private respondent Marciano Sanchez (Sanchez, for short) was an employee of
BISTRANCO, specifically, a quartermaster in one of its vessels, In 1959, he ceased to
be an employee as he engaged in stevedoring services in the port of Butuan City and
rendered steverdoring services for the vessels of BISTRANCO. 1
In May 1975, Sanchez was appointed by BISTRANCO as shipping agent in Butuan
City for the vessel M/V Don Mariano. 2 The new Butuan City Agent 3 referred to in the
letter "Exhibit "C" was Marciano Sanchez. Later, on 12 March 1976, when
BISTRANCO was under receivership, Sanchez was appointed by its Receiver, Atty.
Adolfo V. Amor, as acting shipping agent, also for M/V Doa Remedies, in addition to
M/V Doa Filomena, in the port of Butuan City "pending the execution of the formal
contract of agency. 4 When Sanchez was constituted as acting shipping agent, he
received the same commission as his predecessor, one ONG YUI who received 10%
for all freight and passenger revenues coming from Butuan City and 5 % for all freight
going to Butuan. 5
Thereafter, or on 27 July 1976, a formal Contract of Agency, marked as Exhibit "F",
was executed between BISTRANCO, represented by Receiver Atty. Adolfo V. Amor
and Marciano C. Sanchez, represented by his authorized representative Exequiel
Aranas. On 30 July 1976, after Sanchez found that Paragraph 16 of the Contract of
agency was quite prejudicial to him, he executed with BISTRANCO a Supplemental
Shipping Agency Contract, marked as Exhibit "G", which was duly signed by Receiver
Atty. Adolfo V. Amor on behalf of BISTRANCO and Marciano C. Sanchez
himself. 6 But, both the Contract of Agency and the Supplemental Shipping Agency
Contract were never submitted by Atty. Adolfo Amor to the receivership court for its
approval.
By virtue of the Contract of Agency and the Supplemental Shipping Agency Contract
(hereinafter referred to as Contracts), Sanchez performed his duties as shipping agent
of BISTRANCO, and he received his corresponding commissions as such shipping
agent. Pursuant to the Contracts, Sanchez leased a parcel of land owned by Jose S.
Mondejar which was used as the wharf and berthing facilities of BISTRANCO. 7 At an
expense of more than P100,000.00, Sanchez constructed the wharf on the land he
leased and the wharf was used to facilitate the loading and unloading of cargoes of the
BISTRANCO vessels at the port of Butuan City from 1976 to December 1979.
Sanchez also constructed a bodega at his wharf for use in connection with the
shipping business of BISTRANCO. He constructed an office for the agency and, as of
December 1979, he had an office force of 13 employees, all paid and maintained by
him. Sanchez operated six (6) cargo trucks and one (1) jeep for the service of the
shipping agency. As shipping agent, Sanchez put up billboards and other forms of
advertisement to enhance the shipping business of BISTRANCO. He established good
business relations with the business community of Butuan City. 8 In these endeavors,
Sanchez succeeded in increasing the volume of the shipping business of BISTRANCO
at the Butuan City port, so much so that his earnings on freight alone increased from
an average of P8,535.00 a month in 1975 to an average of about P32,000.00 a month
in the last seven months of 1979. 9
While the shipping business of BISTRANCO in Butuan City flourished, evidently to the
mutual benefit of both parties, on 26 December 1979, co-petitioner Benjamin G. Roa,
as Executive Vice-President of BISTRANCO, wrote Sanchez a letter 10 advising him
that, effective 1 January 1980, BISTRANCO would commence operating its branch
office in Butuan City. Prior to this, on 11 December 1979, Sanchez was invited to
attend a meeting of the Board of Directors of BISTRANCO wherein he was told by co-
petitioner Antonio V. Cuenco that the Board was to open a branch office in Butuan City
and he was asked what would be his proposals. Sanchez submitted his proposals in
writing, marked as Exhibit "NN", but these were not acceptable to BISTRANCO. 11
Realizing that the letter, marked as Exhibit "FF", was in effect a repudiation of the
Contracts, Sanchez filed an action for specific performance with preliminary injunction
and damages with the Regional Trial Court of Cebu City on 28 December 1979.
Pursuant to the letter (Exhibit "FF"), BISTRANCO actually opened and operated a
branch office in Butuan City on 15 January 1980. BISTRANCO through its new
representative contacted the shippers in Butuan City and neighboring towns, advising
them to transact their business directly with its new branch office in Butuan City. Under
these circumstances, the business of Sanchez, as shipping agent of BISTRANCO in
Butuan City, was seriously impaired and undermined He could not solicit as many
passengers as he used to, because the passenger tickets issued to him by
BISTRANCO were limited. The cargoes solicited by Sanchez were loaded on a
"chance basis" because those that were solicited by the branch office were given
priority. 12
After due hearing and their respective memorandum filed, the trial court rendered
judgment in favor of Sanchez, the dispositive portion of which is quoted hereunder: 13
WHEREFORE, judgment is hereby rendered declaring the contracts,
Exhibits "F" and "G", as valid and binding between the plaintiff and
defendant BISTRANCO up to its expiry date on July 27, 1981, and
ordering the defendant BISTRANCO to pay the plaintiff the total sum
of FIVE HUNDRED EIGHTY EIGHT THOUSAND PESOS
(P588,000.00) in concept of unearned commissions as well as
damages, with interest at the legal rate counted from July 28, 1981
up to the time the amount is fully paid, and the further sum of
P15,000.00 as attorney's fees, and the costs of this action.
Thereafter, BISTRANCO appealed to the Court of Appeals which, as heretofore stated,
affirmed the decision of the trial court in toto.
Hence this Petition for certiorari brought to this Court, with the petitioners raising the
following issues: 14
I
CAN A COURT APPOINTED RECEIVER VALIDLY ENTER INTO A CONTRACT
WITHOUT COURT APPROVAL?
II
IS THE OPENING BY BISTRANCO OF A BRANCH OFFICE IN BUTUAN CITY A
VIOLATION OF THE CONTRACT OF AGENCY AND SUPPLEMENTAL SHIPPING
AGENCY CONTRACT EXHIBITS "F" and "G") ASSUMING THEM TO BE VALID?
III
WHAT EFFECT DID THE WORKING AGREEMENTS (EXHIBITS "S" and "U") HAVE
ON AFORESAID QUESTIONED CONTRACTS?
IV
IS THE AWARD FOR UNEARNED COMMISSION AND DAMAGES JUSTIFIED?
The general powers of a court-appointed receiver are provided in Section 7, Rule 59 of
the Rules of Court. Under such rule, the receiver is "subject to the control of the court
in which the action is pending" and he can "generally do such acts respecting the
property as the court may authorize". The act of Receiver Amor in entering into a
contract of agency with Sanchez is not one of the acts specifically allowed in the
mentioned rule. While such act of Amor may be arguably implied from the power of the
receiver to "take and keep possession of the property in controversy", and that the act
of Amor is covered by the broad phrase that a receiver can "generally do such acts
respecting the property as the court may authorize", still, it is necessary that the acts of
the receiver have the approval or authorization of the court which appointed him as a
receiver. As held in one case, 15 a court-appointed receiver cannot validly enter into a
contract without the approval of the court.
What then is the status of the Contracts which Receiver Amor entered into with
Sanchez, without the approval of the court which appointed him receiver? Even the
petitioners noticeably waver as to the exact status of these Contracts. The petitioners
allege in their Memorandum 16 submitted to this Court that they are void contracts
under Article 1409(l) of the Civil Code, whereas, in their Petition, 17 they labelled the
contracts as unenforceable under Article 1403(l) of the Civil Code.
The determination, therefore, of whether the questioned contracts are void or merely
unenforceable is important, because of the settled distinction that a void and inexistent
contract can not be ratified and become enforceable, whereas an unenforceable
contract may still be ratified and, thereafter, enforced.
The petitioners allege that the Contracts are void, citing Article 1409(l) of the Civil
Code which provides that contracts whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy, are inexistent and void from the
beginning. In the case at bar, the contracts of agency were entered into for the
management and operation of BISTRANCO's business in Butuan City. Said Contracts
necessarily imposed obligations and liabilities on the contracting parties, thereby
affecting the disposition of the assets and business of the company under receivership.
But a perusal of the Contracts in question would show that there is nothing in their
cause, object or purpose which renders them void. The purpose of the Contracts was
to create an agency for BISTRANCO with Marciano Sanchez as its agent in Butuan
City. Even as to the other provisions of the Contracts, there is nothing in their cause or
object which can be said as contrary to law, morals, good customs, public order or
public policy so as to render them void.
On the other hand, paragraph 1. Article 1403 of the Civil Code provides that contracts
"entered into in the name of another person by one who has been given no authority or
legal representation, or who has acted beyond his powers" are unenforceable, unless
they are ratified.
In the case at bar, it is undisputed that Atty. Adolfo Amor was entrusted, as receiver,
with the administration of BISTRANCO and it business. But the act of entering into a
contract is one which requires the authorization of the court which appointed him
receiver. Consequently, the questioned Contracts can rightfully be classified as
unenforceable for having been entered into by one who had acted beyond his powers,
due to Receiver Amor's failure to secure the court's approval of said Contracts.
These unenforceable Contracts were nevertheless deemed ratified in the case at bar,
based upon the facts and circumstances on record which have led this Court to
conclude that BISTRANCO had actually ratified the questioned Contracts.
Private respondent Sanchez filed his complaint in the lower court on 28 December
1979. But on 10 January 1980, copetitioner Benjamin G. Roa, as Executive Vice-
President of BISTRANCO, still sent Sanchez three (3) separate letters with the
following contents: (3) reducing his passage commission from 10%, as he used to
receive in the previous years, to 7-1/2% "as stated in the agency contract dated 27
July 1976, 18 (2) advising Sanchez that in view of "his failure to post a bond or such
other securities acceptable to the company in the sum of P5,000.00 pursuant to par. 8
of the Contract executed by Sanchez the plaintiff with BISTRANCO on 27 July 1976,
we are recalling all unused passage tickets issued your agency" and reminding him
(Sanchez) also that "pursuant to par. 2 of aforementioned Contract, solicitation of
cargo and passengers shall be undertaken by you strictly in accordance with the
scheduled rates of the Company; 19 and (3) informing Sanchez that "we
(petitioners) are abiding strictly with the terms of the contracts executed between
Marciano C Sanchez, and Atty. Adolfo V Amor in behalf of BISTRANCO, etc. etc. 20
The three (3) letters of Benjamin G. Roa in effect recognized and gave efficacy to the
Contracts in question. The declaration of Benjamin G. Roa that BISTRANCO did not
have any knowledge about the Contracts before the complaint was filed on 28
December 1979 is contradicted by his own testimony that, as early as 14 December
1979, he was already looking for the contract, after he saw Exhibit "NN", wherein
Sanchez requested the company "to abide with the terms of the contract which will
expire on July 1981; 21 Besides, the pretended lack which will expire on July 1981 of
knowledge of Benjamin G. Roa can not be equated with BISTRANCO's. It should be
noted that Roa started to work for BISTRANCO only on 27 April 1979, 22 whereas, the
Contracts were executed in 1976.
The people who were more in a position to know about the Contracts, like the
company officers and members of the board of directors at the time the Contracts were
entered into, especially Antonio V. Cuenco, were never presented as witnesses. Aside
from this, the company cannot deny its ratification of the Contracts even before the
time of Benjamin G. Roa, because when Atty. Fulveo Pelaez succeeded Atty. Adolfo
Amor as Receiver, he was represented by BISTRANCO's shipping manager as having
taken cognizance of these Contracts and sanctioned the acts of Sanchez as shipping
agent of BISTRANCO in Butuan City. This is shown by a letter, 23 dated 15 February
1977, written by Capt. Federico Reyes, 24 the shipping manager of BISTRANCO at that
time. The letter states that "the Receiver (Atty. Fulveo Pelaez) maintains that the
previous agency contract remains and (sic) basically the same except that the rates of
the agency commission were modified.
Furthermore, it is clear that BISTRANCO received material benefits from the contracts
of agency of Sanchez, based upon the monthly statements of income of BISTRANCO,
upon which the commissions of Sanchez were based. 25 A perusal of the Contracts will
also show that there is no single provision therein that can be said as prejudicial or not
beneficial to BISTRANCO. As held in Savings v. Ball-Bearing Chain Co. 26
Not every act within the letter of an order can be sanctioned, nor
everything done without the direction of the court condemned. The
tests to be applied are: (1) was the act under investigation within the
authority conferred by an order of court? (2) If so, was it performed
with reference to the preservation of the estate, as a man of ordinary
sagacity and prudence would have performed it under like
circumstances? (3) If without authority, was it beneficial to the
estate?
Besides, in our considered opinion, the doctrine of estoppel precludes BISTRANCO
from repudiating an obligation voluntarily assumed by it, after having accepted benefits
therefrom. To countenance such, repudiation would be contrary to equity and would
put a premium on fraud or misrepresentation, 27 which this Court will not sanction.
Anent the issue of whether the Memorandum of Agreement and the Working
Agreement (Exhibits "S" and "U") which were executed by the parties in this case on 4
February 1977 and 28 May 1979, respectively, novated the questioned Contracts, the
answer is also in the negative. BISTRANCO avers that Exhibit "S" substantially altered
or changed the principal terms and conditions of Exhibits "F" and "G" on material
points, such as, reduction of the rate of commission for freight and passage (from 10%
to 7-1/2%), the manner of liquidation and remittance of collections of the agent, the
mode of payment of the agent's commissions, and the term of the Contract which is
from a period of 5 years to a term of 1 year renewable yearly upon mutual consent;
and that Exhibit "U" ,furthermore, bolstered this novation theory.
Novation is not equivalent or synonymous to mere alteration, modification or
amendment. Novation is the substitution of a new obligation for an existing or old one,
which is thereby extinguished. Novation takes place when the object or principal
condition of an obligation is changed or altered. 28 Novation is never presumed; it must
be explicitly stated or there must be a manifest incompatibility between the old and the
new obligations in every aspect. 29 The test of incompatibility between two obligations
or contracts, is whether or not they can stand together, each one having an
independent existence. If they cannot, they are incompatible, and the later obligation
novates the first.
In the case at bar, it can be deduced that the Agreements, Exhibits "S" and "U", were
not meant to novate the herein questioned contracts. Rather, the intent of the parties
was to suspend some of the provisions of the Contracts for a period of one (1) year,
during which, the provisions of the Agreements will prevail. As par. 8 of the
Memorandum of Agreement provides: "It is in this spirit of cooperation with the
Receiver to enable him to pay huge obligations of the company that the agent
Marciano Sanchez has acceded to the request of Messrs. Miguel Cuenco and Antonio
Cuenco to accept the reduction of his commissions." It would not be equitable to
Sanchez to say now that the Contracts were extinguished and substituted by the
Agreements. It would be tantamount to punishing Sanchez for the concessions he
extended to BISTRANCO.
Besides, the changes were not really substantial to bring about a novation. The
changes pointed out by BISTRANCO between the Contracts and the Agreements do
not go into the essence of the cause or object of the former. Under the Agreements,
Sanchez remains the agent of BISTRANCO in Butuan City. There is really no clear
proof of incompatibility. In fact, the Contracts and the Agreements can be reconciled.
The provisions of the Agreements which were more of changes on how to enforce the
agency, prevailed during the period provided in them, but after their expiration, the
conditions under the Contracts were implemented again. The term of the agency
contract which was for a period of five (5) years still continued, until 27 July 1981.
Considering that the contract of agency and the supplemental shipping agency
contract are valid and binding between BISTRANCO and Sanchez, the former's
opening of a branch in Butuan City was, in effect, a violation of the Contracts. Sanchez
entered into the agency Contract because of the expected income and profits for
himself. There could be no other motive from a businessman's point of view. A
provision in the Supplemental Shipping Agency Contract reads:
6. That in consideration of the foregoing additional particular
obligations of the AGENT, the COMPANY agrees not to appoint or
employ another agent in Butuan City or in any of the City's
neighboring towns without the written consent of the AGENT first
obtained. (Exhibit "G ")
The additional particular obligations referred to in Exhibit "G" were the putting up of an
adequate agency office in Butuan City, the employment of canvassers of passengers
and solicitors of cargoes, that the Agent shall provide at least two (2) cargo trucks and
a private docking and berthing facilities for the vessels of the company, at the expense
of Sanchez. Aside from this, Sanchez also had to spend for the lease of the wharf and
the construction of the bodega at the wharf.
It may be true that there is no express prohibition for BISTRANCO to open its branch
in Butuan City. But, the very reason why BISTRANCO agreed not to employ or appoint
another agent in Butuan City was to prevent competition against Sanchez' agency, in
order that he might recover what he invested and eventually maximize his profits. The
opening by BISTRANCO of a branch in Butuan City virtually resulted in consequences
to Sanchez worse than if another agent had been appointed. In effect, the opening of a
branch office in Butuan City was a violation of the Contracts of agency. Article 1315 of
the Civil Code provides:
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.
In the case at bar, good faith required that BISTRANCO refrain from opening its
branch in Butuan City during the effectivity of the agency contract with Sanchez, or
until 27 July 1981.
Moreover, the opening of the branch office which, in effect, was a revocation of the
contracts of agency is not sanctioned by law because the agency was the means by
which Sanchez could fulfill his obligations under Exhibits "F" and "G". Article 1927 of
the Civil Code, among others, provides: "An agency cannot be revoked if a bilateral
contract depends upon it, or if it is the means of fulfilling an obligation already
contracted".
As to the issue of whether the award of P588,000.00 to Sanchez for unearned
commissions and damages is justified, the answer is also in the affirmative,
considering that BISTRANCO violated the Contracts of agency and that Sanchez,
before the breach by BISTRANCO of said agency Contracts, was already earning an
average monthly commission of P32,000.00, as shown by the statements of
commissions prepared by BISTRANCO itself.
WHEREFORE, the petition is denied. The decision of the respondent Court is affirmed.
HERNANDEZ VS CA
To those prevented by fraud from proving their title to land subject of registration
proceedings in another's name, the law affords the remedy of review of the decree of
registration by petition in the land registration court within one year from its issuance of
the order. 1 This was the remedy availed of by Victorino Hernandez, but as he could
convince neither the Court of First Instance of Rizal nor the Court of Appellants 2 of the
merits of his petition, he failed in his bid to reopen and correct the decree in Land
Registration Case No. N-2488 Fr. Lucio V. Garcia the absolute owner of three parcels
of land in Paraaque. 3 This Court however finds that upon the recorded facts, the
petitioner is entitled to the relief sought.
Fr. Garcia 4 applied in 1959 for the registration in his name of Lots 1-A, 1-B, and 2 of
Plan Psu-172410-B in Bo. San Dionisio, Paraaque. His property adjoined that of
Hernandez, and since both estates were once owned by one Andres San
Buenaventura, 5 no dividing boundaries existed thereon until cadastral surveyors from
the Bureau of Lands laid down official monuments to mark the separation of the lots.
These monuments were set along a line which the landowners had previously agreed
upon as representing the correct boundary between their estates. This was in 1956. 6
Unknown to Hernandez, the Advance Plan Psu-172410-B submitted in Fr. Garcia's
behalf to the land registration court in 1959 included 220 square meters of land now
disputed Lots ABC and 4057-A of Lot 1-B. This area fell beyond the stipulated
boundaries of Fr. Garcia's land and encroached pro tanto on the land of Hernandez
(on which, it should be mentioned, his tenants had been living for many years
[decades, in fact] before the date of Fr. Garcia's application). 7 Allegedly lulled into
complacency by the recentness of their agreement as to the limits of their respective
properties, and confident that the visible landmarks installed by the government
surveyors precluded any overstepping of those limits, Hernandez proffered no
opposition to Fr. Garcia's application, leaving the heirs of Andres San Buenaventura as
the only oppositors thereto.
It was not until the court had already ordered the registration of the lots in Fr. Garcia's
name that Hernandez discovered the anomaly in the application. He at once filed a
petition for review of the decree, but in view of the new trial ordered by the court upon
motion of the heirs-oppositors, the petition was dismissed on the ground of
prematurity. 8The court thereafter adjudged Fr. Garcia as the owner of Lots 1-A and 2
and the heirs-oppositors as owners of Lot 1-B.
On appeal, however, the Court of Appeals declared Fr. Garcia absolute owner, by
acquisitive prescription, of an the lots. This judgment became final on December 9,
1970; Decree No. 132620 was issued by the CFI of Rizal, and the Register of Deeds
issued OCT No. 8664 in Fr. Garcia's name. 9
Hernandez promptly refiled his petition for the reopening of the decree. He argued that
the decree covered a substantial portion of his land to which Fr. Garcia could claim no
title. He averred anew that the Advance Plan supporting the application was "irregular,
because it disregarded the existing Bureau of Lands monuments designating the
actual possessions of the petitioner and the applicant" and "falsely designates (other)
... boundaries ... not actually marked by any ... monuments, thus fraudulently giving the
false impression to petitioner that no alteration has actually been made in originally
agreed-upon boundaries in the course of the preparation of (the) Plan." Thus having
been "misled to believe that no encroachment has been made by applicant," and
"conscious of the previous agreement and the fact that the Bureau of Lands
monuments have not been altered." Hernandez had put up no objection to the
application. 10
As stated at the outset, the trial court dismissed Hernandez's petition, 11 and the
appellate court gave his appeal short shrift. 12 Both courts were of the view essentially
that the evidence did not bear out the claim of fraud; that under the Statute of Frauds,
the parties' covenant as to their properties' metes and bounds was unenforceable
since it was not reduced to writing; and that Hernandez's parents and predecessors-in-
interest, 13Victorino and Tranquilino, acquired title by purchase from San Buenaventura
to only 516 square meters of land, which could not have included the disputed
property. 14
Ordinarily, the Appellate Court's factual conclusions are not reviewable by this
Court, 15and since here those conclusions are decidedly adverse to Hernandez, the
application of the rule should result in a verdict against him. The rule admits of
exceptions, however, as when facts of substance were overlooked by the appellate
court which, if correctly considered, might have changed the outcome of the case. 16
In this case there are several pivotal facts about which there is no controversy
whatever, it may be added which clearly should have been weighed by the court a
quoin Hernandez's favor, but inexplicably were not. It is of record, to begin with, that
concrete monuments or "majones" were laid out by government surveyors in 1956
between the properties of Hernandez and Fr. Garcia. Hernandez avows that these
structures were purposely installed to mark the limits of their estates; his opponents
could only let this statement pass with telling silence. Neither did they seriously dispute
that these "mojones" were installed along the line agreed upon by the parties as
marking their properties' boundaries. All they averred in their defense is that the
agreement did not bind them. Lastly, they freely conceded the presence of a fence
along this line, but were quick to point out that they had merely "permitted" Hernandez
to put up this "temporary" structure "to stop the public (from) using ... this place as a
common madden shed." The excuse is lamentably feeble.
