Case On Sales

FIRST DIVISION
SPOUSES GOMER and G.R. No. 145330

LEONOR RAMOS,
Petitioners, Present:
Davide, Jr., C.J.,
Chairman,
Quisumbing,
- versus - Ynares-Santiago,
Carpio, and
Azcuna, JJ.
SPOUSES SANTIAGO and
MINDA HERUELA, and Promulgated:
SPOUSES CHERRY and
RAYMOND PALLORI,
Respondents. October 14, 2005
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DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review[1] assailing the Decision[2] dated 23 August 2000
and the Order dated 20 September 2000 of the Regional Trial Court (trial court) of Misamis
Oriental, Branch 21, in Civil Case No. 98-060. The trial court dismissed the plaintiffs
action for recovery of ownership with damages.
The Antecedent Facts
The spouses Gomer and Leonor Ramos (spouses Ramos) own a parcel of land, consisting of
1,883 square meters, covered by Transfer Certificate of Title (TCT) No. 16535 of the
Register of Deeds of Cagayan de Oro City. On 18 February 1980, the spouses Ramos made an
agreement with the spouses Santiago and Minda Heruela (spouses Heruela)[3]covering 306
square meters of the land (land). According to the spouses Ramos, the agreement is a
contract of conditional sale. The spouses Heruela allege that the contract is a sale on
installment basis.
On 27 January 1998, the spouses Ramos filed a complaint for Recovery of Ownership with
Damages against the spouses Heruela. The case was docketed as Civil Case No. 98-060. The
spouses Ramos allege that out of the P15,300[4] consideration for the sale of the land, the
spouses Heruela paid only P4,000. The last installment that the spouses Heruela paid was
on 18 December 1981. The spouses Ramos assert that the spouses Heruelas unjust refusal to
pay the balance of the purchase price caused the cancellation of the Deed of Conditional
Sale. In June 1982, the spouses Ramos discovered that the spouses Heruela were already
occupying a portion of the land. Cherry and Raymond Pallori (spouses Pallori), daughter
and son-in-law, respectively, of the spouses Heruela, erected another house on the land.
The spouses Heruela and the spouses Pallori refused to vacate the land despite demand by
the spouses Ramos.
The spouses Heruela allege that the contract is a sale on installment basis. They
paid P2,000 as down payment and made the following installment payments:
31 March 1980
2 May 1980
20 June 1980
8 October 1980
P200
P400
P200
P500
5 March 1981
P400
18 December 1981
P300
(for April and May 1980)

(for June 1980)
(for July, August and
part of September 1980)
(for October and
November 1980)
(for December 1980 and
part of January 1981)
The spouses Heruela further allege that the 306 square meters specified in the contract
was reduced to 282 square meters because upon subdivision of the land, 24 square meters
became part of the road. The spouses Heruela claim that in March 1982, they expressed
their willingness to pay the balance of P11,300 but the spouses Ramos refused their offer.
The Ruling of the Trial Court
In its Decision[5] dated 23 August 2000, the trial court ruled that the contract is a sale
by installment. The trial court ruled that the spouses Ramos failed to comply with Section
4 of Republic Act No. 6552 (RA 6552),[6] as follows:
SEC. 4. In case where less than two years of installments were paid, the seller shall give
the buyer a grace period of not less than sixty days from the date the installment became
due. If the buyer fails to pay the installments due at the expiration of the grace period,
the seller may cancel the contract after thirty days from receipt by the buyer of the
notice of cancellation or the demand for rescission of the contract by a notarial act.
The dispositive portion of the Decision reads:
WHEREFORE, the complaint is hereby dismissed and plaintiff[s] are ordered to execute the
corresponding Deed of Sale in favor of defendants after the latter have paid the remaining
balance of Eleven Thousand and Three Hundred Pesos (P11,300.00).
Plaintiffs are further ordered to pay defendants the sum of P20,000.00, as Attorneys fees
and P10,000.00 as litigation expenses.
SO ORDERED.[7]
In an Order[8] dated 20 September 2000, the trial court denied the spouses Ramos motion for
reconsideration.
Hence, this petition.
The Issues
The spouses Ramos raise the following issues:
I.
II.
present case;
III.
IV.
Whether RA 6552 is applicable to an absolute sale of land;

Whether Articles 1191 and 1592 of the Civil Code are applicable to the
Whether the spouses Ramos have a right to cancel the sale;
Whether the spouses Heruela have a right to damages.[9]
The Ruling of the Court

The petition is partly meritorious.
The Agreement is a Contract to Sell
In its Decision, the trial court ruled on whether the contract made by the parties is a
conditional sale or a sale on installment. The spouses Ramos premise is that since the
trial court ruled that the contract is a sale on installment, the trial court also in
effect declared that the sale is an absolute sale. The spouses Ramos allege that RA 6552
is not applicable to an absolute sale.
Article 1458 of the Civil Code provides that a contract of sale may be absolute or
conditional. A contract of sale is absolute when title to the property passes to the
vendee upon delivery of the thing sold.[10] A deed of sale is absolute when there is no
stipulation in the contract that title to the property remains with the seller until full
payment of the purchase price.[11] The sale is also absolute if there is no stipulation
giving the vendor the right to cancel unilaterally the contract the moment the vendee
fails to pay within a fixed period.[12] In a conditional sale, as in a contract to sell,
ownership remains with the vendor and does not pass to the vendee until full payment of
the purchase price.[13]The full payment of the purchase price partakes of a suspensive
condition, and non-fulfillment of the condition prevents the obligation to sell from
arising.[14]
In this case, the agreement of the parties is embodied in a one-page, handwritten
document.[15] The document does not contain the usual terms and conditions of a formal deed
of sale. The original document, elevated to this Court as part of the Records, is torn in
part. Only the words LMENT BASIS is legible on the title. The names and addresses of the
parties and the identity of the property cannot be ascertained. The agreement only
provides for the following terms of the sale:
TERM[S] OF SALE:
PRICE PER SQM P50.00 X 306
DOWN PAYMENT (TWO THOUSAND
BALANCE PAYABLE AT MINIMUM
PER MONTH UNTIL FULLY PAID
SQM P 15,300.00
PESOS) 2,000.00
OF P200.00 P 13,300.00
=======
In Manuel v. Rodriguez, et al.,[16] the Court ruled that to be a written contract, all the
terms must be in writing, so that a contract partly in writing and partly oral is in legal
effect an oral contract. The Court reiterated the Manuel ruling in Alfonso v. Court of
Appeals:[17]
xxx In Manuel, only the price and the terms of payment were in writing, but the most
important matter in the controversy, the alleged transfer of title was never reduced to
any written document.[] It was held that the contract should not be considered as a
written but an oral one; not a sale but a promise to sell; and that the absence of a
formal deed of conveyance was a strong indication that the parties did not intend
immediate transfer of title, but only a transfer after full payment of the price. Under
these circumstances, the Court ruled Article 1504 of the Civil Code of 1889 (Art. 1592 of
the present Code) to be inapplicable to the contract in controversy a contract to sell or
promise to sell where title remains with the vendor until fulfillment of a positive
suspensive condition, such as full payment of the price x x [x].
The records show that the spouses Heruela did not immediately take actual, physical
possession of the land. According to the spouses Ramos, in March 1981, they allowed the
niece of the spouses Heruela to occupy a portion of the land. Indeed, the spouses Ramos
alleged that they only discovered in June 1982 that the spouses Heruela were already
occupying the land. In their answer to the complaint, the spouses Heruela and the spouses
Pallori alleged that their occupation of the land is lawful because having made partial
payments of the purchase price, they already considered themselves owners of the land.
[18]
Clearly, there was no transfer of title to the spouses Heruela. The spouses Ramos
retained their ownership of the land. This only shows that the parties did not intend the
transfer of ownership until full payment of the purchase price.
RA 6552 is the Applicable Law
The trial court did not err in applying RA 6552 to the present case.
Articles 1191[19] and 1592[20] of the Civil Code are applicable to contracts of sale. In
contracts to sell, RA 6552 applies. In Rillo v. Court of Appeals,[21] the Court declared:
xxx Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of
real estate (industrial, commercial, residential) the right of the seller to cancel the
contract upon non-payment of an installment by the buyer, which is simply an event that
prevents the obligation of the vendor to convey title from acquiring binding force. It
also provides the right of the buyer on installments in case he defaults in the payment of
succeeding installments xxx.
Sections 3 and 4 of RA 6552 provide:
Sec. 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred
eighty-nine, where the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment of succeeding
installments:
(a)
To pay, without additional interest, the unpaid installments due within the
total grace period earned by him, which is hereby fixed at the rate of one month grace
period for every one year of installment payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of the life of the contract and its
extensions, if any.
(b)
If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per cent of the total
payments made and, after five years of installments, an additional five per cent every
year but not to exceed ninety per cent of the total payments made: Provided, That the
actual cancellation of the contract shall take place after thirty days from receipt by the
buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of
the total number of installments made.
Sec. 4. In case where less than two years of installments were paid, the seller shall give
In this case, the spouses Heruela paid less than two years of installments. Thus, Section
4 of RA 6552 applies. However, there was neither a notice of cancellation nor demand for
rescission by notarial act to the spouses Heruela. In Olympia Housing, Inc. v. Panasiatic
Travel Corp.,[22] the Court ruled that the vendor could go to court to demand judicial
rescission in lieu of a notarial act of rescission. However, an action for reconveyance is
not an action for rescission. The Court explained in Olympia:
The action for reconveyance filed by petitioner was predicated on an assumption that its
contract to sell executed in favor of respondent buyer had been validly cancelled or
rescinded. The records would show that, indeed, no such cancellation took place at any
time prior to the institution of the action for reconveyance. xxx
xxx
xxx Not only is an action for reconveyance conceptually different from an action for
rescission but that, also, the effects that flow from an affirmative judgment in either
case would be materially dissimilar in various respects. The judicial resolution of a
contract gives rise to mutual restitution which is not necessarily the situation that can
arise in an action for reconveyance. Additionally, in an action for rescission (also often
termed as resolution), unlike in an action for reconveyance predicated on an extrajudicial
rescission (rescission by notarial act), the Court, instead of decreeing rescission, may
authorize for a just cause the fixing of a period.[23]
In the present case, there being no valid rescission of the contract to sell, the action
for reconveyance is premature. Hence, the spouses Heruela have not lost the statutory
grace period within which to pay. The trial court should have fixed the grace period to
sixty days conformably with Section 4 of RA 6552.
The spouses Heruela are not entirely fault-free. They have been remiss in performing their
obligation. The trial court found that the spouses Heruela offered once to pay the balance
of the purchase price. However, the spouses Heruela did not consign the payment during the
pendency of the case. In the meanwhile, the spouses Heruela enjoyed the use of the land.
For the breach of obligation, the court, in its discretion, and applying Article 2209 of
the Civil Code,[24] may award interest at the rate of 6% per annum on the amount of
damages.[25] The spouses Heruela have been enjoying the use of the land since 1982. In
1995, they allowed their daughter and son-in-law, the spouses Pallori, to construct a
house on the land. Under the circumstances, the Court deems it proper to award interest at
6% per annum on the balance of the purchase price.
The records do not show when the spouses Ramos made a demand from the spouses Heruela for
payment of the balance of the purchase price. The complaint only alleged that the spouses
Heruelas unjust refusal to pay in full the purchase price xxx has caused the Deed of
Conditional Sale to be rescinded, revoked and annulled.[26] The complaint did not specify
when the spouses Ramos made the demand for payment. For purposes of computing the legal
interest, the reckoning period should be the filing on 27 January 1998 of the complaint
for reconveyance, which the spouses Ramos erroneously considered an action for rescission
of the contract.
The Court notes the reduction of the land area from 306 square meters to 282 square
meters. Upon subdivision of the land, 24 square meters became part of the road. However,
Santiago Heruela expressed his willingness to pay for the 306 square meters agreed upon
despite the reduction of the land area.[27] Thus, there is no dispute on the amount of the
purchase price even with the reduction of the land area.
On the Award of Attorneys Fees and Litigation Expenses
The trial court ordered the spouses Ramos to pay the spouses Heruela and the spouses
Pallori the amount of P20,000 as attorneys fees and P10,000 as litigation expenses.
Article 2208[28] of the Civil Code provides that subject to certain exceptions, attorneys
fees and expenses of litigation, other than judicial costs, cannot be recovered in the
absence of stipulation. None of the enumerated exceptions applies to this case. Further,
the policy of the law is to put no premium on the right to litigate.[29] Hence, the award
of attorneys fees and litigation expenses should be deleted.
WHEREFORE, we AFFIRM the Decision dated 23 August 2000 of the Regional Trial Court of
Misamis Oriental, Branch 21, dismissing the complaint for Recovery of Ownership with
Damages, with the following MODIFICATION:
1.
The spouses Heruela shall pay the spouses Ramos P11,300 as balance of the
purchase price plus interest at 6% per annum from 27 January 1998. The spouses Heruela
shall pay within 60 days from finality of this Decision;
2.
Upon payment, the spouses Ramos shall execute a deed of absolute sale of the land
and deliver the certificate of title in favor of the spouses Heruela;
3.
In case of failure to thus pay within 60 days from finality of this Decision, the
spouses Heruela and the spouses Pallori shall immediately vacate the premises without need
of further demand, and the down payment and installment payments of P4,000 paid by the
spouses Heruela shall constitute rental for the land;
4.
The award of P20,000 as attorneys fees and P10,000 as litigation expenses in
favor of the spouses Heruela and the spouses Pallori is deleted.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
HILARIO G. DAVIDE, JR.

Chief Justice
Chairman
LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

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

Chief Justice
[1]
Under Rule 45 of the 1997 Rules of Civil Procedure.

Penned by Judge Arcadio D. Fabria.
[3]
The spouses Ramos and the spouses Heruela are collectively referred to in this Decision
as the parties.
[4]
P50 per square meter.
[2]
[5]
Rollo, pp. 15-24.
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
Otherwise known as the Realty Installment Buyer Protection Act.

Rollo, pp. 23-24.
Ibid., p. 25.
Ibid., p. 126.
Universal Robina Sugar Milling Corp. v. Heirs of Teves, 438 Phil. 26 (2002).
Adelfa Properties, Inc. v. CA, 310 Phil. 623 (1995).
Ibid.
Ibid.
Chua v. Court of Appeals, 449 Phil. 25 (2003).
Records, p. 178.
109 Phil. 1 (1960).
G.R. No. 63745, 8 June 1990, 186 SCRA 400.
[18]
Records, p. 24.
[19]
Article 1191 provides:
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.
[20]
Art. 1592. In the sale of immovable property, even though it may have been stipulated that
upon failure to pay the price at the time agreed upon the rescission of the contract shall
of right take place, the vendee may pay, even after the expiration of the period, as long
as no demand for rescission of the contract has been made upon him either judicially or by
a notarial act. After the demand, the court may not grant him a new term.
[21]
G.R. No. 125347, 19 June 1997, 274 SCRA 461, citing the Resolution on Second Motion
for Reconsideration, Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., No. L25885, 16 November 1978, 86 SCRA 305.
[22]
[23]
[24]
443 Phil. 385 (2003).

Ibid.
Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the contrary,
shall be the payment of the interest agreed upon, and in the absence of stipulation, the
legal interest, which is six per cent per annum.
[25]
Consing v. Court of Appeals, G.R. No. 143584, 10 March 2004, 425 SCRA 192; Eastern
Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78.
[26]
Records, p. 4.
[27]
TSN, 8 February 2000, p. 20.
[28]
Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
(1)
When exemplary damages are awarded;
(2)
When the defendants act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;
(3)
In criminal cases of malicious prosecution against the plaintiff;
(4)
In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5)
Where the defendant acted in gross and evident bad faith in refusing to satisfy
the plaintiffs plainly valid, just and demandable claim;
(6)
In actions for legal support;
(7)
In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8)
In actions for indemnity under workmens compensation and employers liability
laws;
(9)
In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorneys fees and
expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be reasonable.
[29]
Liu v. Loy, Jr., 453 Phil. 232 (2003).
FIRST DIVISION
SPOUSES GOMER and G.R. No. 145330
LEONOR RAMOS,
Petitioners, Present:
Davide, Jr., C.J.,
Chairman,
Quisumbing,
- versus - Ynares-Santiago,
Carpio, and
Azcuna, JJ.
SPOUSES SANTIAGO and
MINDA HERUELA, and Promulgated:
SPOUSES CHERRY and
RAYMOND PALLORI,
Respondents. October 14, 2005
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DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review[1] assailing the Decision[2] dated 23 August 2000
and the Order dated 20 September 2000 of the Regional Trial Court (trial court) of Misamis
Oriental, Branch 21, in Civil Case No. 98-060. The trial court dismissed the plaintiffs
action for recovery of ownership with damages.
The Antecedent Facts
The spouses Gomer and Leonor Ramos (spouses Ramos) own a parcel of land, consisting of
1,883 square meters, covered by Transfer Certificate of Title (TCT) No. 16535 of the
Register of Deeds of Cagayan de Oro City. On 18 February 1980, the spouses Ramos made an
agreement with the spouses Santiago and Minda Heruela (spouses Heruela)[3]covering 306
square meters of the land (land). According to the spouses Ramos, the agreement is a
contract of conditional sale. The spouses Heruela allege that the contract is a sale on
installment basis.
On 27 January 1998, the spouses Ramos filed a complaint for Recovery of Ownership with
Damages against the spouses Heruela. The case was docketed as Civil Case No. 98-060. The
spouses Ramos allege that out of the P15,300[4] consideration for the sale of the land, the
spouses Heruela paid only P4,000. The last installment that the spouses Heruela paid was
on 18 December 1981. The spouses Ramos assert that the spouses Heruelas unjust refusal to
pay the balance of the purchase price caused the cancellation of the Deed of Conditional
Sale. In June 1982, the spouses Ramos discovered that the spouses Heruela were already
occupying a portion of the land. Cherry and Raymond Pallori (spouses Pallori), daughter
and son-in-law, respectively, of the spouses Heruela, erected another house on the land.
The spouses Heruela and the spouses Pallori refused to vacate the land despite demand by
the spouses Ramos.
The spouses Heruela allege that the contract is a sale on installment basis. They
paid P2,000 as down payment and made the following installment payments:
31 March 1980
2 May 1980
20 June 1980
8 October 1980
P200
P400
P200
P500
5 March 1981
P400
18 December 1981
P300
(for April and May 1980)

(for June 1980)
(for July, August and
part of September 1980)
(for October and
November 1980)
(for December 1980 and
part of January 1981)
The spouses Heruela further allege that the 306 square meters specified in the contract
was reduced to 282 square meters because upon subdivision of the land, 24 square meters
became part of the road. The spouses Heruela claim that in March 1982, they expressed
their willingness to pay the balance of P11,300 but the spouses Ramos refused their offer.
The Ruling of the Trial Court
In its Decision[5] dated 23 August 2000, the trial court ruled that the contract is a sale
by installment. The trial court ruled that the spouses Ramos failed to comply with Section
4 of Republic Act No. 6552 (RA 6552),[6] as follows:
SEC. 4. In case where less than two years of installments were paid, the seller shall give
The dispositive portion of the Decision reads:
WHEREFORE, the complaint is hereby dismissed and plaintiff[s] are ordered to execute the
corresponding Deed of Sale in favor of defendants after the latter have paid the remaining
balance of Eleven Thousand and Three Hundred Pesos (P11,300.00).
Plaintiffs are further ordered to pay defendants the sum of P20,000.00, as Attorneys fees
and P10,000.00 as litigation expenses.
SO ORDERED.[7]
In an Order[8] dated 20 September 2000, the trial court denied the spouses Ramos motion for
reconsideration.
The Issues
The spouses Ramos raise the following issues:
I.
II.
present case;
III.
IV.
Whether RA 6552 is applicable to an absolute sale of land;

Whether Articles 1191 and 1592 of the Civil Code are applicable to the
Whether the spouses Ramos have a right to cancel the sale;
Whether the spouses Heruela have a right to damages.[9]

The petition is partly meritorious.
The Agreement is a Contract to Sell
In its Decision, the trial court ruled on whether the contract made by the parties is a
conditional sale or a sale on installment. The spouses Ramos premise is that since the
trial court ruled that the contract is a sale on installment, the trial court also in
effect declared that the sale is an absolute sale. The spouses Ramos allege that RA 6552
is not applicable to an absolute sale.
Article 1458 of the Civil Code provides that a contract of sale may be absolute or
conditional. A contract of sale is absolute when title to the property passes to the
vendee upon delivery of the thing sold.[10] A deed of sale is absolute when there is no
stipulation in the contract that title to the property remains with the seller until full
payment of the purchase price.[11] The sale is also absolute if there is no stipulation
giving the vendor the right to cancel unilaterally the contract the moment the vendee
fails to pay within a fixed period.[12] In a conditional sale, as in a contract to sell,
ownership remains with the vendor and does not pass to the vendee until full payment of
the purchase price.[13]The full payment of the purchase price partakes of a suspensive
condition, and non-fulfillment of the condition prevents the obligation to sell from
arising.[14]
In this case, the agreement of the parties is embodied in
document.[15] The document does not contain the usual terms
of sale. The original document, elevated to this Court as
part. Only the words LMENT BASIS is legible on the title.
a one-page, handwritten
and conditions of a formal deed
part of the Records, is torn in
The names and addresses of the
parties and the identity of the property cannot be ascertained. The agreement only
provides for the following terms of the sale:
TERM[S] OF SALE:
PRICE PER SQM P50.00 X 306
DOWN PAYMENT (TWO THOUSAND
BALANCE PAYABLE AT MINIMUM
PER MONTH UNTIL FULLY PAID
SQM P 15,300.00
PESOS) 2,000.00
OF P200.00 P 13,300.00
=======
In Manuel v. Rodriguez, et al.,[16] the Court ruled that to be a written contract, all the
terms must be in writing, so that a contract partly in writing and partly oral is in legal
effect an oral contract. The Court reiterated the Manuel ruling in Alfonso v. Court of
Appeals:[17]
xxx In Manuel, only the price and the terms of payment were in writing, but the most
important matter in the controversy, the alleged transfer of title was never reduced to
any written document.[] It was held that the contract should not be considered as a
written but an oral one; not a sale but a promise to sell; and that the absence of a
formal deed of conveyance was a strong indication that the parties did not intend
immediate transfer of title, but only a transfer after full payment of the price. Under
these circumstances, the Court ruled Article 1504 of the Civil Code of 1889 (Art. 1592 of
the present Code) to be inapplicable to the contract in controversy a contract to sell or
promise to sell where title remains with the vendor until fulfillment of a positive
suspensive condition, such as full payment of the price x x [x].
The records show that the spouses Heruela did not immediately take actual, physical
possession of the land. According to the spouses Ramos, in March 1981, they allowed the
niece of the spouses Heruela to occupy a portion of the land. Indeed, the spouses Ramos
alleged that they only discovered in June 1982 that the spouses Heruela were already
occupying the land. In their answer to the complaint, the spouses Heruela and the spouses
Pallori alleged that their occupation of the land is lawful because having made partial
payments of the purchase price, they already considered themselves owners of the land.
[18]
Clearly, there was no transfer of title to the spouses Heruela. The spouses Ramos
retained their ownership of the land. This only shows that the parties did not intend the
transfer of ownership until full payment of the purchase price.
RA 6552 is the Applicable Law
The trial court did not err in applying RA 6552 to the present case.
Articles 1191[19] and 1592[20] of the Civil Code are applicable to contracts of sale. In
contracts to sell, RA 6552 applies. In Rillo v. Court of Appeals,[21] the Court declared:
xxx Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of
real estate (industrial, commercial, residential) the right of the seller to cancel the
contract upon non-payment of an installment by the buyer, which is simply an event that
prevents the obligation of the vendor to convey title from acquiring binding force. It
also provides the right of the buyer on installments in case he defaults in the payment of
succeeding installments xxx.
Sections 3 and 4 of RA 6552 provide:
Sec. 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred
eighty-nine, where the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment of succeeding
installments:
(a)
To pay, without additional interest, the unpaid installments due within the
total grace period earned by him, which is hereby fixed at the rate of one month grace
period for every one year of installment payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of the life of the contract and its
extensions, if any.
(b)
If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per cent of the total
payments made and, after five years of installments, an additional five per cent every
year but not to exceed ninety per cent of the total payments made: Provided, That the
actual cancellation of the contract shall take place after thirty days from receipt by the
buyer of the notice of cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of
the total number of installments made.
Sec. 4. In case where less than two years of installments were paid, the seller shall give
In this case, the spouses Heruela paid less than two years of installments. Thus, Section
4 of RA 6552 applies. However, there was neither a notice of cancellation nor demand for
rescission by notarial act to the spouses Heruela. In Olympia Housing, Inc. v. Panasiatic
Travel Corp.,[22] the Court ruled that the vendor could go to court to demand judicial
rescission in lieu of a notarial act of rescission. However, an action for reconveyance is
not an action for rescission. The Court explained in Olympia:
The action for reconveyance filed by petitioner was predicated on an assumption that its
contract to sell executed in favor of respondent buyer had been validly cancelled or
rescinded. The records would show that, indeed, no such cancellation took place at any
time prior to the institution of the action for reconveyance. xxx
xxx
xxx Not only is an action for reconveyance conceptually different from an action for
rescission but that, also, the effects that flow from an affirmative judgment in either
case would be materially dissimilar in various respects. The judicial resolution of a
contract gives rise to mutual restitution which is not necessarily the situation that can
arise in an action for reconveyance. Additionally, in an action for rescission (also often
termed as resolution), unlike in an action for reconveyance predicated on an extrajudicial
rescission (rescission by notarial act), the Court, instead of decreeing rescission, may
authorize for a just cause the fixing of a period.[23]
In the present case, there being no valid rescission of the contract to sell, the action
for reconveyance is premature. Hence, the spouses Heruela have not lost the statutory
grace period within which to pay. The trial court should have fixed the grace period to
sixty days conformably with Section 4 of RA 6552.
The spouses Heruela are not entirely fault-free. They have been remiss in performing their
obligation. The trial court found that the spouses Heruela offered once to pay the balance
of the purchase price. However, the spouses Heruela did not consign the payment during the
pendency of the case. In the meanwhile, the spouses Heruela enjoyed the use of the land.
For the breach of obligation, the court, in its discretion, and applying Article 2209 of
the Civil Code,[24] may award interest at the rate of 6% per annum on the amount of
damages.[25] The spouses Heruela have been enjoying the use of the land since 1982. In
1995, they allowed their daughter and son-in-law, the spouses Pallori, to construct a
house on the land. Under the circumstances, the Court deems it proper to award interest at
6% per annum on the balance of the purchase price.
The records do not show when the spouses Ramos made a demand from the spouses Heruela for
payment of the balance of the purchase price. The complaint only alleged that the spouses
Heruelas unjust refusal to pay in full the purchase price xxx has caused the Deed of
Conditional Sale to be rescinded, revoked and annulled.[26] The complaint did not specify
when the spouses Ramos made the demand for payment. For purposes of computing the legal
interest, the reckoning period should be the filing on 27 January 1998 of the complaint
for reconveyance, which the spouses Ramos erroneously considered an action for rescission
of the contract.
The Court notes the reduction of the land area from 306 square meters to 282 square
meters. Upon subdivision of the land, 24 square meters became part of the road. However,
Santiago Heruela expressed his willingness to pay for the 306 square meters agreed upon
despite the reduction of the land area.[27] Thus, there is no dispute on the amount of the
purchase price even with the reduction of the land area.
On the Award of Attorneys Fees and Litigation Expenses
The trial court ordered the spouses Ramos to pay the spouses Heruela and the spouses
Pallori the amount of P20,000 as attorneys fees and P10,000 as litigation expenses.
Article 2208[28] of the Civil Code provides that subject to certain exceptions, attorneys
fees and expenses of litigation, other than judicial costs, cannot be recovered in the
absence of stipulation. None of the enumerated exceptions applies to this case. Further,
the policy of the law is to put no premium on the right to litigate.[29] Hence, the award
of attorneys fees and litigation expenses should be deleted.
WHEREFORE, we AFFIRM the Decision dated 23 August 2000 of the Regional Trial Court of
Misamis Oriental, Branch 21, dismissing the complaint for Recovery of Ownership with
Damages, with the following MODIFICATION:
1.
The spouses Heruela shall pay the spouses Ramos P11,300 as balance of the
purchase price plus interest at 6% per annum from 27 January 1998. The spouses Heruela
shall pay within 60 days from finality of this Decision;
2.
Upon payment, the spouses Ramos shall execute a deed of absolute sale of the land
and deliver the certificate of title in favor of the spouses Heruela;
3.
In case of failure to thus pay within 60 days from finality of this Decision, the
spouses Heruela and the spouses Pallori shall immediately vacate the premises without need
of further demand, and the down payment and installment payments of P4,000 paid by the
spouses Heruela shall constitute rental for the land;
4.
The award of P20,000 as attorneys fees and P10,000 as litigation expenses in
favor of the spouses Heruela and the spouses Pallori is deleted.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:

Chief Justice
Chairman
LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

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

Chief Justice
[1]
Under Rule 45 of the 1997 Rules of Civil Procedure.

Penned by Judge Arcadio D. Fabria.
[3]
The spouses Ramos and the spouses Heruela are collectively referred to in this Decision
as the parties.
[4]
P50 per square meter.
[2]
[5]
[6]
Rollo, pp. 15-24.

Otherwise known as the Realty Installment Buyer Protection Act.
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
Rollo, pp. 23-24.

Ibid., p. 25.
Ibid., p. 126.
Universal Robina Sugar Milling Corp. v. Heirs of Teves, 438 Phil. 26 (2002).
Adelfa Properties, Inc. v. CA, 310 Phil. 623 (1995).
Ibid.
Ibid.
Chua v. Court of Appeals, 449 Phil. 25 (2003).
Records, p. 178.
109 Phil. 1 (1960).
G.R. No. 63745, 8 June 1990, 186 SCRA 400.
[18]
Records, p. 24.
[19]
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.
[20]
Art. 1592. In the sale of immovable property, even though it may have been stipulated that
upon failure to pay the price at the time agreed upon the rescission of the contract shall
of right take place, the vendee may pay, even after the expiration of the period, as long
as no demand for rescission of the contract has been made upon him either judicially or by
a notarial act. After the demand, the court may not grant him a new term.
[21]
G.R. No. 125347, 19 June 1997, 274 SCRA 461, citing the Resolution on Second Motion
for Reconsideration, Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., No. L25885, 16 November 1978, 86 SCRA 305.
[22]
[23]
[24]
443 Phil. 385 (2003).

Ibid.
Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the contrary,
shall be the payment of the interest agreed upon, and in the absence of stipulation, the
legal interest, which is six per cent per annum.
[25]
Consing v. Court of Appeals, G.R. No. 143584, 10 March 2004, 425 SCRA 192; Eastern
Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78.
[26]
Records, p. 4.
[27]
TSN, 8 February 2000, p. 20.
[28]
Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
(1)
When exemplary damages are awarded;
(2)
When the defendants act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;
(3)
In criminal cases of malicious prosecution against the plaintiff;
(4)
In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5)
Where the defendant acted in gross and evident bad faith in refusing to satisfy
the plaintiffs plainly valid, just and demandable claim;
(6)
In actions for legal support;
(7)
In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8)
In actions for indemnity under workmens compensation and employers liability
laws;
(9)
In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorneys fees and
expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be reasonable.
[29]
Liu v. Loy, Jr., 453 Phil. 232 (2003).
SECOND DIVISION
JACINTO GALANG, GREGORIA GALANG

and MARISSA GALANG,
P e t i t i o n e r s,
- versus HON. COURT OF APPEALS, INES
CAMAGANAKAN, ANTONIO
CAMAGANAKAN, MARITA CAMAGANAKAN
and BELINDA CAMAGANAKAN
R e s p o n d e n t s.
G.R. No. 139448

Present:
PUNO,
Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,*
TINGA and
CHICO-NAZARIO, JJ.
Promulgated:
October 11, 2005

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
D E C I S I O N
CHICO-NAZARIO, J.:
Before this Court is a petition for review on certiorari of the Decision[1] of the Court of
Appeals in CA-G.R. SP No. 47417 dated 27 May 1999 and its Resolution[2] dated 27 July 1999
granting private respondents petition for annulment of judgment with prayer for injunction
of the decision of the Securities and Exchange Commission (SEC) in SEC EB Case No. 550.
A summary of the facts that gave rise to the present action follows:
As of 1992, the entire capital stock of CGP Transportation and Services Corp. (CGP) was
equally divided between the Galang family and the family of Lamberto C. Camaganakan, Jr.
(Lamberto). Each family had an aggregate of five thousand (5,000) shares of stock.[3]
On 08 October 1992, the Galangs sold their entire interest in the CGP to Lamberto in a
handwritten document.[4]
On 27 August 1993, the Galangs filed a petition before the SEC (SEC Case No. 08-93-45567)
against CGP and/or Lamberto seeking, among other things, the dissolution of the
corporation and the liquidation of its assets.[5] Thereafter, or on 08 November 1993, a
more formal Memorandum of Agreement (MOA) was entered into between the Galangs and
Lamberto which confirmed the formers earlier sale of its entire 50% interest in the
corporation to the latter.[6] Accordingly, the Galangs withdrew SEC Case No. 08-93-45567.
However, on 24 February 1994, the Galangs filed a petition for mandamus against Lamberto
with the SEC (SEC Case No.
02-94-4697), which sought, among other remedies,
Lamberto to pay damages.[7]
On 03 May 1995, Lamberto entered into a compromise settlement with the Galangs in SEC Case
No.
02-94-4697 which agreement was embodied in a Joint Motion for Approval of
Compromise Agreement dated 03 May 1995.[8] The agreement stipulated the terms of the
payments to be made by Lamberto on the shares of stock of the Galangs earlier sold to him.
[9]
On 09 May 1995, Ines, Honorato, Marita, Cecilia, Belinda, Mario, Aniceto and Antonio,
all surnamed Camaganakan, executed a Special Power of Attorney (SPA) authorizing Lamberto
to (a) acquire CGP shares of stock of the Galang family in their behalf; and (b) to enter
into a compromise agreement in SEC Case No.
02-94-4697 (the case for mandamus).
[10]
Thus, on 16 May 1995, the SEC issued a Judgment By Compromise Agreement.[11]
About a year later, in a MOA dated 30 May 1996 between Lamberto and CGP (referred
collectively in the MOA as Camaganakans) and the Galangs, certain conditions in the
Compromise Agreement dated 03 May 1995 were revised.[12] Said agreement was signed by
Jacinto, Gregoria and Marissa Galang on one hand, and by Lamberto, for himself, and Nilda
Santos, ostensibly representing CGP, on the other.[13] The same was submitted to the SEC
for which Hearing Officer Enrique L. Flores issued an Order dated18 June 1996 approving
the same and rendering judgment in SEC Case No.
02-94-4697 on the basis thereof.[14]
Almost a year thereafter, or on 11 April 1997, it was CGPs turn to file a case before the
SEC. CGP filed a petition for annulment of the compromise agreement claiming that Lamberto
had no authority to involve it in the compromise agreement in SEC Case No.
02-944697 and prayed that the petition, docketed as SEC Case No. 04-97-5608, be consolidated
with SEC Case No.
02-94-4697.[15] The petition was verified by herein private
respondent Ines Camaganakan as President of CGP.[16]

Meanwhile, Lamberto failed to comply with his obligations contained in the Compromise
Agreement dated 30 May 1996. Hence, on 18 April 1997, Hearing Officer Rosalina TividadTesoro issued an Order entering the Judgment by Compromise in the Judgment Book of the SEC
and issuing a writ of execution to implement said agreement.[17] The writ of execution was
issued likewise on 18 April 1997.[18]
On 28 April 1997, CGP filed another case in the SEC, this time, a petition
for certiorari with prayer for temporary restraining order (TRO)/writ of preliminary
injunction docketed as SEC EB Case No. 550 which sought to annul the 18 April 1997 Order.
[19]
CGP specifically questioned its inclusion in the judgment of compromise.
On 05 February 1998, the SEC came out with a decision in SEC EB Case No. 550, where it
held that the compromise agreement between the Galangs and Lamberto is enforceable only
against their respective shareholdings and not against the corporate assets and properties
of CGP. The dispositive portion of the decision reads:
WHEREFORE, premises considered, and there being grave abuse of discretion in issuing the
Writ of Execution against the properties of the petitioner corporation, the following
Orders are hereby issued:
1.
Setting aside the Order dated April 18, 1997 granting the issuance of
a Writ of Execution to execute properties of the corporation which included the eleven
(11) buses, attached and levied by the SEC Sheriff and instead, a Writ of Execution be
issued to attach and levy the shares of stocks of the Camaganakan family.
2.
Lifting any and all levy, the respondent Sheriff may have made on the
properties of the corporation.[20] (Emphasis supplied)
The Galangs moved for reconsideration of the afore-quoted decision which motion they
subsequently withdrew.[21] The decision became final and executory on 24 March 1998.[22] On
even date, Associate Commissioner Edijer A. Martinez directed the Hearing Officer to issue
a writ of execution.[23] A writ of execution was issued on 06 April 1998.[24]
Pursuant to the writ of execution, a notice of garnishment and a notice on levy upon
personal properties, all dated 14 April 1998, were issued by Sheriff Edgardo Grueso.
On 17 April 1998, Ines, Belinda, Honorato, Marita, Aniceto, Cecilia and Antonio, all
surnamed Camaganakan, filed before the Court of Appeals a petition for annulment of
judgment of the 05 February 1998 decision of the SEC in SEC EB Case No. 550 with prayer
for injunction against the SEC and Sheriff Grueso as public respondents and against herein
petitioners, Jacinto, Gregoria and Marissa Galang.[25] The Camaganakans alleged in their
petition that the decision in SEC EB Case No. 550 specifically commanded the enforcement
of the claims of the Galangs against their shares of stocks in CGP when in truth and in
fact they were not parties in SEC EB Case No. 550, thus, said decision is void as to them
for lack of jurisdiction and for violation of their constitutional right to due process.
Likewise, the Camaganakans contended that the singling out of their shares of stock for
levy in satisfaction of the claim of the Galangs violates the rules on enforcement of a
writ of execution.
In the afternoon of 17 April 1998, the Court of Appeals issued a TRO directed against then
public respondents SEC and Sheriff Grueso restraining them from pursuing the scheduled
auction sale on 20 April 1998.[26] The TRO was received by the SEC en banc in the afternoon
of 20 April 1998[27] after Sheriff Grueso had already conducted the auction earlier in the
day, or at ten oclock in the morning.[28] In his Sheriffs Return dated 20 April 1998,
Sheriff Grueso stated that he only sold the shares owned by Lamberto per corporate records
with the SEC (amounting to 4,500 shares) and that the shares of the other members of the
Camaganakans were not touched.[29] The 4,500 shares were sold for P3 Million with herein
petitioner Jacinto Galang as the lone and highest bidder.[30]
In the meantime, the Galangs filed their Comment to the petition for annulment of
judgment.[31] In their Reply to the Comment, the Camaganakans brought forth for the first
time a photocopy of a notarized deed of assignment dated 26 May 1995 which would
ostensibly show that the Galang family transferred to Ines Camaganakan their 5,000 shares
in CGP for and in consideration of Five Hundred Thousand Pesos (P500,000.00). According to
the Camaganakans, another strong reason why the SEC should not have enforced Lambertos P15
Million personal obligation against the CGP shares of stocks is that these shares were not
owned by Lamberto but by Ines.[32]
On 16 May 1998, the Galangs set the case for oral argument.[33]
On 28 May 1998, the Camaganakans filed a Supplemental Petition (With Prayer For Expanded
TRO, Preliminary Mandatory Injunction and to Cite respondent Sheriff Grueso and private
respondents in Contempt of Court) where they alleged in the main that the supplemental
petition was actuated by events subsequent to the filing of the original petition as the
SEC had proceeded with the auction sale of the 4,500 CGP shares originally owned by the
Galangs but later sold not to Lamberto but to Ines. [34]
On 17 June 1998, the Special Twelfth Division of the Court of Appeals granted the
Camaganakans prayer for an amended TRO if only to put the parties on status quo, which
existed before the filing of herein original petition.[35]
On 27 May 1999, the Special Fifth Division of the Court of Appeals rendered the assailed
Decision, the dispositive portion of which reads:
THE FOREGOING CONSIDERED, the contested Decision is hereby nullified but only in so far as
it directed the issuance of a Writ of Execution for the purpose of attaching the shares of
stocks of the Camaganakan family, precisely referring to the properties of herein
petitioners.[36]
On 27 July 1999, the assailed Resolution was rendered denying the Galangs Motion for
Reconsideration.[37]
Hence, the present petition anchored on the following arguments:
I.
THE CONTROVERSY BEFORE THE CA INVOLVED INTRA-CORPORATE CONFLICTS WHICH IS WITHIN THE
EXCLUSIVE JURISDICTION OF THE SEC
II.
THE PENDING MOTION WITH THE SEC CONSTITUTED A BAR TO THE FILING OF THE PETITION FOR
ANNULMENT OF JUDGMENT WITH THE CA ON THE GROUND OF FORUM SHOPPING
III.
THE HONORABLE COURT OF APPEALS SET ASIDE AND NULLIFIED THE FINAL AND EXECUTORY JUDGMENT OF
THE SEC ARISING FROM A COMPROMISE AGREEMENT FINALLY SETTLED UPON THE RESOLUTION OF THE
PETITION FOR CERTIORARI FILED AGAINST AN EARLIER SEC DECISION
IV.
RULE 47 [OF THE 1997 RULES OF CIVIL PROCEDURE] CANNOT BE APPLIED BY THE HONORABLE COURT OF
APPEALS IN A PETITION FOR ANNULMENT OF JUDGMENT [OF THE SEC] AS THE SAME APPLIES ONLY TO
ANNULMENT BY THE COURT OF APPEALS OF JUDGMENTS OR FINAL ORDERS AND RESOLUTIONS IN CIVIL
ACTIONS OF REGIONAL TRIAL COURTS XXX
V.
IN RENDERING THE QUESTIONED DECISION [AND RESOLUTION DENYING THE MOTION FOR
RECONSIDERATION]
1.
The Honorable CA acted with manifest disregard of the right of
petitioners to a fair and impartial hearing when the CA totally ignored the documentary
exhibits of substance and gave credence to manufactured evidence fabricated shortly before
the petition was submitted for resolution;
2.
There is a clear denial of due process of law when the CA failed to
resolve prior to rendition of judgment incidents of substantial importance;
3.
the CA resolved the
REPLY to OPPOSITION
herein petitioners,
There is undue haste amounting to denial of due process of law when

Motion for Reconsideration before the expiration of the period to file
[which was prayed for in the {unresolved} MOTION FOR EXTENSION of the
(said extension prayed yet to expire on July 31, 1999); and
4.
There was an undue haste in the issuance of the TRO by the Division to
which Honorable Demetrio Demetria belongs and there is an unexplained mystery in the case
being assigned to the Division of Justice Demetrio Demetria and his sudden departure from
the division after issuing the TRO.
As we navigate through the seemingly endless diatribes of the parties and their counsels
that have muddled the issues of what is already a complicated case insofar as the facts
thereof are concerned, we have come to the inescapable conclusion that the resolution of
this controversy will not depend on the arguments of the parties but on the central issue
of whether or not the Court of Appeals committed reversible error in granting the
Camaganakans petition for annulment of judgment under Rule 47 of the Rules on Civil
Procedure.
Section 1, Rule 47 states:
SECTION 1. Coverage. This Rule shall govern the annulment by the Court of Appeals of
judgments or final orders and resolutions in civil actions of Regional Trial Courts for
which the ordinary remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of the petitioner. (Emphasis supplied)
Rule 47 on annulment of judgments is a new provision under the 1997 Rules of Civil
Procedure albeit the remedy has long been given imprimatur by the courts.[38] It covers
only the judgments or final orders and resolutions in civil actions of Regional Trial
Courts[39] and not those of the SEC. In fact, Section 9 of Batas Pambansa Blg. 129, as
amended, only vests in the Court of Appeals exclusive jurisdiction over actions for
annulment of judgments of Regional Trial Courts.[40]
An action for annulment of judgment is a remedy in law independent of the case where the
judgment sought to be annulled is rendered.[41] The concern that the remedy could so easily
be resorted to as an instrument to delay a final and executory judgment has prompted
safeguards to be put in place in order to avoid an abuse of the rule.[42] Thus, among other
things, the right to have a final judgment annulled must be expressly granted by law.
[43]
In Macalalag v. Ombudsman[44] we emphatically held that
. . . The right to appeal is a mere statutory privilege and may be exercised only in the
manner prescribed by, and in accordance with, the provisions of law. There must then be a
law expressly granting such right. This legal axiom is also applicable and even more true
in actions for annulment of judgments which is an exception to the rule on finality of
judgments.
Unfortunately for the Camaganakans, the Revised Rules of Procedure in the SEC is silent as
to the remedy of annulment of judgments of its final orders and resolutions.[45]
And so we hold that the Court of Appeals indeed erred as it is without jurisdiction to
entertain a petition for annulment of judgment of a final decision of the Securities and
Exchange Commission.
What the Camaganakans should have done was to seek for clarification from the SEC as to
the inclusion of the Camaganakan family in the dispositive portion of the decision.
However, as the records of the case are already before us, and in the interest of
substantial justice in order to put this issue finally to rest, we will rule squarely on
whether or not the SEC erroneously exercised jurisdiction over the Camaganakans who are
non-parties to the case.[46]
In their original petition dated 16 April 1998, the Camaganakans alleged lack of
jurisdiction and violation of due process as the parties to SEC EB Case No. 550 were just
CGP, the Galangs and Lamberto, yet, the dispositive portion of the decision mentioned the
Camaganakan family. Thus, the Camaganakans lamented that the SEC decision and writ of
execution were null and void as to them for lack of jurisdiction as they were non-parties.
Scrupulously dissecting the decision in SEC EB Case No. 550 as well as the proceedings
leading thereto, it becomes apparent that nowhere from the decision are the Camaganakans
(i.e., Ines, Belinda, Honorato, Marita, Aniceto, Cecilia and Antonio) mentioned except
Lamberto. This can only mean then, that when the SEC mentioned the Camaganakan family in
the dispositive portion of the decision, it only referred to Lamberto Camaganakan, Jr. as
he was the only Camaganakan that had anything to do with the case. Verily, in case of any
ambiguity or uncertainty in the dispositive portion of a decision, the body of the opinion
may be referred to for purposes of construing the dispositive part of the judgment.[47] The
dispositive part of the decision must find support in the body of the decision spelling
out the ratio decidendi.[48] And, in the body of the decision, it is only Lamberto who is
clearly referred to as one of the main parties in the case.
Special note must likewise be made of the fact that SEC EB Case No. 550 referred to CGPs
petition for certiorari to annul the SEC Order dated 18 April 1997 entering the30 May
1996 Judgment by Compromise in the Judgment Book of the SEC and issuing a writ of
execution to implement said agreement. The parties to the judgment by compromise were the
Galangs (i.e., Jacinto, Gregoria and Marissa) on one hand and Lamberto on the other.
[49]
The agreement referred to Lamberto as Camaganakans. This might explain why the SEC as
well referred to Lamberto as the Camaganakan family. Clearly therefore, tagging Lamberto
as Camaganakan family in the dispositive portion was, at most, an oversight on the part of
the SEC which could be remedied without affecting the validity and the effectiveness of
the decision.
We thus quote with approval the comment of the then public respondent SEC:
The portion of the SEC Decision dated February 5, 1998 being questioned by the petitioners
state:
Setting aside the Order dated April 18, 1997 granting the issuance of a Writ of Execution
to execute properties of the corporation which included the eleven (11) buses, attached
and levied by the SEC Sheriff and instead, a Writ of Execution be issued to attach and
levy the shares of stocks of the Camaganakan family. (p. 4, Decision)
The afore-quoted portion of the decision merely states that the attachment and levy be
made on the shares of stock of the Camaganakan family. The decision did not specifically
indicate that petitioners are included in the Camaganakan family. The decision did not
also specifically order the attachment and levy of the shares of stock of petitioners.
Thus, the phrase Camaganakan family should be construed to refer only to the members of
the Camaganakan family who have been involved in the case before the SEC.
The record of the cases filed with the SEC show [sic] that only Lamberto has been involved
in these cases before the SEC. In fact, he was the signatory to the compromise agreements
and other documents filed before the SEC. Hence, the phrase Camaganakan family should be
construed to refer only to Lamberto.[50]
Prescinding from the foregoing, the reference to the Camaganakan family in the dispositive
portion of the SEC decision could only pertain to Lamberto. In Filipino Legion
Corporation v. Court of Appeals, et al.[51] we held:
. . . [W]here there is ambiguity caused by an omission or mistake in the dispositive
portion of a decision the court may clarify such ambiguity by an amendment even after the
judgment had become final, and for this purpose it may resort to the pleadings filed by
the parties, the courts findings of facts and conclusions of law as expressed in the body
of the decision.
Going now to the Supplemental Petition for Annulment of Judgment dated 24 May 1998, a
perusal of the arguments contained therein would readily reveal that what is being
questioned by the Camaganakans is not the decision itself but how it was implemented.
[52]
Any alleged irregular implementation of a writ of execution, however, cannot be
corrected through the equitable relief of annulment of judgment. The purpose of annulment
of judgment is to have the final and executory judgment set aside so that there will be a
renewal of litigation.[53] The remedy to correct any alleged irregular implementation of
the writ of execution thus lies elsewhere. In Canlas v. Court of Appeals,[54] we stated
that while there is no appeal from execution of judgment, appeal lies in case of irregular
implementation of the writ. As a rule, irregular execution means the failure of the writ
to conform to the decree of the decision executed.[55]
In sum, in deciding this case, we have been ultimately governed by the fact that the rule
on annulment of judgment is grounded on equity; thus, the relief it affords is of an
extraordinary character and not as readily available as the remedies obtaining a judgment
that is not yet final.[56]
WHEREFORE, premises considered, the instant petition is GRANTED. The Decision of the Court
of Appeals in CA-G.R. SP No. 47417 dated 27 May 1999 and its Resolution dated 27 July
1999 are hereby SET ASIDE. The Decision of the Securities and Exchange Commission in SEC
EB Case No. 550 dated 05 February 1998 is hereby AFFIRMED with the clarification that the
reference to Camaganakan family in the dispositive portion thereof pertains to Lamberto
Camaganakan, Jr. only. Costs against private respondents.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
Chairman
On Leave
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
ROMEO J. CALLEJO, SR.

Associate Justice
DANTE O. TINGA
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Associate Justice
Chairman, Second Division
C E R T I F I C A T I O N
Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairmans
Attestation, it is hereby certified that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the opinion of the
Courts Division.

Chief Justice
FIRST DIVISION
[G.R. No. 115966. March 20, 2003]
JUANA ALMIRA, RENATO GARCIA, ROGELIO GARCIA, RODOLFO GARCIA, ROSITA GARCIA, RHODORA
GARCIA, ROSALINDA GARCIA, ROLANDO GARCIA and RAFAEL GARCIA Represented in this suit by
EDGARDO ALVAREZ, petitioners, vs. COURT OF APPEALS AND FEDERICO BRIONES, respondents.
D E C I S I O N
AZCUNA, J.:
Before us is a petition for review on certiorari assailing the decision rendered by the
Court of Appeals in C.A. G.R. CV No. 40954[1] which reversed the decision of the Regional
Trial Court, Branch 32, of San Pedro, Laguna that rescinded the Kasunduan ng
Pagbibilihan[2] entered into between petitioners and private respondent over a portion of a
parcel of land situated in Sta. Rosa, Laguna.
The facts of the case are as follows:
Petitioners are the wife and the children of the late Julio Garcia who inherited from his
mother, Maria Alibudbud, a portion of a 90,655 square-meter property denominated as Lot
1642 of the Sta. Rosa Estate in Barangay Caingin, Sta. Rosa, Laguna and covered by TCT No.
RT-1076. Lot 1642 was co-owned and registered in the names of three persons with the
following shares: Vicente de Guzman (), Enrique Hemedes (1/4), and Francisco Alibudbud,
the father of Maria Alibudbud (). Although there was no separate title in the name of
Julio Garcia, there were tax declarations in his name to the extent of his grandfathers
share covering an area of 21,460 square meters. On July 5, 1984, petitioners, as heirs of
Julio Garcia, and respondent Federico Briones entered into a Kasunduan ng Pagbibilihan
(Kasunduan for brevity) over the 21,460 square-meter portion for the sum of P150,000.00.
Respondent paid P65,000.00 upon execution of the contract while the balance of P85,000.00
was made payable within six (6) months from the date of the execution of the instrument.
At the time of the execution of theKasunduan, petitioners allegedly informed respondent
that TCT No. RT-1076 was in the possession of their cousin, Conchalina Alibudbud who
having bought Vicente de Guzmans share, owned the bigger portion of Lot 1642. This
notwithstanding, respondent willingly entered into the Kasunduan provided that the full
payment of the purchase price will be made upon delivery to him of the title.[3]
The Kasunduan provides:
Na ang UNANG BAHAGI ay siyang magkakamayari (co-owners), bilang tagapagmana ng yumaong
Julio Garcia sa isang lagay na lupang taniman ng palay, matatagpuan sa nayon ng Caingin,
Santa Rosa, Laguna, may buong lawak na 21,460 metrong parisukat, humigit kumulang, na
lalong makikilala sa mga katangiang inilalahad sa pahayag ng Buwis Bilang 3472 na ganito
ang natutunguhan: Mga kahanggan: Hilaga-1641-Nazario Lauriles; Timog-Barique Hemedez;
Silangan- Vicente de Guzman; at Kanluran-Francisco Alibudbod; hinalagahan para sa
pagbabayad ng buwis pampamahalaan ng P12,720.00; at kasalukuyang may nabibinbing
kahilingan sa hukuman upang magkaroon ng sariling titulo; nalilibot ng batong mohon na
nagsisilbing hanganan sa bawat sulok.
Na ang UNANG BAHAGI ay inialok sa IKALAWANG BAHAGI upang bilihin ang lupang nabanggit sa
kabuuang halagang ISANG DAAN AT LIMAMPUNG LIBONG (P150,000.00) PISO, Salaping Pilipino,
at ang IKALAWANG BAHAGI ay sumangayon na bilhin ang naulit na lupa batay sa sumusunod na
mga pasubali at Kasunduan:
(1) Na pinatutunayan ng UNANG BAHAGI na tinanggap nila sa buong kasiyahan ng kalooban
buhat sa IKALAWANG BAHAGI ang halagang ANIMNAPU AT LIMANG LIBONG (P65,000.00) PISO,
salaping Pilipino, bilang paunang bayad, at ang nalalabing WALUMPU AT LIMANG LIBONG
(85,000.00) PISO, ay babayaran ng IKALAWANG BAHAGI sa UNANG BAHAGI sa loob ng anim na
buwan simula sa takda ng kasulatang ito, sa pasubali na ang kaukulang titulo sa lupang
nabanggit ay maipagkakaloob ng UNANG BAHAGI;
(2) Na ang UNANG BAHAGI ang siyang mananagot tungkol sa anumang kasulatang inihanda ukol
sa pagbibilihang ito, gayundin sa gastos sa notaryo publiko, capital gains tax at
pagpapatala ng kasulatan sa lalawigan ng Laguna;
(3) Na ang UNANG BAHAGI ay lalagda sa isang Kasulatan ng Bilihang Tuluyan matapos na
mabayarang lahat ng IKALAWANG BAHAGI ang kaukulang kabuuang halaga ng lupang nabanggit.
Respondent took possession of the property subject of the Kasunduan and made various
payments to petitioners amounting to P58,500.00. However, upon failure of petitioners to
deliver to him a separate title to the property in the name of Julio Garcia, he refused to
make further payments, prompting petitioners to file a civil action before the Regional
Trial Court of San Pedro, Laguna, Branch 32, on May 13, 1991 for (a) rescission of
the Kasunduan; (b) return by respondent to petitioners of the possession of the subject
parcel of land; and (c) payment by respondent of damages in favor of petitioners.
Petitioners alleged that respondent was bound to pay the balance of the purchase price
within six (6) months from the date of the execution of the Kasunduan and upon delivery to
him of TCT No. RT-1076. Petitioners claimed that they approached respondent several times
to deliver TCT No. RT-1076 but respondent told them that he did not have money to pay the
balance of the purchase price.[4] Respondent, on the other hand, filed a counterclaim for
damages and averred that he refused to make further payments because of petitioners
failure to deliver to him a separate title in the name of Julio Garcia.
On November 26, 1992, the trial court rendered a decision, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendant decreeing the rescission of the Kasunduan ng Pagbibilihan dated July 5, 1984
and ordering the defendant to return and restore possession of the property subject of
the Kasunduan ng Pagbibilihan to the plaintiffs. For paucity of evidence, no judgment can
be rendered on the other reliefs prayed for in the complaint.
On the other hand, plaintiffs are hereby ordered to refund to the defendant the
downpayment of P65,000.00 and the partial payment of the balance totaling to P58,500.00
plus legal interest. Defendants counterclaim is hereby dismissed for lack of merit. Costs
against defendant.[5]
In its decision, the trial court noted that proceedings for the issuance of a separate
title covering the property subject of sale entail time and the parties could not have
intended delivery by petitioners to respondent of a separate title in the name of Julio

Garcia as a condition for respondents payment of the full purchase price within six months
from the time of the execution of the Kasunduan. Said court observed that even if
petitioners were obliged to deliver a separate title in the name of Julio Garcia to
respondent, the latter appeared to have insufficient funds to settle his obligation as
indicated by the fact that his payments amounting to P58,500.00 were made in trickles,
having been given on thirty-nine occasions within a span of two years from the time of the
execution of the Kasunduan. It concluded that respondent refused to complete payment of
the full purchase price not because of the failure of petitioners to deliver a separate
title in the name of Julio Garcia but because respondent simply did not have sufficient
funds at hand.
The Court of Appeals, however, noting that the Kasunduan made no reference to TCT No. RT1076, reversed the decision of the trial court, and dismissed the complaint. The appellate
court opined that the parties intended to refer to a separate title over the 21,460 square
meter lot when the Kasunduan mentioned a kaukulang titulo ng lupang nabanggit since it was
the portion which was covered by a separate tax declaration in the name of Julio Garcia
and it was the portion that petitioners could sell. The appellate court noted that the
actuations of the parties subsequent to the execution of the Kasunduan confirmed
respondents claim that a separate title to the property subject of the Kasunduan should be
delivered to him. Nevertheless, respondents counterclaim for damages was dismissed on the
ground that the filing of the complaint for rescission was not attended by malice, there
being an honest difference of opinion between the parties as to the interpretation of
the Kasunduan.
Feeling aggrieved by the aforesaid decision, petitioners filed before us the instant
petition for certiorari, raising issues which may essentially be summarized as follows:
(1) whether payment of the balance of the purchase price is conditioned upon delivery of a
separate title in the name of Julio Garcia; (2) whether petitioners are entitled to
rescind the Kasunduan for failure of respondent to complete payment of the purchase price;
and (3) whether the Court of Appeals should have dismissed respondents appeal for failure
to comply with Circular 28-91.
Petitioners contend that the Kasunduan never made a reference to a title in the name of
Julio Garcia and that there was nothing in the actuations of the parties which would
indicate that full payment of the purchase price is conditioned upon the delivery to
respondent of said title. Petitioners allege that respondent refused to give further
payments not because of their failure to deliver a separate title in the name of Julio
Garcia but because he simply did not have sufficient funds to complete payment of the
purchase price. Petitioners ask for rescission of theKasunduan pursuant to Article 1191 of
the Civil Code on the ground that respondent failed to complete payment of the purchase
price. They further aver that the appellate court should have dismissed respondents appeal
in the first place for failure of respondent to comply with Circular No. 28-91[6] requiring
parties to submit a certification of non-forum shopping in petitions filed before the
Supreme Court and the Court of Appeals. Petitioners lament that although they raised the
issue regarding respondents procedural lapse early on at the appellate court, the latter
still entertained respondents appeal.
As a rule, our jurisdiction in cases brought before us from the Court of Appeals under
Rule 45 of the Rules of Court is limited to reviewing errors of law. Factual findings of
the appellate court are generally binding on us.[7] However, this principle is subject to
certain exceptions such as the situation in this case where the trial court and the
appellate court arrived at diverse factual findings.[8]
The subject of conflicting interpretations between the parties pertains to the provision
in the Kasunduan which states:
(1) Na pinatutunayan ng UNANG BAHAGI na tinanggap nila sa buong kasiyahan ng kalooban
buhat sa IKALAWANG BAHAGI ang halagang ANIMNAPU AT LIMANG LIBO (P65,000.00) PISO,
Salaping Pilipino, bilang paunang bayad, at ang nalalabing WALUMPU AT LIMANG LIBONG
(85,000.00) PISO ay babayaran ng IKALAWANG BAHAGI sa UNANG BAHAGI sa loob ng anim na
buwan simula sa takda ng kasulatang ito, sa pasubali na ang kaukulang titulo ng lupang
nabanggit ay maipagkakaloob ng UNANG BAHAGI sa IKALAWANG BAHAGI
Petitioners allege that the kaukulang titulo ng lupang nabanggit refers to TCT No. RT-1076
and not to a separate title in the name of Julio Garcia. Petitioners stress the
implausibility of delivering the separate title to respondent within six (6) months from
the time of the execution of the Kasunduan considering that issuance of the title required
prior settlement of the estates of Francisco Alibudbud, Vicente de Guzman and Enrique
Hemedes; partition of Lot 1642; and segregation of the portion pertaining to the share
acquired by Julio Garcia. Respondent, for his part, insists that the kaukulang titulo ng
lupang nabanggit refers to a separate title in the name of Julio Garcia. He argues that he
only acceded to the Kasunduan upon having been assured by petitioners that they would be
able to deliver to him a separate title in the name of Julio Garcia. Petitioners allegedly
told respondent that there was a pending petition in the court of Bian for the issuance of
a separate title to the subject property.[9]
It is basic in the interpretation and construction of contracts that the literal meaning
of the stipulations shall control if the terms of the contract are clear and leave no
doubt on the intention of the contracting parties. However, if the terms of the agreement
are ambiguous, resort is made to contract interpretation which is the determination of the
meaning attached to written or spoken words that make the contract.[10] To ascertain the
true intention of the parties, their subsequent or contemporaneous actions must be
principally considered.
The tenor of the correspondence between petitioners and respondent shows that the parties
intended that a separate title to the property in the name of Julio Garcia shall be
delivered to respondent as a condition for the latters payment of the balance of the
purchase price. Thus, petitioner Juana Almiras letter dated July 24, 1986 to respondent
reads:
Ang totoo po ngayon ay kailangan naming ang halagang LABING LIMANG LIBO (P15,000.00)
PISO, yan po ang dahilan kung bakit kami ay sumulat sa inyo, sapagkat sa mga unang
naghawak at nag-ayos ng papeles ng lupang ito ay hindi nila naayos at hindi nila natapos,
kaya po kami ay nakakita at malaki po ang nagastos naming sa una na walang nangyari, kaya
nga itong huli ay lalong lumaki
Unawain po naman ninyo kami sa halagang kailangan naming para sa huling gumagawa ng
Titulo ng lupa para naman po maayos na ito.[11]
Respondent signified his willingness to pay the balance of the purchase price but reminded
petitioners of their obligation to deliver title to the property in the following reply:
Hindi lingid sa inyong kaalaman na sa ilalim ng naubit na Kasunduan ng Pagbibilihan ay
maliwanag ang inyong tungkulin na ipagkaboob sa amin ang kaukulang titulo ng lupa sa boob
ng anim (6) na buwan simula sa takda ng nasabing kasulatan at kami naman ay nahahandang
magbayad ng lahat ng nalababing kabayaran x x x at tuwing kayo ay kukuha ng pera ang lagi
niyong idinadahilan ay ang diumano ay paglalakad tungkol sa titulo. x x x[12]
Had the parties intended that petitioners deliver TCT No. RT-1076 instead of a separate
title in the name of Julio Garcia to respondent, then there would have been no need for
petitioners to ask for partial sums on the ground that this would be used to pay for the
processing of the title to the property. Petitioners had only to present the existing
title, TCT No. RT-1076, to respondent and demand the balance of the purchase price. This,
petitioners did not do. Instead, they were content to ask small sums from respondent on
thirty-nine occasions for two years before filing an action in court for rescission of
the Kasunduan another five years later. It is readily discernible from the tenor of
various receipts[13] issued by petitioners that the sums given by respondent on these
thirty-nine occasions were made upon request of petitioners seeking respondents
indulgence. A letter[14] dated October 11, 1984 and addressed to respondents father, Tata
Omy, whom respondent authorized to give payments during the time he was working abroad
reads:
Tata Omy,
Ako si Rogelio A. Garcia ang sumulat nito at ang maydala ay si Rolando Garcia na kapatid
kong bunso at ito ay pinagawa ng aking ina si Juana Garcia. Ang dahilan ay mayroon silang
nabiling t.v. 17 inches at ngayon ay naririto sa amin. Kaya ako ay labis na nahihiya sa
inyo ni Viring ngunit ano ang magagawa ko para diyan kaya kayo na ang bahalang
magpasensiya sa amin. Ang kailangan nila ay halagang P800.00 at para mabili nila ang T.
V. + P200.00
Ang gumagalang,
(Sgd.) Rogelio Garcia
Received: P1,000.00
By( Sgd). Rosita Garcia
There is thus no basis to conclude that insufficiency of funds rather than failure of
petitioners to deliver a separate title in the name of Julio Garcia prevented respondent
from completing payment of the purchase price.
That the parties agreed on delivery of a separate title in the name of Julio Garcia as a
condition for respondents payment of the balance of the purchase price is bolstered by the
fact that there was already an approved subdivision plan of the 21,460 square-meter lot
years before petitioners filed an action in court for rescission.[15] The parties evidently
assumed petitioners would be able to deliver a separate title in the name of Julio Garcia
to respondent within six (6) months from the time of the execution of the Kasunduan since
there was already a pending petition in court for the issuance of a separate title to
21,460 square-meter lot at that time. Unfortunately, the petitioners were not able to
secure a separate title in the name of Julio Garcia within the stipulated period.
Finally, we note that, as quoted earlier, the Kasunduan itself in its opening paragraph
refers to the subject property being sold as buong lawak na 21,640 metrong parisukat, x x
x at sa kasalukuyan may nabibinbing kahilingan sa hukuman upang magkaroon ng sariling
titulo; x x x. The next paragraph of the Kasunduan, therefore, which speaks of ang
kaukulang titulo sa lupang nabanggit, clearly refers to the separate title being applied
for, even without resort to extraneous evidence.
Petitioners, however, insist that it was respondents counsel who prepared
the Kasunduan and any ambiguity therein should be construed against respondent pursuant to
Article 1377 of the Civil Code which states that the interpretation of obscure words or
stipulations in a contract shall not favor the party who caused the obscurity.
We find no reason to apply Article 1377 of the Civil Code in this case where the evident
intention of the parties can be readily discerned by their subsequent and contemporaneous
acts. While it is true that the Kasunduan was prepared by the counsel of respondent, there
is no indication that respondent took unfair advantage of petitioners when he had the
terms of theKasunduan drawn by his counsel. Petitioners freely assented to
the Kasunduan which is written entirely in a language spoken and understood by both
parties. That petitioners were fully aware of the terms of the Kasunduan is evidenced by
their attempts to comply with their obligation by securing a subdivision plan and
technical description[16] of the property subject of sale.
Having ruled that the kaukulang titulo ng lupang nabanggit refers to a separate title in
the name of Julio Garcia, we proceed to the issue as to whether petitioners may rescind
theKasunduan pursuant to Article 1191 of the Civil Code for failure of respondent to give
full payment of the balance of the purchase price.
The rights of the parties are governed by the terms and the nature of the contract they
enter into. Hence, although the nature of the Kasunduan was never placed in dispute by
both parties, it is necessary to ascertain whether the Kasunduan is a contract to sell or
a contract of sale before the issue as to whether petitioners may ask for rescission of
the contract may be resolved. In a contract to sell, ownership is, by agreement, reserved
to the vendor and is not to pass until full payment of the purchase price; whereas, in
contract of sale, title to the property passes to the vendee upon delivery of the thing
sold.[17] Non-payment by the vendee in a contract of sale entitles the vendor to demand
specific performance or rescission of the contract, with damages, under Article 1191 of
the Civil Code.
Although both parties have consistently referred to the Kasunduan as a contract to sell, a
careful reading of the provisions of the Kasunduan reveals that it is a contract of sale.
A deed of sale is absolute in nature in the absence of any stipulation reserving title to
the vendor until full payment of the purchase price. In such cases ownership of the thing
sold passes to the vendee upon actual or constructive delivery thereof.[18] There is
nothing in the Kasunduan which expressly provides that petitioners retain title or
ownership of the property, until full payment of the purchase price. The absence of such
stipulation in the Kasunduan coupled with the fact that respondent took possession of the
property upon the execution of the Kasunduanindicate that the parties have contemplated a
contract of absolute sale.
Stated otherwise, there was a perfected contract of sale. The parties agreed on the sale
of a determinate object, i.e., 21, 460 square meters of Lot 1642, covered by a tax
declaration in the name of Julio Garcia, and the price certain therefor, without any
reservation of title on the part of petitioners. Ownership was effectively conveyed by
petitioners to respondent, who was given possession of the property. The delivery of a
separate title in the name of Julio Garcia was a condition imposed on respondents
obligation to pay the balance of the purchase price. It was not a condition imposed on the
perfection of the contract of sale. In Laforteza v. Machuca,[19] we stated that the fact
that the obligation to pay the balance of the purchase price was made subject to the
condition that the seller first deliver the reconstituted title of the property does not
make the agreement a contract to sell for such condition is not inconsistent with a
contract of sale.
Addressing now the issue as to whether rescission of the Kasunduan by petitioners may
prosper, we rule in the negative. The power to rescind is only given to the injured party.
The injured party is the party who has faithfully fulfilled his obligation or is ready and
willing to perform with his obligation. In the case at bar, petitioners were not ready,
willing and able to comply with their obligation to deliver a separate title in the name
of Julio Garcia to respondent. Therefore, they are not in a position to ask for rescission
of the Kasunduan. Moreover, respondents obligation to pay the balance of the purchase
price was made subject to delivery by petitioners of a separate title in the name of Julio
Garcia within six (6) months from the time of the execution of the Kasunduan, a condition
with which petitioners failed to comply. Failure to comply with a condition imposed on the
performance of an obligation gives the other party the option either to refuse to proceed
with the sale or to waive that condition under Article 1545 of the Civil Code.[20] Hence,
it is the respondent who has the option either to refuse to proceed with the sale or to
waive the performance of the condition imposed on his obligation to pay the balance of the
purchase price.
It follows that, not having established that they were ready, able and willing to comply
with their obligation to deliver to respondent a separate title in the name of Julio
Garcia, petitioners may not ask for rescission of the Kasunduan nor recover damages.
As regards the issue that the appellate court should have dismissed respondents appeal for
failure of respondent to comply with Circular No. 28-91 requiring the submission of a
certificate of non-forum shopping in petitions filed before us and the Court of Appeals,
suffice it to say that when technicality deserts its function of being an aid to justice,
the courts are justified in exempting from its operations a particular case.[21] Procedural
rules are intended to insure the orderly conduct of litigation, because of the higher
objective they seek, which is to protect the parties substantive rights.[22]
WHEREFORE, the petition is DENIED and the decision rendered by the Court of Appeals in CA
G.R. No. 40954 entitled, Juana Almira, et al., plaintiffs-appellees v. Federico
Briones,defendant-appellant is AFFIRMED. No costs.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Vitug, and Carpio, JJ., concur.
Ynares-Santiago, J., on leave.
Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
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.
D E C I S I O N
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.
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 leastP50,000.00.
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.
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
PLAINTIFF-APPELLANT 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. 3004, 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 counteroffer; 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.
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 PETITIONER-APPELLANT 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 PETITIONERAPPELLANT 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 forP1,574,560.47, 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 ofP725,000.00 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.
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,51the 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 was P1,574,560.47 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
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 counteroffer, 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.
Ynares-Santiago, J., Working Chairperson, Austria-Martinez, and Chico-Nazario,
JJ., concur.
Panganiban, C.J., retired as of December 7, 2006.
1. The subject property is an eight thousand fifteen (8,015) square meter land located at
Dansalan St., Barrio Barranca, Mandaluyong, Metro Manila, originally registered in the
name of Manila Metal Container Corporation (MMCC) under Transfer Certificate of Title No.
332098 of the Registry of Deeds for the Province of Rizal.
2. On August 5, 1982, the Philippine National Bank (PNB) filed with the Provincial
of Rizal a petition for extrajudicial foreclosure and sale of the subject property
Act No. 3135, as amended, and Presidential Decree No. 385 to satisfy the mortgage
indebtedness of MMCC in the amount of P911,532.21 plus interest at the rate of 21%
annum on the amount of P679,768.29 and 3% penalty charge as well as 10% attorney's
the total amount due and the Sheriff's fees.
Sheriff
under
per
fees on
3. At the public auction sale held on September 28, 1982, the Provincial Sheriff of Rizal
sold the subject property to PNB as the sole and highest bidder for P1,056,924.40.
4. The period of redemption of the property was until February 17, 1984.
5. On August 25, 1983, MMCC requested PNB by its latter of even date for the opportunity
to redeem/repurchase the property by giving them more time to do so under terms and
conditions which may be agreed upon.
6. On August 30, 1983, MMCC's said letter was referred by PNB to its Pasay City Branch for
appropriate action.
7. On March 1, 1984, TCT No. 332078 in the name of MMCC was cancelled. In its steed, the
Register of Deeds of Mandaluyong issued TCT No. 43792 in the name of PNB.
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.
10. In its letters dated November 14, 1984 and December 28, 1984, Special Assets
Management Department formally informed MMCC President Pablo Gabriel that MMCC's offer to
repurchase the bank acquired Mandaluyong property was returned by top management as the
offered price was too low. PNB then proposed that the offered repurchase price be
increased to at least the then minimum market value of the property that it
is P2,660,000.00.
11. On June 4, 1985, PNB's SAMD informed MMCC by letter that its offer to purchase the
subject property has been approved by the PNB Board, subject to the condition among
others, that the selling price shall be the total banks claim as of documentation date
payable within sixty (60) days from notice of approval.
12. MMCC did not signify its conformity to the terms contained in PNB's June 4, 1985
letter.
13. By letter dated June 30, 1988, PNB's SAMD gave MMCC fifteen (15) days from receipt
thereof to submit its amended repurchase offer. Otherwise, PNB will be constrained to
cancel the approved sale in favor of MMCC and advertise the property for sale.
14. On July 14, 1988, MMCC reiterated its request to PNB to reduce the balance of the
repurchase price toP643,452.34, which request was denied by PNB in its letter dated August
1, 1989. PNB then informed MMCC that it is refunding the deposit of P725,000 at any time
during banking hours and that it will advertise the property for sale thru public bidding.
15. In a letter dated September 20, 1989, PNB demanded MMCC to vacate the premises.
16. In a letter dated May 3, 1992, Mr. Bayani Gabriel and Magtanggol Gabriel children of
MMCC President Mr. Pablo Gabriel requested once again to buy back the subject property. In
reply, PNB informed the Gabriels in a letter dated June 18, 1992 that it can recommend the
sale of the property for P25 M subject to the approval of the PNB Board and to other terms
and conditions.
17. In a letter dated March 18, 1993, MMCC proposed to repurchase the property for P3.5 M
but PNB informed MMCC in its letter dated April 13, 1993 that, as a matter of policy, all
assets acquired by the bank thru foreclosure sale can only be disposed of at market value
or banks claim whichever is higher and that PNB cannot accommodate MMCC's request to
repurchase the property for P3.5 Million which as of the bank's latest appraisal has a
market value of P30 Million.
18. The latest offer of MMCC per letter dated June 21, 1993 is P4,250 Million which offer
was denied by PNB in its letter dated September 13, 1993, reiterating PNB's policy that
sale of foreclosed assets shall be based on the current market value of the property, and
that the offer is too low.
19. The claims for annulment of mortgage and mortgage foreclosure in the amended complaint
are already waived, cancelled and/or withdrawn thereby leaving the claims for specific
performance and damages as the remaining issues to be resolved in the instant case.
Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-59266 February 29, 1988

SILVESTRE DIGNOS and ISABEL LUMUNGSOD, petitioners,
vs.
HON. COURT OF APPEALS and ATILANO G. JABIL, respondents.
BIDIN, J.:
This is a petition for review on certiorari seeking the reversal of the: (1) Decision * of
the 9th Division, Court of Appeals dated July 31,1981, affirming with modification the
Decision, dated August 25, 1972 of the Court of First Instance ** of Cebu in civil Case
No. 23-L entitled Atilano G. Jabil vs. Silvestre T. Dignos and Isabela Lumungsod de Dignos
and Panfilo Jabalde, as Attorney-in-Fact of Luciano Cabigas and Jovita L. de Cabigas; and
(2) its Resolution dated December 16, 1981, denying defendant-appellant's (Petitioner's)
motion for reconsideration, for lack of merit.
The undisputed facts as found by the Court of Appeals are as follows:
The Dignos spouses were owners of a parcel of land, known as Lot No. 3453, of
the cadastral survey of Opon, Lapu-Lapu City. On June 7, 1965, appellants
(petitioners) Dignos spouses sold the said parcel of land to plaintiffappellant (respondent Atilano J. Jabil) for the sum of P28,000.00, payable in
two installments, with an assumption of indebtedness with the First Insular
Bank of Cebu in the sum of P12,000.00, which was paid and acknowledged by the
vendors in the deed of sale (Exh. C) executed in favor of plaintiff-appellant,
and the next installment in the sum of P4,000.00 to be paid on or before
September 15, 1965.
On November 25, 1965, the Dignos spouses sold the same land in favor of
defendants spouses, Luciano Cabigas and Jovita L. De Cabigas, who were then
U.S. citizens, for the price of P35,000.00. A deed of absolute sale (Exh. J,
also marked Exh. 3) was executed by the Dignos spouses in favor of the Cabigas
spouses, and which was registered in the Office of the Register of Deeds
pursuant to the provisions of Act No. 3344.
As the Dignos spouses refused to accept from plaintiff-appellant the balance
of the purchase price of the land, and as plaintiff- appellant discovered the
second sale made by defendants-appellants to the Cabigas spouses, plaintiffappellant brought the present suit. (Rollo, pp. 27-28)
After due trial, the Court of first Instance of Cebu rendered its Decision on August
25,1972, the decretal portion of which reads:
WHEREFORE, the Court hereby declares the deed of sale executed on November 25,
1965 by defendant Isabela L. de Dignos in favor of defendant Luciano Cabigas,
a citizen of the United States of America, null and void ab initio, and the
deed of sale executed by defendants Silvestre T. Dignos and Isabela Lumungsod
de Dignos not rescinded. Consequently, the plaintiff Atilano G. Jabil is
hereby ordered to pay the sum, of Sixteen Thousand Pesos (P16,000.00) to the
defendants-spouses upon the execution of the Deed of absolute Sale of Lot No.
3453, Opon Cadastre and when the decision of this case becomes final and
executory.
The plaintiff Atilano G. Jabil is ordered to reimburse the defendants Luciano
Cabigas and Jovita L. de Cabigas, through their attorney-in-fact, Panfilo
Jabalde, reasonable amount corresponding to the expenses or costs of the
hollow block fence, so far constructed.
It is further ordered that defendants-spouses Silvestre T. Dignos and Isabela
Lumungsod de Dignos should return to defendants-spouses Luciano Cabigas and
Jovita L. de Cabigas the sum of P35,000.00, as equity demands that nobody
shall enrich himself at the expense of another.
The writ of preliminary injunction issued on September 23, 1966, automatically

becomes permanent in virtue of this decision.
With costs against the defendants.
From the foregoing, the plaintiff (respondent herein) and defendants-spouss (petitioners
herein) appealed to the Court of Appeals, which appeal was docketed therein as CA-G.R. No.
54393-R, "Atilano G. Jabil v. Silvestre T. Dignos, et al."
On July 31, 1981, the Court of Appeals affirmed the decision of the lower court except as
to the portion ordering Jabil to pay for the expenses incurred by the Cabigas spouses for
the building of a fence upon the land in question. The disposive portion of said decision
of the Court of Appeals reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, except as to the modification of the
judgment as pertains to plaintiff-appellant above indicated, the judgment
appealed from is hereby AFFIRMED in all other respects.
With costs against defendants-appellants.
SO ORDERED.
Judgment MODIFIED.
A motion for reconsideration of said decision was filed by the defendants- appellants
(petitioners) Dignos spouses, but on December 16, 1981, a resolution was issued by the
Court of Appeals denying the motion for lack of merit.
In the resolution of February 10, 1982, the Second Division of this Court denied the
petition for lack of merit. A motion for reconsideration of said resolution was filed on
March 16, 1982. In the resolution dated April 26,1982, respondents were required to
comment thereon, which comment was filed on May 11, 1982 and a reply thereto was filed on
July 26, 1982 in compliance with the resolution of June 16,1 982. On August 9,1982, acting
on the motion for reconsideration and on all subsequent pleadings filed, this Court
resolved to reconsider its resolution of February 10, 1982 and to give due course to the
instant petition. On September 6, 1982, respondents filed a rejoinder to reply of
petitioners which was noted on the resolution of September 20, 1982.
Petitioners raised the following assignment of errors:
I
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW IN GROSSLY, INCORRECTLY INTERPRETING
THE TERMS OF THE CONTRACT, EXHIBIT C, HOLDING IT AS AN ABSOLUTE SALE, EFFECTIVE TO
TRANSFER OWNERSHIP OVER THE PROPERTY IN QUESTION TO THE RESPONDENT AND NOT MERELY A
CONTRACT TO SELL OR PROMISE TO SELL; THE COURT ALSO ERRED IN MISAPPLYING ARTICLE 1371 AS
WARRANTING READING OF THE AGREEMENT, EXHIBIT C, AS ONE OF ABSOLUTE SALE, DESPITE THE
CLARITY OF THE TERMS THEREOF SHOWING IT IS A CONTRACT OF PROMISE TO SELL.
II
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN INCORRECTLY APPLYING AND OR IN
MISAPPLYING ARTICLE 1592 OF THE NEW CIVIL CODE AS WARRANTING THE ERRONEOUS CONCLUSION THAT
THE NOTICE OF RESCISSION, EXHIBIT G, IS INEFFECTIVE SINCE IT HAS NOT BEEN JUDICIALLY
DEMANDED NOR IS IT A NOTARIAL ACT.
III
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN REJECTING THE APPLICABILITY OF ARTICLES
2208,2217 and 2219 OF THE NEW CIVIL CODE AND ESTABLISHED JURISPRUDENCE AS TO WARRANT THE
AWARD OF DAMAGES AND ATTORNEY'S FEES TO PETITIONERS.
IV
PLAINTIFF'S COMPLAINT FOR SPECIFIC PERFORMANCE SHOULD HAVE BEEN DISMISSED, HE HAVING COME
TO COURT WITH UNCLEAN HANDS.
V
BY AND LARGE, THE COURT OF APPEALS COMMITTED AN ERROR IN AFFIRMING WITH MODIFICATION THE
DECISION OF THE TRIAL COURT DUE TO GRAVE MISINTERPRETATION, MISAPPLICATION AND
MISAPPREHENSION OF THE TERMS OF THE QUESTIONED CONTRACT AND THE LAW APPLICABLE THERETO.
The foregoing assignment of errors may be synthesized into two main issues, to wit:
I. Whether or not subject contract is a deed of absolute sale or a contract
Lot sell.
II. Whether or not there was a valid rescission thereof.
There is no merit in this petition.
It is significant to note that this petition was denied by the Second Division of this
Court in its Resolution dated February 1 0, 1 982 for lack of merit, but on motion for
reconsideration and on the basis of all subsequent pleadings filed, the petition was given
due course.
I.
The contract in question (Exhibit C) is a Deed of Sale, with the following conditions:
1. That Atilano G..Jabilis to pay the amount of Twelve Thousand Pesos
P12,000.00) Phil. Philippine Currency as advance payment;
2. That Atilano G. Jabil is to assume the balance of Twelve Thousand Pesos
(P12,000.00) Loan from the First Insular Bank of Cebu;
3. That Atilano G. Jabil is to pay the said spouses the balance of Four.
Thousand Pesos (P4,000.00) on or before September 15,1965;
4. That the said spouses agrees to defend the said Atilano G. Jabil from other
claims on the said property;
5. That the spouses agrees to sign a final deed of absolute sale in favor of
Atilano G. Jabil over the above-mentioned property upon the payment of the
balance of Four Thousand Pesos. (Original Record, pp. 10-11)
In their motion for reconsideration, petitioners reiterated their contention that the Deed
of Sale (Exhibit "C") is a mere contract to sell and not an absolute sale; that the same
is subject to two (2) positive suspensive conditions, namely: the payment of the balance
of P4,000.00 on or before September 15,1965 and the immediate assumption of the mortgage
of P12,000.00 with the First Insular Bank of Cebu. It is further contended that in said
contract, title or ownership over the property was expressly reserved in the vendor, the
Dignos spouses until the suspensive condition of full and punctual payment of the balance
of the purchase price shall have been met. So that there is no actual sale until full
payment is made (Rollo, pp. 51-52).
In bolstering their contention that Exhibit "C" is merely a contract to sell, petitioners
aver that there is absolutely nothing in Exhibit "C" that indicates that the vendors
thereby sell, convey or transfer their ownership to the alleged vendee. Petitioners insist
that Exhibit "C" (or 6) is a private instrument and the absence of a formal deed of
conveyance is a very strong indication that the parties did not intend "transfer of
ownership and title but only a transfer after full payment" (Rollo, p. 52). Moreover,
petitioners anchored their contention on the very terms and conditions of the contract,
more particularly paragraph four which reads, "that said spouses has agreed to sell the
herein mentioned property to Atilano G. Jabil ..." and condition number five which reads,
"that the spouses agrees to sign a final deed of absolute sale over the mentioned property
upon the payment of the balance of four thousand pesos."
Such contention is untenable.

By and large, the issues in this case have already been settled by this Court in analogous
cases.
Thus, it has been held that a deed of sale is absolute in nature although denominated as a
"Deed of Conditional Sale" where nowhere in the contract in question is a proviso or
stipulation to the effect that title to the property sold is reserved in the vendor until
full payment of the purchase price, nor is there a stipulation giving the vendor the right
to unilaterally rescind the contract the moment the vendee fails to pay within a fixed
period Taguba v. Vda. de Leon, 132 SCRA 722; Luzon Brokerage Co., Inc. v. Maritime
Building Co., Inc., 86 SCRA 305).
A careful examination of the contract shows that there is no such stipulation reserving
the title of the property on the vendors nor does it give them the right to unilaterally
rescind the contract upon non-payment of the balance thereof within a fixed period.
On the contrary, all the elements of a valid contract of sale under Article 1458 of the
Civil Code, are present, such as: (1) consent or meeting of the minds; (2) determinate
subject matter; and (3) price certain in money or its equivalent. In addition, Article
1477 of the same Code provides that "The ownership of the thing sold shall be transferred
to the vendee upon actual or constructive delivery thereof." As applied in the case of
Froilan v. Pan Oriental Shipping Co., et al. (12 SCRA 276), this Court held that in the
absence of stipulation to the contrary, the ownership of the thing sold passes to the
vendee upon actual or constructive delivery thereof.
While it may be conceded that there was no constructive delivery of the land sold in the
case at bar, as subject Deed of Sale is a private instrument, it is beyond question that
there was actual delivery thereof. As found by the trial court, the Dignos spouses
delivered the possession of the land in question to Jabil as early as March 27,1965 so
that the latter constructed thereon Sally's Beach Resort also known as Jabil's Beach
Resort in March, 1965; Mactan White Beach Resort on January 15,1966 and Bevirlyn's Beach
Resort on September 1, 1965. Such facts were admitted by petitioner spouses (Decision,
Civil Case No. 23-L; Record on Appeal, p. 108).
Moreover, the Court of Appeals in its resolution dated December 16,1981 found that the
acts of petitioners, contemporaneous with the contract, clearly show that an absolute deed
of sale was intended by the parties and not a contract to sell.
Be that as it may, it is evident that when petitioners sold said land to the Cabigas
spouses, they were no longer owners of the same and the sale is null and void.
II.
Petitioners claim that when they sold the land to the Cabigas spouses, the contract of
sale was already rescinded.
Applying the rationale of the case of Taguba v. Vda. de Leon (supra) which is on all fours
with the case at bar, the contract of sale being absolute in nature is governed by Article
1592 of the Civil Code. It is undisputed that petitioners never notified private
respondents Jabil by notarial act that they were rescinding the contract, and neither did
they file a suit in court to rescind the sale. The most that they were able to show is a
letter of Cipriano Amistad who, claiming to be an emissary of Jabil, informed the Dignos
spouses not to go to the house of Jabil because the latter had no money and further
advised petitioners to sell the land in litigation to another party (Record on Appeal, p.
23). As correctly found by the Court of Appeals, there is no showing that Amistad was
properly authorized by Jabil to make such extra-judicial rescission for the latter who, on
the contrary, vigorously denied having sent Amistad to tell petitioners that he was
already waiving his rights to the land in question. Under Article 1358 of the Civil Code,
it is required that acts and contracts which have for their object the extinguishment of
real rights over immovable property must appear in a public document.
Petitioners laid considerable emphasis on the fact that private respondent Jabil had no
money on the stipulated date of payment on September 15,1965 and was able to raise the
necessary amount only by mid-October 1965.
It has been ruled, however, that "where time is not of the essence of the agreement, a
slight delay on the part of one party in the performance of his obligation is not a
sufficient ground for the rescission of the agreement" (Taguba v. Vda. de Leon, supra).
Considering that private respondent has only a balance of P4,000.00 and was delayed in
payment only for one month, equity and justice mandate as in the aforecited case that
Jabil be given an additional period within which to complete payment of the purchase
price.
WHEREFORE, the petition filed is hereby Dismissed for lack of merit and the assailed
decision of the Court of Appeals is Affirmed in toto.
SO ORDERED.

Case On Sales

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FIRST DIVISION

SPOUSES GOMER and G.R. No. 145330

(for April and May 1980)

Whether RA 6552 is applicable to an absolute sale of land;

The Ruling of the Court

HILARIO G. DAVIDE, JR.

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

HILARIO G. DAVIDE, JR.

Under Rule 45 of the 1997 Rules of Civil Procedure.

Rollo, pp. 15-24.

Otherwise known as the Realty Installment Buyer Protection Act.

Article 1191 provides:

443 Phil. 385 (2003).

(for April and May 1980)

Whether RA 6552 is applicable to an absolute sale of land;

The Ruling of the Court

HILARIO G. DAVIDE, JR.

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

HILARIO G. DAVIDE, JR.

Under Rule 45 of the 1997 Rules of Civil Procedure.

Rollo, pp. 15-24.

Rollo, pp. 23-24.

Article 1191 provides:

443 Phil. 385 (2003).

JACINTO GALANG, GREGORIA GALANG

G.R. No. 139448

October 11, 2005

Thus, on 16 May 1995, the SEC issued a Judgment By Compromise Agreement.[11]

with SEC Case No.

02-94-4697.[15] The petition was verified by herein private

respondent Ines Camaganakan as President of CGP.[16]

There is undue haste amounting to denial of due process of law when

ROMEO J. CALLEJO, SR.

HILARIO G. DAVIDE, JR.

intended delivery by petitioners to respondent of a separate title in the name of Julio

Republic of the Philippines

December 20, 2006

MANILA METAL CONTAINER CORPORATION, petitioner,

Republic of the Philippines

G.R. No. L-59266 February 29, 1988

The writ of preliminary injunction issued on September 23, 1966, automatically

Such contention is untenable.

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