G.R. No. L-26872 July 25, 1975
VILLONCO REALTY COMPANY, plaintiff-appellee and EDITH PEREZ DE TAGLE, intervenor-appellee, vs. BORMAHECO, INC., FRANCISCO N. CERVANTES and ROSARIO N. CERVANTES, defendants-appellants.

FACTS

Villonco Realty Company initiated an action for specific performance against Bormaheco, Inc. and the spouses Francisco and Rosario Cervantes to enforce a purported contract for the sale of land and improvements in Makati for P1.4 million. The lots were conjugal property of the Cervantes spouses but were occupied by Bormaheco, Inc., of which Francisco Cervantes was president. Negotiations were conducted through broker Edith Perez de Tagle. On February 12, 1964, Bormaheco, Inc., through Cervantes, made a written offer to sell the property to Romeo Villonco, conditioned upon Cervantes’s consummation of his purchase of another property from Nassco. On March 4, 1964, Villonco Realty sent a revised counter-offer directly to “Mr. Francisco Cervantes,” which he accepted in writing on the same letter. The Cervantes spouses later refused to consummate the sale.

ISSUE

The primary issue is whether a perfected contract of sale existed between the parties, binding upon the corporate defendant and the conjugal partnership.

RULING

The Supreme Court ruled that no perfected contract of sale existed. The Court’s legal logic centered on the absence of a meeting of the minds on essential terms and the lack of authority to bind all necessary parties. First, the February 12 offer from Bormaheco, Inc. was a mere proposal, conditional upon the Nassco purchase—a suspensive condition that rendered the offer not definitive. The March 4 counter-offer from Villonco, while accepted by Cervantes, introduced new terms, including a penalty clause for non-consummation. More critically, the negotiations were fatally flawed regarding the parties bound. Francisco Cervantes negotiated as if he represented the owner, but the property was conjugal, requiring his wife’s consent under Article 166 of the Civil Code, which was never obtained or alleged. Furthermore, he purported to act for Bormaheco, Inc., but the corporation owned no real property; it merely occupied the spouses’ land. The March 4 letter was addressed to Cervantes personally, not the corporation, and he signed without indicating any corporate capacity. Thus, his acceptance could not bind the corporation. The Court found no perfected contract because there was no clear consent between the real owners (the conjugal partnership) and the buyer, and the corporate entity was not the true owner or a proper party to the sale. The decision of the lower court was reversed, and the complaint was dismissed.