G.R. No.

170405

February 2, 2010

RAYMUNDO S. DE LEON, Petitioner,

vs.
BENITA T. ONG.1 Respondent.
DECISION
CORONA, J.:
On March 10, 1993, petitioner Raymundo S. de Leon sold three parcels of land2 with improvements situated in
Antipolo, Rizal to respondent Benita T. Ong. As these properties were mortgaged to Real Savings and Loan
Association, Incorporated (RSLAI), petitioner and respondent executed a notarized deed of absolute sale with
assumption of mortgage3 stating:
xxx

xxx

xxx

That for and in consideration of the sum of ONE MILLION ONE HUNDRED THOUSAND PESOS (P1.1 million),
Philippine currency, the receipt whereof is hereby acknowledged from [RESPONDENT] to the entire satisfaction of
[PETITIONER], said [PETITIONER] does hereby sell, transfer and convey in a manner absolute and
irrevocable, unto said [RESPONDENT], his heirs and assigns that certain real estate together with the
buildings and other improvements existing thereon, situated in [Barrio] Mayamot, Antipolo, Rizal under the
following terms and conditions:
1. That upon full payment of [respondent] of the amount of FOUR HUNDRED FIFTEEN THOUSAND FIVE
HUNDRED (P415,000), [petitioner] shall execute and sign a deed of assumption of mortgage in favor of
[respondent] without any further cost whatsoever;
2. That [respondent] shall assume payment of the outstanding loan of SIX HUNDRED EIGHTY FOUR
THOUSAND FIVE HUNDRED PESOS (P684,500) with REAL SAVINGS AND LOAN,4 Cainta, Rizal (emphasis
supplied)
xxx

xxx

xxx

Pursuant to this deed, respondent gave petitioner P415,500 as partial payment. Petitioner, on the other hand,
handed the keys to the properties and wrote a letter informing RSLAI of the sale and authorizing it to accept
payment from respondent and release the certificates of title.
Thereafter, respondent undertook repairs and made improvements on the properties.5 Respondent likewise
informed RSLAI of her agreement with petitioner for her to assume petitioners outstanding loan. RSLAI required
her to undergo credit investigation.
Subsequently, respondent learned that petitioner again sold the same properties to one Leona Viloria after March
10, 1993 and changed the locks, rendering the keys he gave her useless. Respondent thus proceeded to RSLAI to
inquire about the credit investigation. However, she was informed that petitioner had already paid the amount due
and had taken back the certificates of title.
Respondent persistently contacted petitioner but her efforts proved futile.
On June 18, 1993, respondent filed a complaint for specific performance, declaration of nullity of the second sale
and damages6 against petitioner and Viloria in the Regional Trial Court (RTC) of Antipolo, Rizal, Branch 74. She
claimed that since petitioner had previously sold the properties to her on March 10, 1993, he no longer had the
right to sell the same to Viloria. Thus, petitioner fraudulently deprived her of the properties.

Petitioner, on the other hand, insisted that respondent did not have a cause of action against him and
consequently prayed for the dismissal of the complaint. He claimed that since the transaction was subject to a
condition (i.e., that RSLAI approve the assumption of mortgage), they only entered into a contract to sell.
Inasmuch as respondent did apply for a loan from RSLAI, the condition did not arise. Consequently, the sale was
not perfected and he could freely dispose of the properties. Furthermore, he made a counter-claim for damages as
respondent filed the complaint allegedly with gross and evident bad faith.
Because respondent was a licensed real estate broker, the RTC concluded that she knew that the validity of the
sale was subject to a condition. The perfection of a contract of sale depended on RSLAIs approval of the
assumption of mortgage. Since RSLAI did not allow respondent to assume petitioners obligation, the RTC held that
the sale was never perfected.
In a decision dated August 27, 1999,7 the RTC dismissed the complaint for lack of cause of action and ordered
respondent to pay petitioner P100,000 moral damages, P20,000 attorneys fees and the cost of suit.
Aggrieved, respondent appealed to the Court of Appeals (CA),8 asserting that the court a quo erred in dismissing
the complaint.
The CA found that the March 10, 2003 contract executed by the parties did not impose any condition on the sale
and held that the parties entered into a contract of sale. Consequently, because petitioner no longer owned the
properties when he sold them to Viloria, it declared the second sale void. Moreover, it found petitioner liable for
moral and exemplary damages for fraudulently depriving respondent of the properties.
In a decision dated July 22, 2005,9 the CA upheld the sale to respondent and nullified the sale to Viloria. It likewise
ordered respondent to reimburse petitioner P715,250 (or the amount he paid to RSLAI). Petitioner, on the other
hand, was ordered to deliver the certificates of titles to respondent and pay her P50,000 moral damages
andP15,000 exemplary damages.
Petitioner moved for reconsideration but it was denied in a resolution dated November 11, 2005.10 Hence, this
petition,11 with the sole issue being whether the parties entered into a contract of sale or a contract to sell.
Petitioner insists that he entered into a contract to sell since the validity of the transaction was subject to a
suspensive condition, that is, the approval by RSLAI of respondents assumption of mortgage. Because RSLAI did
not allow respondent to assume his (petitioners) obligation, the condition never materialized. Consequently, there
was no sale.
Respondent, on the other hand, asserts that they entered into a contract of sale as petitioner already conveyed
full ownership of the subject properties upon the execution of the deed.
We modify the decision of the CA.
Contract of Sale or Contract to Sell?
The RTC and the CA had conflicting interpretations of the March 10, 1993 deed. The RTC ruled that it was a
contract to sell while the CA held that it was a contract of sale.
In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract.
Should the buyer default in the payment of the purchase price, the seller may either sue for the collection thereof
or have the contract judicially resolved and set aside. The non-payment of the price is therefore a negative
resolutory condition.12
On the other hand, a contract to sell is subject to a positive suspensive condition. The buyer does not acquire
ownership of the property until he fully pays the purchase price. For this reason, if the buyer defaults in the
payment thereof, the seller can only sue for damages.13

The deed executed by the parties (as previously quoted) stated that petitioner sold the properties to respondent
"in a manner absolute and irrevocable" for a sum of P1.1 million.14 With regard to the manner of payment, it
required respondent to pay P415,500 in cash to petitioner upon the execution of the deed, with the
balance15 payable directly to RSLAI (on behalf of petitioner) within a reasonable time.16 Nothing in said instrument
implied that petitioner reserved ownership of the properties until the full payment of the purchase price. 17 On the
contrary, the terms and conditions of the deed only affected the manner of payment, not the immediate transfer
of ownership (upon the execution of the notarized contract) from petitioner as seller to respondent as buyer.
Otherwise stated, the said terms and conditions pertained to the performance of the contract, not the perfection
thereof nor the transfer of ownership.
Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the
buyer.18 In this regard, Article 1498 of the Civil Code19 provides that, as a rule, the execution of a notarized deed of
sale is equivalent to the delivery of a thing sold.
In this instance, petitioner executed a notarized deed of absolute sale in favor of respondent. Moreover, not only
did petitioner turn over the keys to the properties to respondent, he also authorized RSLAI to receive payment
from respondent and release his certificates of title to her. The totality of petitioners acts clearly indicates that he
had unqualifiedly delivered and transferred ownership of the properties to respondent. Clearly, it was a contract of
sale the parties entered into.
Furthermore, even assuming arguendo that the agreement of the parties was subject to the condition that RSLAI
had to approve the assumption of mortgage, the said condition was considered fulfilled as petitioner prevented its
fulfillment by paying his outstanding obligation and taking back the certificates of title without even notifying
respondent. In this connection, Article 1186 of the Civil Code provides:
Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
Void Sale Or Double Sale?
Petitioner sold the same properties to two buyers, first to respondent and then to Viloria on two separate
occasions.20 However, the second sale was not void for the sole reason that petitioner had previously sold the
same properties to respondent. On this account, the CA erred.
This case involves a double sale as the disputed properties were sold validly on two separate occasions by the
same seller to the two different buyers in good faith.
Article 1544 of the Civil Code 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.
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.
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. (emphasis supplied)
This provision clearly states that the rules on double or multiple sales apply only to purchasers in good faith.
Needless to say, it disqualifies any purchaser in bad faith.
A purchaser in good faith is one who buys the property of another without notice that some other person has a
right to, or an interest in, such property and pays a full and fair price for the same at the time of such purchase, or
before he has notice of some other persons claim or interest in the property.21 The law requires, on the part of the
buyer, lack of notice of a defect in the title of the seller and payment in full of the fair price at the time of the sale
or prior to having notice of any defect in the sellers title.

Was respondent a purchaser in good faith? Yes.

Respondent purchased the properties, knowing they were encumbered only by the mortgage to RSLAI. According
to her agreement with petitioner, respondent had the obligation to assume the balance of petitioners outstanding
obligation to RSLAI. Consequently, respondent informed RSLAI of the sale and of her assumption of petitioners
obligation. However, because petitioner surreptitiously paid his outstanding obligation and took back her
certificates of title, petitioner himself rendered respondents obligation to assume petitioners indebtedness to
RSLAI impossible to perform.
Article 1266 of the Civil Code provides:
Article 1266. The debtor in obligations to do shall be released when the prestation become legally or physically
impossible without the fault of the obligor.
Since respondents obligation to assume petitioners outstanding balance with RSLAI became impossible without
her fault, she was released from the said obligation. Moreover, because petitioner himself willfully prevented the
condition vis--vis the payment of the remainder of the purchase price, the said condition is considered fulfilled
pursuant to Article 1186 of the Civil Code. For purposes, therefore, of determining whether respondent was a
purchaser in good faith, she is deemed to have fully complied with the condition of the payment of the remainder
of the purchase price.
Respondent was not aware of any interest in or a claim on the properties other than the mortgage to RSLAI which
she undertook to assume. Moreover, Viloria bought the properties from petitioner after the latter sold them to
respondent. Respondent was therefore a purchaser in good faith. Hence, the rules on double sale are applicable.
Article 1544 of the Civil Code provides that when neither buyer registered the sale of the properties with the
registrar of deeds, the one who took prior possession of the properties shall be the lawful owner thereof.
In this instance, petitioner delivered the properties to respondent when he executed the notarized deed22 and
handed over to respondent the keys to the properties. For this reason, respondent took actual possession and
exercised control thereof by making repairs and improvements thereon. Clearly, the sale was perfected and
consummated on March 10, 1993. Thus, respondent became the lawful owner of the properties.
Nonetheless, while the condition as to the payment of the balance of the purchase price was deemed fulfilled,
respondents obligation to pay it subsisted. Otherwise, she would be unjustly enriched at the expense of petitioner.
Therefore, respondent must pay petitioner P684,500, the amount stated in the deed. This is because the
provisions, terms and conditions of the contract constitute the law between the parties. Moreover, the deed itself
provided that the assumption of mortgage "was without any further cost whatsoever." Petitioner, on the other
hand, must deliver the certificates of title to respondent. We likewise affirm the award of damages.
WHEREFORE, the July 22, 2005 decision and November 11, 2005 resolution of the Court of Appeals in CA-G.R. CV
No. 59748 are hereby AFFIRMED with MODIFICATION insofar as respondent Benita T. Ong is ordered to pay
petitioner Raymundo de Leon P684,500 representing the balance of the purchase price as provided in their March
10, 1993 agreement.
Costs against petitioner.
SO ORDERED.
G.R. No. 165168
July 9, 2010
SPS. NONILON (MANOY) and IRENE MONTECALVO, Petitioners,
vs.
HEIRS (Substitutes) OF EUGENIA T. PRIMERO, represented by their Attorney-in-Fact, ALFREDO T.
PRIMERO, JR., Respondents.
DECISION

DEL CASTILLO, J.:

Jurisprudence is replete with rulings that in civil cases, the party who alleges a fact has the burden of proving it.
Burden of proof is the duty of a party to present evidence on the facts in issue necessary to prove the truth of his
claim or defense by the amount of evidence required by law.11 In this case, the petitioners awfully failed to
discharge their burden to prove by preponderance of evidence that the Agreement they entered into with
respondents' predecessor-in-interest is a contract of sale and not a mere contract to sell, or that said Agreement
was novated after the latter subsequently entered into an oral contract of sale with them over a determinate
portion of the subject property more than a decade ago.
Petitioners filed this appeal from the Decision of the Court of Appeals (CA) affirming the Regional Trial Court's
(RTC's) dismissal of their action for specific performance where they sought to compel the respondents to convey
the property subject of their purported oral contract of sale.
Factual Antecedents
The property involved in this case is a portion of a parcel of land known as Lot No. 263 located at Sabayle Street,
Iligan City. Lot No. 263 has an area of 860 square meters covered by Original Certificate of Title (OCT) No. 02712registered in the name of Eugenia Primero (Eugenia), married to Alfredo Primero, Sr. (Alfredo).
In the early 1980s, Eugenia leased the lot to petitioner Irene Montecalvo (Irene) for a monthly rental of P500.00.
On January 13, 1985, Eugenia entered into an un-notarized Agreement3 with Irene, where the former offered to sell
the property to the latter for P1,000.00 per square meter. They agreed that Irene would deposit the amount
ofP40,000.00 which shall form part of the down payment equivalent to 50% of the purchase price. They also
stipulated that during the term of negotiation of 30 to 45 days from receipt of said deposit, Irene would pay the
balance ofP410,000.00 on the down payment. In case Irene defaulted in the payment of the down payment, the
deposit would be returned within 10 days from the lapse of said negotiation period and the Agreement deemed
terminated. However, if the negotiations pushed through, the balance of the full value of P860,000.00 or the net
amount ofP410,000.00 would be paid in 10 equal monthly installments from receipt of the down payment, with
interest at the prevailing rate.
Irene failed to pay the full down payment within the stipulated 30-45-day negotiation period. Nonetheless, she
continued to stay on the disputed property, and still made several payments with an aggregate amount
ofP293,000.00. On the other hand, Eugenia did not return the P40,000.00 deposit to Irene, and refused to accept
further payments only in 1992.
Thereafter, Irene caused a survey of Lot No. 263 and the segregation of a portion equivalent to 293 square meters
in her favor. However, Eugenia opposed her claim and asked her to vacate the property. Then on May 13, 1996,
Eugenia and the heirs of her deceased husband Alfredo filed a complaint for unlawful detainer against Irene and
her husband, herein petitioner Nonilon Montecalvo (Nonilon) before the Municipal Trial Court (MTC) of Iligan City.
During the preliminary conference, the parties stipulated that the issue to be resolved was whether their
Agreement had been rescinded and novated. Hence, the MTC dismissed the case for lack of jurisdiction since the
issue is not susceptible of pecuniary estimation. The MTC's Decision dismissing the ejectment case became final
as Eugenia and her children did not appeal therefrom.4
On June 18, 1996, Irene and Nonilon retaliated by instituting Civil Case No. II-3588 with the RTC of Lanao del Norte
for specific performance, to compel Eugenia to convey the 293-square meter portion of Lot No. 263.5
Proceedings before the Regional Trial Court
Trial on the merits ensued and the contending parties adduced their respective testimonial and documentary
evidence before the trial court.
Irene testified that after their Agreement for the purpose of negotiating the sale of Lot No. 263 failed to
materialize, she and Eugenia entered into an oral contract of sale and agreed that the amount of P40,000.00 she
earlier paid shall be considered as down payment. Irene claimed that she made several payments amounting
to P293,000.00 which prompted Eugenia's daughters Corazon Calacat (Corazon) and Sylvia Primero (Sylvia) to ask
Engr. Antonio Ravacio (Engr. Ravacio) to conduct a segregation survey on the subject property. Thereafter, Irene
requested Eugenia to execute the deed of sale, but the latter refused to do so because her son, Atty. Alfredo
Primero, Jr. (Atty. Primero), would not agree.
On March 22, 1999, herein respondents filed with the court a quo a "Notice of Death of the
Defendant"6 manifesting that Eugenia passed away on February 28, 1999 and that the decedent's surviving legal
heirs agreed to appoint their co-heir Atty. Primero, to act as their representative in said case. In an Order7 dated
April 8, 1999, the trial court substituted the deceased defendant with Atty. Primero.
Respondents, on the other hand, presented the testimony of Atty. Primero to establish that Eugenia could not have
sold the disputed portion of Lot No. 263 to the petitioners. According to Atty. Primero, at the time of the signing of
the Agreement on January 13, 1985, Eugenia's husband, Alfredo, was already dead. Eugenia merely managed or
administered the subject property and had no authority to dispose of the same since it was a conjugal property. In
addition, respondents asserted that the deposit of P40,000.00 was retained as rental for the subject property.
Respondents likewise presented Sylvia, who testified that the receipts issued to petitioners were for the lot
rentals.8Another sister of Atty. Primero, Corazon, testified that petitioners were their tenants in subject land, which
she co-owns with her mother Eugenia.9 She denied having sold the purported 293-square meter portion of Lot No.
263 to the petitioners.10

As rebuttal witness, petitioners presented Engr. Ravacio, a surveyor who undertook the segregation of the 293square meter portion out of the subject property.11
On October 22, 2001, the RTC rendered a Decision:12 (1) dismissing the complaint and the counterclaim for lack of
legal and factual bases; (2) ordering petitioners to pay respondents P2,500.00 representing rentals due, applying
therefrom the amount deposited and paid; and (3) ordering petitioner to pay 12% legal interest from finality of
decision until full payment of the amount due.13
Aggrieved, petitioners appealed the Decision of the trial court to the CA.
Proceedings before the Court of Appeals
Both parties filed their respective briefs before the appellate court.14 Thereafter, on November 28, 2003, the CA
rendered a Decision15 affirming the RTC Decision.16
Petitioners timely filed a Motion for Reconsideration.17 However, in a Resolution18 dated June 27, 2004, the CA
resolved to deny the same for lack of merit.19
Issues
Petitioners thus filed this Petition for Review on Certiorari anchored on the following grounds.
1. WHETHER AN ORAL CONTRACT OF SALE OF A PORTION OF [A] LOT IS BINDING [UPON] THE SELLER.
2. WHETHER A SELLER IN AN ORAL CONTRACT OF SALE OF A PORTION OF [A] LOT CAN BE COMPELLED TO
EXECUTE THE REQUIRED DEED OF SALE AFTER THE AGREED CONSIDERATION WAS PAID AND POSSESSION
THEREOF DELIVERED TO AND ENJOYED BY THE BUYER.
3. WHETHER THE BUYER HAS A RIGHT TO ENFORCE AN ORAL CONTRACT OF SALE AFTER THE PORTION
SOLD IS SEGREGATED BY AGREEMENT OF THE PARTIES.
4. WHETHER THE SELLER IS BOUND BY THE HANDWRITTEN RECEIPTS PREPARED AND SIGNED BY HER
EXPRESSLY INDICATING PAYMENTS OF LOTS.
5. WHETHER THE TRIAL COURT COULD RENDER A JUDGMENT ON ISSUES NOT DEFINED IN THE PRE-TRIAL
ORDER.
Our Ruling
The petition lacks merit.
The Agreement dated January 13, 1985 is a contract to sell. Hence, with petitioners' non-compliance with its terms
and conditions, the obligation of the respondents to deliver and execute the corresponding deed of sale never
arose.
The CA found that the Agreement dated January 13, 1985 is not a contract of sale but a mere contract to sell, the
efficacy of which is dependent upon the resolutory condition that Irene pay at least 50% of the purchase price as
down payment within 30-45 days from the day Eugenia received the P40,000.00
deposit.20 Said court further found that such condition was admittedly not met.21
Petitioners admit that the Agreement dated January 13, 1985 is at most, "a preliminary agreement for an eventual
contract."22 However, they argue that contrary to the findings of the appellate court, it was not only the buyer,
Irene, who failed to meet the condition of paying the balance of the 50% down payment.23 They assert that the
Agreement explicitly required Eugenia to return the deposit of P40,000.00 within 10 days, in case Irene failed to
pay the balance of the 50% down payment within the stipulated period.24 Thus, petitioners posit that for the
cancellation clause to operate, two conditions must concur, namely, (1) buyer fails to pay the balance of the 50%
down payment within the agreed period and (2) seller should return the deposit of P40,000.00 within 10 days if
the first condition was not complied with. Petitioners conclude that since both seller and buyer failed to discharge
their reciprocal obligations, being in pari delictu, the seller could not repudiate their agreement to sell.
The petitioners' contention is without merit.
There is no dispute as to the due execution and existence of the Agreement. The issue thus presented is whether
the said Agreement is a contract of sale or a contract to sell. For a better understanding and resolution of the
issue at hand, it is apropos to reproduce herein the Agreement in haec verba:
Agreement
This Agreement, made and executed by and between:
EUGENIA T. PRIMERO, a Filipino of legal age and residing in Camague, Iligan City (hereinafter called the OWNER)
- and IRENE P. MONTECALVO, Filipino of legal age and presently residing at Sabayle St., Iligan City (hereinafter [called]
the INTERESTED PARTY);
WITNESSETH:
1. That the OWNER is the true and absolute owner of a parcel of land located at Sabayle St.
immediately fronting the St. Peter's College which is presently leased to the INTERESTED PARTY;
2. That the property referred to contains an area of EIGHT HUNDRED SIXTY SQUARE METERS at the
value of One Thousand Pesos (P1,000.00) per square meters;

3. That this agreement is entered into for the purpose of negotiating the sale of the above referred
property between the same parties herein under the following terms and conditions, to wit:
a) That the term of this negotiation is for a period of Thirty to Forty Five (30-45) days from
receipt of a deposit;
b) That Forty Thousand Pesos (P40,000.00) shall be deposited to demonstrate the interest
of the Interested Party to acquire the property referred to above, which deposit shall not
earn any interest;
c) That should the contract or agreement push through the deposit shall form part of the
down payment of Fifty percent (50%) of the total or full value. Otherwise the deposit shall
be returned within TEN (10) days from the lapse of the period of negotiation;
4. That should this push through, the balance of Four Hundred Ten Thousand on the down payment
shall be made upon execution of the Agreement to Sell and the balance of the full value of Eight
Hundred Sixty Thousand or Four Hundred Ten Thousand Pesos shall be paid in equal monthly
installment within Ten (10) months from receipt of the down payment with [sic] according to
prevailing interest.
IN WITNESS WHEREOF, the parties have signed these presents in the City of Iligan this 13th day of January 1985.
(Signed)
IRENE PEPITO MONTECALVO

(Signed)
EUGENIA TORRES PRIMERO

SIGNED IN THE PRESENCE OF:

(Signed)

(Signed)

In Salazar v. Court of Appeals,25 we distinguished a contract of sale from a contract to sell in that in a contract of
sale the title to the property passes to the buyer upon the delivery of the thing sold; in a contract to sell,
ownership is, by agreement, reserved in the seller and is not to pass to the buyer until full payment of the
purchase price. Otherwise stated, in a contract of sale, the seller loses ownership over the property and cannot
recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by
the seller until full payment of the price.26 In the latter contract, payment of the price is a positive suspensive
condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title
from becoming effective.27
In the Agreement, Eugenia, as owner, did not convey her title to the disputed property to Irene since the
Agreement was made for the purpose of negotiating the sale of the 860-square meter property.28
On this basis, we are more inclined to characterize the agreement as a contract to sell rather than a contract of
sale. Although not by itself controlling, the absence of a provision in the Agreement transferring title from the
owner to the buyer is taken as a strong indication that the Agreement is a contract to sell.29
In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer,
meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of
the contract to sell until the happening of an event, which for present purposes we shall take as the full payment
of the purchase price.30 What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject
property when the entire amount of the purchase price is delivered to him.31 In other words, the full payment of
the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell
from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective
buyer.32 A contract to sell is commonly entered into in order to protect the seller against a buyer who intends to
buy the property in installment by withholding ownership over the property until the buyer effects full payment
therefor.33
In this case, the Agreement expressly provided that it was "entered into for the purpose of negotiating the sale of
the above referred property between the same parties herein x x x." The term of the negotiation shall be for a
period of 30-45 days from receipt of the P40,000.00 deposit and the buyer has to pay the balance of the 50%
down payment amounting to P410,000.00 within the said period of negotiation. Thereafter, an Agreement to Sell
shall be executed by the parties and the remainder of the purchase price amounting to another P410,000.00 shall
be paid in 10 equal monthly installments from receipt of the down payment. The assumption of both parties that
the purpose of the Agreement was for negotiating the sale of Lot No. 263, in its entirety, for a definite price, with a
specific period for payment of a specified down payment, and the execution of a subsequent contract for the sale
of the same on installment payments leads to no other conclusion than that the predecessor-in-interest of the
herein respondents and the herein petitioner Irene entered into a contract to sell.
As stated in the Agreement, the payment of the purchase price, in installments within the period stipulated,
constituted a positive suspensive condition, the failure of which is not really a breach but an event that prevents
the obligation of the seller to convey title in accordance with Article 1184 of the Civil Code.34 Hence, for
petitioners' failure to comply with the terms and conditions laid down in the Agreement, the obligation of the
predecessor-in-interest of the respondents to deliver and execute the corresponding deed of sale never arose.

