G.R. NO. 170115, February 19, 2008
Topics:
Stages of the Contract of Sale
Doctrines:
A contract of sale is a consensual contract and is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price.
Summary:
On September 27, 1961, the Province of Cebu leased Lot 646, which was a portion of the Banilad Estate, to Rufina Morales. The land parcel leased in favor of Rufina was one of several pieces of property that the Province of Cebu ceded to the City of Cebu in 1964. The Province of Cebu was sued by the heirs of Rufina for specific performance and property reconveyance. The Province of Cebu was ordered to transmit the Lot to the Heirs by the Trial Court after finding in favor of the Plaintiffs and against the latter. The RTC’s judgment was upheld by the Court of Appeals.
Facts:
On September 27, 1961, the Province of Cebu leased Lot 646, which was a portion of the Banilad Estate, to Rufina Morales. The land parcel leased in favor of Rufina was one of several pieces of property that the Province of Cebu ceded to the City of Cebu in 1964. Through a TCT, Cebu City received permission to occupy the space vacated by Rufina. In 1965, Cebu City held a public auction to sell the donated lots, including Lot 646, to earn money for building needs. Hever Bascon placed the highest bid, but Rufina was permitted to match it since she had a preferential claim to the land as an actual occupant of it. Rufina made the necessary down payment and a portion of the lot’s purchase price. Cebu Province sued Cebu City for the return of a donation it had provided. A compromise deal between Cebu Province and Cebu City was signed on May 7, 1974, and the court approved it. The contract stated that the donated lots would be delivered back to Cebu Province (Petitioner). Sadly, Rufina Morales passed away in February 1969 while the case between Cebu City and Cebu Province was still pending. She was unable to make any additional payments on the remaining balance of the lot’s purchase price other than the deposit and down payment. In response to the City of Cebu’s previous award, one of Morales’ nieces wrote to the governor of Cebu seeking for the formal conveyance of Lot 646 to Rufina’s remaining heirs. The plea wasn’t heeded, though. The Province of Cebu was sued by the heirs of Rufina for specific performance and property reconveyance. The Province of Cebu was ordered to transmit the Lot to the Heirs by the Trial Court after finding in favor of the Plaintiffs and against the latter. The RTC’s judgment was upheld by the Court of Appeals.
Issue:
Is the sale perfected and consummated?
Ruling:
Yes. A public auction sale is complete when the auctioneer declares it with the fall of the hammer or in another accepted method. The fact that Rufina Morales only matched the highest bid at the auction sale is irrelevant. Rufina only assumed the role of the highest bidder, therefore the terms of the transaction were still complete in her case. As a result, City of Cebu and Rufina Morales had an agreement on the lot sold and its price, allowing each side to demand the other fulfill their end of the bargain. A contract for sale is a consensual agreement that is complete when there is agreement on both the price and the item that will be the subject of the contract. From that point on, pursuant to the rules of the law governing the types of contracts, the parties may demand performance from one another.
(1) Consent or a meeting of the minds,
(2) a predetermined subject matter, and
(3) a fixed price in money or its equivalent are the components of a valid contract of sale. The agreement or transaction between Cebu City and Rufina contained all these components. Rufina’s ability to pay the deposit and down payment for the land in accordance with the provisions of the bid award allowed Cebu City and her to partially complete the sale contract. She first lived on the property as a lessee as well. Similarly, all of the living heirs lived on the estate both while Rufina was alive and even after her passing.
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 this instance, the predecessor of the respondents had unquestionably started fulfilling her commitment by paying a portion of the purchase price. However, due to legal issues between the petitioner and the city, she was sadly unable to finish the payments.