You are on page 1of 26

G.R. No.

L-31018 June 29, 1973


LORENZO VELASCO AND SOCORRO J. VELASCO, petitioners, vs. HONORABLE
COURT OF APPEALS and MAGDALENA ESTATE, INC., respondents.
CASTRO, J.:
This is a petition for certiorari and mandamus filed by Lorenzo Velasco and
Socorro J. Velasco (hereinafter referred to as the petitioners) against the resolution
of the Court of Appeals dated June 28, 1969 in CA-G.R. 42376, which ordered the
dismissal of the appeal interposed by the petitioners from a decision of the Court
of First Instance of Quezon City on the ground that they had failed seasonably to
file their printed record on appeal.
Under date of November 3, 1968, the Court of First Instance of Quezon City, after
hearing on the merits, rendered a decision in civil case 7761, dismissing the
complaint filed by the petitioners against the Magdalena Estate, Inc. (hereinafter
referred to as the respondent) for the purpose of compelling specific performance
by the respondent of an alleged deed of sale of a parcel of residential land in favor
of the petitioners. The basis for the dismissal of the complaint was that the
alleged purchase and sale agreement "was not perfected".
On November 18, 1968, after the perfection of their appeal to the Court of
Appeals, the petitioners received a notice from the said court requiring them to
file their printed record on appeal within sixty (60) days from receipt of said
notice. This 60-day term was to expire on January 17, 1969.
Allegedly under date of January 15, 1969, the petitioners allegedly sent to the
Court of Appeals and to counsel for the respondent, by registered mail allegedly
deposited personally by its mailing clerk, one Juanito D. Quiachon, at the Makati
Post Office, a "Motion For Extension of Time To File Printed Record on Appeal." The
extension of time was sought on the ground "of mechanical failures of the printing
machines, and the voluminous printing jobs now pending with the Vera Printing
Press. ..."
On February 10, 1969, the petitioners filed their printed record on appeal in the
Court of Appeals. Thereafter, the petitioners received from the respondent a
motion filed on February 8, 1969 praying for the dismissal of the appeal on the
ground that the petitioners had failed to file their printed record on appeal on
time. Acting on the said motion to dismiss the appeal, the Court of Appeals, on
February 25, 1969, issued the following resolution:
Upon consideration of the motion of counsel for defendant-appellee praying on the
grounds therein stated that the appeal be dismissed in accordance with Rules of
Court, and of the opposition thereto filed by counsel for plaintiff-appellants, the
Court RESOLVED to DENY the said motion to dismiss.
Upon consideration of the registry-mailed motion of counsel for plaintiffs
appellants praying on the grounds therein stated for an extension of 30 days from
January 15, 1969 within which to file the printed record on appeal, the Court
RESOLVED to GRANT the said motion and the printed record on appeal which has
already been filed is ADMITTED.
On March 11, 1969, the respondent prayed for a reconsideration of the abovementioned resolution, averring that the Court of Appeals had been misled bythe
petitioners' "deceitful allegation that they filed the printed record on appeal within
the reglementary period," because according to a certification issued by the

postmaster of Makati, Rizal, the records of the said post office failed to reveal that
on January 15, 1969 the date when their motion for extension of time to file the
printed record on appeal was supposedly mailed by the petitioners there was
any letter deposited there by the petitioners' counsel. The petitioners opposed the
motion for reconsideration. They submitted to the appellate court the registry
receipts (numbered 0215 and 0216), both stampled January 15, 1969, which were
issued by the receiving clerk of the registry section of the Makati Post Office
covering the mails for the disputed motion for extension of time to file their
printed record on appeal and the affidavit of its mailing clerk Juanito D. Quiachon,
to prove that their motion for extension was timely filed and served on the Court
of Appeals and the respondent, respectively. After several other pleadings and
manifestations were filed by the parties relative to the issue raised by the
respondent's above-mentioned motion for reconsideration, the Court of Appeals
promulgated on June 28, 1969, its questioned resolution, the dispositive portion of
which reads as follows:
WHEREFORE, the motion for reconsideration filed on March 11, 1969 is granted
and appeal interposed by plaintiff-appellants from the judgment of the court below
is hereby dismissed for their failure to file their printed Record on Appeal within
the period authorized by this Court. Atty. Patrocino R. Corpuz [counsel of the
petitioner] is required to show cause within ten (10) days from notice why he
should not be suspended from the practice of his necessary investigation against
Juanito D. Quiachon of the Salonga, Ordoez, Yap, Sicat & Associates Law Office,
Suite 319 337 Rufino Building, Ayala Avenue, Makati Post Office, to file the
appropriate criminal action against them as may be warranted in the premises,
and to report to this Court within thirty (30) days the action he has taken thereon.
The foregoing desposition was based on the following findings of the Court of
Appeals:
An examination of the Rollo of this case, particularly the letter envelope on page
26 thereof, reveals that on January 15, 1969, plaintiffs supposedly mailed via
registered mail from the Post Office of Makati, Rizal their motion for extension of
30 days from that date to file their printed Record on Appeal, under registered
letter No. 0216. However, in an official certification, the Postmaster of Makati
states that the records of his office disclose: (a) that there were no registered
letters Nos. 0215 and 0216 from the Salonga, Ordoez, Yap, Sicat & Associates
addressed to Atty. Abraham F. Sarmiento, 202 Magdalena Building, Espaa Ext.,
Quezon City, and to the Court of Appeals, Manila, respectively, that were posted in
the Post Office of Makati, Rizal, on January 15, 1969; (b) that there is a registered
letter numbered 215 but that the same was posted on January 3, 1969 by
Enriqueta Amada of 7 Angel, Pasillo F-2, Cartimar, Pasay City, as sender, and Giral
Amasan of Barrio Cabuniga-an, Sto. Nio, Samar, as addressee; and that there is
also a registered letter numbered 216; but that the same was likewise posted on
January 3, 1969 with E.B.A. Construction of 1049 Belbar Building, Metropolitan,
Pasong Tamo, Makati, as sender, and Pres. R. Nakaya of the United Pacific Trading
Co., Ltd., 79, 6 Chamo, Nakatu, Yokohari, Japan, as addressee; (c) that on January
15, 1969, the registered letters posted at the Makati Post Office were numbered
consecutively from 1001-2225, inclusive, and none of these letters was addressed
to Atty. Abraham F. Sarmiento of to the Court of Appeals; (d) that in Registry Bill
Book No. 30 for Quezon City as well as that Manila, corresponding to February 7,
1969, there are entries covering registered letters Nos. 0215 and 0216 for
dispatch to Quezon City and Manila, respectively; however, such registry book for
February 7, 1969 shows no letters with such numbers posted on the said date.
The Acting Postmaster of the Commercial Center Post Office of Makati, Rizal,
further certifies that "Registry Receipts Nos. 0215 and 0216 addressed to Atty.

Abraham F. Sarmiento of the Magdalena Estate, Quezon City and the Honorable
Court of Appeals, respectively, does not appear in our Registry Record Book which
was allegedly posted at this office on January 15, 1969."
From the foregoing, it is immediately apparent that the motion for extension of
time to file their Record on Appeal supposedly mailed by the plaintiffs on January
15, 1969 was not really mailed on that date but evidently on a date much later
than January 15, 1969. This is further confirmed by the affidavit of Flaviano
Malindog, a letter carrier of the Makati Post Office, which defendant attached as
Annex 1 to its supplemental reply to plaintiffs' opposition to the motion for
reconsideration. In his said affidavit, Malindog swore among others:
'That on February 7, 1969, between 12:00 o'clock noon and 1:00 o'clock in the
afternoon, JUANITO D. QUIACHON approached me at the Makati Post Office and
talked to me about certain letters which his employer had asked him to mail and
that I should help him do something about the matter; but I asked him what they
were all about, and he told me that they were letters for the Court of Appeals and
for Atty. Abraham Sarmiento and that his purpose was to show that they were
posted on January 15, 1969; that I inquired further, and he said that the letters
were not so important and that his only concern was to have them post maker
January 15, 1969;
'That believing the word of JUANITO D. QUIACHON that the letters were not really
important I agreed to his request; whereupon, I got two (2) registry receipts from
an old registry receipt booklet which is no longer being used and I numbered them
0215 for the letter addressed to Atty. Abraham Sarmiento in Quezon City and 0216
for the letter addressed to the Court of Appeals, Manila; that I placed the same
numbering on the respective envelopes containing the letters; and that I also post
maker them January 15, 1969;
'That to the best of my recollection I wrote the correct date of posting, February 7,
1969, on the back of one or both of the registry receipts above mentioned;
'That the correct date of posting, February 7, 1969 also appears in the Registry Bill
Books for Quezon City and Manila where I entered the subject registered letters;
Of course, plaintiff's counsel denies the sworn statement of Malindog and even
presented the counter-affidavit of one of his clerk by the name of Juanito D.
Quiachon. But between Malindog, whose sworn statement is manifestly a
declaration against interest since he can be criminally prosecuted for falsification
on the basis thereof, and that of Quiachon, whose statement is self-serving, we
are very much inclined to give greater weight and credit to the former. Besides,
plaintiffs have not refuted the facts disclosed in the two (2) official certifications
above mentioned by the Postmakers of Makati, Rizal. These two (2) certifications
alone, even without to move this Court to reconsider its resolution of February 25,
1969 and order the dismissal of this appeal.
On September 5, 1969, after the rendition of the foregoing resolution, the Court of
Appeals promulgated another, denying the motion for reconsideration of the
petitioner, but, at the same time, accepting as satisfactory the explanation of Atty.
Patrocino R. Corpuz why he should not be suspended from the practice of the legal
profession.
On September 20, 1969, the First Assistant Fiscal of Rizal notified the Court of
Appeals that he had found a prima facie case against Flaviano C. Malindog and
would file the corresponding information for falsification of public documents
against him. The said fiscal, however, dismissed the complaint against Quiachon

for lack of sufficient evidence. The information subsequently filed against


Malindog by the first Assistance Fiscal of Rizal reads as follow:
That on or about the 7th day of February 1969, in the municipality of Makati,
province of Rizal, and a place within the jurisdiction of this Honorable Court, the
above-named accused, conspiring and confederating together and mutually
helping and aiding with John Doe, whose true identity and present whereabout is
still unknown, did then and there willfully, unlawfully and feloniously falsify two
registry receipts which are public documents by reason of the fact that said
registry receipts are printed in accordance with the standard forms prescribed by
the Bureau of Posts, committed as follows: the above-named accused John Doe,
on the date above-mentioned approached and induced the accused Malindog, a
letter-carrier at the Makati Post Office, to postmark on Abraham Sarmiento in
Quezon City, and the other to the Court of Appeals, Manila, and the accused
Malindog, acceding to the inducement of, and in conspiracy with, his co-accused
John Doe, did then and there willfully and feloniously falsify said registry receipts
of the Makati Post Office on January 15, 1969, thereby making it appear that the
said sealed envelopes addressed to Atty. Sarmiento and the Court of Appeals were
actually posted, and causing it to appear that the Postmaster of Makati
participated therein by posting said mail matters on January 15, 1969, when in
truth and in fact he did not so participate.
The petitioner contend that in promulgating its questioned resolution, the Court of
Appeals acted without or in excess of jurisdiction, or with such whimsical and
grave abuse of discretion as to amount to lack of jurisdiction, because (a) it
declared that the motion for extension of time to file the printed record on appeal
was not mailed on January 15, 1969, when, in fact, it was mailed on the record on
appeal was filed only on February 10, 1969, beyond the time authorized by the
appellate court, when the truth is that the said date of filing was within the 30-day
extension granted by it; (c) the adverse conclusion of the appellate court are not
supported by the records of the case, because the said court ignored the affidavit
of the mailing clerk of the petitioners' counsel, the registry receipts and
postmarked envelopes (citing Henning v. Western Equipment, 62 Phil. 579, and
Caltex Phil., Inc. v. Katipunan Labor Union, 52 O.G. 6209), and, instead, chose to
rely upon the affidavit of the mail carrier Malindog, which affidavit was prepared
by counsel for the respondent at the affiant himself so declared at the preliminary
investigation at the Fiscal's office which absolved the petitioners' counsel mailing
clerk Quiachon from any criminal liability; (d) section 1, Rule 50 of the Rules of
Court, which enumerates the grounds upon which the Court of Appeals may
dismiss an appeal, does not include as a ground the failure to file a printed record
on appeal; (e) the said section does not state either that the mismailing of a
motion to extend the time to file the printed record on appeal, assuming this to be
the case, may be a basis for the dismissal of the appeal; (f) the Court of Appeals
has no jurisdiction to revoke the extention of time to file the printed record on
appeal it had granted to the petitioners based on a ground not specified in section
1, Rule 50 of the Rules of Court; and (g) the objection to an appeal may be waived
as when the appellee has allowed the record on appeal to be printed and
approved (citing Moran, Vol. II, p. 519).
Some of the objections raised by the petitioners to the questioned resolution of
the Court of Appeals are obviously matters involving the correct construction of
our rules of procedure and, consequently, are proper subjects of an appeal by way
of certiorari under Rule 45 of the Rules of Court, rather than a special civil action
for certiorari under Rule 65. The petitioners, however, have correctly appreciated
the nature of its objections and have asked this Court to treat the instant petition
as an appeal by way of certiorari under Rule 45 "in the event ... that this
Honorable Supreme Court should deem that an appeal is an adequate remedy ..."

The nature of the case at bar permits, in our view, a disquisition of both types of
assignments.
We do not share the view of the petitioners that the Court of Appeals acted
without or in excess of jurisdiction or gravely abused its discretion in promulgating
the questioned resolution.
While it is true that stamped on the registry receipts 0215 and 0215 as well as on
the envelopes covering the mails in question is the date "January 15, 1969," this,
by itself, does not establish an unrebuttable presumption of the fact of date of
mailing. Henning and Caltex, cited by the petitioners, are not in point because the
specific adjective issue resolved in those cases was whether or not the date of
mailing a pleading is to be considered as the date of its filing. The issue in the
case at bar is whether or not the motion of the petitioners for extension of time to
file the printed record on appeal was, in point of fact, mailed (and, therefore, filed)
on January 15, 1969.
In resolving this issue in favor of the respondent, this Court finds, after a careful
study and appraisal of the pleadings, admissions and denials respectively adduced
and made by the parties, that the Court of Appeals did not gravely abuse its
discretion and did not act without or in excess of its jurisdiction. We share the view
of the appellate court that the certifications issued by the two postmasters of
Makati, Rizal and the sworn declaration of the mail carrier Malindog describing
how the said registry receipts came to be issued, are worthy of belief. It will be
observed that the said certifications explain clearly and in detail how it was
improbable that the petitioners' counsel in the ordinary course of official business,
while Malindog's sworn statement, which constitutes a very grave admission
against his own interest, provides ample basis for a finding that where official duty
was not performed it was at the behest of a person interested in the petitioners'
side of the action below. That at the preliminary investigation at the Fiscal's office,
Malindog failed to identify Quiachon as the person who induced him to issue
falsified receipts, contrary to what he declared in his affidavit, is of no moment
since the findings of the inquest fiscal as reflected in the information for
falsification filed against Malindog indicate that someone did induce Malindog to
make and issue false registry receipts to the counsel for the petitioners.
This Court held in Bello vs. Fernando 1 that the right to appeal is nota natural right
nor a part of due process; it is merely a statutory privilege, and may be exercised
only in the manner provided by law. In this connection, the Rule of Court expressly
makes it the duty of an appellant to file a printed record on appeal with the Court
of Appeals within sixty (60) record on appeal approved by the trial court has
already been received by the said court. Thus, section 5 of Rule 46 states:
Sec. 5. Duty of appellant upon receipt of notice. It shall be the duty of the
appellant within fifteen (15) days from the date of the notice referred to in the
preceding section, to pay the clerk of the Court of Appeals the fee for the
docketing of the appeal, and within sixty (60) days from such notice to submit to
the court forty (40) printed copies of the record on appeal, together with proof of
service of fifteen (15) printed copies thereof upon the appelee.
As the petitioners failed to comply with the above-mentioned duty which the Rules
of Court enjoins, and considering that, as found by the Court of Appeals, there was
a deliberate effort on their part to mislead the said Court in grating them an
extension of time within which to file their printed record on appeal, it stands to
reason that the appellate court cannot be said to have abused its discretion or to
have acted without or in excess of its jurisdiction in ordering the dismissal of their
appeal.

