G.R. No.

158380
May 16, 2005
MARIQUITA MACAPAGAL, petitioner,
vs.
CATALINA O. REMORIN, CORAZON CALUZA-BAMRUNGCHEEP, and
LAURELIA CALUZA-VALENCIANO,respondents.
DECISION
PUNO, J.:
Assailed in this petition for review is the Decision dated March 8, 20021 of the Court of
Appeals in CA-G.R. CV No. 448142 which reversed and set aside the Decision of the
Regional Trial Court (RTC), Branch 88, of Quezon City in Civil Case No. Q-90-5384, as
well as its Resolution dated May 7, 20033 which denied petitioners motion for
reconsideration.
Involved in the present controversy is a 105-square meter parcel of land located at No. 7,
Serrano Laktaw Street, Galas, Quezon City, known as Lot 5. Lot 5, together with an
adjacent 52.5-square meter lot known as Lot 4, forms part of the consolidated Lots 24 and
25, Block 12, of subdivision plan Psd-12586, LRC Record No. 16117.
Lots 24 and 25 were registered in the name of Candido Caluza under Transfer Certificate
of Title (TCT) No. 160544. Purificacion Arce-Caluza (Purificacion) is his second wife.
Corazon Caluza-Bamrungcheep (Corazon) is his legally adopted daughter during his first
marriage. After Candido died in 1981, Corazon and Purificacion executed a Deed of
Extrajudicial Settlement dated November 21, 19814 adjudicating between themselves the
properties of Candido, as the latters surviving heirs. Lots 24 and 25, together with Lot 23
which was registered in Candidos name under TCT No. 160543, were adjudicated to
Corazon. Purificacion got Candidos land in Bulacan. However, administration of Lots
23, 24 and 25 were entrusted to Purificacion by Corazon as she had to leave for Thailand
after her marriage to a Thai.
Unknown to Corazon and while she was in Thailand, the 74-year old Purificacion
executed an Affidavit of Loss dated December 31, 1983 alleging that TCT Nos. 160543
and 160544 were lost and could no longer be found. She filed a petition with the RTC of
Quezon City for the issuance of new owners duplicates of title alleging that she was her
deceased husbands sole heir. The petition was granted and TCT Nos. 326633 and 326634
were issued in Purificacions name. In July 1986, Purificacion sold the lots to Catalina
Remorin (Catalina) who was issued TCT Nos. 346876 and 347859. Catalina mortgaged
Lots 24 and 25 to L & R Lending Corporation for two hundred thousand (P200,000.00)
pesos.
After she learned of the foregoing, Corazon, through her attorney-in-fact Ramon
Remorin, filed a complaint on December 29, 1986 for reconveyance and damages against
Purificacion and Catalina before the RTC of Quezon City, docketed as Civil Case No. Q49661. Plaintiff alleged that the two defendants connived with each other in transferring
the three lots in their names through simulated sales. Corazon likewise filed a criminal
complaint for falsification and perjury against the two before the Office of the City Fiscal
of Quezon City, docketed as I.S. No. 87-07726.
On May 4, 1987, Catalina executed a Deed of Transfer, signed by Purificacion as witness,
admitting the wrong they did in illegally transferring the lots in their names and
acknowledging Corazon to be the rightful owner under the Deed of Extrajudicial
Settlement dated November 21, 1981. The document was presented by Corazon in a

