Sales August 6, 2015

SALES AUGUST 6, 2015 1
G.R. No. 112212 March 2, 1998

GREGORIO
vs.
COURT
OF
APPEALS,
BELARMINO, respondents.
FULE, petitioner,
NINEVETCH
CRUZ
and
JUAN
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 2Belarmino 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. 12Petitioner, 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. 15 The 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. 16 Hence, 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. Noncompliance 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.

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.
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
Francisco A. Puray, Sr. for petitioners.

(c) Dismissing the counter-claim. (p. 38, Rollo)
Gabriel N. Duazo for private respondent.
The facts of the case are as follows:
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
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;
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)
On the East-property of Feliciano Destriza;

And on the basis of the findings of fact of the trial court as follows:
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
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. L41605, 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).
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:
... . (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.
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:
SO ORDERED.
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;
G.R. No. 136021
February 22, 2000
BENIGNA SECUYA, MIGUEL SECUYA, MARCELINO

CORAZON SECUYA, RUFINA SECUYA, BERNARDINO
NATIVIDAD
SECUYA,
GLICERIA
SECUYA
and
SECUYA, petitioners,
vs.
GERARDA M. VDA. DE SELMA, respondent.
SECUYA,
SECUYA,
PURITA
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
PANGANIBAN, J.:
The Facts
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 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-12B, 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 squaremeter 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
The Petition fails to show any reversible error in the assailed Decision.
Preliminary
The Action for Quieting of Title
Matter:
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 facieappearance 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 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
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
The Real Nature of the "Agreement of Partition"
Issue:
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 transactions16 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.
Deed21 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
Second
The Purported Sale to Dalmacio Secuya
Issue:
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.
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
The Validity of Private Respondent's Title
Issue:
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:
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
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.
G.R. No. L-55048 May 27, 1981

SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and MARCELINO
SOTTO, petitioners,
vs.
HON. AUXENCIO C. DACUYCUY, Judge of the CFI of Leyte, DELY
RODRIGUEZ, FELIPE ANG CRUZ, CONSTANCIA NOGAR, MANUEL GO,
INOCENTES DIME, WILLY JULIO, JAIME YU, OSCAR DY, DY CHIU
SENG, BENITO YOUNG, FERNANDO YU, SEBASTIAN YU, CARLOS UY,
HOC CHUAN and MANUEL DY,respondents.

BARREDO, J.:1wph1.t
Petition for certiorari and prohibition to declare void for being in grave abuse of
discretion the orders of respondent judge dated November 2, 1978 and August 29,
1980, in Civil Case No. 5759 of the Court of First Instance of Leyte, which denied
the motion filed by petitioners to dismiss the complaint of private respondents for
specific performance of an alleged agreement of sale of real property, the said
motion being based on the grounds that the respondents' complaint states no cause of
action and/or that the claim alleged therein is unenforceable under the Statute of
Frauds.
Finding initially prima facie merit in the petition, We required respondents to answer
and We issued a temporary restraining order on October 7, 1980 enjoining the
execution of the questioned orders.
In essence, the theory of petitioners is that while it is true that they did express
willingness to sell to private respondents the subject property for P6,500,000
provided the latter made known their own decision to buy it not later than July 31,
1978, the respondents' reply that they were agreeable was not absolute, so much so
that when ultimately petitioners' representative went to Cebu City with a prepared
and duly signed contract for the purpose of perfecting and consummating the
transaction, respondents and said representative found variance between the terms of
payment stipulated in the prepared document and what respondents had in mind,
hence the bankdraft which respondents were delivering to petit loners' representative
was returned and the document remained unsigned by respondents. Hence the action
below for specific performance.
This refers to the Sotto property (land and building) situated at

Tacloban City. My clients are willing to sell them at a total price of
P6,500,000.00.
While there are other parties who are interested to buy the
property, I am giving you and the other occupants the preference,
but such priority has to be exercised within a given number of days
as I do not want to lose the opportunity if you are not interested. I
am therefore gluing you and the rest of the occupants until July 31,
1978 within it which to decide whether you want to buy the
property. If I do not hear from you by July 31, I will offer or close
the deal with the other interested buyer.
Thank you so much for the hospitality extended to me during my
last trip to Tacloban, and I hope to hear from you very
soon. 1wph1.t
Room 314, Maria Cristina Bldg.
Osmea Boulevard, Cebu City
Reurlet dated July 12 inform Dra. Yuvienco we agree to buy
property proceed Tacloban to negotiate details 1wph1.t
(Page 10, Record.)
To be more specific, the parties do not dispute that on July 12, 1978, petitioners, thru
a certain Pedro C. Gamboa, sent to respondents the following letter:
Likewise uncontroverted is the fact that under date of July 27,

1978, Atty. Gamboa wired Yao King Ong in Tacloban City as
follows:
Mr. Yao King Ong
NLT
Life Bakery
YAO KING ONG
Tacloban City
LIFE BAKERY
Dear Mr. Yao: 1wph1.t
TACLOBAN CITY

PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING
WITH
CONTRACT
PREPARE
PAYMENT
BANK
DRAFT 1wph1.t
(Page 10, Id.)
Now, Paragraph 10 of the complaint below of respondents alleges: 1wph1.t
10. That on August 1, 1978, defendant Pedro Gamboa arrived
Tacloban City bringing with him the prepared contract to purchase
and to sell referred to in his telegram dated July 27, 1978 (Annex
'D' hereof) for the purpose of closing the transactions referred to in
paragraphs 8 and 9 hereof, however, to the complete surprise of
plaintiffs, the defendant (except def. Tacloban City Ice Plant,
Inc.) without giving notice to plaintiffs, changed the mode of
payment with respect to the balance of P4,500,000.00 by imposing
upon plaintiffs to pay same amount within thirty (30) days from
execution of the contract instead of the former term of ninety (90)
days as stated in paragraph 8 hereof. (Pp. 10-11, Record.)
Additionally and to reenforce their position, respondents alleged further in their
complaint: 1wph1.t
8. That on July 12, 1978, defendants (except defendant Tacloban
City Ice Plant, Inc.) finally sent a telegram letter to plaintiffstenants, through same Mr. Yao King Ong, notifying them that
defendants are willing to sell the properties (lands and building) at
a total price of P6,500,000.00, which herein plaintiffs-tenants have
agreed to buy the said properties for said price; a copy of which
letter is hereto attached as integral part hereof and marked as
Annex 'C', and plaintiffs accepted the offer through a telegram
dated July 25, 1978, sent to defendants (through defendant Pedro
C. Gamboa), a copy of which telegram is hereto attached as
integral part hereof and marked as Annex C-1 and as a
consequence hereof. plaintiffs except plaintiff Tacloban merchants' Realty Development Corporation) and defendants
(except defendant Tacloban City Ice Plant. Inc.) agreed to the
following terms and conditions respecting the payment of said

purchase price, to wit: 1wph1.t
P2,000,000.00 to be paid in full on the date of
the execution of the contract; and the balance of
P4,500,000.00 shall be fully paid within ninety
(90) days thereafter;
9. That on July 27, 1978, defendants sent a telegram to plaintifftenants, through the latter's representative Mr. Yao King Ong,
reiterating their acceptance to the agreement referred to in the next
preceding paragraph hereof and notifying plaintiffs-tenants to
prepare payment by bank drafts; which the latter readily complied
with; a copy of which telegram is hereto attached as integral part
hereof and marked as Annex "D"; (Pp 49-50, Record.)
It was on the basis of the foregoing facts and allegations that herein petitioners filed
their motion to dismiss alleging as main grounds: 1wph1.t
I. That plaintiff, TACLOBAN MERCHANTS' REALTY
DEVELOPMENT CORPORATION, amended complaint, does not
state a cause of action and the claim on which the action is founded
is likewise unenforceable under the provisions of the Statute of
Frauds.
II. That as to the rest of the plaintiffs, their amended complaint
does not state a cause of action and the claim on which the action
is founded is likewise unenforceable under the provisions of the
Statute of Frauds. (Page 81, Record.)
With commendable knowledgeability and industry, respondent judge ruled
negatively on the motion to dismiss, discoursing at length on the personality as real
party-in-interest of respondent corporation, while passing lightly, however, on what
to Us are the more substantial and decisive issues of whether or not the complaint
sufficiently states a cause of action and whether or not the claim alleged therein is
unenforceable under the Statute of Frauds, by holding thus: 1wph1.t

