Republic of the Philippines

REGIONAL TRIAL COURT

FIRST JUDICIAL REGION
Branch 63
La Trinidad, Benguet

JOSEPH L. CAOILI, ET AL.,

Plaintiffs,
Civil Case No. 13-CV-2930
- versus -

SPS. BENEDICTO LACANARIA and

MARY GRACE LACANARIA, ET AL.,
Defendants.
x-------------------------------------------------x

MEMORANDUM FOR THE DEFENDANTS

Defendants-spouses BENEDICTO LACANARIA and MARY

GRACE LACANARIA (hereinafter referred to as Defendants-
spouses for brevity), by counsel, respectfully submit this
Memorandum and aver the following:

STATEMENT OF THE CASE

In April 2013, Plaintiffs Joseph L. Caoili, Diomedes L. Caoili,

Leticia C. Rojas and Rosario C. Hilario filed this case for Recovery of
Possession, Annulment of Deed and Damages against Defendants-
spouses. This action was initiated by the Plaintiffs based on the alleged
failure of the parties to agree on the actual consideration of the sale.1
Thus, they submit that there was never a perfected contract of sale
between them.2 Consequently, being the rightful owners of the subject
property, the Plaintiffs have the right to recover possession of the
same.3

1 Complaint, p. 5, par. 24.

2 Ibid., par. 27.
3 Ibid., par. 28.
 2

On their Complaint, the Plaintiffs prayed that the Defendants-

spouses be ordered to vacate the subject property and to restore
Plaintiffs possession over the same. Furthermore, the Plaintiffs also
asked for the forfeiture of all the payments made by Defendants-
spouses which will be applied as rentals for their stay on the subject
property. Damages were also prayed for.4

These allegations were opposed by the Defendants-spouses in

their Answer alleging, among others, that there is already a perfected
contract of sale between them and that the root cause of the Plaintiffs
predicament is their act unilaterally changing the agreed purchase
price of the sale.5 Thus, it was prayed for that the Complaint against
them be dismissed by the Honorable Court and the Plaintiffs be
ordered to execute the necessary Deed of Conveyance. Damages were
also prayed for.6

THE FACTS OF THE CASE

Involved in this case is a parcel of land, with improvements,

situated at AD-29 Poblacion, Buyagan, La Trinidad, Benguet.
Plaintiffs, along with the late Estrella C. Tenedero, are the registered
owners of the parcel of land which is presently covered by Transfer
Certificate of Title No. T-16484 (Exhibit C).

Trial on the merits ensued. Thus, Plaintiffs presented their only

witness, Joseph Caoili on June 25, 2015. For the defendants, they
presented two witnesses, namely: (1) Benedicto Lacanaria on October
8 and 22, 2015; and (2) Atty. Guererro Felipe on November 12, 2015.

For the Plaintiffs, the following are what they submit as the
narration of facts:

1. During the year 2002, Plaintiff Joseph Caoili

(hereinafter referred to as Joseph for brevity),
started to look for buyers of the subject property
upon the instruction of his sister, Plaintiff Leticia C.
Rojas (hereinafter referred to as Letty for brevity).

4 Complaint, pp. 8-10.

5 Answer, p. 8.
6 Answer, p. 9.
 3

2. It is the understanding of the Plaintiffs that although

the subject property is registered under their names,
it is actually Letty who solely owns the same.

3. Defendant Benedicto approached Joseph and

inquired if he could buy the property for the amount
of Two Million Pesos (Php2,000,000.00).

4. Joseph informed Benedicto that although the

property is for sale, the price has still yet to be
decided by Letty.

5. However, Joseph learned that the Defendants-

spouses drove away the tenants currently staying in
the subject property and started possessing the same.
This possession is by mere tolerance.

6. After sometime, Letty decided that the selling price

of the property should be Two Million Five Hundred
Thousand Pesos (Php2,500,000.00).

7. Thinking that they have already agreed with the

selling price, Joseph and Letty received from
Defendants-spouses the total amount of
Php150,000.00 and US$3,300.00 only.

8. When Defendants-spouses were reminded that the

selling price of the subject property is
Php2,500,000.00, Benedicto insisted that they have
already agreed that the selling price should be
Php2,000,000.00. Since then, the Defendants-spouses
have not given any additional payments.

