4. SOLER VS CAGR NO.

123892
Appeal via certiorari from a decision of the
Court of Appeals,[1] declaring that there was
no perfected contract between petitioner
Jazmin Soler and The Commercial Bank of
Manila (COMBANK FOR BREVITY, formerly
Boston Bank of the Philippines) for the
renovation of its Ermita Branch, thereby
denying
her
claim
for
payment
of
professional fees for services rendered.
The antecedent facts are as follows:
Petitioner Jazmin Soler is a Fine Arts graduate
of the University of Sto. Tomas, Manila. She is
a well known licensed professional interior
designer. In November 1986, her friend
Rosario Pardo asked her to talk to Nida
Lopez, who was manager of the COMBANK
Ermita Branch for they were planning to
renovate the branch offices.[2]
Even prior to November 1986, petitioner and
Nida Lopez knew each other because of
Rosario Pardo, the latters sister. During their
meeting, petitioner was hesitant to accept
the job because of her many out of town
commitments, and also considering that Ms.
Lopez was asking that the designs be
submitted by December 1986, which was
such a short notice. Ms. Lopez insisted,
however, because she really wanted
petitioner
to
do
the
design
for
renovation. Petitioner
acceded
to
the
request. Ms. Lopez assured her that she
would
be
compensated
for
her
services. Petitioner even told Ms. Lopez that
her professional fee was ten thousand pesos
(P10,000.00), to which Ms. Lopez acceded. [3]
During the November 1986 meeting between
petitioner and Ms. Lopez, there were
discussions as to what was to be renovated,
which included a provision for a conference
room, a change in the carpeting and wall
paper, provisions for bookshelves, a clerical
area in the second floor, dressing up the
kitchen, change of the ceiling and renovation
of the tellers booth. Ms. Lopez again assured
petitioner that the bank would pay her fees. [4]
After a few days, petitioner requested for the
blueprint of the building so that the proper

design, plans and specifications could be

given to Ms. Lopez in time for the board
meeting in December 1986. Petitioner then
asked her draftsman Jackie Barcelon to go to
the
jobsite
to
make
the
proper
measurements
using
the
blue
print. Petitioner also did her research on the
designs and individual drawings of what the
bank wanted. Petitioner hired Engineer
Ortanez to make the electrical layout,
architects Frison Cruz and De Mesa to do the
drafting. For the services rendered by these
individuals, petitioner paid the engineer
P4,000.00, architects Cruz and de Mesa
P5,000.00
and
architect
Barcelon
P6,000.00. Petitioner also contacted the
suppliers of the wallpaper and the sash
makers for their quotation. So come
December 1986, the lay out and the design
were submitted to Ms. Lopez. She even told
petitioner that she liked the designs. [5]
Subsequently,
petitioner
repeatedly
demanded payment for her services but Ms.
Lopez just ignored the demands. In February
1987, by chance petitioner and Ms. Lopez
saw each other in a concert at the Cultural
Center of the Philippines. Petitioner inquired
about the payment for her services, Ms.
Lopez curtly replied that she was not
entitled to it because her designs did not
conform to the banks policy of having a
standard design, and that there was no
agreement between her and the bank.[6]
To settle the controversy, petitioner referred
the matter to her lawyers, who wrote Ms.
Lopez on May 20, 1987, demanding payment
for her professional fees in the amount of
P10,000.00 which Ms. Lopez ignored. Hence,
on June 18, 1987, the lawyers wrote Ms.
Lopez once again demanding the return of
the blueprint copies petitioner submitted
which Ms. Lopez refused to return. [7]
On October 13, 1987, petitioner filed at the
Regional Trial Court of Pasig, Branch 153 a
complaint against COMBANK and Ms. Lopez
for collection of professional fees and
damages.[8]
In its answer, COMBANK stated that there
was no contract between COMBANK and

petitioner;[9] that Ms. Lopez merely invited

petitioner to participate in a bid for the
renovation of the COMBANK Ermita Branch;
that any proposal was still subject to the
approval of the COMBANKs head office.[10]
After due trial, on November 19, 1990, the
trial court rendered a decision, the
dispositive portion of which reads:
WHEREFORE,
premises
considered,
judgment is hereby rendered in favor of
plaintiff and against defendants, ordering
defendants jointly and severally, to pay
plaintiff the following, to wit:
1. P15,000.00 representing the actual and
compensatory damages or at least a
reasonable compensation for the services
rendered based on a quantum meruit;
2. P5,000.00 as attorneys fees,
P2,000.00 as litigation expenses;

and

3. P5,000.00 as exemplary damages; and

4. The cost of suit.
SO ORDERED.[11]
On November 29, 1990, COMBANK, and Ms.
Nida Lopez, filed their notice of appeal. [12] On
December
5,
1990,
the
trial
court
ordered[13] the records of the case elevated to
the Court of Appeals.[14]
In the appeal, COMBANK reiterated that
there was no contract between petitioner,
Nida Lopez and the bank.[15] Whereas,
petitioner maintained that there was a
perfected contract between her and the bank
which
was
facilitated
through
Nida
Lopez. According to petitioner there was an
offer and an acceptance of the service she
rendered to the bank.[16]
On October 26, 1995, the Court of Appeals
rendered its decision the relevant portions of
which state:
After going over the record of this case,
including the transcribed notes taken during
the course of the trial, We are convinced that
the question here is not really whether the
alleged contract purportedly entered into
between the plaintiff and defendant Lopez is

enforceable, but whether a contract even

exists between the parties.
Article 1318 of the Civil Code provides that
there is no contract unless the following
requisites concur:
(1) consent of the contracting parties;
(2) object certain which is the subject
matter of the contract;
(3) cause of
established.

the

obligation

which

is

xxx
The defendant bank never gave its
imprimatur or consent to the contract
considering that the bidding or the question
of renovating the ceiling of the branch office
of defendant bank was deferred because the
commercial bank is for sale. It is under
privatization. xxx
At any rate, we find that the appellee failed
to prove the allegations in her complaint. xxx
WHEREFORE, premises considered, the
appealed decision (dated November 19,
1990) of the Regional Trial Court (Branch
153) in Pasig (now 55238, is hereby
REVERSED. No pronouncement as to costs.
SO ORDERED.[17]
Hence, this petition.[18]
Petitioner forwards the argument that:
1. The Court of Appeals erred in ruling that
there was no contract between petitioner
and respondents, in the absence of the
element of consent;
2. The Court of Appeals erred in ruling that
respondents merely invited petitioner to
present her proposal;
3. The Court of Appeals erred in ruling that
petitioner knew that her proposal was still
subject to bidding and approval of the board
of directors of the bank;
4. The Court of Appeals erred in reversing
the decision of the trial court.
We find the petition meritorious.

We see that the issues raised boil down to

whether or not there was a perfected
contract between petitioner Jazmin Soler and
respondents COMBANK and Nida Lopez, and
whether or not Nida Lopez, the manager of
the bank branch, had authority to bind the
bank in the transaction.
The discussions between petitioner and Ms.
Lopez was to the effect that she had
authority to engage the services of
petitioner. During their meeting, she even
gave petitioner specifications as to what was
to be renovated in the branch premises and
when petitioners requested for the blueprints
of the building, Ms. Lopez supplied the
same.
Ms. Lopez was aware that petitioner hired
the services of people to help her come up
with the designs for the December, 1986
board meeting of the bank. Ms. Lopez even
insisted that the designs be rushed in time
for presentation to the bank. With all these
discussion and transactions, it was apparent
to petitioner that Ms. Lopez indeed had
authority to engage the services of
petitioner.
The next issue is whether there was a
perfected contract between petitioner and
the Bank.
A contract is a meeting of the minds
between two persons whereby one binds
himself to give something or to render some
service to bind himself to give something to
render some service to another for
consideration. There is no contract unless
the following requisites concur: 1. Consent
of the contracting parties; 2. Object certain
which is the subject matter of the contract;
and 3. Cause of the obligation which is
established.[19]
A contract undergoes three stages:
(a) preparation, conception, or generation,
which is the period of negotiation and
bargaining, ending at the moment of
agreement of the parties;
(b) perfection or birth of the contract, which
is the moment when the parties come to
agree on the terms of the contract; and

