Professional Documents
Culture Documents
FIRST DIVISION specific performance and damages with the trial court, alleging
that the Spouses Firme reneged on their agreement to sell the
Property. The complaint asked the trial court to order the
[G.R. No. 146608. October 23, 2003] Spouses Firme to execute the deed of sale and to deliver the
title to the Property to Bukal Enterprises upon payment of the
agreed purchase price.
During trial, Bukal Enterprises presented five witnesses,
SPOUSES CONSTANTE FIRME AND AZUCENA E. namely, Aviles, De Castro, Antonio Moreno, Jocelyn Napa and
FIRME, petitioners, vs. BUKAL ENTERPRISES Antonio Ancheta.
AND DEVELOPMENT
Aviles testified that De Castro authorized him to negotiate
CORPORATION, respondent. on behalf of Bukal Enterprises for the purchase of the
Property. According to Aviles, he met with the Spouses Firme
DECISION on 23 January 1995 and he presented them with a draft deed of
CARPIO, J.: sale (First Draft) dated February 1995. The First Draft of the
[4]
G.R. CV No. 60747. The Court of Appeals reversed the This DEED OF ABSOLUTE SALE made and executed by and
Decision of the Regional Trial Court, Branch 223, Quezon
[2] between the Spouses CONSTANTE FIRME and AZUCENA
City (trial court), which held that there was no perfected contract E. FIRME, both of legal age, Filipino citizens and with postal
of sale since there was no consent on the part of the seller. address at No. 1450 Union, Paco, City of Manila, hereinafter
called the VENDOR, and
The Facts BUKAL ENTERPRISES and DEVELOPMENT
CORPORATION, a corporation duly organized and registered
Petitioner Spouses Constante and Azucena Firme (Spouses in accordance with Philippine Laws, with business address
Firme) are the registered owners of a parcel of land (Property)
[3]
at Dahlia Avenue, Fairview Park, Quezon City, herein
located on Dahlia Avenue, Fairview Park, Quezon City. Renato represented by its PRESIDENT, MRS. ZENAIDA A. DE
de Castro (De Castro), the vice president of Bukal Enterprises CASTRO, hereinafter called the VENDEE.
and Development Corporation (Bukal Enterprises) authorized
his friend, Teodoro Aviles (Aviles), a broker, to negotiate with
WITNESSETH:
the Spouses Firme for the purchase of the Property.
That the VENDOR is the absolute and registered owner of a documentation, notarization, removal and relocation of the
certain parcel of land located at Fairview Park, Quezon City, squatters, registration, transfer tax and other fees as may be
and more particularly described as follows: required by law;
A parcel of land (Lot 4, Block 33 of the consolidation- That the VENDOR shall pay the real estate tax for the current
subdivision plan (LRC) Pcs-8124, Sheet No. I, being a portion year and back real estate taxes, charges and penalties if there
of the consolidation of Lots 41-B-2-A and 41-B-2-C, Psd-1136 are any.
and Lot (LRC) Pcs-2665, (LRC) GLRO) Record. No. 1037),
situated in Quezon City, Island of Luzon. Bounded on the NE., IN WITNESS WHEREOF, we have hereunto affixed our
points 2 to 5 by Road Lot 24, of the consolidation-subdivision signatures this ____ day of February, 1995, at Quezon
plan. Beginning at a point marked 1 on plan, being S. 67 deg. City, Philippines.
23W., 9288.80 m. from BLLM I, Mp of Montalban, Rizal;
thence N. 85 deg. 35E., 17.39 m. to point 2; thence S. 54 deg. CONSTANTE FIRME BUKAL ENTERPRISES AND
22E., 4.00 m. to point 3; thence S. 14 deg. 21E., 17.87 m. to DEVELOP
point 4; thence 3 deg. 56E., 17.92 m. to point 5; thence N. 85 MENT
deg. 12 W., 23.38 m. to point 6; thence N. 4 deg. 55 W., 34.35 CORP.
m. to the point of beginning; containing an area of EIGHT
HUNDRED AND SIX (806) SQUARE METERS, more or BY:
less.
