SPS. LUIS V. CRUZ and G.R. NO.

145470
AIDA CRUZ, reasonable rental for the use thereof. Respondents alleged in their complaint that:
Petitioners, Present:
(1) they are owners of the property, having bought the same from the spouses
PUNO, Chairman,
AUSTRIA-MARTINEZ, Clodualdo and Teresita Glorioso (Gloriosos) per Deed of Sale dated March 9,
- versus - CALLEJO, SR.,
TINGA, and 1987; (2) prior to their acquisition of the property, the Gloriosos offered to sell to
CHICO-NAZARIO, JJ.
SPS. ALEJANDRO FERNANDO, petitioners the rear portion of the property but the transaction did not materialize
SR., and RITA FERNANDO, Promulgated:
due to petitioners failure to exercise their option; (3) the offer to sell is embodied
Respondents. December 9, 2005
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
in a Kasunduan dated August 6, 1983 executed before the Barangay Captain; (4)

due to petitioners failure to buy the allotted portion, respondents bought the whole
DECISION
property from the Gloriosos; and (5) despite repeated demands, petitioners
AUSTRIA-MARTINEZ, J.:
refused to vacate the property.[2]

For resolution is a petition for review on certiorari under Rule 45 of

the Rules of Court, assailing the Decision[1] dated October 3, 2000 of the Court Petitioners filed a Motion to Dismiss but the RTC dismissed it for lack of merit

of Appeals (CA) in CA-G.R. CV No. 61247, dismissing petitioners appeal and
affirming the decision of the Regional Trial Court (RTC) of Malolos, Bulacan,
Branch 79, in Civil Case No. 877-M-94.
The antecedent facts are as follows:
in its Order dated March 6, 1995.[3] Petitioners then filed their Answer setting
forth the affirmative defenses that: (1) the Kasunduan is a perfected contract of
sale; (2) the agreement has already been partially consummated as they already
relocated their house from the rear portion of the lot to the front portion that was

sold to them; (3) Mrs. Glorioso prevented the complete consummation of the sale
Luis V. Cruz and Aida Cruz (petitioners) are occupants of the front portion of a
when she refused to have the exact boundaries of the lot bought by petitioners
710-square meter property located in Sto. Cristo, Baliuag, Bulacan. On October
surveyed, and the existing survey was made without their knowledge and
21, 1994, spouses Alejandro Fernando, Sr. and Rita Fernando (respondents) filed
participation; and (4) respondents are buyers in bad faith having bought that
before the RTC a complaint for accion publiciana against petitioners, demanding
portion of the lot occupied by them (petitioners) with full knowledge of the prior
the latter to vacate the premises and to pay the amount of P500.00 a month as
sale to them by the Gloriosos.[4]

After due proceedings, the RTC rendered a Decision on April 3, 1998 in favor
of respondents. The decretal portion of the decision provides:
PREMISES CONSIDERED, the herein plaintiffs
was able to prove by preponderance of evidence the case
of accion publiciana, against the defendants and judgment is
hereby rendered as follows:
1. Ordering defendants and all persons claiming
under them to vacate placefully (sic) the premises in question
and to remove their house therefore (sic);
2. Ordering defendants to pay plaintiff the sum
of P500.00 as reasonable rental per month beginning October
21, 1994 when the case was filed before this Court and every
month thereafter until they vacate the subject premises and to
pay the costs of suit.
The counter claim is hereby DISMISSED for lack of
merit.
SO ORDERED.[5]
Petitioners appealed the RTC decision but it was affirmed by the CA per its
Decision dated October 3, 2000.
Hence, the present petition raising the following issues:
1. Whether the Honorable Court of Appeals
committed an error of law in holding that the Agreement
(Kasunduan) between the parties was a mere offer to sell, and
not a perfected Contract of Purchase and Sale?
2. Whether the Honorable Court of Appeals
committed an error of law in not holding that where the parties
clearly gave the petitioners a period of time within which to
pay the price, but did not fix said period, the remedy of the
vendors is to ask the Court to fix the period for the payment of
the price, and not an accion publiciana?
3. Whether the Honorable Court of Appeals
committed an error of law in not ordering respondents to at
least deliver the back portion of the lot in question upon
payment of the agreed price thereof by petitioners, assuming
that the Regional Trial Court was correct in finding that the
subject matter of the sale was said back portion, and not the
front portion of the property?
4. Whether the Honorable Court of Appeals
committed an error of law in affirming the decision of the trial
court ordering the petitioners, who are possessors in good
faith, to pay rentals for the portion of the lot possessed by
them?[6]
The RTC dwelt on the issue of which portion was being sold by the
Gloriosos to petitioners, finding that it was the rear portion and not the front
portion that was being sold; while the CA construed the Kasunduan as a mere
contract to sell and due to petitioners failure to pay the purchase price, the
Gloriosos were not obliged to deliver to them (petitioners) the portion being sold.
Petitioners, however, insist that the agreement was a perfected contract
of sale, and their failure to pay the purchase price is immaterial. They also contend
that respondents have no cause of action against them, as the obligation set in
the Kasunduan did not set a period, consequently, there is no breach of any
obligation by petitioners.
The resolution of the issues in this case principally is dependent on the or its equivalent. Article 1475 of the Code further provides that the contract of

interpretation of the Kasunduan dated August 6, 1983 executed by petitioners and sale is perfected at the moment there is meeting of the minds upon the thing which

the Gloriosos. The Kasunduanprovided the following pertinent stipulations: is the object of the contract and upon the price. From that moment the parties may

reciprocally demand performance subject to the provisions of the law governing

a. Na pumayag ang mga maysumbong (referring to the
Gloriosos) na pagbilhan ang mga ipinagsumbong the form of contracts.
(referring to petitioners) na bahagi ng lupa at ang
ipagbibili ay may sukat na 213 metrong parisukat
humigit kumulang sa halagang P40.00 bawat
metrong parisukat; In a contract of sale, the title to the property passes to the vendee upon

b. Na sa titulong papapanaugin ang magiging kabuuang sukat the delivery of the thing sold, as distinguished from a contract to sell where
na mauukol sa mga ipinagsusumbong ay 223
metrong parisukat at ang 10 metro nito ay bilang ownership is, by agreement, reserved in the vendor and is not to pass to the vendee
kaloob ng mga maysumbong sa mga
until full payment of the purchase price.[8] Otherwise stated, in a contract of sale,
Ipinagsusumbong na bahagi ng right of way;
the vendor loses ownership over the property and cannot recover it until and
c. Na ang right of way ay may luwang na 1.75 meters magmula
sa daang Lopez Jaena patungo sa likuran ng lote unless the contract is resolved or rescinded; whereas, in a contract to sell, title is
na pagtatayuan ng bahay ng mga
Ipinagsusumbong na kanyang bibilhin; retained by the vendor until full payment of the price. In the latter contract,
d. Na ang gugol sa pagpapasukat at pagpapanaog ng titulo ay payment of the price is a positive suspensive condition, failure of which is not a
paghahatian ng magkabilang panig na ang panig ay
magbibigay ng halagang hindi kukulanging sa breach but an event that prevents the obligation of the vendor to convey title from
halagang tig-AAPAT NA DAANG PISO (P400.00);
becoming effective.
e. Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa
bahaging kanilang nabili o mabibili sa buwan ng
Enero 31, 1984;[7] (Emphasis supplied)
The Kasunduan provides for the following terms and conditions: (a)

that the Gloriosos agreed to sell to petitioners a portion of the property with an
Under Article 1458 of the Civil Code, a contract of sale is a contract by which area of 213 meters at the price of P40.00 per square meter; (b) that in the title that
one of the contracting parties obligates himself to transfer the ownership and to will be caused to be issued, the aggregate area is 223 square meters with 10 meters
deliver a determinate thing, and the other to pay therefor a price certain in money thereof serving as right of way; (c) that the right of way shall have a width of 1.75
meters from Lopez Jaena road going towards the back of the lot where petitioners For another, the telltale provision in the Kasunduan that: Na pumayag

will build their house on the portion of the lot that they will buy; (d) that the ang mga maysumbong na pagbilhan ang mga ipinagsumbong na bahagi ng lupa

expenses for the survey and for the issuance of the title will be divided between at ang ipagbibili ay may sukat na 213 metrong parisukat humigit kumulang sa

the parties with each party giving an amount of no less than P400.00; and (e) that halagang P40.00 bawat metrong parisukat, simply means that the Gloriosos

petitioners will definitely relocate their house to the portion they bought or will only agreed to sell a portion of the property and that the portion to be

buy by January 31, 1984. sold measures 213 square meters.

The foregoing terms and conditions show that it is a contract to sell and Another significant provision is that which reads: Na ang

not a contract of sale. For one, the conspicuous absence of a definite manner of ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kanilang nabili

payment of the purchase price in the agreement confirms the conclusion that it is o mabibili sa buwan ng Enero 31, 1984. The foregoing indicates that a contract

a contract to sell. This is because the manner of payment of the purchase price of sale is yet to be consummated and ownership of the property remained in the

is an essential element before a valid and binding contract of sale can Gloriosos. Otherwise, why would the alternative term mabibili be used if indeed

exist.[9] Although the Civil Code does not expressly state that the minds of the the property had already been sold to petitioners.

parties must also meet on the terms or manner of payment of the price, the same

is needed, otherwise there is no sale.[10] As held in Toyota Shaw, Inc. vs. Court of In addition, the absence of any formal deed of conveyance is a strong

Appeals,[11] a definite agreement on the manner of payment of the price is an indication that the parties did not intend immediate transfer of ownership. [12]

essential element in the formation of a binding and enforceable contract of sale.

The Kasunduan does not establish any definite agreement between the Normally, in a contract to sell, the payment of the purchase price is the

parties concerning the terms of payment. What it merely provides is the purchase positive suspensive condition upon which the transfer of ownership

price for the 213-square meter property at P40.00 per square meter. depends.[13] The parties, however, are not prohibited from stipulating other lawful

conditions that must be fulfilled in order for the contract to be converted from a

contract to sell or at the most an executory sale into an executed one.[14]

 In the present case, aside from the payment of the purchase price, there because the latters non-fulfillment of the suspensive condition rendered the

existed another suspensive condition, i.e.: that petitioners will relocate their house contract to sell ineffective and unperfected.

to the portion they bought or will buy by January 31, 1984.

Petitioners admit that they have not paid a single centavo to the

Petitioners failed to abide by the express condition that they should Gloriosos. However, petitioners argue that their nonpayment of the purchase

relocate to the rear portion of the property being bought by January 31, 1984. price was due to the fact that there is yet to be a survey made of the property. But

Indeed, the Kasunduan discloses that it is the rear portion that was being sold by evidence shows, and petitioners do not dispute, that as early as August 12, 1983,

the Gloriosos, and not the front portion as petitioners stubbornly claim. This is or six days after the execution of the Kasunduan, a survey has already been made

evident from the provisions establishing a right of way from Lopez Jaena road and the property was subdivided into Lot Nos. 565-B-1 (front portion) and 565-

going towards the back of the lot, and requiring them to relocate their house to B-2 (rear portion), with Lot No. 565-B-2 measuring 223 square meters as the

the portion being sold by January 31, 1984. Petitioners are presently occupying portion to be bought by petitioners.

the front portion of the property. Why the need for a right of way and for

petitioners to relocate if the front portion on which their house stands is the Petitioners question the survey made, asserting that it is a table survey

portion being sold? made without their knowledge and participation. It should be pointed out that

the Kasunduan merely provides that the expenses for the survey will be divided

This condition is a suspensive condition noncompliance of which between them and that each party should give an amount of no less than P400.00.

prevented the Gloriosos from proceeding with the sale and ultimately transferring Nowhere is it stated that the survey is a condition precedent for the payment of

title to petitioners; and the Kasunduan from having obligatory force.[15] It is the purchase price.

established by evidence that the petitioners did not transfer their house located in

the front portion of the subject property to the rear portion which, under Petitioners further claim that respondents have no cause of action

the Kasunduan, they intended to buy. Thus, no obligation arose on the part of the against them because their obligation to pay the purchase price did not yet arise,

Gloriosos to consider the subject property as having been sold to petitioners as the agreement did not provide for a period within which to pay the purchase
price. They argue that respondents should have filed an action for specific
performance or judicial rescission before they can avail of accion publiciana.
Notably, petitioners never raised these arguments during the
proceedings before the RTC. Suffice it to say that issues raised for the first time
on appeal and not raised timely in the proceedings in the lower court are barred
by estoppel.[16] Matters, theories or arguments not brought out in the original
proceedings cannot be considered on review or appeal where they are raised for
the first time. To consider the alleged facts and arguments raised belatedly would
amount to trampling on the basic principles of fair play, justice and due
process.[17]
Moreover, it would be inutile for respondents to first petition the court
to fix a period for the performance of the contract. In the first place, respondents
are not parties to the Kasunduan between petitioners and the Gloriosos, and they
have no standing whatsoever to seek such recourse. In the second place, such
recourse properly pertains to petitioners. It was they who should have sought the
courts intercession. If petitioners believed that they have an actionable contract
for the sale of the property, prudence and common sense dictate that they should
have sought its enforcement forthwith. Instead, petitioners whiled away their
time.
Furthermore, there is no need for a judicial rescission of
the Kasunduan for the simple reason that the obligation of the Gloriosos to
transfer the property to petitioners has not yet arisen. There can be no rescission
of an obligation that is nonexistent, considering that the suspensive conditions
therefor have not yet happened.[18]
Hence, petitioners have no superior right of ownership or possession to
speak of. Their occupation of the property was merely through the tolerance of
the owners. Evidence on record shows that petitioners and their predecessors
were able to live and build their house on the property through the permission and
kindness of the previous owner, Pedro Hipolito, who was their relative, [19] and
subsequently, Teresita Glorioso, who is also their relative. They have no title or,
at the very least, a contract of lease over the property. Based as it was on mere
tolerance, petitioners possession could neither ripen into ownership nor operate
to bar any action by respondents to recover absolute possession thereof.[20]
There is also no merit to petitioners contention that respondents are
buyers in bad faith. As explained in Coronel vs. Court of Appeals:
In a contract to sell, there being no previous sale of
the property, a third person buying such property despite
the fulfillment of the suspensive condition such as the full
payment of the purchase price, for instance, cannot be
deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There
is no double sale in such case. Title to the property will
transfer to the buyer after registration because there is no
 defect in the owner-sellers title per se, but the latter, of course,
may be sued for damages by the intending SPS. JORGE NAVARRA and G.R. No. 172674
buyer.[21] (Emphasis supplied) CARMELITA BERNARDO
NAVARRA and RRRC
DEVELOPMENT Present:
CORPORATION,
Petitioners, PUNO, C.J., Chairperson,
A person who occupies the land of another at the latter's forbearance or *
SANDOVAL-GUTIERREZ,
permission without any contract between them is necessarily bound by an implied CORONA,
- versus - AZCUNA and
promise that he will vacate upon demand. [22] GARCIA, JJ.

Promulgated:
PLANTERS DEVELOPMENT
Considering that petitioners continued possession of the property has BANK and ROBERTO July 12, 2007
GATCHALIAN REALTY, INC.,
already been rendered unlawful, they are bound to pay reasonable rental for the Respondents.

use and occupation thereof, which in this case was appropriately pegged by the

RTC at P500.00 per month beginning October 21, 1994 when respondents filed

the case against them until they vacate the premises.

x---------------------------------------------------------------------------------------x

Finally, petitioners seek compensation for the value of the

DECISION
improvements introduced on the property. Again, this is the first time that they

are raising this point. As such, petitioners are now barred from seeking such GARCIA, J.:

relief.[23]
Assailed and sought to be set aside in this petition for review under Rule
45 of the Rules of Court is the decision[1] dated September 27, 2004 of the Court
of Appeals (CA) in CA-G.R. CV No. 50002, as reiterated in its
WHEREFORE, the petition is DENIED. The Decision of the Court
resolution[2] dated May 8, 2006, denying reconsideration thereof. The challenged
of Appeals dated October 3, 2000 in CA-G.R. CV No. 61247 is AFFIRMED. decision reversed that of the Regional Trial Court (RTC) of MakatiCity, Branch
66, in its Civil Case No. 16917, an action for Specific Performance and
Injunction thereat commenced by the herein petitioners against the respondents.
SO ORDERED
The Makati RTC ruled that a perfected contract of sale existed in favor of Jorge
Navarra and Carmelita Bernardo Navarra (Navarras) over the properties involved
in the suit and accordingly ordered Planters Development Bank (Planters Bank)
to execute the necessary deed of sale therefor. The CA reversed that ruling.
Hence, this recourse by the petitioners.
The facts:
The Navarras are the owners of five (5) parcels of land located at B.F.
Homes, Paraaque and covered by Transfer Certificates of Title (TCT) Nos. S-
58017, S-58011, S-51732, S-51733 and A-14574. All these five (5) parcels of
land are the subject of this controversy.
On July 5, 1982, the Navarras obtained a loan of P1,200,000.00 from
Planters Bank and, by way of security therefor, executed a deed of mortgage over
their aforementioned five (5) parcels of land. Unfortunately, the couple failed to
pay their loan obligation. Hence, Planters Bank foreclosed on the mortgage and
the mortgaged assets were sold to it for P1,341,850.00, it being the highest bidder
in the auction sale conducted on May 16, 1984. The one-year redemption period
expired without the Navarras having redeemed the foreclosed properties.
On the other hand, co-petitioner RRRC Development Corporation
(RRRC) is a real estate company owned by the parents of Carmelita Bernardo
Navarra. RRRC itself obtained a loan from Planters Bank secured by a mortgage
over another set of properties owned by RRRC. The loan having been likewise
unpaid, Planters Bank similarly foreclosed the mortgaged assets of RRRC. Unlike
the Navarras, however, RRRC was able to negotiate with the Bank for the
redemption of its foreclosed properties by way of a concession whereby the Bank
allowed RRRC to refer to it would-be buyers of the foreclosed RRRC properties
who would remit their payments directly to the Bank, which payments would then
be considered as redemption price for RRRC. Eventually, the foreclosed
properties of RRRC were sold to third persons whose payments therefor, directly
made to the Bank, were in excess by P300,000.00 for the redemption price.
In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to
repurchase the five (5) lots earlier auctioned to the Bank, with a request that he
be given until August 31, 1985 to pay the down payment of P300,000.00.
Dated July 18, 1985 and addressed to then Planters Bank President Jesus
Tambunting, the letter reads in full:
This will formalize my request for your kind
consideration in allowing my brother and me to buy back my
house and lot and my restaurant building and lot together with
the adjacent road lot.
Since my brother, who is working in Saudi Arabia,
has accepted this arrangement only recently as a result of my
urgent offer to him, perhaps it will be safe for us to set August
31, 1985 as the last day for the payment of a P300,000.00
downpayment. I hope you will grant us the opportunity to raise
the funds within this period, which includes an allowance for
delays.
The purchase price, I understand, will be based on
the redemption value plus accrued interest at the prevailing
rate up to the date of our sales contract. Maybe you can give
us a long term payment scheme on the basis of my brothers
annual savings of roughly US$30,000.00 everytime he comes
home for his home leave.
I realize that this is not a regular transaction but I am
seeking your favor to give me a chance to reserve whatever
values I can still recover from the properties and to avoid any
legal complications that may arise as a consequence of the
total loss of the Balangay lot. I hope that you will extend to
me your favorable action on this grave matter.
 Meanwhile, titles to said properties were consolidated in the name of
In response, Planters Bank, thru its Vice-President Ma. Flordeliza
Planters Bank, and on August 27, 1985, new certificates of title were issued in its
Aguenza, wrote back Navarra via a letter dated August 16, 1985, thus: name, to wit: TCT Nos. 97073, 97074, 97075, 97076 and 97077.

Regarding your letter dated July 18, 1985, requesting that we

give up to August 31, 1985 to buy back your house and lot and Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra
restaurant and building subject to a P300,000.00
downpayment on the purchase price, please be advised that the informing him that it could not proceed with the documentation of the proposed
Collection Committee has agreed to your request.
repurchase of the foreclosed properties on account of his non- compliance with
Please see Mr. Rene Castillo, Head, Acquired Assets
Unit, as soon as possible for the details of the transaction so the Banks request for the submission of the needed board resolution of RRRC.
that they may work on the necessary documentation.

In his reply-letter of January 28, 1987, Navarra claimed having already

Accordingly, Jorge Navarra went to the Office of Mr. Rene Castillo on
delivered copies of the required board resolution to the Bank. The Bank, however,
August 20, 1985, bringing with him a letter requesting that the excess payment
did not receive said copies.Thus, on February 19, 1987, the Bank sent a notice to
of P300,000.00 in connection with the redemption made by the RRRC be applied
the Navarrras demanding that they surrender and vacate the properties in question
as down payment for the Navarras repurchase of their foreclosed properties.
for their failure to exercise their right of redemption.

Because the amount of P300,000.00 was sourced from a different

Such was the state of things when, on June 31, 1987, in the RTC of
transaction between RRRC and Planters Bank and involved different debtors, the
Makati City, the Navarras filed their complaint for Specific Performance with
Bank required Navarra to submit a board resolution from RRRC authorizing him
Injunction against Planters Bank. In their complaint docketed in said court
to negotiate for and its behalf and empowering him to apply the excess amount
as Civil Case No. 16917 and raffled to Branch 66 thereof, the Navarras, as
of P300,000.00 in RRRCs redemption payment as down payment for the
plaintiffs, alleged that a perfected contract of sale was made between them and
repurchase of the Navarras foreclosed properties.
Planters Bank whereby they would repurchase the subject properties

for P1,800,000.00 with a down payment of P300,000.00.


