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G.R. No. L-22487 May 21, 1969 this case, in whose name the corresponding certificate (No.

5056) was issued.
ATILANO, assisted by their respective husbands, HILARIO On December 6, 1952, Eulogio Atilano II having become a
ROMANO, FELIPE BERNARDO, and MAXIMO widower upon the death of his wife Luisa Bautista, he and his
LACANDALO, ISABEL ATILANO and GREGORIO children obtained transfer certificate of title No. 4889 over lot
ATILANO, plaintiffs-appellees, No. 535-E in their names as co-owners. Then, on July 16, 1959,
vs. desiring to put an end to the co-ownership, they had the land
LADISLAO ATILANO and GREGORIO M. resurveyed so that it could properly be subdivided; and it was
ATILANO, defendants-appellants. then discovered that the land they were actually occupying on
the strength of the deed of sale executed in 1920 was lot No.
Climaco and Azcarraga for plaintiff-appellee. 535-A and not lot 535-E, as referred to in the deed, while the
T. de los Santos for defendants-appellants. land which remained in the possession of the vendor, Eulogio
Atilano I, and which passed to his successor, defendant Ladislao
MAKALINTAL, J.: Atilano, was lot No. 535-E and not lot No. 535-A.

In 1916 Eulogio Atilano I acquired, by purchase from one On January 25, 1960, the heirs of Eulogio Atilano II, who was
Gerardo Villanueva, lot No. 535 of the then municipality of by then also deceased, filed the present action in the Court of
Zamboanga cadastre. The vendee thereafter obtained transfer First Instance of Zamboanga, alleging, inter alia, that they had
certificate of title No. 1134 in his name. In 1920 he had the land offered to surrender to the defendants the possession of lot No.
subdivided into five parts, identified as lots Nos. 535-A, 535-B, 535-A and demanded in return the possession of lot No. 535-E,
535-C, 535-D and 535-E, respectively. On May 18 of the same but that the defendants had refused to accept the exchange. The
year, after the subdivision had been effected, Eulogio Atilano I, plaintiffs' insistence is quite understandable, since lot No. 535-E
for the sum of P150.00, executed a deed of sale covering lot No. has an area of 2,612 square meters, as compared to the 1,808
535-E in favor of his brother Eulogio Atilano II, who thereupon square-meter area of lot No. 535-A.
obtained transfer certificate of title No. 3129 in his name. Three
other portions, namely lots Nos. 535-B, 535-C and 535-D, were In their answer to the complaint the defendants alleged that the
likewise sold to other persons, the original owner, Eulogio reference to lot No. 535-E in the deed of sale of May 18, 1920
Atilano I, retaining for himself only the remaining portion of the was an involuntary error; that the intention of the parties to that
land, presumably covered by the title to lot No. 535-A. Upon his sale was to convey the lot correctly identified as lot No. 535-A;
death the title to this lot passed to Ladislao Atilano, defendant in that since 1916, when he acquired the entirety of lot No. 535,


and up to the time of his death, Eulogio Atilano I had been favor even before the subdivision of the entire lot No. 535 at the
possessing and had his house on the portion designated as lot instance of its owner, Eulogio Atillano I. In like manner the
No. 535-E, after which he was succeeded in such possession by latter had his house on the portion correctly identified, after the
the defendants herein; and that as a matter of fact Eulogio subdivision, as lot No. 535-E, even adding to the area thereof by
Atilano I even increased the area under his possession when on purchasing a portion of an adjoining property belonging to a
June 11, 1920 he bought a portion of an adjoining lot, No. 536, different owner. The two brothers continued in possession of the
from its owner Fruto del Carpio. On the basis of the foregoing respective portions the rest of their lives, obviously ignorant of
allegations the defendants interposed a counterclaim, praying the initial mistake in the designation of the lot subject of the
that the plaintiffs be ordered to execute in their favor the 1920 until 1959, when the mistake was discovered for the first
corresponding deed of transfer with respect to lot No. 535-E. time.

The trial court rendered judgment for the plaintiffs on the sole The real issue here is not adverse possession, but the real
ground that since the property was registered under the Land intention of the parties to that sale. From all the facts and
Registration Act the defendants could not acquire it through circumstances we are convinced that the object thereof, as
prescription. There can be, of course, no dispute as to the intended and understood by the parties, was that specific portion
correctness of this legal proposition; but the defendants, aside where the vendee was then already residing, where he
from alleging adverse possession in their answer and reconstructed his house at the end of the war, and where his
counterclaim, also alleged error in the deed of sale of May 18, heirs, the plaintiffs herein, continued to reside thereafter:
1920, thus: "Eulogio Atilano 1.o, por equivocacion o error namely, lot No. 535-A; and that its designation as lot No. 535-E
involuntario, cedio y traspaso a su hermano Eulogio Atilano in the deed of sale was simple mistake in the drafting of the
el lote No. 535-E en vez del Lote No. 535-A." The mistake did not vitiate the consent of
the parties, or affect the validity and binding effect of the
The logic and common sense of the situation lean heavily in contract between them. The new Civil Code provides a remedy
favor of the defendants' contention. When one sells or buys real for such a situation by means of reformation of the instrument.
property a piece of land, for example one sells or buys the This remedy is available when, there having been a meeting of
property as he sees it, in its actual setting and by its physical the funds of the parties to a contract, their true intention is not
metes and bounds, and not by the mere lot number assigned to it expressed in the instrument purporting to embody the agreement
in the certificate of title. In the particular case before us, the by reason of mistake, fraud, inequitable conduct on accident
portion correctly referred to as lot No. 535-A was already in the (Art. 1359, et seq.) In this case, the deed of sale executed in
possession of the vendee, Eulogio Atilano II, who had 1920 need no longer reformed. The parties have retained
constructed his residence therein, even before the sale in his possession of their respective properties conformably to the real


intention of the parties to that sale, and all they should do is to
execute mutual deeds of conveyance.

