SANTOS vs.

COURT OF APPEALS
G.R. No. 120820. August 1, 2000
Facts:
Spouses Santos owned the house and lot in Better Living Subdivision, Paranaque,
Metro
Manila. The land together with the house, was mortgaged with the Rural Bank of
Salinas, Inc.,
to secure a loan of P150K. The bank sent Rosalinda Santos a letter demanding
payment of
P16K in unpaid interest and other charges. Since the Santos couple had no funds,
Rosalinda
offered to sell the house and lot to Carmen Caseda. After inspecting the real property,
Carmen and her husband agreed.
Carmen and Rosalinda signed a document, involving the sale of the house P350K as
full
amount, P54K as downpayment. Among other condition set is that Caseda will pay the
balance of the mortgage in the bank, real estate taxes and the electric and water bills.
The Casedas complied with the bank mortgage and the bills. The Santoses, seeing that
the
Casedas lacked the means to pay the remaining installments and/or amortization of the
loan,
repossessed the property. The Santoses then collected the rentals from the tenants.
Carmen
approached petitioners and offered to pay the balance of the purchase price for the
house
and lot. The parties, however, could not agree, and the deal could not push through
because
the Santoses wanted a higher price.
Carmen is now praying that the Santoses execute the final deed of conveyance over the
property.
Issue:
WON there was a perfected contract of sale? NO
Held:
A contract is what the law defines it to be, taking into consideration its essential
elements, and
not what the contracting parties call it. Article 1458 expressly obliges the vendor to
transfer
ownership of the thing sold as an essential element of a contract of sale. This is
because the
transfer of ownership in exchange for a price paid or promised is the very essence of a
contract of sale.
There was no transfer of ownership simultaneously with the delivery of the property
purportedly sold. The records clearly show that, notwithstanding the fact that the
Casedas first
took then lost possession of the disputed house and lot, the title to the property has
remained
always in the name of Rosalinda Santos. Although the parties had agreed that the
Casedas
would assume the mortgage, all amortization payments made by Carmen Caseda to the
bank
were in the name of Rosalinda Santos. The foregoing circumstances categorically and
clearly
show that no valid transfer of ownership was made by the Santoses to the Casedas.
Absent
this essential element, their agreement cannot be deemed a contract of sale.
It was a contract to sell. Ownership is reserved by the vendor and is not to pass until full
payment of the purchase price. This we find fully applicable and understandable in this
case,
given that the property involved is a titled realty under mortgage to a bank and would
require
notarial and other formalities of law before transfer thereof could be validly effected.
The CA cannot order rescission. If the vendor should eject the vendee for failure to
meet the
condition precedent, he is enforcing the contract and not rescinding it. When the
petitioners in
the instant case repossessed the disputed house and lot for failure of private
respondents to
pay the purchase price in full, they were merely enforcing the contract and not
rescinding it.
ROMERO vs. COURT OF APPEALS
G.R. No. 107207 November 23, 1995
Facts:
Romero, a civil engineer, was engaged in the business of production, manufacture and
exportation of perlite filter aids, permalite insulation and processed perlite ore. In 1988,
he
decided to put up a central warehouse in Metro Manila.
Flores and his wife offered a parcel of land measuring 1,952 square meters. The lot was
covered in a TCT in the name of private respondent Enriqueta Chua vda. de Ongsiong.
Petitioner visited the property and, except for the presence of squatters in the area, he
found
the place suitable for a central warehouse. Flores called on petitioner with a proposal
that
should he advance the amount of P50,000.00 which could be used in taking up an
ejectment
case against the squatters, private respondent would agree to sell the property for only
P800/square meter. Romero agreed. Later, a Deed of Conditional Sale was executed
between Flores and Ongsiong.
Purchase price = P1,561,600.00; Downpayment = P50K; Balance = to be paid 45 days
after
the removal of all the squatters; upon full payment, Ongsiong shall execute deed of
absolute
sale in favour of Romero.
Ongsiong sought to return the P50,000.00 she received from petitioner since, she said,
she
could not get rid of the squatters on the lot. She opted to rescind the sale in view of
her
failure to get rid of the squatters. Regional Trial Court of Makati rendered decision
holding that
private respondent had no right to rescind the contract since it was she who violated
her
obligation to eject the squatters from the subject property and that petitioner, being the
injured party, was the party who could, under Article 1191 of the Civil Code, rescind the
agreement.
Issue:
WON there was a perfected contract of sale? YES
Held:
A sale is at once perfected when a person (the seller) obligates himself, for a price
certain, to
deliver and to transfer ownership of a specified thing or right to another (the buyer) over
which
the latter agrees. (BILATERAL and RECIPROCAL CHARACTERISTIC OF SALE)
In determining the real character of the contract, the title given to it by the parties is not
as
much significant as its substance. For example, a deed of sale, although denominated
as a
deed of conditional sale, may be treated as absolute in nature, if title to the property
sold is
not reserved in the vendor or if the vendor is not granted the right to unilaterally rescind
the
contract predicated on the fulfillment or non-fulfillment, as the case may be, of the
prescribed
condition.
From the moment the contract is perfected, 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. Under the agreement, private
respondent is obligated to evict the squatters on the property. The ejectment of the
squatters
is a condition the operative act of which sets into motion the period of compliance by
petitioner of his own obligation, i.e., to pay the balance of the purchase price. Private
respondents failure to remove the squatters from the property within the stipulated
period
gives petitioner the right to either refuse to proceed with the agreement or waive that
condition in consonance with Article 1545 of the Civil Code. This option clearly belongs
to
petitioner and not to private respondent.
There was no potestative condition on the part of Ongsiong but a mixed condition
dependent not on the will of the vendor alone but also of third persons like the
squatters and
government agencies and personnel concerned.
SECOND DIVISION

[G.R. No. 127206. September 12, 2003]

PERLA PALMA GIL, VICENTE HIZON, JR., and ANGEL PALMA GIL, petitioners, vs.
HON. COURT OF APPEALS, HEIRS OF EMILIO MATULAC, CONSTANCIO MAGLANA,
AGAPITO PACETES & The REGISTER OF DEEDS OF DAVAO CITY, respondents.

DECISION

CALLEJO, SR., J.:

For review on appeal by certiorari are the Decision1[1] of the Court of Appeals in CA-G.R. CV.
No. 43188 promulgated on March 19, 1996, and its Resolution2[2] dated October 17, 1996,
denying the petitioners Motion for Reconsideration of the said decision.

The appealed decision affirmed in toto the judgment of the Regional Trial Court, Davao City,
Branch 16, in Civil Case No. 15,356 which dismissed the complaint of the herein petitioners.

The Antecedents

Concepcion Palma Gil, and her sister, Nieves Palma Gil, married to Angel Villarica, were the co-
owners of a parcel of commercial land with an area of 829 square meters, identified as Lot No.
59-C, covered by Transfer Certificate of Title (TCT) No. 432 located in Davao City. The
spouses Angel and Nieves Villarica had constructed a two-storey commercial building on the
property. On October 13, 1953, Concepcion filed a complaint against her sister Nieves with the
then Court of First Instance of Davao City, docketed as Civil Case No. 1160 for specific
performance, to compel the defendant to cede and deliver to her an undivided portion of the said
property with an area of 256.2 square meters. After due proceedings, the court rendered
judgment on April 7, 1954 in favor of Concepcion, ordering the defendant to deliver to the
plaintiff an undivided portion of the said property with an area of 256.2 square meters:

A la vista de los datos expuestos, el Juzgado dicta sentencia condenando a la demanda, Nieves
Palma Gil de Villarica, cumpla con los terminos del documento (Exh. A) ordenando a aquella
que otogue los documentos necesarios traspasando a favor de la demandante (CONCEPCION
PALMA GIL), 256 metros cuadrados con 20 centimetros del Lote No. 56-C descrito mas
particularmente en el Certificado de Titulo No. 432.3[3]

1[1] Penned by Associate Justice Bernardo Ll. Salas, with Associate Justices Pedro A. Ramirez and Ma.
Alicia Austria-Martinez (now a member of the Court) concurring. Rollo, p. 21.

2[2] Ibid., p. 32.

3[3] Folder of Exhibits, p. 397.

