II. OBJECT OF SALESTATUS

Sale of undivided interestAlmendra vs. IAC, November 21, 1991

III. PRICE

Effect where price is simulatedBayongayong vs. CA, 430 SCRA 210

Meeting of minds as to priceMapalo vs. Mapalo, 17 SCRA 114

Swedish Match vs. Court of Appeals, 20 October 2004

G.R. No. 75111 November 21, 1991MARGARITO ALMENDRA, DELIA ALMENDRA, BERNARDINA OJEDA and MELECIA CENO,petitioners,vs.THE HON. INTERMEDIATE APPELLATE COURT, ANGELES ALMENDRA, ROMAN ALMENDRA and MAGDALENO CENO,respondents.Custodio P. Canete for petitioners.Serafin P. Ramento and Leon T. Tumandao for private respondents.FERNAN,C.J.:pThis is a petition for review oncertiorariof the then Intermediate Appellate Court's decision and resolution denying the motion for reconsideration of said decision which upheld the validity of three (3) deeds of sale of real properties by a mother in favor of two of her children in total reversal of the decision the lower court.The mother, Aleja Ceno, was first married to Juanso Yu Book with whom she had three children named Magdaleno, Melecia and Bernardina, all surnamed Ceno. Sometime in the 1920's, Juanso Yu Book took his family to China where he eventually died. Aleja and her daughter Bernardina later returned to the Philippines.During said marriage, Aleja acquired a parcel of land which she declared in her name under Tax Declaration No. 11500.1After Juanso Yu Book's death, Bernardina filed against her mother a case for the partition of the said property in the then Court of First Instance of Leyte.2On August 17, 1970, the lower court3rendered a "supplemental decision"4finding that the said property had been subdivided into Lots Nos. 6354 (13,788 square meters), 6353 (16,604 square meters), 6352 (23,868 square meters) and 6366 (71,656 square meters). The dispositive portion of said decision reads:IN VIEW OF THE FOREGOING, the Court hereby renders judgment:1. Declaring plaintiff Bernardina C. Ojeda as owner and entitled to the possession of Lot No. 6354 as described in the sketch found on page 44 of the record;2. Declaring said plaintiff as owner and entitled to the possession of Lot 6353 as described in the sketch, without prejudice to whatever may be the rights thereto of her sister Melecia Ceno who is said to be presently in China;3. Declaring defendant Aleja C. Almendra as owner and entitled to the possession of Lot No. 6366 as described in the sketch found on page 44 of the record;4. Declaring said defendant also as owner and entitled to the possession of Lot No. 6352 as described in the sketch, subject to whatever may be the rights thereto of her son Magdaleno Ceno who is said to be presently in China.No special pronouncement as to costs, except that the fees of the commissioner shall be proportionately borne by the parties.SO ORDERED.Meanwhile, Aleja married Santiago Almendra with whom she had four children named Margarito, Angeles, Roman and Delia. During said marriage Aleja and Santiago acquired a 59,196-square-meter parcel of land in Cagbolo, Abuyog, Leyte. Original Certificate of Title No. 10094 was issued therefor in the name of Santiago Almendra married to Aleja Ceno and it was declared for tax purposes in his name.5In addition to said properties, Aleja inherited from her father, Juan Ceno, a 16,000-square-meter parcel of land also in Cagbolo.6For his part, her husband Santiago inherited from his mother Nicolasa Alvero, a 164-square-meter parcel of residential land located in Nalibunan, Abuyog, Leyte.7While Santiago was alive, he apportioned all these properties among Aleja's children in the Philippines, including Bernardina, who, in turn, shared the produce of the properties with their parents. After Santiago's death, Aleja sold to her daughter, Angeles Almendra, for P2,000 two parcels of land more particularly described in the deed of sale dated August 10, 1973,8as follows:1. Half-portion, which pertains to me as my conjugal share, with my late husband Santiago Almendra of the land located at Bo. Cagbolo, under T/D No. 22234, covered by OCT No. P-10094 in name of Santiago Almendra; having an area of 5.9196 hectares; with boundaries specifically designated at the technical descriptions of the title thereof; and hence the half portion subject of sale shall have an area of more or less 2.9598 hectares; specifically designated in the sketch below marked as X: the hilly portion.2. Half-portion of a parcel of land located at Bo. Cagbolo, Abuyog, Leyte under T/D No. 27190 in the name of Aleja Ceno; having an area of 1.6000 hectares bounded as follows to wit: N. Cagbolo creek; E. Leon Elmido; S. Magno Elmido and W., Higasan River, which portion shall have an area of more or less 8000 hec. (sic), and designated as X in the sketch below:9On December 26, 1973, Aleja sold to her son, Roman Almendra, also for P2,000 a parcel of land described in the deed of sale as located in Cagbulo (sic), Abuyog, Leyte "under T/D No. 11500 which cancelled T/D No. 9635; having an area of 6.6181 hec., assessed at P1,580.00 . . ."10On the same day, Aleja sold to Angeles and Roman again for P2,000 yet another parcel of land described in the deed of sale11as follows:A parcel of land designated as Lot No. 6352 in the name of Melicia Ceno, under Project PLS-645, Abuyog, Leyte, which had been treated in the CIVIL CASE No. 4387, For PARTITION OF REAL PROPERTY, CFI-Leyte, Tacloban City, Branch 11; Bernardina Ojeda, Plaintiff, -vs.- Aleja C. Almendra, defendant, wherein said SUPPLEMENTAL DECISION, dated August 17th, 1970, in said case by Judge Jesus N. Borromeo:PART OF THE DECISION, COMMISSIONER'S REPORT:Par. 3) That the partition, plaintiff and defendant agreed to exchange the names or owners of Lot No. 6353 which is in the name of Magdaleno Ceno with Lot No. 6352 in the name of Melecia Ceno as appearing in the sketch, copy of the Public Land Subdivision of Abuyog, Leyte, under Project PLS-645 . . . .DISPOSITIVE PORTION OF SAID DECISION:Par. 4) Declaring said defendant (Aleja C. Almendra) also as owner and entitled to the possession of Lot No. 6352 as described in the sketch, subject to whatever may be the rights thereto of her son Magdaleno Ceno who is said to be presently in China.Aleja died on May 7, 1975. On January 21, 1977 Margarito, Delia and Bernardina filed a complaint against Angeles and Roman for the annulment of the deeds of sale in their favor, partition of the properties subjects therein and accounting of their produce.12From China, their sister Melecia signed a special power of attorney in favor of Bernardina. Magdaleno, who was still in China, was impleaded as a defendant in the case and summons by publication was made on him. Later, the plaintiffs informed the court that they had received a document in Chinese characters which purportedly showed that Magdaleno had died. Said document, however, was not produced in court. Thereafter, Magdaleno was considered as in default without prejudice to the provisions of Section 4, Rule 18 of the Rules of Court which allows the court to decide a case wherein there several defendants upon the evidence submitted only by the answering defendants.On April 30, 1981, the lower court rendered a decision13the dispositive portion of which states:WHEREFORE, judgment is hereby rendered declaring the deeds of sale herein (Exhs."E", "F"and"H") to be simulated and therefore null and void; ordering the partition of the estate of the deceased Aleja Ceno among her heirs and assigns; appointing the Acting Clerk of Court, Atty. Cristina T. Pontejos, as commissioner, for the purpose of said partition, who is expected to proceed accordingly upon receipt of a copy of this decision; and to render her report on or before 30 days from said receipt. The expenses of the commissioner shall be borne proportionately by the parties herein.SO ORDERED.The defendants appealed to the then Intermediate Appellate Court which, on February 20, 1986 rendered a decision14finding that, in nullifying the deeds of sale in question, the lower court totally disregarded the testimony of the notary public confirming the authenticity of the signatures of Aleja on said deeds and the fact that Angeles and Roman actually paid their mother the amounts stipulated in the contracts. The appellate court also stated that the uniformity in the