CASE: SAN MIGUEL PROPERTIES v SPS HUANG

[G.R. No. 137290. July 31, 2000]
FACTS: San Miguel Properties Philippines, Inc. is a domestic corporation engaged in the purchase and sale of
real properties. Part of its inventory are two parcels of land totalling 1, 738 square meters at the corner of
Meralco Avenue and General Capinpin Street, Barrio Oranbo, Pasig City. On February 21, 1994, the properties
were offered for sale for P52,140,000.00 in cash. The offer was made to Atty. Helena M. Dauz who was acting
for respondent spouses as undisclosed principals. Atty. Dauz signified her clients’ interest in purchasing the
properties for the amount for which they were offered by petitioner, under the following terms: the sum of
P500,000.00 would be given as earnest money and the balance would be paid in eight equal monthly
installments from May to December, 1994.
However, petitioner refused the counter-offer. On March 29, 1994, Atty. Dauz wrote another letter proposing
the following
terms for the purchase of the properties, viz: Enclosing herewith the sum of P1,000,000.00 representing
earnestdeposit money, subject to the following conditions.
1. We will be given the exclusive option to purchase the property within the 30 days from date of your
acceptance of this offer.
2. During said period, we will negotiate on the terms and conditions of the purchase; SMPPI will secure the
necessary Management and Board approvals; and we initiate the documentation if there is mutual
agreementbetween us.
3. In the event that we do not come to an agreement on this transaction, the said amount of P1,000,000.00
shall be refundable to us in full upon demand.
Isidro A. Sobrecarey, San Miguel’s vice-president and operations manager for corporate real estate, indicated
his conformity to the offer by affixing his signature to the letter and accepted the "earnest-deposit" of P1
million. Upon request of respondent spouses, Sobrecarey ordered the removal of the "FOR SALE" sign from
the properties. Atty. Dauz and Sobrecarey then commenced negotiations.
Sobrecarey informed Atty. Dauz that San Miguel was willing to sell the subject properties on a 90-day term.
Atty. Dauz countered with an offer of 6 months within which to pay.The parties again met during which
Sobrecarey informed Atty.
Dauz that San Miguel had not yet acted on her counter-offer. Atty. Dauz proposed a 4-month period of
amortization.
On April 25, 1994, Atty. Dauz asked for an extension of 45 days within which to exercise her option to
purchase the property, adding that within that period to finalize the agreement." Her request was granted. On
July 7, 1994, petitioner, through its president and chief executive officer, Federico Gonzales, wrote Atty. Dauz
informing her that because the parties failed to agree on the terms and conditions of the sale despite the
extension granted by petitioner, the latter was returning the amount of P1 million given as "earnest-deposit."
Sps Huang demanded the execution within 5 days of a deed of sale covering the properties. Sps Huang
attempted to return the "earnest-deposit" but San Miguel refused on the ground that respondents’ option to
purchase had already expired. On August 16, 1994, spouses Huang filed a complaint for specific performance
against San Miguel. SAN MIGUEL
(1) the alleged "exclusive option" of respondent spouses lacked a consideration separate and distinct from
the purchase price and was thus unenforceable and
(2) the complaint did not allege a cause of action because there was no "meeting of the minds" between the
parties and, therefore, no perfected contract of sale.
TC Dismissed. CA REVERSED: held that all the requisites of a perfected contract of sale had been complied
with as the offer made on March 29, 1994, in connection with which the earnest money in the amount of P1
million was tendered by respondents, had already been accepted by petitioner. The fact the parties had not
agreed on the mode of payment did not affect the contract as such is not an essential element for its validity.
CA also ruled that Sobrecarey had no authority to sell the subject real properties
ISSUE
WON there was a perfected contract of sale between the parties
RULING: No. On alleged payment and acceptance Earnest money, Sps Huang did not give the P1 million as
"earnest money" as provided by Art. 1482 of the Civil Code. They presented the amount merely as a deposit
of what would eventually become the earnest money or downpayment should a contract of sale be made by
them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the