Nieves appealed to the Court of Appeals which affirmed the assailed decision. In due course, the
decision became final and executory. On motion of the plaintiff (Concepcion), the court issued a
writ of execution. Nieves, however, refused to execute the requisite deed in favor of her sister.
On April 27, 1956, the court issued an order authorizing ex-officio Sheriff Eriberto Unson to
execute the requisite deed of transfer to the plaintiff over an undivided portion of the property
with a total area of 256.2 square meters. Instead of doing so, the sheriff had the property
subdivided into four lots namely, Lot 59-C-1, with an area of 218 square meters; Lot 59-C-2,
with an area of 38 square meters; Lot 59-C-3, with an area of 14 square meters; and Lot 59-C-4,
with an area of 560 square meters, all covered by a subdivision plan. The sheriff thereafter
executed a Deed of Transfer to Concepcion over Lot 59-C-1 and Lot 59-C-2 with a total area of
256.2 square meters.

On October 24, 1956, Concepcion executed a deed of absolute sale over Lot 59-C-1 in favor of
Iluminada Pacetes. In the said deed, the area of Lot 59-C-1 appeared as 256 square meters
although under the subdivision plan, the area of the property was only 218 square meters. The
vendee obliged herself to pay the said amount, to wit:

1. The purchase price of P21,600.00 shall be paid as follows: P7,500.00 to be paid upon the
signing of this instrument; and the balance of P14,100.00 to be paid upon the delivery of the
corresponding Certificate of Title in the name of the VENDEE.4[4]

Under the deed of absolute sale, the parties further agreed as follows:

2. That the VENDOR shall, within the period of ONE HUNDRED TWENTY (120) DAYS,
from the signing of this agreement, undertake and work for the issuance of the corresponding
Certificate of Title of the said Lot No. 59-C-1 in her favor with the proper government office or
offices, to the end that the same can be duly transferred in the name of the herein VENDEE, by
virtue thereof.

3. That pending the full and complete payment of the purchase price to the VENDOR, the
VENDEE shall collect and receive any and all rentals and such other income from the land
above-described for her own account and benefit, this right of the VENDEE to begin from
December 1, 1956.5[5]

In the meantime, Nieves filed a motion in Civil Case No. 1160 to compel the sheriff to report on
his compliance with the courts Order dated April 27, 1956. The motion was denied. A motion
for reconsideration of the denial met the same fate. Nieves appealed to the Court of Appeals,
which appeal was docketed as CA-G.R. No. 22438-R.

In a parallel development, Concepcion filed a complaint for unlawful detainer against the
spouses Angel and Nieves Villarica with the Municipal Trial Court docketed as Civil Case No.

4[4] Records, p. 20.

5[5] Id., at 21.

2246. On October 4, 1956, the court rendered judgment in favor of the plaintiff and against the
defendants, the decretal portion of which reads as follows:

From the foregoing, it is indeed evident and clear that the herein defendants have been
unlawfully withholding possession of the land from the plaintiff, and hereby finds in favor of the
plaintiff, and against the defendants, ordering the latter to vacate the premises described in the
complaint, removing whatever improvements they have constructed thereon. The defendants are
further judged to pay the plaintiff the amount of ONE HUNDRED FIFTY PESOS (P150.00) a
month from the time of the filing of this complaint until the lot is finally vacated in concept of
rentals, deprived of the plaintiff due to the unlawful possession of the defendants, and to pay the
costs of this suit.6[6]

The decision became final and executory but the plaintiff did not file any motion for a writ of
execution.

The spouses Angel and Nieves Villarica filed a complaint on October 24, 1956 against the sheriff
and Concepcion with the Court of First Instance of Davao City, docketed as Civil Case No. 2151
for the nullification of the deed of transfer executed by the sheriff.7[7]

On December 21, 1956, Iluminada Pacetes filed a motion to intervene in Civil Case No. 2151, as
vendee of the property subject of the case, which was granted by the court. She then filed a
motion to dismiss the complaint. The court granted the motion. Nieves appealed to the Court of
Appeals which appeal was docketed as CA-G.R. No. 22008-R. Nieves appeals in Civil Cases
Nos. 1160 and 2151 were certified by the CA to this Court, docketed as G.R. No. L-15799 and
G.R. No. L-15801.

On the basis of the deed of transfer executed by Sheriff Iriberto A. Unson, the Register of Deeds
issued TCT No. 7450 over Lot 59-C-1 and 59-C-2 on July 17, 1957 in the name of Concepcion,
with a total area of 256.2 square meters. However, the latter failed to transfer title to the property
to and under the name of Iluminada Pacetes. Consequently, the latter did not remit the balance of
the purchase price of the property to Concepcion.

In the interim, the spouses Angel and Nieves Villarica executed a real estate mortgage over Lot
59-C-4 in favor of Prudential Bank as security for a loan. On August 4, 1959, Concepcion died
intestate and was survived by Nieves Villarica and her nephews and nieces. Iluminada filed a
motion in Civil Case No. 1160 for her substitution as party-plaintiff in lieu of the deceased
Concepcion. On August 2, 1961, the court issued an order granting the motion.

On August 31, 1961, this Court rendered judgment in G.R. Nos. L-15799 and L-15801 setting
aside the deed of transfer executed by the sheriff in favor of Concepcion Palma Gil, and
remanding the records to the trial court for further proceedings.8[8] In compliance with the

6[6] Folder of Exhibits, Exh. A-4, p. 2.

7[7] Villarica vs.Gil, 2 SCRA 1147 (1961).

8[8] Ibid.
Decision of this Court in G.R. No. L-15801, the trial court conducted further proceedings in
Civil Case No. 1160 and discovered that the defendant had mortgaged Lot 59-C-4 to the
Prudential Bank. Consequently, the court issued an order on February 17, 1964, declaring that
the defendant had waived the benefits of the Decision of the Court on August 31, 1961 in G.R.
No. L-15801; thus, the conveyance of the property made by Concepcion in favor of Iluminada on
October 24, 1956 must stand. Nieves filed a motion for the reconsideration of the said order but
the court denied the same in an Order dated February 29, 1964. Nieves appealed the order to the
CA which dismissed the appeal for her failure to file a record on appeal. Nieves filed a petition
for review with this Court docketed as G.R. No. L-28363.

More than five years having elapsed without the decision in Civil Case No. 2246 being enforced,
Iluminada filed a complaint docketed as Civil Case No. 4413 in the Court of First Instance of
Davao City, for the revival and execution of the decision of the Municipal Trial Court in Civil
Case No. 2246 (the unlawful detainer case). The plaintiff therein averred that, as Concepcions
successor-in-interest, she acquired the right of action to enforce the decision in Civil Case No.
2246. The defendants, on the other hand, averred that Iluminada had not yet paid the balance of
the purchase price of Lot 59-C-1; hence, she had not acquired title over the lot and the right to
evict the defendant. The deed of absolute sale executed by Concepcion in favor of the plaintiff
was an executory, not an executed deed. On January 26, 1965, the court rendered judgment in
favor of the defendants and dismissed the complaint. The decretal portion reads:

IN VIEW OF THE FOREGOING, the Court believes that the plaintiff herein has not been
properly and legally subrogated to the rights and action of deceased Concepcion Palma Gil and,
hence, for these reasons the Court dismisses this case without pronouncement as to costs.

The counterclaim is also hereby ordered dismissed.9[9]

On March 16, 1966, Iluminada Pacetes and Agapito Pacetes executed a deed of absolute sale
over Lot 59-C-1 and Lot 59-C-2 in favor of Constancio B. Maglana for P110,000.00, covered by
TCT No. 7450.10[10] The spouses-vendors undertook to secure title over the lots under the name
of the vendee within ninety days.

On May 15, 1974, this Court denied the petition for certiorari filed by Nieves in G.R. No. L-
28363.11[11] The Court, in part, ruled:

But while the issue at bar exclusively involves the timeliness of the appeal of the petitioners to
the Court of Appeals, this Court has nonetheless examined and analyzed the substantive aspects
of this case and is satisfied that the ORDERS of the trial court complained of are morally just.

9[9] Exhibit A-5-A to A-6.

10[10] Exhibit C-1.

11[11] Villarica v. CA, 57 SCRA 24 (1974).

Accordingly, the instant appeal is dismissed and the resolution of the Court of Appeals dated
July 31, 1967 and its resolution dated October 18, 1967 are affirmed.12[12]

The decision of the Court became final and executory.

On May 5, 1975, the spouses Agapito and Iluminada Pacetes filed a complaint against Nieves in
the Court of First Instance of Davao City, docketed as Civil Case No. 8836 for the recovery of
possession of Lot 59-C-1 and Lot 59-C-2. The Pacetes spouses claimed that Lot 59-C-2 was
included in TCT No. 7450 under the name of Concepcion. The spouses prayed that judgment be
rendered in their favor after due proceedings thus:

PRAYER

PREMISES CONSIDERED, it is most respectfully prayed that:

1. During the pendency of this case, Defendant be ordered:

a. To refrain from collecting rentals from the tenants or occupants of the building
erected in said Lot 59-C-1; in that the tenants be directed to pay their rental to the
plaintiff;

b. To demolish her aforesaid building of strong materials and vacate the premises of
Lot 59-C-1 and Lot 59-C-2.

