1

Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. (n) Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract. (n) Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts Art. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendees failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendees failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. (1454-A-a)

1.

CRUZ vs. FERNANDO 477 scra 173 (2005) G.R. NO. 145470 December 9, 2005

LUIS V. CRUZ and AIDA CRUZ, vs. ALEJANDRO FERNANDO,SR., and RITA FERNANDO

DECISION AUSTRIA-MARTINEZ, J.: For resolution is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated October 3, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 61247, dismissing petitioners appeal and affirming the decision of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 79, in Civil Case No. 877-M-94. The antecedent facts are as follows: Luis V. Cruz and Aida Cruz (petitioners) are occupants of the front portion of a 710-square meter property located in Sto. Cristo, Baliuag, Bulacan. On October 21, 1994, spouses Alejandro Fernando, Sr. and Rita Fernando (respondents) filed before the RTC a complaint for accion publiciana against petitioners, demanding the latter to vacate the premises and to pay the amount of P500.00 a month as reasonable rental for the use thereof. Respondents alleged in their complaint that: (1) they are owners of the property, having bought the same from the spouses Clodualdo and Teresita Glorioso (Gloriosos) per Deed of Sale dated March 9, 1987; (2) prior to their acquisition of the property, the Gloriosos offered to sell to petitioners the rear portion of the property but the transaction did not materialize due to petitioners failure to exercise their option; (3) the offer to sell is embodied in a Kasunduan dated August 6, 1983 executed before the Barangay Captain; (4) due to petitioners failure to buy the allotted portion, respondents bought the whole property from the Gloriosos; and (5) despite repeated demands, petitioners refused to vacate the property.[2] Petitioners filed a Motion to Dismiss but the RTC dismissed it for lack of merit in its Order dated March 6, 1995.[3] Petitioners then filed their Answer setting forth the affirmative defenses that: (1) the Kasunduan is a perfected contract of sale; (2) the agreement has already been partially consummated as they already relocated their house from the rear portion of the lot to the front portion that was sold to them; (3) Mrs. Glorioso prevented the complete consummation of the sale when she refused to have the exact boundaries of the lot bought by petitioners surveyed, and the existing survey was made without their knowledge and participation; and (4) respondents are buyers in bad faith having bought that portion of the lot occupied by them (petitioners) with full knowledge of the prior sale to them by the Gloriosos.[4] After due proceedings, the RTC rendered a Decision on April 3, 1998 in favor of respondents. The decretal portion of the decision provides: PREMISES CONSIDERED, the herein plaintiffs was able to prove by preponderance of evidence the case of accion publiciana, against the defendants and judgment is hereby rendered as follows: 1. Ordering defendants and all persons claiming under them to vacate placefully (sic) the premises in question and to remove their house therefore (sic); 2. Ordering defendants to pay plaintiff the sum of P500.00 as reasonable rental per month beginning October 21, 1994 when the case was filed before this Court and every month thereafter until they vacate the subject premises and to pay the costs of suit. The counter claim is hereby DISMISSED for lack of merit. SO ORDERED.[5] Petitioners appealed the RTC decision but it was affirmed by the CA per its Decision dated October 3, 2000. Hence, the present petition raising the following issues: 1. Whether the Honorable Court of Appeals committed an error of law in holding that the Agreement (Kasunduan) between the parties was a mere offer to sell, and not a perfected Contract of Purchase and Sale?

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2. Whether the Honorable Court of Appeals committed an error of law in not holding that where the parties clearly gave the petitioners a period of time within which to pay the price, but did not fix said period, the remedy of the vendors is to ask the Court to fix the period for the payment of the price, and not an accion publiciana? 3. Whether the Honorable Court of Appeals committed an error of law in not ordering respondents to at least deliver the back portion of the lot in question upon payment of the agreed price thereof by petitioners, assuming that the Regional Trial Court was correct in finding that the subject matter of the sale was said back portion, and not the front portion of the property? 4. Whether the Honorable Court of Appeals committed an error of law in affirming the decision of the trial court ordering the petitioners, who are possessors in good faith, to pay rentals for the portion of the lot possessed by them?[6] The RTC dwelt on the issue of which portion was being sold by the Gloriosos to petitioners, finding that it was the rear portion and not the front portion that was being sold; while the CA construed the Kasunduan as a mere contract to sell and due to petitioners failure to pay the purchase price, the Gloriosos were not obliged to deliver to them (petitioners) the portion being sold. Petitioners, however, insist that the agreement was a perfected contract of sale, and their failure to pay the purchase price is immaterial. They also contend that respondents have no cause of action against them, as the obligation set in the Kasunduan did not set a period, consequently, there is no breach of any obligation by petitioners. The resolution of the issues in this case principally is dependent on the interpretation of the Kasunduan dated August 6, 1983 executed by petitioners and the Gloriosos. The Kasunduan provided the following pertinent stipulations: a. Na pumayag ang mga maysumbong (referring to the Gloriosos) na pagbilhan ang mga ipinagsumbong (referring to petitioners) na bahagi ng lupa at ang ipagbibili ay may sukat na 213 metrong parisukat humigit kumulang sa halagang P40.00 bawat metrong parisukat; b. Na sa titulong papapanaugin ang magiging kabuuang sukat na mauukol sa mga ipinagsusumbong ay 223 metrong parisukat at ang 10 metro nito ay bilang kaloob ng mga maysumbong sa mga Ipinagsusumbong na bahagi ng right of way; c. Na ang right of way ay may luwang na 1.75 meters magmula sa daang Lopez Jaena patungo sa likuran ng lote na pagtatayuan ng bahay ng mga Ipinagsusumbong na kanyang bibilhin; d. Na ang gugol sa pagpapasukat at pagpapanaog ng titulo ay paghahatian ng magkabilang panig na ang panig ay magbibigay ng halagang hindi kukulanging sa halagang tig-AAPAT NA DAANG PISO (P400.00); e. Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kanilang nabili o mabibili sa buwan ng Enero 31, 1984;[7] (Emphasis supplied) Under Article 1458 of the Civil Code, a contract of sale is a contract by which one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. Article 1475 of the Code further provides that the contract of sale is perfected at the moment there is 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 the provisions of the law governing the form of contracts. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold, as distinguished from a contract to sell where ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price.[8] Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until full payment of the price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. The Kasunduan provides for the following terms and conditions: (a) that the Gloriosos agreed to sell to petitioners a portion of the property with an area of 213 meters at the price of P40.00 per square meter; (b) that in the title that will be caused to be issued, the aggregate area is 223 square meters with 10 meters thereof serving as right of way; (c) that the right of way shall have a width of 1.75 meters from Lopez Jaena road going towards the back of the lot where petitioners will build their house on the portion of the lot that they will buy; (d) that the expenses for the survey and for the issuance of the title will be divided between the parties with each party giving an amount of no less than P400.00; and (e) that petitioners will definitely relocate their house to the portion they bought or will buy by January 31, 1984. The foregoing terms and conditions show that it is a contract to sell and not a contract of sale. For one, the conspicuous absence of a definite manner of payment of the purchase price in the agreement confirms the conclusion that it is a contract to sell. This is because the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist.[9] 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.[10] As held in Toyota Shaw, Inc. vs. Court of Appeals,[11] a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. The Kasunduan does not establish any definite agreement between the parties concerning the terms of payment. What it merely provides is the purchase price for the 213-square meter property at P40.00 per square meter. For another, the telltale provision in the Kasunduan that: Na pumayag ang mga maysumbong na pagbilhan ang mga ipinagsumbong na bahagi ng lupa at angipagbibili ay may sukat na 213 metrong parisukat humigit kumulang sa halagang P40.00 bawat metrong parisukat, simply means that the Gloriosos only agreed to sell a portion of the property and that the portion to be sold measures 213 square meters. Another significant provision is that which reads: Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kanilang nabili o mabibili sa buwan ng Enero 31, 1984. The foregoing indicates that a contract of sale is yet to be consummated and ownership of the property remained in the Gloriosos. Otherwise, why would the alternative term mabibili be used if indeed the property had already been sold to petitioners. In addition, the absence of any formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership.[12]

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Normally, in a contract to sell, the payment of the purchase price is the positive suspensive condition upon which the transfer of ownership depends.[13] The parties, however, are not prohibited from stipulating other lawful conditions that must be fulfilled in order for the contract to be converted from a contract to sell or at the most an executory sale into an executed one.[14] In the present case, aside from the payment of the purchase price, there existed another suspensive condition, i.e.: that petitioners will relocate their house to the portion they bought or will buy by January 31, 1984. Petitioners failed to abide by the express condition that they should relocate to the rear portion of the property being bought by January 31, 1984. Indeed, the Kasunduandiscloses that it is the rear portion that was being sold by the Gloriosos, and not the front portion as petitioners stubbornly claim. This is evident from the provisions establishing a right of way from Lopez Jaena road going towards the back of the lot, and requiring them to relocate their house to the portion being sold by January 31, 1984. Petitioners are presently occupying the front portion of the property. Why the need for a right of way and for petitioners to relocate if the front portion on which their house stands is the portion being sold? This condition is a suspensive condition noncompliance of which prevented the Gloriosos from proceeding with the sale and ultimately transferring title to petitioners; and the Kasunduan from having obligatory force.[15] It is established by evidence that the petitioners did not transfer their house located in the front portion of the subject property to the rear portion which, under the Kasunduan, they intended to buy. Thus, no obligation arose on the part of the Gloriosos to consider the subject property as having been sold to petitioners because the latters non-fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected. Petitioners admit that they have not paid a single centavo to the Gloriosos. However, petitioners argue that their nonpayment of the purchase price was due to the fact that there is yet to be a survey made of the property. But evidence shows, and petitioners do not dispute, that as early as August 12, 1983, or six days after the execution of theKasunduan, a survey has already been made and the property was subdivided into Lot Nos. 565-B-1 (front portion) and 565-B-2 (rear portion), with Lot No. 565-B-2 measuring 223 square meters as the portion to be bought by petitioners. Petitioners question the survey made, asserting that it is a table survey made without their knowledge and participation. It should be pointed out that the Kasunduanmerely provides that the expenses for the survey will be divided between them and that each party should give an amount of no less than P400.00. Nowhere is it stated that the survey is a condition precedent for the payment of the purchase price. Petitioners further claim that respondents have no cause of action against them because their obligation to pay the purchase price did not yet arise, as the agreement did not provide for a period within which to pay the purchase price. They argue that respondents should have filed an action for specific performance or judicial rescission before they can avail of accion publiciana. Notably, petitioners never raised these arguments during the proceedings before the RTC. Suffice it to say that issues raised for the first time on appeal and not raised timely in the proceedings in the lower court are barred by estoppel.[16] Matters, theories or arguments not brought out in the original proceedings cannot be considered on review or appeal where they are raised for the first time. To consider the alleged facts and arguments raised belatedly would amount to trampling on the basic principles of fair play, justice and due process.[17] Moreover, it would be inutile for respondents to first petition the court to fix a period for the performance of the contract. In the first place, respondents are not parties to the Kasunduan between petitioners and the Gloriosos, and they have no standing whatsoever to seek such recourse. In the second place, such recourse properly pertains to petitioners. It was they who should have sought the courts intercession. If petitioners believed that they have an actionable contract for the sale of the property, prudence and common sense dictate that they should have sought its enforcement forthwith. Instead, petitioners whiled away their time. Furthermore, there is no need for a judicial rescission of the Kasunduan for the simple reason that the obligation of the Gloriosos to transfer the property to petitioners has not yet arisen. There can be no rescission of an obligation that is nonexistent, considering that the suspensive conditions therefor have not yet happened.[18] Hence, petitioners have no superior right of ownership or possession to speak of. Their occupation of the property was merely through the tolerance of the owners. Evidence on record shows that petitioners and their predecessors were able to live and build their house on the property through the permission and kindness of the previous owner, Pedro Hipolito, who was their relative,[19] and subsequently, Teresita Glorioso, who is also their relative. They have no title or, at the very least, a contract of lease over the property. Based as it was on mere tolerance, petitioners possession could neither ripen into ownership nor operate to bar any action by respondents to recover absolute possession thereof.[20] There is also no merit to petitioners contention that respondents are buyers in bad faith. As explained in Coronel vs. Court of Appeals: In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer.[21] (Emphasis supplied) A person who occupies the land of another at the latter's forbearance or permission without any contract between them is necessarily bound by an implied promise that he will vacate upon demand.[22]

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Considering that petitioners continued possession of the property has already been rendered unlawful, they are bound to pay reasonable rental for the use and occupation thereof, which in this case was appropriately pegged by the RTC at P500.00 per month beginning October 21, 1994 when respondents filed the case against them until they vacate the premises. Finally, petitioners seek compensation for the value of the improvements introduced on the property. Again, this is the first time that they are raising this point. As such, petitioners are now barred from seeking such relief.[23] WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated October 3, 2000 in CA-G.R. CV No. 61247 is AFFIRMED. SO ORDERED. 2. NAVARRA vs. Planters Devt Bank G.R. No. 172674 July 12, 2007
JORGE NAVARRA and CARMELITA BERNARDO NAVARRA and RRRC DEVELOPMENT CORPORATION, Petitioners, vs. PLANTERS DEVELOPMENT BANK and ROBERTO GATCHALIAN REALTY, INC.,

DECISION GARCIA, J.: Assailed and sought to be set aside in this petition for review under Rule 45 of the Rules of Court is the decision[1] dated September 27, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 50002, as reiterated in its resolution[2] dated May 8, 2006, denying reconsideration thereof. The challenged decision reversed that of the Regional Trial Court (RTC) of Makati City, Branch 66, in its Civil Case No. 16917, an action for Specific Performance and Injunction thereat commenced by the herein petitioners against the respondents. The Makati RTC ruled that a perfected contract of sale existed in favor of Jorge Navarra and Carmelita Bernardo Navarra (Navarras) over the properties involved in the suit and accordingly ordered Planters Development Bank (Planters Bank) to execute the necessary deed of sale therefor. The CA reversed that ruling. Hence, this recourse by the petitioners. The facts: The Navarras are the owners of five (5) parcels of land located at B.F. Homes, Paraaque and covered by Transfer Certificates of Title (TCT) Nos. S-58017, S-58011, S-51732, S-51733 and A-14574. All these five (5) parcels of land are the subject of this controversy. On July 5, 1982, the Navarras obtained a loan of P1,200,000.00 from Planters Bank and, by way of security therefor, executed a deed of mortgage over their aforementioned five (5) parcels of land. Unfortunately, the couple failed to pay their loan obligation. Hence, Planters Bank foreclosed on the mortgage and the mortgaged assets were sold to it for P1,341,850.00, it being the highest bidder in the auction sale conducted on May 16, 1984. The one-year redemption period expired without the Navarras having redeemed the foreclosed properties. On the other hand, co-petitioner RRRC Development Corporation (RRRC) is a real estate company owned by the parents of Carmelita Bernardo Navarra. RRRC itself obtained a loan from Planters Bank secured by a mortgage over another set of properties owned by RRRC. The loan having been likewise unpaid, Planters Bank similarly foreclosed the mortgaged assets of RRRC. Unlike the Navarras, however, RRRC was able to negotiate with the Bank for the redemption of its foreclosed properties by way of a concession whereby the Bank allowed RRRC to refer to it would-be buyers of the foreclosed RRRC properties who would remit their payments directly to the Bank, which payments would then be considered as redemption price for RRRC. Eventually, the foreclosed properties of RRRC were sold to third persons whose payments therefor, directly made to the Bank, were in excess by P300,000.00 for the redemption price. In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to repurchase the five (5) lots earlier auctioned to the Bank, with a request that he be given untilAugust 31, 1985 to pay the down payment of P300,000.00. Dated July 18, 1985 and addressed to then Planters Bank President Jesus Tambunting, the letter reads in full: This will formalize my request for your kind consideration in allowing my brother and me to buy back my house and lot and my restaurant building and lot together with the adjacent road lot. Since my brother, who is working in Saudi Arabia, has accepted this arrangement only recently as a result of my urgent offer to him, perhaps it will be safe for us to set August 31, 1985 as the last day for the payment of a P300,000.00 downpayment. I hope you will grant us the opportunity to raise the funds within this period, which includes an allowance for delays. The purchase price, I understand, will be based on the redemption value plus accrued interest at the prevailing rate up to the date of our sales contract. Maybe you can give us a long term payment scheme on the basis of my brothers annual savings of roughly US$30,000.00 everytime he comes home for his home leave. I realize that this is not a regular transaction but I am seeking your favor to give me a chance to reserve whatever values I can still recover from the properties and to avoid any legal complications that may arise as a consequence of the total loss of the Balangay lot. I hope that you will extend to me your favorable action on this grave matter. In response, Planters Bank, thru its Vice-President Ma. Flordeliza Aguenza, wrote back Navarra via a letter dated August 16, 1985, thus: Regarding your letter dated July 18, 1985, requesting that we give up to August 31, 1985 to buy back your house and lot and restaurant and building subject to a P300,000.00 downpayment on the purchase price, please be advised that the Collection Committee has agreed to your request. Please see Mr. Rene Castillo, Head, Acquired Assets Unit, as soon as possible for the details of the transaction so that they may work on the necessary documentation.

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Accordingly, Jorge Navarra went to the Office of Mr. Rene Castillo on August 20, 1985, bringing with him a letter requesting that the excess payment of P300,000.00 in connection with the redemption made by the RRRC be applied as down payment for the Navarras repurchase of their foreclosed properties. Because the amount of P300,000.00 was sourced from a different transaction between RRRC and Planters Bank and involved different debtors, the Bank required Navarra to submit a board resolution from RRRC authorizing him to negotiate for and its behalf and empowering him to apply the excess amount of P300,000.00 in RRRCs redemption payment as down payment for the repurchase of the Navarras foreclosed properties. Meanwhile, titles to said properties were consolidated in the name of Planters Bank, and on August 27, 1985, new certificates of title were issued in its name, to wit: TCT Nos. 97073, 97074, 97075, 97076 and 97077. Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra informing him that it could not proceed with the documentation of the proposed repurchase of the foreclosed properties on account of his non- compliance with the Banks request for the submission of the needed board resolution of RRRC. In his reply-letter of January 28, 1987, Navarra claimed having already delivered copies of the required board resolution to the Bank. The Bank, however, did not receive said copies. Thus, on February 19, 1987, the Bank sent a notice to the Navarrras demanding that they surrender and vacate the properties in question for their failure to exercise their right of redemption. Such was the state of things when, on June 31, 1987, in the RTC of Makati City, the Navarras filed their complaint for Specific Performance with Injunction against Planters Bank. In their complaint docketed in said court as Civil Case No. 16917 and raffled to Branch 66 thereof, the Navarras, as plaintiffs, alleged that a perfected contract of sale was made between them and Planters Bank whereby they would repurchase the subject properties for P1,800,000.00 with a down payment of P300,000.00. In its Answer, Planters Bank asserted that there was no perfected contract of sale because the terms and conditions for the repurchase have not yet been agreed upon. On September 9, 1988, a portion of the lot covered by TCT No. 97077 (formerly TCT No. A-14574) was sold by Planters Bank to herein co-respondent Roberto Gatchalian Realty, Inc. (Gatchalian Realty). Consequently, TCT No. 97077 was cancelled and TCT No. 12692 was issued in the name of Gatchalian Realty. This prompted the Navarras to amend their complaint by impleading Gatchalian Realty as additional defendant. In a decision dated July 10, 1995, the trial court ruled that there was a perfected contract of sale between the Navarras and Planters Bank, and accordingly rendered judgment as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering: a) the cancellation of the Deed of Absolute Sale (Exh. 2) over lot 4137-C between defendant Planters Development Bank and defendant Roberto Gatchalian Realty Corporation (RGRI) with the vendor bank refunding all the payments made by the vendee RGRI without interest less the five percent (5%) brokers commission: b) the defendant Planters Development Bank to execute the Deed of Absolute Sale over the lots covered by TCT Nos. 97073, 97074, 97075, 97076, and 97077 in favor of all the plaintiffs for a consideration of ONE MILLION EIGHT HUNDRED THOUSAND (P1,800,000.00) less the downpayment of P300,000.00 plus interest at the rate of twenty five percent (25%) per year for five (5) years to be paid in full upon the execution of the contract; c) the defendant Planters Development Bank the amount of TEN THOUSAND PESOS (P10,000.00) by way of attorneys fees. d) No costs. SO ORDERED. Therefrom, Planters Bank and Gatchalian Realty separately went on appeal to the CA whereat their appellate recourse were consolidated and docketed as CA-G.R. CV No. 50002. As stated at the threshold hereof, the appellate court, in its decision of September 27, 2004, reversed that of the trial court and ruled that there was no perfected contract of sale between the parties. Partly says the CA in its decision: The Court cannot go along with the deduction of the trial court that the response of Planters Bank was favorable to Jorge Navarras proposal and that the P300,000.00 in its possession is a down payment and as such sufficient bases to conclude that there was a valid and perfected contract of sale. Based on the turn of events and the tenor of the communications between the offerors and the creditor bank, it appears that there was not even a perfected contract to sell, much less a perfected contract of sale. Article 1319 cited by the trial court provides that the acceptance to an offer must be absolute. Simply put, there must be unqualified acceptance and no condition must tag along. But Jorge Navarra in trying to convince the bank to agree, had himself laid out terms in offering (1) a downpayment of P300,000.00 and setting (2) as deadline August 31, 1985 for the payment thereof. Under these terms and conditions the bank indeed accepted his offer, and these are essentially the contents of Exhibits J and K. But was there compliance? According to the evidence on file the P300,000.00, if at all, was given beyond the agreed period. The court a quo missed the fact that the said amount came from the excess of the proceeds of the sale to the Pea spouses which Jorge Navarra made to appear was made before the deadline he set of August 31, 1985. But this is athwart Exhibits M-1 and N, the Contract to Sell and the Deed of Sale between RRRC and the Peas, for these were executed only on September 13, 1985 and October 7, 1985 respectively.

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xxx xxx xxx

There were two separate and independent loans secured by distinct mortgages on different lots and their only commonality is the relationship of the Navarras and Bernardo families. It is thus difficult to conceive and to conclude that such Byzantine arrangement was acquiesced to and provided for in that single and simple letter of the bank. With their motion for reconsideration having been denied by the CA in its resolution of May 8, 2006, petitioners are now with this Court via this recourse on their submission that the CA erred I XXX IN CONCLUDING THAT THERE WAS NO PERFECTED CONTRACT TO REPURCHASE THE FORECLOSED PROPERTIES BETWEEN THE PETITIONERS AND THE PRIVATE RESPONDENT PLANTERS DEVELOPMENT BANK, AS CORRECTLY FOUND BY THE TRIAL COURT. II XXX IN HOLDING THAT THE PARTIES NEVER GOT PAST THE NEGOTIATION STAGE. While the question raised is essentially one of fact, of which the Court normally eschews from, yet, given the conflicting factual findings of the trial and appellate courts, the Court shall go by the exception [3] to the general rule and proceed to make its own assessment of the evidence. We DENY. Petitioners contend that a perfected contract of sale came into being when respondent Bank, thru a letter dated August 16, 1985, formally accepted the offer of the Navarras to repurchase the subject properties. In general, contracts undergo three distinct stages, to wit: negotiation, perfection or birth, and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of their agreement. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract, i.e., consent, object and price. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.[4] A negotiation is formally initiated by an offer which should be certain with respect to both the object and the cause or consideration of the envisioned contract. In order to produce a contract, there must be acceptance, which may be express or implied, but it must not qualify the terms of the offer. The acceptance of an offer must be unqualified and absolute to perfect the contract. In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.[5] Here, the Navarras assert that the following exchange of correspondence between them and Planters Bank constitutes the offer and acceptance, thus: Letter dated July 18, 1985 of Jorge Navarra: This will formalize my request for your kind consideration in allowing my brother and me to buy back my house and lot and my restaurant building and lot together with the adjacent road lot. Since my brother, who is working in Saudi Arabia, has accepted this arrangement only recently as a result of my urgent offer to him, perhaps it will be safe for us to set August 31, 1985 as the last day for the payment of a P300,000.00 downpayment. I hope you will grant us the opportunity to raise the funds within this period, which includes an allowance for delays. The purchase price, I understand, will be based on the redemption value plus accrued interest at the prevailing rate up to the date of our sales contract. Maybe you can give us a long term payment scheme on the basis of my brothers annual savings of roughly US$30,000.00 everytime he comes home for his home leave. I realize that this is not a regular transaction but I am seeking your favor to give me a chance to reserve whatever values I can still recover from the properties and to avoid any legal complications that may arise as a consequence of the total loss of the Balangay lot. I hope that you will extend to me your favorable action on this grave matter. Letter dated August 16, 1985 of Planters Bank Regarding your letter dated July 18, 1985, requesting that we give up to August 31, 1985 to buy back your house and lot and restaurant and building subject to a P300,000.00 downpayment on the purchase price, please be advised that the Collection Committee has agreed to your request. Please see Mr. Rene Castillo, Head, Acquired Assets Unit, as soon as possible for the details of the transaction so that they may work on the necessary documentation. (Emphasis ours) Given the above, the basic question that comes to mind is: Was the offer certain and the acceptance absolute enough so as to engender a meeting of the minds between the parties? Definitely not. While the foregoing letters indicate the amount of P300,000.00 as down payment, they are, however, completely silent as to how the succeeding installment payments shall be made. At most, the letters merely acknowledge that the down payment of P300,000.00 was agreed upon by the parties. However, this fact cannot lead to the conclusion that a contract of sale had been perfected. Quite recently, this Court held that before a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established since the 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.[6]

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Too, the Navarras letter/offer failed to specify a definite amount of the purchase price for the sale/repurchase of the subject properties. It merely stated that the purchase price will be based on the redemption value plus accrued interest at the prevailing rate up to the date of the sales contract. The ambiguity of this statement only bolsters the uncertainty of the Navarras so-called offer for it leaves much rooms for such questions, as: what is the redemption value? what prevailing rate of interest shall be followed: is it the rate stipulated in the loan agreement or the legal rate? when will the date of the contract of sale be based, shall it be upon the time of the execution of the deed of sale or upon the time when the last installment payment shall have been made? To our mind, these questions need first to be addressed, discussed and negotiated upon by the parties before a definite purchase price can be arrived at. Significantly, the Navarras wrote in the same letter the following: Maybe you can give us a long-term payment scheme on the basis of my brothers annual savings of roughly US$30,000.00 every time he comes home for his home leave. Again, the offer was not clear insofar as concerned the exact number of years that will comprise the long-term payment scheme. As we see it, the absence of a stipulated period within which the repurchase price shall be paid all the more adds to the indefiniteness of the Navarras offer. Clearly, then, the lack of a definite offer on the part of the spouses could not possibly serve as the basis of their claim that the sale/repurchase of their foreclosed properties was perfected. The reason is obvious: one essential element of a contract of sale is wanting: the price certain. There can be no contract of sale unless the following elements concur: (a) consent or meeting of the minds; (b) determinate subject matter; and (c) price certain in money or its equivalent. Such contract is born or perfected from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.[7] Here, what is dramatically clear is that there was no meeting of minds vis-a-visthe price, expressly or impliedly, directly or indirectly. Further, the tenor of Planters Banks letter-reply negates the contention of the Navarras that the Bank fully accepted their offer. The letter specifically stated that there is a need to negotiate on the other details of the transaction[8] before the sale may be formalized. Such statement in the Banks letter clearly manifests lack of agreement between the parties as to the terms of the purported contract of sale/repurchase, particularly the mode of payment of the purchase price and the period for its payment. The law requires acceptance to be absolute and unqualified. As it is, the Banks letter is not the kind which would constitute acceptance as contemplated by law for it does not evince any categorical and unequivocal undertaking on the part of the Bank to sell the subject properties to the Navarras. The Navarras attempt to prove the existence of a perfected contract of sale all the more becomes futile in the light of the evidence that there was in the first place no acceptance of their offer. It should be noted that aside from their first letter dated July 18, 1985, the Navarras wrote another letter dated August 20, 1985, this time requesting the Bank that the down payment of P300,000.00 be instead taken from the excess payment made by the RRRC in redeeming its own foreclosed properties. The very circumstance that the Navarras had to make this new request is a clear indication that no definite agreement has yet been reached at that point. As we see it, this request constitutes a new offer on the part of the Navarras, which offer was again conditionally accepted by the Bank as in fact it even required the Navarras to submit a board resolution of RRRC before it could proceed with the proposed sale/repurchase. The eventual failure of the spouses to submit the required board resolution precludes the perfection of a contract of sale/repurchase between the parties. As earlier mentioned, contracts are perfected when there is concurrence of the parties wills, manifested by the acceptance by one of the offer made by the other.[9] Here, there was no concurrence of the offer and acceptance as would result in a perfected contract of sale. Evidently, what transpired between the parties was only a prolonged negotiation to buy and to sell, and, at the most, an offer and a counter-offer with no definite agreement having been reached by them. With the hard reality that no perfected contract of sale/repurchase exists in this case, any independent transaction between the Planters Bank and a third-party, like the one involving the Gatchalian Realty, cannot be affected. WHEREFORE, the petition is DENIED and the assailed decision and resolution of the Court of Appeals are AFFIRMED. No pronouncement as to costs. SO ORDERED.

3. VILLANUEVA vs. CA

[G.R. No. 107624. January 28, 1997]

GAMALIEL C. VILLANUEVA and IRENE C. VILLANUEVA, petitioners, vs. COURT OF APPEALS, SPOUSES JOSE and LEONILA DELA CRUZ, and SPOUSES GUIDO and FELICITAS PILE, respondents.

DECISION PANGANIBAN, J.: The main issue here is whether a contract of sale has been perfected under the attendant facts and circumstances. The petition filed on December 18, 1992 assails the Decision [1] of respondent Court of Appeals promulgated on October 23, 1992 in CA-G.R. CV No. 30741 rendered by the Eleventh Division [2] dismissing the appeal of petitioners and affirming the decision in Civil Case No. Q-50844 dated December 28, 1990 of the Regional Trial Court, Branch 83 of Quezon City, presided by Judge Estrella T. Estrada. The dispositive portion of the affirmed decision of the RTC reads: [3] "WHEREFORE, judgment is hereby rendered dismissing plaintiff's instant action for specific performance. However, defendant Jose de la Cruz is hereby ordered to refund or reimburse the amount of Ten Thousand Pesos (P10,000.00) to plaintiff Irene Villanueva.

