Toyota Shaw Vs CA: Vehicle Sales Proposal
Toyota Shaw Vs CA: Vehicle Sales Proposal
Facts: Sosa wanted to purchase a Toyota Car. She met Bernardo, the sales representative of Toyota. Sosa
emphasized to the sales rep that she needed the car not later than 17 June 1989. They contracted an
agreement on the delivery of the unit and that the balance of the purchase price would be paid by credit
financing. The following day, Sosa delivered the downpayment and a Vehicle sales proposal was printed.
On the day of delivery, Bernardo called Sosa to inform him that the car could not be delivered. Toyota
contends, on the other hand, that the Lite Ace was not delivered to Sosa because of the disapproval by
B.A. Finance of the credit financing application of Sosa. Toyota then gave Sosa the option to purchase the
unit by paying the full purchase price in cash but Sosa refused. Sosa asked that his down payment be
refunded. Toyota did so on the very same day by issuing a Far East Bank check for the full amount, which
Sosa signed with the reservation, “without prejudice to our future claims for damages.” Thereafter, Sosa
sent two letters to Toyota. In the first letter, she demanded the refund of the down payment plus
interest from the time she paid it and for damages. Toyota refused to the demands of Sosa.
Issue: Whether or not there was a perfected contract of sale- NO
Ruling: What is clear from the agreement signed by Sosa and Gilbert is not a contract of sale. No
obligation on the part of Toyota to transfer ownership of the car to Sosa and no correlative obligation on
the part of Sosa to pay. The provision on the down payment of PIOO,OOO.OO made no specific reference
to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment
basis, as the VSP executed the following day. Nothing was mentioned about the full purchase price and
the manner the installments were to be paid. An agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes, into the price such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential
element of a binding agreement to sell personal property.
Ruling: The material averments contained in the petitioners' complaint disclose a lack of complete
"agreement in regard to the manner of payment" of the lot in question. The complaint states pertinently:
That plaintiff and defendant further agreed that the total down payment shall by P30,000.00, including
the P10,000.00 partial payment mentioned in paragraph 3 hereof, and that upon completion of the said
down payment of P30,000.00, the balance of P70,000.00 shall be said by the plaintiff to the defendant in
10 years from November 29, 1962.
That the time within the full down payment of the P30,000.00 was to be completed was not specified by
the parties but the defendant was duly compensated during the said time prior to completion of the down
payment of P30,000.00 by way of lease rentals on the house existing thereon which was earlier leased by
defendant to the plaintiff's sister-in-law, Socorro J. Velasco, and which were duly paid to the defendant
by checks drawn by plaintiff.
Petitioners admit that they still had to meet and agree on how and when the down-payment and the
installment payments were to be paid. There was no perfection of a definite and firm sales agreement
between the parties over the lot in question. Indeed, this Court has already ruled before 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 fact that the petitioners delivered to the respondent the sum of P10,000 cannot be considered as
sufficient proof of the perfection of any purchase and sale agreement between the parties herein under
article 1482 of the new Civil Code, as the petitioners themselves admit that some essential matter — the
terms of payment — still had to be mutually covenanted.
Limson vs. CA
Petitioner Lourdes Ong Limson filed a complaint against respondent spouses Lorenzo De Vera and Asuncion
Santos-de Vera. Petitioner contended that through the respondent spouses’ agent, Marcosa Sanchez,
there was an offer to sell to petitioner a parcel of land.
On July 31, 1978, she agreed to buy the property for the price of 34Php/sq. m. and gave a sum of
20,000Php as ‘earnest money’. Respondent spouses signed a receipt thereof and gave petitioner a 10-day
(Aug. 10) option to purchase the property. Respondent Lorenzo (husband) then informed her that the
property was mortgaged to (Ramoses) Emilio Ramos and Isidro Ramos. Lorenzo asked her to pay the
purchase price to enable him to settle their obligation to Ramoses.
On Aug. 5, 1978, Petitioner agreed to meet with respondent spouses and Ramoses in ROD to consummate
transaction but respondent spouses and Ramoses failed to appear.
