G.R. No. L-22487 May 21, 1969
T-
ASUNCION ATILANO, CRISTINA ATILANO, ROSARIO
ATILANO, assisted by their respective husbands, HILARIO
ROMANO, FELIPE BERNARDO, and MAXIMO
LACANDALO, ISABEL ATILANO and GREGORIO
ATILANO, plaintiffs-appellees,
vs.
LADISLAO ATILANO and GREGORIO M.
ATILANO, defendants-appellants.
Climaco and Azcarraga for plaintiff-appellee.
T. de los Santos for defendants-appellants.
MAKALINTAL, J.:
In 1916 Eulogio Atilano I acquired, by purchase from one
Gerardo Villanueva, lot No. 535 of the then municipality of
Zamboanga cadastre. The vendee thereafter obtained transfer
certificate of title No. 1134 in his name. In 1920 he had the land
subdivided into five parts, identified as lots Nos. 535-A, 535-B,
535-C, 535-D and 535-E, respectively. On May 18 of the same
year, after the subdivision had been effected, Eulogio Atilano I,
for the sum of P150.00, executed a deed of sale covering lot No.
535-E in favor of his brother Eulogio Atilano II, who thereupon
obtained transfer certificate of title No. 3129 in his name. Three
other portions, namely lots Nos. 535-B, 535-C and 535-D, were
likewise sold to other persons, the original owner, Eulogio
Atilano I, retaining for himself only the remaining portion of the
land, presumably covered by the title to lot No. 535-A. Upon his
death the title to this lot passed to Ladislao Atilano, defendant in
SALES - PART III
this case, in whose name the corresponding certificate (No.
5056) was issued.
On December 6, 1952, Eulogio Atilano II having become a
widower upon the death of his wife Luisa Bautista, he and his
children obtained transfer certificate of title No. 4889 over lot
No. 535-E in their names as co-owners. Then, on July 16, 1959,
desiring to put an end to the co-ownership, they had the land
resurveyed so that it could properly be subdivided; and it was
then discovered that the land they were actually occupying on
the strength of the deed of sale executed in 1920 was lot No.
535-A and not lot 535-E, as referred to in the deed, while the
land which remained in the possession of the vendor, Eulogio
Atilano I, and which passed to his successor, defendant Ladislao
Atilano, was lot No. 535-E and not lot No. 535-A.
On January 25, 1960, the heirs of Eulogio Atilano II, who was
by then also deceased, filed the present action in the Court of
First Instance of Zamboanga, alleging, inter alia, that they had
offered to surrender to the defendants the possession of lot No.
535-A and demanded in return the possession of lot No. 535-E,
but that the defendants had refused to accept the exchange. The
plaintiffs' insistence is quite understandable, since lot No. 535-E
has an area of 2,612 square meters, as compared to the 1,808
square-meter area of lot No. 535-A.
In their answer to the complaint the defendants alleged that the
reference to lot No. 535-E in the deed of sale of May 18, 1920
was an involuntary error; that the intention of the parties to that
sale was to convey the lot correctly identified as lot No. 535-A;
that since 1916, when he acquired the entirety of lot No. 535,
1
and up to the time of his death, Eulogio Atilano I had been
possessing and had his house on the portion designated as lot
No. 535-E, after which he was succeeded in such possession by
the defendants herein; and that as a matter of fact Eulogio
Atilano I even increased the area under his possession when on
June 11, 1920 he bought a portion of an adjoining lot, No. 536,
from its owner Fruto del Carpio. On the basis of the foregoing
allegations the defendants interposed a counterclaim, praying
that the plaintiffs be ordered to execute in their favor the
corresponding deed of transfer with respect to lot No. 535-E.
The trial court rendered judgment for the plaintiffs on the sole
ground that since the property was registered under the Land
Registration Act the defendants could not acquire it through
prescription. There can be, of course, no dispute as to the
correctness of this legal proposition; but the defendants, aside
from alleging adverse possession in their answer and
counterclaim, also alleged error in the deed of sale of May 18,
1920, thus: "Eulogio Atilano 1.o, por equivocacion o error
involuntario, cedio y traspaso a su hermano Eulogio Atilano 2.do
el lote No. 535-E en vez del Lote No. 535-A."lawphi1.et
The logic and common sense of the situation lean heavily in
favor of the defendants' contention. When one sells or buys real
property a piece of land, for example one sells or buys the
property as he sees it, in its actual setting and by its physical
metes and bounds, and not by the mere lot number assigned to it
in the certificate of title. In the particular case before us, the
portion correctly referred to as lot No. 535-A was already in the
possession of the vendee, Eulogio Atilano II, who had
constructed his residence therein, even before the sale in his
SALES - PART III
favor even before the subdivision of the entire lot No. 535 at the
instance of its owner, Eulogio Atillano I. In like manner the
latter had his house on the portion correctly identified, after the
subdivision, as lot No. 535-E, even adding to the area thereof by
purchasing a portion of an adjoining property belonging to a
different owner. The two brothers continued in possession of the
respective portions the rest of their lives, obviously ignorant of
the initial mistake in the designation of the lot subject of the
1920 until 1959, when the mistake was discovered for the first
time.
The real issue here is not adverse possession, but the real
intention of the parties to that sale. From all the facts and
circumstances we are convinced that the object thereof, as
intended and understood by the parties, was that specific portion
where the vendee was then already residing, where he
reconstructed his house at the end of the war, and where his
heirs, the plaintiffs herein, continued to reside thereafter:
namely, lot No. 535-A; and that its designation as lot No. 535-E
in the deed of sale was simple mistake in the drafting of the
document.1wphi1.et The mistake did not vitiate the consent of
the parties, or affect the validity and binding effect of the
contract between them. The new Civil Code provides a remedy
for such a situation by means of reformation of the instrument.
This remedy is available when, there having been a meeting of
the funds of the parties to a contract, their true intention is not
expressed in the instrument purporting to embody the agreement
by reason of mistake, fraud, inequitable conduct on accident
(Art. 1359, et seq.) In this case, the deed of sale executed in
1920 need no longer reformed. The parties have retained
possession of their respective properties conformably to the real
2
intention of the parties to that sale, and all they should do is to
execute mutual deeds of conveyance.