8
The parties' other claims for damages and attorney's fees are also hereby dismissed for being necessary consequences of litigation. No pronouncement as to costs."

The Facts The factual antecedents of this case as found by the trial court were reproduced in the assailed Decision, [4] as follows: [5] "x x x plaintiff (and now petitioner) Gamaliel Villanueva has been a tenant-occupant of a unit in the 3-door apartment building erected on a parcel of land owned by defendants-spouses (now private respondents) Jose Dela Cruz and Leonila dela Cruz, with an area of 403 square meters, more or less, located at Short Horn, Project 8, Quezon City (Exhibit 'L'), having succeeded in the occupancy of said unit from the previous tenant Lolita Santos sometime in 1985. About February of 1986, defendant Jose dela Cruz offered said parcel of land with the 3-door apartment building for sale and plaintiffs, son and mother, showed interest in the property. As an initial step, defendant Jose dela Cruz gave plaintiff Irene Villanueva a letter of authority dated February 12, 1986 (Exhibit 'A') for her to inspect the subject property. Because said property was in arrears in the payment of the realty taxes, defendant Jose dela Cruz approached plaintiff Irene Villanueva and asked for a certain amount to pay for the taxes so that the property would be cleared of any incumbrance (sic). Plaintiff Irene Villanueva gave P10,000.00 on two occasions P5,000.00 on July 15, 1986 (Exhibit 'F') and another P5,000.00 on October 17, 1986 (Exhibit 'D'). It was agreed by them that said P10,000.00 would form part of the sale price ofP550,000.00. Sometime thereafter, defendant Jose dela Cruz went to plaintiff Irene Villanueva bringing with him Mr. Ben Sabio, a tenant of one of the units in the 3-door apartment building located on the subject property, and requested her and her son to allow said Ben Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which the plaintiffs consented, so that they would just purchase the other half portion and would be paying only P265,000.00, they having already given an amount of P10,000.00 used for paying the realty taxes in arrears. Accordingly the property was subdivided and two (2) separate titles were secured by defendants Dela Cruz. Mr. Ben Sabio immediately made payments by installments. Sometime in March, 1987 or more specifically on March 6, 1987, defendants Dela Cruz executed in favor of their co-defendants, the spouses Guido Pili (sic) and Felicitas Pili (sic), a Deed of Assignment of the other one-half portion of the parcel of land wherein plaintiff Gamaliel Villanueva's apartment unit is situated, designated as Lot 3-A of the Subdivision Plan (LRC) Psd337290, Block 24, Pcs-4865, with an area of 201.50 square meters, more or less, and covered by Transfer Certificate of Title 332445, purportedly as full payment and satisfaction of an indebtedness (sic) obtained from defendants Pili (sic) (Exhibit 'G'; Exhibit '3'). Consequently, Transfer Certificate of Title No. 356040 was issued in the name of defendants Pili (sic) also on March 6, 1987. Immediately thereafter, the plaintiffs came to know of such assignment and transfer and issuance of a new certificate of title in favor of defendants Pili (sic) so that plaintiff Gamaliel Villanueva complained to the barangay captain of Bahay Turo, Quezon City, on the ground that there was already an agreement between defendants Dela Cruz and themselves that said portion of the parcel of land owned by defendants Dela Cruz would be sold to him. As there was no settlement arrived at, the plaintiffs elevated their complaint to this Court through the instant action." The trial court rendered its decision in favor of private respondents. An appeal was duly brought to public respondent which as earlier stated affirmed the said decision. Hence, this petition for review on certiorari under Rule 45 of the Rules of Court. The Issues The following errors are alleged to have been committed by public respondent:
[6]

I The Court of Appeals erred in failing to find that there is a perfected contract of sale of subject property between petitioners and respondents spouses Dela Cruz II The Court of Appeals erred in applying the Statute of Frauds in this case when it is a contract of sale that was partly executed III The Court of Appeals erred in not finding that this being a case of double sale of immovable property, although respondents spouses Pili (sic) recorded the deed of assignment to them in the Registry of Deeds they were not in good faith while (sic) petitioners as purchasers thereof were in prior possession in good faith of the property. IV The Court of Appeals erred in failing to reverse and set aside the appealed judgment of the trial court and rendering a judgment for petitioners" In the opinion of this Court, these four issues may be summed up in a single question: Under the factual circumstances of this case, was there a perfected contract of sale? Petitioners contend that the adopted findings of facts of public respondent are contradicted by its ruling that there is no agreement as to the price of the apartments. They argue that on the basis of the facts found by public respondent, "the conclusion is ineluctable that there was a perfected contract of sale of the subject property." [7] According to petitioners, private respondents had to secure their consent to enable "Sabio to buy the one-half portion of the property where the unit Sabio was renting pertains so that petitioners will pay only the balance of P265,000.00 for the purchase of the other half after deducting the P10,000.00 petitioners advanced." [8] Public respondent's conclusion that the P10,000.00 paid to petitioners was not intended as part of the purchase price allegedly "collides" with its quoted findings, as follows: [9] "It was agreed by them that said P10,000.00 would form part of the sale price of P550,000.00. x x x defendant Jose de la Cruz .x x x requested her and her son to allow said Ben Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which plaintiffs consented, so they would purchase the other half portion and would be paying only P265,000.00 they having already given an amount of P10,000,00 used for paying the realty taxes in arrears.x x x" (Underscoring in the petition). The Court's Ruling The arguments of petitioners do not persuade us. While it is true that respondent Court adopted the recitation of facts of the trial court, it nonetheless later corrected the relevant portions thereof as it found that no perfected contract of sale was agreed upon. Thus, public respondent explained: [10]

9
"Appellants' theory of earnest money cannot be sustained in view of the catena of circumstance showing that the P10,000.00 given to appellees was not intended to form part of the purchase price. As the great commentator Manresa observes that the delivery of part of the purchase price should not be understood as constituting earnest money unless it be shown that such was the intention of the parties (Manresa Commentaries on the Civil Code, 2d ed., Vol. 10, p. 85). Moreover, as can be gleaned from the records there was no concrete agreement to the price and manner of payment:
'Q A Q A Will you tell us why your transaction with plaintiffs (petitioners herein) did not materialize? Because I have been returning to Mrs. Villanueva and in fact we have executed a Deed of Sale which was in fact not signed. Why did you not sign the Deed of Sale you mentioned? The Villanuevas told me to prepare the documents involved in this transaction because according to her (sic) she (sic) was only waiting for the money to come but because I was then being pressed by Felicitas Pile for the payment of my loan. I was constrained to assign the property to her. What are your other reasons? Aside from that we were still huggling (sic) for the purchase price then and since I was being pressed by my creditor, I was forced to make the assignment.'"

Q A

The most that public respondent can be faulted with is its failure to expressly state that although its conclusion of law was correct, the trial court erred in its statement of the facts. Was There a Perfected Contract of Sale? Petitioners contend that private respondents' counsel admitted that "P10,000 is partial or advance payment of the property (TSN, June 14 [should be 15], 4 (sic) 1990, pages 6 to 7)." Necessarily then, there must have been an agreement as to price. They cite Article 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." [11] Private respondents contradict this claim with the argument that "(w)hat was clearly agreed (upon) between petitioners and respondents Dela Cruz was that the P10,000.00 primarily intended as payment for realty tax was going to form part of the consideration of the sale if and when the transaction would finally be consummated." [12] Private respondents insist that there "was no clear agreement as to the true amount of consideration." [13] Generally, the findings of fact of the lower courts are entitled to great weight and not disturbed except for cogent reasons. [14] Indeed, they should not be changed on appeal in the absence of a clear showing that the trial court overlooked, disregarded, or misinterpreted some facts of weight and significance, which if considered would have altered the result of the case. [15] In this case, and subject to the above clarification made by the appellate court, petitioners have failed to convince us to alter such findings. In fact, a review of the evidence merely strengthens the conclusions of public respondent. We scoured the transcripts but we found that respondent dela Cruz never testified that he (or his spouse Leonila) had agreed to a definite price for the subject property. In fact, his testimony during the cross-examination firmly negated any price agreement with petitioners because he and his wife quoted the price of P575,000.00 and did not agree to reduce it to P550,000.00 as claimed by petitioner: [16]
"Q And despite the fact that the property was mortgaged with Development Bank of Rizal you still contrated (sic) Sandiego (sic) for the purpose of selling the property? A Yes, sir. Q And did Sandiego (sic) agree as agent in selling the property despite the fact that it was mortgaged with the Development Bank of Rizal? A Yes, sir. Q Can you recall the condition you offered to Sandiego (sic) to act as your agent in selling the same? A He will get certain commission for the same. Q Will you state the price and conditions set forth in selling the property? A P575 thousand, sir. Q That is the same offer that was given to you by plaintiff Mrs. Villanueva? A I can not recall, I think so. Q And you will agree with me that 1/2 of P575 thousand is how much (sic)? ATTY. MANZO: There (is) nothing to agree with you counsel. ATTY. GUPIT: And the offer to you, the agreed price between you and Mrs. Villanueva is P275 thousand as stated in the agreement that was prepared? ATTY. MANZO: Counsel is again assuming that there was an agreement made already. (ATTY. GUPIT:) He answered there is a document between Villanueva and Dela Cruz. ATTY. (MANZO): Let the witness be confronted by the document." We are not unmindful of petitioner Irene Villanueva's claim that the parties agreed on the sum of P550,000.00, as follows: [17] "ATTY. GUPIT What was the result of the negotiations? WITNESS (Irene Villanueva): We agreed that he would sell the land to us for the sum of, the amount of P550,000.00 xxx xxx xxx

WITNESS After the Deed of Sale relative to the purchase of the property was prepared, Mr. dela Cruz (private respondent Jose) came to me and told me that he talked with one of the tenants and he offered to buy the portion he was occupying if I will agree and I will cause the partition of the property between us. ATTY. GUPIT Did you agree with the proposal of Mr. dela Cruz that the portion of the property will be sold to one of the tenants? WITNESS Yes(,) sir. I agreed because we are (sic) both tenants. ATTY. GUPIT How about the price? How much are (sic) you supposed to pay in order to complete your payments? WITNESS We are (sic) supposed to divide the amount of P550,000.00."

10
To settle the above conflicting claims of the parties, petitioners could have presented the contract of sale allegedly prepared by private respondent Jose dela Cruz. Unfortunately, the contract was not presented in evidence. However, petitioners aver that even if the unsigned deed of sale was not produced, private respondent Jose dela Cruz "admitted preparing (said) deed in accordance with their agreement." [18] This judicial admission" is allegedly the "best proof of its existence." [19] Further it was "impossible" for petitioners to produce the same "since it was and remained in the possession" of private respondent Jose dela Cruz. [20] We do not agree with petitioners. Assuming arguendo that such draft deed existed, it does not necessarily follow that there was already a definite agreement as to the price. If there was, why then did private respondent Jose de la Cruz not sign it? If indeed the draft deed of sale was that important to petitioners' cause, they should have shown some effort to procure it. They could have secured it through a subpoena duces tecum or thru the use of one of the modes of discovery. But petitioners made no such effort. And even if produced, it would not have commanded any probative value as it was not signed. As has been said in an old case, the price of the leased land not having been fixed, the essential elements which give life to the contract were lacking. It follows that the lessee cannot compel the lessor to sell the leased land to him. [21] The price must be certain, it must be real, not fictitious. [22] It is not necessary that the certainty of the price be actual or determined at the time of executing the contract. The fact that the exact amount to be paid therefor is not precisely fixed, is no bar to an action to recover such compensation, provided the contract, by its terms, furnishes a basis or measure for ascertaining the amount agreed upon. [23] The price could be made certain by the application of known factors; where, in a sale of coal, a basic price was fixed, but subject to modification "in proportion to variations in calories and ash content, and not otherwise," the price was held certain. [24] A contract of sale is not void for uncertainty when the price, though not directly stated in terms of pesos and centavos, can be made certain by reference to existing invoices identified in the agreement. In this respect, the contract of sale is perfected. [25] The price must be certain, otherwise there is no true consent between the parties. [26] There can be no sale without a price. [27] In the instant case, however, what is dramatically clear from the evidence is that there was no meeting of mind as to the price, expressly or impliedly, directly or indirectly. Sale is a consensual contract. He who alleges it must show its existence by competent proof. Here, the very essential element of price has not been proven. Lastly, petitioners' claim that they are ready to pay private respondents [28] is immaterial and irrelevant as the latter cannot be forced to accept such payment, there being no perfected contract of sale in the first place.

Applicability of Statute of Frauds and the Law on Double Sale

Petitioners contend that the statute of frauds does not apply because such statute applies only to executory contracts whereas in this case the contract of sale had already been partly executed. [29] Further, petitioners, citing Article 1544 of the Civil Code asseverate that being in possession of the property in good faith therefore they should be deemed the lawful owners thereof.[30] On the other hand, private respondents counter that the contract in this case is a "mere executory contract and not a completed or executed contract." [31] Both contentions are inaccurate. True, the statute of frauds applies only to executory contracts and not to partially or completely executed ones. [32] However, there is no perfected contract in this case, therefore there is no basis for the application of the statute of frauds. The application of such statute presupposes the existence of a perfected contract and requires only that a note or memorandum be executed in order to compel judicial enforcement thereof. Also, the civil law rule on double sale finds no application because there was no sale at all to begin with. At bottom, what took place was only a prolonged negotiation to buy and to sell, and at most, an offer and a counter-offer but no definite agreement was reached by the parties. Hence, the rules on perfected contract of sale, statute of frauds and double sale find no relevance nor application. WHEREFORE, the Petition is DENIED and the assailed Decision is AFFIRMED. Costs against petitioners. SO ORDERED. 4. MANILA METAL CONTAINER CORPORATION vs. PNB G.R. No. 166862 December 20, 2006

Manila Metal Container Corporation, Petitioner, Reynaldo C. Tolentino, Intervenor, vs.Philippine National Bank, Respondent,Dmci-Project Developers, Inc., Intervenor.

DECISION

CALLEJO, SR., J.: Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. No. 46153 which affirmed the decision2 of the Regional Trial Court (RTC), Branch 71, Pasig City, in Civil Case No. 58551, and its Resolution3 denying the motion for reconsideration filed by petitioner Manila Metal Container Corporation (MMCC). The Antecedents Petitioner was the owner of a 8,015 square meter parcel of land located in Mandaluyong (now a City), Metro Manila. The property was covered by Transfer Certificate of Title (TCT) No. 332098 of the Registry of Deeds of Rizal. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank (PNB), petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation of P1,000,000.00; and, on November 16, 1973, petitioner executed an Amendment4 of Real Estate Mortgage over its property. On March 31, 1981, petitioner secured another loan of P653,000.00 from respondent PNB, payable in quarterly installments of P32,650.00, plus interests and other charges.5 On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction for P911,532.21, petitioner's outstanding obligation to respondent PNB as of June 30, 1982,6 plus interests and attorney's fees. After due notice and publication, the property was sold at public auction on September 28, 1982 where respondent PNB was declared the winning bidder for P1,000,000.00. The Certificate of Sale7 issued in its favor was registered with the Office of the Register of Deeds of Rizal, and was annotated at the dorsal portion of the title on February 17, 1983. Thus, the period to redeem the property was to expire on February 17, 1984.

11
Petitioner sent a letter dated August 25, 1983 to respondent PNB, requesting that it be granted an extension of time to redeem/repurchase the property.8 In its reply dated August 30, 1983, respondent PNB informed petitioner that the request had been referred to its Pasay City Branch for appropriate action and recommendation.9 In a letter10 dated February 10, 1984, petitioner reiterated its request for a one year extension from February 17, 1984 within which to redeem/repurchase the property on installment basis. It reiterated its request to repurchase the property on installment.11 Meanwhile, some PNB Pasay City Branch personnel informed petitioner that as a matter of policy, the bank does not accept "partial redemption."12 Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 on June 1, 1984, and issued a new title in favor of respondent PNB.13 Petitioner's offers had not yet been acted upon by respondent PNB. Meanwhile, the Special Assets Management Department (SAMD) had prepared a statement of account, and as of June 25, 1984 petitioner's obligation amounted to P1,574,560.47. This included the bid price of P1,056,924.50, interest, advances of insurance premiums, advances on realty taxes, registration expenses, miscellaneous expenses and publication cost. 14 When apprised of the statement of account, petitioner remitted P725,000.00 to respondent PNB as "deposit to repurchase," and Official Receipt No. 978191 was issued to it.15 In the meantime, the SAMD recommended to the management of respondent PNB that petitioner be allowed to repurchase the property for P1,574,560.00. In a letter dated November 14, 1984, the PNB management informed petitioner that it was rejecting the offer and the recommendation of the SAMD. It was suggested that petitioner purchase the property for P2,660,000.00, its minimum market value. Respondent PNB gave petitioner until December 15, 1984 to act on the proposal; otherwise, its P725,000.00 deposit would be returned and the property would be sold to other interested buyers.16 Petitioner, however, did not agree to respondent PNB's proposal. Instead, it wrote another letter dated December 12, 1984 requesting for a reconsideration. Respondent PNB replied in a letter dated December 28, 1984, wherein it reiterated its proposal that petitioner purchase the property for P2,660,000.00. PNB again informed petitioner that it would return the deposit should petitioner desire to withdraw its offer to purchase the property.17 On February 25, 1985, petitioner, through counsel, requested that PNB reconsider its letter dated December 28, 1984. Petitioner declared that it had already agreed to the SAMD's offer to purchase the property forP1,574,560.47, and that was why it had paid P725,000.00. Petitioner warned respondent PNB that it would seek judicial recourse should PNB insist on the position. 18 On June 4, 1985, respondent PNB informed petitioner that the PNB Board of Directors had accepted petitioner's offer to purchase the property, but for P1,931,389.53 in cash less the P725,000.00 already deposited with it.19 On page two of the letter was a space above the typewritten name of petitioner's President, Pablo Gabriel, where he was to affix his signature. However, Pablo Gabriel did not conform to the letter but merely indicated therein that he had received it. 20 Petitioner did not respond, so PNB requested petitioner in a letter dated June 30, 1988 to submit an amended offer to repurchase. Petitioner rejected respondent's proposal in a letter dated July 14, 1988. It maintained that respondent PNB had agreed to sell the property for P1,574,560.47, and that since its P725,000.00 downpayment had been accepted, respondent PNB was proscribed from increasing the purchase price of the property.21 Petitioner averred that it had a net balance payable in the amount of P643,452.34. Respondent PNB, however, rejected petitioner's offer to pay the balance of P643,452.34 in a letter dated August 1, 1989.22 On August 28, 1989, petitioner filed a complaint against respondent PNB for "Annulment of Mortgage and Mortgage Foreclosure, Delivery of Title, or Specific Performance with Damages." To support its cause of action for specific performance, it alleged the following: 34. As early as June 25, 1984, PNB had accepted the down payment from Manila Metal in the substantial amount of P725,000.00 for the redemption/repurchase price of P1,574,560.47 as approved by its SMAD and considering the reliance made by Manila Metal and the long time that has elapsed, the approval of the higher management of the Bank to confirm the agreement of its SMAD is clearly a potestative condition which cannot legally prejudice Manila Metal which has acted and relied on the approval of SMAD. The Bank cannot take advantage of a condition which is entirely dependent upon its own will after accepting and benefiting from the substantial payment made by Manila Metal. 35. PNB approved the repurchase price of P1,574,560.47 for which it accepted P725,000.00 from Manila Metal. PNB cannot take advantage of its own delay and long inaction in demanding a higher amount based on unilateral computation of interest rate without the consent of Manila Metal. Petitioner later filed an amended complaint and supported its claim for damages with the following arguments: 36. That in order to protect itself against the wrongful and malicious acts of the defendant Bank, plaintiff is constrained to engage the services of counsel at an agreed fee of P50,000.00 and to incur litigation expenses of at least P30,000.00, which the defendant PNB should be condemned to pay the plaintiff Manila Metal. 37. That by reason of the wrongful and malicious actuations of defendant PNB, plaintiff Manila Metal suffered besmirched reputation for which defendant PNB is liable for moral damages of at least P50,000.00. 38. That for the wrongful and malicious act of defendant PNB which are highly reprehensible, exemplary damages should be awarded in favor of the plaintiff by way of example or correction for the public good of at least P30,000.00.23 Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus: a) Declaring the Amended Real Estate Mortgage (Annex "A") null and void and without any legal force and effect. b) Declaring defendant's acts of extra-judicially foreclosing the mortgage over plaintiff's property and setting it for auction sale null and void. c) Ordering the defendant Register of Deeds to cancel the new title issued in the name of PNB (TCT NO. 43792) covering the property described in paragraph 4 of the Complaint, to reinstate TCT No. 37025 in the name of Manila Metal and to cancel the annotation of the mortgage in question at the back of the TCT No.37025 described in paragraph 4 of this Complaint.

12
d) Ordering the defendant PNB to return and/or deliver physical possession of the TCT No. 37025described in paragraph 4 of this Complaint to the plaintiff Manila Metal. e) Ordering the defendant PNB to pay the plaintiff Manila Metal's actual damages, moral and exemplary damages in the aggregate amount of not less than P80,000.00 as may be warranted by the evidence and fixed by this Honorable Court in the exercise of its sound discretion, and attorney's fees of P50,000.00 and litigation expenses of at least P30,000.00 as may be proved during the trial, and costs of suit. Plaintiff likewise prays for such further reliefs which may be deemed just and equitable in the premises. 24 In its Answer to the complaint, respondent PNB averred, as a special and affirmative defense, that it had acquired ownership over the property after the period to redeem had elapsed. It claimed that no contract of sale was perfected between it and petitioner after the period to redeem the property had expired. During pre-trial, the parties agreed to submit the case for decision, based on their stipulation of facts.25 The parties agreed to limit the issues to the following: 1. Whether or not the June 4, 1985 letter of the defendant approving/accepting plaintiff's offer to purchase the property is still valid and legally enforceable. 2. Whether or not the plaintiff has waived its right to purchase the property when it failed to conform with the conditions set forth by the defendant in its letter dated June 4, 1985. 3. Whether or not there is a perfected contract of sale between the parties.26 While the case was pending, respondent PNB demanded, on September 20, 1989, that petitioner vacate the property within 15 days from notice,27 but petitioners refused to do so. On March 18, 1993, petitioner offered to repurchase the property for P3,500,000.00.28 The offer was however rejected by respondent PNB, in a letter dated April 13, 1993. According to it, the prevailing market value of the property was approximately P30,000,000.00, and as a matter of policy, it could not sell the property for less than its market value.29 On June 21, 1993, petitioner offered to purchase the property for P4,250,000.00 in cash.30The offer was again rejected by respondent PNB on September 13, 1993.31 On May 31, 1994, the trial court rendered judgment dismissing the amended complaint and respondent PNB's counterclaim. It ordered respondent PNB to refund the P725,000.00 deposit petitioner had made.32 The trial court ruled that there was no perfected contract of sale between the parties; hence, petitioner had no cause of action for specific performance against respondent. The trial court declared that respondent had rejected petitioner's offer to repurchase the property. Petitioner, in turn, rejected the terms and conditions contained in the June 4, 1985 letter of the SAMD. While petitioner had offered to repurchase the property per its letter of July 14, 1988, the amount of P643,422.34 was way below the P1,206,389.53 which respondent PNB had demanded. It further declared that the P725,000.00 remitted by petitioner to respondent PNB on June 4, 1985 was a "deposit," and not a downpayment or earnest money. On appeal to the CA, petitioner made the following allegations:
I THE LOWER COURT ERRED IN RULING THAT DEFENDANT-APPELLEE'S LETTER DATED 4 JUNE 1985 APPROVING/ACCEPTING PLAINTIFF-APPELLANT'S OFFER TO PURCHASE THE SUBJECT PROPERTY IS NOT VALID AND ENFORCEABLE. II THE LOWER COURT ERRED IN RULING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN PLAINTIFFAPPELLANT AND DEFENDANT-APPELLEE. III THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLLANT WAIVED ITS RIGHT TO PURCHASE THE SUBJECT PROPERTY WHEN IT FAILED TO CONFORM WITH CONDITIONS SET FORTH BY DEFENDANT-APPELLEE IN ITS LETTER DATED 4 JUNE 1985. IV THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT IT WAS THE DEFENDANT-APPELLEE WHICH RENDERED IT DIFFICULT IF NOT IMPOSSIBLE FOR PLAINTIFF-APPELLANT TO COMPLETE THE BALANCE OF THEIR PURCHASE PRICE. V THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT THERE WAS NO VALID RESCISSION OR CANCELLATION OF SUBJECT CONTRACT OF REPURCHASE. VI THE LOWER COURT ERRED IN DECLARING THAT PLAINTIFF FAILED AND REFUSED TO SUBMIT THE AMENDED REPURCHASE OFFER. VII THE LOWER COURT ERRED IN DISMISSING THE AMENDED COMPLAINT OF PLAINTIFF-APPELLANT. VIII THE LOWER COURT ERRED IN NOT AWARDING PLAINTIFF-APPELLANT ACTUAL, MORAL AND EXEMPLARY DAMAGES, ATTOTRNEY'S FEES AND LITIGATION EXPENSES.33

Meanwhile, on June 17, 1993, petitioner's Board of Directors approved Resolution No. 3-004, where it waived, assigned and transferred its rights over the property covered by TCT No. 33099 and TCT No. 37025 in favor of Bayani Gabriel, one of its Directors.34 Thereafter, Bayani Gabriel executed a Deed of Assignment over 51% of the ownership and management of the property in favor of Reynaldo Tolentino, who later moved for leave to intervene as plaintiff-appellant. On July 14, 1993, the CA issued a resolution granting the motion,35 and likewise granted the motion of Reynaldo Tolentino substituting petitioner MMCC, as plaintiff-appellant, and his motion to withdraw as intervenor.36 The CA rendered judgment on May 11, 2000 affirming the decision of the RTC.37 It declared that petitioner obviously never agreed to the selling price proposed by respondent PNB (P1,931,389.53) since petitioner had kept on insisting that the selling price should be lowered to P1,574,560.47. Clearly therefore, there was no meeting of the minds between the parties as to the price or consideration of the sale. The CA ratiocinated that petitioner's original offer to purchase the subject property had not been accepted by respondent PNB. In fact, it made a counter-offer through its June 4, 1985 letter specifically on the selling price; petitioner did not agree to the counter-offer; and the negotiations did not prosper. Moreover, petitioner did not pay the balance of the purchase price within the sixty-day period set in the June 4, 1985 letter of respondent PNB. Consequently, there was no perfected contract of sale, and as such, there was no contract to rescind. According to the appellate court, the claim for damages and the counterclaim were correctly dismissed by the court a quo for no evidence was presented to support it. Respondent PNB's letter dated June 30, 1988 cannot revive the failed negotiations between the parties. Respondent PNB merely asked petitioner to submit an amended offer to repurchase. While petitioner reiterated its request for a lower selling price and that the balance of the repurchase be reduced, however, respondent rejected the proposal in a letter dated August 1, 1989. Petitioner filed a motion for reconsideration, which the CA likewise denied.

13
Thus, petitioner filed the instant petition for review on certiorari, alleging that:
I. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THERE IS NO PERFECTED CONTRACT OF SALE BETWEEN THE PETITIONER AND RESPONDENT. II. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE AMOUNT OF PHP725,000.00 PAID BY THE PETITIONER IS NOT AN EARNEST MONEY. III. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE FAILURE OF THE PETITIONERAPPELLANT TO SIGNIFY ITS CONFORMITY TO THE TERMS CONTAINED IN PNB'S JUNE 4, 1985 LETTER MEANS THAT THERE WAS NO VALID AND LEGALLY ENFORCEABLE CONTRACT OF SALE BETWEEN THE PARTIES. IV. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW THAT NON-PAYMENT OF THE PETITIONER-APPELLANT OF THE BALANCE OF THE OFFERED PRICE IN THE LETTER OF PNB DATED JUNE 4, 1985, WITHIN SIXTY (60) DAYS FROM NOTICE OF APPROVAL CONSTITUTES NO VALID AND LEGALLY ENFORCEABLE CONTRACT OF SALE BETWEEN THE PARTIES. V. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT HELD THAT THE LETTERS OF PETITIONER-APPELLANT DATED MARCH 18, 1993 AND JUNE 21, 1993, OFFERING TO BUY THE SUBJECT PROPERTY AT DIFFERENT AMOUNT WERE PROOF THAT THERE IS NO PERFECTED CONTRACT OF SALE.38

The threshold issue is whether or not petitioner and respondent PNB had entered into a perfected contract for petitioner to repurchase the property from respondent. Petitioner maintains that it had accepted respondent's offer made through the SAMD, to sell the property forP1,574,560.00. When the acceptance was made in its letter dated June 25, 1984; it then deposited P725,000.00 with the SAMD as partial payment, evidenced by Receipt No. 978194 which respondent had issued. Petitioner avers that the SAMD's acceptance of the deposit amounted to an acceptance of its offer to repurchase. Moreover, as gleaned from the letter of SAMD dated June 4, 1985, the PNB Board of Directors had approved petitioner's offer to purchase the property. It claims that this was the suspensive condition, the fulfillment of which gave rise to the contract. Respondent could no longer unilaterally withdraw its offer to sell the property for P1,574,560.47, since the acceptance of the offer resulted in a perfected contract of sale; it was obliged to remit to respondent the balance of the original purchase price of P1,574,560.47, while respondent was obliged to transfer ownership and deliver the property to petitioner, conformably with Article 1159 of the New Civil Code. Petitioner posits that respondent was proscribed from increasing the interest rate after it had accepted respondent's offer to sell the property for P1,574,560.00. Consequently, respondent could no longer validly make a counter-offer of P1,931,789.88 for the purchase of the property. It likewise maintains that, although theP725,000.00 was considered as "deposit for the repurchase of the property" in the receipt issued by the SAMD, the amount constitutes earnest money as contemplated in Article 1482 of the New Civil Code. Petitioner cites the rulings of this Court in Villonco v. Bormaheco39 and Topacio v. Court of Appeals.40 Petitioner avers that its failure to append its conformity to the June 4, 1984 letter of respondent and its failure to pay the balance of the price as fixed by respondent within the 60-day period from notice was to protest respondent's breach of its obligation to petitioner. It did not amount to a rejection of respondent's offer to sell the property since respondent was merely seeking to enforce its right to pay the balance of P1,570,564.47. In any event, respondent had the option either to accept the balance of the offered price or to cause the rescission of the contract. Petitioner's letters dated March 18, 1993 and June 21, 1993 to respondent during the pendency of the case in the RTC were merely to compromise the pending lawsuit, they did not constitute separate offers to repurchase the property. Such offer to compromise should not be taken against it, in accordance with Section 27, Rule 130 of the Revised Rules of Court. For its part, respondent contends that the parties never graduated from the "negotiation stage" as they could not agree on the amount of the repurchase price of the property. All that transpired was an exchange of proposals and counter-proposals, nothing more. It insists that a definite agreement on the amount and manner of payment of the price are essential elements in the formation of a binding and enforceable contract of sale. There was no such agreement in this case. Primarily, the concept of "suspensive condition" signifies a future and uncertain event upon the fulfillment of which the obligation becomes effective. It clearly presupposes the existence of a valid and binding agreement, the effectivity of which is subordinated to its fulfillment. Since there is no perfected contract in the first place, there is no basis for the application of the principles governing "suspensive conditions." According to respondent, the Statement of Account prepared by SAMD as of June 25, 1984 cannot be classified as a counter-offer; it is simply a recital of its total monetary claims against petitioner. Moreover, the amount stated therein could not likewise be considered as the counter-offer since as admitted by petitioner, it was only recommendation which was subject to approval of the PNB Board of Directors. Neither can the receipt by the SAMD of P725,000.00 be regarded as evidence of a perfected sale contract. As gleaned from the parties' Stipulation of Facts during the proceedings in the court a quo, the amount is merely an acknowledgment of the receipt of P725,000.00 as deposit to repurchase the property. The deposit of P725,000.00 was accepted by respondent on the condition that the purchase price would still be approved by its Board of Directors. Respondent maintains that its acceptance of the amount was qualified by that condition, thus not absolute. Pending such approval, it cannot be legally claimed that respondent is already bound by any contract of sale with petitioner. According to respondent, petitioner knew that the SAMD has no capacity to bind respondent and that its authority is limited to administering, managing and preserving the properties and other special assets of PNB. The SAMD does not have the power to sell, encumber, dispose of, or otherwise alienate the assets, since the power to do so must emanate from its Board of Directors. The SAMD was not authorized by respondent's Board to enter into contracts of sale with third persons involving corporate assets. There is absolutely nothing on record that respondent authorized the SAMD, or made it appear to petitioner that it represented itself as having such authority. Respondent reiterates that SAMD had informed petitioner that its offer to repurchase had been approved by the Board subject to the condition, among others, "that the selling price shall be the total bank's claim as of documentation date x x x payable in cash (P725,000.00 already deposited) within 60 days from notice of approval." A new Statement of Account was attached therein indicating the total bank's claim to be P1,931,389.53 less deposit of P725,000.00, or P1,206,389.00. Furthermore, while respondent's Board of Directors accepted petitioner's offer to repurchase the property, the acceptance was qualified, in that it required a higher sale price and subject to specified terms and conditions enumerated therein. This qualified acceptance was in effect a counter-offer, necessitating petitioner's acceptance in return.

