formation of contract of sale; formalities; form important for validity; sale of realty through an agent CITY LITE v CA
10 February 2000 Bellosillo, ponente Bellosillo, ponente petition for review on certiorari of a Court of Appeals decision SHORT VERSION:
Only when the agent has written authority to sell realty can the sale be valid. FACTS:
FP Holdings and Realty Corp (respondent) was the registered owner of a 71754 sq m-parcel of land along E Rodriguez Ave, QC known as the “Violago Property” or the “San Lorenzo Ruiz Commercial Center”. o It was offered for sale to the general public through a sales brochure: A parcel of land including buildings and and other improvements improvements thereon thereon located along along E. Rodriguez Avenue, Quezon City, with a total lot area of 71,754 square meters - 9,192 square meters in front, 23,332 square meters in the middle, and 39,230 square meters at the back. But the total area for sale excludes 5,000 square meters covering the existing chapel and adjoining areas which will be donated to the Archdiocese of Manila thus reducing the total saleable area to 66,754 square meters. Asking price was P6,250.00/square meter with terms of payment negotiable. Broker's commission was 2.0% of selling price, price, net of withholding withholding taxes and other other charges. As advertised, advertised, contact contact person was Meldin Meldin Al G. Roy, Roy, Metro Drug Inc., with address address at 5/F Metro House, House, 345 Sen. Gil Puyat Avenue, Makati City . o The 9192 sq m- front portion was the subject of litigation. litigation. Meldin Roy (respondent) sent a sales brochure, location plane and copy of the TCT to Atty Gelacio Mamaril, a lawyer and licensed real estate broker. Mamaril passed on the documents to City-Lite’s Executive VP Antonio Teng and Legal Counsel Atty Victor Villanueva. o City-Lite conveyed its interest to purchase ½ of the front portion in a letter send to Metro Drug (Attn: Meldin Roy). Roy also informed City-Lite’s representative that it would take time to subdivide the lot and FP Holdings wasn’t receptive to a ½ purchase. o Atty Mamaril sent a letter to Metro Drug expressing City-Lite’s desire to buy the entire front lot so long as the P6250/sq m asking price was reduced and that payment be made in installments. Roy made a counter offer in another letter: “1. The price shall beP6,250.00/square meter or a total of P57,450,000.00; 2. The above purchase price shall be paid to t o the owner as follows: (a) P15.0 Million downpayment; (b) balance payable within six (6) months from date of downpayment without interest. “ City-Lite and Mamaril met with Roy to consummate the transaction; Roy agreed to sell the property provided City-Lite submit its acceptance in writing to the terms and conditions in Roy’s letter. Later that afternoon Mamaril and Teng conveyed their formal acceptance of the terms. However, FP Holdings refused to execute the corresponding corresponding deed of sale and registered an adverse claim to the title of the th e property with the Register of Deeds of QC, annotated in the memorandum of encumbrance in the TCT. FP Holdings filed a petition for the cancellation of the adverse claim against City-Lite with the RTC QC; City-Lite caused the annotation of the first notice of lis of lis pendens which was recorded in the title of the property. o RTC dismissed FP Holdings’ petition; FP Holdings caused a resurvey and segregation of the property, asking and was granted separate titles from the RD QC. City-Lite instituted a complaint against FP Holdings for specific performance and damages and caused the annotation of the second notice of lis of lis pendens. pendens.
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o o o
The property was transferred to Viewmaster Construc Construction tion Co (respondent) for which a TCT was issued; the lis pendens was carried over to the new title. The RTC rendered a decision in favor of City-Lite ordering FP Holdings to execute a deed of sale of the property and ordering the RD QC to cancel Viewmaster’s TCT. The CA reversed an set aside the RTC judgment.
ISSUE:
was there a contract of sale perfected between City-Lite and FP Holdings through its agent Meldin Roy of Metro Drug?
REASONING:
Art. 1874 of the Civil Code provided: "When
the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void." void."
Roy was FP Holdings’ authorized agent to sell the property, but the NCC required that the authority be in writing. The absence of authority to sell could be determined from the written memo issued by FP Holdings’ president requesting Metro Drug’s assistance in finding buyers. The memo stated: o
We will appreciate Metro Drug's assistance in referring to us buyers for the property. Please proceed to hold preliminary negotiations with interested buyers and endorse formal offers to us for our final evaluation and appraisal.
o
o
RULING:
This meant that Roy and/or Metro Drug were only to assist FP Holdings, and FP Holdings were the only ones who could make the final evaluation, appraisal and acceptance of any transaction. transaction. Roy and/or Metro Drug were only a contact person with no authority to conclude a sale of the property. Consequently, the sale should be null and void, and not produce any legal effect to transfer the property from FP Holdings to any interested party.
appealed decision affirmed