(c) consummation or death, which is the

fulfillment or performance of the terms
agreed upon in the contract.[20]
In the case at bar, there was a perfected oral
contract. When Ms. Lopez and petitioner met
in November 1986, and discussed the details
of the work, the first stage of the contract
commenced. When they agreed to the
payment of the ten thousand pesos
(P10,000.00)
as
professional
fees
of
petitioner and that she should give the
designs before the December 1986 board
meeting of the bank, the second stage of the
contract proceeded, and when finally
petitioner gave the designs to Ms. Lopez, the
contract was consummated.
Petitioner believed that once she submitted
the designs she would be paid her
professional fees. Ms. Lopez assured
petitioner that she would be paid.
It is familiar doctrine that if a corporation
knowingly permits one of its officers, or any
other agent, to act within the scope of an
apparent authority, it holds him out to the
public as possessing the power to do those
acts; and thus, the corporation will, as
against anyone who has in good faith dealt
with it through such agent, be estopped from
denying the agents authority.[21]
Also, petitioner may be paid on the basis
of quantum meruit. It is essential for the
proper operation of the principle that there is
an acceptance of the benefits by one sought
to be charged for the services rendered
under circumstances as reasonably to notify
him that the lawyer performing the task was
expecting
to
be
paid
compensation therefor. The
doctrine
of quantum meruit is a device to prevent
undue enrichment based on the equitable
postulate that it is unjust for a person to
retain benefit without paying for it.[22]
We note that the designs petitioner
submitted
to
Ms.
Lopez
were
not
returned. Ms. Lopez, an officer of the bank
as branch manager used such designs for
presentation to the board of the bank. Thus,
the designs were in fact useful to Ms. Lopez
for she did not appear to the board without

any designs at the time of the deadline set

by the board.
IN VIEW WHEREOF, the decision appealed
from is REVERSED and SET ASIDE.
The decision of the trial court[23] is REVIVED,
REINSTATED and AFFIRMED.
No costs.
SO ORDERED.
5. PALATTAO VS CA
This is a petition for review under Rule 45 of
the Rules of Court seeking to set aside the
August
29,
1997
decision[1] and
the
November 28, 1997 resolution[2] of the Court
of Appeals[3] in CA-G.R. SP No. 40031,
affirming the decision[4] of the Regional Trial
Court of Caloocan City, Branch 131, in Civil
Case No. C-17033 which reversed the
Decision[5] of the Metropolitan Trial Court of
Caloocan, Branch 53, in an ejectment suit
docketed as Civil Case No. 21755.
The antecedent facts are as follows:
Petitioner Yolanda Palattao entered into a
lease contract whereby she leased to private
respondent a house and a 490-square-meter
lot located in 101 Caimito Road, Caloocan
City, covered by Transfer Certificate of Title
No. 247536 and registered in the name of
petitioner. The duration of the lease contract
was for three years, commencing from
January 1, 1991, to December 31, 1993,
renewable at the option of the parties. The
agreed monthly rental was P7,500.00 for the
first year; P8,000.00 for the second year; and
P8,500.00 for the third year. The contract
gave respondent lessee the first option to
purchase the leased property. [6]
During the last year of the contract, the
parties began negotiations for the sale of the
leased premises to private respondent. In a
letter dated April 2, 1993, petitioner offered
to sell to private respondent 413.28 square
meters of the leased lot at P7,800.00 per
square meter, or for the total amount of
P3,223,548.00.[7]Private respondent replied
on April 15, 1993 wherein he informed
petitioner that he shall definitely exercise
[his] option [to buy] the leased property.

Private respondent, however, manifested

his desire to buy the whole 490-square-meter
leased premises and inquired from petitioner
the reason why only 413.28 square meters of
the leased lot were being offered for sale. In
a letter dated November 6, 1993, petitioner
made a final offer to sell the lot at P7,500.00
per square meter with a downpayment of
50% upon the signing of the contract of
conditional sale, the balance payable in one
year with a monthly lease/interest payment
of P14,000.00 which must be paid on or
before the fifth day of every month that the
balance is still outstanding.[9] On November
7, 1993, private respondent accepted
petitioners offer and reiterated his request
for clarification as to the size of the lot for
sale.[10] Petitioner
acknowledged
private
respondents acceptance of the offer in his
letter dated November 10, 1993.
[8]

Petitioner gave private respondent on or

before November 24, 1993, within which to
pay the 50% downpayment in cash or
managers check. Petitioner stressed that
failure to pay the downpayment on the
stipulated period will enable petitioner to
freely sell her property to others. Petitioner
likewise notified private respondent that she
is no longer renewing the lease agreement
upon its expiration on December 31, 1993.[11]
Private respondent did not accept the terms
proposed by petitioner. Neither was there
any documents of sale nor payment by
private
respondent
of
the
required
downpayment. Private respondent wrote a
letter to petitioner on November 29, 1993
manifesting his intention to exercise his
option to renew their lease contract for
another three years, starting January 1, 1994
to December 31, 1996.[12] This was rejected
by petitioner, reiterating that she was no
longer
renewing
the
lease. Petitioner
demanded that private respondent vacate
the premises, but the latter refused.
Hence, private respondent filed with the
Regional Trial Court of Caloocan, Branch 127,
a case for specific performance, docketed as
Civil Case No. 16287,[13]seeking to compel
petitioner to sell to him the leased
property. Private respondent further prayed

for the issuance of a writ of preliminary

injunction to prevent petitioner from filing an
ejectment case upon the expiration of the
lease contract on December 31, 1993.
During the proceedings in the specific
performance case, the parties agreed to
maintain the status quo. After they failed to
reach an amicable settlement, petitioner
filed the instant ejectment case before the
Metropolitan Trial Court of Caloocan City,
Branch
53.[14] In
his
answer,[15] private
respondent alleged that he refused to vacate
the leased premises because there was a
perfected contract of sale of the leased
property between him and petitioner. Private
respondent argued that he did not abandon
his option to buy the leased property and
that his proposal to renew the lease was but
an alternative proposal to the sale. He
further contended that the filing of the
ejectment case violated their agreement to
maintain the status quo.
On July 28, 1995, the Metropolitan Trial Court
rendered
a
decision
in
favor
of
petitioner. The dispositive portion thereof
states:
WHEREFORE, judgment is hereby rendered in
favor of the plaintiff and against the
defendant, ordering the defendant and all
persons claiming right under him to pay the
plaintiff as follows:
1.
P12,000.00 per month representing
reasonable monthly rental from January 1,
1994 and months thereafter until defendants
shall vacate the subject premises;
2.

P10,000.00 representing attorneys fee;

3.

To pay the cost of suit.

SO ORDERED.[16]
On appeal, the Regional Trial Court reversed
the assailed decision, disposing as follows:
WHEREFORE, in view of all the foregoing, the
assailed decision of the Metropolitan Trial
Court, Branch 53, this City, rendered on July
28, 1995, is hereby REVERSED and SET
ASIDE, with costs de officio.
SO ORDERED.[17]

Aggrieved, petitioner filed a petition for

review with the Court of Appeals, which
dismissed the petition. Likewise, the motion
for reconsideration was denied on August 29,
1997. Hence, the instant petition anchored
upon the following grounds:
I
THE COURT OF APPEALS AND RTC,
CALOOCAN CITY, BRANCH 131, ERRED IN
DECLARING THAT PETITIONER IS GUILTY OF
ESTOPPEL IN FILING AN EJECTMENT CASE
AGAINST RESPONDENT CO.
II
THE COURT OF APPEALS AND RTC,
CALOOCAN CITY, BRANCH 131, ERRED IN
FINDING THAT AN INJUNCTIVE SUIT WILL BAR
THE FILING OF EJECTMENT CASE AGAINST
RESPONDENT CO.
III
THE RTC, CALOOCAN CITY, BRANCH 131,
ERRED IN DECLARING THAT THERE WAS A
PERFECTED CONTRACT OF SALE BETWEEN
THE PARTIES OVER THE LEASED PROPERTY.[18]
The petition is impressed with merit.
The Court of Appeals ruled that petitioner
was estopped from filing the instant
ejectment suit against private respondent by
the alleged status quo agreement reached in
the specific performance case filed by
private respondent against petitioner. A
reading, however, of the transcript of
stenographic notes taken during the January
21, 1994 hearing discloses that the
agreement
to
maintain
the status
quo pertained only to the duration of the
negotiation for an amicable settlement and
was not intended to be operative until the
final disposition of the specific performance
case. Thus:
x
x

xxx

Court
Before we go into the prayer for preliminary
injunction and of the merit of the case I want

to see if I can make the parties settle their

differences.
Atty. Siapan
We will in the meantime maintain the status
quo on the matter pending further
negotiation.
Court
As a matter of injunction, are you willing to
maintain a status quo muna [?]
Atty. Mendez
Yes, your Honor.
Court

Atty. Uy
Yes, your Honor.
Court
I will not issue any injunction but there will
be a status quo and we will concentrate our
efforts
on
letting
the
parties
to (sic) negotiate
and
enter
into
an
agreement.[19]
x

Yes, your
saying)[20]

Honor.

(simultaneously (sic) in

The foregoing agreement to maintain

the status quo pending negotiations was
noted by the trial court in its January 21,
1994 Order postponing the hearing to enable
the parties to arrive at an amicable
settlement, to wit:
Upon agreement of the parties herein for
postponement of todays schedule as there
might be some possibility of settling the
claims herein, let the hearing today be
cancelled.
In the meantime this case is set for hearing
on February 28, 1994 at 8:30 a.m., should
the parties not arrive at any amicable
settlement.[21]

How about Atty. Uy are you willing?

x
x

Atty. Siapan, Atty. Mendez & Atty. Uy.

xxx

I will give you the same facts of the case. I

want to settle this and not go into trial
because in due time I will not finish the case,
my stay here is only Acting Presiding Judge
and there are other judges nominated for
this sala and once the judge will
be (sic) appointed then I go, let us get
advantage of settling the matter. I will have
your gentlemans agreement that there will
be no adversarial attitude among you
will (sic) never arrive at any agreement.
Atty. Siapan
In the meantime, we will move for a resetting
of this case your Honor.
Court
Anyway, this is a gentlemans agreement
that there will be no new movement but the
status quo will be maintained.