14
The Ruling of the Court The ruling of the appellate court that there was no perfected contract of sale between the parties on June 4, 1985 is correct. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.41 Under Article 1318 of the New Civil Code, there is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established. Contracts are perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.42 Once perfected, they bind other contracting parties and the obligations arising therefrom have the form of law between the parties and should be complied with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law.43 By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.44 The absence of any of the essential elements will negate the existence of a perfected contract of sale. As the Court ruled in Boston Bank of the Philippines v. Manalo:45 A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.46 A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there is merely an offer by one party without acceptance of the other, there is no contract.47 When the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties. 48 In San Miguel Properties Philippines, Inc. v. Huang,49 the Court ruled that 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. A negotiation is formally initiated by an offer, which, however, must be certain. 50 At any time prior to the perfection of the contract, either negotiating party may stop the negotiation. At this stage, the offer may be withdrawn; the withdrawal is effective immediately after its manifestation. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional and without variance of any sort from the proposal. In Adelfa Properties, Inc. v. Court of Appeals,51 the Court ruled that: x x x The rule is that except where a formal acceptance is so required, although the acceptance must be affirmatively and clearly made and must be evidenced by some acts or conduct communicated to the offeror, it may be shown by acts, conduct, or words of the accepting party that clearly manifest a present intention or determination to accept the offer to buy or sell. Thus, acceptance may be shown by the acts, conduct, or words of a party recognizing the existence of the contract of sale.52 A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. A counter-offer is considered in law, a rejection of the original offer and an attempt to end the negotiation between the parties on a different basis.53 Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to guarantee consent because any modification or variation from the terms of the offer annuls the offer.54 The acceptance must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. In this case, petitioner had until February 17, 1984 within which to redeem the property. However, since it lacked the resources, it requested for more time to redeem/repurchase the property under such terms and conditions agreed upon by the parties.55 The request, which was made through a letter dated August 25, 1983, was referred to the respondent's main branch for appropriate action.56 Before respondent could act on the request, petitioner again wrote respondent as follows: 1. Upon approval of our request, we will pay your goodselves ONE HUNDRED & FIFTY THOUSAND PESOS (P150,000.00); 2. Within six months from date of approval of our request, we will pay another FOUR HUNDRED FIFTY THOUSAND PESOS (P450,000.00); and 3. The remaining balance together with the interest and other expenses that will be incurred will be paid within the last six months of the one year grave period requested for.57 When the petitioner was told that respondent did not allow "partial redemption,"58 it sent a letter to respondent's President reiterating its offer to purchase the property.59 There was no response to petitioner's letters dated February 10 and 15, 1984. The statement of account prepared by the SAMD stating that the net claim of respondent as of June 25, 1984 wasP1,574,560.47 cannot be considered an unqualified acceptance to petitioner's offer to purchase the property. The statement is but a computation of the amount which petitioner was obliged to pay in case respondent would later agree to sell the property, including interests, advances on insurance premium, advances on realty taxes, publication cost, registration expenses and miscellaneous expenses. There is no evidence that the SAMD was authorized by respondent's Board of Directors to accept petitioner's offer and sell the property for P1,574,560.47. Any acceptance by the SAMD of petitioner's offer would not bind respondent. As this Court ruled in AF Realty Development, Inc. vs. Diesehuan Freight Services, Inc.:60

15
Section 23 of the Corporation Code expressly provides that the corporate powers of all corporations shall be exercised by the board of directors. Just as a natural person may authorize another to do certain acts in his behalf, so may the board of directors of a corporation validly delegate some of its functions to individual officers or agents appointed by it. Thus, contracts or acts of a corporation must be made either by the board of directors or by a corporate agent duly authorized by the board. Absent such valid delegation/authorization, the rule is that the declarations of an individual director relating to the affairs of the corporation, but not in the course of, or connected with the performance of authorized duties of such director, are held not binding on the corporation. Thus, a corporation can only execute its powers and transact its business through its Board of Directors and through its officers and agents when authorized by a board resolution or its by-laws.61 It appears that the SAMD had prepared a recommendation for respondent to accept petitioner's offer to repurchase the property even beyond the one-year period; it recommended that petitioner be allowed to redeem the property and pay P1,574,560.00 as the purchase price. Respondent later approved the recommendation that the property be sold to petitioner. But instead of the P1,574,560.47 recommended by the SAMD and to which petitioner had previously conformed, respondent set the purchase price at P2,660,000.00. In fine, respondent's acceptance of petitioner's offer was qualified, hence can be at most considered as a counter-offer. If petitioner had accepted this counter-offer, a perfected contract of sale would have arisen; as it turns out, however, petitioner merely sought to have the counter-offer reconsidered. This request for reconsideration would later be rejected by respondent. We do not agree with petitioner's contention that the P725,000.00 it had remitted to respondent was "earnest money" which could be considered as proof of the perfection of a contract of sale under Article 1482 of the New Civil Code. The provision reads: ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. This contention is likewise negated by the stipulation of facts which the parties entered into in the trial court: 8. On June 8, 1984, the Special Assets Management Department (SAMD) of PNB prepared an updated Statement of Account showing MMCC's total liability to PNB as of June 25, 1984 to be P1,574,560.47 and recommended this amount as the repurchase price of the subject property. 9. On June 25, 1984, MMCC paid P725,000.00 to PNB as deposit to repurchase the property. The deposit of P725,000 was accepted by PNB on the condition that the purchase price is still subject to the approval of the PNB Board.62 Thus, the P725,000.00 was merely a deposit to be applied as part of the purchase price of the property, in the event that respondent would approve the recommendation of SAMD for respondent to accept petitioner's offer to purchase the property for P1,574,560.47. Unless and until the respondent accepted the offer on these terms, no perfected contract of sale would arise. Absent proof of the concurrence of all the essential elements of a contract of sale, the giving of earnest money cannot establish the existence of a perfected contract of sale.63 It appears that, per its letter to petitioner dated June 4, 1985, the respondent had decided to accept the offer to purchase the property for P1,931,389.53. However, this amounted to an amendment of respondent's qualified acceptance, or an amended counter-offer, because while the respondent lowered the purchase price, it still declared that its acceptance was subject to the following terms and conditions: 1. That the selling price shall be the total Bank's claim as of documentation date (pls. see attached statement of account as of 5-31-85), payable in cash (P725,000.00 already deposited) within sixty (60) days from notice of approval; 2. The Bank sells only whatever rights, interests and participation it may have in the property and you are charged with full knowledge of the nature and extent of said rights, interests and participation and waive your right to warranty against eviction. 3. All taxes and other government imposts due or to become due on the property, as well as expenses including costs of documents and science stamps, transfer fees, etc., to be incurred in connection with the execution and registration of all covering documents shall be borne by you; 4. That you shall undertake at your own expense and account the ejectment of the occupants of the property subject of the sale, if there are any; 5. That upon your failure to pay the balance of the purchase price within sixty (60) days from receipt of advice accepting your offer, your deposit shall be forfeited and the Bank is thenceforth authorized to sell the property to other interested parties. 6. That the sale shall be subject to such other terms and conditions that the Legal Department may impose to protect the interest of the Bank.64 It appears that although respondent requested petitioner to conform to its amended counter-offer, petitioner refused and instead requested respondent to reconsider its amended counter-offer. Petitioner's request was ultimately rejected and respondent offered to refund its P725,000.00 deposit. In sum, then, there was no perfected contract of sale between petitioner and respondent over the subject property. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed decision is AFFIRMED. Costs against petitioner Manila Metal Container Corporation. SO ORDERED. 5. DIZON vs. CA G.R. No. 122544. January 28, 1999 REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS and OVERLAND EXPRESS LINES, INC., respondents.[G.R. No. 124741. January 28, 1999]

16
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON, RAYMUND A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR., petitioners, vs. COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and OVERLAND EXPRESS LINES, INC., respondents. DECISION MARTINEZ, J.: Two consolidated petitions were filed before us seeking to set aside and annul the decisions and resolutions of respondent Court of Appeals. What seemed to be a simple ejectment suit was juxtaposed with procedural intricacies which finally found its way to this Court. G. R. NO. 122544: On May 23, 1974, private respondent Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with Option to Buy with petitioners[1] (lessors) involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South "H" Street, Diliman, Quezon City. The term of the lease was for one (1) year commencing from May 16, 1974 up to May 15, 1975. During this period, private respondent was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a monthly rental of P3,000.00. For failure of private respondent to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment (Civil Case No. VIII-29155) on November 10, 1976 before the then City Court (now Metropolitan Trial Court) of Quezon City, Branch VIII. On November 22, 1982, the City Court rendered judgment[2] ordering private respondent to vacate the leased premises and to pay the sum of P624,000.00 representing rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from June 1976 to November 1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December 1982, until private respondent fully vacates the premises, and to pay P20,000.00 as and by way of attorney's fees. Private respondent filed a certiorari petition praying for the issuance of a restraining order enjoining the enforcement of said judgment and dismissal of the case for lack of jurisdiction of the City Court. On September 26, 1984, the then Intermediate Appellate Court[3] (now Court of Appeals) rendered a decision[4] stating that: "x x x, the alleged question of whether petitioner was granted an extension of the option to buy the property; whether such option, if any, extended the lease or whether petitioner actually paid the alleged P300,000.00 to Fidela Dizon, as representative of private respondents in consideration of the option and, whether petitioner thereafter offered to pay the balance of the supposed purchase price, are all merely incidental and do not remove the unlawful detainer case from the jurisdiction of respondent court. In consonance with the ruling in the case of Teodoro, Jr. vs. Mirasol (supra), the above matters may be raised and decided in the unlawful detainer suit as, to rule otherwise, would be a violation of the principle prohibiting multiplicity of suits. (Original Records, pp. 38-39)." The motion for reconsideration was denied. On review, this Court dismissed the petition in a resolution dated June 19, 1985 and likewise denied private respondent's subsequent motion for reconsideration in a resolution dated September 9, 1985.[5] On October 7, 1985, private respondent filed before the Regional Trial Court (RTC) of Quezon City (Civil Case No. Q45541) an action for Specific Performance and Fixing of Period for Obligation with prayer for the issuance of a restraining order pending hearing on the prayer for a writ of preliminary injunction. It sought to compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial payment, and to fix the period to pay the balance. In an Order dated October 25, 1985, the trial court denied the issuance of a writ of preliminary injunction on the ground that the decision of the then City Court for the ejectment of the private respondent, having been affirmed by the then Intermediate Appellate Court and the Supreme Court, has become final and executory. Unable to secure an injunction, private respondent also filed before the RTC of Quezon City, Branch 102 (Civil Case No. Q-46487) on November 15, 1985 a complaint for Annulment of and Relief from Judgment with injunction and damages. In its decision[6] dated May 12, 1986, the trial court dismissed the complaint for annulment on the ground of res judicata, and the writ of preliminary injunction previously issued was dissolved. It also ordered private respondent to pay P3,000.00 as attorney's fees. As a consequence of private respondent's motion for reconsideration, the preliminary injunction was reinstated, thereby restraining the execution of the City Court's judgment on the ejectment case. The two cases were thereafter consolidated before the RTC of Quezon City, Branch 77. On April 28, 1989, a decision[7] was rendered dismissing private respondent's complaint in Civil Case No. Q-45541 (specific performance case) and denying its motion for reconsideration in Civil Case No. 46487 (annulment of the ejectment case). The motion for reconsideration of said decision was likewise denied. On appeal,[8] respondent Court of Appeals rendered a decision[9] upholding the jurisdiction of the City Court of Quezon City in the ejectment case. It also concluded that there was a perfected contract of sale between the parties on the leased premises and that pursuant to the option to buy agreement, private respondent had acquired the rights of a vendee in a contract of sale. It opined that the payment by private respondent of P300,000.00 on June 20, 1975 as partial payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny receipt thereof, private respondent can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf. The Court of Appeals went further by stating that in fact, what was entered into was a "conditional contract of sale" wherein ownership over the leased property shall not pass to the private respondent until it has fully paid the purchase price. Since private respondent did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price. The dispositive portion of said decision reads:

17
"WHEREFORE, the appealed decision in Case No. 46487 is AFFIRMED. The appealed decision in Case No. 45541 is, on the other hand, ANNULLED and SET ASIDE. The defendants-appellees are ordered to execute the deed of absolute sale of the property in question, free from any lien or encumbrance whatsoever, in favor of the plaintiff-appellant, and to deliver to the latter the said deed of sale, as well as the owner's duplicate of the certificate of title to said property upon payment of the balance of the purchase price by the plaintiff-appellant. The plaintiff-appellant is ordered to pay P1,700.00 per month from June 1976, plus 6% interest per annum, until payment of the balance of the purchase price, as previously agreed upon by the parties. SO ORDERED." Upon denial of the motion for partial reconsideration (Civil Case No. Q-45541) by respondent Court of Appeals,[10] petitioners elevated the case via petition for certiorari questioning the authority of Alice A. Dizon as agent of petitioners in receiving private respondent's partial payment amounting to P300,000.00 pursuant to the Contract of Lease with Option to Buy. Petitioners also assail the propriety of private respondent's exercise of the option when it tendered the said amount on June 20, 1975 which purportedly resulted in a perfected contract of sale. G. R. NO. 124741: Petitioners filed with respondent Court of Appeals a motion to remand the records of Civil Case No. 38-29155 (ejectment case) to the Metropolitan Trial Court (MTC), then City Court of Quezon City, Branch 38, for execution of the judgment[11] dated November 22, 1982 which was granted in a resolution dated June 29, 1992. Private respondent filed a motion to reconsider said resolution which was denied. Aggrieved, private respondent filed a petition for certiorari, prohibition with preliminary injunction and/or restraining order with this Court (G.R. Nos. 106750-51) which was dismissed in a resolution dated September 16, 1992 on the ground that the same was a refiled case previously dismissed for lack of merit. On November 26, 1992, entry of judgment was issued by this Court. On July 14, 1993, petitioners filed an urgent ex-parte motion for execution of the decision in Civil Case No. 38-29155 with the MTC of Quezon City, Branch 38. On September 13, 1993, the trial court ordered the issuance of a third alias writ of execution. In denying private respondent's motion for reconsideration, it ordered the immediate implementation of the third writ of execution without delay. On December 22, 1993, private respondent filed with the Regional Trial Court (RTC) of Quezon City, Branch 104 a petition for certiorari and prohibition with preliminary injunction/restraining order (SP. PROC. No. 93-18722) challenging the enforceability and validity of the MTC judgment as well as the order for its execution. On January 11, 1994, RTC of Quezon City, Branch 104 issued an order[12] granting the issuance of a writ of preliminary injunction upon private respondent's posting of an injunction bond of P50,000.00. Assailing the aforequoted order after denial of their motion for partial reconsideration, petitioners filed a petition[13] for certiorari and prohibition with a prayer for a temporary restraining order and/or preliminary injunction with the Court of Appeals. In its decision,[14] the Court of Appeals dismissed the petition and ruled that: "The avowed purpose of this petition is to enjoin the public respondent from restraining the ejectment of the private respondent. To grant the petition would be to allow the ejectment of the private respondent. We cannot do that now in view of the decision of this Court in CA-G.R. CV Nos. 25153-54. Petitioners' alleged right to eject private respondent has been demonstrated to be without basis in the said civil case. The petitioners have been shown, after all, to have no right to eject private respondents. WHEREFORE, the petition is DENIED due course and is accordingly DISMISSED. SO ORDERED."[15] Petitioners' motion for reconsideration was denied in a resolution[16] by the Court of Appeals stating that: "This court in its decision in CA-G.R. CV Nos. 25153-54 declared that the plaintiff-appellant (private respondent herein) acquired the rights of a vendee in a contract of sale, in effect, recognizing the right of the private respondent to possess the subject premises. Considering said decision, we should not allow ejectment; to do so would disturb the status quo of the parties since the petitioners are not in possession of the subject property. It would be unfair and unjust to deprive the private respondent of its possession of the subject property after its rights have been established in a subsequent ruling. WHEREFORE, the motion for reconsideration is DENIED for lack of merit. SO ORDERED."[17] Hence, this instant petition. We find both petitions impressed with merit. First. Petitioners have established a right to evict private respondent from the subject premises for non-payment of rentals. The term of the Contract of Lease with Option to Buy was for a period of one (1) year (May 16, 1974 to May 15, 1975) during which the private respondent was given an option to purchase said property at P3,000.00 per square meter. After the expiration thereof, the lease was for P3,000.00 per month. Admittedly, no definite period beyond the one-year term of lease was agreed upon by petitioners and private respondent. However, since the rent was paid on a monthly basis, the period of lease is considered to be from month to month in accordance with Article 1687 of the New Civil Code.[18] Where the rentals are paid monthly, the lease, even if verbal may be deemed to be on a monthly basis, expiring at the end of every month pursuant to Article 1687, in relation to Article 1673 of the Civil Code.[19] In such case, a demand to vacate is not even necessary for judicial action after the expiration of every month.[20]

18
When private respondent failed to pay the increased rental of P8,000.00 per month in June 1976, the petitioners had a cause of action to institute an ejectment suit against the former with the then City Court. In this regard, the City Court (now MTC) had exclusive jurisdiction over the ejectment suit. The filing by private respondent of a suit with the Regional Trial Court for specific performance to enforce the option to purchase did not divest the then City Court of its jurisdiction to take cognizance over the ejectment case. Of note is the fact that the decision of the City Court was affirmed by both the Intermediate Appellate Court and this Court. Second. Having failed to exercise the option within the stipulated one-year period, private respondent cannot enforce its option to purchase anymore. Moreover, even assuming arguendo that the right to exercise the option still subsists at the time private respondent tendered the amount on June 20, 1975, the suit for specific performance to enforce the option to purchase was filed only on October 7, 1985 or more than ten (10) years after accrual of the cause of action as provided under Article 1144 of the New Civil Code.[21] In this case, there was a contract of lease for one (1) year with option to purchase. The contract of lease expired without the private respondent, as lessee, purchasing the property but remained in possession thereof. Hence, there was an implicit renewal of the contract of lease on a monthly basis. The other terms of the original contract of lease which are revived in the implied new lease under Article 1670 of the New Civil Code[22] are only those terms which are germane to the lessees right of continued enjoyment of the property leased.[23] Therefore, an implied new lease does not ipso facto carry with it any implied revival of private respondent's option to purchase (as lessee thereof) the leased premises. The provision entitling the lessee the option to purchase the leased premises is not deemed incorporated in the impliedly renewed contract because it is alien to the possession of the lessee. Private respondents right to exercise the option to purchase expired with the termination of the original contract of lease for one year. The rationale of this Court is that: This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the lessee to continue enjoying possession of the property for fifteen days after the expiration of the contract he is willing that such enjoyment shall be for the entire period corresponding to the rent which is customarily paid in this case up to the end of the month because the rent was paid monthly. Necessarily, if the presumed will of the parties refers to the enjoyment of possession the presumption covers the other terms of the contract related to such possession, such as the amount of rental, the date when it must be paid, the care of the property, the responsibility for repairs, etc. But no such presumption may be indulged in with respect to special agreements which by nature are foreign to the right of occupancy or enjoyment inherent in a contract of lease.[24] Third. There was no perfected contract of sale between petitioners and private respondent. Private respondent argued that it delivered the check of P300,000.00 to Alice A. Dizon who acted as agent of petitioners pursuant to the supposed authority given by petitioner Fidela Dizon, the payee thereof. Private respondent further contended that petitioners filing of the ejectment case against it based on the contract of lease with option to buy holds petitioners in estoppel to question the authority of petitioner Fidela Dizon. It insisted that the payment of P300,000.00 as partial payment of the purchase price constituted a valid exercise of the option to buy. Under Article 1475 of the New Civil Code, the contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Thus, the elements of a contract of sale are consent, object, and price in money or its equivalent. It bears stressing that the absence of any of these essential elements negates the existence of a perfected contract of sale. Sale is a consensual contract and he who alleges it must show its existence by competent proof.[25] In an attempt to resurrect the lapsed option, private respondent gave P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and private respondent. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.[26] As provided in Article 1868 of the New Civil Code,[27] there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency. In Bacaltos Coal Mines vs. Court of Appeals,[28] we explained the rule in dealing with an agent: Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it. For the long years that private respondent was able to thwart the execution of the ejectment suit rendered in favor of petitioners, we now write finis to this controversy and shun further delay so as to ensure that this case would really attain finality. WHEREFORE, in view of the foregoing, both petitions are GRANTED. The decision dated March 29, 1994 and the resolution dated October 19, 1995 in CA-G.R. CV No. 25153-54, as well as the decision dated December 11, 1995 and the resolution dated April 23, 1997 in CA-G.R. SP No. 33113 of the Court of Appeals are hereby REVERSED and SET ASIDE. Let the records of this case be remanded to the trial court for immediate execution of the judgment dated November 22, 1982 in Civil Case No. VIII-29155 of the then City Court (now Metropolitan Trial Court) of Quezon City, Branch VIII as affirmed in the decision dated September 26, 1984 of the then Intermediate Appellate Court (now Court of Appeals) and in the resolution dated June 19, 1985 of this Court.

19
However, petitioners are ordered to REFUND to private respondent the amount of P300,000.00 which they received through Alice A. Dizon on June 20, 1975. SO ORDERED. 6. PEALOSA vs SANTOS G.R. No. 133749. August 23, 2001 HERNANDO R. PEALOSA alias HENRY PEALOSA, petitioner, vs. SEVERINO C. SANTOS (deceased), Substituted by his heirs: OLIVER SANTOS and ADYLL M. SANTOS, and ADELA DURAN MENDEZ SANTOS, respondents. DECISION QUISUMBING, J.: Petitioner appeals by certiorari from the decision of the Court of Appeals, which affirmed the judgment of the Regional Trial Court of Quezon City, Branch 78, in Civil Case No. Q-92-13531, declaring the deed of absolute sale entered into between petitioner and respondents as void and inexistent and ordering petitioner to vacate the subject property and to pay reasonable compensation for its use. The facts, as revealed by the records, are as follows: Respondents Severino C. Santos (deceased) and Adela Mendez Santos are registered owners of a residential house and lot located at No. 113 Scout Rallos Street, Quezon City under TCT No. PT-23458 (54434).[1] In 1988, Severino and Adela decided to sell their property and for this purpose, negotiated with petitioner Hernando (or Henry) Pealosa. The property was then occupied by a lessee, Eleuterio Perez, who was given preference to buy it under the same terms offered by the buyer.[2] Perez proposed less favorable terms[3] and expectedly, Severino rejected his offer. On August 1, 1988, petitioner Henry Pealosa and respondent Severino Santos attempted to enter into an agreement whereby the latter, for a consideration of P1,800,000.00, would sell to the former the property subject of the instant case. The deed of absolute sale[4] (first deed) evidencing this transaction was signed by Henry but not by Severino, because according to the latter, Henry took time to decide on the matter.[5] On August 15, 1988, Henry signed a document[6] stating that the first deed was executed between him and Severino, for the sole purpose of helping the latter eject Perez, the occupant of the property. Henry acknowledged in said document that although Severino had agreed to sell the property to him, he had not paid the consideration stated in the first deed. Thereafter, Henry and Severino executed another deed of absolute sale[7] (second deed) for a higher consideration of P2,000,000.00. Although the second deed was originally dated August 1988, superimposed upon the same was the date September 12, 1988. This second deed was signed by both parties and duly notarized. It states that Severino sells and transfers the house and lot to Henry, who had paid the full price of P2,000.000.00 therefor. Severino explained that his initial asking price for the property was only P1,800,000.00 as shown in the first deed. But he later asked for a higher price because Henry could not give the money as soon as expected. However, Severino claimed that he made it clear to Henry that he agreed to sell the property under the second deed for P2,000,000.00, provided that payment be immediately effected. Severino said that he wanted to use the money to invest in another property located in Alabang and told Henry that if payment was made at a later date, the price would be the current market value at the time of payment. Henry then gave Severino P300,000.00 as earnest money, purportedly with the understanding that the former was to pay the balance within 60 days. Otherwise, said amount would be forfeited in favor of Severino.[8] The latter also maintained that he signed the second deed only for the purpose of facilitating Henrys acquisition of a bank loan to finance payment of the balance of the purchase price[9] and added that execution of the second deed was necessary to enable Henry to file a court action for ejectment of the tenant.[10] After execution of the second deed, Henry filed a loan application with the Philippine American Life Insurance Company (Philam Life) for the amount of P2,500,000.00.[11] According to Henry, he had agreed with Severino during the signing of the second deed, that the balance of P1,700,000.00 would be paid by means of a loan, with the property itself given as collateral.[12] Meanwhile, on the strength of the first deed and as new owner of the property, Henry wrote a letter[13] dated August 8, 1988 to the lessee, Eleuterio Perez, demanding that the latter vacate the premises within 10 days. Failing in this effort, Henry brought a complaint for ejectment[14] against Perez before the Office of the Barangay Captain. On September 1, 1988, a Certification To File Action[15] was issued by the barangay lupon. This led to the subsequent filing of Civil Case No. 88-0439 for unlawful detainer, before the Metropolitan Trial Court of Quezon City, Branch 43, entitled Henry Pealosa, Plaintiff vs. Eleuterio Perez, Defendant. Claiming that he still had a subsisting contract of lease over the property, Perez countersued and brought Civil Case No. Q-88-1062 before the Regional Trial Court of Quezon City, Branch 96, entitled Eleuterio Perez, Plaintiff vs. Severino Santos, et. al, Defendants. In this latter case, Perez assailed the validity of the sale transaction between Henry and Severino and impleaded the former as co-defendant of Severino. While the aforesaid court cases were pending resolution, Philam Life informed Severino through a letter,[16] that Henrys loan application had been approved by the company on January 18, 1989. Philam Life stated in the letter that of the total purchase price of P2,500,000.00, the amount of P1,700,000.00 would be paid directly to Severino by Philam Life, while P800,000.00 would be paid by Henry. The release of the loan proceeds was made subject to the submission of certain documents in Severinos possession, one of which is the owners duplicate of the Transfer Certificate of Title (TCT) pertaining to the property. However, when Henry and Severino met with officials of Philam Life to finalize the loan/mortgage contract, Severino refused to surrender the owners duplicate title and insisted on being paid immediately in cash.[17] As a consequence, the loan/mortgage contract with Philam Life did not materialize.

