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DIGNOS YS.

COURT OF APPEALS158 SCRA 378

FACTS:
The spouses Silvestre and Isabel Dignos were. owners of a parcel of land in Opon, Lapu-Lapu City. OnJune 7, 1965, appellants, herein
petitioners Dignos spouses sold the said parcel of land to respondentAtilano J. Jabil for the sum of P28,000.00, payable in two
installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of PI 2,000.00, which was paid
andacknowledged by the vendors in the deed of sale executed in favor of plaintiff-appellant, and the nextinstallment in the sum of
P4,000.00 to be paid on or before September 15, 1965.On November 25, 1965, the Dignos spouses sold the same land in favor of
defendants spouses, LucianoCabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed
of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses, and which wasregistered in the Office of the
Register of Deeds pursuant to the provisions of Act No. 3344.As the Dignos spouses refused to accept from plaintiff-appellant the
balance of the purchase price of theland, and as plaintiff- appellant discovered the second sale made by defendants-appellants to the
Cabigasspouses, plaintiff-appellant brought the present suit.

ISSUE:
Whether or not there was an absolute contract of sale.2. Whether or not the contract of sale was already rescinded when the Digros
spouses sold the land toCabigas

HELD:
Yes. That a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale"where nowhere in the contract in
question is a proviso or stipulation to the effect that title to theproperty sold is reserved in the vendor until full payment of the
purchase price, nor is there astipulation giving the vendor the right to unilaterally rescind the contract the moment the vendeefails to
pay within a fixed period.A careful examination of the contract shows that there is no such stipulation reserving the title of the
property on the vendors nor does it give them the right to unilaterally rescind the contract uponnon-payment of the balance thereof
within a fixed period.On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, arepresent, such
as: (1) consent or meeting of the minds; (2) determinate subject matter; and (3)price certain in money or its equivalent. In addition,
Article 1477 of the same Code provides that"The ownership of the thing sold shall be transferred to the vendee upon actual or
constructive delivery thereof." While it may be conceded that there was no constructive delivery of the land soldin the case at bar, as
subject Deed of Sale is a private instrument, it is beyond question that therewas actual delivery thereof. As found by the trial court, the
Dignos spouses delivered the possessionof the land in question to Jabil as early as March 27,1965 so that the latter constructed
thereonSally's Beach Resort also known as Jabil's Beach Resort in March, 1965; Mactan White Beach Resorton January 15, J 966 and
Bevirlyn's Beach Resort on September 1, 1965. Such facts were admittedby petitioner spouses.2. No. The contract of sale being absolute
in nature is governed by Article 1592 of the Civil Code. It isundisputed that petitioners never notified private respondents Jabil by
notarial act that they wererescinding the contract, and neither did they file a suit in court to rescind the sale. There is noshowing that
Amistad was properly authorized by Jabil to make such extra-judicial rescission for thelatter who, on the contrary, vigorously denied
having sent Amistad to tell petitioners that he wasalready waiving his rights to the land in question. Under Article 1358 of the Civil
Code, it is requiredthat acts and contracts which have for their object extinguishment of real rights over immovableproperty must
appear in a public document.Petitioners laid considerable emphasis on the fact that private respondent Jabil had no money onthe
stipulated date of payment on September 15,1965 and was able to raise the necessary amountonly by mid-October 1965. It has been
ruled, however, that where time is not of the essence of theagreement, a slight delay on the part of one party in the performance of his
obligation is not asufficient ground for the rescission of the agreement. Considering that private respondent has only abalance of
P4,OOO.00 and was delayed in payment only for one month, equity and justice mandateas in the aforecited case that Jabil be given an
additional period within which to complete paymentof the purchase price.
TAN vs. BENOLIRAO
G.R. No. 153820
October 16, 2009
FACTS:
Spouses Lamberto and Erlinda Benolirao and the Spouses Reynaldo and Norma Taningco were
the co-owners of a parcel of land located in Tagaytay City. On October 6, 1992, the co-owners
executed a Deed of Conditional Sale over the property in favor of Tan for the price
of P1,378,000.00. The deed stated:
a) An initial down-payment of TWO HUNDRED (P200,000.00) THOUSAND PESOS,
upon signing of the contract; then the remaining balance of ONE MILLION ONE
HUNDRED SEVENTY EIGHT THOUSAND (P1,178,000.00) PESOS, shall be payable
within a period of one hundred fifty (150) days from date hereof without interest;
b) That for any reason, BUYER fails to pay the remaining balance within above
