conso-sep2013 sales cases

7/29/2019 Conso-Sep2013 Sales Cases

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G.R. No. 109125 December 2, 1994

ANG YU ASUNCION, ARTHUR GO AND KEH

TIONG, petitioners, vs. THE HON. COURT OF APPEALS and BUEN

REALTY DEVELOPMENT CORPORATION, respondents.

Facts: Plaintiffs Ang Yu et al. are lessees of a property owned by

defendants located along Ongpin St., Binondo, Manila since

1935. And since plaintiffs have been good tenants,

respondentsinformed plaintiffs that they are offering to sell thepremises and are giving them priority to acquire the same.

But during the negotiations, however, Bobby Cu Unjieng of

respondents offered a fixed price of P6-million short of

petitioners counter offer of only P5-million.

Petitioners then asked defendant to put the offer in writing to

which defendant acceded. Petitioners further asked that

respondent specify the terms and conditions of the offer to sell

to which the latter did not pay attention anymore.

Felt aggrieved on respondents lack of action to their request,

petitioners sue them. In its complaint, Ang Yu et al. alleged that

respondent failed to specify the terms and conditions of the

offer to sell and such failure was because they now intends to

sell the property to another.

The court a quo dismissed the complaint reasoning that

defendants' offer to sell was never accepted by the plaintiffs for

the reason that the parties did not agree upon the terms and

conditions of the proposed sale, hence, there was no contract of

sale at all. The decision though was with a condition that should

the defendant-seller subsequently offer their property for sale at

a price of P11-million or below, plaintiffs Ang Yu will have the

right of first refusal. On appeal by the petitioners, the appellate

court sustained the findings of the trial court that there was no

meeting of the minds between the parties. The appellate court

likewise ruled to remove the right of first refusalawarded by the

trial court, hence this petition.

Issue: Whether the subject property cannot be sold to another

because of petitioner-plaintiff Ang Yus right of first refusal?

HELD: No. In the law on sales, the so-called "right of first refusal"

is an innovative juridical relation. Needless to point out, it cannot

be deemed a perfected contract of sale under Article 1458 of the

Civil Code. Neither can the right of first refusal, understood in its

normal concept, per se be brought within the purview of an

option under the second paragraph of Article 1479, or possibly of

an offer under Article 1319of the same Code.

An option or an offer would require, among other things,a clear

certainty on both the object and the cause or consideration of

the envisioned contract. In a right of first refusal, while the

object might be made determinate, the exercise of the right,

however, would be dependent not only on the grantor's

eventual intention to enter into a binding juridical relation with

another but also on terms, including the price, that obviously are

yet to be later firmed up. Prior thereto, it can at best be so

described as merely belonging to a class of preparatory juridical

relations governed not by contracts (since the essential elements

to establish the vinculum juris would still be indefinite and

inconclusive) but by, among other laws of general application

the pertinent scattered provisions of the Civil Code on human

conduct.

Even on the premise that such right of first refusal has been

decreed under a final judgment, like here, its breach cannot

justify correspondingly an issuance of a writ of execution under a

judgment that merely recognizes its existence, nor would itsanction an action for specific performance without thereby

negating the indispensable element of consensuality in the

perfection of contracts.It is not to say, however, that the right of

first refusal would be inconsequential for, such as already

intimated above, an unjustified disregard thereof, given, fo

instance, the circumstances expressed in Article 19of the Civi

Code, can warrant a recovery for damages.

EQUATORIAL REALTY DEVELOPMENT, INC. vs. MAYFAIR

THEATER (1996)

VILLONCO REALTY COMPANY, plaintiff-appellee and EDITH

PEREZ DE TAGLE, intervenor-appellee,

vs.

BORMAHECO, INC., FRANCISCO N. CERVANTES and ROSARIO N

CERVANTES, defendants-appellants. Meer, Meer & Meer fo

plaintiff-appellee.

(G.R. No. L-26872; July 25, 1975)

FACTS: Defendants-appellants Spouses Cervantes offered to sell

through a letter, lots 3, 15 and 16 located at 245 Buendia

Avenue, Makati, Rizal with a total area of three thousand five

hundred square meters with the following conditions:

1. Purchase price is P400 per square meter2. A deposit of P100,000;3. The purchase of the Sta. Ana property belonging to Nationa

Shipyards and Steel Corporation (NASSCO) [which was late

on acquired by Bormaheco, Inc. (Spouses company) as the

highest bidder]

In the meanwhile, Bormaheco, Inc. and Villonco Realty Companycontinued their negotiations for the sale of the Buendia Avenue

property. Cervantes and Teofilo Villonco had a final conference

on February 27, 1964. As a result of that conference Villonco

Realty Company, through Teofilo Villonco, in its letter of March

4, 1964 made a revised counter-offer (Romeo Villonco's first

counter-offer was dated February 24, 1964, Exh. C) for the

purchase of the property. The counter-offer was accepted by

Cervantes.

A check for P100,000 (Exh. E) mentioned in the foregoing letter

contract was delivered by Edith Perez de Tagle to Bormaheco

Inc. on March 4, 1964 and was received by Cervantes. In the


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voucher-receipt evidencing the delivery the broker indicated in

her handwriting that the earnest money was "subject to the

terms and conditions embodied in Bormaheco's letter" of

February 12 and Villonco Realty Company's letter of March 4,

1964 (Exh. E-1; 14 tsn).

Then, unexpectedly, in a letter dated March 30, 1964, or twenty-

six days after the signing of the contract of sale, Exhibit D,

Cervantes returned the earnest money, with interest amounting

to P694.24 (at ten percent per annum). Cervantes cited as an

excuse the circumstance that "despite the lapse of 45 days from

February 12, 1964 there is no certainty yet" for the acquisition of

the Punta property (Exh. F; F-I and F-2). Villonco Realty Company

refused to accept the letter and the checks of Bormaheco, Inc.

Cervantes sent them by registered mail. When he rescinded the

contract, he was already aware that the Punta lot had been

awarded to Bormaheco, Inc. (25-26 tsn).

Cervantes alleged that the forty-five day period had already

expired and the sale to Bormaheco, Inc. of the Punta property

had not been consummated. Cervantes said that his letter was a

"manifestation that we are no longer interested to sell" the

Buendia Avenue property to Villonco Realty Company (Annex I of

Stipulation of Facts).

In a letter dated April 7, 1964 Villonco Realty Company returned

the two checks to Bormaheco, Inc., stating that the condition for

the cancellation of the contract had not arisen and at the same

time announcing that an action for breach of contract would be

filed against Bormaheco, Inc. (Annex G of Stipulation of Facts).

On that same date, April 7, 1964 Villonco Realty Company filed

the complaint (dated April 6) for specific performance against

Bormaheco, Inc.

Bormaheco, Inc. in its answers dated May 5 and 25, 1964

pleaded the defense1. That the perfection of the contract of sale was subject to the

conditions (a) "that final acceptance or not shall be made

after 45 days" (sic) and (b) that Bormaheco, Inc. "acquires

the Sta. Ana property".

2. That the three lots were registered in the names of theCervantes spouses and not in the name of Bormaheco, Inc.,

Villonco Realty Company.

The lower court rendered a decision

1. Ordering the Cervantes spouses to execute in favor ofBormaheco, Inc. a deed of conveyance for the three lots in

question and2. Directing Bormaheco, Inc. (a) to convey the same lots to

Villonco Realty Company, (b) to pay the latter, as

consequential damages, the sum of P10,000 monthly from

March 24, 1964 up to the consummation of the sale, (c) to

pay Edith Perez de Tagle the sum of P42,000 as broker's

commission and (d) pay P20,000 as to attorney's fees (Civil

Case No. 8109).

ISSUE: WON the sale was perfected?

