Additional Cases Chapter V

PERFECTION STAGE
Absolute Acceptance of a Certain Offer
ARTICLE 1475. The contract of 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. (1450a)
SECTION 1. Consent
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge.
The contract, in such a case, is presumed to have been entered into in the place where the offer was made.
(1262a)
Art. 1325. Unless it appears otherwise, business advertisements of things for sale are not definite offers, but mere
invitations to make an offer. (n)
Art. 1326. Advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to
accept the highest or lowest bidder, unless the contrary appears. (n)
ADDITIONAL CASES FORMNATION 1

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-26872 July 25, 1975
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 for plaintiff-appellee.
J. Villareal, Navarro and Associates for defendants-appellants.
P. P. Gallardo and Associates for intervenor-appellee.
AQUINO, J.:
This action was instituted by Villonco Realty Company against Bormaheco, Inc. and the spouses Francisco N.
Cervantes and Rosario N. Cervantes for the specific performance of a supposed contract for the sale of land and
the improvements thereon for one million four hundred thousand pesos. Edith Perez de Tagle, as agent,
intervened in order to recover her commission. The lower court enforced the sale. Bormaheco, Inc. and the
Cervantes spouses, as supposed vendors, appealed.
This Court took cognizance of the appeal because the amount involved is more than P200,000 and the appeal
was perfected before Republic Act No. 5440 took effect on September 9, 1968. The facts are as follows:
Francisco N. Cervantes and his wife, Rosario P. Navarra-Cervantes, are the owners of lots 3, 15 and 16 located at
245 Buendia Avenue, Makati, Rizal with a total area of three thousand five hundred square meters (TCT Nos.
43530, 43531 and 43532, Exh. A, A-1 and A-2). The lots were mortgaged to the Development Bank of the Phil
(DBP) on April 21, 1959 as security for a loan of P441,000. The mortgage debt was fully paid on July 10, 1969.
Cervantes is the president of Bormaheco, Inc., a dealer and importer of industrial and agricultural machinery. The
entire lots are occupied by the building, machinery and equipment of Bormaheco, Inc. and are adjacent to the
property of Villonco Realty Company situated at 219 Buendia Avenue.
In the early part of February, 1964 there were negotiations for the sale of the said lots and the improvements
thereon between Romeo Villonco of Villonco Realty Company "and Bormaheco, Inc., represented by its president,
Francisco N. Cervantes, through the intervention of Edith Perez de Tagle, a real estate broker".
In the course of the negotiations, the brothers Romeo Villonco and Teofilo Villonco conferred with Cervantes in his
office to discuss the price and terms of the sale. Later, Cervantes "went to see Villonco for the same reason until
some agreement" was arrived at. On a subsequent occasion, Cervantes, accompanied by Edith Perez de Tagle,
discussed again the terms of the sale with Villonco.
During the negotiations, Villonco Realty Company assumed that the lots belonged to Bormaheco, Inc. and that
Cervantes was duly authorized to sell the same. Cervantes did not disclose to the broker and to Villonco Realty
Company that the lots were conjugal properties of himself and his wife and that they were mortgaged to the DBP.

Bormaheco, Inc., through Cervantes, made a written offer dated February 12, 1964, to Romeo Villonco for the
sale of the property. The offer reads (Exh. B):
BORMAHECO, INC.
February 12,1964
Mr. Romeo
Villonco Villonco Building
Buendia Avenue
Makati, Rizal.
Dear Mr. Villonco:
This is with reference to our telephone conversation this noon on the matter of the sale of our
propertylocated at Buendia Avenue, with a total area of 3,500 sq. m., under the following
conditions:
(1) That we are offering to sell to you the above property at the price of P400.00
per square meter;
(2) That a deposit of P100,000.00 must be placed as earnest money on the

purchase of the above property which will become part payment of the property
in the event that the sale is consummated;
(3) That this sale is to be consummated only after I shall have also consummated
my purchase of another property located at Sta. Ana, Manila;
(4) That if my negotiations with said property will not be consummated by reason
beyond my control, I will return to you your deposit of P100,000 and the sale of
my property to you will not also be consummated; and
(5) That final negotiations on both properties can be definitely known after 45
days.
If the above terms is (are) acceptable to your Board, please issue out the said earnest money in
favor of Bormaheco, Inc., and deliver the same thru the bearer, Miss Edith Perez de Tagle.
Very truly yours,
SGD. FRANCISCO N.
CERVANTES
President
The property mentioned in Bormaheco's letter was the land of the National Shipyards & Steel Corporation
(Nassco), with an area of twenty thousand square meters, located at Punta, Sta. Ana, Manila. At the bidding held
on January 17, 1964 that land was awarded to Bormaheco, Inc., the highest bidder, for the price of P552,000. The
Nassco Board of Directors in its resolution of February 18, 1964 authorized the General Manager to sign the
necessary contract (Exh. H).
On February 28, 1964, the Nassco Acting General Manager wrote a letter to the Economic Coordinator,
requesting approval of that resolution. The Acting Economic Coordinator approved the resolution on March 24,
1964 (Exh. 1).

In the meanwhile, Bormaheco, Inc. and Villonco Realty Company continued 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 as shown in Exhibit D, which is quoted below:
VILLONCO REALTY COMPANY

V. R. C. Building
219 Buendia Avenue, Makati,
Rizal, Philippines
March 4, 1964
Mr. Francisco Cervantes.

Bormaheco, Inc.
245 Buendia Avenue
Makati, Rizal
Dear Mr. Cervantes:
In reference to the letter of Miss E. Perez de Tagle dated February 12th and 26, 1964 in respect
to the terms and conditions on the purchase of your property located at Buendia Ave., Makati,
Rizal, with a total area of 3,500 sq. meters., we hereby revise our offer, as follows:
1. That the price of the property shall be P400.00 per sq. m., including the improvements thereon;
2. That a deposit of P100,000.00 shall be given to you as earnest money which will become as
part payment in the event the sale is consummated;
3. This sale shall be cancelled, only if your deal with another property in Sta. Ana shall not be
consummated and in such case, the P100,000-00 earnest money will be returned to us with a
10% interest p.a. However, if our deal with you is finalized, said P100,000.00 will become as part
payment for the purchase of your property without interest:
4. The manner of payment shall be as follows:
a. P100,000.00 earnest money and

650,000.00 as part of the down payment, or
P750,000.00 as total down payment
b. The balance is payable as follows:

P100,000.00 after 3 months
125,000.00 -do-
212,500.00 -do-
P650,000.00 Total
As regards to the other conditions which we have discussed during our last conference on
February 27, 1964, the same shall be finalized upon preparation of the contract to sell.*
If the above terms and conditions are acceptable to you, kindly sign your conformity hereunder.
Enclosed is our check for ONE HUNDRED THOUSAND (P100,000.00) PESOS, MBTC Check
No. 448314, as earnest money.

Very truly yours,
VILLONCO REALTY COMPANY

(Sgd.) TEOFILO VILLONCO
CONFORME:
BORMAHECO, INC.
(Sgd.) FRANCISCO CERVANTES
That this sale shall be subject to favorable consummation of a property in Sta. Ana we are
negotiating.
(Sgd.) FRANCISCO CERVANTES
The 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 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).
Edith Perez de Tagle, the broker, in a letter to Cervantes dated March 31, 1964 articulated her shock and surprise
at Bormaheco's turnabout. She reviewed the history of the deal and explained why Romeo Villonco could not
agree to the rescission of the sale (Exh. G).**
Cervantes in his letter of April 6, 1964, a reply to Miss Tagle's letter, 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). The latter was furnished with a copy of that letter.
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).1wph1.t
On that same date, April 7, 1964 Villonco Realty Company filed the complaint (dated April 6) for specific
performance against Bormaheco, Inc. Also on that same date, April 7, at eight-forty-five in the morning, a notice
of lis pendens was annotated on the titles of the said lots.
Bormaheco, Inc. in its answers dated May 5 and 25, 1964 pleaded the defense 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".
On June 2, 1964 or during the pendency of this case, the Nassco Acting General Manager wrote to Bormaheco,
Inc., advising it that the Board of Directors and the Economic Coordinator had approved the sale of the Punta lot

to Bormaheco, Inc. and requesting the latter to send its duly authorized representative to the Nassco for the
signing of the deed of sale (Exh. 1).
The deed of sale for the Punta land was executed on June 26, 1964. Bormaheco, Inc. was represented by
Cervantes (Exh. J. See Bormaheco, Inc. vs. Abanes, L-28087, July 31, 1973, 52 SCRA 73).
In view of the disclosure in Bormaheco's amended answer that the three lots were registered in the names of the
Cervantes spouses and not in the name of Bormaheco, Inc., Villonco Realty Company on July 21, 1964 filed an
amended complaint impleading the said spouses as defendants. Bormaheco, Inc. and the Cervantes spouses
filed separate answers.
As of January 15, 1965 Villonco Realty Company had paid to the Manufacturers' Bank & Trust Company the sum
of P8,712.25 as interests on the overdraft line of P100,000 and the sum of P27.39 as interests daily on the same
loan since January 16, 1965. (That overdraft line was later settled by Villonco Realty Company on a date not
mentioned in its manifestation of February 19, 1975).
Villonco Realty Company had obligated itself to pay the sum of P20,000 as attorney's fees to its lawyers. It
claimed that it was damaged in the sum of P10,000 a month from March 24, 1964 when the award of the Punta lot
to Bormaheco, Inc. was approved. On the other hand, Bormaheco, Inc. claimed that it had sustained damages of
P200,000 annually due to the notice of lis pendens which had prevented it from constructing a multi-story building
on the three lots. (Pars. 18 and 19, Stipulation of Facts).1wph1.t
Miss Tagle testified that for her services Bormaheco, Inc., through Cervantes, obligated itself to pay her a three
percent commission on the price of P1,400,000 or the amount of forty-two thousand pesos (14 tsn).
After trial, the lower court rendered a decision ordering the Cervantes spouses to execute in favor of Bormaheco,
Inc. a deed of conveyance for the three lots in question and 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).
Bormaheco, Inc. and the Cervantes spouses appealed. Their principal contentions are (a) that no contract of sale
was perfected because Cervantes made a supposedly qualified acceptance of the revised offer contained in
Exhibit D, which acceptance amounted to a counter-offer, and because the condition that Bormaheco, inc. would
acquire the Punta land within the forty-five-day period was not fulfilled; (2) that Bormaheco, Inc. cannot be
compelled to sell the land which belongs to the Cervantes spouses and (3) that Francisco N. Cervantes did not
bind the conjugal partnership and his wife when, as president of Bormaheco, Inc., he entered into negotiations
with Villonco Realty Company regarding the said land.
We hold that the appeal, except as to the issue of damages, is devoid of merit.
"By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver
a determining thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may
be absolute or conditional" (Art. 1458, Civil Code).
"The contract of 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" (Art. 1475, Ibid.).
"Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment
of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law" (Art. 1315, Civil Code).

"Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes
a counter-offer" (Art. 1319, Civil Code). "An acceptance may be express or implied" (Art. 1320, Civil Code).
Bormaheco's acceptance of Villonco Realty Company's offer to purchase the Buendia Avenue property, as shown
in Teofilo Villonco's letter dated March 4, 1964 (Exh. D), indubitably proves that there was a meeting of minds
upon the subject matter and consideration of the sale. Therefore, on that date the sale was perfected. (Compare
with McCullough vs. Aenlle & Co., 3 Phil. 285; Goyena vs. Tambunting, 1 Phil. 490). Not only that Bormaheco's
acceptance of the part payment of one hundred ,thousand pesos shows that the sale was conditionally
consummated or partly executed subject to the purchase by Bormaheco, Inc. of the Punta property. The
nonconsummation of that purchase would be a negative resolutory condition (Taylor vs. Uy Tieng Piao, 43 Phil.
873).
On February 18, 1964 Bormaheco's bid for the Punta property was already accepted by the Nassco which had
authorized its General Manager to sign the corresponding deed of sale. What was necessary only was the
approval of the sale by the Economic Coordinator and a request for that approval was already pending in the
office of that functionary on March 4, 1964.
Bormaheco, Inc. and the Cervantes spouses contend that the sale was not perfected because Cervantes
allegedly qualified his acceptance of Villonco's revised offer and, therefore, his acceptance amounted to a
counter-offer which Villonco Realty Company should accept but no such acceptance was ever transmitted to
Bormaheco, Inc. which, therefore, could withdraw its offer.
That contention is not well-taken. 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 approval 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 in Sta. 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 Nassco property.
Similarly, Cervantes' alleged insertion of the letters "PA" ( per 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 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).
The instant case is not governed by the rulings laid down in Beaumont vs. Prieto, 41 Phil. 670, 985, 63 L. Ed. 770,
and Zayco vs. Serra, 44 Phil. 326. In those two cases the acceptance radically altered the offer and,
consequently, there was no meeting of the minds of the parties.
Thus, in the Zayco case, Salvador Serra offered to sell to Lorenzo Zayco his sugar central for P1,000,000 on
condition that the price be paid in cash, or, if not paid in cash, the price would be payable within three years
provided security is given for the payment of the balance within three years with interest. Zayco, instead of
unconditionally accepting those terms, countered that he was going to make a down payment of P100,000, that
Serra's mortgage obligation to the Philippine National Bank of P600,000 could be transferred to Zayco's account
and that he (plaintiff) would give a bond to secure the payment of the balance of the price. It was held that the
acceptance was conditional or was a counter-offer which had to be accepted by Serra. There was no such
acceptance. Serra revoked his offer. Hence, there was no perfected contract.
In the Beaumont case, Benito Valdes offered to sell to W Borck the Nagtahan Hacienda owned by Benito
Legarda, who had empowered Valdes to sell it. Borck was given three months from December 4, 1911 to buy the
hacienda for P307,000. On January 17, 1912 Borck wrote to Valdes, offering to purchase the hacienda for
P307,000 payable on May 1, 1912. No reply was made to that letter. Borck wrote other letters modifying his
proposal. Legarda refused to convey the property.
It was held that Borck's January 17th letter plainly departed from the terms of the offer as to the time of payment
and was a counter-offer which amounted to a rejection of Valdes' original offer. A subsequent unconditional
acceptance could not revive that offer.

The instant case is different from Laudico and Harden vs. Arias Rodriguez, 43 Phil. 270 where the written offer to
sell was revoked by the offer or before the offeree's acceptance came to the offeror's knowledge.
Appellants' next contention is that the contract was not perfected because 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. This contention is tied up with the following letter of Bormaheco, Inc. (Exh. F):
BORMAHECO, INC.
March 30, 1964
Villonco Realty Company

V.R.C. Building
219 Buendia Ave.,
Makati, Rizal
Gentlemen:
We are returning herewith your earnest money together with interest thereon at 10% per annum.
Please be informed that despite the lapse of the 45 days from February 12, 1964 there is no
certainty yet for us to acquire a substitute property, hence the return of the earnest money as
agreed upon.
Very truly yours,
SGD. FRANCISCO N.
CERVANTES
President
Encl.: P.N.B. Check No. 112994 J

P.N.B. Check No. 112996J
That contention is predicated on the erroneous 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 Tamo lots 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 after forty-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's revised counter-offer of March 4, 1964
subject to the condition that "the final negotiations (acceptance) will have to be made by defendant within 45
daysfrom 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" whatever that means.
That affirmative defense is inconsistent with the other aforequoted incoherent statement in its third answer that
"the final negotiations (acceptance) will have to be made by defendant within 45 days from said acceptance" (31
Record on Appeal).1wph1.t
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.
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.
The appellants, in their fifth assignment of error, argue that Bormaheco, Inc. cannot be required to sell the three
lots in question because they are conjugal properties of the Cervantes spouses. They aver that Cervantes in
dealing with the Villonco brothers acted as president of Bormaheco, Inc. and not in his individual capacity and,
therefore, he did not bind the conjugal partnership nor Mrs. Cervantes who was allegedly opposed to the sale.
Those arguments are not sustainable. 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 "our property" which
"we are offering to sell ..." (Opening paragraph and par. 1 of Exh. B). Whether the prounoun "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; "... my negotiations 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. That defense 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, Inc. and 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 answer the Cervantes spouses never
pleaded as a defense that Mrs. Cervantes was opposed to the sale of three lots or that 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 which he 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 for 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' 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.
Bormaheco, Inc. and the Cervantes spouses in their sixth assignment of error assail the trial court's award to
Villonco Realty Company of consequential damage amounting to ten thousand pesos monthly from March 24,
1964 (when the Economic Coordinator approved the award of the Nassco property to Bormaheco, Inc.) up to the
consummation of the sale. The award was based on paragraph 18 of the stipulation of facts wherein Villonco
Realty Company "submits that the delay in the consummation of the sale" has caused it to suffer the
aforementioned damages.
The appellants contend that statement in the stipulation of facts simply means that Villonco Realty Company
speculates that it has suffered damages but it does not mean that the parties have agreed that Villonco Realty
Company is entitled to those damages.
Appellants' contention is correct. As rightly observed by their counsel, the damages in question were not
specifically pleaded and proven and were "clearly conjectural and speculative".
However, appellants' view in their seventh assignment of error that the trial court erred in ordering Bormaheco,
Inc. to pay Villonco Realty Company the sum of twenty thousand pesos as attorney's fees is not tenable. Under
the facts of the case, it is evident that Bormaheco, Inc. acted in gross and evident bad faith in refusing to satisfy
the valid and just demand of Villonco Realty Company for specific performance. It compelled Villonco Realty
Company to incure expenses to protect its interest. Moreover, this is a case where it is just and equitable that the
plaintiff should recover attorney's fees (Art. 2208, Civil Code).
The appellants in their eighth assignment of error impugn the trial court's adjudication of forty-two thousand pesos
as three percent broker's commission to Miss Tagle. They allege that there is no evidence that Bormaheco, Inc.
engaged her services as a broker in the projected sale of the three lots and the improvements thereon. That
allegation is refuted by paragraph 3 of the stipulation of facts and by the documentary evidence. It was stipulated
that Miss Tagle intervened in the negotiations for the sale of the three lots. Cervantes in his original offer of
February 12, 1964 apprised Villonco Realty Company that the earnest money should be delivered to Miss Tagle,
the bearer of the letter-offer. See also Exhibit G and Annex I of the stipulation of facts.

We hold that the trial court did not err in adjudging that Bormaheco, Inc. should pay Miss Tagle her three percent
commission.
WHEREFORE, the trial court's decision is modified as follows:
1. Within ten (10) days from the date the defendants-appellants receive notice from the clerk of the lower court
that the records of this case have been received from this Court, the spouses Francisco N. Cervantes and
Rosario P. Navarra-Cervantes should execute a deed conveying to Bormaheco, Inc. their three lots covered by
Transfer Certificate of Title Nos. 43530, 43531 and 43532 of the Registry of Deeds of Rizal.
2. Within five (5) days from the execution of such deed of conveyance, Bormaheco, Inc. should execute in favor of
Villonco Realty Company, V. R. C. Building, 219 Buendia Avenue, Makati, Rizal a registerable deed of sale for the
said three lots and all the improvements thereon, free from all lien and encumbrances, at the price of four hundred
pesos per square meter, deducting from the total purchase price the sum of P100,000 previously paid by Villonco
Realty Company to Bormaheco, Inc.
3. Upon the execution of such deed of sale, Villonco Realty Company is obligated to pay Bormaheco, Inc. the
balance of the price in the sum of one million three hundred thousand pesos (P1,300,000).
4. Bormaheco, Inc. is ordered (a) to pay Villonco Realty Company twenty thousand pesos (P20,000) as attorney's
fees and (b) to pay Edith Perez de Tagle the sum of forty-two thousand pesos (P42,000) as commission. Costs
against the defendants-appellants.
SO ORDERED.
Makalintal, C.J, Castro. Fernando, Makasiar, Antonio, Esguerra, Muoz Palma, Concepcion Jr. and Martin, JJ.,
concur.

