EN BANC

[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.

Meer, Meer & Meer for plaintiff-appellee.

J. Villareal, Navarra & Associates for defendants-appellants.
P.P. Gallardo & Associates for intervenor-appellee.

SYNOPSIS

The Carvantes spouses, Francisco and Rosario, owned three lots adjacent to the property
of Villonco Realty Co. In the negotiations for the sale of said lots to Villonco, by
Bormaheco, Inc. of which Francisco was the President, the offer to sell, dated February 12,
1964, signed by Francisco as President of Bormaheco, Inc., stated that "a deposit of
P100,000 must be placed as earnest money"; that the sale "is to be consummated only
after I shall have also consummated my purchase of another property located at Sta. Ana,
Manila" and that "final negotiations on both properties can be definitely known after 45
days." The Sta. Ana lot mentioned in the offer to sell was awarded by NASSCO to
Bormaheco at a bidding held on Jan. 17, 1964, and the NASSCO Board resolution
authorizing the general manager to sign the contract was approved on March 24, 1964 by
the Acting Economic Coordinator.
Meanwhile, on March 4, 1964, Cervantes accepted Villonco's counter-offer, "subject to a
favorable consummation of a property in Sta. Ana we are negotiating." On the same day,
Cervantes received the P100,000 earnest money. Twenty-six days later, Cervantes
unexpectedly returned the earnest money with interest, claiming 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 refused to accept Bormaheco's checks, and sued for specific
performance.
The lower court ordered the Cervantes spouses to execute in favor of Bormaheco, Inc. a
deed conveyance for the three lots in question and directed Bormaheco, Inc. to convey the
same lots to Villonco, and to pay the latter damages and attorney's fees.
On appeal, the Cervantes spouses and Bormaheco, Inc., contended that (a) no contract of
sale was perfected because Cervantes made a qualified acceptance of the counter-offer
and the condition that Bormaheco would acquire the Sta. Ana property within 45 days was
not fulfilled; (2) that Bormaheco, Inc., cannot be compelled to sell the land which belongs
to the Cervantes spouses; and (3) that Francisco did not bind the conjugal partnership and
his wife when he entered into negotiations with Villonco.
The Supreme Court affirmed the judgment, except with respect to damages which were
not specifically pleaded and proven and were" clearly conjectural and speculative."

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 SYLLABUS

1. SPECIAL CONTRACTS; SALE, DEFINED. — "By the contract of sale, one of the
contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent. A
contract of sale may be absolute or conditional" (Art. 1458, Civil Code).
2. ID.; ID.; PERFECTION. — "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" (Art. 1475, Civil Code). Furthermore,
"Contracts are perfected by mere consent and 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" (Art. 1315, Civil; Code).
3. ID.; ID.; ID.; CONSENT; ELEMENTS THEREOF. — "Consent is manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and acceptance absolute. A qualified
acceptance constitutes a counter-offer" (Art. 1319, Civil Code). "An acceptance may be
express or implied" (Art. 1320, Civil Code).
4. ID.; ID.; ID.; ID.; CASE AT BAR. — Vendor's acceptance of the vendee's offer to
purchase the property indubitably proves that there was a meeting of the minds upon the
subject and consideration of the sale. From that moment, the sale was perfected, and the
vendor's acceptance of the part payment of one hundred thousand pesos shows that the
sale was conditionally consummated or partly executed subject to the purchase by the
vendor of another property. The nonconsummation of that purchase would be a negative
resolutory condition.
5. ID.; ID.; ID.; CIRCUMSTANCES SHOWING PERFECTION OF CONTRACT. — The
contention that the sale was not perfected because the seller allegedly qualified his
acceptance of the buyer's offer, and therefore his acceptance amounted to a counter-offer,
which the buyer should accept, is without merit in the absence of evidence as to what
changes were made by the seller in the buyer's offer and in the absence of evidence that
the buyer did not assent to the supposed changes and that assent was never made known
to the seller.
6. ID.; ID.; ID.; EFFECT OF ACCEPTANCE OF EARNEST MONEY. — Where it is shown
that the buyer paid and the seller accepted the agreed sum of earnest money or down
payment, it may be assumed that the alleged changes or qualifications made by the seller
on the buyer's offer was approved by the latter and that such approval was duly
communicated to the seller. The payment by the buyer and acceptance by the seller of the
earnest money implies that the seller was aware that the buyer had accepted the
modifications which the former had made in the latter's offer. 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.
7. ID.; ID.; ID.; CHANGES WHICH MERELY CLARIFY WHAT HAVE BEEN PREVIOUSLY
AGREED UPON DOES NOT PREVENT PERFECTION OF CONTRACT. —Where the changes or
qualifications made by the seller on the buyer's offer are not material or are mere
clarifications of what the parties had previously agreed upon, such changes would not
prevent a perfection of the contract. Thus, the alleged insertion of the letters "PA" (per
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 annum) after the word "interest" could not be categorized as a major alternation of the
offer as to prevent a meeting of the minds of the parties. It is understood that the parties
contemplated a rate of ten percent per annum since ten percent a month or semi-annually
would be usurious.
8. ID.; ID.; ID.; ID.; CHANGE WHICH DOES NOT ESSENTIALLY ALTER TERMS IN OFFER
TO PURCHASE DOES NOT AMOUNT TO REJECTION OF OFFER. — It is true that an
acceptance may contain a request for certain changes in the terms of the offer and yet be
a binding acceptance. So long as it is clear that the meaning of the acceptance is positively
and unequivocally to accept the offer, whether such request is granted or not, a contract is
formed. Thus, the vendor's change in a phrase of the offer to purchase, which change does
not essentially change the terms of the offer, does not amount to a rejection of the offer
and the tender of a counter-offer.
9. ID.; ID.; ID.; CASE AT BAR. — In an offer to sell a land it was stated that the sale
would be consummated after he (the vendor) had consummated the purchase of another
property. In another paragraph thereof, it was stated "that the final negotiations on both
properties can be definitely known after 45 days." HELD: The term 45 days was not a part
of the condition that the other property should be acquired. The statement does not and
cannot mean that the vendor should acquire the other property within the forty-five day
period. It is simply a surmise that after forty-five days it would be known whether the
vendor would be able to acquire the other property and whether it would be able to sell the
property subject to sale.
10. ID.; ID.; ID.; VALIDITY OF SALE DESPITE MISREPRESENTATION. — Where the seller,
in entering into a contract of sale in his capacity as President of a corporation, has
concealed the fact that the lots subject of sale were actually registered in his and his wife's
name as owners in fee simple, making the buyer believe that as President of the
corporation he could dispose of said lots, he cannot subsequently argue that he did not
bind the conjugal partnership and his wife nor that the corporation can not be required to
sell the said lots because they are conjugal properties.
11. DAMAGES; AWARD; PROPRIETY OF. — Award of damages is not proper where the
same was not specially pleaded or proven and were "clearly conjectural and speculative."
12. ATTORNEY'S FEES; AWARD; PROPRIETY OF. — The award of attorney's fees to the
plaintiff buyer is proper in an action for specific performance of a contract of sale where
the seller is found to have acted in gross and evident bad faith in refusing to satisfy the
valid and just demand of the buyer, thereby compelling the latter to incur expenses to
protect its interest; and where, furthermore, said award is found to be just and equitable
under the provisions of Art. 2208 of the Civil Code.
BARREDO, J., concurring:
1. SPECIAL CONTRACTS; SALE PERFECTION OF; INSTANT CASE. — The signing by the
vendor of his conformity to the vendee's counter-offer and his acceptance of P100,000.00
earnest money resulted in a completely perfected contract of sale between the parties in
accordance with Article 1482 of the Civil Code, needing only the execution of the
corresponding deed of sale for its consummation and subject only to the negative
resolutory condition that the sale shall be cancelled only if the vendor's deal with another
property is not consumed.
2. ID.; ID.; DISPOSITION BY HUSBAND PROHIBITED BY CIVIL CODE. — The disposition
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 by a husband prohibited by the Civil Code, unless consented by the wife, refers to a
transaction outrightly prejudicial to the partnership and cannot comprehend a sale made
precisely for its benefit and causing no loss thereto beyond the ordinary risks of
misjudgment of a manager acting in good faith.

