G.R. No. L-4508 March 4, 1910 MARCIANA CONLU, ET AL., plaintiffs-appellants, vs.

PABLO ARANETA, for himself and as administrator of the estate of Vito Tiongco, and ESPIRIDION GUANKO, defendants-appellees. Ruperto Montinola and Carlos Ledesma, for appellants. Guanko, Avancea & Abeto, for appellees. JOHNSON, J.:

to find that the house with tile roof was, at the time of the death of Anselma, really the property of Vito Tiongco, her nephew." From this decision of the lower court the plaintiffs appealed and made the following assignments of error in his court: First. In allowing the defendants to prove by means of oral evidence, the ownership of the said realty. Second. In declaring that Anselma Tiongco sold the realty in question to Vito Tiongco. The appellant in his brief said:

On the 16th day of January, 1906, the plaintiffs commenced an action against the defendants to recover, as owners, certain parcels of land located in the pueblo of Molo, Province of Iloilo, together with damages, which parcels of land are more particularly described in paragraph 6 of the complaint. The defendants, by their answer, allege that they are the owners of the parcels of land in question. The question thus presented by the complaint and answer was simply, Who are the owners of said parcels of land? After hearing the evidence adduced during the trial of the cause, the lower court found that the plaintiffs were the owners and were entitled to the possession of all of the parcels of land described in said paragraph 6 of the complaint, except that parcel, together with the house located thereon, described in subsection (d) of said paragraph 6. This latter parcel of land the lower court held belonged to the estate of Vito Tiongco. In discussing the evidence adduced during the trial relating to the question of ownership of said house and parcel of land, the lower court said: The preponderance of evidence in this case establishes the fact that the house in question, with the tile roof, was originally the property of Catalina Tiongco, sister of Anselma, which was afterwards left to Anselma by virtue of the will made by Catalina before her death, and that after that time, probably in 1887, her nephew, Vito Tiongco, was appointed gobernadorcillo of Molo, whose appointment was contested with much animosity, among other objections adduced against him being the allegation that he was not the owner of any reality. In order to counteract his opposition and avoid his being defeated for that reason, Anselma, who then possessed many properties, put him into possession of the said tile-roofed house as apparently his own property. He lived in the house from that date up to the time of his death in 1904, and, as it appeared to everybody, he considered it as if he was the real owner thereof. He made many repairs as well as alterations in the house on his account and to suit his own wishes. From the weight of the evidence I find that, after being put into possession of the house in the manner above mentioned, Anselma agreed that he could have the house as his own if he would pay to her P3,000, which sum is alleged to be the amount paid by her sister Catalina for the erection of said house; and that afterwards, and before the death of Anselma, he had paid this sum to the satisfaction of Anselma, and, while I can not find any formal conveyance of the property on the part of Anselma, I do find that some time subsequent to that date he claimed it as his property and it was recognized as his own, therefore, I am inclined

The question now at issue in this court is limited to the said house. The appellant contends, in his first assignment of error, that the lower court committed an error by allowing the defendants to prove the sale of said parcel of land by Anselma Tiongco to Vito Tiongco, in or about the year 1887, by oral proof. The simple question presented is, May the sale of real property made in 1887 be proved by oral testimony? In support of his contention the appellant cites articles 1278, 1279, and 1280 of the Civil Code. These articles of the Civil Code have already been construed by this court in the cause of Couto vs. Cortes (8 Phil. Rep., 459) as well as in the cause of Thunga Chui vs. Que Bentec (2 Phil. Rep., 561), where the court held that "An oral contract for the sale of real estate, made prior to the enactment of the Code of Civil Procedure, is binding between the parties thereto, although it may still be necessary for the parties seeking to enforce such contract to take some action to secure the execution of proper documents, but this requirement will not render the agreement invalid." Section 335 of the Code of Procedure in Civil Actions, now in force, has established a rule relating to the method of proving contracts of sale of real property, and an oral contract for the sale of real property can not now be proven under said section 335 except "some note or memorandum thereof be in writing and subscribed by the party charged or by his agent." However, said section (335) makes no attempt to render such contracts [oral contracts] invalid. It simply provides that the contract shall not be enforced by an action, unless the same is evidenced by some note or memorandum. This provision (sec. 335) of the code simply provides how contracts for the sale of real property shall be proved. It does not attempt to make contracts invalid which have not been executed in writing. This provision does not go to the existence of the contract, except when made by an agent (par. 5 of sec. 335). It simply requires a form of contract. The contract exists and is valid, though it may not be clothed with the necessary form and the effect of a noncompliance with the provisions of the statute is simply that no action can be proved unless the requirement is complied with; but a failure to except to the evidence because it does not conform with the statute is a waiver of the provisions of the law. (Anson on Contracts, p. 75.) If the parties to the action, during the trial make no objection to the admissibility of oral evidence to support a contract of sale of real property, and thus permit the contract to be proved, it will be just as binding upon the parties as if it had been reduced to writing. In the present case the defendants called thirteen witnesses, who each testified concerning the sale of the parcel of land and the house in question by Anselma Tiongco to Vito Tiongco, in or about the year 1887, and no objection was made by the plaintiffs to the admissibility of this testimony. The plaintiffs did not invoke the provisions of section 335. They permitted the defendants to prove the oral contract of sale. The contract of sale, therefore, being

fully proven, and under the provisions of the law an oral contract for the sale of real property being binding and valid between the parties, we see no escape from the conclusion that if the evidence was sufficient to show the sale, that the contract was binding, even though it had not been reduced to writing. The second question is, then, Was the evidence adduced during the trial sufficient to show that Anselma Tiongco sold the parcel of land in question to Vito Tiongco in or about the year 1887? The lower court found that a preponderance of the evidence that the sale had actually been made. Upon a full consideration of the evidence adduced during the trial upon this question, we are satisfied and so hold that a large preponderance of the evidence shows, beyond question, that said sale took place and that Vito Tiongco, at the time of his death was the owner of the said parcel of land. For the reasons heretofore stated, the judgment of the lower court is hereby affirmed, with costs. So ordered. Arellano, C.J., Torres, Mapa and Moreland, JJ., concur. JULIO TAPEC and PRISCA GALANO, Petitioner, vs. COURT OF APPEALS and LORETO RAGUIRAG, Respondents. Evangelista & Evangelista for petitioners.chanrobles virtual law library Sylvia R.T. Rubio for private respondent. DAVIDE, JR., J.: chanrobles virtual law library In resolving the issue of which document should be given more weight in deciding ownership, the trial court and the Court of Appeals arrived at irreconcilably conflicting judgments. The former held that the deeds of sale in favor of the petitioners, being duly acknowledged before a notary public and registered under Act No. 3344, although executed much later, should prevail over a prior conveyance in a private document in favor of the private respondent's predecessor-in-interest. On appeal by the private respondent, the Court of Appeals held otherwise on the ground that the private document is an ancient document under the rules of evidence and overturned the decision of the trial court.chanroblesvirtualawlibrary chanrobles virtual law library Hence this petition for review under Rule 45 of the Rules of Court.chanroblesvirtualawlibrary chanrobles virtual law library There can be no question that the determination of which of the two documents should prevail, in the manner it was done by the courts below, is a question of law. At its heart, however, is a question of fact which, under the general rule that only questions of law may be raised in a petition for review, should not be entertained by this Court. The instant case, however, falls within one of the exceptions to such rule: that the findings of fact of the Court of Appeals are contrary to those of the trial court. 1Accordingly, we gave due course to this petition.chanroblesvirtualawlibrary chanrobles virtual law library The procedural and factual antecedents are disclosed by the pleadings.chanroblesvirtualawlibrary chanrobles virtual law library

On 4 December 1994, the petitioners, who are husband and wife, filed a complaint for recovery of ownership with the Regional Trial Court at Batac, Ilocos Norte, against David Cabuyadao and herein private respondent Loreto Raguirag. The petitioners alleged in their complaint that they are the owners of a parcel of land with an area of 11,850 square meters, located at Barangay No. 26, Oaiag-Upay, Paoay, Ilocos Norte, more specifically described as follows: RURAL, part of which is riceland and the rest a pasture, bounded on the North by the Heirs of Oligario Cabuyadao and others; on the East, by Tony Cac (formerly Luis Bacud); on the South, by Rufino Macoco et al.; and, on the West by the successors of Eusebio Agdeppa and Luis Cueva, with an area of 11,850 square meters more or less. They further averred that during the cadastral survey of Paoay, Ilocos Norte, unknown to them and without their consent, the above-described property was surveyed and subdivided into Lot Nos. 7452, 7444, and 7450, and that under baseless claims of ownership, David Cabuyadao and Loreto Raguirag threatened to enter Lot No. 7452 and Lot No. 7444, respectively. The petitioners then prayed that they be declared the owners of Lot Nos. 7452 and 7444 and that a writ of preliminary injunction be issued ordering the defendants and their agents and representatives to desist from entering the lots. David Cabuyadao was declared in default 2for failure to file his answer.chanroblesvirtualawlibrary chanrobles virtual law library In his answer with counterclaim, 3private respondent (defendant) Loreto Raguirag denied having knowledge of the property claimed by the petitioners but by way of special defense asserted that he is the absolute owner of the parcel of land described as follows: UNCULTIVATED LAND - situated at Dumalaoaig, # 19, Paoay, Ilocos Norte, with an area of 3,487 sq. meters, more or less, designated as Lot No. 7444, Cad. 445D of Paoay, Ilocos Norte. Bounded on the north by Benigno Raguirag; on the East by Manuel Raguirag; on the South by Felipe Cueva, and on the West by Gregorio Agdeppa. The petitioners' claim of ownership is based on two deeds of absolute sale, one executed on 2 January 1950 by Trinidad Gonzales in favor of petitioner Julio Tapec, 4and the other executed on 28 May 1949 by Rosario Gonzales in favor of the petitioners, 5both acknowledged before the same notary public and duly registered with the Office of the Register of Deeds under Act No. 3344 on 8 March 1950 and 29 July 1949, respectively.chanroblesvirtualawlibrary chanrobles virtual law library The property subject of the sale by Trinidad Gonzales is described as follows: A parcel of an unirrigated riceland measuring 4832 sq. m. and pasto 6measuring 2380 sq. m. and both bounded on the North by Aquilino Oamil and others, East Rufino Diaz and others, South Leocadio Macoco and others and West Felipe Cueva and others and that said land is valued at P180.00 for this current year as per Tax No. 016399 (previously under Tax No. 68663) in the name of Miguel Gonzales. . . . while the parcel sold by Rosario Gonzales is described thus: A parcel of unirrigated riceland measuring 4832 sq. m. and bounded on the North by Oligario Cabuyadao, Manuel Raguirag and Aquilino Oamil, East by Luis Bacud and Rufino Diaz, South by

Leocadio Macoco and Ariston Cueva, and West by Eusebio Agdeppa and Felipe Cueva. It is valued at P180 for this current year as per Tax No. 016399 under the name of the late Miguel Gonzales. . . . Respondent Loreto Raguirag, on the other hand, anchored his defense on a document, dated 15 May 1931 7and handwritten in Ilocano, wherein the brothers Victoriano, Gregorio, Matias, and Alejandro, all surnamed Gonzales,8sold to the spouses Manuel Raguirag and Clara Tapec, grandparents of respondent Raguirag, for a consideration of P150.00 a pasture situated in Dumalaoing, Paoay, Ilocos Norte, with an area of 3,450 sq. meters and bounded: . . . as follows, North Victoriano Gonzalis I, East Alejandro Gonzalis, Miguel Gonzalis and others, South Pelipi Cuyba West Grigorio Agdippa. 9 chanrobles virtual law library Witnesses to the said handwritten document were Manuel Raguirag, Cornelio Cabuyao, and Miguel Gonzales.chanroblesvirtualawlibrary chanrobles virtual law library At the trial, petitioner Julio Tapec identified the deeds of sale executed by Trinidad and Rosario Gonzales and the sketch plan of Lot Nos. 7444, 7450, and 7452 of the Paoay Cadastre 10and declared that the area sold by Trinidad corresponds to Lot Nos. 7450 and 7452 while the parcel sold by Rosario corresponds to Lot No. 7444. 11He further alleged that he has been in possession of the lots since he purchased them and had them declared for taxation purposes in his name in 1950 12and that before he bought the property of Trinidad Gonzales, he had to first redeem it from Ireneo Raguirag to whom it was mortgaged by Trinidad for P100.00 on 10 November 1947 and who (Trinidad) was in possession thereof. 13 chanrobles virtual law library On the other hand, private respondent Raguirag presented the 1931 private writing which, according to him, was shown to him when he was a boy by his grandfather, Manuel Raguirag, who said, "all of these are our properties of which I bought from Alejandro Gonzales." 14He claimed that his grandfather was in possession of the property until his death during the Japanese occupation. Then his father, Ireneo Raguirag, continued such possession until he died in 1967. 15Ireneo had the property declared for taxation purposes in 1962. 16After his father's death, Loreto took over the possession of the property and during the cadastral survey of Paoay, it was claimed by Leoncia Raguirag, a sister of Ireneo. The private respondent is merely possessing it as tenant-administrator. Thus: ATTY. LUMBO - chanrobles virtual law library q I understand that the land in suit has already a lot number, do you know who is the survey claimant of the lot in suit? xxx xxx xxx a Leoncia Raguirag, sir.chanroblesvirtualawlibrary chanrobles virtual law library q Who is this Leoncia Raguirag? chanrobles virtual law library a A sister of my father, sir.chanroblesvirtualawlibrary chanrobles virtual law library

q You said that from the death of your late father up to the present you are the one possessing this land in suit, my question is, why are you in possession of this property? chanrobles virtual law library a Yes, sir, because my father is no longer living.chanroblesvirtualawlibrary chanrobles virtual law library q And since according to you this survey claimant is Leoncia Raguirag, a sister of your late father, in what capacity are you possessing the land in suit? chanrobles virtual law library a As a tenant-administrator, sir.chanroblesvirtualawlibrary chanrobles virtual law library q Tiller-administrator of what? chanrobles virtual law library a That pastureland in the land of my father, sir.chanroblesvirtualawlibrary chanrobles virtual law library q What is that pastureland you are referring to in the name of your father? chanrobles virtual law library a That is the pastureland that is being claimed by Julio Tapec, sir. 17 On 31 October 1989, the trial court rendered a decision, 18the dispositive portion of which reads as follows: In view of all the foregoing, it is hereby ordered: chanrobles virtual law library 1. That the plaintiffs are absolute owners of Lot Nos. 7942 19and 7444.chanroblesvirtualawlibrary chanrobles virtual law library 2. That the defendants pay the costs. In support thereof, it made the following findings and conclusion: That an impartial assessment of the evidence adduced disclosed that the deed of sale executed in favor of the plaintiffs by the vendees Trinidad Gonzales and Rosario Gonzales marked as Exh. "A" and "B" respectively are public documents registered in the Office of the Register of Deeds of Ilocos Norte while that of the defendant is in a private document.chanroblesvirtualawlibrary chanrobles virtual law library That between a deed of sale in a public document and a deed of sale in private document, the former must prevail; chanrobles virtual law library That a contract may be entered into in whatever form except where the law requires a document or other special form.chanroblesvirtualawlibrary chanrobles virtual law library "When the law requires that a contract be in a public document in order that it may be valid or enforceable, such as contracts which have for their object the creation or transmission of rights over immovable property, that requirement is absolute and indispensable." (Manotok Realty, Inc. vs.