motion to dismiss Civil Case No. Q-49661 but the motion was withdrawn when counsel
for Catalina and Purificacion objected on the ground that the Deed of Transfer was
executed without his legal assistance. The Deed of Transfer, however, was presented by
Corazon before the Register of Deeds of Quezon City. Catalinas TCT No. 347859 over
Lots 24 and 25 was cancelled and TCT No. 375605 was issued in Corazons name. Prior
thereto, however, Catalina mortgaged Lots 24 and 25 to respondent Laurelia CaluzaValenciano (Laurelia) for two hundred ninety-five thousand (P295,000.00) pesos to pay
off her mortgage indebtedness to L & R Lending Corporation. The inscription of the
mortgage in favor of Laurelia was carried over to Corazons TCT No. 375605.
On March 21, 1988, Corazon, Purificacion, Catalina, and Laurelia executed a
Memorandum of Agreement5 to settle Civil Case No. Q-49661 and Criminal Charge No.
I.S. 87-07726. The Agreement read This memorandum of agreement, made and executed by and among CORAZON CALUZA-BAMRUNGCHEEP, of legal age, married, citizen of Thailand by
marriage but Filipino by birth, resident of Bangkok, Thailand, represented by her
attorney-in-fact, CONSUELO R. CARUBIO;
PURIFICACION ARCE-CALUZA and CATALINA OGOY-REMORIN, of legal ages,
widow[s], Filipino citizens and residents at (sic) No. 7 Serrano Laktaw St., Quezon City;
and
LAURELIA VALENCIANO, of legal age, married, Filipino citizen, and resident of No.
98 Bayani St., Santol, Quezon City;
witnesseth, that Whereas, the above-named parties are involved in Civil Case No. Q-49661 of the
Regional Trial Court of Quezon City and in Criminal Charge No. I.S. 87-07726 of the
City Fiscals Office of Quezon City;
Whereas, said parties have decided to mutually resolve their differences out-of-court
voluntarily and without any duress or undue influence on both (sic) of them;
Now, therefore, for and in consideration of the foregoing premises, the above parties
hereby agree and stipulate as follows:
That the first party, Corazon Caluza-Bamrungcheep, hereby cedes and grants unto and in
favor of Purificacion Arce-Caluza full ownership and other real rights over the
southernmost apartment (garage) as well as the portion of the lot occupied thereby,
described as Lot 25, Block 12 of the subdn. plan Psd-12586 covered by Transfer
Certificate of Title No. 375605 of the Registry of Deeds for Quezon City; subject to the
condition that said Purificacion Arce-Caluza shall assume satisfaction of the mortgage
debt contracted by Catalina Ogoy-Remorin in favor of Mrs. Laurelia C. Valenciano
annotated at the back of the title thereof; and shall cause transfer of said annotation to the
title to be issued in her (Purificacions) name; and furthermore that any and all expenses
for segregation survey, re-titling and annotation of said mortgage shall be shouldered by
said Purificacion Arce-Caluza;
That the parties agree that they shall execute such formal requisites for the
implementation of this agreement, and that henceforth they waive and renounce whatever
conflicting claims they may have over the intestate estate of Candido Caluza, deceased.
Before the agreement could be implemented, however, Purificacion died on July 28,
1988. Consequently, another compromise agreement6 was executed on September 9,
1988, viz.:

PLAINTIFF AND DEFENDANTS (sic) respectfully submit for the kind consideration
and approval of the Honorable Court this Compromise Agreement, which provides, thus:
1. That they agreed, as they hereby agree, to dismiss the complaint of the plaintiff as well
as the counterclaim of the defendants (sic);
2. That they bind themselves not to bring any further action, suit or complaint against
each other in connection with this case and/or the property in question or the subjectmatter hereof;
3. That pursuant to the parties Memorandum of Agreement of March 21, 1986 (sic), a
copy of which is attached as Annex "A" hereof, and with the death of defendant
Purificacion Arce Caluza on July 28, 1988, in Quezon City, without an heir, plaintiff
Corazon Caluza Bamrungcheep and defendant Catalina O. Remorin agreed, as they
hereby agree, that title to the southernmost apartment (garage) as well as the portion of
the lot occupied thereby, described as Lot 25, Block 12 of the subdivision plan Psd-12586
covered by Transfer Certificate of Title No. 375605 of the Registry of Deeds for Quezon
City shall be transferred direct to its interested buyer with defendant Catalina O. Remorin
assuming and paying (from the proceeds of the sale) her mortgage obligation with Mrs.
Laurelia C. Valenciano annotated at the back of the title thereof; any and all expenses for
segregation survey, re-titling, capital gains taxes and those connected with the annotation
and/or release of said mortgage should now be shouldered by defendant Catalina O.
Remorin; said defendant further agrees to execute such other documents or papers as are
necessary to implement the aforementioned Memorandum of Agreement of March 21,
1986 (sic).
The Agreement was approved by Judge Benigno T. Dayaw in his Decision dated
September 16, 1988.7
On May 24, 1989, Corazon sold the subject Lot 5 to Laurelia by virtue of a deed entitled
"Sale of Unsegregated Portion of Land." Controversy erupted anew when Catalina sold
the same lot to herein petitioner Mariquita Macapagal on August 24, 1989 claiming to be
authorized under the Compromise Agreement. Laurelia demanded that petitioner and her
family vacate the premises, to no avail. On November 28, 1989, Laurelia filed an
ejectment suit against petitioner before the Metropolitan Trial Court (MeTC) of Quezon
City, docketed as Civil Case No. 2244. In turn, petitioner filed a complaint for
nullification of contract and damages with prayer for a temporary restraining order and/or
writ of preliminary prohibitory injunction against Catalina, Corazon and Laurelia before
the RTC of Quezon City, docketed as Civil Case No. Q-90-5384, root of the present
petition. Petitioner sought to nullify the sale executed by Corazon in favor of Laurelia and
to declare valid the one executed by Catalina in her favor. Plaintiff likewise asked that the
MeTC of Quezon City be ordered to desist from hearing the ejectment suit.
On October 15, 1993, the RTC of Quezon City rendered judgment in favor of petitioner.8
Corazon and Laurelia appealed to the Court of Appeals which reversed the decision of the
trial court.9 Hence, this petition for review.
Petitioner contends that the sale executed by Catalina in her favor should prevail over the
one executed by Corazon in favor of Laurelia, as Catalina was the one authorized to sell
the disputed property under the Compromise Agreement dated September 9, 1988.
Respondents, on the other hand, contend that Corazon, the registered owner of the
disputed property, did not give Catalina authority to sell the lot considering Catalinas
connivance with Purificacion in illegally transferring the lots in their names, in the first