In its Answer, Planters Bank asserted that there was no perfected
contract of sale because the terms and conditions for the repurchase have not yet
been agreed upon.
On September 9, 1988, a portion of the lot covered by TCT No. 97077
(formerly TCT No. A-14574) was sold by Planters Bank to herein co-respondent
Roberto Gatchalian Realty, Inc. (Gatchalian Realty). Consequently, TCT No.
97077 was cancelled and TCT No. 12692 was issued in the name of Gatchalian
Realty. This prompted the Navarras to amend their complaint by impleading
Gatchalian Realty as additional defendant.
In a decision dated July 10, 1995, the trial court ruled that there was a
perfected contract of sale between the Navarras and Planters Bank, and
accordingly rendered judgment as follows:
WHEREFORE, in view of the foregoing, judgment
is hereby rendered ordering:
a) the cancellation of the Deed of
Absolute Sale (Exh. 2) over lot 4137-C
between defendant Planters Development
Bank and defendant Roberto Gatchalian
Realty Corporation (RGRI) with the
vendor bank refunding all the payments
made by the vendee RGRI without interest
less the five percent (5%) brokers
commission:
b) the defendant Planters Development
Bank to execute the Deed of Absolute Sale
over the lots covered by TCT Nos. 97073,
97074, 97075, 97076, and 97077 in favor
of all the plaintiffs for a consideration of
ONE MILLION EIGHT HUNDRED
THOUSAND (P1,800,000.00) less the
downpayment of P300,000.00 plus interest
at the rate of twenty five percent (25%) per
year for five (5) years to be paid in full
upon the execution of the contract;
c) the defendant Planters Development
Bank the amount of TEN THOUSAND
PESOS (P10,000.00) by way of attorneys
fees.
d) No costs.
SO ORDERED.
Therefrom, Planters Bank and Gatchalian Realty separately went
on appeal to the CA whereat their appellate recourse were consolidated and
docketed as CA-G.R. CV No. 50002.
As stated at the threshold hereof, the appellate court, in its decision
of September 27, 2004, reversed that of the trial court and ruled that there was no
perfected contract of sale between the parties. Partly says the CA in its decision:
The Court cannot go along with the deduction of the trial court
that the response of Planters Bank was favorable to Jorge
Navarras proposal and that the P300,000.00 in its possession
is a down payment and as such sufficient bases to conclude
that there was a valid and perfected contract of sale. Based on
the turn of events and the tenor of the communications
between the offerors and the creditor bank, it appears that
 there was not even a perfected contract to sell, much less a
perfected contract of sale. XXX IN CONCLUDING THAT THERE WAS NO
PERFECTED CONTRACT TO REPURCHASE THE
Article 1319 cited by the trial court provides that the FORECLOSED PROPERTIES BETWEEN THE
acceptance to an offer must be absolute. Simply put, there PETITIONERS AND THE PRIVATE RESPONDENT
must be unqualified acceptance and no condition must tag PLANTERS DEVELOPMENT BANK, AS CORRECTLY
along. But Jorge Navarra in trying to convince the bank to FOUND BY THE TRIAL COURT.
agree, had himself laid out terms in offering (1) a
downpayment of P300,000.00 and setting (2) as deadline II
August 31, 1985 for the payment thereof. Under these terms
and conditions the bank indeed accepted his offer, and these XXX IN HOLDING THAT THE PARTIES NEVER GOT
are essentially the contents of Exhibits J and K. PAST THE NEGOTIATION STAGE.

But was there compliance? According to the evidence on file

the P300,000.00, if at all, was given beyond the agreed period.
The court a quo missed the fact that the said amount came While the question raised is essentially one of fact, of which the Court
from the excess of the proceeds of the sale to the Pea spouses
which Jorge Navarra made to appear was made before the normally eschews from, yet, given the conflicting factual findings of the trial and
deadline he set of August 31, 1985. But this is athwart
Exhibits M-1 and N, the Contract to Sell and the Deed of Sale appellate courts, the Court shall go by the exception [3] to the general rule and
between RRRC and the Peas, for these were executed only
on September 13, 1985 and October 7, 1985 respectively. proceed to make its own assessment of the evidence.

xxx xxx xxx

We DENY.
There were two separate and independent loans secured by
distinct mortgages on different lots and their only
commonality is the relationship of the Navarras and Bernardo
families. It is thus difficult to conceive and to conclude that Petitioners contend that a perfected contract of sale came into being
such Byzantine arrangement was acquiesced to and provided
for in that single and simple letter of the bank. when respondent Bank, thru a letter dated August 16, 1985, formally accepted the

offer of the Navarras to repurchase the subject properties.

With their motion for reconsideration having been denied by the CA in

its resolution of May 8, 2006, petitioners are now with this Court via this recourse In general, contracts undergo three distinct stages, to wit: negotiation,

on their submission that the CA erred - perfection or birth, and consummation. Negotiation begins from the time the

prospective contracting parties manifest their interest in the contract and ends at
I the moment of their agreement. Perfection or birth of the contract takes place

when the parties agree upon the essential elements of the contract, i.e., consent,
object and price. Consummation occurs when the parties fulfill or perform the
terms agreed upon in the contract, culminating in the extinguishment thereof. [4]
A negotiation is formally initiated by an offer which should be certain
with respect to both the object and the cause or consideration of the envisioned
contract. In order to produce a contract, there must be acceptance, which may be
express or implied, but it must not qualify the terms of the offer. The acceptance
of an offer must be unqualified and absolute to perfect the contract. In other
words, it must be identical in all respects with that of the offer so as to produce
consent or meeting of the minds.[5]
Here, the Navarras assert that the following exchange of
correspondence between them and Planters Bank constitutes the offer and
acceptance, thus:
Letter dated July 18, 1985 of Jorge Navarra:
This will formalize my request for your kind
consideration in allowing my brother and me to buy back my
house and lot and my restaurant building and lot together with
the adjacent road lot.
Since my brother, who is working in Saudi Arabia,
has accepted this arrangement only recently as a result of my
urgent offer to him, perhaps it will be safe for us to set August
31, 1985 as the last day for the payment of a P300,000.00
downpayment. I hope you will grant us the opportunity to raise
the funds within this period, which includes an allowance for
delays.
The purchase price, I understand, will be based on
the redemption value plus accrued interest at the prevailing
rate up to the date of our sales contract. Maybe you can give
us a long term payment scheme on the basis of my brothers
annual savings of roughly US$30,000.00 everytime he comes
home for his home leave.
I realize that this is not a regular transaction but I am
seeking your favor to give me a chance to reserve whatever
values I can still recover from the properties and to avoid any
legal complications that may arise as a consequence of the
total loss of the Balangay lot. I hope that you will extend to
me your favorable action on this grave matter.
Letter dated August 16, 1985 of Planters Bank
Regarding your letter dated July 18, 1985, requesting that we
give up to August 31, 1985 to buy back your house and lot and
restaurant and building subject to a P300,000.00
downpayment on the purchase price, please be advised that the
Collection Committee has agreed to your request.
Please see Mr. Rene Castillo, Head, Acquired
Assets Unit, as soon as possible for the details of the
transaction so that they may work on the necessary
documentation. (Emphasis ours)
Given the above, the basic question that comes to mind is: Was the offer
certain and the acceptance absolute enough so as to engender a meeting of the
minds between the parties? Definitely not.
While the foregoing letters indicate the amount of P300,000.00 as down
payment, they are, however, completely silent as to how the succeeding
 Maybe you can give us a long-term payment scheme
installment payments shall be made. At most, the letters merely acknowledge that on the basis of my brothers annual savings of roughly
US$30,000.00 every time he comes home for his home leave.
the down payment of P300,000.00 was agreed upon by the parties. However, this

fact cannot lead to the conclusion that a contract of sale had been perfected. Quite
Again, the offer was not clear insofar as concerned the exact number of
recently, this Court held that before a valid and binding contract of sale can exist,
years that will comprise the long-term payment scheme. As we see it, the absence
the manner of payment of the purchase price must first be established since the
of a stipulated period within which the repurchase price shall be paid all the more
agreement on the manner of payment goes into the price such that a disagreement
adds to the indefiniteness of the Navarras offer.
on the manner of payment is tantamount to a failure to agree on the price. [6]

Clearly, then, the lack of a definite offer on the part of the spouses could
Too, the Navarras letter/offer failed to specify a definite amount of the
not possibly serve as the basis of their claim that the sale/repurchase of their
purchase price for the sale/repurchase of the subject properties. It merely stated
foreclosed properties was perfected. The reason is obvious: one essential element
that the purchase price will be based on the redemption value plus accrued interest
of a contract of sale is wanting: the price certain. There can be no contract of sale
at the prevailing rate up to the date of the sales contract. The ambiguity of this
unless the following elements concur: (a) consent or meeting of the minds; (b)
statement only bolsters the uncertainty of the Navarras so-called offer for it leaves
determinate subject matter; and (c) price certain in money or its equivalent. Such
much rooms for such questions, as: what is the redemption value? what prevailing
contract is born or perfected from the moment there is a meeting of minds upon
rate of interest shall be followed: is it the rate stipulated in the loan agreement or
the thing which is the object of the contract and upon the price. [7] Here, what is
the legal rate? when will the date of the contract of sale be based, shall it be upon
dramatically clear is that there was no meeting of minds vis-a-vis the price,
the time of the execution of the deed of sale or upon the time when the last
expressly or impliedly, directly or indirectly.
installment payment shall have been made? To our mind, these questions need

first to be addressed, discussed and negotiated upon by the parties before a

Further, the tenor of Planters Banks letter-reply negates the contention
definite purchase price can be arrived at.
of the Navarras that the Bank fully accepted their offer. The letter specifically

Significantly, the Navarras wrote in the same letter the following: stated that there is a need to negotiate on the other details of the
transaction[8] before the sale may be formalized. Such statement in the Banks sale/repurchase between the parties. As earlier mentioned, contracts are perfected

letter clearly manifests lack of agreement between the parties as to the terms of when there is concurrence of the parties wills, manifested by the acceptance by

the purported contract of sale/repurchase, particularly the mode of payment of the one of the offer made by the other.[9] Here, there was no concurrence of the offer

purchase price and the period for its payment. The law requires acceptance to be and acceptance as would result in a perfected contract of sale.

absolute and unqualified. As it is, the Banks letter is not the kind which would

constitute acceptance as contemplated by law for it does not evince any Evidently, what transpired between the parties was only a prolonged

categorical and unequivocal undertaking on the part of the Bank to sell the subject negotiation to buy and to sell, and, at the most, an offer and a counter-offer with

properties to the Navarras. no definite agreement having been reached by them. With the hard reality that no

perfected contract of sale/repurchase exists in this case, any independent

The Navarras attempt to prove the existence of a perfected contract of transaction between the Planters Bank and a third-party, like the one involving

sale all the more becomes futile in the light of the evidence that there was in the the Gatchalian Realty, cannot be affected.

first place no acceptance of their offer. It should be noted that aside from their

first letter dated July 18, 1985, the Navarras wrote another letter dated August 20, WHEREFORE, the petition is DENIED and the assailed decision and

1985, this time requesting the Bank that the down payment of P300,000.00 be resolution of the Court of Appeals are AFFIRMED.

instead taken from the excess payment made by the RRRC in redeeming its own

foreclosed properties. The very circumstance that the Navarras had to make this No pronouncement as to costs.

new request is a clear indication that no definite agreement has yet been reached

at that point. As we see it, this request constitutes a new offer on the part of the SO ORDERED.

Navarras, which offer was again conditionally accepted by the Bank as in fact it

even required the Navarras to submit a board resolution of RRRC before it could

proceed with the proposed sale/repurchase. The eventual failure of the spouses to

submit the required board resolution precludes the perfection of a contract of

[G.R. No. 107624. January 28, 1997]
GAMALIEL C. VILLANUEVA and IRENE C. VILLANUEVA, petitioners,
vs. COURT OF APPEALS, SPOUSES JOSE and LEONILA DELA
CRUZ, and SPOUSES GUIDO and FELICITAS
PILE, respondents.
DECISION
PANGANIBAN, J.:
The main issue here is whether a contract of sale has been perfected under
the attendant facts and circumstances.
The petition filed on December 18, 1992 assails the Decision [1] of
respondent Court of Appeals promulgated on October 23, 1992 in CA-G.R. CV
No. 30741 rendered by the Eleventh Division [2]dismissing the appeal of
petitioners and affirming the decision in Civil Case No. Q-50844 dated December
28, 1990 of the Regional Trial Court, Branch 83 of Quezon City, presided by
Judge Estrella T. Estrada. The dispositive portion of the affirmed decision of the
RTC reads: [3]
"WHEREFORE, judgment is hereby rendered dismissing plaintiff's instant action
for specific performance. However, defendant Jose de la Cruz is hereby ordered
to refund or reimburse the amount of Ten Thousand Pesos (P10,000.00) to
plaintiff Irene Villanueva.
The parties' other claims for damages and attorney's fees are also hereby
dismissed for being necessary consequences of litigation.
No pronouncement as to costs."
The Facts
The factual antecedents of this case as found by the trial court were
reproduced in the assailed Decision, [4] as follows: [5]
"x x x plaintiff (and now petitioner) Gamaliel Villanueva has been a tenant-
occupant of a unit in the 3-door apartment building erected on a parcel of land
owned by defendants-spouses (now private respondents) Jose Dela Cruz and
Leonila dela Cruz, with an area of 403 square meters, more or less, located at
Short Horn, Project 8, Quezon City (Exhibit 'L'), having succeeded in the
occupancy of said unit from the previous tenant Lolita Santos sometime in 1985.
About February of 1986, defendant Jose dela Cruz offered said parcel of land
with the 3-door apartment building for sale and plaintiffs, son and mother,
showed interest in the property. As an initial step, defendant Jose dela Cruz gave
plaintiff Irene Villanueva a letter of authority dated February 12, 1986 (Exhibit
'A') for her to inspect the subject property. Because said property was in arrears
in the payment of the realty taxes, defendant Jose dela Cruz approached plaintiff
Irene Villanueva and asked for a certain amount to pay for the taxes so that the
property would be cleared of any incumbrance (sic). Plaintiff Irene Villanueva
gave P10,000.00 on two occasions P5,000.00 on July 15, 1986 (Exhibit 'F') and
another P5,000.00 on October 17, 1986 (Exhibit 'D'). It was agreed by them that
said P10,000.00 would form part of the sale price of P550,000.00. Sometime
thereafter, defendant Jose dela Cruz went to plaintiff Irene Villanueva bringing
with him Mr. Ben Sabio, a tenant of one of the units in the 3-door apartment
building located on the subject property, and requested her and her son to allow
said Ben Sabio to purchase one-half (1/2) of the property where the unit occupied
by him pertained to which the plaintiffs consented, so that they would just
purchase the other half portion and would be paying only P265,000.00, they
having already given an amount of P10,000.00 used for paying the realty taxes in
arrears. Accordingly the property was subdivided and two (2) separate titles were
secured by defendants Dela Cruz. Mr. Ben Sabio immediately made payments by
installments.
Sometime in March, 1987 or more specifically on March 6, 1987, defendants
Dela Cruz executed in favor of their co-defendants, the spouses Guido Pili (sic)
and Felicitas Pili (sic), a Deed of Assignment of the other one-half portion of the
parcel of land wherein plaintiff Gamaliel Villanueva's apartment unit is situated,
designated as Lot 3-A of the Subdivision Plan (LRC) Psd-337290, Block 24, Pcs-
4865, with an area of 201.50 square meters, more or less, and covered by Transfer
Certificate of Title 332445, purportedly as full payment and satisfaction of an
indebtedness (sic) obtained from defendants Pili (sic) (Exhibit 'G'; Exhibit
'3'). Consequently, Transfer Certificate of Title No. 356040 was issued in the
name of defendants Pili (sic) also on March 6, 1987. Immediately thereafter, the
plaintiffs came to know of such assignment and transfer and issuance of a new
certificate of title in favor of defendants Pili (sic) so that plaintiff Gamaliel
Villanueva complained to the barangay captain of Bahay Turo, Quezon City, on
the ground that there was already an agreement between defendants Dela Cruz
and themselves that said portion of the parcel of land owned by defendants Dela
Cruz would be sold to him. As there was no settlement arrived at, the plaintiffs
elevated their complaint to this Court through the instant action."
The trial court rendered its decision in favor of private respondents. An
appeal was duly brought to public respondent which as earlier stated affirmed the
said decision. Hence, this petition for review on certiorari under Rule 45 of the
Rules of Court.
The Issues
The following errors are alleged to have been committed by public
respondent: [6]
"I
The Court of Appeals erred in failing to find that there is a perfected contract of
sale of subject property between petitioners and respondents spouses Dela Cruz
II
The Court of Appeals erred in applying the Statute of Frauds in this case when it
is a contract of sale that was partly executed
III
The Court of Appeals erred in not finding that this being a case of double sale of
immovable property, although respondents spouses Pili (sic) recorded the deed
of assignment to them in the Registry of Deeds they were not in good faith while
(sic) petitioners as purchasers thereof were in prior possession in good faith of
the property.
IV
The Court of Appeals erred in failing to reverse and set aside the appealed
judgment of the trial court and rendering a judgment for petitioners"
In the opinion of this Court, these four issues may be summed up in a single
question: Under the factual circumstances of this case, was there a perfected
contract of sale?
Petitioners contend that the adopted findings of facts of public respondent
are contradicted by its ruling that there is no agreement as to the price of the
apartments. They argue that on the basis of the facts found by public respondent,
"the conclusion is ineluctable that there was a perfected contract of sale of the
subject property." [7] According to petitioners, private respondents had to secure
their consent to enable "Sabio to buy the one-half portion of the property where
the unit Sabio was renting pertains so that petitioners will pay only the balance
of P265,000.00 for the purchase of the other half after deducting the P10,000.00
petitioners advanced." [8] Public respondent's conclusion that the P10,000.00 paid
to petitioners was not intended as part of the purchase price allegedly "collides"
with its quoted findings, as follows: [9]
"It was agreed by them that said P10,000.00 would form part of the sale price
of P550,000.00. x x x defendant Jose de la Cruz .x x x requested her and her son
to allow said Ben Sabio to purchase one-half (1/2) of the property where the unit
occupied by him pertained to which plaintiffs consented, so they would purchase
the other half portion and would be paying only P265,000.00 they having already
given an amount of P10,000,00 used for paying the realty taxes in arrears.x x x"
(Underscoring in the petition).
The Court's Ruling
The arguments of petitioners do not persuade us. While it is true that
respondent Court adopted the recitation of facts of the trial court, it nonetheless
later corrected the relevant portions thereof as it found that no perfected contract
of sale was agreed upon. Thus, public respondent explained: [10]
"Appellants' theory of earnest money cannot be sustained in view of the catena of
circumstance showing that the P10,000.00 given to appellees was not intended to
form part of the purchase price. As the great commentator Manresa observes that
the delivery of part of the purchase price should not be understood as constituting
earnest money unless it be shown that such was the intention of the parties
(Manresa Commentaries on the Civil Code, 2d ed., Vol. 10, p. 85). Moreover, as
can be gleaned from the records there was no concrete agreement to the price and
manner of payment:
 'Q Will you tell us why your transaction with plaintiffs
(petitioners herein) did not materialize?
A Because I have been returning to Mrs. Villanueva and
in fact we have executed a Deed of Sale which was
in fact not signed.
Q Why did you not sign the Deed of Sale you mentioned?
A The Villanuevas told me to prepare the documents
involved in this transaction because according to
her (sic) she (sic) was only waiting for the money
to come but because I was then being pressed by
Felicitas Pile for the payment of my loan. I was
constrained to assign the property to her.
Q What are your other reasons?
A Aside from that we were still huggling (sic) for the
purchase price then and since I was being pressed
by my creditor, I was forced to make the
assignment.'"
The most that public respondent can be faulted with is its failure to
expressly state that although its conclusion of law was correct, the trial court erred
in its statement of the facts.
Was There a Perfected Contract of Sale?
Petitioners contend that private respondents' counsel admitted that "P10,000
is partial or advance payment of the property (TSN, June 14 [should be 15], 4
(sic) 1990, pages 6 to 7)." Necessarily then, there must have been an agreement
as to price. They cite Article 1482 of the Civil Code which provides that
"(w)henever earnest money is given in a contract of sale, it shall be considered as
part of the price and as proof of the perfection of the contract." [11]
Private respondents contradict this claim with the argument that "(w)hat
was clearly agreed (upon) between petitioners and respondents Dela Cruz was
that the P10,000.00 primarily intended as payment for realty tax was going to
form part of the consideration of the sale if and when the transaction would finally
be consummated." [12] Private respondents insist that there "was no clear
agreement as to the true amount of consideration." [13]
Generally, the findings of fact of the lower courts are entitled to great weight
and not disturbed except for cogent reasons. [14] Indeed, they should not be
changed on appeal in the absence of a clear showing that the trial court
overlooked, disregarded, or misinterpreted some facts of weight and significance,
which if considered would have altered the result of the case. [15] In this case, and
subject to the above clarification made by the appellate court, petitioners have
failed to convince us to alter such findings.
In fact, a review of the evidence merely strengthens the conclusions of
public respondent. We scoured the transcripts but we found that respondent dela
Cruz never testified that he (or his spouse Leonila) had agreed to a definite price
for the subject property. In fact, his testimony during the cross-examination
firmly negated any price agreement with petitioners because he and his wife
quoted the price of P575,000.00 and did not agree to reduce it to P550,000.00 as
claimed by petitioner: [16]
"Q And despite the fact that the property was mortgaged with
Development Bank of Rizal you still contrated (sic) Sandiego
(sic) for the purpose of selling the property?
A Yes, sir.
Q And did Sandiego (sic) agree as agent in selling the property despite
the fact that it was mortgaged with the Development Bank of
Rizal?
A Yes, sir.
Q Can you recall the condition you offered to Sandiego (sic) to act as
your agent in selling the same?
A He will get certain commission for the same.
Q Will you state the price and conditions set forth in selling the
property?
A P575 thousand, sir.
Q That is the same offer that was given to you by plaintiff Mrs.
Villanueva?
A I can not recall, I think so.
Q And you will agree with me that 1/2 of P575 thousand is how much
(sic)?
ATTY. MANZO:
 There (is) nothing to agree with you counsel.
ATTY. GUPIT:
And the offer to you, the agreed price between you and Mrs.
Villanueva is P275 thousand as stated in the agreement that was
prepared?
ATTY. MANZO:
Counsel is again assuming that there was an agreement made already.
(ATTY. GUPIT:)
He answered there is a document between Villanueva and Dela Cruz.
ATTY. (MANZO):
Let the witness be confronted by the document."
We are not unmindful of petitioner Irene Villanueva's claim that the parties
agreed on the sum of P550,000.00, as follows: [17]
"ATTY. GUPIT
What was the result of the negotiations?
WITNESS (Irene Villanueva):
We agreed that he would sell the land to us for the sum of, the amount
of P550,000.00
xxx xxx xxx
WITNESS
After the Deed of Sale relative to the purchase of the property was
prepared, Mr. dela Cruz (private respondent Jose) came to me
and told me that he talked with one of the tenants and he offered
to buy the portion he was occupying if I will agree and I will
cause the partition of the property between us.
ATTY. GUPIT
Did you agree with the proposal of Mr. dela Cruz that the portion of
the property will be sold to one of the tenants?
WITNESS
Yes(,) sir. I agreed because we are (sic) both tenants.
ATTY. GUPIT
How about the price? How much are (sic) you supposed to pay in
order to complete your payments?
WITNESS
We are (sic) supposed to divide the amount of P550,000.00."
To settle the above conflicting claims of the parties, petitioners could have
presented the contract of sale allegedly prepared by private respondent Jose dela
Cruz. Unfortunately, the contract was not presented in evidence. However,
petitioners aver that even if the unsigned deed of sale was not produced, private
respondent Jose dela Cruz "admitted preparing (said) deed in accordance with
their agreement." [18] This judicial admission" is allegedly the "best proof of its
existence." [19] Further it was "impossible" for petitioners to produce the same
"since it was and remained in the possession" of private respondent Jose dela
Cruz. [20]
We do not agree with petitioners. Assuming arguendo that such draft deed
existed, it does not necessarily follow that there was already a definite agreement
as to the price. If there was, why then did private respondent Jose de la Cruz not
sign it? If indeed the draft deed of sale was that important to petitioners' cause,
they should have shown some effort to procure it. They could have secured it
through a subpoena duces tecum or thru the use of one of the modes of discovery.
But petitioners made no such effort. And even if produced, it would not have
commanded any probative value as it was not signed.
As has been said in an old case, the price of the leased land not having been
fixed, the essential elements which give life to the contract were lacking. It
follows that the lessee cannot compel the lessor to sell the leased land to
him. [21] The price must be certain, it must be real, not fictitious. [22] It is not
necessary that the certainty of the price be actual or determined at the time of
executing the contract. The fact that the exact amount to be paid therefor is not
precisely fixed, is no bar to an action to recover such compensation, provided the
contract, by its terms, furnishes a basis or measure for ascertaining the amount
agreed upon. [23] The price could be made certain by the application of known
factors; where, in a sale of coal, a basic price was fixed, but subject to
modification "in proportion to variations in calories and ash content, and not
otherwise," the price was held certain. [24] A contract of sale is not void for
uncertainty when the price, though not directly stated in terms of pesos and
centavos, can be made certain by reference to existing invoices identified in the
agreement. In this respect, the contract of sale is perfected. [25] The price must be
certain, otherwise there is no true consent between the parties. [26] There can be CORNELIA BALADAD (Represented by Heinrich M. Angeles G.R. No. 160743
no sale without a price. [27] In the instant case, however, what is dramatically clear and Rex Aaron A. Baladad),
from the evidence is that there was no meeting of mind as to the price, expressly Petitioner,
or impliedly, directly or indirectly.
- versus -
Sale is a consensual contract. He who alleges it must show its existence by
competent proof. Here, the very essential element of price has not been proven.
Lastly, petitioners' claim that they are ready to pay private respondents [28] is SERGIO A. RUBLICO and SPOUSES LAUREANO F.
immaterial and irrelevant as the latter cannot be forced to accept such payment, YUPANO,
there being no perfected contract of sale in the first place. Respondents.