mentioned period, the BUYER shall have a grace period of sixty (60) days within which
to make the payment, provided that there shall be an interest of 15% per annum on the
balance amount due from the SELLERS;
c) That should in case (sic) the BUYER fails to comply with the terms and conditions
within the above stated grace period, then the SELLERS shall have the right to forfeit the
down payment, and to rescind this conditional sale without need of judicial action;
d) That in case, BUYER have complied with the terms and conditions of this contract,
then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of
Absolute Sale;
Tan issued and delivered to the co-owners/vendors check for P200,000 as down payment for
the property, respective receipt issued by vendors.
On November 6, 1992, Lamberto Benolirao died intestate. The heirs of the deceased executed
an extrajudicial settlement of Lamberto’s estate on January 20, 1993. A new certificate of title
over the property was issued on March 26, 1993 in the names of the Spouses Reynaldo and
Norma Taningco and Erlinda Benolirao and her children.
As stated in the Deed of Conditional Sale, Tan had until March 15, 1993 to pay the balance of
the purchase price. This period was extended by two months as agreed by the parties, Tan had
until May 15, 1993 to pay the balance. Tan failed to pay and another extension was granted by
the vendors. Tan still failed to pay the remaining balance due on May 21, 1993. The vendors
demanded payment of the balance of the purchase price within five (5) days from notice;
otherwise, they would declare the rescission of the conditional sale and the forfeiture of his
down payment based on the terms of the contract.
Tan refused to comply with the vendors’ demand and instead wrote them a letter dated May 28,
1993 claiming that the annotation on the title constituted an encumbrance on the property that
would prevent the vendors from delivering a clean title to him. Thus, he alleged that he could no
longer be required to pay the balance of the purchase price and demanded the return of his
down payment.
The vendors refused to refund the down payment, Tan, through counsel, sent another demand
letter to the vendors on June 18, 1993. The vendors still refused to heed Tan’s demand,
prompting Tan to file on June 19, 1993 a complaint with the RTC for specific performance
against the vendors. Tan alleged that there was a novation of the Deed of Conditional Sale done.
without his consent since the annotation on the title created an encumbrance over the property.
Tan prayed for the refund of the down payment and the rescission of the contract.
On August 9, 1993, Tan amended his Complaint, contending that if the respondents insist on
forfeiting the down payment, he would be willing to pay the balance of the purchase price
provided there is reformation of the Deed of Conditional Sale. In the meantime, Tan caused the
annotation on the title of a notice of lis pendens.
On August 21, 1993, the respondents the property to Hector de Guzman (de Guzman) for
P689,000.
The respondents moved for the cancellation of the notice of lis pendens on the ground that it
was inappropriate since the case that Tan filed was a personal action which did not involve
either title to, or possession of, real property. The RTC issued an order dated October 22,
1993 granting the respondents’ motion to cancel the lis pendens annotation on the title.
Meanwhile, based on the Deed of Absolute Sale in his favor, de Guzman registered the property
and TCT No. 28104 was issued in his name. Tan then filed a motion to carry over the lis
pendens annotation to TCT No. 28104 registered in de Guzman’s name, but the RTC
denied the motion.
On September 8, 1995, after due proceedings, the RTC rendered judgment ruling that the
respondents’ forfeiture of Tan’s down payment was proper in accordance with the terms
and conditions of the contract between the parties.The RTC ordered Tan to pay the
respondents the amount of P30,000.00, plus P1,000.00 per court appearance, as
attorney’s fees, and to pay the cost of suit.
On appeal, the CA dismissed the petition and affirmed the ruling of the trial court in toto.
Hence, the petition.
ISSUE:
Whether or not the contract between the parties is a contract of sale or a contract of sale.
RULING:
The petition is granted.
The contract between the parties was merely a contract to sell where the vendors
retained title and ownership to the property until Tan had fully paid the purchase price.
Since Tan had no claim of ownership or title to the property yet, he obviously had no
right to ask for the annotation of a lis pendens notice on the title of the property.
A contract is what the law defines it to be, taking into consideration its essential elements, and
not what the contracting parties call it as stated by Article 1485 of the Civil Code
The very essence of a contract of sale is the transfer of ownership in exchange for a price paid
or promised. In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the property despite delivery thereof to the
prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfilment of the condition agreed, i.e., full payment of
the purchase price. A contract to sell may

