sales cases 1-25 (except no. 8)

8/13/2019 Sales Cases 1-25 (Except No. 8)

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G.R. No. 194785

VIRGILIO S. DAVID, PETITIONER, VS. MISAMIS OCCIDENTAL II ELECTRIC COOPERATIVE, INC.,RESPONDENT.

DECISION

MENDOZA, J.:

Before this Court is a petition for review under Rule 45 of the Rules of Court assailing the July 8, 2010 Decision [1]othe Court of Appeals (CA), in CA-G.R. CR No. 91839, which affirmed the July 17, 2008 Decision [2]of the RegionaTrial Court, Branch VIII, Manila (RTC)in Civil Case No. 9469402, an action for specific performance and damages.

The Facts:

Petitioner Virgilio S. David (David)was the owner or proprietor of VSD Electric Sales, a company engaged in thebusiness of supplying electrical hardware including transformers for rural electric cooperatives like respondentMisamis Occidental II Electric Cooperative, Inc. (MOELCI), with principal office located in Ozamis City.

To solve its problem of power shortage affecting some areas within its coverage, MOELCI expressed its intention to

purchase a 10 MVA power transformer from David. For this reason, its General Manager, Engr. ReynaldoRada (Engr. Rada), went to meet David in the latters office in Quezon City. David agreed to supply the powertransformer provided that MOELCI would secure a board resolution because the item would still have to beimported.

On June 8, 1992, Engr. Rada and Director Jose Jimenez (Jimenez), who was in-charge of procurement, returned toManila and presented to David the requested board resolution which authorized the purchase of one 10 MVA powertransformer. In turn, David presented his proposal for the acquisition of said transformer. This proposal was thesame proposal that he would usually give to his clients.

After the reading of the proposal and the discussion of terms, David instructed his then secretary and bookkeeperEllen M. Wong, to type the names of Engr. Rada and Jimenez at the end of the proposal. Both signed the document

under the word conforme. The board resolution was thereafter attached to the proposal.

As stated in the proposal, the subject transformer, together with the basic accessories, was valued aP5,200,000.00. It was also stipulated therein that 50% of the purchase price should be paid as downpayment andthe remaining balance to be paid upon delivery. Freight handling, insurance, customs duties, and incidentaexpenses were for the account of the buyer.

The Board Resolution, on the other hand, stated that the purchase of the said transformer was to be financedthrough a loan from the National Electrification Administration (NEA). As there was no immediate action on the loanapplication, Engr. Rada returned to Manila in early December 1992 and requested David to deliver the transformerto them even without the required downpayment. David granted the request provided that MOELCI would payinterest at 24% per annum. Engr. Rada acquiesced to the condition. On December 17, 1992, the goods wereshipped to Ozamiz City via William Lines. In the Bill of Lading, a sales invoice was included which stated the agreedinterest rate of 24% per annum.

When nothing was heard from MOELCI for sometime after the shipment, Emanuel Medina (Medina), DavidsMarketing Manager, went to Ozamiz City to check on the shipment. Medina was able to confer with Engr. Rada whotold him that the loan was not yet released and asked if it was possible to withdraw the shipped items. Medinaagreed.

When no payment was made after several months, Medina was constrained to send a demand letter, datedSeptember 15, 1993, which MOELCI duly received. Engr. Rada replied in writing that the goods were still in thewarehouse of William Lines again reiterating that the loan had not been approved by NEA. This prompted Medina tohead back to Ozamiz City where he found out that the goods had already been released to MOELCI evidenced by


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the shipping companys copy of the Bill of Lading which was stamped Released,and with the notation that thearrastre charges in the amount of P5,095.60 had been paid. This was supported by a receipt of payment with thecorresponding cargo delivery receipt issued by the Integrated Port Services of Ozamiz, Inc.

Subsequently, demand letters were sent to MOELCI demanding the payment of the whole amount plus the balanceof previous purchases of other electrical hardware. Aside from the formal demand letters, David added that severastatements of accounts were regularly sent through the mails by the company and these were never disputed byMOELCI.

On February 17, 1994, David filed a complaint for specific performance with damages with the RTC. In responseMOECLI moved for its dismissal on the ground that there was lack of cause of action as there was no contract ofsale, to begin with, or in the alternative, the said contract was unenforceable under the Statute of Frauds. MOELCargued that the quotation letter could not be considered a binding contract because there was nothing in the saiddocument from which consent, on its part, to the terms and conditions proposed by David could be inferred. Davidknew that MOELCIs assent could only be obtained upon the issuance of a purchase order in favor of the biddechosen by the Canvass and Awards Committee.

Eventually, pursuant to Rule 16, Section 5 of the Rules of Court, MOELCI filed its Motion for Preliminary Hearing ofAffirmative Defenses and Deferment of the Pre-Trial Conference which was denied by the RTC to abbreviateproceedings and for the parties to proceed to trial and avoid piecemeal resolution of issues. The order denying itsmotion was raised with the CA, and then with this Court. Both courts sustained the RTC ruling.

Trial ensued. By reason of MOELCIs continued failure to appear despite notice, David was allowed to present histestimonial and documentary evidenceex parte, pursuant to Rule 18, Section 5 of the Rules. A Very Urgent Motionto Allow Defendant to Present Evidence was filed by MOELCI, but was denied.

In its July 17, 2008 Decision, the RTC dismissed the complaint. It found that although a contract of sale wasperfected, it was not consummated because David failed to prove that there was indeed a delivery of the subjecitem and that MOELCI received it.[3]

Aggrieved, David appealed his case to the CA.

On July 8, 2010, the CA affirmed the ruling of the RTC. In the assailed decision, the CA reasoned out that although

David was correct in saying that MOELCI was deemed to have admitted the genuineness and due execution of thequotation letter (Exhibit A), wherein the signatures of the Chairman and the General Manager of MOELCappeared, he failed to offer any textual support to his stand that it was a contract of sale instead of a mere pricequotation agreed to by MOELCI representatives. On this score, the RTC erred in stating that a contract of sale wasperfected between the parties despite the irregularities that tainted their transaction. Further, the fact that MOELCIsrepresentatives agreed to the terms embodied in the agreement would not preclude the finding that said contractwas at best a mere contract to sell.

A motion for reconsideration was filed by David but it was denied.[4]

Hence, this petition.

Before this Court, David presents the following issues for consideration:

I.WHETHER OR NOT THERE WAS A PERFECTED

CONTRACT OF SALE.II.WHETHER OR NOT THERE WAS A DELIVERYTHAT CONSUMMATED THE CONTRACT.

The Court finds merit in the petition.

I.


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On the issue as to whether or not there was a perfected contract of sale, this Court is required to delve into theevidence of the case. In a petition for review on certiorari under Rule 45 of the Rules of Court, the issues to bethreshed out are generally questions of law only, and not of fact. This was reiterated in the case of Buenaventura vPascual,

[5]where it was written:Time and again, this Court has stressed that its jurisdiction in a petition for review oncertiorari under Rule 45 of theRules of Court is limited to reviewing only errors of law, not of fact, unless the findings of fact complained of aredevoid of support by the evidence on record, or the assailed judgment is based on the misapprehension of facts.The trial court, having heard the witnesses and observed their demeanor and manner of testifying, is in a better

position to decide the question of their credibility. Hence, the findings of the trial court must be accorded the highesrespect, even finality, by this Court.