9. Thus, demand letters were sent to Defendants-

spouses on May 8, 2004 and on January 22, 2005
(Exhibits G and I). Here, the Defendants-
spouses were asked to vacate the subject property
but to no avail.

10.A complaint was also filed before the Lupon of

Barangay Buyagan for Rescission of Oral Sale. The
 4

Plaintiffs were subsequently given a Certification to

File Action (Exhibit H).

11.With the Defendants-spouses refusal to vacate the

property and to recover Plaintiffs possession of the
subject property, this action was filed as resort.

On the other hand, the Defendants-spouses submit the following

as the narration of facts:

1. That, sometime in May 2002, Maximo Tenedero, Jr.

informed the Defendants-spouses that the subject
property was for sale at Php2,000,000.00. This was
initially turned down by the Defendants-spouses.

2. However, sometime in July 2002, Defendants-

spouses informed Joseph of their willingness to buy
the subject property. Joseph said he would talk with
Letty.

3. That same month, the tenants in the subject property

were advised by Joseph to vacate the same because
the Defendants-spouses were already buying it.

4. The following month, Benedicto made a phone call

to Letty to talk to her about the sale. Letty affirmed
that she was willing to sell the property to them and
she also agreed that the selling price was
Php2,000,000.00.

5. Since the tenants of the subject property already left,

the Defendants-spouses were advised by Joseph to
transfer. However, with the utter state of despair and
neglect of the house, they first cleaned it and made
the necessary repairs.

6. After completing the general cleaning of the house,

the Defendants-spouses were able to transfer to the
house on September 15, 2002.
 5

7. The mechanics for the payment of the purchase price

was then agreed upon. Thus, during the period
October 2002 to April 2003, the Defendants-spouses
made several payments on the purchase price
amounting to a total of Php150,000.00 and
US$5,450.00.

8. In May 2003, the Defendants-spouses suddenly

received an undated letter from Letty stating that the
selling price of the subject property is Php2,500,00.00
and not Php2,000,000.00.

9. Letty was very insistent on setting the selling price at

Php2,500,000.00. Thus, the Defendants-spouses
made no additional payments pending clarification
of the selling price.

10.That the Defendants-spouses, presently, are the ones

possessing the subject property and that several
improvements have already been introduced to it.

ISSUES

From the foregoing, the following are the issues to be resolved:

I. Whether there was a perfected and partially executed contract of

sale of real estate entered into by the parties or was there a mere
contract to sell entered into by the parties?

II. Whether the Defendants-spouses should vacate the subject

property and restore its possession to the Plaintiffs?

III. Whether or not all the payments made by the defendants should
be forfeited in favor of the Plaintiffs or be treated as rentals?

IV. Whether the Defendants-spouses shall be made to comply with

their part of the obligation by paying the remaining balance of
the purchase price?
 6

V. Whether the Plaintiffs are obligated to execute the necessary

Deed of Conveyance transferring the title over the subject
property to the Defendants-spouses?

VI. Which of the parties are entitled to their respective claims and
counter-claims for damages and attorneys fees?

DISCUSSION

Anent the first issue, it is respectfully submitted that there exists

a perfected and partially executed contract of sale of real estate
between the parties.

As a consensual contract, a contract of sale is perfected at the

moment there is meeting of minds upon the thing which is the object
of the contract and upon the price.7 Here, the contract of sale becomes
a binding and valid contract upon the meeting of the minds of the
parties in whatever form it may have been entered into, subject to the
provisions of the Statute of Frauds.8

There is already
meeting of the minds
upon the object of the
contract and upon the
price

It was ruled by the Supreme Court in the case of Heirs of Ignacio

v. Home Bankers Savings and Trust Company that contracts that are
consensual in nature, like a contract of sale, are perfected upon mere
meeting of the minds. Once there is concurrence between the offer and
the acceptance upon the subject matter, consideration, and terms of
payment, a contract is produced. The offer must be certain. To convert
the offer into a contract, the acceptance must be absolute and must not
qualify the terms of the offer; it must be plain, unequivocal,
unconditional, and without variance of any sort from the proposal.9

7 Ibid., Article 1475

8 Ibid., Article 1483
9 Heirs of Ignacio v. Home Bankers Savings and Trust Company; G.R. No. 177783; January 23,

2013.
 7

In the case at hand, there is no question that there is already

meeting of the minds as to the object of the contract because such was
never contested by parties. Here, it is clear that the object of the
contract is the parcel of land, with improvements, situated at AD-29
Poblacion, Buyagan, La Trinidad, Benguet and is presently covered by
Transfer Certificate of Title No. T-16484 (Exhibit C).