WHEREFORE, the judgment appealed from is reversed. The

plaintiffs are ordered to execute a deed of conveyance of lot No.
535-E in favor of the defendants, and the latter in turn, are
ordered to execute a similar document, covering lot No. 595-A,
in favor of the plaintiffs. Costs against the latter.

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

PIO SIAN MELLIZA, petitioner,

and THE COURT APPEALS, respondents.


Cornelio P. Ravena for petitioner. Que en consideracion a la suma total de SEIS MIL CUATRO
Office of the Solicitor General for respondents. CIENTOS VEINTIDOS PESOS (P6,422.00), moneda filipina
que por la presente declaro haber recibido a mi entera
BENGZON, J.P., J.: satisfaccion del Gobierno Municipal de Iloilo, cedo y traspaso en
venta real y difinitiva a dicho Gobierno Municipal de Iloilo los
Juliana Melliza during her lifetime owned, among other lotes y porciones de los mismos que a continuacion se
properties, three parcels of residential land in Iloilo City especifican a saber: el lote No. 5 en toda su extension; una
registered in her name under Original Certificate of Title No. porcion de 7669 metros cuadrados del lote No. 2, cuya porcion
3462. Said parcels of land were known as Lots Nos. 2, 5 and esta designada como sub-lotes Nos. 2-B y 2-C del piano de
1214. The total area of Lot No. 1214 was 29,073 square meters. subdivision de dichos lotes preparado por la Certeza Surveying
Co., Inc., y una porcion de 10,788 metros cuadrados del lote No.
On November 27, 1931 she donated to the then Municipality of 1214 cuya porcion esta designada como sub-lotes Nos. 1214-
Iloilo, 9,000 square meters of Lot 1214, to serve as site for the B-2 y 1214-B-3 del mismo plano de subdivision.
municipal hall. 1 The donation was however revoked by the
parties for the reason that the area donated was found inadequate Asimismo nago constar que la cesion y traspaso que ariba se
to meet the requirements of the development plan of the mencionan es de venta difinitiva, y que para la mejor
municipality, the so-called "Arellano Plan". 2 identificacion de los lotes y porciones de los mismos que son
objeto de la presente, hago constar que dichos lotes y porciones
Subsequently, Lot No. 1214 was divided by Certeza Surveying son los que necesita el Gobierno Municipal de Iloilo para la
Co., Inc. into Lots 1214-A and 1214-B. And still later, Lot 1214- construccion de avenidas, parques y City Hall site del Municipal
B was further divided into Lots 1214-B-1, Lot 1214-B-2 and Lot Government Center de iloilo, segun el plano Arellano.
1214-B-3. As approved by the Bureau of Lands, Lot 1214-B-1
with 4,562 square meters, became known as Lot 1214-B; Lot On January 14, 1938 Juliana Melliza sold her remaining interest
1214-B-2, with 6,653 square meters, was designated as Lot in Lot 1214 to Remedios Sian Villanueva who thereafter
1214-C; and Lot 1214-B-13, with 4,135 square meters, became obtained her own registered title thereto, under Transfer
Lot 1214-D. Certificate of Title No. 18178. Remedios in turn on November 4,
1946 transferred her rights to said portion of land to Pio Sian
On November 15, 1932 Juliana Melliza executed an instrument Melliza, who obtained Transfer Certificate of Title No. 2492
without any caption containing the following: thereover in his name. Annotated at the back of Pio Sian
Melliza's title certificate was the following:


... (a) that a portion of 10,788 square meters of Lot 1214 now and trial, the Court of First Instance rendered its decision on
designated as Lots Nos. 1214-B-2 and 1214-B-3 of the August 15, 1957, dismissing the complaint. Said court ruled that
subdivision plan belongs to the Municipality of Iloilo as per the instrument executed by Juliana Melliza in favor of Iloilo
instrument dated November 15, 1932.... municipality included in the conveyance Lot 1214-B. In support
of this conclusion, it referred to the portion of the instrument
On August 24, 1949 the City of Iloilo, which succeeded to the stating:
Municipality of Iloilo, donated the city hall site together with the
building thereon, to the University of the Philippines (Iloilo Asimismo hago constar que la cesion y traspaso que arriba se
branch). The site donated consisted of Lots Nos. 1214-B, 1214- mencionan es de venta difinitiva, y que para la major
C and 1214-D, with a total area of 15,350 square meters, more identificacion de los lotes y porciones de los mismos que son
or less. objeto de la presente, hago constar que dichos lotes y porciones
son los que necesita el Gobierno municipal de Iloilo para la
Sometime in 1952, the University of the Philippines enclosed the construccion de avenidas, parques y City Hall site del Municipal
site donated with a wire fence. Pio Sian Melliza thereupon made Government Center de Iloilo, segun el plano Arellano.
representations, thru his lawyer, with the city authorities for
payment of the value of the lot (Lot 1214-B). No recovery was and ruled that this meant that Juliana Melliza not only sold Lots
obtained, because as alleged by plaintiff, the City did not have 1214-C and 1214-D but also such other portions of lots as were
funds (p. 9, Appellant's Brief.) necessary for the municipal hall site, such as Lot 1214-B. And
thus it held that Iloilo City had the right to donate Lot 1214-B to
The University of the Philippines, meanwhile, obtained Transfer the U.P.
Certificate of Title No. 7152 covering the three lots, Nos. 1214-
B, 1214-C and 1214-D. Pio Sian Melliza appealed to the Court of Appeals. In its
decision on May 19, 1965, the Court of Appeals affirmed the
On December 10, 1955 Pio Sian Melliza filed an action in the interpretation of the Court of First Instance, that the portion of
Court of First Instance of Iloilo against Iloilo City and the Lot 1214 sold by Juliana Melliza was not limited to the 10,788
University of the Philippines for recovery of Lot 1214-B or of its square meters specifically mentioned but included whatever was
value. needed for the construction of avenues, parks and the city hall
site. Nonetheless, it ordered the remand of the case for reception
The defendants answered, contending that Lot 1214-B was of evidence to determine the area actually taken by Iloilo City
included in the public instrument executed by Juliana Melliza in for the construction of avenues, parks and for city hall site.
favor of Iloilo municipality in 1932. After stipulation of facts