prices of the sale could not have nullified the sale because it had been duly proven that there was consideration and that Angeles and Roman could afford to pay the same. Hence, it upheld validity of the deeds of sale and ordered the partition of the "undisposed" properties left by Aleja and Santiago Almendra and, if an extrajudicial partition can be had, that it be made within a reasonable period of time after receipt of its decision.The plaintiffs' motion for reconsideration having been denied, they filed the instant petition for review oncertioraricontending principally that the appellate court erred in having sanctioned the sale of particular portions of yet undivided real properties.While petitioners' contention is basically correct, we agree with the appellate court that there is no valid, legal and convincing reason for nullifying the questioned deeds of sale. Petitioner had not presented any strong, complete and conclusive proof to override the evidentiary value of the duly notarized deeds of sale.15Moreover, the testimony of the lawyer who notarized the deeds of sale that he saw not only Aleja signing and affixing her thumbmark on the questioned deeds but also Angeles and Aleja "counting money betweenthem,"16deserves more credence than the self-serving allegations of the petitioners. Such testimony is admissible as evidence without further proof of the due execution of the deeds in question and is conclusive as to the truthfulness of their contents in the absence of clear and convincing evidence to the contrary.17The petitioners' allegations that the deeds of sale were "obtained through fraud, undue influence and misrepresentation," and that there was a defect in the consent of Aleja in the execution of the documents because she was then residing with Angeles,18had not been fully substantiated. They failed to show that the uniform price of P2,000 in all the sales was grossly inadequate. It should be emphasized that the sales were effected between a mother and two of her children in which case filial love must be taken into account.19On the other hand, private respondents Angeles and Roman amply proved that they had the means to purchase the properties. Petitioner Margarito Almendra himself admitted that Angeles had a sari-sari store and was engaged in the business of buying and selling logs.20Roman was a policeman before he became an auto mechanic and his wife was a school teacher21The unquestionability of the due execution of the deeds of sale notwithstanding, the Court may not put an imprimatur on the intrinsic validity of all the sales. The August 10, 1973 sale to Angeles of one-half portion of the conjugal property covered by OCT No. P-10094 may only be considered valid as a sale of Aleja's one-halfinteresttherein. Aleja could not have sold particular hilly portion specified in the deed of sale in absence of proof that the conjugal partnership property had been partitioned after the death of Santiago. Before such partition, Aleja could not claim title to any definite portion of the property for all she had was an ideal or abstract quota or proportionate share in the entire property.22However, the sale of the one-half portion of the parcel of land covered by Tax Declaration No. 27190 is valid because the said property is paraphernal being Aleja's inheritance from her own father.23As regards the sale of the property covered by Tax Declaration No. 11500, we hold that, since the property had been found in Civil Case No. 4387 to have been subdivided, Aleja could not have intended the sale of the whole property covered by said tax declaration. She could exercise her right of ownership only over Lot No. 6366 which was unconditionally adjudicated to her in said case.Lot No. 6352 was given to Aleja in Civil Case No. 4387 "subject to whatever may be the rights thereto of her son Magdaleno Ceno." A reading of the deed of Sale24covering parcel of land would show that the sale is subject to the condition stated above; hence, the rights ofMagdaleno Cenoare amply protected. The rule oncaveat emptorapplies.WHEREFORE, the decision of the then Intermediate Appellate Court is hereby affirmed subject to the modifications herein stated. The lower court is directed to facilitate with dispatch the preparation and approval of a project of partition of the properties considered unsold under this decision. No costs.SO ORDERED.

SPOUSES ISABELO and ERLINDA PAYONGAYONG,petitioners, vs.HON. COURT OF APPEALS, SPOUSES CLEMENTE and ROSALIA SALVADOR,respondents.D E C I S I O NCARPIO MORALES,J.:Being assailed bypetition for review oncertiorariunder Rule 45 of the Rules of Court[1]is the June 29, 2000 Decision[2]of the Court of Appeals in CA-G.R. CV No. 52917 affirming that of the Regional Trial Court (RTC), Branch 217, Quezon City dismissing Civil Case No. Q-93-16891,[3]the complaint of spouses Isabelo and Erlinda Payongayong (petitioners) against spouses Clemente and Rosalia Salvador (respondents).Eduardo Mendoza (Mendoza) was the registered owner of a two hundred square meter parcel of land situated in Barrio San Bartolome, Caloocan, covered by and described in Transfer Certificate of Title No. 329509[4]of the Registry of Deeds of Quezon City.On April 18, 1985, Mendoza mortgaged the parcel of land to the Meralco Employees Savings and Loan Association (MESALA) to secure a loan in the amount of P81,700.00.The mortgage was duly annotated on the title as Primary Entry No. 2872[5]on April 23, 1985.On July 11, 1987, Mendoza executed a Deed of Sale with Assumption of Mortgage[6]over the parcel of land together with all the improvements thereon (hereinafter referred to as the property) in favor of petitioners in consideration ofP50,000.00.It is stated in the deed that petitioners bound themselves to assume payment of the balance of the mortgage indebtedness of Mendoza to MESALA.[7]On December 7, 1987, Mendoza, without the knowledge of petitioners, mortgaged the same property to MESALA to secure a loan in the amount ofP758,000.00.On even date, the second mortgage was duly annotated as Primary Entry No. 8697[8]on Mendozas title.On November 28, 1991, Mendoza executed a Deed of Absolute Sale[9]over still the same property in favor of respondents in consideration ofP50,000.00.The sale was duly annotated as Primary Entry No. 1005[10]on Mendozas title.On even date, MESALA issued a Cancellation of Mortgage[11]acknowledging that for sufficient and valuable consideration which it received from Mendoza, it was cancelling and releasing the real estate mortgage over the property.The cancellation was annotated as Primary Entry No. 1003[12]on Mendozas title.Respondents caused the cancellation of Mendozas title and the issuance of Transfer Certificate Title No. 67432[13]in their name.Getting wind of the sale of the property to respondents, petitioners filed on July 16, 1993 a complaint[14]for annulment of deed of absolute sale and transfer certificate of title with recovery of possession and damages against Mendoza, his wife Sally Mendoza, and respondents before the Quezon City RTC.In their complaint, petitioners alleged that the spouses Mendoza maliciously sold to respondents the property which was priorly sold to them and that respondents acted in bad faith in acquiring it, the latter having had knowledge of the existence of the Deed of Absolute Sale with Assumption of Mortgage between them (petitioners) and Mendoza.Branch 217 of the Quezon City RTC, by Order[15]of December 3, 1993, archived the case in view of the failure to determine the whereabouts of the spouses Mendoza.A motion[16]for the revival of the case as against respondents and its dismissal as against the spouses Mendoza was later filed on December 17, 1993 by petitioners, which motion was granted by the trial court by Order[17]of December 27, 1993.By Decision of February 5, 1996, the trial court found for respondents.Dissatisfied, petitioners appealed the decision to the Court of Appeals (CA) which, as stated early on, affirmed the same.Petitioners Motion for Reconsideration[18]having been denied by the CA by Resolution of August 25, 2000,[19]the petition at bar was lodged.Petitioners assign to the CA the following errors:[20]ITHE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING IN (sic) EXCESS OF JURISDICTION WHEN IT FAILED TO RULE THAT THE DEED OF SALE EXECUTED BY EDUARDO MENDOZA IN FAVOR OF PRIVATE RESPONDENTS WAS SIMULATED AND THEREFORE NULL AND VOID.IITHE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING IN (sic) EXCESS OF JURISDICTION WHEN IT GAVE CREDENCE TO THE THEORY OF THE PRIVATE RESPONDENTS THUS FOUND TO BE INNOCENT PURCHASERS FOR VALUE.IIITHE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AMOUNTING IN (sic) EXCESS OF ITS JURISDICTION BY HOLDING THAT PETITIONERS ARE BARRED BY LACHES.