The second ground of the motion to dismiss is that plaintiffs' claim
is unenforceable under the Statute of Frauds. The defendants
argued against this motion and asked the court to reject the
objection for the simple reason that the contract of sale sued upon
in this case is supported by letters and telegrams annexed to the
complaint and other papers which will be presented during the
trial. This contention of the defendants is not well taken. The
plaintiffs having alleged that the contract is backed up by letters
and telegrams, and the same being a sufficient memorandum, the
complaint states a cause of action and they should be given a day
in court and allowed to substantiate their allegations (Paredes vs.
Espino, 22 SCRA 1000).
To take a contract for the sale of land out of the Statute of Frauds a
mere note or memorandum in writing subscribed by the vendor or
his agent containing the name of the parties and a summary
statement of the terms of the sale either expressly or by reference
to something else is all that is required. The statute does not
require a formal contract drawn up with technical exactness for the
language of Par. 2 of Art. 1403 of the Philippine Civil Code is' ...
an agreement ... or some note or memorandum thereof,' thus
recognizing a difference between the contract itself and the written
evidence which the statute requires (Berg vs. Magdalena Estate,
Inc., 92 Phil. 110; Ill Moran, Comments on the Rules of Court,
1952 ed. p. 187). See also Bautista's Monograph on the Statute of
Frauds in 21 SCRA p. 250. (Pp. 110-111, Record)
Our first task then is to dwell on the issue of whether or not in the light of the
foregoing circumstances, the complaint in controversy states sufficiently a cause of
action. This issue necessarily entails the determination of whether or not the
plaintiffs have alleged facts adequately showing the existence of a perfected contract
of sale between herein petitioners and the occupant represented by respondent Yao
King Ong.
In this respect, the governing legal provision is, of course, Article 1319 of the Civil
Code which provides:1wph1.t
ART. 1319. Consent is manifested by the meeting of the offer and

the acceptance upon the thing and the cause which are constitute
the contract. The offer must be certain the acceptance absolute. A
qualified acceptance constitute a counter-offer.
Acceptance made by letter or telegram does not bind offerer except
from the time it came to his knowledge. The contract, in a case, is
presumed to have been entered into in the place where the offer
was made.
In the instant case, We can lay aside, for the moment, petitioners' contention that the
letter of July 12, 1978 of Atty. Pedro C. Gamboa to respondents Yao King Ong and
his companions constitute an offer that is "certain", although the petitioners claim
that it was a mere expression of willingness to sell the subject property and not a
direct offer of sale to said respondents. What We consider as more important and
truly decisive is what is the correct juridical significance of the telegram of
respondents instructing Atty. Gamboa to "proceed to Tacloban tonegotiate details."
We underline the word "negotiate" advisedly because to Our mind it is the key word
that negates and makes it legally impossible for Us to hold that respondents'
acceptance of petitioners' offer, assuming that it was a "certain" offer indeed, was the
"absolute" one that Article 1319 above-quoted requires.
Dictionally, the implication of "to negotiate" is practically the opposite of the Idea
that an agreement has been reached. Webster's Third International Dictionary, Vol. II
(G. & C. Merriam Co., 1971 Philippine copyright) gives the meaning of negotiate as
"to communicate or confer with another so as to arrive at the settlement of some
matter; meet with another so as to arrive through discussion at some kind of
agreement or compromise about something; to arrange for or bring about through
conference or discussion; work at or arrive at or settle upon by meetings and
agreements or compromises ". Importantly, it must be borne in mind that Yao
King Ong's telegram simply says "we agree to buy property". It does not necessarily
connote acceptance of the price but instead suggests that the details were to be
subject of negotiation.
Respondents now maintain that what the telegram refers to as "details" to be
"negotiated" are mere "accidental elements", not the essential elements of the
contract. They even invite attention to the fact that they have alleged in their
complaint (Par. 6) that it was as early as "in the month of October, 1977 (that)

negotiations between plaintiffs and defendants for the purchase and sale (in question)
were made, thus resulting to offers of same defendants and counter-offer of
plaintiffs". But to Our mind such alleged facts precisely indicate the failure of any
meeting of the minds of the parties, and it is only from the letter and telegrams
above-quoted that one can determine whether or not such meeting of the minds did
materialize. As We see it, what such allegations bring out in bold relief is that it was
precisely because of their past failure to arrive at an agreement that petitioners had to
put an end to the uncertainty by writing the letter of July 12, 1978. On the other
hand, that respondents were all the time agreeable to buy the property may be
conceded, but what impresses Us is that instead of "absolutely" accepting the
"certain" offer if there was one of the petitioners, they still insisted on further
negotiation of details. For anyone to read in the telegram of Yao that they accepted
the price of P6,500,000.00 would be an inference not necessarily warranted by the
words "we agree to buy" and "proceed Tacloban to negotiate details". If indeed the
details being left by them for further negotiations were merely accidental or formal
ones, what need was there to say in the telegram that they had still "to negotiate
(such) details", when, being unessential per their contention, they could have been
just easily clarified and agreed upon when Atty. Gamboa would reach Tacloban?
Anent the telegram of Atty. Gamboa of July 27, 1978, also quoted earlier above, We
gather that it was in answer to the telegram of Yao. Considering that Yao was in
Tacloban then while Atty. Gamboa was in Cebu, it is difficult to surmise that there
was any communication of any kind between them during the intervening period,
and none such is alleged anyway by respondents. Accordingly, the claim of
respondents in paragraph 8 of their complaint below that there was an agreement of a
down payment of P2 M, with the balance of P4.5M to be paid within 90 days
afterwards is rather improbable to imagine to have actually happened.
Respondents maintain that under existing jurisprudence relative to a motion to
dismiss on the ground of failure of the complaint to state a cause of action, the
movant-defendant is deemed to admit the factual allegations of the complaint, hence,
petitioners cannot deny, for purposes of their motion, that such terms of payment had
indeed been agreed upon.
While such is the rule, those allegations do not detract from the fact that under
Article 1319 of the Civil Code above-quoted, and judged in the light of the telegramreply of Yao to Atty. Gamboa's letter of July 12, 1978, there was not an absolute
acceptance, hence from that point of view, petitioners' contention that the complaint
of respondents state no cause of action is correct.
Nonetheless, the alleged subsequent agreement about the P2 M down and P4.5 M in
90 days may at best be deemed as a distinct cause of action. And placed against the
insistence of petitioners, as demonstrated in the two deeds of sale taken by Atty.
Gamboa to Tacloban, Annexes 9 and 10 of the answer of herein respondents, that
there was no agreement about 90 days, an issue of fact arose, which could warrant a
trial in order for the trial court to determine whether or not there was such an
agreement about the balance being payable in 90 days instead of the 30 days
stipulated in Annexes 9 and 10 above-referred to. Our conclusion, therefore, is that
although there was no perfected contract of sale in the light of the letter of Atty.
Gamboa of July 12, 1978 and the letter-reply thereto of Yao; it being doubtful
whether or not, under Article 1319 of the Civil Code, the said letter may be deemed
as an offer to sell that is "certain", and more, the Yao telegram is far from being an
"absolute" acceptance under said article, still there appears to be a cause of action
alleged in Paragraphs 8 to 12 of the respondents' complaint, considering it is alleged
therein that subsequent to the telegram of Yao, it was agreed that the petitioners
would sell the property to respondents for P6.5 M, by paving P2 M down and the
balance in 90 days and which agreement was allegedly violated when in the deeds
prepared by Atty. Gamboa and taken to Tacloban, only 30 days were given to
respondents.
But the foregoing conclusion is not enough to carry the day for respondents. It only
brings Us to the question of whether or not the claim for specific performance of
respondents is enforceable under the Statute of Frauds. In this respect, We man, view
the situation at hand from two angles, namely, (1) that the allegations contained in
paragraphs 8 to 12 of respondents' complaint should be taken together with the
documents already aforementioned and (2) that the said allegations constitute a
separate and distinct cause of action. We hold that either way We view the situation,
the conclusion is inescapable e that the claim of respondents that petitioners have
unjustifiably refused to proceed with the sale to them of the property v in question is
unenforceable under the Statute of Frauds.
It is nowhere alleged in said paragraphs 8 to 12 of the complaint that there is any
writing or memorandum, much less a duly signed agreement to the effect that the
price of P6,500,000 fixed by petitioners for the real property herein involved was
agreed to be paid not in cash but in installments as alleged by respondents. The only