The present appeal therefrom was then taken to Us by Pio Sian nature of law as between the parties and their successors-in-
Melliza. Appellant maintains that the public instrument is clear interest.
that only Lots Nos. 1214-C and 1214-D with a total area of
10,788 square meters were the portions of Lot 1214 included in At the outset, it is well to mark that the issue is whether or not
the sale; that the purpose of the second paragraph, relied upon the conveyance by Juliana Melliza to Iloilo municipality
for a contrary interpretation, was only to better identify the lots included that portion of Lot 1214 known as Lot 1214-B. If not,
sold and none other; and that to follow the interpretation then the same was included, in the instrument subsequently
accorded the deed of sale by the Court of Appeals and the Court executed by Juliana Melliza of her remaining interest in Lot
of First Instance would render the contract invalid because the 1214 to Remedios Sian Villanueva, who in turn sold what she
law requires as an essential element of sale, a "determinate" thereunder had acquired, to Pio Sian Melliza. It should be
object (Art. 1445, now 1448, Civil Code). stressed, also, that the sale to Remedios Sian Villanueva from
which Pio Sian Melliza derived title did not specifically
Appellees, on the other hand, contend that the present appeal designate Lot 1214-B, but only such portions of Lot 1214 as
improperly raises only questions of fact. And, further, they argue were not included in the previous sale to Iloilo
that the parties to the document in question really intended to municipality (Stipulation of Facts, par. 5, Record on Appeal, p.
include Lot 1214-B therein, as shown by the silence of the 23). And thus, if said Lot 1214-B had been included in the prior
vendor after Iloilo City exercised ownership thereover; that not conveyance to Iloilo municipality, then it was excluded from the
to include it would have been absurd, because said lot is sale to Remedios Sian Villanueva and, later, to Pio Sian Melliza.
contiguous to the others admittedly included in the conveyance,
lying directly in front of the city hall, separating that building The point at issue here is then the true intention of the parties as
from Lots 1214-C and 1214-D, which were included therein. to the object of the public instrument Exhibit "D". Said issue
And, finally, appellees argue that the sale's object was revolves on the paragraph of the public instrument aforequoted
determinate, because it could be ascertained, at the time of the and its purpose, i.e., whether it was intended merely to further
execution of the contract, what lots were needed by Iloilo describe the lots already specifically mentioned, or whether it
municipality for avenues, parks and city hall site "according to was intended to cover other lots not yet specifically mentioned.
the Arellano Plan", since the Arellano plan was then already in
existence. First of all, there is no question that the paramount intention of
the parties was to provide Iloilo municipality with lots sufficient
The appeal before Us calls for the interpretation of the public or adequate in area for the construction of the Iloilo City hall
instrument dated November 15, 1932. And interpretation of such site, with its avenues and parks. For this matter, a previous
contract involves a question of law, since the contract is in the


donation for this purpose between the same parties was revoked Such contention fails on several counts. The requirement of the
by them, because of inadequacy of the area of the lot donated. law that a sale must have for its object a determinate thing, is
fulfilled as long as, at the time the contract is entered into, the
Secondly, reading the public instrument in toto, with special object of the sale is capable of being made determinate without
reference to the paragraphs describing the lots included in the the necessity of a new or further agreement between the parties
sale, shows that said instrument describes four parcels of land by (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The
their lot numbers and area; and then it goes on to further specific mention of some of the lots plus the statement that the
describe, not only those lots already mentioned, but the lots object of the sale are the ones needed for city hall site,
lots object of the sale, by stating that said lots are the ones avenues and parks, according to the Arellano plan, sufficiently
needed for the construction of the city hall site, avenues and provides a basis, as of the time of the execution of the contract,
parks according to the Arellano plan. If the parties intended for rendering determinate said lots without the need of a new and
merely to cover the specified lots Lots 2, 5, 1214-C and further agreement of the parties.
1214-D, there would scarcely have been any need for the next
paragraph, since these lots are already plainly and very clearly The Arellano plan was in existence as early as 1928. As stated,
described by their respective lot number and area. Said next the previous donation of land for city hall site on November 27,
paragraph does not really add to the clear description that was 1931 was revoked on March 6, 1932 for being inadequate in area
already given to them in the previous one. under said Arellano plan. Appellant claims that although said
plan existed, its metes and bounds were not fixed until 1935, and
It is therefore the more reasonable interpretation, to view it as thus it could not be a basis for determining the lots sold on
describing those other portions of land contiguous to the lots November 15, 1932. Appellant however fails to consider that
aforementioned that, by reference to the Arellano plan, will be the area needed under that plan for city hall site was then
found needed for the purpose at hand, the construction of the already known; that the specific mention of some of the lots
city hall site. covered by the sale in effect fixed the corresponding location of
the city hall site under the plan; that, therefore, considering the
Appellant however challenges this view on the ground that the said lots specifically mentioned in the public instrument Exhibit
description of said other lots in the aforequoted second "D", and the projected city hall site, with its area, as then shown
paragraph of the public instrument would thereby be legally in the Arellano plan (Exhibit 2), it could be determined which,
insufficient, because the object would allegedly not be and how much of the portions of land contiguous to those
determinate as required by law. specifically named, were needed for the construction of the city
hall site.


