G.R. No. L-31018June 29, 1973
LORENZO VELASCO AND SOCORRO J. VELASCO, petitioners, vs.
HONORABLE COURT OF APPEALS and MAGDALENA ESTATE, INC.,
respondents.
CASTRO, J.:
This is a petition for certiorari and mandamus filed by Lorenzo
Velasco and Socorro J. Velasco (hereinafter referred to as the
petitioners) against the resolution of the Court of Appeals dated
June 28, 1969 in CA-G.R. 42376, which ordered the dismissal of the
appeal interposed by the petitioners from a decision of the Court
of First Instance of Quezon City on the ground that they had failed
seasonably to file their printed record on appeal.
Under date of November 3, 1968, the Court of First Instance of
Quezon City, after hearing on the merits, rendered a decision in
civil case 7761, dismissing the complaint filed by the petitioners
against the Magdalena Estate, Inc. (hereinafter referred to as the
respondent) for the purpose of compelling specific performance by
the respondent of an alleged deed of sale of a parcel of
residential land in favor of the petitioners. The basis for the
dismissal of the complaint was that the alleged purchase and sale
agreement "was not perfected".
On November 18, 1968, after the perfection of their appeal to
the Court of Appeals, the petitioners received a notice from the
said court requiring them to file their printed record on appeal
within sixty (60) days from receipt of said notice. This 60-day
term was to expire on January 17, 1969.
Allegedly under date of January 15, 1969, the petitioners
allegedly sent to the Court of Appeals and to counsel for the
respondent, by registered mail allegedly deposited personally by
its mailing clerk, one Juanito D. Quiachon, at the Makati Post
Office, a "Motion For Extension of Time To File Printed Record on
Appeal." The extension of time was sought on the ground "of
mechanical failures of the printing machines, and the voluminous
printing jobs now pending with the Vera Printing Press. ..."
On February 10, 1969, the petitioners filed their printed record
on appeal in the Court of Appeals. Thereafter, the petitioners
received from the respondent a motion filed on February 8, 1969
praying for the dismissal of the appeal on the ground that the
petitioners had failed to file their printed record on appeal on
time. Acting on the said motion to dismiss the appeal, the Court of
Appeals, on February 25, 1969, issued the following resolution:
Upon consideration of the motion of counsel for
defendant-appellee praying on the grounds therein stated that the
appeal be dismissed in accordance with Rules of Court, and of the
opposition thereto filed by counsel for plaintiff-appellants, the
Court RESOLVED to DENY the said motion to dismiss.
Upon consideration of the registry-mailed motion of counsel for
plaintiffs appellants praying on the grounds therein stated for an
extension of 30 days from January 15, 1969 within which to file the
printed record on appeal, the Court RESOLVED to GRANT the said
motion and the printed record on appeal which has already been
filed is ADMITTED.
On March 11, 1969, the respondent prayed for a reconsideration
of the above-mentioned resolution, averring that the Court of
Appeals had been misled bythe petitioners' "deceitful allegation
that they filed the printed record on appeal within the
reglementary period," because according to a certification issued
by the postmaster of Makati, Rizal, the records of the said post
office failed to reveal that on January 15, 1969 the date when
their motion for extension of time to file the printed record on
appeal was supposedly mailed by the petitioners there was any
letter deposited there by the petitioners' counsel. The petitioners
opposed the motion for reconsideration. They submitted to the
appellate court the registry receipts (numbered 0215 and 0216),
both stampled January 15, 1969, which were issued by the receiving
clerk of the registry section of the Makati Post Office covering
the mails for the disputed motion for extension of time to file
their printed record on appeal and the affidavit of its mailing
clerk Juanito D. Quiachon, to prove that their motion for extension
was timely filed and served on the Court of Appeals and the
respondent, respectively. After several other pleadings and
manifestations were filed by the parties relative to the issue
raised by the respondent's above-mentioned motion for
reconsideration, the Court of Appeals promulgated on June 28, 1969,
its questioned resolution, the dispositive portion of which reads
as follows:
WHEREFORE, the motion for reconsideration filed on March 11,
1969 is granted and appeal interposed by plaintiff-appellants from
the judgment of the court below is hereby dismissed for their
failure to file their printed Record on Appeal within the period
authorized by this Court. Atty. Patrocino R. Corpuz [counsel of the
petitioner] is required to show cause within ten (10) days from
notice why he should not be suspended from the practice of his
necessary investigation against Juanito D. Quiachon of the Salonga,
Ordoez, Yap, Sicat & Associates Law Office, Suite 319 337
Rufino Building, Ayala Avenue, Makati Post Office, to file the
appropriate criminal action against them as may be warranted in the
premises, and to report to this Court within thirty (30) days the
action he has taken thereon.
The foregoing desposition was based on the following findings of
the Court of Appeals:
An examination of the Rollo of this case, particularly the
letter envelope on page 26 thereof, reveals that on January 15,
1969, plaintiffs supposedly mailed via registered mail from the
Post Office of Makati, Rizal their motion for extension of 30 days
from that date to file their printed Record on Appeal, under
registered letter No. 0216. However, in an official certification,
the Postmaster of Makati states that the records of his office
disclose: (a) that there were no registered letters Nos. 0215 and
0216 from the Salonga, Ordoez, Yap, Sicat & Associates
addressed to Atty. Abraham F. Sarmiento, 202 Magdalena Building,
Espaa Ext., Quezon City, and to the Court of Appeals, Manila,
respectively, that were posted in the Post Office of Makati, Rizal,
on January 15, 1969; (b) that there is a registered letter numbered
215 but that the same was posted on January 3, 1969 by Enriqueta
Amada of 7 Angel, Pasillo F-2, Cartimar, Pasay City, as sender, and
Giral Amasan of Barrio Cabuniga-an, Sto. Nio, Samar, as addressee;
and that there is also a registered letter numbered 216; but that
the same was likewise posted on January 3, 1969 with E.B.A.
Construction of 1049 Belbar Building, Metropolitan, Pasong Tamo,
Makati, as sender, and Pres. R. Nakaya of the United Pacific
Trading Co., Ltd., 79, 6 Chamo, Nakatu, Yokohari, Japan, as
addressee; (c) that on January 15, 1969, the registered letters
posted at the Makati Post Office were numbered consecutively from
1001-2225, inclusive, and none of these letters was addressed to
Atty. Abraham F. Sarmiento of to the Court of Appeals; (d) that in
Registry Bill Book No. 30 for Quezon City as well as that Manila,
corresponding to February 7, 1969, there are entries covering
registered letters Nos. 0215 and 0216 for dispatch to Quezon City
and Manila, respectively; however, such registry book for February
7, 1969 shows no letters with such numbers posted on the said
date.
The Acting Postmaster of the Commercial Center Post Office of
Makati, Rizal, further certifies that "Registry Receipts Nos. 0215
and 0216 addressed to Atty. Abraham F. Sarmiento of the Magdalena
Estate, Quezon City and the Honorable Court of Appeals,
respectively, does not appear in our Registry Record Book which was
allegedly posted at this office on January 15, 1969."
From the foregoing, it is immediately apparent that the motion
for extension of time to file their Record on Appeal supposedly
mailed by the plaintiffs on January 15, 1969 was not really mailed
on that date but evidently on a date much later than January 15,
1969. This is further confirmed by the affidavit of Flaviano
Malindog, a letter carrier of the Makati Post Office, which
defendant attached as Annex 1 to its supplemental reply to
plaintiffs' opposition to the motion for reconsideration. In his
said affidavit, Malindog swore among others:
'That on February 7, 1969, between 12:00 o'clock noon and 1:00
o'clock in the afternoon, JUANITO D. QUIACHON approached me at the
Makati Post Office and talked to me about certain letters which his
employer had asked him to mail and that I should help him do
something about the matter; but I asked him what they were all
about, and he told me that they were letters for the Court of
Appeals and for Atty. Abraham Sarmiento and that his purpose was to
show that they were posted on January 15, 1969; that I inquired
further, and he said that the letters were not so important and
that his only concern was to have them post maker January 15,
1969;
'That believing the word of JUANITO D. QUIACHON that the letters
were not really important I agreed to his request; whereupon, I got
two (2) registry receipts from an old registry receipt booklet
which is no longer being used and I numbered them 0215 for the
letter addressed to Atty. Abraham Sarmiento in Quezon City and 0216
for the letter addressed to the Court of Appeals, Manila; that I
placed the same numbering on the respective envelopes containing
the letters; and that I also post maker them January 15, 1969;
'That to the best of my recollection I wrote the correct date of
posting, February 7, 1969, on the back of one or both of the
registry receipts above mentioned;
'That the correct date of posting, February 7, 1969 also appears
in the Registry Bill Books for Quezon City and Manila where I
entered the subject registered letters;
Of course, plaintiff's counsel denies the sworn statement of
Malindog and even presented the counter-affidavit of one of his
clerk by the name of Juanito D. Quiachon. But between Malindog,
whose sworn statement is manifestly a declaration against interest
since he can be criminally prosecuted for falsification on the
basis thereof, and that of Quiachon, whose statement is
self-serving, we are very much inclined to give greater weight and
credit to the former. Besides, plaintiffs have not refuted the
facts disclosed in the two (2) official certifications above
mentioned by the Postmakers of Makati, Rizal. These two (2)
certifications alone, even without to move this Court to reconsider
its resolution of February 25, 1969 and order the dismissal of this
appeal.
On September 5, 1969, after the rendition of the foregoing
resolution, the Court of Appeals promulgated another, denying the
motion for reconsideration of the petitioner, but, at the same
time, accepting as satisfactory the explanation of Atty. Patrocino
R. Corpuz why he should not be suspended from the practice of the
legal profession.