The fact that the predecessor-in-interest of the respondents failed to return the P40,000.00 deposit subsequent to
the expiration of the period of negotiation did not prevent the respondents from repudiating the Agreement. The
obligation of the respondent to convey the property never came to pass as the petitioners did not comply with the
positive suspensive condition of full payment of the purchase price within the period as stipulated.
The alleged oral contract of sale for the 293-square meter portion of the property was not proved by preponderant
evidence. Hence, petitioners cannot compel the successors-in-interest of the deceased Eugenia to execute a deed
of absolute sale in their favor.
Petitioners alleged in their Complaint that in 1992, Eugenia refused to accept further payments and suggested
that she will convey to petitioners 293 square meters of her 860-square meter property, in proportion to payments
already made. Thus, Eugenia caused the segregation of the area where the petitioners' building now stands,
consisting of 293 square meters.1avvphi1
In support of their contention, petitioners presented the testimony of Irene, who testified that Eugenia segregated
for them an area of 293 square meters for the agreed price of P1,000.00 per square meter.35 The total purchase
price allegedly agreed upon by the parties, amounting to P293,000.00, corresponded to the amount of payments
already made by Irene.36 They likewise presented (1) 82 receipts covering the period October 13, 1986 to July 10,
1994;37(2) the testimony of the surveyor, Engr. Ravacio, to show that the segregation survey of the 293-square
meter portion of the property was made with the knowledge and consent of Eugenia; and (3) the resulting
subdivision plan.
On the other hand, respondents counter that the alleged contract of sale is contradicted by petitioners' own
evidence.
We cannot sustain the contention of the petitioners. The primal issue to be resolved is whether the parties
subsequently entered into a contract of sale over the segregated 293-square meter portion of Lot No. 263. It is a
fundamental principle that for a contract of sale to be valid, the following elements must be present: (a) consent
or meeting of the minds; (b) determinate subject matter; and (3) price certain in money or its equivalent.38 Until
the contract of sale is perfected, it cannot, as an independent source of obligation, serve as a binding juridical
relation between the parties.39
Contrary to petitioners' allegations that the 82 receipts indicated that they were issued "for payment of lot (at
Sabayle)",40 a cursory examination thereof shows that the receipts from 1986 to 1992 do not consistently indicate
"Sabayle Lot" or "Sabayle Lot Deposit". More than half of the receipts presented merely indicated receipt of
differing sums of money from the petitioners. In addition, the receipts for the years 1993 to 1994 do not establish
installment payments for the purchase of the disputed portion of Lot No. 263. Rather, the receipts indicate that the
same were issued as proof of "cash advance",41 "cash for groceries, electric bill, water bill, telephone/long
distance",42"cash",43 "cash for mktg"44 and "x x x cash to be paid a month after".45 These are not consistent with
the allegation of the petitioners that they have paid the full amount of the purchase price for the 293-square
meter portion of the lot by 1992.
Moreover, the testimony of petitioners' witness, surveyor Engr. Ravacio, shows that Eugenia was neither around
when the survey was conducted nor gave her express consent to the conduct of the same.46 On the other hand,
respondents' witness, Sylvia, testified that the receipts issued to the petitioners were for the lot rentals.47 In
addition, respondents' third witness, Corazon, testified that petitioners were their tenants in subject land, which
she co-owns with her mother Eugenia, and disclaimed any sale of any portion of their lot to the petitioners.48
Thirdly, since the surveyor himself, Engr. Ravacio, admitted that Eugenia did not give her express consent to the
conduct of the segregation plan, the resulting subdivision plan, submitted by the petitioners to the trial court to
prove that Eugenia caused the segregation of the 293-square meter area, cannot be appreciated.
Section 1 of Rule 133 of the Rules of Court provides that in civil cases, the party having the burden of proof must
establish his case by a preponderance of evidence. However, the evidence presented by the petitioners, as
considered above, fails to convince this Court that Eugenia gave her consent to the purported oral deed of sale for
the 293-square meter portion of her property. We are hence in agreement with the finding of the CA that there was
no contract of sale between the parties. As a consequence, petitioners cannot rightfully compel the successors-ininterest of Eugenia to execute a deed of absolute sale in their favor.
The courts below correctly modified the rental award to P2,500.00 per month.
Lastly, petitioners argue that the courts below erred in imposing a P2,500.00 monthly rental from 1985 onwards,
since said amount is far greater than the last agreed monthly rental (December 1984) of P500.00.
In its Decision, the CA affirmed the ruling of the RTC "that the trial court had authority to fix a reasonable value for
the continued use and occupancy of the leased premises after the termination of the lease contract, and that it
was not bound by the stipulated rental in the contract of lease since it is equally settled that upon termination or
expiration of the contract of lease, the rental stipulated therein may no longer be the reasonable value for the use
and occupation of the premises as a result of the change or rise in values. Moreover, the trial court can take
judicial notice of the general increase in rentals of real estate especially of business establishments".49 The
appellate court likewise held that the petitioners failed to discharge their burden to show that the said price was
exorbitant or unconscionable.50 Hence, the CA found no reason to disturb the trial court's decision ordering the
petitioners to payP2,500.00 as monthly rentals.51 The appellate court further held that "to deprive Eugenia of the
rentals due her as the owner-lessor of the subject property would result to unjust enrichment on the part of
Irene."52

The courts below correctly took judicial notice of the nature of the leased property subject of the case at bench
based on its location and commercial viability. As described in the Agreement, the property is immediately in front
of St. Peter's College.53 More significantly, it is stated in the Declaration of Real Property submitted by the
petitioners as evidence in the trial court, that the property is used predominantly for commercial purposes.54 The
assessment by the trial court of the area where the property is located is therefore fairly grounded.
Furthermore, the trial court also had factual basis in arriving at the said conclusion, the same being based on the
un-rebutted testimony of a witness who is a real estate broker. With respect to the prevailing valuation of the
property in litigation, witness Atty. Primero, a licensed real estate broker testified that:
x x x There is no fixed pricing for each year because it always depends on the environment so that if the price in
1986, as you were referring to 1986, it would have risen or increased from P1,000.00, then it would increase
toP3,000.00, then it would increase to P7,000.00 and again increase to P15,000.00 and right now the current price
of property in that area is P25,000.00 per square meter.55
The RTC rightly modified the rental award to P2,500.00 per month, considering that it is settled jurisprudence that
courts may take judicial notice of the general increase in rentals, particularly in business establishments.
WHEREFORE, the petition is DENIED. The November 28, 2003 Decision of the Court of Appeals affirming the
October 22, 2001 Decision of the Regional Trial Court of Lanao del Norte, Branch 2, is hereby AFFIRMED.
SO ORDERED.
G.R. No. 169900

March 18, 2010

MARIO SIOCHI, Petitioner,

vs.
ALFREDO GOZON, WINIFRED GOZON, GIL TABIJE, INTER-DIMENSIONAL REALTY, INC., and ELVIRA
GOZON, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 169977
INTER-DIMENSIONAL REALTY, INC., Petitioner,
vs.
MARIO SIOCHI, ELVIRA GOZON, ALFREDO GOZON, and WINIFRED GOZON, Respondents.
RESOLUTION
CARPIO, J.:
This is a consolidation of two separate petitions for review,1 assailing the 7 July 2005 Decision2 and the 30
September 2005 Resolution3 of the Court of Appeals in CA-G.R. CV No. 74447.
This case involves a 30,000 sq.m. parcel of land (property) covered by TCT No. 5357.4 The property is situated in
Malabon, Metro Manila and is registered in the name of "Alfredo Gozon (Alfredo), married to Elvira Gozon (Elvira)."
On 23 December 1991, Elvira filed with the Cavite City Regional Trial Court (Cavite RTC) a petition for legal
separation against her husband Alfredo. On 2 January 1992, Elvira filed a notice of lis pendens, which was then
annotated on TCT No. 5357.
On 31 August 1993, while the legal separation case was still pending, Alfredo and Mario Siochi (Mario) entered into
an Agreement to Buy and Sell5 (Agreement) involving the property for the price of P18 million. Among the
stipulations in the Agreement were that Alfredo would: (1) secure an Affidavit from Elvira that the property is
Alfredos exclusive property and to annotate the Agreement at the back of TCT No. 5357; (2) secure the approval
of the Cavite RTC to exclude the property from the legal separation case; and (3) secure the removal of the notice
of lis pendenspertaining to the said case and annotated on TCT No. 5357. However, despite repeated demands
from Mario, Alfredo failed to comply with these stipulations. After paying the P5 million earnest money as partial
payment of the purchase price, Mario took possession of the property in September 1993. On 6 September 1993,
the Agreement was annotated on TCT No. 5357.

Meanwhile, on 29 June 1994, the Cavite RTC rendered a decision6 in the legal separation case, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered decreeing the legal separation between petitioner and respondent.
Accordingly, petitioner Elvira Robles Gozon is entitled to live separately from respondent Alfredo Gozon without
dissolution of their marriage bond. The conjugal partnership of gains of the spouses is hereby declared DISSOLVED
and LIQUIDATED. Being the offending spouse, respondent is deprived of his share in the net profits and the same
is awarded to their child Winifred R. Gozon whose custody is awarded to petitioner.
Furthermore, said parties are required to mutually support their child Winifred R. Gozon as her needs arises.
SO ORDERED.7
As regards the property, the Cavite RTC held that it is deemed conjugal property.
On 22 August 1994, Alfredo executed a Deed of Donation over the property in favor of their daughter, Winifred
Gozon (Winifred). The Register of Deeds of Malabon, Gil Tabije, cancelled TCT No. 5357 and issued TCT No. M105088 in the name of Winifred, without annotating the Agreement and the notice of lis pendens on TCT No. M10508.
On 26 October 1994, Alfredo, by virtue of a Special Power of Attorney9 executed in his favor by Winifred, sold the
property to Inter-Dimensional Realty, Inc. (IDRI) for P18 million.10 IDRI paid Alfredo P18 million, representing full
payment for the property.11 Subsequently, the Register of Deeds of Malabon cancelled TCT No. M-10508 and issued
TCT No. M-1097612 to IDRI.
Mario then filed with the Malabon Regional Trial Court (Malabon RTC) a complaint for Specific Performance and
Damages, Annulment of Donation and Sale, with Preliminary Mandatory and Prohibitory Injunction and/or
Temporary Restraining Order.
On 3 April 2001, the Malabon RTC rendered a decision,13 the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
01. On the preliminary mandatory and prohibitory injunction:
1.1 The same is hereby made permanent by:
1.1.1 Enjoining defendants Alfredo Gozon, Winifred Gozon, Inter-Dimensional Realty, Inc.
and Gil Tabije, their agents, representatives and all persons acting in their behalf from any
attempt of commission or continuance of their wrongful acts of further alienating or
disposing of the subject property;
1.1.2. Enjoining defendant Inter-Dimensional Realty, Inc. from entering and fencing the
property;
1.1.3. Enjoining defendants Alfredo Gozon, Winifred Gozon, Inter-Dimensional Realty, Inc. to
respect plaintiffs possession of the property.
02. The Agreement to Buy and Sell dated 31 August 1993, between plaintiff and defendant Alfredo Gozon
is hereby approved, excluding the property and rights of defendant Elvira Robles-Gozon to the undivided
one-half share in the conjugal property subject of this case.
03. The Deed of Donation dated 22 August 1994, entered into by and between defendants Alfredo Gozon
and Winifred Gozon is hereby nullified and voided.

04. The Deed of Absolute Sale dated 26 October 1994, executed by defendant Winifred Gozon, through
defendant Alfredo Gozon, in favor of defendant Inter-Dimensional Realty, Inc. is hereby nullified and
voided.
05. Defendant Inter-Dimensional Realty, Inc. is hereby ordered to deliver its Transfer Certificate of Title No.
M-10976 to the Register of Deeds of Malabon, Metro Manila.
06. The Register of Deeds of Malabon, Metro Manila is hereby ordered to cancel Certificate of Title Nos.
10508 "in the name of Winifred Gozon" and M-10976 "in the name of Inter-Dimensional Realty, Inc.," and
to restore Transfer Certificate of Title No. 5357 "in the name of Alfredo Gozon, married to Elvira Robles"
with the Agreement to Buy and Sell dated 31 August 1993 fully annotated therein is hereby ordered.
07. Defendant Alfredo Gozon is hereby ordered to deliver a Deed of Absolute Sale in favor of plaintiff over
his one-half undivided share in the subject property and to comply with all the requirements for registering
such deed.
08. Ordering defendant Elvira Robles-Gozon to sit with plaintiff to agree on the selling price of her
undivided one-half share in the subject property, thereafter, to execute and deliver a Deed of Absolute Sale
over the same in favor of the plaintiff and to comply with all the requirements for registering such deed,
within fifteen (15) days from the receipt of this DECISION.
09. Thereafter, plaintiff is hereby ordered to pay defendant Alfredo Gozon the balance of Four Million Pesos
(P4,000,000.00) in his one-half undivided share in the property to be set off by the award of damages in
plaintiffs favor.
10. Plaintiff is hereby ordered to pay the defendant Elvira Robles-Gozon the price they had agreed upon for
the sale of her one-half undivided share in the subject property.
11. Defendants Alfredo Gozon, Winifred Gozon and Gil Tabije are hereby ordered to pay the plaintiff, jointly
and severally, the following:
11.1 Two Million Pesos (P2,000,000.00) as actual and compensatory damages;
11.2 One Million Pesos (P1,000,000.00) as moral damages;
11.3 Five Hundred Thousand Pesos (P500,000.00) as exemplary damages;
11.4 Four Hundred Thousand Pesos (P400,000.00) as attorneys fees; and
11.5 One Hundred Thousand Pesos (P100,000.00) as litigation expenses.
11.6 The above awards are subject to set off of plaintiffs obligation in paragraph 9 hereof.
12. Defendants Alfredo Gozon and Winifred Gozon are hereby ordered to pay Inter-Dimensional Realty, Inc.
jointly and severally the following:
12.1 Eighteen Million Pesos (P18,000,000.00) which constitute the amount the former received
from the latter pursuant to their Deed of Absolute Sale dated 26 October 1994, with legal interest
therefrom;
12.2 One Million Pesos (P1,000,000.00) as moral damages;
12.3 Five Hundred Thousand Pesos (P500,000.00) as exemplary damages; and
12.4 One Hundred Thousand Pesos (P100,000.00) as attorneys fees.

13. Defendants Alfredo Gozon and Winifred Gozon are hereby ordered to pay costs of suit.
SO ORDERED.14
On appeal, the Court of Appeals affirmed the Malabon RTCs decision with modification. The dispositive portion of
the Court of Appeals Decision dated 7 July 2005 reads:
WHEREFORE, premises considered, the assailed decision dated April 3, 2001 of the RTC, Branch 74, Malabon is
hereby AFFIRMED with MODIFICATIONS, as follows:
1. The sale of the subject land by defendant Alfredo Gozon to plaintiff-appellant Siochi is declared null and
void for the following reasons:
a) The conveyance was done without the consent of defendant-appellee Elvira Gozon;
b) Defendant Alfredo Gozons one-half () undivided share has been forfeited in favor of his
daughter, defendant Winifred Gozon, by virtue of the decision in the legal separation case rendered
by the RTC, Branch 16, Cavite;
2. Defendant Alfredo Gozon shall return/deliver to plaintiff-appellant Siochi the amount of P5 Million which
the latter paid as earnest money in consideration for the sale of the subject land;
3. Defendants Alfredo Gozon, Winifred Gozon and Gil Tabije are hereby ordered to pay plaintiff-appellant
Siochi jointly and severally, the following:
a) P100,000.00 as moral damages;
b) P100,000.00 as exemplary damages;
c) P50,000.00 as attorneys fees;
d) P20,000.00 as litigation expenses; and
e) The awards of actual and compensatory damages are hereby ordered deleted for lack of basis.
4. Defendants Alfredo Gozon and Winifred Gozon are hereby ordered to pay defendant-appellant IDRI
jointly and severally the following:
a) P100,000.00 as moral damages;
b) P100,000.00 as exemplary damages; and
c) P50,000.00 as attorneys fees.
Defendant Winifred Gozon, whom the undivided one-half share of defendant Alfredo Gozon was awarded, is
hereby given the option whether or not to dispose of her undivided share in the subject land.
The rest of the decision not inconsistent with this ruling stands.
SO ORDERED.15
Only Mario and IDRI appealed the decision of the Court of Appeals. In his petition, Mario alleges that the
Agreement should be treated as a continuing offer which may be perfected by the acceptance of the other spouse
before the offer is withdrawn. Since Elviras conduct signified her acquiescence to the sale, Mario prays for the

Court to direct Alfredo and Elvira to execute a Deed of Absolute Sale over the property upon his payment of P9
million to Elvira.
On the other hand, IDRI alleges that it is a buyer in good faith and for value. Thus, IDRI prays that the Court should
uphold the validity of IDRIs TCT No. M-10976 over the property.
We find the petitions without merit.
This case involves the conjugal property of Alfredo and Elvira. Since the disposition of the property occurred after
the effectivity of the Family Code, the applicable law is the Family Code. Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses
jointly. In case of disagreement, the husbands decision shall prevail, subject to the recourse to the court by the
wife for a proper remedy, which must be availed of within five years from the date of the contract implementing
such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the
conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the
powers of disposition or encumbrance which must have the authority of the court or the written consent of the
other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However,
the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person,
and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the
court before the offer is withdrawn by either or both offerors. (Emphasis supplied)
In this case, Alfredo was the sole administrator of the property because Elvira, with whom Alfredo was separated
in fact, was unable to participate in the administration of the conjugal property. However, as sole administrator of
the property, Alfredo still cannot sell the property without the written consent of Elvira or the authority of the
court. Without such consent or authority, the sale is void.16 The absence of the consent of one of the spouse
renders the entire sale void, including the portion of the conjugal property pertaining to the spouse who
contracted the sale.17Even if the other spouse actively participated in negotiating for the sale of the property, that
other spouses written consent to the sale is still required by law for its validity.18 The Agreement entered into by
Alfredo and Mario was without the written consent of Elvira. Thus, the Agreement is entirely void. As regards
Marios contention that the Agreement is a continuing offer which may be perfected by Elviras acceptance before
the offer is withdrawn, the fact that the property was subsequently donated by Alfredo to Winifred and then sold
to IDRI clearly indicates that the offer was already withdrawn.
However, we disagree with the finding of the Court of Appeals that the one-half undivided share of Alfredo in the
property was already forfeited in favor of his daughter Winifred, based on the ruling of the Cavite RTC in the legal
separation case. The Court of Appeals misconstrued the ruling of the Cavite RTC that Alfredo, being the offending
spouse, is deprived of his share in the net profits and the same is awarded to Winifred.
The Cavite RTC ruling finds support in the following provisions of the Family Code:
Art. 63. The decree of legal separation shall have the following effects:
(1) The spouses shall be entitled to live separately from each other, but the marriage bonds shall not be
severed;
(2) The absolute community or the conjugal partnership shall be dissolved and liquidated but
the offending spouse shall have no right to any share of the net profits earned by the absolute
community or the conjugal partnership, which shall be forfeited in accordance with the
provisions of Article 43(2);
(3) The custody of the minor children shall be awarded to the innocent spouse, subject to the provisions of
Article 213 of this Code; and

The offending spouse shall be disqualified from inheriting from the innocent spouse by intestate succession.
Moreover, provisions in favor of the offending spouse made in the will of the innocent spouse shall be revoked by
operation of law.
Art. 43. The termination of the subsequent marriage referred to in the preceding Article shall produce the following
effects:
xxx
(2) The absolute community of property or the conjugal partnership, as the case may be, shall be dissolved and
liquidated, but if either spouse contracted said marriage in bad faith, his or her share of the net profits of the
community property or conjugal partnership property shall be forfeited in favor of the common children or, if there
are none, the children of the guilty spouse by a previous marriage or, in default of children, the innocent spouse;
(Emphasis supplied)
Thus, among the effects of the decree of legal separation is that the conjugal partnership is dissolved and
liquidated and the offending spouse would have no right to any share of the net profits earned by the conjugal
partnership. It is only Alfredos share in the net profits which is forfeited in favor of Winifred. Article 102(4) of the
Family Code provides that "[f]or purposes of computing the net profits subject to forfeiture in accordance with
Article 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the
community property at the time of the celebration of the marriage and the market value at the time of its
dissolution." Clearly, what is forfeited in favor of Winifred is not Alfredos share in the conjugal partnership
property but merely in the net profits of the conjugal partnership property.
With regard to IDRI, we agree with the Court of Appeals in holding that IDRI is not a buyer in good faith. As found
by the RTC Malabon and the Court of Appeals, IDRI had actual knowledge of facts and circumstances which should
impel a reasonably cautious person to make further inquiries about the vendors title to the property. The
representative of IDRI testified that he knew about the existence of the notice of lis pendens on TCT No. 5357 and
the legal separation case filed before the Cavite RTC. Thus, IDRI could not feign ignorance of the Cavite RTC
decision declaring the property as conjugal.
Furthermore, if IDRI made further inquiries, it would have known that the cancellation of the notice of lis pendens
was highly irregular. Under Section 77 of Presidential Decree No. 1529,19 the notice of lis pendens may be
cancelled (a) upon order of the court, or (b) by the Register of Deeds upon verified petition of the party who
caused the registration of the lis pendens. In this case, the lis pendens was cancelled by the Register of Deeds
upon the request of Alfredo. There was no court order for the cancellation of the lis pendens. Neither did Elvira,
the party who caused the registration of the lis pendens, file a verified petition for its cancellation.
Besides, had IDRI been more prudent before buying the property, it would have discovered that Alfredos donation
of the property to Winifred was without the consent of Elvira. Under Article 12520 of the Family Code, a conjugal
property cannot be donated by one spouse without the consent of the other spouse. Clearly, IDRI was not a buyer
in good faith.1avvphi1
Nevertheless, we find it proper to reinstate the order of the Malabon RTC for the reimbursement of the P18 million
paid by IDRI for the property, which was inadvertently omitted in the dispositive portion of the Court of Appeals
decision.
WHEREFORE, we DENY the petitions. We AFFIRM the 7 July 2005 Decision of the Court of Appeals in CA-G.R. CV
No. 74447 with the following MODIFICATIONS:
(1) We DELETE the portions regarding the forfeiture of Alfredo Gozons one-half undivided share in favor of
Winifred Gozon and the grant of option to Winifred Gozon whether or not to dispose of her undivided share
in the property; and

(2) We ORDER Alfredo Gozon and Winifred Gozon to pay Inter-Dimensional Realty, Inc. jointly and severally
the Eighteen Million Pesos (P18,000,000) which was the amount paid by Inter-Dimensional Realty, Inc. for
the property, with legal interest computed from the finality of this Decision.
SO ORDERED.
G.R. No. 173881

December 1, 2010

HYATT ELEVATORS and ESCALATORS CORPORATION, Petitioner,

vs.
CATHEDRAL HEIGHTS BUILDING COMPLEX ASSOCIATION, INC., Respondent.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari,1 under Rule 45 of the Rules of Court, seeking to set aside the
April 20, 2006 Decision2 and July 31, 2006 Resolution3 of the Court of Appeals (CA), in CA-G.R. CV No. 80427.
The facts of the case are as follows:
On October 1, 1994, petitioner Hyatt Elevators and Escalators Corporation entered into an "Agreement to Service
Elevators" (Service Agreement)4 with respondent Cathedral Heights Building Complex Association, Inc., where
petitioner was contracted to maintain four passenger elevators installed in respondent's building. Under the
Service Agreement, the duties and obligations of petitioner included monthly inspection, adjustment and
lubrication of machinery, motors, control parts and accessory equipments, including switches and electrical
wirings.5 Section D (2) of the Service Agreement provides that respondent shall pay for the additional charges
incurred in connection with the repair and supply of parts.
Petitioner claims that during the period of April 1997 to July 1998 it had incurred expenses amounting to Php
1,161,933.47 in the maintenance and repair of the four elevators as itemized in a statement of
account.6 Petitioner demanded from respondent the payment of the aforesaid amount allegedly through a series of
demand letters, the last one sent on July 18, 2000.7 Respondent, however, refused to pay the amount.
Petitioner filed with the Regional Trial Court (RTC), Branch 100, Quezon City, a Complaint for sum of money against
respondent. Said complaint was docketed as Civil Case No. Q-01-43055.
On March 5, 2003, the RTC rendered Judgment8 ruling in favor of petitioner, the dispositive portion of which reads:
WHEREFORE, premises considered, JUDGMENT IS HEREBY RENDERED IN FAVOR OF THE PLAINTIFF AND AGAINST
THE DEFENDANT ordering the latter to pay Plaintiff as follows:
1. The sum of P1,161,933.27 representing the costs of the elevator parts used, and for services and
maintenance, with legal rate of interest from the filing of the complaint;
2. The sum of P50,000.00 as attorney's fees;
3. The costs of suit.
SO ORDERED.9
The RTC held that based on the sales invoices presented by petitioner, a contract of sale of goods was entered into
between the parties. Since petitioner was able to fulfill its obligation, the RTC ruled that it was incumbent on
respondent to pay for the services rendered. The RTC did not give credence to respondent's claim that the
elevator parts were never delivered and that the repairs were questionable, holding that such defense was a mere
afterthought and was never raised by respondent against petitioner at an earlier time.

