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SECOND DIVISION

[G.R. No. 137290. July 31, 2000]

SAN MIGUEL PROPERTIES PHILIPPINES, INC., petitioner, vs. SPOUSES


ALFREDO HUANG and GRACE HUANG, respondents.
DECISION
MENDOZA, J.:
This is a petition for review of the decision, dated April 8, 1997, of the Court of Appeals
which reversed the decision of the Regional Trial Court, Branch 153, Pasig City
dismissing the complaint brought by respondents against petitioner for enforcement of a
contract of sale.
[1]

The facts are not in dispute.


Petitioner San Miguel Properties Philippines, Inc. is a domestic corporation engaged in
the purchase and sale of real properties. Part of its inventory are two parcels of land
totalling 1, 738 square meters at the corner of Meralco Avenue and General Capinpin
Street, Barrio Oranbo, Pasig City, which are covered by TCT Nos. PT-82395 and PT82396 of the Register of Deeds of Pasig City.
On February 21, 1994, the properties were offered for sale for P52,140,000.00 in cash.
The offer was made to Atty. Helena M. Dauz who was acting for respondent spouses as
undisclosed principals. In a letter dated March 24, 1994, Atty. Dauz signified her clients
interest in purchasing the properties for the amount for which they were offered by
petitioner, under the following terms: the sum of P500,000.00 would be given as earnest
money and the balance would be paid in eight equal monthly installments from May to
December, 1994. However, petitioner refused the counter-offer.
[2]

On March 29, 1994, Atty. Dauz wrote another letter proposing the following terms for
the purchase of the properties, viz:
[3]

This is to express our interest to buy your-above-mentioned property with


an area of 1, 738 sq. meters. For this purpose, we are enclosing herewith
the sum of P1,000,000.00 representing earnest-deposit money, subject to
the following conditions.
1. We will be given the exclusive option to purchase the property within
the 30 days from date of your acceptance of this offer.

2. During said period, we will negotiate on the terms and conditions of the
purchase; SMPPI will secure the necessary Management and Board
approvals; and we initiate the documentation if there is mutual agreement
between us.
3. In the event that we do not come to an agreement on this transaction,
the said amount of P1,000,000.00 shall be refundable to us in full upon
demand. . . .
Isidro A. Sobrecarey, petitioners vice-president and operations manager for corporate
real estate, indicated his conformity to the offer by affixing his signature to the letter and
accepted the "earnest-deposit" of P1 million. Upon request of respondent spouses,
Sobrecarey ordered the removal of the "FOR SALE" sign from the properties.
Atty. Dauz and Sobrecarey then commenced negotiations. During their meeting on April
8, 1994, Sobrecarey informed Atty. Dauz that petitioner was willing to sell the subject
properties on a 90-day term. Atty. Dauz countered with an offer of six months within
which to pay.
On April 14, 1994, the parties again met during which Sobrecarey informed Atty. Dauz
that petitioner had not yet acted on her counter-offer. This prompted Atty. Dauz to
propose a four-month period of amortization.
On April 25, 1994, Atty. Dauz asked for an extension of 45 days from April 29, 1994 to
June 13, 1994 within which to exercise her option to purchase the property, adding that
within that period, "[we] hope to finalize [our] agreement on the matter." Her request
was granted.
[4]

On July 7, 1994, petitioner, through its president and chief executive officer, Federico
Gonzales, wrote Atty. Dauz informing her that because the parties failed to agree on the
terms and conditions of the sale despite the extension granted by petitioner, the latter
was returning the amount of P1 million given as "earnest-deposit."
[5]

On July 20, 1994, respondent spouses, through counsel, wrote petitioner demanding
the execution within five days of a deed of sale covering the properties. Respondents
attempted to return the "earnest-deposit" but petitioner refused on the ground that
respondents option to purchase had already expired.
On August 16, 1994, respondent spouses filed a complaint for specific performance
against petitioner before the Regional Trial Court, Branch 133, Pasig City where it was
docketed as Civil Case No. 64660.
Within the period for filing a responsive pleading, petitioner filed a motion to dismiss the
complaint alleging that (1) the alleged "exclusive option" of respondent spouses lacked
a consideration separate and distinct from the purchase price and was thus
unenforceable and (2) the complaint did not allege a cause of action because there was

no "meeting of the minds" between the parties and, therefore, no perfected contract of
sale. The motion was opposed by respondents.
On December 12, 1994, the trial court granted petitioners motion and dismissed the
action. Respondents filed a motion for reconsideration, but it was denied by the trial
court. They then appealed to the Court of Appeals which, on April 8, 1997, rendered a
decision reversing the judgment of the trial court. The appellate court held that all the
requisites of a perfected contract of sale had been complied with as the offer made on
March 29, 1994, in connection with which the earnest money in the amount of P1 million
was tendered by respondents, had already been accepted by petitioner. The court cited
Art. 1482 of the Civil Code which provides that "[w]henever earnest money is given in a
contract of sale, it shall be considered as part of the price and as proof of the perfection
of the contract." The fact the parties had not agreed on the mode of payment did not
affect the contract as such is not an essential element for its validity. In addition, the
court found that Sobrecarey had authority to act in behalf of petitioner for the sale of the
properties.
[6]

[7]

Petitioner moved for reconsideration of the trial courts decision, but its motion was
denied. Hence, this petition.
Petitioner contends that the Court of Appeals erred in finding that there was a perfected
contract of sale between the parties because the March 29, 1994 letter of respondents,
which petitioner accepted, merely resulted in an option contract, albeit it was
unenforceable for lack of a distinct consideration. Petitioner argues that the absence of
agreement as to the mode of payment was fatal to the perfection of the contract of sale.
Petitioner also disputes the appellate courts ruling that Isidro A. Sobrecarey had
authority to sell the subject real properties.
[8]

Respondents were required to comment within ten (10) days from notice. However,
despite 13 extensions totalling 142 days which the Court had given to them,
respondents failed to file their comment. They were thus considered to have waived the
filing of a comment.
The petition is meritorious.
In holding that there is a perfected contract of sale, the Court of Appeals relied on the
following findings: (1) earnest money was allegedly given by respondents and accepted
by petitioner through its vice-president and operations manager, Isidro A. Sobrecarey;
and (2) the documentary evidence in the records show that there was a perfected
contract of sale.
With regard to the alleged payment and acceptance of earnest money, the Court holds
that respondents did not give the P1 million as "earnest money" as provided by Art.
1482 of the Civil Code. They presented the amount merely as a deposit of what would
eventually become the earnest money or downpayment should a contract of sale be
made by them. The amount was thus given not as a part of the purchase price and as

proof of the perfection of the contract of sale but only as a guarantee that respondents
would not back out of the sale. Respondents in fact described the amount as an
"earnest-deposit." In Spouses Doromal, Sr. v. Court of Appeals, it was held:
[9]

. . . While the P5,000 might have indeed been paid to Carlos in October,
1967, there is nothing to show that the same was in the concept of the
earnest money contemplated in Art. 1482 of the Civil Code, invoked by
petitioner, as signifying perfection of the sale. Viewed in the backdrop of
the factual milieu thereof extant in the record, We are more inclined to
believe that the said P5,000.00 were paid in the concept of earnest money
as the term was understood under the Old Civil Code, that is, as a
guarantee that the buyer would not back out, considering that it is not
clear that there was already a definite agreement as to the price then and
that petitioners were decided to buy 6/7 only of the property should
respondent Javellana refuse to agree to part with her 1/7 share.
[10]

In the present case, the P1 million "earnest-deposit" could not have been given as
earnest money as contemplated in Art. 1482 because, at the time when petitioner
accepted the terms of respondents offer of March 29, 1994, their contract had not yet
been perfected. This is evident from the following conditions attached by respondents to
their letter, to wit: (1) that they be given the exclusive option to purchase the property
within 30 days from acceptance of the offer; (2) that during the option period, the parties
would negotiate the terms and conditions of the purchase; and (3) petitioner would
secure the necessary approvals while respondents would handle the documentation.
The first condition for an option period of 30 days sufficiently shows that a sale was
never perfected. As petitioner correctly points out, acceptance of this condition did not
give rise to a perfected sale but merely to an option or an accepted unilateral promise
on the part of respondents to buy the subject properties within 30 days from the date of
acceptance of the offer. Such option giving respondents the exclusive right to buy the
properties within the period agreed upon is separate and distinct from the contract of
sale which the parties may enter. All that respondents had was just the option to buy
the properties which privilege was not, however, exercised by them because there was
a failure to agree on the terms of payment. No contract of sale may thus be enforced by
respondents.
[11]

Furthermore, even the option secured by respondents from petitioner was fatally
defective. Under the second paragraph of Art. 1479, an accepted unilateral promise to
buy or sell a determinate thing for a price certain is binding upon the promisor only if the
promise is supported by a distinct consideration. Consideration in an option contract
may be anything of value, unlike in sale where it must be the price certain in money or
its equivalent. There is no showing here of any consideration for the option. Lacking any
proof of such consideration, the option is unenforceable.
Equally compelling as proof of the absence of a perfected sale is the second condition
that, during the option period, the parties would negotiate the terms and conditions of

the purchase. The stages of a contract of sale are as follows: (1) negotiation, covering
the period from the time the prospective contracting parties indicate interest in the
contract to the time the contract is perfected; (2) perfection, which takes place upon the
concurrence of the essential elements of the sale which are the meeting of the minds of
the parties as to the object of the contract and upon the price; and (3) consummation,
which begins when the parties perform their respective undertakings under the contract
of sale, culminating in the extinguishment thereof. In the present case, the parties
never got past the negotiation stage. The alleged "indubitable evidence" of a perfected
sale cited by the appellate court was nothing more than offers and counter-offers which
did not amount to any final arrangement containing the essential elements of a contract
of sale. While the parties already agreed on the real properties which were the objects
of the sale and on the purchase price, the fact remains that they failed to arrive at
mutually acceptable terms of payment, despite the 45-day extension given by petitioner.
[12]

[13]

The appellate court opined that the failure to agree on the terms of payment was no bar
to the perfection of the sale because Art. 1475 only requires agreement by the parties
as to the price of the object. This is error. In Navarro v. Sugar Producers Cooperative
Marketing Association, Inc., we laid down the rule that the manner of payment of the
purchase price is an essential element before a valid and binding contract of sale can
exist. Although the Civil Code does not expressly state that the minds of the parties
must also meet on the terms or manner of payment of the price, the same is needed,
otherwise there is no sale. As held in Toyota Shaw, Inc. v. Court of Appeals,
agreement on the manner of payment goes into the price such that a disagreement
on the manner of payment is tantamount to a failure to agree on the price. In Velasco
v. Court of Appeals, the parties to a proposed sale had already agreed on the object of
sale and on the purchase price. By the buyers own admission, however, the parties still
had to agree on how and when the downpayment and the installments were to be paid.
It was held:
[14]

[15]

[16]

[17]

. . . Such being the situation, it can not, therefore, be said that a definite
and firm sales agreement between the parties had been perfected over
the lot in question. Indeed, this Court has already ruled before that a
definite agreement on the manner of payment of the purchase price is an
essential element in the formation of a binding and enforceable contract of
sale. The fact, therefore, that the petitioners delivered to the respondent
the sum of P10,000 as part of the down-payment that they had to pay
cannot be considered as sufficient proof of the perfection of any purchase
and sale agreement between the parties herein under Art. 1482 of the new
Civil Code, as the petitioners themselves admit that some essential matter
- the terms of the payment - still had to be mutually covenanted.
[18]

Thus, it is not the giving of earnest money, but the proof of the concurrence of all the
essential elements of the contract of sale which establishes the existence of a perfected
sale.

In the absence of a perfected contract of sale, it is immaterial whether Isidro A.


Sobrecarey had the authority to enter into a contract of sale in behalf of petitioner. This
issue, therefore, needs no further discussion.
WHEREFORE, the decision of the Court of Appeals is REVERSED and respondents
complaint is DISMISSED.
SO ORDERED.
Quisumbing, Buena, and De Leon, Jr., JJ., concur.
Bellosillo, (Chairman), J., on leave.

Per Associate Justice Corona Ibay-Somera and concurred in by Justices Emeterio C. Cui and Salvador J. Valdez,
Jr.
[2]
Annex D; Rollo, p. 99.
[3]
Annex E; Id., p. 100.
[4]
Annex F; Id., p. 102.
[5]
Annex I; Rollo, p. 107.
[6]
Rollo, pp. 38-61.
[7]
Id., pp. 48-60.
[8]
Petition, pp. 12-13; Rollo, pp. 14-15.
[9]
66 SCRA 575 (1975)
[10]
Id., at 582. (Emphasis added)
[11]
Carceler v. Court of Appeals, 302 SCRA 718 (1999); Cavite Development Bank and Far East Bank and Trust
Company v. Court of Appeals, G.R. No. 131679, Feb. 1, 2000.
[12]
Ang Yu Asuncion v. Court of Appeals, 238 SCRA 602 (1994)
[13]
The Court of Appeals enumerated these as follows: (1) Annex "A" which contains petitioners offer to sell the
subject properties; (2) Annex "D," a letter dated March 24, 1994 through which respondent spouses, through Atty.
Helena M. Dauz, signified their interest to buy the subject properties; and (3) Annex "E," another letter from
respondent spouses dated March 29, 1994 through which respondents again expressed their interest to buy the
subject properties subject to certain conditions.
[14]
1 SCRA 1181 (1961)
[15]
244 SCRA 320 (1995)
[16]
Id., p. 328.
[17]
51 SCRA 439 (1973)
[18]
Id., p. 453. (Emphasis added)
[1]

SECOND DIVISION

[G.R. No. 126444. December 4, 1998]

ALFONSO QUIJADA, CRESENTE QUIJADA, REYNELDA QUIJADA,


DEMETRIO QUIJADA, ELIUTERIA QUIJADA, EULALIO
QUIJADA, and WARLITO QUIJADA, petitioners, vs. COURT OF
APPEALS, REGALADO MONDEJAR, RODULFO GOLORAN,
ALBERTO ASIS, SEGUNDINO RAS, ERNESTO GOLORAN, CELSO
ABISO, FERNANDO BAUTISTA, ANTONIO MACASERO, and
NESTOR MAGUINSAY, respondents.
DECISION
MARTINEZ, J.:

Petitioners, as heirs of the late Trinidad Quijada, filed a complaint against private
respondents for quieting of title, recovery of possession and ownership of parcels of land with
claim for attorney's fees and damages. The suit was premised on the following facts found by the
Court of Appeals, which is materially the same as that found by the trial court:

"Plaintiffs-appellees (petitioners) are the children of the late Trinidad Corvera Vda. de
Quijada. Trinidad was one of the heirs of the late Pedro Corvera and inherited from
the latter the two-hectare parcel of land subject of the case, situated in the barrio of
San Agustin, Talacogon, Agusan del Sur. On April 5, 1956, Trinidad Quijada together
with her sisters Leonila Corvera Vda. de Sequea and Paz Corvera Cabiltes and brother
Epapiadito Corvera executed a conditional deed of donation (Exh. C) of the twohectare parcel of land subject of the case in favor of the Municipality of Talacogon,
the condition being that the parcel of land shall be used solely and exclusively as part
of the campus of the proposed provincial high school in Talacogon. Apparently,
Trinidad remained in possession of the parcel of land despite the donation. On July
29, 1962, Trinidad sold one (1) hectare of the subject parcel of land to defendantappellant Regalado Mondejar (Exh. 1). Subsequently, Trinidad verbally sold the
remaining one (1) hectare to defendant-appellant (respondent) Regalado Mondejar
without the benefit of a written deed of sale and evidenced solely by receipts of
payment. In 1980, the heirs of Trinidad, who at that time was already dead, filed a
complaint for forcible entry (Exh. E) against defendant-appellant (respondent)
Regalado Mondejar, which complaint was, however, dismissed for failure to prosecute
(Exh. F). In 1987, the proposed provincial high school having failed to materialize,

the Sangguniang Bayan of the municipality of Talacogon enacted a resolution


reverting the two (2) hectares of land donated back to the donors (Exh. D). In the
meantime, defendant-appellant (respondent) Regalado Mondejar sold portions of the
land to defendants-appellants (respondents) Fernando Bautista (Exh. 5), Rodolfo
Goloran (Exh. 6), Efren Guden (Exh. 7) and Ernesto Goloran (Exh. 8).
"On July 5, 1988, plaintiffs-appellees (petitioners) filed this action against defendantsappellants (respondents). In the complaint, plaintiffs-appellees (petitioners) alleged
that their deceased mother never sold, conveyed, transferred or disposed of the
property in question to any person or entity much less to Regalado Mondejar save the
donation made to the Municipality of Talacogon in 1956; that at the time of the
alleged sale to Regalado Mondejar by Trinidad Quijada, the land still belongs to the
Municipality of Talacogon, hence, the supposed sale is null and void.
"Defendants-appellants (respondents), on the other hand, in their answer claimed that
the land in dispute was sold to Regalado Mondejar, the one (1) hectare on July 29,
1962, and the remaining one (1) hectare on installment basis until fully paid. As
affirmative and/or special defense, defendants-appellants (respondents) alleged that
plaintiffs' action is barred by laches or has prescribed.
"The court a quo rendered judgment in favor of plaintiffs-appellees (petitioners): firstly because
'Trinidad Quijada had no legal title or right to sell the land to defendant Mondejar in 1962, 1966,
1967 and 1968, the same not being hers to dispose of because ownership belongs to the
Municipality of Talacogon' (Decision, p. 4; Rollo, p. 39) and, secondly, that the deed of sale
executed by Trinidad Quijada in favor of Mondejar did not carry with it the conformity and
acquiescence of her children, more so that she was already 63 years old at the time, and a widow
(Decision, p. 6; Rollo, p. 41)."[1]
The dispositive portion of the trial court's decision reads:

"WHEREFORE, viewed from the above perceptions, the scale of justice having
tilted in favor of the plaintiffs, judgment is, as it is hereby rendered:
1) ordering the Defendants to return and vacate the two (2) hectares of land to Plaintiffs as
described in Tax Declaration No. 1209 in the name of Trinidad Quijada;
2) ordering any person acting in Defendants' behalf to vacate and restore the peaceful
possession of the land in question to Plaintiffs;
3) ordering the cancellation of the Deed of Sale executed by the late Trinidad Quijada in favor
of Defendant Regalado Mondejar as well as the Deeds of Sale/Relinquishments executed by
Mondejar in favor of the other Defendants;
4) ordering Defendants to remove their improvements constructed on the questioned lot;
5) ordering the Defendants to pay Plaintiffs, jointly and severally, the amount of P10,000.00
representing attorney's fees;

6) ordering Defendants to pays the amount of P8,000.00 as expenses of litigation; and


7) ordering Defendants to pay the sum of P30,000.00 representing moral damages.

