SECOND DIVISION

[G.R. No. 145483. November 19, 2004.]

LORENZO SHIPPING CORP. , petitioner,
INTERNATIONAL, INC., respondent.

vs.

BJ

MARTHEL

DECISION
CHICO-NAZARIO, J :
p

This is a petition for review seeking to set aside the Decision 1 of the Court of
Appeals in CA-G.R. CV No. 54334 and its Resolution denying petitioner's motion for
reconsideration.
The factual antecedents of this case are as follows:
Petitioner Lorenzo Shipping Corporation is a domestic corporation engaged in
coastwise shipping. It used to own the cargo vessel M/V Dadiangas Express.
Upon the other hand, respondent BJ Marthel International, Inc. is a business entity
engaged in trading, marketing, and selling of various industrial commodities. It is
also an importer and distributor of different brands of engines and spare parts.
From 1987 up to the institution of this case, respondent supplied petitioner with
spare parts for the latter's marine engines. Sometime in 1989, petitioner asked
respondent for a quotation for various machine parts. Acceding to this request,
respondent furnished petitioner with a formal quotation, 2 thus:
May 31, 1989
MINQ-6093
LORENZO SHIPPING LINES
Pier 8, North Harbor
Manila
SUBJECT: PARTS FOR ENGINE MODEL
MITSUBISHI 6UET 52/60
Dear Mr. Go:
We are pleased to submit our offer for your above subject requirements.

Description

Qty.

Unit Price

Total Price

Nozzle Tip

6 pcs.

Plunger & Barrel

P5,520.00

6 pcs.

Cylinder Head

2 pcs.

Cylinder Liner

1 set

33,120.00

27,630.00

165,780.00

1,035,000.00

2,070,000.00

477,000.00

TOTAL PRICE FOB

MANILA

P2,745,900.00

DELIVERY: Within 2 months after receipt of firm order.

cAaDCE

TERMS: 25% upon delivery, balance payable in 5 bi-monthly equal

Installment[s] not to exceed 90 days.
We trust you nd our above oer acceptable and look forward to your most
valued order.
Very truly yours,
(SGD) HENRY PAJARILLO
Sales Manager

Petitioner thereafter issued to respondent Purchase Order No. 13839, 3 dated 02

November 1989, for the procurement of one set of cylinder liner, valued at
P477,000, to be used for M/V Dadiangas Express. The purchase order was co-signed
by Jose Go, Jr., petitioner's vice-president, and Henry Pajarillo. Quoted hereunder is
the pertinent portion of the purchase order:

Name of Description
Qty.
Amount
CYL. LINER M/E
1 SET
P477,000.00
NOTHING FOLLOW
INV. #
TERM OF PAYMENT:

25% DOWN PAYMENT

5 BI-MONTHLY INSTALLMENT[S]
Instead of paying the 25% down payment for the rst cylinder liner, petitioner
issued in favor of respondent ten postdated checks 4 to be drawn against the
former's account with Allied Banking Corporation. The checks were supposed to
represent the full payment of the aforementioned cylinder liner.
Subsequently, petitioner issued Purchase Order No. 14011, 5 dated 15 January
1990, for yet another unit of cylinder liner. This purchase order stated the term of
payment to be "25% upon delivery, balance payable in 5 bi-monthly equal

