3 Elements of Consent in Contracts
The main controversy in the petition is whether or not there was a perfected contract of sale of the subject property. In resolving this issue, this Court would necessarily re-examine the factual findings of the Court of Appeals, as well as the contrary findings of the trial court. It is a recognized principle that while this Court is not a trier of facts and does not normally embark on the evaluation of evidence adduced during trial, this rule allows exceptions, such as when the findings of the trial court and the Court of Appeals are conflicting or contradictory.
A contract of sale is perfected by mere consent, upon a meeting of the minds in the offer and the acceptance thereof based on subject matter, price and terms of payment. Until the contract of sale is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties. Consent is essential for the existence of a contract, and where it is absent, the contract is non-existent. Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous. Moreover, a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to 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 or consideration. In the present case, Salvador fails to allege the manner of payment of the purchase price on which the parties should have agreed. No period was set within which the payment must be made. Of the purchase price of P66,360.00, which the parties purportedly agreed upon, the amount which should be paid in cash and the amount for construction materials was not determined. This means that the parties had no exact notion of the consideration for the contract to which they supposedly gave their consent.Thus, such failure is fatal to Salvadors claim that a sale had been agreed upon by the parties.
Furthermore, after carefully examining the records, serious doubts became apparent as to whether cash advances and deliveries of construction materials evidenced by numerous statements of accounts and delivery receipts were actually intended as payment for the land.
First of all, the statements of accounts and the delivery receipts do not indicate that the construction materials or the cash advances were made in connection with the sale of the subject property. Any doubt as to the real meaning of the contract must be resolved against the person who drafted the instrument and is responsible for the ambiguity thereof. Since Salvador prepared these statements of accounts and therefore caused the ambiguity, he cannot benefit from the resulting ambiguity. Salvador is hardly an ignorant and illiterate person; rather, he is a businessman engaged in manufacturing and distributing construction materials and operates no less than two branches. It should have been noted in the statement of accounts, or even in another document, that the cash advances and deliveries of construction materials were made in connection with a transaction as important as a sale of land. As they are, the statements of accounts and especially the straightforward delivery receipts are insufficient proof that Judge Amadosold his property to Salvador.
Secondly, one of the delivery receipts presented by Salvador as Annex I of his Complaint in RTC Civil Case No. 1252 was partially paid. If Judge Amado had already agreed that the construction materials delivered to him and his family constituted the payment for the subject property, the act of partially paying for construction materials would be incongruous to such intention.
Thirdly, Salvador himself gave conflicting statements on whether he has completed payment. Among the findings of fact made by the MTC in its Decision dated 16 July 1990 in Civil Case No. 700, based on the very statements made by the Salvador brothers in their Answer with Counterclaim, was that Salvador paid Judge Amado P62,319.38 in cash and construction materials for the subject property, and a balance of P4,040.62 was left unpaid due to the failure of Judge Amado to execute and deliver the deed of sale. However, in the proceedings before the RTC in Civil Case No. 1252, Salvador claimed that he paid Judge Amado P67,215.38 in cash and construction materials, which was more than the purchase price of P66,360.00 upon which they agreed. Lastly, Salvador again contradicts himself as to the date he supposedly completed the payments for the subject property. In his Complaint in Civil Case No. 1252, he alleges that by October 1980, he had already fully paid Judge Amado P67,215.38 in cash and construction materials. Yet in the same pleading, he included 11 separate deliveries of construction materials made from 8 December 1980 to 6 January 1981 as evidence of payment. This Court cannot presume the existence of a sale of land, absent any direct proof of it. The construction of the terms of a contract, which would amount to impairment or loss of rights, is not favored. Conservation and preservation, not waiver or abandonment or forfeiture of a right, is the rule. While it is apparent that Salvador paid cash advances and delivered construction materials to Judge Amado, this fact alone does not attest to the existence of a sale of land. In truth, the inconsistent statements made by Salvador regarding the amount paid to Judge Amado, the date when he was supposed to have completed the payment, and the dissimilarity between the price allegedly agreed upon and the amount supposedly paid show the absence of a uniform intention to apply these cash advances and construction materials as payment for the purchase of the subject property. Absent any tangible connection with the sale of land, these transactions stand by themselves as loans and purchases of construction materials.