That being said, the Court is not unmindful, however, of the recognized exceptions well-entrenched in jurisprudenceIt has always been stressed that when supported by substantial evidence, the findings of fact of the CA areconclusive and binding on the parties and are not reviewable by this Court, unless the case falls under any of thefollowing recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;(2) When the inference made is manifestly mistaken, absurd or impossible;(3) Where there is a grave abuse of discretion:(4) When the judgment is based on a misapprehension of facts;(5) When the findings of fact are conflicting;(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contraryto the admissions of both appellant and appellee;(7) When the findings are contrary to those of the tr ia l court;(8) When the findings of fact are without citation of specific evidence on which the conclusions are based;(9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by therespondents; and(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence andcontradicted by the evidence on record.

[6][Emphasis supplied]

In this case, the CA and the RTC reached different conclusions on the question of whether or not there was aperfected contract of sale. The RTC ruled that a contract of sale was perfected although the same was notconsummated because David failed to show proof of delivery.[7]The CA was of the opposite view. The CA wrote:

Be that as it may, it must be emphasized that the appellant failed to offer any textual support to his insistence thatExhibit A is a contract of sale instead of a mere price quotation conformed to by MOELCI representatives. To thaextent, the trial court erred in laying down the premise that indeed a contract of sale is perfected between the

parties despite the irregularities attending the transaction. x x x

That representatives of MOELCI conformed to the terms embodied in the agreement does not preclude the findingthat such contract is, at best, a mere contract to sell with stipulated costs quoted should it ultimately ripen into one ofsale. The conditions upon which that development may occur may even be obvious from statements in theagreement itself, that go beyond just captions. Thus, the appellant opens with, WE are pleased to submit ourquotation xxx. The purported contract also ends with. Thank you for giving us the opportunity to quote on yourrequirements and we hope to receive your order soon apparently referring to a purchase order which MOELC

contends to be a formal requirement for the entire transaction.

[8]

In other words, the CA was of the position that Exhibit A was at best a contract to sell.

A perusal of the records persuades the Court to hold otherwise.

The elements of a contract of sale are, to wit: a) Consent or meeting of the minds, that is, consent to transferownership in exchange for the price; b) Determinate subject matter; and c) Price certain in money or itsequivalent.[9] It is the absence of the first element which distinguishes a contract of sale from that of a contract tosell.


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In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaningthe prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contractto sell until the happening of an event, such as, in most cases, the full payment of the purchase price. What theseller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount ofthe purchase price is delivered to him. In other words, the full payment of the purchase price partakes of asuspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and, thus, ownership isretained by the prospective seller without further remedies by the prospective buyer.[10]

In a contract of sale, on the other hand, the title to the property passes to the vendee upon the delivery of the thing

sold. Unlike in a contract to sell, the first element of consent is present, although it is conditioned upon thehappening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, theperfection of the contract of sale is completely abated. However, if the suspensive condition is fulfilled, the contractof sale is thereby perfected, such that if there had already been previous delivery of the property subject of the saleto the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further achaving to be performed by the seller. The vendor loses ownership over the property and cannot recover it until andunless the contract is resolved or rescinded.[11]

An examination of the alleged contract to sell, Exhibit A, despite its unconventional form, would show that saiddocument, with all the stipulations therein and with the attendant circumstances surrounding it, was actually aContract of Sale. The rule is that it is not the title of the contract, but its express terms or stipulations that determinethe kind of contract entered into by the parties.[12]First, there was meeting of minds as to the transfer ofownership of the subject matter.The letter (Exhibit A), though appearing to be a mere price quotation/proposalwas not what it seemed. It contained terms and conditions, so that, by the fact that Jimenez, Chairman of theCommittee on Management, and Engr. Rada, General Manager of MOELCI, had signed their names under the wordCONFORME, they, in effect, agreed with the terms and conditions with respect to the purchase of the subject 1 0MVA Power Transformer. As correctly argued by David, if their purpose was merely to acknowledge the receipt ofthe proposal, they would not have signed their name under the word CONFORME.

Besides, the uncontroverted attending circumstances bolster the fact that there was consent or meeting of minds inthe transfer of ownership. To begin with, a board resolution was issued authorizing the purchase of the subjectpower transformer. Next, armed with the said resolution, top officials of MOELCI visited Davi ds office in QuezonCity three times to discuss the terms of the purchase. Then, when the loan that MOELCI was relying upon to financethe purchase was not forthcoming, MOELCI, through Engr. Rada, convinced David to do away with the 50%downpayment and deliver the unit so that it could already address its acute power shortage predicament, to which

David acceded when it made the delivery, through the carrier William Lines, as evidenced by a bill of lading.

Second,the document specified a determinate subject matterwhich was one (1) Unit of 10 MVA PoweTransformer with corresponding KV Line Accessories. And th i rd, the document stated categorically the pricecertain in moneywhich was P5,200,000.00 for one (1) unit of 10 MVA Power Transformer and P2,169,500.00 forthe KV Line Accessories.

In sum, since there was a meeting of the minds, there was consent on the part of David to transfer ownership of thepower transformer to MOELCI in exchange for the price, thereby complying with the first element. Thus, the saiddocument cannot just be considered a contract to sell but rather a perfected contract of sale.

II.

Now, the next question is, was there a delivery?

MOELCI, in denying that the power transformer was delivered to it, argued that the Bill of Lading which David wasrelying upon was not conclusive. It argued that although the bill of lading was stamped Released, there wasnothing in it that indicated that said power transformer was indeed released to it or delivered to its possession. Forthis reason, it is its position that it is not liable to pay the purchase price of the 10 MVA power transformer.

This Court is unable to agree with the CA that there was no delivery of the items. On the contrary, there was deliveryand release.

To begin with, among the terms and conditions of the proposal to which MOELCI agreed stated:


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2. DeliveryNinety (90) working days upon receipt of your purchase order and downpayment.

C&F Mani la, freight, handl ing, insurance, custom duties and inc idental expenses shal l be for th e account o

MOELCI II.[13]

(Emphasis supplied)

On this score, it is clear that MOELCI agreed that the power transformer would be delivered and that the freight,handling, insurance, custom duties, and incidental expenses shall be shouldered by it.

On the basis of this express agreement, Article 1523 of the Civil Code becomes applicable. It provides:

Where, in pursuance of a contract of sale, the sel ler is authorized or required to send the goods to the buyerdel ivery of the goo ds to a carr ier, whether named by the buyer or not, for the purpos e of transmission to the

buyer is deemed to be a del ivery of the goods to the buy er, except in the cases provided for in Article 1503first, second and third paragraphs, or unless a contrary intent appears. (Emphasis supplied)

Thus, the delivery made by David to William Lines, Inc., as evidenced by the Bill of Lading, was deemed to be adelivery to MOELCI. David was authorized to send the power transformer to the buyer pursuant to their agreementWhen David sent the item through the carrier, it amounted to a delivery to MOELCI.