WHEREFORE, the judgment appealed from is reversed. The

plaintiffs are ordered to execute a deed of conveyance of lot No.
535-E in favor of the defendants, and the latter in turn, are
ordered to execute a similar document, covering lot No. 595-A,
in favor of the plaintiffs. Costs against the latter.

G.R. No. L-24732 April 30, 1968

PIO SIAN MELLIZA, petitioner,

vs.
CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES
and THE COURT APPEALS, respondents.

SALES - PART III 3

Cornelio P. Ravena for petitioner.
Office of the Solicitor General for respondents.
BENGZON, J.P., J.:
Juliana Melliza during her lifetime owned, among other
properties, three parcels of residential land in Iloilo City
registered in her name under Original Certificate of Title No.
3462. Said parcels of land were known as Lots Nos. 2, 5 and
1214. The total area of Lot No. 1214 was 29,073 square meters.
On November 27, 1931 she donated to the then Municipality of
Iloilo, 9,000 square meters of Lot 1214, to serve as site for the
municipal hall. 1 The donation was however revoked by the
parties for the reason that the area donated was found inadequate
to meet the requirements of the development plan of the
municipality, the so-called "Arellano Plan". 2
Subsequently, Lot No. 1214 was divided by Certeza Surveying
Co., Inc. into Lots 1214-A and 1214-B. And still later, Lot 1214-
B was further divided into Lots 1214-B-1, Lot 1214-B-2 and Lot
1214-B-3. As approved by the Bureau of Lands, Lot 1214-B-1
with 4,562 square meters, became known as Lot 1214-B; Lot
1214-B-2, with 6,653 square meters, was designated as Lot
1214-C; and Lot 1214-B-13, with 4,135 square meters, became
Lot 1214-D.
On November 15, 1932 Juliana Melliza executed an instrument
without any caption containing the following:
SALES - PART III
Que en consideracion a la suma total de SEIS MIL CUATRO
CIENTOS VEINTIDOS PESOS (P6,422.00), moneda filipina
que por la presente declaro haber recibido a mi entera
satisfaccion del Gobierno Municipal de Iloilo, cedo y traspaso en
venta real y difinitiva a dicho Gobierno Municipal de Iloilo los
lotes y porciones de los mismos que a continuacion se
especifican a saber: el lote No. 5 en toda su extension; una
porcion de 7669 metros cuadrados del lote No. 2, cuya porcion
esta designada como sub-lotes Nos. 2-B y 2-C del piano de
subdivision de dichos lotes preparado por la Certeza Surveying
Co., Inc., y una porcion de 10,788 metros cuadrados del lote No.
1214 cuya porcion esta designada como sub-lotes Nos. 1214-
B-2 y 1214-B-3 del mismo plano de subdivision.
Asimismo nago constar que la cesion y traspaso que ariba se
mencionan es de venta difinitiva, y que para la mejor
identificacion de los lotes y porciones de los mismos que son
objeto de la presente, hago constar que dichos lotes y porciones
son los que necesita el Gobierno Municipal de Iloilo para la
construccion de avenidas, parques y City Hall site del Municipal
Government Center de iloilo, segun el plano Arellano.
On January 14, 1938 Juliana Melliza sold her remaining interest
in Lot 1214 to Remedios Sian Villanueva who thereafter
obtained her own registered title thereto, under Transfer
Certificate of Title No. 18178. Remedios in turn on November 4,
1946 transferred her rights to said portion of land to Pio Sian
Melliza, who obtained Transfer Certificate of Title No. 2492
thereover in his name. Annotated at the back of Pio Sian
Melliza's title certificate was the following:
4
... (a) that a portion of 10,788 square meters of Lot 1214 now
designated as Lots Nos. 1214-B-2 and 1214-B-3 of the
subdivision plan belongs to the Municipality of Iloilo as per
instrument dated November 15, 1932....
On August 24, 1949 the City of Iloilo, which succeeded to the
Municipality of Iloilo, donated the city hall site together with the
building thereon, to the University of the Philippines (Iloilo
branch). The site donated consisted of Lots Nos. 1214-B, 1214-
C and 1214-D, with a total area of 15,350 square meters, more
or less.
Sometime in 1952, the University of the Philippines enclosed the
site donated with a wire fence. Pio Sian Melliza thereupon made
representations, thru his lawyer, with the city authorities for
payment of the value of the lot (Lot 1214-B). No recovery was
obtained, because as alleged by plaintiff, the City did not have
funds (p. 9, Appellant's Brief.)
The University of the Philippines, meanwhile, obtained Transfer
Certificate of Title No. 7152 covering the three lots, Nos. 1214-
B, 1214-C and 1214-D.
On December 10, 1955 Pio Sian Melliza filed an action in the
Court of First Instance of Iloilo against Iloilo City and the
University of the Philippines for recovery of Lot 1214-B or of its
value.
The defendants answered, contending that Lot 1214-B was
included in the public instrument executed by Juliana Melliza in
favor of Iloilo municipality in 1932. After stipulation of facts
SALES - PART III
and trial, the Court of First Instance rendered its decision on
August 15, 1957, dismissing the complaint. Said court ruled that
the instrument executed by Juliana Melliza in favor of Iloilo
municipality included in the conveyance Lot 1214-B. In support
of this conclusion, it referred to the portion of the instrument
stating:
Asimismo hago constar que la cesion y traspaso que arriba se
mencionan es de venta difinitiva, y que para la major
identificacion de los lotes y porciones de los mismos que son
objeto de la presente, hago constar que dichos lotes y porciones
son los que necesita el Gobierno municipal de Iloilo para la
construccion de avenidas, parques y City Hall site del Municipal
Government Center de Iloilo, segun el plano Arellano.
and ruled that this meant that Juliana Melliza not only sold Lots
1214-C and 1214-D but also such other portions of lots as were
necessary for the municipal hall site, such as Lot 1214-B. And
thus it held that Iloilo City had the right to donate Lot 1214-B to
the U.P.
Pio Sian Melliza appealed to the Court of Appeals. In its
decision on May 19, 1965, the Court of Appeals affirmed the
interpretation of the Court of First Instance, that the portion of
Lot 1214 sold by Juliana Melliza was not limited to the 10,788
square meters specifically mentioned but included whatever was
needed for the construction of avenues, parks and the city hall
site. Nonetheless, it ordered the remand of the case for reception
of evidence to determine the area actually taken by Iloilo City
for the construction of avenues, parks and for city hall site.
5
The present appeal therefrom was then taken to Us by Pio Sian
Melliza. Appellant maintains that the public instrument is clear
that only Lots Nos. 1214-C and 1214-D with a total area of
10,788 square meters were the portions of Lot 1214 included in
the sale; that the purpose of the second paragraph, relied upon
for a contrary interpretation, was only to better identify the lots
sold and none other; and that to follow the interpretation
accorded the deed of sale by the Court of Appeals and the Court
of First Instance would render the contract invalid because the
law requires as an essential element of sale, a "determinate"
object (Art. 1445, now 1448, Civil Code).
Appellees, on the other hand, contend that the present appeal
improperly raises only questions of fact. And, further, they argue
that the parties to the document in question really intended to
include Lot 1214-B therein, as shown by the silence of the