[21]On procedural and substantive grounds, the petition fails.The petition which was filed by registered mail was not accompanied by a written explanation why such service was not done personally, in contravention of Section 11, Rule 13 of the Revised Rules of Court which provides:SEC. 11.Priorities in modes of service and filing. Whenever practicable, the service and filing of pleadings and other papers shall be done personally.Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally.A violation of this Rule may be cause to consider the paper as not filed.Under the above-quoted provision, service and filing of pleadings and other papers must, whenever practicable, be done personally.If they are made through other modes, the party concerned must provide a written explanation why the service or filing was not done personally.If only to underscore the mandatory nature of this innovation to the set of adjective rules requiring personal service whenever practicable, the provision gives the court the discretion to consider a pleading or paper as not filed if the other modes of service or filing were resorted to and no written explanation was made as to why personal service was not done in the first place.[22]Strictest compliance is mandated, lest this provision be rendered meaningless and its sound purpose negated.[23]On the merits, respondents claim that they are entitled to the protection accorded to purchasers in good faith is well-taken.It is a well-established principle that a person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.[24]He is charged with notice only of such burdens and claims as are annotated on the title.[25]He is considered in law as an innocent purchaser for value or one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person.[26]That petitioners did not cause the cancellation of the certificate of title of Mendoza and procure one in their names is not disputed.Nor that they had their claims annotated on the same title.Thus, at the time of the sale of the property to respondents on November 28, 1991, only the mortgages in favor of MESALA appeared on the annotations of encumbrances on Mendozas title.Respondent Rosalia Salvador (Rosalia) so testified:Q:Now, according to you, you bought this property from the Mendozas (sic), Eduardo and Sally Mendoza on November 28, 1991, is that correct?A:Yes, sir.x x xQ:Now, Mrs. Sally Salvador, what did you do after buying the property from the Mendozas (sic)?A:We renovated it, we constructed a concrete fence, sir.Q:When you bought the property, is this property encumbered or mortgaged?A:The property was mortgaged to Meralco Savings and Loan Association, sir.x x xQ:And what did you do before buying the property?A:I verified with the City Hall if they are real owners of the property.x x xQ:When you bought the property, mortgaged to Meralco, was this particular property titled in the name of Eduardo Mendoza?A:Yes, sir.x x xQ:When you bought the property, Mrs. Sally Salvador, is this covered by any real property tax in the name of Eduardo Mendoza?A:In the name of Eduardo Mendoza the one given to me, sir.x x xQ:Now, Mrs. Sally Salvador, when for the first time did you see Mr. Payongayong?A:On the third call of Honorable Judge Enriquez, sir.x x xQ:Is it not a fact that before you bought that property, you made an ocular inspection of the premises, is that correct?A:Yes, sir.x x xQ:And after you have inspected the premises in question, is it not a fact that you went to the Register of Deeds, is that correct?A:Yes, sir.Together with Sally Mendoza and the agent.x x xQ:So, you went to the Office of the Register of Deeds of Quezon City, you, together with Benny Salvador and Mrs. Mendoza?A:Yes, sir.Q:What did you find out from your verification as to the authenticity of the title?A:That she is the real owner of the property registered in the Register of Deeds.Q:Who is the owner?A:Mr. and Mrs. Eduardo Mendoza.Q:Did you try to see if the property is free from any lien or encumbrance?A:Before we went to the Register of Deeds, she told us that the property is mortgaged at (sic) Meralco, sir.Q:Did you check it up, were you given a Xerox copy of the TCT, Transfer Certificate of Title No. 329509, in addition to the information given to you that the property in question is mortgaged in favor of Meralco Employees Savings?A:Yes, sir.Q:And when you went to the Register of Deeds, you saw that the mortgage in favor of the Meralco Employees Savings and Loan Association was duly annotated on the title which is being kept and intact in the Office of the Register of Deeds, is that correct?A:Yes, sir.[27]Where innocent third persons rely upon the correctness of a certificate of title and acquire rights over the property, the court cannot just disregard such rights.Otherwise, public confidence in the certificate of title, and ultimately, the Torrens system, would be impaired, for everyone dealing with registered property would still have to inquire at every instance whether the title has been regularly or irregularly issued.[28]The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except to claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto.Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate.Hence, a purchaser is not required to explore further what the Torrens title on its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto.[29]In respondents case, they did not only rely upon Mendozas title.Rosalia personally inspected the property and verified with the Registry of Deeds of Quezon City if Mendoza was indeed the registered owner.Given this factual backdrop, respondents did indeed purchase the property in good faith and accordingly acquired valid and indefeasible title thereto.The law is thus in respondents favor.Article 1544 of the Civil Code so provides:Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.There being double sale of an immovable property, as the above-quoted provision instructs, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith.[30]The trial and appellate courts thus correctly accorded preferential rights to respondents who had the sale registered in their favor.Petitioners claim, however, that the sale between Mendoza and respondents was simulated.Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purpose of deception, the appearance of a juridical act which does not exist or is different from that which was really executed.[31]Its requisites are: a) an outward declaration of will different from the will of the parties; b) the false appearance must have been intended by mutual agreement; and c) the purpose is to deceive third persons.[32]The basic characteristic then of a simulated contract is that it is not really desired or intended to produce legal effects or does not in any way alter the juridical situation of the parties.[33]The cancellation of Mendozas certificate of title over the property and the procurement of one in its stead in the name of respondents, which acts were directed towards the fulfillment of the purpose of the contract, unmistakably show the parties intention to give effect to their agreement.The claim of simulation does not thus lie.That petitioners and respondents were forced to litigate due to the deceitful acts of the spouses Mendoza, this Court is not unmindful.It cannot be denied, however, that petitioners failure to register the sale in their favor made it possible for the Mendozas to sell the same property to respondents.Under the circumstances, this Court cannot come to petitioners succor at the expense of respondents-innocent purchasers in good faith.Petitioners are not without remedy, however.They may bring an action for damages against the spouses Mendoza.[34]WHEREFORE, the petition isDENIED.SO ORDERED.