Other than the statements of accounts and delivery receipts scrutinized above, the other pieces of evidence that Salvador offered are similarly inadequate to establish his allegation of a perfected sale.
Salvador presented as evidence of a perfected sale a handwritten note dated 1 October 1980 as Annex GG of the Complaint dated 16 August 1996, written by Judge Amado, wherein the latter asked Salvador for P500.00. In the same note, Judge Amado informed Salvador that he had not yet signed an unidentified document, which he promised to sign after his plan to divide a certain parcel of land was completed. This note is not conclusive proof of the existence of a perfected sale. What this note proves is that Judge Amado was hesitant to sign the unidentified document and was still waiting for the completion of his plan to divide the land referred to in the note. To say that the document is the deed of sale and the land is the subject property claimed by Salvador would be based on pure surmise and conjecture without a more specific reference to them in the note. Moreover, the P500.00 which Judge Amado was demanding from Salvador could not have been payment pursuant to the purported sale of the subject property. The list of cash advances, which were supposedly part of the payment for the subject property, made by Salvador to Judge Amado from 1 September 1979 to 23 September 1980and attached as Annex D of his Complaint in Civil Case No. 1252, did not include the P500.00 which Judge Amado demanded from Salvador on 1 October 1980.
The testimony of Ismael Angeles is likewise insufficient to support the allegation that Judge Amado agreed to sell the subject property to Salvador. The factual findings of the trial court, especially as regards the credibility of witnesses, are conclusive upon this court. The findings of fact and assessment of credibility of witnesses is a matter best left to the trial court because of its unique position of having observed that elusive and incommunicable evidence of the witnesses deportment on the stand while testifying, which opportunity is denied to the appellate courts. Only the trial judge can observe the furtive glance, blush of conscious shame, hesitation, flippant or sneering tone, calmness, sigh or the scant or full realization of an oath--all of which are useful for an accurate determination of a witness honesty and sincerity. Thus, the assessment by the RTC of Angeles testimony, which it deemed insufficient, is entitled to great respect:
Moreover, [herein respondent Salvador]s corroborative testimonial evidence, that is, the testimony of one Ismael Angeles, is likewise deemed insufficient as even that witness failed to categorically state any sale transaction of the lot between [respondent] Salvador and the late Judge Amado, as in fact, Mr. Angeles manifested uncertainty when he said siguro nagkaroon sila ngbilihan.
The findings of the trial court are well supported by the records of this case. At the time that Judge Amado and Salvador allegedly entered into the sale agreement, IsmaelAngeles testified that I was inside the house, but I did not hear their conversation because I was far from them. Even if Ismael Angeles testimony was given full credence, it would still be insufficient to establish that a sale agreement was perfected between Salvador and Judge Amado. His testimony that Judge Amado ordered the preparation of the deed of sale only proves that Judge Amado and Salvador were in the process of negotiating the sale of the subject property, not that they had already set and agreed to the terms and conditions of the sale. In fact, Ismael Angeles testimony that Judge Amado refused to sign the contract reinforces the fact that the latter had not consented to the sale of the subject property. In addition, Salvadors act of relocating the squatter families formerly residing on the subject property is not substantial proof of ownership. Such act is only consistent with the petitioners allegations that Salvador was allowed to use the subject property for his business, and it would redound to his benefit to relocate the squatters previously occupying it.
From the evidence presented, an agreement of sale of the subject property between him and Judge Amado had not yet reached the stage of perfection. The stages of a contract are, thus, explained:
A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its consummation. Negotiation covers the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is concluded (perfected). The perfection of the contract takes place upon the concurrence of the essential elements thereof. A contract which is consensual as to perfection is so established upon a mere meeting of the minds, i.e. the concurrence of offer and acceptance, on the object and on the cause thereof. x x x. The stage of consummation begins when the parties perform their respective undertakings under the contract culminating in the extinguishment thereof.
Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In sales, particularly, to which the topic for discussion about the case at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees.
In the present case, the terms of payment have not even been alleged. No positive proof was adduced that Judge Amado had fully accepted Salvadors sketchy proposal. Even if the handwritten note actually referred to the subject property, it merely points to the fact that the parties were, at best, negotiating a contract of sale. At the time it was written, on 1 October 1980, Judge Amado had not expressed his unconditional acceptance of Salvadors offer. He merely expressed that he was considering the sale of the subject property, but it was nevertheless clear that he still was unprepared to sign the contract. Salvador himself admitted before the MTC in Civil Case No. 700 that the sale agreement did not push through as he testified that I considered that dead investment because our sale did not materialize because he always made promises. Absent the valid sale agreement between Salvador and Judge Amado, the formers possession of the subject property hinges on the permission and goodwill of Judge Amado and the petitioners, as his successors-in-interest. In the demand letter dated 4 November 1983, Judge Amado had already directed Salvador to vacate the subject property. Thus, there is no more basis for Salvador and his brother, Lamberto Salvador, to retain possession over it, and such possession must now be fully surrendered to the petitioners.
The Court of Appeals imposed moral damages and exemplary damages in view of the petitioners refusal to execute a Deed of Sale and the social humiliation suffered by Salvador due to his ouster from the property. Since petitioners had no demandable obligation to deliver the subject property, the award of moral and exemplary damages, as well as cost of suit, in favor of Salvador is without legal basis.
Moral damages may be recovered if they were the proximate result of defendants wrongful acts or omissions. Two elements are required. First, the act or omission must be the proximate result of the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Second, the act must be wrongful. In this case, petitioners were not under any obligation to execute a Deed of Sale or guarantee Salvadors possession of the property. Absent any wrongful act which may be attributed to petitioners, an award of moral damages is inappropriate.
The award of exemplary damages is also improper. Exemplary damages are awarded only when a wrongful act is accompanied by bad faith or when the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Moreover, where a party is not entitled to actual or moral damages, an award of exemplary damages is likewise baseless. As this Court has found, petitioners refusal to turn over the subject property to Salvador is justified and cannot be the basis for the award of exemplary damages. (G.R. No. 171401; December 13, 2007)
A contract of sale is perfected by mere consent, upon a meeting of the minds in the offer and the acceptance thereof based on subject matter, price and terms of payment. Until the contract of sale is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties. Consent is essential for the existence of a contract, and where it is absent, the contract is non-existent. Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous. Moreover, a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to 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 or consideration. In the present case, Salvador fails to allege the manner of payment of the purchase price on which the parties should have agreed. No period was set within which the payment must be made. Of the purchase price of P66,360.00, which the parties purportedly agreed upon, the amount which should be paid in cash and the amount for construction materials was not determined. This means that the parties had no exact notion of the consideration for the contract to which they supposedly gave their consent.Thus, such failure is fatal to Salvadors claim that a sale had been agreed upon by the parties.
Furthermore, after carefully examining the records, serious doubts became apparent as to whether cash advances and deliveries of construction materials evidenced by numerous statements of accounts and delivery receipts were actually intended as payment for the land.First of all, the statements of accounts and the delivery receipts do not indicate that the construction materials or the cash advances were made in connection with the sale of the subject property. Any doubt as to the real meaning of the contract must be resolved against the person who drafted the instrument and is responsible for the ambiguity thereof. Since Salvador prepared these statements of accounts and therefore caused the ambiguity, he cannot benefit from the resulting ambiguity. Salvador is hardly an ignorant and illiterate person; rather, he is a businessman engaged in manufacturing and distributing construction materials and operates no less than two branches. It should have been noted in the statement of accounts, or even in another document, that the cash advances and deliveries of construction materials were made in connection with a transaction as important as a sale of land. As they are, the statements of accounts and especially the straightforward delivery receipts are insufficient proof that Judge Amadosold his property to Salvador.