Court of Appeals, et al., G.R. No. 35365, 9 April '87, Second Division).chanroblesvirtualawlibrary chanrobles virtual law library Art. 1358 N.C.C. (No. 1). Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property must appear in a public document (Gallardo vs. Intermediate Appellate Court, G.R. No. 67742, 21 Oct. '87, First Division). Loreto Raguirag appealed from the decision to the Court of Appeals which docketed the appeal as CA-G.R. CV No. 26093.chanroblesvirtualawlibrary chanrobles virtual law library In its decision 20of 20 September 1993, the Court of Appeals reversed the appealed decision. It declared: The plaintiffs-appellee raise for the first time, on appeal, the question of the genuineness of the Deed of Sale offered as documentary evidence by the defendants-appellants. It has been decided by the Supreme Court that objection to the admission of evidence must be made seasonably, at the time it is introduced or offered, otherwise they are deemed waived and will not be entertained for the first time on appeal. (People of the Philippines vs. Benjamin Baares, G.R. No. 68298, November 25, 1986, 145 SCRA 680) The rule is that evidence not objected to is deemed admitted and may be validly considered by the court in arriving at its judgment. This is true even if by its nature the evidence is inadmissible and would have surely been rejected if it had been challenged at the proper time. (Interpacific Transit, Inc. vs. Rufo Aviles and Josephine Aviles, G.R. No. 86062, June 6, 1990, 186 SCRA 385).chanroblesvirtualawlibrary chanrobles virtual law library Aside from that, a private document may be exempted from proof of due execution and authenticity under the "ancient document rule." Section 22, Rule 132 of the Rules of Court provides that: Sec. 22. Evidence of execution not necessary. - Where a private writing is more than thirty years old, is produced from a custody in which it would naturally be found if genuine, and is unblemished by any alterations or circumstances of suspicion, no other evidence of its execution and authenticity need be given. In this case, the Deed of Sale dated 15 May 1931 complies with the first requirement of Section 22 since it was offered in evidence in 1986. It was presented in court by the proper custodian thereof who is an heir of the person who would naturally keep it complying with the requirement that it be produced from a custody in which it would naturally be found if genuine. (Resurreccion Bartolome, et al., vs. The Intermediate Appellate Court, et al., G.R. No. 76792, March 12, 1990, 183 SCRA 102) Neither is there any evidence of alterations or any circumstances that would cause a doubt on the genuineness of the document.chanroblesvirtualawlibrary chanrobles virtual law library Thus, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present, such as: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent. In addition, Article 1477 of the same Code provides that "the ownership of the thing sold shall be transferred to the vendee upon actual or constructive delivery thereof." The plaintiff-appellee Julio Tapec himself, testified during cross-examination that Ireneo Raguirag (father of defendants-appellants) was already in possession of the parcel of land when the subject land was offered to him by the vendor, Rosario Gonzales. (Original Records, TSN, June 26, 1986, p. 8)

Moreover, Constancia Gonzales, a sister of the vendor of the plaintiffs-appellees, and a witness for the defendants-appellants, testified that the subject pastureland was sold to the grandfather of the defendants-appellants as told to her by her parents; and that the predecessors-in-interest of the defendants-appellants have been in possession of the property since they bought it. (Original Records, TSN, November 23, 1988, pp. 2-3).chanroblesvirtualawlibrary chanrobles virtual law library The validity of the sale of the subject pastureland to the predecessors-in-interest of the defendantsappellants cannot be disputed. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. (Article 1356, New Civil Code) We do not agree with the ruling of the trial judge that under Article 1358 of the New Civil Code, a contract which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property, must appear in a public document to be valid and enforceable.chanroblesvirtualawlibrary chanrobles virtual law library Article 1358 of the New Civil Code enumerates certain contracts that must appear in public or private documents. This provision does not require such form in order to validate the act or contract but to insure its efficacy. Contracts enumerated by this article are, therefore, valid as between the contracting parties, even when they have not been reduced to public or private writings. (Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines, Volume Four, 1985 ed., pp. 549-550) Therefore, the Deed of Sale in favor of the predecessor-in-interest of the defendants-appellants is considered valid and enforceable, even if it was only embodied in a private writing.chanroblesvirtualawlibrary chanrobles virtual law library In upholding the validity of the 1931 sale of the subject pastureland, we can only conclude that when the land was sold to the plaintiffs-appellees in 1950, the vendor had no right to sell the subject property since at that time her family no longer owned the land and thus no legal right was transferred by the vendor to the plaintiffs-appellees. Article 1459 of the New Civil Code requires that the vendor must have a right to transfer the ownership thereof at the time it is delivered, otherwise the contract of sale is void.chanroblesvirtualawlibrary chanrobles virtual law library Article 1544 of the New Civil Code on double sales does not apply in this case. The article provides that if an immovable property should have been sold to different vendees, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry Property. In order that the abovementioned provision may be invoked, it is necessary that the conveyance must have been made by a party who has an existing right in the thing, and the power to dispose of it. It cannot, therefore, be invoked in a case where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold. (Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines, Volume Five, 1959, pp. 8384). 21 chanrobles virtual law library Before us, the petitioners raise the sole issue of whether the deeds of sale to them, which were embodied in public instruments and registered under Act No. 3344, 22should prevail over the alleged sale to the ancestors of respondent Raguirag executed much earlier in a private instrument.chanroblesvirtualawlibrary chanrobles virtual law library It appears that the petitioners no longer question the validity and due execution of the 1931 deed of conveyance. Nevertheless, they stand firm on their argument that such instrument is valid and

enforceable only as to the parties thereto and cannot bind third persons and innocent purchasers. 23 chanrobles virtual law library We agree with the Court of Appeals that Exhibit "1" for the private respondent, the deed of sale in a private writing executed on 15 May 1931 in favor of Manuel Raguirag and Clara Tapec, private respondent's grandparents, is an ancient document whose proof of authenticity was no longer necessary because of the concurrence of the requisites in Section 21, 24Rule 132 of the Rules of Court. 25It was already more than thirty years old at the time it was offered in evidence in 1986. 26It was produced from the custody of respondent Raguirag, an heir of the vendees in the said instrument. And it is unblemished by any alteration or circumstances of suspicion.chanroblesvirtualawlibrary chanrobles virtual law library As correctly ruled by the Court of Appeals, the said private instrument is a deed of sale in which all the requisites of a valid contract are present and which is binding upon the parties. The trial court erroneously held that it is invalid because it is not in a public document as required by Article 1358 of the Civil Code and pursuant to Manotok Realty, Inc. vs. Court of Appeals. 27Article 1358 does not invalidate the acts or contracts enumerated therein if they are not embodied in public documents. As one noted civilian has said: This Article enumerates certain contracts that must appear in public or private documents. This provision does not require such form in order to validate the act or contract but to insure its efficacy. It is limited to an enumeration of the acts and contracts which should be reduced to writing in a public or private instrument. The reduction to writing in a public or private document, required in this article, is not an essential requisite for the existence of the contract, but is simply a coercive power granted to the contracting parties by which they can reciprocally compel the observance of these formal requisites. Contracts enumerated by this article are, therefore, valid as between the contracting parties, even when they have not been reduced to public or private writings. Except in certain cases where public instruments and registration are required for the validity of the contract itself, the legalization of a contract by means of a public writing and its entry in the register are not essential solemnities or requisites for the validity of the contract as between the contracting parties, but are required for the purpose of making it effective as against third person. 28 chanrobles virtual law library What the trial court referred to in Manotok is not the ruling of this Court but the claim of the petitioner therein, What this Court stated was that "the sale made by Legarda to Lucero should have been embodied in a public instrument in accordance with Article 1358 of the Civil Code and should have been duly registered with the Register of Deeds to make it binding against third persons." (emphasis supplied).chanroblesvirtualawlibrary chanrobles virtual law library While we uphold the ruling of the Court of Appeals that the 15 May 1931 sale in favor of the private respondent's grandparents was valid and enforceable, we cannot, however, accept its findings that: In upholding the validity of the 1931 sale of the subject pastureland, We can only conclude that when the land was sold to the plaintiffs-appellees [petitioners herein] in 1950, the vendor had no right to sell the subject property since at the time her family no longer owned the land and thus no legal right was transferred by the vendor to the plaintiffs-appellees.

Firstly, it should be remembered that per the testimony of petitioner Julio Tapec, the sale in 1950 was that executed on 2 January 1950 by Trinidad Gonzales and the property subject thereof corresponds to Lot Nos. 7450 and 7452,29while the sale executed on 28 May 1949 by Rosario Gonzales 30corresponds to Lot No. 7444. It is the latter lot which is claimed by the private respondent. 31The original owner of the property sold by Trinidad and Rosario was their father, Miguel Gonzales, 32and as indicated in the deeds of sale they executed, the portion each sold was declared for taxation purposes in the name of their father. 33With respect to the 1931 sale, Miguel Gonzales was not a vendor therein but a mere witness thereto. The vendors were Victoriano, Matias, Alejandro, and Gregorio, all surnamed Gonzales. Obviously, the Court of Appeals erred in finding that Trinidad had no more right to sell the property.chanroblesvirtualawlibrary chanrobles virtual law library Secondly, while the petitioners sufficiently established the identity of the property claimed by them, the private respondent failed to prove the identity of the property covered by Exhibit "1." Since he specified in his special defenses the property he claimed and asked the court in his prayer that he be declared "the lawful owner and possessor" thereof, the burden was on him to prove its identity. 34 chanrobles virtual law library Thirdly, it was established that Trinidad Gonzales had mortgaged her property to the private respondent's father, Ireneo Raguirag, on 10 November 1947. 35The mortgage was redeemed only shortly before its sale to the petitioners in 1950. If Ireneo were its owner as heir of Manuel Raguirag, there was no reason for Ireneo to have accepted the mortgage thereof.chanroblesvirtualawlibrary chanrobles virtual law library Finally, the private respondent categorically admitted that he is only a tenant-administrator of Lot No. 7444. This admission belies any claim of ownership. It was his aunt, Leoncia Raguirag, who claimed ownership over it during the cadastral survey. 36 chanrobles virtual law library IN VIEW OF THE FOREGOING, the instant petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 26093 is hereby REVISED, and the dispositive portion of the decision of Branch 17 of the Regional Trial Court at Batac, Ilocos Norte, in Civil Case No. 1669-17 is REINSTATED, subject to the correction of the portion therein which reads "Lot Nos. 7942" to "Lot Nos. 7452." chanrobles virtual law library SO ORDERED. Padilla, Bellosillo, Quiason and Kapunan, JJ., concur. LEONCIA T. ZAIDE and PRIMITIVO ZAIDE, substituted by SIMEON TOLENTINO, Guardian ad litem of the Minors PACITA, ALEX, MARIA ZERLINA all surnamed ZAIDE, etc., petitioners, vs. HON. COURT OF APPEALS, ROBERTO DE LEON and EDITA T. ZAIDE respondents. Tolentino & Associates for petitioners. Benjamin C. Sebastian for private respondents.

NARVASA, J.: Edita Zaide and her husband, Roberto de Leon, were the registered owners of a parcel of land situated in Makati, Rizal, with an area of 201 square meters, covered by TCT No. 69088 of the Register of Deeds of Rizal. Sometime in the middle sixties, Primitivo Zaide, Edita's brother, gave to Edita and her husband, Roberto de Leon, P2,000.00 as a loan, which the latter used to redeem the land mortgaged by them to the Pasay Rural Bank. At about this time, too, Primitive Zaide and his wife, Leoncia T. Zaide, transferred ownership of a jitney 1 owned by them, valued at P7,000.00, to Roberto de Leon. It is the Zaide Spouses' claim that the vehicle was thus ceded as part of the purchase price of the de Leons' above described land, which they had agreed to buy. In any case, neither the loan nor the transfer of the vehicle is disputed. On January 11, 1965, Edita Zaide executed a public instrument denominated "Deed of Sale" by which, in consideration of P5,000.00 paid to her, she sold the parcel of land covered by TCT No. 69088 to Leoncia T. Zaide. 2 The deed described both the vendor, Edita Zaide, and the vendee, Leoncia T. Zaide, as "married," but named neither of their husbands. The document however did bear the signature of Edita's husband, Roberto de Leon, indicating his "marital consent." The omission of the name of the vendee's husband in the deed of sale gave rise to a problem. Precisely because of it, the Register of Deeds refused to accept it for registration. A second deed of sale couched in the same terms as the first, acknowledge before the same Notary Public, Judge Rafael Madrazo, and bearing exactly the same date (January 11, 1965) and document Identification in Judge Madrazo's Notarial Registry (i.e. "Doc. 955, Page No. 92, Book No. 4, Series of 1965"), actually differing from the first only in that it set forth the names of the husbands of both the vendor and the vendee 3-was shortly thereafter presented to, and was promptly accepted for registration, by the Register of Deeds. The latter then cancelled TCT No. 69088, and issued a new one, TCT No. 138606, in the name of "Leoncia T. Zaide, married to Primitivo Zaide." With this lot as collateral, the Zaide Spouses thereafter obtained a loan from the Government Service Insurance System in the sum of P28,500.00. This was sometime in November, 1964. The proceeds were used to construct a two-story apartment building on the land. 4 On June 1, 1969, the house of the de Leons burned down. They moved to one of the doors of the apartment built by the Zaide Spouses. They were asked to pay rentals. They refused. Litigation ensued. On July 4, 1969, the de Leon Spouses filed a complaint with the Court of First Instance of Rizal against the Zaide Spouses. 5 The case was docketed as Civil Case No. 11977. Briefly, the de Leons alleged that in June, 1964 they discovered that their title to the land in question (TCT No. 69088) had been cancelled and another (TCT No. 138606) issued to the Zaides, on the strength of "a forged deed of sale supposedly executed in Tagaytay City on the 11th day of January, 1965," and that they "could not possibly have sold their lot for the measly sum of P5,000.00 appearing in the forged deed ..considering that the market price of the land ... cannot be less than P20,000.00." They thus prayed for the cancellation of TCT No. 138606 and the re-issuance of another "in the name of plaintiff, EDITA ZAIDE," as well as the payment to them of damages and attorneys' fees. Because Primitivo Zaide and Leoncia T. Zaide "were both killed in Tagaytay City" on January 14, 1970, the complaint

was amended to substitute in their stead their minor children: Pacita, Alexander and Maria Zerlina, represented by their guardian ad litem, Simeon Tolentino. 6 On October 20, 1970, said Zaide children, through their guardian, Simeon Tolentino, in turn filed suit against the de Leon Spouses in the same Court of First Instance of Rizal, to recover the possession of the apartment unit occupied by the latter and pay rentals at the rate of P300.00 pursuant to a "verbal contract of lease. 7" The case, docketed as Civil Case No. 14044, was later transferred to the same branch to which the earlier one (No. 11977), had been assigned. The cases were then tried jointly. 8 Judgment was rendered in favor of the Zaide Spouses on September 25, 1972, 9 the dispositive portion of which reads: 10 WHEREFORE, the Court renders judgment dismissing the complaint filed in Civil Case No. 11977 and declaring the sale of the lot covered by Transfer Certificate of Title No. 138606 issued in the names of the deceased spouses Leoncia T. Zaide and Primitivo Zaide legal and valid; ordering the plaintiffs as defendants in Civil Case No. 14044 to pay Pacita, Alexander and Maricar all surnamed Zaide, as plaintiffs in Civil Case No. 14044 the sum of P250.00 representing the rental of the use and occupancy of one of the doors of the apartment, beginning January 1, 1969 and every month thereafter until the said Edita Zaide and Roberto de Leon shall have finally vacated the premises; and ordering Edita Zaide and Roberto de Leon or any person claiming rights from them to immediately vacate the apartment they are now occupying situated on the land in question. With costs against Edita Zaide and Roberto de Leon as plaintiffs in Civil Case No. 11977 and defendants in Civil Case No. 14044. This judgment was however reversed by another Judge by Order dated April 10, 1973, 11 upon a motion for reconsideration seasonably presented by the Spouses de Leon. In that Order, the Court declared that the "firm and unshakable" testimony of an NBI handwriting expert established that the signatures of both plaintiffs Edita Zaide and Roberto de Leon as appearing in the .. (second deed of sale,) Exhibit "A" (Exhibit 2 of the defendants) .. were forgeries based on the sample signatures of the two appearing in the other documents furnished to the NBI ..." The Court further stated that the defect in the admittedly genuine first deed of sale consisting of the omission of the names of the husbands of the vendor and vendee could not be corrected by a forged document which is considered inexistent before the law. It therefore ruled that TCT No. 138606 issued to the Zaide Spouses was null and void, being "the fruit of a forged deed of sale." The Order closed with the following dispositive paragraph: WHEREFORE, in view of the findings of this Court the motion for the reconsideration of the decision is hereby granted, and the decision insofar as the Court ruled the dismissal of the complaint in Civil Case No. 11977 and declared the sale of the lot covered by Transfer Certificate of Title No. 138606 issued in the names of the deceased spouses Leoncia T. Zaide and Primitivo Zaide legal and valid is set aside, and this Court declares that Transfer Certificate of Title No. 138606 issued in the name of defendant Leoncia T. Zaide as cancelled, it being found by the Court as proceeding from a forged Deed of Sale Exhibit "A." As a result of this, this Court orders the Register of Deeds of Rizal to reissue the Transfer Certificate of Title over the disputed parcel of land in the name of the plaintiff. With respect to the other case, Civil Case No. 14044, this Court will not disturb the findings made by the Presiding Judge who rendered the decision sought to be reconsidered. The decision having been

thus reconsidered insofar as Civil Case No. 11977 is concerned, costs of suit in this case are chargeable to the defendants. There is, it will be observed, a curious ambivalence in the amending order: while it declares the de Leons to be the owner of the land (and orders the re-issuance of title to them), it did "not disturb the findings" in the original judgment "with respect to Civil Case No. 14044," to the effect that the Zaide children are entitled to receive rents for "the use and occupancy of one of the doors of the apartment" by the de Leons. 12 Be this as it may, the defendants in Civil Case No. 11977-the children of the deceased Zaide Spouses-and the defendant in Civil Case No. 14044 Roberto de Leon appealed to the Court of Appeals. 13 The Court of Appeals found that, contrary to the Zaides' claim, there had been no admission by the de Leons of the genuineness of the first deed of sale (Exh. 1), and their counsel's statement in the course of the trial that his clients were not contesting" that deed, did "not amount to an outright admission of the genuineness thereof but .. (was) rather an indication on their part to limit themselves within the issue of forgery of Exhibit 2 or the second deed of sale;" that the signatures on the latter deed were definitely forgeries, and since the Zaides invoked that deed as basis of their title to the land, they could not be deemed buyers in good faith; and the judgment in Civil Case No. 14044 decreeing the ejectment of the de Leons was incongruous to its findings of the spurious nature of the deed of sale and the Zaides' character as buyers in bad faith. The Court of Appeals thus AFFIRMED the Order of April 10, 1973 which superseded the judgment of September 25, 1972-in so far as it declared that the sale of the land in favor of the Zaides was null and void and the land should therefore revert to the de Leons, but MODIFIED it by relieving Roberto de Leon of any obligation to pay rent for his occupancy of one door of the apartment building on the land, "which should not be vacated by him and his wife or any person claiming any right from them." The dispositive paragraph of the Court's decision 14 reads as follows: WHEREFORE, We hereby affirm the appealed Order dated April 10, 1973, insofar as it relates to Civil Case No. 11977 of the Court of First Instance at Pasig, Rizal, and hereby modify that portion of the same order insofar as it relates to Civil Case No. 14044 of the same Court by (1) declaring the late spouses Primitivo Zaide and Leoncia T. Zaide, parents of the minors who are the plaintiffs-appellees in CA-G.R. No. 53880-R, as builders in bad faith of the apartment built on the contested lot in CAG.R. No. 53879-R and (2) relieving appellant Roberto de Leon in CA-G.R. No. 53880-R (who is the defendant in Civil Case No. 14044) from paying rental in occupying one door of said apartment which should not be vacated by him and his wife or any person claiming any right from them. In all other respects, the said portion relative to Civil Case No. 14044 is AFFIRMED with costs in both instances to be taxed on the defendants-appellants, Simeon Tolentino, guardian ad litem of the Minors Pacita, Alexander, Maria Zerlina, all surnamed Zaide, who are the plaintiffs-appellees in CAG.R. No. 53880-R. The case is now before this Court on an appeal by certiorari of the Zaide children from the decision of the Appellate Court. There are two (2) deeds of sale which, as already remarked, are exactly the same as to date, contents, and Identification in the notarial registry, differing only in that the second contains the names of the spouses of the vendor and the vendee. 15 It is the Zaides' claim that the second, Exhibit 2, is a forgery, and the first, Exhibit 1, had not been admitted by them.

