DIMAAMPAO, J.:
WHEREFORE, IN VIEW OF THE FOREGOING, this Court hereby RESOLVES:In ruling for respondents, the trial court held thus:SO ORDERED.[20]
- To DECLARE [respondents] as co-owners of a portion of Lot No. 526-B (now designated as Lot 2-B-2 of the subdivision plan, Psd-072217-025026, being a portion of Lot 2-B, Psd-07-018769), having an area of 300 sq. meters, situated in the Barrio of Capitol, City of Cebu, which was included in the Deed of Sale in favor of intervenor Philippine Veterans Bank;
- To DECLARE [respondents] as co-owners of Lot No. 1072 of the Banilad Estate, covered by Transfer Certificate of Title No. 30937;
- To ORDER [petitioner] to EXECUTE a Deed of Absolute Sale involving the two (2) lots in issue;
- To ORDER intervenor Philippine Veterans Bank to PAY [respondents] the Current Fair Market Value of that portion of Lot 526-B (now designated as Lot 2-B-2 of the subdivision plan, Psd-072217-025026. being a portion of Lot 2-B, Psd-07-018769), having an area of 300 sq. meters, situated in the Barrio of Capitol, City of Cebu, which was included in the Deed of Sale in favor of intervenor Philippine Veterans Bank;
- To ORDER [petitioner] and Intervenor Philippine Veterans Bank to PAY, jointly and severally, to [respondents], moral and exemplary damages in the amounts of [PHP] 100,000.00 and [PHP] 50,000.00 respectively; and
- To ORDER [petitioner] and Intervenor Philippine Veterans Baruc, to REIMBURSE, jointly and severally, the [respondents] the contingent attorney's fee in the amount equivalent to 35% of the present value of the 300 sq. meters portion of lot 526-B and Lot No. 1072.
Three significant incidents should be taken into consideration:Crestfallen, petitioner sought recourse[22] before the CA which, however, affirmed the decision of the trial court in toto.[23] The CA emphasized that the contracts of sale were already perfected during the public auction conducted on June 26, 1965 and August 5, 1965, which were both before the issuance of the writ of preliminary injunction on August 6, 1965.[24] Furthermore, according to the Court of Appeals, even if the notarized contracts of sale were only formalized and executed after the service of the writ, this fact did not affect the validity and enforceability of said contracts.[25]x x x x
- The sale by public auction of the two (2) lots:
- Lot No. 526-B on June 26, 1965
- Lot No. 1072 on August 5, 1965- The execution of the Contract of Purchase and Sale:
- The Issuance by the Court of the Writ of Preliminary Injunction which was served on the City of Cebu on August 9 and 10, 1965 per Sheriff's Return dated August 11, 1965.
Article 1315 of the Civil Code provides that a contract is perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Going over the incidents above-cited, the delivery of the pertinent data and the execution of the Contract of Purchase and Sale, are no longer part of the 'perfection' stage, but is rather part of the 'consummation' stage as the parties – [respondents] and the City of Cebu – were already in the process of fulfilling or performing the terms agreed upon in the contract. Perfection of the contract was during the sale by public auction when [respondents] bidded and won the same, agreeing to the purchase price, the specific lot bidded upon, and the terms in purchasing the same. The Contract of Purchase and Sale, therefore, executed by and between [respondents] and the City of Cebu is valid.
As borne by the records, [respondents] made the initial downpayment for the two (2) lots, purchased through public auction, which was 20% of the total price of the auctioned lots. Additional deposit in the amount of [PHP] 3,645.00 was, likewise, made by [respondents] for Lot No. 526-B-portion. An 'Additional' Deposit to equal the highest bidder was also, made by [respondents], in the amount of [PHP] 3,946.13, for Lot No. 1072. Still, another 'Additional Deposit' in the amount of [PHP] 11,838.39, was paid by plaintiffs for Lot No. 1072. [Respondents], then initiated to pay the remaining balance of the purchase price of the two (2) lots. These were turned down by the Provincial Treasurer at that time, as there was still a pending action relating to the donation made by the [petitioner] to the City of Cebu. However, these payments were, later, accepted by the [petitioner]. This, in fact, was acknowledged by [the] then Governor Pablo Garcia, who in his letter to the Sangguniang Panlalawigan narrated that, 'After Civil Case No. 238-BC was amicably settled. Galvez paid in full the balance of the two (2) lots (a portion of Lot No. 2-B-2 and Lot No. 1072) to the [petitioner], which the province accepted.'