G.R. No. L-21489 and L-21628 May 19, 1966MIGUEL MAPALO, ET AL.,petitioners,vs.MAXIMO MAPALO, ET AL.,respondents.Pedro P. Tuason for petitioners.Primicias and Del Castillo for respondents.BENGZON, J.P.,J.:The spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners, with Torrens title certificate O.C.T. No. 46503, of a 1,635-square-meter residential land in Manaoag, Pangasinan. Said spouses-owners, out of love and affection for Maximo Mapalo a brother of Miguel who was about to get married decided to donate the eastern half of the land to him. O.C.T. No. 46503 was delivered. As a result, however, they were deceived into signing, on October 15, 1936, a deed of absolute sale over theentire landin his favor. Their signatures thereto were procured by fraud, that is, they were made to believe by Maximo Mapalo and by the attorney who acted as notary public who "translated" the document, that the same was a deed of donation in Maximo's favor covering one-half (the eastern half) of their land. Although the document of sale stated a consideration of Five Hundred (P500.00) Pesos, the aforesaid spouses did not receive anything of value for the land. The attorney's misbehaviour was the subject of an investigation but its result does not appear on record. However we took note of the fact that during the hearing of these cases said notary public was present but did not take the witness stand to rebut the plaintiffs' testimony supporting the allegation of fraud in the preparation of the document.Following the execution of the afore-stated document, the spouses Miguel Mapalo and Candida Quiba immediately built a fence of permanent structure in the middle of their land segregating the eastern portion from its western portion. Said fence still exists. The spouses have always been in continued possession over the western half of the land up to the present.Not known to them, meanwhile, Maximo Mapalo, on March 15, 1938, registered the deed of sale in his favor and obtained in his name Transfer Certificate of Title No. 12829 over the entire land. Thirteen years later on October 20, 1951, he sold for P2,500.00 said entire land in favor of Evaristo, Petronila Pacifico and Miguel all surnamed Narciso. The sale to the Narcisos was in turn registered on November 5, 1951 and Transfer Certificate of Title No. 11350 was issued for the whole land in their names.The Narcisos took possession only of the eastern portion of the land in 1951, after the sale in their favor was made. On February 7, 1952 they filed suit in the Court of First Instance of Pangasinan (Civil Case No. 1191) to be declared owners of the entire land, for possession of its western portion; for damages; and for rentals. It was brought against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb who had a house on the western part of the land with the consent of the spouses Mapalo and Quiba.The Mapalo spouses filed their answer with a counterclaim on March 17, 1965, seeking cancellation of the Transfer Certificate of Title of the Narcisos as to the western half of the land, on the grounds that their (Mapalo spouses) signatures to the deed of sale of 1936 was procured by fraud and that the Narcisos were buyers in bad faith. They asked for reconveyance to them of the western portion of the land and issuance of a Transfer Certificate of Title in their names as to said portion.In addition, the Mapalo spouses filed on December 16, 1957 their own complaint in the Court of First Instance of Pangasinan (Civil Case No. U-133) against the aforestated Narcisos and Maximo Mapalo. They asked that the deeds of sale of 1936 and of 1951 over the land in question be declared null and void as to the western half of said land.Judge Amado Santiago of the Court of First Instance of Pangasinan located in the municipality of Urdaneta tried the two cases jointly. Said court rendered judgment on January 18, 1961, as follows:WHEREFORE, judgment is hereby rendered as follows, to wit:(a) dismissing the complaint in Civil Case No. 11991;(b) declaring Exhibit A, plaintiffs in Case No. 11991 and Exhibit 1, defendants in Case No. U-133 as a donation only over the eastern half portion of the above-described land, and as null and void with respect to the western half portion thereof;(c) declaring as null and void and without legal force and effect Transfer Certificate of Title No. 12829 issued in favor of Maximo Mapalo as regards the western half portion of the land covered therein;(d) declaring as null and void Transfer Certificate of Title No. 11350 in the names of the Narcisos insofar as the western half portion of the land covered therein is concerned;(e) ordering the spouses Mapalo and Quiba and the Narcisos to have the above-described land be subdivided by a competent land surveyor and that the expenses incident thereto be borne out by said partiespro rata;(f) ordering the Register of Deeds of Pangasinan to issue in lieu of Transfer Certificate of Title No. 11350 two new titles upon completion of the subdivision plan, one in favor of the spouses Miguel Mapalo and Candida Quiba covering the western half portion and another for the Narcisos covering the eastern half portion of the said land, upon payment of the legal fees; meanwhile the right of the spouses Mapalo and Quiba is hereby ordered to be annotated on the back of Transfer Certificate of Title No. 11350; and(g) sentencing Maximo Mapalo and the Narcisos to pay the costs.IT IS SO ORDERED.The Narcisos appealed to the Court of Appeals. In its decision on May 28, 1963, the Court of Appeals reversed the judgment of the Court of First Instance, solely on the ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been obtained by fraud, the same was voidable, not voidab initio, and, therefore, the action to annul the same, within four years from notice of the fraud, had long prescribed. It reckoned said notice of the fraud from the date of registration of the sale on March 15, 1938. The Court of First Instance and the Court of Appeals are therefore unanimous that the spouses Mapalo and Quiba were definitely the victims of fraud. It was only on prescription that they lost in the Court of Appeals.From said decision of the Court of Appeals, the Mapalo spouses appealed to this Court.And here appellants press the contention that the document dated October 15, 1936, purporting to sell the entire land in favor of Maximo Mapalo, is void, not merely voidable, as to the western portion of the land for being absolutely simulated or fictitious.Starting with fundamentals, under the Civil Code, either the old or the new, for a contract to exist at all, three essential requisites must concur: (1) consent, (2) object, and (3) cause or consideration.1The Court of Appeals is right in that the element of consent is present as to the deed of sale of October 15, 1936. For consent was admittedly given, albeit obtained by fraud. Accordingly, said consent, although defective, did exist. In such case, the defect in the consent would provide a ground for annulment of a voidable contract, not a reason for nullityab initio.The parties are agreed that the second element of object is likewise present in the deed of October 15, 1936, namely, the parcel of land subject matter of the same.Not so, however, as to the third element of cause or consideration. And on this point the decision of the Court of Appeals issilent.As regards the eastern portion of the land, the Mapalo spouses are not claiming the same, it being their stand that they have donated and freely given said half of their land to Maximo Mapalo. And since they did not appeal from the decision of the trial court finding that there was a valid and effective donation of the eastern portion of their land in favor of Maximo Mapalo, the same pronouncement has become final as to them, rendering it no longer proper herein to examine the existence, validity efficacy of said donation as to said eastern portion.1wph1.tNow, as to the western portion, however, the fact not disputed herein is that no donation by the Mapalo spouses obtained as to said portion. Accordingly, we start with the fact that liberality as a cause or consideration does not exist as regards the western portion of the land in relation to the deed of 1936; that there was no donation with respect to the same.It is reduced, then, to the question whether there was an onerous conveyance of ownership, that is, a sale, by virtue of said deed of October 15, 1936, with respect to said western portion. Specifically, was there a cause or consideration to support the existence of a contrary of sale?The rule under the Civil Code, again be it the old or the new, is that contractswithouta cause or consideration produce no effect whatsoever.2Nonetheless, under the Old Civil Code, the statement of a false consideration renders the contract voidable, unless it is proven that it is supported by anotherrealandlicitconsideration.3And it is further provided by the Old Civil Code that the action for annulment of a contract on the ground of falsity of consideration shall last four years, the term to run from the date of the consummation of the contract.4Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it should be asked whether its case is one wherein thereis no consideration, or one with a statement of afalse consideration. If the former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code. As observed earlier, the deed of sale of 1936 stated that it had for its consideration Five Hundred (P500.00) Pesos. In fact, however, said consideration was totally absent. The problem, therefore, is whether a deed which states a consideration that in fact did not exist, is a contract without consideration, and therefore voidab initio, or a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable.According to Manresa, what is meant by a contract that states a false consideration is one that has in fact a real consideration but the same is not the one stated in the document. Thus he says:En primer lugar, nor interesa recordar la diferencia entre simulacion y el contrato con proposito fraudulento. Este aunque ilicito es real; mas el primero es falsoen realidad, aunque se le presente como verdadero. (Manresa, Codigo Civil, Tomo VIII, Vol. II, p. 