place. It was provided in the Agreement that Catalina shall pay off her mortgage
obligation and incidental expenses from the proceeds of the sale only to reassure Catalina
that her obligation would be paid in the event that Corazon sells the property.
We rule in favor of respondents.
As correctly pointed out by the appellate court, Corazon was the registered owner of the
disputed Lot 5 at the time the two sales were executed. As owner, she had the right to
enjoy and dispose of Lot 5 as well as to exclude any person from such enjoyment and
disposal.10 A waiver may not be casually attributed when the terms thereof do not
explicitly and clearly prove an intent to abandon the right.11
In the case at bar, the Compromise Agreement dated September 9, 1988 cannot be taken
as a waiver of Corazons authority to sell and grant thereof to Catalina considering that
the Agreement merely provided that Catalina pay off her mortgage obligation and
incidental expenses from the proceeds of the sale. Although it was imperative, as part of
the compromise, that the money come from the proceeds of the sale, it was not expressly
stated, nor did it necessarily mean, that Catalina herself be the one to directly sell the
property. The money may merely be handed over to her for such payment. The rule is that
any reasonable doubt that the language used conveys authority to sell will yield a
construction that no such authority has been given.12 Authority to sell must be couched
in clear and unmistakable language.13
Moreover, intent to give Catalina authority to sell may not be easily attributed to Corazon
considering that the latter had to file the reconveyance case as a result of Purificacions
and Catalinas acts of transferring the disputed lot in their names notwithstanding the
clear terms of the Deed of Extrajudicial Settlement dated November 21, 1981. In contract
interpretation, analysis is not to be limited to the words used in the contract, as they may
not accurately reflect the parties true intent.14 Ambiguities are construed against the
drafter only when justified by the operative facts and surrounding circumstances.15 It is
for this reason that the interpreter must look at the reason behind and the circumstances
under which the contract was executed.16 If the words of the contract appear to be
contrary to the evident intention as revealed by the circumstances, the latter shall prevail
over the former.17
Even assuming arguendo that the parties intended to confer upon Catalina authority to
sell the disputed property, they clearly did not intend the Agreement to be the document
itself considering that they agreed to execute such other documents or papers as are
necessary to implement the agreement,18 which they never did. Under Article 1878,
paragraph 5 of the Civil Code, a special power of attorney is necessary for an agent to
enter into any contract by which the ownership of an immovable property is transmitted
or acquired either gratuitously or for a valuable consideration. Catalina admittedly did not
have such a document in her favor.
Neither can petitioner demand enforcement of the Compromise Agreement on the ground
that she was the "interested buyer" referred to therein to whom title to the disputed
property shall be directly transferred. Being a stranger to the Agreement, petitioner
cannot demand its enforcement for it is settled that a compromise agreement determines
the rights and obligations only of the parties to it.19 It cannot favor or prejudice a third
person20 even if he was aware of the contract and has acted with knowledge of it.21
Moreover, if petitioner was indeed the interested buyer referred to in the Agreement and
there was already a closed deal between her, Corazon and Catalina, even before the

execution of the Compromise Agreement,22 it is strange that petitioner was not identified
outright as the buyer and that the Deed of Sale in her favor was executed only some
twelve (12) months after or on August 24, 1989.
Petitioner cannot be considered a buyer in good faith considering that she did not buy the
disputed lot from its registered owner. One who buys from a person who is not the
registered owner is not a buyer in good faith.23Moreover, in double sales of real property,
ownership passes to the vendee who, in good faith, first recorded it in the Registry of
Property.24 TCT No. 43235 was issued in Laurelias name on July 21, 1989 by virtue of
the "Sale of Unsegregated Portion of Land" executed in her favor by Corazon.
The fact that the deed of sale between respondents Corazon and Laurelia did not
accurately reflect the true consideration thereof is not cause for declaration of its nullity.
When the parties intended to be bound by the contract except that it did not reflect the
actual purchase price of the property, there is only a relative simulation of the contract
which remains valid and enforceable.25 It cannot be declared null and void since it does
not fall under the category of an absolutely simulated or fictitious contract.26 The
contract of sale is valid but subject to reformation.27
IN VIEW WHEREOF, the petition is DENIED. The assailed Decision of the Court of
Appeals, dated March 8, 2002, as well as its Resolution dated May 7, 2003 in CA-G.R.
CV No. 44814 is AFFIRMED.
SO ORDERED.

