Toyota Shaw, Inc. v. Court of Appeals, G.R. No. 116650, May 23, 1995
Summary: Bernardo, a sales representative of Toyota, assured Luna Sosa that a Toyota Lite Ace would be ready for pick up on June 17, 1989. Bernardo signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc.". The Agreement provided that a 100k DP(downpayment) will be paid.
For the balance, the parties executed a document which provided that the balance would be paid by credit financing through B.A. Finance.
The next day, Luna delivered the DP of P100k.
On June 17 1989, no Toyota Lite Ace was delivered. Luna asked that his DP be refunded, and Toyota did so on the very same day.
Soon, thereafter, Luna Sosa filed with the RTC Marinduque a complaint against Toyota for damages. Toyota argued that there was no sale entered into between it and Sosa; that Bernardo had no authority to sign the Agreement for and in its behalf. Bernardo signed the Agreement in his personal capacity.
RTC ruled in favor of Sosa. It ruled that the "AGREEMENTS BETWEEN MR. SOSA AND POPONG BERNARDO," was a valid perfected contract of sale between Sosa and Toyota which bound Toyota to deliver the vehicle to Sosa.
CA affirmed in toto the RTC decision. Toyota, hence, filed a petition for review on certiorari before the SC.
SC reversed the decision of the CA. It ruled that there was no contract of sale between the parties since what was agreed upon was only the payment of a 100k DP. No definite agreement on the manner of payment of the price was perfected as BA Finance disapproved Sosa's credit financing application.
SC stressed that a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. Likewise, the SC noted, that no specific reference to a sale of a vehicle was made in the Agreement.
Lastly, the Court pointed out that the Agreement shows the absence of a meeting of minds between Toyota and Sosa. For one thing, Luna Sosa did not even sign it. For another, Sosa was well aware from its title, that he was not dealing with Toyota but with Bernardo and that the latter did not misrepresent that he had the authority to sell any Toyota vehicle. He knew that Bernardo was only a sales representative of Toyota and hence a mere agent of the latter. It was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to know the extent of Bernardo's authority as an agent in respect of contracts to sell Toyota's vehicles. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.
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Ponente: DAVIDE, JR., J.
Facts:
June 14 1989, Luna Sosa and his son, Gilbert, went to the Toyota office at Shaw Boulevard. There they met Popong Bernardo, a sales representative of Toyota.
Luna emphasized to Bernardo that he needed the Toyota Lite Ace not later than June 17 1989 because he, his family, and a balikbayan guest would use it on June 18 1989 to go to Marinduque, his home province, where he would celebrate his birthday. He added that if he does not arrive in his hometown with the new car, he would become a "laughing stock."
Bernardo assured Luna that a unit would be ready for pick up at 10 am on June 17, 1989. Bernardo then signed the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." which stated the ff:
1. all
necessary documents will be submitted to TOYOTA SHAW, INC. (POPONG BERNARDO) a
week after, upon arrival of Mr. Sosa from the Province (Marinduque) where the
unit will be used on the 19th of June.
2. the
downpayment of P100k will be paid by Mr. Sosa on June 15, 1989.
3. the TOYOTA SHAW, INC. LITE ACE yellow, will be pick-up [sic] and released by TOYOTA SHAW, INC. on the 17th of June at 10 a.m.
It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B.A. Finance.
The next day, Luna and Gilbert went to Toyota to deliver the DP of P100k. They met Bernardo who then accomplished a printed Vehicle Sales Proposal (VSP) No. 928, on which Gilbert signed under the subheading CONFORME.
June 17 1989, no Toyota Lite Ace was delivered. Bernardo told Sosa that the car could not be delivered because "nasulot ang unit ng ibang malakas."
Toyota contended, however, that the Lite Ace was not delivered to Sosa because of the disapproval by B.A. Finance of the credit financing application of Sosa. It further alleged that a particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Luna the option to purchase the unit by paying the full purchase price in cash but Luna refused.
Luna asked that his DP be refunded. Toyota did so on the very same day by issuing a Far East Bank check for the full amount of P100k.
Soon, thereafter, Sosa filed with the RTC Marinduque a complaint against Toyota for damages under A19 & A21 of the NCC in the total amount of P1,230,000.
Toyota's Answer:
-
no sale was entered into between it and Sosa
-
Bernardo had no authority to sign the Agreement for and in its behalf. Bernardo
signed the Agreement in his personal capacity.
-
Also, the VSP did not state date of delivery; Sosa had not completed the
documents required by the financing company, and as a matter of policy, the
vehicle could not and would not be released prior to full compliance with
financing requirements, submission of all documents, and execution of the sales
agreement/invoice;
- the P100k was returned to and received by Sosa
Feb 18 1992, RTC Marinduque ruled in favor of Sosa.
-
the "AGREEMENTS BETWEEN MR. SOSA AND POPONG BERNARDO," was a valid
perfected contract of sale between Sosa and Toyota which bound Toyota to
deliver the vehicle to Sosa
- Toyota acted in bad faith in selling to another the unit already reserved for him.
CA affirmed in toto the decision. Hence this petition for review on certiorari.
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Issue: WON the "AGREEMENTS BETWEEN MR. SOSA AND POPONG BERNARDO," was a valid perfected contract of sale between Sosa and Toyota.
Held:
No.
Pertinent Laws: A1458 and A1475.
(1) No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefor a price certain appears in the Agreement. The provision on the DP of P100k made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP executed the following day confirmed. But nothing was mentioned about the full purchase price and the manner the installments were to be paid.
SC had already ruled that a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property.
(2) Moreover, the Agreement shows the absence of a meeting of minds between Toyota and Sosa. For one thing, Luna Sosa did not even sign it. For another, Sosa was well aware from its title, written in bold letters, viz.,
AGREEMENTS BETWEEN MR. SOSA & POPONG BERNARDO OF TOYOTA SHAW, INC.
At the most, the Agreement may be considered as part of the initial phase of the generation or negotiation stage of a contract of sale.
How about the VSP? (not important)
The VSP, on the other hand, was the second phase of the generation or negotiation stage. It must be emphasized that thereunder, the DP of the purchase price was P53,148.00 while the balance to be paid on installment should be financed by B.A. Finance Corporation.
In a sale on installment basis which is financed by a financing company, three parties are involved: the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment, the seller who assigns the notes or discounts them with a financing company, and the financing company which is subrogated in the place of the seller, as the creditor of the installment buyer. Since B.A. Finance did not approve Sosa's application, there was then no meeting of minds on the sale on installment basis.
We are inclined to believe Toyota's version that B.A. Finance disapproved Sosa's application for which reason it suggested to Luna Sosa that he pay the full purchase price. When the latter refused, Toyota canceled the VSP and returned to him his P100k. Sosa's version that the VSP was canceled because, according to Bernardo, the vehicle was delivered to another who was "mas malakas" does not inspire belief and was obviously a delayed afterthought.
In paragraph 7 of his complaint, Luna Sosa solemnly states:
The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury.
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DECISION: The petition was GRANTED. The decision of the CA as well as that of the RTC Marinduque were REVERSED and SET ASIDE and the complaint is DISMISSED.
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