1

G.R. NO. 145470 December 9, 2005

After due proceedings, the RTC rendered a Decision on April 3, 1998 in favor of respondents. The decretal portion of the decision provides: PREMISES CONSIDERED, the herein plaintiffs was able to prove by preponderance of evidence the case of accion publiciana, against the defendants and judgment is hereby rendered as follows: 1. Ordering defendants and all persons claiming under them to vacate placefully (sic) the premises in question and to remove their house therefore (sic); 2. Ordering defendants to pay plaintiff the sum of P500.00 as reasonable rental per month beginning October 21, 1994 when the case was filed before this Court and every month thereafter until they vacate the subject premises and to pay the costs of suit. The counter claim is hereby DISMISSED for lack of merit. SO ORDERED.[5]

SPS. LUIS V. CRUZ and AIDA CRUZ, Petitioners, - versus SPS. ALEJANDRO FERNANDO, SR., and RITA FERNANDO, Respondents. x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION AUSTRIA-MARTINEZ, J.:

For resolution is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated October 3, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 61247, dismissing petitioners appeal and affirming the decision of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 79, in Civil Case No. 877-M-94. The antecedent facts are as follows: Luis V. Cruz and Aida Cruz (petitioners) are occupants of the front portion of a 710-square meter property located in Sto. Cristo, Baliuag, Bulacan. On October 21, 1994, spouses Alejandro Fernando, Sr. and Rita Fernando (respondents) filed before the RTC a complaint for accion publiciana against petitioners, demanding the latter to vacate the premises and to pay the amount of P500.00 a month as reasonable rental for the use thereof. Respondents alleged in their complaint that: (1) they are owners of the property, having bought the same from the spouses Clodualdo and Teresita Glorioso (Gloriosos) per Deed of Sale dated March 9, 1987; (2) prior to their acquisition of the property, the Gloriosos offered to sell to petitioners the rear portion of the property but the transaction did not materialize due to petitioners failure to exercise their option; (3) the offer to sell is embodied in a Kasunduan dated August 6, 1983 executed before the Barangay Captain; (4) due to petitioners failure to buy the allotted portion, respondents bought the whole property from the Gloriosos; and (5) despite repeated demands, petitioners refused to vacate the property.[2] Petitioners filed a Motion to Dismiss but the RTC dismissed it for lack of merit in its Order dated March 6, 1995.[3] Petitioners then filed their Answer setting forth the affirmative defenses that: (1) the Kasunduan is a perfected contract of sale; (2) the agreement has already been partially consummated as they already relocated their house from the rear portion of the lot to the front portion that was sold to them; (3) Mrs. Glorioso prevented the complete consummation of the sale when she refused to have the exact boundaries of the lot bought by petitioners surveyed, and the existing survey was made without their knowledge and participation; and (4) respondents are buyers in bad faith having bought that portion of the lot occupied by them (petitioners) with full knowledge of the prior sale to them by the Gloriosos.[4]

Petitioners appealed the RTC decision but it was affirmed by the CA per its Decision dated October 3, 2000. Hence, the present petition raising the following issues: 1. Whether the Honorable Court of Appeals committed an error of law in holding that the Agreement (Kasunduan) between the parties was a mere offer to sell, and not a perfected Contract of Purchase and Sale? 2. Whether the Honorable Court of Appeals committed an error of law in not holding that where the parties clearly gave the petitioners a period of time within which to pay the price, but did not fix said period, the remedy of the vendors is to ask the Court to fix the period for the payment of the price, and not an accion publiciana?

3. Whether the Honorable Court of Appeals committed an error of law in not ordering respondents to at least deliver the back portion of the lot in question upon payment of the agreed price thereof by petitioners, assuming that the Regional Trial Court was correct in finding that the subject matter of the sale was said back portion, and not the front portion of the property? 4. Whether the Honorable Court of Appeals committed an error of law in affirming the decision of the trial court ordering the petitioners, who are possessors in good faith, to pay rentals for the portion of the lot possessed by them?[6]

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The RTC dwelt on the issue of which portion was being sold by the Gloriosos to petitioners, finding that it was the rear portion and not the front portion that was being sold; while the CA construed the Kasunduan as a mere contract to sell and due to petitioners failure to pay the purchase price, the Gloriosos were not obliged to deliver to them (petitioners) the portion being sold. Petitioners, however, insist that the agreement was a perfected contract of sale, and their failure to pay the purchase price is immaterial. They also contend that respondents have no cause of action against them, as the obligation set in the Kasunduan did not set a period, consequently, there is no breach of any obligation by petitioners. The resolution of the issues in this case principally is dependent on the interpretation of the Kasunduan dated August 6, 1983 executed by petitioners and the Gloriosos. The Kasunduan provided the following pertinent stipulations: a. Na pumayag ang mga maysumbong (referring to the Gloriosos) na pagbilhan ang mga ipinagsumbong (referring to petitioners) na bahagi ng lupa at ang ipagbibili ay may sukat na 213 metrong parisukat humigit kumulang sa halagang P40.00 bawat metrong parisukat; Na sa titulong papapanaugin ang magiging kabuuang sukat na mauukol sa mga ipinagsusumbong ay 223 metrong parisukat at ang 10 metro nito ay bilang kaloob ng mga maysumbong sa mga Ipinagsusumbong na bahagi ng right of way; Na ang right of way ay may luwang na 1.75 meters magmula sa daang Lopez Jaena patungo sa likuran ng lote na pagtatayuan ng bahay ng mga Ipinagsusumbong na kanyang bibilhin; Na ang gugol sa pagpapasukat at pagpapanaog ng titulo ay paghahatian ng magkabilang panig na ang panig ay magbibigay ng halagang hindi kukulanging sa halagang tig-AAPAT NA DAANG PISO (P400.00); Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kanilang nabili o mabibili sa buwan ng Enero 31, 1984;[7] (Emphasis supplied) reserved in the vendor and is not to pass to the vendee until full payment of the purchase price.[8] Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until full payment of the price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. The Kasunduan provides for the following terms and conditions: (a) that the Gloriosos agreed to sell to petitioners a portion of the property with an area of 213 meters at the price of P40.00 per square meter; (b) that in the title that will be caused to be issued, the aggregate area is 223 square meters with 10 meters thereof serving as right of way; (c) that the right of way shall have a width of 1.75 meters from Lopez Jaena road going towards the back of the lot where petitioners will build their house on the portion of the lot that they will buy; (d) that the expenses for the survey and for the issuance of the title will be divided between the parties with each party giving an amount of no less than P400.00; and (e) that petitioners will definitely relocate their house to the portion they bought or will buy by January 31, 1984. The foregoing terms and conditions show that it is a contract to sell and not a contract of sale. For one, the conspicuous absence of a definite manner of payment of the purchase price in the agreement confirms the conclusion that it is a contract to sell. This is because the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist.[9] Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale.[10] As held in Toyota Shaw, Inc. vs. Court of Appeals,[11] a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. The Kasunduan does not establish any definite agreement between the parties concerning the terms of payment. What it merely provides is the purchase price for the 213square meter property at P40.00 per square meter. For another, the telltale provision in the Kasunduan that: Na pumayag ang mga maysumbong na pagbilhan ang mga ipinagsumbong na bahagi ng lupa at angipagbibili ay may sukat na 213 metrong parisukat humigit kumulang sa halagang P40.00 bawat metrong parisukat, simply means that the Gloriosos only agreed to sell a portion of the property and that the portion to be sold measures 213 square meters. Another significant provision is that which reads: Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kanilang nabili o mabibili sa buwan ng Enero 31, 1984. The foregoing indicates that a contract of sale is yet to be consummated and ownership of the property remained in the Gloriosos. Otherwise, why would the alternative term mabibili be used if indeed the property had already been sold to petitioners. In addition, the absence of any formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership.[12] Normally, in a contract to sell, the payment of the purchase price is the positive suspensive condition upon which the transfer of ownership depends.[13] The parties, however, are not prohibited from stipulating other lawful conditions that must be fulfilled in order for the contract to be converted from a contract to sell or at the most an executory sale into an executed one.[14]

b.

c.

d.

e.

Under Article 1458 of the Civil Code, a contract of sale is a contract by which one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. Article 1475 of the Code further provides that the contract of sale is perfected at the moment there is meeting of the minds upon the thing which is the object of the contract and upon the price. From that moment the parties may reciprocally demand performance subject to the provisions of the law governing the form of contracts. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold, as distinguished from a contract to sell where ownership is, by agreement,

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Moreover, it would be inutile for respondents to first petition the court to fix a period for the performance of the contract. In the first place, respondents are not parties to the Kasunduan between petitioners and the Gloriosos, and they have no standing whatsoever to seek such recourse. In the second place, such recourse properly pertains to petitioners. It was they who should have sought the courts intercession. If petitioners believed that they have an actionable contract for the sale of the property, prudence and common sense dictate that they should have sought its enforcement forthwith. Instead, petitioners whiled away their time. Furthermore, there is no need for a judicial rescission of the Kasunduan for the simple reason that the obligation of the Gloriosos to transfer the property to petitioners has not yet arisen. There can be no rescission of an obligation that is nonexistent, considering that the suspensive conditions therefor have not yet happened.[18] Hence, petitioners have no superior right of ownership or possession to speak of. Their occupation of the property was merely through the tolerance of the owners. Evidence on record shows that petitioners and their predecessors were able to live and build their house on the property through the permission and kindness of the previous owner, Pedro Hipolito, who was their relative,[19] and subsequently, Teresita Glorioso, who is also their relative. They have no title or, at the very least, a contract of lease over the property. Based as it was on mere tolerance, petitioners possession could neither ripen into ownership nor operate to bar any action by respondents to recover absolute possession thereof.[20] There is also no merit to petitioners contention that respondents are buyers in bad faith. As explained in Coronel vs. Court of Appeals: In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer.[21] (Emphasis supplied) A person who occupies the land of another at the latter's forbearance or permission without any contract between them is necessarily bound by an implied promise that he will vacate upon demand.[22] Considering that petitioners continued possession of the property has already been rendered unlawful, they are bound to pay reasonable rental for the use and occupation thereof, which in this case was appropriately pegged by the RTC at P500.00 per month beginning October 21, 1994 when respondents filed the case against them until they vacate the premises. Finally, petitioners seek compensation for the value of the improvements introduced on the property. Again, this is the first time that they are raising this point. As such, petitioners are now barred from seeking such relief.[23]

In the present case, aside from the payment of the purchase price, there existed another suspensive condition, i.e.: that petitioners will relocate their house to the portion they bought or will buy by January 31, 1984. Petitioners failed to abide by the express condition that they should relocate to the rear portion of the property being bought by January 31, 1984. Indeed, the Kasunduandiscloses that it is the rear portion that was being sold by the Gloriosos, and not the front portion as petitioners stubbornly claim. This is evident from the provisions establishing a right of way from Lopez Jaena road going towards the back of the lot, and requiring them to relocate their house to the portion being sold by January 31, 1984. Petitioners are presently occupying the front portion of the property. Why the need for a right of way and for petitioners to relocate if the front portion on which their house stands is the portion being sold? This condition is a suspensive condition noncompliance of which prevented the Gloriosos from proceeding with the sale and ultimately transferring title to petitioners; and the Kasunduan from having obligatory force.[15] It is established by evidence that the petitioners did not transfer their house located in the front portion of the subject property to the rear portion which, under the Kasunduan, they intended to buy. Thus, no obligation arose on the part of the Gloriosos to consider the subject property as having been sold to petitioners because the latters non-fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected. Petitioners admit that they have not paid a single centavo to the Gloriosos. However, petitioners argue that their nonpayment of the purchase price was due to the fact that there is yet to be a survey made of the property. But evidence shows, and petitioners do not dispute, that as early as August 12, 1983, or six days after the execution of theKasunduan, a survey has already been made and the property was subdivided into Lot Nos. 565-B-1 (front portion) and 565-B-2 (rear portion), with Lot No. 565-B-2 measuring 223 square meters as the portion to be bought by petitioners. Petitioners question the survey made, asserting that it is a table survey made without their knowledge and participation. It should be pointed out that the Kasunduanmerely provides that the expenses for the survey will be divided between them and that each party should give an amount of no less than P400.00. Nowhere is it stated that the survey is a condition precedent for the payment of the purchase price. Petitioners further claim that respondents have no cause of action against them because their obligation to pay the purchase price did not yet arise, as the agreement did not provide for a period within which to pay the purchase price. They argue that respondents should have filed an action for specific performance or judicial rescission before they can avail of accion publiciana. Notably, petitioners never raised these arguments during the proceedings before the RTC. Suffice it to say that issues raised for the first time on appeal and not raised timely in the proceedings in the lower court are barred by estoppel.[16] Matters, theories or arguments not brought out in the original proceedings cannot be considered on review or appeal where they are raised for the first time. To consider the alleged facts and arguments raised belatedly would amount to trampling on the basic principles of fair play, justice and due process.[17]

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WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated October 3, 2000 in CA-G.R. CV No. 61247 is AFFIRMED. SO ORDERED. G.R. No. 172674 July 12, 2007 SPS. JORGE NAVARRA and CARMELITA BERNARDO NAVARRA and RRRC DEVELOPMENT CORPORATION, Petitioners, - versus PLANTERS DEVELOPMENT GATCHALIAN REALTY, INC., Respondents. BANK and ROBERTO

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

WE CONCUR:

REYNATO S. PUNO Associate Justice

x---------------------------------------------------------------------------------------x DECISION

ROMEO J. CALLEJO, SR. Associate Justice

DANTE O. TINGA Associate Justice

GARCIA, J.: Assailed and sought to be set aside in this petition for review under Rule 45 of the Rules of Court is the decision[1] dated September 27, 2004 of the Court of Appeals (CA) in CAG.R. CV No. 50002, as reiterated in its resolution[2] dated May 8, 2006, denying reconsideration thereof. The challenged decision reversed that of the Regional Trial Court (RTC) of Makati City, Branch 66, in its Civil Case No. 16917, an action for Specific Performance and Injunction thereat commenced by the herein petitioners against the respondents. The Makati RTC ruled that a perfected contract of sale existed in favor of Jorge Navarra and Carmelita Bernardo Navarra (Navarras) over the properties involved in the suit and accordingly ordered Planters Development Bank (Planters Bank) to execute the necessary deed of sale therefor. The CA reversed that ruling. Hence, this recourse by the petitioners. The facts: The Navarras are the owners of five (5) parcels of land located at B.F. Homes, Paraaque and covered by Transfer Certificates of Title (TCT) Nos. S-58017, S-58011, S-51732, S-51733 and A-14574. All these five (5) parcels of land are the subject of this controversy. On July 5, 1982, the Navarras obtained a loan of P1,200,000.00 from Planters Bank and, by way of security therefor, executed a deed of mortgage over their aforementioned five (5) parcels of land. Unfortunately, the couple failed to pay their loan obligation. Hence, Planters Bank foreclosed on the mortgage and the mortgaged assets were sold to it for P1,341,850.00, it being the highest bidder in the auction sale conducted on May 16, 1984. The one-year redemption period expired without the Navarras having redeemed the foreclosed properties. On the other hand, co-petitioner RRRC Development Corporation (RRRC) is a real estate company owned by the parents of Carmelita Bernardo Navarra. RRRC itself obtained a loan from Planters Bank secured by a mortgage over another set of properties owned by RRRC. The loan having been likewise unpaid, Planters Bank similarly foreclosed the mortgaged assets of RRRC. Unlike the Navarras, however, RRRC was able to negotiate with the Bank for the

MINITA V. CHICO-NAZARIO Associate Justice

ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Associate Justice Chairman, Second Division

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairmans Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

HILARIO G. DAVIDE, JR. Chief Justice

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redemption of its foreclosed properties by way of a concession whereby the Bank allowed RRRC to refer to it would-be buyers of the foreclosed RRRC properties who would remit their payments directly to the Bank, which payments would then be considered as redemption price for RRRC. Eventually, the foreclosed properties of RRRC were sold to third persons whose payments therefor, directly made to the Bank, were in excess by P300,000.00 for the redemption price. In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to repurchase the five (5) lots earlier auctioned to the Bank, with a request that he be given untilAugust 31, 1985 to pay the down payment of P300,000.00. Dated July 18, 1985 and addressed to then Planters Bank President Jesus Tambunting, the letter reads in full: This will formalize my request for your kind consideration in allowing my brother and me to buy back my house and lot and my restaurant building and lot together with the adjacent road lot. Since my brother, who is working in Saudi Arabia, has accepted this arrangement only recently as a result of my urgent offer to him, perhaps it will be safe for us to set August 31, 1985 as the last day for the payment of a P300,000.00 downpayment. I hope you will grant us the opportunity to raise the funds within this period, which includes an allowance for delays. The purchase price, I understand, will be based on the redemption value plus accrued interest at the prevailing rate up to the date of our sales contract. Maybe you can give us a long term payment scheme on the basis of my brothers annual savings of roughly US$30,000.00 everytime he comes home for his home leave. I realize that this is not a regular transaction but I am seeking your favor to give me a chance to reserve whatever values I can still recover from the properties and to avoid any legal complications that may arise as a consequence of the total loss of the Balangay lot. I hope that you will extend to me your favorable action on this grave matter. Accordingly, Jorge Navarra went to the Office of Mr. Rene Castillo on August 20, 1985, bringing with him a letter requesting that the excess payment of P300,000.00 in connection with the redemption made by the RRRC be applied as down payment for the Navarras repurchase of their foreclosed properties. Because the amount of P300,000.00 was sourced from a different transaction between RRRC and Planters Bank and involved different debtors, the Bank required Navarra to submit a board resolution from RRRC authorizing him to negotiate for and its behalf and empowering him to apply the excess amount of P300,000.00 in RRRCs redemption payment as down payment for the repurchase of the Navarras foreclosed properties. Meanwhile, titles to said properties were consolidated in the name of Planters Bank, and on August 27, 1985, new certificates of title were issued in its name, to wit: TCT Nos. 97073, 97074, 97075, 97076 and 97077. Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra informing him that it could not proceed with the documentation of the proposed repurchase of the foreclosed properties on account of his non- compliance with the Banks request for the submission of the needed board resolution of RRRC. In his reply-letter of January 28, 1987, Navarra claimed having already delivered copies of the required board resolution to the Bank. The Bank, however, did not receive said copies. Thus, on February 19, 1987, the Bank sent a notice to the Navarrras demanding that they surrender and vacate the properties in question for their failure to exercise their right of redemption. Such was the state of things when, on June 31, 1987, in the RTC of Makati City, the Navarras filed their complaint for Specific Performance with Injunction against Planters Bank. In their complaint docketed in said court as Civil Case No. 16917 and raffled to Branch 66 thereof, the Navarras, as plaintiffs, alleged that a perfected contract of sale was made between them and Planters Bank whereby they would repurchase the subject properties for P1,800,000.00 with a down payment of P300,000.00. In its Answer, Planters Bank asserted that there was no perfected contract of sale because the terms and conditions for the repurchase have not yet been agreed upon. In response, Planters Bank, thru its Vice-President Ma. Flordeliza Aguenza, wrote back Navarra via a letter dated August 16, 1985, thus: Regarding your letter dated July 18, 1985, requesting that we give up to August 31, 1985 to buy back your house and lot and restaurant and building subject to a P300,000.00 downpayment on the purchase price, please be advised that the Collection Committee has agreed to your request. Please see Mr. Rene Castillo, Head, Acquired Assets Unit, as soon as possible for the details of the transaction so that they may work on the necessary documentation. On September 9, 1988, a portion of the lot covered by TCT No. 97077 (formerly TCT No. A-14574) was sold by Planters Bank to herein co-respondent Roberto Gatchalian Realty, Inc. (Gatchalian Realty). Consequently, TCT No. 97077 was cancelled and TCT No. 12692 was issued in the name of Gatchalian Realty. This prompted the Navarras to amend their complaint by impleading Gatchalian Realty as additional defendant. In a decision dated July 10, 1995, the trial court ruled that there was a perfected contract of sale between the Navarras and Planters Bank, and accordingly rendered judgment as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering:

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a) the cancellation of the Deed of Absolute Sale (Exh. 2) over lot 4137-C between defendant Planters Development Bank and defendant Roberto Gatchalian Realty Corporation (RGRI) with the vendor bank refunding all the payments made by the vendee RGRI without interest less the five percent (5%) brokers commission: the defendant Planters Development Bank to execute the Deed of Absolute Sale over the lots covered by TCT Nos. 97073, 97074, 97075, 97076, and 97077 in favor of all the plaintiffs for a consideration of ONE MILLION EIGHT HUNDRED THOUSAND (P1,800,000.00) less the downpayment of P300,000.00 plus interest at the rate of twenty five percent (25%) per year for five (5) years to be paid in full upon the execution of the contract; the defendant Planters Development Bank the amount of TEN THOUSAND PESOS (P10,000.00) by way of attorneys fees. No costs. XXX IN CONCLUDING THAT THERE WAS NO PERFECTED CONTRACT TO REPURCHASE THE FORECLOSED PROPERTIES BETWEEN THE PETITIONERS AND THE PRIVATE RESPONDENT PLANTERS DEVELOPMENT BANK, AS CORRECTLY FOUND BY THE TRIAL COURT. II XXX IN HOLDING THAT THE PARTIES NEVER GOT PAST THE NEGOTIATION STAGE. While the question raised is essentially one of fact, of which the Court normally eschews from, yet, given the conflicting factual findings of the trial and appellate courts, the Court shall go by the exception[3] to the general rule and proceed to make its own assessment of the evidence. We DENY. Petitioners contend that a perfected contract of sale came into being when respondent Bank, thru a letter dated August 16, 1985, formally accepted the offer of the Navarras to repurchase the subject properties. In general, contracts undergo three distinct stages, to wit: negotiation, perfection or birth, and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of their agreement. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the But was there compliance? According to the evidence on file the P300,000.00, if at all, was given beyond the agreed period. The court a quo missed the fact that the said amount came from the excess of the proceeds of the sale to the Pea spouses which Jorge Navarra made to appear was made before the deadline he set of August 31, 1985. But this is athwart Exhibits M-1 and N, the Contract to Sell and the Deed of Sale between RRRC and the Peas, for these were executed only on September 13, 1985 and October 7, 1985 respectively. xxx xxx xxx

b)

There were two separate and independent loans secured by distinct mortgages on different lots and their only commonality is the relationship of the Navarras and Bernardo families. It is thus difficult to conceive and to conclude that such Byzantine arrangement was acquiesced to and provided for in that single and simple letter of the bank. With their motion for reconsideration having been denied by the CA in its resolution of May 8, 2006, petitioners are now with this Court via this recourse on their submission that the CA erred I

c)

d)

SO ORDERED. Therefrom, Planters Bank and Gatchalian Realty separately went on appeal to the CA whereat their appellate recourse were consolidated and docketed as CA-G.R. CV No. 50002. As stated at the threshold hereof, the appellate court, in its decision of September 27, 2004, reversed that of the trial court and ruled that there was no perfected contract of sale between the parties. Partly says the CA in its decision: The Court cannot go along with the deduction of the trial court that the response of Planters Bank was favorable to Jorge Navarras proposal and that the P300,000.00 in its possession is a down payment and as such sufficient bases to conclude that there was a valid and perfected contract of sale. Based on the turn of events and the tenor of the communications between the offerors and the creditor bank, it appears that there was not even a perfected contract to sell, much less a perfected contract of sale. Article 1319 cited by the trial court provides that the acceptance to an offer must be absolute. Simply put, there must be unqualified acceptance and no condition must tag along. But Jorge Navarra in trying to convince the bank to agree, had himself laid out terms in offering (1) a downpayment of P300,000.00 and setting (2) as deadline August 31, 1985 for the payment thereof. Under these terms and conditions the bank indeed accepted his offer, and these are essentially the contents of Exhibits J and K.

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contract, i.e., consent, object and price. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.[4] A negotiation is formally initiated by an offer which should be certain with respect to both the object and the cause or consideration of the envisioned contract. In order to produce a contract, there must be acceptance, which may be express or implied, but it must not qualify the terms of the offer. The acceptance of an offer must be unqualified and absolute to perfect the contract. In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.[5] Here, the Navarras assert that the following exchange of correspondence between them and Planters Bank constitutes the offer and acceptance, thus: Letter dated July 18, 1985 of Jorge Navarra: This will formalize my request for your kind consideration in allowing my brother and me to buy back my house and lot and my restaurant building and lot together with the adjacent road lot. Since my brother, who is working in Saudi Arabia, has accepted this arrangement only recently as a result of my urgent offer to him, perhaps it will be safe for us to set August 31, 1985 as the last day for the payment of a P300,000.00 downpayment. I hope you will grant us the opportunity to raise the funds within this period, which includes an allowance for delays. The purchase price, I understand, will be based on the redemption value plus accrued interest at the prevailing rate up to the date of our sales contract. Maybe you can give us a long term payment scheme on the basis of my brothers annual savings of roughly US$30,000.00 everytime he comes home for his home leave. I realize that this is not a regular transaction but I am seeking your favor to give me a chance to reserve whatever values I can still recover from the properties and to avoid any legal complications that may arise as a consequence of the total loss of the Balangay lot. I hope that you will extend to me your favorable action on this grave matter. Letter dated August 16, 1985 of Planters Bank Regarding your letter dated July 18, 1985, requesting that we give up to August 31, 1985 to buy back your house and lot and restaurant and building subject to a P300,000.00 downpayment on the purchase price, please be advised that the Collection Committee has agreed to your request. Please see Mr. Rene Castillo, Head, Acquired Assets Unit, as soon as possible for the details of the transaction so that they may work on the necessary documentation. (Emphasis ours) Given the above, the basic question that comes to mind is: Was the offer certain and the acceptance absolute enough so as to engender a meeting of the minds between the parties? Definitely not. While the foregoing letters indicate the amount of P300,000.00 as down payment, they are, however, completely silent as to how the succeeding installment payments shall be made. At most, the letters merely acknowledge that the down payment of P300,000.00 was agreed upon by the parties. However, this fact cannot lead to the conclusion that a contract of sale had been perfected. Quite recently, this Court held that before a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established since the agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price.[6] Too, the Navarras letter/offer failed to specify a definite amount of the purchase price for the sale/repurchase of the subject properties. It merely stated that the purchase price will be based on the redemption value plus accrued interest at the prevailing rate up to the date of the sales contract. The ambiguity of this statement only bolsters the uncertainty of the Navarras socalled offer for it leaves much rooms for such questions, as: what is the redemption value? what prevailing rate of interest shall be followed: is it the rate stipulated in the loan agreement or the legal rate? when will the date of the contract of sale be based, shall it be upon the time of the execution of the deed of sale or upon the time when the last installment payment shall have been made? To our mind, these questions need first to be addressed, discussed and negotiated upon by the parties before a definite purchase price can be arrived at. Significantly, the Navarras wrote in the same letter the following: Maybe you can give us a long-term payment scheme on the basis of my brothers annual savings of roughly US$30,000.00 every time he comes home for his home leave. Again, the offer was not clear insofar as concerned the exact number of years that will comprise the long-term payment scheme. As we see it, the absence of a stipulated period within which the repurchase price shall be paid all the more adds to the indefiniteness of the Navarras offer. Clearly, then, the lack of a definite offer on the part of the spouses could not possibly serve as the basis of their claim that the sale/repurchase of their foreclosed properties was perfected. The reason is obvious: one essential element of a contract of sale is wanting: the price certain. There can be no contract of sale unless the following elements concur: (a) consent or meeting of the minds; (b) determinate subject matter; and (c) price certain in money or its equivalent. Such contract is born or perfected from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.[7] Here, what is dramatically clear is that there was no meeting of minds vis-a-visthe price, expressly or impliedly, directly or indirectly. Further, the tenor of Planters Banks letter-reply negates the contention of the Navarras that the Bank fully accepted their offer. The letter specifically stated that there is a need to negotiate on the other details of the transaction[8] before the sale may be formalized. Such statement in the Banks letter clearly manifests lack of agreement between the parties as to the

8
terms of the purported contract of sale/repurchase, particularly the mode of payment of the purchase price and the period for its payment. The law requires acceptance to be absolute and unqualified. As it is, the Banks letter is not the kind which would constitute acceptance as contemplated by law for it does not evince any categorical and unequivocal undertaking on the part of the Bank to sell the subject properties to the Navarras. The Navarras attempt to prove the existence of a perfected contract of sale all the more becomes futile in the light of the evidence that there was in the first place no acceptance of their offer. It should be noted that aside from their first letter dated July 18, 1985, the Navarras wrote another letter dated August 20, 1985, this time requesting the Bank that the down payment of P300,000.00 be instead taken from the excess payment made by the RRRC in redeeming its own foreclosed properties. The very circumstance that the Navarras had to make this new request is a clear indication that no definite agreement has yet been reached at that point. As we see it, this request constitutes a new offer on the part of the Navarras, which offer was again conditionally accepted by the Bank as in fact it even required the Navarras to submit a board resolution of RRRC before it could proceed with the proposed sale/repurchase. The eventual failure of the spouses to submit the required board resolution precludes the perfection of a contract of sale/repurchase between the parties. As earlier mentioned, contracts are perfected when there is concurrence of the parties wills, manifested by the acceptance by one of the offer made by the other.[9] Here, there was no concurrence of the offer and acceptance as would result in a perfected contract of sale. Evidently, what transpired between the parties was only a prolonged negotiation to buy and to sell, and, at the most, an offer and a counter-offer with no definite agreement having been reached by them. With the hard reality that no perfected contract of sale/repurchase exists in this case, any independent transaction between the Planters Bank and a third-party, like the one involving the Gatchalian Realty, cannot be affected. WHEREFORE, the petition is DENIED and the assailed decision and resolution of the Court of Appeals are AFFIRMED. No pronouncement as to costs. SO ORDERED. In a letter10 dated February 10, 1984, petitioner reiterated its request for a one year extension from February 17, 1984 within which to redeem/repurchase the property on installment basis. It reiterated its request to repurchase the property on installment.11 Meanwhile, some PNB Pasay City Branch personnel informed petitioner that as a matter of policy, the bank does not accept "partial redemption."12 Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 on June 1, 1984, and issued a new title in favor of respondent PNB.13 Petitioner's offers had not yet been acted upon by respondent PNB. Meanwhile, the Special Assets Management Department (SAMD) had prepared a statement of account, and as of June 25, 1984 petitioner's obligation amounted to P1,574,560.47. This included the bid price of P1,056,924.50, interest, advances of insurance premiums, advances on realty taxes, registration expenses, miscellaneous expenses and publication cost.14 When DECISION

CALLEJO, SR., J.: Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. No. 46153 which affirmed the decision2 of the Regional Trial Court (RTC), Branch 71, Pasig City, in Civil Case No. 58551, and its Resolution3 denying the motion for reconsideration filed by petitioner Manila Metal Container Corporation (MMCC). The Antecedents Petitioner was the owner of a 8,015 square meter parcel of land located in Mandaluyong (now a City), Metro Manila. The property was covered by Transfer Certificate of Title (TCT) No. 332098 of the Registry of Deeds of Rizal. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank (PNB), petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation of P1,000,000.00; and, on November 16, 1973, petitioner executed an Amendment4 of Real Estate Mortgage over its property. On March 31, 1981, petitioner secured another loan of P653,000.00 from respondent PNB, payable in quarterly installments of P32,650.00, plus interests and other charges.5 On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction for P911,532.21, petitioner's outstanding obligation to respondent PNB as of June 30, 1982,6 plus interests and attorney's fees. After due notice and publication, the property was sold at public auction on September 28, 1982 where respondent PNB was declared the winning bidder for P1,000,000.00. The Certificate of Sale7 issued in its favor was registered with the Office of the Register of Deeds of Rizal, and was annotated at the dorsal portion of the title on February 17, 1983. Thus, the period to redeem the property was to expire on February 17, 1984. Petitioner sent a letter dated August 25, 1983 to respondent PNB, requesting that it be granted an extension of time to redeem/repurchase the property.8 In its reply dated August 30, 1983, respondent PNB informed petitioner that the request had been referred to its Pasay City Branch for appropriate action and recommendation.9

G.R. No. 166862 December 20, 2006 MANILA METAL CONTAINER CORPORATION, petitioner, REYNALDO C. TOLENTINO, intervenor, vs. PHILIPPINE NATIONAL BANK, respondent, DMCI-PROJECT DEVELOPERS, INC., intervenor.

9
apprised of the statement of account, petitioner remitted P725,000.00 to respondent PNB as "deposit to repurchase," and Official Receipt No. 978191 was issued to it.15 In the meantime, the SAMD recommended to the management of respondent PNB that petitioner be allowed to repurchase the property for P1,574,560.00. In a letter dated November 14, 1984, the PNB management informed petitioner that it was rejecting the offer and the recommendation of the SAMD. It was suggested that petitioner purchase the property for P2,660,000.00, its minimum market value. Respondent PNB gave petitioner until December 15, 1984 to act on the proposal; otherwise, its P725,000.00 deposit would be returned and the property would be sold to other interested buyers.16 Petitioner, however, did not agree to respondent PNB's proposal. Instead, it wrote another letter dated December 12, 1984 requesting for a reconsideration. Respondent PNB replied in a letter dated December 28, 1984, wherein it reiterated its proposal that petitioner purchase the property for P2,660,000.00. PNB again informed petitioner that it would return the deposit should petitioner desire to withdraw its offer to purchase the property.17 On February 25, 1985, petitioner, through counsel, requested that PNB reconsider its letter dated December 28, 1984. Petitioner declared that it had already agreed to the SAMD's offer to purchase the property forP1,574,560.47, and that was why it had paid P725,000.00. Petitioner warned respondent PNB that it would seek judicial recourse should PNB insist on the position.18 On June 4, 1985, respondent PNB informed petitioner that the PNB Board of Directors had accepted petitioner's offer to purchase the property, but for P1,931,389.53 in cash less the P725,000.00 already deposited with it.19 On page two of the letter was a space above the typewritten name of petitioner's President, Pablo Gabriel, where he was to affix his signature. However, Pablo Gabriel did not conform to the letter but merely indicated therein that he had received it.20 Petitioner did not respond, so PNB requested petitioner in a letter dated June 30, 1988 to submit an amended offer to repurchase. Petitioner rejected respondent's proposal in a letter dated July 14, 1988. It maintained that respondent PNB had agreed to sell the property for P1,574,560.47, and that since its P725,000.00 downpayment had been accepted, respondent PNB was proscribed from increasing the purchase price of the property.21 Petitioner averred that it had a net balance payable in the amount of P643,452.34. Respondent PNB, however, rejected petitioner's offer to pay the balance of P643,452.34 in a letter dated August 1, 1989.22 On August 28, 1989, petitioner filed a complaint against respondent PNB for "Annulment of Mortgage and Mortgage Foreclosure, Delivery of Title, or Specific Performance with Damages." To support its cause of action for specific performance, it alleged the following: 34. As early as June 25, 1984, PNB had accepted the down payment from Manila Metal in the substantial amount of P725,000.00 for the redemption/repurchase price of P1,574,560.47 as approved by its SMAD and considering the reliance made by Manila Metal and the long time that has elapsed, the approval of the higher management of the Bank to confirm the agreement of its SMAD is clearly a potestative condition which cannot legally prejudice Manila Metal which has acted and relied on the approval of SMAD. The Bank cannot take advantage of a condition which is entirely dependent upon its own will after accepting and benefiting from the substantial payment made by Manila Metal. 35. PNB approved the repurchase price of P1,574,560.47 for which it accepted P725,000.00 from Manila Metal. PNB cannot take advantage of its own delay and long inaction in demanding a higher amount based on unilateral computation of interest rate without the consent of Manila Metal. Petitioner later filed an amended complaint and supported its claim for damages with the following arguments: 36. That in order to protect itself against the wrongful and malicious acts of the defendant Bank, plaintiff is constrained to engage the services of counsel at an agreed fee of P50,000.00 and to incur litigation expenses of at least P30,000.00, which the defendant PNB should be condemned to pay the plaintiff Manila Metal. 37. That by reason of the wrongful and malicious actuations of defendant PNB, plaintiff Manila Metal suffered besmirched reputation for which defendant PNB is liable for moral damages of at least P50,000.00. 38. That for the wrongful and malicious act of defendant PNB which are highly reprehensible, exemplary damages should be awarded in favor of the plaintiff by way of example or correction for the public good of at least P30,000.00.23 Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus: a) Declaring the Amended Real Estate Mortgage (Annex "A") null and void and without any legal force and effect. b) Declaring defendant's acts of extra-judicially foreclosing the mortgage over plaintiff's property and setting it for auction sale null and void. c) Ordering the defendant Register of Deeds to cancel the new title issued in the name of PNB (TCT NO. 43792) covering the property described in paragraph 4 of the Complaint, to reinstate TCT No. 37025 in the name of Manila Metal and to cancel the annotation of the mortgage in question at the back of the TCT No.37025 described in paragraph 4 of this Complaint. d) Ordering the defendant PNB to return and/or deliver physical possession of the TCT No. 37025described in paragraph 4 of this Complaint to the plaintiff Manila Metal. e) Ordering the defendant PNB to pay the plaintiff Manila Metal's actual damages, moral and exemplary damages in the aggregate amount of not less than P80,000.00 as may be warranted by the evidence and fixed by this Honorable Court in the exercise of its sound discretion, and attorney's fees of P50,000.00 and litigation expenses of at least P30,000.00 as may be proved during the trial, and costs of suit. Plaintiff likewise prays for such further reliefs which may be deemed just and equitable in the premises.24 In its Answer to the complaint, respondent PNB averred, as a special and affirmative defense, that it had acquired ownership over the property after the period to redeem had elapsed. It

10
claimed that no contract of sale was perfected between it and petitioner after the period to redeem the property had expired. During pre-trial, the parties agreed to submit the case for decision, based on their stipulation of facts.25 The parties agreed to limit the issues to the following: 1. Whether or not the June 4, 1985 letter of the defendant approving/accepting plaintiff's offer to purchase the property is still valid and legally enforceable. 2. Whether or not the plaintiff has waived its right to purchase the property when it failed to conform with the conditions set forth by the defendant in its letter dated June 4, 1985. 3. Whether or not there is a perfected contract of sale between the parties.26 While the case was pending, respondent PNB demanded, on September 20, 1989, that petitioner vacate the property within 15 days from notice,27 but petitioners refused to do so. On March 18, 1993, petitioner offered to repurchase the property for P3,500,000.00.28 The offer was however rejected by respondent PNB, in a letter dated April 13, 1993. According to it, the prevailing market value of the property was approximately P30,000,000.00, and as a matter of policy, it could not sell the property for less than its market value.29 On June 21, 1993, petitioner offered to purchase the property for P4,250,000.00 in cash.30The offer was again rejected by respondent PNB on September 13, 1993.31 On May 31, 1994, the trial court rendered judgment dismissing the amended complaint and respondent PNB's counterclaim. It ordered respondent PNB to refund the P725,000.00 deposit petitioner had made.32 The trial court ruled that there was no perfected contract of sale between the parties; hence, petitioner had no cause of action for specific performance against respondent. The trial court declared that respondent had rejected petitioner's offer to repurchase the property. Petitioner, in turn, rejected the terms and conditions contained in the June 4, 1985 letter of the SAMD. While petitioner had offered to repurchase the property per its letter of July 14, 1988, the amount 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-APPELLEE'S LETTER DATED 4 JUNE 1985 APPROVING/ACCEPTING PLAINTIFFAPPELLANT'S OFFER TO PURCHASE THE SUBJECT PROPERTY IS NOT VALID AND ENFORCEABLE. II THE LOWER COURT ERRED IN RULING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN PLAINTIFF-APPELLANT AND DEFENDANTAPPELLEE. III THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLLANT WAIVED ITS RIGHT TO PURCHASE THE SUBJECT PROPERTY WHEN IT FAILED TO CONFORM WITH CONDITIONS SET FORTH BY DEFENDANTAPPELLEE IN ITS LETTER DATED 4 JUNE 1985. IV THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT IT WAS THE DEFENDANT-APPELLEE WHICH RENDERED IT DIFFICULT IF NOT IMPOSSIBLE FOR PLAINTIFF-APPELLANT TO COMPLETE THE BALANCE OF THEIR PURCHASE PRICE. V THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT THERE WAS NO VALID RESCISSION OR CANCELLATION OF SUBJECT CONTRACT OF REPURCHASE. VI THE LOWER COURT ERRED IN DECLARING THAT PLAINTIFF FAILED AND REFUSED TO SUBMIT THE AMENDED REPURCHASE OFFER. VII THE LOWER COURT ERRED IN DISMISSING THE AMENDED COMPLAINT OF PLAINTIFF-APPELLANT. VIII THE LOWER COURT ERRED IN NOT AWARDING PLAINTIFF-APPELLANT ACTUAL, MORAL AND EXEMPLARY DAMAGES, ATTOTRNEY'S FEES AND LITIGATION EXPENSES.33 Meanwhile, on June 17, 1993, petitioner's Board of Directors approved Resolution No. 3-004, where it waived, assigned and transferred its rights over the property covered by TCT No. 33099 and TCT No. 37025 in favor of Bayani Gabriel, one of its Directors.34 Thereafter, Bayani Gabriel executed a Deed of Assignment over 51% of the ownership and management of the property in favor of Reynaldo Tolentino, who later moved for leave to intervene as plaintiff-appellant. On July 14, 1993, the CA issued a resolution granting the motion,35 and likewise granted the motion of Reynaldo Tolentino substituting petitioner MMCC, as plaintiff-appellant, and his motion to withdraw as intervenor.36 The CA rendered judgment on May 11, 2000 affirming the decision of the RTC.37 It declared that petitioner obviously never agreed to the selling price proposed by respondent PNB (P1,931,389.53) since petitioner had kept on insisting that the selling price should be lowered to P1,574,560.47. Clearly therefore, there was no meeting of the minds between the parties as to the price or consideration of the sale. The CA ratiocinated that petitioner's original offer to purchase the subject property had not been accepted by respondent PNB. In fact, it made a counter-offer through its June 4, 1985 letter specifically on the selling price; petitioner did not agree to the counter-offer; and the negotiations did not prosper. Moreover, petitioner did not pay the balance of the purchase price within the