On September 20, 1969, the First Assistant Fiscal of Rizal
notified the Court of Appeals that he had found a prima facie case
against Flaviano C. Malindog and would file the corresponding
information for falsification of public documents against him. The
said fiscal, however, dismissed the complaint against Quiachon for
lack of sufficient evidence. The information subsequently filed
against Malindog by the first Assistance Fiscal of Rizal reads as
follow:That on or about the 7th day of February 1969, in the
municipality of Makati, province of Rizal, and a place within the
jurisdiction of this Honorable Court, the above-named accused,
conspiring and confederating together and mutually helping and
aiding with John Doe, whose true identity and present whereabout is
still unknown, did then and there willfully, unlawfully and
feloniously falsify two registry receipts which are public
documents by reason of the fact that said registry receipts are
printed in accordance with the standard forms prescribed by the
Bureau of Posts, committed as follows: the above-named accused John
Doe, on the date above-mentioned approached and induced the accused
Malindog, a letter-carrier at the Makati Post Office, to postmark
on Abraham Sarmiento in Quezon City, and the other to the Court of
Appeals, Manila, and the accused Malindog, acceding to the
inducement of, and in conspiracy with, his co-accused John Doe, did
then and there willfully and feloniously falsify said registry
receipts of the Makati Post Office on January 15, 1969, thereby
making it appear that the said sealed envelopes addressed to Atty.
Sarmiento and the Court of Appeals were actually posted, and
causing it to appear that the Postmaster of Makati participated
therein by posting said mail matters on January 15, 1969, when in
truth and in fact he did not so participate.
The petitioner contend that in promulgating its questioned
resolution, the Court of Appeals acted without or in excess of
jurisdiction, or with such whimsical and grave abuse of discretion
as to amount to lack of jurisdiction, because (a) it declared that
the motion for extension of time to file the printed record on
appeal was not mailed on January 15, 1969, when, in fact, it was
mailed on the record on appeal was filed only on February 10, 1969,
beyond the time authorized by the appellate court, when the truth
is that the said date of filing was within the 30-day extension
granted by it; (c) the adverse conclusion of the appellate court
are not supported by the records of the case, because the said
court ignored the affidavit of the mailing clerk of the
petitioners' counsel, the registry receipts and postmarked
envelopes (citing Henning v. Western Equipment, 62 Phil. 579, and
Caltex Phil., Inc. v. Katipunan Labor Union, 52 O.G. 6209), and,
instead, chose to rely upon the affidavit of the mail carrier
Malindog, which affidavit was prepared by counsel for the
respondent at the affiant himself so declared at the preliminary
investigation at the Fiscal's office which absolved the
petitioners' counsel mailing clerk Quiachon from any criminal
liability; (d) section 1, Rule 50 of the Rules of Court, which
enumerates the grounds upon which the Court of Appeals may dismiss
an appeal, does not include as a ground the failure to file a
printed record on appeal; (e) the said section does not state
either that the mismailing of a motion to extend the time to file
the printed record on appeal, assuming this to be the case, may be
a basis for the dismissal of the appeal; (f) the Court of Appeals
has no jurisdiction to revoke the extention of time to file the
printed record on appeal it had granted to the petitioners based on
a ground not specified in section 1, Rule 50 of the Rules of Court;
and (g) the objection to an appeal may be waived as when the
appellee has allowed the record on appeal to be printed and
approved (citing Moran, Vol. II, p. 519).
Some of the objections raised by the petitioners to the
questioned resolution of the Court of Appeals are obviously matters
involving the correct construction of our rules of procedure and,
consequently, are proper subjects of an appeal by way of certiorari
under Rule 45 of the Rules of Court, rather than a special civil
action for certiorari under Rule 65. The petitioners, however, have
correctly appreciated the nature of its objections and have asked
this Court to treat the instant petition as an appeal by way of
certiorari under Rule 45 "in the event ... that this Honorable
Supreme Court should deem that an appeal is an adequate remedy ..."
The nature of the case at bar permits, in our view, a disquisition
of both types of assignments.
We do not share the view of the petitioners that the Court of
Appeals acted without or in excess of jurisdiction or gravely
abused its discretion in promulgating the questioned
resolution.
While it is true that stamped on the registry receipts 0215 and
0215 as well as on the envelopes covering the mails in question is
the date "January 15, 1969," this, by itself, does not establish an
unrebuttable presumption of the fact of date of mailing. Henning
and Caltex, cited by the petitioners, are not in point because the
specific adjective issue resolved in those cases was whether or not
the date of mailing a pleading is to be considered as the date of
its filing. The issue in the case at bar is whether or not the
motion of the petitioners for extension of time to file the printed
record on appeal was, in point of fact, mailed (and, therefore,
filed) on January 15, 1969.
In resolving this issue in favor of the respondent, this Court
finds, after a careful study and appraisal of the pleadings,
admissions and denials respectively adduced and made by the
parties, that the Court of Appeals did not gravely abuse its
discretion and did not act without or in excess of its
jurisdiction. We share the view of the appellate court that the
certifications issued by the two postmasters of Makati, Rizal and
the sworn declaration of the mail carrier Malindog describing how
the said registry receipts came to be issued, are worthy of belief.
It will be observed that the said certifications explain clearly
and in detail how it was improbable that the petitioners' counsel
in the ordinary course of official business, while Malindog's sworn
statement, which constitutes a very grave admission against his own
interest, provides ample basis for a finding that where official
duty was not performed it was at the behest of a person interested
in the petitioners' side of the action below. That at the
preliminary investigation at the Fiscal's office, Malindog failed
to identify Quiachon as the person who induced him to issue
falsified receipts, contrary to what he declared in his affidavit,
is of no moment since the findings of the inquest fiscal as
reflected in the information for falsification filed against
Malindog indicate that someone did induce Malindog to make and
issue false registry receipts to the counsel for the
petitioners.
This Court held in Bello vs. Fernando 1 that the right to appeal
is nota natural right nor a part of due process; it is merely a
statutory privilege, and may be exercised only in the manner
provided by law. In this connection, the Rule of Court expressly
makes it the duty of an appellant to file a printed record on
appeal with the Court of Appeals within sixty (60) record on appeal
approved by the trial court has already been received by the said
court. Thus, section 5 of Rule 46 states:
Sec. 5.Duty of appellant upon receipt of notice. It shall be the
duty of the appellant within fifteen (15) days from the date of the
notice referred to in the preceding section, to pay the clerk of
the Court of Appeals the fee for the docketing of the appeal, and
within sixty (60) days from such notice to submit to the court
forty (40) printed copies of the record on appeal, together with
proof of service of fifteen (15) printed copies thereof upon the
appelee.
As the petitioners failed to comply with the above-mentioned
duty which the Rules of Court enjoins, and considering that, as
found by the Court of Appeals, there was a deliberate effort on
their part to mislead the said Court in grating them an extension
of time within which to file their printed record on appeal, it
stands to reason that the appellate court cannot be said to have
abused its discretion or to have acted without or in excess of its
jurisdiction in ordering the dismissal of their appeal.
Our jurisprudence is replete with cases in which this Court
dismissed an appeal on grounds not mentioned specifically in
Section 1, Rule 50 of the Rules of Court. (See, for example, De la
Cruz vs. Blanco, 73 Phil. 596 (1942); Government of the Philippines
vs. Court of Appeals, 108 Phil. 86 (1960); Ferinion vs. Sta.
Romana, L-25521, February 28, 1966, 16 SCRA 370, 375).
It will likewise be noted that inasmuch as the petitioners'
motion for extension of the period to file the printed record on
appeal was belated filed, then, it is as though the same were
non-existent, since as this Court has already stated in Baquiran
vs. Court of Appeals, 2 "The motion for extension of the period for
filing pleadings and papers in court must be made before the
expiration of the period to be extended." The soundness of this
dictum in matters of procedure is self-evident. For, were the
doctrine otherwise, the uncertainties that would follow when
litigants are left to determine and redetermine for themselves
whether to seek further redress in court forthwith or take their
own sweet time will result in litigations becoming more unreable
than the very grievances they are intended to redness.
The argument raised by the petitioner that the objection to an
appeal maybe waived, as when the appellee allows the record on
appeal to be printed and approved is likewise not meritorious
considering that the respondent did file a motion in the Court of
Appeals on February 8, 1969 praying for the dismissal of the below
of the petitioners had not yet filed their record on appeal and,
therefore, must be considered to have abandoned their appeal.
In further assailing the questioned resolution of the Court of
Appeals, the petitioners also point out that on the merits the
equities of the instant case are in their favor. A reading of the
record, however, persuades us that the judgment a quo is
substantially correct and morally just.
The appealed decision of the court a quo narrates both the
alleged and proven facts of the dispute between the petitioners and
the respondent, as follows:
This is a suit for specific performance filed by Lorenzo Velasco
against the Magdalena Estate, Inc. on the allegation that on
November 29, 1962 the plaintiff and the defendant had entered into
a contract of sale (Annex A of the complaint) by virtue of which
the defendant offered to sell the plaintiff and the plaintiff in
turn agreed to buy a parcel of land with an area of 2,059 square
meters more particularly described as Lot 15, Block 7, Psd-6129,
located at No. 39 corner 6th Street and Pacific Avenue, New Manila,
this City, for the total purchase price of P100,000.00.
It is alleged by the plaintiff that the agreement was that the
plaintiff was to give a down payment of P10,000.00 to be followed
by P20,000.00 and the balance of P70,000.00 would be paid in
installments, the equal monthly amortization of which was to be
determined as soon as the P30,000.00 down payment had been
completed. It is further alleged that the plaintiff paid down
payment of P10,000.00 on November 29, 1962 as per receipt No.
