Perfection stage (Arts.
1475-1476) and his wife and that they were
G.R. No. L-26872 July 25, 1975
VILLONCO REALTY COMPANY,
plaintiff-appellee and EDITH PEREZ
DE TAGLE, intervenor-appellee, vs.
BORMAHECO, INC., FRANCISCO N.
CERVANTES and ROSARIO N.
CERVANTES, defendants-appellants.
FACTS:
Francisco N. Cervantes and his
wife, Rosario P. Navarra-Cervantes, are
the owners of 3 lots in Buendia Avenue.
The lots were mortgaged to the DBP on
April 21, 1959. The mortgage debt was
fully paid on July 10, 1969.
The lots are occupied by
Bormaheco, Inc. and are adjacent to the
property of Villonco Realty Company.
On February 1964, Romeo
Villonco of Villonco Realty Company
and Bormaheco, Inc., represented by its
president, Francisco N. Cervantes,
through the intervention of Edith Perez
de Tagle, a real estate-broker, had
negotiations for the sale of the said lots.
Villonco Realty Company
assumed that the lots belonged to
Bormaheco, Inc. and that Cervantes
was duly authorized to sell the same.
Cervantes did not disclose to the broker
and to Villonco Realty Company that the
lots were conjugal properties of himself
It was also stated in the letter
mortgaged to the DBP.
Cervantes made a written offer
dated February 12, 1964 to Villonco for
the sale of the property under the
following conditions:
1. That the price is P400.00 per
square meter;
2. That a deposit of
P100,000.00 must be placed
as earnest money on the
purchase of the property
which will become part
payment of the property in
the event that the sale is
consummated:
3. That the sale is to be
consummated only after
Cervantes shall have also
consummated his purchase
of another property located
in Sta. Ana;
4. That if Cervantes’
negotiations with said
property will not be
consummated by reason
beyond his control, he will
return the deposit of
P100,000 and the sale
between him and Villonco
will not also be
consummated; and
5. That final negotiations on
both properties can be
definitely known after 45
days.
that if the conditions are acceptable,
Villonco must issue out the earnest
money and deliver thru Edith Perez de
Tagle.
The property mentioned in
Bormaheco's letter was the land of the
National Shipyards & Steel Corporation
(Nassco) located in Sta. Ana.
On March 4, 1964, Villonco
made a revised counter-offer for the
purchase of the property which was
accepted by Cervantes. It states that the
sale shall be cancelled only if
Cervantes’ deal with another property in
Sta. Ana shall not be consummated. In
such case, the earnest money will be
returned with a 10% interest p.a.
Villonco also enclosed a check of
P100,00.00 as earnest money. The
check was delivered by Edith Perez de
Tagle and received by Cervantes.
Then, unexpectedly, in a letter
dated March 30, 1964, or twenty-six
days after the signing of the contract of
sale, Cervantes returned the earnest
money with interest. Cervantes cited as
an excuse that despite the lapse of 45
days from February 12, 1964, there is
no certainty yet for the acquisition of the
Sta. Ana property. Villonco Realty
Company refused to accept the letter
and the checks of Cervantes.
Cervantes alleged that the 45-
day period had already expired and the
sale to Bormaheco, Inc. of the Sta. Ana
property had not been consummated.
Cervantes said that his letter was a
manifestation that he is no longer
interested to sell the Buendia Avenue
property to Villonco Realty Company.
Villonco Realty Company
returned the checks to Bormaheco, Inc.,
stated in a letter that the condition for
the cancellation of the contract had not
arisen, and filed a complaint for specific
performance against Bormaheco, Inc.
Bormaheco, Inc. pleaded the
defense that the perfection of the
contract of sale was subject to the
conditions (a) that final acceptance or
not shall be made after 45 days and (b)
that Bormaheco, Inc. acquires the Sta.
Ana property.
On June 2, 1964, the sale of the
Sta. Ana property to Bormaheco, Inc.
was approved. The deed of sale for the
Punta land was executed on June 26,
1964.
The lower court rendered a
decision ordering the Cervantes
spouses to execute in favor of
Bormaheco, Inc. a deed of conveyance
for the 3 lots in question and directing
Bormaheco, Inc. (a) to convey the
same lots to Villonco Realty
Company, (b) to pay the latter, as
consequential damages, the sum of
P10,000 monthly from March 24, 1964
up to the consummation of the sale, (c)
to pay Edith Perez de Tagle the sum of
P42,000 as broker's commission and
(d) to pay P20,000 as attorney's fees.
Bormaheco, Inc. and the
Cervantes spouses appealed. Their
principal contentions are (a) that no
contract of sale was perfected because
Cervantes made a supposedly qualified
acceptance of the revised offer, which
acceptance amounted to a counter-
offer, and because the condition that
Bormaheco, Inc. would acquire the Sta.
Ana land within the 45-day period was
not fulfilled; (2) that Bormaheco, Inc.
cannot be compelled to sell the land
which belongs to the Cervantes
spouses and (3) that Francisco N.
Cervantes did not bind the conjugal
partnership and his wife when, as
president of Bormaheco, Inc., he
entered into negotiations with Villonco
Realty Company regarding the said
land.
ISSUE:
W/N the COS was already
perfected.
HELD:
YES. Bormaheco, Inc.'s
acceptance of Villonco Realty
Company's offer to purchase the
Buendia Avenue property proves that
there was a meeting of minds upon
the subject matter and consideration
of the sale. Therefore, on that date the
sale was perfected.
ART. 1475. The 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. From that
moment, the parties may
reciprocally demand
performance, subject to the
provisions of the law governing
the form of contracts.
Bormaheco's acceptance of the
part payment of P100,000.00 shows
that the sale was conditionally
consummated or partly executed
subject to the purchase by Bormaheco,
Inc. of the Sta. Ana property. The non-
consummation of that purchase would
be a negative resolutory condition.
There was agreement between
the parties on the subject matter, the
price and the mode of payment and
that part of the price was paid.
ART. 1482. Whenever
earnest money is given in a
contract of sale, it shall be
considered as part of the price
and as proof of the perfection of
the contract.
Inasmuch as the sale was
perfected and even partly executed,
Bormaheco, Inc. and the Cervantes
spouses, as a matter of justice and good
faith, are bound to comply with their
contractual commitments.
ART. 1159. Obligations
arising from contracts have the
force of law between the
contracting parties and should
be complied with in good faith.