11
sixty-day period set in the June 4, 1985 letter of respondent PNB. Consequently, there was no perfected contract of sale, and as such, there was no contract to rescind. According to the appellate court, the claim for damages and the counterclaim were correctly dismissed by the court a quo for no evidence was presented to support it. Respondent PNB's letter dated June 30, 1988 cannot revive the failed negotiations between the parties. Respondent PNB merely asked petitioner to submit an amended offer to repurchase. While petitioner reiterated its request for a lower selling price and that the balance of the repurchase be reduced, however, respondent rejected the proposal in a letter dated August 1, 1989. Petitioner filed a motion for reconsideration, which the CA likewise denied. Thus, petitioner filed the instant petition for review on certiorari, alleging that: I. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THERE IS NO PERFECTED CONTRACT OF SALE BETWEEN THE PETITIONER AND RESPONDENT. II. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE AMOUNT OF PHP725,000.00 PAID BY THE PETITIONER IS NOT AN EARNEST MONEY. III. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE FAILURE OF THE PETITIONER-APPELLANT TO SIGNIFY ITS CONFORMITY TO THE TERMS CONTAINED IN PNB'S JUNE 4, 1985 LETTER MEANS THAT THERE WAS NO VALID AND LEGALLY ENFORCEABLE CONTRACT OF SALE BETWEEN THE PARTIES. IV. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW THAT NONPAYMENT OF THE PETITIONER-APPELLANT OF THE BALANCE OF THE OFFERED PRICE IN THE LETTER OF PNB DATED JUNE 4, 1985, WITHIN SIXTY (60) DAYS FROM NOTICE OF APPROVAL CONSTITUTES NO VALID AND LEGALLY ENFORCEABLE CONTRACT OF SALE BETWEEN THE PARTIES. V. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT HELD THAT THE LETTERS OF PETITIONER-APPELLANT DATED MARCH 18, 1993 AND JUNE 21, 1993, OFFERING TO BUY THE SUBJECT PROPERTY AT DIFFERENT AMOUNT WERE PROOF THAT THERE IS NO PERFECTED CONTRACT OF SALE.38 The threshold issue is whether or not petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the property from respondent. Petitioner maintains that it had accepted respondent's offer made through the SAMD, to sell the property forP1,574,560.00. When the acceptance was made in its letter dated June 25, 1984; it then deposited P725,000.00 with the SAMD as partial payment, evidenced by Receipt No. 978194 which respondent had issued. Petitioner avers that the SAMD's acceptance of the deposit amounted to an acceptance of its offer to repurchase. Moreover, as gleaned from the letter of SAMD dated June 4, 1985, the PNB Board of Directors had approved petitioner's offer to purchase the property. It claims that this was the suspensive condition, the fulfillment of which gave rise to the contract. Respondent could no longer unilaterally withdraw its offer to sell the property for P1,574,560.47, since the acceptance of the offer resulted in a perfected contract of sale; it was obliged to remit to respondent the balance of the original purchase price of P1,574,560.47, while respondent was obliged to transfer ownership and deliver the property to petitioner, conformably with Article 1159 of the New Civil Code. Petitioner posits that respondent was proscribed from increasing the interest rate after it had accepted respondent's offer to sell the property for P1,574,560.00. Consequently, respondent could no longer validly make a counter-offer of P1,931,789.88 for the purchase of the property. It likewise maintains that, although theP725,000.00 was considered as "deposit for the repurchase of the property" in the receipt issued by the SAMD, the amount constitutes earnest money as contemplated in Article 1482 of the New Civil Code. Petitioner cites the rulings of this Court in Villonco v. Bormaheco39 and Topacio v. Court of Appeals.40 Petitioner avers that its failure to append its conformity to the June 4, 1984 letter of respondent and its failure to pay the balance of the price as fixed by respondent within the 60-day period from notice was to protest respondent's breach of its obligation to petitioner. It did not amount to a rejection of respondent's offer to sell the property since respondent was merely seeking to enforce its right to pay the balance of P1,570,564.47. In any event, respondent had the option either to accept the balance of the offered price or to cause the rescission of the contract. Petitioner's letters dated March 18, 1993 and June 21, 1993 to respondent during the pendency of the case in the RTC were merely to compromise the pending lawsuit, they did not constitute separate offers to repurchase the property. Such offer to compromise should not be taken against it, in accordance with Section 27, Rule 130 of the Revised Rules of Court. For its part, respondent contends that the parties never graduated from the "negotiation stage" as they could not agree on the amount of the repurchase price of the property. All that transpired was an exchange of proposals and counter-proposals, nothing more. It insists that a definite agreement on the amount and manner of payment of the price are essential elements in the formation of a binding and enforceable contract of sale. There was no such agreement in this case. Primarily, the concept of "suspensive condition" signifies a future and uncertain event upon the fulfillment of which the obligation becomes effective. It clearly presupposes the existence of a valid and binding agreement, the effectivity of which is subordinated to its fulfillment. Since there is no perfected contract in the first place, there is no basis for the application of the principles governing "suspensive conditions." According to respondent, the Statement of Account prepared by SAMD as of June 25, 1984 cannot be classified as a counter-offer; it is simply a recital of its total monetary claims against petitioner. Moreover, the amount stated therein could not likewise be considered as the counteroffer since as admitted by petitioner, it was only recommendation which was subject to approval of the PNB Board of Directors. Neither can the receipt by the SAMD of P725,000.00 be regarded as evidence of a perfected sale contract. As gleaned from the parties' Stipulation of Facts during the proceedings in the court a quo, the amount is merely an acknowledgment of the receipt of P725,000.00 as deposit to repurchase the property. The deposit of P725,000.00 was accepted by respondent on the condition that the purchase price would still be approved by its Board of Directors. Respondent

12
maintains that its acceptance of the amount was qualified by that condition, thus not absolute. Pending such approval, it cannot be legally claimed that respondent is already bound by any contract of sale with petitioner. According to respondent, petitioner knew that the SAMD has no capacity to bind respondent and that its authority is limited to administering, managing and preserving the properties and other special assets of PNB. The SAMD does not have the power to sell, encumber, dispose of, or otherwise alienate the assets, since the power to do so must emanate from its Board of Directors. The SAMD was not authorized by respondent's Board to enter into contracts of sale with third persons involving corporate assets. There is absolutely nothing on record that respondent authorized the SAMD, or made it appear to petitioner that it represented itself as having such authority. Respondent reiterates that SAMD had informed petitioner that its offer to repurchase had been approved by the Board subject to the condition, among others, "that the selling price shall be the total bank's claim as of documentation date x x x payable in cash (P725,000.00 already deposited) within 60 days from notice of approval." A new Statement of Account was attached therein indicating the total bank's claim to be P1,931,389.53 less deposit of P725,000.00, or P1,206,389.00. Furthermore, while respondent's Board of Directors accepted petitioner's offer to repurchase the property, the acceptance was qualified, in that it required a higher sale price and subject to specified terms and conditions enumerated therein. This qualified acceptance was in effect a counter-offer, necessitating petitioner's acceptance in return. The Ruling of the Court The ruling of the appellate court that there was no perfected contract of sale between the parties on June 4, 1985 is correct. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.41 Under Article 1318 of the New Civil Code, there is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established. Contracts are perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.42 Once perfected, they bind other contracting parties and the obligations arising therefrom have the form of law between the parties and should be complied with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law.43 By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.44 The absence of any of the essential elements will negate the existence of a perfected contract of sale. As the Court ruled in Boston Bank of the Philippines v. Manalo:45 A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.46 A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there is merely an offer by one party without acceptance of the other, there is no contract.47 When the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties.48 In San Miguel Properties Philippines, Inc. v. Huang,49 the Court ruled that the stages of a contract of sale are as follows: (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and (3) consummation, which begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof. A negotiation is formally initiated by an offer, which, however, must be certain.50 At any time prior to the perfection of the contract, either negotiating party may stop the negotiation. At this stage, the offer may be withdrawn; the withdrawal is effective immediately after its manifestation. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional and without variance of any sort from the proposal. In Adelfa Properties, Inc. v. Court of Appeals,51 the Court ruled that: x x x The rule is that except where a formal acceptance is so required, although the acceptance must be affirmatively and clearly made and must be evidenced by some acts or conduct communicated to the offeror, it may be shown by acts, conduct, or words of the accepting party that clearly manifest a present intention or determination to accept the offer to buy or sell. Thus, acceptance may be shown by the acts, conduct, or words of a party recognizing the existence of the contract of sale.52 A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. A counter-offer is considered in law, a rejection of the original offer and an attempt to end the negotiation between the parties on a different basis.53 Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to guarantee consent because any modification or variation from the terms of the offer annuls the offer.54 The acceptance must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. In this case, petitioner had until February 17, 1984 within which to redeem the property. However, since it lacked the resources, it requested for more time to redeem/repurchase the property under such terms and conditions agreed upon by the parties.55 The request, which was made through a letter dated August 25, 1983, was referred to the respondent's main branch for appropriate action.56 Before respondent could act on the request, petitioner again wrote respondent as follows:

13
1. Upon approval of our request, we will pay your goodselves ONE HUNDRED & FIFTY THOUSAND PESOS (P150,000.00); 2. Within six months from date of approval of our request, we will pay another FOUR HUNDRED FIFTY THOUSAND PESOS (P450,000.00); and 3. The remaining balance together with the interest and other expenses that will be incurred will be paid within the last six months of the one year grave period requested for.57 When the petitioner was told that respondent did not allow "partial redemption,"58 it sent a letter to respondent's President reiterating its offer to purchase the property.59 There was no response to petitioner's letters dated February 10 and 15, 1984. The statement of account prepared by the SAMD stating that the net claim of respondent as of June 25, 1984 wasP1,574,560.47 cannot be considered an unqualified acceptance to petitioner's offer to purchase the property. The statement is but a computation of the amount which petitioner was obliged to pay in case respondent would later agree to sell the property, including interests, advances on insurance premium, advances on realty taxes, publication cost, registration expenses and miscellaneous expenses. There is no evidence that the SAMD was authorized by respondent's Board of Directors to accept petitioner's offer and sell the property for P1,574,560.47. Any acceptance by the SAMD of petitioner's offer would not bind respondent. As this Court ruled in AF Realty Development, Inc. vs. Diesehuan Freight Services, Inc.:60 Section 23 of the Corporation Code expressly provides that the corporate powers of all corporations shall be exercised by the board of directors. Just as a natural person may authorize another to do certain acts in his behalf, so may the board of directors of a corporation validly delegate some of its functions to individual officers or agents appointed by it. Thus, contracts or acts of a corporation must be made either by the board of directors or by a corporate agent duly authorized by the board. Absent such valid delegation/authorization, the rule is that the declarations of an individual director relating to the affairs of the corporation, but not in the course of, or connected with the performance of authorized duties of such director, are held not binding on the corporation. Thus, a corporation can only execute its powers and transact its business through its Board of Directors and through its officers and agents when authorized by a board resolution or its bylaws.61 It appears that the SAMD had prepared a recommendation for respondent to accept petitioner's offer to repurchase the property even beyond the one-year period; it recommended that petitioner be allowed to redeem the property and pay P1,574,560.00 as the purchase price. Respondent later approved the recommendation that the property be sold to petitioner. But instead of the P1,574,560.47 recommended by the SAMD and to which petitioner had previously conformed, respondent set the purchase price at P2,660,000.00. In fine, respondent's acceptance of petitioner's offer was qualified, hence can be at most considered as a counter-offer. If petitioner had accepted this counter-offer, a perfected contract of sale would have arisen; as it turns out, however, petitioner merely sought to have the counter-offer reconsidered. This request for reconsideration would later be rejected by respondent. We do not agree with petitioner's contention that the P725,000.00 it had remitted to respondent was "earnest money" which could be considered as proof of the perfection of a contract of sale under Article 1482 of the New Civil Code. The provision reads: ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. This contention is likewise negated by the stipulation of facts which the parties entered into in the trial court: 8. On June 8, 1984, the Special Assets Management Department (SAMD) of PNB prepared an updated Statement of Account showing MMCC's total liability to PNB as of June 25, 1984 to be P1,574,560.47 and recommended this amount as the repurchase price of the subject property. 9. On June 25, 1984, MMCC paid P725,000.00 to PNB as deposit to repurchase the property. The deposit of P725,000 was accepted by PNB on the condition that the purchase price is still subject to the approval of the PNB Board.62 Thus, the P725,000.00 was merely a deposit to be applied as part of the purchase price of the property, in the event that respondent would approve the recommendation of SAMD for respondent to accept petitioner's offer to purchase the property for P1,574,560.47. Unless and until the respondent accepted the offer on these terms, no perfected contract of sale would arise. Absent proof of the concurrence of all the essential elements of a contract of sale, the giving of earnest money cannot establish the existence of a perfected contract of sale.63 It appears that, per its letter to petitioner dated June 4, 1985, the respondent had decided to accept the offer to purchase the property for P1,931,389.53. However, this amounted to an amendment of respondent's qualified acceptance, or an amended counter-offer, because while the respondent lowered the purchase price, it still declared that its acceptance was subject to the following terms and conditions: 1. That the selling price shall be the total Bank's claim as of documentation date (pls. see attached statement of account as of 5-31-85), payable in cash (P725,000.00 already deposited) within sixty (60) days from notice of approval; 2. The Bank sells only whatever rights, interests and participation it may have in the property and you are charged with full knowledge of the nature and extent of said rights, interests and participation and waive your right to warranty against eviction. 3. All taxes and other government imposts due or to become due on the property, as well as expenses including costs of documents and science stamps, transfer fees, etc., to be incurred in connection with the execution and registration of all covering documents shall be borne by you; 4. That you shall undertake at your own expense and account the ejectment of the occupants of the property subject of the sale, if there are any; 5. That upon your failure to pay the balance of the purchase price within sixty (60) days from receipt of advice accepting your offer, your deposit shall be forfeited and the Bank is thenceforth authorized to sell the property to other interested parties. 6. That the sale shall be subject to such other terms and conditions that the Legal Department may impose to protect the interest of the Bank.64 It appears that although respondent requested petitioner to conform to its amended counter-offer, petitioner refused and instead requested respondent to reconsider its amended counter-offer.

14
Petitioner's request was ultimately rejected and respondent offered to refund its P725,000.00 deposit. In sum, then, there was no perfected contract of sale between petitioner and respondent over the subject property. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed decision is AFFIRMED. Costs against petitioner Manila Metal Container Corporation. November 10, 1976 before the then City Court (now Metropolitan Trial Court) of Quezon City, Branch VIII. On November 22, 1982, the City Court rendered judgment[2] ordering private respondent to vacate the leased premises and to pay the sum ofP624,000.00 representing rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from June 1976 to November 1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December 1982, until private respondent fully vacates the premises, and to pay P20,000.00 as and by way of attorney's fees. Private respondent filed a certiorari petition praying for the issuance of a restraining order enjoining the enforcement of said judgment and dismissal of the case for lack of jurisdiction of the City Court. On September 26, 1984, the then Intermediate Appellate Court[3] (now Court of Appeals) rendered a decision[4] stating that: "x x x, the alleged question of whether petitioner was granted an extension of the option to buy the property; whether such option, if any, extended the lease or whether petitioner actually paid the allegedP300,000.00 to Fidela Dizon, as representative of private respondents in consideration of the option and, whether petitioner thereafter offered to pay the balance of the supposed purchase price, are all merely incidental and do not remove the unlawful detainer case from the jurisdiction of respondent court. In consonance with the ruling in the case of Teodoro, Jr. vs. Mirasol (supra), the above matters may be raised and decided in the unlawful detainer suit as, to rule otherwise, would be a violation of the principle prohibiting multiplicity of suits. (Original Records, pp. 38-39)." The motion for reconsideration was denied. On review, this Court dismissed the petition in a resolution dated June 19, 1985 and likewise denied private respondent's subsequent motion for reconsideration in a resolution dated September 9, 1985.[5] On October 7, 1985, private respondent filed before the Regional Trial Court (RTC) of Quezon City (Civil Case No. Q-45541) an action for Specific Performance and Fixing of Period for Obligation with prayer for the issuance of a restraining order pending hearing on the prayer for a writ of preliminary injunction. It sought to compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial payment, and to fix the period to pay the balance. In an Order dated October 25, 1985, the trial court denied the issuance of a writ of preliminary injunction on the ground that the decision of the then City Court for the ejectment of the private respondent, having been affirmed by the then Intermediate Appellate Court and the Supreme Court, has become final and executory. Unable to secure an injunction, private respondent also filed before the RTC of Quezon City, Branch 102 (Civil Case No. Q-46487) on November 15, 1985 a complaint for Annulment of and Relief from Judgment with injunction and damages. In its decision[6] dated May 12, 1986, the trial court dismissed the complaint for annulment on the ground of res judicata, and the writ of preliminary injunction previously issued was dissolved. It also ordered private respondent to pay P3,000.00 as attorney's fees. As a consequence of private respondent's motion for reconsideration, the preliminary injunction was reinstated, thereby restraining the execution of the City Court's judgment on the ejectment case. The two cases were thereafter consolidated before the RTC of Quezon City, Branch 77. On April 28, 1989, a decision[7] was rendered dismissing private respondent's complaint in Civil Case No. Q-45541 (specific performance case) and denying its motion for reconsideration in Civil Case No. 46487 (annulment of the ejectment case). The motion for reconsideration of said decision was likewise denied.

SO ORDERED. Ynares-Santiago, J., Working Chairperson, Austria-Martinez, and Chico-Nazario, JJ., concur. Panganiban, C.J., retired as of December 7, 2006.

[G.R. No. 122544. January 28, 1999] REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS and OVERLAND EXPRESS LINES, INC., respondents. [G.R. No. 124741. January 28, 1999] REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and OVERLAND EXPRESS LINES, INC., respondents. DECISION MARTINEZ, J.: Two consolidated petitions were filed before us seeking to set aside and annul the decisions and resolutions of respondent Court of Appeals. What seemed to be a simple ejectment suit was juxtaposed with procedural intricacies which finally found its way to this Court.
G. R. NO. 122544:

On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with Option to Buy with petitioners[1] (lessors) involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South "H" Street, Diliman, Quezon City. The term of the lease was for one (1) year commencing from May 16, 1974 up to May 15, 1975. During this period, private respondent was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a monthly rental of P3,000.00. For failure of private respondent to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment (Civil Case No. VIII-29155) on

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On appeal,[8] respondent Court of Appeals rendered a decision[9] upholding the jurisdiction of the City Court of Quezon City in the ejectment case. It also concluded that there was a perfected contract of sale between the parties on the leased premises and that pursuant to the option to buy agreement, private respondent had acquired the rights of a vendee in a contract of sale. It opined that the payment by private respondent ofP300,000.00 on June 20, 1975 as partial payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny receipt thereof, private respondent can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf. The Court of Appeals went further by stating that in fact, what was entered into was a "conditional contract of sale" wherein ownership over the leased property shall not pass to the private respondent until it has fully paid the purchase price. Since private respondent did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price. The dispositive portion of said decision reads: "WHEREFORE, the appealed decision in Case No. 46487 is AFFIRMED. The appealed decision in Case No. 45541 is, on the other hand, ANNULLED and SET ASIDE. The defendants-appellees are ordered to execute the deed of absolute sale of the property in question, free from any lien or encumbrance whatsoever, in favor of the plaintiff-appellant, and to deliver to the latter the said deed of sale, as well as the owner's duplicate of the certificate of title to said property upon payment of the balance of the purchase price by the plaintiff-appellant. The plaintiff-appellant is ordered to pay P1,700.00 per month from June 1976, plus 6% interest per annum, until payment of the balance of the purchase price, as previously agreed upon by the parties. SO ORDERED." Upon denial of the motion for partial reconsideration (Civil Case No. Q-45541) by respondent Court of Appeals,[10] petitioners elevated the case via petition for certiorari questioning the authority of Alice A. Dizon as agent of petitioners in receiving private respondent's partial payment amounting to P300,000.00 pursuant to the Contract of Lease with Option to Buy. Petitioners also assail the propriety of private respondent's exercise of the option when it tendered the said amount on June 20, 1975 which purportedly resulted in a perfected contract of sale.
G. R. NO. 124741:

On December 22, 1993, private respondent filed with the Regional Trial Court (RTC) of Quezon City, Branch 104 a petition for certiorari and prohibition with preliminary injunction/restraining order (SP. PROC. No. 93-18722) challenging the enforceability and validity of the MTC judgment as well as the order for its execution. On January 11, 1994, RTC of Quezon City, Branch 104 issued an order[12] granting the issuance of a writ of preliminary injunction upon private respondent's posting of an injunction bond of P50,000.00. Assailing the aforequoted order after denial of their motion for partial reconsideration, petitioners filed a petition[13] for certiorari and prohibition with a prayer for a temporary restraining order and/or preliminary injunction with the Court of Appeals. In its decision,[14] the Court of Appeals dismissed the petition and ruled that: "The avowed purpose of this petition is to enjoin the public respondent from restraining the ejectment of the private respondent. To grant the petition would be to allow the ejectment of the private respondent. We cannot do that now in view of the decision of this Court in CA-G.R. CV Nos. 25153-54. Petitioners' alleged right to eject private respondent has been demonstrated to be without basis in the said civil case. The petitioners have been shown, after all, to have no right to eject private respondents. WHEREFORE, the petition is DENIED due course and is accordingly DISMISSED. SO ORDERED."[15] Petitioners' motion for reconsideration was denied in a resolution[16] by the Court of Appeals stating that: "This court in its decision in CA-G.R. CV Nos. 25153-54 declared that the plaintiff-appellant (private respondent herein) acquired the rights of a vendee in a contract of sale, in effect, recognizing the right of the private respondent to possess the subject premises. Considering said decision, we should not allow ejectment; to do so would disturb the status quo of the parties since the petitioners are not in possession of the subject property. It would be unfair and unjust to deprive the private respondent of its possession of the subject property after its rights have been established in a subsequent ruling. WHEREFORE, the motion for reconsideration is DENIED for lack of merit. SO ORDERED."[17] Hence, this instant petition. We find both petitions impressed with merit. First. Petitioners have established a right to evict private respondent from the subject premises for non-payment of rentals. The term of the Contract of Lease with Option to Buy was for a period of one (1) year (May 16, 1974 to May 15, 1975) during which the private respondent was given an option to purchase said property at P3,000.00 per square meter. After the expiration thereof, the lease was for P3,000.00 per month. Admittedly, no definite period beyond the one-year term of lease was agreed upon by petitioners and private respondent. However, since the rent was paid on a monthly basis, the period of lease is considered to be from month to month in accordance with Article 1687 of the New Civil Code.[18] Where the rentals are paid monthly, the lease, even if verbal may be deemed to be on a monthly basis, expiring at the end of every month pursuant to Article 1687, in relation

Petitioners filed with respondent Court of Appeals a motion to remand the records of Civil Case No. 38-29155 (ejectment case) to the Metropolitan Trial Court (MTC), then City Court of Quezon City, Branch 38, for execution of the judgment[11] dated November 22, 1982 which was granted in a resolution dated June 29, 1992. Private respondent filed a motion to reconsider said resolution which was denied. Aggrieved, private respondent filed a petition for certiorari, prohibition with preliminary injunction and/or restraining order with this Court (G.R. Nos. 106750-51) which was dismissed in a resolution dated September 16, 1992 on the ground that the same was a refiled case previously dismissed for lack of merit. On November 26, 1992, entry of judgment was issued by this Court. On July 14, 1993, petitioners filed an urgent ex-parte motion for execution of the decision in Civil Case No. 38-29155 with the MTC of Quezon City, Branch 38. On September 13, 1993, the trial court ordered the issuance of a third alias writ of execution. In denying private respondent's motion for reconsideration, it ordered the immediate implementation of the third writ of execution without delay.

16
to Article 1673 of the Civil Code.[19] In such case, a demand to vacate is not even necessary for judicial action after the expiration of every month.[20] When private respondent failed to pay the increased rental of P8,000.00 per month in June 1976, the petitioners had a cause of action to institute an ejectment suit against the former with the then City Court. In this regard, the City Court (now MTC) had exclusive jurisdiction over the ejectment suit. The filing by private respondent of a suit with the Regional Trial Court for specific performance to enforce the option to purchase did not divest the then City Court of its jurisdiction to take cognizance over the ejectment case. Of note is the fact that the decision of the City Court was affirmed by both the Intermediate Appellate Court and this Court. Second. Having failed to exercise the option within the stipulated one-year period, private respondent cannot enforce its option to purchase anymore. Moreover, even assuming arguendo that the right to exercise the option still subsists at the time private respondent tendered the amount on June 20, 1975, the suit for specific performance to enforce the option to purchase was filed only on October 7, 1985 or more than ten (10) years after accrual of the cause of action as provided under Article 1144 of the New Civil Code.[21] In this case, there was a contract of lease for one (1) year with option to purchase. The contract of lease expired without the private respondent, as lessee, purchasing the property but remained in possession thereof. Hence, there was an implicit renewal of the contract of lease on a monthly basis. The other terms of the original contract of lease which are revived in the implied new lease under Article 1670 of the New Civil Code[22] are only those terms which are germane to the lessees right of continued enjoyment of the property leased.[23] Therefore, an implied new lease does not ipso facto carry with it any implied revival of private respondent's option to purchase (as lessee thereof) the leased premises. The provision entitling the lessee the option to purchase the leased premises is not deemed incorporated in the impliedly renewed contract because it is alien to the possession of the lessee. Private respondents right to exercise the option to purchase expired with the termination of the original contract of lease for one year. The rationale of this Court is that: This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the lessee to continue enjoying possession of the property for fifteen days after the expiration of the contract he is willing that such enjoyment shall be for the entire period corresponding to the rent which is customarily paid in this case up to the end of the month because the rent was paid monthly. Necessarily, if the presumed will of the parties refers to the enjoyment of possession the presumption covers the other terms of the contract related to such possession, such as the amount of rental, the date when it must be paid, the care of the property, the responsibility for repairs, etc. But no such presumption may be indulged in with respect to special agreements which by nature are foreign to the right of occupancy or enjoyment inherent in a contract of lease.[24] Third. There was no perfected contract of sale between petitioners and private respondent. Private respondent argued that it delivered the check of P300,000.00 to Alice A. Dizon who acted as agent of petitioners pursuant to the supposed authority given by petitioner Fidela Dizon, the payee thereof. Private respondent further contended that petitioners filing of the ejectment case against it based on the contract of lease with option to buy holds petitioners in estoppel to question the authority of petitioner Fidela Dizon. It insisted that the payment of P300,000.00 as partial payment of the purchase price constituted a valid exercise of the option to buy. Under Article 1475 of the New Civil Code, the contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Thus, the elements of a contract of sale are consent, object, and price in money or its equivalent. It bears stressing that the absence of any of these essential elements negates the existence of a perfected contract of sale. Sale is a consensual contract and he who alleges it must show its existence by competent proof.[25] In an attempt to resurrect the lapsed option, private respondent gave P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and private respondent. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.[26] As provided in Article 1868 of the New Civil Code,[27] there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency. In Bacaltos Coal Mines vs. Court of Appeals,[28] we explained the rule in dealing with an agent: Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it. For the long years that private respondent was able to thwart the execution of the ejectment suit rendered in favor of petitioners, we now write finis to this controversy and shun further delay so as to ensure that this case would really attain finality. WHEREFORE, in view of the foregoing, both petitions are GRANTED. The decision dated March 29, 1994 and the resolution dated October 19, 1995 in CA-G.R. CV No. 25153-54, as well as the decision dated December 11, 1995 and the resolution dated April 23, 1997 in CAG.R. SP No. 33113 of the Court of Appeals are hereby REVERSED and SET ASIDE. Let the records of this case be remanded to the trial court for immediate execution of the judgment dated November 22, 1982 in Civil Case No. VIII-29155 of the then City Court (now Metropolitan Trial Court) of Quezon City, Branch VIII as affirmed in the decision dated September 26, 1984 of the then Intermediate Appellate Court (now Court of Appeals) and in the resolution dated June 19, 1985 of this Court. However, petitioners are ordered to REFUND to private respondent the amount of P300,000.00 which they received through Alice A. Dizon on June 20, 1975. SO ORDERED. Davide, Jr., C.J. (Chairman), Melo, Kapunan and Pardo, JJ., concur.

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[G.R. No. 107624. January 28, 1997] GAMALIEL C. VILLANUEVA and IRENE C. VILLANUEVA, petitioners, vs. COURT OF APPEALS, SPOUSES JOSE and LEONILA DELA CRUZ, and SPOUSES GUIDO and FELICITAS PILE, respondents. DECISION PANGANIBAN, J.: The main issue here is whether a contract of sale has been perfected under the attendant facts and circumstances. The petition filed on December 18, 1992 assails the Decision [1] of respondent Court of Appeals promulgated on October 23, 1992 in CA-G.R. CV No. 30741 rendered by the Eleventh Division [2] dismissing the appeal of petitioners and affirming the decision in Civil Case No. Q50844 dated December 28, 1990 of the Regional Trial Court, Branch 83 of Quezon City, presided by Judge Estrella T. Estrada. The dispositive portion of the affirmed decision of the RTC reads: [3] "WHEREFORE, judgment is hereby rendered dismissing plaintiff's instant action for specific performance. However, defendant Jose de la Cruz is hereby ordered to refund or reimburse the amount of Ten Thousand Pesos (P10,000.00) to plaintiff Irene Villanueva. The parties' other claims for damages and attorney's fees are also hereby dismissed for being necessary consequences of litigation. No pronouncement as to costs." The Facts The factual antecedents of this case as found by the trial court were reproduced in the assailed Decision, [4] as follows: [5] "x x x plaintiff (and now petitioner) Gamaliel Villanueva has been a tenant-occupant of a unit in the 3-door apartment building erected on a parcel of land owned by defendants-spouses (now private respondents) Jose Dela Cruz and Leonila dela Cruz, with an area of 403 square meters, more or less, located at Short Horn, Project 8, Quezon City (Exhibit 'L'), having succeeded in the occupancy of said unit from the previous tenant Lolita Santos sometime in 1985. About February of 1986, defendant Jose dela Cruz offered said parcel of land with the 3-door apartment building for sale and plaintiffs, son and mother, showed interest in the property. As an initial step, defendant Jose dela Cruz gave plaintiff Irene Villanueva a letter of authority dated February 12, 1986 (Exhibit 'A') for her to inspect the subject property. Because said property was in arrears in the payment of the realty taxes, defendant Jose dela Cruz approached plaintiff Irene Villanueva and asked for a certain amount to pay for the taxes so that the property would be cleared of any incumbrance (sic). Plaintiff Irene Villanueva gave P10,000.00 on two occasions P5,000.00 on July 15, 1986 (Exhibit 'F') and another P5,000.00 on October 17, 1986 (Exhibit 'D'). It was agreed by them that said P10,000.00 would form part of the sale price ofP550,000.00. Sometime thereafter, defendant Jose dela Cruz went to plaintiff Irene Villanueva bringing with him Mr. Ben Sabio, a tenant of one of the units in the 3-door apartment building located on the subject property, and requested her and her son to allow said Ben Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which the plaintiffs consented, so that they would just purchase the other half portion and would be paying only P265,000.00, they having already given an amount of P10,000.00 used for paying the realty taxes in arrears. Accordingly the property was subdivided and two (2) separate titles were secured by defendants Dela Cruz. Mr. Ben Sabio immediately made payments by installments. Sometime in March, 1987 or more specifically on March 6, 1987, defendants Dela Cruz executed in favor of their co-defendants, the spouses Guido Pili (sic) and Felicitas Pili (sic), a Deed of Assignment of the other one-half portion of the parcel of land wherein plaintiff Gamaliel Villanueva's apartment unit is situated, designated as Lot 3-A of the Subdivision Plan (LRC) Psd-337290, Block 24, Pcs-4865, with an area of 201.50 square meters, more or less, and covered by Transfer Certificate of Title 332445, purportedly as full payment and satisfaction of an indebtedness (sic) obtained from defendants Pili (sic) (Exhibit 'G'; Exhibit '3'). Consequently, Transfer Certificate of Title No. 356040 was issued in the name of defendants Pili (sic) also on March 6, 1987. Immediately thereafter, the plaintiffs came to know of such assignment and transfer and issuance of a new certificate of title in favor of defendants Pili (sic) so that plaintiff Gamaliel Villanueva complained to the barangay captain of Bahay Turo, Quezon City, on the ground that there was already an agreement between defendants Dela Cruz and themselves that said portion of the parcel of land owned by defendants Dela Cruz would be sold to him. As there was no settlement arrived at, the plaintiffs elevated their complaint to this Court through the instant action." The trial court rendered its decision in favor of private respondents. An appeal was duly brought to public respondent which as earlier stated affirmed the said decision. Hence, this petition for review on certiorari under Rule 45 of the Rules of Court. The Issues The following errors are alleged to have been committed by public respondent: [6] "I The Court of Appeals erred in failing to find that there is a perfected contract of sale of subject property between petitioners and respondents spouses Dela Cruz II The Court of Appeals erred in applying the Statute of Frauds in this case when it is a contract of sale that was partly executed III The Court of Appeals erred in not finding that this being a case of double sale of immovable property, although respondents spouses Pili (sic) recorded the deed of assignment to them in the Registry of Deeds they were not in good faith while (sic) petitioners as purchasers thereof were in prior possession in good faith of the property. IV The Court of Appeals erred in failing to reverse and set aside the appealed judgment of the trial court and rendering a judgment for petitioners" In the opinion of this Court, these four issues may be summed up in a single question: Under the factual circumstances of this case, was there a perfected contract of sale? Petitioners contend that the adopted findings of facts of public respondent are contradicted by its ruling that there is no agreement as to the price of the apartments. They argue that on the basis of the facts found by public respondent, "the conclusion is ineluctable that there was a perfected contract of sale of the subject property." [7] According to petitioners, private respondents had to secure their consent to enable "Sabio to buy the one-half portion of the property where the unit Sabio was renting pertains so that petitioners will pay only the balance of P265,000.00 for the purchase of the other half after deducting the P10,000.00 petitioners advanced." [8] Public respondent's conclusion that the P10,000.00 paid to petitioners was not intended as part of the purchase price allegedly "collides" with its quoted findings, as follows: [9] "It was agreed by them that said P10,000.00 would form part of the sale price of P550,000.00. x x x defendant Jose de la Cruz .x x x requested her and her son to allow said Ben Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which plaintiffs consented, so they would purchase the other half portion and would be paying

18
only P265,000.00 they having already given an amount of P10,000,00 used for paying the realty taxes in arrears.x x x" (Underscoring in the petition). The Court's Ruling The arguments of petitioners do not persuade us. While it is true that respondent Court adopted the recitation of facts of the trial court, it nonetheless later corrected the relevant portions thereof as it found that no perfected contract of sale was agreed upon. Thus, public respondent explained: [10] "Appellants' theory of earnest money cannot be sustained in view of the catena of circumstance showing that the P10,000.00 given to appellees was not intended to form part of the purchase price. As the great commentator Manresa observes that the delivery of part of the purchase price should not be understood as constituting earnest money unless it be shown that such was the intention of the parties (Manresa Commentaries on the Civil Code, 2d ed., Vol. 10, p. 85). Moreover, as can be gleaned from the records there was no concrete agreement to the price and manner of payment: 'Q Will you tell us why your transaction with plaintiffs (petitioners herein) did not materialize? A Because I have been returning to Mrs. Villanueva and in fact we have executed a Deed of Sale which was in fact not signed. Q Why did you not sign the Deed of Sale you mentioned? A The Villanuevas told me to prepare the documents involved in this transaction because according to her (sic) she (sic) was only waiting for the money to come but because I was then being pressed by Felicitas Pile for the payment of my loan. I was constrained to assign the property to her. Q What are your other reasons? A Aside from that we were still huggling (sic) for the purchase price then and since I was being pressed by my creditor, I was forced to make the assignment.'" The most that public respondent can be faulted with is its failure to expressly state that although its conclusion of law was correct, the trial court erred in its statement of the facts. Was There a Perfected Contract of Sale? Petitioners contend that private respondents' counsel admitted that "P10,000 is partial or advance payment of the property (TSN, June 14 [should be 15], 4 (sic) 1990, pages 6 to 7)." Necessarily then, there must have been an agreement as to price. They cite Article 1482 of the Civil Code which provides that "(w)henever 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." [11] Private respondents contradict this claim with the argument that "(w)hat was clearly agreed (upon) between petitioners and respondents Dela Cruz was that the P10,000.00 primarily intended as payment for realty tax was going to form part of the consideration of the sale if and when the transaction would finally be consummated." [12] Private respondents insist that there "was no clear agreement as to the true amount of consideration." [13] Generally, the findings of fact of the lower courts are entitled to great weight and not disturbed except for cogent reasons. [14] Indeed, they should not be changed on appeal in the absence of a clear showing that the trial court overlooked, disregarded, or misinterpreted some facts of weight and significance, which if considered would have altered the result of the case. [15] In this case, and subject to the above clarification made by the appellate court, petitioners have failed to convince us to alter such findings. In fact, a review of the evidence merely strengthens the conclusions of public respondent. We scoured the transcripts but we found that respondent dela Cruz never testified that he (or his spouse Leonila) had agreed to a definite price for the subject property. In fact, his testimony during the cross-examination firmly negated any price agreement with petitioners because he and his wife quoted the price of P575,000.00 and did not agree to reduce it to P550,000.00 as claimed by petitioner: [16] "Q And despite the fact that the property was mortgaged with Development Bank of Rizal you still contrated (sic) Sandiego (sic) for the purpose of selling the property? A Yes, sir. Q And did Sandiego (sic) agree as agent in selling the property despite the fact that it was mortgaged with the Development Bank of Rizal? A Yes, sir. Q Can you recall the condition you offered to Sandiego (sic) to act as your agent in selling the same? A He will get certain commission for the same. Q Will you state the price and conditions set forth in selling the property? A P575 thousand, sir. Q That is the same offer that was given to you by plaintiff Mrs. Villanueva? A I can not recall, I think so. Q And you will agree with me that 1/2 of P575 thousand is how much (sic)? ATTY. MANZO: There (is) nothing to agree with you counsel. ATTY. GUPIT: And the offer to you, the agreed price between you and Mrs. Villanueva is P275 thousand as stated in the agreement that was prepared? ATTY. MANZO: Counsel is again assuming that there was an agreement made already. (ATTY. GUPIT:) He answered there is a document between Villanueva and Dela Cruz. ATTY. (MANZO): Let the witness be confronted by the document." We are not unmindful of petitioner Irene Villanueva's claim that the parties agreed on the sum of P550,000.00, as follows: [17] "ATTY. GUPIT What was the result of the negotiations? WITNESS (Irene Villanueva): We agreed that he would sell the land to us for the sum of, the amount of P550,000.00 xxx xxx xxx WITNESS After the Deed of Sale relative to the purchase of the property was prepared, Mr. dela Cruz (private respondent Jose) came to me and told me that he talked with one of the tenants and he offered to buy the portion he was occupying if I will agree and I will cause the partition of the property between us. ATTY. GUPIT Did you agree with the proposal of Mr. dela Cruz that the portion of the property will be sold to one of the tenants? WITNESS Yes(,) sir. I agreed because we are (sic) both tenants.

19
ATTY. GUPIT How about the price? How much are (sic) you supposed to pay in order to complete your payments? WITNESS We are (sic) supposed to divide the amount of P550,000.00." To settle the above conflicting claims of the parties, petitioners could have presented the contract of sale allegedly prepared by private respondent Jose dela Cruz. Unfortunately, the contract was not presented in evidence. However, petitioners aver that even if the unsigned deed of sale was not produced, private respondent Jose dela Cruz "admitted preparing (said) deed in accordance with their agreement." [18] This judicial admission" is allegedly the "best proof of its existence." [19] Further it was "impossible" for petitioners to produce the same "since it was and remained in the possession" of private respondent Jose dela Cruz. [20] We do not agree with petitioners. Assuming arguendo that such draft deed existed, it does not necessarily follow that there was already a definite agreement as to the price. If there was, why then did private respondent Jose de la Cruz not sign it? If indeed the draft deed of sale was that important to petitioners' cause, they should have shown some effort to procure it. They could have secured it through a subpoena duces tecum or thru the use of one of the modes of discovery. But petitioners made no such effort. And even if produced, it would not have commanded any probative value as it was not signed. As has been said in an old case, the price of the leased land not having been fixed, the essential elements which give life to the contract were lacking. It follows that the lessee cannot compel the lessor to sell the leased land to him. [21] The price must be certain, it must be real, not fictitious. [22] It is not necessary that the certainty of the price be actual or determined at the time of executing the contract. The fact that the exact amount to be paid therefor is not precisely fixed, is no bar to an action to recover such compensation, provided the contract, by its terms, furnishes a basis or measure for ascertaining the amount agreed upon. [23] The price could be made certain by the application of known factors; where, in a sale of coal, a basic price was fixed, but subject to modification "in proportion to variations in calories and ash content, and not otherwise," the price was held certain. [24] A contract of sale is not void for uncertainty when the price, though not directly stated in terms of pesos and centavos, can be made certain by reference to existing invoices identified in the agreement. In this respect, the contract of sale is perfected. [25] The price must be certain, otherwise there is no true consent between the parties. [26] There can be no sale without a price. [27] In the instant case, however, what is dramatically clear from the evidence is that there was no meeting of mind as to the price, expressly or impliedly, directly or indirectly. Sale is a consensual contract. He who alleges it must show its existence by competent proof. Here, the very essential element of price has not been proven. Lastly, petitioners' claim that they are ready to pay private respondents [28] is immaterial and irrelevant as the latter cannot be forced to accept such payment, there being no perfected contract of sale in the first place. Applicability of Statute of Frauds and the Law on Double Sale Petitioners contend that the statute of frauds does not apply because such statute applies only to executory contracts whereas in this case the contract of sale had already been partly executed. [29] Further, petitioners, citing Article 1544 of the Civil Code asseverate that being in possession of the property in good faith therefore they should be deemed the lawful owners thereof.[30] On the other hand, private respondents counter that the contract in this case is a "mere executory contract and not a completed or executed contract." [31] Both contentions are inaccurate. True, the statute of frauds applies only to executory contracts and not to partially or completely executed ones. [32] However, there is no perfected contract in this case, therefore there is no basis for the application of the statute of frauds. The application of such statute presupposes the existence of a perfected contract and requires only that a note or memorandum be executed in order to compel judicial enforcement thereof. Also, the civil law rule on double sale finds no application because there was no sale at all to begin with. At bottom, what took place was only a prolonged negotiation to buy and to sell, and at most, an offer and a counter-offer but no definite agreement was reached by the parties. Hence, the rules on perfected contract of sale, statute of frauds and double sale find no relevance nor application. WHEREFORE, the Petition is DENIED and the assailed Decision is AFFIRMED. Costs against petitioners. SO ORDERED. Narvasa (Chairman), CJ., Davide, Jr., Melo and Francisco, JJ., concur.

G.R. No. 133749

August 23, 2001

HERNANDO R. PEALOSA alias "HENRY PEALOSA," petitioner, vs. SEVERINO C. SANTOS (deceased), Substituted by his heirs: OLIVER SANTOS and ADYLL M. SANTOS, and ADELA DURAN MENDEZ SANTOS, respondents. QUISUMBING, J.: Petitioner appeals by certiorari from the decision of the Court of Appeals, which affirmed the judgment of the Regional Trial Court of Quezon City, Branch 78, in Civil Case No. Q-92-13531, declaring the deed of absolute sale entered into between petitioner and respondents as void and inexistent and ordering petitioner to vacate the subject property and to pay reasonable compensation for its use. The facts, as revealed by the records, are as follows: Respondents Severino C. Santos (deceased) and Adela Mendez Santos are registered owners of a residential house and lot located at No. 113 Scout Rallos Street, Quezon City under TCT No. PT23458 (54434).1 In 1988, Severino and Adela decided to sell their property and for this purpose, negotiated with petitioner Hernando (or Henry) Pealosa. The property was then occupied by a lessee, Eleuterio Perez, who was given preference to buy it under the same terms offered by the buyer.2 Perez proposed less favorable terms3 and expectedly, Severino rejected his offer. On August 1, 1988, petitioner Henry Pealosa and respondent Severino Santos attempted to enter into an agreement whereby the latter, for a consideration of P1,800.000.00, would sell to the former the property subject of the instant case. The deed of absolute sale4 (first deed) evidencing this transaction was signed by Henry but not by Severino, because according to the latter, Henry "took time to decide" on the matter.5 On August 15, 1988, Henry signed a document6 stating that the first deed was executed between him and Severino, for the sole purpose of helping the latter eject Perez, the occupant of the property. Henry acknowledged in said document that although Severino had agreed to sell the property to him, he had not paid the consideration stated in the first deed.