207848 (Exh. "A")and that when on January 8, 1964 he tendered to
the defendant the payment of the additional P20,000.00 to complete
the P30,000.00 the defendant refused to accept and that eventually
it likewise refused to execute a formal deed of sale obviously
agreed upon. The plaintiff demands P25,000.00 exemplary damages,
P2,000.00 actual damages and P7,000.00 attorney's fees.
The defendant, in its Answer, denies that it has had any direct
dealings, much less, contractual relations with the plaintiff
regarding the property in question, and contends that the alleged
contract described in the document attached to the complaint as
Annex A is entirely unenforceable under the Statute of Frauds; that
the truth of the matter is that a portion of the property in
question was being leased by a certain Socorro Velasco who, on
November 29, 1962, went to the office of the defendant indicated
her desire to purchase the lot; that the defendant indicated its
willingness to sell the property to her at the price of P100,000.00
under the condition that a down payment of P30,000.00 be made,
P20,000.00 of which was to be paid on November 31, 1962, and that
the balance of P70,000.00 including interest a 9% per annum was to
be paid on installments for a period of ten years at the rate of
P5,381.32 on June 30 and December of every year until the same
shall have been fully paid; that on November 29, 1962 Socorro
Velasco offered to pay P10,000.00 as initial payment instead of the
agreed P20,000.00 but because the amount was short of the alleged
P20,000.00 the same was accepted merely as deposited and upon
request of Socorro Velasco the receipt was made in the name of her
brother-in-law the plaintiff herein; that Socorro Velasco failed to
complete the down payment of P30,000.00 and neither has she paid
any installments on the balance of P70,000.00 up to the present
time; that it was only on January 8, 1964 that Socorro Velasco
tendered payment of P20,000.00, which offer the defendant refused
to accept because it had considered the offer to sell rescinded on
account of her failure to complete the down payment on or before
December 31, 1962.
The lone witness for the plaintiff is Lorenzo Velasco, who
exhibits the receipt, Exhibits A, issued in his favor by the
Magdalena Estate, Inc., in the sum of P10,000.00 dated November 29,
1962. He also identifies a letter (Exh. B)of the Magdalena Estate,
Inc. addressed to him and his reply thereto. He testifies that
Socorro Velasco is his sister-in-law and that he had requested her
to make the necessary contacts with defendant referring to the
purchase of the property in question. Because he does not
understand English well, he had authorized her to negotiate with
the defendant in her whenever she went to the office of the
defendant, and as a matter of fact, the receipt for the P10,000.00
down payment was issued in his favor. The plaintiff also depends on
Exhibit A to prove that there was a perfected follows: "Earnest
money for the purchase of Lot 15, Block 7, Psd-6129, Area 2,059
square meters including improvements thereon P10,000.00." At the
bottom of Exhibit A the following appears: "Agreed price:
P100,000.00, P30,000.00 down payment, bal. in 10 years."
To prove that the Magdalena Estate, Inc. had been dealing all
along with him and not with his sister-in-law and that the
Magdalena Estate, Inc. knew very well that he was the person
interested in the lot in question and not his sister-in-law, the
plaintiff offers in evidence five checks all drawn by him in favor
of Magdalena Estate, Inc. for payment of the lease of the property.
....
There does not seem to be any dispute regarding the fact that
the Velasco family was leasing this property from the Magdalena
Estate, Inc. since December 29, 1961; that the Velasco family
sometime in 1962 offered to purchase the lot as a result of which
Lorenzo Velasco thru Socorro Velasco made the P10,000.00 deposit
or, in the language of the defendant 'earnest money or down
payment' as evidenced by Exhibit A. The only matter that remains to
be decided is whether the talks between the Magdalena Estate, Inc.
and Lorenzo Velasco either directly or thru his sister-in-law
Socorro Velasco ever ripened into a consummated sale. It is the
position of the defendant (1) that the sale was never consummated
and (2) that the contract is unenforceable under the Statute of
Frauds.
The court a quo agreed with the respondent's (defendant therein)
contention that no contract of sale was perfected because the minds
of the parties did not meet "in regard to the manner of payment."
The court a quo appraisal of this aspect of the action below is
correct. The material averments contained in the petitioners'
complaint themselves disclose a lack of complete "agreement in
regard to the manner of payment" of the lot in question. The
complaint states pertinently:
4.That plaintiff and defendant further agreed that the total
down payment shall by P30,000.00, including the P10,000.00 partial
payment mentioned in paragraph 3 hereof, and that upon completion
of the said down payment of P30,000.00, the balance of P70,000.00
shall be said by the plaintiff to the defendant in 10 years from
November 29, 1962;
5.That the time within the full down payment of the P30,000.00
was to be completed was not specified by the parties but the
defendant was duly compensated during the said time prior to
completion of the down payment of P30,000.00 by way of lease
rentals on the house existing thereon which was earlier leased by
defendant to the plaintiff's sister-in-law, Socorro J. Velasco, and
which were duly paid to the defendant by checks drawn by
plaintiff.
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 unforceable
contract of sale. 3 The fact, therefore, that the petitioners
delivered to the respondent the sum of P10,000 as part of the
down-payment 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.
ACCORDINGLY, the instant petitioner is hereby denied. No
pronouncement as to costs.
G.R. No. L-116650May 23, 1995
TOYOTA SHAW, INC., petitioner, vs.COURT OF APPEALS and LUNA L.
SOSA, respondents.
DAVIDE, JR., J.:
At the heart of the present controversy is the document marked
Exhibit "A" 1 for the private respondent, which was signed by a
sales representative of Toyota Shaw, Inc. named Popong Bernardo.
The document reads as follows:
4 June 1989
AGREEMENTS BETWEEN MR. SOSA& POPONG BERNARDO OF TOYOTASHAW,
INC.
1.all necessary documents will be submitted to TOYOTA SHAW, INC.
(POPONG BERNARDO) a week after, upon arrival of Mr. Sosa from the
Province (Marinduque) where the unit will be used on the 19th of
June.
2.the downpayment of P100,000.00 will be paid by Mr. Sosa on
June 15, 1989.
3.the TOYOTA SHAW, INC. LITE ACE yellow, will be pick-up [sic]
and released by TOYOTA SHAW, INC. on the 17th of June at 10
a.m.
Very truly yours,
(Sgd.) POPONG BERNARDO.
Was this document, executed and signed by the petitioner's sales
representative, a perfected contract of sale, binding upon the
petitioner, breach of which would entitle the private respondent to
damages and attorney's fees? The trial court and the Court of
Appeals took the affirmative view. The petitioner disagrees. Hence,
this petition for review on certiorari.
The antecedents as disclosed in the decisions of both the trial
court and the Court of Appeals, as well as in the pleadings of
petitioner Toyota Shaw, Inc. (hereinafter Toyota) and respondent
Luna L. Sosa (hereinafter Sosa) are as follows. Sometime in June of
1989, Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was
then a seller's market and Sosa had difficulty finding a dealer
with an available unit for sale. But upon contacting Toyota Shaw,
Inc., he was told that there was an available unit. So on 14 June
1989, Sosa and his son, Gilbert, went to the Toyota office at Shaw
Boulevard, Pasig, Metro Manila. There they met Popong Bernardo, a
sales representative of Toyota.
Sosa emphasized to Bernardo that he needed the Lite Ace not
later than 17 June 1989 because he, his family, and a balikbayan
guest would use it on 18 June 1989 to go to Marinduque, his home
province, where he would celebrate his birthday on the 19th of
June. He added that if he does not arrive in his hometown with the
new car, he would become a "laughing stock." Bernardo assured Sosa
that a unit would be ready for pick up at 10:00 a.m. on 17 June
1989. Bernardo then signed the aforequoted "Agreements Between Mr.
Sosa & Popong Bernardo of Toyota Shaw, Inc." It was also agreed
upon by the parties that the balance of the purchase price would be
paid by credit financing through B.A. Finance, and for this
Gilbert, on behalf of his father, signed the documents of Toyota
and B.A. Finance pertaining to the application for financing.
The next day, 15 June 1989, Sosa and Gilbert went to Toyota to
deliver the downpayment of P100,000.00. They met Bernardo who then
accomplished a printed Vehicle Sales Proposal (VSP) No. 928, 2 on
which Gilbert signed under the subheading CONFORME. This document
shows that the customer's name is "MR. LUNA SOSA" with home address
at No. 2316 Guijo Street, United Paraaque II; that the model series
of the vehicle is a "Lite Ace 1500" described as "4 Dr minibus";
that payment is by "installment," to be financed by "B.A.," 3 with
the initial cash outlay of P100,000.00 broken down as follows:
a)
downpayment
P 53,148.00
b)
insurance
P 13,970.00
c)
BLT registration fee
P 1,067.00
CHMO fee
P 2,715.00
service fee
P 500.00
accessories
P 29,000.00
and that the "BALANCE TO BE FINANCED" is "P274,137.00." The
spaces provided for "Delivery Terms" were not filled-up. It also
contains the following pertinent provisions:
CONDITIONS OF SALES
1.This sale is subject to availability of unit.
2.Stated Price is subject to change without prior notice, Price
prevailing and in effect at time of selling will apply. . . .
Rodrigo Quirante, the Sales Supervisor of Bernardo, checked and
approved the VSP.
On 17 June 1989, at around 9:30 a.m., Bernardo called Gilbert to
inform him that the vehicle would not be ready for pick up at 10:00
a.m. as previously agreed upon but at 2:00 p.m. that same day. At
2:00 p.m., Sosa and Gilbert met Bernardo at the latter's office.
According to Sosa, Bernardo informed them that the Lite Ace was
being readied for delivery. After waiting for about an hour,
Bernardo told them that the car could not be delivered because
"nasulot ang unit ng ibang malakas."
