Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-20659             November 3, 1923

MARIANO S. TUASON, plaintiff-appellant,
vs.
CRISANTO MARQUEZ, defendant-appellee.

Ramon Sotelo for appellant.

Emiliano T. Tirona for appellee.

MALCOLM, J.:

Out of the vicissitudes of the unfortunate Electric Light Company of Lucena, Tayabas, has arisen the
present litigation between Mariano S. Tuason, plaintiff and appellant, and Crisanto Marquez,
defendant and appellee. The facts are not in dispute, and the legal phases of the case are fairly
evident.

On March 5, 1921, Crisanto Marquez, the owner of the electric light plan of Lucena Tayabas,
called Sucesores del Lucena Electric, gave an option to Antonio Tuason for the purchase of the
plant for P14,400. The option was taken advantage of by Mariano S. Tuason, the real principal, on
the 9th of the same month and year, and the contracts as then formulated was ratified before a
notary public on the 18th of the month and year. The agreement was, that Tuason was to pay
Marquez a total of P14,400; P2,400 within sixty days, and the remainder, P12,000, within a year.
The first installment was paid subsequent to the sixty-day period; the second installment has not
been paid.

Tuason being once in possession of the electric light plant, it was run under the management of the
Consolidated Electric Company for about sixteen months, that is, from March 20, 1921, to July 19,
1922. On the date last mentioned, the property was sold under execution by reason of a judgment in
the case of Levy Hermanos vs. The Philippine Electric Light Company. The purchaser at said sale
was Gregorio Marquez, brother of Crisanto Marquez, who paid P5,501.57 for the property.

With this general background of the controversy, we have to give special attention to one clause in
the contract and its antecedents. The contract Exhibit B entered into by Tuason and Marquez
included as a portion of the property sold by Marquez to Tuason "el derecho a la franquicia
concedido a la Compañia para la explotacion de la industria a que la misma esta dedicada."

It appears that originally in either 1913 or 1914, a franchise for thirty-five years was granted the
Lucena Electric Company. The rights of this company passed to Crisanto Marquez at a sheriff's sale
on September 10, 1919. The company seems never to have functioned very efficiently either at that
time or at any other time, as appears from the constant complaint of the municipal authorities of
Lucena. Evidently, Marquez became disgusted with the business, with the result that on February
28, 1921, that is, prior to the accomplishment of the contract, he announced to the Public Utility
Commissioner his intention to give up the franchise. On March 29, 1921, that is, subsequent to the
accomplishment of the contract, the Public Utility Commissioner took action and declared cancelled
the franchise acquired by Crisanto Marquez from the Lucena Electric Light, Ice & Water Company.

Tuason and his outfit were permitted to operate the company pursuant to a special license which
was to continue until they obtained a new franchise. The new franchise was finally granted by the
Public Utility Commissioner with certain conditions, which amounted to a renovation of the entire
plant. It was then, following a knowledge of what was expected by the Government, and following
the execution sale, that Tuason conceived the idea of bringing action against Marquez for a
rescission of the contract.

In the complaint filed in the Court of First Instance of Manila, Mariano S. Tuason, the plaintiff, asked
for judgment against Crisanto Marquez, defendant, for a total of P37,400. The answer and cross-
complaint of the defendant asked for a dismissal of the action and for an allowance of a total of
P12,654.50 from the plaintiff. The case was submitted on an agreed statement of facts in relation
with certain telegrams of record. Judgment was rendered, absolving the defendant from the
complaint and permitting the defendant to recover from the plaintiff P12,240, with legal interest from
August 1, 1922. Parenthetically, it may be explained that P12,000 of this judgment represented the
amount still due on the contract, and P240 represented rent which the plaintiff was expected to pay
the defendant.

The plaintiff claims in effect that the contract should be rescinded and that he should be allowed his
damages, on account of the misrepresentation and fraud perpetrated by the defendant in selling an
electric light plan with a franchise, when the defendant had already given up his rights to that
franchise. In this connection, however, it should be emphasized that the contract in making mention
of the property of the electric light company, merely renewed a previous inventory of the property.
The franchise, therefore, was not the determining cause of the purchase. Indeed, the franchise was
then in force and either party could easily have ascertained its status by applying at the office of the
Public Utility Commissioner. The innocent non-disclosure of a fact does not effect the formation of
the contract or operate to discharge the parties from their agreement. The maxim caveat
emptor should be recalled.

The equitable doctrine termed with questionable propriety "estoppel by laches," has particular
applicability to the facts before us. Inexcusable delay in asserting a right and acquiescene in existing
conditions are a bar to legal action. The plaintiff operated the electric light plant for about sixteen
months without question; he made the first payment on the contract without protest; he bestirred
himself to secure what damages he could from the defendant only after the venture had proved
disastrous and only after the property had passed into the hands of a third party.  lawphil.net

We find no proof of fraud on the part of the defendant and find the plaintiff in estopped to press his
action.

In accordance with the foregoing, we are clearly of the opinion that judgment should be, as it is
hereby affirmed, with costs against the appellant. So ordered.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 110672 September 14, 1999

RURAL BANK OF STA. MARIA, PANGASINAN, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, ROSARIO R. RAYANDAYAN, CARMEN R.
ARCEÑO, respondents.

G.R. No. 111201 September 14, 1999

ROSARIO R. RAYANDAYAN and CARMEN R. ARCEÑO, petitioners,

vs.
COURT OF APPEALS, HALSEMA INC. and RURAL BANK OF STA. MARIA, PANGASINAN,
INC., respondents.

GONZAGA-REYES, J.:

Before us are two consolidated 1 petitions for review on certiorari under Rule 45 of the Revised Rules of
Court. In G.R. No. 110672, petitioner Rural Bank of Sta. Maria, Pangasinan, assails portions of the
Decision dated March 17, 1993, and the Resolution dated January 25, 1993, of the Court of Appeals 2 in
CA-G.R. CV No. 21918, which affirmed with modification the Decision of the Regional Trial Court (Branch
6, Baguio City) 3 in Civil Case No. 890-R entitled "Rosario R. Rayandayan and Carmen R. Arceño versus
Rural Bank of Sta. Maria, Pangasinan and Halsema, Inc." In G.R. No. 111201, petitioners Rosario R.
Rayandayan and Carmen R. Arceño likewise assail portions of said Decision adverse to it.