What is contested in the case at hand is with regard the meeting

of the minds upon the price of the contract. The question arose on the
fact that there exists a disparity between the selling price being alleged
by the Plaintiffs, which is Php2,500,000.00, and the selling price being
alleged by the Defendants-spouses, which is Php2,000,000.00.

It is with such disparity that Plaintiffs alleged that there was no

meeting of minds as to the selling price. Thus, being the lawful owners
of the subject property, an action for recovery of possession was in
proper. This is, however, contested by the Defendants-spouses. Thus,
it is submitted by them that there was already meeting of minds as to
the selling price.

Under the aforecited case, to fulfill the requisite as to the meeting

of minds, there must be a meeting of the offer and the acceptance of
the price.

Analyzing the facts of the case at hand, it was the Plaintiffs who
initially made the offer through Maximo Tenedero, Jr., husband of the
late Estrella C. Tenedero, to wit:

11. Q: You said that you were discussing with Maximo

Tenedero regarding the subject property. How did
this discussion take place?

A: Sir, sometime in May 2002, my wife and I chanced

upon Maximo Tenedero, Jr. at the waiting area of the
ICU of the SLU Hospital of the Sacred Heart where
my mother was confined. It was then that Maximo
informed us that the subject property was for sale at
Php2,000,000.00, and that they prefer to sell the
property to a relative.10

10 Judicial Affidavit of Benedicto Lacanaria, p.3.

 8

Though Maximos offer was initially declined by the

Defendants-spouses, on July 2002, they communicated to Joseph their
interest to buy the subject property at the price of Php2,000,000.00, the
selling price which was informed to them by Maximo, to wit:

13. Q: What happened after that?

A: A few months later, or sometime in July 2002, my

wife and I discussed the offer of Maximo. After much
thought, we then decided to buy the subject property.
I talked with Joseph Caoili (Joseph), whom we
fondly call as Abdon, regarding our interest to buy
the property at the price of Php2,000,000.00, which
was the selling price relayed by Maximo. Joseph said
he will talk with his sister.11

Though under this point, there can be gleaned an uncertainty as

to the selling price of the subject property, this is made absolute when
this was communicated with Letty, such can be inferred from the
testimony of Benedicto.

16. Q: What about Letty, were you able to speak with

her?
A: Yes, sir. The following month, I made a phone call
to Letty to confirm our intention to buy the property
as earlier coordinated by Joseph. Letty afirmed that
she was willing to sell the property to us. When they
talked about the price, I told Letty that the price
stated by her siblings was Php2,000,000.00.

17. Q: What was the reaction of Letty?

A: She agreed, sir. In fact, she did not object to my
statement.12

Even on his cross-examination, Benedicto did not depart from

his statement that Letty already approved of the selling price to be
Php2,000,000.00.

Q: So in item no. 16, we go back.

A: Yes I stand by my statement here, Your Honor.
11 Ibid.
12 Ibid., p. 4.
 9

x x x

Q: That is what I am asking him.

Now that is the price that the siblings of Letty gave.
It is not the price of Letty herself?
A: She agreed, maam.

Q: Okay. She agreed that this is the price of her sibling?

A: Yes, maam.

COURT:

Wait. Clarification.
Q: She agreed that that is the price of her siblings?
A: The Php2,000,000.00 price is the price of the property
for sale, Your Honor.

Q: And she agreed that that will be the price that you
will be paying for her lot?
A: For the entire property maam.

Q: For the entire property.

A: Yes maam. Not the 1/5 share as they are trying to
espouse.

Q: So that the Php2,000,000.00 covers also the share of

her siblings because her share is only 1/5, correct?
A: Yes maam.

Okay, continue.13

Finally, the selling price of Php2,000,000.00 was again confirmed

by the siblings on November 1, 2002:

34. Q: What happened next?

A: On November 1, 2002, at the Poblacion cemetery,

in the presence of Maximo, Joseph and Diomedes,
Louie Tenedero, son of Maximo, asked mehow much

13 TSN; Benedicto Lacanaria; October 8, 2015; pp. 9-11.

 10

was the cost of buying the said property. I replied

that it was Php2,000,000.00, and this was confirmed
by Maximo and Diomedes.14

Putting all these together, we can conclude therefrom that there

really was meeting of the offer and the acceptance of the price in the
case at hand, as opposed to what the Plaintiffs are espousing. This
being the case, we now have before us a perfected oral contract of sale
over the subject property which involves the selling price of
Php2,000,000.00.