DECISION

AQUINO , J : p

This action was instituted by Villonco Realty Company against Bormaheco, Inc. and the
spouses Francisco N. Cervantes and Rosario N. Cervantes for the specific performance of
a supposed contract for the sale of land and the improvements thereon for one million
four hundred thousand pesos. Edith Perez de Tagle, as agent, intervened in order to
recover her commission. The lower court enforced the sale. Bormaheco, Inc. and the
Cervantes spouses, as supposed vendors, appealed.
This Court took cognizance of the appeal because the amount involved is more than
P200,000 and the appeal was perfected before Republic Act No. 5440 took effect on
September 9, 1968. The facts are as follows:
Francisco N. Cervantes and his wife, Rosario P. Navarra-Cervantes, are the owners of Lots
3, 15 and 16 located at 245 Buendia Avenue, Makati, Rizal with a total area of three
thousand five hundred square meters (TCT Nos. 43530, 43531 and 43532, Exh. A, A-1 and
A-2). The lots were mortgaged to the Development Bank of the Philippines (DBP) on April
21, 1959 as security for a loan of P441,000. The mortgage debt was fully paid on July 10,
1969.
Cervantes is the president of Bormaheco, Inc., a dealer and importer of industrial and
agricultural machinery. The entire three lots are occupied by the building, machinery and
equipment of Bormaheco, Inc. and are adjacent to the property of Villonco Realty Company
situated at 219 Buendia Avenue.
In the early part of February, 1964 there were negotiations for the sale of the said lots and
the improvements thereon between 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".
In the course of the negotiations, the brothers Romeo Villonco and Teofilo Villonco
conferred with Cervantes in his office to discuss the price and terms of the sale. Later,
Cervantes "went to see Villonco for the same reason until some agreement" was arrived at.
On a subsequent occasion, Cervantes, accompanied by Edith Perez de Tagle, discussed
again the terms of the sale with Villonco.
During the negotiations, 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.
Bormaheco, Inc., through Cervantes, made a written offer dated February 12, 1964, to
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 Romeo Villonco for the sale of the property. The offer reads (Exh. B):
"BORMAHECO, INC.
February 12, 1964

"Mr. Romeo Villonco

Villonco Building
Buendia Avenue
Makati, Rizal

"Dear Mr. Villonco:

"This is with reference to our telephone conversation this noon on the
matter of the sale of our property located at Buendia Avenue, with a total
area of 3,500 sq. m., under the following conditions:
"(1) That we are offering to sell to you the above property at the
price of P400.00 per square meter;
"(2) That a deposit of P100,000.00 must be placed as earnest
money on the purchase of the above property which will become part
payment of the property in the event that the sale is consummated:
"(3) That this sale is to be consummated only after I shall have
also consummated my purchase of another property located at Sta. Ana,
Manila;
"(4) T h a t if my negotiations with said property will not be
consummated by reason beyond my control, I will return to you your deposit
of P100,000 and the state of my property to you will not also be
consummated; and
"(5) That nal negotiations on both properties can be de nitely
known after 45 days.
"If the above terms is (are) acceptable to your Board, please issue out
the said earnest money in favor of Bormaheco, Inc., and deliver the same
thru the bearer, Miss Edith Perez de Tagle.
Very truly yours,
SGD. FRANCISCO N. CERVANTES
President"

The property mentioned in Bormaheco's letter was the land of the National Shipyards &
Steel Corporation (Nassco), with an area of twenty thousand square meters, located at
Punta, Sta. Ana, Manila. At the bidding held on January 17, 1964 that land was awarded to
Bormaheco, Inc., the highest bidder, for the price of P552,000. The Nassco Board of
Directors in its resolution of February 18, 1964 authorized the General Manager to sign the
necessary contract (Exh. H).
On February 28, 1964, the Nassco Acting General Manager wrote a letter to the Economic
Coordinator, requesting approval of that resolution. The Acting Economic Coordinator
approved the resolution on March 24, 1964 (Exh. I).
In the meanwhile, Bormaheco, Inc. and Villonco Realty Company continued their
negotiations for the sale of the Buendia Avenue property. Cervantes and Teofilo Villonco
had a final conference on February 27, 1964. As a result of that conference Villonco Realty
Company, through Teofilo Villonco, in its letter of March 4, 1964 made a revised counter-
offer (Romeo Villonco's first counter-offer was dated February 24, 1964, Exh. C) for the
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 purchase of the property. The counter-offer was accepted by Cervantes as shown in
Exhibit D, which is quoted below:
"VILLONCO REALTY COMPANY
V. R. C. Building
219 Buendia Avenue, Makati,
Rizal, Philippines

March 4, 1964
Mr. Francisco Cervantes Bormaheco, Inc.
245 Buendia Avenue
Makati, Rizal.
Dear Mr. Cervantes:
In reference to the letter of Miss E. Perez de Tagle dated February 12th and 26,
1964 in respect to the terms and conditions on the purchase of your property
located at Buendia Ave., Makati, Rizal, with a total area of 3,500 sq. meters., we
hereby revise our offer, as follows:
1. That the price of the property shall be P400.00 per sq. m., including the
improvements thereon;
2. That a deposit of P100,000.00 shall be given to you as earnest money
which will become as part payment in the event the sale is consummated;
3. This sale shall be cancelled, only if your deal with another property in Sta.
Ana shall not be consummated and in such case, the P100,000.00 earnest money
will be returned to us with a 10% interest p.a. However, if our deal with you is
finalized, said P100,000.00 will become as part payment for the purchase of your
property without interest:
4. The manner of payment shall be as follows:

a. P100,000.00 earnest money and

650,000.00 as part of the down payment, or
————
P750,000.00 as total down payment
b. The balance is payable as follows:
P100,000.00 after 3 months
125,000.00 —do—
212,500.00 —do—
212,500.00 —do—
————
P650,000.00 Total
As regards to the other conditions which we have discussed during our last
conference on February 27, 1964, the same shall be finalized upon preparation of
the contract to sell. **

If the above terms and conditions are acceptable to you, kindly sign your
conformity hereunder. Enclosed is our check for ONE HUNDRED THOUSAND
(P100,000.00) PESOS, MBTC Check No. 448314, as earnest money.
Very truly yours,
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 VILLONCO REALTY COMPANY
(Sgd.) TEOFILO VILLONCO
CONFORME:

BORMAHECO, INC.
(Sgd.) FRANCISCO CERVANTES
That this sale shall be subject to favorable consummation of a property in Sta.
Ana we are negotiating.
(Sgd.) FRANCISCO CERVANTES"