The facts as found by the trial court and adopted by the Court of Appeals insofar as pertinent to the
instant petitions are as follows:

. . ., the Court Finds that a parcel of land of about 49,969 square meters, located in
Residence Section J, Camp 7, Baguio City, covered by TCT T-29817 (land for short)
is registered in the name of Manuel Behis, married to Cristina Behis (Exhibit "B").
Said land originally was part of a bigger tract of land owned by Behis (one name),
father of Manuel Behis, covered by OCT-0-33 (Exhibit "26", Halsema, for history of
the land). And upon the latter's death on September 24, 1971, his children, namely:
Saro Behis, Marcelo Behis, Manuel Behis, Lucia Behis, Clara Behis and Arana
Behis, in an extrajudicial settlement with Simultaneous Sale of Inheritance
dated September 28, 1978, agreed to sell the land to Manuel Behis, married to
Cristina Behis (Exhibit "2", Halsema) but which subsequently was explained as only
an arrangement adopted by them to facilitate transactions over the land in a
Confirmation of Rights of Co-Ownership over real Property dated September 26,
1983, showing that the Behis brothers and sisters, including Manuel Behis, are still
co-owners thereof (Exhibit "30", Halsema, Exhibit "AA").
Manuel Behis mortgaged said land in favor of the Bank in a Real Estate Mortgage
dated October 23, 1978 (Exhibit "Q-1") as security for loans obtained, covered by six
promissory notes and trust receipts under the Supervised Credit Program in the total
sum of P156,750.00 (Exhibit "Q-2" to "Q-7", Exhibits "4-A" to "4-F", Halsema) and
annotated at the back of the title on February 13, 1979 as Entry No. 85538-10-231
(Exhibit "1-A-1", Halsema). The mortgage, the promissory notes and trust receipts
bear the signatures of both Manuel Behis and Cristina Behis.

Unfortunately thereafter, Manuel Behis was delinquent in paying his debts.

On January 9, 1985, Manuel Behis sold the land to the plaintiffs 4 in a Deed of

Absolute Sale with Assumption of Mortgage for the sum of P250,000.00 (Exhibit "A")
which bears the signature of his wife Cristina Behis. Manuel Behis took it upon himself to
secure the signature of his wife and came back with it. On the same date of January 9,
1985, plaintiffs and Manuel Behis simultaneously executed another Agreement
(Exhibit "15") whereby plaintiffs are indebted to Manuel Behis for the sum of
P2,400,000.00 payable in installments with P10,000.00 paid upon signing and in case of
default in the installments, Manuel Behis shall have legal recourse to the portions of the
land equivalent to the unpaid balance of the amounts in installments. Obviously, the real
consideration of the sale of the land of Manuel Behis to the plaintiffs is contained in this
Agreement (Exhibit "15").

Plaintiffs did not present to the Register of Deeds of Baguio said two contracts and
ask that the title, TCT T-29817 in the name of Manuel Behis be cancelled and a new
one issued in their name which normally a buyer does. Neither did plaintiffs annotate
at the back of the title the aforesaid two contracts. Nor did they immediately go to the
Bank and present said two contracts. Thus, the title to the land, TCT No. T-29817,
remained in the name of Manuel Behis.

Pursuant to their two contracts with Manuel Behis, plaintiffs paid him during his
lifetime the sum of P10,000.00 plus P50,000.00 plus P145,800.00 (Exhibit "U" as
stipulated in the hearing), and the sum of P21,353.75 for the hospitalization, medical
and burial expenses of Manuel Behis when he died on June 21, 1985 (Exhibit "II",
"JJ", "KK", "LL", "PP", "OO", and "RR"). Obviously, from the above payments, the
plaintiffs were unable to complete their full payment to Manuel Behis of the sale of
the land as it is nowhere near P2,400,000.00.

Meantime, the loan in the name of Manuel Behis with the Bank secured by the Real
Estate Mortgage on the land continued to accumulate being delinquent. By May 30,
1985, in a Statement of Account (Exhibit "D") sent to Manuel Behis by the Bank thru
the Paredes Law Office for collection, the debt of P150,750.00 has ballooned into
P316,368.13, with interest and other charges. In fact, the Bank, thru its President,
Vicente Natividad, initiated foreclosure proceedings. But after the usual publication,
the same was discontinued since many parties were interested to buy the land
outside the said procedure but none materialized.

On June 19, 1985, Atty. William Arceño, in behalf of Manuel Behis, wrote a letter
asking for a more detailed Statement of Account from the Bank broken down as to
principal, interest and other charges (Exhibit "E").

Thereafter, plaintiffs finally presented the Deed of Absolute Sale with Assumption of
Mortgage (Exhibit "A") to the Bank when negotiating with its principal stockholder,
Engr. Edilberto Natividad, in Manila, but did not show to the latter the Agreement
(Exhibit "15") with Manuel Behis providing for the real consideration of
P2,400,000.00. And thus, on August 1, 1985, a Memorandum of Agreement (Exhibit
"F") was entered into between plaintiffs, as assignees of Manuel Behis, and the
Bank, the salient features of which are:

xxx xxx xxx

3. That during the lifetime of Manuel Behis he had executed a Deed

of Absolute Sale with Assumption of Mortgage in favor of Carmen
Arceño and Rosario Rayandayan;

4. That the total obligation of the late Manuel Behis to the Bank
amounts to P343,782.22;

5. That the assignees hereby offer to redeem the aforesaid real

property and the Bank hereby agrees to release the mortgage
thereon under the following terms and conditions:

(a). That the amount of P35,000.00 shall be paid by

the assignees to the Bank upon execution of this
Agreement;

(b). That the amount of P108, 000.00 shall be paid by

the assignees to the Bank at the rate of P36,000.00 a
month payable on September 15, 1985, October 15,
1985 and November 15, 1985;

(c). That the balance of P200,000.00 shall be

renewed for one year and shall be secured by another
mortgage over the same property which is renewable
every year upon payment of interests and at least 10
percent of the principal;

(d). That the bank shall release the mortgage of

Manuel Behis and a new mortgage shall be executed
by the assignees and the bank shall give its consent
for the transfer of the title under the name of the
assignees.

xxx xxx xxx.

Plaintiffs did not annotate the Memorandum of Agreement in the title, TCT T-29817.

Pursuant to the Memorandum of Agreement, plaintiffs paid the Bank the following:

(1) P35,000.00 on August 1, 1985 as initial deposit

when the Agreement was signed (Exhibits "G" and
"H");
 (2) P15,000.00 on September 16, 1985 (Exhibit "I")
and P21,000.00 on September 20, 1985 (Exhibit "J")
to cover the obligation of P36,000.00 on September
15, 1985;

(3) P20,000.00 on October 17, 1985 (Exhibit "K") and

P16,000.00 on October 25, 1985 (Exhibit "L") to cover
the obligation to pay P36,000.00 on October 15,
1985;

(4) P36,000.00 in the form of dollars remitted to Engr.

Edilberto Natividad on December 18, 1985 (Exhibit
"N") to cover the obligation to pay P36,000.00 on
November 15, 1985.