Our jurisprudence is replete with cases in which this Court dismissed an appeal on
grounds not mentioned specifically in Section 1, Rule 50 of the Rules of Court.
(See, for example, De la Cruz vs. Blanco, 73 Phil. 596 (1942); Government of the
Philippines vs. Court of Appeals, 108 Phil. 86 (1960); Ferinion vs. Sta. Romana, L25521, February 28, 1966, 16 SCRA 370, 375).
It will likewise be noted that inasmuch as the petitioners' motion for extension of
the period to file the printed record on appeal was belated filed, then, it is as
though the same were non-existent, since as this Court has already stated in
Baquiran vs. Court of Appeals, 2 "The motion for extension of the period for filing
pleadings and papers in court must be made before the expiration of the period to
be extended." The soundness of this dictum in matters of procedure is selfevident. For, were the doctrine otherwise, the uncertainties that would follow
when litigants are left to determine and redetermine for themselves whether to
seek further redress in court forthwith or take their own sweet time will result in
litigations becoming more unreable than the very grievances they are intended to
redness.
The argument raised by the petitioner that the objection to an appeal maybe
waived, as when the appellee allows the record on appeal to be printed and
approved is likewise not meritorious considering that the respondent did file a
motion in the Court of Appeals on February 8, 1969 praying for the dismissal of
the below of the petitioners had not yet filed their record on appeal and, therefore,
must be considered to have abandoned their appeal.
In further assailing the questioned resolution of the Court of Appeals, the
petitioners also point out that on the merits the equities of the instant case are in
their favor. A reading of the record, however, persuades us that the judgment a
quo is substantially correct and morally just.
The appealed decision of the court a quo narrates both the alleged and proven
facts of the dispute between the petitioners and the respondent, as follows:
This is a suit for specific performance filed by Lorenzo Velasco against the
Magdalena Estate, Inc. on the allegation that on November 29, 1962 the plaintiff
and the defendant had entered into a contract of sale (Annex A of the complaint)
by virtue of which the defendant offered to sell the plaintiff and the plaintiff in turn
agreed to buy a parcel of land with an area of 2,059 square meters more
particularly described as Lot 15, Block 7, Psd-6129, located at No. 39 corner 6th
Street and Pacific Avenue, New Manila, this City, for the total purchase price of
P100,000.00.
It is alleged by the plaintiff that the agreement was that the plaintiff was to give a
down payment of P10,000.00 to be followed by P20,000.00 and the balance of
P70,000.00 would be paid in installments, the equal monthly amortization of
which was to be determined as soon as the P30,000.00 down payment had been
completed. It is further alleged that the plaintiff paid down payment of P10,000.00
on November 29, 1962 as per receipt No. 207848 (Exh. "A")and that when on
January 8, 1964 he tendered to the defendant the payment of the additional
P20,000.00 to complete the P30,000.00 the defendant refused to accept and that
eventually it likewise refused to execute a formal deed of sale obviously agreed
upon. The plaintiff demands P25,000.00 exemplary damages, P2,000.00 actual
damages and P7,000.00 attorney's fees.
The defendant, in its Answer, denies that it has had any direct dealings, much
less, contractual relations with the plaintiff regarding the property in question, and

contends that the alleged contract described in the document attached to the
complaint as Annex A is entirely unenforceable under the Statute of Frauds; that
the truth of the matter is that a portion of the property in question was being
leased by a certain Socorro Velasco who, on November 29, 1962, went to the
office of the defendant indicated her desire to purchase the lot; that the defendant
indicated its willingness to sell the property to her at the price of P100,000.00
under the condition that a down payment of P30,000.00 be made, P20,000.00 of
which was to be paid on November 31, 1962, and that the balance of P70,000.00
including interest a 9% per annum was to be paid on installments for a period of
ten years at the rate of P5,381.32 on June 30 and December of every year until
the same shall have been fully paid; that on November 29, 1962 Socorro Velasco
offered to pay P10,000.00 as initial payment instead of the agreed P20,000.00 but
because the amount was short of the alleged P20,000.00 the same was accepted
merely as deposited and upon request of Socorro Velasco the receipt was made in
the name of her brother-in-law the plaintiff herein; that Socorro Velasco failed to
complete the down payment of P30,000.00 and neither has she paid any
installments on the balance of P70,000.00 up to the present time; that it was only
on January 8, 1964 that Socorro Velasco tendered payment of P20,000.00, which
offer the defendant refused to accept because it had considered the offer to sell
rescinded on account of her failure to complete the down payment on or before
December 31, 1962.
The lone witness for the plaintiff is Lorenzo Velasco, who exhibits the receipt,
Exhibits A, issued in his favor by the Magdalena Estate, Inc., in the sum of
P10,000.00 dated November 29, 1962. He also identifies a letter (Exh. B)of the
Magdalena Estate, Inc. addressed to him and his reply thereto. He testifies that
Socorro Velasco is his sister-in-law and that he had requested her to make the
necessary contacts with defendant referring to the purchase of the property in
question. Because he does not understand English well, he had authorized her to
negotiate with the defendant in her whenever she went to the office of the
defendant, and as a matter of fact, the receipt for the P10,000.00 down payment
was issued in his favor. The plaintiff also depends on Exhibit A to prove that there
was a perfected follows: "Earnest money for the purchase of Lot 15, Block 7, Psd6129, Area 2,059 square meters including improvements thereon P10,000.00."
At the bottom of Exhibit A the following appears: "Agreed price: P100,000.00,
P30,000.00 down payment, bal. in 10 years."
To prove that the Magdalena Estate, Inc. had been dealing all along with him and
not with his sister-in-law and that the Magdalena Estate, Inc. knew very well that
he was the person interested in the lot in question and not his sister-in-law, the
plaintiff offers in evidence five checks all drawn by him in favor of Magdalena
Estate, Inc. for payment of the lease of the property. ....
There does not seem to be any dispute regarding the fact that the Velasco family
was leasing this property from the Magdalena Estate, Inc. since December 29,
1961; that the Velasco family sometime in 1962 offered to purchase the lot as a
result of which Lorenzo Velasco thru Socorro Velasco made the P10,000.00 deposit
or, in the language of the defendant 'earnest money or down payment' as
evidenced by Exhibit A. The only matter that remains to be decided is whether the
talks between the Magdalena Estate, Inc. and Lorenzo Velasco either directly or
thru his sister-in-law Socorro Velasco ever ripened into a consummated sale. It is
the position of the defendant (1) that the sale was never consummated and (2)
that the contract is unenforceable under the Statute of Frauds.
The court a quo agreed with the respondent's (defendant therein) contention that
no contract of sale was perfected because the minds of the parties did not meet
"in regard to the manner of payment." The court a quo appraisal of this aspect of

the action below is correct. The material averments contained in the petitioners'
complaint themselves disclose a lack of complete "agreement in regard to the
manner of payment" of the lot in question. The complaint states pertinently:
4.
That plaintiff and defendant further agreed that
shall by P30,000.00, including the P10,000.00 partial
paragraph 3 hereof, and that upon completion of the
P30,000.00, the balance of P70,000.00 shall be said
defendant in 10 years from November 29, 1962;

the total down payment


payment mentioned in
said down payment of
by the plaintiff to the

5.
That the time within the full down payment of the P30,000.00 was to be
completed was not specified by the parties but the defendant was duly
compensated during the said time prior to completion of the down payment of
P30,000.00 by way of lease rentals on the house existing thereon which was
earlier leased by defendant to the plaintiff's sister-in-law, Socorro J. Velasco, and
which were duly paid to the defendant by checks drawn by plaintiff.
It is not difficult to glean from the aforequoted averments that the petitioners
themselves admit that they and the respondent still had to meet and agree on
how and when the down-payment and the installment payments were to be paid.
Such being the situation, it cannot, 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 unforceable contract of sale. 3 The fact, therefore, that the
petitioners delivered to the respondent the sum of P10,000 as part of the downpayment 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
article 1482 of the new Civil Code, as the petitioners themselves admit that some
essential matter the terms of payment still had to be mutually covenanted.
ACCORDINGLY, the instant petitioner is hereby denied. No pronouncement as to
costs.

G.R. No. L-116650

May 23, 1995

TOYOTA SHAW, INC., petitioner,


vs.
COURT OF APPEALS and LUNA L. SOSA, respondents.

Inc." It was also agreed upon by the parties that the balance of the purchase price
would be paid by credit financing through B.A. Finance, and for this Gilbert, on
behalf of his father, signed the documents of Toyota and B.A. Finance pertaining to
the application for financing.

At the heart of the present controversy is the document marked Exhibit "A" 1 for
the private respondent, which was signed by a sales representative of Toyota
Shaw, Inc. named Popong Bernardo. The document reads as follows:

The next day, 15 June 1989, Sosa and Gilbert went to Toyota to deliver the
downpayment of P100,000.00. They met Bernardo who then accomplished a
printed Vehicle Sales Proposal (VSP) No. 928, 2 on which Gilbert signed under the
subheading CONFORME. This document shows that the customer's name is "MR.
LUNA SOSA" with home address at No. 2316 Guijo Street, United Paraaque II; that
the model series of the vehicle is a "Lite Ace 1500" described as "4 Dr minibus";
that payment is by "installment," to be financed by "B.A.," 3 with the initial cash
outlay of P100,000.00 broken down as follows:

4 June 1989

a)

AGREEMENTS BETWEEN MR. SOSA


& POPONG BERNARDO OF TOYOTA
SHAW, INC.

downpayment

1.
all necessary documents will be submitted to TOYOTA SHAW, INC.
(POPONG BERNARDO) a week after, upon arrival of Mr. Sosa from the Province
(Marinduque) where the unit will be used on the 19th of June.

P 53,148.00

2.
1989.

insurance

DAVIDE, JR., J.:

the downpayment of P100,000.00 will be paid by Mr. Sosa on June 15,

b)

3.
the TOYOTA SHAW, INC. LITE ACE yellow, will be pick-up [sic] and
released by TOYOTA SHAW, INC. on the 17th of June at 10 a.m.

P 13,970.00

Very truly yours,

c)

(Sgd.) POPONG BERNARDO.

BLT registration fee

Was this document, executed and signed by the petitioner's sales representative,
a perfected contract of sale, binding upon the petitioner, breach of which would
entitle the private respondent to damages and attorney's fees? The trial court and
the Court of Appeals took the affirmative view. The petitioner disagrees. Hence,
this petition for review on certiorari.

The antecedents as disclosed in the decisions of both the trial court and the Court
of Appeals, as well as in the pleadings of petitioner Toyota Shaw, Inc. (hereinafter
Toyota) and respondent Luna L. Sosa (hereinafter Sosa) are as follows. Sometime
in June of 1989, Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was then a
seller's market and Sosa had difficulty finding a dealer with an available unit for
sale. But upon contacting Toyota Shaw, Inc., he was told that there was an
available unit. So on 14 June 1989, Sosa and his son, Gilbert, went to the Toyota
office at Shaw Boulevard, Pasig, Metro Manila. There they met Popong Bernardo, a
sales representative of Toyota.

Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June
1989 because he, his family, and a balikbayan guest would use it on 18 June 1989
to go to Marinduque, his home province, where he would celebrate his birthday on
the 19th of June. He added that if he does not arrive in his hometown with the new
car, he would become a "laughing stock." Bernardo assured Sosa that a unit would
be ready for pick up at 10:00 a.m. on 17 June 1989. Bernardo then signed the
aforequoted "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw,

accessories

P 1,067.00
CHMO fee

P 2,715.00
service fee

P 500.00

P 29,000.00

and that the "BALANCE TO BE FINANCED" is "P274,137.00." The spaces provided


for "Delivery Terms" were not filled-up. It also contains the following pertinent
provisions:
CONDITIONS OF SALES
1.

This sale is subject to availability of unit.

2.
Stated Price is subject to change without prior notice, Price prevailing and
in effect at time of selling will apply. . . .
Rodrigo Quirante, the Sales Supervisor of Bernardo, checked and approved the
VSP.
On 17 June 1989, at around 9:30 a.m., Bernardo called Gilbert to inform him that
the vehicle would not be ready for pick up at 10:00 a.m. as previously agreed
upon but at 2:00 p.m. that same day. At 2:00 p.m., Sosa and Gilbert met Bernardo
at the latter's office. According to Sosa, Bernardo informed them that the Lite Ace
was being readied for delivery. After waiting for about an hour, Bernardo told them
that the car could not be delivered because "nasulot ang unit ng ibang malakas."
Toyota contends, however, that the Lite Ace was not delivered to Sosa because of
the disapproval by B.A. Finance of the credit financing application of Sosa. It
further alleged that a particular unit had already been reserved and earmarked for
Sosa but could not be released due to the uncertainty of payment of the balance
of the purchase price. Toyota then gave Sosa the option to purchase the unit by
paying the full purchase price in cash but Sosa refused.
After it became clear that the Lite Ace would not be delivered to him, Sosa asked
that his downpayment be refunded. Toyota did so on the very same day by issuing
a Far East Bank check for the full amount of P100,000.00, 4 the receipt of which
was shown by a check voucher of Toyota, 5 which Sosa signed with the
reservation, "without prejudice to our future claims for damages."
Thereafter, Sosa sent two letters to Toyota. In the first letter, dated 27 June 1989
and signed by him, he demanded the refund, within five days from receipt, of the
downpayment of P100,000.00 plus interest from the time he paid it and the
payment of damages with a warning that in case of Toyota's failure to do so he
would be constrained to take legal action. 6 The second, dated 4 November 1989
and signed by M. O. Caballes, Sosa's counsel, demanded one million pesos
representing interest and damages, again, with a warning that legal action would
be taken if payment was not made within three days. 7 Toyota's counsel answered
through a letter dated 27 November 1989 8 refusing to accede to the demands of
Sosa. But even before this answer was made and received by Sosa, the latter filed
on 20 November 1989 with Branch 38 of the Regional Trial Court (RTC) of
Marinduque a complaint against Toyota for damages under Articles 19 and 21 of
the Civil Code in the total amount of P1,230,000.00. 9 He alleges, inter alia, that:
9.
As a result of defendant's failure and/or refusal to deliver the vehicle to
plaintiff, plaintiff suffered embarrassment, humiliation, ridicule, mental anguish
and sleepless nights because: (i) he and his family were constrained to take the
public transportation from Manila to Lucena City on their way to Marinduque; (ii)
his balikbayan-guest canceled his scheduled first visit to Marinduque in order to
avoid the inconvenience of taking public transportation; and (iii) his relatives,
friends, neighbors and other provincemates, continuously irked him about "his
Brand-New Toyota Lite Ace that never was." Under the circumstances,

defendant should be made liable to the plaintiff for moral damages in the amount
of One Million Pesos (P1,000,000.00). 10
In its answer to the complaint, Toyota alleged that no sale was entered into
between it and Sosa, that Bernardo had no authority to sign Exhibit "A" for and in
its behalf, and that Bernardo signed Exhibit "A" in his personal capacity. As special
and affirmative defenses, it alleged that: the VSP did not state date of delivery;
Sosa had not completed the documents required by the financing company, and
as a matter of policy, the vehicle could not and would not be released prior to full
compliance with financing requirements, submission of all documents, and
execution of the sales agreement/invoice; the P100,000.00 was returned to and
received by Sosa; the venue was improperly laid; and Sosa did not have a
sufficient cause of action against it. It also interposed compulsory counterclaims.
After trial on the issues agreed upon during the pre-trial session, 11 the trial court
rendered on 18 February 1992 a decision in favor of Sosa. 12 It ruled that Exhibit
"A," the "AGREEMENTS BETWEEN MR. SOSA AND POPONG BERNARDO," was a
valid perfected contract of sale between Sosa and Toyota which bound Toyota to
deliver the vehicle to Sosa, and further agreed with Sosa that Toyota acted in bad
faith in selling to another the unit already reserved for him.
As to Toyota's contention that Bernardo had no authority to bind it through Exhibit
"A," the trial court held that the extent of Bernardo's authority "was not made
known to plaintiff," for as testified to by Quirante, "they do not volunteer any
information as to the company's sales policy and guidelines because they are
internal matters." 13 Moreover, "[f]rom the beginning of the transaction up to its
consummation when the downpayment was made by the plaintiff, the defendants
had made known to the plaintiff the impression that Popong Bernardo is an
authorized sales executive as it permitted the latter to do acts within the scope of
an apparent authority holding him out to the public as possessing power to do
these acts." 14 Bernardo then "was an agent of the defendant Toyota Shaw, Inc.
and hence bound the defendants." 15
The court further declared that "Luna Sosa proved his social standing in the
community and suffered besmirched reputation, wounded feelings and sleepless
nights for which he ought to be compensated." 16 Accordingly, it disposed as
follows:
WHEREFORE, viewed from the above findings, judgment is hereby rendered in
favor of the plaintiff and against the defendant:
1.
ordering the defendant to pay to the plaintiff the sum of P75,000.00 for
moral damages;
2.
ordering the defendant to pay the plaintiff the sum of P10,000.00 for
exemplary damages;
3.
ordering the defendant to pay the sum of P30,000.00 attorney's fees plus
P2,000.00 lawyer's transportation fare per trip in attending to the hearing of this
case;
4.
ordering the defendant to pay the plaintiff the sum of P2,000.00
transportation fare per trip of the plaintiff in attending the hearing of this case;
and
5.

ordering the defendant to pay the cost of suit.