Toyota contends, however, that the Lite Ace was not delivered to
Sosa because of the disapproval by B.A. Finance of the credit
financing application of Sosa. It further alleged that a particular
unit had already been reserved and earmarked for Sosa but could not
be released due to the uncertainty of payment of the balance of the
purchase price. Toyota then gave Sosa the option to purchase the
unit by paying the full purchase price in cash but Sosa
refused.
After it became clear that the Lite Ace would not be delivered
to him, Sosa asked that his downpayment be refunded. Toyota did so
on the very same day by issuing a Far East Bank check for the full
amount of P100,000.00, 4 the receipt of which was shown by a check
voucher of Toyota, 5 which Sosa signed with the reservation,
"without prejudice to our future claims for damages."
Thereafter, Sosa sent two letters to Toyota. In the first
letter, dated 27 June 1989 and signed by him, he demanded the
refund, within five days from receipt, of the downpayment of
P100,000.00 plus interest from the time he paid it and the payment
of damages with a warning that in case of Toyota's failure to do so
he would be constrained to take legal action. 6 The second, dated 4
November 1989 and signed by M. O. Caballes, Sosa's counsel,
demanded one million pesos representing interest and damages,
again, with a warning that legal action would be taken if payment
was not made within three days. 7 Toyota's counsel answered through
a letter dated 27 November 1989 8 refusing to accede to the demands
of Sosa. But even before this answer was made and received by Sosa,
the latter filed on 20 November 1989 with Branch 38 of the Regional
Trial Court (RTC) of Marinduque a complaint against Toyota for
damages under Articles 19 and 21 of the Civil Code in the total
amount of P1,230,000.00. 9 He alleges, inter alia, that:
9.As a result of defendant's failure and/or refusal to deliver
the vehicle to plaintiff, plaintiff suffered embarrassment,
humiliation, ridicule, mental anguish and sleepless nights because:
(i) he and his family were constrained to take the public
transportation from Manila to Lucena City on their way to
Marinduque; (ii) his balikbayan-guest canceled his scheduled first
visit to Marinduque in order to avoid the inconvenience of taking
public transportation; and (iii) his relatives, friends, neighbors
and other provincemates, continuously irked him about "his
Brand-New Toyota Lite Ace that never was." Under the circumstances,
defendant should be made liable to the plaintiff for moral damages
in the amount of One Million Pesos (P1,000,000.00). 10
In its answer to the complaint, Toyota alleged that no sale was
entered into between it and Sosa, that Bernardo had no authority to
sign Exhibit "A" for and in its behalf, and that Bernardo signed
Exhibit "A" in his personal capacity. As special and affirmative
defenses, it alleged that: the VSP did not state date of delivery;
Sosa had not completed the documents required by the financing
company, and as a matter of policy, the vehicle could not and would
not be released prior to full compliance with financing
requirements, submission of all documents, and execution of the
sales agreement/invoice; the P100,000.00 was returned to and
received by Sosa; the venue was improperly laid; and Sosa did not
have a sufficient cause of action against it. It also interposed
compulsory counterclaims.
After trial on the issues agreed upon during the pre-trial
session, 11 the trial court rendered on 18 February 1992 a decision
in favor of Sosa. 12 It ruled that Exhibit "A," the "AGREEMENTS
BETWEEN MR. SOSA AND POPONG BERNARDO," was a valid perfected
contract of sale between Sosa and Toyota which bound Toyota to
deliver the vehicle to Sosa, and further agreed with Sosa that
Toyota acted in bad faith in selling to another the unit already
reserved for him.
As to Toyota's contention that Bernardo had no authority to bind
it through Exhibit "A," the trial court held that the extent of
Bernardo's authority "was not made known to plaintiff," for as
testified to by Quirante, "they do not volunteer any information as
to the company's sales policy and guidelines because they are
internal matters." 13 Moreover, "[f]rom the beginning of the
transaction up to its consummation when the downpayment was made by
the plaintiff, the defendants had made known to the plaintiff the
impression that Popong Bernardo is an authorized sales executive as
it permitted the latter to do acts within the scope of an apparent
authority holding him out to the public as possessing power to do
these acts." 14 Bernardo then "was an agent of the defendant Toyota
Shaw, Inc. and hence bound the defendants." 15
The court further declared that "Luna Sosa proved his social
standing in the community and suffered besmirched reputation,
wounded feelings and sleepless nights for which he ought to be
compensated." 16 Accordingly, it disposed as follows:
WHEREFORE, viewed from the above findings, judgment is hereby
rendered in favor of the plaintiff and against the defendant:
1.ordering the defendant to pay to the plaintiff the sum of
P75,000.00 for moral damages;
2.ordering the defendant to pay the plaintiff the sum of
P10,000.00 for exemplary damages;
3.ordering the defendant to pay the sum of P30,000.00 attorney's
fees plus P2,000.00 lawyer's transportation fare per trip in
attending to the hearing of this case;
4.ordering the defendant to pay the plaintiff the sum of
P2,000.00 transportation fare per trip of the plaintiff in
attending the hearing of this case; and
5.ordering the defendant to pay the cost of suit.
SO ORDERED.
Dissatisfied with the trial court's judgment, Toyota appealed to
the Court of Appeals. The case was docketed as CA-G.R. CV No.
40043. In its decision promulgated on 29 July 1994, 17 the Court of
Appeals affirmed in toto the appealed decision.
Toyota now comes before this Court via this petition and raises
the core issue stated at the beginning of the ponencia and also the
following related issues: (a) whether or not the standard VSP was
the true and documented understanding of the parties which would
have led to the ultimate contract of sale, (b) whether or not Sosa
has any legal and demandable right to the delivery of the vehicle
despite the non-payment of the consideration and the non-approval
of his credit application by B.A. Finance, (c) whether or not
Toyota acted in good faith when it did not release the vehicle to
Sosa, and (d) whether or not Toyota may be held liable for
damages.
We find merit in the petition.
Neither logic nor recourse to one's imagination can lead to the
conclusion that Exhibit "A" is a perfected contract of sale.
Article 1458 of the Civil Code defines a contract of sale as
follows:
Art. 1458.By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional.
and Article 1475 specifically provides when it is deemed
perfected:
Art. 1475.The contract of sale is perfected at the moment there
is a meeting of minds upon the thing which is the object of the
contract and upon the price.
From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the
form of contracts.
What is clear from Exhibit "A" is not what the trial court and
the Court of Appeals appear to see. It is not a contract of sale.
No obligation on the part of Toyota to transfer ownership of a
determinate thing to Sosa and no correlative obligation on the part
of the latter to pay therefor a price certain appears therein. The
provision on the downpayment of P100,000.00 made no specific
reference to a sale of a vehicle. If it was intended for a contract
of sale, it could only refer to a sale on installment basis, as the
VSP executed the following day confirmed. But nothing was mentioned
about the full purchase price and the manner the installments were
to be paid.
This Court had already ruled that a definite agreement on the
manner of payment of the price is an essential element in the
formation of a binding and enforceable contract of sale. 18 This is
so because the agreement as to the manner of payment goes into the
price such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price. Definiteness as to
the price is an essential element of a binding agreement to sell
personal property. 19
Moreover, Exhibit "A" shows the absence of a meeting of minds
between Toyota and Sosa. For one thing, Sosa did not even sign it.
For another, Sosa was well aware from its title, written in bold
letters, viz.,
AGREEMENTS BETWEEN MR. SOSA & POPONG BERNARDO OF TOYOTA
SHAW, INC.
that he was not dealing with Toyota but with Popong Bernardo and
that the latter did not misrepresent that he had the authority to
sell any Toyota vehicle. He knew that Bernardo was only a sales
representative of Toyota and hence a mere agent of the latter. It
was incumbent upon Sosa to act with ordinary prudence and
reasonable diligence to know the extent of Bernardo's authority as
anagent 20 in respect of contracts to sell Toyota's vehicles. A
person dealing with an agent is put upon inquiry and must discover
upon his peril the authority of the agent. 21
At the most, Exhibit "A" may be considered as part of the
initial phase of the generation or negotiation stage of a contract
of sale. There are three stages in the contract of sale,
namely:
(a)preparation, conception, or generation, which is the period
of negotiation and bargaining, ending at the moment of agreement of
the parties;
(b)perfection or birth of the contract, which is the moment when
the parties come to agree on the terms of the contract; and
(c)consummation or death, which is the fulfillment or
performance of the terms agreed upon in the contract. 22
The second phase of the generation or negotiation stage in this
case was the execution of the VSP. It must be emphasized that
thereunder, the downpayment of the purchase price was P53,148.00
while the balance to be paid on installment should be financed by
B.A. Finance Corporation. It is, of course, to be assumed that B.A.
Finance Corp. was acceptable to Toyota, otherwise it should not
have mentioned B.A. Finance in the VSP.
Financing companies are defined in Section 3(a) of R.A. No.
5980, as amended by P.D. No. 1454 and P.D. No. 1793, as
"corporations or partnerships, except those regulated by the
Central Bank of the Philippines, the Insurance Commission and the
Cooperatives Administration Office, which are primarily organized
for the purpose of extending credit facilities to consumers and to
industrial, commercial, or agricultural enterprises, either by
discounting or factoring commercial papers or accounts receivables,
or by buying and selling contracts, leases, chattel mortgages, or
other evidence of indebtedness, or by leasing of motor vehicles,
heavy equipment and industrial machinery, business and office
machines and equipment, appliances and other movable property."
23
Accordingly, in a sale on installment basis which is financed by
a financing company, three parties are thus involved: the buyer who
executes a note or notes for the unpaid balance of the price of the
thing purchased on installment, the seller who assigns the notes or
discounts them with a financing company, and the financing company
which is subrogated in the place of the seller, as the creditor of
the installment buyer. 24 Since B.A. Finance did not approve Sosa's
application, there was then no meeting of minds on the sale on
installment basis.
