Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=50703:gr-170115-2008&amp;catid=1502&amp;Itemid=566
Timestamp: 2019-04-18 18:23:21+00:00

Document:
G.R. No. 170115 - PROVINCE OF CEBU v. HEIRS OF RUFINA MORALES, ET AL.
PROVINCE OF CEBU, Petitioner, v. HEIRS OF RUFINA MORALES, NAMELY: FELOMINA V. PANOPIO, NENITA VILLANUEVA, ERLINDA V. ADRIANO and CATALINA V. QUESADA, Respondents.
This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals dated March 29, 2005 in CA-G.R. CV No. 53632, which affirmed in toto the Decision2 of the Regional Trial Court of Cebu City, Branch 6, in Civil Case No. CEB-11140 for specific performance and reconveyance of property. Also assailed is the Resolution3 dated August 31, 2005 denying the motion for reconsideration.
On September 27, 1961, petitioner Province of Cebu leased4 in favor of Rufina Morales a 210-square meter lot which formed part of Lot No. 646-A of the Banilad Estate. Subsequently or sometime in 1964, petitioner donated several parcels of land to the City of Cebu. Among those donated was Lot No. 646-A which the City of Cebu divided into sub-lots. The area occupied by Morales was thereafter denominated as Lot No. 646-A-3, for which Transfer Certificate of Title (TCT) No. 308835 was issued in favor of the City of Cebu.
Morales died on February 20, 1969 during the pendency of Civil Case No. 238-BC.10 Apart from the deposit and down payment, she was not able to make any other payments on the balance of the purchase price for the lot.
WHEREFORE, judgment is rendered in favor of the plaintiffs and against the defendant Province of Cebu, hereby directing the latter to convey Lot 646-A-3 to the plaintiffs as heirs of Rufina Morales, and in this connection, to execute the necessary deed in favor of said plaintiffs.
The appellate court correctly ruled that petitioner, as successor-in-interest of the City of Cebu, is bound to respect the contract of sale entered into by the latter pertaining to Lot No. 646-A-3. The City of Cebu was the owner of the lot when it awarded the same to respondents' predecessor-in-interest, Morales, who later became its owner before the same was erroneously returned to petitioner under the compromise judgment. The award is tantamount to a perfected contract of sale between Morales and the City of Cebu, while partial payment of the purchase price and actual occupation of the property by Morales and respondents effectively transferred ownership of the lot to the latter. This is true notwithstanding the failure of Morales and respondents to pay the balance of the purchase price.
Petitioner can no longer assail the award of the lot to Morales on the ground that she had no right to match the highest bid during the public auction. Whether Morales, as actual occupant and/or lessee of the lot, was qualified and had the right to match the highest bid is a foregone matter that could have been questioned when the award was made. When the City of Cebu awarded the lot to Morales, it is assumed that she met all qualifications to match the highest bid. The subject lot was auctioned in 1965 or more than four decades ago and was never questioned. Thus, it is safe to assume, as the appellate court did, that all requirements for a valid public auction sale were complied with.
A sale by public auction is perfected "when the auctioneer announces its perfection by the fall of the hammer or in other customary manner".21 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.
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.22 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.23 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.24 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.25 It did not abolish the contract of sale or result in its automatic invalidation.
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.27 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.28 It appears that the parties simply mistook Lot 646-A-3 as among those not yet sold by the city.
In this regard, the records show that respondent Quesada wrote to then Cebu Governor Eduardo R. Gullas on March 11, 1983, asking for the formal conveyance of Lot 646-A-3 pursuant to the award and sale earlier made by the City of Cebu. On October 10, 1986, she again wrote to Governor Osmundo G. Rama reiterating her previous request. This means that petitioner had known, at least as far back as 1983, that the city sold the lot to respondents' predecessor and that the latter had paid the deposit and the required down payment. Despite this knowledge, however, petitioner did not avail of any rightful recourse to resolve the matter.
Thus, respondents could still tender payment of the full purchase price as no demand for rescission had been made upon them, either judicially or through notarial act. While it is true that it took a long time for respondents to bring suit for specific performance and consign the balance of the purchase price, it is equally true that petitioner or its predecessor did not take any action to have the contract of sale rescinded. Article 1592 allows the vendee to pay as long as no demand for rescission has been made.30 The consignation of the balance of the purchase price before the trial court thus operated as full payment, which resulted in the extinguishment of respondents' obligation under the contract of sale.
Finally, petitioner cannot raise the issue of prescription and laches at this stage of the proceedings. Contrary to petitioner's assignment of errors, the appellate court made no findings on the issue because petitioner never raised the matter of prescription and laches either before the trial court or Court of Appeals. It is basic that defenses and issues not raised below cannot be considered on appeal.31 Thus, petitioner cannot plead the matter for the first time before this Court.
WHEREFORE, in view of the foregoing, the petition is hereby DENIED and the decision and resolution of the Court of Appeals in CA-G.R. CV No. 53632 are AFFIRMED.
5 RTC Records, pp. 8-9.
21 CIVIL CODE, Art. 1476(2).
23 City of Cebu v. Heirs of Candido Rubi, 366 Phil. 70, 78 (1999).
Art. 1483. Subject to the provisions of the Statute of Frauds and of any other applicable statute, a contract of sale may be made in writing, or by word of mouth, or partly in writing and partly by word of mouth, or may be inferred from the conduct of the parties.
25 Buenaventura v. Court of Appeals, 461 Phil. 761, 772 (2003).
26 TSN, August 12, 1994, pp. 11 and 36.
27 San Miguel Properties Phils., Inc. v. Spouses Huang, 391 Phil. 636, 645 (2000).
28 TSN, August 12, 1994, p. 32.
The injured party may choose between fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
30 See note 23 at 83.
31 Ramos v. Sarao, G.R. No. 149756, February 11, 2005, 451 SCRA 103, 122.

References: v. 
 v. 
 V. 
 V. 
 V. 
 Art. 1476
 v. 

Art. 1483
 v. 
 v. 
 v.