G.R. No. 157493

February 5, 2007
RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO,
ERNESTO, LEONORA, BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed
OESMER, Petitioners,
vs.
PARAISO DEVELOPMENT CORPORATION, Respondent.

DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure seeking to reverse and set aside the Court of Appeals
Decision1 dated 26 April 2002 in CA-G.R. CV No. 53130 entitled, Rizalino, Ernesto,
Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo, and Jesus, all surnamed Oesmer vs.
Paraiso Development Corporation, as modified by its Resolution2 dated 4 March 2003,
declaring the Contract to Sell valid and binding with respect to the undivided
proportionate shares of the six signatories of the said document, herein petitioners,
namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed
Oesmer); and ordering them to execute the Deed of Absolute Sale concerning their 6/8
share over the subject parcels of land in favor of herein respondent Paraiso Development
Corporation, and to pay the latter the attorneys fees plus costs of the suit. The assailed
Decision, as modified, likewise ordered the respondent to tender payment to the
petitioners in the amount of P3,216,560.00 representing the balance of the purchase price
of the subject parcels of land.
The facts of the case are as follows:
Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed
Oesmer, together with Adolfo Oesmer (Adolfo) and Jesus Oesmer (Jesus), are brothers
and sisters, and the co-owners of undivided shares of two parcels of agricultural and
tenanted land situated in Barangay Ulong Tubig, Carmona, Cavite, identified as Lot 720
with an area of 40,507 square meters (sq. m.) and Lot 834 containing an area of 14,769
sq. m., or a total land area of 55,276 sq. m. Both lots are unregistered and originally
owned by their parents, Bibiano Oesmer and Encarnacion Durumpili, who declared the
lots for taxation purposes under Tax Declaration No. 34383(cancelled by I.D. No. 6064A) for Lot 720 and Tax Declaration No. 34374 (cancelled by I.D. No. 5629) for Lot 834.
When the spouses Oesmer died, petitioners, together with Adolfo and Jesus, acquired the
lots as heirs of the former by right of succession.
Respondent Paraiso Development Corporation is known to be engaged in the real estate
business.
Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of
Carmona, Cavite, brought along petitioner Ernesto to meet with a certain Sotero Lee,
President of respondent Paraiso Development Corporation, at Otani Hotel in Manila. The
said meeting was for the purpose of brokering the sale of petitioners properties to
respondent corporation.
Pursuant to the said meeting, a Contract to Sell5 was drafted by the Executive Assistant
of Sotero Lee, Inocencia Almo. On 1 April 1989, petitioners Ernesto and Enriqueta
signed the aforesaid Contract to Sell. A check in the amount of P100,000.00, payable to
Ernesto, was given as option money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr.,
and Librado also signed the said Contract to Sell. However, two of the brothers, Adolfo
and Jesus, did not sign the document.
On 5 April 1989, a duplicate copy of the instrument was returned to respondent
corporation. On 21 April 1989, respondent brought the same to a notary public for
notarization.
In a letter6 dated 1 November 1989, addressed to respondent corporation, petitioners
informed the former of their intention to rescind the Contract to Sell and to return the

amount of P100,000.00 given by respondent as option money.