documented indication of the non-wholly-cash payment extant in the record is that
stipulated in Annexes 9 and 10 above-referred to, the deeds already signed by the
petitioners and taken to Tacloban by Atty. Gamboa for the signatures of the
respondents. In other words, the 90-day term for the balance of P4.5 M insisted upon
by respondents choices not appear in any note, writing or memorandum signed by
either the petitioners or any of them, not even by Atty. Gamboa. Hence, looking at
the pose of respondents that there was a perfected agreement of purchase and sale
between them and petitioners under which they would pay in installments of P2 M
down and P4.5 M within ninety 90) days afterwards it is evident that such oral
contract involving the "sale of real property" comes squarely under the Statute of
Frauds (Article 1403, No. 2(e), Civil Code.)
On the other score of considering the supposed agreement of paying installments as
partly supported by the letter and t telegram earlier quoted herein, His Honor
declared with well studied ratiocination, albeit legally inaccurate, that: 1wph1.t
The next issue relate to the State of Frauds. It is contended that
plaintiffs' action for specific performance to compel the defendants
to execute a good and sufficient conveyance of the property in
question (Sotto land and building) is unenforceable because there
is no other note memorandum or writing except annexes "C", "C-l"
and "D", which by themselves did not give birth to a contract to
sell. The argument is not well founded. The rules of pleading limit
the statement of the cause of action only to such operative facts as
give rise to the right of action of the plaintiff to obtain relief
against the wrongdoer. The details of probative matter or
particulars of evidence, statements of law, inferences and
arguments need not be stated. Thus, Sec. 1 of Rule 8 provides that
'every pleading shall contain in a methodical and logical form, a
plain concise and direct statement of the ultimate facts on which
the party pleading relies for his claim or defense, as the case may
be, omitting the statement of mere evidentiary facts.' Exhibits need
not be attached. The contract of sale sued upon in this case is
supported by letters and telegrams annexed to the complaint and
plaintiffs have announced that they will present additional
evidences during the trial to prove their cause of action. The
plaintiffs having alleged that the contract is backed up by letters
and telegrams, and the same being sufficient memorandum, the
complaint states a cause of action and they should be given their

day in court and allowed to substantiate their allegations (Parades
vs. Espino, 22 SCRA 1000). (Pp 165-166, Record.)
The foregoing disquisition of respondent judge misses at least two (2) juridical
substantive aspects of the Statute of Frauds insofar as sale of real property is
concerned. First, His Honor assumed that the requirement of perfection of such kind
of contract under Article 1475 of the Civil Code which provides that "(t)he contract
of sale is perfected at the moment there is a meeting of the minds upon the thing
which is the object of the contract and upon the price", the Statute would no longer
apply as long as the total price or consideration is mentioned in some note or
memorandum and there is no need of any indication of the manner in which such
total price is to be paid.
We cannot agree. In the reality of the economic world and the exacting demands of
business interests monetary in character, payment on installments or staggered
payment of the total price is entirely a different matter from cash payment,
considering the unpredictable trends in the sudden fluctuation of the rate of interest.
In other words, it is indisputable that the value of money - varies from day to day,
hence the indispensability of providing in any sale of the terms of payment when not
expressly or impliedly intended to be in cash.
Thus, We hold that in any sale of real property on installments, the Statute of Frauds
read together with the perfection requirements of Article 1475 of the Civil Code must
be understood and applied in the sense that the idea of payment on installments must
be in the requisite of a note or memorandum therein contemplated. Stated otherwise,
the inessential elements" mentioned in the case of Parades vs. Espino, 22 SCRA
1000, relied upon by respondent judge must be deemed to include the requirement
just discussed when it comes to installment sales. There is nothing in the monograph
re the Statute of Frauds appearing in 21 SCRA 250 also cited by His Honor
indicative of any contrary view to this ruling of Ours, for the essence and thrust of
the said monograph refers only to the form of the note or memorandum which would
comply with the Statute, and no doubt, while such note or memorandum need not be
in one single document or writing and it can be in just sufficiently implicit tenor,
imperatively the separate notes must, when put together', contain all the requisites of
a perfected contract of sale. To put it the other way, under the Statute of Frauds, the
contents of the note or memorandum, whether in one writing or in separate ones

merely indicative for an adequate understanding of all the essential elements of the
entire agreement, may be said to be the contract itself, except as to the form.
Secondly, We are of the considered opinion that under the rules on proper pleading,
the ruling of the trial court that, even if the allegation of the existence of a sale of real
property in a complaint is challenged as barred from enforceability by the Statute of
Frauds, the plaintiff may simply say there are documents, notes or memoranda
without either quoting them in or annexing them to the complaint, as if holding an
ace in the sleeves is not correct. To go directly to the point, for Us to sanction such a
procedure is to tolerate and even encourage undue delay in litigation, for the simple
reason that to await the stage of trial for the showing or presentation of the requisite
documentary proof when it already exists and is asked to be produced by the adverse
party would amount to unnecessarily postponing, with the concomitant waste of time
and the prolongation of the proceedings, something that can immediately be
evidenced and thereby determinable with decisiveness and precision by the court
without further delay.
In this connection, Moran observes that unlike when the ground of dismissal alleged
is failure of the complaint to state a cause of action, a motion to dismiss invoking the
Statute of Frauds may be filed even if the absence of compliance does not appear an
the face of the complaint. Such absence may be the subject of proof in the motion
stage of the proceedings. (Moran, Comment on the Rules of Court, Vol. 1, p. 494,
1979 ed.) It follows then that when such a motion is filed and all the documents
available to movant are before the court, and they are insufficient to comply with the
Statute, it becomes incumbent upon the plaintiff, for the reasons of policy We have
just' indicated regarding speedy administration of justice, to bring out what note or
memorandum still exists in his possession in order to enable the court to
expeditiously determine then and there the need for further proceedings. In other
words, it would be inimical to the public interests in speedy justice for plaintiff to
play hide and seek at his own convenience, particularly, when, as is quite apparent as
in the instant case that chances are that there are no more writings, notes or
memoranda of the installment agreement alleged by respondents. We cannot divine
any reason why any such document would be withheld if they existed, except the
unpermissible desire of the respondents to force the petitioners to undergo the
ordeals, time, effort and expenses of a futile trial.
In the foregoing premises, We find no alternative than to render judgment in favor of
petitioners in this certiorari and prohibition case. If at all, appeal could be available if
the petitioners subjected themselves to the trial ruled to be held by the trial court. We
foresee even at this point, on the basis of what is both extant and implicit in the
records, that no different result can be probable. We consider it as sufficiently a grave
abuse of discretion warranting the special civil actions herein the failure of
respondent judge to properly apply the laws on perfection of contracts in relation to
the Statute of Frauds and the pertinent rules of pleading and practice, as We have
discussed above.
ACCORDINGLY, the impugned orders of respondent judge of November 2, 1978
and August 29, 1980 are hereby set aside and private respondents' amended
complaint, Annex A of the petition, is hereby ordered dismissed and the restraining
order heretofore issued by this Court on October 7, 1980 is declared permanent.
Costs against respondents.
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.
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 VicePresident 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 VicePresidents 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.
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?
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 . . .
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.
(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.
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?
(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 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.
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?
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 VicePresident 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;
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).
Theperfection 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
orcommodatum, 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].)
b. perfection or birth of the contract, which is the moment when

the parties come to agree on the terms of the contract; and
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 crossexamination, 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. VicePresident, 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 vicepresident 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.
G.R. No. L-11311
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.
May 28, 1958
MARTA
C.
vs.
DANIEL LEONARDO, defendant-appellee.
ORTEGA, plaintiff-appellant,
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.
Jose
Ma.
Tomas A. Leonardo for appellee.
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.
Well known is the general rule in the Statute of Frauds precluding enforcement of
oral contracts for the sale of land. Not so well known is exception concerning the
partially executed contracts1 least our jurisprudence offers few, if any, apposite
illustrations. This appeal exemplifies such exception.
SO ORDERED.
Alleging partial performance, plaintiff sought to compel defendant to comply with

their oral contract of sale of a parcel of land. Upon a motion to dismiss, the Manila
court of first instance ordered dismissal following the above general rule.
Reyes
for
appellant.
BENGZON, J.:
Hence this appeal. It should be sustained if the allegations of the complaint which
the motion to dismiss admitted set out an instance of partial performance.
Stripped of non-essentials, the complaint averred that long before and until her house
had been completely destroyed during the liberation of the City of Manila, plaintiff
occupied a parcel of land, designated as Lot 1, Block 3 etc. (hereinafter called Lot I)
located at San Andres Street, Malate, Manila; that after liberation she re-occupied it;
that when the administration and disposition of the said Lot I (together with other
lots in the Ana Sarmiento Estate) were assigned by the Government to the Rural
Progress Administration2 plaintiff asserted her right thereto (as occupant) for