x------------------------------------------------------------------------------------x

Applicability of Statute of Frauds and the Law on Double Sale

DECISION

Petitioners contend that the statute of frauds does not apply because such NACHURA, J.:
statute applies only to executory contracts whereas in this case the contract of sale
had already been partly executed. [29] Further, petitioners, citing Article 1544 of
the Civil Code asseverate that being in possession of the property in good faith
therefore they should be deemed the lawful owners thereof. [30] On the other hand,
private respondents counter that the contract in this case is a "mere executory Before us is a petition for review of the November 5, 2002 Decision [1] of the Court
contract and not a completed or executed contract." [31]
of Appeals (CA), as well as its November 10, 2003 Resolution [2] in CA-G.R. CV
Both contentions are inaccurate. True, the statute of frauds applies only to
executory contracts and not to partially or completely executed No. 34979, which reversed and set aside the September 9, 1991 Decision [3] of
ones. [32] However, there is no perfected contract in this case, therefore there is no Branch 133 of the Regional Trial Court (RTC) of Makati City, in a complaint for
basis for the application of the statute of frauds. The application of such statute
presupposes the existence of a perfected contract and requires only that a note or annulment of sale, cancellation of title and damages[4] filed by petitioner Cornelia
memorandum be executed in order to compel judicial enforcement thereof. Also,
the civil law rule on double sale finds no application because there was no sale at Baladad against herein respondents.
all to begin with.
At bottom, what took place was only a prolonged negotiation to buy and to Below are the antecedent facts.
sell, and at most, an offer and a counter-offer but no definite agreement was
reached by the parties. Hence, the rules on perfected contract of sale, statute of
frauds and double sale find no relevance nor application.
Two parcels of land located in what was then called the Municipality of Makati,
WHEREFORE, the Petition is DENIED and the assailed Decision
Province of Rizal were registered in the name of Julian Angeles on December 20,
is AFFIRMED. Costs against petitioners.
1965 under Transfer Certificate of Title (TCT) No. 155768. [5] On December 3,
SO ORDERED.
1968, Julian and Corazon Rublico, after co-habiting for some time, got
married. Julian was already 65 years old then, while Corazon was already
67.[6] At that time, Corazon already had a son, respondent Sergio A. Rublico, by
Teofilo Rublico, who died sometime before the outbreak of the Second World
War.[7] After Teofilos death, Corazon cohabited with Panfilo de Jesus and then,
later, with Julian. Julian died on February 2, 1969[8] leaving no compulsory
heirs[9] except his wife and his brother, Epitacio.
On February 4, 1985, while on her death bed, Cornelia was surrounded by four
individuals her niece, petitioner Cornelia Baladad; her nephew, Vicente Angeles;
a certain Rosie Francisco; and notary public Atty. Julio Francisco who had been
called, accompanied by Cornelia herself to Corazons house, to notarize a deed
entitled Extrajudicial Settlement of Estate with Absolute Sale. In his testimony,
Atty. Francisco said that Corazon imprinted her thumbmark on the document
after he read and explained the contents thereof in Tagalog to her.[10] In the said
document, Corazon and Epitacio adjudicated unto themselves the two lots
registered in the name of Julian with three-fourths () of the property going to
Corazon
and the remaining one-fourth () to Epitacio. The document also stated that both
Corazon and Epitacio conveyed by way of absolute sale both their shares in the
said lots in favor of Cornelia, Epitacios daughter, in exchange for the amount
of P107,750.00. Corazons thumbmark was imprinted at the bottom of the said
deed, while Vicente, Epitacios son, signed in behalf of Epitacio by virtue of a
power of attorney.[11] There was no signature of Cornelia on the said document.
Two days later, Corazon passed away.
Title over the said lots remained in the name of Julian, but on July 20, 1987, more
than two years after Corazons death, respondent Sergio executed an Affidavit of
Adjudication by Sole Heir of Estate of Deceased Person [12] adjudicating unto
himself the same parcels of land which had been subject of the deed of sale
between Corazon and Cornelia. On October 27, 1987, Sergio filed a petition for
reconstitution of the owners copy of TCT No. 155768 averring that after the death
of Corazon, he tried to locate the copy of the title but to no avail. [13] The petition
was granted on January 11, 1988[14] and a new owners duplicate title (TCT No.
155095) was issued in the name of Sergio on April 18, 1988.[15]
On May 31, 1988, Sergio sold the two lots to spouses Laureano and Felicidad
Yupano for P100,000.00.[16] Sergios certificate of title was cancelled and TCT
No. 155338 was issued in favor of the Yupanos. On July 26, 1988, the said title
was also cancelled and TCT Nos. 156312[17] and 156313[18] separately covering
the two parcels of land were issued. On July 17, 1990, Cornelia caused the
annotation on the said TCTs of her adverse claim over the said properties.
Meanwhile, there were seven families who occupied the lots and paid rentals to
Julian and, later, to Corazon. After Corazons death, they paid rentals to Cornelia
through Pacifica Alvaro, and later to Cornelias brother, Vicente, when Cornelia
transferred her residence to the United States. When the Yupanos demanded
payment of rentals from the tenants, the latter filed a complaint for interpleader
on May 19, 1989. The case was docketed as Civil Case No. 89-3947. On
September 3, 1990, Branch 148 of the Makati RTC rendered a
Decision[19] declaring the Yupanos as the legal and lawful owners of the two lots.
On August 3, 1990, a month before the promulgation of the decision, Cornelia
filed a complaint for annulment of sale, cancellation of title and damages, which
is now the subject of this Rule 45 petition. Cornelia argued that Sergio knew of
the sale made by Corazon in her favor and was even given part of the
proceeds. Cornelia also averred that the Yupanos could not be considered as
buyers in good faith, because they only lived a block from the disputed properties
and had knowledge that the two lots had been sold to Cornelia prior to Corazons
death.[20]
For their part, respondents argued that the Extrajudicial Settlement with Absolute
Sale dated February 4, 1985 could not have been executed because at the
time, Corazon was already dying. Ignacio Rublico, Sergios son, also testified that
he saw Vicente Angeles holding the hand of Corazon to affix her thumbmark on
a blank sheet of paper.[21] Sergio also argued that the property was originally
bought by his mother, but was only registered in the name of Julian in keeping
with the tradition at that time.[22]
After the trial, Branch 133 of the Makati RTC ruled in favor of Cornelia.[23] Upon
appeal, the CA reversed the RTC ruling[24] prompting Cornelia to file a motion
for reconsideration,[25]but the same was denied for lack of merit.[26] Hence, this
petition.
The determinative issue is the validity of the Extrajudicial Settlement of Estate
with Absolute Sale purportedly executed by Corazon prior to her death.
We find in favor of petitioner.
The Extrajudicial Settlement of Estate with Absolute Sale executed by Corazon
and Epitacio through the latters attorney-in-fact, Vicente Angeles, partakes of the
nature of a contract. To be precise, the said document contains two contracts, to
wit: the extrajudicial adjudication of the estate of Julian Angeles between
Corazon and Epitacio as Julians compulsory heirs, and the absolute sale of the
adjudicated properties to Cornelia. While contained in one document, the two are
severable and each can stand on its own. Hence, for its validity, each must comply
with the requisites prescribed in Article 1318 of the Civil Code, namely (1)
consent of the contracting parties; (2) object certain, which is the subject matter
of the contract; and (3) cause of the obligation which is established.
During the trial, respondents argued that the document was not valid because at
the time it was executed, Corazon was already weak and could not have
voluntarily given her consent thereto. One of the witnesses for the defense even
testified that it was Vicente who placed Corazons thumbprint on a blank
document, which later turned out to be the Extrajudicial Adjudication with
Absolute Sale. We are, however, inclined to agree with the RTCs finding on this
matter, viz:
Ignacio is not a reliable witness. He was very certain the event
took place on February 4, 1985 and Corazon was already dead.
 This was his testimony on cross-examination. He had
forgotten that Corazon died on February 6, 1985 or two days
after. So, when confronted with this contradiction, he had to
change his stance and claim that Corazon was still alive when
it happened.[27]
It is also noteworthy that in the course of the trial, respondents did not question
Corazons mental state at the time she executed the said document.
Respondents only focused on her physical weakness, arguing that she could not
have executed the deed because she was already dying and, thus, could not appear
before a notary public.[28] Impliedly, therefore, respondents indulged the
presumption that Corazon was still of sound and disposing mind when she agreed
to adjudicate and sell the disputed properties on February 4, 1985.
Respondents also failed to refute the testimony of Atty. Francisco, who notarized
the deed, that he personally read to Corazon the contents of the Extrajudicial
Settlement of Estate with Absolute Sale, and even translated its contents
to Tagalog.
And, most important of all is the fact that the subject deed is, on its face,
unambiguous. When the terms of a contract are lawful, clear and unambiguous,
facial challenge cannot be allowed. We should not go beyond the provisions of a
clear and unambiguous contract to determine the intent of the parties thereto,
because we will run the risk of substituting our own interpretation for the true
intent of the parties.
It is immaterial that Cornelias signature does not appear on the Extrajudicial
Settlement of Estate with Absolute Sale. A contract of sale is perfected the
moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price.[29] The fact that it was Cornelia herself who brought
Atty. Francisco to Corazons house to notarize the deed shows that she had
previously given her consent to the sale of the two lots in her favor. Her
subsequent act of exercising dominion over the subject properties further
strengthens this assumption.
Based on these findings, we are constrained to uphold the validity of the disputed
deed. Accordingly, respondent Sergio Rublico never had the right to sell the
subject properties to the Yupanos, because he never owned them to begin
with. Nemo dat quod non habet. Even before he could inherit any share of the
properties from his mother, Corazon, the latter had already sold them to Cornelia.
The Yupanos, for their part, cannot feign ignorance of all these, and argue that
Sergios certificate of title was clean on its face. Even prior to May 31, 1988, when
they bought the properties from Sergio, it had been widely known in the
neighborhood and among the tenants residing on the said lots that ownership of
the two parcels of land had been transferred to Cornelia as, in fact, it was
Cornelias brother, Vicente, who had been collecting rentals on the said properties.
The Yupanos lived only a block away from the disputed lots. [30] The husband,
Laureano Yupano, was relatively close to Julian and to Epitacio and had known
Cornelia before the latter left to live in the United States from 1979 to
1983.[31] Before he bought the property from Sergio, Laureano himself verified
that there were tenants who had been paying rentals to Vicente. [32] All these 1. the Extrajudicial Adjudication of Estate with
should have alerted him to doubt the validity of Sergios title over the said Absolute Sale dated February 4, 1985 as VALID;
lots. Yet, the Yupanos chose to ignore these obvious indicators. 2. the sale between respondent Sergio Rublico and
Spouses Laureano Yupano is NULL and
In Abad v. Guimba,[33] we explained: VOID. Respondent Sergio Rublico is ordered to return

[A]s a rule, the purchaser is not required to explore further
than what the Certificate indicates on its face. This rule,
however, applies only to innocent purchasers for value and in
good faith; it excludes a purchaser who has knowledge of a
defect in the title of the vendor, or of facts sufficient to induce
a reasonable prudent man to inquire into the status of the
property.[34]
the P100,000.00 paid by the Yupanos, less the amount
spent on the acquisition of the invalid title procured by
him with the acquiescence of the Yupanos; and
3. the Register of Deeds of Makati is ordered
to CANCEL Transfer Certificate of Title Nos. 156312
and 156313 in the name of Laureano Yupano and, in lieu

We thus declare the Affidavit of Adjudication by Sole Heir of Estate of thereof, RESTORE Transfer Certificate No. 155768.

Deceased person executed by Sergio Rublico to be void and without any

effect. The sale made by him to spouses Yupano is, likewise, declared null and SO ORDERED.

void. Respondent Sergio Rublico is ordered to return the amount of P100,000.00

paid to him by spouses Laureano Yupano, less the amount spent on the acquisition
of the invalid title procured by him with the acquiescence of the Yupanos.

