After due notice and publication, the property was sold at public auction

FIRST DIVISION on September 28, 1982 where respondent PNB was declared the winning bidder
for P1,000,000.00. The Certificate of Sale[7] 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
MANILA METAL CONTAINER G.R. No. 166862 title on February 17, 1983.Thus, the period to redeem the property was to expire
CORPORATION, on February 17, 1984.
Petitioner,
Present: Petitioner sent a letter dated August 25, 1983 to respondent PNB, requesting that it be
REYNALDO C. TOLENTINO, granted an extension of time to redeem/repurchase the property. [8] In its reply
Intervenor, PANGANIBAN, C.J., Chairperson,* dated August 30, 1983, respondent PNB informed petitioner that the request had been
YNARES- referred to its Pasay City Branch for appropriate action and recommendation.[9]
SANTIAGO,**
AUSTRIA-MARTINEZ, In a letter[10] dated February 10, 1984, petitioner reiterated its request for a one year
- versus - CALLEJO, SR., and extension from February 17, 1984within which to redeem/repurchase the property on
CHICO-NAZARIO, JJ. installment basis. It reiterated its request to repurchase the property on
PHILIPPINE NATIONAL BANK, installment.[11] Meanwhile, some PNB Pasay City Branch personnel informed petitioner
Respondent, that as a matter of policy, the bank does not accept partial redemption. [12]
DMCI-PROJECT DEVELOPERS, Promulgated:
INC., Since petitioner failed to redeem the property, the Register of Deeds cancelled
Intervenor. December 20, 2006 TCT No. 32098 on June 1, 1984, and issued a new title in favor of respondent
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x PNB.[13] Petitioners offers had not yet been acted upon by respondent PNB.

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. No. 46153 which affirmed the decision[2] of the Regional Trial
Court (RTC), Branch 71, Pasig City, in Civil Case No. 58551, and its
Resolution[3] 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 of P1,000,000.00; and, on November 16,
1973, petitioner executed an Amendment[4] 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, petitioners outstanding obligation to respondent PNB as
of June 30, 1982,[6] plus interests and attorneys fees.
Meanwhile, the Special Assets Management Department (SAMD) had prepared a
statement of account, and as of June 25, 1984 petitioners 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 PNBs 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 SAMDs 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 petitioners 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 petitioners 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 respondents 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 petitioners 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 defendants acts of extra-judicially foreclosing the
mortgage over plaintiffs 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 Metals
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 attorneys 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 plaintiffs 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 PNBscounterclaim. 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 petitioners 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 of P643,422.34 was way below the P1,206,389.53 which
respondent PNB had demanded. It further declared that the P725,000.00 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-
APPELLEES LETTER DATED 4 JUNE
1985APPROVING/ACCEPTING PLAINTIFF-APPELLANTS 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 DEFENDANT-APPELLEE 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,
ATTOTRNEYS FEES AND LITIGATION EXPENSES.[33]
Meanwhile, on June 17, 1993, petitioners 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 BayaniGabriel, 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 petitioners 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 PNBs 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 PNBS
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 PETITIONER-
APPELLANT 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 PETITIONER-
APPELLANT 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 respondents offer made through the
SAMD, to sell the property for P1,574,560.00. 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 SAMDs 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 petitioners 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 respondents 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. Bormaheco[39] 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 respondents breach of its obligation to
petitioner. It did not amount to a rejection of respondents 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.
Petitioners 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 respondents 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 banks claim as of documentation date x x xpayable 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 banks claim to be P1,931,389.53 less deposit
of P725,000.00, or P1,206,389.00. Furthermore, while respondents Board of Directors
accepted petitioners 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 petitioners 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 respondents 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 respondents President reiterating its offer to purchase the
property.[59] There was no response to petitioners 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 petitioners 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 respondents Board of
Directors to accept petitioners offer and sell the property for P1,574,560.47. Any
acceptance by the SAMD of petitioners 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 petitioners offer to repurchase the property even beyond the one-year period; it
recommended that petitioner be allowed to redeem the property and payP1,574,560.00
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, respondents acceptance of petitioners 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 petitioners 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 MMCCs 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 6. That the sale shall be subject to such other terms and
deposit to repurchase the property. The deposit of P725,000 was conditions that the Legal Department may impose to protect
accepted by PNB on the condition that the purchase price is still the interest of the Bank.[64]
subject to the approval of the PNB Board.[62]

It appears that although respondent requested petitioner to conform to its

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 petitioners 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]
amended counter-offer, petitioner refused and instead requested respondent to
reconsider its amended counter-offer. Petitioners 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.

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 IN LIGHT OF ALL THE FOREGOING, the petition is DENIED.
amounted to an amendment of respondents qualified acceptance, or an amended The assailed decision is AFFIRMED. Costs against petitioner Manila Metal Container
counter-offer, because while the respondent lowered the purchase price, it still declared Corporation.
that its acceptance was subject to the following terms and conditions:
SO ORDERED.

1. That the selling price shall be the total Banks 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.

SECOND DIVISION
[G.R. No. 134971. March 25, 2004]
HERMINIO TAYAG, petitioner, vs. AMANCIA LACSON, ROSENDO LACSON,
ANTONIO LACSON, JUAN LACSON, TEODISIA LACSON-ESPINOSA and
THE COURT OF APPEALS, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision[1] and the
Resolution[2] of respondent Court of Appeals in CA-G.R. SP No. 44883.
The Case for the Petitioner
Respondents Angelica Tiotuyco Vda. de Lacson, [3] and her children Amancia,
Antonio, Juan, and Teodosia, all surnamed Lacson, were the registered owners of three
parcels of land located in Mabalacat, Pampanga, covered by Transfer Certificates of
Title (TCT) Nos. 35922-R, 35923-R, and 35925-R, registered in the Register of Deeds
of San Fernando, Pampanga. The properties, which were tenanted agricultural
lands,[4] were administered by Renato Espinosa for the owner.
On March 17, 1996, a group of original farmers/tillers, namely, Julio Tiamson,
Renato Gozun, Rosita Hernandez, Bienvenido Tongol, Alfonso Flores, Norma
Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino, Sr., Emiliano Laxamana,
Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano
Ramos, and another group, namely, Felino G. Tolentino, Rica Gozun, Perla Gozun,
Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Ricardo
Hernandez, Nicenciana Miranda, Jose Gozun, Alfredo Sosa, Jose Tiamson, Augusto
Tolentino, Sixto Hernandez, Alex Quiambao, Isidro Tolentino, Ceferino de Leon,
Alberto Hernandez, Orlando Flores, and Aurelio Flores, [5] individually executed in favor
of the petitioner separate Deeds of Assignment[6] in which the assignees assigned to
the petitioner their respective rights as tenants/tillers of the landholdings possessed
and tilled by them for and in consideration of P50.00 per square meter. The said
amount was made payable when the legal impediments to the sale of the property to
the petitioner no longer existed. The petitioner was also granted the exclusive right to
buy the property if and when the respondents, with the concurrence of the defendants-
tenants, agreed to sell the property. In the interim, the petitioner gave varied sums of
money to the tenants as partial payments, and the latter issued receipts for the said
amounts.
On July 24, 1996, the petitioner called a meeting of the defendants-tenants to
work out the implementation of the terms of their separate agreements. [7] However, on
August 8, 1996, the defendants-tenants, through Joven Mariano, wrote the petitioner
stating that they were not attending the meeting and instead gave notice of their
collective decision to sell all their rights and interests, as tenants/lessees, over the
landholding to the respondents.[8] Explaining their reasons for their collective decision,
they wrote as follows:
Kami ay nagtiwala sa inyo, naging tapat at nanindigan sa lahat ng ating
napagkasunduan, hindi tumanggap ng ibang buyer o ahente, pero sinira ninyo ang
aming pagtitiwala sa pamamagitan ng demanda ninyo at pagbibigay ng problema sa
amin na hindi naman nagbenta ng lupa.
Kaya kami ay nagpulong at nagpasya na ibenta na lang ang aming karapatan o ang
aming lupang sinasaka sa landowner o sa mga pamilyang Lacson, dahil ayaw naming
magkaroon ng problema.
Kaya kung ang sasabihin ninyong itoy katangahan, lalo sigurong magiging
katangahan kung ibebenta pa namin sa inyo ang aming lupang sinasaka,
kaya pasensya na lang Mister Tayag. Dahil sinira ninyo ang aming pagtitiwala at
katapatan.[9]
On August 19, 1996, the petitioner filed a complaint with the Regional Trial Court
of San Fernando, Pampanga, Branch 44, against the defendants-tenants, as well as
the respondents, for the court to fix a period within which to pay the agreed purchase
price of P50.00 per square meter to the defendants, as provided for in the Deeds of
Assignment. The petitioner also prayed for a writ of preliminary injunction against the
defendants and the respondents therein.[10] The case was docketed as Civil Case No.
10910.
In his complaint, the petitioner alleged, inter alia, the following:
4. That defendants Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido
Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco
Tolentino, Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga
Laxamana, Felicencia de Leon, EmilianoRamos are original farmers or direct tillers of
landholdings over parcels of lands covered by Transfer Certificate of Title Nos.
35922-R, 35923-R and 35925-R which are registered in the names of defendants
LACSONS; while defendants Felino G. Tolentino, Rica Gozun, Perla Gozun,Benigno
Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Alfredo
Gozun, Jose Tiamson, Augusto Tolentino, Sixto Hernandez, Alex Quiambao, Isidro
Tolentino, Ceferino de Leon, Alberto Hernandez, and Aurelio Flores are sub-
tenants over the same parcelof land.
5. That on March 17, 1996 the defendants TIAMSON, et al., entered into Deeds of
Assignment with the plaintiff by which the defendants assigned all their rights and
interests on their landholdings to the plaintiff and that on the same date (March 17,
1996), the defendants received from the plaintiff partial payments in the amounts
corresponding to their names. Subsequent payments were also received:
 1st PAYMENT 2nd PAYMENT CHECK NO. 19. Benigno
TOTAL Tolentino 10,000 ------ ------

1.Julio Tiamson - - - - - - P 20,000 P 10,621.54 231281 20. Rodolfo

P 30,621.54
Quiambao 10,000 ------ ------

2. Renato Gozun - - - - - - P 10,000 96,000 21. Roman

106,000.00
Laxamana 10,000 ------ ------
[son of Felix Gozun (deceased)]
22. Eddie San Luis 10,000 ------ ------
3. Rosita Hernandez - - - - P 5,000 14,374.24 231274 P 19,374.24
23. Ricardo Hernandez 10,000 ------ ------
4. Bienvenido Tongol - - - P 10,000 14,465.90 231285 24,465.90
[Son of Abundio Tongol (deceased)] 24. Nicenciana Miranda 10,000 ------ ------

5. Alfonso Flores - - - - - - P 30,000 26,648.40 231271 56,648.40

25. Jose Gozun 10,000 ------ ------

6. Norma Quiambao - - - - P 10,000 41,501.10 231279 51,501.10

26. Alfredo Sosa 5,000 ------ ------

7. Rosita Tolentino - - - - - P 10,000 22,126.08 231284 32,126.08

27. Jose Tiamson 10,000 ------ ------

8. Jose Sosa - - - - - - - - - P 10,000 14,861.31 231291 24,861.31

28. Augusto Tolentino 5,000 ------ ------

9. Francisco Tolentino, Sr. P 10,000 24,237.62 231283 34,237.62

29. Sixto Hernandez 10,000 ------ ------

10. Emiliano Laxamana - - P 10,000 ------ ------ 30. Alex------

Quiambao 10,000 ------ ------

11. Ruben Torres - - - - - - P 10,000 P 33,587.31 ------ P 43,587.31

31. Isidro Tolentino 10,000 ------ ------

[Son of Mariano Torres (deceased)] 32. Ceferino de Leon ------ 11,378.70 231270

12. Meliton Allanigue P 10,000 12,944.77 231269 P 22,944.77

33. Alberto Hernandez 10,000 ------ ------

13. Dominga Laxamana P 5,000 22,269.02 231275 27,269.02

34. Orlando Florez 10,000 ------ ------

14. Felicencia de Leon 10,000 ------ ------ ------Flores

35. Aurelio 10,000 ------ ------

15. Emiliano Ramos 5,000 18,869.60 231280 23,869.60

6. That on July 24, 1996, the plaintiff wrote the defendants TIAMSON, et al., inviting
16. Felino G. Tolentino 10,000 ------ ------ them for ------
a meeting regarding the negotiations/implementations of the terms of their
Deeds of Assignment;