The record shows that the deed, Exhibit 1, was in fact admitted by the de Leons. Copies of both deeds, Exhibits 1 and 2, were pleaded by the Zaides in their amended answer as an "actionable document" 16 or as "a written instrument or document" on which "an action or defense is based" in accordance with Section 7, Rule 8 of the Rules of Court. The de Leons failed to specifically deny "the genuineness and due execution of the annexed instrument(s) .. under oath, .. (and to set forth what they claim) to be the facts;" hence, under Section 8 of the same Rule, "the genuineness and due execution" of the deeds should "be deemed admitted." The de Leons however insist that they should not be saddled with any such admission because the amended answer (in which the deeds had been pleaded) had never been admitted by the Court a quo. This is not correct. At least two (2) orders of the Trial Court made clear its admission of the amended answer. At one of the hearings, the Court categoricaly stated that "for purposes of record, the court admits the amended complaint as well as the amended answer." 17 In an earlier Order, dated January 6, 1971, lifting an order of default entered against the Zaides, the Court cited as reason therefor the fact that "defendants have filed not only an answer but also an amended answer to the original complaint." 18 It is not the ceremonial phrase of express admission of an amended pleading that should control, but the unequivocal acts of the Court in relation to the revised pleading. Moreover, the de Leons' counsel, Atty. Mariano, explicitly manifested to the Court that they were not contesting Exhibit 1. This is made clear by the following recorded exchange 19 between the Court and counsel, following the observation of the Zaides' attorney, Mr. San Jose, that inter alia the de Leons had not objected to the genuineness of Exhibit 1 when formally offered, the only objection being "that it did not contain documentary stamps." ATTY. MARIANO: The trouble is we are not contesting Exhibit 1, what we are contesting is Exhibit 2, as a forgery which Exh. 2 is the basis of the registration. COURT: What has been attached to the answer? ATTY. SAN JOSE: Both of them. May we have it on record that what they are contesting is Exhibit 2, and not Exhibit 1. COURT: Put it on record. But (that) he is not so such objecting on the document Exhibit 1. ATTY. MARIANO: We are not contesting Exhibit 1. We are contesting Exhibit 2. COURT: Precisely, you are not contesting Exhibit 1.

ATTY. MARIANO: Yes, Your Honor. It is difficult to imagine how an admission of a document could be made any more plain. Prescinding from this, no evidence whatever has been presented or proferred by the de Leons of the spuriousness of Exhibit 1. Their manifestations with respect to Exhibit 1 have been limited to an insistence in limiting the issue to the alleged falsity of the second deed, Exhibit 2. But, to repeat, they have made no effort whatever to prove Exhibit 1 to be other than genuine. Under the circumstances, the genuineness and due execution of Exhibit 1, which had been formally offered and admitted by the Court, cannot but be conceded, not merely on the strength of the unrebutted presumptions of regularity of private transactions, 20 but also and particularly, the admissions by the de Leons just detailed. However, although the first deed of sale (Exh. 1) was genuine, it was so far defective as to render it unregistrable in the Registry of Property. As already pointed out, it did not set forth the name of the vendee's husband and was for this reason refused registration by the Register of Deeds. The defect was unsubstantial. It did not invalidate the deed. The legal dispositions are clear. Though defective in form, the sale was valid; and the parties could compel each other to do what was needful to make the document of sale registrable. The law generally allows a contract of sale to be entered into in any form, whether "in writing, or by word of mouth, or partly in writing and partly by word or mouth, or (even) inferred from the conduct of the parties;" but if the agreement concerns "the sale of land or of an interest therein," the law requires not only that "the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged" in order that it may be enforceable by action, 21 but also that the writing be in the form of a "public document." 22 The law finally provides that "If the law requires a document or other special form, as in the acts and contracts enumerated in .. (Article 1358), the contracting parties may compel each other to observe that form, once the contract has been perfected .. (and such) right may be exercised simultaneously with the action upon the contract." 23 In the case at bar, the Zaides thus had the right to compel the de Leons to observe the special form prescribed by law; i.e., revised the public document by inserting the name of the vendee's husband. Indeed, this was precisely what was done in the second deed of sale, Exhibit 2. The de Leons however contend that Exhibit 2 is a nullity: they had never signed it; their purported signatures thereon had been forged. Assuming this to be so, for the sake of argument, it does not alter (1) the fact that the parties had voluntarily executed a sale in writing Exhibit 1, which recites that the price of P5,000.00 had been paid, and the further fact that (a) the de Leons had received from the Zaides the sum of P2,000.00 as well as a vehicle valued at P7,000.00 and (b) they, the de Leons, knew that the Zaides had exercised an act of ownership over the property thereby acquired by mortgaging it as security for a loan; or (2) the legal consequence flowing therefrom: that in order to cure the defect in the first deed, in that it did not specify the name of the vendee's husband, the Zaides could legally compel the de Leons to execute another deed containing this omitted circumstance. Hence, even if the second document of sale be invalidated as a forgery, and the de Leons' title to the land restored to them, this would be inutile, an empty ceremony, since the de Leons could nevertheless still be compelled by the Zaides to execute another deed, in proper form, to carry into effect the sale originally entered into.

But it is not as indubitable as the Appellate Court and the Trial Court seem to believe that the second deed of sale, Exhibit 2, was in truth a forgery. The conclusion of forgery was founded on the testimony of a handwriting expert. There is in any case no satisfactory explanation why the expert did not see fit to use, for purposes of comparison, the document nearest in point of time to the questioned deed (Exhibit 2), namely, Exhibit 1; or why such expert's testimony should be accorded full faith and credit despite its (1) not having been subjected to cross-examination, and (2) being contradicted by the positive testimony of a subscribing witness, and of the judge who, as notary public ex oficio, had notarized both deeds of sale, both of whom had affirmed that the vendors and vendees had actually signed the documents. There was simply a naked assertion that the expert's evidence proved the forgery without any discussion, much less refutation, of the facts militating against it. Obviously, such an unreasoned assertion cannot be sustained. It cannot be accorded that conclusiveness conceded as a rule to factual findings of the Court of Appeals. In this situation, it cannot rightfully be ruled that the second deed of sale, Exhibit 2, is indeed a forgery. The most that may perhaps be said about it is that its genuineness has been placed in doubt by the evidence given by the handwriting expert. But this is inconsequential, in view of the facts and legal considerations set out in the next preceding paragraph. WHEREFORE, the judgment of the Court of Appeals in CA-G.R. No. 53879-R and CA-G.R. No. 53880-R dated July 26, 1977, and the Order of the Trial Court dated April 10, 1973 thereby affirmed with modification, are REVERSED AND SET ASIDE, and the decision of said Trial Court rendered on September 25, 1972, SUSTAINED AND AFFIRMED in toto. Costs against private respondents. Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur. LIMKETKAI SONS MILLING INC., petitioner, vs. COURT OF APPEALS, ET AL., respondents. RESOLUTION FRANCISCO, J.: In this motion for reconsideration, the Court* is called upon to take a second hard look on its December 1, 1995 decision reversing and setting aside respondent Court of Appeals judgment of August 12, 1994 that dismissed petitioner Limketkai Sons Milling Inc.s complaint for specific performance and damages against private respondents Bank of the Philippine Islands (BPI) and National Book Store (NBS). Petitioner Limketkai Sons Milling, Inc., opposed the motion and filed its Consolidated Comment, to which private respondent NBS filed a Reply. Thereafter, petitioner filed its Manifestation and Motion for the voluntary inhibition of Chief Justice Andres R. Narvasa from taking part in any subsequent deliberations in this case. The Honorable Chief Justice declined.[1] The Court is swayed to reconsider. The bottomline issue is whether or not a contract of sale of the subject parcel of land existed between the petitioner and respondent BPI. A re-evaluation of the attendant facts and the evidence on record, specifically petitioners Exhibits A to I, yields the negative. To elaborate: Exhibit A[2] is a Deed of Trust dated May 14, 1976, entered into between Philippine Remnants Co. Inc., as grantor, and respondent BPI, as trustee, stating that subject property covered by TCT 493122 (formerly TCT No. 27324)[3] has [been] assigned, transferred, conveyed and set over unto

the Trustee[4] expressly authorizing and empowering the same in its own name to sell and dispose of said trust property or any lot or parcel thereof[5] and to facilitate [the] sale of the trust property, the Trustee may engage the services of real estate broker or brokers, under such terms and conditions which the Trustee may deem proper, to sell the Trust property or any lot or parcel thereof.[6] Exhibit B is a Letter of Authority for the petitioner issued by respondent BPI to Pedro A. Revilla, Jr., a real estate broker, to sell the property pursuant to the Deed of Trust. The full text of Exhibit B is hereby quoted: Trust Account No. 75-09 23 June 1988 ASSETRADE CO. 70 San Francisco St. Capitol Subdivision Pasig, Metro Manila Attention: Mr. Pedro P. Revilla, Jr.

Very truly yours, BANK OF THE PHILIPPINE ISLANDS as trustee of Philippine Remnants Co., Inc. (Sgd.) FERNANDO J. SISON, Assistant Vice-President [Note: Italics supplied] security guard on duty at subject property to allow him (Revilla, Jr.) and his companion to conduct an ocular inspection of the premises.[7] Exhibit D is a letter addressed by Pedro Revilla, Jr. to respondent BPI informing the latter that he has procured a prospective buyer.[8] Exhibit E is the written proposal submitted by Alfonso Y. Lim in behalf of petitioner Limketkai Sons Milling, Inc., offering to buy the subject property at P1,000.00/sq. m.[9] Exhibit F is respondent BPIs letter addressed to petitioner pointing out that petitioners proposal embodied in its Letter (Exhibit E) has been rejected by the respondent BPIs Trust Committee.[10] Exhibit G is petitioners letter dated July 22, 1988 reiterating its offer to buy the subject property at P1,000/sq. m. but now on cash basis.[11] Exhibit H refers to respondent BPIs another rejection of petitioners offer to buy the property at P1,000/sq. m.[12] And finally, Exhibit I is a letter by petitioner addressed to respondent BPI claiming the existence of a perfected contract of sale of the subject property between them.[13] These exhibits, either scrutinized singly or collectively, do not reveal a perfection of the purported contract of sale. Article 1458 of the Civil Code defines a contract of sale as follows: (Sgd.) III ALFONSO R. ZAMORA Vice President

Managing Partner . Gentlemen: This will serve as your authority to sell on an as is where is basis the property located at Pasig Blvd., Bagong Ilog, Pasig, Metro Manila, under the following details and basic terms and conditions: TCT No. : 493122 in the name of BPI as trustee of Philippine Remnants Co., Inc.

Area : 33,056.0 square meters (net of 890 sq. m. sold to the Republic of the Philippines due to the widening of Pasig Blvd.) Price : Terms : P1,100.00 per sq. m. or P36,361,600.000. Cash 2%

Brokers Commission :

Others : a) Docuemntary (sic) stamps to be affixed to Deed of Absolute Sale, transfer tax, registration expenses, and other titling expenses for account of the Buyer. b) Capital gains tax, if payable, and real estate taxes up to 30 June 1988 shall be for the account of the Seller. This authority which is good for thirty (30) days only from date hereof is non-exclusive and on a first come first-serve basis.

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. Article 1475 of the same code specifically provides when a contract of sale is deemed perfected, to wit: ART. 1475. The contract of sale is perfected at the moment there is meeting of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. The Court in Toyota Shaw, Inc. v. Court of Appeals[14] 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. Petitioners exhibits did not establish any definitive agreement or meeting of the minds between the concerned parties as regards the price or term of payment. Instead, what merely appears therefrom is respondent BPIs repeated rejection of the petitioners proposal to buy the property at P1,000/ sq.m.[15] In addition, even on the assumption that Exhibit E reflects that respondent BPI offered to sell the disputed property for P1,000/sq. m., petitioners acceptance of the offer is conditioned upon or qualified by its proposed terms[16] to which respondent BPI must first agree with. On the subject of consent as an essential element of contracts, Article 1319 of the Civil Code has this to say: ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. xxx xxx xxx.

(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: xxx xxx xxx

(e) An agreement for the leasing for a long period than one year, or for the sale of real property or of an interest therein. xxx xxx xxx.

In this case there is a patent absence of any deed of sale categorically conveying the subject property from respondent BPI to petitioner. Exhibits E, G, I which petitioner claims as proof of perfected contract of sale between it and respondent BPI were not subscribed by the party charged, i.e., BPI, and did not constitute the memoranda or notes that the law speaks of.[19] To consider them sufficient compliance with the Statute of Frauds is to betray the avowed purpose of the law to prevent fraud and perjury in the enforcement of obligations. We share, in this connection, respondent Court of Appeals observation when it said: xxx. The requirement that the notes or memoranda be subscribed by BPI or its agents, as the party charged, is very vital for the strict compliance with the avowed purpose of the Statute of Frauds which is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged (Asia Production Co., Inc. vs. Pano, 205 SCRA 458). It cannot be gainsaid that a shrewd person could easily concoct a story in his letters addressed to the other party and present the letters to the court as notes to prove the existence of a perfected oral contract of sale when in truth there is none. In adherence to the provisions of the Statute of Frauds, the examination and evaluation of the notes or memoranda adduced by the appellee was confined and limited to within the four corners of the documents. To go beyond what appears on the face of the documents constituting the notes or memoranda, stretching their import beyond what is written in black and white, would certainly be uncalled for, if not violative of the Statute of Frauds and opening the doors to fraud, the very evil sought to be avoided by the statute. In fine, considering that the documents adduced by the appellee do not embody the essentials of the contract of sale aside from not having been subscribed by the party charged or its agent, the transaction involved definitely falls within the ambit of the Statute of Frauds.[20] [Note: Italics added] Corrolarily, as the petitioners exhibits failed to establish the perfection of the contract of sale, oral testimony cannot take their place without violating the parol evidence rule.[21] It was therefore irregular for the trial court to have admitted in evidence testimony to prove the existence of a contract of sale of a real property between the parties despite de persistent objection made by private respondents counsels as early as the first scheduled hearing. While said counsels crossexamined the witnesses, this, to our view, did not constitute a waiver of the parol evidence

The acceptance of an offer must therefor be unqualified and absolute. In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. This was not the case herein considering that petitioners acceptance of the offer was qualified, which amounts to a rejection of the original offer.[17] And contrary to petitioners assertion that its offer was accepted by respondent BPI, there was no showing that petitioner complied with the terms and conditions explicitly laid down by respondent BPI for prospective buyers.[18] Neither was the petitioner able to prove that its offer to buy the subject property was formally approved by the beneficial owner of the property and the Trust Committee of the Bank, an essential requirement for the acceptance of the offer which was clearly specified in Exhibits F and H. Even more telling is petitioners unexplained failure to reduce in writing the alleged acceptance of its offer to buy the property at P1,000/sq. m. The Court also finds as unconvincing petitioners representation under Exhibits E, G, and I that its proposal to buy the subject property for P 1,000/ sq. m. has been accepted by respondent BPI, considering that none of the said Exhibits contained the signature of any responsible official of respondent bank. It is therefore evident from the foregoing that petitioners documentary evidence floundered in establishing its claim of a perfected contract of sale. Moreover, petitioners case failed to hurdle the strict requirements of the Statute of Frauds. Article 1403 of the Civil Code states: ART. 1403. - The following contracts are unenforceable, unless they are ratified: (1) xxx xxx xxx

rule. The Talosig v. Vda. de Nieba,[22] and Abrenica v. Gonda and de Gracia[23] cases cited by the Court in its initial decision, which ruled to the effect that an objection against the admission of any evidence must be made at the proper time, i.e., x x x at the time question is asked,[24] and that if not so made it will be understood to have been waived, do not apply as these two cases involved facts[25] different from the case at bench. More importantly, here, the direct testimonies of the witnesses were presented in affidavit-form where prompt objection to inadmissible evidence is hardly possible, whereas the direct testimonies in these cited cases were delivered orally in open court. The best that counsels could have done, and which they did, under the circumstances was to preface the cross-examination with objection. Thus: ATTY. VARGAS: Before I proceed with the cross-examination of the witness, your Honor, may we object to the particular portion of the affidavit which attempt to prove the existence of a verbal contract to sell more specifically the answers contained in page 3, Par. 1, the whole of the answer. x x x COURT: Objection overruled. Atty. VARGAS. Your Honor, what has been denied by the Court was the motion for preliminary hearing on affirmative defenses. The statement made by the witness to prove that there was a verbal contract to sell is inadmissible in evidence in this case because an agreement must be in writing. COURT: Go ahead, that has been already overruled. ATTY. VARGAS: So may we reiterate our objection with regards to all other portions of the affidavit which deal on the verbal contract. (TSN, Feb. 28, 1989, pp. 3-5; Italics supplied.)[26] xxx xxx xxx x x x x x x.

May we make of record our continued objection on the testimony which is violative of the best evidence rule in relation to Art. 1403 as contained in the affidavit particularly questions Nos. 12, 14, 19 and 20 of the affidavit of Alfonso Lim executed on February 24, 1989 x x x. (T.S.N., June 28, 1990, p. 8).[27] Counsels should not be blamed and, worst, penalized for taking the path of prudence by choosing to cross-examine the witnesses instead of keeping mum and letting the inadmissible testimony in affidavit form pass without challenge. We thus quote with approval the observation of public respondent Court of Appeals on this point: As a logical consequence of the above findings, it follows that the court a quo erred in allowing the appellee to introduce parol evidence to prove the existence of a perfected contract of sale over and above the objection of the counsel for the defendant-appellant. The records show that the court a quo allowed the direct testimony of the witnesses to be in affidavit form subject to crossexamination by the opposing counsel. If the purpose thereof was to prevent the opposing counsel from objecting timely to the direct testimony, the scheme failed for as early as the first hearing of the case on February 28, 1989 during the presentation of the testimony in affidavit form of Pedro Revilla, Jr., plaintiff-appellees first witness, the presentation of such testimony was already objected to as inadmissible. [28] [Italics supplied.] WHEREFORE, in view of the foregoing premises, the Court hereby GRANTS the motion for reconsideration, and SETS ASIDE its December 1, 1995 decision. Accordingly, the petition is DENIED and the Court of Appeals decision dated August 12, 1994, appealed from is AFFIRMED in toto. SO ORDERED. Narvasa, C.J. (Chairman) and Davide, Jr., J., concur. Panganiban, J., joins Justice Melos dissent.

