FORTUNATO HALILI, PLAINTIFF AND APPELLEE, VS. MARIA LLORET AND RICARDO GONZALES LLORET, ADMINISTRATOR OF THE INTESTATE ESTATE OF FRANCISCO A. GONZALES, DEFENDANTS AND APPELLANTS.

This is an action brought by plaintiff against the defendants to
compel the latter to execute a deed of sale of certain parcels of land
described in the complaint, and to recover the sum of P50,000 as
damages.

The lower court decided the case in favor of the plaintiff, and the
case is now before us because it involves an amount which is beyond the
jurisdiction of the Court of Appeals.

The evidence for the plaintiff discloses the following facts:

The six parcels of land subject of the present action were owned pro-indiviso
by Maria Lloret and the estate of Francisco A. Gonzales, of which
Ricardo Gonzales Lloret is the judicial administrator. On May 8, 1944,
the judicial administrator filed a motion in the intestate proceedings
praying for authority to sell the said parcels of land for a price of
not less than P100,000, to which Maria Lloret and the other heirs of
the estate gave their conformity. The court granted the motion as
requested. Plaintiff became interested in the purchase of said parcels
of land and to this effect he sought the services of Atty. Teofilo
Sauco who readily agreed to serve him and took steps to negotiate the
sale of said lands in his behalf. Sauco dealt on the matter with
Ricardo Gonzales Lloret. After several interviews wherein they
discussed the terms of the sale, especially the price, Gonzales Lloret
told Sauco that if plaintiff would agree to pay the sum of P200,000 for
the lands, he may agree to carry out the transaction. Sauco broached
the matter to plaintiff who thereupon agreed to the proposition, and
so, on June 17, 1944, Sauco went to see Gonzales Lloret in his office
in Manila wherein, according to Sauco, it was agreed between them,
among other things, that the lands would be sold to the plaintiff for
the sum of P200,000 and that, after the execution of the sale, the
plaintiff would in turn resell to Ricardo Gonzalez Lloret one of the
parcels of land belonging to the estate for an undisclosed amount. It
was also agreed upon that, since the lands subject of the sale were
then in litigation between the estate and one Ambrosio Valero, the deed
of sale would include a clause to the effect that, if by March, 1945,
the vendors would be unable to deliver to the purchaser the possession
of the lands peacefully and without encumbrance, said lands would be
substituted by others belonging to the estate, of equal area, value,
and conditions. It was likewise agreed upon that Sauco would prepare
the necessary documents, as in facts he did in the same office of
Gonzales Lloret.

After preparing the documents, Sauco gave an account to the
plaintiff of the result of his negotiations, and having signified his
conformity thereto, plaintiff gave to Sauco two checks, one for the sum
of P100,000 drawn against the Philippine National Bank in favor of
Maria Lloret (Exhibit B), and another for the same amount drawn against
the Philippine Trust Co. in favor of Ricardo Gonzales Lloret. With
these checks, Sauco returned on the same date to the office of Gonzales
Lloret to consummate the transaction, but as Maria Lloret was not then
present, Gonzales Lloretto M. Sauco that he could leave the document
with him as he would take care of having them signed by Ids mother
Maria, and that he could return the next Monday, June 19, to get them
which by then would be signed and ratified before a notary public.
Since Sauco was then in a hurry to return to Malolos, and besides he
had confidence in Gonzales Lloret, who was his friend, the former
agreed and left the two checks with the latter. But before receiving
the checks, Gonzales Lloret issued a receipt therefor, which was marked
Exhibit A. Of this development, Sauco informed the plaintiff in the
afternoon of the same day, emphasizing the fact that he wou’d return to
the office of Gonzales Lloret to get the documents on June 19.

Sauco, however, was not able to return as was the understanding
because he fell sick, and apprehensive of such failure, plaintiff went
on the next day, June 20, to the Philippine National Bank to inquire
whether the check he had issued in favor of Maria Lloret had already
been collected, and having been informed in the affirmative, he next
went to the Philippine Trust Co. to make the same inquiry with regard
to the other check he issued against said bank in favor of Ricardo
Gonzales Lloret, and when he was informed that the same had not yet
been collected, he suspended its payment informing the bank that,
should the party concerned execute the deed of sale for which it had
been issued, he would reissue the check. The bank accordingly suspended
the payment of the check as requested.

On the occasion of a visit which plaintiff paid to Sauco in Malolos,
the latter handed over to him the receipt Exhibit A with the request
that, in view of his sickness, he take charge of getting the deed of
sale from Gonzales Lloret. Plaintiff tried to do so, but when he
interviewed Gonzales Lloret, the latter refused to give him the
documents on the pretext that he did not deal with him but with Sauco
intimating that he wouM just wait until the latter recover from his
sickness. When Sauco got well he tried to renew his dealing with
Gonzales Lloret in an attempt to get from him the documents duly signed
and ratified before a notary public, but the latter at first gave
excuses for his inability to do his part as agreed upon until he
finally said that he could not carry out the agreement in view of the
fact that he had received other better offers for the purchase of the
lands among them one for! the sum of P300,000, plus a vehicle called dokar
with its corresponding horse. This attitude was taken by the plaintiff
as a refusal to sign the deed of sale and so he instituted the present
action making as party defendants Maria Lloret and her son Ricardo
Gonzales Lloret. .

