Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-116650 May 23, 1995
TOYOTA SHAW, INC., petitioner,
vs.
COURT O APPEALS a!" LUNA L. SOSA, respondents.

#A$I#E, %R., J.:
t the heart of the present controvers! is the docu"ent "ar#ed $%hibit &&
1
for the
private respondent, 'hich 'as si(ned b! a sales representative of To!ota Sha', Inc.
na"ed Popon( )ernardo. The docu"ent reads as follo's*
+R$$M$NTS )$T,$$N MR. SOS
- POPON+ )$RNRDO OF TO.OT
S/,, IN0.
1. all necessar! docu"ents 'ill be sub"itted to TO.OT S/,,
IN0. 2POPON+ )$RNRDO3 a 'ee# after, upon arrival of Mr. Sosa
fro" the Province 2Marindu4ue3 'here the unit 'ill be used on the
15th of 6une.
7. the do'npa!"ent of P188,888.88 'ill be paid b! Mr. Sosa on 6une
19, 15:5.
;. the TO.OT S/,, IN0. <IT$ 0$ !ello', 'ill be pic#=up >sic?
and released b! TO.OT S/,, IN0. on the 1@th of 6une at 18 a.".
,as this docu"ent, e%ecuted and si(ned b! the petitionerAs sales representative, a
perfected contract of sale, bindin( upon the petitioner, breach of 'hich 'ould entitle the
private respondent to da"a(es and attorne!As feesB The trial court and the 0ourt of
ppeals too# the affir"ative vie'. The petitioner disa(rees. /ence, this petition for
revie' on certiorari.
The antecedents as disclosed in the decisions of both the trial court and the 0ourt of
ppeals, as 'ell as in the pleadin(s of petitioner To!ota Sha', Inc. 2hereinafter Toyota3
and respondent <una <. Sosa 2hereinafter Sosa3 are as follo's. So"eti"e in 6une of
15:5, <una <. Sosa 'anted to purchase a To!ota <ite ce. It 'as then a sellerAs "ar#et
and Sosa had difficult! findin( a dealer 'ith an available unit for sale. )ut upon
contactin( To!ota Sha', Inc., he 'as told that there 'as an available unit. So on 1C
6une 15:5, Sosa and his son, +ilbert, 'ent to the To!ota office at Sha' )oulevard,
Pasi(, Metro Manila. There the! "et Popon( )ernardo, a sales representative of
To!ota.
Sosa e"phasiDed to )ernardo that he needed the <ite ce not later than 1@ 6une 15:5
because he, his fa"il!, and abalikbayan (uest 'ould use it on 1: 6une 15:5 to (o to
Marindu4ue, his ho"e province, 'here he 'ould celebrate his birthda! on the 15th of
6une. /e added that if he does not arrive in his ho"eto'n 'ith the ne' car, he 'ould
beco"e a &lau(hin( stoc#.& )ernardo assured Sosa that a unit 'ould be read! for pic#
up at 18*88 a.". on 1@ 6une 15:5. )ernardo then si(ned the afore4uoted &(ree"ents
)et'een Mr. Sosa - Popon( )ernardo of To!ota Sha', Inc.& It 'as also a(reed upon
b! the parties that the balance of the purchase price 'ould be paid b! credit financin(
throu(h ).. Finance, and for this +ilbert, on behalf of his father, si(ned the docu"ents
of To!ota and ).. Finance pertainin( to the application for financin(.
The ne%t da!, 19 6une 15:5, Sosa and +ilbert 'ent to To!ota to deliver the
do'npa!"ent of P188,888.88. The! "et )ernardo 'ho then acco"plished a printed
Vehicle Sales Proposal 2VSP3 No. 57:,
2
on 'hich +ilbert si(ned under the subheadin(
0ONFORM$. This docu"ent sho's that the custo"erAs na"e is &MR. <EN SOS&
'ith ho"e address at No. 7;1F +uiGo Street, Enited ParaHa4ue III that the "odel series
of the vehicle is a &<ite ce 1988& described as &C Dr "inibus&I that pa!"ent is b!
&install"ent,& to be financed b! &)..,&
3
'ith the initial cash outla! of P188,888.88
bro#en do'n as follo's*
a3 do'npa!"ent J P 9;,1C:.88
b3 insurance J P 1;,[email protected]
c3 )<T re(istration fee J P 1,[email protected]
0/MO fee J P 7,@19.88
service fee J P 988.88
accessories J P 75,888.88

1
and that the &)<N0$ TO )$ FINN0$D& is &P7@C,1;@.88.& The spaces provided for
&Deliver! Ter"s& 'ere not filled=up. It also contains the follo'in( pertinent provisions*
0ONDITIONS OF S<$S
1. This sale is subGect to availabilit! of unit.
7. Stated Price is subGect to chan(e 'ithout prior notice, Price
prevailin( and in effect at ti"e of sellin( 'ill appl!. . . .