ATTY. CORNAGO: Before we proceed, we would like to make of record our continuing objection insofar as questions and answers propounded to Pedro Revilla dated February 27, 1989, in so far as questions would illicit (sic) answers which would be violative of the best evidence rule in relation to Art. 1403. I refer to questions Nos. 8, 13, 16 and 19 of the affidavit of this witness which is considered as his direct testimony. (T.S.N., June 29, 1990, p. 2) ATTY. CORNAGO:

The Third Division of this Court was initially composed of Justices Feliciano, Romero, Melo, Vitug and Panganiban. After the promulgation of the December 1, 1995 decision and in view of Justice Felicianos retirement, the different Divisions of the Court were reorganized. Consequently, the present Third Division is now composed of Chief Justice Narvasa and Justices Davide, Melo, Francisco and Panganiban.
[1]

In a Memorandum dated March 18, 1996, addressed to the members of the Courts Third Division, the Honorable Chief Justice Andres Narvasa noted petitioners baseless motion. Thus: 2. The information upon which petitioner relies is utterly without foundation in fact and is nothing but pure speculation or wishful yearning. The Chief Justice wishes to state for the record that while still in private practice, he never had occasion to represent the National Bookstore and/or its

principal owner, the Ramos family, in any case or matter whatsoever; that he has never had any transaction at all with them and that indeed, he has no recollection of ever having even purchased anything from said store; and that he does not know, and as far as he knows he never met, any member of the Ramos family described as principal owners of the National Bookstore. 3. There is thus absolutely no reason for the inhibition of the Chief Justice in this case, and he will continue to take part in all subsequent deliberations in this case.
[2]

Philippine Remnants Co., Inc. By: (Sgd.) ROLANDO V. AROMIN Assistant Vice-President (Sgd.) PEDRO REVILLA, JR.
[8]

Records, pp. 10-14. Complaint, p.2; Records, p. 2. Deed of Trust, p. 2; Records, p. 11. Id. Id. The Full Text of Exhibit C is as follows:

[3]

[4]

[5]

Exhibit D reads as follows:

[6]

July 9, 1988 Bank of the Philippine Islands Bank of P.I. Building Ayala Avenue, Makati, Metro Manila ATTN: Mr. Alfonso R. Zamora Vice President and Mr. Fernando J. Sison III Asst. Vice President Gentlemen: I refer to the authority you gave me on June 23, 1988, in your capacity as Trustee of the Philippine Remnants Co., Inc., in connection with the sale of one (1) parcel of land, located along Pasig Boulevard, Bagong Ilog,Pasig, Metro Manila, with an area of 33,056 square meters and covered by Transfer Certificate of Title No. 493122. I am pleased to inform you that I have procured a buyer for the above described property in the name of Limketkai Sons Milling Inc., with office address at Limketkai Building, Greenhills, San Juan, Metro Manila and represented by its Executive Vice President, Mr. Alfonso Lim. It is understood therefore, that pursuant to my authority, I shall be paid a brokers fee of 2% of the gross purchase price in the event the sale to the above named buyer is consummated. Very truly yours,

[7]

Trust Account No. 75-11 08 July 1988 The Security Guard On Detail Universal Security & Investigation Agency c/o Phil. Remnants Co., Inc. Pasig Blvd., Bagong Ilog Pasig. Metro Manila Dear Sir: Please allow Mr. Pedro Revilla, Jr., whose specimen signature appears below, and company to enter the premises that you are securing located at the above-given address for the purpose of conducting an ocular inspection and verification survey of the same. Kindly extend to Mr. Revilla your usual courtesies and assistance on this matter. Thank you. Very truly yours, BANK OF THE PHILIPPINE ISLANDS As Trustees For

(Sgd.) Pedro P. Revilla, Jr. [Note: Italics supplied]

[9] [10]

Executive Vice President Exhibit F states: Mr. Alfonso U. Lim

Attention:

Exhibit E has these salient portions:

Executive Vice President Gentlemen: Re: Bo. Bagong Ilog (Pasig) Property In connection with subject property, we regret to inform you that the Banks Trust Committee did not approve your proposal to purchase said property under the terms and conditions of your letter to our Mr. Merlin A. A lbano dated 11 July 1988. instead, the Trust Committee instructed us to consider offers from other interested parties. In a meeting held on 20 July 1988, Senior Management instructed us to offer the same property to all interested buyers under the following terms and conditions: a. b. c. 15% downpayment upon notification of acceptance by BPI; balance payable upon signing of the Deed of Sale; price to BPI shall be net of brokers commission;

Gentlemen: This confirms our conversation this morning regarding the purchase of a parcel of land in Barrio Bagong Ilog, Municipality of Pasig, covered by Transfer Certificate of Title No. 493122 of the Registry of Deeds of Rizal, (specified therein as having an area of 33,946 sq. m. minus 890 sq. m. previously sold to the Republic of the Philippines, or a net area of 33,056 sq. m.), registered in your name as trustee of the Philippine Remnants Company. Specifically, this confirms your offer to sell the said property at One Thousand (P1,000.00) Pesos per square meter, and our acceptance in principle of that offer, subject to the following terms. a) We are to give an initial amount equivalent to Ten (10%) Percent of the total purchase price as earnest money; b) The balance is to be paid by us within ninety (90) days from the execution of the agreement; c) If the balance is not paid within the above-stated period, by reason of any cause other than those mentioned in paragraphs (d), (e) and (f) below, Twenty (20%) Percent of The Ten (10%) Percent paid under paragraph (a) shall be forfeited in your favor, the remaining Eighty (80%) is to be refunded to us; in the event the nonpayment of the said balance is caused by non-performance of any of the stipulations in paragraphs (d), (e) and (f) below, the entire sum paid as earnest money shall be refunded to us; d) The Title of the property shall be free from all liens and encumbrances and the property itself free from all squatters; e) The BPI as trustee - title holder is to warrant that it the legal right and title to transfer ownership to us; f) Physical possession by us upon the payment of the Ten (10%) Percent referred to in paragraph (a) above Anticipating your favorable action, we thank you for your prompt attention and early reply. Very truly yours, LIMKETKAI SONS MILLING, INC. [Note: Italics added] ALFONSO U. LIM (Sgd.)

d. the party with the best price shall have five (5) days within which to pay the downpayment, otherwise, the party with the next best price shall be entertained. Should you still be interested in subject property, kindly submit to us not later than 12:00 noon of 22 July 1988 your written offer together with the price per square meter. The Bank shall not entertain proposals received after said cut-off time. It is understood, however, that acceptance of any offer is still subject to the approval of the Beneficial Owner of the property as well as the Trust Committee of the Bank. Very truly yours, (Sgd.) ALFONSO R ZAMORA Vice President [Note: Italics added]
[11]

(Sgd.) FERNANDO J. SISON III Asst. Vice President

Exhibit G quoted in full is as follows:

July 22, 1988 The Chairman

Trust Committee Bank of the Philippine Islands Makati, Metro Manila Dear Sir: We are, in receipt of the letter dated July 20, 1988, signed by Mr. Alfonso Zamora and Mr. Fernando J. Sison III, copy of which we are hereto attaching. Please consider our letter of July 21, 1988 addressed to Mr. Xavier P. Loinaz, Bank President, and copy furnished your committee, as our reply thereto. We are therefore, hereby adopting and reiterating our former offer to buy the lot of P1,000.00 per square meter but on cash basis. Very truly yours, (Sgd.) LIMKETKAI SONS MILLING, INC. (Sgd.) ALFONSO U. LIM [Note: Italics added]
[12]

Very truly yours, (Sgd.) NELSON M. BONA Vice President [Note: Emphasis added]
[13]

(Sgd.) FERNANDO J. SISON III Asst. Vice President

Exhibit I pertinently provides:

August 8, 1988 Mr. Nelson M. Bona Vice President and Mr. Fernando J. Sison III Asst. Vice-President BANK OF THE PHILIPPINE ISLANDS Manila

Executive Vice-President

Gentlemen: This refers to your letter of 2 August 1988 regarding our agreement to purchase the Barrio Bagong flog property under TCT No. 493122 at P1,000.00 per square meter. xxx xxx xxx

Exhibit H's pertinent portions read as follows: Mr. Alfonso U. Lim

Attention:

Exec. Vice President Gentlemen: We reply to your letter dated 29 July 1988 addressed to the Chairman of our Trust Committee. We again regret to inform you that your offer to purchase the Bo. Bagong Ilog, Pasig property (TCT 493122) at P1,000.00 per square meter has not been approved, as previously communicated to you per our letter dated 20 July 1988. Per the Deed of Trust entered into by and between the Grantor of said property and ourselves, the Bank as Trustee is duty-bound. in the event of sale of the property, to select the terms and consideration it deems to be most advantageous to the Grantor. The 30-day authority given to your broker also presupposed that during said period, the Bank on its own would also consider other offers. This is why no offer to purchase was deemed final and accepted until formally approved by the Trust Committee. xxx xxx xxx

Under the aforequoted provision of the Deed of Trust, your Bank as Trustee, has the absolute authority to sell and dispose of the property under trust without consulting the Grantor as to price and terms. Moreover, under said quoted stipulation, the Bank may engage the services of a real estate broker or brokers under such terms and conditions which the Trustee may deem proper. Consequently, on 23 June 1988, you authorized Mr. Pedro P. Revilla, Jr. as broker to sell the property covered by Title No. 493122 on a first-come first-serve basis as per written authority signed by Mr. Fernando J. Sison III and Mr. Alfonso R. Zamora in behalf of the Bank as Trustee of Philippine Remnants Co., Inc. We would like to invite your kind attention that we are the first-come offeror of the lot. And, while the price mentioned in the authority granted to Mr. Revilla is P1,000.00 per square meter, nonetheless, in the negotiations between us and your responsible bank officials done in the presence of Mr. Revilla, the price per square meter was finally agreed at P1,000.00. True, we requested for payment of the price on terms but, should the terms we requested be not accepted by your bank, we were ready to pay in cash per our understanding with your Mr. Albano

and Mr. Aromin and which we have clearly made known in our July 22, 1988 letters. As a matter of fact, even before July 21 and 22, 1988 we personally tendered a check for the entire purchase price to Mr. Albano but he refused to accept the check because, according to him, the authority to transact the sale was taken away from him. The same proposal to pay in cash was made by us in a meeting with Mr. Bona, Mr. Sison and other Bank officials, and we were told that the matter will be resolved by the Bank officials concerned in due time but nothing positive came about. We are still ready to buy the subject property at P1,000.00 per square meter on cash basis. xxx xxx xxx

Sometime in 1988, STORA, the then parent company of SMAB, decided to sell SMAB of Sweden and the latters worldwide match, lighter and shaving products operation to Eemland Management Services, now known as Swedish Match NV of Netherlands, (SMNV), a corporation organized and existing under the laws of Netherlands. STORA, however, retained for itself the packaging business. SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the shaving business. SMNV adopted a two-pronged strategy, the first being to sell its shares in Phimco Industries, Inc. and a match company in Brazil, which proposed sale would stave-off defaults in the loan covenants of SMNV with its syndicate of lenders. The other move was to sell at once or in one package all the SMNV companies worldwide which were engaged in match and lighter operations thru a global deal (hereinafter, global deal). Ed Enriquez (Enriquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA)the management company of the Swedish Match groupwas commissioned and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of SMNV. Enriquez came to the Philippines in November 1989 and informed the Philippine financial and business circles that the Phimco shares were for sale. Several interested parties tendered offers to acquire the Phimco shares, among whom were the AFP Retirement and Separation Benefits System, herein respondent ALS Management & Development Corporation and respondent Antonio Litonjua (Litonjua), the president and general manager of ALS. In his letter dated 3 November 1989, Litonjua submitted to SMAB a firm offer to buy all of the latters shares in Phimco and all of Phimcos shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. for the sum of P750,000,000.00.[5] Through its Chief Executive Officer, Massimo Rossi (Rossi), SMAB, in its letter dated 1 December 1989, thanked respondents for their interest in the Phimco shares. Rossi informed respondents that their price offer was below their expectations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares, with the assurance that respondents would enjoy a certain priority although several parties had indicated their interest to buy the shares.[6] Thereafter, an exchange of correspondence ensued between petitioners and respondents regarding the projected sale of the Phimco shares. In his letter dated 21 May 1990, Litonjua offered to buy the disputed shares, excluding the lighter division for US$30.6 million, which per another letter of the same date was increased to US$36 million.[7] Litonjua stressed that the bid amount could be adjusted subject to availability of additional information and audit verification of the company finances. Responding to Litonjuas offer, Rossi sent his letter dated 11 June 1990, informing the former that ALS should undertake a due diligence process or pre-acquisition audit and review of the draft contract for the Match and Forestry activities of Phimco at ALS convenience. However, Rossi made it clear that at the completion of the due diligence process, ALS should submit its final offer in US dollar terms not later than 30 June 1990, for the shares of SMAB corresponding to ninety-six percent (96%) of the Match and Forestry activities of Phimco. Rossi added that in case the global

Through this letter we would like to make known to your Bank that we maintain our position that there has been a perfected contract between your Bank as Trustee and our Corporation insofar as the sale of the property to us is concerned because in the written authority granted by you to Mr. Pedro P. Revilla, Jr. signed by no less than the Assistant Vice-President and Vice-President of the Bank as Trustee, there is no condition imposed that the sale of the property transacted by him under said authority is subject to the approval of the Trust Committee. We hope your Bank will understand our position and we expect that the sale of the subject lot in our favor be consummated as early as possible. Very truly yours, (Sgd) ALFONSO U. LIM Exec. Vice-President/Director SWEDISH MATCH, AB, JUAN ENRIQUEZ, RENE DIZON, FRANCISCO RAPACON, FIEL SANTOS, BETH FLORES, LAMBRTO DE LA EVA, GLORIA REYES, RODRIGO ORTIZ, NICANOR ESCALANTE, PETER HODGSON, SAMUEL PARTOSA, HERMINDA ASUNCION, JUANITO HERRERA, JACOBUS NICOLAAS, JOSEPH PEKELHARING (now Representing himself without court sanction as JOOST PEKELHARING), MASSIMO ROSSI and ED ENRIQUEZ, petitioners, vs. COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION and ANTONIO K. LITONJUA, respondents. DECISION TINGA, J.: Petitioners seek a reversal of the twin Orders[1] of the Court of Appeals dated 15 November 1996[2] and 31 January 1997,[3] in CA-G.R. CV No. 35886, entitled ALS Management et al., v. Swedish Match, AB et al. The appellate court overturned the trial courts Order[4] dismissing the respondents complaint for specific performance and remanded the case to the trial court for further proceedings. Swedish Match, AB (hereinafter SMAB) is a corporation organized under the laws of Sweden not doing business in the Philippines. SMAB, however, had three subsidiary corporations in the Philippines, all organized under Philippine laws, to wit: Phimco Industries, Inc. (Phimco), Provident Tree Farms, Inc., and OTT/Louie (Phils.), Inc.

deal presently under negotiation for the Swedish Match Lights Group would materialize, SMAB would reimburse up to US$20,000.00 of ALS costs related to the due diligence process.[8] Litonjua in a letter dated 18 June 1990, expressed disappointment at the apparent change in SMABs approach to the bidding process. He pointed out that in their 4 June 1990 meeting, he was advised that one final bidder would be selected from among the four contending groups as of that date and that the decision would be made by 6 June 1990. He criticized SMABs decision to accept a new bidder who was not among those who participated in the 25 May 1990 bidding. He informed Rossi that it may not be possible for them to submit their final bid on 30 June 1990, citing the advice to him of the auditing firm that the financial statements would not be completed until the end of July. Litonjua added that he would indicate in their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time.[9] Two days prior to the deadline for submission of the final bid, Litonjua again advised Rossi that they would be unable to submit the final offer by 30 June 1990, considering that the acquisition audit of Phimco and the review of the draft agreements had not yet been completed. He said, however, that they would be able to finalize their bid on 17 July 1990 and that in case their bid would turn out better than any other proponent, they would remit payment within ten (10) days from the execution of the contracts.[10] Enriquez sent notice to Litonjua that they would be constrained to entertain bids from other parties in view of Litonjuas failure to make a firm commitment for the shares of Swedish Match in Phimco by 30 June 1990.[11] In a letter dated 3 July 1990, Rossi informed Litonjua that on 2 July 1990, they signed a conditional contract with a local group for the disposal of Phimco. He told Litonjua that his bid would no longer be considered unless the local group would fail to consummate the transaction on or before 15 September1990.[12] Apparently irked by SMABs decision to junk his bid, Litonjua promptly responded by letter dated 4 July 1990. Contrary to his prior manifestations, he asserted that, for all intents and purposes, the US$36 million bid which he submitted on 21 May 1990 was their final bid based on the financial statements for the year 1989. He pointed out that they submitted the best bid and they were already finalizing the terms of the sale. He stressed that they were firmly committed to their bid of US$36 million and if ever there would be adjustments in the bid amount, the adjustments were brought about by SMABs subsequent disclosures and validated accounts, such as the aspect that only ninety-six percent (96%) of Phimco shares was actually being sold and not one-hundred percent (100%).[13] More than two months from receipt of Litonjuas last letter, Enriquez sent a fax communication to the former, advising him that the proposed sale of SMABs shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with ALS on an exclusive basis for a period of fifteen (15) days from 26 September 1990 subject to the terms contained in the letter. Additionally, Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period, SMAB would enter into negotiations with other buyers.[14]

