G.R. No. L-26872 - Villonco Realty Co. vs. Bormaheco, Inc.

Villonco Realty Company — plaintiff and appellee; buyer and payor of earnest money.
Bormaheco, Inc. — defendant and appellant; purported vendor and corporate entity represented by its president.
Francisco N. Cervantes and Rosario N. Cervantes — defendants and appellants; registered owners of the three lots; Cervantes was president of Bormaheco, Inc.
Edith Perez de Tagle — intervenor and appellee; real estate broker who negotiated the sale and received the earnest money as agent of Villonco Realty Company.
National Shipyards & Steel Corporation (Nassco) and Development Bank of the Philippines (DBP) — third parties relevant to the transaction (Nassco owned the Punta, Sta. Ana lot; DBP held a mortgage on the Buendia lots).

The properties consisted of Lots 3, 15 and 16 at 245 Buendia Avenue, Makati, Rizal, totaling 3,500 sq. m., covered by TCT Nos. 43530, 43531 and 43532 (Exhs. A, A-1, A-2).
The three lots were mortgaged to the DBP on April 21, 1959 as security for a loan of P441,000; mortgage debt was fully paid on July 10, 1969.
The lots were occupied by Bormaheco, Inc.'s building, machinery and equipment and were adjacent to Villonco Realty Company's property at 219 Buendia Avenue.

Initial negotiations occurred in early February 1964 between Romeo and Teofilo Villonco (Villonco Realty Company) and Cervantes, with Miss Tagle as broker.
Bormaheco, Inc. made a written offer dated February 12, 1964 setting price at P400 per sq. m., requiring a P100,000 earnest money, conditioning the sale upon the seller's consummation of purchase of another property in Sta. Ana, and stating "final negotiations on both properties can be definitely known after 45 days" (Exh. B).
Villonco Realty Company made a revised counter-offer dated March 4, 1964, accepting P400 per sq. m. including improvements, providing terms of payment and enclosing MBTC Check No. 448314 for P100,000 as earnest money, and requesting the buyer sign conformity (Exh. D).
Cervantes signed the March 4 letter "CONFORME: BORMAHECO, INC. (Sgd.) FRANCISCO CERVANTES" and accepted the P100,000 check, which Miss Tagle delivered and marked as "subject to the terms and conditions embodied in Bormaheco's letter" and Villonco's March 4 letter (Exhs. E, E-1).

Bormaheco, Inc. submitted the highest bid for the Nassco Punta lot at the bidding of January 17, 1964; the lot was awarded to Bormaheco.
Nassco's Board authorized the General Manager to sign the deed of sale by resolution dated February 18, 1964 (Exh. H).
Nassco's Acting General Manager requested approval from the Economic Coordinator on February 28, 1964; the Economic Coordinator approved on March 24, 1964 (Exh. I).
The deed of sale for the Punta land was executed on June 26, 1964, with Bormaheco, Inc. represented by Cervantes (Exh. J).

On March 30, 1964 Cervantes returned the P100,000 earnest money with interest of P694.24, claiming that despite the lapse of 45 days there was "no certainty" of acquiring a substitute property (Exhs. F, F-1, F-2).
Villonco Realty Company refused the returned checks; Miss Tagle protested to Cervantes by letter dated March 31, 1964 (Exh. G).
Cervantes replied April 6, 1964, stating that the forty-five day period had expired and that they were "no longer interested to sell" (Annex I).
Villonco Realty Company filed a complaint for specific performance dated April 6, 1964 and...(Subscriber-Only)

Whether a binding contract of sale was perfected between Villonco Realty Company and Bormaheco, Inc./Francisco N. Cervantes on March 4, 1964.
Whether Cervantes' alleged qualifications, insertions or handwritten changes to the March 4 instrument converted acceptance into a counter-offer preventing perfection.

Whether the contract's perfection was contingent upon Bormaheco, Inc.'s acquisition of the Nassco (Punta, Sta. Ana) property within forty-five days from February 12, 1964 such that failure to acquire by that date avoided the sale.

Whether Bormaheco, Inc. could be compelled to sell lots that were registered in the names of Francisco N. Cervantes and Rosario N. Cervantes.
Whether Cervantes acted beyond authority, whether the conjugal partnership consent (Art. 166, Civil Code) was lacking, and whether Villonco Realty Company was mi...(Subscriber-Only)