Secondly, one of the delivery receipts presented by Salvador as Annex I of his Complaint in RTC Civil Case No. 1252 was partially paid. If Judge Amado had already agreed that the construction materials delivered to him and his family constituted the payment for the subject property, the act of partially paying for construction materials would be incongruous to such intention.
Thirdly, Salvador himself gave conflicting statements on whether he has completed payment. Among the findings of fact made by the MTC in its Decision dated 16 July 1990 in Civil Case No. 700, based on the very statements made by the Salvador brothers in their Answer with Counterclaim, was that Salvador paid Judge Amado P62,319.38 in cash and construction materials for the subject property, and a balance of P4,040.62 was left unpaid due to the failure of Judge Amado to execute and deliver the deed of sale. However, in the proceedings before the RTC in Civil Case No. 1252, Salvador claimed that he paid Judge Amado P67,215.38 in cash and construction materials, which was more than the purchase price of P66,360.00 upon which they agreed. Lastly, Salvador again contradicts himself as to the date he supposedly completed the payments for the subject property. In his Complaint in Civil Case No. 1252, he alleges that by October 1980, he had already fully paid Judge Amado P67,215.38 in cash and construction materials. Yet in the same pleading, he included 11 separate deliveries of construction materials made from 8 December 1980 to 6 January 1981 as evidence of payment. This Court cannot presume the existence of a sale of land, absent any direct proof of it. The construction of the terms of a contract, which would amount to impairment or loss of rights, is not favored. Conservation and preservation, not waiver or abandonment or forfeiture of a right, is the rule. While it is apparent that Salvador paid cash advances and delivered construction materials to Judge Amado, this fact alone does not attest to the existence of a sale of land. In truth, the inconsistent statements made by Salvador regarding the amount paid to Judge Amado, the date when he was supposed to have completed the payment, and the dissimilarity between the price allegedly agreed upon and the amount supposedly paid show the absence of a uniform intention to apply these cash advances and construction materials as payment for the purchase of the subject property. Absent any tangible connection with the sale of land, these transactions stand by themselves as loans and purchases of construction materials.
Other than the statements of accounts and delivery receipts scrutinized above, the other pieces of evidence that Salvador offered are similarly inadequate to establish his allegation of a perfected sale.
Salvador presented as evidence of a perfected sale a handwritten note dated 1 October 1980 as Annex GG of the Complaint dated 16 August 1996, written by Judge Amado, wherein the latter asked Salvador for P500.00. In the same note, Judge Amado informed Salvador that he had not yet signed an unidentified document, which he promised to sign after his plan to divide a certain parcel of land was completed. This note is not conclusive proof of the existence of a perfected sale. What this note proves is that Judge Amado was hesitant to sign the unidentified document and was still waiting for the completion of his plan to divide the land referred to in the note. To say that the document is the deed of sale and the land is the subject property claimed by Salvador would be based on pure surmise and conjecture without a more specific reference to them in the note. Moreover, the P500.00 which Judge Amado was demanding from Salvador could not have been payment pursuant to the purported sale of the subject property. The list of cash advances, which were supposedly part of the payment for the subject property, made by Salvador to Judge Amado from 1 September 1979 to 23 September 1980and attached as Annex D of his Complaint in Civil Case No. 1252, did not include the P500.00 which Judge Amado demanded from Salvador on 1 October 1980.
The testimony of Ismael Angeles is likewise insufficient to support the allegation that Judge Amado agreed to sell the subject property to Salvador. The factual findings of the trial court, especially as regards the credibility of witnesses, are conclusive upon this court. The findings of fact and assessment of credibility of witnesses is a matter best left to the trial court because of its unique position of having observed that elusive and incommunicable evidence of the witnesses deportment on the stand while testifying, which opportunity is denied to the appellate courts. Only the trial judge can observe the furtive glance, blush of conscious shame, hesitation, flippant or sneering tone, calmness, sigh or the scant or full realization of an oath--all of which are useful for an accurate determination of a witness honesty and sincerity. Thus, the assessment by the RTC of Angeles testimony, which it deemed insufficient, is entitled to great respect:
Moreover, [herein respondent Salvador]s corroborative testimonial evidence, that is, the testimony of one Ismael Angeles, is likewise deemed insufficient as even that witness failed to categorically state any sale transaction of the lot between [respondent] Salvador and the late Judge Amado, as in fact, Mr. Angeles manifested uncertainty when he said siguro nagkaroon sila ngbilihan.