We are inclined to believe Toyota's version that B.A. Finance
disapproved Sosa's application for which reason it suggested to
Sosa that he pay the full purchase price. When the latter refused,
Toyota cancelled the VSP and returned to him his P100,000.00.
Sosa's version that the VSP was cancelled because, according to
Bernardo, the vehicle was delivered to another who was "mas
malakas" does not inspire belief and was obviously a delayed
afterthought. It is claimed that Bernardo said, "Pasensiya kayo,
nasulot ang unit ng ibang malakas," while the Sosas had already
been waiting for an hour for the delivery of the vehicle in the
afternoon of 17 June 1989. However, in paragraph 7 of his
complaint, Sosa solemnly states:
On June 17, 1989 at around 9:30 o'clock in the morning,
defendant's sales representative, Mr. Popong Bernardo, called
plaintiff's house and informed the plaintiff's son that the vehicle
will not be ready for pick-up at 10:00 a.m. of June 17, 1989 but at
2:00 p.m. of that day instead. Plaintiff and his son went to
defendant's office on June 17 1989 at 2:00 p.m. in order to pick-up
the vehicle but the defendant for reasons known only to its
representatives, refused and/or failed to release the vehicle to
the plaintiff. Plaintiff demanded for an explanation, but nothing
was given; . . . (Emphasis supplied). 25
The VSP was a mere proposal which was aborted in lieu of
subsequent events. It follows that the VSP created no demandable
right in favor of Sosa for the delivery of the vehicle to him, and
its non-delivery did not cause any legally indemnifiable
injury.
The award then of moral and exemplary damages and attorney's
fees and costs of suit is without legal basis. Besides, the only
ground upon which Sosa claimed moral damages is that since it was
known to his friends, townmates, and relatives that he was buying a
Toyota Lite Ace which they expected to see on his birthday, he
suffered humiliation, shame, and sleepless nights when the van was
not delivered. The van became the subject matter of talks during
his celebration that he may not have paid for it, and this created
an impression against his business standing and reputation. At the
bottom of this claim is nothing but misplaced pride and ego. He
should not have announced his plan to buy a Toyota Lite Ace knowing
that he might not be able to pay the full purchase price. It was he
who brought embarrassment upon himself by bragging about a thing
which he did not own yet.
Since Sosa is not entitled to moral damages and there being no
award for temperate, liquidated, or compensatory damages, he is
likewise not entitled to exemplary damages. Under Article 2229 of
the Civil Code, exemplary or corrective damages are imposed by way
of example or correction for the public good, in addition to moral,
temperate, liquidated, or compensatory damages.
Also, it is settled that for attorney's fees to be granted, the
court must explicitly state in the body of the decision, and not
only in the dispositive portion thereof, the legal reason for the
award of attorney's fees. 26 No such explicit determination thereon
was made in the body of the decision of the trial court. No reason
thus exists for such an award.
WHEREFORE, the instant petition is GRANTED. The challenged
decision of the Court of Appeals in CA-G.R. CV NO. 40043 as well as
that of Branch 38 of the Regional Trial Court of Marinduque in
Civil Case No. 89-14 are REVERSED and SET ASIDE and the complaint
in Civil Case No. 89-14 is DISMISSED. The counterclaim therein is
likewise DISMISSED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. L-26872July 25, 1975
VILLONCO REALTY COMPANY, plaintiff-appellee and EDITH PEREZ DE
TAGLE, intervenor-appellee, vs.BORMAHECO, INC., FRANCISCO N.
CERVANTES and ROSARIO N. CERVANTES, defendants-appellants. Meer,
Meer & Meer for plaintiff-appellee.
J. Villareal, Navarro and Associates for
defendants-appellants.
P. P. Gallardo and Associates for intervenor-appellee.
AQUINO, J.:
This action was instituted by Villonco Realty Company against
Bormaheco, Inc. and the spouses Francisco N. Cervantes and Rosario
N. Cervantes for the specific performance of a supposed contract
for the sale of land and the improvements thereon for one million
four hundred thousand pesos. Edith Perez de Tagle, as agent,
intervened in order to recover her commission. The lower court
enforced the sale. Bormaheco, Inc. and the Cervantes spouses, as
supposed vendors, appealed.
This Court took cognizance of the appeal because the amount
involved is more than P200,000 and the appeal was perfected before
Republic Act No. 5440 took effect on September 9, 1968. The facts
are as follows:
Francisco N. Cervantes and his wife, Rosario P.
Navarra-Cervantes, are the owners of lots 3, 15 and 16 located at
245 Buendia Avenue, Makati, Rizal with a total area of three
thousand five hundred square meters (TCT Nos. 43530, 43531 and
43532, Exh. A, A-1 and A-2). The lots were mortgaged to the
Development Bank of the Phil (DBP) on April 21, 1959 as security
for a loan of P441,000. The mortgage debt was fully paid on July
10, 1969.
Cervantes is the president of Bormaheco, Inc., a dealer and
importer of industrial and agricultural machinery. The entire lots
are occupied by the building, machinery and equipment of Bormaheco,
Inc. and are adjacent to the property of Villonco Realty Company
situated at 219 Buendia Avenue.
In the early part of February, 1964 there were negotiations for
the sale of the said lots and the improvements thereon between
Romeo Villonco of Villonco Realty Company "and Bormaheco, Inc.,
represented by its president, Francisco N. Cervantes, through the
intervention of Edith Perez de Tagle, a real estate broker".
In the course of the negotiations, the brothers Romeo Villonco
and Teofilo Villonco conferred with Cervantes in his office to
discuss the price and terms of the sale. Later, Cervantes "went to
see Villonco for the same reason until some agreement" was arrived
at. On a subsequent occasion, Cervantes, accompanied by Edith Perez
de Tagle, discussed again the terms of the sale with Villonco.
During the negotiations, Villonco Realty Company assumed that
the lots belonged to Bormaheco, Inc. and that Cervantes was duly
authorized to sell the same. Cervantes did not disclose to the
broker and to Villonco Realty Company that the lots were conjugal
properties of himself and his wife and that they were mortgaged to
the DBP.
Bormaheco, Inc., through Cervantes, made a written offer dated
February 12, 1964, to Romeo Villonco for the sale of the property.
The offer reads (Exh. B):
BORMAHECO, INC.
February 12,1964
Mr. Romeo Villonco Villonco Building Buendia AvenueMakati,
Rizal.
Dear Mr. Villonco:
This is with reference to our telephone conversation this noon
on the matter of the sale of our property located at Buendia
Avenue, with a total area of 3,500 sq. m., under the following
conditions:
(1)That we are offering to sell to you the above property at the
price of P400.00 per square meter;
(2)That a deposit of P100,000.00 must be placed as earnest money
on the purchase of the above property which will become part
payment of the property in the event that the sale is
consummated;
(3)That this sale is to be consummated only after I shall have
also consummated my purchase of another property located at Sta.
Ana, Manila;
(4)That if my negotiations with said property will not be
consummated by reason beyond my control, I will return to you your
deposit of P100,000 and the sale of my property to you will not
also be consummated; and
(5)That final negotiations on both properties can be definitely
known after 45 days.
If the above terms is (are) acceptable to your Board, please
issue out the said earnest money in favor of Bormaheco, Inc., and
deliver the same thru the bearer, Miss Edith Perez de Tagle.
Very truly yours,
SGD. FRANCISCO N. CERVANTESPresident
The property mentioned in Bormaheco's letter was the land of the
National Shipyards & Steel Corporation (Nassco), with an area
of twenty thousand square meters, located at Punta, Sta. Ana,
Manila. At the bidding held on January 17, 1964 that land was
awarded to Bormaheco, Inc., the highest bidder, for the price of
P552,000. The Nassco Board of Directors in its resolution of
February 18, 1964 authorized the General Manager to sign the
necessary contract (Exh. H).
On February 28, 1964, the Nassco Acting General Manager wrote a
letter to the Economic Coordinator, requesting approval of that
resolution. The Acting Economic Coordinator approved the resolution
on March 24, 1964 (Exh. 1).
In the meanwhile, Bormaheco, Inc. and Villonco Realty Company
continued their negotiations for the sale of the Buendia Avenue
property. Cervantes and Teofilo Villonco had a final conference on
February 27, 1964. As a result of that conference Villonco Realty
Company, through Teofilo Villonco, in its letter of March 4, 1964
made a revised counter- offer (Romeo Villonco's first counter-offer
was dated February 24, 1964, Exh. C) for the purchase of the
property. The counter-offer was accepted by Cervantes as shown in
Exhibit D, which is quoted below:
VILLONCO REALTY COMPANYV. R. C. Building219 Buendia Avenue,
Makati,Rizal, Philippines
March 4, 1964
Mr. Francisco Cervantes.Bormaheco, Inc.245 Buendia AvenueMakati,
Rizal
Dear Mr. Cervantes:
In reference to the letter of Miss E. Perez de Tagle dated
February 12th and 26, 1964 in respect to the terms and conditions
on the purchase of your property located at Buendia Ave., Makati,
Rizal, with a total area of 3,500 sq. meters., we hereby revise our
offer, as follows:
1.That the price of the property shall be P400.00 per sq. m.,
including the improvements thereon;
2.That a deposit of P100,000.00 shall be given to you as earnest
money which will become as part payment in the event the sale is
consummated;
3.This sale shall be cancelled, only if your deal with another
property in Sta. Ana shall not be consummated and in such case, the
P100,000-00 earnest money will be returned to us with a 10%
interest p.a. However, if our deal with you is finalized, said
P100,000.00 will become as part payment for the purchase of your
property without interest:
4.The manner of payment shall be as follows:
a.P100,000.00 earnest money and650,000.00 as part of the down
payment, or P750,000.00 as total down payment
b.The balance is payable as follows: P100,000.00 after 3
months125,000.00 -do- 212,500.00 -do-P650,000.00 Total
As regards to the other conditions which we have discussed
during our last conference on February 27, 1964, the same shall be
finalized upon preparation of the contract to sell.*
If the above terms and conditions are acceptable to you, kindly
sign your conformity hereunder. Enclosed is our check for ONE
HUNDRED THOUSAND (P100,000.00) PESOS, MBTC Check No. 448314, as
earnest money.