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

WHEREFORE, the decision appealed from is affirmed insofar

as it affirms that of the Court of First Instance, and the complaint
in this case is dismissed. No costs. So ordered.


G.R. No. 105387 November 11, 1993


JR., doing business under the name and style "PHILIPPINE

Hernandez, Velicaria, Vibar & Santiago for petitioner.

Ernesto M. Tomaneng for private respondent.


In this petition for review on certiorari, petitioner questions the

reversal by the Court of Appeals 1 of the trial court's ruling that a
contract of sale had been perfected between petitioner and
private respondent over bus spare parts.


The facts as quoted from the decision of the Court of Appeals On December 29, 1981, defendant personally submitted the
are as follows: quantities he wanted to Mr. Dieter Reichert, General Manager of
plaintiff, at the latter's residence (t.s.n., 13 December, 1984, p.
Sometime in 1981, defendant 2 established contact with 36). The quantities were written in ink by defendant in the same
plaintiff 3 through the Philippine Consulate General in Hamburg, Purchase Order previously submitted. At the bottom of said
West Germany, because he wanted to purchase MAN bus spare Purchase Order, defendant wrote in ink above his signature:
parts from Germany. Plaintiff communicated with its trading "NOTE: Above P.O. will include a 3% discount. The above will
partner. Johannes Schuback and Sohne Handelsgesellschaft serve as our initial P.O." (Exhs. G to G-3-a).
m.b.n. & Co. (Schuback Hamburg) regarding the spare parts
defendant wanted to order. Plaintiff immediately ordered the items needed by defendant
from Schuback Hamburg to enable defendant to avail of the old
On October 16, 1981, defendant submitted to plaintiff a list of prices. Schuback Hamburg in turn ordered (Order No. 12204)
the parts (Exhibit B) he wanted to purchase with specific part the items from NDK, a supplier of MAN spare parts in West
numbers and description. Plaintiff referred the list to Schuback Germany. On January 4, 1982, Schuback Hamburg sent plaintiff
Hamburg for quotations. Upon receipt of the quotations, plaintiff a proforma invoice (Exhs. N-1 to N-3) to be used by defendant
sent to defendant a letter dated 25 November, 1981 (Exh. C) in applying for a letter of credit. Said invoice required that the
enclosing its offer on the items listed by defendant. letter of credit be opened in favor of Schuback Hamburg.
Defendant acknowledged receipt of the invoice (t.s.n., 19
On December 4, 1981, defendant informed plaintiff that he December 1984, p. 40).
preferred genuine to replacement parts, and requested that he be
given 15% on all items (Exh. D). An order confirmation (Exhs. I, I-1) was later sent by Schuback
Hamburg to plaintiff which was forwarded to and received by
On December 17, 1981, plaintiff submitted its formal offer (Exh. defendant on February 3, 1981 (t.s.n., 13 Dec. 1984, p. 42).
E) containing the item number, quantity, part number,
description, unit price and total to defendant. On December, 24, On February 16, 1982, plaintiff reminded defendant to open the
1981, defendant informed plaintiff of his desire to avail of the letter of credit to avoid delay in shipment and payment of
prices of the parts at that time and enclosed Purchase Order No. interest (Exh. J). Defendant replied, mentioning, among others,
0101 dated 14 December 1981 (Exh. F to F-4). Said Purchase the difficulty he was encountering in securing: the required
Order contained the item number, part number and description. dollar allocations and applying for the letter of credit, procuring
Defendant promised to submit the quantity per unit he wanted to a loan and looking for a partner-financier, and of finding ways
order on December 28 or 29 (Exh. F). 'to proceed with our orders" (Exh. K).


In the meantime, Schuback Hamburg received invoices from, In its decision dated June 13, 1988, the trial court 4 ruled in favor
NDK for partial deliveries on Order No.12204 (Direct of petitioner by ordering private respondent to pay petitioner,
Interrogatories., 07 Oct, 1985, p. 3). Schuback Hamburg paid among others, actual compensatory damages in the amount of
NDK. The latter confirmed receipt of payments made on DM 51,917.81, unearned profits in the amount of DM
February 16, 1984 (Exh.C-Deposition). 14,061.07, or their peso equivalent.

On October 18, 1982, Plaintiff again reminded defendant of his Thereafter, private respondent elevated his case before the Court
order and advised that the case may be endorsed to its lawyers of Appeals. On February 18, 1992, the appellate court reversed
(Exh. L). Defendant replied that he did not make any valid the decision of the trial court and dismissed the complaint of
Purchase Order and that there was no definite contract between petitioner. It ruled that there was no perfection of contract since
him and plaintiff (Exh. M). Plaintiff sent a rejoinder explaining there was no meeting of the minds as to the price between the
that there is a valid Purchase Order and suggesting that last week of December 1981 and the first week of January 1982.
defendant either proceed with the order and open a letter of
credit or cancel the order and pay the cancellation fee of 30% of The issue posed for resolution is whether or not a contract of
F.O.B. value, or plaintiff will endorse the case to its lawyers sale has been perfected between the parties.
(Exh. N).
We reverse the decision of the Court of Appeals and reinstate the
Schuback Hamburg issued a Statement of Account (Exh. P) to decision of the trial court. It bears emphasizing that a "contract
plaintiff enclosing therewith Debit Note (Exh. O) charging of sale is perfected at the moment there is a meeting of minds
plaintiff 30% cancellation fee, storage and interest charges in the upon the thing which is the object of the contract and upon the
total amount of DM 51,917.81. Said amount was deducted from price. . . . " 5
plaintiff's account with Schuback Hamburg (Direct
Interrogatories, 07 October, 1985). Article 1319 of the Civil Code states: "Consent is manifested by
the meeting of the offer and acceptance upon the thing and the
Demand letters sent to defendant by plaintiff's counsel dated cause which are to constitute the contract. The offer must be
March 22, 1983 and June 9, 1983 were to no avail (Exhs R and certain and the acceptance absolute. A qualified acceptance
S). constitutes a counter offer." The facts presented to us indicate
that consent on both sides has been manifested.
Consequently, petitioner filed a complaint for recovery of actual
or compensatory damages, unearned profits, interest, attorney's The offer by petitioner was manifested on December 17, 1981
fees and costs against private respondent. when petitioner submitted its proposal containing the item