The check for P100,000 (Exh. E) mentioned in the foregoing letter-contract was delivered
by Edith Perez de Tagle to Bormaheco, Inc. on March 4, 1964 and was received by
Cervantes. In the voucher-receipt evidencing the delivery the broker indicated in her
handwriting that the earnest money was "subject to the terms and conditions embodied in
Bormaheco's letter" of February 12 and Villonco Realty Company's letter of March 4,1964
(Exh. E-1; 14 tsn).
Then, unexpectedly, in a letter dated March 30, 1964, or twenty-six days after the signing of
the contract of sale, Exhibit D, Cervantes returned the earnest money, with interest
amounting to P694.24 (at ten percent per annum). Cervantes cited as an excuse the
circumstance that "despite the lapse of 45 days from February 12, 1964 there is no
certainty yet" for the acquisition of the Punta property (Exh. F; F-1 and F-2). Villonco Realty
Company refused to accept the letter and the checks of Bormaheco, Inc. Cervantes sent
them by registered mail. When he rescinded the contract, he was already aware that the
Punta lot had been awarded to Bormaheco, Inc. (25-26 tsn).
Edith Perez de Tagle, the broker, in a letter to Cervantes dated March 31, 1964 articulated
her shock and surprise at Bormaheco's turnabout. She reviewed the history of the deal and
explained why Romeo Villonco could not agree to the rescission of the sale (Exh. G). ***
Cervantes in his letter of April 6, 1964, a reply to Miss Tagle's letter, alleged that the forty-
five day period had already expired and the sale to Bormaheco, Inc. of the Punta property
had not been consummated. Cervantes said that his letter was a "manifestation that we
are no longer interested to sell" the Buendia Avenue property to Villonco Realty Company
(Annex I of Stipulation of Facts). The latter was furnished with a copy of that letter.
In a letter dated April 7, 1964 Villonco Realty Company returned the two checks to
Bormaheco, Inc., stating that the condition for the cancellation of the contract had not
arisen and at the same time announcing that an action for breach of contract would be
filed against Bormaheco, Inc. (Annex G of Stipulation of Facts).
On that same date, April 7, 1964 Villonco Realty Company filed the complaint (dated April
6) for specific performance against Bormaheco, Inc. Also on that same date, April 7, at
eight-forty-five in the morning, a notice of lis pendens was annotated on the titles of the
said lots.
Bormaheco, Inc. in its answers dated May 5 and 25, 1964 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" (sic) and (b) that Bormaheco, Inc. "acquires the Sta.
Ana property".
On June 2, 1964 or during the pendency of this case, the Nassco Acting General Manager
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 wrote to Bormaheco, Inc., advising it that the Board of Directors and the Economic
Coordinator had approved the sale of the Punta lot to Bormaheco, Inc. and requesting the
latter to send its duly authorized representative to the Nassco for the signing of the deed
of sale (Exh. 1).

The deed of sale for the Punta land was executed on June 26, 1964. Bormaheco, Inc. was
represented by Cervantes (Exh. J. See Bormaheco, Inc. vs. Abanes, L-28087, July 31, 1973,
52 SCRA 73).
In view of the disclosure in Bormaheco's amended answer that the three lots were
registered in the names of the Cervantes spouses and not in the name of Bormaheco, Inc.,
Villonco Realty Company on July 21, 1964 filed an amended complaint impleading the said
spouses as defendants. Bormaheco, Inc. and the Cervantes spouses filed separate
answers.
As of January 15, 1965 Villonco Realty Company had paid to the Manufacturers' Bank &
Trust Company the sum of P8,712.25 as interests on the overdraft line of P100,000 and
the sum of P27.39 as interests daily on the same loan since January 16, 1965. (That
overdraft line was later settled by Villonco Realty Company on a date not mentioned in its
manifestation of February 19, 1975).
Villonco Realty Company had obligated itself to pay the sum of P20,000 as attorney's fees
to its lawyers. It claimed that it was damaged in the sum of P10,000 a month from March
24, 1964 when the award of the Punta lot to Bormaheco, Inc. was approved. On the other
hand, Bormaheco, Inc. claimed that it had sustained damages of P200,000 annually due to
the notice of lis pendens which had prevented it from constructing a multistory building on
the three lots. (Pars. 18 and 19, Stipulation of Facts).
Miss Tagle testified that for her services Bormaheco, Inc., through Cervantes, obligated
itself to pay her a three percent commission on the price of P1,400,000 or the amount of
forty-two thousand pesos (14 tsn).
After trial, the lower court rendered a decision ordering the Cervantes spouses to execute
in favor of Bormaheco, Inc. a deed of conveyance for the three 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 (Civil Case No.
8109).
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 contained in Exhibit D, which acceptance amounted to a
counter-offer, and because the condition that Bormaheco, Inc. would acquire the Punta
land within the forty-five-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.
We hold that the appeal, except as to the issue of damages, is devoid of merit.

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 "By the contract of sale one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determining thing, and the other to pay therefor a price
certain in money or its equivalent. A contract of sale may be absolute or conditional" (Art.
1458, Civil Code).
"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" (Art. 1475, Ibid.).
"Contracts are perfected by mere consent, and 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" (Art. 1315, Civil Code).
"Consent is manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a counter-offer" (Art. 1319, Civil
Code). "An acceptance may be express or implied" (Art. 1320, Civil Code).
Bormaheco's acceptance of Villonco Realty Company's offer to purchase the Buendia
Avenue property, as shown in Teofilo Villonco's letter dated March 4, 1964 (Exh. D),
indubitably 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. (Compare with
McCullough vs. Aenlle & Co., 3 Phil. 285; Goyena vs. Tambunting, 1 Phil. 490). Not only that.
Bormaheco's acceptance of the part payment of one hundred thousand pesos shows that
the sale was conditionally consummated or partly executed subject to the purchase by
Bormaheco, Inc. of the Punta property. The non consummation of that purchase would be
a negative resolutory condition (Taylor vs. Uy Tieng Piao, 43 Phil. 873).
On February 18, 1964 Bormaheco's bid for the Punta property as already accepted by the
Nassco which had authorized its General Manager to sign the corresponding deed of sale.
What was necessary only was the approval of the sale by the Economic Coordinator and a
request for that approval was already pending in the office of that functionary on March 4,
1964.
Bormaheco, Inc. and the Cervantes spouses contend that the sale was not perfected
because Cervantes allegedly qualified his acceptance of Villonco's revised offer and,
therefore, his acceptance amounted to a counter-offer which Villonco Realty Company
should accept but no such acceptance was ever transmitted to Bormaheco, Inc. which,
therefore, could withdraw its offer.
That contention is not well-taken. It should be stressed that there is no evidence as to
what changes were made by Cervantes in Villonco's revised offer. And there is no evidence
that Villonco Realty Company did not assent to the supposed changes and that such
assent was never made known to Cervantes.
What the record reveals is that the broker, Miss Tagle, acted as intermediary between the
parties. It is safe to assume that the alleged changes or qualifications made by Cervantes
were approved by Villonco Realty Company and that such approval was duly
communicated to Cervantes or Bormaheco, Inc. by the broker as shown by the fact that
Villonco Realty Company paid, and Bormaheco, Inc. accepted, the sum of P100,000 as
earnest money or down payment. That crucial fact implies that Cervantes was aware that
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 Villonco Realty Company had accepted the modifications which he had made in Villonco's
counter-offer. Had Villonco Realty Company not asserted to those insertions and
annotations, then it would have stopped payment on its check for P100,000. The fact that
Villonco Realty Company allowed its check to be cashed by Bormaheco, Inc. signifies that
the company was in conformity with the changes made by Cervantes and that Bormaheco,
Inc. was aware of that conformity. Had those insertions not been binding, then Bormaheco,
Inc. would not have paid interest at the rate of ten percent per annum on the earnest
money of P100,000.
The truth is that the alleged changes or qualifications in the revised counter-offer (Exh. D)
are not material or are mere clarifications of what the parties had previously agreed upon.
Thus, Cervantes' alleged insertion in his handwriting of the figure and the words "12th and"
in Villonco's counter-offer is the same as the statement found in the voucher-receipt for
the earnest money, which reads: "subject to the terms and conditions embodied in
Bormaheco's letter of Feb. 12, 1964 and your letter of March 4, 1964" (Exh. E-1).
Cervantes allegedly crossed out the word "Nassco" in paragraph 3 of Villonco's revised
counter-offer and substituted for it the word "another" so that the original phrase
"Nassco's property in Sta. Ana", was made to read as "another property in Sta. Ana". That
change is trivial. What Cervantes did was merely to adhere to the wording of paragraph 3
of Bormaheco's original offer (Exh. B) which mentions "another property located at Sta.
Ana" His obvious purpose was to avoid jeopardizing his negotiation with the Nassco for
the purchase of its Sta. Ana property by unduly publicizing it.
It is noteworthy that Cervantes, in his letter to the broker dated April 6, 1964 (Annex I) or
after the Nassco property had been awarded to Bormaheco, Inc., alluded to the "Nassco
property". At that time, there was no more need of concealing from the public that
Bormaheco, Inc. was interested in the Nassco property.
Similarly, Cervantes' alleged insertion of the letters "PA" (per annum) after the word
"interest" in that same paragraph 3 of the revised counter-offer (Exh. D) could not be
categorized as a major alteration of that counter-offer that prevented a meeting of the
minds of the parties. It was understood that the parties had contemplated a rate of ten
percent per annum since ten percent a month or semi-annually would be usurious.
Appellants Bormaheco, Inc. and Cervantes further contend that Cervantes, in clarifying in
the voucher for the earnest money of P100,000 that Bormaheco's acceptance thereof was
"subject to the terms and conditions embodied in Bormaheco's letter of February 12, 1964
and your (Villonco's) letter of March 4, 1964" made Bormaheco's acceptance "qualified
and conditional".
That contention is not correct. There is no incompatibility between Bormaheco's offer of
February 12, 1964 (Exh. B) and Villonco's counter-offer of March 4, 1964 (Exh. D). The
revised counter-offer merely amplified Bormaheco's original offer.
The controlling fact is that 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. "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" (Art. 1482, Civil Code).
"It is true that an acceptance may contain a request for certain changes in the terms of the
offer and yet be a binding acceptance. 'So long as it is clear that the meaning of the
acceptance is positively and unequivocally to accept the offer, whether such request is
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 granted or not, a contract is formed.'" (Stuart vs. Franklin Life Ins. Co., 165 Fed. 2nd 965,
citing Sec. 79, Williston on Contracts).