not even be considered as a conditional contract of sale where the seller may likewise reserve
title to the property subject of the sale until the fulfilment of a suspensive condition, because in a
conditional contract of sale, the first element of consent is present, although it is conditioned
upon the happening of a contingent event which may or may not occur.
Jurisprudence has established that where the seller promises to execute a deed of absolute
sale upon the completion by the buyer of the payment of the price, the contract is only a
contract to sell.
12
Thus, while the contract is denominated as a Deed of Conditional Sale, the
presence of the above-quoted provision identifies the contract as being a mere contract to sell.
Contract to sell is not rescinded but terminated
What then happens to the contract?
We have held in numerous cases that the remedy of rescission under Article 1191 cannot apply
to mere contracts to sell. We explained the reason for this in Santos v. Court of Appeals,
19
Where we said:
[I]n a contract to sell, title remains with the vendor and does not pass on to the vendee
until the purchase price is paid in full. Thus, in a contract to sell, the payment of the
purchase price is a positive suspensive condition. Failure to pay the price agreed
upon is not a mere breach, casual or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory force. This is
entirely different from the situation in a contract of sale, where non-payment of the price
is a negative resolutory condition. The effects in law are not identical. In a contract of
sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the
contract of sale is rescinded and set aside. In a contract to sell, however, the vendor
remains the owner for as long as the vendee has not complied fully with the condition of
paying the purchase price. If the vendor should eject the vendee for failure to meet the
condition precedent, he is enforcing the contract and not rescinding it. x x x Article 1592
speaks of non-payment of the purchase price as a resolutory condition. It does not apply
to a contract to sell. As to Article 1191, it is subordinated to the provisions of Article 1592
when applied to sales of immovable property. Neither provision is applicable [to a
contract to sell]. [Emphasis supplied.]
We, therefore, hold that the contract to sell was terminated when the vendors could no longer
legally compel Tan to pay the balance of the purchase price as a result of the legal
encumbrance which attached to the title of the property. Since Tan’s refusal to pay was due to
the supervening event of a legal encumbrance on the property and not through his own fault or
negligence, we find and so hold that the forfeiture of Tan’s down payment was clearly
unwarranted

Artates vs. Urbi

37 SCRA 395

January 1971

FACTS:

In September 1952, the proper land authorities issued in favor of herein appellant Lino Artates and Manuela Pojas (spouses Artates)
a homestead which is covered by Patent No. V-12775 and duly registered in their names (OCT No. P-572). In October 1955, Lino
Artates inflicted injuries upon herein defendant Daniel Urbi who then filed Civil Case No. 40 against the former. The Justice of the
Peace of Court of the CFI of Camilaniugan, Cagayan, awarded damages in favor of Urbi in the amount of P1,476.35, so in June 1962,
the Provincial Sheriff of Cagayan made a public sale of the homestead to satisfy the said judgment.

The spouses Artates alleged that the sale of the homestead to satisfy Lino Artates’ indebtedness accrued in October 1955 violated
the provision of the Public Land Law exempting said property from execution for any debt contracted within five years from the
date of the issuance of the patent, and that Urbi executed a deed of sale of the same parcel of land in June 1961 for the sum of
P2,676.35 to herein defendant Crisanto Soliven, who was a minor, to defraud them.

