G.R. No.

131679           February 1, 2000

CAVITE DEVELOPMENT BANK and FAR EAST BANK AND TRUST

COMPANY, petitioners,
vs.
SPOUSES CYRUS LIM and LOLITA CHAN LIM and COURT OF
APPEALS, respondents.

Facts:
Rodolfo Guansing obtained a loan from Cavite Development Bank (CDB) and as a
security he mortgaged his property. However, he defaulted and so CDB foreclosed the
mortgage and sold the lot at auction where CDB won. Lolita Lim offered to purchase the
property and thereon paid option money. To which, CDB accepted. However, upon due
diligence, Lim discovered that a civil case stripped Rodolfo Guansing of his title to the
land and so CDB could not have acquired in reality the lot from Guansing. Aggrieved by
serious misrepresentation CDB Sps. Lim filed an action for specific performance and
damages.
Issue:
1. Was there a perfected contract of sale?
2. When is a sale considered perfected and consummated?
Ruling:
1. There was a perfected contract of sale but the sale could not be consummated
because CDB does not have the title to the property making the sale void. The sale was
perfected because the option money given was actually in the nature of an earnest
money or down payment even though CDB could not transfer ownership because it
does not have the title to the property. It can be noted that when CDB accepted Lim's
offer to purchase, it appears that a contract of sale was perfected and, indeed, partially
executed because of the partial payment of the purchase price. There is, however, a
serious legal obstacle to such sale, rendering it impossible for CDB to perform its
obligation as seller to deliver and transfer ownership of the property thus making the
sale void for it cannot be consummated.
2. A contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price. It is, therefore, not
required that, at the perfection stage, the seller be the owner of the thing sold or even
that such subject matter of the sale exists at that point in time. The sale is
consummated upon delivery and thus , it is required that the seller be the owner of the
thing sold. Otherwise, he will not be able to comply with his obligation to transfer
ownership to the buyer. It is at the consummation stage where the principle of nemo
dat quod non habet applies.