354.)And citing a decision of the Supreme Court of Spain on the matter, Manresa further clarifies the difference of false cause and no cause, thus:Insiste en el distingo con mas detenida descripcion la sentencia de 25 de mayo de 1944, en la que se argumenta:Si bien es elemento fundamental de todo negocio, la declaracion de voluntad substracto de una voluntad efectiva, y la existencia de una causa que leconfiera significado juridico sealando la finalidad que con este se persigue, no ha de deducirse de esta doctrina, fundamentalmente recogida en el articulo 1.261 y concordantes del Codigo civil, que cualquier falta de adecuacion entre cualquier incongruencia entre la causa expresada y la verdadera, y, en general, entre la estructuracion y la finalidad economica; hayan de producir la ineficacia del negocio, pues por el contrario, puede este ser valido y producir sus efectos tanto en el caso de la mera disonancia entre el medio juridico adoptado y el fin practico perseguido, por utilizacion de una via oblicua o combinacion de formas juridicas entrelazadas que permita la obtencion de un resultado no previsto en los cuadros de la ley negocios indirectos y negocios fiduciarlos, validos cuando no envuelven fraude de ley, como en el caso de la verdadera disconformidad entre la apariencia del acto y su real contenido, preparada deliberadamente por las partes negocio simulado , ya que, cuando esta divergencia implicano una ausencia total de voluntad y de acto real, sino mera ocultacion de un negocio verdadero bajo la falsa apariencia de un negocio fingido"sirulacion relativa", la ineficacia de la forma externa simulada, no es obstaculo para la posible validez del negocio disimulado que contiene, en tanto este ultimo sea licito y reuna no solo los requisitos generales, sino tambien los que corresponden a su naturaleza especial, doctrina, en obligada aplicacion de los preceptos de nuestra Ley civil, especialmente en su art. 1.276, que, al establecer el principio de nulidad de loscontratos en los que se hace expresion de una causa falsa, deja a salvo el caso de que esten fundados en otra verdadera y licita. (Manresa, Codigo Civil, Tomo VIII, Vol. II pp. 357-358)Sanchez Roman says:Ya hemos dicho que la intervencion decausaen los contratos es necesaria, y que sin ellos son nulos; solo se concibe que un hombre perturbado en su razon pueda contratar sin causa. ...Por la misma razon de la necesidad de la intervencion decausaen el contrato, es preciso que esta seaverdaderay no supuesta, aparente o figurada. Que lafalsedadde lacausavicia el consentimiento y anula el contrato, es, no solo doctrina indudable de Derecho Cientifico sino tambien de antiguo Derecho de Castilla, que en multitud de leyes asi lo declararon. (Sanchez Roman, Derecho Civil, Tomo IV, p. 206.).In a clearer exposition of the above distinction, Castan states:2.. La causa ha de ser verdadera. La causa falsa puede sererronea o simulada. Es erronea como dice Giorgi, la causa que tiene por base la credulidad en un hecho no existente; y simulada la que tiene lugar cuando se hace aparecer artificiosamente una distinta de la verdadera. La erronea produce siempre la inexistencia del contrato; la simulada no siempre produce este efecto, porque puede suceder que la causa oculta, pero verdadera, baste para sostener el contrato. De acuerdo con esta doctrina, dice el art. 1.276 de nuestro Codigo que "la expresion de una causa falsa en los contratos dara lugar a la nulidad, si no se probase que estaban fundados en otra verdadera y licita". (Castan Derecho Civil Espaol, Tomo II, pp. 618-619)From the foregoing it can be seen that where, as in this case, there was in fact no consideration, the statement of one in the deed will not suffice to bring it under the rule of Article 1276 of the Old Civil Code as stating a false consideration. Returning to Manresa:Figurando en nuestro Derecho positivo la causa, como un elemento esential del contrato, es consecuencia ineludible, se reputar simulada la entrega del precio en la compraventa de autos, el que haya que declararla nula por inexistente haciendose aplicacion indebida de art. 1.276 por el Tribunal sentenciador al cohonestar la falta de precio admitiendo se pueda tratar de una donacion, ya que la recta aplicacion del citado precepto exige que los negocios simulados, o sea con causa falsa, se justifique la verdadera y licita en que se funda el acto que las partes han querido ocultar y el cumplimiento de las formalidades impuestas por la Ley y, cual dice la sentencia de 3 de marzo de 1932, esta rigurosa doctrina ha de ser especialmente impuesta en la donaciones puras y simples; de los que deduce que la sentencia recurrida al no decretar la nulidad instada por falta de causa, incide en la infraccion de los articulos 1.261, 1.274, 1.275 y 1.276 del Codigo Civil. (Sentencia de 22 de febrero de 1940). (Manresa, Codigo Civil, Tomo VIII, Vol. II, p. 356)In our view, therefore, the ruling of this Court inOcejo, Perez & Co. vs. Flores, 40 Phil. 921, is squarely applicable herein. In that case we ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor.Needless to add, the inexistence of a contract is permanent and incurable and cannot be the subject of prescription. In the words of Castan: "La inexistencia es perpetua e insubsanable no pudiendo ser objecto de confirmacion ni prescripcion (Op. cit., p. 644.) InEugenio v. Perdido,97 Phil. 41, 42-43, involving a sale dated 1932, this Court, speaking through Justice Cesar Bengzon, now Chief Justice, stated:Under the existing classification, such contract would be "inexisting" and "the action or defense for declaration" of such inexistence "does not prescribe". (Art. 1410, New Civil Code). While it is true that this is a new provision of the New Civil Code, it is nevertheless a principle recognized sinceTipton vs. Velasco, 6 Phil. 67 that "mere lapse of time cannot give efficacy to contracts that are null and void".Anent the matter of whether the Narcisos were purchasers in good faith, the trial court in its decision resolved this issue, thus:With regard to the second issue, the Narcisos contend that they are the owners of the above-described property by virtue of the deed of sale (Exh. B, plaintiffs in 11991 and Exh. 2, defendants in U-133) executed in their favor by Maximo Mapalo, and further claim that they are purchasers for value and in good faith. This court, however, cannot also give weight and credit on this theory of the Narcisos on the following reasons: Firstly, it has been positively shown by the undisputed testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso stayed for some days on the western side (the portion in question) of the above-described land until their house was removed in 1940 by the spouses Mapalo and Quiba; secondly, Pacifica Narciso admitted in his testimony in chief that when they bought the property, Miguel Mapalo was still in the premises in question (western part) which he is occupying and his house is still standing thereon; and thirdly, said Pacifico Narciso when presented as a rebuttal and sub-rebuttal witness categorically declared that before buying the land in question he went to the house of Miguel Mapalo and Candida Quiba and asked them if they will permit their elder brother Maximo to sell the property.Aside from the fact that all the parties in these cases are neighbors, except Maximo Mapalo the foregoing facts are explicit enough and sufficiently reveal that the Narcisos were aware of the nature and extent of the interest of Maximo Mapalo their vendor, over the above-described land before and at the time the deed of sale in their favor was executed.Upon the aforestated declaration of Pacifico Narciso the following question arises: What was the necessity, purpose and reason of Pacifico Narciso in still going to the spouses Mapalo and asked them to permit their brother Maximo to dispose of the above-described land? To this question it is safe to state that this act of Pacifico Narciso is a conclusive manifestation that they (the Narcisos) did not only have prior knowledge of the ownership of said spouses over the western half portion in question but that they also have recognized said ownership. It also conclusively shows their prior knowledge of the want of dominion on the part of their vendor Maximo Mapalo over the whole land and also of the flaw of his title thereto. Under this situation, the Narcisos may be considered purchasers in value but certainly not as purchasers in good faith. ... (pp. 97-98, Record on Appeal.)And said finding which is one of fact is found by us not a bit disturbed by the Court of Appeals. Said the Court of Appeals:In view of the conclusion thus reached, it becomes unnecessary to pass on the other errors assigned.Suffice it to say that, on the merits the appealed decision could have been upheldunder Article 1332 of the new Civil Code and the following authorities:Ayola vs. Valderrama Lumber Manufacturers Co., Inc., 49 O.G. 980, 982;Trasporte vs. Beltran, 51 O.G. 1434, 1435;Cortez vs. Cortez, CA-G.R. No. 18451-R, August 8, 1961;Castillo vs. Laberinto,CA-G.R. No. 18118-R, December 20, 1961; and 13 C.J. 372-373,as well as the several facts and circumstances appreciated by the trial court as supporting appellees' case.thereby in effect sustaining barring only its ruling on prescription the judgment and findings of the trial court, including that of bad faith on the part of the Narcisos in purchasing the land in question. We therefore see no need to further remand this case to the Court of Appeals for a ruling on this point, as appellees request in their brief in the event we hold the contract of 1936 to be inexistent as regards the western portion of the land.In view of defendants' bad faith under the circumstances we deem it just and equitable to award, in plaintiffs' favor, attorneys' fees on appeal, in the amount of P1,000.00 as prayed for in the counterclaim.Wherefore, the decision of the Court of Appeals is hereby reversed and set aside, and another one is hereby rendered affirmingin totothe judgment of the Court of First Instancea quo, with attorney's fees on appeal in favor of appellants in the amount of P1,000.00, plus the costs, both against the private appellees. So ordered.