In March 1953, the CFI of Camilaniugan, Cagayan, upheld the execution made by the Provincial Sheriff upon the homestead, and at
declared null and void the sale of the land between Urbi and Soliven.

ISSUE:

Do the appellants spouses Artates possess absolute ownership over the homestead which is covered by a patent?

COURT RULING:

The Supreme Court reversed the decision appealed from and declared the spouses Artates to be entitled to the return and
possession of the subject land without prejudice to their continuing obligation to pay the judgment debt, and expenses connected
therewith.

Considering the protective policy of the law, the Supreme Court reiterated that the Philippines’ public land laws, being copied from
American legislation, resort to American precedents which held that the exemption from "debts contracted" by a homesteader
include freedom from money liabilities, from torts or crimes committed by him, such as from bigamy or slander, breach of contract
or other torts.

Heirs of Enrique Zambales vs. Court of Appeals & Nin Bay Mining Corp.

120 SCRA 897

February 1983

FACTS:
The spouses Enrique Zambales and Joaquina Zambales (the Zambaleses), who are illiterate, were the homestead patentees of a
parcel of land in the Municipality of Del Pilar, Roxas, Palawan, pursuant to Homestead Patent No. V-59502 dated September 6, 1955.
They claimed in November 1956 that respondent Nin Bay Mining Corporation (Corporation) had removed silica sand from their land
and destroyed the plants and other improvements thereon, to which said Corporation denied to have done so. On October 29, 1959,
the Zambaleses, duly assisted by their counsel, Atty. Perfecto de los Reyes, and the Corporation, entered into a Compromise
Agreement which state, among others, that the Zambaleses are giving the Corporation full power and authority to sell, transfer and
convey on September 10, 1960 or at any time thereafter the whole or any part of herein subject property.

On September 10, 1960, the Corporation sold the disputed property to Joaquin B. Preysler for the sum of P8,923.70 fixed in the
Compromise Agreement. On December 6, 1969, or ten (10) years after the Trial Court's Decision based on the Compromise
Agreement, and nine (9) years after the sale to Preysler, the Zambaleses filed a civil action in the CFI of Palawan for "Annulment of
a Deed of Sale with Recovery of Possession and Ownership with Damages”, alleging that Atty. de los Reyes and the Corporation
induced them through fraud, deceit and manipulation to sign the Compromise Agreement.

The trial court declared null and void the deed of sale executed between Preysler and the Corporation, but the Court of Appeals
reversed the said decision after finding that the alleged fraud or misrepresentation in the execution of the Compromise Agreement
had not been substantiated by evidence.

ISSUE:

Are the compromise agreement and the subsequent deed of sale valid and legal?

COURT RULING:

The Supreme Court sustained the finding of the appellate court that fraud and misrepresentation did not vitiate petitioners' consent
to the Agreement because the latter were not as ignorant as they themselves tried to show. The Zambaleses were political leaders
who speak in the platform during political rallies, and the lawyers they have hired belong to well-established law firms in Manila,
which show that although they were illiterate, they are still well-informed.

However, while the Compromise Agreement was held to be in violation of the Public Land Act, which prohibits alienation and
encumbrance of a homestead lot within five years from the issuance of the patent. Although the issue was not raised in the Courts
below, the Supreme Court has the authority to review matters even if they are not assigned as errors in the appeal, if it is found
that their consideration is necessary in arriving at a just decision of the case. The bilateral promise to sell between the Zambaleses
and the Corporation, and the subsequent deed of sale between Preysler and the latter were declared null and void.