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Thereafter, Henry and Severino executed another deed of absolute sale7 (second deed) for a higher consideration of P2,000,000.00. Although the second deed was originally dated "August 1988", superimposed upon the same was the date "September 12, 1988". This second deed was signed by both parties and duly notarized. It states that Severino sells and transfers the house and lot to Henry, who had paid the full price of P2,000,000.00 therefor. Severino explained that his initial asking price for the property was only P1,800,000.00 as shown in the first deed. But he later asked for a higher price because Henry could not give the money as soon as expected. However, Severino claimed that he made it clear to Henry that he agreed to sell the property under the second deed for P2,000,000.00, provided that payment be immediately effected. Severino said that he wanted to use the money to invest in another property located in Alabang and told Henry that if payment was made at a later date, the price would be the current market value at the time of payment. Henry then gave Severino P300,000.00 as "earnest money", purportedly with the understanding that the former was to pay the balance within 60 days. Otherwise, said amount would be forfeited in favor of Severino.8 The latter also maintained that he signed the second deed only for the purpose of facilitating Henry's acquisition of a bank loan to finance payment of the balance of the purchase price9 and added that execution of the second deed was necessary to enable Henry to file a court action for ejectment of the tenant.10 After execution of the second deed, Henry filed a loan application with the Philippine American Life Insurance Company (Philam Life) for the amount of P2,500,000.00.11 According to Henry, he had agreed with Severino during the signing of the second deed, that the balance of P1,700,000.00 would be paid by means of a loan, with the property itself given as collateral.12 Meanwhile, on the strength of the first deed and as new "owner" of the property, Henry wrote a letter13 dated August 8, 1988 to the lessee, Eleuterio Perez, demanding that the latter vacate the premises within 10 days. Failing in this effort, Henry brought a complaint for ejectment14 against Perez before the Office of the Barangay Captain. On September 1, 1988, a Certification To File Action15 was issued by the barangay lupon. This led to the subsequent filing of Civil Case No. 88 0439 for unlawful detainer, before the Metropolitan Trial Court of Quezon City, Branch 43, entitled "Henry Pealosa, Plaintiff vs. Eleuterio Perez, Defendant". Claiming that he still had a subsisting contract of lease over the property, Perez countersued and brought Civil Case No. Q-88-1062 before the Regional Trial Court of Quezon City, Branch 96, entitled "Eleuterio Perez, Plaintiffs vs. Severino Santos, et. al, Defendants". In this latter case, Perez assailed the validity of the sale transaction between Henry and Severino and impleaded the former as co-defendant of Severino. While the aforesaid court cases were pending resolution, Philam Life informed Severino through a letter,16 that Henry's loan application had been approved by the company on January 18, 1989. Philam Life stated in the letter that of the total purchase price of P2,500,000.00, the amount of P1,700,000.00 would be paid directly to Severino by Philam Life, while P800,000.00 would be paid by Henry. The release of the loan proceeds was made subject to the submission of certain documents in Severino's possession, one of which is the owner's duplicate of the Transfer Certificate of Title (TCT) pertaining to the property. However, when Henry and Severino met with officials of Philam Life to finalize the loan/mortgage contract, Severino refused to surrender the owner's duplicate title and insisted on being paid immediately in cash.17 As a consequence, the loan/mortgage contract with Philam Life did not materialize. Subsequently, on April 28, 1989, judgment18 was rendered by the MTC-QC, Branch 43, in Civil Case No. 0439, ordering the tenant Perez to vacate and surrender possession of the property to Henry. In said judgment, Henry was explicitly recognized as the new owner of the property by virtue of the contract of sale dated September 12, 1988, after full payment of the purchase price of P2,000,000.00, receipt of which was duly acknowledged by Severino. Upon finality of said judgment, Henry and his family moved into the disputed house and lot on August 1989, after making repairs and improvements.19 Henry spent a total of P700,000.00 for the renovation, as evidenced by receipts.20 On July 27, 1992, Severino sent a letter21 to Henry, through counsel, demanding that Henry vacate the house and lot, on the ground that Henry did not conclusively offer nor tender a price certain for the purchase of the property. The letter also stated that Henry's alleged offer and promise to buy the property has since been rejected by Severino. When Henry refused to vacate the property, Severino brought this action for quieting of title, recovery of possession and damages before the Regional Trial Court of Quezon City, Branch 78, on September 28, 1992. Severino alleged in his complaint22 that there was a cloud over the title to the property, brought about by the existence of the second deed of sale. Essentially, Severino averred that the second deed was void and inexistent because: a) there was no cause or consideration therefor, since he did not receive the P2,000,000.00 stated in the deed; b) his wife, Adela, in whose name the property was titled, did not consent to the sale nor sign the deed; c) the deed was not registered with the Register of Deeds; d) he did not acknowledge the deed personally before the notary public; e) his residence certificate, as appearing in the deed, was falsified; and f) the deed is fictitious and simulated because it was executed only for the purpose of placing Henry in possession of the property because he tendered "earnest money". Severino also claimed that there was no meeting of minds with respect to the cause or consideration, since Henry's varied offers of P1,800,000.00, P2,000,000.00, and P2,500,000.00, were all rejected by him. For his part, Henry asserted that he was already the owner of the property being claimed by Severino, by virtue of a final agreement reached with the latter. Contrary to Severino's claim, the price of the property was pegged at P2,000,000.00, as agreed upon by the parties under the second deed. Prior to the filing of the action, his possession of the property remained undisturbed for three (3) years. Nevertheless, he admitted that since the signing of the second deed, he has not paid Severino the balance of the purchase price. He, however, faulted the latter for the nonpayment, since according to him, Severino refused to deliver the owner's duplicate title to the financing company. On Aug. 20, 1993, the trial court rendered judgment in favor of Severino and disposed: WHEREFORE, judgment is rendered as follows: 1) DECLARING the "Deed of Absolute Sale" which was signed by the plaintiff Severino C. Santos as vendor and the defendant as vendee and which was entered in the notarial register of notary public Dionilo Marfil of Quezon City as Doc. No. 474, Page No. 95, Book No. 173, Series of 1988, as inexistent and void from the beginning; and consequently, plaintiff's title to the property under T.C.T. No. PT-23458 (54434) issued by the Register of Deeds of Quezon City is quieted, sustained and maintained; 2) ORDERING the defendant to pay plaintiffs the amount of P15, 000.00 a month as reasonable compensation for the use of the House and Lot located at No. 113 Scout Rallos St., Quezon City, beginning on the month of August, 1993, until the premises is fully vacated, (the compensation for the use thereof from the time the defendant had occupied the premises up to July, 1993, is recompensed for the repairs made by him); and 3) ORDERING the plaintiffs to reimburse the defendant the amount of P300,000.00 after defendant had vacated the premises in question, and the reasonable compensation for the use thereof had been paid.

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All other claims and counterclaims are DENIED for lack of legal and factual bases. No pronouncement as to costs. SO ORDERED.23 Both Henry and Severino appealed the above decision to the Court of Appeals. Before the appellate court could decide the same, Severino passed away and was substituted by his wife and children as respondents. Henry filed a motion for leave to be allowed to deposit P1,700,000.00 in escrow with the Landbank of the Philippines to answer for the money portion of the decision.24 This motion was granted. On December 29, 1997, the appellate court affirmed25 the judgment of the trial court and thereafter, denied Henry's motion for reconsideration.26 Thus, Henry brought this petition, citing the following as alleged errors: I. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN SEVERINO C. SANTOS AND PETITIONER HENRY R. PEALOSA. II. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONSIDERING NON-PAYMENT OF THE FULL PURCHASE PRICE AS CAUSE FOR DECLARING A PERFECTED CONTRACT OF SALE AS NULL AND VOID. III. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN REFUSING TO RECOGNIZE THAT OWNERSHIP OF THE SUBJECT PROPERTY HAD BEEN EFFECTIVELY VESTED UPON PETITIONER HENRY R. PEALOSA WHEN ACTUAL POSSESSION THEREOF HAD LAWFULLY TRANSFERRED TO PETITIONER HENRY R. PEALOSA BY VIRTUE OF THE COURT JUDGMENT IN THE EJECTMENT SUIT AGAINST THE FORMER LESSEE.27 The pivotal issue presented before us is whether or not the second deed is valid and constitutes evidence of the final agreement between the parties regarding the sale transaction entered into by them. Petitioner maintains that the existence of a perfected contract of sale in this case is beyond doubt, since there clearly was a meeting of minds between the parties as to the object and consideration of the contract. According to petitioner, the agreement of the parties is evidenced by provisions contained in the second deed, which cannot possibly be simulated or fictitious. Subsequent and contemporaneous acts indubitably point to the fact that the parties truly intended to be bound by the second deed. Accordingly, the P2,000,000.00 stated therein was the actual price agreed upon by the parties as consideration for the sale. On the other hand, in their memorandum, respondents insist that the second deed is a complete nullity because, as found by both the appellate and trial court: a) the consideration stated in the deed was not paid; b) Severino's passport showed that he was in the U.S. when said deed was notarized; c) Severino did not surrender a copy of the title at the time of the alleged sale; d) petitioner did not pay real estate taxes on the property; e) it was executed only for the purpose of helping Severino eject the tenant; f) Severino's wife, Adela, did not sign the deed; and g) the various documentary exhibits proved that there was no price certain accepted or paid. Respondents additionally argue that petitioner merely seeks a review of the aforesaid factual findings of the lower court and that consequently, we should deny the petition on the ground that it raises only factual questions. Considering the pivotal issue presented after close scrutiny of the assigned errors as well as the arguments of the parties, we are unable to agree with respondents and we must give due course to the petition. First of all, the petition filed before this Court explicitly questions "the legal significance and consequences of the established facts"28 and not the findings of fact themselves. As pointed out by petitioner, he submits to the factual findings of the lower court, but maintains that its legal conclusions are irreconcilable and inconsistent therewith. He also states that the grounds relied upon in this petition do not call for the weighing of conflicting evidence submitted by the parties. Rather, he merely asks the Court to give due significance to certain undisputed and admitted facts spread throughout the record, which, if properly appreciated, would justify a different conclusion. At any rate, in Baricuatro, Jr. vs. Court of Appeals, 325 SCRA 137, 145 (2000), we reiterated the doctrine that findings of fact of the Court of Appeals are binding and conclusive upon this Court, subject to certain exceptions, one of which is when the judgment is based on a misapprehension of facts. In this case, after carefully poring over the records, we are convinced that the lower courts misappreciated the evidence presented by the parties and that, indeed, a reversal of the assailed judgment is in order. It should have been readily apparent to the trial court that the circumstances it cited in its decision are not proper grounds for holding that the second deed is simulated. Simulation is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for purposes of deception, the appearance of a juridical act which does not exist or is different from that which was really executed. Its requisites are: a) an outward declaration of will different from the will of the parties; b) the false appearance must have been intended by mutual agreement; and c) the purpose is to deceive third persons.29 None of these requisites is present in this case. The basic characteristic of an absolutely simulated or fictitious contract is that the apparent contract is not really desired or intended to produce legal effects or alter the juridical situation of the parties in any way.30 However, in this case, the parties already undertook certain acts which were directed towards fulfillment of their respective covenants under the second deed, indicating that they intended to give effect to their agreement. In particular, as early as August 8, 1988, after execution of the first deed, Severino authorized petitioner to bring an action for ejectment against the overstaying tenant and allowed petitioner to pursue the ejectment case to its final conclusion, presumably to secure possession of the property in petitioner's favor. Petitioner also applied for a loan, which was approved by Philam Life, to complete payment of the stipulated price. After making extensive repairs with the knowledge of Severino, petitioner moved into the premises and actually occupied the same for three years before this action was brought. Moreover, simultaneous with the execution of the second deed, petitioner gave Severino P300,000.00 in earnest money, which under Article 148231 of the New Civil Code, is part of the purchase price and proof of perfection of the contract. What may have led the lower courts into incorrectly believing that the second deed was simulated is Exhibit D a document in which petitioner declared that the deed was executed only for the purpose of helping Severino eject the tenant. However, a perusal of this document reveals that it made reference to the first deed and not the second deed, which was executed only after Exhibit D. So that while the first deed was qualified by stipulations contained in Exhibit D, the same cannot be said of the second deed which was signed by both parties. Further, the fact that Severino executed the two deeds in question, primarily so that petitioner could eject the tenant and enter into a loan/mortgage contract with Philam Life, is to our mind, a strong indication that he intended to transfer ownership of the property to petitioner. For why else would he authorize the latter to sue the tenant for ejectment under a claim of ownership, if he truly did not intend to sell the property to petitioner in the first place? Needless to state, it does not make sense for Severino to allow petitioner to pursue the ejectment case, in petitioner's

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own name, with petitioner arguing that he had bought the property from Severino and thus entitled to possession thereof, if petitioner did not have any right to the property. Also worth noting is the fact that in the case filed by Severino's tenant against Severino and petitioner in 1989, assailing the validity of the sale made to petitioner, Severino explicitly asserted in his sworn answer to the complaint that the sale was a legitimate transaction. He further alleged that the ejectment case filed by petitioner against the tenant was a legitimate action by an owner against one who refuses to turn over possession of his property.32 Our attention is also drawn to the fact that the genuineness and due execution of the second deed was not denied by Severino. Except to allege that he was not physically present when the second deed was notarized before the notary public, Severino did not assail the truth of its contents nor deny that he ever signed the same. As a matter of fact, he even admitted that he affixed his signature on the second deed to help petitioner acquire a loan. This can only signify that he consented to the manner proposed by petitioner for payment of the balance and that he accepted the stipulated price of P2,000,000.00 as consideration for the sale. Since the genuineness and due execution of the second deed was not seriously put in issue, it should be upheld as the best evidence of the intent and true agreement of the parties. Oral testimony, depending as it does exclusively on human memory, is not as reliable as written or documentary evidence.33 It should be emphasized that the non-appearance of the parties before the notary public who notarized the deed does not necessarily nullify nor render the parties' transaction void ab initio. We have held previously that the provision of Article 135834 of the New Civil Code on the necessity of a public document is only for convenience, not for validity or enforceability. Failure to follow the proper form does not invalidate a contract. Where a contract is not in the form prescribed by law, the parties can merely compel each other to observe that form, once the contract has been perfected.35 This is consistent with the basic principle that contracts are obligatory in whatever form they may have been entered into, provided all essential requisites are present.36 The elements of a valid contract of sale under Art. 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.37 In the instant case, the second deed reflects the presence of all these elements and as such, there is already a perfected contract of sale. Respondent's contention that the second deed was correctly nullified by the lower court because Severino's wife, Adela, in whose name the property was titled, did not sign the same, is unavailing. The records are replete with admissions made by Adela that she had agreed with her husband to sell the property38 which is conjugal in nature39 and that she was aware of this particular transaction with petitioner. She also said that it was Severino who actually administered their properties with her consent, because she did not consider this as her responsibility.40 We also observe that Severino's testimony in court contained (1) admissions that he indeed agreed to sell the property and (2) references to petitioner's failure to pay the purchase price.41 He did not mention that he did not intend at all to sell the property to petitioner and instead, stressed the fact that the purchase price had not yet been paid. Why would Severino stress non-payment if there was no sale at all? However, it is well-settled that non-payment of the purchase price is not among the instances where the law declares a contract to be null and void. It should be pointed out that the second deed specifically provides: That for and in consideration of' the sum of TWO MILLION PESOS (P2,000,000.00), Philippine Currency paid in full by HENRY R. PEALOSA, receipt of which is hereby acknowledged by me to my full satisfaction, I hereby by these presents, sells (sic), cede, convey and otherwise dispose of the above described parcel of land, unto HENRY R. PEALOSA, his heirs, successors and assigns, free from all liens and encumbrances. xxx xxx xxx (SGD.) SEVERINO C. SANTOS VENDOR xxx xxx xxx42 As can be seen from above, the contract in this case is absolute in nature and is devoid of any proviso that title to the property is reserved in the seller until full payment of the purchase price. Neither does the second deed give Severino a unilateral right to resolve the contract the moment the buyer fails to pay within a fixed period.43 At most, the non-payment of the contract price merely results in a breach of contract for non-performance and warrants an action for rescission or specific performance under Article 1191 of the Civil Code.44 Be that as it may, we agree with petitioner that although the law allows rescission as a remedy for breach of contract, the same may not be availed of by respondents in this case. To begin with, it was Severino who prevented full payment of the stipulated price when he refused to deliver the owner's original duplicate title to Philam Life. His refusal to cooperate was unjustified, because as Severino himself admitted, he signed the deed precisely to enable petitioner to acquire the loan. He also knew that the property was to be given as security therefor. Thus, it cannot be said that petitioner breached his obligation towards Severino since the former has always been willing to and could comply with what was incumbent upon him. In sum, the only conclusion which can be deduced from the aforesaid circumstances is that ownership of the property has been transferred to petitioner. Article 1477 of the Civil Code states that ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. It is undisputed that the property was placed in the control and possession of petitioner45 when he came into material possession thereof after judgment in the ejectment case. Not only was the contract of sale perfected, but also actual delivery of the property effectively consummated the sale. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated December 29, 1997 and its resolution dated April 15, 1998 in CA-G.R. CV No. 45206 which had affirmed the judgment of the Regional Trial Court of Quezon City, Branch 78, are REVERSED and SET ASIDE. A new judgment is hereby rendered UPHOLDING the validity of Exhibit B, the Deed of Absolute Sale dated September 12, 1988, entered into between the parties. The Landbank of the Philippines is further ordered to RELEASE to respondents the amount of P1,700,000.00 held in escrow, representing the balance of the purchase price agreed upon by the parties under the deed of absolute sale. Finally, the respondents are ordered to DELIVER to petitioner the owner's duplicate copy of TCT No. PT-23458 after said release, with the corresponding payment of taxes due. Costs against respondents. SO ORDERED. Bellosillo, Mendoza, Buena and De Leon, Jr., JJ ., concur.

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[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

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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 reexamine 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

25
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-ininterest. 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; Heirs of Amparo v. Santos, 108 SCRA 43; Araneta v. Montelibano, 14 Phil. 117).[12] Finally, we find no merit in petitioners' contention that their right over the land has not prescribed. The principle of laches was properly applied against petitioner. Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier, it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has either abandoned it or declined to assert it.[13] In the instant case, the Court of Appeals point to the circumstances that warrant the principle to come into play: Laches had been defined to be such neglect or omission to assert a right taken in conjunction with the lapse of time and other circumstances causing prejudice to an adverse party, as will 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 making improvements thereof for 30 long years, only to spring from ambush and claim title when the possessor's efforts and the rise of land values offer an opportunity to make easy profit at his expense.' Thus, notwithstanding the invalidity of the sale with respect to the share of plaintiffs-appellees, the daughters of the late Ernesto Biona, they [allowed] the vendee, defendant-appellant herein, to enter, occupy and possess the property in the concept of an owner without demurrer and molestation for a long period of time, never claiming the land as their own until 1985 when the property has greatly appreciated in value. Vigilantibus non dormientibus sequitas subvenit.[14] WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals is AFFIRMED. SO ORDERED. Puno, Pardo, and Ynares-Santiago, JJ., concur. Davide, Jr., C.J., (Chairman), on official leave.

G.R. No. L-11491

August 23, 1918

ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS HARDWARE CO., defendant-appellee. Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza for appellant. Crossfield & O'Brien for appellee. AVANCEA, J.: On January 24, 1911, in this city of manila, a contract in the following tenor was entered into by and between the plaintiff, as party of the first part, and J. Parsons (to whose rights and obligations the present defendant later subrogated itself), as party of the second part: CONTRACT EXECUTED BY AND BETWEEN ANDRES QUIROGA AND J. PARSONS, BOTH MERCHANTS ESTABLISHED IN MANILA, FOR THE EXCLUSIVE SALE OF "QUIROGA" BEDS IN THE VISAYAN ISLANDS. ARTICLE 1. Don Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J. Parsons under the following conditions: (A) Mr. Quiroga shall furnish beds of his manufacture to Mr. Parsons for the latter's establishment in Iloilo, and shall invoice them at the same price he has fixed for sales, in Manila, and, in the invoices, shall make and allowance of a discount of 25 per cent of the invoiced prices, as commission on the sale; and Mr. Parsons shall order the beds by the dozen, whether of the same or of different styles. (B) Mr. Parsons binds himself to pay Mr. Quiroga for the beds received, within a period of sixty days from the date of their shipment. (C) The expenses for transportation and shipment shall be borne by M. Quiroga, and the freight, insurance, and cost of unloading from the vessel at the point where the beds are received, shall be paid by Mr. Parsons. (D) If, before an invoice falls due, Mr. Quiroga should request its payment, said payment when made shall be considered as a prompt payment, and as such a deduction of 2 per cent shall be made from the amount of the invoice. The same discount shall be made on the amount of any invoice which Mr. Parsons may deem convenient to pay in cash. (E) Mr. Quiroga binds himself to give notice at least fifteen days before hand of any alteration in price which he may plan to make in respect to his beds, and agrees that if on the date when such alteration takes effect he should have any order pending to be served to Mr. Parsons, such order shall enjoy the advantage of the alteration if the price

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thereby be lowered, but shall not be affected by said alteration if the price thereby be increased, for, in this latter case, Mr. Quiroga assumed the obligation to invoice the beds at the price at which the order was given. (F) Mr. Parsons binds himself not to sell any other kind except the "Quiroga" beds. ART. 2. In compensation for the expenses of advertisement which, for the benefit of both contracting parties, Mr. Parsons may find himself obliged to make, Mr. Quiroga assumes the obligation to offer and give the preference to Mr. Parsons in case anyone should apply for the exclusive agency for any island not comprised with the Visayan group. ART. 3. Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, and shall immediately report such action to Mr. Quiroga for his approval. ART. 4. This contract is made for an unlimited period, and may be terminated by either of the contracting parties on a previous notice of ninety days to the other party. Of the three causes of action alleged by the plaintiff in his complaint, only two of them constitute the subject matter of this appeal and both substantially amount to the averment that the defendant violated the following obligations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. As may be seen, with the exception of the obligation on the part of the defendant to order the beds by the dozen and in no other manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself to a determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds. In order to classify a contract, due regard must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. The price agreed upon was the one determined by the plaintiff for the sale of these beds in Manila, with a discount of from 20 to 25 per cent, according to their class. Payment was to be made at the end of sixty days, or before, at the plaintiff's request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds. It would be enough to hold, as we do, that the contract by and between the defendant and the plaintiff is one of purchase and sale, in order to show that it was not one made on the basis of a commission on sales, as the plaintiff claims it was, for these contracts are incompatible with each other. But, besides, examining the clauses of this contract, none of them is found that substantially supports the plaintiff's contention. Not a single one of these clauses necessarily conveys the idea of an agency. The words commission on sales used in clause (A) of article 1 mean nothing else, as stated in the contract itself, than a mere discount on the invoice price. The word agency, also used in articles 2 and 3, only expresses that the defendant was the only one that could sell the plaintiff's beds in the Visayan Islands. With regard to the remaining clauses, the least that can be said is that they are not incompatible with the contract of purchase and sale. The plaintiff calls attention to the testimony of Ernesto Vidal, a former vice-president of the defendant corporation and who established and managed the latter's business in Iloilo. It appears that this witness, prior to the time of his testimony, had serious trouble with the defendant, had maintained a civil suit against it, and had even accused one of its partners, Guillermo Parsons, of falsification. He testified that it was he who drafted the contract Exhibit A, and, when questioned as to what was his purpose in contracting with the plaintiff, replied that it was to be an agent for his beds and to collect a commission on sales. However, according to the defendant's evidence, it was Mariano Lopez Santos, a director of the corporation, who prepared Exhibit A. But, even supposing that Ernesto Vidal has stated the truth, his statement as to what was his idea in contracting with the plaintiff is of no importance, inasmuch as the agreements contained in Exhibit A which he claims to have drafted, constitute, as we have said, a contract of purchase and sale, and not one of commercial agency. This only means that Ernesto Vidal was mistaken in his classification of the contract. But it must be understood that a contract is what the law defines it to be, and not what it is called by the contracting parties. The plaintiff also endeavored to prove that the defendant had returned beds that it could not sell; that, without previous notice, it forwarded to the defendant the beds that it wanted; and that the defendant received its commission for the beds sold by the plaintiff directly to persons in Iloilo. But all this, at the most only shows that, on the part of both of them, there was mutual tolerance in the performance of the contract in disregard of its terms; and it gives no right to have the contract considered, not as the parties stipulated it, but as they performed it. Only the acts of the contracting parties, subsequent to, and in connection with, the execution of the contract, must be considered for the purpose of interpreting the contract, when such interpretation is necessary, but not when, as in the instant case, its essential agreements are clearly set forth and plainly show that the contract belongs to a certain kind and not to another. Furthermore, the return made was of certain brass beds, and was not effected in exchange for the price paid for them, but was for other beds of another kind; and for the letter Exhibit L-1, requested the plaintiff's prior consent with respect to said beds, which shows that it was not considered that the defendant had a right, by virtue of the contract, to make this return. As regards the shipment of beds without previous notice, it is insinuated in the record that these brass beds were precisely the ones so shipped, and that, for this very reason, the plaintiff agreed to their return. And with respect to the so-called commissions, we have said that they merely constituted a discount on the invoice price, and the reason for applying this benefit to the beds sold directly by the plaintiff to persons in Iloilo was because, as the defendant obligated itself in the contract to incur the expenses of advertisement of the plaintiff's beds, such sales were to be considered as a result of that advertisement. In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for having acted thus at his own free will. For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law. The judgment appealed from is affirmed, with costs against the appellant. So ordered. Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ., concur.

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[G.R. No. 137290. July 31, 2000] SAN MIGUEL PROPERTIES PHILIPPINES, INC., petitioner, vs. SPOUSES ALFREDO HUANG and GRACE HUANG, respondents. DECISION MENDOZA, J.: This is a petition for review of the decision,[1] dated April 8, 1997, of the Court of Appeals which reversed the decision of the Regional Trial Court, Branch 153, Pasig City dismissing the complaint brought by respondents against petitioner for enforcement of a contract of sale. The facts are not in dispute. Petitioner San Miguel Properties Philippines, Inc. is a domestic corporation engaged in the purchase and sale of real properties. Part of its inventory are two parcels of land totalling 1, 738 square meters at the corner of Meralco Avenue and General Capinpin Street, Barrio Oranbo, Pasig City, which are covered by TCT Nos. PT-82395 and PT-82396 of the Register of Deeds of Pasig City. On February 21, 1994, the properties were offered for sale for P52,140,000.00 in cash. The offer was made to Atty. Helena M. Dauz who was acting for respondent spouses as undisclosed principals. In a letter[2] dated March 24, 1994, Atty. Dauz signified her clients interest in purchasing the properties for the amount for which they were offered by petitioner, under the following terms: the sum of P500,000.00 would be given as earnest money and the balance would be paid in eight equal monthly installments from May to December, 1994. However, petitioner refused the counter-offer. On March 29, 1994, Atty. Dauz wrote another letter[3] proposing the following terms for the purchase of the properties, viz: This is to express our interest to buy your-above-mentioned property with an area of 1, 738 sq. meters. For this purpose, we are enclosing herewith the sum of P1,000,000.00 representing earnest-deposit money, subject to the following conditions. 1. We will be given the exclusive option to purchase the property within the 30 days from date of your acceptance of this offer. 2. During said period, we will negotiate on the terms and conditions of the purchase; SMPPI will secure the necessary Management and Board approvals; and we initiate the documentation if there is mutual agreement between us. 3. In the event that we do not come to an agreement on this transaction, the said amount of P1,000,000.00 shall be refundable to us in full upon demand. ... Isidro A. Sobrecarey, petitioners vice-president and operations manager for corporate real estate, indicated his conformity to the offer by affixing his signature to the letter and accepted the "earnest-deposit" of P1 million. Upon request of respondent spouses, Sobrecarey ordered the removal of the "FOR SALE" sign from the properties. Atty. Dauz and Sobrecarey then commenced negotiations. During their meeting on April 8, 1994, Sobrecarey informed Atty. Dauz that petitioner was willing to sell the subject properties on a 90-day term. Atty. Dauz countered with an offer of six months within which to pay. On April 14, 1994, the parties again met during which Sobrecarey informed Atty. Dauz that petitioner had not yet acted on her counter-offer. This prompted Atty. Dauz to propose a fourmonth period of amortization. On April 25, 1994, Atty. Dauz asked for an extension of 45 days from April 29, 1994 to June 13, 1994 within which to exercise her option to purchase the property, adding that within that period, "[we] hope to finalize [our] agreement on the matter."[4] Her request was granted. On July 7, 1994, petitioner, through its president and chief executive officer, Federico Gonzales, wrote Atty. Dauz informing her that because the parties failed to agree on the terms and conditions of the sale despite the extension granted by petitioner, the latter was returning the amount of P1 million given as "earnest-deposit."[5] On July 20, 1994, respondent spouses, through counsel, wrote petitioner demanding the execution within five days of a deed of sale covering the properties. Respondents attempted to return the "earnest-deposit" but petitioner refused on the ground that respondents option to purchase had already expired. On August 16, 1994, respondent spouses filed a complaint for specific performance against petitioner before the Regional Trial Court, Branch 133, Pasig City where it was docketed as Civil Case No. 64660. Within the period for filing a responsive pleading, petitioner filed a motion to dismiss the complaint alleging that (1) the alleged "exclusive option" of respondent spouses lacked a consideration separate and distinct from the purchase price and was thus unenforceable and (2) the complaint did not allege a cause of action because there was no "meeting of the minds" between the parties and, therefore, no perfected contract of sale. The motion was opposed by respondents. On December 12, 1994, the trial court granted petitioners motion and dismissed the action. Respondents filed a motion for reconsideration, but it was denied by the trial court. They then appealed to the Court of Appeals which, on April 8, 1997, rendered a decision[6] reversing the judgment of the trial court. The appellate court held that all the requisites of a perfected contract of sale had been complied with as the offer made on March 29, 1994, in connection with which the earnest money in the amount of P1 million was tendered by respondents, had already been accepted by petitioner. The court cited Art. 1482 of the Civil Code which provides that "[w]henever 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." The fact the parties had not agreed on the mode of payment did not affect the contract as such is not an essential element for its validity. In addition, the court found that Sobrecarey had authority to act in behalf of petitioner for the sale of the properties.[7] Petitioner moved for reconsideration of the trial courts decision, but its motion was denied. Hence, this petition. Petitioner contends that the Court of Appeals erred in finding that there was a perfected contract of sale between the parties because the March 29, 1994 letter of respondents, which petitioner accepted, merely resulted in an option contract, albeit it was unenforceable for lack of a distinct consideration. Petitioner argues that the absence of agreement as to the mode of payment was fatal to the perfection of the contract of sale. Petitioner also disputes the appellate courts ruling that Isidro A. Sobrecarey had authority to sell the subject real properties.[8] Respondents were required to comment within ten (10) days from notice. However, despite 13 extensions totalling 142 days which the Court had given to them, respondents failed to file their comment. They were thus considered to have waived the filing of a comment. The petition is meritorious. In holding that there is a perfected contract of sale, the Court of Appeals relied on the following findings: (1) earnest money was allegedly given by respondents and accepted by petitioner through its vice-president and operations manager, Isidro A. Sobrecarey; and (2) the documentary evidence in the records show that there was a perfected contract of sale.

28
With regard to the alleged payment and acceptance of earnest money, the Court holds that respondents did not give the P1 million as "earnest money" as provided by Art. 1482 of the Civil Code. They presented the amount merely as a deposit of what would eventually become the earnest money or downpayment should a contract of sale be made by them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the contract of sale but only as a guarantee that respondents would not back out of the sale. Respondents in fact described the amount as an "earnest-deposit." In Spouses Doromal, Sr. v. Court of Appeals,[9] it was held: . . . While the P5,000 might have indeed been paid to Carlos in October, 1967, there is nothing to show that the same was in the concept of the earnest money contemplated in Art. 1482 of the Civil Code, invoked by petitioner, as signifying perfection of the sale. Viewed in the backdrop of the factual milieu thereof extant in the record, We are more inclined to believe that the said P5,000.00 were paid in the concept of earnest money as the term was understood under the Old Civil Code, that is, as a guarantee that the buyer would not back out, considering that it is not clear that there was already a definite agreement as to the price then and that petitioners were decided to buy 6/7 only of the property should respondent Javellana refuse to agree to part with her 1/7 share.[10] In the present case, the P1 million "earnest-deposit" could not have been given as earnest money as contemplated in Art. 1482 because, at the time when petitioner accepted the terms of respondents offer of March 29, 1994, their contract had not yet been perfected. This is evident from the following conditions attached by respondents to their letter, to wit: (1) that they be given the exclusive option to purchase the property within 30 days from acceptance of the offer; (2) that during the option period, the parties would negotiate the terms and conditions of the purchase; and (3) petitioner would secure the necessary approvals while respondents would handle the documentation. The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. As petitioner correctly points out, acceptance of this condition did not give rise to a perfected sale but merely to an option or an accepted unilateral promise on the part of respondents to buy the subject properties within 30 days from the date of acceptance of the offer. Such option giving respondents the exclusive right to buy the properties within the period agreed upon is separate and distinct from the contract of sale which the parties may enter.[11] All that respondents had was just the option to buy the properties which privilege was not, however, exercised by them because there was a failure to agree on the terms of payment. No contract of sale may thus be enforced by respondents. Furthermore, even the option secured by respondents from petitioner was fatally defective. Under the second paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor only if the promise is supported by a distinct consideration. Consideration in an option contract may be anything of value, unlike in sale where it must be the price certain in money or its equivalent. There is no showing here of any consideration for the option. Lacking any proof of such consideration, the option is unenforceable. Equally compelling as proof of the absence of a perfected sale is the second condition that, during the option period, the parties would negotiate the terms and conditions of the purchase. 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.[12] In the present case, the parties never got past the negotiation stage. The alleged "indubitable evidence"[13] of a perfected sale cited by the appellate court was nothing more than offers and counter-offers which did not amount to any final arrangement containing the essential elements of a contract of sale. While the parties already agreed on the real properties which were the objects of the sale and on the purchase price, the fact remains that they failed to arrive at mutually acceptable terms of payment, despite the 45-day extension given by petitioner. The appellate court opined that the failure to agree on the terms of payment was no bar to the perfection of the sale because Art. 1475 only requires agreement by the parties as to the price of the object. This is error. In Navarro v. Sugar Producers Cooperative Marketing Association, Inc.,[14] we laid down the rule that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale. As held in Toyota Shaw, Inc. v. Court of Appeals,[15] agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price.[16] In Velasco v. Court of Appeals,[17] the parties to a proposed sale had already agreed on the object of sale and on the purchase price. By the buyers own admission, however, the parties still had to agree on how and when the downpayment and the installments were to be paid. It was held: . . . Such being the situation, it can not, therefore, be said that a definite and firm sales agreement between the parties had been perfected over the lot in question. Indeed, this Court has already ruled before that a definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding and enforceable contract of sale. The fact, therefore, that the petitioners delivered to the respondent the sum of P10,000 as part of the down-payment that they had to pay cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties herein under Art. 1482 of the new Civil Code, as the petitioners themselves admit that some essential matter - the terms of the payment - still had to be mutually covenanted.[18] Thus, it is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale. In the absence of a perfected contract of sale, it is immaterial whether Isidro A. Sobrecarey had the authority to enter into a contract of sale in behalf of petitioner. This issue, therefore, needs no further discussion. WHEREFORE, the decision of the Court of Appeals is REVERSED and respondents complaint is DISMISSED. SO ORDERED. Quisumbing, Buena, and De Leon, Jr., JJ., concur. Bellosillo, (Chairman), J., on leave.

29
G.R. No. 163562 July 21, 2006 4. PILIPINAS SHELL PETROLEUM CORPORATION, Petitioner, - versus 5. CARLOS ANG GOBONSENG, JR., Respondent. x------------------------------------------------------------------------------------x 6. DECISION Upon the execution of the Deed of Sale, ownership and possession shall automatically pass to the VENDEE; The VENDOR agrees to pay a penalty of P500.00 for every day of delay in vacating the property; Real property taxes full for 1981 over lot no. 853-A and its improvements, capital gains tax, documentary stamp tax, sales tax shall be shouldered by the VENDOR; Registration expenses shall be shouldered by the VENDEE; All obligations or liabilities on or involving lot no. 853-A or its improvements such as electric bills, water bills, telephone bills, etc., shall be for the account of the VENDOR which if not paid will be automatically deductible from the first payment of the remaining balance;

GARCIA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner Pilipinas Shell Petroleum Corporation (Pilipinas Shell, hereafter) seeks the reversal and setting aside of the Decision[1] dated October 10, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 63777, as reiterated in its Resolution[2] of April 13, 2004, reversing an earlier decision of the Regional Trial Court (RTC) of Negros Oriental, Dumaguete City, Branch 40, in a suit for collection of rentals with damages thereat commenced by the herein respondent Carlos Ang Gobonseng against, among others, the herein petitioner. The rentals sought to be collected pertain to a gasoline station at Lot No. 853-A, located at corner Real Urdaneta streets, Dumaguete City. The factual backdrop: Sometime on January 5, 1982, one Julio Tan Pastor, original owner of Lot No. 853-A, sold it to the respondent for P1.3 million, albeit in the covering Deed of Absolute Sale executed by the parties, the amount indicated was only P13,000.00, evidently to avoid payment of the correct legal fees in the registration and transfer of title to the vendee. On the same date, however, the parties, in order to reflect their real intentions, executed a Memorandum of Agreement thereunder spelling out the true terms and conditions of their transaction, to wit: 1. 2. Purchase price is P1,300,000.00 (P1.3 million); P500,000.00 shall be paid upon the execution of the Deed of Sale. Out of this amount part shall be paid to whatever mortgage obligation there is with the Philippines National Bank and/or any other bank involving lot no. 853-A; and its improvements; Balance of P800,000.00 will be paid in five (5) years at a yearly payment of P160,000.00 the first payment to be paid one year from date hereof and succeeding four installments every year thereafter;

Respondent, armed with the inaccurate Deed of Absolute Sale earlier executed by Julio Tan Pastor, and notwithstanding the Memorandum of Agreement aforementioned, succeeded in registering the conveying instrument with the Registry of Deeds and was then issued Transfer Certificate of Title (TCT) No. 13607 over Lot No. 853-A in his own name. In the meantime, vendor Tan Pastor presented for encashment the postdated checks issued to him by respondent as payment for the subject lot. Unfortunately, the drawee bank dishonored those checks for a variety of reasons, namely, drawn against insufficient funds, stop payment order or closed account. This prompted vendor Tan Pastor to file against respondent a criminal action for violation of Batas Pambansa (BP) 22, otherwise known as the Bouncing Checks Law, docketed as Criminal Case No. 7071, entitled People of the Philippines v. Carlos Ang Gobonseng, Jr., of the xxx. It appears that prior to the sale of Lot No. 853-A to respondent, Tan Pastor had been operating thereon a gasoline station, first with Flying A, subsequently with Getty Oil, and later with Basic Land Oil and Energy Corporation (BLECOR). In 1982, Pilipinas Shell acquired BLECOR, including all the latters assets, liabilities and contracts. Thereafter, Tan Pastor remained as the distributor of Pilipinas Shell products and continued to operate the gas station on Lot No. 853-A until 1991. Sometime in 1991, respondent sent demand letters to Pilipinas Shell for payment by the latter of rentals for its occupancy and use of his property. Responding to said letters, Pilipinas Shell disowned liability for the rentals, explaining that the gas station on Lot No. 853-A was a dealer-owned filling station, hence the demands for rental payment must be directed to Tan Pastor. In any event, Pilipinas Shell, hoping for an amicable settlement of the controversy between respondent and Tan Pastor relative to Lot No. 853-A, facilitated a meeting between the two. True enough, on January 30, 1992, thru the efforts of Pilipinas Shell, Tan Pastor and respondent executed an Agreement[3] embodying the following terms and conditions:

3.

30

The parties herein have agreed, as follows: 1. For humanitarian, peace, and other considerations, Carlos A. Gobonseng, Jr., the OWNER, hereby allows Julio Tan Pastor the use of Lot No. 853-A at Corner Real-Urdaneta Streets, Dumaguete City, covered by TCT No. 13607, as a gas/ fuel/ gasoline/ oil/ filling, selling and servicing, station, and for such other use appropriate, or related, to the same, without any rental for a period of THREE (3) YEARS from January 1st 1992, or up to December 31st 1994, NON-EXTENDIBLE; Consistent with the foregoing, Julio Tan Pastor is authorized to enter into any business contract with a third person for the use of said property for a period of THREE (3) YEARS from JANUARY 1st 1992 or up to DECEMBER 31st 1994, the DEADLINE; No construction, renovation or repair, shall be done by Julio Tan Pastor, without the PRIOR written consent of the owner, Carlos A. Gobonseng, Jr.; All improvements, including old and new constructions, repairs, replacements, and other removable items, shall automatically belong in ownership to the owner, Carlos A. Gobonseng, Jr., upon and at the time of completion of construction of work, installation or repair or replacement, excluding those owned or constructed by Shell Petroleum Corp., or Francisco Baludoy Salva, which shall automatically belong to Carlos Ang Gobonseng, Jr. upon the expiration of the lease contract which the latter executed in favor of Francisco C. Salva; Subject to the terms and conditions stipulated in the contract of lease between Carlos Ang Gobonseng, Jr. and Francisco C. Salva, Julio Tan Pastor and children or heirs, or Lessee, or third person, obligate and undertake to VACATE Lot No. 853-A NOT later than December 31, 1994. On December 31, 1994, PEACEFUL POSSESSION of the property and premises shall be TURNED OVER to the owner, Carlos A. Gobonseng, Jr., otherwise, a penalty of P5,000.00 for every day of delay in vacating the premises is imposed; All the parties herein have no more further claimes against each other, and waived, abandoned, relinquished, any such claim or claims;

The controversy could have ended there were it not for the fact that on November 13, 1992, in the RTC of Negros Oriental, respondent filed a civil suit for collection of rentals and damages against Tan Pastor and Pilipinas Shell. In his complaint, docketed as Civil Case No. 10389, respondent, as plaintiff, alleged ownership of Lot No. 853-A on the basis of TCT No. 13607. He further averred that since 1982, he had been paying the realty taxes due thereon and that Tan Pastor and Pilipinas Shell continued occupying said lot and using the same as a gasoline and service station without paying rentals therefor. He thus prayed that judgment be rendered ordering Tan Pastor and petitioner to pay him rentals and damages for their use and occupation of his lot from 1982 to 1991. In its Answer, Pilipinas Shell countered that plaintiffs claim for unpaid rentals had no basis because the gasoline station on his property is a dealer-owned filling station, as evidenced by a certification[4] issued by the president of the Shell Dealers Association of the Philippines. Pilipinas Shell likewise emphasized that Lot No. 853-A was initially the subject of controversy between respondent and Tan Pastor until 1992 when, thru its efforts, the warring parties executed an Agreement whereunder both (Tan Pastor and respondent) made it expressly clear that they have no more further claims against each other, and waived, abandoned, relinquished, any such claim or claims. On this premise, Pilipinas Shell argued that respondents demand for rentals is devoid of any legal or factual basis. In the meantime, Tan Pastor died, leaving his heirs who were accordingly substituted as Pilipinas Shells co-defendant in the case. On March 15, 1999, the trial court came out with its decision[5] rendering judgment for Pilipinas Shell and its co-defendants, to wit: WHEREFORE, premises considered, plaintiffs complaint for collection of rental and damages against Pilipinas Shell and the heirs of Julio Tan Pastor is hereby dismissed for lack of cause of action against them. Further, plaintiff (Gobonseng) is hereby ordered to pay defendant Pilipinas Shell the amount of P150,000.00 for the other defendants, the heirs of Julio Tan Pastor. The cross-claim filed by defendant Pilipinas Shell Petroleum Corporation against its co-defendants, the heirs of Julio Tan Pastor is hereby denied for lack of legal basis. SO ORDERED.

2.

3.

4.

5.

6.

Therefrom, respondent went to the CA. As stated at the threshold hereof, the CA, in its Decision[6] of October 10, 2003, reversed that of the trial court, thus:

Thereafter, Tan Pastor executed and filed in Criminal Case No. 7071 an Affidavit of Desistance thereunder making known his lack of interest in further pursuing the case, which was eventually dismissed.