Respondent filed a Motion for Reconsideration.10 On August 17, 2003, the RTC issued a Resolution11 denying
respondent's motion. Respondent then filed a Notice of Appeal.12
On April 20, 2006, the CA rendered a Decision finding merit in respondent's appeal, the dispositive portion of
which reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The Judgment of the Regional Trial Court,
Branch 100, Quezon City, dated March 5, 2003, is hereby REVERSED and SET ASIDE. The complaint below is
dismissed.
SO ORDERED.13
In reversing the RTC, the CA ruled that respondent did not give its consent to the purchase of the spare parts
allegedly installed in the defective elevators. Aside from the absence of consent, the CA also held that there was
no perfected contract of sale because there was no meeting of minds upon the price. On this note, the CA ruled
that the Service Agreement did not give petitioner the unbridled license to purchase and install any spare parts
and demand, after the lapse of a considerable length of time, payment of these prices from respondent according
to its own dictated price.
Aggrieved, petitioner filed a Motion for Reconsideration,14 which was, however, denied by the CA in a Resolution
dated July 31, 2006.
Hence, herein petition, with petitioner raising a lone issue for this Court's resolution, to wit:
WHETHER OR NOT THERE IS A PERFECTED CONTRACT OF SALE BETWEEN PETITIONER AND RESPONDENT WITH
REGARDS TO THE SPARE PARTS DELIVERED AND INSTALLED BY PETITIONER ON THE FOUR ELEVATORS OF
RESPONDENT AT ITS HOSPITAL UNDER THE AGREEMENT TO SERVICE ELEVATORS AS TO RENDER RESPONDENT
LIABLE FOR THEIR PRICES?15
Before anything else, this Court shall address a procedural issue raised by respondent in its Comment16 that the
petition should be denied due course for raising questions of fact.
The determination of whether there exists a perfected contract of sale is essentially a question of fact. It is already
a well-settled rule that the jurisdiction of this Court in cases brought before it from the CA by virtue of Rule 45 of
the Revised Rules of Court is limited to reviewing errors of law. Findings of fact of the CA are conclusive upon this
Court. There are, however, recognized exceptions to the foregoing rule, namely: (1) when the findings are
grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken,
absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when, in making its findings, the Court
of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant
and the appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the
petition, as well as in the petitioners main and reply briefs, are not disputed by the respondent; and (10) when
the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on
record.17
The present case falls under the 7th exception, as the RTC and the CA arrived at conflicting findings of fact.
Having resolved the procedural aspect, this Court shall now address the substantive issue raised by petitioner.
Petitioner contends that the CA erred when it ruled that there was no perfected contract of sale between petitioner
and respondent with regard to the spare parts delivered and installed.
It is undisputed that a Service Agreement was entered into by petitioner and respondent where petitioner was
commissioned to maintain respondent's four elevators. Embodied in the Service Agreement is a stipulation
relating to expenses incurred on top of regular maintenance of the elevators, to wit:

SERVICE AND INSPECTION FEE:

xxxx
(2) In addition to the service fee mentioned in the preceding paragraph under this article, the Customer shall pay
whatever additional charges in connection with the repair, supply of parts other than those specifically mentioned
in ARTICLE A.2., or servicing of the elevator/s subject of this contract.18
Petitioner claims that during the period of April 1997 to July 1998, it had used parts in the maintenance and repair
of the four elevators in the total amount of P1,161,933.47 as itemized in a statement of account19 and supported
by sales invoices, delivery receipts, trouble call reports and maintenance and checking reports. Respondent,
however, refuses to pay the said amount arguing that petitioner had not complied with the Standard Operating
Procedure (SOP) following a breakdown of an elevator.
As testified to by respondent's witness Celestino Aguilar, the SOP following an elevator breakdown is as follows:
(a) they (respondent) will notify petitioner's technician; (b) the technician will evaluate the problem and if the
problem is manageable the repair was done right there and then; (c) if some parts have to be replaced, petitioner
will present the defective parts to the building administrator and a quotation is made; (d) the quotation is then
indorsed to respondent's Finance Department; and (e) a purchase order is then prepared and submitted to the
Board of Directors for approval.20
Based on the foregoing procedure, respondent contends that petitioner had failed to follow the SOP since no
purchase orders from respondent's Finance Manager, or Board of Directors relating to the supposed parts used
were secured prior to the repairs. Consequently, since the repairs were not authorized, respondent claims that it
has no way of verifying whether the parts were actually delivered and installed as alleged by petitioner.
At the outset, this Court observes that the SOP is not embodied in the Service Agreement nor was a document
evidencing the same presented in the RTC. The SOP appears, however, to be the industry practice and as such
was not contested by petitioner. Nevertheless, petitioner offers an excuse for non-compliance with the SOP on its
claim that the SOP was not followed upon the behest and request of respondent.
A perusal of petitioner's petition and evidence in the RTC shows that the main thrust of its case is premised on the
following claims: first, that the nature and operations of a hospital necessarily dictate that the elevators are in
good running condition at all times; and, second, that there was a verbal agreement between petitioner's service
manager and respondent's building engineer that the elevators should be running in good condition at all times
and breakdowns should only last one day.
In order to prove its allegations, petitioner presented Wilson Sua, its finance manager, as its sole witness. Sua
testified to the procedure followed by petitioner in servicing respondent's elevators, to wit:
Q: Can you tell us Mr. witness, what is the procedure actually followed whenever there is a need for trouble
call maintenance or repair?
A: The St. Lukes Cathedrals personnel, which includes the administrative officers, the guard on duty, or
the receptionist, will call us through the phone if their elevators brake (sic) down.
Q: Then, what happened?
A: Immediately, we dispatched our technicians to check the trouble.
Q: And who were these technicians whom you normally or regularly dispatched to attend to the trouble of
the elevators of the defendant?
A: With regard to this St. Lukes, we dispatched Sunny Jones and Gilbert Cinamin.
Q: And what happened after dispatching these technicians?

A: They come back immediately to the office to request the parts needed for the troubleshooting of the
elevators.
Q: Then what happened?
A: A part will be brought to the project cite and they will install it and note it in the trouble call report and
have it received properly by the building guard or the receptionist or by the building engineers, and they
will test it for a couple of weeks to determine if the parts are the correct part needed for that elevator
and we will secure their approval, thereafter we will issue our invoices and delivery receipts.
Q: This trouble call reports, are these in writing?
A: Yes, sir. These are in writing and these are being written within that day.
Q: Within the day of?
A: Of the trouble. And have it received by the duly personnel of St. Lukes Cathedral.
Q: And who prepared this trouble call reports?
A: The technician who actually checked the elevator.
Q: When do the parts being installed?
A: On the same date they brought the parts on the project cite.
Q: You mentioned sales invoice and delivery receipts. Who prepared these invoice?
A: Those were prepared by our inventory clerk under my supervision?
Q: How about the delivery receipts?
A: Just the same.
Q: When would the sales invoice be prepared?
A: After the approval of the building engineer.
Q: But at the time that the sales invoice and delivery receipts were being prepared after the approval of
the building engineer, what happened to the parts? Were they already installed or what?
A: They were already installed.
Q: Now, why would the parts be installed before the preparation of the sales invoice and the
delivery receipts?
A: There was an agreement between the building engineer and our service manager that the
elevator should be running in good condition at all times, breakdown should be at least one
day only. It cannot stop for more than a day.21
On cross examination, Sua testified that the procedure was followed on the authority of a verbal agreement
between petitioner's service manager and respondent's engineer, thus:
Q: So, you mean to say that despite the fact that material are expensive you immediately installed these
equipments without the prior approval of the board?

A: There is no need for the approval of the board since there is a verbal agreement between the building
engineer and the Hyatt service manager to have the elevator run.
Q: Aside from the building engineer, there is a building administrator?
A: No, ma'am. He is already the building administrator and the building engineer. That is engineer Tisor.
Q: And with regard to the fact that the delivery receipts were acknowledged by the engineer, is that true?
A: Yes, ma'am.
Q: You also mentioned earlier that aside from the building engineer, the receptionist and guards are also
authorized. Are you sure that they are authorized to receive the delivery receipts?
A: Yes, ma'am. It was an instruction given by Engineer Tisor, the building engineer and also the building
administrator to have it received.
Q: So, all these agreements are only verbally, it is not in writing?
A: Yes, ma'am.22
In its petition, petitioner claims that because of the special circumstances of the building being a hospital, the
procedure actually followed since October 1, 1994 was as follows:
1. Whenever any of the four elevators broke down, the administrative officers, security guard or the
receptionist of respondent called petitioner by telephone;
2. Petitioner dispatched immediately a technician to the St. Lukes Cathedral Heights Building to check the
trouble;
3. If the breakdown could be repaired without installation of parts, repair was done on the spot;
4. If the repair needed replacement of damaged parts, the technician went back to petitioners office to get
the necessary replacement parts;
5. The technician then returned to the St. Lukes Cathedral Heights Building and installed the replacement
parts and finished the repair;
6. The placement parts, which were installed in the presence of the security guard, building engineers or
receptionist of respondents whoever was available, were indicated in the trouble call report or sometimes
in the delivery receipt and copy of the said trouble call report or delivery receipt was then given to the blue
security guard, building engineers or receptionist, who duly acknowledged the same;
7. Based on the trouble call report or the delivery receipts, which already indicated the replacement parts
installed and the services rendered, respondent should prepare the purchase order, but this step was
never followed by respondent for whatever reason;
8. In the meantime, the elevator was tested for a couple of weeks to see if the replacement parts were
correct and the approval of the building engineers was secured;
9. After the building engineers gave their approval that the replacement parts were correct or after the
lapse of two weeks and nothing was heard or no complaint was lodged, then the corresponding sales
invoices and delivery receipts, if nothing had been issued yet, were prepared by petitioner and given to
respondent, thru its receptionists or security guards;

10. For its purposes, respondent should compare the trouble call reports or delivery receipts which
indicated the replacement parts installed or with the sales invoices and delivery receipts to confirm the
correctness of the transaction;
11. If respondent had any complaint that the parts were not actually installed or delivered or did not agree
with the price of the parts indicated in the sales invoices, then it should bring its complaint or
disagreement to the attention of petitioner. In this regard, no complaint or disagreement as to the prices of
the spare parts has been lodged by respondent.23
In varying language, our Rules of Court, in speaking of burden of proof in civil cases, states that each party must
prove his own affirmative allegations and that the burden of proof lies on the party who would be defeated if no
evidence were given on either side.1avvphi1 Thus, in civil cases, the burden of proof is generally on the plaintiff,
with respect to his complaint.24 In the case at bar, it is petitioner's burden to prove that it is entitled to its claims
during the period in dispute.
After an extensive review of the records and evidence on hand, this Court rules that petitioner has failed to
discharge its burden.
This Court finds that the testimony of Sua alone is insufficient to prove the existence of the verbal agreement,
especially in view of the fact that respondent insists that the SOP should have been followed. It is an age-old rule
in civil cases that one who alleges a fact has the burden of proving it and a mere allegation is not evidence.25
The testimony of Sua, at best, only alleges but does not prove the existence of the verbal agreement. It may even
be hearsay. It bears stressing, that the agreement was supposedly entered into by petitioner's service manager
and respondent's building engineer. It behooves this Court as to why petitioner did not present their service
manager and Engineer Tisor, respondent's building engineer, the two individuals who were privy to the
transactions and who could ultimately lay the basis for the existence of the alleged verbal agreement. It should
have occurred to petitioner during the course of the trial that said testimonies would have proved vital and crucial
to its cause. Therefore, absent such testimonies, the existence of the verbal agreement cannot be sustained by
this Court.
Moreover, even assuming arguendo, that this Court were to believe the procedure outlined by Sua, his
testimony26clearly mentions that prior to the preparation of the sales invoices and delivery receipts, the parts
delivered and installed must have been accepted by respondent's engineer or building administrator. However,
again, petitioner offered no evidence of such acceptance by respondents engineer prior to the preparation of the
sales invoices and delivery receipts.
This Court is not unmindful of the fact that petitioner also alleges in its petition that the non-observance of the
SOP was the practice way back in 1994 when petitioner started servicing respondent's elevators. On this note,
petitioner argued in the following manner:
And most importantly, the Court of Appeals failed to appreciate that the parts being sought to be paid by
petitioner in the Complaint were delivered and installed during the period from April 1997 to July 1998, which
followed the same actual procedure adopted since October 1, 1994. Based on the same procedure adopted
because of the special circumstances of St. Luke's Cathedral Heights Building being a hospital, respondent has
paid the replacement parts installed from October 1994 to March 1997. Never did respondent question the
adopted actual procedure from October 1994 to March 1997. x x x27
Was the procedure claimed by petitioner the adopted practice since 1994? This Court rules that other than the
foregoing allegation, petitioner has failed to prove the same. A perusal of petitioner's Formal Offer of
Evidence28would show that the only documents presented by it are sales invoices, trouble call reports and delivery
receipts, all relating to the alleged transactions between 1997 to 1998. It is unfortunate that petitioner had failed
to present in the RTC the documents from 1994 to 1996 for it may have proven that the non-observance of the
SOP was the practice since 1994. Such documents could have shown that respondent had paid petitioner in the
past without objection on similar transactions under similar billing procedures. The same would have also
validated petitioner's claim that the secretary and security guards were all authorized to sign the documents.

Unfortunately, for petitioner's cause, this Court has no basis to validate its claim, because other than its bare
allegation in the petition, petitioner offers no proof to substantiate the same.
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent.29 The absence of any of
the essential elements will negate the existence of a perfected contract of sale. In the case at bar, the CA ruled
that there was no perfected contract of sale between petitioner and respondent, to wit:
Aside from the absence of consent, there was no perfected contract of sale because there was no meeting of
minds upon the price. As the law provides, the fixing of the price can never be left to the discretion of one of the
contracting parties. In this case, the absence of agreement as to the price is evidenced by the lack of purchase
orders issued by CHBCAI where the quantity, quality and price of the spare parts needed for the repair of the
elevators are stated. In these purchase orders, it would show that the quotation of the cost of the spare parts
earlier informed by Hyatt is acceptable to CHBCAI. However, as revealed by the records, it was only Hyatt who
determined the price, without the acceptance or conformity of CHBCAI. From the moment the determination of the
price is left to the judgment of one of the contracting parties, it cannot be said that there has been an
arrangement on the price since it is not possible for the other contracting party to agree on something of which he
does not know beforehand.30
Based on the evidence presented in the RTC, it is clear to this Court that petitioner had failed to secure the
necessary purchase orders from respondent's Board of Directors, or Finance Manager, to signify their assent to the
price of the parts to be used in the repair of the elevators. In Boston Bank of the Philippines v. Manalo,31 this Court
explained that the fixing of the price can never be left to the decision of one of the contracting parties, to wit:
A definite agreement as to the price is an essential element of a binding agreement to sell personal or real
property because it seriously affects the rights and obligations of the parties. Price is an essential element in the
formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the
decision of one of the contracting parties. But a price fixed by one of the contracting parties, if
accepted by the other, gives rise to a perfected sale.32
There would have been a perfected contract of sale had respondent accepted the price dictated by petitioner even
if such assent was given after the services were rendered. There is, however, no proof of such acceptance on the
part of respondent.
This Court shares the observation of the CA that the signatures of receipt by the information clerk or the guard on
duty on the sales invoices and delivery receipts merely pertain to the physical receipt of the papers. It does not
indicate that the parts stated were actually delivered and installed. Moreover, because petitioner failed to prove
the existence of the verbal agreement which allegedly authorized the aforementioned individuals to sign in
respondents behalf, such signatures cannot be tantamount to an approval or acceptance by respondent of the
parts allegedly used and the price quoted by petitioner. Furthermore, what makes the claims doubtful and
questionable is that the date of the sales invoice and the date stated in the corresponding delivery receipt are too
far apart as aptly found by the CA, to wit:
Further, We note that the date stated in the sales invoice vis-a-vis the date stated in the corresponding delivery
receipt is too far apart. For instance, Delivery Receipt No. 3492 dated February 13, 1998 has a corresponding
Sales Invoice No. 7147 dated June 30, 1998. What puts doubt to this transaction is the fact that the sales invoice
was prepared only after four (4) months from the delivery. The considerable length of time that has lapsed from
the delivery to the issuance of the sales invoice is questionable. Further the delivery receipts were received
months after its preparation. In the case of Delivery Receipt No. 3850 dated November 26, 1997, Gumisad
received this only on July 20, 1998, or after a lapse of eight (8) months. Such kind of procedure followed by Hyatt
is certainly contrary to usual business practice, especially since in this case, it involves considerable amount of
money.33
Based on the foregoing, the CA was thus correct when it concluded that "the Service Agreement did not give
petitioner the unbridled license to purchase and install any spare parts and demand, after the lapse of a
considerable length of time, payment of these prices from respondent according to its own dictated price."34

Withal, this Court rules that petitioner's claim must fail for the following reasons: first, petitioner failed to prove
the existence of the verbal agreement that would authorize non-observance of the SOP; second, petitioner failed
to prove that such procedure was the practice since 1994; and, third, there was no perfected contract of sale
between the parties as there was no meeting of minds upon the price.
To stress, the burden of proof is on the plaintiff. He must rely on the strength of his case and not on the weakness
of respondent's defense. Based on the manner by which petitioner had presented its claim, this Court is of the
opinion that petitioner's case leaves too much to be desired.
WHERFORE, premises considered, the petition is DENIED. The April 20, 2006 Decision and July 31, 2006
Resolution of the Court of Appeals, in CA-G.R. CV No. 80427, are AFFIRMED.
SO ORDERED.
G.R. No. 161524
January 27, 2006
LAURA M. MARNELEGO, Petitioner,
vs.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent.
DECISION
PUNO, J.:
This is a petition for review of the decision of the Court of Appeals dated October 9, 2003 in CA-G.R. CV No. 71501
and its resolution dated December 30, 2003.
The facts are as follows:
In September 1980, Spouses Patrick and Beatrize Price and petitioner Laura Marnelego executed a Deed of
Conditional Sale over a parcel of land located at Houston Street, BF Homes, Paraaque, Metro Manila and its
improvements. The contract showed that the property was mortgaged to respondent Banco Filipino Savings and
Mortgage Bank (Banco Filipino) and BF Homes, and that Spouses Price agreed to pay the amortizations for the first
six months beginning August 1980 to January 1981 while petitioner would assume the succeeding amortizations.1
It appears, however, that when the parties faltered on the amortizations, respondent bank foreclosed the
mortgage and acquired the property at public auction. It later consolidated the title to the property in its name
after petitioner failed to redeem it. The Regional Trial Court of Makati issued a writ of possession in February
1984.2
In her letter dated June 15, 1984,3 petitioner made an offer to Banco Filipino to repurchase the property
forP310,000.00. The letter read:
June 15, 1984
Banco Filipino
Paseo de Roxas
Makati, Metro Manila
Attention: RICARDO GABRIEL
Assistant Manager
Real Estate Department
Dear Sir:
May I request for a reconsideration on the property located at
Lots 17 and 19 Block 95, Barrio San Dionisio, Paranaque,
Metro Manila which has been appraised by the bank
atP362,000.00. The house needs repairs on the roof as it is
leaking. The flooring needs new wood parquet, all the gutters
needs [sic] to be replaced. There are cracks on the walls
which needs [sic] new finishing. Aside from termites around
the house which needs [sic] to be controlled. All of these Im
sure has been noticed by the bank[]s appraiser. In these [sic]
connection therefore, I would like to offer P310,000.00 for the
property.
Thank you.
Sincerely yours,
(sgd) LAURA M. MARNELEGO
In response, Banco Filipino wrote to petitioner on September 20, 1984 in this wise:4

September 20, 1984

MS. LAURA M. MARNELEGO
No. 24 Houston Street
BF Homes, [sic] Subdivision
Paraaque, Metro Manila
SUBJECT : Reply to your 15 June 1984 letter
Re: Foreclosed Property of Gaudencio Pereyra
Dear Ms. Marnelego,
Please be informed that your request to repurchase the subject property has
been approved by the Committee on Disposal of Bank Properties per
Resolution No. DCR-143-84 in the amount of P362,000.00 but on the following
terms and conditions:
a. Cash payment of P310,000.00 upon approval of the
request/proposal, otherwise the bank shall immediately implement its
Writ of Possession.
b. Balance of P52,000.00 to be paid within one (1) year at the rate of
35% interest per annum.
Thank you.
(sgd) RICARDO J. GABRIEL
Assistant Manager
Real Estate Department
SECRETARY, COMMITTEE
ON DISPOSAL OF BANK
PROPERTIES
Petitioner replied on October 9, 1984:5
October 9, 1984
23 Houston St.
B.F. Homes
Phase III
Metro-Manila
Banco Filipino
Paseo de Roxas
Makati, Metro Manila
Attention: RICARDO GABRIEL
Assistant Manager
Real Estate Department
Dear Sir:
This is in reference to your letter dated September 20, 1984 informing us of
the asking price and terms for the house and lot of Three Hundred Sixty Two
Thousand Pesos Only (P362,000.00) located at Lots 17 and 19 Block 95,
Barrio San Dionisio, Paranaque, Metro Manila.
In these [sic] connection therefore, may I offer the sum of One Hundred
Thousand Pesos Only (P100,000.00) as downpayment and the balance to be
paid in five (5) equal installment[s] and to be paid within five (5) years with
interest thereon.
Thank you.
Sincerely yours,
(sgd) LAURA M. MARNELEGO
In January 1985, the Central Bank of the Philippines ordered the closure and liquidation of Banco Filipino. Pending
the liquidation of the bank, the Deputy Sheriff of the Regional Trial Court of Makati implemented the writ of
possession issued by the court. Petitioner pleaded with the banks Deputy Liquidator to allow her to stay in the
premises while the bank considers her proposal to repurchase the property.6 The bank, through its legal counsel,
Atty. Vic Villanueva, granted petitioners request.7
On December 5, 1985, petitioner made a proposal to the Deputy Liquidator of Banco Filipino to purchase the
property.8 Her letter explains the terms and conditions of her proposal, thus:
December 5, 1985
MR. ALBERTO V. REYES