SWEDISH MATCH, AB, JUAN ENRIQUEZ, RENE DIZON, FRANCISCO RAPACON, FIEL SANTOS, BETH FLORES, LAMBRTO DE LA EVA, GLORIA REYES, RODRIGO ORTIZ, NICANOR ESCALANTE, PETER HODGSON, SAMUEL PARTOSA, HERMINDA ASUNCION, JUANITO HERRERA, JACOBUS NICOLAAS, JOSEPH PEKELHARING (now Representing himself without court sanction as JOOST PEKELHARING), MASSIMO ROSSI and ED ENRIQUEZ,petitioners, vs.COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION and ANTONIO K. LITONJUA,respondents.D E C I S I O NTINGA,J.:Petitioners seek a reversal of the twinOrders[1]of the Court of Appeals dated 15 November 1996[2]and 31 January 1997,[3]in CA-G.R. CV No. 35886, entitledALS Management et al., v. Swedish Match, AB et al.The appellate court overturned the trial courtsOrder[4]dismissing the respondents complaint for specific performance and remanded the case to the trial court for further proceedings.Swedish Match, AB (hereinafter SMAB) is a corporation organized under the laws of Sweden not doing business in the Philippines. SMAB, however, had three subsidiary corporations in the Philippines, all organized under Philippine laws, to wit: Phimco Industries, Inc. (Phimco), Provident Tree Farms, Inc., and OTT/Louie (Phils.), Inc.Sometime in 1988, STORA, the then parent company of SMAB, decided to sell SMAB of Sweden and the latters worldwide match, lighter and shaving products operation to Eemland Management Services, now known as Swedish Match NV of Netherlands, (SMNV), a corporation organized and existing under the laws of Netherlands. STORA, however, retained for itself the packaging business.SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the shaving business. SMNV adopted a two-pronged strategy, the first being to sell its shares in Phimco Industries, Inc. and a match company in Brazil, which proposed sale would stave-off defaults in the loan covenants of SMNV with its syndicate of lenders. The other move was to sell at once or in one package all the SMNV companies worldwide which were engaged in match and lighter operations thru a global deal (hereinafter, global deal).Ed Enriquez (Enriquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA)the management company of the Swedish Match groupwas commissioned and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of SMNV. Enriquez came to the Philippines in November 1989 and informed the Philippine financial and business circles that the Phimco shares were for sale.Several interested parties tendered offers to acquire the Phimco shares, among whom were the AFP Retirement and Separation Benefits System, herein respondent ALS Management & Development Corporation and respondent Antonio Litonjua (Litonjua), the president and general manager of ALS.In his letter dated 3 November 1989, Litonjua submitted to SMAB a firm offer to buy all of the latters shares in Phimco and all of Phimcos shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. for the sum ofP750,000,000.00.[5]Through its Chief Executive Officer, Massimo Rossi (Rossi), SMAB, in its letter dated 1 December 1989, thanked respondents for their interest in the Phimco shares. Rossi informed respondents that their price offer was below their expectations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares, with the assurance that respondents would enjoy a certain priority although several parties had indicated their interest to buy the shares.[6]Thereafter, an exchange of correspondence ensued between petitioners and respondents regarding the projected sale of the Phimco shares. In his letter dated 21 May 1990, Litonjua offered to buy the disputed shares, excluding the lighter division for US$30.6 million, which per another letter of the same date was increased to US$36 million.[7]Litonjua stressed that the bid amount could be adjusted subject to availability of additional information and audit verification of the company finances.Responding to Litonjuas offer, Rossi sent his letter dated 11 June 1990, informing the former that ALS should undertake a due diligence process or pre-acquisition audit and review of the draft contract for the Match and Forestry activities of Phimco at ALS convenience. However, Rossi made it clear that at the completion of the due diligence process, ALS should submit its final offer in US dollar terms not later than 30 June 1990, for the shares of SMAB corresponding to ninety-six percent (96%) of the Match and Forestry activities of Phimco. Rossi added that in case the global deal presently under negotiation for the Swedish Match Lights Group would materialize, SMAB would reimburse up to US$20,000.00 of ALS costs related to the due diligence process.[8]Litonjua in a letter dated 18 June 1990, expressed disappointment at the apparent change in SMABs approach to the bidding process. He pointed out that in their 4 June 1990 meeting, he was advised that one final bidder would be selected from among the four contending groups as of that date and that the decision would be made by 6 June 1990. He criticized SMABs decision to accept a new bidder who was not among those who participated in the 25 May 1990 bidding. He informed Rossi that it may not be possible for them to submit their final bid on 30 June 1990, citing the advice to him of the auditing firm that the financial statements would not be completed until the end of July. Litonjua added that he would indicate in their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time.[9]Two days prior to the deadline for submission of the final bid, Litonjua again advised Rossi that they would be unable to submit the final offer by 30 June 1990, considering that the acquisition audit of Phimco and the review of the draft agreements had not yet been completed. He said, however, that they would be able to finalize their bid on 17 July 1990 and that in case their bid would turn out better than any other proponent, they would remit payment within ten (10) days from the execution of the contracts.[10]Enriquez sent notice to Litonjua that they would be constrained to entertain bids from other parties in view of Litonjuas failure to make a firm commitment for the shares of Swedish Match in Phimco by 30 June 1990.[11]In a letter dated 3 July 1990, Rossi informed Litonjua that on 2 July 1990, they signed a conditional contract with a local group for the disposal of Phimco. He told Litonjua that his bid would no longer be considered unless the local group would fail to consummate the transaction on or before 15 September1990.[12]Apparently irked by SMABs decision to junk his bid, Litonjua promptly responded by letter dated 4 July 1990. Contrary to his prior manifestations, he asserted that, for all intents and purposes, the US$36 million bid which he submitted on 21 May 1990 was their final bid based on the financial statements for the year 1989. He pointed out that they submitted the best bid and they were already finalizing the terms of the sale. He stressed that they were firmly committed to their bid of US$36 million and if ever there would be adjustments in the bid amount, the adjustments were brought about by SMABs subsequent disclosures and validated accounts, such as the aspect that only ninety-six percent (96%) of Phimco shares was actually being sold and not one-hundred percent (100%).[13]More than two months from receipt of Litonjuas last letter, Enriquez sent a fax communication to the former, advising him that the proposed sale of SMABs shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with ALS on an exclusive basis for a period of fifteen (15) days from 26 September 1990 subject to the terms contained in the letter. Additionally, Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period, SMAB would enter into negotiations with other buyers.[14]Shortly thereafter, Litonjua sent a letter expressing his objections to the totally new set of terms and conditions for the sale of the Phimco shares. He emphasized that the new offer constituted an attempt to reopen the already perfected contract of sale of the shares in his favor. He intimated that he could not accept the new terms and conditions contained therein.[15]On 14 December 1990, respondents, as plaintiffs, filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages, with a prayer for the issuance of a writ of preliminary injunction, against defendants, now petitioners. The individual defendants were sued in their respective capacities as officers of the corporations or entities involved in the aborted transaction.Aside from the averments related to their principal cause of action for specific performance, respondents alleged that the Phimco management, in utter bad faith, induced SMAB to violate its contract with respondents. They contended that the Phimco management took an interest in acquiring for itself the Phimco shares and that petitioners conspired to thwart the closing of such sale by interposing various obstacles to the completion of the acquisition audit.[16]Respondents claimed that the Phimco management maliciously and deliberately delayed the delivery of documents to Laya Manabat Salgado & Co. which prevented them from completing the acquisition audit in time for the deadline on 30 June 1990 set by petitioners.