VILLONCO REALTY V. BORMAHECO (July 25, 1975)
FACTS:
Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a parcel of land and its improvements
located in Buendia, Makati.
Bormaheco made the terms and condition for the sale and Villonco returned it with some modifications.
The sale is for P400 per square meter but it is only to be consummated after respondent shall have also
consummated purchase of a property in Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land and
subsequently bought the property.
Villonco issued a check to Bormaheco amounting to P100,000 as earnest money. 26 days after signing the
contract of sale, Bormaheco returned the P100,000 to Villonco with 10% interest for the reason that they are not
sure yet if they will acquire the Sta.Ana property.
Villonco rejected the return of the check and demanded for specific performance.
ISSUE:
WON Bormaheco is bound to perform the contract with Villonco.
HELD:
The contract is already consummated when Bormaheco accepted the offer by Villonco. The acceptance can be
proven when Bormaheco accepted the check from Villonco and then returned it with 10% interest as stipulated in
the terms made by Villonco.
On the other hand, the fact that Villonco did not object when Bormaheco encashed the check is a proof that it
accepted the offer of Bormaheco.
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).

Villonco v Bormaheco
G.R. No. L-26872 July 25, 1975
FACTS:
Francisco Cervantes (president of Bormaheco) and his wife, Rosario, are the owners of Lots 3, 15 and 16 in
Buendia Avenue Makati, which were mortgaged to DBP as security for a loan of 441k. The mortgage debt was
fully paid on July 10, 1969.
In 1964, there were negotiations for the sale of said lots and improvements between Romeo Villonco (of Villonco
Realty Co) and Bormaheco Inc, represented by Cervantes. In the course of the negotiations, the brothers Romeo
and Teofilo Villonco conferred with Cervantes in his office to discuss the price and terms of sale. Later, Cervantes
went to see Villonco for the same reason until some agreement was arrived at.
Bormaheco (through Cervantes) made a written offer to Villonco for the sale of the property with the terms of sale:
1. Selling price of P400 per sqm,

2. That a deposit of 100k must be placed as earnest money on the purchase of the property which will
become part payment of the property in the event that the sale is consummated
3. That the sale is to be consummated only after I shall have also consummated my purchase of another
property located at Sta. Ana Manila (Punta property),
4. That if the negotiations with said property will not be consummated by reason beyond my control, I will
return to you your deposit of 100k and the sale of my property to you will not also be consummated, and
5. That final negotiations on both properties can be definitely known after 45 days
Villonco Realty made a counter-offer, confirming the previous terms, with the deviation: This sale shall be
cancelled, only if your deal with another property in Sta. Ana shall not be consummated and in such case,
the P100,000-00 earnest money will be returned to us with a 10% interest p.a. However, if our deal with you
is finalized, said P100,000.00 will become as part payment for the purchase of your property without interest. Xxx
If the terms are acceptable to you, kindly sign your conformity. Enclosed is a check for 100k as earnest money.
The check was delivered to Bormaheco and was received by Cervantes. Cervantes signed and wrote on the
letter: That this sale shall be subject to favorable consummation of a property in Sta. Ana we are negotiating.
Then unexpectedly, in a letter dated 26 days after the signing of the contract of sale, Cervantes returned the
earnest money, with interest amounting to 694.24 (10% p.a). He cited as an excuse that there is no certainty yet
for the acquisition of the Punta property (after 45 days). Villonco refused to accept the letter and checks of
Borhameco. Cervantes sent them by registered mail. When he rescinded the contract, he was already aware that
the Punta property had been awarded to Borhameco.
Villonco Realty (through their authorized broker Edith de Tagle) does not agree with the rescission of sale, as per
their dealings. On the other hand, Cervantes alleged that the 45 day period had already expired and the sale to
Bormaheco of the Punta property had not been consummated. In essence, Cervantes contends that no contract
of sale was perfected because Cervantes made a supposedly qualified acceptance of the offer, which
amounted to a counter offer, and because the condition that Bormaheco would acquire the Punta land within the
45-day period was not fulfilled.
ISSUE: Was there a perfected contract of sale? YES

HELD:
Bormaheco's acceptance of Villonco Realty Company's offer to purchase the Buendia Avenue property, as shown
in Teofilo Villonco's letter, indubitably proves that there was a meeting of minds upon the subject matter and
consideration of the sale. Therefore, on that date the sale was perfected. Not only that Bormaheco's acceptance
of the part payment of one hundred ,thousand pesos shows that the sale was conditionally consummated or partly
executed subject to the purchase by Bormaheco, Inc. of the Punta property. The nonconsummation of that
purchase would be a negative resolutory condition.
As to Bormahecos acquisition of the Punta property:
Bormahecos bid for the Punta property was already accepted by Nassco (owner), which had authorized its
General Manager to sign the Deed of Sale. What was necessary only was the approval of the sale by the
Economic Coordinator and a request for that approval was already pending in the office of that functionary.
As to Bormahecos contention that there was no perfection of sale:
That contention is not well-taken. 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 approval 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 are not material or are
mere clarifications of what the parties had previously agreed upon.
Cervantes allegedly crossed out the word "Nassco" in Villonco's revised counter-offer and substituted for it the
word "another" so that the original phrase, "Nassco's property in Sta. 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
Bormaheco's original offer which mentions "another property located at Sta. Ana."
Similarly, Cervantes' alleged insertion of the letters "PA" ( per 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 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).
As to the 45-day period of acquisition of Punta property;
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.
Summary from the book:
There was a perfected contract of sale from the exchange of correspondences, even if there was a correction or
modification contained in the acceptance. The changes were not substantial, but merely clarificatory. Such is
corroborated also by the fact that upon receipt of the check covering the earnest money, Bormaheco had
encashed the same.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 157493 February 5, 2007
RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO, ERNESTO, LEONORA,
BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed OESMER, Petitioners,
vs.
PARAISO DEVELOPMENT CORPORATION, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure seeking to reverse and set aside the Court of Appeals Decision 1 dated 26 April 2002 in CA-G.R. CV
No. 53130 entitled, Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo, and Jesus, all surnamed
Oesmer vs. Paraiso Development Corporation, as modified by its Resolution 2 dated 4 March 2003, declaring the
Contract to Sell valid and binding with respect to the undivided proportionate shares of the six signatories of the
said document, herein petitioners, namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all
surnamed Oesmer); and ordering them to execute the Deed of Absolute Sale concerning their 6/8 share over the
subject parcels of land in favor of herein respondent Paraiso Development Corporation, and to pay the latter the
attorneys fees plus costs of the suit. The assailed Decision, as modified, likewise ordered the respondent to
tender payment to the petitioners in the amount of 3,216,560.00 representing the balance of the purchase price
of the subject parcels of land.
The facts of the case are as follows:
Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed Oesmer, together with
Adolfo Oesmer (Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters, and the co-owners of undivided
shares of two parcels of agricultural and tenanted land situated in Barangay Ulong Tubig, Carmona, Cavite,
identified as Lot 720 with an area of 40,507 square meters (sq. m.) and Lot 834 containing an area of 14,769 sq.
m., or a total land area of 55,276 sq. m. Both lots are unregistered and originally owned by their parents, Bibiano
Oesmer and Encarnacion Durumpili, who declared the lots for taxation purposes under Tax Declaration No.
34383(cancelled by I.D. No. 6064-A) for Lot 720 and Tax Declaration No. 3437 4 (cancelled by I.D. No. 5629) for
Lot 834. When the spouses Oesmer died, petitioners, together with Adolfo and Jesus, acquired the lots as heirs of
the former by right of succession.
Respondent Paraiso Development Corporation is known to be engaged in the real estate business.
Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of Carmona, Cavite, brought
along petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso Development
Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of brokering the sale of petitioners
properties to respondent corporation.

Pursuant to the said meeting, a Contract to Sell 5 was drafted by the Executive Assistant of Sotero Lee, Inocencia
Almo. On 1 April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. A check in the
amount of 100,000.00, payable to Ernesto, was given as option money. Sometime thereafter, Rizalino, Leonora,
Bibiano, Jr., and Librado also signed the said Contract to Sell. However, two of the brothers, Adolfo and Jesus, did
not sign the document.
On 5 April 1989, a duplicate copy of the instrument was returned to respondent corporation. On 21 April 1989,
respondent brought the same to a notary public for notarization.
In a letter6 dated 1 November 1989, addressed to respondent corporation, petitioners informed the former of their
intention to rescind the Contract to Sell and to return the amount of 100,000.00 given by respondent as option
money.
Respondent did not respond to the aforesaid letter. On 30 May 1991, herein petitioners, together with Adolfo and
Jesus, filed a Complaint7 for Declaration of Nullity or for Annulment of Option Agreement or Contract to Sell with
Damages before the Regional Trial Court (RTC) of Bacoor, Cavite. The said case was docketed as Civil Case No.
BCV-91-49.
During trial, petitioner Rizalino died. Upon motion of petitioners, the trial court issued an Order, 8 dated 16
September 1992, to the effect that the deceased petitioner be substituted by his surviving spouse, Josefina O.
Oesmer, and his children, Rolando O. Oesmer and Fernando O. Oesmer. However, the name of Rizalino was
retained in the title of the case both in the RTC and the Court of Appeals.
After trial on the merits, the lower court rendered a Decision 9 dated 27 March 1996 in favor of the respondent, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of herein [respondent] Paraiso
Development Corporation. The assailed Contract to Sell is valid and binding only to the undivided proportionate
share of the signatory of this document and recipient of the check, [herein petitioner] co-owner Ernesto Durumpili
Oesmer. The latter is hereby ordered to execute the Contract of Absolute Sale concerning his 1/8 share over the
subject two parcels of land in favor of herein [respondent] corporation, and to pay the latter the attorneys fees in
the sum of Ten Thousand (10,000.00) Pesos plus costs of suit.
The counterclaim of [respondent] corporation is hereby Dismissed for lack of merit. 10
Unsatisfied, respondent appealed the said Decision before the Court of Appeals. On 26 April 2002, the appellate
court rendered a Decision modifying the Decision of the court a quo by declaring that the Contract to Sell is valid
and binding with respect to the undivided proportionate shares of the six signatories of the said document, herein
petitioners, namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The
decretal portion of the said Decision states that:
WHEREFORE, premises considered, the Decision of the court a quo is hereby MODIFIED. Judgment is hereby
rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid
and binding with respect to the undivided proportionate share of the six (6) signatories of this document, [herein
petitioners], namely, Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The
said [petitioners] are hereby ordered to execute the Deed of Absolute Sale concerning their 6/8 share over the
subject two parcels of land and in favor of herein [respondent] corporation, and to pay the latter the attorneys fees
in the sum of Ten Thousand Pesos (10,000.00) plus costs of suit. 11
Aggrieved by the above-mentioned Decision, petitioners filed a Motion for Reconsideration of the same on 2 July
2002. Acting on petitioners Motion for Reconsideration, the Court of Appeals issued a Resolution dated 4 March
2003, maintaining its Decision dated 26 April 2002, with the modification that respondent tender payment to
petitioners in the amount of 3,216,560.00, representing the balance of the purchase price of the subject parcels
of land. The dispositive portion of the said Resolution reads:

WHEREFORE, premises considered, the assailed Decision is hereby modified.1awphi1.net Judgment is hereby
rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid
and binding with respect to the undivided proportionate shares of the six (6) signatories of this document, [herein
petitioners], namely, Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The
said [petitioners] are hereby ordered to execute the Deed of Absolute Sale concerning their 6/8 share over the
subject two parcels of land in favor of herein [respondent] corporation, and to pay the latter attorneys fees in the
sum of Ten Thousand Pesos (10,000.00) plus costs of suit. Respondent is likewise ordered to tender payment to
the above-named [petitioners] in the amount of Three Million Two Hundred Sixteen Thousand Five Hundred Sixty
Pesos (3,216,560.00) representing the balance of the purchase price of the subject two parcels of land. 12
Hence, this Petition for Review on Certiorari.
Petitioners come before this Court arguing that the Court of Appeals erred:
I. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is not binding upon
petitioner Ernesto Oesmers co-owners (herein petitioners Enriqueta, Librado, Rizalino, Bibiano, Jr., and
Leonora).
II. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is void altogether
considering that respondent itself did not sign it as to indicate its consent to be bound by its terms.
Moreover, Exhibit D is really a unilateral promise to sell without consideration distinct from the price, and
hence, void.
Petitioners assert that the signatures of five of them namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and
Leonora, on the margins of the supposed Contract to Sell did not confer authority on petitioner Ernesto as agent
to sell their respective shares in the questioned properties, and hence, for lack of written authority from the above-
named petitioners to sell their respective shares in the subject parcels of land, the supposed Contract to Sell is
void as to them. Neither do their signatures signify their consent to directly sell their shares in the questioned
properties. Assuming that the signatures indicate consent, such consent was merely conditional. The effectivity of
the alleged Contract to Sell was subject to a suspensive condition, which is the approval of the sale by all the co-
owners.
Petitioners also assert that the supposed Contract to Sell (Exhibit D), contrary to the findings of the Court of
Appeals, is not couched in simple language.
They further claim that the supposed Contract to Sell does not bind the respondent because the latter did not sign
the said contract as to indicate its consent to be bound by its terms. Furthermore, they maintain that the supposed
Contract to Sell is really a unilateral promise to sell and the option money does not bind petitioners for lack of
cause or consideration distinct from the purchase price.
The Petition is bereft of merit.
It is true that the signatures of the five petitioners, namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora,
on the Contract to Sell did not confer authority on petitioner Ernesto as agent authorized to sell their respective
shares in the questioned properties because of Article 1874 of the Civil Code, which expressly provides that:
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter
shall be in writing; otherwise, the sale shall be void.
The law itself explicitly requires a written authority before an agent can sell an immovable. The conferment of
such an authority should be in writing, in as clear and precise terms as possible. It is worth noting that petitioners
signatures are found in the Contract to Sell. The Contract is absolutely silent on the establishment of any
principal-agent relationship between the five petitioners and their brother and co-petitioner Ernesto as to the sale

of the subject parcels of land. Thus, the Contract to Sell, although signed on the margin by the five petitioners, is
not sufficient to confer authority on petitioner Ernesto to act as their agent in selling their shares in the properties
in question.
However, despite petitioner Ernestos lack of written authority from the five petitioners to sell their shares in the
subject parcels of land, the supposed Contract to Sell remains valid and binding upon the latter.
As can be clearly gleaned from the contract itself, it is not only petitioner Ernesto who signed the said Contract to
Sell; the other five petitioners also personally affixed their signatures thereon. Therefore, a written authority is no
longer necessary in order to sell their shares in the subject parcels of land because, by affixing their signatures on
the Contract to Sell, they were not selling their shares through an agent but, rather, they were selling the same
directly and in their own right.
The Court also finds untenable the following arguments raised by petitioners to the effect that the Contract to Sell
is not binding upon them, except to Ernesto, because: (1) the signatures of five of the petitioners do not signify
their consent to sell their shares in the questioned properties since petitioner Enriqueta merely signed as a
witness to the said Contract to Sell, and that the other petitioners, namely: Librado, Rizalino, Leonora, and
Bibiano, Jr., did not understand the importance and consequences of their action because of their low degree of
education and the contents of the aforesaid contract were not read nor explained to them; and (2) assuming that
the signatures indicate consent, such consent was merely conditional, thus, the effectivity of the alleged Contract
to Sell was subject to a suspensive condition, which is the approval by all the co-owners of the sale.
It is well-settled that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer
made by the offeror. From that moment, the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with
good faith, usage and law. To produce a contract, the acceptance must not qualify the terms of the offer. However,
the acceptance may be express or implied. For a contract to arise, the acceptance must be made known to the
offeror. Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror. 13
In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the respondent
of their shares in the subject parcels of land by affixing their signatures on the said contract. Such signatures
show their acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known
to respondent corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing
petitioners signatures.
As to petitioner Enriquetas claim that she merely signed as a witness to the said contract, the contract itself does
not say so. There was no single indication in the said contract that she signed the same merely as a witness. The
fact that her signature appears on the right-hand margin of the Contract to Sell is insignificant. The contract
indisputably referred to the "Heirs of Bibiano and Encarnacion Oesmer," and since there is no showing that
Enriqueta signed the document in some other capacity, it can be safely assumed that she did so as one of the
parties to the sale.
Emphasis should also be given to the fact that petitioners Ernesto and Enriqueta concurrently signed the Contract
to Sell. As the Court of Appeals mentioned in its Decision, 14 the records of the case speak of the fact that
petitioner Ernesto, together with petitioner Enriqueta, met with the representatives of the respondent in order to
finalize the terms and conditions of the Contract to Sell. Enriqueta affixed her signature on the said contract when
the same was drafted. She even admitted that she understood the undertaking that she and petitioner Ernesto
made in connection with the contract. She likewise disclosed that pursuant to the terms embodied in the Contract
to Sell, she updated the payment of the real property taxes and transferred the Tax Declarations of the questioned
properties in her name.15 Hence, it cannot be gainsaid that she merely signed the Contract to Sell as a witness
because she did not only actively participate in the negotiation and execution of the same, but her subsequent
actions also reveal an attempt to comply with the conditions in the said contract.

With respect to the other petitioners assertion that they did not understand the importance and consequences of
their action because of their low degree of education and because the contents of the aforesaid contract were not
read nor explained to them, the same cannot be sustained.
We only have to quote the pertinent portions of the Court of Appeals Decision, clear and concise, to dispose of
this issue. Thus,
First, the Contract to Sell is couched in such a simple language which is undoubtedly easy to read and
understand. The terms of the Contract, specifically the amount of 100,000.00 representing the option money
paid by [respondent] corporation, the purchase price of 60.00 per square meter or the total amount of
3,316,560.00 and a brief description of the subject properties are well-indicated thereon that any prudent and
mature man would have known the nature and extent of the transaction encapsulated in the document that he
was signing.
Second, the following circumstances, as testified by the witnesses and as can be gleaned from the records of the
case clearly indicate the [petitioners] intention to be bound by the stipulations chronicled in the said Contract to
Sell.
As to [petitioner] Ernesto, there is no dispute as to his intention to effect the alienation of the subject property as
he in fact was the one who initiated the negotiation process and culminated the same by affixing his signature on
the Contract to Sell and by taking receipt of the amount of 100,000.00 which formed part of the purchase price.
xxxx
As to [petitioner] Librado, the [appellate court] finds it preposterous that he willingly affixed his signature on a
document written in a language (English) that he purportedly does not understand. He testified that the document
was just brought to him by an 18 year old niece named Baby and he was told that the document was for a check
to be paid to him. He readily signed the Contract to Sell without consulting his other siblings. Thereafter, he
exerted no effort in communicating with his brothers and sisters regarding the document which he had signed, did
not inquire what the check was for and did not thereafter ask for the check which is purportedly due to him as a
result of his signing the said Contract to Sell. (TSN, 28 September 1993, pp. 22-23)
The [appellate court] notes that Librado is a 43 year old family man (TSN, 28 September 1993, p. 19). As such, he
is expected to act with that ordinary degree of care and prudence expected of a good father of a family. His
unwitting testimony is just divinely disbelieving.
The other [petitioners] (Rizalino, Leonora and Bibiano Jr.) are likewise bound by the said Contract to Sell. The
theory adopted by the [petitioners] that because of their low degree of education, they did not understand the
contents of the said Contract to Sell is devoid of merit. The [appellate court] also notes that Adolfo (one of the co-
heirs who did not sign) also possess the same degree of education as that of the signing co-heirs (TSN, 15
October 1991, p. 19). He, however, is employed at the Provincial Treasury Office at Trece Martirez, Cavite and
has even accompanied Rogelio Paular to the Assessors Office to locate certain missing documents which were
needed to transfer the titles of the subject properties. (TSN, 28 January 1994, pp. 26 & 35) Similarly, the other co-
heirs [petitioners], like Adolfo, are far from ignorant, more so, illiterate that they can be extricated from their
obligations under the Contract to Sell which they voluntarily and knowingly entered into with the [respondent]
corporation.
The Supreme Court in the case of Cecilia Mata v. Court of Appeals (207 SCRA 753 [1992]), citing the case of Tan
Sua Sia v. Yu Baio Sontua (56 Phil. 711), instructively ruled as follows:
"The Court does not accept the petitioners claim that she did not understand the terms and conditions of the
transactions because she only reached Grade Three and was already 63 years of age when she signed the
documents. She was literate, to begin with, and her age did not make her senile or incompetent. x x x.