After a thorough analysis, this Court is of the opinion that [respondents] have already paid in full their obligation on the two (2) lots in issue. While it is true that [respondents] failed to pay its obligations as scheduled, this cannot be held against the plaintiffs, as suspension of payments was due to the fact that there was a pending case regarding the donation made by the [petitioner] to the City of Cebu.[21]
THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DECLARING THAT THERE WAS A VALID CONTRACT ENTERED INTO BY THE [RESPONDENTS] AND THE CITY OF CEBU DESPITE THE RECEIPT OF THE LATTER OF THE WRIT OF PRELIMINARY INJUNCTION TWO (2) DAYS BEFORE THE EXECUTION OF THE CONTRACT OF PURCHASE AND SALE FOR THE LOTS SUBJECT TO THIS CASE.Petitioner intransigently proffers the theory that the contracts of sale were not valid since their formalization was only completed after the service of the writ of preliminary injunction, which specifically prohibited such conveyances. Petitioner thus postulates that the City of Cebu had no right to sell the subject realties to the respondents by virtue of the injunctive writ.
THE TRIAL COURT ERRED IN DECLARING THAT THERE INDEED WAS FULL PAYMENT OF THE PURCHASE PRICE OF THE LOTS SUBJECT TO THIS CASE DESPITE FAILURE OF THE [RESPONDENTS] TO PROVE THAT THERE WAS VALID TENDER AND CONSIGNATION OF PAYMENT.
THE TRIAL COURT ERRED IN DECLARING THAT THE [RESPONDENTS] WERE NOT GUILTY OF LACHES.
THE TRIAL COURT ERRED IN AWARDING THE [RESPONDENTS] MORAL AND EXEMPLARY DAMAGES.
THE TRIAL COURT ERRED IN ORDERING THE [PETITIONER] TO REIMBURSE PLAINTIFF'S (sic) THE CONTINGENT ATTORNEY'S FEES EQUIVALENT TO 35% OF THE PRESENT VALUE OF THE 300 SQ. METERS PORTION OF LOT 526-B AND LOT NO. 1072.[29]
A sale by public auction is perfected "when the auctioneer announces its perfection by the fall of the hammer or in other customary manner." It does not matter that Morales merely matched the bid of the highest bidder at the said auction sale. The contract of sale was nevertheless perfected as to Morales, since she merely stepped into the shoes of the highest bidder.As adumbrated, a contract of sale is a consensual contract and is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. In this case, it was during the two public auctions before the issuance of the injunctive writ, that respondents were already awarded their respective bids for the subject realties under the following terms: a portion of Lot No. 526-B with an area of 300 square meters for [PHP] 24,300.00, with a down payment of [PHP] 4,860.00 and the balance of [PHP] 19,440.00 to be paid in equal installments within a period of three years and Lot No. 1072 for [PHP] 78,893.84, with a down payment of [PHP] 15,778.77 and the balance of [PHP] 63,115.07 to be paid in equal installments within a period of three years. Clearly, with the perfection of the two contracts of sale coupled with respondents' down payments, their right over the subject realties is beyond doubt.
Consequently, there was a meeting of minds between the City of Cebu and Morales as to the lot sold and its price, such that each party could reciprocally demand performance of the contract from the other. A contract of sale is a consensual contract and is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment the parties may reciprocally demand performance subject to the provisions of the law governing the form of contracts. The elements of a valid contract of sale under Article 1458 of the Civil Code are: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent. All these elements were present in the transaction between the City of Cebu and Morales.
There is no merit in petitioner's assertion that there was no perfected contract of sale because no "Contract of Purchase and Sale" was ever executed by the parties. As previously stated, a contract of sale is a consensual contract that is perfected upon a meeting of minds as to the object of the contract and its price. Subject to the provisions of the Statute of Frauds, a formal document is not necessary for the sale transaction to acquire binding effect. For as long as the essential elements of a contract of sale are proved to exist in a given transaction, the contract is deemed perfected regardless of the absence of a formal deed evidencing the same.