SO ORDERED.
Dissatisfied with the trial court's judgment, Toyota appealed to the Court of
Appeals. The case was docketed as CA-G.R. CV No. 40043. In its decision
promulgated on 29 July 1994, 17 the Court of Appeals affirmed in toto the
appealed decision.
Toyota now comes before this Court via this petition and raises the core issue
stated at the beginning of the ponencia and also the following related issues: (a)
whether or not the standard VSP was the true and documented understanding of
the parties which would have led to the ultimate contract of sale, (b) whether or
not Sosa has any legal and demandable right to the delivery of the vehicle despite
the non-payment of the consideration and the non-approval of his credit
application by B.A. Finance, (c) whether or not Toyota acted in good faith when it
did not release the vehicle to Sosa, and (d) whether or not Toyota may be held
liable for damages.

Moreover, Exhibit "A" shows the absence of a meeting of minds between Toyota
and Sosa. For one thing, Sosa did not even sign it. For another, Sosa was well
aware from its title, written in bold letters, viz.,
AGREEMENTS BETWEEN MR. SOSA & POPONG BERNARDO OF TOYOTA SHAW, INC.
that he was not dealing with Toyota but with Popong Bernardo and that the latter
did not misrepresent that he had the authority to sell any Toyota vehicle. He knew
that Bernardo was only a sales representative of Toyota and hence a mere agent
of the latter. It was incumbent upon Sosa to act with ordinary prudence and
reasonable diligence to know the extent of Bernardo's authority as an
agent 20 in respect of contracts to sell Toyota's vehicles. A person dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the
agent. 21

We find merit in the petition.

At the most, Exhibit "A" may be considered as part of the initial phase of the
generation or negotiation stage of a contract of sale. There are three stages in the
contract of sale, namely:

Neither logic nor recourse to one's imagination can lead to the conclusion that
Exhibit "A" is a perfected contract of sale.

(a)
preparation, conception, or generation, which is the period of negotiation
and bargaining, ending at the moment of agreement of the parties;

Article 1458 of the Civil Code defines a contract of sale as follows:

(b)
perfection or birth of the contract, which is the moment when the parties
come to agree on the terms of the contract; and

Art. 1458.
By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and the
other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
and Article 1475 specifically provides when it is deemed perfected:
Art. 1475.
The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract and upon the
price.
From that moment, the parties may reciprocally demand performance, subject to
the provisions of the law governing the form of contracts.
What is clear from Exhibit "A" is not what the trial court and the Court of Appeals
appear to see. It is not a contract of sale. No obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and no correlative obligation on
the part of the latter to pay therefor a price certain appears therein. The provision
on the downpayment of P100,000.00 made no specific reference to a sale of a
vehicle. If it was intended for a contract of sale, it could only refer to a sale on
installment basis, as the VSP executed the following day confirmed. But nothing
was mentioned about the full purchase price and the manner the installments
were to be paid.
This Court had already ruled that 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. 18 This is so because the agreement as to 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. Definiteness as to the price is an
essential element of a binding agreement to sell personal property. 19

(c)
consummation or death, which is the fulfillment or performance of the
terms agreed upon in the contract. 22
The second phase of the generation or negotiation stage in this case was the
execution of the VSP. It must be emphasized that thereunder, the downpayment of
the purchase price was P53,148.00 while the balance to be paid on installment
should be financed by B.A. Finance Corporation. It is, of course, to be assumed
that B.A. Finance Corp. was acceptable to Toyota, otherwise it should not have
mentioned B.A. Finance in the VSP.
Financing companies are defined in Section 3(a) of R.A. No. 5980, as amended by
P.D. No. 1454 and P.D. No. 1793, as "corporations or partnerships, except those
regulated by the Central Bank of the Philippines, the Insurance Commission and
the Cooperatives Administration Office, which are primarily organized for the
purpose of extending credit facilities to consumers and to industrial, commercial,
or agricultural enterprises, either by discounting or factoring commercial papers
or accounts receivables, or by buying and selling contracts, leases, chattel
mortgages, or other evidence of indebtedness, or by leasing of motor vehicles,
heavy equipment and industrial machinery, business and office machines and
equipment, appliances and other movable property." 23
Accordingly, in a sale on installment basis which is financed by a financing
company, three parties are thus involved: the buyer who executes a note or notes
for the unpaid balance of the price of the thing purchased on installment, the
seller who assigns the notes or discounts them with a financing company, and the
financing company which is subrogated in the place of the seller, as the creditor of
the installment buyer. 24 Since B.A. Finance did not approve Sosa's application,
there was then no meeting of minds on the sale on installment basis.
We are inclined to believe Toyota's version that B.A. Finance disapproved Sosa's
application for which reason it suggested to Sosa that he pay the full purchase
price. When the latter refused, Toyota cancelled the VSP and returned to him his

P100,000.00. Sosa's version that the VSP was cancelled because, according to
Bernardo, the vehicle was delivered to another who was "mas malakas" does not
inspire belief and was obviously a delayed afterthought. It is claimed that
Bernardo said, "Pasensiya kayo, nasulot ang unit ng ibang malakas," while the
Sosas had already been waiting for an hour for the delivery of the vehicle in the
afternoon of 17 June 1989. However, in paragraph 7 of his complaint, Sosa
solemnly states:

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

On June 17, 1989 at around 9:30 o'clock in the morning, defendant's sales
representative, Mr. Popong Bernardo, called plaintiff's house and informed the
plaintiff's son that the vehicle will not be ready for pick-up at 10:00 a.m. of June
17, 1989 but at 2:00 p.m. of that day instead. Plaintiff and his son went to
defendant's office on June 17 1989 at 2:00 p.m. in order to pick-up the vehicle but
the defendant for reasons known only to its representatives, refused and/or failed
to release the vehicle to the plaintiff. Plaintiff demanded for an explanation, but
nothing was given; . . . (Emphasis supplied). 25

J. Villareal, Navarro and Associates for defendants-appellants.

The VSP was a mere proposal which was aborted in lieu of subsequent events. It
follows that the VSP created no demandable right in favor of Sosa for the delivery
of the vehicle to him, and its non-delivery did not cause any legally indemnifiable
injury.
The award then of moral and exemplary damages and attorney's fees and costs of
suit is without legal basis. Besides, the only ground upon which Sosa claimed
moral damages is that since it was known to his friends, townmates, and relatives
that he was buying a Toyota Lite Ace which they expected to see on his birthday,
he suffered humiliation, shame, and sleepless nights when the van was not
delivered. The van became the subject matter of talks during his celebration that
he may not have paid for it, and this created an impression against his business
standing and reputation. At the bottom of this claim is nothing but misplaced pride
and ego. He should not have announced his plan to buy a Toyota Lite Ace knowing
that he might not be able to pay the full purchase price. It was he who brought
embarrassment upon himself by bragging about a thing which he did not own yet.
Since Sosa is not entitled to moral damages and there being no award for
temperate, liquidated, or compensatory damages, he is likewise not entitled to
exemplary damages. Under Article 2229 of the Civil Code, exemplary or corrective
damages are imposed by way of example or correction for the public good, in
addition to moral, temperate, liquidated, or compensatory damages.
Also, it is settled that for attorney's fees to be granted, the court must explicitly
state in the body of the decision, and not only in the dispositive portion thereof,
the legal reason for the award of attorney's fees. 26 No such explicit
determination thereon was made in the body of the decision of the trial court. No
reason thus exists for such an award.
WHEREFORE, the instant petition is GRANTED. The challenged decision of the
Court of Appeals in CA-G.R. CV NO. 40043 as well as that of Branch 38 of the
Regional Trial Court of Marinduque in Civil Case No. 89-14 are REVERSED and SET
ASIDE and the complaint in Civil Case No. 89-14 is DISMISSED. The counterclaim
therein is likewise DISMISSED.
No pronouncement as to costs.
SO ORDERED.

VILLONCO REALTY COMPANY, plaintiff-appellee and EDITH PEREZ DE TAGLE,


intervenor-appellee,
vs.
BORMAHECO, INC., FRANCISCO N. CERVANTES and ROSARIO N. CERVANTES,
defendants-appellants. Meer, Meer & Meer for plaintiff-appellee.

P. P. Gallardo and Associates for intervenor-appellee.

AQUINO, J.:
This action was instituted by Villonco Realty Company against Bormaheco, Inc.
and the spouses Francisco N. Cervantes and Rosario N. Cervantes for the specific
performance of a supposed contract for the sale of land and the improvements
thereon for one million four hundred thousand pesos. Edith Perez de Tagle, as
agent, intervened in order to recover her commission. The lower court enforced
the sale. Bormaheco, Inc. and the Cervantes spouses, as supposed vendors,
appealed.
This Court took cognizance of the appeal because the amount involved is more
than P200,000 and the appeal was perfected before Republic Act No. 5440 took
effect on September 9, 1968. The facts are as follows:
Francisco N. Cervantes and his wife, Rosario P. Navarra-Cervantes, are the owners
of lots 3, 15 and 16 located at 245 Buendia Avenue, Makati, Rizal with a total area
of three thousand five hundred square meters (TCT Nos. 43530, 43531 and 43532,
Exh. A, A-1 and A-2). The lots were mortgaged to the Development Bank of the
Phil (DBP) on April 21, 1959 as security for a loan of P441,000. The mortgage debt
was fully paid on July 10, 1969.
Cervantes is the president of Bormaheco, Inc., a dealer and importer of industrial
and agricultural machinery. The entire lots are occupied by the building,
machinery and equipment of Bormaheco, Inc. and are adjacent to the property of
Villonco Realty Company situated at 219 Buendia Avenue.
In the early part of February, 1964 there were negotiations for the sale of the said
lots and the improvements thereon between Romeo Villonco of Villonco Realty
Company "and Bormaheco, Inc., represented by its president, Francisco N.
Cervantes, through the intervention of Edith Perez de Tagle, a real estate broker".
In the course of the negotiations, the brothers Romeo Villonco and Teofilo Villonco
conferred with Cervantes in his office to discuss the price and terms of the sale.
Later, Cervantes "went to see Villonco for the same reason until some agreement"
was arrived at. On a subsequent occasion, Cervantes, accompanied by Edith Perez
de Tagle, discussed again the terms of the sale with Villonco.
During the negotiations, Villonco Realty Company assumed that the lots belonged
to Bormaheco, Inc. and that Cervantes was duly authorized to sell the same.
Cervantes did not disclose to the broker and to Villonco Realty Company that the
lots were conjugal properties of himself and his wife and that they were
mortgaged to the DBP.

Bormaheco, Inc., through Cervantes, made a written offer dated February 12,
1964, to Romeo Villonco for the sale of the property. The offer reads (Exh. B):
BORMAHECO, INC.
February 12,1964
Mr. Romeo
Villonco Villonco Building
Buendia Avenue
Makati, Rizal.
Dear Mr. Villonco:
This is with reference to our telephone conversation this noon on the matter of the
sale of our property located at Buendia Avenue, with a total area of 3,500 sq. m.,
under the following conditions:
(1)
That we are offering to sell to you the above property at the price of
P400.00 per square meter;

Villonco had a final conference on February 27, 1964. As a result of that


conference Villonco Realty Company, through Teofilo Villonco, in its letter of March
4, 1964 made a revised counter- offer (Romeo Villonco's first counter-offer was
dated February 24, 1964, Exh. C) for the purchase of the property. The counteroffer was accepted by Cervantes as shown in Exhibit D, which is quoted below:
VILLONCO REALTY COMPANY
V. R. C. Building
219 Buendia Avenue, Makati,
Rizal, Philippines
March 4, 1964
Mr. Francisco Cervantes.
Bormaheco, Inc.
245 Buendia Avenue
Makati, Rizal
Dear Mr. Cervantes:

(2)
That a deposit of P100,000.00 must be placed as earnest money on the
purchase of the above property which will become part payment of the property in
the event that the sale is consummated;

In reference to the letter of Miss E. Perez de Tagle dated February 12th and 26,
1964 in respect to the terms and conditions on the purchase of your property
located at Buendia Ave., Makati, Rizal, with a total area of 3,500 sq. meters., we
hereby revise our offer, as follows:

(3)
That this sale is to be consummated only after I shall have also
consummated my purchase of another property located at Sta. Ana, Manila;

1.
That the price of the property shall be P400.00 per sq. m., including the
improvements thereon;

(4)
That if my negotiations with said property will not be consummated by
reason beyond my control, I will return to you your deposit of P100,000 and the
sale of my property to you will not also be consummated; and

2.
That a deposit of P100,000.00 shall be given to you as earnest money
which will become as part payment in the event the sale is consummated;

(5)
That final negotiations on both properties can be definitely known after
45 days.
If the above terms is (are) acceptable to your Board, please issue out the said
earnest money in favor of Bormaheco, Inc., and deliver the same thru the bearer,
Miss Edith Perez de Tagle.
Very truly yours,
SGD. FRANCISCO N. CERVANTES
President
The property mentioned in Bormaheco's letter was the land of the National
Shipyards & Steel Corporation (Nassco), with an area of twenty thousand square
meters, located at Punta, Sta. Ana, Manila. At the bidding held on January 17,
1964 that land was awarded to Bormaheco, Inc., the highest bidder, for the price
of P552,000. The Nassco Board of Directors in its resolution of February 18, 1964
authorized the General Manager to sign the necessary contract (Exh. H).
On February 28, 1964, the Nassco Acting General Manager wrote a letter to the
Economic Coordinator, requesting approval of that resolution. The Acting
Economic Coordinator approved the resolution on March 24, 1964 (Exh. 1).
In the meanwhile, Bormaheco, Inc. and Villonco Realty Company continued their
negotiations for the sale of the Buendia Avenue property. Cervantes and Teofilo

3.
This sale shall be cancelled, only if your deal with another property in
Sta. Ana shall not be consummated and in such case, the P100,000-00 earnest
money will be returned to us with a 10% interest p.a. However, if our deal with
you is finalized, said P100,000.00 will become as part payment for the purchase of
your property without interest:
4.

The manner of payment shall be as follows:

a.
P100,000.00 earnest money and
650,000.00 as part of the down payment, or
P750,000.00 as total down payment
b.
The balance is payable as follows:
P100,000.00 after 3 months
125,000.00 -do212,500.00 -doP650,000.00 Total
As regards to the other conditions which we have discussed during our last
conference on February 27, 1964, the same shall be finalized upon preparation of
the contract to sell.*
If the above terms and conditions are acceptable to you, kindly sign your
conformity hereunder. Enclosed is our check for ONE HUNDRED THOUSAND
(P100,000.00) PESOS, MBTC Check No. 448314, as earnest money.