Furthermore, in the case of Behn, Meyer & Co. (Ltd.) v. Yangco,[14] it was pointed out that a specification in acontract relative to the payment of freight can be taken to indicate the intention of the parties with regard to the place

of delivery. So that, if the buyer is to pay the freight, as in this case, it is reasonable to suppose that the subject ofthe sale is transferred to the buyer at the point of shipment. In other words, the title to the goods transfers to thebuyer upon shipment or delivery to the carrier.

Of course, Article 1523 provides a mere presumption and in order to overcome said presumption, MOELCI shouldhave presented evidence to the contrary. The burden of proof was shifted to MOELCI, who had to show that the ruleunder Article 1523 was not applicable. In this regard, however, MOELCI failed.

There being delivery and release, said fact constitutes partial performance which takes the case out of theprotection of the Statute of Frauds. It is elementary that the partial execution of a contract of sale takes thetransaction out of the provisions of the Statute of Frauds so long as the essential requisites of consent of thecontracting parties, object and cause of the obligation concur and are clearly established to be present. [15]

That being said, the Court now comes to Davids prayer that MOELCI be made to pay the total sum ofP5,472,722.27 plus the stipulated interest at 24% per annum from the filing of the complaint. Although the Courtagrees that MOELCI should pay interest, the stipulated rate is, however, unconscionable and should be equitablyreduced. While there is no question that parties to a loan agreement have wide latitude to stipulate on any interestrate in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interesteffective January 1, 1983, it is also worth stressing that interest rates whenever unconscionable may still be reducedto a reasonable and fair level. There is nothing in the said circular which grants lenders carte blancheauthority toraise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of theirassets.[16]Accordingly, the excessive interest of 24% per annum stipulated in the sales invoice should be reduced to12% per annum.

Indeed, David was compelled to file an action against MOELCI but this reason alone will not warrant an award ofattorneys fees. It is settled that the award of attorneys fees is the exception ratherthan the rule. Counsels fees arenot awarded every time a party prevails in a suit because of the policy that no premium should be placed on theright to litigate. Attorneys fees, as part of damages, are not necessarily equated to the amount paid by a l itigant to alawyer. In the ordinary sense, attorneys fees represent the reasonable compensation paid to a lawyer by his clientfor the legal services he has rendered to the latter; while in its extraordinary concept, they may be awarded by thecourt as indemnity for damages to be paid by the losing party to the prevailing party. Attorneys fees as part ofdamages are awarded only in the instances specified in Article 2208 of the Civil Code17 which demands factual,legal, and equitable justification. Its basis cannot be left to speculation or conjecture. In this regard, none wasproven.


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Moreover, in the absence of stipulation, a winning party may be awarded attorneys fees only in case plaintiffs actionor defendants stand is so untenable as to amount to gross and evident bad faith.[18]MOELCIs case cannot besimilarly classified.

Also, Davids claim for the balance of P73,059.76 plus the stipulated interest is denied for being unsubstantiated.

WHEREFORE, the petition is GRANTED. The July 8, 2010 Decision of the Court of Appeals IsREVERSEDand SET ASIDE. Respondent Misamis Occidental II Electric Cooperative, Inc. is ordered to paypetitioner Virgilio S. David the total sum of P5,472,722.27 with interest at the rate of 12% per annum reckoned from

the filing of the complaint until fully paid.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Reyes,*and Perlas-Bernabe, JJ., concur.


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SECOND DIVISION

ALEXANDER ALEX MACASAET, G.R. No. 172446Petitioner,Present:

QUISUMBING, J.,- versus - Chairperson,

CARPIO,CARPIO MORALES,TINGA, andVELASCO, JR., JJ.

R. TRANSPORT CORPORATION,Respondent.

Promulgated:

October 10, 2007

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

D E C I S I O N

TINGA, J.:

This petition seeks the reversal of the Decision[1]of the Court of Appeals dated 5 October 2005 in CA G.R. CV

No. 70585, as well as its Resolution[2]dated 28 March 2006 denying petitioners motion for reconsideration.

First, the factual background.

On 3 January 1996, a Complaint for Recovery of Possession and Damages[3]was filed by herein responden

R. Transport Corporation against herein petitioner Alexander Macasaet before the Regional Trial Court (RTC)

of Makati, Branch 147. The complaint alleged that R. Transport was a holder of Certificates of Public Convenience

(CPC) to operate a public utility bus service within Metro Manila and the provinces whereas New Mindoro Transport

Classic (NMTC), represented by petitioner, operates a transportation company in Oriental Mindoro. On 11 Octobe1995, and Macasaet entered into a Deed of Sale with Assumption of Mortgage (deed of sale)

[4]over four (4

passenger buses[5]whereby Macasaet undertook to pay the consideration of twelve million pesos (P12,000,000.00

and assume the existing mortgage obligation on the said buses in favor of Phil. Hino Sales

Corporation. Accordingly, R. Transport delivered to Macasaet two (2) passenger buses.

Despite repeated demands, however, Macasaet failed to pay the stipulated purchase price. This prompted

R. Transport to file a complaint seeking the issuance of a writ of replevin, praying for judgment declaring R.
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Transport as the lawful owner and possessor of the passenger buses and ordering Macasaet to remit the amount

of P660,000.00 representing the income generated by the two buses from 16 October 1995 to 2 January 1996 .[6]

Prior to the execution of the contract, Special Trip Contract was entered into by the parties on 8

October 1995.[7] This contract stipulated that R. Transport would lease the four buses subject of the deed of sale to

Macasaet for the sum of P10,000.00 a day per bus or a total of P280,000.00 for the duration of one week, from 15-

22 October 1995.[8]

Respondents finance officer testified that the purpose of the contract was to support the deliveryof the first two buses pending formal execution of the deed of sale.[9]

On 8 January 1996, on R. Transports motion, the trial court issued a writ of seizure [10]ordering the sheriff to

take possession of the two buses in NMTC subject to R. Transports filing of a bond in the amount

of P12,000,000.00. The sheriff recovered the two buses and delivered them to R. Transport on 16 January 1996.[11]

For his defense, petitioner alleged that he had paid respondent the full consideration of P12,000,000.00 and

had agreed to assume the mortgage obligation in favor of Phil. Hino Sales Corporation. He claimed ownership ove

the four passenger buses, including the two buses already delivered to him. He further contended that he hadalready remitted P120,000.00 to respondent as partial payment of the mortgage obligation. Petitioner admitted tha

he had been earning at least P7,000.00 per day on each of the buses.[12] For his counterclaim, he prayed for the

return of the bus units seized and the immediate delivery of the other two units, as well as for payment o

damages.[13]

In its Decision[14]dated 15 February 2001, the RTC upheld the right of respondent to possess the two buses

but dismissed its claim for recovery of unpaid rentals for the use of the two buses. The dispositive portion of the

decision reads as follows:

WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the defendant andagainst plaintiff, dismissing the Complaint as regards the claim for recovery of the unpaid rentals of the two (2)passenger buses which were used by the defendant from October 16, 1995 until January 16, 1996 for lack ofevidence.