HELD: Yes. It should be stressed that there is no evidence as to

what changes were made by Cervantes in Villonco's revised

offer. And there is no evidence that Villonco Realty Company did

not assent to the supposed changes and that such assent was

never made known to Cervantes.

What the record reveals is that the broker, Miss Tagle, acted as

intermediary between the parties. It is safe to assume that the

alleged changes or qualifications made by Cervantes were

approved by Villonco Realty Company and that such approva

was duly communicated to Cervantes or Bormaheco, Inc. by the

broker as shown by the fact that Villonco Realty Company paid,

and Bormaheco, Inc. accepted, the sum of P100,000 as earnest

money or down payment. That crucial fact implies that Cervantes

was aware that Villonco Realty Company had accepted the

modifications which he had made in Villonco's counter-offer

Had Villonco Realty Company not assented to those insertions

and annotations, then it would have stopped payment on its

check for P100,000. The fact that Villonco Realty Company

allowed its check to be cashed by Bormaheco, Inc. signifies that

the company was in conformity with the changes made by

Cervantes and that Bormaheco, Inc. was aware of that

conformity. Had those insertions not been binding, then

Bormaheco, Inc. would not have paid interest at the rate of ten

percent per annum, on the earnest money of P100,000.

The truth is that the alleged changes or qualifications in the

revised counter offer (Exh. D) are not material or are mere

clarifications of what the parties had previously agreed upon.

Thus, Cervantes' alleged insertion in his handwriting of the figure

and the words "12th and" in Villonco's counter-offer is the same

as the statement found in the voucher-receipt for the earnest

money, which reads: "subject to the terms and conditions

embodied in Bormaheco's letter of Feb. 12, 1964 and your letter

of March 4, 1964" (Exh. E-1).

Cervantes allegedly crossed out the word "Nassco" in paragraph

3 of Villonco's revised counter-offer and substituted for it the

word "another" so that the original phrase, "Nassco's property inSta. Ana", was made to read as "another property in Sta. Ana"

That change is trivial. What Cervantes did was merely to adhere

to the wording of paragraph 3 of Bormaheco's original offer (Exh

B) which mentions "another property located at Sta. Ana." His

obvious purpose was to avoid jeopardizing his negotiation with

the Nassco for the purchase of its Sta. Ana property by unduly

publicizing it.

It is noteworthy that Cervantes, in his letter to the broker dated

April 6, 1964 (Annex 1) or after the Nassco property had been

awarded to Bormaheco, Inc., alluded to the "Nassco property"

At that time, there was no more need of concealing from the

public that Bormaheco, Inc. was interested in the Nasscoproperty.

Similarly, Cervantes' alleged insertion of the letters "PA" ( pe

annum) after the word "interest" in that same paragraph 3 of the

revised counter-offer (Exh. D) could not be categorized as a

major alteration of that counter-offer that prevented a meeting

of the minds of the parties. It was understood that the parties

had contemplated a rate of ten percent per annum since ten

percent a month or semi-annually would be usurious.

Appellants Bormaheco, Inc. and Cervantes further contend that

Cervantes, in clarifying in the voucher for the earnest money of


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P100,000 that Bormaheco's acceptance thereof was subject to

the terms and conditions embodied in Bormaheco's letter of

February 12, 1964 and your (Villonco's) letter of March 4, 1964"

made Bormaheco's acceptance "qualified and conditional".

That contention is not correct. There is no incompatibility

between Bormaheco's offer of February 12, 1964 (Exh. B) and

Villonco's counter-offer of March 4, 1964 (Exh. D). The revised

counter-offer merely amplified Bormaheco's original offer.

The controlling fact is that there was agreement between the

parties on the subject matter, the price and the mode of

payment and that part of the price was paid. "Whenever earnest

money is given in a contract of sale, it shall be considered as

part of the price and as proof of the perfection of the contract"

(Art. 1482, Civil Code).

"It is true that an acceptance may contain a request for certain

changes in the terms of the offer and yet be a binding

acceptance. 'So long as it is clear that the meaning of the

acceptance is positively and unequivocally to accept the offer,

whether such request is granted or not, a contract is formed .' "

(Stuart vs. Franklin Life Ins. Co., 165 Fed. 2nd 965, citing Sec. 79,

Williston on Contracts).

Thus, it was held that the vendor's change in a phrase of the

offer to purchase, which change does not essentially change

the terms of the offer, does not amount to a rejection of the

offer and the tender of a counter-offer (Stuart vs. Franklin Life

Ins. Co., supra).

ISSUE2: WON the contract was not perfected because of the

condition that Bormaheco, Inc. would acquire the Nassco land

within forty-five days from February 12, 1964 or on or before

March 28, 1964 was not fulfilled?

HELD: STILL PERFECTED. That contention is predicated on theerroneous assumption that Bormaheco, Inc. was to acquire the

Nassco land within forty-five days or on or before March 28,

1964.

The trial court ruled that the forty-five-day period was merely an

estimate or a forecast of how long it would take Bormaheco, Inc.

to acquire the Nassco property and it was not "a condition or a

deadline set for the defendant corporation to decide whether or

not to go through with the sale of its Buendia property".

The record does not support the theory of Bormaheco, Inc. and

the Cervantes spouses that the forty-five-day period was the

time within which (a) the Nassco property and two Pasong Tamolots should be acquired, (b) when Cervantes would secure his

wife's consent to the sale of the three lots and (c) when

Bormaheco, Inc. had to decide what to do with the DBP

encumbrance.

Cervantes in paragraph 3 of his offer of February 12, 1964 stated

that the sale of the Buendia lots would be consummated after he

had consummated the purchase of the Nassco property. Then, in

paragraph 5 of the same offer he stated "that final negotiations

on both properties can be definitely known afterforty-five days"

(See Exh. B).

It is deducible from the tenor of those statements that the

consummation of the sale of the Buendia lots to Villonco Realty

Company was conditioned on Bormaheco's acquisition of the

Nassco land. But it was not spelled out that such acquisition

should be effected within forty-five days from February 12, 1964

Had it been Cervantes' intention that the forty-five days would

be the period within which the Nassco land should be acquired

by Bormaheco, then he would have specified that period in

paragraph 3 of his offer so that paragraph would read in this

wise: "That this sale is to be consummated only after I shall have

consummated my purchase of another property located at Sta

Ana, Manila within forty-five days from the date hereof ." He

could have also specified that period in his "conforme" to

Villonco's counter-offer of March 4, 1964 (Exh. D) so that instead

of merely stating "that this sale shall be subject to favorable

consummation of a property in Sta. Ana we are negotiating" he

could have said: "That this sale shall be subject to favorable

consummation within forty-five days from February 12, 1964 of a

property in Sta. Ana we are negotiating".

No such specification was made. The term of forty-five days was

not a part of the condition that the Nassco property should be

acquired. It is clear that the statement "that final negotiations on

both property can be definitely known after 45 days" does not

and cannot mean that Bormaheco, Inc. should acquire the

Nassco property within forty-five days from February 12, 1964 as

pretended by Cervantes. It is simply a surmise that after forty-

five days (in fact when the forty-five day period should be

computed is not clear) it would be known whether Bormaheco

Inc. would be able to acquire the Nassco property and whether it

would be able to sell the Buendia property. That aforementioned

paragraph 5 does not even specify how long after the forty-five

days the outcome of the final negotiations would be known.

It is interesting to note that in paragraph 6 of Bormaheco's

answer to the amended complaint, which answer was verified by

Cervantes, it was alleged that Cervantes accepted Villonco'srevised counter-offer of March 4, 1964 subject to the condition

that "the final negotiations (acceptance) will have to be made by

defendant within 45 days from said acceptance" (31 Record on

Appeal). If that were so, then the consummation of Bormaheco's

purchase of the Nassco property would be made within forty-five

days from March 4, 1964.