At any rate, Metrobank had no obligation to explain the documents to the petitioner as nowhere has it been
proven that she is unable to read or that the contracts were written in a language not known to her. It was her
responsibility to inform herself of the meaning and consequence of the contracts she was signing and, if she
found them difficult to comprehend, to consult other persons, preferably lawyers, to explain them to her. After all,
the transactions involved not only a few hundred or thousand pesos but, indeed, hundreds of thousands of pesos.
As the Court has held:
x x x The rule that one who signs a contract is presumed to know its contents has been applied even to contracts
of illiterate persons on the ground that if such persons are unable to read, they are negligent if they fail to have the
contract read to them. If a person cannot read the instrument, it is as much his duty to procure some reliable
persons to read and explain it to him, before he signs it, as it would be to read it before he signed it if he were able
to do and his failure to obtain a reading and explanation of it is such gross negligence as will estop from avoiding
it on the ground that he was ignorant of its contents."16
That the petitioners really had the intention to dispose of their shares in the subject parcels of land, irrespective of
whether or not all of the heirs consented to the said Contract to Sell, was unveiled by Adolfos testimony as
follows:
ATTY. GAMO: This alleged agreement between you and your other brothers and sisters that unless everybody will
agree, the properties would not be sold, was that agreement in writing?
WITNESS: No sir.
ATTY. GAMO: What you are saying is that when your brothers and sisters except Jesus and you did not sign that
agreement which had been marked as [Exhibit] "D", your brothers and sisters were grossly violating your
agreement.
WITNESS: Yes, sir, they violated what we have agreed upon. 17
We also cannot sustain the allegation of the petitioners that assuming the signatures indicate consent, such
consent was merely conditional, and that, the effectivity of the alleged Contract to Sell was subject to the
suspensive condition that the sale be approved by all the co-owners. The Contract to Sell is clear enough. It is a
cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation shall control. 18 The terms of the Contract to
Sell made no mention of the condition that before it can become valid and binding, a unanimous consent of all the
heirs is necessary. Thus, when the language of the contract is explicit, as in the present case, leaving no doubt as
to the intention of the parties thereto, the literal meaning of its stipulation is controlling.
In addition, the petitioners, being owners of their respective undivided shares in the subject properties, can
dispose of their shares even without the consent of all the co-heirs. Article 493 of the Civil Code expressly
provides:
Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect
to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination
of the co-ownership. [Emphases supplied.]
Consequently, even without the consent of the two co-heirs, Adolfo and Jesus, the Contract to Sell is still valid and
binding with respect to the 6/8 proportionate shares of the petitioners, as properly held by the appellate court.

Therefore, this Court finds no error in the findings of the Court of Appeals that all the petitioners who were
signatories in the Contract to Sell are bound thereby.
The final arguments of petitioners state that the Contract to Sell is void altogether considering that respondent
itself did not sign it as to indicate its consent to be bound by its terms; and moreover, the Contract to Sell is really
a unilateral promise to sell without consideration distinct from the price, and hence, again, void. Said arguments
must necessarily fail.
The Contract to Sell is not void merely because it does not bear the signature of the respondent corporation.
Respondent corporations consent to be bound by the terms of the contract is shown in the uncontroverted facts
which established that there was partial performance by respondent of its obligation in the said Contract to Sell
when it tendered the amount of 100,000.00 to form part of the purchase price, which was accepted and
acknowledged expressly by petitioners. Therefore, by force of law, respondent is required to complete the
payment to enforce the terms of the contract. Accordingly, despite the absence of respondents signature in the
Contract to Sell, the former cannot evade its obligation to pay the balance of the purchase price.
As a final point, the Contract to Sell entered into by the parties is not a unilateral promise to sell merely because it
used the word option money when it referred to the amount of 100,000.00, which also form part of the purchase
price.
Settled is the rule that in the interpretation of contracts, the ascertainment of the intention of the contracting
parties is to be discharged by looking to the words they used to project that intention in their contract, all the
words, not just a particular word or two, and words in context, not words standing alone. 19
In the instant case, the consideration of 100,000.00 paid by respondent to petitioners was referred to as "option
money." However, a careful examination of the words used in the contract indicates that the money is not option
money but earnest money. "Earnest money" and "option money" are not the same but distinguished thus: (a)
earnest money is part of the purchase price, while option money is the money given as a distinct consideration for
an option contract; (b) earnest money is given only where there is already a sale, while option money applies to a
sale not yet perfected; and, (c) when earnest money is given, the buyer is bound to pay the balance, while when
the would-be buyer gives option money, he is not required to buy, but may even forfeit it depending on the terms
of the option.20
The sum of 100,000.00 was part of the purchase price. Although the same was denominated as "option money,"
it is actually in the nature of earnest money or down payment when considered with the other terms of the
contract. Doubtless, the agreement is not a mere unilateral promise to sell, but, indeed, it is a Contract to Sell as
both the trial court and the appellate court declared in their Decisions.
WHEREFORE, premises considered, the Petition is DENIED, and the Decision and Resolution of the Court of
Appeals dated 26 April 2002 and 4 March 2003, respectively, are AFFIRMED, thus, (a) the Contract to Sell
is DECLARED valid and binding with respect to the undivided proportionate shares in the subject parcels of land
of the six signatories of the said document, herein petitioners Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr.,
and Leonora (all surnamed Oesmer); (b) respondent is ORDERED to tender payment to petitioners in the amount
of 3,216,560.00 representing the balance of the purchase price for the latters shares in the subject parcels of
land; and (c) petitioners are further ORDERED to execute in favor of respondent the Deed of Absolute Sale
covering their shares in the subject parcels of land after receipt of the balance of the purchase price, and to pay
respondent attorneys fees plus costs of the suit. Costs against petitioners.
SO ORDERED.

RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO, ERNESTO, LEONORA,
BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed OESMER, Petitioners, vs. PARAISO
DEVELOPMENT CORPORATION, Respondent.
FACTS: Petitioners together with Adolfo Oesmer and Jesus Oesmer, are brothers and sisters, and the co-owners
of undivided shares of two parcels of agricultural and tenanted land which were acquired by right of succession.
Respondent Paraiso Development Corporation is known to be engaged in the real estate business.
This case originated when Ernesto Oesmer, one of the co-owners of the subject land, met with the President of
respondent corporation for the purpose of brokering the sale of petitioners properties to respondent corporation.
Pursuant to the said meeting, a Contract to Sell was drafted whereby petitioners Ernesto and Enriqueta
subsequently signed the aforesaid Contract to Sell. A check in the amount of P100,000.00, payable to Ernesto,
was given as option money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said
Contract to Sell. However, two of the brothers, Adolfo and Jesus, did not sign the document.
Later on, petitioners informed the respondent, through a letter, of their intention to rescind the Contract to Sell and
to return the amount of P100,000.00 given by respondent as option money. Respondent did not respond to the
aforesaid letter. Afterwards, herein petitioners, together with Adolfo and Jesus, filed a Complaint for Declaration of
Nullity or for Annulment of Option Agreement or Contract to Sell with Damages before the RTC.
The trial court held that the assailed Contract to Sell is valid and binding only to the undivided proportionate share
of Ernesto who signed the document and received the check. Ernesto was ordered to execute the Contract of
Absolute Sale concerning his 1/8 share over the subject two parcels of land in favor of respondent.
On appeal, the Court of Appeals modified the decision of RTC whereby it declared that the Contract to Sell is valid
and binding with respect to the undivided proportionate share of the six signatories of the document.
ISSUE: Whether or not the contract to sell binds the co-owners of Ernesto.
HELD: Yes. The contract to sell was valid and binding. In contrast to the contention of the five co-owners who
affixed their signatures in the contract to sell that their signatures do not confer authority to Ernesto as an agent to
sell their shares, the Court held that they were selling the same directly and in their own right. Hence, written
authority is no longer necessary since they were selling their shares in their own capacity as owners.
In addition, the petitioners, being owners of their respective undivided shares in the subject properties, can
dispose of their shares even without the consent of all the co-heirs. Article 493 of the Civil Code provides that,
Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he
may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall
be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

Consequently, even without the consent of the two co-heirs, Adolfo and Jesus, the Contract to Sell was valid and
binding with respect to the 6/8 proportionate shares of the petitioners.
Oesmer vs. Paraiso Development Corporation, 514 SCRA 228(2007)
FACTS:
Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriquita, all surnamed Oesmer, together with
Adolfo Oesmer and Jesus Oesmer, are brothers and sisters, and the co-owners of undivided shares of two parcel
of land. Respondent Paraiso Development Corporation bought from petitioners their respective share of the lot
except the Adolfo and Jesus share. After the said meeting, a Contract to Sell was created between the parties, on
which the petitioners affirming their signatures in the said contract.
Then the petitioners withdrew from the said contract and ask for the rescission to which they allege that they
never sign the contract, the agent has no authority from the petitioners, that said petitioner was illiterate to sign
the contract, etc.
ISSUE:
Whether or not there was a perfected contract between petitioners and respondents.
RULING:
The law itself explicitly requires a written authority before an agent can sell an immovable. The conferment of
such an authority should be in writing, in as clear and precise terms as possible. It is worth noting that petitioners
signatures are found in the Contract to Sell. The Contract is absolutely silent on the establishment of any
principal-agent relationship between the five petitioners and their brother and co-petitioner Ernesto as to the sale
of the subject parcels of land. Thus, the Contract to Sell, although signed on the margin by the five petitioners, is
not sufficient to confer authority on petitioner Ernesto to act as their agent in selling their shares in the properties
in question. However, despite petitioner Ernestos lack of written authority from the five petitioners to sell their
shares in the subject parcels of land, the supposed Contract to Sell remains valid and binding upon the latter. As
can be clearly gleaned from the contract itself, it is not only petitioner Ernesto who signed the said Contract to
Sell; the other five petitioners also personally affixed their signatures thereon. Therefore, a written authority is no
longer necessary in order to sell their shares in the subject parcels of land because, by affixing their signatures on
the Contract to Sell, they were not selling their shares through an agent but, rather, they were selling the same
directly and in their own right.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 112212 March 2, 1998
GREGORIO FULE, petitioner,

vs.
COURT OF APPEALS, NINEVETCH CRUZ and JUAN BELARMINO, respondents.
ROMERO, J.:
This petition for review on certiorari questions the affirmance by the Court of Appeals of the decision 1 of the
Regional Trial Court of San Pablo City, Branch 30, dismissing the complaint that prayed for the nullification of a
contract of sale of a 10-hectare property in Tanay, Rizal in consideration of the amount of P40,000.00 and a 2.5
carat emerald-cut diamond (Civil Case No. SP-2455). The lower court's decision disposed of the case as follows:
WHEREFORE, premises considered, the Court hereby renders judgment dismissing the
complaint for lack of merit and ordering plaintiff to pay:
1. Defendant Dra. Ninevetch M. Cruz the sum of P300,000.00 as and for moral damages and the
sum of P100,000.00 as and for exemplary damages;
2. Defendant Atty. Juan Belarmino the sum of P250,000.00 as and for moral damages and the
sum of P150,000.00 as and for exemplary damages;
3. Defendant Dra. Cruz and Atty. Belarmino the sum of P25,000.00 each as and for attorney's
fees and litigation expenses; and
4. The costs of suit.
SO ORDERED.
As found by the Court of Appeals and the lower court, the antecedent facts of this case are as follows:

Petitioner Gregorio Fule, a banker by profession and a jeweler at the same time, acquired a 10-hectare property
in Tanay, Rizal (hereinafter "Tanay property"), covered by Transfer Certificate of Title No. 320725 which used to be
under the name of Fr. Antonio Jacobe. The latter had mortgaged it earlier to the Rural Bank of Alaminos (the
Bank), Laguna, Inc. to secure a loan in the amount of P10,000.00, but the mortgage was later foreclosed and the
property offered for public auction upon his default.
In July 1984, petitioner, as corporate secretary of the bank, asked Remelia Dichoso and Oliva Mendoza to look for
a buyer who might be interested in the Tanay property. The two found one in the person of herein private
respondent Dr. Ninevetch Cruz. It so happened that at the time, petitioner had shown interest in buying a pair of
emerald-cut diamond earrings owned by Dr. Cruz which he had seen in January of the same year when his
mother examined and appraised them as genuine. Dr. Cruz, however, declined petitioner's offer to buy the jewelry
for P100,000.00. Petitioner then made another bid to buy them for US$6,000.00 at the exchange rate of $1.00 to
P25.00. At this point, petitioner inspected said jewelry at the lobby of the Prudential Bank branch in San Pablo
City and then made a sketch thereof. Having sketched the jewelry for twenty to thirty minutes, petitioner gave
them back to Dr. Cruz who again refused to sell them since the exchange rate of the peso at the time appreciated
to P19.00 to a dollar.
Subsequently, however, negotiations for the barter of the jewelry and the Tanay property ensued. Dr. Cruz
requested herein private respondent Atty. Juan Belarmino to check the property who, in turn, found out that no
sale or barter was feasible because the one-year period for redemption of the said property had not yet expired at
the time.
In an effort to cut through any legal impediment, petitioner executed on October 19, 1984, a deed of redemption
on behalf of Fr. Jacobe purportedly in the amount of P15,987.78, and on even date, Fr. Jacobe sold the property
to petitioner for P75,000.00. The haste with which the two deeds were executed is shown by the fact that the deed
of sale was notarized ahead of the deed of redemption. As Dr. Cruz had already agreed to the proposed barter,
petitioner went to Prudential Bank once again to take a look at the jewelry.
In the afternoon of October 23, 1984, petitioner met Atty. Belarmino at the latter's residence to prepare the
documents of sale.2 Dr. Cruz herself was not around but Atty. Belarmino was aware that she and petitioner had
previously agreed to exchange a pair of emerald-cut diamond earrings for the Tanay property. Atty. Belarmino
accordingly caused the preparation of a deed of absolute sale while petitioner and Dr. Cruz attended to the
safekeeping of the jewelry.
The following day, petitioner, together with Dichoso and Mendoza, arrived at the residence of Atty. Belarmino to
finally execute a deed of absolute sale. Petitioner signed the deed and gave Atty. Belarmino the amount of
P13,700.00 for necessary expenses in the transfer of title over the Tanay property. Petitioner also issued a
certification to the effect that the actual consideration of the sale was P200,000.00 and not P80,000.00 as
indicated in the deed of absolute sale. The disparity between the actual contract price and the one indicated on
the deed of absolute sale was purportedly aimed at minimizing the amount of the capital gains tax that petitioner
would have to shoulder. Since the jewelry was appraised only at P160,000.00, the parties agreed that the balance
of P40,000.00 would just be paid later in cash.
As pre-arranged, petitioner left Atty. Belarmino's residence with Dichoso and Mendoza and headed for the bank,
arriving there at past 5:00 p.m. Dr. Cruz also arrived shortly thereafter, but the cashier who kept the other key to
the deposit box had already left the bank. Dr. Cruz and Dichoso, therefore, looked for said cashier and found him
having a haircut. As soon as his haircut was finished, the cashier returned to the bank and arrived there at 5:48
p.m., ahead of Dr. Cruz and Dichoso who arrived at 5:55 p.m. Dr. Cruz and the cashier then opened the safety
deposit box, the former retrieving a transparent plastic or cellophane bag with the jewelry inside and handing over
the same to petitioner. The latter took the jewelry from the bag, went near the electric light at the bank's lobby,
held the jewelry against the light and examined it for ten to fifteen minutes. After a while, Dr. Cruz asked, " Okay
na ba iyan?" Petitioner expressed his satisfaction by nodding his head.

For services rendered, petitioner paid the agents, Dichoso and Mendoza, the amount of US$300.00 and some
pieces of jewelry. He did not, however, give them half of the pair of earrings in question which he had earlier
promised.
Later, at about 8:00 o'clock in the evening of the same day, petitioner arrived at the residence of Atty. Belarmino
complaining that the jewelry given to him was fake. He then used a tester to prove the alleged fakery. Meanwhile,
at 8:30 p.m., Dichoso and Mendoza went to the residence of Dr. Cruz to borrow her car so that, with Atty.
Belarmino, they could register the Tanay property. After Dr. Cruz had agreed to lend her car, Dichoso called up
Atty. Belarmino. The latter, however, instructed Dichoso to proceed immediately to his residence because
petitioner was there. Believing that petitioner had finally agreed to give them half of the pair of earrings, Dichoso
went posthaste to the residence of Atty. Belarmino only to find petitioner already demonstrating with a tester that
the earrings were fake. Petitioner then accused Dichoso and Mendoza of deceiving him which they, however,
denied. They countered that petitioner could not have been fooled because he had vast experience regarding
jewelry. Petitioner nonetheless took back the US$300.00 and jewelry he had given them.
Thereafter, the group decided to go to the house of a certain Macario Dimayuga, a jeweler, to have the earrings
tested. Dimayuga, after taking one look at the earrings, immediately declared them counterfeit. At around 9:30
p.m., petitioner went to one Atty. Reynaldo Alcantara residing at Lakeside Subdivision in San Pablo City,
complaining about the fake jewelry. Upon being advised by the latter, petitioner reported the matter to the police
station where Dichoso and Mendoza likewise executed sworn statements.
On October 26, 1984, petitioner filed a complaint before the Regional Trial Court of San Pablo City against private
respondents praying, among other things, that the contract of sale over the Tanay property be declared null and
void on the ground of fraud and deceit.
On October 30, 1984, the lower court issued a temporary restraining order directing the Register of Deeds of Rizal
to refrain from acting on the pertinent documents involved in the transaction. On November 20, 1984, however,
the same court lifted its previous order and denied the prayer for a writ of preliminary injunction.
After trial, the lower court rendered its decision on March 7, 1989. Confronting the issue of whether or not the
genuine pair of earrings used as consideration for the sale was delivered by Dr. Cruz to petitioner, the lower court
said:
The Court finds that the answer is definitely in the affirmative. Indeed, Dra. Cruz delivered (the)
subject jewelries (sic) into the hands of plaintiff who even raised the same nearer to the lights of
the lobby of the bank near the door. When asked by Dra. Cruz if everything was in order, plaintiff
even nodded his satisfaction (Hearing of Feb. 24, 1988). At that instance, plaintiff did not protest,
complain or beg for additional time to examine further the jewelries (sic). Being a professional
banker and engaged in the jewelry business plaintiff is conversant and competent to detect a fake
diamond from the real thing. Plaintiff was accorded the reasonable time and opportunity to
ascertain and inspect the jewelries (sic) in accordance with Article 1584 of the Civil Code. Plaintiff
took delivery of the subject jewelries (sic) before 6:00 p.m. of October 24, 1984. When he went at
8:00 p.m. that same day to the residence of Atty. Belarmino already with a tester complaining
about some fake jewelries (sic), there was already undue delay because of the lapse of a
considerable length of time since he got hold of subject jewelries (sic). The lapse of two (2) hours
more or less before plaintiff complained is considered by the Court as unreasonable delay. 3
The lower court further ruled that all the elements of a valid contract under Article 1458 of the Civil Code were
present, namely: (a) consent or meeting of the minds; (b) determinate subject matter, and (c) price certain in
money or its equivalent. The same elements, according to the lower court, were present despite the fact that the
agreement between petitioner and Dr. Cruz was principally a barter contract. The lower court explained thus:
. . . . Plaintiff's ownership over the Tanay property passed unto Dra. Cruz upon the constructive
delivery thereof by virtue of the Deed of Absolute Sale (Exh. D). On the other hand, the ownership