Very truly yours,
VILLONCO REALTY COMPANY(Sgd.) TEOFILO VILLONCO
CONFORME:
BORMAHECO, INC.(Sgd.) FRANCISCO CERVANTES
That this sale shall be subject to favorable consummation of a
property in Sta. Ana we are negotiating.
(Sgd.) FRANCISCO CERVANTES
The check for P100,000 (Exh. E) mentioned in the foregoing
letter-contract was delivered by Edith Perez de Tagle to Bormaheco,
Inc. on March 4, 1964 and was received by Cervantes. In the
voucher-receipt evidencing the delivery the broker indicated in her
handwriting that the earnest money was "subject to the terms and
conditions embodied in Bormaheco's letter" of February 12 and
Villonco Realty Company's letter of March 4, 1964 (Exh. E-1; 14
tsn).
Then, unexpectedly, in a letter dated March 30, 1964, or
twenty-six days after the signing of the contract of sale, Exhibit
D, Cervantes returned the earnest money, with interest amounting to
P694.24 (at ten percent per annum). Cervantes cited as an excuse
the circumstance that "despite the lapse of 45 days from February
12, 1964 there is no certainty yet" for the acquisition of the
Punta property (Exh. F; F-I and F-2). Villonco Realty Company
refused to accept the letter and the checks of Bormaheco, Inc.
Cervantes sent them by registered mail. When he rescinded the
contract, he was already aware that the Punta lot had been awarded
to Bormaheco, Inc. (25-26 tsn).
Edith Perez de Tagle, the broker, in a letter to Cervantes dated
March 31, 1964 articulated her shock and surprise at Bormaheco's
turnabout. She reviewed the history of the deal and explained why
Romeo Villonco could not agree to the rescission of the sale (Exh.
G).**
Cervantes in his letter of April 6, 1964, a reply to Miss
Tagle's letter, alleged that the forty-five day period had already
expired and the sale to Bormaheco, Inc. of the Punta property had
not been consummated. Cervantes said that his letter was a
"manifestation that we are no longer interested to sell" the
Buendia Avenue property to Villonco Realty Company (Annex I of
Stipulation of Facts). The latter was furnished with a copy of that
letter.
In a letter dated April 7, 1964 Villonco Realty Company returned
the two checks to Bormaheco, Inc., stating that the condition for
the cancellation of the contract had not arisen and at the same
time announcing that an action for breach of contract would be
filed against Bormaheco, Inc. (Annex G of Stipulation of
Facts).1wph1.t
On that same date, April 7, 1964 Villonco Realty Company filed
the complaint (dated April 6) for specific performance against
Bormaheco, Inc. Also on that same date, April 7, at
eight-forty-five in the morning, a notice of lis pendens was
annotated on the titles of the said lots.
Bormaheco, Inc. in its answers dated May 5 and 25, 1964 pleaded
the defense that the perfection of the contract of sale was subject
to the conditions (a) "that final acceptance or not shall be made
after 45 days" (sic) and (b) that Bormaheco, Inc. "acquires the
Sta. Ana property".
On June 2, 1964 or during the pendency of this case, the Nassco
Acting General Manager wrote to Bormaheco, Inc., advising it that
the Board of Directors and the Economic Coordinator had approved
the sale of the Punta lot to Bormaheco, Inc. and requesting the
latter to send its duly authorized representative to the Nassco for
the signing of the deed of sale (Exh. 1).
The deed of sale for the Punta land was executed on June 26,
1964. Bormaheco, Inc. was represented by Cervantes (Exh. J. See
Bormaheco, Inc. vs. Abanes, L-28087, July 31, 1973, 52 SCRA
73).
In view of the disclosure in Bormaheco's amended answer that the
three lots were registered in the names of the Cervantes spouses
and not in the name of Bormaheco, Inc., Villonco Realty Company on
July 21, 1964 filed an amended complaint impleading the said
spouses as defendants. Bormaheco, Inc. and the Cervantes spouses
filed separate answers.
As of January 15, 1965 Villonco Realty Company had paid to the
Manufacturers' Bank & Trust Company the sum of P8,712.25 as
interests on the overdraft line of P100,000 and the sum of P27.39
as interests daily on the same loan since January 16, 1965. (That
overdraft line was later settled by Villonco Realty Company on a
date not mentioned in its manifestation of February 19, 1975).
Villonco Realty Company had obligated itself to pay the sum of
P20,000 as attorney's fees to its lawyers. It claimed that it was
damaged in the sum of P10,000 a month from March 24, 1964 when the
award of the Punta lot to Bormaheco, Inc. was approved. On the
other hand, Bormaheco, Inc. claimed that it had sustained damages
of P200,000 annually due to the notice of lis pendens which had
prevented it from constructing a multi-story building on the three
lots. (Pars. 18 and 19, Stipulation of Facts).1wph1.t
Miss Tagle testified that for her services Bormaheco, Inc.,
through Cervantes, obligated itself to pay her a three percent
commission on the price of P1,400,000 or the amount of forty-two
thousand pesos (14 tsn).
After trial, the lower court rendered a decision ordering the
Cervantes spouses to execute in favor of Bormaheco, Inc. a deed of
conveyance for the three lots in question and directing Bormaheco,
Inc. (a) to convey the same lots to Villonco Realty Company, (b) to
pay the latter, as consequential damages, the sum of P10,000
monthly from March 24, 1964 up to the consummation of the sale, (c)
to pay Edith Perez de Tagle the sum of P42,000 as broker's
commission and (d) pay P20,000 as to attorney's fees (Civil Case
No. 8109).
Bormaheco, Inc. and the Cervantes spouses appealed. Their
principal contentions are (a) that no contract of sale was
perfected because Cervantes made a supposedly qualified acceptance
of the revised offer contained in Exhibit D, which acceptance
amounted to a counter-offer, and because the condition that
Bormaheco, inc. would acquire the Punta land within the
forty-five-day period was not fulfilled; (2) that Bormaheco, Inc.
cannot be compelled to sell the land which belongs to the Cervantes
spouses and (3) that Francisco N. Cervantes did not bind the
conjugal partnership and his wife when, as president of Bormaheco,
Inc., he entered into negotiations with Villonco Realty Company
regarding the said land.
We hold that the appeal, except as to the issue of damages, is
devoid of merit.
"By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determining thing, and the other to pay therefor a price certain in
money or its equivalent. A contract of sale may be absolute or
conditional" (Art. 1458, Civil Code).
"The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract
and upon the price. From that moment, the parties may reciprocally
demand performance, subject to the provisions of the law governing
the form of contracts" (Art. 1475, Ibid.).
"Contracts are perfected by mere consent, and from that moment
the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage
and law" (Art. 1315, Civil Code).
"Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer" (Art. 1319, Civil
Code). "An acceptance may be express or implied" (Art. 1320, Civil
Code).
Bormaheco's acceptance of Villonco Realty Company's offer to
purchase the Buendia Avenue property, as shown in Teofilo
Villonco's letter dated March 4, 1964 (Exh. D), indubitably proves
that there was a meeting of minds upon the subject matter and
consideration of the sale. Therefore, on that date the sale was
perfected. (Compare with McCullough vs. Aenlle & Co., 3 Phil.
285; Goyena vs. Tambunting, 1 Phil. 490). Not only that Bormaheco's
acceptance of the part payment of one hundred ,thousand pesos shows
that the sale was conditionally consummated or partly executed
subject to the purchase by Bormaheco, Inc. of the Punta property.
The nonconsummation of that purchase would be a negative resolutory
condition (Taylor vs. Uy Tieng Piao, 43 Phil. 873).
On February 18, 1964 Bormaheco's bid for the Punta property was
already accepted by the Nassco which had authorized its General
Manager to sign the corresponding deed of sale. What was necessary
only was the approval of the sale by the Economic Coordinator and a
request for that approval was already pending in the office of that
functionary on March 4, 1964.
Bormaheco, Inc. and the Cervantes spouses contend that the sale
was not perfected because Cervantes allegedly qualified his
acceptance of Villonco's revised offer and, therefore, his
acceptance amounted to a counter-offer which Villonco Realty
Company should accept but no such acceptance was ever transmitted
to Bormaheco, Inc. which, therefore, could withdraw its offer.
That contention is not well-taken. It should be stressed that
there is no evidence as to what changes were made by Cervantes in
Villonco's revised offer. And there is no evidence that Villonco
Realty Company did not assent to the supposed changes and that such
assent was never made known to Cervantes.
What the record reveals is that the broker, Miss Tagle, acted as
intermediary between the parties. It is safe to assume that the
alleged changes or qualifications made by Cervantes were approved
by Villonco Realty Company and that such approval was duly
communicated to Cervantes or Bormaheco, Inc. by the broker as shown
by the fact that Villonco Realty Company paid, and Bormaheco, Inc.
accepted, the sum of P100,000 as earnest money or down payment.
That crucial fact implies that Cervantes was aware that Villonco
Realty Company had accepted the modifications which he had made in
Villonco's counter-offer. Had Villonco Realty Company not assented
to those insertions and annotations, then it would have stopped
payment on its check for P100,000. The fact that Villonco Realty
Company allowed its check to be cashed by Bormaheco, Inc. signifies
that the company was in conformity with the changes made by
Cervantes and that Bormaheco, Inc. was aware of that conformity.