the supposed sale is null and void. it is immaterial whether Isidro A. as some essential matter . the heirs of Trinidad (deceased) filed a complaint for forcible entry against Mondejar. recovery of possession and ownership of parcels of land with claim for attorney's fees and damages. Trinidad together with her sisters Leonila Corvera and Paz and brother Epapiadito executed a conditional deed of donation of subject land in favor of the Municipality of Talacogon. On July 5. While the parties already agreed on the real properties which were the objects of the sale and on the purchase price. 1998 FACTS: Petitioners. which complaint was. Respondents alleged that the land in dispute was sold to Regalado Mondejar. it is not the giving of earnest money. On April 5. the one (1) hectare on July 29. In 1980. the parties would negotiate the terms and conditions of the purchase. Efren Guden and Ernesto Goloran. their contract had not yet been perfected.contract of sale but only as a guarantee that respondents would not back out of the sale. 1994. filed a complaint against private respondents for quieting of title. The first condition: option period of 30 days sufficiently shows that a sale was never perfected. Also.R. during the option period. Petitioners are the children of the late Trinidad Corvera Vda. the option is unenforceable. Agusan del Sur. An agreement on 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. 126444 December 4. Rodolfo Goloran . the Sangguniang Bayan of the municipality of Talacogon enacted a resolution reverting the (2) hectares of land donated back to the donors. 1988. conveyed. COURT OF APPEALS G. hence. In the meantime. second condition: that. Nothing more than offers and counter-offers which did not amount to any final arrangement containing the essential elements of a contract of sale. 1482 because. 1482 of the new Civil Code. In the present case. Art. the fact remains that they failed to arrive at mutually acceptable terms of payment. the proposed provincial high school having failed to materialize. Trinidad sold (1) hectare of the subject parcel of land to defendant-appellant Regalado Mondejar and verbally sold the remaining (1) hectare also to defendant-appellant without the benefit of a written deed of sale and evidenced solely by receipts of payment. 1479(2) states that 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. de Quijada. but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale. situated in the barrio of San Agustin. Acceptance of this condition did not give rise to a perfected sale but merely to an option or an accepted unilateral promise. Apparently. The fact. at the time when petitioner accepted the terms of respondents’ offer of March 29. despite the 45-day extension given by petitioner.the terms of the payment . the P1 million "earnest-deposit" could not have been given as earnest money as contemplated in Art. therefore. Sobrecarey had the authority to enter into a contract of sale in behalf of petitioner. Heirs of Trinidad filed this action alleging that their deceased mother never sold. however. as heirs of the late Trinidad Quijada. Talacogon. the parties never got past the negotiation stage. No. -------QUIJADA vs. Lacking any proof of such consideration. On July 29. Regalado Mondejar sold portions of the land to (respondents) Fernando. In the present case. Trinidad remained in possession of the parcel of land despite the donation. There is no showing here of any consideration for the option. In the absence of a perfected contract of sale. Trinidad was one of the heirs of the late Pedro Corvera and inherited from Pedro the 2-hectare parcel of land subject of the case. transferred or disposed of the property in question to any person or entity much less to Regalado Mondejar save the donation made to the Municipality of Talacogon in 1956 and that at the time of the alleged sale to Regalado Mondejar by Trinidad Quijada. 1962. dismissed for failure to prosecute. the land still belongs to the Municipality of Talacogon. the condition being that the parcel of land shall be used solely and exclusively as part of the campus of the proposed provincial high school in Talacogon. In 1987. 1956. that the petitioners delivered to the respondent the sum as part of the DP that they had to pay cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties herein under Art. the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. .still had to be mutually covenanted Thus.

the alleged seller (Trinidad) could not have sold the lots since she had earlier transferred ownership thereof by virtue of the deed of donation. Such period. Since no period was imposed by the donor on when must the donee comply with the condition. . Consequently. the same may in the future be closed" the donated property shall automatically revert to the donor. is perfected by mere consent. It would have been different if the donorseller sold her interests over the property under the deed of donation which is subject to the possibility of reversion of ownership arising from the non-fulfillment of the resolutory condition. What the law requires is that the seller has the right to transfer ownership at the time the thing sold is delivered. It further provides that should "the proposed PHS be discontinued or if the same shall be opened but for some reason or another. at the time of the sales made in 1962 towards 1968. Ownership by the seller on the thing sold at the time of the perfection of the contract of sale is not an element for its perfection. became irrelevant herein when the donee-Municipality manifested through a resolution that it cannot comply with the condition of building a school and the same was made known to the donor. which is manifested the moment there is a meeting of the minds as to the offer and acceptance thereof on three (3) elements: subject matter. What the donor sold was the land itself which she no longer owns. A perfected contract of sale cannot be challenged on the ground of non-ownership on the part of the seller at the time of its perfection. the former became the new owner of the donated property — donation being a mode of acquiring and transmitting ownership — notwithstanding the condition imposed by the donee. being a consensual contract. Sale. ISSUE: WON the sale to Mondejar was valid RULING: YES. price and terms of payment of the price. Accordingly. the donation remains effective and the donee continues to be the owner subject only to the rights of the donor or his successors-in-interest under the deed of donation.1962. and the remaining one (1) hectare on installment basis until fully paid. the sale is still valid. There is one thing which militates against the claim of Quijadas. So long as the resolutory condition subsists and is capable of fulfillment. The donation made by Trinidad Quijada and her brother and sisters was subject to the condition that the donated property shall be "used solely and exclusively as a part of the campus of the proposed Provincial High School in Talacogon. Trinidad Quijada's heirs and successors-in-interest became the owners of the subject property upon the reversion of the ownership of the land to them. ownership is transferred to respondent Mondejar and those who claim their right from him. however. When the Municipality's acceptance of the donation was made known to the donor. Thus. ownership is immediately transferred to the donee and that ownership will only revert to the donor if the resolutory condition is not fulfilled (construction of the school). hence. the latter remains the owner so long as he has tried to comply with the condition within a reasonable period.