SO ORDERED."[2]
On appeal, the Court of Appeals reversed and set aside the judgment a quo[3] ruling that the
sale made by Trinidad Quijada to respondent Mondejar was valid as the4 former retained an
inchoate interest on the lots by virtue of the automatic reversion clause in the deed of donation.
[4]
Thereafter, petitioners filed a motion for reconsideration. When the CA denied their motion,
[5]
petitioners instituted a petition for review to this Court arguing principally that the sale of the
subject property made by Trinidad Quijada to respondent Mondejar is void, considering that at
that time, ownership was already transferred to the Municipality of Talacogon. On the contrary,
private respondents contend that the sale was valid, that they are buyers in good faith, and that
petitioners' case is barred by laches.[6]
We affirm the decision of the respondent court.
The donation made on April 5, 1956 by Trinidad Quijada and her brother and sisters [7] was
subject to the condition that the donated property shall be "used solely and exclusively as a part
of the campus of the proposed Provincial High School in Talacogon." [8] The donation further
provides that should "the proposed Provincial High School be discontinued or if the same shall
be opened but for some reason or another, the same may in the future be closed" the donated
property shall automatically revert to the donor.[9] Such condition, not being contrary to law,
morals, good customs, public order or public policy was validly imposed in the donation.[10]
When the Municipality's acceptance of the donation was made known to the donor, the
former became the new owner of the donated property -- donation being a mode of acquiring and
transmitting ownership[11] - notwithstanding the condition imposed by the donee. The donation is
perfected once the acceptance by the donee is made known to the donor.[12] Accordingly,
ownership is immediately transferred to the latter and that ownership will only revert to the
donor if the resolutory condition is not fulfilled.
In this case, that resolutory condition is the construction of the school. It has been ruled that
when a person donates land to another on the condition that the latter would build upon the land
a school, the condition imposed is not a condition precedent or a suspensive condition but a
resolutory one.[13] Thus, at the time of the sales made in 1962 towards 1968, the alleged seller
(Trinidad) could not have sold the lots since she had earlier transferred ownership thereof by
virtue of the deed of donation. So long as the resolutory condition subsists and is capable of
fulfillment, the donation remains effective and the donee continues to be the owner subject only
to the rights of the donor or his successors-in-interest under the deed of donation. Since no
period was imposed by the donor on when must the donee comply with the condition, the latter
remains the owner so long as he has tried to comply with the condition within a reasonable
period. Such period, however, became irrelevant herein when the donee-Municipality manifested
through a resolution that it cannot comply with the condition of building a school and the same
was made known to the donor. Only then - when the non-fulfillment of the resolutory condition
was brought to the donor's knowledge - that ownership of the donated property reverted to the
donor as provided in the automatic reversion clause of the deed of donation.

The donor may have an inchoate interest in the donated property during the time that
ownership of the land has not reverted to her. Such inchoate interest may be the subject of
contracts including a contract of sale. In this case, however, what the donor sold was the land
itself which she no longer owns. It would have been different if the donor-seller sold her interests
over the property under the deed of donation which is subject to the possibility of reversion of
ownership arising from the non-fulfillment of the resolutory condition.
As to laches, petitioners' action is not yet barred thereby. Laches presupposes failure or
neglect for an unreasonable and unexplained length of time, to do that which, by exercising due
diligence, could or should have been done earlier;[14] "it is negligence or omission to assert a right
within a reasonable time, thus, giving rise to a presumption that the party entitled to assert it
either has abandoned or declined to assert it."[15] Its essential elements of:
a) Conduct on the part of the defendant, or of one under whom he claims, giving rise to the
situation complained of;
b) Delay in asserting complainant's right after he had knowledge of the defendant's conduct and
after he has an opportunity to sue;
c) Lack of knowledge or notice on the part of the defendant that the complainant would assert
the right on which he bases his suit; and,
d) Injury or prejudice to the defendant in the event relief is accorded to the complainant." [16]

are absent in this case. Petitioners' cause of action to quiet title commenced only when the
property reverted to the donor and/or his successors-in-interest in 1987. Certainly, when the suit
was initiated the following year, it cannot be said that petitioners had slept on their rights for a
long time. The 1960's sales made by Trinidad Quijada cannot be the reckoning point as to when
petitioners' cause of action arose.They had no interest over the property at that time except under
the deed of donation to which private respondents were not privy. Moreover, petitioners had
previously filed an ejectment suit against private respondents only that it did not prosper on a
technicality.
Be that at it may, there is one thing which militates against the claim of petitioners. Sale,
being a consensual contract, is perfected by mere consent, which is manifested the moment there
is a meeting of the minds [17] as to the offer and acceptance thereof on three (3) elements: subject
matter, price and terms of payment of the price.[18] ownership by the seller on the thing sold at the
time of the perfection of the contract of sale is not an element for its perfection. What the law
requires is that the seller has the right to transfer ownership at the time the thing sold is
delivered.[19] Perfection per se does not transfer ownership which occurs upon the actual or
constructive delivery of the thing sold.[20] A perfected contract of sale cannot be challenged on the
ground of non-ownership on the part of the seller at the time of its perfection; hence, the sale is
still valid.
The consummation, however, of the perfected contract is another matter. It occurs upon the
constructive or actual delivery of the subject matter to the buyer when the seller or her
successors-in-interest subsequently acquires ownership thereof. Such circumstance happened in
this case when petitioners -- who are Trinidad Quijada's heirs and successors-in-interest -became the owners of the subject property upon the reversion of the ownership of the land to
them. Consequently, ownership is transferred to respondent Mondejar ands those who claim their
right from him. Article 1434 of the New Civil Code supports the ruling that the seller's "title

passes by operation of law to the buyer."[21] This rule applies not only when the subject matter of
the contract of sale is goods,[22] but also to other kinds of property, including real property.[23]
There is also no merit in petitioners' contention that since the lots were owned by the
municipality at the time of the sale, they were outside the commerce of men under Article 1409
(4) of the NCC;[24]thus, the contract involving the same is inexistent and void from the
beginning. However, nowhere in Article 1409 (4) is it provided that the properties of a
municipality, whether it be those for public use or its patrimonial property [25] are outside the
commerce of men. Besides, the lots in this case were conditionally owned by the
municipality. To rule that the donated properties are outside the commerce of men would render
nugatory the unchallenged reasonableness and justness of the condition which the donor has the
right to impose as owner thereof. Moreover, the objects referred to as outsides the commerce of
man are those which cannot be appropriated, such as the open seas and the heavenly bodies.
With respect to the trial courts award of attorneys fees, litigation expenses and moral
damages, there is neither factual nor legal basis thereof. Attorneys fees and expenses of litigation
cannot, following the general rule in Article 2208 of the New Civil Code, be recovered in this
case, there being no stipulation to that effect and the case does not fall under any of the
exceptions.[26] It cannot be said that private respondents had compelled petitioners to litigate with
third persons. Neither can it be ruled that the former acted in gross and evident bad faith in
refusing to satisfy the latters claims considering that private respondents were under an honest
belief that they have a legal right over the property by virtue of the deed of sale. Moral damages
cannot likewise be justified as none of the circumstances enumerated under Articles 2219 [27] and
2220[28] of the New Civil Code concur in this case.
WHEREFORE, by virtue of the foregoing, the assailed decision of the Court of Appeals is
AFFIRMED.
SO ORDERED.
Melo (Acting Chairman), Puno, and Mendoza, JJ., concur.

[1]

Decision of Court of Appeals in CA-G.R. CV No. 44016 promulgated on May 31, 1996, pp. 2-5; Rollo, pp. 41-44.

[2]

Regional Trial Court (Bayugan, Agusan del Sur) Decision dated July 16, 1993 penned by Judge Zenaida Placer, p.
6; Annex "A" of Petition; Rollo, p. 21.
[3]

The decretal portion of the CA's decision states: "WHEREFORE, premises considered, the decision appealed
from is hereby REVERSED and SET ASIDE, and judgment rendered declaring the defendants-appellants as the
rightful and lawful owners and possessors of the subject land. There is no pronouncement as to costs."
[4]

CA Decision, pp. 6-7; Rollo, pp. 45-46.

[5]

CA Resolution promulgated August 26, 1996; Rollo, p. 55.

[6]

Comment of Private Respondents, pp. 7-8; Rollo, pp. 67-68.

[7]

Her sisters were Leonila Corvera Vda. de Sequea and Paz Corvera Cabiltes and the brother was Epapiadito
Corvera.
[8]

RTC Decision, p. 1; Rollo, p. 16.

[9]

CA Decision, pp. 5-6; Rollo, pp. 44-45.

[10]

City of Angeles v. CA, 261 SCRA 90.

[11]

Article 712, New Civil Code provides: "Ownership is acquired by occupation and by intellectual creation.

"Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and
intestate succession, and in consequence of certain contracts, by tradition.
"They may also be acquired by means of prescription." (Italics supplied).
[12]

Article 734, New Civil Code (NCC) reads: "The donation is perfected from the moment the donor knows of the
acceptance by the donee."
[13]

Central Philippine University v. CA, 246 SCRA 511.

[14]

Reyes v. CA, 264 SCRA 35; Republic v. Sandiganbayan, 255 SCRA 438; PAL Employees Savings & Loan
Association, Inc. v. NLRC, 260 SCRA 758.
[15]

Catholic Bishop of Balanga v. CA, 264 SCRA 181; Chavez v. Bonto-Perez, 242 SCRA 73; Rivera v. CA, 244
SCRA 218; Cormero v. CA, 317 Phil. 348.
[16]

Santiago v. CA, 278 SCRA 98 (1997); Catholic Bishop of Balanga v. CA, 264 SCRA 181; Claveria v. Quingco,
207 SCRA 66 (1992); Perez v. Ong Cho, 116 SCRA 732 (1982); Yusingco v. Ong Hing Lian, 42 SCRA 589 (1971);
I.E. Lotho, Inc. v. Ice and Cold Storage Industries, Inc., 3 SCRA 744; Go Chi Gun, et. al. v. Co Cho, et. al.,96 Phil.
622.
[17]

Article 1475, New Civil Code (NCC). "The 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. x x x."
[18]

Leabres v. CA, 146 SCRA 158 (1986); See also Navarro v. Sugar Producer's Corporation, 1 SCRA 1180.

[19]

Article 1459, NCC - "The thing must be licit and the vendor must have a right to transfer the ownership thereof at
the time it is delivered."
[20]

Article 712, NCC. "x x x. Ownership and other real rights over property are acquired and transmitted x x x in
consequence of certain cont4racts, by tradition."
[21]

Article 1434, NCC provides: "When a person who is not the owner of a thing sells or alienates and delivers it,
and later the seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee."
[22]

Article 1505 of the NCC provides: "Subject to the provisions of this Title, where goods are sold by a person who
is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer
acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded
from denying the seller's authority to sell.
"x x x x x x x x x." (Emphasis supplied).
Other exceptions to the foregoing includes: (a) when the contrary is provided in recording laws, (b) sales made
under statutory power of sale or pursuant to a valid order from a court of competent jurisdiction, and (c) sales made
in a merchant's store in accordance with the Code of commerce and special laws.
[23]

See Article 1434, NCC, supra.; Estoque v. Pajimula, 133 Phil. 55; 24 SCRA 59 (1968); Bucton v. Gabar, 55
SCRA 499.
[24]

Article 1409 (4), NCC: "The following contracts are inexistent and void from the beginning:

xxxxxxxxx
(4) Those whose object is outside the commerce of men;
x x x x x x x x x."

[25]

Article 423, NCC: "The properties of provinces, cities and municipalities, is divided into property for public use
and patrimonial property."
Article 424 provides: "Property for public use, in the provinces, cities and municipalities, consist of the provincial
roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public
service paid for by said provinces, cities, or municipalities.
"All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to
the provisions of special laws."
[26]

In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be
recovered except:
xxxxxxxxx
(2) when the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest.
xxxxxxxxx
(5) where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly
valid, just and demandable claim.
x x x x x x x x x.
[27]

Moral damages may be recovered in the following and analogous cases:

(1) a criminal offense resulting in physical injuries;


(2) quasi-delicts causing physical injuries;
(3) seduction, abduction, rape or other lascivious acts;
(4) adultery or concubinage;
(5) illegal or arbitrary detention or arrests;
(6) illegal search;
(7) libel, slander or any other form of defamation;
(8) malicious prosecution;
(9) acts mentioned in Article 309;
(10) acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
The parents of the female seduced, abducted, raped or abused referred to in No. 3 of this Article, may also recover
moral damages.
The spouse, ascendants, descendants and brothers and sisters may bring the action mentioned in No. 9 of this
Article, in the order named.
[28]

Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should
find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contracts
where the defendant acted fraudulently or in bad faith.

THIRD DIVISION
[G.R. No. 137552. June 16, 2000]

ROBERTO Z. LAFORTEZA, GONZALO Z. LAFORTEZA, MICHAEL Z.


LAFORTEZA, DENNIS Z. LAFORTEZA, and LEA Z.
LAFORTEZA, petitioners, vs.ALONZO MACHUCA, respondent.
DECISION
GONZAGA_REYES, J.:
This Petition for Review on Certiorari seeks the reversal of the Decision of the Court of
Appeals in CA G.R. CV No. 47457 entitled "ALONZO MACHUCA versus ROBERTO Z.
LAFORTEZA, GONZALO Z. LAFORTEZA, LEA ZULUETA-LAFORTEZA MICHAEL Z.
LAFORTEZA, and DENNIS Z. LAFORTEZA".
[1]

The following facts as found by the Court of Appeals are undisputed:


"The property involved consists of a house and lot located at No. 7757
Sherwood Street, Marcelo Green Village, Paraaque, Metro Manila,
covered by Transfer Certificate of Title (TCT) No. (220656) 8941 of the
Registered of Deeds of Paraaque (Exhibit "D", Plaintiff, record, pp. 331332). The subject property is registered in the name of the late Francisco
Q. Laforteza, although it is conjugal in nature (Exhibit "8", Defendants,
record pp. 331-386).
On August 2, 1988, defendant Lea Zulueta-Laforteza executed a Special
Power of Attorney in favor of defendants Roberto Z. Laforteza and
Gonzalo Z. Laforteza, Jr., appointing both as her Attorney-in-fact
authorizing them jointly to sell the subject property and sign any document
for the settlement of the estate of the late Francisco Q. Laforteza (Exh.
"A", Plaintiff, record, pp. 323-325).
Likewise on the same day, defendant Michael Z. Laforteza executed a
Special Power of Attorney in favor of defendants Roberto Z. Laforteza and
Gonzalo Laforteza, Jr., likewise, granting the same authority (Exh. "B",
record, pp. 326-328). Both agency instruments contained a provision that
in any document or paper to exercise authority granted, the signature of
both attorneys-in-fact must be affixed.
On October 27, 1988, defendant Dennis Z. Laforteza executed a Special
Power of Attorney in favor of defendant Roberto Z. Laforteza for the

purpose of selling the subject property (Exh. "C", Plaintiff, record, pp. 329330). A year later, on October 30, 1989, Dennis Z. Laforteza executed
another Special Power of Attorney in favor of defendants Roberto Z.
Laforteza and Gonzalo Laforteza, Jr. naming both attorneys-in-fact for the
purpose of selling the subject property and signing any document for the
settlement of the estate of the late Francisco Q. Laforteza. The
subsequent agency instrument (Exh. "2", record, pp. 371-373) contained
similar provisions that both attorneys-in-fact should sign any document or
paper executed in the exercise of their authority.
In the exercise of the above authority, on January 20, 1989, the heirs of
the late Francisco Q. Laforteza represented by Roberto Z. Laforteza and
Gonzalo Z. Laforteza, Jr. entered into a Memorandum of Agreement
(Contract to Sell) with the plaintiff over the subject property for the sum of
SIX HUNDRED THIRTY THOUSAND PESOS (P630,000.00) payable as
follows:
[2]

(a) P30,000.00 as earnest money, to be forfeited in favor of the


defendants if the sale is not effected due to the fault of the plaintiff;
(b) P600,000.00 upon issuance of the new certificate of title in the name of
the late Francisco Q. Laforteza and upon execution of an extra-judicial
settlement of the decedents estate with sale in favor of the plaintiff (Par. 2,
Exh. "E", record, pp. 335-336).
Significantly, the fourth paragraph of the Memorandum of Agreement
(Contract to Sell) dated January 20, 1989 (Exh. "E", supra.) contained a
provision as follows:
xxx. Upon issuance by the proper Court of the new title, the
BUYER-LESSEE shall be notified in writing and said BUYERLESSEE shall have thirty (30) days to produce the balance
of P600,000.00 which shall be paid to the SELLER-LESSORS upon
the execution of the Extrajudicial Settlement with sale.
On January 20, 1989, plaintiff paid the earnest money of THIRTY
THOUSAND PESOS (P30,000.00), plus rentals for the subject property
(Exh. "F", Plaintiff, record, p. 339).
On September 18, 1998 , defendant heirs, through their counsel wrote a
letter (Exh. 1, Defendants, record, p. 370) to the plaintiff furnishing the
latter a copy of the reconstituted title to the subject property, advising him
that he had thirty (3) days to produce the balance of SIX HUNDRED
PESOS (sic) (P600,000.00) under the Memorandum of Agreement which
plaintiff received on the same date.
[3]

On October 18, 1989, plaintiff sent the defendant heirs a letter requesting
for an extension of the THIRTY (30) DAYS deadline up to November 15,
1989 within which to produce the balance of SIX HUNDRED THOUSAND
PESOS (P600,000.00) (Exh. "G", Plaintiff, record, pp. 341-342).
Defendant Roberto Z. Laforteza, assisted by his counsel Atty. Romeo L.
Gutierrez, signed his conformity to the plaintiffs letter request (Exh. "G-1
and "G-2", Plaintiff, record, p. 342). The extension, however, does not
appear to have been approved by Gonzalo Z. Laforteza, the second
attorney-in-fact as his conformity does not appear to have been secured.
On November 15, 1989, plaintiff informed the defendant heirs, through
defendant Roberto Z. Laforteza, that he already had the balance of SIX
HUNDRED THOUSAND PESOS (P600,000.00) covered by United
Coconut Planters Bank Managers Check No. 000814 dated November 15,
1989 (TSN, August 25, 1992, p. 11; Exhs. "H", record, pp. 343-344; "M",
records p. 350; and "N", record, p. 351). However, the defendants, refused
to accept the balance (TSN, August 24, 1992, p. 14; Exhs. "M-1", Plaintiff,
record, p. 350; and "N-1", Plaintiff, record, p. 351). Defendant Roberto Z.
Laforteza had told him that the subject property was no longer for sale
(TSN, October 20, 1992, p. 19; Exh. "J", record, p. 347).
On November 20, 1998 , defendants informed the plaintiff that they were
canceling the Memorandum of Agreement (Contract to Sell) in view of the
plaintiffs failure to comply with his contractual obligations (Exh. "3").
[4]

Thereafter, plaintiff reiterated his request to tender payment of the balance


of SIX HUNDRED THOUSAND PESOS (P600,000.00). Defendants,
however, insisted on the rescission of the Memorandum of Agreement.
Thereafter, plaintiff filed the instant action for specific performance. The
lower court rendered judgment on July 6, 1994 in favor of the plaintiff, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff
Alonzo Machuca and against the defendant heirs of the late
Francisco Q. Laforteza, ordering the said defendants.
(a) To accept the balance of P600,000.00 as full payment of the
consideration for the purchase of the house and lot located at No. 7757
Sherwood Street, Marcelo Green Village, Paraaque, Metro Manila,
covered by Transfer Certificate of Title No. (220656) 8941 of the Registry
of Deeds of Rizal Paraaque, Branch;
(b) To execute a registrable deed of absolute sale over the subject
property in favor of the plaintiff;

(c) Jointly and severally to pay the plaintiff the sum of P20,000.00 as
attorneys fees plus cost of suit.
SO ORDERED. (Rollo, pp. 74-75)."