Another important fact that must be taken is the execution by

Letty of a Special Power of Attorney in favor of Joseph Caoili (Exhibits
1 and 2). As narrated by Benedicto in his Judicial Affidavit, after
the first phone call that he had with Letty, the Defendants-spouses
received a Special Power of Attorney from Letty appointing Joseph to
be her attorney-in-fact, to do the following:

To sell, and convey, for a reasonable price, to spouses

Benedicto F. Lacanaria and Mary Grace C. Lacanaria my one-
fifth (1/5) share15

As well as the Waiver of Rights of Undivided Portion of Registered

Land and House (Exhibit 3), which provides that:

we do not object to the sell [sic] of said house and lot

in favor of spouses BENEDICTO F. LACANARIA and MARY
GRACE C. LACANARIA and in fact we are willing to execute
deed of sale in favor of said spouses Benedicto and Mary Grace
Lacanaria anent our respective shares and interests.16

And last is the Absolute Deed of Sale of Undivided Portion of

Registered Land and House (Exhibit 4). With these three documents, it
is clear that there were negotiations made between the parties and
such has lead them to the perfection of the contract of sale wherein 2/5
of the undivided interest owned by Diomedes and Joseph has already
been transferred to the Defendants-spouses.

14 Judicial Affidavit of Benedicto Lacanaria, p.6.

15 Ibid., par. 19, p. 4.
16 Ibid., par. 35, p. 6.
 11

Moreover, the fact of the several partial payments made by the

Defendants-spouses supports further the claim that there already
exists a perfected oral contract of sale. This can be seen from the
Acknowledgment Receipts attached as Exhibits 5, 5-a to 5-i.
Thus, it can now be concluded that the Plaintiffs acceptance of the
partial payments made by Defendants-spouses amounting to a total of
US$5,450.00 and Php150,000.0017 clearly showed their consent to the
contract, thereby precluding them from rejecting its binding effect.18

The contract remains

to be valid despite it
not being reduced in
writing.

It has already been discussed that with the presence of the

meeting of minds of the parties upon the object of the contract and the
price, there now exists a perfected contract of sale. However, it cannot
be denied that problems will arise as to form since the contract entered
into by the parties was not reduced in writing.

Under the Statute of Frauds, several contracts are required to be

in writing for it to become enforceable. One which is enumerated
involves the sale of real property or of an interest therein.19 However,
the Statute of Frauds expressed in Article 1403, paragraph (2) of the
Civil Code applies only to executory contracts, those where no
performance has yet been made. Stated a bit differently, the legal
consequence of non-compliance with the Statute does not come into
play where the contract in question is completed, executed, or partially
consummated.20

Thus, in order to determine the applicability of the Statute of

Frauds in the case at hand, it is necessary to determine whether the
oral contract of sale entered into by the parties is still executory or has
already been partially executed.

Here, it is clear that there has already been partial performance

of the oral contract of sale. Such can be gleaned from some of the pieces

17 Ibid., par. 43, p. 8.

18 Clarin v. Rulona; G.R. No. L-30786. February 20, 1984
19 Ibid., Article 1403

20 Ordua v. Fuentebella; G.R. No. 176841; June 29, 2010.

 12

of evidence submitted and the testimonies made by the witnesses of

both parties.

First, is the fact that the Defendant-spouses has already made

partial payment. This is shown in the testimony of Defendant
Benedicto embodied in his Judicial Affidavit, to wit:

41. Q: Now, what happened after that?

A: Sir, during the period October 2002 to April 2003,
we made several payments on the purchase price.

x x x

43. Q: So, how much have you paid in total?

A: All in all, we have paid a total of US$5,450.00 and
Php150,000.00

44. Q: Do you have evidence of your payments?

A: Yes, sir. We attached copies of our evidence of
payment in our answer.

45. Q: Are you referring to those documents previously

marked during the Preliminary Conference as
Exhibits 5 and series?
A: Yes, sir.21

The making of partial payment by the Defendant-spouses has

also already been established during the cross-examination of Plaintiff
Joseph, as follows:

Q: Would you agree with me Mr. witness that starting

November of 2002, the spouses Lacanaria have been
making partial payments, correct?
A: Yes, Sir.