purposes of purchase; that defendant also asserted a similar right, alleging occupancy
of a portion of the land subsequent to plaintiff's; that during the investigation of such
conflicting interests, defendant asked plaintiff to desist from pressing her claim and
definitely promised that if and when he succeeded in getting title to Lot I 3 , he would
sell to her a portion thereof with an area of 55.60 square meters (particularly
described) at the rate of P25.00 per square meter, provided she paid for the surveying
and subdivision of the Lot and provided further that after he acquired title, she could
continue holding the lot as tenant by paying a monthly rental of P10.00 until said
portion shall have been segregated and the purchase price fully paid; that plaintiff
accepted defendant's offer, and desisted from further claiming Lot I; that defendant
finally acquired title thereto; that relying upon their agreement, plaintiff caused the
survey and segregation of the portion which defendant had promised to sell incurring
expenses therefor, said portion being now designated as Lot I-B in a duly prepared
and approved subdivision plan; that in remodelling her son's house constructed on a
lot adjoining Lot I she extended it over said Lot I-B; that after defendant had
acquired Lot I plaintiff regularly paid him the monthly rental of P10.00; that in July
1954, after the plans of subdivision and segregation of the lot had been approved by
the Bureau of Lands, plaintiff tendered to defendant the purchase price which the
latter refused to accept, without cause or reason.
The court below explained in its order of dismissal:
It is admitted by both parties that an oral agreement to sell a piece of land is
not enforceable. (Art. 1403, Civil Code, Section 21, Rule 123, Rules of
Court.) Plaintiff, however, argues that the contract in question, although
verbal, was partially performed because plaintiff desisted from claiming the
portion of lot I in question due to the promise of defendant to transfer said
portion to her after the issuance of title to defendant. The court thinks that
even granting that plaintiff really desisted to claim not on oral promise to
sell made by defendant, the oral promise to sell cannot be enforced. The
desistance to claim is not a part of the contract of sale of the land. Only in
essential part of the executory contract will, if it has already been
performed, make the verbal contract enforceable, payment of price being an
essential part of the contract of sale.
If the above means that partial performance of a sale contract occurs only when part
of the purchase price is paid, it surely constitutes a defective statement of the law.
American Jurisprudence in its title "Statute of Frauds" lists other acts of partial
performance, such as possession, the making of improvements, rendition of services,

payment of taxes, relinquishment of rights, etc.
Thus, it is stated that "The continuance in possession may, in a proper case, be
sufficiently referable to the parol contract of sale to constitute a part performance
thereof. There may be additional acts or peculiar circumstances which sufficiently
refer the possession to the contract. . . . Continued possession under an oral contract
of sale, by one already in possession as a tenant, has been held a sufficient part
performance, where accompanied by other acts which characterize the continued
possession and refer it to the contract of purchase. Especially is this true where the
circumstances of the case include the making of substantial, permanent, and valuable
improvements." (49 American Jurisprudence 44)
It is also stated that "The making of valuable permanent improvements on the land
by the purchaser, in pursuance of the agreement and with the knowledge of the
vendor, has been said to be the strongest and the most unequivocal act of part
performance by which a verbal contract to sell land is taken out of the statute of
frauds, and is ordinarily an important element in such part performance. . . .
Possession by the purchaser under a parol contract for the purchase of real property,
together with his making valuable and permanent improvements on the property
which are referable exclusively to the contract, in reliance on the contract, in the
honest belief that he has a right to make them, and with the knowledge and consent
or acquiescence of the vendor, is deemed a part performance of the contract. The
entry into possession and the making of the improvements are held on amount to
such an alteration in the purchaser's position as will warrant the court's entering a
degree of specific performance." (49 American Jurisprudence p.755, 756.)
Again, it is stated that "A tender or offer of payment, declined by the vendor, has
been said to be equivalent to actual payment, for the purposes of determining
whether or not there has been a part performance of the contract. This is apparently
true where the tender is by a purchaser who has made improvements. But the
doctrine now generally accepted, that not even the payment of the purchase price,
without something more, . . . is a sufficient part performance. (49 American
Jurisprudence p. 772.)
And the relinquishment of rights or the compromise thereof has likewise been held to
constitute part performance. (See same title secs. 473, 474, 475.)

In the light of the above four paragraphs, it would appear that the complaint in this
case described several circumstance indicating partial performance: relinquishment
of rights4 continued possession, building of improvements, tender of payment plus
the surveying of the lot at plaintiff's expense and the payment of rentals.
We shall not take, time to discuss whether one or the other or any two or three of
them constituted sufficient performance to take the matter away from the operation
of the Statute of Frauds. Enough to hold that the combination of all of
them amounted to partial performance; and we do so line with the accepted basis of
the doctrine, that it would be a fraud upon the plaintiff if the defendant were
permitted to oppose performance of his part after he has allowed or induced the
former to perform in reliance upon the agreement. (See 49 American Jurisprudence
p. 725.)
The paragraph immediately preceding will serve as our comment on the appellee's
quotations from American Jurisprudence itself to the effect that "relinquishment" is
not part performance, and that neither "surveying the land" 5 nor tender of payment is
sufficient. The precedents hereinabove transcribed oppose or explain away or qualify
the appellee's citations. And at the risk of being repetitious we say: granting
that none of the three circumstances indicated by him, (relinquishment, survey,
tender) would separately suffice, still the combination of the three with the others
already mentioned, amounts to more than enough.
Hence, as there was partial performance, the principle excluding parol contracts for
the sale of realty, does not apply.
The judgment will accordingly be reversed and the record remanded for further
proceedings. With costs against appellee.
G.R. No. 85240 July 12, 1991

HEIRS OF CECILIO (also known as BASILIO) CLAUDEL, namely,
MODESTA CLAUDEL, LORETA HERRERA, JOSE CLAUDEL, BENJAMIN
CLAUDEL, PACITA CLAUDEL, CARMELITA CLAUDEL, MARIO
CLAUDEL, ROBERTO CLAUDEL, LEONARDO CLAUDEL, ARSENIA
VILLALON, PERPETUA CLAUDEL and FELISA CLAUDEL, petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF MACARIO, ESPERIDIONA,
RAYMUNDA and CELESTINA, all surnamed CLAUDEL, respondents.
Ricardo L. Moldez for petitioners.
Juan T. Aquino for private respondents

TCT No. 395393 1,997 sq. m. Armenia C. Villalon
SARMIENTO, J.:p
This petition for review on certiorari seeks the reversal of the decision rendered by
the Court of Appeals in CA-G.R. CV No. 04429 1 and the reinstatement of the
decision of the then Court of First Instance (CFI) of Rizal, Branch CXI, in Civil Case
No. M-5276-P, entitled. "Heirs of Macario Claudel, et al. v. Heirs of Cecilio Claudel,
et al.," which dismissed the complaint of the private respondents against the
petitioners for cancellation of titles and reconveyance with damages. 2
As early as December 28, 1922, Basilio also known as "Cecilio" Claudel, acquired
from the Bureau of Lands, Lot No. 1230 of the Muntinlupa Estate Subdivision,
located in the poblacion of Muntinlupa, Rizal, with an area of 10,107 square meters;
he secured Transfer Certificate of Title (TCT) No. 7471 issued by the Registry of
Deeds for the Province of Rizal in 1923; he also declared the lot in his name, the
latest Tax Declaration being No. 5795. He dutifully paid the real estate taxes thereon
until his death in 1937. 3 Thereafter, his widow "Basilia" and later, her son Jose, one
of the herein petitioners, paid the taxes.
The same piece of land purchased by Cecilio would, however, become the subject of
protracted litigation thirty-nine years after his death.
Two branches of Cecilio's family contested the ownership over the land-on one hand
the children of Cecilio, namely, Modesto, Loreta, Jose, Benjamin, Pacita, Carmelita,
Roberto, Mario, Leonardo, Nenita, Arsenia Villalon, and Felisa Claudel, and their
children and descendants, now the herein petitioners (hereinafter referred to as
HEIRS OF CECILIO), and on the other, the brother and sisters of Cecilio, namely,
Macario, Esperidiona, Raymunda, and Celestina and their children and descendants,
now the herein private respondents (hereinafter referred to as SIBLINGS OF
CECILIO). In 1972, the HEIRS OF CECILIO partitioned this lot among themselves
and obtained the corresponding Transfer Certificates of Title on their shares, as
follows:
TCT No. 395391 1,997 sq. m. Jose Claudel
TCT No. 395392 1,997 sq. m. Modesta Claudel and children
TCT No. 395394 1,997 sq. m. Felisa Claudel 4