SO ORDERED.[15]

The trial court observed that there was no basis for the payment of unpaid rentals because respondent failed

to formally offer in evidence the records of operational expenses incurred by the buses

delivered to petitioner and marked as Exhibits W, W-1 to W-3.[16] The trial court did not bother to give a

definitive ruling on the issues related to the counterclaim for specific performance of the deed of sale on the groundthat the issuance of a writ of replevin effectively disposed of the cause of action in the principal complaint, which is

recovery of possession. The trial court was likewise silent with respect to the status of the deed of sale.[17]

Dissatisfied with the RTCs refusal to award rentals, respondent filed a petition for review before the Court o

Appeals asserting its right as an owner to the fruits of the two passenger buses, over the fruits thereof, i.e., the

income derived from their use. The Court of Appeals, in its Decision dated 5 October 2005, sustained the tria

courts finding that ownership over the passenger buses remained with respondent.
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Unlike the RTC, the Court of Appeals ruled that the deed of sale was not perfected, thus, respondent

retained ownership over the buses. It further ordered petitioner to remit the income from the passenger buses in the

amount of P7,000.00 per day for the period between 16 October 1995 and 16 January 1996, deducting therefrom

the amount of P120,000.00 which had already been remitted to respondent.[18]

Macasaet filed a motion for reconsideration which the appellate court denied.

Hence, the instant petition raising this sole issue: Is Section 34 of Rule 132 of the Rules of Court which

states that the court shall consider no evidence which has not been formally offered applicable in the case at

bar?[19] However, other interrelated issues have to be looked into to resolve the controversy.

Petitioner argues in the main that there was no legal and factual basis for the Court of Appeals to order the

remittance of income. He harps on the fact that there was no lease agreement alleged in respondents complaint to

support its claim for unpaid rentals. He reiterates the trial courts finding that the exhibits tending to prove the

rentals were not formally offered in evidence. Moreover, no other competent evidence was presented to substantiateits claim for unpaid rentals.[20] Respondent, in its comment, merely parrots the ruling of the Court of Appeals,

petitioner notes.[21]

Crucial to the resolution of the case is the continuing efficacy of the deed of sale, which in turn is the basis in

determining the ownership of the buses. Respondent, on the other hand, claims that the contract was never

consummated for lack of consideration and because of the subsequent disapproval of the security finance needed

for petitioner to assume the mortgage obligation. On the other hand, petitioner asserts ownership over the subjec

buses by virtue of payment of the stipulated consideration for the sale.

The appellate court declared that the non-perfection of the deed of sale precluded petitioner from possessing

and enjoying the buses, including the income thereof. Explained the appellate court:

True, the plaintiff-appellant and the defendant-appellee have no agreement as to the payment of rentals fothe subject passenger buses, since what was actually agreed upon by the parties herein, was not the lease, but thesale of the subject buses to the defendant-appellee in the amount ofP12,000,000.00, with assumption of mortgage,as evidenced by the Deed of Sale with Assumption of Mortgage.

It was pursuant to this Deed of Sale with Assumption of Mortgage that the subject two passenger buseswere delivered by the plaintiff-appellant to the defendant-appellee in October,[sic] 1995. The said contract was thebasis of the defendant-appellees possession and enjoyment of the subject property, which includes entitlement tothe income thereof.

However, the aforementioned contract of sale has never been perfected.

Firstly, the court a quo found that no payment has been made by the defendant-appellee, for otherwise, icould not have upheld the plaintiff-appellants possession over the subject buses.[22]
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The Court of Appeals erred in stating that the deed of sale was not perfected, for it was. There was no

consummation, though. However, the rescission or resolution of the deed of sale is in order.

The essential requisites of a contract under Article 1318 of the New Civil Code are: (1) consent of the

contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation

which is established. Thus, contracts, other than real contracts are perfected by mere consent which is manifested

by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract

Once perfected, they bind other contracting parties and the obligations arising therefrom have the force of law

between the parties and should be complied with in good faith. The parties are bound not only to the fulfillment o

what has been expressly stipulated but also to the consequences which, according to their nature, may be in

keeping with good faith, usage and law.[23]

Being a consensual contract, sale is perfected at the moment there is a meeting of minds upon the thing

which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand

performance, subject to the provisions of the law governing the form of contracts.[24]A perfected contract of sale

imposes reciprocal obligations on the parties whereby the vendor obligates himself to transfer the ownership of and

to deliver a determinate thing to the buyer who, in turn, is obligated to pay a price certain in money or its

equivalent.[25] Failure of either party to comply with his obligation entitles the other to rescission as the power to

rescind is implied in reciprocal obligations.[26]

Applying these legal precepts to the case at bar, we hold that respondent has the right to rescind or cance

the deed of sale in view of petitioners failure to pay the stipulated consideration. Montecillo v. Reynes,[27]cited by

the appellate court, is particularly instructive in distinguishing the legal effects of failure to pay consideration and

lack of consideration:

x x x Failure to pay the consideration is different from lack of consideration. The former results in a right todemand the fulfillment or cancellation of the obligation under an existing contract, while the latter prevents theexistence of a valid contract.

Where the deed of sale states that the purchase price has been paid but in fact has never been paid, thedeed of sale is null and void ab initiofor lack of consideration. x x x[28]

The Court of Appeals however failed to consider that in the instant case, there was failure on the part of petitioner to

pay the purchase price and to complete the assumption of mortgage. The latter argued before the lower court tha

payment was in fact made and counterclaimed for the immediate delivery of the two other passenger buses and

payment of damages.[29] However, this claim remained a claim and was not substantiated.

While the Court of Appeals relied on the text of the deed of sale which adverts to payment of the purchase

price,[30]the non-payment of the purchase price was no longer an issue at the appellate level. Respondent

presented strong evidence that petitioner did not pay the purchase price, and that paved the way for the issuance of

a writ of replevin. Petitioner did not challenge the finding of the trial court before the Court of Appeals and this
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Court. He did not also controvert the non-consummation of the assumption of mortgage at any level of the

proceedings.

Non-payment of the purchase price of property constitutes a very good reason to rescind a sale for it

violates the very essence of the contract of sale.[31]While it is preferable that respondent instead should have filed

an action to resolve or cancel the deed as the right to do so must be invoked judicially,[32]this shortcoming was

cured when the complaint itself made out a case for rescission or resolution for failure of petitioner to comply with

his obligation to pay the full purchase price. The complaint relevantly alleged:

x x x x

3. (a) That on October 11, 1995, the plaintiff and the defendant entered into and executed a Deed of Salewith Assumption of Mortgage with plaintiff as Vendor and the defendant as Vendee covering four (4) units ofpassenger airconditioned buses. x x x

3. (b) That the plaintiff and the defendant in said Deed of Sale with Assumption of Mortgage x x x hereoagreed that the price of the sale of the above-described motor vehicles is in the sum of PESOS TWELVE MILLION

(P12,000,000.00), Philippine Currency, with the stipulation that the defendant as Vendee will assume the existingmortgage of the above-described motor vehicle with PHIL. HINO SALES CORPORATION and consequently, wilassume the balance of the remaining obligation due to PHIL. HINO SALES CORPORATION as agreed upon in thesaid Deed of Sale with Assumption of Mortgage;