Q: In fact, in Novemeber 8 of 2002, you signed this

acknowledgment receipt which I am showing to you
marked as Exhibit 5 for the defendants.
A: Yes, sir.

21 Judicial Affidavit of Benedicto Lacanaria, pp. 7-8.

 13

Q: Thank you. In this acknowledgment receipt, you

acknowledged having received the amount of eighty
(80) thousand pesos from the spouses Lacanaria?
A: Yes, sir.22

Other than the giving of partial payment of the purchase price,

under a case decided by the Supreme Court, there are other acts or
instances which can constitute partial execution of an oral contract of
sale. Such case states that:

American Jurisprudence in its title "Statute of Frauds" lists

other acts of partial performance, such as possession, the making
of improvements, rendition of services, payment of taxes,
relinquishment of rights, etc.23

As to possession, it has been the Defendants-spouses who has

been in possession of the subject property since September 15, 2002
until the present.

32. Q: By the way, were you able to transfer to the

house?
A: Yes, sir. That was on September 15, 2002.24

x x x

56. Q: Who is in possession of the subject property

right now?
A: We are the ones,sir.25

This was again testified to by Benedicto on cross-examination:

Q: But at this time, after thirteen (13) years, you are

still occupying this property?

A: Yes maam.26

22 Ibid., p. 18.
23 Ortega v. Leonardo; G.R. No. L-11311; May 28, 1958.
24 Judicial Affidavit of Benedicto Lacanaria, pp. 6.

25 Ibid., p. 10.

26 TSN; Benedicto Lacanaria; October 8, 2015; p. 24.

 14

The same has also been admitted by Joseph in his cross-

examination:

Q: The spouses Lacanaria and the family started occupying

the property in September 2002, would you confirm that?

A: Yes, Sir.27

In connection to the issue on possession, the Supreme Court in

the case of Ortega v. Leonardo further stated:

Possession by the purchaser under a parol contract for the

purchase of real property, together with his making valuable and
permanent improvements on the property which are referable
exclusively to the contract, in reliance on the contract, in the
honest belief that he has a right to make them, and with the
knowledge and consent or acquiescence of the vendor, is deemed
a part performance of the contract.28

This falls squarely with the case at hand since the Defendants-
spouses, while being in possession of the property, also made
improvements thereon.

57. Q: Is the property still in the same condition as when

you first possessed it in 2003?
A: No, sir, because we have greatly improved the
subject property.

x x x

59. Q: What improvements have you introduced?

A: Because the property was already in state of
despair, we conducted several repair works on the
property. Also, we introduced another structure
within the land.

60. Q: Do you have proofs of your improvements?

A: Yes sir. We secured permits for the improvements.
Also, if an ocular inspection will be made by the

27 TSN; Joseph Caoili; June 25, 2015; p. 17.

28 Ortega v. Leonardo, op.cit.
 15

Honorable Court, we can show the improvements we

have made.29

Thus, considering all these, as well as the payment of Real

Property Taxes (Exhibits 6, 6-a to 6-r) made by the Defendant-
spouses, it is a logical conclusion that there has already been partial
performance of the oral contract of sale.

Therefore, as further pronounced in the case of Clarin v. Rulona,

with the contract of sale being partially executed, the same is no longer
covered by the requirements of the Statute of Frauds in order to be
enforceable. Now, with the contract being valid and enforceable, the
Plaintiffs can no longer avoid their obligation under the oral contract
of sale of the subject property property.30

The possession of the

Defendants-spouses
wan not by mere
tolerance but by virtue
of a perfected oral
contract of sale.

One of the allegations made by the Plaintiffs in their Complaint

was that the possession of the Defendants-spouses of the subject
property was made possible only by the mere tolerance of the
Plaintiffs.31

Q: The spouses Lacanaria and the family started

occupying the property in September of 2002, would
you confirm that?
A: Yes Sir.

Q: In fact, you know that time when they moved inside

that property, right?
A: I do not know when they entered the house.
Q: Isnt it a fact Mr. Witness that it was even your
truck which was used to help in hauling the
belongings of the family of the Lacanarias?
29 Judicial Affidavit of Benedicto Lacanaria, pp. 10.
30 Clarin v. Rulona; G.R. No. L-30786. February 20, 1984
31 Complaint, par. 31, p. 6.
 16

A: Yes Sir, it was my truck which was used by the

Lacanarias.

