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SECONDDIVISION

[G.R.No.137290.July31,2000]

SANMIGUELPROPERTIESPHILIPPINES,INC.,petitioner,vs.SPOUSESALFREDO
HUANGandGRACEHUANG,respondents.

DECISION
MENDOZA,J.:

Thisisapetitionforreviewofthedecision,[1]datedApril8,1997,oftheCourtofAppealswhich
reversedthedecisionoftheRegionalTrialCourt,Branch153,PasigCitydismissingthecomplaint
broughtbyrespondentsagainstpetitionerforenforcementofacontractofsale.

Thefactsarenotindispute.

PetitionerSanMiguelPropertiesPhilippines,Inc.isadomesticcorporationengagedinthepurchase
andsaleofrealproperties.Partofitsinventoryaretwoparcelsoflandtotalling1,738squaremeters
atthecornerofMeralcoAvenueandGeneralCapinpinStreet,BarrioOranbo,PasigCity,whichare
coveredbyTCTNos.PT82395andPT82396oftheRegisterofDeedsofPasigCity.

OnFebruary21,1994,thepropertieswereofferedforsaleforP52,140,000.00incash.Theofferwas
madetoAtty.HelenaM.Dauzwhowasactingforrespondentspousesasundisclosedprincipals.Ina
letter[2]datedMarch24,1994,Atty.Dauzsignifiedherclientsinterestinpurchasingthepropertiesfor
theamountforwhichtheywereofferedbypetitioner,underthefollowingterms:thesumof
P500,000.00wouldbegivenasearnestmoneyandthebalancewouldbepaidineightequalmonthly
installmentsfromMaytoDecember,1994.However,petitionerrefusedthecounteroffer.

OnMarch29,1994,Atty.Dauzwroteanotherletter[3]proposingthefollowingtermsforthepurchase
oftheproperties,viz:

Thisistoexpressourinteresttobuyyourabovementionedpropertywithanareaof1,
738sq.meters.Forthispurpose,weareenclosingherewiththesumofP1,000,000.00
representingearnestdepositmoney,subjecttothefollowingconditions.

1.Wewillbegiventheexclusiveoptiontopurchasethepropertywithinthe30daysfrom
dateofyouracceptanceofthisoffer.

2.Duringsaidperiod,wewillnegotiateonthetermsandconditionsofthepurchase
SMPPIwillsecurethenecessaryManagementandBoardapprovalsandweinitiatethe
documentationifthereismutualagreementbetweenus.

3.Intheeventthatwedonotcometoanagreementonthistransaction,thesaid
amountofP1,000,000.00shallberefundabletousinfullupondemand....

IsidroA.Sobrecarey,petitionersvicepresidentandoperationsmanagerforcorporaterealestate,
indicatedhisconformitytotheofferbyaffixinghissignaturetotheletterandacceptedthe"earnest
deposit"ofP1million.Uponrequestofrespondentspouses,Sobrecareyorderedtheremovalofthe
"FORSALE"signfromtheproperties.

Atty.DauzandSobrecareythencommencednegotiations.DuringtheirmeetingonApril8,1994,
SobrecareyinformedAtty.Dauzthatpetitionerwaswillingtosellthesubjectpropertiesona90day
term.Atty.Dauzcounteredwithanofferofsixmonthswithinwhichtopay.

OnApril14,1994,thepartiesagainmetduringwhichSobrecareyinformedAtty.Dauzthatpetitioner
hadnotyetactedonhercounteroffer.ThispromptedAtty.Dauztoproposeafourmonthperiodof
amortization.

OnApril25,1994,Atty.Dauzaskedforanextensionof45daysfromApril29,1994toJune13,1994
withinwhichtoexerciseheroptiontopurchasetheproperty,addingthatwithinthatperiod,"[we]hope
tofinalize[our]agreementonthematter."[4]Herrequestwasgranted.

OnJuly7,1994,petitioner,throughitspresidentandchiefexecutiveofficer,FedericoGonzales,wrote
Atty.Dauzinformingherthatbecausethepartiesfailedtoagreeonthetermsandconditionsofthe
saledespitetheextensiongrantedbypetitioner,thelatterwasreturningtheamountofP1million
givenas"earnestdeposit."[5]

OnJuly20,1994,respondentspouses,throughcounsel,wrotepetitionerdemandingtheexecution
withinfivedaysofadeedofsalecoveringtheproperties.Respondentsattemptedtoreturnthe
"earnestdeposit"butpetitionerrefusedonthegroundthatrespondentsoptiontopurchasehad
alreadyexpired.