installment[s]." 6 Like the purchase order of 02 November 1989, the second

purchase order did not state the date of the cylinder liner's delivery.
On 26 January 1990, respondent deposited petitioner's check that was postdated 18
January 1990, however, the same was dishonored by the drawee bank due to
insuciency of funds. The remaining nine postdated checks were eventually
returned by respondent to petitioner.
The parties presented disparate accounts of what happened to the check which was
previously dishonored. Petitioner claimed that it replaced said check with a good
one, the proceeds of which were applied to its other obligation to respondent. For its
part, respondent insisted that it returned said postdated check to petitioner.
Respondent thereafter placed the order for the two cylinder liners with its principal
in Japan, Daiei Sangyo Co. Ltd., by opening a letter of credit on 23 February 1990
under its own name with the First Interstate Bank of Tokyo.
On 20 April 1990, Pajarillo delivered the two cylinder liners at petitioner's
warehouse in North Harbor, Manila. The sales invoices 7 evidencing the delivery of
the cylinder liners both contain the notation "subject to verication" under which
the signature of Eric Go, petitioner's warehouseman, appeared.
Respondent thereafter sent a Statement of Account dated 15 November 1990 8 to
petitioner. While the other items listed in said statement of account were fully paid
by petitioner, the two cylinder liners delivered to petitioner on 20 April 1990
remained unsettled. Consequently, Mr. Alejandro Kanaan, Jr., respondent's vicepresident, sent a demand letter dated 02 January 1991 9 to petitioner requiring the
latter to pay the value of the cylinder liners subjects of this case. Instead of heeding
the demand of respondent for the full payment of the value of the cylinder liners,
petitioner sent the former a letter dated 12 March 1991 10 oering to pay only
P150,000 for the cylinder liners. In said letter, petitioner claimed that as the
cylinder liners were delivered late and due to the scrapping of the M/V Dadiangas
Express, it (petitioner) would have to sell the cylinder liners in Singapore and pay
the balance from the proceeds of said sale.
Shortly thereafter, another demand letter dated 27 March 1991 11 was furnished
petitioner by respondent's counsel requiring the former to settle its obligation to
respondent together with accrued interest and attorney's fees.
THcaDA

Due to the failure of the parties to settle the matter, respondent led an action for
sum of money and damages before the Regional Trial Court (RTC) of Makati City. In
its complaint, 12 respondent (plainti below) alleged that despite its repeated oral
and written demands, petitioner obstinately refused to settle its obligations.
Respondent prayed that petitioner be ordered to pay for the value of the cylinder
liners plus accrued interest of P111,300 as of May 1991 and additional interest of
14% per annum to be reckoned from June 1991 until the full payment of the
principal; attorney's fees; costs of suits; exemplary damages; actual damages; and
compensatory damages.

On 25 July 1991, and prior to the ling of a responsive pleading, respondent led an
amended complaint with preliminary attachment pursuant to Sections 2 and 3,
Rule 57 of the then Rules of Court. 13 Aside from the prayer for the issuance of writ
of preliminary attachment, the amendments also pertained to the issuance by
petitioner of the postdated checks and the amounts of damages claimed.
In an Order dated 25 July 1991, 14 the court a quo granted respondent's prayer for
the issuance of a preliminary attachment. On 09 August 1991, petitioner led an
Urgent Ex-Parte Motion to Discharge Writ of Attachment 15 attaching thereto a
counter-bond as required by the Rules of Court. On even date, the trial court issued
an Order 16 lifting the levy on petitioner's properties and the garnishment of its
bank accounts.
Petitioner afterwards led its Answer 17 alleging therein that time was of the
essence in the delivery of the cylinder liners and that the delivery on 20 April 1990
of said items was late as respondent committed to deliver said items "within two
(2) months after receipt of rm order" 18 from petitioner. Petitioner likewise sought
counterclaims for moral damages, exemplary damages, attorney's fees plus
appearance fees, and expenses of litigation.
Subsequently, respondent led a Second Amended Complaint with Preliminary
Attachment dated 25 October 1991. 19 The amendment introduced dealt solely with
the number of postdated checks issued by petitioner as full payment for the rst
cylinder liner it ordered from respondent. Whereas in the rst amended complaint,
only nine postdated checks were involved, in its second amended complaint,
respondent claimed that petitioner actually issued ten postdated checks. Despite the
opposition by petitioner, the trial court admitted respondent's Second Amended
Complaint with Preliminary Attachment. 20
Prior to the commencement of trial, petitioner led a Motion (For Leave To Sell
Cylinder Liners) 21 alleging therein that "[w]ith the passage of time and with no
denite end in sight to the present litigation, the cylinder liners run the risk of
obsolescence and deterioration" 22 to the prejudice of the parties to this case. Thus,
petitioner prayed that it be allowed to sell the cylinder liners at the best possible
price and to place the proceeds of said sale in escrow. This motion, unopposed by
respondent, was granted by the trial court through the Order of 17 March 1991. 23
After trial, the court a quo dismissed the action, the decretal portion of the Decision
stating:
WHEREFORE, the complaint is hereby dismissed, with costs against the
plainti, which is ordered to pay P50,000.00 to the defendant as and by way
of attorney's fees. 24

