G.R. No.

170405

February 2, 2010

RAYMUNDO S. DE LEON, Petitioner,

vs.
BENITA T. ONG. Respondent.
ISSUE: Whether the parties entered into a contract
of sale or a contract to sell. // Void Sale Or Double
Sale?
On March 10, 1993, petitioner Raymundo S. de
Leon sold three parcels of land with improvements
situated in Antipolo, Rizal to respondent Benita T.
Ong. Respondent was a licensed real estate
broker. As these properties were mortgaged to Real
Savings and Loan Association, Incorporated
(RSLAI), petitioner and respondent executed a
notarized deed of absolute sale with assumption of
mortgage.
***consideration of the sum P1.1 million,
terms: 1. That upon full payment of [respondent] of
the amount of P415,000, [petitioner] shall execute
and sign a deed of assumption of mortgage in favor
of [respondent] without any further cost
whatsoever;
2. That [respondent] shall assume payment of the
outstanding loan of P684,500)with REAL SAVINGS
AND LOAN, Cainta, Rizal ***
Pursuant to this deed, respondent gave petitioner
P415,500 as partial payment. Petitioner, on the
other hand, handed the keys to the properties and
wrote a letter informing RSLAI of the sale and
authorizing it to accept payment from respondent
and release the certificates of title.
Thereafter, respondent made repairs and
improvements on the properties; informed RSLAI of
her agreement with petitioner for her to assume
petitioners outstanding loan. RSLAI required her to
undergo credit investigation.
Subsequently, respondent learned that petitioner
again sold the same properties to one Leona Viloria
after March 10, 1993 and changed the locks,
rendering the keys he gave her useless.
Respondent thus proceeded to RSLAI to inquire
about the credit investigation. However, she was
informed that petitioner had already paid the
amount due and had taken back the certificates of
title. Respondent persistently contacted petitioner
but her efforts proved futile.

Respondent filed a complaint for specific

performance, declaration of nullity of the second
sale and damages in RTC.
RESPONDENT: Since petitioner had previously
sold the properties to her on March 10, 1993, he no
longer had the right to sell the same to Viloria.
Thus, petitioner fraudulently deprived her of the
properties.
PETITIONER: He claimed that since the
transaction was subject to a condition (i.e., that
RSLAI approve the assumption of mortgage), they
only entered into a contract to sell. Inasmuch as
respondent did apply for a loan from RSLAI, the
condition did not arise. Consequently, the sale was
not perfected and he could freely dispose of the
properties.
RTC dismissed case for lack of cause of action.
The perfection of a contract of sale depended on
RSLAIs approval of the assumption of mortgage.
Since RSLAI did not allow respondent to assume
petitioners obligation, the RTC held that the sale
was never perfected.
Respondent appealed to the CA:
The March 10, 2003 contract executed by the
parties did not impose any condition on the sale
and held that the parties entered into a contract of
sale. The CA upheld the sale to respondent and
nullified the sale to Viloria. It likewise ordered
respondent to reimburse petitioner P715,250 (or
the amount he paid to RSLAI). Petitioner, on the
other hand, was ordered to deliver the certificates
of titles to respondent and pay her P50,000 moral
damages and P15,000 exemplary damages.
Petition to SC:
PETITIONER: insists that he entered into a contract
to sell since the validity of the transaction was
subject to a suspensive condition, that is, the
approval by RSLAI of respondents assumption of
mortgage. Because RSLAI did not allow
respondent to assume his (petitioners) obligation,
the condition never materialized. Consequently,
there was no sale.
RESPONDENT: asserts that they entered into a
contract of sale as petitioner already conveyed full
ownership of the subject properties upon the
execution of the deed.
The RTC ruled that it was a contract to sell while
the CA held that it was a contract of sale.
In a contract of sale, the seller conveys ownership
of the property to the buyer upon the perfection of
the contract. Should the buyer default in the

payment of the purchase price, the seller may

either sue for the collection thereof or have the
contract judicially resolved and set aside.
A contract to sell is subject to a positive suspensive
condition. The buyer does not acquire ownership of
the property until he fully pays the purchase price.
The deed executed by the parties (as previously
quoted) stated that petitioner sold the properties to
respondent "in a manner absolute and
irrevocable" for a sum of P1.1 million. With regard
to the manner of payment, it required respondent to
pay P415,500 in cash to petitioner upon the
execution of the deed, with the balance payable
directly to RSLAI (on behalf of petitioner) within a
reasonable time. Nothing in said instrument implied
that petitioner reserved ownership of the properties
until the full payment of the purchase price. On the
contrary, the terms and conditions of the deed only
affected the manner of payment, not the immediate
transfer of ownership (upon the execution of the
notarized contract) from petitioner as seller to
respondent as buyer. Otherwise stated, the said
terms and conditions pertained to the performance
of the contract, not the perfection thereof nor the
transfer of ownership.
In this instance, petitioner executed a notarized
deed of absolute sale in favor of respondent.
Moreover, not only did petitioner turn over the keys
to the properties to respondent, he also authorized
RSLAI to receive payment from respondent and
release his certificates of title to her. The totality of
petitioners acts clearly indicates that he had
unqualifiedly delivered and transferred ownership of
the properties to respondent. Clearly, it was a
contract of sale the parties entered into.
Void Sale Or Double Sale?
This case involves a double sale as the disputed
properties were sold validly on two separate
occasions by the same seller to the two different
buyers in good faith.
*Article 1544 of the Civil Code*
This provision clearly states that the rules on
double or multiple sales apply only to purchasers in
good faith. Needless to say, it disqualifies any
purchaser in bad faith.
Was respondent a purchaser in good faith? Yes.
Respondent purchased the properties, knowing
they were encumbered only by the mortgage to
RSLAI. According to her agreement with petitioner,

respondent had the obligation to assume the

balance of petitioners outstanding obligation to
RSLAI. Consequently, respondent informed RSLAI
of the sale and of her assumption of petitioners
obligation.
However,
because
petitioner
surreptitiously paid his outstanding obligation and
took back her certificates of title, petitioner himself
rendered respondents obligation to assume
petitioners indebtedness to RSLAI impossible to
perform.
Article 1266. The debtor in obligations to do shall
be released when the prestation become legally or
physically impossible without the fault of the obligor.
respondent must pay petitioner P684,500, the
amount stated in the deed. This is because the
provisions, terms and conditions of the contract
constitute the law between the parties. Moreover,
the deed itself provided that the assumption of
mortgage "was without any further cost
whatsoever." Petitioner, on the other hand, must
deliver the certificates of title to respondent. We
likewise affirm the award of damages.
WHEREFORE, the July 22, 2005 decision and
November 11, 2005 resolution of the Court of
Appeals in CA-G.R. CV No. 59748 are
hereby AFFIRMED with MODIFICATION insofar as
respondent Benita T. Ong is ordered to pay
petitioner
Raymundo
de
Leon P684,500
representing the balance of the purchase price as
provided in their March 10, 1993 agreement.