Shortly thereafter, Litonjua sent a letter expressing his objections to the totally new set of terms and conditions for the sale of the Phimco shares. He emphasized that the new offer constituted an attempt to reopen the already perfected contract of sale of the shares in his favor. He intimated that he could not accept the new terms and conditions contained therein.[15] On 14 December 1990, respondents, as plaintiffs, filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages, with a prayer for the issuance of a writ of preliminary injunction, against defendants, now petitioners. The individual defendants were sued in their respective capacities as officers of the corporations or entities involved in the aborted transaction. Aside from the averments related to their principal cause of action for specific performance, respondents alleged that the Phimco management, in utter bad faith, induced SMAB to violate its contract with respondents. They contended that the Phimco management took an interest in acquiring for itself the Phimco shares and that petitioners conspired to thwart the closing of such sale by interposing various obstacles to the completion of the acquisition audit.[16] Respondents claimed that the Phimco management maliciously and deliberately delayed the delivery of documents to Laya Manabat Salgado & Co. which prevented them from completing the acquisition audit in time for the deadline on 30 June 1990 set by petitioners.[17] Respondents added that SMABs refusal to consummate the perfected sale of the Phimco shares amounted to an abuse of right and constituted conduct which is contrary to law, morals, good customs and public policy.[18] Respondents prayed that petitioners be enjoined from selling or transferring the Phimco shares, or otherwise implementing the sale or transfer thereof, in favor of any person or entity other than respondents, and that any such sale to third parties be annulled and set aside. Respondents also asked that petitioners be ordered to execute all documents or instruments and perform all acts necessary to consummate the sales agreement in their favor. Traversing the complaint, petitioners alleged that respondents have no cause of action, contending that no perfected contract, whether verbal or written, existed between them. Petitioners added that respondents cause of action, if any, was barred by the Statute of Frauds since there was no written instrument or document evidencing the alleged sale of the Phimco shares to respondents. Petitioners filed a motion for a preliminary hearing of their defense of bar by the Statute of Frauds, which the trial court granted. Both parties agreed to adopt as their evidence in support of or against the motion to dismiss, as the case may be, the evidence which they adduced in support of their respective positions on the writ of preliminary injunction incident. In its Order dated 17 April 1991, the RTC dismissed respondents complaint.[19] It ruled that there was no perfected contract of sale between petitioners and respondents. The court a quosaid that the letter dated 11 June 1990, relied upon by respondents, showed that petitioners did not accept the bid offer of respondents as the letter was a mere invitation for respondents to conduct a due diligence process or pre-acquisition audit of Phimcos match and forestry operations to enable them to submit their final offer on 30 June 1990. Assuming that respondents bid was favored by an oral acceptance made in private by officers of SMAB, the trial court noted, such acceptance was merely preparatory to a formal acceptance by the SMABthe acceptance that would eventually lead to the execution and signing of the contract of sale. Moreover, the court noted that respondents failed to submit their final bid on the deadline set by petitioners.

Respondents appealed to the Court of Appeals, assigning the following errors: A. THE TRIAL COURT EXCEEDED ITS AUTHORITY AND JURISDICTION WHEN IT ERRED PROCEDURALLY IN MOTU PROPIO (sic) DISMISSING THE COMPLAINT IN ITS ENTIRETY FOR LACK OF A VALID CAUSE OF ACTION WITHOUT THE BENEFIT OF A FULL-BLOWN TRIAL AND ON THE MERE MOTION TO DISMISS. B. THE TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANTS CAUSE OF ACTION BASED ON TORT WHICH, HAVING BEEN SUFFICIENTLY PLEADED, INDEPENDENTLY WARRANTED A FULL-BLOWN TRIAL. C. THE TRIAL COURT ERRED IN IGNORING PLAINTIFFS-APPELLANTS CAUSE OF ACTION BASED ON PROMISSORY ESTOPPEL WHICH, HAVING BEEN SUFFICIENTLY PLEADED, WARRANTED A FULLBLOWN TRIAL, INDEPENDENTLY FOR THE OTHER CAUSES OF ACTION. D. THE TRIAL COURT JUDGE ERRED IN FORSWEARING JUDICIAL OBJECTIVITY TO FAVOR DEFENDANTS-APPELLEES BY MAKING UNFOUNDED FINDINGS, ALL IN VIOLATION OF PLAINTIFFSAPPELLANTS RIGHT TO DUE PROCESS.[20] After assessing the respective arguments of the parties, the Court of Appeals reversed the trial courts decision. It ruled that the series of written communications between petitioners and respondents collectively constitute a sufficient memorandum of their agreement under Article 1403 of the Civil Code; thus, respondents complaint should not have been dismissed on the ground that it was unenforceable under the Statute of Frauds. The appellate court opined that any document or writing, whether formal or informal, written either for the purpose of furnishing evidence of the contract or for another purpose which satisfies all the Statutes requirements as to contents and signature would be sufficient; and, that two or more writings properly connected could be considered together. The appellate court concluded that the letters exchanged by and between the parties, taken together, were sufficient to establish that an agreement to sell the disputed shares to respondents was reached. The Court of Appeals clarified, however, that by reversing the appealed decision it was not thereby declaring that respondents are entitled to the reliefs prayed for in their complaint, but only that the case should not have been dismissed on the ground of unenforceability under the Statute of Frauds. It ordered the remand of the case to the trial court for further proceedings. Hence, this petition. Petitioners argue that the Court of Appeals erred in failing to consider that the Statute of Frauds requires not just the existence of any note or memorandum but that such note or memorandum should evidence an agreement to sell; and, that in this case, there was no word, phrase, or statement in the letters exchanged between the two parties to show or even imply that an agreement had been reached for the sale of the shares to respondent. Petitioners stress that respondent Litonjua made it clear in his letters that the quoted prices were merely tentative and still subject to further negotiations between him and the seller. They point out that there was no meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept respondents offer that consideration would be paid in Philippine pesos. Moreover, Litonjua signified their inability to submit their final bid on 30 June 1990, at the same

time stating that the broad terms and conditions described in their meeting were inadequate for them to make a response at that time so much so that he would have to await the corresponding specifics. Petitioners argue that the foregoing circumstances prove that they failed to reach an agreement on the sale of the Phimco shares. In their Comment, respondents maintain that the Court of Appeals correctly ruled that the Statute of Frauds does not apply to the instant case. Respondents assert that the sale of the subject shares to them was perfected as shown by the following circumstances, namely: petitioners assured them that should they increase their bid, the sale would be awarded to them and that they did in fact increase their previous bid of US$30.6 million to US$36 million; petitioners orally accepted their revised offer and the acceptance was relayed to them by Rene Dizon; petitioners directed them to proceed with the acquisition audit and to submit a comfort letter from the United Coconut Planters Bank (UCPB); petitioner corporation confirmed its previous verbal acceptance of their offer in a letter dated 11 June 1990; with the prior approval of petitioners, respondents engaged the services of Laya, Manabat, Salgado & Co., an independent auditing firm, to immediately proceed with the acquisition audit; and, petitioner corporation reiterated its commitment to be bound by the result of the acquisition audit and promised to reimburse respondents cost to the extent of US$20,000.00. All these incidents, according to respondents, overwhelmingly prove that the contract of sale of the Phimco shares was perfected. Further, respondents argued that there was partial performance of the perfected contract on their part. They alleged that with the prior approval of petitioners, they engaged the services of Laya, Manabat, Salgado & Co. to conduct the acquisition audit. They averred that petitioners agreed to be bound by the results of the audit and offered to reimburse the costs thereof to the extent of US$20,000.00. Respondents added that in compliance with their obligations under the contract, they have submitted a comfort letter from UCPB to show petitioners that the bank was willing to finance the acquisition of the Phimco shares.[21] The basic issues to be resolved are: (1) whether the appellate court erred in reversing the trial courts decision dismissing the complaint for being unenforceable under the Statute of Frauds; and (2) whether there was a perfected contract of sale between petitioners and respondents with respect to the Phimco shares. The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil Code[22] requires certain contracts enumerated therein to be evidenced by some note or memorandum in order to be enforceable. The term Statute of Frauds is descriptive of statutes which require certain classes of contracts to be in writing. The Statute does not deprive the parties of the right to contract with respect to the matters therein involved, but merely regulates the formalities of the contract necessary to render it enforceable.[23] Evidence of the agreement cannot be received without the writing or a secondary evidence of its contents. The Statute, however, simply provides the method by which the contracts enumerated therein may be proved but does not declare them invalid because they are not reduced to writing. By law, contracts are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable.[24] Consequently, the effect of noncompliance with the requirement of the Statute is simply that no action can be enforced unless the

requirement is complied with.[25] Clearly, the form required is for evidentiary purposes only. Hence, if the parties permit a contract to be proved, without any objection, it is then just as binding as if the Statute has been complied with.[26] The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses, by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged.[27] However, for a note or memorandum to satisfy the Statute, it must be complete in itself and cannot rest partly in writing and partly in parol. The note or memorandum must contain the names of the parties, the terms and conditions of the contract, and a description of the property sufficient to render it capable of identification.[28] Such note or memorandum must contain the essential elements of the contract expressed with certainty that may be ascertained from the note or memorandum itself, or some other writing to which it refers or within which it is connected, without resorting to parol evidence.[29] Contrary to the Court of Appeals conclusion, the exchange of correspondence between the parties hardly constitutes the note or memorandum within the context of Article 1403 of the Civil Code. Rossis letter dated 11 June 1990, heavily relied upon by respondents, is not complete in itself. First, it does not indicate at what price the shares were being sold. In paragraph (5) of the letter, respondents were supposed to submit their final offer in U.S. dollar terms, at that after the completion of the due diligence process. The paragraph undoubtedly proves that there was as yet no definite agreement as to the price. Second, the letter does not state the mode of payment of the price. In fact, Litonjua was supposed to indicate in his final offer how and where payment for the shares was planned to be made.[30] Evidently, the trial courts dismissal of the complaint on the ground of unenforceability under the Statute of Frauds is warranted.[31] Even if we were to consider the letters between the parties as a sufficient memorandum for purposes of taking the case out of the operation of the Statute the action for specific performance would still fail. A contract is defined as a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another, or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do.[32] There can be no contract unless the following requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; (c) cause of the obligation which is established.[33] Contracts are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.[34] Specifically, in the case of a contract of sale, required is the concurrence of three elements, to wit: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter, and (c) price certain in money or its equivalent.[35] Such contract is born from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.[36]

In general, contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.[37] A negotiation is formally initiated by an offer. A perfected promise merely tends to insure and pave the way for the celebration of a future contract. An imperfect promise (policitacion), on the other hand, is a mere unaccepted offer.[38] Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. At any time prior to the perfection of the contract, either negotiating party may stop the negotiation.[39] The offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal.[40] An offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. Consent in a contract of sale should be 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.[41] Quite obviously, Litonjuas letter dated 21 May 1990, proposing the acquisition of the Phimco shares for US$36 million was merely an offer. This offer, however, in Litonjuas own words, is understood to be subject to adjustment on the basis of an audit of the assets, liabilities and net worth of Phimco and its subsidiaries and on the final negotiation between ourselves.[42] Was the offer certain enough to satisfy the requirements of the Statute of Frauds? Definitely not. Litonjua repeatedly stressed in his letters that they would not be able to submit their final bid by 30 June 1990.[43] With indubitable inconsistency, respondents later claimed that for all intents and purposes, the US$36 million was their final bid. If this were so, it would be inane for Litonjua to state, as he did, in his letter dated 28 June 1990 that they would be in a position to submit their final bid only on 17 July 1990. The lack of a definite offer on the part of respondents could not possibly serve as the basis of their claim that the sale of the Phimco shares in their favor was perfected, for one essential element of a contract of sale was obviously wantingthe price certain in money or its equivalent. The price must be certain, otherwise there is no true consent between the parties.[44] There can be no sale without a price.[45] Quite recently, this Court reiterated the longstanding doctrine that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist since the agreement on 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.[46] Granting arguendo, that the amount of US$36 million was a definite offer, it would remain as a mere offer in the absence of evidence of its acceptance. To produce a contract, there must be acceptance, which may be express or implied, but it must not qualify the terms of the offer.[47] The acceptance of an offer must be unqualified and absolute to perfect the contract.[48] In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.[49]

Respondents attempt to prove the alleged verbal acceptance of their US$36 million bid becomes futile in the face of the overwhelming evidence on record that there was in the first place no meeting of the minds with respect to the price. It is dramatically clear that the US$36 million was not the actual price agreed upon but merely a preliminary offer which was subject to adjustment after the conclusion of the audit of the company finances. Respondents failure to submit their final bid on the deadline set by petitioners prevented the perfection of the contract of sale. It was not perfected due to the absence of one essential element which was the price certain in money or its equivalent. At any rate, from the procedural stand point, the continuing objections raised by petitioners to the admission of parol evidence[50] on the alleged verbal acceptance of the offer rendered any evidence of acceptance inadmissible. Respondents plea of partial performance should likewise fail. The acquisition audit and submission of a comfort letter, even if considered together, failed to prove the perfection of the contract. Quite the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part of the due diligence process to help them arrive at and make their final offer. On the other hand, the submission of the comfort letter was merely a guarantee that respondents had the financial capacity to pay the price in the event that their bid was accepted by petitioners. The Statute of Frauds is applicable only to contracts which are executory and not to those which have been consummated either totally or partially.[51] If a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already derived by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.[52] This rule, however, is predicated on the fact of ratification of the contract within the meaning of Article 1405 of the Civil Code either (1) by failure to object to the presentation of oral evidence to prove the same, or (2) by the acceptance of benefits under them. In the instant case, respondents failed to prove that there was partial performance of the contract within the purview of the Statute. Respondents insist that even on the assumption that the Statute of Frauds is applicable in this case, the trial court erred in dismissing the complaint altogether. They point out that the complaint presents several causes of action. A close examination of the complaint reveals that it alleges two distinct causes of action, the first is for specific performance[53] premised on the existence of the contract of sale, while the other is solely for damages, predicated on the purported dilatory maneuvers executed by the Phimco management.[54] With respect to the first cause of action for specific performance, apart from petitioners alleged refusal to honor the contract of salewhich has never been perfected in the first place respondents made a number of averments in their complaint all in support of said cause of action. Respondents claimed that petitioners were guilty of promissory estoppel,[55] warranty breaches[56] and tortious conduct[57] in refusing to honor the alleged contract of sale. These averments are predicated on or at least interwoven with the existence or perfection of the contract of sale. As there was no such perfected contract, the trial court properly rejected the averments in conjunction with the dismissal of the complaint for specific performance.

However, respondents second cause of action due to the alleged malicious and deliberate delay of the Phimco management in the delivery of documents necessary for the completion of the audit on time, not being based on the existence of the contract of sale, could stand independently of the action for specific performance and should not be deemed barred by the dismissal of the cause of action predicated on the failed contract. If substantiated, this cause of action would entitle respondents to the recovery of damages against the officers of the corporation responsible for the acts complained of. Thus, the Court cannot forthwith order dismissal of the complaint without affording respondents an opportunity to substantiate their allegations with respect to its cause of action for damages against the officers of Phimco based on the latters alleged self-serving dilatory maneuvers. WHEREFORE, the petition is in part GRANTED. The appealed Decision is hereby MODIFIED insofar as it declared the agreement between the parties enforceable under the Statute of Frauds. The complaint before the trial court is ordered DISMISSED insofar as the cause of action for specific performance is concerned. The case is ordered REMANDED to the trial court for further proceedings with respect to the cause of action for damages as above specified. SO ORDERED. Puno, J., (Chairman), Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur. UNIVERSITY OF THE PHILIPPINES, petitioner, vs. PHILAB INDUSTRIES, INC., respondent. DECISION CALLEJO, SR., J.: Before the Court is a petition for review on certiorari of the Decision[1] of the Court of Appeals in CAG.R. CV No. 44209, as well as its Resolution[2] denying the petitioners motion for the reconsideration thereof. The Court of Appeals set aside the Decision[3] of Branch 150 of the Regional Trial Court (RTC) of Makati City, which dismissed the complaint of the respondent against the petitioner for sum of money and damages. The Facts of the Case Sometime in 1979, the University of the Philippines (UP) decided to construct an integrated system of research organization known as the Research Complex. As part of the project, laboratory equipment and furniture were purchased for the National Institute of Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Baos. Providentially, the Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund the acquisition of the laboratory furniture, including the fabrication thereof. Renato E. Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH to contact a corporation to accomplish the project. On July 23, 1982, Dr. William Padolina, the Executive Deputy Director of BIOTECH, arranged for Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver the same to BIOTECH for the BIOTECH Building Project, for the account of the FEMF. Lirio directed Padolina to give the go-signal to PHILAB to proceed with the

fabrication of the laboratory furniture, and requested Padolina to forward the contract of the project to FEMF for its approval. On July 13, 1982, Padolina wrote Lirio and requested for the issuance of the purchase order and downpayment for the office and laboratory furniture for the project, thus: 1. Supply and Installation of Laboratory furniture for the BIOTECH Building Project : : P2,934,068.90 Philippine Laboratory Furniture Co., College, Laguna Attention: Mr. Hector C. Navasero President Downpayment 2. : 40% or P1,173,627.56

issued Official Receipt No. 256 to FEMF. The remittances were in the form of checks drawn by FEMF and delivered to PHILAB, through Padolina. On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los Baos and FEMF, represented by its Executive Officer, Rolando Gapud, executed a Memorandum of Agreement (MOA) in which FEMF agreed to grant financial support and donate sums of money to UP for the construction of buildings, installation of laboratory and other capitalization for the project, not to exceed P29,000,000.00. The obligations of FEMF under the MOA are the following: ARTICLE II OBLIGATIONS OF THE FOUNDATION 2.1. The FOUNDATION, in carrying out its principal objectives of promoting philantrophic and scientific projects through financial support to such projects that will contribute to the countrys economic development, shall grant such financial support and donate such sums of money to the RESEARCH COMPLEX as may be necessary for the construction of buildings, installation of laboratories, setting up of offices and physical plants and facilities and other capital investment of the RESEARCH COMPLEX and/or any of its component Research Institutes not to exceed P29 Million. For this purpose, the FOUNDATION shall: (a) Acquire and donate to the UNIVERSITY the site for the RESEARCH COMPLEX; and (b) Donate or cause to be donated to the UNIVERSITY the sum of TWENTY-NINE MILLION PESOS (P29,000,000.00) for the construction of the buildings of the National Institutes of Biotechnology and Applied Microbiology (BIOTECH) and the installation of their laboratories and their physical plants and other facilities to enable them to commence operations. 2.2. In addition, the FOUNDATION shall, subject to the approval of the Board of Trustees of the FOUNDATION, continue to support the activities of the RESEARCH COMPLEX by way of recurrent additional grants and donations for specific research and development projects which may be mutually agreed upon and, from time to time, additional grants and donations of such amounts as may be necessary to provide the RESEARCH COMPLEX and/or any of its Research Institutes with operational flexibility especially with regard to incentives to staff purchase of equipment/facilities, travel abroad, recruitment of local and expatriate staff and such other activities and inputs which are difficult to obtain under usual government rules and regulations.[6] The Board of Regents of the UP approved the MOA on November 25, 1982.[7] In the meantime, Navasero promised to submit the contract for the installation of laboratory furniture to BIOTECH, by January 12, 1983. However, Navasero failed to do so. In a Letter dated February 1, 1983, BIOTECH reminded Navasero of the need to submit the contract so that it could be submitted to FEMF for its evaluation and approval.[8] Instead of submitting the said contract, PHILAB submitted to BIOTECH an accomplishment report on the project as of February 28, 1983, and requested payment thereon.[9] By May 1983, PHILAB had completed 78% of the project, amounting to P2,288,573.74 out of the total cost of P2,934,068.90. The FEMF had already paid forty percent (40%) of the total cost of the project. On May 12, 1983, Padolina wrote Lirio and furnished him the progress billing from PHILAB.[10] On August 11, 1983, the FEMF made another partial payment of P836,119.52 representing the already delivered laboratory and office furniture

