EN BANC

[G.R. No. L-22487. May 21, 1969.]

ASUNCION ATILANO, CRISTINA ATILANO, ROSARIO ATILANO, assisted by their respective husbands, HILARIO
ROMANO, FELIPE BERNARDO, and MAXIMO LACANDALO, ISABEL ATILANO and GREGORIO
ATILANO, Plaintiffs-Appellees, v. LADISLAO ATILANO and GREGORIO M. ATILANO, Defendants-Appellants.

Climaco & Azcarraga for Plaintiff-Appellee.

T. de los Santos, for Defendants-Appellants.

SYLLABUS

1. CIVIL LAW; CONTRACTS; SALE; REAL INTENTION OF PARTIES PREVAIL. Where the object of the sale, as
intended and understood by the parties, was that specific portion where the vendee was already residing, where he
reconstructed his house at the end of the war, and where his heirs continued to reside thereafter: namely, lot No. 535-A;
and that its designation as lot No. 535-E in the deed of sale was a simple mistake in the drafting of the document, the
mistake did not vitiate the consent of the parties, or affect the validity and binding effect of the contract between them. The
New Civil Code provides a remedy for such a situation by means of reformation of the instrument. In this case, however,
the deed of sale executed in 1920 need no longer be reformed. The parties have retained possession of their respective
properties conformably to the real intention of the parties to that sale, and all they should do is to execute mutual deeds of
conveyance.

2. ID.; ID.; REFORMATION OF INSTRUMENT; REMEDY WHEN THE TRUE INTENTION OF THE PARTIES IS NOT
EXPRESSED THEREIN. The remedy of reformation of the instrument, provided for by the New Civil Code, is available
when, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the
instrument purporting to embody the agreement by reason of mistake, fraud, inequitable conduct or accident.

DECISION

MAKALINTAL, J.:

In 1916 Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot No. 535 of the then municipality of
Zamboanga cadastre. The vendee thereafter obtained transfer certificate of title No. 1134 in his name. In 1920 he had the
land subdivided into five parts, identified as lots Nos. 535-A, 535-B, 535-C, 535-D and 535-E, respectively. On May 18 of
the same year, after the subdivision had been effected, Eulogio Atilano I, for the sum of P150.00, executed a deed of sale
covering lot No. 535-E in favor of his brother Eulogio Atilano II, who thereupon obtained transfer certificate of title No. 3129
in his name. Three other portions, namely, lots Nos. 535-B, 535-C and 535-D, were likewise sold to other persons, the
original owner, Eulogio Atilano I, retaining for himself only the remaining portion of the land, presumably covered by the
title to lot No. 535-A. Upon his death the title to this lot passed to Ladislao Atilano, defendant in this case, in whose name
the corresponding certificate (No. T-5056) was issued.

On December 6, 1952, Eulogio Atilano II having become a widower upon the death of his wife Luisa Bautista, he and his
children obtained transfer certificate of title No. 4889 over lot No. 535-E in their names as co-owners. Then, on July 16,
1959, desiring to put an end to the co-ownership, they had the land resurveyed so that it could properly be subdivided; and
it was then discovered that the land they were actually occupying on the strength of the deed of sale executed in 1920 was
lot No. 535-A and not lot 535-E, as referred to in the deed, while the land which remained in the possession of the vendor,
Eulogio Atilano I, and which passed to his successor, defendant Ladislao Atilano was lot No. 535-E and not lot No. 535-A.

On January 25, 960, the heirs of Eulogio Atilano II, who was by then also deceased, filed the present action in the Court of
First Instance of Zamboanga, alleging, inter alia, that they had offered to surrender to the defendants the possession of lot
SALES WAVE 1 1
No. 535-A and demanded in return the possession of lot No. 535-E, but that the defendants had refused to accept the
exchange. The plaintiffs insistence is quite understandable, since lot No. 535-E has an area of 2,612 square meters as
compared to the 1,808 square-meter area of lot No. 535-A.

In their answer to the complaint the defendants alleged that the reference to lot No. 535-E in the deed of sale of May 18,
1920 was an involuntary error; that the intention of the parties to that sale was to convey the lot correctly identified as lot
No. 535-A; that since 1916, when he acquired the entirety of lot No. 535, and up to the time of his death, Eulogio Atilano I
had been possessing and had his house on the portion designated as lot No. 535-E, after which he was succeeded in
such possession by the defendants herein; and that as a matter of fact Eulogio Atilano I even increased the area under his
possession when on June 11, 1920 he bought a portion of an adjoining lot, No. 536, from its owner Fruto del Carpio. On
the basis of the foregoing allegations the defendants interposed a counterclaim, praying that the plaintiffs be ordered to
execute in their favor the corresponding deed of transfer with respect to Lot No. 535-E.

The trial court rendered judgment for the plaintiffs on the sole ground that since the property was registered under the
Land Registration Act the defendants could not acquire it through prescription. There can be, of course, no dispute as to
the correctness of this legal proposition; but the defendants, aside from alleging adverse possession in their answer and
counterclaim, also alleged error in the deed of sale of May 18, 1920, thus: "Eulogio Atilano 1,o, por equivocacin o errr
involuntario, cedio y traspaso a su hermano Eulogio Atilano 2.do el lote No. 535-E en vez del Lote No. 535-A."cralaw
virtua1aw library

The logic and common sense of the situation lean heavily in favor of the defendants contention. When one sells or buys
real propertya piece of land, for exampleone sells or buys the property as he sees it, in its actual setting and by its
physical metes and bounds, and not by the mere lot number assigned to it in the certificate of title. In the particular case
before us, the portion correctly referred to as lot No. 535-A was already in the possession of the vendee, Eulogio Atilano II,
who had constructed his residence therein, even before the sale in his favor; indeed, even before the subdivision of the
entire lot No. 535 at the instance of its owner, Eulogio Atilano I. In like manner the latter had his house on the portion
correctly identified, after the subdivision, as lot No. 535-E, even adding to the area thereof by purchasing a portion of an
adjoining property belonging to a different owner. The two brothers continued in possession of the respective portions for
the rest of their lives, obviously ignorant of the initial mistake in the designation of the lot subject of the 1920 sale until 1959,
when the mistake was discovered for the first time.

The real issue here is not adverse possession, but the real intention of the parties to that sale. From all the facts and
circumstances we are convinced that the object thereof, as intended and understood by the parties, was that specific
portion where the vendee was then already residing, where he reconstructed his house at the end of the war, and where
his heirs, the plaintiffs herein, continued to reside thereafter: namely, lot No. 535-A; and that its designation as lot No.
535-E in the deed of sale was a simple mistake in the drafting of the document. The mistake did not vitiate the consent of
the parties, or affect the validity and binding effect of the contract between them. The new Civil Code provides a remedy
for such a situation by means of reformation of the instrument. This remedy is available when, there having been a
meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to
embody the agreement by reason of mistake, fraud, inequitable conduct or accident (Art. 1359, et seq.). In this case, the
deed of sale executed in 1920 need no longer be reformed. The parties have retained possession of their respective
properties conformably to the real intention of the parties to that sale, and all they should do is to execute mutual deed of
conveyance.

WHEREFORE, the judgment appealed from is reversed. The plaintiffs are ordered to execute a deed of conveyance of lot
No. 535-E in favor of the defendants, and the latter, in turn, are ordered to execute a similar document, covering lot No.
535-A, in favor of the plaintiffs. Costs against the latter.

Reyes, J.B.L. (Acting C.J.), Dizon, Zaldivar, Sanchez, Fernando and Capistrano, JJ., concur.

Teehankee and Barredo, JJ., took no part.

Concepcion, C.J. and Castro, J., are on leave.

SALES WAVE 1 2
Atilano vs. Atilano [GR No. L-22487 May 21, 1969]

Facts: In 1916, Atilano I acquired lot No. 535 by purchase. In 1920, he had the land subdivided into five parts, identified as
lots Nos. 535-A, 535-B, 535-C, 535-D and 535-E, respectively. After the subdivision had been effected, Atilano I executed
a deed of salecovering lot No. 535-E in favor of his brother Atilano II. Three other portions, namely, lots Nos. 535-B, 535-C,
and 535-D, were likewise sold to other persons. Atilano I retained for himself the remaining portions of the land,
presumably covered by the title to lot No. 535-A. upon his death, the title to this lot passed to Ladislao, in whose name the
corresponding certificate was issued.

On 1959, Atilano II and his children had the land resurveyed so that it could be properly subdivided. However,
they discovered that the land they were actually occupying on the strength of the deed of sale was lot No. 353-A and not
lot 535-E, while the land which remained in the possession of Atilano I, and which was passed to Ladislao was lot No.
353-E and not lot No. 535-A.

On 1960, the heirs of Atilano II alleging, inter alia, that they offered to surrender to the possession of lot No. 535-A and
demanded in return the possession of lot No. 535-E, but the defendants refused to accept the exchange. The plaintiffs'
insistence is quite understandable, since lot No. 535-E has an area of 2,612 square meters as compared to the 1,808
square-meter area of lot No. 535-A.

In their answer to the complaint, the defendants alleged that the reference to lot No. 535-E in the deed of sale was an
involuntary error; that the intention of the parties to that sale was to convey the lot correctly identified as lot No. 535-A. On
the basis of the foregoing allegations the defendants interposed a counterclaim, praying that the plaintiffs be ordered to
execute in their favor the corresponding deed of transfer with respect to Lot No. 535-E.

The trial court rendered judgment in favor of the plaintiffs.

Issue: Whether or not there has been a valid sale in view of the real intention of the parties.