On Aug. 11, 1978, she claimed she was already willing and ready to pay but transaction did not push
through since respondent spouses did not pay the back taxes of the property.
On Aug. 23, 1978, Limson gave 3 checks to respondent spouses for the settlement of the back taxes and
payment of quitclaims for tenants of land. The amount was considered part of the purchase price and was
signed by the respondent spouses.
That on Sept. 5, she was surprised to learn from the agent of the respondent spouses that the property
was subject to negotiation of a sale with another corporation, SUNVAR represented by Tomas Cuenca.
On Sept. 15, Limson discovered that the respondent spouses bought the property from the Ramoses 8
years ago, but the TCT was only issued to them on that day. Hence, she filed for an Affidavit of Adverse
Claim at the RDO also claiming that she informed the agent of the corporation of her contract to purchase
the property. The deed of sale was executed on the same day between respondent spouses and SUNVAR
and the TCT was issued in favor of the corporation with the annotation of the adverse claim on Sept. 26.
Limson alleged that when it was sold to SUNVAR, her legal right was ignored, if not, violated. That
SUNVAR was in bad faith because it knew of her ‘contract’ with the respondent spouses. That the new
titles be annulled and cancelled and the contract between her and the respondent spouses be executed.
Respondent spouses alleged that there was no sufficient cause, petitioner was not a party in interest, that
option to buy property had expired, that she had no legal capacity to sue.
SUNVAR allege that petitioner had no cause of action and is not a party in interest. Assuming that she was
a party in interest, she could only be entitled to the return of any amount received by respondent
spouses. Petitioner had already lost her option to buy the property for failure to comply with the
agreement. Moreover, that at the time of execution of the DOAS, they had no knowledge of her interest
or claim over the property. That the knowledge had only come upon when they were furnished a copy of
the new title and her adverse claim was annotated. They also filed a cross-claim against respondent
spouses of bad faith for not disclosing the claim of the petitioner. They prayed for reimbursement of all
amounts in the event the court should annul the DOS.
To answer for the cross-claim, respondent spouses allege that they contracted with SUNVAR after the
expiration of the option period given to the petitioner, maintaining good faith. That SUNVAR verified the
title in ROD before the DOAS. That the cross-claim was barred by a waiver executed by SUNVAR.
Ruling of the Trial Court – Petition is meritorious.
Annulment and rescission of the DOAS between respondents, cancellation of titles to SUNVAR’s favor,
restoration of title under the name of respondent spouses, Execution of DOS in favor of petitioner. Ruling
of CA on appeal – Reversed. Delete Adverse claim and any annotations on the titled ensued by the
petitioner.
Issue: Whether or not a contract to sell was perfected
Ruling: It was a contract of option and not a contract to sell. An option in the law of sales is a continuing
offer or contract by which the owner stipulates with another that the latter shall have the right to buy
the property at a fixed price within a time certain, or in compliance with certain conditions. ‘Unaccepted
offer’. It is not a purchase but merely secures the privilege to buy. It is a sale of the right to purchase. It
imposes no binding obligation on the person holding the option, aside from consideration for the offer.
Until acceptance, it is not a contract, does not vest, transfer or agree to transfer any title, interest or
right but merely a contract giving the option the right / privilege of accepting the offer and buying the
property on certain terms.
(CTS involves meeting of the minds between two persons whereby one binds himself with respect to the
other, to give or render some service. They are perfected by consent by the meeting of the offer and
acceptance upon thing and cause to constitute contract. Thus, the offer must be certain and acceptance
absolute.)
Kahit yun yung goal!!!!!!
The receipt provides “P20,000.00 dated July 31, 1978 as earnest money with option to purchase a parcel
of land subject to the condition and stipulation that have been agreed upon by the buyer and me which
will form part of the receipt. Should the transaction of the property not materialize not on the fault of
the buyer, I obligate myself to return the full amount of P20,000.00 earnest money with option to buy or
forfeit on the fault of the buyer. I guarantee to notify the buyer Lourdes Limson or her representative and
get her conformity should I sell or encumber this property to a third person. This option to buy is good
within ten (10) days until the absolute deed of sale is finally signed by the parties or the failure of the
buyer to comply with the terms of the option to buy as herein attached.”
