471 Phil. 440
CALLEJO, SR., J.:
1) It is not true I agreed to shoulder registration fees and other miscellaneous expenses, etc. I do not recall we ever discussed about them. Nonetheless, I made an assurance at that time that there was no liens/encumbrances and tenants on my property (TCT – 36755).Appended thereto was a copy of respondent Fernandez’ letter to the petitioners dated January 16, 1996, in response to the latter’s January 5, 1996 letter.[12]
2) It is not true that we agreed to meet on December 8, 1995 in order to sign the Deed of Absolute Sale. The truth of the matter is that you were the one who emphatically stated that you would prepare a Contract to Sell and requested us to come back first week of December as you would be leaving the country then. In fact, what you were demanding from us was to apprise you of the status of the property, whether we would be able to ascertain that there are really no tenants. Ms. Alimario and I left your office, but we did not assure you that we would be back on the first week of December.
Unfortunately, some people suddenly appeared and claiming to be “tenants” for the entire properties (including those belonging to my other relatives.) Another thing, the Barangay Captain now refuses to give a certification that our properties are not tenanted.
Thereafter, I informed my broker, Ms. Lulu Alimario, to relay to Mr. Agapito that due to the appearance of “alleged tenants” who are demanding for a one-hectare share, my cousin and I have thereby changed our mind and that the sale will no longer push through. I specifically instructed her to inform you thru your broker that we will not be attending the meeting to be held sometime first week of December.
In view thereof, I regret to formally inform you now that we are no longer selling the property until all problems are fully settled. We have not demanded and received from you any earnest money, thereby, no obligations exist. In the meantime, we hope that in the future we will eventually be able to transact business since we still have other properties in San Pablo City.[11]
The petitioners prayed that, after due hearing, judgment be rendered in their favor ordering the respondents to –
- On 27 November 1995, defendants offered to sell to plaintiffs two (2) parcels of land covered by Transfer Certificates of Title Nos. 36766 and 36754 measuring a total of 36,742 square meters in Barrio Concepcion, San Pablo City. … After a brief negotiation, defendants committed and specifically agreed to sell to plaintiffs 33,990 square meters of the two (2) aforementioned parcels of land at P150.00 per square meter.
- The parties also unequivocally agreed to the following:
(a) The transfer tax and all the other fees and expenses for the titling of the subject property in plaintiffs’ names would be for defendants’ account.
(b) The plaintiffs would pay the entire purchase price of P5,098,500.00 for the aforementioned 33,990 square meters of land in plaintiffs’ office on 8 December 1995.- Defendants repeatedly assured plaintiffs that the two (2) subject parcels of land were free from all liens and encumbrances and that no squatters or tenants occupied them.
- Plaintiffs, true to their word, and relying in good faith on the commitment of defendants, pursued the purchase of the subject parcels of lands. On 5 January 1996, plaintiffs sent a letter of even date to defendants, … setting the date of sale and payment on 30 January 1996.
7.1 Defendants received the letter on 12 January 1996 but did not reply to it.- On 1 February 1996, plaintiffs again sent a letter of even date to defendants demanding execution of the Deed of Sale.
8.1 Defendants received the same on 6 February 1996. Again, there was no reply. Defendants thus reneged on their commitment a second time.- On 14 February 1996, defendant Fernandez sent a written communication of the same date to plaintiffs enclosing therein a copy of her 16 January 1996 letter to plaintiffs which plaintiffs never received before. Defendant Fernandez stated in her 16 January 1996 letter that despite the meeting of minds among the parties over the 33,990 square meters of land for P150.00 per square meter on 27 November 1995, defendants suddenly had a change of heart and no longer wished to sell the same. Paragraph 6 thereof unquestionably shows defendants’ previous agreement as above-mentioned and their unjustified breach of their obligations under it. …
- Defendants cannot unilaterally, whimsically and capriciously cancel a perfected contract to sell. …
- Plaintiffs intended to use the subject property for their subdivision project to support plaintiffs’ quarry operations, processing of aggregate products and manufacture of construction materials. Consequently, by reason of defendants’ failure to honor their just obligations, plaintiffs suffered, and continue to suffer, actual damages, consisting in unrealized profits and cost of money, in the amount of at least P5 Million.
- Plaintiffs also suffered sleepless nights and mental anxiety on account of defendants’ fraudulent actuations for which reason defendants are liable to plaintiffs for moral damages in the amount of at least P1.5 Million.
- By reason of defendants’ above-described fraudulent actuations, plaintiffs, despite their willingness and ability to pay the agreed purchase price, have to date been unable to take delivery of the title to the subject property. Defendants acted in a wanton, fraudulent and malevolent manner in violating the contract to sell. By way of example or correction for the public good, defendants are liable to plaintiff for exemplary damages in the amount of P500,000.00.
