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XYST
CORPORATION, Petitioner, |
G.R.
No. 171968 Present: |
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-
versus - |
Quisumbing, J.,
Chairperson, Carpio
Morales, CHICO-NAZARIO,* LEONARDO-DE CASTRO,** and PERALTA, ***
JJ. |
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DMC
URBAN PROPERTIES DEVELOPMENT INC., Respondent, FE
AURORA C. CASTRO, Intervenor. |
Promulgated: July 31, 2009 |
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QUISUMBING, J.:
Before
us is a petition for review assailing the September 26, 2005 Decision[1] and the March 13,
2006 Order[2] of the Regional
Trial Court (RTC) of Makati City, Branch 64 in Civil Case No. 95-063.
The
facts are as follows:
DMC Urban
Properties Development, Inc. and Citibank N.A. entered into an agreement whereby
they agreed to take part in the construction of the
Subsequently,
DMC gave authority to sell to several brokers, one of which is herein
intervenor, Fe Aurora Castro. Through her
effort, Castro found a prospective buyer, Saint Agen Et Fils Limited (SAEFL for
brevity), a foreign corporation represented by William Seitz. Notwithstanding the fact that the construction
of the
In a letter dated
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(1 )
Property Description Location Gross
Floor Area Net
Saleable Area Net Usable
Area Selling
Price Total
Price Parking
Slots |
: 18th Floor,
Paseo
de Roxas, Metro : 2,034
sq m : 1,866 sq m : 1,678 sq m : : : 22 |
* VAT tax for the account of the buyer, except that if
payment of 26% of the total price is made before
The balance of P6,822,552.97 due to Citibank is
included and, hence, is to be deducted from the amount due to DMC-UPDI.
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(2 ) Payment Terms * Reservation
Fee 26% - Upon signing of
agreement but not later than
first banking hour of 24% - Due
on (via post-dated check) 50% - Due on (via post-dated check) * For the Account of the Seller For the Account of the Buyer |
: Non-refundable
but applicable to the down payment. : : : : Expanded Withholding Tax with BIR clearance to the buyer stating that the seller has paid capital gains tax. : Doc stamps; registration; and notarial
and all other [similar] fees. |
On P1,000,000.00 reservation fee.
Soon after, Seitz
was informed that the 18th floor is not available for foreign
acquisition, so Seitz told DMC that he would instead use XYST Corporation, a
domestic corporation of which he is a director and shareholder, to purchase the
subject property. XYST then paid the reservation fee. However, DMC advised XYST that the signing of
the formal document will not take place since Citibank N.A. opted to exercise
its right of first refusal. Hence, the
parties agreed that should Citibank N.A. fail to purchase the 18th
floor on the agreed date, the same should be sold to XYST.
Eventually, Citibank
N.A. did not exercise its right of first refusal, but it reminded DMC that
should the sale of the floor to any party materialize, it should be consistent
with the documents adopted by the co-founders of the project. Hence, a copy of a pro-forma Contract to Sell
was given to DMC, a copy of which was then forwarded to XYST.
DMC then undertook
to obtain the conformity of Citibank N.A. to the intended sale but DMC encountered
problems getting Citibank N.A. to accept the amendments that XYST wanted on the
pro-forma contract. For such failure,
DMC allowed XYST and Citibank N.A. to negotiate directly with one another to
facilitate the transaction, but to no avail. Citibank N.A. refused to concur with the
amendments imposed by XYST on the pro-forma contract. Hence, DMC decided to call off the deal and
return the reservation fee of P1,000,000.00 to XYST.
A complaint
for specific performance with damages was then filed by XYST against DMC. Trial ensued and on
WHEREFORE, in view of the foregoing, judgment is
rendered as follows:
1.
The Complaint for
Specific Performance and Damages filed by plaintiff XYST CORPORATION against
defendant DMC-URBAN PROPERTIES DEVELOPMENT, INC., is DISMISSED. Plaintiff XYST CORPORATION is hereby ordered
to pay defendant DMC-URBAN PROPERTIES DEVELOPMENT, INC. the amount of P1,000,000.00
as attorney’s fees; and
2.
The counterclaim
of defendant DMC-URBAN PROPERTIES DEVELOPMENT, INC. against the Intervenor Fe
Aurora Castro is DISMISSED.
SO ORDERED.[5]
XYST’s motion
for reconsideration was likewise denied. Hence, the instant petition where XYST raises the
following issues:
I.
DID
THE TRIAL COURT ERR IN FINDING THAT THERE WAS NO PERFECTED CONTRACT TO SELL
BETWEEN XYST AND DEFENDANT DMC BASED ON THE SEPTEMBER 14 AND 16, 1994 LETTER
AGREEMENTS, AND THAT DMC CANNOT BE COMPELLED TO PERFORM ITS OBLIGATIONS UNDER
THE AGREEMENT?
II.
DID
THE TRIAL COURT ERR IN ORDERING XYST TO PAY DMC ATTORNEY’S FEES?
III.
IS
XYST ENTITLED TO ATTORNEY’S FEES AND EXEMPLARY DAMAGES.[6]
Simply
stated, in our view, there is one major legal issue for our resolution: whether
there is a perfected contract between DMC and XYST. This issue of a legal nature assumes
primordial significance because it justified direct resort by petitioner to
this Court in a petition for review.