17. Rica Gozun 5,000 ------ ------ ------

7. That on August 8, 1996, the defendants TIAMSON, et al., through Joven Mariano,
replied that they are no longer willing to pursue with the negotiations, and instead they
18. Perla Gozun 10,000 ------ ------ ------to the plaintiff that they will sell all their rights and interests to the
gave notice
registered owners (defendants LACSONS).
A copy of the letter is hereto attached as Annex A etc.;
8. That the defendants TIAMSON, et. al., have no right to deal with the defendants
LACSON or with any third persons while their contracts with the plaintiff are
subsisting; defendants LACSONS are inducing or have induced the defendants
TIAMSON, et. al., to violate their contracts with the plaintiff;
9. That by reason of the malicious acts of all the defendants, plaintiff suffered moral
damages in the forms of mental anguish, mental torture and serious anxiety which in
the sum of P500,000.00 for which defendants should be held liable jointly and
severally.[11]
In support of his plea for injunctive relief, the petitioner, as plaintiff, also alleged
the following in his complaint:
11. That to maintain the status quo, the defendants TIAMSON, et al., should be
restrained from rescinding their contracts with the plaintiff, and the defendants
LACSONS should also be restrained from accepting any offer of sale or alienation
with the defendants TIAMSON, et al., in whatever form, the latters rights and interests
in the properties mentioned in paragraph 4 hereof; further, the LACSONS should be
restrained from encumbering/alienating the subject properties covered by TCT No.
35922-R, 35923-R and TCT No. 35925-R, Registry of Deeds of San Fernando,
Pampanga;
12. That the defendants TIAMSON, et al., threaten to rescind their contracts with the
plaintiff and are also bent on selling/alienating their rights and interests over the
subject properties to their co-defendants (LACSONS) or any other persons to the
damage and prejudice of the plaintiff who already invested much money, efforts and
time in the said transactions;
13. That the plaintiff is entitled to the reliefs being demanded in the complaint;
14. That to prevent irreparable damages and prejudice to the plaintiff, as the latter has
no speedy and adequate remedy under the ordinary course of law, it is essential that
a Writ of Preliminary Injunction be issued enjoining and restraining the
defendants TIAMSON, et al., from rescinding their contracts with the plaintiff and from
selling/alienating their properties to the LACSONS or other persons;
15. That the plaintiff is willing and able to put up a reasonable bond to answer for the
damages which the defendants would suffer should the injunction prayed for and
granted be found without basis.[12]
The petitioner prayed, that after the proceedings, judgment be rendered as
follows:
1. Pending the hearing, a Writ of Preliminary Injunction be issued prohibiting,
enjoining and restraining defendants Julio Tiamson, Renato Gozun, Rosita
Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino,
Jose Sosa, Francisco Tolentino Sr., Emiliano Laxamana, Ruben Torres, Meliton
Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano Ramos, Felino G.
Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman
Laxamana, Eddie San Luis, Ricardo Hernandez, Nicenciana Miranda, Jose Gozun,
Alfredo Sosa, Jose Tiamson, Augusto Tolentino, Ceferino de Leon, Alberto
Hernandez, Orlando Flores, and Aurelio Flores from rescinding their contracts with
the plaintiff and from alienating their rights and interest over the aforementioned
properties in favor of defendants LACSONS or any other third persons; and
prohibiting the defendants LACSONS from encumbering/alienating TCT Nos. 35922-
R, 35923-R and 35925-R of the Registry of Deeds of San Fernando, Pampanga.
2. And pending the hearing of the Prayer for a Writ of Preliminary Injunction, it is
prayed that a restraining order be issued restraining the aforementioned defendants
(TIAMSON, et al.) from rescinding their contracts with the plaintiff and from alienating
the subject properties to the defendants LACSONS or any third persons; further,
restraining and enjoining the defendants LACSONS from encumbering/selling the
properties covered by TCT Nos. 35922-R, 35923-R, and 35925-R of the Registry of
Deeds of San Fernando, Pampanga.
3. Fixing the period within which plaintiff shall pay the balance of the purchase price to
the defendants TIAMSON, et al., after the lapse of legal impediment, if any.
4. Making the Writ of Preliminary Injunction permanent;
5. Ordering the defendants to pay the plaintiff the sum of P500,000.00 as moral
damages;
6. Ordering the defendants to pay the plaintiff attorneys fees in the sum
of P100,000.00 plus litigation expenses of P50,000.00;
Plaintiff prays for such other relief as may be just and equitable under the
premises.[13]
In their answer to the complaint, the respondents as defendants asserted that (a)
the defendant Angelica Vda. de Lacson had died on April 24, 1993; (b) twelve of the
defendants were tenants/lessees of respondents, but the tenancy status of the rest of
the defendants was uncertain; (c) they never induced the defendants Tiamson to violate
their contracts with the petitioner; and, (d) being merely tenants-tillers, the defendants-
tenants had no right to enter into any transactions involving their properties without their
knowledge and consent. They also averred that the transfers or assignments of
leasehold rights made by the defendants-tenants to the petitioner is contrary to
Presidential Decree (P.D.) No. 27 and Republic Act No. 6657, the Comprehensive
Agrarian Reform Program (CARP).[14] The respondents interposed counterclaims for
damages against the petitioner as plaintiff.
The defendants-tenants Tiamson, et al., alleged in their answer with counterclaim
for damages, that the money each of them received from the petitioner were in the form
of loans, and that they were deceived into signing the deeds of assignment:
 a) That all the foregoing allegations in the Answer are hereby repleaded and
incorporated in so far as they are material and relevant herein;
b) That the defendants Tiamson, et al., in so far as the Deeds of Assignment
are concern[ed] never knew that what they did sign is a Deed of
Assignment. What they knew was that they were made to sign a
document that will serve as a receipt for the loan granted [to] them by
the plaintiff;
c) That the Deeds of Assignment were signed through the employment of
fraud, deceit and false pretenses of plaintiff and made the defendants
believe that what they sign[ed] was a mere receipt for amounts received
by way of loans;
d) That the documents signed in blank were filled up and completed after
the defendants Tiamson, et al., signed the documents and their
completion and accomplishment was done in the absence of said
defendants and, worst of all, defendants were not provided a copy
thereof;
e) That as completed, the Deeds of Assignment reflected that the
defendants Tiamson, et al., did assign all their rights and interests in the
properties or landholdings they were tilling in favor of the plaintiff. That if
this is so, assuming arguendo that the documents were voluntarily
executed, the defendants Tiamson, et al., do not have any right to
transfer their interest in the landholdings they are tilling as they have no
right whatsoever in the landholdings, the landholdings belong to their co-
defendants, Lacson, et al., and therefore, the contract is null and void;
f) That while it is admitted that the defendants Tiamson, et al., received
sums of money from plaintiffs, the same were received as approved
loans granted by plaintiff to the defendants Tiamson, et al., and not as
part consideration of the alleged Deeds of Assignment; and by way of:[15]
At the hearing of the petitioners plea for a writ of preliminary injunction, the
respondents counsel failed to appear. In support of his plea for a writ of preliminary
injunction, the petitioner adduced in evidence the Deeds of Assignment, [16] the
receipts[17]issued by the defendants-tenants for the amounts they received from him;
and the letter[18] the petitioner received from the defendants-tenants. The petitioner
then rested his case.
The respondents, thereafter, filed a Comment/Motion to dismiss/deny the
petitioners plea for injunctive relief on the following grounds: (a) the Deeds of
Assignment executed by the defendants-tenants were contrary to public policy and P.D.
No. 27 and Rep. Act No. 6657; (b) the petitioner failed to prove that the respondents
induced the defendants-tenants to renege on their obligations under the Deeds of
Assignment; (c) not being privy to the said deeds, the respondents are not bound by
the said deeds; and, (d) the respondents had the absolute right to sell and dispose of
their property and to encumber the same and cannot be enjoined from doing so by the
trial court.
The petitioner opposed the motion, contending that it was premature for the trial
court to resolve his plea for injunctive relief, before the respondents and the defendants-
tenants adduced evidence in opposition thereto, to afford the petitioner a chance to
adduce rebuttal evidence and prove his entitlement to a writ of preliminary
injunction. The respondents replied that it was the burden of the petitioner to establish
the requisites of a writ of preliminary injunction without any evidence on their part, and
that they were not bound to adduce any evidence in opposition to the petitioners plea
for a writ of preliminary injunction.
On February 13, 1997, the court issued an Order[19] denying the motion of the
respondents for being premature. It directed the hearing to proceed for the respondents
to adduce their evidence. The court ruled that the petitioner, on the basis of the material
allegations of the complaint, was entitled to injunctive relief. It also held that before the
court could resolve the petitioners plea for injunctive relief, there was need for a hearing
to enable the respondents and the defendants-tenants to adduce evidence to
controvert that of the petitioner. The respondents filed a motion for reconsideration,
which the court denied in its Order dated April 16, 1997. The trial court ruled that on the
face of the averments of the complaint, the pleadings of the parties and the evidence
adduced by the petitioner, the latter was entitled to injunctive relief unless the
respondents and the defendants-tenants adduced controverting evidence.
The respondents, the petitioners therein, filed a petition for certiorari in the Court
of Appeals for the nullification of the February 13, 1997 and April 16, 1997 Orders of
the trial court. The case was docketed as CA-G.R. SP No. 44883. The petitioners
therein prayed in their petition that:
1. An order be issued declaring the orders of respondent court dated
February 13, 1997 and April 16, 1997 as null and void;
2. An order be issued directing the respondent court to issue an order
denying the application of respondent Herminio Tayag for the issuance
of a Writ of Preliminary Injunction and/or restraining order.
3. In the meantime, a Writ of Preliminary Injunction be issued against the
respondent court, prohibiting it from issuing its own writ of injunction
against Petitioners, and thereafter making said injunction to be issued
by this Court permanent.
Such other orders as may be deemed just & equitable under the premises also
prayed for.[20]
The respondents asserted that the Deeds of Assignment executed by the
assignees in favor of the petitioner were contrary to paragraph 13 of P.D. No. 27 and
the second paragraph of Section 70 of Rep. Act No. 6657, and, as such, could not be
enforced by the petitioner for being null and void. The respondents also claimed that
the enforcement of the deeds of assignment was subject to a supervening condition:
3. That this exclusive and absolute right given to the assignee shall be exercised
only when no legal impediments exist to the lot to effect the smooth transfer of lawful
ownership of the lot/property in the name of the ASSIGNEE.[21]
The respondents argued that until such condition took place, the petitioner would
not acquire any right to enforce the deeds by injunctive relief. Furthermore, the
petitioners plea in his complaint before the trial court, to fix a period within which to pay
the balance of the amounts due to the tenants under said deeds after the lapse of any
legal impediment, assumed that the deeds were valid, when, in fact and in law, they
were not. According to the respondents, they were not parties to the deeds of
assignment; hence, they were not bound by the said deeds. The issuance of a writ of
preliminary injunction would restrict and impede the exercise of their right to dispose of
their property, as provided for in Article 428 of the New Civil Code. They asserted that
the petitioner had no cause of action against them and the defendants-tenants.
On April 17, 1998, the Court of Appeals rendered its decision against the
petitioner, annulling and setting aside the assailed orders of the trial court; and
permanently enjoining the said trial court from proceeding with Civil Case No.
10901. The decretal portion of the decision reads as follows:
However, even if private respondent is denied of the injunctive relief he demands in
the lower court still he could avail of other course of action in order to protect his
interest such as the institution of a simple civil case of collection of money against
TIAMSON, et al.
For all the foregoing considerations, the orders dated 13 February 1997 and 16 April
1997 are hereby NULLIFIED and ordered SET ASIDE for having been issued with
grave abuse of discretion amounting to lack or excess of jurisdiction. Accordingly,
public respondent is permanently enjoined from proceeding with the case designated
as Civil Case No. 10901.[22]
The CA ruled that the respondents could not be enjoined from alienating or even
encumbering their property, especially so since they were not privies to the deeds of
assignment executed by the defendants-tenants. The defendants-tenants were not yet
owners of the portions of the landholdings respectively tilled by them; as such, they had
nothing to assign to the petitioner. Finally, the CA ruled that the deeds of assignment
executed by the defendants-tenants were contrary to P.D. No. 27 and Rep. Act No.
6657.
On August 4, 1998, the CA issued a Resolution denying the petitioners motion for
reconsideration.[23]
Hence, the petitioner filed his petition for review on certiorari before this Court,
contending as follows:
I that the Court of Appeals, in making its findings, went beyond the issue raised by the
A MERE ALLEGATION IN THE ANSWER OF THE TENANTS
COULD NOT BE USED AS EVIDENCE OR BASIS FOR ANY
CONCLUSION, AS THIS ALLEGATION, IS STILL THE SUBJECT OF
TRIAL IN THE LOWER COURT (RTC).[24]
II
THE COURT OF APPEALS CANNOT ENJOIN THE HEARING
OF A PETITION FOR PRELIMINARY INJUNCTION AT A TIME WHEN
THE LOWER COURT (RTC) IS STILL RECEIVING EVIDENCE
PRECISELY TO DETERMINE WHETHER OR NOT THE WRIT OF
PRELIMINARY INJUNCTION BEING PRAYED FOR BY TAYAG
SHOULD BE GRANTED OR NOT.[25]
III
THE COURT OF APPEALS CANNOT USE FACTS NOT IN
EVIDENCE, TO SUPPORT ITS CONCLUSION THAT THE TENANTS
ARE NOT YET AWARDEES OF THE LAND REFORM.[26]
IV
THE COURT OF APPEALS CANNOT CAUSE THE
PERMANENT STOPPAGE OF THE ENTIRE PROCEEDINGS BELOW
INCLUDING THE TRIAL ON THE MERITS OF THE CASE
CONSIDERING THAT THE ISSUE INVOLVED ONLY THE
PROPRIETY OF MAINTAINING THE STATUS QUO.[27]
V
THE COURT OF APPEALS CANNOT INCLUDE IN ITS