It is beyond cavil therefore that the

preservation of the status quo agreed upon
by the parties applied only during the period
of negotiations for an amicable settlement
and cannot be construed to be effective for
the duration of the pendency of the specific
performance case. It is a settled rule that
injunction suits and specific performance
cases, inter alia, will not preclude the filing
of, or abate, an ejectment case. Unlawful
detainer and forcible entry suits under Rule
70 are designed to summarily restore
physical possession of a piece of land or
building to one who has been illegally or
forcibly deprived thereof, without prejudice
to the settlement of the parties' opposing
claims of juridical possession in appropriate
proceedings. It has been held that these
actions are intended to avoid disruption of
public order by those who would take the law
in their hands purportedly to enforce their
claimed right of possession. In these cases,
the
issue
is
pure
physical
or de
facto possession, and pronouncements made
on questions of ownership are provisional in
nature.[22]
In Wilmon Auto Supply Corporation, et al., v.
Court of Appeals, et al.,[23] the issue of
whether or not an ejectment case based on
expiration of lease contract should be abated

by an action to enforce the right of

preemption or prior purchase of the leased
premises was resolved in the negative. The
Court outlined the following precedents:
1. Injunction suits instituted in the RTC by
defendants in ejectment actions in the
municipal trial courts or other courts of the
first level (Nacorda v. Yatco, 17 SCRA 920
[1966]) do not abate the latter; and neither
do proceedings on consignation of rentals
(Lim Si v. Lim, 98 Phil. 868 [1956], citing Pue,
et al. v. Gonzales, 87 Phil. 81 [1950]).
2. An "accion publiciana" does not suspend
an ejectment suit against the plaintiff in the
former (Ramirez v. Bleza, 106 SCRA 187
[1981]).
3. A "writ of possession case" where
ownership is concededly the principal issue
before the Regional Trial Court does not
preclude nor bar the execution of the
judgment in an unlawful detainer suit where
the only issue involved is the material
possession or possession de facto of the
premises (Heirs of F. Guballa, Sr. v. C.A., et
al.; etc., 168 SCRA 518 [1988]).
4. An action for quieting of title to property
is not a bar to an ejectment suit involving the
same property (Quimpo v. de la Victoria, 46
SCRA 139 [1972]).
5. Suits for specific performance with
damages do not affect ejectment actions
(e.g., to compel renewal of a lease contract)
(Desamito v. Cuyegkeng, 18 SCRA 1184
[1966]; Rosales v. CFI, 154 SCRA 153 [1987];
Commander Realty, Inc. v. C.A., 161 SCRA
264 [1988]).
6. An action for reformation of instrument
(e.g., from deed of absolute sale to one of
sale with pacto de retro) does not suspend
an ejectment suit between the same parties
(Judith v. Abragan, 66 SCRA 600 [1975]).
7. An action for reconveyance of property or
"accion reivindicatoria" also has no effect on
ejectment suits regarding the same property
(Del Rosario v. Jimenez, 8 SCRA 549 [1963];
Salinas v. Navarro, 126 SCRA 167; De la Cruz
v. C.A., 133 SCRA 520 [1984]); Drilon v.
Gaurana, 149 SCRA 352 [1987]; Ching v.

Malaya, 153 SCRA 412 [1987]; Philippine

Feeds Milling Co., Inc. v. C.A., 174 SCRA 108;
Dante v. Sison, 174 SCRA 517 [1989];
Guzman v. C.A. [annulment of sale and
reconveyance], 177 SCRA 604 [1989];
Demamay v. C.A., 186 SCRA 608 [1990];
Leopoldo Sy v. C.A., et al., [annulment of sale
and reconveyance], G.R. No. 95818, Aug. 2,
1991).
8. Neither do suits for annulment of sale, or
title, or document affecting property operate
to abate ejectment actions respecting the
same
property
(Salinas
v.
Navarro
[annulment of deed of sale with assumption
of mortgage and/or to declare the same an
equitable mortgage], 126 SCRA 167 [1983];
Ang Ping v. RTC [annulment of sale and title],
154 SCRA 153 [1987]; Caparros v. C.A.
[annulment of title], 170 SCRA 758 [1989];
Dante v. Sison [annulment of sale with
damages], 174 SCRA 517; Galgala v. Benguet
Consolidated, Inc. [annulment of document],
177 SCRA 288 [1989]).
The underlying reasons for the above ruling
were that the actions in the Regional Trial
Court did not involve physical or de
facto possession, and, on not a few
occasions, that the case in the Regional Trial
Court was merely a ploy to delay disposition
of the ejectment proceeding, or that the
issues presented in the former could quite as
easily be set up as defenses in the ejectment
action and there resolved.
Only in rare instances is suspension allowed
to await the outcome of the pending civil
action. In Wilmon, the Court recognized
that Vda. De Legaspi v. Avendao[24] was an
exception to the general rule against
suspension of an ejectment proceeding.
[25]
Thus:
x x x [A]s regards the seemingly contrary
ruling in Vda. de Legaspi v. Avendano, 89
SCRA 135 (1977), this Court observed in
Salinas v. Navarro, 126 SCRA 167, 172-173
(1983), that the exception to the rule in this
case of Vda. de Legaspi is based on strong
reasons of equity not found in the present
petition. The right of the petitioner is not so
seriously placed in issue in the annulment

case as to warrant a deviation, on equitable

grounds, from the imperative nature of the
rule. In the Vda. de Legaspi case, execution
of the decision in the ejectment case would
also have meant demolition of the premises,
a factor not present in this petition.
In the case at bar, the continued occupation
by private respondent of the leased premises
is conditioned upon his right to acquire
ownership over said property. The factual
milieu obtaining here, however, hardly falls
within the aforecited exception as the
resolution of the ejectment suit will not result
in the demolition of the leased premises, as
in the case of Vda. De Legaspi v.
Avendao. Verily, private respondent failed
to show strong reasons of equity to sustain
the suspension or dismissal of the ejectment
case. Argumentum
a
simili
valet
in
lege. Precedents are helpful in deciding
cases when they are on all fours or at least
substantially
identical
with
previous
litigations.[26] Faced with the same scenario
on which the general rule is founded, and
finding no reason to deviate therefrom, the
Court adheres to the settled jurisprudence
that suits involving ownership may not be
successfully pleaded in abatement of an
action for ejectment.
Contracts that are consensual in nature, like
a contract of sale, are perfected upon mere
meeting of the minds. Once there is
concurrence between the offer and the
acceptance upon the subject matter,
consideration, and terms of payment, a
contract is produced. The offer must be
certain. To convert the offer into a contract,
the acceptance must be absolute and must
not qualify the terms of the offer; it must be
plain,
unequivocal,
unconditional,
and
without variance of any sort from the
proposal. A qualified acceptance, or one that
involves a new proposal, constitutes a
counter-offer and is a rejection of the original
offer. Consequently, when something is
desired which is not exactly what is proposed
in the offer, such acceptance is not sufficient
to
generate
consent
because
any
modification or variation from the terms of
the offer annuls the offer.[27]

In the case at bar, while it is true that private

respondent informed petitioner that he is
accepting the latters offer to sell the leased
property, it appears that they did not reach
an agreement as to the extent of the lot
subject of the proposed sale. This is evident
from the April 15, 1993 reply-letter of private
respondent to petitioner, to wit:
I would like to inform you that I shall
definitely exercise my option as embodied in
Provision F (First Option) of our Contract of
Lease dated December 21, 1990. As per
agreement, my first option covers the 490
square meters site which I am currently
leasing from you at 101 Caimito Road,
Caloocan City. Specifically, your Transfer
Certificate of Title #247536 delineates the
property sizes as 492 square meters.
Your offer, however, states only 413.28
square meters are for sale to me. I trust that
this is merely an oversight on your
part. Notwithstanding the rumors to the
effect that part of the property have already
been sold to other parties, I would like to
believe that you still retain absolute
ownership over the entire property covered
by my Contract of Lease. Kindly enlighten
me on this matter so that we can proceed
with the negotiations for the sale of your
property to me.[28]
Likewise, in his November 7, 1993 replyletter, private respondent stated that:
While it is true that you first offered your
property for sale to me last April 14, 1993, it
is also equally true that you only correspond
with me on this matter again on October 27,
1993. I answered your April 14 offer with a
registered mail on April 15, 1993. In it, I
stated that I am definitely exercising my first
option to purchase your property in
accordance with Provisions F of our
Contract of Lease dated December 21,
1990. Likewise, I requested you to explain
the discrepancy between the size of the
property being offered for sale (413.28
square meters) as against the size stated in
my
option
which
is
492
square
meters. However, I did not get any reply
from you on this matter. Hence the

negotiations got stalled. If anybody should

be blamed for the prolonged negotiation,
then surely it is not all mine alone.[29]
The foregoing letters reveal that private
respondent did not give his consent to buy
only 413.28 square meters of the leased lot,
as he desired to purchase the whole 490
square-meter-leased
premises
which,
however, was not what was exactly proposed
in petitioners offer. Clearly, therefore,
private
respondents
acceptance
of
petitioners offer was not absolute, and will
consequently not generate consent that
would perfect a contract.
Even assuming that the parties reached an
agreement as to the size of the lot subject of
the sale, the records show that there was
subsequently a mutual withdrawal from the
contract.[30] This is so because in the
November 10, 1993 letter of petitioner, she
gave private respondent until November 24,
1993 to pay 50% of the purchase price, with
the caveat that failure to do so would
authorize her to sell to others the leased
premises. The period within which to pay the
downpayment is a new term or a counteroffer in the contract which needs acceptance
by private respondent. The latter, however,
failed to pay said downpayment, or to at
least manifest his conformity to the period
given by petitioner. Neither did private
respondent ask for an extension nor insist on
the sale of the subject lot. What appears in
the record is private respondents November
29, 1993 letter informing petitioner that he
shall exercise or avail of the option to renew
their lease contract for another three years,
starting January 1, 1994 to December 31,
1996. Evidently, there was a subsequent
mutual backing out from the contract of
sale. Hence, private respondent cannot
compel petitioner to sell the leased property
to him.
Considering that the lease contract was not
renewed after its expiration on December 31,
1991, private respondent has no more right
to
continue
occupying
the
leased
premises. Consequently,
his
ejectment
therefrom must be sustained.