Very truly yours,


VILLONCO REALTY COMPANY
(Sgd.) TEOFILO VILLONCO
CONFORME:
BORMAHECO, INC.
(Sgd.) FRANCISCO CERVANTES
That this sale shall be subject to favorable consummation of a property in Sta. Ana
we are negotiating.
(Sgd.) FRANCISCO CERVANTES
The check for P100,000 (Exh. E) mentioned in the foregoing letter-contract was
delivered by Edith Perez de Tagle to Bormaheco, Inc. on March 4, 1964 and was
received by Cervantes. In the voucher-receipt evidencing the delivery the broker
indicated in her handwriting that the earnest money was "subject to the terms and
conditions embodied in Bormaheco's letter" of February 12 and Villonco Realty
Company's letter of March 4, 1964 (Exh. E-1; 14 tsn).
Then, unexpectedly, in a letter dated March 30, 1964, or twenty-six days after the
signing of the contract of sale, Exhibit D, Cervantes returned the earnest money,
with interest amounting to P694.24 (at ten percent per annum). Cervantes cited
as an excuse the circumstance that "despite the lapse of 45 days from February
12, 1964 there is no certainty yet" for the acquisition of the Punta property (Exh.
F; F-I and F-2). Villonco Realty Company refused to accept the letter and the
checks of Bormaheco, Inc. Cervantes sent them by registered mail. When he
rescinded the contract, he was already aware that the Punta lot had been awarded
to Bormaheco, Inc. (25-26 tsn).
Edith Perez de Tagle, the broker, in a letter to Cervantes dated March 31, 1964
articulated her shock and surprise at Bormaheco's turnabout. She reviewed the
history of the deal and explained why Romeo Villonco could not agree to the
rescission of the sale (Exh. G).**
Cervantes in his letter of April 6, 1964, a reply to Miss Tagle's letter, alleged that
the forty-five day period had already expired and the sale to Bormaheco, Inc. of
the Punta property had not been consummated. Cervantes said that his letter was
a "manifestation that we are no longer interested to sell" the Buendia Avenue
property to Villonco Realty Company (Annex I of Stipulation of Facts). The latter
was furnished with a copy of that letter.
In a letter dated April 7, 1964 Villonco Realty Company returned the two checks to
Bormaheco, Inc., stating that the condition for the cancellation of the contract had
not arisen and at the same time announcing that an action for breach of contract
would be filed against Bormaheco, Inc. (Annex G of Stipulation of
Facts).1wph1.t
On that same date, April 7, 1964 Villonco Realty Company filed the complaint
(dated April 6) for specific performance against Bormaheco, Inc. Also on that same
date, April 7, at eight-forty-five in the morning, a notice of lis pendens was
annotated on the titles of the said lots.
Bormaheco, Inc. in its answers dated May 5 and 25, 1964 pleaded the defense
that the perfection of the contract of sale was subject to the conditions (a) "that

final acceptance or not shall be made after 45 days" (sic) and (b) that Bormaheco,
Inc. "acquires the Sta. Ana property".
On June 2, 1964 or during the pendency of this case, the Nassco Acting General
Manager wrote to Bormaheco, Inc., advising it that the Board of Directors and the
Economic Coordinator had approved the sale of the Punta lot to Bormaheco, Inc.
and requesting the latter to send its duly authorized representative to the Nassco
for the signing of the deed of sale (Exh. 1).
The deed of sale for the Punta land was executed on June 26, 1964. Bormaheco,
Inc. was represented by Cervantes (Exh. J. See Bormaheco, Inc. vs. Abanes, L28087, July 31, 1973, 52 SCRA 73).
In view of the disclosure in Bormaheco's amended answer that the three lots were
registered in the names of the Cervantes spouses and not in the name of
Bormaheco, Inc., Villonco Realty Company on July 21, 1964 filed an amended
complaint impleading the said spouses as defendants. Bormaheco, Inc. and the
Cervantes spouses filed separate answers.
As of January 15, 1965 Villonco Realty Company had paid to the Manufacturers'
Bank & Trust Company the sum of P8,712.25 as interests on the overdraft line of
P100,000 and the sum of P27.39 as interests daily on the same loan since January
16, 1965. (That overdraft line was later settled by Villonco Realty Company on a
date not mentioned in its manifestation of February 19, 1975).
Villonco Realty Company had obligated itself to pay the sum of P20,000 as
attorney's fees to its lawyers. It claimed that it was damaged in the sum of
P10,000 a month from March 24, 1964 when the award of the Punta lot to
Bormaheco, Inc. was approved. On the other hand, Bormaheco, Inc. claimed that it
had sustained damages of P200,000 annually due to the notice of lis pendens
which had prevented it from constructing a multi-story building on the three lots.
(Pars. 18 and 19, Stipulation of Facts).1wph1.t
Miss Tagle testified that for her services Bormaheco, Inc., through Cervantes,
obligated itself to pay her a three percent commission on the price of P1,400,000
or the amount of forty-two thousand pesos (14 tsn).
After trial, the lower court rendered a decision ordering the Cervantes spouses to
execute in favor of Bormaheco, Inc. a deed of conveyance for the three lots in
question and directing Bormaheco, Inc. (a) to convey the same lots to Villonco
Realty Company, (b) to pay the latter, as consequential damages, the sum of
P10,000 monthly from March 24, 1964 up to the consummation of the sale, (c) to
pay Edith Perez de Tagle the sum of P42,000 as broker's commission and (d) pay
P20,000 as to attorney's fees (Civil Case No. 8109).
Bormaheco, Inc. and the Cervantes spouses appealed. Their principal contentions
are (a) that no contract of sale was perfected because Cervantes made a
supposedly qualified acceptance of the revised offer contained in Exhibit D, which
acceptance amounted to a counter-offer, and because the condition that
Bormaheco, inc. would acquire the Punta land within the forty-five-day period was
not fulfilled; (2) that Bormaheco, Inc. cannot be compelled to sell the land which
belongs to the Cervantes spouses and (3) that Francisco N. Cervantes did not bind
the conjugal partnership and his wife when, as president of Bormaheco, Inc., he
entered into negotiations with Villonco Realty Company regarding the said land.
We hold that the appeal, except as to the issue of damages, is devoid of merit.

"By the contract of sale one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determining thing, and the other to pay therefor
a price certain in money or its equivalent. A contract of sale may be absolute or
conditional" (Art. 1458, Civil Code).
"The contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price. From that
moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts" (Art. 1475, Ibid.).
"Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to
all the consequences which, according to their nature, may be in keeping with
good faith, usage and law" (Art. 1315, Civil Code).
"Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain
and the acceptance absolute. A qualified acceptance constitutes a counter-offer"
(Art. 1319, Civil Code). "An acceptance may be express or implied" (Art. 1320,
Civil Code).
Bormaheco's acceptance of Villonco Realty Company's offer to purchase the
Buendia Avenue property, as shown in Teofilo Villonco's letter dated March 4, 1964
(Exh. D), indubitably proves that there was a meeting of minds upon the subject
matter and consideration of the sale. Therefore, on that date the sale was
perfected. (Compare with McCullough vs. Aenlle & Co., 3 Phil. 285; Goyena vs.
Tambunting, 1 Phil. 490). Not only that Bormaheco's acceptance of the part
payment of one hundred ,thousand pesos shows that the sale was conditionally
consummated or partly executed subject to the purchase by Bormaheco, Inc. of
the Punta property. The nonconsummation of that purchase would be a negative
resolutory condition (Taylor vs. Uy Tieng Piao, 43 Phil. 873).
On February 18, 1964 Bormaheco's bid for the Punta property was already
accepted by the Nassco which had authorized its General Manager to sign the
corresponding deed of sale. What was necessary only was the approval of the sale
by the Economic Coordinator and a request for that approval was already pending
in the office of that functionary on March 4, 1964.
Bormaheco, Inc. and the Cervantes spouses contend that the sale was not
perfected because Cervantes allegedly qualified his acceptance of Villonco's
revised offer and, therefore, his acceptance amounted to a counter-offer which
Villonco Realty Company should accept but no such acceptance was ever
transmitted to Bormaheco, Inc. which, therefore, could withdraw its offer.
That contention is not well-taken. It should be stressed that there is no evidence
as to what changes were made by Cervantes in Villonco's revised offer. And there
is no evidence that Villonco Realty Company did not assent to the supposed
changes and that such assent was never made known to Cervantes.
What the record reveals is that the broker, Miss Tagle, acted as intermediary
between the parties. It is safe to assume that the alleged changes or qualifications
made by Cervantes were approved by Villonco Realty Company and that such
approval was duly communicated to Cervantes or Bormaheco, Inc. by the broker
as shown by the fact that Villonco Realty Company paid, and Bormaheco, Inc.
accepted, the sum of P100,000 as earnest money or down payment. That crucial
fact implies that Cervantes was aware that Villonco Realty Company had accepted
the modifications which he had made in Villonco's counter-offer. Had Villonco

Realty Company not assented to those insertions and annotations, then it would
have stopped payment on its check for P100,000. The fact that Villonco Realty
Company allowed its check to be cashed by Bormaheco, Inc. signifies that the
company was in conformity with the changes made by Cervantes and that
Bormaheco, Inc. was aware of that conformity. Had those insertions not been
binding, then Bormaheco, Inc. would not have paid interest at the rate of ten
percent per annum, on the earnest money of P100,000.
The truth is that the alleged changes or qualifications in the revised counter
offer (Exh. D) are not material or are mere clarifications of what the parties had
previously agreed upon.
Thus, Cervantes' alleged insertion in his handwriting of the figure and the words
"12th and" in Villonco's counter-offer is the same as the statement found in the
voucher-receipt for the earnest money, which reads: "subject to the terms and
conditions embodied in Bormaheco's letter of Feb. 12, 1964 and your letter of
March 4, 1964" (Exh. E-1).
Cervantes allegedly crossed out the word "Nassco" in paragraph 3 of Villonco's
revised counter-offer and substituted for it the word "another" so that the original
phrase, "Nassco's property in Sta. Ana", was made to read as "another property in
Sta. Ana". That change is trivial. What Cervantes did was merely to adhere to the
wording of paragraph 3 of Bormaheco's original offer (Exh. B) which mentions
"another property located at Sta. Ana." His obvious purpose was to avoid
jeopardizing his negotiation with the Nassco for the purchase of its Sta. Ana
property by unduly publicizing it.
It is noteworthy that Cervantes, in his letter to the broker dated April 6, 1964
(Annex 1) or after the Nassco property had been awarded to Bormaheco, Inc.,
alluded to the "Nassco property". At that time, there was no more need of
concealing from the public that Bormaheco, Inc. was interested in the Nassco
property.
Similarly, Cervantes' alleged insertion of the letters "PA" ( per annum) after the
word "interest" in that same paragraph 3 of the revised counter-offer (Exh. D)
could not be categorized as a major alteration of that counter-offer that prevented
a meeting of the minds of the parties. It was understood that the parties had
contemplated a rate of ten percent per annum since ten percent a month or semiannually would be usurious.
Appellants Bormaheco, Inc. and Cervantes further contend that Cervantes, in
clarifying in the voucher for the earnest money of P100,000 that Bormaheco's
acceptance thereof was subject to the terms and conditions embodied in
Bormaheco's letter of February 12, 1964 and your (Villonco's) letter of March 4,
1964" made Bormaheco's acceptance "qualified and conditional".
That contention is not correct. There is no incompatibility between Bormaheco's
offer of February 12, 1964 (Exh. B) and Villonco's counter-offer of March 4, 1964
(Exh. D). The revised counter-offer merely amplified Bormaheco's original offer.
The controlling fact is that there was agreement between the parties on the
subject matter, the price and the mode of payment and that part of the price was
paid. "Whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and as proof of the perfection of the contract" (Art.
1482, Civil Code).

"It is true that an acceptance may contain a request for certain changes in the
terms of the offer and yet be a binding acceptance. 'So long as it is clear that the
meaning of the acceptance is positively and unequivocally to accept the offer,
whether such request is granted or not, a contract is formed.' " (Stuart vs. Franklin
Life Ins. Co., 165 Fed. 2nd 965, citing Sec. 79, Williston on Contracts).
Thus, it was held that the vendor's change in a phrase of the offer to purchase,
which change does not essentially change the terms of the offer, does not amount
to a rejection of the offer and the tender of a counter-offer (Stuart vs. Franklin Life
Ins. Co., supra).
The instant case is not governed by the rulings laid down in Beaumont vs. Prieto,
41 Phil. 670, 985, 63 L. Ed. 770, and Zayco vs. Serra, 44 Phil. 326. In those two
cases the acceptance radically altered the offer and, consequently, there was no
meeting of the minds of the parties.
Thus, in the Zayco case, Salvador Serra offered to sell to Lorenzo Zayco his sugar
central for P1,000,000 on condition that the price be paid in cash, or, if not paid in
cash, the price would be payable within three years provided security is given for
the payment of the balance within three years with interest. Zayco, instead of
unconditionally accepting those terms, countered that he was going to make a
down payment of P100,000, that Serra's mortgage obligation to the Philippine
National Bank of P600,000 could be transferred to Zayco's account and that he
(plaintiff) would give a bond to secure the payment of the balance of the price. It
was held that the acceptance was conditional or was a counter-offer which had to
be accepted by Serra. There was no such acceptance. Serra revoked his offer.
Hence, there was no perfected contract.
In the Beaumont case, Benito Valdes offered to sell to W Borck the Nagtahan
Hacienda owned by Benito Legarda, who had empowered Valdes to sell it. Borck
was given three months from December 4, 1911 to buy the hacienda for
P307,000. On January 17, 1912 Borck wrote to Valdes, offering to purchase the
hacienda for P307,000 payable on May 1, 1912. No reply was made to that letter.
Borck wrote other letters modifying his proposal. Legarda refused to convey the
property.
It was held that Borck's January 17th letter plainly departed from the terms of the
offer as to the time of payment and was a counter-offer which amounted to a
rejection of Valdes' original offer. A subsequent unconditional acceptance could
not revive that offer.

Makati, Rizal
Gentlemen:
We are returning herewith your earnest money together with interest thereon at
10% per annum. Please be informed that despite the lapse of the 45 days from
February 12, 1964 there is no certainty yet for us to acquire a substitute property,
hence the return of the earnest money as agreed upon.
Very truly yours,
SGD. FRANCISCO N. CERVANTES
President
Encl.: P.N.B. Check No. 112994 J
P.N.B. Check No. 112996J
That contention is predicated on the erroneous assumption that Bormaheco, Inc.
was to acquire the Nassco land within forty-five days or on or before March 28,
1964.
The trial court ruled that the forty-five-day period was merely an estimate or a
forecast of how long it would take Bormaheco, Inc. to acquire the Nassco property
and it was not "a condition or a deadline set for the defendant corporation to
decide whether or not to go through with the sale of its Buendia property".
The record does not support the theory of Bormaheco, Inc. and the Cervantes
spouses that the forty-five-day period was the time within which (a) the Nassco
property and two Pasong Tamo lots should be acquired, (b) when Cervantes would
secure his wife's consent to the sale of the three lots and (c) when Bormaheco,
Inc. had to decide what to do with the DBP encumbrance.
Cervantes in paragraph 3 of his offer of February 12, 1964 stated that the sale of
the Buendia lots would be consummated after he had consummated the purchase
of the Nassco property. Then, in paragraph 5 of the same offer he stated "that
final negotiations on both properties can be definitely known after forty-five days"
(See Exh. B).

March 30, 1964

It is deducible from the tenor of those statements that the consummation of the
sale of the Buendia lots to Villonco Realty Company was conditioned on
Bormaheco's acquisition of the Nassco land. But it was not spelled out that such
acquisition should be effected within forty-five days from February 12, 1964. Had
it been Cervantes' intention that the forty-five days would be the period within
which the Nassco land should be acquired by Bormaheco, then he would have
specified that period in paragraph 3 of his offer so that paragraph would read in
this wise: "That this sale is to be consummated only after I shall have
consummated my purchase of another property located at Sta. Ana, Manila within
forty-five days from the date hereof ." He could have also specified that period in
his "conforme" to Villonco's counter-offer of March 4, 1964 (Exh. D) so that instead
of merely stating "that this sale shall be subject to favorable consummation of a
property in Sta. Ana we are negotiating" he could have said: "That this sale shall
be subject to favorable consummation within forty-five days from February 12,
1964 of a property in Sta. Ana we are negotiating".

Villonco Realty Company


V.R.C. Building
219 Buendia Ave.,

No such specification was made. The term of forty-five days was not a part of the
condition that the Nassco property should be acquired. It is clear that the
statement "that final negotiations on both property can be definitely known after

The instant case is different from Laudico and Harden vs. Arias Rodriguez, 43 Phil.
270 where the written offer to sell was revoked by the offer or before the offeree's
acceptance came to the offeror's knowledge.
Appellants' next contention is that the contract was not perfected because the
condition that Bormaheco, Inc. would acquire the Nassco land within forty-five
days from February 12, 1964 or on or before March 28, 1964 was not fulfilled. This
contention is tied up with the following letter of Bormaheco, Inc. (Exh. F):
BORMAHECO, INC.