The trial court held respondent bound to the quotation it submitted to petitioner
particularly with respect to the terms of payment and delivery of the cylinder liners.
It also declared that respondent had agreed to the cancellation of the contract of
sale when it returned the postdated checks issued by petitioner. Respondent's
counterclaims for moral, exemplary, and compensatory damages were dismissed for

insufficiency of evidence.

IaCHTS

Respondent moved for the reconsideration of the trial court's Decision but the
motion was denied for lack of merit. 25
Aggrieved by the ndings of the trial court, respondent led an appeal with the
Court of Appeals 26 which reversed and set aside the Decision of the court a quo. The
appellate court brushed aside petitioner's claim that time was of the essence in the
contract of sale between the parties herein considering the fact that a signicant
period of time had lapsed between respondent's oer and the issuance by petitioner
of its purchase orders. The dispositive portion of the Decision of the appellate court
states:

WHEREFORE, the decision of the lower court is REVERSED and SET ASIDE.
The appellee is hereby ORDERED to pay the appellant the amount of
P954,000.00, and accrued interest computed at 14% per annum reckoned
from May, 1991. 27

The Court of Appeals also held that respondent could not have incurred delay in the
delivery of cylinder liners as no demand, judicial or extrajudicial, was made by
respondent upon petitioner in contravention of the express provision of Article 1169
of the Civil Code which provides:
Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulllment of their
obligation.

Likewise, the appellate court concluded that there was no evidence of the alleged
cancellation of orders by petitioner and that the delivery of the cylinder liners on 20
April 1990 was reasonable under the circumstances.
On 22 May 2000, petitioner led a motion for reconsideration of the Decision of the
Court of Appeals but this was denied through the resolution of 06 October 2000. 28
Hence, this petition for review which basically raises the issues of whether or not
respondent incurred delay in performing its obligation under the contract of sale and
whether or not said contract was validly rescinded by petitioner.
That a contract of sale was entered into by the parties is not disputed. Petitioner,
however, maintains that its obligation to pay fully the purchase price was
extinguished because the adverted contract was validly terminated due to
respondent's failure to deliver the cylinder liners within the two-month period
stated in the formal quotation dated 31 May 1989.
The threshold question, then, is: Was there late delivery of the subjects of the
contract of sale to justify petitioner to disregard the terms of the contract
considering that time was of the essence thereof?
In determining whether time is of the essence in a contract, the ultimate criterion is