WHEREFORE, in view of the foregoing considerations, the decision appealed from is hereby REVERSED and SET ASIDE and a new

31
one is entered, ordering appellee Pilipinas Shell Petroleum Corporation to pay unto appellant: P8,000 per month as reasonable compensation for the use and occupation of Lot No. 853-A as a Shell refilling station starting from 1982 until 1991 plus interest at 12% per annum until fully paid and attorneys fees of 20% of the total amount due the appellant, without prejudice to its cross-claim against its co-defendants, which is hereby reinstated and prompt resolution of which by the court a quo is hereby directed. SO ORDERED. With its motion for reconsideration having been denied by the CA in its equally challenged Resolution[7] of April 13, 2004, Pilipinas Shell is now with this Court raising the following issues: 1) Whether or not the decision of the Honorable Court of Appeals in upholding the ownership by Respondent of Lot 853-A is in accordance with the provision of Article 1496 of the Civil Code of the Philippines considering that there was no delivery yet to the Respondent of the property which was the subject of a contract of sale between him and Julio Tan Pastor; Whether or not the decision of the Honorable Court of Appeals making the Petitioner liable for the payment of rentals for the use of Lot 853-A by Julio Tan Pastor as an operator of a dealer-owned filling station is consistent with Article 1157 of the Civil Code of the Philippines which provides for the legal sources of obligation; Whether or not the decision of the Honorable Court of Appeals in reversing the findings of facts of the trial court on the ground that the judge who penned the decision is not the one who heard the testimonies of all the witnesses, is in accordance with the general rule that the trial courts decision is to be given credence and accorded due preference by the appellate court. was made aware of the change in the ownership of Lot No. 853-A only in the latter part of 1991 when it received a letter from respondent demanding payment of rentals therefor. Apparently, Tan Pastor did not see the need to inform Pilipinas Shell of the change in ownership of the subject lot primarily because according to him, ownership of the lot remained with him until full payment of the agreed price shall have been effected. As it appears, Pilipinas Shell totally believed Tan Pastors representation since there was indeed a pending criminal case for violation of BP 22 against respondent, coupled by the fact that Tan Pastor continued to be in possession and use of Lot No. 853-A as a filling and service station for Pilipinas Shells petroleum products until 1992. We grant the petition. Anent the issue of ownership of Lot No. 853-A, we hold that this particular question has already been rendered moot by subsequent events and acts of respondent and Tan Pastor. Significantly, respondent and Tan Pastor both admit and agree that said lot was the subject of the Deed of Absolute Sale between them. Despite contrasting allegations on the payment of the contract price, both agreed on the object and consideration of the sale. It must be stressed that a contract of sale is not a real, but a consensual contract. In Buenaventura v. Court of Appeals,[8] this Court made it clear that a contract of sale, being consensual in nature, becomes valid and binding upon the meeting of the minds of the parties as to the object and the price. If there is a meeting of the minds, the contract is valid despite the manner of payment, or even if the manner of payment was breached. In fine, it is not the act of payment of the contract price that determines the validity of a contract of sale. The manner of payment and the payment itself of the agreed price have nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure of a party to effect payment of the contract price results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract.[9] Here, the controversy between Tan Pastor and respondent with respect to the manner of payment or the breach thereof does not vitiate the validity and binding effect of their contract of sale. In this light, respondent cannot thus be faulted for registering the document of sale and successfully securing TCT No. 13607 covering Lot No. 853-A in his name. However, coming to the more basic issue herein of whether or not respondent is entitled to the payment of rentals by Pilipinas Shell for the use and occupancy of Lot No. 853-A, the Court finds and so holds that respondents claim has no basis in fact and in law. To the mind of the Court, respondents entitlement to rentals turns on the nature of the gasoline station being operated by Tan Pastor on the subject lot. To resolve this, we must necessarily venture into determining whether the gasoline station thereat was dealerowned or company-owned. Undoubtedly, this exercise involves an examination of facts which is normally beyond the ambit of this Court. For, well-settled is the rule that this Court, not being a trier of facts, does not normally embark in the evaluation of evidence adduced during trial. The rule, however, admits of exceptions. So it is that in Sampayan v. Court of Appeals,[10] the Court held:

2)

3)

Then, as now, respondent insists that he had sufficiently established his ownership of Lot No. 853-A thru the Deed of Absolute Sale, the Memorandum of Agreement between him and Tan Pastor, TCT No. 13607 and his faithful and religious payments of the real estate taxes due on the property. To him, the existence of a gasoline station in his property since 1982 entitles him to the payment of rentals by Pilipinas Shell. Pilipinas Shell, on the other hand, contends that respondent is without cause of action against it. It asserts non-liability for rentals because the gasoline station on Lot 853-A was operated by Tan Pastor as a dealer-owned station. Expounding on this concept, Pilipinas Shell explained that in a dealer-owned filling station, the owner of the lot is at the same time the operator of the station, with Pilipinas Shell merely providing the dealer-owner with certain equipment and facilities for the operation of his gas station. Pilipinas Shell further alleged that it

32
[i]t is a settled rule that in the exercise of the Supreme Court's power of review, the Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties' during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court. However, the Court had recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. To the Court, exceptions (5), (7) and (11), above, find application in the instant case. And after a careful evaluation of the evidence, the Court finds for the petitioner. To begin with, the trial courts conclusion that Tan Pastor operated the gasoline station in his capacity as dealer-owner is well-supported by the evidence on record. Pilipinas Shell has shown clear and convincing proof that the outlet at Lot No. 853-A was dealer-owned gas station as per the Certification of the president of the Shell Dealers Association of the Philippines. It may be that such a certification, coming as it does from the president of petitioners dealers association, does not warrant the probative value it otherwise deserves. It bears emphasis, however, that respondent himself does not dispute the fact that he never demanded rental payments from Tan Pastor from 1982 to 1991. It was only after the criminal case for bouncing checks was dismissed that he claimed entitlement to rentals. Prior thereto, he never demanded for any rental payment, much less instituted any action to enforce the same. Besides, and as correctly observed by the trial court, there was an admission by the respondent himself that, since 1982 up to 1991, he had been in the possession of Lot No. 853-A and nobody else. Coming as it does from the respondent no less, that statement commands great weight and respect. The lower court succinctly summarizes: There was no legal basis for plaintiff Carlos Gobonseng, Jr. to demand payment from Pilipinas Shell as he himself admitted that he was in possession of the property from 1982 to 1991. As his testimony is against his interest, it became more believable the lack of legal anchorage to base his demand for rental payment from 1982 to 1992. No less than the Court who asked him the questions and hereunder is his answer: Court: Q -Who was in possession of the property since 1982 up to 1991? A -I am the actual possessor from 1982 to 1991. Is it not a fact that it was Julio Tan Pastors who was in possession of that property since 1982 and up to 1991? No, it is not, Your Honor.

Q --

A --

xxx Q --

xxx

You mean to tell the Court that prior to 1992 Julio Tan Pastor was not in possession of the property in question? Not in possession, Your Honor. As an operator, Your Honor, selling the shell products, Your Honor. Who was in possession of that property? Me, myself, Your Honor. (TSN, p. 5, 5-29-96)

A --

Q -A --

What is more, respondent and Tan Pastor had already executed an Agreement[11] whereunder they declared that they had no more further claims against each other, and waived, abandoned, relinquished, any such claim or claims. If anything else, such declaration evidenced respondents stance in not collecting rentals for the use of the subject property as he even in fact allowed Tan Pastor the use of Lot No. 853-A at Corner RealUrdaneta Streets, Dumaguete City, covered by TCT No. 13607, as a gas/ fuel/ gasoline/ oil/ filling, selling and servicing, station, and for such other use appropriate, or related, to the same, without any rental for a period of THREE (3) YEARS from January 1st 1992, or up to December 31st 1994, NON-EXTENDIBLE. (Emphasis supplied.) Thus, respondent is now estopped from demanding payment of rentals from Tan Pastor or Pilipinas Shell. In Bank of the Philippine Islands v. Casa Montessori International,[12] we ruled: Estoppel precludes individuals from denying or asserting, by their own deed or representation, anything contrary to that established as the truth, in legal contemplation. Our rules on evidence even make a juris et de jure presumption that whenever one has, by ones own act or omission, intentionally and deliberately led another to believe a particular thing to be true and to act upon that belief, one cannot in any litigation arising from such act or omission be permitted to falsify that supposed truth.

33
[G.R. No. 119281. November 22, 2000] Lastly, respondent insists that Pilipinas Shell had recognized his ownership of Lot No. 853-A and his right to collect rentals when the latter, through a letter,[13] sought his permission to refurbish the gasoline station located thereat. We are not persuaded. A careful scrutiny of the letter referred to would reveal that it was made and sent to respondent on February 7, 1992, a few days after Tan Pastor and respondent had made amends and executed an Agreement to waive any and all further claims against each other. Clearly, Pilipinas Shell was made aware of this development and the change in the ownership of Lot No. 853-A. To reiterate, Pilipinas Shell was even instrumental in this amicable settlement of the controversy between respondent and Tan Pastor. Hence, it is but proper for Pilipinas Shell to address respondent in seeking permission to make any improvements on the lot. We note that in the decision under review, the CA made a finding that there is not enough evidence for it to competently pass upon and make a ruling on the nature of the gasoline station situated on Lot No. 853A. We rule and so hold that such a finding all the more strengthens the trial courts decision as more in accord with the evidence adduced in the course of the proceedings thereat. As it is, the trial courts decision reflects and shows its distinct advantage of having heard the witnesses themselves, observed their deportment and their manner of testifying and behavior during trial. Finally, respondent submits that the CA correctly set aside the trial courts decision on the ground that the judge who heard most of the witnesses was other than the judge who ultimately penned the decision in the case. On this score, respondent argues that the findings of fact of the trial court cannot be given credence and accorded due deference. The Court does not agree. The circumstance that the judge who wrote the decision had not heard the testimonies of the witnesses does not automatically taint his decision. Here, the decision of the trial court made reference to several transcripts of stenographic notes taken in the course of trial. Likewise, several exhibits were referred to and used as evidence to substantiate the trial courts conclusions. The validity of a decision is not necessarily impaired by the fact that its ponente only took over from a colleague who had earlier presided at the trial. This circumstance alone cannot be the basis for the reversal of the trial courts decision unless there is a clear showing of grave abuse of discretion in the appreciation or a misapprehension of the facts,[14] of which we find none. WHEREFORE, the instant petition is GRANTED and the assailed Decision and Resolution of the CA are REVERSED and SET ASIDE. The decision dated March 15, 1999 of the RTC in Civil Case No. 10389 is REINSTATED. No pronouncement as to costs. SO ORDERED. VETERANS FEDERATION OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, PHILIPPINE NATIONAL RAILWAYS (PNR for short, formerly: MANILA RAILROAD COMPANY OF THE PHILIPPINES), LOURDES CHAVEZ, GODOFREDO CHAVEZ, VICENTE ALVERO, ROSITA VILLAMIN, JUANITO ALCANTARA, FLORENTINO GALANG, RUEL GALANG, LEOCADIO GUSTI, TIBURCIO DE LOS REYES, and FELIXBERTO COSICO, respondents . DECISION YNARES-SANTIAGO, J.: The object of the instant controversy is a parcel of land situated near the public market of San Pablo City, with an approximate area of 1,092 square meters. On the 6th of September 1963, the then owner, Manila Railroad Company of the Philippine Islands (now known as the Philippine National Railways or PNR) sold the subject property to the Veterans Federation of the Philippines (VFP for brevity) for the amount of One Thousand Ninety Two (P1,092.00) Pesos. The Absolute Deed of Sale executed by the parties described the subject property as follows: A parcel of land (Lot No. 1 of the consolidation and subdivision plan Pcs-___________, being a portion of Lots No. 17, 16 and 21, all of plan Psu-49241, and portion of Lot. No. 12 of plan II8964), situated in San Pablo City. Bounded on the NE., by Road to RR Station; on the SE., SW., and NW., by Lot No. 2 of the consolidation and subdivision plan Pcs-__________; and on the NW., by Road to RR Station. Beginning at a point marked 1 on plan, being S. 39 deg. 41W., 351.79 meters from B.L.L.M. No. 2, San Pablo City; thence N. 64 deg. 40 E., 13.50 m. to point 2; thence S. 79 deg. 16 E., 8.57 m. to point 3; thence S. 79 deg. 20 E., 3.89 m. to point 4; thence S. 64 deg. 07 E., 3.00 m. to point 5; thence S. 26 deg. 54 W., 51.00 m. to point 6; thence N. 63 deg. 36 W., 23.23 m. to point 7; thence N. 26 deg. 54 E., 37.00 m. to the point of beginning; containing an area of ONE THOUSAND AND NINETY TWO (1,092) Square Meters, more or less.[1] The said document was registered on June 18, 1964 at the Office of the Register of Deeds of San Pablo City. Consequently, T.C.T. No. T-4414 was issued in favor of the VFP.[2] However, the technical description that was inscribed in the certificate of title was different from what was stated in the deed of sale. Instead, the Register of Deeds copied the technical description appearing in an accompanying document submitted by the PNR. Thus, the parcel of land was described in the certificate of title, as follows: A parcel of land (Lot 1 of the consolidation-subdivision plan (LRC) Pcs-2995, being a portion of Lots 16 and 17 of plan Psu-49241, L.R.C. Record No. 301 65), situated in the City of San Pablo, Island of Luzon, Bounded on the NE., SE., and SW., points 6 to 7 and 7 to 1 by Lot 12 of plan II-8964 (property of the Manila Railroad Company). Beginning at a point marked 1 on plan, being S. 67 deg. 05 W., 447.85 m. from B.L.L.M. No. 1, City of San Pablo, thence S. 79 deg. 20 E., 3.89 m. to point 2; thence S. 64 deg. 07 E., 3.00 m. to point 3; thence S. 63 deg. 06 E., 17.11 m. to point-4; thence S. 26 deg. 54W., 45.00 m. to point 5; thence N. 67 deg. 25 W., 23.91 m. to point 6; thence N. 26 deg. 54 E., 2.10 m. to point 7; thence N. 26 deg. 54 E., 43.56 m. to the point of beginning; containing an area of ONE THOUSAND AND NINETY TWO

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(1,092) Square Meters. All points referred to are indicated on the plan and are marked on the ground as follows: points 1 to 6 inclusive, by P.L.S./M.R. Conc. Mons. 15 x 60 cms.; and point 7 by old P.L.S./B.L.; bearings true; declination 1 deg. 10 E.; date of the original survey, October 7-14, 1924; and that of the consolidation-subdivision survey, October 11, 1963.[3] Meanwhile, the VFP proceeded to clear and fence the property, following the boundaries as stated in the certificate of title, not realizing that the technical descriptions appearing in the deed of sale and the certificate of title did not match on almost all points. Some eighteen (18) years thereafter, the VFP decided to erect a building on the subject property to serve as its headquarters. This plan did not materialize when upon inspection of the subject property, it was discovered that the fence had long been dismantled and that there were now several permanent structures standing thereon. The VFP then learned that the residents had been leasing portions of the subject property from the PNR unbeknownst to VFP. When the residents refused to heed the VFPs demand to vacate the premises, the matter was brought before the Barangay authorities, but no settlement was reached thereat. Hence, the VFP was constrained to file a complaint for accion publiciana before the Regional Trial Court of San Pablo City, Branch 32, which was docketed as Civil Case No. SP-2585. Named defendants were the PNR (MRCPI at the time) and the following lessees: Lourdes Chavez, Godofredo Chavez, Vicente Alvaro, Rosita Villamin, Juanito Alcantara, Florentino Galang, Ruel Galang, Leocadio Gusti, Tiburcio delos Reyes, and Felixberto Cosico. Part of the evidence presented during the trial was a comparative sketch plan delineating the boundaries as described in the deed of sale and in the title, as well as the particular portions occupied by the individual defendants.[4] On January 26, 1989, the trial court rendered judgment, disposing as follows: WHEREFORE, premises considered, judgment is hereby rendered declaring the Deed of Sale (Exhibit A) valid and enforceable and ordering: 1. The Office of the San Pablo Register of Deed to cancel TCT No. T-4414 (Exhibit B) and to issue in its stead a new certificate of title in the name of plaintiff as buyer and owner thereof reflecting therein the true and correct technical description to be provided by PNR appearing in Exhibit A; 2. The cancellation of all the lease contracts and/or other agreements the PNR has entered into with the actual occupants of the premises sold as described in the technical description appearing in Exhibit A; 3. PNR to remove at its expense all existing structures of its lessees/occupants and to deliver and surrender to plaintiff the physical possession of the premises sold per Exhibit A; otherwise, to pay plaintiff rental at the rate of P20.00 per square meter per month from March 25, 1986, date of filing of the Supplemental Complaint, until plaintiff has acquired complete and peaceful possession thereof, and; 4. PNR to pay cost of suit. The other claim for damages of plaintiff and the counterclaims of all the defendants are, as it is hereby, dismissed for lack of merit.[5] Both parties filed separate motions for reconsideration which the trial court resolved by ordering, to wit: Anent the Motion for Reconsideration dated February 9, 1989 filed by defendant PNR, the Court finds no cogent reason to disturb its assailed decision. Hence, the said motion is denied for lack of merit. With respect to the Motion for Reconsideration filed by plaintiff, the Court partially grants the same if only to clarify the spirit and intention of the dispositive portion of the decision in question. Paragraph No. 3 of the dispositive portion should therefore be amplified as follows: 3. PNR to remove at its expense all existing structures of its lessees/occupants and to deliver and surrender to plaintiff the physical possession of the premises sold per Exhibit A; PNR to pay plaintiff rental at the rate of P20.00 per square meter per month from March 25, 1986, date of filing of the Supplemental Complaint and for PNR as well as the other defendants to immediately surrender complete and peaceful possession of the subject lot to plaintiff (Annex B, hereof).[6] Dissatisfied with the trial courts disposition, both parties filed separate appeals before the Court of Appeals. The appellate court dwelt at length on the facts and evidence adduced by the trial court in resolving the issues raised by the opposing parties. On July 29, 1994, the Court of Appeals rendered the impugned Decision, the dispositive portion of which reads: WHEREFORE, the dispositive portion of the appealed decision is hereby MODIFIED by deleting paragraphs 1, 2, and 3 thereof and instead to read as follows: (1) The complaint with respect to defendants-appellants Lourdes Chavez, Godofredo Chavez, Vicente Alvero, Rosito Villamin, Juanito Alcantara, Florentino Galang, Tiborcio delos Reyes, and Felixberto Cosico is DISMISSED. (2) Defendant-Appellant PNR is ordered to convey the parcel of land with an area of 1,092 square meters described in the absolute Deed of Sale dated September 6, 1963 (Exhibit A) to plaintiff-appellant. (3) Defendant-appellants Ruel Galang and Leocadio Gusti and members of their families, relatives and other persons claiming rights under them to vacate the premises and to surrender possession thereof to plaintiff-appellant. In all other respects, the decision is AFFIRMED.[7] Consequently, both parties again filed separate motions for reconsideration, which the appellate court denied.[8] VFP filed the instant petition for review, raising the following issues: First. The trial and the appellate courts erred in ordering the Register of Deeds of San Pablo City to cancel appellant VFPs TCT No. T-4414 and then to issue a new certificate of title in the name of appellant which would reflect therein the technical description appearing in the absolute Deed of Sale; and Second. The Court of Appeals erred in deleting the award of rentals and damages that the trial court had awarded in favor of appellant VFP. There is no question that the technical descriptions appearing in the deed of sale and the certificate of title vary on almost all points. There is, however, a long rectangular portion wherein the two overlap.[9] For this reason, the property described in TCT No. T-4414 was not in its entirety the parcel sold to VFP, at least not the major portion thereof. The Court of Appeals had earlier ruled that: Transfer Certificate of Title No. T-4414, Exhibit B is however void. It was issued supposedly as a result of the sale of the property described in the Absolute Deed of Sale, or Exhibit A. However, the property described in Exhibit B is not the same property as that intended by the parties to be the object of their sales agreement under Exhibit A. As correctly found by the trial court, the technical description of the lot which is the subject matter of the Absolute Deed of Sale, Exhibit A, is not identical to the technical description of the lot described in TCT No. T4414, Exhibit B. Stated bluntly, the technical description in the certificate of title (Exh. B) is erroneous. The court therefore correctly ordered the cancellation of TCT No. T-4414 and the issuance of a new certificate of title in the name of plaintiff-appellant and reflecting therein the true technical description as appearing in Exhibit A or the Absolute Deed of Sale dated 16 September 1963.[10]

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We find no compelling reason to rule otherwise. It is well-established that errors in the certificate of title that relate to the technical description and location cannot just be disregarded as mere clerical aberrations that are harmless in character,[11] but must be treated seriously so as not to jeopardize the integrity and efficacy of the Torrens System of registration of real rights to property. Thus, when the technical description appearing in the title is clearly erroneous, the courts have no other recourse but to order its cancellation and cause the issuance of a new one that would conform to the mutual agreement of the buyer and seller as laid down in the deed of sale. Petitioner VFP argues that the deed of sale notwithstanding, it is the legitimate owner of the property described in TCT No. T-4414. The argument is not meritorious. The simple possession of a certificate of title is not necessarily conclusive of the holders true ownership of all the property described therein for said holder does not by virtue of said certificate of title alone become the owner of what has been either illegally or erroneously included.[12] It has been held by this Court that if a person or entity obtains a title which includes by mistake or oversight land which cannot be registered under the Torrens System or over which the buyer has no legal right, said buyer does not, by virtue of said certificate alone, become the owner of the land illegally or erroneously included.[13] In fact, when an area is erroneously included in a relocation survey and in the title subsequently issued, the said erroneous inclusion is null and void and of no effect.[14] And on the rare occasion where there is such an error, the courts may decree that the certificate of title be cancelled and a correct one issued to the buyer.[15] It is of no moment that it was respondent PNR which prepared the document containing the erroneous technical description copied by the Register of Deeds in the certificate of title issued to petitioner VFP.[16] There is no showing that such error was intentional, much less malicious. In fact, both VFP and PNR, for quite a number of years, did not realize that there was a glaring disparity in the technical descriptions appearing in the deed of sale and the certificate of title. Both parties were remiss in ensuring that all the documents and entries in the certificate of title were in order. That being so, petitioner VFP cannot lay all the blame on respondent PNR, for had the former exercised due diligence, the mistake could have been discovered and corrected in time. Petitioner VFP further argues that respondent PNR is now barred from claiming ownership of the disputed property because for twenty-seven (27) years, VFP has exercised acts of exclusive ownership and possession over said property even paying real estate taxes therefor. However, petitioner VFP contradicted itself by its own admission that way back in 1982, it discovered that there were private individuals occupying portions of the said property, erecting permanent structures thereon and conducting their businesses by virtue of lease agreements between them and respondent PNR. If VFP was indeed in possession of the subject property, there would have been no opportunity for these private individuals and PNR to usurp the use of said property. Petitioner VFP maintains that the deed of sale was valid and enforceable and that it was perfected at the very moment that the parties agreed upon the thing which was the object of the sale and upon the price.[17] The parties herein had agreed on the parcel of land that petitioner would purchase from respondent PNR, and the same was described in the absolute deed of sale. Both parties then are bound by the stipulations in their contract. The binding effect of the deed of sale on the parties is based on the principle that the obligations arising therefrom have the force of law between them.[18] The terms of the deed of sale were clear that the object thereof was the property described therein; thus, petitioner VFP cannot now conveniently set aside the technical description in this agreement and insist that it is the legal owner of the property erroneously described in the certificate of title. Petitioner can only claim right of ownership over the parcel of land that was the object of the deed of sale and nothing else. Hence, the trial court did not err in ordering the cancellation of TCT No. T-4414 and in directing the Register of Deeds of San Pablo City to issue a new one, with the correct technical description as embodied in the absolute deed of sale. Accordingly, respondents Lourdes Chavez, Godofredo Chavez, Vicente Alvero, Rosita Villamin, Juanito Alcantara, Florentino Galang, Tiburcio delos Reyes, and Felixberto Cosico are not occupants of VFPs property. Hence, the suit against them was correctly dismissed by the Court of Appeals. It was discovered during the trial that several individuals had occupied certain portions of the property described and subject of the deed of sale without the consent or knowledge of petitioner. Clearly, these individuals have been enjoying the use of VFPs property and it is but fair that they must pay rentals to VFP for such use. The trial court had earlier ruled that a rental fee of P20.00 per square meter was fair and equitable considering the location of the property. We likewise agree with the following findings of the Court of Appeals: With respect to the second issue, We hold that plaintiff-appellant has a cause of action against the present occupants of its property, conveyed, and described in the Deed of Absolute Sale (Exh. A). Perusal of Plan No. 1 (Exh. L-1, Folder of Exhibits, p. 34) prepared by the courtappointed geodetic engineer would indicate that the following individuals and establishments are the actual occupants of the aforesaid property: Yolanda Guerrero, Ruel Galang, Lucio Jimenez, Leocadio Gusti, Rustico Delos Reyes, Bella Angulo, a certain Mang Erning, Roo Engineering (Machine Shop), Ireneo Aspiras, Barangay Health Center, Celso Cuyagi, Zosimo Hernandez, and Puring Fruits Dealer. Two alleys also traverse the property. These individuals and business establishments have been in the property of plaintiff-appellant without the latters consent or authority. Plaintiff-appellant, therefore, has a cause of action against them. But except for Ruel Galang and Leocadio Gusti, the rest are not party-defendants in this action. Another suit must be initiated by plaintiff-appellant if it desires to recover possession from them.[19] (Underscoring ours). However, there is no showing of how long Ruel Galang and Leocadio Gusti, or any of the above-named individuals, have been occupying the subject premises. There is also no evidence of the specific land area occupied by each individual. Thus, there is no basis for the computation of the rentals that petitioner VFP may collect from them. Consequently, this Court is not in a position to award rentals in this case. Instead, VFP may collect these back rentals from the above-named persons in a separate action. There is a need to modify the ruling of the Court of Appeals. The paragraph directing the Register of Deeds of San Pablo City to cancel TCT No. T-4414 and to issue a new one in the name of VFP with the correct technical description as appearing in the absolute deed of sale should not have been deleted. The Court of Appeals likewise erred in ordering PNR to convey the parcel of land described in the absolute deed of sale. We reiterate that, in a litigation such as the one at bar, the court may decree that the certificate of title be cancelled and a correct one issued in favor of the buyer, without having to require the seller to execute in favor of the buyer an instrument to effect the sale and transfer of the property.[20] The absolute deed of sale between VFP and PNR remains valid and enforceable. As correctly found by the Court of Appeals: Ownership over the property specifically described in that contract (Exhibit A) was conveyed to plaintiff-appellant by defendant-appellant PNR by mutual consent after the former had paid the consideration. The allegation by defendant-appellant PNR that the contract of sale is void because of plaintiff-appellants failure to construct its headquarters and a bank in the property, a condition of the sale, is without merit. A perusal of the contract, Exhibit A, would reveal it does not contain any stipulation regarding the alleged condition. Nor is there any evidence

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adduced to support said allegation. Allegation is not synonymous to proof. A party has the burden of proof to establish its defense by convincing evidence. In short, the sale was not a conditional sale.[21] Respondent PNR cannot shirk from its obligation to convey title and surrender possession of the property which VFP bought on the lame excuse that it is now too late in the day for VFP to seek such redress. There is no question that had it not been for PNRs gross mistake in supplying the wrong technical description to the Register of Deeds, there would have been no erroneous inscription. Justice dictates that the courts must right this wrong without further delay. It is but fair that petitioner VFP finally obtain the correct and legal title to the property it bought thirty-seven (37) years ago. WHEREFORE, in view of all the foregoing, the Decision rendered by the Court of Appeals in CA-G.R. CV No. 21229 is hereby MODIFIED to read as follows: 1. The Register of Deeds of San Pablo City is ordered to cancel TCT No. T-4414 [Exh. B] and to issue in its stead a new certificate of title in the name of the Veterans Federation of the Philippines, reflecting therein the true and correct technical description appearing in the absolute deed of sale [Exh. A]; 2. The complaint with respect to respondents Lourdes Chavez, Godofredo Chavez, Vicente Alvero, Rosita Villamin, Juanito Alcantara, Florentino Galang, Tiburcio delos Reyes and Felixberto Cosico is DISMISSED. 3. Respondent Philippine National Railways is directed to immediately surrender possession of the 1,092 square meter property described in the absolute Deed of Sale [Exh. A] to petitioner Veterans Federation of the Philippines; 4. Respondents Ruel Galang and Leocadio Gusti and members of their families, relatives, and other persons claiming rights under them to vacate the premises and to surrender possession thereof to petitioner Veterans Federation of the Philippines; 5. Respondent Philippine National Railway to pay the costs of litigation. In all other respects, the decision is AFFIRMED. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur. 2000 and May 31, 2001, respectively, dismissing the petition of petitioners Mylene C. Garcia and Myla C. Garcia for violating the rules on forum-shopping. Stripped of the non-essentials, the facts of the case are as follows: On July 22, 1998, Bian Steel Corporation (BSC) filed with the Regional Trial Court of Manila a complaint against Joenas Metal Corporation and spouses Ng Ley Huat and Leticia Dy Ng (the spouses Ng) for collection of a sum of money with damages, docketed as Civil Case No. 98-89831. On July 24, 1998, the trial court[3] issued a Writ of Preliminary Attachment after BSC filed an attachment bond. Pursuant thereto, on July 27, 1998, the sheriff of Branch 7 of the RTC of Manila, Manuelito P. Viloria, levied on the property registered in the names of the spouses Ng and covered by TCT No. 11387 of the Registry of Deeds of Quezon City. This property under preliminary attachment was in fact mortgaged to the Far East Bank and Trust Company (FEBTC), now Bank of the Philippine Islands (BPI), and consisted of a 268-square-meter lot located at 14 Tulip Road, Gardenville Town and Country Homes, Congressional Avenue, Project 8, Quezon City. On August 5, 1998, a sheriffs return was filed by Viloria, stating that, as of that date, summons was not served upon the defendant spouses Ng because they could not be located. BSC caused the filing of a motion to serve the summons by publication which was granted. Summons by publication thereafter ensued. In the meantime, defendant-spouses Ng sold the property to petitioners (in G.R. No. 148430) Mylene and Myla Garcia by means of a deed of sale dated June 29, 1998. Said transaction was registered only about a month-and-a-half later, on August 12, 1998, after the mortgagee FEBTC gave its approval to the sale. On August 19, 1998, TCT No. 11387 in the name of the spouses Ng was cancelled and, in lieu thereof, TCT No. 194226 in the names of Mylene and Myla Garcia was issued. The annotation of the preliminary attachment made earlier on July 27, 1998 by sheriff Viloria on the old title, TCT No. 11387, was transferred to TCT No. 194226. On August 28, 1998, the Garcias filed a complaint-in-intervention in Civil Case No. 9889831 pending at Branch 7 of the Manila RTC, alleging that they were the registered owners of the property covered by TCT No. 194226 which was the subject of BSCs writ of preliminary attachment. Said complaint-in-intervention was denied by the trial court for lack of merit. On April 14, 1999, the trial court rendered judgment by default in favor of BSC, the dispositive portion of which was: WHEREFORE, decision is hereby rendered in favor of plaintiff Bian Steel Corporation, and against defendants Joenas Metal Corporation, Ng Ley Huat and Leticia Dy Ng, ordering the latter to jointly and severally: 1. pay the plaintiff the amount of FIVE MILLION EIGHT HUNDRED FIFTY SIX THOUSAND PESOS (P5,856,000.00) as actual damages; 2. pay the plaintiff the amount of ONE MILLION PESOS (P1,000,000.00) as and for consequential damages; 3. pay the plaintiff the amount equivalent to 25% of the total amount due the plaintiff from the defendant as and for attorneys fees; and 4. to pay the costs of suit. SO ORDERED.[4] On June 14, 1999, a Notice of Sale of Execution on Real Property was issued by respondent sheriff Rufo J. Bernardo. It scheduled the public auction of the property on July 7, 1999. Meanwhile, on February 18, 1999, in view of the dismissal of their complaint-inintervention, the Garcias filed an action against BSC, sheriff Manuelito P. Viloria, the Register

G.R. No. 142013. October 15, 2002] BIAN STEEL CORPORATION, petitioner, vs. HON. COURT OF APPEALS, MYLENE C. GARCIA and MYLA C. GARCIA, respondents. [G.R. No. 148430. October 15, 2002] MYLENE C. GARCIA and MYLA C. GARCIA, petitioners, vs. HON. ENRICO A. LANZANAS, Presiding Judge, RTC, Branch 7, Manila and RUFO J. BERNARDO, Sheriff-In-Charge, for the Ex-Officio Sheriff of Manila, respondents. DECISION CORONA, J.: Before us are two consolidated petitions: (1) G.R. No. 142013, a special civil action for certiorari and mandamus seeking to annul and set aside the Resolutions[1] of the Court of Appeals dated October 21, 1999 and January 31, 2000, denying petitioner Bian Steel Corporations motion for intervention and motion for reconsideration, and (2) G.R. No. 148430, seeking to set aside the decision[2] and resolution of the Court of Appeals dated February 10,

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of Deeds of Quezon City and FEBTC (now BPI) for cancellation of the notice of levy annotated on TCT No. 194226 before Branch 98 of the Regional Trial Court of Quezon City,[5] docketed as Civil Case No. 99-36804. The Garcias claimed that they were the registered owners of the property in dispute, having acquired the same on June 29, 1998 by means of a deed of sale with assumption of mortgage from spouses Ng Ley Huat and Leticia Dy Ng. In said case in the Quezon City RTC, the Garcias were able to secure a temporary restraining order enjoining sheriff Rufo J. Bernardo or any person acting in his behalf from continuing with the public auction sale of the subject property initially scheduled on July 7, 1999. This TRO was disregarded by the Manila RTC. Acting on the ex-parte manifestation with motion to proceed with the execution sale filed by BSC, Judge Enrico Lanzanas of Branch 7, RTC, Manila affirmed, on July 8, 1999, his previous order and directed the public auction of the attached property, unless otherwise enjoined by the Court of Appeals or this Court. Thereafter, the public auction was rescheduled from July 7, 1999 to August 6, 1999. On August 4, 1999, the Garcias filed another case with the Court of Appeals for the issuance of a writ of preliminary injunction with prayer for temporary restraining order which sought to perpetually enjoin Judge Lanzanas and sheriff Bernardo from proceeding with the public auction on August 6, 1999. Their petition did not implead BSC as private respondent. In a resolution dated August 5, 1999, the Third Division of the Court of Appeals[6] temporarily restrained public respondents Judge Lanzanas and Bernardo from proceeding with the public auction of the subject property. Hence, the scheduled public sale on August 6, 1999 did not transpire. This prompted petitioner BSC to file a motion for intervention on August 16, 1999, praying that it be allowed to intervene and be heard in the case as private respondent, and to comment and oppose the petition filed by the Garcias. Likewise, said motion sought to oppose the prayer for preliminary injunction with urgent request for the issuance of the temporary restraining order. On October 21, 1999, the First Division of the Court of Appeals, in its resolution,[7] denied BSCs motion for intervention on the ground that its rights could be protected in a separate proceeding, particularly in the cancellation case filed by the Garcias. BSC's motion for reconsideration was likewise denied on January 31, 2000. Thus, on March 13, 2000, BSC filed with this Court a special civil action for certiorari and mandamus, docketed as G.R. No. 142013, seeking to annul and set aside the Resolutions of the Court of Appeals dated October 21, 1999 and January 31, 2000. BSC is invoking the following issues: I THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN DENYING PETITIONERS MOTION FOR INTERVENTION FOR BEING IMPROPER AS INTERVENORS RIGHTS MAY BE PROTECTED IN A SEPARATE PROCEEDING IN CIVIL CASE NO. 99-36804 OF THE RTC, BRANCH 98, QUEZON CITY, FOR CANCELLATION OF THE NOTICE OF LEVY ANNOTATED ON TCT NO. 194226. II THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT TO ENTERTAIN PETITIONERS INTERVENTION WOULD NECESSARY (SIC) PRE-EMPT THE ADJUDICATION OF ISSUES IN CIVIL CASE NO. 99-36804 BECAUSE EVIDENCE AND COUNTER-EVIDENCE WILL BE PRODUCED BY THE PARTIES IN THE INJUNCTION SUIT, AND THIS WILL UNDULY DELAY OR PREJUDICE THE ADJUDICATION OF THE RIGHTS OF THE PRINCIPAL PARTIES. III THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN RULING THAT THE ALLOWANCE OR DISALLOWANCE OF A MOTION TO INTERVENE IS ADDRESSED TO THE SOUND DISCRETION OF THE COURT, OVERLOOKING THE FACT THAT IN THE INSTANT CASE, THE APPELLATE COURT DID NOT EXERCISE WISELY ITS SOUND DISCRETION WHEN IT DENIED PETITIONERS MOTION FOR INTERVENTION. Similarly, the Fifteenth Division of the Court of Appeals, in its decision[8] dated February 10, 2000, dismissed the petition of the Garcias for violating the rules on forum-shopping. It denied their motion for reconsideration on May 31, 2001. The Garcias thus filed with this Court a petition for review on certiorari, docketed as G.R. No. 148430, seeking to set aside the February 10, 2000 decision of the Court of Appeals as well as its resolution dated May 31, 2001 denying their motion for reconsideration, raising the following errors: I WHETHER OR NOT PETITIONERS WERE GUILTY OF VIOLATING THE RULES ON FORUM-SHOPPING. II WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A WRIT OF INJUNCTION. Subsequently, G.R. No. 142013 and G.R. No. 148430 were consolidated pursuant to this Court's Resolution dated February 27, 2002. In the meantime, on August 4, 2001, the Garcias were again served by the sheriff of the Manila RTC with a notice of sale of execution of the disputed property scheduled for August 7, 2001. Because no TRO was issued by this Court, the public auction ordered by the Manila RTC was held as scheduled and the property was awarded to BSC as the highest bidder. On August 15, 2001, a little too late, this Court[9] issued the TRO sought by the Garcias in a resolution which partially stated that: Acting on the Petitioners Urgent Motion for the Issuance of a temporary restraining order and/or writ of preliminary injunction dated August 6, 2001, praying that public respondents be enjoined from proceeding with the conduct of the public auction sale involving Petitioners property, registered under TCT No. 194226 of the Registry of Deeds of Quezon City, the Court Resolved to ISSUE the TEMPORARY RESTRAINING ORDER prayed for, effective immediately until further orders from this Court.[10] A year after the public auction, on August 6, 2002, the Garcias, fearful of the impending consolidation of title in favor of BSC, filed before this Court an urgent ex-parte motion for the issuance of an order maintaining the status quo ante. They wanted to prevent the consolidation of the title and possession by BSC until such time as the rights and interests of both sets of petitioners in the two cases before us shall have been determined and finally resolved. Acting on the said motion, on August 9, 2002, the Court[11] resolved to grant the motion and directed the parties to maintain the status quo as of August 6, 2002. Going over the merits of the petitions, the Court deems it essential to resolve two pivotal issues: (1) who, between BSC and the Garcias, has a better right to the disputed property, and (2) whether the Garcias violated the rule against forum- shopping. It should be noted that, at the time of the attachment of the property on July 27, 1998, the spouses Ng were still the registered owners of said property. It should also be observed that the preliminary attachment in favor of petitioner BSC was annotated and recorded in the Registry of Deeds of Quezon City on July 27, 1998 in accordance with the provisions of the Property

38
Registration Decree (PD 1529). This annotation produced all the effects which the law gives to its registration or inscription.[12] This Court has always held that attachment is a proceeding in rem. It is against the particular property, enforceable against the whole world. The attaching creditor acquires a specific lien on the attached property which ripens into a judgment against the res when the order of sale is made. Such a proceeding in effect means that the property attached is an indebted thing and a virtual condemnation of it to pay the owners debt.[13] This doctrine was validated by this Court in the more recent case of Republic vs. Saludares[14]: xxx. The law does not provide the length of time an attachment lien shall continue after the rendition of the judgment, and it must therefore necessarily continue until the debt is paid, or sale is had under execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law. Thus, if the property attached is subsequently sold, the purchaser of the attached property acquires it subject to an attachment legally and validly levied thereon. xxx. In the instant case, the records reveal that the levy on attachment covering the subject property was annotated on TCT No. 11387 on July 27, 1998. The deed of sale executed on June 29, 1998 in favor of the Garcias was approved by FEBTC only on August 12, 1998 which was also the date when the sale was registered. From the foregoing, it can be seen that, when the Garcias purchased the property in question, it was already under a duly registered preliminary attachment. In other words, there was already notice to said purchasers (and the whole world) of the impending acquisition by BSC, as the judgment creditor, of a legal lien on the title of the Ng spouses as judgment debtors in case BSC won its case in the Manila RTC. The Garcias claim they acquired the subject property by means of a deed of sale with assumption of mortgage dated June 29, 1998, meaning, they purchased the property ahead of the inscription of the levy on attachment thereon on July 27, 1998. But, even if consensual, not all contracts of sale became automatically and immediately effective.[15] In Ramos vs. Court of Appeals[16] we held: In sales with assumption of mortgage, the assumption of mortgage is a condition precedent to the sellers consent and therefore, without approval of the mortgagee, the sale is not perfected. Apart therefrom, notwithstanding the approval of the sale by mortgagee FEBTC (BPI), there was yet another step the Garcias had to take and it was the registration of the sale from the Ngs to them. Insofar as third persons are concerned, what validly transfers or conveys a person's interest in real property is the registration of the deed.[17] Thus, when the Garcias bought the property on June 29, 1998, it was, at that point, no more than a private transaction between them and the Ngs. It needed to be registered before it could become binding on all third parties, including BSC. It turned out that the Garcias registered it only on August 12, 1998, after FEBTC (now BPI) approved the sale. It was too late by then because, on July 27, 1998, the levy in favor of BSC, pursuant to the preliminary attachment ordered by the Manila RTC, had already been annotated on the original title on file with the Registry of Deeds. This registration of levy (or notice, in laymans language) now became binding on the whole world, including the Garcias. The rights which had already accrued in favor of BSC by virtue of the levy on attachment over the property were never adversely affected by the unregistered transfer from the spouses Ng to the Garcias. We sympathize with the Garcias but, had they only bothered to check first with the Register of Deeds of Quezon City before buying the property as a prudent buyer would have done they would have seen the warning about BSCs superior rights over it. This alone should have been sufficient reason for them to back out of the deal. It is doctrinal that a levy on attachment, duly registered, has preference over a prior unregistered sale and, even if the prior unregistered sale is subsequently registered before the sale on execution but after the levy is made, the validity of the execution sale should be upheld because it retroacts to the date of levy. The priority enjoyed by the levy on attachment extends, with full force and effect, to the buyer at the auction sale conducted by virtue of such levy.[18] The sale between the spouses Ng and the Garcias was undoubtedly a valid transaction between them. However, in view of the prior levy on attachment on the same property, the Garcias took the property subject to the attachment. The Garcias, in buying registered land, stood exactly in the shoes of their vendors, the Ngs, and their title ipso facto became subject to the incidents or results of the pending litigation[19] between the Ngs and BSC. Even the alleged lack of actual and personal knowledge of the existence of the levy on attachment over the subject property by the Garcias cannot be sustained by this Court on the ground that one who deals with registered land is charged with notice of the burdens on the property which are duly noted on the certificate of title. On this specific point, we are concerned not with actual or personal knowledge but constructive notice through registration in the Registry of Deeds. Otherwise stated, what we should follow is the annotation (or lack thereof) on the original title on file with the Registry of Deeds, not on the duplicate title in the hands of the private parties. When a conveyance has been properly recorded, such record is constructive notice of its contents and all interests, legal and equitable, included therein. Under the rule on notice, it is presumed that the purchaser has examined every instrument on record affecting the title. Such presumption is irrefutable and cannot be overcome by any claim of innocence or good faith. Therefore, such presumption cannot be defeated by proof of lack of knowledge of what the public record contains any more than one may be permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless confusion and useless litigation.[20] Otherwise, the very purpose and object of the law requiring public registration would be for naught. Pertinent to the matter at hand is Article 1544 of the New Civil Code which provides: If the same thing should have been sold to different vendees, x x x should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. x x x Because of the principle of constructive notice to the whole world, one who deals with registered property which is the subject of an annotated levy on attachment cannot invoke the rights of a purchaser in good faith. As between two purchasers, the one who registers the sale in his favor has a preferred right over the other who has not registered his title even if the latter is in actual possession of the immovable property.[21] And, as between two purchasers who both registered the respective sales in their favor, the one who registered his sale ahead of the other would have better rights than the other who registered later. Applying said provision of the law and settled jurisprudence to the instant case, when the disputed property was consequently sold on execution to BSC, this auction sale retroacted to the date of inscription of BSC's notice of attachment on July 27, 1998. The earlier registration thus gave BSC superior and preferential rights over the attached property as against the Garcias[22]who registered their purchase of the property at a later date. Notably, the Garcias were not purchasers for value in view of the fact that they acquired the property in payment of the loan earlier obtained from them by the Spouses Ng.[23]