Similarly, petitioner erroneously contends that the failure of Morales to pay the balance of the purchase price is evidence that there was really no contract of sale over the lot between Morales and the City of Cebu. On the contrary, the fact that there was an agreed price for the lot proves that a contract of sale was indeed perfected between the parties. Failure to pay the balance of the purchase price did not render the sale inexistent or invalid, but merely gave rise to a right in favor of the vendor to either demand specific performance or rescission of the contract of sale. It did not abolish the contract of sale or result in its automatic invalidation.
As correctly found by the appellate court, the contract of sale between the City of Cebu and Morales was also partially consummated. The latter had paid the deposit and downpayment for the lot in accordance with the terms of the bid award. She first occupied the property as a lessee in 1961, built a house thereon and was continuously in possession of the lot as its owner until her death in 1969. Respondents on the other hand, who are all surviving heirs of Morales, likewise occupied the property during the latter's lifetime and continue to reside on the property to this day.
The stages of a contract of sale are as follows: (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and (3) consummation, which begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof. In this case, respondents' predecessor had undoubtedly commenced performing her obligation by making a down payment on the purchase price. Unfortunately, however, she was not able to complete the payments due to legal complications between petitioner and the city.
Thus, the City of Cebu could no longer dispose of the lot in question when it was included as among those returned to petitioner pursuant to the compromise agreement in Civil Case No. 238-BC. The City of Cebu had sold the property to Morales even though there remained a balance on the purchase price and a formal contract of sale had yet to be executed. Incidentally, the failure of respondents to pay the balance on the purchase price and the non-execution of a formal agreement was sufficiently explained by the fact that the trial court, in Civil Case No. 238-BC, issued a writ of preliminary injunction enjoining the city from further disposing the donated lots. According to respondents, there was confusion as to the circumstances of payment considering that both the city and petitioner had refused to accept payment by virtue of the injunction. It appears that the parties simply mistook Lot 646-A-3 as among those not yet sold by the city.
The City of Cebu was no longer the owner of Lot 646-A-3 when it ceded the same to petitioner under the compromise agreement in Civil Case No. 238-BC. At that time, the city merely retained rights as an unpaid seller but had effectively transferred ownership of the lot to Morales. As successor-in-interest of the city, petitioner could only acquire rights that its predecessor had over the lot. These rights include the right to seek rescission or fulfillment of the terms of the contract and the right to damages in either case.[31] [Emphasis supplied]
[T]he Court concurs with the RTC that the full payment has already been given by the [respondents] and later accepted by the petitioner. The record discloses that the downpayments for the two lots were duly paid by the [respondents] to the City after the auction sales, as evidenced by the official receipts. These deposits, together with the downpayments given by the other purchasers of the public auction, were then turned over by the City to the [petitioner] in accordance with their Compromise Agreement as approved by the CFI. As for the balance of the purchase price for the two lots, the Court sustains the RTC's finding that there was valid tender of payment of the balance, and that the [respondents] did, in fact, fully pay such balance as shown by: their 1 August 1994 letter addressed to the [petitioner]; the [petitioner's] receipt of the same including the attached UCPB checks; and the remaining check stubs. What is even more significant is that [the] then Cebu Governor Pablo Garcia, voluntarily acknowledged the [petitioner's] acceptance of the full payment made by the [respondents], as shown in his 12 July 2001 letter addressed to the Sangguniang Panlalawigan. Although the Governor later changed his position and questioned the [respondents'] claims in his letter dated 23 November 2001, the fact remains that the [petitioner] accepted the check payments as full satisfaction of the purchase price and acknowledged that in writing. Considering that the Province duly accepted the [respondents'] checks as payment of the balance for the disputed lots and in fact publicly acknowledged their receipt of the same. the RTC correctly ruled that the [respondents'] have fully satisfied their obligation as buyers so as to warrant their rightful title over the disputed lots.[33]Even assuming arguendo that petitioner was not paid, such nonpayment is immaterial and has no effect on the validity of the contracts of sale. At the risk of being repetitive, the Court stresses once more that a contract of sale is a consensual contract — what is required is the meeting of the minds on the object and the price for its perfection and validity.[34]