As to the monthly rental to be paid by

private respondent from the expiration of
their contract of lease until the premises is
vacated, we find that the P12,000.00
awarded by the Metropolitan Trial Court must
be reduced to P8,500.00, it being the highest
amount of monthly rental stated in the lease
contract.
WHEREFORE, the petition is GRANTED. The
August 29, 1997 decision and the November
28, 1997 resolution of the Court of Appeals in
CA-G.R. SP No. 40031 are SET ASIDE. The
Decision of the Metropolitan Trial Court of
Caloocan, Branch 53, in Civil Case No. 21755
is REINSTATED subject to the modification
that the monthly rental to be paid by private
respondent from the date of the termination
of the lease contract until the leased
premises is vacated is reduced to P8,500.00.
SO ORDERED.
6. ABS-CBN VS CA
Facts:
In 1990, ABS-CBN and VIVA executed a
Film Exhibition Agreement whereby VIVA
gave ABS-CBN an exclusive right to exhibit
some
VIVA
films.
According
to
the
agreement, ABS-CBN shall have the right of
first refusal to the next 24 VIVA films for TV
telecast under such terms as may be agreed
upon by the parties, however, such right
shall be exercised by ABS-CBN from the
actual offer in writing.
Sometime in December 1991, VIVA,
through Vicente Del Rosario (Executive
Producer), offered ABS-CBN through VP
Charo Santos-Concio, a list of 3 film
packages from which ABS-CBN may exercise
its right of first refusal. ABS-CBN, however
through Mrs. Concio, tick off only 10 titles
they can purchase among which is the film
Maging Sino Ka Man which is one of the
subjects of the present case, therefore, it did
not accept the said list as per the rejection
letter authored by Mrs. Concio sent to Del
Rosario.
Subsequently, Del Rosario approached
Mrs. Concio with another list consisting of 52
original movie titles and 104 re-runs,

proposing to sell to ABS-CBN airing rights for

P60M (P30M in cash and P30M worth of
television spots). Del Rosario and ABS-CBNs
General Manager, Eugenio Lopez III, met at
the Tamarind Grill Restaurant in QC to
discuss the package proposal but to no avail.
Four days later, Del Rosario and Mr.
Graciano Gozon, Senior VP of Finance of
Republic
Broadcasting
Corporation
(RBS/Channel 7) discussed the terms and
conditions of VIVAs offer. A day after that,
Mrs. Concio sent the draft of the contract
between ABS-CBN and VIVA which contained
a counter-proposal covering 53 films for
P35M. VIVAs Board of Directors rejected the
counter-proposal as it would not sell anything
less than the package of 104 films for P60M.
After said rejection, ABS-CBN closed a deal
with RBS including the 14 films previously
ticked off by ABS-CBN.

Consequently,
ABS-CBN
filed
a
complaint for specific performance with
prayer for a writ of preliminary injunction
and/or TRO against RBS, VIVA and Del
Rosario. RTC then enjoined the latter from
airing the subject films. RBS posted a P30M
counterbond to dissolve the injunction. Later
on, the trial court as well as the CA dismissed
the complaint holding that there was no
meeting of minds between ABS-CBN and
VIVA, hence, there was no basis for ABSCBNs demand, furthermore, the right of first
refusal had previously been exercised.
Hence, the present petition, ABS-CBN
argued that an agreement was made during
the meeting of Mr. Lopez and Del Rosario
jotted down on a napkin (this was never
produced in court). Moreover, it had yet to
fully exercise its right of first refusal since
only 10 titles were chosen from the first list.
As to actual, moral and exemplary damages,
there was no clear basis in awarding the
same.
Issue: WON a contract was perfected
between ABS-CBN and VIVA and WON moral
damages may be awarded to a corporation
Held: Both NO.

Ratio:
Contracts that are consensual in nature are
perfected upon mere meeting of the
minds. Once there is concurrence between
the offer and the acceptance upon the
subject matter, consideration, and terms of
payment a contract is produced. The offer
must be certain. To convert the offer into a
contract, the acceptance must be absolute
and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional,
and without variance of any sort from the
proposal. A qualified acceptance, or one that
involves a new proposal, constitutes a
counter-offer and is a rejection of the original
offer. Consequently, when something is
desired which is not exactly what is proposed
in the offer, such acceptance is not sufficient
to
generate
consent
because
any
modification or variation from the terms of
the offer annuls the offer.
After Mr. Del Rosario of Viva met Mr. Lopez of
ABS-CBN to discuss the package of films,
ABS-CBN, sent through Ms. Concio, counterproposal in the form a draft contract. This
counter-proposal could be nothing less than
the counter-offer of Mr. Lopez during his
conference with Del Rosario. Clearly, there
was no acceptance of VIVAs offer, for it was
met by a counter-offer which substantially
varied the terms of the offer.
In the case at bar, VIVA through its Board
of Directors, rejected such counteroffer. Even
if
it
be
conceded arguendo that
Del
Rosario
had accepted the counter-offer, the
acceptance did not bind VIVA, as there
was no proof whatsoever that Del
Rosario had the specific authority to do
so.
Under the Corporation Code, unless
otherwise provided by said Code,
corporate powers, such as the power to
enter into contracts, are exercised by
the Board of Directors. However, the
Board may delegate such powers to
either an executive committee or
officials or contracted managers. The
delegation, except for the executive

committee,
must
be
for
specific
purposes. Delegation to officers makes the
latter agents of the corporation; accordingly,
the general rules of agency as to the binding
effects of their acts would apply. For such
officers to be deemed fully clothed by the
corporation to exercise a power of the Board,
the latter must specially authorize them to
do so. That Del Rosario did not have the
authority to accept ABS-CBNs counteroffer was best evidenced by his
submission of the draft contract to
VIVAs Board of Directors for the latters
approval. In any event, there was
between Del Rosario and Lopez III no
meeting of minds.
The testimony of Mr. Lopez and the
allegations in the complaint are clear
admissions that what was supposed to have
been agreed upon at the Tamarind Grill
between Mr. Lopez and Del Rosario was not a
binding agreement. It is as it should be
because corporate power to enter into a
contract is lodged in the Board of
Directors. (Sec.
23,
Corporation
Code). Without such board approval by
the Viva board, whatever agreement
Lopez and Del Rosario arrived at could
not ripen into a valid contact binding
upon Viva.
However, the Court find for ABS-CBN on the
issue of damages. Moral damages are in the
category
of
an
award
designed
to
compensate the claimant for actual injury
suffered and not to impose a penalty on the
wrongdoer. The award of moral damages
cannot be granted in favor of a
corporation because, being an artificial
person and having existence only in
legal contemplation, it has no feelings,
no emotions, no senses. It cannot,
therefore, experience physical suffering
and mental anguish, which can be
experienced only by one having a
nervous system. The statement that a
corporation may recover moral damages if it
has a good reputation that is debased,
resulting in social humiliation is an obiter
dictum. On this score alone the award for
damages must be set aside, since RBS is a
corporation.