Hernandez argues that if indeed the Advance Plan, basis of Fr. Garcia's application,
was prepared without regard to the boundary indicated by the fence and the surveyors
markers, and worse, "falsely designate(d) as boundaries the lines marked by
... corners not actually marked by any Bureau of Lands monuments" which purposely
left the mistaken impression that the exact limits of the adjoining estates had been
faithfully drawn, then he was truly a victim of fraud, deftly cheated of the chance to
vindicate his claim to the land. The respondents again did not care to refute the
premises on which the argument is predicated. In any event, the argument is entirely in
accord with the evidence and the norms of logic.
Lastly, the Appellate Court may have been convinced of the impossibility of the
inclusion of the disputes lot in the 516 square meters stated as sold to Hernandez's
parents in the deed of sale in their favor, 17 but only because the Court missed sight of
the fact that the adjoining lots sold to the spouses and to Fr. Garcia were unregistered
and unsurveyed at the time of the transfer. This explains the discrepancy between the
area of the land purportedly conveyed to the Hernandezes in the instrument (516
square meters) and the actual area falling within the boundaries described in the same
document, which, after the survey, was found to be 716 square meters. The
respondents cannot hold Hernandez to the approximate area fixed in the deed and
claim ownership over the excess. All the land embraced within the stated boundaries
was sold. 18 If the respondent insist on the figures named in the deeds of sale, then
they themselves stand to lose 736 square meters of land. San Buenaventura had only
sold 1,545 square meters to Fr. Garcia, 19 but the estate was later found to be actually
2,328 square meters in area. 20
Given the weight they deserve, the recorded facts prove Hernandez's entitlement to
the relief sought. The respondents' reliance on the Statute of Frauds to secure a
contrary judgment is misplaced. The Statute of Frauds finds no application to this case.
Not every agreement "affecting land" must be put in writing to attain enforceability.
Under the Statute of Frauds, Article 1403(2) (e) of the Civil Code, such formality is only
required of contracts involving leases for longer than one year, or for the sale of real
property or of an interest therein. Hernandez's testimony is thus admissible to establish
his agreement with Fr. Garcia as to the boundary of their estates. It is also to be noted
that the presence of Hernandez's tenants on the land within his side of the border,
were this to be reckoned from the "mojones," further buttresses his claim.
The foregoing considerations demonstrate more than adequately that the inclusion of
the 220-square-meter area in the Original Certificate of Title No. 8664 of the Register
of Deeds of Rizal is null and void.
ACCORDINGLY, the appealed decision of the Court of Appeals is hereby REVERSED
and set aside and another one entered, ordering the Register of Deeds of Rizal to
register the 220 square meters in question in favor of petitioner Victorino Hernandez;
and to cancel Original Certificate of Title No. 8664 and issue a new one in favor of the
private respondents excluding said 220-square-meter area belonging to the petitioner.
No pronouncement as to costs.
SO ORDERED.
This petition seeks the review on certiorari of the decision of the Court of Appeals
dated January 10, 1989, which reversed the ruling of the trial court declaring petitioner
Divina J. Victoriano (hereafter "Victoriano") as owner of Lot 897, and instead, declaring
the heirs of Crispin Arcilla, herein represented by Ladislawa A. Masigla (hereafter
"Masigla") as true owners thereof. The dispositive portion of the Court of Appeals
decision provides as follows:jgc:chanrobles.com.ph
"WHEREFORE, in view of the foregoing, the judgment appealed from is hereby
reversed and set aside. In lieu thereof, judgment is hereby
rendered:jgc:chanrobles.com.ph
"1. Declaring plaintiffs-appellants as the owners of Lot #897 located in Barangay
Santol, Tansa, Cavite;
"2. Ordering defendant-appellee to execute the proper deed of sale to enable plaintiffs-
appellants to transfer the title to the property in their name and in case of failure of
defendant-appellee to do so within 30 days from finality hereof, the Register of Deeds
of Cavite is hereby directed to cancel Transfer Certificate of Title No. T-124731 in the
name of defendant-appellant and issue a new one in the name of plaintiffs-appellants.
"SO ORDERED." (pp. 21-22, Rollo)
The facts of the case, as obtained from the Court of Appeals decision, are as
follows:chanrob1es virtual 1aw library
Masigla was in possession of Lot 897 which is situated in Barangay Santol, Tanza,
Cavite. In 1987, her son, Domingo Masigla entered the adjoining property, Lot 898,
owned by Victoriano, and prohibited her and her tenants from cultivating the land.
Victoriano filed a criminal case for theft, malicious mischief, usurpation and squatting
against Domingo. In the process, Victoriano discovered that title to Lot No. 897 was
registered in the name of her grandfather, Cirilo Tamio (TCT No. 1648). She secured
an extrajudicial partition from all the heirs of Cirilo Tamio, who thus waived their shares
in the lot in her favor. Victoriano thereafter secured a title (TCT No. 124731) to said lot
in her name.
The heirs of Crispin Arcilla, represented by Masigla, filed a complaint in court (RTC-
Cavite, Trece Martires, Br. 23) for reconveyance of Lot No. 897, claiming that their
father, Crispin Arcilla, had bought the lot from Cirilo Tamio, and that they had been in
possession thereof since 1927. Masigla could not, however, present a deed of sale
evidencing the transfer of the property from Cirilo Tamio to Crispin Arcilla. All that she
and her heirs could present were a "Sinumpaang Salaysay" dated January 20, 1927,
wherein the children of Cirilo Tamio authorized their mother to sell Lot 897 to Crispin
Arcilla; the owners duplicate of the title to the property in the name of Cirilo Tamio and
real property tax receipts and tax declarations, the earliest of which is 1944. Masigla
claimed that taxes were being paid since 1927 but the receipt had been lost or
destroyed.cralawnad
Victoriano on the other hand, presented the Transfer Certificate of Title in her name
(TCT 124731), a tax declaration and a receipt dated March 30, 1983 (p. 18, Rollo).
In a decision dated October 5, 1987 (p. 61, Rollo), the trial court ruled in favor of
Victoriano, declaring her the lawful and absolute owner of Lot No. 897.
Masigla appealed, assigning as errors, the failure of the trial court to consider
Masiglas evidence submitted in support of her claim for reconveyance and rendering
instead a decision allowing recovery of possession in favor of Victoriano, based on the
allegation and evidence in her counterclaim.
The Court of Appeals reversed the decision of the trial court and declared Masigla and
her co-heirs as true owners of the property. In the resolution dated March 17, 1989, it
denied Victorianos motion for reconsideration.
Victoriano filed this petition on the following grounds:jgc:chanrobles.com.ph
"1. The respondent Court of Appeals abused its discretion by deciding this case based
on the principles of the Statute of Frauds and then on the principle of laches which
principles were never raised in the lower court.
"2. The respondent Court of Appeals decided questions of substance in a way not in
accord with law or with the applicable decisions of the Supreme Court." (p. 9, Rollo).
We uphold the Court of Appeals decision.
The trial courts ruling was anchored solely on the failure of Masigla to prove transfer of
ownership from Cirilo Tamio to their predecessor-in-interest, Crispin Arcilla, because of
the absence of a deed of sale.
Apparently, the trial court relied on the Statute of Frauds principle which requires "an
agreement for the sale . . ." of real property or an interest therein (Art. 1 403(e)) to be
in writing. It overlooked the fact that this principle applies only to executory contracts.
As correctly observed by the Court of Appeals:chanrob1es virtual 1aw library
The Statute of Frauds is applicable only to executory contracts, not to contracts either
totally or partially performed. Thus, where a contract of sale is alleged to be
consummated, it matters not that neither the receipt for the consideration nor the sale
itself was in writing, because oral evidence of the alleged consummated sale is not
forbidden by the Statute of Frauds and may not be excluded in court. (Iigo v. Estate of
Maloto, 21 SCRA (1901) 246)
"Thus, the testimony of plaintiffs-appellants on this point is admissible to prove the
existence of the sale, it being of record that the land has been in their possession since
1927." (CA Decision, pp. 19-20, Rollo)
Performance of the contract, whether total or partial, takes it out of the operation of the
statute (Gomez v. Salcedo, 26 Phil. 485; Hernandez v. Andal, 78 Phil. 196). This
performance, necessarily must be duly proved. And it is in this light that Masigla
pointed out the circumstances to show performance on the contract or transfer of
ownership, as follows:jgc:chanrobles.com.ph
"1. Plaintiffs-appellants are in possession of the owners copy of the title;
"2. They have been undisturbed in their possession of the land for more than fifty
years;

"3. They are in possession of a Sinumpaang Salaysay wherein the children of Cirilo
Tamio authorized their mother to sell Lot 897 specifically to Crispin Arcilla, the
predecessor of plaintiffs-appellants;
"4. They introduced improvements on the land;
"5. They incurred expenses for the resurvey of the land when they had the title in the
name of Cirilo Tamio reconstituted (TSN p. 30, Nov. 29, 1983);
"6. The tax declarations over the property were in the name of plaintiffs father;
"7. Plaintiffs-appellants have been religious in paying taxes over the property;
"8. The immediate heirs of Cirilo Tamio, that is, his wife and children, never contested
plaintiffs-appellants possession of the land, nor did they set up any claim over the
property. This behavior negates any pretense that there was no sale in favor of Crispin
Arcilla." (ibid., p. 20, Rollo)
In ruling in favor of Masigla, the Court of Appeals mentioned the principle of the Statute
of Frauds merely to point out the trial courts improper reliance thereon. It was not
raised as a new issue. Precisely, the inapplicability of the Statute of Frauds allows the
filing of Masiglas complaint seeking the reconveyance of property, which was
erroneously registered in Victorianos name.chanrobles.com : virtual law library
Likewise, We agree with the Court of Appeals when it barred Victorianos action to
recover possession of Lot No. 897, premised on the principle of laches. Defined as
"such neglect or omission to assert a right taken in conjunction with the lapse of time
and other circumstances causing prejudice to an adverse party, as will operate as a
bar in equity." (Heirs of Batiog Lacamen v. Heirs of Laruan, G.R. No. L-27088, July 31,
1975, 65 SCRA 125) the Court of Appeals observed:jgc:chanrobles.com.ph
"However, defendant-appellee disregards the fact that plaintiffs-appellants have been
in continuous possession of the land since 1927 and they were not ousted therefrom
by the grandfather of defendant-appellee who sold the property to them, nor by the
immediate successors of the seller. It was only after decades had passed that it was
discovered that the sale was never registered or the title cancelled and transferred in
the name of plaintiffs-appellants. True, titled lands cannot be acquired by prescription,
however, defendant-appellees inaction for more than 50 years now bars her from
acquiring possession of the land on the ground of laches." (p. 25, Rollo)
Again, the principle of laches was mentioned to refute Victorianos claims that "no title
to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession (Sec. 46, Act No. 496, now Sec. 47 of PD No.
1529). Thus, the Court of Appeals stated:jgc:chanrobles.com.ph
"At this state, therefore, respondents-appellants claim of absolute ownership over the
land cannot be countenanced. It has been held that while a person may not acquire
title to the registered property through continuous adverse possession, in derogation of
the title of the original registered owner, the heir of the latter, however, may lose his
right to recover back the possession of such property and the title thereto, by reason of
laches." (p. 25, Rollo)
ACCORDINGLY, the petition is DENIED and the decision of the Court of Appeals
dated January 10, 1989 as well as its Resolution dated March 17, 1989 declaring the
heirs of Crispin Arcilla, represented by Ladislawa A. Masigla as the owners of Lot No.
897 are AFFIRMED.chanrobles virtual lawlibrary
SO ORDERED.
MACTAN VS CA
his Petition for Review on Certiorari seeks the reversal of the Decision of the
Court of Appeals[1] in CA G.R. CV No. 56495 entitled Virginia Chiongbian vs. Mactan-
Cebu International Airport Authority which affirmed the Decision of the Regional Trial
Court[2], 7th Judicial Region, Branch 24, Cebu City.
The Court of Appeals rendered its decision based on the following facts:
Subject of the action is Lot 941 consisting of 13,766 square meters located in Lahug,
Cebu City, adjoining the then Lahug Airport and covered by TCT No. 120366 of the
Registry of Deeds of Cebu City, in the name of MCIAA.
During the liberation, the Lahug Airport was occupied by the United States
Army. Then, in 1947, it was turned over to the Philippine Government through the
Surplus Property Commission. Subsequently, it was transferred to the Bureau of
Aeronautics which was succeeded by the National Airports Corporation. When the
latter was dissolved, it was replaced by the Civil Aeronautics Administration (CAA).
On April 16, 1952, the Republic of the Philippines, represented by the CAA, filed an
expropriation proceeding, Civil Case No. R-1881 (Court of First Instance of Cebu,
Third Branch), on several parcels of land in Lahug, Cebu City, which included Lot 941,
for the expansion and improvement of Lahug Airport.
In June 1953, appellee Virginia Chiongbian purchased Lot 941 from its original owner,
Antonina Faborada, the original defendant in the expropriation case, for P8,000.00.
Subsequently, TCT No. 9919 was issued in her name (Exh. D).
Then, on December 29, 1961, judgment was rendered in the expropriation case in
favor of the Republic of the Philippines which was made to pay Virginia Chiongbian the
amount of P34,415.00 for Lot 941, with legal interest computed from November 16,
1947, the date when the government begun using it. Virginia Chiongbian did not
appeal therefrom.
Thereafter, absolute title to Lot 941 was transferred to the Republic of the Philippines
under TCT No. 27696 (Exhs. E and 2).
Then, in 1990, Republic Act No. 6958 was passed by Congress creating the Mactan-
Cebu International Airport Authority to which the assets of the Lahug Airport was
transferred.Lot 941 was then transferred in the name of MCIAA under TCT No. 120366
on May 8, 1992.
On July 24, 1995, Virginia Chiongbian filed a complaint for reconveyance of Lot 941
with the Regional Trial Court of Cebu, Branch 9, docketed as Civil Case No. CEB-
17650 alleging, that sometime in 1949, the National Airport Corporation (NAC)
ventured to expand the Cebu Lahug Airport. As a consequence, it sought to acquire by
expropriation or negotiated sale several parcels of lands adjoining the Lahug Airport,
one of which was Lot 941 owned by Virginia Chiongbian. Since she and other
landowners could not agree with the NACs offer for the compensation of their lands, a
suit for eminent domain was instituted on April 16, 1952, before the then Court of First
Instance of Cebu (Branch III), against forty-five (45) landowners, including Virginia
Chiongbian, docketed as Civil Case No. R-1881, entitled Republic of the Philippine vs.
Damian Ouano, et al. It was finally decided on December 29, 1961 in favor of the
Republic of the Philippines.
Some of the defendants-landowners, namely, Milagros Urgello, Mamerto Escano, Inc.
and Ma. Atega Vda. de Deen, appealed the decision to the Court of Appeals under
CA-G.R. No. 33045-R, which rendered a modified judgment allowing them to
repurchase their expropriated properties. Virginia Chiongbian, on the other hand, did
not appeal and instead, accepted the compensation for Lot 941 in the amount
of P34,415, upon the assurance of the NAC that she or her heirs would be given the
right of reconveyance for the same price once the land would no longer be used as
(sic) airport.
Consequently, TCT No. 9919 of Virginia Chiongbian was cancelled and TCT No.
27696 was issued in the name of the Republic of the Philippines. Then, with the
creation of the MCIAA, it was cancelled and TCT No. 120366 was issued in its name.
However, no expansion of the Lahug Airport was undertaken by MCIAA and its
predecessors-in-interest. In fact, when Mactan International Airport was opened for
commercial flights, the Lahug Airport was closed at the end of 1991 and all its airport
activities were undertaken at and transferred to the Mactan International Airport. Thus,
the purpose for which Lot 941 was taken ceased to exist. [3]
On June 3, 1997, the RTC rendered judgment in favor of the respondent Virginia
Chiongbian (CHIONGBIAN) the dispositive portion of the decision reads:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor
of the plaintiff, Virginia Chiongbian and against the defendant, Mactan Cebu
International Authority (MCIAA), ordering the latter to restore to plaintiff the possession
and ownership of the property denominated as Lot No. 941 upon reimbursement of the
expropriation price paid to plaintiff.
The Register of Deeds is therefore ordered to effect the Transfer of the Certificate Title
from the defendant to the plaintiff on Lot No. 941, cancelling Transfer Certificate of
Title No. 120366 in the name of defendant MCIAA and to issue a new title on the same
lot in the name of Virginia Chiongbian.
No pronouncement as to cost.
SO ORDERED.[4]
Aggrieved by the holding of the trial court, the petitioner Mactan Cebu
International Airport Authority (MCIAA) appealed the decision to the Court of Appeals,
which affirmed the RTC decision. Motion for Reconsideration was denied[5] hence this
petition where MCIAA raises the following grounds in support of its petition:
I.
THE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURTS
JUDGMENT THAT THERE WAS A REPURCHASE AGREEMENT AND IGNORING
PETITIONERS PROTESTATIONS THAT ADMISSION OF RESPONDENTS ORAL
EVIDENCE IS NOT ALLOWED UNDER THE STATUE OF FRAUDS.
II.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE DECISION
IN LIMBACO IS MATERIAL AND APPLICABLE TO THE CASE AT BAR.
III.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MODIFIED
JUDGMENT IN CA-GR NO. 33045 SHOULD INURE TO THE BENEFIT OF
CHIONGBIAN EVEN IF SHE WAS NOT A PARTY IN SAID APPEALED CASE.
IV.
THE COURT OF APPEALS ERRED IN RULING THAT THE RIGHT OF VIRGINIA
CHIONGBIAN TO REPURCHASE SHOULD BE UNDER THE SAME TERMS AND
CONDITIONS AS THE OTHER LANDOWNERS SUCH THAT HER REPURCHASE
PRICE IS ONLY P 34, 415.00.[6]
MCIAA contends that the Republic of the Philippines appropriated Lot No. 941
through expropriation proceedings in Civil Case No. R-1881. The judgment rendered
therein was unconditional and did not contain a stipulation that ownership thereof
would revert to CHIONGBIAN nor did it give CHIONGBIAN the right to repurchase the
same in the event the lot was no longer used for the purpose it was
expropriated. Moreover, CHIONGBIANs claim that there was a repurchase agreement
is not supported by documentary evidence. The mere fact that twenty six (26) other
landowners repurchased their property located at the aforementioned Lahug airport is
of no consequence considering that said landowners were able to secure a rider in
their contracts entitling them to repurchase their property.
MCIAA also argues that the Court of Appeals erroneously concluded that it did
not object to the evidence presented by CHIONGBIAN to prove the alleged repurchase
agreement considering that the transcript of stenographic notes shows that it
manifested its objections thereto for being in violation of the Statute of Frauds.
MCIAA also faults the Court of Appeals for applying the ruling in the case
of Limbaco vs. Court of Appeals[7]. It is the position of MCIAA that the ruling in the case
of Limbaco is not squarely in point with respect to the present case for the reason that
the Limbaco case involved a contract of sale of real property and not an expropriation.
Moreover, MCIAA alleges that the Court of Appeals erred in ruling that the case
of Escao, et. al. vs. Republic[8] proves the existence of the repurchase
agreement. MCIAA claims that although the parties in said case were CHIONGBIANs
co-defendants in Civil Case No. R-1881, CHIONGBIAN did not join in their appeal of
the judgment of condemnation. The modified judgment in CA G.R. No. 33045-R should
not therefore redound to CHIONGBIANs benefit who was no longer a party thereto or
to the compromise agreement which Escao et. al. entered into with the Republic of the
Philippines.
Finally, assuming for the sake of argument that CHIONGBIAN has a right to
repurchase Lot No. 941, MCIAA claims that the Court of Appeals erred in ruling that
the right of CHIONGBIAN to purchase said lot should be under the same terms and
conditions given to the other landowners and not at the prevailing market price. Such
ruling is grossly unfair and would result in unjustly enriching CHIONGBIAN for the
reason that she received just compensation for the property at the time of its taking by
the government and that the property is now worth several hundreds of millions of
pesos due to the improvements introduced by MCIAA.[9]
On the other hand, aside from praying that this Court affirm the decision of the
Court of Appeals, the private respondent CHIONGBIAN prays that the petition be
denied for the reason that it violates the 1997 Rules on Civil Procedure, more
specifically the requirement of a certification of non-forum shopping. CHIONGBIAN
claims that the Verification and Certification on Non-Forum Shopping executed by the
MCIAA on September 13, 1999 was signed by a Colonel Marcelino A. Cordova whose
appointment as Assistant General Manager of MCIAA was disapproved by the Civil
Service Commission as early as September 2, 1999. It is CHIONGBIANs position that
since his appointment was disapproved, the Verification attached to the petition for
review on certiorari cannot be considered as having been executed by the plaintiff or
principal party who under Section 5, Rule 7 of the Rules of Court can validly make the
certification in the instant petition. Consequently, the petition should be considered as
not being verified and as such should not be considered as having been filed at all.
After a careful consideration of the arguments presented by the parties, we
resolve to grant the petition.
We first resolve the procedural issue.
We are not persuaded by CHIONGBIANs claim that the Verification and
Certification against forum shopping accompanying MCIAAs petition was insufficient
for allegedly having been signed by one who was not qualified to do so. As pointed out
by the MCIAA, Colonel Cordova signed the Verification and Certification against forum
shopping as Acting General Manager of the MCIAA, pursuant to Office Order No.
