SALES Case Digests

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 petitioner’s 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 RSLAI’s approval of the assumption of mortgage. Since RSLAI did not allow respondent to assume petitioner’s 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 respondent’s assumption of mortgage. Because RSLAI did not allow respondent to assume his (petitioner’s) 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 petitioner’s 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 petitioner’s outstanding obligation to RSLAI. Consequently, respondent informed RSLAI of the sale and of her assumption of petitioner’s obligation. However, because petitioner surreptitiously paid his outstanding obligation and took back her certificates of title, petitioner himself rendered respondent’s obligation to assume petitioner’s 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 Alfredo’s 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 RTC’s 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 spouse’s 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 Mario’s contention that the Agreement is a continuing offer which may be perfected by Elvira’s 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 Elvira’s 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 Elvira’s 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 vendor’s 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 Gozon’s 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.

respondent’s

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 petitioner’s 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 respondent’s 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, Parañaque, 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 Parañaque 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 bank’s 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 petitioner’s 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 party’s offer and counter-offer. Notable is petitioner’s letter to the bank’s 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 bank’s 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 bank’s 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, petitioner’s 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 plaintiff’s 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 petitioner’s 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 petitioner’s 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 XEI’s 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 offer—by 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 Cucueco’s allegations and asserted that Cucueco’s 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 buyer’s 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.

CA’S 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 manager’s or cashier’s 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 defendant’s vice-president. The conformity of the plaintiff was typewritten by the defendant’s 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 Villanueva’s 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 Guevara’s July 6, 1990 letter, made a qualified acceptance of appellee’s 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. Appellee’s 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. Villanueva’s 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 petitioner’s payments did not amount to an implied acceptance of his last counter-offer.

Moreover, petitioner’s 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 petitioner’s 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 SAMD’s 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.