Four years later, on December 7, 1976, private respondents SIBLINGS OF
CECILIO, filed Civil Case No. 5276-P as already adverted to at the outset, with the
then Court of First Instance of Rizal, a "Complaint for Cancellation of Titles and
Reconveyance with Damages," alleging that 46 years earlier, or sometime in 1930,
their parents had purchased from the late Cecilio Claudel several portions of Lot No.
1230 for the sum of P30.00. They admitted that the transaction was verbal. However,
as proof of the sale, the SIBLINGS OF CECILIO presented a subdivision plan of the
said land, dated March 25, 1930, indicating the portions allegedly sold to the
SIBLINGS OF CECILIO.
As already mentioned, the then Court of First Instance of Rizal, Branch CXI,
dismissed the complaint, disregarding the above sole evidence (subdivision plan)
presented by the SIBLINGS OF CECILIO, thus:
Examining the pleadings as well as the evidence presented in this
case by the parties, the Court can not but notice that the present
complaint was filed in the name of the Heirs of Macario,
Espiridiona, Raymunda and Celestina, all surnamed Claudel,
without naming the different heirs particularly involved, and who
wish to recover the lots from the defendants. The Court tried to
find this out from the evidence presented by the plaintiffs but to no
avail. On this point alone, the Court would not be able to apportion
the property to the real party in interest if ever they are entitled to it
as the persons indicated therein is in generic term (Section 2, Rule
3). The Court has noticed also that with the exception of plaintiff
Lampitoc and (sic) the heirs of Raymunda Claudel are no longer
residing in the property as they have (sic) left the same in 1967.
But most important of all the plaintiffs failed to present any
document evidencing the alleged sale of the property to their
predecessors in interest by the father of the defendants.
Considering that the subject matter of the supposed sale is a real
property the absence of any document evidencing the sale would
preclude the admission of oral testimony (Statute of Frauds).
Moreover, considering also that the alleged sale took place in

1930, the action filed by the plaintiffs herein for the recovery of
the same more than thirty years after the cause of action has
accrued has already prescribed.
WHEREFORE, the Court renders judgment dismissing the
complaint, without pronouncement as to costs.
SO ORDERED.
On appeal, the following errors 6 were assigned by the SIBLINGS OF CECILIO:

1. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFFS'
COMPLAINT DESPITE CONCLUSIVE EVIDENCE SHOWING
THE PORTION SOLD TO EACH OF PLAINTIFFS'
PREDECESSORS.
2. THE TRIAL COURT ERRED IN HOLDING THAT
PLAINTIFFS FAILED TO PROVE ANY DOCUMENT
EVIDENCING THE ALLEGED SALE.
3. THE TRIAL COURT ERRED IN NOT GIVING CREDIT TO
THE PLAN, EXHIBIT A, SHOWING THE PORTIONS SOLD
TO EACH OF THE PLAINTIFFS' PREDECESSORS-ININTEREST.
4. THE TRIAL COURT ERRED IN NOT DECLARING
PLAINTIFFS AS OWNERS OF THE PORTION COVERED BY
THE PLAN, EXHIBIT A.
5. THE TRIAL COURT ERRED IN NOT DECLARING
TRANSFER CERTIFICATES OF TITLE NOS. 395391, 395392,
395393 AND 395394 OF THE REGISTER OF DEEDS OF
RIZAL AS NULL AND VOID.
The Court of Appeals reversed the decision of the trial court on the following
grounds:
1. The failure to bring and prosecute the action in the name of the real party in
interest, namely the parties themselves, was not a fatal omission since the court a
quo could have adjudicated the lots to the SIBLINGS OF CECILIO, the parents of
the herein respondents, leaving it to them to adjudicate the property among
themselves.
2. The fact of residence in the disputed properties by the herein respondents had been
made possible by the toleration of the deceased Cecilio.
3. The Statute of Frauds applies only to executory contracts and not to consummated
sales as in the case at bar where oral evidence may be admitted as cited in Iigo
v. Estate of Magtoto 7 and Diana, et al. v. Macalibo. 8
In addition,
. . . Given the nature of their relationship with one another it is not
unusual that no document to evidence the sale was executed, . . .,
in their blind faith in friends and relatives, in their lack of
experience and foresight, and in their ignorance, men, in spite of
laws, will make and continue to make verbal contracts. . . . 9
4. The defense of prescription cannot be set up against the herein petitioners despite
the lapse of over forty years from the time of the alleged sale in 1930 up to the filing
of the "Complaint for Cancellation of Titles and Reconveyance . . ." in 1976.
According to the Court of Appeals, the action was not for the recovery of possession
of real property but for the cancellation of titles issued to the HEIRS OF CECILIO in
1973. Since the SIBLINGS OF CECILIO commenced their complaint for
cancellation of titles and reconveyance with damages on December 7, 1976, only
four years after the HEIRS OF CECILIO partitioned this lot among themselves and
obtained the corresponding Transfer Certificates of Titles, then there is no
prescription of action yet.
Thus the respondent court ordered the cancellation of the Transfer Certificates of
Title Nos. 395391, 395392, 395393, and 395394 of the Register of Deeds of Rizal
issued in the names of the HEIRS OF CECILIO and corollarily ordered the
execution of the following deeds of reconveyance:

To Celestina Claudel, Lot 1230-A with an area of 705 sq. m.
To Raymunda Claudel, Lot 1230-B with an area of 599 sq. m.
such sale and hence has no means to enforce the contract. Thus the Statute of Frauds
was precisely devised to protect the parties in a contract of sale of real property so
that no such contract is enforceable unless certain requisites, for purposes of proof,
are met.
To Esperidiona Claudel, Lot 1230-C with an area of 597 sq. m.

The provisions of the Statute of Frauds pertinent to the present controversy, state:
To Macario Claudel, Lot 1230-D, with an area of 596 sq. m.
10
The respondent court also enjoined that this disposition is without prejudice to the
private respondents, as heirs of their deceased parents, the SIBLINGS OF CECILIO,
partitioning among themselves in accordance with law the respective portions sold to
and herein adjudicated to their parents.
Art. 1403 (Civil Code). The following contracts are unenforceable,

unless they are ratified:
xxx xxx xxx
The crux of the entire litigation is whether or not the Court of Appeals committed a
reversible error in disposing the question of the true ownership of the lots.
2) Those that do not comply with the Statute of Frauds as set forth
in this number. In the following cases, an agreement hereafter
made shall be unenforceable by action unless the same, or some
note or memorandum thereof, be in writing, and subscribed by the
party charged, or by his agent; evidence, therefore, of the
agreement cannot be received without the writing, or a secondary
evidence of its contents:
And the real issues are:
xxx xxx xxx
The rest of the land, lots 1230-E and 1230-F, with an area of 598 and 6,927 square
meters, respectively would go to Cecilio or his heirs, the herein petitioners. Beyond
these apportionments, the HEIRS OF CECILIO would not receive anything else.
1. Whether or not a contract of sale of land may be proven orally:

2. Whether or not the prescriptive period for filing an action for
cancellation of titles and reconveyance with damages (the action
filed by the SIBLINGS OF CECILIO) should be counted from the
alleged sale upon which they claim their ownership (1930) or from
the date of the issuance of the titles sought to be cancelled in favor
of the HEIRS OF CECILIO (1976).
The rule of thumb is that a sale of land, once consummated, is valid regardless of the
form it may have been entered into. 11 For nowhere does law or jurisprudence
prescribe that the contract of sale be put in writing before such contract can validly
cede or transmit rights over a certain real property between the parties themselves.
However, in the event that a third party, as in this case, disputes the ownership of the
property, the person against whom that claim is brought can not present any proof of
e) An agreement for the leasing for a longer period than one year,
or for the sale of real property or of an interest therein;
xxx xxx xxx
(Emphasis supplied.)
The purpose of the Statute of Frauds is to prevent fraud and perjury in the
enforcement of obligations depending for their evidence upon the unassisted memory
of witnesses by requiring certain enumerated contracts and transactions to be
evidenced in Writing. 12
The provisions of the Statute of Frauds originally appeared under the old Rules of
Evidence. However when the Civil Code was re-written in 1949 (to take effect in
1950), the provisions of the Statute of Frauds were taken out of the Rules of
Evidence in order to be included under the title on Unenforceable Contracts in the

Civil Code. The transfer was not only a matter of style but to show that the Statute of
Frauds is also a substantive law.
Therefore, except under the conditions provided by the Statute of Frauds, the
existence of the contract of sale made by Cecilio with his siblings 13 can not be
proved.
On the second issue, the belated claim of the SIBLINGS OF CECILIO who filed a
complaint in court only in 1976 to enforce a light acquired allegedly as early as
1930, is difficult to comprehend.
The Civil Code states:
Art. 1145. The following actions must be commenced within six
years:
torrens system cannot be defeated by prescription. The title, once

registered, is notice to the world. All persons must take notice. No
one can plead ignorance of the registration. 15
xxx xxx xxx
Furthermore, a private individual may not bring an action for
reversion or any action which would have the effect of cancelling a
free patent and the corresponding certificate of title issued on the
basis thereof, with the result that the land covered thereby will
again form part of the public domain, as only the Solicitor General
or the officer acting in his stead may do so. 16
It is true that in some instances, the Court did away with the irrevocability of the
torrens title, but the circumstances in the case at bar varied significantly from these
cases.
(1) Upon an oral contract . . . (Emphasis supplied).