Q: Now, you said that when you found out that the
spouses Lacanaria were already inside that property
or occupying that property, you just allowed them
to stay there, right?
A: Yes sir.32

In his statement, it can be seen that it was the Defendants-

spouses who forced themselves into the subject property and that the
Plaintiffs were left with no other choice but to let them stay there and
as they said, this was by mere tolerance.

Toleration is defined as the act or practice of permitting or

enduring something not wholly approved of. However, not every case
of knowledge and silence on the part of the owner can be considered
mere tolerance. Thus, acts merely tolerated are those which by reason
of neighborliness or familiarity, the owner of property allows his
neighbor or another person to do on the property. They are generally
those particular services or benefits which ones property can give to
another without material injury or prejudice to the owner, who
permits them out of friendship or courtesy.33

In consideration of the abovementioned definition of tolerance,

the facts of the case at hand do not fit. As mentioned, not every case of
knowledge and silence on the part of the owner can be considered
such. In the case of Macasaet v. Macasaet, it was ruled that:

We hold that the facts of the present case rule out the finding
of possession by mere tolerance. Petitioners were able to
establish that respondents had invited them to occupy the
subject lots in order that they could all live near one other and
help in resolving family problems. By occupying those lots,
petitioners demonstrated their acceptance of the invitation.
Hence, there was a meeting of minds, and an agreement
regarding possession of the lots impliedly arose between the
parties.34

32 TSN; Joseph Caoili; June 25, 2015; p. 17.

33 Macasaet v. Macasaet; G.R. Nos. 154391-92; September 30, 2004.
34 Ibid.
 17

Similar to the case above, the case between the Lacanarias and
Caoilis with regard the possession of the subject property is not by
mere tolerance. Here, as in the case above, there was also an invitation
by Joseph.

24. Q: What happened after that?

A: Sir, the tenants already left the property. Joseph

encourage us to transfer already.35

In fact, it was even the truck of Joseph which was used in hauling
the belongings of the family of the Defendants-spouses.

Q: Isnt it a fact Mr. Witness that it was even your

truck which was used to help in hauling the
belongings of the family of the Lacanarias?

A: Yes Sir, it was my truck which was used by the

Lacanarias.36

Thus, the occupancy of the subject property by Defendants-

spouses was not merely something not wholly approved of by
Plaintiffs. Neither did it arise from neighborliness or familiarity. In
point of fact, their possession was upon the invitation of and with the
complete approval of Plaintiffs. However, as opposed to the Macasaet
case, the reason for such invitation was the perfected oral contract of
sale between the parties, which has already been established to be
binding and valid.37

Furthermore, as regards what Joseph has testified about the

driving away of the tenants of the subject property by the Defendants-
spouses, such cannot be admitted for being hearsay.

Q: Now, you said that after Mr. Lacanaria drove away

the tenants, they left?
A: Yes.

Q: But you also said that the tenants did not go to you
to inform what has been done by Mr. Lacanaria?
35 Judicial Affidavit of Benedicto Lacanaria, p. 5.
36 TSN; Joseph Caoili; June 25, 2015; p. 17.
37
 18

A: Yes no one inform me about the incident but only the

neighbors told me about it that the tenants were no
longer in the place.

Q: What is the name of the person who told you that?

A: Mr. Rafael Agbuya.

Q: Did Mr. Rafael Agbuya also tell you that it was Mr.
Lacanaria who drove away your tenants?
A: The information that they were driven away by
Lacanaria came from the tenants who informed
Rafael Agbuya and Rafael Agbuya told me.

Q: So in other words, in so far as you are concerned, you

dont have personal knowledge about what you
stated here that it was Mr. Lacanaria who drove
away your tenants?
A: Yes Sir.

It has well established that personal knowledge of a witness is a

substantive prerequisite for accepting testimonial evidence that
establishes the truth of a disputed fact. A witness bereft of personal
knowledge of the disputed fact cannot be called upon for that purpose
because her testimony derives its value not from the credit accorded
to her as a witness presently testifying but from the veracity and
competency of the extrajudicial source of her information.38

On the other hand, it is even Joseph who advised the tenants of

the property to vacate the same because the Defendants-spouses were
buying it already.39 This is also to show that the possession of the
Defendants-spouses is not by mere tolerance but because of the sale
that was already perfected between the parties.