The receipt readily showed that the contract only entered into a contract of option. Respondent spouses
did not sell their property.
The consideration of 20,000Php paid was referred to as ‘earnest money’ however, examining the
words used indicates it is an option money. That earnest money is part of the purchase price while
option money is given as a distinct consideration for an option contract. That earnest money is given
when there is already sale and option money is when the buyer is bound to pay balance. In option money,
the would-be buyer gives option money but he is not required to buy the property.
The rule is except when a formal acceptance is not required, acceptance must be clearly made and
evidenced by some acts / conducts. However, there is nothing in the conducts of petitioner that present
determination to accept the offer to buy within the 10-day option period. The only opportunity was on
Aug. 5 when she agreed to meet with respondents and Ramoses. But whether that showed acceptance of
offer is hazy and very dubious. On the last day of the option period, no affirmative or clear manifestation
was made by the petitioner (Aug. 10). Thus, on Aug. 11, the option period expired.
On Sept. 14, when respondent spouses sent a telegram to petitioner demanding full payment of the
purchase price simply demonstrated an inclination to give her preference to buy subject property. These
instances did not indicate that the petitioner had exclusive right to purchase.
Moreover, the argument that there was extension of option period when they extended the authority of
their agent is of no moment because extension of contract of agency does not operate to extend option
period.
Assuming that all the instances / meetings were in the 10-day option period, the presence of the
petitioner was not enough as she was not even prepared to pay the purchase price in cash as agreed. Even
without the presence of the Ramoses, petitioner could have easily made necessary payment in cash as the
price of the property was already set. The option period having expired and acceptance was not
effectively made by petitioner, the purchase of subject property by SUNVAR was perfectly valid and
entered into in good faith.
San Miguel Properties Phils., Inc. VS. Spouses Alfredo And Grace Huang
Nature of the Case: A petition for review for a decision of the Court of Appeals which reversed the
decision of the RTC dismissing the complaint brought by the Huangs against San Miguel Properties for
enforcement of a contract of sale
Facts: San Miguel Properties offered two parcels of land for sale and the offer was made to an agent of
the spouses Huang. An “earnest-deposit” of P1 million was offered by the spouses and was accepted by
the petitioner’s authorized officer subject to certain terms.
San Miguel, through its executive officer, wrote the respondent’s lawyer that because the parties failed
to agree on the terms and conditions of the sale despite the extension granted by the petitioner, the
latter was returning the “earnest-deposit”.
The spouses demanded execution of a deed of sale covering the properties and attempted to return the
“earnest-deposit” but San Miguel refused on the ground that the option to purchase had already expired.
A complaint for specific performance was filed against the petitioner and the latter filed a motion to
dismiss the complaint because the alleged “exclusive option” of the respondents lacked a consideration
separate and distinct from the purchase price and was thus unenforceable; the complaint did not allege a
cause of action because there was no “meeting of the mind” between the parties and therefore the
contact of sale was not perfected.
The trial court granted the petitioner’s motion and dismissed the action. The respondents filed a motion
for reconsideration but were denied by the trial court. The respondents elevated the matter to the Court
of Appeals and the latter reversed the decision of the trial court and held that a valid contract of sale had
been complied with.
Issue: WON there was a perfected contract of sale between the parties- NO.
Ruling: Dismissed. The decision of the appellate court was reversed and the respondents’ complaint was
dismissed.
It is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the
contract of sale which establishes the existence of a perfected sale.
The P1 million “earnest-deposit” could not have been given as earnest money because at the time of the
acceptance of the offer offer, their contract had not yet been perfected. This is evident from the
following conditions attached by respondents to their letter.