Held: From the facts and circumstances, the object is lot No. 535-A and its designation as lot No. 535-E in the deed of
sale was a simple mistake in the drafting of the document. The mistake did not vitiate the consent of the parties, or affect
the validity and binding effect of the contract between them. The new Civil Code provides a remedy by means of
reformation of the instrument. This remedy is availablewhen, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to embody the agreement by reason of mistake,
fraud, inequitable conduct or accident

In this case, the deed of sale executed in 1920 need no longer be reformed. The parties have retained possession of their
respective properties conformably to the real intention of the parties to that sale, and all they should do is to execute
mutual deed of conveyance.

Therefore, the judgment appealed from is reversed. The plaintiffs are ordered to execute a deed of conveyance of lot No.
535-E in favor of the defendants, and the latter, in turn, are ordered to execute a similar document, covering lot No. 535-A,
in favor of the plaintiffs. Costs against the latter.

SALES WAVE 1 3
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-24732 April 30, 1968

PIO SIAN MELLIZA, petitioner,

vs.
CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES and THE COURT APPEALS, respondents.

BENGZON, J.P., J.:

Juliana Melliza during her lifetime owned, among other properties, three parcels of residential land in Iloilo City registered
in her name under Original Certificate of Title No. 3462. Said parcels of land were known as Lots Nos. 2, 5 and 1214. The
total area of Lot No. 1214 was 29,073 square meters.

On November 27, 1931 she donated to the then Municipality of Iloilo, 9,000 square meters of Lot 1214, to serve as site for
the municipal hall. 1 The donation was however revoked by the parties for the reason that the area donated was found
inadequate to meet the requirements of the development plan of the municipality, the so-called "Arellano Plan". 2

Subsequently, Lot No. 1214 was divided by Certeza Surveying Co., Inc. into Lots 1214-A and 1214-B. And still later, Lot
1214-B was further divided into Lots 1214-B-1, Lot 1214-B-2 and Lot 1214-B-3. As approved by the Bureau of Lands, Lot
1214-B-1 with 4,562 square meters, became known as Lot 1214-B; Lot 1214-B-2, with 6,653 square meters, was
designated as Lot 1214-C; and Lot 1214-B-13, with 4,135 square meters, became Lot 1214-D.

On November 15, 1932 Juliana Melliza executed an instrument without any caption containing the following:

Que en consideracion a la suma total de SEIS MIL CUATRO CIENTOS VEINTIDOS PESOS (P6,422.00), moneda filipina
que por la presente declaro haber recibido a mi entera satisfaccion del Gobierno Municipal de Iloilo, cedo y traspaso en
venta real y difinitiva a dicho Gobierno Municipal de Iloilo los lotes y porciones de los mismos que a continuacion se
especifican a saber: el lote No. 5 en toda su extension; una porcion de 7669 metros cuadrados del lote No. 2, cuya
porcion esta designada como sub-lotes Nos. 2-B y 2-C del piano de subdivision de dichos lotes preparado por la Certeza
Surveying Co., Inc., y una porcion de 10,788 metros cuadrados del lote No. 1214 cuya porcion esta designada como
sub-lotes Nos. 1214-B-2 y 1214-B-3 del mismo plano de subdivision.

Asimismo nago constar que la cesion y traspaso que ariba se mencionan es de venta difinitiva, y que para la mejor
identificacion de los lotes y porciones de los mismos que son objeto de la presente, hago constar que dichos lotes y
porciones son los que necesita el Gobierno Municipal de Iloilo para la construccion de avenidas, parques y City Hall site
del Municipal Government Center de iloilo, segun el plano Arellano.

On January 14, 1938 Juliana Melliza sold her remaining interest in Lot 1214 to Remedios Sian Villanueva who thereafter
obtained her own registered title thereto, under Transfer Certificate of Title No. 18178. Remedios in turn on November 4,
1946 transferred her rights to said portion of land to Pio Sian Melliza, who obtained Transfer Certificate of Title No. 2492
thereover in his name. Annotated at the back of Pio Sian Melliza's title certificate was the following:

... (a) that a portion of 10,788 square meters of Lot 1214 now designated as Lots Nos. 1214-B-2 and 1214-B-3 of the
subdivision plan belongs to the Municipality of Iloilo as per instrument dated November 15, 1932....

SALES WAVE 1 4
On August 24, 1949 the City of Iloilo, which succeeded to the Municipality of Iloilo, donated the city hall site together with
the building thereon, to the University of the Philippines (Iloilo branch). The site donated consisted of Lots Nos. 1214-B,
1214-C and 1214-D, with a total area of 15,350 square meters, more or less.

Sometime in 1952, the University of the Philippines enclosed the site donated with a wire fence. Pio Sian Melliza
thereupon made representations, thru his lawyer, with the city authorities for payment of the value of the lot (Lot 1214-B).
No recovery was obtained, because as alleged by plaintiff, the City did not have funds (p. 9, Appellant's Brief.)

The University of the Philippines, meanwhile, obtained Transfer Certificate of Title No. 7152 covering the three lots, Nos.
1214-B, 1214-C and 1214-D.

On December 10, 1955 Pio Sian Melliza filed an action in the Court of First Instance of Iloilo against Iloilo City and the
University of the Philippines for recovery of Lot 1214-B or of its value.

The defendants answered, contending that Lot 1214-B was included in the public instrument executed by Juliana Melliza
in favor of Iloilo municipality in 1932. After stipulation of facts and trial, the Court of First Instance rendered its decision on
August 15, 1957, dismissing the complaint. Said court ruled that the instrument executed by Juliana Melliza in favor of
Iloilo municipality included in the conveyance Lot 1214-B. In support of this conclusion, it referred to the portion of the
instrument stating:

Asimismo hago constar que la cesion y traspaso que arriba se mencionan es de venta difinitiva, y que para la major
identificacion de los lotes y porciones de los mismos que son objeto de la presente, hago constar que dichos lotes y
porciones son los que necesita el Gobierno municipal de Iloilo para la construccion de avenidas, parques y City Hall site
del Municipal Government Center de Iloilo, segun el plano Arellano.

and ruled that this meant that Juliana Melliza not only sold Lots 1214-C and 1214-D but also such other portions of lots as
were necessary for the municipal hall site, such as Lot 1214-B. And thus it held that Iloilo City had the right to donate Lot
1214-B to the U.P.

Pio Sian Melliza appealed to the Court of Appeals. In its decision on May 19, 1965, the Court of Appeals affirmed the
interpretation of the Court of First Instance, that the portion of Lot 1214 sold by Juliana Melliza was not limited to the
10,788 square meters specifically mentioned but included whatever was needed for the construction of avenues, parks
and the city hall site. Nonetheless, it ordered the remand of the case for reception of evidence to determine the area
actually taken by Iloilo City for the construction of avenues, parks and for city hall site.

The present appeal therefrom was then taken to Us by Pio Sian Melliza. Appellant maintains that the public instrument is
clear that only Lots Nos. 1214-C and 1214-D with a total area of 10,788 square meters were the portions of Lot 1214
included in the sale; that the purpose of the second paragraph, relied upon for a contrary interpretation, was only to better
identify the lots sold and none other; and that to follow the interpretation accorded the deed of sale by the Court of Appeals
and the Court of First Instance would render the contract invalid because the law requires as an essential element of sale,
a "determinate" object (Art. 1445, now 1448, Civil Code).

Appellees, on the other hand, contend that the present appeal improperly raises only questions of fact. And, further, they
argue that the parties to the document in question really intended to include Lot 1214-B therein, as shown by the silence of
the vendor after Iloilo City exercised ownership thereover; that not to include it would have been absurd, because said lot
is contiguous to the others admittedly included in the conveyance, lying directly in front of the city hall, separating that
building from Lots 1214-C and 1214-D, which were included therein. And, finally, appellees argue that the sale's object
was determinate, because it could be ascertained, at the time of the execution of the contract, what lots were needed by
Iloilo municipality for avenues, parks and city hall site "according to the Arellano Plan", since the Arellano plan was then
already in existence.

The appeal before Us calls for the interpretation of the public instrument dated November 15, 1932. And interpretation of
such contract involves a question of law, since the contract is in the nature of law as between the parties and their
successors-in-interest.

At the outset, it is well to mark that the issue is whether or not the conveyance by Juliana Melliza to Iloilo municipality
included that portion of Lot 1214 known as Lot 1214-B. If not, then the same was included, in the instrument subsequently
executed by Juliana Melliza of her remaining interest in Lot 1214 to Remedios Sian Villanueva, who in turn sold what she
thereunder had acquired, to Pio Sian Melliza. It should be stressed, also, that the sale to Remedios Sian Villanueva
from which Pio Sian Melliza derived title did not specifically designate Lot 1214-B, but only such portions of Lot 1214 as
SALES WAVE 1 5
were not included in the previous sale to Iloilo municipality (Stipulation of Facts, par. 5, Record on Appeal, p. 23). And thus,
if said Lot 1214-B had been included in the prior conveyance to Iloilo municipality, then it was excluded from the sale to
Remedios Sian Villanueva and, later, to Pio Sian Melliza.

The point at issue here is then the true intention of the parties as to the object of the public instrument Exhibit "D". Said
issue revolves on the paragraph of the public instrument aforequoted and its purpose, i.e., whether it was intended merely
to further describe the lots already specifically mentioned, or whether it was intended to cover other lots not yet specifically
mentioned.

First of all, there is no question that the paramount intention of the parties was to provide Iloilo municipality with lots
sufficient or adequate in area for the construction of the Iloilo City hall site, with its avenues and parks. For this matter, a
previous donation for this purpose between the same parties was revoked by them, because of inadequacy of the area of
the lot donated.

Secondly, reading the public instrument in toto, with special reference to the paragraphs describing the lots included in the
sale, shows that said instrument describes four parcels of land by their lot numbers and area; and then it goes on to further
describe, not only those lots already mentioned, but the lots object of the sale, by stating that said lots are the ones
needed for the construction of the city hall site, avenues and parks according to the Arellano plan. If the parties intended
merely to cover the specified lots Lots 2, 5, 1214-C and 1214-D, there would scarcely have been any need for the next
paragraph, since these lots are already plainly and very clearly described by their respective lot number and area. Said
next paragraph does not really add to the clear description that was already given to them in the previous one.