What makes Bormaheco's stand more confusing and untenable

is that in its three answers it invariably articulated the incoherent

and vague affirmative defense that its acceptance of Villonco's

revised counter-offer was conditioned on the circumstance "that

final acceptance or not shall be made after 45 days" whateve

that means. That affirmative defense is inconsistent with theother aforequoted incoherent statement in its third answer tha

"the final negotiations (acceptance) will have to be made by

defendant within 45 days from said acceptance" (31 Record on

Appeal).

Thus, Bormaheco's three answers and paragraph 5 of his offer of

February 12, 1964 do not sustain at all its theory that the Nassco

property should be acquired on or before March 28, 1964. Its

rescission or revocation of its acceptance cannot be anchored on

that theory which, as articulated in its pleadings, is quite

equivocal and unclear.


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It should be underscored that the condition that Bormaheco, Inc.

should acquire the Nassco property was fulfilled. As admitted by

the appellants, the Nassco property was conveyed to

Bormaheco, Inc. on June 26, 1964. As early as January 17, 1964

the property was awarded to Bormaheco, Inc. as the highest

bidder. On February 18, 1964 the Nassco Board authorized its

General Manager to sell the property to Bormaheco, Inc. (Exh.

H). The Economic Coordinator approved the award on March 24,

1964. It is reasonable to assume that had Cervantes been more

assiduous in following up the transaction, the Nassco property

could have been transferred to Bormaheco, Inc. on or before

March 28, 1964, the supposed last day of the forty-five-day

period.

ISSUE3: WON Bormaheco, Inc. cannot be required to sell the

three lots in question because they are conjugal properties of

the Cervantes spouses?

HELD: It can. It should be remembered that Cervantes, in

rescinding the contract of sale and in returning the earnest

money, cited as an excuse the circumstance that there was no

certainty in Bormaheco's acquisition of the Nassco property (Exh.

F and Annex 1). He did not say that Mrs. Cervantes was opposed

to the sale of the three lots. He did not tell Villonco Realty

Company that he could not bind the conjugal partnership. In

truth, he concealed the fact that the three lots were registered

"in the name of FRANCISCO CERVANTES, Filipino, of legal age,

married to Rosario P. Navarro, as owner thereof in fee simple".

He certainly led the Villonco brothers to believe that as president

of Bormaheco, Inc. he could dispose of the said lots. He inveigled

the Villoncos into believing that he had untrammelled control of

Bormaheco, Inc., that Bormaheco, Inc. owned the lots and that

he was invested with adequate authority to sell the same.

Thus, in Bormaheco's offer of February 12, 1964, Cervantes first

identified the three lots as "ourproperty" which "we are offering

to sell ..." (Opening paragraph and par. 1 of Exh. B). Whether theprounoun "we" refers to himself and his wife or to Bormaheco,

Inc. is not clear. Then, in paragraphs 3 and 4 of the offer, he used

the first person and said: "I shall have consummated my

purchase" of the Nassco property; "... mynegotiations with said

property" and "I will return to you your deposit". Those

expressions conveyed the impression and generated the belief

that the Villoncos did not have to deal with Mrs. Cervantes nor

with any other official of Bormaheco, Inc.

The pleadings disclose that Bormaheco, Inc. and Cervantes

deliberately and studiously avoided making the allegation that

Cervantes was not authorized by his wife to sell the three lots or

that he acted merely as president of Bormaheco, Inc. Thatdefense was not interposed so as not to place Cervantes in the

ridiculous position of having acted under false pretenses when

he negotiated with the Villoncos for the sale of the three lots.

Villonco Realty Company, in paragraph 2 of its original complaint,

alleged that "on February 12, 1964, after some prior

negotiations, the defendant (Bormaheco, Inc.) made a formal

offer to sell to the plaintiff the property of the said defendant

situated at the abovenamed address along Buendia Avenue,

Makati, Rizal, under the terms of the letter-offer, a copy of which

is hereto attached as Annex A hereof", now Exhibit B (2 Record

on Appeal).

That paragraph 2 was not, repeat, was not denied by

Bormaheco, Inc. in its answer dated May 5, 1964. It did not

traverse that paragraph 2. Hence, it was deemed admitted

However, it filed an amended answer dated May 25, 1964

wherein it denied that it was the owner of the three lots. It

revealed that the three lots "belong and are registered in the

names of the spouses Francisco N. Cervantes and Rosario N

Cervantes."

The three answers of Bormaheco, Inc. contain the following

affirmative defense:

13. That defendant's insistence to finally decide on the

proposed sale of the land in question after 45 days had not

only for its purpose the determination of its acquisition of the

said Sta. Ana (Nassco) property during the said period, but also

to negotiate with the actual and registered owner of the

parcels of land covered by T.C.T. Nos. 43530, 43531 and 43532

in question which plaintiff was fully aware that the same were

not in the name of the defendant (sic; Par. 18 of Answer to

Amended Complaint, 10, 18 and 34, Record on Appeal).

In that affirmative defense, Bormaheco, Inc. pretended that it

needed forty-five days within which to acquire the Nassco

property and "to negotiate" with the registered owner of the

three lots. The absurdity of that pretension stands out in bold

relief when it is borne in mind that the answers of Bormaheco

Inc. were verified by Cervantes and that the registered owner of

the three lots is Cervantes himself. That affirmative defense

means that Cervantes as president of Bormaheco, Inc. needed

forty-five days in order to "negotiate" with himself (Cervantes).

The incongruous stance of the Cervantes spouses is also patent

in their answer to the amended complaint. In that answer they

disclaimed knowledge or information of certain allegations which

were well-known to Cervantes as president of Bormaheco, Incand which were admitted in Bormaheco's three answers that

were verified by Cervantes.

It is significant to note that Bormaheco, Inc. in its three answers,

which were verified by Cervantes, never pleaded as an

affirmative defense that Mrs. Cervantes opposed the sale of the

three lots or that she did not authorize her husband to sell those

lots. Likewise, it should be noted that in their separate answe

the Cervantes spouses never pleaded as a defense that Mrs

Cervantes was opposed to the sale of three lots or tha

Cervantes could not bind the conjugal partnership. The

appellants were at first hesitant to make it appear that Cervantes

had committed the skullduggery of trying to sell property whichhe had no authority to alienate.

It was only during the trial on May 17, 1965 that Cervantes

declared on the witness stand that his wife was opposed to the

sale of the three lots, a defense which, as already stated, was

never interposed in the three answers of Bormaheco, Inc. and in

the separate answer of the Cervantes spouses. That same

viewpoint was adopted in defendants' motion fo

reconsideration dated November 20, 1965.

But that defense must have been an afterthought or was evolved

post litem motam since it was never disclosed in Cervantes


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letter of rescission and in his letter to Miss Tagle (Exh. F and

Annex 1). Moreover, Mrs. Cervantes did not testify at the trial to

fortify that defense which had already been waived for not

having been pleaded (See sec. 2, Rule 9, Rules of Court).

Taking into account the situation of Cervantes vis-a-vis

Bormaheco, Inc. and his wife and the fact that the three lots

were entirely occupied by Bormaheco's building, machinery and

equipment and were mortgaged to the DBP as security for its

obligation, and considering that appellants' vague affirmative

defenses do not include Mrs. Cervantes' alleged opposition to

the sale, the plea that Cervantes had no authority to sell the lots

strains the rivets of credibility (Cf. Papa and Delgado vs.

Montenegro, 54 Phil. 331; Riobo vs. Hontiveros, 21 Phil. 31).

"Obligations arising from contracts have the force of law

between the contracting parties and should be complied with in

good faith" (Art. 1159, Civil Code). Inasmuch as the sale was

perfected and even partly executed, Bormaheco, Inc., and the

Cervantes spouses, as a matter of justice and good faith, are

bound to comply with their contractual commitments.

Parenthetically, it may be observed that much misunderstanding

could have been avoided had the broker and the buyer taken the

trouble of making some research in the Registry of Deeds and

availing themselves of the services of a competent lawyer in

drafting the contract to sell.