Deputy Liquidator, Banco Filipino

Paseo de Roxas, Makati,
Metro Manila
Dear Mr. Reyes:
This is a proposal to purchase the property which we are presently occupying
situated at #23 Houston St., BF Homes Subd., Paranaque Phase III (Lot[s] 17
& 19, Block 95) owned by Spouses Pereyra and now classified as an ASSETACQUIRED of the bank under the following terms and conditions:
1. Purchase price to be determined by the Liquidator
2. Purchase price to be payable as follows:
2.A. P120,000.00 to be deposited immediately and to be
lodged as A/P for the undersigned
2.B. Balance to be paid once the restraining order/preliminary
injunction is lifted by the Supreme Court in the case filed by
the officers of Banco Filipino
Should I fail to pay the balance upon notice, then I hereby undertake to
voluntarily vacate the premises and surrender possession thereof to BF and I
further undertake to pay rentals for the use of the premises at P1,000.00 a
month from December, 1985, up to the time that possession is given to BF.
The amount of rentals shall be deducted from my aforesaid deposit and the
excess to be refunded to me.
In case liquidation pushes through and the property is sold at public bidding
and awarded to other bidders other than the undersigned, then my deposit
ofP120,000.00 shall be reimbursed to me.
The foregoing is offered to amply protect the interest of the bank while our
court are [sic] deliberating on the cases pertinent to the liquidation and also
to request that in the meantime, the execution of the writ of possession in
LRC Case #M-276 be temporarily held in abeyance since the undersigned is
ready, willing and able to buy the subject property but for reason of
technicality, the process of liquidation is temporarily stopped.
This proposal if acceptable shall not in anyway [sic] novate, modify or
extinguish any right which BF may had [sic] on the subject property including
the implementation of the writ of possession in LRC Case No. M-276.
Thank you.
Very truly yours,
(sgd) LAURA MARNELEGO
The Bank Liquidator responded to petitioners proposal in her letter dated April 3, 1986, thus:9
April 3, 1986
Mrs. Laura Marnelego
23 Houston Street
BF Homes Subdivision Phase II[I]
Paranaque, Metro Manila
Dear Mrs. Marnelego:
This refers to your letter dated December 5, 1985 proposing to purchase the
banks property presently occupied by you and requesting for the deferment
of the execution of the Writ of Possession.
We can only consider your offer to buy the property and allow your temporary
occupancy of the same under the following conditions:
1. That sale of the property after the lifting of the Supreme Court
Restraining Order shall be subject to Central Bank rules/regulations on
the matter for closed banks;
2. That rental at P1,000.00 per month shall be collected and charged
against your deposit of P170,000.00 starting December, 1985;
3. That no interests shall accrue to your deposit and that same shall
be reimbursed only when the property is awarded to another bidder;
4. That should you win in the bidding but fail to produce the balance
of the purchase price set by the liquidator, you agree to immediately
vacate the property and the deposit shall be returned to you net of
the monthly rental of P1,000.00 starting December, 1985 up to the

time ownership of the property is taken back by the Bank which rental
shall be collected;
5. And to such other terms and conditions the Liquidator may further
deem necessary to protect the interest of the Bank.
Please confer with us on the above conditions soonest.
Very truly yours,
CARLOTA P. VALENZUELA
Liquidator
By:
(sgd) ALBERTO V. REYES
On November 22, 1995, after the bank resumed its operations, it sent a letter to petitioner demanding that they
vacate the premises within five days from receipt thereof.10
Petitioner filed a complaint with the Regional Trial Court of Paraaque for specific performance. Invoking the letter
dated September 20, 1984 of Mr. Ricardo J. Gabriel, Assistant Manager, Real Estate Department and Secretary of
the Committee on Disposal of Bank Properties, petitioner claimed that the bank has approved her proposal for the
acquisition of the property. Petitioner prayed that the court order the bank to execute the necessary Deed of Sale
of the property in question.11
The trial court ruled in favor of petitioner. It held that there was a perfected contract of sale between petitioner
and respondent; that the parties have agreed on the purchase price of P362,000.00; and that the terms set in the
banks letter of September 20, 1984 are merely conditions in the performance of the obligation and not a
condition for the birth of the contract.12 The dispositive portion of the decision reads:
Wherefore, judgment is hereby rendered in favor of the plaintiff and against the defendant:
1. Ordering the defendant to execute the Deed of Absolute Sale, upon payment, over the parcels of land
covered by Transfer Certificate of Title Nos. 71660 and 71661 of the Registry of Deeds of Paraaque City
and to pay Php20,000.00 as and for attorneys fees;
2. Ordering the plaintiff to pay the purchase price of Php724,000.00 less the amount of Php120,000.00 as
advance payment immediately;
3. No pronouncement as to costs.
SO ORDERED.
On appeal, the Court of Appeals reversed the decision of the trial court. It found that there was no perfected
contract of sale between petitioner and respondent bank. There was merely a series of offers and counter-offers
between the parties but they never reached an agreement as to the purchase price.
Hence, this petition.
Petitioner argues:
1. The Court of Appeals gravely erred in finding that there was no perfected contract between the parties.
2. The Court of Appeals gravely erred in not finding that the modified terms of payment offered by
petitioner was [sic] merely a condition on the performance of an obligation, not a condition imposed on the
perfection of the contract.
The petition is devoid of merit.
The issue in this case is whether there is a perfected contract of sale between petitioner and respondent Banco
Filipino concerning the property in question.
A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price. From that moment, the parties may reciprocally demand performance subject to the
law governing the form of contracts.13 In the case at bar, the subject of the contract is clear, that is, the house and
lot where petitioner presently resides. However, it appears from the records that the parties have not reached an
agreement on the purchase price.
It has been ruled that a definite agreement on the manner of payment of the purchase price is an essential
element in the formation of a binding and enforceable contract of sale.14 The exchange of letters between
petitioner and respondent shows that petitioner first offered to buy the property for P310,000.00, considering the
numerous repairs that had to be done in the house.15 Respondent, in its letter dated September 20, 1984,
informed petitioner that the bank has approved her request to repurchase the property in the amount
of P362,000.00 but subject to the following terms and conditions: (1) cash payment of P310,000.00 upon approval
of the request/proposal, and (2) balance ofP52,000.00 to be paid within one (1) year at the rate of 35% interest
per annum.16 Petitioner, in her letter to the bank dated October 9, 1984, made a counter-offer to pay a down
payment of P100,000.00 and to pay the balance in 5 equal installments to be paid in 5 years with interest. Before
the bank could act on petitioners proposal, the Central Bank of the Philippines ordered the closure of Banco
Filipino and placed it under liquidation. Thus on December 5, 1985, petitioner wrote to Mr. Alberto V. Reyes,
Deputy Liquidator of Banco Filipino, proposing to purchase the property under the following terms and conditions:
1. Purchase price to be determined by the Liquidator

2. Purchase price to be payable as follows:

2.A. P120,000.00 to be deposited immediately and to be lodged as A/P for the undersigned
2.B. Balance to be paid once the restraining order/preliminary injunction is lifted by the officers of
Banco Filipino17
On April 3, 1986, the Deputy Liquidator replied that they can only consider the sale of the property after the lifting
of the Temporary Restraining Order issued by the Supreme Court and said sale shall be subject to the Central Bank
rules and regulations.18
Clearly, there was no agreement yet between the parties as regards the purchase price and the manner and
schedule of its payment. Neither of them had expressed acceptance of the other partys offer and counter-offer.
Notable is petitioners letter to the banks Deputy Liquidator, Mr. Alberto V. Reyes, which reveals that she herself
believed that no agreement has yet been reached by the parties as regards the purchase price after the exchange
of communication between her and the bank. In said letter, she made a totally new proposal for consideration of
the banks Liquidator that the purchase price shall be determined by the Liquidator; that she would deposit the
amount of P120,000.00 to be lodged in her accounts payable; and that she would pay the balance after the lifting
of the temporary restraining order issued by the Court on the banks transactions.
We find, therefore, that the Court of Appeals did not err in reversing the decision of the trial court. As the parties
have not agreed on the purchase price for the property, petitioners action for specific performance against the
bank must fail.
IN VIEW WHEREOF, the petition is DENIED.
SO ORDERED.
G.R. No. 159373

November 16, 2006

JOSE R. MORENO, JR., Petitioner,

vs.
Private Management Office (formerly, ASSET PRIVATIZATION TRUST), Respondent.
DECISION
PUNO, J.:
At bar is a Petition for Review on Certiorari of the Decision and Resolution of the Court of Appeals in CA-G.R. CV
No. 49227 dated January 30, 2003 and July 31, 2003, respectively, reversing the decision of the Regional Trial
Court of Makati, Branch 62, in Civil Case No. 93-2756 dated August 10, 1994.
The bare facts are stated in the Joint Motion and Stipulation1 dated March 11, 1994, viz.:
COME NOW the parties, through the undersigned counsel, to this Honorable Court respectfully make the following
agreed statement of facts and issues:
1. The parties hereto hereby confirm the allegations contained in paragraphs 1, 2, 3 and 4 of the
Complaint, to wit:
1. Plaintiff is of legal age, with residence at No. 700 Gen. Malvar St., Malate, Manila; while
defendant is a juridical entity with powers to sue and be sued under Proclamation No. 50 with
offices at the 10th floor, BA Lepanto Building, 8747 Paseo de Roxas, Makati, Metro Manila, where it
may be served with summons, thru its Trustees.
2. The subject-matter (sic) of this complaint is the J. Moreno Building (formerly known as the North
Davao Mining Building) or more specifically, the 2nd, 3rd, 4th, 5th and 6th floors of the building.
3. Plaintiff is the owner of the Ground Floor, the 7th Floor and the Penthouse of the J. Moreno
Building and the lot on which it stands.
4. Defendant is the owner of the 2nd, 3rd, 4th, 5th and 6th floors of the building, the subject-matter
(sic) of this suit.

which were admitted in the Answer dated October 29, 1993;

2. On February 13, 1993, the defendant called for a conference for the purpose of discussing plaintiffs
right of first refusal over the floors of the building owned by defendant. At said meeting, defendant
informed plaintiff that the proposed purchase price for said floors was TWENTY[-]ONE MILLION PESOS
(P21,000,000.00);
3. On February 22, 1993, defendant, in a letter signed by its Trustee, Juan W. Moran, informed plaintiff thru
Atty. Jose Feria, Jr., that the Board of Trustees (BOT) of APT "is in agreement that Mr. Jose Moreno, Jr. has the
right of first refusal" and requested plaintiff to deposit 10% of the "suggested indicative price" of P21.0
million on or before February 26, 1993 which letter is attached hereto as Annex "A" and made an integral
part of this pleading;
4. Plaintiff paid the P2.1 million on February 26, 1993. A copy of the Official Receipt issued by defendant to
plaintiff is attached hereto as Annex "B" and made an integral part of this pleading;
5. Then on March 12, 1993, defendant wrote plaintiff that its Legal Department has questioned the basis
for the computation of the indicative price for the said floors. A copy of the letter is attached hereto as
Annex "C" and made an integral part of this pleading;
6. On April 2, 1993, defendant wrote plaintiff that the APT BOT has "tentatively agreed on a settlement
price of P42,274,702.17" for the said floors. A copy of this communication is attached hereto as Annex "D"
and made an integral part hereof;
7. The questions to be resolved by this Honorable Court are:
7.01. Whether or not there was a perfected contract of sale over the said floors for the amount
ofP21.0 million, which will give rise to a right on the part of the plaintiff to demand that the said
floors be sold to him for said amount;
7.02. Assuming that there was a perfected contract, whether or not defendant can be bound by the
price of P21.0 million;
8. Both parties hereto hereby waive their respective claims for damages, attorneys fees and costs;
9. Rule 30 of the Revised Rules of Court provides that:
"SEC. 2. Agreed statement of facts. The parties to any action may agree, in writing, upon the facts involved in the
litigation, and require the judgment of the court upon the facts agreed upon, without the introduction of
evidence."
10. Both parties have agreed to submit this stipulation and to request that a decision of this Honorable Court be
rendered on the basis of the foregoing stipulation of facts and issues, and after both parties have submitted their
respective memoranda.
PRAYER
WHEREFORE, it is respectfully prayed that judgment be rendered on the basis of the agreed stipulation of facts
and issues, without the introduction of evidence in accordance with Section 2, Rule 30 of the Revised Rules of
Court, and after the submission of the parties of their respective Memoranda.
xxx
On August 10, 1994, the trial court ruled in favor of petitioner Moreno, viz.:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, ordering defendant to sell
the 2nd, 3rd, 4th, 5th and 6th floors of the J. Moreno Building to plaintiff at the price of TWENTY[-]ONE MILLION
(P21,000,000.00) PESOS; and ordering defendant to endorse the transaction to the Committee on Privatization,
without costs.2
Respondent filed a Motion for Reconsideration.3 On November 16, 1994, the trial court denied the motion for lack
of merit.4
Respondent appealed with the Court of Appeals. From the time respondent filed its Notice of Appeal with the trial
court, the parties submitted numerous motions, including petitioners Motion to Dismiss5 dated July 8, 1996.
Petitioner moved that the case be dismissed due to the failure of respondent to file its brief within the
reglementary period.
On December 18, 1997, the Eighth Division of the appellate court granted6 the motion to dismiss and
denied7respondents motion for reconsideration. Respondent then filed a Petition for Review on Certiorari8 with this
Court to reverse the dismissal of the appeal. On July 5, 1999, this Court, through a Resolution9 of the Third
Division, reversed the resolution dismissing the appeal on the ground that the appeal raises substantial issues
justifying a review of the case on the merits.
On January 30, 2003, the appellate court found that there was no perfected contract of sale over the subject floors
and reversed the ruling of the trial court, viz.:
WHEREFORE, the appeal is hereby GRANTED. The assailed decision of the Regional Trial Court of Makati, Metro
Manila, Branch 62, rendered in Civil Case No. 93-2756 is hereby REVERSED and SET ASIDE and a new one is
entered DISMISSING the instant complaint.10
Petitioner moved for reconsideration but the motion was denied by the appellate court in its questioned
Resolution11dated July 31, 2003. Hence, this Petition contending that:
IN REVERSING THE TRIAL COURTS DECISION DATED 10 AUGUST 1994, THE COURT OF APPEALS DECIDED ISSUES
NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT CONSIDERING
THAT:
I
GIVEN THE UNDISPUTED FACTS OF THE INSTANT CASE, IT IS CLEAR THAT THERE WAS A PERFECTED, VALID AND
BINDING CONTRACT OF SALE BETWEEN PETITIONER MORENO AND RESPONDENT APT (NOW PMO) WITH RESPECT
TO THE SUBJECT PROPERTY.
II
THE PRINCIPLE OF ESTOPPEL SHOULD HAVE BEEN APPLIED BY THE COURT OF APPEALS TO HOLD RESPONDENT
APT (NOW PMO) TO ITS CONTRACT OF SALE WITH PETITIONER MORENO CONSIDERING THAT:
A. THERE IS NOTHING IRREGULAR OR UNCONSCIONABLE IN THE ACTS OF THE AGENTS OF RESPONDENT
APT (NOW PMO) IN CONNECTION WITH THE PERFECTED AND PARTIALLY EXECUTED CONTRACT OF SALE.
B. RESPONDENT APT (NOW PMO) HAS DESCENDED TO THE LEVEL OF A PRIVATE INDIVIDUAL OR ENTITY
BOUND BY VALID CONTRACTUAL OBLIGATIONS WHEN IT ENGAGED IN PROPRIETARY AND/OR COMMERCIAL
FUNCTIONS.
III
THE COURT OF APPEALS ERRED WHEN IT RULED THAT RESPONDENT APT (NOW PMO) TIMELY RAISED THE ISSUES
ON THE ALLEGED REQUIREMENT OF APPROVAL FOR THE "INDICATED PRICE" AND THE ALLEGED UNCONSCIONABLY
LOW PRICE FOR THE SALE OF THE SUBJECT PROPERTY, CONSIDERING THAT SAID ISSUES WERE NEVER RAISED IN

THE PROCEEDINGS BEFORE THE TRIAL COURT AND DO NOT BEAR RELEVANCE OR CLOSE RELATION TO THE
ISSUES RAISED IN THE PROCEEDINGS BEFORE THE COURT OF APPEALS.
IV
THE COURT OF APPEALS ERRED IN RULING THAT THE BRIEF FILED BY RESPONDENT APT (NOW PMO) DID NOT
VIOLATE SECTION 1(F) OF THE RULES OF COURT WHICH SHOULD HAVE WARRANTED A DISMISSAL OF
RESPONDENT APTS (NOW PMO) APPEAL.12
The hinge issue is whether there was a perfected contract of sale over the subject floors at the price
ofP21,000,000.00.
A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price.13 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.14
To reach that moment of perfection, the parties must agree on the same thing in the same sense,15 so that their
minds meet as to all the terms.16 They must have a distinct intention common to both and without doubt or
difference; until all understand alike, there can be no assent, and therefore no contract. 17 The minds of parties
must meet at every point; nothing can be left open for further arrangement.18 So long as there is any uncertainty
or indefiniteness, or future negotiations or considerations to be had between the parties, there is not a completed
contract, and in fact, there is no contract at all.19
Contract formation undergoes three distinct stages preparation or 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. The perfection or birth of the contract takes place
when the parties agree upon all the essential elements thereof. The last stage is the consummation of the contract
wherein the parties fulfill or perform the terms agreed upon, culminating in its extinguishment. 20 Once there is
concurrence of the offer and acceptance of the object and cause, the stage of negotiation is finished. This
situation does not obtain in the case at bar. The letter of February 22, 1993 and the surrounding circumstances
clearly show that the parties are not past the stage of negotiation, hence there could not have been a perfected
contract of sale.
The letter21 is clear evidence that respondent did not intend to sell the subject floors at the price certain
ofP21,000,000.00, viz.:
22 February 1993
ATTY. JOSE FERIA, JR.
FERIA, FERIA, LUGTU & LAO
Ferlaw Building, 336 Cabildo Street
Intramuros, Manila
Dear Atty. Feria:
During its meeting on February 19, 1993, our Board reviewed your letter of February 18, 1993.
We are pleased to inform you that the Board is in agreement that Mr. Jose Moreno, Jr. has the right of first refusal.
This will be confirmed by our Board during the next board meeting on February 26, 1993. In the meantime, please
advise Mr. Moreno that the suggested indicative price for APTs five (5) floors of the building in question is P21
Million.
If Mr. Moreno is in agreement, he should deposit with APT the amount of P2.1 Million equivalent to 10% of the
price on or before February 26, 1993. The balance will be due within fifteen (15) days after Mr. Moreno receives
the formal notice of approval of the indicative price.

If you or Mr. Moreno have (sic) any question, please let me know.
Very truly yours,
(Signed)
JUAN W. MORAN
Associate Executive Trustee
The letter clearly states that P21,000,000.00 is merely a "suggested indicative price" of the subject floors as it was
yet to be approved by the Board of Trustees. Before the Board could confirm the suggested indicative price, the
Committee on Privatization must first approve the terms of the sale or disposition. The imposition of this
suspensive condition finds basis under Proclamation No. 5022 which vests in the Committee the power to approve
the sale of government assets, including the price of the asset to be sold, viz.:
ARTICLE II. COMMITTEE ON PRIVATIZATION
xxx
SECTION 5. POWERS AND FUNCTIONS. The Committee shall have the following powers and functions:
(1) x x x x Provided, further, that any such independent disposition shall be undertaken with the prior approval of
the Committee and in accordance with the general disposition guidelines as the Committee may provide;
Provided, finally, that in every case the sale or disposition shall be approved by the Committee with respect to the
buyer and price only;
xxx
(4) To approve or disapprove, on behalf of the National Government and without need of any further approval or
other action from any other government institution or agency, the sale or disposition of such assets, in each case
on terms and to purchasers recommended by the Trust or the government institution, as the case may be, to
whom the disposition of such assets may have been delegated; Provided that, the Committee shall not itself
undertake the marketing of any such assets, or participate in the negotiation of their sale;
xxx
ARTICLE III. ASSET PRIVATIZATION TRUST
xxx
SECTION 12. POWERS. The Trust shall, in the discharge of its responsibilities, have the following powers:
xxx
(2) Subject to its having received the prior written approval of the Committee to sell such asset at a price and on
terms of payment and to a party disclosed to the Committee, to sell each asset referred to it by the Committee to
such party and on such terms as in its discretion are in the best interest of the National Government, and for such
purpose to execute and deliver, on behalf and in the name of the National Government. Such deeds of sale,
contracts and other instruments as may be necessary or appropriate to convey title to such assets;
Petitioner construes Section 12, Article III of the Proclamation differently. He argues that what the law says is that
even before respondent sells or offers for sale a government asset, the terms thereof have already been
previously approved by the Committee,23 i.e., "[s]ubject to its having received the prior written approval of the
Committee to sell such an asset at a price and on terms of payment and to a party disclosed to the Committee, to
sell each asset referred to it by the Committee to such party and on such terms as in its discretion are in the best
interest of the National Government."24 Thus, the Committees approval of the suggested indicative price
of P21,000,000.00 is not necessary.

We are not persuaded.