G.R. No. 165168

July 9, 2010

SPS. NONILON (MANOY) and IRENE

MONTECALVO, Petitioners,
vs.
HEIRS (Substitutes) OF EUGENIA T. PRIMERO,
represented by their Attorney-in-Fact,
ALFREDO T. PRIMERO, JR., Respondents
ISSUE: Whether the said Agreement is a contract
of sale or a contract to sell.
The property involved is a portion of a parcel of
land known as Lot No. 263 located at Sabayle
Street, Iligan City, which has an area of 860 square
meters covered by Original Certificate of Title
(OCT) No. 0-271 registered in the name of Eugenia
Primero (Eugenia), married to Alfredo Primero, Sr.
(Alfredo).
In the early 1980s, Eugenia leased the lot to
petitioner Irene Montecalvo (Irene) for a monthly
rental of P500.00. On January 13, 1985, Eugenia
entered into an un-notarized Agreement with Irene,
where the former offered to sell the property to the
latter for P1,000.00 per square meter. They agreed
that Irene would deposit the amount ofP40,000.00
which shall form part of the down payment
equivalent to 50% of the purchase price. They also
stipulated that during the term of negotiation of 30
to 45 days from receipt of said deposit, Irene would
pay the balance ofP410,000.00 on the down
payment. In case Irene defaulted in the payment of
the down payment, the deposit would be returned
within 10 days from the lapse of said negotiation
period and the Agreement deemed terminated.
However, if the negotiations pushed through, the
balance of the full value of P860,000.00 or the net
amount ofP410,000.00 would be paid in 10 equal
monthly installments from receipt of the down
payment, with interest at the prevailing rate.
Irene failed to pay the full down payment within the
stipulated
30-45-day
negotiation
period.
Nonetheless, she continued to stay on the disputed
property, and still made several payments with an
aggregate amount ofP293,000.00. On the other
hand, Eugenia did not return the P40,000.00

deposit to Irene, and refused to accept further

payments only in 1992.
Thereafter, Irene caused a survey of Lot No. 263
and the segregation of a portion equivalent to 293
square meters in her favor. However, Eugenia
opposed her claim and asked her to vacate the
property. Then on May 13, 1996, Eugenia and the
heirs of her deceased husband Alfredo filed a
complaint for unlawful detainer against Irene and
her husband, herein petitioner Nonilon Montecalvo
(Nonilon) before the Municipal Trial Court (MTC) of
Iligan City. During the preliminary conference, the
parties stipulated that the issue to be resolved was
whether their Agreement had been rescinded and
novated. Hence, the MTC dismissed the case for
lack of jurisdiction since the issue is not susceptible
of pecuniary estimation. The MTC's Decision
dismissing the ejectment case became final as
Eugenia and her children did not appeal therefrom.
On June 18, 1996, Irene and Nonilon retaliated by
instituting Civil Case No. II-3588 with the RTC of
Lanao del Norte for specific performance, to
compel Eugenia to convey the 293-square meter
portion of Lot No. 263.
RTC:
IRENE: testified that after their Agreement for the
purpose of negotiating the sale of Lot No. 263 failed
to materialize, she and Eugenia entered into an oral
contract of sale and agreed that the amount
of P40,000.00 she earlier paid shall be considered
as down payment. Irene claimed that she made
several payments amounting to P293,000.00 which
prompted Eugenia's daughters Corazon Calacat
(Corazon) and Sylvia Primero (Sylvia) to ask Engr.
Antonio Ravacio (Engr. Ravacio) to conduct a
segregation survey on the subject property.
Thereafter, Irene requested Eugenia to execute the
deed of sale, but the latter refused to do so
because her son, Atty. Alfredo Primero, Jr. (Atty.
Primero)- who became the representative because
Eugenia died, would not agree.
RESPONDENTS: At the time of the signing of the
Agreement on January 13, 1985, Eugenia's
husband, Alfredo, was already dead. Eugenia
merely managed or administered the subject
property and had no authority to dispose of the
same since it was a conjugal property. In addition,
respondents
asserted
that
the
deposit

of P40,000.00 was retained as rental for the subject

property.
RTC dismissed complaint and counterclaim;
ordered petitioners to pay respondents rentals due.
Petitioners appealed to the CA: affirmed RTC
decision; motion denied for lack of merit.
SC:
The Agreement dated January 13, 1985 is a
contract to sell. Hence, with petitioners' noncompliance with its terms and conditions, the
obligation of the respondents to deliver and execute
the corresponding deed of sale never arose.
In the Agreement, Eugenia, as owner, did not
convey her title to the disputed property to Irene
since the Agreement was made for the purpose of
negotiating the sale of the 860-square meter
property.
On this basis, we are more inclined to characterize
the agreement as a contract to sell rather than a
contract of sale. Although not by itself controlling,
the absence of a provision in the Agreement
transferring title from the owner to the buyer is
taken as a strong indication that the Agreement is a
contract to sell.
In a contract to sell, the prospective seller explicitly
reserves the transfer of title to the prospective
buyer, meaning, the prospective seller does not as
yet agree or consent to transfer ownership of the
property subject of the contract to sell until the
happening of an event, which for present purposes
we shall take as the full payment of the purchase
price. A contract to sell is commonly entered into in
order to protect the seller against a buyer who
intends to buy the property in installment by
withholding ownership over the property until the
buyer effects full payment therefor.
In this case, the Agreement expressly provided that
it was "entered into for the purpose of negotiating
the sale of the above referred property between the
same parties herein x x x." The term of the
negotiation shall be for a period of 30-45 days from
receipt of the P40,000.00 deposit and the buyer
has to pay the balance of the 50% down payment
amounting to P410,000.00 within the said period of
negotiation. Thereafter, an Agreement to Sell shall
be executed by the parties and the remainder of the
purchase price amounting to another P410,000.00
shall be paid in 10 equal monthly installments from

receipt of the down payment. The assumption of

both parties that the purpose of the Agreement was
for negotiating the sale of Lot No. 263, in its
entirety, for a definite price, with a specific period
for payment of a specified down payment, and the
execution of a subsequent contract for the sale of
the same on installment payments leads to no other
conclusion than that the predecessor-in-interest of
the herein respondents and the herein petitioner
Irene entered into a contract to sell.
It is a fundamental principle that for a contract of
sale to be valid, the following elements must be
present: (a) consent or meeting of the minds; (b)
determinate subject matter; and (3) price certain in
money or its equivalent. Until the contract of sale is
perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation
between the parties.
Section 1 of Rule 133 of the Rules of Court
provides that in civil cases, the party having the
burden of proof must establish his case by a
preponderance of evidence. However, the evidence
presented by the petitioners, as considered above,
fails to convince this Court that Eugenia gave her
consent to the purported oral deed of sale for the
293-square meter portion of her property. We are
hence in agreement with the finding of the CA that
there was no contract of sale between the parties.
As a consequence, petitioners cannot rightfully
compel the successors-in-interest of Eugenia to
execute a deed of absolute sale in their favor.
WHEREFORE, the petition is DENIED. The
November 28, 2003 Decision of the Court of
Appeals affirming the October 22, 2001 Decision of
the Regional Trial Court of Lanao del Norte, Branch
2, is hereby AFFIRMED.

G.R. No. 169900

March 18, 2010

MARIO SIOCHI, Petitioner,

vs.
ALFREDO GOZON, WINIFRED GOZON, GIL
TABIJE, INTER-DIMENSIONAL REALTY, INC.,
and ELVIRA GOZON, Respondents.
G.R. No. 169977
INTER-DIMENSIONAL REALTY, INC., Petitioner,
vs.
MARIO SIOCHI, ELVIRA GOZON, ALFREDO
GOZON, and WINIFRED GOZON, Respondents.
ISSUE: Whether or not the Agreement to Buy and
Sell is valid without the consent of the other
spouse.
This case involves a 30,000 sq.m. parcel of land
(property) covered by TCT No. 5357 situated in
Malabon, Metro Manila and is registered in the
name of "Alfredo Gozon (Alfredo), married to Elvira
Gozon (Elvira)."
On 23 December 1991, Elvira filed with the Cavite
RTC a petition for legal separation against her
husband Alfredo. On 2 January 1992, Elvira filed a
notice of lis pendens, which was then annotated on
TCT No. 5357.
On 31 August 1993, while the legal separation case
was still pending, Alfredo and Mario Siochi (Mario)
entered into an Agreement to Buy and
Sell (Agreement) involving the property for the price
of P18 million. Among the stipulations in the
Agreement were that Alfredo would: (1) secure an
Affidavit from Elvira that the property is Alfredos
exclusive property and to annotate the Agreement