2. After hearing, Defendant be ordered to:

a. Pay the Plaintiffs the amount consisting of compensation for the use of the land
they have been depribed (sic) of to receive and enjoy since October 24, 1956 due
to the unwarranted and illegal occupation of the said lots by defendant;

b. Pay Plaintiffs moral and exemplary damages in such amount as the Honorable
Court may fix considering the facts and the law;

c. Pay Plaintiffs such expenses of litigation as may be proven during the trial, and

d. Pay Plaintiffs expenses for services of counsel they had to incurr (sic) in this
complaint.

3. OTHER RELIEFS consonant with justice and equity are prayed for.13[13]

12[12] Id. at 28.

13[13] Exhibit A-7, p. 6.

On May 10, 1977, Nieves Villarica executed a lease agreement with Virginia Jorge and Anita
Vergara over Lots 59-C-1 and 59-C-2. The lessees took actual possession of the leased property.

In their Answer to the complaint in Civil Case No. 8836, the defendants averred, by way of
defense, that the complaint was barred by the decision of the CFI in Civil Case No. 4413, which
ruled that the Deed of Absolute Sale executed by Concepcion in favor of Iluminada was merely
an executory, but not an executed contract. After the plaintiffs had rested their case, the
defendants filed a motion to dismiss (demurrer to evidence). On October 29, 1975, the court
issued an order dismissing the complaint on the ground that the action was barred by the decision
of the court in Civil Case No. 4413.14[14] Thus, Virginia Jorge and Anita Vergara continued to be
in physical possession of the property.

In the meantime, on August 8, 1977, Iluminada consigned with the court in Civil Case No. 1160
the amount of P11,983.00 only as payment of the purchase price of the property. Iluminada was
issued receipts for the amount.15[15] As successor-in-interest of Concepcion, she likewise filed a
motion for execution in Civil Case No. 1160 for the eviction of the defendant Nieves Villarica
and all those acting for and in her behalf. The court issued an order on August 19, 1977 granting
the motion. The defendants filed a motion for reconsideration of the order claiming that
Iluminada was not a party to the case which the court denied on September 2, 1977. The
defendant filed another motion for reconsideration which was likewise denied on September 16,
1977. The defendant filed a petition for certiorari with the Court of Appeals docketed as CA-
G.R. No. 62957-R, which petition was dismissed on August 26, 1980. The CA ruled that
Iluminada Pacetes was the real party-in-interest as the vendee of the property. The defendant
filed a petition with this Court docketed as G.R. No. L-56399.

In the meantime, Iluminada filed a petition with the RTC docketed as Miscellaneous Case No.
4715 for the issuance of an owners duplicate of TCT No. 7450. On March 22, 1978, the court
granted the petition and ordered the Register of Deeds to issue an owners duplicate of the said
title under the name of Concepcion Gil. Iluminada presented the said order and the deed of
absolute sale executed by Concepcion in her favor. On May 9, 1978, the Register of Deeds
issued TCT No. 61514 over Lot 59-C-1, with an area of 218 square meters, in the name of
Iluminada Pacetes.16[16]

On April 21, 1980, TCT No. 73412 was issued by the Register of Deeds of Davao City in favor
of Constancio Maglana over Lot 59-C-1 only.17[17] The next day, Constancio Maglana executed a
deed of sale not only over Lot 59-C-1 but also Lot 59-C-2, in favor of Emilio Matulac for the

14[14] Exhibit A-9.

15[15] Exhibit 3.

16[16] Exhibit C.

17[17] Exhibit C-2.

purchase price of P150,000.00.18[18] On the basis of the said deed, the Register of Deeds issued
TCT No. 80631 to and under the name of Emilio Matulac over the two lots.

In the meantime, Angel Villarica had died on April 20, 1974. On July 7, 1981, his heirs,
including his widow Nieves, executed an Extra-Judicial Settlement of Estate of Deceased in
which the latter waived, ceded and transferred to her children Teresita Magpantay, Antero P.G.
Villarica, Zenaida V. Alovera, Emperatriz V. Garcia, Napoleon P.G. Villarica and Rupendo P.G.
Villarica her rights and interests over the property covered by TCT No. 7450.19[19]

On January 13, 1982, this Court affirmed the resolution of the Court of Appeals, in CA-G.R. No.
62975-R and dismissed the petition for certiorari in G.R. No. L-56399, thus, paving the way for
the execution of the decision of the trial court in Civil Case No. 1160, per its Order dated August
19, 1977. Emilio Matulac filed a motion for the issuance of a writ of execution. The Court
granted the motion on February 18, 1982. Nieves filed a motion for the reconsideration of the
order which the court denied in its Order dated March 17, 1982. Virginia Jorge and Anita
Vergara, the lessees, filed a motion for reconsideration but the court denied the motion.
Nonetheless, the lessees were allowed to stay in the property until April 9, 1982. However, the
lessees refused to vacate the property after said date.

On April 10, 1982, Emilio Matulac filed a motion in Civil Case No. 1160 for the issuance of a
writ of execution and an order of demolition. On April 20, 1982, the trial court issued an order
granting the motion for a writ of execution on April 30, 1982. The court also issued a special
order for the demolition of the buildings on the property. The buildings on the property,
including the properties owned by Virginia Jorge and Anita Vergara, were demolished on June
14, 1982. Emilio Matulac thereafter commenced the construction of a building thereon. The
defendant Nieves Villarica, in the meantime, filed a motion in Civil Case No. 1160 to annul the
proceedings, including the writ of execution issued by the court, and the issuance of a restraining
order.

For their part, Virginia Jorge and Anita Vergara filed a petition for certiorari with this Court
docketed as G.R. No. L-60690 for the nullification of the aforesaid orders and the writ of
demolition issued by the trial court in Civil Case No. 1160.

Three of the surviving heirs of Concepcion Gil, namely, Perla Palma Gil, Vicente Hizon, Jr. and
Angel Palma Gil, through their first cousin, Atty. Vicente Villarica, one of Nieves Villaricas
children, filed on June 17, 1982, a complaint against Emilio Matulac, Constancio Maglana,
Agapito Pacetes, and the Register of Deeds, with the Court of First Instance, docketed as Civil
Case No. 15,356 for the cancellation of the deed of sale executed by Concepcion in favor of
Iliminada Pacetes; the deed of sale executed by the latter in favor of Constancio Maglana; the
deed of sale executed by the latter in favor of Emilio Matulac, as well as TCT Nos. 61514, 73412
and 80631 under the respective names of the vendees.

18[18] Exhibit 3.

19[19] Exhibit E.
The plaintiffs alleged, inter alia, that the deed of absolute sale executed by Concepcion in favor
of Iluminada over Lots 59-C-1 and 59-C-2 was a contract to sell, an executory contract, as
declared by the Court of First Instance in Civil Cases Nos. 4413 and 8836, and not an executed
contract; the defendant spouses Agapito and Iluminada Pacetes failed to pay the balance of the
purchase price of the property during the lifetime of Concepcion; hence, what was embodied in
the said deed was not fulfilled by the vendee. Consequently, the sale is null and void.

The plaintiffs prayed for the issuance of a temporary restraining order and a writ of preliminary
injunction to enjoin the defendant Emilio Matulac from continuing with the construction of a
building on the property. The plaintiffs likewise prayed that after due proceedings, judgment be
rendered in their favor and against the defendants, thus:

WHEREFORE, in view of the aforecited reasons it is most respectfully prayed that:

1) An order be rendered immediately enjoining defendant Matulac from

doing further work in the construction of the building and enjoining him from
entering the premises and the land subject of this complaint and after trial making
the injunction above-mentioned permanent, ordering the removal of any structure
and other construction within the plaintiffs above-described property and
thereafter, upon said defendants failure to do so authorizing plaintiffs to order said
removal at defendants expense.