OnAugust16,1994,respondentspousesfiledacomplaintforspecificperformanceagainstpetitioner
beforetheRegionalTrialCourt,Branch133,PasigCitywhereitwasdocketedasCivilCaseNo.
64660.

Withintheperiodforfilingaresponsivepleading,petitionerfiledamotiontodismissthecomplaint
allegingthat(1)thealleged"exclusiveoption"ofrespondentspouseslackedaconsiderationseparate
anddistinctfromthepurchasepriceandwasthusunenforceableand(2)thecomplaintdidnotallege
acauseofactionbecausetherewasno"meetingoftheminds"betweenthepartiesand,therefore,no
perfectedcontractofsale.Themotionwasopposedbyrespondents.

OnDecember12,1994,thetrialcourtgrantedpetitionersmotionanddismissedtheaction.
Respondentsfiledamotionforreconsideration,butitwasdeniedbythetrialcourt.Theythen
appealedtotheCourtofAppealswhich,onApril8,1997,renderedadecision[6]reversingthe
judgmentofthetrialcourt.Theappellatecourtheldthatalltherequisitesofaperfectedcontractof
salehadbeencompliedwithastheoffermadeonMarch29,1994,inconnectionwithwhichthe
earnestmoneyintheamountofP1millionwastenderedbyrespondents,hadalreadybeenaccepted
bypetitioner.ThecourtcitedArt.1482oftheCivilCodewhichprovidesthat"[w]heneverearnest
moneyisgiveninacontractofsale,itshallbeconsideredaspartofthepriceandasproofofthe
perfectionofthecontract."Thefactthepartieshadnotagreedonthemodeofpaymentdidnotaffect
thecontractassuchisnotanessentialelementforitsvalidity.Inaddition,thecourtfoundthat
Sobrecareyhadauthoritytoactinbehalfofpetitionerforthesaleoftheproperties.[7]

Petitionermovedforreconsiderationofthetrialcourtsdecision,butitsmotionwasdenied.Hence,this
petition.

PetitionercontendsthattheCourtofAppealserredinfindingthattherewasaperfectedcontractof
salebetweenthepartiesbecausetheMarch29,1994letterofrespondents,whichpetitioner
accepted,merelyresultedinanoptioncontract,albeititwasunenforceableforlackofadistinct
consideration.Petitionerarguesthattheabsenceofagreementastothemodeofpaymentwasfatal
totheperfectionofthecontractofsale.PetitioneralsodisputestheappellatecourtsrulingthatIsidro
A.Sobrecareyhadauthoritytosellthesubjectrealproperties.[8]

Respondentswererequiredtocommentwithinten(10)daysfromnotice.However,despite13
extensionstotalling142dayswhichtheCourthadgiventothem,respondentsfailedtofiletheir
comment.Theywerethusconsideredtohavewaivedthefilingofacomment.

Thepetitionismeritorious.

Inholdingthatthereisaperfectedcontractofsale,theCourtofAppealsreliedonthefollowing
findings:(1)earnestmoneywasallegedlygivenbyrespondentsandacceptedbypetitionerthroughits
vicepresidentandoperationsmanager,IsidroA.Sobrecareyand(2)thedocumentaryevidencein
therecordsshowthattherewasaperfectedcontractofsale.

Withregardtotheallegedpaymentandacceptanceofearnestmoney,theCourtholdsthat
respondentsdidnotgivetheP1millionas"earnestmoney"asprovidedbyArt.1482oftheCivilCode.
Theypresentedtheamountmerelyasadepositofwhatwouldeventuallybecometheearnestmoney
ordownpaymentshouldacontractofsalebemadebythem.Theamountwasthusgivennotasapart
ofthepurchasepriceandasproofoftheperfectionofthecontractofsalebutonlyasaguaranteethat
respondentswouldnotbackoutofthesale.Respondentsinfactdescribedtheamountasan
"earnestdeposit."InSpousesDoromal,Sr.v.CourtofAppeals,[9]itwasheld:

...WhiletheP5,000mighthaveindeedbeenpaidtoCarlosinOctober,1967,thereis
nothingtoshowthatthesamewasintheconceptoftheearnestmoneycontemplatedin
Art.1482oftheCivilCode,invokedbypetitioner,assignifyingperfectionofthesale.
Viewedinthebackdropofthefactualmilieuthereofextantintherecord,Wearemore
inclinedtobelievethatthesaidP5,000.00werepaidintheconceptofearnestmoneyas
thetermwasunderstoodundertheOldCivilCode,thatis,asaguaranteethatthebuyer
wouldnotbackout,consideringthatitisnotclearthattherewasalreadyadefinite
agreementastothepricethenandthatpetitionersweredecidedtobuy6/7onlyofthe
propertyshouldrespondentJavellanarefusetoagreetopartwithher1/7share.[10]

Inthepresentcase,theP1million"earnestdeposit"couldnothavebeengivenasearnestmoneyas
contemplatedinArt.1482because,atthetimewhenpetitioneracceptedthetermsofrespondents
offerofMarch29,1994,theircontracthadnotyetbeenperfected.Thisisevidentfromthefollowing
conditionsattachedbyrespondentstotheirletter,towit:(1)thattheybegiventheexclusiveoptionto
purchasethepropertywithin30daysfromacceptanceoftheoffer(2)thatduringtheoptionperiod,
thepartieswouldnegotiatethetermsandconditionsofthepurchaseand(3)petitionerwouldsecure
thenecessaryapprovalswhilerespondentswouldhandlethedocumentation.

Thefirstconditionforanoptionperiodof30dayssufficientlyshowsthatasalewasneverperfected.
Aspetitionercorrectlypointsout,acceptanceofthisconditiondidnotgiverisetoaperfectedsalebut
merelytoanoptionoranacceptedunilateralpromiseonthepartofrespondentstobuythesubject
propertieswithin30daysfromthedateofacceptanceoftheoffer.Suchoptiongivingrespondentsthe
exclusiverighttobuythepropertieswithintheperiodagreeduponisseparateanddistinctfromthe
contractofsalewhichthepartiesmayenter.[11]Allthatrespondentshadwasjusttheoptiontobuythe
propertieswhichprivilegewasnot,however,exercisedbythembecausetherewasafailuretoagree
onthetermsofpayment.Nocontractofsalemaythusbeenforcedbyrespondents.

Furthermore,eventheoptionsecuredbyrespondentsfrompetitionerwasfatallydefective.Underthe
secondparagraphofArt.1479,anacceptedunilateralpromisetobuyorselladeterminatethingfora
pricecertainisbindinguponthepromisoronlyifthepromiseissupportedbyadistinctconsideration.
Considerationinanoptioncontractmaybeanythingofvalue,unlikeinsalewhereitmustbetheprice
certaininmoneyoritsequivalent.Thereisnoshowinghereofanyconsiderationfortheoption.
Lackinganyproofofsuchconsideration,theoptionisunenforceable.

Equallycompellingasproofoftheabsenceofaperfectedsaleisthesecondconditionthat,duringthe
optionperiod,thepartieswouldnegotiatethetermsandconditionsofthepurchase.Thestagesofa
contractofsaleareasfollows:(1)negotiation,coveringtheperiodfromthetimetheprospective
contractingpartiesindicateinterestinthecontracttothetimethecontractisperfected(2)perfection,
whichtakesplaceupontheconcurrenceoftheessentialelementsofthesalewhicharethemeeting
ofthemindsofthepartiesastotheobjectofthecontractanduponthepriceand(3)consummation,
whichbeginswhenthepartiesperformtheirrespectiveundertakingsunderthecontractofsale,
culminatingintheextinguishmentthereof.[12]Inthepresentcase,thepartiesnevergotpastthe
negotiationstage.Thealleged"indubitableevidence"[13]ofaperfectedsalecitedbytheappellate
courtwasnothingmorethanoffersandcounterofferswhichdidnotamounttoanyfinalarrangement
containingtheessentialelementsofacontractofsale.Whilethepartiesalreadyagreedonthereal
propertieswhichweretheobjectsofthesaleandonthepurchaseprice,thefactremainsthatthey
failedtoarriveatmutuallyacceptabletermsofpayment,despitethe45dayextensiongivenby
petitioner.

