G.R. No. 201017 and G.R. No. 215289, December 05, 2016
MAJESTIC PLUS HOLDING INTERNATIONAL, INC., PETITIONER, V. BULLION INVESTMENT AND DEVELOPMENT CORPORATION, ET AL., RESPONDENTS.

FACTS

The City of Manila entered into a 25-year lease contract with Bullion Investment and Development Corporation for the development of a city property. Bullion was to construct two buildings: one as a City Hall extension and another for commercial use as a mall. Bullion completed the City Hall building but could not finish the commercial mall. Bullion then sought investment from Majestic Plus Holding International, Inc. The parties executed a Memorandum of Agreement (MOA) whereby Majestic agreed to acquire an 80% equity interest in Bullion for Php96,000,000.00, payable in installments, and to infuse additional capital to complete the mall construction. The MOA stipulated a schedule for the transfer of shares corresponding to the payments made.
A dispute arose, leading Majestic to file a complaint for specific performance and damages against Bullion and its individual stockholders in the Regional Trial Court (RTC). Majestic alleged that despite making substantial payments, Bullion refused to transfer the corresponding shares and provide corporate records. Bullion, in its defense, claimed the MOA was merely an agreement to enter into a future contract and that Majestic failed to infuse the promised additional capital for the mall’s completion.

ISSUE

The primary issue is whether the MOA dated September 7, 2004, is a contract of sale of shares or merely a preparatory agreement that did not create binding obligations for the transfer of corporate shares.

RULING

The Supreme Court ruled that the MOA is a binding contract of sale of shares, not a mere agreement to agree. The legal logic rests on the application of Article 1305 of the Civil Code, which defines a contract as a meeting of minds between two parties whereby one binds himself to give something or to render some service. The Court examined the MOA’s terms and found it contained all the essential elements of a contract of sale: consent, object certain (80% equity interest in Bullion), and price (Php96,000,000.00). The stipulations were definite and left nothing for the parties to negotiate. Provisions detailing the payment schedule, the corresponding percentage of shares to be transferred upon each payment, and the obligation to execute necessary documents demonstrated a perfected contract.
The Court rejected Bullion’s argument that the MOA was merely preparatory. The agreement imposed immediate reciprocal obligations: Majestic was bound to pay the purchase price in installments, and Bullion was bound to transfer the shares upon receipt of each payment. The fact that some acts, like the execution of specific deeds of assignment, were to be done in the future did not negate the perfection of the contract; it merely pertained to its execution. Consequently, Bullion’s refusal to transfer the shares upon Majestic’s tender of payment constituted a breach of contract. The Court affirmed the CA’s decision ordering Bullion to execute the documents necessary to transfer the shares corresponding to the payments made by Majestic.