Amount Supplier

Fabrication and Supply of office furniture for the BIOTECH Building Project : : P573,375.00 Trans-Oriental Woodworks, Inc. 1st Avenue, Bagumbayan Tanyag, Taguig, Metro Manila

Amount Supplier

Downpayment

50% or P286,687.50[4]

Padolina assured Lirio that the contract would be prepared as soon as possible before the issuance of the purchase orders and the downpayment for the goods, and would be transmitted to the FEMF as soon as possible. In a Letter dated July 23, 1982, Padolina informed Hector Navasero, the President of PHILAB, to proceed with the fabrication of the laboratory furniture, per the directive of FEMF Executive Assistant Lirio. Padolina also requested for copies of the shop drawings and a sample contract[5] for the project, and that such contract and drawings had to be finalized before the down payment could be remitted to the PHILAB the following week. However, PHILAB failed to forward any sample contract. Subsequently, PHILAB made partial deliveries of office and laboratory furniture to BIOTECH after having been duly inspected by their representatives and FEMF Executive Assistant Lirio. On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment for the laboratory furniture for the BIOTECH project, for which PHILAB issued Official Receipt No. 253 to FEMF. On October 22, 1982, FEMF made another partial payment of P800,000 to PHILAB, for which the latter

after the requisite inspection and verification thereof by representatives from the BIOTECH, FEMF, and PHILAB. The payment was made in the form of a check, for which PHILAB issued Official Receipt No. 202 to FEMF through Padolina.[11] On July 1, 1984, PHILAB submitted to BIOTECH Invoice No. 01643 in the amount of P702,939.40 for the final payment of laboratory furniture. Representatives from BIOTECH, PHILAB, and Lirio for the FEMF, conducted a verification of the accomplishment of the work and confirmed the same. BIOTECH forwarded the invoice to Lirio on December 18, 1984 for its payment.[12] Lirio, in turn, forwarded the invoice to Gapud, presumably sometime in the early part of 1985. However, the FEMF failed to pay the bill. PHILAB reiterated its request for payment through a letter on May 9, 1985.[13] BIOTECH again wrote Lirio on March 21, 1985, requesting the payment of PHILABs bill.[14] It sent another letter to Gapud, on November 22, 1985, again appealing for the payment of PHILABs bill.[15] In a Letter to BIOTECH dated December 5, 1985, PHILAB requested payment of P702,939.40 plus interest thereon of P224,940.61.[16] There was, however, no response from the FEMF. On February 24, 1986, PHILAB wrote BIOTECH, appealing for the payment of its bill even on installment basis.[17] President Marcos was ousted from office during the February 1986 EDSA Revolution. On March 26, 1986, Navasero wrote BIOTECH requesting for its much-needed assistance for the payment of the balance already due plus interest of P295,234.55 for its fabrication and supply of laboratory furniture.[18] On April 22, 1986, PHILAB wrote President Corazon C. Aquino asking her help to secure the payment of the amount due from the FEMF.[19] The letter was referred to then Budget Minister Alberto Romulo, who referred the letter to then UP President Edgardo Angara on June 9, 1986. On September 30, 1986, Raul P. de Guzman, the Chancellor of UP Los Baos, wrote then Chairman of the Presidential Commission on Good Government (PCGG) Jovito Salonga, submitting PHILABs claim to be officially entered as accounts payable as soon as the assets of FEMF were liquidated by the PCGG.[20] In the meantime, the PCGG wrote UP requesting for a copy of the relevant contract and the MOA for its perusal.[21] Chancellor De Guzman wrote Navasero requesting for a copy of the contract executed between PHILAB and FEMF. In a Letter dated October 20, 1987, Navasero informed De Guzman that PHILAB and FEMF did not execute any contract regarding the fabrication and delivery of laboratory furniture to BIOTECH. Exasperated, PHILAB filed a complaint for sum of money and damages against UP. In the complaint, PHILAB prayed that it be paid the following: (1) PESOS: SEVEN HUNDRED TWO THOUSAND NINE HUNDRED THIRTY NINE & 40/100 (P702,939.40) plus an additional amount (as shall be determined during the hearing) to cover the actual cost of money which at the time of transaction the value of the peso was eleven to a dollar (P11.00:$1) and twenty seven (27%) percent interest on the total amount from August 1982 until fully paid; (2) PESOS: ONE HUNDRED THOUSAND (P100,000.00) exemplary damages;

(3) (4)

FIFTY THOUSAND [PESOS] (P50,000.00) as and for attorneys fees; and Cost of suit.[22]

PHILAB alleged, inter alia, that: 3. Sometime in August 1982, defendant, through its officials, particularly MR. WILLIAM PADOLINA, Director, asked plaintiff to supply and install several laboratory furnitures and equipment at BIOTECH, a research laboratory of herein defendant located at its campus in College, Laguna, for a total contract price of PESOS: TWO MILLION NINE HUNDRED THIRTY-NINE THOUSAND FIFTY-EIGHT & 90/100 (P2,939,058.90); 4. After the completion of the delivery and installation of said laboratory furnitures and equipment at defendants BIOTECH Laboratory, defendant paid three (3) times on installment basis: a) P600,000.00 as per Official Receipt No. 253 dated August 24, 1982; b) P800,000.00 as per Official Receipt No. 256 dated October 22, 1982; c) P836,119.52 as per Official Receipt No. 202 dated August 11, 1983; thus leaving a balance of PESOS: SEVEN HUNDRED TWO THOUSAND NINE HUNDRED THIRTY-NINE & 40/100 (P702,939.40). 5. That notwithstanding repeated demands for the past eight years, defendant arrogantly and maliciously made plaintiff believe that it was going to pay the balance aforestated, that was why plaintiffs President and General Manager himself, HECTOR C. NAVASERO, personally went to and from UP Los Baos to talk with defendants responsible officers in the hope of expecting payment, when, in truth and in fact, defendant had no intention to pay whatsoever right from the start on a misplaced ground of technicalities. Some of plaintiffs demand letters since year 1983 up to the present are hereto attached as Annexes A, B, C, D, E, F, G, and H hereof; 6. That by reason of defendants malicious, evil and unnecessary misrepresentations that it was going to pay its obligation and asking plaintiff so many red tapes and requirements to submit, compliance of all of which took plaintiff almost eight (8) years to finish, when, in truth and in fact, defendant had no intention to pay, defendant should be ordered to pay plaintiff no less than PESOS: ONE HUNDRED THOUSAND (P100,000.00) exemplary damages, so that other government institutions may be warned that they must not unjustly enrich themselves at the expense of the people they serve.[23] In its answer, UP denied liability and alleged that PHILAB had no cause of action against it because it was merely the donee/beneficiary of the laboratory furniture in the BIOTECH; and that the FEMF, which funded the project, was liable to the PHILAB for the purchase price of the laboratory furniture. UP specifically denied obliging itself to pay for the laboratory furniture supplied by PHILAB. After due proceedings, the trial court rendered judgment dismissing the complaint without prejudice to PHILABs recourse against the FEMF. The fallo of the decision reads:

WHEREFORE, this case is hereby DISMISSED for lack of merit without prejudice to plaintiff's recourse to the assets of the Marcos Foundation for the unpaid balance of P792,939.49. SO ORDERED.[24]

donated was a sum of money equivalent to P29,000,000, and not the laboratory equipment supplied by it to the petitioner. The respondent submits that the petitioner, being the recipient of the laboratory furniture, should not enrich itself at the expense of the respondent. The petition is meritorious.

Undaunted, PHILAB appealed to the Court of Appeals (CA) alleging that the trial court erred in finding that: 1. the contract for the supply and installation of subject laboratory furniture and equipment was between PHILAB and the Marcos Foundation; and, 2. the Marcos Foundation, not the University of the Philippines, is liable to pay the respondent the balance of the purchase price.[25] The CA reversed and set aside the decision of the RTC and held that there was never a contract between FEMF and PHILAB. Consequently, PHILAB could not be bound by the MOA between the FEMF and UP since it was never a party thereto. The appellate court ruled that, although UP did not bind itself to pay for the laboratory furniture; nevertheless, it is liable to PHILAB under the maxim: No one should unjustly enrich himself at the expense of another. The Present Petition Upon the denial of its motion for reconsideration of the appellate courts decision, UP, now the petitioner, filed its petition for review contending that: I. THE COURT OF APPEALS ERRED WHEN IT FAILED TO APPLY THE LAW ON CONTRACTS BETWEEN PHILAB AND THE MARCOS FOUNDATION. II. THE COURT OF APPEALS ERRED IN APPLYING THE LEGAL PRINCIPLE OF UNJUST ENRICHMENT WHEN IT HELD THAT THE UNIVERSITY, AND NOT THE MARCOS FOUNDATION, IS LIABLE TO PHILAB.[26] Prefatorily, the doctrinal rule is that pure questions of facts may not be the subject of appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as this mode of appeal is generally restricted to questions of law.[27] However, this rule is not absolute. The Court may review the factual findings of the CA should they be contrary to those of the trial court.[28]Correspondingly, this Court may review findings of facts when the judgment of the CA is premised on a misapprehension of facts.[29] On the first assigned error, the petitioner argues that the CA overlooked the evidentiary effect and substance of the corresponding letters and communications which support the statements of the witnesses showing affirmatively that an implied contract of sale existed between PHILAB and the FEMF. The petitioner furthermore asserts that no contract existed between it and the respondent as it could not have entered into any agreement without the requisite public bidding and a formal written contract. The respondent, on the other hand, submits that the CA did not err in not applying the law on contracts between the respondent and the FEMF. It, likewise, attests that it was never privy to the MOA entered into between the petitioner and the FEMF. The respondent adds that what the FEMF

It bears stressing that the respondents cause of action is one for sum of money predicated on the alleged promise of the petitioner to pay for the purchase price of the furniture, which, despite demands, the petitioner failed to do. However, the respondent failed to prove that the petitioner ever obliged itself to pay for the laboratory furniture supplied by it. Hence, the respondent is not entitled to its claim against the petitioner. There is no dispute that the respondent is not privy to the MOA executed by the petitioner and FEMF; hence, it is not bound by the said agreement. Contracts take effect only between the parties and their assigns.[30] A contract cannot be binding upon and cannot be enforced against one who is not a party to it, even if he is aware of such contract and has acted with knowledge thereof.[31] Likewise admitted by the parties, is the fact that there was no written contract executed by the petitioner, the respondent and FEMF relating to the fabrication and delivery of office and laboratory furniture to the BIOTECH. Even the CA failed to specifically declare that the petitioner and the respondent entered into a contract of sale over the said laboratory furniture. The parties are in accord that the FEMF had remitted to the respondent partial payments via checks drawn and issued by the FEMF to the respondent, through Padolina, in the total amount ofP2,288,573.74 out of the total cost of the project of P2,934,068.90 and that the respondent received the said checks and issued receipts therefor to the FEMF. There is also no controversy that the petitioner did not pay a single centavo for the said furniture delivered by the respondent that the petitioner had been using ever since. We agree with the petitioner that, based on the records, an implied-in-fact contract of sale was entered into between the respondent and FEMF. A contract implied in fact is one implied from facts and circumstances showing a mutual intention to contract. It arises where the intention of the parties is not expressed, but an agreement in fact creating an obligation. It is a contract, the existence and terms of which are manifested by conduct and not by direct or explicit words between parties but is to be deduced from conduct of the parties, language used, or things done by them, or other pertinent circumstances attending the transaction. To create contracts implied in fact, circumstances must warrant inference that one expected compensation and the other to pay.[32] An implied-in-fact contract requires the parties intent to enter into a contract; it is a true contract.[33] The conduct of the parties is to be viewed as a reasonable man would view it, to determine the existence or not of an implied-in-fact contract.[34] The totality of the acts/conducts of the parties must be considered to determine their intention. An implied-in-fact contract will not arise unless the meeting of minds is indicated by some intelligent conduct, act or sign.[35] In this case, the respondent was aware, from the time Padolina contacted it for the fabrication and supply of the laboratory furniture until the go-signal was given to it to fabricate and deliver the furniture to BIOTECH as beneficiary, that the FEMF was to pay for the same. Indeed, Padolina asked the respondent to prepare the draft of the contract to be received by the FEMF prior to the execution of the parties (the respondent and FEMF), but somehow, the respondent failed to prepare one. The respondent knew that the petitioner was merely the donee-beneficiary of the laboratory furniture and not the buyer; nor was it liable for the payment of the purchase price

thereof. From the inception, the FEMF paid for the bills and statement of accounts of the respondent, for which the latter unconditionally issued receipts to and under the name of the FEMF. Indeed, witness Lirio testified: Q: Now, did you know, Mr. Witness, if PHILAB Industries was aware that it was the Marcos Foundation who would be paying for this particular transaction for the completion of this particular transaction? A: I think they are fully aware. Q: What is your basis for saying so? A: First, I think they were appraised by Dr. Padolina. Secondly, there were occasions during our inspection in Los Baos, at the installation site, there were occasions, two or three occasions, when we met with Mr. Navasero who is the President, I think, or manager of PHILAB, and we appraised him that it was really between the foundation and him to which includes (sic) the construction company constructing the building. He is fully aware that it is the foundation who (sic) engaged them and issued the payments.[36] The respondent, in its Letter dated March 26, 1986, informed the petitioner and sought its assistance for the collection of the amount due from the FEMF: Dear Dr. Padolina: May we request for your much-needed assistance in the payment of the balance still due us on the laboratory furniture we supplied and installed two years ago? Business is still slow and we will appreciate having these funds as soon as possible to keep up our operations. We look forward to hearing from you regarding this matter. Very truly yours, PHILAB INDUSTRIES, INC.[37] The respondent even wrote former President Aquino seeking her assistance for the payment of the amount due, in which the respondent admitted it tried to collect from her predecessor, namely, the former President Ferdinand E. Marcos: YOUR EXCELLENCY: At the instance of the national government, subject laboratory furnitures were supplied by our company to the National Institute of Biotechnology & Applied Microbiology (BIOTECH), University of the Philippines, Los Baos, Laguna, in 1984. Out of the total contract price of PESOS: TWO MILLION NINE HUNDRED THIRTY-NINE THOUSAND FIFTY-EIGHT & 90/100 (P2,939,058.90), the previous administration had so far paid us the sum ofP2,236,119.52 thus leaving a balance of PESOS: ONE MILLION FOUR HUNDRED TWELVE