Theappellatecourtopinedthatthefailuretoagreeonthetermsofpaymentwasnobartothe
perfectionofthesalebecauseArt.1475onlyrequiresagreementbythepartiesastothepriceofthe
object.Thisiserror.InNavarrov.SugarProducersCooperativeMarketingAssociation,Inc.,[14]welaid
downtherulethatthemannerofpaymentofthepurchasepriceisanessentialelementbeforeavalid
andbindingcontractofsalecanexist.AlthoughtheCivilCodedoesnotexpresslystatethattheminds
ofthepartiesmustalsomeetonthetermsormannerofpaymentoftheprice,thesameisneeded,
otherwisethereisnosale.AsheldinToyotaShaw,Inc.v.CourtofAppeals,[15]agreementonthe
mannerofpaymentgoesintothepricesuchthatadisagreementonthemannerofpaymentis
tantamounttoafailuretoagreeontheprice.[16]InVelascov.CourtofAppeals,[17]thepartiestoa
proposedsalehadalreadyagreedontheobjectofsaleandonthepurchaseprice.Bythebuyersown
admission,however,thepartiesstillhadtoagreeonhowandwhenthedownpaymentandthe
installmentsweretobepaid.Itwasheld:

...Suchbeingthesituation,itcannot,therefore,besaidthatadefiniteandfirmsales
agreementbetweenthepartieshadbeenperfectedoverthelotinquestion.Indeed,this
Courthasalreadyruledbeforethatadefiniteagreementonthemannerofpaymentof
thepurchasepriceisanessentialelementintheformationofabindingandenforceable
contractofsale.Thefact,therefore,thatthepetitionersdeliveredtotherespondentthe
sumofP10,000aspartofthedownpaymentthattheyhadtopaycannotbeconsidered
assufficientproofoftheperfectionofanypurchaseandsaleagreementbetweenthe
partieshereinunderArt.1482ofthenewCivilCode,asthepetitionersthemselvesadmit
thatsomeessentialmatterthetermsofthepaymentstillhadtobemutually
covenanted.[18]

Thus,itisnotthegivingofearnestmoney,buttheproofoftheconcurrenceofalltheessential
elementsofthecontractofsalewhichestablishestheexistenceofaperfectedsale.

Intheabsenceofaperfectedcontractofsale,itisimmaterialwhetherIsidroA.Sobrecareyhadthe
authoritytoenterintoacontractofsaleinbehalfofpetitioner.Thisissue,therefore,needsnofurther
discussion.

WHEREFORE,thedecisionoftheCourtofAppealsisREVERSEDandrespondentscomplaintis
DISMISSED.

SOORDERED.

Quisumbing,Buena,andDeLeon,Jr.,JJ.,concur.

Bellosillo,(Chairman),J.,onleave.
[1] PerAssociateJusticeCoronaIbaySomeraandconcurredinbyJusticesEmeterioC.CuiandSalvadorJ.Valdez,Jr.
[2] AnnexDRollo,p.99.
[3] AnnexEId.,p.100.
[4] AnnexFId.,p.102.
[5] AnnexIRollo,p.107.
[6] Rollo,pp.3861.
[7] Id.,pp.4860.
[8] Petition,pp.1213Rollo,pp.1415.
[9] 66SCRA575(1975)
[10] Id.,at582.(Emphasisadded)
[11] Carcelerv.CourtofAppeals,302SCRA718(1999)CaviteDevelopmentBankandFarEastBankandTrustCompanyv.Court
ofAppeals,G.R.No.131679,Feb.1,2000.
[12] AngYuAsuncionv.CourtofAppeals,238SCRA602(1994)
[13] TheCourtofAppealsenumeratedtheseasfollows:(1)Annex"A"whichcontainspetitionersoffertosellthesubjectproperties
(2)Annex"D,"aletterdatedMarch24,1994throughwhichrespondentspouses,throughAtty.HelenaM.Dauz,signifiedtheir
interesttobuythesubjectpropertiesand(3)Annex"E,"anotherletterfromrespondentspousesdatedMarch29,1994throughwhich
respondentsagainexpressedtheirinteresttobuythesubjectpropertiessubjecttocertainconditions.
[14] 1SCRA1181(1961)
[15] 244SCRA320(1995)
[16] Id.,p.328.
[17] 51SCRA439(1973)
[18] Id.,p.453.(Emphasisadded)

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