GR 155066; (August, 2006) (Digest)
G.R. No. 155066 August 3, 2006
Heirs of Pedro Avendaño, et al., Petitioners, vs. Development Bank of the Philippines, Respondent.
FACTS
Pedro Avendaño, as assignee of redemption rights over four foreclosed properties, offered to purchase them from respondent Development Bank of the Philippines (DBP). DBP’s Board of Governors approved his offer via a letter-agreement dated November 26, 1975, outlining payment terms. Avendaño made a partial downpayment of P100,000 and took possession. The letter-agreement stipulated that accrued interest and expenses were to be paid upon the execution of a “contract of sale.” However, Avendaño failed to appear to sign the said contract. He later attempted to renegotiate the purchase in 1978 with a new offer, which DBP conditionally accepted, requiring him to update his account within a week. Avendaño failed to comply. Consequently, DBP revoked the approval of his offer and eventually sold one property to a third party. Avendaño filed a complaint for specific performance.
ISSUE
Was Pedro Avendaño entitled to the execution of a contract to sell by DBP?
RULING
No. The Supreme Court denied the petition, affirming the Court of Appeals. The core document was the November 26, 1975 letter-agreement, which constituted the binding agreement between the parties. This letter-agreement explicitly contemplated the future execution of a “contract of sale,” not a “contract to sell.” A contract of sale is a consensual contract that becomes obligatory upon mere consent, whereas a contract to sell is a conditional contract where ownership is reserved until full payment. The terms of the letter-agreement established a perfected contract of sale, obliging Avendaño to pay the balance as a condition for the execution of the formal document. His failure to pay the stipulated amounts, including accrued interest and expenses prior to signing, constituted a breach of his obligation. His subsequent attempt to renegotiate the terms further demonstrated his failure to comply with the original agreement. Therefore, DBP was justified in reviving its approval and disposing of the properties, as Avendaño had no vested right to demand the execution of a formal contract after breaching the perfected agreement.