of Dra. Cruz over the subject jewelries (sic) transferred to the plaintiff upon her actual personal
delivery to him at the lobby of the Prudential Bank. It is expressly provided by law that the thing
sold shall be understood as delivered, when it is placed in the control and possession of the
vendee (Art. 1497, Civil Code; Kuenzle & Straff vs. Watson & Co. 13 Phil. 26). The ownership
and/or title over the jewelries (sic) was transmitted immediately before 6:00 p.m. of October 24,
1984. Plaintiff signified his approval by nodding his head. Delivery or tradition, is one of the
modes of acquiring ownership (Art. 712, Civil Code).
Similarly, when Exhibit D was executed, it was equivalent to the delivery of the Tanay property in
favor of Dra. Cruz. The execution of the public instrument (Exh. D) operates as a formal or
symbolic delivery of the Tanay property and authorizes the buyer, Dra. Cruz to use the document
as proof of ownership (Florendo v. Foz, 20 Phil. 399). More so, since Exhibit D does not contain
any proviso or stipulation to the effect that title to the property is reserved with the vendor until full
payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally
rescind the contract the moment the vendee fails to pay within a fixed period (Taguba v. Vda. De
Leon, 132 SCRA 722; Luzon Brokerage Co. Inc. vs. Maritime Building Co. Inc. 86 SCRA 305;
Froilan v. Pan Oriental Shipping Co. et al. 12 SCRA 276). 4
Aside from concluding that the contract of barter or sale had in fact been consummated when petitioner and Dr.
Cruz parted ways at the bank, the trial court likewise dwelt on the unexplained delay with which petitioner
complained about the alleged fakery. Thus:
. . . . Verily, plaintiff is already estopped to come back after the lapse of considerable length of
time to claim that what he got was fake. He is a Business Management graduate of La Salle
University, Class 1978-79, a professional banker as well as a jeweler in his own right. Two hours
is more than enough time to make a switch of a Russian diamond with the real diamond. It must
be remembered that in July 1984 plaintiff made a sketch of the subject jewelries (sic) at the
Prudential Bank. Plaintiff had a tester at 8:00 p.m. at the residence of Atty. Belarmino. Why then
did he not bring it out when he was examining the subject jewelries (sic) at about 6:00 p.m. in the
bank's lobby? Obviously, he had no need for it after being satisfied of the genuineness of the
subject jewelries (sic). When Dra. Cruz and plaintiff left the bank both of them had fully performed
their respective prestations. Once a contract is shown to have been consummated or fully
performed by the parties thereto, its existence and binding effect can no longer be disputed. It is
irrelevant and immaterial to dispute the due execution of a contract if both of them have in fact
performed their obligations thereunder and their respective signatures and those of their
witnesses appear upon the face of the document (Weldon Construction v. CA G.R. No. L-35721,
Oct. 12, 1987).5
Finally, in awarding damages to the defendants, the lower court remarked:
The Court finds that plaintiff acted in wanton bad faith. Exhibit 2-Belarmino purports to show that
the Tanay property is worth P25,000.00. However, also on that same day it was executed, the
property's worth was magnified at P75,000.00 (Exh. 3-Belarmino). How could in less than a day
(Oct. 19, 1984) the value would (sic) triple under normal circumstances? Plaintiff, with the
assistance of his agents, was able to exchange the Tanay property which his bank valued only at
P25,000.00 in exchange for a genuine pair of emerald cut diamond worth P200,000.00 belonging
to Dra. Cruz. He also retrieved the US$300.00 and jewelries (sic) from his agents. But he was not
satisfied in being able to get subject jewelries for a song. He had to file a malicious and
unfounded case against Dra. Cruz and Atty. Belarmino who are well known, respected and held in
high esteem in San Pablo City where everybody practically knows everybody. Plaintiff came to
Court with unclean hands dragging the defendants and soiling their clean and good name in the
process. Both of them are near the twilight of their lives after maintaining and nurturing their good
reputation in the community only to be stunned with a court case. Since the filing of this case on
October 26, 1984 up to the present they were living under a pall of doubt. Surely, this affected not
only their earning capacity in their practice of their respective professions, but also they suffered

besmirched reputations. Dra. Cruz runs her own hospital and defendant Belarmino is a well
respected legal practitioner. The length of time this case dragged on during which period their
reputation were (sic) tarnished and their names maligned by the pendency of the case, the Court
is of the belief that some of the damages they prayed for in their answers to the complaint are
reasonably proportionate to the sufferings they underwent (Art. 2219, New Civil Code). Moreover,
because of the falsity, malice and baseless nature of the complaint defendants were compelled to
litigate. Hence, the award of attorney's fees is warranted under the circumstances (Art. 2208,
New Civil Code).6
From the trial court's adverse decision, petitioner elevated the matter to the Court of Appeals. On October 20,
1992, the Court of Appeals, however, rendered a decision 7 affirming in toto the lower court's decision. His motion
for reconsideration having been denied on October 19, 1993, petitioner now files the instant petition alleging that:
I. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFF'S COMPLAINT AND IN HOLDING

THAT THE PLAINTIFF ACTUALLY RECEIVED A GENUINE PAIR OF EMERALD CUT DIAMOND
EARRING(S) FROM DEFENDANT CRUZ . . . ;
II. THE TRIAL COURT ERRED IN AWARDING MORAL AND EXEMPLARY DAMAGES AND
ATTORNEY'S FEES IN FAVOR OF DEFENDANTS AND AGAINST THE PLAINTIFF IN THIS
CASE; and
III. THE TRIAL, COURT ERRED IN NOT DECLARING THE DEED OF SALE OF THE TANAY
PROPERTY (EXH. "D") AS NULL AND VOID OR IN NOT ANNULLING THE SAME, AND IN
FAILING TO GRANT REASONABLE DAMAGES IN FAVOR OF THE PLAINTIFF. 8
As to the first allegation, the Court observes that petitioner is essentially raising a factual issue as it invites us to
examine and weigh anew the facts regarding the genuineness of the earrings bartered in exchange for the Tanay
property. This, of course, we cannot do without unduly transcending the limits of our review power in petitions of
this nature which are confined merely to pure questions of law. We accord, as a general rule, conclusiveness to a
lower court's findings of fact unless it is shown, inter alia, that: (1) the conclusion is a finding grounded on
speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd and impossible; (3) when
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; and (6) when the Court of Appeals, in making its findings, went beyond the issues
of the case and the same is contrary to the admission of both parties. 9 We find nothing, however, that warrants
the application of any of these exceptions.
Consequently, this Court upholds the appellate court's findings of fact especially because these concur with those
of the trial court which, upon a thorough scrutiny of the records, are firmly grounded on evidence presented at the
trial. 10 To reiterate, this Court's jurisdiction is only limited to reviewing errors of law in the absence of any showing
that the findings complained of are totally devoid of support in the record or that they are glaringly erroneous as to
constitute serious abuse of discretion. 11
Nonetheless, this Court has to closely delve into petitioner's allegation that the lower court's decision of March 7,
1989 is a "ready-made" one because it was handed down a day after the last date of the trial of the
case. 12 Petitioner, in this regard, finds it incredible that Judge J. Ausberto Jaramillo was able to write a 12-page
single-spaced decision, type it and release it on March 7, 1989, less than a day after the last hearing on March 6,
1989. He stressed that Judge Jaramillo replaced Judge Salvador de Guzman and heard only his rebuttal
testimony.
This allegation is obviously no more than a desperate effort on the part of petitioner to disparage the lower court's
findings of fact in order to convince this Court to review the same. It is noteworthy that Atty. Belarmino clarified
that Judge Jaramillo had issued the first order in the case as early as March 9, 1987 or two years before the
rendition of the decision. In fact, Atty. Belarmino terminated presentation of evidence on October 13, 1987, while
Dr. Cruz finished hers on February 4, 1989, or more than a month prior to the rendition of the judgment. The

March 6, 1989 hearing was conducted solely for the presentation of petitioner's rebuttal testimony. 13 In other
words, Judge Jaramillo had ample time to study the case and write the decision because the rebuttal evidence
would only serve to confirm or verify the facts already presented by the parties.
The Court finds nothing anomalous in the said situation. No proof has been adduced that Judge Jaramillo was
motivated by a malicious or sinister intent in disposing of the case with dispatch. Neither is there proof that
someone else wrote the decision for him. The immediate rendition of the decision was no more than Judge
Jaramillo's compliance with his duty as a judge to "dispose of the court's business promptly and decide cases
within the required periods." 14 The two-year period within which Judge Jaramillo handled the case provided him
with all the time to study it and even write down its facts as soon as these were presented to court. In fact, this
Court does not see anything wrong in the practice of writing a decision days before the scheduled promulgation of
judgment and leaving the dispositive portion for typing at a time close to the date of promulgation, provided that
no malice or any wrongful conduct attends its adoption. 15The practice serves the dual purposes of safeguarding
the confidentiality of draft decisions and rendering decisions with promptness. Neither can Judge Jaramillo be
made administratively answerable for the immediate rendition of the decision. The acts of a judge which pertain to
his judicial functions are not subject to disciplinary power unless they are committed with fraud, dishonesty,
corruption or bad faith. 16Hence, in the absence of sufficient proof to the contrary, Judge Jaramillo is presumed to
have performed his job in accordance with law and should instead be commended for his close attention to duty.
Having disposed of petitioner's first contention, we now come to the core issue of this petition which is whether
the Court of Appeals erred in upholding the validity of the contract of barter or sale under the circumstances of this
case.
The Civil Code provides that contracts are perfected by mere consent. From this moment, the parties are bound
not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according
to their nature, may be in keeping with good faith, usage and law. 17 A 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. 18 Being
consensual, a contract of sale has the force of law between the contracting parties and they are expected to abide
in good faith by their respective contractual commitments. Article 1358 of the Civil Code which requires the
embodiment of certain contracts in a public instrument, is only for convenience, 19 and registration of the
instrument only adversely affects third parties. 20 Formal requirements are, therefore, for the benefit of third
parties. Non-compliance therewith does not adversely affect the validity of the contract nor the contractual rights
and obligations of the parties thereunder.
It is evident from the facts of the case that there was a meeting of the minds between petitioner and Dr. Cruz. As
such, they are bound by the contract unless there are reasons or circumstances that warrant its nullification.
Hence, the problem that should be addressed in this case is whether or not under the facts duly established
herein, the contract can be voided in accordance with law so as to compel the parties to restore to each other the
things that have been the subject of the contract with their fruits, and the price with interest. 21
Contracts that are voidable or annullable, even though there may have been no damage to the contracting parties
are: (1) those where one of the parties is incapable of giving consent to a contract; and (2) those where the
consent is vitiated by mistake, violence, intimidation, undue influence or fraud. 22 Accordingly, petitioner now
stresses before this Court that he entered into the contract in the belief that the pair of emerald-cut diamond
earrings was genuine. On the pretext that those pieces of jewelry turned out to be counterfeit, however, petitioner
subsequently sought the nullification of said contract on the ground that it was, in fact, "tainted with fraud" 23 such
that his consent was vitiated.
There is fraud when, through the insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed to. 24 The records, however, are
bare of any evidence manifesting that private respondents employed such insidious words or machinations to
entice petitioner into entering the contract of barter. Neither is there any evidence showing that Dr. Cruz induced
petitioner to sell his Tanay property or that she cajoled him to take the earrings in exchange for said property. On
the contrary, Dr. Cruz did not initially accede to petitioner's proposal to buy the said jewelry. Rather, it appears that
it was petitioner, through his agents, who led Dr. Cruz to believe that the Tanay property was worth exchanging for

her jewelry as he represented that its value was P400,000.00 or more than double that of the jewelry which was
valued only at P160,000.00. If indeed petitioner's property was truly worth that much, it was certainly contrary to
the nature of a businessman-banker like him to have parted with his real estate for half its price. In short, it was in
fact petitioner who resorted to machinations to convince Dr. Cruz to exchange her jewelry for the Tanay property.
Moreover, petitioner did not clearly allege mistake as a ground for nullification of the contract of sale. Even
assuming that he did, petitioner cannot successfully invoke the same. To invalidate a contract, mistake must "refer
to the substance of the thing that is the object of the contract, or to those conditions which have principally moved
one or both parties to enter into the contract." 25 An example of mistake as to the object of the contract is the
substitution of a specific thing contemplated by the parties with another. 26 In his allegations in the complaint,
petitioner insinuated that an inferior one or one that had only Russian diamonds was substituted for the jewelry he
wanted to exchange with his 10-hectare land. He, however, failed to prove the fact that prior to the delivery of the
jewelry to him, private respondents endeavored to make such substitution.
Likewise, the facts as proven do not support the allegation that petitioner himself could be excused for the
"mistake." On account of his work as a banker-jeweler, it can be rightfully assumed that he was an expert on
matters regarding gems. He had the intellectual capacity and the business acumen as a banker to take
precautionary measures to avert such a mistake, considering the value of both the jewelry and his land. The fact
that he had seen the jewelry before October 24, 1984 should not have precluded him from having its genuineness
tested in the presence of Dr. Cruz. Had he done so, he could have avoided the present situation that he himself
brought about. Indeed, the finger of suspicion of switching the genuine jewelry for a fake inevitably points to him.
Such a mistake caused by manifest negligence cannot invalidate a juridical act. 27 As the Civil Code provides,
"(t)here is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the
contract."28
Furthermore, petitioner was afforded the reasonable opportunity required in Article 1584 of the Civil Code within
which to examine the jewelry as he in fact accepted them when asked by Dr. Cruz if he was satisfied with the
same. 29 By taking the jewelry outside the bank, petitioner executed an act which was more consistent with his
exercise of ownership over it. This gains credence when it is borne in mind that he himself had earlier delivered
the Tanay property to Dr. Cruz by affixing his signature to the contract of sale. That after two hours he later
claimed that the jewelry was not the one he intended in exchange for his Tanay property, could not sever the
juridical tie that now bound him and Dr. Cruz. The nature and value of the thing he had taken preclude its return
after that supervening period within which anything could have happened, not excluding the alteration of the
jewelry or its being switched with an inferior kind.
Both the trial and appellate courts, therefore, correctly ruled that there were no legal bases for the nullification of
the contract of sale. Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been
transferred to Dr. Cruz and petitioner, respectively, upon the actual and constructive delivery thereof. 30 Said
contract of sale being absolute in nature, title passed to the vendee upon delivery of the thing sold since there
was no stipulation in the contract that title to the property sold has been reserved in the seller until full payment of
the price or that the vendor has the right to unilaterally resolve the contract the moment the buyer fails to pay
within a fixed period. 31 Such stipulations are not manifest in the contract of sale.
While it is true that the amount of P40,000.00 forming part of the consideration was still payable to petitioner, its
nonpayment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and
possession of the things exchanged considering the fact that their contract is silent as to when it becomes due
and demandable. 32
Neither may such failure to pay the balance of the purchase price result in the payment of interest thereon. Article
1589 of the Civil Code prescribes the payment of interest by the vendee "for the period between the delivery of
the thing and the payment of the price" in the following cases:
(1) Should it have been so stipulated;

(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time of judicial or extrajudicial demand for the payment of the
price.
Not one of these cases obtains here. This case should, of course, be distinguished from De la Cruz
v. Legaspi, 33 where the court held that failure to pay the consideration after the notarization of the
contract as previously promised resulted in the vendee's liability for payment of interest. In the case at
bar, there is no stipulation for the payment of interest in the contract of sale nor proof that the Tanay
property produced fruits or income. Neither did petitioner demand payment of the price as in fact he filed
an action to nullify the contract of sale.
All told, petitioner appears to have elevated this case to this Court for the principal reason of mitigating the
amount of damages awarded to both private respondents which petitioner considers as "exorbitant." He contends
that private respondents do not deserve at all the award of damages. In fact, he pleads for the total deletion of the
award as regards private respondent Belarmino whom he considers a mere "nominal party" because "no specific
claim for damages against him" was alleged in the complaint. When he filed the case, all that petitioner wanted
was that Atty. Belarmino should return to him the owner's duplicate copy of TCT No. 320725, the deed of sale
executed by Fr. Antonio Jacobe, the deed of redemption and the check alloted for expenses. Petitioner alleges
further that Atty. Belarmino should not have delivered all those documents to Dr. Cruz because as the "lawyer for
both the seller and the buyer in the sale contract, he should have protected the rights of both parties." Moreover,
petitioner asserts that there was no firm basis for damages except for Atty. Belarmino's uncorroborated
testimony.34
Moral and exemplary damages may be awarded without proof of pecuniary loss. In awarding such damages, the
court shall take into account the circumstances obtaining in the case said assess damages according to its
discretion.35 To warrant the award of damages, it must be shown that the person to whom these are awarded has
sustained injury. He must likewise establish sufficient data upon which the court can properly base its estimate of
the amount of damages.36 Statements of facts should establish such data rather than mere conclusions or
opinions of witnesses. 37 Thus:
. . . . For moral damages to be awarded, it is essential that the claimant must have satisfactorily
proved during the trial the existence of the factual basis of the damages and its causal connection
with the adverse party's acts. If the court has no proof or evidence upon which the claim for moral
damages could be based, such indemnity could not be outrightly awarded. The same holds true
with respect to the award of exemplary damages where it must be shown that the party acted in a
wanton, oppressive or malevolent manner. 38
In this regard, the lower court appeared to have awarded damages on a ground analogous to malicious
prosecution under Article 2219 (8) of the Civil Code 39 as shown by (1) petitioner's "wanton bad faith" in bloating
the value of the Tanay property which he exchanged for "a genuine pair of emerald-cut diamond worth
P200,00.00;" and (2) his filing of a "malicious and unfounded case" against private respondents who were "well
known, respected and held in high esteem in San Pablo City where everybody practically knows everybody" and
whose good names in the "twilight of their lives" were soiled by petitioner's coming to court with "unclean hands,"
thereby affecting their earning capacity in the exercise of their respective professions and besmirching their
reputation.
For its part, the Court of Appeals affirmed the award of damages to private respondents for these reasons:
The malice with which Fule filed this case is apparent. Having taken possession of the genuine
jewelry of Dra. Cruz, Fule now wishes to return a fake jewelry to Dra. Cruz and, more than that,
get back the real property, which his bank owns. Fule has obtained a genuine jewelry which he
could sell anytime, anywhere and to anybody, without the same being traced to the original owner
for practically nothing. This is plain and simple, unjust enrichment. 40

While, as a rule, moral damages cannot be recovered from a person who has filed a complaint against another in
good faith because it is not sound policy to place a penalty on the right to litigate, 41 the same, however, cannot
apply in the case at bar. The factual findings of the courts a quo to the effect that petitioner filed this case because
he was the victim of fraud; that he could not have been such a victim because he should have examined the
jewelry in question before accepting delivery thereof, considering his exposure to the banking and jewelry
businesses; and that he filed the action for the nullification of the contract of sale with unclean hands, all deserve
full faith and credit to support the conclusion that petitioner was motivated more by ill will than a sincere attempt to
protect his rights in commencing suit against respondents.
As pointed out earlier, a closer scrutiny of the chain of events immediately prior to and on October 24, 1984 itself
would amply demonstrate that petitioner was not simply negligent in failing to exercise due diligence to assure
himself that what he was taking in exchange for his property were genuine diamonds. He had rather placed
himself in a situation from which it preponderantly appears that his seeming ignorance was actually just a ruse.
Indeed, he had unnecessarily dragged respondents to face the travails of litigation in speculating at the possible
favorable outcome of his complaint when he should have realized that his supposed predicament was his own
making. We, therefore, see here no semblance of an honest and sincere belief on his part that he was swindled
by respondents which would entitle him to redress in court. It must be noted that before petitioner was able to
convince Dr. Cruz to exchange her jewelry for the Tanay property, petitioner took pains to thoroughly examine said
jewelry, even going to the extent of sketching their appearance. Why at the precise moment when he was about to
take physical possession thereof he failed to exert extra efforts to check their genuineness despite the large
consideration involved has never been explained at all by petitioner. His acts thus failed to accord with what an
ordinary prudent man would have done in the same situation. Being an experienced banker and a businessman
himself who deliberately skirted a legal impediment in the sale of the Tanay property and to minimize the capital
gains tax for its exchange, it was actually gross recklessness for him to have merely conducted a cursory
examination of the jewelry when every opportunity for doing so was not denied him. Apparently, he carried on his
person a tester which he later used to prove the alleged fakery but which he did not use at the time when it was
most needed. Furthermore, it took him two more hours of unexplained delay before he complained that the
jewelry he received were counterfeit. Hence, we stated earlier that anything could have happened during all the
time that petitioner was in complete possession and control of the jewelry, including the possibility of substituting
them with fake ones, against which respondents would have a great deal of difficulty defending themselves. The
truth is that petitioner even failed to successfully prove during trial that the jewelry he received from Dr. Cruz were
not genuine. Add to that the fact that he had been shrewd enough to bloat the Tanay property's price only a few
days after he purchased it at a much lower value. Thus, it is our considered view that if this slew of circumstances
were connected, like pieces of fabric sewn into a quilt, they would sufficiently demonstrate that his acts were not
merely negligent but rather studied and deliberate.
We do not have here, therefore, a situation where petitioner's complaint was simply found later to be based on an
erroneous ground which, under settled jurisprudence, would not have been a reason for awarding moral and
exemplary damages. 42 Instead, the cause of action of the instant case appears to have been contrived by
petitioner himself. In other words, he was placed in a situation where he could not honestly evaluate whether his
cause of action has a semblance of merit, such that it would require the expertise of the courts to put it to a test.
His insistent pursuit of such case then coupled with circumstances showing that he himself was guilty in bringing
about the supposed wrongdoing on which he anchored his cause of action would render him answerable for all
damages the defendant may suffer because of it. This is precisely what took place in the petition at bar and we
find no cogent reason to disturb the findings of the courts below that respondents in this case suffered
considerable damages due to petitioner's unwarranted action.
WHEREFORE, the decision of the Court of Appeals dated October 20, 1992 is hereby AFFIRMED in toto. Dr.
Cruz, however, is ordered to pay petitioner the balance of the purchase price of P40,000.00 within ten (10) days
from the finality of this decision. Costs against petitioner.
SO ORDERED.