WHEREFORE, premises considered, the Decision of the Court of

Appeals in CA-G.R. CV No. 34979 dated November 5, 2002 is
hereby REVERSED and SET ASIDE. Accordingly, the Decision of the
Regional Trial Court of Makati dated September 9, 1991 is REINSTATED with
MODIFICATION in that:
[G.R. No. 137290. July 31, 2000]
SAN MIGUEL PROPERTIES PHILIPPINES, INC., petitioner,
vs. SPOUSES ALFREDO HUANG and GRACE HUANG, respondents.
DECISION
MENDOZA, J.:
[1]
This is a petition for review of the decision, dated April 8, 1997, of the Court
of Appeals which reversed the decision of the Regional Trial Court, Branch 153,
Pasig City dismissing the complaint brought by respondents against petitioner for
enforcement of a contract of sale.
The facts are not in dispute.
Petitioner San Miguel Properties Philippines, Inc. is a domestic corporation
engaged in the purchase and sale of real properties. Part of its inventory are two
parcels of land totalling 1, 738 square meters at the corner of Meralco Avenue
and General Capinpin Street, Barrio Oranbo, Pasig City, which are covered by
TCT Nos. PT-82395 and PT-82396 of the Register of Deeds of Pasig City.
On February 21, 1994, the properties were offered for sale for P52,140,000.00 in
cash. The offer was made to Atty. Helena M. Dauz who was acting for respondent
spouses as undisclosed principals. In a letter[2] dated March 24, 1994, Atty. Dauz
signified her clients interest in purchasing the properties for the amount for which
they were offered by petitioner, under the following terms: the sum
of P500,000.00 would be given as earnest money and the balance would be paid
in eight equal monthly installments from May to December, 1994. However,
petitioner refused the counter-offer.
On March 29, 1994, Atty. Dauz wrote another letter[3] proposing the following
terms for the purchase of the properties, viz:
This is to express our interest to buy your-above-mentioned property with
an area of 1, 738 sq. meters. For this purpose, we are enclosing herewith the
sum of P1,000,000.00 representing earnest-deposit money, subject to the
following conditions.
1. We will be given the exclusive option to purchase the property within
the 30 days from date of your acceptance of this offer.
2. During said period, we will negotiate on the terms and conditions of the
purchase; SMPPI will secure the necessary Management and Board
approvals; and we initiate the documentation if there is mutual agreement
between us.
3. In the event that we do not come to an agreement on this transaction,
the said amount of P1,000,000.00 shall be refundable to us in full upon
demand. . . .
Isidro A. Sobrecarey, petitioners vice-president and operations manager for
corporate real estate, indicated his conformity to the offer by affixing his
signature to the letter and accepted the "earnest-deposit" of P1 million. Upon
request of respondent spouses, Sobrecarey ordered the removal of the "FOR
SALE" sign from the properties.
Atty. Dauz and Sobrecarey then commenced negotiations. During their meeting
on April 8, 1994, Sobrecarey informed Atty. Dauz that petitioner was willing to
sell the subject properties on a 90-day term. Atty. Dauz countered with an offer
of six months within which to pay.
On April 14, 1994, the parties again met during which Sobrecarey informed Atty.
Dauz that petitioner had not yet acted on her counter-offer. This prompted Atty.
Dauz to propose a four-month period of amortization.
On April 25, 1994, Atty. Dauz asked for an extension of 45 days from April 29,
1994 to June 13, 1994 within which to exercise her option to purchase the
property, adding that within that period, "[we] hope to finalize [our] agreement
on the matter."[4] Her request was granted.
On July 7, 1994, petitioner, through its president and chief executive officer,
Federico Gonzales, wrote Atty. Dauz informing her that because the parties failed
to agree on the terms and conditions of the sale despite the extension granted by
petitioner, the latter was returning the amount of P1 million given as "earnest-
deposit."[5]
On July 20, 1994, respondent spouses, through counsel, wrote petitioner
demanding the execution within five days of a deed of sale covering the
properties. Respondents attempted to return the "earnest-deposit" but petitioner
refused on the ground that respondents option to purchase had already expired.
On August 16, 1994, respondent spouses filed a complaint for specific
performance against petitioner before the Regional Trial Court, Branch 133,
Pasig City where it was docketed as Civil Case No. 64660.
Within the period for filing a responsive pleading, petitioner filed a motion to
dismiss the complaint alleging that (1) the alleged "exclusive option" of
respondent spouses lacked a consideration separate and distinct from the purchase
price and was thus unenforceable and (2) the complaint did not allege a cause of
action because there was no "meeting of the minds" between the parties and,
therefore, no perfected contract of sale. The motion was opposed by respondents.
On December 12, 1994, the trial court granted petitioners motion and dismissed
the action. Respondents filed a motion for reconsideration, but it was denied by
the trial court. They then appealed to the Court of Appeals which, on April 8,
1997, rendered a decision[6] reversing the judgment of the trial court. The
appellate court held that all the requisites of a perfected contract of sale had been
complied with as the offer made on March 29, 1994, in connection with which
the earnest money in the amount of P1 million was tendered by respondents, had
already been accepted by petitioner. The court cited Art. 1482 of the Civil Code
which provides that "[w]henever earnest money is given in a contract of sale, it
shall be considered as part of the price and as proof of the perfection of the
contract." The fact the parties had not agreed on the mode of payment did not
affect the contract as such is not an essential element for its validity. In addition,
the court found that Sobrecarey had authority to act in behalf of petitioner for the
sale of the properties.[7]
Petitioner moved for reconsideration of the trial courts decision, but its motion
was denied. Hence, this petition.
Petitioner contends that the Court of Appeals erred in finding that there was a
perfected contract of sale between the parties because the March 29, 1994 letter
of respondents, which petitioner accepted, merely resulted in an option contract,
albeit it was unenforceable for lack of a distinct consideration. Petitioner argues
that the absence of agreement as to the mode of payment was fatal to the
perfection of the contract of sale. Petitioner also disputes the appellate courts
ruling that Isidro A. Sobrecarey had authority to sell the subject real properties. [8]
Respondents were required to comment within ten (10) days from notice.
However, despite 13 extensions totalling 142 days which the Court had given to
them, respondents failed to file their comment. They were thus considered to have
waived the filing of a comment.
The petition is meritorious.
In holding that there is a perfected contract of sale, the Court of Appeals relied
on the following findings: (1) earnest money was allegedly given by respondents
and accepted by petitioner through its vice-president and operations manager,
Isidro A. Sobrecarey; and (2) the documentary evidence in the records show that
there was a perfected contract of sale.
With regard to the alleged payment and acceptance of earnest money, the Court
holds that respondents did not give the P1 million as "earnest money" as provided
by Art. 1482 of the Civil Code. They presented the amount merely as a deposit
of what would eventually become the earnest money or downpayment should a
contract of sale be made by them. The amount was thus given not as a part of the
purchase price and as proof of the perfection of the contract of sale but only as a
guarantee that respondents would not back out of the sale. Respondents in fact
described the amount as an "earnest-deposit." In Spouses Doromal, Sr. v. Court
of Appeals,[9] it was held:
. . . While the P5,000 might have indeed been paid to Carlos in October,
1967, there is nothing to show that the same was in the concept of the
earnest money contemplated in Art. 1482 of the Civil Code, invoked by
petitioner, as signifying perfection of the sale. Viewed in the backdrop of
the factual milieu thereof extant in the record, We are more inclined to
believe that the said P5,000.00 were paid in the concept of earnest money
as the term was understood under the Old Civil Code, that is, as a
guarantee that the buyer would not back out, considering that it is not clear
that there was already a definite agreement as to the price then and that
petitioners were decided to buy 6/7 only of the property should respondent
Javellana refuse to agree to part with her 1/7 share.[10]
In the present case, the P1 million "earnest-deposit" could not have been given as
earnest money as contemplated in Art. 1482 because, at the time when petitioner
accepted the terms of respondents offer of March 29, 1994, their contract had not
yet been perfected. This is evident from the following conditions attached by
respondents to their letter, to wit: (1) that they be given the exclusive option to
purchase the property within 30 days from acceptance of the offer; (2) that during
the option period, the parties would negotiate the terms and conditions of the
purchase; and (3) petitioner would secure the necessary approvals while
respondents would handle the documentation.
The first condition for an option period of 30 days sufficiently shows that a sale
was never perfected. As petitioner correctly points out, acceptance of this
condition did not give rise to a perfected sale but merely to an option or an
accepted unilateral promise on the part of respondents to buy the subject
properties within 30 days from the date of acceptance of the offer. Such option
giving respondents the exclusive right to buy the properties within the period
agreed upon is separate and distinct from the contract of sale which the parties
may enter.[11] All that respondents had was just the option to buy the properties
which privilege was not, however, exercised by them because there was a failure
to agree on the terms of payment. No contract of sale may thus be enforced by
respondents.
Furthermore, even the option secured by respondents from petitioner was fatally
defective. Under the second paragraph of Art. 1479, an accepted unilateral
promise to buy or sell a determinate thing for a price certain is binding upon the
promisor only if the promise is supported by a distinct consideration.
Consideration in an option contract may be anything of value, unlike in sale where
it must be the price certain in money or its equivalent. There is no showing here
of any consideration for the option. Lacking any proof of such consideration, the
option is unenforceable.
Equally compelling as proof of the absence of a perfected sale is the second
condition that, during the option period, the parties would negotiate the terms and
conditions of the purchase. The stages of a contract of sale are as follows:
(1) negotiation, covering the period from the time the prospective contracting
parties indicate interest in the contract to the time the contract is perfected;
(2) perfection, which takes place upon the concurrence of the essential elements
of the sale which are the meeting of the minds of the parties as to the object of
the contract and upon the price; and (3) consummation, which begins when the
parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment thereof.[12] In the present case, the parties never
got past the negotiation stage. The alleged "indubitable evidence"[13] of a
perfected sale cited by the appellate court was nothing more than offers and
counter-offers which did not amount to any final arrangement containing the
essential elements of a contract of sale. While the parties already agreed on the
real properties which were the objects of the sale and on the purchase price, the
fact remains that they failed to arrive at mutually acceptable terms of payment,
despite the 45-day extension given by petitioner.
The appellate court opined that the failure to agree on the terms of payment was
no bar to the perfection of the sale because Art. 1475 only requires agreement by
the parties as to the price of the object. This is error. In Navarro v. Sugar
Producers Cooperative Marketing Association, Inc.,[14] we laid down the rule that
the manner of payment of the purchase price is an essential element before a valid
and binding contract of sale can exist. Although the Civil Code does not expressly
state that the minds of the parties must also meet on the terms or manner of
payment of the price, the same is needed, otherwise there is no sale. As held
in Toyota Shaw, Inc. v. Court of Appeals,[15] agreement on the manner of payment
goes into the price such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price.[16] In Velasco v. Court of
Appeals,[17] the parties to a proposed sale had already agreed on the object of sale
and on the purchase price. By the buyers own admission, however, the parties
still had to agree on how and when the downpayment and the installments were
to be paid. It was held:
. . . Such being the situation, it can not, therefore, be said that a definite and
firm sales agreement between the parties had been perfected over the lot in
question. Indeed, this Court has already ruled before that a definite
agreement on the manner of payment of the purchase price is an essential
element in the formation of a binding and enforceable contract of sale. The
fact, therefore, that the petitioners delivered to the respondent the sum of
P10,000 as part of the down-payment that they had to pay cannot be
considered as sufficient proof of the perfection of any purchase and sale
agreement between the parties herein under Art. 1482 of the new Civil
Code, as the petitioners themselves admit that some essential matter - the
terms of the payment - still had to be mutually covenanted.[18]
Thus, it is not the giving of earnest money, but the proof of the concurrence of all
the essential elements of the contract of sale which establishes the existence of a
perfected sale.
In the absence of a perfected contract of sale, it is immaterial whether Isidro A.
Sobrecarey had the authority to enter into a contract of sale in behalf of petitioner.
This issue, therefore, needs no further discussion.
WHEREFORE, the decision of the Court of Appeals is REVERSED and
respondents complaint is DISMISSED. SO ORDERED.
[G.R. No. 120820. August 1, 2000]
SPS. FORTUNATO SANTOS and ROSALINDA R. SANTOS, petitioners,
vs. COURT OF APPEALS, SPS. MARIANO R. CASEDA and
CARMEN CASEDA, respondents.
DECISION
QUISUMBING, J.:
For review on certiorari is the decision of the Court of Appeals, dated
March 28, 1995, in CA-G.R. CV No. 30955, which reversed and set aside the
judgment of the Regional Trial Court of Makati, Branch 133, in Civil Case No.
89-4759. Petitioners (the Santoses) were the owners of a house and lot informally
sold, with conditions, to herein private respondents (the Casedas). In the trial
court, the Casedas had complained that the Santoses refused to deliver said house
and lot despite repeated demands. The trial court dismissed the complaint for
specific performance and damages, but in the Court of Appeals, the dismissal was
reversed, as follows:
WHEREFORE, in view of the foregoing, the decision appealed from is hereby
REVERSED and SET ASIDE and a new one entered:
1. GRANTING plaintiffs-appellants a period of NINETY (90) DAYS from the
date of the finality of judgment within which to pay the balance of the obligation
in accordance with their agreement;
2. Ordering appellees to restore possession of the subject house and lot to the
appellants upon receipt of the full amount of the balance due on the purchase
price; and
3. No pronouncement as to costs.
SO ORDERED.[1]
The undisputed facts of this case are as follows:
The spouses Fortunato and Rosalinda Santos owned the house and lot
consisting of 350 square meters located at Lot 7, Block 8, Better Living
Subdivision, Paranaque, Metro Manila, as evidenced by TCT (S-11029) 28005
of the Register of Deeds of Paranaque. The land together with the house, was
mortgaged with the Rural Bank of Salinas, Inc., to secure a loan of P150,000.00
maturing on June 16, 1987.
Sometime in 1984, Rosalinda Santos met Carmen Caseda, a fellow market
vendor of hers in Pasay City and soon became very good friends with her. The
duo even became kumadres when Carmen stood as a wedding sponsor of
Rosalinda's nephew.
On June 16, 1984, the bank sent Rosalinda Santos a letter demanding
payment of P16,915.84 in unpaid interest and other charges. Since the Santos
couple had no funds, Rosalinda offered to sell the house and lot to Carmen. After
inspecting the real property, Carmen and her husband agreed.
Sometime that month of June, Carmen and Rosalinda signed a document,
which reads:
Received the amount of P54,100.00 as a partial payment of Mrs. Carmen Caseda
to the (total) amount of 350,000.00 (house and lot) that is own (sic) by Mrs.
Rosalinda R. Santos.
(Mrs.) (Sgd.) Carmen Caseda
direct buyer
Mrs. Carmen Caseda
(Sgd.) Rosalinda Del R. Santos
Owner
Mrs. Rosalinda R. Santos
House and Lot
Better Living Subd. Paraaque, Metro Manila
Section V Don Bosco St."[2]
The other terms and conditions that the parties agreed upon were for the
Caseda spouses to pay: (1) the balance of the mortgage loan with the Rural bank
amounting to P135,385.18; (2) the real estate taxes; (3) the electric and water
bills; and (4) the balance of the cash price to be paid not later than June 16, 1987,
which was the maturity date of the loan.[3]
 The Casedas gave an initial payment of P54,100.00 and immediately took
possession of the property, which they then leased out. They also paid in
installments, P81,696.84 of the mortgage loan.The Casedas, however, in
1987. Notwithstanding the state of their finances, Carmen nonetheless paid in
March 1990, the real estate taxes on the property for 1981-1984. She also settled
the electric bills from December 12, 1988 to July 12, 1989. All these payments
were made in the name of Rosalinda Santos.
In January 1989, the Santoses, seeing that the Casedas lacked the means to
pay the remaining installments and/or amortization of the loan, repossessed the
property. The Santoses then collected the rentals from the tenants.
In February 1989, Carmen Caseda sold her fishpond in Batangas. She then
approached petitioners and offered to pay the balance of the purchase price for
the house and lot. The parties, however, could not agree, and the deal could not
push through because the Santoses wanted a higher price. For understandably, the
real estate boom in Metro Manila at this time, had considerably jacked up realty
values.
On August 11, 1989, the Casedas filed Civil Case No. 89-4759, with the
RTC of Makati, to have the Santoses execute the final deed of conveyance over
the property, or in default thereof, to reimburse the amount of P180,000.00 paid
in cash and P249,900.00 paid to the rural bank, plus interest; as well as rentals for
eight months amounting to P32,000.00, plus damages and costs of suit.
After trial on the merits, the lower court disposed of the case as follows:
WHEREFORE, judgment is hereby ordered:
(a) dismissing plaintiff's (Casedas') complaint; and
(b) declaring the agreement marked as Annex "C" of the complaint
rescinded. Costs against plaintiffs.
SO ORDERED.[4]
Said judgment of dismissal is mainly based on the trial court's finding that:
Admittedly, the purchase price of the house and lot was P485,385.18, i.e.
P350,000.00 as cash payment and P135,385.18, assumption of mortgage. Of it
plaintiffs [Casedas] paid the following: (1) P54,100.00 down payment; and (2)
P81,694.64 installment payments to the bank on the loan (Exhs. E to E-19) or a
total of P135,794.64. Thus, plaintiffs were short of the purchase price. They
cannot, therefore, demand specific performance.[5]
The trial court further held that the Casedas were not entitled to
reimbursement of payments already made, reasoning that:
As, earlier mentioned, plaintiffs made a total payment of P135,794.64 out of the
purchase price of P485,385.18. The property was in plaintiffs' possession from
June 1984 to January 1989 or a period of fifty-five months. During that time,
plaintiffs leased the property. Carmen said the property was rented for P25.00 a
day or P750.00 a month at the start and in 1987 it was increased to P2,000.00 and
P4,000.00 a month. But the evidence is not precise when the different amounts of
rental took place. Be that as it may, fairness demands that plaintiffs must pay
defendants for their exercise of dominical rights over the property by renting it to
others. The amount of P2,000.00 a month would be reasonable based on the
average of P750.00, P2,000.00, P4,000.00 lease-rentals charged.Multiply
P2,000.00 by 55 months, the plaintiffs must pay defendants P110,000.00 for the
use of the property. Deducting this amount from the P135,794.64 payment of the
plaintiffs on the property, the difference is P25,794.64. Should the plaintiffs be
entitled to a reimbursement of this amount? The answer is in the
negative. Because of failure of plaintiffs to liquidated the mortgage loan on time,
it had ballooned from its original figure of P135,384.18 as of June 1984 to
P337,280.78 as of December 31, 1988. Defendants [Santoses] had to pay the last
amount to the bank to save the property from foreclosure. Logically, plaintiffs
must share in the burden arising from their failure to liquidate the loan per their
contractual commitment. Hence, the amount of P25,794.64 as their share in the
defendants' damages in the form of increased loan-amount, is reasonable.[6]
On appeal, the appellate court, as earlier noted, reversed the lower
court. The appellate court held that rescission was not justified under the
circumstances and allowed the Caseda spouses a period of ninety days within
which to pay the balance of the agreed purchase price.
Hence, this instant petition for review on certiorari filed by the Santoses.
Petitioners now submit the following issues for our consideration:
WHETHER OR NOT THE COURT OF APPEALS HAS JURISDICTION TO
DECIDE PRIVATE RESPONDENT'S APPEAL INTERPOSING PURELY
QUESTIONS OF LAW.
WHETHER THE SUBJECT TRANSACTION IS NOT A CONTRACT OF
ABSOLUTE SALE BUT A MERE ORAL CONTRACT TO SELL IN WHICH
CASE JUDICIAL DEMAND FOR RESCISSION (ART. 1592,[7] CIVIL CODE)
IS NOT APPLICABLE.
ASSUMING ARGUENDO THAT A JUDICIAL DEMAND FOR RESCISSION
IS REQUIRED, WHETHER PETITIONERS' DEMAND AND PRAYER FOR
RESCISSION CONTAINED IN THEIR ANSWER FILED BEFORE THE
TRIAL SATISFIED THE SAID REQUIREMENT.
WHETHER OR NOT THE NON-PAYMENT OF MORE THAN HALF OF
THE ENTIRE PURCHASE PRICE INCLUDING THE NON-COMPLIANCE
WITH THE STIPULATION TO LIQUIDATE THE MORTGAGE LOAN ON
TIME WHICH CAUSED GRAVE DAMAGE AND PREJUDICE TO
PETITIONERS, CONSTITUTE SUBSTANTIAL BREACH TO JUSTIFY
RESCISSION OF A CONTRACT TO SELL UNDER ARTICLE 1191[8] (CIVIL
CODE).
On the first issue, petitioners argue that, since both the parties and the
appellate court adopted the findings of trial court, [9] no questions of fact were
raised before the Court of Appeals. According to petitioners, CA-G.R. CV No.
30955, involved only pure questions of law. They aver that the court a quo had
no jurisdiction to hear, much less decide, CA-G.R. CV No. 30955, without
running afoul of Supreme Court Circular No. 2-90 (4) [c].[10]
There is a question of law in a given case when the doubt or difference arises
as to what the law is on a certain set of facts, and there is a question of fact when
the doubt or difference arises as to the truth or falsehood of the alleged
facts.[11] But we note that the first assignment of error submitted by respondents
for consideration by the appellate court dealt with the trial court's finding that
herein petitioners got back the property in question because respondents did not
have the means to pay the installments and/or amortization of the loan. [12] The
resolution of this question involved an evaluation of proof, and not only a
consideration of the applicable statutory and case laws. Clearly, CA-G.R. CV No.
30955 did not involve pure questions of law, hence the Court of Appeals had
jurisdiction and there was no violation of our Circular No. 2-90.
Moreover, we find that petitioners took an active part in the proceedings
before the Court of Appeals, yet they did not raise there the issue of
jurisdiction. They should have raised this issue at the earliest opportunity before
the Court of Appeals. A party taking part in the proceedings before the appellate
court and submitting his case for as decision ought not to later on attack the court's
decision for want of jurisdiction because the decision turns out to be adverse to
him.[13]
The second and third issues deal with the question: Did the Court of
Appeals err in holding that a judicial rescission of the agreement was
necessary? In resolving both issues, we must first make a preliminary
determination of the nature of the contract in question: Was it a contract of sale,
as insisted by respondents or a mere contract to sell, as contended by petitioners?
Petitioners argue that the transaction between them and respondents was a
mere contract to sell, and not a contract of sale, since the sole documentary
evidence (Exh. D, receipt) referring to their agreement clearly showed that they
did not transfer ownership of the property in question simultaneous with its
delivery and hence remained its owners, pending fulfillment of the other
suspensive conditions, i.e., full payment of the balance of the purchase price and
the loan amortizations. Petitioners point to Manuel v. Rodriguez, 109 Phil. 1
(1960) and Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 43 SCRA
93 (1972), where we held that Article 1592 of the Civil Code is inapplicable to a
contract to sell. They charge the court a quo with reversible error in holding that
petitioners should have judicially rescinded the agreement with respondents when
the latter failed to pay the amortizations on the bank loan.
Respondents insist that there was a perfected contract of sale, since upon
their partial payment of the purchase price, they immediately took possession of
the property as vendees, and subsequently leased it, thus exercising all the rights
of ownership over the property. This showed that transfer of ownership was
simultaneous with the delivery of the realty sold, according to respondents.
It must be emphasized from the outset that a contract is what the law defines
it to be, taking into consideration its essential elements, and not what the
contracting parties call it.[14] Article 1458[15]of the Civil Code defines a contract
of sale. Note that the said article expressly obliges the vendor to transfer
ownership of the thing sold as an essential element of a contract of sale. This is
because the transfer of ownership in exchange for a price paid or promised is the
very essence of a contract of sale.[16] We have carefully examined the contents of
the unofficial receipt, Exh. D, with the terms and conditions informally agreed
upon by the parties, as well as the proofs submitted to support their respective
contentions. We are far from persuaded that there was a transfer of ownership
simultaneously with the delivery of the property purportedly sold. The records
clearly show that, notwithstanding the fact that the Casedas first took then lost
possession of the disputed house and lot, the title to the property, TCT No. 28005
(S-11029) issued by the Register of Deeds of Paraaque, has remained always in
the name of Rosalinda Santos.[17] Note further that although the parties had agreed
that the Casedas would assume the mortgage, all amortization payments made by
Carmen Caseda to the bank were in the name of Rosalinda Santos.[18] We likewise to rescission. Having ruled that there is no rescission to speak of in this case, the
find that the bank's cancellation and discharge of mortgage dated January 20, question is moot.
1990, was made in favor of Rosalinda Santos.[19] The foregoing circumstances
categorically and clearly show that no valid transfer of ownership was made by WHEREFORE, the instant petition is GRANTED and the assailed
the Santoses to the Casedas. Absent this essential element, their agreement cannot decision of the Court of Appeals in CA-G.R. CV No. 30955 is REVERSED and
be deemed a contract of sale. We agree with petitioners' averment that the SET ASIDE. The judgment of the Regional Trial Court of Makati, Branch 133,
agreement between Rosalinda Santos and Carmen Caseda is a contract to sell. In with respect to the DISMISSAL of the complaint in Civil Case No. 89-4759, is
contracts to sell, ownership is reserved by the vendor and is not to pass until full hereby REINSTATED. No pronouncement as to costs.
payment of the purchase price. This we find fully applicable and understandable SO ORDERED.
in this case, given that the property involved is a titled realty under mortgage to
a bank and would require notarial and other formalities of law before transfer
thereof could be validly effected.
In view of our finding in the present case that the agreement between the
parties is a contract to sell, it follows that the appellate court erred when it decreed
that a judicial rescission of said agreement was necessary. This is because there
was no rescission to speak of in the first place. As we earlier pointed out, in a
contract to sell, title remains with the vendor and does not pass on to the vendee
until the purchase price is paid in full. Thus, in a contract to sell, the payment of
the purchase price is a positive suspensive condition. Failure to pay the price
agreed upon is not a mere breach, casual or serious, but a situation that prevents
the obligation of the vendor to convey title from acquiring an obligatory
force.[20] This is entirely different from the situation in a contract of sale, where
non-payment of the price is a negative resolutory condition. The effects in law
are not identical. In a contract of sale, the vendor has lost ownership of the thing
sold and cannot recover it, unless the contract of sale is rescinded and set
aside.[21] In a contract to sell, however, the vendor remains the owner for as long
as the vendee has not complied fully with the condition of paying the purchase
price. If the vendor should eject the vendee for failure to meet the condition
precedent, he is enforcing the contract and not rescinding it. When the petitioners
in the instant case repossessed the disputed house and lot for failure of private
respondents to pay the purchase price in full, they were merely enforcing the
contract and not rescinding it. As petitioners correctly point out, the Court of
Appeals erred when it ruled that petitioners should have judicially rescinded the
contract pursuant to Articles 1592 and 1191 of the Civil Code. Article 1592
speaks of non-payment of the purchase price as a resolutory condition. It does not
apply to a contract to sell.[22] As to Article 1191, it is subordinated to the
provisions of Article 1592 when applied to sales of immovable
property.[23] Neither provision is applicable in the present case.
As to the last issue, we need not tarry to make a determination of whether
the breach of contract by private respondents is so substantial as to defeat the
purpose of the parties in entering into the agreement and thus entitle petitioners
G.R. No. 107207 November 23, 1995
VIRGILIO R. ROMERO, petitioner,
vs.
HON. COURT OF APPEALS and ENRIQUETA CHUA VDA. DE
ONGSIONG, respondents.
VITUG, J.:
The parties pose this question: May the vendor demand the rescission of a
contract for the sale of a parcel of land for a cause traceable to his own failure to
have the squatters on the subject property evicted within the contractually-
stipulated period?
Petitioner Virgilio R. Romero, a civil engineer, was engaged in the business of
production, manufacture and exportation of perlite filter aids, permalite insulation
and processed perlite ore. In 1988, petitioner and his foreign partners decided to
put up a central warehouse in Metro Manila on a land area of approximately 2,000
square meters. The project was made known to several freelance real estate
brokers.
A day or so after the announcement, Alfonso Flores and his wife, accompanied
by a broker, offered a parcel of land measuring 1,952 square meters. Located in
Barangay San Dionisio, Paraaque, Metro Manila, the lot was covered by TCT
No. 361402 in the name of private respondent Enriqueta Chua vda. de Ongsiong.
Petitioner visited the property and, except for the presence of squatters in the area,
he found the place suitable for a central warehouse.
Later, the Flores spouses called on petitioner with a proposal that should he
advance the amount of P50,000.00 which could be used in taking up an ejectment
case against the squatters, private respondent would agree to sell the property for
only P800.00 per square meter. Petitioner expressed his concurrence. On 09 June
1988, a contract, denominated "Deed of Conditional Sale," was executed between
petitioner and private respondent. The simply-drawn contract read:
DEED OF CONDITIONAL SALE
KNOW ALL MEN BY THESE PRESENTS:
This Contract, made and executed in the Municipality of Makati,
Philippines this 9th day of June, 1988 by and between:
ENRIQUETA CHUA VDA. DE ONGSIONG, of legal age, widow,
Filipino and residing at 105 Simoun St., Quezon City, Metro Manila,
hereinafter referred to as the VENDOR;
-and-
VIRGILIO R. ROMERO, married to Severina L. Lat, of Legal age,
Filipino, and residing at 110 San Miguel St., Plainview Subd.,
Mandaluyong Metro Manila, hereinafter referred to as the VENDEE:
W I T N E S S E T H : That
WHEREAS, the VENDOR is the owner of One (1) parcel of
land with a total area of ONE THOUSAND NINE
HUNDRED FIFTY TWO (1,952) SQUARE METERS, more
or less, located in Barrio San Dionisio, Municipality of
Paraaque, Province of Rizal, covered by TCT No. 361402
issued by the Registry of Deeds of Pasig and more particularly
described as follows:
xxx xxx xxx
WHEREAS, the VENDEE, for (sic) has offered to buy a
parcel of land and the VENDOR has accepted the offer,
subject to the terms and conditions hereinafter stipulated:
NOW, THEREFORE, for and in consideration of the sum of
ONE MILLION FIVE HUNDRED SIXTY ONE
THOUSAND SIX HUNDRED PESOS (P1,561,600.00)
ONLY, Philippine Currency, payable by VENDEE to in to
(sic) manner set forth, the VENDOR agrees to sell to the
VENDEE, their heirs, successors, administrators, executors,
assign, all her rights, titles and interest in and to the property
mentioned in the FIRST WHEREAS CLAUSE, subject to the
following terms and conditions:
1. That the sum of FIFTY THOUSAND PESOS (P50,000.00) ONLY
Philippine Currency, is to be paid upon signing and execution of this
instrument.
2. The balance of the purchase price in the amount of ONE MILLION
FIVE HUNDRED ELEVEN THOUSAND SIX HUNDRED PESOS
(P1,511,600.00) ONLY shall be paid 45 days after the removal of all
squatters from the above described property.
3. Upon full payment of the overall purchase price as aforesaid, VENDOR
without necessity of demand shall immediately sign, execute,
acknowledged (sic) and deliver the corresponding deed of absolute sale in
favor of the VENDEE free from all liens and encumbrances and all Real
Estate taxes are all paid and updated.
It is hereby agreed, covenanted and stipulated by and between the parties
hereto that if after 60 days from the date of the signing of this contract the
VENDOR shall not be able to remove the squatters from the property
being purchased, the downpayment made by the buyer shall be
returned/reimbursed by the VENDOR to the VENDEE.
That in the event that the VENDEE shall not be able to pay the VENDOR
the balance of the purchase price of ONE MILLION FIVE HUNDRED
ELEVEN THOUSAND SIX HUNDRED PESOS (P1,511,600.00)
ONLY after 45 days from written notification to the VENDEE of the
removal of the squatters from the property being purchased, the FIFTY
THOUSAND PESOS (P50,000.00) previously paid as downpayment
shall be forfeited in favor of the VENDOR.
Expenses for the registration such as registration fees, documentary
stamp, transfer fee, assurances and such other fees and expenses as may
be necessary to transfer the title to the name of the VENDEE shall be for
the account of the VENDEE while capital gains tax shall be paid by the
VENDOR.
IN WITNESS WHEREOF, the parties hereunto signed those
(sic) presents in the City of Makati MM, Philippines on this
9th day of June, 1988.
(Sgd.) (Sgd.)
VIRGILIO R. ROMERO ENRIQUETA
CHUA VDA.
DE ONGSIONG
Vendee Vendor
SIGNED IN THE PRESENCE OF:
(Sgd.) (Sgd.)
Rowena C. Ongsiong Jack M. Cruz1
Alfonso Flores, in behalf of private respondent, forthwith received and
acknowledged a check for P50,000.002from petitioner.3
Pursuant to the agreement, private respondent filed a complaint for ejectment
(Civil Case No. 7579) against Melchor Musa and 29 other squatter families with
the Metropolitan Trial Court of Paraaque. A few months later, or on 21 February
1989, judgment was rendered ordering the defendants to vacate the premises. The
decision was handed down beyond the 60-day period (expiring 09 August 1988)
stipulated in the contract. The writ of execution of the judgment was issued, still
later, on 30 March 1989.
In a letter, dated 07 April 1989, private respondent sought to return the
P50,000.00 she received from petitioner since, she said, she could not "get rid of
the squatters" on the lot. Atty. Sergio A.F. Apostol, counsel for petitioner, in his
reply of 17 April 1989, refused the tender and stated:.
Our client believes that with the exercise of reasonable
diligence considering the favorable decision rendered by the
Court and the writ of execution issued pursuant thereto, it is
now possible to eject the squatters from the premises of the
subject property, for which reason, he proposes that he shall
take it upon himself to eject the squatters, provided, that
expenses which shall be incurred by reason thereof shall be
chargeable to the purchase price of the land.4
Meanwhile, the Presidential Commission for the Urban Poor ("PCUD"), through
its Regional Director for Luzon, Farley O. Viloria, asked the Metropolitan Trial
Court of Paraaque for a grace period of 45 days from 21 April 1989 within which
to relocate and transfer the squatter families. Acting favorably on the request, the
court suspended the enforcement of the writ of execution accordingly.
On 08 June 1989, Atty. Apostol reminded private respondent on the expiry of the
45-day grace period and his client's willingness to "underwrite the expenses for
the execution of the judgment and ejectment of the occupants." 5
In his letter of 19 June 1989, Atty. Joaquin Yuseco, Jr., counsel for private
respondent, advised Atty. Apostol that the Deed of Conditional Sale had been
rendered null and void by virtue of his client's failure to evict the squatters from
the premises within the agreed 60-day period. He added that private respondent
had "decided to retain the property."6
On 23 June 1989, Atty. Apostol wrote back to explain:
The contract of sale between the parties was perfected from the very
moment that there was a meeting of the minds of the parties upon the
subject lot and the price in the amount of P1,561,600.00. Moreover, the
contract had already been partially fulfilled and executed upon receipt
of the downpayment of your client. Ms. Ongsiong is precluded from
rejecting its binding effects relying upon her inability to eject the
squatters from the premises of subject property during the agreed period.
Suffice it to state that, the provision of the Deed of Conditional Sale do
not grant her the option or prerogative to rescind the contract and to
retain the property should she fail to comply with the obligation she has
assumed under the contract. In fact, a perusal of the terms and conditions
of the contract clearly shows that the right to rescind the contract and to
demand the return/reimbursement of the downpayment is granted to our
client for his protection.
Instead, however, of availing himself of the power to rescind the
contract and demand the return, reimbursement of the downpayment,
our client had opted to take it upon himself to eject the squatters from
the premises. Precisely, we refer you to our letters addressed to your
client dated April 17, 1989 and June 8, 1989.
Moreover, it is basic under the law on contracts that the power to rescind
is given to the injured party. Undoubtedly, under the circumstances, our
client is the injured party.
Furthermore, your client has not complied with her obligation under
their contract in good faith. It is undeniable that Ms. Ongsiong
deliberately refused to exert efforts to eject the squatters from the
premises of the subject property and her decision to retain the property
was brought about by the sudden increase in the value of realties in the
surrounding areas.
Please consider this letter as a tender of payment to your client and a
demand to execute the absolute Deed of Sale.7
A few days later (or on 27 June 1989), private respondent, prompted by
petitioner's continued refusal to accept the return of the P50,000.00 advance
payment, filed with the Regional Trial Court of Makati, Branch 133, Civil Case
No. 89-4394 for rescission of the deed of "conditional" sale, plus damages, and
for the consignation of P50,000.00 cash.
Meanwhile, on 25 August 1989, the Metropolitan Trial Court issued an alias writ
of execution in Civil Case No. 7579 on motion of private respondent but the
squatters apparently still stayed on.
Back to Civil Case No. 89-4394, on 26 June 1990, the Regional Trial Court of
Makati8 rendered decision holding that private respondent had no right to rescind
the contract since it was she who "violated her obligation to eject the squatters
from the subject property" and that petitioner, being the injured party, was the
party who could, under Article 1191 of the Civil Code, rescind the agreement.
The court ruled that the provisions in the contract relating to (a) the