[5]

Petitioners appealed to the Court of Appeals, which affirmed with modification the
decision of the lower court; the dispositive portion of the Decision reads:
"WHEREFORE, the questioned decision of the lower court is hereby
AFFIRMED with the MODIFICATION that defendant heirs Lea ZuluetaLaforteza, Michael Z. Laforteza, Dennis Z. Laforteza and Roberto Z.
Laforteza including Gonzalo Z. Laforteza, Jr. are hereby ordered to pay
jointly and severally the sum of FIFTY THOUSAND PESOS (P50,000.00)
as moral damages.
SO ORDERED."

[6]

Motion for Reconsideration was denied but the Decision was modified so as to absolve
Gonzalo Z. Laforteza, Jr. from liability for the payment of moral damages. Hence this
petition wherein the petitioners raise the following issues:
[7]

"I. WHETHER THE TRIAL AND APPELLATE COURTS CORRECTLY


CONSTRUED THE MEMORANDUM OF AGREEMENT AS IMPOSING
RECIPROCAL OBLIGATIONS.
II. WHETHER THE COURTS A QUO CORRECTLY RULED THAT
RESCISSION WILL NOT LIE IN THE INSTANT CASE.
III. WHETHER THE RESPONDENT IS UNDER ESTOPPEL FROM
RAISING THE ALLEGED DEFECT IN THE SPECIAL POWER OF
ATTORNEY DATED 30 OCTOBER 1989 EXECUTED BY DENNIS
LAFORTEZA.
IV. SUPPOSING EX GRATIA ARGUMENTI THE MEMORANDUM OF
AGREEMENT IMPOSES RECIPROCAL OBLIGATIONS, WHETHER
THE PETITIONERS MAY BE COMPELLED TO SELL THE SUBJECT
PROPERTY WHEN THE RESPONDENT FAILED TO MAKE A JUDICIAL
CONSIGNATION OF THE PURCHASE PRICE?
V. WHETHER THE PETITIONERS ARE IN BAD FAITH SO TO AS MAKE
THEM LIABLE FOR MORAL DAMAGES?"
[8]

The petitioners contend that the Memorandum of Agreement is merely a lease


agreement with "option to purchase". As it was merely an option, it only gave the
respondent a right to purchase the subject property within a limited period without
imposing upon them any obligation to purchase it. Since the respondents tender of

payment was made after the lapse of the option agreement, his tender did not give rise
to the perfection of a contract of sale.
It is further maintained by the petitioners that the Court of Appeals erred in ruling that
rescission of the contract was already out of the question. Rescission implies that a
contract of sale was perfected unlike the Memorandum of Agreement in question which
as previously stated is allegedly only an option contract.
Petitioner adds that at most, the Memorandum of Agreement (Contract to Sell) is a mere
contract to sell, as indicated in its title. The obligation of the petitioners to sell the
property to the respondent was conditioned upon the issuance of a new certificate of
title and the execution of the extrajudicial partition with sale and payment of the
P600,000.00. This is why possession of the subject property was not delivered to the
respondent as the owner of the property but only as the lessee thereof. And the failure
of the respondent to pay the purchase price in full prevented the petitioners obligation to
convey title from acquiring obligatory force.
Petitioners also allege that assuming for the sake of argument that a contract of sale
was indeed perfected, the Court of Appeals still erred in holding that respondents failure
to pay the purchase price of P600,000.00 was only a "slight or casual breach".
The petitioners also claim that the Court of Appeals erred in ruling that they were not
ready to comply with their obligation to execute the extrajudicial settlement. The Power
of Attorney to execute a Deed of Sale made by Dennis Z. Laforteza was sufficient and
necessarily included the power to execute an extrajudicial settlement. At any rate, the
respondent is estopped from claiming that the petitioners were not ready to comply with
their obligation for he acknowledged the petitioners ability to do so when he requested
for an extension of time within which to pay the purchase price. Had he truly believed
that the petitioners were not ready, he would not have needed to ask for said extension.
Finally, the petitioners allege that the respondents uncorroborated testimony that third
persons offered a higher price for the property is hearsay and should not be given any
evidentiary weight. Thus, the order of the lower court awarding moral damages was
without any legal basis.
The appeal is bereft of merit.
A perusal of the Memorandum Agreement shows that the transaction between the
petitioners and the respondent was one of sale and lease. The terms of the agreement
read:
"1. For and in consideration of the sum of PESOS: SIX HUNDRED
THIRTY THOUSAND (P630,000.00) payable in a manner herein below
indicated, SELLER-LESSOR hereby agree to sell unto BUYER-LESSEE
the property described in the first WHEREAS of this Agreement within six
(6) months from the execution date hereof, or upon issuance by the Court

of a new owners certificate of title and the execution of extrajudicial


partition with sale of the estate of Francisco Laforteza, whichever is
earlier;
2. The above-mentioned sum of PESOS: SIX HUNDRED THIRTY
THOUSAND (P630,000.00) shall be paid in the following manner:
P30,000.00- as earnest money and as consideration for this
Agreement, which amount shall be forfeited in favor of SELLERLESSORS if the sale is not effected because of the fault or option
of BUYER-LESSEE;
P600,000.00- upon the issuance of the new certificate of title in the
name of the late Francisco Laforteza and upon the execution of an
Extrajudicial Settlement of his estate with sale in favor of BUYERLESSEE free from lien or any encumbrances.
3. Parties reasonably estimate that the issuance of a new title in place of
the lost one, as well as the execution of extrajudicial settlement of estate
with sale to herein BUYER-LESSEE will be completed within six (6)
months from the execution of this Agreement. It is therefore agreed that
during the six months period, BUYER-LESSEE will be leasing the subject
property for six months period at the monthly rate of PESOS: THREE
THOUSAND FIVE HUNDRED (P3,500.00). Provided however, that if the
issuance of new title and the execution of Extrajudicial Partition is
completed prior to the expiration of the six months period, BUYERLESSEE shall only be liable for rentals for the corresponding period
commencing from his occupancy of the premises to the execution and
completion of the Extrajudicial Settlement of the estate, provided further
that if after the expiration of six (6) months, the lost title is not yet replaced
and the extra judicial partition is not executed, BUYER-LESSEE shall no
longer be required to pay rentals and shall continue to occupy, and use
the premises until subject condition is complied by SELLER-LESSOR;
4. It is hereby agreed that within reasonable time from the execution of
this Agreement and the payment by BUYER-LESSEE of the amount of
P30,000.00 as herein above provided, SELLER-LESSORS shall
immediately file the corresponding petition for the issuance of a new title in
lieu of the lost one in the proper Courts. Upon issuance by the proper
Courts of the new title, the BUYER-LESSEE shall have thirty (30) days to
produce the balance of P600,000.00 which shall be paid to the SELLERLESSORS upon the execution of the Extrajudicial Settlement with sale."
[9]

A contract of sale is a consensual contract and 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. From that moment the parties may reciprocally demand performance subject to
[10]

the provisions of the law governing the form of contracts. The elements of a valid
contract of sale under Article 1458 of the Civil Code are (1) consent or meeting of the
minds; (2) determinate subject matter and (3) price certain in money or its equivalent.
[11]

[12]

In the case at bench, there was a perfected agreement between the petitioners and the
respondent whereby the petitioners obligated themselves to transfer the ownership of
and deliver the house and lot located at 7757 Sherwood St., Marcelo Green Village,
Paraaque and the respondent to pay the price amounting to six hundred thousand
pesos (P600,000.00). All the elements of a contract of sale were thus present. However,
the balance of the purchase price was to be paid only upon the issuance of the new
certificate of title in lieu of the one in the name of the late Francisco Laforteza and upon
the execution of an extrajudicial settlement of his estate. Prior to the issuance of the
"reconstituted" title, the respondent was already placed in possession of the house and
lot as lessee thereof for six months at a monthly rate of three thousand five hundred
pesos (P3,500.00). It was stipulated that should the issuance of the new title and the
execution of the extrajudicial settlement be completed prior to expiration of the sixmonth period, the respondent would be liable only for the rentals pertaining to the period
commencing from the date of the execution of the agreement up to the execution of the
extrajudicial settlement. It was also expressly stipulated that if after the expiration of the
six month period, the lost title was not yet replaced and the extrajudicial partition was
not yet executed, the respondent would no longer be required to pay rentals and would
continue to occupy and use the premises until the subject condition was complied with
by the petitioners.
The six-month period during which the respondent would be in possession of the
property as lessee, was clearly not a period within which to exercise an option. An
option is a contract granting a privilege to buy or sell within an agreed time and at a
determined price. An option contract is a separate and distinct contract from that which
the parties may enter into upon the consummation of the option. An option must be
supported by consideration. An option contract is governed by the second paragraph
of Article 1479 of the Civil Code , which reads:
[13]

[14]

[15]

"Article 1479. xxx


An accepted unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price."
In the present case, the six-month period merely delayed the demandability of the
contract of sale and did not determine its perfection for after the expiration of the sixmonth period, there was an absolute obligation on the part of the petitioners and the
respondent to comply with the terms of the sale. The parties made a "reasonable
estimate" that the reconstitution of the lost title of the house and lot would take
approximately six months and thus presumed that after six months, both parties would
be able to comply with what was reciprocally incumbent upon them. The fact that after
the expiration of the six-month period, the respondent would retain possession of the

house and lot without need of paying rentals for the use therefor, clearly indicated that
the parties contemplated that ownership over the property would already be transferred
by that time.
The issuance of the new certificate of title in the name of the late Francisco Laforteza
and the execution of an extrajudicial settlement of his estate was not a condition which
determined the perfection of the contract of sale. Petitioners contention that since the
condition was not met, they no longer had an obligation to proceed with the sale of the
house and lot is unconvincing. The petitioners fail to distinguish between a condition
imposed upon the perfection of the contract and a condition imposed on the
performance of an obligation. Failure to comply with the first condition results in the
failure of a contract, while the failure to comply with the second condition only gives the
other party the option either to refuse to proceed with the sale or to waive the condition.
Thus, Art. 1545 of the Civil Code states:
"Art. 1545. Where the obligation of either party to a contract of sale is
subject to any condition which is not performed, such party may refuse to
proceed with the contract or he may waive performance of the condition. If
the other party has promised that the condition should happen or be
performed, such first mentioned party may also treat the nonperformance
of the condition as a breach of warranty.
Where the ownership in the things has not passed, the buyer may treat
the fulfillment by the seller of his obligation to deliver the same as
described and as warranted expressly or by implication in the contract of
sale as a condition of the obligation of the buyer to perform his promise to
accept and pay for the thing."
[16]

In the case at bar, there was already a perfected contract. The condition was imposed
only on the performance of the obligations contained therein. Considering however that
the title was eventually "reconstituted" and that the petitioners admit their ability to
execute the extrajudicial settlement of their fathers estate, the respondent had a right to
demand fulfillment of the petitioners obligation to deliver and transfer ownership of the
house and lot.
What further militates against petitioners argument that they did not enter into a contract
of sale is the fact that the respondent paid thirty thousand pesos (P30,000.00) as
earnest money. Earnest money is something of value to show that the buyer was really
in earnest, and given to the seller to bind the bargain. Whenever earnest money is
given in a contract of sale, it is considered as part of the purchase price and proof of the
perfection of the contract.
[17]

[18]

We do not subscribe to the petitioners view that the Memorandum Agreement was a
contract to sell. There is nothing contained in the Memorandum Agreement from which it
can reasonably be deduced that the parties intended to enter into a contract to sell, i.e.
one whereby the prospective seller would explicitly reserve the transfer of title to the

prospective buyer, meaning, the prospective seller does not as yet agree or consent to
transfer ownership of the property subject of the contract to sell until the full payment of
the price, such payment being a positive suspensive condition, the failure of which is not
considered a breach, casual or serious, but simply an event which prevented the
obligation from acquiring any obligatory force. There is clearly no express reservation
of title made by the petitioners over the property, or any provision which would impose
non-payment of the price as a condition for the contracts entering into force. Although
the memorandum agreement was also denominated as a "Contract to Sell", we hold
that the parties contemplated a contract of sale. A deed of sale is absolute in nature
although denominated a conditional sale in the absence of a stipulation reserving title in
the petitioners until full payment of the purchase price. In such cases, ownership of the
thing sold passes to the vendee upon actual or constructive delivery thereof. The mere
fact that the obligation of the respondent to pay the balance of the purchase price was
made subject to the condition that the petitioners first deliver the reconstituted title of the
house and lot does not make the contract a contract to sell for such condition is not
inconsistent with a contract of sale.
[19]

[20]

[21]

[22]

The next issue to be addressed is whether the failure of the respondent to pay the
balance of the purchase price within the period allowed is fatal to his right to enforce the
agreement.
We rule in the negative.
Admittedly, the failure of the respondent to pay the balance of the purchase price was a
breach of the contract and was a ground for rescission thereof. The extension of thirty
(30) days allegedly granted to the respondent by Roberto Z. Laforteza (assisted by his
counsel Attorney Romeo Gutierrez) was correctly found by the Court of Appeals to be
ineffective inasmuch as the signature of Gonzalo Z. Laforteza did not appear thereon as
required by the Special Powers of Attorney. However, the evidence reveals that after
the expiration of the six-month period provided for in the contract, the petitioners were
not ready to comply with what was incumbent upon them, i.e. the delivery of the
reconstituted title of the house and lot. It was only on September 18, 1989 or nearly
eight months after the execution of the Memorandum of Agreement when the petitioners
informed the respondent that they already had a copy of the reconstituted title and
demanded the payment of the balance of the purchase price. The respondent could not
therefore be considered in delay for in reciprocal obligations, neither party incurs in
delay if the other party does not comply or is not ready to comply in a proper manner
with what was incumbent upon him.
[23]

[24]

Even assuming for the sake of argument that the petitioners were ready to comply with
their obligation, we find that rescission of the contract will still not prosper. The
rescission of a sale of an immovable property is specifically governed by Article 1592 of
the New Civil Code, which reads:
"In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the

rescission of the contract shall of right take place, the vendee may pay,
even after the expiration of the period, as long as no demand for
rescission of the contract has been made upon him either judicially or by a
notarial act. After the demand, the court may not grant him a new term."
[25]

It is not disputed that the petitioners did not make a judicial or notarial demand for
rescission. The November 20, 1989 letter of the petitioners informing the respondent of
the automatic rescission of the agreement did not amount to a demand for rescission,
as it was not notarized. It was also made five days after the respondents attempt to
make the payment of the purchase price. This offer to pay prior to the demand for
rescission is sufficient to defeat the petitioners right under article 1592 of the Civil Code.
Besides, the Memorandum Agreement between the parties did not contain a clause
expressly authorizing the automatic cancellation of the contract without court
intervention in the event that the terms thereof were violated. A seller cannot unilaterally
and extrajudicially rescind a contract of sale where there is no express stipulation
authorizing him to extrajudicially rescind. Neither was there a judicial demand for the
rescission thereof. Thus, when the respondent filed his complaint for specific
performance, the agreement was still in force inasmuch as the contract was not yet
rescinded. At any rate, considering that the six-month period was merely an
approximation of the time it would take to reconstitute the lost title and was not a
condition imposed on the perfection of the contract and considering further that the
delay in payment was only thirty days which was caused by the respondents justified
but mistaken belief that an extension to pay was granted to him, we agree with the
Court of Appeals that the delay of one month in payment was a mere casual breach that
would not entitle the respondents to rescind the contract. Rescission of a contract will
not be permitted for a slight or casual breach, but only such substantial and
fundamental breach as would defeat the very object of the parties in making the
agreement.
[26]

[27]

[28]

[29]

Petitioners insistence that the respondent should have consignated the amount is not
determinative of whether respondents action for specific performance will lie. Petitioners
themselves point out that the effect of consignation is to extinguish the obligation. It
releases the debtor from responsibility therefor. The failure of the respondent to
consignate the P600,000.00 is not tantamount to a breach of the contract for by the fact
of tendering payment, he was willing and able to comply with his obligation.
[30]

The Court of Appeals correctly found the petitioners guilty of bad faith and awarded
moral damages to the respondent. As found by the said Court, the petitioners refused to
comply with their obligation for the reason that they were offered a higher price therefor
and the respondent was even offered P100,000.00 by the petitioners lawyer, Attorney
Gutierrez, to relinquish his rights over the property. The award of moral damages is in
accordance with Article 1191 of the Civil Code pursuant to Article 2220 which provides
that moral damages may be awarded in case of a breach of contract where the
defendant acted in bad faith. The amount awarded depends on the discretion of the
court based on the circumstances of each case. Under the circumstances, the award
[31]

[32]

given by the Court of Appeals amounting to P50,000.00 appears to us to be fair and


reasonable.
ACCORDINGLY, the decision of the Court of Appeals in CA G.R. CV No. 47457 is
AFFIRMED and the instant petition is hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
Melo, (Chairman), Panganiban, and Purisima, JJ., concur.
Vitug, J., Abroad, On Official Business.