DECISION THE CASE OF THE OTHER 35 TENANTS WHO DO NOT
QUESTION THE JURISDICTION OF THE LOWER COURT (RTC)
OVER THE CASE AND WHO ARE IN FACT STILL PRESENTING
THEIR EVIDENCE TO OPPOSE THE INJUNCTION PRAYED FOR,
AND TO PROVE AT THE SAME TIME THE COUNTER-CLAIMS THEY
FILED AGAINST THE PETITIONER.[28]
VI
THE LOWER COURT (RTC) HAS JURISDICTION OVER THE
CASE FILED BY TAYAG FOR FIXING OF PERIOD UNDER ART. 1197
OF THE NEW CIVIL CODE AND FOR DAMAGES AGAINST THE
LACSONS UNDER ART. 1314 OF THE SAME CODE. THIS CASE
CANNOT BE SUPPRESSED OR RENDERED NUGATORY
UNCEREMONIOUSLY.[29]
The petitioner faults the Court of Appeals for permanently enjoining the trial court
from proceeding with Civil Case No. 10910.He opines that the same was too drastic,
tantamount to a dismissal of the case. He argues that at that stage, it was premature
for the appellate court to determine the merits of the case since no evidentiary hearing
thereon was conducted by the trial court. This, the Court of Appeals cannot do, since
neither party moved for the dismissal of Civil Case No. 10910. The petitioner points out
private respondents, namely, whether or not the trial court committed a grave abuse of
discretion amounting to excess or lack of jurisdiction when it denied the respondents
motion for the denial/dismissal of the petitioners plea for a writ of preliminary
injunction. He, likewise, points out that the appellate court erroneously presumed that
the leaseholders were not DAR awardees and that the deeds of assignment were
contrary to law. He contends that leasehold tenants are not prohibited from conveying
or waiving their leasehold rights in his favor. He insists that there is nothing illegal with
his contracts with the leaseholders, since the same shall be effected only when there
are no more legal impediments.
At bottom, the petitioner contends that, at that stage, it was premature for the
appellate court to determine the merits of his case since no evidentiary hearing on the
merits of his complaint had yet been conducted by the trial court.
The Comment/Motion of the
Respondents to Dismiss/Deny
Petitioners Plea for a Writ
of Preliminary Injunction
Was Not Premature.
Contrary to the ruling of the trial court, the motion of the respondents to
dismiss/deny the petitioners plea for a writ of preliminary injunction after the petitioner
had adduced his evidence, testimonial and documentary, and had rested his case on
the incident, was proper and timely. It bears stressing that the petitioner had the burden
to prove his right to a writ of preliminary injunction. He may rely solely on the material
allegations of his complaint or adduce evidence in support thereof. The petitioner
adduced his evidence to support his plea for a writ of preliminary injunction against the
respondents and the defendants-tenants and rested his case on the said incident. The
respondents then had three options: (a) file a motion to deny/dismiss the motion on the
ground that the petitioner failed to discharge his burden to prove the factual and legal
basis for his plea for a writ of preliminary injunction and, if the trial court denies his
motion, for them to adduce evidence in opposition to the petitioners plea; (b) forgo their
motion and adduce testimonial and/or documentary evidence in opposition to the
petitioners plea for a writ of preliminary injunction; or, (c) waive their right to adduce
evidence and submit the incident for consideration on the basis of the pleadings of the
parties and the evidence of the petitioner. The respondents opted not to adduce any
evidence, and instead filed a motion to deny or dismiss the petitioners plea for a writ of
preliminary injunction against them, on their claim that the petitioner failed to prove his
entitlement thereto. The trial court cannot compel the respondents to adduce evidence
in opposition to the petitioners plea if the respondents opt to waive their right to adduce
such evidence. Thus, the trial court should have resolved the respondents motion even
without the latters opposition and the presentation of evidence thereon.
The RTC Committed a Grave
Abuse of Discretion Amounting
to Excess or Lack of Jurisdiction
in Issuing its February 13, 1997
and April 16, 1997 Orders
In its February 13, 1997 Order, the trial court ruled that the petitioner was entitled
to a writ of preliminary injunction against the respondents on the basis of the material
averments of the complaint. In its April 16, 1997 Order, the trial court denied the
respondents motion for reconsideration of the previous order, on its finding that the
petitioner was entitled to a writ of preliminary injunction based on the material
allegations of his complaint, the evidence on record, the pleadings of the parties, as
well as the applicable laws:
For the record, the Court denied the LACSONS COMMENT/MOTION on the basis of
the facts culled from the evidence presented, the pleadings and the law applicable
unswayed by the partisan or personal interests, public opinion or fear of criticism
(Canon 3, Rule 3.02, Code of Judicial Ethics).[30]
Section 3, Rule 58 of the Rules of Court, as amended, enumerates the grounds
for the issuance of a writ of preliminary injunction, thus:
(a) That the applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance
of the act or acts complained of, or in requiring the performance of an
act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject
of the action or proceeding, and tending to render the judgment
ineffectual.
A preliminary injunction is an extraordinary event calculated to preserve or
maintain the status quo of things ante litem and is generally availed of to prevent actual
or threatened acts, until the merits of the case can be heard. Injunction is accepted as
the strong arm of equity or a transcendent remedy. [31] While generally the grant of a
writ of preliminary injunction rests on the sound discretion of the trial court taking
cognizance of the case, extreme caution must be observed in the exercise of such
discretion.[32]Indeed, in Olalia v. Hizon,[33] we held:
It has been consistently held that there is no power the exercise of which is more
delicate, which requires greater caution, deliberation and sound discretion, or more
dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm
of equity that should never be extended unless to cases of great injury, where courts
of law cannot afford an adequate or commensurate remedy in damages.
Every court should remember that an injunction is a limitation upon the freedom of
action of the defendant and should not be granted lightly or precipitately. It should be
granted only when the court is fully satisfied that the law permits it and the emergency
demands it.[34]
The very foundation of the jurisdiction to issue writ of injunction rests in the
existence of a cause of action and in the probability of irreparable injury, inadequacy of
pecuniary compensation and the prevention of the multiplicity of suits. Where facts are
not shown to bring the case within these conditions, the relief of injunction should be
refused.[35]
For the court to issue a writ of preliminary injunction, the petitioner was burdened
to establish the following: (1) a right in esseor a clear and unmistakable right to be
protected; (2) a violation of that right; (3) that there is an urgent and permanent act and
urgent necessity for the writ to prevent serious damage.[36] Thus, in the absence of a
clear legal right, the issuance of the injunctive writ constitutes a grave abuse of
discretion. Where the complainants right is doubtful or disputed, injunction is not
proper. Injunction is a preservative remedy aimed at protecting substantial rights and
interests. It is not designed to protect contingent or future rights. The possibility of
irreparable damage without proof of adequate existing rights is not a ground for
injunction.[37]
We have reviewed the pleadings of the parties and found that, as contended by
the respondents, the petitioner failed to establish the essential requisites for the
issuance of a writ of preliminary injunction. Hence, the trial court committed a grave
abuse of its discretion amounting to excess or lack of jurisdiction in denying the
respondents comment/motion as well as their motion for reconsideration.
First. The trial court cannot enjoin the respondents, at the instance of the
petitioner, from selling, disposing of and encumbering their property. As the registered
owners of the property, the respondents have the right to enjoy and dispose of their
property without any other limitations than those established by law, in accordance with
Article 428 of the Civil Code. The right to dispose of the property is the power of the
owner to sell, encumber, transfer, and even destroy the property. Ownership also
includes the right to recover the possession of the property from any other person to
whom the owner has not transmitted such property, by the appropriate action for
restitution, with the fruits, and for indemnification for damages.[38] The right of ownership
of the respondents is not, of course, absolute. It is limited by those set forth by law,
such as the agrarian reform laws. Under Article 1306 of the New Civil Code, the
respondents may enter into contracts covering their property with another under such
terms and conditions as they may deem beneficial provided they are not contrary to
law, morals, good conduct, public order or public policy.
The respondents cannot be enjoined from selling or encumbering their property
simply and merely because they had executed Deeds of Assignment in favor of the
petitioner, obliging themselves to assign and transfer their rights or interests as
agricultural farmers/laborers/sub-tenants over the landholding, and granting the
petitioner the exclusive right to buy the property subject to the occurrence of certain
conditions. The respondents were not parties to the said deeds. There is no evidence
that the respondents agreed, expressly or impliedly, to the said deeds or to the terms
and conditions set forth therein. Indeed, they assailed the validity of the said deeds on
their claim that the same were contrary to the letter and spirit of P.D. No. 27 and Rep.
Act No. 6657. The petitioner even admitted when he testified that he did not know any
of the respondents, and that he had not met any of them before he filed his complaint
in the RTC. He did not even know that one of those whom he had impleaded as
defendant, Angelica Vda. de Lacson, was already dead.
Q: But you have not met any of these Lacsons?
A: Not yet, sir.
Q: Do you know that two (2) of the defendants are residents of the United
States?
A: I do not know, sir.
Q: You do not know also that Angela Tiotuvie (sic) Vda. de Lacson had
already been dead?
A: I am aware of that, sir.[39]
We are one with the Court of Appeals in its ruling that:
We cannot see our way clear on how or why injunction should lie against
petitioners. As owners of the lands being tilled by TIAMSON, et al., petitioners, under
the law, have the right to enjoy and dispose of the same. Thus, they have the right to
possess the lands, as well as the right to encumber or alienate them. This principle of
law notwithstanding, private respondent in the lower court sought to restrain the
petitioners from encumbering and/or alienating the properties covered by TCT No.
35922-R, 35923-R and TCT No. 35925-R of the Registry of Deeds of San Fernando,
Pampanga. This cannot be allowed to prosper since it would constitute a limitation or
restriction, not otherwise established by law on their right of ownership, more so
considering that petitioners were not even privy to the alleged transaction between
private respondent and TIAMSON, et al.[40]
Second. A reading the averments of the complaint will show that the petitioner
clearly has no cause of action against the respondents for the principal relief prayed for
therein, for the trial court to fix a period within which to pay to each of the defendants-
tenants the balance of the P50.00 per square meter, the consideration under the Deeds
of Assignment executed by the defendants-tenants. The respondents are not parties or
privies to the deeds of assignment. The matter of the period for the petitioner to pay the
balance of the said amount to each of the defendants-tenants is an issue between
them, the parties to the deed.
Third. On the face of the complaint, the action of the petitioner against the
respondents and the defendants-tenants has no legal basis. Under the Deeds of
Assignment, the obligation of the petitioner to pay to each of the defendants-tenants
the balance of the purchase price was conditioned on the occurrence of the following
events: (a) the respondents agree to sell their property to the petitioner; (b) the legal
impediments to the sale of the landholding to the petitioner no longer exist; and, (c) the
petitioner decides to buy the property. When he testified, the petitioner admitted that
the legal impediments referred to in the deeds were (a) the respondents refusal to sell
their property; and, (b) the lack of approval of the Department of Agrarian Reform:
Q : There is no specific agreement prior to the execution of those documents
as when they will pay?
A : We agreed to that, that I will pay them when there are no legal
impediment, sir.
Q : Many of the documents are unlattered (sic) and you want to convey to
this Honorable Court that prior to the execution of these documents
you have those tentative agreement for instance that the amount or the
cost of the price is to be paid when there are no legal impediment, you
are using the word legal impediment, do you know the meaning of that?
A : When there are (sic) no more legal impediment exist, sir.
Q : Did you make how (sic) to the effect that the meaning of that phrase that
you used the unlettered defendants?
A : We have agreed to that, sir.
ATTY. OCAMPO:
May I ask, Your Honor, that the witness please answer my question not
to answer in the way he wanted it.
COURT:
Just answer the question, Mr. Tayag.
WITNESS:
 Yes, Your Honor.
ATTY. OCAMPO:
Q : Did you explain to them?
A : Yes, sir.
Q : What did you tell them?
A : I explain[ed] to them, sir, that the legal impediment then especially if the
Lacsons will not agree to sell their shares to me or to us it would be
hard to (sic) me to pay them in full. And those covered by DAR. I
explain[ed] to them and it was clearly stated in the title that there is [a]
prohibited period of time before you can sell the property. I explained
every detail to them.[41]
It is only upon the occurrence of the foregoing conditions that the petitioner would
be obliged to pay to the defendants-tenants the balance of the P50.00 per square meter
under the deeds of assignment. Thus:
2. That in case the ASSIGNOR and LANDOWNER will mutually agree to sell the said
lot to the ASSIGNEE, who is given an exclusive and absolute right to buy the lot, the
ASSIGNOR shall receive the sum of FIFTY PESOS (P50.00) per square meter as
consideration of the total area actually tilled and possessed by the ASSIGNOR, less
whatever amount received by the ASSIGNOR including commissions, taxes and all
allowable deductions relative to the sale of the subject properties.
3. That this exclusive and absolute right given to the ASSIGNEE shall be exercised
only when no legal impediments exist to the lot to effect the smooth transfer of lawful
ownership of the lot/property in the name of the ASSIGNEE;
4. That the ASSIGNOR will remain in peaceful possession over the said property and
shall enjoy the fruits/earnings and/or harvest of the said lot until such time that full
