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G.R. No.

78903 February 28, 1990

SPS. SEGUNDO DALION AND EPIFANIA SABESAJE-DALION, petitioners, vs.


THE HONORABLE COURT OF APPEALS AND RUPERTO SABESAJE, JR., respondents.

Francisco A. Puray, Sr. for petitioners. Gabriel N. Duazo for private respondent.

MEDIALDEA, J.:

This is a petition to annul and set aside the decision of the Court of Appeals rendered on May 26, 1987, upholding
the validity of the sale of a parcel of land by petitioner Segundo Dalion (hereafter, "Dalion") in favor of private
respondent Ruperto Sabesaje, Jr. (hereafter, "Sabesaje"), described thus:

A parcel of land located at Panyawan, Sogod, Southern Leyte, declared in the name of Segundo
Dalion, under Tax Declaration No. 11148, with an area of 8947 hectares, assessed at P 180.00, and
bounded on the North, by Sergio Destriza and Titon Veloso, East, by Feliciano Destriza, by Barbara
Bonesa (sic); and West, by Catalino Espina. (pp. 36-37, Rollo)

The decision affirms in toto the ruling of the trial court 1 issued on January 17, 1984, the dispositive portion of which
provides as follows:

WHEREFORE, IN VIEW OF THE FOREGOING, the Court hereby renders judgment.

(a) Ordering the defendants to deliver to the plaintiff the parcel of land subject of this case, declared
in the name of Segundo Dalion previously under Tax Declaration No. 11148 and lately under Tax
Declaration No. 2297 (1974) and to execute the corresponding formal deed of conveyance in a
public document in favor of the plaintiff of the said property subject of this case, otherwise, should
defendants for any reason fail to do so, the deed shall be executed in their behalf by the Provincial
Sheriff or his Deputy;

(b) Ordering the defendants to pay plaintiff the amount of P2,000.00 as attorney's fees and P 500.00
as litigation expenses, and to pay the costs; and

(c) Dismissing the counter-claim. (p. 38, Rollo)

The facts of the case are as follows:

On May 28, 1973, Sabesaje sued to recover ownership of a parcel of land, based on a private document of absolute
sale, dated July 1, 1965 (Exhibit "A"), allegedly executed by Dalion, who, however denied the fact of sale,
contending that the document sued upon is fictitious, his signature thereon, a forgery, and that subject land is
conjugal property, which he and his wife acquired in 1960 from Saturnina Sabesaje as evidenced by the "Escritura
de Venta Absoluta" (Exhibit "B"). The spouses denied claims of Sabesaje that after executing a deed of sale over
the parcel of land, they had pleaded with Sabesaje, their relative, to be allowed to administer the land because
Dalion did not have any means of livelihood. They admitted, however, administering since 1958, five (5) parcels of
land in Sogod, Southern Leyte, which belonged to Leonardo Sabesaje, grandfather of Sabesaje, who died in 1956.
They never received their agreed 10% and 15% commission on the sales of copra and abaca, respectively.
Sabesaje's suit, they countered, was intended merely to harass, preempt and forestall Dalion's threat to sue for
these unpaid commissions.

From the adverse decision of the trial court, Dalion appealed, assigning errors some of which, however, were
disregarded by the appellate court, not having been raised in the court below. While the Court of Appeals duly
recognizes Our authority to review matters even if not assigned as errors in the appeal, We are not inclined to do so
since a review of the case at bar reveals that the lower court has judicially decided the case on its merits.

As to the controversy regarding the identity of the land, We have no reason to dispute the Court of Appeals' findings
as follows:
To be sure, the parcel of land described in Exhibit "A" is the same property deeded out in Exhibit "B".
The boundaries delineating it from adjacent lots are identical. Both documents detail out the
following boundaries, to wit:

On the North-property of Sergio Destriza and Titon Veloso;

On the East-property of Feliciano Destriza;

On the South-property of Barbara Boniza and

On the West-Catalino Espina.

(pp. 41-42, Rollo)

The issues in this case may thus be limited to: a) the validity of the contract of sale of a parcel of land and b) the
necessity of a public document for transfer of ownership thereto.

The appellate court upheld the validity of the sale on the basis of Secs. 21 and 23 of Rule 132 of the Revised Rules
of Court.

SEC. 21. Private writing, its execution and authenticity, how proved.-Before any private writing may
be received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the writing executed;

(b) By evidence of the genuineness of the handwriting of the maker; or

(c) By a subscribing witness

xxx xxx xxx

SEC. 23. Handwriting, how proved. — The handwriting of a person may be proved by any witness
who believes it to be the handwriting of such person, and has seen the person write, or has seen
writing purporting to be his upon which the witness has acted or been charged, and has thus
acquired knowledge of the handwriting of such person. Evidence respecting the handwriting may
also be given by a comparison, made by the witness or the court, with writings admitted or treated as
genuine by the party against whom the evidence is offered, or proved to be genuine to the
satisfaction of the judge. (Rule 132, Revised Rules of Court)

And on the basis of the findings of fact of the trial court as follows:

Here, people who witnessed the execution of subject deed positively testified on the authenticity
thereof. They categorically stated that it had been executed and signed by the signatories thereto. In
fact, one of such witnesses, Gerardo M. Ogsoc, declared on the witness stand that he was the one
who prepared said deed of sale and had copied parts thereof from the "Escritura De Venta Absoluta"
(Exhibit B) by which one Saturnina Sabesaje sold the same parcel of land to appellant Segundo
Dalion. Ogsoc copied the bounderies thereof and the name of appellant Segundo Dalion's wife,
erroneously written as "Esmenia" in Exhibit "A" and "Esmenia" in Exhibit "B". (p. 41, Rollo)

xxx xxx xxx

Against defendant's mere denial that he signed the document, the positive testimonies of the
instrumental Witnesses Ogsoc and Espina, aside from the testimony of the plaintiff, must prevail.
Defendant has affirmatively alleged forgery, but he never presented any witness or evidence to
prove his claim of forgery. Each party must prove his own affirmative allegations (Section 1, Rule
131, Rules of Court). Furthermore, it is presumed that a person is innocent of a crime or wrong
(Section 5 (a),Idem), and defense should have come forward with clear and convincing evidence to
show that plaintiff committed forgery or caused said forgery to be committed, to overcome the
presumption of innocence. Mere denial of having signed, does not suffice to show forgery.

In addition, a comparison of the questioned signatories or specimens (Exhs. A-2 and A-3) with the
admitted signatures or specimens (Exhs. X and Y or 3-C) convinces the court that Exhs. A-2 or Z
and A-3 were written by defendant Segundo Dalion who admitted that Exhs. X and Y or 3-C are his
signatures. The questioned signatures and the specimens are very similar to each other and appear
to be written by one person.

Further comparison of the questioned signatures and the specimens with the signatures Segundo D.
Dalion appeared at the back of the summons (p. 9, Record); on the return card (p. 25, Ibid.); back of
the Court Orders dated December 17, 1973 and July 30, 1974 and for October 7, 1974 (p. 54 & p.
56, respectively, Ibid.), and on the open court notice of April 13, 1983 (p. 235, Ibid.) readily reveal
that the questioned signatures are the signatures of defendant Segundo Dalion.

It may be noted that two signatures of Segundo D. Dalion appear on the face of the questioned
document (Exh. A), one at the right corner bottom of the document (Exh. A-2) and the other at the
left hand margin thereof (Exh. A-3). The second signature is already a surplusage. A forger would
not attempt to forge another signature, an unnecessary one, for fear he may commit a revealing
error or an erroneous stroke. (Decision, p. 10) (pp. 42-43, Rollo)

We see no reason for deviating from the appellate court's ruling (p. 44, Rollo) as we reiterate that

Appellate courts have consistently subscribed to the principle that conclusions and findings of fact by
the trial courts are entitled to great weight on appeal and should not be disturbed unless for strong
and cogent reasons, since it is undeniable that the trial court is in a more advantageous position to
examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the
case (Chase v. Buencamino, Sr., G.R. No. L-20395, May 13, 1985, 136 SCRA 365; Pring v. Court of
Appeals, G.R. No. L-41605, August 19, 1985, 138 SCRA 185)

Assuming authenticity of his signature and the genuineness of the document, Dalion nonetheless still impugns the
validity of the sale on the ground that the same is embodied in a private document, and did not thus convey title or
right to the lot in question since "acts and contracts which have for their object the creation, transmission,
modification or extinction of real rights over immovable property must appear in a public instrument" (Art. 1358, par
1, NCC).

This argument is misplaced. The provision of Art. 1358 on the necessity of a public document is only for
convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of
land that this be embodied in a public instrument.

A contract of sale is a consensual contract, which means that the sale is perfected by mere consent. No particular
form is required for its validity. Upon perfection of the contract, the parties may reciprocally demand performance
(Art. 1475, NCC), i.e., the vendee may compel transfer of ownership of the object of the sale, and the vendor may
require the vendee to pay the thing sold (Art. 1458, NCC).

The trial court thus rightly and legally ordered Dalion to deliver to Sabesaje the parcel of land and to execute
corresponding formal deed of conveyance in a public document. Under Art. 1498, NCC, when the sale is made
through a public instrument, the execution thereof is equivalent to the delivery of the thing. Delivery may either be
actual (real) or constructive. Thus delivery of a parcel of land may be done by placing the vendee in control and
possession of the land (real) or by embodying the sale in a public instrument (constructive).