7) LIMSON VS CA
Filed under Rule 45 of the Rules of
Court this Petition for Review on Certiorari
seeks to review, reverse and set aside the
Decision[1] of the Court of Appeals dated 18
May 1998 reversing that of the Regional Trial
Court dated 30 June 1993. The petition
likewise assails the Resolution[2] of the
appellate court of 19 October 1998 denying
petitioners Motion for Reconsideration.
Petitioner Lourdes Ong Limson, in her
14 May 1979 Complaint filed before the trial
court,[3] alleged that in July 1978 respondent
spouses Lorenzo de Vera and Asuncion
Santos-de Vera, through their agent Marcosa
Sanchez, offered to sell to petitioner a parcel
of land consisting of 48,260 square meters,
more or less, situated in Barrio San Dionisio,
Paraaque, Metro Manila; that respondent
spouses informed her that they were the
owners of the subject property; that on 31
July 1978 she agreed to buy the property at
the price of P34.00 per square meter and
gave the sum of P20,000.00 to respondent
spouses
as
"earnest
money;"
that
respondent spouses signed a receipt therefor
and gave her a 10-day option period to
purchase the property; that respondent
Lorenzo de Vera then informed her that the
subject property was mortgaged to Emilio
Ramos and Isidro Ramos; that respondent
Lorenzo de Vera asked her to pay the
balance of the purchase price to enable him
and his wife to settle their obligation with the
Ramoses.
Petitioner also averred that she agreed
to meet respondent spouses and the
Ramoses on 5 August 1978 at the Office of
the Registry of Deeds of Makati, Metro
Manila, to consummate the transaction but
due to the failure of respondent Asuncion
Santos-de Vera and the Ramoses to appear,
no transaction was formalized. In a second
meeting scheduled on 11 August 1978 she
claimed that she was willing and ready to
pay the balance of the purchase price but
the transaction again did not materialize as
respondent spouses failed to pay the back
taxes of subject property. Subsequently, on
23 August 1978 petitioner allegedly gave

respondent Lorenzo de Vera three (3) checks

in the total amount of P36,170.00 for the
settlement of the back taxes of the property
and for the payment of the quitclaims of the
three (3) tenants of subject land.
The
amount was purportedly considered part of
the purchase price and respondent Lorenzo
de Vera signed the receipts therefor.
Petitioner alleged that on 5 September
1978 she was surprised to learn from the
agent of respondent spouses that the
property was the subject of a negotiation for
the sale to respondent Sunvar Realty
Development
Corporation
(SUNVAR)
represented by respondent Tomas Cuenca, Jr.
On 15 September 1978 petitioner discovered
that although respondent spouses purchased
the property from the Ramoses on 20 March
1970 it was only on 15 September 1978 that
TCT No. S-72946 covering the property was
issued to respondent spouses.
As a
consequence, she filed on the same day an
Affidavit of Adverse Claim with the Office of
the Registry of Deeds of Makati, Metro
Manila, which was annotated on TCT No. S72946. She also claimed that on the same
day she informed respondent Cuenca of her
"contract" to purchase the property.
The Deed of Sale between respondent
spouses and respondent SUNVAR was
executed on 15 September 1978 and TCT No.
S-72377 was issued in favor of the latter on
26 September 1978 with the Adverse Claim
of petitioner annotated thereon. Petitioner
claimed that when respondent spouses sold
the property in dispute to SUNVAR, her valid
and legal right to purchase it was ignored if
not violated. Moreover, she maintained that
SUNVAR was in bad faith as it knew of her
"contract" to purchase the subject property
from respondent spouses.
Finally, for the alleged unlawful and
unjust acts of respondent spouses, which
caused her damage, prejudice and injury,
petitioner claimed that the Deed of Sale,
should be annuled and TCT No. S-72377 in
the name of respondent SUNVAR canceled
and TCT No. S-72946 restored. She also
insisted that a Deed of Sale between her and
respondent spouses be now executed upon

her payment of the balance of the purchase

price agreed upon, plus damages and
attorneys fees.
In their Answer[4] respondent spouses
maintained that petitioner had no sufficient
cause of action against them; that she was
not the real party in interest; that the option
to buy the property had long expired; that
there was no perfected contract to sell
between them; and, that petitioner had no
legal capacity to sue.
Additionally,
respondent spouses claimed actual, moral
and exemplary damages, and attorneys fees
against petitioner.
On the other hand, respondents SUNVAR and
Cuenca, in their Answer,[5] alleged that
petitioner was not the proper party in
interest and/or had no cause of action
against them.
But, even assuming that
petitioner was the proper party in interest,
they claimed that she could only be entitled
to the return of any amount received by
respondent spouses. In the alternative, they
argued that petitioner had lost her option to
buy the property for failure to comply with
the terms and conditions of the agreement
as embodied in the receipt issued therefor.
Moreover, they contended that at the time of
the execution of the Deed of Sale and the
payment of consideration to respondent
spouses, they "did not know nor was
informed" of petitioners interest or claim
over the subject property.
They claimed
furthermore that it was only after the signing
of the Deed of Sale and the payment of the
corresponding
amounts
to
respondent
spouses that they came to know of the claim
of petitioner as it was only then that they
were furnished copy of the title to the
property where the Adverse Claim of
petitioner was annotated.
Consequently,
they also instituted a Cross-Claim against
respondent spouses for bad faith in
encouraging the negotiations between them
without telling them of the claim of
petitioner.
The
same
respondents
maintained that had they known of the claim
of petitioner, they would not have initiated
negotiations with respondent spouses for the
purchase of the property. Thus, they prayed
for reimbursement of all amounts and

monies received from them by respondent

spouses, attorneys fees and expenses for
litigation in the event that the trial court
should annul the Deed of Sale and deprive
them of their ownership and possession of
the subject land.
In their Answer to the Cross-Claim[6] of
respondents
SUNVAR
and
Cuenca,
respondent spouses insisted that they
negotiated with the former only after the
expiration of the option period given to
petitioner and her failure to comply with her
commitments thereunder.
Respondent
spouses contended that they acted legally
and validly, in all honesty and good faith.
According to them, respondent SUNVAR
made a verification of the title with the Office
of the Register of Deeds of Metro Manila
District IV before the execution of the Deed
of Absolute Sale. Also, they claimed that the
Cross-Claim was barred by a written waiver
executed by respondent SUNVAR in their
favor. Thus, respondent spouses prayed for
actual damages for the unjustified filing of
the Cross-Claim, moral damages for the
mental anguish and similar injuries they
suffered by reason thereof, exemplary
damages "to prevent others from emulating
the bad example" of respondents SUNVAR
and Cuenca, plus attorneys fees.
After a protracted trial and reconstitution of
the court records due to the fire that razed
the Pasay City Hall on 18 January 1992, the
Regional Trial Court rendered its 30 June
1993 Decision[7] in favor of petitioner. It
ordered (a) the annulment and rescission of
the Deed of Absolute Sale executed on 15
September 1978 by respondent spouses in
favor of respondent SUNVAR; (b) the
cancellation and revocation of TCT No. S75377 of the Registry of Deeds, Makati,
Metro Manila, issued in the name of
respondent Sunvar Realty Development
Corporation,
and
the
restoration
or
reinstatement of TCT No. S-72946 of the
same Registry issued in the name of
respondent spouses; (c) respondent spouses
to execute a deed of sale conveying
ownership of the property covered by TCT
No. S-72946 in favor of petitioner upon her
payment of the balance of the purchase

price agreed upon; and, (d) respondent

spouses to pay petitioner P50,000.00 as and
for attorneys fees, and to pay the costs.
On appeal, the Court of Appeals completely
reversed the decision of the trial court. It
ordered (a) the Register of Deeds of Makati
City to lift the Adverse Claim and such other
encumbrances petitioner might have filed or
caused to be annotated on TCT No. S-75377;
and, (b) petitioner to pay (1) respondent
SUNVAR P50,000.00 as nominal damages,
P30,000.00 as exemplary damages and
P20,000 as attorneys fees; (2) respondent
spouses, P15,000.00 as nominal damages,
P10,000.00 as exemplary damages and
P10,000.00 as attorneys fees; and, (3) the
costs.
Petitioner timely filed a Motion for
Reconsideration which was denied by the
Court of Appeals on 19 October 1998.
Hence, this petition.
At issue for resolution by the Court is the
nature of the contract entered into between
petitioner Lourdes Ong Limson on one hand,
and respondent spouses Lorenzo de Vera and
Asuncion Santos-de Vera on the other.
The main argument of petitioner is that there
was a perfected contract to sell between her
and respondent spouses. On the other hand,
respondent
spouses
and
respondents
SUNVAR and Cuenca argue that what was
perfected between petitioner and respondent
spouses was a mere option.
A scrutiny of the facts as well as the
evidence of the parties overwhelmingly leads
to the conclusion that the agreement
between the parties was a contract of option
and not a contract to sell.
An option, as used in the law of sales, is a
continuing offer or contract by which the
owner stipulates with another that the latter
shall have the right to buy the property at a
fixed price within a time certain, or under, or
in compliance with, certain terms and
conditions, or which gives to the owner of
the property the right to sell or demand a
sale.
It is also sometimes called an
"unaccepted offer." An option is not of itself a

purchase, but merely secures the privilege to

buy.[8] It is not a sale of property but a sale
of the right to purchase.[9] It is simply a
contract by which the owner of property
agrees with another person that he shall
have the right to buy his property at a fixed
price within a certain time. He does not sell
his land; he does not then agree to sell it; but
he does sell something, i.e., the right or
privilege to buy at the election or option of
the other party.[10] Its distinguishing
characteristic is that it imposes no binding
obligation on the person holding the option,
aside from the consideration for the offer.
Until acceptance, it is not, properly speaking,
a contract, and does not vest, transfer, or
agree to transfer, any title to, or any interest
or right in the subject matter, but is merely a
contract by which the owner of the property
gives the optionee the right or privilege of
accepting the offer and buying the property
on certain terms.[11]
On the other hand, a contract, like a contract
to sell, involves the meeting of minds
between two persons whereby one binds
himself, with respect to the other, to give
something or to render some service.[12]
Contracts, in general, are perfected by mere
consent,[13] which is manifested by the
meeting of the offer and the acceptance
upon the thing and the cause which are to
constitute the contract. The offer must be
certain and the acceptance absolute.[14]
The Receipt[15] that contains the contract
between petitioner and respondent spouses
provides
Received from Lourdes Limson the sum of
Twenty Thousand Pesos (P20,000.00) under
Check No. 22391 dated July 31, 1978 as
earnest money with option to purchase a
parcel of land owned by Lorenzo de Vera
located at Barrio San Dionisio, Municipality of
Paraaque, Province of Rizal with an area of
forty eight thousand two hundred sixty
square meters more or less at the price of
Thirty Four Pesos (P34.00)[16] cash subject
to the condition and stipulation that have
been agreed upon by the buyer and me
which will form part of the receipt. Should
the transaction of the property not