payment of the agreed purchase price had been made by the ASSIGNEE.[42]
There is no showing in the petitioners complaint that the respondents had agreed
to sell their property, and that the legal impediments to the agreement no longer
existed. The petitioner and the defendants-tenants had yet to submit the Deeds of
Assignment to the Department of Agrarian Reform which, in turn, had to act on and
approve or disapprove the same. In fact, as alleged by the petitioner in his complaint,
he was yet to meet with the defendants-tenants to discuss the implementation of the
deeds of assignment. Unless and until the Department of Agrarian Reform approved
the said deeds, if at all, the petitioner had no right to enforce the same in a court of law
by asking the trial court to fix a period within which to pay the balance of the purchase
price and praying for injunctive relief.
We do not agree with the contention of the petitioner that the deeds of assignment
executed by the defendants-tenants are perfected option contracts.[43] An option is a
contract by which the owner of the property agrees with another person that he shall
have the right to buy his property at a fixed price within a certain time. It is a condition
offered or contract by which the owner stipulates with another that the latter shall have
the right to buy the property at a fixed price within a certain time, or under, or in
compliance with certain terms and conditions, or which gives to the owner of the
property the right to sell or demand a sale. It imposes no binding obligation on the
person holding the option, aside from the consideration for the offer. Until accepted, it
is not, properly speaking, treated as a contract. [44] The second party gets in praesenti,
not lands, not an agreement that he shall have the lands, but the right to call for and
receive lands if he elects.[45] An option contract is a separate and distinct contract from
which the parties may enter into upon the conjunction of the option.[46]
In this case, the defendants-tenants-subtenants, under the deeds of assignment,
granted to the petitioner not only an option but the exclusive right to buy the
landholding. But the grantors were merely the defendants-tenants, and not the
respondents, the registered owners of the property. Not being the registered owners of
the property, the defendants-tenants could not legally grant to the petitioner the option,
much less the exclusive right to buy the property. As the Latin saying goes, NEMO DAT
QUOD NON HABET.
Fourth. The petitioner impleaded the respondents as parties-defendants solely on
his allegation that the latter induced or are inducing the defendants-tenants to violate
the deeds of assignment, contrary to the provisions of Article 1314 of the New Civil
Code which reads:
Art. 1314. Any third person who induces another to violate his contract shall be liable
for damages to the other contracting party.
In So Ping Bun v. Court of Appeals,[47] we held that for the said law to apply, the
pleader is burdened to prove the following: (1) the existence of a valid contract; (2)
knowledge by the third person of the existence of the contract; and (3) interference by
the third person in the contractual relation without legal justification.
Where there was no malice in the interference of a contract, and the impulse
behind ones conduct lies in a proper business interest rather than in wrongful motives,
a party cannot be a malicious interferer. Where the alleged interferer is financially
interested, and such interest motivates his conduct, it cannot be said that he is an
officious or malicious intermeddler.[48]
In fine, one who is not a party to a contract and who interferes thereon is not
necessarily an officious or malicious intermeddler. The only evidence adduced by the
petitioner to prove his claim is the letter from the defendants-tenants informing him that
they had decided to sell their rights and interests over the landholding to the
respondents, instead of honoring their obligation under the deeds of assignment
because, according to them, the petitioner harassed those tenants who did not want to
execute deeds of assignment in his favor, and because the said defendants-tenants
did not want to have any problem with the respondents who could cause their eviction
for executing with the petitioner the deeds of assignment as the said deeds are in
violation of P.D. No. 27 and Rep. Act No. 6657.[49] The defendants-tenants did not
allege therein that the respondents induced them to breach their contracts with the
petitioner. The petitioner himself admitted when he testified that his claim that the
respondents induced the defendants-assignees to violate contracts with him was based
merely on what he heard, thus:
 Q: Going to your last statement that the Lacsons induces (sic) the
defendants, did you see that the Lacsons were inducing the
defendants?
A: I heard and sometime in [the] first week of August, sir, they went in the
barrio (sic). As a matter of fact, that is the reason why they sent me
letter that they will sell it to the Lacsons.
Q: Incidentally, do you knew (sic) these Lacsons individually?
A: No, sir, it was only Mr. Espinosa who I knew (sic) personally, the alleged
negotiator and has the authority to sell the property.[50]
Even if the respondents received an offer from the defendants-tenants to assign
and transfer their rights and interests on the landholding, the respondents cannot be
enjoined from entertaining the said offer, or even negotiating with the defendants-
tenants.The respondents could not even be expected to warn the defendants-tenants
for executing the said deeds in violation of P.D. No. 27 and Rep. Act No. 6657. Under
Section 22 of the latter law, beneficiaries under P.D. No. 27 who have culpably sold,
disposed of, or abandoned their land, are disqualified from becoming beneficiaries.
From the pleadings of the petitioner, it is quite evident that his purpose in having
the defendants-tenants execute the Deeds of Assignment in his favor was to acquire
the landholding without any tenants thereon, in the event that the respondents agreed
to sell the property to him. The petitioner knew that under Section 11 of Rep. Act No.
3844, if the respondents agreed to sell the property, the defendants-tenants shall have
preferential right to buy the same under reasonable terms and conditions:
SECTION 11. Lessees Right of Pre-emption. In case the agricultural lessor desires to
sell the landholding, the agricultural lessee shall have the preferential right to buy the
same under reasonable terms and conditions: Provided, That the entire landholding
offered for sale must be pre-empted by the Land Authority if the landowner so
desires, unless the majority of the lessees object to such acquisition: Provided,
further, That where there are two or more agricultural lessees, each shall be entitled
to said preferential right only to the extent of the area actually cultivated by him. [51]
Under Section 12 of the law, if the property was sold to a third person without the
knowledge of the tenants thereon, the latter shall have the right to redeem the same at
a reasonable price and consideration. By assigning their rights and interests on the
landholding under the deeds of assignment in favor of the petitioner, the defendants-
tenants thereby waived, in favor of the petitioner, who is not a beneficiary under Section
22 of Rep. Act No. 6657, their rights of preemption or redemption under Rep. Act No.
3844. The defendants-tenants would then have to vacate the property in favor of the
petitioner upon full payment of the purchase price. Instead of acquiring ownership of
the portions of the landholding respectively tilled by them, the defendants-tenants
would again become landless for a measly sum of P50.00 per square meter. The
petitioners scheme is subversive, not only of public policy, but also of the letter and
spirit of the agrarian laws. That the scheme of the petitioner had yet to take effect in the
future or ten years hence is not a justification. The respondents may well argue that the
agrarian laws had been violated by the defendants-tenants and the petitioner by the
mere execution of the deeds of assignment. In fact, the petitioner has implemented the
deeds by paying the defendants-tenants amounts of money and even sought their
immediate implementation by setting a meeting with the defendants-tenants. In fine,
the petitioner would not wait for ten years to evict the defendants-tenants.For him, time
is of the essence.
The Appellate Court Erred
In Permanently Enjoining
The Regional Trial Court
From Continuing with the
Proceedings in Civil Case
No. 10910.
We agree with the petitioners contention that the appellate court erred when it
permanently enjoined the RTC from continuing with the proceedings in Civil Case No.
10910. The only issue before the appellate court was whether or not the trial court
committed a grave abuse of discretion amounting to excess or lack of jurisdiction in
denying the respondents motion to deny or dismiss the petitioners plea for a writ of
preliminary injunction. Not one of the parties prayed to permanently enjoin the trial court
from further proceeding with Civil Case No. 10910 or to dismiss the complaint. It bears
stressing that the petitioner may still amend his complaint, and the respondents and
the defendants-tenants may file motions to dismiss the complaint. By permanently
enjoining the trial court from proceeding with Civil Case No. 10910, the appellate court
acted arbitrarily and effectively dismissed the complaint motu proprio, including the
counterclaims of the respondents and that of the defendants-tenants. The defendants-
tenants were even deprived of their right to prove their special and affirmative defenses.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY
GRANTED. The Decision of the Court of Appeals nullifying the February 13, 1996 and
April 16, 1997 Orders of the RTC is AFFIRMED. The writ of injunction issued by the
Court of Appeals permanently enjoining the RTC from further proceeding with Civil
Case No. 10910 is hereby LIFTED and SET ASIDE. The Regional Trial Court of
Mabalacat, Pampanga, Branch 44, is ORDERED to continue with the proceedings in
Civil Case No. 10910 as provided for by the Rules of Court, as amended.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 97332 October 10, 1991
SPOUSES JULIO D. VILLAMOR AND MARINA VILLAMOR, petitioners,
vs.
THE HON. COURT OF APPEALS AND SPOUSES MACARIA LABINGISA REYES
AND ROBERTO REYES,respondents.
Tranquilino F. Meris for petitioners.
Agripino G. Morga for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals in CA-
G.R. No. 24176 entitled, "Spouses Julio Villamor and Marina Villamor, Plaintiffs-
Appellees, versus Spouses Macaria Labing-isa Reyes and Roberto Reyes,
Defendants-Appellants," which reversed the decision of the Regional Trial Court
(Branch 121) at Caloocan City in Civil Case No. C-12942.
The facts of the case are as follows:
Macaria Labingisa Reyes was the owner of a 600-square meter lot located at Baesa,
Caloocan City, as evidenced by Transfer Certificate of Title No. (18431) 18938, of the
Register of Deeds of Rizal.
In July 1971, Macaria sold a portion of 300 square meters of the lot to the Spouses
Julio and Marina and Villamor for the total amount of P21,000.00. Earlier, Macaria
borrowed P2,000.00 from the spouses which amount was deducted from the total
purchase price of the 300 square meter lot sold. The portion sold to the Villamor
spouses is now covered by TCT No. 39935 while the remaining portion which is still in
the name of Macaria Labing-isa is covered by TCT No. 39934 (pars. 5 and 7,
Complaint). On November 11, 1971, Macaria executed a "Deed of Option" in favor of
Villamor in which the remaining 300 square meter portion (TCT No. 39934) of the lot
would be sold to Villamor under the conditions stated therein. The document reads:
DEED OF OPTION
This Deed of Option, entered into in the City of Manila, Philippines, this 11th
day of November, 1971, by and between Macaria Labing-isa, of age, married
to Roberto Reyes, likewise of age, and both resideing on Reparo St., Baesa,
Caloocan City, on the one hand, and on the other hand the spouses Julio
Villamor and Marina V. Villamor, also of age and residing at No. 552 Reparo
St., corner Baesa Road, Baesa, Caloocan City.
WITNESSETH
That, I Macaria Labingisa, am the owner in fee simple of a parcel of land with
an area of 600 square meters, more or less, more particularly described in
TCT No. (18431) 18938 of the Office of the Register of Deeds for the
province of Rizal, issued in may name, I having inherited the same from my
deceased parents, for which reason it is my paraphernal property;
That I, with the conformity of my husband, Roberto Reyes, have sold one-
half thereof to the aforesaid spouses Julio Villamor and Marina V. Villamor at
the price of P70.00 per sq. meter, which was greatly higher than the actual
reasonable prevailing value of lands in that place at the time, which portion,
after segregation, is now covered by TCT No. 39935 of the Register of
Deeds for the City of Caloocan, issued on August 17, 1971 in the name of
the aforementioned spouses vendees;
That the only reason why the Spouses-vendees Julio Villamor and Marina V.
Villamor, agreed to buy the said one-half portion at the above-stated price of
about P70.00 per square meter, is because I, and my husband Roberto
Reyes, have agreed to sell and convey to them the remaining one-half
portion still owned by me and now covered by TCT No. 39935 of the
Register of Deeds for the City of Caloocan, whenever the need of such sale
arises, either on our part or on the part of the spouses (Julio) Villamor and
Marina V. Villamor, at the same price of P70.00 per square meter, excluding
whatever improvement may be found the thereon;
That I am willing to have this contract to sell inscribed on my aforesaid title
as an encumbrance upon the property covered thereby, upon payment of the
corresponding fees; and
That we, Julio Villamor and Marina V. Villamor, hereby agree to, and accept,
the above provisions of this Deed of Option.
IN WITNESS WHEREOF, this Deed of Option is signed in the City of Manila,
Philippines, by all the persons concerned, this 11th day of November, 1971.
JULIO VILLAMOR MACARIA LABINGISA
With My Conformity:
MARINA VILLAMOR ROBERTO REYES
 Signed in the Presence Of:
MARIANO Z. SUNIGA
ROSALINDA S. EUGENIO
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES)
CITY OF MANILA ) S.S.
At the City of Manila, on the 11th day of November, 1971, personally
appeared before me Roberto Reyes, Macaria Labingisa, Julio Villamor and
Marina Ventura-Villamor, known to me as the same persons who executed
the foregoing Deed of Option, which consists of two (2) pages including the
page whereon this acknowledgement is written, and signed at the left margin
of the first page and at the bottom of the instrument by the parties and their
witnesses, and sealed with my notarial seal, and said parties acknowledged
to me that the same is their free act and deed. The Residence Certificates of
the parties were exhibited to me as follows: Roberto Reyes, A-22494, issued
at Manila on Jan. 27, 1971, and B-502025, issued at Makati, Rizal on Feb.
18, 1971; Macaria Labingisa, A-3339130 and B-1266104, both issued at
Caloocan City on April 15, 1971, their joint Tax Acct. Number being 3028-
767-6; Julio Villamor, A-804, issued at Manila on Jan. 14, 1971, and B-138,
issued at Manila on March 1, 1971; and Marina Ventura-Villamor, A-803,