AZUCENA E. FIRME ZENAIDA A. DE CASTRO
VENDORS title thereto being evidenced by Transfer VENDOR President
Certificate of Title No. 264243 issued by the Register of Deeds
of Quezon City; xxx
unto the said VENDEE, its assigns, transferees and successors Spouses Firme allegedly accepted the Second Draft in view of
in interest the above described property, free from all liens and the deletion of the objectionable conditions contained in the First
Draft. According to Aviles, the Spouses Firme were willing to
encumbrances whatsoever;
sell the Property at P4,000 per square meter. They then agreed
that payment would be made at the Far East Bank and Trust
It is hereby mutually agreed that the VENDEE shall bear all Company (FEBTC), Padre Faura Branch, Manila. However, the
the expenses for the capital gains tax, documentary stamps,
scheduled payment had to be postponed due to problems in the Jocelyn Mapa, the manager of FEBTC, Padre Faura
transfer of funds. The Spouses Firme later informed Aviles that Branch, testified that Bukal Enterprises has been their client
they were no longer interested in selling the Property.
[6]
since 1994. According to her, Bukal Enterprises applied for a
loan of P4,500,000 on the third week of February 1995 allegedly
De Castro testified that he authorized Aviles to negotiate for
to buy a lot in Fairview. FEBTC approved the loan on the last
Bukal Enterprises the purchase of the Property owned by the
week of February and released the proceeds on the first week
Spouses Firme. The Property was located beside the Dahlia
of March.[10]
Enterprises offered to pay the purchase price of P3,224,000 to Dr. Firme testified that on 30 January 1995, he and his wife
the Spouses Firme upon execution of the transfer documents met with Aviles at the Aristocrat Restaurant in Quezon
and delivery of the owners duplicate copy of TCT No. 264243. City. Aviles arranged the meeting with the Spouses Firme
The Spouses Firme did not accept this offer but instead sent involving their Property in Fairview. Aviles offered to buy the
Bukal Enterprises a letter demanding that its workers vacate the Property at P2,500 per square meter. The Spouses Firme did
Property. Bukal Enterprises then filed a complaint for specific not accept the offer because they were reserving the Property
performance and damages. [8]
for their children. On 6 February 1995, the Spouses Firme met
again with Aviles upon the latters insistence. Aviles showed the
Antonio Moreno, one of the alleged squatters on the
Spouses Firme a copy of a draft deed of sale (Third Draft)
[12]
CONSTANTE E. FIRME BUKAL ENTERPRISES DEV. 1. the sum of Three Hundred Thirty Five Thousand
CORP. Nine Hundred Sixty Four and 90/100
VENDOR VENDEE (P335,964.90) as and by way of actual and
compensatory damages;
AZUCENA E. FIRME BY:
VENDOR ________________________
2. the sum of Five Hundred Thousand Pesos
President & Chief Executive Officer (P500,000.00) as and by way of moral damages;
xxx
3. the sum of One Hundred Thousand Pesos
The Spouses Firme did not accept the Third Draft because (P100,000.00) as and by way of attorneys fees;
they found its provisions one-sided. The Spouses Firme and
particularly opposed the provision on the delivery of the
Propertys title to Bukal Enterprises for the latter to obtain a loan
4. the costs of the suit.
from the bank and use the proceeds to pay for the Property. The
Spouses Firme repeatedly told Aviles that the Property was not
for sale when Aviles called on 2 and 4 March 1995 regarding SO ORDERED. [16]
perusal of the First Draft and the Second Draft would show that
findings of the Court of Appeals are contrary to those of the trial
both deeds of sale contain exactly the same provisions. The
court or when the inference made is manifestly mistaken, this
only difference is that the date of the First Draft is February
Court has the authority to review the findings of fact. Likewise,
[21]
meeting. One already with notarial, the one without testimony, thus:
notarial page and the other one with notarial page
Q. Now, the next question which states: But did you not have
already, so I prepared two documents but with the same
any occasion to talk to him after that second meeting?
contents both were dated February of 1995.[32]
and the answer of Dr. Firme is He called up a month
Q: So, you are referring now to Exhibit C and C-1 for the after, thats March 2, 1995. What can you say on this?
plaintiff?