As regards petitioners' contention that the proper action should have been one for specific performance, We believe
that the suit for recovery of ownership is proper. As earlier stated, Art. 1475 of the Civil Code gives the parties to a
perfected contract of sale the right to reciprocally demand performance, and to observe a particular form, if
warranted, (Art. 1357). The trial court, aptly observed that Sabesaje's complaint sufficiently alleged a cause of action
to compel Dalion to execute a formal deed of sale, and the suit for recovery of ownership, which is premised on the
binding effect and validity inter partes of the contract of sale, merely seeks consummation of said contract.
... . A sale of a real property may be in a private instrument but that contract is valid and binding
between the parties upon its perfection. And a party may compel the other party to execute a public
instrument embodying their contract affecting real rights once the contract appearing in a private
instrument hag been perfected (See Art. 1357).

... . (p. 12, Decision, p. 272, Records)

ACCORDINGLY, the petition is DENIED and the decision of the Court of Appeals upholding the ruling of the trial
court is hereby AFFIRMED. No costs.

SO ORDERED.

Narvasa, Cruz, Gancayco and Grino-Aquino, JJ., concur.

DALLION V. CA (February 28, 2009)

FACTS:
Petitioner Segundo Dalion allegedly sold his property in Southern Leyte to respondent Ruperto Sabesaje through a
private deed of sale.

Dalion denies the sale and claims that his signature in the document was forged.

ISSUE:
WON there has been a contract of sale between the parties.

HELD:
The authenticity of the signature of Dallion was proven by the testimony of several witness including the person who made
the deed of sale. Dalion never presented any evidence or witness to prove his claim of forgery.

Dallion’s claim that the sale is invalid because it was not made in a public document is of no merit. This argument is
misplaced. The provision of Art. 1358 on the necessity of a public document is only for convenience, not for validity or
enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a
public instrument. Sale is perfected upon meeting of the minds of both parties.
G.R. No. L-55048 May 27, 1981

SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and MARCELINO SOTTO, petitioners, vs.
HON. AUXENCIO C. DACUYCUY, Judge of the CFI of Leyte, DELY RODRIGUEZ, FELIPE ANG CRUZ,
CONSTANCIA NOGAR, MANUEL GO, INOCENTES DIME, WILLY JULIO, JAIME YU, OSCAR DY, DY CHIU
SENG, BENITO YOUNG, FERNANDO YU, SEBASTIAN YU, CARLOS UY, HOC CHUAN and MANUEL
DY, respondents.

BARREDO, J.: 1äwphï1.ñ ët

Petition for certiorari and prohibition to declare void for being in grave abuse of discretion the orders of respondent
judge dated November 2, 1978 and August 29, 1980, in Civil Case No. 5759 of the Court of First Instance of Leyte,
which denied the motion filed by petitioners to dismiss the complaint of private respondents for specific performance
of an alleged agreement of sale of real property, the said motion being based on the grounds that the respondents'
complaint states no cause of action and/or that the claim alleged therein is unenforceable under the Statute of
Frauds.

Finding initially prima facie merit in the petition, We required respondents to answer and We issued a temporary
restraining order on October 7, 1980 enjoining the execution of the questioned orders.

In essence, the theory of petitioners is that while it is true that they did express willingness to sell to private
respondents the subject property for P6,500,000 provided the latter made known their own decision to buy it not
later than July 31, 1978, the respondents' reply that they were agreeable was not absolute, so much so that when
ultimately petitioners' representative went to Cebu City with a prepared and duly signed contract for the purpose of
perfecting and consummating the transaction, respondents and said representative found variance between the
terms of payment stipulated in the prepared document and what respondents had in mind, hence the bankdraft
which respondents were delivering to petit loners' representative was returned and the document remained
unsigned by respondents. Hence the action below for specific performance.

To be more specific, the parties do not dispute that on July 12, 1978, petitioners, thru a certain Pedro C. Gamboa,
sent to respondents the following letter:

Mr. Yao King Ong


Life Bakery
Tacloban City
Dear Mr. Yao: 1äw phï1.ñët

This refers to the Sotto property (land and building) situated at Tacloban City. My clients are willing
to sell them at a total price of P6,500,000.00.

While there are other parties who are interested to buy the property, I am giving you and the other
occupants the preference, but such priority has to be exercised within a given number of days as I
do not want to lose the opportunity if you are not interested. I am therefore gluing you and the rest of
the occupants until July 31, 1978 within it which to decide whether you want to buy the property. If I
do not hear from you by July 31, I will offer or close the deal with the other interested buyer.

Thank you so much for the hospitality extended to me during my last trip to Tacloban, and I hope to
hear from you very soon. 1äw phï1.ñët

Very truly yours, Pedro C. Gamboa 1

(Page 9, Record.)
Reacting to the foregoing letter, the following telegram was sent by "Yao King Ong & tenants" to
Atty. Pedro Gamboa in Cebu City:
Atty. Pedro Gamboa
Room 314, Maria Cristina Bldg.
Osmeña Boulevard, Cebu City
Reurlet dated July 12 inform Dra. Yuvienco we agree to buy property proceed Tacloban to negotiate
details 1äwphï1.ñët

Yao King Ong & tenants


(Page 10, Record.)
Likewise uncontroverted is the fact that under date of July 27, 1978, Atty. Gamboa wired Yao King
Ong in Tacloban City as follows:
NLT
YAO KING ONG
LIFE BAKERY
TACLOBAN CITY
PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING WITH CONTRACT PREPARE
PAYMENT BANK DRAFT 1äwphï1.ñët

ATTY. GAMBOA
(Page 10, Id.)

Now, Paragraph 10 of the complaint below of respondents alleges: 1äwphï1.ñët

10. That on August 1, 1978, defendant Pedro Gamboa arrived Tacloban City bringing with him the
prepared contract to purchase and to sell referred to in his telegram dated July 27, 1978 (Annex 'D'
hereof) for the purpose of closing the transactions referred to in paragraphs 8 and 9 hereof,
however, to the complete surprise of plaintiffs, the defendant (except def. Tacloban City Ice Plant,
Inc.) without giving notice to plaintiffs, changed the mode of payment with respect to the balance of
P4,500,000.00 by imposing upon plaintiffs to pay same amount within thirty (30) days from execution
of the contract instead of the former term of ninety (90) days as stated in paragraph 8 hereof. (Pp.
10-11, Record.)

Additionally and to reenforce their position, respondents alleged further in their complaint: 1äw phï1.ñët

8. That on July 12, 1978, defendants (except defendant Tacloban City Ice Plant, Inc.) finally sent a
telegram letter to plaintiffs- tenants, through same Mr. Yao King Ong, notifying them that defendants
are willing to sell the properties (lands and building) at a total price of P6,500,000.00, which herein
plaintiffs-tenants have agreed to buy the said properties for said price; a copy of which letter is
hereto attached as integral part hereof and marked as Annex 'C', and plaintiffs accepted the offer
through a telegram dated July 25, 1978, sent to defendants (through defendant Pedro C. Gamboa),
a copy of which telegram is hereto attached as integral part hereof and marked as Annex C-1 and as
a consequence hereof. plaintiffs except plaintiff Tacloban - merchants' Realty Development
Corporation) and defendants (except defendant Tacloban City Ice Plant. Inc.) agreed to the following
terms and conditions respecting the payment of said purchase price, to wit: 1äw phï1.ñët

P2,000,000.00 to be paid in full on the date of the execution of the contract; and the
balance of P4,500,000.00 shall be fully paid within ninety (90) days thereafter;

9. That on July 27, 1978, defendants sent a telegram to plaintiff- tenants, through the latter's
representative Mr. Yao King Ong, reiterating their acceptance to the agreement referred to in the
next preceding paragraph hereof and notifying plaintiffs-tenants to prepare payment by bank drafts;
which the latter readily complied with; a copy of which telegram is hereto attached as integral part
hereof and marked as Annex "D"; (Pp 49-50, Record.)

It was on the basis of the foregoing facts and allegations that herein petitioners filed their motion to dismiss alleging
as main grounds: 1äwphï1.ñët

I. That plaintiff, TACLOBAN MERCHANTS' REALTY DEVELOPMENT CORPORATION, amended


complaint, does not state a cause of action and the claim on which the action is founded is likewise
unenforceable under the provisions of the Statute of Frauds.

II. That as to the rest of the plaintiffs, their amended complaint does not state a cause of action and
the claim on which the action is founded is likewise unenforceable under the provisions of the
Statute of Frauds. (Page 81, Record.)
With commendable knowledgeability and industry, respondent judge ruled negatively on the motion to dismiss,
discoursing at length on the personality as real party-in-interest of respondent corporation, while passing lightly,
however, on what to Us are the more substantial and decisive issues of whether or not the complaint sufficiently
states a cause of action and whether or not the claim alleged therein is unenforceable under the Statute of Frauds,
by holding thus: 1äwphï1.ñët

The second ground of the motion to dismiss is that plaintiffs' claim is unenforceable under the
Statute of Frauds. The defendants argued against this motion and asked the court to reject the
objection for the simple reason that the contract of sale sued upon in this case is supported by
letters and telegrams annexed to the complaint and other papers which will be presented during the
trial. This contention of the defendants is not well taken. The plaintiffs having alleged that the
contract is backed up by letters and telegrams, and the same being a sufficient memorandum, the
complaint states a cause of action and they should be given a day in court and allowed to
substantiate their allegations (Paredes vs. Espino, 22 SCRA 1000).

To take a contract for the sale of land out of the Statute of Frauds a mere note or memorandum in
writing subscribed by the vendor or his agent containing the name of the parties and a summary
statement of the terms of the sale either expressly or by reference to something else is all that is
required. The statute does not require a formal contract drawn up with technical exactness for the
language of Par. 2 of Art. 1403 of the Philippine Civil Code is' ... an agreement ... or some note or
memorandum thereof,' thus recognizing a difference between the contract itself and the written
evidence which the statute requires (Berg vs. Magdalena Estate, Inc., 92 Phil. 110; Ill Moran,
Comments on the Rules of Court, 1952 ed. p. 187). See also Bautista's Monograph on the Statute of
Frauds in 21 SCRA p. 250. (Pp. 110-111, Record)

Our first task then is to dwell on the issue of whether or not in the light of the foregoing circumstances, the complaint
in controversy states sufficiently a cause of action. This issue necessarily entails the determination of whether or not
the plaintiffs have alleged facts adequately showing the existence of a perfected contract of sale between herein
petitioners and the occupant represented by respondent Yao King Ong.