[17]Respondents added that SMABs refusal to consummate the perfected sale of the Phimco shares amounted to an abuse of right and constituted conduct which is contrary to law, morals, good customs and public policy.[18]Respondents prayed that petitioners be enjoined from selling or transferring the Phimco shares, or otherwise implementing the sale or transfer thereof, in favor of any person or entity other than respondents, and that any such sale to third parties be annulled and set aside. Respondents also asked that petitioners be ordered to execute all documents or instruments and perform all acts necessary to consummate the sales agreement in their favor.Traversing the complaint, petitioners alleged that respondents have no cause of action, contending that no perfected contract, whether verbal or written, existed between them. Petitioners added that respondents cause of action, if any, was barred by the Statute of Frauds since there was no written instrument or document evidencing the alleged sale of the Phimco shares to respondents.Petitioners filed a motion for a preliminary hearing of their defense of bar by the Statute of Frauds, which the trial court granted. Both parties agreed to adopt as their evidence in support of or against the motion to dismiss, as the case may be, the evidence which they adduced in support of their respective positions on the writ of preliminary injunction incident.In itsOrderdated 17 April 1991, the RTC dismissed respondents complaint.[19]It ruled that there was no perfected contract of sale between petitioners and respondents. The court aquosaid that the letter dated 11 June 1990, relied upon by respondents, showed that petitioners did not accept the bid offer of respondents as the letter was a mere invitation for respondents to conduct a due diligence process or pre-acquisition audit of Phimcos match and forestry operations to enable them to submit their final offer on 30 June 1990. Assuming that respondents bid was favored by an oral acceptance made in private by officers of SMAB, the trial court noted, such acceptance was merely preparatory to a formal acceptance by the SMABthe acceptance that would eventually lead to the execution and signing of the contract of sale. Moreover, the court noted that respondents failed to submit their final bid on the deadline set by petitioners.Respondents appealed to the Court of Appeals, assigning the following errors:A. THE TRIAL COURT EXCEEDED ITS AUTHORITY AND JURISDICTION WHEN IT ERRED PROCEDURALLY IN MOTU PROPIO (sic) DISMISSING THE COMPLAINT IN ITS ENTIRETY FOR LACK OF A VALID CAUSE OF ACTION WITHOUT THE BENEFIT OF A FULL-BLOWN TRIAL AND ON THE MERE MOTION TO DISMISS.B. THE TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANTS CAUSE OF ACTION BASED ON TORT WHICH, HAVING BEEN SUFFICIENTLY PLEADED, INDEPENDENTLY WARRANTED A FULL-BLOWN TRIAL.C. THE TRIAL COURT ERRED IN IGNORING PLAINTIFFS-APPELLANTS CAUSE OF ACTION BASED ON PROMISSORY ESTOPPEL WHICH, HAVING BEEN SUFFICIENTLY PLEADED, WARRANTED A FULL-BLOWN TRIAL, INDEPENDENTLY FOR THE OTHER CAUSES OF ACTION.D. THE TRIAL COURT JUDGE ERRED IN FORSWEARING JUDICIAL OBJECTIVITY TO FAVOR DEFENDANTS-APPELLEES BY MAKING UNFOUNDED FINDINGS, ALL IN VIOLATION OF PLAINTIFFS-APPELLANTS RIGHT TO DUE PROCESS.[20]After assessing the respective arguments of the parties, the Court of Appeals reversed the trial courts decision. It ruled that the series of written communications between petitioners and respondents collectively constitute a sufficient memorandum of their agreement under Article 1403 of the Civil Code; thus, respondents complaint should not have been dismissed on the ground that it was unenforceable under the Statute of Frauds. The appellate court opined that any document or writing, whether formal or informal, written either for the purpose of furnishing evidence of the contract or for another purpose which satisfies all the Statutes requirements as to contents and signature would be sufficient; and, that two or more writings properly connected could be considered together. The appellate court concluded that the letters exchanged by and between the parties, taken together, were sufficient to establish that an agreement to sell the disputed shares to respondents was reached.The Court of Appeals clarified, however, that by reversing the appealed decision it was not thereby declaring that respondents are entitled to the reliefs prayed for in their complaint, but only that the case should not have been dismissed on the ground of unenforceability under the Statute of Frauds. It ordered the remand of the case to the trial court for further proceedings.Hence, this petition.Petitioners argue that the Court of Appeals erred in failing to consider that the Statute of Frauds requires not just the existence of any note or memorandum but that such note or memorandum should evidence an agreement to sell; and, that in this case, there was no word, phrase, or statement in the letters exchanged between the two parties to show or even imply that an agreement had been reached for the sale of the shares to respondent.Petitioners stress that respondent Litonjua made it clear in his letters that the quoted prices were merely tentative and still subject to further negotiations between him and the seller. They point out that there was no meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept respondents offer that consideration would be paid in Philippine pesos. Moreover, Litonjua signified their inability to submit their final bid on 30 June 1990, at the same time stating that the broad terms and conditions described in their meeting were inadequate for them to make a response at that time so much so that he would have to await the corresponding specifics. Petitioners argue that the foregoing circumstances prove that they failed to reach an agreement on the sale of the Phimco shares.In theirComment, respondents maintain that the Court of Appeals correctly ruled that the Statute of Frauds does not apply to the instant case. Respondents assert that the sale of the subject shares to them was perfected as shown by the following circumstances, namely: petitioners assured them that should they increase their bid, the sale would be awarded to them and that they did in fact increase their previous bid of US$30.6 million to US$36 million; petitioners orally accepted their revised offer and the acceptance was relayed to them by Rene Dizon; petitioners directed them to proceed with the acquisition audit and to submit a comfort letter from the United Coconut Planters Bank (UCPB); petitioner corporation confirmed its previous verbal acceptance of their offer in a letter dated 11 June 1990; with the prior approval of petitioners, respondents engaged the services of Laya, Manabat, Salgado & Co., an independent auditing firm, to immediately proceed with the acquisition audit; and, petitioner corporation reiterated its commitment to be bound by the result of the acquisition audit and promised to reimburse respondents cost to the extent of US$20,000.00. All these incidents, according to respondents, overwhelmingly prove that the contract of sale of the Phimco shares was perfected.Further, respondents argued that there was partial performance of the perfected contract on their part. They alleged that with the prior approval of petitioners, they engaged the services of Laya, Manabat, Salgado & Co. to conduct the acquisition audit. They averred that petitioners agreed to be bound by the results of the audit and offered to reimburse the costs thereof to the extent of US$20,000.00. Respondents added that in compliance with their obligations under the contract, they have submitted a comfort letter from UCPB to show petitioners that the bank was willing to finance the acquisition of the Phimco shares.[21]The basic issues to be resolved are: (1) whether the appellate court erred in reversing the trial courts decision dismissing the complaint for being unenforceable under the Statute of Frauds; and (2) whether there was a perfected contract of sale between petitioners and respondents with respect to the Phimco shares.The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil Code[22]requires certain contracts enumerated therein to be evidenced by some note or memorandum in order to be enforceable. 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.[23]Evidence of the agreement cannot be received without the writing or a secondary evidence of its contents.The Statute, however, simply provides the method by which the contracts enumerated therein may be proved but does not declare them invalid because they are not reduced to writing. By law, contracts are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable.[24]Consequently, the effect of non-compliance with the requirement of the Statute is simply that no action can be enforced unless the requirement is complied with.[25]Clearly, the form required is for evidentiary purposes only. Hence, if the parties permit a contract to be proved, without any objection, it is then just as binding as if the Statute has been complied with.[26]The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their evidence 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.[27]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.[28]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.