materialize not on the fault of the buyer, I

obligate myself to return the full amount of
P20,000.00 earnest money with option to
buy or forfeit on the fault of the buyer. I
guarantee to notify the buyer Lourdes
Limson or her representative and get her
conformity should I sell or encumber this
property to a third person. This option to
buy is good within ten (10) days until the
absolute deed of sale is finally signed by the
parties or the failure of the buyer to comply
with the terms of the option to buy as herein
attached.
In the interpretation of contracts, the
ascertainment of the intention of the
contracting parties is to be discharged by
looking to the words they used to project
that intention in their contract, all the words,
not just a particular word or two, and words
in context, not words standing alone.[17] The
above Receipt readily shows that respondent
spouses and petitioner only entered into a
contract of option; a contract by which
respondent spouses agreed with petitioner
that the latter shall have the right to buy the
formers property at a fixed price of P34.00
per square meter within ten (10) days from
31 July 1978. Respondent spouses did not
sell their property; they did not also agree to
sell it; but they sold something, i.e., the
privilege to buy at the election or option of
petitioner.
The agreement imposed no
binding obligation on petitioner, aside from
the consideration for the offer.
The consideration of P20,000.00 paid by
petitioner to respondent spouses was
referred to as "earnest money." However, a
careful examination of the words used
indicates that the money is not earnest
money but option money. "Earnest money"
and "option money" are not the same but
distinguished thus: (a) earnest money is part
of the purchase price, while option money is
the money given as a distinct consideration
for an option contract; (b) earnest money is
given only where there is already a sale,
while option money applies to a sale not yet
perfected; and, (c) when earnest money is
given, the buyer is bound to pay the balance,
while when the would-be buyer gives option
money, he is not required to buy,[18] but

may even forfeit it depending on the terms

of the option.

There is nothing in the Receipt which

indicates that the P20,000.00 was part of the
purchase price. Moreover, it was not shown
that there was a perfected sale between the
parties where earnest money was given.
Finally, when petitioner gave the "earnest
money," the Receipt did not reveal that she
was bound to pay the balance of the
purchase price.
In fact, she could even
forfeit the money given if the terms of the
option were not met. Thus, the P20,000.00
could only be money given as consideration
for the option contract. That the contract
between the parties is one of option is
buttressed by the provision therein that
should the transaction of the property not
materialize without fault of petitioner as
buyer, respondent Lorenzo de Vera obligates
himself to return the full amount of
P20,000.00 "earnest money" with option to
buy or forfeit the same on the fault of
petitioner.
It is further bolstered by the
provision therein that guarantees petitioner
that she or her representative would be
notified in case the subject property was sold
or encumbered to a third person. Finally, the
Receipt provided for a period within which
the option to buy was to be exercised, i.e.,
"within ten (10) days" from 31 July 1978.
Doubtless,
the
agreement
between
respondent spouses and petitioner was an
"option contract" or what is sometimes called
an "unaccepted offer." During the option
period the agreement was not converted into
a bilateral promise to sell and to buy where
both respondent spouses and petitioner were
then reciprocally bound to comply with their
respective undertakings as petitioner did not
timely, affirmatively and clearly accept the
offer of respondent spouses.
The rule is that except where a formal
acceptance is not required, although the
acceptance must be affirmatively and clearly
made and evidenced by some acts or
conduct communicated to the offeror, it may
be made either in a formal or an informal

manner, and may be shown by acts, conduct

or words by the accepting party that clearly
manifest
a
present
intention
or
determination to accept the offer to buy or
sell. But there is nothing in the acts, conduct
or words of petitioner that clearly manifest a
present intention or determination to accept
the offer to buy the property of respondent
spouses within the 10-day option period.
The only occasion within the option period
when petitioner could have demonstrated
her acceptance was on 5 August 1978 when,
according to her, she agreed to meet
respondent spouses and the Ramoses at the
Office of the Register of Deeds of Makati.
Petitioners
agreement
to
meet
with
respondent
spouses
presupposes
an
invitation from the latter, which only
emphasizes their persistence in offering the
property to the former. But whether that
showed acceptance by petitioner of the offer
is hazy and dubious.
On or before 10 August 1978, the last day of
the option period, no affirmative or clear
manifestation was made by petitioner to
accept the offer. Certainly, there was no
concurrence of private respondent spouses
offer and petitioners acceptance thereof
within the option period.
Consequently,
there was no perfected contract to sell
between the parties.
On 11 August 1978 the option period expired
and the exclusive right of petitioner to buy
the property of respondent spouses ceased.
The subsequent meetings and negotiations,
specifically on 11 and 23 August 1978,
between the parties only showed the desire
of respondent spouses to sell their property
to petitioner. Also, on 14 September 1978
when respondent spouses sent a telegram to
petitioner demanding full payment of the
purchase price on even date simply
demonstrated an inclination to give her
preference
to
buy
subject
property.
Collectively, these instances did not indicate
that petitioner still had the exclusive right to
purchase subject property.
Verily, the
commencement of negotiations between
respondent spouses and respondent SUNVAR
clearly manifested that their offer to sell

subject property to petitioner was no longer

exclusive to her.
We cannot subscribe to the argument of
petitioner that respondent spouses extended
the option period when they extended the
authority of their agent until 31 August 1978.
The extension of the contract of agency
could not operate to extend the option
period between the parties in the instant
case. The extension must not be implied but
categorical and must show the clear
intention of the parties.
As to whether respondent spouses were at
fault for the non-consummation of their
contract with petitioner, we agree with the
appellate court that they were not to be
blamed. First, within the option period, or on
4 August 1978, it was respondent spouses
and not petitioner who initiated the meeting
at the Office of the Register of Deeds of
Makati. Second, that the Ramoses failed to
appear on 4 August 1978 was beyond the
control of respondent spouses. Third, the
succeeding meetings that transpired to
consummate the contract were all beyond
the option period and, as declared by the
Court of Appeals, the question of who was at
fault was already immaterial. Fourth, even
assuming that the meetings were within the
option period, the presence of petitioner was
not enough as she was not even prepared to
pay the purchase price in cash as agreed
upon. Finally, even without the presence of
the Ramoses, petitioner could have easily
made the necessary payment in cash as the
price of the property was already set at
P34.00 per square meter and payment of the
mortgage could very well be left to
respondent spouses.

Petitioner
further
claims
that
when
respondent spouses sent her a telegram
demanding full payment of the purchase
price on 14 September 1978 it was an
acknowledgment of their contract to sell,
thus denying them the right to claim
otherwise.
We do not agree. As explained above, there
was no contract to sell between petitioner

and respondent spouses to speak of. Verily,

the telegram could not operate to estop
them from claiming that there was such
contract between them and petitioner.
Neither could it mean
that respondent
spouses extended the option period. The
telegram only showed that respondent
spouses were willing to give petitioner a
chance to buy subject property even if it was
no longer exclusive.
The option period having expired and
acceptance was not effectively made by
petitioner, the purchase of subject property
by respondent SUNVAR was perfectly valid
and entered into in good faith. Petitioner
claims that in August 1978 Hermigildo
Sanchez, the son of respondent spouses
agent, Marcosa Sanchez, informed Marixi
Prieto, a member of the Board of Directors of
respondent SUNVAR, that the property was
already sold to petitioner. Also, petitioner
maintains that on 5 September 1978
respondent Cuenca met with her and offered
to buy the property from her at P45.00 per
square meter. Petitioner contends that these
incidents, including the annotation of her
Adverse Claim on the title of subject property
on 15 September 1978 show that respondent
SUNVAR was aware of the perfected sale
between her and respondent spouses, thus
making respondent SUNVAR a buyer in bad
faith.
Petitioner is not correct.
The dates
mentioned, at least 5 and 15 September
1978, are immaterial as they were beyond
the option period given to petitioner. On the
other hand, the referral to sometime in
August 1978 in the testimony of Hermigildo
Sanchez as emphasized by petitioner in her
petition is very vague. It could be within or
beyond the option period. Clearly then, even
assuming that the meeting with Marixi Prieto
actually transpired, it could not necessarily
mean that she knew of the agreement
between petitioner and respondent spouses
for the purchase of subject property as the
meeting could have occurred beyond the
option period. In which case, no bad faith
could be attributed to respondent SUNVAR.
If, on the other hand, the meeting was within
the option period, petitioner was remiss in