2) Judgment be rendered ordering:

a. Defendant Register of Deeds to cancel TCT No. T-61514, T-73412 and T-80631
and issued (sic) a new Transfer Certificate of Title in the name of the above-
mentioned heirs of the late Concepcion Palma Gil nullifying the deeds of sale,
Annexes B, C, and D hereof;

b. Defendants Pacetes, Maglana and Matulac jointly and solidarily liable to

plaintiffs for moral and exemplary damages as may be granted by this Honorable
Court and the amount of P25,000.00 as attorneys fees; and

c. Litigation expenses and other reliefs as may be justified under this case.20[20]

In his answer to the complaint, defendant Emilio Matulac interposed the following special and
affirmative defenses: (a) he is the lawful owner of the property; (b) the action is barred by the
Decision of this Court in G.R. No. L-56399; (c) the plaintiffs are estopped from assailing the sale
to him of the property; and (d) he is a purchaser in good faith.

On November 29, 1982, the court issued an order in Civil Case No. 1160, denying the motion for
the nullification of the proceedings and for a writ of preliminary injunction. Nieves filed a

20[20] Records, p. 9.
motion for reconsideration of the order. On February 18, 1983, the court issued an order denying
the motion. Nieves filed a petition with the Court of Appeals for the nullification of the same.

In the meantime, Emilio Matulac died intestate and was substituted by his heirs Sonia Matulac,
Josephine Matulac and Gregorio Matulac.21[21] A petition was filed with the RTC of Davao City
for the settlement of his estate docketed as SP-No. 2747. The Court appointed Sonia Matulac as
administratrix of the estate.

The CA rendered a decision granting the petition and ordering the trial court to conduct further
proceedings to implement the August 19, 1977 Order. Sonia Matulac filed a petition for review
on certiorari with this Court docketed as G.R. No. 85538 for the nullification of the decision of
the CA.

On November 24, 1989, this Court rendered a Decision dismissing the petition in G.R. No. L-
60690. This Court said:

When We dismissed on September 16, 1974, the petition for certiorari filed by defendants
questioning the orders, dated December 7, 1961 and December 17, 1964, in effect We had
confirmed the sale by plaintiff in Civil case No. 1160, Concepcion Palma Gil, of Lot 59-C-1 and
59-C-2 to Illuminada Pacetes and affirmed the ruling of the trial court that defendants had
waived the benefit of Our Resolution rendered on August 31, 1961.22[22]

Meanwhile, one of the plaintiffs, Perla Palma Gil in Civil Case No. 15,356, was appointed by the
court as administratrix of the estate of Concepcion on December 29, 1989,23[23] and filed in the
said case a motion to intervene as plaintiff in her capacity as administratrix in behalf of all the
heirs of Concepcion.24[24] The heirs of Emilio Matulac opposed the motion considering that they,
and not the estate of Concepcion, owned the subject property; thus the claim of the plaintiff
should be filed in SP-No. 2747. On April 7, 1990, the said motion was denied by the trial
court.25[25] The said court declared:

Being already a plaintiff together with the other plaintiffs in thise (sic) case, said intervention by
plaintiff Perla Palma Gil is not absolutely necessary and imperative. It would only delay the early
disposition of the case if allowed.

21[21] Records, p. 227.

22[22] Jorge v. Hon. Consolacion, 179 SCRA 593 (1989).

23[23] Id. at 264.

24[24] Id. at 262.

25[25] Id. at 266.

On January 8, 1990, this Court dismissed the petition in G.R. No. 85538. The petitioners filed a
motion for reconsideration and on July 2, 1992, this Court granted the motion and reversed the
decision of the CA. This Court ruled in the said case as follows:

When Concepcion Palma Gil, plaintiff in Civil Case No. 1160 sold the land in question to
Iluminada Pacetes on October 24, 1956, the latter became the new owner of the property. By
virtue of the order of substitution issued by the court, said new owner (Pacetes) became a formal
party---the party plaintiff. As the new party plaintiff, Pacetes had the right to move for the
issuance of a writ of execution, which was correctly granted by the trial court in the questioned
Order dated August 19, 1977.

The subsequent transfers of the property from Pacetes to Maglana, and then from Maglana to
herein movant Matulac, was acquired pendente lite. The latter (Matulac) as the latest owner of
the property, was, as aptly put by the trial court, subrogated to all the rights and obligations of
Pacetes. He is thus the party who now has a substantial interest in the property. Matulac is a real
party-in- interest subrogated to all the rights of Iluminada Pacetes, including the right to the
issuance of a writ of execution in his name. Hence, the questioned orders of the lower court
dated November 29, 1982 and February 18, 1983 as well as the Writ of Possession issued
pursuant to the aforementioned orders are valid. They do not in any way run counter to the order
of the lower court dated August 19, 1977, which granted the motion for execution filed by
Pacetes, who, as earlier pointed out, was succeeded in all his rights and interests, by herein
petitioner, Matulac.

Although the dispositive portion of the judgment rendered in Civil Case No. 1160 did not award
the parties their respective shares in the property, the power of the court to issue the order of
execution cannot be limited to what is stated in the dispositive portion of the judgment. As held
in Paylago vs. Nicolas (189 SCRA 728 [1990]), the body of the decision must be consulted in
case of ambiguity in the dispositive portion. Hence, in Jorge vs. Consolacion (supra), we ruled
that the execution of the judgment cannot be limited to its dispositive portion, considering the
continued failure of the defendant Nieves Palma Gil-Villarica, to comply with what was required
of her in the judgment. Respondents deprived petitioner Concepcion Palma Gil and her
successors-in-interest of their legal right to possess the land.26[26] (Underscoring supplied)

On June 11, 1993, the trial court rendered judgment in Civil Case No. 15,356 in favor of the
defendants. The trial court ruled that this Court had affirmed, in G.R. No. 85538 and G.R. No. L-
60690, the sales of the property from Concepcion Palma Gil to Iluminada Pacetes, then to
Constancio Maglana and to Emilio Matulac; hence, the trial court was barred by the rulings of
this Court. The plaintiffs appealed to the CA with the following assignment of errors:

I. The trial court erred in not holding that Iluminada Pacetes had no right to sell or
transfer the two (2) parcels of land to Constancio Maglana;

26[26] Folder of Exhibits, Exhibit 8, pp. 6-7.

 II. That the trial court erred in not declaring the sale of the properties in question
from Iluminada Pacetes to Constancio Maglana, thence, from Constancio
Maglana to Emilio Matulac NULL and VOID;

III. That the trial court erred in dismissing the complaint;

IV. That the trial court erred in not ordering the cancellation of transfer Certificate of
Title No. T-80631 in the name of Emilio Matulac and the issuance of a new title
in the name of Concepcion Palma Gil;

V. That the trial court erred in not holding the appellees liable for damages to the
appellants.27[27]

In the meantime, on June 29, 1994, the estate of Emilio Matulac executed a deed of sale of real
estate in which the estate sold Lots 59-C-1 and 59-C-2 and the building thereon to the Prudential
Education Plan, Inc. for P7,000,000.00.28[28] On March 19, 1996, the CA rendered a decision
affirming the decision assailed therein and dismissing the appeal. The CA ruled that the deed of
absolute sale executed by Concepcion in favor of Iluminada Pacetes was a deed of absolute sale
over Lots 59-C-1 and 59-C-2, under which the ownership over the property subject thereof was
transferred to the vendee. Moreover, the validity of the sales of the subject lots by Concepcion to
Iluminada, by the latter to Constancio Maglana, and by the latter to Emilio Matulac, had been
confirmed by this Court in G.R. No. L-60690 and G.R. No. 85538. Although Iluminada paid the
balance of the purchase price of the property only on August 8, 1977, the payment was still
timely, in light of Article 1592 of the New Civil Code. Besides, the property had already been
sold to the respondents Constancio Maglana and Emilio Matulac.

The appellants, now petitioners in this case, assert that private respondents Agapito and
Iluminada Pacetes failed to pay the balance of the purchase price in the amount of P14,100.00.
They did consign and deposit the amount of P11,983.00, but only on August 8, 1977, twenty one
years from the execution of the Deed of Absolute Sale in favor of the said spouses, without the
latter instituting an action for the cancellation of their obligation. According to the petitioners,
the consignation made by Iluminada Pacetes of the amount did not produce any legal effect.
Furthermore, private respondents Constancio Maglana and Emilio Matulac were not purchasers
in good faith because at the time they purchased the respective properties, the two-storey
building constructed by the spouses Angel and Nieves Villarica on the said property was still
existing. Hence, the decision of the CA should be reversed and set aside.

In their Comment on the petition, private respondents Constancio Maglana and Agapito Pacetes
averred that the action of the petitioners in the court a quo was barred by the Decision of this
Court in G.R. No. L-60690 on November 24, 1989.

THE RULING OF THE COURT

27[27] Rollo, pp. 26-27.