Had those insertions not been binding, then Bormaheco, Inc. would
not have paid interest at the rate of ten percent per annum, on the
earnest money of P100,000.
The truth is that the alleged changes or qualifications in the
revised counter offer (Exh. D) are not material or are mere
clarifications of what the parties had previously agreed upon.
Thus, Cervantes' alleged insertion in his handwriting of the
figure and the words "12th and" in Villonco's counter-offer is the
same as the statement found in the voucher-receipt for the earnest
money, which reads: "subject to the terms and conditions embodied
in Bormaheco's letter of Feb. 12, 1964 and your letter of March 4,
1964" (Exh. E-1).
Cervantes allegedly crossed out the word "Nassco" in paragraph 3
of Villonco's revised counter-offer and substituted for it the word
"another" so that the original phrase, "Nassco's property in Sta.
Ana", was made to read as "another property in Sta. Ana". That
change is trivial. What Cervantes did was merely to adhere to the
wording of paragraph 3 of Bormaheco's original offer (Exh. B) which
mentions "another property located at Sta. Ana." His obvious
purpose was to avoid jeopardizing his negotiation with the Nassco
for the purchase of its Sta. Ana property by unduly publicizing
it.
It is noteworthy that Cervantes, in his letter to the broker
dated April 6, 1964 (Annex 1) or after the Nassco property had been
awarded to Bormaheco, Inc., alluded to the "Nassco property". At
that time, there was no more need of concealing from the public
that Bormaheco, Inc. was interested in the Nassco property.
Similarly, Cervantes' alleged insertion of the letters "PA" (
per annum) after the word "interest" in that same paragraph 3 of
the revised counter-offer (Exh. D) could not be categorized as a
major alteration of that counter-offer that prevented a meeting of
the minds of the parties. It was understood that the parties had
contemplated a rate of ten percent per annum since ten percent a
month or semi-annually would be usurious.
Appellants Bormaheco, Inc. and Cervantes further contend that
Cervantes, in clarifying in the voucher for the earnest money of
P100,000 that Bormaheco's acceptance thereof was subject to the
terms and conditions embodied in Bormaheco's letter of February 12,
1964 and your (Villonco's) letter of March 4, 1964" made
Bormaheco's acceptance "qualified and conditional".
That contention is not correct. There is no incompatibility
between Bormaheco's offer of February 12, 1964 (Exh. B) and
Villonco's counter-offer of March 4, 1964 (Exh. D). The revised
counter-offer merely amplified Bormaheco's original offer.
The controlling fact is that there was agreement between the
parties on the subject matter, the price and the mode of payment
and that part of the price was paid. "Whenever earnest money is
given in a contract of sale, it shall be considered as part of the
price and as proof of the perfection of the contract" (Art. 1482,
Civil Code).
"It is true that an acceptance may contain a request for certain
changes in the terms of the offer and yet be a binding acceptance.
'So long as it is clear that the meaning of the acceptance is
positively and unequivocally to accept the offer, whether such
request is granted or not, a contract is formed.' " (Stuart vs.
Franklin Life Ins. Co., 165 Fed. 2nd 965, citing Sec. 79, Williston
on Contracts).
Thus, it was held that the vendor's change in a phrase of the
offer to purchase, which change does not essentially change the
terms of the offer, does not amount to a rejection of the offer and
the tender of a counter-offer (Stuart vs. Franklin Life Ins. Co.,
supra).
The instant case is not governed by the rulings laid down in
Beaumont vs. Prieto, 41 Phil. 670, 985, 63 L. Ed. 770, and Zayco
vs. Serra, 44 Phil. 326. In those two cases the acceptance
radically altered the offer and, consequently, there was no meeting
of the minds of the parties.
Thus, in the Zayco case, Salvador Serra offered to sell to
Lorenzo Zayco his sugar central for P1,000,000 on condition that
the price be paid in cash, or, if not paid in cash, the price would
be payable within three years provided security is given for the
payment of the balance within three years with interest. Zayco,
instead of unconditionally accepting those terms, countered that he
was going to make a down payment of P100,000, that Serra's mortgage
obligation to the Philippine National Bank of P600,000 could be
transferred to Zayco's account and that he (plaintiff) would give a
bond to secure the payment of the balance of the price. It was held
that the acceptance was conditional or was a counter-offer which
had to be accepted by Serra. There was no such acceptance. Serra
revoked his offer. Hence, there was no perfected contract.
In the Beaumont case, Benito Valdes offered to sell to W Borck
the Nagtahan Hacienda owned by Benito Legarda, who had empowered
Valdes to sell it. Borck was given three months from December 4,
1911 to buy the hacienda for P307,000. On January 17, 1912 Borck
wrote to Valdes, offering to purchase the hacienda for P307,000
payable on May 1, 1912. No reply was made to that letter. Borck
wrote other letters modifying his proposal. Legarda refused to
convey the property.
It was held that Borck's January 17th letter plainly departed
from the terms of the offer as to the time of payment and was a
counter-offer which amounted to a rejection of Valdes' original
offer. A subsequent unconditional acceptance could not revive that
offer.
The instant case is different from Laudico and Harden vs. Arias
Rodriguez, 43 Phil. 270 where the written offer to sell was revoked
by the offer or before the offeree's acceptance came to the
offeror's knowledge.
Appellants' next contention is that the contract was not
perfected because the condition that Bormaheco, Inc. would acquire
the Nassco land within forty-five days from February 12, 1964 or on
or before March 28, 1964 was not fulfilled. This contention is tied
up with the following letter of Bormaheco, Inc. (Exh. F):
BORMAHECO, INC.
March 30, 1964
Villonco Realty CompanyV.R.C. Building219 Buendia Ave.,Makati,
Rizal
Gentlemen:
We are returning herewith your earnest money together with
interest thereon at 10% per annum. Please be informed that despite
the lapse of the 45 days from February 12, 1964 there is no
certainty yet for us to acquire a substitute property, hence the
return of the earnest money as agreed upon.
Very truly yours,
SGD. FRANCISCO N. CERVANTESPresident
Encl.: P.N.B. Check No. 112994 JP.N.B. Check No. 112996J
That contention is predicated on the erroneous assumption that
Bormaheco, Inc. was to acquire the Nassco land within forty-five
days or on or before March 28, 1964.
The trial court ruled that the forty-five-day period was merely
an estimate or a forecast of how long it would take Bormaheco, Inc.
to acquire the Nassco property and it was not "a condition or a
deadline set for the defendant corporation to decide whether or not
to go through with the sale of its Buendia property".
The record does not support the theory of Bormaheco, Inc. and
the Cervantes spouses that the forty-five-day period was the time
within which (a) the Nassco property and two Pasong Tamo lots
should be acquired, (b) when Cervantes would secure his wife's
consent to the sale of the three lots and (c) when Bormaheco, Inc.
had to decide what to do with the DBP encumbrance.
Cervantes in paragraph 3 of his offer of February 12, 1964
stated that the sale of the Buendia lots would be consummated after
he had consummated the purchase of the Nassco property. Then, in
paragraph 5 of the same offer he stated "that final negotiations on
both properties can be definitely known after forty-five days" (See
Exh. B).
It is deducible from the tenor of those statements that the
consummation of the sale of the Buendia lots to Villonco Realty
Company was conditioned on Bormaheco's acquisition of the Nassco
land. But it was not spelled out that such acquisition should be
effected within forty-five days from February 12, 1964. Had it been
Cervantes' intention that the forty-five days would be the period
within which the Nassco land should be acquired by Bormaheco, then
he would have specified that period in paragraph 3 of his offer so
that paragraph would read in this wise: "That this sale is to be
consummated only after I shall have consummated my purchase of
another property located at Sta. Ana, Manila within forty-five days
from the date hereof ." He could have also specified that period in
his "conforme" to Villonco's counter-offer of March 4, 1964 (Exh.
D) so that instead of merely stating "that this sale shall be
subject to favorable consummation of a property in Sta. Ana we are
negotiating" he could have said: "That this sale shall be subject
to favorable consummation within forty-five days from February 12,
1964 of a property in Sta. Ana we are negotiating".
No such specification was made. The term of forty-five days was
not a part of the condition that the Nassco property should be
acquired. It is clear that the statement "that final negotiations
on both property can be definitely known after 45 days" does not
and cannot mean that Bormaheco, Inc. should acquire the Nassco
property within forty-five days from February 12, 1964 as pretended
by Cervantes. It is simply a surmise that after forty-five days (in
fact when the forty-five day period should be computed is not
clear) it would be known whether Bormaheco, Inc. would be able to
acquire the Nassco property and whether it would be able to sell
the Buendia property. That aforementioned paragraph 5 does not even
specify how long after the forty-five days the outcome of the final
negotiations would be known.
It is interesting to note that in paragraph 6 of Bormaheco's
answer to the amended complaint, which answer was verified by
Cervantes, it was alleged that Cervantes accepted Villonco's
revised counter-offer of March 4, 1964 subject to the condition
that "the final negotiations (acceptance) will have to be made by
defendant within 45 days from said acceptance" (31 Record on
Appeal). If that were so, then the consummation of Bormaheco's
purchase of the Nassco property would be made within forty-five
days from March 4, 1964.
What makes Bormaheco's stand more confusing and untenable is
that in its three answers it invariably articulated the incoherent
and vague affirmative defense that its acceptance of Villonco's
revised counter-offer was conditioned on the circumstance "that
final acceptance or not shall be made after 45 days" whatever that
means. That affirmative defense is inconsistent with the other
aforequoted incoherent statement in its third answer that "the
final negotiations (acceptance) will have to be made by defendant
within 45 days from said acceptance" (31 Record on
Appeal).1wph1.t
Thus, Bormaheco's three answers and paragraph 5 of his offer of
February 12, 1964 do not sustain at all its theory that the Nassco
property should be acquired on or before March 28, 1964. Its
rescission or revocation of its acceptance cannot be anchored on
that theory which, as articulated in its pleadings, is quite
equivocal and unclear.
