Olympia Housing, Inc. vs Panasiatic Travel Corp.

395 scra 298

Facts: Olympia Housing, Inc. agreed to sell a condominium unit to Ma. Nelida GalvezYcasiano for P2,340,000 payable in installments of P33,657.40 per month and
schedule of payments were also agreed on. Pursuant to the contract, defendant
made a deposit of P100,000 and 50% down payment on the dates agreed. She
made several payments in cash and thru cash credit memos issued by plaintiff
representing plane tickets bought from Panasiatic Travel Corp, owned by Ma. Nelida.
When defendant failed to pay installments which amounted to P1,924,345.52 even
after demand, plaintiff allegedly rescinded the contract by a Notarial Act of
Rescission.
Issue: whether or not the contract to sell executed in favor of respondent buyer had
been validly cancelled or rescinded
Held: no cancellation took place. The notarial rescission was not sent to respondents
prior to the institution of the case for reconveyance but merely served on
respondents by way of an attachment to the complaint. In any case, a notarial
rescission, standing alone, could not have invalidly effected the cancellation of the
contract. RA 6552 (Realty Installment Buyer Protection Act) states that any
cancellation must be done in conformity with the requirements therein prescribed.
In addition to the notarial act of rescission, the seller is required to refund to the
buyer the cash surrender value of the payments on the property. The actual
cancellation of the contract can only be deemed to take place upon the expiry of a
30day period following the receipt by the buyer of the notice of cancellation or
demand for rescission by a notarial act and the full payment of the cash surrender
value.
Chua vs CA
401 scra 54
Facts: Encarnacion Valdes-Choy advertised for sale her paraphernal house and lot.
Tomas Chua responded and after several meetings they agreed on the price of
P10,800,000 payable in cash. Valdes-Choy received from Chua a check for P100,000
and signed the receipt for evidence of the transaction. On July 14, 1989, Chua
handed a managers check for P485,000 to Valdes-Choy so the latter may pay the
capital gains tax. He also showed a managers check for P10,215,000 for the balance
of purchase price but did not give it to Valdes-Choy and required that the Property
be registered in his name before he would hand over the check. This angered
Valdes-Choy who tore up the Deeds of Sale. Chua then filed a complaint for specific
performance with damages.
Issue: whether the transaction is a perfected contract of sale or a mere contract to
sell

Held: the transaction is a contract to sell. A perusal of the Receipt shows that the
true agreement between the parties was a contract to sell. Ownership over the
Property was retained by Valdes-Choy and was not to pass to Chua until full
payment of the purchase price. It is true that Article 1482 of the Civil Code provides
that [W]henever earnest money is given in a contract of sale, it shall be considered
as part of the price and proof of the perfection of the contract. However, this article
speaks of earnest money given in a contract of sale. In this case, the earnest money
was given in a contract to sell. The Receipt evidencing the contract to sell stipulates
that the earnest money is a forfeitable deposit, to be forfeited if the sale is not
consummated should Chua fail to pay the balance of the purchase price. The
earnest money forms part of the consideration only if the sale is consummated upon
full payment of the purchase price. If there is a contract of sale, Valdes-Choy should
have the right to compel Chua to pay the balance of the purchase price. Chua,
however, has the right to walk away from the transaction, with no obligation to pay
the balance, although he will forfeit the earnest money. Clearly, there is no contract
of sale. The earnest money was given in a contract to sell, and thus Article 1482,
which speaks of a contract of sale, is not applicable.
Moreno Jr. vs Private Mgt. office
507 scra 63
Facts: Private Management Office called for a conference for the purpose of
discussing with Jose Moreno Jr. of his right of first refusal over the 2 nd, 3rd, 4th, 5th and
6th floors of the J.Moreno Building with the proposed price of P21M. Moreno
deposited 10% of this suggested indicative price as requested by the defendant on
Feb. 26, 1993. On Mar.12, 1993, defendant wrote plaintiff that the indicative price
was being questioned by its Legal Department. On April 2, 1993, defendant wrote
that the tentative price became P42,274,702.17 for the subject floors.
Issue: whether or not there was a perfected contract of sale over the subject floors
for P21M.
Held: there was no perfected contract of sale. Based on the objective manifestations
of the parties in the case at bar, there was no meeting of the minds. That the letter
constituted a definite, complete and certain offer is the subjective belief of
petitioner alone. The letter in question is a mere evidence of a memorialization of
inconclusive negotiations, or a mere agreement to agree, in which material term is
left for future negotiations. It is a mere evidence of the parties preliminary
transactions which did not crystallize into a perfected contract. Preliminary
negotiations or an agreement still involving future negotiations is not the functional
equivalent of a valid, subsisting agreement. For a valid contract to have been
created, the parties must have progressed beyond this stage of imperfect
negotiation. But as the records would show, the parties are yet undergoing the
preliminary steps towards the formation of a valid contract.