3. (c) That pursuant to said Deed of Sale with Assumption of Mortgage, the plaintiff delivered to thedefendant at Calapan, Oriental Mindoro, the first two (2) motor vehicles x x x withholding the other two (2passenger buses pending the payment by the defendant to the plaintiff of the purchase price of the sale of PESOSTWELVE MILLION (P12,000,000.00), Philippine currency and assumption of mortgage by said defendant obligatinghimself to pay the remaining balance of the obligation due to the PHIL. HINO SALES CORPORATION constitutedover the above-described motor vehicles;

3. (d) That inspite of repeated demands made by the plaintiff to the defendant to pay the purchase price of

the sale x x x the defendant, in evident bad faith, refused and failed and continue to refuse and fail to pay theplaintiff the purchase price of the said vehicles;

x x x x

4. b.) That the plaintiff-applicant is the owner of the two (2) buses claimed as above-described and is entitledto the rightful possession thereof x x x

4. c.) That the above-described two (2) units of passenger buses are wrongfully detained by the defendantpretending that he is the owner under the Deed of Sale with Assumption of Mortgage which pretension is falsebecause the defendant has not paid the plaintiff any single centavo out of the PESOS TWELVE MILLION(P12,000,000.00), Philippine currency, the purchase price of the sale of the four (4) passenger buses,[33]

x x x x

As previously noted, petitioner did not pay the full purchase price as stipulated in the contract whereas

respondent complied with its obligation when it delivered the two buses to petitioner.

A necessary consequence of rescission is restitution with payment of damages. Article 1191 provides:

x x x x
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The injured party may choose between the fulfillment and the rescission of the obligation, with the payment ofdamages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter shouldbecome impossible.

x x x x

Also, corollary to the rescission of the contract of sale is the recovery of possession of the object thereof

Thus, petitioners possession over the passenger buses became unlawful when upon demand for return, hewrongfully retained possession over the same.

In ordering petitioner to remit to respondent the income derived from the passenger buses, the appellate cour

ratiocinated thus:

Although the parties herein did not agree on the rentals for the use of the property, the fact that thedefendant-appellee was able to use the two passenger buses for the months of October, [sic] 1995 to January, [sic1996, and has derived income therefrom, was acknowledged by the court a quo and the defendant-appellee himself

Under such circumstances, it is but fair that the defendant-appellee be made to pay reasonable rentals forthe use of the two passenger buses from the time that they were delivered, until they were seized from him. It wouldbe against the equitable proscription against unjust enrichment for the defendant-appellee to keep the income froma property over which he has no legal right. It would be unfair to excuse the defendant-appellee from the paymenof reasonable rentals because he enjoyed and made use of the subject passenger buses. It is a basic rule in lawthat no one shall unjustly enrich himself at the expense of another. Niguno non deue enriquecerse tortizamentecondao de otro.

Thus, a modification of the decision of the court a quois in order.

In view of the plaintiff-appellants failure to substantiate its claim for the unpaid rentals amountingto P660,000.00, we could not grant the same.

However, we deem it just for the defendant-appellee to remit the plaintiff-appellant the income he derivedfrom the subject passenger buses in the amount of P7,000.00 per day within the period that they were in thedefendant-appellants possession, that is from October 16, 1997 to January 16, 1995, minus the amounof P120,000.00 which the defendant-appellee already remitted to the plaintiff-appellant.[34]

It can be inferred from this decision that the appellate court did not consider petitioner liable for the unpaid

rentals when it noted that respondent had failed to support its claim over it. Instead, it concluded that he was liable

to respondent for damages, in the form of reasonable rentals for the use of the passenger buses.

However, with respect to the amount of damages, we differ from the award of the appellate court. Settled is

the rule that actual damages must be proved with reasonable degree of certainty. A party is entitled only up to such

compensation for the pecuniary loss that he has duly proven. It cannot be presumed. Absent proof of the amount o

actual damages sustained, the court cannot rely on speculations, conjectures, or guesswork as to the fact and

amount of damages, but must depend upon competent proof that they have been suffered by the injured party and

on the best obtainable evidence of the actual amount thereof.[35]
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The appellate court arrived at the amount of P7,000.00 per day as income for the use of the two passenger

buses due to respondent on the basis of the allegations in the answer of petitioner.[36] The award cannot be

sustained because no evidence was produced to support this averment made by petitioner. Petitioner did not

present any record or journal that would have evidenced the earnings of the passenger buses for said period. Bare

allegations would not suffice.

Since the amount of damages awarded by the Court of Appeals was founded merely on speculations, we turn

to the provisions of the Special Trip Contract. In said contract, the rental is fixed at P10,000.00 per day for each

bus. This duly executed contract was presented, marked and formally offered in evidence. The fact that Macasae

voluntarily signed the contract evinced his acquiescence to its terms, particularly the amount of rentals. Therefore

the amount of P1,460,000.00 is deemed reasonable compensation for the use of the passenger buses, computed

as follows:

Amt of rentals per bus: P10,000.00x No. of buses: 2

__________Amt of rentals per day: P 20,000.00x No. of days (16 Oct-2 Jan) 79

____________P1,580,000.00

- Payment by Macasaet 120,000.00____________

TOTAL P1,460,000.00

Since the amount awarded as damages in the form of reasonable rentals is more than the amount of rentals

specified in the complaint, additional filing fees corresponding to the difference between the amount prayed for inthe complaint and the award based on the evidence should be assessed as a lien on the judgment, as mandated by

Section 2, Rule 141 of the Rules of Court, to wit:

SEC. 2. Fees in lien. Where the court in its final judgment awards a claim not alleged, or a relief differentfrom, or more than that claimed in the pleading, the party concerned shall pay the additional fees which shallconstitute a lien on the judgment in satisfaction of said lien. The clerk of court shall assess and collect thecorresponding fees.[37]

WHEREFORE, the petition is DENIED. However, the decision of the Court of Appeals is MODIFIED in tha

petitioner is ORDERED to pay respondent damages in the form of reasonable rentals in the amount

of P1,460,000.00 with interest at 12% per annum from the finality of this decision, with a lien thereon corresponding

to the additional filing fees adverted to above. The Clerk of Court of the Regional Trial Court of Makati is directed to

assess and collect the additional filing fees.
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SO ORDERED.

DANTE O. TINGAAssociate Justice

SECOND DIVISION

[G.R. No. 120820. August 1, 2000]

SPS. FORTUNATO SANTOS and ROSALINDA R. SANTOS, peti t ioners, vs. COURT OF APPEALS, SPSMARIANO R. CASEDA and CARMEN CASEDA, respondents.

D E C I S I O NQUISUMBING,J.:

For review on certiorari is the decision of the Court of Appeals, dated March 28, 1995, in CA-G.R. CV No.30955, which reversed and set aside the judgment of the Regional Trial Court of Makati, Branch 133, in Civil CaseNo. 89-4759. Petitioners (the Santoses) were the owners of a house and lot informally sold, with conditions, toherein private respondents (the Casedas). In the trial court, the Casedas had complained that the Santoses refused

to deliver said house and lot despite repeated demands. The trial court dismissed the complaint for specificperformance and damages, but in the Court of Appeals, the dismissal was reversed, as follows: WHEREFORE, in view of the foregoing, the decision appealed from is hereby REVERSED and SET ASIDE and anew one entered:1. GRANTING plaintiffs-appellants a period of NINETY (90) DAYS from the date of the finality of judgment withinwhich to pay the balance of the obligation in accordance with their agreement;2. Ordering appellees to restore possession of the subject house and lot to the appellants upon receipt of the fullamount of the balance due on the purchase price; and 3. No pronouncement as to costs.SO ORDERED.