the actual or apparent intention of the parties and before time may be so regarded
by a court, there must be a sucient manifestation, either in the contract itself or
the surrounding circumstances of that intention. 29 Petitioner insists that although
its purchase orders did not specify the dates when the cylinder liners were supposed
to be delivered, nevertheless, respondent should abide by the term of delivery
appearing on the quotation it submitted to petitioner. 30 Petitioner theorizes that
the quotation embodied the oer from respondent while the purchase order
represented its (petitioner's) acceptance of the proposed terms of the contract of
sale. 31 Thus, petitioner is of the view that these two documents "cannot be taken
separately as if there were two distinct contracts." 32 We do not agree.
It is a cardinal rule in interpretation of contracts that if the terms thereof are clear
and leave no doubt as to the intention of the contracting parties, the literal meaning
shall control. 33 However, in order to ascertain the intention of the parties, their
contemporaneous and subsequent acts should be considered. 34 While this Court
recognizes the principle that contracts are respected as the law between the
contracting parties, this principle is tempered by the rule that the intention of the
parties is primordial 35 and "once the intention of the parties has been ascertained,
that element is deemed as an integral part of the contract as though it has been
originally expressed in unequivocal terms." 36
In the present case, we cannot subscribe to the position of petitioner that the
documents, by themselves, embody the terms of the sale of the cylinder liners. One
can easily glean the signicant dierences in the terms as stated in the formal
quotation and Purchase Order No. 13839 with regard to the due date of the down
payment for the rst cylinder liner and the date of its delivery as well as Purchase
Order No. 14011 with respect to the date of delivery of the second cylinder liner.
While the quotation provided by respondent evidently stated that the cylinder liners
were supposed to be delivered within two months from receipt of the rm order of
petitioner and that the 25% down payment was due upon the cylinder liners'
delivery, the purchase orders prepared by petitioner clearly omitted these significant
items. The petitioner's Purchase Order No. 13839 made no mention at all of the due
dates of delivery of the rst cylinder liner and of the payment of 25% down
payment. Its Purchase Order No. 14011 likewise did not indicate the due date of
delivery of the second cylinder liner.
cIECaS

In the case of Bugatti v. Court of Appeals, 37 we reiterated the principle that "[a]
contract undergoes three distinct stages preparation or negotiation, its perfection,
and nally, its 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 fulll or perform the terms
agreed upon in the contract, culminating in the extinguishment thereof."
In the instant case, the formal quotation provided by respondent represented the
negotiation phase of the subject contract of sale between the parties. As of that
time, the parties had not yet reached an agreement as regards the terms and

conditions of the contract of sale of the cylinder liners. Petitioner could very well
have ignored the oer or tendered a counter-oer to respondent while the latter
could have, under the pertinent provision of the Civil Code, 38 withdrawn or
modied the same. The parties were at liberty to discuss the provisions of the
contract of sale prior to its perfection. In this connection, we turn to the testimonies
of Pajarillo and Kanaan, Jr., that the terms of the oer were, indeed, renegotiated
prior to the issuance of Purchase Order No. 13839.
During the hearing of the case on 28 January 1993, Pajarillo testified as follows:
Q:

You testied Mr. Witness, that you submitted a quotation with

defendant Lorenzo Shipping Corporation dated rather marked as
Exhibit A stating the terms of payment and delivery of the cylinder
liner, did you not?

A:

Yes sir.

Q:

I am showing to you the quotation which is marked as Exhibit A there

appears in the quotation that the delivery of the cylinder liner will be
made in two months' time from the time you received the conrmation
of the order. Is that correct?

A:

Yes sir.

Q:

Now, after you made the formal quotation which is Exhibit A how long
a time did the defendant make a confirmation of the order?

A:

After six months.

Q:

And this is contained in the purchase order given to you by Lorenzo

Shipping Corporation?

A:

Yes sir.

Q:

Now, in the purchase order dated November 2, 1989 there appears

only the date the terms of payment which you required of them of
25% down payment, now, it is stated in the purchase order the date
of delivery, will you explain to the court why the date of delivery of the
cylinder liner was not mentioned in the purchase order which is the
contract between you and Lorenzo Shipping Corporation?

A:

When Lorenzo Shipping Corporation inquired from us for that cylinder

liner, we have inquired [with] our supplier in Japan to give us the price
and delivery of that item. When we received that quotation from our
supplier it is stated there that they can deliver within two months but
we have to get our confirmed order within June.

Q:

But were you able to conrm the order from your Japanese supplier
on June of that year?

A:

No sir.

Q:

Why? Will you tell the court why you were not able to conrm your
order with your Japanese supplier?

A:

Because Lorenzo Shipping Corporation did not give us the purchase

order for that cylinder liner.

Q:

And it was only on November 2, 1989 when they gave you the
purchase order?