28[28] Annex A, Rollo, p. 78-80.

The petition is denied due course.

We note that the petitioners failed to implead all the compulsory heirs of the deceased
Concepcion Gil in their complaint. When she died intestate, Concepcion Gil, a spinster, was
survived by her sister Nieves, and her nephews and nieces, three of whom are the petitioners
herein.

Upon Concepcions demise, all her rights and interests over her properties, and the rights and
obligations under the Deed of Absolute Sale executed in favor of Iluminada Pacetes, were
transmitted to her sister, and her nephews and nieces29[29] by way of succession, a mode of
acquiring the property, rights and obligation of the decedent to the extent of the value of the
inheritance of the heirs. The heirs stepped into the shoes of the decedent upon the latters
death.30[30]

In their complaint, the petitioners alleged that:

7. That upon the death of the late Concepcion Palma Gil, her heirs namely: A. Children of the
deceased Pilar Palma Gil Rodriguez; B. Children of the deceased Asuncion Palma Gil Hizon one
of whom is plaintiff Vicente Hizon, Jr.; C. Nieves Palma Gil Villarica; D. David Palma Gil one
of whom is plaintiff Angel Palma Gil; E. Perla Palma Gil; and F. Children of the deceased Jose
Palma Gil, ipso facto became co-owners of the said subject property by operation of law;31[31]

When she testified, petitioner Palma Gil stated that:

ATTY. GALLARDO:

With the Courts permission.

Q You said that you are one of the 3 plaintiffs in this case?

A Yes, sir.

Q Now, aside from these 3 plaintiffs who are supposed to be the heirs of the late
Concepcion Palma Gil, there are also other heirs who were not included as plaintiffs in this case?

A Yes, because that time when they demolished the building and I accompanied Atty.
Villarica at the site where they had the demolition, we found out that during the confrontation
that we have to hurry and file the case right away. So we were not able to contact all the heirs
and I have contacted . . .since 3 of us were there during the demolition, so we decided that I will
be one, and Angel Palma Gil was also there and also Vicente Hizon Jr. whom I contacted at the

29[29] Articles 975, 1003, 1005, 1009, New Civil Code.

30[30] Emmace v. Court of Appeals, 370 SCRA 431 (2001).

31[31] Records, p. 8.
Apo View Hotel and I contacted also Julian Rodriguez, another cousin thru telephone and he told
us to go ahead and file the case. We cannot get all the heirs. We cannot gather all of them and we
will have a hard time asking them to sign, so we just filed the case.

Q You are telling the court that the other heirs were not included because they were not
available to sign the complaint?

A They were not there during the demolition.

Q When was the case filed?

A June 14, the demolition was on June 14, 1982.

ATTY. QUITAIN:

The best evidence would be the complaint, Your Honor.

ATTY. GALLARDO:

Q It appears in the complaint that it was filed sometime on June 16, 1982?

A We had it on June 14 the demolition, and we filed it right away because we were in a
hurry.

Q Since June 16, 1982 up to the present the other heirs did not do anything to be included in
the complaint?

ATTY. QUITAIN:

The best evidence would be the motion for intervention and it would seem that
compaero is contending that there is a need to include all heirs. Under the civil law on property
even one co-owner may file a case.32[32]

Although the petitioners sought leave from the trial court to amend their complaint to implead
the intestate estate of the deceased Concepcion Gil through her administratrix Perla Palma Gil, as
party plaintiff, the trial court denied the petitioners plea. The petitioners manifested to the trial
court that they would assign the denial of their plea as one of the assigned errors in case of
appeal to the CA. They failed to do so. The petitioners were duty bound to implead all their
cousins as parties-plaintiffs; otherwise, the trial court could not validly grant relief as to the
present parties and as to those who were not impleaded.33[33]

32[32] TSN, 25 May 1990, p. 7-9 (Gil).

33[33] Santana-Cruz v. Court of Appeals, 361 SCRA 520 (2001); Nufable v. Nufable, 309 SCRA 692 (1999).
Being indispensable parties, the absence of the surviving sister, nephews and nieces of the
decedent in the complaint as parties-plaintiffs, and in this case, as parties-petitioners, renders all
subsequent actions of the trial court null and void for want of authority to act, not only as to the
absent parties, but even as to those present. Hence, the petition at bar should be dismissed.34[34]

Even if we were to brush aside this procedural lapse and delve into the merits of the case, a
denial in due course is inevitable.

Article 119135[35] in tandem with Article 159236[36] of the New Civil Code are central to the issues
at bar. Under the last paragraph of Article 1169 of the New Civil Code, in reciprocal obligations,
neither party incurs in delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfills his
obligation, delay in the other begins. Thus, reciprocal obligations are to be performed
simultaneously so that the performance of one is conditioned upon the simultaneous fulfillment
of the other.37[37] The right of rescission of a party to an obligation under Article 1191 of the New
Civil Code is predicated on a breach of faith by the other party that violates the reciprocity
between them.38[38]

That the deed of absolute sale executed by Concepcion Gil in favor of Iluminada Pacetes is an
executory contract and not an executed contract is a settled matter. In a perfected contract of
sale of realty, the right to rescind the said contract depends upon the fulfillment or non-
fulfillment of the prescribed condition. We ruled that the condition pertains in reality to the

34[34] Metropolitan Waterworks & Sewerage System v. Court of Appeals, 297 SCRA 287 (1998); Zarate, v.
RTC of Kalibo, Aklan, Br. 2, 316 SCRA 594 (1999).

35[35] Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if
the latter should become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in
accordance with Articles 1385 and 1388 and the Mortgage Law. (1124)

36[36] Art. 1592. In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the
vendee may pay, even after the expiration of the period, as long as no demand for rescission of the
contract has been made upon him either judicially or by notarial act. After the demand, the court may not
grant him a new term. (1504a)

37[37] Integrated Packing Corporation v. Court of Appeals, 333 SCRA 170 (2000).

38[38] Romero v. Court of Appeals, 250 SCRA 223 (1995).

compliance by one party of an undertaking the fulfillment of which would give rise to the
demandability of the reciprocal obligation pertaining to the other party.39[39] The reciprocal
obligation envisaged would normally be, in the case of the vendee, the payment by the vendee of
the agreed purchase price and in the case of the vendor, the fulfillment of certain express
warranties.40[40]

In another case, we ruled that the non-payment of the purchase price of property constitutes a
very good reason to rescind a sale for it violates the very essence of the contract of sale. In
Central Bank of the Philippines v. Bichara,41[41] we held that the non-payment of the purchase
price of property is a resolutory condition for which the remedy is either rescission or specific
performance under Article 1191 of the New Civil Code. This is true for reciprocal obligations
where the obligation is a resolutory condition of the other.42[42] The vendee is entitled to retain
the purchase price or a part of the purchase price of realty if the vendor fails to perform any
essential obligation of the contract. Such right is premised on the general principles of reciprocal
obligations.43[43]

In this case, Concepcion Gil sold Lot 59-C-1 to Iluminada Pacetes for P21,600.00 payable as
follows:

1. The purchase price of P21,600.00 shall be paid as follows: P7,500.00, to be paid upon the
signing of this instrument; and the balance of P14,100.00, to be paid upon the delivery of the
corresponding Certificate of Title in the name of the VENDEE.

Concepcion Gil obliged herself to transfer title over the property to and under the name of the
vendee within 120 days from the execution of the deed.

2. That the VENDOR shall, within the period of ONE HUNDRED TWENTY (120) DAYS,
from the signing of this agreement, undertake and work for the issuance of the corresponding
Certificate of Title of the said Lot No. 59-C-1 in her favor with the proper government office or
offices, to the end that the same can be duly transferred in the name of the herein VENDEE, by
virtue thereof.

3. That pending the full and complete payment of the purchase price to the VENDOR, the
VENDEE shall collect and receive any and all rentals and such other income from the land
above-described for her own account and benefit, this right of the VENDEE to begin from
December 1, 1956.

39[39] Id.

40[40] Id.

41[41] 328 SCRA 807 (2000).

42[42] Id.

43[43] Id.
That it is further stipulated that this contract shall be binding upon the heirs, executors and
administrators of the respective parties hereof.