her duty to prove so. Necessarily, we are left

with the conclusion that respondent SUNVAR
bought subject property from respondent
spouses in good faith, for value and without
knowledge of any flaw or defect in its title.
The appellate court awarded nominal and
exemplary damages plus attorneys fees to
respondent
spouses
and
respondent
SUNVAR.
But nominal damages are
adjudicated to vindicate or recognize the
right of the plaintiff that has been violated or
invaded by the defendant.[19] In the instant
case, the Court recognizes the rights of all
the parties and finds no violation or invasion
of the rights of respondents by petitioner.
Petitioner, in filing her complaint, only seeks
relief, in good faith, for what she believes she
was entitled to and should not be made to
suffer therefor. Neither should exemplary
damages be awarded to respondents as they
are imposed only by way of example or
correction for the public good and only in
addition to the moral, temperate, liquidated
or compensatory damages.[20] No such
kinds of damages were awarded by the Court
of Appeals, only nominal, which was not
justified in this case. Finally, attorneys fees
could not also be recovered as the Court
does not deem it just and equitable under
the circumstances.
WHEREFORE, the petition is DENIED. The
Decision of the Court of Appeals ordering the
Register of Deeds of Makati City to lift the
adverse claim and such other encumbrances
petitioner Lourdes Ong Limson may have
filed or caused to be annotated on TCT No. S75377 is AFFIRMED, with the MODIFICATION
that the award of nominal and exemplary
damages as well as attorneys fees is
DELETED.
SO ORDERED.

8) Villanueva v. Philippine National Bank

The Petition for Review on Certiorari under
Rule 45 before this Court assails the January
29, 2002 Decision[1] and June 27, 2002
Resolution[2] of the Court of Appeals (CA) in
CA-G.R. CV No. 52008[3] which reversed and

set aside the September 14, 1995

Decision[4] of the Regional Trial Court,
Branch 22, General Santos City (RTC) in Civil
Case No. 4553.
As culled from the records, the facts are as
follows:
The Special Assets Management
Department (SAMD) of the Philippine
National
Bank
(PNB)
issued
an
advertisement for the sale thru bidding of
certain PNB properties in Calumpang,
General Santos City, including Lot No. 17,
covered by TCT No. T-15042, consisting of
22,780 square meters, with an advertised
floor price of P1,409,000.00, and Lot No. 19,
covered by TCT No. T-15036, consisting of
41,190 square meters, with an advertised
floor price of P2,268,000.00.[5] Bidding was
subject to the following conditions: 1) that
cash bids be submitted not later than April
27, 1989; 2) that said bids be accompanied
by a 10% deposit in managers or cashiers
check; and 3) that all acceptable bids be
subject to approval by PNB authorities.
In a June 28, 1990 letter[6] to the Manager,
PNB-General
Santos
Branch,
Reynaldo
Villanueva (Villanueva) offered to purchase
Lot Nos. 17 and 19 for P3,677,000.00. He
also manifested that he was depositing
P400,000.00 to show his good faith but with
the understanding that said amount may be
treated as part of the payment of the
purchase price only when his offer is
accepted by PNB. At the bottom of said letter
there appears an unsigned marginal note
stating that P400,000.00 was deposited into
Villanuevas account (Savings Account No.
43612) with PNB-General Santos Branch. [7]
PNB-General Santos Branch forwarded
the June 28, 1990 letter of Villanueva to
Ramon Guevara (Guevara), Vice President,
SAMD.[8] On July 6, 1990, Guevara informed
Villanueva that only Lot No. 19 is available
and that the asking price therefor is
P2,883,300.00.[9] Guevara further wrote:
If our quoted price is acceptable to you,
please submit a revised offer to purchase.
Sale shall be subject to our Board of
Directors approval and to other terms and

conditions imposed by the Bank on sale of

acquired assets. [10] (Emphasis ours)
Instead of submitting a revised offer,
Villanueva merely inserted at the bottom of
Guevaras letter a July 11, 1990 marginal
note, which reads:

1.
To execute a deed of sale in
favor of the plaintiff over Lot 19 comprising
41,190
square
meters
situated
at
Calumpang, General Santos City covered by
TCT No. T-15036 after payment of the
balance in cash in the amount of
P2,303,300.00;

C O N F O R M E:
PRICE OF P2,883,300.00
(downpayment of P600,000.00 and the
balance payable in two (2) years at quarterly
amortizations.) [11]
Villanueva paid P200,000.00 to PNB
which issued O.R. No. 16997 to acknowledge
receipt of the partial payment deposit on
offer to purchase.[12] On the dorsal portion
of Official Receipt No. 16997, Villanueva
signed a typewritten note, stating:
This is a deposit made to show the
sincerity of my purchase offer with the
understanding that it shall be returned
without interest if my offer is not favorably
considered or be forfeited if my offer is
approved but I fail/refuse to push through the
purchase.[13]
Also, on July 24, 1990, P380,000.00 was
debited from Villanuevas Savings Account
No. 43612 and credited to SAMD.[14]
On October 11, 1990, however, Guevara
wrote Villanueva that, upon orders of the
PNB Board of Directors to conduct another
appraisal and public bidding of Lot No. 19,
SAMD is deferring negotiations with him
over said property and returning his deposit
of P580,000.00.[15] Undaunted, Villanueva
attempted to deliver postdated checks
covering the balance of the purchase price
but PNB refused the same.
Hence, Villanueva filed with the RTC a
Complaint[16] for specific performance and
damages against PNB. In its September 14,
1995 Decision, the RTC granted the
Complaint, thus:
WHEREFORE, judgment is rendered in
favor of the plaintiff and against the
defendant directing it to do the following:

2.
To pay the plaintiff P1,000,000.00 as
moral damages; P500,000.00 as attorneys
fees, plus litigation expenses and costs of
the suit.
SO ORDERED.[17]
The RTC anchored its judgment on the
finding that there existed a perfected
contract of sale between PNB and Villanueva.
It found:
The following facts are either admitted
or undisputed:
xxx
The defendant through Vice-President
Guevara negotiated with the plaintiff in
connection with the offer of the plaintiff to
buy Lots 17 & 19. The offer of plaintiff to buy,
however, was accepted by the defendant
only insofar as Lot 19 is concerned as
exemplified by its letter dated July 6, 1990
where the plaintiff signified his concurrence
after conferring with the defendants vicepresident. The conformity of the plaintiff was
typewritten by the defendants own people
where the plaintiff accepted the price of
P2,883,300.00. The defendant also issued a
receipt to the plaintiff on the same day when
the plaintiff paid the amount of P200,000.00
to
complete
the
downpayment
of
P600,000.00 (Exhibit F & Exhibit I). With
this development, the plaintiff was also given
the go signal by the defendant to improve
Lot 19 because it was already in effect sold
to him and because of that the defendant
fenced the lot and completed his two houses
on the property.[18]
The RTC also pointed out that
Villanuevas P580,000.00 downpayment was
actually in the nature of earnest money
acceptance of which by PNB signified that

there was already a sale.[19]

The RTC
further cited contemporaneous acts of PNB
purportedly indicating that, as early as July
25, 1990, it considered Lot 19 already sold,
as shown by Guevaras July 25, 1990 letter
(Exh. H)[20] to another interested buyer.
PNB appealed to the CA which
reversed and set aside the September 14,
1995 RTC Decision, thus:
WHEREFORE, the appealed decision is
REVERSED and SET ASIDE and another
rendered DISMISSING the complaint.
SO ORDERED.[21]

According to the CA, there was no perfected

contract of sale because the July 6, 1990
letter of Guevara constituted a qualified
acceptance of the June 28, 1990 offer of
Villanueva, and to which Villanueva replied
on July 11, 1990 with a modified offer. The
CA held:
In the case at bench, consent, in
respect to the price and manner of its
payment, is lacking. The record shows that
appellant, thru Guevaras July 6, 1990 letter,
made a qualified acceptance of appellees
letter-offer dated June 28, 1990 by imposing
an asking price of P2,883,300.00 in cash for
Lot 19. The letter dated July 6, 1990
constituted a counter-offer (Art. 1319, Civil
Code), to which appellee made a new
proposal, i.e., to pay the amount of
P2,883,300.00 in staggered amounts, that is,
P600,000.00 as downpayment and the
balance within two years in quarterly
amortizations.
A qualified acceptance, or one that
involves a new proposal, constitutes a
counter-offer and a rejection of the original
offer (Art. 1319, id.). Consequently, when
something is desired which is not exactly
what is proposed in the offer, such
acceptance is not sufficient to generate
consent because any modification or
variation from the terms of the offer annuls
the offer (Tolentino, Commentaries and
Jurisprudence on the Civil Code of the
Philippines, 6th ed., 1996, p. 450, cited in