Thus, it was held that the vendor's change in a phrase of the offer to purchase, which
change does not essentially change the terms of the offer, does not amount to a rejection
of the offer, and the tender of a counter-offer (Stuart vs. Franklin Life Ins. Co., supra).
The instant case is not governed by the rulings laid down in Beaumont vs. Prieto, 41 Phil.
670, 985, 63 L. Ed. 770, and Zayco vs. Serra, 44 Phil. 326. In those two cases the
acceptance radically altered the offer and, consequently, there was no meeting of the
minds of the parties.
Thus, in the Zayco case, Salvador Serra offered to sell to Lorenzo Zayco his sugar central
for P1,000,000 on condition that the price be paid in cash, or, if not paid in cash, the price
would be payable within three years provided security is given for the payment of the
balance within three years with interest. Zayco, instead of unconditionally accepting those
terms, countered that he was going to make a down payment of P100,000, that Serra's
mortgage obligation to the Philippine National Bank of P600,000 could be transferred to
Zayco's account and that he (plaintiff) would give a bond to secure the payment of the
balance of the price. It was held that the acceptance was conditional or was a counter-
offer which had to be accepted by Serra. There was no such acceptance. Serra revoked his
offer. Hence, there was no perfected contract.
In the Beaumont case, Benito Valdes offered to sell to W Borck the Nagtahan Hacienda
owned by Benito Legarda, who had empowered Valdes to sell it. Borck was given three
months from December 4, 1911 to buy the hacienda for P307,000. On January 17, 1912
Borck wrote to Valdes, offering to purchase the hacienda for P307,000 payable on May 1,
1912. No reply was made to that letter. Borck wrote other letters modifying his proposal.
Legarda refused to convey the property.
It was held that Borck's January 17th letter plainly departed from the terms of the offer as
to the time of payment and was a counter-offer which amounted to a rejection of Valdes'
original offer. A subsequent unconditional acceptance could not revive that offer.
The instant case is different from Laudico and Harden vs. Arias Rodriguez, 43 Phil. 270
where the written offer to sell was revoked by the offeror before the offeree's acceptance
came to the offeror's knowledge.
Appellants' next contention is that the contract was not perfected because the condition
that Bormaheco, Inc. would acquire the Nassco land within forty-five days from February
12, 1964 or on or before March 28, 1964 was not fulfilled. This contention is tied up with
the following letter of Bormaheco. Inc. (Exh. F):
"BORMAHECO. INC.

March 30, 1964

Villonco Realty Company
V.R.C. Building
219 Buendia Ave.,
Makati, Rizal

Gentlemen:
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 We are returning herewith your earnest money together with interest thereon at
10% per annum. Please be informed that despite the lapse of the 45 days from
February 12, 1964 there is no certainty yet for us to acquire a substitute property,
hence the return of the earnest money as agreed upon.
Very truly yours,
SGD. FRANCISCO N. CERVANTES
President

Encl.: P.N.B. Check No. 112994 J

P.N.B. Check No. 112996 J"