Ricardo Gonzales Lloret denied that a definite understanding had
ever been reached between him and the plaintiff or his representative
relative to the sale of the lands; in question. He testified that the
documents marked Exhibits D and D-l do not represent the agreement
which, according to Teofilo Sauco, was concluded between them,
intimating that said documents were already prepared when Sauco went to
his office to take up with him the matter relative to the sale on June
17, 1944; that Sauco, on that occasion, had already with him the two
checks referred to in the receipt Exhibit A, who insisted in leaving
them with him because he was in a hurry to return to Malalos, and in so
he accepted them by way of deposit and deposited them in his current
account with the Philippine National Bank in order that they may not be
lost; and that sometime in the morning of the succeeding Monday, June
19, a messenger of the Philippine National Bank came to see him to
return the check issued in his favor against the Philippine Trust Co.
with the information that the same had not been honored by the bank for
the reason that the plaintiff had suspended its payment which act he
interpreted as an indication that the plaintiff had decided to call off
the negotiation. In other words, according to Gonzales Lloret, when
plaintiff suspended the payment of the two checks on June 19, 1944, as
in fact one of them had been actually suspended because it had not yet
been actually collected from the Philippine Trust Co., the
understanding he had with Teofilo Sauco regarding the sale did not pass
the stage of mere negotiation, and, as such it did not produce any
legal relation by which the defendants could be compelled to carry out
the sale as now pretended by plaintiff in his complaint.

After a careful examination of the evidence presented by both
parties, both testimonial and documentary, we are persuaded to uphold
this contention of the defendants for the following reasons:

1. According to Teofilo Sauco, representative of the
   plaintiff, his agreement with defendant Gonzales Lloret was that the
   price of the lands subject of the sale would be P200,000 so much so
   that he delivered to said defendant two checks in the amount of
   P100,000 each issued in favor of each defendant against two banking
   institutions. On the other hand, in the document Exhibit D, which is
   claimed to be the one drawn up by Sauco in the very office of defendant
   Gonzales Lloret and which, according to Sauco, contained the precise
   terms and conditions that were agreed upon between them, the amount
   which appears therein as the consideration of the sale is P100,000.
   This discrepancy, which does not appear sufficiently explained in the
   record, lends cogency to the claim of Gonzales Lloret that when Sauco
   went to his office to discuss the transaction he had already with him
   the document Exhibit D with the expectation that defendants might be
   prevailed upon to accept the terms therein contained, or with the
   intention of leaving the document with Gonzales Lloret for his perusal
   and for such alteration or amendment he may desire to introduce therein
   in accordance with his interest.

2. Both plaintiff
   and the defendants knew well that the properties were subject to
   judicial administration and that the sale could have no valid effect
   until it merits the approval of the court, so much so that before the
   lands were opened for negotiation the judicial administrator, with the
   conformity of the heirs, secured from the court an authorization to
   that effect, and yet, as will be stated elsewhere, the terms that were
   made to appear in the document Exhibit D differ substantially from the
   conditions prescribed in the authorization given by the court, which
   indicates that said document cannot have any binding effect upon the
   parties nor serve as basis for an action for specific performance, as
   now pretended by the plaintiff, in the absence of such judicial
   approval.

3. It is a fact duly established and
   admitted by the parties that the plaintiff suspended the payment of the
   two checks of P100,000 each on June 19, 1944 (or June 20 according to
   plaintiff) in view of the failure of defendants to sign the documents
   Exhibit D and D-l which were delivered to them by Teofilo Sauco, and in
   fact plaintiff succeeded in stopping the payment of one of them, or the
   check issued against the Philippine Trust Co. This attitude of the
   plaintiff clearly indicates that the understanding between the parties
   was merely in the stage of negotiation for otherwise the plaintiff
   could not have with- drawn legally from a transaction which had ripened
   into a consumated contract. And even if the transaction had reached the
   stage of perfection, we may say that it became rescinded when plaintiff
   withdraw from his part in the transaction.

4. It
   should be recalled that when Sauco handed over to defendant Gonzales
   Lloret the two checks referred to above, the latter was made to sign a
   receipt therefor, which was marked Exhibit A. This receipt was prepared
   by Sauco himself, and it merely recited the fact of the receipt of the
   two checks, without mentioning the purpose for which the checks were
   delivered. If it is true that those checks were delivered as advance
   payment of the consideration of the sale referred to in the contract
   Exhibit D, no reason is seen why no mention of that fact was made in
   the receipt. This ambiguity cannot but argue against the pretense of
   Sauco who drafted the receipt in view of the rule that an obscure
   clause in a contract cannot favor the one who has caused the obscurity
   (Article 1288, Old Civil Code.)