G.R. No. L-36083 September 5, 1975

Spouses RAMON DOROMAL, SR., and ROSARIO SALAS, and

Spouses RAMON DOROMAL, JR., and GAUDELIA VEGA,

petitioners, vs.HON. COURT OF APPEALS and FILOMENAJAVELLANA

FACTS

Lot 3504 of the cadastral survey of Iloilo, situated in thepoblacion of La Paz (a districtwith an area of a little

more than 2-1/2 hectares was originally decreed in the

name of the late Justice Antonio Horilleno in 1916.

Before he died, Justice Horilleno executed a last willand testament attesting to the fact that it was a co-

ownership between himself and his brothers and sisters

(co-owners: Luis, Soledad, Fe, Rosita, Carlos and

Esperanza, all surnamed Horilleno in the proportion of

1/7 undivided ownership each).

Since Esperanza had already died, she was succeededby her only daughter, Filomena Javellana.

The co-owners led by Carlos (even though their righthad not as yet been annotated in the title) and as to

deceased Justice Antonio Horilleno, his daughter Mary,

sometime since early 1967, had wanted to sell their

shares, or if possible if Filomena Javellana were

agreeable, to sell the entire property.

An acquaintance hired by the Horillenos, CresenciaHarder, looked for buyers, and the latter came to the

interest of Ramon Doromal, Sr. and Jr.

In preparation for the execution of the sale (since thebrothers and sisters Horilleno were scattered in various

parts of the country: Carlos in Ilocos Sur, Mary in

Baguio, Soledad and Fe, in Mandaluyong, Rizal, and

Rosita in Basilan City), the Horillenos executed various

powers of attorney in favor of their niece, Mary H

Jimenez. They also caused preparation of a power of

attorney of identical tenor for signature by Javellana

and sent it with a letter of Carlos, dated 18 January

1968 unto her thru Mrs. Harder.

Carlos informed Javellana that the price was P4.00 asquare meter. It appears, however, that as early as

October 1967, Carlos had received in check as earnest

money from Ramon Doromal, Jr., the sum of P5,000.00

and the price therein agreed upon was P5.00 a square

meter.

At any rate, Javellana, not being agreeable, did not signthe power of attorney, and the rest of the co-owners

went ahead with their sale of their 6/7.

On the observation of Carlos, the deed of sale preparedby their common attorney in fact, Mary H. Jimenez, was

signed and ratified in Candon, Ilocos Sur in 1968 and

was brought to Carlos in the same month.

The Register of Deeds of Iloilo refused to register rightaway, since the original registered owner, Justice

Antonio Horilleno was already dead.

Carlos then hired a counsel to file a petition within thecadastral case in 1968; said petition was approved.

Thereafter, Carlos caused the registration (Register ofDeeds Iloilo) of the order of the cadastral court

approving the issuance of a new title in the name of the

co-owners, as well as of the deed of sale to the

Doromals, as a result of which on that same date, a

new title was issued, in the name of the Horillenos to

6/7 and Javellana to 1/7.

The Doromals paid Carlos the sum of P97,000.00 by acheck of the Chartered Bank which was later

substituted by check of PNB, because there was no

Chartered Bank Branch in Ilocos Sur.

Besides the amount paid in check, the Doromalsaccording to their evidence still paid an additiona

amount in cash of P18,250.00 since the agreed price

was P5.00 a square meter; and thus was consummated

the transaction.

In June 1968, Arturo H. Villanueva (Javellanas lawyerarrived at the residence of the Doromals in Dumangas

Iloilo, bringing with him her letter of that date, making


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a formal offer to repurchase or redeem the 6/7

undivided share in Lot No. 3504, of the Iloilo Cadastre,

which the Doromals bought from her erstwhile co-

owners, the Horillenos, for the sum of P30,000.00 (the

sum Atty. Villanueva has with him which he would

deliver to the Doromals as soon as they execute the

contract of sale in her favor). The Doromals refused.

Subsequently, Javellana filed the case before the CFIIloilo seeking to exercise her right to redeem the share

of the property, as co-owner, at the price stated in the

deed of sale, i.e. P30,000.00. The trial judge, after

hearing the evidence, ruled in favor of the Doromals,

holding that Javellana had no more right, to redeem as

she was already informed of the intended sale of the

6/7 share belonging to the Horillenos, and further

condemned Javellana to pay attorneys fees, and moral

and exemplary damages. Javellana appealed.

The Court of Appeals (in CA-GR 47945-R) reversed thetrial courts decision and held that although respondent

Javellana was informed of her co-owners proposal to

sell the land in question to the Doromals she was,

however, never notified least of all, in writing, of the

actual execution and registration of the corresponding

deed of sale, hence, Javellana s right to redeem had

not yet expired at the time she made her offer for that

purpose thru her letter of 10 June 1968 delivered to the

Doromals on even date. The intermediate court further

held that the redemption price to be paid by Javellana

should be that stated in the deed of sale which is

P30,000 notwithstanding that the preponderance of

the evidence proves that the actual price paid by the

Doromals was P115,250. The Doromals appealed.

ISSUE (1): Whether the sale is said to be perfected during the

time of the sending of letters.

HELD: NO. While the letters relied upon by the Doromals could

convey the idea that more or less some kind of consensus had

been arrived at among the other co-owners to sell the property

in dispute to the Doromals, it cannot be said definitely that such

a sale had even been actually perfected. The difference in the

prices per square meter in the two letters negatives the

possibility that a price definite had already been agreed upon.

While 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 Article 1482 of the Civil

Code as signifying perfection of the sale. Viewed in the backdrop

of the factual milieu thereof extant in the record, said P5,000

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 the Doromals were decided to buy 6/7 only of the property

should Javellana refuse to agree to part with her 1/7 share.

ISSUE (2): Whether the letters aforementioned sufficed to

comply with the requirement of notice of a sale by co-owners

under Article 1623 of the Civil Code.

HELD: YES. It cannot be said that the CA erred in holding the

same. The SC is of the opinion and so held that for purposes o

the co-owner's right of redemption granted by Article 1620 of

the Civil Code, the notice in writing which Article 1623 requires

to be made to the other co-owners and from receipt of which

the 30-day period to redeem should be counted is a notice notonly of a perfected sale but of the actual execution and delivery

of the deed of sale. This is implied from the latter portion of

Article 1623 which requires that before a register of deeds can

record a sale by a co-owner, there must be presented to him, an

affidavit to the effect that the notice of the sale had been sent in

writing to the other co-owners.

A sale may not be presented to the register of deeds for

registration unless it be in the form of a duly executed public

instrument. Moreover, the law prefers that all the terms and

conditions of the sale should be definite and in writing. As aptlyobserved by Justice Gatmaitan in the decision under review

Article 1619 of the Civil Code bestows unto a co-owner the right

to redeem and "to be subrogated under the same terms and

conditions stipulated in the contract", and to avoid any

controversy as to the terms and conditions under which the righ

to redeem may be exercised, it is best that the period therefor

should not be deemed to have commenced unless the notice of

the disposition is made after the formal deed of disposal has

been duly executed. And it being beyond dispute that

respondent herein has never been notified in writing of the

execution of the deed of sale by which petitioners acquired the

subject property, it necessarily follows that her tender to redeem

the same made on June 10, 1968 was well within the periodprescribed by law. Indeed, it is immaterial when she might have

actually come to know about said deed, it appearing she has

never been shown a copy thereof through a written

communication by either any of the petitioners-purchasers or

any of her co-owners-vendees. (Cornejo et al. vs. CA et al., 16

SCRA 775.)

ISSUE (3): The petitioners contend that considering said finding

of fact of the intermediate court, the CA erred in holding

nevertheless that "the redemption price should be that stated in

the deed of sale."

Is their contention tenable?