It is therefore the more reasonable interpretation, to view it as describing those other portions of land contiguous to the lots
aforementioned that, by reference to the Arellano plan, will be found needed for the purpose at hand, the construction of
the city hall site.

Appellant however challenges this view on the ground that the description of said other lots in the aforequoted second
paragraph of the public instrument would thereby be legally insufficient, because the object would allegedly not be
determinate as required by law.

Such contention fails on several counts. The requirement of the law that a sale must have for its object a determinate thing,
is fulfilled as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate
without the necessity of a new or further agreement between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil
Code). The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed for
city hall site, avenues and parks, according to the Arellano plan, sufficiently provides a basis, as of the time of the
execution of the contract, for rendering determinate said lots without the need of a new and further agreement of the
parties.

The Arellano plan was in existence as early as 1928. As stated, the previous donation of land for city hall site on
November 27, 1931 was revoked on March 6, 1932 for being inadequate in area under said Arellano plan. Appellant
claims that although said plan existed, its metes and bounds were not fixed until 1935, and thus it could not be a basis for
determining the lots sold on November 15, 1932. Appellant however fails to consider that the area needed under that plan
for city hall site was then already known; that the specific mention of some of the lots covered by the sale in effect fixed the
corresponding location of the city hall site under the plan; that, therefore, considering the said lots specifically mentioned in
the public instrument Exhibit "D", and the projected city hall site, with its area, as then shown in the Arellano plan (Exhibit
2), it could be determined which, and how much of the portions of land contiguous to those specifically named, were
needed for the construction of the city hall site.

And, moreover, there is no question either that Lot 1214-B is contiguous to Lots 1214-C and 1214-D, admittedly covered
by the public instrument. It is stipulated that, after execution of the contract Exhibit "D", the Municipality of Iloilo possessed
it together with the other lots sold. It sits practically in the heart of the city hall site. Furthermore, Pio Sian Melliza, from the
stipulation of facts, was the notary public of the public instrument. As such, he was aware of its terms. Said instrument was
also registered with the Register of Deeds and such registration was annotated at the back of the corresponding title
certificate of Juliana Melliza. From these stipulated facts, it can be inferred that Pio Sian Melliza knew of the aforesaid
terms of the instrument or is chargeable with knowledge of them; that knowing so, he should have examined the Arellano
plan in relation to the public instrument Exhibit "D"; that, furthermore, he should have taken notice of the possession first
by the Municipality of Iloilo, then by the City of Iloilo and later by the University of the Philippines of Lot 1214-B as part of
the city hall site conveyed under that public instrument, and raised proper objections thereto if it was his position that the
same was not included in the same. The fact remains that, instead, for twenty long years, Pio Sian Melliza and his
predecessors-in-interest, did not object to said possession, nor exercise any act of possession over Lot 1214-B. Applying,
SALES WAVE 1 6
therefore, principles of civil law, as well as laches, estoppel, and equity, said lot must necessarily be deemed included in
the conveyance in favor of Iloilo municipality, now Iloilo City.

WHEREFORE, the decision appealed from is affirmed insofar as it affirms that of the Court of First Instance, and the
complaint in this case is dismissed. No costs. So ordered.

Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
Concepcion , C.J., is on leave.

Melliza v. Iloilo City [G.R. No. L-24732. April 30, 1968.]

Facts:

Juliana Melliza during her lifetime owned, among other properties, 3 parcels of residential land in Iloilo City (OCT 3462).
Said parcels of land were known as Lots Nos. 2, 5 and 1214. The total area of Lot 1214 was 29,073 sq. m. On 27
November 1931 she donated to the then Municipality of Iloilo, 9,000 sq. m. of Lot 1214, to serve as site for the municipal
hall. The donation was however revoked by the parties for the reason that the area donated was found inadequate to meet
the requirements of the development plan of the municipality, the so- called Arellano Plan. Subsequently, Lot 1214 was
divided by Certeza Surveying Co., Inc. into Lots 1214-A and 1214-B. And still later, Lot 1214-B was further divided into
Lots 1214-B-1, Lot 1214-B-2 and Lot 1214-B-3. As approved by the Bureau of Lands, Lot 1214-B-1, with 4,562 sq. m.,
became known as Lot 1214-B; Lot 1214-B-2, with 6,653 sq. m., was designated as Lot 1214-C; and Lot 1214-B-3, with
4,135 sq. m., became Lot 1214-D. On 15 November 1932, Juliana Melliza executed an instrument without any caption
providing for the absolute sale involving all of lot 5, 7669 sq. m. of Lot 2 (sublots 2-B and 2-C), and a portion of 10,788 sq.
m. of Lot 1214 (sublots 1214-B2 and 1214-B3) in favor of the Municipal Government of Iloilo for the sum of P6,422; these
lots and portions being the ones needed by the municipal government for the construction of avenues, parks and City hall
site according the Arellano plan. On 14 January 1938, Melliza sold her remaining interest in Lot 1214 to Remedios Sian
Villanueva (thereafter TCT 18178). Remedios in turn on 4 November 1946 transferred her rights to said portion of land to
Pio Sian Melliza (thereafter TCT 2492). Annotated at the back of Pio Sian Mellizas title certificate was the following that a
portion of 10,788 sq. m. of Lot 1214 now designated as Lots 1412-B-2 and 1214-B-3 of the subdivision plan belongs to the
Municipality of Iloilo as per instrument dated 15 November 1932. On 24 August 1949 the City of Iloilo, which succeeded to
the Municipality of Iloilo, donated the city hall site together with the building thereon, to the University of the Philippines
(Iloilo branch). The site donated consisted of Lots 1214-B, 1214-C and 1214-D, with a total area of 15,350 sq. m., more or
less. Sometime in 1952, the University of the Philippines enclosed the site donated with a wire fence. Pio Sian Melliza
thereupon made representations, thru his lawyer, with the city authorities for payment of the value of the lot (Lot 1214-B).
No recovery was obtained, because as alleged by Pio Sian Melliza, the City did not have funds. The University of the
Philippines, meanwhile, obtained Transfer Certificate of Title No. 7152 covering the three lots, Nos. 1214-B, 1214-C and
1214-D.

On 10 December 1955 Pio Sian Melizza filed an action in the CFI Iloilo against Iloilo City and the University of the
Philippines for recovery of Lot 1214-B or of its value. After stipulation of facts and trial, the CFI rendered its decision on 15
August 1957, dismissing the complaint. Said court ruled that the instrument executed by Juliana Melliza in favor of Iloilo
municipality included in the conveyance Lot 1214-B, and thus it held that Iloilo City had the right to donate Lot 1214-B to
UP. Pio Sian Melliza appealed to the Court of Appeals. On 19 May 1965, the CA affirmed the interpretation of the CFI that
the portion of Lot 1214 sold by Juliana Melliza was not limited to the 10,788 square meters specifically mentioned but
included whatever was needed for the construction of avenues, parks and the city hall site. Nonetheless, it ordered the
remand of the case for reception of evidence to determine the area actually taken by Iloilo City for the construction of
avenues, parks and for city hall site. Hence, the appeal by Pio San Melliza to the Supreme Court.

The Supreme Court affirmed the decision appealed from insofar as it affirms that of the CFI, and dismissed the complaint;
without costs.

Held:

Requirement, that sale must have a determinate thing as object, is fulfilled if object of sale is capable of being made
determinate at the time of the contract.

SALES WAVE 1 7
The requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the
contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or
further agreement between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The specific mention of
some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site; avenues and parks,
according to the Arellano plan, sufficiently provides a basis, as of the time of the execution of the contract, for rendering
determinate said lots without the need of a new and further agreement of the parties.

PIO SIAN MELLIZA, petitioner, vs. CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES and THE COURT APPEALS,
respondents.

Facts:

Juliana Melliza owned properties located in Iloilo City, three parcels of land known as Lts nos. 2, 5, and 1214. She then
donated lot no. 1214 to the municipality of Iloilo to serve as site for the municipal hall. However, the donation was revoked
since the lot was inadequate to meet the requirements of the development plan of the municipality. Lot 1214 was divided
by Certeza Surveying Co., Inc. into lots 1214-A and 1214-B an lot 1214-B was then again divided into lots 1214-B-1,
1214-B-2 and 1214-B-3. Melliza executed an instrument without a clear caption providing for the absolute sale involving lot
5, lot 2, and a portion of lot 1214. On January 14, 1938, Melizza sold her remaining interest in lot 1214 to Remedios Sian
Villanueva. n 24 August 1949 the City of Iloilo, which succeeded to the Municipality of Iloilo, donated the city hall site
together with the building thereon, to the University of the Philippines (Iloilo branch). On 10 December 1955 Pio Sian
Melizza filed an action in the CFI Iloilo against Iloilo City and the University of the Philippines for recovery of Lot 1214-B or
of its value. After stipulation of facts and trial, the CFI rendered its decision on 15 August 1957, dismissing the complaint.
Said court ruled that the instrument executed by Juliana Melliza in favor of Iloilo municipality included in the conveyance
Lot 1214-B, and thus it held that Iloilo City had the right to donate Lot 1214-B to UP. Pio Sian Melliza appealed to the Court
of Appeals. On 19 May 1965, the CA affirmed the interpretation of the CFI that the portion of Lot 1214 sold by Juliana
Melliza was not limited to the 10,788 square meters specifically mentioned but included whatever was needed for the
construction of avenues, parks and the city hall site. Nonetheless, it ordered the remand of the case for reception of
evidence to determine the area actually taken by Iloilo City for the construction of avenues, parks and for city hall site.
Hence, the appeal by Pio San Melliza to the Supreme Court.