In this respect, the governing legal provision is, of course, Article 1319 of the Civil Code which provides: 1äwphï1.ñët

ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are constitute the contract. The offer must be certain the acceptance absolute.
A qualified acceptance constitute a counter-offer.

Acceptance made by letter or telegram does not bind offerer except from the time it came to his
knowledge. The contract, in a case, is presumed to have been entered into in the place where the
offer was made.

In the instant case, We can lay aside, for the moment, petitioners' contention that the letter of July 12, 1978 of Atty.
Pedro C. Gamboa to respondents Yao King Ong and his companions constitute an offer that is "certain", although
the petitioners claim that it was a mere expression of willingness to sell the subject property and not a direct offer of
sale to said respondents. What We consider as more important and truly decisive is what is the correct juridical
significance of the telegram of respondents instructing Atty. Gamboa to "proceed to Tacloban to negotiate details."
We underline the word "negotiate" advisedly because to Our mind it is the key word that negates and makes it
legally impossible for Us to hold that respondents' acceptance of petitioners' offer, assuming that it was a "certain"
offer indeed, was the "absolute" one that Article 1319 above-quoted requires.

Dictionally, the implication of "to negotiate" is practically the opposite of the Idea that an agreement has been
reached. Webster's Third International Dictionary, Vol. II (G. & C. Merriam Co., 1971 Philippine copyright) gives the
meaning of negotiate as "to communicate or confer with another so as to arrive at the settlement of some matter;
meet with another so as to arrive through discussion at some kind of agreement or compromise about something; —
to arrange for or bring about through conference or discussion; work at or arrive at or settle upon by meetings and
agreements or compromises — ". Importantly, it must be borne in mind that Yao King Ong's telegram simply says
"we agree to buy property". It does not necessarily connote acceptance of the price but instead suggests that the
details were to be subject of negotiation.
Respondents now maintain that what the telegram refers to as "details" to be "negotiated" are mere "accidental
elements", not the essential elements of the contract. They even invite attention to the fact that they have alleged in
their complaint (Par. 6) that it was as early as "in the month of October, 1977 (that) negotiations between plaintiffs
and defendants for the purchase and sale (in question) — were made, thus resulting to offers of same defendants
and counter-offer of plaintiffs". But to Our mind such alleged facts precisely indicate the failure of any meeting of the
minds of the parties, and it is only from the letter and telegrams above-quoted that one can determine whether or
not such meeting of the minds did materialize. As We see it, what such allegations bring out in bold relief is that it
was precisely because of their past failure to arrive at an agreement that petitioners had to put an end to the
uncertainty by writing the letter of July 12, 1978. On the other hand, that respondents were all the time agreeable to
buy the property may be conceded, but what impresses Us is that instead of "absolutely" accepting the "certain"
offer — if there was one — of the petitioners, they still insisted on further negotiation of details. For anyone to read
in the telegram of Yao that they accepted the price of P6,500,000.00 would be an inference not necessarily
warranted by the words "we agree to buy" and "proceed Tacloban to negotiate details". If indeed the details being
left by them for further negotiations were merely accidental or formal ones, what need was there to say in the
telegram that they had still "to negotiate (such) details", when, being unessential per their contention, they could
have been just easily clarified and agreed upon when Atty. Gamboa would reach Tacloban?

Anent the telegram of Atty. Gamboa of July 27, 1978, also quoted earlier above, We gather that it was in answer to
the telegram of Yao. Considering that Yao was in Tacloban then while Atty. Gamboa was in Cebu, it is difficult to
surmise that there was any communication of any kind between them during the intervening period, and none such
is alleged anyway by respondents. Accordingly, the claim of respondents in paragraph 8 of their complaint below
that there was an agreement of a down payment of P2 M, with the balance of P4.5M to be paid within 90 days
afterwards is rather improbable to imagine to have actually happened.

Respondents maintain that under existing jurisprudence relative to a motion to dismiss on the ground of failure of
the complaint to state a cause of action, the movant-defendant is deemed to admit the factual allegations of the
complaint, hence, petitioners cannot deny, for purposes of their motion, that such terms of payment had indeed
been agreed upon.

While such is the rule, those allegations do not detract from the fact that under Article 1319 of the Civil Code above-
quoted, and judged in the light of the telegram-reply of Yao to Atty. Gamboa's letter of July 12, 1978, there was not
an absolute acceptance, hence from that point of view, petitioners' contention that the complaint of respondents
state no cause of action is correct.

Nonetheless, the alleged subsequent agreement about the P2 M down and P4.5 M in 90 days may at best be
deemed as a distinct cause of action. And placed against the insistence of petitioners, as demonstrated in the two
deeds of sale taken by Atty. Gamboa to Tacloban, Annexes 9 and 10 of the answer of herein respondents, that
there was no agreement about 90 days, an issue of fact arose, which could warrant a trial in order for the trial court
to determine whether or not there was such an agreement about the balance being payable in 90 days instead of
the 30 days stipulated in Annexes 9 and 10 above-referred to. Our conclusion, therefore, is that although there was
no perfected contract of sale in the light of the letter of Atty. Gamboa of July 12, 1978 and the letter-reply thereto of
Yao; it being doubtful whether or not, under Article 1319 of the Civil Code, the said letter may be deemed as an offer
to sell that is "certain", and more, the Yao telegram is far from being an "absolute" acceptance under said article, still
there appears to be a cause of action alleged in Paragraphs 8 to 12 of the respondents' complaint, considering it is
alleged therein that subsequent to the telegram of Yao, it was agreed that the petitioners would sell the property to
respondents for P6.5 M, by paving P2 M down and the balance in 90 days and which agreement was allegedly
violated when in the deeds prepared by Atty. Gamboa and taken to Tacloban, only 30 days were given to
respondents.

But the foregoing conclusion is not enough to carry the day for respondents. It only brings Us to the question of
whether or not the claim for specific performance of respondents is enforceable under the Statute of Frauds. In this
respect, We man, view the situation at hand from two angles, namely, (1) that the allegations contained in
paragraphs 8 to 12 of respondents' complaint should be taken together with the documents already aforementioned
and (2) that the said allegations constitute a separate and distinct cause of action. We hold that either way We view
the situation, the conclusion is inescapable e that the claim of respondents that petitioners have unjustifiably refused
to proceed with the sale to them of the property v in question is unenforceable under the Statute of Frauds.
It is nowhere alleged in said paragraphs 8 to 12 of the complaint that there is any writing or memorandum, much
less a duly signed agreement to the effect that the price of P6,500,000 fixed by petitioners for the real property
herein involved was agreed to be paid not in cash but in installments as alleged by respondents. The only
documented indication of the non-wholly-cash payment extant in the record is that stipulated in Annexes 9 and 10
above-referred to, the deeds already signed by the petitioners and taken to Tacloban by Atty. Gamboa for the
signatures of the respondents. In other words, the 90-day term for the balance of P4.5 M insisted upon by
respondents choices not appear in any note, writing or memorandum signed by either the petitioners or any of them,
not even by Atty. Gamboa. Hence, looking at the pose of respondents that there was a perfected agreement of
purchase and sale between them and petitioners under which they would pay in installments of P2 M down and
P4.5 M within ninety 90) days afterwards it is evident that such oral contract involving the "sale of real property"
comes squarely under the Statute of Frauds (Article 1403, No. 2(e), Civil Code.)

On the other score of considering the supposed agreement of paying installments as partly supported by the letter
and t telegram earlier quoted herein, His Honor declared with well studied ratiocination, albeit legally inaccurate,
that:1äw phï1.ñët

The next issue relate to the State of Frauds. It is contended that plaintiffs' action for specific
performance to compel the defendants to execute a good and sufficient conveyance of the property
in question (Sotto land and building) is unenforceable because there is no other note memorandum
or writing except annexes "C", "C-l" and "D", which by themselves did not give birth to a contract to
sell. The argument is not well founded. The rules of pleading limit the statement of the cause of
action only to such operative facts as give rise to the right of action of the plaintiff to obtain relief
against the wrongdoer. The details of probative matter or particulars of evidence, statements of law,
inferences and arguments need not be stated. Thus, Sec. 1 of Rule 8 provides that 'every pleading
shall contain in a methodical and logical form, a plain concise and direct statement of the ultimate
facts on which the party pleading relies for his claim or defense, as the case may be, omitting the
statement of mere evidentiary facts.' Exhibits need not be attached. The contract of sale sued upon
in this case is supported by letters and telegrams annexed to the complaint and plaintiffs have
announced that they will present additional evidences during the trial to prove their cause of action.
The plaintiffs having alleged that the contract is backed up by letters and telegrams, and the same
being sufficient memorandum, the complaint states a cause of action and they should be given their
day in court and allowed to substantiate their allegations (Parades vs. Espino, 22 SCRA 1000). (Pp
165-166, Record.)

The foregoing disquisition of respondent judge misses at least two (2) juridical substantive aspects of the Statute of
Frauds insofar as sale of real property is concerned. First, His Honor assumed that the requirement of perfection of
such kind of contract under Article 1475 of the Civil Code which provides that "(t)he contract of sale is perfected at
the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price",
the Statute would no longer apply as long as the total price or consideration is mentioned in some note or
memorandum and there is no need of any indication of the manner in which such total price is to be paid.