After the last payment of P36,000.00 on December 18, 1985, received in dollars
(Exhibit "N") which completed the P143,000.00 under paragraphs 5 (a) and 5 (b) of
the memorandum of Agreement Engr. Edilberto Natividad, wrote a letter (Exhibit "M")
to Vicente Natividad, with instructions that payment be duly credited and Atty. Arceño
will communicate about the transfer of title to them and to consult the Bank's counsel
on the matter, and with instructions also to Ana Acosta of the Rural Bank of Tuba to
debit said amount from the savings of Edilberto Natividad. . . ..

From the above payments made, the total amount of P143,000.00 as required by
paragraphs 5 (a) and 5 (b) of the Memorandum of Agreement was fully paid by
plaintiffs although they were not paid on time.

Meanwhile, on September 5, 1985, Cristina Behis, widow of Manuel Behis, wrote a

letter to the Bank (Exhibit "3", Halsema) claiming the Real Estate mortgage was
without her signature. And in another letter dated October 28, 1985 to the Bank
(Exhibit 4, Halsema), Cristina Behis stressed she did not authorize anybody to
redeem the property in her behalf as one of the mortgagors of the land.

On January 7, 1986, plaintiffs demanded in a letter (Exhibit "O") that the

Bank comply with its obligation under the Memorandum of Agreement to (1) release
the mortgage of Manuel Behis, (2) give its consent for the transfer of title in the name
of the plaintiffs, and (3) execute a new mortgage with plaintiffs for the balance of
P200,000.00 over the same land.

Meanwhile on January 18, 1986, Cristina Behis went to the Bank inquiring about her
protest about her signature. The Bank told her it did not receive her two letters and
instead advised her to write the Bank again as well as the plaintiffs about her
objections.

In a reply letter dated February 11, 1986, (Exhibit "B") to the demand of the plaintiffs,
the Bank said it cannot comply because of supervening circumstances, enclosing the
two letters of Cristina Behis dated September 5, 1985 and October 28, 1985 which
they said were both self explanatory, and suggested that plaintiffs take up the matter
with Mrs. Cristina Behis.

On February 15, 1986, as suggested by the Bank, Cristina Behis wrote another letter
to the Bank claiming this time that she was not a party to the Deed of Absolute Sale
with Assumption of Mortgage and her signature was forged (Exhibit "5", Halsema)
and requesting the Bank not to release the title with copy furnished to the plaintiffs
(Exhibit "5-B", Halsema).

Then, months passed, and nothing was heard from the plaintiffs by the Bank. On the
first week of July, 1986, Teodoro Verzosa, President of Halsema, Inc., heard about
the land and got interested and had preliminary talks with Vicente Natividad,
President of the Bank, and with Edilberto Natividad, the principal stockholder of the
bank.

xxx xxx xxx

. . ., upon suggestion of the lawyer of Halsema, an Assignment of Mortgage was

entered into on July 28, 1986 between Halsema and the Bank for the consideration
of P520,765.45 (Exhibit "1", Bank) which amount was the total indebtedness of
Manuel Behis with the Bank at the time (Exhibit "7-A", Halsema). Note however, that
what was assigned was the Mortgage made originally by Manuel Behis and not the
Mortgage as assumed by plaintiffs under a restructured and liberalized terms. 1âwphi1.nêt

As explained by Halsema lawyer, she suggested the Assignment of Mortgage as the

cheapest and fastest way for Halsema to acquire the property of Manuel Behis as (1)
they assume the role of the Bank as Mortgagee with the assignment of mortgage
credit, (2) they acquire the property for the amount only of the mortgage debt at the
time, (3) after execution thereof, the Bank is out of the picture, and (4) in case of
foreclosure, Halsema controls the foreclosure proceedings and is assured of its
legality.

In turn, the Bank explained it entered into the Assignment of Mortgage because at
the time it considered the Memorandum of Agreement cancelled as first, plaintiffs
failed to settle the objections of Cristina Behis aforesaid on her signature being
forged in the Deed of Sale with Assumption of Mortgage despite the lapse of time
from February, 1986 to July, 1986. Second, the terms of the Memorandum of
Agreement have not been fully complied with as the payments were not made on
time on the dates fixed therein; and third, their consent to the Memorandum of
Agreement was secured by the plaintiffs thru fraud as the Bank was not
shown the Agreement containing the real consideration of P2,400.000.00 of the sale
of the land of Manuel Behis to plaintiffs.

On the same date of July 28, 1986, Vicente Natividad of the Bank sent notice of the
Assignment of Mortgage to the debtor mortgagor, Manuel Behis (already dead at the
time) and Cristina Behis. Notice of the Assignment of Mortgage was not sent to
plaintiffs for as aforesaid what was assigned was the Mortgage originally made by
Manuel Behis and not the Mortgage as assumed by plaintiffs under the restructured
and liberalized terms in the Memorandum of Agreement which was considered by
the Bank as cancelled.

xxx xxx xxx

After the assignment of mortgage, the Bank returned the P143,000.00 to plaintiffs
(Exhibit "13", Bank). But the latter rejected the same maintaining the Memorandum of
Agreement is valid until annulled by Court Action. Subsequently, however, the Bank
 paid plaintiffs P143,000.00 and P90,000.00 interest in settlement of the criminal case
of Estafa against Edilberto Natividad and Vicente Natividad (Exhibit "14", Bank).

In the meantime, since the account of the late Manuel Behis has been delinquent
and his widow, Cristina Behis, and his brothers and sisters could not pay as in fact
they have already assigned their rights to redeem, Halsema as Mortgage Creditor in
place of the Bank instituted foreclosure proceedings by filing an Application for
Foreclosure of Real Estate Mortgage in the Office of the Sheriff on July 31, 1986
(Exhibit "37", Halsema) setting the public auction sale on September 2, 1986 and
was published and posted as required by law. A Notice of Foreclosure was sent
directly to the mortgagor (Exhibit "38", Halsema) and the public auction sale was held
on September 2, 1986 at 10:00 a.m. at the City Hall, Baguio City, with Halsema as
the only bidder to whom accordingly the Sheriff's Certificate of Sale was issued
(Exhibit "8", Halsema).

