Perfection stage (Arts.

1475-1476)

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 and his wife and that
they were 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.
It was also stated in the letter 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.