issued at Manila on Jan. 14, 1971, their joint Tax Acct. Number being 608-
202-6.
ARTEMIO M. MALUBAY
Notary Public
Until December 31, 1972
PTR No. 338203, Manila
January 15, 1971
Doc. No. 1526;
Page No. 24;
Book No. 38;
Series of 1971. (pp. 25-29, Rollo)
According to Macaria, when her husband, Roberto Reyes, retired in 1984, they
offered to repurchase the lot sold by them to the Villamor spouses but Marina Villamor
refused and reminded them instead that the Deed of Option in fact gave them the
option to purchase the remaining portion of the lot.
The Villamors, on the other hand, claimed that they had expressed their desire to
purchase the remaining 300 square meter portion of the lot but the Reyeses had been
ignoring them. Thus, on July 13, 1987, after conciliation proceedings in the barangay
level failed, they filed a complaint for specific performance against the Reyeses.
On July 26, 1989, judgment was rendered by the trial court in favor of the Villamor
spouses, the dispositive portion of which states:
WHEREFORE, and (sic) in view of the foregoing, judgment is hereby
rendered in favor of the plaintiffs and against the defendants ordering the
defendant MACARIA LABING-ISA REYES and ROBERTO REYES, to sell
unto the plaintiffs the land covered by T.C.T No. 39934 of the Register of
Deeds of Caloocan City, to pay the plaintiffs the sum of P3,000.00 as and for
attorney's fees and to pay the cost of suit.
The counterclaim is hereby DISMISSED, for LACK OF MERIT.
SO ORDERED. (pp. 24-25, Rollo)
Not satisfied with the decision of the trial court, the Reyes spouses appealed to the
Court of Appeals on the following assignment of errors:
1. HOLDING THAT THE DEED OF OPTION EXECUTED ON NOVEMBER
11, 1971 BETWEEN THE PLAINTIFF-APPELLEES AND DEFENDANT-
APPELLANTS IS STILL VALID AND BINDING DESPITE THE LAPSE OF
MORE THAN THIRTEEN (13) YEARS FROM THE EXECUTION OF THE
CONTRACT;
2. FAILING TO CONSIDER THAT THE DEED OF OPTION CONTAINS
OBSCURE WORDS AND STIPULATIONS WHICH SHOULD BE
RESOLVED AGAINST THE PLAINTIFF-APPELLEES WHO
UNILATERALLY DRAFTED AND PREPARED THE SAME;
3. HOLDING THAT THE DEED OF OPTION EXPRESSED THE TRUE
INTENTION AND PURPOSE OF THE PARTIES DESPITE ADVERSE,
CONTEMPORANEOUS AND SUBSEQUENT ACTS OF THE PLAINTIFF-
APPELLEES;
4. FAILING TO PROTECT THE DEFENDANT-APPELLANTS ON
ACCOUNT OF THEIR IGNORANCE PLACING THEM AT A
DISADVANTAGE IN THE DEED OF OPTION;
5. FAILING TO CONSIDER THAT EQUITABLE CONSIDERATION TILT IN
FAVOR OF THE DEFENDANT-APPELLANTS; and
6. HOLDING DEFENDANT-APPELLANTS LIABLE TO PAY PLAINTIFF-
APPELLEES THE AMOUNT OF P3,000.00 FOR AND BY WAY OF
ATTORNEY'S FEES. (pp. 31-32, Rollo)
On February 12, 1991, the Court of Appeals rendered a decision reversing the
decision of the trial court and dismissing the complaint. The reversal of the trial court's
decision was premised on the finding of respondent court that the Deed of Option is
void for lack of consideration.
The Villamor spouses brought the instant petition for review on certiorari on the
following grounds:
I. THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE
PHRASE WHENEVER THE NEED FOR SUCH SALE ARISES ON OUR
(PRIVATE RESPONDENT) PART OR ON THE PART OF THE SPOUSES
JULIO D. VILLAMOR AND MARINA V. VILLAMOR' CONTAINED IN THE
DEED OF OPTION DENOTES A SUSPENSIVE CONDITION;
II. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE QUESTIONED
PHRASE IS INDEED A CONDITION, THE COURT OF APPEALS ERRED
IN NOT FINDING, THAT THE SAID CONDITION HAD ALREADY BEEN
FULFILLED;
III. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE
QUESTIONED PHRASE IS INDEED A CONDITION, THE COURT OF
APPEALS ERRED IN HOLDING THAT THE IMPOSITION OF SAID
CONDITION PREVENTED THE PERFECTION OF THE CONTRACT OF
SALE DESPITE THE EXPRESS OFFER AND ACCEPTANCE CONTAINED
IN THE DEED OF OPTION;
IV. THE COURT OF APPEALS ERRED IN FINDING THAT THE DEED OF
OPTION IS VOID FOR LACK OF CONSIDERATION;
V. THE COURT OF APPEALS ERRED IN HOLDING THAT A DISTINCT
CONSIDERATION IS NECESSARY TO SUPPORT THE DEED OF OPTION
DESPITE THE EXPRESS OFFER AND ACCEPTANCE CONTAINED
THEREIN. (p. 12, Rollo)
The pivotal issue to be resolved in this case is the validity of the Deed of Option
whereby the private respondents agreed to sell their lot to petitioners "whenever the
need of such sale arises, either on our part (private respondents) or on the part of
Julio Villamor and Marina Villamor (petitioners)." The court a quo, rule that the Deed
of Option was a valid written agreement between the parties and made the following
conclusions:
xxx xxx xxx
It is interesting to state that the agreement between the parties are evidence
by a writing, hence, the controverting oral testimonies of the herein
defendants cannot be any better than the documentary evidence, which, in
this case, is the Deed of Option (Exh. "A" and "A-a")
The law provides that when the terms of an agreement have been reduced
to writing it is to be considered as containing all such terms, and therefore,
there can be, between the parties and their successors in interest no
evidence of their terms of the agreement, other than the contents of the
writing. ... (Section 7 Rule 130 Revised Rules of Court) Likewise, it is a
general and most inflexible rule that wherever written instruments are
appointed either by the requirements of law, or by the contract of the parties,
to be the repositories and memorials of truth, any other evidence is excluded
from being used, either as a substitute for such instruments, or to contradict
or alter them. This is a matter both of principle and of policy; of principle
because such instruments are in their nature and origin entitled to a much
higher degree of credit than evidence of policy, because it would be attended
with great mischief if those instruments upon which man's rights depended
were liable to be impeached by loose collateral evidence. Where the terms
of an agreement are reduced to writing, the document itself, being
constituted by the parties as the expositor of their intentions, it is the only
instrument of evidence in respect of that agreement which the law will
recognize so long as it exists for the purpose of evidence. (Starkie, EV, pp.
648, 655 cited in Kasheenath vs. Chundy, W.R. 68, cited in Francisco's
Rules of Court, Vol. VII Part I p. 153) (Emphasis supplied, pp. 126-127,
Records).
The respondent appellate court, however, ruled that the said deed of option is void for
lack of consideration. The appellate court made the following disquisitions:
Plaintiff-appellees say they agreed to pay P70.00 per square meter for the
portion purchased by them although the prevailing price at that time was only
P25.00 in consideration of the option to buy the remainder of the land. This
does not seem to be the case. In the first place, the deed of sale was never
produced by them to prove their claim. Defendant-appellants testified that no
copy of the deed of sale had ever been given to them by the plaintiff-
appellees. In the second place, if this was really the condition of the prior
sale, we see no reason why it should be reiterated in the Deed of Option. On
the contrary, the alleged overprice paid by the plaintiff-appellees is given in
the Deed as reason for the desire of the Villamors to acquire the land rather
than as a consideration for the option given to them, although one might
wonder why they took nearly 13 years to invoke their right if they really were
in due need of the lot.
At all events, the consideration needed to support a unilateral promise to sell
is a dinstinct one, not something that is as uncertain as P70.00 per square
meter which is allegedly 'greatly higher than the actual prevailing value of
lands.' A sale must be for a price certain (Art. 1458). For how much the
portion conveyed to the plaintiff-appellees was sold so that the balance could
be considered the consideration for the promise to sell has not been shown,
beyond a mere allegation that it was very much below P70.00 per square
meter.
The fact that plaintiff-appellees might have paid P18.00 per square meter for
another land at the time of the sale to them of a portion of defendant-
appellant's lot does not necessarily prove that the prevailing market price at
the time of the sale was P18.00 per square meter. (In fact they claim it was
P25.00). It is improbable that plaintiff-appellees should pay P52.00 per
square meter for the privilege of buying when the value of the land itself was
allegedly P18.00 per square meter. (pp. 34-35, Rollo)
As expressed in Gonzales v. Trinidad, 67 Phil. 682, consideration is "the why of the
contracts, the essential reason which moves the contracting parties to enter into the
contract." The cause or the impelling reason on the part of private respondent
executing the deed of option as appearing in the deed itself is the petitioner's having
agreed to buy the 300 square meter portion of private respondents' land at P70.00
per square meter "which was greatly higher than the actual reasonable prevailing
price." This cause or consideration is clear from the deed which stated:
That the only reason why the spouses-vendees Julio Villamor and Marina V.
Villamor agreed to buy the said one-half portion at the above stated price of
about P70.00 per square meter, is because I, and my husband Roberto
Reyes, have agreed to sell and convey to them the remaining one-half
portion still owned by me ... (p. 26, Rollo)
The respondent appellate court failed to give due consideration to petitioners'
evidence which shows that in 1969 the Villamor spouses bough an adjacent lot from
the brother of Macaria Labing-isa for only P18.00 per square meter which the private
respondents did not rebut. Thus, expressed in terms of money, the consideration for
the deed of option is the difference between the purchase price of the 300 square
meter portion of the lot in 1971 (P70.00 per sq.m.) and the prevailing reasonable price
of the same lot in 1971. Whatever it is, (P25.00 or P18.00) though not specifically
stated in the deed of option, was ascertainable. Petitioner's allegedly paying P52.00
per square meter for the option may, as opined by the appellate court, be improbable
but improbabilities does not invalidate a contract freely entered into by the parties.
The "deed of option" entered into by the parties in this case had unique features.
Ordinarily, an optional contract is a privilege existing in one person, for which he had
paid a consideration and which gives him the right to buy, for example, certain
merchandise or certain specified property, from another person, if he chooses, at any
time within the agreed period at a fixed price (Enriquez de la Cavada v. Diaz, 37 Phil.
982). If We look closely at the "deed of option" signed by the parties, We will notice
that the first part covered the statement on the sale of the 300 square meter portion of
the lot to Spouses Villamor at the price of P70.00 per square meter "which was higher
than the actual reasonable prevailing value of the lands in that place at that time (of
sale)." The second part stated that the only reason why the Villamor spouses agreed
to buy the said lot at a much higher price is because the vendor (Reyeses) also
agreed to sell to the Villamors the other half-portion of 300 square meters of the land.
Had the deed stopped there, there would be no dispute that the deed is really an
ordinary deed of option granting the Villamors the option to buy the remaining 300
square meter-half portion of the lot in consideration for their having agreed to buy the
other half of the land for a much higher price. But, the "deed of option" went on and
stated that the sale of the other half would be made "whenever the need of such sale
arises, either on our (Reyeses) part or on the part of the Spouses Julio Villamor and
Marina V. Villamor. It appears that while the option to buy was granted to the
Villamors, the Reyeses were likewise granted an option to sell. In other words, it was
not only the Villamors who were granted an option to buy for which they paid a
consideration. The Reyeses as well were granted an option to sell should the need for
such sale on their part arise.
In the instant case, the option offered by private respondents had been accepted by
the petitioner, the promise, in the same document. The acceptance of an offer to sell
for a price certain created a bilateral contract to sell and buy and upon acceptance,
the offer, ipso facto assumes obligations of a vendee (See Atkins, Kroll & Co. v. Cua
Mian Tek, 102 Phil. 948). Demandabilitiy may be exercised at any time after the
execution of the deed. In Sanchez v. Rigos, No. L-25494, June 14, 1972, 45 SCRA
368, 376, We held:
In other words, since there may be no valid contract without a cause of
consideration, the promisory is not bound by his promise and may,
accordingly withdraw it. Pending notice of its withdrawal, his accepted
promise partakes, however, of the nature of an offer to sell which, if
accepted, results in a perfected contract of sale.
A contract of sale is, under Article 1475 of the Civil Code, "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 perform of
contracts." Since there was, between the parties, a meeting of minds upon the object
and the price, there was already a perfected contract of sale. What was, however, left
to be done was for either party to demand from the other their respective
undertakings under the contract. It may be demanded at any time either by the private
respondents, who may compel the petitioners to pay for the property or the
petitioners, who may compel the private respondents to deliver the property.
However, the Deed of Option did not provide for the period within which the parties
may demand the performance of their respective undertakings in the instrument. The
parties could not have contemplated that the delivery of the property and the payment
thereof could be made indefinitely and render uncertain the status of the land. The
failure of either parties to demand performance of the obligation of the other for an
unreasonable length of time renders the contract ineffective.
Under Article 1144 (1) of the Civil Code, actions upon written contract must be
brought within ten (10) years. The Deed of Option was executed on November 11,
1971. The acceptance, as already mentioned, was also accepted in the same
instrument. The complaint in this case was filed by the petitioners on July 13, 1987,
seventeen (17) years from the time of the execution of the contract. Hence, the right
of action had prescribed. There were allegations by the petitioners that they
demanded from the private respondents as early as 1984 the enforcement of their
rights under the contract. Still, it was beyond the ten (10) years period prescribed by
the Civil Code. In the case of Santos v. Ganayo,
L-31854, September 9, 1982, 116 SCRA 431, this Court affirming and subscribing to
the observations of the court a quo held, thus:
... Assuming that Rosa Ganayo, the oppositor herein, had the right based on
the Agreement to Convey and Transfer as contained in Exhibits '1' and '1-A',
her failure or the abandonment of her right to file an action against Pulmano
Molintas when he was still a co-owner of the on-half (1/2) portion of the
10,000 square meters is now barred by laches and/or prescribed by law
because she failed to bring such action within ten (10) years from the date of
the written agreement in 1941, pursuant to Art. 1144 of the New Civil Code,
 so that when she filed the adverse claim through her counsel in 1959 she
had absolutely no more right whatsoever on the same, having been barred
by laches.