A:

Yes sir.

Q:

So upon receipt of the purchase order from Lorenzo Shipping Lines

in 1989 did you conrm the order with your Japanese supplier after
receiving the purchase order dated November 2, 1989?

A:

Only when Lorenzo Shipping Corporation will give us the down

payment of 25%. 39

For his part, during the cross-examination conducted by counsel for petitioner,
Kanaan, Jr., testified in the following manner:
WITNESS:
This term said 25% upon delivery. Subsequently, in the nal contract,
what was agreed upon by both parties was 25% down payment.
HTcDEa

Q:

When?

A:

Upon confirmation of the order.

xxx xxx xxx

Q:
A:

Q:
A:

And when was the down payment supposed to be paid?

It was not stated when we were supposed to receive that. Normally,
we expect to receive at the earliest possible time. Again, that would
depend on the customers. Even after receipt of the purchase order
which was what happened here, they re-negotiated the terms and
sometimes we do accept that.
Was there a re-negotiation of this term?
This oer, yes. We oered a nal requirement of 25% down payment
upon delivery.

Q:

What was the re-negotiated term?

A:

25% down payment.

Q:

To be paid when?

A:

Supposed to be paid upon order.

40

The above declarations remain unassailed. Other than its bare assertion that the
subject contracts of sale did not undergo further renegotiation, petitioner failed to
proer sucient evidence to refute the above testimonies of Pajarillo and Kanaan,
Jr.
Notably, petitioner was the one who caused the preparation of Purchase Orders No.
13839 and No. 14011 yet it utterly failed to adduce any justication as to why said
documents contained terms which are at variance with those stated in the
quotation provided by respondent. The only plausible reason for such failure on the
part of petitioner is that the parties had, in fact, renegotiated the proposed terms of
the contract of sale. Moreover, as the obscurity in the terms of the contract between
respondent and petitioner was caused by the latter when it omitted the date of
delivery of the cylinder liners in the purchase orders and varied the term with
respect to the due date of the down payment, 41 said obscurity must be resolved
against it. 42

Relative to the above discussion, we nd the case of Smith, Bell & Co., Ltd. v. Matti,
43 instructive. There, we held that
When the time of delivery is not xed or is stated in general and indenite
terms, time is not of the essence of the contract. . . .
In such cases, the delivery must be made within a reasonable time.
The law implies, however, that if no time is xed, delivery shall be made
within a reasonable time, in the absence of anything to show that an
immediate delivery intended. . . .

We also nd signicant the fact that while petitioner alleges that the cylinder liners
were to be used for dry dock repair and maintenance of its M/V Dadiangas Express
between the later part of December 1989 to early January 1990, the record is bereft
of any indication that respondent was aware of such fact. The failure of petitioner to
notify respondent of said date is fatal to its claim that time was of the essence in
the subject contracts of sale.
In addition, we quote, with approval, the keen observation of the Court of Appeals:
. . . It must be noted that in the purchase orders issued by the appellee,
dated November 2, 1989 and January 15, 1990, no specic date of delivery
was indicated therein. If time was really of the essence as claimed by the
appellee, they should have stated the same in the said purchase orders, and
not merely relied on the quotation issued by the appellant considering the
lapse of time between the quotation issued by the appellant and the
purchase orders of the appellee.
DSacAE

In the instant case, the appellee should have provided for an allowance of
time and made the purchase order earlier if indeed the said cylinder liner was
necessary for the repair of the vessel scheduled on the rst week of

January, 1990. In fact, the appellee should have cancelled the rst purchase
order when the cylinder liner was not delivered on the date it now says was
necessary. Instead it issued another purchase order for the second set of
cylinder liner. This fact negates appellee's claim that time was indeed of the
essence in the consummation of the contract of sale between the parties. 44