39
All told, the purchaser of a property subject to an attachment legally and validly levied thereon is merely subrogated to the rights of the vendor and acquires the property subject to the rights of the attachment creditor. An attaching creditor who registers the order of attachment and the sale by public auction of the property to him as the highest bidder acquires a superior title to the property as against a vendee who previously bought the same property from the registered owner but who failed to register his deed of sale.[24] Petitioners Garcias failed to show that BSC acted in bad faith which would have impelled this Court to rule otherwise. The foregoing considerations show that the Garcias are not entitled to the issuance of a writ of preliminary injunction from this Court. For the issuance of the writ to be proper, it must be shown that the invasion of the right sought to be protected is material and substantial, that the right of the Garcias is clear and unmistakable and that there is an urgent and paramount necessity for the writ to prevent serious damage.[25] Such requirements are all wanting in the case at bar. Thus, in view of the clear and unmistakable absence of any legal basis for the issuance thereof, the same must be denied. On the second question whether the Garcias violated the rule against forum-shopping we answer in the affirmative. The Court of Appeals, in dismissing the Garcias' petition on the ground of forum-shopping, explained: A party is guilty of forum-shopping where he repetitively availed of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in, or already resolved adversely by some other court (Gatmaytan vs. Court of Appeals, 267 SCRA 487). The test to determine whether a party violated the rule against forum-shopping is where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another (Solid Homes, Inc. vs. Court of Appeals, 271 SCRA 157). What is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and parties-litigants by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs, in the process creating possibility of conflicting decisions being rendered by the different fora upon the same issues (Golangco vs. Court of Appeals, 283 SCRA 493). The above jurisprudence instructs us the various indicia of forum-shopping. The more important of these are: when the final judgment in one case will amount to res judicata in another, or where the cases filed are substantially founded on the same transactions and the same essential facts and circumstances, or raising substantially the same issues, or more importantly, where there exists the possibility of conflicting decisions being rendered by different fora upon the same issues. If we take a look closely on the instant Petition for Injunction, forum-shopping is evident. In Civil Case No. 99-36804 raffled to Branch 98 of RTC- Quezon City, petitioners therein prayed for the cancellation of the notice of levy in their title. They are claiming that the controverted property is owned by them such that the respondent therein has no right to levy on their property, petitioners not being the respondents debtor. In the present petition, petitioners seek that the scheduled auction sale of the same property be perpetually enjoined, claiming that the property is owned by them and that the same is erroneously made to answer for liability not owing by them. Ultimately, the two actions involve the same essential facts and circumstances, and are raising the same issues. x x x The propriety of the issuance of injunction would depend on the finding that the petitioners have a clear legal right over the property - a right in esse or the existence of a right to be protected. Thus, this court must make a categorical finding of fact. This very same issue of fact who as between the two contending parties have a better right to the property is the very issue presented before the RTC of Quezon City. Clearly therefore, this Court and that of RTC Quezon City are called upon to decide on the same issues based on the same essential facts and circumstances. Hence, the possibility of these two courts rendering or coming up with different or conflicting decisions is very much real. Needless to say, the decision in one case would constitute res judicata in the other. The instant petition for injunction obviously violates the rule on forum-shopping. We agree with the Court of Appeals. As clearly demonstrated, the willful attempt by the Garcias to obtain a preliminary injunction in another court (the Court of Appeals) after they filed a case seeking the same relief from the original court (the Quezon City RTC) constitutes grave abuse of the judicial process. Such contemptuous act is penalized by the summary dismissal of both actions as mandated by paragraph 17 of the Interim Rules and Guidelines issued by this Court on January 11, 1983 and Supreme Court Circular No. 28-91, to wit: xxx SUBJECT: ADDITIONAL REQUISITES FOR PETITIONS FILED WITH THE SUPREME COURT AND THE COURT OF APPEALS TO PREVENT FORUM-SHOPPING OR MULTIPLE FILING OF PETITIONS AND COMPLAINTS. The attention of the Court has been called to the filing of multiple petitions and complaints involving the same issues in the Supreme Court, the Court of Appeals or different Divisions thereof, or any other tribunal or agency, with the result that said tribunals or agency have to resolve the same issues. x x x. 3. Penalties. (a) Any violation of this Circular shall be a cause for the summary dismissal of the multiple petition or complaint; x x x. In Bugnay Construction & Development Corporation vs. Laron,[26] we declared: Forum-shopping, an act of malpractice, is proscribed and condemned as trifling with the courts and abusing their processes. It is improper conduct that degrades the administration of justice. The rule has been formalized in Paragraph 17 of the Interim Rules and Guidelines issued by this Court of January 11, 1983, in connection with the implementation of the Judiciary Reorganization Act x x x. The Rule ordains that (a) violation of the rule shall constitute a contempt of court and shall be a cause for the summary dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or party concerned. The rule against forum-shopping has been further strengthened by the issuance of Supreme Court Administrative Circular No. 04-94. Said circular formally established the rule that the deliberate filing of multiple complaints to obtain favorable action constitutes forum-shopping and shall be a ground for summary dismissal thereof. Accordingly, the Garcias cannot pursue simultaneous remedies in two different fora. This is a practice which degrades the judicial process, messes up the orderly rules of procedure and is vexatious and unfair to the other party in the case. We rule therefore that the execution sale in favor of BSC was superior to the sale of the same property by the Ngs to the Garcias on August 12, 1998. The right of petitioner BSC to the ownership and possession of the property, the surrender of the owner's duplicate copy of TCT No. 194226 covering the subject property for inscription of the certificate of sale, the

40
cancellation of TCT No. 194226 and the issuance of a new title in favor of BSC, is affirmed without prejudice to the right of the Garcias to seek reimbursement from the spouses Ng. In view of our disposition of the first issue resulting in the denial of the Garcias petition, the petition of BSC praying that it be allowed to intervene therein has been rendered moot. The Court thus finds it unnecessary to discuss it. WHEREFORE, the petitions are DENIED. The Resolution dated August 9, 2002 issued by this Court directing the parties to maintain the status quo as of August 6, 2002 is hereby lifted and set aside. The Registry of Deeds of Quezon City is hereby ordered to cancel TCT No. 194226 in the names of Myla and Mylene Garcia and issue a new title in favor of BSC without further delay. SO ORDERED. Puno, (Chairman), and Panganiban, JJ., concur. Sandoval-Gutierrez, J., no part. participated in G.R. No. 148430. Morales, J., no part. concurred in assailed decision of the Court of Appeals. BUKAL ENTERPRISES and DEVELOPMENT CORPORATION, a corporation duly organized and registered in accordance with Philippine Laws, with business address at Dahlia Avenue, Fairview Park, Quezon City, herein represented by its PRESIDENT, MRS. ZENAIDA A. DE CASTRO, hereinafter called the VENDEE. WITNESSETH: That the VENDOR is the absolute and registered owner of a certain parcel of land located at Fairview Park, Quezon City, and more particularly described as follows: A parcel of land (Lot 4, Block 33 of the consolidation-subdivision plan (LRC) Pcs-8124, Sheet No. I, being a portion of the consolidation of Lots 41-B-2-A and 41-B-2-C, Psd-1136 and Lot (LRC) Pcs-2665, (LRC) GLRO) Record. No. 1037), situated in Quezon City, Island of Luzon. Bounded on the NE., points 2 to 5 by Road Lot 24, of the consolidationsubdivision plan. Beginning at a point marked 1 on plan, being S. 67 deg. 23W., 9288.80 m. from BLLM I, Mp of Montalban, Rizal; thence N. 85 deg. 35E., 17.39 m. to point 2; thence S. 54 deg. 22E., 4.00 m. to point 3; thence S. 14 deg. 21E., 17.87 m. to point 4; thence 3 deg. 56E., 17.92 m. to point 5; thence N. 85 deg. 12 W., 23.38 m. to point 6; thence N. 4 deg. 55 W., 34.35 m. to the point of beginning; containing an area of EIGHT HUNDRED AND SIX (806) SQUARE METERS, more or less. VENDORS title thereto being evidenced by Transfer Certificate of Title No. 264243 issued by the Register of Deeds of Quezon City; That the VENDOR, for and in consideration of the sum of THREE MILLION TWO HUNDRED TWENTY FOUR THOUSAND PESOS (P3,224,000.00) Philippine Currency, to them in hand paid and receipt whereof is hereby acknowledged, do hereby SELL, TRANSFER and CONVEY unto the said VENDEE, its assigns, transferees and successors in interest the above described property, free from all liens and encumbrances whatsoever; It is hereby mutually agreed that the VENDEE shall bear all the expenses for the capital gains tax, documentary stamps, documentation, notarization, removal and relocation of the squatters, registration, transfer tax and other fees as may be required by law; That the VENDOR shall pay the real estate tax for the current year and back real estate taxes, charges and penalties if there are any. IN WITNESS WHEREOF, we have hereunto affixed our signatures this ____ day of February, 1995, at Quezon City, Philippines. CONSTANTE FIRME BUKAL ENTERPRISES AND DEVELOPMENT CORP. BY: AZUCENA E. FIRME ZENAIDA A. DE CASTRO VENDOR President xxx The Spouses Firme rejected this First Draft because of several objectionable conditions, including the payment of capital gains and other government taxes by the seller and the relocation of the squatters at the sellers expense. During their second meeting, Aviles presented to the Spouses Firme another draft deed of sale[5] (Second Draft) dated March 1995. The Spouses Firme allegedly accepted the Second Draft in view of the deletion of the objectionable conditions contained in the First Draft. According to Aviles, the Spouses Firme were willing to sell the Property atP4,000 per square meter. They then agreed that payment would be made at the Far East Bank and Trust Company (FEBTC), Padre Faura Branch, Manila. However, the scheduled payment had to be postponed due to problems in the transfer of funds. The Spouses Firme later informed Aviles that they were no longer interested in selling the Property.[6]

[G.R. No. 146608. October 23, 2003] SPOUSES CONSTANTE FIRME AND AZUCENA E. FIRME, petitioners, vs. BUKAL ENTERPRISES AND DEVELOPMENT CORPORATION,respondent. DECISION CARPIO, J.: The Case This is a petition for review on certiorari of the Decision[1] dated 3 January 2001 of the Court of Appeals in CA-G.R. CV No. 60747. The Court of Appeals reversed the Decision[2] of the Regional Trial Court, Branch 223, Quezon City (trial court), which held that there was no perfected contract of sale since there was no consent on the part of the seller. The Facts Petitioner Spouses Constante and Azucena Firme (Spouses Firme) are the registered owners of a parcel of land[3] (Property) located on Dahlia Avenue, Fairview Park, Quezon City. Renato de Castro (De Castro), the vice president of Bukal Enterprises and Development Corporation (Bukal Enterprises) authorized his friend, Teodoro Aviles (Aviles), a broker, to negotiate with the Spouses Firme for the purchase of the Property. On 28 March 1995, Bukal Enterprises filed a complaint for specific performance and damages with the trial court, alleging that the Spouses Firme reneged on their agreement to sell the Property. The complaint asked the trial court to order the Spouses Firme to execute the deed of sale and to deliver the title to the Property to Bukal Enterprises upon payment of the agreed purchase price. During trial, Bukal Enterprises presented five witnesses, namely, Aviles, De Castro, Antonio Moreno, Jocelyn Napa and Antonio Ancheta. Aviles testified that De Castro authorized him to negotiate on behalf of Bukal Enterprises for the purchase of the Property. According to Aviles, he met with the Spouses Firme on 23 January 1995 and he presented them with a draft deed of sale[4] (First Draft) dated February 1995. The First Draft of the deed of sale provides: DEED OF ABSOLUTE SALE KNOW ALL MEN BY THESE PRESENTS: This DEED OF ABSOLUTE SALE made and executed by and between the Spouses CONSTANTE FIRME and AZUCENA E. FIRME, both of legal age, Filipino citizens and with postal address at No. 1450 Union, Paco, City of Manila, hereinafter called the VENDOR, and

41
De Castro testified that he authorized Aviles to negotiate for Bukal Enterprises the purchase of the Property owned by the Spouses Firme. The Property was located beside the Dahlia Commercial Complex owned by Bukal Enterprises. Aviles informed him that the Spouses Firme agreed to sell the Property at P4,000 per square meter, payable in cash for a lump sum ofP3,224,000. Furthermore, Bukal Enterprises agreed to pay the taxes due and to undertake the relocation of the squatters on the Property. For this purpose, Bukal Enterprises applied for a loan of P4,500,000 which FEBTC granted. Bukal Enterprises then relocated the four families squatting on the Property at a cost of P60,000 per family. After the squatters vacated the Property, Bukal Enterprises fenced the area, covered it with filling materials, and constructed posts and riprap. Bukal Enterprises spent approximately P300,000 for these improvements. In a letter[7] dated 7 March 1995, Bukal Enterprises offered to pay the purchase price of P3,224,000 to the Spouses Firme upon execution of the transfer documents and delivery of the owners duplicate copy of TCT No. 264243. The Spouses Firme did not accept this offer but instead sent Bukal Enterprises a letter demanding that its workers vacate the Property. Bukal Enterprises then filed a complaint for specific performance and damages.[8] Antonio Moreno, one of the alleged squatters on the Property, testified that he constructed his house on the Property sometime in 1982. On 26 February 1995, he was summoned together with the other squatters to a meeting with Aviles regarding their relocation. They agreed to relocate provided they would be given financial assistance of P60,000 per family. Thus, on 6 March 1995, the squatter families were each paid P60,000 in the presence of De Castro and Aviles. Thereafter, they voluntarily demolished their houses and vacated the Property.[9] Jocelyn Mapa, the manager of FEBTC, Padre Faura Branch, testified that Bukal Enterprises has been their client since 1994. According to her, Bukal Enterprises applied for a loan ofP4,500,000 on the third week of February 1995 allegedly to buy a lot in Fairview. FEBTC approved the loan on the last week of February and released the proceeds on the first week of March.[10] Antonio Ancheta (Ancheta), barangay captain of Barangay Fairview, testified that he was present when one of the officers of Bukal Enterprises, a certain Renato, paid each of the four squatter families around P60,000 to P100,000. Ancheta informed Dr. Constante Firme that he told the squatters to leave considering that they already received payment for their relocation. According to Ancheta, Dr. Constante Firme must have misunderstood him and thought that the squatters left through Anchetas own efforts.[11] On the other hand, Dr. Constante Firme (Dr. Firme) was the sole witness for the defendant spouses. Dr. Firme testified that on 30 January 1995, he and his wife met with Aviles at the Aristocrat Restaurant in Quezon City. Aviles arranged the meeting with the Spouses Firme involving their Property in Fairview. Aviles offered to buy the Property at P2,500 per square meter. The Spouses Firme did not accept the offer because they were reserving the Property for their children. On 6 February 1995, the Spouses Firme met again with Aviles upon the latters insistence. Aviles showed the Spouses Firme a copy of a draft deed of sale[12] (Third Draft) which Aviles prepared. The Third Draft of the deed of sale provides: CONRACT OF SALE KNOW ALL MEN BY THESE PRESENTS: This AGREEMENT, executed this ___ day of February, 1995, by and between the Spouses CONSTANTE FIRME and AZUCENA E. FIRME, both of legal age, Filipino citizen and with postal address at __________, Quezon City, hereinafter referred to as the VENDORS, and BUKAL ENTERPRISES and DEVELOPMENT CORPORATION, a corporation duly organized and registered in accordance with Philippine Laws, with postal address at Fairview Park, Quezon City, herein represented by its President and Chief Executive Officer, hereinafter referred to as the VENDEE. WITNESSETH: That for and in consideration of the sum of THREE MILLION TWO HUNDRED TWENTY FOUR THOUSAND PESOS (P3,224,000.00), Philippine Currency, payable in the form hereinafter expressed, agreed to sell to the VENDEE and the VENDEE has agreed to buy from the VENDORS, a parcel of land situated at Dahlia Avenue corner Rolex Street, Fairview Park, Quezon City, containing an area of 806 Square Meters more or less, of which the VENDORS are the absolute registered owners in accordance with the Land Registration Act, as evidenced by Transfer Certificate of Title No. 264243 issued by the Register of Deeds of Quezon City, more particularly described and bounded as follows: (DESCRIPTION AND BOUNDARIES OF PROPERTY) THE FURTHER TERMS AND CONDITIONS OF THE CONTRACT ARE AS FOLLOWS: 1. The VENDEE agrees to pay the VENDORS upon execution of this Contract the sum of ONE MILLION PESOS (P1,000,000.00), Philippine Currency, as downpayment and agrees to pay the balance of TWO MILLION TWO HUNDRED TWENTY FOUR THOUSAND PESOS (P2,224,000.00) at the post office address of the VENDORS in Quezon City, or such other place or Office as the VENDORS may designate within a period of sixty (60) days counted from the date of this Contract; 2. The VENDORS have hereunto authorized the VENDEE to mortgage the property and submit this Contract, together with a certified true copy of the TCT, Tax Declaration, Tax Clearance and Vicinity/Lot Plan, with their Lending Bank. The proceeds of the VENDEES Loan shall directly be paid and remitted by the Bank to the VENDORS; 3. The said parcel of land shall remain in the name of the VENDORS until the Lending Bank of the VENDEE shall have issued a Letter Guaranty Payment in favor of the VENDORS, at which time the VENDORS agree to execute a Deed of Absolute Sale in favor of the VENDEE and cause the issuance of the Certificate of Title in the name of the latter. The Capital Gains Tax and Documentary Stamps shall be charged from the VENDORS in accordance with law; 4. The payment of the balance of P2,224,000.00 by the VENDEE to the VENDORS shall be within a period of sixty (60) days effective from the date of this Contract. After the lapse of 60 days and the loan has not yet been released due to fortuitous events the VENDEE shall pay an interest of the balance a monthly interest based on existing bank rate until said fortuitous event is no longer present; 5. The VENDEE shall remove and relocate the Squatters, however, such actual, reasonable and necessary expenses shall be charged to the VENDORS upon presentation of receipts and documents to support the act; 6. The VENDEE shall be allowed for all legal purposes to take possession of the parcel of land after the execution of this Contract and payment of the downpayment; 7. The VENDEE shall shoulder all expenses like the documentation, registration, transfer tax and relocation of the property. IN WITNESS WHEREOF, we have hereunto affixed our signatures this ____ day of February, 1995, at Quezon City, Philippines.

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the parties. Furthermore, Aviles had no valid authority to bind Bukal Enterprises in the sale transaction. Under Sections 23 and 36 (No. 7) of the Corporation Code, the corporate power to purchase a specific property is exercised by the Board of Directors of the corporation. Without an authorization from the Board of Directors, Aviles could not validly finalize the purchase of the Property on behalf of Bukal Enterprises. There is no basis to apply the Statute of Frauds since there was no perfected contract of sale. The Ruling of the Court of Appeals The Court of Appeals held that the lack of a board resolution authorizing Aviles to act on behalf of Bukal Enterprises in the purchase of the Property was cured by ratification. Bukal Enterprises ratified the purchase when it filed the complaint for the enforcement of the sale. The Court of Appeals also held there was a perfected contract of sale. The appellate court ruled that the Spouses Firme revealed their intent to sell the Property when they met with Avilestwice. The Spouses Firme rejected the First Draft because they considered the terms unacceptable. When Aviles presented the Second Draft without the objectionable provisions, the Spouses Firme no longer had any cause for refusing to sell the Property. On the other hand, the acts of Bukal Enterprises in fencing the Property, constructing posts, relocating the squatters and obtaining a loan to purchase the Property are circumstances supporting their claim that there was a perfected contract of sale. The Spouses Firme allowed Bukal Enterprises to exercise acts of ownership over the Property when the latter introduced improvements on the Property and evicted the squatters. These acts constitute partial performance of the contract of sale that takes the oral contract out of the scope of the Statute of Frauds. The Issues The Spouses Firme raise the following issues: 1. WHETHER THE COURT OF APPEALS ERRED IN FINDING THAT THERE WAS A PERFECTED CONTRACT OF SALE BETWEEN PETITIONERS AND RESPONDENT DESPITE THE ADDUCED EVIDENCE PATENTLY TO THE CONTRARY; 2. WHETHER THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE ALLEGED CONTRACT OF SALE IS ENFORCEABLE DESPITE THE FACT THAT THE SAME IS COVERED BY THE STATUTE OF FRAUDS; 3. WHETHER THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT THAT IT WAS NOT LEGALLY AND FACTUALLY POSSIBLE FOR RESPONDENT TO PERFECT A CONTRACT OF SALE; AND 4. THE COURT OF APPEALS ERRED IN RULING THAT THE AWARD BY THE TRIAL COURT OF MORAL AND COMPENSATORY DAMAGES TO PETITIONERS IS IMPROPER.[18] The Ruling of the Court Hence, the instant petition. The Ruling of the Trial Court The trial court held there was no perfected contract of sale. Bukal Enterprises failed to establish that the Spouses Firme gave their consent to the sale of the Property. The parties did not go beyond the negotiation stage and there was no evidence of meeting of the minds between The petition is meritorious. The fundamental question for resolution is whether there was a perfected contract of sale between the Spouses Firme and Bukal Enterprises. This requires a review of the factual and legal issues of this case. As a rule, only questions of law are appealable to this Court under Rule 45[19] of the Rules of Civil Procedure. The findings of fact by the Court of Appeals are generally

CONSTANTE E. FIRME VENDOR AZUCENA E. FIRME VENDOR

BUKAL ENTERPRISES DEV. CORP. VENDEE BY: ________________________ President & Chief Executive Officer xxx The Spouses Firme did not accept the Third Draft because they found its provisions onesided. The Spouses Firme particularly opposed the provision on the delivery of the Propertys title to Bukal Enterprises for the latter to obtain a loan from the bank and use the proceeds to pay for the Property. The Spouses Firme repeatedly told Aviles that the Property was not for sale whenAviles called on 2 and 4 March 1995 regarding the Property. On 6 March 1995, the Spouses Firme visited their Property and discovered that there was a hollow block fence on one side, concrete posts on another side and bunkers occupied by workers of a certain Florante de Castro. On 11 March 1995, Spouses Firme visited the Property again with a surveyor. Dr. Firme talked with Ancheta who told him that the squatters had voluntarily demolished their shanties. The Spouses Firme sent a letter[13] dated 20 March 1995 to Bukal Enterprises demanding removal of the bunkers and vacation by the occupants of the Property. On 22 March 1995, the Spouses Firme received a letter[14] dated 7 March 1995 from Bukal Enterprises demanding that they sell the Property.[15] On 7 August 1998, the trial court rendered judgment against Bukal Enterprises as follows: WHEREFORE, in the light of the foregoing premises, the above-entitled case [is] hereby DISMISSED and plaintiff BUKAL ENTERPRISES DEVELOPMENT CORPORATION is hereby ordered to pay the defendants Spouses Constante and Azucena Firme: 1. the sum of Three Hundred Thirty Five Thousand Nine Hundred Sixty Four and 90/100 (P335,964.90) as and by way of actual and compensatory damages; 2. the sum of Five Hundred Thousand Pesos (P500,000.00) as and by way of moral damages; 3. the sum of One Hundred Thousand Pesos (P100,000.00) as and by way of attorneys fees; and 4. the costs of the suit. SO ORDERED.[16] Bukal Enterprises appealed to the Court of Appeals, which reversed and set aside the decision of the trial court. The dispositive portion of the decision reads: WHEREFORE, premises considered, the Decision, dated August 7, 1998, is hereby REVERSED and SET ASIDE. The complaint is granted and the appellees are directed to henceforth execute the Deed of Absolute Sale transferring the ownership of the subject property to the appellant immediately upon receipt of the purchase price of P3,224,000.00 and to perform all such acts necessary and proper to effect the transfer of the property covered by TCT No. 264243 to appellant. Appellant is directed to deliver the payment of the purchase price of the property within sixty days from the finality of this judgment. Costs against appellees. SO ORDERED.[17]

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conclusive and binding on the parties and are not reviewable by this Court.[20] However, when the factual findings of the Court of Appeals are contrary to those of the trial court or when the inference made is manifestly mistaken, this Court has the authority to review the findings of fact.[21] Likewise, this Court may review findings of fact when the judgment of the Court of Appeals is premised on a misapprehension of facts.[22] This is the situation in this case. Whether there was a perfected contract of sale We agree with the finding of the trial court that there was no perfected contract of sale. Clearly, the Court of Appeals misapprehended the facts of the case in ruling otherwise. First, the records indubitably show that there was no consent on the part of the Spouses Firme. Aviles did not present any draft deed of sale during his first meeting with the Spouses Firmeon 30 January 1995.[23] Dr. Firme was consistent in his testimony that he and his wife rejected the provisions of the Third Draft presented by Aviles during their second meeting on 6 February 1995. The Spouses Firme found the terms and conditions unacceptable and told Aviles that they would not sell the property.[24] Aviles showed them only one draft deed of sale (Third Draft) during their second and last meeting on 6 February 1995.[25] When shown a copy of the First Draft, Dr. Firme testified that it was not the deed of sale shown to them by Aviles during their second meeting[26] and that the Third Draft was completely different from the First Draft.[27] On the other hand, Aviles gave conflicting testimony as to what transpired during the two meetings with the Spouses Firme. In his direct examination, Aviles testified that during his first meeting with the Spouses Firme on 23 January 1995, he showed them the First Draft which the Spouses Firme rejected.[28] On their second meeting, Aviles showed the Spouses Firme the Second Draft, which the Spouses Firme allegedly approved because the objectionable conditions contained in the First Draft were already deleted. However, a perusal of the First Draft and the Second Draft would show that both deeds of sale contain exactly the same provisions. The only difference is that the date of the First Draft is February 1995 while that of the Second Draft is March 1995. When Aviles testified again as rebuttal witness, his testimony became more confusing. Aviles testified that during his first meeting with the Spouses Firme on 30 January 1995, he showed them the Third Draft, which was not acceptable to the latter.[29] However, upon further questioning by his counsel, Aviles concurred with Dr. Firmes testimony that he presented the Third Draft (Exh. 5; Exh. L) to the Spouses Firme only during their second meeting. He also stated that he prepared and presented to the Spouses Firme the First Draft (Exh. C) and the Second Draft (Exh. C-1) during their first or second meeting. He testified: ATTY. MARQUEDA: Q: On page 11 of the tsn dated August 5, 1997 a question was posed How did you find this draft the Contract of Sale which was presented to you by Mr. Aviles on the second meeting? The answer is On the first meeting(sic), we find it totally unacceptable, sir.[30] What can you say on this? Before that, Mr. Witness, what is this Contract of Sale that you presented to Mr. Aviles on the second meeting? Is this different from the Contract of Sale that was marked as Exhibit 5-L? Q: May I see the document Exhibit 5 L?[31] INTERPRETER: Witness going over the record. ATTY. MARQUEDA: Q: Is that the same document that was presented by you to Mr. Firme on the second meeting or there is a different contract? A: This is the same document draft of the document that I submitted to them during our second meeting. That was February. This was the draft. Q: What about Exhibit C and C-1 [which] were identified by you. When was this presented to Dr. Firme? A: This is the same. Q: Exhibit C and C-1? A: Yes because I prepared two documents during our meeting. One already with notarial, the one without notarial page and the other one with notarial page already, so I prepared two documents but with the same contents both were dated February of 1995.[32] Q: So, you are referring now to Exhibit C and C-1 for the plaintiff? A: C-1 is already in the final form because we agreed already as to the date of the payment, so I prepared already another document which is dated March 1995.[33] (Emphasis supplied) In his cross-examination, Aviles again changed his testimony. According to him, he presented the Third Draft to the Spouses Firme during their first meeting.[34] However, when he went over the records, he again changed his answer and stated that he presented the Third Draft during their second meeting.[35] In his re-direct examination, Aviles gave another version of what he presented to the Spouses Firme during the two meetings. According to him, he presented the Third Draft during the first meeting. On their second meeting, he presented the First and the Second Drafts to the Spouses Firme.[36] Furthermore, Aviles admitted that the first proposal of Bukal Enterprises was at P2,500 per square meter for the Property.[37] But the First, Second and Third Drafts of the deed of sale prepared by Aviles all indicated a purchase price of P4,000 per square meter or a lump sum of P3,224,000 (P4,000 per sq.m. x 806 sq.m. = P3,224,000) for the Property. Hence, Aviles could not have presented any of these draft deeds of sale to the Spouses Firme during their first meeting. Considering the glaring inconsistencies in Aviles testimony, it was proper for the trial court to give more credence to the testimony of Dr. Firme. Even after the two meetings with Aviles, the Spouses Firme were firm in their decision not to sell the Property. Aviles called the Spouses Firme twice after their last meeting. The Spouses Firme informed Aviles that they were not selling the Property.[38] Aviles himself admitted this during his testimony, thus: Q. Now, the next question which states: But did you not have any occasion to talk to him after that second meeting? and the answer of Dr. Firme is He called up a month after, thats March 2, 1995. What can you say on this? A. I called him to inform him that the loan was already transferred from Makati to Padre Faura Branch of the Far East Bank, so I scheduled already the payment of their property. Q. When? A. On March 4, 1995. Q. And then the next question which also states: What did you talked (sic) about over the telephone? The answer of Dr. Firme was When I found out that he was calling, I told him that the property is not for sale. What can you say on this? A. He mentioned that they are no longer interested to sell their property, perhaps they would like a higher price of the property. They did not mention to me. I do not know what was their reason.

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Q. The next question So, what happened next? The answer is He called up two days later, March 4 and my wife answered the telephone and told him that the property is not for sale, sir. What can you say on this? A. That is true. That is what Mrs. Firme told me during our conversation on the telephone that they are no longer interested to sell the property for obvious reason. Q. When was that? A. March 4, 1995, your honor.[39] (Emphasis supplied) Significantly, De Castro also admitted that he was aware of the Spouses Firmes refusal to sell the Property.[40] The confusing testimony of Aviles taken together with De Castros admission that he was aware of the Spouses Firmes refusal to sell the Property reinforces Dr. Firmes testimony that he and his wife never consented to sell the Property. Consent is one of the essential elements of a valid contract. The Civil Code provides: Art. 1318. 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. The absence of any of these essential elements will negate the existence of a perfected contract of sale.[41] Thus, where there is want of consent, the contract is non-existent.[42] As held inSalonga, et al. v. Farrales, et al.:[43] It is elementary that consent is an essential element for the existence of a contract, and where it is wanting, the contract is non-existent. The essence of consent is the conformity of the parties on the terms of the contract, the acceptance by one of the offer made by the other. The contract to sell is a bilateral contract. Where there is merely an offer by one party, without the acceptance of the other, there is no consent. (Emphasis supplied) In this case, the Spouses Firme flatly rejected the offer of Aviles to buy the Property on behalf of Bukal Enterprises. There was therefore no concurrence of the offer and the acceptance on the subject matter, consideration and terms of payment as would result in a perfected contract of sale.[44] Under Article 1475 of the Civil Code, the contract of sale is perfected at the moment there is a meeting of minds on the thing which is the object of the contract and on the price. Another piece of evidence which supports the contention of the Spouses Firme that they did not consent to the contract of sale is the fact they never signed any deed of sale. If the Spouses Firme were already agreeable to the offer of Bukal Enterprises as embodied in the Second Draft, then the Spouses Firme could have simply affixed their signatures on the deed of sale, but they did not. Even the existence of a signed document purporting to be a contract of sale does not preclude a finding that the contract is invalid when the evidence shows that there was no meeting of the minds between the seller and buyer.[45] In this case, what were offered in evidence were mere unsigned deeds of sale which have no probative value.[46] Bukal Enterprises failed to show the existence of a perfected contract of sale by competent proof. Second, there was no approval from the Board of Directors of Bukal Enterprises as would finalize any transaction with the Spouses Firme. Aviles did not have the proper authority to negotiate for Bukal Enterprises. Aviles testified that his friend, De Castro, had asked him to negotiate with the Spouses Firme to buy the Property.[47] De Castro, as Bukal Enterprises vice president, testified that he authorized Aviles to buy the Property.[48] However, there is no Board Resolution authorizing Aviles to negotiate and purchase the Property on behalf of Bukal Enterprises.[49] It is the board of directors or trustees which exercises almost all the corporate powers in a corporation. Thus, the Corporation Code provides: SEC. 23. The board of directors or trustees. Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stock, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year and until their successors are elected and qualified. x x x SEC. 36. Corporate powers and capacity. Every corporation incorporated under this Code has the power and capacity: xxx 7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise deal with such real and personal property, including securities and bonds of other corporations, as the transaction of a lawful business of the corporation may reasonably and necessarily require, subject to the limitations prescribed by the law and the Constitution. xxx Under these provisions, the power to purchase real property is vested in the board of directors or trustees. While a corporation may appoint agents to negotiate for the purchase of real property needed by the corporation, the final say will have to be with the board, whose approval will finalize the transaction.[50] A corporation can only exercise 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.[51] As held in AF Realty & Development, Inc. v. Dieselman Freight Services, Co.:[52] 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. (Emphasis supplied) In this case, Aviles, who negotiated the purchase of the Property, is neither an officer of Bukal Enterprises nor a member of the Board of Directors of Bukal Enterprises. There is no Board Resolution authorizing Aviles to negotiate and purchase the Property for Bukal Enterprises. There is also no evidence to prove that Bukal Enterprises approved whatever transaction Aviles made with the Spouses Firme. In fact, the president of Bukal Enterprises did not sign any of the deeds of sale presented to the Spouses Firme. Even De Castro admitted that he had never met the Spouses Firme.[53] Considering all these circumstances, it is highly improbable for Aviles to finalize any contract of sale with the Spouses Firme. Furthermore, the Court notes that in the Complaint filed by Bukal Enterprises with the trial court, Aviles signed[54] the verification and certification of non-forum shopping.[55] The verification and certification of non-forum shopping was not accompanied by proof that Bukal Enterprises authorized Aviles to file the complaint on behalf of Bukal Enterprises. The power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors.[56]

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The purpose of verification is to secure an assurance that the allegations in the pleading are true and correct and that it is filed in good faith.[57] True, this requirement is procedural and not jurisdictional. However, the trial court should have ordered the correction of the complaint since Aviles was neither an officer of Bukal Enterprises nor authorized by its Board of Directors to act on behalf of Bukal Enterprises. Whether the Statute of Frauds is applicable The Court of Appeals held that partial performance of the contract of sale takes the oral contract out of the scope of the Statute of Frauds. This conclusion arose from the appellate courts erroneous finding that there was a perfected contract of sale. The records show that there was no perfected contract of sale. There is therefore no basis for the application of the Statute of Frauds. The application of the Statute of Frauds presupposes the existence of a perfected contract.[58] Article 1403 of the Civil Code provides: Art. 1403. The following contracts are unenforceable, unless they are ratified: (1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; (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 (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 Whether Bukal Enterprises is a builder in good faith Bukal Enterprises is not a builder in good faith. The Spouses Firme did not accept Aviles offer to purchase the Property. Aviles testified that when he called the Spouses Firme on 2 March 1995, Dr. Firme informed him that they were no longer interested in selling the Property. On 4 March 1995, Aviles called again and this time Mrs. Firme told him that they were not selling the Property. Aviles informed De Castro of the refusal of the Spouses Firme to sell the Property. However, Bukal Enterprises still proceeded in relocating the squatters and constructing improvements on the Property. De Castro testified: ATTY. EJERCITO: Q: The truth of the matter, Mr. Witness, is that the post was constructed sometime late 1994. Is that not correct? A: No, sir. It is not true. Q: When was it constructed? A: That March. Q: When in March? A: 1995. Q: When in March 1995? A: From the period of March 2, 1995 or two (2) weeks after the removal of the squatters. Q: When were the squatters removed? WITNESS: A: March 6 and 7 because there were four (4) squatters. ATTY. EJERCITO: Q: When did you find out that the Spouses Firme did not want to sell the same? A: First week of March 1995. Q: In your Complaint you said you find out on March 3, 1995. Is that not correct? A: I cannot exactly remember, sir. ATTY. MARQUEDA: In the Complaint it does not state March 3. Maybe counsel was thinking of this Paragraph 6 which states, When the property was rid of the squatters on March 2, 1995 for the documentation and payment of the sale, xxx. ATTY. EJERCITO: Q: So, you found out on March 2, 1995 that the defendants were no longer interested in selling to you the property. Is that correct? A: Yes, sir, because Mr. Aviles relayed it to me. Q: Mr. Aviles relayed to you that the Spouses Firme were no longer interested in selling to you the property in March 2, 1995. Is that correct? A: Yes, sir. Mr. Aviles told me. Q: In so many words, Mr. Witness, you learned that the Spouses Firme were no longer interested in selling the property before you spent allegedly all the sum of money for the relocation of squatters for all this construction that you are telling this Court now? WITNESS: A: The refusal to sell is not yet formal and the lawyer sent a letter tendering full payment of the purchase price. ATTY. EJERCITO: Q: You mean to say that you did not believe Mr. Aviles when he told you that the Spouses Firme were no longer selling the property? A: No, sir. Q: Was there anything formal when you say the Spouses Firme agreed to sell the property? A: None, sir. Q: And yet that time you believe Mr. Aviles when he verbally told you that the Sps. Firme agreed to sell the property? At what point of the transaction with the Spouses Firme were you advised by your lawyer? WITNESS: A: At the time when they refused to sell the lot. ATTY. EJERCITO: Q: Was that before the squatters were relocated allegedly by Bukal Enterprises? A: Yes, sir. Q: In fact, it was the lawyer who advised you to relocate the squatters. Is it not true? A: No, sir.[59] (Emphasis supplied) Bukal Enterprises is obviously a builder in bad faith. No deed of sale has been executed in this case. Despite the refusal of the Spouses Firme to sell the Property, Bukal Enterprises still proceeded to introduce improvements on the Property. Bukal Enterprises introduced improvements on the Property without the knowledge and consent of the Spouses Firme. When the Spouses Firme learned about the unauthorized constructions made by Bukal Enterprises on the Property, they advised the latter to desist from further acts of trespass on their Property.[60] The Civil Code provides: Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right of indemnity.