Issue:

Whether or not the contract is fulfilled if object of sale is capable of being made determinate at the time of the contract

Held:

The requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the
contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or
further agreement between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The specific mention of
some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site; avenues and parks,
according to the Arellano plan, sufficiently provides a basis, as of the time of the execution of the contract, for rendering
determinate said lots without the need of a new and further agreement of the parties.

SALES WAVE 1 8
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 74470 March 8, 1989

NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners

vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO, respondents.

Cordoba, Zapanta, Rola & Garcia for petitioner National Grains Authority.

Plaridel Mar Israel for respondent Leon Soriano.

MEDIALDEA, J.:

This is a petition for review of the decision (pp. 9-21, Rollo) of the Intermediate Appellate Court (now Court of Appeals)
dated December 23, 1985 in A.C. G.R. CV No. 03812 entitled, "Leon Soriano, Plaintiff- Appellee versus National Grains
Authority and William Cabal, Defendants Appellants", which affirmed the decision of the Court of First Instance of
Cagayan, in Civil Case No. 2754 and its resolution (p. 28, Rollo) dated April 17, 1986 which denied the Motion for
Reconsideration filed therein.

The antecedent facts of the instant case are as follows:

Petitioner National Grains Authority (now National Food Authority, NFA for short) is a government agency created under
Presidential Decree No. 4. One of its incidental functions is the buying of palay grains from qualified farmers.

On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to the NFA, through William Cabal, the
Provincial Manager of NFA stationed at Tuguegarao, Cagayan. He submitted the documents required by the NFA for
pre-qualifying as a seller, namely: (1) Farmer's Information Sheet accomplished by Soriano and certified by a Bureau of
Agricultural Extension (BAEX) technician, Napoleon Callangan, (2) Xerox copies of four (4) tax declarations of the riceland
leased to him and copies of the lease contract between him and Judge Concepcion Salud, and (3) his Residence Tax
Certificate. Private respondent Soriano's documents were processed and accordingly, he was given a quota of 2,640
cavans of palay. The quota noted in the Farmer's Information Sheet represented the maximum number of cavans of palay
that Soriano may sell to the NFA.

In the afternoon of August 23, 1979 and on the following day, August 24, 1979, Soriano delivered 630 cavans of palay.
The palay delivered during these two days were not rebagged, classified and weighed. when Soriano demanded payment
of the 630 cavans of palay, he was informed that its payment will be held in abeyance since Mr. Cabal was still
investigating on an information he received that Soriano was not a bona tide farmer and the palay delivered by him was
not produced from his farmland but was taken from the warehouse of a rice trader, Ben de Guzman. On August 28, 1979,
Cabal wrote Soriano advising him to withdraw from the NFA warehouse the 630 cavans Soriano delivered stating that

SALES WAVE 1 9
NFA cannot legally accept the said delivery on the basis of the subsequent certification of the BAEX technician, Napoleon
Callangan that Soriano is not a bona fide farmer.

Instead of withdrawing the 630 cavans of palay, private respondent Soriano insisted that the palay grains delivered be
paid. He then filed a complaint for specific performance and/or collection of money with damages on November 2, 1979,
against the National Food Authority and Mr. William Cabal, Provincial Manager of NFA with the Court of First Instance of
Tuguegarao, and docketed as Civil Case No. 2754.

Meanwhile, by agreement of the parties and upon order of the trial court, the 630 cavans of palay in question were
withdrawn from the warehouse of NFA. An inventory was made by the sheriff as representative of the Court, a
representative of Soriano and a representative of NFA (p. 13, Rollo).

On September 30, 1982, the trial court rendered judgment ordering petitioner National Food Authority, its officers and
agents to pay respondent Soriano (as plaintiff in Civil Case No. 2754) the amount of P 47,250.00 representing the unpaid
price of the 630 cavans of palay plus legal interest thereof (p. 1-2, CA Decision). The dispositive portion reads as follows:

WHEREFORE, the Court renders judgment in favor of the plaintiff and against the defendants National Grains Authority,
and William Cabal and hereby orders:

1. The National Grains Authority, now the National Food Authority, its officers and agents, and Mr. William Cabal, the
Provincial Manager of the National Grains Authority at the time of the filing of this case, assigned at Tuguegarao, Cagayan,
whomsoever is his successors, to pay to the plaintiff Leon T. Soriano, the amount of P47,250.00, representing the unpaid
price of the palay deliveries made by the plaintiff to the defendants consisting of 630 cavans at the rate Pl.50 per kilo of 50
kilos per cavan of palay;

2. That the defendants National Grains Authority, now National Food Authority, its officer and/or agents, and Mr. William
Cabal, the Provincial Manager of the National Grains Authority, at the time of the filing of this case assigned at
Tuguegarao, Cagayan or whomsoever is his successors, are likewise ordered to pay the plaintiff Leon T. Soriano, the
legal interest at the rate of TWELVE (12%) percent per annum, of the amount of P 47,250.00 from the filing of the
complaint on November 20, 1979, up to the final payment of the price of P 47,250.00;

3. That the defendants National Grains Authority, now National Food Authority, or their agents and duly authorized
representatives can now withdraw the total number of bags (630 bags with an excess of 13 bags) now on deposit in the
bonded warehouse of Eng. Ben de Guzman at Tuguegarao, Cagayan pursuant to the order of this court, and as appearing
in the written inventory dated October 10, 1980, (Exhibit F for the plaintiff and Exhibit 20 for the defendants) upon payment
of the price of P 47,250.00 and TWELVE PERCENT (12%) legal interest to the plaintiff,

4. That the counterclaim of the defendants is hereby dismissed;

5. That there is no pronouncement as to the award of moral and exemplary damages and attorney's fees; and

6. That there is no pronouncement as to costs.

SO ORDERED (pp. 9-10, Rollo)

Petitioners' motion for reconsideration of the decision was denied on December 6, 1982.

Petitioners' appealed the trial court's decision to the Intermediate Appellate Court. In a decision promulgated on December
23, 1986 (pp. 9-21, Rollo) the then Intermediate Appellate Court upheld the findings of the trial court and affirmed the
decision ordering NFA and its officers to pay Soriano the price of the 630 cavans of rice plus interest. Petitioners' motion
for reconsideration of the appellate court's decision was denied in a resolution dated April 17, 1986 (p. 28, Rollo).

Hence, this petition for review filed by the National Food Authority and Mr. William Cabal on May 15, 1986 assailing the
decision of the Intermediate Appellate Court on the sole issue of whether or not there was a contract of sale in the case at
bar.

Petitioners contend that the 630 cavans of palay delivered by Soriano on August 23, 1979 was made only for purposes of
having it offered for sale. Further, petitioners stated that the procedure then prevailing in matters of palay procurement
from qualified farmers were: firstly, there is a rebagging wherein the palay is transferred from a private sack of a farmer to
the NFA sack; secondly, after the rebagging has been undertaken, classification of the palay is made to determine its
SALES WAVE 1 10
variety; thirdly, after the determination of its variety and convinced that it passed the quality standard, the same will be
weighed to determine the number of kilos; and finally, it will be piled inside the warehouse after the preparation of the
Warehouse Stock Receipt (WSP) indicating therein the number of kilos, the variety and the number of bags. Under this
procedure, rebagging is the initial operative act signifying acceptance, and acceptance will be considered complete only
after the preparation of the Warehouse Stock Receipt (WSR). When the 630 cavans of palay were brought by Soriano to
the Carig warehouse of NFA they were only offered for sale. Since the same were not rebagged, classified and weighed in
accordance with the palay procurement program of NFA, there was no acceptance of the offer which, to petitioners' mind
is a clear case of solicitation or an unaccepted offer to sell.

The petition is not impressed with merit.

Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay therefore a price certain
in money or its equivalent. A contract, on the other hand, is a meeting of minds between two (2) persons whereby one
binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil Code of the
Philippines). The essential requisites of contracts are: (1) consent of the contracting parties, (2) object certain which is the
subject matter of the contract, and (3) cause of the obligation which is established (Art. 1318, Civil Code of the Philippines.

In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted
the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a meeting of the
minds between the parties. The object of the contract, being the palay grains produced in Soriano's farmland and the NFA
was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has not
been determined does not affect the perfection of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact
that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to
determine the same, without the need of a new contract between the parties." In this case, there was no need for NFA and
Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so
much of his produce as long as it does not exceed 2,640 cavans.

In its memorandum (pp. 66-71, Rollo) dated December 4, 1986, petitioners further contend that there was no contract of
sale because of the absence of an essential requisite in contracts, namely, consent. It cited Section 1319 of the Civil Code
which states: "Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause which are
to constitute the contract. ... " Following this line, petitioners contend that there was no consent because there was no
acceptance of the 630 cavans of palay in question.

The above contention of petitioner is not correct Sale is a consensual contract, " ... , there is perfection when there is
consent upon the subject matter and price, even if neither is delivered." (Obana vs. C.A., L-36249, March 29, 1985, 135
SCRA 557, 560) This is provided by Article 1475 of the Civil Code which states:

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.

xxx

The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of
the goods delivered as contended by petitioners.

From the moment the contract of sale is perfected, it is incumbent upon the parties to comply with their mutual obligations
or "the parties may reciprocally demand performance" thereof. (Article 1475, Civil Code, 2nd par.).

The reason why NFA initially refused acceptance of the 630 cavans of palay delivered by Soriano is that it (NFA) cannot
legally accept the said delivery because Soriano is allegedly not a bona fide farmer. The trial court and the appellate court
found that Soriano was a bona fide farmer and therefore, he was qualified to sell palay grains to NFA.

Both courts likewise agree that NFA's refusal to accept was without just cause. The above factual findings which are
supported by the record should not be disturbed on appeal.