It is of judicial notice that the price of real estate in Metro Manila is continuously on
the rise. To allow the petitioner to demand the delivery of the property subject of this
case thirteen (13) years or seventeen (17) years after the execution of the deed at the
price of only P70.00 per square meter is inequitous. For reasons also of equity and in
consideration of the fact that the private respondents have no other decent place to
live, this Court, in the exercise of its equity jurisdiction is not inclined to grant
petitioners' prayer.

ACCORDINGLY, the petition is DENIED. The decision of respondent appellate court

is AFFIRMED for reasons cited in this decision. Judgement is rendered dismissing the
complaint in Civil Case No. C-12942 on the ground of prescription and laches.

SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25494 June 14, 1972
NICOLAS SANCHEZ, plaintiff-appellee,
vs.
SEVERINA RIGOS, defendant-appellant.
Santiago F. Bautista for plaintiff-appellee.
Jesus G. Villamar for defendant-appellant.
CONCEPCION, C.J.:p
Appeal from a decision of the Court of First Instance of Nueva Ecija to the Court of
Appeals, which certified the case to Us, upon the ground that it involves a question
purely of law.
The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant
Severina Rigos executed an instrument entitled "Option to Purchase," whereby Mrs.
Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of P1,510.00,
a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose,
province of Nueva Ecija, and more particularly described in Transfer Certificate of
Title No. NT-12528 of said province, within two (2) years from said date with the
understanding that said option shall be deemed "terminated and elapsed," if
"Sanchez shall fail to exercise his right to buy the property" within the stipulated
period. Inasmuch as several tenders of payment of the sum of Pl,510.00, made by
Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the
former deposited said amount with the Court of First Instance of Nueva Ecija and
commenced against the latter the present action, for specific performance and
damages.
After the filing of defendant's answer — admitting some allegations of the complaint,
denying other allegations thereof, and alleging, as special defense, that the contract
between the parties "is a unilateral promise to sell, and the same being unsupported
by any valuable consideration, by force of the New Civil Code, is null and void" — on
February 11, 1964, both parties, assisted by their respective counsel, jointly moved
for a judgment on the pleadings. Accordingly, on February 28, 1964, the lower court
rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum judicially
consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs.
Rigos was, likewise, sentenced to pay P200.00, as attorney's fees, and other costs.
Hence, this appeal by Mrs. Rigos.
This case admittedly hinges on the proper application of Article 1479 of our Civil
Code, which provides:
ART. 1479. A promise to buy and sell a determinate thing for a
price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing
for a price certain is binding upon the promissor if the promise is
supported by a consideration distinct from the price.
In his complaint, plaintiff alleges that, by virtue of the option under consideration,
"defendant agreed and committed to sell" and "the plaintiff agreed and committed to
buy" the land described in the option, copy of which was annexed to said pleading as
Annex A thereof and is quoted on the margin.1 Hence, plaintiff maintains that the
promise contained in the contract is "reciprocally demandable," pursuant to the first
paragraph of said Article 1479. Although defendant had really "agreed, promised and
committed" herself to sell the land to the plaintiff, it is not true that the latter had, in
turn, "agreed and committed himself " to buy said property. Said Annex A does not
bear out plaintiff's allegation to this effect. What is more, since Annex A has been
made "an integral part" of his complaint, the provisions of said instrument form part
"and parcel"2 of said pleading.
The option did not impose upon plaintiff the obligation to purchase defendant's
property. Annex A is not a "contract to buy and sell." It merely granted plaintiff an
"option" to buy. And both parties so understood it, as indicated by the caption, "Option
to Purchase," given by them to said instrument. Under the provisions thereof, the
defendant "agreed, promised and committed" herself to sell the land therein described
to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that her
aforementioned agreement, promise and undertaking is supported by a consideration
"distinct from the price" stipulated for the sale of the land.
Relying upon Article 1354 of our Civil Code, the lower court presumed the existence
of said consideration, and this would seem to be the main factor that influenced its
decision in plaintiff's favor. It should be noted, however, that:
(1) Article 1354 applies to contracts in general, whereas the second paragraph of
Article 1479 refers to "sales" in particular, and, more specifically, to "an accepted
unilateral promise to buy or to sell." In other words, Article 1479 is controlling in the
case at bar.
(2) In order that said unilateral promise may be "binding upon the promisor, Article
1479 requires the concurrence of a condition, namely, that the promise be "supported
by a consideration distinct from the price." Accordingly, the promisee can not compel
the promisor to comply with the promise, unless the former establishes the existence
of said distinct consideration. In other words, the promisee has the burden of
proving such consideration. Plaintiff herein has not even alleged the existence thereof
in his complaint.
(3) Upon the other hand, defendant explicitly averred in her answer, and pleaded as a
special defense, the absence of said consideration for her promise to sell and, by
joining in the petition for a judgment on the pleadings, plaintiff has impliedly admitted
the truth of said averment in defendant's answer. Indeed as early as March 14, 1908,
it had been held, in Bauermann v. Casas,3 that:
One who prays for judgment on the pleadings without offering proof
as to the truth of his own allegations, and without giving the
opposing party an opportunity to introduce evidence, must be
understood to admit the truth of all the material and relevant
allegations of the opposing party, and to rest his motion for
judgment on those allegations taken together with such of his own
as are admitted in the pleadings. (La Yebana Company vs. Sevilla,
9 Phil. 210). (Emphasis supplied.)
This view was reiterated in Evangelista v. De la Rosa4 and Mercy's Incorporated v.
Herminia Verde.5
Squarely in point is Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific
Co.,6 from which We quote:
The main contention of appellant is that the option granted to
appellee to sell to it barge No. 10 for the sum of P30,000 under the
terms stated above has no legal effect because it is not supported
by any consideration and in support thereof it invokes article 1479
of the new Civil Code. The article provides:
"ART. 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or sell a
determinate thing for a price certain is binding
upon the promisor if the promise is supported by
a consideration distinct from the price."
On the other hand, Appellee contends that, even granting that the
"offer of option" is not supported by any consideration, that option
became binding on appellant when the appellee gave notice to it of
its acceptance, and that having accepted it within the period of
option, the offer can no longer be withdrawn and in any event such
withdrawal is ineffective. In support this contention, appellee
invokes article 1324 of the Civil Code which provides:
"ART. 1324. When the offerer has allowed the
offeree a certain period to accept, the offer may
be withdrawn any time before acceptance by
communicating such withdrawal, except when the
option is founded upon consideration as
something paid or promised."
There is no question that under article 1479 of the new Civil Code
"an option to sell," or "a promise to buy or to sell," as used in said
article, to be valid must be "supported by a consideration distinct
from the price." This is clearly inferred from the context of said
article that a unilateral promise to buy or to sell, even if accepted, is
only binding if supported by consideration. In other words, "an
accepted unilateral promise can only have a binding effect if
supported by a consideration which means that the option can still
be withdrawn, even if accepted, if the same is not supported by any
consideration. It is not disputed that the option is without
consideration. It can therefore be withdrawn notwithstanding the
acceptance of it by appellee.
It is true that under article 1324 of the new Civil Code, the general
rule regarding offer and acceptance is that, when the offerer gives
to the offeree a certain period to accept, "the offer may be
withdrawn at any time before acceptance" except when the option
is founded upon consideration, but this general rule must be
interpreted as modified by the provision of article 1479 above
referred to, which applies to "a promise to buy and sell" specifically.
As already stated, this rule requires that a promise to sell to be valid
must be supported by a consideration distinct from the price.
We are not oblivious of the existence of American authorities which
hold that an offer, once accepted, cannot be withdrawn, regardless
of whether it is supported or not by a consideration (12 Am. Jur.
528). These authorities, we note, uphold the general rule applicable
to offer and acceptance as contained in our new Civil Code. But we
are prevented from applying them in view of the specific provision
embodied in article 1479. While under the "offer of option" in
question appellant has assumed a clear obligation to sell its barge
to appellee and the option has been exercised in accordance with
its terms, and there appears to be no valid or justifiable reason for
appellant to withdraw its offer, this Court cannot adopt a different
attitude because the law on the matter is clear. Our imperative duty
is to apply it unless modified by Congress.
However, this Court itself, in the case of Atkins, Kroll and Co., Inc. v. Cua Hian
Tek,8 decided later that Southwestern Sugar & Molasses Co. v. Atlantic Gulf & Pacific
Co.,9 saw no distinction between Articles 1324 and 1479 of the Civil Code and applied
the former where a unilateral promise to sell similar to the one sued upon here was
involved, treating such promise as an option which, although not binding as a contract
in itself for lack of a separate consideration, nevertheless generated a bilateral
contract of purchase and sale upon acceptance. Speaking through Associate Justice,
later Chief Justice, Cesar Bengzon, this Court said:
Furthermore, an option is unilateral: a promise to sell at the price
fixed whenever the offeree should decide to exercise his option
within the specified time. After accepting the promise and before he
exercises his option, the holder of the option is not bound to buy.
He is free either to buy or not to buy later. In this case, however,
upon accepting herein petitioner's offer a bilateral promise to sell
and to buy ensued, and the respondent ipso facto assumed the
obligation of a purchaser. He did not just get the right subsequently
to buy or not to buy. It was not a mere option then; it was a bilateral
contract of sale.
Lastly, even supposing that Exh. A granted an option which is not
binding for lack of consideration, the authorities hold that:
"If the option is given without a consideration, it is
a mere offer of a contract of sale, which is not
binding until accepted. If, however, acceptance is
made before a withdrawal, it constitutes a binding
contract of sale, even though the option was not
supported by a sufficient consideration. ... . (77
Corpus Juris Secundum, p. 652. See also 27
Ruling Case Law 339 and cases cited.)
"It can be taken for granted, as contended by the
defendant, that the option contract was not valid
for lack of consideration. But it was, at least, an
offer to sell, which was accepted by letter, and of
the acceptance the offerer had knowledge before
said offer was withdrawn. The concurrence of
both acts — the offer and the acceptance —
could at all events have generated a contract, if
none there was before (arts. 1254 and 1262 of
the Civil Code)." (Zayco vs. Serra, 44 Phil. 331.)
In other words, since there may be no valid contract without a cause or consideration,
the promisor is not bound by his promise and may, accordingly, withdraw it. Pending
notice of its withdrawal, his accepted promise partakes, however, of the nature of an
offer to sell which, if accepted, results in a perfected contract of sale.
This view has the advantage of avoiding a conflict between Articles 1324 — on the
general principles on contracts — and 1479 — on sales — of the Civil Code, in line
with the cardinal rule of statutory construction that, in construing different provisions of
one and the same law or code, such interpretation should be favored as will reconcile
or harmonize said provisions and avoid a conflict between the same. Indeed, the
presumption is that, in the process of drafting the Code, its author has maintained a
consistent philosophy or position. Moreover, the decision in Southwestern Sugar &
Molasses Co. v. Atlantic Gulf & Pacific Co., 10 holding that Art. 1324 is modified by
Art. 1479 of the Civil Code, in effect, considers the latter as an exception to the
former, and exceptions are not favored, unless the intention to the contrary is clear,
and it is not so, insofar as said two (2) articles are concerned. What is more, the
reference, in both the second paragraph of Art. 1479 and Art. 1324, to an option or
promise supported by or founded upon a consideration, strongly suggests that the two
(2) provisions intended to enforce or implement the same principle.
Upon mature deliberation, the Court is of the considered opinion that it should, as it
hereby reiterates the doctrine laid down in the Atkins, Kroll & Co. case, and that,
insofar as inconsistent therewith, the view adhered to in the Southwestern Sugar &
Molasses Co. case should be deemed abandoned or modified.
WHEREFORE, the decision appealed from is hereby affirmed, with costs against
defendant-appellant Severina Rigos. It is so ordered.
Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Barredo and Makasiar, JJ., concur.
Castro, J., took no part.
Separate Opinions
ANTONIO, J., concurring:
I concur in the opinion of the Chief Justice.
I fully agree with the abandonment of the view previously adhered to in Southwestern
Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co.,1 which holds that an option to
sell can still be withdrawn, even if accepted, if the same is not supported by any
consideration, and the reaffirmance of the doctrine in Atkins, Kroll & Co., Inc. vs. Cua
Hian Tek,2 holding that "an option implies ... the legal obligation to keep the offer (to
sell) open for the time specified;" that it could be withdrawn before acceptance, if
there was no consideration for the option, but once the "offer to sell" is accepted, a
bilateral promise to sell and to buy ensues, and the offeree ipso facto assumes the
obligations of a purchaser. In other words, if the option is given without a
consideration, it is a mere offer to sell, which is not binding until accepted. If, however,
acceptance is made before a withdrawal, it constitutes a binding contract of sale. The
concurrence of both acts — the offer and the acceptance — could in such event
generate a contract.
While the law permits the offeror to withdraw the offer at any time before acceptance
even before the period has expired, some writers hold the view, that the offeror can
not exercise this right in an arbitrary or capricious manner. This is upon the principle
that an offer implies an obligation on the part of the offeror to maintain in such length before she could withdraw her offer, a bilateral reciprocal contract — to sell and to
of time as to permit the offeree to decide whether to accept or not, and therefore buy — was generated.
cannot arbitrarily revoke the offer without being liable for damages which the offeree
may suffer. A contrary view would remove the stability and security of business
transactions.3

In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had
offered the sum of Pl,510.00 before any withdrawal from the contract has been made
by the Defendant (Severina Rigos)." Since Rigos' offer sell was accepted by Sanchez,
before she could withdraw her offer, a bilateral reciprocal contract — to sell and to
buy — was generated.

Separate Opinions

ANTONIO, J., concurring:

I concur in the opinion of the Chief Justice.

I fully agree with the abandonment of the view previously adhered to in Southwestern
Sugar & Molasses Co. vs. Atlantic Gulf and Pacific Co.,1 which holds that an option to
sell can still be withdrawn, even if accepted, if the same is not supported by any
consideration, and the reaffirmance of the doctrine in Atkins, Kroll & Co., Inc. vs. Cua
Hian Tek,2 holding that "an option implies ... the legal obligation to keep the offer (to
sell) open for the time specified;" that it could be withdrawn before acceptance, if
there was no consideration for the option, but once the "offer to sell" is accepted, a
bilateral promise to sell and to buy ensues, and the offeree ipso facto assumes the
obligations of a purchaser. In other words, if the option is given without a
consideration, it is a mere offer to sell, which is not binding until accepted. If, however,
acceptance is made before a withdrawal, it constitutes a binding contract of sale. The
concurrence of both acts — the offer and the acceptance — could in such event
generate a contract.

While the law permits the offeror to withdraw the offer at any time before acceptance
even before the period has expired, some writers hold the view, that the offeror can
not exercise this right in an arbitrary or capricious manner. This is upon the principle
that an offer implies an obligation on the part of the offeror to maintain in such length
of time as to permit the offeree to decide whether to accept or not, and therefore
cannot arbitrarily revoke the offer without being liable for damages which the offeree
may suffer. A contrary view would remove the stability and security of business
transactions.3

In the present case the trial court found that the "Plaintiff (Nicolas Sanchez) had
offered the sum of Pl,510.00 before any withdrawal from the contract has been made
by the Defendant (Severina Rigos)." Since Rigos' offer sell was accepted by Sanchez,