5322-99 dated September 10, 1999 issued by the General Manager of MCIAA, Alfonso
Allere.[10] Colonel Cordova did not sign the Verification and Certification against forum
shopping pursuant to his appointment as assistant General Manager of the MCIAA,
which was later disapproved by the Commission on Appointments. This fact has not
been disputed by CHIONGBIAN.
We come now to the substantive aspects of the case wherein the issue to be
resolved is whether the abandonment of the public use for which Lot No. 941 was
expropriated entitles CHIONGBIAN to reacquire it.
In Fery vs. Municipality of Cabanatuan[11], this Court had occasion to rule on the
same issue as follows:
The answer to that question depends upon the character of the title acquired by the
expropriator, whether it be the State, a province, a municipality, or a corporation which
has the right to acquire property under the power of eminent domain. If, for example,
land is expropriated for a particular purpose, with the condition that when that purpose
is ended or abandoned the property shall return to its former owner, then, of course,
when the purpose is terminated or abandoned the former owner reacquires the
property so expropriated.If, for example, land is expropriated for a public street and the
expropriation is granted upon condition that the city can only use it for a public street,
then, of course, when the city abandons its use as a public street, it returns to the
former owner, unless there is some statutory provision to the contrary. Many other
similar examples might be given. If, upon the contrary, however, the decree of
expropriation gives to the entity a fee simple title, then, of course, the land becomes
the absolute property of the expropriator, whether it be the State, a province, or
municipality, and in that case the non-user does not have the effect of defeating the
title acquired by the expropriation proceedings.
When land has been acquired for public use in fee simple, unconditionally, either by
the exercise of eminent domain or by purchase, the former owner retains no rights in
the land, and the public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired, or any reversion to
the former owner.[12]
In the present case, evidence reveals that Lot No. 941 was appropriated by the
Republic of the Philippines through expropriation proceedings in Civil Case No. R-
1881. The dispositive portion of the decision in said case reads insofar as pertinent as
follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
1. Declaring the expropriation of Lots Nos. 75, 76, 89, 90, 91, 105, 106, 107, 108, 104,
921-A, 88, 93, 913-B, 72, 77, 916, 777-A, 918, 919, 920, 764-A, 988, 744-A, 745-A,
746, 747, 752-A, 263-A, 941, 942, 740-A, 743, 985, 956, 976-A, 984, 989-A; and 947,
including in the Lahug Airport, Cebu City, justified and in lawful exercise of the right of
eminent domain;
2. Declaring the fair market values of the lots thus taken and condemning the plaintiff
to pay the same to the respective owners with legal interest from the dates indicated
therein, as follows: Lots Nos. 75, 76, 89, 90, 91, 92, 105, 106, 107, 108-P31, 977
(minus P10,639 or P21,278 as balance in favor of Mamerto Escao, Inc., with legal
interest from November 16, 1947 until fully paid; xxx Lot No. 941- P34,415.00 in favor
of Virginia Chiongbian, with legal interest from November 16, 1947 until fully
paid; xxx
3. After the payment of the foregoing financial obligation to the landowners, directing
the latter to deliver to the plaintiff the corresponding Transfer Certificate of Title to their
representative lots; and upon the presentation of the said titles to the Register of
Deeds, ordering the latter to cancel the same and to issue, in lieu thereof, new
Transfer Certificates of Title in the name of the plaintiff.
NO COST.
SO ORDERED.[13] (Emphasis supplied)
The terms of the judgment are clear and unequivocal and grant title to Lot No.
941 in fee simple to the Republic of the Philippines. There was no condition imposed to
the effect that the lot would return to CHIONGBIAN or that CHIONGBIAN had a right to
repurchase the same if the purpose for which it was expropriated is ended or
abandoned or if the property was to be used other than as the Lahug airport.
CHIONGBIAN cannot rely on the ruling in Mactan Cebu International Airport vs.
Court of Appeals[14] wherein the presentation of parol evidence was allowed to prove
the existence of a written agreement containing the right to repurchase. Said case did
not involve expropriation proceedings but a contract of sale. This Court consequently
allowed the presentation of parol evidence to prove the existence of an agreement
allowing the right of repurchase based on the following ratiocination:
Under the parol evidence rule, when the terms of an agreement have been reduced
into writing, it is considered as containing all the terms agreed upon, and there can be,
between the parties and their successors-in-interest, no evidence of such terms other
than the contents of the written agreement. However, a party may present evidence to
modify, explain or add to the terms of the written agreement if he puts in issue in his
pleading, the failure of the written agreement to express the true intent of the parties
thereto.In the case at bench, the fact which private respondents seek to establish by
parol evidence consists of the agreement or representation made by the NAC that
induced Inez Ouano to execute the deed of sale; that the vendors and their heirs are
given the right of repurchase should the government no longer need the property.
Where a parol contemporaneous agreement was the moving cause of the written
contract, or where the parol agreement forms part of the consideration of the written
contract, and it appears that the written contract was executed on the faith of the parol
contract or representation, such evidence is admissible. It is recognized that proof is
admissible of any collateral parol agreement that is not inconsistent with the terms of
the written contract though it may relate to the same subject matter. The rule excluding
parol evidence to vary or contradict a writing does not extend so far as to preclude the
admission of existing evidence to show prior or contemporaneous collateral parol
agreements between the parties, but such evidence may be received, regardless of
whether or not the written agreement contains any reference to such collateral
agreement, and whether the action is at law or in equity.
More importantly, no objection was made by petitioner when private respondents
introduced evidence to show the right of repurchase granted by the NAC to Inez
Ouano. It has been repeatedly laid down as a rule of evidence that a protest or
objection against the admission of any evidence must be made at the proper time, and
if not so made, it will be understood to have been waived. [15]
This pronouncement is not applicable to the present case since the parol
evidence rule which provides that when the terms of a written agreement have been
reduced to writing, it is considered as containing all the terms agreed upon, and there
can be, between the parties and their successors-in-interest, no evidence of such
terms other than the contents of the written agreement applies to written agreements
and has no application to a judgment of a court. To permit CHIONGBIAN to prove the
existence of a compromise settlement which she claims to have entered into with the
Republic of the Philippines prior to the rendition of judgment in the expropriation case Q: Now, can you tell us so far as you can remember who was that person or
would result in a modification of the judgment of a court which has long become final government authority or employee that made the alleged assurance?
and executory.
A: The owner of the property.
And even assuming for the sake of argument that CHIONGBIAN could prove the
existence of the alleged written agreement acknowledging her right to repurchase Lot Q: Now, how many times was this assurance being made to you to return this
No. 941 through parol evidence, the Court of Appeals erred in holding that the property in case the Lahug Airport will no longer be used?
evidence presented by CHIONGBIAN was admissible. A: 2 or 3, I cannot recall.
Under 1403 of the Civil Code, a contract for the sale of real property shall be Q: You cannot also remember in what particular place or places was this
unenforceable unless the same, or some note or memorandum thereof, be in writing, assurance being made?
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 A: In my previous residence in Mabolo.
contents.
DEPOSITION OFFICER:
Contrary to the finding of the Court of Appeals, the records reveal that MCIAA
objected to the purpose for which the testimonies of CHIONGBIAN [16] and Patrosinio The assurance was made in my previous residence at Mabolo.
Bercede[17](BERCEDE) were offered, i.e. to prove the existence of the alleged written
WITNESS:
agreement evincing a right to repurchase Lot No. 941 in favor of CHIONGBIAN, for
being in violation of the Statute of Frauds. MCIAA also objected to the purpose for A: I entrusted that to my lawyer, Atty. Pedro Calderon.
which the testimony of Attorney Manuel Pastrana (PASTRANA) was offered, i.e. to
prove the existence of the alleged written agreement and an alleged deed of sale, on ATTY. DUBLIN: (to witness)
the same ground.[18] Consequently, the testimonies of these witnesses are
inadmissible under the Statute of Frauds to prove the existence of the alleged sale. Q: You mean the assurance was made personally to your lawyer at that time, Atty.
Pedro Calderon?
Aside from being inadmissible under the provisions of the Statute of Frauds,
A: Yes, sir.
CHIONGBIANs and BERCEDEs testimonies are also inadmissible for being hearsay in
nature.Evidence is hearsay if its probative value is not based on the personal Q: So you are now trying to tell us that that assurance was never made to you
knowledge of the witness but on the knowledge of another person who is not on the personally. Is that right, Mam?
witness stand.[19]CHIONGBIAN, through deposition, testified that:
A: He assured me directly that the property will be returned to me.
ATTY. DUBLIN (To Witness)
Q: When you said he, are you referring to your lawyer at that time, Atty. Pedro
Q: Mrs. Chiongbian, you said a while ago that there was an assurance by the Calderon
government to return this property to you in case Lahug Airport will be no
longer used, is that correct? A: Yes, sir.

WITNESS: Q: So, in effect, it was your lawyer, Atty. Pedro Calderon, who made the assurance
to you that the property will be returned in case Lahug Airport will be
A: Yes, sir. That is true. abandoned?
ATTY. DUBLIN: (To witness) A: Yes, sir.[20]
Q: Can you recall when was this verbal assurance made? CHIONGBIANs testimony shows that she had no personal knowledge of the
alleged assurance made by the Republic of the Philippines that Lot No. 941 would be
A: I cannot remember anymore.
returned to her in the event that the Lahug Airport was closed. She stated that she only
Q: You cannot also remember the year in which the alleged assurance was made? learned of the alleged assurance of the Republic of the Philippines through her lawyer,
Attorney Calderon, who was not presented as a witness.
A: I cannot also remember because Im very forgetful.
 BERCEDEs testimony regarding the alleged agreement is likewise inadmissible
to prove the existence of the agreement for also being hearsay in nature. Like
CHIONGBIAN, BERCEDE did not have personal knowledge of the alleged assurance
made by the Republic of the Philippines to his father that their land would be returned
should the Lahug Airport cease to operate for he only learned of the alleged assurance
through his father.
PASTRANAs testimony does little to help CHIONGBIANs cause. He claims that
subsequent to the execution of the alleged written agreement but prior to the rendition
of judgment in the expropriation case, the Republic and CHIONGBIAN executed a
Deed of Sale over Lot No. 941 wherein CHIONGBIAN sold the aforementioned lot to
the Republic of the Philippines. However, CHIONGBIAN never mentioned the
existence of a deed of sale.[21] In fact, the records disclose that Lot No. 941 was
transferred to the Republic of the Philippines pursuant to the judgment of expropriation
in Civil Case No. R-1881 which CHIONGBIAN herself enforced by filing a motion for
withdrawal of the money after the decision was rendered. [22] Moreover, since the very
terms of the judgment in Civil Case No. R-1881 are silent regarding the alleged deed
of sale or of the alleged written agreement acknowledging the right of CHIONGBIAN to
repurchase Lot No. 941, the only logical conclusion is that no sale in fact took place
and that no compromise agreement was executed prior to the rendition of the
judgment. Had CHIONGBIAN and the Republic executed a contract of sale as claimed
by PASTRANA, the Republic of the Philippines would not have needed to pursue the
expropriation case inasmuch as it would be duplicitous and would result in the
Republic of the Philippines expropriating something it had already
owned. Expropriation lies only when it is made necessary by the opposition of the
owner to the sale or by the lack of agreement as to the price. [23] Consequently,
CHIONGBIAN cannot compel MCIAA to reconvey Lot No. 941 to her since she has no
cause of action against MCIAA.
Finally, CHIONGBIAN cannot invoke the modified judgment of the Court of
Appeals in the case of Republic of the Philippines vs. Escao, et. al.[24] where her co-
defendants, Mamerto Escao, Inc., Milagros Urgello and Maria Atega Vda. De Deen
entered into separate and distinct compromise agreements with the Republic of the
Philippines wherein they agreed to sell their land subject of the expropriation
proceedings to the latter subject to the resolutory condition that in the event the
Republic of the Philippines no longer uses said property as an airport, title and
ownership of said property shall revert to its respective owners upon reimbursement of
the price paid therefor without interest. MCIAA correctly points out that since
CHIONGBIAN did not appeal the judgment of expropriation in Civil Case No. R-1881
and was not a party to the appeal of her co-defendants, the judgment therein cannot
redound to her benefit. And even assuming that CHIONGBIAN was a party to the
appeal, she was not a party to the compromise agreements entered into by her co-
defendants. A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced. [25] Essentially, it
is a contract perfected by mere consent, the latter being manifested by the meeting of
the offer and the acceptance upon the thing and the cause which are to constitute the
contract.[26] A judicial compromise has the force of law and is conclusive between the
parties[27] and it is not valid and binding on a party who did not sign the same. [28] Since
CHIONGBIAN was not a party to the compromise agreements, she cannot legally
invoke the same.
ACCORDINGLY, the Decision of the Court of Appeals is
hereby REVERSED and SET ASIDE. The complaint of Virgina Chiongbian against the
Mactan-Cebu International Airport Authority for reconveyance of Lot No. 941
is DISMISSED
CITY OF CEBU VS HEIRS OF RUBI
This is a petition for review on Certiorari under Rule 45 of the Rules of Court
seeking to set aside the Decision of the Court of Appeals [1] dated October 2, 1996 and
the Order denying the Motion for Reconsideration [2] dated February 7, 1997 in CA-G.R.
CV No. 40098 entitled Heirs of Candido Rubi, et. al. vs. Mayor Tomas R. Osmea, et.
al.
The following antecedents stated in the decision of the Court of Appeals are
undisputed:
Candido Rubi was a lessor (sic) from the Province of Cebu of a parcel of land identified
as Lot 1141 of the Banilad Estate containing an area of THIRTY THREE THOUSAND
ONE HUNDRED EIGHTY EIGHT (33,188) square meters, more or less, covered by
Transfer Certificate of Title No. RT-5513 (Exh. A).
Paragraph 7 of the contract of lease provides that the lessee shall use the leased
premises for residential and agricultural purposes only and pursuant to this stipulation,
Candido Rubi introduced various improvements, among which is a residential building
constructed in 1961 where he and his family resided up to the time of his death in
1983.
In 1964, the Province of Cebu conveyed by way of donation to the City of Cebu two
hundred and ten (210) lots among which was Lot 1141 leased to Candido Rubi.
On March 4, 1965, the City Council of Cebu enacted Ordinance No. 522 (Exh. D)
authorizing the City Mayor to sell at public auction the 210 province-owned lots
donated to defendant City of Cebu, among which was Lot 1141.
Among the conditions set forth in Ordinance No. 522 (see par. C) was that if the lot is
leased, the lesseeshall be given the right to equal the highest bid on the date of the
public bidding and if he so equals the highest bid, he shall be awarded the sale.
On August 5, 1965 after the public bidding held on the same day, the bidding
committee wrote Candido Rubi advising him that the highest bid for Lot 1141 was
submitted by Mr. Miguel Kho in the amount of P104,556.00 and that since he stated
that he is the actual occupant and going to equal the highest bid, he is advised to
deposit with the City Treasurer 5% of P104,556.00 as earnest money and an additional
15% as downpayment, after which the corresponding contract of sale will be entered
into between him and the City on August 9, 1965 (Exh. E.).
A day after the bidding, however, on August 6, 1965, a writ of preliminary injunction
was issued in Civil Case 238-BC filed by the province of Cebu to recover the donated
lots, enjoining the City of Cebu from selling or otherwise disposing any of the 210 lots
donated by the province (Lot 1141 included).
On July 15, 1974, on the basis of a compromise agreement entered into in Civil Case
No. 238-BC, Lot No. 1141, among others, was adjudicated to defendant City of
Cebu. By this time, Lot 1141 had already been subdivided into Lots 1141-A, 1141-B,
1141-C and 1141-D, the last the lot subject of the case, containing an area of 11,779
square meters where the house of Candido Rubi stands.
On September 19, 1974, the City Council of Cebu through Resolution No. 1747,
authorized the City Mayor to advertise the sale of Lots 1141-A and 1141-D (Exh. L).
At the public bidding held on October 1, 1974, there was no bidder for Lot 1141-D
(Exh. M-1).
On January 30, 1976, Candido Rubi paid the amount of P4,500.00 under OR No.
9876421 as bidders cash bond for Lot No. 1141-D (Exh. N).
On February 3, 1976, Candido Rubi wrote the City Mayor of Cebu stating that he was
one of the bidders of Lots 1141-B, 1141-C and 1141-D in a bidding held January 30,
1976 at 10:00 a.m. at the Office of the City Mayor and that as lessee of Lot No. 1141-D
he is exercising his option of equaling the highest bid price at P10.00 per square meter
on the area that is on level ground and P8.00 per square meter on the remaining area
(Exh. O).
On March 2, 1976, the Committee on Award awarded Lot 1141-D consisting of 11,934
square meters at P10.00 per square meter to Candido Rubi (Exh. P).
On March 9, 1976, Mayor Eulogio E. Borres furnished Candido Rubi a copy of the
award and instructed him to make the necessary payment for the land in order that the
deed of sale may be executed in his favor (Exh Q).
On April 7, 1976, the City Appraisal Committee, acting upon the 1 st Indorsement dated
April 6, 1976 of the City Mayor indorsing Candido Rubis letter dated February 3, 1976
(Exh. O) resolved to appraise a portion of Lot No. 1141-D containing an area of 6,423
square meters at P10.00 per square meter and the lower area containing an area of
5511 square meters, more or less, at P8.00 per square meter (Exh. T).
On April 23, 1976, Mayor Eulogio Borres again wrote Candido Rubi furnishing him a
copy of Resolution No. 7 of the City Appraisal Committee and advising him to pay for
the lot within 15 days from receipt thereof (Exh. U).
On May 11, 1976, Candido Rubi wrote the City Mayor a letter reading:
By reason of circumstances beyond my control, I regret to inform you that I am unable
to complete the payment for Lot 1141-D as required by your office. For this reason I
most respectfully request that I be given an extension of time within which to make the
said payment (Exh. V.).
In a 2nd Indorsement, dated December 23, 1980, the City Administrator referred to the
City Attorney for comment and/or legal advice all pertinent correspondence relative to
the purchase of Lot 1141-D by Candido Rubi considering that as per documents
submitted, Mr. Rubi has not fully paid the total purchase price of the herein-mentioned
lot (Exh. X).
In a 3rd Indorsement, dated January 6, 1981, the City Attorney replied to the City
Administrators 2nd Indorsement stating that there appears to be no legal impediment to
the request of Mr. Rubi, however, per the charter of the City of Cebu, the City Mayor
must be clothed with the corresponding authority from the Sangguniang Panglunsod to
sell Lot 1141-D to Candido Rubi at the price approved by the Committee on Award per
Resolution No. 7 of the City Appraisal Committee dated April 7, 1976 (Exh. Y).
Candido Rubi died on February 17, 1983, survived by his wife, Maria J. Rubi, and
children Lina Rubi Bonoan, Hilda Rubi Borres and Sylvia Machacor, plaintiffs in the
case.
On May 17, 1989, plaintiffs filed the complaint at bench for specific performance
(Record, p. 1). On the same day, plaintiffs tendered the amount of P103,818.00 to the
City Treasurer of Cebu City (Exh. 9) and on June 28, 1989, consigned the amount with
the Clerk of Court (Exhs. AA, AA-1 to AA-4).
On January 17, 1991, the court a quo rendered the appealed decision dismissing the
complaint and declaring the defendant to have been released of its obligation to sell
the property to the plaintiffs under the terms and conditions of the award in 1976,
stating:
The Court believes, and so holds, that the contract between the parties was a mere
contract to sell on the part of the defendant City of Cebu in which the full payment of
the price was a positive suspensive condition. Since the latter condition was not met,
the sellers obligation to deliver and transfer ownership of the property never vested.
The acceptance of a unilateral promise to sell must be plain, clear and
unconditional. Therefore, if there is a qualified acceptance, with terms different from
the offer, there is no acceptance, and there is no perfected sale. (Beaumonth vs. Prieto
41 Phil 670)
As there was no absolute acceptance on the part of Candido Rubi of the terms of the
Award, nor of the condition of the City acting through the City Mayor, to pay for the
property within the period provided, the transaction between the parties never ripened
into a contract of sale. There was no perfected contract of sale. Consequently, the
defendant cannot be compelled to execute the necessary documents of conveyance to
the plaintiffs. (Decision, pp. 8-9; Rollo, pp. 60-61)[3]
The Court of Appeals reversed the court a quo. It ruled that there was a perfected
contract of sale but Candido Rubi was not able to make payments thereunder due to
circumstances beyond his control. Such failure of the buyer to pay within a fixed period
does not, by itself, bar the transfer of ownership or possession, much less dissolve the
contract of sale; in the sale of an immovable under Article 1592 of the Civil Code, the
vendee is allowed to pay for the purchase price so long as no demand has been made
for rescission judicially or by a notarial act. The Court added that the fact that the
obligation was already substantially performed in good faith militates against the
unilateral extinguishment/rescission claimed by the City of Cebu. [4]
In seeking the reversal of the Court of Appeals decision, the petitioner assigns
the following errors:
I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
CONSIDERING AND DECLARING THAT THERE WAS A PERFECTED
CONTRACT OF SALE BY AND BETWEEN CANDIDO RUBI AND THE
CITY OF CEBU OVER LOT NO. 1141-D.
II. THAT EVEN CONCEDING GRATIA ARGUMENTI THAT A CONTRACT
OF SALE WAS PERFECTED BY MERE REASON OF THE AWARD OF
SALE GRANTED IN FAVOR OF CANDIDO RUBI, RESPONDENTS
LATE PREDECESSOR-IN-INTEREST, THE HONORABLE COURT OF
APPEALS NEVERTHELESS SERIOUSLY ERRED IN NOT
CONSIDERING THAT SAID CANDIDO RUBI, WAS GUILTY OF
UNREASONABLE DELAY AND/OR LACHES IN COMPLYING WITH
THE CONDITIONS OF THE AWARD.
III. EVEN ASSUMING THAT THERE WAS A PERFECTED CONTRACT OF
SALE, THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
DECLARING THAT THERE WAS NO AUTOMATIC RESCISSION OF
THE CONTRACT, NOTWITHSTANDING RESPONDENTS FAILURE
TO PAY THE PRICE AT THE TIME AGREED UPON.