Rodri(o Kuirante, the Sales Supervisor of )ernardo, chec#ed and approved the VSP.
On 1@ 6une 15:5, at around 5*;8 a."., )ernardo called +ilbert to infor" hi" that the
vehicle 'ould not be read! for pic# up at 18*88 a.". as previousl! a(reed upon but at
7*88 p.". that sa"e da!. t 7*88 p."., Sosa and +ilbert "et )ernardo at the latterAs
office. ccordin( to Sosa, )ernardo infor"ed the" that the <ite ce 'as bein( readied
for deliver!. fter 'aitin( for about an hour, )ernardo told the" that the car could not be
delivered because &nasulot ang unit ng ibang malakas.&
To!ota contends, ho'ever, that the <ite ce 'as not delivered to Sosa because of the
disapproval b! ).. Finance of the credit financin( application of Sosa. It further
alle(ed that a particular unit had alread! been reserved and ear"ar#ed for Sosa but
could not be released due to the uncertaint! of pa!"ent of the balance of the purchase
price. To!ota then (ave Sosa the option to purchase the unit b! pa!in( the full
purchase price in cash but Sosa refused.
fter it beca"e clear that the <ite ce 'ould not be delivered to hi", Sosa as#ed that
his do'npa!"ent be refunded. To!ota did so on the ver! sa"e da! b! issuin( a Far
$ast )an# chec# for the full a"ount of P188,888.88,
&
the receipt of 'hich 'as sho'n
b! a chec# voucher of To!ota,
5
'hich Sosa si(ned 'ith the reservation, &'ithout
preGudice to our future clai"s for da"a(es.&
Thereafter, Sosa sent t'o letters to To!ota. In the first letter, dated 7@ 6une 15:5 and
si(ned b! hi", he de"anded the refund, 'ithin five da!s fro" receipt, of the
do'npa!"ent of P188,888.88 plus interest fro" the ti"e he paid it and the pa!"ent of
da"a(es 'ith a 'arnin( that in case of To!otaAs failure to do so he 'ould be
constrained to ta#e le(al action.
6
The second, dated C Nove"ber 15:5 and si(ned b!
M. O. 0aballes, SosaAs counsel, de"anded one "illion pesos representin( interest and
da"a(es, a(ain, 'ith a 'arnin( that le(al action 'ould be ta#en if pa!"ent 'as not
"ade 'ithin three da!s.
'
To!otaAs counsel ans'ered throu(h a letter dated 7@
Nove"ber 15:5
(
refusin( to accede to the de"ands of Sosa. )ut even before this
ans'er 'as "ade and received b! Sosa, the latter filed on 78 Nove"ber 15:5 'ith
)ranch ;: of the Re(ional Trial 0ourt 2RT03 of Marindu4ue a co"plaint a(ainst To!ota
for da"a(es under rticles 15 and 71 of the 0ivil 0ode in the total a"ount of
P1,7;8,888.88.
9
/e alle(es, inter alia, that*
5. s a result of defendantAs failure andLor refusal to deliver the
vehicle to plaintiff, plaintiff suffered e"barrass"ent, hu"iliation,
ridicule, "ental an(uish and sleepless ni(hts because* 2i3 he and his
fa"il! 'ere constrained to ta#e the public transportation fro" Manila
to <ucena 0it! on their 'a! to Marindu4ueI 2ii3 his bali#ba!an=(uest
canceled his scheduled first visit to Marindu4ue in order to avoid the
inconvenience of ta#in( public transportationI and 2iii3 his relatives,
friends, nei(hbors and other province"ates, continuousl! ir#ed hi"
about &his )rand=Ne' To!ota <ite ce J that never 'as.& Ender the
circu"stances, defendant should be "ade liable to the plaintiff for
"oral da"a(es in the a"ount of One Million Pesos
2P1,888,888.883.