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 168325 December 8, 2010
ROBERTO D. TUAZON, Petitioner,
vs.
LOURDES Q. DEL ROSARIO-SUAREZ, CATALINA R. SUAREZ-DE LEON,
WILFREDO DE LEON, MIGUEL LUIS S. DE LEON, ROMMEL LEE S. DE LEON,
and GUILLERMA L. SANDICO-SILVA, as attorney-in-fact of the defendants,
except Lourdes Q. Del Rosario-Suarez, Respondents.
DECISION
DEL CASTILLO, J.:
In a situation where the lessor makes an offer to sell to the lessee a certain property
at a fixed price within a certain period, and the lessee fails to accept the offer or to
purchase on time, then the lessee loses his right to buy the property and the owner
can validly offer it to another.
This Petition for Review on Certiorari1 assails the Decision2 dated May 30, 2005 of
the Court of Appeals (CA) in CA-G.R. CV No. 78870, which affirmed the
Decision3 dated November 18, 2002 of the Regional Trial Court (RTC), Branch 101,
Quezon City in Civil Case No. Q-00-42338.
Factual Antecedents
Respondent Lourdes Q. Del Rosario-Suarez (Lourdes) was the owner of a parcel of
land, containing more or less an area of 1,211 square meters located along Tandang
Sora Street, Barangay Old Balara, Quezon City and previously covered by Transfer
Certificate of Title (TCT) No. RT-561184 issued by the Registry of Deeds of Quezon
City.
On June 24, 1994, petitioner Roberto D. Tuazon (Roberto) and Lourdes executed a
Contract of Lease5 over the abovementioned parcel of land for a period of three
years. The lease commenced in March 1994 and ended in February 1997. During the
effectivity of the lease, Lourdes sent a letter6 dated January 2, 1995 to Roberto where
she offered to sell to the latter subject parcel of land. She pegged the price at
₱37,541,000.00 and gave him two years from January 2, 1995 to decide on the said
offer.
On June 19, 1997, or more than four months after the expiration of the Contract of
Lease, Lourdes sold subject parcel of land to her only child, Catalina Suarez-De
Leon, her son-in-law Wilfredo De Leon, and her two grandsons, Miguel Luis S. De
Leon and Rommel S. De Leon (the De Leons), for a total consideration of only
₱2,750,000.00 as evidenced by a Deed of Absolute Sale 7 executed by the parties.
TCT No. 1779868 was then issued by the Registry of Deeds of Quezon City in the
name of the De Leons.
The new owners through their attorney-in-fact, Guillerma S. Silva, notified Roberto to
vacate the premises. Roberto refused hence, the De Leons filed a complaint for
Unlawful Detainer before the Metropolitan Trial Court (MeTC) of Quezon City against
him. On August 30, 2000, the MeTC rendered a Decision9 ordering Roberto to vacate
the property for non-payment of rentals and expiration of the contract.
Ruling of the Regional Trial Court
On November 8, 2000, while the ejectment case was on appeal, Roberto filed with the
RTC of Quezon City a Complaint10 for Annulment of Deed of Absolute Sale,
Reconveyance, Damages and Application for Preliminary Injunction against Lourdes
and the De Leons. On November 13, 2000, Roberto filed a Notice of Lis
Pendens11 with the Registry of Deeds of Quezon City.
On January 8, 2001, respondents filed An Answer with Counterclaim 12 praying that
the Complaint be dismissed for lack of cause of action. They claimed that the filing of
such case was a mere leverage of Roberto against them because of the favorable
Decision issued by the MeTC in the ejectment case.
On September 17, 2001, the RTC issued an Order13 declaring Lourdes and the De
Leons in default for their failure to appear before the court for the second time despite
notice. Upon a Motion for Reconsideration,14 the trial court in an Order15 dated
October 19, 2001 set aside its Order of default.
After trial, the court a quo rendered a Decision declaring the Deed of Absolute Sale
made by Lourdes in favor of the De Leons as valid and binding. The offer made by
Lourdes to Roberto did not ripen into a contract to sell because the price offered by
the former was not acceptable to the latter. The offer made by Lourdes is no longer
binding and effective at the time she decided to sell the subject lot to the De Leons
because the same was not accepted by Roberto. Thus, in a Decision dated
November 18, 2002, the trial court dismissed the complaint. Its dispositive portion
reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing the
above-entitled Complaint for lack of merit, and ordering the Plaintiff to pay the
Defendants, the following:
1. the amount of ₱30,000.00 as moral damages;
2. the amount of ₱30,000.00 as exemplary damages;
 3. the amount of ₱30,000.00 as attorney’s fees; and
4. cost of the litigation.
SO ORDERED.16
Ruling of the Court of Appeals
On May 30, 2005, the CA issued its Decision dismissing Roberto’s appeal and
affirming the Decision of the RTC.
Hence, this Petition for Review on Certiorari filed by Roberto advancing the following
arguments:
I.
The Trial Court and the Court of Appeals had decided that the "Right of First Refusal"
exists only within the parameters of an "Option to Buy", and did not exist when the
property was sold later to a third person, under favorable terms and conditions which
the former buyer can meet.
II.
What is the status or sanctions of an appellee in the Court of Appeals who has not
filed or failed to file an appellee’s brief?17
Petitioner’s Arguments
Roberto claims that Lourdes violated his right to buy subject property under
the principle of "right of first refusal" by not giving him "notice" and the opportunity to
buy the property under the same terms and conditions or specifically based on the
much lower price paid by the De Leons.
Roberto further contends that he is enforcing his "right of first refusal" based
on Equatorial Realty Development, Inc. v. Mayfair Theater, Inc.18 which is the leading
case on the "right of first refusal."
Respondents’ Arguments
On the other hand, respondents posit that this case is not covered by the principle of
"right of first refusal" but an unaccepted unilateral promise to sell or, at best, a
contract of option which was not perfected. The letter of Lourdes to Roberto clearly
embodies an option contract as it grants the latter only two years to exercise the
option to buy the subject property at a price certain of ₱37,541,000.00. As an option
contract, the said letter would have been binding upon Lourdes without need of any
consideration, had Roberto accepted the offer. But in this case there was no
acceptance made neither was there a distinct consideration for the option contract.
Our Ruling
The petition is without merit.
This case involves an option contract and not a contract of a right of first refusal
In Beaumont v. Prieto,19 the nature of an option contract is explained thus:
In his Law Dictionary, edition of 1897, Bouvier defines an option as a contract, in the
following language:
‘A contract by virtue of which A, in consideration of the payment of a certain sum to B,
acquires the privilege of buying from, or selling to, B certain securities or properties
within a limited time at a specified price. (Story vs. Salamon, 71 N. Y., 420.)’
From Vol. 6, page 5001, of the work "Words and Phrases," citing the case of Ide vs.
Leiser (24 Pac., 695; 10 Mont., 5; 24 Am. St. Rep., 17) the following quotation has
been taken:
‘An agreement in writing to give a person the ‘option’ to purchase lands within a given
time at a named price is neither a sale nor an agreement to sell. It is simply a
contract by which the owner of property agrees with another person that he
shall have the right to buy his property at a fixed price within a certain time. He
does not sell his land; he does not then agree to sell it; but he does sell something;
that is, the right or privilege to buy at the election or option of the other party. The
second party gets in praesenti, not lands, nor an agreement that he shall have lands,
but he does get something of value; that is, the right to call for and receive lands if he
elects. The owner parts with his right to sell his lands, except to the second party, for
a limited period. The second party receives this right, or rather, from his point of view,
he receives the right to elect to buy.
But the two definitions above cited refer to the contract of option, or, what amounts to
the same thing, to the case where there was cause or consideration for the obligation
x x x. (Emphasis supplied.)
On the other hand, in Ang Yu Asuncion v. Court of Appeals,20 an elucidation on the
"right of first refusal" was made thus:
In the law on sales, the so-called ‘right of first refusal’ is an innovative juridical
relation. Needless to point out, it cannot be deemed a perfected contract of sale under
Article 1458 of the Civil Code. Neither can the right of first refusal, understood in its
normal concept, per se be brought within the purview of an option under the second
paragraph of Article 1479, aforequoted, or possibly of an offer under Article 1319 of
the same Code. An option or an offer would require, among other things, a clear
certainty on both the object and the cause or consideration of the envisioned
contract. In a right of first refusal, while the object might be made determinate,
the exercise of the right, however, would be dependent not only on the
grantor's eventual intention to enter into a binding juridical relation with
another but also on terms, including the price, that obviously are yet to be later
firmed up. Prior thereto, it can at best be so described as merely belonging to a class
of preparatory juridical relations governed not by contracts (since the essential
elements to establish the vinculum juris would still be indefinite and inconclusive) but
by, among other laws of general application, the pertinent scattered provisions of the
Civil Code on human conduct.
Even on the premise that such right of first refusal has been decreed under a final
judgment, like here, its breach cannot justify correspondingly an issuance of a writ of
execution under a judgment that merely recognizes its existence, nor would it
sanction an action for specific performance without thereby negating the
indispensable element of consensuality in the perfection of contracts. It is not to say,
however, that the right of first refusal would be inconsequential for, such as already
intimated above, an unjustified disregard thereof, given, for instance, the
circumstances expressed in Article 19 of the Civil Code, can warrant a recovery for
damages. (Emphasis supplied.)
From the foregoing, it is thus clear that an option contract is entirely different and
distinct from a right of first refusal in that in the former, the option granted to the
offeree is for a fixed period and at a determined price. Lacking these two essential
requisites, what is involved is only a right of first refusal.
In this case, the controversy is whether the letter of Lourdes to Roberto dated January
2, 1995 involved an option contract or a contract of a right of first refusal. In its
entirety, the said letter-offer reads:
206 Valdes Street
Josefa Subd. Balibago
Angeles City 2009
January 2, 1995
Tuazon Const. Co.
986 Tandang Sora Quezon City
Dear Mr. Tuazon,
I received with great joy and happiness the big box of sweet grapes and ham, fit for a
king’s party. Thanks very much.
I am getting very old (79 going 80 yrs. old) and wish to live in the U.S.A. with my only
family. I need money to buy a house and lot and a farm with a little cash to start.
I am offering you to buy my 1211 square meter at ₱37,541,000.00 you can pay me in
dollars in the name of my daughter. I never offered it to anyone. Please shoulder the
expenses for the transfer. I wish the Lord God will help you buy my lot easily and you
will be very lucky forever in this place. You have all the time to decide when you
can, but not for 2 years or more.
I wish you long life, happiness, health, wealth and great fortune always!
I hope the Lord God will help you be the recipient of multi-billion projects aid from
other countries.
Thank you,
Lourdes Q. del Rosario vda de Suarez
It is clear that the above letter embodies an option contract as it grants Roberto a
fixed period of only two years to buy the subject property at a price certain of
₱37,541,000.00. It being an option contract, the rules applicable are found in Articles
1324 and 1479 of the Civil Code which provide:
Art. 1324. When the offerer has allowed the offeree a certain period to accept, the
offer may be withdrawn at any time before acceptance by communicating such
withdrawal, except when the option is founded upon a consideration, as something
paid or promised.
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain
is binding upon the promissor if the promise is supported by a consideration distinct
from the price.
It is clear from the provision of Article 1324 that there is a great difference between
the effect of an option which is without a consideration from one which is founded
upon a consideration. If the option is without any consideration, the offeror may
withdraw his offer by communicating such withdrawal to the offeree at anytime before
acceptance; if it is founded upon a consideration, the offeror cannot withdraw his offer
before the lapse of the period agreed upon.
The second paragraph of Article 1479 declares that "an accepted unilateral promise
to buy or to sell a determinate thing for a price certain is binding upon the promissor if
the promise is supported by a consideration distinct from the price." Sanchez v.
Rigos21 provided an interpretation of the said second paragraph of Article 1479 in
relation to Article 1324. Thus:
There is no question that under Article 1479 of the new Civil Code "an option to sell,"
or "a promise to buy or to sell," as used in said article, to be valid must be "supported
by a consideration distinct from the price." This is clearly inferred from the context of
said article that a unilateral promise to buy or to sell, even if accepted, is only binding
if supported by consideration. In other words, "an accepted unilateral promise can
only have a binding effect if supported by a consideration, which means that the
option can still be withdrawn, even if accepted, if the same is not supported by any
consideration. Hence, it is not disputed that the option is without consideration. It can
therefore be withdrawn notwithstanding the acceptance made of it by appellee.
It is true that under Article 1324 of the new Civil Code, the general rule regarding offer
and acceptance is that, when the offerer gives to the offeree a certain period to
accept, "the offer may be withdrawn at any time before acceptance" except when the
option is founded upon consideration, but this general rule must be interpreted
as modified by the provision of Article 1479 above referred to, which applies to "a
promise to buy and sell" specifically. As already stated, this rule requires that a
promise to sell to be valid must be supported by a consideration distinct from the
price.
In Diamante v. Court of Appeals,22 this Court further declared that:
A unilateral promise to buy or sell is a mere offer, which is not converted into a
contract except at the moment it is accepted. Acceptance is the act that gives life
to a juridical obligation, because, before the promise is accepted, the promissor
may withdraw it at any time. Upon acceptance, however, a bilateral contract to sell
and to buy is created, and the offeree ipso facto assumes the obligations of a
purchaser; the offeror, on the other hand, would be liable for damages if he fails to
deliver the thing he had offered for sale.
xxxx
Even if the promise was accepted, private respondent was not bound thereby in
the absence of a distinct consideration. (Emphasis ours.)
In this case, it is undisputed that Roberto did not accept the terms stated in the letter
of Lourdes as he negotiated for a much lower price. Roberto’s act of negotiating for a
much lower price was a counter-offer and is therefore not an acceptance of the offer
of Lourdes. Article 1319 of the Civil Code provides:
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 acceptanceconstitutes a counter-offer.
(Emphasis supplied.)
The counter-offer of Roberto for a much lower price was not accepted by Lourdes.
There is therefore no contract that was perfected between them with regard to the
sale of subject property. Roberto, thus, does not have any right to demand that the
property be sold to him at the price for which it was sold to the De Leons neither does
he have the right to demand that said sale to the De Leons be annulled.
Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. is not applicable here
It is the position of Roberto that the facts of this case and that of Equatorial are similar
in nearly all aspects. Roberto is a lessee of the property like Mayfair Theater
in Equatorial. There was an offer made to Roberto by Lourdes during the effectivity of
the contract of lease which was also the case in Equatorial. There were negotiations
as to the price which did not bear fruit because Lourdes sold the property to the De
Leons which was also the case in Equatorial wherein Carmelo and Bauermann sold
the property to Equatorial. The existence of the lease of the property is known to the
De Leons as they are related to Lourdes while in Equatorial, the lawyers of Equatorial
studied the lease contract of Mayfair over the property. The property in this case was
sold by Lourdes to the De Leons at a much lower price which is also the case
in Equatorial where Carmelo and Bauerman sold to Equatorial at a lesser price. It is
Roberto’s conclusion that as in the case of Equatorial, there was a violation of his
right of first refusal and hence annulment or rescission of the Deed of Absolute Sale is
the proper remedy.
Roberto’s reliance in Equatorial is misplaced. Despite his claims, the facts
in Equatorial radically differ from the facts of this case. Roberto overlooked the fact
that in Equatorial, there was an express provision in the Contract of Lease that –
(i)f the LESSOR should desire to sell the leased properties, the LESSEE shall be
given 30-days exclusive option to purchase the same.
There is no such similar provision in the Contract of Lease between Roberto and
Lourdes. What is involved here is a separate and distinct offer made by Lourdes
through a letter dated January 2, 1995 wherein she is selling the leased property to
Roberto for a definite price and which gave the latter a definite period for acceptance.
Roberto was not given a right of first refusal. The letter-offer of Lourdes did not form
part of the Lease Contract because it was made more than six months after the
commencement of the lease.
It is also very clear that in Equatorial, the property was sold within the lease period. In
this case, the subject property was sold not only after the expiration of the period
provided in the letter-offer of Lourdes but also after the effectivity of the Contract of
Lease.
Moreover, even if the offer of Lourdes was accepted by Roberto, still the former is not
bound thereby because of the absence of a consideration distinct and separate from
the price. The argument of Roberto that the separate consideration was the liberality
on the part of Lourdes cannot stand. A perusal of the letter-offer of Lourdes would
show that what drove her to offer the property to Roberto was her immediate need for
funds as she was already very old. Offering the property to Roberto was not an act of
liberality on the part of Lourdes but was a simple matter of convenience and
practicality as he was the one most likely to buy the property at that time as he was
then leasing the same.
All told, the facts of the case, as found by the RTC and the CA, do not support
Roberto’s claims that the letter of Lourdes gave him a right of first refusal which is
similar to the one given to Mayfair Theater in the case of Equatorial.Therefore, there
is no justification to annul the deed of sale validly entered into by Lourdes with the De
Leons.
What is the effect of the failure of Lourdes to file her appellee’s brief at the CA?