We cannot agree. In the reality of the economic world and the exacting demands of business interests monetary in
character, payment on installments or staggered payment of the total price is entirely a different matter from cash
payment, considering the unpredictable trends in the sudden fluctuation of the rate of interest. In other words, it is
indisputable that the value of money - varies from day to day, hence the indispensability of providing in any sale of
the terms of payment when not expressly or impliedly intended to be in cash.

Thus, We hold that in any sale of real property on installments, the Statute of Frauds read together with the
perfection requirements of Article 1475 of the Civil Code must be understood and applied in the sense that the idea
of payment on installments must be in the requisite of a note or memorandum therein contemplated. Stated
otherwise, the inessential elements" mentioned in the case of Parades vs. Espino, 22 SCRA 1000, relied upon by
respondent judge must be deemed to include the requirement just discussed when it comes to installment sales.
There is nothing in the monograph re — the Statute of Frauds appearing in 21 SCRA 250 also cited by His Honor
indicative of any contrary view to this ruling of Ours, for the essence and thrust of the said monograph refers only to
the form of the note or memorandum which would comply with the Statute, and no doubt, while such note or
memorandum need not be in one single document or writing and it can be in just sufficiently implicit tenor,
imperatively the separate notes must, when put together', contain all the requisites of a perfected contract of sale.
To put it the other way, under the Statute of Frauds, the contents of the note or memorandum, whether in one
writing or in separate ones merely indicative for an adequate understanding of all the essential elements of the
entire agreement, may be said to be the contract itself, except as to the form.

Secondly, We are of the considered opinion that under the rules on proper pleading, the ruling of the trial court that,
even if the allegation of the existence of a sale of real property in a complaint is challenged as barred from
enforceability by the Statute of Frauds, the plaintiff may simply say there are documents, notes or memoranda
without either quoting them in or annexing them to the complaint, as if holding an ace in the sleeves is not correct.
To go directly to the point, for Us to sanction such a procedure is to tolerate and even encourage undue delay in
litigation, for the simple reason that to await the stage of trial for the showing or presentation of the requisite
documentary proof when it already exists and is asked to be produced by the adverse party would amount to
unnecessarily postponing, with the concomitant waste of time and the prolongation of the proceedings, something
that can immediately be evidenced and thereby determinable with decisiveness and precision by the court without
further delay.

In this connection, Moran observes that unlike when the ground of dismissal alleged is failure of the complaint to
state a cause of action, a motion to dismiss invoking the Statute of Frauds may be filed even if the absence of
compliance does not appear an the face of the complaint. Such absence may be the subject of proof in the motion
stage of the proceedings. (Moran, Comment on the Rules of Court, Vol. 1, p. 494, 1979 ed.) It follows then that
when such a motion is filed and all the documents available to movant are before the court, and they are insufficient
to comply with the Statute, it becomes incumbent upon the plaintiff, for the reasons of policy We have just' indicated
regarding speedy administration of justice, to bring out what note or memorandum still exists in his possession in
order to enable the court to expeditiously determine then and there the need for further proceedings. In other words,
it would be inimical to the public interests in speedy justice for plaintiff to play hide and seek at his own convenience,
particularly, when, as is quite apparent as in the instant case that chances are that there are no more writings, notes
or memoranda of the installment agreement alleged by respondents. We cannot divine any reason why any such
document would be withheld if they existed, except the unpermissible desire of the respondents to force the
petitioners to undergo the ordeals, time, effort and expenses of a futile trial.

In the foregoing premises, We find no alternative than to render judgment in favor of petitioners in this certiorari and
prohibition case. If at all, appeal could be available if the petitioners subjected themselves to the trial ruled to be held
by the trial court. We foresee even at this point, on the basis of what is both extant and implicit in the records, that
no different result can be probable. We consider it as sufficiently a grave abuse of discretion warranting the special
civil actions herein the failure of respondent judge to properly apply the laws on perfection of contracts in relation to
the Statute of Frauds and the pertinent rules of pleading and practice, as We have discussed above.

ACCORDINGLY, the impugned orders of respondent judge of November 2, 1978 and August 29, 1980 are hereby
set aside and private respondents' amended complaint, Annex A of the petition, is hereby ordered dismissed and
the restraining order heretofore issued by this Court on October 7, 1980 is declared permanent. Costs against
respondents.

YUVIENCO V. DACUYCUY (May 27, 1981)

FACTS: Petitioners own a property in Tacloban City which they intend to sell for 6.5M. They gave the respondents the
right to purchase the property nut only until July 31, 1978. Respondents replied that they agree to buy the property and
they will negotiate for details. Petitioner sent another telegram informing respondents that their proposal is accepted and a
contract will be prepared.

Lawyer of defendant, Mr.Gamboa, arrived bringing a contact with an altered mode of payment which says that the
balance payment should be paid withing 30 days instead of the former 90 days. (Otiginal terms: 2M payment upon
execution. 4.5M after 90 days)

ISSUE:WON there was already a perfected contract of sale between the parties.

HELD: There was no perfected contract of sale yet because both parties are still under negotiation and hence, no
meeting of the minds. Mr.Gamboa even went to the respondents to negotiate for the sale. Even though there was an
agreement on the terms of payment, there was no absolute acceptance because respondents still insisted on further
details.
With regard to the alleged violation of terms of payment, there was no written document to prove that the respondents
agreed to pay not in cash but in installment. In sale of real property, payment of installment must be in requisite of a note
under the statute of frauds.
G.R. No. L-11311 May 28, 1958

MARTA C. ORTEGA, plaintiff-appellant,


vs.
DANIEL LEONARDO, defendant-appellee.

Jose Ma. Reyes for appellant.


Tomas A. Leonardo for appellee.

BENGZON, J.:

Well known is the general rule in the Statute of Frauds precluding enforcement of oral contracts for the sale of land.
Not so well known is exception concerning the partially executed contracts1 — least our jurisprudence offers few, if
any, apposite illustrations. This appeal exemplifies such exception.

Alleging partial performance, plaintiff sought to compel defendant to comply with their oral contract of sale of a
parcel of land. Upon a motion to dismiss, the Manila court of first instance ordered dismissal following the above
general rule.

Hence this appeal. It should be sustained if the allegations of the complaint — which the motion to dismiss admitted
— set out an instance of partial performance.

Stripped of non-essentials, the complaint averred that long before and until her house had been completely
destroyed during the liberation of the City of Manila, plaintiff occupied a parcel of land, designated as Lot 1, Block 3
etc. (hereinafter called Lot I) located at San Andres Street, Malate, Manila; that after liberation she re-occupied it;
that when the administration and disposition of the said Lot I (together with other lots in the Ana Sarmiento Estate)
were assigned by the Government to the Rural Progress Administration2 plaintiff asserted her right thereto (as
occupant) for purposes of purchase; that defendant also asserted a similar right, alleging occupancy of a portion of
the land subsequent to plaintiff's; that during the investigation of such conflicting interests, defendant asked plaintiff
to desist from pressing her claim and definitely promised that if and when he succeeded in getting title to Lot I3 , he
would sell to her a portion thereof with an area of 55.60 square meters (particularly described) at the rate of P25.00
per square meter, provided she paid for the surveying and subdivision of the Lot and provided further that after he
acquired title, she could continue holding the lot as tenant by paying a monthly rental of P10.00 until said portion
shall have been segregated and the purchase price fully paid; that plaintiff accepted defendant's offer, and desisted
from further claiming Lot I; that defendant finally acquired title thereto; that relying upon their agreement, plaintiff
caused the survey and segregation of the portion which defendant had promised to sell incurring expenses therefor,
said portion being now designated as Lot I-B in a duly prepared and approved subdivision plan; that in remodelling
her son's house constructed on a lot adjoining Lot I she extended it over said Lot I-B; that after defendant had
acquired Lot I plaintiff regularly paid him the monthly rental of P10.00; that in July 1954, after the plans of
subdivision and segregation of the lot had been approved by the Bureau of Lands, plaintiff tendered to defendant
the purchase price which the latter refused to accept, without cause or reason.

The court below explained in its order of dismissal:

It is admitted by both parties that an oral agreement to sell a piece of land is not enforceable. (Art. 1403,
Civil Code, Section 21, Rule 123, Rules of Court.) Plaintiff, however, argues that the contract in question,
although verbal, was partially performed because plaintiff desisted from claiming the portion of lot I in
question due to the promise of defendant to transfer said portion to her after the issuance of title to
defendant. The court thinks that even granting that plaintiff really desisted to claim not on oral promise to sell
made by defendant, the oral promise to sell cannot be enforced. The desistance to claim is not a part of the
contract of sale of the land. Only in essential part of the executory contract will, if it has already been
performed, make the verbal contract enforceable, payment of price being an essential part of the contract of
sale.

If the above means that partial performance of a sale contract occurs only when part of the purchase price is paid, it
surely constitutes a defective statement of the law. American Jurisprudence in its title "Statute of Frauds" lists other
acts of partial performance, such as possession, the making of improvements, rendition of services, payment of
taxes, relinquishment of rights, etc.
Thus, it is stated that "The continuance in possession may, in a proper case, be sufficiently referable to the parol
contract of sale to constitute a part performance thereof. There may be additional acts or peculiar circumstances
which sufficiently refer the possession to the contract. . . . Continued possession under an oral contract of sale, by
one already in possession as a tenant, has been held a sufficient part performance, where accompanied by other
acts which characterize the continued possession and refer it to the contract of purchase. Especially is this true
where the circumstances of the case include the making of substantial, permanent, and valuable improvements."
(49 American Jurisprudence — 44)

It is also stated that "The making of valuable permanent improvements on the land by the purchaser, in pursuance
of the agreement and with the knowledge of the vendor, has been said to be the strongest and the most unequivocal
act of part performance by which a verbal contract to sell land is taken out of the statute of frauds, and is ordinarily
an important element in such part performance. . . . Possession by the purchaser under a parol contract for the
purchase of real property, together with his making valuable and permanent improvements on the property which
are referable exclusively to the contract, in reliance on the contract, in the honest belief that he has a right to make
them, and with the knowledge and consent or acquiescence of the vendor, is deemed a part performance of the
contract. The entry into possession and the making of the improvements are held on amount to such an alteration in
the purchaser's position as will warrant the court's entering a degree of specific performance." (49 American
Jurisprudence p.755, 756.)