XYST argues that there exists a perfected contract of sale between the
parties. This was perfected from the
moment there was a meeting of the minds upon the thing which is object of the
contract and upon the price as manifested by the P1,000,000.00
reservation fee it paid is actually in the nature of earnest money or down
payment and shall be considered as part of the price and as proof of the
perfection of the contract.
Conversely, DMC insists that a contract to sell was entered into by the
parties. It avers that in the contract
to sell, the element of consent is lacking, and since the acceptance made by
XYST is not absolute, no contract of sale existed between the parties. It claims that the terms, conditions and
amendments which XYST tried to impose upon DMC and Citibank N.A. were proof
that indeed XYST had qualifiedly accepted DMC’s offer.
We find the petition of XYST Corporation bereft of merit.
It is a fundamental rule that, being consensual, a contract is
perfected by mere consent.[7] From the moment of a meeting of the offer and
the acceptance upon the object and the cause that would constitute the
contract, consent arises.[8] The essence of consent is the conformity of
the parties on the terms of the contract, that is, the acceptance by one of the
offer made by the other.[9] However, the acceptance must be absolute; otherwise,
the same constitutes a counter-offer[10] and has the
effect of rejecting the offer.[11]
Equally important are the three stages of a contract: (1) preparation
or negotiation, (2) perfection, and (3) 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. The perfection or birth of the contract takes
place when the parties agree upon the essential elements of the contract. The last stage is the consummation of the
contract wherein the parties fulfill or perform the terms agreed upon in the
contract, culminating in the extinguishment thereof.[12]
XYST
and DMC were still in the negotiation stage of the contract when the latter
called off the deal. The facts show that
DMC as agreed undertook to obtain the conformity of Citibank N.A. However, Citibank N.A.’s consent to the
intended sale cannot be obtained since it does not conform to the amendments
made by XYST on the pro-forma Contract to Sell. By introducing amendments to the contract,
XYST presented a counter-offer to which DMC did not agree. Clearly, there was only an offer and a
counter-offer that did not sum up to any final arrangement containing the
elements of a contract. No meeting of
the minds was established. The rule on
the concurrence of the offer and its acceptance did not apply because other
matters or details–in addition to the subject matter and the consideration–would
still be stipulated and agreed upon by the parties.[13]
Therefore,
since the element of consent is absent, there is no contract to speak of. Where the parties merely exchanged offers and
counter-offers, no agreement or contract is perfected.
As to XYST’s claim that the P1,000,000.00
reservation fee it paid is earnest money, we hold that it is not. Earnest money applies to a perfected sale. Here, no contract whatsoever was perfected since
the element of consent was lacking. Therefore,
the reservation fee paid by XYST could not be earnest money.
Coming now to the issue of whether DMC is entitled to
attorney’s fees, the Court finds that the award of attorney’s fees to DMC is
not proper. Article 2208 of the Civil
Code states that in the absence of a stipulation, attorney’s fees cannot be
recovered, except in any of the following circumstances:
(1)
When exemplary
damages are awarded;
(2)
When the
defendant’s act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
(3)
In criminal cases
of malicious prosecution against the plaintiff;
(4)
In case of a
clearly unfounded civil action or proceeding against the plaintiff;
(5)
Where the
defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid, just and demandable claim;
(6)
In actions for
legal support;
(7)
In actions for
the recovery of wages of household helpers, laborers and skilled workers;
(8)
In actions for
indemnity under workmen’s compensation and employer’s liability laws;
(9)
In a separate
civil action to recover civil liability arising from a crime;
(10)
When at least
double judicial costs are awarded;
(11)
In any other case
where the court deems it just and equitable that attorney’s fees and expenses
of litigation should be recovered.
In the instant case, none
of the enumerated grounds for recovery of attorney’s fees is present.
WHEREFORE,
this petition is DENIED.
The September 26, 2005 Decision and
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
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WE CONCUR: CONCHITA
CARPIO MORALES Associate Justice |
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MINITA V.
CHICO-NAZARIO Associate Justice |
TERESITA J. LEONARDO-DE CASTRO Associate Justice |
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DIOSDADO
M. PERALTA Associate Justice |
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A T T E S T A T I O N
I
attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
LEONARDO
A. QUISUMBING
Associate Justice
Chairperson
C E R T I F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
* Designated member of the Second Division per Special Order No. 658.
** Designated member of the Second Division per Special Order No. 635.
*** Designated member of the Second Division per Special Order No. 664.
[1] Rollo, pp. 9-29. Penned by Judge Delia H. Panganiban.
[2]
[3]
[4]
[5]
[6]
[7] Civil Code, Art. 1315.
[8] Insular Life Assurance Company, Ltd. v. Asset Builders Corporation, G.R. No. 147410, February 5, 2004, 422 SCRA 148, 160.
[9] Salonga v. Farrales, No. L-47088,
[10] Civil Code,
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. (Emphasis supplied.)
x x x x
[11] III J.C. Vitug, Civil Law, Obligations and Contracts, 116 (2003).
[12] Gateway Electronics Corporation v. Land
Bank of the
[13] Insular Life Assurance Company, Ltd. v. Asset Builders Corporation, supra at 161-162.