at the back of TCT No. 5357; (2) secure the

approval of the Cavite RTC to exclude the property
from the legal separation case; and (3) secure the
removal of the notice of lis pendens pertaining to
the said case and annotated on TCT No. 5357.
However, despite repeated demands from Mario,
Alfredo failed to comply with these stipulations.
After paying the P5 million earnest money as partial
payment of the purchase price, Mario took
possession of the property in September 1993. On
6 September 1993, the Agreement was annotated
on TCT No. 5357.
On 29 June 1994, the Cavite RTC rendered a
judgment decreeing the legal separation.
Accordingly, petitioner Elvira Robles Gozon is
entitled to live separately from respondent Alfredo
Gozon without dissolution of their marriage bond.
The conjugal partnership of gains of the spouses is
hereby declared DISSOLVED and LIQUIDATED.
Being the offending spouse, respondent is deprived
of his share in the net profits and the same is
awarded to their child Winifred R. Gozon whose
custody is awarded to petitioner. The Cavite RTC
held that it is deemed conjugal property.
On 22 August 1994, Alfredo executed a Deed of
Donation over the property in favor of their
daughter, Winifred Gozon (Winifred). The Register
of Deeds of Malabon, Gil Tabije, cancelled TCT No.
5357 and issued TCT No. M-10508 in the name of
Winifred, without annotating the Agreement and the
notice of lis pendens on TCT No. M-10508.
On 26 October 1994, Alfredo, by virtue of a Special
Power of Attorney executed in his favor by Winifred,
sold the property to Inter-Dimensional Realty, Inc.
(IDRI) for P18 million. IDRI paid Alfredo P18 million,
representing
full
payment
for
the
property. Subsequently, the Register of Deeds of
Malabon cancelled TCT No. M-10508 and issued
TCT No. M-10976 to IDRI.
Mario then filed with the Malabon RTC a complaint
for Specific Performance and Damages, Annulment
of Donation and Sale, with Preliminary Mandatory
and Prohibitory Injunction and/or Temporary
Restraining Order.

On 3 April 2001, the Malabon RTC rendered a

decision: The Register of Deeds of Malabon, Metro
Manila is hereby ordered to cancel Certificate of
Title Nos. 10508 "in the name of Winifred Gozon"
and M-10976 "in the name of Inter-Dimensional
Realty, Inc.," and to restore Transfer Certificate of
Title No. 5357 "in the name of Alfredo Gozon,
married to Elvira Robles" with the Agreement to
Buy and Sell dated 31 August 1993 fully annotated
therein.
On appeal, the Court of Appeals affirmed the
Malabon RTCs decision with modification. The sale
of the subject land by defendant Alfredo Gozon to
plaintiff-appellant Siochi is declared null and void.

of the consent of one of the spouse renders the

entire sale void, including the portion of the
conjugal property pertaining to the spouse who
contracted the sale. Even if the other spouse
actively participated in negotiating for the sale of
the property, that other spouses written consent to
the sale is still required by law for its validity. The
Agreement entered into by Alfredo and Mario was
without the written consent of Elvira. Thus, the
Agreement is entirely void. As regards Marios
contention that the Agreement is a continuing offer
which may be perfected by Elviras acceptance
before the offer is withdrawn, the fact that the
property was subsequently donated by Alfredo to
Winifred and then sold to IDRI clearly indicates that
the offer was already withdrawn.

Mario and IDRI appealed the decision:

MARIO: alleges that the Agreement should be
treated as a continuing offer which may be
perfected by the acceptance of the other spouse
before the offer is withdrawn. Since Elviras conduct
signified her acquiescence to the sale, Mario prays
for the Court to direct Alfredo and Elvira to execute
a Deed of Absolute Sale over the property upon his
payment of P9 million to Elvira.
IDRI: Mario alleges that the Agreement should be
treated as a continuing offer which may be
perfected by the acceptance of the other spouse
before the offer is withdrawn. Since Elviras conduct
signified her acquiescence to the sale, Mario prays
for the Court to direct Alfredo and Elvira to execute
a Deed of Absolute Sale over the property upon his
payment of P9 million to Elvira.
This case involves the conjugal property of Alfredo
and Elvira. Since the disposition of the property
occurred after the effectivity of the Family Code, the
applicable law is the Family Code. Article 124.
In this case, Alfredo was the sole administrator of
the property because Elvira, with whom Alfredo was
separated in fact, was unable to participate in the
administration of the conjugal property. However,
as sole administrator of the property, Alfredo still
cannot sell the property without the written consent
of Elvira or the authority of the court. Without such
consent or authority, the sale is void. The absence

With regard to IDRI, we agree with the Court of

Appeals in holding that IDRI is not a buyer in good
faith. As found by the RTC Malabon and the Court
of Appeals, IDRI had actual knowledge of facts and
circumstances which should impel a reasonably
cautious person to make further inquiries about the
vendors title to the property. The representative of
IDRI testified that he knew about the existence of
the notice of lis pendens on TCT No. 5357 and the
legal separation case filed before the Cavite RTC.
Thus, IDRI could not feign ignorance of the Cavite
RTC decision declaring the property as conjugal.

Under Section 77 of Presidential Decree No.

1529,19 the notice of lis pendens may be cancelled
(a) upon order of the court, or (b) by the Register of
Deeds upon verified petition of the party who
caused the registration of the lis pendens. In this
case, the lis pendens was cancelled by the
Register of Deeds upon the request of Alfredo.
WHEREFORE,
we DENY the
petitions.
We AFFIRM the 7 July 2005 Decision of the Court
of Appeals in CA-G.R. CV No. 74447 with the
following MODIFICATIONS:
(1) We DELETE the portions regarding the
forfeiture of Alfredo Gozons one-half
undivided share in favor of Winifred Gozon
and the grant of option to Winifred Gozon

whether or not to dispose of her undivided

share in the property; and
(2) We ORDER Alfredo Gozon and Winifred
Gozon to pay Inter-Dimensional Realty, Inc.
jointly and severally the Eighteen Million
Pesos (P18,000,000) which was the amount
paid by Inter-Dimensional Realty, Inc. for
the property, with legal interest computed
from the finality of this Decision.

On October 1, 1994, petitioner Hyatt Elevators and

Escalators Corporation entered into an "Agreement
to Service Elevators" (Service Agreement) with
respondent Cathedral Heights Building Complex
Association, Inc., where petitioner was contracted
to maintain four passenger elevators installed in
respondent's
building.
Under
the
Service
Agreement, the duties and obligations of petitioner
included monthly inspection, adjustment and
lubrication of machinery, motors, control parts and
accessory equipments, including switches and
electrical wirings. Section D (2) of the Service
Agreement provides that respondent shall pay for
the additional charges incurred in connection with
the repair and supply of parts.
Petitioner claims that during the period of April 1997
to July 1998 it had incurred expenses amounting to
Php 1,161,933.47 in the maintenance and repair of
the four elevators as itemized in a statement of
account. Petitioner demanded from respondent the
payment of the aforesaid amount allegedly through
a series of demand letters, the last one sent on July
18, 2000. Respondent, however, refused to pay the
amount.
Petitioner filed with the Regional Trial Court (RTC),
Branch 100, Quezon City, a Complaint for sum of
money against respondent.
On March 5, 2003, the RTC rendered Judgment in
favor of the plaintiffs. The RTC held that based on
the sales invoices presented by petitioner, a
contract of sale of goods was entered into between
the parties. Since petitioner was able to fulfill its
obligation, the RTC ruled that it was incumbent on
respondent to pay for the services rendered.

G.R. No. 173881

December 1, 2010

HYATT ELEVATORS and ESCALATORS

CORPORATION, Petitioner,
vs.
CATHEDRAL HEIGHTS BUILDING COMPLEX
ASSOCIATION, INC., Respondent.
ISSUE: Whether there exists a perfected contract
of sale.