Twelfth Division composed of the ponente J. Mariano M. Umali and the members: J. Consuelo Ynares-Santiago
(Chairman) and J. Romeo J. Callejo, Sr. concurring.
[2]
Alonzo Machuca, respondent herein.
[3]
Should be 1989; Exhibit "1", Record, p. 370.
[4]
Should be 1989; Exhibit "3"; Record, p. 374.
[5]
Decision, pp. 1-4; Rollo, pp. 39-42.
[6]
Decision, pp. 14-15; Rollo, pp. 52-53.
[7]
Resolution, p. 7; Rollo, p. 59.
[8]
Petitioners Memorandum, p. 7-8; Rollo, pp. 119-120.
[9]
Rollo, pp. 23-25.
[10]
City of Cebu vs. Heirs of Candido Rubi, 306 SCRA 408 at p. 417 [1999].
[11]
Article 1475, Civil Code.
[12]
City of Cebu vs. Heirs of Candido Rubi, supra.
[13]
Co vs. Court of Appeals, G. R. No. 112330, August 17, 1999 at p. 7.
[14]
Ibid.
[15]
Ibid.
[16]
Lim vs. Court of Appeals, 263 SCRA 569 at p. 578 [1996].
[17]
Topacio vs. Court of Appeals, 211 SCRA 291 at p. 295 [1992].
[18]
Article 1482, Civil Code.
[19]
City of Cebu vs. Heirs of Candido Rubi, supra at p. 419.
[20]
Babasa vs. Court of Appeals, 290 SCRA 532 at p. 540 [1998].
[21]
Ibid.
[22]
Ibid.
[1]

[23]

The Powers of Attorney read:

"xxx It is hereby understood that in signing any document or paper to exercise the authority herein granted, the
signature of both attorneys must be affixed to said document." (emphasis supplied)
[24]
Article 1169, Civil Code.
[25]
Article 1592 requiring demand by suit or notarial act in case the vendor wants to rescind does not apply to a
contract to sell or promise to sell where title remains with the vendor until fulfillment of a positive condition such as
full payment of the price [Roque vs. Lapuz, 96 SCRA 741 citing Manuel vs. Rodriguez 109 Phil.].
[26]
Record, p. 56.
[27]
Ocampo vs. Court of Appeals, 233 SCRA 551 at p. 562 [1994].
[28]
Co vs. Court of Appeals, supra at p. 9.

Ocampo vs. Court of Appeals, supra.


Article 1256 of the Civil Code reads: "If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due.
xxx"
[29]
[30]

"The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.
[31]

The injured party may choose between fulfillment and rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. xxx"
[32]
Lim vs. Court of Appeals, Supra at p. 581.

SECOND DIVISION

[G.R. No. 133638. April 15, 2005]

PERPETUA VDA. DE APE, petitioner, vs. THE HONORABLE COURT


OF
APPEALS
and
GENOROSA
CAWIT
VDA.
DE
LUMAYNO, respondents.
DECISION
CHICO-NAZARIO, J.:

Before Us is a petition for review on certiorari of the Decision[1] of the Court of


Appeals in CA-G.R. CV No. 45886 entitled, Generosa Cawit de Lumayno, accompanied
by her husband Braulio Lumayno v. Fortunato Ape, including his wife Perpetua de Ape.
The pertinent facts are as follows:
Cleopas Ape was the registered owner of a parcel of land particularly known as Lot
No. 2319 of the Escalante Cadastre of Negros Occidental and covered by Original
Certificate of Title (OCT) No. RP 1379 (RP-154 [300]). [2] Upon Cleopas Apes death
sometime in 1950, the property passed on to his wife, Maria Ondoy, and their eleven
(11) children, namely: Fortunato, Cornelio, Bernalda, Bienvenido, Encarnacion, Loreta,
Lourdes, Felicidad, Adela, Dominador, and Angelina, all surnamed Ape.
On 15 March 1973, Generosa Cawit de Lumayno (private respondent herein),
joined by her husband, Braulio,[3] instituted a case for Specific Performance of a Deed of
Sale with Damages against Fortunato and his wife Perpetua (petitioner herein) before
the then Court of First Instance of Negros Occidental. It was alleged in the complaint
that on 11 April 1971, private respondent and Fortunato entered into a contract of sale
of land under which for a consideration of P5,000.00, Fortunato agreed to sell his share
in Lot No. 2319 to private respondent. The agreement was contained in a receipt
prepared by private respondents son-in-law, Andres Flores, at her behest. Said receipt
was attached to the complaint as Annex A thereof and later marked as Exhibit G for
private respondent. The receipt states:

April 11, 1971


TO WHOM IT MAY CONCERN:

This date received from Mrs. Generosa Cawit de Lumayno the sum of THIRTY
PESOS ONLY as Advance Payment of my share in Land Purchased, for FIVE
THOUSAND PESOS LOT #2319.

(Signed)
FORTUNATO APE
P30.00 WITNESS:

(Illegible) [4]
As private respondent wanted to register the claimed sale transaction, she
supposedly demanded that Fortunato execute the corresponding deed of sale and to
receive the balance of the consideration. However, Fortunato unjustifiably refused to
heed her demands. Private respondent, therefore, prayed that Fortunato be ordered to
execute and deliver to her a sufficient and registrable deed of sale involving his oneeleventh (1/11) share or participation in Lot No. 2319 of the Escalante Cadastre; to pay
P5,000.00 in damages; P500.00 reimbursement for litigation expenses as well as
additional P500.00 for every appeal made; P2,000.00 for attorneys fees; and to pay the
costs.[5]
Fortunato and petitioner denied the material allegations of the complaint and
claimed that Fortunato never sold his share in Lot No. 2319 to private respondent and
that his signature appearing on the purported receipt was forged. By way of
counterclaim, the defendants below maintained having entered into a contract of lease
with respondent involving Fortunatos portion of Lot No. 2319. This purported lease
contract commenced in 1960 and was supposed to last until 1965 with an option for
another five (5) years. The annual lease rental was P100.00 which private respondent
and her husband allegedly paid on installment basis. Fortunato and petitioner also
assailed private respondent and her husbands continued possession of the rest of Lot
No. 2319 alleging that in the event they had acquired the shares of Fortunatos coowners by way of sale, he was invoking his right to redeem the same. Finally, Fortunato
and petitioner prayed that the lease contract between them and respondent be ordered
annulled; and that respondent be ordered to pay them attorneys fees; moral damages;
and exemplary damages.[6]
In their reply,[7] the private respondent and her husband alleged that they had
purchased from Fortunatos co-owners, as evidenced by various written instruments,
[8]
their respective portions of Lot No. 2319. By virtue of these sales, they insisted that
Fortunato was no longer a co-owner of Lot No. 2319 thus, his right of redemption no
longer existed.
Prior to the resolution of this case at the trial court level, Fortunato died and was
substituted in this action by his children named Salodada, Clarita, Narciso, Romeo,
Rodrigo, Marieta, Fortunato, Jr., and Salvador, all surnamed Ape. [9]
During the trial, private respondent testified that she and her husband acquired the
various portions of Lot No. 2319 belonging to Fortunatos co-owners. Thereafter, her
husband caused the annotation of an adverse claim on the certificate of title of Lot No.
2319.[10] The annotation states:

Entry No. 123539 Adverse claim filed by Braulio Lumayno. Notice of adverse claim
filed by Braulio Lumayno affecting the lot described in this title to the extent of
77511.93 square meters, more or less, the aggregate area of shares sold to him on the
basis of (alleged) sales in his possession. Doc. No. 157, Page No. 33, Book No. XI,
Series of 1967 of Alexander Cawit of Escalante, Neg. Occ. Date of instrument. June
22, 1967 at 8:30 a.m. (SGD) FEDENCIORRAZ, Actg. Register of Deeds. [11]
In addition, private respondent claimed that after the acquisition of those shares,
she and her husband had the whole Lot No. 2319 surveyed by a certain Oscar Mascada
who came up with a technical description of said piece of land. [12] Significantly, private
respondent alleged that Fortunato was present when the survey was conducted. [13]
Also presented as evidence for private respondent were pictures taken of some
parts of Lot No. 2319 purportedly showing the land belonging to Fortunato being
bounded by a row of banana plants thereby separating it from the rest of Lot No. 2319.
[14]

As regards the circumstances surrounding the sale of Fortunatos portion of the


land, private respondent testified that Fortunato went to her store at the time when their
lease contract was about to expire. He allegedly demanded the rental payment for his
land but as she was no longer interested in renewing their lease agreement, they
agreed instead to enter into a contract of sale which Fortunato acceded to provided
private respondent bought his portion of Lot No. 2319 for P5,000.00. Thereafter, she
asked her son-in-law Flores to prepare the aforementioned receipt. Flores read the
document to Fortunato and asked the latter whether he had any objection thereto.
Fortunato then went on to affix his signature on the receipt.
For her part, petitioner insisted that the entire Lot No. 2319 had not yet been
formally subdivided;[15] that on 11 April 1971 she and her husband went to private
respondents house to collect past rentals for their land then leased by the former,
however, they managed to collect only thirty pesos; [16] that private respondent made her
(petitioners) husband sign a receipt acknowledging the receipt of said amount of money;
[17]
and that the contents of said receipt were never explained to them. [18] She also stated
in her testimony that her husband was an illiterate and only learned how to write his
name in order to be employed in a sugar central. [19] As for private respondents purchase
of the shares owned by Fortunatos co-owners, petitioner maintained that neither she
nor her husband received any notice regarding those sales transactions. [20] The
testimony of petitioner was later on corroborated by her daughter-in-law, Marietta Ape
Dino.[21]
After due trial, the court a quo rendered a decision [22] dismissing both the complaint
and the counterclaim. The trial court likewise ordered that deeds or documents
representing the sales of the shares previously owned by Fortunatos co-owners be
registered and annotated on the existing certificate of title of Lot No. 2319. According to
the trial court, private respondent failed to prove that she had actually paid the purchase
price of P5,000.00 to Fortunato and petitioner. Applying, therefore, the provision of
Article 1350 of the Civil Code, [23] the trial court concluded that private respondent did not

have the right to demand the delivery to her of the registrable deed of sale over
Fortunatos portion of the Lot No. 2319.
The trial court also rejected Fortunato and petitioners claim that they had the right of
redemption over the shares previously sold to private respondent and the latters
husband, reasoning as follows:

Defendants in their counterclaim invoke their right of legal redemption under Article
1623 of the New Civil Code in view of the alleged sale of the undivided portions of
the lot in question by their co-heirs and co-owners as claimed by the plaintiffs in their
complaint. They have been informed by the plaintiff about said sales upon the filing of
the complaint in the instant case as far back as March 14, 1973. Defendant themselves
presented as their very own exhibits copies of the respective deeds of sale or
conveyance by their said co-heirs and co-owners in favor of the plaintiffs or their
predecessors-in-interest way back on January 2, 1992 when they formally offered
their exhibits in the instant case; meaning, they themselves acquired possession of
said documentary exhibits even before they formally offered them in evidence. Under
Art. 1623 of the New Civil Code, defendants have only THIRTY (30) DAYS counted
from their actual knowledge of the exact terms and conditions of the deeds of sale or
conveyance of their co-heirs and co-owners share within which to exercise their right
of legal redemption.[24]
Within the reglementary period, both parties filed their respective notices of appeal
before the trial court with petitioner and her children taking exception to the finding of
the trial court that the period within which they could invoke their right of redemption had
already lapsed.[25] For her part, private respondent raised as errors the trial courts ruling
that there was no contract of sale between herself and Fortunato and the dismissal of
their complaint for specific performance.[26]
The Court of Appeals, in the decision now assailed before us, reversed and set
aside the trial courts dismissal of the private respondents complaint but upheld the
portion of the court a quos decision ordering the dismissal of petitioner and her
childrens counterclaim. The dispositive portion of the appellate courts decision reads:

WHEREFORE, the decision dated March 11, 1994, is hereby REVERSED and SET
ASIDE insofar as the dismissal of plaintiffs-appellants complaint is concerned, and
another one is entered ordering the defendant-appellant Fortunato Ape and/or his wife
Perpetua de Ape and successors-in-interest to execute in favor of plaintiff-appellant
Generosa Cawit de Lumayno a Deed of Absolute Sale involving the one-eleventh
(1/11) share or participation of Fortunato Ape in Lot No. 2319, Escalante Cadastre,
containing an area of 12,527.19 square meters, more or less, within (30) days from
finality of this decision, and in case of non-compliance with this Order, that the Clerk
of Court of said court is ordered to execute the deed on behalf of the vendor. The

decision is AFFIRMED insofar as the dismissal of defendants-appellants counterclaim


is concerned.
Without pronouncement as to costs.[27]
The Court of Appeals upheld private respondents position that Exhibit G had all the
earmarks of a valid contract of sale, thus:

Exhibit G is the best proof that the P5,000.00 representing the purchase price of the
1/11th share of Fortunato Ape was not paid by the vendee on April 11, 1971, and/or up
to the present, but that does not affect the binding force and effect of the document.
The vendee having paid the vendor an advance payment of the agreed purchase price
of the property, what the vendor can exact from the vendee is full payment upon his
execution of the final deed of sale. As is shown, the vendee precisely instituted this
action to compel the vendor Fortunato Ape to execute the final document, after she
was informed that he would execute the same upon arrival of his daughter Bala from
Mindanao, but afterwards failed to live up to his contractual obligation (TSN, pp. 1113, June 10, 1992).
It is not right for the trial court to expect plaintiff-appellant to pay the balance of the
purchase price before the final deed is executed, or for her to deposit the equivalent
amount in court in the form of consignation. Consignation comes into fore in the case
of a creditor to whom tender of payment has been made and refuses without just cause
to accept it (Arts. 1256 and 1252, N.C.C.; Querino vs. Pelarca, 29 SCRA 1). As
vendee, plaintiff-appellant Generosa Cawit de Lumayno does not fall within the
purview of a debtor.
We, therefore, find and so hold that the trial court should have found that exhibit G
bears all the earmarks of a private deed of sale which is valid, binding and enforceable
between the parties, and that as a consequence of the failure and refusal on the part of
the vendor Fortunato Ape to live up to his contractual obligation, he and/or his heirs
and successors-in-interest can be compelled to execute in favor of, and to deliver to
the vendee, plaintiff-appellant Generosa Cawit de Lumayno a registerable deed of
absolute sale involving his one-eleventh (1/11th) share or participation in Lot No.
2319, Escalante Cadastre, containing an area of 12,527.19 square meters, more or less,
within 30 days from finality of this decision, and, in case of non-compliance within
said period, this Court appoints the Clerk of Court of the trial court to execute on
behalf of the vendor the said document.[28]
The Court of Appeals, however, affirmed the trial courts ruling on the issue of
petitioner and her childrens right of redemption. It ruled that Fortunatos receipt of the
Second Owners Duplicate of OCT (RP) 1379 (RP-154 ([300]), containing the adverse
claim of private respondent and her husband, constituted a sufficient compliance with

the written notice requirement of Article 1623 of the Civil Code and the period of
redemption under this provision had long lapsed.
Aggrieved by the decision of the appellate court, petitioner is now before us raising,
essentially, the following issues: whether Fortunato was furnished with a written notice
of sale of the shares of his co-owners as required by Article 1623 of the Civil Code; and
whether the receipt signed by Fortunato proves the existence of a contract of sale
between him and private respondent.
In her memorandum, petitioner claimed that the Court of Appeals erred in sustaining
the court a quos pronouncement that she could no longer redeem the portion of Lot No.
2319 already acquired by private respondent for no written notice of said sales was
furnished them. According to her, the Court of Appeals unduly expanded the scope of
the law by equating Fortunatos receipt of Second Owners Duplicate of OCT (RP) 1379
(RP-154 ([300]) with the written notice requirement of Article 1623. In addition, she
argued that Exhibit G could not possibly be a contract of sale of Fortunatos share in Lot
No. 2319 as said document does not contain (a) definite agreement on the manner of
payment of the price.[29] Even assuming that Exhibit G is, indeed, a contract of sale
between private respondent and Fortunato, the latter did not have the obligation to
deliver to private respondent a registrable deed of sale in view of private respondents
own failure to pay the full purchase price of Fortunatos portion of Lot No. 2319.
Petitioner is also of the view that, at most, Exhibit G merely contained a unilateral
promise to sell which private respondent could not enforce in the absence of a
consideration distinct from the purchase price of the land. Further, petitioner reiterated
her claim that due to the illiteracy of her husband, it was incumbent upon private
respondent to show that the contents of Exhibit G were fully explained to him. Finally,
petitioner pointed out that the Court of Appeals erred when it took into consideration the
same exhibit despite the fact that only its photocopy was presented before the court.
On the other hand, private respondent argued that the annotation on the second
owners certificate over Lot No. 2319 constituted constructive notice to the whole world
of private respondents claim over the majority of said parcel of land. Relying on our
decision in the case of Cabrera v. Villanueva,[30] private respondent insisted that when
Fortunato received a copy of the second owners certificate, he became fully aware of
the contracts of sale entered into between his co-owners on one hand and private
respondent and her deceased husband on the other.
Private respondent also averred that although (Lot No. 2319) was not actually
partitioned in a survey after the death of Cleopas Ape, the land was partitioned in
a hantal-hantal manner by the heirs. Each took and possessed specific portion or
premises as his/her share in land, farmed their respective portion or premises, and
improved them, each heir limiting his/her improvement within the portion or premises
which were his/her respective share. [31] Thus, when private respondent and her husband
purchased the other parts of Lot No. 2319, it was no longer undivided as petitioner
claims.
The petition is partly meritorious.
Article 1623 of the Civil Code provides:

The right of legal pre-emption or redemption shall not be exercised except within
thirty days from the notice in writing by the prospective vendor, or by the vendor, as
the case may be. The deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given written notice
thereof to all possible redemptioners.
Despite the plain language of the law, this Court has, over the years, been tasked to
interpret the written notice requirement of the above-quoted provision. In the case Butte
v. Manuel Uy & Sons, Inc.,[32] we declared that

In considering whether or not the offer to redeem was timely, we think that the notice
given by the vendee (buyer) should not be taken into account. The text of Article 1623
clearly and expressly prescribes that the thirty days for making the redemption are to
be counted from notice in writing by the vendor. Under the old law (Civ. Code of
1889, Art. 1524), it was immaterial who gave the notice; so long as the redeeming coowner learned of the alienation in favor of the stranger, the redemption period began
to run. It is thus apparent that the Philippine legislature in Article 1623 deliberately
selected a particular method of giving notice, and that method must be deemed
exclusive. (39 Am. Jur., 237; Payne vs. State, 12 S.W. 2(d) 528). As ruled in Wampler
vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.] 275)
why these provisions were inserted in the statute we are not informed, but we may
assume until the contrary is shown, that a state of facts in respect thereto existed,
which warranted the legislature in so legislating.
The reasons for requiring that the notice should be given by the seller, and not by the
buyer, are easily divined. The seller of an undivided interest is in the best position to
know who are his co-owners that under the law must be notified of the sale. Also, the
notice by the seller removes all doubts as to fact of the sale, its perfection; and its
validity, the notice being a reaffirmation thereof, so that the party notified need not
entertain doubt that the seller may still contest the alienation. This assurance would
not exist if the notice should be given by the buyer.[33]
The interpretation was somehow modified in the case of De Conejero, et al. v. Court
of Appeals, et al.[34] wherein it was pointed out that Article 1623 does not prescribe a
particular form of notice, nor any distinctive method for notifying the redemptioner thus,
as long as the redemptioner was notified in writing of the sale and the particulars
thereof, the redemption period starts to run. This view was reiterated in Etcuban v. The
Honorable Court of Appeals, et al.,[35] Cabrera v. Villanueva,[36] Garcia, et al. v.
Calaliman, et al.,[37] Distrito, et al. v. The Honorable Court of Appeals, et al., [38] and
Mariano, et al. v. Hon. Court of Appeals, et al.[39]
However, in the case of Salatandol v. Retes,[40] wherein the plaintiffs were not
furnished any written notice of sale or a copy thereof by the vendor, this Court again

referred to the principle enunciated in the case of Butte. As observed by Justice Vicente
Mendoza, such reversion is only sound, thus:

Art. 1623 of the Civil Code is clear in requiring that the written notification should
come from the vendor or prospective vendor, not from any other person. There is,
therefore, no room for construction. Indeed, the principal difference between Art.
1524 of the former Civil Code and Art. 1623 of the present one is that the former did
not specify who must give the notice, whereas the present one expressly says the
notice must be given by the vendor. Effect must be given to this change in statutory
language. [41]
In this case, the records are bereft of any indication that Fortunato was given any
written notice of prospective or consummated sale of the portions of Lot No. 2319 by the
vendors or would-be vendors. The thirty (30)-day redemption period under the law,
therefore, has not commenced to run.
Despite this, however, we still rule that petitioner could no longer invoke her right to
redeem from private respondent for the exercise of this right presupposes the existence
of a co-ownership at the time the conveyance is made by a co-owner and when it is
demanded by the other co-owner or co-owners. [42] The regime of co-ownership exists
when ownership of an undivided thing or right belongs to different persons. [43] By the
nature of a co-ownership, a co-owner cannot point to specific portion of the property
owned in common as his own because his share therein remains intangible. [44] As legal
redemption is intended to minimize co-ownership, [45] once the property is subdivided and
distributed among the co-owners, the community ceases to exist and there is no more
reason to sustain any right of legal redemption. [46]
In this case, records reveal that although Lot No. 2319 has not yet been formally
subdivided, still, the particular portions belonging to the heirs of Cleopas Ape had
already been ascertained and they in fact took possession of their respective parts. This
can be deduced from the testimony of petitioner herself, thus:

Q When the plaintiffs leased the share of your husband, were there any metes
and bounds?
A It was not formally subdivided. We have only a definite portion. (hantalhantal)
Q This hantal-hantal of your husband, was it also separate and distinct from
the hantal-hantal or the share of the brothers and sisters of your
husband?
A Well, this property in question is a common property.

Q To the north, whose share was that which is adjacent to your husbands
assumed partition?
A I do not know what [does] this north [mean].
COURT
(To Witness)
Q To the place from where the sun rises, whose share was that?
A The shares of Cornelia, Loreta, Encarnacion and Adela.
Q How could you determine their own shares?
A They were residing in their respective assumed portions.
Q How about determining their respective boundaries?
A It could be determined by stakes and partly a row of banana plantations
planted by my son-in-law.
Q Who is this son-in-law you mentioned?
A Narciso Ape.
ATTY. CAWIT
(Continuing)
Q You said that there were stakes to determine the hantal-hantal of your
husband and the hantal-hantal of the other heirs, did I get you right?
ATTY. TAN
Admitted, Your Honor.
ATTY. CAWIT
Q Mrs. Ape, in 1960, Cleopas Ape was already dead, is that correct?
A Certainly, since he died in 1950.

Q By the manifestation of your counsel that the entire land (13 hectares) of
your father-in-law, Cleopas Ape, was leased to Generosa Lumayno, is
this correct?
A No, it is only the assumed portion of my husband [which] was leased to
Generosa Lumayno.
Q For clarification, it was only the share of your husband [which] was leased
to Generosa Cawit Lumayno?
A Yes.[47]
ATTY. CAWIT
Q My question: is that portion which you said was leased by your husband to
the Lumayno[s] and which was included to the lease by your mother-inlaw to the Lumayno[s], when the Lumayno[s] returned your husband[s]
share, was that the same premises that your husband leased to the
Lumayno[s]?
A The same.
Q In re-possessing this portion of the land corresponding to the share of your
husband, did your husband demand that they should re-possess the land
from the Lumayno[s] or did the Lumayno[s] return them to your
husband voluntarily?
A They just returned to us without paying the rentals.
COURT
Q Was the return the result of your husbands request or just voluntarily they
returned it to your husband?
A No, sir, it was just returned voluntarily, and they abandoned the area but my
husband continued farming.[48]
Similarly telling of the partition is the stipulation of the parties during the pre-trial
wherein it was admitted that Lot No. 2319 had not been subdivided nevertheless,
Fortunato Ape had possessed a specific portion of the land ostensibly corresponding to
his share.[49]
From the foregoing, it is evident that the partition of Lot No. 2319 had already been
effected by the heirs of Cleopas Ape. Although the partition might have been informal is

of no moment for even an oral agreement of partition is valid and binding upon the
parties.[50] Likewise, the fact that the respective shares of Cleopas Apes heirs are still
embraced in one and the same certificate of title and have not been technically
apportioned does not make said portions less determinable and identifiable from one
another nor does it, in any way, diminish the dominion of their respective owners. [51]
Turning now to the second issue of the existence of a contract of sale, we rule that
the records of this case betray the stance of private respondent that Fortunato Ape
entered into such an agreement with her.
A contract of sale is a consensual contract, thus, it is perfected by mere consent of
the parties. It is born from the moment there is a meeting of minds upon the thing which
is the object of the sale and upon the price. [52] Upon its perfection, the parties may
reciprocally demand performance, that is, the vendee may compel the transfer of the
ownership and to deliver the object of the sale while the vendor may demand the
vendee to pay the thing sold. [53] For there to be a perfected contract of sale, however,
the following elements must be present: consent, object, and price in money or its
equivalent. In the case of Leonardo v. Court of Appeals, et al.,[54] we explained the
element of consent, to wit:

The essence of consent is the agreement of the parties on the terms of the contract, the
acceptance by one of the offer made by the other. It is the concurrence of the minds of
the parties on the object and the cause which constitutes the contract. The area of
agreement must extend to all points that the parties deem material or there is no
consent at all.
To be valid, consent must meet the following requisites: (a) it should be intelligent, or
with an exact notion of the matter to which it refers; (b) it should be free and (c) it
should be spontaneous. Intelligence in consent is vitiated by error; freedom by
violence, intimidation or undue influence; spontaneity by fraud. [55]
In this jurisdiction, the general rule is that he who alleges fraud or mistake in a
transaction must substantiate his allegation as the presumption is that a person takes
ordinary care for his concerns and that private dealings have been entered into fairly
and regularly.[56] The exception to this rule is provided for under Article 1332 of the Civil
Code which provides that [w]hen one of the parties is unable to read, or if the contract is
in a language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained to the
former.
In this case, as private respondent is the one seeking to enforce the claimed
contract of sale, she bears the burden of proving that the terms of the agreement were
fully explained to Fortunato Ape who was an illiterate. This she failed to do. While she
claimed in her testimony that the contents of the receipt were made clear to Fortunato,
such allegation was debunked by Andres Flores himself when the latter took the witness
stand. According to Flores:

ATTY. TAN
Q Mr. Witness, that receipt is in English, is it not?
A Yes, sir.
Q When you prepared that receipt, were you aware that Fortunato Ape doesnt
know how to read and write English?
A Yes, sir, I know.
Q Mr. Witness, you said you were present at the time of the signing of that
alleged receipt of P30.00, correct?
A Yes, sir.
Q Where, in what place was this receipt signed?
A At the store.
Q At the time of the signing of this receipt, were there other person[s] present
aside from you, your mother-in-law and Fortunato Ape?
A In the store, yes, sir.
Q When you signed that document of course you acted as witness upon
request of your mother-in-law?
A No, this portion, I was the one who prepared that document.
Q Without asking of (sic) your mother-in-law, you prepared that document or
it was your mother-in-law who requested you to prepare that document
and acted as witness?
A She requested me to prepare but does not instructed (sic) me to act as
witness. It was our opinion that whenever I prepared the document, I
signed it as a witness.
Q Did it not occur to you to ask other witness to act on the side of Fortunato
Ape who did not know how to read and write English?
A It occurred to me.

Q But you did not bother to request a person who is not related to your
mother-in-law, considering that Fortunato Ape did not know how to read
and write English?
A The one who represented Fortunato Ape doesnt know also how to read and
write English. One a maid.
Q You mentioned that there [was another] person inside the store, under your
previous statement, when the document was signed, there [was another]
person in the store aside from you, your mother-in-law and Fortunato
Ape, is not true?
A That is true, there is one person, but that person doesnt know how to
read also.
Q Of course, Mr. Witness, since it occurred to you that there was need for
other witness to sign that document for Fortunato Ape, is it not a fact that
the Municipal Building is very near your house?
A Quite (near).
Q But you could readily proceed to the Municipal Building and request one
who is knowledgeable in English to act as witness?
A I think there is no need for that small receipt. So I dont bother myself to go.
Q You did not consider that receipt very important because you said that small
receipt?
A Yes, I know.[57]
As can be gleaned from Floress testimony, while he was very much aware of
Fortunatos inability to read and write in the English language, he did not bother to fully
explain to the latter the substance of the receipt (Exhibit G). He even dismissed the idea
of asking somebody else to assist Fortunato considering that a measly sum of thirty
pesos was involved. Evidently, it did not occur to Flores that the document he himself
prepared pertains to the transfer altogether of Fortunatos property to his mother-in-law.
It is precisely in situations such as this when the wisdom of Article 1332 of the Civil
Code readily becomes apparent which is to protect a party to a contract disadvantaged
by illiteracy, ignorance, mental weakness or some other handicap. [58]
In sum, we hold that petitioner is no longer entitled to the right of redemption under
Article 1632 of the Civil Code as Lot No. 2319 had long been partitioned among its co-

owners. This Court likewise annuls the contract of sale between Fortunato and private
respondent on the ground of vitiated consent.
WHEREFORE, premises considered, the decision dated 25 March 1998 of the
Court of Appeals is hereby REVERSED and SET ASIDE and the decision dated 11
March 1994 of the Regional Trial Court, Branch 58, San Carlos City, Negros Occidental,
dismissing both the complaint and the counterclaim, is hereby REINSTATED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

[1]

Penned by Associate Justice Artemon D. Luna with Associate Justices Godardo A. Jacinto and Roberto
A. Barrios, concurring; Rollo, pp. 29-48.

[2]

Records, Vol. II, pp. 213-214.

[3]

Braulio Lumayno passed away on 14 October 1988 per Notice of Death of (Plaintiff) Braulio Lumayno
and Motion for Substitution dated 21 February 1989 filed by counsel, Atty. Alexander J. Cawit;
Records, Vol. I, pp. 27-29.

[4]

Records, Vol. I, p. 5.

[5]

Records, Vol. I, p. 3.

[6]

Records, Vol. I, pp. 8-11.

[7]

Id., p. 16.

[8]

Exhibits Q, T, U, W, X, Y, Z, AA, CC, DD, EE, FF, GG, HH, II, JJ, KK, LL, TT, XX, YY, ZZ, AAA, BBB,
CCC, and DDD for respondent.

[9]

Records, Vol. I, pp. 118-120.

[10]

TSN, 7 March 1990, p. 51.

[11]

Rollo, p. 47.

[12]

Supra, note 10, p. 56; Exhibit D for respondent.

[13]

Ibid.

[14]

Exhibits NN, NN-1, NN-2, NN-3, OO, OO-1, OO-2, OO-3, PP, PP-1, PP-2, and PP-3 for respondent.

[15]

TSN, 24 October 1990, p. 7.

[16]

Id., p. 8.

[17]

Id., p. 12.

[18]

Ibid.

[19]

Id., pp. 13-14.

[20]

Id., pp. 14-15.

[21]

TSN, 27 November 1991.

[22]

Records, Vol. II, pp. 355-369.

[23]

Article 1350 of the Civil Code reads: In onerous contracts the cause is understood to be, for each
contracting party, the prestation or promise of a thing or service by the other; in remuneratory
ones, the service or benefit which is remunerated; and in contracts of pure beneficence, the mere
liberality of the benefactor.

[24]

Supra, note 22, pp. 362-363; emphasis in the original.

[25]

Ibid., p. 370.

[26]

CA Rollo, p. 93.

[27]

Rollo, pp. 47-48.

[28]

Rollo, pp. 45-46.

[29]

Rollo, p. 204; citing Limketkai Sons Milling, Inc. v. Court of Appeals, G.R. No. 118509, 29 March 1996,
255 SCRA 626.

[30]

G.R. No. 70569, 05 April 1988, 160 SCRA 672.

[31]

Rollo, p. 158.

[32]

G.R. No. L-15499, 28 February 1962, 4 SCRA 526.

[33]

Id. at p. 533.

[34]

G.R. No. L-21812, 29 April 1966, 16 SCRA 775.

[35]

G.R. No. L-45164, 16 March 1987, 148 SCRA 507.

[36]

Supra, note 30.

[37]

G.R. No. 26855, 17 April 1989, 172 SCRA 201.

[38]

G.R. No. 95256, 28 May 1991, 197 SCRA 606.

[39]

G.R. No. 101522, 28 May 1993, 222 SCRA 736.

[40]

G.R. No. L-38120, 27 June 1988, 162 SCRA 569.

[41]

Francisco v. Boiser, G.R. No. 137677, 31 May 2000, 332 SCRA 792, 800.

[42]

Uy v. Hon. Court of Appeals, G.R. No. 107439, 20 July 1995, 246 SCRA 711.

[43]

Felices v. Colegado, G.R. No. L-23374, 30 September 1970, 35 SCRA 173.

[44]

Supra., note 40, p. 573.

[45]

Basa, et al. v. Hon. Adres C. Aguilar, et al., G.R. No. L-30994, 30 September 1982, 117 SCRA 128.

[46]

Hernandez v. Hon. Pedro C. Quitain, et al., G.R. No. L-48457, 29 November 1988, 168 SCRA 92,
citing Caro v. Court of Appeals, G.R. No. L-46001, 25 March 1982, 113 SCRA 10.

[47]

TSN, 24 October 1990, pp. 30-34.

[48]

TSN, 25 July 1991, pp. 6-7.

[49]

Records, Vol. II, p. 68.

[50]

Caro v. Court of Appeals, G.R. No. L-46001, 25 March 1982, 113 SCRA 10, citing Hernandez v. Andal,
et al., 78 Phil. 196 (1947).

[51]

Dela Cruz v. Cruz, et al., G.R. No. L-27759, 17 April 1970, 32 SCRA 307.

[52]

Katipunan v. Katipunan, Jr., G.R. No. 132415, 30 January 2002, 375 SCRA 200.

[53]

Article 1458 of the Civil Code.

[54]

G.R. No. 125485, 13 September 2004.

[55]

Id., pp. 6-7.

[56]

Cayabyab v. Intermediate Appellate Court, G.R. No. 75120, 28 April 1994, 232 SCRA 1.

[57]

TSN, 3 October 1990, pp. 10-13.

[58]

Supra, note 56, p. 6.