Gregorio Fule vs CA, Cruz and Belarmino (286 SCRA 698)
Facts:
Gregorio Fule, a banker and jeweler, acquired a 10 hectare of property in Rizal which used to be under the name
of Fr. Jacobe on which (Jacobe) mortgaged the land to the Bank of Alaminos to secure a loan of P10,000. The
mortgage was forclosed and the property later offered for public auction.
1984, Gregorio asked Remilia and Oliva to look for a buyer (property), the found Dr. Cruz, just so happens that
Gregorio wants the 2.5 carat EMERALD CUT EARRINGS of Dr. Ninevetch Cruz (MD), Gregorio offered to buy
the jewelry for P100,000, was refused, he then offered $6000 in the exchange rate of $1 is to P25, was still
refused. They agreed, however, on the land of Fule for the jewelry.
Dr. Cruz asked her counsel, Atty. Belarmino to check the land for any impediments. There was. Gregorio then
executed to a DEED OF REDEMPTION to cut through the legal impediment. Land is now A-Okay J
Dr. Cruz went to the bank with Gregorio to show the jewelry and said (non-verbatim Oy bobo check this shit out,
tapat mo sa ilaw to see if its fake or not. ICE ba?. Gregorio checked it and was happy. Gregorio and the counsel
executed a DEED OF ABSOLUTE SALE. The Property was for P200,000 and the Jewelry for P160,000, both
agreed that Dr. Cruz will pay the remaining P40,000 by cash.
Gregorio happy with his jewelry, went straight to a appraiser named *wait for it* DIMAYUGA hahahahaha but
anyway, Dimayuga said that the jewel is fake.
Gregorio then filed a complaint before the RTC, praying for the CONTRACT OF SALE be deemed null and void.
RTC ruled in favor of Cruz stating that Gerggy boy was in badfaith. CA affirmed.
Issue:
W/ON CA erred in upholding the validity of the Contract of Sale
Held:
No. The NCC provides that the Contract of Sale is consensual, and is perfected when the minds met. Contract
may be rendered void if (1) Party has no capacity to give consent, and (2) if consent was gained because of
VIMFU (Violence, Intimidation, Mistake, Fraud, and Undue Influence). Dr. Cruz was not Fraudulent. SC said that
Greggy Boy was also a jeweler, he was given time to inspect the jewel before perfecting the contract.

Fule vs CA
FACTS:
Gregorio Fule, a banker by profession and a jeweler at the same time, acquired a 10 hectare property in Tanay,
Rizal. The said property used to be owned by Fr. Antonio Jacobe, who mortgaged the same to the Rural Bank of
Alaminos, Laguna Inc. to secure a loan. But the mortgage was later foreclosed and the property offered for public
auction upon his default.
Petitioner Fule, as corporate secretary of the bank, asked Dichos and Mendoza to look for a buyer who might be
interested in the Tanay property. The two found one in the person of herein private respondent Dr. Nineveth Cruz.
It so happened that at the same time, petitioner has shown interest in buying a pair of emerald-cut diamond
earrings owned by Dr. Cruz. However, Dr. Cruz declined petitioners offer to buy the jewelry for P100,000.
Petitioner made another bid to buy them for US$6,000 at the exchange rate of $1.00 to P25.00. At this point,
Petitioner inspected said jewelry at the lobby of the Prudential Bank and made a sketch thereof. Having sketched
the jewelry for 20-30 minutes, petitioner gave them back to Dr. Cruz who again refused to sell them since the
exchange rate of the peso at the time appreciated to P19.00 to a dollar.
Negotiations for barter of the jewelry and the Tanay property ensued. Dr. Cruz requested herein private
respondent Atty. Juan Bellarmino to check the property who in turn found out that no sale or barter was feasible
because the one year period for redemption of the said property had not yet expired that time. In an effort to cut
any legal impediment , petitioner executed a deed of redemption on behalf of Fr. Jacobe and then the latter sold
the property to petitioner for P75,000.
The deed of sale was notarized ahead of the deed of redemption. As Dr. Cruz had already agreed to the proposed
barter, petitioner went to a Prudential Bank once again to take a look at the jewelry. Petitioner met Atty. Belarmino
at the latters residence to prepare the documents of sale. Dr. Cruz was not around but Atty. Belarmino was aware
that she and petitioner had previously agreed to exchange a pair of emerald-cut diamond earrings for the Tanay
property. Atty. Belarmino accordingly caused the preparation of a deed of absolute sale while petitioner and Dr.
Cruz attended to the safekeeping of the jewelry.
Petitioner, Dichoso and Mendoza arrived at Atty. Belarminos residence to finally execute the deed of absolute
sale. Then when the day came when petitioner was finally able to acquire the jewelry from Dr. Cruz, later that
evening of the same day, he went to Atty. Belarminos residence complaining that the jewelry given to him was
fake. Petitioner filed a complaint against private respondents, praying that the contract of sale over the Tanay
property be declared null and void on the ground of fraud and deceit.

ISSUE:
Whether the sale should be nullified on the ground of fraud
HELD:
A 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. Being consensual, a contract of sale has the force of law between the contracting
parties and they are expected to abide in good faith by their respective contractual commitments. It is evident from
the facts of the case that there was a meeting of the minds between petitioner and Dr. Cruz. As such, they are
bound by the contract unless there are reasons or circumstances that warrant its nullification.
Contracts that are voidable or annullable, even though there may have been no damage to the contracting parties
are: (1) those where one of the parties is incapable of giving consent to a contract; and (2) those where the
consent is vitiated by mistake, violence, intimidation, undue influence or fraud. The records, however, are bare of
any evidence manifesting that private respondents employed such insidious words or machinations to entice
petitioner into entering the contract of barter. It was in fact petitioner who resorted to machinations to convince Dr.
Cruz to exchange her jewelry for the Tanay property.
Furthermore, petitioner was afforded the reasonable opportunity required in Article 1584 of the Civil Code within
which to examine the jewelry as he in fact accepted them when asked by Dr. Cruz if he was satisfied with the
same. By taking the jewelry outside the bank, petitioner executed an act which was more consistent with his
exercise of ownership over it. This gains credence when it is borne in mind that he himself had earlier delivered
the Tanay property to Dr. Cruz by affixing his signature to the contract of sale. That after two hours he later
claimed that the jewelry was not the one he intended in exchange for his Tanay property, could not sever the
juridical tie that now bound him and Dr. Cruz. The nature and value of the thing he had taken preclude its return
after that supervening period within which anything could have happened, not excluding the alteration of the
jewelry or its being switched with an inferior kind.
Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to Dr. Cruz
and petitioner, respectively, upon the actual and constructive delivery thereof. Said contract of sale being absolute
in nature, title passed to the vendee upon delivery of the thing sold since there was no stipulation in the contract
that title to the property sold has been reserved in the seller until full payment of the price or that the vendor has
the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.
While it is true that the amount of P40,000.00 forming part of the consideration was still payable to petitioner, its
non payment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and
possession of the things exchanged considering the fact that their contract is silent as to when it becomes due
and demandable.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 78903 February 28, 1990
SPS. SEGUNDO DALION AND EPIFANIA SABESAJE-DALION, petitioners,

vs.
THE HONORABLE COURT OF APPEALS AND RUPERTO SABESAJE, JR., respondents.
Francisco A. Puray, Sr. for petitioners.
Gabriel N. Duazo for private respondent.
MEDIALDEA, J.:
This is a petition to annul and set aside the decision of the Court of Appeals rendered on May 26, 1987, upholding
the validity of the sale of a parcel of land by petitioner Segundo Dalion (hereafter, "Dalion") in favor of private
respondent Ruperto Sabesaje, Jr. (hereafter, "Sabesaje"), described thus:
A parcel of land located at Panyawan, Sogod, Southern Leyte, declared in the name of Segundo
Dalion, under Tax Declaration No. 11148, with an area of 8947 hectares, assessed at P 180.00,
and bounded on the North, by Sergio Destriza and Titon Veloso, East, by Feliciano Destriza, by
Barbara Bonesa (sic); and West, by Catalino Espina. (pp. 36-37, Rollo)
The decision affirms in toto the ruling of the trial court 1 issued on January 17, 1984, the dispositive portion of
which provides as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, the Court hereby renders judgment.

(a) Ordering the defendants to deliver to the plaintiff the parcel of land subject of this case,
declared in the name of Segundo Dalion previously under Tax Declaration No. 11148 and lately
under Tax Declaration No. 2297 (1974) and to execute the corresponding formal deed of
conveyance in a public document in favor of the plaintiff of the said property subject of this case,
otherwise, should defendants for any reason fail to do so, the deed shall be executed in their
behalf by the Provincial Sheriff or his Deputy;
(b) Ordering the defendants to pay plaintiff the amount of P2,000.00 as attorney's fees and P
500.00 as litigation expenses, and to pay the costs; and
(c) Dismissing the counter-claim. (p. 38, Rollo)
The facts of the case are as follows:
On May 28, 1973, Sabesaje sued to recover ownership of a parcel of land, based on a private document of
absolute sale, dated July 1, 1965 (Exhibit "A"), allegedly executed by Dalion, who, however denied the fact of
sale, contending that the document sued upon is fictitious, his signature thereon, a forgery, and that subject land
is conjugal property, which he and his wife acquired in 1960 from Saturnina Sabesaje as evidenced by the
"Escritura de Venta Absoluta" (Exhibit "B"). The spouses denied claims of Sabesaje that after executing a deed of
sale over the parcel of land, they had pleaded with Sabesaje, their relative, to be allowed to administer the land
because Dalion did not have any means of livelihood. They admitted, however, administering since 1958, five (5)
parcels of land in Sogod, Southern Leyte, which belonged to Leonardo Sabesaje, grandfather of Sabesaje, who
died in 1956. They never received their agreed 10% and 15% commission on the sales of copra and abaca,
respectively. Sabesaje's suit, they countered, was intended merely to harass, preempt and forestall Dalion's threat
to sue for these unpaid commissions.
From the adverse decision of the trial court, Dalion appealed, assigning errors some of which, however, were
disregarded by the appellate court, not having been raised in the court below. While the Court of Appeals duly
recognizes Our authority to review matters even if not assigned as errors in the appeal, We are not inclined to do
so since a review of the case at bar reveals that the lower court has judicially decided the case on its merits.
As to the controversy regarding the identity of the land, We have no reason to dispute the Court of Appeals'
findings as follows:
To be sure, the parcel of land described in Exhibit "A" is the same property deeded out in Exhibit
"B". The boundaries delineating it from adjacent lots are identical. Both documents detail out the
following boundaries, to wit:
On the North-property of Sergio Destriza and Titon Veloso;
On the East-property of Feliciano Destriza;
On the South-property of Barbara Boniza and
On the West-Catalino Espina.
(pp. 41-42, Rollo)
The issues in this case may thus be limited to: a) the validity of the contract of sale of a parcel of land and b) the
necessity of a public document for transfer of ownership thereto.
The appellate court upheld the validity of the sale on the basis of Secs. 21 and 23 of Rule 132 of the Revised
Rules of Court.

SEC. 21. Private writing, its execution and authenticity, how proved.-Before any private writing
may be received in evidence, its due execution and authenticity must be proved either:
(a) By anyone who saw the writing executed;
(b) By evidence of the genuineness of the handwriting of the maker; or
(c) By a subscribing witness
xxx xxx xxx
SEC. 23. Handwriting, how proved. The handwriting of a person may be proved by any
witness who believes it to be the handwriting of such person, and has seen the person write, or
has seen writing purporting to be his upon which the witness has acted or been charged, and has
thus acquired knowledge of the handwriting of such person. Evidence respecting the handwriting
may also be given by a comparison, made by the witness or the court, with writings admitted or
treated as genuine by the party against whom the evidence is offered, or proved to be genuine to
the satisfaction of the judge. (Rule 132, Revised Rules of Court)
And on the basis of the findings of fact of the trial court as follows:
Here, people who witnessed the execution of subject deed positively testified on the authenticity
thereof. They categorically stated that it had been executed and signed by the signatories thereto.
In fact, one of such witnesses, Gerardo M. Ogsoc, declared on the witness stand that he was the
one who prepared said deed of sale and had copied parts thereof from the "Escritura De Venta
Absoluta" (Exhibit B) by which one Saturnina Sabesaje sold the same parcel of land to appellant
Segundo Dalion. Ogsoc copied the bounderies thereof and the name of appellant Segundo
Dalion's wife, erroneously written as "Esmenia" in Exhibit "A" and "Esmenia" in Exhibit "B". (p. 41,
Rollo)
xxx xxx xxx
Against defendant's mere denial that he signed the document, the positive testimonies of the
instrumental Witnesses Ogsoc and Espina, aside from the testimony of the plaintiff, must prevail.
Defendant has affirmatively alleged forgery, but he never presented any witness or evidence to
prove his claim of forgery. Each party must prove his own affirmative allegations (Section 1, Rule
131, Rules of Court). Furthermore, it is presumed that a person is innocent of a crime or wrong
(Section 5 (a),Idem), and defense should have come forward with clear and convincing evidence
to show that plaintiff committed forgery or caused said forgery to be committed, to overcome the
presumption of innocence. Mere denial of having signed, does not suffice to show forgery.
In addition, a comparison of the questioned signatories or specimens (Exhs. A-2 and A-3) with the
admitted signatures or specimens (Exhs. X and Y or 3-C) convinces the court that Exhs. A-2 or Z
and A-3 were written by defendant Segundo Dalion who admitted that Exhs. X and Y or 3-C are
his signatures. The questioned signatures and the specimens are very similar to each other and
appear to be written by one person.
Further comparison of the questioned signatures and the specimens with the signatures Segundo
D. Dalion appeared at the back of the summons (p. 9, Record); on the return card (p. 25, Ibid.);
back of the Court Orders dated December 17, 1973 and July 30, 1974 and for October 7, 1974
(p. 54 & p. 56, respectively, Ibid.), and on the open court notice of April 13, 1983 (p. 235, Ibid.)
readily reveal that the questioned signatures are the signatures of defendant Segundo Dalion.

It may be noted that two signatures of Segundo D. Dalion appear on the face of the questioned
document (Exh. A), one at the right corner bottom of the document (Exh. A-2) and the other at the
left hand margin thereof (Exh. A-3). The second signature is already a surplusage. A forger would
not attempt to forge another signature, an unnecessary one, for fear he may commit a revealing
error or an erroneous stroke. (Decision, p. 10) (pp. 42-43, Rollo)
We see no reason for deviating from the appellate court's ruling (p. 44, Rollo) as we reiterate that
Appellate courts have consistently subscribed to the principle that conclusions and findings of fact
by the trial courts are entitled to great weight on appeal and should not be disturbed unless for
strong and cogent reasons, since it is undeniable that the trial court is in a more advantageous
position to examine real evidence, as well as to observe the demeanor of the witnesses while
testifying in the case (Chase v. Buencamino, Sr., G.R. No. L-20395, May 13, 1985, 136 SCRA
365; Pring v. Court of Appeals, G.R. No. L-41605, August 19, 1985, 138 SCRA 185)
Assuming authenticity of his signature and the genuineness of the document, Dalion nonetheless still impugns the
validity of the sale on the ground that the same is embodied in a private document, and did not thus convey title or
right to the lot in question since "acts and contracts which have for their object the creation, transmission,
modification or extinction of real rights over immovable property must appear in a public instrument" (Art. 1358,
par 1, NCC).
This argument is misplaced. The provision of Art. 1358 on the necessity of a public document is only for
convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel
of land that this be embodied in a public instrument.
A contract of sale is a consensual contract, which means that the sale is perfected by mere consent. No particular
form is required for its validity. Upon perfection of the contract, the parties may reciprocally demand performance
(Art. 1475, NCC), i.e., the vendee may compel transfer of ownership of the object of the sale, and the vendor may
require the vendee to pay the thing sold (Art. 1458, NCC).
The trial court thus rightly and legally ordered Dalion to deliver to Sabesaje the parcel of land and to execute
corresponding formal deed of conveyance in a public document. Under Art. 1498, NCC, when the sale is made
through a public instrument, the execution thereof is equivalent to the delivery of the thing. Delivery may either be
actual (real) or constructive. Thus delivery of a parcel of land may be done by placing the vendee in control and
possession of the land (real) or by embodying the sale in a public instrument (constructive).
As regards petitioners' contention that the proper action should have been one for specific performance, We
believe that the suit for recovery of ownership is proper. As earlier stated, Art. 1475 of the Civil Code gives the
parties to a perfected contract of sale the right to reciprocally demand performance, and to observe a particular
form, if warranted, (Art. 1357). The trial court, aptly observed that Sabesaje's complaint sufficiently alleged a
cause of action to compel Dalion to execute a formal deed of sale, and the suit for recovery of ownership, which is
premised on the binding effect and validity inter partes of the contract of sale, merely seeks consummation of said
contract.
... . A sale of a real property may be in a private instrument but that contract is valid and binding
between the parties upon its perfection. And a party may compel the other party to execute a
public instrument embodying their contract affecting real rights once the contract appearing in a
private instrument hag been perfected (See Art. 1357).
... . (p. 12, Decision, p. 272, Records)
ACCORDINGLY, the petition is DENIED and the decision of the Court of Appeals upholding the ruling of the trial
court is hereby AFFIRMED. No costs.

