3. Must be certain or ascertainable at time of perfection (Art.

1469)
Toyota Shaw, Inc. vs. Court of Appeals, G.R. No. 116650, May 23, 1995

Doctrine:

This case underscores the principles of contract formation outlined in the Civil Code, specifically Articles
1458 and 1475, which dictate that a sale is perfected upon agreement on the object and price. The
absence of a definitive agreement on the financing terms and the lack of mutual consent precludes the
realization of a contract of sale.

Facts:

Luna Sosa entered into an agreement with Toyota Shaw, Inc. to purchase a Toyota Lite Ace, making a
₱100,000 downpayment on June 15, 1989, with the vehicle scheduled for release on June 17 for his
birthday trip on June 19. However, Toyota failed to deliver the car, citing a rejected financing application
and suggesting full cash payment, which Sosa declined. Feeling distressed and humiliated, Sosa
demanded a refund, which was promptly processed. He subsequently filed a complaint for moral
damages, alleging harm to his reputation and emotional distress. The Regional Trial Court ruled in favor
of Sosa, and the Court of Appeals upheld this decision, prompting Toyota Shaw to elevate the case to
the Supreme Court.

Issue:

Was Exhibit “A” a perfected contract of sale binding on Toyota Shaw, Inc.?

Did Sosa have a legal claim to the delivery of the vehicle despite the issues with financing and the non-
payment of the full purchase price?

Ruling: (c/o PPT)

F. Manner of Payment must be agreed upon

Facts:

Lorenzo Velasco filed a suit for specific performance against Magdalena Estate, Inc., claiming that they
entered into a contract to sell a parcel of land for ₱100,000 on November 29, 1962. Velasco alleged that
the agreement included a ₱30,000 down payment (₱10,000 paid initially and ₱20,000 to follow) and that
the remaining ₱70,000 would be paid in installments over ten years. While Velasco tendered ₱20,000 in
January 1964 to complete the down payment, Magdalena Estate refused to accept it and declined to
formalize the sale. Magdalena Estate countered that it had no direct dealings with Velasco, asserting
that negotiations were made through Velasco's sister-in-law, Socorro Velasco, who failed to complete
the agreed ₱30,000 down payment on or before December 31, 1962 or make installment payments on
time. The company deemed the offer rescinded and argued that no contract was perfected.

The lower court agreed with the defendant, holding that there was no perfected contract because of the
lack of a definite and mutual agreement on the terms of payment, particularly the manner and time of
completing the down payment.

Issue:

Whether a binding and enforceable contract of sale was perfected between Lorenzo Velasco and
Magdalena Estate, Inc., considering the alleged agreement’s terms and the parties’ conduct.

Ruling: (c/o PPT)

This case establishes the principle that an option contract provides a privilege to purchase but does not
create obligations for the optionee until they accept the offer, highlighting the need for a clear
acceptance before the expiration of the option period to transform it into a binding contract of sale.
Furthermore, a ceding party does not bear responsibility for subsequent transactions conducted in good
faith after an option agreement has lapsed.

Facts:

Lourdes Ong Limson agreed to purchase land in Parañaque from Lorenzo and Asuncion de Vera in 1978,
paying ₱20,000 as earnest money with a 10-day option to finalize the sale. However, issues arose due to
the property's mortgage and unpaid taxes, delaying the transaction. Despite Limson's efforts, the
property was sold to Sunvar Realty Development Corporation (SUNVAR), prompting her to file an
Affidavit of Adverse Claim. Limson sought to annul the sale to SUNVAR and compel the spouses to
finalize the sale in her favor. While the Regional Trial Court ruled for Limson, the Court of Appeals
reversed the decision, leading her to petition for review.

Issue:

Whether the P20,000 paid by Limson represented “earnest money”?

Was there a perfected contract of sale between petitioner Lourdes Ong Limson and respondents
Lorenzo de Vera and Asuncion Santos-de Vera?

Ruling: (c/o PPT) plus the below statements

Also, on 14 September 1978 when respondent spouses sent a telegram to petitioner demanding full
payment of the purchase price on even date simply demonstrated an inclination to give her
preference to buy subject property. Collectively, these instances did not indicate that petitioner still
had the exclusive right to purchase subject property. Verily, the commencement of negotiations
between respondent spouses and respondent SUNVAR clearly manifested that their offer to sell
subject property to petitioner was no longer exclusive to her.

On 11 August 1978 the option period expired and the exclusive right of petitioner to buy the property
of respondent spouses ceased. WHEREFORE, the petition is DENIED.

San Miguel Properties Philippines, Inc. vs. Spouses Huang, G.R. No.
137290, Jul 31, 2000
Doctrine:

This case underscores the principles surrounding the perfection of contracts in Philippine law,
particularly emphasizing that mere earnest deposits do not equate to a perfected sale without clear
agreement on essential terms, including the method of payment.

Facts:

The dispute between San Miguel Properties Philippines, Inc. (petitioner) and spouses Alfredo and Grace
Huang (respondents) revolved around the sale of two parcels of land totaling 1,738 square meters in
Pasig City. The properties were offered for sale on February 21, 1994, for ₱52,140,000.00 in cash. Atty.
Helena M. Dauz acted as an undisclosed principal for the spouses Huang during negotiations.

On March 24, 1994, the spouses expressed their intent to purchase the properties, offering ₱500,000.00
as earnest money with a payment plan in eight monthly installments. This counter-offer was rejected by
the petitioner. A revised offer on March 29, 1994, included a ₱1,000,000.00 earnest deposit, which was
accepted by the petitioner’s vice-president, Isidro A. Sobrecarey. Negotiations commenced, and the
“FOR SALE” sign was removed from the properties.

However, negotiations ultimately failed as both parties exchanged offers and counter-offers without
reaching a final agreement. On July 7, 1994, the petitioner returned the deposit, stating that the option
to purchase had expired. On July 20, 1994, the spouses Huang demanded a deed of sale, which the
petitioner refused, leading to the filing of a complaint for specific performance before the Regional Trial
Court, Branch 133, Pasig City. The trial court dismissed the complaint on December 12, 1994, citing a
lack of a perfected contract due to insufficient agreement on terms, including the mode of payment. An
appeal was filed to the Court of Appeals, which reversed the trial court's decision on April 8, 1997. This
prompted the petitioner to challenge the appellate court's ruling, leading to the petition now before the
Supreme Court.

Issue:

Did the Court of Appeals err in ruling that a perfected contract of sale existed between the parties?

Ruling: (c/o ppt)