vendor after Iloilo City exercised ownership thereover; that not
to include it would have been absurd, because said lot is
contiguous to the others admittedly included in the conveyance,
lying directly in front of the city hall, separating that building
from Lots 1214-C and 1214-D, which were included therein.
And, finally, appellees argue that the sale's object was
determinate, because it could be ascertained, at the time of the
execution of the contract, what lots were needed by Iloilo
municipality for avenues, parks and city hall site "according to
the Arellano Plan", since the Arellano plan was then already in
existence.
The appeal before Us calls for the interpretation of the public
instrument dated November 15, 1932. And interpretation of such
contract involves a question of law, since the contract is in the
SALES - PART III
nature of law as between the parties and their successors-in-
interest.
At the outset, it is well to mark that the issue is whether or not
the conveyance by Juliana Melliza to Iloilo municipality
included that portion of Lot 1214 known as Lot 1214-B. If not,
then the same was included, in the instrument subsequently
executed by Juliana Melliza of her remaining interest in Lot
1214 to Remedios Sian Villanueva, who in turn sold what she
thereunder had acquired, to Pio Sian Melliza. It should be
stressed, also, that the sale to Remedios Sian Villanueva from
which Pio Sian Melliza derived title did not specifically
designate Lot 1214-B, but only such portions of Lot 1214 as
were not included in the previous sale to Iloilo
municipality (Stipulation of Facts, par. 5, Record on Appeal, p.
23). And thus, if said Lot 1214-B had been included in the prior
conveyance to Iloilo municipality, then it was excluded from the
sale to Remedios Sian Villanueva and, later, to Pio Sian Melliza.
The point at issue here is then the true intention of the parties as
to the object of the public instrument Exhibit "D". Said issue
revolves on the paragraph of the public instrument aforequoted
and its purpose, i.e., whether it was intended merely to further
describe the lots already specifically mentioned, or whether it
was intended to cover other lots not yet specifically mentioned.
First of all, there is no question that the paramount intention of
the parties was to provide Iloilo municipality with lots sufficient
or adequate in area for the construction of the Iloilo City hall
site, with its avenues and parks. For this matter, a previous
6
donation for this purpose between the same parties was revoked
by them, because of inadequacy of the area of the lot donated.
Secondly, reading the public instrument in toto, with special
reference to the paragraphs describing the lots included in the
sale, shows that said instrument describes four parcels of land by
their lot numbers and area; and then it goes on to further
describe, not only those lots already mentioned, but the
lots object of the sale, by stating that said lots are the ones
needed for the construction of the city hall site, avenues and
parks according to the Arellano plan. If the parties intended
merely to cover the specified lots Lots 2, 5, 1214-C and
1214-D, there would scarcely have been any need for the next
paragraph, since these lots are already plainly and very clearly
described by their respective lot number and area. Said next
paragraph does not really add to the clear description that was
already given to them in the previous one.
It is therefore the more reasonable interpretation, to view it as
describing those other portions of land contiguous to the lots
aforementioned that, by reference to the Arellano plan, will be
found needed for the purpose at hand, the construction of the
city hall site.
Appellant however challenges this view on the ground that the
description of said other lots in the aforequoted second
paragraph of the public instrument would thereby be legally
insufficient, because the object would allegedly not be
determinate as required by law.
SALES - PART III
Such contention fails on several counts. The requirement of the
law that a sale must have for its object a determinate thing, is
fulfilled as long as, at the time the contract is entered into, the
object of the sale is capable of being made determinate without
the necessity of a new or further agreement between the parties
(Art. 1273, old Civil Code; Art. 1460, New Civil Code). The
specific mention of some of the lots plus the statement that the
lots object of the sale are the ones needed for city hall site,
avenues and parks, according to the Arellano plan, sufficiently
provides a basis, as of the time of the execution of the contract,
for rendering determinate said lots without the need of a new and
further agreement of the parties.
The Arellano plan was in existence as early as 1928. As stated,
the previous donation of land for city hall site on November 27,
1931 was revoked on March 6, 1932 for being inadequate in area
under said Arellano plan. Appellant claims that although said
plan existed, its metes and bounds were not fixed until 1935, and
thus it could not be a basis for determining the lots sold on
November 15, 1932. Appellant however fails to consider that
the area needed under that plan for city hall site was then
already known; that the specific mention of some of the lots
covered by the sale in effect fixed the corresponding location of
the city hall site under the plan; that, therefore, considering the
said lots specifically mentioned in the public instrument Exhibit
"D", and the projected city hall site, with its area, as then shown
in the Arellano plan (Exhibit 2), it could be determined which,
and how much of the portions of land contiguous to those
specifically named, were needed for the construction of the city
hall site.
7
And, moreover, there is no question either that Lot 1214-B is
contiguous to Lots 1214-C and 1214-D, admittedly covered by
the public instrument. It is stipulated that, after execution of the
contract Exhibit "D", the Municipality of Iloilo possessed it
together with the other lots sold. It sits practically in the heart of
the city hall site. Furthermore, Pio Sian Melliza, from the
stipulation of facts, was the notary public of the public
instrument. As such, he was aware of its terms. Said instrument
was also registered with the Register of Deeds and such
registration was annotated at the back of the corresponding title
certificate of Juliana Melliza. From these stipulated facts, it can
be inferred that Pio Sian Melliza knew of the aforesaid terms of
the instrument or is chargeable with knowledge of them; that
knowing so, he should have examined the Arellano plan in
relation to the public instrument Exhibit "D"; that, furthermore,
he should have taken notice of the possession first by the
Municipality of Iloilo, then by the City of Iloilo and later by the
University of the Philippines of Lot 1214-B as part of the city
hall site conveyed under that public instrument, and raised
proper objections thereto if it was his position that the same was
not included in the same. The fact remains that, instead, for
twenty long years, Pio Sian Melliza and his predecessors-in-
interest, did not object to said possession, nor exercise any act of
possession over Lot 1214-B. Applying, therefore, principles of
civil law, as well as laches, estoppel, and equity, said lot must
necessarily be deemed included in the conveyance in favor of
Iloilo municipality, now Iloilo City.