A. I called him to inform him that the loan was already
A: C-1 is already in the final form because we agreed already transferred from Makati to Padre Faura Branch of the
as to the date of the payment, so I prepared already Far East Bank, so I scheduled already the payment of
another document which is dated March their property.
1995.[33] (Emphasis supplied)
Q. When?
In his cross-examination, Aviles again changed his
A. On March 4, 1995.
testimony. According to him, he presented the Third Draft to the
Spouses Firme during their first meeting. However, when he
[34]
Q. And then the next question which also states: What did
went over the records, he again changed his answer and stated you talked (sic) about over the telephone? The answer
that he presented the Third Draft during their second meeting. [35] of Dr. Firme was When I found out that he was calling, I
told him that the property is not for sale. What can you
In his re-direct examination, Aviles gave another version of say on this?
what he presented to the Spouses Firme during the two
A. He mentioned that they are no longer interested to sell
meetings. According to him, he presented the Third Draft during their property, perhaps they would like a higher price of
the first meeting. On their second meeting, he presented the the property. They did not mention to me. I do not know
First and the Second Drafts to the Spouses Firme. [36]
what was their reason.
Furthermore, Aviles admitted that the first proposal of Bukal Q. The next question So, what happened next? The answer
Enterprises was at P2,500 per square meter for the is He called up two days later, March 4 and my wife
Property. But the First, Second and Third Drafts of the deed of
[37]
answered the telephone and told him that the property is contract. Where there is merely an offer by one party, without
not for sale, sir. What can you say on this? the acceptance of the other, there is no consent. (Emphasis
A. That is true. That is what Mrs. Firme told me during supplied)
our conversation on the telephone that they are no
longer interested to sell the property for obvious In this case, the Spouses Firme flatly rejected the offer
reason. of Aviles to buy the Property on behalf of Bukal
Q. When was that? Enterprises.There was therefore no concurrence of the offer and
the acceptance on the subject matter, consideration and terms
A. March 4, 1995, your honor.[39] (Emphasis supplied)
of payment as would result in a perfected contract of
Significantly, De Castro also admitted that he was aware of sale. Under Article 1475 of the Civil Code, the contract of sale
[44]
3. Cause of the obligation which is established. show the existence of a perfected contract of sale by competent
proof.
The absence of any of these essential elements will negate
the existence of a perfected contract of sale. Thus, where
[41] Second, there was no approval from the Board of Directors
there is want of consent, the contract is non-existent. As held
[42] of Bukal Enterprises as would finalize any transaction with the
in Salonga, et al. v. Farrales, et al.:
[43] Spouses Firme. Aviles did not have the proper authority to
negotiate for Bukal Enterprises. Aviles testified that his friend,
It is elementary that consent is an essential element for the De Castro, had asked him to negotiate with the
Spouses Firme to buy the Property. De Castro, as Bukal
[47]
existence of a contract, and where it is wanting, the contract is Enterprises vice president, testified that he authorized Aviles to
non-existent.The essence of consent is the conformity of the buy the Property. However, there is no Board Resolution
[48]
parties on the terms of the contract, the acceptance by one of authorizing Aviles to negotiate and purchase the Property on
the offer made by the other. The contract to sell is a bilateral behalf of Bukal Enterprises.[49]
It is the board of directors or trustees which exercises Section 23 of the Corporation Code expressly provides that the
almost all the corporate powers in a corporation. Thus, the corporate powers of all corporations shall be exercised by the
Corporation Code provides: board of directors. Just as a natural person may authorize
another to do certain acts in his behalf, so may the board of
SEC. 23. The board of directors or trustees. Unless otherwise
directors of a corporation validly delegate some of its
provided in this Code, the corporate powers of all corporations
functions to individual officers or agents appointed by
formed under this Code shall be exercised, all business
it. Thus, contracts or acts of a corporation must be made
conducted and all property of such corporations controlled and
either by the board of directors or by a corporate agent duly
held by the board of directors or trustees to be elected from