- Defendants’ bad faith and refusal to honor their just obligations to plaintiffs constrained the latter to litigate and to engage the services of undersigned counsel for a fee in the amount of at least P250,000.00.[14]
(a) Secure at defendants’ expense all clearances from the appropriate government agencies that will enable defendants to comply with their obligations under the Contract to Sell;On July 5, 1996, respondent Fernandez filed her Answer to the complaint.[16] She claimed that while the petitioners offered to buy the property during the meeting of November 27, 1995, she did not accept the offer; thus, no verbal contract to sell was ever perfected. She specifically alleged that the said contract to sell was unenforceable for failure to comply with the statute of frauds. She also maintained that even assuming arguendo that she had, indeed, made a commitment or promise to sell the property to the petitioners, the same was not binding upon her in the absence of any consideration distinct and separate from the price. She, thus, prayed that judgment be rendered as follows:
(b) Execute a Contract to Sell with terms agreed upon by the parties;
(c) Solidarily pay the plaintiffs the following amounts:
- P5,000,000.00 in actual damages;
- P1,500,000.00 in moral damages;
- P500,000.00 in exemplary damages;
- P250,000.00 in attorney’s fees.[15]
On September 24, 1997, the trial court, upon motion of the petitioners, declared the other respondents in default for failure to file their responsive pleading within the reglementary period.[18] At the pre-trial conference held on March 2, 1998, the parties agreed that the following issues were to be resolved by the trial court: (1) whether or not there was a perfected contract to sell; (2) in the event that there was, indeed, a perfected contract to sell, whether or not the respondents breached the said contract to sell; and (3) the corollary issue of damages.[19]
- Dismissing the Complaint, with costs against the plaintiffs;
- On the COUNTERCLAIM, ordering plaintiffs to pay defendant moral damages in the amount of not less than P2,000,000.00 and exemplary damages in the amount of not less than P500,000.00 and attorney’s fees and reimbursement expenses of litigation in the amount of P300,000.00.[17]
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of plaintiffs ANTONIO K. LITONJUA and AURELIO K. LITONJUA and against defendants MARY MEDIATRIX T. FERNANDEZ, HEIRS OF PAZ TICZON ELEOSIDA, represented by GREGORIO T. ELEOSIDA, JOHN DOES and JANE DOES; HEIRS OF DOMINGO B. TICZON, represented by MARY MEDIATRIX T. FERNANDEZ, CRISTETA TICZON, EVANGELINE JILL R. TICZON, ERLINDA T. BENITEZ, DOMINIC TICZON, JOSEFINA LUISA PIAMONTE, JOHN DOES and JANE DOES, ordering defendants to:On appeal to the Court of Appeals, the respondents ascribed the following errors to the court a quo:
- execute a Contract of Sale and/or Absolute Deed of Sale with the terms agreed upon by the parties and to secure all clearances from the concerned government agencies and removal of any tenants from the subject property at their expense to enable defendants to comply with their obligations under the perfected agreement to sell; and
- pay to plaintiffs the sum of Two Hundred Thousand (P200,000.00) Pesos as and by way of attorney’s fees.[21]
On February 28, 2001, the appellate court promulgated its decision reversing and setting aside the judgment of the trial court and dismissing the petitioners’ complaint, as well as the respondents’ counterclaim.[23] The appellate court ruled that the petitioners failed to prove that a sale or a contract to sell over the property between the petitioners and the private respondent had been perfected.
- THE LOWER COURT ERRED IN HOLDING THAT THERE WAS A PERFECTED CONTRACT OF SALE OF THE TWO LOTS ON NOVEMBER 27, 1995.
- THE LOWER COURT ERRED IN NOT HOLDING THAT THE VERBAL CONTRACT OF SALE AS CLAIMED BY PLAINTIFFS-APPELLEES ANTONIO LITONJUA AND AURELIO LITONJUA WAS UNENFORCEABLE.
- THE LOWER COURT ERRED IN HOLDING THAT THE LETTER OF DEFENDANT-APPELLANT FERNANDEZ DATED JANUARY 16, 1996 WAS A CONFIRMATION OF THE PERFECTED SALE AND CONSTITUTED AS WRITTEN EVIDENCE THEREOF.
- THE LOWER COURT ERRED IN NOT HOLDING THAT A SPECIAL POWER OF ATTORNEY WAS REQUIRED IN ORDER THAT DEFENDANT-APPELLANT FERNANDEZ COULD NEGOTIATE THE SALE ON BEHALF OF THE OTHER REGISTERED CO-OWNERS OF THE TWO LOTS.
- THE LOWER COURT ERRED IN AWARDING ATTORNEY’S FEES IN THE DISPOSITIVE PORTION OF THE DECISION WITHOUT STATING THE BASIS IN THE TEXT OF SAID DECISION.[22]
The petition has no merit.
- WHETHER OR NOT THERE WAS A PERFECTED CONTRACT OF SALE BETWEEN THE PARTIES.
- WHETHER OR NOT THE CONTRACT FALLS UNDER THE COVERAGE OF THE STATUTE OF FRAUDS.
