Absolute and Conditional Sales (Case)

1) Peoples Homesite and House Corp v CA (1981)

Petitioner: Peoples Homesite & Housing Corp
Respondents: CA and Sps Mendoza Ponente: Aquino,
J.
Doctrine: There is no perfected contract of sale if
suspensive conditions do not happen.
Short version: A subdivision plan was made, and the
lot was awarded to the spouses. The contract had two
suspensive conditions (it would be subject to
approval of two higher bodies). However, the higher
body disapproved the contract. Another subdivision
plan was made, the land awarded to the spouses was
reduced and this time, the higher body approved the
contract. However, since the spouses did not pay the
down payment, the land was withdrawn and sold to
others. Spouses now want the land back. SC says
they cannot have the land back because the
suspensive conditions on the first plan did not happen
and on the second plan, there was no meeting of
minds.
February 18, 1960
(Peoples Homesite Plan #1):
The Peoples Homesite board of directors passed
Resolution. No. 513 which is a subdivision
consolidation plan; stating:
- (suspensive condition) That Lot No. 4
(about 4,800 sq mtrs) shall be subject to the
approval of the Quezon City Council
- That the lot is awarded to Sps. Mendoza at
P21.00/square meter
- (suspensive condition) That the award shall
be subject to the approval of the Valuation
Committee and higher authorities
In 1961, the City Council disapproved the
proposed consolidation subdivision plan. Peoples
Homesite advised the spouses of the disapproval by
mail.
In 1964, there was Peoples Homesite Plan #2.
- Peoples Homesite submitted a revised plan
which also included Lot No. 4 but with
reduced area (about 2,600sq mtrs)
This was approved by the City Council However,
the Mendoza spouses never paid down payment
In April 1965, the Peoples Homesite board of
directors passed a Resolution recalling all awards of
lots to persons who failed to pay deposit or down
payment for the lots awarded to them
- Hence, the Mendoza spouses lot was
recalled and not awarded to them

In October 1965, another resolution was passed

withdrawing the tentative award of Lot No. 4 to the
spouses and awarding the lot to 5 other people.
- The new awardees were required to deposit
20% of the total selling prince which all of
them did.
In 1966, the Mendoza Spouses wanted to cancel
the award to the 5 people and requested for a
reconsideration of the withdrawal of the award in
their favor.
TC dismissed complaint of Mendoza sps. (Held
that withdrawal was valid)
CA reversed.
Issue: Was there a perfected sale of Lot 4, with the
approved or reduced area (plan #2), to the Mendoza
spouses?
Held: No.
Ratio:
There was no perfected contract of sale. It was
subject to a suspensive condition which did not
happen, and they did not manifest in writing their
interest of accepting the award after Plan #2 was
approved.
NCC1475 provides that a contract of sale is
perfected at the moment of the meeting of the minds.
An exception to the rule is provided by NCC 1475
which states: where by virtue of the will of the parties
or the law, the sale is held under a suspensive
condition, and in which the sale is not perfected until
the fulfillment of the condition
Also, NCC1181 states that in conditional
obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired,
shall depend upon the happening of the event which
constitutes the condition. In this case: There was a
suspensive condition in the contract:
- It is subject to the approval by the city
council of the proposed consolidation
subdivision plan, and
- Approval of the award by the valuation
committee and higher authorities of
Peoples Homesite
The suspensive condition was not met.
The Mendozas were advised of the disapproval but
did not manifest in writing their acceptance of the
award of Lot 4 to show their interest in purchasing it
even after Plan #2 (reduced area)
So, there was no meeting of minds on the purchase
of Lot 4 with an area of 2,600 sq mtrs at P21 a square
meter. Decision reversed.