Republic of the Philippines


Supreme Court
Manila
FIRST DIVISION
REYNALDO VILLANUEVA, G.R. NO. 154493
Petitioner,
Present:
PANGANIBAN, C.J.
(Chairperson)
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
PHILIPPINE NATIONAL BANK
(PNB),
Respondent. Promulgated:
December 6, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
AUSTRIA-MARTINEZ, J.:
The Petition for Review on Certiorari under Rule 45 before this Court assails the
January 29, 2002 Decision[1] and June 27, 2002 Resolution[2] of the Court of
Appeals (CA) in CA-G.R. CV No. 52008[3] which reversed and set aside the
September 14, 1995 Decision[4] of the Regional Trial Court, Branch 22, General
Santos City (RTC) in Civil Case No. 4553.

As culled from the records, the facts are as follows:


The Special Assets Management Department (SAMD) of the Philippine National
Bank (PNB) issued an advertisement for the sale thru bidding of certain PNB
properties inCalumpang, General Santos City, including Lot No. 17, covered by
TCT No. T-15042, consisting of 22,780 square meters, with an advertised floor
price of P1,409,000.00, and Lot No. 19, covered by TCT No. T-15036, consisting
of 41,190 square meters, with an advertised floor price of P2,268,000.00.[5] Bidding
was subject to the following conditions: 1) that cash bids be submitted not later
than April 27, 1989; 2) that said bids be accompanied by a 10% deposit in
managers or cashiers check; and 3) that all acceptable bids be subject to approval
by PNB authorities.
In a June 28, 1990 letter[6] to the Manager, PNB-General Santos Branch,
Reynaldo Villanueva (Villanueva) offered to purchase Lot Nos. 17 and 19
for P3,677,000.00. He also manifested that he was depositing P400,000.00 to show
his good faith but with the understanding that said amount may be treated as part of
the payment of the purchase price only when his offer is accepted by PNB. At the
bottom of said letter there appears an unsigned marginal note stating
that P400,000.00 was deposited into Villanuevas account (Savings Account No.
43612) with PNB-General Santos Branch. [7]
PNB-General Santos Branch forwarded the June 28, 1990 letter of Villanueva to
Ramon Guevara (Guevara), Vice President, SAMD. [8] On July 6, 1990, Guevara
informed Villanueva that only Lot No. 19 is available and that the asking
price therefor is P2,883,300.00.[9] Guevara further wrote:

If our quoted price is acceptable to you, please submit a revised offer to


purchase. Sale shall be subject to our Board of Directors approval and to other
terms and conditions imposed by the Bank on sale of acquired
assets. [10] (Emphasis ours)

Instead of submitting a revised offer, Villanueva merely inserted at the


bottom of Guevaras letter a July 11, 1990 marginal note, which reads:
C O N F O R M E:

PRICE OF P2,883,300.00 (downpayment of P600,000.00 and the balance payable in


two (2) years at quarterly amortizations.) [11]

Villanueva paid P200,000.00 to PNB which issued O.R. No. 16997 to


acknowledge receipt of the partial payment deposit on offer to purchase. [12] On the
dorsal portion of Official Receipt No. 16997, Villanueva signed a typewritten note,
stating:
This is a deposit made to show the sincerity of my purchase offer with the
understanding that it shall be returned without interest if my offer is not favorably
considered or be forfeited if my offer is approved but I fail/refuse to push through
the purchase.[13]

Also, on July 24, 1990, P380,000.00 was debited from Villanuevas Savings
Account No. 43612 and credited to SAMD.[14]
On October 11, 1990, however, Guevara wrote Villanueva that, upon orders
of the PNB Board of Directors to conduct another appraisal and public bidding of
Lot No. 19,SAMD is deferring negotiations with him over said property and
returning his deposit of P580,000.00.[15] Undaunted, Villanueva attempted to
deliver postdated checks covering the balance of the purchase price but PNB
refused the same.
Hence, Villanueva filed with the RTC a Complaint [16] for specific
performance and damages against PNB. In its September 14, 1995 Decision, the
RTC granted the Complaint, thus:
WHEREFORE, judgment is rendered in favor of the plaintiff and against the
defendant directing it to do the following:
1. To execute a deed of sale in favor of the plaintiff over Lot 19 comprising
41,190 square meters situated at Calumpang, General Santos City covered by
TCT No. T-15036 after payment of the balance in cash in the amount
of P2,303,300.00;
2. To pay the plaintiff P1,000,000.00 as moral damages; P500,000.00 as
attorneys fees, plus litigation expenses and costs of the suit.
SO ORDERED.[17]

The RTC anchored its judgment on the finding that there existed a perfected
contract of sale between PNB and Villanueva. It found:
The following facts are either admitted or undisputed:
xxx
The defendant through Vice-President Guevara negotiated with the plaintiff in
connection with the offer of the plaintiff to buy Lots 17 & 19. The offer of
plaintiff to buy, however, was accepted by the defendant only insofar as Lot 19 is
concerned as exemplified by its letter dated July 6, 1990 where the plaintiff
signified his concurrence after conferring with the defendants vice-president. The
conformity of the plaintiff was typewritten by the defendants own people where
the plaintiff accepted the price of P2,883,300.00. The defendant also issued a
receipt to the plaintiff on the same day when the plaintiff paid the amount
of P200,000.00 to complete the downpayment of P600,000.00 (Exhibit F &
Exhibit I). With this development, the plaintiff was also given the go signal by the
defendant to improve Lot 19 because it was already in effect sold to him and
because of that the defendant fenced the lot and completed his two houses on the
property.[18]

The RTC also pointed out that Villanuevas P580,000.00 downpayment was
actually in the nature of earnest money acceptance of which by PNB signified that
there was already a sale.[19] The RTC further cited contemporaneous acts of PNB
purportedly indicating that, as early as July 25, 1990, it considered Lot 19 already
sold, as shown by Guevaras July 25, 1990 letter (Exh. H)[20] to another interested
buyer.
PNB appealed to the CA which reversed and set aside the September 14, 1995 RTC
Decision, thus:
WHEREFORE, the appealed decision is REVERSED and SET ASIDE and
another rendered DISMISSING the complaint.
SO ORDERED.[21]

According to the CA, there was no perfected contract of sale because


the July 6, 1990 letter of Guevara constituted a qualified acceptance of the June 28,
1990 offer of Villanueva, and to which Villanueva replied on July 11, 1990 with a
modified offer. The CA held:
In the case at bench, consent, in respect to the price and manner of its payment, is
lacking. The record shows that appellant, thru Guevaras July 6, 1990 letter, made
a qualified acceptance ofappellees letter-offer dated June 28, 1990 by imposing an

asking price of P2,883,300.00 in cash for Lot 19. The letter dated July 6, 1990
constituted a counter-offer (Art. 1319, Civil Code), to which appellee made a new
proposal, i.e., to pay the amount of P2,883,300.00 in staggered amounts, that
is, P600,000.00 as downpayment and the balance within two years in quarterly
amortizations.
A qualified acceptance, or one that involves a new proposal, constitutes a counteroffer and a rejection of the original offer (Art. 1319, id.). Consequently, when
something is desired which is not exactly what is proposed in the offer, such
acceptance is not sufficient to generate consent because any modification or
variation from the terms of the offer annuls the offer (Tolentino, Commentaries
and Jurisprudence on the Civil Code of the Philippines, 6 th ed., 1996, p. 450, cited
in ABS-CBN Broadcasting Corporation v. Court of Appeals, et al., 301 SCRA
572).
Appellees new proposal, which constitutes a counter-offer, was not accepted by
appellant, its board having decided to have Lot 19 reappraised and sold thru
public bidding.
Moreover, it was clearly stated in Guevaras July 6, 1990 letter that the sale shall
be subject to our Board of Directors approval and to other terms and conditions
imposed by the Bank on sale of acquired assets.[22]

Villanuevas Motion for Reconsideration[23] was denied by the CA in its Resolution


of June 27, 2002.
Petitioner Villanueva now assails before this Court the January 29, 2002 Decision
and June 27, 2002 Resolution of the CA. He assigns five issues which may be
condensed into two: first, whether a perfected contract of sale exists between
petitioner and respondent PNB; and second, whether the conduct and actuation of
respondent constitutes bad faith as to entitle petitioner to moral and exemplary
damages and attorneys fees.
The Court sustains the CA on both issues.

Contracts of sale are perfected by mutual consent whereby the seller obligates
himself, for a price certain, to deliver and transfer ownership of a specified thing or
right to the buyer over which the latter agrees. [24] Mutual consent being a state of
mind, its existence may only be inferred from the confluence of two acts of the
parties: an offer certain as to the object of the contract and its consideration, and an
acceptance of the offer which is absolute in that it refers to the exact object and
consideration embodied in said offer.[25]While it is impossible to expect the
acceptance to echo every nuance of the offer, it is imperative that it assents to those
points in the offer which, under the operative facts of each contract, are not only
material but motivating as well. Anything short of that level of mutuality produces
not a contract but a mere counter-offer awaiting acceptance. [26] More particularly
on the matter of the consideration of the contract, the offer and its acceptance must
be unanimous both on the rate of the payment and on its term. An acceptance of an
offer which agrees to the rate but varies the term is ineffective. [27]
To determine whether there was mutual consent between the parties herein, it is
necessary to retrace each offer and acceptance they made.
Respondent began with an invitation to bid issued in April 1989 covering
several of its acquired assets in Calumpang, General Santos City, including Lot No.
19 for which the floor price was P2,268,000.00. The offer was subject to the
condition that sealed bids, accompanied by a 10% deposit in managers or cashiers
check, be submitted not later than 10 oclock in the morning of April 27, 1989.
On June 28, 1990, petitioner made an offer to buy Lot No. 17 and Lot No.
19 for an aggregate price of P3,677,000.00. It is noted that this offer exactly
corresponded to the April 1989 invitation to bid issued by respondent in that the
proposed aggregate purchase price for Lot Nos. 17 and 19 matched the advertised
floor prices for the same properties. However, it cannot be said that the June 28,
1990 letter of petitioner was an effective acceptance of the April 1989 invitation to
bid for, by its express terms, said invitation lapsed on April 27, 1989.[28] More than
that, the April 1989 invitation was subject to the condition that all sealed bids
submitted and accepted be approved by respondents higher authorities.
Thus, the June 28, 1990 letter of petitioner was an offer to buy independent
of the April 1989 invitation to bid. It was a definite offer as it identified with
certainty the properties sought to be purchased and fixed the contract price.
However, respondent replied to the June 28, 1990 offer with a July 6,
1990 letter that only Lot No. 19 is available and that the price therefor is

now P2,883,300.00. As the CA pointed out, this reply was certainly not an
acceptance of the June 28, 1990 offer but a mere counter-offer. It deviated from the
original offer on three material points: first, the object of the proposed sale is now
only Lot No. 19 rather than Lot Nos. 17 and 19; second, the area of the property to
be sold is still 41,190 sq. m but an 8,797-sq. m portion is now part of a public road;
and third, the consideration is P2,883,300 for one lot rather than P3,677,000.00 for
two lots. More important, this July 6, 1990 counter-offer imposed two conditions:
one, that petitioner submit a revised offer to purchase based on the quoted price;
and two, that the sale of the property be approved by the Board of Directors and
subjected to other terms and conditions imposed by the Bank on the sale of
acquired assets.
In reply to the July 6, 1990 counter-offer, petitioner signed his July 11,
1990 conformity to the quoted price of P2,883,300.00 but inserted the term
downpayment of P600,000.00 and the balance payable in two years at quarterly
amortization. The CA viewed this July 11, 1990 conformity not as an acceptance of
the July 6, 1990 counter-offer but a further counter-offer for, while petitioner
accepted the P2,883,300.00 price for Lot No. 19, he qualified his acceptance by
proposing a two-year payment term.
Petitioner does not directly impugn such reasoning of the CA. He merely
questions it for taking up the issue of whether his July 11, 1990 conformity
modified the July 6, 1990 counter-offer as this was allegedly never raised during
the trial nor on appeal.[29]
Such argument is not well taken. From beginning to end, respondent denied
that a contract of sale with petitioner was ever perfected. [30] Its defense was broad
enough to encompass every issue relating to the concurrence of the elements of
contract, specifically on whether it consented to the object of the sale and its
consideration. There was nothing to prevent the CA from inquiring into the offers
and counter-offers of the parties to determine whether there was indeed a perfected
contract between them.
Moreover, there is merit in the ruling of the CA that the July 11,
1990 marginal note was a further counter-offer which did not lead to the perfection
of a contract of sale between the parties. Petitioners own June 28, 1990 offer
quoted the price of P3,677,000.00 for two lots but was silent on the term of
payment. Respondents July
6,
1990 counter-offer
quoted
the
price
of P2,833,300.00 and was also silent on the term of payment. Up to that point, the
term or schedule of payment was not on the negotiation table. Thus,when

petitioner suddenly introduced a term of payment in his July 11, 1990 counteroffer, he interjected into the negotiations a new substantial matter on which the
parties had no prior discussion and over which they must yet agree.
[31]
Petitioners July 11, 1990 counter-offer, therefore, did not usher the parties
beyond the negotiation stage of contract making towards its perfection. He made a
counter-offer that required acceptance by respondent.
As it were, respondent, through its Board of Directors, did not accept this
last counter-offer. As stated in its October 11, 1990 letter to petitioner, respondent
ordered the reappraisal of the property, in clear repudiation not only of the
proposed price but also the term of payment thereof.
Petitioner insists, however, that the October 11, 1990 repudiation was
belated as respondent had already agreed to his July 11, 1990 counter-offer when it
accepted hisdownpayment or earnest money of P580,000.00.[32] He cites Article
1482 of the Civil Code where it says that acceptance of downpayment or earnest
money presupposes the perfection of a contract.
Not so. Acceptance of petitioners payments did not amount to an implied
acceptance of his last counter-offer.
To begin with, PNB-General Santos Branch, which accepted
petitioners P380,000.00 payment, and PNB-SAMD, which accepted
his P200,000.00 payment, had no authority to bind respondent to a contract of sale
with petitioner.[33] Petitioner is well aware of this. To recall, petitioner sent his June
28, 1990 offer to PNB-General Santos Branch. Said branch did not act on his offer
except to endorse it to Guevarra. Thereafter, petitioner transacted directly
with Guevarra. Petitioner then cannot pretend that PNB-General Santos Branch
had authority to accept his July 11, 1990 counter-offer by merely accepting
his P380,000.00 payment.
Neither did SAMD have authority to bind PNB. In its April 1989 invitation
to bid, as well as its July 6, 1990 counter-offer, SAMD was always careful to
emphasize that whatever offer is made and entertained will be subject to the
approval of respondents higher authorities. This is a reasonable disclaimer
considering the corporate nature of respondent. [34]
Moreover, petitioners payment of P200,000.00 was with the clear understanding
that his July 11, 1990 counter-offer was still subject to approval by
respondent. This is borne out by respondents Exhibits 2-a and 2-b, which
petitioner never controverted, where it appears on the dorsal portion of O.R.

No. 16997 that petitioner acceded that the amount he paid was a mere x x x deposit
made to show the sincerity of [his] purchase offer with the understanding that it
shall be returned without interest if [his] offer is not favorably considered x x x.
[35]
This was a clear acknowledgment on his part that there was yet no perfected
contract with respondent and that even with the payments he had advanced, his
July 11, 1990 counter-offer was still subject to consideration by respondent.
Not only that, in the same Exh. 2-a as well as in his June 28, 1990 offer, petitioner
referred to his payments as mere deposits. Even O.R. No. 16997 refers to
petitioners payment as mere deposit. It is only in the debit notice issued by PNBGeneral Santos Branch where petitioners payment is referred to as downpayment.
But then, as we said, PNB-General Santos Branch has no authority to bind
respondent by its interpretation of the nature of the payment made by petitioner.
In sum, the amounts paid by petitioner were not in the nature of downpayment or
earnest money but were mere deposits or proof of his interest in the purchase of
Lot No. 19. Acceptance of said amounts by respondent does not presuppose
perfection of any contract.[36]
It must be noted that petitioner has expressly admitted that he had withdrawn the
entire amount of P580,000.00 deposit from PNB-General Santos Branch.[37]
With the foregoing disquisition, the Court foregoes resolution of the second issue
as it is evident that respondent acted well within its rights when it rejected the last
counter-offer of petitioner.
In fine, petitioners petition lacks merit.
WHEREFORE, the petition is DENIED. The Decision dated January 29, 2002 and
Resolution dated June 27, 2002 of the Court of Appeals are AFFIRMED.
No costs.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN

Chief Justice
Chairperson

CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.


Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

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

[1]

Penned
by Associate
Justice Edgardo P.
Cruz
and
concurred
in
by
Justices Hilarion L. Aquino and Amelita G. Tolentino.
[2]
CA rollo, p. 132.
[3]
Entitled Reynaldo Villanueva, Plaintiff-Appellee v. Philippine National Bank, Defendant-Appellant.
[4]
Records, p. 151.
[5]
Exhibit B, Plaintiffs Folder of Exhibits, p. 2.
[6]
Exhibit C, id. at 3.
[7]
Exhibit C-1, id.
[8]
Exhibit D, id. at 5.
[9]
Exhibit F, id. at 7.
[10]
Id.
[11]
Exhibit F-1, id.
[12]
Exhibit E, id. at 6.
[13]
Exhibit 2-a and 2-b, id. (dorsal portion).
[14]
Exhibit G, id. at 8.
[15]
Exhibit J, id. at 12.
[16]
Records, p. 1.
[17]
Id. at 157-158.
[18]
Id. at 155.

Associate

[19]

Id. at 156.
Plaintiffs Folder of Exhibits, p. 9.
[21]
CA rollo, p. 105.
[22]
Id. at 102-103.
[23]
Id. at 112.
[24]
Blas v. Angeles-Hutalla, G.R. No. 155594. September 27, 2004, 439 SCRA 273, 292.
[25]
Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R. No. 143896, July 8, 2005, 463 SCRA 64,
77; San Lorenzo Development Corporation v. Court of Appeals , G.R. No. 124242, January 21, 2005, 449
SCRA 99, 111.
[26]
Swedish Match, et al. v. Court of Appeals, G.R. No. 128120, October 20, 2004, 441 SCRA 1, 19.
[27]
Marnelego v. Banco Filipino Savings and Mortgage Bank, G.R. No. 161524, January 27, 2006, 480 SCRA 399,
408.
[28]
Villegas v. Court of Appeals, G.R. No. 111495, August 18, 2006.
[29]
Rollo, pp. 27-28.
[30]
Records, pp. 23 and 38.
[31]
Marnelego v. Banco Filipino Savings and Mortgage Bank, supra note 27.
[20]

[32]

Rollo, pp. 28-30.


Firme v. Bukal Enterprises and Development Corporation, G.R. No. 146608, October 23, 2003, 414 SCRA 190,
207.
[34]
Development Bank of the Philippines v. Ong, G.R. Nos. 144661 and 144797, June 15, 2005, 460 SCRA 170,
183; Spouses Firme v. Bukal, supra note 33.
[35]
See note 13.
[36]
San Miguel Properties Philippines, Inc. v. Spouses Huang, 391 Phil. 636, 646, (2000), citing Navarro v. Sugar
Producers Cooperative Marketing Association, Inc., 111 Phil. 820 (1961); Toyota Shaw, Inc. v. Court of
Appeals, 314 Phil. 201, 214 (1995); Velasco v. Court of Appeals, 151-A Phil. 868 (1973).
[37]
TSN, October 18, 1997, p. 27.
[33]

G.R. No. 126083

July 12, 2006

ANTONIO R. CORTES (in his capacity as Administrator of the estate of Claro S. Cortes), petitioner,
vs.
HON. COURT OF APPEALS and VILLA ESPERANZA DEVELOPMENT CORPORATION, respondents.
DECISION
YNARES-SANTIAGO, J.:
The instant petition for review seeks the reversal of the June 13, 1996 Decision 1 of the Court of Appeals in CA-G.R. CV No. 47856,
setting aside the June 24, 1993 Decision2 of the Regional Trial Court of Makati, Branch 138, which rescinded the contract of sale
entered into by petitioner Antonio Cortes (Cortes) and private respondent Villa Esperanza Development Corporation (Corporation).
The antecedents show that for the purchase price of P3,700,000.00, the Corporation as buyer, and Cortes as seller, entered into a
contract of sale over the lots covered by Transfer Certificate of Title (TCT) No. 31113-A, TCT No. 31913-A and TCT No. 32013-A,
located at Baclaran, Paraaque, Metro Manila. On various dates in 1983, the Corporation advanced to Cortes the total sum of
P1,213,000.00. Sometime in September 1983, the parties executed a deed of absolute sale containing the following terms: 3
1. Upon execution of this instrument, the Vendee shall pay unto the Vendor sum of TWO MILLION AND TWO HUNDRED
THOUSAND (P2,200,000.00) PESOS, Philippine Currency, less all advances paid by the Vendee to the Vendor in
connection with the sale;
2. The balance of ONE MILLION AND FIVE HUNDRED THOUSAND [P1,500,000.00] PESOS, Phil. Currency shall be
payable within ONE (1) YEAR from date of execution of this instrument, payment of which shall be secured by an
irrevocable standby letter of credit to be issued by any reputable local banking institution acceptable to the Vendor.
xxxx
4. All expense for the registration of this document with the Register of Deeds concerned, including the transfer tax, shall
be divided equally between the Vendor and the Vendee. Payment of the capital gains shall be exclusively for the account
of the Vendor; 5% commission of Marcosa Sanchez to be deducted upon signing of sale.4
Said Deed was retained by Cortes for notarization.
On January 14, 1985, the Corporation filed the instant case5 for specific performance seeking to compel Cortes to deliver the TCTs
and the original copy of the Deed of Absolute Sale. According to the Corporation, despite its readiness and ability to pay the
purchase price, Cortes refused delivery of the sought documents. It thus prayed for the award of damages, attorney's fees and
litigation expenses arising from Cortes' refusal to deliver the same documents.
In his Answer with counterclaim,6 Cortes claimed that the owner's duplicate copy of the three TCTs were surrendered to the
Corporation and it is the latter which refused to pay in full the agreed down payment. He added that portion of the subject property is
occupied by his lessee who agreed to vacate the premises upon payment of disturbance fee. However, due to the Corporation's
failure to pay in full the sum of P2,200,000.00, he in turn failed to fully pay the disturbance fee of the lessee who now refused to pay
monthly rentals. He thus prayed that the Corporation be ordered to pay the outstanding balance plus interest and in the alternative,
to cancel the sale and forfeit the P1,213,000.00 partial down payment, with damages in either case.
On June 24, 1993, the trial court rendered a decision rescinding the sale and directed Cortes to return to the Corporation the
amount of P1,213,000.00, plus interest. It ruled that pursuant to the contract of the parties, the Corporation should have fully paid
the amount of P2,200,000.00 upon the execution of the contract. It stressed that such is the law between the parties because the
Corporation failed to present evidence that there was another agreement that modified the terms of payment as stated in the
contract. And, having failed to pay in full the amount of P2,200,000.00 despite Cortes' delivery of the Deed of Absolute Sale and the
TCTs, rescission of the contract is proper.
In its motion for reconsideration, the Corporation contended that the trial court failed to consider their agreement that it would pay
the balance of the down payment when Cortes delivers the TCTs. The motion was, however, denied by the trial court holding that
the rescission should stand because the Corporation did not act on the offer of Cortes' counsel to deliver the TCTs upon payment of
the balance of the down payment. Thus:
The Court finds no merit in the [Corporation's] Motion for Reconsideration. As stated in the decision sought to be
reconsidered, [Cortes'] counsel at the pre-trial of this case, proposed that if [the Corporation] completes the down

payment agreed upon and make arrangement for the payment of the balances of the purchase price, [Cortes] would sign
the Deed of Sale and turn over the certificate of title to the [Corporation]. [The Corporation] did nothing to comply with its
undertaking under the agreement between the parties.
WHEREFORE, in view of the foregoing considerations, the Motion for Reconsideration is hereby DENIED.
SO ORDERED.7
On appeal, the Court of Appeals reversed the decision of the trial court and directed Cortes to execute a Deed of Absolute Sale
conveying the properties and to deliver the same to the Corporation together with the TCTs, simultaneous with the Corporation's
payment of the balance of the purchase price of P2,487,000.00. It found that the parties agreed that the Corporation will fully pay
the balance of the down payment upon Cortes' delivery of the three TCTs to the Corporation. The records show that no such
delivery was made, hence, the Corporation was not remiss in the performance of its obligation and therefore justified in not paying
the balance. The decretal portion thereof, provides:
WHEREFORE, premises considered, [the Corporation's] appeal is GRANTED. The decision appealed from is hereby
REVERSED and SET ASIDE and a new judgment rendered ordering [Cortes] to execute a deed of absolute sale
conveying to [the Corporation] the parcels of land subject of and described in the deed of absolute sale, Exhibit D.
Simultaneously with the execution of the deed of absolute sale and the delivery of the corresponding owner's duplicate
copies of TCT Nos. 31113-A, 31931-A and 32013-A of the Registry of Deeds for the Province of Rizal, Metro Manila,
District IV, [the Corporation] shall pay [Cortes] the balance of the purchase price of P2,487,000.00. As agreed upon in
paragraph 4 of the Deed of Absolute Sale, Exhibit D, under terms and conditions, "All expenses for the registration of this
document (the deed of sale) with the Register of Deeds concerned, including the transfer tax, shall be divided equally
between [Cortes and the Corporation]. Payment of the capital gains shall be exclusively for the account of the Vendor; 5%
commission of Marcosa Sanchez to be deducted upon signing of sale." There is no pronouncement as to costs.
SO ORDERED.8
Cortes filed the instant petition praying that the decision of the trial court rescinding the sale be reinstated.
There is no doubt that the contract of sale in question gave rise to a reciprocal obligation of the parties. Reciprocal obligations are
those which arise from the same cause, and which each party is a debtor and a creditor of the other, such that the obligation of one
is dependent upon the obligation of the other. They are to be performed simultaneously, so that the performance of one is
conditioned upon the simultaneous fulfillment of the other.9
Article 1191 of the Civil Code, states:
ART. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.
xxxx
As to when said failure or delay in performance arise, Article 1169 of the same Code provides that
ART. 1169
xxxx
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the
other begins. (Emphasis supplied)
The issue therefore is whether there is delay in the performance of the parties' obligation that would justify the rescission of the
contract of sale. To resolve this issue, we must first determine the true agreement of the parties.
The settled rule is that the decisive factor in evaluating an agreement is the intention of the parties, as shown not necessarily by the
terminology used in the contract but by their conduct, words, actions and deeds prior to, during and immediately after executing the
agreement. As such, therefore, documentary and parol evidence may be submitted and admitted to prove such intention. 10
In the case at bar, the stipulation in the Deed of Absolute Sale was that the Corporation shall pay in full the P2,200,000.00 down
payment upon execution of the contract. However, as correctly noted by the Court of Appeals, the transcript of stenographic notes

reveal Cortes' admission that he agreed that the Corporation's full payment of the sum of P2,200,000.00 would depend upon his
delivery of the TCTs of the three lots. In fact, his main defense in the Answer is that, he performed what is incumbent upon him by
delivering to the Corporation the TCTs and the carbon duplicate of the Deed of Absolute Sale, but the latter refused to pay in full the
down payment.11 Pertinent portion of the transcript, reads:
[Q] Now, why did you deliver these three titles to the plaintiff despite the fact that it has not been paid in full the agreed
down payment?
A Well, the broker told me that the down payment will be given if I surrender the titles.
Q Do you mean to say that the plaintiff agreed to pay in full the down payment of P2,200,000.00 provided you surrender
or entrust to the plaintiff the titles?
A Yes, sir.12
What further confirmed the agreement to deliver the TCTs is the testimony of Cortes that the title of the lots will be transferred in the
name of the Corporation upon full payment of the P2,200,000.00 down payment. Thus
ATTY. ANTARAN
Q Of course, you have it transferred in the name of the plaintiff, the title?
A Upon full payment.
xxxx
ATTY. SARTE
Q When you said upon full payment, are you referring to the agreed down payment of P2,200,000.00?
A Yes, sir.13
By agreeing to transfer title upon full payment of P2,200,000.00, Cortes' impliedly agreed to deliver the TCTs to the Corporation in
order to effect said transfer. Hence, the phrase "execution of this instrument" 14 as appearing in the Deed of Absolute Sale, and
which event would give rise to the Corporation's obligation to pay in full the amount of P2,200,000.00, can not be construed as
referring solely to the signing of the deed. The meaning of "execution" in the instant case is not limited to the signing of a contract
but includes as well the performance or implementation or accomplishment of the parties' agreement. 15 With the transfer of titles as
the corresponding reciprocal obligation of payment, Cortes' obligation is not only to affix his signature in the Deed, but to set into
motion the process that would facilitate the transfer of title of the lots, i.e., to have the Deed notarized and to surrender the original
copy thereof to the Corporation together with the TCTs.
Having established the true agreement of the parties, the Court must now determine whether Cortes delivered the TCTs and the
original Deed to the Corporation. The Court of Appeals found that Cortes never surrendered said documents to the Corporation.
Cortes testified that he delivered the same to Manny Sanchez, the son of the broker, and that Manny told him that her mother,
Marcosa Sanchez, delivered the same to the Corporation.
Q Do you have any proof to show that you have indeed surrendered these titles to the plaintiff?
A Yes, sir.
Q I am showing to you a receipt dated October 29, 1983, what relation has this receipt with that receipt that you have
mentioned?
A That is the receipt of the real estate broker when she received the titles.
Q On top of the printed name is Manny Sanchez, there is a signature, do you know who is that Manny Sanchez?
A That is the son of the broker.

xxxx
Q May we know the full name of the real estate broker?
A Marcosa Sanchez
xxxx
Q Do you know if the broker or Marcosa Sanchez indeed delivered the titles to the plaintiff?
A That is what [s]he told me. She gave them to the plaintiff.
x x x x.16
ATTY. ANTARAN
Q Are you really sure that the title is in the hands of the plaintiff?
xxxx
Q It is in the hands of the broker but there is no showing that it is in the hands of the plaintiff?
A Yes, sir.
COURT
Q How do you know that it was delivered to the plaintiff by the son of the broker?
A The broker told me that she delivered the title to the plaintiff.
ATTY. ANTARAN
Q Did she not show you any receipt that she delivered to [Mr.] Dragon17 the title without any receipt?
A I have not seen any receipt.
Q So, therefore, you are not sure whether the title has been delivered to the plaintiff or not. It is only upon the allegation of
the broker?
A Yes, sir.18
However, Marcosa Sanchez's unrebutted testimony is that, she did not receive the TCTs. She also denied knowledge of delivery
thereof to her son, Manny, thus:
Q The defendant, Antonio Cortes testified during the hearing on March 11, 1986 that he allegedly gave you the title to the
property in question, is it true?
A I did not receive the title.
Q He likewise said that the title was delivered to your son, do you know about that?
A I do not know anything about that.19
What further strengthened the findings of the Court of Appeals that Cortes did not surrender the subject documents was the offer of
Cortes' counsel at the pre-trial to deliver the TCTs and the Deed of Absolute Sale if the Corporation will pay the balance of the down
payment. Indeed, if the said documents were already in the hands of the Corporation, there was no need for Cortes' counsel to
make such offer.

Since Cortes did not perform his obligation to have the Deed notarized and to surrender the same together with the TCTs, the trial
court erred in concluding that he performed his part in the contract of sale and that it is the Corporation alone that was remiss in the
performance of its obligation. Actually, both parties were in delay. Considering that their obligation was reciprocal, performance
thereof must be simultaneous. The mutual inaction of Cortes and the Corporation therefore gave rise to a compensation morae or
default on the part of both parties because neither has completed their part in their reciprocal obligation. 20 Cortes is yet to deliver the
original copy of the notarized Deed and the TCTs, while the Corporation is yet to pay in full the agreed down payment of
P2,200,000.00. This mutual delay of the parties cancels out the effects of default, 21 such that it is as if no one is guilty of delay.22
We find no merit in Cortes' contention that the failure of the Corporation to act on the proposed settlement at the pre-trial must be
construed against the latter. Cortes argued that with his counsel's offer to surrender the original Deed and the TCTs, the Corporation
should have consigned the balance of the down payment. This argument would have been correct if Cortes actually surrendered the
Deed and the TCTs to the Corporation. With such delivery, the Corporation would have been placed in default if it chose not to pay
in full the required down payment. Under Article 1169 of the Civil Code, from the moment one of the parties fulfills his obligation,
delay by the other begins. Since Cortes did not perform his part, the provision of the contract requiring the Corporation to pay in full
the down payment never acquired obligatory force. Moreover, the Corporation could not be faulted for not automatically heeding to
the offer of Cortes. For one, its complaint has a prayer for damages which it may not want to waive by agreeing to the offer of
Cortes' counsel. For another, the previous representation of Cortes that the TCTs were already delivered to the Corporation when no
such delivery was in fact made, is enough reason for the Corporation to be more cautious in dealing with him.
The Court of Appeals therefore correctly ordered the parties to perform their respective obligation in the contract of sale, i.e., for
Cortes to, among others, deliver the necessary documents to the Corporation and for the latter to pay in full, not only the down
payment, but the entire purchase price. And since the Corporation did not question the Court of Appeal's decision and even prayed
for its affirmance, its payment should rightfully consist not only of the amount of P987,000.00, representing the balance of the
P2,200,000.00 down payment, but the total amount of P2,487,000.00, the remaining balance in the P3,700,000.00 purchase price.
WHEREFORE, the petition is DENIED and the June 13, 1996 Decision of the Court of Appeals in CA-G.R. CV No. 47856,
is AFFIRMED.
SO ORDERED.
Panganiban, C.J., Austria-Martinez, Callejo, Sr., Chico-Nazario, J.J., concur.

Footnotes
Penned by Associate Justice Eduardo G. Montenegro and concurred in by Associate Justices Emeterio C. Cui and Jose
C. De La Rama; rollo, pp. 33-51.
1

Penned by Judge Fernando P. Agdamag; rollo, pp. 66-68.

Complaint, records, pp. 1-2.

Exhibit "D," records, p. 10.

Records, pp. 1-4.

Id. at 35-39.

Id. at 102.

Id. at 50-51. Petitioner filed a motion for reconsideration but was denied on August 30, 1996; rollo, p. 53.

Asuncion v. Evangelista, 375 Phil. 328, 356 (1999), citing Tolentino, Arturo, Commentaries and Jurisprudence on the
Civil Code of the Phil., Vol. IV, 1985 edition, p. 175.
9

10

Agas v. Sabico, G.R. No. 156447, April 26, 2005, 457 SCRA 263, 275.

11

Rollo, p. 62.

12

TSN, March 11, 1986, records, p. 324.

13

Id. at 373.

"1. Upon execution of this instrument, the Vendee shall pay unto the Vendor sum of TWO MILLION AND TWO
HUNDRED THOUSAND (P2,200,000.00) PESOS, Philippine Currency, less all advances paid by the Vendee to the
Vendor in connection with the sale; (Emphasis supplied)
14

Eastern Assurance & Surety Corporation v. Intermediate Appellate Court, G.R. No. 69450, November 22, 1988, 179
SCRA 561, 567.
15

16

TSN, March 11, 1988, records, 321-324.

Mr. Renato Dragon is the President of respondent Corporation and the signatory to the Deed of Sale. See records, p.
11.
17

18

TSN, March 11, 1988, records, pp. 367-369.

19

TSN, October 27, 1989, records, pp. 389-390.

20

Paras, Civil Code, Book IV, Fourteenth edition, p. 123.

21

Vitug, Compendium of Civil Law and Jurisprudence, 1993 edition, p. 482.

22

Paras, supra.

G.R. No. 170479

February 18, 2008

ANDRE T. ALMOCERA, petitioner,


vs.
JOHNNY ONG, respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which seeks to set aside the
Decision1 of the Court of Appeals dated 18 July 2005 in CA-G.R. CV No. 75610 affirming in toto the Decision 2 of Branch 11 of the
Regional Trial Court (RTC) of Cebu City in Civil Case No. CEB-23687 and its Resolution 3 dated 16 November 2005 denying
petitioners motion for reconsideration. The RTC decision found petitioner Andre T. Almocera, Chairman and Chief Executive Officer
of First Builder Multi-Purpose Cooperative (FBMC), solidarily liable with FMBC for damages.
Stripped of non-essentials, the respective versions of the parties have been summarized by the Court of Appeals as follows:
Plaintiff Johnny Ong tried to acquire from the defendants a "townhome" described as Unit No. 4 of Atrium Townhomes in
Cebu City. As reflected in a Contract to Sell, the selling price of the unit was P3,400,000.00 pesos, for a lot area of eightyeight (88) square meters with a three-storey building. Out of the purchase price, plaintiff was able to pay the amount
of P1,060,000.00. Prior to the full payment of this amount, plaintiff claims that defendants Andre Almocera and First
Builders fraudulently concealed the fact that before and at the time of the perfection of the aforesaid contract to sell, the
property was already mortgaged to and encumbered with the Land Bank of the Philippines (LBP). In addition, the
construction of the house has long been delayed and remains unfinished. On March 13, 1999, Lot 4-a covered by TCT
No. 148818, covering the unit was advertised in a local tabloid for public auction for foreclosure of mortgage. It is the
assertion of the plaintiff that had it not for the fraudulent concealment of the mortgage and encumbrance by defendants,
he would have not entered into the contract to sell.
On the other hand, defendants assert that on March 20, 1995, First Builders Multi-purpose Coop. Inc., borrowed money in
the amount of P500,000.00 from Tommy Ong, plaintiffs brother. This amount was used to finance the documentation
requirements of the LBP for the funding of the Atrium Town Homes. This loan will be applied in payment of one (1) town
house unit which Tommy Ong may eventually purchase from the project. When the project was under way, Tommy Ong
wanted to buy another townhouse for his brother, Johnny Ong, plaintiff herein, which then, the amount of P150,000.00
was given as additional partial payment. However, the particular unit was not yet identified. It was only on January 10,
1997 that Tommy Ong identified Unit No. 4 plaintiffs chosen unit and again tendered P350,000.00 as his third partial
payment. When the contract to sell for Unit 4 was being drafted, Tommy Ong requested that another contract to sell
covering Unit 5 be made so as to give Johnny Ong another option to choose whichever unit he might decide to have.
When the construction was already in full blast, defendants were informed by Tommy Ong that their final choice was Unit
5. It was only upon knowing that the defendants will be selling Unit 4 to some other persons for P4million that plaintiff
changed his choice from Unit 5 to Unit 4.4
In trying to recover the amount he paid as down payment for the townhouse unit, respondent Johnny Ong filed a complaint for
Damages before the RTC of Cebu City, docketed as Civil Case No. CEB-23687, against defendants Andre T. Almocera and FBMC
alleging that defendants were guilty of fraudulent concealment and breach of contract when they sold to him a townhouse unit
without divulging that the same, at the time of the perfection of their contract, was already mortgaged with the Land Bank of the
Philippines (LBP), with the latter causing the foreclosure of the mortgage and the eventual sale of the townhouse unit to a third
person.
In their Answer, defendants denied liability claiming that the foreclosure of the mortgage on the townhouse unit was caused by the
failure of complainant Johnny Ong to pay the balance of the price of said townhouse unit.
After the pre-trial conference was terminated, trial on the merits ensued. Respondent and his brother, Thomas Y. Ong, took the
witness stand. For defendants, petitioner testified.
In a Decision dated 20 May 2002, the RTC disposed of the case in this manner:
WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered in this case in favor of the plaintiff and
against the defendants:
(a) Ordering the defendants to solidarily pay to the plaintiff the sum of P1,060,000.00, together with a legal interest
thereon at 6% per annum from April 21, 1999 until its full payment before finality of the judgment. Thereafter, if the amount

adjudged remains unpaid, the interest rate shall be 12% per annum computed from the time when the judgment becomes
final and executory until fully satisfied;
(b) Ordering the defendants to solidarily pay to the plaintiff the sum of P100,000.00 as moral damages, the sum
of P50,000.00 as attorneys fee and the sum of P15,619.80 as expenses of litigation; and
(c) Ordering the defendants to pay the cost of this suit.5
The trial court ruled against defendants for not acting in good faith and for not complying with their obligations under their contract
with respondent. In the Contract to Sell6 involving Unit 4 of the Atrium Townhomes, defendants agreed to sell said townhouse to
respondent for P3,400,000.00. The down payment wasP1,000,000.00, while the balance of P2,400,000.00 was to be paid in full
upon completion, delivery and acceptance of the townhouse. Under the contract which was signed on 10 January 1997, defendants
agreed to complete and convey to respondent the unit within six months from the signing thereof.
The trial court found that respondent was able to make a down payment or partial payment of P1,060,000.00 and that the
defendants failed to complete the construction of, as well as deliver to respondent, the townhouse within six months from the signing
of the contract. Moreover, respondent was not informed by the defendants at the time of the perfection of their contract that the
subject townhouse was already mortgaged to LBP. The mortgage was foreclosed by the LBP and the townhouse was eventually
sold at public auction. It said that defendants were guilty of fraud in their dealing with respondent because the mortgage was not
disclosed to respondent when the contract was perfected. There was also non-compliance with their obligations under the contract
when they failed to complete and deliver the townhouse unit at the agreed time. On the part of respondent, the trial court declared
he was justified in suspending further payments to the defendants and was entitled to the return of the down payment.
Aggrieved, defendants appealed the decision to the Court of Appeals assigning the following as errors:
1. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF HAS A VALID CAUSE OF ACTION FOR DAMAGES
AGAINST DEFENDANT(S).
2. THE LOWER COURT ERRED IN HOLDING THAT DEFENDANT ANDRE T. ALMOCERA IS SOLIDARILY LIABLE
WITH THE COOPERATIVE FOR THE DAMAGES TO THE PLAINTIFF.7
The Court of Appeals ruled that the defendants incurred delay when they failed to deliver the townhouse unit to the respondent
within six months from the signing of the contract to sell. It agreed with the finding of the trial court that the nonpayment of the
balance of P2.4M by respondent to defendants was proper in light of such delay and the fact that the property subject of the case
was foreclosed and auctioned. It added that the trial court did not err in giving credence to respondents assertion that had he known
beforehand that the unit was used as collateral with the LBP, he would not have proceeded in buying the townhouse. Like the trial
court, the Court of Appeals gave no weight to defendants argument that had respondent paid the balance of the purchase price of
the townhouse, the mortgage could have been released. It explained:
We cannot find fault with the choice of plaintiff not to further dole out money for a property that in all events, would never
be his. Moreover, defendants could, if they were really desirous of satisfying their obligation, demanded that plaintiff pay
the outstanding balance based on their contract. This they had not done. We can fairly surmise that defendants could not
comply with their obligation themselves, because as testified to by Mr. Almocera, they already signified to LBP that they
cannot pay their outstanding loan obligations resulting to the foreclosure of the townhouse.8
Moreover, as to the issue of petitioners solidary liability, it said that this issue was belatedly raised and cannot be treated for the first
time on appeal.
On 18 July 2005, the Court of Appeals denied the appeal and affirmed in toto the decision of the trial court. The dispositive portion of
the decision reads:
IN LIGHT OF ALL THE FOREGOING, this appeal is DENIED. The assailed decision of the Regional Trial Court, Branch
11, Cebu City in Civil Case No. CEB-23687 is AFFIRMED in toto.9
In a Resolution dated 16 November 2005, the Court of Appeals denied defendants motion for reconsideration.
Petitioner is now before us pleading his case via a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure. The petition raises the following issues:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT HAS INCURRED
DELAY.

II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING RESPONDENTS REFUSAL TO PAY
THE BALANCE OF THE PURCHASE PRICE.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT ANDRE T.
ALMOCERA IS SOLIDARILY LIABLE WITH THE DEFENDANT COOPERATIVE FOR DAMAGES TO PLAINTIFF.10
It cannot be disputed that the contract entered into by the parties was a contract to sell. The contract was denominated as such and
it contained the provision that the unit shall be conveyed by way of an Absolute Deed of Sale, together with the attendant documents
of Ownership the Transfer Certificate of Title and Certificate of Occupancy and that the balance of the contract price shall be
paid upon the completion and delivery of the unit, as well as the acceptance thereof by respondent. All these clearly indicate that
ownership of the townhouse has not passed to respondent.
In Serrano v. Caguiat, 11 we explained:
A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendors obligation to transfer
title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take
place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly
full payment of the purchase price.
The differences between a contract to sell and a contract of sale are well-settled in jurisprudence. As early as 1951,
in Sing Yee v. Santos [47 O.G. 6372 (1951)], we held that:
"x x x [a] distinction must be made between a contract of sale in which title passes to the buyer upon delivery of
the thing sold and a contract to sell x x x where by agreement the ownership is reserved in the seller and is not
to pass until the full payment of the purchase price is made. In the first case, non-payment of the price is a
negative resolutory condition; in the second case, full payment is a positive suspensive condition. Being
contraries, their effect in law cannot be identical. In the first case, the vendor has lost and cannot recover the
ownership of the land sold until and unless the contract of sale is itself resolved and set aside. In the second
case, however, the title remains in the vendor if the vendee does not comply with the condition precedent of
making payment at the time specified in the contract."
In other words, in a contract to sell, ownership is retained by the seller and is not to pass to the buyer until full
payment of the price.
The Contract to Sell entered into by the parties contains the following pertinent provisions:
4. TERMS OF PAYMENT:
4a. ONE MILLION PESOS (P1,000,000.00) is hereby acknowledged as Downpayment for the above-mentioned Contract
Price.
4b. The Balance, in the amount of TWO MILLION FOUR HUNDRED PESOS (P2,400,000.00) shall be paid thru financing
Institution facilitated by the SELLER, preferably Landbank of the Philippines (LBP).
Upon completion, delivery and acceptance of the BUYER of the Townhouse Unit, the BUYER shall have paid the Contract
Price in full to the SELLER.
xxxx
6. COMPLETION DATES OF THE TOWNHOUSE UNIT:
The unit shall be completed and conveyed by way of an Absolute Deed of Sale together with the attendant documents of
Ownership in the name of the BUYER the Transfer Certificate of Title and Certificate of Occupancy within a period of six
(6) months from the signing of Contract to Sell.12
From the foregoing provisions, it is clear that petitioner and FBMC had the obligation to complete the townhouse unit within six
months from the signing of the contract. Upon compliance therewith, the obligation of respondent to pay the balance
of P2,400,000.00 arises. Upon payment thereof, the townhouse shall be delivered and conveyed to respondent upon the execution
of the Absolute Deed of Sale and other relevant documents.

The evidence adduced shows that petitioner and FBMC failed to fulfill their obligation -- to complete and deliver the townhouse
within the six-month period. With petitioner and FBMCs non-fulfillment of their obligation, respondent refused to pay the balance of
the contract price. Respondent does not ask that ownership of the townhouse be transferred to him, but merely asks that the
amount or down payment he had made be returned to him.
Article 1169 of the Civil Code reads:
Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist:
(1) When the obligation or the law expressly so declares; or
(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the
thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other
begins.
The contract subject of this case contains reciprocal obligations which were to be fulfilled by the parties, i.e., to complete and deliver
the townhouse within six months from the execution of the contract to sell on the part of petitioner and FBMC, and to pay the
balance of the contract price upon completion and delivery of the townhouse on the part of the respondent.
In the case at bar, the obligation of petitioner and FBMC which is to complete and deliver the townhouse unit within the prescribed
period, is determinative of the respondents obligation to pay the balance of the contract price. With their failure to fulfill their
obligation as stipulated in the contract, they incurred delay and are liable for damages.13 They cannot insist that respondent comply
with his obligation. Where one of the parties to a contract did not perform the undertaking to which he was bound by the terms of the
agreement to perform, he is not entitled to insist upon the performance of the other party.14
On the first assigned error, petitioner insists there was no delay when the townhouse unit was not completed within six months from
the signing of the contract inasmuch as the mere lapse of the stipulated six (6) month period is not by itself enough to constitute
delay on his part and that of FBMC, since the law requires that there must either be judicial or extrajudicial demand to fulfill an
obligation so that the obligor may be declared in default. He argues there was no evidence introduced showing that a prior demand
was made by respondent before the original action was instituted in the trial court.
We do not agree.
Demand is not necessary in the instant case. Demand by the respondent would be useless because the impossibility of complying
with their (petitioner and FBMC) obligation was due to their fault. If only they paid their loans with the LBP, the mortgage on the
subject townhouse would not have been foreclosed and thereafter sold to a third person.
Anent the second assigned error, petitioner argues that if there was any delay, the same was incurred by respondent because he
refused to pay the balance of the contract price.
We find his argument specious.
As above-discussed, the obligation of respondent to pay the balance of the contract price was conditioned on petitioner and FBMCs
performance of their obligation. Considering that the latter did not comply with their obligation to complete and deliver the townhouse
unit within the period agreed upon, respondent could not have incurred delay. For failure of one party to assume and perform the
obligation imposed on him, the other party does not incur delay.15
Under the circumstances obtaining in this case, we find that respondent is justified in refusing to pay the balance of the contract
price. He was never in possession of the townhouse unit and he can no longer be its owner since ownership thereof has been
transferred to a third person who was not a party to the proceedings below. It would simply be the height of inequity if we are to
require respondent to pay the balance of the contract price. To allow this would result in the unjust enrichment of petitioner and
FBMC. The fundamental doctrine of unjust enrichment is the transfer of value without just cause or consideration. The elements of
this doctrine which are present in this case are: enrichment on the part of the defendant; impoverishment on the part of the plaintiff;
and lack of cause. The main objective is to prevent one to enrich himself at the expense of another. It is commonly accepted that

this doctrine simply means a person shall not be allowed to profit or enrich himself inequitably at another's expense. 16Hence, to
allow petitioner and FBMC keep the down payment made by respondent amounting to P1,060,000.00 would result in their unjust
enrichment at the expense of the respondent. Thus, said amount should be returned.
What is worse is the fact that petitioner and FBMC intentionally failed to inform respondent that the subject townhouse which he was
going to purchase was already mortgaged to LBP at the time of the perfection of their contract. This deliberate withholding by
petitioner and FBMC of the mortgage constitutes fraud and bad faith. The trial court had this say:
In the light of the foregoing environmental circumstances and milieu, therefore, it appears that the defendants are guilty of
fraud in dealing with the plaintiff. They performed voluntary and willful acts which prevent the normal realization of the
prestation, knowing the effects which naturally and necessarily arise from such acts. Their acts import a dishonest
purpose or some moral obliquity and conscious doing of a wrong. The said acts certainly gtive rise to liability for damages
(8 Manresa 72; Borrell-Macia 26-27; 3 Camus 34; OLeary v. Macondray & Company, 454 Phil. 812; Heredia v. Salinas,
10 Phil. 157). Article 1170 of the New Civil Code of the Philippines provides expressly that "those who in the performance
of their obligations are guilty of fraud and those who in any manner contravene the tenor thereof are liable for damages. 17
On the last assigned error, petitioner contends that he should not be held solidarily liable with defendant FBMC, because the latter is
a separate and distinct entity which is the seller of the subject townhouse. He claims that he, as Chairman and Chief Executive
Officer of FBMC, cannot be held liable because his representing FBMC in its dealings is a corporate act for which only FBMC should
be held liable.
This issue of piercing the veil of corporate fiction was never raised before the trial court. The same was raised for the first time
before the Court of Appeals which ruled that it was too late in the day to raise the same. The Court of Appeals declared:
In the case below, the pleadings and the evidence of the defendants are one and the same and never had it made to
appear that Almocera is a person distinct and separate from the other defendant. In fine, we cannot treat this error for the
first time on appeal. We cannot in good conscience, let the defendant Almocera raise the issue of piercing the veil of
corporate fiction just because of the adverse decision against him. x x x.18
To allow petitioner to pursue such a defense would undermine basic considerations of due process. Points of law, theories, issues
and arguments not brought to the attention of the trial court will not be and ought not to be considered by a reviewing court, as these
cannot be raised for the first time on appeal. It would be unfair to the adverse party who would have no opportunity to present further
evidence material to the new theory not ventilated before the trial court. 19
As to the award of damages granted by the trial court, and affirmed by the Court of Appeals, we find the same to be proper and
reasonable under the circumstances.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 18 July 2005 in CA-G.R. CV No. 75610
is AFFIRMED. Costs against the petitioner.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ


Associate Justice

ANTONIO EDUARDO B. NACHURA


Associate Justice

RUBEN T. REYES
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

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

Footnotes
Associate Justice Pampio A. Abarintos with Associate Justices Mercedes Gozo-Dadole and Ramon M. Bato, Jr.,
concurring; rollo, pp. 25-32;
1

Penned by Hon. Isaias P. Dicdican.

Id. at 33-34.

Rollo, pp. 26-27.

Id. at 47.

Exhibit A.

Rollo, pp. 15-16.

Id. at 30.

Id. at 32.

10

Id. at 16.

11

G.R. No. 139173, 28 February 2007, 517 SCRA 57, 64-65.

12

Rollo, p. 28-29.

13

Leao v. Court of Appeals, 420 Phil. 836, 848 (2001).

14

Agustin v. Court of Appeals, G.R. No. 84751, 6 June 1990, 186 SCRA 375, 383.

15

Agustin v. Court of Appeals, id., citing Abaya v. Standard-Vacuum Oil Co., 101 Phil. 1262 (1957).

16

P.C. Javier & Sons, Inc. v. Court of Appeals, G.R. No. 129552, 29 June 2005, 462 SCRA 36, 47.

17

Rollo, p. 44.

18

Id. at 31.

19

Valdez v. China Banking Corporation, G.R. No. 155009, 12 April 2005, 455 SCRA 687, 696.