45 days" does not and cannot mean that Bormaheco, Inc. should acquire the
Nassco property within forty-five days from February 12, 1964 as pretended by
Cervantes. It is simply a surmise that after forty-five days (in fact when the fortyfive day period should be computed is not clear) it would be known whether
Bormaheco, Inc. would be able to acquire the Nassco property and whether it
would be able to sell the Buendia property. That aforementioned paragraph 5 does
not even specify how long after the forty-five days the outcome of the final
negotiations would be known.
It is interesting to note that in paragraph 6 of Bormaheco's answer to the
amended complaint, which answer was verified by Cervantes, it was alleged that
Cervantes accepted Villonco's revised counter-offer of March 4, 1964 subject to
the condition that "the final negotiations (acceptance) will have to be made by
defendant within 45 days from said acceptance" (31 Record on Appeal). If that
were so, then the consummation of Bormaheco's purchase of the Nassco property
would be made within forty-five days from March 4, 1964.
What makes Bormaheco's stand more confusing and untenable is that in its three
answers it invariably articulated the incoherent and vague affirmative defense
that its acceptance of Villonco's revised counter-offer was conditioned on the
circumstance "that final acceptance or not shall be made after 45 days" whatever
that means. That affirmative defense is inconsistent with the other aforequoted
incoherent statement in its third answer that "the final negotiations (acceptance)
will have to be made by defendant within 45 days from said acceptance" (31
Record on Appeal).1wph1.t
Thus, Bormaheco's three answers and paragraph 5 of his offer of February 12,
1964 do not sustain at all its theory that the Nassco property should be acquired
on or before March 28, 1964. Its rescission or revocation of its acceptance cannot
be anchored on that theory which, as articulated in its pleadings, is quite
equivocal and unclear.
It should be underscored that the condition that Bormaheco, Inc. should acquire
the Nassco property was fulfilled. As admitted by the appellants, the Nassco
property was conveyed to Bormaheco, Inc. on June 26, 1964. As early as January
17, 1964 the property was awarded to Bormaheco, Inc. as the highest bidder. On
February 18, 1964 the Nassco Board authorized its General Manager to sell the
property to Bormaheco, Inc. (Exh. H). The Economic Coordinator approved the
award on March 24, 1964. It is reasonable to assume that had Cervantes been
more assiduous in following up the transaction, the Nassco property could have
been transferred to Bormaheco, Inc. on or before March 28, 1964, the supposed
last day of the forty-five-day period.
The appellants, in their fifth assignment of error, argue that Bormaheco, Inc.
cannot be required to sell the three lots in question because they are conjugal
properties of the Cervantes spouses. They aver that Cervantes in dealing with the
Villonco brothers acted as president of Bormaheco, Inc. and not in his individual
capacity and, therefore, he did not bind the conjugal partnership nor Mrs.
Cervantes who was allegedly opposed to the sale.
Those arguments are not sustainable. It should be remembered that Cervantes, in
rescinding the contract of sale and in returning the earnest money, cited as an
excuse the circumstance that there was no certainty in Bormaheco's acquisition of
the Nassco property (Exh. F and Annex 1). He did not say that Mrs. Cervantes was
opposed to the sale of the three lots. He did not tell Villonco Realty Company that
he could not bind the conjugal partnership. In truth, he concealed the fact that the
three lots were registered "in the name of FRANCISCO CERVANTES, Filipino, of

legal age, married to Rosario P. Navarro, as owner thereof in fee simple". He


certainly led the Villonco brothers to believe that as president of Bormaheco, Inc.
he could dispose of the said lots. He inveigled the Villoncos into believing that he
had untrammelled control of Bormaheco, Inc., that Bormaheco, Inc. owned the lots
and that he was invested with adequate authority to sell the same.
Thus, in Bormaheco's offer of February 12, 1964, Cervantes first identified the
three lots as "our property" which "we are offering to sell ..." (Opening paragraph
and par. 1 of Exh. B). Whether the prounoun "we" refers to himself and his wife or
to Bormaheco, Inc. is not clear. Then, in paragraphs 3 and 4 of the offer, he used
the first person and said: "I shall have consummated my purchase" of the Nassco
property; "... my negotiations with said property" and "I will return to you your
deposit". Those expressions conveyed the impression and generated the belief
that the Villoncos did not have to deal with Mrs. Cervantes nor with any other
official of Bormaheco, Inc.
The pleadings disclose that Bormaheco, Inc. and Cervantes deliberately and
studiously avoided making the allegation that Cervantes was not authorized by his
wife to sell the three lots or that he acted merely as president of Bormaheco, Inc.
That defense was not interposed so as not to place Cervantes in the ridiculous
position of having acted under false pretenses when he negotiated with the
Villoncos for the sale of the three lots.
Villonco Realty Company, in paragraph 2 of its original complaint, alleged that "on
February 12, 1964, after some prior negotiations, the defendant (Bormaheco, Inc.)
made a formal offer to sell to the plaintiff the property of the said defendant
situated at the abovenamed address along Buendia Avenue, Makati, Rizal, under
the terms of the letter-offer, a copy of which is hereto attached as Annex A
hereof", now Exhibit B (2 Record on Appeal).
That paragraph 2 was not, repeat, was not denied by Bormaheco, Inc. in its
answer dated May 5, 1964. It did not traverse that paragraph 2. Hence, it was
deemed admitted. However, it filed an amended answer dated May 25, 1964
wherein it denied that it was the owner of the three lots. It revealed that the three
lots "belong and are registered in the names of the spouses Francisco N.
Cervantes and Rosario N. Cervantes."
The three answers of Bormaheco, Inc. contain the following affirmative defense:
13.
That defendant's insistence to finally decide on the proposed sale of the
land in question after 45 days had not only for its purpose the determination of its
acquisition of the said Sta. Ana (Nassco) property during the said period, but also
to negotiate with the actual and registered owner of the parcels of land covered
by T.C.T. Nos. 43530, 43531 and 43532 in question which plaintiff was fully aware
that the same were not in the name of the defendant (sic; Par. 18 of Answer to
Amended Complaint, 10, 18 and 34, Record on Appeal).
In that affirmative defense, Bormaheco, Inc. pretended that it needed forty- five
days within which to acquire the Nassco property and "to negotiate" with the
registered owner of the three lots. The absurdity of that pretension stands out in
bold relief when it is borne in mind that the answers of Bormaheco, Inc. were
verified by Cervantes and that the registered owner of the three lots is Cervantes
himself. That affirmative defense means that Cervantes as president of
Bormaheco, Inc. needed forty-five days in order to "negotiate" with himself
(Cervantes).

The incongruous stance of the Cervantes spouses is also patent in their answer to
the amended complaint. In that answer they disclaimed knowledge or information
of certain allegations which were well-known to Cervantes as president of
Bormaheco, Inc. and which were admitted in Bormaheco's three answers that
were verified by Cervantes.
It is significant to note that Bormaheco, Inc. in its three answers, which were
verified by Cervantes, never pleaded as an affirmative defense that Mrs.
Cervantes opposed the sale of the three lots or that she did not authorize her
husband to sell those lots. Likewise, it should be noted that in their separate
answer the Cervantes spouses never pleaded as a defense that Mrs. Cervantes
was opposed to the sale of three lots or that Cervantes could not bind the conjugal
partnership. The appellants were at first hesitant to make it appear that Cervantes
had committed the skullduggery of trying to sell property which he had no
authority to alienate.
It was only during the trial on May 17, 1965 that Cervantes declared on the
witness stand that his wife was opposed to the sale of the three lots, a defense
which, as already stated, was never interposed in the three answers of
Bormaheco, Inc. and in the separate answer of the Cervantes spouses. That same
viewpoint was adopted in defendants' motion for reconsideration dated November
20, 1965.
But that defense must have been an afterthought or was evolved post litem
motam since it was never disclosed in Cervantes' letter of rescission and in his
letter to Miss Tagle (Exh. F and Annex 1). Moreover, Mrs. Cervantes did not testify
at the trial to fortify that defense which had already been waived for not having
been pleaded (See sec. 2, Rule 9, Rules of Court).
Taking into account the situation of Cervantes vis-a-vis Bormaheco, Inc. and his
wife and the fact that the three lots were entirely occupied by Bormaheco's
building, machinery and equipment and were mortgaged to the DBP as security
for its obligation, and considering that appellants' vague affirmative defenses do
not include Mrs. Cervantes' alleged opposition to the sale, the plea that Cervantes
had no authority to sell the lots strains the rivets of credibility (Cf. Papa and
Delgado vs. Montenegro, 54 Phil. 331; Riobo vs. Hontiveros, 21 Phil. 31).
"Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith" (Art. 1159, Civil Code).
Inasmuch as the sale was perfected and even partly executed, Bormaheco, Inc.,
and the Cervantes spouses, as a matter of justice and good faith, are bound to
comply with their contractual commitments.
Parenthetically, it may be observed that much misunderstanding could have been
avoided had the broker and the buyer taken the trouble of making some research
in the Registry of Deeds and availing themselves of the services of a competent
lawyer in drafting the contract to sell.
Bormaheco, Inc. and the Cervantes spouses in their sixth assignment of error
assail the trial court's award to Villonco Realty Company of consequential damage
amounting to ten thousand pesos monthly from March 24, 1964 (when the
Economic Coordinator approved the award of the Nassco property to Bormaheco,
Inc.) up to the consummation of the sale. The award was based on paragraph 18
of the stipulation of facts wherein Villonco Realty Company "submits that the
delay in the consummation of the sale" has caused it to suffer the aforementioned
damages.

The appellants contend that statement in the stipulation of facts simply means
that Villonco Realty Company speculates that it has suffered damages but it does
not mean that the parties have agreed that Villonco Realty Company is entitled to
those damages.
Appellants' contention is correct. As rightly observed by their counsel, the
damages in question were not specifically pleaded and proven and were "clearly
conjectural and speculative".
However, appellants' view in their seventh assignment of error that the trial court
erred in ordering Bormaheco, Inc. to pay Villonco Realty Company the sum of
twenty thousand pesos as attorney's fees is not tenable. Under the facts of the
case, it is evident that Bormaheco, Inc. acted in gross and evident bad faith in
refusing to satisfy the valid and just demand of Villonco Realty Company for
specific performance. It compelled Villonco Realty Company to incure expenses to
protect its interest. Moreover, this is a case where it is just and equitable that the
plaintiff should recover attorney's fees (Art. 2208, Civil Code).
The appellants in their eighth assignment of error impugn the trial court's
adjudication of forty-two thousand pesos as three percent broker's commission to
Miss Tagle. They allege that there is no evidence that Bormaheco, Inc. engaged
her services as a broker in the projected sale of the three lots and the
improvements thereon. That allegation is refuted by paragraph 3 of the stipulation
of facts and by the documentary evidence. It was stipulated that Miss Tagle
intervened in the negotiations for the sale of the three lots. Cervantes in his
original offer of February 12, 1964 apprised Villonco Realty Company that the
earnest money should be delivered to Miss Tagle, the bearer of the letter-offer. See
also Exhibit G and Annex I of the stipulation of facts.
We hold that the trial court did not err in adjudging that Bormaheco, Inc. should
pay Miss Tagle her three percent commission.
WHEREFORE, the trial court's decision is modified as follows:
1.
Within ten (10) days from the date the defendants-appellants receive
notice from the clerk of the lower court that the records of this case have been
received from this Court, the spouses Francisco N. Cervantes and Rosario P.
Navarra-Cervantes should execute a deed conveying to Bormaheco, Inc. their
three lots covered by Transfer Certificate of Title Nos. 43530, 43531 and 43532 of
the Registry of Deeds of Rizal.
2.
Within five (5) days from the execution of such deed of conveyance,
Bormaheco, Inc. should execute in favor of Villonco Realty Company, V. R. C.
Building, 219 Buendia Avenue, Makati, Rizal a registerable deed of sale for the
said three lots and all the improvements thereon, free from all lien and
encumbrances, at the price of four hundred pesos per square meter, deducting
from the total purchase price the sum of P100,000 previously paid by Villonco
Realty Company to Bormaheco, Inc.
3.
Upon the execution of such deed of sale, Villonco Realty Company is
obligated to pay Bormaheco, Inc. the balance of the price in the sum of one million
three hundred thousand pesos (P1,300,000).
4.
Bormaheco, Inc. is ordered (a) to pay Villonco Realty Company twenty
thousand pesos (P20,000) as attorney's fees and (b) to pay Edith Perez de Tagle
the sum of forty-two thousand pesos (P42,000) as commission. Costs against the
defendants-appellants.

SO ORDERED.
Makalintal, C.J, Castro. Fernando, Makasiar, Antonio, Esguerra, Muoz Palma,
Concepcion Jr. and Martin, JJ., concur.

.R. No. L-18335

January 10, 1923

LORENZO ZAYCO, DIONISIO INZA, and SEVERINO LIZARRAGA, plaintiffs-appellants,


vs.
SALVADOR SERRA, VENANCIO CONCEPCION, and PHIL. C. WHITAKER, defendantsappellees.
A. P. Seva, Montinola, Montinola and Hontiveros and J. M. Arroyo for appellants.
Antonio Sanz, Perkins and Kincaid and Emilio I. Hilado for appellee Serra.
No appearance for the others appellees.
AVANCEA, J.:
On November 7, 1918, the plaintiff, Lorenzo Zayco, and the defendant, Salvador
Serra, entered into a contract, the pertinent clauses of which are following:
1. That the party of the first part shall give the party of the second part an option
to buy the Palma Central for the sum of one million pesos (P1,000,000).
xxx

xxx

xxx

4. That in the case the purchase of the Palma Central is made and the party of the
second part cannot pay the whole price in cash, then he will be given a period not
exceeding three years within which to make the full payment, computed from the
day of the execution of the contract of sale, provided that the party of the second
part gives a security or bond to the satisfaction of the party of the first part to
guarantee the payment of the balance of the purchase price, with interest thereon
at a reasonable rate.
xxx

xxx

xxx

6. That this option of the party of the second part to purchase the Palma Central,
or to become a partner of, or join, the party of the first, expires on the 30th of
June, 1919.
7. That hereafter, in case of the sale of the Palma Central, or the formation of a
partnership to operate the same, the party of the second part shall have
preference to make such sale, or become a partner, over any other persons
desiring to purchase the central or enter into partnership.
Under date of June 28, 1919, the plaintiff, Lorenzo Zayco, through his attorney,
wrote a letter (Exhibit A) to the defendant, Salvador Serra, accepting the foregoing
contract and placing at his disposal a cash order of the Bank of the Philippine
Islands of Iloilo in the amount of P100,000, in part payment of the price of the
Palma Central and Estate. In this letter, notice was also given to Serra that the
Philippine National Bank agreed to transfer his long term loan of P600,000, to the
account of Zayco and to hold the latter responsible for all the amounts had and
received on account of this loan, Serra to be completely relieved from all
responsibility arising therefrom. Offer was further made in this letter to give the
bond required by the contract of November 7, 1918, to secure the payment of the
balance of the price of the Palma Central and Estate. The letter ended with a
demand by Zayco on Serra to execute the deed of sale. Serra had knowledge of
this letter on June 30, 1919, as may be inferred from his answer bearing that date
(Exhibit C). On the following 15th of July, Serra wrote to Zayco's attorney, stating
that the option contract of November 7, 1918, was cancelled and annulled.

On the same day, June 30, 1919, Zayco brought suit against Serra to compel him
to execute the deed of sale and conveyance of the Palma Central and Estate and
to pay, in addition, P500,000 as damages.
It might be well to make a brief statement of the proceedings had thereafter until
the holding of the trial.
To this complaint the defendant demurred on the ground, among others, that the
contract of November 7, 1918, does not specify the part of the price that was to
be paid in cash and the part that was to be paid within a period not exceeding
three years.
Before the court could pass upon this demurrer, Zayco filed an amended
complaint on September 9, 1919, which was later withdrawn, and substituted by
another one dated October 21, 1919.
To this amended complaint of October 21, 1919, another demurrer was filed, one
of its grounds being the same as that alleged in the first demurrer, to wit, that the
contract of November 7, 1918, does not stipulate what part of the price was to be
in cash and what part within a period not exceeding three years. The court
sustained this demurrer and granted the plaintiff a period within which to amend
his complaint.
On January 23, 1920, the last amended complaint was filed in which, for the first
time, an allegation is made that subsequent to the contract of November 7, 1918,
and prior to June 28, 1919, a stipulation was made by the plaintiff, Zayco, and the
defendant, Serra, that the sum to be paid in cash on account of the total price of
the sale was P100,000.
A demurrer was also interposed to this last amended complaint, which was
overruled.
The defendant filed his answer on February 27, 1920, containing a general and
specific denial of all and each of the allegations of the complaint and a special
defense consisting in that the contract of November 7, 1918, did not specify a
sufficient consideration on the part of the plaintiff Zayco.
On March 19, 1920, the plaintiff filed a supplemental complaint in which Philip
Whitaker, Venancio Concepcion, and Eusebio R. de Luzuriaga were included as
defendants, and it was alleged that, without the knowledge of the plaintiff Zayco,
the defendant Serra sold the Palma Central and Estate to said Messrs. Philip
Whitaker, Venancio Concepcion, and Eusebio R. de Luzuriaga on January 29, 1920,
for the sum of P1,500,000 on the terms and conditions specified in said contract.
It is prayed in this complaint that, at all events, the plaintiff Zayco be declared
entitled to purchase from the defendant, Serra, the Palma Central and Estate on
the same terms and conditions as those of the sale to Messrs. Whitaker,
Concepcion, and Luzuriaga.
Later Mr. Eusebio R. de Luzuriaga was excluded from this complaint. The plaintiff
Zayco having assigned his rights to Dionisio Inza and Severino Lizarraga, these
parties were admitted to intervene as plaintiffs. The cause having been tried, the
court below rendered judgment absolving the defendants from the complaint.
By the terms of the contract of November 7, 1918, Zayco was granted the right:
(a) To purchase the Palma Central and Estate until June 30, 1919, and (b) have
preference, after that date, over any other purchaser making the same terms.

