NORMA M. DIAMPOC, Petitioner vs.

JESSIE BUENAVENTURA and THE REGISTRY OF DEEDS

FOH THE CITY OF TAGUIG, Respondents March 19, 2018 G.R. No. 200383

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside the February 21, 2011 Decision2 and May
6, 2011 Resolution3 of the Court of .Appeals (CA) in CA-G.R, CV No. 92453 which denied herein
petitioner's appeal and affirmed the December 20, 2007 Decision4 of the Regional Trial Court of
Pasig City, Branch 268 (RTC) in Civil Case No. 70076.

Factual Antecedents

In July, 2004, petitioner Norma M. Diampoc and her husband Wilbur L. Diampoc (the Diampocs)
filed a Complaint5 for annulment of deed of sale and recovery of duplicate original copy of title,
with damages, against respondent Jessie Buenaventura (Buenaventura) and the Registry of Deeds
for the Province of Rizal. The case was docketed before the RTC as Civil Case No. 70076.

The Diampocs alleged in their Complaint that they owned a 174- square meter parcel of land
(subject property) in Signal Village, Taguig City covered by Transfer Certificate of Title No. 25044
(TCT 25044); that Buenaventura became their friend; that Buenaventura asked to borrow the
owner's copy of TCT 25044 to be used as security for a ₱1 million loan she wished to secure; that
they acceded, on the condition that Buenaventura should not sell the subject property; that
Buenaventura promised to give them ₱300,000.00 out of the ₱1 million loan proceeds; that on July
2, 2000, Buenaventura cause them to sign a folded document without giving them the opportunity
to read its contents; that Buenaventura filed to give them a copy of the document which they
signed; that they discovered later on that Buenaventura became the owner of a one· half portion
(87 square meters) of the subject property by virtue of a supposed deed of sale in her favor; that
they immediately proceeded to the notary public who notarized the said purported deed of sales
and discovered that the said 87-square meter portion was purportedly sold to Buenaventura for
₱200,000.00; that barangay conciliation proceedings were commenced, but proved futile; that the
purported deed of sale is spurious; and that the deed was secured through fraud and deceit, and
thus null and void. The Diampocs thus prayed that the purported deed of sale be annulled and the
annotation thereof on TCT 25044 be canceled; that the owner's duplicate copy of TCT 25044 be
returned to them; and that attorney's fees and costs of suit be awarded to them.

In her Answer, Buenaventura claimed that the Diampocs have no cause of action; that the case is a
rehash of an estafa case they previously filed against her but which was dismissed; and that the
case is dismissible for lack of merit and due to procedural lapses.6

Ruling of the Regional Trial Court

After trial, the RTC rendered its December 20, 2007 Decision, pronouncing as follows:

Counsel for the plaintiffs presented two witnesses, namely: Norma Diampoc and Wilbur Diampoc,
Stripped off of its non-essentials, their testimonies are summarized as follows:

1. MRS. NORMA DIAMPOC - The witness is one of the plaintiffs. She testifies that they are the
owners of the property x x x covered by Transfer Certificate of Title No. 25044 x x x; that sometime
in May 2000, defendant borrowed the original owner's duplicate copy of said title from the
plaintiffs to be used as collateral of her loan from a bank as she needed additional capital for her
store x x x; that they have agreed that after getting the proceeds of the loan of Php1,000,000.00,
defendant will give Php300,000.00 to plaintiff to be used for the repair of plaintiffs' second floor x x
x; it was further agreed by the parties that defendant will pay the entire amount of the loan and the
Php300,000.00 shall represent payment for the use of plaintiffs' title x x x; that in the morning of
July 3, 2000, while plaintiff Norma Diampoc was in the store of a certain Marissa Ibes, defendant
Jessie Buenaventura arrived and force her to sign a document without giving her a chance to read
the same x xx; that in the morning of November 19, 2002, Eng[r]. Perciliano Aguinaldo went to the
plaintiffs' house and conducted a survey of the subject property; that plaintiffs asked said engineer
why he was conducting a Survey and the engineer replied that it was the instruction of defendant
Buenaventura as the said property has already been sold x x x;. that Engineer Aguinaldo showed
plaintiff a document denominated as "Deed of Sale" x x x; that when plaintiffs signed the Deed of
Sale, the word "Vendor" was not yet written x x x; that plaintiffs did not appear before the notary
public who notarized the document and never received the amount of Php200,000.00 as statod in
the document x x x; that when they confronted the lawyer who notarized the document, plaintiffs
were advised to file a complaint before the Office of the Barangay x x x; that the Lupong
Tagapamayapa of the said Barangay issued a certificate to file action as the parties failed to settle
the case amicably x x x; that plaintiffs sent a letter of protest to Eng[r]. Aguinaldo x x x; that in
connection with the filing of the instant complaint, the witness executed a sw0rn statement x x x.

2. MR. WILBUR DIAMPOC -, x x x He was presented to corroborate the testimony of his wife-co-
plaintiff, Mrs. Norma Diampoc.

On May 19, 2005, defendant through counsel filed a Motion for Reconsideration praying that he be
allowed to participate in the trial. The Court in its Order dated August 22, 2005 gave defendant last
opportunity to present evidence in her behalf and allowed her to cross-examine the plaintiffs'
witnesses.

On cross-examination, the witnesses confirmed that they signed the subject deed of sale but did not
read the contents of the document they signed; that they never appeared before the Notary Public
to acknowledge the Deed of Sale; that they did not file a case against the Notary Public; that they did
not receive any consideration for the alleged sale; that they filed a complaint against defendant only
after they discovered that what they have signed was a Deed of Sale: that they did not read the
document before they affixed their signatures because they trusted the defendant x x x.

Counsel for the defendant on the other hand presented the defendant herself as his lone witness.
Jessie Buenaventura testified that spouses Diampoc sold to her a portion of their land consisting of
87 square meters as evidenced by a Deed of Sale marked in evidence x x x; that the said deed of sale
was signed and acknowledged before a Notary Public, Atty. Pastor Mendoza on July 6, 2000 x x x;
that spouses Diampoc filed a case against her for Estafa, Grave Threat, Coercion and Falsification
before the Prosecutor's Office of Rizal x x x; that said cases were dismissed x x x; that because of the
filing of the instant case, defendant spent litigation expenses x x x. On cross-examination, defendant
further testified that [she] personally gave the amount of Php200,000.00 to plaintiff Norma
Diampoc before they went to the Notary Public x x x.

After evaluating the evidence on hand, the Court finds that plaintiffs fall short of the required
evidence to substantiate their allegations that subject Deed of Sale x x x is illegal and spurious. "The
Deed of Sale being a public document, it is prima facie evidence of the facts state therein’ (Domingo
versus Domingo, 455 SCRA 555). Under the rule, the terms of a contract are rendered conclusive
upon the parties and evidence aliunde is not admissible to vary or contradict a complete and
enforceable agreement embodied in a document. (Rosario Textile Mills Corp. versus Home Bankers
Savings, 462 SCRA 88).

The pertinent provision of the New Civil Code reads:

‘Art. 1159. Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith'

WHEREFORE, foregoing premises considered, the above-captioned case is hereby DISMISSED for
insufficiency of evidence. No pronouncement as to costs.

SO ORDERED.7

Ruling of the Court of Appeals

Respondents filed an appeal before the CA, which denied the same, ruling as follows:

In beseeching the annulment of the notarized deed of sale, appellants impress upon Us that they
were deceived by Jessie (now ‘appellee’) into believing that they were signing papers for the
intended bank loan. They failed to read the contents of the document fr.lr it 'was folded’, and Jessie
was in a hurry.
These specious arguments are devoid adjudicial mooring.

As aptly declared by the court a quo, notarized documents, like the deed in question, enjoy the
presumption of regularity which can be overturned only by clear, convincing and more than merely
preponderant evidence. Miserably, appellants failed to discharge this burden.

Appellants are not illiterate, hut educated persons who understood the meaning of the word
‘vendor’ printed [ vividly] under their names. They could easily read such word before they could
affix their signatures. We are simply appalled by appellant Wilbur's pathetic explanation that it was
‘dark’ at the time he signed the deed so that he failed to read the word 'vendor'.

Yet, even if they avouch to be illiterate, which they most certainly are not being high school
graduates themselves, the enunciations in Bernardo v. Court of Appeals come to mind -

‘[G]ranting, without conceding, that private respondent and his wife were both illiterate, this still
does not save the day for them. As stressed in Tan Tua Sia v. Yu Biao Sontua, 56 Phil. 711, cited in
Mata v. Court of Appeals - .... The rule that one who signs a contract is presumed to know its
contents have been applied even to contracts of illiterate persons on the ground that if such
persons are unable to read, they are negligent if they fail to have the contract read to them. If a
person cannot read the instrument, it is as much his duty to procure some reliable persons to read
and explain it to him, before he signs it, x x x and his failure to obtain a reading and explanation of it
is such gross negligence as will estop him from avoiding it on the ground that he was ignorant of its
contents. ‘x x x

Verily, the fact that appellants used only one community tax certificate cannot emasculate the
evidentiary weight of the notarized deed. The notary public may have been lax in his duty of
requiring two community tax certificates from the appellants, but this will not adversely affect the
validity of the notarized deed.

Invariably, appellants cannot now be allowed to disavow the contractual effects of the notarized
deed. It is true that parol evidence may be admitted to challenge the contents of such agreement
'where a mistake or imperfection of the writing, or its failure to express the true intent and
agreement of the parties, or the validity of the agreement is put in issue by the pleadings.’ However,
such evidence must be clear and convincing and of such sufficient credibility as to overturn the
written agreement. The flimsy protestations of the parties are not substantiated by compelling
evidence which would Warrant a reversal of the impugned judgment.