Respondent did not respond to the aforesaid letter. On 30 May 1991, herein petitioners,
together with Adolfo and Jesus, filed a Complaint7 for Declaration of Nullity or for
Annulment of Option Agreement or Contract to Sell with Damages before the Regional
Trial Court (RTC) of Bacoor, Cavite. The said case was docketed as Civil Case No. BCV91-49.
During trial, petitioner Rizalino died. Upon motion of petitioners, the trial court issued an
Order,8 dated 16 September 1992, to the effect that the deceased petitioner be substituted
by his surviving spouse, Josefina O. Oesmer, and his children, Rolando O. Oesmer and
Fernando O. Oesmer. However, the name of Rizalino was retained in the title of the case
both in the RTC and the Court of Appeals.
After trial on the merits, the lower court rendered a Decision9 dated 27 March 1996 in
favor of the respondent, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of herein
[respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and
binding only to the undivided proportionate share of the signatory of this document and
recipient of the check, [herein petitioner] co-owner Ernesto Durumpili Oesmer. The latter
is hereby ordered to execute the Contract of Absolute Sale concerning his 1/8 share over
the subject two parcels of land in favor of herein [respondent] corporation, and to pay the
latter the attorneys fees in the sum of Ten Thousand (P10,000.00) Pesos plus costs of
suit.
The counterclaim of [respondent] corporation is hereby Dismissed for lack of merit.10
Unsatisfied, respondent appealed the said Decision before the Court of Appeals. On 26
April 2002, the appellate court rendered a Decision modifying the Decision of the court a
quo by declaring that the Contract to Sell is valid and binding with respect to the
undivided proportionate shares of the six signatories of the said document, herein
petitioners, namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all
surnamed Oesmer). The decretal portion of the said Decision states that:
WHEREFORE, premises considered, the Decision of the court a quo is hereby
MODIFIED. Judgment is hereby rendered in favor of herein [respondent] Paraiso
Development Corporation. The assailed Contract to Sell is valid and binding with respect
to the undivided proportionate share of the six (6) signatories of this document, [herein
petitioners], namely, Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all
surnamed Oesmer). The said [petitioners] are hereby ordered to execute the Deed of
Absolute Sale concerning their 6/8 share over the subject two parcels of land and in favor
of herein [respondent] corporation, and to pay the latter the attorneys fees in the sum of
Ten Thousand Pesos (P10,000.00) plus costs of suit.11
Aggrieved by the above-mentioned Decision, petitioners filed a Motion for
Reconsideration of the same on 2 July 2002. Acting on petitioners Motion for
Reconsideration, the Court of Appeals issued a Resolution dated 4 March 2003,
maintaining its Decision dated 26 April 2002, with the modification that respondent
tender payment to petitioners in the amount of P3,216,560.00, representing the balance of
the purchase price of the subject parcels of land. The dispositive portion of the said
Resolution reads:
WHEREFORE, premises considered, the assailed Decision is hereby
modified.1awphi1.net Judgment is hereby rendered in favor of herein [respondent]

Paraiso Development Corporation. The assailed Contract to Sell is valid and binding with
respect to the undivided proportionate shares of the six (6) signatories of this document,
[herein petitioners], namely, Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and
Leonora (all surnamed Oesmer). The said [petitioners] are hereby ordered to execute the
Deed of Absolute Sale concerning their 6/8 share over the subject two parcels of land in
favor of herein [respondent] corporation, and to pay the latter attorneys fees in the sum
of Ten Thousand Pesos (P10,000.00) plus costs of suit. Respondent is likewise ordered to
tender payment to the above-named [petitioners] in the amount of Three Million Two
Hundred Sixteen Thousand Five Hundred Sixty Pesos (P3,216,560.00) representing the
balance of the purchase price of the subject two parcels of land. 12
Hence, this Petition for Review on Certiorari.
Petitioners come before this Court arguing that the Court of Appeals erred:
I. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is
not binding upon petitioner Ernesto Oesmers co-owners (herein petitioners Enriqueta,
Librado, Rizalino, Bibiano, Jr., and Leonora).
II. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is
void altogether considering that respondent itself did not sign it as to indicate its consent
to be bound by its terms. Moreover, Exhibit D is really a unilateral promise to sell
without consideration distinct from the price, and hence, void.
Petitioners assert that the signatures of five of them namely: Enriqueta, Librado, Rizalino,
Bibiano, Jr., and Leonora, on the margins of the supposed Contract to Sell did not confer
authority on petitioner Ernesto as agent to sell their respective shares in the questioned
properties, and hence, for lack of written authority from the above-named petitioners to
sell their respective shares in the subject parcels of land, the supposed Contract to Sell is
void as to them. Neither do their signatures signify their consent to directly sell their
shares in the questioned properties. Assuming that the signatures indicate consent, such
consent was merely conditional. The effectivity of the alleged Contract to Sell was
subject to a suspensive condition, which is the approval of the sale by all the co-owners.
Petitioners also assert that the supposed Contract to Sell (Exhibit D), contrary to the
findings of the Court of Appeals, is not couched in simple language.
They further claim that the supposed Contract to Sell does not bind the respondent
because the latter did not sign the said contract as to indicate its consent to be bound by
its terms. Furthermore, they maintain that the supposed Contract to Sell is really a
unilateral promise to sell and the option money does not bind petitioners for lack of cause
or consideration distinct from the purchase price.
The Petition is bereft of merit.
It is true that the signatures of the five petitioners, namely: Enriqueta, Librado, Rizalino,
Bibiano, Jr., and Leonora, on the Contract to Sell did not confer authority on petitioner
Ernesto as agent authorized to sell their respective shares in the questioned properties
because of Article 1874 of the Civil Code, which expressly provides that:
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void.
The law itself explicitly requires a written authority before an agent can sell an
immovable. The conferment of such an authority should be in writing, in as clear and
precise terms as possible. It is worth noting that petitioners signatures are found in the
Contract to Sell. The Contract is absolutely silent on the establishment of any principal-