SO ORDERED.
Spouses Dalion v. CA
GR. No. 78903 February 28,1990
Facts:
A land in Southern Leyte was declared in the name of Segundo Dalion. Sabesaje sued to recover ownership this
land based on a private document of absolute sale, allegedly executed by Segundo Dalion.
Dalion, however, denied the sale, saying that:

The document was fictitious
His signature was a forgery, and
That the land is conjugal property, which he and his wife acquired in 1960 from Saturnina Sabesaje as
evidenced by the "Escritura de Venta Absoluta."
The spouses denied the claims of Sabesaje that after executing a deed of sale over the parcel of land, they had
pleaded with Sabesaje to be allowed to administer the land because Dalion did not have livelihood.
Spouses Dalion admitted, however, administering 5 parcels of land in Southern Leyte, which belonged to
Leonardo Sabesaje, grandfather of Sabesaje, who died in 1956.
The Dalions never received their agreed 10% and 15% commission on the sales of copra and abaca. Sabesaje's
suit, they say, was intended merely to harass and forestall Dalion's threat to sue for these unpaid commissions.
Trial Court decided in favor of Sabesaje and ordered the Dalions to deliver the parcel of land in a public
document. CA affirmed.
Issues:
1. Was the contract of sale valid?

2. Is a public document needed for transfer of ownership?
Held:

1. Yes. People who witnessed the execution of the deed positively testified on its authenticity. They stated that it
had been executed and signed by the signatories. A contract of sale is a consensual contract, which means that
the sale is perfected by mere consent. No particular form is required for its validity. Upon perfection of the
contract, the parties may reciprocally demand performance (NCC 1475, NCC), i.e., the vendee may compel
transfer of ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold (NCC
1458).
2. No. The provision of NCC 1358 of NCC on the necessity of a public document is only for convenience, not for
validity or enforceability. The trial court thus rightly and legally ordered Dalion to deliver to Sabesaje the parcel of
land and to execute corresponding formal deed of conveyance in a public document. Under NCC 1498, when the
sale is made through a public instrument, the execution is equivalent to the delivery of the thing. Delivery may
either be actual (real) or constructive. Thus delivery of a parcel of land may be done by placing the vendee in
control and possession of the land (real) or by embodying the sale in a public instrument (constructive).
THIRD DIVISION
G.R. No. 136021 February 22, 2000
BENIGNA SECUYA, MIGUEL SECUYA, MARCELINO SECUYA, CORAZON SECUYA, RUFINA SECUYA,
BERNARDINO SECUYA, NATIVIDAD SECUYA, GLICERIA SECUYA and PURITA SECUYA, petitioners,
vs.
GERARDA M. VDA. DE SELMA, respondent.
PANGANIBAN, J.:
In action for quieting of title, the plaintiff must show not only that there is a cloud or contrary interest over the
subject real property, but that the have a valid title to it. In the present case, the action must fail, because
petitioners failed to show the requisite title.
The Case
Before us is a Petition for Review seeking to set aside the July 30, 1998 Decision of the Court of Appeals (CA) in
CA-G.R. CV No. 38580,1 which affirmed the judgment2 of the Regional Trial Court (RTC) of Cebu City. The CA
ruled:
WHEREFORE, [there being] no error in the appealed decision, the same is hereby AFFIRMED in toto.3
The decretal portion of the trial court Decision reads as follows:
WHEREFORE, in view of all the foregoing [evidence] and considerations, this court hereby finds the
preponderance of evidence to be in favor of the defendant Gerarda Selma as judgment is rendered:

1. Dismissing this Complaint for Quieting of title, Cancellation of Certificate of Title of Gerarda vda. de
Selma and damages,
2. Ordering the plaintiffs to vacate the premises in question and turn over the possession of the same to
the defendant Gerarda Selma;
3. Requiring the plaintiffs to pay defendant the sum of P20,000 as moral damages, according to Art. 2217,
attorney's fees of P15,000.00, litigation expenses of P5,000.00 pursuant to Art. 2208 No. 11 and to pay
the costs of this suit.1wphi1.nt
SO ORDERED.4
Likewise challenged is the October 14, 1998 CA Resolution which denied petitioners' Motion for Reconsideration. 5
The Facts
The present Petition is rooted in an action for quieting of title filed before the RTC by Benigna, Miguel, Marcelino,
Corazon, Rufina, Bernardino, Natividad, Gliceria and Purita all surnamed Secuya against Gerarda M. vda.
de Selma. Petitioners asserted ownership over the disputed parcel of land, alleging the following facts:
xxx xxx xxx
8. The parcel of land subject of this case is a PORTION of Lot 5679 of the Talisay-Minglanilla Friar Lands
Estate, referred to and covered [o]n Page 279, Friar Lands Sale Certificate Register of the Bureau of
Lands (Exh. "K"). The property was originally sold, and the covering patent issued, to Maxima Caballero
Vda. de Cario (Exhs. "K-1"; "K-2). Lot 5679 has an area of 12,750 square meters, more or less;
9. During the lifetime of Maxima Caballero, vendee and patentee of Lot 5679, she entered into that
AGREEMENT OF PARTITION dated January 5, 1938 with Paciencia Sabellona, whereby the former
bound herself and parted [with] one-third (1/3) portion of Lot 5679 in favor of the latter (Exh. "D"). Among
others it was stipulated in said agreement of partition that the said portion of one-third so ceded will be
located adjoining the municipal road (par. 5. Exh "D");
10. Paciencia Sabellona took possession and occupation of that one-third portion of Lot 5679 adjudicated
to her. Later, she sold the three thousand square meter portion thereof to Dalmacio Secuya on October
20, 1953, for a consideration of ONE THOUSAND EIGHT HUNDRED FIFTY PESOS (P1,850.00), by
means of a private document which was lost (p. 8, tsn., 8/8/89-Calzada). Such sale was admitted and
confirmed by Ramon Sabellona, only heir of Paciencia Sabellona, per that instrument denominated
CONFIRMATION OF SALE OF UNDIVIDED SHARES, dated September 28, 1976(Exh. "B");
11. Ramon Sabellona was the only [or] sole voluntary heir of Paciencia Sabellona, per that KATAPUSAN
NGA KABUT-ON UG PANUGON NI PACIENCIA SABELLONA (Last Will and Testament of Paciencia
Sabellona), dated July 9, 1954, executed and acknowledged before Notary Public Teodoro P. Villarmina
(Exh. "C"). Pursuant to such will, Ramon Sabellona inherited all the properties left by Paciencia
Sabellona;
12. After the purchase [by] Dalmacio Secuya, predecessor-in interest of plaintiffs of the property in
litigation on October 20, 1953, Dalmacio, together with his brothers and sisters he being single took
physical possession of the land and cultivated the same. In 1967, Edilberto Superales married Rufina
Secuya, niece of Dalmacio Secuya. With the permission and tolerance of the Secuyas, Edilberto
Superales constructed his house on the lot in question in January 1974 and lived thereon continuously up
to the present (p. 8., tsn 7/25/88 Daclan). Said house is inside Lot 5679-C-12-B, along lines 18-19-20
of said lot, per Certification dated August 10, 1985, by Geodetic Engineer Celestino R. Orozco (Exh. "F");

13. Dalmacio Secuya died on November 20, 1961. Thus his heirs brothers, sisters, nephews and
nieces are the plaintiffs in Civil Case No. CEB-4247 and now the petitioners;
14. In 1972, defendant-respondent Gerarda Selma bought a 1,000 square-meter portion of Lot 5679,
evidenced by Exhibit "P". Then on February 19, 1975, she bought the bigger bulk of Lot 5679, consisting
of 9,302 square meters, evidenced by that deed of absolute sale, marked as Exhibit "5". The land in
question, a 3,000-square meter portion of Lot 5679, is embraced and included within the boundary of the
later acquisition by respondent Selma;
15. Defendant-respondent Gerarda Selma lodged a complaint, and had the plaintiffs-petitioners
summoned, before the Barangay Captain of the place, and in the confrontation and conciliation
proceedings at the Lupong Tagapayapa, defendant-respondent Selma was asserting ownership over the
land inherited by plaintiffs-petitioners from Dalmacio Secuya of which they had long been in possession . .
. in concept of owner. Such claim of defendant-respondent Selma is a cloud on the title of plaintiffs-
petitioners, hence, their complaint (Annex "C").6
Respondent Selma's version of the facts, on the other hand, was summarized by the appellate court as follows:
She is the registered owner of Lot 5679-C-120 consisting of 9,302 square meters as evidenced by TCT
No. T-35678 (Exhibit "6", Record, p. 324), having bought the same sometime in February 1975 from
Cesaria Caballero as evidenced by a notarized Deed of Sale (Exhibit "5", Record, p. 323) and ha[ve]
been in possession of the same since then. Cesaria Caballero was the widow of Silvestre Aro, registered
owner of the mother lot, Lot. No. 5679 with an area of 12,750 square meters of the Talisay-Minglanilla
Friar Lands Estate, as shown by Transfer Certificate of Title No. 4752 (Exhibit "10", Record, p. 340). Upon
Silvestre Aro's demise, his heirs executed an "Extrajudicial Partition and Deed of Absolute Sale" (Exhibit
"11", Record, p. 341) wherein one-half plus one-fifth of Lot No. 5679 was adjudicated to the widow,
Cesaria Caballero, from whom defendant-appellee derives her title. 7
The CA Ruling
In affirming the trial court's ruling, the appellate court debunked petitioners' claim of ownership of the land and
upheld Respondent Selma's title thereto. It held that respondent's title can be traced to a valid TCT. On the other
hand, it ruled that petitioners anchor their claim on an "Agreement of Partition" which is void for being violative of
the Public Land Act. The CA noted that the said law prohibited the alienation or encumbrance of land acquired
under a free patent or homestead patent, for a period of five years from the issuance of the said patent.
Hence, this Petition.8
The Issues
In their Memorandum, petitioners urge the Court to resolve the following questions:
1. Whether or not there was a valid transfer or conveyance of one-third (1/3) portion of Lot 5679 by
Maxima Caballero in favor of Paciencia Sabellona, by virtue of [the] Agreement of Partition dated January
5, 1938[;] and
2. Whether or not the trial court, as well as the court, committed grave abuse of discretion amounting to
lack of jurisdiction in not making a finding that respondent Gerarda M. vda. de Selma [was] a buyer in bad
faith with respect to the land, which is a portion of Lot 5679. 9
For a clearer understanding of the above matters, we will divide the issues into three: first, the implications of the
Agreement of Partition; second, the validity of the Deed of Confirmation of Sale executed in favor of the
petitioners; and third, the validity of private respondent's title.

The Court's Ruling
The Petition fails to show any reversible error in the assailed Decision.
Preliminary Matter:
The Action for Quieting of Title
In an action to quiet title, the plaintiffs or complainants must demonstrate a legal or an equitable title to, or an
interest in, the subject real property.10 Likewise, they must show that the deed, claim, encumbrance or proceeding
that purportedly casts a cloud on their title is in fact invalid or inoperative despite its prima facie appearance of
validity or legal efficacy.11 This point is clear from Article 476 of the Civil Code, which reads:
Whenever there is cloud on title to real property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact
invalid, ineffective, voidable or unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest
therein.
In the case at bar, petitioners allege that TCT No. 5679-C-120, issued in the name of Private Respondent Selma,
is a cloud on their title as owners and possessors of the subject property, which is a 3,000 square-meter portion
of Lot No. 5679-C-120 covered by the TCT. But the underlying question is, do petitioners have the requisite title
that would enable them to avail themselves of the remedy of quieting of title?
Petitioners anchor their claim of ownership on two documents: the Agreement of Partition executed by Maxima
Caballero and Paciencia Sabellona and the Deed of Confirmation of Sale executed by Ramon Sabellona. We will
now examine these two documents.
First Issue:
The Real Nature of the "Agreement of Partition"
The duly notarized Agreement of Partition dated January 5, 1938; is worded as follows:
AGREEMENT OF PARTITION
I, MAXIMA CABALLERO, Filipina, of legal age, married to Rafael Cario, now residing and with postal
address in the Municipality of Dumaguete, Oriental Negros, depose the following and say:
1. That I am the applicant of vacant lot No. 5679 of the Talisay-Minglanilla Estate and the said application
has already been indorsed by the District Land Officer, Talisay, Cebu, for private sale in my favor;
2. That the said Lot 5679 was formerly registered in the name of Felix Abad y Caballero and the sale
certificate of which has already been cancelled by the Hon. Secretary of Agriculture and Commerce;
3. That for and in representation of my brother, Luis Caballero, who is now the actual occupant of said lot
I deem it wise to have the said lot paid by me, as Luis Caballero has no means o[r] any way to pay the
government;
4. That as soon as the application is approved by the Director of Lands, Manila, in my favor, I hereby bind
myself to transfer the one-third (l/3) portion of the above mentioned lot in favor of my aunt, Paciencia
Sabellana y Caballero, of legal age, single, residing and with postal address in Tungkop, Minglanilla,

Cebu. Said portion of one-third (1/3) will be subdivided after the approval of said application and the same
will be paid by her to the government [for] the corresponding portion.
5. That the said portion of one-third (1/3) will be located adjoining the municipal road;
6. I, Paciencia Sabellana y Caballero, hereby accept and take the portion herein adjudicated to me by
Mrs. Maxima Caballero of Lot No. 5679 Talisay-Minglanilla Estate and will pay the corresponding portion
to the government after the subdivision of the same;
IN WITNESS WHEREOF, we have hereunto set our hands this 5th day of January, 1988, at Talisay,
Cebu."12
The Agreement: An Express Trust, Not a Partition
Notwithstanding its purported nomenclature, this Agreement is not one of partition, because there was no property
to partition and the parties were not co-owners. Rather, it is in the nature of a trust agreement.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. 13 Trust relations
between parties may either be express or implied. An express trust is created by the intention of the trustor or of
the parties. An implied trust comes into being by operation of law. 14
The present Agreement of Partition involves an express trust. Under Article 1444 of the Civil Code, "[n]o particular
words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." That
Maxima Caballero bound herself to give one third of Lot No. 5629 to Paciencia Sabellona upon the approval of the
former's application is clear from the terms of the Agreement. Likewise, it is evident that Paciencia acquiesced to
the covenant and is thus bound to fulfill her obligation therein.
As a result of the Agreement, Maxima Caballero held the portion specified therein as belonging to Paciencia
Sabellona when the application was eventually approved and a sale certificate was issued in her name. 15 Thus,
she should have transferred the same to the latter, but she never did so during her lifetime. Instead, her heirs sold
the entire Lot No. 5679 to Silvestre Aro in 1955.
From 1954 when the sale certificate was issued until 1985 when petitioners filed their Complaint, Paciencia and
her successors-in-interest did not do anything to enforce their proprietary rights over the disputed property or to
consolidate their ownership over the same. In fact, they did not even register the said Agreement with the Registry
of Property or pay the requisite land taxes. While petitioners had been doing nothing, the disputed property, as
part of Lot No. 5679, had been the subject of several sales transactions 16 and covered by several transfer
certificates of title.
The Repudiation of the Express Trust
While no time limit is imposed for the enforcement of rights under express trusts, 17 prescription may, however, bar
a beneficiary's action for recovery, if a repudiation of the trust is proven by clear and convincing evidence and
made known to the beneficiary.18
There was a repudiation of the express trust when the heirs of Maxima Caballero failed to deliver or transfer the
property to Paciencia Sabellona, and instead sold the same to a third person not privy to the Agreement. In the
memorandum of incumbrances of TCT No. 308719 issued in the name of Maxima, there was no notation of the
Agreement between her and Paciencia. Equally important, the Agreement was not registered; thus, it could not
bind third persons. Neither was there any allegation that Silvestre Aro, who purchased the property from Maxima's
heirs, knew of it. Consequently, the subsequent sales transactions involving the land in dispute and the titles
covering it must be upheld, in the absence of proof that the said transactions were fraudulent and irregular.

Second Issue:
The Purported Sale to Dalmacio Secuya
Even granting that the express trust subsists, petitioners have not proven that they are the rightful successors-in-
interest of Paciencia Sabellona.
The Absence of the Purported Deed of Sale
Petitioners insist that Paciencia sold the disputed property to Dalmacio Secuya on October 20, 1953, and that the
sale was embodied in a private document. However, such document, which would have been the best evidence of
the transaction, was never presented in court, allegedly because it had been lost. While a sale of a piece of land
appearing in a private deed is binding between the parties, it cannot be considered binding on third persons, if it is
not embodied in a public instrument and recorded in the Registry of Property. 20
Moreover, while petitioners could not present the purported deed evidencing the transaction between Paciencia
Sabellona and Dalmacio Secuya, petitioners' immediate predecessor-in-interest, private respondent in contrast
has the necessary documents to support her claim to the disputed property.
The Questionable Value of the Deed
Executed by Ramon Sabellona
To prove the alleged sale of the disputed property to Dalmacio, petitioners instead presented the testimony of
Miguel Secuya, one of the petitioners; and a Deed 21 confirming the sale executed by Ramon Sabellona,
Paciencia's alleged heir. The testimony of Miguel was a bare assertion that the sale had indeed taken place and
that the document evidencing it had been destroyed. While the Deed executed by Ramon ratified the transaction,
its probative value is doubtful. His status as heir of Paciencia was not affirmatively established. Moreover, he was
not presented in court and was thus not quizzed on his knowledge or lack thereof of the 1953 transaction.
Petitioners' Failure to Exercise Owners'
Rights to the Property
Petitioners insist that they had been occupying the disputed property for forty-seven years before they filed their
Complaint for quieting of title. However, there is no proof that they had exercised their rights and duties as owners
of the same. They argue that they had been gathering the fruits of such property; yet, it would seem that they had
been remiss in their duty to pay the land taxes. If petitioners really believed that they owned the property, they
have should have been more vigilant in protecting their rights thereto. As noted earlier, they did nothing to enforce
whatever proprietary rights they had over the disputed parcel of land.
Third Issue:
The Validity of Private Respondent's Title
Petitioners debunk Private Respondent Selma's title to the disputed property, alleging that she was aware of their
possession of the disputed properties. Thus, they insist that she could not be regarded as a purchaser in good
faith who is entitled to the protection of the Torrens system.
Indeed, a party who has actual knowledge of facts and circumstances that would move a reasonably cautious
man to make an inquiry will not be protected by the Torrens system. In Sandoval v. Court of Appeals,22 we held:
It is settled doctrine that one who deals with property registered under the Torrens system need not go
beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and
claims as are annotated on the title.