[1]The undisputed facts of this case are as follows:The spouses Fortunato and Rosalinda Santos owned the house and lot consisting of 350 square meters

located at Lot 7, Block 8, Better Living Subdivision, Paranaque, Metro Manila, as evidenced by TCT (S-11029)28005 of the Register of Deeds of Paranaque. The land together with the house, was mortgaged with the RuraBank of Salinas, Inc., to secure a loan of P150,000.00 maturing on June 16, 1987.
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Sometime in 1984, Rosalinda Santos met Carmen Caseda, a fellow market vendor of hers in Pasay City andsoon became very good friends with her. The duo even became kumadres when Carmen stood as a weddingsponsor of Rosalinda's nephew.

On June 16, 1984, the bank sent Rosalinda Santos a letter demanding payment of P16,915.84 in unpaidinterest and other charges. Since the Santos couple had no funds, Rosalinda offered to sell the house and lot toCarmen. After inspecting the real property, Carmen and her husband agreed.

Sometime that month of June, Carmen and Rosalinda signed a document, which reads:Received the amount of P54,100.00 as a partial payment of Mrs. Carmen Caseda to the (total) amount of350,000.00 (house and lot) that is own (sic) by Mrs. Rosalinda R. Santos.(Mrs.) (Sgd.) Carmen Caseda

direct buyerMrs. Carmen Caseda(Sgd.) Rosalinda Del R. Santos

OwnerMrs. Rosalinda R. SantosHouse and LotBetter Living Subd. Paraaque, Metro ManilaSection V Don Bosco St."[2]

The other terms and conditions that the parties agreed upon were for the Caseda spouses to pay: (1) thebalance of the mortgage loan with the Rural bank amounting to P135,385.18; (2) the real estate taxes; (3) theelectric and water bills; and (4) the balance of the cash price to be paid not later than June 16, 1987, which was thematurity date of the loan.[3]

The Casedas gave an initial payment of P54,100.00 and immediately took possession of the property, whichthey then leased out. They also paid in installments, P81,696.84 of the mortgage loan. The Casedas, however, in1987. Notwithstanding the state of their finances, Carmen nonetheless paid in March 1990, the real estate taxes onthe property for 1981-1984. She also settled the electric bills from December 12, 1988 to July 12, 1989. All thesepayments were made in the name of Rosalinda Santos.

In January 1989, the Santoses, seeing that the Casedas lacked the means to pay the remaining installmentsand/or amortization of the loan, repossessed the property. The Santoses then collected the rentals from thetenants.

In February 1989, Carmen Caseda sold her fishpond in Batangas. She then approached petitioners andoffered to pay the balance of the purchase price for the house and lot. The parties, however, could not agree, andthe deal could not push through because the Santoses wanted a higher price. For understandably, the real estateboom in Metro Manila at this time, had considerably jacked up realty values.

On August 11, 1989, the Casedas filed Civil Case No. 89-4759, with the RTC of Makati, to have the Santosesexecute the final deed of conveyance over the property, or in default thereof, to reimburse the amount ofP180,000.00 paid in cash and P249,900.00 paid to the rural bank, plus interest; as well as rentals for eight monthsamounting to P32,000.00, plus damages and costs of suit.

After trial on the merits, the lower court disposed of the case as follows:WHEREFORE, judgment is hereby ordered:

(a) dismissing plaintiff's (Casedas') complaint; and(b) declaring the agreement marked as Annex "C" of the complaint rescinded. Costs against plaintiffs.

SO ORDERED.[4]

Said judgment of dismissal is mainly based on the trial court's finding that:
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Admittedly, the purchase price of the house and lot was P485,385.18, i.e. P350,000.00 as cash payment andP135,385.18, assumption of mortgage. Of it plaintiffs [Casedas] paid the following: (1) P54,100.00 down payment;and (2) P81,694.64 installment payments to the bank on the loan (Exhs. E to E-19) or a total of P135,794.64. Thus,plaintiffs were short of the purchase price. They cannot, therefore, demand specific performance.[5]

The trial court further held that the Casedas were not entitled to reimbursement of payments already madereasoning that:As, earlier mentioned, plaintiffs made a total payment of P135,794.64 out of the purchase price of

P485,385.18. The property was in plaintiffs' possession from June 1984 to January 1989 or a period of fifty-fivemonths. During that time, plaintiffs leased the property. Carmen said the property was rented for P25.00 a day orP750.00 a month at the start and in 1987 it was increased to P2,000.00 and P4,000.00 a month. But the evidenceis not precise when the different amounts of rental took place. Be that as it may, fairness demands that plaintiffsmust pay defendants for their exercise of dominical rights over the property by renting it to others. The amount ofP2,000.00 a month would be reasonable based on the average of P750.00, P2,000.00, P4,000.00 lease-rentalscharged. Multiply P2,000.00 by 55 months, the plaintiffs must pay defendants P110,000.00 for the use of theproperty. Deducting this amount from the P135,794.64 payment of the plaintiffs on the property, the difference isP25,794.64. Should the plaintiffs be entitled to a reimbursement of this amount? The answer is in thenegative. Because of failure of plaintiffs to liquidated the mortgage loan on time, it had ballooned from its originalfigure of P135,384.18 as of June 1984 to P337,280.78 as of December 31, 1988. Defendants [Santoses] had to paythe last amount to the bank to save the property from foreclosure. Logically, plaintiffs must share in the burdenarising from their failure to liquidate the loan per their contractual commitment. Hence, the amount of P25,794.64 astheir share in the defendants' damages in the form of increased loan-amount, is reasonable.[6]

On appeal, the appellate court, as earlier noted, reversed the lower court. The appellate court held thatrescission was not justified under the circumstances and allowed the Caseda spouses a period of ninety days withinwhich to pay the balance of the agreed purchase price.

Hence, this instant petition for review on certiorarifiled by the Santoses.Petitioners now submit the following issues for our consideration:

WHETHER OR NOT THE COURT OF APPEALS HAS JURISDICTION TO DECIDE PRIVATE RESPONDENT'SAPPEAL INTERPOSING PURELY QUESTIONS OF LAW.WHETHER THE SUBJECT TRANSACTION IS NOT A CONTRACT OF ABSOLUTE SALE BUT A MERE ORALCONTRACT TO SELL IN WHICH CASE JUDICIAL DEMAND FOR RESCISSION (ART. 1592,[7]CIVIL CODE) ISNOT APPLICABLE.