- WHETHER OR NOT THE DEFENDANTS DECLARED IN DEFAULT ARE BENEFITED BY THE ASSAILED DECISION OF THE COURT OF APPEALS.[24]
… [M]y cousin and I have thereby changed our mind and that the sale will no longer push through. I specifically instructed her to inform you thru your broker that we will not be attending the meeting to be held sometime first week of December.The petitioners argue that the letter is a sufficient note or memorandum of the perfected contract, thus, removing it from the coverage of the statute of frauds. The letter specifically makes reference to a sale which respondent Fernandez agreed to initially, but which the latter withdrew because of the emergence of some people who claimed to be tenants on both parcels of land. According to the petitioners, the respondents-owners, in their answer to the complaint, as well as respondent Fernandez when she testified, admitted the authenticity and due execution of the said letter. Besides, when the petitioner Antonio Litonjua testified on the contract of sale entered into between themselves and the respondents-owners, the latter did not object thereto. Consequently, the respondents-owners thereby ratified the said contract of sale. The petitioners thus contend that the appellate court’s declaration that there was no perfected contract of sale between the petitioners and the respondents-owners is belied by the evidence, the pleadings of the parties, and the law.
In view thereof, I regret to formally inform you now that we are no longer selling the property until all problems are fully settled. We have not demanded and received from you any earnest money, thereby, no obligations exist…[28]
Art. 1403. The following contracts are unenforceable, unless they are ratified:…The appellate court based its ruling on the following disquisitions:
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or secondary evidence of its contents:…(e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein.[29]
In the case at bar, the letter dated January 16, 1996 of defendant-appellant can hardly be said to constitute the note or memorandum evidencing the agreement of the parties to enter into a contract of sale as it is very clear that defendant-appellant as seller did not accept the condition that she will be the one to pay the registration fees and miscellaneous expenses and therein also categorically denied she had already committed to execute the deed of sale as claimed by the plaintiffs-appellees. The letter, in fact, stated the reasons beyond the control of the defendant-appellant, why the sale could no longer push through – because of the problem with tenants. The trial court zeroed in on the statement of the defendant-appellant that she and her cousin changed their minds, thereby concluding that defendant-appellant had unilaterally cancelled the sale or backed out of her previous commitment. However, the tenor of the letter actually reveals a consistent denial that there was any such commitment on the part of defendant-appellant to sell the subject lands to plaintiffs-appellees. When defendant-appellant used the words “changed our mind,” she was clearly referring to the decision to sell the property at all (not necessarily to plaintiffs-appellees) and not in selling the property to herein plaintiffs-appellees as defendant-appellant had not yet made the final decision to sell the property to said plaintiffs-appellees. This conclusion is buttressed by the last paragraph of the subject letter stating that “we are no longer selling the property until all problems are fully settled.” To read a definite previous agreement for the sale of the property in favor of plaintiffs-appellees into the contents of this letter is to unduly restrict the freedom of the contracting parties to negotiate and prejudice the right of every property owner to secure the best possible offer and terms in such sale transactions. We believe, therefore, that the trial court committed a reversible error in finding that there was a perfected contract of sale or contract to sell under the foregoing circumstances. Hence, the defendant-appellant may not be held liable in this action for specific performance with damages.[30]In Rosencor Development Corporation vs. Court of Appeals,[31] the term “statute of frauds” is descriptive of statutes which require certain classes of contracts to be in writing. The statute does not deprive the parties of the right to contract with respect to the matters therein involved, but merely regulates the formalities of the contract necessary to render it enforceable. The purpose of the statute is to prevent fraud and perjury in the enforcement of obligations, depending for their existence on the unassisted memory of witnesses, by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged. The statute is satisfied or, as it is often stated, a contract or bargain is taken within the statute by making and executing a note or memorandum of the contract which is sufficient to state the requirements of the statute.[32] The application of such statute presupposes the existence of a perfected contract. However, for a note or memorandum to satisfy the statute, it must be complete in itself and cannot rest partly in writing and partly in parol. The note or memorandum must contain the names of the parties, the terms and conditions of the contract and a description of the property sufficient to render it capable of identification.[33] Such note or memorandum must contain the essential elements of the contract expressed with certainty that may be ascertained from the note or memorandum itself, or some other writing to which it refers or within which it is connected, without resorting to parol evidence.[34] To be binding on the persons to be charged, such note or memorandum must be signed by the said party or by his agent duly authorized in writing.[35]
The petitioners cannot feign ignorance of respondent Fernandez’ lack of authority to sell the properties for the respondents-owners. It must be stressed that the petitioners are noted businessmen who ought to be very familiar with the intricacies of business transactions, such as the sale of real property.
Q Madam Witness, what else did you tell to the plaintiffs? A I told them that I was there representing myself as one of the owners of the properties, and I was just there to listen to his proposal because that time, we were just looking for the best offer and I did not have yet any written authorities from my brother and sisters and relatives. I cannot agree on anything yet since it is just a preliminary meeting, and so, I have to secure authorities and relate the matters to my relatives, brother and sisters, sir. Q And what else was taken up? A Mr. Antonio Litonjua told me that they will be leaving for another country and he requested me to come back on the first week of December and in the meantime, I should make an assurance that there are no tenants in our properties, sir.[44]