If the parties SIBLINGS OF CECILIO had allegedly derived their right of action
from the oral purchase made by their parents in 1930, then the action filed in 1976
would have clearly prescribed. More than six years had lapsed.
We do not agree with the parties SIBLINGS OF CECILIO when they reason that an
implied trust in favor of the SIBLINGS OF CECILIO was established in 1972, when
the HEIRS OF CECILIO executed a contract of partition over the said properties.
But as we had pointed out, the law recognizes the superiority of the torrens title.
Above all, the torrens title in the possession of the HEIRS OF CECILIO carries more
weight as proof of ownership than the survey or subdivision plan of a parcel of land
in the name of SIBLINGS OF CECILIO.
The Court has invariably upheld the indefeasibility of the torrens title. No possession
by any person of any portion of the land could defeat the title of the registered
owners thereof. 14
A torrens title, once registered, cannot be defeated, even by
adverse, open and notorious possession. A registered title under the
In Bornales v. IAC, 17 the defense of indefeasibility of a certificate of title was

disregarded when the transferee who took it had notice of the flaws in the transferor's
title. No right passed to a transferee from a vendor who did not have any in the first
place. The transferees bought the land registered under the torrens system from
vendors who procured title thereto by means of fraud. With this knowledge, they can
not invoke the indefeasibility of a certificate of title against the private respondent to
the extent of her interest. This is because the torrens system of land registration,
though indefeasible, should not be used as a means to perpetrate fraud against the
rightful owner of real property.
Mere registration of the sale is not good enough, good faith must concur with
registration. Otherwise registration becomes an exercise in futility. 18
In Amerol v. Bagumbaran, 19 we reversed the decision of the trial court. In this case,
the title was wrongfully registered in another person's name. An implied trust was
therefore created. This trustee was compelled by law to reconvey property
fraudulently acquired notwithstanding the irrevocability of the torrens title. 20
In the present case, however, the facts belie the claim of ownership.

For several years, when the SIBLINGS OF CECILIO, namely, Macario, Esperidiona
Raymunda, and Celestina were living on the contested premises, they regularly paid
a sum of money, designated as "taxes" at first, to the widow of Cecilio, and later, to
his heirs. 21 Why their payments were never directly made to the Municipal
Government of Muntinlupa when they were intended as payments for "taxes" is
difficult to square with their claim of ownership. We are rather inclined to consider
this fact as an admission of non-ownership. And when we consider also that the
petitioners HEIRS OF CECILIO had individually paid to the municipal treasury the
taxes corresponding to the particular portions they were occupying, 22 we can readily
see the superiority of the petitioners' position.
Renato Solema and Decimina Calvez, two of the respondents who derive their right
from the SIBLINGS OF CLAUDEL, bought a portion of the lot from Felisa Claudel,
one of the HEIRS OF CLAUDEL. 23 The Calvezes should not be paying for a lot that
they already owned and if they did not acknowledge Felisa as its owner.
In addition, before any of the SIBLINGS OF CECILIO could stay on any of the
portions of the property, they had to ask first the permission of Jose Claudel again,
one of the HEIRS OF CECILIO. 24 In fact the only reason why any of the heirs of
SIBLINGS OF CECILIO could stay on the lot was because they were allowed to do
so by the HEIRS OF CECILIO. 25
In view of the foregoing, we find that the appellate court committed a reversible
error in denigrating the transfer certificates of title of the petitioners to the survey or
subdivision plan proffered by the private respondents. The Court generally
recognizes the profundity of conclusions and findings of facts reached by the trial
court and hence sustains them on appeal except for strong and cogent reasons
inasmuch as the trial court is in a better position to examine real evidence and
observe the demeanor of witnesses in a case.
No clear specific contrary evidence was cited by the respondent appellate court to
justify the reversal of the lower court's findings. Thus, in this case, between the
factual findings of the trial court and the appellate court, those of the trial court must
prevail over that of the latter. 26
WHEREFORE, the petition is GRANTED We REVERSE and SET ASIDE the
decision rendered in CA-G.R. CV No. 04429, and we hereby REINSTATE the
decision of the then Court of First Instance of Rizal (Branch 28, Pasay City) in Civil
Case No. M-5276-P which ruled for the dismissal of the Complaint for Cancellation
of Titles and Reconveyance with Damages filed by the Heirs of Macario,
Esperidiona Raymunda, and Celestina, all surnamed CLAUDEL. Costs against the
private respondents.
SO ORDERED.

1. all necessary documents will be submitted to TOYOTA SHAW,
INC. (POPONG BERNARDO) a week after, upon arrival of Mr.
Sosa from the Province (Marinduque) where the unit will be used
on the 19th of June.
2. the downpayment of P100,000.00 will be paid by Mr. Sosa on
June 15, 1989.
3. the TOYOTA SHAW, INC. LITE ACE yellow, will be pick-up
[sic] and released by TOYOTA SHAW, INC. on the 17th of June at
10 a.m.
Was this document, executed and signed by the petitioner's sales representative, a
perfected contract of sale, binding upon the petitioner, breach of which would entitle
the private respondent to damages and attorney's fees? The trial court and the Court
of Appeals took the affirmative view. The petitioner disagrees. Hence, this petition
for review oncertiorari.
G.R. No. L-116650 May 23, 1995

TOYOTA
SHAW,
vs.
COURT OF APPEALS and LUNA L. SOSA, respondents.
INC., petitioner,
DAVIDE, JR., J.:

At the heart of the present controversy is the document marked Exhibit "A" 1 for the
private respondent, which was signed by a sales representative of Toyota Shaw, Inc.
named Popong Bernardo. The document reads as follows:
AGREEMENTS
&
POPONG
SHAW, INC.
BETWEEN
BERNARDO
MR.
OF
SOSA
TOYOTA
The antecedents as disclosed in the decisions of both the trial court and the Court of
Appeals, as well as in the pleadings of petitioner Toyota Shaw, Inc.
(hereinafter Toyota) and respondent Luna L. Sosa (hereinafter Sosa) are as follows.
Sometime in June of 1989, Luna L. Sosa wanted to purchase a Toyota Lite Ace. It
was then a seller's market and Sosa had difficulty finding a dealer with an available
unit for sale. But upon contacting Toyota Shaw, Inc., he was told that there was an
available unit. So on 14 June 1989, Sosa and his son, Gilbert, went to the Toyota
office at Shaw Boulevard, Pasig, Metro Manila. There they met Popong Bernardo, a
sales representative of Toyota.
Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989
because he, his family, and abalikbayan guest would use it on 18 June 1989 to go to
Marinduque, his home province, where he would celebrate his birthday on the 19th
of June. He added that if he does not arrive in his hometown with the new car, he
would become a "laughing stock." Bernardo assured Sosa that a unit would be ready
for pick up at 10:00 a.m. on 17 June 1989. Bernardo then signed the aforequoted
"Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." It was
also agreed upon by the parties that the balance of the purchase price would be paid
by credit financing through B.A. Finance, and for this Gilbert, on behalf of his father,
signed the documents of Toyota and B.A. Finance pertaining to the application for
financing.
The next day, 15 June 1989, Sosa and Gilbert went to Toyota to deliver the
downpayment of P100,000.00. They met Bernardo who then accomplished a printed
Vehicle Sales Proposal (VSP) No. 928, 2 on which Gilbert signed under the