The court below holds that this contract of November 7, 1918, has no
consideration and is, for this reason, null and void. This conclusion, however, is
not supported by the evidence.
It is true that the contract does not state any consideration on the part of Serra,
but it is presumed that there is a consideration in all contracts (art. 1277, Civ.
Code). Besides, a consideration can be proved and, in this case, there is evidence
showing its existence.
The Palma Central was in competition with the Bearin Central of Lizarraga
Hermanos and both were doing their best to gain the greater number of
supporters, which, as is well-known, constitutes the basis and measures of their
development. Zayco owned an estate containing 350 hectares used for cultivating
cane, situated between both centrals is such a way as to constitute an opening to
them from the adjacent estates. Owing to this circumstance, Zayco has been the
subject of solicitations of both centrals, each making the most favorable offers to
win him. Lizarraga Hermanos went so far as to offer to remit his debt, amounting
to P40,000, if he became a supporter of their central. Serra, in turn, offered to give
him 60 per cent of the sugar of his cane milled in the Palma Central instead of 55
per cent, as allowed by the other centrals, and besides, they promised to assist
him in acquiring this central. Zayco, at last, decided to become, as he in fact
became, a supporter of the Palma Central.
All this, which preceded and led to the execution of the contract of November 7,
1918, is evidently a sufficient consideration to give life to the contract. It meant,
on the part of Zayco, the waiver of positive benefits which he would have obtained
from Lizarraga Hermanos. It meant at the same time, on the part of Serra, an
expansion of his central and the consequent increase in his production and profit.
Under such circumstance Zayco's support to the Palma Central was a prestation of
thing or service which positively benefited Serra.
As has been stated, Zayco prays in this action that Serra be compelled to sell to
him the Palma Central in accordance with the contract to sell of November 7,
1918. It having been determined that there exists a consideration for this
contract, the same is binding upon the parties.
However, it is not necessary to view the question from this standpoint. It can be
taken for granted, as contended by the defendants, 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 this 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).
However, Zayco's acceptance, as his letter of June 28, 1919, indicates, could not,
in itself, convert the offer of sale made by Serra in the document of November 7,
1918, into a perfect contract. In order for the acceptance to have this effect, it
must be plain and unconditional, and it will not be so if it involves any new
proposal, for in that case it would not mean conformity with the offer, which is
what gives rise to the generation of the contract. The letter of acceptance of
Zayco lacks these requisites.
It should be noted that, according to the terms of the offer, in case the total of the
agreed price of P1,000,000 could not be paid in cash, the balance was to be paid
within a period not exceeding three years. This means that a part of this price was
to be paid in cash. But the amount of this first payment was not determined.
Consequently, when Zayco accepted the offer, tendering the sum of P100,000 as

first payment, his acceptance involved a proposal, not contained in the offer, that
this precisely, and not any other, should be the amount of the first payment. This
proposal, in turn, required acceptance on the part of Serra. For this reason,
Zayco's acceptance did not imply conformity with the offer of Serra, but only when
the latter shall, in turn, have accepted his proposal that the amount to be paid in
cash was P100,000. Not only was this not accepted by Serra, but Serra cancelled
his offer on July 15, 1919.
An attempt was made to prove the allegation contained in the last amended
complaint to the effect that subsequent to the execution of the contract November
7, 1918, Zayco and Serra agreed, as a suppletory stipulation, that the amount of
the first payment to be made in cash should be P100,000. It is said that this
stipulation is contained in a letter sent by Serra to Zayco. This letter, however,
was not introduced in evidence, but was alleged to have been lost, and secondary
evidence of its contents was presented which consisted in the testimonies of
Zayco, his son, Rafael, and Antonio Velez. Upon examination of the testimony of
these witnesses, the same is found so uncertain and contradictory on many points
affecting their veracity as not to be considered sufficient to prove either the loss
of the alleged letter, or its existence and contents. Moreover, it is strange, if that
stipulation ever existed, that Zayco, in accepting the offer, not only agreed to pay
P100,000 in cash, but agreed also, as part of his acceptance, to assume Serra's
obligations in connection with the credit of P600,000 given him by the National
Bank. It is stranger still that this stipulation, being so important a part of the
contract, was not alleged in the original complaint, and notwithstanding that in
the demurrer to this complaint attention was called to the fact that this stipulation
was lacking, this allegation was not made in the two successive amended
complaints but only in the fourth, after the court had sustained the demurrer filed
on this ground.
Our conclusion is that the acceptance made by Zayco of Serra's offer was not
sufficient to give life to a contract and is no ground for compelling Serra to
execute the sale offered.
As to plaintiff's claim that they have preference over the defendants, Messrs.
Venancio Concepcion and Phil. C. Whitaker in the purchase of the Palma Central,
two members of this court and the writer of this opinion believe that the plaintiffs
are entitled to this preference, but the majority of the court hold otherwise, for the
reason that the plaintiffs have not formally offered to repay the defendant
Concepcion and Whitaker incurred under the contract.
For the foregoing reasons, the judgment appealed from is affirmed with the costs
against the appellants. So ordered.

G.R. No. L-20435

October 23, 1923

LUIS ASIAIN, plaintiff-appellant,


vs.
BENJAMIN JALANDONI, defendant-appellee.
Arroyo and Gurrea for appellant.
Francisco Soriano for appellee.

MALCOLM, J.:
Luis Asiain, the plaintiff-appellant in this case, is the owner of the hacienda known
as "Maria" situated in the municipality of La Carlota, Province of Occidental
Negros, containing about 106 hectares. Benjamin Jalandoni, the defendantappellee, is the owner of another hacienda adjoining of Asiain.
Asiain and Jalandoni happening to meet no one of the days of May, 1920, Asiain
said to Jalandoni that he was willing to sell a portion of his hacienda for the sum of
P55,000. With a wave of his hand, Asiain indicated the tract of land in question,
affirming that it contained between 25 and 30 hectares, and that the crop of sugar
cane then planted would produce not less than 2,000 piculs of sugar. But
Jalandoni, remaining doubtful as to the extent of the land and as to the amount of
crop on it, Asiain wrote Jalandoni the letter which follows:
HDA. MARIA

May, 26, 1920.

MR. BENJAMIN JALANDONI.


DEAR BENJAMIN: I am in receipt of your letter and with regard to your statement
that parcel does not contain 21 hectares I do not believe. I bet anything that part
only which is planted with cane contains more than 20 hectares, I bet 2 against 1.
If you agree, I would be that you pay only one-half. I am not a surveyor, but these
days I had the pleasure to survey the land and I know more or less its area.
1awph!l.net

Your friend LUIS ASIAIN


Sometime later, in July of the same year, Asiain and Jalandoni having met at Iloilo,
they prepared and signed the memorandum-agreement which follows:
Purchase of land of Mr. Luis Asiain and his wife Maria Cadenas, by B. Jalandoni,
containing 25 hectares more or less of land bounded by property of the purchaser,
with its corresponding crop, estimated at 2,000 piculs, the total value of which is
55 thousand. The price is to be paid by paying 30 thousand at the signing of the
document, and 25 thousand within one year, with interest at the rate of 10 per
cent.
Mr. Asiain is under obligation to take care of all the plantation until the planting is
finished and in case the crop exceeds 2,000 piculs, all the excess will belong to Mr.
Asiain.
The adjacent landowner on the north and the west is the vendor himself, on the
east, B. Jalandoni, and on the south, B. Jalandoni and the widow of Abdon Ferrer.
The purchaser is under obligation to answer for all the rights and obligations of
the land with the central of Inchausti.
After the planting of the cane is completely finished, Mr. Asiain shall vacate the
parcel sold to the purchaser.
The expenses for taking care of said plantation until the planting is completely
finished will be for the account of the vendor Mr. Asiain.
(Sgd.) "LUIS ASIAIN
"BENJAMIN JALANDONI"
During all of the period of negotiations, Jalandoni remained a doubting Thomas
and was continually suggesting that, in his opinion, the amount of the land and of
the crop was overestimated. Asiain on his part always gave assurances in
conformity with the letter which he had written intended to convince Jalandoni
that the latter was in error in his opinion. As a result, the parties executed the
agreement which follows:

Here we are not to deceive each other. If you like that parcel and if you want to
buy it I will give you good propositions. I don't know where and how they learned
that I was selling the hacienda and they made me a good offer, but as we do not
want to part but with that parcel, hence my propositions are the following, in view
of the time that has elapsed and the progress of the cane.

This document, executed in the city of Iloilo, Province of Iloilo, Philippine Islands,
by and between Messrs. Luis Asiain and Benjamin Jalandoni, of age and residents
of the municipality of La Carlota, Province of Occidental Negros, Philippine Islands.

I assure (aseguro) that there are 2,000 piculs and sell on that basis, provided that
the cane is milled in due time. In case the sugar does not amount to 2,000 piculs, I
will pay in sugar all such amount as will be necessary to complete the 2,000, but if
after milling the cane, as I say, there is an excess over 2,000 piculs, all the excess
shall be mine. So that if you like, I make the sale for the same price that we talked
about and the same conditions, not a dime more or less.

(1) That Luis Asiain does hereby promise and bind himself to sell to Benjamin
Jalandoni a parcel of land the hacienda "Maria" of the aforesaid Luis Asiain,
situated in the municipality of La Carlota, Province of Occidental Negros, P.I.

Since you left it did rain, so the "alociman" (Philippine herb) of Guimib must die on
the field, whether of the hacienda or of the "lagatio." You have a contract for a
lump sum. Now they have begun to plow the old plantations within the boundary
some days ago and you may rest and throw one (unintelligible), answer yes or no,
so that I may decide.

Witnesseth:

(2) That Benjamin Jalandoni does hereby promise and bind himself to purchase the
aforesaid parcel of land in the sum P55,000 upon certain conditions specified in a
memorandum signed by the parties which is in the hands of Attorneys Padilla &
Treas.
(3) That upon the signing of this agreement, the vendor shall have the right to
collect from the purchaser part of the price giving receipts thereof signed by said
vendor.

(4) That in case the vendor should withdraw from the contract and desist from
signing the document of final sale, the purchaser shall have the right to collect
from said vendor all such amount as may have been advanced on account of this
sale, with an indemnity of P15,000 as penalty.
(5) In case it is the purchaser who should withdraw from the contract of sale, then
he will lose all such amount as may have been paid in advance on account of this
transaction.
In witness whereof, we have hereunto affixed our signatures, at Iloilo, Iloilo, this
12th day of July, 1920.
(Sgd) "LUIS ASIAIN
"BENJAMIN JALANDONI
Signed in the presence of:
(Sgd.) "ENGRACIO PADILLA
"P.T. TREAS"
Once in possession of the land, Jalandoni did two things. He had the sugar cane
ground in La Carlota Sugar Central with the result that it gave and output of P800
piculs and 23 cates of centrifugal sugar. When opportunity offered, he secured the
certificate of title of Asiain and produced a surveyor to survey the land. According
to his survey, the parcel in question contained an area of 118 hectares, 54 ares,
and 22 centiares.
Of the purchase price of P55,000, Jalandoni had paid P30,000, leaving a balance
unpaid of P25,000. To recover the sum of P25,000 from Jalandoni or to obtain the
certificate of title and the rent from him, action was begun by Asiain in the Court
of First Instance of Occidental Negros. To the complaint, an answer and a countercomplaint were interposed by the defendant, by which it was asked that he be
absolved from the complaint, that the contract be annulled, both parties to return
whatever they had received, and that he recover from the plaintiff the sum of
P3,600 annually as damages. In a well-reasoned decision, the Honorable Eduardo
Gutierrez David, Judge of First Instance, declared null the document of purchase
and its related memorandum; absolved the defendant from the payment of
P25,000; ordered the plaintiff to return to the defendant the sum of P30,000 with
legal interest from July 12, 1920; ordered the defendant to turn over to the
plaintiff the tract of land and the certificate of title No. 468, and absolved the
plaintiff from the counter-complaint, all without special finding as to the costs. It
is from said judgment that the plaintiff has appealed.
The true facts need not give us pause. They are as found by the trial judge and as
pratically agreed to by the parties. It is only necessary to keep in mind that
apparently there was always a difference of opinion between Asiain and Jalandoni
as to the area of the tract and as to the crop of sugar cane; that the agreement
between them mentions land containing 25 hectares more or less, giving the
boundaries, and a crop estimated and in one sense warranted at 2,000 piculs, and
that in reality the land contained only a little more than 18 hectares and produced
a crop of only about 800 piculs. The legal consequences arising from these facts
are more difficult of determination.
Our Civil Code contains provisions which must be taken into consideration. Codal
articles 1265, 1266, and 1269 relate to consent given by reason of error and
deceit. They provide the rules which shall avoid contracts for these and other

reasons. But the provisions of the Civil Code most directly pertinent are found in
articles 1469, 1470, and 1471.
The first two mentioned articles, 1469 and 1470, are not applicable because of the
proviso relating to the sale being made at a certain price for each unit of measure
or number which is not our case. The facts seem to fall within article 1471. It
first paragraph provides that in case of the sale of real estate for a lump sum and
not at the rate of specified price of each unit or measure, there shall be no
increase or decrease of the price even if the area be found to be more or less than
that stated in the contract. The next paragraph provides that the same rule is
applicable when two or more estates are sold for a single price. Then comes the
following: ". . . but, if in addition to a statement of the boundaries, which is
indispensable in every conveyance of real estate, the area estate should be
designated in the contract, the vendor shall be obliged to deliver all that is
included within such boundaries, even should it exceed the area specified in the
contract; and, should he not be able to do so, he shall suffer a reduction of the
price in proportion to what is lacking of the area, unless the contract be annulled
by reason of the vendee's refusal to accept anything other than that which was
stipulated."
A study of the Spanish commentators discloses that the meaning of article 1471 is
not clear as it might be, and that they are not unanimous in their views. Manresa
gives emphasis to the intention of the parties and the option on the part of the
purchaser to rescind the contract. To quote from Manresa:
The rule in the latter case is found in the second paragraph of article 1471, with
the exception of the first clause which refers to the former hypothesis. This rule
may be formulated as follows: Whether the case is one of sale of realty for a lump
sum or of two or more for a single price which is also a lump sum and,
consequently, not at the rate of specified price for each unit of measure or
number, the vendor shall be bound to deliver all that is within the boundaries
stated although it may exceed the area or number expressed in the contract; in
case he cannot deliver it, the purchaser shall have the right to reduce the price
proportionately to what is lacking of the area or number, or rescind the contract at
his option.
xxx

xxx

xxx

The manner in which the matter covered by this article was distributed in its two
paragraphs contributes to making it difficult to understand. The rule might have
been clearly stated had the first clause of the second paragraph been included in
the first paragraph, the latter to end with the words, "The same rule shall apply
when two or more estates are sold for a single price." And if by constituting an
independent paragraph, with the rest of the second paragraph, it were made to
appear more expressly that the rule of the second paragraph thus drawn referred
to all the cases of paragraph one, as we have expounded, namely, to the case of a
sale of one single estate and that of two or more for one single price, the precept
would have been clearer.
In our opinion, this would have better answered what we deem to be indubitable
intention of the legislator.
Some eminent commentators construe the last part of article 1471 in a different
way. To them the phrase "and should he not be able to do so" as applied to the
vendor, does not mean as apparently it does "should he not be able to deliver all
that is included within the boundaries stated," but this other thing, namely, that if
by reason of the fact that a less area is included within the boundaries than that

expressed in the contract, it is not possible for the vendor to comply therewith
according to its literal sense, he must suffer either the effects of the nullity of the
contract or a reduction of the price proportionately to what may be lacking of the
area or number. It is added as a ground for this solution that if the vendor fulfills
the obligation, as stated in the article, by delivering what is not included within
the boundaries, there can never by any case of proportionate reduction of the
price on account of shortage of an area, because he does not give less who
delivers all that he bound himself to.
According to this opinion, which we believe erroneous, if within the boundaries of
the property sold, there is included more than area than that expressed in the title
deeds, nothing can be claimed by the vendor who losses the value of that excess,
but if there is less area, then he loses also, because either the price is reduced or
the contract is annulled. This theory would be anomalous in case of sale of
properties in bulk, but, above all, would do gross injustice which the legislator
never intended.
There is no such thing. So long as the vendor can deliver, and for that reason,
delivers all the land included within the boundaries assigned to the property, there
can be no claim whatsoever either on his part, although the area may be found to
be much greater than what was expressed, nor on the part of the purchaser
although what area may be in reality much smaller. But as he sold everything
within the boundaries and this is all the purchaser has paid, or must pay, for
whether much or little, if afterwards, it is found that he cannot deliver all,
because, for instance, a part, a building, a valley, various pieces of land, a glen
etc., are not his, there is no sale of a specified thing, there is longer a sale of the
object agreed upon, and the solution given by the article is then just and logical:
Either the contract is annulled or the price is reduced proportionately." (10
Comentarious al Codigo Civil, p. 157.)
The principle is deduced from the Code, that if land shall be sold within
boundaries with an expression of the area and if the area is grossly deficient, the
vendee has an option, either to have the price reduced proportionately or to ask
for the rescission of the contract. The rule of the civil law is more favorable to the
purchaser than is the common law. It gives the excess to the purchaser without
compensation to the vendor, where the property is sold by a specific description
followed by the mention of the quantity or measure, but allows the purchaser
either to secure a deduction from the price in case a deficiency or to annul the
contract.
The decision of this court which gave most direct consideration to article 1471 of
the Civil Code, now chiefly relied upon by the appellant, is found in Irureta Goyena
vs. Tambunting ([1902], 1 Phil., 490). The rule announced in the syllabus is this:
"An agreement to purchase a certain specified lot of land at a certain price is
obligatory and enforceable regardless of the fact that its area is less than that
mentioned in the contract." Taken literally, this rule would lead to the result
desired by the appellant. But the syllabus naturally must be understood in relation
what is found in the decision itself; and the fact was that the tract of land was
mentioned as being located at No. 20 Calle San Jose, Ermita, Manila. The private
contract expressed a specific thing as the object of the contract and specified a
certain price. There was no statement in the document of the superficial area and
no hint in the record that either or both parties were misled. The facts, therefore,
are different than those before us and the doctrine in the Irureta Goyena vs.
Tambunting case, can well be followed and distinguished.