THOUSAND SEVEN HUNDRED FORTY-EIGHT & 61/100 (P1,412.748.61) inclusive of interest of 24% per annum and 30% exchange rate adjustment. On several occasions, we have tried to collect this amount from your predecessor, the latest of which was subject invoice (01643) we submitted to DR. W. PADOLINA, deputy director of BIOTECH. But this, notwithstanding, our claim has remained unacted upon up to now. Copy of said invoice is hereto attached for easy reference. Now that your excellency is the head of our government, we sincerely hope that payment of this obligation will soon be made as this is one project the Republic of the Philippines has use of and derives benefit from.[38] Admittedly, the respondent sent to the petitioner its bills and statements of accounts for the payments of the laboratory furniture it delivered to the petitioner which the petitioner, through Padolina, transmitted to the FEMF for its payment. However, the FEMF failed to pay the last statement of account of the respondent because of the onset of the EDSA upheaval. It was only when the respondent lost all hope of collecting its claim from the government and/or the PCGG did it file the complaint against the petitioner for the collection of the payment of its last delivery of laboratory furniture. We reject the ruling of the CA holding the petitioner liable for the claim of the respondent based on the maxim that no one should enrich itself at the expense of another. Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally or unlawfully.[39] Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally prove that another party knowingly received something of value to which he was not entitled and that the state of affairs are such that it would be unjust for the person to keep the benefit.[40] Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or equitable obligation to account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request.[41] Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of restitution.[42] Article 22 of the New Civil Code reads: Every person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. (Boldface supplied) In order that accion in rem verso may prosper, the essential elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3) that the enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict.[43] An accion in rem verso is considered merely an auxiliary action, available only when there is no other remedy on contract, quasi-contract, crime, and quasi-delict. If there is an obtainable action

under any other institution of positive law, that action must be resorted to, and the principle of accion in rem verso will not lie.[44] The essential requisites for the application of Article 22 of the New Civil Code do not obtain in this case. The respondent had a remedy against the FEMF via an action based on an implied-in-fact contract with the FEMF for the payment of its claim. The petitioner legally acquired the laboratory furniture under the MOA with FEMF; hence, it is entitled to keep the laboratory furniture. IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision of the Court of Appeals is REVERSED AND SET ASIDE. The Decision of the Regional Trial Court, Makati City, Branch 150, is REINSTATED. No costs. SO ORDERED. Puno, (Chairman), Austria-Martinez, and Tinga, JJ., concur. Chico-Nazario, J., on leave. ESTELITA VILLAMAR, PETITIONER, VS. BALBINO MANGAOIL, RESPONDENT. DECISION

The CA aptly summarized as follows the facts of the case prior to the filing by Mangaoil of the complaint[6] for rescission of contract before the RTC: Villamar is the registered owner of a 3.6080 hectares parcel of land [hereinafter referred as the subject property] in San Francisco, Manuel, Isabela covered by Transfer Certificate of Title (TCT) No. T-92958-A. On March 30, 1998, she entered into anAgreement with Mangaoil for the purchase and sale of said parcel of land, under the following terms and conditions: 1. The price of the land is ONE HUNDRED AND EIGHTY THOUSAND (180,000.00) PESOS per hectare but only the 3.5000 hec. shall be paid and the rest shall be given free, so that the total purchase or selling price shall be [P]630,000.00 only; 2. ONE HUNDRED EIGHTY FIVE THOUSAND (185,000.00) PESOS of the total price was already received on March 27, 1998 for payment of the loan secured by the certificate of title covering the land in favor of the Rural Bank of Cauayan, San Manuel Branch, San Manuel, Isabela [Rural Bank of Cauayan], in order that the certificate of title thereof be withdrawn and released from the said bank, and the rest shall be for the payment of the mortgag[e]s in favor of Romeo Lacaden and Florante Parangan; 3. After the release of the certificate of title covering the land subject-matter of this agreement, the necessary deed of absolute sale in favor of the PARTY OF THE SECOND PART shall be executed and the transfer be immediately effected so that the latter can apply for a loan from any lending institution using the corresponding certificate of title as collateral therefor, and the proceeds of the loan, whatever be the amount, be given to the PARTY OF THE FIRST PART; 4. Whatever balance left from the agreed purchase price of the land subject matter hereof after deducting the proceed of the loan and the [P]185,000.00 already received as above-mentioned, the PARTY OF THE SECOND PART shall pay unto the PARTY OF THE FIRST PART not later thanJune 30, 1998 and thereafter the parties shall be released of any obligations for and against each other; xxx

REYES, J.:

The Case

Before us is a petition for review on certiorari[1] under Rule 45 of the Rules of Court filed by Estelita Villamar (Villamar) to assail the Decision[2] rendered by the Court of Appeals (CA) on February 20, 2009 in CA-G.R. CV No. 86286, the dispositive portion of which reads:cralaw WHEREFORE, the instant appeal is DISMISSED. The assailed decision is AFFIRMED in toto. SO ORDERED.[3]

On April 1, 1998, the parties executed a Deed of Absolute Sale whereby Villamar (then Estelita Bernabe) transferred the subject parcel of land to Mangaoil for and in consideration of [P]150,000.00. In a letter dated September 18, 1998, Mangaoil informed Villamar that he was backing out from the sale agreed upon giving as one of the reasons therefor: 3. That the area is not yet fully cleared by incumbrances as there are tenants who are not willing to vacate the land without giving them back the amount that they mortgaged the land.

The resolution[4] issued by the CA on July 8, 2009 denied the petitioner's motion for reconsideration to the foregoing. The of Branch 23, Regional Trial Court (RTC) of Roxas, Isabela, which was affirmed by the CA in the herein assailed decision and resolution, ordered the (1) rescission of the contract of sale of real property entered into by Villamar and Balbino Mangaoil (Mangaoil); and (2) return of the down payment made relative to the said contract. Antecedents Facts ruling[5]

Mangaoil demanded refund of his [P]185,000.00 down payment. Reiterating said demand in another letter dated April 29, 1999, the same, however, was unheeded.[7] x x x (Citations omitted)

On January 28, 2002, the respondent filed before the RTC a complaint[8] for rescission of contract

against the petitioner. In the said complaint, the respondent sought the return of P185,000.00 which he paid to the petitioner, payment of interests thereon to be computed from March 27, 1998 until the suit's termination, and the award of damages, costs and P20,000.00 attorney's fees. The respondent's factual allegations were as follows: 5. That as could be gleaned the Agreement (Annex A), the plaintiff [Mangaoil] handed to the defendant [Villamar] the sum of [P]185,000.00 to be applied as follows; [P]80,000 was for the redemption of the land which was mortgaged to the Rural Bank of Cauayan, San Manuel Branch, San Manuel, Isabela, to enable the plaintiff to get hold of the title and register the sale x x x and [P]105,000.00 was for the redemption of the said land from private mortgages to enable plaintiff to posses[s] and cultivate the same; 6. That although the defendant had already long redeemed the said land from the said bank and withdrawn TCT No. T-92958-A, she has failed and refused, despite repeated demands, to hand over the said title to the plaintiff and still refuses and fails to do so; 7. That, also, the plaintiff could not physically, actually and materially posses[s] and cultivate the said land because the private mortgage[e]s and/or present possessors refuse to vacate the same; xxxx 11. That on September 18, 1998, the plaintiff sent a letter to the defendant demanding a return of the amount so advanced by him, but the latter ignored the same, x x x; 12. That, again, on April 29, 1999, the plaintiff sent to the defendant another demand letter but the latter likewise ignored the same, x x x; 13. That, finally, the plaintiff notified the defendant by a notarial act of his desire and intention to rescind the said contract of sale, xxx; xxx x.[9] (Citations omitted)

There is no dispute that the defendant sold the LAND to the plaintiff for [P]630,000.00 with down payment of [P]185,000.00. There is no evidence presented if there were any other partial payments made after the perfection of the contract of sale. Article 1458 of the Civil Code provides: 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 therefore a price certain in money or its equivalent.

As such, in a contract of sale, the obligation of the vendee to pay the price is correlative of the obligation of the vendor to deliver the thing sold. It created or established at the same time, out of the same course, and which result in mutual relations of creditor and debtor between the parties. The claim of the plaintiff that the LAND has not been delivered to him was not refuted by the defendant. Considering that defendant failed to deliver to him the certificate of title and of the possession over the LAND to the plaintiff, the contract must be rescinded pursuant to Article 1191 of the Civil Code which, in part, provides: Art. 1191. The power of rescind obligations is implied in reciprocal ones in case one of the obligors should not comply with what is incumbent upon him.[10]

The petitioner filed before the CA an appeal to challenge the foregoing. She ascribed error on the part of the RTC when the latter ruled that the agreement and deed of sale executed by and between the parties can be rescinded as she failed to deliver to the respondent both the subject property and the certificate of title covering the same. The Ruling of the CA

On February 20, 2009, the CA rendered the now assailed decision dismissing the petitioners appeal based on the following grounds: In the respondents answer to the complaint, she averred that she had complied with her obligations to the respondent. Specifically, she claimed having caused the release of TCT No. T92958-A by the Rural Bank of Cauayan and its delivery to a certain Atty. Pedro C. Antonio (Atty. Antonio). The petitioner alleged that Atty. Antonio was commissioned to facilitate the transfer of the said title in the respondent's name. The petitioner likewise insisted that it was the respondent who unceremoniously withdrew from their agreement for reasons only the latter knew. The Ruling of the RTC Burden of proof is the duty of a party to prove the truth of his claim or defense, or any fact in issue necessary to establish his claim or defense by the amount of evidence required by law. In civil cases, the burden of proof is on the defendant if he alleges, in his answer, an affirmative defense, which is not a denial of an essential ingredient in the plaintiff's cause of action, but is one which, if established, will be a good defense i.e., an avoidance of the claim, which prima facie, the plaintiff already has because of the defendant's own admissions in the pleadings. Defendant-appellant Villamar's defense in this case was an affirmative defense. She did not deny plaintiff-appellees allegation that she had an agreement with plaintiff-appellee for the sale of the subject parcel of land. Neither did she deny that she was obliged under the contract to deliver the certificate of title to plaintiff-appellee immediately after said title/property was redeemed from the bank. What she rather claims is that she already complied with her obligation to deliver the title to plaintiff-appellee when she delivered the same to Atty. Antonio as it was plaintiff-appellee

On September 9, 2005, the RTC ordered the rescission of the agreement and the deed of absolute sale executed between the respondent and the petitioner. The petitioner was, thus directed to return to the respondent the sum of P185,000.00 which the latter tendered as initial payment for the purchase of the subject property. The RTC ratiocinated that:

himself who engaged the services of said lawyer to precisely work for the immediate transfer of said title in his name. Since, however, this affirmative defense as alleged in defendant-appellant's answer was not admitted by plaintiff-appellee, it then follows that it behooved the defendantappellant to prove her averments by preponderance of evidence. Yet, a careful perusal of the record shows that the defendant-appellant failed to sufficiently prove said affirmative defense. She failed to prove that in the first place, Atty. Antonio existed to receive the title for and in behalf of plaintiff-appellee. Worse, the defendant-appellant failed to prove that Atty. Antonio received said title as allegedly agreed upon. We likewise sustain the RTC's finding that defendant-appellant V[i]llamar failed to deliver possession of the subject property to plaintiff-appellee Mangaoil. As correctly observed by the RTC [t]he claim of the plaintiff that the land has not been delivered to him was not refuted by the defendant. Not only that. On cross-examination, the defendant-appellant gave Us insight on why no such delivery could be made, viz.: x x x x Q: So, you were not able to deliver this property to Mr. Mangaoil just after you redeem the property because of the presence of these two (2) persons, is it not? xxx A: Yes, sir. Q: Forcing you to file the case against them and which according to you, you have won, is it not? A: Yes, sir. Q: And now at present[,] you are in actual possession of the land? A: Yes, sir. x x x

change or encumbrance not declared or known to the buyer. x x x.

shows that actual, and not mere constructive delivery is warrantied by the seller to the buyer. (P)eaceful possession of the thing sold can hardly be enjoyed in a mere constructive delivery. The obligation of defendant-appellant Villamar to transfer ownership and deliver possession of the subject parcel of land was her correlative obligation to plaintiff-appellee in exchange for the latter's purchase price thereof. Thus, if she fails to comply with what is incumbent upon her, a correlative right to rescind such contract from plaintiff-appellee arises, pursuant to Article 1191 of the Civil Code.[11] x x x (Citations omitted)

The Issues

Aggrieved, the petitioner filed before us the instant petition and submits the following issues for resolution: I.

WHETHER THE FAILURE OF PETITIONER-SELLER TO DELIVER THE CERTIFICATE OF TITLE OVER THE PROPERTY TO RESPONDENT-BUYER IS A BREACH OF OBLIGATION IN A CONTRACT OF SALE OF REAL PROPERTY THAT WOULD WARRANT RESCISSION OF THE CONTRACT; II.

With the foregoing judicial admission, the RTC could not have erred in finding that defendant[appellant] failed to deliver the possession of the property sold, to plaintiff-appellee. Neither can We agree with defendant-appellant in her argument that the execution of the Deed of Absolute Sale by the parties is already equivalent to a valid and constructive delivery of the property to plaintiff-appellee. Not only is it doctrinally settled that in a contract of sale, the vendor is bound to transfer the ownership of, and to deliver the thing that is the object of the sale, the way Article 1547 of the Civil Code is worded, viz.: Art. 1547. In a contract of sale, unless a contrary intention appears, there is: (1) An implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing; (2) An implied warranty that the thing shall be free from any hidden defaults or defects, or any

WHETHER PETITIONER IS LIABLE FOR BREACH OF OBLIGATION IN A CONTRACT OF SALE FOR FAILURE OF RESPONDENT[-]BUYER TO IMMEDIATELY TAKE ACTUAL POSSESSION OF THE PROPERTY NOTWITHSTANDING THE ABSENCE OF ANY STIPULATION IN THE CONTRACT PROVIDING FOR THE SAME; III.

WHETHER THE EXECUTION OF A DEED OF SALE OF REAL PROPERTY IN THE PRESENT CASE IS ALREADY EQUIVALENT TO A VALID AND CONSTRUCTIVE DELIVERY OF THE PROPERTY TO THE BUYER; IV.

WHETHER OR NOT THE CONTRACT OF SALE SUBJECT MATTER OF THIS CASE SHOULD BE RESCINDED ON SLIGHT OR CASUAL BREACH;

V.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE RTC ORDERING THE RESCISSION OF THE CONTRACT OF SALE[.][12]

The petitioner argues that in the case at bar, the agreement and the absolute deed of sale contains no stipulation that she was obliged to actually and physically deliver the subject property to the respondent. The respondent fully knew Lacaden's and Parangan's possession of the subject property. When they agreed on the sale of the property, the respondent consciously assumed the risk of not being able to take immediate physical possession on account of Lacaden's and Parangan's presence therein. The petitioner likewise laments that the CA allegedly misappreciated the evidence offered before it when it declared that she failed to prove the existence of Atty. Antonio. For the record, she emphasizes that the said lawyer prepared and notarized the agreement and deed of absolute sale which were executed between the parties. He was also the petitioners counsel in the proceedings before the RTC. Atty. Antonio was also the one asked by the respondent to cease the transfer of the title over the subject property in the latter's name and to return the money he paid in advance. The Respondent's Contentions

The Petitioner's Arguments

The petitioner avers that the CA, in ordering the rescission of the agreement and deed of sale, which she entered into with the respondent, on the basis of her alleged failure to deliver the certificate of title, effectively imposed upon her an extra duty which was neither stipulated in the contract nor required by law. She argues that under Articles 1495[13] and 1496[14] of the New Civil Code (NCC), the obligation to deliver the thing sold is complied with by a seller who executes in favor of a buyer an instrument of sale in a public document. Citing Chua v. Court of Appeals,[15] she claims that there is a distinction between transferring a certificate of title in the buyer's name, on one hand, and transferring ownership over the property sold, on the other. The latter can be accomplished by the seller's execution of an instrument of sale in a public document. The recording of the sale with the Registry of Deeds and the transfer of the certificate of title in the buyer's name are necessary only to bind third parties to the transfer of ownership.[16] The petitioner contends that in her case, she had already complied with her obligations under the agreement and the law when she had caused the release of TCT No. T-92958-A from the Rural Bank of Cauayan, paid individual mortgagees Romeo Lacaden (Lacaden) and Florante Parangan (Paranga), and executed an absolute deed of sale in the respondent's favor. She adds that before T-92958-A can be cancelled and a new one be issued in the respondent's favor, the latter decided to withdraw from their agreement. She also points out that in the letters seeking for an outright rescission of their agreement sent to her by the respondent, not once did he demand for the delivery of TCT. The petitioner insists that the respondent's change of heart was due to (1) the latter's realization of the difficulty in determining the subject property's perimeter boundary; (2) his doubt that the property he purchased would yield harvests in the amount he expected; and (3) the presence of mortgagees who were not willing to give up possession without first being paid the amounts due to them. The petitioner contends that the actual reasons for the respondent's intent to rescind their agreement did not at all constitute a substantial breach of her obligations. The petitioner stresses that under Article 1498 of the NCC, when a sale is made through a public instrument, its execution is equivalent to the delivery of the thing which is the contract's object, unless in the deed, the contrary appears or can be inferred. Further, in Power Commercial and Industrial Corporation v. CA,[17] it was ruled that the failure of a seller to eject lessees from the property he sold and to deliver actual and physical possession, cannot be considered a substantial breach, when such failure was not stipulated as a resolutory or suspensive condition in the contract and when the effects and consequences of the said failure were not specified as well. The execution of a deed of sale operates as a formal or symbolic delivery of the property sold and it already authorizes the buyer to use the instrument as proof of ownership.[18]

In the respondent's comment,[19] he seeks the dismissal of the instant petition. He invokes Articles 1191 and 1458 to argue that when a seller fails to transfer the ownership and possession of a property sold, the buyer is entitled to rescind the contract of sale. Further, he contends that the execution of a deed of absolute sale does not necessarily amount to a valid and constructive delivery. In Masallo v. Cesar,[20] it was ruled that a person who does not have actual possession of real property cannot transfer constructive possession by the execution and delivery of a public document by which the title to the land is transferred. In Addison v. Felix and Tioco,[21] the Court was emphatic that symbolic delivery by the execution of a public instrument is equivalent to actual delivery only when the thing sold is subject to the control of the vendor. Our Ruling

The instant petition is bereft of merit. There is only a single issue for resolution in the instant petition, to wit, whether or not the failure of the petitioner to deliver to the respondent both the physical possession of the subject property and the certificate of title covering the same amount to a substantial breach of the former's obligations to the latter constituting a valid cause to rescind the agreement and deed of sale entered into by the parties. We rule in the affirmative. The RTC and the CA both found that the petitioner failed to comply with her obligations to deliver to the respondent both the possession of the subject property and the certificate of title covering the same. Although Articles 1458, 1495 and 1498 of the NCC and case law do not generally require the seller to deliver to the buyer the physical possession of the property subject of a contract of sale and the certificate of title covering the

same, the agreement entered into by the petitioner and the respondent provides otherwise. However, the terms of the agreement cannot be considered as violative of law, morals, good customs, public order, or public policy, hence, valid.