At the auction sale, the lawyer of Halsema was approached by the plaintiff Rosario
Rayandayan who told the former that the land foreclosed was also sold to the
plaintiffs. Since plaintiffs could not do anything anymore, they registered and
annotated on the title, TCT T-29817, their adverse claim on September 3, 1986. 5

Since the Bank could not comply with the Memorandum of Agreement, petitioners Rayandayan and
Arceño instituted Civil Case No. 890-R before the Regional Trial Court of Baguio City (Branch 6)
against the Rural Bank of Sta. Maria, Pangasinan and Halsema, Inc. for "Specific Performance,
Declaration of Nullity and/or Annulment of Assignment of Mortgage and Damages" on September 5,
1986, and caused a notice of lis pendens annotated at the back of the title, TCT T-29817, on the
same date. On March 6, 1989, judgment was rendered, the dispositive portion of the decision
pertinent to this case reads:

WHEREFORE, in view of All the Foregoing, Judgment is hereby rendered, as

follows:

1. xxx xxx xxx;

2. Declaring the Deed of Sale with assumption of Mortgage (Exhibit

"A") and the Agreement (Exhibit "15") taken together valid until
annulled or cancelled;

3. Ordering the Bank to pay the plaintiffs the sum of P30,000.00 as

Moral Damages, P10,000.00 as Exemplary Damages, P20,000.00 as
Attorney's fees and P5,000.00 as litigation expenses for their bad
faith in violating the Memorandum of Agreement which took place
while the Memorandum of Agreement was still valid there being no
court action first filed to nullify it before entering into the Assignment
of Mortgage;

4. Ordering the plaintiffs to pay the Bank the sum of P30,000.00 as

Moral Damages, P10,000.00 as Exemplary Damages, P20,000.00 as
Attorney's fees and P5,000.00 as litigation expenses for plaintiffs' bad
faith in deceiving the Bank to enter into the Memorandum of
Agreement;
 5. Ordering the setting off in compensation the Damages awarded to
plaintiffs and the Bank.

6. xxx xxx xxx;

7. Declaring the Memorandum of Agreement as annulled due to the

fraud of plaintiffs;

8. xxx xxx xxx;

9. xxx xxx xxx;

10. xxx xxx xxx,

Without pronouncement as to costs.

SO ORDERED. 6

From the decision, plaintiffs Rayandayan and Arceño and defendant Halsema, Inc. appealed. Defendant
Rural Bank of Sta. Maria, Pangasinan did not appeal. 7 The Court of Appeals rendered herein assailed
decision, the dispositive portion insofar as pertinent to this case reads:

WHEREFORE, premises considered, decision is hereby rendered:

1. xxx xxx xxx;

2. xxx xxx xxx;

3. xxx xxx xxx;

4. Declaring the Deed of Absolute Sale with

Assumption of Mortgage, Exhibit A and the
Memorandum of Agreement, Exhibit F, valid as
between the parties thereto;

5. Ordering and sentencing defendant Rural Bank of

Sta. Maria, Pangasinan to pay plaintiffs-appellants the
sum of
P229,135.00 as actual damages, the sum of
P30,000.00 as moral damages, P10,000.00 as
exemplary damages, P20,000.00 as attorney's fees
and P5,000.00 as litigation expenses;

6. Affirming the dismissal of all other counterclaims for

damages;

7. Reversing and setting aside all other dispositions

made by the trial court inconsistent with this decision;

8. There is no pronouncement as to costs.

 SO ORDERED. 8

In sum, the Court of Appeals in its assailed decision: (1) affirmed the validity of the Memorandum of
Agreement between the parties thereto; (2) reversed and set aside the finding of the trial court on the bad
faith of Rayandayan and Arceño in concealing the real purchase price of the land sold to them by Manuel
Behis during negotiations with the bank on the assumption of the mortgage debt; (3) modified the trial
court's finding as to the damages due Rayandayan and Arceño from the bank by adding P229,135.00 as
actual damages: (4) dismissed the counterclaim for damages by the bank and deleted the portion on the
set-off of damages due between the bank on the one hand, and Rayandayan and Arceño on the other.

Motions for reconsideration were filed by plaintiffs-appellants Rayandanan and Arceño and
defendant Rural Bank of Sta. Maria, Pangasinan which were denied for lack of merit. 9

Hence, the instant consolidated petitions.

In a Resolution dated August 25, 1993, this Court denied the petition for review on certiorari (G.R.
No. 111201) filed by Rayandayan and Arceño for having been filed out of time and for late payment
of docket fees. 10 Petitioners Rayandayan and Arceño moved to reconsider; this Court in a Resolution
dated November 22, 1993, resolved to deny the same with finality considering petitioners failed to show
any compelling reason and to raise any substantial argument which would warrant a modification of the
said resolution. 11

What remains for resolution then is G.R. No. 110672, wherein petitioner Rural Bank of Sta. Maria,
Pangasinan, contends that:

THE MEMORANDUM OF AGREEMENT (EXH. "F") ENTERED INTO BETWEEN

PRIVATE RESPONDENTS, AS ALLEGED ASSIGNEES OF MANUEL BEHIS, AND
PETITIONER BANK IS VOIDABLE AND MUST BE ANNULLED.

II

PRIVATE RESPONDENTS ARE IN BAD FAITH, HENCE, THEY ARE NOT

ENTITLED TO THE SUMS OF P30,000.00 AS MORAL DAMAGES; P10,000.00 AS
EXEMPLARY DAMAGES; P20,000.00 AS ATTORNEY'S FEES; AND P5,000.00 AS
LITIGATION EXPENSES. 12

The petition is devoid of merit.

Briefly, the antecedents material to this appeal are as follows: A Deed of Absolute Sale with
Assumption of Mortgage was executed between Manuel Behis as vendor/assignor and Rayandayan
and Arceño as vendees/assignees for the sum of P250,000.00. On the same day, Rayandayan and
Arceño together with Manuel Behis executed another Agreement embodying the real consideration
of the sale of the land in the sum of P2,400,000.00. Thereafter, Rayandayan and Arceño negotiated
with the principal stockholder of the bank, Engr. Edilberto Natividad in Manila, for the assumption of
the indebtedness of Manuel Behis and the subsequent release of the mortgage on the property by
the bank. Rayandayan and Arceño did not show to the bank the Agreement with Manuel Behis
providing for the real consideration of P2,400,000.00 for the sale of the property to the former.
Subsequently, the bank consented to the substitution of plaintiffs as mortgage debtors in place of
Manuel Behis in a Memorandum of Agreement between private respondents and the bank with
restructured and liberalized terms for the payment of the mortgage debt. Instead of the bank
foreclosing immediately for non-payment of the delinquent account, petitioner bank agreed to
receive only a partial payment of P143,000.00 by installment on specified dates. After payment
thereof, the bank agreed to release the mortgage of Manuel Behis; to give its consent to the transfer
of title to the private respondents; and to the payment of the balance of P200,000.00 under new
terms with a new mortgage to be executed by the private respondents over the same land.

This brings us to the first issue raised by petitioner bank that the Memorandum of Agreement is
voidable on the ground that its consent to enter said agreement was vitiated by fraud because
private respondents withheld from petitioner bank the material information that the real consideration
for the sale with assumption of mortgage of the property by Manuel Behis to Rayandayan and
Arceño is P2,400,000.00, and not P250,000.00 as represented to petitioner bank. According to
petitioner bank, had it known of the real consideration for the sale, i.e. P2.4 million, it would not have
consented into entering the Memorandum of Agreement with Rayandayan and Arceño as it was put
in the dark as to the real capacity and financial standing of private respondents to assume the
mortgage from Manuel Behis. Petitioner bank pointed out that it would not have assented to the
agreement, as it could not expect the private respondents to pay the bank the approximately
P343,000.00 mortgage debt when private respondents have to pay at the same time P2,400,000.00
to Manuel Behis on the sale of the land.