Finally, the ten postdated checks issued in November 1989 by petitioner and
received by the respondent as full payment of the purchase price of the rst cylinder
liner supposed to be delivered on 02 January 1990 fail to impress. It is not an
indication of failure to honor a commitment on the part of the respondent. The
earliest maturity date of the checks was 18 January 1990. As delivery of said checks
could produce the eect of payment only when they have been cashed, 45
respondent's obligation to deliver the rst cylinder liner could not have arisen as
early as 02 January 1990 as claimed by petitioner since by that time, petitioner had
yet to fulll its undertaking to fully pay for the value of the rst cylinder liner. As
explained by respondent, it proceeded with the placement of the order for the
cylinder liners with its principal in Japan solely on the basis of its previously
harmonious business relationship with petitioner.
As an aside, let it be underscored that "[e]ven where time is of the essence, a
breach of the contract in that respect by one of the parties may be waived by the
other party's subsequently treating the contract as still in force." 46 Petitioner's
receipt of the cylinder liners when they were delivered to its warehouse on 20 April
1990 clearly indicates that it considered the contract of sale to be still subsisting up
to that time. Indeed, had the contract of sale been cancelled already as claimed by
petitioner, it no longer had any business receiving the cylinder liners even if said
receipt was "subject to verication." By accepting the cylinder liners when these
were delivered to its warehouse, petitioner indisputably waived the claimed delay in
the delivery of said items.
We, therefore, hold that in the subject contracts, time was not of the essence. The
delivery of the cylinder liners on 20 April 1990 was made within a reasonable period
of time considering that respondent had to place the order for the cylinder liners
with its principal in Japan and that the latter was, at that time, beset by heavy
volume of work. 47
There having been no failure on the part of the respondent to perform its obligation,
the power to rescind the contract is unavailing to the petitioner. Article 1191 of the
New Civil Code runs as follows:
The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.

The law explicitly gives either party the right to rescind the contract only upon the
failure of the other to perform the obligation assumed thereunder. 48 The right,
however, is not an unbridled one. This Court in the case of University of the
Philippines v. De los Angeles, 49 speaking through the eminent civilist Justice J.B.L.
Reyes, exhorts:

Of course, it must be understood that the act of a party in treating a

contract as cancelled or resolved on account of infractions by the other
contracting party must be made known to the other and is always
provisional, being ever subject to scrutiny and review by the proper court. If
the other party denied that rescission is justied, it is free to resort to judicial
action in its own behalf, and bring the matter to court. Then, should the
court, after due hearing, decide that the resolution of the contract was not
warranted, the responsible party will be sentenced to damages; in the
contrary case, the resolution will be armed, and the consequent indemnity
awarded to the party prejudiced. (Emphasis supplied)
In other words, the party who deems the contract violated may consider it
resolved or rescinded, and act accordingly, without previous court action,
but it proceeds at its own risk. For it is only the nal judgment of the
corresponding court that will conclusively and nally settle whether the
action taken was or was not correct in law. But the law denitely does not
require that the contracting party who believes itself injured must rst le
suit and wait for a judgment before taking extrajudicial steps to protect its
interest. Otherwise, the party injured by the other's breach will have to
passively sit and watch its damages accumulate during the pendency of the
suit until the nal judgment of rescission is rendered when the law itself
requires that he should exercise due diligence to minimize its own damages.
50

Here, there is no showing that petitioner notied respondent of its intention to

rescind the contract of sale between them. Quite the contrary, respondent's act of
proceeding with the opening of an irrevocable letter of credit on 23 February 1990
belies petitioner's claim that it notied respondent of the cancellation of the
contract of sale. Truly, no prudent businessman would pursue such action knowing
that the contract of sale, for which the letter of credit was opened, was already
rescinded by the other party.
THaDAE

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is

DENIED. The Decision of the Court of Appeals, dated 28 April 2000, and its
Resolution, dated 06 October 2000, are hereby AFFIRMED. No costs.
SO ORDERED.

Puno, Austria-Martinez, Callejo, Sr. and Tinga, JJ ., concur.

Footnotes
1.