Again, it is stated that "A tender or offer of payment, declined by the vendor, has been said to be equivalent to
actual payment, for the purposes of determining whether or not there has been a part performance of the contract.
This is apparently true where the tender is by a purchaser who has made improvements. But the doctrine now
generally accepted, that not even the payment of the purchase price, without something more, . . . is a sufficient part
performance. (49 American Jurisprudence p. 772.)

And the relinquishment of rights or the compromise thereof has likewise been held to constitute part performance.
(See same title secs. 473, 474, 475.)

In the light of the above four paragraphs, it would appear that the complaint in this case described several
circumstance indicating partial performance: relinquishment of rights4 continued possession, building of
improvements, tender of payment plus the surveying of the lot at plaintiff's expense and the payment of rentals.

We shall not take, time to discuss whether one or the other or any two or three of them constituted sufficient
performance to take the matter away from the operation of the Statute of Frauds. Enough to hold that the
combination of all of them amounted to partial performance; and we do so line with the accepted basis of the
doctrine, that it would be a fraud upon the plaintiff if the defendant were permitted to oppose performance of his part
after he has allowed or induced the former to perform in reliance upon the agreement. (See 49 American
Jurisprudence p. 725.)

The paragraph immediately preceding will serve as our comment on the appellee's quotations from American
Jurisprudence itself to the effect that "relinquishment" is not part performance, and that neither "surveying the
land"5nor tender of payment is sufficient. The precedents hereinabove transcribed oppose or explain away or qualify
the appellee's citations. And at the risk of being repetitious we say: granting that none of the three circumstances
indicated by him, (relinquishment, survey, tender) would separately suffice, still the combination of the three with the
others already mentioned, amounts to more than enough.

Hence, as there was partial performance, the principle excluding parol contracts for the sale of realty, does not
apply.

The judgment will accordingly be reversed and the record remanded for further proceedings. With costs against
appellee.

Paras, C.J., Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia and Felix,
JJ., concur.
103 Phil. 870

BENGZON, J.:
Well known is the general rule in the Statute of Frauds precluding enfocement of oral contracts for the sale of land. Not so
well known is the exception concerning partially executed contracts [1] at least our jurisprudence offers few, if any, apposite
illustrations. This appeal exemplifies such exception.
Alleging partial performance, plaintiff sought to compel defendant to comply with their oral contract of sale of a parcel of
land. Upon a motion to dismiss, the Manila court of first instance ordered dismissal following the above general rule.

Hence this appeal. It should be sustained if the allegations of the complaint-which the motion to dismiss admitted-set put
an instance of partial performance.
Stripped of non-essentials, the complaint averred that long before and until her house had been completely destroyed
during the liberation of the City of Manila, plaintiff occupied a parcel of land, designated as Lot I, Block 3 etc. (hereinafter
called Lot I) located at San Andres Street, Malate, Manila; that after liberation she re-occupied it; that when the
administration and disposition of the said Lot I (together with other lots in the Ana Sarmiento Estate) were assigned by
the Government to the Rural Progress Administration[1] plaintiff asserted her right thereto (as occupant) for purposes of
purchase; that defendant also asserted a similar right, alleging occupancy of a portion of the land subsequent to plaintiff's;
that during the investigation of such conflicting interests, defendant asked plaintiff to desist from pressing her claim and
definitely promised that if and when he succeeded in getting title to Lot 1 [2], he would sell to her a portion thereof with an
area of 55.60 square meters (particularly described) at the rate of P25.00 per square meter, provided she paid for the
surveying and subdivision of the Lot, and provided further that after he acquired title, she could continue holding the lot
as tenant by paying a monthly rental of P10.00 until said portion shall have been segregated and the purchase price fully
paid; that plaintiff accepted defendant's offer, and desisted from further claiming Lot I; that defendant finally acquired
title thereto; that relying upon their agreement, plaintiff caused the survey and segregation of the portion which defendant
had promised to sell, incurring expenses therefor, said portion being now designated as Lot I-E in a duly prepared and
approved subdivision plan; that in remodelling her son's house constructed on a lot adjoining Lot I she extended it over
said Lot I-B; that after defendant had acquired Lot I plaintiff regularly paid him the monthly rental of P10.00; that in July
1954, after the plans of subdivision and segregation of the lot had been approved by the Bureau of Lands, plaintiff
tendered to defendant the purchase price which the latter refused to accept, without cause or reason.
The court below explained in its order of dismissal:
"It is admitted by both parties that an oral agreement to sell a piece of land is not enforceable. (Art. 1403, Civil Code,
Section 21, Rule 123, Rules of Court.) Plaintiff, however, argues that the contract in question, although verbal, was
partially performed because plaintiff desisted from claiming the portion of lot I in question due to the promise of
defendant to transfer said portion to her after the issuance of title to defendant. The court thinks that even granting that
plaintiff really desisted to claim not I on oral promise to sell made by defendant, the oral promise to sell cannot be
enforced. The desistance to claim is not a part of the contract of sale of the land. Only in essential part of the executory
contract will, if it has already been performed, make the verbal contract enforceable, payment of price being an essential
part of the contract of sale."

If the above means that partial performance of a sale contract occurs only when part of the purchase price is paid, it surely
constitutes a defective statement of the law. American Jurisprudence in its title "Statute of Frauds" lists other acts of
partial performance, such as possession, the making of improvements, rendition of services, payment of taxes,
relinquishment of rights, etc.
Thus, it is stated that "The continuance in possession by a purchaser who is already in possession may, in a proper case, be
sufficiently referable to the parol contract of sale to constitute a part performance thereof. There may be additional acts, or
peculiar circumstances which sufficiently refer the possession to the contract. * * * Continued possession under an oral
contract of sale, by one already in possession as a tenant, has been held a sufficient part performance, where accompanied
by other acts which characterize the continued possession and refef it to the contract of purchase. Especially is this true
where the circumstances of the case include the making of substantial, permanent, and valuable improvements." (49
American Jurisprudence-44)
It is also stated that "The making of valuable permanent improvements on the land by the purchaser, in pursuance of the
agreement and with the knowledge of the vendor, has been said to be the strongest and most unequivocal act of part
performance by which a verbal contract to sell land is taken out of the statute of frauds, and is ordinarily an important
element in such part performance. * * * Possession by the purchaser under a parol contract for the purchase of real
property, together with his making valuable and permanent improvements on the property which are referable exclusively
to the contract, in reliance on the contract, in the honest belief that he has a right to make them, and with the knowledge
and consent or acquiescence of the vendor, is deemed a part performance of the contract. The entry into possession and
the making of the improvements are held on amount to such an alteration in the purchaser's position as will warrant the
court's entering a degree of specific performance." (49 American Jurisprudence p. 755, 756.)
Again, it is stated that "A tender or offer of payment, declined by the vendor, has been said to be equivalent to actual
payment, for the purposes of determining whether or not there has been a part performance of the contract. This is
apparently true where the tender is by a purchaser who has made improvements. But the doctrine now generally accepted,
that not even the payment of the purchase price, without something more, * * * is a sufficient part performance. (49
American Jurisprudence p. 772.)
And the relinquishment of rights or the compromise thereof has likewise been held to constitute part performance. (See
same title sees. 473, 474, 475.)
In the light of the above four paragraphs, it would appear that the complaint in this case described several circumstance
indicating partial performance: relinquishment of rights[1] continued possession, building of improvements, tender of
payment plus the surveying of the lot at plaintiff's expense and the payment of rentals.
We shall not take time to discuss whether one or the other or any two or three of them constituted sufficient performance
to take the matter away from the operation of the Statute of Frauds. Enough to hold that the combination of all of them
amounted to partial performance; and we do so line with the accepted basis of the doctrine, that it would be a fraud upon
the plaintiff if the defendant were permitted to oppose performance of his part after he has allowed or induced the former
to perform in reliance upon the agreement. (See 49 American Jurisprudence p. 725.)
The paragraph immediately preceding will serve as our comment on the appellee's quotations from American
Jurisprudence itself to the effect that "relinquishment" is not part performance, and that neither "surveying the
land"[2] nor tender of payment is sufficient. The precedents hereinabove transcribed oppose or explain away or qualify the
appellee's citations. And at the risk of being repetitious we say: granting that none of the three circumstances indicated by
him, (relinquishment, survey, tender) would separately suffice, still the combination of the three with the others already
mentioned, amounts to more than enough.
Hence, as there was partial performance, the principle excluding parol contracts for the sale of realty, does not apply.
The judgment will accordingly be reversed and the record remanded for further proceedings. With costs against appellee.
Paras, C. J., Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia and Felix,
JJ., concur.

[1]See Moran, Rules of Court, 1957 Ed. Vol. 3, p. 178.

[1]Evidently in connection, with purchase of landed estates for re-sale to occupants.