The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. As
petitioner correctly points out, acceptance of this condition did not give rise to a perfected sale but
merely to an option or an accepted unilateral promise on the part of respondents to buy the subject
properties within 30 days from the date of acceptance of the offer. Such option giving spouses the
exclusive right to buy the properties within the period agreed upon is separate and distinct from the
contract of sale which the parties may enter. All that respondents had was just the option to buy the
properties which privilege was not, however, exercised by them because there was a failure to agree on
the terms of payment. No contract of sale may thus be enforced by respondents.
Even the option secured by respondents from petitioner was fatally defective. Under the second
paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing for a price
certain is binding upon the promisor only if the promise is supported by a distinct consideration.
Consideration in an option contract may be anything of value, unlike in sale where it must be the price
certain in money or its equivalent. There is no showing here of any consideration for the option. Lacking
any proof of such consideration, the option is unenforceable.
Equally compelling as proof of the absence of a perfected sale is the second condition that, during the
option period, the parties would negotiate the terms and conditions of the purchase. The stages of a
contract of sale are as follows: (1) negotiation, covering the period from the time the prospective
contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection,
which takes place upon the concurrence of the essential elements of the sale which are the meeting of
the minds of the parties as to the object of the contract and upon the price; and (3) consummation,
which begins when the parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment thereof.
In the present case, the parties never got past the negotiation stage. The alleged “indubitable evidence”
of a perfected sale cited by the appellate court was nothing more than offers and counter-offers which
did not amount to any final arrangement containing the essential elements of a contract of sale. While
the parties already agreed on the real properties which were the objects of the sale and on the purchase
price, the fact remains that they failed to arrive at mutually acceptable terms of payment, despite the
45-day extension given by petitioner
ZAYCO v. SERRA
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been entered into in the place where the
offer was made.
Art. 1325. Unless it appears otherwise, business advertisements of things for sale are not definite offers,
but mere invitations to make an offer.
Art. 1326. Advertisements for bidders are simply invitations to make proposals, and the advertiser is not
bound to accept the highest or lowest bidder, unless the contrary appears.
FACTS:
Nov. 7, 1918 - Lorenzo Zayco who had a property and Salvador Serra who owned Palma Central entered
into a contract, the pertinent clauses of which state that:
Serra shall give Zayco an option to buy Palma Central for P1M. When the purchase of Palma Central is
made and Zayco cannot pay the whole price in cash, he has to pay the first half in cash and half paid in 3
years. Provided that the Zayco gives a security or bond that satisfies the party of the first part. The
option of the party to buy or become a partner of Serra expires on June 30,1919. If its sold or a
partnership with another is formed, Zayco shall have preference to make such a sale or become a
partner over any other persons desiring to purchase the central or enter into a partnership.
June 28, 1919- Zayco through attorney accepted the contract and partly paid using a cash order from
BPI Iloilo for P100,000. Notice was also given to Serra in the letter that PNB agreed to transfer his long
term loan of P600,000 to the account of Zayco to hold him responsible for all the amounts had and
received due to the loan.
Serra was to be completely removed from responsibility
Ready to give the bond required by the contract b
Demanded Serra to execute the deed of sale
Serra knew about it and answered June 30, 1919. But on July 15, Serra wrote that the option contract
of Nov. 7 was cancelled.
July 30, 1919 – Zayco brought action for specific performance vs. Serra to compel him to execute the
deed of sale, convey Palma Central, and pay P500,000 damages. Jan. 23, 1920 amended complaint that
after Nov. 7 contract and before June 28, 1919, a stipulation was made by them that the sum to be paid
in cash of total price was P100,000.
Re first complaint: Serra said contract of Nov. 7, 1918 did not specify the part of the price that was
to be paid in cash and the part that was to be paid not exceeding 3 years
After amendment: Serra alleged there was no such stipulation that specified how much he needed to
pay.
March 19, 1920- SUPPLEMENTAL COMPLAINT cus Serra sold Palma Central to certain people for P1.5M on
the terms of the said contract. Prayed that Zayco be declared entitled to buy on the same terms as the
sale to 3rd parties.