As borne out by the notarized deed, a perfected contract of sale was forged between the
parties.1â wphi1 Appellants received in full the payment of ₱200,000.00, having sold to appellee a
portion of their lot. If the terms of the deed were not in consonance with their expectations, they
should have objected to it and insisted on the provisions they wanted. Courts are not authorized to
extricate parties from the necessary consequences of their acts, and the fact that the contractual
stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their
obligations.

With this discourse, appellants' recourse falls through. The claim for payment of damages
necessarily fails.

WHEREFORE, the Appeal is hereby DENIED. The Decision dated 20 December 2007 of the Regional
Trial Court, Pasig City, Branch 268, in Civil Case No. 70076, is AFFIRMED.

SO ORDERED.8 (Emphasis in the original)

Petitioner filed a Motion for Reconsideration,9 which was denied via the May 6, 2011 Resolution.
Hence, the instant Petition.

In a January 25, 2016 Resolution,10 this Court resolved to dispense with the filing of respondent
Buenaventura's comment, and petitioner manifested11 her willingness to submit the case for
resolution on the basis of the pleadings on record.
Issues

Petitioner claims that -

A. THE COURT OF APPEALS ERRED IN APPLYING THE PRIMA FACIE PRESUMPTION OF

REGULARITY OF NOTARIZED DOCUMENTS AND UPHOLDING THE VALIDITY OF THE NOTARIZED
DEED OF SALE NOTWITHSTANDING THE UNDISPUTED FACT THAT THERE. WERE
IRREGULARITIES JN THE EXECUTION AND NOTARIZATlON OF THE DEED OF SALE.

B. THE COURT OF APPEALS ERRED IN RULING THAT THERE WAS A VALID CONTRACT OF SALE.12

Petitioner’s Arguments

Seeking reversal of the assailed CA dispositions, nullification of the subject deed of sale, cancellation
of Entry No. 5381 on the back of TCT 25044, 'the return of the owner’s duplicate copy of TCT
25044, and payment of attorney's fees and costs of suit, petitioner argues that while a notarized
document enjoys the presumption of regularity, this does not apply to the subject deed of sale as it
was not signed before the notary public, and was notarized in the absence of petitioner and her
husband; that Buenaventura failed to present as her witness the notary public who notarized the
deed of sale; that Buenaventura herself failed to show that she was present at the notarization; that
there was only one· Community Tax Certificate used for both petitioner and her husband; that with
the irregularities pointed out, the prima facie; presumption of regularity no longer applies to the
subject deed of sale; that she and her husband never intended to sell the subject property; that
while she and her husband were not illiterate, still what matters is that Buenaventura deceived
them into signing the subject document without reading it through assurances that what they were
signing was an authorization for the purpose of obtaining a bank loan; that she and her husband
had no reason to distn1st Buenaventura as the purported Joan was previously agreed upon; that
Buenaventura failed to prove that she paid the purported consideration of ₱200,000,00 for the
supposed sale, as she did not present any receipt therefor; and that in view of these facts, the deed
of sale should be annulled and voided.

Our Ruling

The Court denies the Petition.

Petitioner's arguments center on the claim that the deed of sale suffers from defects relative to its
notarization, which thus render the deed ineffective, if not null and void. Petitioner claims that the
deed was not signed by the parties before the notary public; that it was notarized in her and her
husband's absence; that there was only one Community Tax Certificate used for both petitioner and
her husband; and that Buenaventura failed to present the notary public as her witness.

It must be remembered, however, that "the absence of notarization of the deed of sale would not
invalidate the transaction evidenced therein"; it merely "reduces the evidentiary value of a
document to that of a private document, which requires proof of its due execution and authenticity
to be admissible as evidence."13 "A defective notarization will strip the document of its public
character and reduce it to a private instrument. Consequently, when there is a defect in the
notarization of a document, the clear and convincing evidentiary standard normally attached to a
duly-notarized document is dispensed with, and the measure to test the validity of such document
is preponderance of evidence."14

x x x Article 1358 of the Civil Code requires that the form of a contract that transmits or
extinguishes real rights over immovable property should be in a public document, yet the failure to
observe the proper form does not render the transaction invalid. The necessity of a public
document for said contracts is only for convenience; it is not essential for validity or enforceability.
Even a sale of real property, though not contained in a public instrument or formal writing, is
nevertheless valid and binding, for even a verbal contract of sale or real estate; produces legal
effects between the parties. Consequently, when there is a defect in the notarization of a document,
the clear and convincing evidentiary standard originally attached to a duly-notarized document is
dispensed with, and the measure to test the validity of such document is preponderance of
evidence.15
x x x Nevertheless, the defective notarization of the deed does not affect the validity of the sale of
the house. Although Article 1358 of the Civil Code states that the sale of real property must appear
in a public instrument, the formalities required by this article is not essential for the validity of the
contract but is simply for its greater efficacy or convenience, or to bind third persons, and is merely
a coercive means granted to the contracting parties to enab1e them to reciprocally compel the
observance of the prescribed form. Consequently, the private conveyance of the house is valid
between the parties.16

Thus, following the above pronouncements, the remaining judicial task, therefore, is to determine if
the deed of sale executed by and between the parties should be upheld. The RTC and the CA are
unanimous in declaring that the deed should be sustained on account of petitioner's failure to
discredit it with her evidence. The CA farther found that petitioner and her husband received in full
the consideration of ₱200,000.00 for the sale. As far as the lower courts are concerned, the three
requirements of cause, object, and consideration concurred. This Court is left with no option but to
respect the lower courts' findings, for its jurisdiction in a petition for review on certiorari is limited
to reviewing only errors of law since it is not a trier of facts. This is especially so in view of the
identical conclusions affirmed at by them.

Indeed, petitioner and her husband conceded that there was such a deed of sale, but only that they
were induced to sign it without being given the opportunity to read its contents -believing that the
document they were signing was a mere authorization to obtain a bank loan. According to
petitioner, the document was "folded" when she affixed her signature thereon; on the other hand,
her husband added that at the time he signed the same, it was "dark". These circumstances,
however, did not prevent them from discovering the true nature of the document; being high school
graduates and thus literate, they were not completely precluded from reading the contents thereof,
as they should have done if they were prudent enough, Petitioner's excuses are therefore flimsy and
specious.

Petitioner and her husband's admission that they failed to exercise prudence can only be fatal to
their cause. They are not unlettered people possessed with a modicum of intelligence; they are
educated property owners capable of securing themselves and their property from unwarranted
intrusion when required. They knew the wherewithal of property ownership. Their failure to thus
observe the care and circumspect expected of them precludes the courts from lending a helping
hand, and so they must bear the consequences flowing from their own negligence.

The rule that one who signs a contract is presumed to know its contents has been applied
even to contracts of illiterate persons on the ground that if such persons are unable to read,
they are negligent if they fail to have the contract read to them. If a person cannot read the
instrument, it is as much his duty to procure some reliable persons to read and explain it to
him, before he signs it, as it would be to read it before he signed it if he were able to do so
and his failure to obtain a reading and explanation of it is such gross negligence as will
estopped him from avoiding it on the ground that he was ignorant of its contents.17

It is also a well-settled principle that "the law will not relieve parties from the effects of an
unwise, foolish or disastrous agreement they entered into with all the required formalities
and with full awareness of what they were doing. Courts have no power to relieve them from
obligations they voluntarily assumed, simply because their contracts turn out to be
disastrous deals or unwise investments. Neither the law nor the courts will extricate them
from an unwise or undesirable contract which they entered into with all the required
formalities and with full knowledge of its consequences."18

WHEREFORE, the Petition is DENlED. The February 21, 2011 Decision and May 6, 2011 Resolution
of the Court of Appeals in CA-G.R. CV No. 92453 are AFFIRMED in toto.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

Footnotes
*On leave.

** Designated as Acting Chairperson pursuant to Special Order No. 2540 dated February 28, 2018.

1 Rollo, pp. 21-34.

2 Id. at 35-4 I; penned by Associate Justice Japar B. Dimaampao and concurred in by Presiding
Justice Andres B. Reyes, Jr. (now a member of this Court) and Associate Justice Jane Aurora C.
Lantion.

3 Id. at 42-43.

4 Id. at 58-62; penned by Judge Amelia C. Manalastas

5 Id. at. 51-57.

6 See RTC Decision, id. at 58-59.

7 Id. at 59-62.

8 Id. at 38-40.

9 Id. at 78-87.

10 Id. at 215-216.

11 Id. at 220-224.

12 Id. at 25.

13 Riosa v. Tabaco la Suerte Corporation, 720 Phil. 586, 602(7013).

14 Menauza v. Fermin, 738 Phil. 429, 445 (2014).

15 Castillo v. Security Bank Corporation, 738 Phil. 145, 153-154 (2014).

16 Chong v. Court of Appeals, 554 Phil . 43, 61-62 (2007)

17 Bernardo v. Court of Appeals, 387 Phil. 736, 748 (2000), citing Mata v. Court of Appeals, 284
Phil. 36, 45 (1992),

18 Fernandez v. Spouses Tanm, 440 Phil. 334; 347 (2002).

19 Pursuant to Special Order No. 2539 dated February 28, 2018.

PLATINUM PLANS PHIL. INC. v. ROMEO R. CUCUECO [ GR NO. 147405, Apr 25, 2006 ]
DECISION
522 Phil. 133

AZCUNA, J.:

Challenged in this petition for review on certiorari[1] is the Decision[2] dated February 21, 2001
rendered by the Court of Appeals (CA) in CA-G.R. CV No. 60071 setting aside the decision[3] of the
Regional Trial Court (RTC) of Pasig City, Branch 266, in Civil Case No. 64903 entitled "Romeo R.
Cucueco vs. Platinum Philippines Inc., Youth Educational Plans, Inc., and Ernesto L. Salas."