ASSUMINGARGUENDO THAT A JUDICIAL DEMAND FOR RESCISSION IS REQUIRED, WHETHERPETITIONERS' DEMAND AND PRAYER FOR RESCISSION CONTAINED IN THEIR ANSWER FILED BEFORETHE TRIAL SATISFIED THE SAID REQUIREMENT.WHETHER OR NOT THE NON-PAYMENT OF MORE THAN HALF OF THE ENTIRE PURCHASE PRICEINCLUDING THE NON-COMPLIANCE WITH THE STIPULATION TO LIQUIDATE THE MORTGAGE LOAN ONTIME WHICH CAUSED GRAVE DAMAGE AND PREJUDICE TO PETITIONERS, CONSTITUTE SUBSTANTIALBREACH TO JUSTIFY RESCISSION OF A CONTRACT TO SELL UNDER ARTICLE 1191 [8](CIVIL CODE).

On the firstissue, petitioners argue that, since both the parties and the appellate court adopted the findings otrial court,[9]no questions of fact were raised before the Court of Appeals. According to petitioners, CA-G.R. CV No30955, involved only pure questions of law. They aver that the court a quo had no jurisdiction to hear, much lessdecide, CA-G.R. CV No. 30955, without running afoul of Supreme Court Circular No. 2-90 (4) [c].[10]

There is a question of law in a given case when the doubt or difference arises as to what the law is on a certainset of facts, and there is a question of fact when the doubt or difference arises as to the truth or falsehood of thealleged facts.[11]But we note that the first assignment of error submitted by respondents for consideration by theappellate court dealt with the trial court's finding that herein petitioners got back the property in question becauserespondents did not have the means to pay the installments and/or amortization of the loan.[12]The resolution of thisquestion involved an evaluation of proof, and not only a consideration of the applicable statutory and case
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laws. Clearly, CA-G.R. CV No. 30955 did not involve pure questions of law, hence the Court of Appeals hadjurisdiction and there was no violation of our Circular No. 2-90.

Moreover, we find that petitioners took an active part in the proceedings before the Court of Appeals, yet theydid not raise there the issue of jurisdiction. They should have raised this issue at the earliest opportunity before theCourt of Appeals. A party taking part in the proceedings before the appellate court and submitting his case for asdecision ought not to later on attack the court's decision for want of jurisdiction because the decision turns out to beadverse to him.[13]

The second and third issues deal with the question: Did the Court of Appeals err in holding that a judicia

rescission of the agreement was necessary? In resolving both issues, we must first make a preliminarydetermination of the nature of the contract in question: Was it a contract of sale, as insisted by respondents or amere contract to sell, as contended by petitioners?

Petitioners argue that the transaction between them and respondents was a mere contract to sell, and not acontract of sale, since the sole documentary evidence (Exh. D, receipt) referring to their agreement clearly showedthat they did not transfer ownership of the property in question simultaneous with its delivery and hence remained itsowners, pending fulfillment of the other suspensive conditions, i.e., full payment of the balance of the purchase priceand the loan amortizations. Petitioners point to Manuel v. Rodriguez, 109 Phil. 1 (1960) and Luzon Brokerage Co.Inc. v. Maritime Building Co., Inc., 43 SCRA 93 (1972), where we held that Article 1592 of the Civil Code isinapplicable to a contract to sell. They charge the court a quo with reversible error in holding that petitioners shouldhave judicially rescinded the agreement with respondents when the latter failed to pay the amortizations on the bankloan.

Respondents insist that there was a perfected contract of sale, since upon their partial payment of the purchaseprice, they immediately took possession of the property as vendees, and subsequently leased it, thus exercising althe rights of ownership over the property. This showed that transfer of ownership was simultaneous with thedelivery of the realty sold, according to respondents.

It must be emphasized from the outset that a contract is what the law defines it to be, taking into considerationits essential elements, and not what the contracting parties call it .[14]Article 1458[15]of the Civil Code defines acontract of sale. Note that the said article expressly obliges the vendor to transfer ownership of the thing sold as anessential element of a contract of sale. This is because the transfer of ownership in exchange for a price paid opromised is the very essence of a contract of sale.[16]We have carefully examined the contents of the unofficiareceipt, Exh. D, with the terms and conditions informally agreed upon by the parties, as well as the proofs submittedto support their respective contentions. We are far from persuaded that there was a transfer of ownershipsimultaneously with the delivery of the property purportedly sold. The records clearly show that, notwithstanding thefact that the Casedas first took then lost possession of the disputed house and lot, the title to the property, TCT No28005 (S-11029) issued by the Register of Deeds of Paraaque, has remained always in the name of RosalindaSantos.[17]Note further that although the parties had agreed that the Casedas would assume the mortgage, alamortization payments made by Carmen Caseda to the bank were in the name of Rosalinda Santos.[18]We likewisefind that the bank's cancellation and discharge of mortgage dated January 20, 1990, was made in favor of RosalindaSantos.[19]The foregoing circumstances categorically and clearly show that no valid transfer of ownership was madeby the Santoses to the Casedas. Absent this essential element, their agreement cannot be deemed a contract osale. We agree withpetitioners' averment that the agreement between Rosalinda Santos and Carmen Caseda is acontract to sell. In contracts to sell, ownership is reserved by the vendor and is not to pass until full payment of thepurchase price. This we find fully applicable and understandable in this case, given that the property involved is atitled realty under mortgage to a bank and would require notarial and other formalities of law before transfer thereofcould be validly effected.

In view of our finding in the present case that the agreement between the parties is a contract to sell, it followsthat the appellate court erred when it decreed that a judicial rescission of said agreement was necessary. This isbecause there was no rescission to speak of in the first place. As we earlier pointed out, in a contract to sell, titleremains with the vendor and does not pass on to the vendee until the purchase price is paid in full. Thus, in acontract to sell, the payment of the purchase price is a positive suspensive condition. Failure to pay the priceagreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor toconvey title from acquiring an obligatory force.[20]This is entirely different from the situation in a contract of salewhere non-payment of the price is a negative resolutory condition. The effects in law are not identical. In a contracof sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale isrescinded and set aside.[21]In a contract to sell, however, the vendor remains the owner for as long as the vendeehas not complied fully with the condition of paying the purchase price. If the vendor should eject the vendee fofailure to meet the condition precedent, he is enforcing the contract and not rescinding it. When the petitioners in
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the instant case repossessed the disputed house and lot for failure of private respondents to pay the purchase pricein full, they were merely enforcing the contract and not rescinding it. As petitioners correctly point out, the Court o

Appeals erred when it ruled that petitioners should have judicially rescinded the contract pursuant to Articles 1592and 1191 of the Civil Code. Article 1592 speaks of non-payment of the purchase price as a resolutory condition. Idoes not apply to a contract to sell.[22]As to Article 1191, it is subordinated to the provisions of Article 1592 whenapplied to sales of immovable property.[23]Neither provision is applicable in the present case.

As to the last issue, we need not tarry to make a determination of whether the breach of contract by privaterespondents is so substantial as to defeat the purpose of the parties in entering into the agreement and thus entitlepetitioners to rescission. Having ruled that there is no rescission to speak of in this case, the question is moot.

WHEREFORE, the instant petition is GRANTED and the assailed decision of the Court of Appeals in CA-G.RCV No. 30955 is REVERSEDand SET ASIDE. The judgment of the Regional Trial Court of Makati, Branch 133with respect to the DISMISSAL of the complaint in Civil Case No. 89-4759, is hereby REINSTATED. Nopronouncement as to costs.