And I, CONCEPCION PALMA GIL, with all the personal circumstances above-stated, hereby
confirm all the terms and conditions stipulated in this instrument.44[44]

The vendee paid the downpayment of P7,500.00. By the terms of the contract, the obligation of
the vendee to pay the balance of the purchase price ensued only upon the issuance of the
certificate of title by the Register of Deeds over the property sold to and under the name of the
vendee, and the delivery thereof by the vendor Concepcion Gil to the latter. Concepcion failed to
secure a certificate of title over the property. When she died intestate on August 4, 1959, her
obligation to deliver the said title to the vendee devolved upon her heirs, including the
petitioners. The said heirs, including the petitioners failed to do so, despite the lapse of eighteen
years since Concepcions death.

Iluminada was not yet obliged on August 8, 1977 to pay the balance of the purchase price of the
property, but as a sign of good faith, she nevertheless consigned the amount of P11,983.00, part
of the balance of the purchase price of P14,000.00, with the court in Civil Case No. 1160. The
court accepted the consignation and she was issued receipts therefor. Still, the heirs of
Concepcion Gil, including the petitioners, failed to deliver the said title to the vendee. Iluminada
was compelled to file, at her expense, a petition with the RTC docketed as Miscellaneous Case
No. 4715 for the issuance of an owners duplicate of TCT No. 7450 covering the property sold
which was granted by the court on March 22, 1978. It was only on May 9, 1978 that Iluminada
managed to secure TCT No. 61514 over the property under her name. Upon the failure of the
heirs to comply with the decedents prestation, Iluminada Pacetes was impelled to resort to legal
means to protect her rights and interests.

The petitioners, as successors-in-interest of the vendor, are not the injured parties entitled to a
rescission of the deed of absolute sale. It was Concepcions heirs, including the petitioners, who
were obliged to deliver to the vendee a certificate of title over the property under the latters
name, free from all liens and encumbrances within 120 days from the execution of the deed of
absolute sale on October 24, 1956, but had failed to comply with the obligation.

The consignation by the vendee of the purchase price of the property is sufficient to defeat the
right of the petitioners to demand for a rescission of the said deed of absolute sale.45[45]

44[44] Exhibit A-3; Folder of Exhibits for petitioners, p. 2.

 G.R. No. 165272

SERGIO R. OSMEA III, JUAN M. FLAVIER,

RODOLFO G. BIAZON, ALFREDO S. LIM, JAMBY
A.S. MADRIGAL, LUIS F. SISON, AND PATRICIA
C. SISON, Present:

Petitioners,

PUNO, C.J.,
- versus -
QUISUMBING,

YNARES-SANTIAGO,

SANDOVAL- GUTIERREZ,
SOCIAL SECURITY SYSTEM OF THE
PHILIPPINES, SOCIAL SECURITY COMMISSION, CARPIO,
CORAZON S. DELA PAZ, THELMO Y. CUNANAN,
PATRICIA A. STO. TOMAS, FE TIBAYAN- AUSTRIA-MARTINEZ,
PANLILEO, DONALD DEE, SERGIO R. ORTIZ-
LUIS, JR., EFREN P. ARANZAMENDEZ, CORONA,
MARIANITA O. MENDOZA, and RAMON J.
JABAR, in their capacities as Members of the Social CARPIO MORALES,
Security Commission, AND BDO CAPITAL &
INVESTMENT CORPORATION,
AZCUNA,

Respondents.
TINGA,

CHICO-NAZARIO,

GARCIA,

VELASCO,

NACHURA, and

REYES, JJ.

Promulgated:

September 13, 2007

x-------------------------------------------------------------------------------------x

DECISION

GARCIA, J.:

Senator Sergio R. Osmea III45[1] and four (4) other members45[2] of the Philippine Senate,
joined by Social Security System (SSS) members Luis F. Sison and Patricia C. Sison, specifically seek in
this original petition for certiorari and prohibition the nullification of the following issuances of
respondent Social Security Commission (SSC):

1) RESOLUTION No. 42845[3] dated July 14, 2004; and

2) RESOLUTION No. 48545[4] dated August 11, 2004.

The first assailed resolution approved the proposed sale of the entire equity stake of the SSS in
what was then the Equitable PCI Bank, Inc. (EPCIB or EPCI), consisting of 187,847,891 common shares,
through the Swiss Challenge bidding procedure, and authorized SSS President Corazon S. Dela Paz (Dela
Paz) to constitute a bidding committee that would formulate the terms of reference of the Swiss Challenge
bidding mode. The second resolution approved the Timetable and Instructions to Bidders.

Petitioners45[5] also ask that a prohibitive writ issue to permanently enjoin public respondents
from implementing Res. Nos. 428 and 485 or otherwise proceeding with the sale of subject shares through
the Swiss Challenge method.
 By Resolution45[6] dated October 5, 2004, the Court en banc required the parties to observe the
status quo ante the passage of the assailed resolutions. In the same resolution, the Court noted the motion
of respondent BDO Capital and Investment Corporation (BDO Capital) to admit its Opposition to the
Petition.

The relevant factual antecedents:

Sometime in 2003, SSS, a government financial institution (GFI) created pursuant to Republic Act
(RA) No. 116145[7] and placed under the direction and control of SSC, took steps to liquefy its long-term
investments and diversify them into higher-yielding and less volatile investment products. Among its
assets determined as needing to be liquefied were its shareholdings in EPCIB. The principal reason
behind the intended disposition, as explained by respondent Dela Paz during the February 4, 2004
hearing conducted by the Senate Committee on Banks, Financial Institutions and Currencies, is that the
shares in question have substantially declined in value and the SSS could no longer afford to continue
holding on to them at the present level of EPCIBs income.

Some excerpts of what respondent Dela Paz said in that hearing:

The market value of Equitable-PCI Bank had actually hovered at P34.00 since
July 2003. At some point after the price went down to P16 or P17 after the September 11
, it went up to P42.00 but later on went down to P34.00. xxx. We looked at the prices in
about March of 2001 and noted that the trade prices then ranged from P50 to P57.
xxx xxx xxx
I have to concede that [EPCIB] has started to recover, .
Perhaps the fact that there had been this improved situation in the bank that
attracted Banco de Oro . xxx. I wouldnt know whether the prices would eventually go
up to 60 of (sic) 120. But on the basis of my being the vice-chair on the bank, I believe
that this is the subject of a lot of conjecture. It can also go down . So, in the present
situation where the holdings of SSS in [EPCIB] consists of about 10 percent of the total
reserve fund, we cannot afford to continue holding it at the present level of income
.xxx. And therefore, on that basis, an exposure to certain form of assets whose price
can go down to 16 to 17 which is a little over 20 percent of what we have in our books, is
not a very prudent way or conservative way of handling those funds. We need not
 continue experiencing opportunity losses but have an amount that will give us a fair
return to that kind of value (Words in bracket added.)

Albeit there were other interested parties, only Banco de Oro Universal Bank (BDO) and its
investment subsidiary, respondent BDO Capital,45[8] appeared in earnest to acquire the shares in
question. Following talks between them, BDO and SSS signed, on December 30, 2003, a Letter-
Agreement,45[9] for the sale and purchase of some 187.8 million EPCIB common shares (the Shares,
hereinafter), at P43.50 per share, which represents a premium of 30% of the then market value of the
EPCIB shares. At about this time, the Shares were trading at an average of P34.50 @ share.

In the same Letter-Agreement,45[10] the parties agreed to negotiate in good faith a mutually
acceptable Share Sale and Purchase Agreement and execute the same not later than thirty (30) business
days from [December 30, 2003].

On April 19, 2004, the Commission on Audit (COA),45[11] in response to respondent Dela Pazs
letter-query on the applicability of the public bidding requirement under COA Circular No. 89-29645[12]
on the divestment by the SSS of its entire EPICB equity holdings, stated that the circular covers all assets of
government agencies except those merchandize or inventory held for sale in the regular course of business. And
while it expressed the opinion45[13] that the sale of the subject Shares are subject to guidelines in the
Circular, the COA qualified its determination with a statement that such negotiated sale would partake
of a stock exchange transaction and, therefore, would be adhering to the general policy of public auction.
Wrote the COA:

Nevertheless, since activities in the stock exchange which offer to the general
public stocks listed therein, the proposed sale, although denominated as negotiated
sale substantially complies with the general policy of public auction as a mode of
divestment. This is so for shares of stocks are actually being auctioned to the general
public every time that the stock exchanges are openly operating.
 Following several drafting sessions, SSS and BDO Capital, the designated buyers of the Banco de
Oro Group, agreed on a final draft version of the Share Purchase Agreement45[14] (SPA). In it, the parties
mutually agreed to the purchase by the BDO Capital and the sale by SSS of all the latters EPCIB shares
at the closing date at the specified price of P43.50 per share or a total of P8,171,383,258.50.