The kind of fraud that will vitiate a contract refers to those insidious words or machinations resorted
to by one of the contracting parties to induce the other to enter into a contract which without them he
would not have agreed to. 13 Simply stated, the fraud must be the determining cause of the contract, or
must have caused the consent to be given. It is believed that the non-disclosure to the bank of the
purchase price of the sale of the land between private respondents and Manuel Behis cannot be the
"fraud" contemplated by Article 1338 of the Civil Code. 14 From the sole reason submitted by the petitioner
bank that it was kept in the dark as to the financial capacity of private respondents, we cannot see how
the omission or concealment of the real purchase price could have induced the bank into giving its
consent to the agreement; or that the bank would not have otherwise given its consent had it known of the
real purchase price.

First of all, the consideration for the purchase of the land between Manuel Behis and herein private
respondents Rayandayan and Arceño could not have been the determining cause for the petitioner
bank to enter into the memorandum of agreement. To all intents and purposes, the bank entered into
said agreement in order to effect payment on the indebtedness of Manuel Behis. As correctly ruled
by the Court of Appeals:

. . . . The real consideration for the sale with assumption of mortgage, or the non-
disclosure thereof, was not the determining influence on the consent of the bank.

The bank received payments due under the Memorandum of Agreement, even if
delayed. It initially claimed that the sale with assumption of mortgage was invalid not
because of the concealment of the real consideration of P2,400,000.00 but because
of the information given by Cristina Behis, the widow of the mortgagor Manuel Behis
that her signature on the deed of absolute sale with assumption of mortgage was
forged. Thus, the alleged nullity of the Memorandum of Agreement, Exhibit F, is a
clear afterthought. It was raised by defendant bank, by way of counterclaim only after
it was sued.

The deceit which avoids the contract exists where the party who obtains the consent
does so by means of concealing or omitting to state material facts, with intent to
deceive, by reason of which omission or concealment the other party was induced to
give a consent which he would not otherwise have given (Tolentino, Commentaries
 and Jurisprudence on the Civil Code, Vol. IV, p. 480). In this case, the consideration
for the sale with assumption of mortgage was not the inducement to defendant bank
to give a consent which it would not otherwise have given.

Indeed, whether the consideration of the sale with assumption of mortgage was
P250,000.00 as stated in Exhibit A, or P2,400,000.00 as stated in the Agreement,
Exhibit 15, should not be of importance to the bank. Whether it was P250,000.00 or
P2,400,000.00 the bank's security remained unimpaired.

The stipulation in Exhibit 15, reading "in case of default in all of the above, Manuel
Behis shall have legal recourse to the portion of the parcel of land under TCT No. T-
29817 equivalent to the unpaid balance of the amount subject of this Agreement",
obviously even if revealed would not have induced defendant bank to withhold its
consent. The legal recourse to TCT No. T-29817 given to Manuel Behis, under the
Agreement, is subordinate and inferior to the mortgage to the bank.

We are, therefore, constrained to uphold the validity of the Memorandum of

Agreement, Exhibit F, and reverse and set aside the ruling declaring the same
annulled allegedly due to fraud of plaintiffs-appellants (paragraph 7, dispositive
portion).

With the above conclusion reached, the award of moral and exemplary damages,
attorney's fees and expenses of litigation in favor of defendant bank and against
plaintiffs-appellants in paragraph 4 of the dispositive portion of the decision of the
trial court must likewise be reversed and set aside; and similarly, paragraph 5. The
basis for the award, which we quote "for plaintiffs' bad faith in deceiving the Bank to
enter into the Memorandum of Agreement" is not correct as we have discussed. 15

Secondly, pursuant to Article 1339 of the Civil Code 16, silence or concealment, by itself, does not
constitute fraud, unless there is a special duty to disclose certain facts, or unless according to good faith
and the usages of commerce the communication should be made. Verily, private respondents
Rayandayan and Arceño had no duty, and therefore did not act in bad faith, in failing to disclose the real
consideration of the sale between them and Manuel Behis.

Thirdly, the bank had other means and opportunity of verifying the financial capacity of private
respondents and cannot avoid the contract on the ground that they were kept in the dark as to the
financial capacity by the non-disclosure of the purchase price. As correctly pointed out by
respondent court, the bank security remained unimpaired regardless of the consideration of the sale.
Under the terms of the Memorandum of Agreement, the property remains as security for the
payment of the indebtedness, in case of default of payment. Thus, petitioner bank does not and can
not even allege that the agreement was operating to its disadvantage. In fact, the bank admits that
no damages has been suffered by it. 17

Consequently, not all the elements of fraud vitiating consent for purposes of annulling a contract concur,
to wit: (a) It was employed by a contracting party upon the other; (b) It induced the other party to enter
into the contract; (c) It was serious; and; (d) It resulted in damages and injury to the party seeking
annulment. 18 Petitioner bank has not sufficiently shown that it was induced to enter into the agreement by
the non-disclosure of the purchase price, and that the same resulted in damages to the bank. Indeed, the
general rule is that whosoever alleges fraud or mistake in any transaction must substantiate his
allegation, since it is presumed that a person takes ordinary care for his concerns and that private
transactions have been fair and regular. Petitioner bank's allegation of fraud and deceit have not been
established sufficiently and competently to rebut the presumption of regularity and due execution of the
agreement.
Based on the foregoing, the second issue raised by petitioner bank must likewise fail. Petitioner
bank's imputation of bad faith to private respondents premised on the same non-disclosure of the
real purchase price of the sale so as to preclude their entitlement to damages must necessarily be
resolved in the negative. Petitioner bank does not question the actual damages awarded to private
respondents in the amount of P229,135.00, but only the moral damages of P30,000.00, exemplary
damages of P10,000.00, attorney' s fees of P20,000.00 and litigation expenses of P5,000.00. We
may no longer examine the amounts awarded by the trial court and affirmed by the appellate court
as petitioner bank did not appeal from the decision of the trial court. It is well-settled that a party who
does not appeal from the decision may not obtain any affirmative relief from the appellate court other
than what he has obtained from the lower court, if any, whose decision is brought up on appeal. 19

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals, dated March 17,
1993 is AFFIRMED. No costs. 1âwphi1.nêt

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-29449          December 29, 1928

LEODEGARIO AZARRAGA, plaintiff-appellee,
vs.
MARIA GAY, defendant-appellant.

Araneta and Zaragoza for appellant.

Azarraga and Panis for appellee.