subheading CONFORME. This document shows that the customer's name is "MR.
LUNA SOSA" with home address at No. 2316 Guijo Street, United Paraaque II;
that the model series of the vehicle is a "Lite Ace 1500" described as "4 Dr minibus";
that payment is by "installment," to be financed by "B.A.," 3 with the initial cash
outlay of P100,000.00 broken down as follows:
a)
downpayment
P 53,148.00
b)
insurance
P 13,970.00
c)
BLT registration fee
P 1,067.00
CHMO fee
P 2,715.00
service fee
P 500.00
accessories
P 29,000.00
and that the "BALANCE TO BE FINANCED" is "P274,137.00." The spaces

provided for "Delivery Terms" were not filled-up. It also contains the following
pertinent provisions:
CONDITIONS OF SALES
1. This sale is subject to availability of unit.
2. Stated Price is subject to change without prior notice, Price
prevailing and in effect at time of selling will apply. . . .
Rodrigo Quirante, the Sales Supervisor of Bernardo, checked and approved the VSP.
On 17 June 1989, at around 9:30 a.m., Bernardo called Gilbert to inform him that the
vehicle would not be ready for pick up at 10:00 a.m. as previously agreed upon but at
2:00 p.m. that same day. At 2:00 p.m., Sosa and Gilbert met Bernardo at the latter's
office. According to Sosa, Bernardo informed them that the Lite Ace was being
readied for delivery. After waiting for about an hour, Bernardo told them that the car
could not be delivered because "nasulot ang unit ng ibang malakas."
Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the
disapproval by B.A. Finance of the credit financing application of Sosa. It further
alleged that a particular unit had already been reserved and earmarked for Sosa but
could not be released due to the uncertainty of payment of the balance of the
purchase price. Toyota then gave Sosa the option to purchase the unit by paying the
full purchase price in cash but Sosa refused.
After it became clear that the Lite Ace would not be delivered to him, Sosa asked
that his downpayment be refunded. Toyota did so on the very same day by issuing a
Far East Bank check for the full amount of P100,000.00, 4 the receipt of which was
shown by a check voucher of Toyota, 5 which Sosa signed with the reservation,
"without prejudice to our future claims for damages."
Thereafter, Sosa sent two letters to Toyota. In the first letter, dated 27 June 1989 and
signed by him, he demanded the refund, within five days from receipt, of the
downpayment of P100,000.00 plus interest from the time he paid it and the payment
of damages with a warning that in case of Toyota's failure to do so he would be
constrained to take legal action. 6 The second, dated 4 November 1989 and signed by
M. O. Caballes, Sosa's counsel, demanded one million pesos representing interest
and damages, again, with a warning that legal action would be taken if payment was
not made within three days. 7 Toyota's counsel answered through a letter dated 27
November 1989 8 refusing to accede to the demands of Sosa. But even before this
answer was made and received by Sosa, the latter filed on 20 November 1989 with
Branch 38 of the Regional Trial Court (RTC) of Marinduque a complaint against
Toyota for damages under Articles 19 and 21 of the Civil Code in the total amount of
P1,230,000.00. 9 He alleges, inter alia, that:
9. As a result of defendant's failure and/or refusal to deliver the
vehicle to plaintiff, plaintiff suffered embarrassment, humiliation,
ridicule, mental anguish and sleepless nights because: (i) he and
his family were constrained to take the public transportation from
Manila to Lucena City on their way to Marinduque; (ii) his
balikbayan-guest canceled his scheduled first visit to Marinduque
in order to avoid the inconvenience of taking public transportation;
and (iii) his relatives, friends, neighbors and other provincemates,
continuously irked him about "his Brand-New Toyota Lite Ace

that never was." Under the circumstances, defendant should be
made liable to the plaintiff for moral damages in the amount of
One Million Pesos (P1,000,000.00). 10
2. ordering the defendant to pay the plaintiff the

sum of P10,000.00 for exemplary damages;
3. ordering the defendant to pay the sum of
P30,000.00 attorney's fees plus P2,000.00
lawyer's transportation fare per trip in attending
to the hearing of this case;
In its answer to the complaint, Toyota alleged that no sale was entered into between
it and Sosa, that Bernardo had no authority to sign Exhibit "A" for and in its behalf,
and that Bernardo signed Exhibit "A" in his personal capacity. As special and
affirmative defenses, it alleged that: the VSP did not state date of delivery; Sosa had
not completed the documents required by the financing company, and as a matter of
policy, the vehicle could not and would not be released prior to full compliance with
financing requirements, submission of all documents, and execution of the sales
agreement/invoice; the P100,000.00 was returned to and received by Sosa; the venue
was improperly laid; and Sosa did not have a sufficient cause of action against it. It
also interposed compulsory counterclaims.
After trial on the issues agreed upon during the pre-trial session, 11 the trial court
rendered on 18 February 1992 a decision in favor of Sosa. 12 It ruled that Exhibit
"A," the "AGREEMENTS BETWEEN MR. SOSA AND POPONG BERNARDO,"
was a valid perfected contract of sale between Sosa and Toyota which bound Toyota
to deliver the vehicle to Sosa, and further agreed with Sosa that Toyota acted in bad
faith in selling to another the unit already reserved for him.
As to Toyota's contention that Bernardo had no authority to bind it through Exhibit
"A," the trial court held that the extent of Bernardo's authority "was not made known
to plaintiff," for as testified to by Quirante, "they do not volunteer any information as
to the company's sales policy and guidelines because they are internal
matters." 13 Moreover, "[f]rom the beginning of the transaction up to its
consummation when the downpayment was made by the plaintiff, the defendants had
made known to the plaintiff the impression that Popong Bernardo is an authorized
sales executive as it permitted the latter to do acts within the scope of an apparent
authority holding him out to the public as possessing power to do these
acts." 14 Bernardo then "was an agent of the defendant Toyota Shaw, Inc. and hence
bound the defendants." 15
The court further declared that "Luna Sosa proved his social standing in the
community and suffered besmirched reputation, wounded feelings and sleepless
nights for which he ought to be compensated." 16 Accordingly, it disposed as follows:
WHEREFORE, viewed from the above findings, judgment is
hereby rendered in favor of the plaintiff and against the defendant:
1. ordering the defendant to pay to the plaintiff
the sum of P75,000.00 for moral damages;
4. ordering the defendant to pay the plaintiff the

sum of P2,000.00 transportation fare per trip of
the plaintiff in attending the hearing of this case;
and
5. ordering the defendant to pay the cost of suit.
SO ORDERED.
Dissatisfied with the trial court's judgment, Toyota appealed to the Court of Appeals.
The case was docketed as CA-G.R. CV No. 40043. In its decision promulgated on 29
July 1994, 17 the Court of Appeals affirmed in toto the appealed decision.
Toyota now comes before this Court via this petition and raises the core issue stated
at the beginning of the ponenciaand also the following related issues: (a) whether or
not the standard VSP was the true and documented understanding of the parties
which would have led to the ultimate contract of sale, (b) whether or not Sosa has
any legal and demandable right to the delivery of the vehicle despite the nonpayment of the consideration and the non-approval of his credit application by B.A.
Finance, (c) whether or not Toyota acted in good faith when it did not release the
vehicle to Sosa, and (d) whether or not Toyota may be held liable for damages.
We find merit in the petition.
Neither logic nor recourse to one's imagination can lead to the conclusion that
Exhibit "A" is a perfected contract of sale.
Article 1458 of the Civil Code defines a contract of sale as follows:
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.