agent relationship between the five petitioners and their brother and co-petitioner Ernesto
as to the sale of the subject parcels of land. Thus, the Contract to Sell, although signed on
the margin by the five petitioners, is not sufficient to confer authority on petitioner
Ernesto to act as their agent in selling their shares in the properties in question.
However, despite petitioner Ernestos lack of written authority from the five petitioners to
sell their shares in the subject parcels of land, the supposed Contract to Sell remains valid
and binding upon the latter.
As can be clearly gleaned from the contract itself, it is not only petitioner Ernesto who
signed the said Contract to Sell; the other five petitioners also personally affixed their
signatures thereon. Therefore, a written authority is no longer necessary in order to sell
their shares in the subject parcels of land because, by affixing their signatures on the
Contract to Sell, they were not selling their shares through an agent but, rather, they were
selling the same directly and in their own right.
The Court also finds untenable the following arguments raised by petitioners to the effect
that the Contract to Sell is not binding upon them, except to Ernesto, because: (1) the
signatures of five of the petitioners do not signify their consent to sell their shares in the
questioned properties since petitioner Enriqueta merely signed as a witness to the said
Contract to Sell, and that the other petitioners, namely: Librado, Rizalino, Leonora, and
Bibiano, Jr., did not understand the importance and consequences of their action because
of their low degree of education and the contents of the aforesaid contract were not read
nor explained to them; and (2) assuming that the signatures indicate consent, such
consent was merely conditional, thus, the effectivity of the alleged Contract to Sell was
subject to a suspensive condition, which is the approval by all the co-owners of the sale.
It is well-settled that contracts are perfected by mere consent, upon the acceptance by the
offeree of the offer made by the offeror. From that moment, the parties are bound not only
to the fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law. To
produce a contract, the acceptance must not qualify the terms of the offer. However, the
acceptance may be express or implied. For a contract to arise, the acceptance must be
made known to the offeror. Accordingly, the acceptance can be withdrawn or revoked
before it is made known to the offeror.13
In the case at bar, the Contract to Sell was perfected when the petitioners consented to the
sale to the respondent of their shares in the subject parcels of land by affixing their
signatures on the said contract. Such signatures show their acceptance of what has been
stipulated in the Contract to Sell and such acceptance was made known to respondent
corporation when the duplicate copy of the Contract to Sell was returned to the latter
bearing petitioners signatures.
As to petitioner Enriquetas claim that she merely signed as a witness to the said contract,
the contract itself does not say so. There was no single indication in the said contract that
she signed the same merely as a witness. The fact that her signature appears on the righthand margin of the Contract to Sell is insignificant. The contract indisputably referred to
the "Heirs of Bibiano and Encarnacion Oesmer," and since there is no showing that
Enriqueta signed the document in some other capacity, it can be safely assumed that she
did so as one of the parties to the sale.
Emphasis should also be given to the fact that petitioners Ernesto and Enriqueta
concurrently signed the Contract to Sell. As the Court of Appeals mentioned in its