46
Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the owner the proper rent. Under these provisions the Spouses Firme have the following options: (1) to appropriate what Bukal Enterprises has built without any obligation to pay indemnity; (2) to ask Bukal Enterprises to remove what it has built; or (3) to compel Bukal Enterprises to pay the value of the land.[61] Since the Spouses Firme are undoubtedly not selling the Property to Bukal Enterprises, they may exercise any of the first two options. They may appropriate what has been built without paying indemnity or they may ask Bukal Enterprises to remove what it has built at Bukal Enterprises own expense. Bukal Enterprises is not entitled to reimbursement for the expenses incurred in relocating the squatters. Bukal Enterprises spent for the relocation of the squatters even after learning that the Spouses Firme were no longer interested in selling the Property. De Castro testified that even though the Spouses Firme did not require them to remove the squatters, they chose to spend for the relocation of the squatters since they were interested in purchasing the Property.[62] Whether the Spouses Firme are entitled to compensatory and moral damages The Court agrees with the Court of Appeals to delete the award for compensatory and moral damages. In awarding actual damages, the trial court took into account the traveling expenses incurred by the Spouses Firme who are already residing in the United States. However, the trial court failed to consider the testimony of Dr. Firme that they normally travel to the Philippines more than once a year to visit their children.[63] Thus, the expenses for the roundtrip tickets dated 1996-1997 could not be attributed solely for the attendance of hearings in the case. Nevertheless, an award of nominal damages of P30,000 is warranted since Bukal Enterprises violated the property rights of the Spouses Firme.[64] The Civil Code provides: Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in article 1157, or in every case where any property right has been invaded. The award of damages is also in accordance with Article 451 of the Civil Code which states that the landowner is entitled to damages from the builder in bad faith.[65] WHEREFORE, we SET ASIDE the Decision of the Court of Appeals and RENDER a new one: 1. Declaring that there was no perfected contract of sale; 2. Ordering Bukal Enterprises to pay the Spouses Firme P30,000 as nominal damages. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, and Azcuna, JJ., concur. Ynares-Santiago, J., on official leave. [G.R. No. 134712. August 13, 2004] MARIA CABOTAJE, AGUSTIN CABOTAJE, AMELIA TOMAS and DANIEL PUGAYAN, petitioners, vs. SPOUSES SOTERO PUDUNAN and MARIA RIVERA, respondents. DECISION CALLEJO, SR., J.: This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 42432 which reversed the Decision[2] of the Regional Trial Court of Bayombong, Nueva Vizcaya, Branch 30, in Civil Case No. 207 for recovery of ownership and possession, and damages. The Antecedents Bonifacia Lang-ew was the owner of two parcels of land, Lot 1 of Plan Psu-776-44 with an area of 9,951 square meters; and Lot 2 of Plan Psu-776-44 with an area of 6,382 square meters. The lots were located in Lamut, Indiana, Bambang, Nueva Vizcaya, and were covered by Transfer Certificate of Title (TCT) No. T-1657.[3] Lang-ew died intestate on November 23, 1965 and was survived by her grandchildren Maria Cabotaje, Agustin Cabotaje, Amelia Tomas, the children of her daughter Josefina Bintican who died on November 21, 1952; and, her grandson Daniel Pugayan, the son of her daughter Emerenciana Bintican who also predeceased her. Maria Cabotaje, Daniel Pugayan and their close relatives Remicio Marques and Amelia Tomas, were in dire need of money. On January 4, 1966, they borrowed P1,000 from the Spouses Sotero Pudunan and Maria Rivera. They signed a private document prepared by Juan Anungos, which stated inter alia that the payment of the said amount was secured by a mortgage over Lot 1covered by TCT No. T-1657, and that the property was redeemable within one year, extendible for another year, until the full amount of the loan was paid.[4] The owners duplicate copy of TCT No. T-1657 was then delivered to the mortgagees by the mortgagors. The Spouses Pudunan took possession of the property, although under the document, the mortgagors had the right to remain in possession thereof. On the same date, January 4, 1966, Maria Cabotaje, Agustin Cabotaje, Daniel Pugayan, Amelia Tomas and her husband Pedro Tomas affixed their signatures over a deed entitled Confirmatory Deed of Sale, in which they undertook to sell Lot 2 covered by TCT No. T-1657 to the Spouses Pudunan for the price of P2,000.00. Also in the document was a statement that part of the money was remitted to Bonifacia Lang-ew and was spent by her during her illness, and to her heirs which was used for burial expenses. The document was notarized by Judge Tomas P. Maddela, the Municipal Judge and Ex-Officio Notary Public of Bayombong, Nueva Vizcaya, and registered in his notarial register as Document No. 461, Page 96, Book V, Series of 1966.[5] The property sold under the said deed is described as follows: A parcel of land Lot No. 2, Plan Psu. 77644, situated in the Barrio of Lamut, Municipality of Bambang, Province of Nueva Vizcaya; bounded on the S. by prop. of Arcadio Biag; on the W. by Aritao-Bambang Prov. Road; on the N by prop. of Crisanto Caro; on the SE. by the Acdao Brook; and on the NW. by prop. of Francisco Concepcion. Containing an area of 6,382 sq. meters, more or less. Covered by Transfer Certificate of Title No. T-1657 of the land records of Nueva Vizcaya.[6] Judge Tomas Maddela retained two copies of the deed for his notarial file. However, the deed was not filed with the Registry of Deeds of Nueva Vizcaya. Subsequently, it was made to appear in the original copy of the said deed that both Lots 1 and 2, consisting of 6,382 square meters and 9,951 square meters, respectively, were sold to the Spouses Pudunan. The alterations are underscored, thus: Two parcels of land Lot No. 1 and 2, Plan Psu. 77644, situated in the Barrio of Lamut, Municipality of Bambang, Province of Nueva Vizcaya; bounded on the S. by prop. of Arcadio

47
Biag; on the W. by Aritao-Bambang Prov. Road; on the N by prop. of Crisanto Caro; on the SE. by the Acdao Brook; and on the NW. by prop. of Francisco Concepcion. Containing an area of 15,333 sq. meters, more or less. Covered by Transfer Certificate of Title No. T-1657 of the land records of Nueva Vizcaya.[7] Such altered original copy was filed on July 18, 1966 with the Office of the Register of Deeds of Nueva Vizcaya. On the same day, TCT No. T-20808 was issued by the Register of Deeds in favor of the Spouses Pudunan. After nineteen years or so, or on February 26, 1985, petitioners Maria Cabotaje, Agustin Cabotaje, Amelia Tomas and Daniel Pugayan filed a complaint with the RTC of Bayombong, Nueva Vizcaya against the respondents, the Spouses Pudunan, for recovery of ownership and possession of Lots 1 and 2 covered by TCT No. T-1657. The petitioners alleged inter alia that in a private document they signed on January 4, 1966, it appears that they mortgaged Lot 1 to secure the payment of a P1,000-loan from the respondents. They averred, however, that they only receivedP660.00 and that the respondents thereafter took possession of the property. Being impoverished, they tolerated the respondents possession of the property. The petitioners further narrated that they offered to pay their loan in 1972, but that the respondents refused to accept such payment as they (the respondents) were the rightful owners of the property. The petitioners further averred that after eighteen years, or in 1984, they sought the assistance of counsel on what course of action to take, and it was only then that they discovered that by virtue of a deed of sale issued in favor of the respondents, TCT No. T-20808 covering Lots 1 and 2 had been issued in the names of the latter. The petitioners alleged, however, that no copy of the said deed could be found in the Register of Deeds, and that they never executed any deed of sale covering the said lots, much less any deed settling the estate of the deceased Bonifacia Lang-ew. The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus: WHEREFORE, it is respectfully prayed of the Honorable Court that, after notice and hearing, judgment be rendered in favor of the plaintiffs and against the defendants as follows, thus: a) Declaring as null and void Transfer Certificate of Title No. T-20808 and the deed of sale which caused the issuance thereof; b) Declaring plaintiffs as the lawful owners of the above-described landholding, and directing the Register of Deeds to issue another title in the names of said plaintiffs; c) Ordering defendants to pay actual damages to the plaintiffs equivalent to the monetary value of 2,440 cavanes (sic) of palay at 46 kilos per cavan; d) Granting the claim for damages: moral damages of P10,000.00 each for all the plaintiffs or a total of P40,000.00 and exemplary damages of P10,000.00; and e) Reimbursing attorneys fees of P7,000.00. PLAINTIFFS further pray for such other reliefs consistent with law and equity and available in the premises.[8] In their answer to the complaint, the respondents interposed the defense of prescription of action, to wit: That similarly the plaintiffs alleged cause of action to annul and cancel Transfer Certificate of Title No. T-20808 covering the parcels of land in question which had long legally belong to the defendants and which certificate of title lawfully, validly and regularly issued to the herein defendants on July 18, 1966 by the Register of Deeds of Nueva Vizcaya, in the absence of any plaintiffs allegation of fraud, mistake, intimidation, violence or undue influence as alleged reasons for its nullification and cancellation, the same is very true likewise to said plaintiffs seeking the nullification of the sale in favor of defendants, has also long prescribed and barred by the statute of limitations;[9] In the course of the presentation of the petitioners evidence, Cornelio Tubal from the Office of the Register of Deeds of Nueva Vizcaya testified on July 15, 1986 that TCT No. T20808 was issued on the basis of a Confirmatory Deed of Sale[10] covering Lots 1 and 2[11] which deed, on its face, contained intercalations and alterations. Subsequently, the petitioners, with prior leave of court, filed an amended complaint in which they alleged inter alia that they never received any amount by virtue of the altered Confirmatory Deed of Sale; that they turned over the owners duplicate copy of TCT No. T-1657 to the respondents as a sign of good faith on account of their P1,000-loan of which only P673.60 was received by them; that they discovered the existence of the altered Confirmatory Deed of Sale covering Lots 1 and 2 only on July 15, 1986;[12] and, that they never executed any deed of sale covering Lot 1,[13] nor received the amount of P2,000.00 as stated on the said deed of sale. The petitioners concluded that as such, the altered deed was null and void. The petitioners prayed that they be granted the following reliefs: WHEREFORE, it is respectfully prayed of the Honorable Court that, after notice and hearing, judgment be rendered in favor of the plaintiffs and against the defendants as follows, thus: a) Declaring as null and void partially both Transfer Certificate of Title No. T-20808 as far as Lot No. 1 covering an area of 9,951 square meters and the deed of sale which caused the issuance thereof; b) Declaring plaintiffs as the lawful owners of the above-described landholding, directing the Register of Deeds to issue a title in the names of said plaintiffs covering said parcel of land and ordering the defendants to deliver the physical possession thereof to the plaintiffs; c) Ordering defendants to pay actual damages to the plaintiffs equivalent to the monetary value of 2,870 cavans of palay at 46 kilos per cavan; d) Granting the claim for damages: moral damages of P10,000.00 each for all the plaintiffs or a total of P40,000.00 and exemplary damages of P10,000.00; and e) Reimbursing attorneys fees of P7,000.00. PLAINTIFFS further pray for such other reliefs consistent with law and equity and available in the premises.[14] The respondents filed a motion to dismiss the amended complaint on the grounds of acquisitive prescription under Article 1117, in relation to Article 1134 of the New Civil Code, and prescription of action. The trial court granted the motion but reinstated the case on the petitioners motion for reconsideration. At the trial, petitioner Maria Cabotaje testified that of the P1,000-loan, they received only P468.00, of which the amount of P326.60 was used for title expenses; P6.00 was received by Belong, while the balance of P199.60 was divided among the petitioners.[15] The petitioners also presented Tubal who appeared for the Office of the Register of Deeds and testified that TCT No. T-1657 was cancelled on the basis of the altered copy of the Confirmatory Deed of Sale. Respondent Maria Rivera testified that after the death of Lang-ew in 1965, the petitioners offered to sell Lot 1 for P2,500.00 to them and that the latter agreed. The amount of P1,000.00 was then given to the petitioners, while the remaining P1,500.00 was spent for the burial of Lang-ew. The respondents remittances were further evidenced by receipts.[16] Respondent Rivera narrated that the parties to the sale arrived in the Office of Judge Maddela and requested the latter to revise the original copy of the Confirmatory Deed of Sale so as to include Lot 1 thereon. Since Judge Maddela was in a hurry, he instructed his Clerk of Court Mariano Gonzales to include Lot 1 in the deed, and the latter did as he was told. The petitioners and respondents then proceeded to the Office of the Register of Deeds where the said deed was filed. According to respondent Rivera, she was not aware if Judge Maddelas notarial copies of the deed were altered as to include Lot 1 therein, since the judge was in such a hurry.[17]

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The petitioners presented Maria Cabotaje on rebuttal, who testified that the petitioners never sold Lot 1 to the respondents and that they learned of the insertions and intercalations in the original copy of the Confirmatory Deed of Sale only when Tubal testified.[18] After trial, the court rendered judgment in favor of the petitioners, the decretal portion of which reads: WHEREFORE, by preponderance of evidence, justice and equity demand that Judgment be hereby rendered in favor of the plaintiffs and against the defendants: 1. Declaring null and void ab initio TCT No. T-20808 as far as Lot No. 1 is concerned with an area of 9,951 sq. meters, and the Confirmatory Deed of Sale (Exh. C) which caused the issuance of said title; 2. Declaring plaintiffs as the lawful owners of said Lot No. 1 and directing the Register of Deeds to issue corresponding Title to plaintiffs and Ordering the defendants to deliver the physical possession thereof to the plaintiffs; 3. Ordering defendants to deliver to the plaintiffs 2,870 cavans of palay at 46 kilos per cavan or pay its monetary equivalent computed at the then prevailing rate or cost as actual damages; 4. Ordering defendants to pay plaintiffs as damages: a) moral Damages P2,000.00 for each plaintiff or a total of P8,000.00; b) exemplary Damages P2,000.00; c) attorneys Fees P5,000.00; and, d) The costs of suit. SO ORDERED.[19] The trial court ruled that the petitioners merely mortgaged Lot 1 to the respondents and that the conveyance thereof to the latter after the death of Lang-ew was null and void because it was not made in the settlement of the estate of the deceased. According to the trial court, the action to declare the non-existence of the said deed is imprescriptible. It also ruled that the action for the cancellation of the conveyance on the ground of fraud commenced to run only when Cornelio Tubal testified, and not on July 18, 1966 upon the filing of the original copy of the deed in the Office of the Register of Deeds and the cancellation of TCT No. T-1657 in favor of TCT No. T-20808 over Lots 1 and 2 which was issued under the names of the respondents. The trial court also ruled that the respondents had not acquired ownership of Lot 1 by acquisitive prescription because the possession of the said lot by the respondents was merely upon the tolerance of the petitioners. On appeal to the Court of Appeals, the petitioners did not bother to file their brief. The CA, thereafter, rendered judgment reversing the decision of the trial court, holding that the original copy of the Confirmatory Deed of Sale was voidable under Article 1391 of the New Civil Code and not void ab initio; hence, the action to annul the said deed prescribed four years from the time of the petitioners actual or presumptive knowledge thereof. The appellate court held that the cause of action of the petitioners to nullify the deed accrued on July 18, 1966 when the Confirmatory Deed of Sale was filed with the Office of the Register of Deeds, as the petitioners henceforth had presumptive knowledge of the existence of the altered Confirmatory Deed of Sale.[20] Hence, the petitioners should have filed their complaint within four years from July 18, 1966 or, on or before July 19, 1970. Since the appellees filed their complaint only on February 26, 1995, their action had long prescribed and should have been dismissed by the trial court. The appellate court further ruled that there is no law requiring the heirs to execute the conveyance in the settlement of the estate of the deceased. On motion for reconsideration by the petitioners, they alleged that the respondents altered the original copy of the Confirmatory Deed of Sale after the said deed was executed by the parties; as such, the deed was null and void, not merely voidable. However, the CA denied the said motion. In their petition at bar, the petitioners raise the following issues for resolution: WHETHER OR NOT IN RESOLVING THE APPEAL BEFORE IT, THE HONORABLE COURT OF APPEALS, SECOND DIVISION, HAS DONE SO IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THE HONORABLE HIGHEST TRIBUNAL. SPECIFICALLY: HAS PRESCRIPTION SET IN THE INSTANT CIVIL CASE AS TO DENY THE PETITIONERS OF THEIR RIGHT TO PURSUE THEIR CAUSE/COMPLAINT TO RECOVER THEIR OWNERSHIP AND POSSESSION OF THE SUBJECT PROPERTY?[21] The core issue for resolution is whether the original copy of the Confirmatory Deed of Sale wherein it appears that the petitioners also sold Lot 1 of their property to the respondents is null and void. The petitioners assert that they did not sell Lot 1 to the respondents, much less receive from them the P2,000.00 purchase price which appears in the original copy of the Confirmatory Deed of Sale. Absent their consent to the sale and the price or consideration for their property, such deed is null and void; hence, they contend that their action is imprescriptible as provided for in Article 1410 of the New Civil Code. The petitioners further contend that Article 1391 of the New Civil Code applies only in a case where fraud is committed prior to or simultaneous with the execution of a deed.[22] The petitioners argue that the deed is null and void since the respondents altered the original copy of the deed after the execution and notarization thereof. For their part, the respondents contend that the original copy of the Confirmatory Deed of Sale is valid. They aver that the alterations and intercalations contained in the original copy of the deed were reflective of the fact that Lot 1 was sold by the petitioners after the execution of the said deed, and that such alterations were known and agreed to by the petitioners before the same was filed with the Register of Deeds. They aver that the petitioners even turned over to them not only the owners duplicate copy of TCT No. T-1657 so that title over the two lots could be issued in their names, but also the possession of the property after Lang-ews death on November 23, 1965. They also insist that they have been in possession of the property since then. The respondents further contend that even if the altered original copy of the Confirmatory Deed of Sale is fraudulent, the same is merely voidable; hence, the action to nullify the same is prescriptible. The respondents aver that since the petitioners filed their complaint only on February 26, 1985, their action had long prescribed, considering that their cause of action accrued on July 18, 1966. We rule for the petitioners. The general rule is that in a petition for review on certiorari, only questions of law may be raised. However, the rule is not without exceptions, which the Court enumerated in Fuentes v. Court of Appeals[23] as follows: (a) when the factual findings of the trial court and the Court of Appeals are contradictory; (b) when the inference made by the Court of Appeals is manifestly mistaken or absurd; (c) when the judgment of the Court of Appeals is premised on its misapprehension of the facts; and, (d) when the Court of Appeals failed to resolve relevant facts which, if properly considered, would justify a modification or reversal of the decision of the appellate court.[24] The present case falls within the foregoing exceptions. Rule 132, Section 31 of the Revised Rules of Evidence, provides: Alterations in document, how to explain. The party producing a document as genuine which has been altered and appears to have been altered after its execution, in a part material to the question in dispute, must account for the alteration. He may show that the alteration was made by another, without his concurrence, or was made with the consent of the parties affected by it, or was otherwise properly or innocently made, or that the alteration did not change the meaning or language of the instrument. If he fails to do that, the document shall not be admissible in evidence.

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There is no doubt that the alterations in the assailed deed of sale are substantial and material. We have reviewed the evidence on record and we are convinced that the respondents, either by themselves or at their behest and without the knowledge of the petitioners, caused the alterations in the assailed copy of the Confirmatory Deed of Sale by making it appear therein that the petitioners sold Lot 1 as well as Lot 2 with a total area of 15,333 square meters for only P2,000.00. First. Respondent Maria Rivera admitted in court that the alteration occurred after the execution of the Confirmatory Deed of Sale.[25] Second. The petitioners did not authenticate the alterations in the assailed deed by affixing their initials or signatures thereon. Third. Neither did Ex-Officio Notary Public, Judge Tomas Maddela authenticate the said alterations when he notarized the Confirmatory Deed of Sale.[26] Fourth. Under the Confirmatory Deed of Sale, the petitioners sold Lot 2 for P2,000.00. In the assailed deed, the petitioners purportedly also sold Lot 1 to the respondents, but the purchase price thereof remained unchanged. Thus, under the assailed deed, the respondents paid P2,000.00 for the two lots. The respondents failed to give a satisfactory explanation why the price of the property remained at P2,000.00 Evidently, there was no price or consideration for the sale of Lot 1, as it is incredible that the petitioners would sell the property to the respondents without any price or consideration therefor. Fifth. The respondents claim that they told Judge Maddela that they were also buying Lot 1 from the petitioners, but since the judge was in a hurry to leave, he merely instructed his clerk of court to make the necessary alterations in his copies of the deed of sale. The respondents also claim that the parties to the deed left without seeing to it that the clerk of court had made the alterations in the copies of Judge Maddela: Q And when the plaintiffs, according to you, went to you for the needed amount, you allegedly went to Judge Maddela? A Yes, Sir. Q And you brought with you Exh. E, which is the Confirmatory Deed of Sale, which Exh. E appears not to contain any intercalation or insertion, isnt it? A Yes, Sir. Q And when you went to Judge Maddela, according to you, you told him that you were also buying Lot 1, did I hear you right? A Yes, Sir. Q And what did he tell you? A He asked, What about this Lot 1? Q And what did you tell him? A We told him that the plaintiffs were willing to give us the parcel of land, Lot 1. Q And the plaintiffs were with you, is that what you mean when you went to Judge Maddela? A Yes, Sir. Q And when you said or when you told (sic) to Judge Maddela that the plaintiffs wanted to give you Lot 1, what did he do? A As Judge Maddela was rushing up then, he just ordered his clerk to make the necessary insertion. I do not know with regards the file copy of Judge Maddela, but our copy contains the insertion. Q You said that Judge Maddela was rushing then and he just told his clerk to make the insertion, my question is, did you see the clerk bring out the file copy of Judge Maddela so that the insertion would be made on that file copy? I do not know how to answer that but what the clerk said since they are not strangers to each other, meaning to say, the plaintiffs. Q By the way, what office or place did you go and see Judge Maddela at that time? A It is his office at Bayombong? Q Do you know that he was a Judge at that time of the Municipal Court of Bayombong? A Yes, Sir. Q Do you still remember that clerk who allegedly was told to make [the] insertion by Judge Maddela? A I cannot remember anymore because that happened long time ago. Q At the time that the plaintiffs presented their witnesses, one witness was presented, which is the Clerk of the Municipal Trial Court of Bayombong by the name of Saturnino Galapon. My question, did you see that clerk who was subpoenaed to appear here and testified before about this Exh. E? A Yes, Sir. Q And can you tell the Honorable Court if that clerk who have testified here before for the plaintiffs if he was the clerk whom you were referring to as the one who was directed by Judge Maddela to make [the] insertion in Exh. E? A He was the one.[27] The claim of the respondents is incredible because Saturnino Galapon, the Clerk of Court of the Municipal Trial Court of Bayombong, who testified for the petitioners, declared that he was appointed to the position during the incumbency of Judge Florante Tupasi: ATTY. BAGASAO: ON CROSSQ Mr. Witness, when you begin (sic) your duty as Clerk of Court, who is the Judge then? A Judge FLORANTE TUPASI, Sir. Q Meaning to say, Mr. Witness, Judge MADDELA was then out? A He transferred, Sir. Q So, you were not the Clerk of Court of MTC, Bayombong, Nueva Vizcaya, during the time of Judge Maddela? A Yes, Sir. Q And, of course, you are not aware of any side agreement? A In 1965, I had nothing to know of, Sir.[28] The Clerk of Court during the incumbency of Judge Tomas Maddela was Mariano Gonzales, who was already deceased at the time Galapon testified: ATTY. CORPUZ: ON RE-DIRECT Q Who is (sic) the Clerk of Court from whom you took over the position of Clerk of Court? A The deceased MARIANO GONZALES, Sir. Q When you took over these 2 documents and the Notarial Register Book No. V of Judge Maddela, were they all intact in the office? A This is a part of the big file including the Notarial Register, Sir.[29] Furthermore, Judge Maddela knew or should have known the legal implications of the alterations on the original copy of the Confirmatory Deed of Sale without making the appropriate alterations in his own copies of the deed, and could not have agreed to merely ordering the clerk of court to make the alterations himself. Aside from the fact that the copies of the deed[30] retained by Judge Maddela do not contain any alterations, the respondents failed to present Judge Tomas Maddela to corroborate the testimony of respondent Maria Rivera. A

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While it is true that a notarized deed of sale is a public document and has in its favor the presumption of regularity and that to contradict the same, there must be evidence that is clear and convincing; the evidence on record in this case is, however, so clear and convincing in support of the finding that the assailed copy of the Confirmatory Deed of Sale has been altered and is, in fact, null and void. All told then, we find and so hold that the petitioners did not consent to the sale of Lot 1 to the respondents. One of the essential requirements of a valid contract, including a contract of sale, is the consent of the owner of the property.[31] Absent such consent, the contract is null and void ab initio.[32] A void contract is absolutely wanting in civil effects; it is equivalent to nothing.[33] It produces no effects whatsoever either against or in favor of anyone; hence, it does not create, modify, or extinguish the judicial relation to which it refers.[34] In fine, the petitioners, not the respondents, are the rightful owners of Lot 1. Under Article 1410 of the New Civil Code, the action for the declaration of the nonexistence of a contract does not prescribe. Thus, the action of the petitioners for the declaration of the non-existence of the assailed deed is imprescriptible. IN LIGHT OF THE FOREGOING, the petition is GRANTED. The decision of the Court of Appeals is REVERSED and SET ASIDE. The decision of the Regional Trial Court in Civil Case No. 207 is REINSTATED. No costs. SO ORDERED. Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur. On April 8, 1991, the Church tendered to the NHA a managers check in the amount of P55,350.00, purportedly in full payment of the subject properties.9 The Church insisted that this was the price quoted to them by the NHA Field Office, as shown by an unsigned piece of paper with a handwritten computation scribbled thereon.10Petitioner NHA returned the check, stating that the amount was insufficient considering that the price of the properties have changed. The Church made several demands on the NHA to accept their tender of payment, but the latter refused. Thus, the Church instituted a complaint for specific performance and damages against the NHA with the Regional Trial Court of Quezon City,11 where it was docketed as Civil Case No. Q-91-9148. On February 25, 1997, the trial court rendered its decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. Ordering the defendant to reimburse to the plaintiff the amount of P4,290.00 representing the overpayment made for Lots 1, 2, 3, 18, 19 and 20; 2. Declaring that there was no perfected contract of sale with respect to Lots 4 and 17 and ordering the plaintiff to return possession of the property to the defendant and to pay the latter reasonable rental for the use of the property at P200.00 per month computed from the time it took possession thereof until finally vacated. Costs against defendant. SO ORDERED.12 On appeal, the Court of Appeals, affirmed the trial courts finding that there was indeed no contract of sale between the parties. However, petitioner was ordered to execute the sale of the lots to Grace Baptist Church at the price of P700.00 per square meter, with 6% interest per annum from March 1991. The dispositive portion of the Court of Appeals decision, dated February 26, 2001, reads: WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that defendant-appellee NHA is hereby ordered to sell to plaintiffappellant Grace Baptist Church Lots 4 and 17 at the price of P700.00 per square meter, or a total cost P430,000.00 with 6% interest per annum from March, 1991 until full payment in cash. SO ORDERED.13 The appellate court ruled that the NHAs Resolution No. 2126, which earlier approved the sale of the subject lots to Grace Baptist Church at the price of P700.00 per square meter, has not been revoked at any time and was therefore still in effect. As a result, the NHA was estopped from fixing a different price for the subject properties. Considering further that the Church had been occupying the subject lots and even introduced improvements thereon, the Court of Appeals ruled that, in the interest of equity, it should be allowed to purchase the subject properties.14 Petitioner NHA filed a Motion for Reconsideration which was denied in a Resolution dated November 8, 2002. Hence, the instant petition for review on the sole issue of: Can the NHA be compelled to sell the subject lots to Grace Baptist Church in the absence of any perfected contract of sale between the parties? Petitioner submits that the Court cannot compel it to sell the subject property to Grace Baptist Church without violating its freedom to contract.15 Moreover, it contends that equity should be applied only in the absence of any law governing the relationship between the parties, and that the law on sales and the law on contracts in general apply to the present case.16 We find merit in petitioners submission. Petitioner NHA is not estopped from selling the subject lots at a price equal to their fair market value, even if it failed to expressly revoke Resolution No. 2126. It is, after all, hornbook law that

G.R. No. 156437 March 1, 2004 NATIONAL HOUSING AUTHORITY, petitioner, vs. GRACE BAPTIST CHURCH and the COURT OF APPEALS, respondents. DECISION YNARES-SANTIAGO, J.: This is a petition for review under Rule 45 of the Rules of Court, seeking to reverse the Decision of the Court of Appeals dated February 26, 2001,1 and its Resolution dated November 8, 2002,2 which modified the decision of the Regional Trial Court of Quezon City, Branch 90, dated February 25, 1997.3 On June 13, 1986, respondent Grace Baptist Church (hereinafter, the Church) wrote a letter to petitioner National Housing Authority (NHA), manifesting its interest in acquiring Lots 4 and 17 of the General Mariano Alvarez Resettlement Project in Cavite.4 In its letter-reply dated July 9, 1986, petitioner informed respondent: In reference to your request letter dated 13 June 1986, regarding your application for Lots 4 and 17, Block C-3-CL, we are glad to inform you that your request was granted and you may now visit our Project Office at General Mariano Alvarez for processing of your application to purchase said lots. We hereby advise you also that prior to approval of such application and in accordance with our existing policies and guidelines, your other accounts with us shall be maintained in good standing.5 Respondent entered into possession of the lots and introduced improvements thereon.6 On February 22, 1991, the NHAs Board of Directors passed Resolution No. 2126, approving the sale of the subject lots to respondent Church at the price of P700.00 per square meter, or a total price of P430,500.00.7 The Church was duly informed of this Resolution through a letter sent by the NHA.8

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the principle of estoppel does not operate against the Government for the act of its agents,17 or, as in this case, their inaction. On the application of equity, it appears that the crux of the controversy involves the characterization of equity in the context of contract law. Preliminarily, we reiterate that this Court, while aware of its equity jurisdiction, is first and foremost, a court of law. While equity might tilt on the side of one party, the same cannot be enforced so as to overrule positive provisions of law in favor of the other.18 Thus, before we can pass upon the propriety of an application of equitable principles in the case at bar, we must first determine whether or not positive provisions of law govern. It is a fundamental rule that contracts, once perfected, bind both contracting parties, and obligations arising therefrom have the force of law between the parties and should be complied with in good faith.19 However, it must be understood that contracts are not the only source of law that govern the rights and obligations between the parties. More specifically, no contractual stipulation may contradict law, morals, good customs, public order or public policy.20 Verily, the mere inexistence of a contract, which would ordinarily serve as the law between the parties, does not automatically authorize disposing of a controversy based on equitable principles alone. Notwithstanding the absence of a perfected contract between the parties, their relationship may be governed byother existing laws which provide for their reciprocal rights and obligations. It must be remembered that contracts in which the Government is a party are subject to the same rules of contract law which govern the validity and sufficiency of contract between individuals. All the essential elements and characteristics of a contract in general must be present in order to create a binding and enforceable Government contract.21 It appearing that there is no dispute that this case involves an unperfected contract, the Civil Law principles governing contracts should apply. In Vda. de Urbano v. Government Service Insurance System,22 it was ruled that a qualified acceptance constitutes a counter-offer as expressly stated by Article 1319 of the Civil Code. In said case, petitioners offered to redeem mortgaged property and requested for an extension of the period of redemption. However, the offer was not accepted by the GSIS. Instead, it made a counter-offer, which petitioners did not accept. Petitioners again offer to pay the redemption price on staggered basis. In deciding said case, it was held that when there is absolutely no acceptance of an offer or if the offer is expressly rejected, there is no meeting of the minds. Since petitioners offer was denied twice by GSIS, it was held that there was clearly no meeting of the minds and, thus, no perfected contract. All that is established was a counter-offer.23 In the case at bar, the offer of the NHA to sell the subject property, as embodied in Resolution No. 2126, was similarly not accepted by the respondent.24 Thus, the alleged contract involved in this case should be more accurately denominated as inexistent. There being no concurrence of the offer and acceptance, it did not pass the stage of generation to the point of perfection.25 As such, it is without force and effect from the very beginning or from its incipiency, as if it had never been entered into, and hence, cannot be validated either by lapse of time or ratification.26 Equity can not give validity to a void contract,27 and this rule should apply with equal force to inexistent contracts. We note from the records, however, that the Church, despite knowledge that its intended contract of sale with the NHA had not been perfected, proceeded to introduce improvements on the disputed land. On the other hand, the NHA knowingly granted the Church temporary use of the subject properties and did not prevent the Church from making improvements thereon. Thus, the Church and the NHA, who both acted in bad faith, shall be treated as if they were both in good faith.28 In this connection, Article 448 of the Civil Code provides: The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land and if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. Pursuant to our ruling in Depra v. Dumlao,29 there is a need to remand this case to the trial court, which shall conduct the appropriate proceedings to assess the respective values of the improvements and of the land, as well as the amounts of reasonable rentals and indemnity, fix the terms of the lease if the parties so agree, and to determine other matters necessary for the proper application of Article 448, in relation to Articles 546 and 548, of the Civil Code. WHEREFORE, in view of the foregoing, the petition is GRANTED. The Court of Appeals Decision dated February 26, 2001 and Resolution dated November 8, 2002 are REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Quezon City-Branch 90, dated February 25, 1997, is REINSTATED. This case is REMANDED to the Regional Trial Court of Quezon City, Branch 90, for further proceedings consistent with Articles 448 and 546 of the Civil Code. No costs. SO ORDERED. Davide, Jr., C.J., Carpio, and Azcuna, JJ., concur. Panganiban, J., on official leave.

G.R. No. 126083 July 12, 2006 ANTONIO R. CORTES (in his capacity as Administrator of the estate of Claro S. Cortes), petitioner, vs. HON. COURT OF APPEALS and VILLA ESPERANZA DEVELOPMENT CORPORATION, respondents. DECISION YNARES-SANTIAGO, J.: The instant petition for review seeks the reversal of the June 13, 1996 Decision1 of the Court of Appeals in CA-G.R. CV No. 47856, setting aside the June 24, 1993 Decision2 of the Regional Trial Court of Makati, Branch 138, which rescinded the contract of sale entered into by petitioner Antonio Cortes (Cortes) and private respondent Villa Esperanza Development Corporation (Corporation). The antecedents show that for the purchase price of P3,700,000.00, the Corporation as buyer, and Cortes as seller, entered into a contract of sale over the lots covered by Transfer Certificate of Title (TCT) No. 31113-A, TCT No. 31913-A and TCT No. 32013-A, located at Baclaran, Paraaque, Metro Manila. On various dates in 1983, the Corporation advanced to Cortes the total sum of P1,213,000.00. Sometime in September 1983, the parties executed a deed of absolute sale containing the following terms:3 1. Upon execution of this instrument, the Vendee shall pay unto the Vendor sum of TWO MILLION AND TWO HUNDRED THOUSAND (P2,200,000.00) PESOS, Philippine Currency, less all advances paid by the Vendee to the Vendor in connection with the sale; 2. The balance of ONE MILLION AND FIVE HUNDRED THOUSAND [P1,500,000.00] PESOS, Phil. Currency shall be payable within ONE (1) YEAR from

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date of execution of this instrument, payment of which shall be secured by an irrevocable standby letter of credit to be issued by any reputable local banking institution acceptable to the Vendor. xxxx 4. All expense for the registration of this document with the Register of Deeds concerned, including the transfer tax, shall be divided equally between the Vendor and the Vendee. Payment of the capital gains shall be exclusively for the account of the Vendor; 5% commission of Marcosa Sanchez to be deducted upon signing of sale.4 Said Deed was retained by Cortes for notarization. On January 14, 1985, the Corporation filed the instant case5 for specific performance seeking to compel Cortes to deliver the TCTs and the original copy of the Deed of Absolute Sale. According to the Corporation, despite its readiness and ability to pay the purchase price, Cortes refused delivery of the sought documents. It thus prayed for the award of damages, attorney's fees and litigation expenses arising from Cortes' refusal to deliver the same documents. In his Answer with counterclaim,6 Cortes claimed that the owner's duplicate copy of the three TCTs were surrendered to the Corporation and it is the latter which refused to pay in full the agreed down payment. He added that portion of the subject property is occupied by his lessee who agreed to vacate the premises upon payment of disturbance fee. However, due to the Corporation's failure to pay in full the sum of P2,200,000.00, he in turn failed to fully pay the disturbance fee of the lessee who now refused to pay monthly rentals. He thus prayed that the Corporation be ordered to pay the outstanding balance plus interest and in the alternative, to cancel the sale and forfeit the P1,213,000.00 partial down payment, with damages in either case. On June 24, 1993, the trial court rendered a decision rescinding the sale and directed Cortes to return to the Corporation the amount of P1,213,000.00, plus interest. It ruled that pursuant to the contract of the parties, the Corporation should have fully paid the amount of P2,200,000.00 upon the execution of the contract. It stressed that such is the law between the parties because the Corporation failed to present evidence that there was another agreement that modified the terms of payment as stated in the contract. And, having failed to pay in full the amount of P2,200,000.00 despite Cortes' delivery of the Deed of Absolute Sale and the TCTs, rescission of the contract is proper. In its motion for reconsideration, the Corporation contended that the trial court failed to consider their agreement that it would pay the balance of the down payment when Cortes delivers the TCTs. The motion was, however, denied by the trial court holding that the rescission should stand because the Corporation did not act on the offer of Cortes' counsel to deliver the TCTs upon payment of the balance of the down payment. Thus: The Court finds no merit in the [Corporation's] Motion for Reconsideration. As stated in the decision sought to be reconsidered, [Cortes'] counsel at the pre-trial of this case, proposed that if [the Corporation] completes the down payment agreed upon and make arrangement for the payment of the balances of the purchase price, [Cortes] would sign the Deed of Sale and turn over the certificate of title to the [Corporation]. [The Corporation] did nothing to comply with its undertaking under the agreement between the parties. WHEREFORE, in view of the foregoing considerations, the Motion for Reconsideration is hereby DENIED. SO ORDERED.7 On appeal, the Court of Appeals reversed the decision of the trial court and directed Cortes to execute a Deed of Absolute Sale conveying the properties and to deliver the same to the Corporation together with the TCTs, simultaneous with the Corporation's payment of the balance of the purchase price of P2,487,000.00. It found that the parties agreed that the Corporation will fully pay the balance of the down payment upon Cortes' delivery of the three TCTs to the Corporation. The records show that no such delivery was made, hence, the Corporation was not remiss in the performance of its obligation and therefore justified in not paying the balance. The decretal portion thereof, provides: WHEREFORE, premises considered, [the Corporation's] appeal is GRANTED. The decision appealed from is hereby REVERSED and SET ASIDE and a new judgment rendered ordering [Cortes] to execute a deed of absolute sale conveying to [the Corporation] the parcels of land subject of and described in the deed of absolute sale, Exhibit D. Simultaneously with the execution of the deed of absolute sale and the delivery of the corresponding owner's duplicate copies of TCT Nos. 31113-A, 31931A and 32013-A of the Registry of Deeds for the Province of Rizal, Metro Manila, District IV, [the Corporation] shall pay [Cortes] the balance of the purchase price of P2,487,000.00. As agreed upon in paragraph 4 of the Deed of Absolute Sale, Exhibit D, under terms and conditions, "All expenses for the registration of this document (the deed of sale) with the Register of Deeds concerned, including the transfer tax, shall be divided equally between [Cortes and the Corporation]. Payment of the capital gains shall be exclusively for the account of the Vendor; 5% commission of Marcosa Sanchez to be deducted upon signing of sale." There is no pronouncement as to costs. SO ORDERED.8 Cortes filed the instant petition praying that the decision of the trial court rescinding the sale be reinstated. There is no doubt that the contract of sale in question gave rise to a reciprocal obligation of the parties. Reciprocal obligations are those which arise from the same cause, and which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously, so that the performance of one is conditioned upon the simultaneous fulfillment of the other.9 Article 1191 of the Civil Code, states: ART. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. xxxx As to when said failure or delay in performance arise, Article 1169 of the same Code provides that ART. 1169 xxxx In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. (Emphasis supplied) The issue therefore is whether there is delay in the performance of the parties' obligation that would justify the rescission of the contract of sale. To resolve this issue, we must first determine the true agreement of the parties. The settled rule is that the decisive factor in evaluating an agreement is the intention of the parties, as shown not necessarily by the terminology used in the contract but by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement. As such, therefore, documentary and parol evidence may be submitted and admitted to prove such intention.10 In the case at bar, the stipulation in the Deed of Absolute Sale was that the Corporation shall pay in full the P2,200,000.00 down payment upon execution of the contract. However, as correctly noted by the Court of Appeals, the transcript of stenographic notes reveal Cortes' admission that

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he agreed that the Corporation's full payment of the sum of P2,200,000.00 would depend upon his delivery of the TCTs of the three lots. In fact, his main defense in the Answer is that, he performed what is incumbent upon him by delivering to the Corporation the TCTs and the carbon duplicate of the Deed of Absolute Sale, but the latter refused to pay in full the down payment.11 Pertinent portion of the transcript, reads: [Q] Now, why did you deliver these three titles to the plaintiff despite the fact that it has not been paid in full the agreed down payment? A Well, the broker told me that the down payment will be given if I surrender the titles. Q Do you mean to say that the plaintiff agreed to pay in full the down payment of P2,200,000.00 provided you surrender or entrust to the plaintiff the titles? A Yes, sir.12 What further confirmed the agreement to deliver the TCTs is the testimony of Cortes that the title of the lots will be transferred in the name of the Corporation upon full payment of the P2,200,000.00 down payment. Thus ATTY. ANTARAN Q Of course, you have it transferred in the name of the plaintiff, the title? A Upon full payment. xxxx ATTY. SARTE Q When you said upon full payment, are you referring to the agreed down payment of P2,200,000.00? A Yes, sir.13 By agreeing to transfer title upon full payment of P2,200,000.00, Cortes' impliedly agreed to deliver the TCTs to the Corporation in order to effect said transfer. Hence, the phrase "execution of this instrument" 14 as appearing in the Deed of Absolute Sale, and which event would give rise to the Corporation's obligation to pay in full the amount of P2,200,000.00, can not be construed as referring solely to the signing of the deed. The meaning of "execution" in the instant case is not limited to the signing of a contract but includes as well the performance or implementation or accomplishment of the parties' agreement.15 With the transfer of titles as the corresponding reciprocal obligation of payment, Cortes' obligation is not only to affix his signature in the Deed, but to set into motion the process that would facilitate the transfer of title of the lots, i.e., to have the Deed notarized and to surrender the original copy thereof to the Corporation together with the TCTs. Having established the true agreement of the parties, the Court must now determine whether Cortes delivered the TCTs and the original Deed to the Corporation. The Court of Appeals found that Cortes never surrendered said documents to the Corporation. Cortes testified that he delivered the same to Manny Sanchez, the son of the broker, and that Manny told him that her mother, Marcosa Sanchez, delivered the same to the Corporation. Q Do you have any proof to show that you have indeed surrendered these titles to the plaintiff? A Yes, sir. Q I am showing to you a receipt dated October 29, 1983, what relation has this receipt with that receipt that you have mentioned? A That is the receipt of the real estate broker when she received the titles. Q On top of the printed name is Manny Sanchez, there is a signature, do you know who is that Manny Sanchez? A That is the son of the broker. xxxx Q May we know the full name of the real estate broker? A Marcosa Sanchez xxxx Q Do you know if the broker or Marcosa Sanchez indeed delivered the titles to the plaintiff? A That is what [s]he told me. She gave them to the plaintiff. x x x x.16 ATTY. ANTARAN Q Are you really sure that the title is in the hands of the plaintiff? xxxx Q It is in the hands of the broker but there is no showing that it is in the hands of the plaintiff? A Yes, sir. COURT Q How do you know that it was delivered to the plaintiff by the son of the broker? A The broker told me that she delivered the title to the plaintiff. ATTY. ANTARAN Q Did she not show you any receipt that she delivered to [Mr.] Dragon17 the title without any receipt? A I have not seen any receipt. Q So, therefore, you are not sure whether the title has been delivered to the plaintiff or not. It is only upon the allegation of the broker? A Yes, sir.18 However, Marcosa Sanchez's unrebutted testimony is that, she did not receive the TCTs. She also denied knowledge of delivery thereof to her son, Manny, thus: Q The defendant, Antonio Cortes testified during the hearing on March 11, 1986 that he allegedly gave you the title to the property in question, is it true? A I did not receive the title. Q He likewise said that the title was delivered to your son, do you know about that? A I do not know anything about that.19 What further strengthened the findings of the Court of Appeals that Cortes did not surrender the subject documents was the offer of Cortes' counsel at the pre-trial to deliver the TCTs and the Deed of Absolute Sale if the Corporation will pay the balance of the down payment. Indeed, if the said documents were already in the hands of the Corporation, there was no need for Cortes' counsel to make such offer. Since Cortes did not perform his obligation to have the Deed notarized and to surrender the same together with the TCTs, the trial court erred in concluding that he performed his part in the contract of sale and that it is the Corporation alone that was remiss in the performance of its obligation. Actually, both parties were in delay. Considering that their obligation was reciprocal, performance thereof must be simultaneous. The mutual inaction of Cortes and the Corporation therefore gave rise to a compensation morae or default on the part of both parties because neither has completed their part in their reciprocal obligation.20 Cortes is yet to deliver the original copy of the notarized Deed and the TCTs, while the Corporation is yet to pay in full the agreed down payment of P2,200,000.00. This mutual delay of the parties cancels out the effects of default,21 such that it is as if no one is guilty of delay.22 We find no merit in Cortes' contention that the failure of the Corporation to act on the proposed settlement at the pre-trial must be construed against the latter. Cortes argued that with his counsel's offer to surrender the original Deed and the TCTs, the Corporation should have consigned the balance of the down payment. This argument would have been correct if Cortes

54
actually surrendered the Deed and the TCTs to the Corporation. With such delivery, the Corporation would have been placed in default if it chose not to pay in full the required down payment. Under Article 1169 of the Civil Code, from the moment one of the parties fulfills his obligation, delay by the other begins. Since Cortes did not perform his part, the provision of the contract requiring the Corporation to pay in full the down payment never acquired obligatory force. Moreover, the Corporation could not be faulted for not automatically heeding to the offer of Cortes. For one, its complaint has a prayer for damages which it may not want to waive by agreeing to the offer of Cortes' counsel. For another, the previous representation of Cortes that the TCTs were already delivered to the Corporation when no such delivery was in fact made, is enough reason for the Corporation to be more cautious in dealing with him. The Court of Appeals therefore correctly ordered the parties to perform their respective obligation in the contract of sale, i.e., for Cortes to, among others, deliver the necessary documents to the Corporation and for the latter to pay in full, not only the down payment, but the entire purchase price. And since the Corporation did not question the Court of Appeal's decision and even prayed for its affirmance, its payment should rightfully consist not only of the amount of P987,000.00, representing the balance of the P2,200,000.00 down payment, but the total amount of P2,487,000.00, the remaining balance in the P3,700,000.00 purchase price. WHEREFORE, the petition is DENIED and the June 13, 1996 Decision of the Court of Appeals in CA-G.R. CV No. 47856, is AFFIRMED. SO ORDERED. Panganiban, C.J., Austria-Martinez, Callejo, Sr., Chico-Nazario, J.J., concur. petitioner Andre T. Almocera, Chairman and Chief Executive Officer of First Builder MultiPurpose Cooperative (FBMC), solidarily liable with FMBC for damages. Stripped of non-essentials, the respective versions of the parties have been summarized by the Court of Appeals as follows: Plaintiff Johnny Ong tried to acquire from the defendants a townhome described as Unit No. 4 of Atrium Townhomes in Cebu City. As reflected in a Contract to Sell, the selling price of the unit was P3,400,000.00 pesos, for a lot area of eighty-eight (88) square meters with a three-storey building. Out of the purchase price, plaintiff was able to pay the amount of P1,060,000.00. Prior to the full payment of this amount, plaintiff claims that defendants Andre Almocera and First Builders fraudulently concealed the fact that before and at the time of the perfection of the aforesaid contract to sell, the property was already mortgaged to and encumbered with the Land Bank of the Philippines (LBP). In addition, the construction of the house has long been delayed and remains unfinished. On March 13, 1999, Lot 4-a covered by TCT No. 148818, covering the unit was advertised in a local tabloid for public auction for foreclosure of mortgage. It is the assertion of the plaintiff that had it not for the fraudulent concealment of the mortgage and encumbrance by defendants, he would have not entered into the contract to sell. On the other hand, defendants assert that on March 20, 1995, First Builders Multi-purpose Coop. Inc., borrowed money in the amount of P500,000.00 from Tommy Ong, plaintiffs brother. This amount was used to finance the documentation requirements of the LBP for the funding of the Atrium Town Homes. This loan will be applied in payment of one (1) town house unit which Tommy Ong may eventually purchase from the project. When the project was under way, Tommy Ong wanted to buy another townhouse for his brother, Johnny Ong, plaintiff herein, which then, the amount of P150,000.00 was given as additional partial payment. However, the particular unit was not yet identified. It was only on January 10, 1997 that Tommy Ong identified Unit No. 4 plaintiffs chosen unit and again tenderedP350,000.00 as his third partial payment. When the contract to sell for Unit 4 was being drafted, Tommy Ong requested that another contract to sell covering Unit 5 be made so as to give Johnny Ong another option to choose whichever unit he might decide to have. When the construction was already in full blast, defendants were informed by Tommy Ong that their final choice was Unit 5. It was only upon knowing that the defendants will be selling Unit 4 to some other persons for P4million that plaintiff changed his choice from Unit 5 to Unit 4.[4]

G.R. No. 170479 February 18, 2008 ANDRE T. ALMOCERA, Petitioner, - versus JOHNNY ONG, Respondent. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which seeks to set aside the Decision[1] of the Court of Appeals dated 18 July 2005 in CA-G.R. CV No. 75610 affirming in toto the Decision[2] of Branch 11 of the Regional Trial Court (RTC) of Cebu City in Civil Case No. CEB-23687 and its Resolution[3] dated 16 November 2005 denying petitioners motion for reconsideration. The RTC decision found

In trying to recover the amount he paid as down payment for the townhouse unit, respondent Johnny Ong filed a complaint for Damages before the RTC of Cebu City, docketed as Civil Case No. CEB-23687, against defendants Andre T. Almocera and FBMC alleging that defendants were guilty of fraudulent concealment and breach of contract when they sold to him a

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townhouse unit without divulging that the same, at the time of the perfection of their contract, was already mortgaged with the Land Bank of the Philippines (LBP), with the latter causing the foreclosure of the mortgage and the eventual sale of the townhouse unit to a third person. In their Answer, defendants denied liability claiming that the foreclosure of the mortgage on the townhouse unit was caused by the failure of complainant Johnny Ong to pay the balance of the price of said townhouse unit. After the pre-trial conference was terminated, trial on the merits ensued. Respondent and his brother, Thomas Y. Ong, took the witness stand. For defendants, petitioner testified. 2. In a Decision dated 20 May 2002, the RTC disposed of the case in this manner: WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered in this case in favor of the plaintiff and against the defendants: (a) Ordering the defendants to solidarily pay to the plaintiff the sum of P1,060,000.00, together with a legal interest thereon at 6% per annum from April 21, 1999 until its full payment before finality of the judgment. Thereafter, if the amount adjudged remains unpaid, the interest rate shall be 12% per annum computed from the time when the judgment becomes final and executory until fully satisfied; (b) Ordering the defendants to solidarily pay to the plaintiff the sum of P100,000.00 as moral damages, the sum of P50,000.00 as attorneys fee and the sum of P15,619.80 as expenses of litigation; and (c) Ordering the defendants to pay the cost of this suit.[5] suspending further payments to the defendants and was entitled to the return of the down payment. Aggrieved, defendants appealed the decision to the Court of Appeals assigning the following as errors: 1. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF HAS A VALID CAUSE OF ACTION FOR DAMAGES AGAINST DEFENDANT(S). THE LOWER COURT ERRED IN HOLDING THAT DEFENDANT ANDRE T. ALMOCERA IS SOLIDARILY LIABLE WITH THE COOPERATIVE FOR THE DAMAGES TO THE PLAINTIFF.[7]

The Court of Appeals ruled that the defendants incurred delay when they failed to deliver the townhouse unit to the respondent within six months from the signing of the contract to sell. It agreed with the finding of the trial court that the nonpayment of the balance of P2.4M by respondent to defendants was proper in light of such delay and the fact that the property subject of the case was foreclosed and auctioned. It added that the trial court did not err in giving credence to respondents assertion that had he known beforehand that the unit was used as collateral with the LBP, he would not have proceeded in buying the townhouse. Like the trial court, the Court of Appeals gave no weight to defendants argument that had respondent paid the balance of the purchase price of the townhouse, the mortgage could have been released. It explained: We cannot find fault with the choice of plaintiff not to further dole out money for a property that in all events, would never be his. Moreover, defendants could, if they were really desirous of satisfying their obligation, demanded that plaintiff pay the outstanding balance based on their contract. This they had not done. We can fairly surmise that defendants could not comply with their obligation themselves, because as testified to by Mr. Almocera, they already signified to LBP that they cannot pay their outstanding loan obligations resulting to the foreclosure of the townhouse.[8]

The trial court ruled against defendants for not acting in good faith and for not complying with their obligations under their contract with respondent. In the Contract to Sell[6] involving Unit 4 of the Atrium Townhomes, defendants agreed to sell said townhouse to respondent for P3,400,000.00. The down payment was P1,000,000.00, while the balance of P2,400,000.00 was to be paid in full upon completion, delivery and acceptance of the townhouse. Under the contract which was signed on 10 January 1997, defendants agreed to complete and convey to respondent the unit within six months from the signing thereof. The trial court found that respondent was able to make a down payment or partial payment of P1,060,000.00 and that the defendants failed to complete the construction of, as well as deliver to respondent, the townhouse within six months from the signing of the contract. Moreover, respondent was not informed by the defendants at the time of the perfection of their contract that the subject townhouse was already mortgaged to LBP. The mortgage was foreclosed by the LBP and the townhouse was eventually sold at public auction. It said that defendants were guilty of fraud in their dealing with respondent because the mortgage was not disclosed to respondent when the contract was perfected. There was also non-compliance with their obligations under the contract when they failed to complete and deliver the townhouse unit at the agreed time. On the part of respondent, the trial court declared he was justified in

Moreover, as to the issue of petitioners solidary liability, it said that this issue was belatedly raised and cannot be treated for the first time on appeal. On 18 July 2005, the Court of Appeals denied the appeal and affirmed in toto the decision of the trial court. The dispositive portion of the decision reads: IN LIGHT OF ALL THE FOREGOING, this appeal is DENIED. The assailed decision of the Regional Trial Court, Branch 11, Cebu City in Civil Case No. CEB-23687 is AFFIRMED in toto.[9]

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In a Resolution dated 16 November 2005, the Court of Appeals denied defendants motion for reconsideration. Petitioner is now before us pleading his case via a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure. The petition raises the following issues: I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT HAS INCURRED DELAY. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING RESPONDENTS REFUSAL TO PAY THE BALANCE OF THE PURCHASE PRICE. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT ANDRE T. ALMOCERA IS SOLIDARILY LIABLE WITH THE DEFENDANT COOPERATIVE FOR DAMAGES TO PLAINTIFF.[10] identical. In the first case, the vendor has lost and cannot recover the ownership of the land sold until and unless the contract of sale is itself resolved and set aside. In the second case, however, the title remains in the vendor if the vendee does not comply with the condition precedent of making payment at the time specified in the contract. In other words, in a contract to sell, ownership is retained by the seller and is not to pass to the buyer until full payment of the price.