ACCORDINGLY, the instant petition for review is DISMISSED. The assailed decision of the then Intermediate Appellate
Court (now Court of Appeals) is affirmed. No costs.

SO ORDERED.
SALES WAVE 1 11
NGA vs IAC

Facts:

Petitioner National Grains Authority (now National Food Authority or NFA) is a government agency created under PD No.
4. One of its incidental functions is the buying of palay grains from qualified farmers.

On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to the NFA, through William Cabal, the
Provincial Manager of NFA stationed at Tuguegarao, Cagayan. He submitted the documents required by the NFA for
pre-qualifying as a seller. Private respondent Soriano's documents were processed and accordingly, he was given a
maximum quota of 2,640 cavans of palay that he may sell to the NFA.

In the afternoon of August 23, 1979 and on the following day, August 24, 1979, Soriano delivered 630 cavans of palay.
The palay delivered during these two days were not rebagged, classified and weighed. When Soriano demanded payment
of the 630 cavans of palay, he was informed that its payment will be held in abeyance since Mr. Cabal was still
investigating on an information he received that Soriano was not a bona fide farmer. On August 28, 1979, Cabal wrote
Soriano advising him to withdraw from the NFA warehouse the 630 cavans Soriano delivered stating that NFA cannot
legally accept the said delivery on the basis of the subsequent certification of the BAEX technician, Napoleon Callangan
that Soriano is not a bona fide farmer.

Petitioner contended that when the 630 cavans of palay were brought by Soriano to the Carig warehouse of NFA they
were only offered for sale. Since the same were not rebagged, classified and weighed in accordance with the palay
procurement program of NFA, there was no acceptance of the offer which, to petitioners' mind is a clear case of solicitation
or an unaccepted offer to sell.

On September 30, 1982, the trial court rendered judgment ordering petitioner National Food Authority, its officer and
agents to pay respondent Soriano.

Petitioners' appealed the trial court's decision to the Intermediate Appellate Court. The IAC affirmed the decision of the
lower court.

Issue:

Whether or not there is a contract of sale.

Held:

Yes.

SALES WAVE 1 12
Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting parties
obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay therefore a
price certain in money or its equivalent.

Article 147 of NCC provides that 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.

The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of
the goods delivered as contended by petitioners.

The reason why NFA initially refused acceptance of the 630 cavans of palay delivered by Soriano is that it (NFA) cannot
legally accept the said delivery because Soriano is allegedly not a bona fide farmer. The trial court and the appellate court
found that Soriano was a bona fide farmer and therefore, he was qualified to sell palay grains to NFA.

The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection
of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the quantity is not determinate shall not
be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of
a new contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to
determine the exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does
not exceed 2,640 cavans.

Both courts likewise agree that NFA's refusal to accept was without just cause. ACCORDINGLY, the instant petition for
review is DISMISSED.

SALES WAVE 1 13
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 105387 November 11, 1993

JOHANNES SCHUBACK & SONS PHILIPPINE TRADING CORPORATION, petitioner,

vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR., doing business under the name and style "PHILIPPINE
SJ INDUSTRIAL TRADING," respondents.

Hernandez, Velicaria, Vibar & Santiago for petitioner.

Ernesto M. Tomaneng for private respondent.

ROMERO, J.:

In this petition for review on certiorari, petitioner questions the reversal by the Court of Appeals 1 of the trial court's ruling
that a contract of sale had been perfected between petitioner and private respondent over bus spare parts.

The facts as quoted from the decision of the Court of Appeals are as follows:

Sometime in 1981, defendant 2 established contact with plaintiff 3 through the Philippine Consulate General in Hamburg,
West Germany, because he wanted to purchase MAN bus spare parts from Germany. Plaintiff communicated with its
trading partner. Johannes Schuback and Sohne Handelsgesellschaft m.b.n. & Co. (Schuback Hamburg) regarding the
spare parts defendant wanted to order.

On October 16, 1981, defendant submitted to plaintiff a list of the parts (Exhibit B) he wanted to purchase with specific part
numbers and description. Plaintiff referred the list to Schuback Hamburg for quotations. Upon receipt of the quotations,
plaintiff sent to defendant a letter dated 25 November, 1981 (Exh. C) enclosing its offer on the items listed by defendant.

On December 4, 1981, defendant informed plaintiff that he preferred genuine to replacement parts, and requested that he
be given 15% on all items (Exh. D).

On December 17, 1981, plaintiff submitted its formal offer (Exh. E) containing the item number, quantity, part number,
description, unit price and total to defendant. On December, 24, 1981, defendant informed plaintiff of his desire to avail of
the prices of the parts at that time and enclosed Purchase Order No. 0101 dated 14 December 1981 (Exh. F to F-4). Said

SALES WAVE 1 14
Purchase Order contained the item number, part number and description. Defendant promised to submit the quantity per
unit he wanted to order on December 28 or 29 (Exh. F).

On December 29, 1981, defendant personally submitted the quantities he wanted to Mr. Dieter Reichert, General Manager
of plaintiff, at the latter's residence (t.s.n., 13 December, 1984, p. 36). The quantities were written in ink by defendant in
the same Purchase Order previously submitted. At the bottom of said Purchase Order, defendant wrote in ink above his
signature: "NOTE: Above P.O. will include a 3% discount. The above will serve as our initial P.O." (Exhs. G to G-3-a).

Plaintiff immediately ordered the items needed by defendant from Schuback Hamburg to enable defendant to avail of the
old prices. Schuback Hamburg in turn ordered (Order No. 12204) the items from NDK, a supplier of MAN spare parts in
West Germany. On January 4, 1982, Schuback Hamburg sent plaintiff a proforma invoice (Exhs. N-1 to N-3) to be used by
defendant in applying for a letter of credit. Said invoice required that the letter of credit be opened in favor of Schuback
Hamburg. Defendant acknowledged receipt of the invoice (t.s.n., 19 December 1984, p. 40).

An order confirmation (Exhs. I, I-1) was later sent by Schuback Hamburg to plaintiff which was forwarded to and received
by defendant on February 3, 1981 (t.s.n., 13 Dec. 1984, p. 42).

On February 16, 1982, plaintiff reminded defendant to open the letter of credit to avoid delay in shipment and payment of
interest (Exh. J). Defendant replied, mentioning, among others, the difficulty he was encountering in securing: the required
dollar allocations and applying for the letter of credit, procuring a loan and looking for a partner-financier, and of finding
ways 'to proceed with our orders" (Exh. K).

In the meantime, Schuback Hamburg received invoices from, NDK for partial deliveries on Order No.12204 (Direct
Interrogatories., 07 Oct, 1985, p. 3). Schuback Hamburg paid NDK. The latter confirmed receipt of payments made on
February 16, 1984 (Exh.C-Deposition).

On October 18, 1982, Plaintiff again reminded defendant of his order and advised that the case may be endorsed to its
lawyers (Exh. L). Defendant replied that he did not make any valid Purchase Order and that there was no definite contract
between him and plaintiff (Exh. M). Plaintiff sent a rejoinder explaining that there is a valid Purchase Order and suggesting
that defendant either proceed with the order and open a letter of credit or cancel the order and pay the cancellation fee of
30% of F.O.B. value, or plaintiff will endorse the case to its lawyers (Exh. N).

Schuback Hamburg issued a Statement of Account (Exh. P) to plaintiff enclosing therewith Debit Note (Exh. O) charging
plaintiff 30% cancellation fee, storage and interest charges in the total amount of DM 51,917.81. Said amount was
deducted from plaintiff's account with Schuback Hamburg (Direct Interrogatories, 07 October, 1985).

Demand letters sent to defendant by plaintiff's counsel dated March 22, 1983 and June 9, 1983 were to no avail (Exhs R
and S).

Consequently, petitioner filed a complaint for recovery of actual or compensatory damages, unearned profits, interest,
attorney's fees and costs against private respondent.

In its decision dated June 13, 1988, the trial court4 ruled in favor of petitioner by ordering private respondent to pay
petitioner, among others, actual compensatory damages in the amount of DM 51,917.81, unearned profits in the amount
of DM 14,061.07, or their peso equivalent.

Thereafter, private respondent elevated his case before the Court of Appeals. On February 18, 1992, the appellate court
reversed the decision of the trial court and dismissed the complaint of petitioner. It ruled that there was no perfection of
contract since there was no meeting of the minds as to the price between the last week of December 1981 and the first
week of January 1982.

The issue posed for resolution is whether or not a contract of sale has been perfected between the parties.

We reverse the decision of the Court of Appeals and reinstate the decision of the trial court. It bears emphasizing that a
"contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract
and upon the price. . . . " 5

Article 1319 of the Civil Code states: "Consent is manifested by the meeting of the offer and acceptance upon the thing
and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified

SALES WAVE 1 15
acceptance constitutes a counter offer." The facts presented to us indicate that consent on both sides has been
manifested.

The offer by petitioner was manifested on December 17, 1981 when petitioner submitted its proposal containing the item
number, quantity, part number, description, the unit price and total to private respondent. On December 24, 1981, private
respondent informed petitioner of his desire to avail of the prices of the parts at that time and simultaneously enclosed its
Purchase Order No. 0l01 dated December 14, 1981. At this stage, a meeting of the minds between vendor and vendee
has occurred, the object of the contract: being the spare parts and the consideration, the price stated in petitioner's offer
dated December 17, 1981 and accepted by the respondent on December 24,1981.

Although said purchase order did not contain the quantity he wanted to order, private respondent made good, his promise
to communicate the same on December 29, 1981. At this juncture, it should be pointed out that private respondent was
already in the process of executing the agreement previously reached between the parties.