This case is rooted in the complaint[4] filed by respondent Romeo R. Cucueco against petitioners
Platinum Philippines Inc., Youth Educational Plans, Inc., and Ernesto L. Salas for specific
performance and damages pursuant to an alleged contract of sale executed by them for the
purchase of a condominium unit[5] in Valle Verde, Pasig City.

The antecedent facts are as follows:

Plaintiff-appellant [herein respondent] alleged in his complaint that sometime in July 1993, being
the lessee and present occupant of the said condominium unit, he verbally offered to buy the same
from the defendants-appellants [herein petitioners], free from any lien or encumbrance in two(2)
installments of P2,000,000.00.

This was made into a formal offer in writing, the salient conditions of which are: (1) Plaintiff-
appellant will issue a check for P100,000.00 as earnest money; (2) Plaintiff will also issue a post-
dated check for P1,900,000.00 encashable on 30 September. 1993 on the condition that he will stop
paying rental(s) for the said unit after 30 September 1993; and (3) That in case the defendants-
appellants still had an outstanding loan (with the said unit as collateral/security) with the bank of
less than P2,000,000.00, as of 31 December 1993, plaintiff-appellant shall assume the said loan and
pay the defendants-appellants the difference from the remaining P2,000,000.00.

Plaintiff-appellant claims that the defendants-appellants duly accepted his offer- the checks he
issued in favor of the defendants-appellants were accepted and encashed. However, he was
surprised to receive a letter from the defendants-appellants where the due date for the second
installment was changed to 23 September 1993. Despite earnest efforts, both parties failed to settle
the said difference amicably. Apparently, the plaintiff-appellant felt he was on the short end of the
bargain since he stood to forfeit the initial P2,000,000.00 he has paid in favor of the defendants-
appellants as provided in their agreement. The refusal of the defendants-appellants to return the
said initial payment thus prompted the plaintiff-appellant to file a case for specific performance of
the said sale and claim of damages for the injury he suffered as a result of the defendants-
appellants' unjust refusal to comply with their obligation.

In the main, plaintiff-appellant argued before the lower court that there was a perfected sale
between them, as based on the facts he alleged Based on such perfected sale, plaintiff-appellant
maintains that he may validly demand of the defendants-appellants to execute the necessary deed
of sale and other documents transferring ownership and title over the property in his favor.

On the other hand, defendants-appellants denied the substantial allegations of the plaintiff-
appellant and asserted during trial that the plaintiff-appellant has already forfeited his initial
downpayment of P2,000,000.00 as based on the terms and conditions agreed upon, to wit:

The terms of payment is only for two installments...payable on 1 August 1993 and the balance
payable on 30 September 1993.

To ensure performance, (the) parties herein further agreed that in case of non-compliance on the
part of the plaintiff, all installments made shall be forfeited in favor of the defendants;

Ownership over subject property is retained by defendants and is not to pass until full payment of
the purchase price.
Defendants-appellants counter the plaintiff-appellant's contention, stating they never accepted the
plaintiff-appellant's offer to pay the remaining balance only on 31 December 1993. Their letter of
23 September 1993 undoubtedly contained their non-acceptance of the plaintiff-appellant's offer.
Along with this, they maintain that the very fact that the plaintiff-appellant went to the defendants-
appellants to negotiate the due date of the final payment belies the plaintiff-appellant's assertion
that there was any sale perfected between them. They further submit as evidence the want of
consent to the plaintiff-appellant's offer as shown by the absence of their signature of conformity
on the letter sent to them.[6]

The trial court found that under the circumstances, the essential element of consent to the contract
was lacking as indicated by the failure of the parties to agree on a definite date when full payment
of the purchase price should be made by respondent. As a result, the court ruled against the
existence of a perfected contract of sale between the parties and ordered petitioners to return the
Two Million Pesos (P2,000,000) they received from respondent as downpayment for the
condominium unit and to likewise pay respondent interest, moral damages and attorney's fees. For
his part, respondent was directed to pay petitioners rentals in arrears for the use of the unit in the
amount of Eighteen Thousand Pesos (P18,000) per month commencing in July 1993. Unsatisfied,
both parties appealed the decision to the CA.

The CA, on the other hand, differed from the conclusion of the trial court and ruled that there was,
in this instance, a perfected contract of sale despite the fact that the parties never agreed on the
date of payment of the remaining balance of the purchase price. Accordingly, the CA reversed and
set aside the judgment of the RTC in its Decision dated February 21, 2001, the dispositive portion of
which reads:

WHEREFORE, premises considered, the judgment of the Regional Trial Court of Pasig City, Branch
226, in Civil Case No. 64903 is hereby REVERSED and SET ASIDE and a new one is RENDERED as
follows:

Plaintiff-appellant ROMEO R. CUCUECO is hereby ordered to pay the defendants-appellants the

balance of the purchase price in the amount of P2,000,000.00 with 6% interest per annum starting
from 21 October 1993 until full payment, for the sale of Unit 17, Block 3, Casa Verde Townhouse,
Valle Verde, Pasig City as covered by TCT No. PT-80413 registered with the Registry of Deeds of
Pasig City.

Defendants-appellants, PLATINUM PLANS PHILIPPINES, INC. is hereby ordered to execute and

deliver the sufficient Deed of Sale of the said property in favor of said plaintiff-appellant, as well as
any other pertinent document necessary for the transfer of ownership and title of the said property
to the plaintiff-appellant, after full payment of the balance purchase price plus interest has been
made by the plaintiff-appellant in their favor.

SO ORDERED.[7]

Hence, this petition which assigns the following errors:

I.

THE HONORABLE COURT OF APPEALS SERIOUSLY MISAPPREHENDED THE FACTS OF THE CASE
AND GROSSLY MISAPPRECIATED THE EVIDENCE, AND THUS COMMITTED PATENT ERROR WHEN
IT RULED THAT THERE WAS A PERFECTED CONTRACT OF SALE OVER THE SUBJECT PROPERTY.

II.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT FOUND THAT THE PRIVATE
RESPONDENT'S BREACH OF THE CONTRACT WAS NOT SUBSTANTIAL AS TO WARRANT THE
RESCISSION THEREOF.

III.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED AGAINST THE
PETITIONERS' FORFEITURE OF THE PRIVATE RESPONDENT'S 1ST INSTALLMENT.
IV.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVERSED THE DECISION OF
THE REGIONAL TRIAL COURT INSOFAR AS THE TRIAL COURT'S ORDER DIRECTED THE PRIVATE
RESPONDENT TO PAY BACK RENTALS IN THE AMOUNT OF PI 8,000.00 PER MONTH
COMMENCING FROM JULY 1993

The petition has merit.

The primary issue in this case centers upon a determination of the true nature of the agreement of
the parties concerning the condominium unit. In brief, petitioners claim that the parties merely
entered into a contract to sell while respondent insists that it was already a perfected contract of
sale. It is therefore critical to ascertain whether the parties intended to enter into a contract of sale
or a contract to sell as these two contracts produce very different effects under the law.

To begin with, a contract of sale is defined under Article 1458 of the Civil Code as follows:

By the contract of sale one of the contracting parties obligates himself to transfer the ownership of
and to deliver a determinate thing, and the other to pay therefor a price certain in money or its
equivalent.

In a contract of sale, the vendor cannot recover ownership of the thing sold until and unless the
contract itself is resolved and set aside.[8] On this score, it is significant to note that the resolution
or rescission of a contract of sale is further circumscribed by Article 1592 of the Civil Code which
provides:

In the sale of immovable property, even though it may have been stipulated that upon failure to pay
the price at the time agreed upon, the rescission of the contract shall of right take place, the vendee
may pay, even after the expiration of the period, as long as no demand for rescission of the contract
has been made upon him either judicially or by a notarial act. After the demand, the court may not
grant him a new term. (Emphasis supplied.)

The demand mentioned above refers to that made, upon the vendee to agree to the resolution of the
contract. A party who fails to invoke judicially or by notarial act the resolution of the contract of
sale would be prevented from blocking the consummation of the same in light of the precept that
mere failure to fulfill that contract does not operate ipso facto as its rescission.[9]

On the other hand, a contract to sell is defined as a bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property despite its delivery to the
prospective buyer, commits to sell the property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, that is, full payment of the purchase price. Full payment in
this context is deemed a positive suspensive condition. It bears stressing that ownership of the
property offered for sale is reserved in the seller and is not to pass to the buyer until such condition
has been fulfilled.

As a result, if the party contracting to sell, because of non-compliance with the suspensive condition
stipulated, seeks to eject the would-be buyer from the land object of the agreement, the former is
enforcing the contract and not resolving it.[10] The failure to make payment is not a breach of the
contract but an event that prevented the obligation to convey the title from materializing.[11]

Based on the foregoing distinctions, a contract to sell may not be considered as a contract of sale
because the first essential element of consent to a transfer of ownership is lacking in the former.
Since the prospective seller in a contract to sell explicitly reserves the transfer of title to the
prospective buyer, the prospective seller does not as yet unequivocally agree or consent to a
transfer ownership of the property subject of the contract to sell. On the happening of an event, that
is, the full payment of the purchase price, the obligation then arises to execute a contract of sale that
alone will transfer such ownership.
In its decision, the CA characterized the transaction as a straight sale and ruled that the failure of
the parties to agree with respect to the manner of payment did not negate the existence of a
perfected contract of sale between them, explaining as follows:

Apparently, the lower court relied upon the time element regarding the payment of the balance of
the purchase price. We consider, however, that first, the object and the total amount of the purchase
price has been agreed upon. It was error on the part of the lower court to consider any form or
manner of payment since under the present circumstances, and based upon the Levy Hermanos'
definition of what a sale on installment is, the agreement between the parties to this case would
constitute a simple "straight sale." Such manner of payment as discussed by the lower court, to Our
mind, would find pertinent application in the realm of installment sales. Thus, being a case of
straight sale, the manner of payment- which must be construed here as being made in cash- has no
bearing in the present case. The mode of payment is cash and there is no subsequent installment to
speak of. Being such, the performance of the contract will not necessarily affect the validity of the
perfected contract of sale.[12]

However, the reliance of the CA upon Levy Hermanos, Inc. vs. Gervacio[13] is misplaced because
the factual circumstances as well as the issues raised therein are not on all fours with those in the
present case. Levy Hermanos involved a collection suit to recover the balance of the purchase price
in a sale of personal property after the vendee already paid partly in cash and partly on term by
way of a promissory note that was secured with a mortgage over the property. Since the vendee
failed to pay the note upon its maturity, the vendor was constrained to foreclose on the mortgage.
The proceeds from the foreclosure sale, however, were insufficient to discharge the note,
prompting the vendor to seek judicial recourse.

