GR 170115; (February, 2008) (Digest)
G.R. No. 170115 ; February 19, 2008
PROVINCE OF CEBU, petitioner, vs. HEIRS OF RUFINA MORALES, respondents.
FACTS
The Province of Cebu leased a lot to Rufina Morales in 1961. In 1964, the Province donated the parent lot, including the leased portion, to the City of Cebu. The City subsequently subdivided the property and, in 1965, sold the specific sub-lot (Lot No. 646-A-3) at public auction. As the actual occupant, Morales exercised her preferential right to match the highest bid. She paid the required deposit and a partial payment, and the City awarded the lot to her. However, the Province later filed a case for reversion of the donation against the City. In a 1974 compromise agreement, the City returned several lots, including Lot No. 646-A-3, to the Province. Morales died in 1969 without completing payment. Decades later, her heirs requested the Province to formally convey the lot, consigned the balance of the purchase price, and ultimately filed an action for specific performance and reconveyance.
ISSUE
Whether a perfected and binding contract of sale existed between the City of Cebu and Rufina Morales, which the Province of Cebu, as the successor-in-interest to the City’s rights and obligations over the lot, is obligated to respect and execute.
RULING
Yes. The Supreme Court affirmed the lower courts’ decisions, ruling that a perfected contract of sale existed. Under Article 1475 of the Civil Code, a sale is perfected at the moment there is a meeting of the minds upon the thing and the price. The public auction constituted a valid offer by the City of Cebu, then the absolute owner. Morales’s act of matching the highest bid and the City’s acceptance through the award constituted a clear meeting of the minds. Her payment of the deposit and partial payment confirmed the perfection of the contract. The subsequent reversion of the lot to the Province via compromise agreement did not nullify this prior perfected contract. The compromise judgment did not invalidate sales made by the City; it merely transferred the property subject to existing liens and obligations. Consequently, the Province, as the City’s successor-in-interest, assumed the obligation to convey the title upon full payment. The Court also noted that the defense of laches or prescription was improperly raised for the first time on appeal and thus could not be considered. The heirs’ consignation of the balance was a valid tender of payment, obligating the Province to execute the final deed of sale.