Lastly, Roberto argues that Lourdes should be sanctioned for her failure to file her
appellee’s brief before the CA.

Certainly, the appellee’s failure to file her brief would not mean that the case would be
automatically decided against her. Under the circumstances, the prudent action on
the part of the CA would be to deem Lourdes to have waived her right to file her
appellee’s brief. De Leon v. Court of Appeals,23 is instructive when this Court
decreed:

On the second issue, we hold that the Court of Appeals did not commit grave abuse
of discretion in considering the appeal submitted for decision. The proper remedy in
case of denial of the motion to dismiss is to file the appellee’s brief and proceed with
the appeal. Instead, petitioner opted to file a motion for reconsideration which,
unfortunately, was pro forma. All the grounds raised therein have been discussed in
the first resolution of the respondent Court of Appeals. There is no new ground raised
that might warrant reversal of the resolution. A cursory perusal of the motion would
readily show that it was a near verbatim repetition of the grounds stated in the motion
to dismiss; hence, the filing of the motion for reconsideration did not suspend the
period for filing the appellee’s brief. Petitioner was therefore properly deemed to
have waived his right to file appellee’s brief. (Emphasis supplied.)lawphi1

In the above cited case, De Leon was the plaintiff in a Complaint for a sum of money
in the RTC. He obtained a favorable judgment and so defendant went to the CA. The
appeal of defendant-appellant was taken cognizance of by the CA but De Leon filed a
Motion to Dismiss the Appeal with Motion to Suspend Period to file Appellee’s Brief.
The CA denied the Motion to Dismiss. De Leon filed a Motion for Reconsideration
which actually did not suspend the period to file the appellee’s brief. De Leon
therefore failed to file his brief within the period specified by the rules and hence he
was deemed by the CA to have waived his right to file appellee’s brief.

The failure of the appellee to file his brief would not result to the rendition of a
decision favorable to the appellant. The former is considered only to have waived his
right to file the Appellee’s Brief. The CA has the jurisdiction to resolve the case based
on the Appellant’s Brief and the records of the case forwarded by the RTC. The
appeal is therefore considered submitted for decision and the CA properly acted on it.

WHEREFORE, the instant petition for review on certiorari is DENIED. The assailed
Decision of the Court of Appeals in CA-G.R. CV No. 78870, which affirmed the
Decision dated November 18, 2002 of the Regional Trial Court, Branch 101, Quezon
City in Civil Case No. Q-00-42338 is AFFIRMED.

SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-10141 January 31, 1958
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
PHILIPPINE RESOURCES DEVELOPMENT CORPORATION and the COURT OF
APPEALS, respondents.
Office of the Solicitor General Ambrosio Padilla, and Solicitor Frine C. Zaballero for
petitioner.
Vicente L. Santiago for respondent Corporation.
PADILLA, J.:
This is a petition under Rule 46 to review a judgment rendered by the Court of
Appeals,in CA-GR No. 15767-R, Philippine Resources Development Corporation vs.
The Hon. Judge Magno Gatmaitan et al.
The findings of the Court of Appeals are, as follows.
It appears that on May 6, 1955, the Republic of the Philippines in
representation of the Bureau of Prisons instituted against Macario Apostol
and the Empire Insurance Co. a complaint docketed as Civil Case No. 26166
of the Court of First instance of Manila. The complaint alleges as the first
cause of action, that defendant Apostol submitted the highest bid the amount
P450.00 per ton for the purchase of 100 tons of Palawan Almaciga from the
Bureau of Prisons; that a contract therefor was drawn and by virtue of which,
Apostol obtained goods from the Bureau of Prisons valued P15,878.59; that
of said account, Apostol paid only P691.10 leaving a balane obligation of
P15,187.49. The complaint further averes, as second cause of action, that
Apostol submitted the best bid with the Bureau of Prisons for the purchase of
three million board feet of logs at P88.00 per 1,000 board feet; that a
contract was executed between the Director of Prisons and Apostol pursuant
to which contract Apostol obtained deliveries of logs valued at P65.830.00,
and that Apostol failed to pay a balance account Of P18,827.57. All told, for
the total demand set forth in complaint against Apostol is for P34,015.06 with
legal interests thereon from January 8, 1952. The Empire lnsurance
Company was included in the complaint having executed a performance
bond of P10,000.00 in favor of Apostol.
In his answer, Apostol interposed payment as a defense and sought the
dismissal of the complaint.
On July 19, 1955, the Philippine Resources Development Corporation
moved to intervene, appending to its motion, the complaint in the
intervention of even date. The complaint recites that for sometime prior to
Apostol's transactions the corporate had some goods deposited in a
warehouse at 1201 Herran, Manila; that Apostol, then the president of the
corporation but without the knowledge or consent of the stockholders
thereof, disposed of said goods by delivering the same to the Bureau of
Prisons of in an attempt to settle his personal debts with the latter entity; that
upon discovery of Apodol's act, the corporation took steps to recover said
goods by demanding from the Bureau of Prisons the return thereof; and that
upon the refusal of the Bureau to return said goods, the corporation sought
leave to intervene in Civil Case No. 26166.
As aforestated, His Honor denied the motion for intervention and thereby
issued an order to this effect on July 23, 1955. A motion for the
reconsideration of said order was filed by the movant corporation and the
same was likewise denied by His Honor on August 18, 1955 . . . (Annex L.).
On 3 September 1955, in a petition for a writ of certiorari filed in the Court of Appeals,
the herein respondent corporation prayed for the setting aside of the order of the
Court of First Instance that had denied the admission of its complaint-in-intervention
and for an order directing the latter Court to allow the herein respondent corporation
to intervene in the action (Annex G). On 12 December 1955 the Court of Appeals set
aside the order denying the motion to intervene and ordered the respondent court to
admit the herein respondent corporation's complaint-in-intervention with costs against
Macario Apostol.
On 9 January 1956 the Republic of the Philippines filed this petition in this Court for
the purpose stated at the beginning of this opinion.
The Goverment contends that the intervenor has no legal interest in the matter in
litigation, because the action brought in the Court of First Instance of Manila against
Macario Apostol and the Empire Insurance Company (Civil Case No. 26166, Annex
A) is just for the collection from the defendant Apostol of a sum of money, the unpaid
balance of the purchase price of logs and almaciga bought by him from the Bureau of
Prisons, whereas the intervenor seeks to recover ownership and possession of G. I.
sheets, black sheets, M. S. plates, round bars and G. I. pipes that it claims its owns-
an intervention which would change a personal action into one ad rem and would
unduly delay the disposition of the case.
The Court of Appeals held that:
Petitioner ardently claims that the reason behind its motion to intervene is
the desire to protect its rights and interests over some materials purportedly
belonging to it; that said material were unauthorizedly and illegally assigned
and delivered to the Bureau of Prisons by petitioning corporation's president
Macario Apostol in payment of the latter's personal accounts with the said
entity; and that the Bureau of Prisons refused to return said materials despite
petitioner's demands to do so.
Petitioner refers to the particulars recited in Apostol's answer dated July 12,
1955 to the effect that Apostol had paid unto the Bureau of Prisons his
accounts covered, among others, by BPPO 1077 for the sum of P4,638.40
and BPPO 1549 for the amount of P4,398.54. Petitioner moreover, points to
the State of Paid and Unpaid accounts of Apostol dated January 16, 1954
prepared by the accounting of officer of the Bureau of Prisons (Annex B.
Complaint in Intervention), wherein it appears that the aforementioned
accounts covered respectively by BPPO Nos. 1077 for 892 pieces of GI
sheets and 1549 for 399 pieces of GI pipes in the total sum of P9,036.94
have not been credited to Apostol's account in view of lack of supporting
papers; and that according to the reply letter of the Undersecretary of
Justice, said GI sheets and pipes were delivered by Macario Apostol to the
Bureau of Prisons allegedly in Apostol's capacity as owner and that the black
iron sheets were delivered by Apostol as President of the petitioner
corporation.
Respondents, on the other hand, assert that the subject matter of the original
litigation is a sum of money allegedly due to the Bureau of Prisons from
Macario Apostol and not the goods or the materials reportedly turned over by
Apostol as payment of his private debts to the Bureau of Prisons and the
recovery of which is sought by the petitioner; and that for this reason,
petitioner has no legal interest in the very subject matter in litigation as to
entitle it to intervene.
We find no merit in respondents' contention. It is true that the very subject
matter of the original case is a sum of money. But it is likewise true as borne
out by the records, that the materials purportedly belonging to the petitioner
corporation have been assessed and evaluated and their price equivalent in
terms of money have been determined; and that said materials for whatever
price they have been assigned by defendant now respondent Apostol as
tokens of payment of his private debts with the Bureau of Prisons. In view of
these considerations, it becomes enormously plain in the event the
respondent judge decides to credit Macario Apostol with the value of the
goods delivered by the latter to the Bureau of Prisons, the petitioner
corporation stands to be adversely affected by such judgment. The
conclusion, therefore, is inescapable that the petitioner possesses a legal
interest in the matter in litigation and that such interest is of an actual,
material, direct and immediate nature as to entitle petitioner to intervene.
xxx xxx xxx
Section 3 of Rule 13 of the Rules of Court endows the lower Court with
discretion to allow or disapprove the motion for intrvention (Santarromana et
al. vs. Barrios, 63 Phil. 456); and that in the exercise of such discretion, the
court shall consider whether or not the intervention will unduly delay or
prejudice the adjudicatio of the rights of the original parties and whether or
not the intervenors the rights may be fully protected in a separate
proceeding. The petitioner in the instant case positively authorized to a
separate action against any of all the respondents. But considering that the
resolution of the issues raised in and enjoined by the pleadings in the main
case, would virtally affect the rights not only the original parties but also of
the berein petitioner: that far from unduly delaying or prejudicing the
adjudication of the rights of the original parties or bringing about confusion in
the original case, the adnission of the complaint in intervention would help
clarify the vital issue of the true and real ownership of the materials involved,
besides preventing an abhorrent munltiplicity of suit, we believe that the
motion to intervene should be given due to cause.
We find no reason for disturbing the foregoing pronouncements. The Government
argues that "Price . . . is always paid in terms of money and the supposed payment
beeing in kind, it is no payment at all, "citing Article 1458 of the new Civil Code.
However, the same Article provides that the purschaser may pay "a price certain in
money or its equivalent," which means that they meant of the price need not be in
money. Whether the G.I. sheets, black sheets, M. S. Plates, round bars and G. I.
pipes claimed by the respondent corporation to belong to it and delivered to the
Bureau of Prison by Macario Apostol in payment of his account is sufficient payment
therefore, is for the court to pass upon and decide after hearing all the parties in the
case. Should the trial court hold that it is as to credit Apostol with the value or price of
the materials delivered by him, certainly the herein respondent corporation would be
affected adversely if its claim of ownership of such sheets, plates, bars and pipes is
true.
The Government reiterates in its original stand that counsel appearing for the
respondent corporation has no authority to represent it or/and sue in its behalf, the
Court of Appeals held that:
Respondents aver also that petitioner lacks legal capacity to sue and that its
counsel is acting merely in an individual capacity without the benefit of the
corporate act authorizing him to bring sue. In this connection, respondents
invoked among others section 20 of Rule 127 which provision, in our opinion,
squarely disproves their claim as by virtue thereof, the authority of
petitioner's counsel is pressumed. Withal, the claim of the counsel for the
petitioner that a resolution to proceed against Apostol, had been
unanonimously adopted by the stockholders of the corporation, has not been
refuted.
Evidently, petitioner is a duly organized corporation with offices at the
Samanillo Building and that as such, it is endowed with a personality distinct
and separate from that of its president or stockholders. It has the right to
bring suit to safeguard its interests and ordinarily, such right is exercised at
the instance of the president. However, under the circumstance now
obtaining, such right properly devolves upon the other officers of the
corporations as said right is sought to be exercised against the president
himself who is the very object of the intended suit.
The power of a corporation to sue and be sued in any court 1 is lodged in the board of
directors which exercises it corporater powers,2 and not in the president, as
contended by the Government. The "motion for admission of complaint in
intervention" (Annex C) and the "complaint in intervention" attached thereto, signed by
counsel and filed in the Court of First Instance begin with the following statement:
"COMES NOW the above-name Intervenor, by its undersigned counsel, . . . , "and
underneath his typewritten name is affixed the description" Counsel for the
Intervenor." As counsels authority to appeal for the respondent corporation was
newer questioned in the Court of First Instance, it is to be pressumed that he was
properly authorized to file the complaint in intervention and appeal for his client. 1 It
was only in the Court of Appeals where his authority to appear was questioned. As
the Court of Appeals was satisfied that counsel was duly authorized by his client to
file the complaint does in intervention and to appear in its behalf, hte resolution of the
Court of Appeals on this point should not be disturbed.

Granting that counsel has not been actually authorized by the board of directors to
appear for and in behalf of the respondent corporation, the fact that counsel is the
secretary treasurer of the respondent corporation and member of the board of
directors; and that the other members of the board, namely, Macario Apostol, the
president, and his wife Pacita R. Apostol, who shuold normally initiate the action to
protect the corporate properties and in interest are the ones to be adversely affected
thereby, a single stockholder under such circumstances may sue in behalf of the
corporation.2 Counsel as a stockholder and director of the respondent corporation
may sue in its behalf and file the complaint in intervention in the proper court.

The judgment under review is affirmed, without pronouncements as to costs.