II.

The Contract to Sell entered into by the parties contains the following pertinent provisions: 4. TERMS OF PAYMENT: 4a. ONE MILLION PESOS (P1,000,000.00) is hereby acknowledged as Downpayment for the above-mentioned Contract Price. 4b. The Balance, in the amount of TWO MILLION FOUR HUNDRED PESOS (P2,400,000.00) shall be paid thru financing Institution facilitated by the SELLER, preferably Landbank of the Philippines (LBP). Upon completion, delivery and acceptance of the BUYER of the Townhouse Unit, the BUYER shall have paid the Contract Price in full to the SELLER. xxxx 6. COMPLETION DATES OF THE TOWNHOUSE UNIT: The unit shall be completed and conveyed by way of an Absolute Deed of Sale together with the attendant documents of Ownership in the name of the BUYER the Transfer Certificate of Title and Certificate of Occupancy within a period of six (6) months from the signing of Contract to Sell.[12]

III.

It cannot be disputed that the contract entered into by the parties was a contract to sell. The contract was denominated as such and it contained the provision that the unit shall be conveyed by way of an Absolute Deed of Sale, together with the attendant documents of Ownership the Transfer Certificate of Title and Certificate of Occupancy and that the balance of the contract price shall be paid upon the completion and delivery of the unit, as well as the acceptance thereof by respondent. All these clearly indicate that ownership of the townhouse has not passed to respondent. In Serrano v. Caguiat, [11] we explained: A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendors obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price. The differences between a contract to sell and a contract of sale are well-settled in jurisprudence. As early as 1951, in Sing Yee v. Santos [47 O.G. 6372 (1951)], we held that: x x x [a] distinction must be made between a contract of sale in which title passes to the buyer upon delivery of the thing sold and a contract to sell x x x where by agreement the ownership is reserved in the seller and is not to pass until the full payment of the purchase price is made. In the first case, non-payment of the price is a negative resolutory condition; in the second case, full payment is a positive suspensive condition. Being contraries, their effect in law cannot be

From the foregoing provisions, it is clear that petitioner and FBMC had the obligation to complete the townhouse unit within six months from the signing of the contract. Upon compliance therewith, the obligation of respondent to pay the balance of P2,400,000.00 arises. Upon payment thereof, the townhouse shall be delivered and conveyed to respondent upon the execution of the Absolute Deed of Sale and other relevant documents. The evidence adduced shows that petitioner and FBMC failed to fulfill their obligation -to complete and deliver the townhouse within the six-month period. With petitioner and FBMCs non-fulfillment of their obligation, respondent refused to pay the balance of the contract price. Respondent does not ask that ownership of the townhouse be transferred to him, but merely asks that the amount or down payment he had made be returned to him.

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Article 1169 of the Civil Code reads: Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declares; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. As above-discussed, the obligation of respondent to pay the balance of the contract price was conditioned on petitioner and FBMCs performance of their obligation. Considering that the latter did not comply with their obligation to complete and deliver the townhouse unit within the period agreed upon, respondent could not have incurred delay. For failure of one party to assume and perform the obligation imposed on him, the other party does not incur delay.[15] Under the circumstances obtaining in this case, we find that respondent is justified in refusing to pay the balance of the contract price. He was never in possession of the townhouse unit and he can no longer be its owner since ownership thereof has been transferred to a third person who was not a party to the proceedings below. It would simply be the height of inequity if we are to require respondent to pay the balance of the contract price. To allow this would result in the unjust enrichment of petitioner and FBMC. The fundamental doctrine of unjust enrichment is the transfer of value without just cause or consideration. The elements of this doctrine which are present in this case are: enrichment on the part of the defendant; impoverishment on the part of the plaintiff; and lack of cause. The main objective is to prevent one to enrich himself at the expense of another. It is commonly accepted that this doctrine simply means a person shall not be allowed to profit or enrich himself inequitably at another's expense.[16] Hence, to allow petitioner and FBMC keep the down payment made by respondent amounting to P1,060,000.00 would result in their unjust enrichment at the expense of the respondent. Thus, said amount should be returned. What is worse is the fact that petitioner and FBMC intentionally failed to inform respondent that the subject townhouse which he was going to purchase was already mortgaged to LBP at the time of the perfection of their contract. This deliberate withholding by petitioner and FBMC of the mortgage constitutes fraud and bad faith. The trial court had this say: In the light of the foregoing environmental circumstances and milieu, therefore, it appears that the defendants are guilty of fraud in dealing with the plaintiff. They performed voluntary and willful acts which prevent the normal realization of the prestation, knowing the effects which naturally and necessarily arise from such acts. Their acts import a dishonest purpose or some moral obliquity and conscious doing of a wrong. The said acts certainly gtive rise to liability for damages (8 Manresa 72; Borrell-Macia 2627; 3 Camus 34; OLeary v. Macondray & Company, 454 Phil. 812; Heredia v. Salinas, 10 Phil. 157). Article 1170 of the New Civil Code of the Philippines provides expressly that those who in the performance of their obligations are guilty of fraud and those who in any manner contravene the tenor thereof are liable for damages.[17] Demand is not necessary in the instant case. Demand by the respondent would be useless because the impossibility of complying with their (petitioner and FBMC) obligation was due to their fault. If only they paid their loans with the LBP, the mortgage on the subject townhouse would not have been foreclosed and thereafter sold to a third person. Anent the second assigned error, petitioner argues that if there was any delay, the same was incurred by respondent because he refused to pay the balance of the contract price. We find his argument specious.

The contract subject of this case contains reciprocal obligations which were to be fulfilled by the parties, i.e., to complete and deliver the townhouse within six months from the execution of the contract to sell on the part of petitioner and FBMC, and to pay the balance of the contract price upon completion and delivery of the townhouse on the part of the respondent. In the case at bar, the obligation of petitioner and FBMC which is to complete and deliver the townhouse unit within the prescribed period, is determinative of the respondents obligation to pay the balance of the contract price. With their failure to fulfill their obligation as stipulated in the contract, they incurred delay and are liable for damages.[13] They cannot insist that respondent comply with his obligation. Where one of the parties to a contract did not perform the undertaking to which he was bound by the terms of the agreement to perform, he is not entitled to insist upon the performance of the other party.[14] On the first assigned error, petitioner insists there was no delay when the townhouse unit was not completed within six months from the signing of the contract inasmuch as the mere lapse of the stipulated six (6) month period is not by itself enough to constitute delay on his part and that of FBMC, since the law requires that there must either be judicial or extrajudicial demand to fulfill an obligation so that the obligor may be declared in default. He argues there was no evidence introduced showing that a prior demand was made by respondent before the original action was instituted in the trial court. We do not agree.

58
This appeal comes to us directly from the Court of First Instance because the claims involved aggregate more than P200,000.00. Defendant-appellant Isabelo Fonacier was the owner and/or holder, either by himself or in a representative capacity, of 11 iron lode mineral claims, known as the Dawahan Group, situated in the municipality of Jose Panganiban, province of Camarines Norte. By a "Deed of Assignment" dated September 29, 1952(Exhibit "3"), Fonacier constituted and appointed plaintiff-appellee Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical person for the exploration and development of the mining claims aforementioned on a royalty basis of not less than P0.50 per ton of ore that might be extracted therefrom. On March 19, 1954, Gaite in turn executed a general assignment (Record on Appeal, pp. 17-19) conveying the development and exploitation of said mining claims into the Larap Iron Mines, a single proprietorship owned solely by and belonging to him, on the same royalty basis provided for in Exhibit "3". Thereafter, Gaite embarked upon the development and exploitation of the mining claims in question, opening and paving roads within and outside their boundaries, making other improvements and installing facilities therein for use in the development of the mines, and in time extracted therefrom what he claim and estimated to be approximately 24,000 metric tons of iron ore. For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite to exploit and develop the mining claims in question, and Gaite assented thereto subject to certain conditions. As a result, a document entitled "Revocation of Power of Attorney and Contract" was executed on December 8, 1954 (Exhibit "A"),wherein Gaite transferred to Fonacier, for the consideration of P20,000.00, plus 10% of the royalties that Fonacier would receive from the mining claims, all his rights and interests on all the roads, improvements, and facilities in or outside said claims, the right to use the business name "Larap Iron Mines" and its goodwill, and all the records and documents relative to the mines. In the same document, Gaite transferred to Fonacier all his rights and interests over the "24,000 tons of iron ore, more or less" that the former had already extracted from the mineral claims, in consideration of the sum of P75,000.00, P10,000.00 of which was paid upon the signing of the agreement, and b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00) will be paid from and out of the first letter of credit covering the first shipment of iron ores and of the first amount derived from the local sale of iron ore made by the Larap Mines & Smelting Co. Inc., its assigns, administrators, or successors in interests. To secure the payment of the said balance of P65,000.00, Fonacier promised to execute in favor of Gaite a surety bond, and pursuant to the promise, Fonacier delivered to Gaite a surety bond dated December 8, 1954 with himself (Fonacier) as principal and the Larap Mines and Smelting Co. and its stockholders George Krakower, Segundina Vivas, Pacifico Escandor, Francisco Dante, and Fernando Ty as sureties (Exhibit "A-1"). Gaite testified, however, that when this bond was presented to him by Fonacier together with the "Revocation of Power of Attorney and Contract", Exhibit "A", on December 8, 1954, he refused to sign said Exhibit "A" unless another bond under written by a bonding company was put up by defendants to secure the payment of the P65,000.00 balance of their price of the iron ore in the stockpiles in the mining claims. Hence, a second bond, also dated December 8, 1954 (Exhibit "B"),was executed by the same parties to the first bond Exhibit "A-1", with the Far Eastern Surety and Insurance Co. as additional surety, but it provided that the liability of the surety company would attach only when there had been an actual sale of iron ore by the Larap Mines & Smelting Co. for an amount of not less then P65,000.00, and that, furthermore, the liability of said surety company would automatically expire on December 8, 1955. Both bonds were attached to the "Revocation of Power of Attorney and Contract", Exhibit "A", and made integral parts thereof.

On the last assigned error, petitioner contends that he should not be held solidarily liable with defendant FBMC, because the latter is a separate and distinct entity which is the seller of the subject townhouse. He claims that he, as Chairman and Chief Executive Officer of FBMC, cannot be held liable because his representing FBMC in its dealings is a corporate act for which only FBMC should be held liable. This issue of piercing the veil of corporate fiction was never raised before the trial court. The same was raised for the first time before the Court of Appeals which ruled that it was too late in the day to raise the same. The Court of Appeals declared: In the case below, the pleadings and the evidence of the defendants are one and the same and never had it made to appear that Almocera is a person distinct and separate from the other defendant. In fine, we cannot treat this error for the first time on appeal. We cannot in good conscience, let the defendant Almocera raise the issue of piercing the veil of corporate fiction just because of the adverse decision against him. x x x.[18]

To allow petitioner to pursue such a defense would undermine basic considerations of due process. Points of law, theories, issues and arguments not brought to the attention of the trial court will not be and ought not to be considered by a reviewing court, as these cannot be raised for the first time on appeal. It would be unfair to the adverse party who would have no opportunity to present further evidence material to the new theory not ventilated before the trial court.[19] As to the award of damages granted by the trial court, and affirmed by the Court of Appeals, we find the same to be proper and reasonable under the circumstances. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 18 July 2005 in CA-G.R. CV No. 75610 is AFFIRMED. Costs against the petitioner. SO ORDERED.

G.R. No. L-11827

July 31, 1961

FERNANDO A. GAITE, plaintiff-appellee, vs. ISABELO FONACIER, GEORGE KRAKOWER, LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS, FRNACISCO DANTE, PACIFICO ESCANDOR and FERNANDO TY, defendants-appellants. Alejo Mabanag for plaintiff-appellee. Simplicio U. Tapia, Antonio Barredo and Pedro Guevarra for defendants-appellants. REYES, J.B.L., J.:

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On the same day that Fonacier revoked the power of attorney he gave to Gaite and the two executed and signed the "Revocation of Power of Attorney and Contract", Exhibit "A", Fonacier entered into a "Contract of Mining Operation", ceding, transferring, and conveying unto the Larap Mines and Smelting Co., Inc. the right to develop, exploit, and explore the mining claims in question, together with the improvements therein and the use of the name "Larap Iron Mines" and its good will, in consideration of certain royalties. Fonacier likewise transferred, in the same document, the complete title to the approximately 24,000 tons of iron ore which he acquired from Gaite, to the Larap & Smelting Co., in consideration for the signing by the company and its stockholders of the surety bonds delivered by Fonacier to Gaite (Record on Appeal, pp. 82-94). Up to December 8, 1955, when the bond Exhibit "B" expired with respect to the Far Eastern Surety and Insurance Company, no sale of the approximately 24,000 tons of iron ore had been made by the Larap Mines & Smelting Co., Inc., nor had the P65,000.00 balance of the price of said ore been paid to Gaite by Fonacier and his sureties payment of said amount, on the theory that they had lost right to make use of the period given them when their bond, Exhibit "B" automatically expired (Exhibits "C" to "C-24"). And when Fonacier and his sureties failed to pay as demanded by Gaite, the latter filed the present complaint against them in the Court of First Instance of Manila (Civil Case No. 29310) for the payment of the P65,000.00 balance of the price of the ore, consequential damages, and attorney's fees. All the defendants except Francisco Dante set up the uniform defense that the obligation sued upon by Gaite was subject to a condition that the amount of P65,000.00 would be payable out of the first letter of credit covering the first shipment of iron ore and/or the first amount derived from the local sale of the iron ore by the Larap Mines & Smelting Co., Inc.; that up to the time of the filing of the complaint, no sale of the iron ore had been made, hence the condition had not yet been fulfilled; and that consequently, the obligation was not yet due and demandable. Defendant Fonacier also contended that only 7,573 tons of the estimated 24,000 tons of iron ore sold to him by Gaite was actually delivered, and counterclaimed for more than P200,000.00 damages. At the trial of the case, the parties agreed to limit the presentation of evidence to two issues: (1) Whether or not the obligation of Fonacier and his sureties to pay Gaite P65,000.00 become due and demandable when the defendants failed to renew the surety bond underwritten by the Far Eastern Surety and Insurance Co., Inc. (Exhibit "B"), which expired on December 8, 1955; and (2) Whether the estimated 24,000 tons of iron ore sold by plaintiff Gaite to defendant Fonacier were actually in existence in the mining claims when these parties executed the "Revocation of Power of Attorney and Contract", Exhibit "A." On the first question, the lower court held that the obligation of the defendants to pay plaintiff the P65,000.00 balance of the price of the approximately 24,000 tons of iron ore was one with a term: i.e., that it would be paid upon the sale of sufficient iron ore by defendants, such sale to be effected within one year or before December 8, 1955; that the giving of security was a condition precedent to Gait's giving of credit to defendants; and that as the latter failed to put up a good and sufficient security in lieu of the Far Eastern Surety bond (Exhibit "B") which expired on December 8, 1955, the obligation became due and demandable under Article 1198 of the New Civil Code. As to the second question, the lower court found that plaintiff Gaite did have approximately 24,000 tons of iron ore at the mining claims in question at the time of the execution of the contract Exhibit "A." Judgment was, accordingly, rendered in favor of plaintiff Gaite ordering defendants to pay him, jointly and severally, P65,000.00 with interest at 6% per annum from December 9, 1955 until payment, plus costs. From this judgment, defendants jointly appealed to this Court. During the pendency of this appeal, several incidental motions were presented for resolution: a motion to declare the appellants Larap Mines & Smelting Co., Inc. and George Krakower in contempt, filed by appellant Fonacier, and two motions to dismiss the appeal as having become academic and a motion for new trial and/or to take judicial notice of certain documents, filed by appellee Gaite. The motion for contempt is unmeritorious because the main allegation therein that the appellants Larap Mines & Smelting Co., Inc. and Krakower had sold the iron ore here in question, which allegedly is "property in litigation", has not been substantiated; and even if true, does not make these appellants guilty of contempt, because what is under litigation in this appeal is appellee Gaite's right to the payment of the balance of the price of the ore, and not the iron ore itself. As for the several motions presented by appellee Gaite, it is unnecessary to resolve these motions in view of the results that we have reached in this case, which we shall hereafter discuss. The main issues presented by appellants in this appeal are: (1) that the lower court erred in holding that the obligation of appellant Fonacier to pay appellee Gaite the P65,000.00 (balance of the price of the iron ore in question)is one with a period or term and not one with a suspensive condition, and that the term expired on December 8, 1955; and (2) that the lower court erred in not holding that there were only 10,954.5 tons in the stockpiles of iron ore sold by appellee Gaite to appellant Fonacier. The first issue involves an interpretation of the following provision in the contract Exhibit "A": 7. That Fernando Gaite or Larap Iron Mines hereby transfers to Isabelo F. Fonacier all his rights and interests over the 24,000 tons of iron ore, more or less, above-referred to together with all his rights and interests to operate the mine in consideration of the sum of SEVENTY-FIVE THOUSAND PESOS (P75,000.00) which the latter binds to pay as follows: a. TEN THOUSAND PESOS (P10,000.00) will be paid upon the signing of this agreement. b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00)will be paid from and out of the first letter of credit covering the first shipment of iron ore made by the Larap Mines & Smelting Co., Inc., its assigns, administrators, or successors in interest. We find the court below to be legally correct in holding that the shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance of P65,000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. That the parties to the contract Exhibit "A" did not intend any such state of things to prevail is supported by several circumstances: 1) The words of the contract express no contingency in the buyer's obligation to pay: "The balance of Sixty-Five Thousand Pesos (P65,000.00) will be paid out of the first letter of credit covering the first shipment of iron ores . . ." etc. There is no uncertainty that the payment will have to be made sooner or later; what is undetermined is merely the exact date at which it will be made. By the very terms of the contract, therefore, the existence of the obligation to pay is recognized; only its maturity or demandability is deferred. 2) A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course of business to do so; hence, the contingent character of the obligation must clearly appear.

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Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the company's stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance of P65,000.00. 3) To subordinate the obligation to pay the remaining P65,000.00 to the sale or shipment of the ore as a condition precedent, would be tantamount to leaving the payment at the discretion of the debtor, for the sale or shipment could not be made unless the appellants took steps to sell the ore. Appellants would thus be able to postpone payment indefinitely. The desireability of avoiding such a construction of the contract Exhibit "A" needs no stressing. 4) Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive condition or a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation would incline the scales in favor of "the greater reciprocity of interests", since sale is essentially onerous. The Civil Code of the Philippines, Article 1378, paragraph 1, in fine, provides: If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests. and there can be no question that greater reciprocity obtains if the buyer' obligation is deemed to be actually existing, with only its maturity (due date) postponed or deferred, that if such obligation were viewed as non-existent or not binding until the ore was sold. The only rational view that can be taken is that the sale of the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was intended merely to fix the future date of the payment. This issue settled, the next point of inquiry is whether appellants, Fonacier and his sureties, still have the right to insist that Gaite should wait for the sale or shipment of the ore before receiving payment; or, in other words, whether or not they are entitled to take full advantage of the period granted them for making the payment. We agree with the court below that the appellant have forfeited the right court below that the appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier (Exhibit "A"). The case squarely comes under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines: "ART. 1198. The debtor shall lose every right to make use of the period: (1) . . . (2) When he does not furnish to the creditor the guaranties or securities which he has promised. (3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he immediately gives new ones equally satisfactory. Appellants' failure to renew or extend the surety company's bond upon its expiration plainly impaired the securities given to the creditor (appellee Gaite), unless immediately renewed or replaced. There is no merit in appellants' argument that Gaite's acceptance of the surety company's bond with full knowledge that on its face it would automatically expire within one year was a waiver of its renewal after the expiration date. No such waiver could have been intended, for Gaite stood to lose and had nothing to gain barely; and if there was any, it could be rationally explained only if the appellants had agreed to sell the ore and pay Gaite before the surety company's bond expired on December 8, 1955. But in the latter case the defendants-appellants' obligation to pay became absolute after one year from the transfer of the ore to Fonacier by virtue of the deed Exhibit "A.". All the alternatives, therefore, lead to the same result: that Gaite acted within his rights in demanding payment and instituting this action one year from and after the contract (Exhibit "A") was executed, either because the appellant debtors had impaired the securities originally given and thereby forfeited any further time within which to pay; or because the term of payment was originally of no more than one year, and the balance of P65,000.00 became due and payable thereafter. Coming now to the second issue in this appeal, which is whether there were really 24,000 tons of iron ore in the stockpiles sold by appellee Gaite to appellant Fonacier, and whether, if there had been a short-delivery as claimed by appellants, they are entitled to the payment of damages, we must, at the outset, stress two things: first, that this is a case of a sale of a specific mass of fungible goods for a single price or a lump sum, the quantity of "24,000 tons of iron ore, more or less," stated in the contract Exhibit "A," being a mere estimate by the parties of the total tonnage weight of the mass; and second, that the evidence shows that neither of the parties had actually measured of weighed the mass, so that they both tried to arrive at the total quantity by making an estimate of the volume thereof in cubic meters and then multiplying it by the estimated weight per ton of each cubic meter. The sale between the parties is a sale of a specific mass or iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such measurement.(see Art. 1480, second par., New Civil Code). The subject matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons contained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that the quantity delivered is less than the amount estimated by them (Mobile Machinery & Supply Co., Inc. vs. York Oilfield Salvage Co., Inc. 171 So. 872, applying art. 2459 of the Louisiana Civil Code). There is no charge in this case that Gaite did not deliver to appellants all the ore found in the stockpiles in the mining claims in questions; Gaite had, therefore, complied with his promise to deliver, and appellants in turn are bound to pay the lump price. But assuming that plaintiff Gaite undertook to sell and appellants undertook to buy, not a definite mass, but approximately 24,000 tons of ore, so that any substantial difference in this quantity delivered would entitle the buyers to recover damages for the short-delivery, was there really a short-delivery in this case? We think not. As already stated, neither of the parties had actually measured or weighed the whole mass of ore cubic meter by cubic meter, or ton by ton. Both parties predicate their respective claims only upon an estimated number of cubic meters of ore multiplied by the average tonnage factor per cubic meter. Now, appellee Gaite asserts that there was a total of 7,375 cubic meters in the stockpiles of ore that he sold to Fonacier, while appellants contend that by actual measurement, their witness

61
Cirpriano Manlagit found the total volume of ore in the stockpiles to be only 6.609 cubic meters. As to the average weight in tons per cubic meter, the parties are again in disagreement, with appellants claiming the correct tonnage factor to be 2.18 tons to a cubic meter, while appellee Gaite claims that the correct tonnage factor is about 3.7. In the face of the conflict of evidence, we take as the most reliable estimate of the tonnage factor of iron ore in this case to be that made by Leopoldo F. Abad, chief of the Mines and Metallurgical Division of the Bureau of Mines, a government pensionado to the States and a mining engineering graduate of the Universities of Nevada and California, with almost 22 years of experience in the Bureau of Mines. This witness placed the tonnage factor of every cubic meter of iron ore at between 3 metric tons as minimum to 5 metric tons as maximum. This estimate, in turn, closely corresponds to the average tonnage factor of 3.3 adopted in his corrected report (Exhibits "FF" and FF-1") by engineer Nemesio Gamatero, who was sent by the Bureau of Mines to the mining claims involved at the request of appellant Krakower, precisely to make an official estimate of the amount of iron ore in Gaite's stockpiles after the dispute arose. Even granting, then, that the estimate of 6,609 cubic meters of ore in the stockpiles made by appellant's witness Cipriano Manlagit is correct, if we multiply it by the average tonnage factor of 3.3 tons to a cubic meter, the product is 21,809.7 tons, which is not very far from the estimate of 24,000 tons made by appellee Gaite, considering that actual weighing of each unit of the mass was practically impossible, so that a reasonable percentage of error should be allowed anyone making an estimate of the exact quantity in tons found in the mass. It must not be forgotten that the contract Exhibit "A" expressly stated the amount to be 24,000 tons, more or less. (ch. Pine River Logging & Improvement Co. vs U.S., 279, 46 L. Ed. 1164). There was, consequently, no short-delivery in this case as would entitle appellants to the payment of damages, nor could Gaite have been guilty of any fraud in making any misrepresentation to appellants as to the total quantity of ore in the stockpiles of the mining claims in question, as charged by appellants, since Gaite's estimate appears to be substantially correct. WHEREFORE, finding no error in the decision appealed from, we hereby affirm the same, with costs against appellants. Bengzon, C.J., Padilla, Labrador, Concepcion, Barrera, Paredes, Dizon, De Leon and Natividad, JJ., concur. This is a petition for review on certiorari[1] to annul the Decision[2] dated 26 June 1996 of the Court of Appeals in CA-G.R. CV No. 41996. The Court of Appeals affirmed the Decision[3] dated18 February 1993 rendered by Branch 65 of the Regional Trial Court of Makati (trial court) in Civil Case No. 89-5174. The trial court dismissed the case after it found that the parties executed the Deeds of Sale for valid consideration and that the plaintiffs did not have a cause of action against the defendants. The Facts The Court of Appeals summarized the facts of the case as follows: Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The married Joaquin children are joined in this action by their respective spouses. Sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates of title issued in their names, to wit: 1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd256395 executed on 11 July 1978, in favor of defendant Felicitas Joaquin, for a consideration of P6,000.00 (Exh. C), pursuant to which TCT No. [36113/T172] was issued in her name (Exh. C-1); 2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd256394 executed on 7 June 1979, in favor of defendant Clarita Joaquin, for a consideration of P1[2],000.00 (Exh. D), pursuant to which TCT No. S-109772 was issued in her name (Exh. D-1); 3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd256394 executed on 12 May 1988, in favor of defendant spouses Fidel Joaquin and Conchita Bernardo, for a consideration of P54,[3]00.00 (Exh. E), pursuant to which TCT No. 155329 was issued to them (Exh. E-1); 4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd256394 executed on 12 May 1988, in favor of defendant spouses Artemio Joaquin and Socorro Angeles, for a consideration of P[54,3]00.00 (Exh. F), pursuant to which TCT No. 155330 was issued to them (Exh. F-1); and 5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan (LRC) Psd-256395 executed on 9 September 1988, in favor of Tomas Joaquin, for a consideration of P20,000.00 (Exh. G), pursuant to which TCT No. 157203 was issued in her name (Exh. G-1). [6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd256395 executed on 7 October 1988, in favor of Gavino Joaquin, for a consideration of P25,000.00 (Exh. K), pursuant to which TCT No. 157779 was issued in his name (Exh. K-1).] In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of title, plaintiffs, in their complaint, aver: - XXThe deeds of sale, Annexes C, D, E, F, and G, [and K] are simulated as they are, are NULL AND VOID AB INITIO because a) Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in litis; b) Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the properties are more than three-fold times more valuable than the measly sums appearing therein;

[G.R. No. 126376. November 20, 2003] SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO EDRA and NORA JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and NATIVIDAD JOAQUIN, petitioners, vs. COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN and CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO JOAQUIN and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA JOAQUIN, SPOUSES TELESFORO CARREON and FELICITAS JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES GAVINO JOAQUIN and LEA ASIS, respondents. DECISION CARPIO, J.: The Case

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Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees); and d) Fourthly, the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime. - XXI Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos. 36113/T-172, S-109772, 155329, 155330, 157203 [and 157779] issued by the Registrar of Deeds over the properties in litis xxx are NULL AND VOID AB INITIO. Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them as well as the requisite standing and interest to assail their titles over the properties in litis; (2) that the sales were with sufficient considerations and made by defendants parents voluntarily, in good faith, and with full knowledge of the consequences of their deeds of sale; and (3) that the certificates of title were issued with sufficient factual and legal basis.[4] (Emphasis in the original) The Ruling of the Trial Court Before the trial, the trial court ordered the dismissal of the case against defendant spouses Gavino Joaquin and Lea Asis.[5] Instead of filing an Answer with their co-defendants, Gavino Joaquin and Lea Asis filed a Motion to Dismiss.[6] In granting the dismissal to Gavino Joaquin and Lea Asis, the trial court noted that compulsory heirs have the right to a legitime but such right is contingent since said right commences only from the moment of death of the decedent pursuant to Article 777 of the Civil Code of the Philippines.[7] After trial, the trial court ruled in favor of the defendants and dismissed the complaint. The trial court stated: In the first place, the testimony of the defendants, particularly that of the xxx father will show that the Deeds of Sale were all executed for valuable consideration. This assertion must prevail over the negative allegation of plaintiffs. And then there is the argument that plaintiffs do not have a valid cause of action against defendants since there can be no legitime to speak of prior to the death of their parents. The court finds this contention tenable. In determining the legitime, the value of the property left at the death of the testator shall be considered (Art. 908 of the New Civil Code). Hence, the legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore cannot claim an impairment of their legitime while their parents live. All the foregoing considered, this case is DISMISSED. In order to preserve whatever is left of the ties that should bind families together, the counterclaim is likewise DISMISSED. No costs. SO ORDERED.[8] The Ruling of the Court of Appeals The Court of Appeals affirmed the decision of the trial court. The appellate court ruled: To the mind of the Court, appellants are skirting the real and decisive issue in this case, which is, whether xxx they have a cause of action against appellees. Upon this point, there is no question that plaintiffs-appellants, like their defendant brothers and sisters, are compulsory heirs of defendant spouses, Leonardo Joaquin and Feliciana Landrito, who are their parents. However, their right to the properties of their defendant parents, as compulsory heirs, is merely inchoate and vests only upon the latters death. While still alive, defendant parents are free to dispose of their properties, provided that such dispositions are not made in fraud of creditors. c) Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither do they claim to be creditors of their defendant parents. Consequently, they cannot be considered as real parties in interest to assail the validity of said deeds either for gross inadequacy or lack of consideration or for failure to express the true intent of the parties. In point is the ruling of the Supreme Court in Velarde, et al. vs. Paez, et al., 101 SCRA 376, thus: The plaintiffs are not parties to the alleged deed of sale and are not principally or subsidiarily bound thereby; hence, they have no legal capacity to challenge their validity. Plaintiffs-appellants anchor their action on the supposed impairment of their legitime by the dispositions made by their defendant parents in favor of their defendant brothers and sisters. But, as correctly held by the court a quo, the legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore cannot claim an impairment of their legitime while their parents live. With this posture taken by the Court, consideration of the errors assigned by plaintiffs-appellants is inconsequential. WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against plaintiffsappellants. SO ORDERED.[9] Hence, the instant petition. Issues Petitioners assign the following as errors of the Court of Appeals: 1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE IN QUESTION HAD NO VALID CONSIDERATION. 2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING THAT THERE WAS A CONSIDERATION, THE SAME IS GROSSLY INADEQUATE. 3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS OF SALE DO NOT EXPRESS THE TRUE INTENT OF THE PARTIES. 4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE WAS PART AND PARCEL OF A CONSPIRACY AIMED AT UNJUSTLY DEPRIVING THE REST OF THE CHILDREN OF THE SPOUSES LEONARDO JOAQUIN AND FELICIANA LANDRITO OF THEIR INTEREST OVER THE SUBJECT PROPERTIES. 5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONERS HAVE A GOOD, SUFFICIENT AND VALID CAUSE OF ACTION AGAINST THE PRIVATE RESPONDENTS.[10] The Ruling of the Court We find the petition without merit. We will discuss petitioners legal interest over the properties subject of the Deeds of Sale before discussing the issues on the purported lack of consideration and gross inadequacy of the prices of the Deeds of Sale. Whether Petitioners have a legal interest over the properties subject of the Deeds of Sale Petitioners Complaint betrays their motive for filing this case. In their Complaint, petitioners asserted that the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime. Petitioners strategy was to have the Deeds of Sale declared void so that ownership of the lots would eventually revert to their respondent parents. If their parents die still owning the lots, petitioners and their respondent siblings will then co-own their parents estate by hereditary succession.[11]

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It is evident from the records that petitioners are interested in the properties subject of the Deeds of Sale, but they have failed to show any legal right to the properties. The trial and appellate courts should have dismissed the action for this reason alone. An action must be prosecuted in the name of the real party-in-interest.[12] [T]he question as to real party-in-interest is whether he is the party who would be benefitted or injured by the judgment, or the party entitled to the avails of the suit. xxx In actions for the annulment of contracts, such as this action, the real parties are those who are parties to the agreement or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the contracting parties and can show the detriment which would positively result to them from the contract even though they did not intervene in it (Ibaez v. Hongkong & Shanghai Bank, 22 Phil. 572 [1912]) xxx. These are parties with a present substantial interest, as distinguished from a mere expectancy or future, contingent, subordinate, or consequential interest. The phrase present substantial interest more concretely is meant such interest of a party in the subject matter of the action as will entitle him, under the substantive law, to recover if the evidence is sufficient, or that he has the legal title to demand and the defendant will be protected in a payment to or recovery by him.[13] Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As the appellate court stated, petitioners right to their parents properties is merely inchoate and vests only upon their parents death. While still living, the parents of petitioners are free to dispose of their properties. In their overzealousness to safeguard their future legitime, petitioners forget that theoretically, the sale of the lots to their siblings does not affect the value of their parents estate. While the sale of the lots reduced the estate, cash of equivalent value replaced the lots taken from the estate. Whether the Deeds of Sale are void for lack of consideration Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of Sale to their respondent father. Thus, petitioners ask the court to declare the Deeds of Sale void. A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a contract of sale becomes a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. If there is no meeting of the minds of the parties as to the price, because the price stipulated in the contract is simulated, then the contract is void.[14] Article 1471 of the Civil Code states that if the price in a contract of sale is simulated, the sale is void. It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract.[15] Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To prove simulation, petitioners presented Emma Joaquin Valdozs testimony stating that their father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed of sale without need for her payment of the purchase price.[16] The trial court did not find the allegation of absolute simulation of price credible. Petitioners failure to prove absolute simulation of price is magnified by their lack of knowledge of their respondent siblings financial capacity to buy the questioned lots.[17] On the other hand, the Deeds of Sale which petitioners presented as evidence plainly showed the cost of each lot sold. Not only did respondents minds meet as to the purchase price, but the real price was also stated in the Deeds of Sale. As of the filing of the complaint, respondent siblings have also fully paid the price to their respondent father.[18] Whether the Deeds of Sale are void for gross inadequacy of price Petitioners ask that assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale. Articles 1355 of the Civil Code states: Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied) Article 1470 of the Civil Code further provides: Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract. (Emphasis supplied) Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. All the respondents believed that they received the commutative value of what they gave. As we stated in Vales v. Villa:[19] Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of persons who are not legally incompetent. Courts operate not because one person has been defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, aviolation of the law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it. (Emphasis in the original) Moreover, the factual findings of the appellate court are conclusive on the parties and carry greater weight when they coincide with the factual findings of the trial court. This Court will not weigh the evidence all over again unless there has been a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of discretion.[20] In the instant case, the trial court found that the lots were sold for a valid consideration, and that the defendant children actually paid the purchase price stipulated in their respective Deeds of Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is now conclusive upon us. WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto. SO ORDERED. Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Azcuna, JJ., concur.