RTC
denied
Reconsideration.

respondents

Motion

for

CA rendered a Decision finding merit in

respondent's appeal. The CA ruled that respondent
did not give its consent to the purchase of the spare
parts allegedly installed in the defective elevators.
Aside from the absence of consent, the CA also
held that there was no perfected contract of sale

because there was no meeting of minds upon the

price. On this note, the CA ruled that the Service
Agreement did not give petitioner the unbridled
license to purchase and install any spare parts and
demand, after the lapse of a considerable length of
time, payment of these prices from respondent
according to its own dictated price.
RTC
denied
petitioners
Reconsideration., went to SC:

Motion

for

RESPONDENT: contends that petitioner had failed

to follow the SOP since no purchase orders from
respondent's Finance Manager, or Board of
Directors relating to the supposed parts used were
secured prior to the repairs. Consequently, since
the repairs were not authorized, respondent claims
that it has no way of verifying whether the parts
were actually delivered and installed as alleged by
petitioner.
A perusal of petitioner's petition and evidence in the
RTC shows that the main thrust of its case is
premised on the following claims: first, that the
nature and operations of a hospital necessarily
dictate that the elevators are in good running
condition at all times; and, second, that there was a
verbal agreement between petitioner's service
manager and respondent's building engineer that
the elevators should be running in good condition at
all times and breakdowns should only last one day.
This Court finds that the testimony of Sua alone is
insufficient to prove the existence of the verbal
agreement, especially in view of the fact that
respondent insists that the SOP should have been
followed. It is an age-old rule in civil cases that one
who alleges a fact has the burden of proving it and
a mere allegation is not evidence.
Based on the evidence presented in the RTC, it is
clear to this Court that petitioner had failed to
secure the necessary purchase orders from
respondent's Board of Directors, or Finance
Manager, to signify their assent to the price of the
parts to be used in the repair of the elevators.
The fixing of the price can never be left to the
decision of one of the contracting parties. But a

price fixed by one of the contracting parties, if

accepted by the other, gives rise to a perfected
sale
There would have been a perfected contract of sale
had respondent accepted the price dictated by
petitioner even if such assent was given after the
services were rendered. There is, however, no
proof of such acceptance on the part of respondent.
This Court shares the observation of the CA that
the signatures of receipt by the information clerk or
the guard on duty on the sales invoices and
delivery receipts merely pertain to the physical
receipt of the papers. It does not indicate that the
parts stated were actually delivered and installed.
Moreover, because petitioner failed to prove the
existence of the verbal agreement which allegedly
authorized the aforementioned individuals to sign in
respondents behalf, such signatures cannot be
tantamount to an approval or acceptance by
respondent of the parts allegedly used and the
price quoted by petitioner.
Withal, this Court rules that petitioner's claim must
fail for the following reasons: first, petitioner failed
to prove the existence of the verbal agreement that
would authorize non-observance of the SOP;
second, petitioner failed to prove that such
procedure was the practice since 1994; and, third,
there was no perfected contract of sale between
the parties as there was no meeting of minds upon
the price.
WHERFORE, premises considered, the petition
is DENIED. The April 20, 2006 Decision and July
31, 2006 Resolution of the Court of Appeals, in CAG.R. CV No. 80427, are AFFIRMED.

G.R. No. 161524

January 27, 2006

LAURA M. MARNELEGO, Petitioner,

vs.
BANCO FILIPINO SAVINGS AND MORTGAGE
BANK, Respondent
ISSUE: Whether there is a perfected contract of
sale between petitioner and respondent Banco
Filipino concerning the property in question.
In September 1980, Spouses Patrick and Beatrize
Price and petitioner Laura Marnelego executed a
Deed of Conditional Sale over a parcel of land
located at Houston Street, BF Homes, Paraaque,
Metro Manila and its improvements. The contract
showed that the property was mortgaged to
respondent Banco Filipino Savings and Mortgage
Bank (Banco Filipino) and BF Homes, and that
Spouses Price agreed to pay the amortizations for
the first six months beginning August 1980 to
January 1981 while petitioner would assume the
succeeding amortizations.
It appears, however, that when the parties faltered
on the amortizations, respondent bank foreclosed
the mortgage and acquired the property at public
auction. It later consolidated the title to the property
in its name after petitioner failed to redeem it. The
Regional Trial Court of Makati issued a writ of
possession in February 1984.
There were letters sent between the parties.
On November 22, 1995, after the bank resumed its
operations, it sent a letter to petitioner demanding
that they vacate the premises within five days from
receipt thereof.

Petitioner filed a complaint with the Regional Trial

Court of Paraaque for specific performance.
Invoking the letter dated September 20, 1984 of Mr.
Ricardo J. Gabriel, Assistant Manager, Real Estate
Department and Secretary of the Committee on
Disposal of Bank Properties, petitioner claimed that
the bank has approved her proposal for the
acquisition of the property. Petitioner prayed that
the court order the bank to execute the necessary
Deed of Sale of the property in question.
The trial court ruled in favor of petitioner. It held that
there was a perfected contract of sale between
petitioner and respondent; that the parties have
agreed on the purchase price of P362,000.00; and
that the terms set in the banks letter of September
20, 1984 are merely conditions in the performance
of the obligation and not a condition for the birth of
the contract.
The Court of Appeals reversed the decision of the
trial court. It found that there was no perfected
contract of sale between petitioner and respondent
bank. There was merely a series of offers and
counter-offers between the parties but they never
reached an agreement as to the purchase price.

petitioner that the bank has approved her request

to repurchase the property in the amount
ofP362,000.00 but subject to the following terms
and conditions: (1) cash payment of P310,000.00
upon approval of the request/proposal, and (2)
balance of P52,000.00 to be paid within one (1)
year at the rate of 35% interest per
annum. Petitioner, in her letter to the bank dated
October 9, 1984, made a counter-offer to pay a
down payment of P100,000.00 and to pay the
balance in 5 equal installments to be paid in 5
years with interest. Before the bank could act on
petitioners proposal, the Central Bank of the
Philippines ordered the closure of Banco Filipino
and placed it under liquidation. Thus on December
5, 1985, petitioner wrote to Mr. Alberto V. Reyes,
Deputy Liquidator of Banco Filipino, proposing to
purchase the property under the following terms
and conditions:
1. Purchase price to be determined by the
Liquidator
2. Purchase price to be payable as follows:
2.A. P120,000.00 to be deposited immediately
and to be lodged as A/P for the undersigned

Petition to SC: Petitioner argues:

1. The Court of Appeals gravely erred in finding
that there was no perfected contract between the
parties.
2. The Court of Appeals gravely erred in not
finding that the modified terms of payment
offered by petitioner was [sic] merely a condition
on the performance of an obligation, not a
condition imposed on the perfection of the
contract.
It has been ruled that a definite agreement on the
manner of payment of the purchase price is an
essential element in the formation of a binding and
enforceable contract of sale. The exchange of
letters between petitioner and respondent shows
that petitioner first offered to buy the property
for P310,000.00, considering the numerous repairs
that had to be done in the house. Respondent, in its
letter dated September 20, 1984, informed

2.B. Balance to be paid once the restraining

order/preliminary injunction is lifted by the officers
of Banco Filipino
On April 3, 1986, the Deputy Liquidator replied that
they can only consider the sale of the property after
the lifting of the Temporary Restraining Order
issued by the Supreme Court and said sale shall be
subject to the Central Bank rules and regulations.
Clearly, there was no agreement yet between the
parties as regards the purchase price and the
manner and schedule of its payment. Neither of
them had expressed acceptance of the other
partys offer and counter-offer.
Notable is petitioners letter to the banks Deputy
Liquidator, Mr. Alberto V. Reyes, which reveals that
she herself believed that no agreement has yet
been reached by the parties as regards the
purchase
price
after
the
exchange
of
communication between her and the bank. In said

letter, she made a totally new proposal for

consideration of the banks Liquidator that the
purchase price shall be determined by the
Liquidator; that she would deposit the amount
of P120,000.00 to be lodged in her accounts
payable; and that she would pay the balance after
the lifting of the temporary restraining order issued
by the Court on the banks transactions.
We find, therefore, that the Court of Appeals did not
err in reversing the decision of the trial court. As the
parties have not agreed on the purchase price for
the property, petitioners action for specific
performance against the bank must fail.
IN VIEW WHEREOF, the petition is DENIED.