[29]Contrary to the Court of Appeals conclusion, the exchange of correspondence between the parties hardly constitutes the note or memorandum within the context of Article 1403 of the Civil Code. Rossis letter dated 11 June 1990, heavily relied upon by respondents, is not complete in itself. First, it does not indicate at what price the shares were being sold. In paragraph (5) of the letter, respondents were supposed to submit their final offer in U.S. dollar terms, at that after the completion of the due diligence process. The paragraph undoubtedly proves that there was as yet no definite agreement as to the price. Second, the letter does not state the mode of payment of the price. In fact, Litonjua was supposed to indicate in his final offer how and where payment for the shares was planned to be made.[30]Evidently, the trial courts dismissal of the complaint on the ground of unenforceability under the Statute of Frauds is warranted.[31]Even if we were to consider the letters between the parties as a sufficient memorandum for purposes of taking the case out of the operation of the Statute the action for specific performance would still fail.A contract is defined as a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another, or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do.[32]There can be no contract unless the following requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; (c) cause of the obligation which is established.[33]Contracts are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.[34]Specifically, in the case of a contract of sale, required is the concurrence of three elements, to wit: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter, and (c) price certain in money or its equivalent.[35]Such contract is born from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.[36]In general, contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.[37]A negotiation is formally initiated by an offer. A perfected promise merely tends to insure and pave the way for the celebration of a future contract. An imperfect promise (policitacion), on the other hand, is a mere unaccepted offer.[38]Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. At any time prior to the perfection of the contract, either negotiating party may stop the negotiation.[39]The offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal.[40]An offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. Consent in a contract of sale should be 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.[41]Quite obviously, Litonjuas letter dated 21 May 1990, proposing the acquisition of the Phimco shares for US$36 million was merely an offer. This offer, however, in Litonjuas own words, is understood to be subject to adjustment on the basis of an audit of the assets, liabilities and net worth of Phimco and its subsidiaries and on the final negotiation between ourselves.[42]Was the offer certain enough to satisfy the requirements of the Statute of Frauds? Definitely not.Litonjua repeatedly stressed in his letters that they would not be able to submit their final bid by 30 June 1990.[43]With indubitable inconsistency, respondents later claimed that for all intents and purposes, the US$36 million was their final bid. If this were so, it would be inane for Litonjua to state, as he did, in his letter dated 28 June 1990 that they would be in a position to submit their final bid only on 17 July 1990. The lack of a definite offer on the part of respondents could not possibly serve as the basis of their claim that the sale of the Phimco shares in their favor was perfected, for one essential element of a contract of sale was obviously wantingthe price certain in money or its equivalent. The price must be certain, otherwise there is no true consent between the parties.[44]There can be no sale without a price.[45]Quite recently, this Court reiterated the long-standing doctrine that the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist since the agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price.[46]Grantingarguendo, that the amount of US$36 million was a definite offer, it would remain as a mere offer in the absence of evidence of its acceptance. To produce a contract, there must be acceptance, which may be express or implied, but it must not qualify the terms of the offer.[47]The acceptance of an offer must be unqualified and absolute to perfect the contract.[48]In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.[49]Respondents attempt to prove the alleged verbal acceptance of their US$36 million bid becomes futile in the face of the overwhelming evidence on record that there was in the first place no meeting of the minds with respect to the price. It is dramatically clear that the US$36 million was not the actual price agreed upon but merely a preliminary offer which was subject to adjustment after the conclusion of the audit of the company finances. Respondents failure to submit their final bid on the deadline set by petitioners prevented the perfection of the contract of sale. It was not perfected due to the absence of one essential element which was the price certain in money or its equivalent.At any rate, from the procedural stand point, the continuing objections raised by petitioners to the admission of parol evidence[50]on the alleged verbal acceptance of the offer rendered any evidence of acceptance inadmissible.Respondents plea of partial performance should likewise fail. The acquisition audit and submission of a comfort letter, even if considered together, failed to prove the perfection of the contract. Quite the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part of the due diligence process to help them arrive at and make their final offer. On the other hand, the submission of the comfort letter was merely a guarantee that respondents had the financial capacity to pay the price in the event that their bid was accepted by petitioners.The Statute of Frauds is applicable only to contracts which are executory and not to those which have been consummated either totally or partially.[51]If a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already derived by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.[52]This rule, however, is predicated on the fact of ratification of the contract within the meaning of Article 1405 of the Civil Code either (1) by failure to object to the presentation of oral evidence to prove the same, or (2) by the acceptance of benefits under them. In the instant case, respondents failed to prove that there was partial performance of the contract within the purview of the Statute.Respondents insist that even on the assumption that the Statute of Frauds is applicable in this case, the trial court erred in dismissing the complaint altogether. They point out that the complaint presents several causes of action.A close examination of the complaint reveals that it alleges two distinct causes of action, the first is for specific performance[53]premised on the existence of the contract of sale, while the other is solely for damages, predicated on the purported dilatory maneuvers executed by the Phimco management.[54]With respect to the first cause of action for specific performance, apart from petitioners alleged refusal to honor the contract of salewhich has never been perfected in the first placerespondents made a number of averments in their complaint all in support of said cause of action. Respondents claimed that petitioners were guilty of promissory estoppel,[55]warranty breaches[56]and tortious conduct[57]in refusing to honor the alleged contract of sale. These averments are predicated on or at least interwoven with the existence or perfection of the contract of sale. As there was no such perfected contract, the trial court properly rejected the averments in conjunction with the dismissal of the complaint for specific performance.However, respondents second cause of action due to the alleged malicious and deliberate delay of the Phimco management in the delivery of documents necessary for the completion of the audit on time, not being based on the existence of the contract of sale, could stand independently of the action for specific performance and should not be deemed barred by the dismissal of the cause of action predicated on the failed contract. If substantiated, this cause of action would entitle respondents to the recovery of damages against the officers of the corporation responsible for the acts complained of.Thus, the Court cannot forthwith order dismissal of the complaint without affording respondents an opportunity to substantiate their allegations with respect to its cause of action for damages against the officers of Phimco based on the latters alleged self-serving dilatory maneuvers.WHEREFORE, the petition is in part GRANTED. The appealedDecisionis hereby MODIFIED insofar as it declared the agreement between the parties enforceable under the Statute of Frauds. The complaint before the trial court is ordered DISMISSED insofar as the cause of action for specific performance is concerned. The case is ordered REMANDED to the trial court for further proceedings with respect to the cause of action for damages as above specified.SO ORDERED.Puno, J., (Chairman), Austria-Martinez, Callejo, Sr.andChico-Nazario, JJ.,concur.