10
In its ans'er to the co"plaint, To!ota alle(ed that no sale 'as entered into bet'een it
and Sosa, that )ernardo had no authorit! to si(n $%hibit && for and in its behalf, and
that )ernardo si(ned $%hibit && in his personal capacit!. s special and affir"ative
defenses, it alle(ed that* the VSP did not state date of deliver!I Sosa had not
co"pleted the docu"ents re4uired b! the financin( co"pan!, and as a "atter of polic!,
the vehicle could not and 'ould not be released prior to full co"pliance 'ith financin(
re4uire"ents, sub"ission of all docu"ents, and e%ecution of the sales
a(ree"entLinvoiceI the P188,888.88 'as returned to and received b! SosaI the venue
'as i"properl! laidI and Sosa did not have a sufficient cause of action a(ainst it. It also
interposed co"pulsor! counterclai"s.
fter trial on the issues a(reed upon durin( the pre=trial session,
11
the trial court
rendered on 1: Februar! 1557 a decision in favor of Sosa.
12
It ruled that $%hibit &,&
the &+R$$M$NTS )$T,$$N MR. SOS ND POPON+ )$RNRDO,& 'as a valid
perfected contract of sale bet'een Sosa and To!ota 'hich bound To!ota to deliver the
vehicle to Sosa, and further a(reed 'ith Sosa that To!ota acted in bad faith in sellin( to
another the unit alread! reserved for hi".
s to To!otaAs contention that )ernardo had no authorit! to bind it throu(h $%hibit &,&
the trial court held that the e%tent of )ernardoAs authorit! &'as not "ade #no'n to
plaintiff,& for as testified to b! Kuirante, &the! do not volunteer an! infor"ation as to the
co"pan!As sales polic! and (uidelines because the! are internal "atters.&
13
Moreover,
&>f?ro" the be(innin( of the transaction up to its consu""ation 'hen the do'npa!"ent
'as "ade b! the plaintiff, the defendants had "ade #no'n to the plaintiff the
i"pression that Popon( )ernardo is an authoriDed sales e%ecutive as it per"itted the
latter to do acts 'ithin the scope of an apparent authorit! holdin( hi" out to the public
2
as possessin( po'er to do these acts.&
1&
)ernardo then &'as an a(ent of the
defendant To!ota Sha', Inc. and hence bound the defendants.&
15
The court further declared that &<una Sosa proved his social standin( in the co""unit!
and suffered bes"irched reputation, 'ounded feelin(s and sleepless ni(hts for 'hich
he ou(ht to be co"pensated.&
16
ccordin(l!, it disposed as follo's*
,/$R$FOR$, vie'ed fro" the above findin(s, Gud("ent is hereb!
rendered in favor of the plaintiff and a(ainst the defendant*
1. orderin( the defendant to pa! to the plaintiff the
su" of P@9,888.88 for "oral da"a(esI
7. orderin( the defendant to pa! the plaintiff the
su" of P18,888.88 for e%e"plar! da"a(esI
;. orderin( the defendant to pa! the su" of
P;8,888.88 attorne!As fees plus P7,888.88 la'!erAs
transportation fare per trip in attendin( to the
hearin( of this caseI
C. orderin( the defendant to pa! the plaintiff the
su" of P7,888.88 transportation fare per trip of the
plaintiff in attendin( the hearin( of this caseI and
9. orderin( the defendant to pa! the cost of suit.
SO ORD$R$D.
Dissatisfied 'ith the trial courtAs Gud("ent, To!ota appealed to the 0ourt of ppeals.
The case 'as doc#eted as 0=+.R. 0V No. C88C;. In its decision pro"ul(ated on 75
6ul! 155C,
1'
the 0ourt of ppeals affir"ed in toto the appealed decision.
To!ota no' co"es before this 0ourt via this petition and raises the core issue stated at
the be(innin( of the ponenciaand also the follo'in( related issues* 2a3 'hether or not
the standard VSP 'as the true and docu"ented understandin( of the parties 'hich
'ould have led to the ulti"ate contract of sale, 2b3 'hether or not Sosa has an! le(al
and de"andable ri(ht to the deliver! of the vehicle despite the non=pa!"ent of the
consideration and the non=approval of his credit application b! ).. Finance, 2c3
'hether or not To!ota acted in (ood faith 'hen it did not release the vehicle to Sosa,
and 2d3 'hether or not To!ota "a! be held liable for da"a(es.
,e find "erit in the petition.
Neither lo(ic nor recourse to oneAs i"a(ination can lead to the conclusion that $%hibit
&& is a perfected contract of sale.
rticle 1C9: of the 0ivil 0ode defines a contract of sale as follo's*
rt. 1C9:. )! the contract of sale one of the contractin( parties
obli(ates hi"self to transfer the o'nership of and to deliver a
deter"inate thin(, and the other to pa! therefor a price certain in
"one! or its e4uivalent.
contract of sale "a! be absolute or conditional.
and rticle 1C@9 specificall! provides 'hen it is dee"ed perfected*
rt. 1C@9. The contract of sale is perfected at the "o"ent there is a
"eetin( of "inds upon the thin( 'hich is the obGect of the contract
and upon the price.