G.R. No. 159373

November 16, 2006

JOSE R. MORENO, JR., Petitioner,

vs.
Private Management Office (formerly, ASSET
PRIVATIZATION TRUST), Respondent.
ISSUE: Whether or not there was a perfected
contract of sale over the subject floors at the price
ofP21,000,000.00.

The subject-matter of this complaint is the J.

Moreno Building (formerly known as the North
Davao Mining Building) or more specifically, the
2nd, 3rd, 4th, 5th and 6th floors of the building.

Plaintiff is the owner of the Ground Floor, the 7th

Floor and the Penthouse of the J. Moreno Building
and the lot on which it stands.
Defendant is the owner of the 2nd, 3rd, 4th, 5th and
6th floors of the building, the subject-matter of this
suit.
On February 13, 1993, the defendant called for a
conference for the purpose of discussing plaintiffs
right of first refusal over the floors of the building
owned by defendant. At said meeting, defendant
informed plaintiff that the proposed purchase price
for said floors was P21,000,000.00;
On February 22, 1993, defendant, in a letter signed
by its Trustee, Juan W. Moran, informed plaintiff
thru Atty. Jose Feria, Jr., that the Board of Trustees
(BOT) of APT "is in agreement that Mr. Jose
Moreno, Jr. has the right of first refusal" and
requested plaintiff to deposit 10% of the "suggested
indicative price" ofP21.0 million on or before
February 26, 1993 ;
Plaintiff paid the P2.1 million on February 26, 1993.
Then on March 12, 1993, defendant wrote plaintiff
that its Legal Department has questioned the basis
for the computation of the indicative price for the
said floors.
On April 2, 1993, defendant wrote plaintiff that the
APT BOT has "tentatively agreed on a settlement
price of P42,274,702.17" for the said floors;
On August 10, 1994, the trial court ruled in favor of
petitioner Moreno, viz.:
WHEREFORE, judgment is hereby rendered in
favor of plaintiff and against defendant, ordering
defendant to sell the 2nd, 3rd, 4th, 5th and 6th
floors of the J. Moreno Building to plaintiff at the
price
of
TWENTY[-]ONE
MILLION
(P21,000,000.00) PESOS; and ordering defendant
to endorse the transaction to the Committee on
Privatization, without costs.
Respondent filed a Motion for Reconsideration. On
November 16, 1994, the trial court denied the
motion for lack of merit.

Respondent appealed with the Court of Appeals.

(dismissed: no perfected contract of sale) Motion
for Reconsideration was denied. Respondent then
filed a Petition for Review on Certiorari.
Contract formation undergoes three distinct stages
preparation or negotiation, perfection or birth, and
consummation. This situation does not obtain in
the case at bar.
The letter of February 22, 1993 and the
surrounding circumstances clearly show that the
parties are not past the stage of negotiation, hence
there could not have been a perfected contract of
sale.
The letter is clear evidence that respondent did not
intend to sell the subject floors at the price certain
ofP21,000,000.00,
The letter clearly states that P21,000,000.00 is
merely a "suggested indicative price" of the subject
floors as it was yet to be approved by the Board of
Trustees. Before the Board could confirm the
suggested indicative price, the Committee on
Privatization must first approve the terms of the
sale or disposition.
Petitioner further argues that the "suggested
indicative price" of P21,000,000.00 is not a
proposed price, but the selling price indicative of
the value at which respondent was willing to
sell. Petitioner posits that under Section 14, Rule
130 of the Revised Rules of Court, the term should
be taken in its ordinary and usual acceptation and
should be taken to mean as a price which is
"indicated" or "specified" which, if accepted, gives
rise to a meeting of minds. We do not agree.
It appears in the case at bar that petitioners
construction of the letter of February 22, 1993
that his assent to the "suggested indicative price"
of P21,000,000.00 converted it as the price certain,
thus giving rise to a perfected contract of sale is
petitioners own subjective understanding. As such,
it is not shared by respondent. Under American
jurisprudence, mutual assent is judged by
an objective standard, looking to the express
words the parties used in the contract. Under the

objective theory of contract, understandings and

beliefs are effective only if shared. Based on the
objective manifestations of the parties in the case
at bar, there was no meeting of the minds. That the
letter constituted a definite, complete and certain
offer is the subjective belief of petitioner alone. The
letter in question is a mere evidence of a
memorialization of inconclusive negotiations, or a
mere agreement to agree, in which material term is
left for future negotiations. It is a mere evidence of
the parties preliminary transactions which did not
crystallize into a perfected contract. Preliminary
negotiations or an agreement still involving future
negotiations is not the functional equivalent of a
valid, subsisting agreement. For a valid contract to
have been created, the parties must have
progressed beyond this stage of imperfect
negotiation. But as the records would show, the
parties are yet undergoing the preliminary steps
towards the formation of a valid contract. Having
thus established that there is no perfected contract
of sale in the case at bar, the issue on estoppel is
now moot and academic.
Decision affirmed.

G. R. No. 158149 February 9, 2006

BOSTON BANK OF THE PHILIPPINES, (formerly
BANK OF COMMERCE), Petitioner,
vs.
PERLA P. MANALO and CARLOS MANALO, JR.,
Respondents.
ISSUE: whether petitioner or its predecessors-in-interest,
the XEI or the OBM, as seller, and the respondents, as
buyers, forged a perfect contract to sell over the
property.
1. Xavierville Estate, Inc. (XEI) sold to The Overseas
Bank of Manila (OBM)some residential lots in
Xavierville
subdivision.
Nevertheless,
XEI
continuedselling the residential lots in the subdivision as
agent of OBM.
2. Carlos Manalo, Jr. proposed to XEI, through its
President Emerito Ramos(Ramos), that he will purchase
two lots in the Xavierville subdivision andoffered as part
of the downpayment the P34,887.66 Ramos owed him.
XEI,through Ramos, agreed.
3. In a letter dated August 22, 1972 to Perla Manalo
(Carlos wife), Ramosconfirmed the reservation of the
lots. In the letter he also pegged the price of the lots at
P348,060 with a 20% down payment of the purchase
priceamounting to P69,612.00 (less the P34,887.66
owing from Ramos), payableas soon as XEI resumes its
selling operations; the corresponding Contract of
Conditional Sale would then be signed on or before the
same date. PerlaManalo conformed to the letter
agreement.
4. Thereafter, the spouses constructed a house on the
property. The spouses were notified of XEIs resumption
of selling operations. However,they did not pay the
balance of the downpayment because XEI failed
toprepare a contract of conditional sale and transmit the
same to them. XEIalso billed them for unpaid interests
which they also refused to pay. XEIturned over its
selling operations to OBM.

