GR 137290; (July, 2000) (Digest)
G.R. No. 137290; July 31, 2000
SAN MIGUEL PROPERTIES PHILIPPINES, INC., petitioner, vs. SPOUSES ALFREDO HUANG and GRACE HUANG, respondents.
FACTS
Petitioner San Miguel Properties offered to sell two parcels of land for ₱52,140,000.00 in cash. Respondents, acting through Atty. Helena Dauz, expressed interest. In a letter dated March 29, 1994, they offered to buy the property, enclosed ₱1,000,000.00 as “earnest-deposit,” and requested a 30-day exclusive option to purchase to negotiate terms. Petitioner’s vice-president, Isidro Sobrecarey, signed his conformity and accepted the money. Negotiations ensued but the parties failed to agree on the period of payment, with offers ranging from a 90-day term to a six-month or four-month amortization.
After an extension, negotiations remained deadlocked. Petitioner returned the ₱1 million, stating the option had expired. Respondents demanded specific performance, leading to a complaint. The trial court dismissed the case, but the Court of Appeals reversed, holding a perfected contract of sale existed under Article 1482 of the Civil Code, as earnest money was given, and the lack of agreement on payment terms was not essential.
ISSUE
Whether a perfected contract of sale existed between the parties.
RULING
No. The Supreme Court reversed the Court of Appeals. The March 29, 1994 letter created only an option contract, not a perfected sale. An option requires a consideration separate from the price. Here, the ₱1 million was a mere deposit refundable if no agreement was reached, not a distinct consideration for the option. Thus, the option was unenforceable.
Crucially, even assuming a sale was contemplated, no perfection occurred. For a contract of sale to be perfected, there must be a meeting of minds on the essential elements: the object (the property) and the price. While these were determinate, the parties undisputedly failed to agree on the manner of payment. Jurisprudence holds that a definite agreement on the terms of payment is essential to a binding contract of sale. The earnest money provision in Article 1482 presupposes a concurrence of all essential elements; it does not by itself prove perfection if such concurrence is absent. Since the parties did not mutually covenant on the payment schedule, there was no “meeting of the minds.” Consequently, no cause of action for specific performance existed, and the complaint was properly dismissed.