Quiroga vs Parsons
G.R. No. L-11491

Subject: Sales
Doctrine: Contract of Agency to Sell vs Contract of Sale

Facts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an “agent” of the former. The contract stipulates that
Don Andres Quiroga, here in petitioner, grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only stipulates that
J.Parsons should pay Quiroga within 6 months upon the delivery of beds.
Quiroga files a case against Parsons for allegedly violating the following stipulations: not to sell the beds at higher prices than those of the invoices;
to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses
for the same; and to order the beds by the dozen and in no other manner. With the exception of the obligation on the part of the defendant to order the
beds by the dozen and in no other manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the
contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract
of commercial agency. The whole question, therefore, reduced itself to a determination as to whether the defendant, by reason of the contract
hereinbefore transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds.

Issue: Whether the contract is a contract of agency or of sale.

Held: In order to classify a contract, due attention must be given to its essential clauses. In the contract in question, what was essential, as
constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price
stipulated, and that the defendant was to pay the price in the manner stipulated. Payment was to be made at the end of sixty days, or before, at the
plaintiff’s request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment.
These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds,
and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory
or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving
the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had
not sold the beds.
In respect to the defendant’s obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only
entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives
his right and cannot complain for having acted thus at his own free will.
For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that
the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law.

Concrete Aggregates vs. CTA and CIR

185 SCRA 416

May 1990

FACTS:

Petitioner, a domestic corporation duly existing under the laws of the Philippines, has an aggregate plant at Montalban, Rizal which
processes rock aggregates mined by it from private lands, and maintains and operates a plant at Longos, Quezon City for the
production of ready-mixed concrete and plant-mixed hot asphalt. Sometime in 1968, the agents of respondent Commission on
Internal Revenue (CIR) conducted an investigation of petitioner's tax liabilities, and assessed and demanded payment from petitioner
the amount of P244,002.76 as sales and ad valorem taxes for the first semester of 1968, inclusive of surcharges.

Instead of paying, the petitioner appealed to respondent CTA. The said Court concluded that petitioner is a manufacturer subject to
the 7% sales tax under the Section Section 186 of the 1968 National Internal Revenue Code, and ordered it to pay what the
respondent CIR demands, plus interest at the rate of 14% per centum from January 1, 1973 up to the date of full payment thereof
pursuant to Section 183 (now 193) of the same Code. Petitioner contends, however, that it is a contractor within the meaning of
Section 191 under the same Code, that its business falls under "other construction work contractors" or "other independent
contractors", and that it produced asphalt and concrete mix only upon previous orders.

ISSUE:

Is the petitioner a contractor subject to the 3% contractor's tax under Section 191 or a manufacturer subject to the 7% sales tax
under Section 186?

COURT RULING:

The Supreme Court affirmed respondent CTA’s decision and declared that petitioner is a manufacturer as defined by Section 194(x),
now Section 187(x), of the Tax Code. It reiterated the respondent CTA’s finding that petitioner was formed and organized primarily
as a manufacturer; that it has an aggregate plant at Montalban, Rizal, which processes rock aggregates mined by it from private
lands; it operates a concrete batching plant at Longos, Quezon City where the specified aggregates from its plant at Montalban are
mixed with sand and cement, after which water is added and the concrete mixture is sold and delivered to customers; and at its
plant site at Longos, Quezon City, petitioner has also an asphalt mixing machinery where bituminous asphalt mix is manufactured.

People’s Homesite vs. Court of Appeals, and Mendoza

133 SCRA 777

December 1984

FACTS:

In February 1960, herein petitioner People’s Homesite & Housing Corporation (PHHC) passed a resolution, subject to the approval of
the Court Court Council of the PHHC’s consolidation subdivision plan, awarding Lot 4 with an area of 4,182.2 square meters located
at Diliman, Court City to respondents Rizalino and Adelaida Mendoza (spouses Mendoza) at a price of twenty-one pesos (P21.00) per
square meter. The Court Court Council disapproved the consolidation subdivision plan in August 1960 but approved in February 1964
its revised version where Lot 4 was reduced to an area of 2,608.7 square meters. Then in October 1965, the PHHC withdrew the
tentative award of Lot 4 to the spouses Mendoza for the latter’s failure neither to pay its price nor to make a 20% initial deposit,
and re-awarded said lot jointly and in equal shares to Miguela Sto. Domingo, Enrique Esteban, Virgilio Pinzon, Leonardo Redublo and
Jose Fernandez, all of whom made the initial deposit. The subdivision of Lot 4 into five lots was later approved by the Court council
and the Bureau of Lands.