Decision,14 the records of the case speak of the fact that petitioner Ernesto, together with
petitioner Enriqueta, met with the representatives of the respondent in order to finalize
the terms and conditions of the Contract to Sell. Enriqueta affixed her signature on the
said contract when the same was drafted. She even admitted that she understood the
undertaking that she and petitioner Ernesto made in connection with the contract. She
likewise disclosed that pursuant to the terms embodied in the Contract to Sell, she
updated the payment of the real property taxes and transferred the Tax Declarations of the
questioned properties in her name.15 Hence, it cannot be gainsaid that she merely signed
the Contract to Sell as a witness because she did not only actively participate in the
negotiation and execution of the same, but her subsequent actions also reveal an attempt
to comply with the conditions in the said contract.
With respect to the other petitioners assertion that they did not understand the importance
and consequences of their action because of their low degree of education and because
the contents of the aforesaid contract were not read nor explained to them, the same
cannot be sustained.
We only have to quote the pertinent portions of the Court of Appeals Decision, clear and
concise, to dispose of this issue. Thus,
First, the Contract to Sell is couched in such a simple language which is undoubtedly
easy to read and understand. The terms of the Contract, specifically the amount of
P100,000.00 representing the option money paid by [respondent] corporation, the
purchase price of P60.00 per square meter or the total amount ofP3,316,560.00 and a
brief description of the subject properties are well-indicated thereon that any prudent and
mature man would have known the nature and extent of the transaction encapsulated in
the document that he was signing.
Second, the following circumstances, as testified by the witnesses and as can be gleaned
from the records of the case clearly indicate the [petitioners] intention to be bound by the
stipulations chronicled in the said Contract to Sell.
As to [petitioner] Ernesto, there is no dispute as to his intention to effect the alienation of
the subject property as he in fact was the one who initiated the negotiation process and
culminated the same by affixing his signature on the Contract to Sell and by taking
receipt of the amount of P100,000.00 which formed part of the purchase price.
xxxx
As to [petitioner] Librado, the [appellate court] finds it preposterous that he willingly
affixed his signature on a document written in a language (English) that he purportedly
does not understand. He testified that the document was just brought to him by an 18 year
old niece named Baby and he was told that the document was for a check to be paid to
him. He readily signed the Contract to Sell without consulting his other siblings.
Thereafter, he exerted no effort in communicating with his brothers and sisters regarding
the document which he had signed, did not inquire what the check was for and did not
thereafter ask for the check which is purportedly due to him as a result of his signing the
said Contract to Sell. (TSN, 28 September 1993, pp. 22-23)
The [appellate court] notes that Librado is a 43 year old family man (TSN, 28 September
1993, p. 19). As such, he is expected to act with that ordinary degree of care and prudence
expected of a good father of a family. His unwitting testimony is just divinely
disbelieving.
The other [petitioners] (Rizalino, Leonora and Bibiano Jr.) are likewise bound by the said

Contract to Sell. The theory adopted by the [petitioners] that because of their low degree
of education, they did not understand the contents of the said Contract to Sell is devoid of
merit. The [appellate court] also notes that Adolfo (one of the co-heirs who did not sign)
also possess the same degree of education as that of the signing co-heirs (TSN, 15
October 1991, p. 19). He, however, is employed at the Provincial Treasury Office at Trece
Martirez, Cavite and has even accompanied Rogelio Paular to the Assessors Office to
locate certain missing documents which were needed to transfer the titles of the subject
properties. (TSN, 28 January 1994, pp. 26 & 35) Similarly, the other co-heirs
[petitioners], like Adolfo, are far from ignorant, more so, illiterate that they can be
extricated from their obligations under the Contract to Sell which they voluntarily and
knowingly entered into with the [respondent] corporation.
The Supreme Court in the case of Cecilia Mata v. Court of Appeals (207 SCRA 753
[1992]), citing the case of Tan Sua Sia v. Yu Baio Sontua (56 Phil. 711), instructively
ruled as follows:
"The Court does not accept the petitioners claim that she did not understand the terms
and conditions of the transactions because she only reached Grade Three and was already
63 years of age when she signed the documents. She was literate, to begin with, and her
age did not make her senile or incompetent. x x x.
At any rate, Metrobank had no obligation to explain the documents to the petitioner as
nowhere has it been proven that she is unable to read or that the contracts were written in
a language not known to her. It was her responsibility to inform herself of the meaning
and consequence of the contracts she was signing and, if she found them difficult to
comprehend, to consult other persons, preferably lawyers, to explain them to her. After
all, the transactions involved not only a few hundred or thousand pesos but, indeed,
hundreds of thousands of pesos.
As the Court has held:
x x x The rule that one who signs a contract is presumed to know its contents has been
applied even to contracts of illiterate persons on the ground that if such persons are
unable to read, they are negligent if they fail to have the contract read to them. If a person
cannot read the instrument, it is as much his duty to procure some reliable persons to read
and explain it to him, before he signs it, as it would be to read it before he signed it if he
were able to do and his failure to obtain a reading and explanation of it is such gross
negligence as will estop from avoiding it on the ground that he was ignorant of its
contents."16
That the petitioners really had the intention to dispose of their shares in the subject
parcels of land, irrespective of whether or not all of the heirs consented to the said
Contract to Sell, was unveiled by Adolfos testimony as follows:
ATTY. GAMO: This alleged agreement between you and your other brothers and sisters
that unless everybody will agree, the properties would not be sold, was that agreement in
writing?
WITNESS: No sir.
ATTY. GAMO: What you are saying is that when your brothers and sisters except Jesus
and you did not sign that agreement which had been marked as [Exhibit] "D", your
brothers and sisters were grossly violating your agreement.
WITNESS: Yes, sir, they violated what we have agreed upon.17
We also cannot sustain the allegation of the petitioners that assuming the signatures

