G.R. No. 118509 December 1, 1995
Limketkai Sons Milling, Inc., petitioner, vs. Court of Appeals, Bank of the Philippine Islands and National Book Store, respondents.

FACTS

Petitioner Limketkai Sons Milling, Inc. negotiated through a broker to purchase a parcel of land from respondent Bank of the Philippine Islands (BPI), which held the property in trust. On July 11, 1988, petitioner’s representatives met with BPI officials Vice-President Merlin Albano and Asst. Vice-President Rolando Aromin. After negotiations, they agreed on a cash sale at P1,000 per square meter. Petitioner then inquired about paying in installments. The bank officials indicated such a request could be submitted for approval but clarified that if disapproved, the original cash term would prevail. Petitioner immediately submitted a written offer proposing installment payment.
BPI later refused petitioner’s subsequent tender of full cash payment, claiming the authority to sell had been withdrawn. BPI then sold the property to respondent National Book Store (NBS) during the pendency of the suit for specific performance filed by petitioner. The trial court ruled a perfected contract existed and nullified the sale to NBS. The Court of Appeals reversed, holding no contract was perfected.

ISSUE

Was there a perfected contract of sale between petitioner and BPI?

RULING

Yes, a contract of sale was perfected. The Supreme Court reinstated the trial court’s decision, except for the award of P10 million in damages. The legal logic is grounded in the consensual nature of a contract of sale under Article 1475 of the Civil Code, which is perfected at the moment there is a meeting of the minds upon the thing and the price.
The Court found that during the July 11, 1988 meeting, the parties had already agreed on the essential elements: the definite parcel of land and the price of P1,000 per square meter payable in cash. Petitioner’s subsequent written request for installment payment was a mere proposal to modify the mode of payment, a collateral term that did not negate the prior agreement on the object and price. The bank officials’ conditional assent to consider the installment proposal, with the explicit understanding that the cash term would control if the proposal was rejected, demonstrated that the core agreement was already binding. The perfection occurred at the point of mutual agreement on the object and price. Therefore, BPI’s refusal to accept the full payment and its subsequent sale to NBS, which was done in bad faith during litigation, constituted a breach of the perfected contract.