That contention is predicated on the erroneous assumption that Bormaheco, Inc. was to
acquire the Nassco land within forty-five days or on or before March 28, 1964.
The trial court ruled that the forty-five-day period was merely an estimate or a forecast of
how long it would take Bormaheco, Inc. to acquire the Nassco property and it was not "a
condition or a deadline set for the defendant corporation to decide whether or not to go
through with the sale of its Buendia property".
The record does not support the theory of Bormaheco, Inc. and the Cervantes spouses
that the forty-five-day period was the time within which (a) the Nassco property and two
Pasong Tamo lots should be acquired, (b) when Cervantes would secure his wife's consent
to the sale of the three lots and (c) when Bormaheco, Inc. had to decide what to do with
the DBP encumbrance.
Cervantes in paragraph 3 of his offer of February 12, 1964 stated that the sale of the
Buendia lots would be consummated after he had consummated the purchase of the
Nassco property. Then, in paragraph 5 of the same offer he stated "that final negotiations
on both properties can be definitely known offer forty-five days" (See Exh. B).
It is deducible from the tenor of those statements that the consummation of the sale of
the Buendia lots to Villonco Realty Company was conditioned on Bormaheco's acquisition
of the Nassco land. But it was not spelled out that such acquisition should be effected
within forty-five days from February 12, 1964. Had it been Cervantes' intention that the
forty-five days would be the period within which the Nassco land should be acquired by
Bormaheco, then he would have specified that period in paragraph 3 of his offer so that
paragraph would read in this wise: "That this sale is to be consummated only after I shall
have consummated my purchase of another property located at Sta. Ana, Manila within
forty-five days from the date hereof." He could have also specified that period in his
"conforme" to Villonco's counter-offer of March 4, 1964 (Exh. D) so that instead of merely
stating "that this sale shall be subject to favorable consummation of a property in Sta. Ana
we are negotiating" he could have said: "That this sale shall be subject to favorable
consummation within forty-five days from February 12, 1964 of a Property in Sta. Ana we
are negotiating".
No such specification was made. The term of forty-five days was not a part of the
condition that the Nassco property should he acquired. It is clear that the statement "that
final negotiations on both property can be definitely known after 45 days" does not and
cannot mean that Bormaheco, Inc. should acquire the Nassco property within forty-five
days from February 12, 1964 as pretended by Cervantes. It is simply a surmise that after
forty-five days (in fact when the forty-five day period should be computed is not clear) it
would be known whether Bormaheco, Inc. would be able to acquire the Nassco property
and whether it would be able to sell the Buendia property. That aforementioned paragraph
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 5 does not even specify how long after the forty-five days the outcome of the final
negotiations would be known.
It is interesting to note that in paragraph 6 of Bormaheco's answer to the amended
complaint, which answer was verified by Cervantes, it was alleged that Cervantes accepted
Villonco's revised counter-offer of March 4, 1964 subject to the condition that "the final
negotiations (acceptance) will have to be made by defendant within 45 days from said
acceptance" (31 Record on Appeal). If that were so, then the consummation of
Bormaheco's purchase of the Nassco property would be made within forty-five days from
March 4, 1964.
What makes Bormaheco's stand more confusing and untenable is that in its three answers
it invariably articulated the incoherent and vague affirmative defense that its acceptance of
Villonco's revised counter offer was conditioned on the circumstance "that final
acceptance or not shall be made after 45 days" whatever that means. That affirmative
defense is inconsistent with the other aforequoted incoherent statement in its third
answer that "the final negotiations (acceptance) will have to be made by defendant within
45 days from said acceptance" (31 Record on Appeal).
Thus, Bormaheco's three answers and paragraph 5 of his offer of February 12, 1964 do not
sustain at all its theory that the Nassco property should be acquired on or before March
28, 1964. Its rescission or revocation of its acceptance cannot be anchored on that theory
which, as articulated in its pleadings, is quite equivocal and unclear.
It should be underscored that the condition that Bormaheco, Inc. should acquire the
Nassco property was fulfilled. As admitted by the appellants, the Nassco property was
conveyed to Bormaheco, Inc. on June 26, 1964. As early as January 17, 1964 the property
was awarded to Bormaheco, Inc. as the highest bidder. On February 18, 1964 the Nassco
Board authorized its General Manager to sell the property to Bormaheco, Inc. (Exh. H). The
Economic Coordinator approved the award on March 24, 1964. It is reasonable to assume
that had Cervantes been more assiduous in following up the transaction, the Nassco
property could have been transferred to Bormaheco, Inc. on or before March 28, 1964, the
supposed last day of the forty-five-day period.
The appellants, in their fifth assignment of error, argue that Bormaheco, Inc. cannot be
required to sell the three lots in question because they are conjugal properties of the
Cervantes spouses. They aver that Cervantes in dealing with the Villonco brothers acted as
president of Bormaheco, Inc. and not in his individual capacity and, therefore, he did not
bind the conjugal partnership nor Mrs. Cervantes who was allegedly opposed to the sale.
Those arguments are not sustainable It should be remembered that Cervantes, in
rescinding the contract of sale and in returning the earnest money, cited as an excuse the
circumstance that there was no certainty in Bormaheco's acquisition of the Nassco
property (Exh. F and Annex I). He did not say that Mrs. Cervantes was opposed to the sale
of the three lots. He did not tell Villonco Realty Company that he could not bind the
conjugal partnership. In truth, he concealed the fact that the three lots were registered "in
the name of FRANCISCO CERVANTES, Filipino, of legal age, married to Rosario P. Navarra,
as owner thereof in fee simple". He certainly led the Villonco brothers to believe that as
president of Bormaheco, Inc. he could dispose of the said lots. He inveigled the Villoncos
into believing that he had untrammelled control of Bormaheco, Inc., that Bormaheco, Inc.
owned the lots and that he was invested with adequate authority to sell the same.
Thus, in Bormaheco's offer of February 12, 1964, Cervantes first identified the three lots as
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 "our property" which "we are offering to sell . . ." (Opening paragraph and par. 1 of Exh. B).
Whether the pronoun "we" refers to himself and his wife or to Bormaheco, Inc. is not clear.
Then, in paragraphs 3 and 4 of the offer, he used the first person and said: "I shall have
consummated my purchase" of the Nassco property; ". . . my negotiations with said
property" and "I will return to you your deposit". Those expressions conveyed the
impression and generated the belief that the Villoncos did not have to deal with Mrs.
Cervantes nor with any other official of Bormaheco, Inc.

The pleadings disclose that Bormaheco, Inc. and Cervantes deliberately and studiously
avoided making the allegation that Cervantes was not authorized by his wife to sell the
three lots or that he acted merely as president of Bormaheco, Inc. That defense was not
interposed so as not to place Cervantes in the ridiculous position of having acted under
false pretenses when he negotiated with the Villoncos for the sale of the three lots.
Villonco Realty Company, in paragraph 2 of its original complaint, alleged that "on February
12, 1964, after some prior negotiations, the defendant (Bormaheco, Inc.) made a formal
offer to sell to the plaintiff the property of the said defendant situated at the abovenamed
address along Buendia Avenue, Makati, Rizal, under the terms of the letter-offer, a copy of
which is hereto attached as Annex A hereof", now Exhibit B (2 Record on Appeal).
That paragraph 2 was not, repeat, was not denied by Bormaheco, Inc. in its answer dated
May 5, 1964. It did not traverse that paragraph 2. Hence, it was deemed admitted.
However, it filed an amended answer dated May 25, 1964 wherein it denied that it was the
owner of the three lots. It revealed that the three lots "belong and are registered in the
names of the spouses Francisco N. Cervantes and Rosario N. Cervantes."
The three answers of Bormaheco, Inc. contain the following affirmative defense:
"13. That defendant's insistence to finally decide on the proposed sale of the
land in question after 45 days had not only for its purpose the determination of its
acquisition of the said Sta. Ana (Nassco) property during the said period, but also
to negotiate with the actual and registered owner of the parcels of land covered
by T.C.T. Nos. 4353C, 43531 and 43532 in question which plaintiff was fully
aware that the same were not in the name of the defendant" (sic: Par. 18 of
Answer to Amended Complaint, 10, 18 and 34, Record or Appeal).