20
Subsequently, on April 28, 1989, judgment[18] was rendered by the MTC-QC, Branch 43, in Civil Case No. 0439, ordering the tenant Perez to vacate and surrender possession of the property to Henry. In said judgment, Henry was explicitly recognized as the new owner of the property by virtue of the contract of sale dated September 12, 1988, after full payment of the purchase price of P2,000,000.00, receipt of which was duly acknowledged by Severino. Upon finality of said judgment, Henry and his family moved into the disputed house and lot on August 1989, after making repairs and improvements.[19] Henry spent a total of P700,000.00 for the renovation, as evidenced by receipts.[20] On July 27, 1992, Severino sent a letter[21] to Henry, through counsel, demanding that Henry vacate the house and lot, on the ground that Henry did not conclusively offer nor tender a price certain for the purchase of the property. The letter also stated that Henrys alleged offer and promise to buy the property has since been rejected by Severino. When Henry refused to vacate the property, Severino brought this action for quieting of title, recovery of possession and damages before the Regional Trial Court of Quezon City, Branch 78, on September 28, 1992. Severino alleged in his complaint[22] that there was a cloud over the title to the property, brought about by the existence of the second deed of sale. Essentially, Severino averred that the second deed was void and inexistent because: a) there was no cause or consideration therefor, since he did not receive the P2,000,000.00 stated in the deed; b) his wife, Adela, in whose name the property was titled, did not consent to the sale nor sign the deed; c) the deed was not registered with the Register of Deeds; d) he did not acknowledge the deed personally before the notary public; e) his residence certificate, as appearing in the deed, was falsified; and f) the deed is fictitious and simulated because it was executed only for the purpose of placing Henry in possession of the property because he tendered earnest money. Severino also claimed that there was no meeting of minds with respect to the cause or consideration, since Henrys varied offers of P1,800,000.00, P2,000,000.00, and P2,500,000.00, were all rejected by him. For his part, Henry asserted that he was already the owner of the property being claimed by Severino, by virtue of a final agreement reached with the latter. Contrary to Severinos claim, the price of the property was pegged at P2,000,000.00, as agreed upon by the parties under the second deed. Prior to the filing of the action, his possession of the property remained undisturbed for three (3) years. Nevertheless, he admitted that since the signing of the second deed, he has not paid Severino the balance of the purchase price. He, however, faulted the latter for the non-payment, since according to him, Severino refused to deliver the owners duplicate title to the financing company. On Aug. 20, 1993, the trial court rendered judgment in favor of Severino and disposed: WHEREFORE, judgment is rendered as follows: 1) DECLARING the Deed of Absolute Sale which was signed by the plaintiff Severino C. Santos as vendor and the defendant as vendee and which was entered in the notarial register of notary public Dionilo Marfil of Quezon City as Doc. No. 474, Page No. 95, Book No. 173, Series of 1988, as inexistent and void from the beginning; and consequently, plaintiffs title to the property under T.C.T. No. PT-23458 (54434) issued by the Register of Deeds of Quezon City is quieted, sustained and maintained; 2) ORDERING the defendant to pay plaintiffs the amount of P 15, 000.00 a month as reasonable compensation for the use of the House and Lot located at No. 113 Scout Rallos St., Quezon City, beginning on the month of August, 1993, until the premises is fully vacated, (the compensation for the use thereof from the time the defendant had occupied the premises up to July, 1993, is recompensed for the repairs made by him); and 3) ORDERING the plaintiffs to reimburse the defendant the amount of P300,000.00 after defendant had vacated the premises in question, and the reasonable compensation for the use thereof had been paid. All other claims and counterclaims are DENIED for lack of legal and factual bases. No pronouncement as to costs. SO ORDERED.[23] Both Henry and Severino appealed the above decision to the Court of Appeals. Before the appellate court could decide the same, Severino passed away and was substituted by his wife and children as respondents. Henry filed a motion for leave to be allowed to deposit P1,700,000.00 in escrow with the Landbank of the Philippines to answer for the money portion of the decision.[24] This motion was granted. On December 29, 1997, the appellate court affirmed[25] the judgment of the trial court and thereafter, denied Henrys motion for reconsideration.[26] Thus, Henry brought this petition, citing the following as alleged errors: I. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN SEVERINO C. SANTOS AND PETITIONER HENRY R. PEALOSA. II. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONSIDERING NON-PAYMENT OF THE FULL PURCHASE PRICE AS CAUSE FOR DECLARING A PERFECTED CONTRACT OF SALE AS NULL AND VOID. III. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN REFUSING TO RECOGNIZE THAT OWNERSHIP OF THE SUBJECT PROPERTY HAD BEEN EFFECTIVELY VESTED UPON PETITIONER HENRY R. PEALOSA WHEN ACTUAL POSSESSION THEREOF HAD LAWFULLY TRANSFERRED TO PETITIONER HENRY R. PEALOSA BY VIRTUE OF THE COURT JUDGMENT IN THE EJECTMENT SUIT AGAINST THE FORMER LESSEE.[27] The pivotal issue presented before us is whether or not the second deed is valid and constitutes evidence of the final agreement between the parties regarding the sale transaction entered into by them. Petitioner maintains that the existence of a perfected contract of sale in this case is beyond doubt, since there clearly was a meeting of minds between the parties as to the object and consideration of the contract. According to petitioner, the agreement of the parties is evidenced by provisions contained in the second deed, which cannot possibly be simulated or fictitious. Subsequent and contemporaneous acts indubitably point to the fact that the parties truly intended to be bound by the second deed. Accordingly, the P2,000,000.00 stated therein was the actual price agreed upon by the parties as consideration for the sale.

21
On the other hand, in their memorandum, respondents insist that the second deed is a complete nullity because, as found by both the appellate and trial court: a) the consideration stated in the deed was not paid; b) Severinos passport showed that he was in the U.S. when said deed was notarized; c) Severino did not surrender a copy of the title at the time of the alleged sale; d) petitioner did not pay real estate taxes on the property; e) it was executed only for the purpose of helping Severino eject the tenant; f) Severinos wife, Adela, did not sign the deed; and g) the various documentary exhibits proved that there was no price certain accepted or paid. Respondents additionally argue that petitioner merely seeks a review of the aforesaid factual findings of the lower court and that consequently, we should deny the petition on the ground that it raises only factual questions. Considering the pivotal issue presented after close scrutiny of the assigned errors as well as the arguments of the parties, we are unable to agree with respondents and we must give due course to the petition. First of all, the petition filed before this Court explicitly questions the legal significance and consequences of the established facts[28] and not the findings of fact themselves. As pointed out by petitioner, he submits to the factual findings of the lower court, but maintains that its legal conclusions are irreconcilable and inconsistent therewith. He also states that the grounds relied upon in this petition do not call for the weighing of conflicting evidence submitted by the parties. Rather, he merely asks the Court to give due significance to certain undisputed and admitted facts spread throughout the record, which, if properly appreciated, would justify a different conclusion. At any rate, in Baricuatro, Jr. vs. Court of Appeals, 325 SCRA 137, 145 (2000), we reiterated the doctrine that findings of fact of the Court of Appeals are binding and conclusive upon this Court, subject to certain exceptions, one of which is when the judgment is based on a misapprehension of facts. In this case, after carefully poring over the records, we are convinced that the lower courts misappreciated the evidence presented by the parties and that, indeed, a reversal of the assailed judgment is in order. It should have been readily apparent to the trial court that the circumstances it cited in its decision are not proper grounds for holding that the second deed is simulated. Simulation is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for purposes of deception, the appearance of a juridical act which does not exist or is different from that which was really executed. Its requisites are: a) an outward declaration of will different from the will of the parties; b) the false appearance must have been intended by mutual agreement; and c) the purpose is to deceive third persons.[29] None of these requisites is present in this case. The basic characteristic of an absolutely simulated or fictitious contract is that the apparent contract is not really desired or intended to produce legal effects or alter the juridical situation of the parties in any way.[30] However, in this case, the parties already undertook certain acts which were directed towards fulfillment of their respective covenants under the second deed, indicating that they intended to give effect to their agreement. In particular, as early as August 8, 1988, after execution of the first deed, Severino authorized petitioner to bring an action for ejectment against the overstaying tenant and allowed petitioner to pursue the ejectment case to its final conclusion, presumably to secure possession of the property in petitioners favor. Petitioner also applied for a loan, which was approved by Philam Life, to complete payment of the stipulated price. After making extensive repairs with the knowledge of Severino, petitioner moved into the premises and actually occupied the same for three years before this action was brought. Moreover, simultaneous with the execution of the second deed, petitioner gave Severino P300,000.00 in earnest money, which under Article 1482[31] of the New Civil Code, is part of the purchase price and proof of perfection of the contract. What may have led the lower courts into incorrectly believing that the second deed was simulated is Exhibit D - a document in which petitioner declared that the deed was executed only for the purpose of helping Severino eject the tenant. However, a perusal of this document reveals that it made reference to the first deed and not the second deed, which was executed only after Exhibit D. So that while the first deed was qualified by stipulations contained in Exhibit D, the same cannot be said of the second deed which was signed by both parties. Further, the fact that Severino executed the two deeds in question, primarily so that petitioner could eject the tenant and enter into a loan/mortgage contract with Philam Life, is to our mind, a strong indication that he intended to transfer ownership of the property to petitioner. For why else would he authorize the latter to sue the tenant for ejectment under a claim of ownership, if he truly did not intend to sell the property to petitioner in the first place? Needless to state, it does not make sense for Severino to allow petitioner to pursue the ejectment case, in petitioners own name, with petitioner arguing that he had bought the property from Severino and thus entitled to possession thereof, if petitioner did not have any right to the property. Also worth noting is the fact that in the case filed by Severinos tenant against Severino and petitioner in 1989, assailing the validity of the sale made to petitioner, Severino explicitly asserted in his sworn answer to the complaint that the sale was a legitimate transaction. He further alleged that the ejectment case filed by petitioner against the tenant was a legitimate action by an owner against one who refuses to turn over possession of his property.[32] Our attention is also drawn to the fact that the genuineness and due execution of the second deed was not denied by Severino. Except to allege that he was not physically present when the second deed was notarized before the notary public, Severino did not assail the truth of its contents nor deny that he ever signed the same. As a matter of fact, he even admitted that he affixed his signature on the second deed to help petitioner acquire a loan. This can only signify that he consented to the manner proposed by petitioner for payment of the balance and that he accepted the stipulated price of P2,000,000.00 as consideration for the sale. Since the genuineness and due execution of the second deed was not seriously put in issue, it should be upheld as the best evidence of the intent and true agreement of the parties. Oral testimony, depending as it does exclusively on human memory, is not as reliable as written or documentary evidence.[33]

22
It should be emphasized that the non-appearance of the parties before the notary public who notarized the deed does not necessarily nullify nor render the parties transaction void ab initio. We have held previously that the provision of Article 1358[34] of the New Civil Code on the necessity of a public document is only for convenience, not for validity or enforceability. Failure to follow the proper form does not invalidate a contract. Where a contract is not in the form prescribed by law, the parties can merely compel each other to observe that form, once the contract has been perfected.[35] This is consistent with the basic principle that contracts are obligatory in whatever form they may have been entered into, provided all essential requisites are present.[36] The elements of a valid contract of sale under Art. 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.[37] In the instant case, the second deed reflects the presence of all these elements and as such, there is already a perfected contract of sale. Respondents contention that the second deed was correctly nullified by the lower court because Severinos wife, Adela, in whose name the property was titled, did not sign the same, is unavailing. The records are replete with admissions made by Adela that she had agreed with her husband to sell the property[38] which is conjugal in nature[39] and that she was aware of this particular transaction with petitioner. She also said that it was Severino who actually administered their properties with her consent, because she did not consider this as her responsibility.[40] We also observe that Severinos testimony in court contained (1) admissions that he indeed agreed to sell the property and (2) references to petitioners failure to pay the purchase price.[41] He did not mention that he did not intend at all to sell the property to petitioner and instead, stressed the fact that the purchase price had not yet been paid. Why would Severino stress non-payment if there was no sale at all? However, it is well-settled that non-payment of the purchase price is not among the instances where the law declares a contract to be null and void. It should be pointed out that the second deed specifically provides: That for and in consideration of the sum of TWO MILLION PESOS (P2,000,000.00), Philippine Currency paid in full by HENRY R. PEALOSA, receipt of which is hereby acknowledged by me to my full satisfaction, I hereby by these presents, sells (sic), cede, convey and otherwise dispose of the above described parcel of land, unto HENRY R. PEALOSA, his heirs, successors and assigns, free from all liens and encumbrances.
xxx (SGD.) SEVERINO C. SANTOS VENDOR x x x[42]

As can be seen from above, the contract in this case is absolute in nature and is devoid of any proviso that title to the property is reserved in the seller until full payment of the purchase price. Neither does the second deed give Severino a unilateral right to resolve the contract the moment the buyer fails to pay within a fixed period.[43] At most, the non-payment of the contract price merely results in a breach of contract for non-performance and warrants an action for rescission or specific performance under Article 1191 of the Civil Code.[44] Be that as it may, we agree with petitioner that although the law allows rescission as a remedy for breach of contract, the same may not be availed of by respondents in this case. To begin with, it was Severino who prevented full payment of the stipulated price when he refused to deliver the owners original duplicate title to Philam Life. His refusal to cooperate was unjustified, because as Severino himself admitted, he signed the deed precisely to enable petitioner to acquire the loan. He also knew that the property was to be given as security therefor. Thus, it cannot be said that petitioner breached his obligation towards Severino since the former has always been willing to and could comply with what was incumbent upon him. In sum, the only conclusion which can be deduced from the aforesaid circumstances is that ownership of the property has been transferred to petitioner. Article 1477 of the Civil Code states that ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. It is undisputed that the property was placed in the control and possession of petitioner[45] when he came into material possession thereof after judgment in the ejectment case. Not only was the contract of sale perfected, but also actual delivery of the property effectively consummated the sale. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated December 29, 1997 and its resolution dated April 15, 1998 in CA-G.R. CV No. 45206 which had affirmed the judgment of the Regional Trial Court of Quezon City, Branch 78, are REVERSED and SET ASIDE. A new judgment is hereby rendered UPHOLDING the validity of Exhibit B, the Deed of Absolute Sale dated September 12, 1988, entered into between the parties. The Landbank of the Philippines is further ordered to RELEASE to respondents the amount of P1,700,000.00 held in escrow, representing the balance of the purchase price agreed upon by the parties under the deed of absolute sale. Finally, the respondents are ordered to DELIVER to petitioner the owners duplicate copy of TCT No. PT-23458 after said release, with the corresponding payment of taxes due. Costs against respondents. SO ORDERED. 7. HEIRS OF ERNESTO BIONA vs. CA [G.R. No. 105647.* July 31, 2001]
HEIRS OF ERNESTO BIONA, NAMELY: EDITHA B. BLANCAFLOR, MARIANITA D. DE JESUS, VILMA B. BLANCAFLOR, ELSIE B. RAMOS and PERLITA B. CARMEN, petitioners, vs. THE COURT OF APPEALS and LEOPOLDO HILAJOS, respondents.

DECISION KAPUNAN, J.: Before us is a petition for review on certiorari under Rule 45 of the Decision of the Court of Appeals dated March 31, 1992, reversing the decision of the Regional Trial Court, 11th Judicial region, Branch 26, Surallah, South Cotabato and the Resolution dated May 26, 1992, denying the subsequent motion for reconsideration. Quoting from the decision of the Court of Appeals, the antecedent facts are as follows: On October 23, 1953, the late Ernesto Biona, married to plaintiff-appellee Soledad Biona, was awarded Homestead Patent No. V-840 over the property subject of this suit, a parcel of agricultural land denominated as lot 177 of PLS-285-D, located in Bo. 3, Banga, Cotabato, containing an area of ten (10) hectares, forty-three (43) acres and sixty-eight (68) centares,

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Original Certificate of Title No. (V-2323) P-3831 was issued in his name by the Register of Deeds of Cotabato (Exh. C). On June 3, 1954, Ernesto and Soledad Biona obtained a loan from the then Rehabilitation Finance Corporation (now the Development Bank of the Philippines) and put up as collateral the subject property (Exh. 4). On June 12, 1956, Ernesto Biona died (Exh. B) leaving as his heirs herein plaintiffs-appellees, namely, his wife, Soledad Estrobillo Vda. De Biona, and five daughters, Editha B. Blancaflor, Marianita B. de Jesus, Vilma B. Blancaflor, Elsie B. Ramos and Perlita B. Carmen. On March 1, 1960, plaintiff-appellee Soledad Biona obtained a loan from defendant-appellant in the amount of P1,000 and as security therefore, the subject property was mortgaged. It was further agreed upon by the contracting parties that for a period of two years until the debt is paid, defendant-appellant shall occupy the land in dispute and enjoy the usufruct thereof. The two-year period elapsed but Soledad Biona was not able to pay her indebtedness. Defendant-appellant continued occupying and cultivating the subject property without protest from plaintiffs-appellees. On July 3, 1962, defendant-appellant paid the sum of P1,400.00 to the Development Bank of the Philippines to cancel the mortgage previously constituted by the Biona spouses on June 3, 1953 (Exhs. 4 and 6). Thereafter, and for a period of not less than twenty-five years, defendant-appellant continued his peaceful and public occupation of the property, declaring it in his name for taxation purposes (Exhs. 10 and 11), paying real estate property taxes thereon (Exhs. 12, 13, 13-a to 13-e, F, G, H and I), and causing the same to be tenanted (Exhs. 7, 8, 9). On June 19, 1985, plaintiffs-appellees, filed a complaint for recovery of ownership, possession, accounting and damages, with a prayer for a writ of preliminary mandatory injunction and/ or restraining order against defendant-appellant alleging, among others, that the latter had unlawfully been depriving them of the use, possession and enjoyment of the subject property; that the entire parcel of land, which was devoted and highly suited to palay and corn, was yielding three harvests annually, with an average of one hundred twenty (120) sacks of corn and eighty cavans of rice per hectare; that plaintiffsappellees were deprived of its total produce amounting to P150,000.00. Plaintiffs-appellees prayed for the award of moral damages in the sum of P50,000.00, exemplary damages in the amount of P20,000,00 and litigation expenses in the amount of P2,000.00. On September 19, 1986, defendant-appellant filed his answer with counterclaim traversing the material allegations in the complaint and alleging, by way of affirmative and special defenses, that: on September 11, 1961, Soledad Biona, after obtaining the loan of P1,000.00 from defendant-appellant, approached and begged the latter to buy the whole of Lot No. 177 since it was then at the brink of foreclosure by the Development Bank of the Philippines and she had no money to redeem the same nor the resources to support herself and her five small children; that defendant-appellant agreed to buy the property for the amount of P4,300.00, which consideration was to include the redemption price to be paid to the Development Bank of the Philippines; that the purchase price paid by defendant far exceeded the then current market value of the property and defendant had to sell his own eight-hectare parcel of land in Surallah to help Soledad Biona; that to evidence the transaction, a deed of sale was handwritten by Soledad Biona and signed by her and the defendant; that at the time of the sale, half of the portion of the property was already submerged in water and from the years 1969 to 1984, two and one-half hectares thereof were eroded by the Allah River; that by virtue of his continuous and peaceful occupation of the property from the time of its sale and for more than twenty- five years thereafter, defendant possesses a better right thereto subject only to the rights of the tenants whom he had allowed to cultivate the land under the Land Reform Program of the government; that the complaint states no cause of action; that plaintiffs alleged right, if any, is barred by the statutes of fraud. As counterclaim, defendant-appellant prayed that plaintiffs-appellees be ordered to execute a formal deed of sale over the subject property and to pay him actual, moral and exemplary damages as the trial court may deem proper. He likewise prayed for the award of attorney's fees in the sum of P10,000.00. During the hearing of the case, plaintiffs-appellees presented in evidence the testimonies of Editha Biona Blancaflor and Vilma Biona Blancaflor, and documentary exhibits A to G and their submarkings. Defendant-appellant, for his part, presented the testimonies of himself and Mamerto Famular, including documentary exhibits 1 to 13, F, G, H, I, and their submarkings.[1] On January 31, 1990, the RTC rendered a decision with the following dispositive portion: I (SIC) VIEW OF THE FOREGOING, decision is hereby rendered: 1. ordering the defendant to vacate possession of the lot in question to the extent of six-tenths (6/10) of the total area thereof and to deliver the same to the plaintiff Soledad Estrobillo Biona upon the latter's payment of the sum of P1,000.00 TO THE FORMER IN REDEMPTION OF ITS MORTGAGE CONSTITUTED UNDER exh. "1" of defendant; 2. ordering the defendant to vacate the possession of the remaining four-tenths (4/10) of the area of the lot in question, representing the shares of the children of the late Ernesto Biona and deliver the same to said plaintiffs; the defendant shall render an accounting of the net produce of the area ordered returned to the co-plaintiffs of Soledad Biona commencing from the date of the filing of the complaint until possession thereto has been delivered to said co-plaintiffs and to deliver or pay 25% of said net produce to said co-plaintiffs; 3. ordering the defendant to pay the costs of this suit. The defendant's counter-claim are dismissed for lack of merit.SO ORDERED.[2] Dissatisfied, herein private respondent appealed to the Court of Appeals which reversed the trial court's ruling. The dispositive portion reads as follows: WHEREFORE, premises considered, the judgment appealed from is set aside and a new one entered dismissing the complaint, and the plaintiffs-appellees are ordered to execute a registrable deed of conveyance of the subject property in favor of the defendant-appellant within ten (10) days from the finality of this decision. With costs against plaintiffs-appellees.[3]

24
Hence, the instant petition where the following assignment of errors were made:
I.- RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE SIGNATURE OF SOLEDAD ESTROBILLO IN THE DEED OF SALE (EXHIBIT "2"), A PRIVATE DOCUMENT, IS GENUINE. II - RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE DEED OF SALE (EXHIBIT 2) IS VALID AND COULD LEGALLY CONVEY TO PRIVATE RESPONDENT OWNERSHIP AND TITLE OVER THE SUBJECT PROPERTY. III - RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT HEREIN PETITIONERS HAD LOST THEIR RIGHT TO RECOVER THE SUBJECT PROPERTY BY VIRTUE OF THE EQUITABLE PRINCIPLE OF LACHES. IV- RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT PRIVATE RESPONDENT'S RIGHT OF ACTION UNDER THE DEED OF SALE (EXHIBIT "2") HAD PRESCRIBED.[4]

As correctly pointed out by the Court of Appeals, the pivotal issue in the instant case is whether or not the deed of sale is valid and if it effectively conveyed to the private respondents the subject property. In ruling in favor of the petitioners, the trial court refused to give weight to the evidence of private respondent which consisted of (1) the handwritten and unnotarized deed of sale executed by Soledad Biona in favor of the private respondent; and (2) the corresponding acknowledgment receipt of the amount of P3,500.00 as partial payment for the land in dispute. To the mind of the trial court, the signature of Soledad Biona on the deed of sale was not genuine. There was no direct evidence to prove that Soledad Biona herself signed the document. Moreover, the deed of sale was not notarized and therefore, did not convey any rights to the vendee. The trial court also ruled that petitioners' rights over the land have not allegedly prescribed. On the other hand, the respondent Court of Appeals accepted as genuine the deed of sale (Exh. 2) which "sets forth in unmistakable terms that Soledad Biona agreed for the consideration of P4,500.00, to transfer to defendant-appellant Lot 177. The fact that payment was made is evidenced by the acknowledgment receipt for P3,500.00 (Exh. 3) signed by Soledad Biona, and private respondent previous delivery of P1,000.00 to her pursuant to the Mutual Agreement (Exh. 1). The contract of sale between the contracting parties was consummated by the delivery of the subject land to private respondent who since then had occupied and cultivated the same continuously and peacefully until the institution of this suit."[5] Given the contrary findings of the trial court and the respondent court, there is a need to re-examine the evidence altogether. After a careful study, we are inclined to agree with the findings and conclusions of the respondent court as they are more in accord with the law and evidence on record. As to the authenticity of the deed of sale, we subscribe to the Court of Appeals' appreciation of evidence that private respondent has substantially proven that Soledad Biona indeed signed the deed of sale of the subject property in his favor. His categorical statement in the trial court that he himself saw Soledad Estrobillo affix her signature on the deed of sale lends credence. This was corroborated by another witness, Mamerto Famular. Although the petitioners consider such testimony as self-serving and biased,[6] it can not, however, be denied that private respondent has shown by competent proof that a contract of sale where all the essential elements are present for its validity was executed between the parties.[7] The burden is on the petitioners to prove the contrary which they have dismally failed to do. As aptly stated by the Court of Appeals: Having established the due execution of the subject deed of sale and the receipt evidencing payment of the consideration, the burden now shifted to plaintiffs-appellees to prove by contrary evidence that the property was not so transferred. They were not able to do this since the very person who could deny the due execution of the document, Soledad Biona, did not testify. She similarly failed to take the witness stand in order to deny her signatures on Exhs. 2 and 3. Admitting as true that she was under medication in Manila while the hearing of the case was underway, it was easy enough to get her deposition. Her non-presentation gives rise to the presumption that if her testimony was taken, the same would be adverse to the claim by plaintiffs-appellees. It must also be noted that under Sec. 22 Rule 132 of our procedural law, evidence respecting handwriting may also be given by a comparison, made by the witness or the court, with writings admitted or treated as genuine by the party against whom the evidence is offered. Our own close scrutiny of the signature of Soledad Biona appearing on Exh. 1, the document admitted by the contending parties, reveals that it is the same as the signatures appearing on Exhs. 2 and 3, the documents in dispute. Admittedly, as was pointed out by the trial court, the "S" in Exhs. 2 and 3 were written in printed type while that in Exh. 1 is in handwriting type. But a careful look at the text of Exh. 2 would reveal that Soledad Biona alternately wrote the letter "S" in longhand and printed form. Thus, the words "Sum" and "Sept.," found in the penultimate and last paragraphs of the document, respectively, were both written in longhand, while her name appearing on first part of the document, as well as the erased word "Sept." in the last paragraph thereof were written in printed form. Moreover, all doubts about the genuineness of Soledad Biona's signatures on Exhs. 2 and 3 are removed upon their comparison to her signature appearing on the special power of attorney (Exh. A) presented in evidence by plaintiffs-appellees during trial. In said document, Soledad Biona signed her name using the same fact that Soledad Estrobillo Biona wrote her entire name on Exh. 2 while she merely affixed her maiden name on the other two documents may have been due to the lesser options left to her when the lawyers who drafted the two documents (Exhs. 2 and 3) already had typewritten the names "SOLEDAD ESTROBILLO" thereon whereas in Exh. 2, it was Soledad Biona herself who printed and signed her own name. Thus, in the special power of attorney (Exh. A), Soledad Biona signed her name in the same manner it was typewritten on the document.[8] We agree with the private respondent that all the requisites for a valid contract of sale are present in the instant case. For a valuable consideration of P4,500.00, Soledad Biona agreed to sell and actually conveyed the subject property to private respondent. The fact that the deed of sale was not notarized does not render the agreement null and void and without any effect. The provision of Article 1358 of the Civil Code[9] on the necessity of a public document is only for convenience, and not for validity or enforceability.[10] The observance of which is only necessary to insure its efficacy, so that after the existence of said contract had been admitted, the party bound may be compelled to execute the proper document.[11] Undeniably, a contract has been entered into by Soledad Biona and the private respondent. Regardless of its form, it was valid, binding and enforceable between the parties. We quote with favor the respondent court's ratiocination on the matter: xxx The trial court cannot dictate the manner in which the parties may execute their agreement, unless the law otherwise provides for a prescribed form, which is not so in this case. The deed of sale so executed, although a private document, is effective as between the parties themselves and also as the third persons having no better title, and should be admitted in evidence for the purpose of showing the rights and relations of the contracting parties (Carbonell v. Court of Appeals,

25
69 SCRA 99; Elumbaring v. Elumbaring, 12 Phil. 384). Under Art. 1356 of the Civil Code, contracts shall be obligatory in whatever form they may have been entered into provided all the essential requisites for their necessary elements for a valid contract of sale were met when Soledad Biona agreed to sell and actually conveyed Lot 177 to defendant-appellant who paid the amount of P4,500.00 therefore. The deed of sale (Exh. 2) is not made ineffective merely because it is not notarized or does not appear in a public document. The contract is binding upon the contracting parties, defendant-appellant and Soledad Biona, including her successors-in-interest. Pursuant to Art. 1357, plaintiffs-appellees may be compelled by defendant-appellant to execute a public document to embody their valid and enforceable contract and for the purpose of registering the property in the latter's name (Clarin v. Rulona, 127 SCRA 512; Heirs of Amparo v. Santos, 108 SCRA 43; Araneta v. Montelibano, 14 Phil. 117).[12] Finally, we find no merit in petitioners' contention that their right over the land has not prescribed. The principle of laches was properly applied against petitioner. Laches has been defined as the 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, it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has either abandoned it or declined to assert it.[13] In the instant case, the Court of Appeals point to the circumstances that warrant the principle to come into play: Laches had been defined to be such neglect or omission to assert a right taken in conjunction with the lapse of time and other circumstances causing prejudice to an adverse party, as will bar him in equity (Heirs of Batiog Lacamen v. Heirs of Laruan, 65 SCRA 605, 609-610). In the instant suit, Soledad Biona, at the time of the execution of the deed of sale (Exh. 2) on September 11, 1961, could only alienate that portion of Lot 177 belonging to her, which is seven-twelfths of the entire property. She had no power or authority to dispose of the shares of her co-owners, the five daughters of the deceased Ernesto Biona, who were entitled to an indivisible five-twelfths portion of the whole property. It is not disputed, however, that as early as 1960, when Soledad Biona borrowed money from defendant-appellant (Exh. L), the latter entered, possessed and started occupying the same in the concept of an owner. He caused its cultivation through various tenants under Certificates of Land Transfer (Exhs. 7-9), declared the property in his name, religiously paid taxes thereon, reaped benefits therefrom, and executed other acts of dominion without any protest or interference from plaintiffs-appellees for more than twenty-five years. Even when the five daughters of the deceased Ernesto Biona were way past the age of majority, when they could have already asserted their right to their share, no sale in defendant-appellant's favor was ever brought or any other action was taken by them to recover their share. Instead, they allowed defendant-appellant to peacefully occupy the property without protest. Although it is true that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession as the right to recover possession of registered land is imprescriptible, jurisprudence has laid down the rule that a person and his heirs may lose their right to recover back the possession of such property and title thereto by reason of laches. (Victoriano v. Court of Appeals, 194 SCRA 19; Lola v. CA, 145 SCRA 439, 449). Indeed, it has been ruled in the case of Miguel v. Catalino, 26 SCRA 234, 239, that: 'Courts can not look with favor at parties who, by their silence, delay and inaction, knowingly induce another to spend time, effort and expense in cultivating the land, paying taxes and making improvements thereof for 30 long years, only to spring from ambush and claim title when the possessor's efforts and the rise of land values offer an opportunity to make easy profit at his expense.' Thus, notwithstanding the invalidity of the sale with respect to the share of plaintiffs-appellees, the daughters of the late Ernesto Biona, they [allowed] the vendee, defendant-appellant herein, to enter, occupy and possess the property in the concept of an owner without demurrer and molestation for a long period of time, never claiming the land as their own until 1985 when the property has greatly appreciated in value. Vigilantibus non dormientibus sequitas subvenit.[14] WHEREFORE, the Petition is DENIED & the assailed Decision of the Court of Appeals is AFFIRMED. SO ORDERED. 8. SAN MIGUEL PROPERTIES PHILS VS. HUANG 336 SCRA 737 (2000) [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,[1] 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. 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 PT-82396 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[2] 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. On March 29, 1994, Atty. Dauz wrote another letter[3] proposing the following terms for the purchase of the properties, viz: 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.

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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."[4] Her request was granted. 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[6] 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.[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,[9] it was held: . . . 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

27
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.[11] 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. 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.[12] In the present case, the parties never got past the negotiation stage. The alleged "indubitable evidence"[13] 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. 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.,[14] 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,[15] 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.[16] In Velasco v. Court of Appeals,[17] 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: . . . 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. 9. SANTOS V. CA 337 SCRA 67 (2000) [G.R. No. 120820. August 1, 2000]
SPS. FORTUNATO SANTOS and ROSALINDA R. SANTOS, petitioners, vs. COURT OF APPEALS, SPS. MARIANO R. CASEDA and CARMEN CASEDA, respondents.

DECISION QUISUMBING, J.: For review on certiorari is the decision of the Court of Appeals, dated March 28, 1995, in CA-G.R. CV No. 30955, which reversed and set aside the judgment of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 89-4759. Petitioners (the Santoses) were the owners of a house and lot informally sold, with conditions, to herein private respondents (the

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Casedas). In the trial court, the Casedas had complained that the Santoses refused to deliver said house and lot despite repeated demands. The trial court dismissed the complaint for specific performance and damages, but in the Court of Appeals, the dismissal was reversed, as follows: WHEREFORE, in view of the foregoing, the decision appealed from is hereby REVERSED and SET ASIDE and a new one entered: 1. GRANTING plaintiffs-appellants a period of NINETY (90) DAYS from the date of the finality of judgment within which to pay the balance of the obligation in accordance with their agreement; 2. Ordering appellees to restore possession of the subject house and lot to the appellants upon receipt of the full amount of the balance due on the purchase price; and 3. No pronouncement as to costs. SO ORDERED.[1] The undisputed facts of this case are as follows: The spouses Fortunato and Rosalinda Santos owned the house and lot consisting of 350 square meters located at Lot 7, Block 8, Better Living Subdivision, Paranaque, Metro Manila, as evidenced by TCT (S-11029) 28005 of the Register of Deeds of Paranaque. The land together with the house, was mortgaged with the Rural Bank of Salinas, Inc., to secure a loan of P150,000.00 maturing on June 16, 1987. Sometime in 1984, Rosalinda Santos met Carmen Caseda, a fellow market vendor of hers in Pasay City and soon became very good friends with her. The duo even became kumadreswhen Carmen stood as a wedding sponsor of Rosalinda's nephew. On June 16, 1984, the bank sent Rosalinda Santos a letter demanding payment of P16,915.84 in unpaid interest and other charges. Since the Santos couple had no funds, Rosalinda offered to sell the house and lot to Carmen. After inspecting the real property, Carmen and her husband agreed. Sometime that month of June, Carmen and Rosalinda signed a document, which reads: Received the amount of P54,100.00 as a partial payment of Mrs. Carmen Caseda to the (total) amount of 350,000.00 (house and lot) that is own (sic) by Mrs. Rosalinda R. Santos. (Mrs.) (Sgd.) Carmen Caseda direct buyer Mrs. Carmen Caseda (Sgd.) Rosalinda Del R. Santos Owner Mrs. Rosalinda R. Santos House and Lot Better Living Subd. Paraaque, Metro Manila Section V Don Bosco St."[2] The other terms and conditions that the parties agreed upon were for the Caseda spouses to pay: (1) the balance of the mortgage loan with the Rural bank amounting to P135,385.18; (2) the real estate taxes; (3) the electric and water bills; and (4) the balance of the cash price to be paid not later than June 16, 1987, which was the maturity date of the loan. [3] The Casedas gave an initial payment of P54,100.00 and immediately took possession of the property, which they then leased out. They also paid in installments, P81,696.84 of the mortgage loan. The Casedas, however, in 1987. Notwithstanding the state of their finances, Carmen nonetheless paid in March 1990, the real estate taxes on the property for 1981-1984. She also settled the electric bills from December 12, 1988 to July 12, 1989. All these payments were made in the name of Rosalinda Santos. In January 1989, the Santoses, seeing that the Casedas lacked the means to pay the remaining installments and/or amortization of the loan, repossessed the property. The Santoses then collected the rentals from the tenants. In February 1989, Carmen Caseda sold her fishpond in Batangas. She then approached petitioners and offered to pay the balance of the purchase price for the house and lot. The parties, however, could not agree, and the deal could not push through because the Santoses wanted a higher price. For understandably, the real estate boom in Metro Manila at this time, had considerably jacked up realty values. On August 11, 1989, the Casedas filed Civil Case No. 89-4759, with the RTC of Makati, to have the Santoses execute the final deed of conveyance over the property, or in default thereof, to reimburse the amount of P180,000.00 paid in cash and P249,900.00 paid to the rural bank, plus interest; as well as rentals for eight months amounting to P32,000.00, plus damages and costs of suit. After trial on the merits, the lower court disposed of the case as follows: WHEREFORE, judgment is hereby ordered: (a) dismissing plaintiff's (Casedas') complaint; and (b) declaring the agreement marked as Annex "C" of the complaint rescinded. Costs against plaintiffs. SO ORDERED.[4] Said judgment of dismissal is mainly based on the trial court's finding that: Admittedly, the purchase price of the house and lot was P485,385.18, i.e. P350,000.00 as cash payment and P135,385.18, assumption of mortgage. Of it plaintiffs [Casedas] paid the following: (1) P54,100.00 down payment; and (2) P81,694.64 installment payments to the bank on the loan (Exhs. E to E-19) or a total of P135,794.64. Thus, plaintiffs were short of the purchase price. They cannot, therefore, demand specific performance.[5] The trial court further held that the Casedas were not entitled to reimbursement of payments already made, reasoning that:

29
As, earlier mentioned, plaintiffs made a total payment of P135,794.64 out of the purchase price of P485,385.18. The property was in plaintiffs' possession from June 1984 to January 1989 or a period of fifty-five months. During that time, plaintiffs leased the property. Carmen said the property was rented for P25.00 a day or P750.00 a month at the start and in 1987 it was increased to P2,000.00 and P4,000.00 a month. But the evidence is not precise when the different amounts of rental took place. Be that as it may, fairness demands that plaintiffs must pay defendants for their exercise of dominical rights over the property by renting it to others. The amount of P2,000.00 a month would be reasonable based on the average of P750.00, P2,000.00, P4,000.00 lease-rentals charged. Multiply P2,000.00 by 55 months, the plaintiffs must pay defendants P110,000.00 for the use of the property. Deducting this amount from the P135,794.64 payment of the plaintiffs on the property, the difference is P25,794.64. Should the plaintiffs be entitled to a reimbursement of this amount? The answer is in the negative. Because of failure of plaintiffs to liquidated the mortgage loan on time, it had ballooned from its original figure of P135,384.18 as of June 1984 to P337,280.78 as of December 31, 1988. Defendants [Santoses] had to pay the last amount to the bank to save the property from foreclosure. Logically, plaintiffs must share in the burden arising from their failure to liquidate the loan per their contractual commitment. Hence, the amount of P25,794.64 as their share in the defendants' damages in the form of increased loan-amount, is reasonable.[6] On appeal, the appellate court, as earlier noted, reversed the lower court. The appellate court held that rescission was not justified under the circumstances and allowed the Caseda spouses a period of ninety days within which to pay the balance of the agreed purchase price. Hence, this instant petition for review on certiorari filed by the Santoses. Petitioners now submit the following issues for our consideration:
WHETHER OR NOT THE COURT OF APPEALS HAS JURISDICTION TO DECIDE PRIVATE RESPONDENT'S APPEAL INTERPOSING PURELY QUESTIONS OF LAW. WHETHER THE SUBJECT TRANSACTION IS NOT A CONTRACT OF ABSOLUTE SALE BUT A MERE ORAL CONTRACT TO SELL IN WHICH CASE JUDICIAL DEMAND FOR RESCISSION (ART. 1592,[7] CIVIL CODE) IS NOT APPLICABLE. ASSUMING ARGUENDO THAT A JUDICIAL DEMAND FOR RESCISSION IS REQUIRED, WHETHER PETITIONERS' DEMAND AND PRAYER FOR RESCISSION CONTAINED IN THEIR ANSWER FILED BEFORE THE TRIAL SATISFIED THE SAID REQUIREMENT. WHETHER OR NOT THE NON-PAYMENT OF MORE THAN HALF OF THE ENTIRE PURCHASE PRICE INCLUDING THE NONCOMPLIANCE WITH THE STIPULATION TO LIQUIDATE THE MORTGAGE LOAN ON TIME WHICH CAUSED GRAVE DAMAGE AND PREJUDICE TO PETITIONERS, CONSTITUTE SUBSTANTIAL BREACH TO JUSTIFY RESCISSION OF A CONTRACT TO SELL UNDER ARTICLE 1191 [8] (CIVIL CODE).

On the first issue, petitioners argue that, since both the parties and the appellate court adopted the findings of trial court,[9] no questions of fact were raised before the Court of Appeals. According to petitioners, CA-G.R. CV No. 30955, involved only pure questions of law. They aver that the court a quo had no jurisdiction to hear, much less decide, CA-G.R. CV No. 30955, without running afoul of Supreme Court Circular No. 2-90 (4) [c].[10] There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain set of facts, and there is a question of fact when the doubt or difference arises as to the truth or falsehood of the alleged facts.[11] But we note that the first assignment of error submitted by respondents for consideration by the appellate court dealt with the trial court's finding that herein petitioners got back the property in question because respondents did not have the means to pay the installments and/or amortization of the loan.[12] The resolution of this question involved an evaluation of proof, and not only a consideration of the applicable statutory and case laws. Clearly, CA-G.R. CV No. 30955 did not involve pure questions of law, hence the Court of Appeals had jurisdiction and there was no violation of our Circular No. 2-90. Moreover, we find that petitioners took an active part in the proceedings before the Court of Appeals, yet they did not raise there the issue of jurisdiction. They should have raised this issue at the earliest opportunity before the Court of Appeals. A party taking part in the proceedings before the appellate court and submitting his case for as decision ought not to later on attack the court's decision for want of jurisdiction because the decision turns out to be adverse to him.[13] The second and third issues deal with the question: Did the Court of Appeals err in holding that a judicial rescission of the agreement was necessary? In resolving both issues, we must first make a preliminary determination of the nature of the contract in question: Was it a contract of sale, as insisted by respondents or a mere contract to sell, as contended by petitioners? Petitioners argue that the transaction between them and respondents was a mere contract to sell, and not a contract of sale, since the sole documentary evidence (Exh. D, receipt) referring to their agreement clearly showed that they did not transfer ownership of the property in question simultaneous with its delivery and hence remained its owners, pending fulfillment of the other suspensive conditions, i.e., full payment of the balance of the purchase price and the loan amortizations. Petitioners point to Manuel v. Rodriguez, 109 Phil. 1 (1960) and Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 43 SCRA 93 (1972), where we held that Article 1592 of the Civil Code is inapplicable to a contract to sell. They charge the court a quo with reversible error in holding that petitioners should have judicially rescinded the agreement with respondents when the latter failed to pay the amortizations on the bank loan. Respondents insist that there was a perfected contract of sale, since upon their partial payment of the purchase price, they immediately took possession of the property as vendees, and subsequently leased it, thus exercising all the rights of ownership over the property. This showed that transfer of ownership was simultaneous with the delivery of the realty sold, according to respondents. It must be emphasized from the outset that a contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it.[14] Article 1458[15] of the Civil Code defines a contract of sale. Note that the said article expressly obliges the vendor to transfer ownership of the thing sold as an essential element of a contract of sale. This is because the transfer of ownership in exchange for a price paid or promised is the very essence of a contract of sale.[16] We have carefully examined the contents of the unofficial receipt, Exh. D, with the terms and conditions informally agreed upon by the parties, as well as the proofs submitted to support their respective contentions. We are far from persuaded that there was a transfer of ownership simultaneously with the delivery of the property purportedly sold. The records clearly show that, notwithstanding the fact that the Casedas first took then lost possession of the disputed house and lot, the title to the property, TCT No. 28005 (S-11029) issued by the Register of Deeds of Paraaque, has remained always in the name of Rosalinda Santos.[17] Note further that although the parties had agreed that the Casedas would assume the mortgage, all amortization payments made by Carmen Caseda to the bank were in the name of Rosalinda Santos.[18]We likewise find that the bank's cancellation and discharge of mortgage dated January 20, 1990, was made in favor of Rosalinda Santos. [19] The foregoing circumstances categorically and clearly show that no valid transfer of ownership was made by the Santoses to the Casedas. Absent this essential element, their agreement cannot be deemed a contract of sale. We agree withpetitioners'

30
averment that the agreement between Rosalinda Santos and Carmen Caseda is a contract to sell. In contracts to sell, ownership is reserved by the vendor and is not to pass until full payment of the purchase price. This we find fully applicable and understandable in this case, given that the property involved is a titled realty under mortgage to a bank and would require notarial and other formalities of law before transfer thereof could be validly effected. In view of our finding in the present case that the agreement between the parties is a contract to sell, it follows that the appellate court erred when it decreed that a judicial rescission of said agreement was necessary. This is because there was no rescission to speak of in the first place. As we earlier pointed out, in a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase price is a positive suspensive condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.[20] This is entirely different from the situation in a contract of sale, where non-payment of the price is a negative resolutory condition. The effects in law are not identical. In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside.[21] In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price. If the vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not rescinding it. When the petitioners in the instant case repossessed the disputed house and lot for failure of private respondents to pay the purchase price in full, they were merely enforcing the contract and not rescinding it. As petitioners correctly point out, the Court of Appeals erred when it ruled that petitioners should have judicially rescinded the contract pursuant to Articles 1592 and 1191 of the Civil Code. Article 1592 speaks of non-payment of the purchase price as a resolutory condition. It does not apply to a contract to sell.[22] As to Article 1191, it is subordinated to the provisions of Article 1592 when applied to sales of immovable property.[23] Neither provision is applicable in the present case. As to the last issue, we need not tarry to make a determination of whether the breach of contract by private respondents is so substantial as to defeat the purpose of the parties in entering into the agreement and thus entitle petitioners to rescission. Having ruled that there is no rescission to speak of in this case, the question is moot. WHEREFORE, the instant petition is GRANTED and the assailed decision of the Court of Appeals in CA-G.R. CV No. 30955 is REVERSED and SET ASIDE. The judgment of the Regional Trial Court of Makati, Branch 133, with respect to the DISMISSAL of the complaint in Civil Case No. 89-4759, is hereby REINSTATED. No pronouncement as to costs. SO ORDERED.

September 20, 2006 HEIRS OF VENANCIO BAJENTING and FELISA S. BAJENTING, NAMELY: Teresita A. Bajenting, Ruel A. Bajenting, Gilbert A. Bajenting, Cresilda B. Puebla, Imelda B. Salac, Benedictina B. Ravina, Margarita B. Reusora, Renato A. Bajenting, Lorena A. Bajenting, Elizalde A. Bajenting, Francisco Malda, Jr., B. Selecio Bajenting, Trinidad M. Antinola, Roland B. Malda, Luisa B. Malda, Arsenia C. Ramirez, Angelina Ricarte, Editha Esteban, Lourdes M. Garcia, Nora M. Alivio, Francisca B. Espina, Francisco Malda, Sr., and Venencio A. Bajenting, represented by VENENCIO A. BAJENTING, Attorney-in-Fact, petitioners, vs. ROMEO F. BAEZ, SPOUSES JONATHAN and SONIA LUZ ALFAFARA, respondents.

10. HEIRS OF VENANCIO BEJENTING vs. BANEZ 502 SCRA 531 (2006) G.R. No. 166190

DECISION CALLEJO, SR., J.: This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 76526, as well as its October 31, 2004 Resolution2 denying the Motion for Reconsideration thereof. The factual and procedural antecedents are as follows: Venancio Bajenting applied for a free patent over a parcel of land, Lot 23 (Sgs. 546 D), Davao Cadastre, located in Langub, Davao City, with an area of 104,140 square meters. The application was docketed as Free Patent Application No. IV45340. In the meantime, Venancio planted fruit trees in the property3 such as mango, lanzones, coconut and santol. He and his wife, Felisa Bajenting, along with their children, also resided in a house which stood on the property.4 On February 18, 1974, Venancio died intestate.5 His application for a free patent was thereafter approved, and on December 18, 1975, Free Patent No. 577244 was issued in his favor. On February 6, 1976, the Register of Deeds issued Original Certificate of Title (OCT) No. P-5677 over the property in the name of "Venancio Bajenting, married to Felisa Sultan."6 Selecio Bajenting continued cultivating the land.7 In the meantime, the Sangguniang Panglunsod approved City Ordinance No. 263, Series of 1982 and Resolution No. 10254 declaring the properties in Langub as a low density residential zone.8 On May 31, 1993, Felisa and the other heirs of Venancio (Heirs, for brevity),9 executed an Extrajudicial Settlement with Deed of Absolute Sale over Lot 23. They alleged therein that when Venancio died intestate, they had agreed to adjudicate unto themselves as heirs of the deceased the aforesaid property, as follows: TO: FELISA S. BAJENTING, One half (1/2) share of the whole of Oct. No. P-5677, as her conjugal share; and the remaining one-half (1/2) of OCT No. P-5677. TO: FELISA S. BAJENTING, MARGARITA BAJENTING, FRANCISCA BAJENTING, SILVERIO BAJENTING (Deceased) represented by his wife and children: Teresita Apas-Bajenting, Renato Bajenting, Gilbert Bajenting, Criselda Bejenting, Imelda Bajenting, Venancio Bajenting and Elizalde Bajenting; MAXIMA BAJENTING (Deceased) represented by her husband, Francisco Malda, and children: Lee B. Malda, Angelina B. Malda, Milagros B. Malda, Editha B. Malda and Susana B. Malda; BENEDICTINA BAJENTING, ARSENIA BAJENTING; and CELECISO BAJENTING, in equal share pro-indiviso.10 In the same deed, a 50,000 square meter portion of the property was sold to the spouses Sonia Luz Alfafara; and the 54,140 square meter portion to Engr. Romeo F. Baez. The share of Felisa was included in the portion sold to Engr. Baez.11 However, the deed was not notarized; neither was the sale approved by the Secretary of Environment and Natural Resources. In the Agreement/Receipt executed by Felisa Bajenting and Romeo Baez, the parties declared that the price of property was P500,000.00; P350,000.00 was paid by the vendees, the balance of P150,000.00 to be due and payable on or before December 31, 1993 at the residence of the vendors.12 The owner's duplicate of title was turned over to the vendees. However, the deed was not filed with the Office of the Register of Deeds.

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The Heirs, including Felisa, tried to repurchase the property as provided under Section 119 of Commonwealth Act No. 141, but Romeo Baez and Sonia Alfafara did not allow them to exercise their right. On May 31, 1995, the Heirs, through Venencio Bajenting, filed a Complaint for recovery of title against Romeo Baez and the spouses Alfafara in the Office of the Barangay Captain. When no settlement was reached, the Heirs filed a complaint for Quieting of Title, Repurchase of Property, Recovery of Title plus Damages with the Regional Trial Court, claiming that they had tried to repurchase the property from the defendants and that the latter had ignored the summons from the Barangay Captain for an amicable settlement of the case. They prayed that after due proceedings, judgment be rendered in their favor: WHEREFORE, PREMISES CONSIDERED, it is prayed of this Honorable Court that after hearing, judgment be rendered in favor of plaintiffs and against herein defendants, by quieting and removing any cloud on the Original Certificate of Title No. P-5677, Free Patent No. 577244, of the Registry of Deeds of Davao City, and thereafter ordering the defendants to: a) Return the owner's duplicate copy of Original Certificate of Title No. P-5677, Free Patent No. 577244 to plaintiff forthwith; b) Vacate the premises including those who are acting for and in their behalf; and, IN THE ALTERNATIVE, should the defendants prove their superior right over the subject property (i.e., sale) as against the herein plaintiffs that they be ordered to resell back the said property to the plaintiffs consonant to the provision of Sec. 119, C.A. No. 141, and in both instances, defendants be, jointly and severally, ordered to pay plaintiffs: 1. P50,000.00 - Moral Damages; 2. P50,000.00 - Exemplary Damages; 3. P70,000.00 - Actual Damages; 4. P50,000.00 - Attorney's fees. Plaintiffs further pray for such relief just and equitable in the premises.13 On October 29, 1996, the Heirs filed an Amended Complaint, alleging the following: 5. Sometime in May 1993, the afore-described real property was sold to defendants for a consideration of Five Hundred Thousand (P500,000.00) Pesos and several months thereafter, the owner's duplicate copy Original Certificate of Title No. P5677, Free Patent No. 577244, was handed to them and, thereafter, their representative occupied the area. x x x 6. Defendants paid only the sum of THREE HUNDRED FIFTY THOUSAND (P350,000.00) but did not pay the remaining purchase price in the amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS. x x x 7. The aforedescribed property sold to defendants, being a Free Patent, can be repurchased within five (5) years from date of conveyance (1993) by the applicant, his widow, or legal heirs pursuant to Sec. 119, Commonwealth Act No. 141, as amended, which provides that: "That every conveyance of land acquired under the free patent provisions, when proper, shall be the subject to repurchase by the applicant, his widow, or legal heirs, within a period of five (5) years from the date of the conveyance; (Underscoring supplied).14 xxxx 13. Herein Plaintiffs have tendered the amount of THREE HUNDRED FIFTY THOUSAND (P350,000.00) as repurchase price with the Office of the Clerk of Court as shown in hereto attached xerox copy of Official Receipt No. 6547953 as Annex "L."15 The Amended Complaint contained the following prayer: WHEREFORE, PREMISES CONSIDERED, it is prayed of this Honorable Court that after hearing, judgment be rendered ordering defendants to resell the property back to herein plaintiffs in accordance with the provision of Sec. 119, C.A. No. 141 and ordering defendants further to: a) Return the owner's duplicate copy of Original Certificate of Title No. P-5677, Free Patent No. 577244 to plaintiffs forthwith; b) Vacate the premises including those who are acting for and in their behalf; and c) Jointly and severally, pay plaintiffs: 1) P 50,000.00 - Moral Damages; 2) P 50,000.00 - Exemplary Damages; 3) P 70,000.00 - Actual Damages; 4) P 50,000.00 - Attorney's fees. Plaintiffs further pray for such relief just and equitable in the premises. 16 The Heirs deposited the amount of P350,000.00 with the Clerk of Court, and an official receipt was issued therefore. In their Amended Answer to the Complaint, the defendants averred, inter alia, that: (1) the plaintiffs, who did not sign the Extrajudicial Settlement and Deed of Absolute Sale, were not heirs of Venancio Bajenting; (2) it was only Venencio Bajenting, Jr. who wanted to repurchase the property for and in behalf of a "speculator" i.e., for the sole use and enjoyment of the interested buyer and not for cultivation of the heirs of the deceased homesteader; and (3) the Heirs have not tendered any amount to perfect their repurchase of the property. They alleged, by way of Compulsory Counterclaim, that: 13. The parties herein have entered into an Extrajudicial Settlement of Estate with Deed of Absolute Sale to evidence their agreement over the land in question. However, such deed has not yet been notarized. Pursuant to Art. 1357 in relation to Art. 1358 (1) of the Civil Code, defendants may require plaintiffs to deliver the proper document in the proper form to evidence the conveyance of the property subject of this case and sufficient to effect the transfer of title to the same in favor of defendants;17 The defendants prayed that, after due proceedings, judgment be rendered in their favor as follows: WHEREFORE, PREMISES CONSIDERED, it is respectfully prayed of this Honorable Court that after trial on the merits, a decision be rendered:

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1. Finding that plaintiffs are not entitled to exercise their right to repurchase and confirming the right of the defendants to continue to own, possess and enjoy the subject property; 2. Ordering plaintiffs to deliver to defendants the proper document in the proper form to evidence the conveyance of the property subject of this case and sufficient to effect the transfer of title to the same in favor of defendants; 3. Finding that plaintiffs should pay defendants, jointly and severally, the sum of: a). equivalent to 25% of the value of the property as attorney's fee and P50,000.00 as expenses of litigation; b). P100,000.00 for each defendant as moral damages; c). P50,000.00 for each defendant as exemplary damages; Defendants further pray for such other equitable and legal reliefs as may be just and proper under the premises.18 During the pre-trial on January 19, 1998, considering the possibility that the parties would amicably settle the matter (that is, they would agree to entrust the property to a receiver, later sell it to a third party and divide the proceeds among themselves), the court ordered a resetting of the case. On February 6, 1998, the plaintiffs, through counsel, filed a Manifestation with the trial court. The pertinent portion reads: 3. Plaintiffs are willing to receive the amount of FIVE MILLION (P5,000,000.00) Pesos, as an additional purchase price of their property covered by Original Certificate of Title No. P-5677 within the period of two (2) months counted from today. Should the defendant cannot (sic) pay said amount, the plaintiffs will no longer agree to the payment of P5,000,000.00. 4. Although, the plaintiffs have no intention whatsoever to sell the property, but in order to settle the case amicably, they are willing to look for interested buyers of the property, subject matter of this repurchase, to sell the same for a consideration of not less than P5,000,000.00. And out of the said purchase price, Plaintiffs are willing to give, by way of settlement to defendant, the amount equivalent to twenty percent (20%) of the proceeds; 5. Plaintiffs shall go on with the presentation of their evidence; 6. During the pendency of this case, receiver shall be appointed to take charge of the property; 7. Plaintiffs are willing to meet the defendant for the discussion of the foregoing on February 11, 1998 at 2:30 in the afternoon.19 The case was referred to the Barangay Captain and the Lupon Tagapamayapa for a possible settlement, to no avail.20 The Heirs presented Vicente Ravino, the husband of Benedicta Bajenting, one of the daughters of Venancio and Felisa. He testified that Felisa had died intestate on January 21, 1996.21 For a period of two years, he had been demanding that the vendee pay the balance of the purchase price, P150,000.00, but the latter failed to pay the amount. The Heirs authorized Venencio Bajenting22 to represent them for the purpose of repurchasing the property from the defendants. The defendants adduced evidence that the Sangguniang Panglunsod approved Ordinance No. 4042, Series of 1996, classifying the properties in Langub as part of a low density property zone.23 Such properties were primarily intended for housing development with at least 20 dwelling units per hectare density and below per hectare.24 They pointed out that under Presidential Decree (P.D.) No. 957, the lots could be used as first class residential. The City Planning Office and the Regional Development Council had, likewise, recommended to the National Economic Development Authority the plan to establish an astrodome, a government center to house government agencies, as well as the construction of a circumferential road; however, no money had yet been appropriated to implement the said plans.25 Anne Reyes, a real estate agent, testified that in March 1993, Venencio Bajenting and Margarita Bajenting-Reusora, another heir, asked her to help them sell the property for P350,000.00. She agreed. To enable her to offer the property for sale, the Bajentings entrusted to her a copy of the owner's duplicate of OCT No. P-5677, Tax Declaration No. D-8-8-159, Tax Clearance dated October 22, 1991 and a Certificate from the City Assessor.26 However, she failed to sell the property. In December 1995, Margarita saw her again and asked her to return the said documents because she (Margarita) wanted to sell the property for P10,000,000.00. Margarita told her that the property had been earlier sold for a cheaper price, but she was requested to accompany any prospective buyers willing to pay P10,000,000.00 to Venencio Bajenting who had a special power of attorney to sell the property in behalf of the Heirs.27 After her meeting with Margarita, nothing happened. On crossexamination, Anne admitted that she had no written authority to sell the property.28 In December 1995, she inquired from Engr. Baez if he was willing to resell the property to the heirs of Venancio Bajenting.29 In February 1996, Engr. Baez, accompanied by Atty. Susan Cariaga, saw her (Anne) and asked if the Bajentings were indeed going to repurchase the property; she answered in the affirmative and volunteered to testify.30 Ermelinda Oyco testified that during the proceedings of the case in the Office of the Barangay Captain, Margarita told her and her sister that the Bajentings were going to repurchase the property and would resell the same. She told Margarita that she had a prospective buyer, but withheld the person's identity. Margarita told her that the Bajentings would sell the property for P10,000,000.00. Venencio Bajenting confirmed the price and told her that she would receive a 3% commission if she succeeded in selling the property.31 On cross-examination, she declared that she was invited to testify for Engr. Baez and that she agreed because she pitied him. On rebuttal, Venencio Bajenting testified and declared that he did not meet Oyco and her mother in December 1996, and that they had no interest to sell the property.32 Before she could testify, Margarita Reusora died on August 24, 1997.33 On March 1, 2002, the trial court rendered judgment in favor of the Heirs. The dispositive portion reads: FOR THE FOREGOING, judgment is hereby rendered in favor of plaintiffs and against defendants, ordering the latter to vacate subject property covered by Original Certificate of Title No. T-5677 and deliver said Certificate of Title to plaintiffs within ten (10) days from receipt hereof. Accordingly, the Clerk of Court of the Regional Trial Court, Davao City, is hereby ordered to release the amount of P350,000.00 deposited by plaintiffs in favor of defendants, representing the repurchase money of subject property, evidenced by

33
Official Receipt No. 6547953, dated October 11, 1996. Further, the compulsory counter-claim filed by defendants against plaintiffs is hereby DISMISSED. SO ORDERED.34 The RTC ruled that while there is evidence that first-class subdivisions are being developed in the vicinity, no budget had been appropriated for the plans to construct the government center and the sports complex. However, it declared that the defendants failed to present any evidence that the plaintiffs were repurchasing the property for and in behalf of a financier. The spouses Alfafara, and Baez filed a motion for reconsideration, which the court denied. It declared that the ruling of this Court in Santana V. Marias35 is not applicable, and that it was the case of Hernaez v. Mamalio36 that was controlling. The spouses Alfafara, and Baez appealed the Decision to the CA, alleging that: FIRST ASSIGNED ERROR THE TRIAL COURT ERRED IN NOT FINDING THAT PLAINTIFFS' PURPOSE IN REPURCHASING THE PROPERTY IS ONLY TO BE ABLE TO SELL THE SAME TO ANOTHER BUYER FOR A HIGHER PRICE OR MERELY FOR SPECULATION. SECOND ASSIGNED ERROR THE TRIAL COURT ERRED IN NOT FINDING THAT THERE WAS NO PROPER BARANGAY CONCILIATION BEFORE THIS CASE WAS FILED IN THE REGIONAL TRIAL COURT AND THAT THIS DEFECT WAS NEVER CURED.37 They averred that the trial court erred in not applying the ruling of this Court in Santana v. Marias,38 reiterated in Quisumbing v. Court of Appeals39 and Lacorda v. Intermediate Appellate Court.40 They maintained that the Heirs were exercising their right to repurchase the property for commercial purposes, not for the purpose of using the property for their family home. They asserted that the property is surrounded by first-class subdivisions and is classified as a low-density residential zone. On February 27, 2004, the CA rendered judgment granting the appeal, and reversed the Decision of the trial court. The CA ruled that as gleaned from the evidence on record and the pleadings of the Heirs, the property was sought to be repurchased for profit, and not to preserve it for themselves and their families.41 The appellate court applied the ruling in the Santana case. The Heirs filed a motion for the reconsideration of the Decision, which the CA denied for lack of merit. Hence, the instant Petition for Review on Certiorari, where petitioners allege that the CA erred in disregarding the findings of the trial court based on the evidence on record in applying the Santana case, and in not resolving the issue of respondents' failure to pay the balance of the purchase price of the property. They insist that the factual backdrop in Santana is substantially different from that in this case. The speculative purpose ascribed to them may as well apply to respondents, who refused to resell the property to petitioner, knowing that the value of the property had considerably increased. As between the petitioners and the respondents, the law should be applied in their favor, being the heirs of the beneficiaries under Commonwealth Act 141, as amended. The petitioners aver that respondents failed to prove with clear and convincing evidence that they were exercising their right to repurchase the property only for the purpose of reselling the same at a higher price, thereby rendering nugatory Section 119 of Commonwealth Act 141. The collective testimonies of Reyes and Oyco were hearsay and inadmissible in evidence under the dead man's statute, Margarita Reusora having died on August 24, 1997 before the witnesses had even testified. Neither Margarita nor Venencio Bajenting could have informed Reyes and Oyco that the petitioners were selling the property for P10,000,000.00 because petitioners, through Venencio Bajenting, had filed a case against the respondents in the Office of the Barangay Captain. They insist that the CA erred in declaring as self-serving the testimony of petitioner Venencio Bajenting. Worse, petitioners aver, the CA ignored the fact that respondents had not paid them the balance of the purchase price of the property worth P150,000.00; thus, they would have to file a separate suit to collect the amount. For their part, respondents aver that only petitioner Venencio Bajenting signed the verification and certification of nonforum shopping in the petition. Petitioners failed to attach any power of attorney authorizing Venencio Bajenting to sign the Verification and Certification Against Forum Shopping for and in their behalf. As found by the CA, the testimonies of Reyes and Oyco were credible and deserving of full probative weight. Indeed, their testimonies are buttressed by the trial court's Order dated January 19, 1998. They add that the findings of the CA are binding on this Court, and that the dead man's statute does not apply to the testimonies of Reyes and Oyco, being as they were, mere witnesses not parties to the case. Respondents maintain that the ruling of this Court in Santana which reiterated its ruling in Simeon v. Pea,42 applies in this case. They further claim that the CA cannot be faulted for not ordering them to pay the balance of P150,000.00 to petitioners because it was not contained in their prayer. Petitioners counter that they mentioned the non-payment by respondents of the balance of the purchase price, P150,000.00 to emphasize their point that it was unfair for the CA to reverse the decision of the RTC. The issues are as follows: (a) whether or not petitioners complied with the rule on verification and certification against forum shopping; (b) whether petitioners are entitled to repurchase the property from respondents; and (c) whether petitioners are obliged to execute a notarized deed of absolute sale over the property. The petition has no merit. On the first issue, the Court notes that, of the 23 petitioners, only petitioner Venencio Bajenting signed the Verification and Certification of Non-Forum Shopping. Petitioners did not append to their petition a special power of attorney authorizing petitioner Venencio Bajenting to sign the Certification for and in their behalf. The rule is that the certification of non-forum

34
shopping must be signed by all the petitioners or plaintiffs and the signing by only one of them is not sufficient. However, in Cavile v. Heirs of Clarita Cavile,43 the Court made the following pronouncement: The rule is that the certificate of non-forum shopping must be signed by all the petitioners or plaintiffs in a case and the signing by only one of them is insufficient. However, the Court has also stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification. This is because the requirement of strict compliance with the provisions regarding the certification of non-forum shopping merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. It does not thereby interdict substantial compliance with its provisions under justifiable circumstance. We find that the execution by Thomas George Cavile, Sr. in behalf of all the other petitioners of the certificate of nonforum shopping constitutes substantial compliance with the Rules. All the petitioners, being relatives and co-owners of the properties in dispute, share a common interest thereon. They also share a common defense in the complaint for partition filed by the respondents. Thus, when they filed the instant petition, they filed it as a collective, raising only one argument to defend their rights over the properties in question. There is sufficient basis, therefore, for Thomas George Cavili, Sr. to speak for and in behalf of his co-petitioners that they have not filed any action or claim involving the same issues in another court or tribunal, nor is there other pending action or claim in another court or tribunal involving the same issues. Moreover, it has been held that the merits of substantive aspects of the case may be deemed as "special circumstance" for the Court to take cognizance of a petition for review although the certification against forum shopping was executed and signed by only one of the petitioners.44 In the present case, we find and so rule that petitioners substantially complied with the Rules of Court. Petitioners, as heirs of the spouses Venancio and Felisa Bajenting (the patentees), sought to exercise their right under Section 119, Act 141 to repurchase the property within the statutory period therefor. Petitioner Venencio Bajenting was empowered to act for and in their behalf before the Barangay Captain and in the RTC for the enforcement of their right as such heirs. Petitioners have not filed any action against respondents in another court or tribunal involving the same issues and property. We note that the Secretary of Agriculture and Natural Resources had not approved the sale of the property (by the heirs of the patentee) to respondents. It bears stressing that Free Patent No. 577244 which was granted in favor of Venancio Bajenting on December 18, 1975 is subject to the following conditions therein: NOW, THEREFORE, KNOW YE, That by authority of the Constitution of the Philippines, and in conformity with the provisions thereof and of the aforecited Republic Act No. 782 and Commonwealth Act No. 141, as amended, there is hereby granted unto said VENANCIO BAJENTING, Filipino, of legal age, married to Felisa Sultan, and residing in Langub, Ma-a, Davao City the tract of land above-described. TO HAVE AND TO HOLD the said tract of land, with the appurtenances thereunto of right belonging unto the said VENANCIO BEJENTING and to his heirs and assigns forever, subject to the provisions of Sections 118, 119, 121, 122 and 124 of Commonwealth Act No. 141, as amended, which provide that except in favor of the Government or any of its branches, units, or institutions, the land hereby acquired shall be inalienable and shall not be subject to encumbrance for a period of five (5) years from the date of this patent, and shall not be liable for the satisfaction of any debt contracted prior to the expiration of said period; that every conveyance of land acquired under the free patent provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance; that it shall not be encumbered, alienated, or transferred to any person, not qualified to acquire lands of the public domain under said Commonwealth Act No. 141, as amended; and that it shall not be subject to any encumbrance whatsoever in favor of any corporation, association or partnership except with the consent of the grantee and the approval of the Secretary of Natural Resources and solely for educational, religious or charitable purposes or for a right of way; and subject finally to all conditions and public easements and servitudes recognized and prescribed by law especially those mentioned in Sections 109, 110, 111, 113 and 114 of Commonwealth Act No. 141, as amended, and the right of the Government to administer and protect the timber found thereon for a term of five (5) years from the date of this patent, provided; however, that the grantee or heirs may cut and utilize such timber as may be needed for his use or their personal use. Sections 118, 119 and 122 of Commonwealth Act No. 141, as amended, reads: SEC. 118. Except in favor of the Government or any of its branches, units, or institutions, or legally constituted banking corporations, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations. No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agricultural and Natural Resources, which approval shall not be denied except on constitutional and legal grounds.45 SEC. 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance. SEC. 122. No land originally acquired in any manner under the provisions of this Act, nor any permanent improvement on such land, shall be encumbered, alienated, or transferred, except to persons, corporations, associations, or partnerships who may acquire lands of the public domain under this Act or to corporations organized in the Philippines authorized therefore by their charters. Except in cases of hereditary succession, no land or any portion thereof originally acquired under the free patent, homestead, or individual sale provisions of this Act, or any permanent improvement on such land, shall be transferred or assigned to any individual, nor shall such land or any permanent improvement thereon be leased to such individual, when the

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area of said land, added to that of his own, shall exceed one hundred and forty-four hectares. Any transfer, assignment, or lease made in violation hereof shall be null and void.46 OCT No. P-5677 was issued to and in the name of Venancio Bajenting over the property on February 6, 1976. The 25year period provided in Section 118 of the law was to expire on February 6, 2001. However, in May 1999, Felisa Bajenting and her children sold the property to respondents without the approval of the Secretary of Environment and Natural Resources (formerly the Department of Agriculture and Natural Resources). There is no showing in the records that the Secretary of Environment and Natural Resources had approved the sale. The failure of the vendors to secure the approval of the Secretary of the DENR does not, ipso facto, make the sale void. The approval may be secured later, producing the effect of ratifying and adopting the transaction as if the sale had been previously authorized. The approval of the sale subsequent thereto would have the effect of the Secretary's ratification and adoption as if the sale had been previously authorized.47 The Secretary may disapprove the sale on legal grounds. The second issue is factual because it involves the determination of petitioners' intention to repurchase the property to enable them to amass a hefty net profit of P9,635,000.00 from its resale to a third party, and not for the purpose of preserving the same for themselves and their families' use as envisioned in Com. Act No. 141, as amended. Section 1, Rule 45 of the Rules of Court provides that only questions of law and not factual issues may be raised in this Court. Settled is the rule that the jurisdiction of this Court in cases brought before it from the CA via Rule 45 of the Rules of Court is limited to reviewing errors of law. However, while the findings of fact of the CA are conclusive on this Court, there are, likewise, recognized exceptions, to wit: (1) when the findings are grounded entirely on speculations, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making its findings are contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record.48 In the present case, the findings and conclusions of the trial court are contrary to those of the CA. Indeed, the trial court gave no probative weight to the testimonies of Reyes and Oyco despite the absence of any factual and legal basis for it to do so. It is thus imperative for the Court to delve into and resolve this factual issue. As elucidated by this Court, the object of the provisions of Act 141, as amended, granting rights and privileges to patentees or homesteaders is to provide a house for each citizen where his family may settle and live beyond the reach of financial misfortune and to inculcate in the individuals the feelings of independence which are essential to the maintenance of free institution. The State is called upon to ensure that the citizen shall not be divested of needs for support, and reclined to pauperism.49 The Court, likewise, emphasized that the purpose of such law is conservation of a family home in keeping with the policy of the State to foster families as the factors of society, and thus promote public welfare. The sentiment of patriotism and independence, the spirit of citizenship, the feeling of interest in public affairs, are cultivated and fostered more readily when the citizen lives permanently in his own house with a sense of its protection and durability.50 It is intended to promote the spread of small land ownership and the preservation of public land grants in the names of the underprivileged for whose benefits they are specially intended and whose welfare is a special concern of the State.51 The law is intended to commence ownership of lands acquired as homestead by the patentee or homesteader or his heirs.52 In Simeon v. Pea,53 the Court declared that the law was enacted to give the homesteader or patentee every chance to preserve for himself and his family the land that the State had gratuitously given to him as a reward for his labor in cleaning and cultivating it. In that sense, the law becomes unqualified and unconditional. Its basic objective, the Court stressed, is to promote public policy, that is, to provide home and decent living for destitutes, aimed at providing a class of independent small landholders which is the bulwark of peace and order. To ensure the attainment of said objectives, the law gives the patentee, his widow or his legal heirs the right to repurchase the property within five years from date of the sale. However, the patentee, his widow or legal heirs should not be allowed to take advantage of the salutary policy of the law to enable them to recover the land only to dispose of it again to amass a hefty profit to themselves.54 The Court cannot sustain such a transaction which would put a premium on speculation which is contrary to the philosophy behind Section 119 of Act 141, as amended. In this case, we agree with the ruling of the CA that, based on the pleadings of the parties and the evidence on record, petitioners, through Venencio Bajenting and Margarita Reusora, sought to repurchase the property only for the purpose of reselling the same for P10,000,000.00 and in the process, amass a net profit amounting to P9,650,000.00. We quote, with approval, the findings of the CA, thus: The almost conclusive effect of the findings of the trial court cannot be denied. This is anchored on the practical recognition of the vantage position of the trial judge in observing the demeanor of the witness. However, such rule admits certain exceptions. Almost as well-recognized as the general rule is the exception that We may nonetheless reverse the factual findings of the trial court if by the evidence on record, or lack of it, it appears that the trial court erred. We find that such exception exists in the present case. The lack of documentary evidence proving that plaintiffs constituted Reyes and Oyco as agents for the sale of the subject property merely shows that Reyes and Oyco were not constituted as agents in accordance with the specific form prescribed by law. It does not, however, render their testimonies improbable nor does it have any tendency to lessen the credibility of their testimonies respecting the fact sought to be proven. What is material and should have been considered by the trial court were the assertions of Reyes and Oyco stating that plaintiff made negotiations for them to find a buyer for the subject property since it would prove that plaintiffs want to repurchase the subject property only in order to resell it to another at a higher price.

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The testimony of plaintiff Venencio Bajenting denying the claim of Reyes and Oyco cannot be given much weight and credence. Being one who has a direct interest in the case, Venencio Bajenting necessarily has a motive for coloring his testimony. Besides, apart from his denials, his testimony is uncorroborated. In contrast, there is no evidence that Reyes and Oyco were actuated by any ill motive in testifying against plaintiffs. In fact, their testimonies even show that their mother is a relative of plaintiffs. The profit motivation behind the instant complaint for repurchase is further shown by plaintiffs' declaration in their Opposition to defendants' motion for reconsideration, that "the Three Hundred Fifty Thousand (P350,000.00) Pesos given for the ten-hectare land would be too small for defendant to own the property." Evidently, it is the same profit motivation that impelled plaintiffs to agree to a settlement during the early stages of the proceedings before the trial court. In the Manifestation filed by plaintiffs on February 4, 1998, plaintiffs expressed their agreement to a settlement but only if defendants pay them an additional purchase price of Five Million Pesos (PhP5,000,000.00) or if the subject property were to be sold to an interested buyer for no less than the said amount with 80% of the proceeds going to the plaintiffs and offering 20% thereof to defendant. In fine, the trial court committed an error in not applying the doctrine laid down in the Santana case. As in the Santana case, plaintiffs' motive in filing the present complaint for repurchase is not for the purpose of preserving the subject property for themselves and their family but to dispose of it again at a much greater profit for themselves. Hence, the repurchase should not be allowed.55 We note that petitioner Venencio Bajenting is merely a mechanic. He had not explained to the trial court how he and his co-heirs were able to produce P350,000.00 in 1996 and deposit the same with the Clerk of Court when they filed their amended complaint. There is no evidence on record that petitioners were financially capable to produce the amount in 1996, considering that they had to sell the property for P500,000.00 three years earlier. The foregoing circumstances buttress the contention of respondents that petitioners, through Venencio Bajenting, sought to repurchase the property for no other purpose than to generate a hefty profit of P9,650,000.00. That petitioners had no intention of retaining the property for their and their families' use and purpose is fortified by the fact that during pre-trial, they manifested their willingness to have the property sold to a third party and, from the proceeds thereof, to receive the amount of P5,000,000.00; and that in the meantime, a receiver would be appointed by the court. Contrary to the allegations of petitioners, the collective testimonies of Reyes and Oyco are admissible in evidence despite the fact that when they testified, Margarita Reusora was already dead. Section 20(a), Rule 130 of the Revised Rules of Court reads: Section 20. Disqualification by reason of interest or relationship. The following persons cannot testify as to matters in which they are interested, directly or indirectly as herein enumerated: (a) Parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted, against an executor or administrator or other representative of a deceased person, or against a person of unsound mind, upon a claim or demand against the estate of such deceased person or against such person of unsound mind, cannot testify as to any matter of fact occurring before the death of such deceased person or before such became of unsound mind. The bar under aforequoted rule applies only to parties to a case, or assignors of parties to a case or persons in whose behalf a case is prosecuted. Reyes and Oyco were mere witnesses for respondents, not parties in the court a quo, nor assignors of any of the parties in whose behalf the case was prosecuted. Their testimonies were presented only to prove that the petitioners intended to repurchase the property for profit, and not for the purpose of preserving it for their and their families' use and enjoyment.56 We agree with the ruling of the CA that the ruling in Santana v. Marias57 applies in this case. As in Santana, the property in this case was no longer agricultural but residential and commercial, in the midst of several high-class residential subdivisions. The government had planned to construct in the vicinity a circumferential road, a government center and an astrodome. As in Santana, petitioners, through counsel, declared their willingness to settle the case for the amount of P5,000,000.00 and the sale of the property to a third party. The money which petitioners were to use to repurchase the property was not theirs, but the money of petitioner Venencio Bajenting's employer. Petitioner cannot find solace in the ruling of this Court in Hernaez v. Mamalio,58 which in part reads: In an action to enforce the right to repurchase a homestead within five (5) years from the sale thereof, it is of no consequence what exactly might be the motive of the plaintiff, and it is unnecessary for the Court to inquire before hand into his financial capacity to make the repurchase for the simple reason that such question will resolve itself should he fail to make the corresponding tender of payment within the prescribed period. First. The decision of the trial court ordering petitioner to execute a deed of sale over the property in favor of respondent is grounded on the fact that his record on appeal of petitioner, as appellant, does not contain sufficient relevant data showing that the appeal was filed on time; Second. The ruling in Hernaez has not been reiterated by this Court. On the other hand, this Court in Lacorda v. Intermediate Appellate Court,59 ruled that: While it is true that the offer to repurchase was made within the statutory period both the trial and appellate courts found as a fact that the petitioners did not really intend to derive their livelihood from it but to resell part of it for a handsome profit. It is now settled that homesteaders should not be allowed to take advantage of the salutary policy behind the Public Land Law to enable them to recover the land in question from vendees only to dispose of it again at much greater profit. (Simeon v. Pea, L29049, Dec. 29, 1970, 36 SCRA 619 and other cases cited therein.)60 In a case of recent vintage, Fontanilla, Sr. v. Court of Appeals,61 this Court reiterated the doctrine that:

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The foregoing construction is merely in keeping with the purpose of Section 119 "to enable the family of the applicant or grantee to keep their homestead" for it is well settled that the law must be construed liberally in order to carry out that purpose." As we held in Ferrer v. Magente "x x x The applicant for a homestead is to be given all the inducement that the law offers and is entitled to its full protection. Its blessings, however, do not stop with him. This is particularly so in this case as the appellee is the son of the deceased. There is no question then as to his status of being a legal heir. The policy of the law is not difficult to understand. The incentive for a pioneer to venture into developing virgin land becomes more attractive if he is assured that his effort will not go for naught should perchance his life be cut short. This is merely a recognition of how closely bound parents and children are in Filipino family. Logic, the sense of fitness and of right, as well as pragmatic considerations thus call for continued adherence to the policy that not the individual applicant alone but those so closely related to him as are entitled to legal succession may take full advantage of the benefits the law confers.62 On the third issue, we agree with respondents' contention that petitioners are obliged to execute a notarized deed of absolute sale over the property upon payment of the P150,000.00 balance of the purchase price of the property. A contract of sale is a consensual contract. Upon the perfection of the contract, the parties may reciprocally demand performance. The vendee may compel transfer of ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold. In this case, the balance of the purchase price of the property was due on or before December 31, 1993. IN VIEW OF ALL THE FOREGOING, the Petition is DENIED for lack of merit. The Decision of the Court of Appeals in CA-G.R. CV No. 76526 is AFFIRMED with MODIFICATION. Petitioners are ORDERED to execute in favor of respondents a Deed of Absolute Sale over the property upon payment of P150,000.00, the balance of the purchase price. This is without prejudice to any action the Secretary of the Department of Environment and Natural Resources may take on the sale of the property by the petitioners to the respondents. No costs. SO ORDERED.

11. GABELO VS. CA 316 SCRA 386 (1999) [G.R. No. 111743. October 8, 1999] Visitacion Gabelo, Erlinda Abella, Petra Perez, Erlinda Traquena, Ben Cardinal, Eduardo Traquena, Leopoldo Traquena, Marife Tubalas, Ulysis Mateo, Jocelyn Fernandez, Alfonso Placido, Leonardo Traquena, Susan Rendon And Mateo Trinidad, Petitioners, Vs. Court Of Appeals, Ursula Maglente, Consolacion Berja, Mercedita Ferrer, Thelma Abella, Antonio Ngo, And Philippine Realty Corporation, Respondents. DECISION PURISIMA, J.: This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, of the decision of the Court of Appeals, dated April 29, 1993, in CA-G.R. CV No. 33178, affirming the decision of the Regional Trial Court of Manila, Branch 38, in Civil Case No. 89-48057, entitled Philippine Realty Corporation vs. Ursula Maglente, et al., declaring the defendants (herein respondents) as the rightful party to purchase the land under controversy, and ordering the plaintiff, Philippine Realty Corporation (PRC, for brevity), to execute the corresponding Contract of Sale/Contract to Sell in favor of the defendants aforenamed. The antecedent facts culminating in the filing of the present petition are as follows: On January 15, 1986, Philippine Realty Corporation, owner of a parcel of land at 400 Solana Street, Intramuros, Manila, with an area of 675.80 square meters, and covered by Transfer Certificate of Title No. 43989, entered into a Contract of Lease thereover with the herein private respondent, Ursula Maglente. The lease was for a period of three (3) years at a monthly rental of P3,000.00 during the first year, P3,189.78 per month in the second year and P3,374.00 monthly for the third year. The lease contract stipulated: 12. That the LESSOR shall have the right to sell any part of the entire leased land for any amount or consideration it deems convenient, subject to the condition, however, that the LESSEE shall be notified about it sixty (60) days in advance; that the LESSEE shall be given the first priority to buy it; and in the event that the LESSEE cannot afford to buy, the final buyer shall respect this lease for the duration of the same, except in cases of exproriation. It also prohibited the lessee to cede, transfer, mortgage, sublease or in any manner encumber the whole or part of the leased land and its improvements or its rights as LESSEE of the leased land, without the previous consent in writing of the LESSOR contained in a public instrument. However, after the execution of the lease agreement, respondent Maglente started leasing portions of the leased area to the herein petitioners, Visitacion Gabelo, Erlinda Abella, Petra Perez, Erlinda Traquena, Ben Cardinal, Eduardo Traquena, Leopoldo Traquena, Marife Tubalas, Ulysis Mateo, Jocelyn Fernandez, Alfonso Placido, Leonardo Traquena, Susan Rendon and Mateo Trinidad, who erected their respective houses thereon. On March 9, 1987, when the lease contract was about to expire, the Philippine Realty Corporation, through its Junior Trust and Property Officers, Mr. Leandro Buguis and Mr. Florentino B. Rosario, sent a written offer to sell subject properties to respondent Ursula Maglente. The said letter stated: We wish to inform you that the Archdiocese of Manila has now decided to open for sale the properties it own (sic) in the District of Intramuros, Manila. However, before we acccept offers from other parties we are of course giving the first priority to our tenants or lessees of Intramuros lots. Responding to such written offer, Maglente wrote a letter, dated February 2, 1988, to the Roman Catholic Archbishop of Manila manifesting an intention to exercise her right of first priority to purchase the property as stipulated in the lease contract. On February 15, 1988, a Memorandum on the offer of Maglente to purchase the property was prepared and presented to Msgr. Domingo Cirilos, president of Philippine Realty Corporation, at the offered price of P1,800.00 per square meter or for a

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total amount of P1,216,440.00, with a downpayment of P100,000.00; the balance of the purchase price payable within ten (10) years with interest at the rate of eighteen (18%) percent per annum. Msgr. Cirilos found the offer acceptable and approved the same. On May 11, 1988, Maglente gave a partial downpayment of P25,000.00 and additional P25,000.00 on May 20, 1988. In a letter, dated January 28, 1989, Maglente informed the said corporation that there were other persons who were her co-buyers, actually occupying the premises, namely: Consolacion Berja, Mercedita Ferrer, Thelma Abella and Antonio Ngo within their respective areas of 100, 50, 60 and 400 square meters. On January 30, 1989 Maglente paid her back rentals of P60,642.16 and P50,000.00 more, to complete her downpayment of P100,000.00. On February 1989, Philippine Realty Corporation (PRC) received copy of a letter sent by the herein petitioners to the Archbishop of Manila, Jaime Cardinal Sin, expressing their desire to purchase the portions of subject property on which they have been staying for a long time. And so, PRC met with the petitioners who apprised the corporation of their being actual occupants of the leased premises and of the impending demolition of their houses which Maglente threatened to cause. Petitioners then asked PRC to prevent the demolition of their houses which might result in trouble and violence. On February 23, 1989, in order to resolve which group has the right to purchase subject property as between the petitioners/sublessees of Maglente, and respondent Maglente, and her co-buyers, PRC brought a Complaint in Interpleader against the herein petitioners and private respondents, docketed as Civil Case No. 89-48057 before Branch 38 of the Regional Trial Court of Manila. On March 11, 1991, after trial on the merits, the lower court of origin rendered judgment in favor of respondent Maglente and her group, disposing thus: WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. Declaring the defendants Ursula Maglente, Consolacion Berja, Mercedita Ferrer, Thelma Abella and Antonio Ngo as the rightful party to purchase the land in controversy; and 2. Ordering plaintiff Philippine Realty Corporation to execute the corresponding contract of sale/contract to sell in favor of the defendants aforementioned in accordance with this Decision within thirty (30) days from notice thereof. Dissatisfied with the aforesaid decision below, the Gabelo group (petitioners here) appealed to the Court of Appeals, which affirmed the disposition of the trial court appealed from. Undaunted, petitioners found their way to this Court via the present petition, assigning as sole error the ruling of the Court of Appeals upholding the right of the private respondents, Consolacion Berja and Antonio Ngo, to purchase subject property. Petitioners theorize that they are tenants of Ursula Maglente on the land in dispute, which they are occupying, and as such actual occupants they have the preferential right to purchase the portions of land respectively occupied by them; that the private respondents, Thelma Abella and Antonio Ngo, have never been occupants of the contested lot, and that, as defined in the Pre-trial Order[1] issued below, the issue for resolution should have been limited to whether or not Berja and Ngo actually occupied the premises in question because occupation thereon is the basis of the right to purchase subject area. Petitioners contention is untenable. There is no legal basis for the assertion by petitioners that as actual occupants of the said property, they have the right of first priority to purchase the same. As regards the freedom of contract, it signifies or implies the right to choose with whom to contract. PRC is thus free to offer its subject property for sale to any interested person. It is not duty bound to sell the same to the petitioners simply because the latter were in actual occupation of the property absent any prior agreement vesting in them as occupants the right of first priority to buy, as in the case of respondent Maglente. As a matter of fact, because it (PRC) contracted only with respondent Maglente, it could even evict the petitioners from the premises occupied by them considering that the sublease contract between petitioners and Maglente was inked without the prior consent in writing of PRC, as required under the lease contract. Thus, although the other private respondents were not parties to the lease contract between PRC and Maglente, the former could freely enter into a contract with them. So also, the contract of sale having been perfected, the parties thereto are already bound thereby and petitioners can no longer assert their right to buy. It is well-settled that a contract of sale is perfected the moment there is a meeting of the minds of the contracting parties upon the thing which is the object of the contract and upon the price.[2] From the time a party accepts the other partys offer to sell within the stipulated period without qualification, a contract of sale is deemed perfected.[3] In the case under consideration, the contract of sale was already perfected - PRC offered the subject lot for sale to respondent Maglente and her group through its Junior Trust and Property Officers. Respondent Maglente and her group accepted such offer through a letter addressed to the Roman Catholic Archbishop of Manila, dated February 2, 1988, manifesting their intention to purchase the property as provided for under the lease contract. Thus, there was already an offer and acceptance giving rise to a valid contract. As a matter of fact, respondents have already completed payment of their downpayment of P100,000.00. Therefore, as borne by evidence on record, the requisites under Article 1318 of the Civil Code[4] for a perfected contract have been met. Anent petitioners submission that the sale has not been perfected because the parties have not affixed their signatures thereto, suffice it to state that under the law, the meeting of the minds between the parties gives rise to a binding contract although they have not affixed their signatures to its written form.[5] WHEREFORE, the petition is hereby DENIED for lack of merit and the decision of the Court of Appeals in CA-G.R. CV No. 33178 AFFIRMED. No pronouncement as to costs. SO ORDERED.

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12. PILIPINAS SHELL PETROLEUM CORP VS. GABONSENG 496 SCRA 305 (2006) G.R. No. 163562 July 21, 2006 Pilipinas Shell Petroleum Corporation, Petitioner, - versus -Carlos Ang Gobonseng, Jr., Respondent. DECISION GARCIA, J In this petition for review under Rule 45 of the Rules of Court, petitioner Pilipinas Shell Petroleum Corporation (Pilipinas Shell, hereafter) seeks the reversal and setting aside of the Decision[1] dated October 10, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 63777, as reiterated in its Resolution[2] of April 13, 2004, reversing an earlier decision of the Regional Trial Court (RTC) of Negros Oriental, Dumaguete City, Branch 40, in a suit for collection of rentals with damages thereat commenced by the herein respondent Carlos Ang Gobonseng against, among others, the herein petitioner. The rentals sought to be collected pertain to a gasoline station at Lot No. 853-A, located at corner Real Urdaneta streets, Dumaguete City. The factual backdrop: Sometime on January 5, 1982, one Julio Tan Pastor, original owner of Lot No. 853-A, sold it to the respondent for P1.3 million, albeit in the covering Deed of Absolute Sale executed by the parties, the amount indicated was only P13,000.00, evidently to avoid payment of the correct legal fees in the registration and transfer of title to the vendee. On the same date, however, the parties, in order to reflect their real intentions, executed a Memorandum of Agreement thereunder spelling out the true terms and conditions of their transaction, to wit: 1. Purchase price is P1,300,000.00 (P1.3 million); 2. P500,000.00 shall be paid upon the execution of the Deed of Sale. Out of this amount part shall be paid to whatever mortgage obligation there is with the Philippines National Bank and/or any other bank involving lot no. 853-A; and its improvements; 3. Balance of P800,000.00 will be paid in five (5) years at a yearly payment of P160,000.00 the first payment to be paid one year from date hereof and succeeding four installments every year thereafter; 4. All obligations or liabilities on or involving lot no. 853-A or its improvements such as electric bills, water bills, telephone bills, etc., shall be for the account of the VENDOR which if not paid will be automatically deductible from the first payment of the remaining balance; 5. Real property taxes full for 1981 over lot no. 853-A and its improvements, capital gains tax, documentary stamp tax, sales tax shall be shouldered by the VENDOR; Registration expenses shall be shouldered by the VENDEE; 6. Upon the execution of the Deed of Sale, ownership and possession shall automatically pass to the VENDEE; The VENDOR agrees to pay a penalty of P500.00 for every day of delay in vacating the property; Respondent, armed with the inaccurate Deed of Absolute Sale earlier executed by Julio Tan Pastor, and notwithstanding the Memorandum of Agreement aforementioned, succeeded in registering the conveying instrument with the Registry of Deeds and was then issued Transfer Certificate of Title (TCT) No. 13607 over Lot No. 853-A in his own name. In the meantime, vendor Tan Pastor presented for encashment the postdated checks issued to him by respondent as payment for the subject lot. Unfortunately, the drawee bank dishonored those checks for a variety of reasons, namely, drawn against insufficient funds, stop payment order or closed account. This prompted vendor Tan Pastor to file against respondent a criminal action for violation of Batas Pambansa (BP) 22, otherwise known as the Bouncing Checks Law, docketed as Criminal Case No. 7071, entitled People of the Philippines v. Carlos Ang Gobonseng, Jr., of the xxx. It appears that prior to the sale of Lot No. 853-A to respondent, Tan Pastor had been operating thereon a gasoline station, first with Flying A, subsequently with Getty Oil, and later with Basic Land Oil and Energy Corporation (BLECOR). In 1982, Pilipinas Shell acquired BLECOR, including all the latters assets, liabilities and contracts. Thereafter, Tan Pastor remained as the distributor of Pilipinas Shell products and continued to operate the gas station on Lot No. 853-A until 1991. Sometime in 1991, respondent sent demand letters to Pilipinas Shell for payment by the latter of rentals for its occupancy and use of his property. Responding to said letters, Pilipinas Shell disowned liability for the rentals, explaining that the gas station on Lot No. 853-A was a dealer-owned filling station, hence the demands for rental payment must be directed to Tan Pastor. In any event, Pilipinas Shell, hoping for an amicable settlement of the controversy between respondent and Tan Pastor relative to Lot No. 853-A, facilitated a meeting between the two. True enough, on January 30, 1992, thru the efforts of Pilipinas Shell, Tan Pastor and respondent executed an Agreement[3] embodying the following terms and conditions: The parties herein have agreed, as follows: 1. For humanitarian, peace, and other considerations, Carlos A. Gobonseng, Jr., the OWNER, hereby allows Julio Tan Pastor the use of Lot No. 853-A at Corner Real-Urdaneta Streets, Dumaguete City, covered by TCT No. 13607, as a gas/ fuel/ gasoline/ oil/ filling, selling and servicing, station, and for such other use appropriate, or related, to the same, without any rental for a period of THREE (3) YEARS from January 1st 1992, or up to December 31st 1994, NON-EXTENDIBLE; 2. Consistent with the foregoing, Julio Tan Pastor is authorized to enter into any business contract with a third person for the use of said property for a period of THREE (3) YEARS from JANUARY 1st 1992 or up to DECEMBER 31st 1994, the DEADLINE; 3. No construction, renovation or repair, shall be done by Julio Tan Pastor, without the PRIOR written consent of the owner, Carlos A. Gobonseng, Jr.; 4. All improvements, including old and new constructions, repairs, replacements, and other removable items, shall automatically belong in ownership to the owner, Carlos A. Gobonseng, Jr., upon and at the time of completion of construction of work, installation or repair or replacement, excluding those owned or constructed by Shell Petroleum Corp., or Francisco Baludoy Salva, which shall automatically belong to Carlos Ang Gobonseng, Jr. upon the expiration of the lease contract which the latter executed in favor of Francisco C. Salva; 5. Subject to the terms and conditions stipulated in the contract of lease between Carlos Ang Gobonseng, Jr. and Francisco C. Salva, Julio Tan Pastor and children or heirs, or Lessee, or third person, obligate and undertake to VACATE Lot

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No. 853-A NOT later than December 31, 1994. On December 31, 1994, PEACEFUL POSSESSION of the property and premises shall be TURNED OVER to the owner, Carlos A. Gobonseng, Jr., otherwise, a penalty of P5,000.00 for every day of delay in vacating the premises is imposed; 6. All the parties herein have no more further claimes against each other, and waived, abandoned, relinquished, any such claim or claims; Thereafter, Tan Pastor executed and filed in Criminal Case No. 7071 an Affidavit of Desistance thereunder making known his lack of interest in further pursuing the case, which was eventually dismissed. The controversy could have ended there were it not for the fact that on November 13, 1992, in the RTC of Negros Oriental, respondent filed a civil suit for collection of rentals and damages against Tan Pastor and Pilipinas Shell. In his complaint, docketed as Civil Case No. 10389, respondent, as plaintiff, alleged ownership of Lot No. 853-A on the basis of TCT No. 13607. He further averred that since 1982, he had been paying the realty taxes due thereon and that Tan Pastor and Pilipinas Shell continued occupying said lot and using the same as a gasoline and service station without paying rentals therefor. He thus prayed that judgment be rendered ordering Tan Pastor and petitioner to pay him rentals and damages for their use and occupation of his lot from 1982 to 1991. In its Answer, Pilipinas Shell countered that plaintiffs claim for unpaid rentals had no basis because the gasoline station on his property is a dealer-owned filling station, as evidenced by a certification[4] issued by the president of the Shell Dealers Association of the Philippines. Pilipinas Shell likewise emphasized that Lot No. 853-A was initially the subject of controversy between respondent and Tan Pastor until 1992 when, thru its efforts, the warring parties executed an Agreement whereunder both (Tan Pastor and respondent) made it expressly clear that they have no more further claims against each other, and waived, abandoned, relinquished, any such claim or claims. On this premise, Pilipinas Shell argued that respondents demand for rentals is devoid of any legal or factual basis. In the meantime, Tan Pastor died, leaving his heirs who were accordingly substituted as Pilipinas Shells codefendant in the case. On March 15, 1999, the trial court came out with its decision[5] rendering judgment for Pilipinas Shell and its codefendants, to wit: WHEREFORE, premises considered, plaintiffs complaint for collection of rental and damages against Pilipinas Shell and the heirs of Julio Tan Pastor is hereby dismissed for lack of cause of action against them. Further, plaintiff (Gobonseng) is hereby ordered to pay defendant Pilipinas Shell the amount of P150,000.00 for the other defendants, the heirs of Julio Tan Pastor. The cross-claim filed by defendant Pilipinas Shell Petroleum Corporation against its co-defendants, the heirs of Julio Tan Pastor is hereby denied for lack of legal basis.SO ORDERED. Therefrom, respondent went to the CA. As stated at the threshold hereof, the CA, in its Decision[6] of October 10, 2003, reversed that of the trial court, thus: WHEREFORE, in view of the foregoing considerations, the decision appealed from is hereby REVERSED and SET ASIDE and a new one is entered, ordering appellee Pilipinas Shell Petroleum Corporation to pay unto appellant: P8,000 per month as reasonable compensation for the use and occupation of Lot No. 853-A as a Shell refilling station starting from 1982 until 1991 plus interest at 12% per annum until fully paid and attorneys fees of 20% of the total amount due the appellant, without prejudice to its cross-claim against its co-defendants, which is hereby reinstated and prompt resolution of which by the court a quo is hereby directed. SO ORDERED. With its motion for reconsideration having been denied by the CA in its equally challenged Resolution[7] of April 13, 2004, Pilipinas Shell is now with this Court raising the following issues: 1) Whether or not the decision of the Honorable Court of Appeals in upholding the ownership by Respondent of Lot 853-A is in accordance with the provision of Article 1496 of the Civil Code of the Philippines considering that there was no delivery yet to the Respondent of the property which was the subject of a contract of sale between him and Julio Tan Pastor; 2) Whether or not the decision of the Honorable Court of Appeals making the Petitioner liable for the payment of rentals for the use of Lot 853-A by Julio Tan Pastor as an operator of a dealer-owned filling station is consistent with Article 1157 of the Civil Code of the Philippines which provides for the legal sources of obligation; 3) Whether or not the decision of the Honorable Court of Appeals in reversing the findings of facts of the trial court on the ground that the judge who penned the decision is not the one who heard the testimonies of all the witnesses, is in accordance with the general rule that the trial courts decision is to be given credence and accorded due preference by the appellate court.

Then, as now, respondent insists that he had sufficiently established his ownership of Lot No. 853-A thru the Deed of Absolute Sale, the Memorandum of Agreement between him and Tan Pastor, TCT No. 13607 and his faithful and religious payments of the real estate taxes due on the property. To him, the existence of a gasoline station in his property since 1982 entitles him to the payment of rentals by Pilipinas Shell. Pilipinas Shell, on the other hand, contends that respondent is without cause of action against it. It asserts nonliability for rentals because the gasoline station on Lot 853-A was operated by Tan Pastor as a dealer-owned station.

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Expounding on this concept, Pilipinas Shell explained that in a dealer-owned filling station, the owner of the lot is at the same time the operator of the station, with Pilipinas Shell merely providing the dealer-owner with certain equipment and facilities for the operation of his gas station. Pilipinas Shell further alleged that it was made aware of the change in the ownership of Lot No. 853-A only in the latter part of 1991 when it received a letter from respondent demanding payment of rentals therefor. Apparently, Tan Pastor did not see the need to inform Pilipinas Shell of the change in ownership of the subject lot primarily because according to him, ownership of the lot remained with him until full payment of the agreed price shall have been effected. As it appears, Pilipinas Shell totally believed Tan Pastors representation since there was indeed a pending criminal case for violation of BP 22 against respondent, coupled by the fact that Tan Pastor continued to be in possession and use of Lot No. 853-A as a filling and service station for Pilipinas Shells petroleum products until 1992. We grant the petition. Anent the issue of ownership of Lot No. 853-A, we hold that this particular question has already been rendered moot by subsequent events and acts of respondent and Tan Pastor. Significantly, respondent and Tan Pastor both admit and agree that said lot was the subject of the Deed of Absolute Sale between them. Despite contrasting allegations on the payment of the contract price, both agreed on the object and consideration of the sale. It must be stressed that a contract of sale is not a real, but a consensual contract. In Buenaventura v. Court of Appeals,[8] this Court made it clear that a contract of sale, being consensual in nature, becomes valid and binding upon the meeting of the minds of the parties as to the object and the price. If there is a meeting of the minds, the contract is valid despite the manner of payment, or even if the manner of payment was breached. In fine, it is not the act of payment of the contract price that determines the validity of a contract of sale. The manner of payment and the payment itself of the agreed price have nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure of a party to effect payment of the contract price results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract.[9] Here, the controversy between Tan Pastor and respondent with respect to the manner of payment or the breach thereof does not vitiate the validity and binding effect of their contract of sale. In this light, respondent cannot thus be faulted for registering the document of sale and successfully securing TCT No. 13607 covering Lot No. 853-A in his name. However, coming to the more basic issue herein of whether or not respondent is entitled to the payment of rentals by Pilipinas Shell for the use and occupancy of Lot No. 853-A, the Court finds and so holds that respondents claim has no basis in fact and in law. To the mind of the Court, respondents entitlement to rentals turns on the nature of the gasoline station being operated by Tan Pastor on the subject lot. To resolve this, we must necessarily venture into determining whether the gasoline station thereat was dealer-owned or company-owned. Undoubtedly, this exercise involves an examination of facts which is normally beyond the ambit of this Court. For, well-settled is the rule that this Court, not being a trier of facts, does not normally embark in the evaluation of evidence adduced during trial. The rule, however, admits of exceptions. So it is that in Sampayan v. Court of Appeals,[10] the Court held: [i]t is a settled rule that in the exercise of the Supreme Court's power of review, the Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties' during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court. However, the Court had recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. To the Court, exceptions (5), (7) and (11), above, find application in the instant case. And after a careful evaluation of the evidence, the Court finds for the petitioner. To begin with, the trial courts conclusion that Tan Pastor operated the gasoline station in his capacity as dealer-owner is well-supported by the evidence on record. Pilipinas Shell has shown clear and convincing proof that the outlet at Lot No. 853A was dealer-owned gas station as per the Certification of the president of the Shell Dealers Association of the Philippines. It may be that such a certification, coming as it does from the president of petitioners dealers association, does not warrant the probative value it otherwise deserves. It bears emphasis, however, that respondent himself does not dispute the fact that he never demanded rental payments from Tan Pastor from 1982 to 1991. It was only after the criminal case for bouncing checks was dismissed that he claimed entitlement to rentals. Prior thereto, he never demanded for any rental payment, much less instituted any action to enforce the same. Besides, and as correctly observed by the trial court, there was an admission by the respondent himself that, since 1982 up to 1991, he had been in the possession of Lot No. 853-A and nobody else. Coming as it does from the respondent no less, that statement commands great weight and respect. The lower court succinctly summarizes: There was no legal basis for plaintiff Carlos Gobonseng, Jr. to demand payment from Pilipinas Shell as he himself admitted that he was in possession of the property from 1982 to 1991. As his testimony is against his interest, it became more believable the lack of legal anchorage to base his demand for rental payment from 1982 to 1992. No less than the Court who asked him the questions and hereunder is his answer: Court: Q -- Who was in possession of the property since 1982 up to 1991? A -- I am the actual possessor from 1982 to 1991.

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Q -1991? A -xxx Q -question? A -Q -A -No, it is not, Your Honor. xxx You mean to tell the Court that prior to 1992 Julio Tan Pastor was not in possession of the property in Not in possession, Your Honor. As an operator, Your Honor, selling the shell products, Your Honor. Who was in possession of that property? Me, myself, Your Honor. (TSN, p. 5, 5-29-96) Is it not a fact that it was Julio Tan Pastors who was in possession of that property since 1982 and up to

What is more, respondent and Tan Pastor had already executed an Agreement[11] whereunder they declared that they had no more further claims against each other, and waived, abandoned, relinquished, any such claim or claims. If anything else, such declaration evidenced respondents stance in not collecting rentals for the use of the subject property as he even in fact allowed Tan Pastor the use of Lot No. 853-A at Corner Real-Urdaneta Streets, Dumaguete City, covered by TCT No. 13607, as a gas/ fuel/ gasoline/ oil/ filling, selling and servicing, station, and for such other use appropriate, or related, to the same, without any rental for a period of THREE (3) YEARS from January 1st 1992, or up to December 31st 1994, NONEXTENDIBLE. (Emphasis supplied.) Thus, respondent is now estopped from demanding payment of rentals from Tan Pastor or Pilipinas Shell. In Bank of the Philippine Islands v. Casa Montessori International,[12] we ruled: Estoppel precludes individuals from denying or asserting, by their own deed or representation, anything contrary to that established as the truth, in legal contemplation. Our rules on evidence even make a juris et de jure presumption that whenever one has, by ones own act or omission, intentionally and deliberately led another to believe a particular thing to be true and to act upon that belief, one cannot in any litigation arising from such act or omission be permitted to falsify that supposed truth.

Lastly, respondent insists that Pilipinas Shell had recognized his ownership of Lot No. 853-A and his right to collect rentals when the latter, through a letter,[13] sought his permission to refurbish the gasoline station located thereat. We are not persuaded. A careful scrutiny of the letter referred to would reveal that it was made and sent to respondent on February 7, 1992, a few days after Tan Pastor and respondent had made amends and executed an Agreement to waive any and all further claims against each other. Clearly, Pilipinas Shell was made aware of this development and the change in the ownership of Lot No. 853-A. To reiterate, Pilipinas Shell was even instrumental in this amicable settlement of the controversy between respondent and Tan Pastor. Hence, it is but proper for Pilipinas Shell to address respondent in seeking permission to make any improvements on the lot. We note that in the decision under review, the CA made a finding that there is not enough evidence for it to competently pass upon and make a ruling on the nature of the gasoline station situated on Lot No. 853-A. We rule and so hold that such a finding all the more strengthens the trial courts decision as more in accord with the evidence adduced in the course of the proceedings thereat. As it is, the trial courts decision reflects and shows its distinct advantage of having heard the witnesses themselves, observed their deportment and their manner of testifying and behavior during trial. Finally, respondent submits that the CA correctly set aside the trial courts decision on the ground that the judge who heard most of the witnesses was other than the judge who ultimately penned the decision in the case. On this score, respondent argues that the findings of fact of the trial court cannot be given credence and accorded due deference. The Court does not agree. The circumstance that the judge who wrote the decision had not heard the testimonies of the witnesses does not automatically taint his decision. Here, the decision of the trial court made reference to several transcripts of stenographic notes taken in the course of trial. Likewise, several exhibits were referred to and used as evidence to substantiate the trial courts conclusions. The validity of a decision is not necessarily impaired by the fact that its ponente only took over from a colleague who had earlier presided at the trial. This circumstance alone cannot be the basis for the reversal of the trial courts decision unless there is a clear showing of grave abuse of discretion in the appreciation or a misapprehension of the facts,[14] of which we find none. WHEREFORE, the instant petition is GRANTED and the assailed Decision and Resolution of the CA are REVERSED and SET ASIDE. The decision dated March 15, 1999 of the RTC in Civil Case No. 10389 is REINSTATED. No pronouncement as to costs .SO ORDERED. 13. BALADAD VS. RUBLICO 595 SCRA 125 (2009) G.R. No. 160743 August 4, 2009 CORNELIA BALADAD (Represented by Heinrich M. Angeles and Rex Aaron A. Baladad),Petitioner, - versus -SERGIO A. RUBLICO and SPOUSES LAUREANO F. YUPANO, Respondents. DECISION NACHURA, J.: Before us is a petition for review of the November 5, 2002 Decision[1] of the Court of Appeals (CA), as well as its November 10, 2003 Resolution[2] in CA-G.R. CV No. 34979, which reversed and set aside the September 9, 1991 Decision[3] of Branch 133 of the Regional Trial Court (RTC) of Makati City, in a complaint for annulment of sale, cancellation of title and damages[4] filed by petitioner Cornelia Baladad against herein respondents. Below are the antecedent facts. Two parcels of land located in what was then called the Municipality of Makati, Province of Rizal were registered in the name of Julian Angeles on December 20, 1965 under Transfer Certificate of Title (TCT) No. 155768.[5] On December 3, 1968, Julian and Corazon Rublico, after co-habiting for some time, got married. Julian was already 65 years old then, while Corazon

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was already 67.[6] At that time, Corazon already had a son, respondent Sergio A. Rublico, by Teofilo Rublico, who died sometime before the outbreak of the Second World War.[7] After Teofilos death, Corazon cohabited with Panfilo de Jesus and then, later, with Julian. Julian died on February 2, 1969[8] leaving no compulsory heirs[9] except his wife and his brother, Epitacio. On February 4, 1985, while on her death bed, Cornelia was surrounded by four individuals her niece, petitioner Cornelia Baladad; her nephew, Vicente Angeles; a certain Rosie Francisco; and notary public Atty. Julio Francisco who had been called, accompanied by Cornelia herself to Corazons house, to notarize a deed entitled Extrajudicial Settlement of Estate with Absolute Sale. In his testimony, Atty. Francisco said that Corazon imprinted her thumbmark on the document after he read and explained the contents thereof in Tagalog to her.[10] In the said document, Corazon and Epitacio adjudicated unto themselves the two lots registered in the name of Julian with three-fourths () of the property going to Corazon and the remaining one-fourth () to Epitacio. The document also stated that both Corazon and Epitacio conveyed by way of absolute sale both their shares in the said lots in favor of Cornelia, Epitacios daughter, in exchange for the amount of P107,750.00. Corazons thumbmark was imprinted at the bottom of the said deed, while Vicente, Epitacios son, signed in behalf of Epitacio by virtue of a power of attorney.[11] There was no signature of Cornelia on the said document. Two days later, Corazon passed away. Title over the said lots remained in the name of Julian, but on July 20, 1987, more than two years after Corazons death, respondent Sergio executed an Affidavit of Adjudication by Sole Heir of Estate of Deceased Person[12] adjudicating unto himself the same parcels of land which had been subject of the deed of sale between Corazon and Cornelia. On October 27, 1987, Sergio filed a petition for reconstitution of the owners copy of TCT No. 155768 averring that after the death of Corazon, he tried to locate the copy of the title but to no avail.[13] The petition was granted on January 11, 1988[14] and a new owners duplicate title (TCT No. 155095) was issued in the name of Sergio on April 18, 1988.[15] On May 31, 1988, Sergio sold the two lots to spouses Laureano and Felicidad Yupano for P100,000.00.[16] Sergios certificate of title was cancelled and TCT No. 155338 was issued in favor of the Yupanos. On July 26, 1988, the said title was also cancelled and TCT Nos. 156312[17] and 156313[18] separately covering the two parcels of land were issued. On July 17, 1990, Cornelia caused the annotation on the said TCTs of her adverse claim over the said properties. Meanwhile, there were seven families who occupied the lots and paid rentals to Julian and, later, to Corazon. After Corazons death, they paid rentals to Cornelia through Pacifica Alvaro, and later to Cornelias brother, Vicente, when Cornelia transferred her residence to the United States. When the Yupanos demanded payment of rentals from the tenants, the latter filed a complaint for interpleader on May 19, 1989. The case was docketed as Civil Case No. 89-3947. On September 3, 1990, Branch 148 of the Makati RTC rendered a Decision[19] declaring the Yupanos as the legal and lawful owners of the two lots. On August 3, 1990, a month before the promulgation of the decision, Cornelia filed a complaint for annulment of sale, cancellation of title and damages, which is now the subject of this Rule 45 petition. Cornelia argued that Sergio knew of the sale made by Corazon in her favor and was even given part of the proceeds. Cornelia also averred that the Yupanos could not be considered as buyers in good faith, because they only lived a block from the disputed properties and had knowledge that the two lots had been sold to Cornelia prior to Corazons death.[20] For their part, respondents argued that the Extrajudicial Settlement with Absolute Sale dated February 4, 1985 could not have been executed because at the time, Corazon was already dying. Ignacio Rublico, Sergios son, also testified that he saw Vicente Angeles holding the hand of Corazon to affix her thumbmark on a blank sheet of paper.[21] Sergio also argued that the property was originally bought by his mother, but was only registered in the name of Julian in keeping with the tradition at that time.[22] After the trial, Branch 133 of the Makati RTC ruled in favor of Cornelia.[23] Upon appeal, the CA reversed the RTC ruling[24] prompting Cornelia to file a motion for reconsideration,[25] but the same was denied for lack of merit.[26] Hence, this petition. The determinative issue is the validity of the Extrajudicial Settlement of Estate with Absolute Sale purportedly executed by Corazon prior to her death. We find in favor of petitioner. The Extrajudicial Settlement of Estate with Absolute Sale executed by Corazon and Epitacio through the latters attorney-in-fact, Vicente Angeles, partakes of the nature of a contract. To be precise, the said document contains two contracts, to wit: the extrajudicial adjudication of the estate of Julian Angeles between Corazon and Epitacio as Julians compulsory heirs, and the absolute sale of the adjudicated properties to Cornelia. While contained in one document, the two are severable and each can stand on its own. Hence, for its validity, each must comply with the requisites prescribed in Article 1318 of the Civil Code, namely (1) consent of the contracting parties; (2) object certain, which is the subject matter of the contract; and (3) cause of the obligation which is established. During the trial, respondents argued that the document was not valid because at the time it was executed, Corazon was already weak and could not have voluntarily given her consent thereto. One of the witnesses for the defense even testified that it was Vicente who placed Corazons thumbprint on a blank document, which later turned out to be the Extrajudicial Adjudication with Absolute Sale. We are, however, inclined to agree with the RTCs finding on this matter, viz: Ignacio is not a reliable witness. He was very certain the event took place on February 4, 1985 and Corazon was already dead. This was his testimony on cross-examination. He had forgotten that Corazon died on February 6, 1985 or two days after. So, when confronted with this contradiction, he had to change his stance and claim that Corazon was still alive when it happened.[27] It is also noteworthy that in the course of the trial, respondents did not question Corazons mental state at the time she executed the said document.

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Respondents only focused on her physical weakness, arguing that she could not have executed the deed because she was already dying and, thus, could not appear before a notary public.[28] Impliedly, therefore, respondents indulged the presumption that Corazon was still of sound and disposing mind when she agreed to adjudicate and sell the disputed properties on February 4, 1985. Respondents also failed to refute the testimony of Atty. Francisco, who notarized the deed, that he personally read to Corazon the contents of the Extrajudicial Settlement of Estate with Absolute Sale, and even translated its contents to Tagalog. And, most important of all is the fact that the subject deed is, on its face, unambiguous. When the terms of a contract are lawful, clear and unambiguous, facial challenge cannot be allowed. We should not go beyond the provisions of a clear and unambiguous contract to determine the intent of the parties thereto, because we will run the risk of substituting our own interpretation for the true intent of the parties. It is immaterial that Cornelias signature does not appear on the Extrajudicial Settlement of Estate with Absolute Sale. A contract of sale is perfected the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price.[29] The fact that it was Cornelia herself who brought Atty. Francisco to Corazons house to notarize the deed shows that she had previously given her consent to the sale of the two lots in her favor. Her subsequent act of exercising dominion over the subject properties further strengthens this assumption. Based on these findings, we are constrained to uphold the validity of the disputed deed. Accordingly, respondent Sergio Rublico never had the right to sell the subject properties to the Yupanos, because he never owned them to begin with. Nemo dat quod non habet. Even before he could inherit any share of the properties from his mother, Corazon, the latter had already sold them to Cornelia. The Yupanos, for their part, cannot feign ignorance of all these, and argue that Sergios certificate of title was clean on its face. Even prior to May 31, 1988, when they bought the properties from Sergio, it had been widely known in the neighborhood and among the tenants residing on the said lots that ownership of the two parcels of land had been transferred to Cornelia as, in fact, it was Cornelias brother, Vicente, who had been collecting rentals on the said properties. The Yupanos lived only a block away from the disputed lots.[30] The husband, Laureano Yupano, was relatively close to Julian and to Epitacio and had known Cornelia before the latter left to live in the United States from 1979 to 1983.[31] Before he bought the property from Sergio, Laureano himself verified that there were tenants who had been paying rentals to Vicente.[32] All these should have alerted him to doubt the validity of Sergios title over the said lots. Yet, the Yupanos chose to ignore these obvious indicators. In Abad v. Guimba,[33] we explained: [A]s a rule, the purchaser is not required to explore further than what the Certificate indicates on its face. This rule, however, applies only to innocent purchasers for value and in good faith; it excludes a purchaser who has knowledge of a defect in the title of the vendor, or of facts sufficient to induce a reasonable prudent man to inquire into the status of the property.[34] We thus declare the Affidavit of Adjudication by Sole Heir of Estate of Deceased person executed by Sergio Rublico to be void and without any effect. The sale made by him to spouses Yupano is, likewise, declared null and void. Respondent Sergio Rublico is ordered to return the amount of P100,000.00 paid to him by spouses Laureano Yupano, less the amount spent on the acquisition of the invalid title procured by him with the acquiescence of the Yupanos. WHEREFORE, premises considered, the Decision of the Court of Appeals in CA-G.R. CV No. 34979 dated November 5, 2002 is hereby REVERSED and SET ASIDE. Accordingly, the Decision of the Regional Trial Court of Makati dated September 9, 1991 is REINSTATED with MODIFICATION in that: 1. the Extrajudicial Adjudication of Estate with Absolute Sale dated February 4, 1985 as VALID; 2. the sale between respondent Sergio Rublico and Spouses Laureano Yupano is NULL and VOID. Respondent Sergio Rublico is ordered to return the P100,000.00 paid by the Yupanos, less the amount spent on the acquisition of the invalid title procured by him with the acquiescence of the Yupanos; and 3. the Register of Deeds of Makati is ordered to CANCEL Transfer Certificate of Title Nos. 156312 and 156313 in the name of Laureano Yupano and, in lieu thereof, RESTORE Transfer Certificate No. 155768.SO ORDERED. 14. CANTEMPRATE VS. CRS REALTY DEV'T CORP. 587 SCRA 492 (2009) G.R. No. 171399 May 8, 2009 VICENTA CANTEMPRATE, ZENAIDA DELFIN, ELVIRA MILLAN, FEVITO G. OBIDOS, MACARIO YAP, CARMEN YAP, LILIA CAMACHO, LILIA MEJIA, EMILIA DIMAS, ESTRELLA EUGENIO, MILAGROS L. CRUZ, LEONARDO ECAT, NORA MASANGKAY, JESUS AYSON, NILO SAMIA and CARMENCITA LORNA RAMIREZ, Petitioners,vs. CRS REALTY DEVELOPMENT CORPORATION, CRISANTA SALVADOR, CESAR CASAL, BENNIE CUASON and CALEB ANG, Respondents. DECISION TINGA, J.: This is a petition for review on certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure assailing the decision2 and resolution3 of the Court of Appeals in CA-G.R. SP No. 81859. The Court of Appeals decision affirmed the decision4 of the Office of the President, which adopted the decision5 of the Housing Land Use and Regulatory Board (HLURB) dismissing petitioners complaint for lack of jurisdiction, while the resolution denied petitioners motion for reconsideration. The following factual antecedents are matters of record. Herein petitioners Vicenta Cantemprate, Zenaida Delfin, Elvira Millan, Fevito G. Obidos, Macario Yap, Carmen Yap, Lilia Camacho, Lilia Mejia, Emilia Dimas, Estrella Eugenio, Milagros L. Cruz, Leonardo Ecat, Nora Masangkay, Jesus Ayson, Nilo Samia, Carmencita Morales and Lorna Ramirez were among those who filed before the HLURB a complaint6 for the delivery of certificates of title against respondents CRS Realty Development Corporation (CRS Realty), Crisanta Salvador and Cesar Casal.7

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The complaint alleged that respondent Casal was the owner of a parcel of land situated in General Mariano Alvarez, Cavite known as the CRS Farm Estate while respondent Salvador was the president of respondent CRS Realty, the developer of CRS Farm Estate. Petitioners averred that they had bought on an installment basis subdivision lots from respondent CRS Realty and had paid in full the agreed purchase prices; but notwithstanding the full payment and despite demands, respondents failed and refused to deliver the corresponding certificates of title to petitioners. The complaint prayed that respondents be ordered to deliver the certificates of title corresponding to the lots petitioners had purchased and paid in full and to pay petitioners damages.8 An amended complaint9 was subsequently filed impleading other respondents, among them, the Heirs of Vitaliano and Enrique Laudiza, who were the predecessors-in-interest of respondent Casal, herein respondents Bennie Cuason and Caleb Ang, to whom respondent Casal purportedly transferred the subdivision lots and one Leticia Ligon. The amended complaint alleged that by virtue of the deed of absolute sale executed between respondent Casal and respondents Ang and Cuason, Transfer Certificate of Title (TCT) No. 669732 covering the subdivided property was issued in the names of respondents Ang and Cuason as registered owners thereof.10 The amended complaint prayed for additional reliefs, namely: (1) that petitioners be declared the lawful owners of the subdivision lots; (2) that the deed of absolute sale executed between respondent Casal and respondents Cuason and Ang and TCT No. 669732 be nullified; and (3) that respondents Cuason and Ang be ordered to reconvey the subdivision lots to petitioners.11 In his answer,12 respondent Casal averred that despite his willingness to deliver them, petitioners refused to accept the certificates of title with notice of lis pendens covering the subdivision lots. The notice of lis pendens pertained to Civil Case No. BCV-90-14, entitled "Heirs of Vitaliano and Enrique Laudiza, represented by their Attorney-In-Fact Rosa Medina, Plaintiffs, v. Cesar E. Casal, CRS Realty and Development Corporation and the Register of Deeds of Cavite, Defendants," which was pending before the Regional Trial Court (RTC), Branch 19, Bacoor, Cavite. Leticia Ligon was said to have intervened in the said civil case.13 By way of special and affirmative defenses, respondent Casal further averred that the obligation to deliver the certificate of titles without encumbrance fell on respondent CRS Realty on the following grounds: (1) as stipulated in the subdivision development agreement between respondents Casal and CRS Realty executed on 06 September 1988, the certificates of title of the subdivision lots would be transferred to the developer or buyers thereof only upon full payment of the purchase price of each lot; (2) the contracts to sell were executed between petitioners and respondent CRS Realty; and (3) the monthly amortizations were paid to respondent CRS Realty and not to respondent Casal.14 Respondent Casal also alleged that he subsequently entered into a purchase agreement over the unsold portions of the subdivision with respondents Ang, Cuason and one Florinda Estrada who assumed the obligation to reimburse the amortizations already paid by petitioners.15 In her answer, respondent Salvador alleged that the failure by respondent Casal to comply with his obligation under the first agreement to deliver to CRS or the buyers the certificates of title was caused by the annotation of the notice of lis pendens on the certificate of title covering the subdivision property. Respondent Salvador further averred that the prior agreements dated 6 September 1988 and 08 August 1989 between respondents Casal and CRS Realty were superseded by an agreement dated 30 August 1996 between respondents Casal and Salvador. In the subsequent agreement, respondent Casal purportedly assumed full responsibility for the claims of the subdivision lot buyers while respondent Salvador sold her share in CRS Realty and relinquished her participation in the business. Respondents Ang and Cuason claimed in their answer with counterclaim16 that respondent Casal remained the registered owner of the subdivided lots when they were transferred to them and that the failure by petitioners to annotate their claims on the title indicated that they were unfounded. Respondent CRS Realty and the Heirs of Laudiza were declared in default for failure to file their respective answers.17 On 18 December 1998, HLURB Arbiter Ma. Perpetua Y. Aquino rendered a decision18 primarily ruling that the regular courts and not the HLURB had jurisdiction over petitioners complaint, thus, the complaint for quieting of title could not be given due course. The Heirs of Laudiza and Ligon were dropped as parties on the ground of lack of cause of action. However, she found respondents CRS Realty, Casal and Salvador liable on their obligation to deliver the certificates of title of the subdivision lots to petitioners who had paid in full the purchase price of the properties. She also found as fraudulent and consequently nullified the subsequent transfer of a portion of the subdivision to respondents Ang and Cuason. The dispositive portion of the decision reads: WHEREFORE, in view of the foregoing, judgement [sic] is hereby rendered as follows: 1) For respondents CRS Realty and Development Corp., Crisanta Salvador, and Cesar Casal to, jointly and severally: a) cause the delivery or to deliver the individual titles, within thirty (30) days from the finality of the decision, to the following complainants who have fully paid the purchase price of their lots, and to whom Deeds of Sale were issued, to wit:
1. Vicenta Cantemprate = Lots 1 to 8 Block 2 Lots 5 & 6 Block 13 2. Leonardo/Felicidad Ecat = Lots 21, 23 & 25 Block 11 3. Jesus Ayson = Lot 2 Block 9 4. Lilia Camacho = Lot 4 Block 11 5. Zenaida Delfin = Lot 2 Block 3 6. Natividad Garcia = Lot 8 Block 11 7. Nora Masangkay = Lot 7 Block 13 8. Elvira Millan = Lot 10 Block 13 9. Fevito Obidos = Lot 1 Block 3 10. Josefina Quinia = Lot 1 & 2 Block 12 11. Nilo Samia = Lot 1 Block 9 12. Rosel Vedar = Lot 10 Block 4 13. Macario/Carmen Yap = Lot 14 Block 4 14. Estrella/Danilo Eugerio = Lot 10 Block 5 15. Nerissa Cabanag = Lot 5 Block 4 16. Milagros Cruz = Lots 11 & 13 to 16 Block 3 17. Erlinda Delleva = Lot 6 Block 4 18. Lilia Mejia = Lot 2 & 3 Block 4 19. Carmen Yap/H. Capulso = Lot 13 Block 11 20. Mercedes Montano = Lot 4 Block 4 21. Teresita Manuel = Lot 11 Block 5 22. Amalia Sambile = Lot 3 Block 3 23. Carmencita Lorna Ramirez = Lot 13 Block 13 24. Emilia Dimas = Lot 16 Block 13 25. Rosita Torres = Lot 2 Block 13 26. Alladin Abubakar = Lot 9 Block 6 27. Manuel Andaya = Lot 5 & 6 Block 11 28. Remigio Araya = Lot 11 Block 4 29. J. Ayson/R. Elquiero = Lot 5 Block 3 30. L. Bernal/D. Morada = Lot 19 Block 11

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31. Rosa Nely Buna = Lot 9 Block 5 32. Nestor Calderon = Lot 6 Block 3 33. Ernesto Capulso = Lot 15 Block 11 34. Jorge Chiuco = Lots 12, 13 & 15 to 17 Block 4 35. Carolina Cruz = Lot 4 Block 14 36. Erna Daniel = Lot 6 Block 5 37. Zenaida De Guzman = Lots 19, 20 & 21 Block 10 38. Joselito De Lara = Lot 1 Block 11 39. J. De Lara/N. Gusi = Lot 11, Block 11 40. Virginia De La Paz = Lot 22, Block 11 41. Anastacia De Leon = Lot 10, Block 11 42. Salvador De Leon = Lot 7 & 8 Block 4 43. Josefina De Vera = Lot 20 Block 11 44. Julieta Danzon = Lot 4 Block 13 45. Constancia Diestro = Lot 17 Block 13 46. Corazon Ducusin = Lots 14, 16 & 18 Block 11 47. Juanita Flores = Lots 2 & 4 Block 5 48. Remedios Galman = Lot 12 Block 11 49. Mila Galamay = Lot 12 Block 5 50. Grace Baptist Church = Lot 24 Block 11 51. Rizalina Guerrero = Lot 26 Block 10 52. Nema Ida = Lot 9 Block 4 53. Milagros Jamir = Lot 8 Block 13 54. Violeta Josef = Lots 3 & 5 Block 5 55. Marivic Ladines = Lot 3 Block 13 56. Eulogio Legacion = Lots 8 & 9 Block 3 57. Emerita Mauri = Lot 12 Block 3 58. Mina Mary & Co. = Lot 1 Block 4 59. Babyrose Navarro = Lot 22 Block 10 60. Lauretto Nazarro = Lots 14 to 18 Block 10 61. Amelia Nomura = Lots 4 & 5 Block 9 62. Virgilio Ocampo = Lot 5 Block 12 63. Norma Paguagan = Lot 8 Block 12 64. Nicostrato Pelayo = Lots 7 & 9 Block 11 65. Gloria Racho = Lot 1 Block 5 66. Pepito Ramos = Lot 9 Block 13 67. Pedro Rebustillo = Lot 8 Block 5 68. S. Recato/A. Rebullar = Lot 11 Block 13 69. Laura Regidor = Lot 4 Block 3 70. Zenaida Santos = Lot 7 Block 5 71. R. Sarmiento/H. Eugenio = Lot 1 Block 13 72. Lourdes Teran = Lot 17 Block 6 73. R. Valdez/F. Corre = Lot 3 Block 9 74. Teodoro Velasco = Lot 17 Block 11 75. Edgardo Villanueva = Lots 1 to 5 Block 1 76. Gregorio Yao = Lots 2 & 3 Block 11 77. Willie Atienza = Lot 3 Block 12 78. Z. Zacarias/A. Guevarra = Lot 6 Block 12

That as concern[ed] complainant LEONARDO/FELICIDAD ECAT, whose total lost area is deficient by 278 square meters from the 2,587 square meters provided for in the Contract to Sell and that covered by the Deed of Sale which is 2,309 square meters, for respondents to deliver the deficiency by the execution of the Deed of Sale on the said portion and the delivery of the titles on their three (3) lots. b) submit to the Register of Deeds of Trece Martires City, Cavite a certified true copy of the approved subdivision plan of CRS Farm Estate, as well as photocopies of the technical description of complainants individual lots, blue prints and tracing cloth: In the event that said respondents cannot surrender said documents, complainants are hereby ordered to secure said documents and be the ones to submit them to the Register of Deeds; c) to refund to complainants the expenses theyve incurred in registering their individual Deeds of Sale with the Register of Deeds of Trece Martires City, Cavite; d) pay each of the complainants the sum of P10,000.00[,] as actual damages; the sum of P15,000.00[,] as moral damages; and the sum of P20,000.00[,] as exemplary damages; e) pay complainants the sum of P30,000.00 as and by way of attorneys fees; f) pay to the Board the sum of P20,000.00 as administrative fine for violation of section 25 of P.D. No. 957 in relation to sections 38 and 39 of the same decree. 2.) The sale of the subject property in whole to respondents Caleb Ang and Bennie Cuason is hereby declared annulled and of no effect especially that which pertains to the portion of the subdivision which have already been previously sold by the respondent CRS Realty to herein complainants, prior to the sale made by respondent Cesar Casal to Caleb Ang and Bennie Cuason. As a consequence thereof, respondents Ang and Cuason are hereby ordered to surrender to the Register of Deeds of Trece Martires City, Cavite, the owners duplicate copy of TCT No. 669732 in order for the said Register of Deeds to issue the corresponding certificates of title to all complainants named herein; 3.) The Register of Deeds of Trece Martires City, Cavite is hereby ordered to cancel TCT No. 669732 and reinstate TCT No. T-2500 in the name of Cesar Casal, from which the individual titles of herein complainants would be issued, with all the annotations of encumbrances inscribed at the back of TCT No. 669732 carried over to the said reinstated title. All other claims and counterclaims are hereby dismissed.SO ORDERED.19 From the decision of the HLURB Arbiter, respondents Casal, Cuason and Ang, as well as Leticia Ligon, filed separate petitions for review before the Board of Commissioners (Board). On 22 November 1999, the Board rendered a decision,20 affirming the HLURB Arbiters ruling that the HLURB had no jurisdiction over an action for the quieting of title, the nullification of a certificate of title or the reconveyance of a property. Notably, the Board referred to an earlier case, HLURB Case No. REM-A-0546, involving respondent Casal and the Heirs of Laudiza, where the Board deferred the issuance of a license to sell in favor of CRS Farm Estate until the issue of ownership thereof would be resolved in Civil Case No. BCV-90-14 pending before the RTC of Bacoor, Cavite. Furthermore, the Board ruled that to allow petitioners to proceed with the purchases of the subdivision lots would be preempting the proceedings before the RTC of Bacoor, Cavite and compounding the prejudice caused to petitioners. Thus, the Board dismissed the complaint for quieting of title but ordered the refund of the amounts paid by petitioners and other buyers to CRS Realty, to wit: WHEREFORE, premises considered, judgment is hereby rendered, MODIFYING the Decision dated December 18, 1998 by the Office below, to wit: 1. The complaint for quieting of title against Cesar Casal, Bennie Cuason, Caleb Ang, Heirs of Vitaliano and Enrique Laudiza, and Leticia Ligon is DISMISSED for lack of jurisdiction. 2. Ordering CRS Realty and/or any of the Officers to refund to complainants for all payments made plus 12% from the time the contract to sell is executed until fully paid. 3. All other claims and counterclaims are hereby DISMISSED. 4. Directing CRS to pay P10,000.00 as administrative fine for each and every sale without license. Let case be referred to the Legal Services Group (LSG) for possible criminal prosecution against the Officers of CRS Realty and Casal. SO ORDERED.21

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Ligon, respondent Casal and herein petitioners filed separate motions for reconsideration. On 28 November 2000, the Board issued a resolution,22 modifying its Decision dated 22 November 2009 by imposing the payment of damages in favor of petitioners, thus: WHEREFORE, based on the foregoing: 1. The decision of this Board dated November 22, 1999 is hereby MODIFIED to read as follows: WHEREFORE, premises considered, judgment is hereby rendered, MODIFYING the Decision dated December 18, 1998 by the Office below, thus: a. The complaint for quieting of title against Cesar Casal, Bennie Cuason, Caleb Ang, Heirs of Vitaliano and Enrique Laudiza and Leticia Ligon is DISMISSED for lack of jurisdiction; b. CRS Realty and/or any of the officers jointly and severally is/are ordered to refund to complainants, at the complainants option, all payments made for the purchase of the lots plus 12% interest from the time the contract to sell is executed until fully paid and cost of improvement, if any; d. CRS Realty and/or any of its officers jointly and severally is/are ordered [to] pay each of the complainants the sum of P30,000.00 as and by way [of] moral damages, P30,000.00 as and by way of exemplary damages, and P20,000.00 as attorneys fees; e. CRS Realty and/or any of its officers is/are hereby ordered to pay this Board P10,000.00 as administrative fine for each and every sale executed without license f. All other claims and counterclaims are hereby DISMISSED. Let the case be referred to the Legal Services Group (LSG) for possible criminal prosecution against the officers of CRS Realty and Casal. 2. Complainants Motion for Reconsideration, save in so far as we have above given due course, is hereby DISMISSED. 3. Likewise respondents Motion for Reconsideration are hereby DISMISSED for lack of merit. 4. Respondent Bennie Cuasons Motion to Cancel Lis Pendens is hereby DENIED, the same being premature. Let the records be elevated to the Office of the President in view of the appeal earlier filed by complainants. SO ORDERED.23 Upon appeal, the Office of the President (OP) on 03 December 2003 affirmed in toto both the decision and resolution of the Board.24 Aggrieved, petitioners elevated the matter to the Court of Appeals via a Rule 43 petition for review. Before the Court of Appeals, petitioners argued that the OP erred in rendering a decision which adopted by mere reference the decision of the HLURB and that the HLURB erred in ruling that it had no jurisdiction over petitioners complaint, in not nullifying the deed of absolute sale executed between respondent Casal and respondents Cuason and Ang and in ordering the refund of the amounts paid by petitioners for the subdivision lots.25 On 21 June 2005, the Court of Appeals rendered the assailed decision,26 affirming the OP Decision dated 03 December 2003. On 03 February 2006, the appellate court denied petitioners motion for reconsideration for lack of merit.27 Hence, the instant petition, essentially praying for judgment ordering the cancellation of the deed of absolute sale entered between respondent Casal, on the one hand, and respondents Ang and Cuason, on the other, the delivery of the certificates of title of the subdivision lots, and the payment of damages to petitioners. Petitioners have raised the following issues: (1) whether or not the absence of a license to sell has rendered the sales void; (2) whether or not the subsequent sale to respondent Cuason and Ang constitutes double sale; (3) whether or not the HLURB has jurisdiction over petitioners complaint; and (4) whether a minute decision conforms to the requirement of Section 14, Article VIII of the Constitution.28 We shall resolve the issues in seriatim. Petitioners assail the Court of Appeals ruling that the lack of the requisite license to sell on the part of respondent CRS Realty rendered the sales void; hence, neither party could compel performance of each others contractual obligations. The only requisite for a contract of sale or contract to sell to exist in law is the meeting of minds upon the thing which is the object of the contract and the price, including the manner the price is to be paid by the vendee. Under Article 1458 of the New Civil Code, in a contract of sale, whether absolute or conditional, one of the contracting parties obliges himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.29 In the instant case, the failure by respondent CRS Realty to obtain a license to sell the subdivision lots does not render the sales void on that ground alone especially that the parties have impliedly admitted that there was already a meeting of the minds as to the subject of the sale and price of the contract. The absence of the license to sell only subjects respondent CRS Realty and its officers civilly and criminally liable for the said violation under Presidential Decree (P.D.) No. 95730 and related rules and regulations. The absence of the license to sell does not affect the validity of the already perfected contract of sale between petitioners and respondent CRS Realty. In Co Chien v. Sta. Lucia Realty and Development, Inc.,31 the Court ruled that the requisite registration and license to sell under P.D. No. 957 do not affect the validity of the contract between a subdivision seller and buyer. The Court explained, thus: A review of the relevant provisions of P.D. [No.] 957 reveals that while the law penalizes the selling subdivision lots and condominium units without prior issuance of a Certificate of Registration and License to sell by the HLURB, it does not provide that the absence thereof will automatically render a contract, otherwise validly entered, void. Xxx

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As found by the Court of Appeals, in the case at bar, the requirements of Sections 4 and 5 of P.D. [No.] 957 do not go into the validity of the contract, such that the absence thereof would automatically render the contract null and void. It is rather more of an administrative convenience in order to allow a more effective regulation of the industry. x x x32 The second and third issues are interrelated as they pertain to whether the HLURB has jurisdiction over petitioners complaint for the delivery of certificates of titles and for quieting of title. Petitioners are partly correct in asserting that under Section 1 of P.D. No. 1344,33 an action for specific performance to compel respondents to comply with their obligations under the various contracts for the purchase of lots located in the subdivision owned, developed and/or sold by respondents CRS Realty, Casal and Salvador is within the province of the HLURB. The HLURB has exclusive jurisdiction over the complaint for specific performance to compel respondents CRS Realty, Casal and Salvador as subdivision owners and developers to deliver to petitioners the certificates of title after full payment of the subdivision lots. On this score, the Court affirms the findings of HLURB Arbiter Aquino with respect to the obligation of respondents Casal, Salvador and CRS Realty to deliver the certificates of title of the subdivision to petitioners pursuant to their respective contracts to sell. Indeed, under Section 25 of P.D. No. 957, among the obligations of a subdivision owner or developer is the delivery of the subdivision lot to the buyer by causing the transfer of the corresponding certificate of title over the subject lot.34 The provision states: Sec. 25. Issuance of Title.The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith. In the instant case, the contract to sell itself expressly obliges the vendor to cause the issuance of the corresponding certificate of title upon full payment of the purchase price, to wit: 3. Title to said parcel of land shall remain in the name of the VENDOR until complete payment of the agreed price by the VENDEE and all obligations herein stipulated, at which time the VENDOR agrees to cause the issuance of a certificate of title in the Land Registration Act and the restrictions as may be provided in this Contract.35 From the foregoing it is clear that upon full payment, the seller is duty-bound to deliver the title of the unit to the buyer. Thus, for instance, even with a valid mortgage over the lot, the seller is still bound to redeem said mortgage without any cost to the buyer apart from the balance of the purchase price and registration fees.36 There is no question that respondents Casal, Salvador and CRS Realty breached their obligations to petitioners under the contracts to sell. It is settled that a breach of contract is a cause of action either for specific performance or rescission of contracts.37 Respondents Casal, Salvador and CRS Realty have the obligation to deliver the corresponding clean certificates of title of the subdivision lots, the purchase price of which have been paid in full by petitioners. That the subject subdivision property is involved in a pending litigation between respondent Casal and persons not parties to the instant case must not prejudice petitioners. Respondents obligation to deliver the corresponding certificates of title is simultaneous and reciprocal. Upon the full payment of the purchase price of the subdivision lots, respondents obligation to deliver the certificates of title becomes extant. Respondents must cause the delivery of the certificates of title to petitioners free of any encumbrance. But since the lots are involved in litigation and there is a notice of lis pendens at the back of the titles involved, respondents have to be given a reasonable period of time to work on the adverse claims and deliver clean titles to petitioners. The Court believes that six (6) months is a reasonable period for the purpose. Should respondents fail to deliver such clean titles at the end of the period, they ought to pay petitioners actual or compensatory damages. Article 1191 of the Civil Code sanctions the right to rescind the obligation in the event that specific performance becomes impossible, to wit: 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. The injured party may choose between the fulfillment and the 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. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.38 Rescission creates the obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore. Rescission abrogates the contract from its inception and requires a mutual restitution of the benefits received.39 Thus, respondents Casal, Salvador and CRS Realty must return the benefits received from the contract to sell if they cannot comply with their obligation to deliver the corresponding certificates of title to petitioners. Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong that has been done, to compensate for the injury inflicted and not to impose a penalty.40 Also, under Article 2200, indemnification for

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damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain. Thus, there are two kinds of actual or compensatory damages: one is the loss of what a person already possesses, and the other is the failure to receive as a benefit that which would have pertained to him.41 In the event that respondents Casal, Salvador and CRS Realty cannot deliver clean certificates of title to petitioners, the latter must be reimbursed not only of the purchase price of the subdivision lots sold to them but also of the incremental value arising from the appreciation of the lots. Thus, petitioners are entitled to actual damages equivalent to the current market value of the subdivision lots. In Solid Homes, Inc. v. Spouses Tan,42 the Court ordered instead the payment of the current market value of the subdivision lot after it was established that the subdivision owner could no longer comply with its obligation to develop the subdivision property in accordance with the approved plans and advertisements. On this score, in its Decision dated 28 November 2000 which was affirmed by the OP and the Court of Appeals, the Board found respondent CRS Realty and its officers solidarily liable to refund the complainants or herein petitioners the installments paid by them including interest, to pay them moral and exemplary damages and attorneys fees and to pay the corresponding fine to the Board. The decision, however, failed to name the responsible officers of respondent CRS Realty who should be solidarily liable petitioners. The 18 December 1998 Decision of the HLURB Arbiter is quite instructive on this matter, thus: Obviously, respondents CRS Realty Development Corporation, Crisanta R. Salvador and Cesar E. Casal, avoided responsibility and liability for their failure to comply with their contractual and statutory obligation to deliver the titles to the individual lots of complainants, by "passing the buck" to each other. The Board[,] however, is not oblivious to the various schemes willfully employed by developers and owners of subdivision projects to subtly subvert the law, and evade their obligations to lot buyers, as it finds the justifications advanced by respondents CRS Realty Development Corp., Crisanta R. Salvador, and Cesar E. Casal grossly untenable. The failure in the implementation of the agreement dated 06 September 1998 entered into by respondent CRS, Salvador and Casal involving the subject property should not operate and work to prejudice complainants, who are lot buyers in good faith and who have complied with their obligations by paying in full the price of their respective lots in accordance with the terms and conditions of their contract to sell. Respondent Casal is not without recourse against respondents CRS Realty or Salvador for the violation of their agreement and as such, the same reason could not be made and utilized as a convenient excuse to evade their obligation and responsibility to deliver titles to complainants. Under the so called "doctrine of estoppel," where one of two innocent persons, as respondents CRS Development Corp./Crisanta R. Salvador and Cesar E. Casal claimed themselves to be, must suffer, he whose acts occasioned the loss must bear it. In the herein case, it is respondents CRS Realty Development Corp./Crisanta Salvador and Cesar E. Casal who must bear the loss. x x x43 In denying any liability, respondent Salvador argues that even before the filing of the case before the HLURB, the agreements between her and respondent Casal involving the development and sale of the subdivision lots were superseded by an agreement dated 30 August 1996, whereby respondent Casal purportedly assumed full responsibility over the claims of the subdivision lot buyers while respondent Salvador sold her share in CRS Realty and relinquished her participation in the business. The subsequent agreement which purportedly rescinded the subdivision development agreement between respondents Casal and Salvador could not affect third persons like herein petitioners because of the basic civil law principle of relativity of contracts which provides that contracts can only bind the parties who entered into it, and it cannot favor or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof.44 The fact remains that the contracts to sell involving the subdivision lots were entered into by and between petitioners, as vendees, and respondent Salvador, on behalf of respondent CRS Realty as vendor. As one of the responsible officers of respondent CRS Realty, respondent Salvador is also liable to petitioners for the failure of CRS Realty to perform its obligations under the said contracts and P.D. No. 957, notwithstanding that respondent Salvador had subsequently divested herself of her interest in the CRS Realty. One of the purposes of P.D. No. 957 is to discourage and prevent unscrupulous owners, developers, agents and sellers from reneging on their obligations and representations to the detriment of innocent purchasers.45 The Court cannot countenance a patent violation on the part of the said respondents that will cause great prejudice to petitioners. The Court must be vigilant and should punish, to the fullest extent of the law, those who prey upon the desperate with empty promises of better lives, only to feed on their aspirations.46 As regards petitioners prayer to declare them the absolute owners of the subdivision lots, the HLURB correctly ruled that it had no jurisdiction over the same. Petitioners amended complaint47 included a cause of action for reconveyance of the subdivision lots to petitioners and/or the quieting of petitioners title thereto and impleaded a different set of defendants, namely, the Heirs of Laudiza and respondents Ang and Cuason, who allegedly bought the subdivision lots previously sold to petitioners. In Spouses Suntay v. Gocolay,48 the Court held that the HLURB has no jurisdiction over the issue of ownership, possession or interest in the condominium unit subject of the dispute therein because under Section 19 of Batas Pambansa (B.P.) Blg. 129,49 the Regional Trial Courts shall exercise exclusive original jurisdiction in all civil actions which involve the title to, or possession of, real property, or any interest therein. In view of the aforequoted delineation of jurisdiction between the HLURB and the RTCs, the HLURB has no jurisdiction to declare petitioners as absolute owners of the subdivision lots as against the Heirs of Laudiza who filed an action for reconveyance against respondent Casal, which is still pending before the RTC.

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However, nothing prevents the HLURB from adjudicating on the issue of whether the alleged subsequent sale of the subdivision lots to respondents Ang and Cuason constituted a double sale because the issue is intimately related to petitioners complaint to compel respondents CRS Realty, Casal and Salvador to perform their obligation under the contracts to sell. Considering that the alleged subsequent sale to respondents Ang and Cuason apparently would constitute a breach of respondents obligation to issue the certificate of title to petitioners, if not an unsound business practice punishable under Section 1 of P.D. No. 1344,50 the HLURB cannot shirk from its mandate to enforce the laws for the protection of subdivision buyers. In Union Bank of the Philippines v. Housing and Land Use Regulatory Board,51 the Court upheld HLURBs jurisdiction over a condominium unit buyers complaint to annul the certificate of title over the unit issued to the highest bidder in the foreclosure of the mortgage constituted on the unit by the condominium developer without the consent of the buyer. The remand of the instant case to the HLURB is in order so that the HLURB may determine if the alleged subsequent sale to respondents Ang and Cuason of those lots initially sold to petitioners constituted a double sale and was tainted with fraud as opposed to the respondents claim that only the unsold portions of the subdivision property were sold to them. One final note. Contrary to petitioners contention, the decision of the OP does not violate the mandate of Section 14, Article VIII of the Constitution, which provides that "No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based."1avvphi1.zw+ The OP decision ruled that "the findings of fact and conclusions of law of the office a quo are amply supported by substantial evidence" and that it is "bound by said findings of facts and conclusions of law and hereby adopt(s) the assailed resolution by reference." The Court finds these legal bases in conformity with the requirements of the Constitution. The Court has sanctioned the use of memorandum decisions, a species of succinctly written decisions by appellate courts in accordance with the provisions of Section 40, B.P. Blg. 129 on the grounds of expediency, practicality, convenience and docket status of our courts. The Court has declared that memorandum decisions comply with the constitutional mandate.52 As already discussed, the Court affirms the ruling of the HLURB Arbiter insofar as it ordered respondents Casal, Salvador and CRS Realty, jointly and severally, to cause the delivery of clean certificates of title to petitioners at no cost to the latter. Said respondents have six months from the finality of this decision to comply with this directive, failing which they shall pay petitioners actual damages equivalent to the current market value of the subdivision lots sold to them, as determined by the HLURB. However, the Court finds in order and accordingly affirms the Boards award of moral and exemplary damages and attorneys fees in favor of each petitioner, as well as the imposition of administrative fine, against respondents Casal, Salvador and CRS Realty. WHEREFORE, the instant petition for review on certiorari is PARTLY GRANTED. The decision and resolution of the Court of Appeals in CA-G.R. SP No. 81859, which upheld the decisions of the Office of the President and the Housing and Land Use Regulatory Board, are AFFIRMED in all respects except for the following MODIFICATIONS, to wit: (1) Respondents CRS Realty, Cesar E. Casal and Crisanta R. Salvador are ORDERED to secure and deliver to each of petitioners the corresponding certificates of titles, free of any encumbrance, in this names for the lots they respectively purchased and fully paid for, within six (6) months from the finality of this Decision and, in case of default, jointly and severally to pay petitioners the prevailing or current fair market value of the lots as determined by the Housing and Land Use Regulatory Board; and (2) Without prejudice to the implementation of the other reliefs granted in this Decision, including the reliefs awarded by the HLURB which are affirmed in this Decision, this case is REMANDED to the HLURB for the purpose of determining (a) the prevailing or current fair market value of the lots and (b) the validity of the subsequent sale of the lots to respondents Bennie Cuason and Caleb Ang by ascertaining whether or not the sale was attended with fraud and executed in bad faith. No costs. SO ORDERED.