return/reimbursement of the P50,000.00 if the vendor were to fail in her
obligation to free the property from squatters within the stipulated period or (b),
upon the other hand, the sum's forfeiture by the vendor if the vendee were to fail
in paying the agreed purchase price, amounted to "penalty clauses". The court
added:
This Court is not convinced of the ground relied upon by the plaintiff in
seeking the rescission, namely: (1) he (sic) is afraid of the squatters; and
(2) she has spent so much to eject them from the premises (p. 6, tsn, ses.
Jan. 3, 1990). Militating against her profession of good faith is plaintiffs
conduct which is not in accord with the rules of fair play and justice.
Notably, she caused the issuance of an alias writ of execution on August
25, 1989 (Exh. 6) in the ejectment suit which was almost two months after
she filed the complaint before this Court on June 27, 1989. If she were
really afraid of the squatters, then she should not have pursued the
 issuance of an alias writ of execution. Besides, she did not even report to
the police the alleged phone threats from the squatters. To the mind of the
Court, the so-called squatter factor is simply factuitous (sic).9
The lower court, accordingly, dismissed the complaint and ordered,
instead, private respondent to eject or cause the ejectment of the
squatters from the property and to execute the absolute deed of
conveyance upon payment of the full purchase price by petitioner.
Private respondent appealed to the Court of Appeals. On 29 May 1992, the
appellate court rendered its decision. 10It opined that the contract entered into by
the parties was subject to a resolutory condition, i.e., the ejectment of the
squatters from the land, the non-occurrence of which resulted in the failure of the
object of the contract; that private respondent substantially complied with her
obligation to evict the squatters; that it was petitioner who was not ready to pay
the purchase price and fulfill his part of the contract, and that the provision
requiring a mandatory return/reimbursement of the P50,000.00 in case private
respondent would fail to eject the squatters within the 60-day period was not a
penal clause. Thus, it concluded.
WHEREFORE, the decision appealed from is REVERSED and SET
ASIDE, and a new one entered declaring the contract of conditional sale
dated June 9, 1988 cancelled and ordering the defendant-appellee to
accept the return of the downpayment in the amount of P50,000.00
which was deposited in the court below. No pronouncement as to
costs.11
Failing to obtain a reconsideration, petitioner filed this petition for review
on certiorari raising issues that, in fine, center on the nature of the contract
adverted to and the P50,000.00 remittance made by petitioner.
A perfected contract of sale may either be absolute or conditional 12 depending on
whether the agreement is devoid of, or subject to, any condition imposed on
the passing of title of the thing to be conveyed or on the obligation of a party
thereto. When ownership is retained until the fulfillment of a positive condition
the breach of the condition will simply prevent the duty to convey title from
acquiring an obligatory force. If the condition is imposed on an obligationof a
party which is not complied with, the other party may either refuse to proceed or
waive said condition (Art. 1545, Civil Code). Where, of course, the condition is
imposed upon the perfection of the contract itself, the failure of such condition
would prevent the juridical relation itself from coming into existence. 13
In determining the real character of the contract, the title given to it by the parties
is not as much significant as its substance. For example, a deed of sale, although
denominated as a deed of conditional sale, may be treated as absolute in nature,
if title to the property sold is not reserved in the vendor or if the vendor is not
granted the right to unilaterally rescind the contract predicated
on the fulfillment or non-fulfillment, as the case may be, of the prescribed
condition.14
The term "condition" in the context of a perfected contract of sale pertains, in
reality, to the compliance by one party of an undertaking the fulfillment of which
would beckon, in turn, the demandability of the reciprocal prestation of the other
party. The reciprocal obligations referred to would normally be, in the case of
vendee, the payment of the agreed purchase price and, in the case of the vendor,
the fulfillment of certain express warranties (which, in the case at bench is the
timely eviction of the squatters on the property).
It would be futile to challenge the agreement here in question as not being a duly
perfected contract. A sale is at once perfected when a person (the seller) obligates
himself, for a price certain, to deliver and to transfer ownership of a specified
thing or right to another (the buyer) over which the latter agrees.15
The object of the sale, in the case before us, was specifically identified to be a
1,952-square meter lot in San Dionisio, Paraaque, Rizal, covered by Transfer
Certificate of Title No. 361402 of the Registry of Deeds for Pasig and therein
technically described. The purchase price was fixed at P1,561,600.00, of which
P50,000.00 was to be paid upon the execution of the document of sale and the
balance of P1,511,600.00 payable "45 days after the removal of all squatters from
the above described property."
From the moment the contract is perfected, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and
law. Under the agreement, private respondent is obligated to evict the squatters
on the property. The ejectment of the squatters is a condition the operative act of
which sets into motion the period of compliance by petitioner of his own
obligation, i.e., to pay the balance of the purchase price. Private respondent's
failure "to remove the squatters from the property" within the stipulated period
gives petitioner the right to either refuse to proceed with the agreement or waive
that condition in consonance with Article 1545 of the Civil Code. 16 This option
clearly belongs to petitioner and not to private respondent.
We share the opinion of the appellate court that the undertaking required of
private respondent does not constitute a "potestative condition dependent solely
on his will" that might, otherwise, be void in accordance with Article 1182 of the
Civil Code17 but a "mixed" condition "dependent not on the will of the vendor
alone but also of third persons like the squatters and government agencies and
personnel concerned."18 We must hasten to add, however, that where the so-called
"potestative condition" is imposed not on the birth of the obligation but on its
fulfillment, only the obligation is avoided, leaving unaffected the obligation
itself.19
In contracts of sale particularly, Article 1545 of the Civil Code, aforementioned,
allows the obligee to choose between proceeding with the agreement or waiving
the performance of the condition. It is this provision which is the pertinent rule in
the case at bench. Here, evidently, petitioner has waived the performance of the
condition imposed on private respondent to free the property from squatters. 20
In any case, private respondent's action for rescission is not warranted. She is not
the injured party.21 The right of resolution of a party to an obligation under Article
1191 of the Civil Code is predicated on a breach of faith by the other party that
violates the reciprocity between them.22 It is private respondent who has failed in
her obligation under the contract. Petitioner did not breach the agreement. He has
agreed, in fact, to shoulder the expenses of the execution of the judgment in the
ejectment case and to make arrangements with the sheriff to effect such
execution. In his letter of 23 June 1989, counsel for petitioner has tendered
payment and demanded forthwith the execution of the deed of absolute sale.
Parenthetically, this offer to pay, having been made prior to the demand for
rescission, assuming for the sake of argument that such a demand is proper under
Article 159223 of the Civil Code, would likewise suffice to defeat private
respondent's prerogative to rescind thereunder.
There is no need to still belabor the question of whether the P50,000.00 advance
payment is reimbursable to petitioner or forfeitable by private respondent, since,
on the basis of our foregoing conclusions, the matter has ceased to be an issue.
Suffice it to say that petitioner having opted to proceed with the sale, neither may
petitioner demand its reimbursement from private respondent nor may private
respondent subject it to forfeiture.
WHEREFORE, the questioned decision of the Court of Appeals is hereby
REVERSED AND SET ASIDE, and another is entered ordering petitioner to pay
private respondent the balance of the purchase price and the latter to execute the
deed of absolute sale in favor of petitioner. No costs. SO ORDERED.
[G.R. No. 111743. October 8, 1999]
VISITACION GABELO, ERLINDA ABELLA, PETRA PEREZ,
ERLINDA TRAQUENA, BEN CARDINAL, EDUARDO TRAQUENA,
LEOPOLDO TRAQUENA, MARIFE TUBALAS, ULYSIS MATEO,
JOCELYN FERNANDEZ, ALFONSO PLACIDO, LEONARDO
TRAQUENA, SUSAN RENDON AND MATEO TRINIDAD, petitioners,
vs. COURT OF APPEALS, URSULA MAGLENTE, CONSOLACION
BERJA, MERCEDITA FERRER, THELMA ABELLA, ANTONIO NGO,
and PHILIPPINE REALTY CORPORATION, respondents.
DECISION
PURISIMA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court, of the decision of the Court of Appeals, dated April 29, 1993, in
CA-G.R. CV No. 33178, affirming the decision of the Regional Trial Court of
Manila, Branch 38, in Civil Case No. 89-48057, entitled Philippine Realty
Corporation vs. Ursula Maglente, et al., declaring the defendants (herein
respondents) as the rightful party to purchase the land under controversy, and
ordering the plaintiff, Philippine Realty Corporation (PRC, for brevity), to
execute the corresponding Contract of Sale/Contract to Sell in favor of the
defendants aforenamed.
The antecedent facts culminating in the filing of the present petition are as
follows:
On January 15, 1986, Philippine Realty Corporation, owner of a parcel of
land at 400 Solana Street, Intramuros, Manila, with an area of 675.80 square
meters, and covered by Transfer Certificate of Title No. 43989, entered into a
Contract of Lease thereover with the herein private respondent, Ursula
Maglente. The lease was for a period of three (3) years at a monthly rental
of P3,000.00 during the first year, P3,189.78 per month in the second year
and P3,374.00 monthly for the third year. The lease contract stipulated:
12. That the LESSOR shall have the right to sell any part of the entire leased land
for any amount or consideration it deems convenient, subject to the condition,
however, that the LESSEE shall be notified about it sixty (60) days in advance;
that the LESSEE shall be given the first priority to buy it; and in the event that
the LESSEE cannot afford to buy, the final buyer shall respect this lease for the
duration of the same, except in cases of exproriation.
It also prohibited the lessee to cede, transfer, mortgage, sublease or in any manner
encumber the whole or part of the leased land and its improvements or its rights
as LESSEE of the leased land, without the previous consent in writing of the
LESSOR contained in a public instrument.
However, after the execution of the lease agreement, respondent Maglente
started leasing portions of the leased area to the herein petitioners, Visitacion
Gabelo, Erlinda Abella, Petra Perez, Erlinda Traquena, Ben Cardinal, Eduardo
Traquena, Leopoldo Traquena, Marife Tubalas, Ulysis Mateo, Jocelyn
Fernandez, Alfonso Placido, Leonardo Traquena, Susan Rendon and Mateo
Trinidad, who erected their respective houses thereon.
On March 9, 1987, when the lease contract was about to expire, the
Philippine Realty Corporation, through its Junior Trust and Property Officers, Mr.
Leandro Buguis and Mr. Florentino B. Rosario, sent a written offer to sell subject
properties to respondent Ursula Maglente. The said letter stated:
We wish to inform you that the Archdiocese of Manila has now decided to open
for sale the properties it own (sic) in the District of Intramuros, Manila. However,
before we acccept offers from other parties we are of course giving the first
priority to our tenants or lessees of Intramuros lots.
Responding to such written offer, Maglente wrote a letter, dated February
2, 1988, to the Roman Catholic Archbishop of Manila manifesting an intention
to exercise her right of first priority to purchase the property as stipulated in the
lease contract.
On February 15, 1988, a Memorandum on the offer of Maglente to purchase
the property was prepared and presented to Msgr. Domingo Cirilos, president of
Philippine Realty Corporation, at the offered price of P1,800.00 per square meter
or for a total amount of P1,216,440.00, with a downpayment of P100,000.00; the
balance of the purchase price payable within ten (10) years with interest at the
rate of eighteen (18%) percent per annum. Msgr. Cirilos found the offer
acceptable and approved the same.
On May 11, 1988, Maglente gave a partial downpayment of P25,000.00 and
additional P25,000.00 on May 20, 1988. In a letter, dated January 28, 1989,
Maglente informed the said corporation that there were other persons who were
her co-buyers, actually occupying the premises, namely: Consolacion Berja,
Mercedita Ferrer, Thelma Abella and Antonio Ngo within their respective areas
of 100, 50, 60 and 400 square meters.
On January 30, 1989 Maglente paid her back rentals of P60,642.16
and P50,000.00 more, to complete her downpayment of P100,000.00.
On February 1989, Philippine Realty Corporation (PRC) received copy of
a letter sent by the herein petitioners to the Archbishop of Manila, Jaime Cardinal
Sin, expressing their desire to purchase the portions of subject property on which
they have been staying for a long time. And so, PRC met with the petitioners who
apprised the corporation of their being actual occupants of the leased premises
and of the impending demolition of their houses which Maglente threatened to
cause. Petitioners then asked PRC to prevent the demolition of their houses which
might result in trouble and violence.
On February 23, 1989, in order to resolve which group has the right to
purchase subject property as between the petitioners/sublessees of Maglente, and
respondent Maglente, and her co-buyers, PRC brought a Complaint in
Interpleader against the herein petitioners and private respondents, docketed as
Civil Case No. 89-48057 before Branch 38 of the Regional Trial Court of Manila.
On March 11, 1991, after trial on the merits, the lower court of origin
rendered judgment in favor of respondent Maglente and her group, disposing
thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring the defendants Ursula Maglente, Consolacion Berja,
Mercedita Ferrer, Thelma Abella and Antonio Ngo as the rightful
party to purchase the land in controversy; and
2. Ordering plaintiff Philippine Realty Corporation to execute the
corresponding contract of sale/contract to sell in favor of the
defendants aforementioned in accordance with this Decision
within thirty (30) days from notice thereof.
Dissatisfied with the aforesaid decision below, the Gabelo group
(petitioners here) appealed to the Court of Appeals, which affirmed the
disposition of the trial court appealed from.
Undaunted, petitioners found their way to this Court via the present petition,
assigning as sole error the ruling of the Court of Appeals upholding the right of
the private respondents, Consolacion Berja and Antonio Ngo, to purchase subject have already completed payment of their downpayment
property. of P100,000.00. Therefore, as borne by evidence on record, the requisites under
Article 1318 of the Civil Code[4] for a perfected contract have been met.
Petitioners theorize that they are tenants of Ursula Maglente on the land in
dispute, which they are occupying, and as such actual occupants they have the Anent petitioners submission that the sale has not been perfected because
preferential right to purchase the portions of land respectively occupied by them; the parties have not affixed their signatures thereto, suffice it to state that under
that the private respondents, Thelma Abella and Antonio Ngo, have never been the law, the meeting of the minds between the parties gives rise to a binding
occupants of the contested lot, and that, as defined in the Pre-trial Order[1] issued contract although they have not affixed their signatures to its written form.[5]
below, the issue for resolution should have been limited to whether or not Berja
and Ngo actually occupied the premises in question because occupation thereon WHEREFORE, the petition is hereby DENIED for lack of merit and the
is the basis of the right to purchase subject area. decision of the Court of Appeals in CA-G.R. CV No. 33178 AFFIRMED. No
pronouncement as to costs.
Petitioners contention is untenable. There is no legal basis for the assertion
by petitioners that as actual occupants of the said property, they have the right of SO ORDERED.
first priority to purchase the same.
As regards the freedom of contract, it signifies or implies the right to choose
with whom to contract. PRC is thus free to offer its subject property for sale to
any interested person. It is not duty bound to sell the same to the petitioners
simply because the latter were in actual occupation of the property absent any
prior agreement vesting in them as occupants the right of first priority to buy, as
in the case of respondent Maglente. As a matter of fact, because it (PRC)
contracted only with respondent Maglente, it could even evict the petitioners from
the premises occupied by them considering that the sublease contract between
petitioners and Maglente was inked without the prior consent in writing of PRC,
as required under the lease contract. Thus, although the other private respondents
were not parties to the lease contract between PRC and Maglente, the former
could freely enter into a contract with them.
So also, the contract of sale having been perfected, the parties thereto are
already bound thereby and petitioners can no longer assert their right to buy. It is
well-settled that a contract of sale is perfected the moment there is a meeting of
the minds of the contracting parties upon the thing which is the object of the
contract and upon the price.[2] From the time a party accepts the other partys offer
to sell within the stipulated period without qualification, a contract of sale is
deemed perfected.[3]
In the case under consideration, the contract of sale was already perfected -
PRC offered the subject lot for sale to respondent Maglente and her group through
its Junior Trust and Property Officers. Respondent Maglente and her group
accepted such offer through a letter addressed to the Roman Catholic Archbishop
of Manila, dated February 2, 1988, manifesting their intention to purchase the
property as provided for under the lease contract. Thus, there was already an offer
and acceptance giving rise to a valid contract. As a matter of fact, respondents
G.R. No. 173038 September 14, 2011
ELENA JANE DUARTE, Petitioner,
vs.
MIGUEL SAMUEL A.E. DURAN, Respondent.
DECISION
DEL CASTILLO, J.:
Preponderance of evidence only requires that evidence be greater or more
convincing than the opposing evidence.1
Assailed in this Petition for Review on Certiorari2 under Rule 45 of the Rules of
Court are the October 26, 2005 Decision3 and May 22, 2006 Resolution4 of the
Court of Appeals (CA) in CA-G.R. SP No. 84461.
Factual Antecedents
This petition arose from a suit5 for collection of sum of money filed by respondent
Miguel Samuel A.E. Duran6against petitioner Elena Jane Duarte with
Branch 5 of the Municipal Trial Court in Cities (MTCC), Cebu.
According to respondent, on February 14, 2002, he offered to sell a laptop
computer for the sum of 15,000.00 to petitioner thru the help of a common
friend, Josephine Dy (Dy).7 Since petitioner was undecided, respondent left the
laptop with petitioner for two days.8 On February 16, 2002, petitioner told
respondent that she was willing to buy the laptop on installment. 9 Respondent
agreed; thus, petitioner gave 5,000.00 as initial payment and promised to pay
3,000.00 on February 18, 2002 and 7,000.00 on March 15, 2002. 10 On
February 18, 2002, petitioner gave her second installment of 3,000.00 to Dy,
who signed the handwritten receipt11 allegedly made by petitioner as proof of
payment.12 But when Dy returned to get the remaining balance on March 15,
2002, petitioner offered to pay only 2,000.00 claiming that the laptop was only
worth 10,000.00.13 Due to the refusal of petitioner to pay the remaining balance,
respondent thru counsel sent petitioner a demand letter dated July 29, 2002. 14
Petitioner, however, denied writing the receipt dated February 18, 2002, 15 and
receiving the demand letter dated July 29, 2002. 16 Petitioner claimed that there
was no contract of sale.17 Petitioner said that Dy offered to sell respondents
laptop but because petitioner was not interested in buying it, Dy asked if petitioner
could instead lend respondent the amount of 5,000.00. 18 Petitioner agreed and
in turn, Dy left the laptop with petitioner.19 On February 18, 2002, Dy came to
get the laptop but petitioner refused to give it back because the loan was not yet
paid.20 Dy then asked petitioner to lend an additional amount of 3,000.00 to
respondent who allegedly was in dire need of money.21 Petitioner gave the money
under agreement that the amounts she lent to respondent would be considered as
partial payments for the laptop in case she decides to buy it. 22 Sometime in the
first week of March 2002, petitioner informed respondent that she has finally
decided not to buy the laptop.23 Respondent, however, refused to pay and insisted
that petitioner purchase the laptop instead.24
Ruling of the Municipal Trial Court in Cities
On June 2, 2003, the MTCC rendered a Decision25 in favor of respondent. It found
the receipt dated February 18, 2002 and the testimonies of respondent and his
witness, Dy, sufficient to prove that there was a contract of sale between the
parties.26 Thus:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against
the defendant ordering the latter to pay plaintiff the following measure of
damages:
(a) Actual damages in the amount of Seven Thousand (7,000.00) Pesos
with interest thereon at 12% per annum from July 29, 2002 until fully
paid;
(b) Attorneys fees in the amount of Five Thousand (5,000.00) Pesos;
and
(c) Litigation expenses in the amount of Three Thousand (3,000.00)
Pesos.
SO ORDERED.27
Ruling of the Regional Trial Court
On appeal,28 the Regional Trial Court (RTC) of Cebu, Branch 12, reversed the
MTCC Decision. Pertinent portions of the Decision, 29 including the dispositive
portion, read:
xxxx
As shown in the records of the case, this Court finds the alleged receipt issued by
the witness Josephine Dy [in] her own handwriting a mere product of
machination, trickery and self-serving. It shows no proof of conformity or
acknowledgment on the part of the defendant that indeed she agreed on the
stipulations. Thus, it cannot be given any credence and ultimately, did not bind
her.
xxxx
WHEREFORE, the assailed Decision is REVERSED and SET ASIDE. The
defendant Elena Jane Duarte is hereby directed to return the computer laptop to
plaintiff Miguel Samuel A.E. Duran and plaintiff is directed to return the money
borrowed from defendant.
SO ORDERED.30
Respondent moved for reconsideration but the same was denied by the RTC in
an Order31 dated May 13, 2004.
Ruling of the Court of Appeals
On June 1, 2004, respondent filed a Petition for Review32 with the CA. Finding
the petition meritorious, the CA reversed the RTC Decision and reinstated the
Decision of the MTCC. The CA said that the RTC erred in not giving weight and
credence to the demand letter dated July 29, 2002 and the receipt dated February
18, 2002.33 The CA pointed out that petitioner failed to overturn the presumption
that the demand letter dated July 29, 2002 sent by respondents counsel by
registered mail was received by her.34 Neither was she able to deny under oath
the genuineness and due execution of the receipt dated February 18, 2002. 35 Thus,
the fallo of the Decision36 reads:
WHEREFORE, premises considered, the petition for review is
hereby GRANTED. The decision of the Regional Trial Court, Branch 12, Cebu
City is REVERSED and the judgment of Municipal Trial Court in Cities Branch
5, Cebu City is REINSTATED. No pronouncement as to costs.
SO ORDERED.37
Petitioner filed a Motion for Reconsideration38 which the CA denied in a
Resolution39 dated May 22, 2006.
Issues
Hence, the present recourse by petitioner raising five issues, to wit:
I. Whether x x x the [CA] committed grave error in not resolving the
issue as to whether or not the petition for review that respondent filed
in the said court was filed out of time.
II. Whether x x x the [CA] committed grave error when it reinstated the
judgment of the [MTCC], Branch 5, Cebu City which awarded
excessive attorneys fees and litigation expenses without factual and
legal justification since the awards were merely stated in the dispositive
portion of the decision and the factual and legal bases thereof were not
discussed in the text thereof.
III. Whether x x x the [CA] committed grave error in holding that the
denial by the petitioner of a receipt of the demand letter, sent through
registered mail has not overturned the principal presumption of
regularity in the performance of duty.
IV. Whether x x x the [CA] committed grave error in holding that a
"receipt" which does not contain the signature of the petitioner is an
actionable document.
V. Whether x x x the [CA] committed grave error in holding that the
evidence available confirm the existence of a contract of sale.40
Summed up, the issues boil down to: (1) the timeliness of the filing of the Petition
for Review with the CA; (2) the existence of a contract of sale; and (3)
respondents entitlement to attorneys fees and litigation expenses.
Petitioners Arguments
Petitioner contends that the filing of the Petition for Review with the CA on June
1, 2004 was beyond the reglementary period. 41 Records show that respondent
received a copy of the RTC Decision on March 25, 2004, filed a Motion for
Reconsideration on April 12, 2004 since April 9 and 10 were holidays and April
11, 2004 was a Sunday, and received a copy of the RTC Order denying his Motion
for Reconsideration on May 27, 2004.42 Thus, he only had one day left from May
27, 2004 within which to file a Petition for Review with the CA. 43
Petitioner likewise denies the existence of a contract of sale, insisting that the
laptop was not sold to her but was given as a security for respondents debt. To
prove that there was no contract of sale, petitioner calls attention to respondents
failure to present a written contract of sale.44 She claims that under the Statute of
Frauds, a contract of sale to be enforceable must be in writing. 45 She also imputes
error on the part of the CA in giving weight and credence to the receipt dated
February 18, 2002 and the demand letter dated July 29, 2002. 46 She claims that
the receipt dated February 18, 2002, which she denies having written, is not an
actionable document; thus, there was no need for her to deny under oath its
genuineness and due execution.47 Furthermore, she claims that her denial of the
receipt of the demand letter dated July 29, 2002 shifted the burden upon
respondent to prove that the letter was indeed received by her. 48 As to the
attorneys fees and litigation expenses, petitioner contends that these were not
discussed in the MTCC Decision but were only stated in the dispositive portion
and that the amount of 5,000.00 is excessive considering that it is 70% of the
principal amount claimed by respondent.49
Respondents Arguments
Respondent, on the other hand, argues that his Petition for Review was timely
filed with the CA because he has 15 days from receipt of the RTC Order dated
May 13, 2004 within which to file a Petition for Review with the CA under
Section 150 of Rule 42 of the Rules of Court.51 Respondent defends the ruling of
the CA by arguing that the receipt dated February 18, 2002 is an actionable
document, and thus, petitioners failure to deny under oath its genuineness and
due execution constitutes an admission thereof. 52 In addition, petitioners denial
of the receipt of the demand letter dated July 29, 2002 cannot overcome the
presumption that the said letter was received in the regular course of
mail.53 Respondent likewise points out that the Statute of Frauds does not apply
in the instant case.54 Finally, respondent claims that the award of attorneys fees
and litigation expenses are not excessive and that the factual and legal bases of
the award were stated in the body of MTCC Decision.55
Our Ruling
The Petition lacks merit.
The Petition for Review was timely filed with the CA
To standardize the appeal periods and afford litigants fair opportunity to appeal
their cases, we ruled in Neypes v. Court of Appeals56 that litigants must be given
a fresh period of 15 days within which to appeal, counted from receipt of the order
dismissing a motion for a new trial or motion for reconsideration under Rules 40,
41, 42, 43 and 45 of the Rules of Court. 57 This ruling, as we have said in Fil-
Estate Properties, Inc. v. Homena-Valencia,58retroactively applies even to cases
pending prior to the promulgation of Neypes on September 14, 2005, there being
no vested rights in the rules of procedure.59
Since the instant case was pending in the CA at the time Neypes was promulgated,
respondent is entitled to a fresh period of 15 days, counted from May 27, 2004,
the date respondent received the RTC Order dated May 13, 2004 denying his
motion for reconsideration of the RTC Decision dated March 19, 2004 or until
June 11, 2004, within which to file his Petition for Review with the CA. Thus,
we find that when he filed the Petition for Review with the CA on June 1, 2004,
his period to appeal had not yet lapsed.
There was a contract of sale between the parties
As to whether there was a contract of sale between the parties, we hold that there
was, and the absence of a written contract of sale does not mean otherwise. A
contract of sale is perfected the moment the parties agree upon the object of the
sale, the price, and the terms of payment.60 Once perfected, the parties are bound
by it whether the contract is verbal or in writing because no form is
required.61 Contrary to the view of petitioner, the Statute of Frauds does not apply
in the present case as this provision applies only to executory, and not to
completed, executed or partially executed contracts.62 In this case, the contract of
sale had been partially executed because the possession of the laptop was already
transferred to petitioner and the partial payments had been made by her. Thus, the
absence of a written contract is not fatal to respondents case. Respondent only
needed to show by a preponderance of evidence that there was an oral contract of
sale, which he did by submitting in evidence his own affidavit, the affidavit of his
witness Dy, the receipt dated February 18, 2002 and the demand letter dated July
29, 2002.
As regards the receipt dated February 18, 2002, we agree with petitioner that it is
not an actionable document. Hence, there was no need for her to deny its
genuineness and due execution under oath. Nonetheless, we find no error on the
part of the CA in giving full weight and credence to it since it corroborates the
testimonies of respondent and his witness Dy that there was an oral contract of
sale between the parties.
With regard to petitioners denial of the receipt of the demand letter dated July
29, 2002, we believe that this did not overturn the presumption of regularity that
the letter was delivered and received by the addressee in the regular course of the
mail considering that respondent was able to present the postmasters
certification63 stating that the letter was indeed sent to the address of petitioner.
Bare denial of receipt of a mail cannot prevail over the certification of the
postmaster, whose official duty is to send notices of registered mail. 64
As we see it then, the evidence submitted by respondent weigh more than
petitioners bare denials. Other than her denials, no other evidence was submitted
by petitioner to prove that the laptop was not sold but was only given as security
for respondents loan. What adds doubt to her story is the fact that from the first
week of March 2002, the time she allegedly decided not to buy the laptop, up to
the time the instant case was filed against her, she did not exert any effort to
recover from respondent the payment of the alleged loan. Her inaction leads us to
conclude that the alleged loan was a mere afterthought.
All told, no error can be attributed to the CA in finding that there was a contract
of sale between the parties
The award for attorneys fees and litigation expenses was proper
Neither do we find any error in the award of attorneys fees and litigation
expenses.
Article 220865 of the Civil Code enumerates the legal grounds which justify or
warrant the grant of attorneys fees and expenses of litigation, among which is
when the defendants act or omission has compelled the plaintiff to incur
expenses to protect his interest.66 The reason for the award of attorneys fees and
litigation expenses, however, must be set forth in the decision of the court and not
in the dispositive portion only.67 In this case, the factual and legal bases for the
award were set forth in the body of the MTCC Decision dated June 2, 2003, to
wit:
x x x As the defendant refused to satisfy plaintiffs just and valid claim, the latter
was compelled to litigate and engage the services of counsel to protect his interest
and in the process, incurred litigation expenses.68 1avvphi1
The award of attorneys fees in the amount of 5,000.00 is also reasonable and
not excessive considering that this case, a simple collection of a measly sum of
7,000.00, has dragged for almost a decade and even had to reach this Court only
because petitioner refused to pay. The fact that it is 70% of the principal amount
claimed is of no moment as the amount of attorneys fees is discretionary upon
the court as long as it is reasonable.69
Finally, although not raised as an issue, we find it necessary to modify the legal
interest rate imposed on the principal amount claimed. Since the claim involves
an obligation arising from a contract of sale and not a loan or forbearance of
money, the interest rate should be six percent (6%) per annum of the amount
claimed from July 29, 2002.70 The interest rate of twelve percent (12%) per
annum, however, shall apply from the finality of judgment until the total amount
awarded is fully paid.71
WHEREFORE, the petition is hereby DENIED. The assailed October 26, 2005
Decision and May 22, 2006 Resolution of the Court of Appeals in CA-G.R. SP
No. 84461 are hereby AFFIRMED with MODIFICATION as to the legal interest
imposed on the principal amount claimed. The legal interest shall be at the rate
of six percent (6%) per annum from July 29, 2002 and at the rate of twelve percent
(12%) per annum from the time the judgment of this Court becomes final and
executory until the obligation is fully satisfied.
SO ORDERED.
[G.R. No. 126376. November 20, 2003]
SPOUSES BERNARDO BUENAVENTURA and CONSOLACION
JOAQUIN, SPOUSES JUANITO EDRA and NORA JOAQUIN,
SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and
NATIVIDAD JOAQUIN, petitioners, vs. COURT OF APPEALS,
SPOUSES LEONARDO JOAQUIN and FELICIANA
LANDRITO, SPOUSES FIDEL JOAQUIN and CONCHITA
BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD
ALCORAN, SPOUSES ARTEMIO JOAQUIN and SOCORRO
ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA
JOAQUIN, SPOUSES TELESFORO CARREON and FELICITAS
JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and
SPOUSES GAVINO JOAQUIN and LEA ASIS, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] to annul the Decision[2] dated 26
June 1996 of the Court of Appeals in CA-G.R. CV No. 41996. The Court of
Appeals affirmed the Decision[3] dated 18 February 1993 rendered by Branch 65
of the Regional Trial Court of Makati (trial court) in Civil Case No. 89-5174. The
trial court dismissed the case after it found that the parties executed the Deeds of
Sale for valid consideration and that the plaintiffs did not have a cause of action
against the defendants.
The Facts
The Court of Appeals summarized the facts of the case as follows:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of
plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel,
Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The
married Joaquin children are joined in this action by their respective spouses.
Sought to be declared null and void ab initio are certain deeds of sale of real
property executed by defendant parents Leonardo Joaquin and Feliciana Landrito
in favor of their co-defendant children and the corresponding certificates of title
issued in their names, to wit:
1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan
(LRC) Psd-256395 executed on 11 July 1978, in favor of
defendant Felicitas Joaquin, for a consideration of P6,000.00
(Exh. C), pursuant to which TCT No. [36113/T-172] was issued
in her name (Exh. C-1);
2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan
(LRC) Psd-256394 executed on 7 June 1979, in favor of defendant
Clarita Joaquin, for a consideration of P1[2],000.00 (Exh. D),
pursuant to which TCT No. S-109772 was issued in her name
(Exh. D-1);
3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan
(LRC) Psd-256394 executed on 12 May 1988, in favor of
defendant spouses Fidel Joaquin and Conchita Bernardo, for a
consideration of P54,[3]00.00 (Exh. E), pursuant to which TCT
No. 155329 was issued to them (Exh. E-1);
4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan
(LRC) Psd-256394 executed on 12 May 1988, in favor of
defendant spouses Artemio Joaquin and Socorro Angeles, for a
consideration of P[54,3]00.00 (Exh. F), pursuant to which TCT
No. 155330 was issued to them (Exh. F-1); and
5. Absolute Sale of Real Property covering Lot 168-C-4 of
subdivision plan (LRC) Psd-256395 executed on 9 September
1988, in favor of Tomas Joaquin, for a consideration
of P20,000.00 (Exh. G), pursuant to which TCT No. 157203 was
issued in her name (Exh. G-1).
[6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan
(LRC) Psd-256395 executed on 7 October 1988, in favor of
Gavino Joaquin, for a consideration of P25,000.00 (Exh. K),
pursuant to which TCT No. 157779 was issued in his name (Exh.
K-1).]
In seeking the declaration of nullity of the aforesaid deeds of sale and certificates
of title, plaintiffs, in their complaint, aver:
- XX-
The deeds of sale, Annexes C, D, E, F, and G, [and K] are simulated as they are,
are NULL AND VOID AB INITIO because
a) Firstly, there was no actual valid consideration for the deeds of sale
xxx over the properties in litis;
b) Secondly, assuming that there was consideration in the sums
reflected in the questioned deeds, the properties are more than
three-fold times more valuable than the measly sums
appearing therein;
c) Thirdly, the deeds of sale do not reflect and express the true intent
of the parties (vendors and vendees); and
d) Fourthly, the purported sale of the properties in litis was the result
of a deliberate conspiracy designed to unjustly deprive the rest
of the compulsory heirs (plaintiffs herein) of their legitime.
- XXI -
Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos.
36113/T-172, S-109772, 155329, 155330, 157203 [and 157779] issued by the
Registrar of Deeds over the properties in litis xxx are NULL AND VOID AB
INITIO.
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action
against them as well as the requisite standing and interest to assail their titles over
the properties in litis; (2) that the sales were with sufficient considerations and
made by defendants parents voluntarily, in good faith, and with full knowledge
of the consequences of their deeds of sale; and (3) that the certificates of title were
issued with sufficient factual and legal basis.[4] (Emphasis in the original)
The Ruling of the Trial Court
Before the trial, the trial court ordered the dismissal of the case against
defendant spouses Gavino Joaquin and Lea Asis.[5] Instead of filing an Answer
with their co-defendants, Gavino Joaquin and Lea Asis filed a Motion to
Dismiss.[6] In granting the dismissal to Gavino Joaquin and Lea Asis, the trial
court noted that compulsory heirs have the right to a legitime but such right is
contingent since said right commences only from the moment of death of the
decedent pursuant to Article 777 of the Civil Code of the Philippines. [7]
After trial, the trial court ruled in favor of the defendants and dismissed the
complaint. The trial court stated:
In the first place, the testimony of the defendants, particularly that of the xxx
father will show that the Deeds of Sale were all executed for valuable
consideration. This assertion must prevail over the negative allegation of
plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause of action
against defendants since there can be no legitime to speak of prior to the death of
their parents. The court finds this contention tenable. In determining the legitime,
the value of the property left at the death of the testator shall be considered (Art.
908 of the New Civil Code). Hence, the legitime of a compulsory heir is
computed as of the time of the death of the decedent. Plaintiffs therefore cannot
claim an impairment of their legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that should bind families together,
the counterclaim is likewise DISMISSED.
No costs.
SO ORDERED.[8]
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision of the trial court. The appellate
court ruled:
To the mind of the Court, appellants are skirting the real and decisive issue in this Issues
case, which is, whether xxx they have a cause of action against appellees.