A comparative study of the American Authorities throws considerable light on the


situation. In volume 39 Cyc., page 1250, under the subject "Vendor and
Purchaser," is found the following:
If, in a contract of sale the quantity of the realty to be conveyed is indicated by a
unit of area, as by the acre, a marked excess or deficiency in the quantity
stipulated for is a ground for avoiding the contract. Since it is very difficult, if not
impossible, to ascertain the quality of a tract with perfect accuracy, a slight
excess or deficiency does not affect the validity of the contract.
Where, however, the contract is not for the sale of a specific quantity of land, but
for the sale of particular tract, or designated lot or parcel, by name or description,
for a sum in gross, and the transaction is bona fide, a mutual mistake as to
quantity, but not as to boundaries, will not generally entitle the purchaser to
compensation, and is not ground for rescission. But it is well settled that a
purchaser of land, when it is sold in gross, or with the description, "more or less"
or "about," does not thereby ipso facto take all risk of quantity in the tract. If the
difference between the real and the represented quantity is very great, both
parties act obviously under a mistake which it is the duty of a court of equity to
correct. And relief will be granted when the mistake is so material if the truth had
been known to the parties the sale would not have been made.
Volume 27 of the Ruling Case Law, pages 354, 434, 436, states what follows:
A mutual mistake as to the quantity of the land sold may afford ground for
equitable relief. As has been said, if, through gross and palpable mistake, more or
less land should be conveyed than was in the contemplation of the seller to part
with or the purchaser to receive, the injured party would be entitled to relief in like
manner as he would be for an injury produced by a similar cause in a contract of
any other species. And when it is evident that there has been a gross mistake s to
quantity, and the complaining party has not been guilty of any fraud or culpable
negligence, nor has he otherwise impaired the equity resulting from the mistake,
he may be entitled to relief from the technical or legal effect of his contract,
whether it be executed or only executory. It has also been held that where there is
a very great diference between the actual and the estimated quantity of acres of
land sold in gross, relief may be granted on the ground of gross mistake. Relief,
however, will not be granted as general rule where it appears that the parties
intended a contract of hazard, as where the sale is a sale in gross and not by
acreage or quantity as a basis for the price; and it has been held that a mistake on
the part of the vendor of a town lot sold by description as to number on the plat,
as to its area or dimensions, inducing a sale thereof at smaller price than he would
have asked had he been cognizant of its size, not in any way occasioned or
concealed by conduct of the purchaser, constitutes no ground for the rescission of
the contract. The apparent conflict and discrepancies in the adjudicated cases
involving mistakes as to quantity arise not from a denial of or a failure to
recognize the general principle, but from the difficulty of its practical application in
particular cases in determining the questions whether the contract was done of
hazard as to quantity or not and whether the variance is unreasonable. The
relative extent of the surplus or deficit cannot furnish, per se, an infallible criterion
in each case for its determination, but each case must be considered with
reference not only to that but its other peculiar circumstances. The conduct of the
parties, the value, extent, and locality of the land, the date of the contract, the
price, and other nameless circumstances, are always important, and generally
decisive. In other words, each case must depend on its own peculiar
circumstances and surroundings.

The rule denying relief in case of a deficit or an excess is frequently applied in


equity as well as at law, but a court of equity will not interfere on account of either
a surplus or a deficiency where it is clear that the parties intend a contract of
hazard, and it is said that although this general rule may not carry into effect the
real intention of the parties it is calculated to prevent litigation. From an early
date, courts of equity under their general jurisdiction to grant relief on the ground
of mistake have in case of mistake in the estimation of the acreage in tract sold
and conveyed interposed their aid to grant relief to the vendor where there was a
large surplus over the estimated acreage, and to the purchaser where there was
large deficit. For the purpose of determining whether relief shall be granted the
courts have divided the cases into two general classes: (1) Where the sale is of a
specific quantity which is usually denominated a sale by the acre; (2) where the
sale is usually called a sale in gross. . . .
Sales in gross for the purpose of equitable relief may be divided into various
subordinate classifications: (1) Sales strictly and essentially by the tract, without
reference in the negotiation or in the consideration to any designated or
estimated quantity of acres; (2) sales of the like kind, in which, though a supposed
quantity by estimation is mentioned or referred to in the contract, the reference
was made only for the purpose of description, and under such circumstances or in
such a manner as to show that the parties intended to risk the contingency of
quantity, whatever it might be, or how much so ever it might exceed or fall short
of that which was mentioned in the contract; (3) sales in which it is evident, from
extraneous circumstances of locality, value, price, time, and the conduct and
conversations of the parties, that they did not contemplate or intend to risk more
than the usual rates of excess or deficit in similar cases, or than such as might
reasonably be calculated on as within the range of ordinary contingency; (4) sales
which, though technically deemed and denominated sales in gross, are in fact
sales by the acre, and so understood by the parties. Contracts belonging to either
of the two first mentioned classes, whether executed or executory, should not be
modified by the chancellor when there has been no fraud. But in sales of either
the third of fourth kind, an unreasonable surplus or deficit may entitle the injured
party to equitable relief, unless he has, by his conduct, waived or forfeited his
equity. . . .
The memorandum-agreement between Asiain and Jalandoni contains the phrase
or "more or less." It is the general view that this phrase or others of like import,
added to a statement of quantity, can only be considered as covering
inconsiderable or small differences one way or the other, and do not in themselves
determine the character of the sale as one in gross or by the acre. The use of this
phrase in designating quantity covers only a reasonable excess or deficiency. Such
words may indeed relieve from exactness but not from gross deficiency.
The apparent conflict and discrepancies in the adjudicated cases arise not from a
denial of or a failure to recognize the general principles. These principles, as
commonly agreed to, may be summarized as follows: A vendee of land when it is
sold in gross or with the description "more or less" does not thereby ipso facto
take all risk of quantity in the land. The use of "more or less" or similar words in
designating quantity covers only a reasonable excess or deficiency. Mutual
mistake of the contracting parties to sale in regard to the subject-matter of the
sale which is so material as to go to the essence of the contract, is a ground for
relief and rescission. It has even been held that when the parties saw the
premises and knew the boundaries it cannot prevent relief when there was mutual
gross mistake as to quantity. Innocent and mutual mistake alone are sufficient
grounds for rescission. (Bigham vs. Madison [1899], 47 L. R. A., 267) The difficulty
comes from the application of the principles in particular cases.

A practical demonstration of what has just been said is disclosed by the notes in
volume 27 of Ruling Case Law, page 439. In the following cases, relief was denied:
Lawson vs. Floyd, 124 U. S., 108; 8 S. Ct., 409; 31 U. S. (L. ed.), 347 (estimated
acreage about 1,000 acres; shortage 368 acres); Frederick vs. Youngblood, 19 Ala.,
680; 54 Am. Dec., 209 (estimated acreage 500 acres more or less; shortage 39
acres); Jones vs. Plater, 2 Gill (Md.), 125; 41 Am. Dec., 408 (stated acreage 998
acres; shortage 55 acres); Frenche vs. State, 51 N. J. Eq., 624; 27 Atl., 140; 40 A.
S. R., 548 (stated acreage 195-98/100 be the same more or less; shortage 137/100); Faure vs. Martin, 7 N. Y., 210; 57 Am. Dec., 515 (stated acreage 96 acres
more or less; deficit 10 acres); Smith vs. Evans, 6 Bin. (Pa.), 102; 6 Am. Dec., 436
(shortage of 88 acres in tract conveyed as containing 991 1/4 acres more or less);
Jollife vs. Hite, 1 Call (Va.), 301; 1 Am. Dec., 519 (stated acreage 578 acres more
or less; shortage 66 acres); Pendleton vs. Stewart, 5 Call (Va.), 1;2 Am. Dec., 583
(stated acreage 1,100 acres more or less; shortage 160 acres); Nelson vs.
Matthews, 2 Hen. & M. (Va.), 164; 3 Am. Dec., 620 (stated acreage 852 acres more
or less; shortage of 8 acres). In the following cases relief was granted: Harrel vs.
Hill, 19 Ark., 102; 68 Am. Dec., 202 (stated acreage 180 acres more or less; deficit
84 acres); Solinger vs. Jewett, 25 Ind., 479; 87 Am. Dec., 372 (stated acreage 121
acres more or less; deficit 36 acres); Hays vs. Hays, 126 Ind., 92; 25 N.E., 600; 11
L. R. A., 376 (stated acreage 28.4 acres more or less; deficit 5 acres); Baltimore,
etc., Land Soc. vs. Smith, 54 Md., 187; 39 Am. Rep., 374 (stated acreage about 65
acres; deficit 30 to 35 acres); Newton vs. Tolles, 66 N. H., 136; 19 Atl., 1092; 49 A.
S. R., 593; 9 L. R. A., 50 (stated acreage about 200 acres; deficit 65 acres); Couse
vs. Boyles, 4 N. J. Eq., 212; 38 Am. Dec., 212 (stated acreage 135 acres more or
less; deficit 30 acres) Belknap vs. Sealey, 14 N. Y., 143; 67 Am. Dec., 120 (stated
acreage 8 acres more or less; deficit 4 acres); Paine vs. Upton, 87 N.Y., 327; 41
Am. Rep., 371 (stated acreage "about 222 acres be the same more or less;"
shortage 18 acres); Bigham vs. Madison, 103 Tenn., 358; 52 S. W., 1074; 47 L. R.
A., 267 (stated acreage 25 acres more or less; deficit 12 acres); Smith vs. Fly, 24
Tex., 345; 76 Am. Dec., 109 (stated acreage 500 acres more or less; deficit 115
acres); Triplett vs. Allen, 26 Grat. (Va.), 721; 21 Am. Dec., 320 (stated acreage 166
acres more or less; deficit 10 acres); Epes vs. Saunders, 109 Va., 99; 63 S. E., 428;
132 A. S. R., 904 (stated acreage 75 acres more or less; deficit 22 acres); McComb
vs. Gilkeson, 110 Va., 406; 66 S. E., 77; 135 A. S. R., 944 (stated acreage 245
acres more or less; deficit 10 acres).
A case often cited and which on examination is found to contain a most
exhaustive review of the decisions, is that of Belknap vs. Sealey ([1856], 14 N.Y.
143; 67 Am. Dec.,, 120) The facts were: "Upon the merits of the controversy the
case is quite simple in its facts. The land in question is situated in the city of
Brooklyn; and being valuable only for division and sale as city lots, its valuable
only for division and sale as city lots, its value is precisely in proportion to the
quantity. In consideration of the gross sum of fourteen thousand dollars, of which
one thousand dollars was paid down, the defendant agreed to convey the land to
the plaintiff, describing it as "the premises conveyed to him by Samuel T.
Roberts," by deed dated about nine months previous. The deed of Roberts
contained a definite description by meters and bounds, and stated the quantity to
be "about nine acres, more or less," excepting a certain parcel of one acre and six
perches. The quantity in fact is only about half as much as the deed asserted. The
plaintiff, in agreeing to purchase the tract at the sum named, acted under a
mistake which affected the price nearly one half, and the judge has found that the
seller was mistaken also. . . . The Judge has found that the actual quantity was
substantially and essentially less than the plaintiff supposed he was purchasing;
and although the finding does not so state in terms, there can be no difficulty, I
think, in affirming that if the true quantity had been known, the contract would not
have been made. The agreement has never been consummated by a conveyance.
These are the only essential facts in the case." The learned Judge remarked: "The

counsel for the defendant is obliged to contend, and he does not contend, that
mere mistake as to the quantity of land affords no ground of relief against a
contract in the terms of the present one, however serious such mistake may be,
and although we can readily see the contract would never have been made if the
quantity had been made known. The convenience of such a rule has been insisted
on, and in the denial of justice it certainly has the merit of simplicity. If the
doctrine is true as broadly as stated, then there is one class of contracts to which
the settled maxim that equity will relieve against mistake can have no application.
Upon a careful examination of the cases cited, as well as upon principle, my
conclusion is, that agreements of this description are not necessarily proof against
the maxims which apply to all others." Then follows a review of the cases not
alone of the state of New York and other states in the America Union but of
England as well. The rule was announced that equity will rescind a contract for the
sale of land for mutual mistake as to the quantity of land which the boundaries
given in the contract contained, where the deficiency is material. "More or less,"
used in the contract in connection with the statement of the quantity, will not
prevent the granting of such relief.
Coordinating more closely the law and the facts in the instant case, we reach the
following conclusions: This was not a contract of hazard. It was a sale in gross in
which there was a mutual mistake as to the quantity of land sold and as to the
amount of the standing crop. The mistake of fact as disclosed not alone by the
terms of the contract but by the attendant circumstances, which it is proper to
consider in order to throw light upon the intention of the parties, is, as it is
sometimes expressed, the efficient cause of the concoction. The mistake with
reference to the subject-matter of the contract is such that, at the option of the
purchaser, it is rescindable. Without such mistake the agreement would not have
been made and since this is true, the agreement is inoperative and void. It is not
exactly a case of over reaching on the plaintiff's part, or of misrepresentation and
deception, or of fraud, but is more nearly akin to a bilateral mistake for which
relief should be granted. Specific performance of the contract can therefore not be
allowed at the instance of the vendor.
The ultimate result is to put the parties back in exactly their respective positions
before they became involved in the negotiations and before accomplishment of
the agreement. This was the decision of the trial judge and we think that decision
conforms to the facts, the law, and the principles of equity.
Judgment is affirmed, without prejudice to the right of the plaintiff to establish in
this action in the lower court the amount of the rent of the land pursuant to the
terms of the complaint during the time the land was in the possession of the
defendant, and to obtain judgment against the defendant for that amount, with
costs against the appellant. So ordered.

.R. No. L-11668

April 1, 1918

ANTONIO ENRIQUEZ DE LA CAVADA, plaintiff-appellee,


vs.
ANTONIO DIAZ, defendant-appellant.
Ramon Diokno for appellant.
Alfredo Chicote and Jose Arnaiz for appellee.
JOHNSON, J.:
This action was instituted by the plaintiff for the purpose of requiring the
defendant to comply with a certain "contract of option" to purchase a certain
piece or parcel of land described in said contract and for damages for a
noncompliance with said contract. After the close of the trial the Honorable James
A. Ostrand, judge, rendered a judgment the dispositive part of which is as follows:
Wherefore, it is hereby ordered and adjudged that the defendant, within the
period of thirty days from the date upon which this decision becomes final, convey
to the plaintiff a good and sufficient title in fee simple to the land described in
decrees Nos. 13909 and 13919 of the Court of Land Registration, upon payment or
legal tender of payment by said plaintiff of the sum of thirty thousand pesos
(P30,000) in cash, and upon said plaintiff giving security approved by this court for
the payment within the term of 6 years from the date of the conveyance for the
additional sum of forty thousand pesos (P40,000) with interest at the rate of 6 per
cent per annum.
It is further ordered and adjudged that in the event of the failure of the defendant
to execute the conveyance as aforesaid, the plaintiff have and recover judgment
against him, the said defendant, for the sum of twenty thousand pesos (P20,000),
with interest at the rate of six per cent (6 per cent per annum from the date upon
which the conveyance should have been made). It is so ordered.
From that judgment the defendant appealed and made several assignment of
error.
It appears from the record that on the 15th day of November, 1912, the defendant
and the plaintiff entered into the following "contract of option:"
(EXHIBIT A.)
CONTRACT OF OPTION.
I, the undersigned, Antonio Diaz, of legal age, with personal registration certificate
Number F-855949, issued at Pitogo, Tayabas, January 16, 1912, and temporarily
residing in Manila, P. I., do hereby grant an option to Antonio Enriquez to purchase
my hacienda at Pitogo consisting of 100 and odd hectares, within the period
necessary for the approval and issuance of a Torrens title thereto by the
Government for which he may pay me either the sum of thirty thousand pesos
(P30,000), Philippine currency, in cash, or within the period of six (6) years,
beginning with the date of the purchase, the sum of forty thousand pesos
(P40,000), Philippine currency, at six per cent interest per annum, with due
security for the payment of the said P40,000 in consideration of the sale to him of
my property described as follows, to wit:
About one hundred hectares of land in Pitogo, Tayabas, containing about 20,000
coconut trees and 10,000 nipa-palm trees, all belonging to me, which I hereby sell

to Antonio Enriquez de la Cavada for seventy thousand pesos, under the


conditions herein specified.
I declare that Antonio Enriquez is the sole person who has, and shall have, during
the period of this option, the right to purchase the property above-mentioned.
I likewise declare that Antonio Enriquez shall be free to resell the said property at
whatever price he may desire, provided that he should comply with the
stipulations covenanted with me.
In witness of my entire conformity with the foregoing, I hereunto affix my
signature, in Manila, P. I., this 15th day of November, 1912.
(Sgd.)