IV. THAT IT IS PATENTLY ERRONEOUS FOR THE HONORABLE
COURT OF APPEALS TO ORDER HEREIN PETITIONER CITY OF
CEBU TO EXECUTE THE NECESSARY DEED OF CONVEYANCE
WITHOUT ORDERING RESPONDENTS TO PAY LEGAL INTEREST
ON THE PURCHASE PRICE RECKONED FROM THE DATE OF
AWARD IN 1976 UNTIL ITS CONSIGNATION IN 1989.
The petitioner reiterates its position that the contract entered into by the petitioner
and Candido Rubi was a contract to sell and the failure of Rubi to make payment
caused the automatic rescission of the obligation. Petitioner bases its claim on two
grounds:
1. that title to the property remained with the petitioner, City of Cebu, before
the necessary payment of the purchase price of the lot in question was
made by the respondents; and
2. that there was no written contract which makes the contract
unenforceable under the statute of frauds.[5]
Petitioner also avers that even if the contract was indeed a contract of sale, the
respondents were guilty of laches in exercising and enforcing their rights.[6]
On the other hand, respondents maintain that the contract entered into by the
City and Rubi was a contract of sale. They argue that a contract of sale can be
perfected without a written document since a contract of sale is a consensual contract,
and since it is a contract of sale, respondents could still tender payment of the
purchase price because no demand to rescind the contract was made by the
petitioner, citing Article 1592 of the Civil Code. They also assert that there was no
delay in the performance of the obligation by the respondents since the City impliedly
granted Rubi an extension of time to pay the purchase price. [7]
We agree with the Court of Appeals that there was a perfected contract of sale
between the parties. A contract of sale is a consensual contract and is perfected at the
moment there is a meeting of the 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.[8] The
elements of a valid contract of sale under Article 1458 of the Civil Code are (1) consent
or meeting of the minds; (2) determinate subject matter; and (3) price certain in money
or its equivalent.[9] All three elements are present in the transaction between the City of
Cebu and Candido Rubi. On February 3, 1976, Candido Rubi wrote the City Mayor that
he was one of the bidders of Lot 1141-D in a bidding held on January 30, 1976 and
that he was exercising his option of equaling the highest bid price of P10.00 per square
meter for the area containing 6,423 square meters and P8.00 per square meter for the
area containing 5,511 square meters.The acceptance by the city was conveyed in the
letter of Mayor Eulogio Borres informing Rubi of the resolution of the Appraisal
Committee appraising Lot 1141-D at P10.00 for the area of 6,423 square meters
and P8.00 for the rest of the area consisting of 5,511 square meters and advising him
to pay for the lot within 15 days from receipt thereof. There was a perfected agreement
between the City of Cebu and Rubi whereby the City obligated itself to transfer the
ownership of and deliver Lot 1141-D and Rubi to pay the price. The effect of an
unqualified acceptance of the offer or proposal of the bidder is to perfect a contract,
upon notice of the award to the bidder.[10] An agreement presupposes a meeting of the
minds and when that point is reached in the negotiations between the parties intending
to enter into a contract, the purported contract is deemed perfected and none of them
may thereafter disengage himself therefrom without being liable to the other in an
action for specific performance.[11]
The deed of sale was never formalized, and there is no document the terms of
which may be interpreted to determine its legal significance, particularly whether the
parties have entered into a contract of sale or a contract to sell.
However, there is nothing in the exchange of correspondence between the
parties namely:
1. Exhibit O - the letter of Candido Rubi addressed to the Mayor where he
notified the Mayor that he was exercising his option of equaling the
highest bid price over Lot No. 1141-D;
2. Exhibit P - the award of the Committee on Awards awarding Lot 1141-D
to Candido Rubi;
3. Exhibit Q - the letter of Mayor Eulogio E. Borres to Rubi informing him to
pay for Lot 1141-D;
4. Exhibit T - the appraisal made by the City Appraisal Committee
appraising the value of the lot to be P10.00 per square meter for the
area containing 6,423 square meters and P8.00 per square meter for
the area containing 5,511 square meters; and
5. Exhibit U - the second letter of Mayor Borres again informing Rubi to pay
for Lot 1141-D at the price appraised by the City Appraisal Committee.
taken together with the documents of record, from which it can reasonably be deduced
that the parties intended to enter into a contract to sell, i.e., one whereby the
prospective seller would explicitly reserve 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 full payment of the price, such
payment being a positive suspensive condition, the failure of which is not considered a
breach, casual or serious, but simply an event which prevented the obligation from
acquiring any obligatory force.[12] A contract to sell is commonly entered into so as to
protect the seller against a buyer who intends to buy the property in installments by
withholding ownership over the property until the buyer effects full payment
therefor.[13] In this case, the parties intended to enter into a contract of sale of Lot
1141-D for a cash price of P108,318.00 in one payment. The advertisement for bids for
Lot 1141-D expressly stated that the sale shall be for cash[14] and Rubis letter
exercising the lessees option to equal the bid offered a straight bid of P10.00 per
square meter.[15] Mayor Borres letter of March 9, 1976 informing Rubi of the award
asked Rubi to make the necessary payment, stating that This must be made before we
have to execute the deed of sale in your favor and the title to the lot.[16]; and a
subsequent letter dated April 23, 1976 requested Rubi to pay the lot subject of (your)
bid, within fifteen days from receipt hereof.[17] The assumption of both parties that the
offer and acceptance was for a bid price in cash, not in staggered payments taken
together with the fact that there was no expressed or apparent intent to reserve
ownership over the lot until full payment was made leads to no other conclusion that
Rubi and the City entered into a contract of sale.
As stated, no deed of sale was ever formalized but there was compliance with the
requirements of the statute of frauds. Under this law,[18] an agreement for the sale of
real property or of an interest thereon shall be unenforceable unless the same or some
note or memorandum thereof be in writing and subscribed by the party charged or his
agent.We hold that the exchange of written correspondence between the parties,
earlier cited, constitutes sufficient writing to evidence the agreement for purposes of
complying with the statute of frauds.
The next issue to be addressed is whether the failure of Rubi to pay the balance
of the purchase price within fifteen days as directed by the City Mayor is fatal to his
right to enforce the agreement and ask the City of Cebu to execute the deed of sale in
his favor.
The rescission of a sale of an immovable property is specifically governed by
Article 1592 of the New Civil Code which reads:
In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of
right take place, the vendee may pay, even after the expiration of the period, as long
as no demand for rescission of the contract has been made upon him either judicially
or by a notarial act. After the demand, the court may not grant him a new term.[19]
It is not disputed that the City of Cebu did not give notice of rescission much less
make a judicial or notarial demand for rescission. The only subsequent action taken by
petitioner was to send to the respondents a Formal Notice dated March 4, 1989
ordering the latter to vacate the premises within fifteen days from receipt of notice for
the reason that the occupancy of lot 1141-D is presumed to be illegal as the lot is still
registered in the name of the City of Cebu.[20] This letter did not amount to a demand
for rescission, as indeed there was no reference to the sale much less a declaration
that the sale was being rescinded or abrogated from the beginning. [21] It was only when
the City of Cebu filed its Answer on June 15, 1989 to the instant complaint for specific
performance that the city invoked automatic rescission and prayed for relief allowing it
to rescind the contract.
 Given that there was no valid demand for rescission made by the City of Cebu,
was Rubi justified in not making full payment or tendering such payment of the price
despite the long lapse of time since the award was made in his favor?
The Court notes that the vendee Rubi requested for an extension of time to pay
as he was prevented by circumstances beyond his control from making payment within
fifteen days from notice, but this request was not acted upon. Neither did Rubi follow
up his request; he tendered payment only when he had filed this action for specific
performance, which suit was filed only after he received notice from the petitioner to
vacate the premises.
The petitioner admits in its pleadings[22] that an extension was impliedly
given. However, we are not prepared to rule that an implied extension of time to pay
the purchase price was granted when the City of Cebu did not act on Rubis request for
extension. The general rule is that an agreement to extend the time of payment, in
order to be valid, must be for a definite time, although it seems that no precise date be
fixed, it being sufficient that the time can readily be determined.[23]
We accordingly do not agree with the ruling of the Court of Appeals that the
request for extension was granted by the City of Cebu, as shown by the complete
silence on the part of the City of Cebu on Rubis request for extension. The fact that the
City did not act on the request for what amounts to an indefinite extension may be
construed just as logically as a denial thereof.
Is the contract of sale still subsisting after the lapse of several years, during which
time neither party took any action to enforce the contract. The City did not demand
compliance or rescission and Rubi did not pursue enforcement. Petitioners Amended
Answer claims that Rubi was guilty of unreasonable delay and/or laches, as he brought
his action for specific performance and tendered full payment of the price only in
1989. However, the City is no less guilty of neglect and delay in not reiterating its
demand for payment within a reasonable period from the implied extension which it
admittedly granted. Article 1592 allows the vendee to pay, even after the expiration of
the period agreed upon, as long as no demand for rescission has been made either
judicially or by notarial act, and it was incumbent upon the City to demand
rescission. This conclusion also takes into account the fact that Rubi had made a
partial payment, consisting of the bidders cash bond which was accepted by the City,
and also the consideration that the City was mindful of the need to protect the rights of
the actual lessees to the lands formerly comprising the Friar Lands Estate having
granted said lessees the right to match the offer of the highest bidder in the public
auction. Rubi has been a lessee/occupant of the property since 1957, has introduced
considerable improvements thereon consisting of a 90-meter road, a residential house,
water pipes, and fruit trees[24] and has lived in the lot since 1961.[25] He was awarded
Lot 1141-D not only once, but twice; the first time was in 1965, (which did not
materialize because of the filing of Civil Case No. 238-BC and the injunction issued
therein) and the second time in 1976. The respondents alleged in the Comment and
this is not controverted in petitioners reply, that:
After Candido Rubi paid the City the sum of P4,500.00 representing partial payment of
the bid price, he was advised that the balance will be payable as soon as the
Sangguniang Panlungsod approves a resolution authorizing the City Mayor to sell Lot
1141-D at the price approved by the Committee on Awards.
After an unreasonable lapse of time without the resolution having been approved,
Candido Rubi repeatedly inquired from the Sangguniang Panlungsod of Cebu City the
reason forthe delay.
The matter was endorsed to the Office of the City Attorney for legal opinion. On
January 6, 1981, City Attorney Vicente Varela, Jr. rendered an opinion to the effect
that the agreement between the City of Cebu and the late Candido Rubi was valid and
binding notwithstanding the non-payment of the full consideration of the sale (Exh. Y).
In 1981, the Committee on Laws of the Sangguniang Panlungsod to which the matter
was referred, found that all the legal requirements relative to the purchase of Lot 1141-
D (Exh. BB) was complied with and recommended the approval of a resolution
authorizing the City Mayor to sign the deed of sale in favor of Candido Rubi (Exhibit
Z).[26]
Verily, Rubi has not slept on his rights. A finding of laches, which is an equitable
doctrine and the application of which is controlled by equitable
considerations,[27] against Rubi would not conform to law nor equity taking into account
the factual milieu of this case.
With respect to the petitioners claim that the Court of Appeals erred in not
ordering respondents to pay interest due from the time of the award in 1976 until the
time of the consignation of the balance of the purchase price in 1989, respondents
aver that:
petitioner did not raise the issue of interest in the Lower Court. Neither was the issue
raised in their Appeal Brief when the case was elevated to the Court of Appeals. It was
only in the `Motion for Reconsideration of the Decision of the Court of Appeals that the
issue of legal interest was raised for the first time as an alternative remedy.
Neither did petitioner refute the above allegation in its Brief. Rather it invokes fairness
and justice in seeking payment of interest.
We find the plea unavailing. This Court has had occasion to rule that:
xxx the issue of interest was never raised before and cannot be raised for the first time
on appeal[28]
xxx petitioner is deemed to have waived such right for his failure to raise its violation
before the trial court xxx In petitions under Rule 45, as distinguished from an ordinary
appeal of criminal cases where the whole case is opened for review, the appeal is
generally limited to the errors assigned by the petitioner. Issues not raised below
cannot be pleaded for the first time on appeal.[29] (Italics supplied)
Points of law, theories, issues and arguments not adequately brought to the attention
of the lower court need not be, and ordinarily will not be, considered by a reviewing
court
YOSHIZAKI VS JOEY TRAINING
Respondent Joy Training Center of Aurora, Inc. (Joy Training) is a non-stock, non-
profit religious educational institution. It was the registered owner of a parcel of land
and the building thereon (real properties) located in San Luis Extension, Purok No. 1,
Barangay Buhangin, Baler, Aurora. The parcel of land was designated as Lot No. 125-
L and was covered by Transfer Certificate of Title (TCT) No. T-25334.4cralaw virtualaw
library
On November 10, 1998, the spouses Richard and Linda Johnson sold the real
properties, a Wrangler jeep, and other personal properties in favor of the spouses Sally
and Yoshio Yoshizaki. On the same date, a Deed of Absolute Sale5 and a Deed of
Sale of Motor Vehicle6 were executed in favor of the spouses Yoshizaki. The spouses
Johnson were members of Joy Trainings board of trustees at the time of sale. On
December 7, 1998, TCT No. T-25334 was cancelled and TCT No. T-260527 was
issued in the name of the spouses Yoshizaki.
On December 8, 1998, Joy Training, represented by its Acting Chairperson Reuben V.
Rubio, filed an action for the Cancellation of Sales and Damages with prayer for the
issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction
against the spouses Yoshizaki and the spouses Johnson before the Regional Trial
Court of Baler, Aurora (RTC).8 On January 4, 1999, Joy Training filed a Motion to
Amend Complaint with the attached Amended Complaint. The amended complaint
impleaded Cecilia A. Abordo, officer-in-charge of the Register of Deeds of Baler,
Aurora, as additional defendant. The RTC granted the motion on the same
date.9cralaw virtualaw library
In the complaint, Joy Training alleged that the spouses Johnson sold its properties
without the requisite authority from the board of directors.10 It assailed the validity of
a board resolution dated September 1, 199811 which purportedly granted the
spouses Johnson the authority to sell its real properties. It averred that only a minority
of the board, composed of the spouses Johnson and Alexander Abadayan, authorized
the sale through the resolution. It highlighted that the Articles of Incorporation provides
that the board of trustees consists of seven members, namely: the spouses Johnson,
Reuben, Carmencita Isip, Dominador Isip, Miraflor Bolante, and Abelardo
Aquino.12cralaw virtualaw library
Cecilia and the spouses Johnson were declared in default for their failure to file an
Answer within the reglementary period.13 On the other hand, the spouses Yoshizaki
filed their Answer with Compulsory Counterclaims on June 23, 1999. They claimed that
Joy Training authorized the spouses Johnson to sell the parcel of land. They asserted
that a majority of the board of trustees approved the resolution. They maintained that
the actual members of the board of trustees consist of five members, namely: the
spouses Johnson, Reuben, Alexander, and Abelardo. Moreover, Connie Dayot, the
corporate secretary, issued a certification dated February 20, 199814 authorizing the
spouses Johnson to act on Joy Trainings behalf. Furthermore, they highlighted that
the Wrangler jeep and other personal properties were registered in the name of the
spouses Johnson.15 Lastly, they assailed the RTCs jurisdiction over the case. They
posited that the case is an intra-corporate dispute cognizable by the Securities and
Exchange Commission (SEC).16cralaw virtualaw library
After the presentation of their testimonial evidence, the spouses Yoshizaki formally
offered in evidence photocopies of the resolution and certification, among others. 17 Joy
Training objected to the formal offer of the photocopied resolution and certification on
the ground that they were not the best evidence of their contents. 18 In an Order19 dated
May 18, 2004, the RTC denied the admission of the offered copies.
The RTC Ruling
The RTC ruled in favor of the spouses Yoshizaki. It found that Joy Training owned the
real properties. However, it held that the sale was valid because Joy Training
authorized the spouses Johnson to sell the real properties. It recognized that there
were only five actual members of the board of trustees; consequently, a majority of the
board of trustees validly authorized the sale. It also ruled that the sale of personal
properties was valid because they were registered in the spouses Johnsons
name.20cralaw virtualaw library
Joy Training appealed the RTC decision to the CA.
The CA Ruling
The CA upheld the RTCs jurisdiction over the case but reversed its ruling with respect
to the sale of real properties. It maintained that the present action is cognizable by the
RTC because it involves recovery of ownership from third parties.
It also ruled that the resolution is void because it was not approved by a majority of the
board of trustees. It stated that under Section 25 of the Corporation Code, the basis for
determining the composition of the board of trustees is the list fixed in the articles of
incorporation. Furthermore, Section 23 of the Corporation Code provides that the
board of trustees shall hold office for one year and until their successors are elected
and qualified. Seven trustees constitute the board since Joy Training did not hold an
election after its incorporation.
The CA did not also give any probative value to the certification. It stated that the
certification failed to indicate the date and the names of the trustees present in the
meeting. Moreover, the spouses Yoshizaki did not present the minutes that would
prove that the certification had been issued pursuant to a board resolution. 21 The CA
also denied22 the spouses Yoshizakis motion for reconsideration, prompting Sally23to
file the present petition.
certification should not be given any probative value because they were not admitted in
evidence by the RTC. It argues that the resolution is void for failure to comply with the
voting requirements under Section 40 of the Corporation Code. It also posits that the
certification is void because it lacks material particulars.
The Issues
The case comes to us with the following issues:
1. Whether or not the RTC has jurisdiction over the present case; and

2) Whether or not there was a contract of agency to sell the real properties between
The Petition Joy Training and the spouses Johnson.

Sally avers that the RTC has no jurisdiction over the case. She points out that the 3) As a consequence of the second issue, whether or not there was a valid contract of
complaint was principally for the nullification of a corporate act. The transfer of the sale of the real properties between Joy Training and the spouses Yoshizaki
SECs original and exclusive jurisdiction to the RTC24 does not have any retroactive
application because jurisdiction is a substantive matter. Our Ruling
She argues that the spouses Johnson were authorized to sell the parcel of land and
that she was a buyer in good faith because she merely relied on TCT No. T-25334.
The title states that the spouses Johnson are Joy Trainings representatives.
We find the petition unmeritorious.
She also argues that it is a basic principle that a party dealing with a registered land
The RTC has jurisdiction over disputes
need not go beyond the certificate of title to determine the condition of the property. In
concerning the application of the
fact, the resolution and the certification are mere reiterations of the spouses Johnsons
Civil Code
authority in the title to sell the real properties. She further claims that the resolution and
the certification are not even necessary to clothe the spouses Johnson with the
Jurisdiction over the subject matter is the power to hear and determine cases of the
authority to sell the disputed properties. Furthermore, the contract of agency was
general class to which the proceedings before a court belong. 28 It is conferred by law.
subsisting at the time of sale because Section 108 of Presidential Decree No. (PD)
The allegations in the complaint and the status or relationship of the parties determine
1529 requires that the revocation of authority must be approved by a court of
which court has jurisdiction over the nature of an action. 29 The same test applies in
competent jurisdiction and no revocation was reflected in the certificate of title. 25cralaw
ascertaining whether a case involves an intra-corporate controversy.30cralaw virtualaw
virtualaw library
library

The CA correctly ruled that the RTC has jurisdiction over the present case. Joy
The Case for the Respondent
Training seeks to nullify the sale of the real properties on the ground that there was no
contract of agency between Joy Training and the spouses Johnson. This was beyond
In its Comment26 and Memorandum,27 Joy Training takes the opposite view that the
the ambit of the SECs original and exclusive jurisdiction prior to the enactment of
RTC has jurisdiction over the case. It posits that the action is essentially for recovery of
Republic Act No. 8799 which only took effect on August 3, 2000. The determination of
property and is therefore a case cognizable by the RTC. Furthermore, Sally is
the existence of a contract of agency and the validity of a contract of sale requires the
estopped from questioning the RTCs jurisdiction because she seeks to reinstate the
application of the relevant provisions of the Civil Code. It is a well-settled rule that
RTC ruling in the present case.
[d]isputes concerning the application of the Civil Code are properly cognizable by
courts of general jurisdiction.31Indeed, no special skill requiring the SECs technical
Joy Training maintains that it did not authorize the spouses Johnson to sell its real
expertise is necessary for the disposition of this issue and of this case.
properties. TCT No. T-25334 does not specifically grant the authority to sell the parcel
of land to the spouses Johnson. It further asserts that the resolution and the
The Supreme Court may review questions of
fact in a petition for review on certiorari
when the findings of fact by the lower courts
are conflicting
We are aware that the issues at hand require us to review the pieces of evidence
presented by the parties before the lower courts. As a general rule, a petition for
review on certiorari precludes this Court from entertaining factual issues; we are not
duty-bound to analyze again and weigh the evidence introduced in and considered by
the lower courts. However, the present case falls under the recognized exception that
a review of the facts is warranted when the findings of the lower courts are
conflicting.32Accordingly, we will examine the relevant pieces of evidence presented to
the lower court.
There is no contract of agency between Joy
Training and the spouses Johnson to sell the
parcel of land with its improvements
Article 1868 of the Civil Code defines a contract of agency as a contract whereby a
person binds himself to render some service or to do something in representation or
on behalf of another, with the consent or authority of the latter. It may be express, or
implied from the acts of the principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on his behalf without
authority.
As a general rule, a contract of agency may be oral. However, it must be written when
the law requires a specific form.33 Specifically, Article 1874 of the Civil Code provides
that the contract of agency must be written for the validity of the sale of a piece of land
or any interest therein. Otherwise, the sale shall be void. A related provision, Article
1878 of the Civil Code, states that special powers of attorney are necessary to convey
real rights over immovable properties.
The special power of attorney mandated by law must be one that expressly
mentions a sale or that includes a sale as a necessary ingredient of the
authorized act. We unequivocably declared in Cosmic Lumber Corporation v. Court of
Appeals34 that a special power of attorney must express the powers of the agent in
clear and unmistakable language for the principal to confer the right upon an agent
to sell real estate. When there is any reasonable doubt that the language so used
conveys such power, no such construction shall be given the document. The purpose
of the law in requiring a special power of attorney in the disposition of immovable
property is to protect the interest of an unsuspecting owner from being prejudiced by
the unwarranted act of another and to caution the buyer to assure himself of the
specific authorization of the putative agent.35cralaw virtualaw library
In the present case, Sally presents three pieces of evidence which allegedly prove that
Joy Training specially authorized the spouses Johnson to sell the real properties: (1)
TCT No. T-25334, (2) the resolution, (3) and the certification. We quote the
pertinent portions of these documents for a thorough examination of Sallys claimuote
the pertinent portions of the said documents.. this Court becuse es. es Training did not
e. TCT No. T-25334, entered in the Registry of Deeds on March 5, 1998,
states:cralawlibrary
A parcel of land x x x is registered in accordance with the provisions of the Property
Registration Decree in the name of JOY TRAINING CENTER OF AURORA,
INC., Rep. by Sps. RICHARD A. JOHNSON and LINDA S. JOHNSON, both of legal
age, U.S. Citizen, and residents of P.O. Box 3246, Shawnee, Ks 66203,
U.S.A.36 (emphasis ours)
On the other hand, the fifth paragraph of the certification provides:cralawlibrary
Further, Richard A. and Linda J[.] Johnson were given FULL AUTHORITY for ALL
SIGNATORY purposes for the corporation on ANY and all matters and decisions
regarding the property and ministry here. They will follow guidelines set forth
according to their appointment and ministerial and missionary training and in that, they
will formulate and come up with by-laws which will address and serve as governing
papers over the center and corporation. They are to issue monthly and quarterly
statements to all members of the corporation.37 (emphasis ours)
The resolution states:cralawlibrary
We, the undersigned Board of Trustees (in majority) have authorized the sale of land
and building owned by spouses Richard A. and Linda J[.] Johnson (as described
in the title SN No. 5102156 filed with the Province of Aurora last 5th day of March,
1998. These proceeds are going to pay outstanding loans against the project and the
dissolution of the corporation shall follow the sale. This is a religious, non-profit
corporation and no profits or stocks are issued.38 (emphasis ours)
The above documents do not convince us of the existence of the contract of agency to
sell the real properties. TCT No. T-25334 merely states that Joy Training is
represented by the spouses Johnson. The title does not explicitly confer to the
spouses Johnson the authority to sell the parcel of land and the building thereon.
Moreover, the phrase Rep. by Sps. Richard A. Johnson and LINDA S.
JOHNSON39only means that the spouses Johnson represented Joy Training in land
registration.
The lower courts should not have relied on the resolution and the certification in
resolving the case. The spouses Yoshizaki did not produce the original documents
during trial. They also failed to show that the production of pieces of secondary
evidence falls under the exceptions enumerated in Section 3, Rule 130 of the Rules of
Court.40 Thus, the general rule that no evidence shall be admissible other than the
original document itself when the subject of inquiry is the contents of a document and Resolution dated October 3, 2006 of the Court of Appeals are
applies.41cralaw virtualaw library hereby AFFIRMED and the petition is hereby DENIED for lack of merit.

Nonetheless, if only to erase doubts on the issues surrounding this case, we declare
that even if we consider the photocopied resolution and certification, this Court will still
arrive at the same conclusion. LIMKETKAI VS CA

The resolution which purportedly grants the spouses Johnson a special power of
attorney is negated by the phrase land and building owned by spouses Richard A.
and Linda J[.] Johnson.42 Even if we disregard such phrase, the resolution must be
given scant consideration. We adhere to the CAs position that the basis for
determining the board of trustees composition is the trustees as fixed in the articles of
incorporation and not the actual members of the board. The second paragraph of
Section 2543 of the Corporation Code expressly provides that a majority of the number
of trustees as fixed in the articles of incorporation shall constitute a quorum for the
transaction of corporate business.
Moreover, the certification is a mere general power of attorney which comprises all of
Joy Trainings business.44 Article 1877 of the Civil Code clearly states that [a]n agency
couched in general terms comprises only acts of administration, even if the principal
should state that he withholds no power or that the agent may execute such acts
as he may consider appropriate, or even though the agency should authorize a
general and unlimited management.45cralaw virtualaw library
The contract of sale is unenforceable
Necessarily, the absence of a contract of agency renders the contract of sale
unenforceable;46 Joy Training effectively did not enter into a valid contract of sale with
the spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith. She
misapprehended the rule that persons dealing with a registered land have the legal
right to rely on the face of the title and to dispense with the need to inquire further,
except when the party concerned has actual knowledge of facts and circumstances
that would impel a reasonably cautious man to make such inquiry. 47 This rule applies
when the ownership of a parcel of land is disputed and not when the fact of agency
is contested.
At this point, we reiterate the established principle that persons dealing with an agent
must ascertain not only the fact of agency, but also the nature and extent of the
agents authority. 48 A third person with whom the agent wishes to contract on behalf of
the principal may require the presentation of the power of attorney, or the instructions
as regards the agency.49 The basis for agency is representation and a person dealing
with an agent is put upon inquiry and must discover on his own peril the authority of
the agent.50 Thus, Sally bought the real properties at her own risk; she bears the risk of
injury occasioned by her transaction with the spouses Johnson.
WHEREFORE, premises considered, the assailed Decision dated February 14, 2006
he issue in the petition before us is whether or not there was a perfected contract
between petitioner Limketkai Sons Milling, Inc. and respondent Bank of the Philippine
Islands (BPI) covering the sale of a parcel of land, approximately 3.3 hectares in area,
and located in Barrio Bagong Ilog, Pasig City, Metro Manila.
Branch 151 of the Regional Trial Court of the National Capital Judicial Region
stationed in Pasig ruled that there was a perfected contract of sale between petitioner
and BPI. It stated that there was mutual consent between the parties; the subject
matter is definite; and the consideration was determined. It concluded that all the
elements of a consensual contract are attendant. It ordered the cancellation of a sale
effected by BPI to respondent National Book Store (NBS) while the case was pending
and the nullification of a title issued in favor of said respondent NBS.
Upon elevation of the case to the Court of Appeals, it was held that no contract of sale
was perfected because there was no concurrence of the three requisites enumerated
in Article 1318 of the Civil Code. The decision of the trial court was reversed and the
complaint dismissed.
Hence, the instant petition.
Shorn of the interpretations given to the acts of those who participated in the disputed
sale, the findings of facts of the trial court and the Court of Appeals narrate basically
the same events and occurrences. The records show that on May 14, 1976, Philippine
Remnants Co., Inc. constituted BPI as its trustee to manage, administer, and sell its
real estate property. One such piece of property placed under trust was the disputed
lot, a 33,056-square meter lot at Barrio Bagong Ilog, Pasig, Metro Manila covered by
Transfer Certificate of Title No. 493122.
On June 23, 1988, Pedro Revilla, Jr., a licensed real estate broker was given formal
authority by BPI to sell the lot for P1,000.00 per square meter. This arrangement was
concurred in by the owners of the Philippine Remnants.
Broker Revilla contacted Alfonso Lim of petitioner company who agreed to buy the
land. On July 8, 1988, petitioner's officials and Revilla were given permission by
Rolando V. Aromin, BPI Assistant Vice-President, to enter and view the property they
were buying.
On July 9, 1988, Revilla formally informed BPI that he had procured a buyer, herein
petitioner. On July 11, 1988, petitioner's officials, Alfonso Lim and Albino Limketkai,
went to BPI to confirm the sale. They were entertained by Vice-President Merlin
Albano and Asst. Vice-President Aromin. Petitioner asked that the price of P1,000.00
per square meter be reduced to P900.00 while Albano stated the price to be
P1,100.00. The parties finally agreed that the lot would be sold at P1,000.00 per
square meter to be paid in cash. Since the authority to sell was on a first come, first
served and non-exclusive basis, it may be mentioned at this juncture that there is no
dispute over petitioner's being the first comer and the buyer to be first served.
Notwithstanding the final agreement to pay P1,000.00 per square meter on a cash
basis, Alfonso Lim asked if it was possible to pay on terms. The bank officials stated
that there was no harm in trying to ask for payment on terms because in previous
transactions, the same had been allowed. It was the understanding, however, that
should the term payment be disapproved, then the price shall be paid in cash.
It was Albano who dictated the terms under which the installment payment may be
approved, and acting thereon, Alfonso Lim, on the same date, July 11, 1988, wrote BPI
through Merlin Albano embodying the payment initially of 10% and the remaining 90%
within a period of 90 days.
Two or three days later, petitioner learned that its offer to pay on terms had been
frozen. Alfonso Lim went to BPI on July 18, 1988 and tendered the full payment of
P33,056,000.00 to Albano. The payment was refused because Albano stated that the
authority to sell that particular piece of property in Pasig had been withdrawn from his
unit. The same check was tendered to BPI Vice-President Nelson Bona who also
refused to receive payment.
An action for specific performance with damages was thereupon filed on August 25,
1988 by petitioner against BPI. In the course of the trial, BPI informed the trial court
that it had sold the property under litigation to NBS on July 14, 1989. The complaint
was thus amended to include NBS.
On June 10, 1991, the trial court rendered judgment in the case as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and
against defendants Bank of the Philippine Islands and National Book
Store, Inc.:
1. Declaring the Deed of Sale of the property covered by T.C.T. No.
493122 in the name of the Bank of the Philippine Islands, situated in
Barrio Bagong Ilog, Pasig, Metro Manila, in favor of National Book
Store, Inc., null and void;
2. Ordering the Register of Deeds of the Province of Rizal to cancel
the Transfer Certificate of Title which may have been issued in favor
of National Book Store, Inc. by virtue of the aforementioned Deed of
Sale dated July 14, 1989;
3. Ordering defendant BPI, upon receipt by it from plaintiff of the sum
of P33,056,000.00, to execute a Deed of Sale in favor of plaintiff of
the aforementioned property at the price of P1,000.00 per square
meter; in default thereof, the Clerk of this Court is directed to
execute the said deed;
4. Ordering the Register of Deeds of Pasig, upon registration of the
said deed, whether executed by defendant BPI or the Clerk of Court
and payment of the corresponding fees and charges, to cancel said
T.C.T. No. 493122 and to issue, in lieu thereof, another transfer
certificate of title in the name of plaintiff;
5. Ordering defendants BPI and National Book Store, Inc. to pay,
jointly and severally, to the plaintiff the sums of P10,000,000.00 as
actual and consequential damages and P150,000.00 as attorney's
fees and litigation expenses, both with interest at 12% per
annum from date hereof;
6. On the cross-claim of defendant bank against National Book
Store, ordering the latter to indemnify the former of whatever
amounts BPI shall have paid to the plaintiff by reason hereof; and
7. Dismissing the counterclaims of the defendants against the
plaintiff and National Book Store's cross-claim against defendant
bank.
Costs against defendants.
(pp. 44-45, Rollo.)
As earlier intimated, upon the decision being appealed, the Court of Appeals (Buena
[P], Rasul, and Mabutas, JJ.), on August 12, 1994, reversed the trial court's decision
and dismissed petitioner's complaint for specific performance and damages.
The issues raised by the parties revolve around the following four questions:
(1) Was there a meeting of the minds between petitioner Limketkai and respondent
BPI as to the subject matter of the contract and the cause of the obligation?
(2) Were the bank officials involved in the transaction authorized by BPI to enter into
the questioned contract?
(3) Is there competent and admissible evidence to support the alleged meeting of the
minds?
(4) Was the sale of the disputed land to the NBS during the pendency of trial effected
in good faith?
There is no dispute in regard to the following: (a) that BPI as trustee of the property of
Philippine Remnant Co. authorized a licensed broker, Pedro Revilla, to sell the lot for
P1,000.00 per square meter; (b) that Philippine Remnants confirmed the authority to
sell of Revilla and the price at which he may sell the lot; (c) that petitioner and Revilla
agreed on the former buying the property; (d) that BPI Assistant Vice-President
Rolando V. Aromin allowed the broker and the buyer to inspect the property; and (e)
that BPI was formally informed about the broker having procured a buyer.
The controversy revolves around the interpretation or the significance of the
happenings or events at this point.
Petitioner states that the contract to sell and to buy was perfected on July 11, 1988
when its top officials and broker Revilla finalized the details with BPI Vice-Presidents
Merlin Albano and Rolando V. Aromin at the BPI offices.
Respondents, however, contend that what transpired on this date were part of
continuing negotiations to buy the land and not the perfection of the sale. The
arguments of respondents center on two propositions (1) Vice-Presidents Aromin
and Albano had no authority to bind BPI on this particular transaction and (2) the
subsequent attempts of petitioner to pay under terms instead of full payment in cash
constitutes a counter-offer which negates the existence of a perfected contract.
The alleged lack of authority of the bank officials acting in behalf of BPI is not
sustained by the record.
At the start of the transactions, broker Revilla by himself already had full authority to
sell the disputed lot. Exhibit B dated June 23, 1988 states, "this will serve as your
authority to sell on an as is, where is basis the property located at Pasig Blvd., Bagong
Ilog . . . ." We agree with Revilla's testimony that the authority given to him was to
sell and not merely to look for a buyer, as contended by respondents.
Revilla testified that at the time he perfected the agreement to sell the litigated
property, he was acting for and in behalf of the BPI as if he were the Bank itself. This
notwithstanding and to firm up the sale of the land, Revilla saw it fit to bring BPI
officials into the transaction. If BPI could give the authority to sell to a licensed broker,
we see no reason to doubt the authority to sell of the two BPI Vice-Presidents whose
precise job in the Bank was to manage and administer real estate property.
Respondent BPI alleges that sales of trust property need the approval of a Trust
Committee made up of top bank officials. It appears from the record that this trust
committee meets rather infrequently and it does not have to pass on regular
transactions.
Rolando Aromin was BPI Assistant Vice-President and Trust Officer. He directly
supervised the BPI Real Property Management Unit. He had been in the Real Estate
Division since 1985 and was the head supervising officer of real estate matters.
Aromin had been with the BPI Trust Department since 1968 and had been involved in
the handling of properties of beneficial owners since 1975 (tsn., December 3, 1990, p.
5).
Exhibit 10 of BPI, the February 15, 1989 letter from Senior Vice-President Edmundo
Barcelon, while purporting to inform Aromin of his poor performance, is an admission
of BPI that Aromin was in charge of Torrens titles, lease contracts, problems of
tenants, insurance policies, installment receivables, management fees, quitclaims, and
other matters involving real estate transactions. His immediate superior, Vice-
President Merlin Albano had been with the Real Estate Division for only one week but
he was present and joined in the discussions with petitioner.
There is nothing to show that Alfonso Lim and Albino Limketkai knew Aromin before
the incident. Revilla brought the brothers directly to Aromin upon entering the BPI
premises. Aromin acted in a perfectly natural manner on the transaction before him
with not the slightest indication that he was acting ultra vires. This shows that BPI held
Aromin out to the public as the officer routinely handling real estate transactions and,
as Trust Officer, entering into contracts to sell trust properties.
Respondents state and the record shows that the authority to buy and sell this
particular trust property was later withdrawn from Trust Officer Aromin and his entire
unit. If Aromin did not have any authority to act as alleged, there was no need to
withdraw authority which he never possessed.
Petitioner points to Areola vs. Court of Appeals (236 SCRA 643 [1994]) which
cited Prudential Bank vs. Court of Appeals (22 SCRA 350 [1993]), which in turn relied
upon McIntosh vs. Dakota Trust Co. (52 ND 752, 204 NW 818, 40 ALR 1021), to wit:
Accordingly a banking corporation is liable to innocent third persons
where the representation is made in the course of its business by an
agent acting within the general scope of his authority even though, in
the particular case, the agent is secretly abusing his authority and
 attempting to perpetrate a fraud upon his principal or some other
person for his own ultimate benefit.
(at pp. 652-653.)
In the present case, the position and title of Aromin alone, not to mention the testimony
and documentary evidence about his work, leave no doubt that he had full authority to
act for BPI in the questioned transaction. There is no allegation of fraud, nor is there
the least indication that Aromin was acting for his own ultimate benefit. BPI later
dismissed Aromin because it appeared that a top official of the bank was personally
interested in the sale of the Pasig property and did not like Aromin's testimony. Aromin
was charged with poor performance but his dismissal was only sometime after he
testified in court. More than two long years after the disputed transaction, he was still
Assistant Vice-President of BPI.
The records show that the letter of instruction dated June 14, 1988 from the owner of
Philippine Remnants Co. regarding the sale of the firm's property was addressed to
Aromin. The P1,000.00 figure on the first page of broker Revilla's authority to sell was
changed to P1,100.00 by Aromin. The price was later brought down again to
P1,000.00, also by Aromin. The permission given to petitioner to view the lot was
signed by Aromin and honored by the BPI guards. The letter dated July 9, 1988 from
broker Revilla informing BPI that he had a buyer was addressed to Aromin. The
conference on July 11, 1988 when the contract was perfected was with Aromin and
Vice-President Albano. Albano and Aromin were the ones who assured petitioner
Limketkai's officers that term payment was possible. It was Aromin who called up
Miguel Bicharra of Philippine Remnants to state that the BPI rejected payment on
terms and it was to Aromin that Philippine Remnants gave the go signal to proceed
with the cash sale. Everything in the record points to the full authority of Aromin to bind
the bank, except for the self-serving memoranda or letters later produced by BPI that
Aromin was an inefficient and undesirable officer and who, in fact, was dismissed after
he testified in this case. But, of course, Aromin's alleged inefficiency is not proof that
he was not fully clothed with authority to bind BPI.
Respondents' second contention is that there was no perfected contract because
petitioner's request to pay on terms constituted a counter-offer and that negotiations
were still in progress at that point.
Asst. Vice-President Aromin was subpoenaed as a hostile witness for petitioner during
trial. Among his statements is one to the effect that
. . . Mr. Lim offered to buy the property at P900.00 per square meter
while Mr. Albano counter-offered to sell the property at P1,100.00
per square meter but after the usual haggling, we finally agreed to
sell the property at the price of P1,000.00 per square meter . . .
(tsn, 12-3-90, p. 17; Emphasis supplied.)
Asked if there was a meeting of the minds between the buyer and the bank in respect
to the price of P1,000.00 per square meter, Aromin answered:
Yes, sir, as far as my evaluation there was a meeting of the minds
as far as the price is concerned, sir.
(ibid, p. 17.)
The requirements in the payment of the purchase price on terms instead of cash were
suggested by BPI Vice-President Albano. Since the authority given to broker Revilla
specified cash payment, the possibility of paying on terms was referred to the Trust
Committee but with the mutual agreement that "if the proposed payment on terms will
not be approved by our Trust Committee, Limketkai should pay in cash . . . the amount
was no longer subject to the approval or disapproval of the Committee, it is only on the
terms." (ibid, p. 19). This is incontrovertibly established in the following testimony of
Aromin:
A. After you were able to agree on the price of
P1,000.00/sq. m., since the letter or authority says
the payment must be in cash basis, what
transpired later on?
B. After we have agreed on the price, the Lim
brothers inquired on how to go about submitting
the covering proposal if they will be allowed to pay
on terms. They requested us to give them a guide
on how to prepare the corresponding letter of
proposal. I recall that, upon the request of Mr.
Albino Limketkai, we dictated a guide on how to
word a written firm offer that was to be submitted
by Mr. Lim to the bank setting out the terms of
payment but with the mutual agreement that if his
proposed payment on terms will not be approved
by our trust committee, Limketkai should pay the
price in cash.
Q And did buyer Limketkai agree to pay in cash in
case the offer of terms will be cash (disapproved).
A Yes, sir.
 Q At the start, did they show their willingness to
pay in cash?
A Yes, sir.
Q You said that the agreement on terms was to be
submitted to the trust committee for approval, are
you telling the Court that what was to be approved
by the trust committee was the provision on the
payment on terms?
A Yes, sir.
Q So the amount was no longer subject to the
approval or disapproval of the committee, it is only
on the terms?
A Yes, sir.
(tsn, Dec. 3, 1990, pp. 18-19; Emphasis supplied.)
The record shows that if payment was in cash, either broker Revilla or Aromin had full
authority. But because petitioner took advantage of the suggestion of Vice-President
Albano, the matter was sent to higher officials. Immediately upon learning that
payment on terms was frozen and/or denied, Limketkai exercised his right within the
period given to him and tendered payment in full. The BPI rejected the payment.
In its Comment and Memorandum, respondent NBS cites Ang Yu Asuncion vs. Court
of Appeals (238 SCRA 602 [1994]) to bolster its case. Contrarywise, it would seem that
the legal principles found in said case strengthen and support petitioner's submission
that the contract was perfected upon the meeting of the minds of the parties.
The negotiation or preparation stage started with the authority given by Philippine
Remnants to BPI to sell the lot, followed by (a) the authority given by BPI and
confirmed by Philippine Remnants to broker Revilla to sell the property, (b) the offer to
sell to Limketkai, (c) the inspection of the property and finally (d) the negotiations with
Aromin and Albano at the BPI offices.
The perfection of the contract took place when Aromin and Albano, acting for BPI,
agreed to sell and Alfonso Lim with Albino Limketkai, acting for petitioner Limketkai,
agreed to buy the disputed lot at P1,000.00 per square meter. Aside from this there
was the earlier agreement between petitioner and the authorized broker. There was a
concurrence of offer and acceptance, on the object, and on the cause thereof.
The phases that a contract goes through may be summarized as follows:
a. preparation, conception or generation, which is the period of
negotiation and bargaining, ending at the moment of agreement of
the parties;
b. perfection or birth of the contract, which is the moment when the
parties come to agree on the terms of the contract; and
c. consummation or death, which is the fulfillment or performance of
the terms agreed upon in the contract (Toyota Shaw, Inc. vs. Court
of Appeals, G.R. No. 116650, May 23, 1995).
But in more graphic prose, we turn to Ang Yu Asuncion, per Justice Vitug:
. . . 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.
(238 SCRA 602; 611 [1994].)
In Villonco Realty Company vs. Bormaheco (65 SCRA 352 [1975]), bearing factual
antecendents similar to this case, the Court, through Justice Aquino (later to be Chief
Justice), quoting authorities, upheld the perfection of the contract of sale thusly:
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.)
xxx xxx xxx
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).
xxx xxx xxx
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., 105 Fed. 2nd 965, citing Sec. 79, Williston on
Contracts).
xxx xxx xxx
. . . 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 or a counter-offer.
(Stuart vs. Franklin Life Ins. Co., supra.)
(at pp. 362-363; 365-366.)
In the case at bench, the allegation of NBS that there was no concurrence of the offer
and acceptance upon the cause of the contract is belied by the testimony of the very
BPI official with whom the contract was perfected. Aromin and Albano concluded the
sale for BPI. The fact that the deed of sale still had to be signed and notarized does
not mean that no contract had already been perfected. A sale of land is valid
regardless of the form it may have been entered into (Claudel vs. Court of Appeals,
199 SCRA 113, 119 [1991]). The requisite form under Article 1458 of the Civil Code is
merely for greater efficacy or convenience and the failure to comply therewith does not
affect the validity and binding effect of the act between the parties (Vitug, Compendium
of Civil Law and Jurisprudence, 1993 Revised Edition, p. 552). If the law requires a
document or other special form, as in the sale of real property, the contracting parties
may compel each other to observe that form, once the contract has been perfected.
Their right may be exercised simultaneously with action upon the contract (Article
1359, Civil Code).
Regarding the admissibility and competence of the evidence adduced by petitioner,
respondent Court of Appeals ruled that because the sale involved real property, the
statute of frauds is applicable.
In any event, petitioner cites Abrenica vs. Gonda (34 Phil. 739 [1916]) wherein it was
held that contracts infringing the Statute of Frauds are ratified when the defense fails to
object, or asks questions on cross-examination. The succinct words of Justice Araullo
still ring in judicial cadence:
As no timely objection or protest was made to the admission of the
testimony of the plaintiff with respect to the contract; and as the
motion to strike out said evidence came too late; and, furthermore,
as the defendants themselves, by the cross-questions put by their
counsel to the witnesses in respect to said contract, tacitly waived
their right to have it stricken out, that evidence, therefore, cannot be
considered either inadmissible or illegal, and court, far from having
erred in taking it into consideration and basing his judgment thereon,
notwithstanding the fact that it was ordered to be stricken out during
the trial, merely corrected the error he committed in ordering it to be
so stricken out and complied with the rules of procedure
hereinbefore cited.
(at p. 748.)
In the instant case, counsel for respondents cross-examined petitioner's witnesses at
length on the contract itself, the purchase price, the tender of cash payment, the
authority of Aromin and Revilla, and other details of the litigated contract. Under
the Abrenica rule (reiterated in a number of cases, among them Talosig vs. Vda. de
Nieba 43 SCRA 472 [1972]), even assuming that parol evidence was initially
inadmissible, the same became competent and admissible because of the cross-
examination, which elicited evidence proving the evidence of a perfected contract. The
cross-examination on the contract is deemed a waiver of the defense of the Statute of
Frauds (Vitug, Compendium of Civil Law and Jurisprudence, 1993 Revised
Edition, supra, p. 563).
The reason for the rule is that as pointed out in Abrenica "if the answers of those
witnesses were stricken out, the cross-examination could have no object whatsoever,
and if the questions were put to the witnesses and answered by them, they could only
be taken into account by connecting them with the answers given by those witnesses
on direct examination" (pp. 747-748).
Moreover, under Article 1403 of the Civil Code, an exception to the unenforceability of
contracts pursuant to the Statute of Frauds is the existence of a written note or
memorandum evidencing the contract. The memorandum may be found in several
writings, not necessarily in one document. The memorandum or memoranda is/are
written evidence that such a contract was entered into.
We cite the findings of the trial court on this matter:
In accordance with the provisions of Art. 1403 of the Civil Code, the
existence of a written contract of the sale is not necessary so long as
the agreement to sell real property is evidenced by a written note or
memorandum, embodying the essentials of the contract and signed
by the party charged or his agent. Thus, it has been held:
The Statute of Frauds, embodied in Article 1403 of
the Civil Code of the Philippines, does not require
that the contract itself be written. The plain test of
Article 1403, Paragraph (2) is clear that a written
note or memorandum, embodying the essentials
of the contract and signed by the party charged, or
his agent suffices to make the verbal agreement
enforceable, taking it out of the operation of the
statute. (Emphasis supplied)
xxx xxx xxx
In the case at bar, the complaint in its paragraph 3
pleads that the deal had been closed by letter and
telegram (Record on Appeal, p. 2), and the letter
referred to was evidently the one copy of which
was appended as Exhibit A to plaintiffs opposition
to the motion to dismiss. The letter, transcribed
above in part, together with the one marked as
Appendix B, constitute an adequate memorandum
of the transaction. They are signed by the
defendant-appellant; refer to the property sold as a
Lot in Puerto Princesa, Palawan, covered by
T.C.T. No. 62, give its area as 1,825 square
meters and the purchase price of four (P4.00)
pesos per square meter payable in cash. We have
in them, therefore, all the essential terms of the
contract and they satisfy the requirements of the
Statute of Frauds.
(Footnote 26, Paredes vs. Espino, 22 SCRA 1000 [1968]).
While there is no written contract of sale of the Pasig property
executed by BPI in favor of plaintiff, there are abundant notes and
memoranda extant in the records of this case evidencing the
elements of a perfected contract. There is Exhibit P, the letter of
Kenneth Richard Awad addressed to Roland Aromin, authorizing the
sale of the subject property at the price of P1,000.00 per square
meter giving 2% commission to the broker and instructing that the
sale be on cash basis. Concomitantly, on the basis of the instruction
of Mr. Awad, (Exh. P), an authority to sell, (Exh. B) was issued by
BPI to Pedro Revilla, Jr., representing Assetrade Co., authorizing the
latter to sell the property at the initial quoted price of P1,000.00 per
square meter which was altered on an unaccepted offer by
Technoland. After the letter authority was issued to Mr. Revilla, a
letter authority was signed by Mr. Aromin allowing the buyer to enter
the premises of the property to inspect the same (Exh. C). On July 9,
1988, Pedro Revilla, Jr., acting as agent of BPI, wrote a letter to BPI
informing it that he had procured a buyer in the name of Limketkai
Sons Milling, Inc. with offices at Limketkai Bldg., Greenhills, San
Juan, Metro Manila, represented by its Exec. Vice-President, Alfonso
Lim (Exh. D). On July 11, 1988, the plaintiff, through Alfonso Lim,
wrote a letter to the bank, through Merlin Albano, confirming their
transaction regarding the purchase of the subject property (Exh. E).
On July 18, 1988, the plaintiff tendered upon the officials of the bank
a check for P33,056,000.00 covered by Check No. CA510883, dated
July 18, 1988. On July 1, 1988, Alfonso Zamora instructed Mr.
Aromin in a letter to resubmit new offers only if there is no
transaction closed with Assetrade Co. (Exh. S). Combining all these
notes and memoranda, the Court is convinced of the existence of
perfected contract of sale. Aptly, the Supreme Court, citing American
cases with approval, held:
No particular form of language or instrument is
necessary to constitute a memorandum or note in
writing under the statute of frauds; any document
or writing, formal or informal, written either for the
purpose of furnishing evidence of the contract or
for another purpose, which satisfies all the
 requirements of the statute as to contents and
signature, as discussed respectively infra secs.
178-200, and infra secs. 201-205, is a sufficient
memorandum or note. A memorandum may be
written as well with lead pencil as with pen and
ink. It may also be filled in on a printed form. (37
C.J.S., 653-654).
The note or memorandum required by the statute
of frauds need not be contained in a single
document, nor, when contained in two or more
papers, need each paper be sufficient as to
contents and signature to satisfy the statute. Two
or more writings properly connected may be
considered together, matters missing or uncertain
in one may be supplied or rendered certain by
another, and their sufficiency will depend on
whether, taken together, they meet the
requirements of the statute as to contents and the
requirements of the statutes as to signature, as
considered respectively infra secs. 179-200 and
secs. 201-215.
(pp. 460-463, Original RTC Record).
The credibility of witnesses is also decisive in this case. The trial court directly
observed the demeanor and manner of testifying of the witnesses while the Court of
Appeals relied merely on the transcript of stenographic notes.
In this regard, the court of origin had this to say:
Apart from weighing the merits of the evidence of the parties, the
Court had occasion to observe the demeanor of the witnesses they
presented. This is one important factor that inclined the Court to
believe in the version given by the plaintiff because its witnesses,
including hostile witness Roland V. Aromin, an assistant vice-
president of the bank, were straightforward, candid and unhesitating
in giving their respective testimonies. Upon the other hand, the
witnesses of BPI were evasive, less than candid and hesitant in
giving their answers to cross examination questions. Moreover, the
witnesses for BPI and NBS contradicted each other. Fernando Sison
III insisted that the authority to sell issued to Mr. Revilla was merely
an evidence by which a broker may convince a prospective buyer
that he had authority to offer the property mentioned therein for sale
and did not bind the bank. On the contrary, Alfonso Zamora, a
Senior Vice-President of the bank, admitted that the authority to sell
issued to Mr. Pedro Revilla, Jr. was valid, effective and binding upon
the bank being signed by two class "A" signatories and that the bank
cannot back out from its commitment in the authority to sell to Mr.
Revilla.
While Alfredo Ramos of NBS insisted that he did not know
personally and was not acquainted with Edmundo Barcelon, the
latter categorically admitted that Alfredo Ramos was his friend and
that they have even discussed in one of the luncheon meetings the
matter of the sale of the Pasig property to NBS. George Feliciano
emphatically said that he was not a consultant of Mr. Ramos nor was
he connected with him in any manner, but his calling card states that
he was a consultant to the chairman of the Pacific Rim Export and
Holdings Corp. whose chairman is Alfredo Ramos. This deliberate
act of Mr. Feliciano of concealing his being a consultant to Mr.
Alfredo Ramos evidently was done by him to avoid possible
implication that he committed some underhanded maneuvers in
manipulating to have the subject property sold to NBS, instead of
being sold to the plaintiff.
(pp. 454-455, Original RTC Record.)
On the matter of credibility of witnesses where the findings or conclusions of the Court
of Appeals and the trial court are contrary to each other, the pronouncement of the
Court in Serrano vs. Court of Appeals (196 SCRA 107 [1991]) bears stressing:
It is a settled principle of civil procedure that the conclusions of the
trial court regarding the credibility of witnesses are entitled to great
respect from the appellate courts because the trial court had an
opportunity to observe the demeanor of witnesses while giving
testimony which may indicate their candor or lack thereof. While the
Supreme Court ordinarily does not rule on the issue of credibility of
witnesses, that being a question of fact not properly raised in a
petition under Rule 45, the Court has undertaken to do so in
exceptional situations where, for instance, as here, the trial court and
the Court of Appeals arrived at divergent conclusions on questions
of fact and the credibility of witnesses.
(at p. 110.)
On the fourth question of whether or not NBS is an innocent purchaser for value, the
record shows that it is not. It acted in bad faith.
Respondent NBS ignored the notice of lis pendens annotated on the title when it
bought the lot. It was the willingness and design of NBS to buy property already sold to
another party which led BPI to dishonor the contract with Limketkai.
Petitioner cites several badges of fraud indicating that BPI and NBS conspired to
prevent petitioner from paying the agreed price and getting possession of the property:
1. The sale was supposed to be done through an authorized broker, but top officials of
BPI personally and directly took over this particular sale when a close friend became
interested.
2. BPI Senior Vice President Edmundo Barcelon admitted that NBS's President,
Alfredo Ramos, was his friend; that they had lunch meetings before this incident and
discussed NBS's purchase of the lot. Barcelon's father was a business associate of
Ramos.
3. George Feliciano, in behalf of NBS, offered P5 million and later P7 million if
petitioner would drop the case and give up the lot. Feliciano went to petitioner's office
and haggled with Alfonso Lim but failed to convince him inspite of various and
increasing offers.
4. In a place where big and permanent buildings abound, NBS had constructed only a
warehouse marked by easy portability. The warehouse is bolted to its foundations and
can easily be dismantled.
It is the very nature of the deed of absolute sale between BPI and NBS which,
however, clearly negates any allegation of good faith on the part of the buyer. Instead
of the vendee insisting that the vendor guarantee its title to the land and recognize the
right of the vendee to proceed against the vendor if the title to the land turns out to be
defective as when the land belongs to another person, the reverse is found in the deed
of sale between BPI and NBS. Any losses which NBS may incur in the event the title
turns out to be vested in another person are to be borne by NBS alone. BPI is
expressly freed under the contract from any recourse of NBS against it should BPI's
title be found defective.
NBS, in its reply memorandum, does not refute or explain the above circumstance
squarely. It simply cites the badges of fraud mentioned in Oria vs. McMicking (21 Phil.
243 [1912]) and argues that the enumeration there is exclusive. The decision in said
case plainly states "the following are some of the circumstances attending sales which
have been denominated by courts (as) badges of fraud." There are innumerable
situations where fraud is manifested. One enumeration in a 1912 decision cannot
possibly cover all indications of fraud from that time up to the present and into the
future.
The Court of Appeals did not discuss the issue of damages. Petitioner cites the fee for
filing the amended complaint to implead NBS, sheriffs fees, registration fees, plane
fare and hotel expenses of Cebu-based counsel. Petitioner also claimed, and the trial
court awarded, damages for the profits and opportunity losses caused to petitioner's
business in the amount of P10,000,000.00.
We rule that the profits and the use of the land which were denied to petitioner
because of the non-compliance or interference with a solemn obligation by
respondents is somehow made up by the appreciation in land values in the meantime.
Prescinding from the above, we rule that there was a perfected contract between BPI
and petitioner Limketkai; that the BPI officials who transacted with petitioner had full
authority to bind the bank; that the evidence supporting the sale is competent and
admissible; and that the sale of the lot to NBS during the trial of the case was
characterized by bad faith.
WHEREFORE, the questioned judgment of the Court of Appeals is hereby
REVERSED and SET ASIDE. The June 10, 1991 judgment of Branch 151 of the
Regional Trial Court of The National Capital Judicial Region stationed in Pasig, Metro
Manila is REINSTATED except for the award of Ten Million Pesos (P10,000,000.00)
damages which is hereby DELETED.
BADILLO VS FERRER
This case was certified to this Court by the Court of Appeals which found in its
Resolution dated August 13, 1979, that the issues raised therein are pure questions of
law. The instant case is treated as a petition for review on certiorari.
The facts of this case as found by the Court of Appeals are as follows:
... Macario Badillo died intestate onFebruary 4, 1966,survived by his widow,
Clarita Ferrer, and five minor children: Alberto, 16, Nenita, 14, Hilly 12, Cristy,
9, and Maria Salome, 5. He left a parcel of registered land of 77 square
meters in Lumban, Laguna, with a house erected thereon, valued at
P7,500.00, (the "PROPERTY", for short). Hence, each of the five minor
plaintiffs had inherited a 1/12 share of the P7,500.00, or P625.00 each, which
is less than the P2,000.00 mentioned in Article 320 of the Civil Code.
On January 18, 1967, the surviving widow, in her own behalf and as natural
guardian of the minor plaintiffs, executed a Deed of Extrajudicial Partition and
Sale of the PROPERTY through which the PROPERTY was sold to
defendants-appellants, the spouses Gregorio Soromero and Eleuteria Rana.
The Register of Deeds at Sta. Cruz, Laguna, extended recognition to the
 validity of the Deed of Extrajudicial Partition and Sale, recorded the same,
and issued a new transfer certificate of title to defendants-appellants. ...
On November 11, 1968, Modesta Badillo, a sister of Macario Badillo, was
able to obtain guardianship over the persons and properties of the minor
plaintiffs, without personal notice to their mother, who was alleged "could not
be located inspite of the efforts exerted" (ROA, p. 26).
On July 23, 1970, their guardian caused the minor plaintiffs to file a complaint
in the case below for the annulment of the sale of their participation in the
PROPERTY to defendants-appellants and, conceding the validity of the sale
of the widow's participation in the PROPERTY, they asked that, as co-
owners, they be allowed to exercise the right of legal redemption.
The lower court defined the issues in the case below as follows:
(1) Was the sale of the shares of the plaintiffs in the ownership of the
land in question which was made by their mother, defendant Clarita
Ferrer Badillo, in favor of the defendant spouses Gregorio Soromero
and Eleuteria Rana as evidenced by the document marked as
Exhibit "A" for the plaintiffs and Exhibit "2" for the defendants, valid
and binding upon the plaintiffs?
(2) May the plaintiffs, as co-owners of the property in question, still
exercise their right of redemption under Art. 1620 and pursuant to
Art. 1623 of the Civil Code; and if so, for how much?
The lower court, invoking the Nario case (Nario vs. Philippine American Life
Insurance Co., 20 SCRA 434), promulgated the appealed judgment annulling
the sale to defendants-appellants of the minor plaintiffs' participation in the
PROPERTY, and allowing them to redeem the sold participation of their
mother. 1
In this appeal, the defendants-appellants assign the following errors:
1 notice in writing. When she received her copy of the Deed of Extrajudicial Partition and
THE COURT ERRED IN FINDING THAT THE PERIOD OF THIRTY (30) DAYS
PROVIDED FOR BY ARTICLE 1623 OF THE NEW CIVIL CODE FOR PLAINTIFFS
TO REDEEM THE SHARE OF THEIR MOTHER IN THE PROPERTY SUBJECT OF
THEIR CO-OWNERSHIP SOLD BY THE LATTER TO DEFEN DANTS HAS NOT YET
ELAPSED.
2
THE COURT ERRED IN DECLARING THE SALE BY CLARITA FERRER BADILLO
OF THE 5/12 SHARE OF HIS CHILDREN ON THE PROPERTY INVOLVED TO
DEFENDANTS AS NULL AND VOID AND RELATIVE THERETO THE COURT
CONSEQUENTLY ERRED IN ITS FAILURE TO ORDER PLAINTIFFS MINORS TO
RETURN TO DEFENDANTS THE PURCHASE PRICE AS WELL AS THE VALUE OF
THE IMPROVEMENTS MADE BY DEFENDANTS ON THE PROPERTY,
3
THE COURT ERRED IN ORDERING THE DEFENDANTS TO RE-SELL TO
PLAINTIFFS THE REMAINING 7/12 PORTION OF THE PROPERTY IN QUESTION
IN THE AMOUNT OF P4,375 .00.2
The Statutory provision involved in the first error assigned is Article 1623 of the New
Civil Code, which is hereunder reproduced thus:
ART. 1623. 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.
The right of redemption of co-owners excludes that of adjoining owners.
Under their first assignment of error, the appellants advance the view that "the
requisite notice in writing provided for by Article 1623 of the New Civil Code was
already received by the minors-plaintiffs thru their then legal guardian, Clarita Ferrer
Badillo, their mother, on the date the deed of extrajudicial partition and sale was
executed on January 18, 1967. And the thirty-day period of redemption must be
reckoned from this date."3 Stated differently, under Article 320 of the New Civil Code,
the right granted to Clarita Ferrer Badillo to administer her children's property if the
same is less than P2,000.00 includes the right to receive for her minor children such
Sale, Clarita Ferrer Badillo in effect received a notice in writing of the said sale in
behalf of her minor children.
This argument is meritorious.
Articles 320 and 326 of the New Civil Code state that:
 ART. 320. The father, or in his absence the mother, is the legal administrator
of the property pertaining to the child under parental authority. If the property
is worth more than two thousand pesos, the father or mother shall give a
bond subject to the approval of the Court of First Instance.
ART. 326. When the property of the child is worth more than two thousand
pesos, the father or mother shall be considered a guardian of the child's
property, subject to the duties and obligations of guardians under the Rules of
Court.
In other words, the father, or in his absence the mother, is considered the legal
administrator of the property pertaining to his child under parental authority without
need of giving a bond in case the amount of his child's property does not exceed Two
Thousand Pesos.
Rule 93, Section 7, of the Revised Rules of Court goes further by automatically
designating the parent as the legal guardian of the child without need of any judicial
appointment in case the latter's property does not exceed Two Thousand Pesos. It
reads, thus:
SEC. 7. Parents as guardians. When the property of the child under
parental authority is worth two thousand pesos or less, the father or the
mother, without the necessity of court appointment, shall be his legal
guardian. When the property of the child is worth more than two thousand
pesos, the father or the mother shall be considered guardian of the child's
property, with the duties and obligations of guardians under these rules, and
shall file the petition required by section 2 hereof. For good reasons the court
may, however, appoint another suitable person.
Our standing jurisprudence reveals that there is a case which is applicable to the case
at bar. This case involved an interpretation of Article 1524 of the Old Civil Code, the
statutory provision from which Article 1623 of the New Civil Code originated and the
one which the latter amended. The two articles are basically the same except that
Article 1623 mandates a longer period for redemption and limits the manner of
transmitting the notice of the sale of the property co-owned to one in writing served by
the vendor.
The case is Villasor vs. Medel, et al.4
In this case, the co-owner plaintiff, upon reaching the age of majority, sought to
redeem a portion of a large tract of land which was sold to the defendant while the
former was still a minor. The plaintiff, during his minority, became a co-owner of an
undivided property which he, together with his cousins, acquired by donation from his
grandmother. A legal guardian was duly appointed by the court to represent the minor
co-owners. This legal guardian later sold, with the necessary permission of the court,
the shares of three co-owners to the defendant. When the plaintiff reached the age of
majority, he wanted to redeem the said shares.
This Court ruled in favor of the defendant, holding that:
The law in prescribing certain contingencies as the starting point from which
the nine-day period should be counted, is to be presumed to exclude all
others. Exclusio unius est exclusio alterius. The starting point is registration
or, in the absence of registration, knowledge of the conveyance by the co-
owners. It is logical to assume that if minority had been contemplated, the law
would have so expressly stated. This is specially true in a code which, unlike
an ordinary statute, is framed with meticulous care and thorough reflection.
The role of minors in cases of legal redemption is too conspicuous and
perceptible to have been overlooked in the framing of article 1524. The
onerous position of the purchaser and considerations of public interest, we
believe forbade liberality as to time in favor of redemptioners; hence the
limitation of the causes of extension to those factors (actual or constructive
notice) without which the exercise of the right of redemption would not be
possible. The shortness of the period fixed in the above article is itself a safe
index, in our opinion, of its peremptoriness and inflexibility.
... The present appellant not only had such a guardian but it was this very
guardian, Jose C. Villasor who, as guardian of plaintiff's cousins and former
co-owners, sold the lots in question to the defendant-appellee. This guardian
not only could have repurchased those lots for the plaintiff within nine days
but could have sold them, with the court's authority, directly to the plaintiff
himself instead of to Medalla. 5
In the decision, this Court frowned against a liberal interpretation of the codal provision
prescribing the period for legal redemption, hence, the following disquisition, to wit:
... legal redemption is in the nature of a mere privilege created by law partly
for reasons of public policy and partly for the benefit and convenience of the
redemptioner, to afford him a way out of what might be a disagreeable or
inconvenient association into which he has been trust.
... The right of legal redemption is a pure creature of the law regulated by law,
and works only one way in favor of the redemptioner. Not having parted with
anything, the legal redemptioner can compel the purchaser to sell but can not
be compelled to buy.
We do not believe that the framers of the Civil Code ever intended to
countenance a situation so unjust to one of the parties and prejudicial to
 social interest. The construction of article 1524 which the plaintiff offers would
keep the property in a state of indivision even if one of the co-owners wanted
to separate. This is contrary to the express policy of the law that "No co-
owner shall be obliged to remain a party to the community, but each may, at
any time, demand partition of the thing held in common." (Article 400, Civil
Code.) It would be extremely unfair to the purchaser and injurious to the
public welfare to keep in a state of suspense, for possibility as long as 20
years or more, what his co-owner might do when he becomes of age. While
the uncertainty continued the purchaser could not make any improvement on
the property without running the risk of losing his investments and the fruits of
his labor. 6
The wisdom that can easily be formulated in reconciling the laws and the case
discussed above is that the period fixed for legal redemption in accordance with Article
1623 (then Article 1524) of the New Civil Code will run against a minor co-owner duly
represented by a judicially appointed guardian, provided that said guardian is served
with the necessary written notice by the vendor. Corollary to this, the period fixed for
legal redemption will also run against a minor co-owner whose property is valued no
more than Two Thousand Pesos and who is merely represented by his father or
mother with no judicial appointment as a guardian because according to Rule 93,
Section 7 of the Revised Rules of Court, the parent in this situation is automatically the
child's legal guardian. Of course, the parent-guardian must first be served with a notice
in writing of the sale of an undivided portion of the property by the vendor in order that
the period for redemption may begin to accrue.
In the case at bar, the value of the property of each appellee minor does not exceed
Two Thousand Pesos. The Court of Appeals found that each of them inherited only an
undivided portion worth P625.00.7 Therefore, after the minors' father died, their mother,
Clarita Ferrer Badillo, automatically became their legal guardian. As such, she
acquired the plenary powers of a judicial guardian except that power to alienate or
encumber her children's property without judicial authorization. 8
When Clarita Ferrer Badillo signed and received on January 18, 1967, her copy of the
Deed of Extrajudicial Partition and Sale, the document evidencing the transfer of the
property in question to the appellants, she also in effect received the notice in writing
required by Article 1623 in behalf of her children. This manner of receiving a written
notice is specifically sanctioned by the case of Conejero, et al. vs. Court of Appeals, et
al.9 Thus, in this case, the period of redemption began to toll from the time of that
receipt.
On the other hand, the judicial guardian of the appellee minors, Modesta Badillo, was
only appointed as such on November 11, 1968. She thereafter manifested her desire
to redeem the property from the appellants, formalizing such intention in the complaint
that was finally filed for this case on July 23, 1970.
Since the required written notice was served on January 18, 1967 and the offer to
redeem was only made after November 11, 1968, the period for legal redemption had
already expired and the appellants cannot now be ordered to reconvey to the
appellees that portion of the undivided property which originally belonged to Clarita
Ferrer Badillo.
Under the second assignment of error, the appellants contend that the Deed of
Extrajudicial Partition and Sale, in so far as it sold to them the appellee minors' share
of 5/12, is a voidable contract pursuant to Article 1390 of the New Civil Code. They
then quoted verbatim the text of the said article without Identifying the particular portion
of that provision which directly supports their contention.
According to the appellants, in case a voidable contract is annulled, Article 1398
requires the restitution by the contracting parties to each other of the things received
by them under the contract. The appellants, however, concede that by express
mandate of Article 1399, full restitution cannot be ordered from the minors involved in
the contract. Said minors can only be required to restore partially, only to the extent of
the benefits they received by virtue of the questioned contract.
This contention is untenable.
The Deed of Extrajudicial Partition and Sale is not a voidable or an annullable contract
under Article 1390 of the New Civil Code. Article 1390 renders a contract voidable if
one of the parties is incapable of giving consent to the contract or if the contracting
party's consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
In this case, however, the appellee minors are not even parties to the contract
involved. Their names were merely dragged into the contract by their mother who
claimed a right to represent them, purportedly in accordance with Article 320 of the
New Civil Code.10
The Deed of Extrajudicial Partition and Sale is an unenforceable or, more specifically,
an unauthorized contract under Articles 1403 (1) and 1317 of the New Civil Code.
These provisions state that:
ART. 1403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his
powers; ...
ART. 1317. No one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to represent him.
 A contract entered into in the name of another by one who has no authority or
legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on
whose behalf it has been executed, before it is revoked by the other
contracting party.
Clearly, Clarita Ferrer Badillo has no authority or has acted beyond her powers in
conveying to the appellants that 5/12 undivided share of her minor children in the
property involved in this case.11 The powers given to her by the laws as the natural
guardian covers only matters of administration and cannot include the power of
disposition.12She should have first secured the permission of the court before she
alienated that portion of the property in question belonging to her minor children. 13
The appellee minors never ratified this Deed of Extrajudicial Partition and
Sale.1avvphi1 In fact, they question its validity as to them. Hence, the contract
remained unenforceable or unauthorized. No restitution may be ordered from the
appellee minors either as to that portion of the purchase price which pertains to their
share in the property or at least as to that portion which benefited them because the
law does not sanction any.
The third error assigned need not be discussed further because Our pronouncement
on the first assignment of error has rendered it academic. Suffice it to state that since
the 30-day period for redemption had already lapsed, the appellants cannot be ordered
to re-sell to the appellees the remaining 7/12 portion of the property in question.
In view of the foregoing, the appellants are hereby ordered to restore to the appellees
the full ownership and possession of the latter's 5/12 share in the undivided property
by executing the proper deed of reconveyance. The appellants' ownership over the
remaining 7/12 share in the undivided property is hereby confirmed.
WHEREFORE, the decision under review is hereby modified accordingly and
appellants are directed to deliver possession of above appellees' share, with no
pronouncement as to costs.
DIWA VS DONATO
This is a petition for certiorari under Rule 45 of the Revised Rules of Court from two
Orders of the RTC of Tuguegarao, Cagayan, Br. 1. 1 The first, dated January 8, 1990,
dismissed Civil Case No. 4117-(Tug '90) on the ground of res judicata; ;and the
second, dated January 31, 1991, denied petitioners' motion for reconsideration of the
earlier Order.
Petitioners first filed a Complaint for Interpleader And Execution Of Registerable Deed
Of Sale With Damages against respondents docketed as Civil Case No. 3892, and
raffled to Branch 4 of the RTC of Tuguegarao, Cagayan. 2 The Complaint alleged:
1. Plaintiffs (petitioners herein) are spouses, of legal age, Filipinos
and residents of Tuguegarao, Cagayan;
2. Defendants (respondents herein) who are brothers are of legal
age; Arnold L. Donato is however a Filipino and a resident of and
with postal address at 10 Masbate Street, Quezon City while
Napoleon L. Donato is an American citizen and resident of
Tuguegarao, Cagayan;
3. DONATO ENTERPRISES COMPANY, LIMITED was a duly
constituted and registered partnership composed of only three (3)
partners, the brothers and sister, Arnold L. Donato, Napoleon L.
Donato and Adoracion Donato, who had equal contributions and
shares or interests therein.
4. DONATO ENTERPRISES COMPANY, LIMITED was the
registered owner per Transfer Certificate of Title No. T-16000 of a
residential-commercial lot situated in Centro, Tuguegarao, Cagayan
more particularly bounded and described as follows:
xxx xxx xxx
5. Partner Adoracion L. Donato who died single on
October 20, 1985 with neither ascendant nor descendant was
survived by the (respondents) who were her brothers;
6. The death of partner Adoracion L. Donato ipso jure dissolved the
DONATO ENTERPRISES COMPANY, LIMITED so that her one-
third (1/3) share and interest in the above-described lot devolved
upon her heir or heirs;
7. Sometime in November 1986 (respondents) jointly sold the above-
described lot to the (petitioners) for P504,000.00 Philippine currency
and accordingly delivered to the latter the said lot;
8. (Petitioners) forthwith took exclusive possession of said lot and
have been possessing it since then continuously up to the present;
9. Of the total consideration of P504,000.00 (respondent) Arnold L.
Donato already received from (petitioners) P168,000.00 on
November 19, 1986 as per xerox copy of a Receipt which he signed
and (respondent) Napoleon L. Donato also already received from
(petitioners) on June 10, 1988 the same amount of P168,000.00 per
xerox copy of a Receipt which he likewise signed, both of which are
hereto attached . . .;
10. Since November 1986 when the sale of said lot was made by
(respondents) to the (petitioners) the latter had been tendering the
payment of the balance of P168,000.00 to (respondents); the
(respondent) Arnold L. Donato wanted to get and receive the whole
balance asserting that his late sister Adoracion L. Donato inter
alia conveyed her share and interest in said lot to him which was
however denied by (respondent) Napoleon L. Donato who claimed
that being one of the two intestate heirs of deceased Adoracion L.
Donato, he is entitled to one-half of said balance which is
P84,000.00;
11. In the light of the conflicting claims of the (respondents) over the
balance of P168,000.00 and in order to finally relieve (petitioners) of
further obligation vis a vis said lot, the latter hereby deliver and
deposit said amount of money with this Honorable Court which will
determine who is/are entitled to receive it and to dispose of it
accordingly;
12. Despite the consummation of the sale of the said lot to the
(petitioners) the (respondents) have not yet executed a registerable
deed of sale to evidence the same, hence (petitioners) have a legal
right to demand the execution of the said documents;
13. In fact since June 1988, (petitioners) had been demanding of
(respondents) to execute the said registerable deed of sale with a
proposal to deposit the balance of P168,000.00 in escrow in a
commercial bank in favor of whoever would finally be judicially
declared entitled to it but although (respondent) Napoleon L. Donato
is willing, (respondent) Arnold L. Donato without just cause refussed;
14. Since the sale of the lot to the (petitioners) in November 1986,
they intended to build a commercial building thereon with the
proceeds of a loan which they planned to secure from a banking
institution with the lot as their collateral;
15. The delay in the execution of the registerable deed of sale
necessarily delayed the issuance of a title over said lot in the names
of the (petitioners) which resulted in the delay in securing the loan
and ultimately in the construction of the said building;
16. The delay mentioned in the preceding paragraph is directly
attributable to the intransigence of (respondent) Arnold L. Donato
which caused (petitioners) to suffer damages consisting of the big
increase in the prices of construction materials and cost of labor
from their index in November 1986 and the present index which is
reasonably estimated to be P200,000.00;
17. (Petitioners) were constrained to engage the services of the
undersigned counsel for an agreed fee of P20,000.00; 3
Petitioners prayed for judgment: (1) declaring them the owners of the lot in
question; (2) ordering respondents to execute in their favor a registerable
deed of sale over the lot; (3) declaring who is/are entitled to the P168,000.00
balance; and (4) condemning respondent Arnold L. Donato to pay damages,
attorney's fees and costs.
The Complaint was dismissed on December 29, 1988 on the ground that interpleader
is not the proper remedy for breach of contract. This court 4 affirmed the dismissal in a
Resolution, dated September 20, 1989.
Accordingly, on February 13, 1990, petitioners filed Civil Case No. 4117-(Tug '90) for
Specific Performance (Execution of Registerable Deed of Sale and Delivery of
Certificate of Title) With Damages. The Complaint contains basically the same
allegations and prayers as the Complaint in the interpleader case, except for the
following added allegation, viz:
That even if the transaction between (petitioners) and (respondents)
constitutes only a contract to sell the said land, still (petitioners) who
have partially complied with their obligation and are willing to fully
comply with it have the right to compel (respondents) to perform their
obligation to sell the land to them; 5
and the prayer, which reads as follows:
WHEREFORE, (petitioners) pray this Honorable Court to render
judgment:
 1. Declaring (petitioners) to be the owners of the lot described above
or compelling the (respondents) to sell the lot to the former and
ordering (respondent) Arnold L. Donato to execute with his co-
(respondent) Napoleon L. Donato the registerable deed of sale over
said lot in favor of (petitioners) and to deliver to the latter the owner's
duplicate copy of Transfer Certificate of Title No. T-16000;
2. Applying the deposited amount of P168,000.00 in payment of the
balance upon the price of said land;
3. Condemning (respondent) Arnold L. Donato to pay the
(petitioners) a damage of P100,000.00 and attorney's fees of
P20,000.00 and cost of this suit;
4. Granting other proper reliefs. 6
Private respondents filed separate Answers to the second Complaint. Their Affirmative
Defenses constituting grounds for dismissal were heard by the trial court.
On January 8, 1990, the trial court issued the first impugned Order. It dismissed with
prejudice the Complaint for specific performance. It held, inter alia:
There is no dispute that the first case entitled Interpleader and
Execution of Registerable Deed of Sale with Damages, Civil Case
No. 3892 was upon review by the Supreme Court denied for lack of
merit.
It was held in the case of Leonor Magdangal, et al. vs. City of
Olongapo, et al., . . . "that a party cannot by varying the form of
action or adopting a different method of presenting the case, escape
the application of the rule of res judicata." This was reiterated in the
case of Filipinas Investment, et al. vs. Intermediate Appellate Court,
et al., . . . (Citations omitted.) 7
In its Order of January 31, 1991 denying petitioners' motion for
reconsideration, the same court held:
This Court made a comparison between the first civil case No. 3892
between the same parties is entitled Interpleader and Execution of
Registerable Deed of Sale with Damages while the instant case is
for specific performance (execution of registerable deed of sale and
delivery of certificate of title with damages). Basically, the two
complaints are the same as they involve the same parties, the same
cause of action and the subject matter. The only difference is in
the caption.
Granting for the sake of argument that there is no res judicata and
that the present case is for specific performance, will the latter
remedy lie?
Specific performance is not an absolute right, but
one which rests entirely in judicial discretion;
exercised according to the settled principles of
equity and with reference to the facts of the
particular case, and not arbitrarily or capriciously .
...
One of the requisites for the specific performance of the agreement
is that there must be contract and the contract must be in writing
(Statute of Frauds).
The contract must be clearly and unequivocally
proved and its subject matter, consideration and
all other essentials must be specific and
unambiguous . . . .
Definitely the receipts by Arnold Donato and Napoleon Donato are
not contracts for the following reasons:
(1) They are not in the prescribed form as provided by law;
(2) They are not specific as indicated by the wording of last
paragraph of Annex "A",
However, should the circumstances occur
whereby the transaction will not push through,
then this amount will be refundable to Mr. Rolando
T. Diwa.
(3) It is doubted whether the Supreme Court made a pronouncement
that there was a contract to sell considering that the petition for
review was denied for lack of merit for failure of counsel to comply
with certain requirements with regards to his petition. 8 (Citation
omitted.)
In this petition, petitioners contend:
 The errors of the lower court are the following:
1. It erroneously applied res judicata to dismiss with prejudice Civil
Case No. 4117 (90-Tug).
2. It mistakenly ruled that there was no contract between the
petitioners and respondents.
3. It incorrectly held that specific performance was not the proper
remedy.
4. It blundered when it impliedly applied the Statute of Frauds to the
agreement between the parties.
5. It goofed when it dismissed Civil Case No. 4117 (90-Tug) with
prejudice. 9
The petition is meritorious.
The elements of res judicata are: (1) the previous judgment has become final; (2) the
prior judgment was rendered by a court having jurisdiction over the subject matter and
the parties; (3) the first judgment was made on the merits; and (4) there was
substantial identity of parties, subject matter and causes of action, as between the
prior and subsequent actions.
We hold that the trial court erred in considering our September 20, 1989 Resolution in
the interpleader case as an adjudication on the merits. Said Resolution held:
xxx xxx xxx
After a careful review of the Petition, its Annexes and the Comment
thereto, the Court finds that no reversible error was committed by the
RTC in dismissing petitioners' complaint. The RTC correctly applied
the doctrine laid down by this Court in the case of Beltran vs. PHHC,
G.R. No. L-25138, August 28, 1969, 29 SCRA 145, that if the
conflicting claims of the two defendants are only between
themselves and are not against the plaintiff-in-interpleader nor do
they involve or affect him, the special civil action of interpleader will
not lie.
xxx xxx xxx
While it is true that petitioners have a cause of action to compel
private respondents to execute a registrable deed of sale pursuant to
their contract, the proper remedy should be an ordinary civil action
for breach of contract or an action for specific performance and not
an action for interpleader. 10
A judgment on the merits is one rendered after argument and investigation, and when
there is determination which party is right, as distinguished from a judgment rendered
upon some preliminary or formal or merely technical point, or by default and without
trial. 11 By not stretch of the imagination can our Resolution of September 20, 1989 be
considered a judgment on the merits. All it resolved is the issue of the proper action
that petitioners should file in light of the allegations of their Complaint. We ruled that
they should file an action for specific performance and not an action for interpleader.
Only after the filing of the proper action can the substantive rights of the parties be
adjudicated. Needless to state, we did not adjudicate the substantive rights of the
parties in our Resolution of September 20, 1989.
The trial court also erred when it further held that specific performance does not lie
against respondent, by applying the Statute of Frauds. Under said Statute, agreements
for the sale of real property "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." 12 Non-compliance with
this provision, while not invalidating the contract which is not in writing, makes
ineffective the action for specific performance. 13
It is settled, however, that the Statute of Frauds applies only to executory and not to
completed, executed, or partially executed contracts. 14 Thus, as early as 1925, we
held that where the land has been delivered under the oral contract of sale, and the
vendees have already paid part of the purchase price, the heirs of the vendor cannot
invoke the statute of frauds in a proceeding where the vendees seek to have the land
registered in their names. 15
In the case at bench, the agreement to sell the lot in question was already partially
executed when the present action was commenced. No specific denial was made by
their respondent that petitioners have paid a part of the contract price, and that
possession of the land has been delivered to them. Respondent Arnold L. Donato's
argument in his Memorandum filed on July 2, 1991 that petitioners' act of refunding the
amount of P168,000.00 covered by a receipt dated November 19, 1986, and
consigning it with the trial court effectively revoked the contract to sell over the property
does not persuade us. In the first place, the alleged refunding is not supported by
evidence; and in the second place, even assuming it did occur, there is still the
P168,000.00 partial payment made by petitioners to respondent Napoleon L. Donato
that makes for the partial execution of the contract to sell.
Finally, we do not see how the trial court could have doubted our finding as to the
existence of a contract to sell. We clearly stated in our Resolution in the interpleader
case that:
In the present case, the two private respondents do not dispute the
existence of the contract to sell the commercial land in question to
petitioners nor do they demand adverse claims against petitioners.
In fact, private respondents did not object when the petitioners
deposited in court the balance of the purchase price. The conflicting
claims of the two private respondents over the sharing of the
balance of the purchase price cannot be the subject of an
interpleader case since they are exclusively between the private
respondents and are not against the petitioners. Neither do they
involve or affect the petitioners' interest in the commercial land.
xxx xxx xxx
While it is true that petitioners have a cause of action to compel
private respondents to execute a registrable deed of sale pursuant to
their contract, the proper remedy should be an ordinary civil action
for breach of contract or an action for specific performance and not
an action for interpleader. 16(Emphasis supplied.)
IN VIEW WHEREOF, the instant Petition is GRANTED. The Orders, dated January 8,
1990 and January 31, 1991 in Civil Case No. 4117 (90-Tug) are REVERSED AND
SET ASIDE. The RTC of Tuguegarao, Cagayan, Branch 1, is hereby ordered to hear
the reinstated case on its merits. No Costs
LITONJUA VS FERNANDEZ
This is a petition for review on certiorari of the Decision[1] of the Court of Appeals
in CA-G.R. CV No. 64940, which reversed and set aside the June 23, 1999
Decision[2] of the Regional Trial Court of Pasig City, Branch 68, in Civil Case No.
65629, as well as its Resolution dated April 30, 2001 denying the petitioners motion for
reconsideration of the aforesaid decision.
The heirs of Domingo B. Ticzon[3] are the owners of a parcel of land located
in San Pablo City, covered by Transfer Certificate of Title (TCT) No. T-36766 of the
Register of Deeds of San Pablo City.[4] On the other hand, the heirs of Paz Ticzon
Eleosida, represented by Gregorio T. Eleosida, are the owners of a parcel of land
located in San Pablo City, covered by TCT No. 36754, also of the Register of Deeds of
San Pablo City.[5]
The Case for the Petitioners
Sometime in September 1995, Mrs. Lourdes Alimario and Agapito Fisico who
worked as brokers, offered to sell to the petitioners, Antonio K. Litonjua and Aurelio K.
Litonjua, Jr., the parcels of land covered by TCT Nos. 36754 and 36766. The
petitioners were shown a locator plan and copies of the titles showing that the owners
of the properties were represented by Mary Mediatrix Fernandez and Gregorio T.
Eleosida, respectively. The brokers told the petitioners that they were authorized by
respondent Fernandez to offer the property for sale. The petitioners, thereafter, made
two ocular inspections of the property, in the course of which they saw some people
gathering coconuts.
In the afternoon of November 27, 1995, the petitioners met with respondent
Fernandez and the two brokers at the petitioners office in Mandaluyong City.[6] The
petitioners and respondent Fernandez agreed that the petitioners would buy the
property consisting of 36,742 square meters, for the price of P150 per square meter, or
the total sum of P5,098,500. They also agreed that the owners would shoulder the
capital gains tax, transfer tax and the expenses for the documentation of the sale. The
petitioners and respondent Fernandez also agreed to meet on December 8, 1995 to
finalize the sale. It was also agreed upon that on the said date, respondent Fernandez
would present a special power of attorney executed by the owners of the property,
authorizing her to sell the property for and in their behalf, and to execute a deed of
absolute sale thereon. The petitioners would also remit the purchase price to the
owners, through respondent Fernandez. However, only Agapito Fisico attended the
meeting. He informed the petitioners that respondent Fernandez was encountering
some problems with the tenants and was trying to work out a settlement with
them.[7] After a few weeks of waiting, the petitioners wrote respondent Fernandez
on January 5, 1995, demanding that their transaction be finalized by January 30,
1996.[8]
When the petitioners received no response from respondent Fernandez, the
petitioners sent her another Letter[9] dated February 1, 1996, asking that the Deed of
Absolute Sale covering the property be executed in accordance with their verbal
agreement dated November 27, 1995. The petitioners also demanded the turnover of
the subject properties to them within fifteen days from receipt of the said letter;
otherwise, they would have no option but to protect their interest through legal means.
Upon receipt of the above letter, respondent Fernandez wrote the petitioners
on February 14, 1996[10] and clarified her stand on the matter in this wise:
1) It is not true I agreed to shoulder registration fees and other miscellaneous
expenses, etc. I do not recall we ever discussed about them. Nonetheless, I made an
assurance at that time that there was no liens/encumbrances and tenants on my
property (TCT 36755).
2) It is not true that we agreed to meet on December 8, 1995 in order to sign the Deed
of Absolute Sale. The truth of the matter is that you were the one who emphatically
stated that you would prepare a Contract to Sell and requested us to come back first
week of December as you would be leaving the country then. In fact, what you were
demanding from us was to apprise you of the status of the property, whether we would
be able to ascertain that there are really no tenants. Ms. Alimario and I left your office,
but we did not assure you that we would be back on the first week of December.
Unfortunately, some people suddenly appeared and claiming to be tenants for the
entire properties (including those belonging to my other relatives.) Another thing, the
Barangay Captain now refuses to give a certification that our properties are not
tenanted.
Thereafter, I informed my broker, Ms. Lulu Alimario, to relay to Mr. Agapito that due to
the appearance of alleged tenants who are demanding for a one-hectare share, my
cousin and I have thereby changed our mind and that the sale will no longer push
through. I specifically instructed her to inform you thru your broker that we will not be
attending the meeting to be held sometime first week of December.
In view thereof, I regret to formally inform you now that we are no longer selling the
property until all problems are fully settled. We have not demanded and received from
you any earnest money, thereby, no obligations exist. In the meantime, we hope that in
the future we will eventually be able to transact business since we still have other
properties in San Pablo City.[11]
Appended thereto was a copy of respondent Fernandez letter to the petitioners
dated January 16, 1996, in response to the latters January 5, 1996 letter.[12]
On April 12, 1996, the petitioners filed the instant Complaint for specific
performance with damages[13] against respondent Fernandez and the registered
owners of the property. In their complaint, the petitioners alleged, inter alia, the
following:
4. On 27 November 1995, defendants offered to sell to plaintiffs two (2) parcels of land
covered by Transfer Certificates of Title Nos. 36766 and 36754 measuring a total of
36,742 square meters in Barrio Concepcion, San Pablo City. After a brief
negotiation, defendants committed and specifically agreed to sell to plaintiffs 33,990
square meters of the two (2) aforementioned parcels of land at P150.00 per square
meter.
5. The parties also unequivocally agreed to the following:
(a) The transfer tax and all the other fees and expenses for the titling of the subject
property in plaintiffs names would be for defendants account.
(b) The plaintiffs would pay the entire purchase price of P5,098,500.00 for the
aforementioned 33,990 square meters of land in plaintiffs office on 8 December 1995.
6. Defendants repeatedly assured plaintiffs that the two (2) subject parcels of land
were free from all liens and encumbrances and that no squatters or tenants occupied
them.
7. Plaintiffs, true to their word, and relying in good faith on the commitment of
defendants, pursued the purchase of the subject parcels of lands. On 5 January 1996,
plaintiffs sent a letter of even date to defendants, setting the date of sale and payment
on 30 January 1996.
7.1 Defendants received the letter on 12 January 1996 but did not reply to it.
8. On 1 February 1996, plaintiffs again sent a letter of even date to defendants
demanding execution of the Deed of Sale.
8.1 Defendants received the same on 6 February 1996. Again, there was no
reply. Defendants thus reneged on their commitment a second time.
9. On 14 February 1996, defendant Fernandez sent a written communication of the
same date to plaintiffs enclosing therein a copy of her 16 January 1996 letter to
plaintiffs which plaintiffs never received before. Defendant Fernandez stated in her 16
January 1996 letter that despite the meeting of minds among the parties over the
33,990 square meters of land for P150.00 per square meter on 27 November 1995,
defendants suddenly had a change of heart and no longer wished to sell the
same. Paragraph 6 thereof unquestionably shows defendants previous agreement as
above-mentioned and their unjustified breach of their obligations under it.
10. Defendants cannot unilaterally, whimsically and capriciously cancel a perfected
contract to sell.
11. Plaintiffs intended to use the subject property for their subdivision project to
support plaintiffs quarry operations, processing of aggregate products and
manufacture of construction materials.Consequently, by reason of defendants failure to
honor their just obligations, plaintiffs suffered, and continue to suffer, actual damages,
consisting in unrealized profits and cost of money, in the amount of at least P5 Million.
12. Plaintiffs also suffered sleepless nights and mental anxiety on account of
defendants fraudulent actuations for which reason defendants are liable to plaintiffs for
moral damages in the amount of at least P1.5 Million.
13. By reason of defendants above-described fraudulent actuations, plaintiffs, despite
their willingness and ability to pay the agreed purchase price, have to date been
unable to take delivery of the title to the subject property. Defendants acted in a
wanton, fraudulent and malevolent manner in violating the contract to sell. By way of
example or correction for the public good, defendants are liable to plaintiff for
exemplary damages in the amount of P500,000.00.
14. Defendants bad faith and refusal to honor their just obligations to plaintiffs
constrained the latter to litigate and to engage the services of undersigned counsel for
a fee in the amount of at least P250,000.00.[14]
The petitioners prayed that, after due hearing, judgment be rendered in their
favor ordering the respondents to
(a) Secure at defendants expense all clearances from the appropriate government
agencies that will enable defendants to comply with their obligations under the
Contract to Sell;
(b) Execute a Contract to Sell with terms agreed upon by the parties;
(c) Solidarily pay the plaintiffs the following amounts:
1. P5,000,000.00 in actual damages;
2. P1,500,000.00 in moral damages;
3. P500,000.00 in exemplary damages;
4. P250,000.00 in attorneys fees.[15]
On July 5, 1996, respondent Fernandez filed her Answer to the complaint. [16] She
claimed that while the petitioners offered to buy the property during the meeting
of November 27, 1995, she did not accept the offer; thus, no verbal contract to sell was
ever perfected. She specifically alleged that the said contract to sell was unenforceable
for failure to comply with the statute of frauds. She also maintained that even
assuming arguendo that she had, indeed, made a commitment or promise to sell the
property to the petitioners, the same was not binding upon her in the absence of any
consideration distinct and separate from the price. She, thus, prayed that judgment be
rendered as follows:
1. Dismissing the Complaint, with costs against the plaintiffs;
2. On the COUNTERCLAIM, ordering plaintiffs to pay defendant moral
damages in the amount of not less than P2,000,000.00 and
exemplary damages in the amount of not less than P500,000.00 and
attorneys fees and reimbursement expenses of litigation in the
amount of P300,000.00.[17]
On September 24, 1997, the trial court, upon motion of the petitioners, declared
the other respondents in default for failure to file their responsive pleading within the
reglementary period.[18] At the pre-trial conference held on March 2, 1998, the parties
agreed that the following issues were to be resolved by the trial court: (1) whether or
not there was a perfected contract to sell; (2) in the event that there was, indeed, a
perfected contract to sell, whether or not the respondents breached the said contract to
sell; and (3) the corollary issue of damages.[19]
Respondent Fernandez testified that she requested Lourdes Alimario to look for a
buyer of the properties in San Pablo City on a best offer basis. She was later informed
by Alimario that the petitioners were interested to buy the properties. On November 27,
1995, along with Alimario and another person, she met with the petitioners in the
latters office and told them that she was at the conference merely to hear their offer,
that she could not bind the owners of the properties as she had no written authority to
sell the same. The petitioners offered to buy the property at P150 per square
meter. After the meeting, respondent Fernandez requested Joy Marquez to secure a
barangay clearance stating that the property was free of any tenants. She was
surprised to learn that the clearance could not be secured. She contacted a cousin of
hers, also one of the owners of the property, and informed him that there was a
prospective buyer of the property but that there were tenants thereon. Her cousin told
her that he was not selling his share of the property and that he was not agreeable to
the price of P150 per square meter. She no longer informed the other owners of the
petitioners offer. Respondent Fernandez then asked Alimario to apprise the petitioners
of the foregoing developments, through their agent, Agapito Fisico. She was surprised
to receive a letter from the petitioners dated January 5, 1996.Nonetheless, she
informed the petitioners that she had changed her mind in pursuing the negotiations in
a Letter dated January 18, 1996. When she received petitioners February 1,
1996 Letter, she sent a Reply-Letter dated February 14, 1996.
After trial on the merits, the trial court rendered judgment in favor of the
petitioners on June 23, 1999,[20] the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of
plaintiffs ANTONIO K. LITONJUA and AURELIO K. LITONJUA and against defendants
MARY MEDIATRIX T. FERNANDEZ, HEIRS OF PAZ TICZON ELEOSIDA,
represented by GREGORIO T. ELEOSIDA, JOHN DOES and JANE DOES; HEIRS OF
DOMINGO B. TICZON, represented by MARY MEDIATRIX T. FERNANDEZ,
CRISTETA TICZON, EVANGELINE JILL R. TICZON, ERLINDA T. BENITEZ,
DOMINIC TICZON, JOSEFINA LUISA PIAMONTE, JOHN DOES and JANE DOES,
ordering defendants to:
 1. execute a Contract of Sale and/or Absolute Deed of Sale with the
terms agreed upon by the parties and to secure all
clearances from the concerned government agencies and
removal of any tenants from the subject property at their
expense to enable defendants to comply with their
obligations under the perfected agreement to sell; and
2. pay to plaintiffs the sum of Two Hundred Thousand (P200,000.00)
Pesos as and by way of attorneys fees.[21]
On appeal to the Court of Appeals, the respondents ascribed the following errors
to the court a quo:
I. THE LOWER COURT ERRED IN HOLDING THAT THERE WAS A
PERFECTED CONTRACT OF SALE OF THE TWO LOTS
ON NOVEMBER 27, 1995.
II. THE LOWER COURT ERRED IN NOT HOLDING THAT THE VERBAL
CONTRACT OF SALE AS CLAIMED BY PLAINTIFFS-APPELLEES
ANTONIO LITONJUA AND AURELIO LITONJUA WAS
UNENFORCEABLE.
III. THE LOWER COURT ERRED IN HOLDING THAT THE LETTER OF
DEFENDANT-APPELLANT FERNANDEZ DATED JANUARY 16,
1996 WAS A CONFIRMATION OF THE PERFECTED SALE AND
CONSTITUTED AS WRITTEN EVIDENCE THEREOF.
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT A SPECIAL
POWER OF ATTORNEY WAS REQUIRED IN ORDER THAT
DEFENDANT-APPELLANT FERNANDEZ COULD NEGOTIATE
THE SALE ON BEHALF OF THE OTHER REGISTERED CO-OWNERS
OF THE TWO LOTS.
V. THE LOWER COURT ERRED IN AWARDING ATTORNEYS FEES IN
THE DISPOSITIVE PORTION OF THE DECISION WITHOUT STATING
THE BASIS IN THE TEXT OF SAID DECISION.[22]
On February 28, 2001, the appellate court promulgated its decision reversing and
setting aside the judgment of the trial court and dismissing the petitioners complaint, as
well as the respondents counterclaim.[23] The appellate court ruled that the petitioners
failed to prove that a sale or a contract to sell over the property between the petitioners
and the private respondent had been perfected.
Hence, the instant petition for review on certiorari under Rule 45 of the Revised
Rules of Court.
The petitioners submit the following issues for the Courts resolution:
A. WHETHER OR NOT THERE WAS A PERFECTED CONTRACT
OF SALE BETWEEN THE PARTIES.
B. WHETHER OR NOT THE CONTRACT FALLS UNDER THE COVERAGE OF THE
STATUTE OF FRAUDS.
C. WHETHER OR NOT THE DEFENDANTS DECLARED IN DEFAULT ARE
BENEFITED BY THE ASSAILED DECISION OF THE COURT OF APPEALS.[24]
The petition has no merit.
The general rule is that the Courts jurisdiction under Rule 45 of the Rules of
Court is limited to the review of errors of law committed by the appellate court. As the
findings of fact of the appellate court are deemed continued, this Court is not duty-
bound to analyze and calibrate all over again the evidence adduced by the parties in
the court a quo.[25]This rule, however, is not without exceptions, such as where the
factual findings of the Court of Appeals and the trial court are conflicting or
contradictory.[26] Indeed, in this case, the findings of the trial court and its conclusion
based on the said findings contradict those of the appellate court. However, upon
careful review of the records of this case, we find no justification to grant the
petition. We, thus, affirm the decision of the appellate court.
On the first and second assignment of errors, the petitioners assert that there
was a perfected contract of sale between the petitioners as buyers and the
respondents-owners, through respondent Fernandez, as sellers. The petitioners
contend that the perfection of the said contract is evidenced by the January 16,
1996 Letter of respondent Fernandez.[27] The pertinent portions of the said letter are as
follows:
[M]y cousin and I have thereby changed our mind and that the sale will
no longer push through. I specifically instructed her to inform you thru your broker that
we will not be attending the meeting to be held sometime first week of December.
In view thereof, I regret to formally inform you now that we are no longer selling the
property until all problems are fully settled. We have not demanded and received from
you any earnest money, thereby, no obligations exist[28]
The petitioners argue that the letter is a sufficient note or memorandum of the
perfected contract, thus, removing it from the coverage of the statute of frauds. The
letter specifically makes reference to a sale which respondent Fernandez agreed to
initially, but which the latter withdrew because of the emergence of some people who
claimed to be tenants on both parcels of land. According to the petitioners, the
respondents-owners, in their answer to the complaint, as well as respondent
Fernandez when she testified, admitted the authenticity and due execution of the said
letter. Besides, when the petitioner Antonio Litonjua testified on the contract of sale
entered into between themselves and the respondents-owners, the latter did not object
thereto. Consequently, the respondents-owners thereby ratified the said contract of
sale. The petitioners thus contend that the appellate courts declaration that there was
no perfected contract of sale between the petitioners and the respondents-owners is
belied by the evidence, the pleadings of the parties, and the law.
The petitioners contention is bereft of merit. In its decision, the appellate court
ruled that the Letter of respondent Fernandez dated January 16, 1996 is hardly the
note or memorandum contemplated under Article 1403(2)(e) of the New Civil Code,
which reads:
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 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 of an interest therein.[29]
The appellate court based its ruling on the following disquisitions:
In the case at bar, the letter dated January 16, 1996 of defendant-appellant can hardly
be said to constitute the note or memorandum evidencing the agreement of the parties
to enter into a contract of sale as it is very clear that defendant-appellant as seller did
not accept the condition that she will be the one to pay the registration fees and
miscellaneous expenses and therein also categorically denied she had already
committed to execute the deed of sale as claimed by the plaintiffs-appellees. The
letter, in fact, stated the reasons beyond the control of the defendant-appellant, why
the sale could no longer push through because of the problem with tenants. The trial
court zeroed in on the statement of the defendant-appellant that she and her cousin
changed their minds, thereby concluding that defendant-appellant had unilaterally
cancelled the sale or backed out of her previous commitment. However, the tenor of
the letter actually reveals a consistent denial that there was any such commitment on
the part of defendant-appellant to sell the subject lands to plaintiffs-appellees. When
defendant-appellant used the words changed our mind, she was clearly referring to the
decision to sell the property at all (not necessarily to plaintiffs-appellees) and not in
selling the property to herein plaintiffs-appellees as defendant-appellant had not yet
made the final decision to sell the property to said plaintiffs-appellees. This conclusion
is buttressed by the last paragraph of the subject letter stating that we are no longer
selling the property until all problems are fully settled. To read a definite previous
agreement for the sale of the property in favor of plaintiffs-appellees into the contents
of this letter is to unduly restrict the freedom of the contracting parties to negotiate and
prejudice the right of every property owner to secure the best possible offer and terms
in such sale transactions. We believe, therefore, that the trial court committed a
reversible error in finding that there was a perfected contract of sale or contract to sell
under the foregoing circumstances. Hence, the defendant-appellant may not be held
liable in this action for specific performance with damages.[30]
In Rosencor Development Corporation vs. Court of Appeals,[31] the term statute of
frauds is descriptive of statutes which require certain classes of contracts to be in
writing.The statute does not deprive the parties of 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 existence 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
statute is satisfied or, as it is often stated, a contract or bargain is taken within the
statute by making and executing a note or memorandum of the contract which is
sufficient to state the requirements of the statute. [32] The application of such
statute presupposes the existence of a perfected contract. However, for a note or
memorandum to satisfy the statute, it must be complete in itself and cannot rest partly
in writing and partly in parol. The note or memorandum must contain the names of the
parties, the terms and conditions of the contract and a description of the property
sufficient to render it capable of identification. [33] Such note or memorandum must
contain the essential elements of the contract expressed with certainty that may be
ascertained from the note or memorandum itself, or some other writing to which it
refers or within which it is connected, without resorting to parol evidence.[34] To be
binding on the persons to be charged, such note or memorandum must be signed by
the said party or by his agent duly authorized in writing.[35]
In City of Cebu v. Heirs of Rubi,[36] we held that the exchange of written
correspondence between the parties may constitute sufficient writing to evidence the
agreement for purposes of complying with the statute of frauds.
In this case, we agree with the findings of the appellate court that there was no
perfected contract of sale between the respondents-owners, as sellers, and the
petitioners, as buyers.
There is no documentary evidence on record that the respondents-owners
specifically authorized respondent Fernandez to sell their properties to another,
including the petitioners. Article 1878 of the New Civil Code provides that a special
power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable
consideration,[37] or to create or convey real rights over immovable property,[38] or for
any other act of strict dominion.[39]Any sale of real property by one purporting to be the
agent of the registered owner without any authority therefor in writing from the said
owner is null and void.[40] The declarations of the agent alone are generally insufficient
to establish the fact or extent of her authority. [41] In this case, the only evidence
adduced by the petitioners to prove that respondent Fernandez was authorized by the
respondents-owners is the testimony of petitioner Antonio Litonjua that respondent
Fernandez openly represented herself to be the representative of the respondents-
owners,[42] and that she promised to present to the petitioners on December 8, 1996 a
written authority to sell the properties.[43] However, the petitioners claim was belied by
respondent Fernandez when she testified, thus:
Q Madam Witness, what else did you tell to the plaintiffs?
A I told them that I was there representing myself as one of the owners of
the properties, and I was just there to listen to his proposal because
that time, we were just looking for the best offer and I did not have yet
any written authorities from my brother and sisters and relatives. I
cannot agree on anything yet since it is just a preliminary meeting, and
so, I have to secure authorities and relate the matters to my relatives,
brother and sisters, sir.
Q And what else was taken up?
We note that the petitioners themselves were uncertain as to the specific area of
the properties they were seeking to buy. In their complaint, they alleged to have
agreed to buy from the respondents-owners 33,990 square meters of the total acreage
of the two lots consisting of 36,742 square meters. In their Letter to respondent
Fernandez datedJanuary 5, 1996, the petitioners stated that they agreed to buy the
two lots, with a total area of 36,742 square meters. [47] However, in their Letter
dated February 1, 1996, the petitioners declared that they agreed to buy a portion of
the properties consisting of 33,990 square meters. [48] When he testified, petitioner
Antonio Litonjua declared that the petitioners agreed to buy from the respondents-
owners 36,742 square meters at P150 per square meter or for the total price
of P5,098,500.[49]
The failure of respondent Fernandez to object to parol evidence to prove (a) the
essential terms and conditions of the contract asserted by the petitioners and, (b) her
authority to sell the properties for the respondents-registered owners did not and
should not prejudice the respondents-owners who had been declared in default.[50]

A Mr. Antonio Litonjua told me that they will be leaving for another country IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of
and he requested me to come back on the first week of December and the appellate court is AFFIRMED IN TOTO. Costs against the petitioners.
in the meantime, I should make an assurance that there are no SO ORDERED.
tenants in our properties, sir.[44]
The petitioners cannot feign ignorance of respondent Fernandez lack of authority
to sell the properties for the respondents-owners. It must be stressed that the
petitioners are noted businessmen who ought to be very familiar with the intricacies of
business transactions, such as the sale of real property.
The settled rule is that persons dealing with an assumed agent are bound at their
peril, and if they would hold the principal liable, to ascertain not only the fact of agency
but also the nature and extent of authority, and in case either is controverted, the
burden of proof is upon them to prove it. [45] In this case, respondent Fernandez
specifically denied that she was authorized by the respondents-owners to sell the
properties, both in her answer to the complaint and when she testified. The Letter
dated January 16, 1996 relied upon by the petitioners was signed by respondent
Fernandez alone, without any authority from the respondents-owners. There is no
evidence on record that the respondents-owners ratified all the actuations of
respondent Fernandez in connection with her dealings with the petitioners. As such,
said letter is not binding on the respondents as owners of the subject properties.
Contrary to the petitioners contention, the letter of January 16, 1996 [46] is not a
note or memorandum within the context of Article 1403(2) because it does not contain
the following: (a) all the essential terms and conditions of the sale of the properties; (b)
an accurate description of the property subject of the sale; and, (c) the names of the
respondents-owners of the properties. Furthermore, the letter made reference to only
one property, that covered by TCT No. T-36755.