WHEREFORE, the decision appealed from is affirmed insofar

as it affirms that of the Court of First Instance, and the complaint
in this case is dismissed. No costs. So ordered.

SALES - PART III 8

 G.R. No. 105387 November 11, 1993

JOHANNES SCHUBACK & SONS PHILIPPINE

TRADING CORPORATION, petitioner,
vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE,
JR., doing business under the name and style "PHILIPPINE
SJ INDUSTRIAL TRADING," respondents.

Hernandez, Velicaria, Vibar & Santiago for petitioner.

Ernesto M. Tomaneng for private respondent.

ROMERO, J.:

In this petition for review on certiorari, petitioner questions the

reversal by the Court of Appeals 1 of the trial court's ruling that a
contract of sale had been perfected between petitioner and
private respondent over bus spare parts.

SALES - PART III 9

The facts as quoted from the decision of the Court of Appeals
are as follows:
Sometime in 1981, defendant 2 established contact with
plaintiff 3 through the Philippine Consulate General in Hamburg,
West Germany, because he wanted to purchase MAN bus spare
parts from Germany. Plaintiff communicated with its trading
partner. Johannes Schuback and Sohne Handelsgesellschaft
m.b.n. & Co. (Schuback Hamburg) regarding the spare parts
defendant wanted to order.
On October 16, 1981, defendant submitted to plaintiff a list of
the parts (Exhibit B) he wanted to purchase with specific part
numbers and description. Plaintiff referred the list to Schuback
Hamburg for quotations. Upon receipt of the quotations, plaintiff
sent to defendant a letter dated 25 November, 1981 (Exh. C)
enclosing its offer on the items listed by defendant.
On December 4, 1981, defendant informed plaintiff that he
preferred genuine to replacement parts, and requested that he be
given 15% on all items (Exh. D).
On December 17, 1981, plaintiff submitted its formal offer (Exh.
E) containing the item number, quantity, part number,
description, unit price and total to defendant. On December, 24,
1981, defendant informed plaintiff of his desire to avail of the
prices of the parts at that time and enclosed Purchase Order No.
0101 dated 14 December 1981 (Exh. F to F-4). Said Purchase
Order contained the item number, part number and description.
Defendant promised to submit the quantity per unit he wanted to
order on December 28 or 29 (Exh. F).
SALES - PART III
On December 29, 1981, defendant personally submitted the
quantities he wanted to Mr. Dieter Reichert, General Manager of
plaintiff, at the latter's residence (t.s.n., 13 December, 1984, p.
36). The quantities were written in ink by defendant in the same
Purchase Order previously submitted. At the bottom of said
Purchase Order, defendant wrote in ink above his signature:
"NOTE: Above P.O. will include a 3% discount. The above will
serve as our initial P.O." (Exhs. G to G-3-a).
Plaintiff immediately ordered the items needed by defendant
from Schuback Hamburg to enable defendant to avail of the old
prices. Schuback Hamburg in turn ordered (Order No. 12204)
the items from NDK, a supplier of MAN spare parts in West
Germany. On January 4, 1982, Schuback Hamburg sent plaintiff
a proforma invoice (Exhs. N-1 to N-3) to be used by defendant
in applying for a letter of credit. Said invoice required that the
letter of credit be opened in favor of Schuback Hamburg.
Defendant acknowledged receipt of the invoice (t.s.n., 19
December 1984, p. 40).
An order confirmation (Exhs. I, I-1) was later sent by Schuback
Hamburg to plaintiff which was forwarded to and received by
defendant on February 3, 1981 (t.s.n., 13 Dec. 1984, p. 42).
On February 16, 1982, plaintiff reminded defendant to open the
letter of credit to avoid delay in shipment and payment of
interest (Exh. J). Defendant replied, mentioning, among others,
the difficulty he was encountering in securing: the required
dollar allocations and applying for the letter of credit, procuring
a loan and looking for a partner-financier, and of finding ways
'to proceed with our orders" (Exh. K).
10
In the meantime, Schuback Hamburg received invoices from,
NDK for partial deliveries on Order No.12204 (Direct
Interrogatories., 07 Oct, 1985, p. 3). Schuback Hamburg paid
NDK. The latter confirmed receipt of payments made on
February 16, 1984 (Exh.C-Deposition).
On October 18, 1982, Plaintiff again reminded defendant of his
order and advised that the case may be endorsed to its lawyers
(Exh. L). Defendant replied that he did not make any valid
Purchase Order and that there was no definite contract between
him and plaintiff (Exh. M). Plaintiff sent a rejoinder explaining
that there is a valid Purchase Order and suggesting that
defendant either proceed with the order and open a letter of
credit or cancel the order and pay the cancellation fee of 30% of
F.O.B. value, or plaintiff will endorse the case to its lawyers
(Exh. N).
Schuback Hamburg issued a Statement of Account (Exh. P) to
plaintiff enclosing therewith Debit Note (Exh. O) charging
plaintiff 30% cancellation fee, storage and interest charges in the
total amount of DM 51,917.81. Said amount was deducted from
plaintiff's account with Schuback Hamburg (Direct
Interrogatories, 07 October, 1985).
Demand letters sent to defendant by plaintiff's counsel dated
March 22, 1983 and June 9, 1983 were to no avail (Exhs R and
S).
Consequently, petitioner filed a complaint for recovery of actual
or compensatory damages, unearned profits, interest, attorney's
fees and costs against private respondent.
SALES - PART III
In its decision dated June 13, 1988, the trial court 4 ruled in favor
of petitioner by ordering private respondent to pay petitioner,
among others, actual compensatory damages in the amount of
DM 51,917.81, unearned profits in the amount of DM
14,061.07, or their peso equivalent.
Thereafter, private respondent elevated his case before the Court
of Appeals. On February 18, 1992, the appellate court reversed
the decision of the trial court and dismissed the complaint of
petitioner. It ruled that there was no perfection of contract since
there was no meeting of the minds as to the price between the
last week of December 1981 and the first week of January 1982.
The issue posed for resolution is whether or not a contract of
sale has been perfected between the parties.
We reverse the decision of the Court of Appeals and reinstate the
decision of the trial court. It bears emphasizing that a "contract
of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the
price. . . . " 5
Article 1319 of the Civil Code states: "Consent is manifested by
the meeting of the offer and acceptance upon the thing and the
cause which are to constitute the contract. The offer must be
certain and the acceptance absolute. A qualified acceptance
constitutes a counter offer." The facts presented to us indicate
that consent on both sides has been manifested.
The offer by petitioner was manifested on December 17, 1981
when petitioner submitted its proposal containing the item
11
number, quantity, part number, description, the unit price and
total to private respondent. On December 24, 1981, private
respondent informed petitioner of his desire to avail of the prices
of the parts at that time and simultaneously enclosed its Purchase
Order No. 0l01 dated December 14, 1981. At this stage, a
meeting of the minds between vendor and vendee has occurred,
the object of the contract: being the spare parts and the
consideration, the price stated in petitioner's offer dated
December 17, 1981 and accepted by the respondent on
December 24,1981.
Although said purchase order did not contain the quantity he
wanted to order, private respondent made good, his promise to
communicate the same on December 29, 1981. At this juncture,
it should be pointed out that private respondent was already in
the process of executing the agreement previously reached
between the parties.
Below Exh. G-3, marked as Exhibit G-3-A, there appears this
statement made by private respondent: "Note. above P.O. will
include a 3% discount. The above will serve as our initial P.O."
This notation on the purchase order was another indication of
acceptance on the part of the vendee, for by requesting a 3%
discount, he implicitly accepted the price as first offered by the
vendor. The immediate acceptance by the vendee of the offer
was impelled by the fact that on January 1, 1982, prices would
go up, as in fact, the petitioner informed him that there would be
a 7% increase, effective January 1982. On the other hand,
concurrence by the vendor with the said discount requested by
the vendee was manifested when petitioner immediately ordered
the items needed by private respondent from Schuback Hamburg
SALES - PART III
which in turn ordered from NDK, a supplier of MAN spare parts
in West Germany.
When petitioner forwarded its purchase order to NDK, the price
was still pegged at the old one. Thus, the pronouncement of the
Court Appeals that there as no confirmed price on or about the
last week of December 1981 and/or the first week of January
1982 was erroneous.
While we agree with the trial court's conclusion that indeed a
perfection of contract was reached between the parties, we differ
as to the exact date when it occurred, for perfection took place,
not on December 29, 1981. Although the quantity to be ordered
was made determinate only on December 29, 1981, quantity is
immaterial in the perfection of a sales contract. What is of
importance is the meeting of the minds as to
the object and cause, which from the facts disclosed, show that
as of December 24, 1981, these essential elements had already
occurred.
On the part of the buyer, the situation reveals that private
respondent failed to open an irrevocable letter of credit without
recourse in favor of Johannes Schuback of Hamburg, Germany.
This omission, however. does not prevent the perfection of the
contract between the parties, for the opening of the letter of
credit is not to be deemed a suspensive condition. The facts
herein do not show that petitioner reserved title to the goods
until private respondent had opened a letter of credit. Petitioner,
in the course of its dealings with private respondent, did not
incorporate any provision declaring their contract of sale without
12
effect until after the fulfillment of the act of opening a letter of
credit.