Held: Nov. 7, 1918 contract: Zayco had the right to (1) buy Palma Central until June 30, 1919, and (2)
have preference, after that date, over any other purchaser making the same terms.
While it is true that the contract did not state any consideration on the part of Serra, it is presumed that
there is a consideration in all contracts (Art. 1277, CC). Consideration can be proved and there is
evidence in this case.
SPOUSES VILLAMOR, vs. CA AND SPOUSES MACARIA LABINGISA REYES AND ROBERTO REYES
FACTS: Reyes was the owner of a lot located at Caloocan City, as evidenced by TCT of the Register of
Deeds of Rizal. Reyes sold a portion of the lot (300sqm) to the Spouses Villamor. Earlier, Reyes borrowed
money from the spouses which amount was deducted from the total purchase price of the lot sold. The
portion sold to the Villamor spouses is now covered by a different TCT while the remaining portion which
is still in the name of Reyes is covered by a different TCT. Reyes executed a "Deed of Option" in favor of
Villamor in which the remaining portion of the lot would be sold to Villamor under the certain conditions.
According to Macaria Reyes, when her husband, Roberto Reyes, retired, they offered to repurchase the lot
sold by them to the Villamor spouses but Marina Villamor refused and reminded them instead that the
Deed of Option in fact gave them the option to purchase the remaining portion of the lot.
The Villamors, on the other hand, claimed that they had expressed their desire to purchase the remaining
portion of the lot but the Reyes had been ignoring them. Thus, after conciliation proceedings in the
barangay level failed, they filed a complaint for specific performance against the Reyes.
Judgment was rendered by the trial court in favor of the Villamor spouses.
The Court of Appeals rendered a decision reversing the decision of the trial court and dismissing the
complaint. The reversal of the trial court's decision was premised on the finding of respondent court that
the Deed of Option is void for lack of consideration.
The Villamor spouses brought the instant petition for review on certiorari.
ISSUE: Whether the ‘kind’ of Deed of Option in this case was valid
Ruling: The court a quo, rule that the Deed of Option was a valid written agreement between the parties.
The law provides that when the terms of an agreement have been reduced to writing it is to be
considered as containing all such terms, and therefore, there can be, between the parties and their
successors in interest no evidence of their terms of the agreement, other than the contents of the
writing. ... (Section 7 Rule 130 Revised Rules of Court)
A sale must be for a price certain (Art. 1458). The respondent appellate court failed to give due
consideration to the evidence which shows that the Villamor spouses bought an adjacent lot from the
brother of Macaria Reyes for only P18.00 per square meter which the respondents Reyes did not rebut.
Thus, expressed in terms of money, the consideration for the deed of option is the difference between
the purchase price of the portion of the lot in 1971 (P70.00 per sq.m.) and the prevailing reasonable price
of the same lot in 1971. Whatever it is, (P25.00 or P18.00) though not specifically stated in the deed of
option, was ascertainable. Villamors allegedly paying P52.00 per square meter for the option may, as
opined by the appellate court, be improbable but improbabilities do not invalidate a contract freely
entered into by the parties.
The "deed of option" entered into by the parties in this case had unique features. Ordinarily, an optional
contract is a privilege existing in one person, for which he had paid a consideration and which gives him
the right to buy, for example, certain merchandise or certain specified property, from another person, if
he chooses, at any time within the agreed period at a fixed price. The first part of the deed covered the
statement on the sale of the 300 square meter portion of the lot to Spouses Villamor at the price of
P70.00 per square meter "which was higher than the actual reasonable prevailing value of the lands in
that place at that time (of sale)." The second part stated that the only reason why the Villamor spouses
agreed to buy the said lot at a much higher price is because the vendor (Reyes) also agreed to sell to the
Villamors the other half-portion of 300 square meters of the land. Had the deed stopped there, there
would be no dispute that the deed is really an ordinary deed of option granting the Villamors the option
to buy the remaining 300 square meter-half portion of the lot in consideration for their having agreed to
buy the other half of the land for a much higher price. But, the "deed of option" went on and stated that
the sale of the other half would be made "whenever the need of such sale arises, either on our (Reyes)
part or on the part of the Spouses Villamor. It appears that while the option to buy was granted to the
Villamors, the Reyes were likewise granted an option to sell. In other words, it was not only the Villamors
who were granted an option to buy for which they paid a consideration. The Reyes as well were granted
an option to sell should the need for such sale on their part arise.