In Levy Hermanos, there was no question as to the intent and nature of the agreement entered into
by the parties. Clearly, it was a contract of sale which immediately vested unto the vendee the
ownership of the personal property subject of the transaction. The issue posed in that case, rather,
pertained to the applicability of Article 1454-A[14] of the old Civil Code regarding the right of the
vendor to recover the remaining balance of the purchase price when such vendor has previously
exercised the right to foreclose the subject property. In resolving the issue, this Court delineated the
difference between an installment sale and a "straight" sale and declared that the transaction
between the parties in that case was a "straight" sale not falling within the purview of Section 1454-
A of the old Civil Code.

In the present case, it was unnecessary for the CA to distinguish whether the transaction between
the parties was an installment sale or a straight sale. In the first place, there is no valid and
enforceable contract to speak of. It was error for the appellate court to rely upon Article 1482 of the
Civil Code in concluding that the earnest money given "would be considered as part of the purchase
price and proof of the perfection of the contract."[15] This Court has emphasized that it is the proof
of the concurrence of all the essential elements of the contract of sale, and not the giving of earnest
money, which establishes the existence of a perfected sale.[16]

As correctly pointed out by the trial court, the fact that respondent delivered to petitioners and
petitioners accepted part of the downpayment on the price cannot be considered as proof of the
perfection of the contract as they had not agreed on how and when the balance was to be paid.
Respondent admitted as much during his cross-examination on August 12, 1996, to wit:

Court: Do I understand from you that after all in regard to writing, there was no consummated
agreement in regards to the terms and period of payment?

A: None, your Honor.

Court: So there was no definite period when the full payment...

A: No, your honor. There is a definite agreement as to the period of payment, your Honor, but
apparently there is a misunderstanding or both parties alleged different date, that's why...

Court: That's why my question is, there was no definite time frame agreed upon by you and the
defendant as to when the last payment of full payment will be made?
A: Based on my letter...

Court: No, between you ..."yung definite na pinagkasunduan ninyo. Yung proposal n'yo that was
rejected by the defendant." My question is, there was nothing definite in regard to specific date
when the full payment may be made, because your proposal was rejected, isn't it?

A: Yes, your Honor, it was rejected.

Court: Alright, to clarify, what was the date you proposed?

A: December 30, your Honor.

Court: What was the counter date made by the defendant?

A: The last payment, your Honor, they asked me to pay October 19... October 15 and October 31.

xxx

Court: And you did not agree in regard to the dates fixed by defendants?

A: Yes, your Honor, I did not agree.

xxx

Q: Do you recall having gone to the office of defendant corporation on November 4, 1993?

A: Yes, ma'm.

Q: What was the purpose of your visit to the office of defendant corporation?

A: To remind them of my proposal that the balance. I will only pay it on December 30.

Q: Was there any negotiation on the payment of the balance of the purchase price of the unit?

A: They insists (sic) on that I will pay it earlier, ma'm.

Q: But you did not agree to the payment?

A: Yes, ma'm.

Q: Were you not given another period within which you could pay the balance instead of December
30, 1993?

A: They gave me a period earlier than December 30 but I did not accept.

Q: Are you saying that in the negotiation, you just went to tell the defendant corporation that you
are not acceeding (sic) to their proposal of an earlier payment?

A: Yes, ma'm.[17] (Emphasis supplied.)

Significantly, neither side has been able to produce any written evidence documenting the actual
terms of their agreement, specifically the date of full payment of the purchase price. The evidence
adduced during the trial showed that the respective offers and counter-offers made by the parties
were not accepted by the other party. The trial court properly found that there was no meeting of
the minds in this case considering the acceptance of the offer was not absolute and unconditional.
[18] This further confirmed the absence of the contractual element of consent.

In a number of cases,[19] this Court has held that before a valid and binding contract of sale can
exist, the manner of payment of the purchase price must first be established. The manner of
payment affects the essential validity of the sale notwithstanding that the object and purchase price
may have previously been agreed upon. Although not an express statutory requirement, the minds
of the parties must meet on the terms or manner of payment of the price, otherwise, there is no
sale.[20] An agreement on the manner of payment goes into the price such that a disagreement on
the manner of payment is tantamount to a failure to agree on the price[21]

Secondly, the reservation of the title in the name of petitioners indicates the intention of the parties
to enter, at most, into a contract to sell. The CA already found that "there was an express stipulation
regarding the reservation of title of the property made by the seller until full payment of the price
agreed upon."[22] Indeed, this finding is supported by the records of this case and admitted by
respondent himself.[23] Both parties understood that the documents conveying title over the unit
shall be executed only upon completing payment of the purchase price. Otherwise, even prior to the
belated tender by respondent of the remaining balance, he would have demanded that petitioners
draw in his favor the necessary deed of absolute sale. Where the seller promises to execute a deed
of absolute sale upon completion of payment of the purchase price by the buyer, the agreement is
unequivocally a contract to sell.[24]

Be that as it may, the intention of the parties to enter into a contract to sell did not effectively
translate into an enforceable obligation in view of their failure to agree on the contract's actual
terms.[25] As in a contract of sale, it is important that there be a stipulation on the period within
which the payment would become due and demandable, the absence of which would justify the
conclusion that there was no consent to the contract proposed.

The Court, in this instance, cannot step in to cure the deficiency by fixing the period of the
obligation pursuant to either Article 1191[26] [which, incidentally, applies only to contracts of sale]
or Article 1197[27] of the Civil Code. In the first place, respondent did not pray for this relief when
he filed his complaint for specific performance seeking to compel petitioners to receive the balance
of the purchase price and to transfer title of the property in his name. He instead claimed that the
parties had previously fixed the period of the obligation on December 31, 1993.

Secondly, respondent impliedly admits in his pleadings below that he was in default when he
tendered payment on August 4, 1994, or almost eight months after the above-stated deadline. Even
as he acknowledges that petitioners made several demands upon him to complete payment,
respondent argues that his belated tender of payment was still acceptable considering that
petitioners did not validly rescind by judicial or notarial act their perfected contract. This, however,
applies only to a contract of sale.

Thirdly, the Court cannot arbitrarily set a period different from the term probably contemplated by
the parties.[28] In the present case, both parties submit that the due date of the final payment had
been sometime in 1993; they only differ with respect to the exact month and day. For this reason,
the Court would have no basis for granting to respondent an extension of time within which to pay
his outstanding balance well beyond the contemplated period.

Furthermore, assuming that there was a perfected contract to sell, the Court would not be inclined
to interfere with the decision of petitioners to extra-judicially terminate the operation of their
contract. Article 1592 of the Civil Code which requires that prior demand upon the respondent be
made by judicial or notarial act so as to rescind the contract would be inapplicable in this case as
the provision contemplates only contracts of sale. Rather, the contract to sell would be rendered
ineffective and without force and effect by the non-fulfillment of respondent's obligation to pay,
which is a suspensive condition to the obligation of petitioners to sell and deliver the title to the
property. The parties stand as if the conditional obligation had never existed.[29] There can be no
rescission of an obligation that is still non-existent, the suspensive condition not having as yet
occurred.[30]

This is not to say that petitioners can treat the agreement as cancelled without serving notice to
respondent of their decision to do so. The act of a party in treating a contract as cancelled should be
made known to the other party because this act is subject to scrutiny and review by the courts in
case the alleged defaulter brings the matter for judicial determination.[31] This point was
explained in University of the Philippines v. De Los Angeles,[32] thus:

It is understood that the act of a party in treating a contract as rescinded or cancelled or resolved
on account of infractions by the other contracting party must be made known to the other and is
always provisional, being ever subject to the scrutiny and review by the proper court. If the other
party denies that rescission is justified, it is free to resort to judicial action in its own behalf, and
bring the matter to court. Then, should the court, after due hearing, decide that the resolution of the
contract was not warranted, the responsible party will be sentenced to damages; in the contrary
case, the resolution will be affirmed, and the consequent indemnity awarded to the party
prejudiced.

In other words, the party who deems the contract violated may consider it resolved or rescinded,
and act accordingly, without previous court action, but it proceeds at its own risk. For it is only the
final judgment of the corresponding court that will conclusively and finally settle whether the
action taken was or was not correct in law. But the law definitely does not require that the
contracting party who believes itself injured must first file suit and wait for a judgment before
taking extra-judicial steps to protect its interest. Otherwise, the party injured by the other's breach
will have to passively sit and watch its damages accumulate during the pendency of the suit until
the final judgment of rescission is rendered when the law itself requires that [it] should exercise
due diligence to minimize its own damages.