The spouses Mendoza asked for reconsideration and for the withdrawal of the said 2nd award to Sto. Domingo and four others, and
at the same time filed an action for specific performance plus damages. The trial court sustained the award but the Court of
Appeals reversed the said decision, declared void the re-award to Sto. Domingo and four others, and ordered the PHHC to sell Lot 4
with an area of 2,608.7 square meters at P21.00 per square meter to spouses Mendoza.

ISSUE:

Was there a perfected sale of Lot 4, with its reduced area, between the parties?

COURT RULING:

The Supreme Court found that there was no perfected sale of Lot 4 because the said lot was conditionally or contingently awarded
to the Mendozas subject to the approval by the Court council of the proposed consolidation subdivision plan and the approval of the
award by the valuation committee and higher authorities.

When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved in 1964, the spouses Court should have
manifested in writing their acceptance of the award for the purchase of Lot 4 just to show that they were still interested in its
purchase although the area was reduced. Article 1475 of the Civil Court says “[t]he 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. From that moment, the parties
may reciprocally demand performance, subject to the law governing the form of contracts.” Indeed, there was a no meeting of the
minds between the parties on the purchase of Lot 4 with an area of 2,608.7 square meters at P21 a square meter and the PHHC
board of directors acted within its rights in withdrawing the tentative award.

Toyota Shaw Inc. vs. Court of Appeals, and Sosa

Toyota Shaw Inc. vs. Court of Appeals, and Sosa

244 SCRA 320

May 1995

FACTS:

Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the Toyota office at Shaw Boulevard, Pasig

(petitioner Toyota) on June 14, 1989 where they met Popong Bernardo who was a sales representative of said branch. Sosa

emphasized that he needed the car not later than June 17, 1989 because he, his family, and a balikbayan guest would be using it on

June 18 to go home to Marinduque where he will celebrate his birthday on June 19. Bernardo assured Sosa that a unit would be

ready for pick up on June 17 at 10:00 in the morning, and signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota

Shaw, Inc.,” a document which did not mention anything about the full purchase price and the manner the installments were to be

paid. Sosa and Gilbert delivered the down payment of P100,000.00 on June 15, 1989 and Bernardo accomplished a printed Vehicle

Sales Proposal (VSP) No. 928 which showed Sosa’s full name and home address, that payment is by "installment," to be financed by

"B.A.," and that the "BALANCE TO BE FINANCED" is "P274,137.00", but the spaces provided for "Delivery Terms" were not filled-up.

When June 17 came, however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa asked that his down payment be refunded

and petitioner Toyota issued also on June 17 a Far East Bank check for the full amount of P100,000.00, the receipt of which was
shown by a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice to our future claims for damages."

Petitioner Toyota contended that the B.A. Finance disapproved Sosa’s the credit financing application and further alleged that a

particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of

the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash

but Sosa refused.

The trial court found that there was a valid perfected contract of sale between Sosa and Toyota which bound the latter to deliver

the vehicle and that Toyota acted in bad faith in selling to another the unit already reserved for Sosa, and the Court of Appeals

affirmed the said decision.

ISSUE:

Was there a perfected contract of sale between respondent Sosa and petitioner Toyota?

COURT’sRULING:

The Supreme Court granted Toyota’s petition and dismissed Sosa’s complaint for damages because the document entitled

“Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc.,” was not a perfected contract of sale, but merely an

agreement between Mr. Sosa and Bernardo as private individuals and not between Mr. Sosa and Toyota as parties to a contract.

There was no indication in the said document of any obligation on the part of Toyota to transfer ownership of a determinate thing to

Sosa and neither was there a correlative obligation on the part of the latter to pay therefor a price certain. The provision on the

downpayment of P100,000.00 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 VSP No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable

right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury.