G.R. No.
177783 : January 23, 2013 In the meantime, respondent bank made the following
HEIRS OF FAUSTO C. IGNACIO, namely MARFEL D.
IGNACIO-MANALO, MILFA D. IGNACIO-MANALO AND
FAUSTINO D. IGNACIO, Petitioners, v. HOME BANKERS
SAVINGS AND TRUST COMPANY, SPOUSES PHILLIP AND
THELMA RODRIGUEZ, CATHERINE, REYNOLD &
JEANETTE, all surnamed ZUNIGA, Respondent.
DECISION
VILLARAMA, JR., J.:
Before the Court is a Petition for Review on Certiorari under
Rule 45 assailing the Decision1 dated July 18, 2006 and
Resolution2 dated May 2, 2007 of the Court of Appeals (CA) in
CA-G.R. CV No. 73551. The CA reversed the Decision3 dated
June 15, 1999 of the Regional Trial Court (RTC) of Pasig City,
Branch 151 in Civil Case No. 58980.
The factual antecedents:cralawlibrary
In August 1981, petitioner Fausto C. Ignacio mortgaged two
parcels of land to Home Savings Bank and Trust Company, the
predecessor of respondent Home Bankers Savings and Trust
Company, as security for the P500,000.00 loan extended to him
by said bank. These properties which are located in Cabuyao,
Laguna are covered by Transfer Certificate of Title Nos. (T-
40380) T-8595 and (T-45804) T-8350 containing an area of
83,303 square meters and 120,110 square meters,
respectively.4?r?l1
When petitioner defaulted in the payment of his loan obligation,
respondent bank proceeded to foreclose the real estate
mortgage. At the foreclosure sale held on January 26, 1983,
respondent bank was the highest bidder for the sum
of P764,984.67. On February 8, 1983, the Certificate of Sale
issued to respondent bank was registered with the Registry of
Deeds of Calamba, Laguna. With the failure of petitioner to
redeem the foreclosed properties within one year from such
registration, title to the properties were consolidated in favor of
respondent bank. Consequently, TCT Nos. T-8595 and T-8350
were cancelled and TCT Nos. 111058 and 111059 were issued
in the name of respondent bank.5?r?l1
Despite the lapse of the redemption period and consolidation of
title in respondent bank, petitioner offered to repurchase the
properties. While the respondent bank considered petitioner's
offer to repurchase, there was no repurchase contract executed.
The present controversy was fuelled by petitioner's stance that a
verbal repurchase/compromise agreement was actually reached
and implemented by the parties.
dispositions of the foreclosed properties already titled in its
name:cralawlibrary
TCT No. 111059 (Subdivided into six lots with individual titles -
TCT Nos. 117771, 117772, 117773, 117774, 117775 and
117776)
A. TCT No. 117771 (16,350 sq.ms.) - Sold to Fermin Salvador
and Bella Salvador under Deed of Absolute Sale dated May 23,
1984 for the price of P150,000.00
B. TCT No. 11772 (82,569 sq.ms. subdivided into 2 portions
1) Lot 3-B-1 (35,447 sq.ms.) - Sold to Dr. Oscar Remulla and
Natividad Pagtakhan, Dr. Edilberto Torres and Dra. Rebecca
Amores under Deed of Absolute Sale dated April 17, 1985 for
the price of P150,000.00
2) Lot 3-B-2 covered by separate title TCT No. 124660
(Subdivided into 3 portions -
Lot 3-B-2-A (15,000 sq.ms.) - Sold to Dr. Myrna del Carmen
Reyes under Deed of Absolute Sale dated March 23, 1987 for
the price of P150,000.00
Lot 3-B-2-B (15,000 sq.ms.) - Sold to Dr. Rodito Boquiren under
Deed of Absolute Sale dated March 23, 1987 for the price
of P150,000.00
Lot 3-B-2-C (17,122 sq.ms.) covered by TCT No. T-154568 -
C. TCT No.117773 (17,232 sq.ms.) - Sold to Rizalina Pedrosa
under Deed of Absolute Sale dated June 4, 1984 for the price
of P150,000.00 ???�r?bl?��??r�??l�l??�l?br?r�
The expenses for the subdivision of lots covered by TCT No.
111059 and TCT No. 117772 were shouldered by petitioner who
likewise negotiated the above-mentioned sale transactions. The
properties covered by TCT Nos. T-117774 to 117776 are still
registered in the name of respondent bank.6?r?l1
In a letter addressed to respondent bank dated July 25, 1989,
petitioner expressed his willingness to pay the amount
of P600,000.00 in full, as balance of the repurchase price, and
requested respondent bank to release to him the remaining
parcels of land covered by TCT Nos. 111058 and T-154658
("subject properties").7 Respondent bank however, turned down
his request. This prompted petitioner to cause the annotation of
an adverse claim on the said titles on September 18,
1989.8?r?l1
Prior to the annotation of the adverse claim, on August 24,
1989, the property covered by TCT No. 154658 was sold by
respondent bank to respondent spouses Phillip and Thelma
Rodriguez, without informing the petitioner. On October 6, 1989,
again without petitioner's knowledge, respondent bank sold the
property covered by TCT No T-111058 to respondents Phillip
and Thelma Rodriguez, Catherine M. Zu�iga, Reynold M.
Zu�iga and Jeannette M. Zu�iga.9?r?l1
On December 27, 1989, petitioner filed an action for specific
performance and damages in the RTC against the respondent
bank. As principal relief, petitioner sought in his original
complaint the reconveyance of the subject properties after his
payment of P600,000.00.10 Respondent bank filed its Answer
denying the allegations of petitioner and asserting that it was
merely exercising its right as owner of the subject properties
when the same were sold to third parties.
For failure of respondent bank to appear during the pre-trial
conference, it was declared as in default and petitioner was
allowed to present his evidence ex parte on the same date
(September 3, 1990). Petitioner simultaneously filed an "Ex-
Parte Consignation" tendering the amount of P235,000.00 as
balance of the repurchase price.11 On September 7, 1990, the
trial court rendered judgment in favor of petitioner. Said
decision, as well as the order of default, were subsequently set
aside by the trial court upon the filing of a motion for
reconsideration by the respondent bank.12?r?l1
In its Order dated November 19, 1990, the trial court granted the
motion for intervention filed by respondents Phillip and Thelma
Rodriguez, Catherine Zu�iga, Reynold Zu�iga and Jeannette
Zu�iga. Said intervenors asserted their status as innocent
purchasers for value who had no notice or knowledge of the
claim or interest of petitioner when they bought the properties
already registered in the name of respondent bank. Aside from a
counterclaim for damages against the petitioner, intervenors
also prayed that in the event respondent bank is ordered to
reconvey the properties, respondent bank should be adjudged
liable to the intervenors and return all amounts paid to it.13?r?l1
On July 8, 1991, petitioner amended his complaint to include as
alternative relief under the prayer for reconveyance the payment
by respondent bank of the prevailing market value of the subject
properties "less whatever remaining obligation due the bank by
reason of the mortgage under the terms of the compromise
agreement.14?r?l1
On June 15, 1999, the trial court rendered its Decision, the
dispositive portion of which reads:cralawlibrary
WHEREFORE, findings [sic] the facts aver[r]ed in the complaint
supported by preponderance of evidences adduced, judgment is
hereby rendered in favor of the plaintiff and against the
defendant and intervenors by:cralawlibrary
1. Declaring the two Deeds of Sale executed by the defendant in
favor of the intervenors as null and void and the Register of
Deeds in Calamba, Laguna is ordered to cancel and/or annul
the two Transfer Certificate of Titles No. T-154658 and TCT No.
T-111058 issued to the intervenors.
2. Ordering the defendant to refund the amount
of P1,004,250.00 to the intervenors as the consideration of the
sale of the two properties.
3. Ordering the defendant to execute the appropriate Deed of
Reconveyance of the two (2) properties in favor of the plaintiff
after the plaintiff pays in full the amount of P600,000.00 as
balance of the repurchase price.
4. Ordering the defendant bank to pay plaintiff the sum
of P50,000.00 as attorney's fees.
5. Dismissing the counterclaim of the defendant and intervenors
against the plaintiff. ???�r?bl?��??r�??l�l??�l?br?r�
Costs against the defendant.
SO ORDERED.15?r?l1
The trial court found that respondent bank deliberately
disregarded petitioner's substantial payments on the total
repurchase consideration. Reference was made to the letter
dated March 22, 1984 (Exhibit "I")16as the authority for petitioner
in making the installment payments directly to the Universal
Properties, Inc. (UPI), respondent bank's collecting agent. Said
court concluded that the compromise agreement amounts to a
valid contract of sale between petitioner, as Buyer, and
respondent bank, as Seller. Hence, in entertaining other buyers
for the same properties already sold to petitioner with intention
to increase its revenues, respondent bank acted in bad faith and
is thus liable for damages to the petitioner. Intervenors were
likewise found liable for damages as they failed to exercise due
diligence before buying the subject properties.
Respondent bank appealed to the CA which reversed the trial
court's ruling, as follows:cralawlibrary
WHEREFORE, the foregoing premises considered, the instant
appeal is hereby GRANTED. Accordingly, the assailed decision
is hereby REVERSED and SET ASIDE.
SO ORDERED.17?r?l1
The CA held that by modifying the terms of the offer contained
in the March 22, 1984 letter of respondent bank, petitioner
effectively rejected the original offer with his counter-offer. There
was also no written conformity by respondent bank's officers to
the amended conditions for repurchase which were unilaterally
inserted by petitioner. Consequently, no contract of repurchase
was perfected and respondent bank acted well within its rights
when it sold the subject properties to herein respondents-
intervenors.
As to the receipts presented by petitioner allegedly proving the
installment payments he had completed, the CA said that these
were not payments of the repurchase price but were actually
remittances of the payments made by petitioner's buyers for the
purchase of the foreclosed properties already titled in the name
of respondent bank. It was noted that two of these receipts
(Exhibits "K" and "K-1")18 were issued to Fermin Salvador and
Rizalina Pedrosa, the vendees of two subdivided lots under
separate Deeds of Absolute Sale executed in their favor by the
respondent bank. In view of the attendant circumstances, the
CA concluded that petitioner acted merely as a broker or
middleman in the sales transactions involving the foreclosed
properties. Lastly, the respondents-intervenors were found to be
purchasers who bought the properties in good faith without
notice of petitioner's interest or claim. Nonetheless, since there
was no repurchase contract perfected, the sale of the subject
properties to respondents-intervenors remains valid and binding,
and the issue of whether the latter were innocent purchasers for
value would be of no consequence.
Petitioner's motion for reconsideration was likewise denied by
the appellate court.
Hence, this petition alleging that:cralawlibrary
A.
THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN REVERSING THE
FINDING OF THE TRIAL COURT THAT THERE WAS A
PERFECTED CONTRACT TO REPURCHASE BETWEEN
PETITIONER AND RESPONDENT-BANK.
B.
THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN REVERSING THE
FINDING OF THE TRIAL COURT THAT PETITIONER DID NOT
ACT AS BROKER IN THE SALE OF THE FORECLOSED
PROPERTIES AND THUS FAILED TO CONSIDER THE
EXISTENCE OF OFFICIAL RECEIPTS ISSUED IN THE NAME
OF THE PETITIONER THAT ARE DULY NOTED FOR HIS
ACCOUNT.
C.
THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN REVERSING THE
FINDING OF THE TRIAL COURT THAT RESPONDENT-BANK
DID NOT HAVE THE RIGHT TO DISPOSE THE SUBJECT
PROPERTIES.
D.
THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN REVERSING THE
FINDING OF THE TRIAL COURT THAT RESPONDENTS-
INTERVENORS ARE NOT INNOCENT PURCHASERS FOR
VALUE IN GOOD
FAITH.19?r?l1 ???�r?bl?��??r�??l�l??�l?br?r�
It is to be noted that the above issues raised by petitioner
alleged grave abuse of discretion committed by the CA, which is
proper in a petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure, as amended, but not in the present
petition for review on certiorari under Rule 45.
The core issue for resolution is whether a contract for the
repurchase of the foreclosed properties was perfected between
petitioner and respondent bank.
The Court sustains the decision of the CA.
Contracts are perfected by mere consent, which is manifested
by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract.20 The
requisite acceptance of the offer is expressed in Article 1319 of
the Civil Code which states:cralawlibrary
ART. 1319. 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.
In Palattao v. Court of Appeals,21 this Court held that if the
acceptance of the offer was not absolute, such acceptance is
insufficient to generate consent that would perfect a contract.
Thus:cralawlibrary
Contracts that are consensual in nature, like a contract of sale,
are perfected upon mere meeting of the minds. Once there is
concurrence between the offer and the acceptance upon the
subject matter, consideration, and terms of payment, a contract
is produced. The offer must be certain. To convert the offer into
a contract, the acceptance must be absolute and must not
qualify the terms of the offer; it must be plain, unequivocal,
unconditional, and without variance of any sort from the
proposal. A qualified acceptance, or one that involves a new
proposal, constitutes a counter-offer and is a rejection of the
original offer. Consequently, when something is desired which is
not exactly what is proposed in the offer, such acceptance is not
sufficient to generate consent because any modification or
variation from the terms of the offer annuls the offer.22?r?l1
The acceptance must be identical in all respects with that of the
offer so as to produce consent or meeting of the minds.23 Where
a party sets a different purchase price than the amount of the
offer, such acceptance was qualified which can be at most
considered as a counter-offer; a perfected contract would have
arisen only if the other party had accepted this counter-offer.24 In
Villanueva v. Philippine National Bank25 this Court further
elucidated on the meaning of unqualified acceptance, as
follows:cralawlibrary
While it is impossible to expect the acceptance to echo every
nuance of the offer, it is imperative that it assents to those points
in the offer which, under the operative facts of each contract, are
not only material but motivating as well. Anything short of that
level of mutuality produces not a contract but a mere counter-
offer awaiting acceptance. More particularly on the matter of the
consideration of the contract, the offer and its acceptance must
be unanimous both on the rate of the payment and on its term.
An acceptance of an offer which agrees to the rate but varies
the term is ineffective.26 (Emphasis supplied)
Petitioner submitted as evidence of a perfected contract of
repurchase the March 22, 1984 letter (Exhibit "I")27 from Rita B.
Manuel, then President of UPI, a corporation formed by
respondent bank to dispose of its acquired assets, with
notations handwritten by petitioner himself. Said letter
reads:cralawlibrary
March 22, 1984
Honorable Judge Fausto Ignacio
412 Bagumbayan Street, Pateros
Metro Manila
Dear Judge Ignacio:cralawlibrary
Your proposal to repurchase your foreclosed properties located
at Cabuyao, Laguna consisting of a total area of 203,413 square
meters has been favorably considered subject to the following
terms and conditions:cralawlibrary
1) Total Selling Price shall be P950,000.00
2) Downpayment of P150,00000 with the balance
Payable in Three (3) equal installments
as follows:cralawlibrary
1st Installment - P 266,667 - on or before May 31, '84
2nd Installment - P 266,667 - on or before Sept. 31, '84
3rd Installment - P 266,666 - on or before Jan. 30, '85
TOTAL - P
800,000.00 ???�r?bl?��??r�??l�l??�l?br?r�
3) All expenses pertinent to the subdivision of the parcel of land
consisting of 120,110 square meters shall be for your
account. ???�r?bl?��??r�??l�l??�l?br?r�
Thank you,
Very truly yours,
RITA B. MANUEL
President ???�r?bl?��??r�??l�l??�l?br?r�
According to petitioner, he wrote the notations in the presence
of a certain Mr. Lazaro, the representative of Mrs. Manuel
(President), and a certain Mr. Fajardo, which notations
supposedly represent their "compromise agreement."28 These
notations indicate that the repurchase price would
be P900,000.00 which shall be paid as follows: P150,000 - end
of May '84; P150,000 - end of June '84; Balance - "Depending
on financial position". Petitioner further alleged the following
conditions of the verbal agreement: (1) respondent bank shall
release the equivalent land area for payments made by
petitioner who shall shoulder the expenses for subdivision of the
land; (2) in case any portion of the subdivided land is sold by
petitioner, a separate document of sale would be executed
directly to the buyer; (3) the remaining portion of the properties
shall not be subject of respondent bank's transaction without the
consent and authority of petitioner; (4) the petitioner shall
continue in possession of the properties and whatever portion
still remaining, and attending to the needs of its tenants; and (5)
payments shall be made directly to UPI.29?r?l1
The foregoing clearly shows that petitioner's acceptance of the
respondent bank's terms and conditions for the repurchase of
the foreclosed properties was not absolute. Petitioner set a
different repurchase price and also modified the terms of
payment, which even contained a unilateral condition for
payment of the balance (P600,000), that is, depending on
petitioner's "financial position." The CA thus considered the
qualified acceptance by petitioner as a counter-proposal which
must be accepted by respondent bank. However, there was no
evidence of any document or writing showing the conformity of
respondent bank's officers to this counter-proposal.
Petitioner contends that the receipts issued by UPI on his
installment payments are concrete proof -- despite denials to the
contrary by respondent bank -- that there was an implied
acceptance of his counter-proposal and that he did not merely
act as a broker for the sale of the subdivided portions of the
foreclosed properties to third parties. Since all these receipts,
except for two receipts issued in the name of Fermin Salvador
and Rizalina Pedrosa, were issued in the name of petitioner
instead of the buyers themselves, petitioner emphasizes that the
payments were made for his account. Moreover, petitioner
asserts that the execution of the separate deeds of sale directly
to the buyers was in pursuance of the perfected repurchase
agreement with respondent bank, such an arrangement being
"an accepted practice to save on taxes and shortcut paper
works."???�r?bl?��??r�??l�l??�l?br?r�
The Court is unconvinced.
In Adelfa Properties, Inc. v. CA,30 the Court ruled
that:cralawlibrary
x x x The rule is that except where a formal acceptance is so
required, although the acceptance must be affirmatively and
clearly made and must be evidenced by some acts or conduct
communicated to the offeror, it may be made either in a formal
or an informal manner, and may be shown by acts, conduct, or
words of the accepting party that clearly manifest a present
intention or determination to accept the offer to buy or sell.
Thus, acceptance may be shown by the acts, conduct, or words
of a party recognizing the existence of the contract of
sale.31?r?l1
Even assuming that the bank officer or employee whom
petitioner claimed he had talked to regarding the March 22,
1984 letter had acceded to his own modified terms for the
repurchase, their supposed verbal exchange did not bind
respondent bank in view of its corporate nature. There was no
evidence that said Mr. Lazaro or Mr. Fajardo was authorized by
respondent bank's Board of Directors to accept petitioner's
counter-proposal to repurchase the foreclosed properties at the
price and terms other than those communicated in the March
22, 1984 letter. As this Court ruled in AF Realty & Development,
Inc. v. Dieselman Freight Services, Co.32?r?l1
Section 23 of the Corporation Code expressly provides that the
corporate powers of all corporations shall be exercised by the
board of directors. Just as a natural person may authorize
another to do certain acts in his behalf, so may the board of
directors of a corporation validly
delegate some of its functions to individual officers or agents
appointed by it. Thus, contracts or acts of a corporation must be
made either by the board of directors or by a corporate agent
duly authorized by the board. Absent such valid
delegation/authorization, the rule is that the declarations of an
individual director relating to the affairs of the corporation, but
not in the course of, or connected with, the performance of
authorized duties of such director, are held not binding on the
corporation.33?r?l1
Thus, a corporation can only execute its powers and transact its
business through its Board of Directors and through its officers
and agents when authorized by a board resolution or its by-
laws.34?r?l1
In the absence of conformity or acceptance by properly
authorized bank officers of petitioner's counter-proposal, no
perfected repurchase contract was born out of the talks or
negotiations between petitioner and Mr. Lazaro and Mr. Fajardo.
Petitioner therefore had no legal right to compel respondent
bank to accept the P600,000 being tendered by him as payment
for the supposed balance of repurchase price.
A contract of sale is consensual in nature and is perfected upon
mere meeting of the minds. When there is merely an offer by
one party without acceptance of the other, there is no
contract.35 When the contract of sale is not perfected, it cannot,
as an independent source of obligation, serve as a binding
juridical relation between the parties.36?r?l1
In sum, we find the ruling of the CA more in accord with the
established facts and applicable law and jurisprudence.
Petitioner's claim of utmost accommodation by respondent bank
of his own terms for the repurchase of his foreclosed properties
are simply contrary to normal business practice. As aptly
observed by the appellate court:cralawlibrary
The submission of the plaintiff-appellee is unimpressive.
First, if the counter-proposal was mutually agreed upon by both
the plaintiff-appellee and defendant-appellant, how come not a
single signature of the representative of the defendant-appellant
was affixed thereto. Second, it is inconceivable that an
agreement of such great importance, involving two personalities
who are both aware and familiar of the practical and legal
necessity of reducing agreements into writing, the plaintiff-
appellee, being a lawyer and the defendant-appellant, a banking
institution, not to formalize their repurchase agreement. Third, it
is quite absurd and unusual that the defendant-appellant could
have acceded to the condition that the balance of the payment
of the repurchase price would depend upon the financial
position of the plaintiff-appellee. Such open[-]ended and
indefinite period for payment is hardly acceptable to a banking
institution like the defendant-appellant whose core existence
fundamentally depends upon its financial arrangements and
transactions which, most, if not all the times are intended to bear
favorable outcome to its business. Last, had there been a
repurchase agreement, then, there should have been titles or
deeds of conveyance issued in favor of the plaintiff-appellee.
But as it turned out, the plaintiff-appellee never had any land
deeded or titled in his name as a result of the alleged
repurchase agreement. All these, reinforce the conclusion that
the counter-proposal was unilaterally made and inserted by the
plaintiff-appellee in Exhibit "I" and could not have been accepted
by the defendant-appellant, and that a different agreement other
than a repurchase agreement was perfected between
them.37?r?l1
Petitioner Fausto C. Ignacio passed away on November 11,
2008 and was substituted by his heirs, namely: Marfel D.
Ignacio-Manalo, Milfa D. Ignacio-Manalo and Faustino D.
Ignacio.
WHEREFORE, the petition for review on certiorari is DENIED.
The Decision dated July 18, 2006 and Resolution dated May 2,
2007 of the Court of Appeals in CA-G.R. CV No. 73551 are
hereby AFFIRMED.
With costs against the petitioners.
SO ORDERED.
G.R. No. L-26872 July 25, 1975
VILLONCO REALTY COMPANY, plaintiff-appellee and EDITH
PEREZ DE TAGLE, intervenor-appellee,
vs.
BORMAHECO, INC., FRANCISCO N. CERVANTES and
ROSARIO N. CERVANTES, defendants-appellants. Meer, Meer
& Meer for plaintiff-appellee.
J. Villareal, Navarro and Associates for defendants-appellants.
P. P. Gallardo and Associates for intervenor-appellee.
AQUINO, J.:
This action was instituted by Villonco Realty Company against
Bormaheco, Inc. and the spouses Francisco N. Cervantes and
Rosario N. Cervantes for the specific performance of a
supposed contract for the sale of land and the improvements
thereon for one million four hundred thousand pesos. Edith
Perez de Tagle, as agent, intervened in order to recover her
commission. The lower court enforced the sale. Bormaheco, Inc.
and the Cervantes spouses, as supposed vendors, appealed.
This Court took cognizance of the appeal because the amount
involved is more than P200,000 and the appeal was perfected
before Republic Act No. 5440 took effect on September 9, 1968.
The facts are as follows:
Francisco N. Cervantes and his wife, Rosario P. Navarra-
Cervantes, are the owners of lots 3, 15 and 16 located at 245
Buendia Avenue, Makati, Rizal with a total area of three
thousand five hundred square meters (TCT Nos. 43530, 43531
and 43532, Exh. A, A-1 and A-2). The lots were mortgaged to
the Development Bank of the Phil (DBP) on April 21, 1959 as
security for a loan of P441,000. The mortgage debt was fully
paid on July 10, 1969.
Cervantes is the president of Bormaheco, Inc., a dealer and
importer of industrial and agricultural machinery. The entire lots
are occupied by the building, machinery and equipment of
Bormaheco, Inc. and are adjacent to the property of Villonco
Realty Company situated at 219 Buendia Avenue.
In the early part of February, 1964 there were negotiations for
the sale of the said lots and the improvements thereon between
Romeo Villonco of Villonco Realty Company "and Bormaheco,
Inc., represented by its president, Francisco N. Cervantes,
through the intervention of Edith Perez de Tagle, a real estate
broker".
In the course of the negotiations, the brothers Romeo Villonco I shall have also
and Teofilo Villonco conferred with Cervantes in his office to consummated my
discuss the price and terms of the sale. Later, Cervantes "went purchase of another
to see Villonco for the same reason until some agreement" was property located at Sta.
arrived at. On a subsequent occasion, Cervantes, accompanied Ana, Manila;
by Edith Perez de Tagle, discussed again the terms of the sale
with Villonco. (4) That if my
negotiations with said
During the negotiations, Villonco Realty Company assumed that property will not be
the lots belonged to Bormaheco, Inc. and that Cervantes was consummated by reason
duly authorized to sell the same. Cervantes did not disclose to beyond my control, I will
the broker and to Villonco Realty Company that the lots were return to you your
conjugal properties of himself and his wife and that they were deposit of P100,000 and
mortgaged to the DBP. the sale of my property
to you will not also be
Bormaheco, Inc., through Cervantes, made a written offer dated consummated; and
February 12, 1964, to Romeo Villonco for the sale of the
property. The offer reads (Exh. B): (5) That final
negotiations on both
BORMAHECO, INC. properties can be
definitely known after 45
days.
February 12,1964

If the above terms is (are) acceptable to

Mr. Romeo
your Board, please issue out the said
Villonco Villonco Building
earnest money in favor of Bormaheco, Inc.,
Buendia Avenue
and deliver the same thru the bearer, Miss
Makati, Rizal.
Edith Perez de Tagle.
Dear Mr. Villonco:

This is with reference to our telephone

conversation this noon on the matter of the
sale of our propertylocated at Buendia
Avenue, with a total area of 3,500 sq. m.,
under the following conditions:

(1) That we are offering

to sell to you the above
property at the price of
P400.00 per square
meter;

(2) That a deposit of

P100,000.00 must be
placed as earnest
money on the purchase
of the above property
which will become part
payment of the property
in the event that the sale
is consummated;

(3) That this sale is to be

consummated only after
 VILLONCO
N REALTY COMPANY
V. R.CC. Building
219 Buendia
I Avenue, Makati,
Rizal,SPhilippines
C
MarchO 4, 1964

N
Mr. Francisco Cervantes.
.
Bormaheco, Inc.
245 Buendia Avenue
C
Makati, Rizal
E
R
Dear VMr. Cervantes:
A
In reference
N to the letter of Miss E. Perez de
TagleTdated February 12th and 26, 1964 in
respect
E to the terms and conditions on the
purchase
S of your property located at
Buendia Ave., Makati, Rizal, with a total
area Pof 3,500 sq. meters., we hereby revise
our offer,
r as follows:
e
s the price of the property shall be
1. That
i per sq. m., including the
P400.00
d
improvements thereon;
e
n a deposit of P100,000.00 shall be
2. That
givent to you as earnest money which will
become as part payment in the event the
The property mentioned in Bormaheco's letter was the land of sale is consummated;
the National Shipyards & Steel Corporation (Nassco), with an
area of twenty thousand square meters, located at Punta, Sta. 3. This sale shall be cancelled, only if your
Ana, Manila. At the bidding held on January 17, 1964 that land deal with another property in Sta. Ana shall
was awarded to Bormaheco, Inc., the highest bidder, for the not be consummated and in such case, the
price of P552,000. The Nassco Board of Directors in its P100,000-00 earnest money will be returned
resolution of February 18, 1964 authorized the General to us with a 10% interest p.a. However, if
Manager to sign the necessary contract (Exh. H). our deal with you is finalized, said
P100,000.00 will become as part payment
On February 28, 1964, the Nassco Acting General Manager for the purchase of your property without
wrote a letter to the Economic Coordinator, requesting approval interest:
of that resolution. The Acting Economic Coordinator approved
the resolution on March 24, 1964 (Exh. 1). 4. The manner of payment shall be as
follows:
In the meanwhile, Bormaheco, Inc. and Villonco Realty
Company continued their negotiations for the sale of the a. P100,000.00 earnest money and
Buendia Avenue property. Cervantes and Teofilo Villonco had a 650,000.00 as part of the down payment, or
final conference on February 27, 1964. As a result of that P750,000.00 as total down payment
conference Villonco Realty Company, through Teofilo Villonco,
in its letter of March 4, 1964 made a revised counter- offer
b. The balance is payable as follows:
(Romeo Villonco's first counter-offer was dated February 24,
P100,000.00 after 3 months
1964, Exh. C) for the purchase of the property. The counter-
125,000.00 -do-
offer was accepted by Cervantes as shown in Exhibit D, which is
212,500.00 -do-
quoted below:
P650,000.00 Total
As regards to the other conditions which we
have discussed during our last conference
on February 27, 1964, the same shall be
finalized upon preparation of the contract to
sell.*

If the above terms and conditions are

acceptable to you, kindly sign your
conformity hereunder. Enclosed is our check CONFORME:
for ONE HUNDRED THOUSAND
(P100,000.00) PESOS, MBTC Check No. BORMAHECO, INC.
448314, as earnest money. (Sgd.) FRANCISCO CERVANTES

Very truly yours, That this sale shall be subject to favorable

consummation of a property in Sta. Ana we
are negotiating.
V
I
(Sgd.)L FRANCISCO CERVANTES
L
O
The check for P100,000 (Exh. E) mentioned in the foregoing
N
letter-contract was delivered by Edith Perez de Tagle to
C
Bormaheco, Inc. on March 4, 1964 and was received by
O
Cervantes. In the voucher-receipt evidencing the delivery the
broker indicated in her handwriting that the earnest money was
R
"subject to the terms and conditions embodied in Bormaheco's
E
letter" of February 12 and Villonco Realty Company's letter of
A
March 4, 1964 (Exh. E-1; 14 tsn).
L
T
Then, unexpectedly, in a Yletter dated March 30, 1964, or twenty-
six days after the signing of the contract of sale, Exhibit D,
Cervantes returned the earnest
C money, with interest amounting
to P694.24 (at ten percentO per annum). Cervantes cited as an
excuse the circumstance Mthat "despite the lapse of 45 days from
February 12, 1964 there isP no certainty yet" for the acquisition of
the Punta property (Exh. AF; F-I and F-2). Villonco Realty
Company refused to accept N the letter and the checks of
Bormaheco, Inc. Cervantes Y sent them by registered mail. When
he rescinded the contract, he was already aware that the Punta
lot had been awarded to Bormaheco,
( Inc. (25-26 tsn).
S
Edith Perez de Tagle, thegbroker, in a letter to Cervantes dated
March 31, 1964 articulated d her shock and surprise at
Bormaheco's turnabout. She . reviewed the history of the deal
and explained why Romeo ) Villonco could not agree to the
rescission of the sale (Exh. G).**
T
Cervantes in his letter of EApril 6, 1964, a reply to Miss Tagle's
O
letter, alleged that the forty-five day period had already expired
and the sale to Bormaheco, F Inc. of the Punta property had not
been consummated. Cervantes I said that his letter was a
"manifestation that we areL no longer interested to sell" the
Buendia Avenue propertyOto Villonco Realty Company (Annex I
of Stipulation of Facts). The latter was furnished with a copy of
that letter. V
In a letter dated April 7, 1964 Villonco Realty Company returned
the two checks to Bormaheco, Inc., stating that the condition for
the cancellation of the contract had not arisen and at the same
time announcing that an action for breach of contract would be
filed against Bormaheco, Inc. (Annex G of Stipulation of
Facts).1äwphï1.ñët
On that same date, April 7, 1964 Villonco Realty Company filed
the complaint (dated April 6) for specific performance against
Bormaheco, Inc. Also on that same date, April 7, at eight-forty-
five in the morning, a notice of lis pendens was annotated on the
titles of the said lots.
Bormaheco, Inc. in its answers dated May 5 and 25, 1964
pleaded the defense that the perfection of the contract of sale
was subject to the conditions (a) "that final acceptance or not
shall be made after 45 days" (sic) and (b) that Bormaheco, Inc.
"acquires the Sta. Ana property".
On June 2, 1964 or during the pendency of this case, the
Nassco Acting General Manager wrote to Bormaheco, Inc.,
advising it that the Board of Directors and the Economic
Coordinator had approved the sale of the Punta lot to
Bormaheco, Inc. and requesting the latter to send its duly
authorized representative to the Nassco for the signing of the
deed of sale (Exh. 1).
The deed of sale for the Punta land was executed on June 26,
1964. Bormaheco, Inc. was represented by Cervantes (Exh. J.
See Bormaheco, Inc. vs. Abanes, L-28087, July 31, 1973, 52
SCRA 73).
In view of the disclosure in Bormaheco's amended answer that
the three lots were registered in the names of the Cervantes
spouses and not in the name of Bormaheco, Inc., Villonco
Realty Company on July 21, 1964 filed an amended complaint
impleading the said spouses as defendants. Bormaheco, Inc.
and the Cervantes spouses filed separate answers.
As of January 15, 1965 Villonco Realty Company had paid to
the Manufacturers' Bank & Trust Company the sum of
P8,712.25 as interests on the overdraft line of P100,000 and the
sum of P27.39 as interests daily on the same loan since
January 16, 1965. (That overdraft line was later settled by
Villonco Realty Company on a date not mentioned in its
manifestation of February 19, 1975).
Villonco Realty Company had obligated itself to pay the sum of
P20,000 as attorney's fees to its lawyers. It claimed that it was
damaged in the sum of P10,000 a month from March 24, 1964
when the award of the Punta lot to Bormaheco, Inc. was
approved. On the other hand, Bormaheco, Inc. claimed that it
had sustained damages of P200,000 annually due to the notice
of lis pendens which had prevented it from constructing a multi-
story building on the three lots. (Pars. 18 and 19, Stipulation of
Facts).1äwphï1.ñët
Miss Tagle testified that for her services Bormaheco, Inc.,
through Cervantes, obligated itself to pay her a three percent
commission on the price of P1,400,000 or the amount of forty-
two thousand pesos (14 tsn).
After trial, the lower court rendered a decision ordering the
Cervantes spouses to execute in favor of Bormaheco, Inc. a
deed of conveyance for the three lots in question and directing
Bormaheco, Inc. (a) to convey the same lots to Villonco Realty
Company, (b) to pay the latter, as consequential damages, the
sum of P10,000 monthly from March 24, 1964 up to the
consummation of the sale, (c) to pay Edith Perez de Tagle the
sum of P42,000 as broker's commission and (d) pay P20,000 as
to attorney's fees (Civil Case No. 8109).
Bormaheco, Inc. and the Cervantes spouses appealed. Their
principal contentions are (a) that no contract of sale was
perfected because Cervantes made a supposedly qualified
acceptance of the revised offer contained in Exhibit D, which
acceptance amounted to a counter-offer, and because the
condition that Bormaheco, inc. would acquire the Punta land
within the forty-five-day period was not fulfilled; (2) that
Bormaheco, Inc. cannot be compelled to sell the land which
belongs to the Cervantes spouses and (3) that Francisco N.
Cervantes did not bind the conjugal partnership and his wife
when, as president of Bormaheco, Inc., he entered into
negotiations with Villonco Realty Company regarding the said
land.
We hold that the appeal, except as to the issue of damages, is
devoid of merit.
"By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determining
thing, and the other to pay therefor a price certain in money or
its equivalent. A contract of sale may be absolute or conditional"
(Art. 1458, Civil Code).
"The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the
contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of
the law governing the form of contracts" (Art. 1475, Ibid.).
"Contracts are perfected by mere consent, and from that
moment the parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good
faith, usage and law" (Art. 1315, Civil Code).
"Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute
the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer"
(Art. 1319, Civil Code). "An acceptance may be express or
implied" (Art. 1320, Civil Code).
Bormaheco's acceptance of Villonco Realty Company's offer to
purchase the Buendia Avenue property, as shown in Teofilo
Villonco's letter dated March 4, 1964 (Exh. D), indubitably
proves that there was a meeting of minds upon the subject
matter and consideration of the sale. Therefore, on that date the
sale was perfected. (Compare with McCullough vs. Aenlle &
Co., 3 Phil. 285; Goyena vs. Tambunting, 1 Phil. 490). Not only
that Bormaheco's acceptance of the part payment of one
hundred ,thousand pesos shows that the sale was conditionally
consummated or partly executed subject to the purchase by
Bormaheco, Inc. of the Punta property. The nonconsummation
of that purchase would be a negative resolutory condition
(Taylor vs. Uy Tieng Piao, 43 Phil. 873).
On February 18, 1964 Bormaheco's bid for the Punta property
was already accepted by the Nassco which had authorized its
General Manager to sign the corresponding deed of sale. What
was necessary only was the approval of the sale by the
Economic Coordinator and a request for that approval was
already pending in the office of that functionary on March 4,
1964.
Bormaheco, Inc. and the Cervantes spouses contend that the
sale was not perfected because Cervantes allegedly qualified
his acceptance of Villonco's revised offer and, therefore, his
acceptance amounted to a counter-offer which Villonco Realty
Company should accept but no such acceptance was ever
transmitted to Bormaheco, Inc. which, therefore, could withdraw
its offer.
That contention is not well-taken. It should be stressed that
there is no evidence as to what changes were made by
Cervantes in Villonco's revised offer. And there is no evidence
that Villonco Realty Company did not assent to the supposed
changes and that such assent was never made known to
Cervantes.
What the record reveals is that the broker, Miss Tagle, acted as
intermediary between the parties. It is safe to assume that the
alleged changes or qualifications made by Cervantes were
approved by Villonco Realty Company and that such approval
was duly communicated to Cervantes or Bormaheco, Inc. by the
broker as shown by the fact that Villonco Realty Company paid,
and Bormaheco, Inc. accepted, the sum of P100,000 as earnest
money or down payment. That crucial fact implies that
Cervantes was aware that Villonco Realty Company had
accepted the modifications which he had made in Villonco's
counter-offer. Had Villonco Realty Company not assented to
those insertions and annotations, then it would have stopped
payment on its check for P100,000. The fact that Villonco Realty
Company allowed its check to be cashed by Bormaheco, Inc.
signifies that the company was in conformity with the changes
made by Cervantes and that Bormaheco, Inc. was aware of that
conformity. Had those insertions not been binding, then
Bormaheco, Inc. would not have paid interest at the rate of ten
percent per annum, on the earnest money of P100,000.
The truth is that the alleged changes or qualifications in the
revised counter — offer (Exh. D) are not material or are mere
clarifications of what the parties had previously agreed upon.
Thus, Cervantes' alleged insertion in his handwriting of the
figure and the words "12th and" in Villonco's counter-offer is the
same as the statement found in the voucher-receipt for the
earnest money, which reads: "subject to the terms and
conditions embodied in Bormaheco's letter of Feb. 12, 1964 and
your letter of March 4, 1964" (Exh. E-1).
Cervantes allegedly crossed out the word "Nassco" in paragraph
3 of Villonco's revised counter-offer and substituted for it the
word "another" so that the original phrase, "Nassco's property in
Sta. Ana", was made to read as "another property in Sta. Ana".
That change is trivial. What Cervantes did was merely to adhere
to the wording of paragraph 3 of Bormaheco's original offer
(Exh. B) which mentions "another property located at Sta. Ana."
His obvious purpose was to avoid jeopardizing his negotiation
with the Nassco for the purchase of its Sta. Ana property by
unduly publicizing it.
It is noteworthy that Cervantes, in his letter to the broker dated
April 6, 1964 (Annex 1) or after the Nassco property had been
awarded to Bormaheco, Inc., alluded to the "Nassco property".
At that time, there was no more need of concealing from the
public that Bormaheco, Inc. was interested in the Nassco
property.
Similarly, Cervantes' alleged insertion of the letters "PA" ( per
annum) after the word "interest" in that same paragraph 3 of the
revised counter-offer (Exh. D) could not be categorized as a
major alteration of that counter-offer that prevented a meeting of
the minds of the parties. It was understood that the parties had
contemplated a rate of ten percent per annum since ten percent
a month or semi-annually would be usurious.
Appellants Bormaheco, Inc. and Cervantes further contend that
Cervantes, in clarifying in the voucher for the earnest money of
P100,000 that Bormaheco's acceptance thereof was subject to
the terms and conditions embodied in Bormaheco's letter of
February 12, 1964 and your (Villonco's) letter of March 4, 1964"
made Bormaheco's acceptance "qualified and conditional".
That contention is not correct. There is no incompatibility
between Bormaheco's offer of February 12, 1964 (Exh. B) and
Villonco's counter-offer of March 4, 1964 (Exh. D). The revised
counter-offer merely amplified Bormaheco's original offer.
The controlling fact is that there was agreement between the
parties on the subject matter, the price and the mode of
payment and that part of the price was paid. "Whenever earnest
money is given in a contract of sale, it shall be considered as
part of the price and as proof of the perfection of the contract"
(Art. 1482, Civil Code).
"It is true that an acceptance may contain a request for certain
changes in the terms of the offer and yet be a binding
acceptance. 'So long as it is clear that the meaning of the
acceptance is positively and unequivocally to accept the offer,
whether such request is granted or not, a contract is formed.' "
(Stuart vs. Franklin Life Ins. Co., 165 Fed. 2nd 965, citing Sec.
79, Williston on Contracts).
Thus, it was held that the vendor's change in a phrase of the
offer to purchase, which change does not essentially change the
terms of the offer, does not amount to a rejection of the offer
and the tender of a counter-offer (Stuart vs. Franklin Life Ins.
Co., supra).
It was held that Borck's January 17th letter plainly departed from
the terms of the offer as to the time of payment and was a
counter-offer which amounted to a rejection of Valdes' original
offer. A subsequent unconditional acceptance could not revive
that offer.
The instant case is different from Laudico and Harden vs. Arias
Rodriguez, 43 Phil. 270 where the written offer to sell was
revoked by the offer or before the offeree's acceptance came to
the offeror's knowledge.
Appellants' next contention is that the contract was not perfected
because the condition that Bormaheco, Inc. would acquire the
Nassco land within forty-five days from February 12, 1964 or on
or before March 28, 1964 was not fulfilled. This contention is
tied up with the following letter of Bormaheco, Inc. (Exh. F):
BORMAHECO, INC.
March 30, 1964
Villonco Realty Company
V.R.C. Building
219 Buendia Ave.,
Makati, Rizal

The instant case is not governed by the rulings laid down

Gentlemen:
in Beaumont vs. Prieto, 41 Phil. 670, 985, 63 L. Ed. 770,
and Zayco vs. Serra, 44 Phil. 326. In those two cases the
acceptance radically altered the offer and, consequently, there We are returning herewith your earnest
was no meeting of the minds of the parties. money together with interest thereon at 10%
per annum. Please be informed that despite
the lapse of the 45 days from February 12,
Thus, in the Zayco case, Salvador Serra offered to sell to
1964 there is no certainty yet for us to
Lorenzo Zayco his sugar central for P1,000,000 on condition
acquire a substitute property, hence the
that the price be paid in cash, or, if not paid in cash, the price
return of the earnest money as agreed
would be payable within three years provided security is given
upon.
for the payment of the balance within three years with interest.
Zayco, instead of unconditionally accepting those terms,
countered that he was going to make a down payment of Very truly yours,
P100,000, that Serra's mortgage obligation to the Philippine
National Bank of P600,000 could be transferred to Zayco's
account and that he (plaintiff) would give a bond to secure the
payment of the balance of the price. It was held that the
acceptance was conditional or was a counter-offer which had to
be accepted by Serra. There was no such acceptance. Serra
revoked his offer. Hence, there was no perfected contract.

In the Beaumont case, Benito Valdes offered to sell to W Borck

the Nagtahan Hacienda owned by Benito Legarda, who had
empowered Valdes to sell it. Borck was given three months from
December 4, 1911 to buy the hacienda for P307,000. On
January 17, 1912 Borck wrote to Valdes, offering to purchase
the hacienda for P307,000 payable on May 1, 1912. No reply
was made to that letter. Borck wrote other letters modifying his
proposal. Legarda refused to convey the property.

Encl.: P.N.B. Check No. 112994 J
P.N.B. Check No. 112996J
That contention is predicated on the erroneous assumption that
Bormaheco, Inc. was to acquire the Nassco land within forty-five
days or on or before March 28, 1964.
The trial court ruled that the forty-five-day period was merely an
estimate or a forecast of how long it would take Bormaheco, Inc.
to acquire the Nassco property and it was not "a condition or a
deadline set for the defendant corporation to decide whether or
not to go through with the sale of its Buendia property".
The record does not support the theory of Bormaheco, Inc. and
the Cervantes spouses that the forty-five-day period was the
time within which (a) the Nassco property and two Pasong Tamo
lots should be acquired, (b) when Cervantes would secure his
wife's consent to the sale of the three lots and (c) when
Bormaheco, Inc. had to decide what to do with the DBP
encumbrance.
Cervantes in paragraph 3 of his offer of February 12, 1964
stated that the sale of the Buendia lots would be consummated
after he had consummated the purchase of the Nassco
property. Then, in paragraph 5 of the same offer he stated "that
final negotiations on both properties can be definitely
known after forty-five days" (See Exh. B).
It is deducible from the tenor of those statements that the
consummation of the sale of the Buendia lots to Villonco Realty
Company was conditioned on Bormaheco's acquisition of the
Nassco land. But it was not spelled out that such acquisition
should be effected within Nforty-five days from February 12, 1964.
Had it been Cervantes' intention
. that the forty-five days would
be the period within which the Nassco land should be acquired
by Bormaheco, then he would C have specified that period in
paragraph 3 of his offer so E that paragraph would read in this
wise: "That this sale is to Rbe consummated only after I shall
have consummated my purchaseV of another property located at
Sta. Ana, Manila within forty-five
A days from the date hereof ." He
could have also specifiedNthat period in his "conforme" to
Villonco's counter-offer ofTMarch 4, 1964 (Exh. D) so that
instead of merely stating E"that this sale shall be subject to
favorable consummation Sof a property in Sta. Ana we are
negotiating" he could have said: "That this sale shall be subject
to favorable consummation P within forty-five days from February
12, 1964 of a property in rSta. Ana we are negotiating".
e
No such specification wass made. The term of forty-five days was
not a part of the conditioni that the Nassco property should be
d statement "that final negotiations on
acquired. It is clear that the
e
both property can be definitely known after 45 days" does not
n
and cannot mean that Bormaheco, Inc. should acquire the
t
Nassco property within forty-five days from February 12, 1964
as pretended by Cervantes. It is simply a surmise that after
forty-five days (in fact when the forty-five day period should be
computed is not clear) it would be known whether Bormaheco,
Inc. would be able to acquire the Nassco property and whether it
would be able to sell the Buendia property. That aforementioned
paragraph 5 does not even specify how long after the forty-five
days the outcome of the final negotiations would be known.
It is interesting to note that in paragraph 6 of Bormaheco's
answer to the amended complaint, which answer was verified by
Cervantes, it was alleged that Cervantes accepted Villonco's
revised counter-offer of March 4, 1964 subject to the condition
that "the final negotiations (acceptance) will have to be made by
defendant within 45 daysfrom said acceptance" (31 Record on
Appeal). If that were so, then the consummation of Bormaheco's
purchase of the Nassco property would be made within forty-five
days from March 4, 1964.
What makes Bormaheco's stand more confusing and untenable
is that in its three answers it invariably articulated the incoherent
and vague affirmative defense that its acceptance of Villonco's
revised counter-offer was conditioned on the circumstance "that
final acceptance or not shall be made after 45 days" whatever
that means. That affirmative defense is inconsistent with the
other aforequoted incoherent statement in its third answer that
"the final negotiations (acceptance) will have to be made by
defendant within 45 days from said acceptance" (31 Record on
Appeal).1äwphï1.ñët
Thus, Bormaheco's three answers and paragraph 5 of his offer
of February 12, 1964 do not sustain at all its theory that the
Nassco property should be acquired on or before March 28,
1964. Its rescission or revocation of its acceptance cannot be
anchored on that theory which, as articulated in its pleadings, is
quite equivocal and unclear.
It should be underscored that the condition that Bormaheco, Inc.
should acquire the Nassco property was fulfilled. As admitted by
the appellants, the Nassco property was conveyed to
Bormaheco, Inc. on June 26, 1964. As early as January 17,
1964 the property was awarded to Bormaheco, Inc. as the
highest bidder. On February 18, 1964 the Nassco Board
authorized its General Manager to sell the property to
Bormaheco, Inc. (Exh. H). The Economic Coordinator approved
the award on March 24, 1964. It is reasonable to assume that
had Cervantes been more assiduous in following up the
transaction, the Nassco property could have been transferred to
Bormaheco, Inc. on or before March 28, 1964, the supposed
last day of the forty-five-day period.
The appellants, in their fifth assignment of error, argue that
Bormaheco, Inc. cannot be required to sell the three lots in
question because they are conjugal properties of the Cervantes
spouses. They aver that Cervantes in dealing with the Villonco
brothers acted as president of Bormaheco, Inc. and not in his
individual capacity and, therefore, he did not bind the conjugal
partnership nor Mrs. Cervantes who was allegedly opposed to
the sale.
Those arguments are not sustainable. It should be remembered
that Cervantes, in rescinding the contract of sale and in
returning the earnest money, cited as an excuse the
circumstance that there was no certainty in Bormaheco's
acquisition of the Nassco property (Exh. F and Annex 1). He did
not say that Mrs. Cervantes was opposed to the sale of the
three lots. He did not tell Villonco Realty Company that he could
not bind the conjugal partnership. In truth, he concealed the fact
that the three lots were registered "in the name of FRANCISCO
CERVANTES, Filipino, of legal age, married to Rosario P.
Navarro, as owner thereof in fee simple". He certainly led the
Villonco brothers to believe that as president of Bormaheco, Inc.
he could dispose of the said lots. He inveigled the Villoncos into
believing that he had untrammelled control of Bormaheco, Inc.,
that Bormaheco, Inc. owned the lots and that he was invested
with adequate authority to sell the same.
Thus, in Bormaheco's offer of February 12, 1964, Cervantes first
identified the three lots as "our property" which "we are offering
to sell ..." (Opening paragraph and par. 1 of Exh. B). Whether
the prounoun "we" refers to himself and his wife or to
Bormaheco, Inc. is not clear. Then, in paragraphs 3 and 4 of the
offer, he used the first person and said: "I shall have
consummated my purchase" of the Nassco property;
"... my negotiations with said property" and "I will return to you
your deposit". Those expressions conveyed the impression and
generated the belief that the Villoncos did not have to deal with
Mrs. Cervantes nor with any other official of Bormaheco, Inc.
The pleadings disclose that Bormaheco, Inc. and Cervantes
deliberately and studiously avoided making the allegation that
Cervantes was not authorized by his wife to sell the three lots or
that he acted merely as president of Bormaheco, Inc. That
defense was not interposed so as not to place Cervantes in the
ridiculous position of having acted under false pretenses when
he negotiated with the Villoncos for the sale of the three lots.
Villonco Realty Company, in paragraph 2 of its original
complaint, alleged that "on February 12, 1964, after some prior
negotiations, the defendant (Bormaheco, Inc.) made a formal
offer to sell to the plaintiff the property of the said defendant
situated at the abovenamed address along Buendia Avenue,
Makati, Rizal, under the terms of the letter-offer, a copy of which
is hereto attached as Annex A hereof", now Exhibit B (2 Record
on Appeal).
That paragraph 2 was not, repeat, was not denied by
Bormaheco, Inc. in its answer dated May 5, 1964. It did not
traverse that paragraph 2. Hence, it was deemed admitted.
However, it filed an amended answer dated May 25, 1964
wherein it denied that it was the owner of the three lots. It
revealed that the three lots "belong and are registered in the
names of the spouses Francisco N. Cervantes and Rosario N.
Cervantes."
The three answers of Bormaheco, Inc. contain the following
affirmative defense:
13. That defendant's insistence to finally
decide on the proposed sale of the land in
question after 45 days had not only for its
purpose the determination of its acquisition
of the said Sta. Ana (Nassco) property
during the said period, but also to negotiate
with the actual and registered owner of the
parcels of land covered by T.C.T. Nos.
43530, 43531 and 43532 in question which
plaintiff was fully aware that the same were
not in the name of the defendant (sic; Par.
18 of Answer to Amended Complaint, 10, 18
and 34, Record on Appeal).
In that affirmative defense, Bormaheco, Inc. pretended that it
needed forty- five days within which to acquire the Nassco
property and "to negotiate" with the registered owner of the
three lots. The absurdity of that pretension stands out in bold
relief when it is borne in mind that the answers of Bormaheco,
Inc. were verified by Cervantes and that the registered owner of
the three lots is Cervantes himself. That affirmative defense
means that Cervantes as president of Bormaheco, Inc. needed
forty-five days in order to "negotiate" with himself (Cervantes).
The incongruous stance of the Cervantes spouses is also patent
in their answer to the amended complaint. In that answer they
disclaimed knowledge or information of certain allegations which
were well-known to Cervantes as president of Bormaheco, Inc.
and which were admitted in Bormaheco's three answers that
were verified by Cervantes.
It is significant to note that Bormaheco, Inc. in its three answers,
which were verified by Cervantes, never pleaded as an
affirmative defense that Mrs. Cervantes opposed the sale of the
three lots or that she did not authorize her husband to sell those
lots. Likewise, it should be noted that in their separate answer
the Cervantes spouses never pleaded as a defense that Mrs.
Cervantes was opposed to the sale of three lots or that
Cervantes could not bind the conjugal partnership. The
appellants were at first hesitant to make it appear that
Cervantes had committed the skullduggery of trying to sell
property which he had no authority to alienate.
It was only during the trial on May 17, 1965 that Cervantes
declared on the witness stand that his wife was opposed to the
sale of the three lots, a defense which, as already stated, was
never interposed in the three answers of Bormaheco, Inc. and in
the separate answer of the Cervantes spouses. That same
viewpoint was adopted in defendants' motion for reconsideration
dated November 20, 1965.
But that defense must have been an afterthought or was
evolved post litem motam since it was never disclosed in
Cervantes' letter of rescission and in his letter to Miss Tagle
(Exh. F and Annex 1). Moreover, Mrs. Cervantes did not testify
at the trial to fortify that defense which had already been waived
for not having been pleaded (See sec. 2, Rule 9, Rules of
Court).
Taking into account the situation of Cervantes vis-a-vis
Bormaheco, Inc. and his wife and the fact that the three lots
were entirely occupied by Bormaheco's building, machinery and
equipment and were mortgaged to the DBP as security for its
obligation, and considering that appellants' vague affirmative
defenses do not include Mrs. Cervantes' alleged opposition to
the sale, the plea that Cervantes had no authority to sell the lots
strains the rivets of credibility (Cf. Papa and Delgado vs.
Montenegro, 54 Phil. 331; Riobo vs. Hontiveros, 21 Phil. 31).
"Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in
good faith" (Art. 1159, Civil Code). Inasmuch as the sale was
perfected and even partly executed, Bormaheco, Inc., and the
Cervantes spouses, as a matter of justice and good faith, are
bound to comply with their contractual commitments.
Parenthetically, it may be observed that much misunderstanding
could have been avoided had the broker and the buyer taken
the trouble of making some research in the Registry of Deeds
and availing themselves of the services of a competent lawyer in
drafting the contract to sell.
Bormaheco, Inc. and the Cervantes spouses in their sixth
assignment of error assail the trial court's award to Villonco
Realty Company of consequential damage amounting to ten
thousand pesos monthly from March 24, 1964 (when the
Economic Coordinator approved the award of the Nassco
property to Bormaheco, Inc.) up to the consummation of the
sale. The award was based on paragraph 18 of the stipulation of
facts wherein Villonco Realty Company "submits that the delay
in the consummation of the sale" has caused it to suffer the
aforementioned damages.
The appellants contend that statement in the stipulation of facts
simply means that Villonco Realty Company speculates that it
has suffered damages but it does not mean that the parties
have agreed that Villonco Realty Company is entitled to those
damages.
Appellants' contention is correct. As rightly observed by their
counsel, the damages in question were not specifically pleaded
and proven and were "clearly conjectural and speculative".
However, appellants' view in their seventh assignment of error
that the trial court erred in ordering Bormaheco, Inc. to pay
Villonco Realty Company the sum of twenty thousand pesos as
attorney's fees is not tenable. Under the facts of the case, it is
evident that Bormaheco, Inc. acted in gross and evident bad
faith in refusing to satisfy the valid and just demand of Villonco
Realty Company for specific performance. It compelled Villonco
Realty Company to incure expenses to protect its interest.
Moreover, this is a case where it is just and equitable that the
plaintiff should recover attorney's fees (Art. 2208, Civil Code).
The appellants in their eighth assignment of error impugn the
trial court's adjudication of forty-two thousand pesos as three
percent broker's commission to Miss Tagle. They allege that
there is no evidence that Bormaheco, Inc. engaged her services
as a broker in the projected sale of the three lots and the
improvements thereon. That allegation is refuted by paragraph 3
of the stipulation of facts and by the documentary evidence. It
was stipulated that Miss Tagle intervened in the negotiations for
the sale of the three lots. Cervantes in his original offer of
February 12, 1964 apprised Villonco Realty Company that the
earnest money should be delivered to Miss Tagle, the bearer of
the letter-offer. See also Exhibit G and Annex I of the stipulation
of facts.
We hold that the trial court did not err in adjudging that
Bormaheco, Inc. should pay Miss Tagle her three percent
commission.
WHEREFORE, the trial court's decision is modified as follows:
1. Within ten (10) days from the date the defendants-appellants
receive notice from the clerk of the lower court that the records
of this case have been received from this Court, the spouses MANILA METAL CONTAINER G.R. No. 166862
Francisco N. Cervantes and Rosario P. Navarra-Cervantes CORPORATION,
should execute a deed conveying to Bormaheco, Inc. their three Petitioner,
lots covered by Transfer Certificate of Title Nos. 43530, 43531 Present:
and 43532 of the Registry of Deeds of Rizal. REYNALDO C. TOLENTINO,
Intervenor, PANGANIBAN, C.J.,
2. Within five (5) days from the execution of such deed of C
conveyance, Bormaheco, Inc. should execute in favor of h
Villonco Realty Company, V. R. C. Building, 219 Buendia a
Avenue, Makati, Rizal a registerable deed of sale for the said i
three lots and all the improvements thereon, free from all lien r
and encumbrances, at the price of four hundred pesos per p
square meter, deducting from the total purchase price the sum e
of P100,000 previously paid by Villonco Realty Company to r
Bormaheco, Inc. s
o
n
3. Upon the execution of such deed of sale, Villonco Realty
,
Company is obligated to pay Bormaheco, Inc. the balance of the *
price in the sum of one million three hundred thousand pesos
(P1,300,000).
Y
N
4. Bormaheco, Inc. is ordered (a) to pay Villonco Realty A
Company twenty thousand pesos (P20,000) as attorney's fees R
and (b) to pay Edith Perez de Tagle the sum of forty-two E
thousand pesos (P42,000) as commission. Costs against the S
defendants-appellants. -
S
SO ORDERED. A
N
T
I
A
G
O
,
*
*

AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR., and
CHICO-NAZARIO, JJ.
PHILIPPINE NATIONAL BANK,
Respondent,
DMCI-PROJECT DEVELOPERS, Promulgated:
INC.,
Intervenor. December 20, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
-----x

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the

Decision[1] of the Court of Appeals (CA) in CA-G.R. No. 46153
which affirmed the decision[2] of the Regional Trial Court (RTC),
Branch 71, Pasig City, in Civil Case No. 58551, and its
Resolution[3] denying the motion for reconsideration filed by
petitioner Manila Metal Container Corporation (MMCC).
The Antecedents
Petitioner was the owner of a 8,015 square meter
parcel of land located in Mandaluyong (now a City), Metro
Manila. The property was covered by Transfer Certificate of Title
(TCT) No. 332098 of the Registry of Deeds of Rizal. To secure
a P900,000.00 loan it had obtained from respondent Philippine
National Bank (PNB), petitioner executed a real estate mortgage
over the lot. Respondent PNB later granted petitioner a new
credit accommodation of P1,000,000.00; and, on November 16,
1973, petitioner executed an Amendment[4] of Real Estate
Mortgage over its property. On March 31, 1981, petitioner
secured another loan of P653,000.00 from respondent PNB,
payable in quarterly installments of P32,650.00, plus interests
and other charges.[5]
On August 5, 1982, respondent PNB filed a petition for
extrajudicial foreclosure of the real estate mortgage and sought
to have the property sold at public auction for P911,532.21,
petitioners outstanding obligation to respondent PNB as of June
30, 1982,[6] plus interests and attorneys fees.
After due notice and publication, the property was sold
at public auction on September 28, 1982 where respondent
PNB was declared the winning bidder for P1,000,000.00. The
Certificate of Sale[7] issued in its favor was registered with the
Office of the Register of Deeds of Rizal, and was annotated at
the dorsal portion of the title on February 17, 1983. Thus, the
period to redeem the property was to expire on February 17,
1984.
Petitioner sent a letter dated August 25, 1983 to respondent
PNB, requesting that it be granted an extension of time to
redeem/repurchase the property.[8] In its reply dated August 30,
1983, respondent PNB informed petitioner that the request had
been referred to its Pasay City Branch for appropriate action
and recommendation.[9]
In a letter[10] dated February 10, 1984, petitioner reiterated its
request for a one year extension from February 17, 1984 within
which to redeem/repurchase the property on installment basis. It
reiterated its request to repurchase the property on
installment.[11] Meanwhile, some PNB Pasay City Branch
personnel informed petitioner that as a matter of policy, the bank
does not accept partial redemption.[12]
Since petitioner failed to redeem the property, the
Register of Deeds cancelled TCT No. 32098 on June 1, 1984,
and issued a new title in favor of respondent PNB.[13] Petitioners
offers had not yet been acted upon by respondent PNB.
Meanwhile, the Special Assets Management Department
(SAMD) had prepared a statement of account, and as of June
25, 1984 petitioners obligation amounted to P1,574,560.47. This
included the bid price of P1,056,924.50, interest, advances of
insurance premiums, advances on realty taxes, registration
expenses, miscellaneous expenses and publication
cost.[14] When apprised of the statement of account, petitioner
remitted P725,000.00 to respondent PNB as deposit to
repurchase, and Official Receipt No. 978191 was issued to it.[15]
In the meantime, the SAMD recommended to the management
of respondent PNB that petitioner be allowed to repurchase the
property for P1,574,560.00. In a letter dated November 14,
1984, the PNB management informed petitioner that it was
rejecting the offer and the recommendation of
the SAMD. It was suggested that petitioner purchase the
property for P2,660,000.00, its minimum market
value. Respondent PNB gave petitioner until December 15,
1984 to act on the proposal; otherwise, its P725,000.00 deposit
would be returned and the property would be sold to other
interested buyers.[16]
Petitioner, however, did not agree to
respondent PNBs proposal. Instead, it wrote another letter
dated December 12, 1984 requesting for a
reconsideration. Respondent PNB replied in a letter
dated December 28, 1984, wherein it reiterated its proposal that
petitioner purchase the property for P2,660,000.00. PNB again
informed petitioner that it would return the deposit should
petitioner desire to withdraw its offer to purchase the
property.[17] On February 25, 1985, petitioner, through counsel,
requested that PNB reconsider its letter dated December 28,
1984. Petitioner declared that it had already agreed to
the SAMDs offer to purchase the property for P1,574,560.47,
and that was why it had paid P725,000.00. Petitioner warned
respondent PNB that it would seek judicial recourse should PNB
insist on the position.[18]
On June 4, 1985, respondent PNB informed petitioner
that the PNB Board of Directors had accepted petitioners offer
to purchase the property, but for P1,931,389.53 in cash less
the P725,000.00 already deposited with it.[19] On page two of the
letter was a space above the typewritten name of petitioners
President, Pablo Gabriel, where he was to affix his
signature. However, Pablo Gabriel did not conform to the letter
but merely indicated therein that he had received it.[20] Petitioner
did not respond, so PNB requested petitioner in a letter
dated June 30, 1988 to submit an amended offer to repurchase.
 Petitioner rejected respondents proposal in a letter
dated July 14, 1988. It maintained that respondent PNB had
agreed to sell the property for P1,574,560.47, and that since
its P725,000.00 downpayment had been accepted, respondent
PNB was proscribed from increasing the purchase price of the
property.[21] Petitioner averred that it had a net balance payable
in the amount of P643,452.34. Respondent PNB, however,
rejected petitioners offer to pay the balance of P643,452.34 in a
letter dated August 1, 1989.[22]
On August 28, 1989, petitioner filed a complaint
against respondent PNB for Annulment of Mortgage and
Mortgage Foreclosure, Delivery of Title, or Specific Performance
with Damages. To support its cause of action for specific
performance, it alleged the following:
34. As early as June 25, 1984, PNB had
accepted the down payment from
Manila Metal in the substantial amount
of P725,000.00 for the
redemption/repurchase price
of P1,574,560.47 as approved by its
SMAD and considering the reliance
made by Manila Metal and the long
time that has elapsed, the approval of
the higher management of the Bank to
confirm the agreement of its SMAD is
clearly a potestative condition which
cannot legally prejudice Manila Metal
which has acted and relied on the
approval of SMAD. The Bank cannot
take advantage of a condition which is
entirely dependent upon its own will
after accepting and benefiting from the
substantial payment made by Manila
Metal.
35. PNB approved the repurchase price
of P1,574,560.47 for which it
accepted P725,000.00 from Manila
Metal. PNB cannot take advantage of
its own delay and long inaction in
demanding a higher amount based on
unilateral computation of interest rate
without the consent of Manila Metal.
Petitioner later filed an amended complaint and
supported its claim for damages with the following arguments:
36. That in order to protect itself against the
wrongful and malicious acts of the
defendant Bank, plaintiff is constrained
to engage the services of counsel at an
agreed fee of P50,000.00 and to incur
litigation expenses of at
least P30,000.00, which the defendant
PNB should be condemned to pay the
plaintiff Manila Metal.
37. That by reason of the wrongful and
malicious actuations of defendant PNB,
plaintiff Manila Metal suffered
besmirched reputation for which
defendant PNB is liable for moral
damages of at least P50,000.00.
38. That for the wrongful and malicious act
of defendant PNB which are highly
reprehensible, exemplary damages
should be awarded in favor of the
plaintiff by way of example or correction
for the public good of at
least P30,000.00.[23]
Petitioner prayed that, after due proceedings,
judgment be rendered in its favor, thus:
a) Declaring the Amended Real Estate
Mortgage (Annex A) null and void and
without any legal force and effect.
b) Declaring defendants acts of extra-
judicially foreclosing the mortgage over
plaintiffs property and setting it for
auction sale null and void.
c) Ordering the defendant Register of
Deeds to cancel the new title issued in
the name of PNB (TCT NO.
43792) covering the property described
in paragraph 4 of the Complaint, to
reinstate TCT No. 37025 in the name of
Manila Metal and to cancel the
annotation of the mortgage in question
at the back of the TCT
No. 37025 described in paragraph 4 of
this Complaint.
d) Ordering the defendant PNB to return
and/or deliver physical possession of
the TCT No. 37025 described in
paragraph 4 of this Complaint to the
plaintiff Manila Metal.
e) Ordering the defendant PNB to pay
the plaintiff Manila Metals actual
damages, moral and exemplary
damages in the aggregate amount of
not less than P80,000.00 as may be
warranted by the evidence and fixed by
 this Honorable Court in the exercise of
its sound discretion, and attorneys fees
of P50,000.00 and litigation expenses
of at least P30,000.00 as may be
proved during the trial, and costs of
suit.
Plaintiff likewise prays for such
further reliefs which may be deemed just
and equitable in the premises.[24]
In its Answer to the complaint, respondent PNB
averred, as a special and affirmative defense, that it had
acquired ownership over the property after the period to redeem
had elapsed. It claimed that no contract of sale was perfected
between it and petitioner after the period to redeem the property
had expired.
During pre-trial, the parties agreed to submit the case
for decision, based on their stipulation of facts.[25] The parties
agreed to limit the issues to the following:
1. Whether or not the June 4, 1985 letter of
the defendant approving/accepting
plaintiffs offer to purchase the property
is still valid and legally enforceable.
2. Whether or not the plaintiff has waived its
right to purchase the property when it
failed to conform with the conditions
set forth by the defendant in its letter
dated June 4, 1985.
refund the P725,000.00 deposit petitioner had made.[32] The trial
court ruled that there was no perfected contract of sale between
the parties; hence, petitioner had no cause of action for specific
performance against respondent. The trial court declared that
respondent had rejected petitioners offer to repurchase the
property. Petitioner, in turn, rejected the terms and conditions
contained in the June 4, 1985 letter of the SAMD. While
petitioner had offered to repurchase the property per its letter of
July 14, 1988, the amount of P643,422.34 was way below
the P1,206,389.53 which respondent PNB had demanded. It
further declared that the P725,000.00 remitted by petitioner to
respondent PNB on June 4, 1985 was a deposit, and not a
downpayment or earnest money.
On appeal to the CA, petitioner made the following
allegations:
I
THE LOWER COURT ERRED IN RULING
THAT DEFENDANT-APPELLEES LETTER
DATED 4 JUNE
1985 APPROVING/ACCEPTING
PLAINTIFF-APPELLANTS OFFER TO
PURCHASE THE SUBJECT PROPERTY IS
NOT VALID AND ENFORCEABLE.
II
THE LOWER COURT ERRED IN RULING
THAT THERE WAS NO PERFECTED
CONTRACT OF SALE BETWEEN
PLAINTIFF-APPELLANT AND
DEFENDANT-APPELLEE.

3. Whether or not there is a perfected III

contract of sale between the parties.[26] THE LOWER COURT ERRED IN RULING
THAT PLAINTIFF-APPELLLANT WAIVED
ITS RIGHT TO PURCHASE THE SUBJECT
While the case was pending, respondent PNB PROPERTY WHEN IT FAILED TO
demanded, on September 20, 1989, that petitioner vacate the CONFORM WITH CONDITIONS
property within 15 days from notice,[27] but petitioners refused to SET FORTH BY DEFENDANT-APPELLEE
do so. IN ITS LETTER DATED 4 JUNE 1985.

On March 18, 1993, petitioner offered to repurchase IV

the property for P3,500,000.00.[28] The offer was however THE LOWER COURT ERRED IN
rejected by respondent PNB, in a letter dated April 13, DISREGARDING THE FACT THAT IT WAS
1993. According to it, the prevailing market value of the property THE DEFENDANT-APPELLEE WHICH
was approximately P30,000,000.00, and as a matter of policy, it RENDERED IT DIFFICULT IF NOT
could not sell the property for less than its market IMPOSSIBLE FOR PLAINTIFF-
value.[29] On June 21, 1993, petitioner offered to purchase the APPELLANT TO COMPLETE THE
property for P4,250,000.00 in cash.[30] The offer was again BALANCE OF THEIR PURCHASE PRICE.
rejected by respondent PNB on September 13, 1993.[31]
V
THE LOWER COURT ERRED IN
On May 31, 1994, the trial court rendered judgment
DISREGARDING THE FACT THAT THERE
dismissing the amended complaint and WAS NO VALID RESCISSION OR
respondent PNBs counterclaim. It ordered respondent PNB to
 CANCELLATION OF SUBJECT it. Respondent PNBs letter dated June 30, 1988 cannot revive
CONTRACT OF REPURCHASE. the failed negotiations between the parties. Respondent PNB
merely asked petitioner to submit an amended offer to
VI repurchase. While petitioner reiterated its request for a lower
THE LOWER COURT ERRED IN selling price and that the balance of the repurchase be reduced,
DECLARING THAT PLAINTIFF FAILED however, respondent rejected the proposal in a letter
AND REFUSED TO SUBMIT THE dated August 1, 1989.
AMENDED REPURCHASE OFFER.
Petitioner filed a motion for reconsideration, which the
VII
CA likewise denied.
THE LOWER COURT ERRED IN
DISMISSING THE AMENDED COMPLAINT
Thus, petitioner filed the instant petition for review
OF PLAINTIFF-APPELLANT.
on certiorari, alleging that:
VIII
THE LOWER COURT ERRED IN NOT I. THE COURT OF APPEALS ERRED ON A
AWARDING PLAINTIFF-APPELLANT QUESTION OF LAW WHEN IT
ACTUAL, MORAL AND EXEMPLARY RULED THAT THERE IS NO
DAMAGES, ATTOTRNEYS FEES AND PERFECTED CONTRACT
LITIGATION EXPENSES.[33] OF SALE BETWEEN THE
PETITIONER AND
Meanwhile, on June 17, 1993, petitioners Board of
RESPONDENT.
Directors approved Resolution No. 3-004, where it waived,
assigned and transferred its rights over the property covered by
II. THE COURT OF APPEALS ERRED ON
TCT No. 33099 and TCT No. 37025 in favor of Bayani Gabriel, A QUESTION OF LAW WHEN IT
one of its Directors.[34] Thereafter, Bayani Gabriel executed a RULED THAT THE AMOUNT OF
Deed of Assignment over 51% of the ownership and PHP725,000.00 PAID BY THE
management of the property in favor of Reynaldo Tolentino, who PETITIONER IS NOT AN
later moved for leave to intervene as plaintiff-appellant. On July EARNEST MONEY.
14, 1993, the CA issued a resolution granting the motion, [35] and
likewise granted the motion of Reynaldo Tolentino substituting III. THE COURT OF APPEALS ERRED ON
petitioner MMCC, as plaintiff-appellant, and his motion to A QUESTION OF LAW WHEN IT
withdraw as intervenor.[36] RULED THAT THE FAILURE OF
THE PETITIONER-APPELLANT
The CA rendered judgment on May 11, 2000 affirming TO SIGNIFY ITS CONFORMITY
the decision of the RTC.[37] It declared that petitioner obviously TO THE TERMS CONTAINED IN
never agreed to the selling price proposed by respondent PNB PNBS JUNE 4, 1985 LETTER
(P1,931,389.53) since petitioner had kept on insisting that the MEANS THAT THERE WAS NO
selling price should be lowered to P1,574,560.47. Clearly VALID AND LEGALLY
therefore, there was no meeting of the minds between the ENFORCEABLE CONTRACT OF
parties as to the price or consideration of the sale. SALE BETWEEN THE PARTIES.

The CA ratiocinated that petitioners original offer to IV. THE COURT OF APPEALS ERRED ON
purchase the subject property had not been accepted by A QUESTION OF LAW THAT
respondent PNB. In fact, it made a counter-offer through NON-PAYMENT OF THE
PETITIONER-APPELLANT OF
its June 4, 1985 letter specifically on the selling price; petitioner
THE BALANCE OF THE
did not agree to the counter-offer; and the negotiations did not
OFFERED PRICE IN THE
prosper. Moreover, petitioner did not pay the balance of the
LETTER OF PNB DATED JUNE
purchase price within the sixty-day period set in the June 4, 4, 1985, WITHIN SIXTY (60)
1985 letter of respondent PNB. Consequently, there was no DAYS FROM NOTICE OF
perfected contract of sale, and as such, there was no contract to APPROVAL CONSTITUTES NO
rescind. VALID AND LEGALLY
ENFORCEABLE CONTRACT OF
According to the appellate court, the claim for SALE BETWEEN THE PARTIES.
damages and the counterclaim were correctly dismissed by the
court a quo for no evidence was presented to support
 V. THE COURT OF APPEALS SERIOUSLY respondents offer to sell the property since respondent was
ERRED WHEN IT HELD THAT merely seeking to enforce its right to pay the balance
THE LETTERS OF PETITIONER- of P1,570,564.47. In any event, respondent had the option
APPELLANT DATED MARCH 18, either to accept the balance of the offered price or to cause the
1993 AND JUNE 21, 1993, rescission of the contract.
OFFERING TO BUY THE
SUBJECT PROPERTY AT Petitioners letters dated March 18, 1993 and June 21, 1993 to
DIFFERENT AMOUNT WERE respondent during the pendency of the case in the RTC were
PROOF THAT THERE IS NO merely to compromise the pending lawsuit, they did not
PERFECTED CONTRACT
constitute separate offers to repurchase the property. Such offer
OF SALE.[38]
to compromise should not be taken against it, in accordance
with Section 27, Rule 130 of the Revised Rules of Court.
The threshold issue is whether or not petitioner and respondent
For its part, respondent contends that the parties
PNB had entered into a perfected contract for petitioner to
never graduated from the negotiation stage as they could not
repurchase the property from respondent.
agree on the amount of the repurchase price of the property. All
that transpired was an exchange of proposals and counter-
Petitioner maintains that it had accepted respondents
proposals, nothing more. It insists that a definite agreement on
offer made through the SAMD, to sell the property
the amount and manner of payment of the price are essential
for P1,574,560.00. When the acceptance was made in its letter
elements in the formation of a binding and enforceable contract
dated June 25, 1984; it then deposited P725,000.00 with the
of sale. There was no such agreement in this case. Primarily,
SAMD as partial payment, evidenced by Receipt No. 978194
the concept of suspensive condition signifies a future and
which respondent had issued. Petitioner avers that
uncertain event upon the fulfillment of which the obligation
the SAMDs acceptance of the deposit amounted to an
becomes effective. It clearly presupposes the existence of a
acceptance of its offer to repurchase. Moreover, as gleaned
valid and binding agreement, the effectivity of which is
from the letter of SAMD dated June 4, 1985, the PNB Board of
subordinated to its fulfillment. Since there is no perfected
Directors had approved petitioners offer to purchase the
contract in the first place, there is no basis for the application of
property. It claims that this was the suspensive condition, the
the principles governing suspensive conditions.
fulfillment of which gave rise to the contract. Respondent could
no longer unilaterally withdraw its offer to sell the property
According to respondent, the Statement of Account prepared by
for P1,574,560.47, since the acceptance of the offer resulted in
SAMD as of June 25, 1984 cannot be classified as a counter-
a perfected contract of sale; it was obliged to remit to
offer; it is simply a recital of its total monetary claims against
respondent the balance of the original purchase price
petitioner.Moreover, the amount stated therein could not
of P1,574,560.47, while respondent was obliged to transfer
likewise be considered as the counter-offer since as admitted by
ownership and deliver the property to petitioner, conformably
petitioner, it was only recommendation which was subject to
with Article 1159 of the New Civil Code.
approval of the PNB Board of Directors.
Petitioner posits that respondent was proscribed from
Neither can the receipt by the SAMD of P725,000.00 be
increasing the interest rate after it had accepted respondents
regarded as evidence of a perfected sale contract. As gleaned
offer to sell the property for P1,574,560.00. Consequently,
from the parties Stipulation of Facts during the proceedings in
respondent could no longer validly make a counter-offer
the court a quo, the amount is merely an acknowledgment of the
of P1,931,789.88 for the purchase of the property. It likewise
receipt of P725,000.00 as deposit to repurchase the property.
maintains that, although the P725,000.00 was considered as
The deposit of P725,000.00 was accepted by respondent on the
deposit for the repurchase of the property in the receipt issued
condition that the purchase price would still be approved by its
by the SAMD, the amount constitutes earnest money as
Board of Directors. Respondent maintains that its acceptance of
contemplated in Article 1482 of the New Civil Code. Petitioner
the amount was qualified by that condition, thus not
cites the rulings of this Court
absolute. Pending such approval, it cannot be legally claimed
in Villonco v. Bormaheco[39]and Topacio v. Court of Appeals.[40]
that respondent is already bound by any contract of sale with
petitioner.
Petitioner avers that its failure to append its conformity to the
June 4, 1984 letter of respondent and its failure to pay the
According to respondent, petitioner knew that the
balance of the price as fixed by respondent within the 60-day
SAMD has no capacity to bind respondent and that its authority
period from notice was to protest respondents breach of its
is limited to administering, managing and preserving the
obligation to petitioner. It did not amount to a rejection of
properties and other special assets of PNB. The SAMD does not
have the power to sell, encumber, dispose of, or otherwise
alienate the assets, since the power to do so must emanate
from its Board of Directors. The SAMD was not authorized by
respondents Board to enter into contracts of sale with third
persons involving corporate assets. There is absolutely nothing
on record that respondent authorized the SAMD, or made it
appear to petitioner that it represented itself as having such
authority.
Respondent reiterates that SAMD had informed petitioner that
its offer to repurchase had been approved by the Board subject
to the condition, among others, that the selling price shall be the
total banks claim as of documentation date x x x payable in cash
(P725,000.00 already deposited)
within 60 days from notice of approval. A new Statement of
Account was attached therein indicating the total banks claim to
be P1,931,389.53 less deposit of P725,000.00,
or P1,206,389.00.Furthermore, while respondents Board of
Directors accepted petitioners offer to repurchase the property,
the acceptance was qualified, in that it required a higher sale
price and subject to specified terms and conditions enumerated
therein. This qualified acceptance was in effect a counter-offer,
necessitating petitioners acceptance in return.
The Ruling of the Court
The ruling of the appellate court that there was no perfected
contract of sale between the parties on June 4, 1985 is correct.
A contract is a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something
or to render some service.[41] Under Article 1318 of the New Civil
Code, there is no contract unless the following requisites
concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter
of the contract;
(3) Cause of the obligation which is
established.
Contracts are perfected by mere consent which is manifested by
the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract.[42] Once
perfected, they bind other contracting parties and the obligations
arising therefrom have the form of law between the parties and
should be complied with in good faith. The parties are bound not
only to the fulfillment of what has been expressly stipulated but
also to the consequences which, according to their nature, may
be in keeping with good faith, usage and law.[43]
By the contract of sale, one of the contracting parties obligates
himself to transfer the ownership of and deliver a determinate
thing, and the other to pay therefor a price certain in money or
its equivalent.[44] The absence of any of the essential elements
will negate the existence of a perfected contract of sale. As the
Court ruled in Boston Bank of the Philippines v. Manalo:[45]
A definite agreement as to the price is an
essential element of a binding agreement to
sell personal or real property because it
seriously affects the rights and obligations of
the parties. Price is an essential element in
the formation of a binding and enforceable
contract of sale. The fixing of the price can
never be left to the decision of one of the
contracting parties. But a price fixed by one
of the contracting parties, if accepted by the
other, gives rise to a perfected sale.[46]
A contract of sale is consensual in nature and is perfected upon
mere meeting of the minds. When there is merely an offer by
one party without acceptance of the other, there is no
contract.[47] When the contract of sale is not perfected, it cannot,
as an independent source of obligation, serve as a binding
juridical relation between the parties.[48]
In San Miguel Properties Philippines, Inc. v. Huang,[49] the Court
ruled that the stages of a contract of sale are as
follows: (1) negotiation, covering the period from the time the
prospective contracting parties indicate interest in the contract to
the time the contract is perfected; (2) perfection, which takes
place upon the concurrence of the essential elements of the
sale which are the meeting of the minds of the parties as to the
object of the contract and upon the price; and
(3) consummation, which begins when the parties perform their
respective undertakings under the contract of sale, culminating
in the extinguishment thereof.
A negotiation is formally initiated by an offer, which, however,
must be certain.[50] At any time prior to the perfection of the
contract, either negotiating party may stop the negotiation. At
this stage, the offer may be withdrawn; the withdrawal is
effective immediately after its manifestation. To convert the offer
into a contract, the acceptance must be absolute and must not
qualify the terms of the offer; it must be plain, unequivocal,
unconditional and without variance of any sort from the
proposal. In Adelfa Properties, Inc. v. Court of Appeals,[51] the
Court ruled that:
x x x The rule is that except where a formal
acceptance is so required, although the
acceptance must be affirmatively and clearly
 made and must be evidenced by some acts
or conduct communicated to the offeror, it
may be shown by acts, conduct, or words of
the accepting party that clearly manifest a
present intention or determination to accept
the offer to buy or sell. Thus, acceptance
may be shown by the acts, conduct, or
words of a party recognizing the existence of
the contract of sale.[52]
A qualified acceptance or one that involves a new proposal
constitutes a counter-offer and a rejection of the original offer. A
counter-offer is considered in law, a rejection of the original offer
and an attempt to end the negotiation between the parties on a
different basis.[53] Consequently, when something is desired
which is not exactly what is proposed in the offer, such
acceptance is not sufficient to guarantee consent because any
modification or variation from the terms of the offer annuls the
offer.[54] The acceptance must be identical in all respects with
that of the offer so as to produce consent or meeting of the
minds.
In this case, petitioner had until February 17,
1984 within which to redeem the property. However, since it
lacked the resources, it requested for more time to
redeem/repurchase the property under such terms and
conditions agreed upon by the parties.[55] The request, which
was made through a letter dated August 25, 1983, was referred
to the respondents main branch for appropriate action.[56] Before
respondent could act on the request, petitioner again wrote
respondent as follows:
1. Upon approval of our request, we will pay
your goodselves ONE HUNDRED &
FIFTY THOUSAND PESOS
(P150,000.00);
2. Within six months from date of approval of
our request, we will pay another
FOUR HUNDRED FIFTY
THOUSAND PESOS (P450,000.00);
and
3. The remaining balance together with the
interest and other expenses that will
be incurred will be paid within the last
six months of the one year grave
period requested for.[57]
When the petitioner was told that respondent did not
allow partial redemption,[58] it sent a letter to respondents
President reiterating its offer to purchase the property.[59] There
was no response to petitioners letters dated February 10 and
15, 1984.
The statement of account prepared by the SAMD
stating that the net claim of respondent as of June 25,
1984 was P1,574,560.47 cannot be considered an unqualified
acceptance to petitioners offer to purchase the property. The
statement is but a computation of the amount which petitioner
was obliged to pay in case respondent would later agree to sell
the property, including interests, advances on insurance
premium, advances on realty taxes, publication cost, registration
expenses and miscellaneous expenses.
There is no evidence that the SAMD was authorized
by respondents Board of Directors to accept petitioners offer
and sell the property for P1,574,560.47. Any acceptance by the
SAMD of petitioners offer would not bind respondent. As this
Court ruled in AF Realty Development, Inc.
vs. Diesehuan Freight Services, Inc.:[60]
Section 23 of the Corporation
Code expressly provides that the corporate
powers of all corporations shall be exercised
by the board of directors. Just as a natural
person may authorize another to do certain
acts in his behalf, so may the board of
directors of a corporation validly delegate
some of its functions to individual officers or
agents appointed by it. Thus, contracts or
acts of a corporation must be made either by
the board of directors or by a corporate
agent duly authorized by the board. Absent
such valid delegation/authorization, the rule
is that the declarations of an individual
director relating to the affairs of the
corporation, but not in the course of, or
connected with the performance of
authorized duties of such director, are held
not binding on the corporation.
Thus, a corporation can only execute its powers and
transact its business through its Board of Directors and through
its officers and agents when authorized by a board resolution or
its by-laws.[61]
It appears that the SAMD had prepared a
recommendation for respondent to accept petitioners offer to
repurchase the property even beyond the one-year period; it
recommended that petitioner be allowed to redeem the property
and pay P1,574,560.00 as the purchase price. Respondent later
approved the recommendation that the property be sold to
petitioner. But instead of the P1,574,560.47 recommended by
the SAMD and to which petitioner had previously conformed,
respondent set the purchase price at P2,660,000.00. In fine,
respondents acceptance of petitioners offer was qualified, hence amended counter-offer, because while the respondent lowered
can be at most considered as a counter-offer. If petitioner had the purchase price, it still declared that its acceptance was
accepted this counter-offer, a perfected contract of sale would subject to the following terms and conditions:
have arisen; as it turns out, however, petitioner merely sought to
have the counter-offer reconsidered. This request for
reconsideration would later be rejected by respondent.

We do not agree with petitioners contention that

the P725,000.00 it had remitted to respondent was earnest 1. That the selling price shall be the
money which could be considered as proof of the perfection of a total Banks claim as of
contract of sale under Article 1482 of the New Civil Code. The documentation date (pls. see
provision reads: attached statement of account as
of 5-31-85), payable in cash
(P725,000.00 already deposited)
ART. 1482. Whenever earnest within sixty (60) days from notice of
money is given in a contract of sale, it shall approval;
be considered as part of the price and as
proof of the perfection of the contract. 2. The Bank sells only whatever
rights, interests and participation it
may have in the property and you are
charged with full knowledge of the
This contention is likewise negated by the stipulation
nature and extent of said rights,
of facts which the parties entered into in the trial court:
interests and participation and waive
your right to warranty against
8. On June 8, 1984, the Special eviction.
Assets Management Department (SAMD) of
PNB prepared an updated Statement of 3. All taxes and other government
Account showing MMCCs total liability to imposts due or to become due on the
PNB as of June 25, 1984 to be property, as well as expenses
P1,574,560.47 and recommended this including costs of documents and
amount as the repurchase price of the science stamps, transfer fees, etc., to
subject property. be incurred in connection with the
execution and registration of all
9. On June 25, 1984, MMCC paid covering documents shall be borne
P725,000.00 to PNB as deposit to by you;
repurchase the property. The deposit of
P725,000 was accepted by PNB on the 4. That you shall undertake at your
condition that the purchase price is still own expense and account the
subject to the approval of the PNB ejectment of the occupants of the
Board.[62] property subject of the sale, if there
are any;
Thus, the P725,000.00 was merely a deposit to be 5. That upon your failure to pay the
applied as part of the purchase price of the property, in the balance of the purchase price within
event that respondent would approve the recommendation of sixty (60) days from receipt of advice
SAMD for respondent to accept petitioners offer to purchase the accepting your offer, your deposit
property for P1,574,560.47. Unless and until the respondent shall be forfeited and the Bank is
accepted the offer on these terms, no perfected contract of sale thenceforth authorized to sell the
would arise. Absent proof of the concurrence of all the essential property to other interested parties.
elements of a contract of sale, the giving of earnest money
cannot establish the existence of a perfected contract of sale.[63] 6. That the sale shall be subject to
such other terms and conditions that
It appears that, per its letter to petitioner dated June 4, 1985, the the Legal Department may impose to
respondent had decided to accept the offer to purchase the protect the interest of the Bank.[64]
property for P1,931,389.53. However, this amounted to an
amendment of respondents qualified acceptance, or an
 It appears that although respondent requested
petitioner to conform to its amended counter-offer, petitioner
refused and instead requested respondent to reconsider its
amended counter-offer.Petitioners request was ultimately
rejected and respondent offered to refund its P725,000.00
deposit.
In sum, then, there was no perfected contract of sale
between petitioner and respondent over the subject property.
IN LIGHT OF ALL THE FOREGOING, the petition
is DENIED.
The assailed decision is AFFIRMED. Costs against petitioner
Manila Metal Container Corporation.
SO ORDERED.
SECOND DIVISION
G.R. No. 199648, January 28, 2015
FIRST OPTIMA REALTY
CORPORATION, Petitioner, v. SECURITRON SECURITY
SERVICES, INC., Respondents.
DECISION
DEL CASTILLO, J.:
In a potential sale transaction, the prior payment of earnest
money even before the property owner can agree to sell his
property is irregular, and cannot be used to bind the owner to
the obligations of a seller under an otherwise perfected contract
of sale; to cite a well-worn clich�, the carriage cannot be
placed before the horse.� The property owner-prospective
seller may not be legally obliged to enter into a sale with a
prospective buyer through the latter�s employment of
questionable practices which prevent the owner from freely
giving his consent to the transaction; this constitutes a palpable
transgression of the prospective seller�s rights of ownership
over his property, an anomaly which the Court will certainly not
condone.
This Petition for Review on Certiorari1 seeks to set aside: 1) the
September 30, 2011 Decision2 of the Court of Appeals (CA) in
CA-G.R. CV No. 93715 affirming the February 16, 2009
Decision3 of the Regional Trial Court (RTC) of Pasay City,
Branch 115 in Civil Case No. 06-0492 CFM; and 2) the CA�s
December 9, 2011 Resolution4 denying the herein petitioner�s
Motion for Reconsideration5 of the assailed judgment.
Factual Antecedents
Petitioner First Optima Realty Corporation is a domestic
corporation engaged in the real estate business.� It is the
registered owner of a 256-square meter parcel of land with
improvements located in Pasay City, covered by Transfer
Certificate of Title No. 125318 (the subject property).6�
Respondent Securitron Security Services, Inc., on the other
hand, is a domestic corporation with offices located beside the
subject property.
Looking to expand its business and add to its existing offices,
respondent � through its General Manager, Antonio Eleazar
(Eleazar) � sent a December 9, 2004 Letter7 addressed to
petitioner � through its Executive Vice-President, Carolina T.
Young (Young) � offering to purchase the subject property at
P6,000.00 per square meter.� A series of telephone calls
ensued, but only between Eleazar and Young�s secretary;8�
Eleazar likewise personally negotiated with a certain Maria
Remoso (Remoso), who was an employee of petitioner.9� At
this point, Eleazar was unable to personally negotiate with
Young or the petitioner�s board of directors.
Sometime thereafter, Eleazar personally went to petitioner�s
office offering to pay for the subject property in cash, which he
already brought with him.� However, Young declined to accept
payment, saying that she still needed to secure her sister�s
advice on the matter.10� She likewise informed Eleazar that
prior approval of petitioner�s Board of Directors was required
for the transaction, to which remark Eleazar replied that
respondent shall instead await such
approval.11chanroblesvirtuallawlibrary
On February 4, 2005, respondent sent a Letter12 of even date to
petitioner.� It was accompanied by Philippine National Bank
Check No. 24677 (the subject check), issued for P100,000.00
and made payable to petitioner.� The letter states
thus:chanRoblesvirtualLawlibrary
Gentlemen:chanRoblesvirtualLawlibrary
As agreed upon, we are making a deposit of ONE HUNDRED
THOUSAND PESOS (Php 100,000.00) as earnest money for
your property at the corner of Layug St., & Lim-An St., Pasay
City as per TCT No. 125318 with an area of 256 sq. m. at
6,000.00/ sq. m. for a total of ONE MILLION FIVE HUNDRED
THIRTY SIX THOUSAND PESOS (Php 1,536,000.00).
Full payment upon clearing of the tenants at said property and
signing of the Deed of Sale.
(signed)
ANTONIO S. ELEAZAR13
Despite the delicate nature of the matter and large amount
involved, respondent did not deliver the letter and check directly
to Young or her office; instead, they were coursed through an
ordinary receiving clerk/receptionist of the petitioner, who thus
received the same and therefor issued and signed Provisional
Receipt No. 33430.14� The said receipt
reads:chanRoblesvirtualLawlibrary
Received from x x x Antonio Eleazar x x x the sum of Pesos
One Hundred Thousand x x x
IN PAYMENT OF THE FOLLOWING x x x
Earnest money or Partial payment of Pasay Property Layug &
Lim-an St. x x x.
Note: This is issued to
transactions not yet
� cleared but
subsequently an
Official Receipt will be
issued. x x x15
The check was eventually deposited with and credited to
petitioner�s bank account.
Thereafter, respondent through counsel demanded in writing
that petitioner proceed with the sale of the property.16� In a
March 3, 2006 Letter17 addressed to respondent�s counsel,
petitioner wrote back:chanRoblesvirtualLawlibrary
Dear Atty. De Jesus:chanRoblesvirtualLawlibrary
Anent your letter dated January 16, 2006 received on February
20, 2006, please be informed of the
following:chanRoblesvirtualLawlibrary
1. It was your client SECURITRON SECURITY
SERVICES, INC. represented by Mr. Antonio Eleazar
who offered to buy our property located at corner
Layug and Lim-An St., Pasay City;chanrobleslaw
2. It tendered an earnest money despite the fact that we
are still undecided to sell the said
property;chanrobleslaw
3. Our Board of Directors failed to pass a resolution to
date whether it agrees to sell the
property;chanrobleslaw
4. We have no Contract for the earnest money nor
Contract to Sell the said property with your client;
Considering therefore the above as well as due to haste and
demands which we feel [are forms] of intimidation and
harassment, we regret to inform you that we are now incline
(sic) not to accept your offer to buy our property.� Please
inform your client to coordinate with us for the refund of this (sic)
money.
Very truly yours,
(signed)
CAROLINA T. YOUNG
Executive Vice[-]President18
Ruling of the Regional Trial Court of Pasay City
On April 18, 2006, respondent filed with the Pasay RTC a civil
case against petitioner for specific performance with damages to
compel the latter to consummate the supposed sale of the
subject property.� Docketed as Civil Case No. 06-0492 CFM
and assigned to Branch 115 of the Pasay RTC, the
Complaint19 is predicated on the claim that since a perfected
contract of sale arose between the parties after negotiations
were conducted and respondent paid the P100,000.00
supposed earnest money � which petitioner accepted, the
latter should be compelled to sell the subject property to the
former.� Thus, respondent prayed that petitioner be ordered to
comply with its obligation as seller, accept the balance of the
purchase price, and execute the corresponding deed of sale in
respondent�s favor; and that petitioner be made to pay
P200,000.00 damages for its breach and delay in the
performance of its obligations, P200,000.00 by way of attorney's
fees, and costs of suit.
In its Answer with Compulsory Counterclaim,20 petitioner argued
that it never agreed to sell the subject property; that its board of
directors did not authorize the sale thereof to respondent, as no
corresponding board resolution to such effect was issued; that
the respondent�s P100,000.00 check payment cannot be
considered as earnest money for the subject property, since
said payment was merely coursed through petitioner�s
receiving clerk, who was forced to accept the same; and that
respondent was simply motivated by a desire to acquire the
subject property at any cost.� Thus, petitioner prayed for the
dismissal of the case and, by way of counterclaim, it sought the
payment of moral damages in the amount of P200,000.00;
exemplary damages in the amount of P100,000.00; and
attorney�s fees and costs of suit.
In a Reply,21 respondent countered that authorization by
petitioner�s Board of Directors was not necessary since it is a
real estate corporation principally engaged in the buying and
selling of real property; that respondent did not force nor
intimidate petitioner�s receiving clerk into accepting the
February 4, 2005 letter and check for P100,000.00; that
petitioner�s acceptance of the check and its failure � for more
than a year � to return respondent�s payment amounts to
estoppel and a ratification of the sale; and that petitioner is not
entitled to its counterclaim.
After due proceedings were taken, the Pasay RTC issued its
Decision dated February 16, 2009, decreeing as
follows:chanRoblesvirtualLawlibrary
WHEREFORE, defendant First Optima Realty Corporation is
directed to comply with its obligation by accepting the remaining
balance of One Million Five Hundred Thirty-Six Thousand Pesos
and Ninety-Nine Centavos (P1,536,000.99), and executing the
corresponding deed of sale in favor of the plaintiff Securitron
Security Services, Inc. over the subject parcel of land.
No costs.
SO ORDERED.22
In ruling for the respondent, the trial court held that petitioner�s
acceptance of P100,000.00 earnest money indicated the
existence of a perfected contract of sale between the parties;
that there is no showing that when respondent gave the
February 4, 2005 letter and check to petitioner�s receiving
clerk, the latter was harassed or forced to accept the same; and
that for the sale of the subject property, no resolution of
petitioner�s board of directors was required since Young was
�free to represent� the corporation in negotiating with
respondent for the sale thereof.
Ruling of the Court of Appeals
Petitioner filed an appeal with the CA.� Docketed as CA-G.R.
CV No. 93715, the appeal made out a case that no earnest
money can be considered to have been paid to petitioner as the
supposed payment was received by a mere receiving clerk, who
was not authorized to accept the same; that the required board
of directors resolution authorizing the sale of corporate assets
cannot be dispensed with in the case of petitioner; that whatever
negotiations were held between the parties only concerned the
possible sale, not the sale itself, of the subject property; that
without the written authority of petitioner�s board of directors,
Young cannot enter into a sale of its corporate property; and
finally, that there was no meeting of the minds between the
parties in the first place.
On September 30, 2011, the CA issued the assailed Decision
affirming the trial court�s February 16, 2009 Decision,
pronouncing thus:chanRoblesvirtualLawlibrary
Article 1318 of the Civil Code declares that no contract exists
unless the following requisites concur: (1) consent of the
contracting parties; (2) object certain which is the subject matter
of the contract; and (3) cause of the obligation established.
A careful perusal of the records of the case show[s] that there
was indeed a negotiation between the parties as regards the
sale of the subject property, their disagreement lies on whether
they have arrived on an agreement regarding said sale.�
Plaintiff-appellee avers that the parties have already agreed on
the sale and the price for it and the payment of earnest money
and the remaining balance upon clearing of the property of
unwanted tenants.� Defendant-appellant on the other hand
disputes the same and insists that there was no concrete
agreement between the parties.
Upon a careful consideration of the arguments of the parties and
the records of the case, we are more inclined to sustain the
arguments of the plaintiff-appellee and affirm the findings of the
trial court that there was indeed a perfected contract of sale
between the parties. The following instances militate against the
claim of the defendant-appellant: First. The letter of the plaintiff-
appellee dated February 4, 2005 reiterating their agreement as
to the sale of the realty for the consideration of Php
1,536,000.00 was not disputed nor replied to by the defendant-
appellant, the said letter also provides for the payment of the
earnest money of Php 100,000.00 and the full payment upon the
clearing of the property of unwanted tenants, if the defendant-
appellant did not really agree on the sale of the property it could
have easily replied to the said letter informing the plaintiff-
appellee that it is not selling the property or that the matter will
be decided first by the board of directors, defendant-
appellant�s silence or inaction on said letter shows its
conformity or consent thereto; Second.� In addition to the
aforementioned letter, defendant-appellant�s acceptance of
the earnest money and the issuance of a provisional receipt
clearly shows that there was indeed an agreement between the
parties and we do not subscribe to the argument of the
defendant-appellant that the check was merely forced upon its
employee and the contents of the receipt was just dictated by
the plaintiff-appellee�s employee because common sense
dictates that a person would not issue a receipt for a check with
a huge amount if she does not know what that is for and
similarly would not issue [a] receipt which would bind her
employer if she does not have prior instructions to do [so] from
her superiors;� Third. The said check for earnest money was
deposited in the bank by defendant-appellant and not until after
one year did it offer to return the same.� Defendant-appellant
cannot claim lack of knowledge of the payment of the check
since there was a letter for it, and it is just incredible that a big
amount of money was deposited in [its] account [without
knowing] about it [or] investigat[ing] what [it was] for.� We are
more inclined to believe that their inaction for more than one
year on the earnest money paid was due to the fact that after
the payment of earnest money the place should be cleared of
unwanted tenants before the full amount of the purchase price
will be paid as agreed upon as shown in the letter sent by the
plaintiff-appellee.
As stated above the presence of defendant-appellant�s
consent and, corollarily, the existence of a perfected contract
between the parties are evidenced by the payment and receipt
of Php 100,000.00 as earnest money by the contracting
parties� x x x.� Under the law on sales, specifically Article
1482 of the Civil Code, it provides that whenever earnest money
is given in a contract of sale, it shall be considered as part of the
price and proof of the perfection of the contract.� Although the
presumption is not conclusive, as the parties may treat the
earnest money differently, there is nothing alleged in the present
case that would give rise to a contrary presumption.
We also do not find merit in the contention of the defendant-
appellant that there is a need for a board resolution for them to
sell the subject property since it is a corporation, a juridical entity
which acts only thru the board of directors.� While we agree
that said rule is correct, we must also point out that said rule is
the general rule for all corporations [but] a corporation [whose
main business is buying and selling real estate] like herein
defendant-appellant, is not required to have a board resolution
for the sale of the realty in the ordinary course of business, thus
defendant-appellant�s claim deserves scant consideration.
Furthermore, the High Court has held that �a corporate officer
or agent may represent and bind the corporation in transactions
with third persons to the extent that the authority to do so has
been conferred upon him, and this includes powers which have
been intentionally conferred, and also such powers as, in the
usual course of the particular business, are incidental to, or may
be implied from, the powers intentionally conferred, powers
added by custom and usage, as usually pertaining to the
particular officer or agent, and such apparent powers as the
corporation has caused persons dealing with the officer or agent
to believe that it was conferred.�
In the case at bench, it is not disputed and in fact was admitted
by the defendant-appellant that Ms. Young, the Executive Vice-
President was authorized to negotiate for the possible sale of
the subject parcel of land.� Therefore, Ms. Young can
represent and bind defendant-appellant in the transaction.
Moreover, plaintiff-appellee can assume that Ms. Young, by
virtue of her position, was authorized to sell the property of the
corporation.� Selling of realty is not foreign to [an] executive
vice[-]president�s function, and the real estate sale was shown
to be a normal business activity of defendant-appellant since its
primary business is the buy and sell of real estate.�
Unmistakably, its Executive Vice-President is cloaked with
actual or apparent authority to buy or sell real property, an
activity which falls within the scope of her general authority.
Furthermore, assuming arguendo that a board resolution was
indeed needed for the sale of the subject property, the
defendant-appellant is estopped from raising it now since, [it] did
not inform the plaintiff-appellee of the same, and the latter deal
(sic) with them in good faith.� Also it must be stressed that the
plaintiff-appellee negotiated with one of the top officer (sic) of
the company thus, any requirement on the said sale must have
been known to Ms. Young and she should have informed the
plaintiff-appellee of the same.
In view of the foregoing we do not find any reason to deviate
from the findings of the trial court, the parties entered into the
contract freely, thus they must perform their obligation faithfully.
Defendant-appellant�s unjustified refusal to perform its part of
the agreement constitutes bad faith and the court will not
tolerate the same.
WHEREFORE, premises considered, the Decision of the
Regional Trial Court of Pasay City Branch 115, in Civil Case No.
06-0492 CFM is hereby AFFIRMED.
SO ORDERED.23
Petitioner moved for reconsideration,24 but in a December 9,
2011 Resolution, the CA held its ground.� Hence, the present
Petition.
Issues

In an October 9, 2013 Resolution,25 this Court resolved to give
due course to the Petition, which raises the following
issues:chanRoblesvirtualLawlibrary
I
THE HONORABLE COURT OF APPEALS ERRED ON A
QUESTION OF LAW WHEN IT RULED THAT THE MONEY
RESPONDENT DELIVERED TO PETITIONER WAS EARNEST
MONEY THEREBY PROVIDING A PERFECTED CONTRACT
OF SALE.
II
THE HONORABLE COURT OF APPEALS ERRED ON A
QUESTION OF LAW WHEN IT RULED THAT THE TIME THAT
LAPSED IN RETURNING THE MONEY AND IN REPLYING TO
THE LETTER IS PROOF OF ACCEPTANCE OF EARNEST
MONEY.
III
THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS AND GRAVE ERROR WHEN IT IGNORED THE
RESERVATION IN THE PROVISIONAL RECEIPT �
�Note:� This is issued to transactions not yet cleared but
subsequently an Official Receipt will be issued.�26
Petitioner�s Arguments
In its Petition and Reply27 seeking to reverse and set aside the
assailed CA dispositions and in effect to dismiss Civil Case No.
06-0492 CFM, petitioner argues that respondent failed to prove
its case that a contract of sale was perfected between the
parties.� It particularly notes that, contrary to the CA�s ruling,
respondent�s delivery of the February 4, 2005 letter and
check; petitioner�s failure to respond to said letter;
petitioner�s supposed acceptance of the check by depositing
the same in its account; and its failure to return the same after
more than one year from its tender � these circumstances do
not at all prove that a contract of sale was perfected between
the parties.� It claims that there was never an agreement in the
first place between them concerning the sale of the subject
property, much less the payment of earnest money therefor; that
during trial, Eleazar himself admitted that the check was merely
a �deposit�;28 that the February 4, 2005 letter and check
were delivered not to Young, but to a mere receiving clerk of
petitioner who knew nothing about the supposed transaction
and was simply obliged to accept the same without the
prerogative to reject them; that the acceptance of
respondent�s supposed payment was not cleared and was
subject to approval and issuance of the corresponding official
receipt as noted in Provisional Receipt No. 33430; that
respondent intentionally delivered the letter and check in the
manner that it did in order to bind petitioner to the supposed
sale with or without the latter�s consent; that petitioner could
not be faulted for receiving the check and for depositing the
same as a matter of operational procedure with respect to
checks received in the course of its day-to-day business.
Petitioner argues that ultimately, it cannot be said that it gave its
consent to any transaction with respondent or to the payment
made by the latter.� Respondent�s letter and check
constitute merely an offer which required petitioner�s
acceptance in order to give rise to a perfected sale;
�[o]therwise, a buyer can easily bind any unsuspecting seller
to a contract of sale by merely devising a way that prevents the
latter from acting on the communicated
offer.�29chanroblesvirtuallawlibrary
Petitioner thus theorizes that since it had no perfected
agreement with the respondent, the latter�s check should be
treated not as earnest money, but as mere guarantee, deposit
or option money to prevent the prospective seller from backing
out from the sale,30 since the payment of any consideration
acquires the character of earnest money only after a perfected
sale between the parties has been arrived
at.31chanroblesvirtuallawlibrary
Respondent�s Arguments
In its Comment,32 respondent counters that petitioner�s case
typifies a situation where the seller has had an undue change of
mind and desires to escape the legal consequences attendant
to a perfected contract of sale.� It reiterates the appellate
court�s pronouncements that petitioner�s failure to reply to
respondent�s February 4, 2005 letter indicates its consent to
the sale; that its acceptance of the check as earnest money and
the issuance of the provisional receipt prove that there is a prior
agreement between the parties; that the deposit of the check in
petitioner�s account and failure to timely return the money to
respondent militates against petitioner�s claim of lack of
knowledge and consent. Rather they indicate petitioner�s
decision to sell subject property as agreed.� Respondent adds
that contrary to petitioner�s claim, negotiations were in fact
held between the parties after it sent its December 9, 2004
letter-offer, which negotiations precisely culminated in the
preparation and issuance of the February 4, 2005 letter; that
petitioner�s failure to reply to its February 4, 2005 letter meant
that it was amenable to respondent�s terms; that the issuance
of a provisional receipt does not prevent the perfection of the
agreement between the parties, since earnest money was
already paid; and that petitioner cannot pretend to be ignorant of
respondent�s check payment, as it involved a large sum of
money that was deposited in the former�s bank account.
Our Ruling
The Court grants the Petition.� The trial and appellate courts
erred materially in deciding the case; they overlooked important
facts that should change the complexion and outcome of the
case.
It cannot be denied that there were negotiations between the
parties conducted after the respondent�s December 9, 2004
letter-offer and prior to the February 4, 2005 letter.� These
negotiations culminated in a meeting between Eleazar and
Young whereby the latter declined to enter into an agreement
and accept cash payment then being tendered by the former.�
Instead, Young informed Eleazar during said meeting that she
still had to confer with her sister and petitioner�s board of
directors; in turn, Eleazar told Young that respondent shall await
the necessary approval.
Thus, the trial and appellate courts failed to appreciate that
respondent�s offer to purchase the subject property was never
accepted by the petitioner at any instance, even after
negotiations were held between them.� Thus, as between
them, there is no sale to speak of.� �When there is merely an
offer by one party without acceptance of the other, there is no
contract.�33� To borrow a pronouncement in a previously
decided case,
The stages of a contract of sale are: (1) negotiation, starting
from the time the prospective contracting parties indicate
interest in the contract to the time the contract is perfected; (2)
perfection, which takes place upon the concurrence of the
essential elements of the sale; and (3) consummation, which
commences when the parties perform their respective
undertakings under the contract of sale, culminating in the
extinguishment of the contract.
In the present case, the parties never got past the negotiation
stage. Nothing shows that the parties had agreed on any final
arrangement containing the essential elements of a contract of
sale, namely, (1) consent or the meeting of the minds of the
parties; (2) object or subject matter of the contract; and (3) price
or consideration of the sale.34
Respondent�s subsequent sending of the February 4, 2005
letter and check to petitioner � without awaiting the approval of
petitioner�s board of directors and Young�s decision, or
without making a new offer � constitutes a mere reiteration of
its original offer which was already rejected previously; thus,
petitioner was under no obligation to reply to the February 4,
2005 letter.� It would be absurd to require a party to reject the
very same offer each and every time it is made; otherwise, a
perfected contract of sale could simply arise from the failure to
reject the same offer made for the hundredth time.� Thus, said
letter cannot be considered as evidence of a perfected sale,
which does not exist in the first place; no binding obligation on
the part of the petitioner to sell its property arose as a
consequence.� The letter made no new offer replacing the first
which was rejected.
Since there is no perfected sale between the parties,
respondent had no obligation to make payment through the
check; nor did it possess the right to deliver earnest money to
petitioner in order to bind the latter to a sale.� As contemplated
under Art. 1482 of the Civil Code, �there must first be a
perfected contract of sale before we can speak of earnest
money.�35� �Where the parties merely exchanged offers
and counter-offers, no contract is perfected since they did not
yet give their consent to such offers.� Earnest money applies
to a perfected sale.�36chanroblesvirtuallawlibrary
This Court is inclined to accept petitioner�s explanation that
since the check was mixed up with all other checks and
correspondence sent to and received by the corporation during
the course of its daily operations, Young could not have timely
discovered respondent�s check payment; petitioner�s failure
to return the purported earnest money cannot mean that it
agreed to respondent�s offer.� Besides, respondent�s
payment of supposed earnest money was made under dubious
circumstances and in disregard of sound business practice and
common sense.� Indeed, respondent must be faulted for
taking such a course of action that is irregular and extraordinary:
common sense and logic dictate that if any payment is made
under the supposed sale transaction, it should have been made
directly to Young or coursed directly through her office, since
she is the officer directly responsible for negotiating the sale, as
far as respondent is concerned and considering the amount of
money involved; no other ranking officer of petitioner can be
expected to know of the ongoing talks covering the subject
property.� Respondent already knew, from Eleazar�s
previous meeting with Young, that it could only effectively deal
with her; more than that, it should know that corporations work
only through the proper channels.� By acting the way it did �
coursing the February 4, 2005 letter and check through
petitioner�s mere receiving clerk or receptionist instead of
directly with Young�s office, respondent placed itself under
grave suspicion of putting into effect a premeditated plan to
unduly bind petitioner to its rejected offer, in a manner which it
could not achieve through negotiation and employing normal
business practices.� It impresses the Court that respondent
attempted to secure the consent needed for the sale by
depositing part of the purchase price and under the false
pretense that an agreement was already arrived at, even though
there was none.� Respondent achieved the desired effect up
to this point, but the Court will not be fooled.
Thus, as between respondent�s irregular and improper actions
and petitioner�s failure to timely return the P100,000.00
purported earnest money, this Court sides with petitioner.� In a
manner of speaking, respondent cannot fault petitioner for not
making a refund since it is equally to blame for making such
payment under false pretenses and irregular circumstances, and
with improper motives.� Parties must come to court with clean
hands, as it were.
 RIZALINO, substituted by G.R. No. 157493
In a potential sale transaction, the prior payment of earnest his heirs, JOSEFINA,
money even before the property owner can agree to sell his ROLANDO and
property is irregular, and cannot be used to bind the owner to Present:
FERNANDO, ERNESTO,
the obligations of a seller under an otherwise perfected contract
LEONORA, BIBIANO, JR.,
of sale; to cite a well-worn clich�, the carriage cannot be
placed before the horse.� The property owner-prospective LIBRADO and YNARES-SANTIAGO, J.,
seller may not be legally obliged to enter into a sale with a ENRIQUETA, all surnamed Chairperson,
prospective buyer through the latter�s employment of OESMER, AUSTRIA-MARTINEZ,
questionable practices which prevent the owner from freely
giving his consent to the transaction; this constitutes a palpable Petitioners, CALLEJO, SR., and
transgression of the prospective seller�s rights of ownership
over his property, an anomaly which the Court will certainly not CHICO-NAZARIO, JJ.
condone.� An agreement where the prior free consent of one
party thereto is withheld or suppressed will be struck down, and
the Court shall always endeavor to protect a property owner�s
rights against devious practices that put his property in danger - versus -
of being lost or unduly disposed without his prior knowledge or
consent.� As this ponente has held before, �[t]his Court Promulgated:
cannot presume the existence of a sale of land, absent any
direct proof of it.�37chanroblesvirtuallawlibrary

Nor will respondent�s supposed payment be treated as a
deposit or guarantee; its actions will not be dignified and must
be called for what they are: they were done irregularly and with
a view to acquiring the subject property against petitioner�s
consent.
Finally, since there is nothing in legal contemplation which
petitioner must perform particularly for the respondent, it should
follow that Civil Case No. 06-0492 CFM for specific performance
with damages is left with no leg to stand on; it must be
dismissed.
With the foregoing view, there is no need to resolve the other
specific issues and arguments raised by the petitioner, as they
do not materially affect the rights and obligations of the parties
� the Court having declared that no agreement exists between
them; nor do they have the effect of altering the outcome of the
case.
WHEREFORE, the Petition is GRANTED.� The September 30,
2011 Decision and December 9, 2011 Resolution of the Court of
Appeals in CA-G.R. CV No. 93715, as well as the February 16,
2009 Decision� of the Regional Trial Court of Pasay City,
Branch 115 in Civil Case No. 06-0492 CFM
are REVERSED and SET ASIDE.� Civil Case No. 06-0492
CFM is ordered DISMISSED.
Petitioner First Optima Realty Corporation is ordered
to REFUND the amount of P100,000.00 to respondent
Securitron Security Services, Inc. without interest, unless
petitioner has done so during the course of the proceedings.
PARAISO DEVELOPMENT February 5, 2007
CORPORATION,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - -x
Before this Court is a Petition for Review on Certiorari under
Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to
reverse and set aside the Court of Appeals Decision[1] dated 26
April 2002 in CA-G.R. CV No. 53130 entitled, Rizalino, Ernesto,
Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo, and Jesus, all
surnamed Oesmer vs. Paraiso Development Corporation, as
modified by its Resolution[2] dated 4 March 2003, declaring the
Contract to Sell valid and binding with respect to the undivided
proportionate shares of the six signatories of the said document,
herein petitioners, namely: Ernesto, Enriqueta, Librado,
Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer); and
ordering them to execute the Deed of Absolute Sale concerning
their 6/8 share over the subject parcels of land in favor of herein
respondent Paraiso Development Corporation, and to pay the
latter the attorneys fees plus costs of the suit. The assailed
Decision, as modified, likewise ordered the respondent to tender
payment to the petitioners in the amount of P3,216,560.00
representing the balance of the purchase price of the subject
parcels of land.

SO ORDERED. The facts of the case are as follows:


Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and
Enriqueta, all surnamed Oesmer, together with Adolfo Oesmer
(Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters,
and the co-owners of undivided shares of two parcels of
agricultural and tenanted land situated in Barangay Ulong Tubig,
Carmona, Cavite, identified as Lot 720 with an area of 40,507
square meters (sq. m.) and Lot 834 containing an area of
14,769 sq. m., or a total land area of 55,276 sq. m. Both lots are
unregistered and originally owned by their parents, Bibiano
Oesmer and Encarnacion Durumpili, who declared the lots for
taxation purposes under Tax Declaration No. 3438[3] (cancelled
by I.D. No. 6064-A) for Lot 720 and Tax Declaration No.
3437[4] (cancelled by I.D. No. 5629) for Lot 834. When the
spouses Oesmer died, petitioners, together with Adolfo and
Jesus, acquired the lots as heirs of the former by right of
succession.
Respondent Paraiso Development Corporation is known to be
engaged in the real estate business.
Sometime in March 1989, Rogelio Paular, a resident and former
Municipal Secretary of Carmona, Cavite, brought along
petitioner Ernesto to meet with a certain Sotero Lee, President
of respondent Paraiso Development Corporation, at Otani Hotel
in Manila. The said meeting was for the purpose of brokering the
sale of petitioners properties to respondent corporation.
Pursuant to the said meeting, a Contract to Sell[5] was drafted by
the Executive Assistant of Sotero Lee, Inocencia Almo. On 1
April 1989, petitioners Ernesto and Enriqueta signed the
aforesaid Contract to Sell. A check in the amount
of P100,000.00, payable to Ernesto, was given as option
money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr.,
and Librado also signed the said Contract to Sell. However, two
of the brothers, Adolfo and Jesus, did not sign the document.
On 5 April 1989, a duplicate copy of the instrument was returned
to respondent corporation. On 21 April 1989, respondent
brought the same to a notary public for notarization.
In a letter[6] dated 1 November 1989, addressed to respondent
corporation, petitioners informed the former of their intention to
rescind the Contract to Sell and to return the amount
of P100,000.00 given by respondent as option money.
Respondent did not respond to the aforesaid letter. On 30 May
1991, herein petitioners, together with Adolfo and Jesus, filed a
Complaint[7] for Declaration of Nullity or for Annulment of Option
Agreement or Contract to Sell with Damages before the
Regional Trial Court (RTC) of Bacoor, Cavite. The said case
was docketed as Civil Case No. BCV-91-49.
During trial, petitioner Rizalino died. Upon motion of petitioners,
the trial court issued an Order,[8] dated 16 September 1992, to
the effect that the deceased petitioner be substituted by his
surviving spouse, Josefina O. Oesmer, and his children,
Rolando O. Oesmer and Fernando O. Oesmer. However, the
name of Rizalino was retained in the title of the case both in the
RTC and the Court of Appeals.
After trial on the merits, the lower court rendered a
Decision[9] dated 27 March 1996 in favor of the respondent, the
dispositive portion of which reads:
WHEREFORE, premises
considered, judgment is hereby rendered in
favor of herein [respondent] Paraiso
Development Corporation. The assailed
Contract to Sell is valid and binding only to
the undivided proportionate share of the
signatory of this document and recipient of
the check, [herein petitioner] co-
owner Ernesto Durumpili Oesmer. The latter
is hereby ordered to execute the Contract of
Absolute Sale concerning his 1/8 share over
 the subject two parcels of land in favor of
herein [respondent] corporation, and to pay
the latter the attorneys fees in the sum of
Ten Thousand (P10,000.00) Pesos plus
costs of suit.
The counterclaim of [respondent]
corporation is hereby Dismissed for lack of
merit.[10]
Unsatisfied, respondent appealed the said Decision before the
Court of Appeals. On 26 April 2002, the appellate court
rendered a Decision modifying the Decision of the court a
quo by declaring that the Contract to Sell is valid and binding
with respect to the undivided proportionate shares of the six
signatories of the said document, herein petitioners, namely:
Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora
(all surnamed Oesmer). The decretal portion of the said
Decision states that:
WHEREFORE, premises considered, the
Decision of the court a quo is
hereby MODIFIED. Judgment is hereby
rendered in favor of herein [respondent]
Paraiso Development Corporation. The
assailed Contract to Sell is valid and binding
with respect to the undivided proportionate
share of the six (6) signatories of this
document, [herein petitioners], namely,
Ernesto, Enriqueta, Librado, Rizalino,
Bibiano, Jr., and Leonora (all surnamed
Oesmer). The said [petitioners] are hereby
ordered to execute the Deed of Absolute
Sale concerning their 6/8 share over the
subject two parcels of land and in favor of
herein [respondent] corporation, and to pay
the latter the attorneys fees in the sum of
Ten Thousand Pesos (P10,000.00) plus
costs of suit.[11]
Aggrieved by the above-mentioned Decision, petitioners filed a
Motion for Reconsideration of the same on 2 July 2002. Acting
on petitioners Motion for Reconsideration, the Court of Appeals
issued a Resolution dated 4 March 2003, maintaining its
Decision dated 26 April 2002, with the modification that
respondent tender payment to petitioners in the amount
of P3,216,560.00, representing the balance of the purchase
price of the subject parcels of land. The dispositive portion of the
said Resolution reads:
WHEREFORE, premises considered, the
assailed Decision is
hereby modified. Judgment is hereby
rendered in favor of herein [respondent]
Paraiso Development Corporation. The
assailed Contract to Sell is valid and binding
with respect to the undivided proportionate
shares of the six (6) signatories of this
document, [herein petitioners], namely,
Ernesto, Enriqueta, Librado, Rizalino,
Bibiano, Jr., and Leonora (all surnamed
Oesmer).The said [petitioners] are hereby
ordered to execute the Deed of Absolute
Sale concerning their 6/8 share over the
subject two parcels of land in favor of herein
[respondent] corporation, and to pay the
latter attorneys fees in the sum of Ten
Thousand Pesos (P10,000.00) plus costs of
suit. Respondent is likewise ordered to
tender payment to the above-named
[petitioners] in the amount of Three Million
Two Hundred Sixteen Thousand Five
Hundred Sixty Pesos (P3,216,560.00)
representing the balance of the purchase
price of the subject two parcels of land. [12]
Hence, this Petition for Review on Certiorari.
Petitioners come before this Court arguing that the Court of
Appeals erred:
I. On a question of law in
not holding that, the supposed
Contract to Sell (Exhibit D) is not
binding upon petitioner Ernesto
Oesmers co-owners (herein
petitioners Enriqueta, Librado,
Rizalino, Bibiano, Jr., and
Leonora).
II. On a question of law in not
holding that, the supposed
Contract to Sell (Exhibit D) is void
altogether considering that
respondent itself did not sign it as
to indicate its consent to be bound
by its terms.Moreover, Exhibit D is
really a unilateral promise to sell
without consideration distinct from
the price, and hence, void.
Petitioners assert that the signatures of five of them namely:
Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the
margins of the supposed Contract to Sell did not confer authority
on petitioner Ernesto as agent to sell their respective shares in
the questioned properties, and hence, for lack of written
authority from the above-named petitioners to sell their
respective shares in the subject parcels of land, the supposed
Contract to Sell is void as to them. Neither do their signatures
signify their consent to directly sell their shares in the
questioned properties. Assuming that the signatures indicate
consent, such consent was merely conditional. The effectivity of
the alleged Contract to Sell was subject to a suspensive
condition, which is the approval of the sale by all the co-owners.
Petitioners also assert that the supposed Contract to Sell
(Exhibit D), contrary to the findings of the Court of Appeals, is
not couched in simple language.
They further claim that the supposed Contract to Sell does not
bind the respondent because the latter did not sign the said
contract as to indicate its consent to be bound by its
terms. Furthermore, they maintain that the supposed Contract to
Sell is really a unilateral promise to sell and the option money
does not bind petitioners for lack of cause or consideration
distinct from the purchase price.
The Petition is bereft of merit.
It is true that the signatures of the five petitioners, namely:
Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the
Contract to Sell did not confer authority on petitioner Ernesto as
agent authorized to sell their respective shares in the
questioned properties because of Article 1874 of the Civil Code,
which expressly provides that:
Art. 1874. When a sale of a piece of land or
any interest therein is through an agent, the
authority of the latter shall be in writing;
otherwise, the sale shall be void.
The law itself explicitly requires a written authority before an
agent can sell an immovable. The conferment of such an
authority should be in writing, in as clear and precise terms as
possible. It is worth noting that petitioners signatures are found
in the Contract to Sell. The Contract is absolutely silent on the
establishment of any principal-agent relationship between the
five petitioners and their brother and co-petitioner Ernesto as to
the sale of the subject parcels of land. Thus, the Contract to
Sell, although signed on the margin by the five petitioners, is not
sufficient to confer authority on petitioner Ernesto to act as their the acceptance must not qualify the terms of the offer. However,
agent in selling their shares in the properties in question. the acceptance may be express or implied. For a contract to
arise, the acceptance must be made known to the
offeror. Accordingly, the acceptance can be withdrawn or
revoked before it is made known to the offeror.[13]
However, despite petitioner Ernestos lack of written authority
from the five petitioners to sell their shares in the subject parcels
of land, the supposed Contract to Sell remains valid and binding
upon the latter. In the case at bar, the Contract to Sell was perfected when the
petitioners consented to the sale to the respondent of their
shares in the subject parcels of land by affixing their signatures
on the said contract. Such signatures show their acceptance of
As can be clearly gleaned from the contract itself, it is not only
what has been stipulated in the Contract to Sell and such
petitioner Ernesto who signed the said Contract to Sell; the
acceptance was made known to respondent corporation when
other five petitioners also personally affixed their signatures
the duplicate copy of the Contract to Sell was returned to the
thereon.Therefore, a written authority is no longer necessary in
latter bearing petitioners signatures.
order to sell their shares in the subject parcels of land because,
by affixing their signatures on the Contract to Sell, they were not
selling their shares through an agent but, rather, they were
selling the same directly and in their own right. As to petitioner Enriquetas claim that she merely signed as a
witness to the said contract, the contract itself does not say
so. There was no single indication in the said contract that she
signed the same merely as a witness. The fact that her
The Court also finds untenable the following arguments raised
signature appears on the right-hand margin of the Contract to
by petitioners to the effect that the Contract to Sell is not binding
Sell is insignificant. The contract indisputably referred to the
upon them, except to Ernesto, because: (1) the signatures of
Heirs of Bibiano and Encarnacion Oesmer, and since there is no
five of the petitioners do not signify their consent to sell their
showing that Enriqueta signed the document in some other
shares in the questioned properties since petitioner Enriqueta
capacity, it can be safely assumed that she did so as one of the
merely signed as a witness to the said Contract to Sell, and that
parties to the sale.
the other petitioners, namely: Librado, Rizalino, Leonora, and
Bibiano, Jr., did not understand the importance and
consequences of their action because of their low degree of
education and the contents of the aforesaid contract were not Emphasis should also be given to the fact that
read nor explained to them; and (2) assuming that the petitioners Ernesto and Enriqueta concurrently signed the
signatures indicate consent, such consent was merely Contract to Sell. As the Court of Appeals mentioned in its
conditional, thus, the effectivity of the alleged Contract to Sell Decision,[14] the records of the case speak of the fact that
was subject to a suspensive condition, which is the approval by petitioner Ernesto, together with petitioner Enriqueta, met with
all the co-owners of the sale. the representatives of the respondent in order to finalize the
terms and conditions of the Contract to Sell.Enriqueta affixed
her signature on the said contract when the same was
drafted. She even admitted that she understood the undertaking
It is well-settled that contracts are perfected by mere consent,
that she and petitioner Ernesto made in connection with the
upon the acceptance by the offeree of the offer made by the
contract. She likewise disclosed that pursuant to the terms
offeror. From that moment, the parties are bound not only to the
embodied in the Contract to Sell, she updated the payment of
fulfillment of what has been expressly stipulated but also to all
the real property taxes and transferred the Tax Declarations of
the consequences which, according to their nature, may be in
the questioned properties in her name.[15] Hence, it cannot be
keeping with good faith, usage and law. To produce a contract,
gainsaid that she merely signed the Contract to Sell as a
witness because she did not only actively participate in the
negotiation and execution of the same, but her subsequent
actions also reveal an attempt to comply with the conditions in
the said contract.
With respect to the other petitioners assertion that they did not
understand the importance and consequences of their action
because of their low degree of education and because the
contents of the aforesaid contract were not read nor explained
to them, the same cannot be sustained.
We only have to quote the pertinent portions of the Court of
Appeals Decision, clear and concise, to dispose of this
issue. Thus,
First, the Contract to Sell is
couched in such a simple language which is
undoubtedly easy to read and
understand. The terms of the Contract,
specifically the amount of P100,000.00
representing the option money paid by
[respondent] corporation, the purchase price
of P60.00 per square meter or the total
amount of P3,316,560.00 and a brief
description of the subject properties are
well-indicated thereon that any prudent and
mature man would have known the nature
and extent of the transaction encapsulated
in the document that he was signing.
Second, the following
circumstances, as testified by the witnesses
and as can be gleaned from the records of
the case clearly indicate the [petitioners]
intention to be bound by the stipulations
chronicled in the said Contract to Sell.
As to [petitioner] Ernesto, there is
no dispute as to his intention to effect the
alienation of the subject property as he in
fact was the one who initiated the
negotiation process and culminated the
same by affixing his signature on the
Contract to Sell and by taking receipt of the
amount of P100,000.00 which formed part of
the purchase price.
xxxx
As to [petitioner] Librado, the
[appellate court] finds it preposterous that he
willingly affixed his signature on a document
written in a language (English) that he
purportedly does not understand. He
testified that the document was just brought
to him by an 18 year old niece named Baby
and he was told that the document was for a
check to be paid to him. He readily signed
the Contract to Sell without consulting his
other siblings. Thereafter, he exerted no
effort in communicating with his brothers
and sisters regarding the document which
he had signed, did not inquire what the
check was for and did not thereafter ask for
the check which is purportedly due to him as
a result of his signing the said Contract to
Sell. (TSN, 28 September 1993, pp. 22-23)
The [appellate court] notes that
Librado is a 43 year old family man (TSN, 28
September 1993, p. 19). As such, he is
expected to act with that ordinary degree of
care and prudence expected of a good
father of a family. His unwitting testimony is
just divinely disbelieving.
The other [petitioners] (Rizalino,
Leonora and Bibiano Jr.) are likewise bound
by the said Contract to Sell. The theory
adopted by the [petitioners] that because of
their low degree of education, they did not
understand the contents of the said Contract
to Sell is devoid of merit. The [appellate
court] also notes that Adolfo (one of the co-
heirs who did not sign) also possess the
same degree of education as that of the
signing co-heirs (TSN, 15 October 1991, p.
19). He, however, is employed at the
Provincial Treasury Office at Trece
Martirez, Cavite and has even accompanied
Rogelio Paular to the Assessors Office to
locate certain missing documents which
were needed to transfer the titles of the
subject properties. (TSN, 28 January 1994,
pp. 26 & 35) Similarly, the other co-heirs
[petitioners], like Adolfo, are far from
ignorant, more so, illiterate that they can be
extricated from their obligations under the
Contract to Sell which they voluntarily and
knowingly entered into with the [respondent]
corporation.
The Supreme Court in the case
of Cecilia Mata v. Court of Appeals (207
SCRA 753 [1992]), citing the case of Tan
Sua Sia v. Yu Baio Sontua (56 Phil. 711),
instructively ruled as follows:
The Court does not accept the
petitioners claim that she did not understand
the terms and conditions of the transactions
because she only reached Grade Three and
was already 63 years of age when she
signed the documents. She was literate, to
begin with, and her age did not make her
senile or incompetent. x x x.
At any rate, Metrobank had no
obligation to explain the documents to the
petitioner as nowhere has it been proven
that she is unable to read or that the
contracts were written in a language not
known to her. It was her responsibility to
inform herself of the meaning and
consequence of the contracts she was
signing and, if she found them difficult to
comprehend, to consult other persons,
preferably lawyers, to explain them to
her.After all, the transactions involved not
only a few hundred or thousand pesos but,
indeed, hundreds of thousands of pesos.
As the Court has held:
x x x The rule that one who signs a contract
is presumed to know its contents has been
applied even to contracts of illiterate persons
on the ground that if such persons are
unable to read, they are negligent if they fail
to have the contract read to them. If a
person cannot read the instrument, it is as
much his duty to procure some reliable
persons to read and explain it to him, before
he signs it, as it would be to read it before
he signed it if he were able to do and his
failure to obtain a reading and explanation of
it is such gross negligence as will estop from
avoiding it on the ground that he was
ignorant of its contents.[16]
That the petitioners really had the intention to dispose of their
shares in the subject parcels of land, irrespective of whether or
not all of the heirs consented to the said Contract to Sell, was
unveiled by Adolfos testimony as follows:
ATTY. GAMO: This alleged agreement
between you and your other
brothers and sisters that unless
everybody will agree, the
properties would not be sold, was
that agreement in writing?
WITNESS: No sir.
ATTY. GAMO: What you are saying is that
when your brothers and sisters
except Jesus and you did not sign
 that agreement which had been
marked as [Exhibit] D, your
brothers and sisters were grossly
violating your agreement.
Consequently, even without the consent of the two co-heirs,
Adolfo and Jesus, the Contract to Sell is still valid and binding
with respect to the 6/8 proportionate shares of the petitioners, as
WITNESS: Yes, sir, they violated what we
properly held by the appellate court.
have agreed upon.[17]

Therefore, this Court finds no error in the findings of

We also cannot sustain the allegation of the petitioners that
assuming the signatures indicate consent, such consent was
merely conditional, and that, the effectivity of the alleged
Contract to Sell was subject to the suspensive condition that the
sale be approved by all the co-owners. The Contract to Sell is
clear enough. It is a cardinal rule in the interpretation of
contracts that if the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall control.[18] The terms of the
Contract to Sell made no mention of the condition that before it
can become valid and binding, a unanimous consent of all the
heirs is necessary. Thus, when the language of the contract is
explicit, as in the present case, leaving no doubt as to the
intention of the parties thereto, the literal meaning of its
stipulation is controlling.
In addition, the petitioners, being owners of their
respective undivided shares in the subject properties, can
dispose of their shares even without the consent of all the co-
heirs. Article 493 of the Civil Code expressly provides:
Article 493. Each co-owner shall
have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he
may therefore alienate, assign or
mortgage it, and even substitute another
person in its enjoyment, except when
personal rights are involved. But the effect
of the alienation or the mortgage, with
respect to the co-owners, shall be limited to
the portion which may be allotted to him in
the division upon the termination of the co-
ownership. [Emphases supplied.]
the Court of Appeals that all the petitioners who were
signatories in the Contract to Sell are bound thereby.
The final arguments of petitioners state that the
Contract to Sell is void altogether considering that respondent
itself did not sign it as to indicate its consent to be bound by its
terms; and moreover, the Contract to Sell is really a unilateral
promise to sell without consideration distinct from the price, and
hence, again, void. Said arguments must necessarily fail.
The Contract to Sell is not void merely because it
does not bear the signature of the respondent
corporation. Respondent corporations consent to be bound by
the terms of the contract is shown in the uncontroverted facts
which established that there was partial performance by
respondent of its obligation in the said Contract to Sell when it
tendered the amount of P100,000.00 to form part of the
purchase price, which was accepted and acknowledged
expressly by petitioners. Therefore, by force of law, respondent
is required to complete the payment to enforce the terms of the
contract.Accordingly, despite the absence of respondents
signature in the Contract to Sell, the former cannot evade its
obligation to pay the balance of the purchase price.
As a final point, the Contract to Sell entered into by
the parties is not a unilateral promise to sell merely because it
used the word option money when it referred to the amount
of P100,000.00, which also form part of the purchase price.
 Settled is the rule that in the interpretation of
contracts, the ascertainment of the intention of the contracting
parties is to be discharged by looking to the words they used to
project that intention in their contract, all the words, not just a
particular word or two, and words in context, not words standing
alone.[19]
Absolute Sale covering their shares in the subject parcels of
land after receipt of the balance of the purchase price, and to
pay respondent attorneys fees plus costs of the suit. Costs
against petitioners.
SO ORDERED.

In the instant case, the consideration of P100,000.00 paid by

respondent to petitioners was referred to as option
money. However, a careful examination of the words used in the
contract indicates that the money is not option money
but earnest money. Earnest money and option money are not
the same but distinguished thus: (a) earnest money is part of the
purchase price, while option money is the money given as a
distinct consideration for an option contract; (b) earnest money
is given only where there is already a sale, while option money
applies to a sale not yet perfected; and, (c) when earnest money
is given, the buyer is bound to pay the balance, while when the
would-be buyer gives option money, he is not required to buy,
but may even forfeit it depending on the terms of the option.[20]

The sum of P100,000.00 was part of the purchase

price. Although the same was denominated as option money, it
is actually in the nature of earnest money or down payment
when considered with the other terms of the contract. Doubtless,
the agreement is not a mere unilateral promise to sell, but,
indeed, it is a Contract to Sell as both the trial court and the
appellate court declared in their Decisions.

WHEREFORE, premises considered, the Petition

is DENIED, and the Decision and Resolution of the Court of
Appeals dated 26 April 2002 and 4 March 2003, respectively,
are AFFIRMED, thus, (a) the Contract to Sell
is DECLARED valid and binding with respect to the undivided
proportionate shares in the subject parcels of land of the six
signatories of the said document, herein petitioners Ernesto,
Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all
surnamed Oesmer); (b) respondent is ORDERED to tender
payment to petitioners in the amount of P3,216,560.00
representing the balance of the purchase price for the latters
shares in the subject parcels of land; and (c) petitioners are
further ORDERED to execute in favor of respondent the Deed of
SERAFIN, RAUL, NENITA, NAZARETO, NEOLANDA, all surnamed G.R. No. 160132
NARANJA, AMELIA NARANJA-RUBINOS, NILDA NARANJA-
LIMANA, and NAIDA NARANJA-GICANO, Roque Naranja was the registered owner of a parcel
of land, denominated as Lot No. 4 in Consolidation-Subdivision
Petitioners,
Plan (LRC) Pcs-886, Bacolod Cadastre, with an area of 136
Present:
square meters and covered by Transfer Certificate of Title (TCT)
No. T-18764. Roque was also a co-owner of an adjacent lot, Lot
- versus - No. 2, of the same subdivision plan, which he co-owned with his
YNARES-SANTIAGO, J.,
brothers, Gabino and Placido Naranja. When Placido died, his
one-third share was inherited by his children, Nenita, Nazareto,
Chairperson,
COURT OF APPEALS, LUCILIA P. BELARDO, represented by her Nilda, Naida and Neolanda, all surnamed Naranja, herein
Attorney-in-Fact, REBECCA CORDERO, and THE LOCAL AUSTRIA-MARTINEZ,
petitioners. Lot No. 2 is covered by TCT No. T-18762 in the
REGISTER OF DEEDS, BACOLOD CITY, names of Roque, Gabino and the said children of Placido. TCT
CHICO-NAZARIO,
No. T-18762 remained even after Gabino died. The other
Respondents.
NACHURA, and Naranja, Raul Naranja, and Amelia Naranja-
petitioners Serafin
Rubinos are the children of Gabino.[3]
PERALTA, JJ.

The two lots were being leased by Esso Standard

Promulgated:
Eastern, Inc. for 30 years from 1962-1992. For his properties,
Roque was being paid P200.00 per month by the company.[4]

April 17, 2009

x------------------------------------------------------------------------------------x In 1976, Roque, who was single and had no children,

lived with his half sister, Lucilia P. Belardo (Belardo), in
Pontevedra, Negros Occidental. At that time, a catheter was
attached to Roques body to help him urinate. But the catheter
was subsequently removed when Roque was already able to
DECISION
urinate normally. Other than this and the influenza prior to his
death, Roque had been physically sound.[5]

NACHURA, J.:

Roque had no other source of income except for

the P200.00 monthly rental of his two properties. To show his
gratitude to Belardo, Roque sold Lot No. 4 and his one-third
share in Lot No. 2 to Belardo on August 21, 1981, through a
Deed of Sale of Real Property which was duly notarized by Atty.
Eugenio Sanicas. The Deed of Sale reads:

This petition seeks a review of the Court of Appeals

(CA) Decision[1] dated September 13, 2002 and I, ROQUE NARANJA, of legal
Resolution[2] dated September 24, 2003 which upheld the age, single, Filipino and a resident of
contract of sale executed by petitioners predecessor, Roque Bacolod City, do hereby declare that I am
Naranja, during his lifetime, over two real properties. the registered owner of Lot No. 4 of the
 Cadastral Survey of the City of Bacolod,
consisting of 136 square meters, more or
less, covered by Transfer Certificate of Title
No. T-18764 and a co-owner of Lot No. 2,
situated at the City of Bacolod, consisting of
151 square meters, more or less, covered
by Transfer Certificate of Title No. T-18762
and my share in the aforesaid Lot No. 2 is
one-third share.
That for and in consideration of
the sum of TEN THOUSAND PESOS
(P10,000.00), Philippine Currency, and other
valuable consideration, receipt of which in
full I hereby acknowledge to my entire
satisfaction, by these presents, I hereby
transfer and convey by way of absolute sale
the above-mentioned Lot No. 4 consisting of
136 square meters covered by Transfer
Certificate of Title No. T-18764 and my one-
third share in Lot No. 2, covered by Transfer
Certificate of Title No. T-18762, in favor of
my sister LUCILIA P. BELARDO, of legal
age, Filipino citizen, married to Alfonso D.
Belardo, and a resident of Pontevedra,
Negros Occidental, her heirs, successors
and assigns.
IN WITNESS WHEREOF, I have
hereunto set my hand this 21st day of
August, 1981 at Bacolod City, Philippines.
(SGD.)
ROQUE NARANJA[6]
Roques copies of TCT No. T-18764 and TCT No. T-
18762 were entrusted to Atty. Sanicas for registration of the
deed of sale and transfer of the titles to Belardo. But the deed of
sale could not be registered because Belardo did not have the
money to pay for the registration fees.[7]
Belardos only source of income was her store and
coffee shop. Sometimes, her children would give her money to
help with the household expenses, including the expenses
incurred for Roques support. At times, she would also borrow
money from Margarita Dema-ala, a neighbor.[8] When the
amount of her loan reached P15,000.00, Dema-ala required a
security. On November 19, 1983, Roque executed a deed of
sale in favor of Dema-ala, covering his two properties in
consideration of the P15,000.00 outstanding loan and an
additional P15,000.00, for a total of P30,000.00. Dema-ala
explained that she wanted Roque to execute the deed of sale
himself since the properties were still in his name. Belardo
merely acted as a witness. The titles to the properties were
given to Dema-ala for safekeeping.[9]
Three days later, or on December 2, 1983, Roque
died of influenza. The proceeds of the loan were used for his
treatment while the rest was spent for his burial.[10]
In 1985, Belardo fully paid the loan secured by the
second deed of sale. Dema-ala returned the certificates of title
to Belardo, who, in turn, gave them back to Atty. Sanicas.[11]
Unknown to Belardo, petitioners, the children of
Placido and Gabino Naranja, executed an Extrajudicial
Settlement Among Heirs[12] on October 11, 1985, adjudicating
among themselves Lot No. 4. On February 19, 1986, petitioner
Amelia Naranja-Rubinos, accompanied by Belardo, borrowed
the two TCTs, together with the lease agreement with Esso
Standard Eastern, Inc., from Atty. Sanicas on account of the
loan being proposed by Belardo to her. Thereafter, petitioners
had the Extrajudicial Settlement Among Heirs notarized on
February 25, 1986. With Roques copy of TCT No. T-18764 in
their possession, they succeeded in having it cancelled and a
new certificate of title, TCT No. T-140184, issued in their
names.[13]
 In 1987, Belardo decided to register the Deed of Sale
dated August 21, 1981. With no title in hand, she was compelled
to file a petition with the RTC to direct the Register of Deeds to
annotate the deed of sale even without a copy of the TCTs. In
an Order dated June 18, 1987, the RTC granted the petition. But
she only succeeded in registering the deed of sale in TCT No.
T-18762 because TCT No. T-18764 had already been
cancelled.[14]
On December 11, 1989, Atty. Sanicas prepared a
certificate of authorization, giving Belardos daughter, Jennelyn
P. Vargas, the authority to collect the payments from Esso
Standard Eastern, Inc.But it appeared from the companys
Advice of Fixed Payment that payment of the lease rental had
already been transferred from Belardo to Amelia Naranja-
Rubinos because of the Extrajudicial Settlement Among Heirs.
T-18764 consisting of 136 square meters, and one-third portion
of Lot No. 2 covered by TCT No. T-18762. The trial court held
that, being defective in form, the Deed of Sale did not vest title
in private respondent. Full and absolute ownership did not pass
to private respondent because she failed to register the Deed of
Sale. She was not a purchaser in good faith since she acted as
a witness to the second sale of the property knowing that she
had already purchased the property from Roque. Whatever
rights private respondent had over the properties could not be
superior to the rights of petitioners, who are now the registered
owners of the parcels of land. The RTC disposed, thus:
IN VIEW OF ALL THE
FOREGOING, judgment is hereby rendered:
1. Dismissing Civil Case No.
7144.

On June 23, 1992, Belardo,[15] through her daughter

and attorney-in-fact, Rebecca Cordero, instituted a suit for
reconveyance with damages. The complaint prayed that 2. Civil Case No. 7214.
judgment be rendered declaring Belardo as the sole legal owner
of Lot No. 4, declaring null and void the Extrajudicial Settlement
Among Heirs, and TCT No. T-140184, and ordering petitioners a) Declaring
to reconvey to her the subject property and to pay damages. the Deed of Sale dated August 21,
The case was docketed as Civil Case No. 7144. 1981, executed by Roque
Naranja, covering his one-third
(1/3) share of Lot 2 of the
consolidation-subdivision plan
Subsequently, petitioners also filed a case against (LRC) Pcs-886, being a portion of
respondent for annulment of sale and quieting of title with the consolidation of Lots 240-A,
damages, praying, among others, that judgment be rendered 240-B, 240-C and 240-D,
nullifying the Deed of Sale, and ordering the Register of Deeds described on plan, Psd-33443
of Bacolod City to cancel the annotation of the Deed of Sale on (LRC) GLRO Cad. Rec. No. 55 in
favor of Lucilia Belardo, and
TCT No. T-18762. This case was docketed as Civil Case No.
entered as Doc. No. 80, Page 17,
7214.
Book No. XXXVI, Series of 1981
of Notary Public Eugenio Sanicas
of Bacolod City, as null and void
On March 5, 1997, the RTC rendered a Decision in and of no force and effect;
the consolidated cases in favor of petitioners. The trial court
noted that the Deed of Sale was defective in form since it did not
contain a technical description of the subject properties but b) Ordering
merely indicated that they were Lot No. 4, covered by TCT No. the Register of Deeds of Bacolod
 City to cancel Entry No. 148123
annotate at the back of Transfer
Certificate of Title No. T-18762; 1. Civil Case No. 7214 is hereby
ordered DISMISSED for lack of cause of
action.

c) Ordering
Lucilia Belardo or her successors-
in-interest to pay plaintiffs the sum 2. In Civil Case No. 7144, the
of P20,000.00 as attorneys fees, extrajudicial settlement executed by the
the amount of P500.00 as heirs of Roque Naranja adjudicating among
appearance fees. themselves Lot No. 4 of the consolidation-
subdivision plan (LRC) Pcs 886 of the
Bacolod Cadastre is hereby declared null
and void for want of factual and legal basis.
Counterclaims in both The certificate of title issued to the heirs of
Civil Cases Nos. 7144 and 7214 Roque Naranja (Transfer Certificate of
are hereby DISMISSED. [T]i[t]le No. T-140184) as a consequence of
the void extra-judicial settlement is hereby
ordered cancelled and the previous title to
SO ORDERED.[16] Lot No. 4, Transfer Certificate of Title No. T-
18764, is hereby ordered reinstated. Lucilia
Belardo is hereby declared the sole and
legal owner of said Lot No. 4, and one-third
of Lot No. 2 of the same consolidation-
subdivision plan, Bacolod Cadastre, by
On September 13, 2002, the CA reversed the RTC virtue of the deed of sale thereof in her favor
Decision. The CA held that the unregisterability of a deed of sale dated August 21, 1981.
will not undermine its validity and efficacy in transferring
ownership of the properties to private respondent. The CA noted
that the records were devoid of any proof evidencing the alleged
SO ORDERED.[17]
vitiation of Roques consent to the sale; hence, there is no
reason to invalidate the sale. Registration is only necessary to
bind third parties, which petitioners, being the heirs of Roque
Naranja, are not. The trial court erred in applying Article 1544 of
the Civil Code to the case at bar since petitioners are not
The CA denied petitioners motion for reconsideration
purchasers of the said properties. Hence, it is not significant that
on September 24, 2003.[18] Petitioners filed this petition for
private respondent failed to register the deed of sale before the
review, raising the following issues:
extrajudicial settlement among the heirs. The dispositive portion
of the CA Decision reads:

1. WHETHER OR NOT THE HONORABLE

RESPONDENT COURT OF
WHEREFORE, the decision dated APPEALS IS CORRECT IN
March 5, 1997 in Civil Cases Nos. 7144 and IGNORING THE POINT RAISED
7214 is hereby REVERSED and SET BY [PETITIONERS] THAT THE
ASIDE. In lieu thereof, judgment is hereby DEED OF SALE WHICH DOES
rendered as follows: NOT COMPL[Y] WITH THE
 PROVISIONS OF ACT NO. 496 IS
[NOT] VALID.
2. WHETHER OR NOT THE ALLEGED
DEED OF SALE [OF REAL
PROPERTIES] IS VALID
CONSIDERING THAT THE
CONSENT OF THE LATE
ROQUE NARANJA HAD BEEN
VITIATED; x x x THERE [IS] NO
CONCLUSIVE SHOWING THAT
THERE WAS CONSIDERATION
AND THERE [ARE] SERIOUS
IRREGULARITIES IN THE
NOTARIZATION OF THE SAID
DOCUMENTS.[19]
In her Comment, private respondent questioned the
Verification and Certification of Non-Forum Shopping attached
to the Petition for Review, which was signed by a certain
Ernesto Villadelgado without a special power of attorney. In their
reply, petitioners remedied the defect by attaching a Special
Power of Attorney signed by them.
Pursuant to its policy to encourage full adjudication of
the merits of an appeal, the Court had previously excused the
late submission of a special power of attorney to sign a
certification against forum-shopping.[20] But even if we excuse
this defect, the petition nonetheless fails on the merits.
The Court does not agree with petitioners contention
that a deed of sale must contain a technical description of the
subject property in order to be valid. Petitioners anchor their
theory on Section 127 of Act No. 496,[21] which provides a
sample form of a deed of sale that includes, in particular, a
technical description of the subject property.
To be valid, a contract of sale need not contain a
technical description of the subject property. Contracts of sale of
real property have no prescribed form for their validity; they
follow the general rule on contracts that they may be entered
into in whatever form, provided all the essential requisites for
their validity are present.[22] The requisites 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.
The failure of the parties to specify with absolute
clarity the object of a contract by including its technical
description is of no moment. What is important is that there is, in
fact, an object that is determinate or at least determinable, as
subject of the contract of sale. The form of a deed of sale
provided in Section 127 of Act No. 496 is only a suggested form.
It is not a mandatory form that must be strictly followed by the
parties to a contract.
In the instant case, the deed of sale clearly identifies the subject
properties by indicating their respective lot numbers, lot areas,
and the certificate of title covering them. Resort can always be
made to the technical description as stated in the certificates of
title covering the two properties.
On the alleged nullity of the deed of sale, we hold that
petitioners failed to submit sufficient proof to show that Roque
executed the deed of sale under the undue influence of Belardo
or that the deed of sale was simulated or without consideration.
A notarized document carries the evidentiary weight
conferred upon it with respect to its due execution, and
documents acknowledged before a notary public have in their
favor the presumption of regularity. It must be sustained in full
force and effect so long as he who impugns it does not present
strong, complete, and conclusive proof of its falsity or nullity on
account of some flaws or defects provided by law.[23]
 Petitioners allege that Belardo unduly influenced second deed of sale because the title to the properties were still
Roque, who was already physically weak and senile at that time, in his name.
into executing the deed of sale. Belardo allegedly took
advantage of the fact that Roque was living in her house and
was dependent on her for support.
Finally, petitioners argue that the Deed of Sale was
not supported by a consideration since no receipt was shown,
and it is incredulous that Roque, who was already weak, would
There is undue influence when a person takes travel to BacolodCity just to be able to execute the Deed of
improper advantage of his power over the will of another, Sale.
depriving the latter of a reasonable freedom of choice.[24] One
who alleges any defect, or the lack of consent to a contract by
reason of fraud or undue influence, must establish by full, clear
The Deed of Sale which states receipt of which in full I
and convincing evidence, such specific acts that vitiated the
hereby acknowledge to my entire satisfaction is an
partys consent; otherwise, the latters presumed consent to the
acknowledgment receipt in itself. Moreover, the presumption
contract prevails.[25] For undue influence to be present, the
that a contract has sufficient consideration cannot be
influence exerted must have so overpowered or subjugated the
overthrown by a mere assertion that it has no consideration.[29]
mind of a contracting party as to destroy his free agency,
making him express the will of another rather than his own.[26]

Heirs are bound by contracts entered into by their

predecessors-in-interest.[30] As heirs of Roque, petitioners are
Petitioners adduced no proof that Roque had lost
bound by the contract of sale that Roque executed in favor of
control of his mental faculties at the time of the sale. Undue
Belardo. Having been sold already to Belardo, the two
influence is not to be inferred from age, sickness, or debility of
properties no longer formed part of Roques estate which
body, if sufficient intelligence remains.[27] The evidence
petitioners could have inherited. The deed of extrajudicial
presented pertained more to Roques physical condition rather
settlement that petitioners executed over Lot No. 4 is, therefore,
than his mental condition. On the contrary, Atty. Sanicas, the
void, since the property subject thereof did not become part of
notary public, attested that Roque was very healthy and
Roques estate.
mentally sound and sharp at the time of the execution of the
deed of sale. Atty. Sanicas said that Roque also told him that he
was a Law graduate.[28]
WHEREFORE, premises considered, the petition
is DENIED. The Court of Appeals Decision dated September 13,
2002 and Resolution dated September 24, 2003
Neither was the contract simulated. The late
are AFFIRMED.
registration of the Deed of Sale and Roques execution of the
second deed of sale in favor of Dema-ala did not mean that the
contract was simulated. We are convinced with the explanation
given by respondents witnesses that the deed of sale was not SO ORDERED.
immediately registered because Belardo did not have the money
to pay for the fees. This explanation is, in fact, plausible
considering that Belardo could barely support herself and her
brother, Roque. As for the second deed of sale, Dema-ala,
herself, attested before the trial court that she let Roque sign the
G.R. No. 78903 February 28, 1990
SPS. SEGUNDO DALION AND EPIFANIA SABESAJE-
DALION, petitioners,
vs.
THE HONORABLE COURT OF APPEALS AND RUPERTO
SABESAJE, JR., respondents.
Francisco A. Puray, Sr. for petitioners.
Gabriel N. Duazo for private respondent.
MEDIALDEA, J.:
This is a petition to annul and set aside the decision of the Court
of Appeals rendered on May 26, 1987, upholding the validity of
the sale of a parcel of land by petitioner Segundo Dalion
(hereafter, "Dalion") in favor of private respondent Ruperto
Sabesaje, Jr. (hereafter, "Sabesaje"), described thus:
A parcel of land located at Panyawan,
Sogod, Southern Leyte, declared in the
name of Segundo Dalion, under Tax
Declaration No. 11148, with an area of 8947
hectares, assessed at P 180.00, and
bounded on the North, by Sergio Destriza
and Titon Veloso, East, by Feliciano
Destriza, by Barbara Bonesa (sic); and
West, by Catalino Espina. (pp. 36-37, Rollo)
The decision affirms in toto the ruling of the trial court 1 issued
on January 17, 1984, the dispositive portion of which provides
as follows:
WHEREFORE, IN VIEW OF THE
FOREGOING, the Court hereby renders
judgment.
(a) Ordering the defendants to deliver to the
plaintiff the parcel of land subject of this
case, declared in the name of Segundo
Dalion previously under Tax Declaration No.
11148 and lately under Tax Declaration No.
2297 (1974) and to execute the
corresponding formal deed of conveyance in
a public document in favor of the plaintiff of
the said property subject of this case,
otherwise, should defendants for any reason
fail to do so, the deed shall be executed in
their behalf by the Provincial Sheriff or his
Deputy;
(b) Ordering the defendants to pay plaintiff
the amount of P2,000.00 as attorney's fees
and P 500.00 as litigation expenses, and to
pay the costs; and
(c) Dismissing the counter-claim. (p. 38,
Rollo)
The facts of the case are as follows:
On May 28, 1973, Sabesaje sued to recover ownership of a
parcel of land, based on a private document of absolute sale,
dated July 1, 1965 (Exhibit "A"), allegedly executed by Dalion,
who, however denied the fact of sale, contending that the
document sued upon is fictitious, his signature thereon, a
forgery, and that subject land is conjugal property, which he and
his wife acquired in 1960 from Saturnina Sabesaje as evidenced
by the "Escritura de Venta Absoluta" (Exhibit "B"). The spouses
denied claims of Sabesaje that after executing a deed of sale
over the parcel of land, they had pleaded with Sabesaje, their
relative, to be allowed to administer the land because Dalion did
not have any means of livelihood. They admitted, however,
administering since 1958, five (5) parcels of land in Sogod,
Southern Leyte, which belonged to Leonardo Sabesaje,
grandfather of Sabesaje, who died in 1956. They never received
their agreed 10% and 15% commission on the sales of copra
and abaca, respectively. Sabesaje's suit, they countered, was
intended merely to harass, preempt and forestall Dalion's threat
to sue for these unpaid commissions.
From the adverse decision of the trial court, Dalion appealed,
assigning errors some of which, however, were disregarded by
the appellate court, not having been raised in the court below.
While the Court of Appeals duly recognizes Our authority to
review matters even if not assigned as errors in the appeal, We
are not inclined to do so since a review of the case at bar
reveals that the lower court has judicially decided the case on its
merits.
As to the controversy regarding the identity of the land, We have
no reason to dispute the Court of Appeals' findings as follows:
To be sure, the parcel of land described in
Exhibit "A" is the same property deeded out
in Exhibit "B". The boundaries delineating it
from adjacent lots are identical. Both
documents detail out the following
boundaries, to wit:
On the North-property of Sergio Destriza
and Titon Veloso;
On the East-property of Feliciano Destriza;
 On the South-property of Barbara Boniza
and
On the West-Catalino Espina.
(pp. 41-42, Rollo)
The issues in this case may thus be limited to: a) the validity of
the contract of sale of a parcel of land and b) the necessity of a
public document for transfer of ownership thereto.
The appellate court upheld the validity of the sale on the basis of
Secs. 21 and 23 of Rule 132 of the Revised Rules of Court.
SEC. 21. Private writing, its execution and
authenticity, how proved.-Before any private
writing may be received in evidence, its due
execution and authenticity must be proved
either:
(a) By anyone who saw the writing
executed;
(b) By evidence of the genuineness of the
handwriting of the maker; or
(c) By a subscribing witness
xxx xxx xxx
SEC. 23. Handwriting, how proved. — The
handwriting of a person may be proved by
any witness who believes it to be the
handwriting of such person, and has seen
the person write, or has seen writing
purporting to be his upon which the witness
has acted or been charged, and has thus
acquired knowledge of the handwriting of
such person. Evidence respecting the
handwriting may also be given by a
comparison, made by the witness or the
court, with writings admitted or treated as
genuine by the party against whom the
evidence is offered, or proved to be genuine
to the satisfaction of the judge. (Rule 132,
Revised Rules of Court)
And on the basis of the findings of fact of the trial court as
follows:
Here, people who witnessed the execution
of subject deed positively testified on the
authenticity thereof. They categorically
stated that it had been executed and signed
by the signatories thereto. In fact, one of
such witnesses, Gerardo M. Ogsoc,
declared on the witness stand that he was
the one who prepared said deed of sale and
had copied parts thereof from the "Escritura
De Venta Absoluta" (Exhibit B) by which one
Saturnina Sabesaje sold the same parcel of
land to appellant Segundo Dalion. Ogsoc
copied the bounderies thereof and the name
of appellant Segundo Dalion's wife,
erroneously written as "Esmenia" in Exhibit
"A" and "Esmenia" in Exhibit "B". (p. 41,
Rollo)
xxx xxx xxx
Against defendant's mere denial that he
signed the document, the positive
testimonies of the instrumental Witnesses
Ogsoc and Espina, aside from the testimony
of the plaintiff, must prevail. Defendant has
affirmatively alleged forgery, but he never
presented any witness or evidence to prove
his claim of forgery. Each party must prove
his own affirmative allegations (Section 1,
Rule 131, Rules of Court). Furthermore, it is
presumed that a person is innocent of a
crime or wrong (Section 5 (a),Idem), and
defense should have come forward with
clear and convincing evidence to show that
plaintiff committed forgery or caused said
forgery to be committed, to overcome the
presumption of innocence. Mere denial of
having signed, does not suffice to show
forgery.
In addition, a comparison of the questioned
signatories or specimens (Exhs. A-2 and A-
3) with the admitted signatures or
specimens (Exhs. X and Y or 3-C)
convinces the court that Exhs. A-2 or Z and
A-3 were written by defendant Segundo
Dalion who admitted that Exhs. X and Y or
3-C are his signatures. The questioned
signatures and the specimens are very
similar to each other and appear to be
written by one person.
Further comparison of the questioned
signatures and the specimens with the
signatures Segundo D. Dalion appeared at
the back of the summons (p. 9, Record); on
the return card (p. 25, Ibid.); back of the
Court Orders dated December 17, 1973 and
 July 30, 1974 and for October 7, 1974 (p. 54
& p. 56, respectively, Ibid.), and on the open
court notice of April 13, 1983 (p. 235, Ibid.)
readily reveal that the questioned signatures
are the signatures of defendant Segundo
Dalion.
It may be noted that two signatures of
Segundo D. Dalion appear on the face of
the questioned document (Exh. A), one at
the right corner bottom of the document
(Exh. A-2) and the other at the left hand
margin thereof (Exh. A-3). The second
signature is already a surplusage. A forger
would not attempt to forge another
signature, an unnecessary one, for fear he
may commit a revealing error or an
erroneous stroke. (Decision, p. 10) (pp. 42-
43, Rollo)
We see no reason for deviating from the appellate court's ruling
(p. 44, Rollo) as we reiterate that
Appellate courts have consistently
subscribed to the principle that conclusions
and findings of fact by the trial courts are
entitled to great weight on appeal and
should not be disturbed unless for strong
and cogent reasons, since it is undeniable
that the trial court is in a more advantageous
position to examine real evidence, as well as
to observe the demeanor of the witnesses
while testifying in the case (Chase v.
Buencamino, Sr., G.R. No. L-20395, May
13, 1985, 136 SCRA 365; Pring v. Court of
Appeals, G.R. No. L-41605, August 19,
1985, 138 SCRA 185)
Assuming authenticity of his signature and the genuineness of
the document, Dalion nonetheless still impugns the validity of
the sale on the ground that the same is embodied in a private
document, and did not thus convey title or right to the lot in
question since "acts and contracts which have for their object
the creation, transmission, modification or extinction of real
rights over immovable property must appear in a public
instrument" (Art. 1358, par 1, NCC).
This argument is misplaced. The provision of Art. 1358 on the
necessity of a public document is only for convenience, not for
validity or enforceability. It is not a requirement for the validity of
a contract of sale of a parcel of land that this be embodied in a
public instrument.
A contract of sale is a consensual contract, which means that
the sale is perfected by mere consent. No particular form is
required for its validity. Upon perfection of the contract, the
parties may reciprocally demand performance (Art. 1475, NCC),
i.e., the vendee may compel transfer of ownership of the object
of the sale, and the vendor may require the vendee to pay the
thing sold (Art. 1458, NCC).
The trial court thus rightly and legally ordered Dalion to deliver
to Sabesaje the parcel of land and to execute corresponding
formal deed of conveyance in a public document. Under Art.
1498, NCC, when the sale is made through a public instrument,
the execution thereof is equivalent to the delivery of the thing.
Delivery may either be actual (real) or constructive. Thus
delivery of a parcel of land may be done by placing the vendee
in control and possession of the land (real) or by embodying the
sale in a public instrument (constructive).
As regards petitioners' contention that the proper action should
have been one for specific performance, We believe that the suit
for recovery of ownership is proper. As earlier stated, Art. 1475
of the Civil Code gives the parties to a perfected contract of sale
the right to reciprocally demand performance, and to observe a
particular form, if warranted, (Art. 1357). The trial court, aptly
observed that Sabesaje's complaint sufficiently alleged a cause
of action to compel Dalion to execute a formal deed of sale, and
the suit for recovery of ownership, which is premised on the
binding effect and validity inter partes of the contract of sale,
merely seeks consummation of said contract.
... . A sale of a real property may be in a
private instrument but that contract is valid
and binding between the parties upon its
perfection. And a party may compel the
other party to execute a public instrument
embodying their contract affecting real rights
once the contract appearing in a private
instrument hag been perfected (See Art.
1357).
... . (p. 12, Decision, p. 272, Records)
ACCORDINGLY, the petition is DENIED and the decision of the
Court of Appeals upholding the ruling of the trial court is hereby
AFFIRMED. No costs.
SO ORDERED.
 G.R. No. 105647.* July 31, 2001]
HEIRS OF ERNESTO BIONA, NAMELY: EDITHA B.
BLANCAFLOR, MARIANITA D. DE JESUS, VILMA
B. BLANCAFLOR, ELSIE B. RAMOS and PERLITA
B. CARMEN, petitioners, vs. THE COURT OF
APPEALS and LEOPOLDO HILAJOS, respondents.
DECISION
KAPUNAN, J.:
Before us is a petition for review on certiorari under Rule
45 of the Decision of the Court of Appeals dated March 31,
1992, reversing the decision of the Regional Trial Court,
11th Judicial region, Branch 26, Surallah, South Cotabato and
the Resolution dated May 26, 1992, denying the subsequent
motion for reconsideration.
Quoting from the decision of the Court of Appeals, the
antecedent facts are as follows:
On October 23, 1953, the late Ernesto Biona, married to
plaintiff-appellee Soledad Biona, was awarded Homestead
Patent No. V-840 over the property subject of this suit, a parcel
of agricultural land denominated as lot 177 of PLS-285-D,
located in Bo. 3, Banga, Cotabato, containing an area of ten
(10) hectares, forty-three (43) acres and sixty-eight (68)
centares, Original Certificate of Title No. (V-2323) P-3831 was
issued in his name by the Register of Deeds of Cotabato (Exh.
C). On June 3, 1954, Ernesto and Soledad Biona obtained a
loan from the then Rehabilitation Finance Corporation (now the
Development Bank of the Philippines) and put up as collateral
the subject property (Exh. 4).On June 12, 1956, Ernesto Biona
died (Exh. B) leaving as his heirs herein plaintiffs-appellees,
namely, his wife, Soledad Estrobillo Vda. De Biona, and five
daughters, Editha B. Blancaflor, Marianita B. de Jesus, Vilma B.
Blancaflor, Elsie B. Ramos and Perlita B. Carmen.
On March 1, 1960, plaintiff-appellee Soledad Biona obtained a
loan from defendant-appellant in the amount of P1,000 and as
security therefore, the subject property was mortgaged. It was
further agreed upon by the contracting parties that for a period
of two years until the debt is paid, defendant-appellant shall
occupy the land in dispute and enjoy the usufruct thereof.
The two-year period elapsed but Soledad Biona was not able to
pay her indebtedness. Defendant-appellant continued occupying
and cultivating the subject property without protest from
plaintiffs-appellees.
On July 3, 1962, defendant-appellant paid the sum of P1,400.00
to the Development Bank of the Philippines to cancel the
mortgage previously constituted by the Biona spouses on June
3, 1953 (Exhs. 4 and 6).
Thereafter, and for a period of not less than twenty-five years,
defendant-appellant continued his peaceful and public
occupation of the property, declaring it in his name for taxation
purposes (Exhs. 10 and 11), paying real estate property taxes
thereon (Exhs. 12, 13, 13-a to 13-e, F, G, H and I), and causing
the same to be tenanted (Exhs. 7, 8, 9).
On June 19, 1985, plaintiffs-appellees, filed a complaint for
recovery of ownership, possession, accounting and damages,
with a prayer for a writ of preliminary mandatory injunction and/
or restraining order against defendant-appellant alleging, among
others, that the latter had unlawfully been depriving them of the
use, possession and enjoyment of the subject property; that the
entire parcel of land, which was devoted and highly suited to
palay and corn, was yielding three harvests annually, with an
average of one hundred twenty (120) sacks of corn and eighty
cavans of rice per hectare; that plaintiffs-appellees were
deprived of its total produce amounting to
P150,000.00. Plaintiffs-appellees prayed for the award of moral
damages in the sum of P50,000.00, exemplary damages in the
amount of P20,000,00 and litigation expenses in the amount of
P2,000.00.
On September 19, 1986, defendant-appellant filed his answer
with counterclaim traversing the material allegations in the
complaint and alleging, by way of affirmative and special
defenses, that: on September 11, 1961, Soledad Biona, after
obtaining the loan of P1,000.00 from defendant-appellant,
approached and begged the latter to buy the whole of Lot No.
177 since it was then at the brink of foreclosure by the
Development Bank of the Philippines and she had no money to
redeem the same nor the resources to support herself and her
five small children; that defendant-appellant agreed to buy the
property for the amount of P4,300.00, which consideration was
to include the redemption price to be paid to the Development
Bank of the Philippines; that the purchase price paid by
defendant far exceeded the then current market value of the
property and defendant had to sell his own eight-hectare parcel
of land in Surallah to help Soledad Biona; that to evidence the
transaction, a deed of sale was handwritten by Soledad Biona
and signed by her and the defendant; that at the time of the
sale, half of the portion of the property was already submerged
in water and from the years 1969 to 1984, two and one-half
hectares thereof were eroded by the Allah River; that by virtue
of his continuous and peaceful occupation of the property from
the time of its sale and for more than twenty- five years
thereafter, defendant possesses a better right thereto subject
only to the rights of the tenants whom he had allowed to
cultivate the land under the Land Reform Program of the
government; that the complaint states no cause of action; that
plaintiffs alleged right, if any, is barred by the statutes of
fraud. As counterclaim, defendant-appellant prayed that
plaintiffs-appellees be ordered to execute a formal deed of sale
over the subject property and to pay him actual, moral and
exemplary damages as the trial court may deem proper. He
likewise prayed for the award of attorney's fees in the sum of
P10,000.00.
During the hearing of the case, plaintiffs-appellees presented in
evidence the testimonies of Editha Biona Blancaflor and Vilma
Biona Blancaflor, and documentary exhibits A to G and their
submarkings.
Defendant-appellant, for his part, presented the testimonies of
himself and Mamerto Famular, including documentary exhibits 1
to 13, F, G, H, I, and their submarkings.[1]
On January 31, 1990, the RTC rendered a decision with the
following dispositive portion:
I (SIC) VIEW OF THE FOREGOING, decision is hereby
rendered:
1. ordering the defendant to vacate possession of the lot in
question to the extent of six-tenths (6/10) of the total area
thereof and to deliver the same to the plaintiff Soledad Estrobillo
Biona upon the latter's payment of the sum of P1,000.00 TO
THE FORMER IN REDEMPTION OF ITS MORTGAGE
CONSTITUTED UNDER exh. "1" of defendant;
2. ordering the defendant to vacate the possession of the
remaining four-tenths (4/10) of the area of the lot in question,
representing the shares of the children of the late Ernesto Biona
and deliver the same to said plaintiffs; the defendant shall
render an accounting of the net produce of the area ordered
returned to the co-plaintiffs of Soledad Biona commencing from
the date of the filing of the complaint until possession thereto
has been delivered to said co-plaintiffs and to deliver or pay
25% of said net produce to said co-plaintiffs;
3. ordering the defendant to pay the costs of this suit.
The defendant's counter-claim are dismissed for lack of merit.
SO ORDERED.[2]
Dissatisfied, herein private respondent appealed to the
Court of Appeals which reversed the trial court's ruling. The
dispositive portion reads as follows:
WHEREFORE, premises considered, the judgment appealed
from is set aside and a new one entered dismissing the
complaint, and the plaintiffs-appellees are ordered to execute a
registrable deed of conveyance of the subject property in favor
of the defendant-appellant within ten (10) days from the finality
of this decision. With costs against plaintiffs-appellees.[3]
Hence, the instant petition where the following assignment
of errors were made:
I.- RESPONDENT COURT OF APPEALS ERRED
IN CONCLUDING THAT THE SIGNATURE
OF SOLEDAD ESTROBILLO IN THE
DEED OF SALE (EXHIBIT "2"), A
PRIVATE DOCUMENT, IS GENUINE.
II - RESPONDENT COURT OF APPEALS ERRED
IN HOLDING THAT THE DEED OF SALE
(EXHIBIT 2) IS VALID AND COULD
LEGALLY CONVEY TO PRIVATE
RESPONDENT OWNERSHIP AND TITLE
OVER THE SUBJECT PROPERTY.
III - RESPONDENT COURT OF APPEALS ERRED
IN HOLDING THAT HEREIN
PETITIONERS HAD LOST THEIR RIGHT
TO RECOVER THE SUBJECT
PROPERTY BY VIRTUE OF THE
EQUITABLE PRINCIPLE OF LACHES.
IV- RESPONDENT COURT OF APPEALS ERRED
IN NOT HOLDING THAT PRIVATE
RESPONDENT'S RIGHT OF ACTION
UNDER THE DEED OF SALE (EXHIBIT "2")
HAD PRESCRIBED.[4]
As correctly pointed out by the Court of Appeals, the
pivotal issue in the instant case is whether or not the deed of
sale is valid and if it effectively conveyed to the private
respondents the subject property.
In ruling in favor of the petitioners, the trial court refused to
give weight to the evidence of private respondent which
consisted of (1) the handwritten and unnotarized deed of sale
executed by Soledad Biona in favor of the private respondent;
and (2) the corresponding acknowledgment receipt of the
amount of P3,500.00 as partial payment for the land in
dispute. To the mind of the trial court, the signature of Soledad
Biona on the deed of sale was not genuine.There was no direct
evidence to prove that Soledad Biona herself signed the
document. Moreover, the deed of sale was not notarized and
therefore, did not convey any rights to the vendee. The trial
court also ruled that petitioners' rights over the land have not
allegedly prescribed.
On the other hand, the respondent Court of Appeals
accepted as genuine the deed of sale (Exh. 2) which "sets forth
in unmistakable terms that Soledad Biona agreed for the
consideration of P4,500.00, to transfer to defendant-appellant
Lot 177. The fact that payment was made is evidenced by the
acknowledgment receipt for P3,500.00 (Exh. 3) signed by
Soledad Biona, and private respondent previous delivery of
P1,000.00 to her pursuant to the Mutual Agreement (Exh. 1).
The contract of sale between the contracting parties was
consummated by the delivery of the subject land to private
respondent who since then had occupied and cultivated the
same continuously and peacefully until the institution of this
suit."[5]
Given the contrary findings of the trial court and the
respondent court, there is a need to re-examine the evidence
altogether. After a careful study, we are inclined to agree with
the findings and conclusions of the respondent court as they are
more in accord with the law and evidence on record.
As to the authenticity of the deed of sale, we subscribe to
the Court of Appeals' appreciation of evidence that private
respondent has substantially proven that Soledad Biona indeed
signed the deed of sale of the subject property in his favor. His
categorical statement in the trial court that he himself saw
Soledad Estrobillo affix her signature on the deed of sale lends
credence. This was corroborated by another witness, Mamerto
Famular. Although the petitioners consider such testimony as
self-serving and biased,[6] it can not, however, be denied that
private respondent has shown by competent proof that a
contract of sale where all the essential elements are present for
its validity was executed between the parties.[7] The burden is on
the petitioners to prove the contrary which they have dismally
failed to do. As aptly stated by the Court of Appeals:
Having established the due execution of the subject deed of
sale and the receipt evidencing payment of the consideration,
the burden now shifted to plaintiffs-appellees to prove by
contrary evidence that the property was not so transferred. They
were not able to do this since the very person who could deny
the due execution of the document, Soledad Biona, did not
testify. She similarly failed to take the witness stand in order to
deny her signatures on Exhs. 2 and 3. Admitting as true that she
was under medication in Manila while the hearing of the case
was underway, it was easy enough to get her deposition. Her
non-presentation gives rise to the presumption that if her
testimony was taken, the same would be adverse to the claim
by plaintiffs-appellees.
It must also be noted that under Sec. 22 Rule 132 of our
procedural law, evidence respecting handwriting may also be
given by a comparison, made by the witness or the court, with
writings admitted or treated as genuine by the party against
whom the evidence is offered. Our own close scrutiny of the
signature of Soledad Biona appearing on Exh. 1, the document
admitted by the contending parties, reveals that it is the same as
the signatures appearing on Exhs. 2 and 3, the documents in
dispute. Admittedly, as was pointed out by the trial court, the "S"
in Exhs. 2 and 3 were written in printed type while that in Exh. 1
is in handwriting type. But a careful look at the text of Exh. 2
would reveal that Soledad Biona alternately wrote the letter "S"
in longhand and printed form. Thus, the words "Sum" and
"Sept.," found in the penultimate and last paragraphs of the
document, respectively, were both written in longhand, while her
name appearing on first part of the document, as well as the
erased word "Sept." in the last paragraph thereof were written in
printed form. Moreover, all doubts about the genuineness of
Soledad Biona's signatures on Exhs. 2 and 3 are removed upon
their comparison to her signature appearing on the special
power of attorney (Exh. A) presented in evidence by plaintiffs-
appellees during trial. In said document, Soledad Biona signed
her name using the same fact that Soledad Estrobillo Biona
wrote her entire name on Exh. 2 while she merely affixed her
maiden name on the other two documents may have been due
to the lesser options left to her when the lawyers who drafted
the two documents (Exhs. 2 and 3) already had typewritten the
names "SOLEDAD ESTROBILLO" thereon whereas in Exh. 2, it
was Soledad Biona herself who printed and signed her own
name. Thus, in the special power of attorney (Exh. A), Soledad
Biona signed her name in the same manner it was typewritten
on the document.[8]
We agree with the private respondent that all the
requisites for a valid contract of sale are present in the instant
case. For a valuable consideration of P4,500.00, Soledad Biona
agreed to sell and actually conveyed the subject property to
private respondent. The fact that the deed of sale was not
notarized does not render the agreement null and void and
without any effect. The provision of Article 1358 of the Civil
Code[9] on the necessity of a public document is only for
convenience, and not for validity or enforceability.[10] The
observance of which is only necessary to insure its efficacy, so
that after the existence of said contract had been admitted, the
party bound may be compelled to execute the proper
document.[11] Undeniably, a contract has been entered into by
Soledad Biona and the private respondent. Regardless of its
form, it was valid, binding and enforceable between the
parties. We quote with favor the respondent court's ratiocination
on the matter:
xxx The trial court cannot dictate the manner in which the
parties may execute their agreement, unless the law otherwise
provides for a prescribed form, which is not so in this case. The
deed of sale so executed, although a private document, is
effective as between the parties themselves and also as the
third persons having no better title, and should be admitted in
evidence for the purpose of showing the rights and relations of
the contracting parties (Carbonell v. Court of Appeals, 69 SCRA
99; Elumbaring v. Elumbaring, 12 Phil. 384). Under Art. 1356 of
the Civil Code, contracts shall be obligatory in whatever form
they may have been entered into provided all the essential
requisites for their necessary elements for a valid contract of
sale were met when Soledad Biona agreed to sell and actually
conveyed Lot 177 to defendant-appellant who paid the amount
of P4,500.00 therefore. The deed of sale (Exh. 2) is not made
ineffective merely because it is not notarized or does not appear
in a public document. The contract is binding upon the
contracting parties, defendant-appellant and Soledad Biona,
including her successors-in-interest. Pursuant to Art. 1357,
plaintiffs-appellees may be compelled by defendant-appellant to
execute a public document to embody their valid and
enforceable contract and for the purpose of registering the
property in the latter's name (Clarin v. Rulona, 127 SCRA 512; making improvements thereof for 30 long years, only to spring
Heirs of Amparo v. Santos, 108 SCRA 43; Araneta v. from ambush and claim title when the possessor's efforts and
Montelibano, 14 Phil. 117).[12] the rise of land values offer an opportunity to make easy profit at
his expense.'
Finally, we find no merit in petitioners' contention that their
right over the land has not prescribed. The principle of laches Thus, notwithstanding the invalidity of the sale with respect to
was properly applied against petitioner. Laches has been the share of plaintiffs-appellees, the daughters of the late
defined as the failure or neglect, for an unreasonable and Ernesto Biona, they [allowed] the vendee, defendant-appellant
unexplained length of time, to do that which by exercising due herein, to enter, occupy and possess the property in the concept
diligence could or should have been done earlier, it is of an owner without demurrer and molestation for a long period
negligence or omission to assert a right within a reasonable of time, never claiming the land as their own until 1985 when the
time, warranting a presumption that the party entitled to assert it property has greatly appreciated in value. Vigilantibus non
has either abandoned it or declined to assert it.[13] In the instant dormientibus sequitas subvenit.[14]
case, the Court of Appeals point to the circumstances that
warrant the principle to come into play: WHEREFORE, the Petition is DENIED and the assailed
Decision of the Court of Appeals is AFFIRMED.
Laches had been defined to be such neglect or omission to
assert a right taken in conjunction with the lapse of time and SO ORDERED.
other circumstances causing prejudice to an adverse party, as
will bar him in equity (Heirs of Batiog Lacamen v. Heirs of
Laruan, 65 SCRA 605, 609-610). In the instant suit, Soledad
Biona, at the time of the execution of the deed of sale (Exh. 2)
on September 11, 1961, could only alienate that portion of Lot
177 belonging to her, which is seven-twelfths of the entire
property. She had no power or authority to dispose of the shares
of her co-owners, the five daughters of the deceased Ernesto
Biona, who were entitled to an indivisible five-twelfths portion of
the whole property. It is not disputed, however, that as early as
1960, when Soledad Biona borrowed money from defendant-
appellant (Exh. L), the latter entered, possessed and started
occupying the same in the concept of an owner. He caused its
cultivation through various tenants under Certificates of Land
Transfer (Exhs. 7-9), declared the property in his name,
religiously paid taxes thereon, reaped benefits therefrom, and
executed other acts of dominion without any protest or
interference from plaintiffs-appellees for more than twenty-five
years. Even when the five daughters of the deceased Ernesto
Biona were way past the age of majority, when they could have
already asserted their right to their share, no sale in defendant-
appellant's favor was ever brought or any other action was taken
by them to recover their share. Instead, they allowed defendant-
appellant to peacefully occupy the property without
protest. Although it is true that no title to registered land in
derogation of that of the registered owner shall be acquired by
prescription or adverse possession as the right to recover
possession of registered land is imprescriptible, jurisprudence
has laid down the rule that a person and his heirs may lose their
right to recover back the possession of such property and title
thereto by reason of laches. (Victoriano v. Court of Appeals, 194
SCRA 19; Lola v. CA, 145 SCRA 439, 449). Indeed, it has been
ruled in the case of Miguel v. Catalino, 26 SCRA 234, 239, that:

'Courts can not look with favor at parties who, by their silence,
delay and inaction, knowingly induce another to spend time,
effort and expense in cultivating the land, paying taxes and
G.R. No. 85240 July 12, 1991
HEIRS OF CECILIO (also known as BASILIO) CLAUDEL,
namely, MODESTA CLAUDEL, LORETA HERRERA, JOSE
CLAUDEL, BENJAMIN CLAUDEL, PACITA CLAUDEL,
CARMELITA CLAUDEL, MARIO CLAUDEL, ROBERTO
CLAUDEL, LEONARDO CLAUDEL, ARSENIA VILLALON,
PERPETUA CLAUDEL and FELISA CLAUDEL, petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF MACARIO,
ESPERIDIONA, RAYMUNDA and CELESTINA, all surnamed
CLAUDEL, respondents.
SARMIENTO, J.:
This petition for review on certiorari seeks the reversal of the
decision rendered by the Court of Appeals in CA-G.R. CV No.
044291 and the reinstatement of the decision of the then Court
of First Instance (CFI) of Rizal, Branch CXI, in Civil Case No. M-
5276-P, entitled. "Heirs of Macario Claudel, et al. v. Heirs of
Cecilio Claudel, et al.," which dismissed the complaint of the
private respondents against the petitioners for cancellation of
titles and reconveyance with damages.2
As early as December 28, 1922, Basilio also known as "Cecilio"
Claudel, acquired from the Bureau of Lands, Lot No. 1230 of the
Muntinlupa Estate Subdivision, located in the poblacion of
Muntinlupa, Rizal, with an area of 10,107 square meters; he
secured Transfer Certificate of Title (TCT) No. 7471 issued by
the Registry of Deeds for the Province of Rizal in 1923; he also
declared the lot in his name, the latest Tax Declaration being
No. 5795. He dutifully paid the real estate taxes thereon until his
death in 1937.3 Thereafter, his widow "Basilia" and later, her son
Jose, one of the herein petitioners, paid the taxes.
The same piece of land purchased by Cecilio would, however,
become the subject of protracted litigation thirty-nine years after
his death.
Two branches of Cecilio's family contested the ownership over
the land-on one hand the children of Cecilio, namely, Modesto,
Loreta, Jose, Benjamin, Pacita, Carmelita, Roberto, Mario,
Leonardo, Nenita, Arsenia Villalon, and Felisa Claudel, and their
children and descendants, now the herein petitioners
(hereinafter referred to as HEIRS OF CECILIO), and on the
other, the brother and sisters of Cecilio, namely, Macario,
Esperidiona, Raymunda, and Celestina and their children and
descendants, now the herein private respondents (hereinafter
referred to as SIBLINGS OF CECILIO). In 1972, the HEIRS OF
CECILIO partitioned this lot among themselves and obtained the
corresponding Transfer Certificates of Title on their shares, as
follows:
TCT No. 395391 1,997 sq. m. –– Jose Claudel
TCT No. 395392 1,997 sq. m. –– Modesta Claudel
and children
TCT No. 395393 1,997 sq. m. –– Armenia C. Villalon
TCT No. 395394 1,997 sq. m. –– Felisa Claudel4
Four years later, on December 7, 1976, private respondents
SIBLINGS OF CECILIO, filed Civil Case No. 5276-P as already
adverted to at the outset, with the then Court of First Instance of
Rizal, a "Complaint for Cancellation of Titles and Reconveyance
with Damages," alleging that 46 years earlier, or sometime in
1930, their parents had purchased from the late Cecilio Claudel
several portions of Lot No. 1230 for the sum of P30.00. They
admitted that the transaction was verbal. However, as proof of
the sale, the SIBLINGS OF CECILIO presented a subdivision
plan of the said land, dated March 25, 1930, indicating the
portions allegedly sold to the SIBLINGS OF CECILIO.
As already mentioned, the then Court of First Instance of Rizal,
Branch CXI, dismissed the complaint, disregarding the above
sole evidence (subdivision plan) presented by the SIBLINGS OF
CECILIO, thus:
Examining the pleadings as well as the evidence
presented in this case by the parties, the Court can
not but notice that the present complaint was filed in
the name of the Heirs of Macario, Espiridiona,
Raymunda and Celestina, all surnamed Claudel,
without naming the different heirs particularly involved,
and who wish to recover the lots from the defendants.
The Court tried to find this out from the evidence
presented by the plaintiffs but to no avail. On this point
alone, the Court would not be able to apportion the
property to the real party in interest if ever they are
entitled to it as the persons indicated therein is in
generic term (Section 2, Rule 3). The Court has
noticed also that with the exception of plaintiff
Lampitoc and (sic) the heirs of Raymunda Claudel are
no longer residing in the property as they have (sic)
left the same in 1967. But most important of all the
plaintiffs failed to present any document evidencing
the alleged sale of the property to their predecessors
in interest by the father of the defendants. Considering
that the subject matter of the supposed sale is a real
property the absence of any document evidencing the
sale would preclude the admission of oral testimony
(Statute of Frauds). Moreover, considering also that
the alleged sale took place in 1930, the action filed by
the plaintiffs herein for the recovery of the same more
than thirty years after the cause of action has accrued
has already prescribed.
 WHEREFORE, the Court renders judgment dismissing
the complaint, without pronouncement as to costs.
SO ORDERED.5
On appeal, the following errors6 were assigned by the
SIBLINGS OF CECILIO:
1. THE TRIAL COURT ERRED IN DISMISSING
PLAINTIFFS' COMPLAINT DESPITE CONCLUSIVE
EVIDENCE SHOWING THE PORTION SOLD TO
EACH OF PLAINTIFFS' PREDECESSORS.
2. THE TRIAL COURT ERRED IN HOLDING THAT
PLAINTIFFS FAILED TO PROVE ANY DOCUMENT
EVIDENCING THE ALLEGED SALE.
3. THE TRIAL COURT ERRED IN NOT GIVING
CREDIT TO THE PLAN, EXHIBIT A, SHOWING THE
PORTIONS SOLD TO EACH OF THE PLAINTIFFS'
PREDECESSORS-IN-INTEREST.
4. THE TRIAL COURT ERRED IN NOT DECLARING
PLAINTIFFS AS OWNERS OF THE PORTION
COVERED BY THE PLAN, EXHIBIT A.
5. THE TRIAL COURT ERRED IN NOT DECLARING
TRANSFER CERTIFICATES OF TITLE NOS. 395391,
395392, 395393 AND 395394 OF THE REGISTER
OF DEEDS OF RIZAL AS NULL AND VOID.
The Court of Appeals reversed the decision of the trial court on
the following grounds:
1. The failure to bring and prosecute the action in the name of
the real party in interest, namely the parties themselves, was not
a fatal omission since the court a quo could have adjudicated
the lots to the SIBLINGS OF CECILIO, the parents of the herein
respondents, leaving it to them to adjudicate the property among
themselves.
2. The fact of residence in the disputed properties by the herein
respondents had been made possible by the toleration of the
deceased Cecilio.
3. The Statute of Frauds applies only to executory contracts and
not to consummated sales as in the case at bar where oral
evidence may be admitted as cited in Iñigo v. Estate of
Magtoto7 and Diana, et al. v. Macalibo.8
In addition,
. . . Given the nature of their relationship with one
another it is not unusual that no document to evidence
the sale was executed, . . ., in their blind faith in
friends and relatives, in their lack of experience and
foresight, and in their ignorance, men, in spite of laws,
will make and continue to make verbal contracts. . . .9
4. The defense of prescription cannot be set up against the
herein petitioners despite the lapse of over forty years from the
time of the alleged sale in 1930 up to the filing of the "Complaint
for Cancellation of Titles and Reconveyance . . ." in 1976.
According to the Court of Appeals, the action was not for the
recovery of possession of real property but for the cancellation
of titles issued to the HEIRS OF CECILIO in 1973. Since the
SIBLINGS OF CECILIO commenced their complaint for
cancellation of titles and reconveyance with damages on
December 7, 1976, only four years after the HEIRS OF CECILIO
partitioned this lot among themselves and obtained the
corresponding Transfer Certificates of Titles, then there is no
prescription of action yet.
Thus the respondent court ordered the cancellation of the
Transfer Certificates of Title Nos. 395391, 395392, 395393, and
395394 of the Register of Deeds of Rizal issued in the names of
the HEIRS OF CECILIO and corollarily ordered the execution of
the following deeds of reconveyance:
To Celestina Claudel, Lot 1230-A with an area of 705
sq. m.
To Raymunda Claudel, Lot 1230-B with an area of
599 sq. m.
To Esperidiona Claudel, Lot 1230-C with an area of
597 sq. m.
To Macario Claudel, Lot 1230-D, with an area of 596
sq. m.10
The respondent court also enjoined that this disposition is
without prejudice to the private respondents, as heirs of their
deceased parents, the SIBLINGS OF CECILIO, partitioning
among themselves in accordance with law the respective
portions sold to and herein adjudicated to their parents.
The rest of the land, lots 1230-E and 1230-F, with an area of
598 and 6,927 square meters, respectively would go to Cecilio
or his heirs, the herein petitioners. Beyond these
apportionments, the HEIRS OF CECILIO would not receive
anything else.
The crux of the entire litigation is whether or not the Court of
Appeals committed a reversible error in disposing the question
of the true ownership of the lots.
And the real issues are:
1. Whether or not a contract of sale of land may be
proven orally:
2. Whether or not the prescriptive period for filing an
action for cancellation of titles and reconveyance with
damages (the action filed by the SIBLINGS OF
CECILIO) should be counted from the alleged sale
upon which they claim their ownership (1930) or from
the date of the issuance of the titles sought to be
cancelled in favor of the HEIRS OF CECILIO (1976).
The rule of thumb is that a sale of land, once consummated, is
valid regardless of the form it may have been entered into.11 For
nowhere does law or jurisprudence prescribe that the contract of
sale be put in writing before such contract can validly cede or
transmit rights over a certain real property between the parties
themselves.
However, in the event that a third party, as in this case, disputes
the ownership of the property, the person against whom that
claim is brought can not present any proof of such sale and
hence has no means to enforce the contract. Thus the Statute of
Frauds was precisely devised to protect the parties in a contract
of sale of real property so that no such contract is enforceable
unless certain requisites, for purposes of proof, are met.
The provisions of the Statute of Frauds pertinent to the present
controversy, state:
Art. 1403 (Civil Code). The following contracts are
unenforceable, unless they are ratified:
xxx xxx xxx
2) Those that do not comply with the Statute of Frauds
as set forth in this number. In the following cases, an
agreement hereafter made shall be unenforceable by
action unless the same, or some note or
memorandum thereof, be in writing, and subscribed by
the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received
without the writing, or a secondary evidence of its
contents:
xxx xxx xxx
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;
xxx xxx xxx
(Emphasis supplied.)
The purpose of the Statute of Frauds is to prevent fraud and
perjury in the enforcement of obligations depending for their
evidence upon the unassisted memory of witnesses by requiring
certain enumerated contracts and transactions to be evidenced
in Writing.12
The provisions of the Statute of Frauds originally appeared
under the old Rules of Evidence. However when the Civil Code
was re-written in 1949 (to take effect in 1950), the provisions of
the Statute of Frauds were taken out of the Rules of Evidence in
order to be included under the title on Unenforceable Contracts
in the Civil Code. The transfer was not only a matter of style but
to show that the Statute of Frauds is also a substantive law.
Therefore, except under the conditions provided by the Statute
of Frauds, the existence of the contract of sale made by Cecilio
with his siblings13 can not be proved.
On the second issue, the belated claim of the SIBLINGS OF
CECILIO who filed a complaint in court only in 1976 to enforce a
light acquired allegedly as early as 1930, is difficult to
comprehend.
The Civil Code states:
Art. 1145. The following actions must be commenced
within six years:
(1) Upon an oral contract . . . (Emphasis supplied).
If the parties SIBLINGS OF CECILIO had allegedly derived their
right of action from the oral purchase made by their parents in
1930, then the action filed in 1976 would have clearly
prescribed. More than six years had lapsed.
We do not agree with the parties SIBLINGS OF CECILIO when
they reason that an implied trust in favor of the SIBLINGS OF
CECILIO was established in 1972, when the HEIRS OF
CECILIO executed a contract of partition over the said
properties.
But as we had pointed out, the law recognizes the superiority of
the torrens title.
Above all, the torrens title in the possession of the HEIRS OF
CECILIO carries more weight as proof of ownership than the
survey or subdivision plan of a parcel of land in the name of
SIBLINGS OF CECILIO.
The Court has invariably upheld the indefeasibility of the torrens
title. No possession by any person of any portion of the land
could defeat the title of the registered owners thereof.14
A torrens title, once registered, cannot be defeated, even
by adverse, open and notorious possession. A registered
title under the torrens system cannot be defeated by
prescription.1âwphi1 The title, once registered, is notice to
the world. All persons must take notice. No one can plead
ignorance of the registration.15
xxx xxx xxx
Furthermore, a private individual may not bring an action
for reversion or any action which would have the effect of
cancelling a free patent and the corresponding certificate
of title issued on the basis thereof, with the result that the
land covered thereby will again form part of the public
domain, as only the Solicitor General or the officer acting
in his stead may do so.16
It is true that in some instances, the Court did away with the
irrevocability of the torrens title, but the circumstances in the
case at bar varied significantly from these cases.
In Bornales v. IAC, 17 the defense of indefeasibility of a
certificate of title was disregarded when the transferee who took
it had notice of the flaws in the transferor's title. No right passed
to a transferee from a vendor who did not have any in the first
place. The transferees bought the land registered under the
torrens system from vendors who procured title thereto by
means of fraud. With this knowledge, they can not invoke the
indefeasibility of a certificate of title against the private
respondent to the extent of her interest. This is because the
torrens system of land registration, though indefeasible, should
not be used as a means to perpetrate fraud against the rightful
owner of real property.
Mere registration of the sale is not good enough, good faith
must concur with registration. Otherwise registration becomes
an exercise in futility.18
In Amerol v. Bagumbaran,19 we reversed the decision of the trial
court. In this case, the title was wrongfully registered in another
person's name. An implied trust was therefore created. This
trustee was compelled by law to reconvey property fraudulently
acquired notwithstanding the irrevocability of the torrens title.20
In the present case, however, the facts belie the claim of
ownership.
For several years, when the SIBLINGS OF CECILIO, namely,
Macario, Esperidiona Raymunda, and Celestina were living on
the contested premises, they regularly paid a sum of money,
designated as "taxes" at first, to the widow of Cecilio, and later,
to his heirs.21 Why their payments were never directly made to
the Municipal Government of Muntinlupa when they were
intended as payments for "taxes" is difficult to square with their
claim of ownership. We are rather inclined to consider this fact
as an admission of non-ownership. And when we consider also
that the petitioners HEIRS OF CECILIO had individually paid to
the municipal treasury the taxes corresponding to the particular
portions they were occupying,22 we can readily see the
superiority of the petitioners' position.
Renato Solema and Decimina Calvez, two of the respondents
who derive their right from the SIBLINGS OF CLAUDEL, bought
a portion of the lot from Felisa Claudel, one of the HEIRS OF
CLAUDEL.23 The Calvezes should not be paying for a lot that
they already owned and if they did not acknowledge Felisa as its
owner.
In addition, before any of the SIBLINGS OF CECILIO could stay
on any of the portions of the property, they had to ask first the
permission of Jose Claudel again, one of the HEIRS OF
CECILIO.24 In fact the only reason why any of the heirs of
SIBLINGS OF CECILIO could stay on the lot was because they
were allowed to do so by the HEIRS OF CECILIO.25
In view of the foregoing, we find that the appellate court
committed a reversible error in denigrating the transfer
certificates of title of the petitioners to the survey or subdivision
plan proffered by the private respondents. The Court generally
recognizes the profundity of conclusions and findings of facts
reached by the trial court and hence sustains them on appeal
except for strong and cogent reasons inasmuch as the trial court
is in a better position to examine real evidence and observe the
demeanor of witnesses in a case.
No clear specific contrary evidence was cited by the respondent
appellate court to justify the reversal of the lower court's
findings. Thus, in this case, between the factual findings of the
trial court and the appellate court, those of the trial court must
prevail over that of the latter.26
WHEREFORE, the petition is GRANTED We REVERSE and
SET ASIDE the decision rendered in CA-G.R. CV No. 04429,
and we hereby REINSTATE the decision of the then Court of
First Instance of Rizal (Branch 28, Pasay City) in Civil Case No.
M-5276-P which ruled for the dismissal of the Complaint for
Cancellation of Titles and Reconveyance with Damages filed by
the Heirs of Macario, Esperidiona Raymunda, and Celestina, all
surnamed CLAUDEL. Costs against the private respondents.
SO ORDERED.
 [G.R. No. 144225. June 17, 2003]
SPOUSES GODOFREDO ALFREDO and CARMEN LIMON
ALFREDO, SPOUSES ARNULFO SAVELLANO and
EDITHA B. SAVELLANO, DANTON D.
MATAWARAN, SPOUSES DELFIN F. ESPIRITU, JR.
and ESTELA S. ESPIRITU and ELIZABETH
TUAZON, petitioners, vs. SPOUSES ARMANDO
BORRAS and ADELIA LOBATON
BORRAS, respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for review assailing the
Decision[1] of the Court of Appeals dated 26 November 1999
affirming the decision[2] of the Regional Trial Court of Bataan,
Branch 4, in Civil Case No. DH-256-94.Petitioners also question
the Resolution of the Court of Appeals dated 26 July 2000
denying petitioners motion for reconsideration.
The Antecedent Facts
A parcel of land measuring 81,524 square meters (Subject
Land) in Barrio Culis, Mabiga, Hermosa, Bataan is the subject of
controversy in this case. The registered owners of the Subject
Land were petitioner spouses, Godofredo Alfredo (Godofredo)
and Carmen Limon Alfredo (Carmen). The Subject Land is
covered by Original Certificate of Title No. 284 (OCT No. 284)
issued to Godofredo and Carmen under Homestead Patent No.
V-69196.
On 7 March 1994, the private respondents, spouses
Armando Borras (Armando) and Adelia Lobaton Borras (Adelia),
filed a complaint for specific performance against Godofredo
and Carmen before the Regional Trial Court of Bataan, Branch
4. The case was docketed as Civil Case No. DH-256-94.
Armando and Adelia alleged in their complaint that
Godofredo and Carmen mortgaged the Subject Land
for P7,000.00 with the Development Bank of the Philippines
(DBP). To pay the debt, Carmen and Godofredo sold the
Subject Land to Armando and Adelia for P15,000.00, the buyers
to pay the DBP loan and its accumulated interest, and the
balance to be paid in cash to the sellers.
Armando and Adelia gave Godofredo and Carmen the
money to pay the loan to DBP which signed the release of
mortgage and returned the owners duplicate copy of OCT No.
284 to Godofredo and Carmen.Armando and Adelia
subsequently paid the balance of the purchase price of the
Subject Land for which Carmen issued a receipt dated 11 March
1970. Godofredo and Carmen then delivered to Adelia the
owners duplicate copy of OCT No. 284, with the document of
cancellation of mortgage, official receipts of realty tax payments,
and tax declaration in the name of Godofredo. Godofredo and
Carmen introduced Armando and Adelia, as the new owners of
the Subject Land, to the Natanawans, the old tenants of the
Subject Land. Armando and Adelia then took possession of the
Subject Land.
In January 1994, Armando and Adelia learned that hired
persons had entered the Subject Land and were cutting trees
under instructions of allegedly new owners of the Subject
Land. Subsequently, Armando and Adelia discovered that
Godofredo and Carmen had re-sold portions of the Subject Land
to several persons.
On 8 February 1994, Armando and Adelia filed an adverse
claim with the Register of Deeds of Bataan. Armando and Adelia
discovered that Godofredo and Carmen had secured an owners
duplicate copy of OCT No. 284 after filing a petition in court for
the issuance of a new copy. Godofredo and Carmen claimed in
their petition that they lost their owners duplicate copy. Armando
and Adelia wrote Godofredo and Carmen complaining about
their acts, but the latter did not reply. Thus, Armando and Adelia
filed a complaint for specific performance.
On 28 March 1994, Armando and Adelia amended their
complaint to include the following persons as additional
defendants: the spouses Arnulfo Savellano and Editha B.
Savellano, Danton D. Matawaran, the spouses Delfin F. Espiritu,
Jr. and Estela S. Espiritu, and Elizabeth Tuazon (Subsequent
Buyers). The Subsequent Buyers, who are also petitioners in
this case, purchased from Godofredo and Carmen the
subdivided portions of the Subject Land. The Register of Deeds
of Bataan issued to the Subsequent Buyers transfer certificates
of title to the lots they purchased.
In their answer, Godofredo and Carmen and the
Subsequent Buyers (collectively petitioners) argued that the
action is unenforceable under the Statute of Frauds. Petitioners
pointed out that there is no written instrument evidencing the
alleged contract of sale over the Subject Land in favor of
Armando and Adelia. Petitioners objected to whatever parole
evidence Armando and Adelia introduced or offered on the
alleged sale unless the same was in writing and subscribed by
Godofredo. Petitioners asserted that the Subsequent Buyers
were buyers in good faith and for value. As counterclaim,
petitioners sought payment of attorneys fees and incidental
expenses.
Trial then followed. Armando and Adelia presented the
following witnesses: Adelia, Jesus Lobaton, Roberto Lopez,
Apolinario Natanawan, Rolando Natanawan, Tomas
Natanawan, and Mildred Lobaton.Petitioners presented two
witnesses, Godofredo and Constancia Calonso.
On 7 June 1996, the trial court rendered its decision in
favor of Armando and Adelia. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiffs, the spouses Adelia Lobaton
Borras and Armando F. Borras, and against the defendant-
spouses Godofredo Alfredo and Carmen Limon Alfredo,
spouses Arnulfo Sabellano and Editha B. Sabellano, spouses
Delfin F. Espiritu, Jr. and Estela S. Espiritu, Danton D.
Matawaran and Elizabeth Tuazon, as follows:
1. Declaring the Deeds of Absolute Sale of the
disputed parcel of land (covered
by OCT No. 284) executed by the
spouses Godofredo Alfredo and
Camen Limon Alfredo in favor of
spouses Arnulfo Sabellano and
Editha B. Sabellano, spouses
Delfin F. Espiritu, Danton D.
Matawaran and Elizabeth Tuazon,
as null and void;
2. Declaring the Transfer Certificates of Title
Nos. T-163266 and T-163267 in
the names of spouses Arnulfo
Sabellano and Editha B.
Sabellano; Transfer Certificates of
Title Nos. T-163268 and 163272 in
the names of spouses Delfin F.
Espiritu, Jr. and Estela S. Espiritu;
Transfer Certificates of Title Nos.
T-163269 and T-163271 in the
name of Danton D. Matawaran;
and Transfer Certificate of Title
No. T-163270 in the name of
Elizabeth Tuazon, as null and void
and that the Register of Deeds of
Bataan is hereby ordered to
cancel said titles;
3. Ordering the defendant-spouses Godofredo
Alfredo and Carmen Limon Alfredo
to execute and deliver a good and
valid Deed of Absolute Sale of the
disputed parcel of land (covered
by OCT No. 284) in favor of the
spouses Adelia Lobaton Borras
and Armando F. Borras within a
period of ten (10) days from the
finality of this decision;
4. Ordering defendant-spouses Godofredo
Alfredo and Carmen Limon Alfredo
to surrender their owners duplicate
copy of OCT No. 284 issued to
them by virtue of the Order dated
May 20, 1992 of the Regional Trial
Court of Bataan, Dinalupihan
Branch, to the Registry of Deeds
of Bataan within ten (10) days
from the finality of this decision,
who, in turn, is directed to cancel
the same as there exists in the
possession of herein plaintiffs of
the owners duplicate copy of said
OCT No. 284 and, to restore
and/or reinstate OCT No. 284 of
the Register of Deeds of Bataan to
its full force and effect;
5. Ordering the defendant-spouses Godofredo
Alfredo and Carmen Limon Alfredo
to restitute and/or return the
amount of the respective purchase
prices and/or consideration of sale
of the disputed parcels of land
they sold to their co-defendants
within ten (10) days from the
finality of this decision with legal
interest thereon from date of the
sale;
6. Ordering the defendants, jointly and
severally, to pay plaintiff-spouses
the sum of P20,000.00 as and for
attorneys fees and litigation
expenses; and
7. Ordering defendants to pay the costs of
suit.
Defendants counterclaims are hereby dismissed for lack of
merit.
SO ORDERED.[3]
Petitioners appealed to the Court of Appeals.
On 26 November 1999, the Court of Appeals issued its
Decision affirming the decision of the trial court, thus:
WHEREFORE, premises considered, the appealed decision in
Civil Case No. DH-256-94 is hereby AFFIRMED in its
entirety. Treble costs against the defendants-appellants.
SO ORDERED.[4]
 On 26 July 2000, the Court of Appeals denied petitioners
motion for reconsideration.
The Ruling of the Trial Court
The trial court ruled that there was a perfected contract of
sale between the spouses Godofredo and Carmen and the
spouses Armando and Adelia. The trial court found that all the
elements of a contract of sale were present in this case. The
object of the sale was specifically identified as the 81,524-
square meter lot in Barrio Culis, Mabigas, Hermosa, Bataan,
covered by OCT No. 284 issued by the Registry of Deeds of
Bataan. The purchase price was fixed at P15,000.00, with the
buyers assuming to pay the sellers P7,000.00 DBP mortgage
loan including its accumulated interest. The balance of the
purchase price was to be paid in cash to the sellers. The last
payment of P2,524.00 constituted the full settlement of the
purchase price and this was paid on 11 March 1970 as
evidenced by the receipt issued by Carmen.
The trial court found the following facts as proof of a
perfected contract of sale: (1) Godofredo and Carmen delivered
to Armando and Adelia the Subject Land; (2) Armando and
Adelia treated as their own tenants the tenants of Godofredo
and Carmen; (3) Godofredo and Carmen turned over to
Armando and Adelia documents such as the owners duplicate
copy of the title of the Subject Land, tax declaration, and the
receipts of realty tax payments in the name of Godofredo;
and (4) the DBP cancelled the mortgage on the Subject
Property upon payment of the loan of Godofredo and
Carmen. Moreover, the receipt of payment issued by Carmen
served as an acknowledgment, if not a ratification, of the verbal
sale between the sellers and the buyers. The trial court ruled
that the Statute of Frauds is not applicable because in this case
the sale was perfected.
The trial court concluded that the Subsequent Buyers
were not innocent purchasers. Not one of the Subsequent
Buyers testified in court on how they purchased their respective
lots. The Subsequent Buyers totally depended on the testimony
of Constancia Calonso (Calonso) to explain the subsequent
sale. Calonso, a broker, negotiated with Godofredo and Carmen
the sale of the Subject Land which Godofredo and Carmen
subdivided so they could sell anew portions to the Subsequent
Buyers.
Calonso admitted that the Subject Land was adjacent to
her own lot. The trial court pointed out that Calonso did not
inquire on the nature of the tenancy of the Natanawans and on
who owned the Subject Land. Instead, she bought out the
tenants for P150,000.00. The buy out was embodied in
a Kasunduan. Apolinario Natanawan (Apolinario) testified that
he and his wife accepted the money and signed
theKasunduan because Calonso and the Subsequent Buyers
threatened them with forcible ejectment. Calonso brought
Apolinario to the Agrarian Reform Office where he was asked to
produce the documents showing that Adelia is the owner of the
Subject Land. Since Apolinario could not produce the
documents, the agrarian officer told him that he would lose the
case. Thus, Apolinario was constrained to sign
the Kasunduan and accept the P150,000.00.
Another indication of Calonsos bad faith was her own
admission that she saw an adverse claim on the title of the
Subject Land when she registered the deeds of sale in the
names of the Subsequent Buyers. Calonso ignored the adverse
claim and proceeded with the registration of the deeds of sale.
The trial court awarded P20,000.00 as attorneys fees to
Armando and Adelia. In justifying the award of attorneys fees,
the trial court invoked Article 2208 (2) of the Civil Code which
allows a court to award attorneys fees, including litigation
expenses, when it is just and equitable to award the same. The
trial court ruled that Armando and Adelia are entitled to
attorneys fees since they were compelled to file this case due to
petitioners refusal to heed their just and valid demand.
The Ruling of the Court of Appeals
The Court of Appeals found the factual findings of the trial
court well supported by the evidence. Based on these findings,
the Court of Appeals also concluded that there was a perfected
contract of sale and the Subsequent Buyers were not innocent
purchasers.
The Court of Appeals ruled that the handwritten receipt
dated 11 March 1970 is sufficient proof that Godofredo and
Carmen sold the Subject Land to Armando and Adelia upon
payment of the balance of the purchase price. The Court of
Appeals found the recitals in the receipt as sufficient to serve as
the memorandum or note as a writing under the Statute of
Frauds.[5] The Court of Appeals then reiterated the ruling of the
trial court that the Statute of Frauds does not apply in this case.
The Court of Appeals gave credence to the testimony of a
witness of Armando and Adelia, Mildred Lobaton, who explained
why the title to the Subject Land was not in the name of
Armando and Adelia.Lobaton testified that Godofredo was then
busy preparing to leave for Davao. Godofredo promised that he
would sign all the papers once they were ready. Since Armando
and Adelia were close to the family of Carmen, they trusted
Godofredo and Carmen to honor their commitment. Armando
and Adelia had no reason to believe that their contract of sale
was not perfected or validly executed considering that they had
received the duplicate copy of OCT No. 284 and other relevant
documents. Moreover, they had taken physical possession of
the Subject Land.
The Court of Appeals held that the contract of sale is not
void even if only Carmen signed the receipt dated 11 March
1970. Citing Felipe v. Heirs of Maximo Aldon,[6] the appellate
court ruled that a contract of sale made by the wife without the
husbands consent is not void but merely voidable. The Court of
Appeals further declared that the sale in this case binds the
conjugal partnership even if only the wife signed the receipt
because the proceeds of the sale were used for the benefit of
the conjugal partnership. The appellate court based this
conclusion on Article 161[7] of the Civil Code.
The Subsequent Buyers of the Subject Land cannot claim
that they are buyers in good faith because they had constructive
notice of the adverse claim of Armando and Adelia. Calonso,
who brokered the subsequent sale, testified that when she
registered the subsequent deeds of sale, the adverse claim of
Armando and Adelia was already annotated on the title of the
Subject Land. The Court of Appeals believed that the act of
Calonso and the Subsequent Buyers in forcibly ejecting the
Natanawans from the Subject Land buttresses the conclusion
that the second sale was tainted with bad faith from the very
beginning.
Finally, the Court of Appeals noted that the issue of
prescription was not raised in the Answer. Nonetheless, the
appellate court explained that since this action is actually based
on fraud, the prescriptive period is four years, with the period
starting to run only from the date of the discovery of the
fraud. Armando and Adelia discovered the fraudulent sale of the
Subject Land only in January 1994. Armando and Adelia lost no
time in writing a letter to Godofredo and Carmen on 2 February
1994 and filed this case on 7 March 1994. Plainly, Armando and
Adelia did not sleep on their rights or lose their rights by
prescription.
The Court of Appeals sustained the award of attorneys
fees and imposed treble costs on petitioners.
The Issues
Petitioners raise the following issues:
I
Whether the alleged sale of the Subject Land in
favor of Armando and Adelia is valid and
enforceable, where (1) it was orally entered into and
not in writing; (2) Carmen did not obtain the consent
and authority of her husband, Godofredo, who was
the sole owner of the Subject Land in whose name
the title thereto (OCT No. 284) was issued; and (3) it
was entered into during the 25-year prohibitive period
for alienating the Subject Land without the approval
of the Secretary of Agriculture and Natural
Resources.
II
Whether the action to enforce the alleged oral
contract of sale brought after 24 years from its
alleged perfection had been barred by prescription
and by laches.
III
Whether the deeds of absolute sale and the transfer
certificates of title over the portions of the Subject
Land issued to the Subsequent Buyers, innocent
purchasers in good faith and for value whose
individual titles to their respective lots are absolute
and indefeasible, are valid.
IV
Whether petitioners are liable to pay Armando and
Adelia P20,0000.00 as attorneys fees and litigation
expenses and the treble costs, where the claim of
Armando and Adelia is clearly unfounded and
baseless.
V
Whether petitioners are entitled to the counterclaim
for attorneys fees and litigation expenses, where they
have sustained such expenses by reason of
institution of a clearly malicious and unfounded
action by Armando and Adelia.[8]
The Courts Ruling
The petition is without merit.
In a petition for review on certiorari under Rule 45, this
Court reviews only errors of law and not errors of facts.[9] The
factual findings of the appellate court are generally binding on
this Court.[10] This applies with greater force when both the trial
court and the Court of Appeals are in complete agreement on
their factual findings.[11] In this case, there is no reason to
deviate from the findings of the lower courts. The facts relied
upon by the trial and appellate courts are borne out by the
record. We agree with the conclusions drawn by the lower
courts from these facts.
Validity and Enforceability of the Sale
The contract of sale between the spouses Godofredo and
Carmen and the spouses Armando and Adelia was a perfected
contract. A contract is perfected once there is consent of the
contracting parties on the object certain and on the cause of the
obligation.[12] In the instant case, the object of the sale is the
Subject Land, and the price certain is P15,000.00. The trial and
appellate courts found that there was a meeting of the minds on
the sale of the Subject Land and on the purchase price
of P15,000.00. This is a finding of fact that is binding on this
Court. We find no reason to disturb this finding since it is
supported by substantial evidence.
The contract of sale of the Subject Land has also been
consummated because the sellers and buyers have performed
their respective obligations under the contract. In a contract of
sale, the seller obligates himself to transfer the ownership of the
determinate thing sold, and to deliver the same, to the buyer
who obligates himself to pay a price certain to the seller. [13] In
the instant case, Godofredo and Carmen delivered the Subject
Land to Armando and Adelia, placing the latter in actual physical
possession of the Subject Land. This physical delivery of the
Subject Land also constituted a transfer of ownership of the
Subject Land to Armando and Adelia.[14] Ownership of the thing
sold is transferred to the vendee upon its actual or constructive
delivery.[15] Godofredo and Carmen also turned over to Armando
and Adelia the documents of ownership to the Subject Land,
namely the owners duplicate copy of OCT No. 284, the tax
declaration and the receipts of realty tax payments.
On the other hand, Armando and Adelia paid the full
purchase price as evidenced by the receipt dated 11 March
1970 issued by Carmen. Armando and Adelia fulfilled their
obligation to provide the P7,000.00 to pay the DBP loan of
Godofredo and Carmen, and to pay the latter the balance
of P8,000.00 in cash. The P2,524.00 paid under the receipt
dated 11 March 1970 was the last installment to settle fully the
purchase price. Indeed, upon payment to DBP of the P7,000.00
and the accumulated interests, the DBP cancelled the mortgage
on the Subject Land and returned the owners duplicate copy of
OCT No. 284 to Godofredo and Carmen.
The trial and appellate courts correctly refused to apply
the Statute of Frauds to this case. The Statute of
Frauds[16] provides that a contract for the sale of real property
shall be unenforceable unless the contract or some note or
memorandum of the sale is in writing and subscribed by the
party charged or his agent. The existence of the receipt dated
11 March 1970, which is a memorandum of the sale, removes
the transaction from the provisions of the Statute of Frauds.
The Statute of Frauds applies only to executory contracts
and not to contracts either partially or totally performed.[17] Thus,
where one party has performed ones obligation, oral evidence
will be admitted to prove the agreement.[18] In the instant case,
the parties have consummated the sale of the Subject Land,
with both sellers and buyers performing their respective
obligations under the contract of sale. In addition, a contract that
violates the Statute of Frauds is ratified by the acceptance of
benefits under the contract.[19] Godofredo and Carmen benefited
from the contract because they paid their DBP loan and secured
the cancellation of their mortgage using the money given by
Armando and Adelia. Godofredo and Carmen also accepted
payment of the balance of the purchase price.
Godofredo and Carmen cannot invoke the Statute of
Frauds to deny the existence of the verbal contract of sale
because they have performed their obligations, and have
accepted benefits, under the verbal contract. [20] Armando and
Adelia have also performed their obligations under the verbal
contract. Clearly, both the sellers and the buyers have
consummated the verbal contract of sale of the Subject
Land. The Statute of Frauds was enacted to prevent
fraud.[21] This law cannot be used to advance the very evil the
law seeks to prevent.
Godofredo and Carmen also claim that the sale of the
Subject Land to Armando and Adelia is void on two
grounds. First, Carmen sold the Subject Land without the marital
consent of Godofredo. Second, the sale was made during the
25-year period that the law prohibits the alienation of land grants
without the approval of the Secretary of Agriculture and Natural
Resources.
These arguments are without basis.
The Family Code, which took effect on 3 August 1988,
provides that any alienation or encumbrance made by the
husband of the conjugal partnership property without the
consent of the wife is void. However, when the sale is made
before the effectivity of the Family Code, the applicable law is
the Civil Code.[22]
Article 173 of the Civil Code provides that the disposition
of conjugal property without the wifes consent is not void but
merely voidable. Article 173 reads:
The wife may, during the marriage, and within ten years from
the transaction questioned, ask the courts for the annulment of
any contract of the husband entered into without her consent,
when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the
conjugal partnership property. Should the wife fail to exercise
this right, she or her heirs, after the dissolution of the marriage,
may demand the value of property fraudulently alienated by the
husband.
In Felipe v. Aldon,[23] we applied Article 173 in a case where
the wife sold some parcels of land belonging to the conjugal
partnership without the consent of the husband. We ruled that
the contract of sale was voidable subject to annulment by the
husband. Following petitioners argument that Carmen sold the
land to Armando and Adelia without the consent of Carmens
husband, the sale would only be voidable and not void.
However, Godofredo can no longer question the sale.
Voidable contracts are susceptible of ratification.[24] Godofredo
ratified the sale when he introduced Armando and Adelia to his
tenants as the new owners of the Subject Land. The trial court
noted that Godofredo failed to deny categorically on the witness
stand the claim of the complainants witnesses that Godofredo
introduced Armando and Adelia as the new landlords of the
tenants.[25] That Godofredo and Carmen allowed Armando and
Adelia to enjoy possession of the Subject Land for 24 years is
formidable proof of Godofredos acquiescence to the sale. If the
sale was truly unauthorized, then Godofredo should have filed
an action to annul the sale. He did not. The prescriptive period
to annul the sale has long lapsed. Godofredos conduct belies
his claim that his wife sold the Subject Land without his consent.
Moreover, Godofredo and Carmen used most of the
proceeds of the sale to pay their debt with the DBP. We agree
with the Court of Appeals that the sale redounded to the benefit
of the conjugal partnership.Article 161 of the Civil Code provides
that the conjugal partnership shall be liable for debts and
obligations contracted by the wife for the benefit of the conjugal
partnership. Hence, even if Carmen sold the land without the
consent of her husband, the sale still binds the conjugal
partnership.
Petitioners contend that Godofredo and Carmen did not
deliver the title of the Subject Land to Armando and Adelia as
shown by this portion of Adelias testimony on cross-
examination:
Q -- No title was delivered to you by Godofredo
Alfredo?
A -- I got the title from Julie Limon because my sister
told me.[26]
Petitioners raise this factual issue for the first time. The
Court of Appeals could have passed upon this issue had
petitioners raised this earlier. At any rate, the cited testimony of
Adelia does not convincingly prove that Godofredo and Carmen
did not deliver the Subject Land to Armando and Adelia. Adelias
cited testimony must be examined in context not only with her
entire testimony but also with the other circumstances.
Adelia stated during cross-examination that she obtained
the title of the Subject Land from Julie Limon (Julie), her
classmate in college and the sister of Carmen. Earlier, Adelias
own sister had secured the title from the father of
Carmen. However, Adelias sister, who was about to leave for
the United States, gave the title to Julie because of the absence
of the other documents. Adelias sister told Adelia to secure the
title from Julie, and this was how Adelia obtained the title from
Julie.
It is not necessary that the seller himself deliver the title of
the property to the buyer because the thing sold is understood
as delivered when it is placed in the control and possession of
the vendee.[27] To repeat, Godofredo and Carmen themselves
introduced the Natanawans, their tenants, to Armando and
Adelia as the new owners of the Subject Land. From then on,
Armando and Adelia acted as the landlords of the
Natanawans. Obviously, Godofredo and Carmen themselves
placed control and possession of the Subject Land in the hands
of Armando and Adelia.
Petitioners invoke the absence of approval of the sale by
the Secretary of Agriculture and Natural Resources to nullify the
sale. Petitioners never raised this issue before the trial court or
the Court of Appeals.Litigants cannot raise an issue for the first
time on appeal, as this would contravene the basic rules of fair
play, justice and due process.[28] However, we will address this
new issue to finally put an end to this case.
The sale of the Subject Land cannot be annulled on the
ground that the Secretary did not approve the sale, which was
made within 25 years from the issuance of the homestead
title. Section 118 of the Public Land Act (Commonwealth Act No.
141) reads as follows:
SEC. 118. Except in favor of the Government or any of its
branches, units, or institutions or legally constituted banking
corporation, lands acquired under free patent or homestead
provisions shall not be subject to encumbrance or alienation
from the date of the approval of the application and for a term of
five years from and after the date of the issuance of the patent
or grant.
xxx
No alienation, transfer, or conveyance of any homestead after 5
years and before twenty-five years after the issuance of title
shall be valid without the approval of the Secretary of Agriculture
and Commerce, which approval shall not be denied except on
constitutional and legal grounds.
A grantee or homesteader is prohibited from alienating to
a private individual a land grant within five years from the time
that the patent or grant is issued.[29] A violation of this prohibition
renders a sale void.[30]This prohibition, however, expires on the
fifth year. From then on until the next 20 years[31] the land grant
may be alienated provided the Secretary of Agriculture and
Natural Resources approves the alienation. The Secretary is
required to approve the alienation unless there are constitutional
and legal grounds to deny the approval. In this case, there are
no apparent constitutional or legal grounds for the Secretary to
disapprove the sale of the Subject Land.
The failure to secure the approval of the Secretary does
not ipso facto make a sale void.[32] The absence of approval by
the Secretary does not nullify a sale made after the expiration of
the 5-year period, for in such event the requirement of Section
118 of the Public Land Act becomes merely directory[33] or a
formality.[34] The approval may be secured later, producing the
effect of ratifying and adopting the transaction as if the sale had
been previously authorized.[35] As held in Evangelista v.
Montano:[36]
Section 118 of Commonwealth Act No. 141, as amended,
specifically enjoins that the approval by the Department
Secretary "shall not be denied except on constitutional and legal
grounds." There being no allegation that there were
constitutional or legal impediments to the sales, and no pretense
that if the sales had been submitted to the Secretary concerned
they would have been disapproved, approval was a ministerial
duty, to be had as a matter of course and demandable if
refused. For this reason, and if necessary, approval may now be
applied for and its effect will be to ratify and adopt the
transactions as if they had been previously
authorized. (Emphasis supplied)
Action Not Barred by Prescription and Laches
Petitioners insist that prescription and laches have set
in. We disagree.
The Amended Complaint filed by Armando and Adelia with
the trial court is captioned as one for Specific Performance. In
reality, the ultimate relief sought by Armando and Adelia is the
reconveyance to them of the Subject Land. An action for
reconveyance is one that seeks to transfer property, wrongfully
registered by another, to its rightful and legal owner. [37] The body
of the pleading or complaint determines the nature of an action,
not its title or heading.[38] Thus, the present action should be
treated as one for reconveyance.[39]
Article 1456 of the Civil Code provides that a person
acquiring property through fraud becomes by operation of law a
trustee of an implied trust for the benefit of the real owner of the
property. The presence of fraud in this case created an implied
trust in favor of Armando and Adelia. This gives Armando and
Adelia the right to seek reconveyance of the property from the
Subsequent Buyers.[40]
To determine when the prescriptive period commenced in
an action for reconveyance, plaintiffs possession of the disputed
property is material. An action for reconveyance based on an
implied trust prescribes in ten years.[41] The ten-year prescriptive
period applies only if there is an actual need to reconvey the
property as when the plaintiff is not in possession of the
property.[42] However, if the plaintiff, as the real owner of the
property also remains in possession of the property, the
prescriptive period to recover title and possession of the
property does not run against him.[43] In such a case, an action
for reconveyance, if nonetheless filed, would be in the nature of
a suit for quieting of title, an action that is imprescriptible.[44]
In this case, the appellate court resolved the issue of
prescription by ruling that the action should prescribe four years
from discovery of the fraud. We must correct this erroneous
application of the four-year prescriptive period. In Caro v. Court
of Appeals,[45] we explained why an action for reconveyance
based on an implied trust should prescribe in ten years. In that
case, the appellate court also erroneously applied the four-year
prescriptive period. We declared in Caro:
We disagree. The case of Liwalug Amerol, et al. v. Molok
Bagumbaran, G.R. No. L-33261, September 30, 1987,154
SCRA 396 illuminated what used to be a gray area on the
prescriptive period for an action to reconvey the title to real
property and, corollarily, its point of reference:
xxx It must be remembered that before August 30, 1950, the
date of the effectivity of the new Civil Code, the old Code of Civil
Procedure (Act No. 190) governed prescription. It provided:
SEC. 43. Other civil actions; how limited.- Civil actions other
than for the recovery of real property can only be brought within
the following periods after the right of action accrues:
xxx xxx xxx
3. Within four years: xxx An action for relief on the ground of
fraud, but the right of action in such case shall not be deemed to
have accrued until the discovery of the fraud;
xxx xxx xxx
In contrast, under the present Civil Code, we find that just as an
implied or constructive trust is an offspring of the law (Art. 1456,
Civil Code), so is the corresponding obligation to reconvey the
property and the title thereto in favor of the true owner. In this
context, and vis-a-vis prescription, Article 1144 of the Civil Code
is applicable.
Article 1144. The following actions must be brought within ten
years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxxxxxxxx
(Emphasis supplied).
An action for reconveyance based on an implied or
constructive trust must perforce prescribe in ten years and
not otherwise. A long line of decisions of this Court, and of very
recent vintage at that, illustrates this rule. Undoubtedly, it is
now well-settled that an action for reconveyance based on
an implied or constructive trust prescribes in ten years
from the issuance of the Torrens title over the property. The
only discordant note, it seems, is Balbin vs. Medalla which
states that the prescriptive period for a reconveyance action is
four years. However, this variance can be explained by the
erroneous reliance on Gerona vs. de Guzman. But in Gerona,
the fraud was discovered on June 25,1948, hence Section 43(3)
of Act No. 190, was applied, the new Civil Code not coming into
effect until August 30, 1950 as mentioned earlier. It must be
stressed, at this juncture, that article 1144 and article 1456, are
new provisions. They have no counterparts in the old Civil Code
or in the old Code of Civil Procedure, the latter being then
resorted to as legal basis of the four-year prescriptive period for
an action for reconveyance of title of real property acquired
under false pretenses.
An action for reconveyance has its basis in Section 53,
paragraph 3 of Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner may
pursue all his legal and equitable remedies against the parties to
such fraud without prejudice, however, to the rights of any
innocent holder of the decree of registration on the original
petition or application, xxx
This provision should be read in conjunction with Article 1456 of
the Civil Code, which provides:
Article 1456. If property is acquired through mistake or fraud,
the person obtaining it is, by force of law, considered a trustee
of an implied trust for the benefit of the person from whom the
property comes.
The law thereby creates the obligation of the trustee to
reconvey the property and the title thereto in favor of the true
owner. Correlating Section 53, paragraph 3 of Presidential
Decree No. 1529 and Article 1456 of the Civil Code with Article
1144(2) of the Civil Code, supra, the prescriptive period for the
reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of
title xxx (Emphasis supplied)[46]
Following Caro, we have consistently held that an action
for reconveyance based on an implied trust prescribes in ten
years.[47] We went further by specifying the reference point of
the ten-year prescriptive period as the date of the registration of
the deed or the issuance of the title.[48]
Had Armando and Adelia remained in possession of the
Subject Land, their action for reconveyance, in effect an action
to quiet title to property, would not be subject to prescription.
Prescription does not run against the plaintiff in actual
possession of the disputed land because such plaintiff has a
right to wait until his possession is disturbed or his title is
questioned before initiating an action to vindicate his right.[49] His
undisturbed possession gives him the continuing right to seek
the aid of a court of equity to determine the nature of the
adverse claim of a third party and its effect on his title.[50]
Armando and Adelia lost possession of the Subject Land
when the Subsequent Buyers forcibly drove away from the
Subject Land the Natanawans, the tenants of Armando and
Adelia.[51] This created an actual need for Armando and Adelia
to seek reconveyance of the Subject Land. The statute of
limitation becomes relevant in this case. The ten-year
prescriptive period started to run from the date the Subsequent
Buyers registered their deeds of sale with the Register of
Deeds.
The Subsequent Buyers bought the subdivided portions of
the Subject Land on 22 February 1994, the date of execution of
their deeds of sale. The Register of Deeds issued the transfer
certificates of title to the Subsequent Buyers on 24 February
1994. Armando and Adelia filed the Complaint on 7 March
1994. Clearly, prescription could not have set in since the case
was filed at the early stage of the ten-year prescriptive period.
Neither is the action barred by laches. We have defined
laches as the failure or neglect, for an unreasonable time, to do
that which, by the exercise of due diligence, could or should
have been done earlier.[52] It is negligence or omission to assert
a right within a reasonable time, warranting a presumption that
the party entitled to assert it either has abandoned it or declined
to assert it.[53] Armando and Adelia discovered in January 1994
the subsequent sale of the Subject Land and they filed this case
on 7 March 1994. Plainly, Armando and Adelia did not sleep on
their rights.
Validity of Subsequent Sale of Portions of the Subject Land
Petitioners maintain that the subsequent sale must be
upheld because the Subsequent Buyers, the co-petitioners of
Godofredo and Carmen, purchased and registered the Subject
Land in good faith.Petitioners argue that the testimony of
Calonso, the person who brokered the second sale, should not
prejudice the Subsequent Buyers. There is no evidence that
Calonso was the agent of the Subsequent Buyers and that she
communicated to them what she knew about the adverse claim
and the prior sale. Petitioners assert that the adverse claim
registered by Armando and Adelia has no legal basis to render
defective the transfer of title to the Subsequent Buyers.
We are not persuaded. Godofredo and Carmen had
already sold the Subject Land to Armando and Adelia. The
settled rule is when ownership or title passes to the buyer, the
seller ceases to have any title to transfer to any third
person.[54] If the seller sells the same land to another, the
second buyer who has actual or constructive knowledge of the
prior sale cannot be a registrant in good faith. [55] Such second
buyer cannot defeat the first buyers title.[56] In case a title is
issued to the second buyer, the first buyer may seek
reconveyance of the property subject of the sale.[57]
 Thus, to merit protection under the second paragraph of
Article 1544[58] of the Civil Code, the second buyer must act in
good faith in registering the deed.[59] In this case, the
Subsequent Buyers good faith hinges on whether they had
knowledge of the previous sale. Petitioners do not dispute that
Armando and Adelia registered their adverse claim with the
Registry of Deeds of Bataan on 8 February 1994. The
Subsequent Buyers purchased their respective lots only on 22
February 1994 as shown by the date of their deeds of
sale. Consequently, the adverse claim registered prior to the
second sale charged the Subsequent Buyers with constructive
notice of the defect in the title of the sellers,[60] Godofredo and
Carmen.
It is immaterial whether Calonso, the broker of the second
sale, communicated to the Subsequent Buyers the existence of
the adverse claim. The registration of the adverse claim on 8
February 1994 constituted, by operation of law, notice to the
whole world.[61] From that date onwards, the Subsequent Buyers
were deemed to have constructive notice of the adverse claim of
Armando and Adelia. When the Subsequent Buyers purchased
portions of the Subject Land on 22 February 1994, they already
had constructive notice of the adverse claim registered
earlier.[62] Thus, the Subsequent Buyers were not buyers in good
faith when they purchased their lots on 22 February 1994. They
were also not registrants in good faith when they registered their
deeds of sale with the Registry of Deeds on 24 February 1994.
The Subsequent Buyers individual titles to their respective
lots are not absolutely indefeasible. The defense of
indefeasibility of the Torrens Title does not extend to a
transferee who takes the certificate of title with notice of a flaw in
his title.[63] The principle of indefeasibility of title does not apply
where fraud attended the issuance of the titles as in this case.[64]
Attorneys Fees and Costs
We sustain the award of attorneys fees. The decision of
the court must state the grounds for the award of attorneys
fees. The trial court complied with this requirement.[65] We agree
with the trial court that if it were not for petitioners unjustified
refusal to heed the just and valid demands of Armando and
Adelia, the latter would not have been compelled to file this
action.
The Court of Appeals echoed the trial courts
condemnation of petitioners fraudulent maneuverings in
securing the second sale of the Subject Land to the Subsequent
Buyers. We will also not turn a blind eye on petitioners brazen
tactics. Thus, we uphold the treble costs imposed by the Court
of Appeals on petitioners.
WHEREFORE, the petition is DENIED and the appealed
decision is AFFIRMED. Treble costs against petitioners.
SO ORDERED.
G.R. No. 164482
LOURDES J. ESTRELLADO; THE HEIRS OF EUGENIO
ESTRELLADO, represented by LOURDES J. ESTRELLADO;
NARCISA T. ESTRELLADO; THE HEIRS OF NICOLAS
ESTRELLADO, represented by CLARITA E. MAINAR; PILAR
E. BARREDO-FUENTES; and THE HEIRS OF VIVINA
ESTRELLADO-BARREDO and ALIPIO BARREDO,
represented by PILAR E. BARREDO-FUENTES, Petitioners
vs.
THE PRESIDING JUDGE OF THE MUNICIPALTRIAL COURT
IN CITIES, llTH JUDICIAL REGION, BRANCH 3, DAVAO
CITY; J.S. FRANCISCO,AND SONS, INC., represented by its
PRESIDENT, JOSELITO C. FRANCISCO; and THE HEIRS OF
DR. JOVITO S. FRANCISCO, represented by JOSELITO C.
FRANCISCO, Respondents
x-----------------------x
G.R. No. 211320
LOURDES C.FRANCISCO-MADRAZO; ROMEO C.
FRANCISCO; CONCEPCION C. FRANCISCO; GATCHALIAN;
and RENE JOSE C. FRANCISCO, Petitioners,
vs.
PILAR BARREDO-FUENTES; JORGE BARREDO; OSCAR
BARREDO; RODOLFO BARREDO; ERNESTO BARREDO;
ARMANDO BARREDO; DANILO BARREDO; TERESITA
BARREDO-MCMAHON; LETICIA BARREDO-CUARIO; and
ESPERANZA BARREDO-TUL-ID, Respondents
DECISION
BERSAMIN, J.:
A petition for the annulment of a judgment is a remedy in equity
so exceptional in nature that it may be availed of only when
other remedies are wanting, and only if the judgment, final order
or final resolution sought to be annulled was rendered without
jurisdiction or through extrinsic fraud. The remedy is not
available as a recourse to obtain relief from a judgment that has
long attained finality after having been passed upon and
affirmed by the higher court on appeal taken in due course.
The Case
For consideration and resolution are the consolidated appeals
by petition for review on certiorari, namely:
(a) G.R. No. 164482, the petitioners, namely: Lourdes J.
Estrellado; the Heirs of Eugenio Estrellado, represented by
Lourdes J. Estrellado; Narcisa T. Estrellado; the Heirs of Nicolas
Estrellado, represented by Clarita E. Mainar; Pilar E. Barredo-
Fuentes; and the Heirs of Vivina Estrellado-Barredo; and Alipio
Barredo, represented by Pilar E. Barredo-Fuentes, assail the
adverse decision rendered by the Regional Trial Court (RTC),
Branch 13, in Davao City dismissing their petition for annulment
of judgment;1 and
(b) G.R. No. 211320, the petitioners, namely: Lourdes C.
Francisco-Madrazo, Romeo C. Francisco, Concepcion C.
Francisco-Gatchalian, and Rene Jose C. Francisco, challenge
the decision promulgated on March 14, 2013,2whereby the
Court of Appeals (CA), in CA-G.R. CV No. 01727- MIN,
reversed the decision of the Regional Trial Court (RTC), Branch
16, in Davao City rendered on October 20, 2008, and declared
respondents Heirs of the late Vivina Estrellado-Barredo and
Alipio Barredo (namely: Pilar Barredo-Fuentes, Jorge Barredo,
Oscar Barredo, Rodolfo Barredo, Ernesto Barredo, Armando
Barredo, Danilo Barredo, Teresita Barredo-Mcmahon, Leticia
Barredo-Cuario, and Esperanza Barredo-Tul-Id) the lawful
owners and possessors of the property covered by Transfer
Certificate of Title (TCT) No. T-19930 of the Registry of Deeds
of Davao City.
Antecedents
These consolidated appeals originated from special civil actions
for forcible entry involving three adjacent parcels of land.
The Spouses Eugenio and Lourdes Estrellado were the former
owners of the parcel of land with an area of 15,465 square
meters located in Barangay Matina-Aplaya, Davao City and
covered by TCT No. T-19351 of the Registry of Deeds of Davao
City. The Spouses and Nicolas and Narcisa Estrellado were .
the former owners of the parcel of land also located in Barangay
Matina-Aplaya, Davao City with an area of 15,466 square
meters and covered by TCT No. 19350 of the Registry of Deeds
of Davao City. The late Spouses Alipio and Vivina Barredo were
the former owners of the parcel of land containing an area of
15,465 square meters located in the same area and covered by
TCT No. 19348 of the Registry of Deeds of Davao City. The
landowners herein mentioned were related to one another either
by consanguinity or by affinity.3
The petitioners in G.R. No. 164482 are the successors-in-
interest and heirs of the above-named landowners. The
respondents in G.R. No. 211320 are the heirs of the late
Spouses Alipio and Vivina Barredo. For ease of reference, they
are collectively referred herein as the Estrellados unless
otherwise indicated.
Each of the three parcels of land herein mentioned was
subdivided into two portions - the smaller portion containing
5,000 square meters, and the bigger portion with an area of
about 10,465 square meters.
In September 1967, the Spouses Eugene and Lourdes
Estrellado sold their 5,000-square meter lot for ₱l0,000.00 to Dr.
Jovito S. Francisco, the owner of J.S. Francisco & Sons, Inc.
and the predecessor-in-interest of the respondents
in G.R. No. 164482 and petitioners in G.R. No. 211320. The
sale was evidenced by a deed of absolute sale dated
September 25, 1967.4
The Spouses Nicolas and Narcisa Estrellado also sold their
5,000- square meter property to Dr. Francisco for ₱l0,000.00
through the deed of absolute sale dated September 25, 1967.5
The late Spouses Alipio and Vivina Barredo likewise sold their
5,000- square meter lot to Dr. Francisco for ₱l0,000.00 under
the deed of absolute sale dated September 25, 1967.6
After selling the smaller lots to Dr. Francisco, the Estrellados
separately sold the bigger portions of their respective lots to the
latter on the following dates: the Spouses Eugene and Lourdes
Estrellado on August 2, 1969; the Spouses Nicolas and Narcisa
Estrellado on October 29, 1969; and the late Spouses Alipio and
Vivina Barredo on June 10, 1970. Dr. Francisco and his
successors-in-interest (collectively referred to as the Franciscos)
immediately started their uninterrupted possession of the entire
landholdings of the Estrellados in 1967. However, the
Franciscos could not produce the formal deeds of sale relevant
to the subsequent sales. They only had a book of accounts
evidencing their installments to the Estrellados.7
The three bigger lots covered by TCT No. 19932, TCT No.
19930, and TCT No. 19928 of the Register of Deeds of Davao
City became the subject of the three forcible entry cases
commenced in the Municipal Trial Court in Cities in Davao City
(MTCC) by J.S. Francisco & Sons, Inc. against the Estrellados
on October 21, 19988 (Civil Case No. 6,296-C-98, Civil Case
No. 6,297-C-98, and Civil Case No. 6,298-C-98). The
Estrellados, as the defendants in the three cases, denied selling
the bigger lots to Dr. Francisco.
On April 26, 1999, the MTCC rendered judgment in favor of the
Franciscos, and ordered the Estrellados, their successors-in-
interest and other persons acting on their behalf to vacate the
properties; to pay the Franciscos the fruits of the properties
appropriated by the Estrellados; and to further pay the rent for
the use of the properties, as well as attorney's fees, litigation
expenses, and the costs of suit.9
On appeal, the RTC, Branch 12, in Davao City affirmed the
MTCC's judgment on August 27, 1999.10
The Estrellados appealed to the CA.
By decision dated June 28, 2000,11 and another decision dated
January 24, 2003,12 the CA dismissed the appeals and affirmed
the decision of the RTC.13 Considering that the Estrellados did
not thereafter appeal, the decisions of the CA became final and
executory.14 On October 7, 2003, upon motion, the MTCC
issued the writ of execution to enforce the judgment.15
G.R. No. 164482
The petitioners were some of the defendants and successors-in-
interest in the already concluded forcible entry cases filed by
J.S. Francisco & Sons, Inc. On December 15, 2003, they filed a
petition for annulment of the judgments of the MTCC in the RTC
in Davao City (docketed as Civil Case No. 30,111-03), alleging
that they were victims of extrinsic fraud that had deprived them
of the opportunity to fully present their defense in the MTCC that
eventually cost them the case;16 that the MTCC had no
jurisdiction over the forcible entry cases filed against them;17and
that they had valid, clear and current possessory rights over the
disputed parcels of land.18
The respondents moved to dismiss the petition for annulment,
submitting that' the decisions of the MTCC were not the proper
subjects of the petition for annulment due to their having been
affirmed by the RTC and the CA; that the annulment of the
decisions would be tantamount to vesting in the R TC the power
to annul the decision of a co-equal branch, as well as the
decision of a superior court like the CA;19 that the petition for
annulment was barred by res judicata, litis pendentia and the
rules prohibiting forum-shopping; that the MTCC had jurisdiction
over the forcible entry cases because the issue involved prior de
facto possession; and that not all of the petitioners for
annulment had executed the certificate of non-forum shopping in
violation of the Rules of Court.20
On June 11, 2004, the RTC rendered judgment in Civil Case
No. 30, 111-03 dismissing the petition for annulment of
judgment. It held that it had no jurisdiction over the petition for
annulment inasmuch as the decision sought to be annulled had
been affirmed on appeal by the R TC and the CA; that the
petition for annulment was already barred by res judicata; and
that the petitioners were guilty of forum-shopping. It disposed:
WHEREFORE, in view of the foregoing, this case is hereby
DISMISSED.
The Motion of Private Respondents to cite counsels for
petitioners have (sic) direct contempt, however, is GRANTED.
Petitioners' counsel is summarily found GUILTY of Direct
Contempt and fined Five Hundred Pesos (₱500.00).
SO ORDERED.21
Hence, this appeal directly filed in this Court.
The main issue raised is whether an independent action for the
annulment of the judgment of the MTCC filed in the RTC should
be given due course. The ancillary issues are whether or not the
remedy of annulment of judgment is available; and whether or
not non-parties could file an action for the annulment of a final
and executory judgment.
The petitioners submit that the judgment rendered in the forcible
entry cases did not bind them because they had not been
impleaded as parties therein; and that for the same reason the
judgment could not be enforced against them without violating
their rights as co-owners of the properties subject thereof.
G.R. No. 211320
The respondents were the children of the late Spouses Alipio
and Vivina Barredo. They alleged their ownership of the parcel
of land covered by TCT No. 19930 that had been the subject of
one of the forcible entry cases decided against the Estrellados.
The respondents contended that the execution of the judgment
rendered in the forcible entry case would violate their rights as
the owners of the property; that they sought to recover all the
attributes of their ownership and to erase the cloud over their
title; and that, accordingly, they had brought the accion
reinvindicatoria and action for quieting of title in the RTC
(Branch 16) in Davao City (Civil Case No. 29,759-03).22
On October 20, 2008, the RTC (Branch 16), through Judge
Emmanuel Carpio, rendered its decision against the
respondents, viz.:
PREMISES CONSIDERED, judgment is hereby rendered:
1. Dismissing the complaints filed by plaintiff and plaintiffs-
intervenors;
2. Ordering the Register of Deeds to:
A. REINSTATE TCT No. T-19930; and
B. CANCEL all derivative titles of TCT No. T-19930; and
3. Ordering the plaintiff and plaintiffs-intervenors solidarily to pay
defendants, collectively:
A. Nominal damages in the amount of ₱50,000.00;
B. Exemplary damages in the amount of ₱50,000.00; and
C. ₱100,000.00 as attorney's fees and expenses of litigation.
SO ORDERED.23
The respondents appealed to the CA (C.A.-G.R. CV No. 01727-
MIN), which, on March 14, 2013, reversed and set aside the
decision of the RTC, and declared the respondents as the
rightful owners and possessors of the property,24 decreeing:
WHEREFORE, the appeal is hereby GRANTED and the
Decision dated October 20, 2008 of the RTC, 11th Judicial
Region, Branch 16, Davao City is REVERSED AND SET
ASIDE. A new judgment is hereby entered DECLARING
plaintiff-appellant and plaintiffs-intervenors, as the heirs of
Vivina Estrellado and Alipio Barredo, to be the lawful and rightful
owners and possessors of the property covered by TCT No. T-
19930. The issuance of the new transfer certificate of titles to
plaintiff-appellant and plaintiffs-intervenors derived from TCT
No. T- 19930 is therefore respected.
SO ORDERED.25
The CA opined that the adjudication of the issue of ownership in
ejectment cases was merely provisional and did not bar an
action between the same parties involving title to the same
property; that the RTC had only referred to the decision of the
CA in CA-G.R. SP No. 55727 regarding the forcible entry case
as well as the petitions to cancel the adverse claims of Dr.
Francisco annotated on the TCTs of the disputed properties;
and that the R TC did not thereby determine who among the
parties owned the parcels of land, and relied primordially on the
principle of conclusiveness of judgment.
The petitioners assert that the CA erred in holding that the RTC
did not make its own determination on who owned the property;
that the CA did not consider that the case for the cancellation of
adverse claim was conclusive between the parties; and that the
complaint for quieting of title was already barred by
prescription.26
Ruling of the Court
We deny the petition for review on certiorari in G.R. No. 164482
but grant the petition for review on certiorari in G.R. No. 211320.
G.R. No. 164482
I.
At the heart of the arguments of the Estrellados was the
ownership of the bigger parcels of land and their contention that
the final and executory decisions promulgated in CA-G.R. SP
No. 55727, CA-G.R. SP No. 55732 and CA-G.R. SP No. 55734
did not bind them because they had not been impleaded as
parties therein. Accordingly, they have adamantly opposed the
execution of the judgment against them, and have sued to
recover the parcels of land.
There ought to be no dispute that once the judgment of the
MTCC in the forcible entry cases attained finality, the
Estrellados as well as their heirs and successors-in-interest
became bound thereby. The judgment of the MTCC, even if it
was in personam, could be enforced against the petitioners in
G.R. No. 164482 notwithstanding that they had not been
expressly impleaded in the complaint. Their being bound by the
judgment was by virtue of their privity with their predecessors-in-
interest. They were not strangers as to such judgment. The
enforceability of the judgment against them was explained
thuswise:
A judgment directing a party to deliver possession of a property
to another is in personam. x x x Any judgment therein is binding
only upon the parties properly impleaded and duly heard or
given an opportunity to be heard. However, this rule admits of
the exception, such that even a non-party may be bound by the
judgment in an ejectment suit where he is any of the following:
(a) trespasser, squatter; or agent of the defendant fraudulently
occupying the property to frustrate the judgment; (b) guest or
occupant of the premises with the permission of the defendant;
(c) transferee pendente lite; (d) sublessee; (e) co-lessee; or (f)
member of the family, relative or privy of the defendant.27 (Bold
underscoring supplied for emphasis)
II.
The RTC correctly dismissed the petition for annulment of the
judgment of the MTCC considering that the RTC and the CA
had already affirmed the judgment in due course.
The grounds for the remedy annulment of judgment under Rule
47 of the Rules of Court were limited to extrinsic fraud and lack
of jurisdiction. The limitation was stringent; otherwise, there
would be interminable litigations because the objective of the
proceedings for annulment was to return the petitioners to a
situation as if the judgment had not been rendered.
The Court has expounded on the nature and scope of the
remedy annulment of judgment in Dare Adventure Farm
Corporation v. Court of Appeals,28 to wit:
A petition for annulment of judgment is a remedy in equity so
exceptional in nature that it may be availed of only when other
remedies are wanting, and only if the judgment, final order or
final resolution sought to be annulled was rendered by a court
lacking jurisdiction or through extrinsic fraud. Yet, the remedy,
being exceptional in character, is not allowed to be so easily and
readily abused by parties aggrieved by the final judgments,
orders or resolutions. The Court has thus instituted safeguards
by limiting the grounds for the annulment to lack of jurisdiction
and extrinsic fraud, and by prescribing in Section 1 of Rule 47 of
the Rules of Court that the petitioner should show that the
ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault of
the petitioner. A petition for annulment that ignores or disregards
any of the safeguards cannot prosper.29
It is worthy to emphasize that the petition for annulment of
judgment is available only when the ordinary remedies of new
trial, appeal, petition for relief or other appropriate remedies are
no longer available through no fault of the petitioner. Given that
the petitioners herein (or their predecessors-in-interest) had
earlier availed themselves of the remedy of appeal, they could
no longer resort to the remedy of annulment of judgment.
Moreover, the petitioners alleged extrinsic fraud, claiming that
their counsel had failed to submit important documents to
support their defense. However, the allegation could not justify
the relief of annulment being sought. For purposes of Rule 47 of
the Rules of Court, only extrinsic fraud is recognized as a
ground. Fraud is extrinsic when it prevents a party from having a
trial or from presenting his entire case to the court, or where it
operates upon matters pertaining not to the judgment itself, but
to the manner in which the judgment is procured. The overriding
consideration is that the fraudulent scheme of the prevailing
litigant prevented the petitioner from having his day in court.30
In this case, however, the Franciscos as the prevailing parties
had no part in the commission of the fraud committed by the
petitioners' counsel.
The petitioners' contention that the MTCC had no jurisdiction
over the subject matter was similarly unwarranted.1âwphi1 It is
noteworthy that the averments of the Franciscos as plaintiffs in
the forcible entry cases were resolved by the MTCC, and such
resolution was affirmed on appeal by the RTC and later on by
the CA.
At any rate, the challenge mounted against the decision of the
RTC dismissing the petition for annulment of judgment
implicates the determination of questions of fact centering on
the issues and the conduct of the trial. If there is the need for re-
evaluation of the averments in the forcible entry case, the Court
cannot involve itself in the determination because it is not a trier
of facts. In addition, the Court will not engage in another review
of the same facts that were already the subject of the common
findings among the MTCC, RTC and the CA.
G.R. No. 211320
The R TC and the CA differed on the outcome for the ace ion
reinvindicatoria initiated by the respondents. The CA concluded
that the RTC did not make any further examination and
determination of the ownership of the parcel of land in question;
and gave premium to the owner's duplicate copy of the TCT the
respondents had obtained in 1998 over the petitioners' evidence
showing the sale to Dr. Francisco, their father, by the late Vivina
Barredo, the predecessor in interest of the respondents, of the
parcel of land in question.
The CA's conclusion cannot be upheld.
The sole issue for resolution in ejectment cases relates to the
physical or material possession of the property involved,
independent of any claim of ownership by any of the parties.
Where the issue of ownership is raised by any of the parties, the
courts may pass upon the same only in order to determine who
has the better right to possess the property. The adjudication of
ownership, being merely provisional, does not bar or prejudice
an action between the same parties involving title to the same
property.31 As such, the resolutions of the CA in CA-G.R. SP No.
55727, CA-G.R. SP No. 55732 and CA-G.R. SP No. 55734
sustaining the ownership of the Franciscos over the disputed
parcels of land did not prevent the Estrellados from initiating the
present action in court.
Under Article 1475 of the Civil Code, the contract of sale is
perfected at the moment there is a meeting of minds not only
upon the thing that is the object of the contract but also upon the
price. From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the
form of contracts. The elements of a contract of sale are
consent, object, and price in money or its equivalent. The
absence of any of these essential elements negates the
existence of a perfected contract of sale. Sale is a consensual
contract, and the party who alleges the sale must show its
existence by competent proof.32
The Franciscos could not produce the deeds of sale between
them and the Estrellados. Nonetheless, they presented the
certification dated June 10, 1970 signed in Davao City by the
late Spouses Alipio and Vivina Barredo,33 to wit:
This is to certify that we have sold to Dr. JOVITO S.
FRANCISCO 15,465 sq. m. of our land in Barrio Sangay, Matina
Aplaya for (₱30,930.00) THIRTY THOUSAND NINE HUNDRED
THIRTY PESOS; and that to date we have received a total of
TWENTY NINE THOUSAND SIX HUNDRED EIGHTY NINE
AND 50/100 (₱29,689.SO) PESOS duly receipted and TWO
HUNDRED SIXTY EIGHT and 35/100 (₱268.35) PESOS for
medicine, survey fee and miscellaneous expenses giving a total
of TWENTY NINE THOUSAND NINE HUNDRED FIFTY SEVEN
and 85/100 PESOS leaving a balance of NINE HUNDRED
SEVENTY TWO and 15/100 (₱972.15) PESOS.
The Franciscos also presented the receipt signed on June 13,
1970 by the late Spouses Alipio and Vivina Barredo to the effect
that they had received from Dr. Francisco the balance of
₱972.15 as the "final instalment and full payment of the sale of
15,465 sq. m. of our land in Barrio Sangay, Matina Aplaya,
Davao City x x x."34
These documents pointed to nothing else but that the late
Spouses Alipio and Vivina Barredo had sold their parcel of land
of 15,465 square meters to Dr. Francisco.
It is required under Article 1403(2) of the Civil Code that the sale
of real property, to be enforceable, should be in a writing
subscribed by the party charged for it. This requirement was met
herein by the Franciscos even in the absence of any formal
deed of sale. Considering that the agreement between the
parties on the sale was reduced in writing and signed by the late
Spouses Alipio and Vivina Barredo as the sellers, the sale was
enforceable under the Statute of Frauds. Despite the document
embodying the agreement on the sale not being acknowledged
before a notary public, the nonobservance of the form
prescribed by Article 1358(1)35 of the Civil Code did not render
the sale invalid. Indeed, the form required by Article 1358 was
only for convenience of the parties, and was not essential to the
validity or enforceability of the sale.36

Lastly, the respondents' possession of the owner's duplicate

copy of the TCT obtained in 1998 did not justify the conclusion
of the CA that they were the owners of the parcel of land.
Indeed, possession of the owner's duplicate copy of the TCT
was not necessarily equivalent to ownership of the land therein
described. For one, the TCT was merely evidence of title.37 And,
moreover, registration of real property under the Torrens System
does not create or vest title because it is not a mode of
acquiring ownership.

WHEREFORE, the Court DISPOSES of the consolidated

appeals as follows:

1. In G.R. No. 164482, the Court AFFIRMS the

decision rendered by the Regional Trial Court, Branch
13, in Davao City DISMISSING the petition for
annulment of judgment in Civil Case No. 30,111-03;
and

2. In G.R. No. 211320, the Court REVERSES and

SETS ASIDE the decision promulgated by the Court of
Appeals in CA-G.R. CV No. 01727-MIN, and
REINSTATES the decision rendered in Civil Case No.
29,759-03 by the Regional Trial Court, Branch 16, in
Davao City.

The Court ORDERS the petitioners in G.R. No. 164482 and the
respondents in G.R. No. 211320 to pay the costs of suit.

SO ORDERED.