In that af rmative defense, Bormaheco, Inc. pretended that it needed forty- ve days
within which to acquire the Nassco property and "to negotiate" with the registered
owner of the three lots. The absurdity of that pretension stands out in bold relief when
it is borne in mind that the answers of Bormaheco Inc. were veri ed by Cervantes and
that the registered owner of the three lots is Cervantes himself. That af rmative
defense means that Cervantes as president of Bormaheco, Inc. needed forty- ve days
in order to "negotiate" with himself (Cervantes).
The incongruous stance of the Cervantes spouses is also patent in their answer to the
amended complaint. In that answer they disclaimed knowledge or information of certain
allegations which were well-known to Cervantes as president of Bormaheco, Inc. and
which were admitted in Bormaheco's three answers that were verified by Cervantes.
It is significant to note that Bormaheco, Inc. in its three answers, which were verified by
Cervantes, never pleaded as an affirmative defense that Mrs. Cervantes opposed the sale
of the three lots or that she did not authorize her husband to sell those lots. Likewise, it
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 should he noted that in their separate answer the Cervantes spouses never pleaded as a
defense that Mrs. Cervantes was opposed to the sale of three lots or that Cervantes could
not bind the conjugal partnership. The appellants were at first hesitant to make it appear
that Cervantes had committed the skullduggery of trying to sell property which he had no
authority to alienate.
It was only during the trial on May 17, 1965 that Cervantes declared on the witness stand
that his wife was opposed to the sale of the three lots, a defense which, as already stated,
was never interposed in the three answers of Bormaheco, Inc. and in the separate answer
of the Cervantes spouses. That same viewpoint was adopted in defendants' motion for
reconsideration dated November 20, 1965.
But that defense must have been an afterthought or was evolved post litem motam since it
was never disclosed in Cervantes' letter of rescission and in his letter to Miss Tagle (Exh. F
and Annex I). Moreover, Mrs. Cervantes did not testify at the trial to fortify that defense
which had already been waived for not having been pleaded (See sec. 2, Rule 9, Rules of
Court).
Taking into account the situation of Cervantes vis-a-vis Bormaheco, Inc. and his wife and
the fact that the three lots were entirely occupied by Bormaheco's building, machinery and
equipment and were mortgaged to the DBP as security for its obligation, and considering
that appellants' vague affirmative defenses do not include Mrs. Cervantes' alleged
opposition to the sale, the plea that Cervantes had no authority to sell the lots strains the
rivets of credibility (Cf. Papa and Delgado vs. Montenegro, 54 Phil. 331; Riobo vs.
Hontiveros, 21 Phil. 31).
"Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith" (Art. 1159, Civil Code). 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.
Parenthetically, it may be observed that much misunderstanding could have been avoided
had the broker and the buyer taken the trouble of making some research in the Registry of
Deeds and availing themselves of the services of a competent lawyer in drafting the
contract to sell.
Bormaheco, Inc. and the Cervantes spouses in their sixth assignment of error assail the
trial court's award to Villonco Realty Company of consequential damages amounting to
ten thousand pesos monthly from March 24, 1964 (when the Economic Coordinator
approved the award of the Nassco property to Bormaheco, Inc.) up to the consummation
of the sale. The award was based on paragraph 18 of the stipulation of facts wherein
Villonco Realty Company "submits that the delay in the consummation of the sale" has
caused it to suffer the aforementioned damages.
The appellants contend that statement in the stipulation of facts simply means that
Villonco Realty Company speculates that it has suffered damages but it does not mean
that the parties have agreed that Villonco Realty Company is entitled to those damages.
Appellants' contention is correct. As rightly observed by their counsel, the damages in
question were not specifically pleaded and proven and were "clearly conjectural and
speculative".
However, appellants' view in their seventh assignment of error that the trial court erred in
ordering Bormaheco, Inc. to pay Villonco Realty Company the sum of twenty thousand
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 pesos as attorney's fees is not tenable. Under the facts of the case, it is evident that
Bormaheco, Inc. acted in gross and evident bad faith in refusing to satisfy the valid and
just demand of Villonco Realty Company for specific performance. It compelled Villonco
Realty Company to insure expenses to protect its interest. Moreover, this is a case where it
is just and equitable that the plaintiff should recover attorney's fees (Art. 2208, Civil Code).
The appellants in their eighth assignment of error impugn the trial court's adjudication of
forty-two thousand pesos as three percent broker's commission to Miss Tagle. They
allege that there is no evidence that Bormaheco, Inc. engaged her services as a broker in
the projected sale of the three lots and the improvements thereon. That allegation is
refuted by paragraph 3 of the stipulation of facts and by the documentary evidence. It was
stipulated that Miss Tagle intervened in the negotiations for the sale of the three lots.
Cervantes in his original offer of February 12, 1964 apprised Villonco Realty Company that
the earnest money should be delivered to Miss Tagle, the bearer of the letter-offer. See
also Exhibit G and Annex I of the stipulation of facts.
We hold that the trial court did not err in adjudging that Bormaheco, Inc. should pay Miss
Tagle her three percent commission.
WHEREFORE, the trial court's decision is modified as follows:
1. Within ten (10) days from the date the defendants-appellants receive notice from
the clerk of the lower court that the records of this case have been received from this
Court, the spouses Francisco N. Cervantes and Rosario P. Navarra-Cervantes should
execute a deed conveying to Bormaheco, Inc. their three lots covered by Transfer
Certificate of Title Nos. 43530, 43531 and 43532 of the Registry of Deeds of Rizal.
2. Within five (5) days from the execution of such deed of conveyance, Bormaheco, Inc.
should execute in favor of Villonco Realty Company, V. R. C. Building, 219 Buendia Avenue,
Makati, Rizal a registerable deed of sale for the said three lots and all the improvements
thereon, free from all lien and encumbrances, at the price of four hundred pesos per square
meter, deducting from the total purchase price the sum of P100,000 previously paid by
Villonco Realty Company to Bormaheco, Inc.
3. Upon the execution of such deed of sale, Villonco Realty Company is obligated to
pay Bormaheco, Inc. the balance of the price in the sum of one million three hundred
thousand pesos (P1,300,000).
4. Bormaheco, Inc. is ordered (a) to pay Villonco Realty Company twenty thousand
pesos (P20,000) as attorney's fees and (b) to pay Edith Perez de Tagle the sum of forty-
two thousand pesos (P42,000) as commission. Costs against the defendants-appellants.
SO ORDERED.
Makalintal, C.J., Castro, Fernando, Makasiar, Antonio, Esguerra, Muñoz Palma, Concepcion,
Jr. and Martin, JJ., concur.
Teehankee, J., is on leave.

Separate Opinions
BARREDO , J., concurring:

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 The comprehensive and well prepared opinion of Mr. Justice Aquino deserves concurrence
and I do not hesitate to accord my assent to it. The only purpose of the following lines is to
express my personal view regarding two basic points which I feel should be thoroughly
emphasized.
1. I am not for giving the letter proposal of appellant Francisco Cervantes to Romeo
Villonco of February 12, 1964, Exhibit B, any decisive importance. To my mind, it has no
more legal significance than what is appears to be — a mere unaccepted proposal.
Accordingly, to my mind, paragraph (5) thereof to the effect that "final negotiations on
both properties can be definitely known after 45 days" has no relevance in the disposition
of this case, there being nothing in the record to show that the same was accepted by
appellee.

