Lorenzo and Socorro Velasco v. CA and Magdalena Estate Inc. [June 29, 1973]

Facts:

· Suit for specific performance filed by Lorenzo Velasco against the Magdalena Estate, Inc.

Plaintiff’s Version

· On Nov 29, 1962 the plaintiff and the defendant had entered into a CONTRACT OF SALE of land (2,059 sq m) at for P100,000.00.

· Payment terms:

o down payment: P10,000.00 and P20,000.00

o P70,000.00 would be paid in installments

o equal monthly amortization will be determined as soon as the P30,000.00 DP had been completed.

· Plaintiff paid P10,000.00 on November 29, 1962 (Exh. "A")

· On Jan 8, 1964 he tendered the payment of P20,000.00 but the defendant refused to accept and refused to execute a formal deed of sale.

· Socorro Velasco is his sister-in-law and that he had requested her to make the necessary contacts referring to the purchase of the property because he does not understand English well.

· The receipt states: "Earnest money for the purchase of Lot 15, Block 7, Psd-6129, Area 2,059 square meters including improvements thereon — P10,000.00." At the bottom of Exhibit A the following appears: "Agreed price: P100,000.00, P30,000.00 down payment, bal. in 10 years."

Defendant:

· No contract of sale was perfected because the minds of the parties did not meet "in regard to the manner of payment.”

· Contract is unenforceable under the Statute of Frauds.

· the property was leased by Socorro Velasco and that the defendant indicated its willingness to sell the property for P100,000.00:

o P30,000.00

o P20,000.00 of which was to be paid on November 31, 1962,

o P70,000.00 including interest a 9% per annum was to be paid on installments for a period of ten years at the rate of P5,381.32 on June 30 and December of every year until the same shall have been fully paid;

· On November 29, 1962 Socorro Velasco offered to pay P10,000.00 as initial payment instead of the agreed P20,000.00 but because the amount was short of the alleged P20,000.00 the same was accepted merely as deposited and upon request of Socorro Velasco the receipt was made in the name of her brother-in-law the plaintiff herein;

· Socorro Velasco failed to complete the down payment of P30,000.00 and neither has she paid any installments on the balance of P70,000.00 up to the present time;

· On January 8, 1964 that Socorro Velasco tendered payment of P20,000.00, which offer the defendant refused to accept because it had considered the offer to sell rescinded on account of her failure to complete the down payment on or before December 31, 1962.

Issue: Whether the talks between the Magdalena Estate, Inc. and Lorenzo Velasco ever ripened into a consummated sale? NO.

Ratio:

· The material averments contained in the petitioners' complaint disclose a lack of complete "agreement in regard to the manner of payment" of the lot in question. The complaint states pertinently:

o 4. That plaintiff and defendant further agreed that the total down payment shall by P30,000.00, including the P10,000.00 partial payment mentioned in paragraph 3 hereof, and that upon completion of the said down payment of P30,000.00, the balance of P70,000.00 shall be said by the plaintiff to the defendant in 10 years from November 29, 1962;

o 5. That the time within the full down payment of the P30,000.00 was to be completed was not specified by the parties but the defendant was duly compensated during the said time prior to completion of the down payment of P30,000.00 by way of lease rentals on the house existing thereon which was earlier leased by defendant to the plaintiff's sister-in-law, Socorro J. Velasco, and which were duly paid to the defendant by checks drawn by plaintiff.

· Petitioners admit that they still had to meet and agree on how and when the down-payment and the installment payments were to be paid.

· Such being the situation, it cannot be said that a definite and firm sales agreement between the parties had been perfected over the lot in question.

· Indeed, this Court has already ruled before that a definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding and enforceable contract of sale.



· The fact that the petitioners delivered to the respondent the sum of P10,000 cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties herein under article 1482 of the new Civil Code, as the petitioners themselves admit that some essential matter — the terms of payment — still had to be mutually covenanted.