5. Subsequently, Commercial Bank of Manila (CBM)

acquired the XaviervilleEstate from OBM. CBM
requested Perla Manalo to stop any on-goingconstruction
on the property since it (CBM) was the owner of the lot
and shehad no permission for such construction. Perla
informed them that her husband had a contract with
OBM, through XEI, to purchase the property.She
promised to send CBM the documents. However, she
failed to do so.Thus, CBM filed a complaint for
unlawful detainer against the spouses. Butlater on, CBM
moved to withdraw its complaint because of the issues
raised.In the meantime, CBM was renamed the Boston
Bank of the Philippines.
6. Then, the spouses filed a complaint for specific
performance and damagesagainst the bank before the
RTC. The spouses alleged that they had alwaysbeen
ready and willing to pay the installments on the lots sold
to them but nocontract was forthcoming. The spouses
further alleged that upon their partialpayment of the
downpayment, they were entitled to the execution
anddelivery of a Deed of Absolute Sale covering the
subject lots. During the trial,the spouses adduced in
evidence the separate Contracts of Conditional
Saleexecuted between XEI and 3 other buyers to prove
that XEI continued sellingresidential lots in the
subdivision as agent of OBM after the latter hadacquired
the said lots.
RTC : The trial court ordered the petitioner (Boston
Bank) to execute a Deed of Absolute Sale in favor of the
spouses upon the payment of the spouses of the balance
of the purchase price. It ruled that under the August 22,
1972letter agreement of XEI and the spouses, the parties
had a "completecontract to sell" over the lots, and that
they had already partiallyconsummated the same.
CA: The Court of Appeals sustained the ruling of the
RTC, but declared that thebalance of the purchase price
of the property was payable in fixed amountson a
monthly basis for 120 months, based on the deeds of
conditional saleexecuted by XEI in favor of other lot
buyers.Boston Bank filed a Motion for the
Reconsideration of the decision allegingthat there was
no perfected contract to sell the two lots, as there was
noagreement between XEI and the respondents on the
manner of payment aswell as the other terms and
conditions of the sale. Boston Bank also assertsthat there
is no factual basis for the CA ruling that the terms and

conditionsrelating to the payment of the balance of the

purchase price of the property(as agreed upon by XEI
and other lot buyers in the same subdivision) werealso
applicable to the contract entered into between the
petitioner and therespondents. CA denied the MR.

Based on these two letters, the determination of the

terms of payment of the P278,448.00 had yet to be
agreed upon on or before December 31, 1972, or even
afterwards, when the parties sign the corresponding
contract of conditional sale.

Boston Bank, now petitioner, filed the instant petition for

review on certiorari assailing the CA rulings.

Jurisprudence is that if a material element of a

contemplated contract is left for future negotiations, the
same is too indefinite to be enforceable. And when an
essential element of a contract is reserved for future
agreement of the parties, no legal obligation arises until
such future agreement is concluded

SC:Petitioner posits that, even on the assumption that

there was a perfected contract to sell between the parties,
nevertheless, it cannot be compelled to convey the
property to the respondents because the latter failed to
pay the balance of the downpayment of the property, as
well as the balance of 80% of the purchase price, thus
resulting in the extinction of its obligation to convey title
to the lots to the Respondents.
Respondents further posit that the terms and conditions
to be incorporated in the "corresponding contract of
conditional sale" to be executed by the parties would be
the same as those contained in the contracts of
conditional sale executed by lot buyers in the
subdivision. After all, they maintain, the contents of the
corresponding contract of conditional sale referred to in
the August 22, 1972 letter agreement envisaged those
contained in the contracts of conditional sale that XEI
and other lot buyers executed.
A definite agreement as to the price is an essential
element of a binding agreement to sell personal or real
property because it seriously affects the rights and
obligations of the parties. Price is an essential element in
the formation of a binding and enforceable contract of
sale. The fixing of the price can never be left to the
decision of one of the contracting parties. But a price
fixed by one of the contracting parties, if accepted by the
other, gives rise to a perfected sale.
In a contract to sell property by installments, it is not
enough that the parties agree on the price as well as the
amount of downpayment. The parties must, likewise,
agree on the manner of payment of the balance of the
purchase price and on the other terms and conditions
relative to the sale. Even if the buyer makes a
downpayment or portion thereof, such payment cannot
be considered as sufficient proof of the perfection of any
purchase and sale between the parties.

It bears stressing that the respondents failed and refused

to pay the balance of the downpayment and of the
purchase price of the property amounting to P278,448.00
despite notice to them of the resumption by XEI of its
selling operations. The respondents enjoyed possession
of the property without paying a centavo. On the other
hand, XEI and OBM failed and refused to transmit a
contract of conditional sale to the Respondents. The
respondents could have at least consigned the balance of
the downpayment after notice of the resumption of the
selling operations of XEI and filed an action to compel
XEI or OBM to transmit to them the said contract;
however, they failed to do so.
As a consequence, respondents and XEI (or OBM for
that matter) failed to forge a perfected contract to sell the
two lots; hence, respondents have no cause of action for
specific performance against petitioner. Republic Act
No. 6552 "Realty Installment Buyer Act." applies only to
a perfected contract to sell and not to a contract with no
binding and enforceable effect.
The petition is granted. The decision of CA is reversed
and set aside.

he will stop paying rentals for the said unit after

September 30
c.
In case Platinum Plans has an outstanding loan of
less than P2 million with the bank as of December 1993,
Cucueco shall assume the same and pay the difference
from the remaining P2 million
Cucueco likewise claimed that Platinum Plans accepted
his offerby encashing the checks he issued. However,
he was surprised to learn that Platinum Plans had
changed the due date of the installment payment to
September 30, 1993.
Respondent argued that there was a perfected sale
between him and Platinum plans and as such, he may
validly demand from the petitioner to execute the
necessary deed of sale transferring ownership and title
over the property in his favor
Platinum Plans denied Cucuecos allegations and
asserted that Cucuecos initial down payment was
forfeited based on the following terms and conditions:
a.
The terms of payment only includes two
installments (August 1993 and September 1993)
PLATINUM PLANS PHILS INC V. CUCUECO 488
SCRA 156 (2006)

b.
In case of non-compliance on the part of the
vendee, all installments made shall be forfeited in favor
of the vendor Platinum Plans

ISSUE: ISSUE: whether or not the contract is a

perfected contract of sale

c.
Ownership over the property shall not pass until
payment of the full purchase price

FACTS: Respondent Cucueco filed a case for specific

performance with damages against petitioner Platinum
Plans pursuant to an alleged contract of sale executed by
them for the purchase of a condominium unit.

Petitioners anchor their argument on the claim that there

was no meeting of the minds between the two parties, as
evidenced by their letter of non-acceptance.

According to the respondent: sometime in July 1993, he

offered to buy from petitioner Platinum Plans Phils a
condominium unit he was leasing from the latter for P 4
million payable in 2 installments of P2 million with the
following terms and conditions:

The trial court ruled in favor of Platinum, citing that

since the element of consent was absent there was no
perfected contract. The trial court ordered Platinum
Plans to return the P2 million they had received from
Cucueco, and for Cucueco to pay Platinum Plans rentals
in arrears for the use of the unit.

a.
Cucueco will issue a check for P100,00 as earnest
money
b.
He will issue a post-dated check for P1.9 million to
be encashed on September 30, 1993 on the condition that

Upon appeal, CA held that there was a perfected

contract despite the fact that both parties never agreed on
the date of payment of the remaining balance. CA
ordered Cucueco to pay the remaining balance of the

purchase price and for Platinum Plans, to execute a deed

of sale over the property
HELD: it is a contract to sell.
In a contract of sale, the vendor cannot recover
ownership of the thing sold until and unless the contract
itself is resolved and set aside. Art 1592 provides:
In the sale of immovable property, even though it may
have been stipulated that upon failure to pay the price at
the time agreed upon, the rescission of the contract shall
of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for
rescission of the contract has been upon him either
judicially or by a notarial act. After the demand, the
court may not grant him a new term.
Based on the above provision, a party who fails to
invoke judicially or by notarial act would be prevented
from blocking the consummation of the same in light of
the precept that mere failure to fulfill the contract does
not by itself have the effect of rescission.
On the other hand, a contract to sell is bilateral contract
whereby the prospective seller, while expressly reserving
the ownership of the subject property despite its delivery
to the prospective buyer, commits to sell the property
exclusively to the prospective buyer upon fulfillment of
the condition agreed upon, i.e., full payment of the
purchase price. Full payment here is considered as a
positive suspensive condition.
As a result if the party contracting to sell, because of
non-compliance with the suspensive condition, seeks to
eject the prospective buyer from, the land, the seller is
enforcing the contract and is not resolving it. The failure
to pay is not a breach of contract but an event which
prevent the obligation to convey title from materializing.