Upon this point, there is no question that plaintiffs-appellants, like their defendant Petitioners assign the following as errors of the Court of Appeals:
brothers and sisters, are compulsory heirs of defendant spouses, Leonardo 1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
Joaquin and Feliciana Landrito, who are their parents.However, their right to the THE CONVEYANCE IN QUESTION HAD NO VALID
properties of their defendant parents, as compulsory heirs, is merely inchoate and CONSIDERATION.
vests only upon the latters death. While still alive, defendant parents are free to
dispose of their properties, provided that such dispositions are not made in fraud 2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
of creditors. EVEN ASSUMING THAT THERE WAS A
CONSIDERATION, THE SAME IS GROSSLY
Plaintiffs-appellants are definitely not parties to the deeds of sale in INADEQUATE.
question. Neither do they claim to be creditors of their defendant 3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
parents. Consequently, they cannot be considered as real parties in interest to THE DEEDS OF SALE DO NOT EXPRESS THE TRUE
assail the validity of said deeds either for gross inadequacy or lack of INTENT OF THE PARTIES.
consideration or for failure to express the true intent of the parties. In point is the
ruling of the Supreme Court in Velarde, et al. vs. Paez, et al., 101 SCRA 376, 4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
thus: THE CONVEYANCE WAS PART AND PARCEL OF A
CONSPIRACY AIMED AT UNJUSTLY DEPRIVING THE
The plaintiffs are not parties to the alleged deed of sale and are not principally or REST OF THE CHILDREN OF THE SPOUSES LEONARDO
subsidiarily bound thereby; hence, they have no legal capacity to challenge their JOAQUIN AND FELICIANA LANDRITO OF THEIR
validity. INTEREST OVER THE SUBJECT PROPERTIES.
5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
Plaintiffs-appellants anchor their action on the supposed impairment of their PETITIONERS HAVE A GOOD, SUFFICIENT AND VALID
legitime by the dispositions made by their defendant parents in favor of their CAUSE OF ACTION AGAINST THE PRIVATE
defendant brothers and sisters. But, as correctly held by the court a quo, the RESPONDENTS.[10]
legitime of a compulsory heir is computed as of the time of the death of the
decedent. Plaintiffs therefore cannot claim an impairment of their legitime while
their parents live.
The Ruling of the Court
With this posture taken by the Court, consideration of the errors assigned by
plaintiffs-appellants is inconsequential.
We find the petition without merit.

WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs We will discuss petitioners legal interest over the properties subject of the
against plaintiffs-appellants. Deeds of Sale before discussing the issues on the purported lack of consideration
and gross inadequacy of the prices of the Deeds of Sale.
SO ORDERED.[9]

Hence, the instant petition. Whether Petitioners have a legal interest

over the properties subject of the Deeds of Sale
 Petitioners Complaint betrays their motive for filing this case. In their
Complaint, petitioners asserted that the purported sale of the properties in
litis was the result of a deliberate conspiracy designed to unjustly deprive the rest
of the compulsory heirs (plaintiffs herein) of their legitime. Petitioners strategy
was to have the Deeds of Sale declared void so that ownership of the lots would
eventually revert to their respondent parents. If their parents die still owning the
lots, petitioners and their respondent siblings will then co-own their parents estate
by hereditary succession.[11]
It is evident from the records that petitioners are interested in the properties
subject of the Deeds of Sale, but they have failed to show any legal right to the
properties. The trial and appellate courts should have dismissed the action for this
reason alone. An action must be prosecuted in the name of the real party-in-
interest.[12]
[T]he question as to real party-in-interest is whether he is the party who would be
benefitted or injured by the judgment, or the party entitled to the avails of the suit.
xxx
In actions for the annulment of contracts, such as this action, the real parties are
those who are parties to the agreement or are bound either principally or
subsidiarily or are prejudiced in their rights with respect to one of the contracting
parties and can show the detriment which would positively result to them from
the contract even though they did not intervene in it (Ibaez v. Hongkong &
Shanghai Bank, 22 Phil. 572 [1912]) xxx.
These are parties with a present substantial interest, as distinguished from a mere
expectancy or future, contingent, subordinate, or consequential interest. The
phrase present substantial interest more concretely is meant such interest of a
party in the subject matter of the action as will entitle him, under the substantive
law, to recover if the evidence is sufficient, or that he has the legal title to demand
and the defendant will be protected in a payment to or recovery by him. [13]
Petitioners do not have any legal interest over the properties subject of the
Deeds of Sale. As the appellate court stated, petitioners right to their parents
properties is merely inchoate and vests only upon their parents death. While still
living, the parents of petitioners are free to dispose of their properties. In their
overzealousness to safeguard their future legitime, petitioners forget that
theoretically, the sale of the lots to their siblings does not affect the value of their
parents estate. While the sale of the lots reduced the estate, cash of equivalent
value replaced the lots taken from the estate.
Whether the Deeds of Sale are void
for lack of consideration
Petitioners assert that their respondent siblings did not actually pay the
prices stated in the Deeds of Sale to their respondent father. Thus, petitioners ask
the court to declare the Deeds of Sale void.
A contract of sale is not a real contract, but a consensual contract. As a
consensual contract, a contract of sale becomes a binding and valid contract upon
the meeting of the minds as to price. If there is a meeting of the minds of the
parties as to the price, the contract of sale is valid, despite the manner of payment,
or even the breach of that manner of payment. If the real price is not stated in the
contract, then the contract of sale is valid but subject to reformation. If there is no
meeting of the minds of the parties as to the price, because the price stipulated in
the contract is simulated, then the contract is void.[14] Article 1471 of the Civil
Code states that if the price in a contract of sale is simulated, the sale is void.
It is not the act of payment of price that determines the validity of a contract
of sale. Payment of the price has nothing to do with the perfection of the
contract. Payment of the price goes into the performance of the contract. Failure
to pay the consideration is different from lack of consideration. The former results
in a right to demand the fulfillment or cancellation of the obligation under an
existing valid contract while the latter prevents the existence of a valid
contract.[15]
Petitioners failed to show that the prices in the Deeds of Sale were
absolutely simulated. To prove simulation, petitioners presented Emma Joaquin
Valdozs testimony stating that their father, respondent Leonardo Joaquin, told her
that he would transfer a lot to her through a deed of sale without need for her
payment of the purchase price.[16] The trial court did not find the allegation of
absolute simulation of price credible. Petitioners failure to prove absolute
simulation of price is magnified by their lack of knowledge of their respondent
siblings financial capacity to buy the questioned lots. [17] On the other hand, the
Deeds of Sale which petitioners presented as evidence plainly showed the cost of
each lot sold. Not only did respondents minds meet as to the purchase price, but
the real price was also stated in the Deeds of Sale. As of the filing of the
complaint, respondent siblings have also fully paid the price to their respondent
father.[18]
Whether the Deeds of Sale are void support or are clearly erroneous so as to constitute serious abuse of
for gross inadequacy of price discretion.[20] In the instant case, the trial court found that the lots were sold for a
valid consideration, and that the defendant children actually paid the purchase
price stipulated in their respective Deeds of Sale. Actual payment of the purchase
Petitioners ask that assuming that there is consideration, the same is grossly price by the buyer to the seller is a factual finding that is now conclusive upon us.
inadequate as to invalidate the Deeds of Sale.
WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.
Articles 1355 of the Civil Code states:
SO ORDERED.
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall
not invalidate a contract, unless there has been fraud, mistake or undue
influence. (Emphasis supplied)

Article 1470 of the Civil Code further provides:

Art. 1470. Gross inadequacy of price does not affect a contract of sale, except
as may indicate a defect in the consent, or that the parties really intended a
donation or some other act or contract. (Emphasis supplied)

Petitioners failed to prove any of the instances mentioned in Articles 1355

and 1470 of the Civil Code which would invalidate, or even affect, the Deeds of
Sale. Indeed, there is no requirement that the price be equal to the exact value of
the subject matter of sale. All the respondents believed that they received the
commutative value of what they gave. As we stated in Vales v. Villa:[19]

Courts cannot follow one every step of his life and extricate him from bad
bargains, protect him from unwise investments, relieve him from one-sided
contracts, or annul the effects of foolish acts. Courts cannot constitute themselves
guardians of persons who are not legally incompetent. Courts operate not because
one person has been defeated or overcome by another, but because he has been
defeated or overcome illegally. Men may do foolish things, make ridiculous
contracts, use miserable judgment, and lose money by them indeed, all they have
in the world; but not for that alone can the law intervene and restore. There must
be, in addition, a violation of the law, the commission of what the law knows as
an actionable wrong, before the courts are authorized to lay hold of the situation
and remedy it. (Emphasis in the original)