HELD: NO. The trial court found that "the consideration of

P30,000 only was placed in the deed of sale to minimize the

payment of the registration fees, stamps and sales tax." With this

undisputed fact in mind, it is impossible for the Supreme Cour

to sanction petitioners' pragmatic but immoral posture. Being

patently violative of public policy and injurious to public interest

the seemingly wide practice of understating considerations of

transactions for the purpose of evading taxes and fees due to the

government must be condemned and all parties guilty thereo


7/13

must be made to suffer the consequences of their ill-advised

agreement to defraud the state.

Verily, the trial court fell short of its devotion and loyalty to the

Republic in officially giving its stamp of approval to the stand of

petitioners and even berating respondent Javellana as wanting

to enrich herself "at the expense of her own blood relatives who

are her aunts, uncles and cousins." On the contrary, said "blood

relatives" should have been sternly told, as the SC held, that they

are in pari-delicto with petitioners in committing tax evasion andshould not receive any consideration from any court in respect

to the money paid for the sale in dispute. Their situation is

similar to that of parties to an illegal contract.

Provisions that supported the conclusion of the SC regarding

legal redemption

Article 1619

Legal redemption is the right to be subrogated, upon the same

terms and conditions stipulated in the contract, in the place of

one who acquires a thing by purchase or dation in payment, or

by any other transaction whereby ownership is transmitted by

onerous title. In the present case, the stipulation in the public

evidence of the contract, made public by both vendors and

vendees is that the price was P30,000.00.

Article 1620 and 1623

A co-owner of a thing may exercise the right of redemption in

case the share of all the other co- owners or any of them, are

sold to a third person. If the price of the alienation is grossly

excessive, the redemptioner shall pay only a reasonable one.

The law seeks to protect redemptioner and converts his position

into one not that of a contractually but of a legally subrogated

creditor as to the right of redemption, if the price is not grossly

excessive, what the law had intended redemptioner to pay can

be read in Art. 1623, which provides that

The right of a legal pre-emption or redemption shall not be

exercised except within thirty (30) days from the notice in writing

by the prospective vendor, or by the vendor as the case may be.

The deed of sale shall not be recorded in the Registry of

Property, unless accompanied by an affidavit of the vendor that

he has given written notice thereof of all possible

redemptioners.

Disposition

The Supreme Court affirmed the decision of the Court of

Appeals, with costs against Spouses Doromal Sr. and Doromal Jr.

G.R. No. 126812 November 24, 1998

GOLDENROD, INC., petitioner, vs. COURT OF APPEALS, PIO

BARRETO & SONS, INC., PIO BARRETO REALTY DEVELOPMENT

INC. and ANTHONY QUE, respondents.

FACTS: Pio Barreto and Sons, Inc. (BARRETO & SONS) owned 43

parcels of registered land with a total area of 18,500 square

meters located at Carlos Palanca St., Quiapo, Manila. These

properties were mortgaged with United Coconut Planters Bank(UCPB) and until 1988, the obligation remained unpaid making

foreclosure of the mortgage imminent.

Here comes Goldenrod, Inc. (GOLDENROD), which offered in

writing to buy the subject property from BARRETO & SONS. The

offer was accepted and resulted for the payment of P1

million earnest money.

When the term of existence of BARRETO & SONS expired, all its

assets and liabilities including the property located in Quiapo

were transferred to respondent Pio Barreto Realty Development

Inc. (BARRETO REALTY). Petitioners and the latter subsequently

agreed that petitioner GOLDENROD would be the one to pay theoutstanding obligations of BARRETO REALTY with UCPB and, (b)

pay the balance of the purchase price in installments within a 3-

year period.

Petitioner, however, did not pay UCPB for the loan obligation of

BARRETO REALTY; instead, it asked for an extension of one

month to settle, which the bank granted. Petitioner requested

another extension of sixty days to pay the loan. This time the

bank demurred.

Because of the denial by UCPB of its request, petitioner now

informed respondent BARRETO REALTY that it could not go

through with the purchase anymore and so they now demand

the refund of the earnest money of P1 million they earlier gave

When the demand remain unheeded by BARRETO REALTY

petitioner GOLDENROD filed a complaint. In its Answer

private respondent contended that it was the agreement of the

parties that the earnest money of P1 million would be forfeited

to answer for losses and damages that might be suffered by

private respondents in case of failure by petitioner to comply

with the terms of their purchase agreement.

As an aside, BARRETTO REALTY sold to Asiaworld Trade Center

Phils., Inc. (ASIAWORLD) the property subject of this case.

Subsequently, the trial court sustained GOLDENRODs complain

and found that there was no written agreement between the

parties concerning forfeiture of the earnest money if the sale did

not push through. It further declared that the earnest money

given by petitioner to respondent BARRETO REALTY was

intended to form part of the purchase price; thus, the refusal of

the latter to return the money when the sale was not

consummated violated Arts. 22 and 23 of the Civil Code against

unjust enrichment. On appeal, the Court of Appeals reversed the

trial court and ordered the dismissal of the complaint; hence,

this petition.


8/13

Issue: Whether inthe absence of a specific stipulation, may the

seller of real estate keep/forfeit the earnest money to answer for

damages in the event the sale fails?

Held: No. We sustain petitioner. Under Art. 1482 of the Civil

Code, whenever earnest money is given in a contract of sale, it

shall be considered as part of the purchase price and as proof of

the perfection of the contract. It was an advance payment which

must be deducted from the total price. Hence, the parties could

not have intended that the earnest money or advance paymentwould be forfeited when the buyer should fail to pay the balance

of the price, especially in the absence of a clear and express

agreement thereon. By reason of its failure to make payment,

petitioner, through its agent, informed private respondents that

it would no longer push through with the sale. In other words,

petitioner resorted to extrajudicial rescission of its agreement

with private respondents.

Rescission of reciprocal contracts may be extrajudicially

rescinded unless successfully impugned in court. If the party

does not oppose the declaration of rescission of the other party,

specifying the grounds therefor, and it fails to reply or protest

against it, its silence thereon suggests an admission of theveracity and validity of the rescinding party's claim.

Private respondents did not interpose any objection to the

rescission by petitioner of the agreement after it received the

broker's letter rescinding the sale [due non-approval of the loan

in UCPB].

Art. 1385 of the Civil Code provides that rescission creates the

obligation to return the things which were the object of the

contract together with their fruits and interest. The vendor is

therefore obliged to return the purchase price paid to him by the

buyer if the latter rescinds the sale, or when the transaction was

called off and the subject property had already been sold to athird person, as what obtained in this case. Therefore, by virtue

of the extrajudicial rescission of the contract to sell by petitioner

without opposition from private respondents who, in turn, sold

the property to other persons, private respondent BARRETTO

REALTY, as the vendor, had the obligation to return the earnest

money of P1,000,000.00 plus legal interest from the date it

received notice of rescission from petitioner. It would be most

inequitable if respondent BARRETTO REALTY would be allowed

to retain petitioner's payment of P1,000,000.00 and at the same

time appropriate the proceeds of the second sale made to

another.

SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and MARCELINO

SOTTO, petitioners,

vs.

HON. AUXENCIO C. DACUYCUY, Judge of the CFI of Leyte, DELY

RODRIGUEZ, FELIPE ANG CRUZ, CONSTANCIA NOGAR, MANUEL

GO, INOCENTES DIME, WILLY JULIO, JAIME YU, OSCAR DY, DY

CHIU SENG, BENITO YOUNG, FERNANDO YU, SEBASTIAN YU,

CARLOS UY, HOC CHUAN and MANUEL DY, respondents.