The option offered by Reyes had been accepted by the Villamors, the promise, in the same document.
The acceptance of an offer to sell for a price certain created a bilateral contract to sell and buy and upon
acceptance, the offer, ipso facto assumes obligations of a vendee. Demandabilitiy may be exercised at
any time after the execution of the deed.
Since there may be no valid contract without a cause of consideration, the promisory is not bound by his
promise and may, accordingly withdraw it. Pending notice of its withdrawal, his accepted promise
partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of
sale.
A contract of sale is, under Article 1475 of the Civil Code, "perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From that moment, the
parties may reciprocally demand perform of contracts." Since there was, between the parties, a meeting
of minds upon the object and the price, there was already a perfected contract of sale. What was,
however, left to be done was for either party to demand from the other their respective undertakings
under the contract. It may be demanded at any time either by the private respondents, who may compel
the petitioners to pay for the property or the petitioners, who may compel the private respondents to
deliver the property.
However, the Deed of Option did not provide for the period within which the parties may demand the
performance of their respective undertakings in the instrument. The parties could not have contemplated
that the delivery of the property and the payment thereof could be made indefinitely and render
uncertain the status of the land. The failure of either parties to demand performance of the obligation of
the other for an unreasonable length of time renders the contract ineffective.
Under Article 1144 (1) of the Civil Code, actions upon written contract must be brought within ten (10)
years. The Deed of Option was executed on November 11, 1971. The acceptance, as already mentioned,
was also accepted in the same instrument. The complaint in this case was filed by the petitioners 17 years
from the time of the execution of the contract. Hence, the right of action had prescribed.
It is of judicial notice that the price of real estate in Metro Manila is continuously on the rise. To allow
the Villamors to demand the delivery of the property 17 years after the execution of the deed at the price
of only P70.00 per square meter is inequitous. For reasons also of equity and in consideration of the fact
that the Reyes have no other decent place to live, the Court, in the exercise of its equity jurisdiction is
not inclined to grant petitioners' prayer.
ROSENCOR V. INQUING
FACTS: Respondents are tenants of a two-storey residential apartment in Tomas Morato QC. The lease was
not covered by any contract. Lessees were verbally given by the lessors the pre-emptive right to
purchase the property in case of sale. The original lessors died and their heir also promised the lessees
the same pre-emptive right to purchase. The new lessors represented by Eufrocina de Leon demanded the
lessees to vacate the property because the building will allegedly be demolished but after the lessees
declined, she sent them a letter offering to sell the property for 2M. Lessees made a counter offer of 1M
but no reply was made by the lessors.
De leon subsequently informed the lessees that the property was already sold to Rosencor. Lessees
claimed that they were deceived because the property was already sold to Rosencor before it was offered
to them. They offered to reimburse the payment to the lessors but the offer was declined as hence, this
petition.
ISSUE: WON the lessors should recognize the pre-emptive right of the lessees even if it was only given
verbally.
HELD: The right of first refusal is not covered by the Statute of Frauds. The application of such statute
presupposes the existence of a perfected contact which is no applicable in this case. As such, a right of
first refusal need not be written to be enforceable and can be proved by oral evidence. Lessees have
proven that the lessors admit the right of first refusal given to them when the property was offered to
them by 2M.
The prevailing doctrine is that a contract of sale entered in violation of right of first refusal is rescissible.
However, this doctrine cannot be applied here because the vendees (Rosencor) is in good faith. Under
Art.1358, recission cannot take place when things which are the object of sale is legally in possession of
third person who did not act in bad faith.
Rosencor could not have acted in bad faith because they are not aware of the right of first refusal given
verbally. Respondents should instead file for damages.