Villonco Reality Cpmany vs. Bormaheco, Inc.

No. L-26872. July 25, 1975

Facts:
The case involves the Villonco Realty Company against Bormaheco, Inc. its president, Francisco
N. Cervantes and, his wife, Rosario N. Cervantes. The Cervantes are the owners of Lots 3, 15, and
16 in Buendia Avenue.
In February 1964, there were negotiations for the sale of the aforementioned lots and the
improvements thereon between Romeo Villonco of Villonco Realty Company and Bormaheco,
Inc., represented by Francisco, through the intervention of Edit Perez de Tagle, real estate broker.
Bromaheco, Inc. made a written offer dated February 12, 1964 to Romeo Villonco for the sale of
the property. It mentioned the property located in Buendia Avenue, with total area of 3,500 sq.m.,
under the condition that it will be bought at the price of P400.00/sq.m., that an earnest money of
P100,000 be placed which will become part of the payment once sale is consummated, that the
sale be only consummated only after Cervantes have consummated his purchase of another
property in Sta. Ana, Manila, that if the negotiation of the latter property be not consummated by
reason beyond Cervante’s control, the earnest money will be returned and the sale of property will
not be consummated, and that the final negotiations on both properties be definitely known after
45 days. Cervantes also specified that if the aforementioned terms are acceptable to Villonco
Realty Villonco, the earnest money be issued in favor of Bormabheco, Inc., and be delivered thru
the bearer of offer, Edith Perez de Tagle.
The property in Sta. Ana (Punta Property), mentioned in the offer, was the land of the NASSCO
which, after a bidding conducted on January 17, 1964, was awarded to Bormaheco. NASSCO
authorized the General Manager to sign the necessary contract.
Both companies continued their negotiation for the sale of the Buendia Avenue Property and had
a final conference on February 27, 1964. As a result of the conference, Villonco Realty
Corporation, through Teofilo Villonco, in its letter of March 04, 1964, made a revised counter-
offer for the purchase of the said property. Beforehand, there was a counter-offer dated February
24, 1964 in which some information were corrected by Cervantes. The latest counter-offer by
Villonco, dated March 04, 1964, was accepted by Cervantes which contains that the offer pertains
to the property in Buendia Avenue with a total of 3,500 sq.m. which will be sold at a price at
P400.00/sq.m., including the improvements thereon, that a deposit of P100,000 be given as earnest
money which will become part of payment in the event the sale is consummated, that the sale shall
only be cancelled if the deal of Cervantes with another property in Sta. Ana will not be
consummated,a nd such, the earnest money be returned with 10% per annum interest, and
enclosing in the offer is the earnest money of P100,000.00. The Conforme was signed by Francisco
Cervantes representing the Bormaheco, Inc. The check of P100.000.00 was delivered by Tagle to
Bormaheco, Inc. and was received by Cervantes on the same day.
Unexpectedly, in a letter dated March 30, 1964, or 26 days after the signing of the Contract of
Sale, Cervantes returned the earnest money with interest amounting to P694.24, ten percent per
annum, stating the excuse the circumstance that “despite the lapse of 35 days from February 12,
1964 there is no certainty yet” for the acquisition of the Punta Property. The Villonco Realty
Company refused to accept the letter and the checks of Bromaheco, Inc. When Cervantes rescinded
the contract, he was already aware that the Punta lot had been awarded to Bormaheco, Inc.
Tagle, broker, articulated her shock and surprise at Bormaheco’s turnabout, through a letter to
Cervantes, dated March 31, 1964. Cervantes replied to the said letter on April 06, 1964 alleging
that the 45 days period had already expired and the sale of Punta Property to Bormaheco, Inc. (BI)
was not consummated and that his letter was a manifestation that they were no longer interested
to sell the Buendia Avenue property to Villonco Realty Company (VRC).
In a letter dated April 07, 1964, VRC returned the two checks to BI 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 BI.
The lower court rendered a decision ordering the Cervantes spouses to execute in favor of BI a
deed of conveyance of the three lots in question and directed BI to convey the lots to VRC, pay
the P10,000 monthly consequential damages, to pay Tagle the sum of P42,000 as broker’s
commission, and to pay P20,000.00 as attorney’s fees. BI and the Cervantes spouses appealed.
Thus, this case.
Issue: Whether the Contract of Sale was perfected?
Held:
1. The appeal was held devoid of merit, except as to the issue of damages.
2. “By the contract of sale one of the contracting parties obligates himself to transfer the
ownership of the to deliver a determinate thing, and the other to pay therefore a price certain
in money or its equivalent. A contract of sale may be absolute or conditional.”
3. “The contract of sale is perfected at the moment there is meeting of minds upon the thing
which is the object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing the form
of contracts.”
4. BI’s acceptance of VRC’s offer to purchase the Buendia Avenue property through the
revised- counter-offer, dated March 04, 1964, 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.
5. BI’s acceptance of the earnest money of P100,000 shows that the sale was conditionally
consummated or partly executed subject to the purchase by BI of the Punta property.
Nonconsummation of the purchase would be a negative resolutory condition.
6. The contention of the defendants that the sale was not perfected because Cervantes
allegedly qualified his acceptance of Villonco’s revised offer and therefore, Cervantes
acceptance amounted to a counter-offer which VRC should accept but no such acceptance
was transmitted to BI, is not well-taken. No evidence proved to the alleged changes of the
revised offer and there was no evidence that VRC opposed to the supposed changes. What
the record reveals is that Miss Tagle acted as intermediary between the parties and thus it
 is safe to assume that the alleged changes or qualifications made by Cervantes were
approved by VRC and that approval was duly communicated to Cervantes or BI by the
broker as shown by the payment of earnest money of P100,000 by VRC and which was
duly accepted by BI. On the alleged changes or qualification in the revised counter-offer,
these were not material and were just mere clarification of what the parties had previously
agreed upon.
7. Further, BI’s contention is predicated on the erroneous assumption that BI was to acquire
NASSCO land within 45 days or on or before March 28, 1964. The contention of the trial
court was right that the 45-day period was merely an estimate or a forecast of how long it
would take BI to acquire the NASSCO 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 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.”
8. It is deducible from the tenor of those statements that the consummation of the sale of the
Buendia lots to VRC was conditioned on BI’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. He could have also specified that period in his “conforme” to
Villonco’s counter-offer of March 4, 1964 instead of merely stating “that this sale shall be
subject to favorable consummation of a property in Sta. Ana we are negotiating.” 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.
9. The court affirmed the trial court with a modification on the awarding of damages to VRC.