What to me is the actual contract between appellee and appellant Francisco Cervantes is
the counter-offer signed by Teofilo Villonco and addressed to the latter of March 4, 1964,
Exhibit D, which does not even make any reference to the abovementioned proposal of
Cervantes of February 12, 1964, even as it mentions specifically the letters of the agent,
Miss E. Perez de Tagle, of February 12 and 26, 1964. The last paragraph of said Exhibit D
reads thus: "If the above terms and conditions are acceptable to you, kindly sign your
conformity hereunder. Enclosed is our check for One Hundred Thousand (P100,000)
Pesos, M.B.T.C. Check No. 448314, as earnest money." And it is undisputed that Francisco
Cervantes did affix his signature in the place indicated for his conformity, albeit under the
typewritten words, Bormaheco, Inc. It is also a fact that on the same date, the stipulated
P100,000 earnest money was received by Cervantes.
It is true that in the voucher-receipt evidencing the delivery of the earnest money, the agent,
Miss Tagle, indicated in her own handwriting that the same was "subject to the terms and
conditions embodied in Bormaheco's letter of February 12, 1974 and Villonco Realty
Company's letter of March 4, 1974," but it is my considered opinion that such reservation
cannot be understood as comprehending reference to the above-quoted paragraph (5) of
the proposal of February 12, for the simple reason that since the parties had in fact
continued negotiating after February 12 until the final conference of February 27,
Cervantes must be deemed as having intended his signing of his conformity to the letter of
March 4 to be the formalization of the "final negotiations" referred to in said paragraph (5),
thereby rendering said provision of no further consequence. It should be noted that, to be
sure, as said paragraph (5) was worded, the idea it conveyed was that Cervantes was just
making a mere tentative offer which he would finalize only April 45 days, and so, when he
signed Villonco's counter-offer of March 4 and accepted the P100,000 earnest money
tendered therein, no other significance could be given to such acts than that they were
meant to finalize and perfect the transaction in advance of the 45-day waiting period
originally proposed by him. Indeed, in the addendum written and signed by Cervantes
himself (not by the agent) to the March 4 letter, all that he stated was that "this sale shall
be subject to favorable consummation of a property in Sta. Ana we are negotiating", and
this was none other than the Nassco property which the Nassco Board authorized its
manager on February 18,1964 to sell to appellants who had won the award the day before.
In other words, when Cervantes signed the space for his conformity to the terms of that
letter of March 4, he already knew or must have known that the acquisition of the Nassco
property was already an impending certainty and must have cared less about what had
become an unnecessary waiting period, hence the omission of any mention thereof by him
in his addendum.
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 My conclusion, therefore, is that said acts of Cervantes of signing his conformity to
Villonco's counter-offer of March 4 and accepting the P100,000 earnest money therein
offered resulted in a completely perfected contract of sale between the parties per Article
1482 of the Civil Code, needing only the execution of the corresponding deed of sale for its
consummation and subject solely to the negative resolutory condition that the "sale shall
be cancelled, only if your (Cervantes') deal with another property in Sta. Ana (indisputably
the Nassco transaction) shall not be consummated", without stipulating anymore a period
for such consummation, since evidently, with the sale thereof having been authorized
already by the Nassco Board on February 18, 1964, the Villoncos must have been made to
understand or they did understand that such consummation was inexorably forthcoming.
In fact, the Nassco Board already approved on March 3, 1964 not only the award but the
actual sale of the property to appellants, and the Economic Coordinator gave his sanction
thereto on March 24 following. Thus, as of March 3, one day before Cervantes accepted
Villonco's counter-offer, nothing more was left to formalize the transaction with Nassco
except that approval of the Economic Coordinator.
I cannot believe that Cervantes did not have up-to-date information of the progress of his
transactions with Nassco. Actually, from the legal standpoint, he was under obligation, if
only in consequence of his offer of February 12 and his continuous conversations and
negotiations with the Villoncos up to the signing of their agreement on March 4, to keep
constant and close tract thereof in order that he might be able to inform the parties he was
dealing with of the real status thereof, the finalization of the same being a material factor
in the accomplishment of their common purpose. Withal, equity would assume that he did
what ought to have been done by him in taking ordinary care of his concerns, which he is
presumed to have taken, according to Section 5 (d) of Rule 131. Under these
circumstances, I am amply persuaded that he must have been aware of the favorable
actuations of the Nassco authorities all the while that he was dealing with appellee up to
March 4, the day after the Nassco Board approved the sale. Accordingly, I hold that when
he gave his conformity to the counter-offer of the Villoncos of March 4, he was already
fully confident his transaction with Nassco would eventually materialize.
What is worse is that assuming that the 45-day period invoked by him could be considered
in this discussion, it would be inequitable to allow him to take advantage thereof in the
light of the circumstances extant in the record. It cannot be denied that, as already stated,
the Economic Coordinator approved the Nassco transaction on March 24, 1964. Anyone
would know, and much more so Cervantes who was directly interested therein and must
have been anxiously and even excitedly waiting for it, that was the last requisite for the
inevitable execution of the deed of sale in his favor. One has to be very naive and it would
be contrary to the ordinary course of human experience and business practices for anyone
to concede to appellants that when Cervantes wrote his letter to Villonco Realty Company
of March 30, 1964 stating that "despite the lapse of 45 days from February 12, 1964, there
is no certainty yet for us to acquire a substitute property", he did not even have the
slightest inkling of the favorable action of the Economic Coordinator of March 24. The
same or more may be said relative to his letter to Miss Tagle of as late as April 6, 1964
wherein he alleged that the forty-five day period had already expired and the sale to
Bormaheco, Inc. of the Punta (Nassco) property had not been consummated as of then
and that, therefore, his letter was a "manifestation that we are no longer interested to sell"
the Buendia property to the Villoncos.
I have no doubt whatsoever that the whole trouble here is that after Cervantes had already
signed his conformity and received earnest money on March 4, he had a change of heart,
perhaps dictated by reasons of better economic advantage, and banking on the idea, albeit
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 erroneous, that he could utilize paragraph (5) of his letter of February 12 as a escape door
through which he could squeeze out of the perfected contract with the Villoncos, he opted
to actually back out and break with them thru his letters of March 30 to them and of April 6
to the agent, Miss Tagle. The Court would certainly be sanctioning a deliberate mala fide
breach of a contract already definitely perfected were it to buy the theory of non-perfection
appellants are lamely pressing on Us. No amount of rationalization can convince me that
the Villoncos had agreed to any 45-day suspensive condition for the perfection of the
agreement, but even on the remote assumption that they did, I would hold as I do hold that
the purchase of the Nassco property by appellants was virtually consummated, from the
viewpoint of the spirit and intent of the contract here in question, on March 24, 1964, when
the Economic Coordinator approved the same and nothing else remained to be done to
formalize it except the actual execution of the deed of sale which in fact took place on
June 26, 1964, hence, Cervantes had no more excuse for further delaying compliance with
his agreement with the Villoncos. In other words, for all legal purposes, assuming
hypothetically the plausibility of the theory of appellants about a 45-day waiting period, the
negative resolutory condition arising from said theory became inoperative four days
before said 45 days expired. After the approval of the sale by the Economic Coordinator,
there was nothing anymore that could impede the formal conveyance of the Nassco
property to appellants, other than their own desistance, and even that might have been
legally controversial if Nassco insisted otherwise. Reading all the communications
exchanged between the parties, the conclusion therefrom is inevitable that the 45-day
period stipulation was inextricably tied up with appellants' being able to acquire the
Nassco property. In other words, Cervantes merely wanted to be sure that they would get
the Nassco property before proceeding with the sale of the Buendia property. To construe
the 45-day stipulation as giving Cervantes the absolute right to disregard the Villoncos
entirely until after the 45 days had expired is to render the whole of Cervantes' letter of
February 12 as totally meaningless, legally nonexistent and as deceitfully farcical.
Consequently, the acquisition of the Nassco property having actually eventualized, it
cannot lie in the lips of Cervantes to claim that he may not be compelled to proceed with
the transaction. To view the situation otherwise is to condone resort to ambiguity as a
means of deception and informality in contractual obligations, which in my opinion is
contrary to the elementary requirements of candidness and honest dealing between
responsible contracting parties, and in that sense offensive to public policy.