In the present case, petitioners repeatedly reminded respondent in writing to pay the outstanding
balance of the purchase price of the unit, always with a warning that his failure to do so would
result in the cancellation of their agreement and the forfeiture of the downpayment already made.
[33] Finally, because of respondent's continuing default in his obligation, petitioners served notice
of their decision to rescind the contract in a letter dated September 23, 1994.[34] Under such
circumstances, the cancellation by petitioners of the purported contract is reasonable and valid.
However, the forfeiture of the downpayment is unwarranted as respondent never acceded to the
same.

Considering that the agreement of the parties did not ripen into a binding and enforceable contract
meaning it did not acquire any obligatory force either for the transfer of the ownership of the
property or the rendition of payments as part of the purchase price due to the absence of the
essential element of consent, the Court is precluded from finding any cause of action that would
warrant the granting of the reliefs prayed for in respondent's complaint. Accordingly, the initial
payment of Two Million Pesos (P2,000,000) advanced by respondent should be returned by
petitioners lest the latter unjustly enrich themselves at the expense of the former. In the same vein,
considering that respondent has been in continuous possession of the subject unit beginning July of
1993, the award of back rentals in favor of petitioners is likewise proper, but the award of moral
damages and attorney's fees should be deleted for lack of sufficient basis.

WHEREFORE, the petition is GRANTED and the assailed Decision dated February 21, 2001
rendered by the Court of Appeals (CA) in CA-G.R. CV No. 60071 is REVERSED and SET ASIDE.
Accordingly, the Decision dated May 18, 1998 of the Regional Trial Court of Pasig City, Branch 266,
in Civil Case No, 64903 is REINSTATED.

However, moral damages and attorney's fees awarded are DELETED for lack of basis.

No costs.

SO ORDERED.

Sandoval-Gutierrez (Acting Chairperson), Corona, and Cancio-Garcia, JJ., concur.

Puno, C.J., (Chairperson), on leave.

[1] Under Rule 45 of the Rules of Court.

[2] CA Rollo, pp. 149-164.

[3] Records, pp. 460-472.

[4] Records, pp. 1-17.

[5] The subject unit measuring one hundred thirty-six (136) square meters is covered by Transfer
Certificate of Title No. PT-80413.
[6] CA Rollo, pp. 150-152.

[7] CA Rollo, p. 163.

[8] V COMMENT ARIES AND JURISPRUDENCE ON THE CIVIL CODE, TOLENTINO, p. 24 (1999).

[9] Guevara v. Pascual, 12 Phil. 311 (1908).

[10] TOLENTINO, supra note 8.

[11] Spouses Gimenez v. CA, G.R. No. 92171, March 13, 1991, 195 SCRA 205; Augustin v. CA, G.R. No.
84751, June 6, 1990, 186 SCRA 375; Roque v. Lapuz, G.R. No. L-32811, March 31, 1980, 96 SCRA
741; Luzon Brokerage Co. v. Maritime Building Co., G.R. No. 25885, January 31,1972, 43 SCRA 93.

[12] CA Rollo, pp. 158-159.

[13] 69 Phil. 52 (1939).

[14] This article outlined the remedies of a vendor in a contract of sale of personal property payable
in installments, to wit:
In a contract for the sale of personal property payable in installments, failure to pay two or more
installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if
one has been given on the property, without reimbursement to the purchasers of the installments
already paid, if there be an agreement to this effect.
However, if the vendor has chosen to foreclose the mortgage, he shall have no further action against
the purchaser for the recovery of any unpaid balance owing by the same, and any agreement to the
contrary shall be null and void.
[15] CA Rollo, p. 159.

[16] San Miguel Properties Philippines, Inc. v. Spouses Huang, G.R. No. 137290, July 31, 2000, 336
SCRA 737.

[17] Transcript of Stenographic Notes (TSN), August 12, 1996, pp. 12-16.

[18] Records, pp. 470-471.

[19] Swedish Match, AB v. CA, G.R. No. 128120, October 20, 2004, 441 SCRA 1; Montecillo v. Reynes,
434 Phil. 456 (2002); San Miguel Properties Philippines, Inc. v. Spouses Huang, supra note 16; Co v.
CA, 349 Phil 745 (1998); Uraca v. CA, G.R. No. 115158, September 5, 1997, 278 SCRA 702; Limketkai
Sons Milling, Inc. v. CA, 330 Phil. 171 (1996); Toyota Shaw, Inc. v. CA, 314 Phil. 201 (1995).

[20] Montecillo v. Reynes, supra note 19; Navarro v. Sugar Producers Cooperative Marketing
Association, Inc., G.R. No. L-12888, April 29, 1961, 1 SCRA 1181.

[21] San Miguel Properties Philippines, Inc. v. Spouses Huang quoting Toyota Shaw, Inc. v. CA, 314
Phil. 201 (1995)], supra note 16.

[22] CA Rollo, p. 159.

[23] TSN, August 12,1996, p. 10.

[24] Rayos v. CA, G.R. No. 135528, July 14, 2004, 434 SCRA 365.

[25] Ebrada v. Ramos, G.R. No. 154413, August 31, 2005, 468 SCRA 597.

[26] CIVIL CODE, Article 1191-

The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a
period. This is understood to be without prejudice to the rights of third persons who have acquired
the thing, in accordance with articles 1385 and 1388 and the Mortgage Law. (1124)

[27] CIVIL CODE, Article 1197-

If the obligation does not fix a period, but from its nature and the circumstances it can be inferred
that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case, the courts shall determine such period as may under the circumstances have been
probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by
them. (1128a)

[28] Gregorio Araneta, Inc. v. Philippine Sugar Estates Development Co., Ltd., G.R. No. L-22558, May
31, 1967, 20 SCRA 331.

[29] Rayos v. CA, supra note 21.

[30] Cheng v. Genato, G.R. No. 129760, December 29,1998, 300 SCRA 722.

[31] Palay, Inc. v. Clave, GR No. L-56076, September 21, 1983, 124 SCRA 638.

[32] L-28602, September 29, 1970, 35 SCRA 107.

[33] Records, pp. 332-334, 435-437.

[34] Id. at 440.

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRIVATIZATION AND MANAGEMENT
OFFICE (PMO), Petitioner, v. ANTONIO V. BAÑ EZ, LUISITA BAÑ EZ VALERA, NENA BAÑ EZ HOJILLA,
AND EDGARDO B. HOJILLA, JR., Respondents. G.R. No. 169442, October 14, 2015

DECISION

PEREZ, J.:

Assailed and sought to be annulled in this Petition for Review on Certiorari under Rule 45 of the
1997 Rules of Civil Procedure is the Decision1 of the Court of Appeals dated 23 August 2005 in CA-
G.R. CV No. 70137, entitled "Cellophil Resources Corporation v. Antonio V. Bañ ez, Luisita Bañ ez
Valera, Nena Bañ ez Hojilla and Edgar do B. Hojilla, Jr.," which affirmed the Order2 of the Regional
Trial Court (RTC), Branch 1, Bangued, Abra, dated 16 August 2000, that dismissed the complaint of
petitioner Republic of the Philippines, represented by Privatization and Management Office (PMO),
for specific performance, recovery of possession, and damages against respondents Antonio V.
Bañ ez, Luisita Bañ ez Valera, Nena Bañ ez Hojilla and Edgardo B. Hojilla, Jr., docketed as Civil Case
No. 1853.

The facts as culled from the records are as follows:

In 1976, Antonio V. Bañ ez, Luisita Bañ ez Valera, and Nena Bañ ez Hojilla (collectively, respondents)
offered for sale a parcel of land (subject property), with an area of 20,000 sq m in Barangay Calaba,
Bangued, Abra to Cellophil Resources Corporation (CRC). Pursuant to the offer to sell on 7
December 1981, respondents executed a Letter Agreement irrevocably giving CRC the option to
purchase the subject property, which CRC accepted. The pertinent portion of the Letter Agreement
(hereinafter referred to as Contract), to wit:

1. The purchase price shall be Twenty Pesos xxx per square meter or a total amount of Four
Hundred Thousand Pesos (P400,000.00).

2. The co-owners shall take all necessary steps to cause the CRC Portion to be brought under the
operation of Republic Act No. 496, as amended, and to cause the issuance in their name of the
corresponding original certificate of title, all of the foregoing to be accomplished within a
reasonable time from date hereof. xxx

xxxx

7. The co-owners hereby confirm their agreement and permission to CRC's entry into, construction
of building[s] and improvements, and occupancy of, any portion of the Property, and xxx waive any
right of action they may have against CRC respecting such entry, construction, or occupancy by the
latter of any Portion of the Property.

8. An absolute deed of sale containing the above provisions and standard warranties on
conveyances of real property shall be executed by the co-owners in favor of CRC or its assignee/s
and the same delivered to the latter together with the original certificate of title upon payment of
the purchase price less the advances made by CRC in accordance with Paragraphs 2 and 3 above;
provided, that payment shall be made by CRC only upon presentation by the co-owners to CRC of
certificate/s and/or clearances, with corresponding receipts, issued by the appropriate government
office/s or agency/ies to the effect that capital gains tax, real estate taxes on the Property and local
transfer tax and other taxes, fees or charges due on the transaction and/or on the Property have
been paid.

9. This option shall be effective from [the] date of your acceptance as indicated by your conformity
below and for a period of one (1) month from and after CRC shall have been notified in writing by
the co-owners that an original certificate of title has been issued in their names and that they are
ready to execute the xxx deed of sale.3

Respondents asked for several cash advances which reached the total amount of, more or less, Two
Hundred Seventeen Thousand Pesos (P217,000.00), to be deducted from the purchase price of Four
Hundred Thousand Pesos (P400,000.00). After paying cash advances to respondents, CRC
constructed staff houses and introduced improvements on the subject property. As respondents
would be staying abroad for a time, they executed a Special Power of Attorney (SPA) in favor of
Edgardo B. Hojilla (Hojilla). The SPA authorized Hojilla to perform the following:

1. To take all steps necessary to cause a portion of the lot covered by Tax Declaration No. 40185 in
the name of Urbano Bañ ez which is the subject of our "Offer to Sell" to Cellophil Resources
Corporation containing an area xxx to be brought under the operation of Republic Act No. 496, as
amended, and to cause the issuance in our name of the corresponding original certificate of title.