Below Exh. G-3, marked as Exhibit G-3-A, there appears this statement made by private respondent: "Note. above P.O.
will include a 3% discount. The above will serve as our initial P.O." This notation on the purchase order was another
indication of acceptance on the part of the vendee, for by requesting a 3% discount, he implicitly accepted the price as first
offered by the vendor. The immediate acceptance by the vendee of the offer was impelled by the fact that on January 1,
1982, prices would go up, as in fact, the petitioner informed him that there would be a 7% increase, effective January 1982.
On the other hand, concurrence by the vendor with the said discount requested by the vendee was manifested when
petitioner immediately ordered the items needed by private respondent from Schuback Hamburg which in turn ordered
from NDK, a supplier of MAN spare parts in West Germany.

When petitioner forwarded its purchase order to NDK, the price was still pegged at the old one. Thus, the pronouncement
of the Court Appeals that there as no confirmed price on or about the last week of December 1981 and/or the first week of
January 1982 was erroneous.

While we agree with the trial court's conclusion that indeed a perfection of contract was reached between the parties, we
differ as to the exact date when it occurred, for perfection took place, not on December 29, 1981. Although the quantity to
be ordered was made determinate only on December 29, 1981, quantity is immaterial in the perfection of a sales contract.
What is of importance is the meeting of the minds as to the object and cause, which from the facts disclosed, show that as
of December 24, 1981, these essential elements had already occurred.

On the part of the buyer, the situation reveals that private respondent failed to open an irrevocable letter of credit without
recourse in favor of Johannes Schuback of Hamburg, Germany. This omission, however. does not prevent the perfection
of the contract between the parties, for the opening of the letter of credit is not to be deemed a suspensive condition. The
facts herein do not show that petitioner reserved title to the goods until private respondent had opened a letter of credit.
Petitioner, in the course of its dealings with private respondent, did not incorporate any provision declaring their contract of
sale without effect until after the fulfillment of the act of opening a letter of credit.

The opening of a etter of credit in favor of a vendor is only a mode of payment. It is not among the essential requirements
of a contract of sale enumerated in Article 1305 and 1474 of the Civil Code, the absence of any of which will prevent the
perfection of the contract from taking place.

To adopt the Court of Appeals' ruling that the contract of sale was dependent on the opening of a letter of credit would be
untenable from a pragmatic point of view because private respondent would not be able to avail of the old prices which
were open to him only for a limited period of time. This explains why private respondent immediately placed the order with
petitioner which, in turn promptly contacted its trading partner in Germany. As succinctly stated by petitioner, "it would
have been impossible for respondent to avail of the said old prices since the perfection of the contract would arise much
later, or after the end of the year 1981, or when he finally opens the letter of credit." 6

WHEREFORE, the petition is GRANTED and the decision of the trial court dated June 13, 1988 is REINSTATED with
modification.

SO ORDERED.

SALES WAVE 1 16
Schuback & Sons vs. CA

Facts:

On October 16, 1981, defendant submitted to plaintiff the list of bus spare parts he wanted to purchase to its counterpart in
Hamburg. Plaintiff sent an offer on the items listed. On December 4, 1981, defendant informed plaintiff that he preferred
genuine to replacement parts, and requested a 15% discount. On December 17, plaintiff submitted its formal offer. On
December 24, defendant submitted a purchase order, and submitted the quantity on December 29. Plaintiff immediately
ordered the items from Schuback Hamburg, which thereafter ordered the same from NDK, a supplier in Germany. Plaintiff
sent a pro-forma invoice to be used in applying for letter of credit. On February 16, 1982, plaintiff reminded defendant to
open a letter of credit to avoid delay in shipment. Defendant mentioned the difficulty he was encountering in procuring the
same. Plaintiff continued receiving invoices and partial deliveries from NDK. On October 18, 1982, plaintiff again reminded
the defendant to open a letter of credit. Defendant replied that he did not make a valid purchase order and that there was
no definite contract between him and the plaintiff. Plaintiff sent a rejoinder explaining that there is a valid Purchase Order
and suggesting that defendant either proceed with the order and open a letter of credit or cancel the order and pay the
cancellation fee of 30% of F.O.B. value, or plaintiff will endorse the case to its lawyers. Demand letters sent to defendant
by plaintiff's counsel dated March 22, 1983 and June 9, 1983 were to no avail. Consequently, petitioner filed a complaint
for recovery of actual or compensatory damages, unearned profits, interest, attorney's fees and costs against private
respondent.

Issue:

Whether or not a contract of sale has been perfected between the parties

Held:

Article 1319 of the Civil Code states: "Consent is manifested by the meeting of the offer and 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." The facts presented to us indicate that consent on both sides has been
manifested. The offer by petitioner was manifested on December 17, 1981 when petitioner submitted its proposal
containing the item number, quantity, part number, description, the unit price and total to private respondent. On
December 24, 1981, private respondent informed petitioner of his desire to avail of the prices of the parts at that time and
simultaneously enclosed its Purchase Order. At this stage, a meeting of the minds between vendor and vendee has
occurred, the object of the contract: being the spare parts and the consideration, the price stated in petitioner's offer dated
December 17, 1981 and accepted by the respondent on December 24, 1981.

SALES WAVE 1 17
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 116635 July 24, 1997

CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,

vs.
COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE, respondents.

PANGANIBAN, J.:

A contract of repurchase arising out of a contract of sale where the seller did not have any title to the property "sold" is not
valid. Since nothing was sold, then there is also nothing to repurchase.

Statement of the Case

This postulate is explained by this Court as it resolves this petition for review on certiorari assailing the January 20, 1993
Decision1 of Respondent Court of Appeals2 in CA-G.R. CV No. 36473, affirming the decision3 of the trial court4which
disposed as follows:5

WHEREFORE, judgment is hereby rendered dismissing the complaint for no cause of action, and hereby:

1. Declaring the private writing, Exhibit "C", to be an option to sell, not binding and considered validly withdrawn by the
defendants for want of consideration;

2. Ordering the plaintiffs to return to the defendants the sum of P30,000.00 plus interest thereon at the legal rate, from the
time of filing of defendants' counterclaim until the same is fully paid;

3. Ordering the plaintiffs to deliver peaceful possession of the two hectares mentioned in paragraph 7 of the complaint and
in paragraph 31 of defendants' answer (counterclaim);

SALES WAVE 1 18
4. Ordering the plaintiffs to pay reasonable rents on said two hectares at P5,000.00 per annum or at P2,500.00 per
cropping from the time of judicial demand mentioned in paragraph 2 of the dispositive portion of this decision, until the said
two hectares shall have been delivered to the defendants; and

5. To pay the costs.

SO ORDERED.

The Antecedent Facts

The facts, which appear undisputed by the parties, are narrated by the Court of Appeals as follows:

Two (2) parcels of land are in dispute and litigated upon here. The first has an area of 1 hectare. It was formerly owned by
Victorino Nool and covered by Transfer Certificate of Title No. T-74950. With an area of 3.0880 hectares, the other parcel
was previously owned by Francisco Nool under Transfer Certificate of Title No. T-100945. Both parcel's are situated in
San Manuel, Isabela. The plaintiff spouses, Conchita Nool and Gaudencio Almojera, now the appellants, seek recovery of
the aforementioned parcels of land from the defendants, Anacleto Nool, a younger brother of Conchita, and Emilia Nebre,
now the appellees.

In their complaint, plaintiff-appellants alleged inter alia that they are the owners of subject parcels of land, and they bought
the same from Conchita's other brothers, Victorino Nool and Francisco Nool; that as plaintiffs were in dire need of money,
they obtained a loan from the Ilagan Branch of the Development Bank of the Philippines, in Ilagan, Isabela, secured by a
real estate mortgage on said parcels of land, which were still registered in the names of Victorino Nool and Francisco Nool,
at the time, and for the failure of plaintiffs to pay the said loan, including interest and surcharges, totaling P56,000.00, the
mortgage was foreclosed; that within the period of redemption, plaintiffs contacted defendant Anacleto Nool for the latter to
redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the two (2) parcels of land in
question were transferred to Anacleto Nool; that as part of their arrangement or understanding, Anacleto Nool agreed to
buy from plaintiff Conchita Nool the two (2) parcels of land under controversy, for a total price of P100,000.00, P30,000.00
of which price was paid to Conchita, and upon payment of the balance of P14,000.00, plaintiffs were to regain possession
of the two (2) hectares of land, which amounts defendants failed to pay, and the same day the said arrangement 6 was
made; another covenant7 was entered into by the parties, whereby defendants agreed to return to plaintiffs the lands in
question, at anytime the latter have the necessary amount; that plaintiffs asked the defendants to return the same but
despite the intervention of the Barangay Captain of their place, defendants refused to return the said parcels of land to
plaintiffs; thereby impelling them (plaintiffs) to come to court for relief.

In their Answer, defendants-appellees theorized that they acquired the lands in question from the Development Bank of
the Philippines, through negotiated sale, and were misled by plaintiffs when defendant Anacleto Nool signed the private
writing, agreeing to return subject lands when plaintiffs have the money to redeem the same; defendant Anacleto having
been made to believe, then, that his sister, Conchita, still had the right to redeem the said properties.

The pivot of inquiry here, as aptly observed below, is the nature and significance of the private document, marked Exhibit
"D" for plaintiffs, which document has not been denied by the defendants, as defendants even averred in their Answer that
they gave an advance payment of P30,000.00 therefor, and acknowledged that they had a balance of P14,000.00 to
complete their payment. On this crucial issue, the lower court adjudged the said private writing (Exhibit "D") as an option to
sell not binding upon and considered the same validly withdrawn by defendants for want of consideration; and decided the
case in the manner above-mentioned.