If we adopt the argument of petitioner, Section 12, Article III would nullify the power granted to the Committee
under Section 5 (4), Article II of the same Proclamation. Under Section 5 (4), the Committee has the power "to
approve or disapprove, on behalf of the National Government and without need of any further approval or other
action from any other government institution or agency, the sale or disposition of such assets, in each case
on terms and to purchasers recommended by the Trust or the government institution, as the case may be,
to whom the disposition of such assets may have been delegated; Provided that, the Committee shall not itself
undertake the marketing of any such assets, or participate in the negotiation of their sale."25 The law is clear that
the Trust shall recommend the terms for the Committees approval or disapproval, and not the other way around.
It is a basic canon of statutory construction that in interpreting a statute, care should be taken that every part
thereof be given effect, on the theory that it was enacted as an integrated measure and not as a hodge-podge of
conflicting provisions. The rule is that a construction that would render a provision inoperative should be avoided;
instead, apparently inconsistent provisions should be reconciled whenever possible as parts of a coordinated and
harmonious whole.26
To bolster the argument that the Committees approval may be dispensed with, petitioner also cites Opinion No.
27, Series of 1989, of the Secretary of Justice which recognizes a case where the Committee may delegate to
respondent the power to approve the sale or disposition of assets with a transfer price not
exceedingP60,000,000.00.27
The argument fails to impress. The Opinion involves a case where "no material discretion is involved in the
disposition of assets pursuant to the subject proposal" and the act which could be delegated, as opined, is
ministerial. The Opinion further notes that "the criteria and guidelines stated therein are concrete and definite
enough that once these criteria and guidelines are present in a particular case, the APT is practically left with no
choice in the disposition of the assets involved and that all that the APT shall do in disposing off an asset
thereunder is ascertain whether a prospective buyer and the price he offers satisfy such conditions." Petitioner
failed to show that the case at bar is of the same nature that is, that the disposition of the subject floors
"partakes of the nature of a ministerial act which has been defined as one performed under a given state of facts,
in a prescribed manner, in obedience to the mandate of legal authority, without regard to the exercise of judgment
upon the propriety or impropriety of the act done."
Petitioner further argues that the "suggested indicative price" of P21,000,000.00 is not a proposed price, but the
selling price indicative of the value at which respondent was willing to sell.28 Petitioner posits that under Section
14, Rule 130 of the Revised Rules of Court, the term should be taken in its ordinary and usual acceptation and
should be taken to mean as a price which is "indicated" or "specified" which, if accepted, gives rise to a meeting of
minds.29 This was the same construction adopted by the trial court, viz.:
Going to defendants main defense that P21 Million was a "suggested indicative price" we have to find out
exactly what "indicative" means. Webster Comprehensive Dictionary, International Edition, gives us a graphic
meaning that everybody can understand, when it says that "to indicate" is [t]o point out; direct attention[;]
to indicate the correct page[.] "Indicative" is merely the adjective of the verb to indicate. x x x when the price
of P21 [M]illion was indicated then it becomes the "indicative" price the correct price, no ifs[,] no
buts.30 (emphases in the original)
We do not agree.
Under the same section and rule invoked by petitioner, the terms of a writing are presumed to have been used in
their primary and general acceptation, but evidence is admissible to show that they have a local, technical, or
otherwise peculiar signification, and were so used and understood in the particular instance, in which case the
agreement must be construed accordingly.31
The reliance of the trial court in the Webster definition of the term "indicative," as also adopted by petitioner, is
misplaced. The transaction at bar involves the sale of an asset under a privatization scheme which attaches a
peculiar meaning or signification to the term "indicative price." Under No. 6.1 of the General Bidding Procedures

and Rules32 of respondent, "an indicative price is a ball-park figure and [respondent] supplies such a figure purely
to define the ball-park."33 The plain contention of petitioner that the transaction involves an "ordinary armslength
sale of property" is unsubstantiated and leaves much to be desired. This case sprung from a case of specific
performance initiated by petitioner who has the burden to prove that the case should be spared from the
application of the technical terms in the sale and disposition of assets under privatization. Petitioner failed to
discharge the burden.1wphi1
It appears in the case at bar that petitioners construction of the letter of February 22, 1993 that his assent to
the "suggested indicative price" of P21,000,000.00 converted it as the price certain, thus giving rise to a perfected
contract of sale34 is petitioners own subjective understanding. As such, it is not shared by respondent. Under
American jurisprudence, mutual assent is judged by an objective standard, looking to the express words the
parties used in the contract.35 Under the objective theory of contract, understandings and beliefs are effective only
ifshared.36 Based on the objective manifestations of the parties in the case at bar, there was no meeting of the
minds. That the letter constituted a definite, complete and certain offer is the subjective belief of petitioner alone.
The letter in question is a mere evidence of a memorialization of inconclusive negotiations, or a mere agreement
to agree, in which material term is left for future negotiations.37 It is a mere evidence of the parties preliminary
transactions which did not crystallize into a perfected contract. Preliminary negotiations or an agreement still
involving future negotiations is not the functional equivalent of a valid, subsisting agreement.38 For a valid contract
to have been created, the parties must have progressed beyond this stage of imperfect negotiation. But as the
records would show, the parties are yet undergoing the preliminary steps towards the formation of a valid
contract. Having thus established that there is no perfected contract of sale in the case at bar, the issue on
estoppel is now moot and academic.
Finally, petitioner contends that the appellate court should have dismissed the appeal of respondent on the
procedural technicality that the Appellants Brief does not have page references to the record in its Statement of
Facts, Statement of the Case and Arguments in the Appellants Brief.39
We find no reason to reverse the ruling of the appellate court which has judiciously explained why the appeal
should not be dismissed on this ground, viz.:
x x x x Procedural rules are required to be followed as a general rule, but they may be relaxed to relieve a litigant
of an injustice not commensurate with the degree of his noncompliance with the procedure required. In this case,
[respondents] brief does not substantially violate our procedural rules. Besides, the merits of its arguments will
show that the trial court seriously erred in issuing its assailed decision.40
IN VIEW WHEREOF, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 49227 dated
January 30, 2003 and July 31, 2003, respectively, are AFFIRMED.
SO ORDERED.
Boston Bank of the Philippines vs. Perla P. Manalo and Carlos Manalo
DECISION

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV
No. 47458 affirming, on appeal, the Decision[2] of the Regional Trial Court (RTC) of Quezon City, Branch 98, in Civil
Case No. Q-89-3905.
The Antecedents

The Xavierville Estate, Inc. (XEI) was the owner of parcels of land in Quezon City, known as the Xavierville
Estate Subdivision, with an area of 42 hectares. XEI caused the subdivision of the property into residential lots,
which was then offered for sale to individual lot buyers.[3]
On September 8, 1967, XEI, through its General Manager, Antonio Ramos, as vendor, and The Overseas Bank of
Manila (OBM), as vendee, executed a Deed of Sale of Real Estate over some residential lots in the subdivision,
including Lot 1, Block 2, with an area of 907.5 square meters, and Lot 2, Block 2, with an area of 832.80 square
meters. The transaction was subject to the approval of the Board of Directors of OBM, and was covered by real
estate mortgages in favor of the Philippine National Bank as security for its account amounting to P5,187,000.00,
and the Central Bank of the Philippines as security for advances amounting to P22,185,193.74.[4] Nevertheless,
XEI continued selling the residential lots in the subdivision as agent of OBM.[5]
Sometime in 1972, then XEI president Emerito Ramos, Jr. contracted the services of Engr. Carlos Manalo, Jr. who
was in business of drilling deep water wells and installing pumps under the business name Hurricane Commercial,
Inc. For P34,887.66, Manalo, Jr. installed a water pump at Ramos residence at the corner of Aurora Boulevard and
Katipunan Avenue, Quezon City. Manalo, Jr. then proposed to XEI, through Ramos, to purchase a lot in the
Xavierville subdivision, and offered as part of the downpayment the P34,887.66 Ramos owed him. XEI, through
Ramos, agreed. In a letter dated February 8, 1972, Ramos requested Manalo, Jr. to choose which lots he wanted
to buy so that the price of the lots and the terms of payment could be fixed and incorporated in the conditional
sale.[6] Manalo, Jr. met with Ramos and informed him that he and his wife Perla had chosen Lots 1 and 2 of Block
2 with a total area of 1,740.3 square meters.
In a letter dated August 22, 1972 to Perla Manalo, Ramos confirmed the reservation of the lots. He also pegged
the price of the lots at P200.00 per square meter, or a total of P348,060.00, with a 20% down payment of the
purchase price amounting to P69,612.00 less the P34,887.66 owing from Ramos, payable on or before December
31, 1972; the corresponding Contract of Conditional Sale would then be signed on or before the same date, but if
the selling operations of XEI resumed after December 31, 1972, the balance of the downpayment would fall due
then, and the spouses would sign the aforesaid contract within five (5) days from receipt of the notice of
resumption of such selling operations. It was also stated in the letter that, in the meantime, the spouses may
introduce improvements thereon subject to the rules and regulations imposed by XEI in the subdivision. Perla
Manalo conformed to the letter agreement.[7]
The spouses Manalo took possession of the property on September 2, 1972, constructed a house thereon, and
installed a fence around the perimeter of the lots.
In the meantime, many of the lot buyers refused to pay their monthly installments until they were assured that
they would be issued Torrens titles over the lots they had purchased.[8] The spouses Manalo were notified of the
resumption of the selling operations of XEI.[9] However, they did not pay the balance of the downpayment on the
lots because Ramos failed to prepare a contract of conditional sale and transmit the same to Manalo for their
signature. On August 14, 1973, Perla Manalo went to the XEI office and requested that the payment of the
amount representing the balance of the downpayment be deferred, which, however, XEI rejected. On August 10,
1973, XEI furnished her with a statement of their account as of July 31, 1973, showing that they had a balance of
P34,724.34 on the downpayment of the two lots after deducting the account of Ramos, plus P3,819.68[10] interest
thereon from September 1, 1972 to July 31, 1973, and that the interests on the unpaid balance of the purchase
price of P278,448.00 from September 1, 1972 to July 31, 1973 amounted to P30,629.28.[11] The spouses were
informed that they were being billed for said unpaid interests.[12]
On January 25, 1974, the spouses Manalo received another statement of account from XEI, inclusive of interests
on the purchase price of the lots.[13] In a letter dated April 6, 1974 to XEI, Manalo, Jr. stated they had not yet
received the notice of resumption of Leis selling operations, and that there had been no arrangement on the
payment of interests; hence, they should not be charged with interest on the balance of the downpayment on the
property.[14] Further, they demanded that a deed of conditional sale over the two lots be transmitted to them for
their signatures. However, XEI ignored the demands. Consequently, the spouses refused to pay the balance of
the downpayment of the purchase price.[15]
Sometime in June 1976, Manalo, Jr. constructed a business sign in the sidewalk near his house. In a letter dated
June 17, 1976, XEI informed Manalo, Jr. that business signs were not allowed along the sidewalk. It demanded that
he remove the same, on the ground, among others, that the sidewalk was not part of the land which he had
purchased on installment basis from XEI.[16] Manalo, Jr. did not respond. XEI reiterated its demand on September
15, 1977.[17]

Subsequently, XEI turned over its selling operations to OBM, including the receivables for lots already contracted
and those yet to be sold.[18] On December 8, 1977, OBM warned Manalo, Jr., that putting up of a business sign is
specifically prohibited by their contract of conditional sale and that his failure to comply with its demand would
impel it to avail of the remedies as provided in their contract of conditional sale.[19]
Meanwhile, on December 5, 1979, the Register of Deeds issued Transfer Certificate of Title (TCT) No. T-265822
over Lot 1, Block 2, and TCT No. T-265823 over Lot 2, Block 2, in favor of the OBM.[20] The lien in favor of the
Central Bank of the Philippines was annotated at the dorsal portion of said title, which was later cancelled on
August 4, 1980.[21]
Subsequently, the Commercial Bank of Manila (CBM) acquired the Xavierville Estate from OBM. CBM wrote
Edilberto Ng, the president of Xavierville Homeowners Association that, as of January 31, 1983, Manalo, Jr. was one
of the lot buyers in the subdivision.[22] CBM reiterated in its letter to Ng that, as of January 24, 1984, Manalo was
a homeowner in the subdivision.[23]
In a letter dated August 5, 1986, the CBM requested Perla Manalo to stop any on-going construction on the
property since it (CBM) was the owner of the lot and she had no permission for such construction.[24] She agreed
to have a conference meeting with CBM officers where she informed them that her husband had a contract with
OBM, through XEI, to purchase the property. When asked to prove her claim, she promised to send the documents
to CBM. However, she failed to do so.[25] On September 5, 1986, CBM reiterated its demand that it be furnished
with the documents promised,[26] but Perla Manalo did not respond.
On July 27, 1987, CBM filed a complaint[27] for unlawful detainer against the spouses with the Metropolitan Trial
Court of Quezon City. The case was docketed as Civil Case No. 51618. CBM claimed that the spouses had been
unlawfully occupying the property without its consent and that despite its demands, they refused to vacate the
property. The latter alleged that they, as vendors, and XEI, as vendee, had a contract of sale over the lots which
had not yet been rescinded.[28]
While the case was pending, the spouses Manalo wrote CBM to offer an amicable settlement, promising to abide
by the purchase price of the property (P313,172.34), per agreement with XEI, through Ramos. However, on July
28, 1988, CBM wrote the spouses, through counsel, proposing that the price of P1,500.00 per square meter of the
property was a reasonable starting point for negotiation of the settlement.[29] The spouses rejected the counter
proposal,[30] emphasizing that they would abide by their original agreement with XEI. CBM moved to withdraw its
complaint[31] because of the issues raised.[32]
In the meantime, the CBM was renamed the Boston Bank of the Philippines. After CBM filed its complaint against
the spouses Manalo, the latter filed a complaint for specific performance and damages against the bank before
the Regional Trial Court (RTC) of Quezon City on October 31, 1989.
The plaintiffs alleged therein that they had always been ready, able and willing to pay the installments on the lots
sold to them by the defendants remote predecessor-in-interest, as might be or stipulated in the contract of sale,
but no contract was forthcoming; they constructed their house worth P2,000,000.00 on the property in good faith;
Manalo, Jr., informed the defendant, through its counsel, on October 15, 1988 that he would abide by the terms
and conditions of his original agreement with the defendants predecessor-in-interest; during the hearing of the
ejectment case on October 16, 1988, they offered to pay P313,172.34 representing the balance on the purchase
price of said lots; such tender of payment was rejected, so that the subject lots could be sold at considerably
higher prices to third parties.
Plaintiffs further alleged that upon payment of the P313,172.34, they were entitled to the execution and delivery
of a Deed of Absolute Sale covering the subject lots, sufficient in form and substance to transfer title thereto free
and clear of any and all liens and encumbrances of whatever kind and nature.[33] The plaintiffs prayed that, after
due hearing, judgment be rendered in their favor, to wit:
WHEREFORE, it is respectfully prayed that after due hearing:

(a) The defendant should be ordered to execute and deliver a Deed of Absolute Sale over subject lots in favor of
the plaintiffs after payment of the sum of P313,172.34, sufficient in form and substance to transfer to them titles
thereto free and clear of any and all liens and encumbrances of whatever kind or nature;
(b) The defendant should be held liable for moral and exemplary damages in the amounts of P300,000.00 and
P30,000.00, respectively, for not promptly executing and delivering to plaintiff the necessary Contract of Sale,
notwithstanding repeated demands therefor and for having been constrained to engage the services of
undersigned counsel for which they agreed to pay attorneys fees in the sum of P50,000.00 to enforce their rights
in the premises and appearance fee of P500.00;
(c) And for such other and further relief as may be just and equitable in the premises.[34]

In its Answer to the complaint, the defendant interposed the following affirmative defenses: (a) plaintiffs had no
cause of action against it because the August 22, 1972 letter agreement between XEI and the plaintiffs was not
binding on it; and (b) it had no record of any contract to sell executed by it or its predecessor, or of any
statement of accounts from its predecessors, or records of payments of the plaintiffs or of any documents which
entitled them to the possession of the lots.[35] The defendant, likewise, interposed counterclaims for damages
and attorneys fees and prayed for the eviction of the plaintiffs from the property.[36]
Meanwhile, in a letter dated January 25, 1993, plaintiffs, through counsel, proposed an amicable settlement of the
case by paying P942,648.70, representing the balance of the purchase price of the two lots based on the current
market value.[37] However, the defendant rejected the same and insisted that for the smaller lot, they pay
P4,500,000.00, the current market value of the property.[38] The defendant insisted that it owned the property
since there was no contract or agreement between it and the plaintiffs relative thereto.
During the trial, the plaintiffs adduced in evidence the separate Contracts of Conditional Sale executed between
XEI and Alberto Soller;[39] Alfredo Aguila,[40] and Dra. Elena Santos-Roque[41] to prove that XEI continued selling
residential lots in the subdivision as agent of OBM after the latter had acquired the said lots.
For its part, defendant presented in evidence the letter dated August 22, 1972, where XEI proposed to sell the two
lots subject to two suspensive conditions: the payment of the balance of the downpayment of the property, and
the execution of the corresponding contract of conditional sale. Since plaintiffs failed to pay, OBM consequently
refused to execute the corresponding contract of conditional sale and forfeited the P34,877.66 downpayment for
the two lots, but did not notify them of said forfeiture.[42] It alleged that OBM considered the lots unsold because
the titles thereto bore no annotation that they had been sold under a contract of conditional sale, and the plaintiffs
were not notified of XEIs resumption of its selling operations.
On May 2, 1994, the RTC rendered judgment in favor of the plaintiffs and against the defendant. The fallo of the
decision reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant
(a) Ordering the latter to execute and deliver a Deed of Absolute Sale over Lot 1 and 2, Block 2 of the Xavierville
Estate Subdivision after payment of the sum of P942,978.70 sufficient in form and substance to transfer to them
titles thereto free from any and all liens and encumbrances of whatever kind and nature.
(b) Ordering the defendant to pay moral and exemplary damages in the amount of P150,000.00; and
(c) To pay attorneys fees in the sum of P50,000.00 and to pay the costs.
SO ORDERED.[43]

The trial court ruled that under the August 22, 1972 letter agreement of XEI and the plaintiffs, the parties had
a complete contract to sell over the lots, and that they had already partially consummated the same. It declared

that the failure of the defendant to notify the plaintiffs of the resumption of its selling operations and to execute a
deed of conditional sale did not prevent the defendants obligation to convey titles to the lots from acquiring
binding effect. Consequently, the plaintiffs had a cause of action to compel the defendant to execute a deed of
sale over the lots in their favor.
Boston Bank appealed the decision to the CA, alleging that the lower court erred in (a) not concluding that the
letter of XEI to the spouses Manalo, was at most a mere contract to sell subject to suspensive conditions, i.e., the
payment of the balance of the downpayment on the property and the execution of a deed of conditional sale
(which were not complied with); and (b) in awarding moral and exemplary damages to the spouses Manalo despite
the absence of testimony providing facts to justify such awards.[44]
On September 30, 2002, the CA rendered a decision affirming that of the RTC with modification. The fallo reads:
WHEREFORE, the appealed decision is AFFIRMED with MODIFICATIONS that (a) the figure P942,978.70 appearing
[in] par. (a) of the dispositive portion thereof is changed to P313,172.34 plus interest thereon at the rate of 12%
per annum from September 1, 1972 until fully paid and (b) the award of moral and exemplary damages and
attorneys fees in favor of plaintiffs-appellees is DELETED.
SO ORDERED.[45]

The appellate court sustained the ruling of the RTC that the appellant and the appellees had executed a Contract
to Sell over the two lots but declared that the balance of the purchase price of the property amounting to
P278,448.00 was payable in fixed amounts, inclusive of pre-computed interests, from delivery of the possession of
the property to the appellees on a monthly basis for 120 months, based on the deeds of conditional sale executed
by XEI in favor of other lot buyers.[46] The CA also declared that, while XEI must have resumed its selling
operations before the end of 1972 and the downpayment on the property remained unpaid as of December 31,
1972, absent a written notice of cancellation of the contract to sell from the bank or notarial demand therefor as
required by Republic Act No. 6552, the spouses had, at the very least, a 60-day grace period from January 1, 1973
within which to pay the same.
Boston Bank filed a motion for the reconsideration of the decision alleging that there was no perfected contract to
sell the two lots, as there was no agreement between XEI and the respondents on the manner of payment as well
as the other terms and conditions of the sale. It further averred that its claim for recovery of possession of the
aforesaid lots in its Memorandum dated February 28, 1994 filed before the trial court constituted a judicial
demand for rescission that satisfied the requirements of the New Civil Code. However, the appellate court denied
the motion.
Boston Bank, now petitioner, filed the instant petition for review on certiorari assailing the CA rulings. It maintains
that, as held by the CA, the records do not reflect any schedule of payment of the 80% balance of the purchase
price, or P278,448.00. Petitioner insists that unless the parties had agreed on the manner of payment of the
principal amount, including the other terms and conditions of the contract, there would be no existing contract of
sale or contract to sell.[47] Petitioner avers that the letter agreement to respondent spouses dated August 22,
1972 merely confirmed their reservation for the purchase of Lot Nos. 1 and 2, consisting of 1,740.3 square meters,
more or less, at the price of P200.00 per square meter (or P348,060.00), the amount of the downpayment thereon
and the application of the P34,887.00 due from Ramos as part of such downpayment.
Petitioner asserts that there is no factual basis for the CA ruling that the terms and conditions relating to the
payment of the balance of the purchase price of the property (as agreed upon by XEI and other lot buyers in the
same subdivision) were also applicable to the contract entered into between the petitioner and the respondents.
It insists that such a ruling is contrary to law, as it is tantamount to compelling the parties to agree to something
that was not even discussed, thus, violating their freedom to contract. Besides, the situation of the respondents
cannot be equated with those of the other lot buyers, as, for one thing, the respondents made a partial payment
on the downpayment for the two lots even before the execution of any contract of conditional sale.
Petitioner posits that, even on the assumption that there was a perfected contract to sell between the parties,
nevertheless, it cannot be compelled to convey the property to the respondents because the latter failed to pay
the balance of the downpayment of the property, as well as the balance of 80% of the purchase price, thus
resulting in the extinction of its obligation to convey title to the lots to the respondents.

Another egregious error of the CA, petitioner avers, is the application of Republic Act No. 6552. It insists that such
law applies only to a perfected agreement or perfected contract to sell, not in this case where the downpayment
on the purchase price of the property was not completely paid, and no installment payments were made by the
buyers.
Petitioner also faults the CA for declaring that petitioner failed to serve a notice on the respondents of cancellation
or rescission of the contract to sell, or notarial demand therefor. Petitioner insists that its August 5, 1986 letter
requiring respondents to vacate the property and its complaint for ejectment in Civil Case No. 51618 filed in the
Metropolitan Trial Court amounted to the requisite demand for a rescission of the contract to sell. Moreover, the
action of the respondents below was barred by laches because despite demands, they failed to pay the balance of
the purchase price of the lots (let alone the downpayment) for a considerable number of years.
For their part, respondents assert that as long as there is a meeting of the minds of the parties to a contract of
sale as to the price, the contract is valid despite the parties failure to agree on the manner of payment. In such a
situation, the balance of the purchase price would be payable on demand, conformably to Article 1169 of the New
Civil Code. They insist that the law does not require a party to agree on the manner of payment of the purchase
price as a prerequisite to a valid contract to sell. The respondents cite the ruling of this Court in Buenaventura v.
Court of Appeals[48] to support their submission.
They argue that even if the manner and timeline for the payment of the balance of the purchase price of the
property is an essential requisite of a contract to sell, nevertheless, as shown by their letter agreement of August
22, 1972 with the OBM, through XEI and the other letters to them, an agreement was reached as to the manner of
payment of the balance of the purchase price. They point out that such letters referred to the terms of the
terms of the deeds of conditional sale executed by XEI in favor of the other lot buyers in the subdivision, which
contained uniform terms of 120 equal monthly installments (excluding the downpayment, but inclusive of precomputed interests). The respondents assert that XEI was a real estate broker and knew that the contracts
involving residential lots in the subdivision contained uniform terms as to the manner and timeline of the payment
of the purchase price of said lots.
Respondents further posit that the terms and conditions to be incorporated in the corresponding contract of
conditional sale to be executed by the parties would be the same as those contained in the contracts of
conditional sale executed by lot buyers in the subdivision. After all, they maintain, the contents of the
corresponding contract of conditional sale referred to in the August 22, 1972 letter agreement envisaged those
contained in the contracts of conditional sale that XEI and other lot buyers executed. Respondents cite the ruling
of this Court in Mitsui Bussan Kaisha v. Manila E.R.R. & L. Co.[49]
The respondents aver that the issues raised by the petitioner are factual, inappropriate in a petition for review on
certiorari under Rule 45 of the Rules of Court. They assert that petitioner adopted a theory in litigating the case in
the trial court, but changed the same on appeal before the CA, and again in this Court. They argue that the
petitioner is estopped from adopting a new theory contrary to those it had adopted in the trial and appellate
courts. Moreover, the existence of a contract of conditional sale was admitted in the letters of XEI and OBM. They
aver that they became owners of the lots upon delivery to them by XEI.
The issues for resolution are the following: (1) whether the factual issues raised by the petitioner are proper; (2)
whether petitioner or its predecessors-in-interest, the XEI or the OBM, as seller, and the respondents, as buyers,
forged a perfect contract to sell over the property; (3) whether
petitioner is estopped from contending that no such contract was forged by the parties; and (4) whether
respondents has a cause of action against the petitioner for specific performance.
The rule is that before this Court, only legal issues may be raised in a petition for review on certiorari. The reason
is that this Court is not a trier of facts, and is not to review and calibrate the evidence on record. Moreover, the
findings of facts of the trial court, as affirmed on appeal by the Court of Appeals, are conclusive on this Court
unless the case falls under any of the following exceptions:
(1) when the conclusion is a finding grounded entirely on speculations, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) where there is a grave abuse of discretion; (4)
when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when
the Court of Appeals, in making its findings went beyond the issues of the case and the same is contrary to the

admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when
the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondents; and (10) when the findings of fact of the Court of Appeals are premised on the supposed absence of
evidence and contradicted by the evidence on record.[50]
We have reviewed the records and we find that, indeed, the ruling of the appellate court dismissing petitioners
appeal is contrary to law and is not supported by evidence. A careful examination of the factual backdrop of the
case, as well as the antecedental proceedings constrains us to hold that petitioner is not barred from asserting
that XEI or OBM, on one hand, and the respondents, on the other, failed to forge a perfected contract to sell the
subject lots.
It must be stressed that the Court may consider an issue not raised during the trial when there is plain error.[51]
Although a factual issue was not raised in the trial court, such issue may still be considered and resolved by the
Court in the interest of substantial justice, if it finds that to do so is necessary to arrive at a just decision,[52] or
when an issue is closely related to an issue raised in the trial court and the Court of Appeals and is necessary for a
just and complete resolution of the case.[53] When the trial court decides a case in favor of a party on certain
grounds, the Court may base its decision upon some other points, which the trial court or appellate court ignored
or erroneously decided in favor of a party.[54]
In this case, the issue of whether XEI had agreed to allow the respondents to pay the purchase price of the
property was raised by the parties. The trial court ruled that the parties had perfected a contract to sell, as
against petitioners claim that no such contract existed. However, in resolving the issue of whether the petitioner
was obliged to sell the property to the respondents, while the CA declared that XEI or OBM and the respondents
failed to agree on the schedule of payment of the balance of the purchase price of the property, it ruled that XEI
and the respondents had forged a contract to sell; hence, petitioner is entitled to ventilate the issue before this
Court.
We agree with petitioners contention that, for a perfected contract of sale or contract to sell to exist in law, there
must be an agreement of the parties, not only on the price of the property sold, but also on the manner the price
is to be paid by the vendee.
Under Article 1458 of the New Civil Code, in a contract of sale, whether absolute or conditional, one of the
contracting parties obliges himself to transfer the ownership of and deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent. A contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the contract and the price. From the averment of
perfection, the parties are bound, not only to the fulfillment of what has been
expressly stipulated, but also to all the consequences which, according to their nature, may be in keeping with
good faith, usage and law.[55] On the other hand, when the contract of sale or to sell is not perfected, it cannot,
as an independent source of obligation, serve as a binding juridical relation between the parties.[56]
A definite agreement as to the price is an essential element of a binding agreement to sell personal or real
property because it seriously affects the rights and obligations of the parties. Price is an essential element in the
formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of
one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives
rise to a perfected sale.[57]
It is not enough for the parties to agree on the price of the property. The parties must also agree on the manner of
payment of the price of the property to give rise to a binding and enforceable contract of sale or contract to sell.
This is so because the agreement as to the manner of payment goes into the price, such that a disagreement on
the manner of payment is tantamount to a failure to agree on the price.[58]
In a contract to sell property by installments, it is not enough that the parties agree on the price as well as
the amount of downpayment. The parties must, likewise, agree on the manner of payment of the balance of the
purchase price and on the other terms and conditions relative to the sale. Even if the buyer makes a
downpayment or portion thereof, such payment cannot be considered as sufficient proof of the perfection of any
purchase and sale between the parties. Indeed, this Court ruled in Velasco v. Court of Appeals[59] that:

It is not difficult to glean from the aforequoted averments that the petitioners themselves admit that they and the
respondent still had to meet and agree on how and when the down-payment and the installment payments were
to be paid. Such being the situation, it cannot, therefore, be said that a definite and firm sales agreement between
the parties had been perfected over the lot in question. Indeed, this Court has already ruled before that a definite
agreement on the manner of payment of the purchase price is an essential element in the formation of a binding
and enforceable contract of sale. The fact, therefore, that the petitioners delivered to the respondent the sum of
P10,000.00 as part of the downpayment that they had to pay cannot be considered as sufficient proof of the
perfection of any purchase and sale agreement between the parties herein under article 1482 of the New Civil
Code, as the petitioners themselves admit that some essential matter the terms of payment still had to be
mutually covenanted.[60]

We agree with the contention of the petitioner that, as held by the CA, there is no showing, in the records, of the
schedule of payment of the balance of the purchase price on the property amounting to P278,448.00. We have
meticulously reviewed the records, including Ramos February 8, 1972 and August 22, 1972 letters to
respondents,[61] and find that said parties confined themselves to agreeing on the price of the property
(P348,060.00), the 20% downpayment of the purchase price (P69,612.00), and credited respondents for the
P34,887.00 owing from Ramos as part of the 20% downpayment. The timeline for the payment of the balance of
the downpayment (P34,724.34) was also agreed upon, that is, on or before XEI resumed its selling operations, on
or before December 31, 1972, or within five (5) days from written notice of such resumption of selling operations.
The parties had also agreed to incorporate all the terms and conditions relating to the sale, inclusive of the terms
of payment of the balance of the purchase price and the other substantial terms and conditions in the
corresponding contract of conditional sale, to be later signed by the parties, simultaneously with respondents
settlement of the balance of the downpayment.
The February 8, 1972 letter of XEI reads:
Mr. Carlos T. Manalo, Jr.
Hurricane Rotary Well Drilling
Rizal Avenue Ext.,Caloocan City
Dear Mr. Manalo:
We agree with your verbal offer to exchange the proceeds of your contract with us to form as a down payment for
a lot in our Xavierville Estate Subdivision.
Please let us know your choice lot so that we can fix the price and terms of payment in our conditional sale.
Sincerely yours,
XAVIERVILLE ESTATE, INC.
(Signed)
EMERITO B. RAMOS, JR.
President
CONFORME:
(Signed)
CARLOS T. MANALO, JR.
Hurricane Rotary Well Drilling[62]

The August 22, 1972 letter agreement of XEI and the respondents reads:
Mrs. Perla P. Manalo
1548 Rizal Avenue Extension

Caloocan City
Dear Mrs. Manalo:
This is to confirm your reservation of Lot Nos. 1 and 2; Block 2 of our consolidation-subdivision plan as amended,
consisting of 1,740.3 square meters more or less, at the price of P200.00 per square meter or a total price of
P348,060.00.
It is agreed that as soon as we resume selling operations, you must pay a down payment of 20% of the purchase
price of the said lots and sign the corresponding Contract of Conditional Sale, on or before December 31, 1972,
provided, however, that if we resume selling after December 31, 1972, then you must pay the aforementioned
down payment and sign the aforesaid contract within five (5) days from your receipt of our notice of resumption of
selling operations.
In the meanwhile, you may introduce such improvements on the said lots as you may desire, subject to the rules
and regulations of the subdivision.
If the above terms and conditions are acceptable to you, please signify your conformity by signing on the space
herein below provided.
Thank you.

Very truly yours,

XAVIERVILLE ESTATE, INC.
By:
(Signed)
EMERITO B. RAMOS, JR.
President

CONFORME:

(Signed)
PERLA P. MANALO
Buyer[63]

Based on these two letters, the determination of the terms of payment of the P278,448.00 had yet to be agreed
upon on or before December 31, 1972, or even afterwards, when the parties sign the corresponding contract of
conditional sale.
Jurisprudence is that if a material element of a contemplated contract is left for future negotiations, the same is
too indefinite to be enforceable.[64] And when an essential element of a contract is reserved for future agreement
of the parties, no legal obligation arises until such future agreement is concluded.[65]
So long as an essential element entering into the proposed obligation of either of the parties remains to be
determined by an agreement which they are to make, the contract is incomplete and unenforceable.[66] The
reason is that such a contract is lacking in the necessary qualities of definiteness, certainty and mutuality.[67]
There is no evidence on record to prove that XEI or OBM and the respondents had agreed, after December 31,
1972, on the terms of payment of the balance of the purchase price of the property and the other substantial
terms and conditions relative to the sale. Indeed, the parties are in agreement that there had been no contract of
conditional sale ever executed by XEI, OBM or petitioner, as vendor, and the respondents, as vendees.[68]
The ruling of this Court in Buenaventura v. Court of Appeals has no bearing in this case because the issue of the
manner of payment of the purchase price of the property was not raised therein.
We reject the submission of respondents that they and Ramos had intended to incorporate the terms of payment
contained in the three contracts of conditional sale executed by XEI and other lot buyers in the corresponding

contract of conditional sale, which would later be signed by them.[69] We have meticulously reviewed the
respondents complaint and find no such allegation therein.[70] Indeed, respondents merely alleged in their
complaint that they were bound to pay the balance of the purchase price of the property in installments. When
respondent Manalo, Jr. testified, he was never asked, on direct examination or even on cross-examination, whether
the terms of payment of the balance of the purchase price of the lots under the contracts of conditional sale
executed by XEI and other lot buyers would form part of the corresponding contract of conditional sale to be
signed by them simultaneously with the payment of the balance of the downpayment on the purchase price.
We note that, in its letter to the respondents dated June 17, 1976, or almost three years from the execution by the
parties of their August 22, 1972 letter agreement, XEI stated, in part, that respondents had purchased the
property on installment basis.[71] However, in the said letter, XEI failed to state a specific amount for each
installment, and whether such payments were to be made monthly, semi-annually, or annually. Also, respondents,
as plaintiffs below, failed to adduce a shred of evidence to prove that they were obliged to pay the P278,448.00
monthly, semi-annually or annually. The allegation that the payment of the P278,448.00 was to be paid in
installments is, thus, vague and indefinite. Case law is that, for a contract to be enforceable, its terms must be
certain and explicit, not vague or indefinite.[72]
There is no factual and legal basis for the CA ruling that, based on the terms of payment of the balance of the
purchase price of the lots under the contracts of conditional sale executed by XEI and the other lot buyers,
respondents were obliged to pay the P278,448.00 with pre-computed interest of 12% per annum in 120-month
installments. As gleaned from the ruling of the appellate court, it failed to justify its use of the terms of payment
under the three contracts of conditional sale as basis for such ruling, to wit:
On the other hand, the records do not disclose the schedule of payment of the purchase price, net of the
downpayment. Considering, however, the Contracts of Conditional Sale (Exhs. N, O and P) entered into by
XEI with other lot buyers, it would appear that the subdivision lots sold by XEI, under contracts to sell, were
payable in 120 equal monthly installments (exclusive of the downpayment but including pre-computed interests)
commencing on delivery of the lot to the buyer.[73]

By its ruling, the CA unilaterally supplied an essential element to the letter agreement of XEI and the respondents.
Courts should not undertake to make a contract for the parties, nor can it enforce one, the terms of which are in
doubt.[74] Indeed, the Court emphasized in Chua v. Court of Appeals[75] that it is not the province of a court to
alter a contract by construction or to make a new contract for the parties; its duty is confined to the interpretation
of the one which they have made for themselves, without regard to its wisdom or folly, as the court cannot supply
material stipulations or read into contract words which it does not contain.
Respondents, as plaintiffs below, failed to allege in their complaint that the terms of payment of the P278,448.00
to be incorporated in the corresponding contract of conditional sale were those contained in the contracts of
conditional sale executed by XEI and Soller, Aguila and Roque.[76] They likewise failed to prove such allegation in
this Court.
The bare fact that other lot buyers were allowed to pay the balance of the purchase price of lots purchased by
them in 120 or 180 monthly installments does not constitute evidence that XEI also agreed to give the
respondents the same mode and timeline of payment of the P278,448.00.
Under Section 34, Rule 130 of the Revised Rules of Court, evidence that one did a certain thing at one time is not
admissible to prove that he did the same or similar thing at another time, although such evidence may be
received to prove habit, usage, pattern of conduct or the intent of the parties.
Similar acts as evidence. Evidence that one did or did not do a certain thing at one time is not admissible to
prove that he did or did not do the same or a similar thing at another time; but it may be received to prove a
specific intent or knowledge, identity, plan, system, scheme, habit, custom or usage, and the like.
However, respondents failed to allege and prove, in the trial court, that, as a matter of business usage, habit or
pattern of conduct, XEI granted all lot buyers the right to pay the balance of the purchase price in installments of
120 months of fixed amounts with pre-computed interests, and that XEI and the respondents had intended to
adopt such terms of payment relative to the sale of the two lots in question. Indeed, respondents adduced in
evidence the three contracts of conditional sale executed by XEI and other lot buyers merely to prove that XEI

continued to sell lots in the subdivision as sales agent of OBM after it acquired said lots, not to prove usage, habit
or pattern of conduct on the part of XEI to require all lot buyers in the subdivision to pay the balance of the
purchase price of said lots in 120 months. It further failed to prive that the trial court admitted the said deeds[77]
as part of the testimony of respondent Manalo, Jr.[78]
Habit, custom, usage or pattern of conduct must be proved like any other facts. Courts must contend with the
caveat that, before they admit evidence of usage, of habit or pattern of conduct, the offering party must establish
the degree of specificity and frequency of uniform response that ensures more than a mere tendency to act in a
given manner but rather, conduct that is semi-automatic in nature. The offering party must allege and prove
specific, repetitive conduct that might constitute evidence of habit. The examples offered in evidence to prove
habit, or pattern of evidence must be numerous enough to base on inference of systematic conduct. Mere
similarity of contracts does not present the kind of sufficiently similar circumstances to outweigh the danger of
prejudice and confusion.
In determining whether the examples are numerous enough, and sufficiently regular, the key criteria are adequacy
of sampling and uniformity of response. After all, habit means a course of behavior of a person regularly
represented in like circumstances.[79] It is only when examples offered to establish pattern of conduct or habit
are numerous enough to lose an inference of systematic conduct that examples are admissible. The key criteria
are adequacy of sampling and uniformity of response or ratio of reaction to situations.[80]
There are cases where the course of dealings to be followed is defined by the usage of a particular trade or market
or profession. As expostulated by Justice Benjamin Cardozo of the United States Supreme Court: Life casts the
moulds of conduct, which will someday become fixed as law. Law preserves the moulds which have taken form
and shape from life.[81] Usage furnishes a standard for the measurement of many of the rights and acts of men.
[82] It is also well-settled that parties who contract on a subject matter concerning which known usage prevail,
incorporate such usage by implication into their agreement, if nothing is said to be contrary.[83]
However, the respondents inexplicably failed to adduce sufficient competent evidence to prove usage, habit or
pattern of conduct of XEI to justify the use of the terms of payment in the contracts of the other lot buyers, and
thus grant respondents the right to pay the P278,448.00 in 120 months, presumably because of respondents
belief that the manner of payment of the said amount is not an essential element of a contract to sell. There is no
evidence that XEI or OBM and all the lot buyers in the subdivision, including lot buyers who pay part of the
downpayment of the property purchased by them in the form of service, had executed contracts of conditional
sale containing uniform terms and conditions. Moreover, under the terms of the contracts of conditional sale
executed by XEI and three lot buyers in the subdivision, XEI agreed to grant 120 months within which to pay the
balance of the purchase price to two of them, but granted one 180 months to do so.[84] There is no evidence on
record that XEI granted the same right to buyers of two or more lots.
Irrefragably, under Article 1469 of the New Civil Code, the price of the property sold may be considered certain if it
be so with reference to another thing certain. It is sufficient if it can be determined by the stipulations of the
contract made by the parties thereto[85] or by reference to an agreement incorporated in the contract of sale or
contract to sell or if it is capable of being ascertained with certainty in said contract;[86] or if the contract contains
express or implied provisions by which it may be rendered certain;[87] or if it provides some method or criterion
by which it can be definitely ascertained.[88] As this Court held in Villaraza v. Court of Appeals,[89] the price is
considered certain if, by its terms, the contract furnishes a basis or measure for ascertaining the amount agreed
upon.
We have carefully reviewed the August 22, 1972 letter agreement of the parties and find no direct or implied
reference to the manner and schedule of payment of the balance of the purchase price of the lots covered by the
deeds of conditional sale executed by XEI and that of the other lot buyers[90] as basis for or mode of
determination of the schedule of the payment by the respondents of the P278,448.00.
The ruling of this Court in Mitsui Bussan Kaisha v. Manila Electric Railroad and Light Company[91] is not applicable
in this case because the basic price fixed in the contract was P9.45 per long ton, but it was stipulated that the
price was subject to modification in proportion to variations in calories and ash content, and not otherwise. In
this case, the parties did not fix in their letters-agreement, any method or mode of determining the terms of
payment of the balance of the purchase price of the property amounting to P278,448.00.
It bears stressing that the respondents failed and refused to pay the balance of the downpayment and of the
purchase price of the property amounting to P278,448.00 despite notice to them of the resumption by XEI of its
selling operations. The respondents enjoyed possession of the property without paying a centavo. On the other
hand, XEI and OBM failed and refused to transmit a contract of conditional sale to the respondents. The

respondents could have at least consigned the balance of the downpayment after notice of the resumption of the
selling operations of XEI and filed an action to compel XEI or OBM to transmit to them the said contract; however,
they failed to do so.
As a consequence, respondents and XEI (or OBM for that matter) failed to forge a perfected contract to sell the
two lots; hence, respondents have no cause of action for specific performance against petitioner. Republic Act No.
6552 applies only to a perfected contract to sell and not to a contract with no binding and enforceable effect.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV
No. 47458 is REVERSED and SET ASIDE. The Regional Trial Court of Quezon City, Branch 98 is ordered to dismiss
the complaint. Costs against the respondents.
SO ORDERED.
G.R. No. 154493
December 6, 2006
REYNALDO VILLANUEVA, petitioner,
vs.
PHILIPPINE NATIONAL BANK (PNB), respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The Petition for Review on Certiorari under Rule 45 before this Court assails the January 29, 2002 Decision1 and
June 27, 2002 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 520083 which reversed and set aside the
September 14, 1995 Decision4 of the Regional Trial Court, Branch 22, General Santos City (RTC) in Civil Case No.
4553.
As culled from the records, the facts are as follows:
The Special Assets Management Department (SAMD) of the Philippine National Bank (PNB) issued an
advertisement for the sale thru bidding of certain PNB properties in Calumpang, General Santos City, including Lot
No. 17, covered by TCT No. T-15042, consisting of 22,780 square meters, with an advertised floor price
ofP1,409,000.00, and Lot No. 19, covered by TCT No. T-15036, consisting of 41,190 square meters, with an
advertised floor price of P2,268,000.00.5 Bidding was subject to the following conditions: 1) that cash bids be
submitted not later than April 27, 1989; 2) that said bids be accompanied by a 10% deposit in managers or
cashiers check; and 3) that all acceptable bids be subject to approval by PNB authorities.
In a June 28, 1990 letter6 to the Manager, PNB-General Santos Branch, Reynaldo Villanueva (Villanueva) offered to
purchase Lot Nos. 17 and 19 for P3,677,000.00. He also manifested that he was depositing P400,000.00 to show
his good faith but with the understanding that said amount may be treated as part of the payment of the purchase
price only when his offer is accepted by PNB. At the bottom of said letter there appears an unsigned marginal note
stating that P400,000.00 was deposited into Villanuevas account (Savings Account No. 43612) with PNB-General
Santos Branch. 7
PNB-General Santos Branch forwarded the June 28, 1990 letter of Villanueva to Ramon Guevara (Guevara), Vice
President, SAMD.8 On July 6, 1990, Guevara informed Villanueva that only Lot No. 19 is available and that the
asking price therefor is P2,883,300.00.9 Guevara further wrote:
If our quoted price is acceptable to you, please submit a revised offer to purchase. Sale shall be subject to
our Board of Directors approval and to other terms and conditions imposed by the Bank on sale of
acquired assets. 10 (Emphasis ours)
Instead of submitting a revised offer, Villanueva merely inserted at the bottom of Guevaras letter a July 11, 1990
marginal note, which reads:
C O N F O R M E:
PRICE OF P2,883,300.00 (downpayment of P600,000.00 and the balance payable in two (2) years
at quarterly amortizations.) 11
Villanueva paid P200,000.00 to PNB which issued O.R. No. 16997 to acknowledge receipt of the "partial payment
deposit on offer to purchase."12 On the dorsal portion of Official Receipt No. 16997, Villanueva signed a typewritten
note, stating:
This is a deposit made to show the sincerity of my purchase offer with the understanding that it shall be
returned without interest if my offer is not favorably considered or be forfeited if my offer is approved but I
fail/refuse to push through the purchase.13
Also, on July 24, 1990, P380,000.00 was debited from Villanuevas Savings Account No. 43612 and credited to
SAMD.14
On October 11, 1990, however, Guevara wrote Villanueva that, upon orders of the PNB Board of Directors to
conduct another appraisal and public bidding of Lot No. 19, SAMD is deferring negotiations with him over said

property and returning his deposit of P580,000.00.15 Undaunted, Villanueva attempted to deliver postdated checks
covering the balance of the purchase price but PNB refused the same.
Hence, Villanueva filed with the RTC a Complaint16 for specific performance and damages against PNB. In its
September 14, 1995 Decision, the RTC granted the Complaint, thus:
WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant directing it to do the
following:
1. To execute a deed of sale in favor of the plaintiff over Lot 19 comprising 41,190 square meters situated
at Calumpang, General Santos City covered by TCT No. T-15036 after payment of the balance in cash in
the amount of P2,303,300.00;
2. To pay the plaintiff P1,000,000.00 as moral damages; P500,000.00 as attorneys fees, plus litigation
expenses and costs of the suit.
SO ORDERED.17
The RTC anchored its judgment on the finding that there existed a perfected contract of sale between PNB and
Villanueva. It found:
The following facts are either admitted or undisputed:
xxx
The defendant through Vice-President Guevara negotiated with the plaintiff in connection with the offer of
the plaintiff to buy Lots 17 & 19. The offer of plaintiff to buy, however, was accepted by the defendant only
insofar as Lot 19 is concerned as exemplified by its letter dated July 6, 1990 where the plaintiff signified his
concurrence after conferring with the defendants vice-president. The conformity of the plaintiff was
typewritten by the defendants own people where the plaintiff accepted the price of P2,883,300.00. The
defendant also issued a receipt to the plaintiff on the same day when the plaintiff paid the amount
ofP200,000.00 to complete the downpayment of P600,000.00 (Exhibit "F" & Exhibit "I"). With this
development, the plaintiff was also given the go signal by the defendant to improve Lot 19 because it was
already in effect sold to him and because of that the defendant fenced the lot and completed his two
houses on the property.18
The RTC also pointed out that Villanuevas P580,000.00 downpayment was actually in the nature of earnest money
acceptance of which by PNB signified that there was already a sale.19 The RTC further cited contemporaneous acts
of PNB purportedly indicating that, as early as July 25, 1990, it considered Lot 19 already sold, as shown by
Guevaras July 25, 1990 letter (Exh. "H")20 to another interested buyer.
PNB appealed to the CA which reversed and set aside the September 14, 1995 RTC Decision, thus:
WHEREFORE, the appealed decision is REVERSED and SET ASIDE and another rendered DISMISSING the
complaint.
SO ORDERED.21
According to the CA, there was no perfected contract of sale because the July 6, 1990 letter of Guevara
constituted a qualified acceptance of the June 28, 1990 offer of Villanueva, and to which Villanueva replied on July
11, 1990 with a modified offer. The CA held:
In the case at bench, consent, in respect to the price and manner of its payment, is lacking. The record
shows that appellant, thru Guevaras July 6, 1990 letter, made a qualified acceptance of appellees letteroffer dated June 28, 1990 by imposing an asking price of P2,883,300.00 in cash for Lot 19. The letter dated
July 6, 1990 constituted a counter-offer (Art. 1319, Civil Code), to which appellee made a new
proposal, i.e., to pay the amount of P2,883,300.00 in staggered amounts, that is, P600,000.00 as
downpayment and the balance within two years in quarterly amortizations.
A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and a rejection of
the original offer (Art. 1319, id.). Consequently, when something is desired which is not exactly what is
proposed in the offer, such acceptance is not sufficient to generate consent because any modification or
variation from the terms of the offer annuls the offer (Tolentino, Commentaries and Jurisprudence on the
Civil Code of the Philippines, 6th ed., 1996, p. 450, cited in ABS-CBN Broadcasting Corporation v. Court of
Appeals, et al., 301 SCRA 572).
Appellees new proposal, which constitutes a counter-offer, was not accepted by appellant, its board
having decided to have Lot 19 reappraised and sold thru public bidding.
Moreover, it was clearly stated in Guevaras July 6, 1990 letter that "the sale shall be subject to our Board
of Directors approval and to other terms and conditions imposed by the Bank on sale of acquired assets."22
Villanuevas Motion for Reconsideration23 was denied by the CA in its Resolution of June 27, 2002.
Petitioner Villanueva now assails before this Court the January 29, 2002 Decision and June 27, 2002 Resolution of
the CA. He assigns five issues which may be condensed into two: first, whether a perfected contract of sale exists
between petitioner and respondent PNB; and second, whether the conduct and actuation of respondent
constitutes bad faith as to entitle petitioner to moral and exemplary damages and attorneys fees.
The Court sustains the CA on both issues.