2. To do all acts and things and to execute all papers and documents of whatever nature or kind
required for the accomplishments of the aforesaid purpose.

HEREBY GRANTING AND GIVING unto our said attorney full power and authority whatsoever
requisite or necessary or proper to be done in or about the premises as fully to all intents and
purposes as we might or could lawfully do if personally present (with power of substitution and
revocation), and hereby ratifying and confirming all that our said attorney shall do or cause to be
done under and by virtue of these presents.4ChanRoblesVirtualawlibrary

However, CRC stopped its operation. The Development Bank of the Philippines and National
Development Company took over CRC's operation and turned over CRC's equity to Asset
Privatization Trust (APT), which is a government agency created by virtue of Proclamation No. 50,
as amended. The APT's function is to take title to and possession of, provisionally manage and
dispose of nonperforming assets of government financial institutions. Upon the expiration of APT's
term on 31 December 2000, the government issued Executive Order (E.O.) No. 323, which created
the Privatization and Management Office (PMO). By virtue of E.O. No. 323, the powers, functions,
and duties of APT were transferred to the PMO. Thus, the original party, CRC, is now represented by
the Republic of the Philippines through the PMO (hereinafter referred to as petitioner), the
successor of the defunct APT.

As alleged by petitioner, respondents declared afterwards the subject property as Urbano Bañ ez
property, rented out to third parties the staff houses petitioner constructed, and ordered its guards
to prohibit the petitioner from entering the compound, which impelled petitioner to file a complaint
for specific performance, recovery of possession, and damages against respondents, including
Hojilla, on 10 April 2000. Among others, the complaint prayed for respondents to surrender and
deliver the title of the subject property, and execute a deed of absolute sale in favor of petitioner
upon full payment. It mentioned three letters sent to respondents on 29 May 1991, 24 October
1991, and 6 July 1999.

In the Complaint, it was alleged that:

"[t]here is no justification, legal or otherwise for the [respondents] to dispossess (sic) the
[petitioner] from the subject property. [Petitioner] is more than willing and able to pay the
[respondents] the balance of the purchase price of the subject parcel of land but its inability to do
so was due to the [respondents'] failure to produce the original certificate of title of the subject
parcel of land and to execute the pertinent deed of sale, as well as the unjustified occupation by the
[respondents] of the property and [of] the staff houses built by [petitioner and that] such actions of
the [respondents] are contrary to their undertaking under condition no. 7 of the subject letter
agreement, that is, for [respondents] to permit [petitioner's] entry into and occupancy of any
portion of the subject property and their waiver of any right of action they may have against
[petitioner] respecting such entry and occupancy of any portion of the property. And despite
repeated demands made by [petitioner] upon the [respondents] for them to vacate and turnover
the subject parcel of land and the staff houses to [petitioner], the last of which was in a letter dated
July 6, 1999, the said [respondents] have failed and neglected and still fail and neglect to do so up to
the present time."5ChanRoblesVirtualawlibrary

Ruling of the RTC

On 23 June 2000, Hojilla filed a Motion to Dismiss on the grounds that he was not a real party-in-
interest and that the action was barred by the Statute of Limitations, which Motion the RTC granted
in an Order dated 16 August 2000 based on Article 1144(1) of the Civil Code, which bars actions
filed beyond ten (10) years upon the execution of the written contract. According to the RTC, the
letters petitioner sent to respondents were not demands for respondents to comply with their
obligation to deliver the title as to interrupt the running of the prescriptive period. The pertinent
portion of the RTC Order reads:

In the instant case, the defendants were given [enough] time from December 7, 1981 to comply
with their obligation, hence, after a reasonable period of time, the plaintiff should have demanded
compliance of defendants' undertakings or initiated any other action to protect its interest without
waiting for the statute of limitations to bar their claim.6

The RTC resolved that because the written contract was executed on 7 December 1981, then the
complaint that was filed more than eighteen (18) years since the contract was executed was beyond
the 10-year prescriptive period. Within that 18-year period, there was no act on the part of
petitioner, whether judicial or extrajudicial, to interrupt prescription.

While petitioner paid cash advances to respondents for the processing of the registration of the
title, "which totaled to more or less P217,000.00 as of September 7, 1984 xxx to the filing of this
suit, [petitioner] has not demanded compliance by [respondents] of their obligation, that is, the
execution of the absolute deed of sale and the delivery of the Original Certificate of Title to the
property to [petitioner] upon payment of the purchase price stipulated. There were letters
addressed to [respondents] but these were not demands for compliance of [respondents']
obligation and which is not sufficient under the law to interrupt the prescriptive period."7

The RTC further stated that:

"[t]he 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
[of the] parties to demand performance of the obligation of the other for an unreasonable length of
time renders the contract ineffective."8

The motion for reconsideration was likewise denied in an Order dated 5 January 2001.

On appeal, petitioner argued that the RTC erred when it dismissed the complaint. Petitioner
averred that: (1) its claim was not yet barred by prescription; (2) the period of prescription had
been interrupted by extrajudicial demand; (3) the Statute of Limitation did not run against the
State; (4) petitioner's claim not having prescribed, laches could not have set in; (5) the laches of one
nullified the laches of the other; and (6) laches cannot be used to defeat justice or to perpetuate
fraud and injustice.chanrobleslaw

Ruling of the Court of Appeals

The Court of Appeals affirmed the ruling of the RTC in a Decision dated 23 August 2005 on the
ground that the complaint was barred by the Statute of Limitations. Contrary to petitioner's
arguments, the Court of Appeals found that the extrajudicial demand to respondents did not serve
to toll the running of the prescriptive period. The Court of Appeals ruled that the record is bereft of
evidence that would attest that written extrajudicial demands were sent to respondents. While
petitioner sent demand letters dated 29 May 1991 and 24 October 1991, these demand letters were
not considered as demand letters because the letters simply called the attention of Hojilla to return
the properties and unlock the gates. As regards the letter dated 6 July 1999, the Court of Appeals
ruled that because the letter was addressed to Hojilla, who was only an attorney-in-fact authorized
to register the property, it was not binding upon the respondents. The Court of Appeals also gave no
probative value to the 6 July 1999 letter for having no proof of service.

With regard to the issue of running of prescriptive period against the State, the Court of Appeals
opined that because the subject property is a patrimonial property of the State when APT became
the controlling stockholder of CRC, prescription may run against the State. Thus, the reasonable
period within which to register the property is three (3) years. According to the Court of Appeals,
the cause of action of petitioner accrued three (3) years from the time the Contract was executed on
7 December 1981 or, to say the least, on 15 August 1984 when Hojilla sent the acknowledgment
letter dated 15 August 1984, at which time it became clear that respondents could no longer fulfill
their obligation.

Hence, petitioner is before us raising the following arguments:

The Court of Appeals erred in ruling that the running of the prescriptive period was not interrupted
when respondents acknowledged their still unfulfilled obligation to initiate proceedings for the
registration of title of the subject property and at the same time committed that they will only claim
the full payment of the property upon presentation of a clean title and execution of a Deed of Sale
signed by the heirs as stated in the letter dated August 15, 1984.

The Court of Appeals erred in affirming the outright dismissal of petitioner's suit for specific
performance, recovery of possession and damages on the basis of prescription even as it is evident
that there is a need to fix a period considering that the performance of the condition or obligation is
dependent upon the will of respondents.

The Court of Appeals erred in ignoring certain manifest equitable considerations which militate
against a resort to a purely mathematical computation of the prescriptive period and in
disregarding the provision of the irrevocable offer that the option remains effective for a period of
one month from and after notice that a certificate of title has been issued.9

The main issue is whether or not the complaint for specific performance was filed beyond the
prescriptive period.

Petitioner's Arguments

The petitioner argues that although there is a 10-year limitation within which to file a case based on
a written contract, the period was interrupted due to a written acknowledgment of respondents'
obligation and demand by petitioner. The argument is based on Article 1155 of the Civil Code,
which provides that the running of the prescriptive period is interrupted when there is a written
extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt
by the debtor.

The petitioner referred to the letter sent by Hojilla to the former dated 15 August 1984, and letters
given by petitioner to Hojilla dated 29 May 1991, 24 October 1991, and 6 July 1999. In the letter
dated 15 August 1984, respondents affirmed their undertaking that they will claim full payment of
the property upon presentation of a clean title and the execution of the Absolute Deed of Sale,
which reads, "[t]he Bañ ez heirs will only claim for the full payment of the property upon
presentation of a clean title and execution of a Deed of Sale signed by the heirs."10

Based on Hojilla's representation as stated in the letter dated 15 August 1984, petitioner argues
that Hojilla is estopped by his own acts and for misleading petitioner because "respondents not
only failed to comply with their commitment to deliver a certificate of title but where [sic] they also
[misled] petitioner into believing that they were working on the title of subject property even as
they had[,] at the back of their mind[s], the running of the statute of limitations as an arsenal once
petitioner demands the fulfillment of their obligation."11

The petitioner further added that because there was no period fixed for the fulfillment or
performance of the obligation to deliver the title, the least the court should have done was to fix the
period pursuant to Article 1197 of the Civil Code.

Finally, the petitioner posits that pursuant to paragraph 9 of the Contract, its obligation is
conditioned upon respondents' obligation, which is to deliver the title. Thus, because the
respondents failed to deliver such, the obligation of petitioner never ripened.