ABS-CBN Broadcasting Corporation v. Court

of Appeals, et al., 301 SCRA 572).
Appellees new proposal, which
constitutes a counter-offer, was not accepted
by appellant, its board having decided to
have Lot 19 reappraised and sold thru public
bidding.
Moreover, it was clearly stated in
Guevaras July 6, 1990 letter that the sale
shall be subject to our Board of Directors
approval and to other terms and conditions
imposed by the Bank on sale of acquired
assets.[22]
Villanuevas Motion for
Reconsideration[23] was denied by the CA in
its Resolution of June 27, 2002.
Petitioner Villanueva now assails
before this Court the January 29, 2002
Decision and June 27, 2002 Resolution of the
CA. He assigns five issues which may be
condensed into two: first, whether a
perfected contract of sale exists between
petitioner and respondent PNB; and second,
whether
the conduct and actuation of
respondent constitutes bad faith as to entitle
petitioner to moral and exemplary damages
and attorneys fees.
The Court sustains the CA on both
issues.
Contracts of sale are perfected by
mutual consent whereby the seller obligates
himself, for a price certain, to deliver and
transfer ownership of a specified thing or
right to the buyer over which the latter
agrees.[24] Mutual consent being a state of
mind, its existence may only be inferred from
the confluence of two acts of the parties: an
offer certain as to the object of the contract
and its consideration, and an acceptance of
the offer which is absolute in that it refers to
the exact object and consideration embodied
in said offer.[25] While it is impossible to
expect the acceptance to echo
every
nuance of the offer, it is imperative that it
assents to those points in the offer which,
under the operative facts of each contract,
are not only material but motivating as well.
Anything short of that level of mutuality

produces not a contract but a mere counteroffer awaiting acceptance.[26]

More
particularly
on
the
matter
of
the
consideration of the contract, the offer and
its acceptance must be unanimous both on
the rate of the payment and on its term. An
acceptance of an offer which agrees to the
rate but varies the term is ineffective. [27]
To determine whether there was
mutual consent between the parties herein,
it is necessary to retrace each offer and
acceptance they made.
Respondent began with an invitation to bid
issued in April 1989 covering several of its
acquired assets in Calumpang, General
Santos City, including Lot No. 19 for which
the floor price was P2,268,000.00. The offer
was subject to the condition that sealed bids,
accompanied by a 10% deposit in managers
or cashiers check, be submitted not later
than 10 oclock in the morning of April 27,
1989.
On June 28, 1990, petitioner made an offer to
buy Lot No. 17 and Lot No. 19 for an
aggregate price of P3,677,000.00.
It is
noted that this offer exactly corresponded to
the April 1989 invitation to bid issued by
respondent in that the proposed aggregate
purchase price for Lot Nos. 17 and 19
matched the advertised floor prices for the
same properties. However, it cannot be said
that the June 28, 1990 letter of petitioner
was an effective acceptance of the April
1989 invitation to bid for, by its express
terms, said invitation lapsed on April 27,
1989.[28] More than that, the April 1989
invitation was subject to the condition that
all sealed bids submitted and accepted be
approved by respondents higher authorities.
Thus, the June 28, 1990 letter of petitioner
was an offer to buy independent of the April
1989 invitation to bid. It was a definite offer
as it identified with certainty the properties
sought to be purchased and fixed the
contract price.
However, respondent replied to the June 28,
1990 offer with a July 6, 1990 letter that only
Lot No. 19 is available and that the price
therefor is now P2,883,300.00.
As the CA

pointed out, this reply was certainly not an

acceptance of the June 28, 1990 offer but a
mere counter-offer.
It deviated from the
original offer on three material points: first,
the object of the proposed sale is now only
Lot No. 19 rather than Lot Nos. 17 and 19;
second, the area of the property to be sold is
still 41,190 sq. m but an 8,797-sq. m
portion is now part of a public road; and
third, the consideration is P2,883,300 for one
lot rather than P3,677,000.00 for two lots.
More important, this July 6, 1990 counteroffer imposed two conditions: one, that
petitioner submit a revised offer to purchase
based on the quoted price; and two, that the
sale of the property be approved by the
Board of Directors and subjected to other
terms and conditions imposed by the Bank
on the sale of acquired assets.
In reply to the July 6, 1990 counteroffer, petitioner signed his July 11, 1990
conformity
to
the
quoted
price
of
P2,883,300.00 but inserted the term
downpayment of P600,000.00 and the
balance payable in two years at quarterly
amortization. The CA viewed this July 11,
1990 conformity not as an acceptance of the
July 6, 1990 counter-offer but a further
counter-offer for, while petitioner accepted
the P2,883,300.00 price for Lot No. 19, he
qualified his acceptance by proposing a twoyear payment term.
Petitioner does not directly impugn such
reasoning of the CA. He merely questions it
for taking up the issue of whether his July 11,
1990 conformity modified the July 6, 1990
counter-offer as this was allegedly never
raised during the trial nor on appeal.[29]
Such argument is not well taken.
From
beginning to end, respondent denied that a
contract of sale with petitioner was ever
perfected.[30]
Its
defense was broad
enough to encompass every issue relating to
the concurrence of the elements of contract,
specifically on whether it consented to the
object of the sale and its consideration.
There was nothing to prevent the CA from
inquiring into the offers and counter-offers of
the parties to determine whether there was
indeed a perfected contract between them.

Moreover, there is merit in the ruling of the

CA that the July 11, 1990 marginal note was
a further counter-offer which did not lead to
the perfection of a contract of sale between
the parties. Petitioners own June 28, 1990
offer quoted the price of P3,677,000.00 for
two lots but was silent on the term of
payment.
Respondents July 6, 1990
counter-offer
quoted
the
price
of
P2,833,300.00 and was also silent on the
term of payment. Up to that point, the term
or schedule of payment was not on the
negotiation table. Thus, when petitioner
suddenly introduced a term of payment in his
July 11, 1990 counter-offer, he interjected
into the negotiations a
new substantial
matter on which the parties had no prior
discussion and over which they must yet
agree.[31] Petitioners July 11, 1990 counteroffer, therefore, did not usher the parties
beyond the negotiation stage of contract
making towards its perfection. He made a
counter-offer that required acceptance by
respondent.
As it were, respondent, through its Board of
Directors, did not accept this last counteroffer. As stated in its October 11, 1990 letter
to petitioner, respondent ordered the
reappraisal of the property, in clear
repudiation not only of the proposed price
but also the term of payment thereof.
Petitioner insists, however, that the October
11, 1990 repudiation was belated as
respondent had already agreed to his July 11,
1990 counter-offer when it accepted his
downpayment or earnest money
of
P580,000.00.[32] He cites Article 1482 of
the Civil Code where it says that acceptance
of downpayment or earnest money
presupposes the perfection of a contract.
Not so. Acceptance of petitioners payments
did not amount to an implied acceptance of
his last counter-offer.
To begin with, PNB-General Santos Branch,
which accepted petitioners P380,000.00
payment, and PNB-SAMD, which accepted his
P200,000.00 payment, had no authority to
bind respondent to a contract of sale with
petitioner.[33] Petitioner is well aware of

this. To recall, petitioner sent his June 28,

1990 offer to PNB-General Santos Branch.
Said branch did not act on his offer except to
endorse it to Guevarra.
Thereafter,
petitioner transacted directly with Guevarra.
Petitioner then cannot pretend that PNBGeneral Santos Branch had authority to
accept his July 11, 1990 counter-offer by
merely accepting his P380,000.00 payment.
Neither did SAMD have authority to bind
PNB. In its April 1989 invitation to bid, as well
as its July 6, 1990 counter-offer, SAMD was
always careful to emphasize that whatever
offer is made and entertained will be subject
to the approval of
respondents higher
authorities. This is a reasonable disclaimer
considering
the
corporate
nature
of
respondent. [34]
Moreover, petitioners payment of
P200,000.00
was
with
the
clear
understanding that his July 11, 1990 counteroffer was still subject to approval by
respondent.
This is borne out by
respondents Exhibits 2-a and 2-b, which
petitioner never controverted,
where it
appears on the dorsal portion of O.R. No.
16997 that petitioner acceded that the
amount he paid was a mere x x x deposit
made to show the sincerity of [his] purchase
offer with the understanding that it shall be
returned without interest if [his] offer is not
favorably considered x x x.[35] This was a
clear acknowledgment on his part that there
was yet no perfected contract with
respondent and that even with the payments
he had advanced, his July 11, 1990 counteroffer was still subject to consideration by
respondent.
Not only that, in the same Exh. 2-a
as well as in his June 28, 1990 offer,
petitioner referred to his payments as mere
deposits. Even O.R. No. 16997 refers to
petitioners payment as mere deposit. It is
only in the debit notice issued by PNBGeneral Santos Branch where petitioners
payment is referred to as downpayment.
But then, as we said, PNB-General Santos
Branch has no authority to bind respondent
by its interpretation of the nature of the
payment made by petitioner.

In sum, the amounts paid by petitioner

were not in the nature of downpayment or
earnest money but were mere deposits or
proof of his interest in the purchase of Lot
No. 19. Acceptance of said amounts by
respondent does not presuppose perfection
of any contract.[36]
It must be noted that petitioner has
expressly admitted that he had withdrawn
the entire amount of P580,000.00 deposit
from PNB-General Santos Branch.[37]

With the foregoing disquisition, the

Court foregoes resolution of the second issue

as it is evident that respondent acted well

within its rights when it rejected the last
counter-offer of petitioner.
In fine, petitioners petition lacks merit.
WHEREFORE, the petition is DENIED.
The Decision dated January 29, 2002 and
Resolution dated June 27, 2002 of the Court
of Appeals are AFFIRMED.
No costs.
SO ORDERED