Antonio Diaz.

Signed in the presence of:


(Sgd.)

J. VALDS DIAZ.

(EXHIBIT B.)
P. I., November 15, 1912.
Sr. Don ANTONIO DIAZ,
Calle Victoria, No. 125, W. C., Manila, P. I.
DEAR SIR: I have the honor to inform you that, in conformity with the letter of
option in my favor of even date, I will buy your coconut plantation in Pitogo,
containing one hundred hectares, together with all the coconut and nipa-palm
trees planted thereon, under the following conditions:
1.
I shall send a surveyor to survey the said property, and to apply to the
Government for a Torrens title therefore, and, if the expenses incurred for the
same should not exceed P1,000, I shall pay the P500 and you the other P500;
Provided, however, that you shall give the surveyor all necessary assistance
during his stay at the hacienda.
2.
I shall pay the purchase price to you in conformity with our letter of
option of this date, and after the Torrens title shall have been officially approved.
Yours respectfully,
(Sgd.)

A. ENRIQUEZ

I acknowledge receipt of, and conform with, the foregoing.


(Sgd.)

ANTONIO DIAZ

It appears from the record that soon after the execution of said contract, and in
part compliance with the terms thereof, the defendant presented two petitions in
the Court of Land Registration (Nos. 13909 and 13919), each for the purpose of
obtaining the registration of a part of the "Hacienda de Pitogo." Said petitions
were granted, and each parcel as registered and a certificate of title was issued
for each part under the Torrens system to the defendant herein. Later, and
pretending to comply with the terms of said contract, the defendant offered to
transfer to the plaintiff one of said parcels only, which was a part of said
"hacienda." The plaintiff refused to accept said certificate for a part only of said

"hacienda" upon the ground (a) that it was only a part of the "Hacienda de
Pitogo," and (b) under the contract (Exhibits A and B) he was entitled to a transfer
to him all said "hacienda."

was not permitted to present all the proof he desired to present. He makes no
contention that he has been prejudiced in any manner whatsoever by virtue of the
method agreed upon for taking the testimony.

The theory of the defendant is that the contract of sale of said "Hacienda de
Pitogo" included only 100 hectares, more or less, of said "hacienda," and that by
offering to convey to the plaintiff a portion of said "hacienda" composed of "100
hectares, more or less," he thereby complied with the terms of the contract. The
theory of the plaintiff is that he had purchased all of said "hacienda," and that the
same contained, at least, 100 hectares, more or less. The lower court sustained
the contention of the plaintiff, to wit, that the sale was a sale of the "Hacienda de
Pitogo" and not a sale of a part of it, and rendered a judgment requiring the
defendant to comply with the terms of the contract by transferring to the plaintiff,
by proper deeds of conveyance, all said "hacienda," or to pay in lieu thereof the
sum of P20,000 damages, together with 6 per cent interest from the date upon
which said conveyance should have been made.

There is nothing in the law nor in public policy which prohibits the parties in a civil
litigation from making the agreement above quoted. While the law concedes to
parties litigant, generally, the right to have their proof taken in the presence of the
judge, such right is a renounceable one. In a civil action the parties litigant have a
right to agree, outside of the court, upon the facts in litigation. Under certain
conditions the parties litigant have a right to take the depositions of witnesses and
submit the sworn statements in that form to the court. The proof, as it was
submitted to the court in the present case, by virtue of said agreement, was, in
effect, in the form of a deposition of the various witnesses presented. Having
agreed to the method of taking the proof, and the same having been taking in
compliance with said agreement, it is now too late, there being no law to the
contrary, for them to deny and repudiate the effect of their agreement. (Biunas vs.
Mora, R. G. No. 11464, March 11, 1918; Behr vs. Levy Hermanos, R. G. No 12211,
March 19, 1918.1)

After issue had been joined between the plaintiff and defendant upon their
pleadings, they entered into the following agreement with reference to the
method of presenting their proof:
The attorneys for the parties in this case make the following stipulations:
1.
Each of the litigating parties shall present his evidence before Don Felipe
Canillas, assistant clerk of the Court of First Instance of Manila, who, for such
purpose, should be appointed commissioner.
2.
Said commissioner shall set a day and hour for the presentation of the
evidence above-mentioned, both oral and documentary, and in the stenographic
notes shall have record entered of all objections made to the evidence by either
party, in order that they may afterwards be decided by the court.
3.
The transcription of the stenographic notes, containing the record of the
evidence taken, shall be paid for in equal shares by both parties.
4.
At the close of the taking of the evidence, each of the parties shall file his
brief in respect to such evidence, whereupon the case as it then stands shall be
submitted to the decision of the court.
The parties request the court to approve this agreement in the part thereof which
refers to the proceedings in this case.
Manila, P. I., December 21, 1914.
(Sgd.)

ANTONIO V. HERRERO.

(Sgd.) ALFREDO CHICOTE.

Approved:
(Sgd.)

GEO. R. HARVEY,
Judge.

Said agreement was approved by the lower court, and proof was taken in
accordance therewith. The defendant-appellant now alleges, giving several
reasons therefor, that the proof was improperly practiced, and that the judge was
without authority o decide the cause upon proof taken in the manner agreed upon
by the respective parties. The defendant-appellant makes no contention that he

Not only is there no law prohibiting the parties from entering into an agreement to
submit their proof to the court in civil actions as was done in the present case, but
it may be a method highly convenient, not only to the parties, but to busy courts.
The judgment of the lower court, therefore, should not be modified or reversed on
account of the first assignment of error.
In the second assignment of error, the appellant alleges (a) that the lower court
committed an error in declaring the contract (Exhibits A and B) a valid obligation,
for the reason that it not been admitted in evidence, and (b) that the same was
null for a failure of consideration. Upon the first question, an examination of the
proof shows that said contract (Exhibits A and B) was offered in evidence and
admitted as proof without objection. Said contract was, therefore, properly
presented to the court as proof. Not only was the contract before the court by
reason of its having been presented in evidence, but the defendant himself made
said contract an integral part of his pleadings. The defendant admitted the
execution and delivery of the contract, and alleged that he made an effort to
comply with its terms. His only defense is that he sold to the plaintiff a part of the
"hacienda" only and that he offered, in compliance with the terms of the contract,
to convey to the plaintiff all of the land which he had promised to sell.
With reference to the second objection, to wit, that there was no consideration for
said contract it may be said (a) that the contract was for the sale of a definite
parcel of land; (b) that it was reduced to writing; (c) that the defendant promised
to convey to the plaintiff said parcel of land; (d) that the plaintiff promised to pay
therefor the sum of P70,000 in the manner prescribed in said contract; (e) that the
defendant admitted the execution and delivery of the contract and alleged that he
made an effort to comply with the same (par. 3 of defendant's answer) and
requested the plaintiff to comply with his part of the contract; and (f) that no
defense or pretension was made in the lower court that there was no
consideration for his contract. Having admitted the execution and delivery of the
contract, having admitted an attempt to comply with its terms, and having failed
in the court below to raise any question whatsoever concerning the inadequacy of
consideration, it is rather late, in the face of said admissions, to raise that
question for the first time in this court. The only dispute between the parties in
the lower court was whether or not the defendant was obliged to convey to the
plaintiff all of said "hacienda." The plaintiff insisted that his contract entitled him
to a conveyance of all of said "hacienda." The defendant contended that he had
complied with the terms of his contract by offering to convey to the plaintiff a part

of the said "hacienda" only. That was the only question presented to the lower
court and that was the only question decided.
A promise made by one party, if made in accordance with the forms required by
the law, may be a good consideration (causa) for a promise made by another
party. (Art. 1274, Civil Code.) In other words, the consideration (causa) need not
pass from one to the other at the time the contract is entered into. For example, A
promises to sell a certain parcel of land to B for the sum of P70,000. A, by virtue of
the promise of B to pay P70,000, promises to sell said parcel of land to B for said
sum, then the contract is complete, provided they have complied with the forms
required by the law. The consideration need not be paid at the time of the
promise. The one promise is a consideration for the other. Of course, A cannot
enforce a compliance with the contract and require B to pay said sum until he has
complied with his part of the contract. In the present case, the defendant
promised to convey the land in question to the plaintiff as soon as the same could
be registered. The plaintiff promised to pay to the defendant P70,000 therefor in
accordance with the terms of their contract. The plaintiff stood ready to comply
with his part of the contract. The defendant, even though he had obtained a
registered title to said parcel of land, refused to comply with his promise. All of the
conditions of the contract on the part of the defendant had been concluded,
except delivering the deeds of transfer. Of course, if the defendant had been
unable to obtain a registration of his title, or if he had violated the terms of the
alleged optional contract by selling the same to some other person than the
plaintiff, then he might have raised the objection that he had received nothing
from the plaintiff for the option which he had conceded. That condition, of course,
would have presented a different question from the one which we have before us.
The said contract (Exhibits A and B) was not, in fact, an "optional contract" as that
phrase is generally used. Reading the said contract from its four corners it is
clearly as absolute promise to sell a definite parcel of land for a fixed price upon
definite conditions. The defendant promised to convey to the plaintiff the land in
question as soon as the same was registered under the Torrens system, and the
plaintiff promised to pay to the defendant the sum of P70,000, under the
conditions named, upon the happening of that event. The contract was not, in
fact, what is generally known as a "contract of option." It differs very essentially
from a contract of option. An optional contract is a privilege existing in one
person, for which he had paid a consideration, which gives him the right to buy,
for example, certain merchandise of certain specified property, from another
person, if he chooses, at any time within the agreed period, at a fixed price. The
contract of option is a separate and distinct contract from the contract which the
parties may enter into upon the consummation of the option. A consideration for
an optional contract is just as important as the consideration for any other kind of
contract. If there was no consideration for the contract of option, then it cannot be
entered any more than any other contract where no consideration exists. To
illustrate, A offers B the sum of P100,000 for the option of buying his property
within the period of 30 days. While it is true that the conditions upon which A
promises to buy the property at the end of the period mentioned are usually fixed
in the option, the consideration for the option is an entirely different consideration
from the consideration of the contract with reference to which the option exists. A
contract of option is a contract by virtue of the terms of which the parties thereto
promise and obligate themselves to enter into contract at a future time, upon the
happening of certain events, or the fulfillment of certain conditions.
Upon the other hand, suppose that the defendant had complied with his part of
the contract and had tendered the deeds of transfer of the "Hacienda de Pitogo" in
accordance with its terms and had demanded the payments specified in the
contract, and the plaintiff refused to comply what then would have been the
rights of the defendant? Might he not have successfully maintained an action for

the specific performance of the contract, or for the damages resulting from the
breach of said contract? When the defendant alleged that he had complied with
his part of the contract (par. 3 of defendant's answer) and demanded that the
plaintiff should immediately comply with his part of the same, he evidently was
laying the foundation for an action for damages, the nullification or a specific
compliance with the contract.
The appellant contends that the contract which he made was not with the plaintiff
but with Rosenstock, Elser and Co. That question was not presented in the court
below. The contract in question shows, upon its face, that the defendant made the
same with the plaintiff, Not having raised the question in the court below, and
having admitted the execution and delivery of the contract in question with the
plaintiff, we are of the opinion that his admission is conclusive upon that question
(par. 1 of special defense of defendant's answer) and need not be further
discussed.
The appellant further contends that the action was premature, for the reason that
the plaintiff had not paid nor offered to pay the price agreed upon, under the
conditions named, for the land in question. That question was not raised in the
court below, which fact, ordinarily, would be a sufficient answer to the contention
of the appellant. It may be added, however, that the defendant could not demand
the payment until he had offered the deeds of conveyance, in accordance with the
terms of his contract. He did not offer to comply with the terms of his contract.
True it is that he offered to comply partially with the terms of the contract, but not
fully. While the payment must be simultaneous with the delivery of the deeds of
conveyance, the payment need not be made until the deed of conveyance is
offered. The plaintiff stood ready and willing to perform his part of the contract
immediately upon the performance on the part of the defendant. (Arts. 1258 and
1451 of Civil Code.)
In the fifth assignment of error the appellant contends that the lower court
committed an error in not declaring that the defendant was not obligated to sell
the "Hacienda de Pitogo" to the plaintiff "por incumplimiento, renuncia abandono
y negligencia del mismo demandante, etc." (For nonfulfillment, renunciation,
abandonment and negligence of plaintiff himself, etc.) That question was not
presented to the court below. But even though it had been the record shows that
the plaintiff, at all times, insisted upon a compliance with the terms of the contract
on the part of the defendant, standing ready to comply with his part of the same.
The appellant contends in his sixth assignment of error that the plaintiff had not
suffered the damages complained of, to wit, in the sum of P20,000. The only proof
upon the question of damages suffered by the plaintiff for the noncompliance with
the terms of the contract in question on the part of the defendant is that the
plaintiff, in contemplation of the compliance with the terms of the contract on the
part of the defendant, entered into a contract with a third party to sell the said
"hacienda" at a profit of P30,000. That proof is not disputed. No attempt was
made in the lower court to deny that fact. The proof shows that the person with
whom the plaintiff had entered into a conditional sale of the land in question had
made a deposit for the purpose of guaranteeing the final consummation of that
contract. By reason of the failure of the defendant to comply with the contract
here in question, the plaintiff was obliged to return the sum deposited by said
third party with a promise to pay damages. The record does not show why the
plaintiff did not ask for damages in the sum of P30,000. He asked for a judgment
only in the sum of P20,000. He now asks that the judgment of the lower court be
modified and that he be given a judgment for P30,000. Considering the fact that
he neither asked for a judgment for more than P20,000 nor appealed from the
judgment of the lower court, his request now cannot be granted. We find no

reason for modifying the judgment of the lower court by virtue of the sixth
assignment of error.
In the seventh assignment of error the appellant contends that the contract of
sale was not in effect a contract of sale. He alleges that the contract was, in fact, a
contract by virtue of which the plaintiff promised to find a buyer for the parcel of
land in question; that the plaintiff was not in fact the purchaser; that the only
obligation that the plaintiff assumed was to find some third person who would
purchase the land from the defendant. Again, it would be sufficient to say, in
answer to that assignment of error, that no contention of that nature was
presented in the court below, and for that reason it is improperly presented now
for the first time. In addition, however, it may be added that the defendant, in his
answer, admitted that he not only sold the land in question, but offered to transfer
the same to the plaintiff, in compliance with the contract. (See answer of
defendant.)
In the eighth assignment of error the appellant contends that the lower court
committed an error in its order requiring him to convey to the plaintiff the

"Hacienda de Pitogo," for the reason that the plaintiff had not demanded a
transfer of said property, and for the additional reason that a portion of said
"hacienda" had already been sold to a third person. With reference to the first
contention, the record clearly shows that the plaintiff was constantly insisting
upon a compliance with the terms of the contract, to wit, a conveyance to him of
the "Hacienda de Pitogo" by the defendant. Naturally, he refused, under the
contract, to accept a conveyance of a part only of said "hacienda." With reference
to the second contention, it may be said that the mere fact that the defendant
had sold a part of the "hacienda" to other persons, is no sufficient reason for not
requiring a strict compliance with the terms of his contract with the plaintiff, or to
answer in damages for his failure. (Arts. 1101 and 1252 of the Civil Code.)
In view of the foregoing, and after a consideration of the facts and the law
applicable thereto, we are persuaded that there is no reason given in the record
justifying a modification or reversal of the judgment of the lower court. The same
is, however, hereby affirmed, with costs. So ordered.