[2]Of about 234 square meters.
[1]An occupant of the landed estate has preference to buy.
[2]Here the survey was at plaintiff's expense and pursuant to their agreement.
G.R. No. 85240 July 12, 1991

HEIRS OF CECILIO (also known as BASILIO) CLAUDEL, namely, MODESTA CLAUDEL, LORETA HERRERA,
JOSE CLAUDEL, BENJAMIN CLAUDEL, PACITA CLAUDEL, CARMELITA CLAUDEL, MARIO CLAUDEL,
ROBERTO CLAUDEL, LEONARDO CLAUDEL, ARSENIA VILLALON, PERPETUA CLAUDEL and FELISA
CLAUDEL, petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF MACARIO, ESPERIDIONA, RAYMUNDA and CELESTINA, all
surnamed CLAUDEL, respondents.

Ricardo L. Moldez for petitioners.


Juan T. Aquino for private respondents

SARMIENTO, J.:

This petition for review on certiorari seeks the reversal of the decision rendered by the Court of Appeals in CA-G.R.
CV No. 044291 and the reinstatement of the decision of the then Court of First Instance (CFI) of Rizal, Branch CXI,
in Civil Case No. M-5276-P, entitled. "Heirs of Macario Claudel, et al. v. Heirs of Cecilio Claudel, et al.," which
dismissed the complaint of the private respondents against the petitioners for cancellation of titles and
reconveyance with damages.2

As early as December 28, 1922, Basilio also known as "Cecilio" Claudel, acquired from the Bureau of Lands, Lot
No. 1230 of the Muntinlupa Estate Subdivision, located in the poblacion of Muntinlupa, Rizal, with an area of 10,107
square meters; he secured Transfer Certificate of Title (TCT) No. 7471 issued by the Registry of Deeds for the
Province of Rizal in 1923; he also declared the lot in his name, the latest Tax Declaration being No. 5795. He
dutifully paid the real estate taxes thereon until his death in 1937.3 Thereafter, his widow "Basilia" and later, her son
Jose, one of the herein petitioners, paid the taxes.

The same piece of land purchased by Cecilio would, however, become the subject of protracted litigation thirty-nine
years after his death.

Two branches of Cecilio's family contested the ownership over the land-on one hand the children of Cecilio, namely,
Modesto, Loreta, Jose, Benjamin, Pacita, Carmelita, Roberto, Mario, Leonardo, Nenita, Arsenia Villalon, and Felisa
Claudel, and their children and descendants, now the herein petitioners (hereinafter referred to as HEIRS OF
CECILIO), and on the other, the brother and sisters of Cecilio, namely, Macario, Esperidiona, Raymunda, and
Celestina and their children and descendants, now the herein private respondents (hereinafter referred to as
SIBLINGS OF CECILIO). In 1972, the HEIRS OF CECILIO partitioned this lot among themselves and obtained the
corresponding Transfer Certificates of Title on their shares, as follows:

TCT No. 395391 1,997 sq. m. –– Jose Claudel

TCT No. 395392 1,997 sq. m. –– Modesta Claudel and children

TCT No. 395393 1,997 sq. m. –– Armenia C. Villalon

TCT No. 395394 1,997 sq. m. –– Felisa Claudel4

Four years later, on December 7, 1976, private respondents SIBLINGS OF CECILIO, filed Civil Case No. 5276-P as
already adverted to at the outset, with the then Court of First Instance of Rizal, a "Complaint for Cancellation of
Titles and Reconveyance with Damages," alleging that 46 years earlier, or sometime in 1930, their parents had
purchased from the late Cecilio Claudel several portions of Lot No. 1230 for the sum of P30.00. They admitted that
the transaction was verbal. However, as proof of the sale, the SIBLINGS OF CECILIO presented a subdivision plan
of the said land, dated March 25, 1930, indicating the portions allegedly sold to the SIBLINGS OF CECILIO.

As already mentioned, the then Court of First Instance of Rizal, Branch CXI, dismissed the complaint, disregarding
the above sole evidence (subdivision plan) presented by the SIBLINGS OF CECILIO, thus:
Examining the pleadings as well as the evidence presented in this case by the parties, the Court can not but
notice that the present complaint was filed in the name of the Heirs of Macario, Espiridiona, Raymunda and
Celestina, all surnamed Claudel, without naming the different heirs particularly involved, and who wish to
recover the lots from the defendants. The Court tried to find this out from the evidence presented by the
plaintiffs but to no avail. On this point alone, the Court would not be able to apportion the property to the real
party in interest if ever they are entitled to it as the persons indicated therein is in generic term (Section 2,
Rule 3). The Court has noticed also that with the exception of plaintiff Lampitoc and (sic) the heirs of
Raymunda Claudel are no longer residing in the property as they have (sic) left the same in 1967. But most
important of all the plaintiffs failed to present any document evidencing the alleged sale of the property to
their predecessors in interest by the father of the defendants. Considering that the subject matter of the
supposed sale is a real property the absence of any document evidencing the sale would preclude the
admission of oral testimony (Statute of Frauds). Moreover, considering also that the alleged sale took place
in 1930, the action filed by the plaintiffs herein for the recovery of the same more than thirty years after the
cause of action has accrued has already prescribed.

WHEREFORE, the Court renders judgment dismissing the complaint, without pronouncement as to costs.

SO ORDERED.5

On appeal, the following errors6 were assigned by the SIBLINGS OF CECILIO:

1. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFFS' COMPLAINT DESPITE CONCLUSIVE


EVIDENCE SHOWING THE PORTION SOLD TO EACH OF PLAINTIFFS' PREDECESSORS.

2. THE TRIAL COURT ERRED IN HOLDING THAT PLAINTIFFS FAILED TO PROVE ANY DOCUMENT
EVIDENCING THE ALLEGED SALE.

3. THE TRIAL COURT ERRED IN NOT GIVING CREDIT TO THE PLAN, EXHIBIT A, SHOWING THE
PORTIONS SOLD TO EACH OF THE PLAINTIFFS' PREDECESSORS-IN-INTEREST.

4. THE TRIAL COURT ERRED IN NOT DECLARING PLAINTIFFS AS OWNERS OF THE PORTION
COVERED BY THE PLAN, EXHIBIT A.

5. THE TRIAL COURT ERRED IN NOT DECLARING TRANSFER CERTIFICATES OF TITLE NOS.
395391, 395392, 395393 AND 395394 OF THE REGISTER OF DEEDS OF RIZAL AS NULL AND VOID.

The Court of Appeals reversed the decision of the trial court on the following grounds:

1. The failure to bring and prosecute the action in the name of the real party in interest, namely the parties
themselves, was not a fatal omission since the court a quo could have adjudicated the lots to the SIBLINGS OF
CECILIO, the parents of the herein respondents, leaving it to them to adjudicate the property among themselves.

2. The fact of residence in the disputed properties by the herein respondents had been made possible by the
toleration of the deceased Cecilio.

3. The Statute of Frauds applies only to executory contracts and not to consummated sales as in the case at bar
where oral evidence may be admitted as cited in Iñigo v. Estate of Magtoto7 and Diana, et al. v. Macalibo.8

In addition,

. . . Given the nature of their relationship with one another it is not unusual that no document to evidence the
sale was executed, . . ., in their blind faith in friends and relatives, in their lack of experience and foresight,
and in their ignorance, men, in spite of laws, will make and continue to make verbal contracts. . . .9

4. The defense of prescription cannot be set up against the herein petitioners despite the lapse of over forty years
from the time of the alleged sale in 1930 up to the filing of the "Complaint for Cancellation of Titles and
Reconveyance . . ." in 1976.
According to the Court of Appeals, the action was not for the recovery of possession of real property but for the
cancellation of titles issued to the HEIRS OF CECILIO in 1973. Since the SIBLINGS OF CECILIO commenced their
complaint for cancellation of titles and reconveyance with damages on December 7, 1976, only four years after the
HEIRS OF CECILIO partitioned this lot among themselves and obtained the corresponding Transfer Certificates of
Titles, then there is no prescription of action yet.

Thus the respondent court ordered the cancellation of the Transfer Certificates of Title Nos. 395391, 395392,
395393, and 395394 of the Register of Deeds of Rizal issued in the names of the HEIRS OF CECILIO and
corollarily ordered the execution of the following deeds of reconveyance:

To Celestina Claudel, Lot 1230-A with an area of 705 sq. m.

To Raymunda Claudel, Lot 1230-B with an area of 599 sq. m.

To Esperidiona Claudel, Lot 1230-C with an area of 597 sq. m.

To Macario Claudel, Lot 1230-D, with an area of 596 sq. m.10

The respondent court also enjoined that this disposition is without prejudice to the private respondents, as heirs of
their deceased parents, the SIBLINGS OF CECILIO, partitioning among themselves in accordance with law the
respective portions sold to and herein adjudicated to their parents.

The rest of the land, lots 1230-E and 1230-F, with an area of 598 and 6,927 square meters, respectively would go to
Cecilio or his heirs, the herein petitioners. Beyond these apportionments, the HEIRS OF CECILIO would not receive
anything else.

The crux of the entire litigation is whether or not the Court of Appeals committed a reversible error in disposing the
question of the true ownership of the lots.

And the real issues are:

1. Whether or not a contract of sale of land may be proven orally:

2. Whether or not the prescriptive period for filing an action for cancellation of titles and reconveyance with
damages (the action filed by the SIBLINGS OF CECILIO) should be counted from the alleged sale upon
which they claim their ownership (1930) or from the date of the issuance of the titles sought to be cancelled
in favor of the HEIRS OF CECILIO (1976).

The rule of thumb is that a sale of land, once consummated, is valid regardless of the form it may have been
entered into.11 For nowhere does law or jurisprudence prescribe that the contract of sale be put in writing before
such contract can validly cede or transmit rights over a certain real property between the parties themselves.

However, in the event that a third party, as in this case, disputes the ownership of the property, the person against
whom that claim is brought can not present any proof of such sale and hence has no means to enforce the contract.
Thus the Statute of Frauds was precisely devised to protect the parties in a contract of sale of real property so that
no such contract is enforceable unless certain requisites, for purposes of proof, are met.