(G.R. No. L-55048 May 27, 1981)

In essence, the theory of petitioners is that while it is true that

they did express willingness to sell to private respondents the

subject property for P6,500,000 provided the latter made known

their own decision to buy it not later than July 31, 1978, the

respondents' reply that they were agreeable was not absolute

so much so that when ultimately petitioners' representative

went to Cebu City with a prepared and duly signed contract for

the purpose of perfecting and consummating the transaction

respondents and said representative found variance between

the terms of payment stipulated in the prepared document and

what respondents had in mind, hence the bankdraft which

respondents were delivering to petitioners' representative was

returned and the document remained unsigned by respondents

Hence the action below for specific performance.

FACTS: On July 12, 1978, petitioners, thru a certain Pedro C

Gamboa, sent to respondents a letter offering to sell the Sotto

property situated at Tacloban City for P6,500,000. In the said

letter, it is said that I am giving you and the other occupants the

preference, but such priority has to be exercised within a given

number of days as I do not want to lose the opportunity if you

are not interested. I am therefore gluing you and the rest of the

occupants until July 31, 1978 within which to decide whether you

want to buy the property. If I do not hear from you by July 31,

will offer or close the deal with the other interested buyer.

Reacting to the foregoing letter, a telegram was sent by "Yao

King Ong & tenants" to Atty. Pedro Gamboa in Cebu City stating

we agree to buy property proceed Tacloban to negotiate

details.

On July 27, 1978, Atty. Gamboa wired Yao King Ong in Tacloban

City stating PROPOSAL ACCEPTED ARRIVING TUESDAY

MORNING WITH CONTRACT PREPARE PAYMENT BANK DRAFT

It is alleged by the respondents that when Atty. Gamboa arrived

in Tacloban City bringing with him the prepared contract topurchase and to sell referred to in his telegram dated July 27,

1978for the purpose of closing the sale with an original term o

payment of P2M on the date of the execution of the contract

the balance of P4.5M shall be fully paid within 90 days. However

to the complete surprise of respondents, the petitioner (excep

def. Tacloban City Ice Plant, Inc.) without giving notice to

respondents, changed the mode of payment with respect to the

balance of P4,500,000.00 by imposing upon respondents to pay

same amount within thirty (30) days from execution of the

contract instead of the former term of ninety (90) days.

Petitioners filed a motion to dismiss which was denied by

respondent judge.

ISSUE: WON there is a perfected contract of sale?

HELD: No. In this respect, the governing legal provision is, o

course, Article 1319 of the Civil Code which provides:

ART. 1319. Consent is manifested by the meeting of the offer

and the acceptance upon the thing and the cause which are

constitute the contract. The offer must be certain the

acceptance absolute. A qualified acceptance constitute a

counter-offer.


9/13

Acceptance made by letter or telegram does not bind offerer

except from the time it came to his knowledge. The contract,

in a case, is presumed to have been entered into in the place

where the offer was made.

In the instant case, We can lay aside, for the moment,

petitioners' contention that the letter of July 12, 1978 of Atty.

Pedro C. Gamboa to respondents Yao King Ong and his

companions constitute an offer that is "certain", although the

petitioners claim that it was a mere expression of willingness to

sell the subject property and not a direct offer of sale to said

respondents. What We consider as more important and truly

decisive is what is the correct juridical significance of the

telegram of respondents instructing Atty. Gamboa to "proceed

to Tacloban to negotiate details." We underline the word

"negotiate" advisedly because to Our mind it is the key word that

negates and makes it legally impossible for Us to hold that

respondents' acceptance of petitioners' offer, assuming that it

was a "certain" offer indeed, was the "absolute" one that Article

1319 above-quoted requires.

Dictionarilly, the implication of "to negotiate" is practically the

opposite of the Idea that an agreement has been reached.

Webster's Third International Dictionary, Vol. II (G. & C. Merriam

Co., 1971 Philippine copyright) gives the meaning of negotiate as

"to communicate or confer with another so as to arrive at the

settlement of some matter; meet with another so as to arrive

through discussion at some kind of agreement or compromise

about something; to arrange for or bring about through

conference or discussion; work at or arrive at or settle upon by

meetings and agreements or compromises ". Importantly, it

must be borne in mind that Yao King Ong's telegram simply says

"we agree to buy property". It does not necessarily connote

acceptance of the price but instead suggests that the details

were to be subject of negotiation.

Respondents now maintain that what the telegram refers to as"details" to be "negotiated" are mere "accidental elements", not

the essential elements of the contract. They even invite

attention to the fact that they have alleged in their complaint

(Par. 6) that it was as early as "in the month of October, 1977

(that) negotiations between plaintiffs and defendants for the

purchase and sale (in question) were made, thus resulting to

offers of same defendants and counter-offer of plaintiffs". But to

Our mind such alleged facts precisely indicate the failure of any

meeting of the minds of the parties, and it is only from the letter

and telegrams above-quoted that one can determine whether or

not such meeting of the minds did materialize. As We see it,

what such allegations bring out in bold relief is that it was

precisely because of their past failure to arrive at an agreementthat petitioners had to put an end to the uncertainty by writing

the letter of July 12, 1978. On the other hand, that respondents

were all the time agreeable to buy the property may be

conceded, but what impresses Us is that instead of "absolutely"

accepting the "certain" offer if there was one of the

petitioners, they still insisted on further negotiation of details.

For anyone to read in the telegram of Yao that they accepted the

price of P6,500,000.00 would be an inference not necessarily

warranted by the words "we agree to buy" and "proceed

Tacloban to negotiate details". If indeed the details being left by

them for further negotiations were merely accidental or formal

ones, what need was there to say in the telegram that they had

still "to negotiate (such) details", when, being unessential per

their contention, they could have been just easily clarified and

agreed upon when Atty. Gamboa would reach Tacloban?

Anent the telegram of Atty. Gamboa of July 27, 1978, also

quoted earlier above, We gather that it was in answer to the

telegram of Yao. Considering that Yao was in Tacloban then

while Atty. Gamboa was in Cebu, it is difficult to surmise that

there was any communication of any kind between them during

the intervening period, and none such is alleged anyway by

respondents. Accordingly, the claim of respondents in their

complaint below that there was an agreement of a down

payment of P2 M, with the balance of P4.5M to be paid within 90

days afterwards is rather improbable to imagine to have actually

happened.

The alleged subsequent agreement about the P2 M down and

P4.5 M in 90 days may at best be deemed as a distinct cause of

action. And placed against the insistence of petitioners, as

demonstrated in the two deeds of sale taken by Atty. Gamboa to

Tacloban, that there was no agreement about 90 days, an issue

of fact arose, which could warrant a trial in order for the tria

court to determine whether or not there was such an agreement

about the balance being payable in 90 days instead of the 30

days stipulated as alleged. Our conclusion, therefore, is that

although there was no perfected contract of sale in the light of

the letter of Atty. Gamboa of July 12, 1978 and the letter-reply

thereto of Yao; it being doubtful whether or not, under Article

1319 of the Civil Code, the said letter may be deemed as an offer

to sell that is "certain", and more, the Yao telegram is far from

being an "absolute" acceptance under said article, still there

appears to be a cause of action alleged in Paragraphs 8 to 12 of

the respondents' complaint, considering it is alleged therein that

subsequent to the telegram of Yao, it was agreed that the

petitioners would sell the property to respondents for P6.5 M, by

paving P2 M down and the balance in 90 days and which

agreement was allegedly violated when in the deeds prepared byAtty. Gamboa and taken to Tacloban, only 30 days were given to

respondents.

But the foregoing conclusion is not enough to carry the day fo

respondents. It only brings Us to the question of whether or not

the claim for specific performance of respondents is enforceable

under the Statute of Frauds. In this respect, We may view the

situation at hand from two angles, namely, (1) that the

allegations contained in paragraphs 8 to 12 of respondents

complaint should be taken together with the documents already

aforementioned and (2) that the said allegations constitute a

separate and distinct cause of action. We hold that either way

We view the situation, the conclusion is inescapable that theclaim of respondents that petitioners have unjustifiably refused

to proceed with the sale to them of the property in question is

unenforceable under the Statute of Frauds.