The opening of a etter of credit in favor of a vendor is only a

mode of payment. It is not among the essential requirements of a
contract of sale enumerated in Article 1305 and 1474 of the Civil
Code, the absence of any of which will prevent the perfection of
the contract from taking place.

To adopt the Court of Appeals' ruling that the contract of sale

was dependent on the opening of a letter of credit would be
untenable from a pragmatic point of view because private
respondent would not be able to avail of the old prices which
were open to him only for a limited period of time. This explains
why private respondent immediately placed the order with
petitioner which, in turn promptly contacted its trading partner in
Germany. As succinctly stated by petitioner, "it would have been
impossible for respondent to avail of the said old prices since the
perfection of the contract would arise much later, or after the end
of the year 1981, or when he finally opens the letter of credit." 6

WHEREFORE, the petition is GRANTED and the decision of

the trial court dated June 13, 1988 is REINSTATED with
modification.
CONCHITA NOOL and GAUDENCIO
SO ORDERED. ALMOJERA, petitioner, vs. COURT OF APPEALS,
ANACLETO NOOL and EMILIA
NEBRE, respondents.

DECISION

SALES - PART III 13

PANGANIBAN, J.: 3. Ordering the plaintiffs to deliver
peaceful possession of the two hectares
A contract of repurchase arising out of a contract of sale mentioned in paragraph 7 of the
where the seller did not have any title to the property sold is not complaint and in paragraph 31 of
valid. Since nothing was sold, then there is also nothing to defendants answer (counterclaim);
repurchase.
4. Ordering the plaintiffs to pay reasonable
rents on said two hectares at P5,000.00
per annum or at P2,500.00 per cropping
Statement of the Case from the time of judicial demand
mentioned in paragraph 2 of the
This postulate is explained by this Court as it resolves this dispositive portion of this decision, until
petition for review on certiorari assailing the January 20, 1993 the said two hectares shall have been
Decision[1] of Respondent Court of Appeals[2] in CA-G.R. CV delivered to the defendants; and
No. 36473, affirming the decision[3] of the trial court[4] which 5. To pay the costs.
disposed as follows:[5]
SO ORDERED.
WHEREFORE, judgment is hereby rendered dismissing
the complaint for no cause of action, and hereby:
1. Declaring the private writing, Exhibit C, The Antecedent Facts
to be an option to sell, not binding and
considered validly withdrawn by the
The facts, which appear undisputed by the parties, are
defendants for want of consideration;
narrated by the Court of Appeals as follows:
2. Ordering the plaintiffs to return to the
Two (2) parcels of land are in dispute and litigated upon
defendants the sum of P30,000.00 plus
here. The first has an area of 1 hectare . It was formerly
interest thereon at the legal rate, from
owned by Victorino Nool and covered by Transfer
the time of filing of defendants
Certificate of Title No. T-74950. With an area of 3.0880
counterclaim until the same is fully
hectares, the other parcel was previously owned by
paid;
Francisco Nool under Transfer Certificate of Title No.
T-100945. Both parcels are situated in San Manuel,