2. The contention of appellants that inasmuch as in actual fact the Buendia property
contemplated in the contract is the conjugal property of Cervantes spouses and that since
in dealing with the Villoncos, Cervantes acted as President of Bormaheco, Inc., the appellee
cannot have any right to compel the conveyance to them thereof is in my view definitely
puerile. It is predicated on duplicity and smacks of utter bad faith.
I do not find in the evidence before Us adequate basis for accepting the suggestion that
Francisco Cervantes acted for and in behalf of Bormaheco, Inc. in his dealings with the
Villoncos. The mere fact that he signed his letter of February 12, 1964 over the title of
President, there being no showing that he was duly authorized to make the offer therein
contained in the name of the corporation, did not convert it into a corporate act. The
language of the letter which is conspicuously sprinkled with the pronoun I used by
Cervantes to refer to himself rather than exclusively the pronoun we does not so indicate.
Besides, Cervantes is undisputably the registered owner with his wife of the property
therein mentioned, and being evidently conscious, as he ought to have been of this fact, he
knew his act would be ultra vires and void, if he were to act for the corporation. He was the
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 manager of the conjugal partnership and he knew it was only in that capacity that he could
in good faith give validity to his representation, assuming the conformity of his wife.
Unless Cervantes wants Us to hold that he deliberately negotiated with the Villoncos
clothed in dubious garments of authority precisely to afford him the opportunity to
repudiate at his convenience any agreement they may enter into with him, I am for holding
as I do hold that Bormaheco, Inc. had nothing to do with the transaction here in
controversy. In any event, if Cervantes may be held to have acted for Bormaheco, Inc., in
spite of the absence of evidence of any authority for him to do so, it must be because
Bormaheco, Inc. is Cervantes himself, and there being no proof to the contrary, the
corporate shield of Bormaheco, Inc. may be deemed pierced in order to prevent any further
fraudulent implications in his actuations. Moreover, it may be observed that the March 4
letter of Teofilo Villonco was not addressed to Bormaheco, Inc. but to Francisco Cervantes
and it does not even mention his being President of that corporation.
Anent the requirement of consent of Mrs. Cervantes under Article 166 of the Civil Code, I
consider any defense along this line as unavailing to the appellants in this case. As very
ably discussed in the main opinion of Mr. Justice Aquino, the answer of the defendants
make no reference at all to any lack of such consent. And considering that the subsequent
testimony of Cervantes to the effect that his wife opposed the transaction cannot cure
such omission, if only because any husband in the circumstances revealed in the record is
estopped from setting up such a defense (cf Riobo vs. Hontiveros, 21 Phil. 31; Papa vs.
Montenegro, 54 Phil. 531; see Civil Law by Reyes & Puno, 1964 ed. p. 192), and that from
her silence in her answer in this respect Mrs. Cervantes may either be presumed to have
given her consent thereto or to have ratified the same (Montederamos vs. Ynonoy, 56 Phil.
457; Castañeda vs. Samson, 43 Phil. 751), it is obvious that the belated invocation of this
defense now should be deemed in fact and in law as an unacceptable and ineffective
afterthought. Besides, it appearing that the sale of the Buendia property was purposely to
enable the spouses to acquire the Nassco property, I have grave doubts as to the
application of Article 166 to the sale here in dispute. I believe that the disposition by a
husband prohibited by the Code unless consented to by the wife refers to a transaction
outrightly prejudicial to the partnership and cannot comprehend a sale made precisely for
its benefit and causing no loss thereto beyond the ordinary risks of misjudgment of a
manager acting in good faith.
IN VIEW OF THE FOREGOING, I would not even require the formality of the serial execution
of instruments by the Cervantes spouses and Bormaheco, Inc. In the view I have taken
above, it would be legally feasible for the sale to the Villonco Realty Property to be made
directly by the spouses. But I would not insist in the modification of the dispositive portion
of the judgment, since the result would be the same anyway.
Footnotes

** Emphasis supplied. Note that, according to the defendants, Cervantes inserted "12th
and" between the "February" and "26" in the second line of the foregoing letter, that in
paragraph 3 of the terms and conditions he crossed out "Nassco's" and wrote "another"
and he inserted "pa" after "interest" (p. 7, defendants-appellants' brief). There is no
stipulation nor testimony on the alleged insertions.
*** March 31, 1964

Mr. Francisco Cervantes

President, BORMAHECO, INC.

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 245 Buendia Avenue
Makati, Rizal

Dear Cervantes:

As your official and authorized representative on the sale of your property located at
245 Buendia Avenue, Makati, Rizal, with a total area of 3,500 square meters, at P400.00
per square meter or a total purchase cost of P1,400.000.00 in favor of Mr. Romeo
Villonco of Villonco Realty Co., I was surprised and shocked at the news of your actions
yesterday afternoon when you had a certain Mr. de Guzman bring to Mr. Romeo Villonco,
your letter dated March 30th, 1964, together with 2 checks. One for P100,000.00 and
another for P694.25 as 10% interest on the same.
If you will recall, this deal on selling your property started way back in October 1963
when you ordered me to negotiate for your certain properties to buy in order that you
could move to a bigger location than that at 245 Buendia Avenue which was becoming
too small for your needs.

You also authorized me to negotiate with the BUYERS, one of whom was the Villonco
Brothers who owned the adjacent property, on the sale of your property. Plenty of
conferences were held between you and me, also between the Villoncos and me on the
said property, specially after your Formal Bidding of the NASSCO PROPERTY, located at
Punta, Sta. Ana, was made on January 17, 1964.

After this made (sic) was made, you called me and had me offer your property at 245
Buendia Avenue to the Villoncos. For this you made your formal offer as per your letter
dated February 12, 1964. And that after there were many personal conferences made
between you and the Villoncos either by phone and also personally at their office in my
presence.

After your Formal Offer of February 12, 1964, and the subsequent acceptance by the
Villoncos of your offer, and the payment of the EARNEST MONEY of P100,000.00 which
you accepted on March 4, 1964 and signed CONFORME to the LETTER CONTRACT of
the same date, this deal become a close deal as the said Earnest Money becomes a part
of the down payment on the property.

The only stipulation mentioned in your Contractual Letter of March 4, 1964 which
followed your letter of February 12, 1964, was that the said sale becomes ineffective
only if the purchases of the property at Sta. Ana is not approved by the NASSCO or the
OEC. However, from all my follow up on the matter at the NASSCO and the OEC, it
appears that your bid on purchasing the said property at Sta. Ana has been approved by
the NASSCO BOARD on March 3, 1964, and subsequently approved by the Officer of the
Economic Coordinator and signed by Mr. Adevoso on March 25, 1964. This, therefore,
removes the stipulation on your letter of February 12, 1964 and thus affecting the
consummation of this deal.
Mr. Romeo Villonco has called me to this office and has returned to me your letter
and the checks, as he is not agreeable to a cancellation of Buendia Avenue, Makati,
Rizal, for the following reasons:

(1.) That this deal has been made after a Formal Written Offer from you after
several lengthy verbal conferences between you, and which terms have been agreed
upon;
(2.) That after the Earnest Money had been received by you, I, as your official
representative have followed the matter and have kept them informed on the progress of
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 the deal with the NASSCO and the OEC, this being the only stipulation on the
consummation of the deal; and as such made it necessary that the Villoncos mortgage
several of their properties with the bank to have ready the Cash payment required by you
as per your Contractual Letter of March 4, 1964;
(3.) That in all big business firms, the presence of a large amount of spot cash is
always not present, thus it was necessary that the Villoncos raised this spot cash which
was one of your requirements for this sale;
(4.) That the Villoncos have put aside all other projects in favor of this deal, since
the same requires a large amount of cash, not only for the payment of the land, but also
for the cost of the new building to be erected;

(5.) That the stipulation on the letters of February 12, 1964 and March 4, 1964
wherein the approval and consequent purchase of the lot at Sta. Ana, Manila has been
removed by the approval of your bid purchase of the property of the NASSCO, at Punta,
Sta. Ana which has been approved by the NASSCO BOARD on March 3, 1964 and the
OEC on March 25, 1964;

For all the above reasons, Mr. Romeo Villonco will not agree to your backing out of
this deal or rescinding your Contractual Agreement with them for any other reason
whatsoever.

Trusting that you will see your way clear in all this, I am.

Very truly yours,

(Sgd.) Edith Perez de Tagle

(Typed) EDITH PEREZ DE TAGLE
Realtor"

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