It is nowhere alleged in said paragraphs 8 to 12 of the complaint

that there is any writing or memorandum, much less a duly

signed agreement to the effect that the price of P6,500,000

fixed by petitioners for the real property herein involved was

agreed to be paid not in cash but in installments as alleged by

respondents. The only documented indicative of the non-wholly

cash payment existing in the record is that stipulated in Annexes

9 and 10 of respondents, the deeds already signed by the


10/13

petitioners and taken to Tacloban by Atty. Gamboa for the

signatures of the respondents. In other words, the 90-day term

for the balance of P4.5 M insisted upon by respondents choices

not appear in any note, writing or memorandum signed by

either the petitioners or any of them, not even by Atty.

Gamboa. Hence, looking at the pose of respondents that there

was a perfected agreement of purchase and sale between them

and petitioners under which they would pay in installments of

P2 M down and P4.5 M within ninety 90) days afterwards it is

evident that such oral contract involving the "sale of real

property" comes squarely under the Statute of Frauds (Article

1403, No. 2(e), Civil Code.)

On the other score of considering the supposed agreement of

paying installments as partly supported by the letter and

telegram earlier quoted herein, His Honor declared with well

studied ratiocination, albeit legally inaccurate, that:

The next issue relate to the State of Frauds. It is contended

that plaintiffs' action for specific performance to compel the

defendants to execute a good and sufficient conveyance of the

property in question (Sotto land and building) is unenforceable

because there is no othernote memorandum or writing except

annexes "C", "C-l" and "D", which by themselves did not give

birth to a contract to sell. The argument is not well founded.

The rules of pleading limit the statement of the cause of action

only to such operative facts as give rise to the right of action of

the plaintiff to obtain relief against the wrongdoer. The details

of probative matter or particulars of evidence, statements of

law, inferences and arguments need not be stated. Thus, Sec.

1 of Rule 8 provides that 'every pleading shall contain in a

methodical and logical form, a plain concise and direct

statement of the ultimate facts on which the party pleading

relies for his claim or defense, as the case may be, omitting the

statement of mere evidentiary facts.' Exhibits need not be

attached. The contract of sale sued upon in this case is

supported by letters and telegrams annexed to the complaintand plaintiffs have announced that they will present additional

evidences during the trial to prove their cause of action. The

plaintiffs having alleged that the contract is backed up by

letters and telegrams, and the same being sufficient

memorandum, the complaint states a cause of action and they

should be given their day in court and allowed to substantiate

their allegations (Parades vs. Espino, 22 SCRA 1000). (Pp 165-

166, Record.)

The foregoing disquisition of respondent judge misses at least

two (2) juridical substantive aspects of the Statute of Frauds

insofar as sale of real property is concerned. First, His Honor

assumed that the requirement of perfection of such kind ofcontract under Article 1475 of the Civil Code which provides that

"(t)he contract of sale is perfected at the moment there is a

meeting of the minds upon the thing which is the object of the

contract and upon the price", the Statute would no longer apply

as long as the total price or consideration is mentioned in some

note or memorandum and there is no need of any indication of

the manner in which such total price is to be paid.

We cannot agree. In the reality of the economic world and the

exacting demands of business interests monetary in character,

payment on installments or staggered payment of the total

price is entirely a different matter from cash payment,

considering the unpredictable trends in the sudden fluctuation

of the rate of interest. In other words, it is indisputable that the

value of money - varies from day to day, hence the

indispensability of providing in any sale of the terms of

payment when not expressly or impliedly intended to be in

cash.

Thus, We hold that in any sale of real property on installments

the Statute of Frauds read together with the perfection

requirements of Article 1475 of the Civil Code must be

understood and applied in the sense that the idea of payment

on installments must be in the requisite of a note or

memorandum therein contemplated. Stated otherwise, the

inessential elements" mentioned in the case of Parades vs

Espino, 22 SCRA 1000, relied upon by respondent judge must be

deemed to include the requirement just discussed when it comes

to installment sales. There is nothing in the monograph re the

Statute of Frauds appearing in 21 SCRA 250 also cited by His

Honor indicative of any contrary view to this ruling of Ours, fo

the essence and thrust of the said monograph refers only to the

form of the note or memorandum which would comply with the

Statute, and no doubt, while such note or memorandum need

not be in one single document or writing and it can be in just

sufficiently implicit tenor, imperatively the separate notes must

when put together', contain all the requisites of a perfected

contract of sale. To put it the other way, under the Statute of

Frauds, the contents of the note or memorandum, whether in

one writing or in separate ones merely indicative for an

adequate understanding of all the essential elements of the

entire agreement, may be said to be the contract itself, except as

to the form.

Secondly, We are of the considered opinion that under the rules

on proper pleading, the ruling of the trial court that, even if the

allegation of the existence of a sale of real property in a

complaint is challenged as barred from enforceability by the

Statute of Frauds, the plaintiff may simply say there aredocuments, notes or memoranda without either quoting them in

or annexing them to the complaint, as if holding an ace in the

sleeves is not correct. To go directly to the point, for Us to

sanction such a procedure is to tolerate and even encourage

undue delay in litigation, for the simple reason that to await the

stage of trial for the showing or presentation of the requisite

documentary proof when it already exists and is asked to be

produced by the adverse party would amount to unnecessarily

postponing, with the concomitant waste of time and the

prolongation of the proceedings, something that can

immediately be evidenced and thereby determinable with

decisiveness and precision by the court without further delay.

G.R. No. 115849 January 24, 1996

FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers

Bank of the Philippines) and MERCURIO RIVERA, petitioners,

vs.

COURT OF APPEALS, CARLOS EJERCITO, in substitution of

DEMETRIO DEMETRIA, and JOSE JANOLO,respondents.


11/13

Petitioner First Philippine International Bank (formerly Producers

Bank of the Philippines; petitioner Bank, for brevity) is a banking

institution organized and existing under the laws of the Republic

of the Philippines. Petitioner Mercurio Rivera (petitioner Rivera,

for brevity) is of legal age and was, at all times material to this

case, Head-Manager of the Property Management Department

of the petitioner Bank.

Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of

legal age and is the assignee of original plaintiffs-appelleesDemetrio Demetria and Jose Janolo.

Respondent Court of Appeals is the court which issued the

Decision and Resolution sought to be set aside through this

petition.

FACTS

(1) In the course of its banking operations, the

defendant Producer Bank of the Philippines acquired six

(6) parcels of land with a total area of 101 hectares

located at Don Jose, Sta. Rose, Laguna. The property

used to be owned by BYME Investment andDevelopment Corporation which had them mortgaged

with the bank as collateral for a loan. The original

plaintiffs, Demetrio Demetria and Jose O. Janolo,

wanted to purchase the property and thus initiated

negotiations for that purpose.

(2) In the early part of August 1987 said plaintiffs, upon

the suggestion of BYME investment's legal counsel, Jose

Fajardo, met with defendant Mercurio Rivera, Manager

of the Property Management Department of the

defendant bank. The meeting was held pursuant to

plaintiffs' plan to buy the property. After the meeting,

plaintiff Janolo made a formal purchase offer to thebank through a letter

(3) Defendant Rivera made a formal reply in behalf of

the bank also indicating the baks counter-offer at

P5.5M for more than 101 hectares on lot basis.

(4) Plaintiff Janolo in his corresponding letter amended

his previous offer and instead proposed to buy the

subject lot at P4.250M in cash.

(5) There was no reply to plaintiffs letter. What took

place was a meeting in September 1987 between the

plaintiffs and Luis Co, the Senior Vice-President of

defendant bank. Rivera as well as the BYME lawyer also

attended the meeting. Two days later, Janolo sent to

bak through Rivera a letter accepting the offer for them

to purchase the property at Sta. Rosa, Laguna, formerly

owned by Byme Investment, for a total price of PESOS:

FIVE MILLION FIVE HUNDRED THOUSAND

(P5,500,000.00).