Contracts of sale are perfected by mutual consent whereby the seller obligates himself, for a price certain, to
deliver and transfer ownership of a specified thing or right to the buyer over which the latter agrees.24 Mutual
consent being a state of mind, its existence may only be inferred from the confluence of two acts of the parties: an
offer certain as to the object of the contract and its consideration, and an acceptance of the offer which is
absolute in that it refers to the exact object and consideration embodied in said offer.25 While it is impossible to
expect the acceptance to echo every nuance of the offer, it is imperative that it assents to those points in the offer
which, under the operative facts of each contract, are not only material but motivating as well. Anything short of
that level of mutuality produces not a contract but a mere counter-offer awaiting acceptance.26 More particularly
on the matter of the consideration of the contract, the offer and its acceptance must be unanimous both on the
rate of the payment and on its term. An acceptance of an offer which agrees to the rate but varies the term is
ineffective. 27
To determine whether there was mutual consent between the parties herein, it is necessary to retrace each offer
and acceptance they made.
Respondent began with an invitation to bid issued in April 1989 covering several of its acquired assets in
Calumpang, General Santos City, including Lot No. 19 for which the floor price was P2,268,000.00. The offer was
subject to the condition that sealed bids, accompanied by a 10% deposit in managers or cashiers check, be
submitted not later than 10 oclock in the morning of April 27, 1989.
On June 28, 1990, petitioner made an offer to buy Lot No. 17 and Lot No. 19 for an aggregate price
ofP3,677,000.00. It is noted that this offer exactly corresponded to the April 1989 invitation to bid issued by
respondent in that the proposed aggregate purchase price for Lot Nos. 17 and 19 matched the advertised floor
prices for the same properties. However, it cannot be said that the June 28, 1990 letter of petitioner was an
effective acceptance of the April 1989 invitation to bid for, by its express terms, said invitation lapsed on April 27,
1989.28 More than that, the April 1989 invitation was subject to the condition that all sealed bids submitted and
accepted be approved by respondents higher authorities.
Thus, the June 28, 1990 letter of petitioner was an offer to buy independent of the April 1989 invitation to bid. It
was a definite offer as it identified with certainty the properties sought to be purchased and fixed the contract
price.
However, respondent replied to the June 28, 1990 offer with a July 6, 1990 letter that only Lot No. 19 is available
and that the price therefor is now P2,883,300.00. As the CA pointed out, this reply was certainly not an
acceptance of the June 28, 1990 offer but a mere counter-offer. It deviated from the original offer on three material
points: first, the object of the proposed sale is now only Lot No. 19 rather than Lot Nos. 17 and 19; second, the
area of the property to be sold is still 41,190 sq. m but an 8,797-sq. m portion is now part of a public road; and
third, the consideration is P2,883,300 for one lot rather than P3,677,000.00 for two lots. More important, this July
6, 1990 counter-offer imposed two conditions: one, that petitioner submit a revised offer to purchase based on the
quoted price; and two, that the sale of the property be approved by the Board of Directors and subjected to other
terms and conditions imposed by the Bank on the sale of acquired assets.
In reply to the July 6, 1990 counter-offer, petitioner signed his July 11, 1990 conformity to the quoted price
ofP2,883,300.00 but inserted the term "downpayment of P600,000.00 and the balance payable in two years at
quarterly amortization." The CA viewed this July 11, 1990 conformity not as an acceptance of the July 6, 1990
counter-offer but a further counter-offer for, while petitioner accepted the P2,883,300.00 price for Lot No. 19, he
qualified his acceptance by proposing a two-year payment term.
Petitioner does not directly impugn such reasoning of the CA. He merely questions it for taking up the issue of
whether his July 11, 1990 conformity modified the July 6, 1990 counter-offer as this was allegedly never raised
during the trial nor on appeal.29
Such argument is not well taken. From beginning to end, respondent denied that a contract of sale with petitioner
was ever perfected.30 Its defense was broad enough to encompass every issue relating to the concurrence of the
elements of contract, specifically on whether it consented to the object of the sale and its consideration. There
was nothing to prevent the CA from inquiring into the offers and counter-offers of the parties to determine whether
there was indeed a perfected contract between them.
Moreover, there is merit in the ruling of the CA that the July 11, 1990 marginal note was a further counter-offer
which did not lead to the perfection of a contract of sale between the parties. Petitioners own June 28, 1990 offer
quoted the price of P3,677,000.00 for two lots but was silent on the term of payment. Respondents July 6, 1990
counter-offer quoted the price of P2,833,300.00 and was also silent on the term of payment. Up to that point, the
term or schedule of payment was not on the negotiation table. Thus, when petitioner suddenly introduced a term
of payment in his July 11, 1990 counter-offer, he interjected into the negotiations a new substantial matter on
which the parties had no prior discussion and over which they must yet agree.31 Petitioners July 11, 1990 counteroffer, therefore, did not usher the parties beyond the negotiation stage of contract making towards its perfection.
He made a counter-offer that required acceptance by respondent.
As it were, respondent, through its Board of Directors, did not accept this last counter-offer. As stated in its
October 11, 1990 letter to petitioner, respondent ordered the reappraisal of the property, in clear repudiation not
only of the proposed price but also the term of payment thereof.
Petitioner insists, however, that the October 11, 1990 repudiation was belated as respondent had already agreed
to his July 11, 1990 counter-offer when it accepted his "downpayment" or "earnest money" of P580,000.00.32 He

cites Article 1482 of the Civil Code where it says that acceptance of "downpayment" or "earnest money"
presupposes the perfection of a contract.
Not so. Acceptance of petitioners payments did not amount to an implied acceptance of his last counter-offer.
To begin with, PNB-General Santos Branch, which accepted petitioners P380,000.00 payment, and PNB-SAMD,
which accepted his P200,000.00 payment, had no authority to bind respondent to a contract of sale with
petitioner.33 Petitioner is well aware of this. To recall, petitioner sent his June 28, 1990 offer to PNB-General Santos
Branch. Said branch did not act on his offer except to endorse it to Guevarra. Thereafter, petitioner transacted
directly with Guevarra. Petitioner then cannot pretend that PNB-General Santos Branch had authority to accept his
July 11, 1990 counter-offer by merely accepting his P380,000.00 payment.
Neither did SAMD have authority to bind PNB. In its April 1989 invitation to bid, as well as its July 6, 1990 counteroffer, SAMD was always careful to emphasize that whatever offer is made and entertained will be subject to the
approval of respondents higher authorities. This is a reasonable disclaimer considering the corporate nature of
respondent. 34
Moreover, petitioners payment of P200,000.00 was with the clear understanding that his July 11, 1990 counteroffer was still subject to approval by respondent. This is borne out by respondents Exhibits "2-a" and "2-b", which
petitioner never controverted, where it appears on the dorsal portion of O.R. No. 16997 that petitioner acceded
that the amount he paid was a mere "x x x deposit made to show the sincerity of [his] purchase offer with the
understanding that it shall be returned without interest if [his] offer is not favorably considered x x x." 35 This was a
clear acknowledgment on his part that there was yet no perfected contract with respondent and that even with
the payments he had advanced, his July 11, 1990 counter-offer was still subject to consideration by respondent.
Not only that, in the same Exh. "2-a" as well as in his June 28, 1990 offer, petitioner referred to his payments as
mere "deposits." Even O.R. No. 16997 refers to petitioners payment as mere deposit. It is only in the debit notice
issued by PNB-General Santos Branch where petitioners payment is referred to as "downpayment". But then, as
we said, PNB-General Santos Branch has no authority to bind respondent by its interpretation of the nature of the
payment made by petitioner.
In sum, the amounts paid by petitioner were not in the nature of downpayment or earnest money but were mere
deposits or proof of his interest in the purchase of Lot No. 19. Acceptance of said amounts by respondent does not
presuppose perfection of any contract.36
It must be noted that petitioner has expressly admitted that he had withdrawn the entire amount of P580,000.00
deposit from PNB-General Santos Branch.37
With the foregoing disquisition, the Court foregoes resolution of the second issue as it is evident that respondent
acted well within its rights when it rejected the last counter-offer of petitioner.
In fine, petitioners petition lacks merit.
WHEREFORE, the petition is DENIED. The Decision dated January 29, 2002 and Resolution dated June 27, 2002 of
the Court of Appeals are AFFIRMED.
No costs.
SO ORDERED.
G.R. No. 166862
December 20, 2006
MANILA METAL CONTAINER CORPORATION, petitioner,
REYNALDO C. TOLENTINO, intervenor,
vs.
PHILIPPINE NATIONAL BANK, respondent,
DMCI-PROJECT DEVELOPERS, INC., intervenor.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. No. 46153
which affirmed the decision2 of the Regional Trial Court (RTC), Branch 71, Pasig City, in Civil Case No. 58551, and
its Resolution3 denying the motion for reconsideration filed by petitioner Manila Metal Container Corporation
(MMCC).
The Antecedents
Petitioner was the owner of a 8,015 square meter parcel of land located in Mandaluyong (now a City), Metro
Manila. The property was covered by Transfer Certificate of Title (TCT) No. 332098 of the Registry of Deeds of
Rizal. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank (PNB), petitioner
executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit
accommodation ofP1,000,000.00; and, on November 16, 1973, petitioner executed an Amendment4 of Real Estate
Mortgage over its property. On March 31, 1981, petitioner secured another loan of P653,000.00 from respondent
PNB, payable in quarterly installments of P32,650.00, plus interests and other charges.5

On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and
sought to have the property sold at public auction for P911,532.21, petitioner's outstanding obligation to
respondent PNB as of June 30, 1982,6 plus interests and attorney's fees.
After due notice and publication, the property was sold at public auction on September 28, 1982 where
respondent PNB was declared the winning bidder for P1,000,000.00. The Certificate of Sale7 issued in its favor was
registered with the Office of the Register of Deeds of Rizal, and was annotated at the dorsal portion of the title on
February 17, 1983. Thus, the period to redeem the property was to expire on February 17, 1984.
Petitioner sent a letter dated August 25, 1983 to respondent PNB, requesting that it be granted an extension of
time to redeem/repurchase the property.8 In its reply dated August 30, 1983, respondent PNB informed petitioner
that the request had been referred to its Pasay City Branch for appropriate action and recommendation.9
In a letter10 dated February 10, 1984, petitioner reiterated its request for a one year extension from February 17,
1984 within which to redeem/repurchase the property on installment basis. It reiterated its request to repurchase
the property on installment.11 Meanwhile, some PNB Pasay City Branch personnel informed petitioner that as a
matter of policy, the bank does not accept "partial redemption."12
Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 on June 1, 1984,
and issued a new title in favor of respondent PNB.13 Petitioner's offers had not yet been acted upon by respondent
PNB.
Meanwhile, the Special Assets Management Department (SAMD) had prepared a statement of account, and as of
June 25, 1984 petitioner's obligation amounted to P1,574,560.47. This included the bid price of P1,056,924.50,
interest, advances of insurance premiums, advances on realty taxes, registration expenses, miscellaneous
expenses and publication cost.14 When apprised of the statement of account, petitioner remitted P725,000.00 to
respondent PNB as "deposit to repurchase," and Official Receipt No. 978191 was issued to it.15
In the meantime, the SAMD recommended to the management of respondent PNB that petitioner be allowed to
repurchase the property for P1,574,560.00. In a letter dated November 14, 1984, the PNB management informed
petitioner that it was rejecting the offer and the recommendation of the SAMD. It was suggested that petitioner
purchase the property for P2,660,000.00, its minimum market value. Respondent PNB gave petitioner until
December 15, 1984 to act on the proposal; otherwise, its P725,000.00 deposit would be returned and the property
would be sold to other interested buyers.16
Petitioner, however, did not agree to respondent PNB's proposal. Instead, it wrote another letter dated December
12, 1984 requesting for a reconsideration. Respondent PNB replied in a letter dated December 28, 1984, wherein
it reiterated its proposal that petitioner purchase the property for P2,660,000.00. PNB again informed petitioner
that it would return the deposit should petitioner desire to withdraw its offer to purchase the property. 17 On
February 25, 1985, petitioner, through counsel, requested that PNB reconsider its letter dated December 28, 1984.
Petitioner declared that it had already agreed to the SAMD's offer to purchase the property for P1,574,560.47, and
that was why it had paid P725,000.00. Petitioner warned respondent PNB that it would seek judicial recourse
should PNB insist on the position.18
On June 4, 1985, respondent PNB informed petitioner that the PNB Board of Directors had accepted petitioner's
offer to purchase the property, but for P1,931,389.53 in cash less the P725,000.00 already deposited with it.19 On
page two of the letter was a space above the typewritten name of petitioner's President, Pablo Gabriel, where he
was to affix his signature. However, Pablo Gabriel did not conform to the letter but merely indicated therein that
he had received it.20 Petitioner did not respond, so PNB requested petitioner in a letter dated June 30, 1988 to
submit an amended offer to repurchase.
Petitioner rejected respondent's proposal in a letter dated July 14, 1988. It maintained that respondent PNB had
agreed to sell the property for P1,574,560.47, and that since its P725,000.00 downpayment had been accepted,
respondent PNB was proscribed from increasing the purchase price of the property.21 Petitioner averred that it had
a net balance payable in the amount of P643,452.34. Respondent PNB, however, rejected petitioner's offer to pay
the balance of P643,452.34 in a letter dated August 1, 1989.22
On August 28, 1989, petitioner filed a complaint against respondent PNB for "Annulment of Mortgage and
Mortgage Foreclosure, Delivery of Title, or Specific Performance with Damages." To support its cause of action for
specific performance, it alleged the following:
34. As early as June 25, 1984, PNB had accepted the down payment from Manila Metal in the substantial
amount of P725,000.00 for the redemption/repurchase price of P1,574,560.47 as approved by its SMAD
and considering the reliance made by Manila Metal and the long time that has elapsed, the approval of the
higher management of the Bank to confirm the agreement of its SMAD is clearly a potestative condition
which cannot legally prejudice Manila Metal which has acted and relied on the approval of SMAD. The Bank
cannot take advantage of a condition which is entirely dependent upon its own will after accepting and
benefiting from the substantial payment made by Manila Metal.
35. PNB approved the repurchase price of P1,574,560.47 for which it accepted P725,000.00 from Manila
Metal. PNB cannot take advantage of its own delay and long inaction in demanding a higher amount based
on unilateral computation of interest rate without the consent of Manila Metal.
Petitioner later filed an amended complaint and supported its claim for damages with the following arguments:

36. That in order to protect itself against the wrongful and malicious acts of the defendant Bank, plaintiff is
constrained to engage the services of counsel at an agreed fee of P50,000.00 and to incur litigation
expenses of at least P30,000.00, which the defendant PNB should be condemned to pay the plaintiff Manila
Metal.
37. That by reason of the wrongful and malicious actuations of defendant PNB, plaintiff Manila Metal
suffered besmirched reputation for which defendant PNB is liable for moral damages of at
least P50,000.00.
38. That for the wrongful and malicious act of defendant PNB which are highly reprehensible, exemplary
damages should be awarded in favor of the plaintiff by way of example or correction for the public good of
at least P30,000.00.23
Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus:
a) Declaring the Amended Real Estate Mortgage (Annex "A") null and void and without any legal force and
effect.
b) Declaring defendant's acts of extra-judicially foreclosing the mortgage over plaintiff's property and
setting it for auction sale null and void.
c) Ordering the defendant Register of Deeds to cancel the new title issued in the name of PNB (TCT NO.
43792) covering the property described in paragraph 4 of the Complaint, to reinstate TCT No. 37025 in the
name of Manila Metal and to cancel the annotation of the mortgage in question at the back of the TCT
No.37025 described in paragraph 4 of this Complaint.
d) Ordering the defendant PNB to return and/or deliver physical possession of the TCT No. 37025 described
in paragraph 4 of this Complaint to the plaintiff Manila Metal.
e) Ordering the defendant PNB to pay the plaintiff Manila Metal's actual damages, moral and exemplary
damages in the aggregate amount of not less than P80,000.00 as may be warranted by the evidence and
fixed by this Honorable Court in the exercise of its sound discretion, and attorney's fees of P50,000.00 and
litigation expenses of at least P30,000.00 as may be proved during the trial, and costs of suit.
Plaintiff likewise prays for such further reliefs which may be deemed just and equitable in the premises.24
In its Answer to the complaint, respondent PNB averred, as a special and affirmative defense, that it had acquired
ownership over the property after the period to redeem had elapsed. It claimed that no contract of sale was
perfected between it and petitioner after the period to redeem the property had expired.
During pre-trial, the parties agreed to submit the case for decision, based on their stipulation of facts.25 The
parties agreed to limit the issues to the following:
1. Whether or not the June 4, 1985 letter of the defendant approving/accepting plaintiff's offer to purchase
the property is still valid and legally enforceable.
2. Whether or not the plaintiff has waived its right to purchase the property when it failed to conform with
the conditions set forth by the defendant in its letter dated June 4, 1985.
3. Whether or not there is a perfected contract of sale between the parties.26
While the case was pending, respondent PNB demanded, on September 20, 1989, that petitioner vacate the
property within 15 days from notice,27 but petitioners refused to do so.
On March 18, 1993, petitioner offered to repurchase the property for P3,500,000.00.28 The offer was however
rejected by respondent PNB, in a letter dated April 13, 1993. According to it, the prevailing market value of the
property was approximately P30,000,000.00, and as a matter of policy, it could not sell the property for less than
its market value.29 On June 21, 1993, petitioner offered to purchase the property for P4,250,000.00 in cash.30 The
offer was again rejected by respondent PNB on September 13, 1993.31
On May 31, 1994, the trial court rendered judgment dismissing the amended complaint and respondent PNB's
counterclaim. It ordered respondent PNB to refund the P725,000.00 deposit petitioner had made.32 The trial court
ruled that there was no perfected contract of sale between the parties; hence, petitioner had no cause of action
for specific performance against respondent. The trial court declared that respondent had rejected petitioner's
offer to repurchase the property. Petitioner, in turn, rejected the terms and conditions contained in the June 4,
1985 letter of the SAMD. While petitioner had offered to repurchase the property per its letter of July 14, 1988, the
amount ofP643,422.34 was way below the P1,206,389.53 which respondent PNB had demanded. It further
declared that theP725,000.00 remitted by petitioner to respondent PNB on June 4, 1985 was a "deposit," and not a
downpayment or earnest money.
On appeal to the CA, petitioner made the following allegations:
I
THE LOWER COURT ERRED IN RULING THAT DEFENDANT-APPELLEE'S LETTER DATED 4 JUNE 1985
APPROVING/ACCEPTING PLAINTIFF-APPELLANT'S OFFER TO PURCHASE THE SUBJECT PROPERTY IS NOT
VALID AND ENFORCEABLE.
II
THE LOWER COURT ERRED IN RULING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN
PLAINTIFF-APPELLANT AND DEFENDANT-APPELLEE.

III
THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLLANT WAIVED ITS RIGHT TO PURCHASE THE
SUBJECT PROPERTY WHEN IT FAILED TO CONFORM WITH CONDITIONS SET FORTH BY DEFENDANTAPPELLEE IN ITS LETTER DATED 4 JUNE 1985.
IV
THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT IT WAS THE DEFENDANT-APPELLEE WHICH
RENDERED IT DIFFICULT IF NOT IMPOSSIBLE FOR PLAINTIFF-APPELLANT TO COMPLETE THE BALANCE OF
THEIR PURCHASE PRICE.
V
THE LOWER COURT ERRED IN DISREGARDING THE FACT THAT THERE WAS NO VALID RESCISSION OR
CANCELLATION OF SUBJECT CONTRACT OF REPURCHASE.
VI
THE LOWER COURT ERRED IN DECLARING THAT PLAINTIFF FAILED AND REFUSED TO SUBMIT THE
AMENDED REPURCHASE OFFER.
VII
THE LOWER COURT ERRED IN DISMISSING THE AMENDED COMPLAINT OF PLAINTIFF-APPELLANT.
VIII
THE LOWER COURT ERRED IN NOT AWARDING PLAINTIFF-APPELLANT ACTUAL, MORAL AND EXEMPLARY
DAMAGES, ATTOTRNEY'S FEES AND LITIGATION EXPENSES.33
Meanwhile, on June 17, 1993, petitioner's Board of Directors approved Resolution No. 3-004, where it waived,
assigned and transferred its rights over the property covered by TCT No. 33099 and TCT No. 37025 in favor of
Bayani Gabriel, one of its Directors.34 Thereafter, Bayani Gabriel executed a Deed of Assignment over 51% of the
ownership and management of the property in favor of Reynaldo Tolentino, who later moved for leave to intervene
as plaintiff-appellant. On July 14, 1993, the CA issued a resolution granting the motion,35 and likewise granted the
motion of Reynaldo Tolentino substituting petitioner MMCC, as plaintiff-appellant, and his motion to withdraw as
intervenor.36
The CA rendered judgment on May 11, 2000 affirming the decision of the RTC.37 It declared that petitioner
obviously never agreed to the selling price proposed by respondent PNB (P1,931,389.53) since petitioner had kept
on insisting that the selling price should be lowered to P1,574,560.47. Clearly therefore, there was no meeting of
the minds between the parties as to the price or consideration of the sale.
The CA ratiocinated that petitioner's original offer to purchase the subject property had not been accepted by
respondent PNB. In fact, it made a counter-offer through its June 4, 1985 letter specifically on the selling price;
petitioner did not agree to the counter-offer; and the negotiations did not prosper. Moreover, petitioner did not pay
the balance of the purchase price within the sixty-day period set in the June 4, 1985 letter of respondent PNB.
Consequently, there was no perfected contract of sale, and as such, there was no contract to rescind.
According to the appellate court, the claim for damages and the counterclaim were correctly dismissed by the
court a quo for no evidence was presented to support it. Respondent PNB's letter dated June 30, 1988 cannot
revive the failed negotiations between the parties. Respondent PNB merely asked petitioner to submit an
amended offer to repurchase. While petitioner reiterated its request for a lower selling price and that the balance
of the repurchase be reduced, however, respondent rejected the proposal in a letter dated August 1, 1989.
Petitioner filed a motion for reconsideration, which the CA likewise denied.
Thus, petitioner filed the instant petition for review on certiorari, alleging that:
I. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THERE IS NO PERFECTED
CONTRACT OF SALE BETWEEN THE PETITIONER AND RESPONDENT.
II. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE AMOUNT OF
PHP725,000.00 PAID BY THE PETITIONER IS NOT AN EARNEST MONEY.
III. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE FAILURE OF THE
PETITIONER-APPELLANT TO SIGNIFY ITS CONFORMITY TO THE TERMS CONTAINED IN PNB'S JUNE 4, 1985
LETTER MEANS THAT THERE WAS NO VALID AND LEGALLY ENFORCEABLE CONTRACT OF SALE BETWEEN
THE PARTIES.
IV. THE COURT OF APPEALS ERRED ON A QUESTION OF LAW THAT NON-PAYMENT OF THE PETITIONERAPPELLANT OF THE BALANCE OF THE OFFERED PRICE IN THE LETTER OF PNB DATED JUNE 4, 1985, WITHIN
SIXTY (60) DAYS FROM NOTICE OF APPROVAL CONSTITUTES NO VALID AND LEGALLY ENFORCEABLE
CONTRACT OF SALE BETWEEN THE PARTIES.
V. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT HELD THAT THE LETTERS OF PETITIONERAPPELLANT DATED MARCH 18, 1993 AND JUNE 21, 1993, OFFERING TO BUY THE SUBJECT PROPERTY AT
DIFFERENT AMOUNT WERE PROOF THAT THERE IS NO PERFECTED CONTRACT OF SALE. 38
The threshold issue is whether or not petitioner and respondent PNB had entered into a perfected contract for
petitioner to repurchase the property from respondent.