The provisions of the Statute of Frauds pertinent to the present controversy, state:

Art. 1403 (Civil Code). The following contracts are unenforceable, unless they are ratified:

xxx xxx xxx

2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases, an
agreement hereafter made shall be unenforceable by action unless the same, or some note or
memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents:

xxx xxx xxx

e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an
interest therein;

xxx xxx xxx

(Emphasis supplied.)

The purpose of the Statute of Frauds is to prevent fraud and perjury in the enforcement of obligations depending for
their evidence upon the unassisted memory of witnesses by requiring certain enumerated contracts and
transactions to be evidenced in Writing.12

The provisions of the Statute of Frauds originally appeared under the old Rules of Evidence. However when the Civil
Code was re-written in 1949 (to take effect in 1950), the provisions of the Statute of Frauds were taken out of the
Rules of Evidence in order to be included under the title on Unenforceable Contracts in the Civil Code. The transfer
was not only a matter of style but to show that the Statute of Frauds is also a substantive law.

Therefore, except under the conditions provided by the Statute of Frauds, the existence of the contract of sale made
by Cecilio with his siblings13 can not be proved.

On the second issue, the belated claim of the SIBLINGS OF CECILIO who filed a complaint in court only in 1976 to
enforce a light acquired allegedly as early as 1930, is difficult to comprehend.

The Civil Code states:

Art. 1145. The following actions must be commenced within six years:

(1) Upon an oral contract . . . (Emphasis supplied).

If the parties SIBLINGS OF CECILIO had allegedly derived their right of action from the oral purchase made by their
parents in 1930, then the action filed in 1976 would have clearly prescribed. More than six years had lapsed.

We do not agree with the parties SIBLINGS OF CECILIO when they reason that an implied trust in favor of the
SIBLINGS OF CECILIO was established in 1972, when the HEIRS OF CECILIO executed a contract of partition
over the said properties.

But as we had pointed out, the law recognizes the superiority of the torrens title.

Above all, the torrens title in the possession of the HEIRS OF CECILIO carries more weight as proof of ownership
than the survey or subdivision plan of a parcel of land in the name of SIBLINGS OF CECILIO.

The Court has invariably upheld the indefeasibility of the torrens title. No possession by any person of any portion of
the land could defeat the title of the registered owners thereof.14

A torrens title, once registered, cannot be defeated, even by adverse, open and notorious possession. A
registered title under the torrens system cannot be defeated by prescription. The title, once registered, is
1âwphi1

notice to the world. All persons must take notice. No one can plead ignorance of the registration.15

xxx xxx xxx

Furthermore, a private individual may not bring an action for reversion or any action which would have the
effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with
the result that the land covered thereby will again form part of the public domain, as only the Solicitor
General or the officer acting in his stead may do so.16

It is true that in some instances, the Court did away with the irrevocability of the torrens title, but the circumstances
in the case at bar varied significantly from these cases.

In Bornales v. IAC, 17 the defense of indefeasibility of a certificate of title was disregarded when the transferee who
took it had notice of the flaws in the transferor's title. No right passed to a transferee from a vendor who did not have
any in the first place. The transferees bought the land registered under the torrens system from vendors who
procured title thereto by means of fraud. With this knowledge, they can not invoke the indefeasibility of a certificate
of title against the private respondent to the extent of her interest. This is because the torrens system of land
registration, though indefeasible, should not be used as a means to perpetrate fraud against the rightful owner of
real property.

Mere registration of the sale is not good enough, good faith must concur with registration. Otherwise registration
becomes an exercise in futility.18

In Amerol v. Bagumbaran,19 we reversed the decision of the trial court. In this case, the title was wrongfully
registered in another person's name. An implied trust was therefore created. This trustee was compelled by law to
reconvey property fraudulently acquired notwithstanding the irrevocability of the torrens title.20

In the present case, however, the facts belie the claim of ownership.

For several years, when the SIBLINGS OF CECILIO, namely, Macario, Esperidiona Raymunda, and Celestina were
living on the contested premises, they regularly paid a sum of money, designated as "taxes" at first, to the widow of
Cecilio, and later, to his heirs.21 Why their payments were never directly made to the Municipal Government of
Muntinlupa when they were intended as payments for "taxes" is difficult to square with their claim of ownership. We
are rather inclined to consider this fact as an admission of non-ownership. And when we consider also that the
petitioners HEIRS OF CECILIO had individually paid to the municipal treasury the taxes corresponding to the
particular portions they were occupying,22 we can readily see the superiority of the petitioners' position.

Renato Solema and Decimina Calvez, two of the respondents who derive their right from the SIBLINGS OF
CLAUDEL, bought a portion of the lot from Felisa Claudel, one of the HEIRS OF CLAUDEL.23 The Calvezes should
not be paying for a lot that they already owned and if they did not acknowledge Felisa as its owner.

In addition, before any of the SIBLINGS OF CECILIO could stay on any of the portions of the property, they had to
ask first the permission of Jose Claudel again, one of the HEIRS OF CECILIO.24 In fact the only reason why any of
the heirs of SIBLINGS OF CECILIO could stay on the lot was because they were allowed to do so by the HEIRS OF
CECILIO.25

In view of the foregoing, we find that the appellate court committed a reversible error in denigrating the transfer
certificates of title of the petitioners to the survey or subdivision plan proffered by the private respondents. The Court
generally recognizes the profundity of conclusions and findings of facts reached by the trial court and hence
sustains them on appeal except for strong and cogent reasons inasmuch as the trial court is in a better position to
examine real evidence and observe the demeanor of witnesses in a case.

No clear specific contrary evidence was cited by the respondent appellate court to justify the reversal of the lower
court's findings. Thus, in this case, between the factual findings of the trial court and the appellate court, those of the
trial court must prevail over that of the latter.26

WHEREFORE, the petition is GRANTED We REVERSE and SET ASIDE the decision rendered in CA-G.R. CV No.
04429, and we hereby REINSTATE the decision of the then Court of First Instance of Rizal (Branch 28, Pasay City)
in Civil Case No. M-5276-P which ruled for the dismissal of the Complaint for Cancellation of Titles and
Reconveyance with Damages filed by the Heirs of Macario, Esperidiona Raymunda, and Celestina, all surnamed
CLAUDEL. Costs against the private respondents.

SO ORDERED. Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.


G.R. No. L-116650 May 23, 1995

TOYOTA SHAW, INC., petitioner, vs.


COURT OF APPEALS and LUNA L. SOSA, respondents.

DAVIDE, JR., J.:

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

4 June 1989

AGREEMENTS BETWEEN MR. SOSA


& POPONG BERNARDO OF TOYOTA
SHAW, INC.

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

2. the downpayment of P100,000.00 will be paid by Mr. Sosa on June 15, 1989.

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

(Sgd.) POPONG
BERNARDO.

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

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

Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989 because he, his family, and
a balikbayan guest would use it on 18 June 1989 to go to Marinduque, his home province, where he would celebrate
his birthday on the 19th of June. He added that if he does not arrive in his hometown with the new car, he would
become a "laughing stock." Bernardo assured Sosa that a unit would be ready for pick up at 10:00 a.m. on 17 June
1989. Bernardo then signed the aforequoted "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw,
Inc." It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing
through B.A. Finance, and for this Gilbert, on behalf of his father, signed the documents of Toyota and B.A. Finance
pertaining to the application for financing.

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

a) downpayment — P 53,148.00
b) insurance — P 13,970.00
c) BLT registration fee — P 1,067.00
CHMO fee — P 2,715.00
service fee — P 500.00
accessories — P 29,000.00

and that the "BALANCE TO BE FINANCED" is "P274,137.00." The spaces provided for "Delivery Terms" were not
filled-up. It also contains the following pertinent provisions:

CONDITIONS OF SALES

1. This sale is subject to availability of unit.

2. Stated Price is subject to change without prior notice, Price prevailing and in effect at time of
selling will apply. . . .

Rodrigo Quirante, the Sales Supervisor of Bernardo, checked and approved the VSP.

On 17 June 1989, at around 9:30 a.m., Bernardo called Gilbert to inform him that the vehicle would not be ready for
pick up at 10:00 a.m. as previously agreed upon but at 2:00 p.m. that same day. At 2:00 p.m., Sosa and Gilbert met
Bernardo at the latter's office. According to Sosa, Bernardo informed them that the Lite Ace was being readied for
delivery. After waiting for about an hour, Bernardo told them that the car could not be delivered because "nasulot
ang unit ng ibang malakas."

Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the disapproval by B.A. Finance
of the credit financing application of Sosa. It further alleged that a particular unit had already been reserved and
earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase
price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa
refused.

After it became clear that the Lite Ace would not be delivered to him, Sosa asked that his downpayment be
refunded. Toyota did so on the very same day by issuing a Far East Bank check for the full amount of
P100,000.00, 4 the receipt of which was shown by a check voucher of Toyota,5 which Sosa signed with the
reservation, "without prejudice to our future claims for damages."