SALES - PART III 14

 Isabela. The plaintiff spouses, Conchita Nool and
Gaudencio Almojera, now the appellants, seek recovery
of the aforementioned parcels of land from the
defendants, Anacleto Nool, a younger brother of
Conchita, and Emilia Nebre, now the appellees.
In their complaint, plaintiff-appellants alleged inter alia that they
are the owners of subject parcels of land, and they bought the
same from Conchitas other brothers, Victorino Nool and
Francisco Nool; that as plaintiffs were in dire need of money,
they obtained a loan from the Iligan Branch of the Development
Bank of the Philippines, in Ilagan, Isabela, secured by a real
estate mortgage on said parcels of land, which were still
registered in the names of Victorino Nool and Francisco Nool, at
the time, and for the failure of plaintiffs to pay the said loan,
including interest and surcharges, totaling P56,000.00, the
mortgage was foreclosed; that within the period of redemption,
plaintiffs contacted defendant Anacleto Nool for the latter to
redeem the foreclosed properties from DBP, which the latter did;
and as a result, the titles of the two (2) parcels of land in
question were transferred to Anacleto Nool; that as part of their
arrangement or understanding, Anacleto Nool agreed to buy
from the plaintiff Conchita Nool the two (2) parcels of land
under controversy, for a total price of P100,000.00, P30,000.00
of which price was paid to Conchita, and upon payment of the
balance of P14,000.00, plaintiffs were to regain possession of
the two (2) hectares of land, which amounts defendants failed to
pay, and the same day the said arrangement[6] was made; another
covenant[7] was entered into by the parties, whereby defendants
agreed to return to plaintiffs the lands in question, at anytime the
latter have the necessary amount; that plaintiffs asked the
SALES - PART III
defendants to return the same but despite the intervention of the
Barangay Captain of their place, defendants refused to return the
said parcels of land to plaintiffs; thereby impelling them
(plaintiffs) to come to court for relief.
In their answer defendants-appellees theorized that they
acquired the lands in question from the Development
Bank of the Philippines, through negotiated sale, and
were misled by plaintiffs when defendant Anacleto Nool
signed the private writing agreeing to return subject
lands when plaintiffs have the money to redeem the
same; defendant Anacleto having been made to believe,
then, that his sister, Conchita, still had the right to
redeem the said properties.
The pivot of inquiry here, as aptly observed below, is
the nature and significance of the private document,
marked Exhibit D for plaintiffs, which document has
not been denied by the defendants, as defendants even
averred in their Answer that they gave an advance
payment of P30,000.00 therefor, and acknowledged that
they had a balance of P14,000.00 to complete their
payment. On this crucial issue, the lower court adjudged
the said private writing (Exhibit D) as an option to sell
not binding upon and considered the same validly
withdrawn by defendants for want of consideration; and
decided the case in the manner abovementioned.
There is no quibble over the fact that the two (2) parcels of land
in dispute were mortgaged to the Development Bank of the
Philippines, to secure a loan obtained by plaintiffs from DBP
15
(Ilagan Branch), Ilagan, Isabela. For the non-payment of said
loan, the mortgage was foreclosed and in the process, ownership
of the mortgaged lands was consolidated in DBP (Exhibits 3 and
4 for defendants). After DBP became the absolute owner of the
two parcels of land, defendants negotiated with DBP and
succeeded in buying the same. By virtue of such sale by DBP in
favor of defendants, the titles of DBP were cancelled and
corresponding Transfer Certificates of Title (Annexes C and D to
the complaint) issued to the dependants.[8]
It should be stressed that Manuel S. Mallorca, authorized
officer of DBP, certified that the one-year redemption period was
from March 16, 1982 up to March 15, 1983 and that the
Mortgagors right of redemption was not exercised within this
period.[9] Hence, DBP became the absolute owner of said parcels
of land for which it was issued new certificates of title, both
entered on May 23, 1983 by the Registry of Deeds for the
Province of Isabela.[10] About two years thereafter, on April 1,
1985, DBP entered into a Deed of Conditional Sale [11] involving
the same parcels of land with Private Respondent Anacleto Nool
as vendee. Subsequently, the latter was issued new certificates of
title on February 8, 1988.[12]
The Court of Appeals ruled:[13]
WHEREFORE, finding no reversible error infirming it,
the appealed Judgment is hereby AFFIRMED in
toto. No pronouncement as to costs.
The Issues
SALES - PART III
Petitioners impute to Respondent Court the following
alleged errors:
1. The Honorable Court of Appeals, Second
Division has misapplied the legal import or
meaning of Exhibit C in a way contrary to law and
existing jurisprudence in stating that it has no
binding effect between the parties and considered
validly withdrawn by defendants-appellees for
want of consideration.
2. The Honorable Court of Appeals, Second
Division has miserably failed to give legal
significance to the actual possession and cultivation
and appropriating exclusively the palay harvest of
the two (2) hectares land pending the payment of
the remaining balance of fourteen thousand pesos
(P14,000.00) by defendants-appellees as indicated
in Exhibit C.
3. The Honorable Court of Appeals has seriously erred
in affirming the decision of the lower court by
awarding the payment of rents per annum and the
return of P30,000.00 and not allowing the plaintiffs-
appellants to re-acquire the four (4) hectares, more or
less upon payment of one hundred thousand pesos
(P100,000.00) as shown in Exhibit D.[14]
The Courts Ruling
16
 The petition is bereft of merit.
First Issue: Are Exhibits C and D Valid and Enforceable?
The petitioner-spouses plead for the enforcement of their
agreement with private respondents as contained in Exhibits C
and D, and seek damages for the latters alleged breach
thereof. In Exhibit C, which was a private handwritten document
labeled by the parties as Resibo ti Katulagan or Receipt of
Agreement, the petitioners appear to have sold to private
respondents the parcels of land in controversy covered by TCT
No. T-74950 and TCT No. T-100945. On the other hand, Exhibit
D, which was also a private handwritten document in Ilocano
and labeled as Kasuratan, private respondents agreed that
Conchita Nool can acquire back or repurchase later on said land
when she has the money.[15]
In seeking to enforce her alleged right to repurchase the