SO ORDERED.Mendoza, Buena, and De Leon, Jr., JJ., concur.Bellosillo, J. (Chairman), on official leave.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 135634 May 31, 2000

HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA,petitioners,vs.VICENTE RODRIGUEZ,respondent.

MENDOZA, J .:

This is a petition for review on certiorari of the decision of the Court of Appeals1reversing the decision of the

Regional Trial Court, Naga City, Branch 19, in Civil Case No. 87-1335, as well as the appellate court's resolutiondenying reconsideration.

The antecedent facts are as follows:

Juan San Andres was the registered owner of Lot No. 1914-B-2 situated in Liboton, Naga City. On September 28,1964, he sold a portion thereof, consisting of 345 square meters, to respondent Vicente S. Rodriguez for P2,415.00.The sale is evidenced by a Deed of Sale.2

Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was appointed judicial administrator of thedecedent's estate in Special Proceedings No. R-21, RTC, Branch 19, Naga City. Ramon San Andres engaged theservices of a geodetic engineer, Jose Peero, to prepare a consolidated plan (Exh. A) of the estate. EngineerPeero also prepared a sketch plan of the 345-square meter lot sold to respondent. From the result of the survey, it

was found that respondent had enlarged the area which he purchased from the late Juan San Andres by 509 squaremeters.3

Accordingly, the judicial administrator sent a letter,4dated July 27, 1987, to respondent demanding that the lattervacate the portion allegedly encroached by him. However, respondent refused to do so, claiming he had purchasedthe same from the late Juan San Andres. Thereafter, on November 24, 1987, the judicial administrator brought anaction, in behalf of the estate of Juan San Andres, for recovery of possession of the 509-square meter lot.

In his Re-amended Answer filed on February 6, 1989, respondent alleged that apart from the 345-square meter lotwhich had been sold to him by Juan San Andres on September 28, 1964, the latter likewise sold to him the followingday the remaining portion of the lot consisting of 509 square meters, with both parties treating the two lots as onewhole parcel with a total area of 854 square meters. Respondent alleged that the full payment of the 509-square
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meter lot would be effected within five (5) years from the execution of a formal deed of sale after a survey isconducted over said property. He further alleged that with the consent of the former owner, Juan San Andres, hetook possession of the same and introduced improvements thereon as early as 1964.

As proof of the sale to him of 509 square meters, respondent attached to his answer a receipt (Exh. 2)5signed bythe late Juan San Andres, which reads in full as follows:

Received from Vicente Rodriguez the sum of Five Hundred (P500.00) Pesos representing anadvance payment for a residential lot adjoining his previously paid lot on three sides excepting on

the frontage with the agreed price of Fifteen (15.00) Pesos per square meter and the payment of thefull consideration based on a survey shall be due and payable in five (5) years period from theexecution of the formal deed of sale; and it is agreed that the expenses of survey and its approval bythe Bureau of Lands shall be borne by Mr. Rodriguez.

Naga City, September 29, 1964.

(Sgd.)

JUAN R. SANANDRES

Vendor

Noted:

(Sgd.)

VICENTE RODRIGUEZ

Vendee

Respondent also attached to his answer a letter of judicial administrator Ramon San Andres (Exh.3),6asking payment of the balance of the purchase price. The letter reads:

Dear Inting,

Please accommodate my request for Three Hundred (P300.00) Pesos as I am in need of funds as I

intimated to you the other day.

We will just adjust it with whatever balance you have payable to the subdivision.

Thanks.

Sincerely,

(Sgd.)

RAMON SAN

ANDRES

Vicente Rodriguez

Penafrancia Subdivision, Naga City

P.S.

You can let bearer Enrique del Castillo sign for the amount.

Received One Hundred Only

(Sgd.)
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RAMON SAN ANDRES

3/30/66

Respondent deposited in court the balance of the purchase price amounting to P7,035.00 for the aforesaid 509-square meter lot.

While the proceedings were pending, judicial administrator Ramon San Andres died and was substituted by his sonRicardo San Andres. On the other band, respondent Vicente Rodriguez died on August 15, 1989 and wassubstituted by his heirs.7

Petitioner, as plaintiff, presented two witnesses. The first witness, Engr. Jose Peero,8testified that based on hissurvey conducted sometime between 1982 and 1985, respondent had enlarged the area which he purchased fromthe late Juan San Andres by 509 square meters belonging to the latter's estate. According to Peero, the titledproperty (Exh. A-5) of respondent was enclosed with a fence with metal holes and barbed wire, while the expandedarea was fenced with barbed wire and bamboo and light materials.

The second witness, Ricardo San Andres,9administrator of the estate, testified that respondent had not filed anyclaim before Special Proceedings No. R-21 and denied knowledge of Exhibits 2 and 3. However, he recognized thesignature in Exhibit 3 as similar to that of the former administrator, Ramon San Andres. Finally, he declared that theexpanded portion occupied by the family of respondent is now enclosed with barbed wire fence unlike before whereit was found without fence.

On the other hand, Bibiana B. Rodriguez,10widow of respondent Vicente Rodriguez, testified that they hadpurchased the subject lot from Juan San Andres, who was their compadre, on September 29, 1964, at P15.00 persquare meter. According to her, they gave P500.00 to the late Juan San Andres who later affixed his signature toExhibit 2. She added that on March 30, 1966; Ramon San Andres wrote them a letter asking for P300.00 as partialpayment for the subject lot, but they were able to give him only P100.00. She added that they had paid the totalpurchase price of P7,035.00 on November 21, 1988 by depositing it in court. Bibiana B. Rodriquez stated that theyhad been in possession of the 509-square meter lot since 1964 when the late Juan San Andres signed the receipt.(Exh. 2) Lastly, she testified that they did not know at that time the exact area sold to them because they were toldthat the same would be known after the survey of the subject lot.

On September 20, 1994, the trial court11rendered judgment in favor of petitioner. It ruled that there was no contractof sale to speak of for lack of a valid object because there was no sufficient indication in Exhibit 2 to identify theproperty subject of the sale, hence, the need to execute a new contract.

Respondent appealed to the Court of Appeals, which on April 21, 1998 rendered a decision reversing the decision ofthe trial court. The appellate court held that the object of the contract was determinable, and that there was aconditional sale with the balance of the purchase price payable within five years from the execution of the deed ofsale. The dispositive portion of its decision's reads:

IN VIEW OF ALL THE FOREGOING, the judgment appealed from is hereby REVERSED and SETASIDE and a new one entered DISMISSING the complaint and rendering judgment against theplaintiff-appellee:

1. to accept the P7,035.00 representing the balance of the purchase price of the portion and which isdeposited in court under Official Receipt No. 105754 (page 122, Records);

2. to execute the formal deed of sale over the said 509 square meter portion of Lot 1914-B-2 in favorof appellant Vicente Rodriguez;

3. to pay the defendant-appellant the amount of P50,000.00 as damages and P10,000.00 attorney'sfees as stipulated by them during the trial of this case; and

4. to pay the costs of the suit.

SO ORDERED.

Hence, this petition. Petitioner assigns the following errors as having been allegedly committed by the trial court:
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sales cases 1-25 (except no. 8)

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