The aforesaid principle admits of an unchallenged exception: that a person dealing with registered land
has a right to rely on the Torrens certificate of title and to dispense without the need of inquiring further
except when the party has actual knowledge of facts and circumstances that would impel a reasonably
cautious man to make such inquiry, or when the purchaser has knowledge of a defect or the lack of title in
his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of title of the
property in litigation. The presence of anything which excites or arouses suspicion should then prompt the
vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of the
certificate. One who falls within the exception can neither be denominated an innocent purchaser for
value purchaser in good faith; and hence does not merit the protection of the law.
Granting arguendo that private respondent knew that petitioners, through Superales and his family, were actually
occupying the disputed lot, we must stress that the vendor, Cesaria Caballero, assured her that petitioners were
just tenants on the said lot. Private respondent cannot be faulted for believing this representation, considering that
petitioners' claim was not noted in the certificate of the title covering Lot No. 5679.
Moreover, the lot, including the disputed portion, had been the subject of several sales transactions. The title
thereto had been transferred several times, without any protestation or complaint from the petitioners. In any
case, private respondent's title is amply supported by clear evidence, while petitioners' claim is barren of proof.
Clearly, petitioners do not have the requisite title to pursue an action for quieting of title.1wphi1.nt
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
SECUYA v. VDA. DE SELMA
FACTS:
Before the grant of her application for private sale of Lot 5679, a friar land, the beautiful Maxima Caballero
executed a document entitled "Agreement of Partition," wherein she stipulated to transfer one-third (1/3) of the lot
to and accepted by Paciencia Sabellano, her aunt. When the application was approved, Maxima failed to transfer
the agreed portion to Paciencia who took possession thereof. Paciencia thereafter sold the same to
Dalmacio Secuya. When Paciencia died, her only heir, Ramon Sabellano, executed a private document, "Deed of
Confirmation of Sale," confirming the sale between Paciencia and Dalmacio. The document was, however, lost.
Meanwhile, Maxima sold the entire lot to Silverio Aro, husband of Cesaria Caballero. Upon Silverio's death, the lot
was transferred to Cesaria from whom respondent bought the lot. Respondent was assured that petitioners who
were occupying a portion of the land were tenants. A clean title to the whole lot was transferred to respondent.
Petitioners, heirs of Dalmacio Secuya, filed an action for quieting of title on the ground that respondent's title is a
cloud on their title as owners and possessors of the property subject of litigation. They claimed that they had been
occupying the property for forty-seven years though they did not pay the land taxes. The trial court rendered
judgment against respondent. It was affirmed, on appeal, by the Court of Appeals.
ISSUES:
1. Whether or not the Agreement is one of partition
2. Whether or not there was a repudiation of the Express Trust
HELD:
(1) NO. It was an express trust. Trust is the right to the beneficial enjoyment of property, the legal title to which is
vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of
the beneficiary. Trust relations between parties may either be express or implied. An express trust is
created by the intention of the trustor or of the parties. An implied trust comes into being by operation of
law. The present Agreement of Partition involves an express trust. Under Article 1444 of the Civil Code, "[n]o
particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended."

That Maxima Caballero bound herself to give one third of Lot No. 5629 to Paciencia Sabellona upon the approval
of the former's application is clear from the terms of the Agreement. Likewise, it is evident that Paciencia
acquiesced to the covenant and is thus bound to fulfill her obligation therein. As a result of the Agreement,
Maxima Caballero held the portion specified therein as belonging to Paciencia Sabellona when the application
was eventually approved and a sale certificate was issued in her name. Thus, she should have transferred the
same to the latter, but she never did so during her lifetime. Instead, her heirs sold the entire Lot No. 5679 to
Silvestre Aro in 1955.
(2)YES. While no time limit is imposed for the enforcement of rights under express trusts, prescription may,
however, bar a beneficiary's action for recovery, if a repudiation of the trust is proven by clear and convincing
evidence and made known to the beneficiary. There was a repudiation of the express trust when the heirs of
Maxima Caballero failed to deliver or transfer the property to Paciencia Sabellona, and instead sold the
same to a third person not privy to the Agreement. In the memorandum of incumbrances of TCT No. 3087,
issued in the name of Maxima, there was no notation of the Agreement between her and Paciencia. Equally
important, the Agreement was not registered; thus, it could not bind third persons. Neither was there any
allegation that Silvestre Aro, who purchased the property from Maxima's heirs, knew of it. Consequently, the
subsequent sales transactions involving the land in dispute and the titles covering it must be upheld, in the
absence of proof that the said transactions were fraudulent and irregular.
YUVIENCO V. DACUYCUY (May 27, 1981)
FACTS:
Petitioners own a property in Tacloban City which they intend to sell for 6.5M. They gave the respondents the right
to purchase the property nut only until July 31, 1978. Respondents replied that they agree to buy the property and
they will negotiate for details. Petitioner sent another telegram informing respondents that their proposal is
accepted and a contract will be prepared.
Lawyer of defendant, Mr.Gamboa, arrived bringing a contact with an altered mode of payment which says that the
balance payment should be paid withing 30 days instead of the former 90 days. (Otiginal terms: 2M payment upon
execution. 4.5M after 90 days)
ISSUE:
WON there was already a perfected contract of sale between the parties.
HELD:
There was no perfected contract of sale yet because both parties are still under negotiation and hence, no
meeting of the minds. Mr.Gamboa even went to the respondents to negotiate for the sale. Even though there was
an agreement on the terms of payment, there was no absolute acceptance because respondents still insisted on
further details.
With regard to the alleged violation of terms of payment, there was no written document to prove that the
respondents agreed to pay not in cash but in installment. In sale of real property, payment of installment must be
in requisite of a note under the statute of frauds.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 118509 December 1, 1995
LIMKETKAI SONS MILLING, INC., petitioner,

vs.
COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS and NATIONAL BOOK STORE, respondents.
MELO, J.:
The issue in the petition before us is whether or not there was a perfected contract between petitioner Limketkai
Sons Milling, Inc. and respondent Bank of the Philippine Islands (BPI) covering the sale of a parcel of land,
approximately 3.3 hectares in area, and located in Barrio Bagong Ilog, Pasig City, Metro Manila.
Branch 151 of the Regional Trial Court of the National Capital Judicial Region stationed in Pasig ruled that there
was a perfected contract of sale between petitioner and BPI. It stated that there was mutual consent between the
parties; the subject matter is definite; and the consideration was determined. It concluded that all the elements of
a consensual contract are attendant. It ordered the cancellation of a sale effected by BPI to respondent National

Book Store (NBS) while the case was pending and the nullification of a title issued in favor of said respondent
NBS.
Upon elevation of the case to the Court of Appeals, it was held that no contract of sale was perfected because
there was no concurrence of the three requisites enumerated in Article 1318 of the Civil Code. The decision of the
trial court was reversed and the complaint dismissed.
Hence, the instant petition.
Shorn of the interpretations given to the acts of those who participated in the disputed sale, the findings of facts of
the trial court and the Court of Appeals narrate basically the same events and occurrences. The records show that
on May 14, 1976, Philippine Remnants Co., Inc. constituted BPI as its trustee to manage, administer, and sell its
real estate property. One such piece of property placed under trust was the disputed lot, a 33,056-square meter
lot at Barrio Bagong Ilog, Pasig, Metro Manila covered by Transfer Certificate of Title No. 493122.
On June 23, 1988, Pedro Revilla, Jr., a licensed real estate broker was given formal authority by BPI to sell the lot
for P1,000.00 per square meter. This arrangement was concurred in by the owners of the Philippine Remnants.
Broker Revilla contacted Alfonso Lim of petitioner company who agreed to buy the land. On July 8, 1988,
petitioner's officials and Revilla were given permission by Rolando V. Aromin, BPI Assistant Vice-President, to
enter and view the property they were buying.
On July 9, 1988, Revilla formally informed BPI that he had procured a buyer, herein petitioner. On July 11, 1988,
petitioner's officials, Alfonso Lim and Albino Limketkai, went to BPI to confirm the sale. They were entertained by
Vice-President Merlin Albano and Asst. Vice-President Aromin. Petitioner asked that the price of P1,000.00 per
square meter be reduced to P900.00 while Albano stated the price to be P1,100.00. The parties finally agreed that
the lot would be sold at P1,000.00 per square meter to be paid in cash. Since the authority to sell was on a first
come, first served and non-exclusive basis, it may be mentioned at this juncture that there is no dispute over
petitioner's being the first comer and the buyer to be first served.
Notwithstanding the final agreement to pay P1,000.00 per square meter on a cash basis, Alfonso Lim asked if it
was possible to pay on terms. The bank officials stated that there was no harm in trying to ask for payment on
terms because in previous transactions, the same had been allowed. It was the understanding, however, that
should the term payment be disapproved, then the price shall be paid in cash.
It was Albano who dictated the terms under which the installment payment may be approved, and acting thereon,
Alfonso Lim, on the same date, July 11, 1988, wrote BPI through Merlin Albano embodying the payment initially of
10% and the remaining 90% within a period of 90 days.
Two or three days later, petitioner learned that its offer to pay on terms had been frozen. Alfonso Lim went to BPI
on July 18, 1988 and tendered the full payment of P33,056,000.00 to Albano. The payment was refused because
Albano stated that the authority to sell that particular piece of property in Pasig had been withdrawn from his unit.
The same check was tendered to BPI Vice-President Nelson Bona who also refused to receive payment.
An action for specific performance with damages was thereupon filed on August 25, 1988 by petitioner against
BPI. In the course of the trial, BPI informed the trial court that it had sold the property under litigation to NBS on
July 14, 1989. The complaint was thus amended to include NBS.
On June 10, 1991, the trial court rendered judgment in the case as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants Bank of
the Philippine Islands and National Book Store, Inc.:

1. Declaring the Deed of Sale of the property covered by T.C.T. No. 493122 in the name of the
Bank of the Philippine Islands, situated in Barrio Bagong Ilog, Pasig, Metro Manila, in favor of
National Book Store, Inc., null and void;
2. Ordering the Register of Deeds of the Province of Rizal to cancel the Transfer Certificate of
Title which may have been issued in favor of National Book Store, Inc. by virtue of the
aforementioned Deed of Sale dated July 14, 1989;
3. Ordering defendant BPI, upon receipt by it from plaintiff of the sum of P33,056,000.00, to
execute a Deed of Sale in favor of plaintiff of the aforementioned property at the price of
P1,000.00 per square meter; in default thereof, the Clerk of this Court is directed to execute the
said deed;
4. Ordering the Register of Deeds of Pasig, upon registration of the said deed, whether executed
by defendant BPI or the Clerk of Court and payment of the corresponding fees and charges, to
cancel said T.C.T. No. 493122 and to issue, in lieu thereof, another transfer certificate of title in
the name of plaintiff;
5. Ordering defendants BPI and National Book Store, Inc. to pay, jointly and severally, to the
plaintiff the sums of P10,000,000.00 as actual and consequential damages and P150,000.00 as
attorney's fees and litigation expenses, both with interest at 12% per annum from date hereof;
6. On the cross-claim of defendant bank against National Book Store, ordering the latter to
indemnify the former of whatever amounts BPI shall have paid to the plaintiff by reason hereof;
and
7. Dismissing the counterclaims of the defendants against the plaintiff and National Book Store's
cross-claim against defendant bank.
Costs against defendants.
(pp. 44-45, Rollo.)
As earlier intimated, upon the decision being appealed, the Court of Appeals (Buena [P], Rasul, and
Mabutas, JJ.), on August 12, 1994, reversed the trial court's decision and dismissed petitioner's complaint for
specific performance and damages.
The issues raised by the parties revolve around the following four questions:
(1) Was there a meeting of the minds between petitioner Limketkai and respondent BPI as to the subject matter of
the contract and the cause of the obligation?
(2) Were the bank officials involved in the transaction authorized by BPI to enter into the questioned contract?
(3) Is there competent and admissible evidence to support the alleged meeting of the minds?
(4) Was the sale of the disputed land to the NBS during the pendency of trial effected in good faith?
There is no dispute in regard to the following: (a) that BPI as trustee of the property of Philippine Remnant Co.
authorized a licensed broker, Pedro Revilla, to sell the lot for P1,000.00 per square meter; (b) that Philippine
Remnants confirmed the authority to sell of Revilla and the price at which he may sell the lot; (c) that petitioner
and Revilla agreed on the former buying the property; (d) that BPI Assistant Vice-President Rolando V. Aromin

allowed the broker and the buyer to inspect the property; and (e) that BPI was formally informed about the broker
having procured a buyer.
The controversy revolves around the interpretation or the significance of the happenings or events at this point.
Petitioner states that the contract to sell and to buy was perfected on July 11, 1988 when its top officials and
broker Revilla finalized the details with BPI Vice-Presidents Merlin Albano and Rolando V. Aromin at the BPI
offices.
Respondents, however, contend that what transpired on this date were part of continuing negotiations to buy the
land and not the perfection of the sale. The arguments of respondents center on two propositions (1) Vice-
Presidents Aromin and Albano had no authority to bind BPI on this particular transaction and (2) the subsequent
attempts of petitioner to pay under terms instead of full payment in cash constitutes a counter-offer which negates
the existence of a perfected contract.
The alleged lack of authority of the bank officials acting in behalf of BPI is not sustained by the record.
At the start of the transactions, broker Revilla by himself already had full authority to sell the disputed lot. Exhibit B
dated June 23, 1988 states, "this will serve as your authority to sell on an as is, where is basis the property
located at Pasig Blvd., Bagong Ilog . . . ." We agree with Revilla's testimony that the authority given to him was to
sell and not merely to look for a buyer, as contended by respondents.
Revilla testified that at the time he perfected the agreement to sell the litigated property, he was acting for and in
behalf of the BPI as if he were the Bank itself. This notwithstanding and to firm up the sale of the land, Revilla saw
it fit to bring BPI officials into the transaction. If BPI could give the authority to sell to a licensed broker, we see no
reason to doubt the authority to sell of the two BPI Vice-Presidents whose precise job in the Bank was to manage
and administer real estate property.
Respondent BPI alleges that sales of trust property need the approval of a Trust Committee made up of top bank
officials. It appears from the record that this trust committee meets rather infrequently and it does not have to pass
on regular transactions.
Rolando Aromin was BPI Assistant Vice-President and Trust Officer. He directly supervised the BPI Real Property
Management Unit. He had been in the Real Estate Division since 1985 and was the head supervising officer of
real estate matters. Aromin had been with the BPI Trust Department since 1968 and had been involved in the
handling of properties of beneficial owners since 1975 (tsn., December 3, 1990, p. 5).
Exhibit 10 of BPI, the February 15, 1989 letter from Senior Vice-President Edmundo Barcelon, while purporting to
inform Aromin of his poor performance, is an admission of BPI that Aromin was in charge of Torrens titles, lease
contracts, problems of tenants, insurance policies, installment receivables, management fees, quitclaims, and
other matters involving real estate transactions. His immediate superior, Vice-President Merlin Albano had been
with the Real Estate Division for only one week but he was present and joined in the discussions with petitioner.
There is nothing to show that Alfonso Lim and Albino Limketkai knew Aromin before the incident. Revilla brought
the brothers directly to Aromin upon entering the BPI premises. Aromin acted in a perfectly natural manner on the
transaction before him with not the slightest indication that he was acting ultra vires. This shows that BPI held
Aromin out to the public as the officer routinely handling real estate transactions and, as Trust Officer, entering
into contracts to sell trust properties.
Respondents state and the record shows that the authority to buy and sell this particular trust property was later
withdrawn from Trust Officer Aromin and his entire unit. If Aromin did not have any authority to act as alleged,
there was no need to withdraw authority which he never possessed.

Petitioner points to Areola vs. Court of Appeals (236 SCRA 643 [1994]) which cited Prudential Bank vs. Court of
Appeals (22 SCRA 350 [1993]), which in turn relied upon McIntosh vs. Dakota Trust Co. (52 ND 752, 204 NW
818, 40 ALR 1021), to wit:
Accordingly a banking corporation is liable to innocent third persons where the representation is
made in the course of its business by an agent acting within the general scope of his authority
even though, in the particular case, the agent is secretly abusing his authority and attempting to
perpetrate a fraud upon his principal or some other person for his own ultimate benefit.
(at pp. 652-653.)
In the present case, the position and title of Aromin alone, not to mention the testimony and documentary
evidence about his work, leave no doubt that he had full authority to act for BPI in the questioned transaction.
There is no allegation of fraud, nor is there the least indication that Aromin was acting for his own ultimate benefit.
BPI later dismissed Aromin because it appeared that a top official of the bank was personally interested in the
sale of the Pasig property and did not like Aromin's testimony. Aromin was charged with poor performance but his
dismissal was only sometime after he testified in court. More than two long years after the disputed transaction,
he was still Assistant Vice-President of BPI.
The records show that the letter of instruction dated June 14, 1988 from the owner of Philippine Remnants Co.
regarding the sale of the firm's property was addressed to Aromin. The P1,000.00 figure on the first page of
broker Revilla's authority to sell was changed to P1,100.00 by Aromin. The price was later brought down again to
P1,000.00, also by Aromin. The permission given to petitioner to view the lot was signed by Aromin and honored
by the BPI guards. The letter dated July 9, 1988 from broker Revilla informing BPI that he had a buyer was
addressed to Aromin. The conference on July 11, 1988 when the contract was perfected was with Aromin and
Vice-President Albano. Albano and Aromin were the ones who assured petitioner Limketkai's officers that term
payment was possible. It was Aromin who called up Miguel Bicharra of Philippine Remnants to state that the BPI
rejected payment on terms and it was to Aromin that Philippine Remnants gave the go signal to proceed with the
cash sale. Everything in the record points to the full authority of Aromin to bind the bank, except for the self-
serving memoranda or letters later produced by BPI that Aromin was an inefficient and undesirable officer and
who, in fact, was dismissed after he testified in this case. But, of course, Aromin's alleged inefficiency is not proof
that he was not fully clothed with authority to bind BPI.
Respondents' second contention is that there was no perfected contract because petitioner's request to pay on
terms constituted a counter-offer and that negotiations were still in progress at that point.
Asst. Vice-President Aromin was subpoenaed as a hostile witness for petitioner during trial. Among his statements
is one to the effect that
. . . Mr. Lim offered to buy the property at P900.00 per square meter while Mr. Albano counter-
offered to sell the property at P1,100.00 per square meter but after the usual haggling, we finally
agreed to sell the property at the price of P1,000.00 per square meter . . .
(tsn, 12-3-90, p. 17; Emphasis supplied.)
Asked if there was a meeting of the minds between the buyer and the bank in respect to the price of P1,000.00
per square meter, Aromin answered:
Yes, sir, as far as my evaluation there was a meeting of the minds as far as the price is
concerned, sir.
(ibid, p. 17.)