VILLAMOR, J.:

By a public document Exhibit A, dated January 17, 1921, the plaintiff sold two parcels of lands to the
defendant for the lump sum of P47,000, payable in installments.

The conditions of the payment were: P5,000 at the time of signing the contract Exhibit A; P20,000
upon delivery by the vendor to the purchaser of the Torrens title to the first parcel described in the
deed of sale, P10,000 upon delivery by the vendor to the purchaser of Torrens title to the second
parcel; and lastly the sum of P12,000 one year after the delivery of the Torrens title to the second
parcel.

The vendee paid P5,000 to the vendor when the contract was signed. The vendor delivered the
Torrens title to the first parcel to the vendee who, pursuant to the agreement, paid him P20,000. In
the month of March 1921, Torrens title to the second parcel was issued and forthwith delivered by
the vendor to the vendee who, however, failed to pay the P10,000 as agreed, neither did she pay the
remaining P12,000 one year after having received the Torrens title to the second parcel.

The plaintiff here claims the sum of P22,000, with legal interest from the month of April 1921 on the
sum of P10,000, and from April 1922 on the sum of P12,000, until full payment of the amounts
claimed.

The defendant admits that she purchased the two parcels of land referred to by plaintiff, by virtue of
the deed of sale Exhibit A, but alleges in defense: (a) That the plaintiff knowing that the second
parcels of land he sold had an area of 60 hectares, by misrepresentation lead the defendant to
believe that said second parcel contained 98 hectares, and thus made it appear in the deed of sale
and induced the vendee to bind herself to pay the price of P47,000 for the two parcels of land, which
he represented contained an area of no less than 200 hectares, to which price the defendant would
not have bound herself had she known that the real area of the second parcel was 60 hectares, and,
consequently, she is entitled to a reduction in the price of the two parcels in proportion to the area
lacking, that is, that the price be reduced to P38,000; (b) that the defendant, in addition to the
amounts acknowledged by the plaintiff, had paid other sums amounting to P4,000; and (c) that the
defendants never refused to pay the justly reduced price, but the plaintiff refused to receive the just
amount of the debt.

And by way of cross-complaint, the defendant prays that she be indemnified in the sum of P15,000
for damages sustained by her by reason of the malicious filing of the instant complaint.

The plaintiff, replying to the amended answer, alleges that the contract of sale in question was made
only for the lump sum of P47,000, and not at the rate of so much per hectare, and that the
defendant's claim for alleged damages has prescribed.

The lower court, having minutely analyzed the evidence adduced by the parties held that neither the
plaintiff nor the defendant gave any importance to the area of the land in consenting to the contract
in question, and that there having been no fraud when the parties agreed to the lump sum for the
two parcels of land described in the deed Exhibit A, following article 1471 of the Civil Code, ordered
the defendant to pay the plaintiff the sum of P19,300 with legal interest at 8 per cent per annum from
April 30, 1921 on the sum of P7,300, and from April 30, 1922, on the sum of P12,000. And finally
dismissed the defendant's cross-complaint, without special pronuncement as to costs.

A motion for a new trial having been denied, this case was brought up to this court through the
proper bill of exceptions.

The appellant alleges that the trial court erred in not considering that the plaintiff induced the
defendant by deceit, to pay him the stipulated price for the two parcels he sold, stating falsely in the
deed of sale that the second of said parcels had an area of 98 hectares when he knew that in reality
it only had about 60 hectares more or less, or at least, if such deceit was not practised that mre that
there was a mistake on the part of Maria Gay in believing that said second parcel contained 98
hectares.

As a question of fact the trial court found from the evidence adduced by the parties, that the plaintiff
had not practised any deception in agreeing with the defendant upon the sale of the two parcels of
land described in Exhibit A. We concur with the trial court in this conclusion. It appears of record that
before the execution of the contract Exhibit A, the defendant went over the plaintiff's land and made
her wn calculations as to the area of said two parcels. But this not all. The plaintiff delivered to the
defendant the documents covering the land he was trying to sell. As to the first parcel there is no
question whatever and the defendant's contention is limited solely to the actual area of the second
parcel. The defendant had document Exhibit 4 in her possession which is the deed by which the
plaintiff acquired the land from the original owner, Crispulo Beramo, in which document it appears
that the area of the second parcel is about 70 hectares. It was the defendant who intrusted the
drawing of the deed of sale Exhibit A to her attorney and notary, Hontiveros, and it is to be presumed
that both she and the lawyer who drew the document Exhibit A, had read the contents of the
document Exhibit 4. The plaintiff declares that he signed the document between 5 and 7 in the
afternoon of that day and he did not pay any attention to the area of the second parcel, probably in
the belief that in the drawing of the document the data concerning the area of the land had been
taken from the said Exhibit 4. The defendant testified that she received from the plaintiff a note or
piece of paper containing the data to be inserted in the contract Exhibit A. The plaintiff denies this
and said note or piece of paper was not presented at the trial. We are of opinion that this testimony
of the defendant's is unimportant, because, in reality, if the plaintiff had delivered Exhibit 4 to the
defendant, there was no need to deliver to her another note to indicate the area of the second which
already appeared in the said Exhibit 4.

If, notwithstanding the fact that it appeared in Exhibit 4 that the area of the second parcel was,
approximately, 70 hectares, the defendant, however, stated in said document Exhibit A that said
second parcel contained 98 hectares as was admitted by him in his interviews with the plaintiff in the
months of April and June, 1924, then she has no right to claim from the plaintiff the shortage in area
of the second parcel. Furthermore, there is no evidence of record that the plaintiff made
representatin to the defendant as to the area of said second parcel, and even if he did make such
false representations as are now imputed to him by the defendant, the latter accepted such
representations at her own risk and she is the only one responsible for the consqunces of her
inexcusable credulousness. In the case of Songco vs. Sellner (37 Phil., 254), the court said:

The law allows considerable latitude to seller's statements, or dealer's talk; and experience
teaches that it as exceedingly risky to accept it at its face value.

Assertions concerning the property which is the subject of a contract of sale, or in regard to
its qualities and characteristics, are the usual and ordinary means used by sellers to obtain a
high price and are always understood as affording to buyers no grund from omitting to make
inquires. A man who relies upon such an affirmation made by a person whose interest might
so readily prompt him to exaggerate the value of his property does so at his peril, and must
take the consequences of his own imprudence.