Respondents' Arguments

The arguments of respondents, which are aligned with the reasons of the lower courts, rely on
Article 1144 of the Civil Code, which provides that actions upon a written contract must be brought
within ten (10) years from execution. Because the complaint was filed beyond the 10-year
prescriptive period, the action was already barred by the Statute of Limitations. Further, during
such period, petitioner failed to act either judicially or extrajudicially to effectively interrupt the
running of the prescriptive period. Thus, the complaint must be dismissed for having been
extinguished by the Statute of Limitations.
Our Ruling

We rule in favor of the petitioner.

We deem material, for the resolution of the issues in this case, the letters that were exchanged by
the parties.

We shall discuss each letter in seriatim.

Hojilla 's letter dated 15 August 1984

In Hojilla's letter to petitioner dated 15 August 1984, Hojilla updated petitioner of the status of the
subject property's title, in this wise:

The preparation of the advance survey plan, technical description and Engineer's Certificate
pursuant to Land Administrative Order No. 10-4 has been submitted to the Regional Land Office,
and approved by the Regional Director.

Atty. Valera is now in the process of preparing the petition papers of the Calaba property for
submission to the local court.12

There is no other logical conclusion but that the 15 August 1984 letter is an acknowledgment of
respondents' commitment under the Contract. The letter served to update petitioner of the status
of the subject property's title, an obligation agreed upon by the parties in the Contract. It would be
specious to argue that respondents did not acknowledge the existence of the Contract and yet, send
correspondence to petitioner updating it of the status of the application for title on the subject
property. Therefore, the letter dated 15 August 1984 served as a written acknowledgment of debt
or obligation of respondents.

In Philippine National Railways v. NLRC,13 it was stated that a written acknowledgment of debt or
obligation effectively interrupts the running of the prescriptive period and sets the same running
anew.14 Hence, because Hojilla's letter dated 15 August 1984 served as a written
acknowledgement of the respondents' debt or obligation, it interrupted the running of the
prescriptive period and set the same running anew with a new expiry period of 15 August 1994.

Petitioner's letters dated 29 May

1991 and 24 October 1991

With regard to the letters petitioner sent to Hojilla dated 29 May 1991 and 24 October 1991, the
RTC ruled that these letters were insufficient under the law to interrupt the prescriptive period
because these were not demand letters. We lift the pertinent portion from the letter dated 29 May
1991, which demanded respondents to return the properties and to unlock the gates:

Under the agreement to purchase the lot, APT-CRC shall pay the whole of the purchase price thereof
when the certificate of title and other documents enumerated therein are presented to it. Clearly,
the consummation of the sale is within your control, x x x

In view of the foregoing, demand is hereby made upon you and your principals, the heirs of Urbano
Bañ ez, to return the properties withdrawn and to unlock the gates leading to the staffhouses (sic),
within fifteen (15) days from receipt thereof, otherwise we will be constrained to institute the
necessary action to protect the interest of APT-CRC.15 (Emphasis and underscoring ours)

In the same vein, the letter dated 24 October 1991 demanded respondents to discontinue the
construction, repair, demolition, and occupancy of several staff houses. A pertinent portion of the
24 October 1991 letter reads:

Considering that these action (sic) are unauthorized, they constitute violations of the irrevocable
option to purchase dated December 7, 1981, which remains valid, binding and effective to this day.
Demand is hereby made upon you to discontinue such unauthorized acts and vacate the premises
within fifteen (15) days from receipt hereof.16 x x x (Emphasis and underscoring ours)
We do not agree with the lower courts. Clearly, the 29 May 1991 and 24 October 1991 letters
demanded respondents to return the properties, discontinue the construction, repair, demolition
and occupancy of several staff houses, and unlock the gates, which is to enforce respondents'
obligations pursuant to paragraph 7 of the Contract which reads:

7. The co-owners hereby confirm their agreement and permission to CRC's entry into, construction
of building and improvements, and occupancy of, any portion of the Property, and hereby
accordingly waive any right of action they may have against CRC respecting such entry,
construction, or occupancy by the latter of any Portion of the Property.17

The letters dated 29 May 1991 and 24 October 1991 are deemed demand letters as contemplated
under Article 1155. They are demand letters to enforce respondents' obligation under the Contract,
which is to cede possession to petitioner. The letters interrupted the running of the prescriptive
period which commenced to run anew.

Petitioner's letter dated 6 July 1999

Compared to the letters dated 29 May and 24 October 1991, which demanded Hojilla to surrender
possession of the subject property, this time, in petitioner's letter to Hojilla dated 6 July 1999,
petitioner demanded Hojilla to produce the title of the subject property. However, despite the fact
that the letter was a clear demand of the nature contemplated by law that would interrupt the
prescriptive period, the Court of Appeals found that (1) the letter did not effectively interrupt the
prescriptive period because the complaint had long prescribed; (2) the letter was addressed to the
wrong party; and, finally, (3) the letter did not bear any proof of service or receipt.

We do not agree.

Hojilla's SPA

We refer to the SPA, which granted the authority of Hojilla.

When respondents went abroad pending the performance of their obligations in the Contract, they
authorized Hojilla to register the subject property— a single obligation in the whole range of
obligations in the Contract. The SPA appeared to have left no representative to fulfill respondents'
obligations in the Contract on their behalf except for Hojilla's authority to register the subject
property. The pertinent portion of the SPA reads:

1. To take all steps necessary to cause a portion of the lot covered by Tax Declaration No. 40185 in
the name of Urbano Baflez which is the subject of our "Offer to Sell" to Cellophil Resources
Corporation containing an area xxx to be brought under the operation of Republic Act No. 496, as
amended, and to cause the issuance in our name of the corresponding original certificate of title.

2. To do all acts and things and to execute all papers and documents of whatever nature or kind
required for the accomplishments of the aforesaid purpose.

HEREBY GRANTING AND GIVING unto our said attorney full power and authority whatsoever
requisite or necessary or proper to be done in or about the premises as fully to all intents and
purposes as we might or could lawfully do if personally present (with power of substitution and
revocation), and hereby ratifying and confirming all that our said attorney shall do or cause to be
done under and by virtue of these presents.18 (Emphasis and underscoring ours)

This was read simply by the lower courts as limiting Hojilla's authority to the registration of the
subject property under the name of his principal, and all the necessary acts for such purpose. It
observed that nowhere in the SPA was Hojilla authorized as administrator or agent of respondents
with respect to the execution of the Contract.

In the case at bar, the reliefs prayed for by petitioner include the execution of the Contract such as
delivery of the subject title, recovery of possession of the subject property, execution of the deed of
sale or transfer of absolute ownership upon full payment of the balance, and damages for alleged
violation of respondents of the Contract for non-delivery of the title and refusal to vacate the
subject property. Indeed, following the reading of the lower courts of the scope of Hojilla's
authority, Hojilla is neither the proper party to execute the Contract nor the proper party to receive
the demand letters on behalf of respondents.

This strict construction of the tenor of the SPA will render the obligatory force of the Contract
ineffective. Construction is not a tool to prejudice or commit fraud or to obstruct, but to attain
justice. Ea Est Accipienda Interpretatio Quae Vitio Caret. To favor the lower court's interpretation of
the scope of Hojilla's power is to defeat the juridical tie of the Contract—the vinculum juris of the
parties. As no one was authorized to represent respondents in the Contract, then petitioner cannot
enforce the Contract, as it were. This is an absurd interpretation of the SPA. It renders the Contract
ineffective for lack of a party to execute the Contract.

Contrary to the findings of the lower court, the present case is a case of an express agency, where,
Hojilla, the agent, binds himself to represent another, the principal, who are herein respondents,
with the latter's express consent or authority.19 In a contract of agency, the agent acts for and in
behalf of the principal on matters within the scope of the authority conferred upon him, such that,
the acts of the agent have the same legal effect as if they were personally done by the principal.20
Because there is an express authority granted upon Hojilla to represent the respondents as
evidenced by the SPA, Hojilla's actions bind the respondents.

As agent, the representations and guarantees of Hojilla are considered representations and
guarantees of the principal. This is the principle of agency by promissory estoppel. We refer to the
evidence on record. It was Hojilla who administered and/or managed the subject property.21
Based on Hojilla's letter dated 15 August 1984 to petitioner, Hojilla made the representation that
besides being the attorney-in-fact of the respondents with limited authority to register the
property, he was also their agent with regard to respondents' other obligations related to the
Contract. The pertinent portion of the 15 August 1984 letter of Hojilla to petitioner reads:

Regarding our loan with the National Electrification Administration (NEA), Hon. Mel Mathay who is
helping the Bafiez heirs has initiated negotiations with NEA for Abreco to purchase our lot in front
of the Provincial Jail to offset our loan with NEA.22

Also, one glaring fact that cannot escape us is Hojilla's representation and guarantee that
petitioner's obligation will only arise upon presentation of a clean title and execution of a Deed of
Sale signed by the respondents' heirs, which reads, "[t]he Bañ ez heirs will only claim for the full
payment of the property upon presentation of a clean title and execution of a Deed of Sale signed by
the heirs."23

If Hojilla knew that he had no authority to execute the Contract and receive the letters on behalf of
respondents, he should have opposed petitioner's demand letters. However, having received the
several demand letters from petitioner, Hojilla continuously represented himself as the duly
authorized agent of respondents, authorized not only to administer and/or manage the subject
property, but also authorized to register the subject property and represent the respondents with
regard to the latter's obligations in the Contract. Hojilla also assured petitioner that petitioner's
obligation to pay will arise only upon presentation of the title.