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G.R. No. L-27829 August 19, 1988 PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner, vs. HON. WALFRIDO DE LOS ANGELES, Judge of the Court of First Instance of Rizal, Branch IV (Quezon City) and TIMOTEO A. SEVILLA, doing business under the name and style of PHILIPPINE ASSOCIATED RESOURCES and PRUDENTIAL BANK AND TRUST COMPANY, respondents. Lorenzo F. Miravite for respondent Timoteo Sevilla. Ferrer & Ranada Law Office for respondent Prudential Bank & Trust Co. PARAS, J.: In these petition and supplemental petition for Certiorari, Prohibition and mandamus with Preliminary Injunction, petitioner Philippine Virginia Tobacco Administration seeks to annul and set aside the following Orders of respondent Judge of the Court of First Instance of Rizal, Branch IV (Quezon City) in Civil Case No. Q-10351 and prays that the Writ of Preliminary Injunction (that may be) issued by this Court enjoining enforcement of the aforesaid Orders be made permanent. (Petition, Rollo, pp. 1-9) They are: The Order of July 17, 1967: AS PRAYED FOR, the Prudential Bank & Trust Company is hereby directed to release and deliver to the herein plaintiff, Timoteo A. Sevilla, the amount of P800,000.00 in its custody representing the marginal deposit of the Letters of Credit which said bank has issued in favor of the defendant, upon filing by the plaintiff of a bond in the um of P800,000.00, to answer for whatever damage that the defendant PVTA and the Prudential Bank & Trust Company may suffer by reason of this order. (Annex "A," Rollo, p. 12) The Order of November 3,1967: IN VIEW OF THE FOREGOING, the petition under consideration is granted, as follows: (a) the defendant PVTA is hereby ordered to issue the corresponding certificate of Authority to the plaintiff, allowing him to export the remaining balance of his tobacco quota at the current world market price and to make the corresponding import of American high-grade tobacco; (b) the defendant PVTA is hereby restrained from issuing any Certificate of Authority to export or import to any persons and/or entities while the right of the plaintiff to the balance of his quota remains valid, effective and in force; and (c) defendant PVTA is hereby enjoined from opening public bidding to sell its Virginia leaf tobacco during the effectivity of its contract with the plaintiff. xxx xxx xxx In order to protect the defendant from whatever damage it may sustain by virtue of this order, the plaintiff is hereby directed to file a bond in the sum of P20,000.00. (Annex "K," Rollo, pp. 4-5) The Order of March 16, 1968: WHEREFORE, the motion for reconsideration of the defendant against the order of November 3, 1967 is hereby DENIED. (Annex "M," Rollo, P. 196) The facts of the case are as follows: Respondent Timoteo Sevilla, proprietor and General Manager of the Philippine Associated Resources (PAR) together with two other entities, namely, the Nationwide Agro-Industrial Development Corp. and the Consolidated Agro-Producers Inc. were awarded in a public bidding the right to import Virginia leaf tobacco for blending purposes and exportation by them of PVTA and farmer's low-grade tobacco at a rate of one (1) kilo of imported tobacco for every nine (9) kilos of leaf tobacco actually exported. Subsequently, the other two entities assigned their rights to PVTA and respondent remained the only private entity accorded the privilege. The contract entered into between the petitioner and respondent Sevilla was for the importation of 85 million kilos of Virginia leaf tobacco and a counterpart exportation of 2.53 million kilos of PVTA and 5.1 million kilos of farmer's and/or PVTA at P3.00 a kilo. (Annex "A," p. 55 and Annex "B," Rollo, p. 59) In accordance with their contract respondent Sevilla purchased from petitioner and actually exported 2,101.470 kilos of tobacco, paying the PVTA the sum of P2,482,938.50 and leaving a balance of P3,713,908.91. Before respondent Sevilla could import the counterpart blending Virginia tobacco, amounting to 525,560 kilos, Republic Act No. 4155 was passed and took effect on June 20, 1 964, authorizing the PVTA to grant import privileges at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its tobacco stock at the best price available. Thus, on September 14, 1965 subject contract which was already amended on December 14, 1963 because of the prevailing export or world market price under which respondent will be exporting at a loss, (Complaint, Rollo, p. 3) was further amended to grant respondent the privileges under aforesaid law, subject to the following conditions: (1) that on the 2,101.470 kilos already purchased, and exported, the purchase price of about P3.00 a kilo was maintained; (2) that the unpaid balance of P3,713,908.91 was to be liquidated by paying PVTA the sum of P4.00 for every kilo of imported Virginia blending tobacco and; (3) that respondent Sevilla would open an irrevocable letter of credit No. 6232 with the Prudential Bank and Trust Co. in favor of the PVTA to secure the payment of said balance, drawable upon the release from the Bureau of Customs of the imported Virginia blending tobacco. While respondent was trying to negotiate the reduction of the procurement cost of the 2,101.479 kilos of PVTA tobacco already exported which attempt was denied by petitioner and also by the Office of the President, petitioner prepared two drafts to be drawn against said letter of credit for amounts which have already become due and demandable. Respondent then filed a complaint for damages with preliminary injunction against the petitioner in the amount of P5,000,000.00. Petitioner filed an answer with counterclaim, admitting the execution of the contract. It alleged however that respondent, violated the terms thereof by causing the issuance of the preliminary injunction to prevent the former from drawing from the letter of credit for amounts due and payable and thus caused petitioner additional damage of 6% per annum. A writ of preliminary injunction was issued by respondent judge enjoining petitioner from drawing against the letter of credit. On motion of respondent, Sevilla, the lower court dismissed the complaint on April 19, 1967 without prejudice and lifted the writ of preliminary injunction but petitioner's motion for reconsideration was granted on June 5,1967 and the Order of April 19,1967 was set aside. On July 1, 1967 Sevilla filed an urgent motion for reconsideration of the Order of June 5, 1967 praying that the Order of dismissal be reinstated. But pending the resolution of respondent's motion and without notice to the petitioner, respondent judge issued the assailed Order of July 17, 1967 directing the Prudential Bank & Trust Co. to make the questioned release of funds from the Letter of Credit. Before petitioner could file a motion for reconsideration of said order, respondent Sevilla was able to secure the releaseof P300,000.00 and the rest of the amount. Hence this petition, followed by the supplemental petition when respondent filed with the lower court an urgent ex-parte petition for the issuance of preliminary mandatory and preventive injunction which was granted in the resolution of respondent Judge on November 3, 1967, above quoted. On March 16, 1968, respondent Judge denied petitioner's motion for reconsideration. (Supp. Petition, Rollo, pp. 128- 130)

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Pursuant to the resolution of July 21, 1967, the Supreme Court required respondent to file an answer to the petition within 10 days from notice thereof and upon petitioner's posting a bond of fifty thousand pesos (P50,000.00), a writ of preliminary mandatory injunction was issued enjoining respondent Judge from enforcing and implementing his Order of July 17,1967 and private respondents Sevilla and Prudential Bank and Trust Co. from complying with and implementing said order. The writ further provides that in the event that the said order had already been complied with and implemented, said respondents are ordered to return and make available the amounts that might have been released and taken delivery of by respondent Sevilla. (Rollo, pp. 16-17) In its answer, respondent bank explained that when it received the Order of the Supreme Court to stop the release of P800,000.00 it had already released the same in obedience to ailieged earlier Order of the lower Court which was reiterated with ailieged admonition in a subsequent Order. (Annex "C," Rollo, pp. 37-38) A Manifestation to that effect has already been filed c,irrency respondent bank (Rollo, pp. 19-20) which was noted c,irrency this Court in the resolution of August 1, 1967, a copy of which was sent to the Secretary of Justice. (Rollo, p. 30) Before respondent Sevilla could file his answer, petitioner filed a motion to declare him and respondent bank in contempt of court for having failed to comply with the resolution to this court of July 21, 1967 to the effect that the assailed order has already been implemented but respondents failed to return and make available the amounts that had been released and taken delivery of by respondent Sevilla. (Rollo, pp. 100-102) In his answer to the petition, respondent Sevilla claims that petitioner demanded from him a much higher price for Grades D and E tobacco than from the other awardees; that petitioner violated its contract by granting indiscriminately to numerous buyers the right to export and import tobacco while his agreement is being implemented, thereby depriving respondent of his exclusive right to import the Virginia leaf tobacco for blending purposes and that respondent Judge did not abuse his discretion in ordering the release of the amount of P800,000.00 from the Letter of Credit, upon his posting a bond for the same amount. He argued further that the granting of said preliminary injunction is within the sound discretion of the court with or without notice to the adverse party when the facts and the law are clear as in the instant case. He insists that petitioner caretaker.2 claim from him a price higher than the other awardees and that petitioner has no more right to the sum in controversy as the latter has already been overpaid when computed not at the price of tobacco provided in the contract which is inequitable and therefore null and void but at the price fixed for the other awardees. (Answer of Sevilla, Rollo, pp. 105-111) In its Answer to the Motion for Contempt, respondent bank reiterates its allegations in the Manifestation and Answer which it filed in this case. (Rollo, pp. 113-114) In his answer, (Rollo, pp. 118-119) to petitioner's motion to declare him in contempt, respondent Sevilla explains that when he received a copy of the Order of this Court, he had already disbursed the whole amount withdrawn, to settle his huge obligations. Later he filed a supplemental answer in compliance with the resolution of this Court of September 15, 1967 requiring him to state in detail the amounts allegedly disbursed c,irrency him out of the withdrawn funds. (Rollo, pp. 121-123) Pursuant to the resolution of the Supreme Court on April 25, 1968, a Writ of Preliminary Injunction was issued upon posting of a surety bond in the amount of twenty thousand pesos (P20,000.00) restraining respondent Judge from enforcing and implementing his orders of November 3, 1967 and March 16, 1968 in Civil Case No. Q-10351 of the Court of First Instance of Rizal (Quezon City). Respondent Sevilla filed an answer to the supplemental petition (Rollo, pp. 216-221) and so did respondent bank (Rollo, p. 225). Thereafter, all the parties filed their respective memoranda (Memo for Petitioners, Rollo, pp. 230-244 for Resp. Bank, pp. 246-247; and for Respondents, Rollo, pp. 252-257). Petitioners filed a rejoinder (rollo, pp. 259-262) and respondent Sevilla filed an Amended Reply Memorandum (Rollo, pp. 266274). Thereafter the case was submitted for decision:' in September, 1968 (Rollo, p. 264). Petitioner has raised the following issues: 1. Respondent Judge acted without or in excess of jurisdiction or with grave abuse of discretion when he issued the Order of July 17, 1967, for the following reasons: (a) the letter of credit issued by respondent bank is irrevocable; (b) said Order was issued without notice and (c) said order disturbed the status quo of the parties and is tantamount to prejudicing the case on the merits. (Rollo, pp. 7-9) 2. Respondent Judge likewise acted without or in excess of jurisdiction or with grave abuse of discretion when he issued the Order of November 3, 1967 which has exceeded the proper scope and function of a Writ of Preliminary Injunction which is to preserve the status quo and caretaker.2 therefore assume without hearing on the merits, that the award granted to respondent is exclusive; that the action is for specific performance a d that the contract is still in force; that the conditions of the contract have already been complied with to entitle the party to the issuance of the corresponding Certificate of Authority to import American high grade tobacco; that the contract is still existing; that the parties have already agreed that the balance of the quota of respondent will be sold at current world market price and that petitioner has been overpaid. 3. The alleged damages suffered and to be suffered by respondent Sevilla are not irreparable, thus lacking in one essential prerequisite to be established before a Writ of Preliminary Injunction may be issued. The alleged damages to be suffered are loss of expected profits which can be measured and therefore reparable. 4. Petitioner will suffer greater damaaes than those alleged by respondent if the injunction is not dissolved. Petitioner stands to lose warehousing storage and servicing fees amounting to P4,704.236.00 yearly or P392,019.66 monthly, not to mention the loss of opportunity to take advantage of any beneficial change in the price of tobacco. 5. The bond fixed by the lower court, in the amount of P20,000.00 is grossly inadequate, (Rollo, pp. 128-151) The petition is impressed with merit. In issuing the Order of July 17, 1967, respondent Judge violated the irrevocability of the letter of credit issued by respondent Bank in favor of petitioner. An irrevocable letter of credit caretaker.2 during its lifetime be cancelled or modified Without the express permission of the beneficiary (Miranda and Garrovilla, Principles of Money Credit and Banking, Revised Edition, p. 291). Consequently, if the finding agricul- the trial on the merits is that respondent Sevilla has ailieged unpaid balance due the petitioner, such unpaid obligation would be unsecured. In the issuance of the aforesaid Order, respondent Judge likewise violated: Section 4 of Rule 15 of the Relatiom, Rules of Court which requires that notice of a motion be served by the applicant to all parties concerned at least three days before the hearing thereof; Section 5 of the same Rule which provides that the notice shall be directed to the parties concerned; and shall state the time and place for the hearing of the motion; and Section 6 of the same Rule which requires proof of service of the notice thereof, except when the Court is satisfied that the rights of the adverse party or parties are not affected, (Sunga vs. Lacson, L-26055, April 29, 1968, 23 SCRA 393) A motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of the Relatiom, Rules of Court is considered a worthless piece of paper which the Clerk has no right to receiver and the respondent court a quo he has no authority to act thereon. (Vda. de A. Zarias v. Maddela, 38 SCRA 35; Cledera v. Sarn-j-iento, 39 SCRA 552; and Sacdalan v. Bautista, 56 SCRA 175). The three-day notice required by law in the filing of a motion is intended not for the movant's benefit but to avoid surprises upon the opposite party and to give the latter time to study and

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meet the arguments of the motion. (J.M. Tuason and Co., Inc. v. Magdangal, L-1 5539. 4 SCRA 84). More specifically, Section 5 of Rule 58 requires notice to the defendant before a preliminary injunction is granted unless it shall appear from facts shown bv affidavits or by the verified complaint that great or irreparable injury would result to the applyin- before the matter can be heard on notice. Once the application is filed with the Judge, the latter must cause ailieged Order to be served on the defendant, requiring him to show cause at a given time and place why the injunction should not be granted. The hearing is essential to the legality of the issuance of a preliminary injunction. It is ailieged abuse of discretion on the part of the court to issue ailieged injunction without hearing the parties and receiving evidence thereon (Associated Watchmen and Security Union, et al. v. United States Lines, et al., 101 Phil. 896). In the issuance of the Order of November 3, 1967, with notice and hearing notwithstanding the discretionary power of the trial court to Issue a preliminary mandatory injunction is not absolute as the issuance of the writ is the exception rather than the rule. The party appropriate for it must show a clear legal right the violation of which is so recent as to make its vindication an urgent one (Police Commission v. Bello, 37 SCRA 230). It -is granted only on a showing that (a) the invasion of the right is material and substantial; (b) the right of the complainant is clear and unmistakable; and (c) there is ailieged urgent and permanent necessity for the writ to prevent serious decision ( Pelejo v. Court of Appeals, 117 SCRA 665). In fact, it has always been said that it is improper to issue a writ of preliminary mandatory injunction prior to the final hearing except in cases of extreme urgency, where the right of petitioner to the writ is very clear; where considerations of relative inconvenience bear strongly in complainant's favor; where there is a willful and unlawful invasion of plaintiffs right against his protest and remonstrance the injury being a contributing one, and there the effect of the mandatory injunctions is rather to reestablish and maintain a pre-existing continuing relation between the parties, recently and arbitrarily interrupted c,irrency the defendant, than to establish a new relation (Alvaro v. Zapata, 11 8 SCRA 722; Lemi v. Valencia, February 28, 1963, 7 SCRA 469; Com. of Customs v. Cloribel, L-20266, January 31, 1967,19 SCRA 234. In the case at bar there appears no urgency for the issuance of the writs of preliminary mandatory injunctions in the Orders of July 17, 1967 and November 3, 1967; much less was there a clear legal right of respondent Sevilla that has been violated by petitioner. Indeed, it was ailieged abuse of discretion on the part of respondent Judge to order the dissolution of the letter of credit on the basis of assumptions that cannot be established except by a hearing on the merits nor was there a showing that R.A. 4155 applies retroactively to respondent in this case, modifying his importation / exportation contract with petitioner. Furthermore, a writ of preliminary injunction's enjoining any withdrawal from Letter of Credit 6232 would have been sufficient to protect the rights of respondent Sevilla should the finding be that he has no more unpaid obligations to petitioner. Similarly, there is merit in petitioner's contention that the question of exclusiveness of the award is ailieged issue raised by the pleadings and therefore a matter of controversy, hence a preliminary mandatory injunction directing petitioner to issue respondent Sevilla a certificate of authority to import Virginia leaf tobacco and at the same time restraining petitioner from issuing a similar certificate of authority to others is premature and improper. The sole object of a preliminary injunction is to preserve the status quo until the merit can be heard. It is the last actual peaceable uncontested status which precedes the pending controversy (Rodulfo v. Alfonso, L-144, 76 Phil. 225), in the instant case, before the Case No. Q-10351 was filed in the Court of First Instance of Rizal. Consequently, instead of operating to preserve the status quo until the parties' rights can be fairly and fully investigated and determined (De los Reyes v. Elepano, et al., 93 Phil. 239), the Orders of July 17, 1966 and March 3, 1967 serve to disturb the status quo. Injury is considered irreparable if it is of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law (Allundorff v. Abrahanson, 38 Phil. 585) or where there is no standard c,irrency which their amount can be measured with reasonable accuracy, that is, it is not susceptible of mathematical computation (SSC v. Bayona, et al., L13555, May 30, 1962). Any alleged damage suffered or might possibly be suffered by respondent Sevilla refers to expected profits and claimed by him in this complaint as damages in the amount of FIVE Million Pesos (P5,000,000.00), a damage that can be measured, susceptible of mathematical computation, not irreparable, nor do they necessitate the issuance of the Order of November 3, 1967. Conversely, there is truth in petitioner's claim that it will suffer greater damage than that suffered by respondent Sevilla if the Order of November 3, 1967 is not annulled. Petitioner's stock if not made available to other parties will require warehouse storage and servicing fees in the amount of P4,704,236.00 yearly or more than P9,000.000.00 in two years time. Parenthetically, the alleged insufficiency of a bond fixed by the Court is not by itself ailieged adequate reason for the annulment of the three assailed Orders. The filing of ailieged insufficient or defective bond does not dissolve absolutely and unconditionally ailieged injunction. The remedy in a proper case is to order party to file a sufficient bond (Municipality of La Trinidad v. CFI of Baguio - Benguet, Br. I, 123 SCRA 81). However, in the instant case this remedy is not sufficient to cure the defects already adverted to. PREMISES CONSIDERED, the petition is given due course and the assailed Orders of July 17, 1967 and November 3, 1967 and March 16, 1968 are ANNULLED and SET ASIDE; and the preliminary injunctions issued c,irrency this Court should continue until the termination of Case No. Q-10351 on the merits. SO ORDERED, Melencio-Herrera (Chairperson) and Padilla, JJ., concur. Sarmiento J., took no part.

G.R. No. 141323 June 8, 2005 DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners, vs. MELKI E. PEREZ, Respondent. DECISION AUSTRIA-MARTINEZ, J.: This resolves the petition for review on certiorari seeking the reversal of the Decision1 of the Court of Appeals (CA) promulgated on April 20, 1999 which reversed the Decision of the Regional Trial Court (RTC) of Panabo, Davao, Branch 34, in Civil Case No. 91-46; and the CA Resolution dated December 17, 1999 denying petitioners motion for reconsideration. The antecedent facts as aptly narrated by the CA are as follows: David Pelayo (Pelayo),by a Deed of Absolute Sale executed on January 11, 1988, conveyed to Melki Perez (Perez) two parcels of agricultural land (the lots) situated in Panabo, Davao which are portions of Lot 4192, Cad. 276 covered by OCT P-16873. Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is illegible witnessed the execution of the deed.

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Loreza, however, signed only on the third page in the space provided for witnesses on account of which Perez application for registration of the deed with the Office of the Register of Deeds in Tagum, Davao was denied. Perez thereupon asked Loreza to sign on the first and second pages of the deed but she refused, hence, he instituted on August 8, 1991 the instant complaint for specific performance against her and her husband Pelayo (defendants). The defendants moved to dismiss the complaint on the ground that it stated no cause of action, citing Section 6 of RA 6656 otherwise known as the Comprehensive Agrarian Reform Law which took effect on June 10, 1988 and which provides that contracts executed prior thereto shall "be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act." The questioned deed having been executed on January 10, 1988, the defendants claimed that Perez had at least up to September 10, 1988 within which to register the same, but as they failed to, it is not valid and, therefore, unenforceable. The trial court thus dismissed the complaint. On appeal to this Court, the dismissal was set aside and the case was remanded to the lower court for further proceedings. In their Answer, the defendants claimed that as the lots were occupied illegally by some persons against whom they filed an ejectment case, they and Perez who is their friend and known at the time as an activist/leftist, hence feared by many, just made it appear in the deed that the lots were sold to him in order to frighten said illegal occupants, with the intentional omission of Lorezas signature so that the deed could not be registered; and that the deed being simulated and bereft of consideration is void/inexistent. Perez countered that the lots were given to him by defendant Pelayo in consideration of his services as his attorney-in-fact to make the necessary representation and negotiation with the illegal occupants-defendants in the ejectment suit; and that after his relationship with defendant Pelayo became sour, the latter sent a letter to the Register of Deeds of Tagum requesting him not to entertain any transaction concerning the lots title to which was entrusted to Perez who misplaced and could [not] locate it. Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March 19, 1996, that the deed was without his wife Lorezas consent, hence, in light of Art. 166 of the Civil Code which provides: Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wifes consent . . . it is null and void. The trial court, finding, among others, that Perez did not possess, nor pay the taxes on the lots, that defendant Pelayo was indebted to Perez for services rendered and, therefore, the deed could only be considered as evidence of debt, and that in any event, there was no marital consent to nor actual consideration for the deed, held that the deed was null and void and accordingly rendered judgment the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered ordering and directing the defendants to pay plaintiff Melki Perez the sum of TEN THOUSAND (P10,000.00) Pesos as principal with 12% interest per annum starting from the date of filing of the complaint on August 1, 1991 until plaintiff is fully paid. The defendants shall likewise pay to plaintiff the sum of THREE THOUSAND (P3,000.00) as attorneys fees. The court further orders that the Deed of Absolute Sale, (Annex A) of the complaint and (Annex C) of the plaintiffs Motion for Summary Judgment is declared null and void and without force and it is likewise removed as a cloud over defendants title and property in suit. . . ."2 The RTC Decision was appealed by herein respondent Perez to the CA. Petitioners failed to file their appellees brief. The CA then promulgated its Decision on April 20, 1999 whereby it ruled that by Lorenzas signing as witness to the execution of the deed, she had knowledge of the transaction and is deemed to have given her consent to the same; that herein petitioners failed to adduce sufficient proof to overthrow the presumption that there was consideration for the deed, and that petitioner David Pelayo, being a lawyer, is presumed to have acted with due care and to have signed the deed with full knowledge of its contents and import. The CA reversed and set aside the RTC Decision, declaring as valid and enforceable the questioned deed of sale and ordering herein petitioner Lorenza Pelayo to affix her signature on all pages of said document. Petitioners moved for reconsideration of the decision but the same was denied per Resolution dated December 17, 1999. The CA found said motion to have been filed out of time and ruled that even putting aside technicality, petitioners failed to present any ground bearing on the merits of the case to justify a reversal or setting aside of the decision. Hence, this petition for review on certiorari on the following grounds: 1. The CA erred in ignoring the specific provision of Section 6, in relation to Section 4 of R.A. No. 6657 otherwise known as the Comprehensive Agrarian Reform Law of 1988 which took effect on June 15, 1988 and which provides that contracts executed prior thereto shall "be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act." 2. The CA erred in holding that the deed of sale was valid and considering the P10,000.00 adjudged by the trial court as Perezs remuneration as the consideration for the deed of sale, instead of declaring the same as null and void for being fictitious or simulated and on the basis of Art. 491, Par. 2 of the New Civil Code which prohibits agents from acquiring by purchase properties from his principal under his charge. 3. The CA made a novel ruling that there was implied marital consent of the wife of petitioner David Pelayo. 4. Petitioners should have been allowed to file their appellees brief to ventilate their side, considering the existence of peculiar circumstances which prevented petitioners from filing said brief. On the other hand, respondent points out that the CA, in resolving the first appeal docketed as CA-G.R. SP No. 387003 brought by respondent assailing the RTC Order granting herein petitioners motion to dismiss, already ruled that under R.A. No. 6657, the sale or transfer of private agricultural land is allowed only when the area of the land being conveyed constitutes or is a part of, the landowner-seller retained area and when the total landholding of the purchasertransferee, including the property sold, does not exceed five (5) hectares; that in this case, the land in dispute is only 1.3 hectares and there is no proof that the transferees (herein respondent) total landholding inclusive of the subject land will exceed 5 hectares, the landholding ceiling prescribed by R.A. No. 6657; that the failure of respondent to register the instrument was not due to his fault or negligence but can be attributed to Lorenzas unjustified refusal to sign two pages of the deed despite several requests of respondent; and that therefore, the CA ruled that the deed of sale subject of this case is valid under R.A. No. 6657. Respondent further maintains that the CA correctly held in its assailed Decision that there was consideration for the contract and that Lorenza is deemed to have given her consent to the deed of sale. Respondent likewise opines that the CA was right in denying petitioners motion for reconsideration where they prayed that they be allowed to file their appellees brief as their counsel failed to file the same on account of said counsels failing health due to cancer of the

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liver. Respondent emphasized that in petitioners motion for reconsideration, they did not even cite any errors made by the CA in its Decision. The issues boil down to the question of whether or not the deed of sale was null and void on the following grounds: (a) for not complying with the provision in R.A. No. 6657 that such document must be registered with the Register of Deeds within three months after the effectivity of said law; (b) for lack of marital consent; (c) for being prohibited under Article 1491 (2) of the Civil Code; and (d) for lack of consideration. We rule against petitioners. The issue of whether or not the deed of sale is null and void under R.A. No. 6657, for respondents failure to register said document with the Register of Deeds within three months after the effectivity of R.A. No. 6657, had been resolved with finality by the CA in its Decision dated November 24, 1994 in CA-G.R. SP No. 38700.4 Herein petitioners no longer elevated said CA Decision to this Court and the same became final and executory on January 7, 1995.5 In said decision, the CA interpreted Section 4, in relation to Section 70 of R.A. No. 6657, to mean thus: . . . the proper interpretation of both sections is that under R.A. No. 6657, the sale or transfer of a private agricultural land is allowed only when said land area constitutes or is a part of the landowner-seller retained area and only when the total landholdings of the purchaser-transferee, including the property sold does not exceed five (5) hectares. Aside from declaring that the failure of respondent to register the deed was not of his own fault or negligence, the CA ruled that respondents failure to register the deed of sale within three months after effectivity of The Comprehensive Agrarian Reform Law did not invalidate the deed of sale as "the transaction over said property is not proscribed by R.A. No. 6657." Thus, under the principle of law of the case, said ruling of the CA is now binding on petitioners.1avvph!1 Such principle was elucidated in Cucueco vs. Court of Appeals,6 to wit: Law of the case has been defined as the opinion delivered on a former appeal. It is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. Petitioners not having questioned the Decision of the CA dated November 24, 1994 which then attained finality, the ruling that the deed of sale subject of this case is not among the transactions deemed as invalid under R.A. No. 6657, is now immutable. We agree with the CA ruling that petitioner Lorenza, by affixing her signature to the Deed of Sale on the space provided for witnesses, is deemed to have given her implied consent to the contract of sale. Sale is a consensual contract that is perfected by mere consent, which may either be express or implied.7 A wifes consent to the husbands disposition of conjugal property does not always have to be explicit or set forth in any particular document, so long as it is shown by acts of the wife that such consent or approval was indeed given.8 In the present case, although it appears on the face of the deed of sale that Lorenza signed only as an instrumental witness, circumstances leading to the execution of said document point to the fact that Lorenza was fully aware of the sale of their conjugal property and consented to the sale. In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988, they have been having serious problems, including threats to the life of petitioner David Pelayo, due to conflicts with the illegal occupants of the property in question, so that respondent, whom many feared for being a leftist/activist, offered his help in driving out said illegal occupants. Human experience tells us that a wife would surely be aware of serious problems such as threats to her husbands life and the reasons for such threats. As they themselves stated, petitioners problems over the subject property had been going on for quite some time, so it is highly improbable for Lorenza not to be aware of what her husband was doing to remedy such problems. Petitioners do not deny that Lorenza Pelayo was present during the execution of the deed of sale as her signature appears thereon. Neither do they claim that Lorenza Pelayo had no knowledge whatsoever about the contents of the subject document. Thus, it is quite certain that she knew of the sale of their conjugal property between her husband and respondent. Under the rules of evidence, it is presumed that a person takes ordinary care of his concerns.10 Petitioners did not even attempt to overcome the aforementioned presumption as no evidence was ever presented to show that Lorenza was in any way lacking in her mental faculties and, hence, could not have fully understood the ramifications of signing the deed of sale. Neither did petitioners present any evidence that Lorenza had been defrauded, forced, intimidated or threatened either by her own husband or by respondent into affixing her signature on the subject document. If Lorenza had any objections over the conveyance of the disputed property, she could have totally refrained from having any part in the execution of the deed of sale. Instead, Lorenza even affixed her signature thereto. Moreover, under Article 173, in relation to Article 166, both of the New Civil Code, which was still in effect on January 11, 1988 when the deed in question was executed, the lack of marital consent to the disposition of conjugal property does not make the contract void ab initio but merely voidable. Said provisions of law provide: Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal property without the wifes consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same. ... Art. 173. 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. Hence, it has been held that the contract is valid until the court annuls the same and only upon an action brought by the wife whose consent was not obtained.11 In the present case, despite respondents repeated demands for Lorenza to affix her signature on all the pages of the deed of sale, showing respondents insistence on enforcing said contract, Lorenza still did not file a case for annulment of the deed of sale. It was only when respondent filed a complaint for specific performance on August 8, 1991 when petitioners brought up Lorenzas alleged lack of consent as an affirmative defense. Thus, if the transaction was indeed entered into without Lorenzas consent, we find it quite puzzling why for more than three and a half years, Lorenza did absolutely nothing to seek the nullification of the assailed contract. The foregoing circumstances lead the Court to believe that Lorenza knew of the full import of the transaction between respondent and her husband; and, by affixing her signature on the deed of sale, she, in effect, signified her consent to the disposition of their conjugal property. With regard to petitioners asseveration that the deed of sale is invalid under Article 1491, paragraph 2 of the New Civil Code, we find such argument unmeritorious. Article 1491 (2) provides:

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Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: ... (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; ... In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas, designated one of her sons as the administrator of several parcels of her land. The landowner subsequently executed a Deed of Certification of Sale of Unregistered Land, conveying some of said land to her son/administrator. Therein, we held that: Under paragraph (2) of the above article, the prohibition against agents purchasing property in their hands for sale or management is not absolute. It does not apply if the principal consents to the sale of the property in the hands of the agent or administrator. In this case, the deeds of sale signed by Iluminada Abiertas shows that she gave consent to the sale of the properties in favor of her son, Rufo, who was the administrator of the properties. Thus, the consent of the principal Iluminada Abiertas removes the transaction out of the prohibition contained in Article 1491(2).13 The above-quoted ruling is exactly in point with this case before us. Petitioners, by signing the Deed of Sale in favor of respondent, are also deemed to have given their consent to the sale of the subject property in favor of respondent, thereby making the transaction an exception to the general rule that agents are prohibited from purchasing the property of their principals. Petitioners also argue that the CA erred in ruling that there was consideration for the sale. We find no error in said appellate courts ruling. The element of consideration for the sale is indeed present. Petitioners, in adopting the trial courts narration of antecedent facts in their petition,14 thereby admitted that they authorized respondent to represent them in negotiations with the "squatters" occupying the disputed property and, in consideration of respondents services, they executed the subject deed of sale. Aside from such services rendered by respondent, petitioners also acknowledged in the deed of sale that they received in full the amount of Ten Thousand Pesos. Evidently, the consideration for the sale is respondents services plus the aforementioned cash money. Petitioners contend that the consideration stated in the deed of sale is excessively inadequate, indicating that the deed of sale was merely simulated. We are not persuaded. Our ruling in Buenaventura vs. Court of Appeals15 is pertinent, to wit: . . . Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. . . . As we stated in Vales vs. Villa: Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of persons who are not legally incompetent. Courts operate not because one person has been defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a violation of the law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it.16 Verily, in the present case, petitioners have not presented proof that there has been fraud, mistake or undue influence exercised upon them by respondent. It is highly unlikely and contrary to human experience that a layman like respondent would be able to defraud, exert undue influence, or in any way vitiate the consent of a lawyer like petitioner David Pelayo who is expected to be more knowledgeable in the ways of drafting contracts and other legal transactions. Furthermore, in their Reply to Respondents Memorandum,17 petitioners adopted the CAs narration of fact that petitioners stated in a letter they sent to the Register of Deeds of Tagum that they have entrusted the titles over subject lots to herein respondent. Such act is a clear indication that they intended to convey the subject property to herein respondent and the deed of sale was not merely simulated or fictitious. Lastly, petitioners claim that they were not able to fully ventilate their defense before the CA as their lawyer, who was then suffering from cancer of the liver, failed to file their appellees brief. Thus, in their motion for reconsideration of the CA Decision, they prayed that they be allowed to submit such appellees brief. The CA, in its Resolution dated December 17, 1999, stated thus: By movant-defendant-appellees own information, his counsel received a copy of the decision on May 5, 1999. He, therefore, had fifteen (15) days from said date or up to May 20, 1999 to file the motion. The motion, however, was sent through a private courier and, therefore, considered to have been filed on the date of actual receipt on June 17, 1999 by the addressee Court of Appeals, was filed beyond the reglementary period. Technicality aside, movant has not proffered any ground bearing on the merits of the case why the decision should be set aside.1awphi1 Petitioners never denied the CA finding that their motion for reconsideration was filed beyond the fifteen-day reglementary period. On that point alone, the CA is correct in denying due course to said motion. The motion having been belatedly filed, the CA Decision had then attained finality. Thus, in Abalos vs. Philex Mining Corporation,18 we held that: . . . Nothing is more settled in law than that once a judgment attains finality it thereby becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land. Moreover, it is pointed out by the CA that said motion did not present any defense or argument on the merits of the case that could have convinced the CA to reverse or modify its Decision. We have consistently held that a petitioners right to due process is not violated where he was able to move for reconsideration of the order or decision in question.19 In this case, petitioners had the opportunity to fully expound on their defenses through a motion for reconsideration. Petitioners did file such motion but they wasted such opportunity by failing to present therein whatever errors they believed the CA had committed in its Decision. Definitely, therefore, the denial of petitioners motion for reconsideration, praying that they be allowed to file appellees brief, did not infringe petitioners right to due process as any issue that petitioners wanted to raise could and should have been contained in said motion for reconsideration. IN VIEW OF THE FOREGOING, the petition is DENIED and the Decision of the Court of Appeals dated April 20, 1999 and its Resolution dated December 17, 1999 are hereby AFFIRMED. SO ORDERED. MA. ALICIA AUSTRIA-MARTINEZ Associate Justice WE CONCUR:

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G.R. No. L-25494 June 14, 1972 NICOLAS SANCHEZ, plaintiff-appellee, vs. SEVERINA RIGOS, defendant-appellant. Santiago F. Bautista for plaintiff-appellee. Jesus G. Villamar for defendant-appellant. CONCEPCION, C.J.:p Appeal from a decision of the Court of First Instance of Nueva Ecija to the Court of Appeals, which certified the case to Us, upon the ground that it involves a question purely of law. The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly described in Transfer Certificate of Title No. NT-12528 of said province, within two (2) years from said date with the understanding that said option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Inasmuch as several tenders of payment of the sum of Pl,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija and commenced against the latter the present action, for specific performance and damages. After the filing of defendant's answer admitting some allegations of the complaint, denying other allegations thereof, and alleging, as special defense, that the contract between the parties "is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void" on February 11, 1964, both parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings. Accordingly, on February 28, 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum judicially consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorney's fees, and other costs. Hence, this appeal by Mrs. Rigos. This case admittedly hinges on the proper application of Article 1479 of our Civil Code, which provides: ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. In his complaint, plaintiff alleges that, by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option, copy of which was annexed to said pleading as Annex A thereof and is quoted on the margin. 1 Hence, plaintiff maintains that the promise contained in the contract is "reciprocally demandable," pursuant to the first paragraph of said Article 1479. Although defendant had really "agreed, promised and committed" herself to sell the land to the plaintiff, it is not true that the latter had, in turn, "agreed and committed himself " to buy said property. Said Annex A does not bear out plaintiff's allegation to this effect. What is more, since Annex A has been made "an integral part" of his complaint, the provisions of said instrument form part "and parcel" 2 of said pleading. The option did not impose upon plaintiff the obligation to purchase defendant's property. Annex A is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy. And both parties so understood it, as indicated by the caption, "Option to Purchase," given by them to said instrument. Under the provisions thereof, the defendant "agreed, promised and committed" herself to sell the land therein described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land. Relying upon Article 1354 of our Civil Code, the lower court presumed the existence of said consideration, and this would seem to be the main factor that influenced its decision in plaintiff's favor. It should be noted, however, that: (1) Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers to "sales" in particular, and, more specifically, to "an accepted unilateral promise to buy or to sell." In other words, Article 1479 is controlling in the case at bar. (2) In order that said unilateral promise may be "binding upon the promisor, Article 1479 requires the concurrence of a condition, namely, that the promise be "supported by a consideration distinct from the price." Accordingly, the promisee can not compel the promisor to comply with the promise, unless the former establishes the existence of said distinct consideration. In other words, the promisee has the burden of proving such consideration. Plaintiff herein has not even alleged the existence thereof in his complaint. (3) Upon the other hand, defendant explicitly averred in her answer, and pleaded as a special defense, the absence of said consideration for her promise to sell and, by joining in the petition for a judgment on the pleadings, plaintiff has impliedly admitted the truth of said averment in defendant's answer. Indeed as early as March 14, 1908, it had been held, in Bauermann v. Casas, 3 that: One who prays for judgment on the pleadings without offering proof as to the truth of his own allegations, and without giving the opposing party an opportunity to introduce evidence, must be understood to admit the truth of all the material and relevant allegations of the opposing party, and to rest his motion for judgment on those allegations taken together with such of his own as are admitted in the pleadings. (La Yebana Company vs. Sevilla, 9 Phil. 210). (Emphasis supplied.) This view was reiterated in Evangelista v. De la Rosa 4 and Mercy's Incorporated v. Herminia Verde. 5 Squarely in point is Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 6 from which We quote: The main contention of appellant is that the option granted to appellee to sell to it barge No. 10 for the sum of P30,000 under the terms stated above has no legal effect because it is not supported by any consideration and in support thereof it invokes article 1479 of the new Civil Code. The article provides: "ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price." On the other hand, Appellee contends that, even granting that the "offer of option" is not supported by any consideration, that option became binding on appellant when the appellee gave notice to it of its acceptance, and that having accepted it within the period of option, the offer can no longer be withdrawn and in any event such withdrawal is ineffective. In support this contention, appellee invokes article 1324 of the Civil Code which provides:

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"ART. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn any time before acceptance by communicating such withdrawal, except when the option is founded upon consideration as something paid or promised." There is no question that under article 1479 of the new Civil Code "an option to sell," or "a promise to buy or to sell," as used in said article, to be valid must be "supported by a consideration distinct from the price." This is clearly inferred from the context of said article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported by consideration. In other words, "an accepted unilateral promise can only have a binding effect if supported by a consideration which means that the option can still be withdrawn, even if accepted, if the same is not supported by any consideration. It is not disputed that the option is without consideration. It can therefore be withdrawn notwithstanding the acceptance of it by appellee. It is true that under article 1324 of the new Civil Code, the general rule regarding offer and acceptance is that, when the offerer gives to the offeree a certain period to accept, "the offer may be withdrawn at any time before acceptance" except when the option is founded upon consideration, but this general rule must be interpreted as modified by the provision of article 1479 above referred to, which applies to "a promise to buy and sell" specifically. As already stated, this rule requires that a promise to sell to be valid must be supported by a consideration distinct from the price. We are not oblivious of the existence of American authorities which hold that an offer, once accepted, cannot be withdrawn, regardless of whether it is supported or not by a consideration (12 Am. Jur. 528). These authorities, we note, uphold the general rule applicable to offer and acceptance as contained in our new Civil Code. But we are prevented from applying them in view of the specific provision embodied in article 1479. While under the "offer of option" in question appellant has assumed a clear obligation to sell its barge to appellee and the option has been exercised in accordance with its terms, and there appears to be no valid or justifiable reason for appellant to withdraw its offer, this Court cannot adopt a different attitude because the law on the matter is clear. Our imperative duty is to apply it unless modified by Congress. However, this Court itself, in the case of Atkins, Kroll and Co., Inc. v. Cua Hian Tek, 8 decided later thatSouthwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 9 saw no distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral promise to sell similar to the one sued upon here was involved, treating such promise as an option which, although not binding as a contract in itself for lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon acceptance. Speaking through Associate Justice, later Chief Justice, Cesar Bengzon, this Court said: Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to buy later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale. Lastly, even supposing that Exh. A granted an option which is not binding for lack of consideration, the authorities hold that: "If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale, even though the option was not supported by a sufficient consideration. ... . (77 Corpus Juris Secundum, p. 652. See also 27 Ruling Case Law 339 and cases cited.) "It can be taken for granted, as contended by the defendant, that the option contract was not valid for lack of consideration. But it was, at least, an offer to sell, which was accepted by letter, and of the acceptance the offerer had knowledge before said offer was withdrawn. The concurrence of both acts the offer and the acceptance could at all events have generated a contract, if none there was before (arts. 1254 and 1262 of the Civil Code)." (Zayco vs. Serra, 44 Phil. 331.) In other words, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. This view has the advantage of avoiding a conflict between Articles 1324 on the general principles on contracts and 1479 on sales of the Civil Code, in line with the cardinal rule of statutory construction that, in construing different provisions of one and the same law or code, such interpretation should be favored as will reconcile or harmonize said provisions and avoid a conflict between the same. Indeed, the presumption is that, in the process of drafting the Code, its author has maintained a consistent philosophy or position. Moreover, the decision in Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific Co., 10 holding that Art. 1324 is modifiedby Art. 1479 of the Civil Code, in effect, considers the latter as an exception to the former, and exceptions are not favored, unless the intention to the contrary is clear, and it is not so, insofar as said two (2) articles are concerned. What is more, the reference, in both the second paragraph of Art. 1479 and Art. 1324, to an option or promise supported by or founded upon a consideration, strongly suggests that the two (2) provisions intended to enforce or implement the same principle. Upon mature deliberation, the Court is of the considered opinion that it should, as it hereby reiterates the doctrine laid down in the Atkins, Kroll & Co. case, and that, insofar as inconsistent therewith, the view adhered to in theSouthwestern Sugar & Molasses Co. case should be deemed abandoned or modified. WHEREFORE, the decision appealed from is hereby affirmed, with costs against defendantappellant Severina Rigos. It is so ordered. Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Barredo and Makasiar, JJ., concur. Castro, J., took no part.

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Separate Opinions ANTONIO, J., concurring: I concur in the opinion of the Chief Justice. I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co., 1 which holds that an option to sell can still be withdrawn, even if accepted, if the same is not supported by any consideration, and the reaffirmance of the doctrine in Atkins, Kroll & Co., Inc. vs. Cua Hian Tek, 2 holding that "an option implies ... the legal obligation to keep the offer (to sell) open for the time specified;" that it could be withdrawn before acceptance, if there was no consideration for the option, but once the "offer to sell" is accepted, a bilateral promise to sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser. In other words, if the option is given without a consideration, it is a mere offer to sell, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale. The concurrence of both acts the offer and the acceptance could in such event generate a contract. While the law permits the offeror to withdraw the offer at any time before acceptance even before the period has expired, some writers hold the view, that the offeror can not exercise this right in an arbitrary or capricious manner. This is upon the principle that an offer implies an obligation on the part of the offeror to maintain in such length of time as to permit the offeree to decide whether to accept or not, and therefore cannot arbitrarily revoke the offer without being liable for damages which the offeree may suffer. A contrary view would remove the stability and security of business transactions. 3 In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of Pl,510.00before any withdrawal from the contract has been made by the Defendant (Severina Rigos)." Since Rigos' offer sell was accepted by Sanchez, before she could withdraw her offer, a bilateral reciprocal contract to sell and to buy was generated. liable for damages which the offeree may suffer. A contrary view would remove the stability and security of business transactions. 3 In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of Pl,510.00before any withdrawal from the contract has been made by the Defendant (Severina Rigos)." Since Rigos' offer sell was accepted by Sanchez, before she could withdraw her offer, a bilateral reciprocal contract to sell and to buy was generated. Footnotes CONCEPCION, C.J.: 1 OPTION TO PURCHASE KNOW ALL MEN BY THESE PRESENTS: I, SEVERINA RIGOS, Filipino, of legal age, widow, with residence at San Jose, Nueva Ecija do by these presents WITNESSETH: That I am the owner of that property covered by Transfer Certificate of Title No. NT-12528 of the Land Records of Nueva Ecija, my ownership thereof is evidenced by a Deed of Absolute Sale in my favor known as Doc. No. 47; Page No. 12; Book No. 1; Series of 1961 of Notary Public, A. Tomas; That I have agreed, promised and committed and do hereby agree, promise and commit to sell the property concerned by the above numbered certificate of title to NICOLAS SANCHEZ, Filipino, of legal age, married to Engracia Barrantes, with residence at San Jose, Nueva Ecija, within a period of two (2) years from the execution of this instrument for the amount of One Thousand Five Hundred Ten Pesos (Pl,510.00) Philippine Currency; That if within the period of two (2) years from the execution of this instrument said Nicolas Sanchez shall fail to exercise his right to buy the property under this option, then his right is deemed terminated and elapsed and that I shall no longer be compelled to sell to him the property; That I, NICOLAS SANCHEZ, whose personal circumstances are mentioned above hereby agree and conform with all the conditions set forth in this option to purchase executed in my favor; that I bind myself with all the terms and conditions. IN WITNESS WHEREOF, the parties have hereunto affixed their signatures below this 3rd day of April, 1961, at San Jose, Nueva Ecija. (Sgd.) Nicolas SANCHEZ (Sgd.) SEVERINA RIGOS Res. Cert. No. A-3914416 Res. Cert. No. A-2977240 Issued at San Jose, N.E. Issued at San Jose, N.E. on April 3, 1961 on April 1, 1961 SIGNED IN THE PRESENCE OF: (Sgd.) F. R. Bautista (Sgd.) Hipolito Francisco 2 As alleged in paragraph 5 of the Complaint.

Separate Opinions ANTONIO, J., concurring: I concur in the opinion of the Chief Justice. I fully agree with the abandonment of the view previously adhered to in Southwestern Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co., 1 which holds that an option to sell can still be withdrawn, even if accepted, if the same is not supported by any consideration, and the reaffirmance of the doctrine in Atkins, Kroll & Co., Inc. vs. Cua Hian Tek, 2 holding that "an option implies ... the legal obligation to keep the offer (to sell) open for the time specified;" that it could be withdrawn before acceptance, if there was no consideration for the option, but once the "offer to sell" is accepted, a bilateral promise to sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser. In other words, if the option is given without a consideration, it is a mere offer to sell, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale. The concurrence of both acts the offer and the acceptance could in such event generate a contract. While the law permits the offeror to withdraw the offer at any time before acceptance even before the period has expired, some writers hold the view, that the offeror can not exercise this right in an arbitrary or capricious manner. This is upon the principle that an offer implies an obligation on the part of the offeror to maintain in such length of time as to permit the offeree to decide whether to accept or not, and therefore cannot arbitrarily revoke the offer without being