Penned by Associate Justice Eubulo G. Verzola with Associate Justices Roberto A.

Barrios and Eriberto U. Rosario, Jr., concurring.

2.

Exhibit "2" for petitioner; Exhibit "A" for respondent; Records, p. 244.

3.

Exhibit "3" for petitioner; Exhibit "B" for respondent; Records, p. 6.

4.

Exhibits "4-A" to "4-J" for petitioner; Exhibits "E" to "E-9" for respondent; Records,
pp. 248250.

5.

Exhibit "5" for petitioner; Exhibit "C" for respondent; Records, p. 7.

6.

Ibid.

7.

Exhibits "G" and "H" for respondent; Records, pp. 252253.

8.

Exhibit "J" for respondent; Records, p. 255.

9.

Exhibit "K" for respondent; Records, p. 256.

10.

Exhibit "6" for petitioner; Records, p. 269.

11.

Exhibit "S" for respondent; Records, p. 263.

12.

Records, pp. 15.

13.

Records, pp. 1320.

14.

Records, pp. 2729.

15.

Records, pp. 6162.

16.

Records, p. 58.

17.

Records, pp. 8795.

18.

Id.

19.

Records, pp. 115122.

20.

Order dated 09 December 1991; Records, p. 139.

21.

Dated 20 January 1992; Records, pp. 143144.

22.

Id.

23.

Records, p. 152.

24.

Rollo, p. 54.

25.

Order dated 04 December 1995; Records, pp. 389390.

26.

Decision dated 28 April 2000, Annex "A" of the Petition; Rollo, pp. 3946.

27.

Id. at 7; Rollo, p. 45.

28.

Annex "B" of the Petition; Rollo, pp. 4849.

29.

17 Am Jur 2d, 333, p. 772.

30.

Petition, p. 12; Rollo, p. 23.

31.

Petition, p. 13; Rollo, p. 24.

32.

Ibid.

33.

Paramount Surety & Insurance Co ., Inc. v. Court of Appeals , G.R. No. 38669, 31
March 1989, 171 SCRA 481.

34.

Agro Conglomerates, Inc. v. Court of Appeals, et al., G.R. No. 117660, 18

December 2000, 348 SCRA 450.

35.

Golden Diamond, Inc. v. Court of Appeals , G.R. No. 131436, 31 May 2000, 332
SCRA 605.

36.

Carceller v. Court of Appeals and State Investments Houses, Inc., G.R. No.
124791, 10 February 1999, 302 SCRA 718, 725.

37.

G.R. No. 138113, 17 October 2000, 343 SCRA 335, 346, citing Ang Yu Asuncion
v. CA, G.R. No. 109125, 02 December 1994, 238 SCRA 602.

38.

Article 1324 of the Civil Code states: "When the oerer has allowed the oeree a
certain period to accept, the oer may be withdrawn at any time before
acceptance by communicating such withdrawal, except when the option is
founded upon a consideration, as something paid or promised."

39.

TSN, 28 January 1993, pp. 48.

40.

TSN, 01 June 1993, pp. 910.

41.

Supra, note 3.

42.

Ang v. Court of Appeals , G.R. No. 80058, 13 February 1989, 170 SCRA 286.

43.

G.R. No. 16570, 09 March 1922, 44 Phil. 874, 881882.

44.

Decision dated 28 April 2000, p. 5; Rollo, p. 43.

45.

Article 1249 of the Civil Code states that "(t)he delivery of promissory notes
payable to order, or bills of exchange or other mercantile documents shall produce
the eect of payment only when they have been cashed, or when through the
fault of the creditor they have been impaired."

46.

17A Am Jur. 2d 624, p. 633.

47.

TSN, 28 January 1993, p. 18.

48.

Angeles, et al. v. Calasanz, et al., G.R. No. L-42283, 18 March 1985, 135 SCRA
329.

49.

G.R. No. L-28602, 29 September 1970, 35 SCRA 102.

50.

Id. at 107.