JOSE BENARES, ET AL., PLAINTIFFS AND APPELLANT VS. CAPITOL SUBDIVISION, INC., DEFENDANT AND APPELLEE.

The subject of this litigation is a portion of Hacienda Mandalagan, Bacolod
Cadastre. Jose Benares Montelibano, father of the plaintiffs, mortgaged the
whole hacienda in 1926 to the Philippine National Bank to secure an obligation
of P331,000.00. In 1950, upon default of the mortgagor, the bank filed a
foreclosure suit and thereafter acquired the property in a public auction
sale.

On November 8, 1935, the bank granted Carlos P. Benares an option to purchase
the hacienda. Thereupon Carlos P. Benares sold and transferred his rights to the
defendant, and this transfer was approved by the bank on January 29, 1936.

In the latter part of 1936, in the face of difficulties in meeting the
amortization payments due to the bank, Alfredo Montelibano, in representation of
the defendant company of which he was and is the president, requested the bank
to sell large portions of the hacienda which were most remote from the
provincial highway and least suitable for subdivision. To this end the defendant
caused Adelantar Surveying Company to segregate an area (identified in the plan
as lots Nos. 1205-L-1, 1641 and 1205-K-2) containing 150 hectares.

In the meantime Jose Benares Fernandez and Ernesto Benares, brothers, sent a
letter to the defendant on May 15, 1937, offering to purchase 150 hectares of
the hacienda for P100,000.00. The defendant, which had already authorized and
requested the bank to sell, referred the offer to that entity. On July 18, 1938,
the Benares brothers reiterated their offer but at a reduced price of
P70,000.00. As the defendant had informed them that any offer had to be approved
by the bank, the plaintiffs, Jose Benares “Fernandez and Carmen Benares (the
latter in lieu of Ernesto Benares), on November 28, 1938, directly addressed
their offer to the bank. On December 3, 1938, the defendant Indorsed said
offer.

On July 24, 1940, the defendant called the attention of the bank to its
failure to approve the offer of the plaintiffs and accordingly asked (among
other things) for authority to sell the same 150 hectares for even as low as
P50,000,00. The bank, in an office memorandum dated July 30, 1940, was forced to
inquire from the Manager of its Bacolod Branch about the standing and status of
plaintiffs’ offer. Said memorandum’was referred to the defendant which on August
28, 1940, through its president, Alfredo Montelibano, answered that the
plaintiffs had already backed out.

It was only after the war, or to be exact, on August 11, 1948, when the
plaintiffs wrote the bank renewing their offer of November 28, 1938. The
communication was referred to the defendant which informed the bank that it had
ceased to be interested in the offer. The plaintiffs therefore instituted the
present action on September 29, 1949, based on an alleged option to purchase a
parcel of land from the defendant. After trial, the Court of First Instance of
Negros Occidental dismissed the complaint and ordered the plaintiffs to pay to
the defendant P10,000.00 as attorney’s fees, P10,000.00 as actual expenses of
litigation, and P10,000.00 as moral, nominal, temperate and exemplary damages,
plus the costs of suit.

The evidence shows that plaintiff’s offer of November 28, 1938, is contained
in their letter to the bank (Exhibit “A” which was only endorsed favorably by
the defendant in its letter of December 3, 1938 (Exhibit “F”). Upon the other
hand, Exhibit “8”, which evidenced the agreement between the bank and the
defendant over Hacienda Mandalagan, establishes the fact that it was the bank
which should accept the offer and execute the sale. To quote:

“13. At the request of Capitol Subdivision Inc., and for its account and at
its expense, the Bank will execute the corresponding deed of sale to the
purchasers of lots who have paid the stipulated purchase price and interest and
with respect to which the Bank shall have received the 70% thereof. Capitol
Subdivision, Inc., witt pay the Bank a special fee of P1.50 for each such’ deed
of sale executed by the bank pursuant hereto.” (Exhibit “8” par.
13.)

All that the defendant could thus do, as it in fact did, was to negotiate for
the sale and recommend the offer favorably; but the final determination of the
matter rested upon the bank.

We verily agree with the defendant’s argument that considering the
circumstances attending the indorsement by the defendant, the urgent and
demanding problem it faced at that time, the expedient solution it conceived to
solve the problem, and then the transformation of all these to the concrete
condition that the price of whatever sale is made by the bank -should be
directly and immediately deducted from the amounts due from the defendant, the
only possible conclusion is that it was intended that the sale be approved by
the Philippine National Bank immediately, or if not immediately, within a
reasonable time for the sale to serve the purposes for which it was
conceived.

We find it natural to also conclude that the option had been abandoned, not
only from the oral evidence in support thereof, but also from Exhibit “10”, a
memorandum of the defendant to. the bank written on August 28, 1940, which
partly states as follows:

“Request No. 3. As regards the sale of 150 hectares with the corresponding’
sugar quota of 7200 piculs, no action was taken on same because the party who
wished to purchase this lots backed out These lots are Nos. 1205-K-2, 1205-L-1
and 1641 as per blue print plan.”

To clarify the relevancy of the above statement, Alfredo Montelibano
testified that the same referred to plaintiffs’ offer of November 28, 1938. Said
evidence is not self-serving, because at the time it was prepared, the defendant
was still in a financial decadence. The fact that on March 31, 1940,. Jose
Benares only leased a portion of land particularly lot 1205-L-1, for a term of
five years, renewable for another five years, confirms the memorandum of August
28, 1940. (This lease had already expired and Jose Benares had been ordered
ejected by the Court of Appeals in CA-G. R. No. 12529-R, Nov. 11, 1955).

In view of the foregoing, the decision appealed from is hereby affirmed with
costs against the plaintiffs-appellants. So ordered.

Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,
Barrera, Gutierrez David, Paredes and Dizon, JJ., concur.

Judgment affirmed.