The findings of the trial court are well supported by the records of this case. At the time that Judge Amado and Salvador allegedly entered into the sale agreement, IsmaelAngeles testified that I was inside the house, but I did not hear their conversation because I was far from them. Even if Ismael Angeles testimony was given full credence, it would still be insufficient to establish that a sale agreement was perfected between Salvador and Judge Amado. His testimony that Judge Amado ordered the preparation of the deed of sale only proves that Judge Amado and Salvador were in the process of negotiating the sale of the subject property, not that they had already set and agreed to the terms and conditions of the sale. In fact, Ismael Angeles testimony that Judge Amado refused to sign the contract reinforces the fact that the latter had not consented to the sale of the subject property. In addition, Salvadors act of relocating the squatter families formerly residing on the subject property is not substantial proof of ownership. Such act is only consistent with the petitioners allegations that Salvador was allowed to use the subject property for his business, and it would redound to his benefit to relocate the squatters previously occupying it.
From the evidence presented, an agreement of sale of the subject property between him and Judge Amado had not yet reached the stage of perfection. The stages of a contract are, thus, explained:
A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its consummation. Negotiation covers the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is concluded (perfected). The perfection of the contract takes place upon the concurrence of the essential elements thereof. A contract which is consensual as to perfection is so established upon a mere meeting of the minds, i.e. the concurrence of offer and acceptance, on the object and on the cause thereof. x x x. The stage of consummation begins when the parties perform their respective undertakings under the contract culminating in the extinguishment thereof.
Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In sales, particularly, to which the topic for discussion about the case at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees.
In the present case, the terms of payment have not even been alleged. No positive proof was adduced that Judge Amado had fully accepted Salvadors sketchy proposal. Even if the handwritten note actually referred to the subject property, it merely points to the fact that the parties were, at best, negotiating a contract of sale. At the time it was written, on 1 October 1980, Judge Amado had not expressed his unconditional acceptance of Salvadors offer. He merely expressed that he was considering the sale of the subject property, but it was nevertheless clear that he still was unprepared to sign the contract. Salvador himself admitted before the MTC in Civil Case No. 700 that the sale agreement did not push through as he testified that I considered that dead investment because our sale did not materialize because he always made promises. Absent the valid sale agreement between Salvador and Judge Amado, the formers possession of the subject property hinges on the permission and goodwill of Judge Amado and the petitioners, as his successors-in-interest. In the demand letter dated 4 November 1983, Judge Amado had already directed Salvador to vacate the subject property. Thus, there is no more basis for Salvador and his brother, Lamberto Salvador, to retain possession over it, and such possession must now be fully surrendered to the petitioners.
The Court of Appeals imposed moral damages and exemplary damages in view of the petitioners refusal to execute a Deed of Sale and the social humiliation suffered by Salvador due to his ouster from the property. Since petitioners had no demandable obligation to deliver the subject property, the award of moral and exemplary damages, as well as cost of suit, in favor of Salvador is without legal basis.
Moral damages may be recovered if they were the proximate result of defendants wrongful acts or omissions. Two elements are required. First, the act or omission must be the proximate result of the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Second, the act must be wrongful. In this case, petitioners were not under any obligation to execute a Deed of Sale or guarantee Salvadors possession of the property. Absent any wrongful act which may be attributed to petitioners, an award of moral damages is inappropriate.
The award of exemplary damages is also improper. Exemplary damages are awarded only when a wrongful act is accompanied by bad faith or when the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Moreover, where a party is not entitled to actual or moral damages, an award of exemplary damages is likewise baseless. As this Court has found, petitioners refusal to turn over the subject property to Salvador is justified and cannot be the basis for the award of exemplary damages. (G.R. No. 171401; December 13, 2007)