The proposed SPA, together with the Letter-Agreement, was then submitted to the Department
of Justice (DOJ) which, in an Opinion45[15] dated April 29, 2004, concurred with the COAs opinion
adverted to and stated that it did not find anything objectionable with the terms of both documents.

On July 14, 2004, SSC passed Res. No. 42845[16] approving, as earlier stated, the sale of the EPCIB
shares through the Swiss Challenge method. A month later, the equally assailed Res. No. 48545[17] was
also passed.

On August 23, 24, and 25, 2004, SSS advertised an Invitation to Bid45[18] for the block purchase of
the Shares. The Invitation to Bid expressly provided that the result of the bidding is subject to the right of
BDO Capital to match the highest bid. October 20, 2004 was the date set for determining the winning
bid.

The records do not show whether or not any interested group/s submitted bids. The bottom line,
however, is that even before the bid envelopes, if any, could be opened, the herein petitioners
commenced the instant special civil action for certiorari, setting their sights primarily on the legality of the
Swiss Challenge angle and a provision in the Instruction to Bidders under which the SSS undertakes to offer
the Shares to BDO should no bidder or prospective bidder qualifies. And as earlier mentioned, the Court,
via a status quo order,45[19] effectively suspended the proceedings on the proposed sale.

Under the Swiss Challenge format, one of the bidders is given the option or preferential right to
match the winning bid.
 Petitioners assert, in gist, that a public bidding with a Swiss Challenge component is contrary to
COA Circular No. 89-296 and public policy which requires adherence to competitive public bidding in a
government-contract award to assure the best price possible for government assets. Accordingly, the
petitioners urge that the planned disposition of the Shares through a Swiss Challenge method be scrapped.
As argued, the Swiss Challenge feature tends to discourage would-be-bidders from undertaking the
expense and effort of bidding if the chance of winning is diminished by the preferential right to match
clause. Pushing the point, petitioners aver that the Shares are in the nature of long-term or non-current
assets not regularly traded or held for sale in the regular course of business. As such, their disposition
must be governed by the aforementioned COA circular which, subject to several exceptions, prescribes
public auction as a primary mode of disposal of GFIs assets. And obviously finding the proposed
purchase price to be inadequate, the petitioners expressed the belief that if properly bidded out in
accordance with [the] COA Circular , the Shares could be sold at a price of at least Sixty Pesos (P60.00) per
share. Other supporting arguments for allowing certiorari are set forth in some detail in the basic petition.

Against the petitioners stance, public respondents inter alia submit that the sale of subject Shares
is exempt from the tedious public bidding requirement of COA. Obviously stressing the practical side of
the matter, public respondents assert that if they are to hew to the bidding requirement in the disposition
of SSSs Philippine Stock Exchange (PSE)-listed stocks, it would place the System at a disadvantage vis--
vis other stock market players who certainly enjoy greater flexibility in reacting to the vagaries of the
market and could sell their holdings at a moments notice when the price is right. Public respondents
hasten to add, however, that the bidding-exempt status of the Shares did not prevent the SSS from
prudently proceeding with the bidding as contemplated in the assailed resolutions as a measure to
validate the adequacy of the unit price BDO Capital offered therefor and to possibly obtain a higher price
than its definitive offer of P43.50 per share.45[20] Public respondents also advanced the legal argument,
also shared by their co-respondent BDO Capital, in its Comment,45[21] that the proposed sale is not
covered by COA Circular No. 89-296 since the Shares partake of the nature of merchandise or inventory
held for sale in the regular course of SSSs business.

Pending consideration of the petition, supervening events and corporate movements transpired
that radically altered the factual complexion of the case. Some of these undisputed events are detailed in
the petitioners separate Manifestation & Motion to Take Judicial Notice45[22] and their respective annexes.
To cite the relevant ones:

1. In January 2006, BDO made public its intent to merge with EPCIB. Under what BDO termed
as Merger of Equals, EPCIB shareholders would get 1.6 BDO shares for every EPCIB share.45[23]

2. In early January 2006, the GSIS publicly announced receiving from an undisclosed entity an
offer to buy its stake in EPCIB 12% of the banks outstanding capital stock at P92.00 per share.45[24]

3. On August 31, 2006, SM Investments Corporation, an affiliate of BDO and BDO Capital, in
consortium with Shoemart, Inc. et al., (collectively, the SM Group) commenced, through the facilities of
the PSE and pursuant to R.A. No. 879945[25], a mandatory tender offer (Tender Offer) covering the
purchase of the entire outstanding capital stock of EPCIB at P92.00 per share. Pursuant to the terms of
the Tender Offer, which was to start on August 31, 2006 and end on September 28, 2006 the Tender
Offer Period all shares validly tendered under it by EPCIB shareholders of record shall be deemed
accepted for payment on closing date subject to certain conditions.45[26] Among those who accepted the
Tender Offer of the SM Group was EBC Investments, Inc., a subsidiary of EPCIB.

4. A day or two later, BDO filed a Tender Offer Report with the Securities and Exchange
Commission (SEC) and the PSE.45[27]

Owing to the foregoing developments, the Court, on October 3, 2006, issued a Resolution
requiring the parties to CONFIRM news reports that price of subject shares has been agreed upon at P92; and if
so, to MANIFEST whether this case has become moot.

First to comply with the above were public respondents SSS et al., by filing their Compliance and
Manifestation,45[28] therein essentially stating that the case is now moot in view of the SM-BDO Groups
Tender Offer at P92.00 @ unit share, for the subject EPCIB common shares, inclusive of the SSS shares
subject of the petition. They also stated the observation that the petitioners Manifestation and Motion to
Take Judicial Notice,45[29] never questioned the Tender Offer, thus confirming the dispensability of a
competitive public bidding in the disposition of subject Shares.

For perspective, a tender offer is a publicly announced intention by a person acting alone or in
concert with other persons to acquire equity securities of a public company, i.e., one listed on an
exchange, among others.45[30] The term is also defined as an offer by the acquiring person to stockholders of
a public company for them to tender their shares therein on the terms specified in the offer45[31] Tender offer is
in place to protect the interests of minority stockholders of a target company against any scheme that
dilutes the share value of their investments. It affords such minority shareholders the opportunity to
withdraw or exit from the company under reasonable terms, a chance to sell their shares at the same price
as those of the majority stockholders.45[32]

Next to comply with the same Resolution of the Court was respondent BDO Capital via its
Compliance,45[33] thereunder practically reiterating public respondents position on the question of
mootness and the need, under the premises, to go into public bidding. It added the arguments that the
BDO-SM Groups Tender Offer, involving as it did a general offer to buy all EPCIB common shares at the
stated price and terms, were inconsistent with the idea of public bidding; and that the Tender Offer rules
actually provide for an opportunity for competing groups to top the Tender Offer price.

On the other hand, petitioners, in their Manifestation,45[34] concede the huge gap between the
unit price stated in the Tender Offer and the floor price of P43.50 per share stated in the Invitation to Bid.
It is their posture, however, that unless SSS withdraws the sale of the subject shares by way of the Swiss
Challenge, the offer price of P92 per share cannot render the case moot and academic.

Meanwhile, the positive response to the Tender Offer enabled the SM-BDO Group to acquire
controlling interests over EPCIB and paved the way for a BDO-EPCIB merger. The merger was
formalized by subsequent submission of the necessary merger documents45[35] to the SEC.
 On May 25, 2007, the SEC issued a Certificate of Filing of the Article and Plan of Merger45[36]
approving the merger between BDO and EPCIB, relevant portions of which are reproduced hereunder:

THIS IS TO CERTIFY that the Plan and Articles of Merger

executed on December 28, 2006 by and between:

BANCO DE ORO UNIVERSAL BANK,

Now BANCO DE ORO-EPCI, INC.
(Surviving Corporation)
and

EQUITABLE PCI BANK, INC.

(Absorbed Corporation)

approved by a majority of the Board of Directors on November 06, 2006 and by a vote
of the stockholders owning or representing at least two-thirds of the outstanding capital
stock of constituent corporations on December 27, 2006, signed by the Presidents,
certified by their respective Corporate Secretaries, whereby the entire assets of [EPCI]
Inc. will be transferred to and absorbed by [BDO] UNIVERSAL BANK now BANCO
DE ORO-EPCI, INC. was approved by this Office on this date but which approval shall
be effective on May 31, 2007 pursuant to the provisions of (Word in bracket added;
emphasis in the original)

In line with Section 80 of the Corporation Code and as explicitly set forth in Article 1.3 of the Plan
of Merger adverted to, among the effects of the BDO-EPCIB merger are the following:

a. BDO and EPCI shall become a single corporation, with BDO as the surviving
corporation. [EPCIB] shall cease to exist;

xxx xxx xxx

c. All the rights, privileges, immunities, franchises and powers of EPCI shall be
deemed transferred to and possessed by the merged Bank; and
 d. All the properties of EPCI, real or personal, tangible or intangible shall be
deemed transferred to the Merged Bank without further act or deed.