There is no quibble over the fact that the two (2) parcels of land in dispute were mortgaged to the Development Bank of
the Philippines, to secure a loan obtained by plaintiffs from DBP (Ilagan Branch), Ilagan, Isabela. For the non-payment of
said loan, the mortgage was foreclosed and in the process, ownership of the mortgaged lands was consolidated in DBP
(Exhibits 3 and 4 for defendants). After DBP became the absolute owner of the two parcels of land, defendants negotiated
with DBP and succeeded in buying the same. By virtue of such sale by DBP in favor of defendants, the titles of DBP were
cancelled and the corresponding Transfer Certificates of Title (Annexes "C" and "D" to the Complaint) issued to the
defendants.8

It should be stressed that Manuel S. Mallorca, authorized officer of DBP, certified that the one-year redemption period was
from March 16, 1982 up to March 15, 1983 and that the mortgagors' right of redemption was not exercised within this
period.9 Hence, DBP became the absolute owner of said parcels of land for which it was issued new certificates of title,
both entered on May 23, 1983 by the Registry of Deeds for the Province of Isabela. 10 About two years thereafter, on April

SALES WAVE 1 19
1, 1985, DBP entered into a Deed of Conditional Sale 11 involving the same parcels of land with Private Respondent
Anacleto Nool as vendee. Subsequently, the latter was issued new certificates of title on February 8, 1988. 12

The Court of Appeals ruled: 13

WHEREFORE, finding no reversible error infirming it, the appealed Judgment is hereby AFFIRMED in toto. No
pronouncement as to costs.

The Issues

Petitioners impute to Respondent Court the following alleged "errors":

1. The Honorable Court of Appeals, Second Division has misapplied the legal import or meaning of Exhibit "C" in a way
contrary to law and existing jurisprudence in stating that it has no binding effect between the parties and considered validly
withdrawn by defendants-appellees for want of consideration.

2. The Honorable Court of Appeals, Second Division has miserably failed to give legal significance to the actual
possession and cultivation and appropriating exclusively the palay harvest of the two (2) hectares land pending the
payment of the remaining balance of fourteen thousand pesos (P14,000.00) by defendants-appellees as indicated in
Exhibit "C".

3. The Honorable Court of Appeals has seriously erred in affirming the decision of the lower court by awarding the
payment of rents per annum and the return of P30,000.00 and not allowing the plaintiffs-appellants to re-acquire the four
(4) hectares, more or less upon payment of one hundred thousand pesos (P100,000.00) as shown in Exhibit "D". 14

The Court's Ruling

The petition is bereft of merit.

First Issue: Are Exhibits "C" and "D" Valid and Enforceable?

The petitioner-spouses plead for the enforcement of their agreement with private respondents as contained in Exhibits "C"
and "D," and seek damages for the latter's alleged breach thereof. In Exhibit C, which was a private handwritten document
labeled by the parties as Resibo ti Katulagan or Receipt of Agreement, the petitioners appear to have "sold" to private
respondents the parcels of land in controversy covered by TCT No. T-74950 and TCT No. T-100945. On the other hand,
Exhibit D, which was also a private handwritten document in Ilocano and labeled as Kasuratan, private respondents
agreed that Conchita Nool "can acquire back or repurchase later on said land when she has the money." 15

In seeking to enforce her alleged right to repurchase the parcels of land, Conchita (joined by her co-petitioner-husband)
invokes Article 1370 of the Civil Code which mandates that "(i)f the terms of a contract are clear and leave no doubt upon
the intention of the contracting parties, the literal meaning of its stipulations shall control." Hence, petitioners contend that
the Court of Appeals erred in affirming the trial court's finding and conclusion that said Exhibits C and D were "not merely
voidable but utterly void and inexistent."

We cannot sustain petitioners' view. Article 1370 of the Civil Code is applicable only to valid and enforceable contracts.
The Regional Trial Court and the Court of Appeals ruled that the principal contract of sale contained in Exhibit C and the
auxiliary contract of repurchase in Exhibit D are both void. This conclusion of the two lower courts appears to find support
in Dignos vs. Court of Appeals, 16 where the Court held:

Be that as it may, it is evident that when petitioners sold said land to the Cabigas spouses, they were no longer owners of
the same and the sale is null and void.

In the present case, it is clear that the sellers no longer had any title to the parcels of land at the time of sale. Since Exhibit
D, the alleged contract of repurchase, was dependent on the validity of Exhibit C, it is itself void. A void contract cannot
give rise to a valid one. 17 Verily, Article 1422 of the Civil Code provides that "(a) contract which is the direct result of a
previous illegal contract, is also void and inexistent."

We should however add that Dignos did not cite its basis for ruling that a "sale is null and void" where the sellers "were no
longer the owners" of the property. Such a situation (where the sellers were no longer owners) does not appear to be one
SALES WAVE 1 20
of the void contracts enumerated in Article 1409 of the Civil Code. 18 Moreover, the Civil Code 19itself recognizes a sale
where the goods are to be "acquired . . . by the seller after the perfection of the contract of sale," clearly implying that a
sale is possible even if the seller was not the owner at the time of sale, provided he acquires title to the property later on.

In the present case however, it is likewise clear that the sellers can no longer deliver the object of the sale to the buyers,
as the buyers themselves have already acquired title and delivery thereof from the rightful owner, the DBP. Thus, such
contract may be deemed to be inoperative 20 and may thus fall, by analogy, under item no. 5 of Article 1409 of the Civil
Code: "Those which contemplate an impossible service." Article 1459 of the Civil Code provides that "the vendor must
have a right to transfer the ownership thereof [object of the sale] at the time it is delivered." Here, delivery of ownership is
no longer possible. It has become impossible.

Furthermore, Article 1505 of the Civil Code provides that "where goods are sold by a person who is not the owner thereof,
and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods
than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell."
Here, there is no allegation at all that petitioners were authorized by DBP to sell the property to the private respondents.
Jurisprudence, on the other hand, teaches us that "a person can sell only what he owns or is authorized to sell; the buyer
can as a consequence acquire no more than what the seller can legally transfer." 21 No one can give what he does not
have nono dat quod non habet. On the other hand, Exhibit D presupposes that petitioners could repurchase the
property that they "sold" to private respondents. As petitioners "sold" nothing, it follows that they can also "repurchase"
nothing. Nothing sold, nothing to repurchase. In this light, the contract of repurchase is also inoperative and by the
same analogy, void.

Contract of Repurchase
Dependent on Validity of Sale

As borne out by the evidence on record, the private respondents bought the two parcels of land directly from DBP on April
1, 1985 after discovering that petitioners did not own said property, the subject of Exhibits C and D executed on November
30, 1984. Petitioners, however, claim that they can exercise their alleged right to "repurchase" the property, after private
respondents had acquired the same from DBP. 22 We cannot accede to this, for it clearly contravenes the intention of the
parties and the nature of their agreement. Exhibit D reads:

WRITING

Nov. 30, 1984

That I, Anacleto Nool have bought from my sister Conchita Nool a land an area of four hectares (4 has.) in the value of
One Hundred Thousand (100,000.00) Pesos. It is our agreement as brother and sister that she can acquire back or
repurchase later on said land when she has the money. [Emphasis supplied].

As proof of this agreement we sign as brother and sister this written document this day of Nov. 30, 1984, at District 4, San
Manuel, Isabela.

Sgd ANACLETO NOOL

Anacleto Nool

Sgd Emilio Paron

Witness

Sgd Conchita Nool

Conchita Nool 23

One "repurchases" only what one has previously sold. In other words, the right to repurchase presupposes a valid contract
of sale between the same parties. Undisputedly, private respondents acquired title to the property from DBP, and not from
petitioners.
SALES WAVE 1 21
Assuming arguendo that Exhibit D is separate and distinct from Exhibit C and is not affected by the nullity of the latter, still
petitioners do not thereby acquire a right to repurchase the property. In that scenario, Exhibit D ceases to be a "right to
repurchase" ancillary and incidental to the contract of sale; rather, it becomes an accepted unilateral promise to sell.
Article 1479 of the Civil Code, however, provides that "an accepted unilateral promise to buy or sell a determinate thing for
a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price." In the
present case, the alleged written contract of repurchase contained in Exhibit D is bereft of any consideration distinct from
the price. Accordingly, as an independent contract, it cannot bind private respondents. The ruling
in Diamante vs. CA 24 supports this. In that case, the Court through Mr. Justice Hilario G. Davide, Jr. explained:

Article 1601 of the Civil Code provides:

Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of article 1616 and other stipulations which may have been agreed upon.

In Villarica, et al. Vs. Court of Appeals, et al., decided on 29 November 1968, or barely seven (7) days before the
respondent Court promulgated its decisions in this case, this Court, interpreting the above Article, held:

The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a right reserved
by the vendor in the same instrument of sale as one of the stipulations of the contract. Once the instrument of absolute
sale is executed, the vendor can not longer reserve the right to repurchase, and any right thereafter granted the vendor by
the vendee in a separate instrument cannot be a right of repurchase but some other right like the option to buy in the
instant case. . . .

In the earlier case of Ramos, et al. vs. Icasiano, et al., decided in 1927, this Court had already ruled that "an agreement to
repurchase becomes a promise to sell when made after the sale, because when the sale is made without such an
agreement, the purchaser acquires the thing sold absolutely, and if he afterwards grants the vendor the right to purchase,
it is a new contract entered into by the purchaser, as absolute owner already of the object. In that case the vendor has nor
reserved to himself the right to repurchase.

In Vda. De Cruzo, et al. vs. Carriaga, et al. this Court found another occasion to apply the foregoing principle.

Hence, the Option to Repurchase executed by private respondent in the present case, was merely a promise to sell, which
must be governed by Article 1479 of the Civil Code which reads as follows:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price.