Fro" that "o"ent, the parties "a! reciprocall! de"and
perfor"ance, subGect to the provisions of the la' (overnin( the for"
of contracts.
,hat is clear fro" $%hibit && is not 'hat the trial court and the 0ourt of ppeals
appear to see. It is not a contract of sale. No obli(ation on the part of To!ota to transfer
o'nership of a deter"inate thin( to Sosa and no correlative obli(ation on the part of
the latter to pa! therefor a price certain appears therein. The provision on the
do'npa!"ent of P188,888.88 "ade no specific reference to a sale of a vehicle. If it
'as intended for a contract of sale, it could onl! refer to a sale on install"ent basis, as
the VSP e%ecuted the follo'in( da! confir"ed. )ut nothin( 'as "entioned about the
full purchase price and the "anner the install"ents 'ere to be paid.
This 0ourt had alread! ruled that a definite a(ree"ent on the "anner of pa!"ent of the
price is an essential ele"ent in the for"ation of a bindin( and enforceable contract of
sale.
1(
This is so because the a(ree"ent as to the "anner of pa!"ent (oes into the
price such that a disa(ree"ent on the "anner of pa!"ent is tanta"ount to a failure to
a(ree on the price. Definiteness as to the price is an essential ele"ent of a bindin(
a(ree"ent to sell personal propert!.
19
3
Moreover, $%hibit && sho's the absence of a "eetin( of "inds bet'een To!ota and
Sosa. For one thin(, Sosa did not even si(n it. For another, Sosa 'as 'ell a'are fro"
its title, 'ritten in bold letters, viz.,
+R$$M$NTS )$T,$$N MR. SOS -
POPON+ )$RNRDO OF TO.OT S/,, IN0.
that he 'as not dealin( 'ith To!ota but 'ith Popon( )ernardo and that the latter did not
"isrepresent that he had the authorit! to sell an! To!ota vehicle. /e #ne' that
)ernardo 'as onl! a sales representative of To!ota and hence a "ere a(ent of the
latter. It 'as incu"bent upon Sosa to act 'ith ordinar! prudence and reasonable
dili(ence to #no' the e%tent of )ernardoAs authorit! as an
a(ent
20
in respect of contracts to sell To!otaAs vehicles. person dealin( 'ith an a(ent
is put upon in4uir! and "ust discover upon his peril the authorit! of the a(ent.
21
t the "ost, $%hibit && "a! be considered as part of the initial phase of the (eneration
or ne(otiation sta(e of a contract of sale. There are three sta(es in the contract of sale,
na"el!*
2a3 preparation, conception, or (eneration, 'hich is the period of
ne(otiation and bar(ainin(, endin( at the "o"ent of a(ree"ent of
the partiesI
2b3 perfection or birth of the contract, 'hich is the "o"ent 'hen the
parties co"e to a(ree on the ter"s of the contractI and
2c3 consu""ation or death, 'hich is the fulfill"ent or perfor"ance of
the ter"s a(reed upon in the contract.
22
The second phase of the (eneration or ne(otiation sta(e in this case 'as the e%ecution
of the VSP. It "ust be e"phasiDed that thereunder, the do'npa!"ent of the purchase
price 'as P9;,1C:.88 'hile the balance to be paid on install"ent should be financed
b! ).. Finance 0orporation. It is, of course, to be assu"ed that ).. Finance 0orp.
'as acceptable to To!ota, other'ise it should not have "entioned ).. Finance in the
VSP.
Financin( co"panies are defined in Section ;2a3 of R.. No. 95:8, as a"ended b! P.D.
No. 1C9C and P.D. No. 1@5;, as &corporations or partnerships, e%cept those re(ulated
b! the 0entral )an# of the Philippines, the Insurance 0o""ission and the
0ooperatives d"inistration Office, 'hich are pri"aril! or(aniDed for the purpose of
e%tendin( credit facilities to consu"ers and to industrial, co""ercial, or a(ricultural
enterprises, either b! discountin( or factorin( co""ercial papers or accounts
receivables, or b! bu!in( and sellin( contracts, leases, chattel "ort(a(es, or other
evidence of indebtedness, or b! leasin( of "otor vehicles, heav! e4uip"ent and
industrial "achiner!, business and office "achines and e4uip"ent, appliances and
other "ovable propert!.&
23
ccordin(l!, in a sale on install"ent basis 'hich is financed b! a financin( co"pan!,
three parties are thus involved* the bu!er 'ho e%ecutes a note or notes for the unpaid
balance of the price of the thin( purchased on install"ent, the seller 'ho assi(ns the
notes or discounts the" 'ith a financin( co"pan!, and the financin( co"pan! 'hich is
subro(ated in the place of the seller, as the creditor of the install"ent bu!er.