good customs, public order or public policy. While Articles 1458 and 1495 of the NCC and the doctrine enunciated in the case of Chua do not impose upon the petitioner the obligation to physically deliver to the respondent the certificate of title covering the subject property or cause the transfer in the latter's name of the said title, a stipulation requiring otherwise is not prohibited by law and cannot be regarded as violative of morals, good customs, public order or public policy. Item no. 3 of the agreement executed by the parties expressly states that transfer [shall] be immediately effected so that the latter can apply for a loan from any lending institution using the corresponding certificate of title as collateral therefore. Item no. 3 is literal enough to mean that there should be physical delivery of the TCT for how else can the respondent use it as a collateral to obtain a loan if the title remains in the petitioners possession. We agree with the RTC and the CA that the petitioner failed to prove that she delivered the TCT covering the subject property to the respondent. What the petitioner attempted to establish was that she gave the TCT to Atty. Antonio whom she alleged was commissioned to effect the transfer of the title in the respondent's name. Although Atty. Antonio's existence is certain as he was the petitioners counsel in the proceedings before the RTC, there was no proof that the former indeed received the TCT or that he was commissioned to process the transfer of the title in the respondent's name. It is likewise the petitioners contention that pursuant to Article 1498 of the NCC, she had already complied with her obligation to deliver the subject property upon her execution of an absolute deed of sale in the respondents favor. The petitioner avers that she did not undertake to eject the mortgagors Parangan and Lacaden, whose presence in the premises of the subject property was known to the respondent. We are not persuaded. In the case of Power Commercial and Industrial Corporation[25] cited by the petitioner, the Court ruled that the failure of the seller to eject the squatters from the property sold cannot be made a ground for rescission if the said ejectment was not stipulated as a condition in the contract of sale, and when in the negotiation stage, the buyer's counsel himself undertook to eject the illegal settlers. The circumstances surrounding the case now under our consideration are different. In item no. 2 of the agreement, it is stated that part of the P185,000.00 initially paid to the petitioner shall be used to pay the mortgagors, Parangan and Lacaden. While the provision does not expressly impose upon the petitioner the obligation to eject the said mortgagors, the undertaking is necessarily implied. Cessation of occupancy of the subject property is logically expected from the mortgagors upon payment by the petitioner of the amounts due to them. We note that in the demand letter[26] dated September 18, 1998, which was sent by the respondent to the petitioner, the former lamented that the area is not yet fully cleared of incumbrances as there are tenants who are not willing to vacate the land without giving them back the amount that they mortgaged the land. Further, in the proceedings before the RTC conducted after the complaint for rescission was filed, the petitioner herself testified that she won the ejectment suit against the mortgagors only last year.[27] The complaint was filed on September 8, 2002 or more than four years from the execution of the parties' agreement. This means that after the lapse of a

Article 1458 of the NCC obliges the seller to transfer the ownership of and to deliver a determinate thing to the buyer, who shall in turn pay therefor a price certain in money or its equivalent. In addition thereto, Article 1495 of the NCC binds the seller to warrant the thing which is the object of the sale. On the other hand, Article 1498 of the same code provides that when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed, the contrary does not appear or cannot clearly be inferred. In the case of Chua v. Court of Appeals,[22] which was cited by the petitioner, it was ruled that when the deed of absolute sale is signed by the parties and notarized, then delivery of the real property is deemed made by the seller to the buyer.[23] The transfer of the certificate of title in the name of the buyer is not necessary to confer ownership upon him. In the case now under our consideration, item nos. 2 and 3 of the agreement entered into by the petitioner and the respondent explicitly provide: 2. ONE HUNDRED EIGHTY FIVE THOUSAND (P185,000.00) PESOS of the total price was already received on March 27, 1998 for payment of the loan secured by the certificate of title covering the land in favor of the Rural Bank of Cauayan, San Manuel Branch, San Manuel, Isabela, in order that the certificate of title thereof be withdrawn and released from the said bank, and the rest shall be for the payment of the mortgages in favor of Romeo Lacaden and Florante Parangan; 3. After the release of the certificate of title covering the land subject-matter of this agreement, the necessary deed of absolute sale in favor of the PARTY OF THE SECOND PART shall be executed and the transfer be immediately effected so that the latter can apply for a loan from any lending institution using the corresponding certificate of title as collateral therefor, and the proceeds of the loan, whatever be the amount, be given to the PARTY OF THE FIRST PART;[24] (underlining supplied)

As can be gleaned from the agreement of the contending parties, the respondent initially paid the petitioner P185,000.00 for the latter to pay the loan obtained from the Rural Bank of Cauayan and to cause the release from the said bank of the certificate of title covering the subject property. The rest of the amount shall be used to pay the mortgages over the subject property which was executed in favor of Lacaden and Parangan. After the release of the TCT, a deed of sale shall be executed and transfer shall be immediately effected so that the title covering the subject property can be used as a collateral for a loan the respondent will apply for, the proceeds of which shall be given to the petitioner. Under Article 1306 of the NCC, the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals,

considerable period of time from the agreement's execution, the mortgagors remained in possession of the subject property. Notwithstanding the absence of stipulations in the agreement and absolute deed of sale entered into by Villamar and Mangaoil expressly indicating the consequences of the former's failure to deliver the physical possession of the subject property and the certificate of title covering the same, the latter is entitled to demand for the rescission of their contract pursuant to Article 1191 of the NCC.

x where the vendor has no control over the thing sold at the moment of the sale, and, therefore, its material delivery could not have been made.[30](Underlining supplied and citations omitted)

Stated differently, as a general rule, the execution of a public instrument amounts to a constructive delivery of the thing subject of a contract of sale. However, exceptions exist, among which is when mere presumptive and not conclusive delivery is created in cases where the buyer fails to take material possession of the subject of sale. A person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument. In the case at bar, the RTC and the CA found that the petitioner failed to deliver to the respondent the possession of the subject property due to the continued presence and occupation of Parangan and Lacaden. We find no ample reason to reverse the said findings. Considered in the light of either the agreement entered into by the parties or the pertinent provisions of law, the petitioner failed in her undertaking to deliver the subject property to the respondent.cralaw IN VIEW OF THE FOREGOING, the instant petition is DENIED. The February 20, 2009 Decision and July 8, 2009 Resolution of the Court of Appeals, directing the rescission of the agreement and absolute deed of sale entered into by Estelita Villamar and Balbino Mangaoil and the return of the down payment made for the purchase of the subject property, are AFFIRMED. However, pursuant to our ruling in Eastern Shipping Lines, Inc. v. CA,[31] an interest of 12% per annum is imposed on the sum of P185,000.00 to be returned to Mangaoil to be computed from the date of finality of this Decision until full satisfaction thereof. SO ORDERED. Carpio, (Chairperson), Brion, Perez, and Sereno, JJ. concur. SPOUSES MARIO ONG AND MARIA CARMELITA ONG, and DEMETRIO VERZANO, Petitioners, Present: G.R. No. 162045

We note that the agreement entered into by the petitioner and the respondent only contains three items specifying the parties' undertakings. In item no. 5, the parties consented to abide with all the terms and conditions set forth in this agreement and never violate the same.[28] Article 1191 of the NCC is clear that the power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The respondent cannot be deprived of his right to demand for rescission in view of the petitioners failure to abide with item nos. 2 and 3 of the agreement. This remains true notwithstanding the absence of express stipulations in the agreement indicating the consequences of breaches which the parties may commit. To hold otherwise would render Article 1191 of the NCC as useless. Article 1498 of the NCC generally considers the execution of a public instrument as constructive delivery by the seller to the buyer of the property subject of a contract of sale. The case at bar, however, falls among the exceptions to the foregoing rule since a mere presumptive and not conclusive delivery is created as the respondent failed to take material possession of the subject property.

Further, even if we were to assume for argument's sake that the agreement entered into by the contending parties does not require the delivery of the physical possession of the subject property from the mortgagors to the respondent, still, the petitioner's claim that her execution of an absolute deed of sale was already sufficient as it already amounted to a constructive delivery of the thing sold which Article 1498 of the NCC allows, cannot stand. In Philippine Suburban Development Corporation v. The Auditor General,[29] we held: When the sale of real property is made in a public instrument, the execution thereof is equivalent to the delivery of the thing object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. In other words, there is symbolic delivery of the property subject of the sale by the execution of the public instrument, unless from the express terms of the instrument, or by clear inference therefrom, this was not the intention of the parties. Such would be the case, for instance, x x

QUISUMBING, J., Chairperson,* CARPIO, Acting Chairperson, - versus CARPIO MORALES, and TINGA, JJ.

SPOUSES ERGELIA OLASIMAN and LEONARDO OLASIMAN,

Respondents.

Promulgated:

questioned lot) and sold it to petitioner Carmelita Ong (Carmelita). Carmelita subsequently caused the cancellation of Tax Declaration No. 20-020-0174 covering the questioned lot and the issuance of Tax Declaration No. 96-020-0316[11] in her own name.

March 28, 2006 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

On February 5, 1996, Bernandita, by Deed of Sale of even date,[12] sold the questioned lot to respondents spouses Ergelia Olasiman and Leonardo Olasiman.

DECISION

CARPIO MORALES, J.:

On November 28, 1997, respondents filed a Complaint[13] against petitioners, for annulment of the Extrajudicial Settlement by Sole Heir and Sale, quieting of title, and damages before the Regional Trial Court (RTC) of Dumaguete City. They alleged, inter alia, that they, through their predecessorsin-interest, have been in actual, continuous and adverse possession of the questioned lot since time immemorial until mid-February 1996 when petitioners spouses Ong disturbed them in their possession by fencing the same;[14] and petitioner Verzano executed the Extrajudicial Settlement by Sole Heir and Sale fraudulently.

By Deed of Sale dated June 1, 1992, Paula Verzano (Paula) sold an unregistered parcel of land covered by Tax Declaration No. 18-270-A[1] in her name to her niece Bernandita Verzano-Matugas (Bernandita)-daughter of her brother Isebero.[2] The land was particularly described as:

In their Answer (with Affirmative Defenses and Compulsory Counterclaim),[15] petitioners alleged that respondents, not being co-heirs, are not the real parties in interest;[16] and the RTC has no jurisdiction over the case as their cause of action is more of forcible entry.[17]

A parcel of land, covered by Tax Dec. No. 18-270-A, situated at Mampas, Valencia, Negros Oriental, bounded on the North by Crisanta Abequibel, 62.00 m.; on the East by Victoria Verzano, 90.00 m.; on the South by Demetrio Abante, 62.00 m.; and, on the West by Vicente Darong, 90.00 m., containing an area of .5518 square meters, more or less. x x x[3] A road traversed the land, dividing it into two lots: Lot 4080, Cad. 903, with an area of approximately 3,624 sq. m., covered by Tax Declaration No. 20-020-0174;[4] and Lot 4091, Cad. 903, with an area of approximately 506 sq. m., covered by Tax Declaration No. 20-020-0214.[5]

Applying Article 1544 of the Civil Code which provides:

Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Bernandita took initial steps to register the land but failed to complete the registration process.[6]

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

On November 26, 1992, Paula died single and without issue.[7] She was survived by her siblings herein petitioner Demetrio Verzano (Verzano), Victoria Verzano, and the children of her deceased brother Isebero Verzano, namely Isebero Verzano, Jr.,[8] Epifanio Verzano, Bernandita and Estrella Verzano.[9]

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith, (Underscoring supplied)

On November 22, 1995, Verzano executed a public document entitled Extrajudicial Settlement by Sole Heir and Sale[10] wherein he adjudicated exclusively unto himself Lot 4080, Cad. 903 (the

and finding petitioners spouses Ong to be buyers in good faith and the first to possess the questioned lot, Branch 41 of the Dumaguete City RTC dismissed respondents complaint.

Therefore, it becomes unnecessary to discuss the other issues as without ownership, an action may not be brought to remove such cloud or to quiet title.[18] (Underscoring in the original; emphasis supplied)

Defendant Demetrio Verzano is a compulsory heir [sic] of the deceased Paula Verzano and as the Tax Declaration under the name of the latter had not been cancelled, coupled with the fact that he continued to be in possession of the property in question, defendant Verzano had every reason to believe that the title to the property passed on to him upon Paulas death by operation of law. He hadcontinued paying realty taxes thereon which plaintiffs, thru their predecessor-in-interest had not even bothered to pay. Hence, when defendant Maria Carmelita Ong had established defendant Verzanos relationship with the registered owner [sic] of the property and thereafter secured clearances from the Provincial Agrarian Reform Office, the BIR, the Municipal Agrarian Reform Office, and the Community Environment and Natural Resources Office II, and caused the cancellation of the Tax Declaration in the name of Paula Verzano, and filed an application for free patent, she was no doubt abuyer in good faith. Further being first in the possession of the property, defendant Maria Carmelita Ong must necessarily be preferred as neither of the parties have inscribed their respective Deeds of Sale with the Register of Deeds.

On appeal by respondents, the Court of Appeals reversed the decision of the trial court by the assailed Decision[19] of October 14, 2003. It found the Extrajudicial Settlement by Sole Heir and Sale to be void not only because Verzano was not the only heir when he executed the same document,[20] but also because when the deed, by which the property in question was sold by Demetrio Verzano to appellees Carmelita and Mario Ong, was executed on November 22, 1995, the original owner, PaulaVerzano, had already disposed of the same in favor of her niece, Bernandita Matugas, on June 1, 1992, by virtue of a Deed of Sale. (Underscoring supplied)

The appellate court thus concluded that the second sale was invalid and of no effect because Demetrio Verzano had nothing to convey and transfer to appellees at the time of the second sale.[21] (Emphasis and underscoring supplied)

In the case of Vda. De Laig v. Court of Appeals, 82 SCRA 294, it was held: The trial courts application of Article 1544 of the Civil Code was erroneous, held the appellate court, because the case does not involve a double sale. For respondents bought the questioned lot from Bernandita to whom it was sold by the original owner Paula, whereas petitioners bought it from Verzano whose claim to ownership arose from the Extrajudicial Settlement by Sole Heir and Sale.

Where there was no proper inscription of two deeds of sale of the same land, the vendee who in good faith was first in possession will be preferred.

Plaintiffs have not shown an iota of proof that they were first in possession of the property as vendees thereof. Plaintiffs predecessor-in-interest, Bernandita Matugas contends that her caretaker, Fidela Darong, cultivated the land in question. However, the Agricultural Leasehold Contract shows that Darong cultivated the same as a lessee of the questioned property and not as an agent or caretaker of the buyer thereof. Had plaintiffs Olasimans made further inquiries, they would have known that as early as 23 November 1995, defendant Maria Carmelita Ong had filed her notice and application for free patent. Hence, they were buyers in bad faith.

The Court of Appeals thus disposed:

On the other hand, defendant Maria Carmelita Ong has shown that she had fenced the property and that per certifications of the MARO, the said property has not been cultivated nor tenanted. Between a bare allegation of possession by plaintiffs and a certification from the MARO that the property is untenanted, the latter is given more credence on the presumption that its officers acted in the performance of its duties. Hence, the Contract of Sale executed by Demetrio Verzano in favor of Maria Carmelita Ong should be given effect.

WHEREFORE, the Decision appealed from is hereby REVERSED and SET ASIDE and another one entered (1) declaring as null and void the Deed of Extra-judicial Settlement by Sole Heir and Sale and Tax Declaration No. 96-20-020-0316 issued in the name of appellees; (2) declaring and restoring the appellants as the true, rightful and legal owners of Lot No. 4080, Cad 903, situated in Mampas, Valencia, Negros Oriental; and (3) ordering appellees to vacate the said property thirty (30) days from receipt of this decision.

SO ORDERED.[22] (Underscoring supplied)

Their Motion for Reconsideration[23] having been denied by the Court of Appeals by a Resolution[24] of February 9, 2004, petitioners filed the petition[25] at bar.

his [sic] brother[26] despite the fact that other heirs his sister Victoria and the four children of his deceased brother Isebero were still alive.[27]

The petition fails.

Petitioners insistence that Article 1544 on double sales should apply does not lie. Article 1544 applies where the same thing is sold to different vendees by the same vendor. It does not apply where the same thing is sold to different vendees by different vendors[28] as in the case at bar.

When Paula sold to Bernandita by Deed of Absolute Sale dated June 1, 1992 the parcel of land of which the questioned lot formed part, ownership thereof was transferred to the latter in accordance with Article 1496 of the Civil Code reading:

Finally, petitioners claim of good faith does not lie too as it is irrelevant:

ART. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee,

in relation to Article 1498 of the Civil Code reading:

[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and the purchaser is buying the same from the registered owner whose title to the land is clean xxx in such case the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value. Since the properties in question areunregistered lands, petitioners as subsequent buyers thereof did so at their peril. Their claim of having bought the land in good faith, i.e., without notice that some other person has a right to or interest in the property, would not protect them if it turns out, as it actually did in this case, that their seller did not own the property at the time of the sale.[29] (Italics in the original; underscoring supplied)

ART. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred.

WHEREFORE, the assailed October 14, 2003 Decision of the Court of Appeals is AFFIRMED. This Decision is WITHOUT PREJUDICE to the filing of any action which petitioner-spouses Mario Ong and Maria Carmelita Ong may maintain against their co-petitioner Demetrio Verzano.

xxxx The Deed of Absolute Sale in favor of Bernandita contains nothing contrary to an intent to transfer ownership.

When Paula died on November 26, 1992, she no longer owned the questioned lot and, therefore, her brother petitioner Verzano could not have inherited it. The Extrajudicial Settlement by Sole Heir and Sale did not thus confer upon Verzano ownership of the questioned lot; hence, he could not have conveyed it to petitioners spouses Ong.

Parenthetically, the execution by Verzano of the Extrajudicial Settlement by Sole Heir and Sale is fraudulent, he having falsely stated therein that his deceased sister Paula left no known debts, neither has she left any ascendants or descendants or any other heirs, except myself being