Right to Repurchase Based on

Homestead or Trust Non-Existent

Petitioners also base their alleged right to repurchase on (1) Sec. 119 of the Public Land Act 25 and (2) an implied trust
relation as "brother and sister." 26

The Court notes that Victorino Nool and Francisco Nool mortgaged the land to DBP. The brothers, together with Conchita
Nool and Anacleto Nool, were all siblings and heirs qualified to repurchase the two parcels of land under Sec. 119 of the
Public Land Act which provides that "(e)very conveyance of land acquired under the free patent or homestead provisions,
when proper, shall be subject to repurchase by the applicant, his widow or legal heirs, within a period of five years from the
date of conveyance." Assuming the applicability of this statutory provision to the case at bar, it is indisputable that Private
Respondent Anacleto Nool already repurchased from DBP the contested properties. Hence, there was no more right of
repurchase that his sister Conchita or brothers Victorino and Francisco could exercise. The properties were already
owned by an heir of the homestead grantee and the rationale of the provision to keep homestead lands within the family of
the grantee was thus fulfilled. 27

The claim of a trust relation is likewise without merit. The records show that private respondents did not purchase the
contested properties from DBP in trust for petitioners. The former, as previously mentioned, in fact bought the land from
DBP upon realization that the latter could not validly sell the same. Obviously, petitioners bought it for themselves. There
is no evidence at all in the records that they bought the land in trust for private respondents. The fact that Anacleto Nool

SALES WAVE 1 22
was the younger brother of Conchita Nool and that they signed a contract of repurchase, which as discussed earlier was
void, does not prove the existence of an implied trust in favor of petitioners.

Second Issue: No Estoppel in Impugning the

Validity of Void Contracts

Petitioners argue that "when Anacleto Nool took the possession of the two hectares, more or less, and let the other two
hectares to be occupied and cultivated by plaintiffs-appellant, Anacleto Nool cannot later on disclaim the terms or contions
(sic) agreed upon and his actuation is within the ambit of estoppel . . . 28 We disagree. The private respondents cannot be
estopped from raising the defense of nullity of contract, specially in this case where they acted in good faith, believing that
indeed petitioners could sell the two parcels of land in question. Article 1410 of the Civil Code mandates that "(t)he action
or defense for the declaration of the inexistence of a contract does not prescribe." It is a well-settled doctrine that "as
between parties to a contract, validity cannot be given to it by estoppel if it is prohibited by law or it is against public policy
(19 Am. Jur. 802). It is not within the competence of any citizen to barter away what public policy by law seeks to
preserve." 29 Thus, it is immaterial that private respondents initially acted to implement the contract of sale, believing in
good faith that the same was valid. We stress that a contract void at inception cannot be validated by ratification or
prescription and certainly cannot be binding on or enforceable against private respondents. 30

Third Issue: Return of P30,000.00 with Interest

and Payment of Rent

Petitioners further argue that it would be a "miscarriage of justice" to order them (1) to return the sum of P30,000.00 to
private respondents when allegedly it was Private Respondent Anacleto Nool who owed the former a balance of
P14,000.00 and (2) to order petitioners to pay rent when they "were allowed to cultivate the said two hectares." 31

We are not persuaded. Based on the previous discussion, the balance of P14,000.00 under the void contract of sale may
not be enforced. Petitioners are the ones who have an obligation to return what they unduly and improperly received by
reason of the invalid contract of sale. Since they cannot legally give title to what they "sold," they cannot keep the money
paid for the object of the sale. It is basic that "(e)very person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall
return the same." 32 Thus, if a void contract has already "been performed, the restoration of what has been given is in
order." 33 Corollarily and as aptly ordered by respondent appellate court, interest thereon will run only from the time of
private respondents' demand for the return of this amount in their counterclaim. 34 In the same vein, petitioners'
possession and cultivation of the two hectares are anchored on private respondents' tolerance. Clearly, the latter's
tolerance ceased upon their counterclaim and demand on the former to vacate. Hence, their right to possess and cultivate
the land ipso facto ceased.

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals affirming that of the trial court is
hereby AFFIRMED.

SO ORDERED.

SALES WAVE 1 23
 CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CA
GR No. 116635
July 24, 1997

Facts:

One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously owned by Francisco Nool has an
area of 3.0880 hectares. Spouses (plaintiffs) Conchita Nool and Gaudencio Almojera alleged that they are the owners of
the subject lands. They are in dire need of money, they obtained a loan DBP , secured by a real estate mortgage on said
parcels of land, which were still registered in the names of Victorino and Francisco Nool, at the time, Since the plaintiffs
failed to pay the said loan, the mortgage was foreclosed; that within the period of redemption, the plaintiffs contacted
Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of
the 2 parcels of land in question were transferred to Anacleto; that as part of their arrangement or understanding, Anacleto
agreed to buy from Conchita the 2 parcels of land , for a total price of P100,000.00, P30,000.00 of which price was paid to
Conchita, and upon payment of the balance of P14,000.00, the plaintiffs were to regain possession of the 2 hectares of
land, which amounts spouses Anacleto Nool and Emilia Nebre failed to pay. Anacleto Nool signed the private writing,
agreeing to return subject lands when plaintiffs have the money to redeem the same; defendant Anacleto having been
made to believe, then, that his sister, Conchita, still had the right to redeem the said properties.

Issue: Is the purchase of the subject lands to Anacleto valid?

Held:

Nono dat quod non habet, No one can give what he does not have; Contract of repurchase inoperative thus void.

Article 1505 of the Civil Code provides that where goods are sold by a person who is not the owner thereof, and who does
not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller
had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Jurisprudence,
on the other hand, teaches us that a person can sell only what he owns or is authorized to sell; the buyer can as a

SALES WAVE 1 24
consequence acquire no more than what the seller can legally transfer. No one can give what he does not have nono
dat quod non habet. In the present case, there is no allegation at all that petitioners were authorized by DBP to sell the
property to the private respondents. Further, the contract of repurchase that the parties entered into presupposes that
petitioners could repurchase the property that they sold to private respondents. As petitioners sold nothing, it follows
that they can also repurchase nothing. In this light, the contract of repurchase is also inoperative and by the same
analogy, void.

G.R. No. 116635 July 24, 1997

CONCHITA NOOL and GAUDENCIO ALMOJERA vs. COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE

A contract of repurchase arising out of a contract of sale where the seller did not have any title to the property "sold" is not
valid. Since nothing was sold, then there is also nothing to repurchase.

Facts:

Two (2) parcels of land are in dispute and litigated upon here. The first has an area of 1 hectare it was formerly owned by
Victorino Nool and covered by Transfer Certificate and an area of 3.0880 hectares, the other parcel was previously owned
by Francisco .Both parcel's are situated in San Manuel, Isabela. The plaintiff spouses, Conchita Nool and Gaudencio
Almojera, now the appellants, seek recovery of the aforementioned parcels of land from the defendants, Anacleto Nool, a
younger brother of Conchita. Conchita Nool and Gaudencio Almojera alleged that they are the owners of the subject lands.
They are in dire need of money, they obtained a loan at DBP secured by a real estate mortgage on said parcels of land.
For the failure of plaintiffs to pay the said loan, including interest and surcharges, totaling P56,000.00, the mortgage was
foreclosed; that within the period of redemption, plaintiffs contacted defendant Anacleto Nool for the latter to redeem the
foreclosed properties from DBP, which the latter did; as a result, the titles of the two (2) parcels of land in question were
transferred to Anacleto that as part of their arrangement or understanding. Anacleto agreed to buy from Conchita the 2
parcels of land ,for a total price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the
balance of P14,000.00, the plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses
Anacleto Nool and Emilia Nebre failed to pay. Anacleto Nool signed the private writing, agreeing to return subject lands
when plaintiffs have the money to redeem the same; defendant Anacleto having been made to believe, then, that his sister,
Conchita, still had the right to redeem the said properties. Plaintiffs asked the defendants to return the same but despite
the intervention of the Barangay Captain of their place, defendants refused to return the said parcels of land to plaintiffs;
thereby impelling them (plaintiffs) to come to court for relief. The RTC rendered a decision that the one-year redemption
period was from March 16, 1982 up to March 15, 1983 and that the mortgagors' right of redemption was not exercised
within this period thus DBP became the absolute owner of said parcels of land for which it was issued new certificates of
title, both entered on May 23, 1983 by the Registry of Deeds for the Province of Isabela. About two years thereafter, on
April 1, 1985, DBP entered into a Deed of Conditional Sale involving the same parcels of land with Private Respondent
Anacleto Nool as vendee.
SALES WAVE 1 25
Issue:

Whether or not the handwritten document labeled by the parties as Resibo ti Katulagan or Receipt of Agreement, the
petitioners appear to have "sold" to private respondents was valid and enforceable.

Held:

NO, Article 1370 of the Civil Code is applicable only to valid and enforceable contracts. The Regional Trial Court and the
Court of Appeals ruled that the principal contract of sale contained in the handwritten document and the auxiliary contract
are both void. It is clear that the sellers no longer had any title to the parcels of land at the time of sale. A void contract
cannot give rise to a valid one. it is likewise clear that the sellers can no longer deliver the object of the sale to the buyers,
as the buyers themselves have already acquired title and delivery thereof from the rightful owner, the DBP. Thus, such
contract may be deemed to be inoperative and may thus fall, by analogy, under item no. 5 of Article 1409 of the Civil Code:
"Those which contemplate an impossible service." Article 1459 of the Civil Code provides that "the vendor must have a
right to transfer the ownership thereof [object of the sale] at the time it is delivered." Here, delivery of ownership is no
longer possible. It has become impossible.

Article 1505 of the Civil Code provides that "where goods are sold by a person who is not the owner thereof, and who does
not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller
had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell." Here, there is
no allegation at all that petitioners were authorized by DBP to sell the property to the private respondents. Jurisprudence,
on the other hand, teaches us that "a person can sell only what he owns or is authorized to sell; the buyer can as a
consequence acquire no more than what the seller can legally transfer." No one can give what he does not have nono
dat quod non habet.

SALES WAVE 1 26