5. One of the
   documents turned over by Sauco to defend- ant Gonzales Lloret is
   Exhibit D-1 which represents the resale by the plaintiff to the latter
   of one of the parcels of land originally included in the sale contained
   in the document Exhibit D, and, according to Sauco, said document
   Exhibit D-1 was delivered to defendant Gonzales Lloret for ratification
   before a notary public. An examination of said document Exhibit D-l
   will reveal that it contains many blank spaces intended to be filled
   out later on, and the same does not bear the signature of the
   plaintiff. This indicates that said document Exhibit D-1 was but a mere
   draft and corroborates the statement of Gonzales Lloret that it was
   given to him, together with the document Exhibit D, merely for his
   perusal and possible amendment or alteration. And

6. It should be noted that the lands subject of negotiation were owned pro-indiviso
   by Maria Lloret and the estate of Francisco A. Gonzales, and in that
   negotiation defendant Gonzales Lloret was merely acting in his capacity
   as judicial administrator. Being a co-owner of the lands, the consent
   of Maria Lloret to the terms of the sale is evidently indispensable,
   and yet there is nothing in the evidence to show that she has ever been
   contacted in connection with the sale, nor is there any proof that
   Gonzales Lloret had been authorized to conduct negotiations in her
   behalf. What the record shows was that Gonzales Lloret would take up
   the matter with Maria Lloret on the date subsequent to that when the
   two documents were delivered by Sauco to him (June 17, 1944), but this
   never materialized because of the unexpected sickness of Teofilo Sauco.

Let us now examine the terms of the authorization given by the court
relative to the sale of the lands in question, and see if the same had
been observed in the preparation of the deed of sale Exhibit D. Let us
note, at the outset, that the authorization of the court refers to the
sale of certain parcels of land of an area of 20 hectares situated in
the barrio of Sabang, municipality of Baliuag, Province of
Bulacan, for a price of not less than P100,000 with the express
condition that the encumbrance affecting those lands would first be
paid. Analyzing now the terms appearing in the document Exhibit D, we
find that among the lands included in the sale are lands situated in
the barrio of San Roque. This is a variation of the terms of
the judicial authorization. The document Exhibit D also stipulates that
the sale would be free from any encumbrance, with the exception of the
sum of P30,000 which is indebted to Ambrosio Valero, but said document
likewise stipulates that the possession of the lands sold should be
delivered to the purchaser sometime in March of the next year and that
if this could not be done the lands would be substituted by others of
the same area and value, belonging to the estate of Francisco A.
Gonzales. This is an onerous condition which does not appear in the
authorization of the court. Of course, this is an eventuality which the
plaintiff wanted to forestall in view of the fact that the lands
subject of the sale were pending litigation between the estate and
Ambrosio Valero, but this is no justification for departing from the
precise terms contained in the authorization of the court. And we find,
finally, that the authorization calls for the sale of six parcels of
land belonging to the estate, but in the document as drawn up by Sauco
it appears that only five parcels would be sold to the plaintiff, and
the other parcel to Ricardo Gonzales Lloret. Undoubtedly, this cannot
legally be done for, as we know, the law prohibits that a land subject
of administration be sold to its judicial administrator.

The foregoing discrepancies between the conditions appearing in the
document Exhibit D and the terms contained in the authorization of the
court, plus the incongruencies and unexplained circumstances we have
pointed out above, clearly give an idea that all that had taken place
between Sauco and defendant Gonzales Lloret was but mere planning or
negotiation to be threshed out between them in the conference they
expected to have on June 19, 1944, but which unfortunately was not
carried out in view of the illness of Teofilo Sauco. Such being the
case, it logically follows that the action of the plaintiff has no
legal basis.

Before closing, one circumstance which should be mentioned here is
that which refers to the delivery by Sauco to Gonzales Lloret of the
check in the amount of P100,000 drawn against the Philippine National
Bank which Lloret deposited in his current account with that
institution. According to the evidence, when the transaction was called
off because of the failure of Sauco to appear on the date set for his
last conference with Lloret, the latter attempted to return the said
amount to Sauco on August 2, 1944 who declined to accept it on the
pretext that he had another buyer who was willing to purchase the lands
for the sum of P300,000 and that if that sale were carried out Lloret
could just deduct that amount from the purchase price: That offer to
return, in our opinion, cannot have the effect of relieving Lloret from
liability. His duty was to consign it in court as required by law. His
failure to do so makes him answerable therefor to the plaintiff which
he is now in duty bound to pay subject to adjustment under the
Ballentyne Scale of Values.

Wherefore the decision appealed from is reversed, with; out
pronouncement as to costs. Defendant Ricardo Gonzales Lloret is ordered
to pay to the plaintiff the sum of P100,000 which should be adjusted in
accordance with the Ballentyne Scale of Values.

Paras, C. J., Pablo, Bengzon, Montemayor, Reyes, A., Jugo, Labrador, and Concepcion, JJ., concur.