It should be underscored that the condition that Bormaheco, Inc.
should acquire the Nassco property was fulfilled. As admitted by
the appellants, the Nassco property was conveyed to Bormaheco, Inc.
on June 26, 1964. As early as January 17, 1964 the property was
awarded to Bormaheco, Inc. as the highest bidder. On February 18,
1964 the Nassco Board authorized its General Manager to sell the
property to Bormaheco, Inc. (Exh. H). The Economic Coordinator
approved the award on March 24, 1964. It is reasonable to assume
that had Cervantes been more assiduous in following up the
transaction, the Nassco property could have been transferred to
Bormaheco, Inc. on or before March 28, 1964, the supposed last day
of the forty-five-day period.
The appellants, in their fifth assignment of error, argue that
Bormaheco, Inc. cannot be required to sell the three lots in
question because they are conjugal properties of the Cervantes
spouses. They aver that Cervantes in dealing with the Villonco
brothers acted as president of Bormaheco, Inc. and not in his
individual capacity and, therefore, he did not bind the conjugal
partnership nor Mrs. Cervantes who was allegedly opposed to the
sale.
Those arguments are not sustainable. It should be remembered
that Cervantes, in rescinding the contract of sale and in returning
the earnest money, cited as an excuse the circumstance that there
was no certainty in Bormaheco's acquisition of the Nassco property
(Exh. F and Annex 1). He did not say that Mrs. Cervantes was
opposed to the sale of the three lots. He did not tell Villonco
Realty Company that he could not bind the conjugal partnership. In
truth, he concealed the fact that the three lots were registered
"in the name of FRANCISCO CERVANTES, Filipino, of legal age,
married to Rosario P. Navarro, as owner thereof in fee simple". He
certainly led the Villonco brothers to believe that as president of
Bormaheco, Inc. he could dispose of the said lots. He inveigled the
Villoncos into believing that he had untrammelled control of
Bormaheco, Inc., that Bormaheco, Inc. owned the lots and that he
was invested with adequate authority to sell the same.
Thus, in Bormaheco's offer of February 12, 1964, Cervantes first
identified the three lots as "our property" which "we are offering
to sell ..." (Opening paragraph and par. 1 of Exh. B). Whether the
prounoun "we" refers to himself and his wife or to Bormaheco, Inc.
is not clear. Then, in paragraphs 3 and 4 of the offer, he used the
first person and said: "I shall have consummated my purchase" of
the Nassco property; "... my negotiations with said property" and
"I will return to you your deposit". Those expressions conveyed the
impression and generated the belief that the Villoncos did not have
to deal with Mrs. Cervantes nor with any other official of
Bormaheco, Inc.
The pleadings disclose that Bormaheco, Inc. and Cervantes
deliberately and studiously avoided making the allegation that
Cervantes was not authorized by his wife to sell the three lots or
that he acted merely as president of Bormaheco, Inc. That defense
was not interposed so as not to place Cervantes in the ridiculous
position of having acted under false pretenses when he negotiated
with the Villoncos for the sale of the three lots.
Villonco Realty Company, in paragraph 2 of its original
complaint, alleged that "on February 12, 1964, after some prior
negotiations, the defendant (Bormaheco, Inc.) made a formal offer
to sell to the plaintiff the property of the said defendant
situated at the abovenamed address along Buendia Avenue, Makati,
Rizal, under the terms of the letter-offer, a copy of which is
hereto attached as Annex A hereof", now Exhibit B (2 Record on
Appeal).
That paragraph 2 was not, repeat, was not denied by Bormaheco,
Inc. in its answer dated May 5, 1964. It did not traverse that
paragraph 2. Hence, it was deemed admitted. However, it filed an
amended answer dated May 25, 1964 wherein it denied that it was the
owner of the three lots. It revealed that the three lots "belong
and are registered in the names of the spouses Francisco N.
Cervantes and Rosario N. Cervantes."
The three answers of Bormaheco, Inc. contain the following
affirmative defense:
13.That defendant's insistence to finally decide on the proposed
sale of the land in question after 45 days had not only for its
purpose the determination of its acquisition of the said Sta. Ana
(Nassco) property during the said period, but also to negotiate
with the actual and registered owner of the parcels of land covered
by T.C.T. Nos. 43530, 43531 and 43532 in question which plaintiff
was fully aware that the same were not in the name of the defendant
(sic; Par. 18 of Answer to Amended Complaint, 10, 18 and 34, Record
on Appeal).
In that affirmative defense, Bormaheco, Inc. pretended that it
needed forty- five days within which to acquire the Nassco property
and "to negotiate" with the registered owner of the three lots. The
absurdity of that pretension stands out in bold relief when it is
borne in mind that the answers of Bormaheco, Inc. were verified by
Cervantes and that the registered owner of the three lots is
Cervantes himself. That affirmative defense means that Cervantes as
president of Bormaheco, Inc. needed forty-five days in order to
"negotiate" with himself (Cervantes).
The incongruous stance of the Cervantes spouses is also patent
in their answer to the amended complaint. In that answer they
disclaimed knowledge or information of certain allegations which
were well-known to Cervantes as president of Bormaheco, Inc. and
which were admitted in Bormaheco's three answers that were verified
by Cervantes.
It is significant to note that Bormaheco, Inc. in its three
answers, which were verified by Cervantes, never pleaded as an
affirmative defense that Mrs. Cervantes opposed the sale of the
three lots or that she did not authorize her husband to sell those
lots. Likewise, it should be noted that in their separate answer
the Cervantes spouses never pleaded as a defense that Mrs.
Cervantes was opposed to the sale of three lots or that Cervantes
could not bind the conjugal partnership. The appellants were at
first hesitant to make it appear that Cervantes had committed the
skullduggery of trying to sell property which he had no authority
to alienate.
It was only during the trial on May 17, 1965 that Cervantes
declared on the witness stand that his wife was opposed to the sale
of the three lots, a defense which, as already stated, was never
interposed in the three answers of Bormaheco, Inc. and in the
separate answer of the Cervantes spouses. That same viewpoint was
adopted in defendants' motion for reconsideration dated November
20, 1965.
But that defense must have been an afterthought or was evolved
post litem motam since it was never disclosed in Cervantes' letter
of rescission and in his letter to Miss Tagle (Exh. F and Annex 1).
Moreover, Mrs. Cervantes did not testify at the trial to fortify
that defense which had already been waived for not having been
pleaded (See sec. 2, Rule 9, Rules of Court).
Taking into account the situation of Cervantes vis-a-vis
Bormaheco, Inc. and his wife and the fact that the three lots were
entirely occupied by Bormaheco's building, machinery and equipment
and were mortgaged to the DBP as security for its obligation, and
considering that appellants' vague affirmative defenses do not
include Mrs. Cervantes' alleged opposition to the sale, the plea
that Cervantes had no authority to sell the lots strains the rivets
of credibility (Cf. Papa and Delgado vs. Montenegro, 54 Phil. 331;
Riobo vs. Hontiveros, 21 Phil. 31).
"Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good
faith" (Art. 1159, Civil Code). Inasmuch as the sale was perfected
and even partly executed, Bormaheco, Inc., and the Cervantes
spouses, as a matter of justice and good faith, are bound to comply
with their contractual commitments.
Parenthetically, it may be observed that much misunderstanding
could have been avoided had the broker and the buyer taken the
trouble of making some research in the Registry of Deeds and
availing themselves of the services of a competent lawyer in
drafting the contract to sell.
Bormaheco, Inc. and the Cervantes spouses in their sixth
assignment of error assail the trial court's award to Villonco
Realty Company of consequential damage amounting to ten thousand
pesos monthly from March 24, 1964 (when the Economic Coordinator
approved the award of the Nassco property to Bormaheco, Inc.) up to
the consummation of the sale. The award was based on paragraph 18
of the stipulation of facts wherein Villonco Realty Company
"submits that the delay in the consummation of the sale" has caused
it to suffer the aforementioned damages.
The appellants contend that statement in the stipulation of
facts simply means that Villonco Realty Company speculates that it
has suffered damages but it does not mean that the parties have
agreed that Villonco Realty Company is entitled to those
damages.
Appellants' contention is correct. As rightly observed by their
counsel, the damages in question were not specifically pleaded and
proven and were "clearly conjectural and speculative".
However, appellants' view in their seventh assignment of error
that the trial court erred in ordering Bormaheco, Inc. to pay
Villonco Realty Company the sum of twenty thousand pesos as
attorney's fees is not tenable. Under the facts of the case, it is
evident that Bormaheco, Inc. acted in gross and evident bad faith
in refusing to satisfy the valid and just demand of Villonco Realty
Company for specific performance. It compelled Villonco Realty
Company to incure expenses to protect its interest. Moreover, this
is a case where it is just and equitable that the plaintiff should
recover attorney's fees (Art. 2208, Civil Code).
The appellants in their eighth assignment of error impugn the
trial court's adjudication of forty-two thousand pesos as three
percent broker's commission to Miss Tagle. They allege that there
is no evidence that Bormaheco, Inc. engaged her services as a
broker in the projected sale of the three lots and the improvements
thereon. That allegation is refuted by paragraph 3 of the
stipulation of facts and by the documentary evidence. It was
stipulated that Miss Tagle intervened in the negotiations for the
sale of the three lots. Cervantes in his original offer of February
12, 1964 apprised Villonco Realty Company that the earnest money
should be delivered to Miss Tagle, the bearer of the letter-offer.
See also Exhibit G and Annex I of the stipulation of facts.
We hold that the trial court did not err in adjudgin