Per Article 2 of the Plan of Merger on the exchange of shares mechanism, all the issued and
outstanding common stock of [EPCIB] (EPCI shares) shall be converted into fully-paid and non assessable
common stock of BDO (BDO common shares) at the ratio of 1.80 BDO Common shares for each issued [EPCIB]
share (the Exchange Ratio). And under the exchange procedure, BDO shall issue BDO Common Shares to
EPCI stockholders corresponding to each EPCI Share held by them in accordance with the aforesaid Exchange
Ratio.

It appears that BDO, or BDO-EPCI, Inc. to be precise, has since issued BDO common shares to
respondent SSS corresponding to the number of its former EPCIB shareholdings under the ratio and
exchange procedure prescribed in the Plan of Merger. In net effect, SSS, once the owner of a block of
EPCIB shares, is now a large stockholder of BDO-EPCI, Inc.

On the postulate that the instant petition has now become moot and academic, BDO Capital
supplemented its earlier Compliance and Manifestation45[37] with a formal Motion to Dismiss.45[38]

By Resolution dated July 10, 2007, the Court required petitioners and respondent SSS to comment
on BDO Capitals motion to dismiss within ten (10) days from notice.

To date, petitioners have not submitted their compliance. On the other hand, SSS, by way of
comment, reiterated its position articulated in respondents Compliance and Motion45[39] that the SM-BDO
Group Tender Offer at the price therein stated had rendered this case moot and academic. And
respondent SSS confirmed the following: a) its status as BDO-EPCIB stockholder; b) the Tender Offer
made by the SM Group to EPCIB stockholders, including SSS, for their shares at P92.00 per share; and c)
SSS acceptance of the Tender Offer thus made.
 A case or issue is considered moot and academic when it ceases to present a justiciable
controversy by virtue of supervening events,45[40] so that an adjudication of the case or a declaration on
the issue would be of no practical value or use.45[41] In such instance, there is no actual substantial relief
which a petitioner would be entitled to, and which would be negated by the dismissal of the
petition.45[42] Courts generally decline jurisdiction over such case or dismiss it on the ground of
mootness -- save when, among others, a compelling constitutional issue raised requires the formulation of
controlling principles to guide the bench, the bar and the public; or when the case is capable of repetition
yet evading judicial review.45[43]

The case, with the view we take of it, has indeed become moot and academic for interrelated
reasons.

We start off with the core subject of this case. As may be noted, the Letter-Agreement,45[44] the
SPA,45[45] the SSC resolutions assailed in this recourse, and the Invitation to Bid sent out to implement
said resolutions, all have a common subject: the Shares the 187.84 Million EPCIB common shares. It
cannot be overemphasized, however, that the Shares, as a necessary consequence of the BDO-EPCIB
merger45[46] which saw EPCIB being absorbed by the surviving BDO, have been transferred to BDO and
converted into BDO common shares under the exchange ratio set forth in the BDO-EPCIB Plan of
Merger. As thus converted, the subject Shares are no longer equity security issuances of the now defunct
EPCIB, but those of BDO-EPCI, which, needless to stress, is a totally separate and distinct entity from
what used to be EPCIB. In net effect, therefore, the 187.84 Million EPCIB common shares are now lost or
inexistent. And in this regard, the Court takes judicial notice of the disappearance of EPCIB stocks from
the local bourse listing. Instead, BDO-EPCI Stocks are presently listed and being traded in the PSE.

Under the law on obligations and contracts, the obligation to give a determinate thing is
extinguished if the object is lost without the fault of the debtor.45[47] And per Art. 1192 (2) of the Civil
Code, a thing is considered lost when it perishes or disappears in such a way that it cannot be
recovered.45[48] In a very real sense, the interplay of the ensuing factors: a) the BDO-EPCIB merger; and
b) the cancellation of subject Shares and their replacement by totally new common shares of BDO, has
rendered the erstwhile 187.84 million EPCIB shares of SSS unrecoverable in the contemplation of the
adverted Civil Code provision.

With the above consideration, respondent SSS or SSC cannot, under any circumstance, cause the
implementation of the assailed resolutions, let alone proceed with the planned disposition of the Shares,
be it via the traditional competitive bidding or the challenged public bidding with a Swiss Challenge
feature.

At any rate, the moot-and-academic angle would still hold sway even if it were to be assumed
hypothetically that the subject Shares are still existing. This is so, for the supervening BDO-EPCIB merger
has so effected changes in the circumstances of SSS and BDO/BDO Capital as to render the fulfillment of
any of the obligations that each may have agreed to undertake under either the Letter-Agreement, the
SPA or the Swiss Challenge package legally impossible. When the service has become so difficult as to be
manifestly beyond the contemplation of the parties,45[49] total or partial release from a prestation and
from the counter-prestation is allowed.

Under the theory of rebus sic stantibus,45[50] the parties stipulate in the light of certain prevailing
conditions, and once these conditions cease to exist, the contract also ceases to exist.45[51] Upon the facts
obtaining in this case, it is abundantly clear that the conditions in which SSS and BDO Capital and/or
BDO executed the Letter-Agreement upon which the pricing component at P43.50 per share of the
Invitation to Bid was predicated, have ceased to exist. Accordingly, the implementation of the Letter-
Agreement or of the challenged Res. Nos. 428 and 485 cannot plausibly push through, even if the central
figures in this case are so minded.

Lest it be overlooked, BDO-EPCI, in a manner of speaking, stands now as the issuer45[52] of

what were once the subject Shares. Consequently, should SSS opt to exit from BDO and BDO Capital, or
BDO Capital, in turn, opt to pursue SSSs shareholdings in EPCIB, as thus converted into BDO shares, the
sale-purchase ought to be via an Issuer Tender Offer -- a phrase which means a publicly announced
It bears stressing that when the vendee consigned part of the purchase price with the Court and
secured title over the property in her name, the heirs of Concepcion, including the petitioners,
had not yet sent any notarial demand for the rescission of the deed of absolute sale to the vendee,
or filed any action for the rescission of the said deed with the appropriate court.

Although the vendee consigned with the Court only the amount of P11,983.00, P2,017.00 short
of the purchase price of P14,000.00, it cannot be claimed that Concepcion was an unpaid seller
because under the deed of sale, she was still obligated to transfer the property in the name of the
vendee, which she failed to do so. According to Article 1167 of the New Civil Code:

Art. 1167. If a person obliged to do something fails to do it, the same shall be executed at his
cost.

This same rule shall be observed if he does it in contravention of the tenor of the obligation.
Furthermore, it may be decreed that what has been poorly done be undone. (1098)

The vendee (Iluminada) had to obtain the owners duplicate of TCT No. 7450 and thereafter
secure its transfer in her name. Pursuant to Article 1167, the expenses incurred by the vendee
should be charged against the amount of P2,617.00 due to the heirs of Concepcion Gil as the
vendors successors-in-interest.

intention by an issuer to acquire any of its own class of equity securities or by an affiliate of such issuer to
acquire such securities.45[53] In that eventuality, BDO or BDO Capital cannot possibly exercise the right
to match under the Swiss Challenge procedure, a tender offer being wholly inconsistent with public
bidding. The offeror or buyer in an issue tender offer transaction proposes to buy or acquire, at the stated
price and given terms, its own shares of stocks held by its own stockholder who in turn simply have to
accept the tender to effect the sale. No bidding is involved in the process.

While the Court ends up dismissing this petition because the facts and legal situation call for this
kind of disposition, petitioners have to be commended for their efforts in initiating this proceeding. For,
in the final analysis, it was their petition which initially blocked implementation of the assailed SSC
resolutions, and, in the process, enabled the SSS and necessarily their members to realize very much more
for their investments.

WHEREFORE, the instant petition is DISMISSED.

In sum, the decision of the CA affirming the decision of the RTC dismissing the complaint of the
petitioners is affirmed.

IN LIGHT OF ALL THE FOREGOING, the petition for review is DENIED for lack of merit.

SO ORDERED.

Bellosillo, (Chairman), Quisumbing, and Tinga, JJ., concur.

Austria-Martinez, J., no part, concurred in CA decision.