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SALES – Introduction; Definitions; Contract to Sell.

United Muslim and Christian Urban Poor Association, Inc. (UMCUPAI) Full FACTS:
v. BRYC-V Development Corporation (BRYC-V) and Sea Foods  Petitioners United Muslim and Christian Urban Poor Association,
Corporation (SFC) Inc. (hereinafter referred to as “UMCUPAI”) wanted to buy a Lot No.
300, owned by respondents Sea Foods Corporation.
G.R No 179653, 31 July 2009, Nachura, J.  UMCUPAI and Sea Foods Corp. negotiated the sale.
o UMCPUAI expressed its intention to buy the lot using the
Summary of the Facts: proceeds from a pending loan.
Petitioners UMCUPAI assailed the sale of a lot by Respondents SFC to  To this end, the parties executed a Letter of intent to Sell (by Sea
BRYC-V, claiming that a previously executed Letter of Intent to Buy and Sell Foods Corp), and a Letter of Intent to Purchase (by UMCUPAI).
between UMCUPAI and SFC for the sale of the lot constituted a conditional  However, UMCUPAI was not able to secure the loan, so the sale did
reciprocal contract of sale, with the suspensive condition of the full payment not push through.
of the purchase price. The Supreme Court, however, ruled that such letter of  Subsequently, Lot 300 was subdivided into 3 separate lots with 3
intent did not constitute a reciprocal contract to sell, nor did it constitute a separate titles (Lot 300-A, Lot 300-B, and Lot 300-C).
conditional contract of sale. The court defined the concepts of a contract to o Lot 300-A was purchased by the petitioners
sell and a contract of sale, and they illustrated that such letter did not fall o Lot 300-B was donated to the Government as right of way
within the definitions of either.  UMCUPAI was not able to purchase Lot 300-C for lack of funds.
o Sea Foods Corp. gave petitioners another 3 months to try
Provisions applicable: and purchase the land.
Art. 1458.  Upon the lapse of the 3 month period without any sale, Sea Foods
By the contract of sale one of the contracting parties obligates himself to Corp sold to Respondent BRYC-V Development Corp (hereinafter
transfer the ownership and to deliver a determinate thing, and the other to referred to as “BRYC-V”).
pay therefor a price certain in money or its equivalent.
 UMCUPAI filed a petition to annul the sale of Lot 300-C
o It argued that the previously-executed Letter of Intent to Sell
A contract of sale may be absolute or conditional. (1445a)
granted them a “prior, better, and preferred” right to the lot,
compared to that of BRYC-V.
Art. 1479.
 Respondents filed separate answers to the petition
A promise to buy and sell a determinate thing for a price certain is
o Sea Foods Corp:
reciprocally demandable.
 The letter of intent is not, and cannot be considered
as, a subsisting Contract of Sale; it was merely
An accepted unilateral promise to buy or to sell a determinate thing for a
drawn up so that UMCPUAI could secure its
price certain is binding upon the promissor if the promise is supported by a
pending loan.
consideration distinct from the price. (1451a)
 Furthermore, the sale was subject to the condition
(the payment of the acquisition price), which
Relevant info on the topic:
UMCUPAI did not comply with.
Definition of a “Contract to Sell:”
o BRYC-V:
A contract to sell may thus be defined as a bilateral contract whereby the
 the Complaint did not state a cause of action since
prospective seller, while expressly reserving the ownership of the subject
UMCUPAI unequivocally recognized its ownership
property despite delivery thereof to the prospective buyer, binds himself to
when it sent a letter to BRYC-V asking them to re-
sell the said property exclusively to the prospective buyer upon fulfillment of
sell the lot to them.
the condition agreed upon, that is, full payment of the purchase price
 RTC dismissed the petition; CA affirmed the RTC.
SALES – Introduction; Definitions; Contract to Sell.
ISSUES/RATIOS:  All that the document shows is “Intent to Buy and Sell.”
W/N The Letter of Intent to Sell and Letter of Intent to Purchase Lot 300 o As the Lower Courts opined, a letter of intent merely shows
constitute a bilateral reciprocal contract as contemplated in Art. 1479(1) of an intention to accomplish a goal; in this case, it merely
the Civil Code? NO showed the intent of the parties to enter into a contract of
 Petitioners seem to have confused Art. 1479, CC (Bilateral Contract sale.
to Sell) with Art. 1458, CC (Contract of Sale) o As an obligation is a “juridical necessity to give, to do, or not
 Coronel v. CA explains the difference between a conditional to do,” one cannot enter into a contract regarding what one
contract of sale and a bilateral contract to sell: proposes to do.
o Contract to Sell:
 Bilateral contract, where the prospective seller, Ruling: Petition DISMISSED, Lower Courts AFFIRMED
while expressly reserving the ownership of the
subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said
property exclusively to the prospective buyer upon
the condition;
o A contract to sell May not be considered a conditional
contract of sale
 Ownership will not automatically transfer to the
buyer upon fulfillment of the suspensive condition.
 An absolute contract of sale still needs to be
executed by the parties.
o Whereas in a conditional contract of sale, upon fulfillment of
the suspensive condition (payment of the purchase price),
ownership automatically transfers to the prospective buyer.
 In this case, the parties executed a “Letter of Intent”, which is
neither a contract to sell nor a contract of sale.
o Pertinent portions of the document show that the letter was
merely executed to help UMCUPAI secure a loan to buy the
Lot. Pertinent portions include:
 WHEREAS, it appears that UMCUPAI will ultimately
apply with the Home Mortgage and Finance
Corporation for a loan to pay the acquisition price of
said land;
 WHEREAS, as one of the steps required by the
government authorities to initiate proceedings is to
receive a formal manifestation of Intent to Sell from
[SFC].
o It did not say in the document that SFC relinquishes its title
over the subject property, subject to the condition of
complete payment.
o There was also no mention that SFC bound itself to sell the
land exclusively to UMCUPAI.

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