number, quantity, part number, description, the unit price and which in turn ordered from NDK, a supplier of MAN spare parts
total to private respondent. On December 24, 1981, private in West Germany.
respondent informed petitioner of his desire to avail of the prices
of the parts at that time and simultaneously enclosed its Purchase When petitioner forwarded its purchase order to NDK, the price
Order No. 0l01 dated December 14, 1981. At this stage, a was still pegged at the old one. Thus, the pronouncement of the
meeting of the minds between vendor and vendee has occurred, Court Appeals that there as no confirmed price on or about the
the object of the contract: being the spare parts and the last week of December 1981 and/or the first week of January
consideration, the price stated in petitioner's offer dated 1982 was erroneous.
December 17, 1981 and accepted by the respondent on
December 24,1981. While we agree with the trial court's conclusion that indeed a
perfection of contract was reached between the parties, we differ
Although said purchase order did not contain the quantity he as to the exact date when it occurred, for perfection took place,
wanted to order, private respondent made good, his promise to not on December 29, 1981. Although the quantity to be ordered
communicate the same on December 29, 1981. At this juncture, was made determinate only on December 29, 1981, quantity is
it should be pointed out that private respondent was already in immaterial in the perfection of a sales contract. What is of
the process of executing the agreement previously reached importance is the meeting of the minds as to
between the parties. the object and cause, which from the facts disclosed, show that
as of December 24, 1981, these essential elements had already
Below Exh. G-3, marked as Exhibit G-3-A, there appears this occurred.
statement made by private respondent: "Note. above P.O. will
include a 3% discount. The above will serve as our initial P.O." On the part of the buyer, the situation reveals that private
This notation on the purchase order was another indication of respondent failed to open an irrevocable letter of credit without
acceptance on the part of the vendee, for by requesting a 3% recourse in favor of Johannes Schuback of Hamburg, Germany.
discount, he implicitly accepted the price as first offered by the This omission, however. does not prevent the perfection of the
vendor. The immediate acceptance by the vendee of the offer contract between the parties, for the opening of the letter of
was impelled by the fact that on January 1, 1982, prices would credit is not to be deemed a suspensive condition. The facts
go up, as in fact, the petitioner informed him that there would be herein do not show that petitioner reserved title to the goods
a 7% increase, effective January 1982. On the other hand, until private respondent had opened a letter of credit. Petitioner,
concurrence by the vendor with the said discount requested by in the course of its dealings with private respondent, did not
the vendee was manifested when petitioner immediately ordered incorporate any provision declaring their contract of sale without
the items needed by private respondent from Schuback Hamburg


effect until after the fulfillment of the act of opening a letter of

The opening of a etter of credit in favor of a vendor is only a

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

To adopt the Court of Appeals' ruling that the contract of sale

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

WHEREFORE, the petition is GRANTED and the decision of

the trial court dated June 13, 1988 is REINSTATED with
NEBRE, respondents.



PANGANIBAN, J.: 3. Ordering the plaintiffs to deliver
peaceful possession of the two hectares
A contract of repurchase arising out of a contract of sale mentioned in paragraph 7 of the
where the seller did not have any title to the property sold is not complaint and in paragraph 31 of
valid. Since nothing was sold, then there is also nothing to defendants answer (counterclaim);
4. Ordering the plaintiffs to pay reasonable
rents on said two hectares at P5,000.00
per annum or at P2,500.00 per cropping
Statement of the Case from the time of judicial demand
mentioned in paragraph 2 of the
This postulate is explained by this Court as it resolves this dispositive portion of this decision, until
petition for review on certiorari assailing the January 20, 1993 the said two hectares shall have been
Decision[1] of Respondent Court of Appeals[2] in CA-G.R. CV delivered to the defendants; and
No. 36473, affirming the decision[3] of the trial court[4] which 5. To pay the costs.
disposed as follows:[5]
WHEREFORE, judgment is hereby rendered dismissing
the complaint for no cause of action, and hereby:
1. Declaring the private writing, Exhibit C, The Antecedent Facts
to be an option to sell, not binding and
considered validly withdrawn by the
The facts, which appear undisputed by the parties, are
defendants for want of consideration;
narrated by the Court of Appeals as follows:
2. Ordering the plaintiffs to return to the
Two (2) parcels of land are in dispute and litigated upon
defendants the sum of P30,000.00 plus
here. The first has an area of 1 hectare . It was formerly
interest thereon at the legal rate, from
owned by Victorino Nool and covered by Transfer
the time of filing of defendants
Certificate of Title No. T-74950. With an area of 3.0880
counterclaim until the same is fully
hectares, the other parcel was previously owned by
Francisco Nool under Transfer Certificate of Title No.
T-100945. Both parcels are situated in San Manuel,