Thereafter, Sosa sent two letters to Toyota. In the first letter, dated 27 June 1989 and signed by him, he demanded
the refund, within five days from receipt, of the downpayment of P100,000.00 plus interest from the time he paid it
and the payment of damages with a warning that in case of Toyota's failure to do so he would be constrained to take
legal action. 6 The second, dated 4 November 1989 and signed by M. O. Caballes, Sosa's counsel, demanded one
million pesos representing interest and damages, again, with a warning that legal action would be taken if payment
was not made within three days.7 Toyota's counsel answered through a letter dated 27 November 1989 8 refusing to
accede to the demands of Sosa. But even before this answer was made and received by Sosa, the latter filed on 20
November 1989 with Branch 38 of the Regional Trial Court (RTC) of Marinduque a complaint against Toyota for
damages under Articles 19 and 21 of the Civil Code in the total amount of P1,230,000.00.9 He alleges, inter
alia, that:

9. As a result of defendant's failure and/or refusal to deliver the vehicle to plaintiff, plaintiff suffered
embarrassment, humiliation, ridicule, mental anguish and sleepless nights because: (i) he and his
family were constrained to take the public transportation from Manila to Lucena City on their way to
Marinduque; (ii) his balikbayan-guest canceled his scheduled first visit to Marinduque in order to
avoid the inconvenience of taking public transportation; and (iii) his relatives, friends, neighbors and
other provincemates, continuously irked him about "his Brand-New Toyota Lite Ace — that never
was." Under the circumstances, defendant should be made liable to the plaintiff for moral damages
in the amount of One Million Pesos (P1,000,000.00). 10
In its answer to the complaint, Toyota alleged that no sale was entered into between it and Sosa, that Bernardo had
no authority to sign Exhibit "A" for and in its behalf, and that Bernardo signed Exhibit "A" in his personal capacity. As
special and affirmative defenses, it alleged that: the VSP did not state date of delivery; Sosa had not completed the
documents required by the financing company, and as a matter of policy, the vehicle could not and would not be
released prior to full compliance with financing requirements, submission of all documents, and execution of the
sales agreement/invoice; the P100,000.00 was returned to and received by Sosa; the venue was improperly laid;
and Sosa did not have a sufficient cause of action against it. It also interposed compulsory counterclaims.

After trial on the issues agreed upon during the pre-trial session, 11 the trial court rendered on 18 February 1992 a
decision in favor of Sosa. 12 It ruled that Exhibit "A," the "AGREEMENTS BETWEEN MR. SOSA AND POPONG
BERNARDO," was a valid perfected contract of sale between Sosa and Toyota which bound Toyota to deliver the
vehicle to Sosa, and further agreed with Sosa that Toyota acted in bad faith in selling to another the unit already
reserved for him.

As to Toyota's contention that Bernardo had no authority to bind it through Exhibit "A," the trial court held that the
extent of Bernardo's authority "was not made known to plaintiff," for as testified to by Quirante, "they do not
volunteer any information as to the company's sales policy and guidelines because they are internal
matters." 13 Moreover, "[f]rom the beginning of the transaction up to its consummation when the downpayment was
made by the plaintiff, the defendants had made known to the plaintiff the impression that Popong Bernardo is an
authorized sales executive as it permitted the latter to do acts within the scope of an apparent authority holding him
out to the public as possessing power to do these acts." 14 Bernardo then "was an agent of the defendant Toyota
Shaw, Inc. and hence bound the defendants." 15

The court further declared that "Luna Sosa proved his social standing in the community and suffered besmirched
reputation, wounded feelings and sleepless nights for which he ought to be compensated." 16 Accordingly, it
disposed as follows:

WHEREFORE, viewed from the above findings, judgment is hereby rendered in favor of the plaintiff
and against the defendant:
1. ordering the defendant to pay to the plaintiff the sum of P75,000.00 for moral damages;
2. ordering the defendant to pay the plaintiff the sum of P10,000.00 for exemplary damages;
3. ordering the defendant to pay the sum of P30,000.00 attorney's fees plus P2,000.00
lawyer's transportation fare per trip in attending to the hearing of this case;
4. ordering the defendant to pay the plaintiff the sum of P2,000.00 transportation fare per trip
of the plaintiff in attending the hearing of this case; and
5. ordering the defendant to pay the cost of suit.
SO ORDERED.

Dissatisfied with the trial court's judgment, Toyota appealed to the Court of Appeals. The case was docketed as CA-
G.R. CV No. 40043. In its decision promulgated on 29 July 1994,17 the Court of Appeals affirmed in toto the
appealed decision.

Toyota now comes before this Court via this petition and raises the core issue stated at the beginning of
the ponenciaand also the following related issues: (a) whether or not the standard VSP was the true and
documented understanding of the parties which would have led to the ultimate contract of sale, (b) whether or not
Sosa has any legal and demandable right to the delivery of the vehicle despite the non-payment of the consideration
and the non-approval of his credit application by B.A. Finance, (c) whether or not Toyota acted in good faith when it
did not release the vehicle to Sosa, and (d) whether or not Toyota may be held liable for damages.

We find merit in the petition.

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

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


Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in
money or its equivalent.

A contract of sale may be absolute or conditional.

and Article 1475 specifically provides when it is deemed perfected:

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of
the law governing the form of contracts.

What is clear from Exhibit "A" is not what the trial court and the Court of Appeals appear to see. It is not a contract of
sale. No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative
obligation on the part of the latter to pay therefor a price certain appears therein. The provision on the downpayment
of P100,000.00 made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could
only refer to a sale on installment basis, as the VSP executed the following day confirmed. But nothing was
mentioned about the full purchase price and the manner the installments were to be paid.

This Court had already ruled that a definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of sale. 18 This is so because the agreement as to the
manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a
failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell
personal property. 19

Moreover, Exhibit "A" shows the absence of a meeting of minds between Toyota and Sosa. For one thing, Sosa did
not even sign it. For another, Sosa was well aware from its title, written in bold letters, viz.,

AGREEMENTS BETWEEN MR. SOSA & POPONG BERNARDO OF TOYOTA


SHAW, INC.

that he was not dealing with Toyota but with Popong Bernardo and that the latter did not misrepresent that he had
the authority to sell any Toyota vehicle. He knew that Bernardo was only a sales representative of Toyota and hence
a mere agent of the latter. It was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to
know the extent of Bernardo's authority as an
agent20 in respect of contracts to sell Toyota's vehicles. A person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent.21

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

(a) preparation, conception, or generation, which is the period of negotiation and bargaining,
ending at the moment of agreement of the parties;
(b) perfection or birth of the contract, which is the moment when the parties come to agree on
the terms of the contract; and
(c) consummation or death, which is the fulfillment or performance of the terms agreed upon
in the contract.22

The second phase of the generation or negotiation stage in this case was the execution of the VSP. It must be
emphasized that thereunder, the downpayment of the purchase price was P53,148.00 while the balance to be paid
on installment should be financed by B.A. Finance Corporation. It is, of course, to be assumed that B.A. Finance
Corp. was acceptable to Toyota, otherwise it should not have mentioned B.A. Finance in the VSP.

Financing companies are defined in Section 3(a) of R.A. No. 5980, as amended by P.D. No. 1454 and P.D. No.
1793, as "corporations or partnerships, except those regulated by the Central Bank of the Philippines, the Insurance
Commission and the Cooperatives Administration Office, which are primarily organized for the purpose of extending
credit facilities to consumers and to industrial, commercial, or agricultural enterprises, either by discounting or
factoring commercial papers or accounts receivables, or by buying and selling contracts, leases, chattel mortgages,
or other evidence of indebtedness, or by leasing of motor vehicles, heavy equipment and industrial machinery,
business and office machines and equipment, appliances and other movable property." 23

Accordingly, in a sale on installment basis which is financed by a financing company, three parties are thus involved:
the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment,
the seller who assigns the notes or discounts them with a financing company, and the financing company which is
subrogated in the place of the seller, as the creditor of the installment buyer. 24 Since B.A. Finance did not approve
Sosa's application, there was then no meeting of minds on the sale on installment basis.

We are inclined to believe Toyota's version that B.A. Finance disapproved Sosa's application for which reason it
suggested to Sosa that he pay the full purchase price. When the latter refused, Toyota cancelled the VSP and
returned to him his P100,000.00. Sosa's version that the VSP was cancelled because, according to Bernardo, the
vehicle was delivered to another who was "mas malakas" does not inspire belief and was obviously a delayed
afterthought. It is claimed that Bernardo said, "Pasensiya kayo, nasulot ang unit ng ibang malakas," while the Sosas
had already been waiting for an hour for the delivery of the vehicle in the afternoon of 17 June 1989. However, in
paragraph 7 of his complaint, Sosa solemnly states:

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

The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created no
demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally
indemnifiable injury.

The award then of moral and exemplary damages and attorney's fees and costs of suit is without legal basis.
Besides, the only ground upon which Sosa claimed moral damages is that since it was known to his friends,
townmates, and relatives that he was buying a Toyota Lite Ace which they expected to see on his birthday, he
suffered humiliation, shame, and sleepless nights when the van was not delivered. The van became the subject
matter of talks during his celebration that he may not have paid for it, and this created an impression against his
business standing and reputation. At the bottom of this claim is nothing but misplaced pride and ego. He should not
have announced his plan to buy a Toyota Lite Ace knowing that he might not be able to pay the full purchase price.
It was he who brought embarrassment upon himself by bragging about a thing which he did not own yet.

Since Sosa is not entitled to moral damages and there being no award for temperate, liquidated, or compensatory
damages, he is likewise not entitled to exemplary damages. Under Article 2229 of the Civil Code, exemplary or
corrective damages are imposed by way of example or correction for the public good, in addition to moral,
temperate, liquidated, or compensatory damages.

Also, it is settled that for attorney's fees to be granted, the court must explicitly state in the body of the decision, and
not only in the dispositive portion thereof, the legal reason for the award of attorney's fees. 26 No such explicit
determination thereon was made in the body of the decision of the trial court. No reason thus exists for such an
award.

WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV
NO. 40043 as well as that of Branch 38 of the Regional Trial Court of Marinduque in Civil Case No. 89-14 are
REVERSED and SET ASIDE and the complaint in Civil Case No. 89-14 is DISMISSED. The counterclaim therein is
likewise DISMISSED.

No pronouncement as to costs.
SO ORDERED.