A contract of sale may be absolute or conditional.
agent is put upon inquiry and must discover upon his peril the authority of the
agent. 21
and Article 1475 specifically provides when it is deemed perfected:

Art. 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.
What is clear from Exhibit "A" is not what the trial court and the Court of Appeals
appear to see. It is not a contract of sale. No obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and no correlative obligation on the
part of the latter to pay therefor a price certain appears therein. The provision on the
downpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it
was intended for a contract of sale, it could only refer to a sale on installment basis,
as the VSP executed the following day confirmed. But nothing was mentioned about
the full purchase price and the manner the installments were to be paid.
This Court had already ruled that a definite agreement on the manner of payment of
the price is an essential element in the formation of a binding and enforceable
contract of sale. 18 This is so because the agreement as to the manner of payment
goes into the price such that a disagreement on the manner of payment is tantamount
to a failure to agree on the price. Definiteness as to the price is an essential element
of a binding agreement to sell personal property. 19
Moreover, Exhibit "A" shows the absence of a meeting of minds between Toyota and
Sosa. For one thing, Sosa did not even sign it. For another, Sosa was well aware from
its title, written in bold letters, viz.,
AGREEMENTS BETWEEN MR. SOSA &
POPONG BERNARDO OF TOYOTA SHAW,
INC.
that he was not dealing with Toyota but with Popong Bernardo and that the latter did
not misrepresent that he had the authority to sell any Toyota vehicle. He knew that
Bernardo was only a sales representative of Toyota and hence a mere agent of the
latter. It was incumbent upon Sosa to act with ordinary prudence and reasonable
diligence to know the extent of Bernardo's authority as an
agent 20 in respect of contracts to sell Toyota's vehicles. A person dealing with an
At the most, Exhibit "A" may be considered as part of the initial phase of the
generation or negotiation stage of a contract of sale. There are three stages in the
contract of sale, namely:
(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. 22
The second phase of the generation or negotiation stage in this case was the
execution of the VSP. It must be emphasized that thereunder, the downpayment of
the purchase price was P53,148.00 while the balance to be paid on installment should
be financed by B.A. Finance Corporation. It is, of course, to be assumed that B.A.
Finance Corp. was acceptable to Toyota, otherwise it should not have mentioned
B.A. Finance in the VSP.
Financing companies are defined in Section 3(a) of R.A. No. 5980, as amended by
P.D. No. 1454 and P.D. No. 1793, as "corporations or partnerships, except those
regulated by the Central Bank of the Philippines, the Insurance Commission and the
Cooperatives Administration Office, which are primarily organized for the purpose
of extending credit facilities to consumers and to industrial, commercial, or
agricultural enterprises, either by discounting or factoring commercial papers or
accounts receivables, or by buying and selling contracts, leases, chattel mortgages, or
other evidence of indebtedness, or by leasing of motor vehicles, heavy equipment
and industrial machinery, business and office machines and equipment, appliances
and other movable property." 23
Accordingly, in a sale on installment basis which is financed by a financing
company, three parties are thus involved: the buyer who executes a note or notes for
the unpaid balance of the price of the thing purchased on installment, the seller who
assigns the notes or discounts them with a financing company, and the financing
company which is subrogated in the place of the seller, as the creditor of the
installment buyer. 24 Since B.A. Finance did not approve Sosa's application, there
was then no meeting of minds on the sale on installment basis.

We are inclined to believe Toyota's version that B.A. Finance disapproved Sosa's
application for which reason it suggested to Sosa that he pay the full purchase price.
When the latter refused, Toyota cancelled the VSP and returned to him his
P100,000.00. Sosa's version that the VSP was cancelled because, according to
Bernardo, the vehicle was delivered to another who was "mas malakas" does not
inspire belief and was obviously a delayed afterthought. It is claimed that Bernardo
said, "Pasensiya kayo, nasulot ang unit ng ibang malakas," while the Sosas had
already been waiting for an hour for the delivery of the vehicle in the afternoon of 17
June 1989. However, in paragraph 7 of his complaint, Sosa solemnly states:
On June 17, 1989 at around 9:30 o'clock in the morning,
defendant's sales representative, Mr. Popong Bernardo, called
plaintiff's house and informed the plaintiff's son that the vehicle
will not be ready for pick-up at 10:00 a.m. of June 17, 1989 but at
2:00 p.m. of that day instead. Plaintiff and his son went to
defendant's office on June 17 1989 at 2:00 p.m. in order to pick-up
the vehicle but the defendant for reasons known only to its
representatives, refused and/or failed to release the vehicle to the
plaintiff. Plaintiff demanded for an explanation, but nothing was
given; . . . (Emphasis supplied). 25
The VSP was a mere proposal which was aborted in lieu of subsequent events. It
follows that the VSP created no demandable right in favor of Sosa for the delivery of
the vehicle to him, and its non-delivery did not cause any legally indemnifiable
injury.
The award then of moral and exemplary damages and attorney's fees and costs of suit
is without legal basis. Besides, the only ground upon which Sosa claimed moral
damages is that since it was known to his friends, townmates, and relatives that he
was buying a Toyota Lite Ace which they expected to see on his birthday, he suffered
humiliation, shame, and sleepless nights when the van was not delivered. The van
became the subject matter of talks during his celebration that he may not have paid
for it, and this created an impression against his business standing and reputation. At
the bottom of this claim is nothing but misplaced pride and ego. He should not have
announced his plan to buy a Toyota Lite Ace knowing that he might not be able to
pay the full purchase price. It was he who brought embarrassment upon himself by
bragging about a thing which he did not own yet.
Since Sosa is not entitled to moral damages and there being no award for temperate,
liquidated, or compensatory damages, he is likewise not entitled to exemplary
damages. Under Article 2229 of the Civil Code, exemplary or corrective damages are
imposed by way of example or correction for the public good, in addition to moral,
temperate, liquidated, or compensatory damages.
Also, it is settled that for attorney's fees to be granted, the court must explicitly state
in the body of the decision, and not only in the dispositive portion thereof, the legal
reason for the award of attorney's fees. 26 No such explicit determination thereon was
made in the body of the decision of the trial court. No reason thus exists for such an
award.
WHEREFORE, the instant petition is GRANTED. The challenged decision of the
Court of Appeals in CA-G.R. CV NO. 40043 as well as that of Branch 38 of the
Regional Trial Court of Marinduque in Civil Case No. 89-14 are REVERSED and
SET ASIDE and the complaint in Civil Case No. 89-14 is DISMISSED. The
counterclaim therein is likewise DISMISSED.
No pronouncement as to costs.
SO ORDERED.

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SALES AUGUST 6, 2015 1

G.R. No. 112212 March 2, 1998

SALES AUGUST 6, 2015 2

Thereafter, the group decided to go to the house of a certain Macario Dimayuga, a

SALES AUGUST 6, 2015 3

University, Class 1978-79, a professional banker as well as a

SALES AUGUST 6, 2015 4

SALES AUGUST 6, 2015 5

SALES AUGUST 6, 2015 6

to pay the consideration after the notarization of the contract as previously

SALES AUGUST 6, 2015 7

SALES AUGUST 6, 2015 8

plaintiff of the said property subject of this case, otherwise, should

Francisco A. Puray, Sr. for petitioners.

SALES AUGUST 6, 2015 9

On the East-property of Feliciano Destriza;

Here, people who witnessed the execution of subject deed

SALES AUGUST 6, 2015 10

SALES AUGUST 6, 2015 11

... . (p. 12, Decision, p. 272, Records)

WHEREFORE, [there being] no error in the appealed decision, the same is

G.R. No. 136021

February 22, 2000

BENIGNA SECUYA, MIGUEL SECUYA, MARCELINO

3. Requiring the plaintiffs to pay defendant the sum of P20,000 as moral

SALES AUGUST 6, 2015 12

SALES AUGUST 6, 2015 13

In an action to quiet title, the plaintiffs or complainants must demonstrate a legal or

The duly notarized Agreement of Partition dated January 5, 1938; is worded as

SALES AUGUST 6, 2015 14

Notwithstanding its purported nomenclature, this Agreement is not one of partition,

SALES AUGUST 6, 2015 15

The Questionable Value of the Deed

SALES AUGUST 6, 2015 16

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

SALES AUGUST 6, 2015 17

This refers to the Sotto property (land and building) situated at

Likewise uncontroverted is the fact that under date of July 27,

Mr. Yao King Ong

YAO KING ONG

Dear Mr. Yao: 1wph1.t

SALES AUGUST 6, 2015 18

following terms and conditions respecting the payment of said

SALES AUGUST 6, 2015 19

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

SALES AUGUST 6, 2015 20

SALES AUGUST 6, 2015 21

complaint states a cause of action and they should be given their

SALES AUGUST 6, 2015 22

SALES AUGUST 6, 2015 23

G.R. No. 118509 December 1, 1995

SALES AUGUST 6, 2015 24

SALES AUGUST 6, 2015 25

SALES AUGUST 6, 2015 26

Accordingly a banking corporation is liable to innocent third

SALES AUGUST 6, 2015 27

B. After we have agreed on the price, the Lim

(tsn, 12-3-90, p. 17; Emphasis supplied.)

Q And did buyer Limketkai agree to pay in cash

A. After you were able to agree on the price of

Q So the amount was no longer subject to the

SALES AUGUST 6, 2015 28

c. consummation or death, which is the fulfillment or performance

b. perfection or birth of the contract, which is the moment when