The defendant had ample opportunity to appraise herself of the condition of the land which she
purchased, and the plaintiff did nothing to prevent her from making such investigation as she
deemed fit, and as was said in Songco vs. Sellner, supra, when the purchaser proceeds to make
investigations by himself, and the vendor does nothing to prevent such investigation from being as
complete as the former might wish, the purchaser cannot later allege that the vendor made false
representations to him. (National Cash Register Co. vs. Townsend, 137 N. C., 652; 70 L. R. A., 349;
Williamson vs. Holt, 147 N. C., 515.) The same doctrine has been sustained by the courts of the
United States in the following cases, among others: Misrepresentation by a vendor of real property
with reference to its area are not actionable, where a correct description of the property was given in
the deed and recorded chain of title, which the purchaser's agent undertook to investigate and report
upon, and the vendor made on effort to prevent a full investigation." (Shappirio vs. Goldberg, 48
Law. ed., 419.) "One who contracts for the purchase of real estate in reliance on the representations
and statements of the vendor as to its character and value, but after he has visited and examined it
for himself, and has had the means and opportunity of verifying such statements, cannot avoid the
contract on the ground that they were false or exaggerated." (Brown vs. Smith, 109 Fed., 26.)

That the defendant knew that the area of the second parcel was only about 70 hectares is shown by
the fact that she received the document Exhibit 4 before the execution of the contract Exhibit A, as
also Exhibit E-3 on September 30, 1920; which is the notification of the day for the trial of the
application for registratin of said parcel, wherein it appears that it had an area of 60 hectares more or
less, and by the fact that she received from the plaintiff in the month of June 1924 the copy of the
plans of the two parcels, wherein appear their respective areas; and yet, in spite of all this, she did
not complain of the difference in the area of said second parcel until the year 1926. Moreover, the
record contains several of the defendant's letters to the plaintiff in the years 1921 to 1925, in which
said defendant acknowledges her debt, and confining herself to petitioning for extentions of time
within which to make payment for the reasons given therein. But in none of these letters is there any
allusion to such lack of area, nor did she complain to the plaintiff of the supposed deceit of which she
believes she is a victim. All of which, in our opinion, shows that no such deceit was practised, as the
trial court rightly found.
As to the alleged error to the effect that the trial court failed to order the reduction from the price due
on the second parcel as stated in the contract of sale Exhibit A, the proportional price of the area
lacking, we are of the opinion that said error has no legal ground.

It appears that by the contract Exhibit A, the parties agreed to the sale of two parcels of land, the first
one containing 102 hectares, 67 ares and 32 centares, and the second one containing about 98
hectares, for the lump sum of P47,000 payable partly in cash and partly in installments. Said two
parcels are defind by means of the boundaries given in the instrument. Therefore, the case falls
within the provision of article 1471 of the Civil Code, which reads as follows:

ART. 1471. In case of the sale of real estate for a lump sum and not at the rate of a specified
price for each unit of measure, there shall be no increase or decrease of the price even if the
area be found to be more or less than that stated in the contract.

The same rule shall apply when two or more estates are sold for a single price; but, if in
addition to a statement of the boundaries, which is indispensable in every conveyance of real
estate, the area of the estate should be designated in the contract, the vendor shall be
obliged to deliver all that is included with such boundaries, even should it exceed the area
specified in the contract; and, should he not be able to do so, he shall suffer a reduction of
the price in proportion to what is lacking of the area, unless the contract be annulled by
reason of the vendee's refusal to accept anything other than that which was stipulated.

The plaintiff contends that, in accrdance with the first paragraph of this article, the defendant has no
right to ask for the reduction of price, whatever may be the area of the two parcels of land sold her.
On the ther hand, the defendant contends that, according to paragraph 2 of the same article of the
Civil Code, she has a right to ask for a reduction of the price due on the second parcel, in proportion
to the area lacking.

In his comments on the article cited, Manresa says, among other things:

. . . if the sale was made for a price per unit of measure or number, the consideration of the
contract with respect to the vendee, is the number of such units, or, if you wish, the thing
purchased as determined by the stipulated number of units. But if, on the other hand, the
sale was made for a lump sum, the consideration of the contract is the object sold,
independently of its number or measure, the thing as determined by the stipulated
boundaries, which has been called in law a determinate object.

This difference in consideration between the two cases implies a distinct regulation of the
obligation to deliver the object, because, for an acquittance delivery must be made in
accordance with the agreement of the parties, and the performance of the agreement must
show the confirmation in fact, of the consideratin which induces each of the parties to enter
into the contract.

From all this, it follows that the provisions of article 1471 concerning the delivery
of determinate objects had to be materially different from those governing the delivery of
things sold a price per unit of measure or number. Let us examine it, and for the sake of
greater clearness, let us expound it as we understand it.

With respect to the delivery of determinate objects two cases may arise, either the
determinate object is delivered as stipulated, that is, delivering everything included within the
boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object; or
that such entirety is impaired in the delivery by failing to deliver to the purchaser something
included within the boundaries. These are the two cases for which the Code has provided
although, in our opinion, it has not been sufficiently explicit in expressing the distinction;
hence, at first sight, the article seems somewhat difficult to understand.

The first paragraph and the first clause of the second paragraph of article 1471 deal with the
first of said cases; that is where everything included within the boundaries as set forth in the
contract has been delivered. The Code goes on to consider the case where a definite area or
number has been expressed in the contract, and enunciates the rule to be followed when,
after delivery, the area included within said bundaries is found not to coincide with the
aforesaid content or number. Said rule may be thus stated: Whether or not the object of sale
be one realty for a lump sum, or two or more for a single price also a lump sum, and,
consequently, not for so much per unit of measure or number, there shall be no increase or
decrease in the price even if the area be found to be more or less than that stated in the
contract.

Thus understood the reason for the regulation is clear and no doubts can arise from its
application. It is concerned with determinate objects. The consideration of the contract, and
the thing to be delivered is a determinate object, and not the number of units it contains. The
price is determined with relation to it; hence, its greater or lesser area cannot influence the
increase or decrease of the price agreed upon. We have just learned the reason for the
regulation, bearing in mind that the Code has rightly considered an object as determinate for
the purposes now treated, when it is a single realty as when it is two or more, so long as they
are solds for a single price constituting a lump sum and not for a specified amount per unit of
measure or number.

We have stated that the second possible case in the delivery of determinate objects is that in
which, on account or circumstances of diverse possible origins, everything included within
the boundaries is not delivered.

We have indicated about that where everything included within the boundaries is delivered
there can be no increase or decrease in price, no matter whether the area be more or less
than that given in the contract. From this a very important consequence follows, to wit: That if
the vendor is bound to deliver a determinate object, he is bound to deliver all of it, that is,
everything within its boundaries, in the contract, and that from the moment he fails to do so,
either because he cannot, or because, ignoring the meaning of the contract, he alleges that it
contains a greater area than that stipulated, the contract is partially unfulfilled and it is but
just the certain actions be available to the vendee for the protection of his right.