Furthermore, the reservation of the title in the name of

Platinum Plans clearly indicates an intention of the
parties to enter into a contract to sell. Where the seller
promises to execute a deed of absolute sale upon
completion of the payment of purchase price, the
agreement is a contract to sell.
The court cannot, in this case, step in to cure the
deficiency by fixing the period pursuant to:
1.The relief sought by Cucueco was for specific
performance to compel Platinum Plans to receive the
balance of the purchase price.
2.The relief provide in Art 1592 only applies to contracts
of sale
3. Because of the differing dates set by both parties, the
court would have no basis for granting Cucueco an
extension of time within which to pay the outstanding
balance
SELLER CANNOT TREAT THE CONTRACT AS
CANCELLED WITHOUT SERVING NOTICE
The act of a party in treating the contract as cancelled
should be made known to the other party because this act
is subject to scrutiny and review by the courts in cased
the alleged defaulter brings the matter for judicial
determination as explained in UP v. De los Angeles. In
the case at bar, there were repeated written notices sent
by Platinum Plans to Cucueco that failure to pay the
balance would result in the cancellation of the contract
and forfeiture of the down payment already made. Under
these circumstance, the cancellation made by Platinum
Plans is valid and reasonable (except for the forfeiture of
the down payment because Cucueco never agreed to the
same)
EFFECTS OF CONTRACT TO SELL

In the present case, neither side was able to produce any

written evidence documenting the actual terms of their
agreement. The trial court was correct in finding that
there was no meeting of minds in this case considering
that the acceptance of the offer was not absolute and
uncondition. In earlier cases, the SC held that before a
valid and binding contract of sale can exist, the manner
of payment of the purchase price must first be
established.

A contract to sell would be rendered ineffective and

without force and effect by the non-fulfillment of the
buyers obligation to pay since this is a suspensive
condition to the obligation of the seller to sell and
deliver the title of the property. As an effect, the parties
stand as if the conditional obligation had never existed.
There can be no rescission of an obligation that is still
non-existent as the suspensive condition has not yet
occurred.

CAS RELIANCE ON LEVY

GERVACIO IS MISPLACED

HERMANOS

V.

It was unnecessary for CA to distinguish whether the

transaction between the parties was an installment sale
or a straight sale. In the first place, there is no valid and
enforceable contract to speak of.

REYNALDO VILLANUEVA, petitioner,

vs.
PHILIPPINE NATIONAL BANK
(PNB), respondent.
ISSUE: Whether a perfected contract of sale exists
between petitioner and respondent PNB
The Special Assets Management Department
(SAMD) of the Philippine National Bank (PNB)
issued an advertisement for the sale thru bidding of
certain PNB properties in Calumpang, General
Santos City, including Lot No. 17, covered by TCT
No. T-15042, consisting of 22,780 square meters,
with an advertised floor price ofP1,409,000.00, and
Lot No. 19, covered by TCT No. T-15036,
consisting of 41,190 square meters, with an
advertised floor price of P2,268,000.00. Bidding
was subject to the following conditions: 1) that cash
bids be submitted not later than April 27, 1989; 2)
that said bids be accompanied by a 10% deposit in
managers or cashiers check; and 3) that all
acceptable bids be subject to approval by PNB
authorities.
The defendant through Vice-President Guevara
negotiated with the plaintiff in connection with the
offer of the plaintiff to buy Lots 17 & 19. The offer of
plaintiff to buy, however, was accepted by the
defendant only insofar as Lot 19 is concerned as
exemplified by its letter dated July 6, 1990 where
the plaintiff signified his concurrence after
conferring with the defendants vice-president. The
conformity of the plaintiff was typewritten by the
defendants own people where the plaintiff
accepted the price of P2,883,300.00. The
defendant also issued a receipt to the plaintiff on
the same day when the plaintiff paid the amount
ofP200,000.00 to complete the downpayment
of P600,000.00. With this development, the plaintiff
was also given the go signal by the defendant to
improve Lot 19 because it was already in effect
sold to him and because of that the defendant
fenced the lot and completed his two houses on the
property.

G.R. No. 154493

December 6, 2006

On October 11, 1990, however, Guevara wrote

Villanueva that, upon orders of the PNB Board of
Directors to conduct another appraisal and public

bidding of Lot No. 19, SAMD is deferring

negotiations with him over said property and
returning his deposit of P580,000.00. Undaunted,
Villanueva attempted to deliver postdated checks
covering the balance of the purchase price but PNB
refused the same.
Villanueva filed with the RTC a Complaint
RTC: judgment is rendered in favor of the plaintiff.
The RTC anchored its judgment on the finding that
there existed a perfected contract of sale between
PNB and Villanueva. The RTC also pointed out that
Villanuevas P580,000.00
downpayment
was
actually in the nature of earnest money acceptance
of which by PNB signified that there was already a
sale.
PNB appealed to the CA: decision is reversed.
According to the CA, there was no perfected
contract of sale because the July 6, 1990 letter of
Guevara constituted a qualified acceptance of the
June 28, 1990 offer of Villanueva, and to which
Villanueva replied on July 11, 1990 with a modified
offer.
In the case at bench, consent, in respect to the
price and manner of its payment, is lacking. The
record shows that appellant, thru Guevaras July 6,
1990 letter, made a qualified acceptance of
appellees letter-offer dated June 28, 1990 by
imposing an asking price of P2,883,300.00 in cash
for Lot 19. The letter dated July 6, 1990 constituted
a counter-offer (Art. 1319, Civil Code), to which
appellee made a new proposal, i.e., to pay the
amount of P2,883,300.00 in staggered amounts,
that is, P600,000.00 as downpayment and the
balance within two years in quarterly amortizations.
Appellees new proposal, which constitutes a
counter-offer, was not accepted by appellant, its
board having decided to have Lot 19 reappraised
and sold thru public bidding.
Villanuevas motion for reconsideration is CA is
denied. Hence, petition to SC:
Court sustains CA on both issues.
Contracts of sale are perfected by mutual consent
whereby the seller obligates himself, for a price

certain, to deliver and transfer ownership of a

specified thing or right to the buyer over which the
latter agrees. Mutual consent being a state of mind,
its existence may only be inferred from the
confluence of two acts of the parties: an offer
certain as to the object of the contract and its
consideration, and an acceptance of the offer which
is absolute in that it refers to the exact object and
consideration embodied in said offer. While it is
impossible to expect the acceptance to echo every
nuance of the offer, it is imperative that it assents to
those points in the offer which, under the operative
facts of each contract, are not only material but
motivating as well. Anything short of that level of
mutuality produces not a contract but a mere
counter-offer
awaiting
acceptance. More
particularly on the matter of the consideration of the
contract, the offer and its acceptance must be
unanimous both on the rate of the payment and on
its term. An acceptance of an offer which agrees to
the rate but varies the term is ineffective.
From beginning to end, respondent denied that a
contract of sale with petitioner was ever perfected.
Its defense was broad enough to encompass every
issue relating to the concurrence of the elements of
contract, specifically on whether it consented to the
object of the sale and its consideration.
Acceptance of petitioners payments did not
amount to an implied acceptance of his last
counter-offer.

Moreover, petitioners payment of P200,000.00 was

with the clear understanding that his July 11, 1990
counter-offer was still subject to approval by
respondent. This is borne out by respondent, which
petitioner never controverted, where it appears on
the dorsal portion of O.R. No. 16997 that petitioner
acceded that the amount he paid was a mere "x x x
deposit made to show the sincerity of [his]
purchase offer with the understanding that it shall
be returned without interest if [his] offer is not
favorably considered x x x." This was a clear
acknowledgment on his part that there was yet no
perfected contract with respondent and that even
with the payments he had advanced, his July 11,
1990 counter-offer was still subject to consideration
by respondent.