authorized by the board. Absent such valid
among the holders of stock, or where there is no stock, from
delegation/authorization, the rule is that the declarations of
among the members of the corporation, who shall hold office
an individual director relating to the affairs of the
for one (1) year and until their successors are elected and
corporation, but not in the course of, or connected with, the
qualified. x x x performance of authorized duties of such director, are held
not binding on the corporation.(Emphasis supplied)
SEC. 36. Corporate powers and capacity. Every corporation
incorporated under this Code has the power and capacity: In this case, Aviles, who negotiated the purchase of the
xxx Property, is neither an officer of Bukal Enterprises nor a
7. To purchase, receive, take or grant, hold, convey, member of the Board of Directors of Bukal Enterprises. There is
sell, lease, pledge, mortgage and otherwise deal with no Board Resolution authorizing Aviles to negotiate and
such real and personal property, including securities purchase the Property for Bukal Enterprises. There is also no
and bonds of other corporations, as the transaction of a evidence to prove that Bukal Enterprises approved whatever
lawful business of the corporation may reasonably and transaction Aviles made with the Spouses Firme. In fact, the
president of Bukal Enterprises did not sign any of the deeds of
necessarily require, subject to the limitations
sale presented to the Spouses Firme. Even De Castro admitted
prescribed by the law and the Constitution. that he had never met the Spouses Firme. Considering all
[53]
real property needed by the corporation, the final say will have verification and certification of non-forum shopping. The [55]
to be with the board, whose approval will finalize the verification and certification of non-forum shopping was not
transaction. A corporation can only exercise its powers and
[50] accompanied by proof that Bukal Enterprises
transact its business through its board of directors and through authorized Aviles to file the complaint on behalf of Bukal
its officers and agents when authorized by a board resolution or Enterprises.
its by-laws. As held in AF Realty & Development, Inc.
[51]
The power of a corporation to sue and be sued is exercised
v. Dieselman Freight Services, Co.: [52]
by the board of directors. The physical acts of the corporation,
like the signing of documents, can be performed only by natural xxx
persons duly authorized for the purpose by corporate by-laws or
by a specific act of the board of directors.
[56]
(e) An agreement for the leasing for a longer period than one
The purpose of verification is to secure an assurance that year, or for the sale of real property or of an interest therein;
the allegations in the pleading are true and correct and that it is
filed in good faith. True, this requirement is procedural and not
[57] xxx
jurisdictional. However, the trial court should have ordered the
correction of the complaint since Aviles was neither an officer of
Bukal Enterprises nor authorized by its Board of Directors to act Whether Bukal Enterprises is a builder in good faith
on behalf of Bukal Enterprises.
Bukal Enterprises is not a builder in good faith. The
Spouses Firme did not accept Aviles offer to purchase the
Whether the Statute of Frauds is applicable Property.Aviles testified that when he called the
Spouses Firme on 2 March 1995, Dr. Firme informed him that
The Court of Appeals held that partial performance of the they were no longer interested in selling the Property. On 4
contract of sale takes the oral contract out of the scope of the March 1995, Aviles called again and this time Mrs. Firme told
Statute of Frauds. This conclusion arose from the appellate him that they were not selling the Property. Aviles informed De
courts erroneous finding that there was a perfected contract of Castro of the refusal of the Spouses Firme to sell the Property.
sale. The records show that there was no perfected contract of However, Bukal Enterprises still proceeded in relocating the
sale. There is therefore no basis for the application of the squatters and constructing improvements on the Property. De
Statute of Frauds. The application of the Statute of Frauds Castro testified:
presupposes the existence of a perfected contract. Article[58]
ATTY. EJERCITO:
1403 of the Civil Code provides:
Q: The truth of the matter, Mr. Witness, is that the post was
constructed sometime late 1994. Is that not correct?
Art. 1403. The following contracts are unenforceable, unless
they are ratified: A: No, sir. It is not true.
(1) Those entered into in the name of another person Q: When was it constructed?
by one who has been given no authority or legal A: That March.
representation, or who has acted beyond his powers;
Q: When in March?
(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement A: 1995.
hereafter made shall be unenforceable by action, unless the Q: When in March 1995?
same, or some note or memorandum thereof, be in writing and
A: From the period of March 2, 1995 or two (2) weeks
subscribed by the party charged or by his agent; evidence, after the removal of the squatters.
therefore, of the agreement cannot be received without the
Q: When were the squatters removed?
writing, or a secondary evidence of its contents:
WITNESS: Q: You mean to say that you did not believe Mr. Aviles when
he told you that the Spouses Firme were no longer
A: March 6 and 7 because there were four (4) squatters. selling the property?
ATTY. EJERCITO:
A: No, sir.
Q: When did you find out that the Spouses Firme did not
Q: Was there anything formal when you say the Spouses
want to sell the same?
Firme agreed to sell the property?
A: First week of March 1995. A: None, sir.
Q: In your Complaint you said you find out on March 3,
Q: And yet that time you believe Mr. Aviles when he
1995. Is that not correct?
verbally told you that the Sps. Firme agreed to sell
A: I cannot exactly remember, sir. the property?At what point of the transaction with
the Spouses Firme were you advised by your
ATTY. MARQUEDA: lawyer?
In the Complaint it does not state March 3. Maybe counsel WITNESS:
was thinking of this Paragraph 6 which states, When the
property was rid of the squatters on March 2, 1995 for A: At the time when they refused to sell the lot.
the documentation and payment of the sale, xxx.
ATTY. EJERCITO:
ATTY. EJERCITO:
Q: Was that before the squatters were relocated
Q: So, you found out on March 2, 1995 that the allegedly by Bukal Enterprises?
defendants were no longer interested in selling to
A: Yes, sir.
you the property. Is that correct?
Q: In fact, it was the lawyer who advised you to relocate the
A: Yes, sir, because Mr. Aviles relayed it to me. squatters. Is it not true?
Q: Mr. Aviles relayed to you that the Spouses Firme
A: No, sir.[59] (Emphasis supplied)
were no longer interested in selling to you the
property in March 2, 1995. Is that correct? Bukal Enterprises is obviously a builder in bad faith. No
A: Yes, sir. Mr. Aviles told me. deed of sale has been executed in this case. Despite the refusal
of the Spouses Firme to sell the Property, Bukal Enterprises still
Q: In so many words, Mr. Witness, you learned that the proceeded to introduce improvements on the Property. Bukal
Spouses Firme were no longer interested in selling Enterprises introduced improvements on the Property without
the property before you spent allegedly all the sum the knowledge and consent of the Spouses Firme. When the
of money for the relocation of squatters for all this
Spouses Firme learned about the unauthorized constructions
construction that you are telling this Court now?
made by Bukal Enterprises on the Property, they advised the
WITNESS: latter to desist from further acts of trespass on their Property. [60]
A: The refusal to sell is not yet formal and the lawyer The Civil Code provides:
sent a letter tendering full payment of the purchase
price.
ATTY. EJERCITO:
Art. 449. He who builds, plants or sows in bad faith on the The Court agrees with the Court of Appeals to delete the
land of another, loses what is built, planted or sown without award for compensatory and moral damages. In awarding
right of indemnity. actual damages, the trial court took into account the traveling
expenses incurred by the Spouses Firme who are already
residing in the United States. However, the trial court failed to
Art. 450. The owner of the land on which anything has been
consider the testimony of Dr. Firme that they normally travel to
built, planted or sown in bad faith may demand the demolition the Philippines more than once a year to visit their
of the work, or that the planting or sowing be removed, in children. Thus, the expenses for the roundtrip tickets dated
[63]
order to replace things in their former condition at the expense 1996-1997 could not be attributed solely for the attendance of
of the person who built, planted or sowed; or he may compel hearings in the case.
the builder or planter to pay the price of the land, and the Nevertheless, an award of nominal damages of P30,000 is
owner the proper rent. warranted since Bukal Enterprises violated the property rights
of the Spouses Firme. The Civil Code provides:
[64]
Spouses Firme did not require them to remove the squatters, WHEREFORE, we SET ASIDE the Decision of the Court of
they chose to spend for the relocation of the squatters since Appeals and RENDER a new one:
they were interested in purchasing the Property. [62]