(6) Rivera, through a letter, informed Demetria that the

property which [the plaintiffs] have proposed to buy

are yet under study by the newly replaced Acting

Conservator of the bank.

(7) Series of demands were made by the plaintiffs for

compliance by the bank with what plaintiff considered

as a perfected contract of sale, which demands were in

one form or another refused by the bank. As detailed

by the trial court in its decision, on November 17, 1987

plaintiffs through a letter to defendant Rivera tendered

payment of the amount of P5.5 million "pursuant to theperfected sale agreement." Defendants refused to

receive both the payment and the letter. Instead, the

parcels of land involved in the transaction were

advertised by the bank for sale to any interested buyer

Plaintiffs demanded the execution by the bank of the

documents on what was considered as a "perfected

agreement."

(8) The demands were communicated with the Acting

Conservator but the plaintiffs got no response so they

made a second tender of payment (in the same

amount).

(9) For receiving no response for four months, plaintiffs

made a final demand for compliance by the bank with

its obligations under the considered perfected contrac

of sale. In a reply letter by the defendants through

Acting Conservator Encarnacion, they repudiated the

authority of defendant Rivera and claimed that his

dealings with the plaintiffs, particularly his counter

offer of P5.5 Million are unauthorized or illegal. On that

basis, the defendants justified the refusal of the tenders

of payment and the non-compliance with the

obligations under what the plaintiffs considered to be a

perfected contract of sale.

(10) Plaintiffs filed a suit for specific performance with

damages against the bank, its Manager Rivera and

Acting Conservator Encarnacion. The basis of the suit

was that the transaction had with the bank resulted in a

perfected contract of sale, The defendants took the

position that there was no such perfected sale because

the defendant Rivera is not authorized to sell the

property, and that there was no meeting of the minds

as to the price. In the course of the proceedings in the

respondent Court, Carlos Ejercito was substituted in

place of Demetria and Janolo, in view of the assignment

of the latters' rights in the matter in litigation to said

private respondent. During the pendency of theproceedings in the CA, Henry Co and several other

stockholders of the Bank filed an with the Regional Tria

Court of Makatiagainst Encarnacion, Demetria and

Janolo "to declare any perfected sale of the property as

unenforceable and to stop Ejercito from enforcing o

implementing the sale".

(11) The trial Court declared the existence of a

perfected sale and ordered defendant Producers Bank

of the Philippines, upon finality of this decision and

receipt from the plaintiffs the amount of P5.5 Million

to execute in favor of said plaintiffs a deed of absolute


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sale over the aforementioned six (6) parcels of land,

and to immediately deliver to the plaintiffs the owner's

copies of T.C.T., inclusive, for purposes of registration

of the same deed and transfer of the six (6) titles in the

names of the plaintiffs. The CA denied the MR of

petitioners and modified the ruling of the trial court as

to damages (eliminated).

ISSUE: Whether or not there was a perfected contract of sale.

HELD: YES. On the basis of the evidence already in the record

and as appreciated by the lower courts, the inevitable conclusion

is simply that there was a perfected contract of sale.

Article 1318 of the Civil Code enumerates the requisites of a valid

and perfected contract as follows: "(1) Consent of the

contracting parties; (2) Object certain which is the subject matter

of the contract; (3) Cause of the obligation which is established."

There is no dispute on requisite no. 2. The object of the

questioned contract consists of the six (6) parcels of land in Sta.

Rosa, Laguna with an aggregate area of about 101 hectares,

more or less, and covered by Transfer Certificates of Title. There

is, however, a dispute on the first and third requisites.

Petitioners allege that "there is no counter-offer made by the

Bank, and any supposed counter-offer which Rivera (or Co) may

have made is unauthorized. Since there was no counter-offer by

the Bank, there was nothing for Ejercito (in substitution of

Demetria and Janolo) to accept." They disputed the factual basis

of the respondent Court's findings that there was an offer made

by Janolo for P3.5 million, to which the Bank counter-offered

P5.5 million. The Court has perused the evidence but cannot find

fault with the said Court's findings of fact. Verily, in a petition

under Rule 45 such as this, errors of fact if there be any - are,

as a rule, not reviewable. The mere fact that respondent Court

(and the trial court as well) chose to believe the evidencepresented by respondent more than that presented by

petitioners is not by itself a reversible error. In fact, such findings

merit serious consideration by the Court, particularly where, as

in this case, said courts carefully and meticulously discussed their

findings. This is basic.

Petitioners also alleged that Demetria's and Janolo's P4.25

million counter-offer in the letter dated September 17,

1987 extinguishedthe Bank's offer of P5.5 million.They disputed

the respondent Court's finding that "there was a meeting of

minds when on 30 September 1987 Demetria and Janolo through

a letter dated September 30, 1987)"accepted" Rivera's counter

offer of P5.5 million.

Indeed, the Court sees no reason to disturb the lower courts'

(both the RTC and the CA) common finding that private

respondents' evidence is more in keeping with truth and logic

that during the meeting on September 28, 1987, Luis Co and

Rivera "confirmed that the P5.5 million price has been passed

upon by the Committee and could no longer be lowered ".

Hence, assuming arguendo that the counter-offer of P4.25

million extinguished the offer of P5.5 million, Luis Co's reiteration

of the said P5.5 million price during the September 28, 1987

meeting revivedthe said offer. And by virtue of the September

30, 1987 letter accepting this revivedoffer, there was a meeting

of the minds, as the acceptance in said letter was absolute and

unqualified.

The Bank's repudiation, through Conservator Encarnacion, of

Rivera's authority and action, particularly the latter's counter

offer of P5.5 million, as being "unauthorized and illegal" came

only on May 12, 1988 or more than seven (7) months after

Janolo' acceptance. Such delay, and the absence of any

circumstance which might have justifiably prevented the Bankfrom acting earlier, clearly characterizes the repudiation as

nothing more than a last-minute attempt on the Bank's part to

get out of a binding contractual obligation.

On Riveras Authority

Be that as it may, and in addition to the foregoing disquisitions

by the Court of Appeals, let us review the question of Rivera's

authority to act and petitioner's allegations that the P5.5 million

counter-offer was extinguished by the P4.25 million revised offer

of Janolo. Here, there are questions of law which could be drawn

from the factual findings of the respondent Court. They alsodelve into the contractual elements of consent and cause.

The authority of a corporate officer in dealing with third persons

may be actual or apparent. From the evidence found by

respondent Court, it is obvious that petitioner Rivera has

apparent or implied authority to act for the Bank in the matter of

selling its acquired assets. In the very recent case ofLimketka

Sons Milling, Inc. vs. Court of Appeals, et. al., the Court, through

Justice Jose A. R. Melo, affirmed the doctrine of apparent

authority as it held that the apparent authority of the officer of

the Bank of P.I. in charge of acquired assets is borne out by

similar circumstances surrounding his dealings with buyers.

To be sure, petitioners attempted to repudiate Rivera's apparent

authority through documents and testimony which seek to

establish Rivera's actualauthority. These pieces of evidence

however, are inherently weak as they consist of Rivera's self-

serving testimony and various inter-office memoranda that

purport to show his limited actual authority, of which private

respondent cannot be charged with knowledge. In any event,

since the issue is apparent authority, the existence of which is

borne out by the respondent Court's findings, the evidence of

actual authority is immaterial insofar as the liability of a

corporation is concerned.

Disposition

The Court denies the petition. The assailed Decision is affirmed

Moreover, petitioner Bank is reprimanded for engaging in forum-

shopping and warned that a repetition of the same or similar

acts will be dealt with more severely. Costs against petitioners.

G.R. No. 92871 August 2, 1991 - MARIA P. VDA. DE JOMOC, ET

AL., petitioners


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