In sum, the amounts paid by petitioner were not in

the nature of downpayment or earnest money but
were mere deposits or proof of his interest in the
purchase of Lot No. 19. Acceptance of said
amounts by respondent does not presuppose
perfection of any contract.
It must be noted that petitioner has expressly
admitted that he had withdrawn the entire amount
of P580,000.00 deposit from PNB-General Santos
Branch.
The petition is denied. The of the Court of Appeals
are AFFIRMED.

G.R. No. 166862 December 20, 2006

MANILA METAL CONTAINER CORPORATION,
petitioner,
REYNALDO C. TOLENTINO, intervenor,
vs.
PHILIPPINE NATIONAL BANK, respondent,
DMCI-PROJECT DEVELOPERS, INC., intervenor.
ISSUE: Whether or not petitioner and respondent
PNB had entered into a perfected contract for
petitioner to repurchase the property from
respondent.
Petitioner was the owner of 8,015 square
meters of parcel of land located in Mandaluyong
City, Metro Manila. To secure a P900,000.00 loan it
had obtained from respondent Philippine National
Bank, petitioner executed a real estate mortgage
over the lot. Respondent PNB later granted
petitioner a new credit accommodation. On August
5, 1982, respondent PNB filed a petition for
extrajudicial foreclosure of the real estate mortgage
and sought to have the property sold at public
auction. After due notice and publication, the
property was sold at public action where
respondent PNB was declared the winning bidder.
Petitioner sent a letter to PNB, requesting it to be
granted an extension of time to redeem/repurchase
the property. Some PNB personnel informed that as
a matter of policy, the bank does not accept partial
redemption. Since petitioner failed to redeem the
property, the Register of Deeds cancelled TCT No.
32098 and issued a new title in favor of PNB.
Meanwhile, the Special Asset Management
Department (SAMD) had prepared a statement of
account of petitioners obligation. It also
recommended the management of PNB to allow
petitioner to repurchase the property for
P1,574,560.oo. PNB rejected the offer and
recommendation of SAMD. It instead suggested to
petitioner
to
purchase
the
property
for
P2,660,000.00, in its minimum market value.
Petitioner declared that it had already agreed to
SAMDs offer to purchase for P1,574,560.47 and
deposited a P725,000.00.

Petitioner, however, did not agree to

respondent PNB's proposal. PNB again informed
petitioner that it would return the deposit should
petitioner desire to withdraw its offer to purchase
the property. On June 4, 1985, respondent PNB
informed petitioner that the PNB Board of Directors
had accepted petitioner's offer to purchase the
property, but for P1,931,389.53 in cash less the
P725,000.00 already deposited with it.
PETITIONER: Petitioner rejected respondent's
proposal in a letter dated July 14, 1988. It
maintained that respondent PNB had agreed to sell
the property for P1,574,560.47, and that since its
P725,000.00 downpayment had been accepted,
respondent PNB was proscribed from increasing
the purchase price of the property.
RESPONDENT: it had acquired ownership over
the property after the period to redeem had
elapsed. It claimed that no contract of sale was
perfected between it and petitioner after the period
to redeem the property had expired.
RTC dismissed the complaint. It ordered
respondent PNB to refund the P725,000.00 deposit
petitioner had made. The trial court ruled that there
was no perfected contract of sale between the
parties; hence, petitioner had no cause of action for
specific performance against respondent. The trial
court declared that respondent had rejected
petitioner's offer to repurchase the property.
Petitioner, in turn, rejected the terms and conditions
contained in the June 4, 1985 letter of the SAMD.
While petitioner had offered to repurchase the
property per its letter of July 14, 1988, the amount
of P643,422.34 was way below the P1,206,389.53
which respondent PNB had demanded. It further
declared that the P725,000.00 remitted by
petitioner to respondent PNB on June 4, 1985 was
a "deposit," and not a downpayment or earnest
money.
Petitioner appealed in CA. CA affirmed the decision
of RTC. It declared that petitioner obviously never
agreed to the selling price proposed by respondent
PNB (P1,931,389.53) since petitioner had kept on
insisting that the selling price should be lowered to
P1,574,560.47. Clearly therefore, there was no
meeting of the minds between the parties as to the
price or consideration of the sale.
The CA ratiocinated that petitioner's original offer to
purchase the subject property had not been
accepted by respondent PNB. In fact, it made a
counter-offer through its June 4, 1985 letter
specifically on the selling price; petitioner did not
agree to the counter-offer; and the negotiations did
not prosper. Moreover, petitioner did not pay the

balance of the purchase price within the sixty-day

period set in the June 4, 1985 letter of respondent
PNB. Consequently, there was no perfected
contract of sale, and as such, there was no contract
to rescind.
Petitioner filed a motion for reconsideration, which the
CA likewise denied.
Thus, petitioner filed the instant petition for review on
certiorari.
PETITIONER: Petitioner posits that respondent was
proscribed from increasing the interest rate after it had
accepted respondent's offer to sell the property for
P1,574,560.00. Consequently, respondent could no
longer validly make a counter-offer of P1,931,789.88 for
the purchase of the property. It likewise maintains that,
although the P725,000.00 was considered as "deposit for
the repurchase of the property" in the receipt issued by
the SAMD, the amount constitutes earnest money.
RESPONDENT: respondent contends that the parties
never graduated from the "negotiation stage" as they
could not agree on the amount of the repurchase price of
the property. the Statement of Account prepared by
SAMD as of June 25, 1984 cannot be classified as a
counter-offer; it is simply a recital of its total monetary
claims against petitioner.
Ruling:
The SC affirmed the ruling of the appellate
court that there was no perfected contact of sale
between the parties.
A contract is meeting of minds between two
persons whereby one binds himself, with respect to
the other, to give something or to render some
service. Under 1818 of the Civil Code, there is no
contract unless the following requisites concur:
Contract is perfected by mere consent which is
manifested by the meeting of the offer and the
acceptance upon the thing and causes which are to
constitute the contract. Once perfected, the bind
between other contracting parties and the
obligations arising therefrom have the form of law
between the parties and should be complied in
good faith. The absence of any essential element
will negate the existence of a perfected contract of
sale.
The court ruled in Boston Bank of the
Philippines vs Manalo:

A definite agreement as to the price is an

essential element of a binding agreement to sell
personal or real property because it seriously
affects the rights and obligations of the parties.
Price is an essential element in the formation of a
binding and enforceable contract of sale. The fixing
of the price can never be left to the decision of one
of the contracting parties. But a price fixed by one
of the contracting parties, if accepted by the other,
gives rise to a perfected sale.
In the case at bar, the parties to the contract is
between Manila Metal Container Corporation and
Philippine National Bank and not to Special Asset
Management Department. Since the price offered
by PNB was not accepted, there is no contract.
Hence it cannot serve as a binding juridical relation
between the parties.
The P725,000.00 was merely a deposit to be applied as
part of the purchase price of the property, in the event
that respondent would approve the recommendation of
SAMD for respondent to accept petitioner's offer to
purchase the property for P1,574,560.47. Unless and
until the respondent accepted the offer on these terms, no
perfected contract of sale would arise. Absent proof of
the concurrence of all the essential elements of a
contract of sale, the giving of earnest money cannot
establish the existence of a perfected contract of sale.

It appears that although respondent requested

petitioner to conform to its amended counter-offer,
petitioner
refused
and
instead
requested
respondent to reconsider its amended counteroffer. Petitioner's request was ultimately rejected
and respondent offered to refund its P725,000.00
deposit.
In sum, then, there was no perfected contract of sale
between petitioner and respondent over the subject
property.
Petition is denied. Decision is affirmed.