Having been able to establish that there really exists a perfected

oral contract of sale between the parties, it can now be said that the act
of the Plaintiffs in unilaterally changing the selling price of the subject
property from Php2,000,000.00 to Php2,500,000.00 is violative of the
principle of mutuality of contracts.

38 Patula v. Pp.; G.R. No. 164457; April 11, 2012.

39 Judicial Affidavit of Benedicto Lacanaria, par. 14, p. 4.
 19

50. Q: You mentioned a while ago that your last

payment for the purchase price was in April 2003,
were there payments after that?
A: This is what happened, sir. Sometime in May
2003, we received an undated handwritten letter
from Letty demanding the purchase price to be
Php2,500,000.00, instead of the agreed
Php2,000,000.00. We were so surprised at this, as
apparently, she had changed her mind as to the
purchase price.

51. Q: So, what did you do when you received the letter
from Letty?
A: We made long distance calls to clarify with Letty
the purchase price since the Php2,500,000.00 that she
stated was not the agreed price. However, she was
very insistent about the new price of
Php2,500,000.00.40

Under Article 1308 of the Civil Code, which provides that the
contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them.41 Thus, what Letty did,
unilaterally changing the selling price of the subject property, cannot
be considered as valid.

The action filed by the

Plaintiffs is actually
an action for the
rescission of an oral
contract of sale

Having been able to prove the existence of a valid oral contract

of sale between the parties, it can now be gleaned that the Plaintiffs
underlying cause of action is really a rescission for a contract of sale.

Such intent is manifested even with the documents submitted by

the Plaintiffs, in fact, this really is an action for rescission of an oral
contract of sale.

40
Ibid., p. 9.
41 Philippine Savings Bank v. Sps. Castillo; G.R. No. 193178; May 30, 2011.
 20

Let us first consider the portion of the Special Power of Attorney

which was attached by the Plaintiffs as Exhibit A-1. Here, the
authority given by Letty to Joseph is to attend and perform any and all
acts required in connection with the recovery of possession and rescission of
oral contract of sale.(Exhibit 9)

Even on the Certification to File Action attached to the

Complaint (Exhibit 11) indicates therein that the Barangay Case No.
21-2004 refers to Recession [sic] of Oral Sale.

These are clearly admissions against their interest. An admission

is any statement of fact made by a party against his interest or
unfavorable to the conclusion for which he contends or is inconsistent
with the facts alleged by him. Admission against interest is governed
by Section 26 of Rule 130 of the Rules of Court, which provides:

Sec. 26. Admissions of a party. The act, declaration or omission

of a party as to a relevant fact may be given in evidence against
him.

To be admissible, an admission must (a) involve matters of fact,

and not of law; (b) be categorical and definite; (c) be knowingly and
voluntarily made; and (d) be adverse to the admitters interests,
otherwise it would be self-serving and inadmissible.

Thus, rescission being the proper action of the Plaintiffs, such has
already prescribed. It is well-settled that an action for rescission should
be filed within a period of 4 years from the time the cause of action
accrues.42 Since the failure of the Defendants-spouses to fulfil their
obligation in the contract of sale accrued on April 2003 when they
stopped making partial payments, the prescriptive period must start
to run from that time. Clearly, the action has already prescribed.

Furthermore, even if it were based on the oral contract of sale,

Article 1145 of the Civil Code provides that the right of action
prescribes within a period of 6 years. And similar to the first instance,
such has already prescribed.

42
Article 1191 in relation to Article 1146(1), Civil Code of the Philippines.
 21

Therefore, the Defendants-spouses can no longer be asked to

vacate the property nor can the Plaintiffs ask for the forfeiture in
favour of the Plaintiffs the payments made by Defendants-spouses.

The only action to be done now is for the parties to fulfil their
reciprocal obligations. The Plaintiffs, to execute the necessary Deed of
Conveyance in favour of the Defendants-spouses transferring the title
over the subject property and the Defendants-spouses to pay the
remaining balance of the purchase price. In reciprocal obligations,
before a party can demand the performance of the obligation of the
other, the former must also perform its own obligation.43

43
Consolidated Industrial Gases, Inc. v. Alabang Medical Center; G.R. No. 181983; November 13, 2013.