2&
Since
).. Finance did not approve SosaAs application, there 'as then no "eetin( of "inds
on the sale on install"ent basis.
,e are inclined to believe To!otaAs version that ).. Finance disapproved SosaAs
application for 'hich reason it su((ested to Sosa that he pa! the full purchase price.
,hen the latter refused, To!ota cancelled the VSP and returned to hi" his
P188,888.88. SosaAs version that the VSP 'as cancelled because, accordin( to
)ernardo, the vehicle 'as delivered to another 'ho 'as &mas malakas& does not
inspire belief and 'as obviousl! a dela!ed afterthou(ht. It is clai"ed that )ernardo
said, &Pasensiya kayo, nasulot ang unit ng ibang malakas,& 'hile the Sosas had
alread! been 'aitin( for an hour for the deliver! of the vehicle in the afternoon of 1@
6une 15:5. /o'ever, in para(raph @ of his co"plaint, Sosa sole"nl! states*
On 6une 1@, 15:5 at around 5*;8 oAcloc# in the "ornin(, defendantAs
sales representative, Mr. Popon( )ernardo, called plaintiffAs house
and infor"ed the plaintiffAs son that the vehicle 'ill not be read! for
pic#=up at 18*88 a.". of 6une 1@, 15:5 but at 7*88 p.". of that da!
instead. Plaintiff and his son went to defendant's office on June 1
1!"! at #$%% p&m& in order to pick'up the vehicle but the defendant for
reasons known only to its representatives, refused and(or failed to
release the vehicle to the plaintiff& Plaintiff demanded for an
e)planation, but nothing was givenI . . . 2$"phasis supplied3.
25
The VSP 'as a "ere proposal 'hich 'as aborted in lieu of subse4uent events. It
follo's that the VSP created no de"andable ri(ht in favor of Sosa for the deliver! of
the vehicle to hi", and its non=deliver! did not cause an! le(all! inde"nifiable inGur!.
The a'ard then of "oral and e%e"plar! da"a(es and attorne!As fees and costs of suit
is 'ithout le(al basis. )esides, the onl! (round upon 'hich Sosa clai"ed "oral
da"a(es is that since it 'as #no'n to his friends, to'n"ates, and relatives that he 'as
bu!in( a To!ota <ite ce 'hich the! e%pected to see on his birthda!, he suffered
hu"iliation, sha"e, and sleepless ni(hts 'hen the van 'as not delivered. The van
beca"e the subGect "atter of tal#s durin( his celebration that he "a! not have paid for
4
it, and this created an i"pression a(ainst his business standin( and reputation. t the
botto" of this clai" is nothin( but "isplaced pride and e(o. /e should not have
announced his plan to bu! a To!ota <ite ce #no'in( that he "i(ht not be able to pa!
the full purchase price. It 'as he 'ho brou(ht e"barrass"ent upon hi"self b!
bra((in( about a thin( 'hich he did not o'n !et.
Since Sosa is not entitled to "oral da"a(es and there bein( no a'ard for te"perate,
li4uidated, or co"pensator! da"a(es, he is li#e'ise not entitled to e%e"plar!
da"a(es. Ender rticle 7775 of the 0ivil 0ode, e%e"plar! or corrective da"a(es are
i"posed b! 'a! of e%a"ple or correction for the public (ood, in addition to "oral,
te"perate, li4uidated, or co"pensator! da"a(es.
lso, it is settled that for attorne!As fees to be (ranted, the court "ust e%plicitl! state in
the bod! of the decision, and not onl! in the dispositive portion thereof, the le(al reason
for the a'ard of attorne!As fees.
26
No such e%plicit deter"ination thereon 'as "ade in
the bod! of the decision of the trial court. No reason thus e%ists for such an a'ard.
,/$R$FOR$, the instant petition is +RNT$D. The challen(ed decision of the 0ourt
of ppeals in 0=+.R. 0V NO. C88C; as 'ell as that of )ranch ;: of the Re(ional Trial
0ourt of Marindu4ue in 0ivil 0ase No. :5=1C are R$V$RS$D and S$T SID$ and the
co"plaint in 0ivil 0ase No. :5=1C is DISMISS$D. The counterclai" therein is li#e'ise
DISMISS$D.
No pronounce"ent as to costs.
SO ORD$R$D.
Padilla, *ellosillo and +apunan, JJ&, concur&
,uiason, J&, is on leave&

5