Isabela. The plaintiff spouses, Conchita Nool and defendants to return the same but despite the intervention of the
Gaudencio Almojera, now the appellants, seek recovery Barangay Captain of their place, defendants refused to return the
of the aforementioned parcels of land from the said parcels of land to plaintiffs; thereby impelling them
defendants, Anacleto Nool, a younger brother of (plaintiffs) to come to court for relief.
Conchita, and Emilia Nebre, now the appellees.
In their answer defendants-appellees theorized that they
In their complaint, plaintiff-appellants alleged inter alia that they acquired the lands in question from the Development
are the owners of subject parcels of land, and they bought the Bank of the Philippines, through negotiated sale, and
same from Conchitas other brothers, Victorino Nool and were misled by plaintiffs when defendant Anacleto Nool
Francisco Nool; that as plaintiffs were in dire need of money, signed the private writing agreeing to return subject
they obtained a loan from the Iligan Branch of the Development lands when plaintiffs have the money to redeem the
Bank of the Philippines, in Ilagan, Isabela, secured by a real same; defendant Anacleto having been made to believe,
estate mortgage on said parcels of land, which were still then, that his sister, Conchita, still had the right to
registered in the names of Victorino Nool and Francisco Nool, at redeem the said properties.
the time, and for the failure of plaintiffs to pay the said loan,
The pivot of inquiry here, as aptly observed below, is
including interest and surcharges, totaling P56,000.00, the
the nature and significance of the private document,
mortgage was foreclosed; that within the period of redemption,
marked Exhibit D for plaintiffs, which document has
plaintiffs contacted defendant Anacleto Nool for the latter to
not been denied by the defendants, as defendants even
redeem the foreclosed properties from DBP, which the latter did;
averred in their Answer that they gave an advance
and as a result, the titles of the two (2) parcels of land in
payment of P30,000.00 therefor, and acknowledged that
question were transferred to Anacleto Nool; that as part of their
they had a balance of P14,000.00 to complete their
arrangement or understanding, Anacleto Nool agreed to buy
payment. On this crucial issue, the lower court adjudged
from the plaintiff Conchita Nool the two (2) parcels of land
the said private writing (Exhibit D) as an option to sell
under controversy, for a total price of P100,000.00, P30,000.00
not binding upon and considered the same validly
of which price was paid to Conchita, and upon payment of the
withdrawn by defendants for want of consideration; and
balance of P14,000.00, plaintiffs were to regain possession of
decided the case in the manner abovementioned.
the two (2) hectares of land, which amounts defendants failed to
pay, and the same day the said arrangement[6] was made; another
There is no quibble over the fact that the two (2) parcels of land
covenant[7] was entered into by the parties, whereby defendants
in dispute were mortgaged to the Development Bank of the
agreed to return to plaintiffs the lands in question, at anytime the
Philippines, to secure a loan obtained by plaintiffs from DBP
latter have the necessary amount; that plaintiffs asked the


(Ilagan Branch), Ilagan, Isabela. For the non-payment of said Petitioners impute to Respondent Court the following
loan, the mortgage was foreclosed and in the process, ownership alleged errors:
of the mortgaged lands was consolidated in DBP (Exhibits 3 and
1. The Honorable Court of Appeals, Second
4 for defendants). After DBP became the absolute owner of the
Division has misapplied the legal import or
two parcels of land, defendants negotiated with DBP and
meaning of Exhibit C in a way contrary to law and
succeeded in buying the same. By virtue of such sale by DBP in
existing jurisprudence in stating that it has no
favor of defendants, the titles of DBP were cancelled and
binding effect between the parties and considered
corresponding Transfer Certificates of Title (Annexes C and D to
validly withdrawn by defendants-appellees for
the complaint) issued to the dependants.[8]
want of consideration.
It should be stressed that Manuel S. Mallorca, authorized 2. The Honorable Court of Appeals, Second
officer of DBP, certified that the one-year redemption period was Division has miserably failed to give legal
from March 16, 1982 up to March 15, 1983 and that the significance to the actual possession and cultivation
Mortgagors right of redemption was not exercised within this and appropriating exclusively the palay harvest of
period.[9] Hence, DBP became the absolute owner of said parcels the two (2) hectares land pending the payment of
of land for which it was issued new certificates of title, both the remaining balance of fourteen thousand pesos
entered on May 23, 1983 by the Registry of Deeds for the (P14,000.00) by defendants-appellees as indicated
Province of Isabela.[10] About two years thereafter, on April 1, in Exhibit C.
1985, DBP entered into a Deed of Conditional Sale [11] involving
the same parcels of land with Private Respondent Anacleto Nool 3. The Honorable Court of Appeals has seriously erred
as vendee. Subsequently, the latter was issued new certificates of in affirming the decision of the lower court by
title on February 8, 1988.[12] awarding the payment of rents per annum and the
return of P30,000.00 and not allowing the plaintiffs-
The Court of Appeals ruled:[13]
appellants to re-acquire the four (4) hectares, more or
WHEREFORE, finding no reversible error infirming it, less upon payment of one hundred thousand pesos
the appealed Judgment is hereby AFFIRMED in (P100,000.00) as shown in Exhibit D.[14]
toto. No pronouncement as to costs.

The Courts Ruling

The Issues


The petition is bereft of merit. principal contract of sale contained in Exhibit C and the
auxilliary contract of repurchase in Exhibit D are both void. This
conclusion of the two lower courts appears to find support
First Issue: Are Exhibits C and D Valid and Enforceable? in Dignos vs. Court of Appeals,[16] where the Court held:
Be that as it may, it is evident that when petitioners sold
The petitioner-spouses plead for the enforcement of their said land to the Cabigas spouses, they were no longer
agreement with private respondents as contained in Exhibits C owners of the same and the sale is null and void.
and D, and seek damages for the latters alleged breach In the present case, it is clear that the sellers no longer had
thereof. In Exhibit C, which was a private handwritten document any title to the parcels of land at the time of sale. Since Exhibit
labeled by the parties as Resibo ti Katulagan or Receipt of D, the alleged contract of repurchase, was dependent on the
Agreement, the petitioners appear to have sold to private validity of Exhibit C, it is itself void. A void contract cannot give
respondents the parcels of land in controversy covered by TCT rise to a valid one.[17] Verily, Article 1422 of the Civil Code
No. T-74950 and TCT No. T-100945. On the other hand, Exhibit provides that (a) contract which is the direct result of a previous
D, which was also a private handwritten document in Ilocano illegal contract, is also void and inexistent.
and labeled as Kasuratan, private respondents agreed that
Conchita Nool can acquire back or repurchase later on said land We should however add that Dignos did not cite its basis for
when she has the money.[15] ruling that a sale is null and void where the sellers were no
longer the owners of the property. Such a situation (where the
In seeking to enforce her alleged right to repurchase the sellers were no longer owners) does not appear to be one of the
parcels of land, Conchita (joined by her co-petitioner-husband) void contracts enumerated in Article 1409 of the Civil Code.
invokes Article 1370 of the Civil Code which mandates that (i)f [18]
Moreover, the Civil Code[19] itself recognizes a sale where the
the terms of a contract are clear and leave no doubt upon the goods are to be acquired x x x by the seller after the perfection
intention of the contracting parties, the literal meaning of its of the contract of sale, clearly implying that a sale is possible
stipulation shall control. Hence, petitioners contend that the even if the seller was not the owner at the time of sale, provided
Court of Appeals erred in affirming the trial courts finding and he acquires title to the property later on.
conclusion that said Exhibits C and D were not merely voidable
but utterly void and inexistent. In the present case however, it is likewise clear that the
sellers can no longer deliver the object of the sale to the buyers,
We cannot sustain petitioners view. Article 1370 of the Civil as the buyers themselves have already acquired title and delivery
Code is applicable only to valid and enforceable contracts. The thereof from the rightful owner, the DBP. Thus, such contract
Regional Trial Court and the Court of Appeals ruled that the may be deemed to be inoperative[20] and may thus fall, by


analogy, under item no. 5 of Article 1409 of the Civil As borne out by the evidence on record, the private
Code: Those which contemplate an impossible service. Article respondents bought the two parcels of land directly from DBP on
1459 of the Civil Code provides that the vendor must have a April 1, 1985 after discovering that petitioners did not own said
right to transfer the ownership thereof [object of the sale] at the property, the subject of Exhibits C and D executed on November
time it is delivered. Here, delivery of ownership is no longer 30, 1984.Petitioners, however, claim that they can exercise their
possible. It has become impossible. alleged right to repurchase the property, after private respondents
had acquired the same from DBP.[22] We cannot accede to this,
Furthermore, Article 1505 of the Civil Code provides that
for it clearly contravenes the intention of the parties and the
where goods are sold by a person who is not the owner thereof,
nature of their agreement. Exhibit D reads:
and who does not sell them under authority or with consent of
the owner, the buyer acquires no better title to the goods than the
seller had, unless the owner of the goods is by his conduct
precluded from denying the sellers authority to sell. Here, there
is no allegation at all that petitioners were authorized by DBP to
sell the property to the private respondents. Jurisprudence, on Nov. 30, 1984
the other hand, teaches us that a person can sell only what he
owns or is authorized to sell; the buyer can as a consequence That I, Anacleto Nool have bought from my sister
acquire no more than what the seller can legally transfer.[21] No Conchita Nool a land an area of four hectares (4 has.) in
one can give what he does not have neno dat quod non the value of One Hundred Thousand (100,000.00)
habet. On the other hand, Exhibit D presupposes that petitioners Pesos. It is our agreement as brother and sister that she
could repurchase the property that they sold to private can acquire back or repurchase later on said land when
respondents. As petitioners sold nothing, it follows that they can she has the money. [Underscoring supplied]
also repurchase nothing. Nothing sold, nothing to repurchase. In As proof of this agreement we sign as brother and sister
this light, the contract of repurchase is also inoperative and by this written document this day of Nov. 30, 1984, at
the same analogy, void. District 4, San Manuel, Isabela.
Contract of Repurchase Anacleto Nool
Dependent on Validity of Sale Sgd Emilio Paron


Sgd Conchita Nool thing sold, with the obligation to comply with
the provisions of article 1616 and other
Conchita Nool[23] stipulations which may have been agreed upon.
In Villarica, et al. Vs. Court of Appeals, et al.,
One repurchases only what one has previously sold. In other
decided on 29 November 1968, or barely seven
words, the right to repurchase presupposes a valid contract of
(7) days before the respondent Court
sale between the same parties. Undisputedly, private respondents
promulgated its decisions in this case, this
acquired title to the property from DBP, and not from the
Court, interpreting the above Article, held:
The right of repurchase is not a right granted
Assuming arguendo that Exhibit D is separate and distinct
the vendor by the vendee in a subsequent
from Exhibit C and is not affected by the nullity of the latter, still
instrument, but is a right reserved by the vendor
petitioners do not thereby acquire a right to repurchase the
in the same instrument of sale as one of the
property. In that scenario, Exhibit D ceases to be a right to
stipulations of the contract. Once the instrument
repurchase ancillary and incidental to the contract of sale; rather,
of absolute sale is executed, the vendor can not
it becomes an accepted unilateral promise to sell. Article 1479 of
longer reserve the right to repurchase, and any
the Civil Code, however, provides that an accepted unilateral
right thereafter granted the vendor by the
promise to buy or sell a determinate thing for a price certain is
vendee in a separate instrument cannot be a
binding upon the promissor if the promise is supported by a
right of repurchase but some other right like the
consideration distinct from the price. In the present case, the
option to buy in the instant case. x x x.
alleged written contract of repurchase contained in Exhibit D is
bereft of any consideration distinct from the price. Accordingly, In the earlier case of Ramos, et al. vs.
as an independent contract, it cannot bind private Icasiano, et al., decided in 1927, this Court had
respondents. The ruling in Diamante vs. CA[24] supports this. In already ruled that an agreement to repurchase
that case, the Court through Mr. Justice Hilario G. Davide, Jr. becomes a promise to sell when made after the
explained: sale, because when the sale is made without
such an agreement, the purchaser acquires the
Article 1601 of the Civil Code provides: thing sold absolutely, and if he afterwards
grants the vendor the right to repurchase, it is a
Conventional redemption shall take place when new contract entered into by the purchaser, as
the vendor reserves the right to repurchase the absolute owner already of the object. In that


case the vendor has nor reserved to himself the Conchita Nool and Anacleto Nool, were all siblings and heirs
right to repurchase. qualified to repurchase the two parcels of land under Sec. 119 of
the Public Land Act which provides that (e)very conveyance of
In Vda. De Cruzo, et al. vs. Carriaga, et al. this
land acquired under the free patent or homestead provisions,
Court found another occasion to apply the
when proper, shall be subject to repurchase by the applicant, his
foregoing principle.
widow or legal heirs, within a period of five years from the date
Hence, the Option to Repurchase executed by private of conveyance. Assuming the applicability of this statutory
respondent in the present case, was merely a promise to provision to the case at bar, it is indisputable that Private
sell, which must be governed by Article 1479 of the Respondent Anacleto Nool already repurchased from DBP the
Civil Code which reads as follows: contested properties. Hence, there was no more right of
repurchase that his sister Conchita or brothers Victorino and
Art. 1479. A promise to buy and sell a Francisco could exercise. The properties were already owned by
determinate thing for a price certain is an heir of the homestead grantee and the rationale of the of the
reciprocally demandable. provision to keep homestead lands within the family of the
An accepted unilateral promise to buy or to sell grantee was thus fulfilled.[27]
a determinate thing for a price certain is The claim of a trust relation is likewise without merit. The
binding upon the promissor if the promise is records show that private respondents did not purchase the
supported by a consideration distinct from the contested properties from DBP in trust for petitioners. The
price. former, as previously mentioned, in fact bought the land from
DBP upon realization that the latter could not validly sell the
same. Obviously, petitioners bought it for themselves. There is
Right to Repurchase Based on no evidence at all in the records that they bought the land in trust
Homestead or Trust Non-Existent for private respondents. The fact that Anacleto Nool was the
younger brother of Conchita Nool and that they signed a contract
Petitioners also base their alleged right to repurchase on (1) of repurchase, which as discussed earlier was void, does not
Sec. 119 of the Public Land Act[25] and (2) an implied trust prove the existence of an implied trust in favor of petitioners.
relation as brother and sister.[26]
The Court notes that Victorino Nool and Francisco Nool Second Issue: No Estoppel in Impugning the
mortgaged the land to DBP. The brothers, together with Validity of Void Contracts


Petitioners argue that when Anacleto Nool took the Anacleto Nool who owed the former a balance of P14,000.00
possession of the two hectares, more or less, and let the other and (2) to order petitioners to pay rent when they were allowed
two hectares to be occupied and cultivated by plaintiffs- to cultivate the said two hectares.[31]
appellants, Anacleto Nool cannot later on disclaim the terms or
We are not persuaded. Based on the previous discussion, the
contions (sic) agreed upon and his actuation is within the ambit
balance of P14,000.00 under the void contract of sale may not be
of estoppel x x x.[28] We disagree. The private respondents cannot
enforced. Petitioners are the ones who have an obligation to
be estopped from raising the defense of nullity of contract,
return what they unduly and improperly received by reason of
specially in this case where they acted in good faith, believing
the invalid contract of sale. Since they cannot legally give title to
that indeed petitioners could sell the two parcels of land in
what they sold, they cannot keep the money paid for the object
question. Article 1410 of the Civil Code mandates that (t)he
of the sale. It is basic that (e)very person who through an act of
action or defense for the declaration of the inexistence of a
performance by another, or any other means, acquires or comes
contract does not prescribe. It is well-settled doctrine that as
into possession of something at the expense of the latter without
between parties to a contract, validity cannot be given to it by
just or legal ground, shall return the same.[32] Thus, if a void
estoppel if it is prohibited by law or it is against public policy
contract has already been performed, the restoration of what has
(19 Am. Jur. 802). It is not within the competence of any citizen
been given is in order.[33] Corollarily and as aptly ordered by
to barter away what public policy by law seeks to preserve.
[29] respondent appellate court, interest thereon will run only from
Thus, it is immaterial that private respondents initially acted
the time of private respondents demand for the return of this
to implement the contract of sale, believing in good faith that the
amount in their counterclaim.[34] In the same vein, petitioners
same was valid. We stress that a contract void at inception
possession and cultivation of the two hectares are anchored on
cannot be validated by ratification or prescription and certainly
private respondents tolerance. Clearly, the latters tolerance
cannot be binding on or enforceable against private respondents.
[30] ceased upon their counterclaim and demand on the former to
vacate. Hence, their right to possess and cultivate the land ipso
facto ceased.
Third Issue: Return of P30,000.00 with Interest WHEREFORE, the petition is DENIED and the assailed
and Payment of Rent Decision of the Court of Appeals affirming that of the trial court
is hereby AFFIRMED.
Petitioners further argue that it would be a miscarriage of SO ORDERED.
justice to order them (1) to return the sum of P30,000.00 to
private respondents when allegedly it was Private Respondent