Petitioner maintains that it had accepted respondent's offer made through the SAMD, to sell the property
forP1,574,560.00. When the acceptance was made in its letter dated June 25, 1984; it then deposited P725,000.00
with the SAMD as partial payment, evidenced by Receipt No. 978194 which respondent had issued. Petitioner
avers that the SAMD's acceptance of the deposit amounted to an acceptance of its offer to repurchase. Moreover,
as gleaned from the letter of SAMD dated June 4, 1985, the PNB Board of Directors had approved petitioner's offer
to purchase the property. It claims that this was the suspensive condition, the fulfillment of which gave rise to the
contract. Respondent could no longer unilaterally withdraw its offer to sell the property for P1,574,560.47, since
the acceptance of the offer resulted in a perfected contract of sale; it was obliged to remit to respondent the
balance of the original purchase price of P1,574,560.47, while respondent was obliged to transfer ownership and
deliver the property to petitioner, conformably with Article 1159 of the New Civil Code.
Petitioner posits that respondent was proscribed from increasing the interest rate after it had accepted
respondent's offer to sell the property for P1,574,560.00. Consequently, respondent could no longer validly make a
counter-offer of P1,931,789.88 for the purchase of the property. It likewise maintains that, although
the P725,000.00 was considered as "deposit for the repurchase of the property" in the receipt issued by the SAMD,
the amount constitutes earnest money as contemplated in Article 1482 of the New Civil Code. Petitioner cites the
rulings of this Court in Villonco v. Bormaheco39 and Topacio v. Court of Appeals.40
Petitioner avers that its failure to append its conformity to the June 4, 1984 letter of respondent and its failure to
pay the balance of the price as fixed by respondent within the 60-day period from notice was to protest
respondent's breach of its obligation to petitioner. It did not amount to a rejection of respondent's offer to sell the
property since respondent was merely seeking to enforce its right to pay the balance of P1,570,564.47. In any
event, respondent had the option either to accept the balance of the offered price or to cause the rescission of the
contract.
Petitioner's letters dated March 18, 1993 and June 21, 1993 to respondent during the pendency of the case in the
RTC were merely to compromise the pending lawsuit, they did not constitute separate offers to repurchase the
property. Such offer to compromise should not be taken against it, in accordance with Section 27, Rule 130 of the
Revised Rules of Court.
For its part, respondent contends that the parties never graduated from the "negotiation stage" as they could not
agree on the amount of the repurchase price of the property. All that transpired was an exchange of proposals and
counter-proposals, nothing more. It insists that a definite agreement on the amount and manner of payment of the
price are essential elements in the formation of a binding and enforceable contract of sale. There was no such
agreement in this case. Primarily, the concept of "suspensive condition" signifies a future and uncertain event
upon the fulfillment of which the obligation becomes effective. It clearly presupposes the existence of a valid and
binding agreement, the effectivity of which is subordinated to its fulfillment. Since there is no perfected contract in
the first place, there is no basis for the application of the principles governing "suspensive conditions."
According to respondent, the Statement of Account prepared by SAMD as of June 25, 1984 cannot be classified as
a counter-offer; it is simply a recital of its total monetary claims against petitioner. Moreover, the amount stated
therein could not likewise be considered as the counter-offer since as admitted by petitioner, it was only
recommendation which was subject to approval of the PNB Board of Directors.
Neither can the receipt by the SAMD of P725,000.00 be regarded as evidence of a perfected sale contract. As
gleaned from the parties' Stipulation of Facts during the proceedings in the court a quo, the amount is merely an
acknowledgment of the receipt of P725,000.00 as deposit to repurchase the property. The deposit of P725,000.00
was accepted by respondent on the condition that the purchase price would still be approved by its Board of
Directors. Respondent maintains that its acceptance of the amount was qualified by that condition, thus not
absolute. Pending such approval, it cannot be legally claimed that respondent is already bound by any contract of
sale with petitioner.
According to respondent, petitioner knew that the SAMD has no capacity to bind respondent and that its authority
is limited to administering, managing and preserving the properties and other special assets of PNB. The SAMD
does not have the power to sell, encumber, dispose of, or otherwise alienate the assets, since the power to do so
must emanate from its Board of Directors. The SAMD was not authorized by respondent's Board to enter into
contracts of sale with third persons involving corporate assets. There is absolutely nothing on record that
respondent authorized the SAMD, or made it appear to petitioner that it represented itself as having such
authority.
Respondent reiterates that SAMD had informed petitioner that its offer to repurchase had been approved by the
Board subject to the condition, among others, "that the selling price shall be the total bank's claim as of
documentation date x x x payable in cash (P725,000.00 already deposited)
within 60 days from notice of approval." A new Statement of Account was attached therein indicating the total
bank's claim to be P1,931,389.53 less deposit of P725,000.00, or P1,206,389.00. Furthermore, while respondent's
Board of Directors accepted petitioner's offer to repurchase the property, the acceptance was qualified, in that it
required a higher sale price and subject to specified terms and conditions enumerated therein. This qualified
acceptance was in effect a counter-offer, necessitating petitioner's acceptance in return.
The Ruling of the Court
The ruling of the appellate court that there was no perfected contract of sale between the parties on June 4, 1985
is correct.

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to
give something or to render some service.41 Under Article 1318 of the New Civil Code, there is no contract unless
the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
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.42 Once perfected, they bind other contracting
parties and the obligations arising therefrom have the form of law between the parties and should be complied
with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also
to the consequences which, according to their nature, may be in keeping with good faith, usage and law.43
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent.44 The absence of any of
the essential elements will negate the existence of a perfected contract of sale. As the Court ruled in Boston Bank
of the Philippines v. Manalo:45
A definite agreement as to the price is an essential element of a binding agreement to sell personal or real
property because it seriously affects the rights and obligations of the parties. Price is an essential element
in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to
the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if
accepted by the other, gives rise to a perfected sale.46
A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there is merely
an offer by one party without acceptance of the other, there is no contract.47 When the contract of sale is not
perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the
parties.48
In San Miguel Properties Philippines, Inc. v. Huang,49 the Court ruled that the stages of a contract of sale are as
follows: (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in
the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the
essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract
and upon the price; and (3) consummation, which begins when the parties perform their respective undertakings
under the contract of sale, culminating in the extinguishment thereof.
A negotiation is formally initiated by an offer, which, however, must be certain.50 At any time prior to the
perfection of the contract, either negotiating party may stop the negotiation. At this stage, the offer may be
withdrawn; the withdrawal is effective immediately after its manifestation. To convert the offer into a contract, the
acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal,
unconditional and without variance of any sort from the proposal. In Adelfa Properties, Inc. v. Court of
Appeals,51 the Court ruled that:
x x x The rule is that except where a formal acceptance is so required, although the acceptance must be
affirmatively and clearly made and must be evidenced by some acts or conduct communicated to the
offeror, it may be shown by acts, conduct, or words of the accepting party that clearly manifest a present
intention or determination to accept the offer to buy or sell. Thus, acceptance may be shown by the acts,
conduct, or words of a party recognizing the existence of the contract of sale.52
A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the
original offer. A counter-offer is considered in law, a rejection of the original offer and an attempt to end the
negotiation between the parties on a different basis.53 Consequently, when something is desired which is not
exactly what is proposed in the offer, such acceptance is not sufficient to guarantee consent because any
modification or variation from the terms of the offer annuls the offer.54 The acceptance must be identical in all
respects with that of the offer so as to produce consent or meeting of the minds.
In this case, petitioner had until February 17, 1984 within which to redeem the property. However, since it lacked
the resources, it requested for more time to redeem/repurchase the property under such terms and conditions
agreed upon by the parties.55 The request, which was made through a letter dated August 25, 1983, was referred
to the respondent's main branch for appropriate action.56 Before respondent could act on the request, petitioner
again wrote respondent as follows:
1. Upon approval of our request, we will pay your goodselves ONE HUNDRED & FIFTY THOUSAND PESOS
(P150,000.00);
2. Within six months from date of approval of our request, we will pay another FOUR HUNDRED FIFTY
THOUSAND PESOS (P450,000.00); and
3. The remaining balance together with the interest and other expenses that will be incurred will be paid
within the last six months of the one year grave period requested for.57
When the petitioner was told that respondent did not allow "partial redemption,"58 it sent a letter to
respondent's President reiterating its offer to purchase the property.59 There was no response to petitioner's letters
dated February 10 and 15, 1984.

The statement of account prepared by the SAMD stating that the net claim of respondent as of June 25, 1984
wasP1,574,560.47 cannot be considered an unqualified acceptance to petitioner's offer to purchase the property.
The statement is but a computation of the amount which petitioner was obliged to pay in case respondent would
later agree to sell the property, including interests, advances on insurance premium, advances on realty taxes,
publication cost, registration expenses and miscellaneous expenses.
There is no evidence that the SAMD was authorized by respondent's Board of Directors to accept petitioner's offer
and sell the property for P1,574,560.47. Any acceptance by the SAMD of petitioner's offer would not bind
respondent. As this Court ruled in AF Realty Development, Inc. vs. Diesehuan Freight Services, Inc.:60
Section 23 of the Corporation Code expressly provides that the corporate powers of all corporations shall
be exercised by the board of directors. Just as a natural person may authorize another to do certain acts in
his behalf, so may the board of directors of a corporation validly delegate some of its functions to
individual officers or agents appointed by it. Thus, contracts or acts of a corporation must be made either
by the board of directors or by a corporate agent duly authorized by the board. Absent such valid
delegation/authorization, the rule is that the declarations of an individual director relating to the affairs of
the corporation, but not in the course of, or connected with the performance of authorized duties of such
director, are held not binding on the corporation.
Thus, a corporation can only execute its powers and transact its business through its Board of Directors and
through its officers and agents when authorized by a board resolution or its by-laws.61
It appears that the SAMD had prepared a recommendation for respondent to accept petitioner's offer to
repurchase the property even beyond the one-year period; it recommended that petitioner be allowed to redeem
the property and pay P1,574,560.00 as the purchase price. Respondent later approved the recommendation that
the property be sold to petitioner. But instead of the P1,574,560.47 recommended by the SAMD and to which
petitioner had previously conformed, respondent set the purchase price at P2,660,000.00. In fine, respondent's
acceptance of petitioner's offer was qualified, hence can be at most considered as a counter-offer. If petitioner had
accepted this counter-offer, a perfected contract of sale would have arisen; as it turns out, however, petitioner
merely sought to have the counter-offer reconsidered. This request for reconsideration would later be rejected by
respondent.
We do not agree with petitioner's contention that the P725,000.00 it had remitted to respondent was "earnest
money" which could be considered as proof of the perfection of a contract of sale under Article 1482 of the New
Civil Code. The provision reads:
ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the
price and as proof of the perfection of the contract.
This contention is likewise negated by the stipulation of facts which the parties entered into in the trial court:
8. On June 8, 1984, the Special Assets Management Department (SAMD) of PNB prepared an updated
Statement of Account showing MMCC's total liability to PNB as of June 25, 1984 to be P1,574,560.47 and
recommended this amount as the repurchase price of the subject property.
9. On June 25, 1984, MMCC paid P725,000.00 to PNB as deposit to repurchase the property. The deposit
of P725,000 was accepted by PNB on the condition that the purchase price is still subject to
the approval of the PNB Board.62
Thus, the P725,000.00 was merely a deposit to be applied as part of the purchase price of the property, in the
event that respondent would approve the recommendation of SAMD for respondent to accept petitioner's offer to
purchase the property for P1,574,560.47. Unless and until the respondent accepted the offer on these terms, no
perfected contract of sale would arise. Absent proof of the concurrence of all the essential elements of a contract
of sale, the giving of earnest money cannot establish the existence of a perfected contract of sale.63
It appears that, per its letter to petitioner dated June 4, 1985, the respondent had decided to accept the offer to
purchase the property for P1,931,389.53. However, this amounted to an amendment of respondent's qualified
acceptance, or an amended counter-offer, because while the respondent lowered the purchase price, it still
declared that its acceptance was subject to the following terms and conditions:
1. That the selling price shall be the total Bank's claim as of documentation date (pls. see attached
statement of account as of 5-31-85), payable in cash (P725,000.00 already deposited) within sixty (60)
days from notice of approval;
2. The Bank sells only whatever rights, interests and participation it may have in the property and you are
charged with full knowledge of the nature and extent of said rights, interests and participation and waive
your right to warranty against eviction.
3. All taxes and other government imposts due or to become due on the property, as well as expenses
including costs of documents and science stamps, transfer fees, etc., to be incurred in connection with the
execution and registration of all covering documents shall be borne by you;
4. That you shall undertake at your own expense and account the ejectment of the occupants of the
property subject of the sale, if there are any;
5. That upon your failure to pay the balance of the purchase price within sixty (60) days from receipt of
advice accepting your offer, your deposit shall be forfeited and the Bank is thenceforth authorized to sell
the property to other interested parties.

6. That the sale shall be subject to such other terms and conditions that the Legal Department may impose
to protect the interest of the Bank.64
It appears that although respondent requested petitioner to conform to its amended counter-offer, petitioner
refused and instead requested respondent to reconsider its amended counter-offer. Petitioner's request was
ultimately rejected and respondent offered to refund its P725,000.00 deposit.
In sum, then, there was no perfected contract of sale between petitioner and respondent over the subject
property.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED.
The assailed decision is AFFIRMED. Costs against petitioner Manila Metal Container Corporation.
SO ORDERED.
Platinum Plans Inc. Vs. Cucueco 488 scra 156
1
G.R. No. 147405 April 25, 2006 PLATINUM PLANS PHIL. INC vs CUCUECOPLATINUM PLANS PHIL. INC., YOUTH
EDUCATIONAL PLANS, INC., ANDERNESTO L. SALAS, PETITIONERS, VS. ROMEO R. CUCUECO,RESPONDENT.
Challenged in this petition for review on certiorari
[1]
is the Decision
[2]
dated February 21,2001 rendered by the Court of Appeals (CA) in CA-G.R. CV No. 60071 setting asidethe decision
[3]
of the Regional Trial Court (RTC) of Pasig City, Branch 266, in CivilCase No. 64903 entitled Romeo R. Cucueco vs.
Platinum Philippines Inc., YouthEducational Plans, Inc., and Ernesto L. Salas.This case is rooted in the complaint
[4]
filed by respondent Romeo R. Cucueco against petitioners Platinum Philippines Inc., Youth Educational Plans, Inc.,
and Ernesto L.Salas for specific performance and damages pursuant to an alleged contract of saleexecuted by
them for the purchase of a condominium unit
[5]
in Valle Verde, Pasig City.The antecedent facts are as follows:Plaintiff-appellant [herein respondent] alleged in his
complaint that sometime in July1993, being the lessee and present occupant of the said condominium unit, he
verballyoffered to buy the same from the defendants-appellants [herein petitioners], free fromany lien or
encumbrance in two(2) installments of P2,000,000.00.This was made into a formal offer in writing, the salient
conditions of which are: (1)Plaintiff-appellant will issue a check for P100,000.00 as earnest money; (2) Plaintiff
willalso issue a post-dated check for P1,900,000.00 encashable on 30 September. 1993 onthe condition that he
will stop paying rental(s) for the said unit after 30 September 1993;and (3) That in case the defendants-appellants
still had an outstanding loan (with thesaid unit as collateral/security) with the bank of less than P2,000,000.00, as
of 31December 1993, plaintiff-appellant shall assume the said loan and pay the defendants-appellants the
difference from the remaining P2,000,000.00.Plaintiff-appellant claims that the defendants-appellants duly
accepted his offer- thechecks he issued in favor of the defendants-appellants were accepted and
encashed.However, he was surprised to receive a letter from the defendants-appellants where thedue date for the
second installment was changed to 23 September 1993. Despite earnestefforts, both parties failed to settle the
said difference amicably. Apparently, the plaintiff-appellant felt he was on the short end of the bargain since he
stood to forfeit theinitial P2,000,000.00 he has paid in favor of the defendants-appellants as provided intheir
agreement. The refusal of the defendants-appellants to return the said initial payment thus prompted the plaintiffappellant to file a case for specific performance of the said sale and claim of damages for the injury he suffered as
a result of thedefendants-appellants unjust refusal to comply with their obligation.In the main, plaintiff-appellant
argued before the lower court that there was a perfectedsale between them, as based on the facts he alleged
Based on such perfected sale, plaintiff-appellant maintains that he may validly demand of the defendantsappellants toexecute the necessary deed of sale and other documents transferring ownership and titleover the
property in his favor.On the other hand, defendants-appellants denied the substantial allegations of the plaintiffappellant and asserted during trial that the plaintiff-appellant has alreadyforfeited his initial downpayment of
P2,000,000.00 as based on the terms and conditionsagreed upon, to wit:1.The terms of payment is only for two
installmentspayable on 1 August 1993and the balance payable on 30 September 1993.2.To ensure performance,
(the) parties herein further agreed that in case of non-compliance on the part of the plaintiff, all installments made
shall be forfeitedin favor of the defendants;3.Ownership over subject property is retained by defendants and is not
to passuntil full payment of the purchase price.Defendants-appellants counter the plaintiff-appellants contention,
stating they never accepted the plaintiff-appellants offer to pay the remaining balance only on 31December 1993.
Their letter of 23 September 1993 undoubtedly contained their non-acceptance of the plaintiff-appellants offer.
Along with this, they maintain that the veryfact that the plaintiff-appellant went to the defendants-appellants to
negotiate the duedate of the final payment belies the plaintiff-appellants assertion that there was any sale
perfected between them. They further submit as evidence the want of consent to the plaintiff-appellants offer as
shown by the absence of their signature of conformity onthe letter sent to them.

[6]
The trial court found that under the circumstances, the essential element of consent tothe contract was lacking as
indicated by the failure of the parties to agree on a definitedate when full payment of the purchase price should
be made by respondent. As a result,the court ruled against the existence of a perfected contract of sale between
the partiesand ordered petitioners to return the Two Million Pesos (P2,000,000) they received fromrespondent as
downpayment for the condominium unit and to likewise pay respondentinterest, moral damages and attorneys
fees. For his part, respondent was directed to pay petitioners rentals in arrears for the use of the unit in the
amount of Eighteen Thousand
PLATINUM PLANS PHILS INC V. CUCUECO 488 SCRA 156 (2006)

FACTS: Respondent Cucueco filed a case for specific performance with damages against petitioner Platinum Plans
pursuant to an alleged contract of sale executed by them for the purchase of a condominium unit.
According to the respondent: sometime in July 1993, he offered to buy from petitioner Platinum Plans Phils a
condominium unit he was leasing from the latter for P 4 million payable in 2 installments of P2 million with the
following terms and conditions:
a.
Cucueco will issue a check for P100,00 as earnest money
b.
He will issue a post-dated check for P1.9 million to be encashed on September 30, 1993 on the condition
that he will stop paying rentals for the said unit after September 30
c.
In case Platinum Plans has an outstanding loan of less than P2 million with the bank as of December 1993,
Cucueco shall assume the same and pay the difference from the remaining P2 million
Cucueco likewise claimed that Platinum Plans accepted his offerby encashing the checks he issued. However, he
was surprised to learn that Platinum Plans had changed the due date of the installment payment to September 30,
1993.
Respondent argued that there was a perfected sale between him and Platinum plans and as such, he may validly
demand from the petitioner to execute the necessary deed of sale transferring ownership and title over the
property in his favor
Platinum Plans denied Cucuecos allegations and asserted that Cucuecos initial down payment was forfeited
based on the following terms and conditions:
a.
The terms of payment only includes two installments (August 1993 and September 1993)
b.
In case of non-compliance on the part of the vendee, all installments made shall be forfeited in favor of the
vendor Platinum Plans
c.
Ownership over the property shall not pass until payment of the full purchase price
Petitioners anchor their argument on the claim that there was no meeting of the minds between the two parties,
as evidenced by their letter of non-acceptance.
The trial court ruled in favor of Platinum, citing that since the element of consent was absent there was no
perfected contract. The trial court ordered Platinum Plans to return the P2 million they had received from Cucueco,
and for Cucueco to pay Platinum Plans rentals in arrears for the use of the unit.
Upon appeal, CA held that there was a perfected contract despite the fact that both parties never agreed on the
date of payment of the remaining balance. CA ordered Cucueco to pay the remaining balance of the purchase
price and for Platinum Plans, to execute a deed of sale over the property
ISSUE: WON the contract there is a perfected contract of sale
HELD: No, it is a contract to sell.
In a contract of sale, the vendor cannot recover ownership of the thing sold until and unless the contract itself is
resolved and set aside. Art 1592 provides:
In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at
the time agreed upon, the rescission of the contract shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission of the contract has been upon him either judicially or
by a notarial act. After the demand, the court may not grant him a new term.
Based on the above provision, a party who fails to invoke judicially or by notarial act would be prevented from
blocking the consummation of the same in light of the precept that mere failure to fulfill the contract does not by
itself have the effect of rescission.

On the other hand, a contract to sell is bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the subject property despite its delivery to the prospective buyer, commits to sell the property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., full payment of the
purchase price. Full payment here is considered as a positive suspensive condition.
As a result if the party contracting to sell, because of non-compliance with the suspensive condition, seeks to eject
the prospective buyer from, the land, the seller is enforcing the contract and is not resolving it. The failure to pay
is not a breach of contract but an event which prevent the obligation to convey title from materializing.
In the present case, neither side was able to produce any written evidence documenting the actual terms of their
agreement. The trial court was correct in finding that there was no meeting of minds in this case considering that
the acceptance of the offer was not absolute and uncondition. In earlier cases, the SC held that before a valid and
binding contract of sale can exist, the manner of payment of the purchase price must first be established.
Furthermore, the reservation of the title in the name of Platinum Plans clearly indicates an intention of the parties
to enter into a contract of sell. Where the seller promises to execute a deed of absolute sale upon completion of
the payment of purchase price, the agreement is a contract to sell.
The court cannot, in this case, step in to cure the deficiency by fixing the period pursuant to:
The relief sought by Cucueco was for specific performance to compel Platinum Plans to receive the balance of the
purchase price.
The relief provide in Art 1592 only applies to contracts of sale
Because of the differing dates set by both parties, the court would have no basis for granting Cucueco an
extension of time within which to pay the outstanding balance
SELLER CANNOT TREAT THE CONTRACT AS CANCELLED WITHOUT SERVING NOTICE
The act of a party in treating the contract as cancelled should be made known to the other party because this act
is subject to scrutiny and review by the courts in cased the alleged defaulter brings the matter for judicial
determination as explained in UP v. De los Angeles. In the case at bar, there were repeated written notices sent by
Platinum Plans to Cucueco that failure to pay the balance would result in the cancellation of the contract and
forfeiture of the down payment already made. Under these circumstance, the cancellation made by Platinum Plans
is valid and reasonable (except for the forfeiture of the down payment because Cucueco never agreed to the
same)
EFFECTS OF CONTRACT TO SELL
A contract to sell would be rendered ineffective and without force and effect by the non-fulfillment of the buyers
obligation to pay since this is a suspensive condition to the obligation of the seller to sell and deliver the title of
the property. As an effect, the parties stand as if the conditional obligation had never existed. There can be no
rescission of an obligation that is still non-existent as the suspensive condition has not yet occurred.
CAS RELIANCE ON LEVY HERMANOS V. GERVACIO IS MISPLACED
It was unnecessary for CA to distinguish whether the transaction between the parties was an installment sale or a
straight sale. In the first place, there is no valid and enforceable contract to speak of.