indicate consent, such consent was merely conditional, and that, the effectivity of the
alleged Contract to Sell was subject to the suspensive condition that the sale be approved
by all the co-owners. The Contract to Sell is clear enough. It is a cardinal rule in the
interpretation of contracts that if 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.18 The terms of the Contract to Sell made no mention of the condition that before
it can become valid and binding, a unanimous consent of all the heirs is necessary. Thus,
when the language of the contract is explicit, as in the present case, leaving no doubt as to
the intention of the parties thereto, the literal meaning of its stipulation is controlling.
In addition, the petitioners, being owners of their respective undivided shares in the
subject properties, can dispose of their shares even without the consent of all the co-heirs.
Article 493 of the Civil Code expressly provides:
Article 493. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when personal rights are involved. But
the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited
to the portion which may be allotted to him in the division upon the termination of the coownership. [Emphases supplied.]
Consequently, even without the consent of the two co-heirs, Adolfo and Jesus, the
Contract to Sell is still valid and binding with respect to the 6/8 proportionate shares of
the petitioners, as properly held by the appellate court.
Therefore, this Court finds no error in the findings of the Court of Appeals that all the
petitioners who were signatories in the Contract to Sell are bound thereby.
The final arguments of petitioners state that the Contract to Sell is void altogether
considering that respondent itself did not sign it as to indicate its consent to be bound by
its terms; and moreover, the Contract to Sell is really a unilateral promise to sell without
consideration distinct from the price, and hence, again, void. Said arguments must
necessarily fail.
The Contract to Sell is not void merely because it does not bear the signature of the
respondent corporation. Respondent corporations consent to be bound by the terms of the
contract is shown in the uncontroverted facts which established that there was partial
performance by respondent of its obligation in the said Contract to Sell when it tendered
the amount of P100,000.00 to form part of the purchase price, which was accepted and
acknowledged expressly by petitioners. Therefore, by force of law, respondent is required
to complete the payment to enforce the terms of the contract. Accordingly, despite the
absence of respondents signature in the Contract to Sell, the former cannot evade its
obligation to pay the balance of the purchase price.
As a final point, the Contract to Sell entered into by the parties is not a unilateral promise
to sell merely because it used the word option money when it referred to the amount of
P100,000.00, which also form part of the purchase price.
Settled is the rule that 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.19
In the instant case, the consideration of P100,000.00 paid by respondent to petitioners
was referred to as "option money." However, a careful examination of the words used in

the contract indicates that the money is not option money but earnest 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, but may even forfeit it depending on
the terms of the option.20
The sum of P100,000.00 was part of the purchase price. Although the same was
denominated as "option money," it is actually in the nature of earnest money or down
payment when considered with the other terms of the contract. Doubtless, the agreement
is not a mere unilateral promise to sell, but, indeed, it is a Contract to Sell as both the trial
court and the appellate court declared in their Decisions.
WHEREFORE, premises considered, the Petition is DENIED, and the Decision and
Resolution of the Court of Appeals dated 26 April 2002 and 4 March 2003, respectively,
are AFFIRMED, thus, (a) the Contract to Sell isDECLARED valid and binding with
respect to the undivided proportionate shares in the subject parcels of land of the six
signatories of the said document, herein petitioners Ernesto, Enriqueta, Librado, Rizalino,
Bibiano, Jr., and Leonora (all surnamed Oesmer); (b) respondent is ORDERED to tender
payment to petitioners in the amount ofP3,216,560.00 representing the balance of the
purchase price for the latters shares in the subject parcels of land; and (c) petitioners are
further ORDERED to execute in favor of respondent the Deed of Absolute Sale covering
their shares in the subject parcels of land after receipt of the balance of the purchase
price, and to pay respondent attorneys fees plus costs of the suit. Costs against
petitioners.
SO ORDERED.

G.R. No. 154493

December 6, 2006
REYNALDO VILLANUEVA, petitioner,
vs.
PHILIPPINE NATIONAL BANK (PNB), respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The Petition for Review on Certiorari under Rule 45 before this Court assails the January
29, 2002 Decision1 and June 27, 2002 Resolution2 of the Court of Appeals (CA) in CAG.R. CV No. 520083 which reversed and set aside the September 14, 1995 Decision4 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 ofP1,409,000.00, 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 letter6 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:
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 Complaint16 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:
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;
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 vice-president. 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 ofP200,000.00 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 Reconsideration23 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 counter-offer 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 ofP3,677,000.00. 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 counter-offer 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 counter-offer, petitioner signed his July 11, 1990 conformity
to the quoted price ofP2,883,300.00 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 two-year 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
counter-offer, 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 PNB-General 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 counter-offer 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 counter-offer 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 PNB-General 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.