Clearly, the respondents are estopped by the acts and representations of their agent. Falling
squarely in the case at bar is our pronouncement in Philippine National Bank v. IAC (First Civil
Cases Div.),24 "[h]aving given that assurance, [Hojilla] may not turn around and do the exact
opposite of what [he] said [he] would do. One may not take inconsistent positions. A party may not
go back on his own acts and representations to the prejudice of the other party who relied upon
them."25cralawred

Assuming further that Hojilla exceeded his authority, the respondents are still solidarity liable
because they allowed Hojilla to act as though he had full powers by impliedly ratifying Hojilia's
actions—through action by omission.26 This is the import of the principle of agency by estoppel or
the doctrine of apparent authority.

In an agency by estoppel or apparent authority, "[t]he principal is bound by the acts of his agent
with the apparent authority which he knowingly permits the agent to assume, or which he holds the
agent out to the public as possessing."27
The respondents' acquiescence of Hojilla's acts was made when they failed to repudiate the latter's
acts. They knowingly permitted Hojilla to represent them and petitioners were clearly misled into
believing Hojilla's authority. Thus, the respondents are now estopped from repudiating Hojilla's
authority, and Hojilla's actions are binding upon the respondents.

Receipt of the Letters

Time and time again, this Court has reiterated it is not a trier of facts and parties may raise only
questions of law. The jurisdiction of the Court is limited to reviewing errors of law and findings of
fact of the Court of Appeals are conclusive because it is not the Court's function to review, examine,
and evaluate or weigh the evidence all over again.28 The rule, however, is not without exceptions,
viz.:

(1) [W]hen the [conclusion is a finding] grounded entirely on speculations, surmises [and]
conjectures;cralawlawlibrary

(2) [W]hen the inference made is manifestly mistaken, absurd or impossible;cralawlawlibrary

(3) [W]hen there is grave abuse of discretion;cralawlawlibrary

(4) [W]hen the judgment is based on a misapprehension of facts;cralawlawlibrary

(5) [W]hen the findings of fact are conflicting;

(6) [W]hen xxx the Court of Appeals[, in making its findings,] went beyond the issues of the case
[and the same is] contrary to the admissions of both the appellant and the
appellee;cralawlawlibrary

(7) [W]hen the findings are contrary to [those] of the trial court;

(8) [W]hen the findings [of fact] are conclusions without citation of specific evidence on which they
are based;cralawlawlibrary

(9) [W]hen the facts set forth in the petition as well as in the petitioner's main and reply briefs are
not disputed by the respondents;cralawlawlibrary

(10) [w]hen the findings of fact [of the Court of Appeals] are premised on the supposed absence of
evidence and contradicted by the evidence on record and

(11) [When] the Court of Appeals manifestly overlooked certain irrelevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion.29

In the case at bar, the findings of the RTC and the Court of Appeals are contradictory: the RTC did
not make any finding on the receipt of the demand letters by Hojilla, while the Court of Appeals
resolved that assuming arguendo that the letters were demand letters contemplated under Article
1155 of the Civil Code, the same are unavailing because the letters do not bear any proof of service
of receipt by respondents.

A perusal of the records reveals that only the 24 October 1991 letter has no proof of receipt.30 The
demand letters dated 29 May 199131 and 6 July 199932 contain proofs of receipt.

Thus, the core issue of whether or not the action has prescribed.

An action based on a written contract must be brought within ten (10) years from the time
the right of action accrued. Accordingly, a cause of action on a written contract accrues only
when an actual breach or violation thereof occurs.33 A cause of action has three elements, to
wit: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises
or is created; (2) an obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such defendant violative of the
right of the plaintiff or constituting a breach of the obligation of the defendant to the
plaintiff.34
By the contract between the herein parties, the cause of action accrued at the point when the
reasonable time within which to present the title lapsed. The parties did not determine the
date when the respondents must present the title and other documents to the petitioner.
The parties only agreed that the respondents must present the same within a "reasonable
time." Reasonable time means "so much time as is necessary under the circumstances for a
reasonably prudent and diligent man to do, conveniently, what the contract or duty requires
that should be done, having a regard for the rights and possibility of loss, if any, to the other
party."35 Such reasonable time was determined by the respondents through the letter dated
15 August 1984. The respondents acknowledged their obligation to deliver the title and
asked for a new period to do so. It states:

The preparation of the advance survey plan, technical description and Engineer's Certificate
pursuant to Land Administrative Order No. 10-4 has been submitted to the Regional Land Office,
and approved by the Regional Director.

Arty. Valera is now in the process of preparing the petition papers of the Calaba property for
submission to the local court.

xxxx

The Bañ ez heirs will only claim for the full payment of the property upon presentation of a clean
title and execution of a Deed of Sale signed by the heirs.36

The accrual of the cause of action to demand the titling of the land cannot be earlier than 15 August
1984. So that, the petitioner can sue on the contract until 15 August 1994. Prior to the expiration of
the aforesaid period, the petitioner sent a demand letter to Hojilla dated 29 May 1991. A few
months thereafter, petitioner sent another demand letter to Hojilla dated 24 October 1991.37 The
prescriptive period was interrupted on 29 May 1991.

The consequence is stated in Article 1155 of the Civil Code. It states, "[t]he prescription of
actions is interrupted when they are filed before the court, when there is a written
extrajudicial demand by the creditors, and when there is any written acknowledgment of the
debt by the debtor."

Following the law, the new ten-year period for the filing of a case by the petitioner should be
counted from 29 May 1991, ending on 29 May 2001. The complaint at bar was filed on 10 April
2000, well within the required period.

Notably, before the expiration of the new prescriptive period, the petitioner again sent a new
demand letter on 6 July 1999, which again caused the same to run anew, which will expire on 6 July
2009. The complaint filed on 10 April 2000 was timely.

The Contract and True Intent of the Parties

Based on the stipulation in the Contract, the parties agreed that payment shall be made only upon
presentation of the title and other documents of the subject property to petitioner. Paragraph 8 of
the Contract reads:

8. An absolute deed of sale containing the above provisions and standard warranties on
conveyances of real property shall be executed by the co-owners in favor of CRC or its assignee/s
and the same delivered to the latter together with the original certificate of title upon payment of
the purchase price less the advances made by CRC in accordance with Paragraphs 2 and 3 above;
provided, that payment shall be made by CRC only upon presentation by the co-owners to CRC of
certificate/s and/or clearances, with corresponding receipts, issued by the appropriate government
office/s or agency/ies to the effect that capital gains tax, real estate taxes on the Property and local
transfer tax and other taxes, fees or charges due on the transaction and/or on the Property have
been paid.38 (Emphasis and underscoring ours)
The true intent of the parties is further enunciated in Hojilla's letter to petitioner dated 15 August
1984, which stated, "[t]he Bañ ez heirs will only claim for the full payment of the property upon
presentation of a clean title and execution of a Deed of Sale signed by the heirs."39

To rule in favor of respondents despite their failure to perform their obligations is the
height of injustice. Respondents cannot benefit from their own inaction and failure to
comply with their obligations in the Contract and let the petitioner suffer from respondents'
own default.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 23 August 2005
in CA-G.R. CV No. 70137, affirming the Order of the Regional Trial Court, which ruled that the action
has prescribed, is reversed and set aside. Let the records of this case be REMANDED to the court of
origin, which is DIRECTED to admit the Answer with Counterclaim of the petitioner for further trial
on the merits. The respondents are further ordered to return possession of the subject property to
petitioner. No pronouncement as to costs.

SO ORDERED

Sereno, C.J., (Chairperson), Velasco, Jr.,* Leonardo-De Castro, and Perlas-Bernabe, JJ., concur.
Endnotes:

* Designated as Additional Member in lieu of Associate Justice Lucas P. Bcrsnmin per Raffle dated
10 August 2015.

1 Penned by Presiding Justice Romeo A. Brawner, with Associate Justices Mario L. Guarina III and
Jose C. Mendoza (now a member of this Court) concurring; rollo, pp. 7-17.

2 Penned by Judge Charito B. Gonzales; records, pp. 370-373.

3 Id. at 11-13. (Emphases and underscoring ours.)

4 Id. at 14.

5Rollo, pp. 77-78.

6 Id. at 101.

7 Id.

8 Id.

9 Petition for Review; id. at 39-40.

10 Id. at 43.

11 Id. at 46.

12 Records, p. 383.

13 258 Phil. 552(1989).

14 Id. at 553.

15 Records, p. 105.

16 Id. at 385.

17 Id. at 12.

18 Id. at 14.
19Country Bankers Insurance Corporation v. Keppel Cebu Shipyard, G.R. No. 166044, 18 June 2012,
673 SCRA 427, 444-445.

20 Id. at 445.

21Rollo, p. 96.

22 Records, p. 383.

23 Petition for Review; rollo, p. 43.

24 267 Phil. 720 (1990).

25 Id. at 728. (Citations omitted.)

26Filipinos Life Assurance Company v. Pedroso, 567 Phil. 514, 519 (2008).

27Professional Services, Inc., v Agana, 542 Phil. 464, 490 (2007), citing Irving v. Doctors Hospital of
Lake Worth, Inc., 415 So. 2d 55 (1982).

28Adriano v. Lasala, G.R. No. 197842, 9 October 2013, 707 SCRA 346, 355.

29 Id.

30 Records, p. 106.

31 Id. at 105.

32 Id. at 16.

33China Banking Corporation v. Court of Appeals, 499 Phil. 770, 775 (2005).

34 Id.

35Pascual v. Pascual, 622 Phil. 307, 320 (2009).

36 Records, p. 383.

37 The 24 October 1991 letter was not duly received by the sellers. Such fact is irrelevant because
the expiration of the prescriptive period may be reckoned on 29 May 1991, giving a new
prescriptive period until 29 May 2001.

38 Records, p. 12.

39 Petition for Review; rollo, p. 43.