The requirements in the payment of the purchase price on terms instead of cash were suggested by BPI Vice-
President Albano. Since the authority given to broker Revilla specified cash payment, the possibility of paying on
terms was referred to the Trust Committee but with the mutual agreement that "if the proposed payment on terms
will not be approved by our Trust Committee, Limketkai should pay in cash . . . the amount was no longer subject
to the approval or disapproval of the Committee, it is only on the terms." (ibid, p. 19). This is incontrovertibly
established in the following testimony of Aromin:
A. After you were able to agree on the price of P1,000.00/sq. m., since the letter
or authority says the payment must be in cash basis, what transpired later on?
B. After we have agreed on the price, the Lim brothers inquired on how to go
about submitting the covering proposal if they will be allowed to pay on terms.
They requested us to give them a guide on how to prepare the corresponding
letter of proposal. I recall that, upon the request of Mr. Albino Limketkai, we
dictated a guide on how to word a written firm offer that was to be submitted by
Mr. Lim to the bank setting out the terms of payment but with the mutual
agreement that if his proposed payment on terms will not be approved by our
trust committee, Limketkai should pay the price in cash.
Q And did buyer Limketkai agree to pay in cash in case the offer of terms will be
cash (disapproved).
A Yes, sir.
Q At the start, did they show their willingness to pay in cash?
A Yes, sir.
Q You said that the agreement on terms was to be submitted to the trust
committee for approval, are you telling the Court that what was to be approved
by the trust committee was the provision on the payment on terms?
A Yes, sir.
Q So the amount was no longer subject to the approval or disapproval of the

committee, it is only on the terms?
A Yes, sir.
(tsn, Dec. 3, 1990, pp. 18-19; Emphasis supplied.)
The record shows that if payment was in cash, either broker Revilla or Aromin had full authority. But because
petitioner took advantage of the suggestion of Vice-President Albano, the matter was sent to higher officials.
Immediately upon learning that payment on terms was frozen and/or denied, Limketkai exercised his right within
the period given to him and tendered payment in full. The BPI rejected the payment.
In its Comment and Memorandum, respondent NBS cites Ang Yu Asuncion vs. Court of Appeals (238 SCRA 602
[1994]) to bolster its case. Contrarywise, it would seem that the legal principles found in said case strengthen and
support petitioner's submission that the contract was perfected upon the meeting of the minds of the parties.
The negotiation or preparation stage started with the authority given by Philippine Remnants to BPI to sell the lot,
followed by (a) the authority given by BPI and confirmed by Philippine Remnants to broker Revilla to sell the

property, (b) the offer to sell to Limketkai, (c) the inspection of the property and finally (d) the negotiations with
Aromin and Albano at the BPI offices.
The perfection of the contract took place when Aromin and Albano, acting for BPI, agreed to sell and Alfonso Lim
with Albino Limketkai, acting for petitioner Limketkai, agreed to buy the disputed lot at P1,000.00 per square
meter. Aside from this there was the earlier agreement between petitioner and the authorized broker. There was a
concurrence of offer and acceptance, on the object, and on the cause thereof.
The phases that a contract goes through may be summarized as follows:
a. preparation, conception or generation, which is the period of negotiation and bargaining,

ending at the moment of agreement of the parties;
b. perfection or birth of the contract, which is the moment when the parties come to agree on the
terms of the contract; and
c. consummation or death, which is the fulfillment or performance of the terms agreed upon in the
contract (Toyota Shaw, Inc. vs. Court of Appeals, G.R. No. 116650, May 23, 1995).
But in more graphic prose, we turn to Ang Yu Asuncion, per Justice Vitug:
. . . A contract undergoes various stages that include its negotiation or preparation, its perfection
and, finally, its consummation. Negotiation covers the period from the time the prospective
contracting parties indicate interest in the contract to the time the contract is concluded
(perfected). The perfection of the contract takes place upon the concurrence of the essential
elements thereof. A contract which is consensual as to perfection is so established upon a mere
meeting of minds, i.e., the concurrence of offer and acceptance, on the object and on the cause
thereof. A contract which requires, in addition to the above, the delivery of the object of the
agreement, as in a pledge or commodatum, is commonly referred to as a real contract. In
a solemn contract, compliance with certain formalities prescribed by law, such as in a donation of
real property, is essential in order to make the act valid, the prescribed form being thereby an
essential element thereof. The stage of consummation begins when the parties perform their
respective undertakings under the contract culminating in the extinguishment thereof.
Until the contract is perfected, it cannot, as an independent source of obligation, serve as a

binding juridical relation. In sales, particularly, to which the topic for discussion about the case at
bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a
price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer,
over which the latter agrees.
(238 SCRA 602; 611 [1994].)
In Villonco Realty Company vs. Bormaheco (65 SCRA 352 [1975]), bearing factual antecendents similar to this
case, the Court, through Justice Aquino (later to be Chief Justice), quoting authorities, upheld the perfection of the
contract of sale thusly:
The contract of 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. (Art.
1475, Ibid.)
xxx xxx xxx

Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer (Art. 1319, Civil Code). "An
acceptance may be express or implied." (Art. 1320, Civil Code).
xxx xxx xxx
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., 105 Fed. 2nd 965, citing Sec. 79, Williston
on Contracts).
xxx xxx xxx
. . . 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 or a
counter-offer. (Stuart vs. Franklin Life Ins. Co., supra.)
(at pp. 362-363; 365-366.)
In the case at bench, the allegation of NBS that there was no concurrence of the offer and acceptance upon the
cause of the contract is belied by the testimony of the very BPI official with whom the contract was perfected.
Aromin and Albano concluded the sale for BPI. The fact that the deed of sale still had to be signed and notarized
does not mean that no contract had already been perfected. A sale of land is valid regardless of the form it may
have been entered into (Claudel vs. Court of Appeals, 199 SCRA 113, 119 [1991]). The requisite form under
Article 1458 of the Civil Code is merely for greater efficacy or convenience and the failure to comply therewith
does not affect the validity and binding effect of the act between the parties (Vitug, Compendium of Civil Law and
Jurisprudence, 1993 Revised Edition, p. 552). If the law requires a document or other special form, as in the sale
of real property, the contracting parties may compel each other to observe that form, once the contract has been
perfected. Their right may be exercised simultaneously with action upon the contract (Article 1359, Civil Code).
Regarding the admissibility and competence of the evidence adduced by petitioner, respondent Court of Appeals
ruled that because the sale involved real property, the statute of frauds is applicable.
In any event, petitioner cites Abrenica vs. Gonda (34 Phil. 739 [1916]) wherein it was held that contracts infringing
the Statute of Frauds are ratified when the defense fails to object, or asks questions on cross-examination. The
succinct words of Justice Araullo still ring in judicial cadence:
As no timely objection or protest was made to the admission of the testimony of the plaintiff with
respect to the contract; and as the motion to strike out said evidence came too late; and,
furthermore, as the defendants themselves, by the cross-questions put by their counsel to the
witnesses in respect to said contract, tacitly waived their right to have it stricken out, that
evidence, therefore, cannot be considered either inadmissible or illegal, and court, far from having
erred in taking it into consideration and basing his judgment thereon, notwithstanding the fact that
it was ordered to be stricken out during the trial, merely corrected the error he committed in
ordering it to be so stricken out and complied with the rules of procedure hereinbefore cited.
(at p. 748.)
In the instant case, counsel for respondents cross-examined petitioner's witnesses at length on the contract itself,
the purchase price, the tender of cash payment, the authority of Aromin and Revilla, and other details of the
litigated contract. Under the Abrenica rule (reiterated in a number of cases, among them Talosig vs. Vda. de

Nieba 43 SCRA 472 [1972]), even assuming that parol evidence was initially inadmissible, the same became
competent and admissible because of the cross-examination, which elicited evidence proving the evidence of a
perfected contract. The cross-examination on the contract is deemed a waiver of the defense of the Statute of
Frauds (Vitug, Compendium of Civil Law and Jurisprudence, 1993 Revised Edition, supra, p. 563).
The reason for the rule is that as pointed out in Abrenica "if the answers of those witnesses were stricken out, the
cross-examination could have no object whatsoever, and if the questions were put to the witnesses and answered
by them, they could only be taken into account by connecting them with the answers given by those witnesses on
direct examination" (pp. 747-748).
Moreover, under Article 1403 of the Civil Code, an exception to the unenforceability of contracts pursuant to the
Statute of Frauds is the existence of a written note or memorandum evidencing the contract. The memorandum
may be found in several writings, not necessarily in one document. The memorandum or memoranda is/are
written evidence that such a contract was entered into.
We cite the findings of the trial court on this matter:
In accordance with the provisions of Art. 1403 of the Civil Code, the existence of a written
contract of the sale is not necessary so long as the agreement to sell real property is evidenced
by a written note or memorandum, embodying the essentials of the contract and signed by the
party charged or his agent. Thus, it has been held:
The Statute of Frauds, embodied in Article 1403 of the Civil Code of the
Philippines, does not require that the contract itself be written. The plain test of
Article 1403, Paragraph (2) is clear that a written note or memorandum,
embodying the essentials of the contract and signed by the party charged, or his
agent suffices to make the verbal agreement enforceable, taking it out of the
operation of the statute. (Emphasis supplied)
xxx xxx xxx
In the case at bar, the complaint in its paragraph 3 pleads that the deal had been
closed by letter and telegram (Record on Appeal, p. 2), and the letter referred to
was evidently the one copy of which was appended as Exhibit A to plaintiffs
opposition to the motion to dismiss. The letter, transcribed above in part, together
with the one marked as Appendix B, constitute an adequate memorandum of the
transaction. They are signed by the defendant-appellant; refer to the property
sold as a Lot in Puerto Princesa, Palawan, covered by T.C.T. No. 62, give its area
as 1,825 square meters and the purchase price of four (P4.00) pesos per square
meter payable in cash. We have in them, therefore, all the essential terms of the
contract and they satisfy the requirements of the Statute of Frauds.
(Footnote 26, Paredes vs. Espino, 22 SCRA 1000 [1968]).
While there is no written contract of sale of the Pasig property executed by BPI in favor of plaintiff,
there are abundant notes and memoranda extant in the records of this case evidencing the
elements of a perfected contract. There is Exhibit P, the letter of Kenneth Richard Awad
addressed to Roland Aromin, authorizing the sale of the subject property at the price of P1,000.00
per square meter giving 2% commission to the broker and instructing that the sale be on cash
basis. Concomitantly, on the basis of the instruction of Mr. Awad, (Exh. P), an authority to sell,
(Exh. B) was issued by BPI to Pedro Revilla, Jr., representing Assetrade Co., authorizing the
latter to sell the property at the initial quoted price of P1,000.00 per square meter which was
altered on an unaccepted offer by Technoland. After the letter authority was issued to Mr. Revilla,
a letter authority was signed by Mr. Aromin allowing the buyer to enter the premises of the

property to inspect the same (Exh. C). On July 9, 1988, Pedro Revilla, Jr., acting as agent of BPI,
wrote a letter to BPI informing it that he had procured a buyer in the name of Limketkai Sons
Milling, Inc. with offices at Limketkai Bldg., Greenhills, San Juan, Metro Manila, represented by its
Exec. Vice-President, Alfonso Lim (Exh. D). On July 11, 1988, the plaintiff, through Alfonso Lim,
wrote a letter to the bank, through Merlin Albano, confirming their transaction regarding the
purchase of the subject property (Exh. E). On July 18, 1988, the plaintiff tendered upon the
officials of the bank a check for P33,056,000.00 covered by Check No. CA510883, dated July 18,
1988. On July 1, 1988, Alfonso Zamora instructed Mr. Aromin in a letter to resubmit new offers
only if there is no transaction closed with Assetrade Co. (Exh. S). Combining all these notes and
memoranda, the Court is convinced of the existence of perfected contract of sale. Aptly, the
Supreme Court, citing American cases with approval, held:
No particular form of language or instrument is necessary to constitute a

memorandum or note in writing under the statute of frauds; any document or
writing, formal or informal, written either for the purpose of furnishing evidence of
the contract or for another purpose, which satisfies all the requirements of the
statute as to contents and signature, as discussed respectively infra secs. 178-
200, and infra secs. 201-205, is a sufficient memorandum or note. A
memorandum may be written as well with lead pencil as with pen and ink. It may
also be filled in on a printed form. (37 C.J.S., 653-654).
The note or memorandum required by the statute of frauds need not be

contained in a single document, nor, when contained in two or more papers,
need each paper be sufficient as to contents and signature to satisfy the statute.
Two or more writings properly connected may be considered together, matters
missing or uncertain in one may be supplied or rendered certain by another, and
their sufficiency will depend on whether, taken together, they meet the
requirements of the statute as to contents and the requirements of the statutes
as to signature, as considered respectively infra secs. 179-200 and secs. 201-
215.
(pp. 460-463, Original RTC Record).
The credibility of witnesses is also decisive in this case. The trial court directly observed the demeanor and
manner of testifying of the witnesses while the Court of Appeals relied merely on the transcript of stenographic
notes.
In this regard, the court of origin had this to say:
Apart from weighing the merits of the evidence of the parties, the Court had occasion to observe
the demeanor of the witnesses they presented. This is one important factor that inclined the Court
to believe in the version given by the plaintiff because its witnesses, including hostile witness
Roland V. Aromin, an assistant vice-president of the bank, were straightforward, candid and
unhesitating in giving their respective testimonies. Upon the other hand, the witnesses of BPI
were evasive, less than candid and hesitant in giving their answers to cross examination
questions. Moreover, the witnesses for BPI and NBS contradicted each other. Fernando Sison III
insisted that the authority to sell issued to Mr. Revilla was merely an evidence by which a broker
may convince a prospective buyer that he had authority to offer the property mentioned therein
for sale and did not bind the bank. On the contrary, Alfonso Zamora, a Senior Vice-President of
the bank, admitted that the authority to sell issued to Mr. Pedro Revilla, Jr. was valid, effective
and binding upon the bank being signed by two class "A" signatories and that the bank cannot
back out from its commitment in the authority to sell to Mr. Revilla.

While Alfredo Ramos of NBS insisted that he did not know personally and was not acquainted
with Edmundo Barcelon, the latter categorically admitted that Alfredo Ramos was his friend and
that they have even discussed in one of the luncheon meetings the matter of the sale of the Pasig
property to NBS. George Feliciano emphatically said that he was not a consultant of Mr. Ramos
nor was he connected with him in any manner, but his calling card states that he was a consultant
to the chairman of the Pacific Rim Export and Holdings Corp. whose chairman is Alfredo Ramos.
This deliberate act of Mr. Feliciano of concealing his being a consultant to Mr. Alfredo Ramos
evidently was done by him to avoid possible implication that he committed some underhanded
maneuvers in manipulating to have the subject property sold to NBS, instead of being sold to the
plaintiff.
(pp. 454-455, Original RTC Record.)
On the matter of credibility of witnesses where the findings or conclusions of the Court of Appeals and the trial
court are contrary to each other, the pronouncement of the Court in Serrano vs. Court of Appeals (196 SCRA 107
[1991]) bears stressing:
It is a settled principle of civil procedure that the conclusions of the trial court regarding the
credibility of witnesses are entitled to great respect from the appellate courts because the trial
court had an opportunity to observe the demeanor of witnesses while giving testimony which may
indicate their candor or lack thereof. While the Supreme Court ordinarily does not rule on the
issue of credibility of witnesses, that being a question of fact not properly raised in a petition
under Rule 45, the Court has undertaken to do so in exceptional situations where, for instance, as
here, the trial court and the Court of Appeals arrived at divergent conclusions on questions of fact
and the credibility of witnesses.
(at p. 110.)
On the fourth question of whether or not NBS is an innocent purchaser for value, the record shows that it is not. It
acted in bad faith.
Respondent NBS ignored the notice of lis pendens annotated on the title when it bought the lot. It was the
willingness and design of NBS to buy property already sold to another party which led BPI to dishonor the contract
with Limketkai.
Petitioner cites several badges of fraud indicating that BPI and NBS conspired to prevent petitioner from paying
the agreed price and getting possession of the property:
1. The sale was supposed to be done through an authorized broker, but top officials of BPI personally and directly
took over this particular sale when a close friend became interested.
2. BPI Senior Vice President Edmundo Barcelon admitted that NBS's President, Alfredo Ramos, was his friend;
that they had lunch meetings before this incident and discussed NBS's purchase of the lot. Barcelon's father was
a business associate of Ramos.
3. George Feliciano, in behalf of NBS, offered P5 million and later P7 million if petitioner would drop the case and
give up the lot. Feliciano went to petitioner's office and haggled with Alfonso Lim but failed to convince him inspite
of various and increasing offers.
4. In a place where big and permanent buildings abound, NBS had constructed only a warehouse marked by easy
portability. The warehouse is bolted to its foundations and can easily be dismantled.

It is the very nature of the deed of absolute sale between BPI and NBS which, however, clearly negates any
allegation of good faith on the part of the buyer. Instead of the vendee insisting that the vendor guarantee its title
to the land and recognize the right of the vendee to proceed against the vendor if the title to the land turns out to
be defective as when the land belongs to another person, the reverse is found in the deed of sale between BPI
and NBS. Any losses which NBS may incur in the event the title turns out to be vested in another person are to be
borne by NBS alone. BPI is expressly freed under the contract from any recourse of NBS against it should BPI's
title be found defective.
NBS, in its reply memorandum, does not refute or explain the above circumstance squarely. It simply cites the
badges of fraud mentioned in Oria vs. McMicking (21 Phil. 243 [1912]) and argues that the enumeration there is
exclusive. The decision in said case plainly states "the following are some of the circumstances attending sales
which have been denominated by courts (as) badges of fraud." There are innumerable situations where fraud is
manifested. One enumeration in a 1912 decision cannot possibly cover all indications of fraud from that time up to
the present and into the future.
The Court of Appeals did not discuss the issue of damages. Petitioner cites the fee for filing the amended
complaint to implead NBS, sheriffs fees, registration fees, plane fare and hotel expenses of Cebu-based counsel.
Petitioner also claimed, and the trial court awarded, damages for the profits and opportunity losses caused to
petitioner's business in the amount of P10,000,000.00.
We rule that the profits and the use of the land which were denied to petitioner because of the non-compliance or
interference with a solemn obligation by respondents is somehow made up by the appreciation in land values in
the meantime.
Prescinding from the above, we rule that there was a perfected contract between BPI and petitioner Limketkai;
that the BPI officials who transacted with petitioner had full authority to bind the bank; that the evidence
supporting the sale is competent and admissible; and that the sale of the lot to NBS during the trial of the case
was characterized by bad faith.
WHEREFORE, the questioned judgment of the Court of Appeals is hereby REVERSED and SET ASIDE. The
June 10, 1991 judgment of Branch 151 of the Regional Trial Court of The National Capital Judicial Region
stationed in Pasig, Metro Manila is REINSTATED except for the award of Ten Million Pesos (P10,000,000.00)
damages which is hereby DELETED.
SO ORDERED.

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PERFECTION STAGE

Absolute Acceptance of a Certain Offer

ADDITIONAL CASES FORMNATION 1

G.R. No. L-26872 July 25, 1975

VILLONCO REALTY COMPANY, plaintiff-appellee and EDITH PEREZ DE TAGLE, intervenor-appellee,

J. Villareal, Navarro and Associates for defendants-appellants.

P. P. Gallardo and Associates for intervenor-appellee.

ADDITIONAL CASES FORMNATION 2

Dear Mr. Villonco:

(2) That a deposit of P100,000.00 must be placed as earnest money on the

Very truly yours,

ADDITIONAL CASES FORMNATION 3

VILLONCO REALTY COMPANY

Mr. Francisco Cervantes.

Dear Mr. Cervantes:

4. The manner of payment shall be as follows:

a. P100,000.00 earnest money and

b. The balance is payable as follows:

ADDITIONAL CASES FORMNATION 4

VILLONCO REALTY COMPANY

(Sgd.) FRANCISCO CERVANTES

ADDITIONAL CASES FORMNATION 5

ADDITIONAL CASES FORMNATION 6

ADDITIONAL CASES FORMNATION 7

ADDITIONAL CASES FORMNATION 8

March 30, 1964

Villonco Realty Company

Very truly yours,

Encl.: P.N.B. Check No. 112994 J

ADDITIONAL CASES FORMNATION 9

ADDITIONAL CASES FORMNATION 10

ADDITIONAL CASES FORMNATION 11

ADDITIONAL CASES FORMNATION 12

WHEREFORE, the trial court's decision is modified as follows:

ADDITIONAL CASES FORMNATION 13

ADDITIONAL CASES FORMNATION 14

G.R. No. L-26872 July 25, 1975

1. Selling price of P400 per sqm,

ISSUE: Was there a perfected contract of sale? YES

ADDITIONAL CASES FORMNATION 15

As to Bormahecos acquisition of the Punta property:

As to Bormahecos contention that there was no perfection of sale:

ADDITIONAL CASES FORMNATION 16

As to the 45-day period of acquisition of Punta property;

Summary from the book:

ADDITIONAL CASES FORMNATION 17

G.R. No. 157493 February 5, 2007

The facts of the case are as follows:

ADDITIONAL CASES FORMNATION 18

The counterclaim of [respondent] corporation is hereby Dismissed for lack of merit. 10

ADDITIONAL CASES FORMNATION 19

Hence, this Petition for Review on Certiorari.

The Petition is bereft of merit.

ADDITIONAL CASES FORMNATION 20

ADDITIONAL CASES FORMNATION 21

ADDITIONAL CASES FORMNATION 22

As the Court has held:

WITNESS: Yes, sir, they violated what we have agreed upon. 17

ADDITIONAL CASES FORMNATION 23

ADDITIONAL CASES FORMNATION 24

ADDITIONAL CASES FORMNATION 25

Oesmer vs. Paraiso Development Corporation, 514 SCRA 228(2007)

ADDITIONAL CASES FORMNATION 26

G.R. No. 112212 March 2, 1998