parcels of land, Conchita (joined by her co-petitioner-husband)
invokes Article 1370 of the Civil Code which mandates that (i)f
the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its
stipulation shall control. Hence, petitioners contend that the
Court of Appeals erred in affirming the trial courts finding and
conclusion that said Exhibits C and D were not merely voidable
but utterly void and inexistent.
We cannot sustain petitioners view. Article 1370 of the Civil
Code is applicable only to valid and enforceable contracts. The
Regional Trial Court and the Court of Appeals ruled that the
SALES - PART III
principal contract of sale contained in Exhibit C and the
auxilliary contract of repurchase in Exhibit D are both void. This
conclusion of the two lower courts appears to find support
in Dignos vs. Court of Appeals,[16] where the Court held:
Be that as it may, it is evident that when petitioners sold
said land to the Cabigas spouses, they were no longer
owners of the same and the sale is null and void.
In the present case, it is clear that the sellers no longer had
any title to the parcels of land at the time of sale. Since Exhibit
D, the alleged contract of repurchase, was dependent on the
validity of Exhibit C, it is itself void. A void contract cannot give
rise to a valid one.[17] Verily, Article 1422 of the Civil Code
provides that (a) contract which is the direct result of a previous
illegal contract, is also void and inexistent.
We should however add that Dignos did not cite its basis for
ruling that a sale is null and void where the sellers were no
longer the owners of the property. Such a situation (where the
sellers were no longer owners) does not appear to be one of the
void contracts enumerated in Article 1409 of the Civil Code.
[18]
Moreover, the Civil Code[19] itself recognizes a sale where the
goods are to be acquired x x x by the seller after the perfection
of the contract of sale, clearly implying that a sale is possible
even if the seller was not the owner at the time of sale, provided
he acquires title to the property later on.
In the present case however, it is likewise clear that the
sellers can no longer deliver the object of the sale to the buyers,
as the buyers themselves have already acquired title and delivery
thereof from the rightful owner, the DBP. Thus, such contract
may be deemed to be inoperative[20] and may thus fall, by
17
analogy, under item no. 5 of Article 1409 of the Civil
Code: Those which contemplate an impossible service. Article
1459 of the Civil Code provides that the vendor must have a
right to transfer the ownership thereof [object of the sale] at the
time it is delivered. Here, delivery of ownership is no longer
possible. It has become impossible.
Furthermore, Article 1505 of the Civil Code provides that
where goods are sold by a person who is not the owner thereof,
and who does not sell them under authority or with consent of
the owner, the buyer acquires no better title to the goods than the
seller had, unless the owner of the goods is by his conduct
precluded from denying the sellers authority to sell. Here, there
is no allegation at all that petitioners were authorized by DBP to
sell the property to the private respondents. Jurisprudence, on
the other hand, teaches us that a person can sell only what he
owns or is authorized to sell; the buyer can as a consequence
acquire no more than what the seller can legally transfer.[21] No
one can give what he does not have neno dat quod non
habet. On the other hand, Exhibit D presupposes that petitioners
could repurchase the property that they sold to private
respondents. As petitioners sold nothing, it follows that they can
also repurchase nothing. Nothing sold, nothing to repurchase. In
this light, the contract of repurchase is also inoperative and by
the same analogy, void.
Contract of Repurchase
Dependent on Validity of Sale
SALES - PART III
As borne out by the evidence on record, the private
respondents bought the two parcels of land directly from DBP on
April 1, 1985 after discovering that petitioners did not own said
property, the subject of Exhibits C and D executed on November
30, 1984.Petitioners, however, claim that they can exercise their
alleged right to repurchase the property, after private respondents
had acquired the same from DBP.[22] We cannot accede to this,
for it clearly contravenes the intention of the parties and the
nature of their agreement. Exhibit D reads:
WRITING
Nov. 30, 1984
That I, Anacleto Nool have bought from my sister
Conchita Nool a land an area of four hectares (4 has.) in
the value of One Hundred Thousand (100,000.00)
Pesos. It is our agreement as brother and sister that she
can acquire back or repurchase later on said land when
she has the money. [Underscoring supplied]
As proof of this agreement we sign as brother and sister
this written document this day of Nov. 30, 1984, at
District 4, San Manuel, Isabela.
Sgd ANACLETO NOOL
Anacleto Nool
Sgd Emilio Paron
Witness
18
Sgd Conchita Nool
Conchita Nool[23]
One repurchases only what one has previously sold. In other
words, the right to repurchase presupposes a valid contract of
sale between the same parties. Undisputedly, private respondents
acquired title to the property from DBP, and not from the
petitioners.
Assuming arguendo that Exhibit D is separate and distinct
from Exhibit C and is not affected by the nullity of the latter, still
petitioners do not thereby acquire a right to repurchase the
property. In that scenario, Exhibit D ceases to be a right to
repurchase ancillary and incidental to the contract of sale; rather,
it becomes an accepted unilateral promise to sell. Article 1479 of
the Civil Code, however, provides that an accepted unilateral
promise to buy or sell a determinate thing for a price certain is
binding upon the promissor if the promise is supported by a
consideration distinct from the price. In the present case, the
alleged written contract of repurchase contained in Exhibit D is
bereft of any consideration distinct from the price. Accordingly,
as an independent contract, it cannot bind private
respondents. The ruling in Diamante vs. CA[24] supports this. In
that case, the Court through Mr. Justice Hilario G. Davide, Jr.
explained:
Article 1601 of the Civil Code provides:
Conventional redemption shall take place when
the vendor reserves the right to repurchase the
SALES - PART III
thing sold, with the obligation to comply with
the provisions of article 1616 and other
stipulations which may have been agreed upon.
In Villarica, et al. Vs. Court of Appeals, et al.,
decided on 29 November 1968, or barely seven
(7) days before the respondent Court
promulgated its decisions in this case, this
Court, interpreting the above Article, held:
The right of repurchase is not a right granted
the vendor by the vendee in a subsequent
instrument, but is a right reserved by the vendor
in the same instrument of sale as one of the
stipulations of the contract. Once the instrument
of absolute sale is executed, the vendor can not
longer reserve the right to repurchase, and any
right thereafter granted the vendor by the
vendee in a separate instrument cannot be a
right of repurchase but some other right like the
option to buy in the instant case. x x x.
In the earlier case of Ramos, et al. vs.
Icasiano, et al., decided in 1927, this Court had
already ruled that an agreement to repurchase
becomes a promise to sell when made after the
sale, because when the sale is made without
such an agreement, the purchaser acquires the
thing sold absolutely, and if he afterwards
grants the vendor the right to repurchase, it is a
new contract entered into by the purchaser, as
absolute owner already of the object. In that
19
 case the vendor has nor reserved to himself the
right to repurchase.
In Vda. De Cruzo, et al. vs. Carriaga, et al. this
Court found another occasion to apply the
foregoing principle.
Hence, the Option to Repurchase executed by private
respondent in the present case, was merely a promise to
sell, which must be governed by Article 1479 of the
Civil Code which reads as follows:
Art. 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell
a determinate thing for a price certain is
binding upon the promissor if the promise is
supported by a consideration distinct from the
price.
Right to Repurchase Based on
Homestead or Trust Non-Existent
Petitioners also base their alleged right to repurchase on (1)
Sec. 119 of the Public Land Act[25] and (2) an implied trust
relation as brother and sister.[26]
The Court notes that Victorino Nool and Francisco Nool
mortgaged the land to DBP. The brothers, together with
SALES - PART III
Conchita Nool and Anacleto Nool, were all siblings and heirs
qualified to repurchase the two parcels of land under Sec. 119 of
the Public Land Act which provides that (e)very conveyance of
land acquired under the free patent or homestead provisions,
when proper, shall be subject to repurchase by the applicant, his
widow or legal heirs, within a period of five years from the date
of conveyance. Assuming the applicability of this statutory
provision to the case at bar, it is indisputable that Private
Respondent Anacleto Nool already repurchased from DBP the
contested properties. Hence, there was no more right of
repurchase that his sister Conchita or brothers Victorino and
Francisco could exercise. The properties were already owned by
an heir of the homestead grantee and the rationale of the of the
provision to keep homestead lands within the family of the
grantee was thus fulfilled.[27]
The claim of a trust relation is likewise without merit. The
records show that private respondents did not purchase the
contested properties from DBP in trust for petitioners. The
former, as previously mentioned, in fact bought the land from
DBP upon realization that the latter could not validly sell the
same. Obviously, petitioners bought it for themselves. There is
no evidence at all in the records that they bought the land in trust
for private respondents. The fact that Anacleto Nool was the
younger brother of Conchita Nool and that they signed a contract
of repurchase, which as discussed earlier was void, does not
prove the existence of an implied trust in favor of petitioners.
Second Issue: No Estoppel in Impugning the
Validity of Void Contracts
20
 Petitioners argue that when Anacleto Nool took the Anacleto Nool who owed the former a balance of P14,000.00
possession of the two hectares, more or less, and let the other and (2) to order petitioners to pay rent when they were allowed
two hectares to be occupied and cultivated by plaintiffs- to cultivate the said two hectares.[31]
appellants, Anacleto Nool cannot later on disclaim the terms or
We are not persuaded. Based on the previous discussion, the
contions (sic) agreed upon and his actuation is within the ambit
balance of P14,000.00 under the void contract of sale may not be
of estoppel x x x.[28] We disagree. The private respondents cannot
enforced. Petitioners are the ones who have an obligation to
be estopped from raising the defense of nullity of contract,
return what they unduly and improperly received by reason of
specially in this case where they acted in good faith, believing
the invalid contract of sale. Since they cannot legally give title to
that indeed petitioners could sell the two parcels of land in
what they sold, they cannot keep the money paid for the object
question. Article 1410 of the Civil Code mandates that (t)he
of the sale. It is basic that (e)very person who through an act of
action or defense for the declaration of the inexistence of a
performance by another, or any other means, acquires or comes
contract does not prescribe. It is well-settled doctrine that as
into possession of something at the expense of the latter without
between parties to a contract, validity cannot be given to it by
just or legal ground, shall return the same.[32] Thus, if a void
estoppel if it is prohibited by law or it is against public policy
contract has already been performed, the restoration of what has
(19 Am. Jur. 802). It is not within the competence of any citizen
been given is in order.[33] Corollarily and as aptly ordered by
to barter away what public policy by law seeks to preserve.
[29] respondent appellate court, interest thereon will run only from
Thus, it is immaterial that private respondents initially acted
the time of private respondents demand for the return of this
to implement the contract of sale, believing in good faith that the
amount in their counterclaim.[34] In the same vein, petitioners
same was valid. We stress that a contract void at inception
possession and cultivation of the two hectares are anchored on
cannot be validated by ratification or prescription and certainly
private respondents tolerance. Clearly, the latters tolerance
cannot be binding on or enforceable against private respondents.
[30] ceased upon their counterclaim and demand on the former to
vacate. Hence, their right to possess and cultivate the land ipso
facto ceased.
Third Issue: Return of P30,000.00 with Interest WHEREFORE, the petition is DENIED and the assailed
and Payment of Rent Decision of the Court of Appeals affirming that of the trial court
is hereby AFFIRMED.
Petitioners further argue that it would be a miscarriage of SO ORDERED.
justice to order them (1) to return the sum of P30,000.00 to
private respondents when allegedly it was Private Respondent

SALES - PART III 21

SALES - PART III 22