Contracts undergo three distinct stages: negotiation, perfection and consummation. Negotiation is formally initiated by an offer that must be certain and definite as to the object and consideration of the envisioned contract. Perfection takes place when the offer is unqualifiedly and absolutely accepted. This is illustrated in this case of the spouses Jaime and Charo.
Jaime and Charo were the registered owners of 5 parcels of land which they mortgaged with a development bank (PDB) as security for the loan of P1,200,000. Unfortunately the couple failed to pay the loan, so PDB foreclosed the mortgage on May 16, 1984 and auctioned off the properties where with it emerged as the highest bidder with a bid price of P1,341,850.
On July 18, 1985 or after the one year redemption period expired without the couple having redeemed the foreclosed properties, Jaime sent a letter to PDB proposing to buy back the 5 lots at a purchase price based on the redemption value plus accrued interest at the prevailing rate up to the date of the sales contract. Jaime also proposed to pay a downpayment of P300,000 and requested that he be given until August 31, 1985 to pay the same. For the balance he asked for a long term payment scheme based on his brother’s annual savings of $30,000 from his job at Saudi Arabia. Jaime informed PDB that his brother agreed to finance the arrangement.
In reply, PDB wrote that it has agreed to Jaime’s request to buy back the properties and pay P300,000 down-payment up to August 31, 1985. In the same letter PDB through its Vice President asked Jaime to see the head of the Acquired Assets Unit for the detail of the transaction and necessary documentation.
On August 20, 1985, Jaime wrote another letter requesting that the down-payment of P300,000 be taken from the excess of the redemption payment made by RRRC, a corporation belonging to Charo’s parents whose properties were also foreclosed by PDB but which was able to redeem the same and even paid in excess of P300,000.
Since the P300,000 down-payment was sourced from a different transaction involving a different and a corporate debtor, PDB requested Jaime to submit RRRC’s board resolution authorizing him to apply the excess amount of P300,000 in its redemption payment as down payment for their foreclosed properties.
In the meantime titles were already consolidated and issued in PDB’s name. Then on January 21, 1987, PDB wrote Jaime that it could not proceed with the proposed repurchase of their foreclosed properties for his non-compliance with its request for submission of the board resolution. While Jaime claimed that he had already delivered the said resolution, PDB did not receive it. Thus on February 19, 1987, PDB sent a notice to Jaime and Charo demanding that they surrender possession of their properties for their failure to exercise their right of redemption.
This prompted the couple to sue PDB for Specific Performance with Injunction. They alleged that a perfected contract of sale was already made between them and PDB whereby they would repurchase the subject properties for P1,800,000 with a down payment of P300,000. Were they correct?
No. Jaime’s letter-offer and the PDB’s reply merely show an agreement on the down payment of P300,000. They are completely silent as to how the succeeding installment payments shall be made. Before a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established since the agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price.
Jaime also failed to specify a definite amount of purchase price for the repurchase of the subject properties. His letter merely stated that it will be based on the redemption value plus accrued interest at the prevailing rate up to the date of the sales contract. A contract is perfected when there is a meeting of the minds upon the thing which is the object of the contract and upon the price. Here there was no meeting of the minds on the price, expressly or impliedly, directly or indirectly.
The offer was not also clear as regards the exact number of years that will comprise the long term payment scheme. Such absence all the more adds to the indefiniteness of their offer. This lack of a definite offer could not therefore serve as basis of the couple’s claim that the repurchase of their foreclosed properties has been perfected.
On the other hand, PDB did not likewise fully accept the offer. Its reply stated that there is a need to negotiate on the other details of the transaction before the sale may be formalized. There was lack of agreement on the mode and period of payment of the purchase price. The acceptance is not absolute and unqualified as required by law.
Finally, Jaime’s letter dated August 20, 1985 requesting that the downpayment be instead taken from the excess payments made by RRRC in redeeming its own foreclosed properties constitutes a new offer which was again conditionally accepted by PDB when it required the submission of a board resolution. This is another clear indication that no definite agreement has yet been reached at that point.
Hence there is no perfected contract as there is no concurrence of the parties’ wills as manifested by the acceptance by one of the offer made by the other (Navarra et. al. vs. Planters Development Bank et. al. G.R. 172674, July 12, 2007)
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E-mail at: jcson@pldtdsl.net