Moreover, the factual findings of the appellate court are conclusive on the
parties and carry greater weight when they coincide with the factual findings of
the trial court. This Court will not weigh the evidence all over again unless there
has been a showing that the findings of the lower court are totally devoid of
[G.R. No. 124242. January 21, 2005]
SAN LORENZO DEVELOPMENT
CORPORATION, petitioner, vs. COURT OF APPEALS, PABLO
S. BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA
LU, respondents.
DECISION
TINGA, J.:
From a coaptation of the records of this case, it appears that respondents
Miguel Lu and Pacita Zavalla, (hereinafter, the Spouses Lu) owned two (2)
parcels of land situated in Sta. Rosa, Laguna covered by TCT No. T-39022 and
TCT No. T-39023 both measuring 15,808 square meters or a total of 3.1616
hectares.
On 20 August 1986, the Spouses Lu purportedly sold the two parcels of
land to respondent Pablo Babasanta, (hereinafter, Babasanta) for the price of
fifteen pesos (P15.00) per square meter. Babasanta made a downpayment of fifty
thousand pesos (P50,000.00) as evidenced by a memorandum receipt issued by
Pacita Lu of the same date. Several other payments totaling two hundred thousand
pesos (P200,000.00) were made by Babasanta.
Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand
the execution of a final deed of sale in his favor so that he could effect full
payment of the purchase price. In the same letter, Babasanta notified the spouses
about having received information that the spouses sold the same property to
another without his knowledge and consent. He demanded that the second sale be
cancelled and that a final deed of sale be issued in his favor.
In response, Pacita Lu wrote a letter to Babasanta wherein she
acknowledged having agreed to sell the property to him at fifteen pesos (P15.00)
per square meter. She, however, reminded Babasanta that when the balance of the
purchase price became due, he requested for a reduction of the price and when
she refused, Babasanta backed out of the sale. Pacita added that she returned the
sum of fifty thousand pesos (P50,000.00) to Babasanta through Eugenio Oya.
On 2 June 1989, respondent Babasanta, as plaintiff, filed before the
Regional Trial Court (RTC), Branch 31, of San Pedro, Laguna, a Complaint for
Specific Performance and Damages[1] against his co-respondents herein, the
Spouses Lu. Babasanta alleged that the lands covered by TCT No. T- 39022 and
T-39023 had been sold to him by the spouses at fifteen pesos (P15.00) per square
meter. Despite his repeated demands for the execution of a final deed of sale in
his favor, respondents allegedly refused.
In their Answer,[2] the Spouses Lu alleged that Pacita Lu obtained loans
from Babasanta and when the total advances of Pacita reached fifty thousand
pesos (P50,000.00), the latter and Babasanta, without the knowledge and consent
of Miguel Lu, had verbally agreed to transform the transaction into a contract to
sell the two parcels of land to Babasanta with the fifty thousand pesos
(P50,000.00) to be considered as the downpayment for the property and the
balance to be paid on or before 31 December 1987. Respondents Lu added that
as of November 1987, total payments made by Babasanta amounted to only two
hundred thousand pesos (P200,000.00) and the latter allegedly failed to pay the
balance of two hundred sixty thousand pesos (P260,000.00) despite repeated
demands. Babasanta had purportedly asked Pacita for a reduction of the price
from fifteen pesos (P15.00) to twelve pesos (P12.00) per square meter and when
the Spouses Lu refused to grant Babasantas request, the latter rescinded the
contract to sell and declared that the original loan transaction just be carried out
in that the spouses would be indebted to him in the amount of two hundred
thousand pesos (P200,000.00). Accordingly, on 6 July 1989, they purchased
Interbank Managers Check No. 05020269 in the amount of two hundred thousand
pesos (P200,000.00) in the name of Babasanta to show that she was able and
willing to pay the balance of her loan obligation.
Babasanta later filed an Amended Complaint dated 17 January
1990[3] wherein he prayed for the issuance of a writ of preliminary injunction with
temporary restraining order and the inclusion of the Register of Deeds of
Calamba, Laguna as party defendant. He contended that the issuance of a
preliminary injunction was necessary to restrain the transfer or conveyance by the
Spouses Lu of the subject property to other persons.
The Spouses Lu filed their Opposition[4] to the amended complaint
contending that it raised new matters which seriously affect their substantive
rights under the original complaint. However, the trial court in its Order dated 17
January 1990[5] admitted the amended complaint.
On 19 January 1990, herein petitioner San Lorenzo Development
Corporation (SLDC) filed a Motion for Intervention[6] before the trial court.
SLDC alleged that it had legal interest in the subject matter under litigation
because on 3 May 1989, the two parcels of land involved, namely Lot 1764-A
and 1764-B, had been sold to it in a Deed of Absolute Sale with Mortgage.[7] It
alleged that it was a buyer in good faith and for value and therefore it had a better
right over the property in litigation.
 In his Opposition to SLDCs motion for intervention,[8] respondent
Babasanta demurred and argued that the latter had no legal interest in the case
because the two parcels of land involved herein had already been conveyed to
him by the Spouses Lu and hence, the vendors were without legal capacity to
transfer or dispose of the two parcels of land to the intervenor.
Meanwhile, the trial court in its Order dated 21 March 1990 allowed SLDC
to intervene. SLDC filed its Complaint-in-Intervention on 19 April
1990.[9] Respondent Babasantas motion for the issuance of a preliminary
injunction was likewise granted by the trial court in its Order dated 11 January
1991[10] conditioned upon his filing of a bond in the amount of fifty thousand
pesos (P50,000.00).
SLDC in its Complaint-in-Intervention alleged that on 11 February 1989,
the Spouses Lu executed in its favor an Option to Buy the lots subject of the
complaint. Accordingly, it paid an option money in the amount of three hundred
sixteen thousand one hundred sixty pesos (P316,160.00) out of the total
consideration for the purchase of the two lots of one million two hundred sixty-
four thousand six hundred forty pesos (P1,264,640.00). After the Spouses Lu
received a total amount of six hundred thirty-two thousand three hundred twenty
pesos (P632,320.00) they executed on 3 May 1989 a Deed of Absolute Sale with
Mortgage in its favor. SLDC added that the certificates of title over the property
were delivered to it by the spouses clean and free from any adverse claims and/or
notice of lis pendens. SLDC further alleged that it only learned of the filing of the
complaint sometime in the early part of January 1990 which prompted it to file
the motion to intervene without delay. Claiming that it was a buyer in good faith,
SLDC argued that it had no obligation to look beyond the titles submitted to it by
the Spouses Lu particularly because Babasantas claims were not annotated on the
certificates of title at the time the lands were sold to it.
After a protracted trial, the RTC rendered its Decision on 30 July 1993
upholding the sale of the property to SLDC. It ordered the Spouses Lu to pay
Babasanta the sum of two hundred thousand pesos (P200,000.00) with legal
interest plus the further sum of fifty thousand pesos (P50,000.00) as and for
attorneys fees. On the complaint-in-intervention, the trial court ordered the
Register of Deeds of Laguna, Calamba Branch to cancel the notice of lis
pendens annotated on the original of the TCT No. T-39022 (T-7218) and No. T-
39023 (T-7219).
Applying Article 1544 of the Civil Code, the trial court ruled that since both
Babasanta and SLDC did not register the respective sales in their favor,
ownership of the property should pertain to the buyer who first acquired
possession of the property. The trial court equated the execution of a public
instrument in favor of SLDC as sufficient delivery of the property to the latter. It
concluded that symbolic possession could be considered to have been first
transferred to SLDC and consequently ownership of the property pertained to
SLDC who purchased the property in good faith.
Respondent Babasanta appealed the trial courts decision to the Court of
Appeals alleging in the main that the trial court erred in concluding that SLDC is
a purchaser in good faith and in upholding the validity of the sale made by the
Spouses Lu in favor of SLDC.
Respondent spouses likewise filed an appeal to the Court of Appeals. They
contended that the trial court erred in failing to consider that the contract to sell
between them and Babasanta had been novated when the latter abandoned the
verbal contract of sale and declared that the original loan transaction just be
carried out. The Spouses Lu argued that since the properties involved were
conjugal, the trial court should have declared the verbal contract to sell between
Pacita Lu and Pablo Babasanta null and void ab initio for lack of knowledge and
consent of Miguel Lu. They further averred that the trial court erred in not
dismissing the complaint filed by Babasanta; in awarding damages in his favor
and in refusing to grant the reliefs prayed for in their answer.
On 4 October 1995, the Court of Appeals rendered its Decision[11] which set
aside the judgment of the trial court. It declared that the sale between Babasanta
and the Spouses Lu was valid and subsisting and ordered the spouses to execute
the necessary deed of conveyance in favor of Babasanta, and the latter to pay the
balance of the purchase price in the amount of two hundred sixty thousand pesos
(P260,000.00). The appellate court ruled that the Absolute Deed of Sale with
Mortgage in favor of SLDC was null and void on the ground that SLDC was a
purchaser in bad faith. The Spouses Lu were further ordered to return all
payments made by SLDC with legal interest and to pay attorneys fees to
Babasanta.
SLDC and the Spouses Lu filed separate motions for reconsideration with
the appellate court.[12] However, in a Manifestation dated 20 December
1995,[13] the Spouses Lu informed the appellate court that they are no longer
contesting the decision dated 4 October 1995.
In its Resolution dated 11 March 1996,[14] the appellate court considered as
withdrawn the motion for reconsideration filed by the Spouses Lu in view of their
manifestation of 20 December 1995. The appellate court denied SLDCs motion
for reconsideration on the ground that no new or substantial arguments were
raised therein which would warrant modification or reversal of the courts decision
dated 4 October 1995.
Hence, this petition.
 SLDC assigns the following errors allegedly committed by the appellate
court:
THE COURT OF APPEALS ERRED IN HOLDING THAT SAN LORENZO
WAS NOT A BUYER IN GOOD FAITH BECAUSE WHEN THE SELLER
PACITA ZAVALLA LU OBTAINED FROM IT THE CASH ADVANCE
OF P200,000.00, SAN LORENZO WAS PUT ON INQUIRY OF A PRIOR
TRANSACTION ON THE PROPERTY.
THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE
ESTABLISHED FACT THAT THE ALLEGED FIRST BUYER,
RESPONDENT BABASANTA, WAS NOT IN POSSESSION OF THE
DISPUTED PROPERTY WHEN SAN LORENZO BOUGHT AND TOOK
POSSESSION OF THE PROPERTY AND NO ADVERSE CLAIM, LIEN,
ENCUMBRANCE OR LIS PENDENS WAS ANNOTATED ON THE TITLES.
THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE
FACT THAT RESPONDENT BABASANTA HAS SUBMITTED NO
EVIDENCE SHOWING THAT SAN LORENZO WAS AWARE OF HIS
RIGHTS OR INTERESTS IN THE DISPUTED PROPERTY.
THE COURT OF APPEALS ERRED IN HOLDING THAT
NOTWITHSTANDING ITS FULL CONCURRENCE ON THE FINDINGS OF
FACT OF THE TRIAL COURT, IT REVERSED AND SET ASIDE THE
DECISION OF THE TRIAL COURT UPHOLDING THE TITLE OF SAN
LORENZO AS A BUYER AND FIRST POSSESSOR IN GOOD FAITH. [15]
SLDC contended that the appellate court erred in concluding that it had
prior notice of Babasantas claim over the property merely on the basis of its
having advanced the amount of two hundred thousand pesos (P200,000.00) to
Pacita Lu upon the latters representation that she needed the money to pay her
obligation to Babasanta. It argued that it had no reason to suspect that Pacita was
not telling the truth that the money would be used to pay her indebtedness to
Babasanta. At any rate, SLDC averred that the amount of two hundred thousand
pesos (P200,000.00) which it advanced to Pacita Lu would be deducted from the
balance of the purchase price still due from it and should not be construed as
notice of the prior sale of the land to Babasanta. It added that at no instance did
Pacita Lu inform it that the lands had been previously sold to Babasanta.
Moreover, SLDC stressed that after the execution of the sale in its favor it
immediately took possession of the property and asserted its rights as new owner
as opposed to Babasanta who has never exercised acts of ownership. Since the
titles bore no adverse claim, encumbrance, or lien at the time it was sold to it,
SLDC argued that it had every reason to rely on the correctness of the certificate
of title and it was not obliged to go beyond the certificate to determine the
condition of the property. Invoking the presumption of good faith, it added that
the burden rests on Babasanta to prove that it was aware of the prior sale to him
but the latter failed to do so. SLDC pointed out that the notice of lis pendens was
annotated only on 2 June 1989 long after the sale of the property to it was
consummated on 3 May 1989.
Meanwhile, in an Urgent Ex-Parte Manifestation dated 27 August 1999,
the Spouses Lu informed the Court that due to financial constraints they have no
more interest to pursue their rights in the instant case and submit themselves to
the decision of the Court of Appeals.[16]
On the other hand, respondent Babasanta argued that SLDC could not have
acquired ownership of the property because it failed to comply with the
requirement of registration of the sale in good faith. He emphasized that at the
time SLDC registered the sale in its favor on 30 June 1990, there was already a
notice of lis pendens annotated on the titles of the property made as early as 2
June 1989. Hence, petitioners registration of the sale did not confer upon it any
right. Babasanta further asserted that petitioners bad faith in the acquisition of the
property is evident from the fact that it failed to make necessary inquiry regarding
the purpose of the issuance of the two hundred thousand pesos (P200,000.00)
managers check in his favor.
The core issue presented for resolution in the instant petition is who between
SLDC and Babasanta has a better right over the two parcels of land subject of the
instant case in view of the successive transactions executed by the Spouses Lu.
To prove the perfection of the contract of sale in his favor, Babasanta
presented a document signed by Pacita Lu acknowledging receipt of the sum of
fifty thousand pesos (P50,000.00) as partial payment for 3.6 hectares of farm lot
situated at Barangay Pulong, Sta. Cruz, Sta. Rosa, Laguna. [17] While the receipt
signed by Pacita did not mention the price for which the property was being sold,
this deficiency was supplied by Pacita Lus letter dated 29 May 1989 [18] wherein
she admitted that she agreed to sell the 3.6 hectares of land to Babasanta for
fifteen pesos (P15.00) per square meter.
An analysis of the facts obtaining in this case, as well as the evidence
presented by the parties, irresistibly leads to the conclusion that the agreement
between Babasanta and the Spouses Lu is a contract to sell and not a contract of
sale.
 Contracts, in general, are perfected by mere consent,[19] which is manifested
by the meeting of the offer and the acceptance upon the thing which are to
constitute the contract. The offer must be certain and the acceptance
absolute.[20] Moreover, contracts shall be obligatory in whatever form they may
have been entered into, provided all the essential requisites for their validity are
present.[21]
The receipt signed by Pacita Lu merely states that she accepted the sum of
fifty thousand pesos (P50,000.00) from Babasanta as partial payment of 3.6
hectares of farm lot situated in Sta. Rosa, Laguna. While there is no stipulation
that the seller reserves the ownership of the property until full payment of the
price which is a distinguishing feature of a contract to sell, the subsequent acts of
the parties convince us that the Spouses Lu never intended to transfer ownership
to Babasanta except upon full payment of the purchase price.
Babasantas letter dated 22 May 1989 was quite telling. He stated therein
that despite his repeated requests for the execution of the final deed of sale in his
favor so that he could effect full payment of the price, Pacita Lu allegedly refused
to do so. In effect, Babasanta himself recognized that ownership of the property
would not be transferred to him until such time as he shall have effected full
payment of the price. Moreover, had the sellers intended to transfer title, they
could have easily executed the document of sale in its required form
simultaneously with their acceptance of the partial payment, but they did not.
Doubtlessly, the receipt signed by Pacita Lu should legally be considered as a
perfected contract to sell.
The distinction between a contract to sell and a contract of sale is quite
germane. In a contract of sale, title passes to the vendee upon the delivery of the
thing sold; whereas in a contract to sell, by agreement the ownership is reserved
in the vendor and is not to pass until the full payment of the price.[22] In a contract
of sale, the vendor has lost and cannot recover ownership until and unless the
contract is resolved or rescinded; whereas in a contract to sell, title is retained by
the vendor until the full payment of the price, such payment being a positive
suspensive condition and failure of which is not a breach but an event that
prevents the obligation of the vendor to convey title from becoming effective.[23]
The perfected contract to sell imposed upon Babasanta the obligation to pay
the balance of the purchase price. There being an obligation to pay the price,
Babasanta should have made the proper tender of payment and consignation of
the price in court as required by law. Mere sending of a letter by the vendee
expressing the intention to pay without the accompanying payment is not
considered a valid tender of payment.[24] Consignation of the amounts due in court
is essential in order to extinguish Babasantas obligation to pay the balance of the
purchase price. Glaringly absent from the records is any indication that Babasanta
even attempted to make the proper consignation of the amounts due, thus, the
obligation on the part of the sellers to convey title never acquired obligatory force.
On the assumption that the transaction between the parties is a contract of
sale and not a contract to sell, Babasantas claim of ownership should nevertheless
fail.
Sale, being a consensual contract, is perfected by mere consent[25] and from
that moment, the parties may reciprocally demand performance. [26] The essential
elements of a contract of sale, to wit: (1) consent or meeting of the minds, that is,
to transfer ownership in exchange for the price; (2) object certain which is the
subject matter of the contract; (3) cause of the obligation which is established. [27]
The perfection of a contract of sale should not, however, be confused with
its consummation. In relation to the acquisition and transfer of ownership, it
should be noted that sale is not a mode, but merely a title. A mode is the legal
means by which dominion or ownership is created, transferred or destroyed, but
title is only the legal basis by which to affect dominion or ownership. [28] Under
Article 712 of the Civil Code, ownership and other real rights over property are
acquired and transmitted by law, by donation, by testate and intestate succession,
and in consequence of certain contracts, by tradition. Contracts only constitute
titles or rights to the transfer or acquisition of ownership, while delivery or
tradition is the mode of accomplishing the same.[29] Therefore, sale by itself does
not transfer or affect ownership; the most that sale does is to create the obligation
to transfer ownership. It is tradition or delivery, as a consequence of sale, that
actually transfers ownership.
Explicitly, the law provides that the ownership of the thing sold is acquired
by the vendee from the moment it is delivered to him in any of the ways specified
in Article 1497 to 1501.[30] The word delivered should not be taken restrictively
to mean transfer of actual physical possession of the property. The law recognizes
two principal modes of delivery, to wit: (1) actual delivery; and (2) legal or
constructive delivery.
Actual delivery consists in placing the thing sold in the control and
possession of the vendee.[31] Legal or constructive delivery, on the other hand,
may be had through any of the following ways: the execution of a public
instrument evidencing the sale;[32] symbolical tradition such as the delivery of the
keys of the place where the movable sold is being kept;[33] traditio longa manu or
by mere consent or agreement if the movable sold cannot yet be transferred to the
possession of the buyer at the time of the sale;[34] traditio brevi manu if the buyer
already had possession of the object even before the sale; [35] and traditio
constitutum possessorium, where the seller remains in possession of the property
in a different capacity.[36]
 Following the above disquisition, respondent Babasanta did not acquire
ownership by the mere execution of the receipt by Pacita Lu acknowledging
receipt of partial payment for the property. For one, the agreement between
Babasanta and the Spouses Lu, though valid, was not embodied in a public
instrument. Hence, no constructive delivery of the lands could have been effected.
For another, Babasanta had not taken possession of the property at any time after
the perfection of the sale in his favor or exercised acts of dominion over it despite
his assertions that he was the rightful owner of the lands. Simply stated, there was
no delivery to Babasanta, whether actual or constructive, which is essential to
transfer ownership of the property. Thus, even on the assumption that the
perfected contract between the parties was a sale, ownership could not have
passed to Babasanta in the absence of delivery, since in a contract of sale
ownership is transferred to the vendee only upon the delivery of the thing sold.[37]
However, it must be stressed that the juridical relationship between the
parties in a double sale is primarily governed by Article 1544 which lays down
the rules of preference between the two purchasers of the same property. It
provides:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
The principle of primus tempore, potior jure (first in time, stronger in right)
gains greater significance in case of double sale of immovable property. When
the thing sold twice is an immovable, the one who acquires it and first records it
in the Registry of Property, both made in good faith, shall be deemed the
owner.[38] Verily, the act of registration must be coupled with good faith that is,
the registrant must have no knowledge of the defect or lack of title of his vendor
or must not have been aware of facts which should have put him upon such
inquiry and investigation as might be necessary to acquaint him with the defects
in the title of his vendor.[39]
Admittedly, SLDC registered the sale with the Registry of Deeds after it
had acquired knowledge of Babasantas claim. Babasanta, however, strongly
argues that the registration of the sale by SLDC was not sufficient to confer upon
the latter any title to the property since the registration was attended by bad faith.
Specifically, he points out that at the time SLDC registered the sale on 30 June
1990, there was already a notice of lis pendens on the file with the Register of
Deeds, the same having been filed one year before on 2 June 1989.
Did the registration of the sale after the annotation of the notice of lis
pendens obliterate the effects of delivery and possession in good faith which
admittedly had occurred prior to SLDCs knowledge of the transaction in favor of
Babasanta?
We do not hold so.
It must be stressed that as early as 11 February 1989, the Spouses Lu
executed the Option to Buy in favor of SLDC upon receiving P316,160.00 as
option money from SLDC. After SLDC had paid more than one half of the agreed
purchase price of P1,264,640.00, the Spouses Lu subsequently executed on 3
May 1989 a Deed of Absolute Sale in favor or SLDC. At the time both deeds were
executed, SLDC had no knowledge of the prior transaction of the Spouses Lu
with Babasanta. Simply stated, from the time of execution of the first deed up to
the moment of transfer and delivery of possession of the lands to SLDC, it had
acted in good faith and the subsequent annotation of lis pendens has no effect at
all on the consummated sale between SLDC and the Spouses Lu.
A purchaser in good faith is one who buys property of
another without notice that some other person has a right to, or interest in, such
property and pays a full and fair price for the same at the time of such purchase,
or before he has notice of the claim or interest of some other person in the
property.[40] Following the foregoing definition, we rule that SLDC qualifies as a
buyer in good faith since there is no evidence extant in the records that it had
knowledge of the prior transaction in favor of Babasanta. At the time of the sale
of the property to SLDC, the vendors were still the registered owners of the
property and were in fact in possession of the lands. Time and again, this Court
has ruled that a person dealing with the owner of registered land is not bound to
go beyond the certificate of title as he is charged with notice of burdens on the
property which are noted on the face of the register or on the certificate of
title.[41] In assailing knowledge of the transaction between him and the Spouses
Lu, Babasanta apparently relies on the principle of constructive notice
incorporated in Section 52 of the Property Registration Decree (P.D. No. 1529)
which reads, thus:
Sec. 52. Constructive notice upon registration. Every conveyance, mortgage,
lease, lien, attachment, order, judgment, instrument or entry affecting registered
land shall, if registered, filed, or entered in the office of the Register of Deeds for
the province or city where the land to which it relates lies, be constructive notice
to all persons from the time of such registering, filing, or entering.
However, the constructive notice operates as suchby the express wording of
Section 52from the time of the registration of the notice of lis pendens which in
this case was effected only on 2 June 1989, at which time the sale in favor of
SLDC had long been consummated insofar as the obligation of the Spouses Lu to
transfer ownership over the property to SLDC is concerned.
More fundamentally, given the superiority of the right of SLDC to the claim
of Babasanta the annotation of the notice of lis pendens cannot help Babasantas
position a bit and it is irrelevant to the good or bad faith characterization of SLDC
as a purchaser. A notice of lis pendens, as the Court held in Natao v.
Esteban,[42] serves as a warning to a prospective purchaser or incumbrancer that
the particular property is in litigation; and that he should keep his hands off the
same, unless he intends to gamble on the results of the litigation. Precisely, in this
case SLDC has intervened in the pending litigation to protect its rights.
Obviously, SLDCs faith in the merit of its cause has been vindicated with the
Courts present decision which is the ultimate denouement on the controversy.
The Court of Appeals has made capital[43] of SLDCs averment in
its Complaint-in-Intervention[44] that at the instance of Pacita Lu it issued a check
for P200,000.00 payable to Babasanta and the confirmatory testimony of Pacita
Lu herself on cross-examination.[45] However, there is nothing in the said
pleading and the testimony which explicitly relates the amount to the transaction
between the Spouses Lu and Babasanta for what they attest to is that the amount
was supposed to pay off the advances made by Babasanta to Pacita Lu. In any
event, the incident took place after the Spouses Lu had already executed the Deed
of Absolute Sale with Mortgage in favor of SLDC and therefore, as previously
explained, it has no effect on the legal position of SLDC.
Assuming ex gratia argumenti that SLDCs registration of the sale had been
tainted by the prior notice of lis pendens and assuming further for the same nonce
that this is a case of double sale, still Babasantas claim could not prevail over that
of SLDCs. In Abarquez v. Court of Appeals,[46] this Court had the occasion to rule
that if a vendee in a double sale registers the sale after he has acquired knowledge
of a previous sale, the registration constitutes a registration in bad faith and does
not confer upon him any right. If the registration is done in bad faith, it is as if
there is no registration at all, and the buyer who has taken possession first of the
property in good faith shall be preferred.
In Abarquez, the first sale to the spouses Israel was notarized and registered
only after the second vendee, Abarquez, registered their deed of sale with the
Registry of Deeds, but the Israels were first in possession. This Court awarded
the property to the Israels because registration of the property by Abarquez lacked
the element of good faith. While the facts in the instant case substantially differ
from that in Abarquez, we would not hesitate to rule in favor of SLDC on the
basis of its prior possession of the property in good faith. Be it noted that delivery
of the property to SLDC was immediately effected after the execution of the deed
in its favor, at which time SLDC had no knowledge at all of the prior transaction
by the Spouses Lu in favor of Babasanta.
The law speaks not only of one criterion. The first criterion is priority of
entry in the registry of property; there being no priority of such entry, the second
is priority of possession; and, in the absence of the two priorities, the third priority
is of the date of title, with good faith as the common critical element. Since SLDC
acquired possession of the property in good faith in contrast to Babasanta, who
neither registered nor possessed the property at any time, SLDCs right is
definitely superior to that of Babasantas.
At any rate, the above discussion on the rules on double sale would be
purely academic for as earlier stated in this decision, the contract between
Babasanta and the Spouses Lu is not a contract of sale but merely a contract to
sell. In Dichoso v. Roxas,[47] we had the occasion to rule that Article 1544 does
not apply to a case where there was a sale to one party of the land itself while the
other contract was a mere promise to sell the land or at most an actual assignment
of the right to repurchase the same land. Accordingly, there was no double sale
of the same land in that case.
WHEREFORE, the instant petition is hereby GRANTED. The decision of
the Court of Appeals appealed from is REVERSED and SET ASIDE and the
decision of the Regional Trial Court, Branch 31, of San Pedro, Laguna is
REINSTATED. No costs.
SO ORDERED.
[G.R. No. 126444. December 4, 1998]
ALFONSO QUIJADA, CRESENTE QUIJADA, REYNELDA QUIJADA,
DEMETRIO QUIJADA, ELIUTERIA QUIJADA, EULALIO
QUIJADA, and WARLITO QUIJADA,petitioners, vs. COURT OF
APPEALS, REGALADO MONDEJAR, RODULFO GOLORAN,
ALBERTO ASIS, SEGUNDINO RAS, ERNESTO GOLORAN,
CELSO ABISO, FERNANDO BAUTISTA, ANTONIO
MACASERO, and NESTOR MAGUINSAY, respondents.
DECISION
MARTINEZ, J.:
Petitioners, as heirs of the late Trinidad Quijada, filed a complaint against
private respondents for quieting of title, recovery of possession and ownership of
parcels of land with claim for attorney's fees and damages.The suit was premised
on the following facts found by the Court of Appeals, which is materially the
same as that found by the trial court:
"Plaintiffs-appellees (petitioners) are the children of the late Trinidad Corvera
Vda. de Quijada. Trinidad was one of the heirs of the late Pedro Corvera and
inherited from the latter the two-hectare parcel of land subject of the case, situated
in the barrio of San Agustin, Talacogon, Agusan del Sur. On April 5, 1956,
Trinidad Quijada together with her sisters Leonila Corvera Vda. de Sequea and
Paz Corvera Cabiltes and brother Epapiadito Corvera executed a conditional deed
of donation (Exh. C) of the two-hectare parcel of land subject of the case in favor
of the Municipality of Talacogon, the condition being that the parcel of land shall
be used solely and exclusively as part of the campus of the proposed provincial
high school in Talacogon. Apparently, Trinidad remained in possession of the
parcel of land despite the donation. On July 29, 1962, Trinidad sold one (1)
hectare of the subject parcel of land to defendant-appellant Regalado Mondejar
(Exh. 1). Subsequently, Trinidad verbally sold the remaining one (1) hectare to
defendant-appellant (respondent) Regalado Mondejar without the benefit of a
written deed of sale and evidenced solely by receipts of payment. In 1980, the
heirs of Trinidad, who at that time was already dead, filed a complaint for forcible
entry (Exh. E) against defendant-appellant (respondent) Regalado Mondejar,
which complaint was, however, dismissed for failure to prosecute (Exh. F). In
1987, the proposed provincial high school having failed to materialize, the
Sangguniang Bayan of the municipality of Talacogon enacted a resolution
reverting the two (2) hectares of land donated back to the donors (Exh. D). In the
meantime, defendant-appellant (respondent) Regalado Mondejar sold portions of
the land to defendants-appellants (respondents) Fernando Bautista (Exh. 5),
Rodolfo Goloran (Exh. 6), Efren Guden (Exh. 7) and Ernesto Goloran (Exh. 8).
"On July 5, 1988, plaintiffs-appellees (petitioners) filed this action against
defendants-appellants (respondents). In the complaint, plaintiffs-appellees
(petitioners) alleged that their deceased mother never sold, conveyed, transferred
or disposed of the property in question to any person or entity much less to
Regalado Mondejar save the donation made to the Municipality of Talacogon in
1956; that at the time of the alleged sale to Regalado Mondejar by Trinidad
Quijada, the land still belongs to the Municipality of Talacogon, hence, the
supposed sale is null and void.
"Defendants-appellants (respondents), on the other hand, in their answer claimed
that the land in dispute was sold to Regalado Mondejar, the one (1) hectare on
July 29, 1962, and the remaining one (1) hectare on installment basis until fully
paid. As affirmative and/or special defense, defendants-appellants (respondents)
alleged that plaintiffs' action is barred by laches or has prescribed.
"The court a quo rendered judgment in favor of plaintiffs-appellees (petitioners):
firstly because 'Trinidad Quijada had no legal title or right to sell the land to
defendant Mondejar in 1962, 1966, 1967 and 1968, the same not being hers to
dispose of because ownership belongs to the Municipality of Talacogon'
(Decision, p. 4; Rollo, p. 39) and, secondly, that the deed of sale executed by
Trinidad Quijada in favor of Mondejar did not carry with it the conformity and
acquiescence of her children, more so that she was already 63 years old at the
time, and a widow (Decision, p. 6; Rollo, p. 41)."[1]
The dispositive portion of the trial court's decision reads:
"WHEREFORE, viewed from the above perceptions, the scale of justice
having tilted in favor of the plaintiffs, judgment is, as it is hereby rendered:
1) ordering the Defendants to return and vacate the two (2) hectares
of land to Plaintiffs as described in Tax Declaration No. 1209 in
the name of Trinidad Quijada;
 2) ordering any person acting in Defendants' behalf to vacate and
restore the peaceful possession of the land in question to
Plaintiffs;
3) ordering the cancellation of the Deed of Sale executed by the late
Trinidad Quijada in favor of Defendant Regalado Mondejar as
well as the Deeds of Sale/Relinquishments executed by Mondejar
in favor of the other Defendants;
4) ordering Defendants to remove their improvements constructed on
the questioned lot;
5) ordering the Defendants to pay Plaintiffs, jointly and severally, the
amount of P10,000.00 representing attorney's fees;
6) ordering Defendants to pays the amount of P8,000.00 as expenses
of litigation; and
7) ordering Defendants to pay the sum of P30,000.00 representing
moral damages.
SO ORDERED."[2]
On appeal, the Court of Appeals reversed and set aside the judgment a
quo[3] ruling that the sale made by Trinidad Quijada to respondent Mondejar was
valid as the4 former retained an inchoate interest on the lots by virtue of the
automatic reversion clause in the deed of donation.[4] Thereafter, petitioners filed
a motion for reconsideration. When the CA denied their motion,[5] petitioners
instituted a petition for review to this Court arguing principally that the sale of
the subject property made by Trinidad Quijada to respondent Mondejar is void,
considering that at that time, ownership was already transferred to the
Municipality of Talacogon. On the contrary, private respondents contend that the
sale was valid, that they are buyers in good faith, and that petitioners' case is
barred by laches.[6]
We affirm the decision of the respondent court.
The donation made on April 5, 1956 by Trinidad Quijada and her brother
and sisters[7] was subject to the condition that the donated property shall be "used
solely and exclusively as a part of the campus of the proposed Provincial High
School in Talacogon."[8] The donation further provides that should "the proposed
Provincial High School be discontinued or if the same shall be opened but for
some reason or another, the same may in the future be closed" the donated
property shall automatically revert to the donor. [9] Such condition, not being
contrary to law, morals, good customs, public order or public policy was validly
imposed in the donation.[10]
When the Municipality's acceptance of the donation was made known to the
donor, the former became the new owner of the donated property -- donation
being a mode of acquiring and transmitting ownership [11] - notwithstanding the
condition imposed by the donee. The donation is perfected once the acceptance
by the donee is made known to the donor.[12] Accordingly, ownership is
immediately transferred to the latter and that ownership will only revert to the
donor if the resolutory condition is not fulfilled.
In this case, that resolutory condition is the construction of the school. It has
been ruled that when a person donates land to another on the condition that the
latter would build upon the land a school, the condition imposed is not a condition
precedent or a suspensive condition but a resolutory one. [13] Thus, at the time of
the sales made in 1962 towards 1968, the alleged seller (Trinidad) could not have
sold the lots since she had earlier transferred ownership thereof by virtue of the
deed of donation. So long as the resolutory condition subsists and is capable of
fulfillment, the donation remains effective and the donee continues to be the
owner subject only to the rights of the donor or his successors-in-interest under
the deed of donation. Since no period was imposed by the donor on when must
the donee comply with the condition, the latter remains the owner so long as he
has tried to comply with the condition within a reasonable period. Such period,
however, became irrelevant herein when the donee-Municipality manifested
through a resolution that it cannot comply with the condition of building a school
and the same was made known to the donor. Only then - when the non-fulfillment
of the resolutory condition was brought to the donor's knowledge - that ownership
of the donated property reverted to the donor as provided in the automatic
reversion clause of the deed of donation.
The donor may have an inchoate interest in the donated property during the
time that ownership of the land has not reverted to her. Such inchoate interest
may be the subject of contracts including a contract of sale. In this case, however,
what the donor sold was the land itself which she no longer owns. It would have
been different if the donor-seller sold her interests over the property under the
deed of donation which is subject to the possibility of reversion of ownership
arising from the non-fulfillment of the resolutory condition.
As to laches, petitioners' action is not yet barred thereby. Laches
presupposes failure or neglect for an unreasonable and unexplained length of
time, to do that which, by exercising due diligence, could or should have been
done earlier;[14] "it is negligence or omission to assert a right within a reasonable
time, thus, giving rise to a presumption that the party entitled to assert it either
has abandoned or declined to assert it."[15] Its essential elements of:
 a) Conduct on the part of the defendant, or of one under whom he
claims, giving rise to the situation complained of;
b) Delay in asserting complainant's right after he had knowledge of
the defendant's conduct and after he has an opportunity to sue;
c) Lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit; and,
d) Injury or prejudice to the defendant in the event relief is accorded
to the complainant."[16]
are absent in this case. Petitioners' cause of action to quiet title commenced only
when the property reverted to the donor and/or his successors-in-interest in
1987. Certainly, when the suit was initiated the following year, it cannot be said
that petitioners had slept on their rights for a long time. The 1960's sales made by
Trinidad Quijada cannot be the reckoning point as to when petitioners' cause of
action arose. They had no interest over the property at that time except under the
deed of donation to which private respondents were not privy. Moreover,
petitioners had previously filed an ejectment suit against private respondents only
that it did not prosper on a technicality.
Be that at it may, there is one thing which militates against the claim of
petitioners. Sale, being a consensual contract, is perfected by mere consent, which
is manifested the moment there is a meeting of the minds [17]as to the offer and
acceptance thereof on three (3) elements: subject matter, price and terms of
payment of the price.[18] ownership by the seller on the thing sold at the time of
the perfection of the contract of sale is not an element for its perfection. What the
law requires is that the seller has the right to transfer ownership at the time the
thing sold is delivered.[19] Perfection per se does not transfer ownership which
occurs upon the actual or constructive delivery of the thing sold. [20] A perfected
contract of sale cannot be challenged on the ground of non-ownership on the part
of the seller at the time of its perfection; hence, the sale is still valid.
The consummation, however, of the perfected contract is another matter. It
occurs upon the constructive or actual delivery of the subject matter to the buyer
when the seller or her successors-in-interest subsequently acquires ownership
thereof. Such circumstance happened in this case when petitioners -- who are
Trinidad Quijada's heirs and successors-in-interest -- became the owners of the
subject property upon the reversion of the ownership of the land to
them. Consequently, ownership is transferred to respondent Mondejar ands those
who claim their right from him. Article 1434 of the New Civil Code supports the
ruling that the seller's "title passes by operation of law to the buyer." [21] This rule
applies not only when the subject matter of the contract of sale is goods, [22] but
also to other kinds of property, including real property.[23]
There is also no merit in petitioners' contention that since the lots were
owned by the municipality at the time of the sale, they were outside the commerce
of men under Article 1409 (4) of the NCC;[24] thus, the contract involving the
same is inexistent and void from the beginning. However, nowhere in Article
1409 (4) is it provided that the properties of a municipality, whether it be those
for public use or its patrimonial property[25] are outside the commerce of
men. Besides, the lots in this case were conditionally owned by the
municipality. To rule that the donated properties are outside the commerce of men
would render nugatory the unchallenged reasonableness and justness of the
condition which the donor has the right to impose as owner thereof. Moreover,
the objects referred to as outsides the commerce of man are those which cannot
be appropriated, such as the open seas and the heavenly bodies.
With respect to the trial courts award of attorneys fees, litigation expenses
and moral damages, there is neither factual nor legal basis thereof. Attorneys fees
and expenses of litigation cannot, following the general rule in Article 2208 of
the New Civil Code, be recovered in this case, there being no stipulation to that
effect and the case does not fall under any of the exceptions. [26] It cannot be said
that private respondents had compelled petitioners to litigate with third
persons. Neither can it be ruled that the former acted in gross and evident bad
faith in refusing to satisfy the latters claims considering that private respondents
were under an honest belief that they have a legal right over the property by virtue
of the deed of sale. Moral damages cannot likewise be justified as none of the
circumstances enumerated under Articles 2219[27] and 2220[28] of the New Civil
Code concur in this case.
WHEREFORE, by virtue of the foregoing, the assailed decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.