The rule in the latter case is found in the second paragraph of article 1471, with the
exception of the first clause which refers of the former hypothesis. This rule may be stated as
follows: Whether or not the object of the sale be one realty for a lump sum, or two or more for
a single price also a lump sum, and, consequently not at the rate of a specified price for each
unit of measuring or number, the vendor shall be bound to deliver everything that is included
within the boundaries stated, although it may exceed the area or number expressed in the
contract; in case he cannot deliver it, the purchaser shall have the right either to reduce the
price proportionately to what is lacking of the area or number, or to rescind the contract at his
option.

Comprehending the meaning of a sale of a determinate object, it is easily understod how, in

cases wherein by virtue of the rule enunciated, the vendor has to deliver a greater area than
that expressed in the contract, there is, strictly speaking, no excess of area, inasmuch as
one may always properly ask, excess with respect to what? With respect to the area
appearing in the deed, it will be answered. But as this area was not taken into account in
entering into the contract inasmuch as the parties made neither the amount of the price, nor
the efficacy of the contract to depend on the number of its units; since area was written in to
fulfill a formal requisite demanded by the present rules upon the drawing of public
instruments, but as a condition essential to the contract, which, if it were not true, would not
be consummated, it results in the long run, that this detail of the written recital, with respect
to which the excess is to be estimated, is so negligible, so inconsistent, so haphazard, and in
the vast majority of cases so wide of the mark, that it is impossible to calculate the excess;
and considering the nature of a contract of sale of a definite object, it cannot be strictly held
that there is any excess at all.

If everything within the stipulated boundaries is not delivered, then the determination object
which was the consideration of the contract for the vendee, is not delivered; hence his power
to nullify it. However, it might be (and this he alone can say), that although he has not
received the object, according to the stipulated terms, it suits him; hence his power to carry
the contract into effect with the just decrease in price referred to in the article under
comment.

The manner in which the matter covered by this article was distributed in its two paragraphs
constributes to making it difficult to understand. The rule might have been clearly stated had
the first clause of the second paragraph been included in the first paragraph, the latter to end
with the words: "The same rule shall apply when two or more estates are sold fos a single
price." And if by constituting an independent paragraph, with the rest of the second
paragraph, it were made to appear more expressly that the rule of the second paragraph
thus drawn referred to all the cases of paragraph one, as we have expounded, namely, to
the case of a sale of one single estate and that of two or more for one single price, the rule
would have been clearer.

In our opinion, this would have better answered what we deem to be the indubitable intention
of the legislator.

Some eminent commentators construe the last part of article 1471 in a different way. To
them the phrase "and should he not be able to do so" as applied to the vendor, does not
mean as apparently it does "should he not be able to deliver all that is included within the
boundaries stated," but this other thing namely, that if by reason of the fact that a less area is
included within the boundaries than that expressed in the contract, it is not possible for the
vendor to comply therewith according to its literal sense, he must suffer the effects of the
nullity of the contract or a reduction of the price proportionately what may be lacking of the
area or number. It is added as a ground for this solution that if the vendor fulfills the
obligations, as stated in the article, by delivering what is not included with in the boundaries,
there can never be any case of proportionate reduction of the price on account of shortage of
area, because he does not give less who delivers all that he bound himself to. 1awphi1.net

According to this opinion, which we believe erroneous, if within the boundaries of the
property sold, there is included more area than that expressed in the title deeds, nothing can
be claimed by the vendor who losses the value of that excess, but if there is less area, then
he loses also because either the price is reduced or the contract is annulled. This theory
would be anomalous in case of sale of properties in bulk, but, especially, would work a gross
injustice which the legislator never intended.

There is no such thing. So long as the vendor can deliver, and for that reason, delivers all
the land included within the boundaries assigned to the property, there can be no claim
 whatsoever either on his part, although the area may be found to be much greater than what
was expressed, nor on the part of the puchaser although that area may be in reality much
smaller. But as he sold everything within the boundaries and this is all the purchaser has
paid, or must pay for whether much or little, if afterwards it is found that he cannot deliver all,
because, for instance, a part, a building, a valley, various pieces of land, a glen, etc., are not
his, there is no sale of a determinate object, there is no longer a sale of the object agreed
upon, and the solution given by the article is then just and logical: Either the contract is
annulled or the price reduced proportionately.

We have quoted from Manresa's Commentaries at length for a better understanding of the doctrine
on the matter, inasmuch as the contending counsel have inserted in their respective briefs only such
portions of said commentaries as relate to their respective contentions.

It may be seen from a careful reading of the commentaries on said article 1471, that the great author
distinguishes between the two cases dealt with in article 1471, and formulates the proper rules for
each. In the delivery of a determinate object, says the author, two cases may arise; either the
determinate object is delivered as stipulated, that is, delivering everything included within the
boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object; or that
such entirely is impaired in the delivery by failing to deliver to the purchaser something included
within the boundaries. For the first case, Manresa gives the following rule: "Whether or not the object
of the sale be one realty for a lump sum, or two or more for a single price also a lump sum, and,
consequently, not for so much per unit of measure or number, there shall be no increase or
decrease in the price ecven if the area be found to be more or less than that stated in the contract."
And for the second case, this other: "Whether or not the object of the sale one realty for a lump sum,
or two or more for a single price also a lump sum, and, consequently, not at the rate a specified price
for each unit of measure or number, the vendor shall be bnound to deliver everything that is included
within the boundaries stated, although it may exceed the area or number expressed in the contract;
in case he cannot deliver it, the purchaser shall have the right either to reduce the price
proportionately to what is lacking of the area or number, or to rescind the contract, at his option."

Considering the facts of the present controversy, it seems clear to us that the rule formulated for the
second paragraph or article 1471 is inapplicable in the instant case inasmuch as all the land
included within the boundaries of the two parcels sold has been delivered inits entirety to the
vendee. There is no division of the land enclosed within the boundaries of the properties sold; the
determinate object which is the subject matter of the contract has been delivered by the vendor in its
entirety as he obligate himself to do. Therefore, there is no right to complain either on the part of the
vendor, even if there be a greater area than that stated in the deed, or on the part of the vendee,
though the area of the second parcel be really much smaller. (Irureta Goyena vs. Tambunting, 1
Phil., 490.)

With regard to the damages prayed for by the defendant, the lower court finally dismissed the cross-
complaint without special pronouncement as to costs. And according to the decision of the Supreme
Court od Spain of 1897, a judgment absolving a party from a claim of damages against him, who has
not contravened his obligations, does not violate articles 1101 and 1108 of the Civil Code.

With respect to the question of interest, the lower court likewise held that, as the defendant had not
paid the sum of P7,300 on April 30, 1921, when the plaintiff had delivered the certificate of title, she
was in default from that date and also from the date of one year thereafter, with respect to the sum
of P12,000, contituting the last period of the obligation. We are of the opinion that the lower court
has committed no error which should be corrected by this court.
The judgment appealed from being in accordance with the law, it should be as it is hereby, affirmed
with costs against the appellant. So ordered.