Toyota Shaw, Inc. v. Court of Appeals

G.R. №11650, May 23, 1995; Davide, Jr., J.

nikko ✨
nikko ✨
Jul 23, 2017 · 3 min read

Facts: Private respondent Luna Sosa wanted to purchase a Toyota Lite Ace and had difficulty finding a dealer selling an available unit. He was able to contact petitioner Toyota Shaw, Inc. and was told they had an available unit. Popong Bernardo, a sales representative of petitioner company, entered into an Agreement with private respondent in consideration of the latter’s request to have the unit ready not later than 17 June 1898 which he will use to go to his home province for his birthday celebration. It was also agreed upon that the balance will be paid by credit financing through B.A. Finance. The next day, a Vehicle Sales Proposal (VSP) was accomplished by Bernardo in lieu of the delivery of the P 100,000 downpayment containing the aforementioned manner of payment and was approved by the sales supervisor. On 17 June 1898, the private vehicle was not delivered as agreed upon because, as Bernardo told private respondent, “nasulot ang unit ng ibang malakas.” Private respondent then asked for the refund of his P 100,000 downpayment which the petitioner did so on the same day by issuing a check then signed by the former with reservation as to future claims for damages. Thereafter, petitioner refused to accede to the demands contained in private respondent’s two letters, prompting the latter to file a complaint. The trial court resolved in favor of the latter and was subsequently affirmed by public respondent Court of Appeals in toto hence the instant case.

Issue: WON the Agreement, executed and signed by petitioner’s sales representative, a perfected contract of sale, binding upon the petitioner?

Held: The Court resolved in the negative. This Court 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.

There was 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 downpayment 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.

Moreover, there was absence of a meeting of minds between Toyota and Sosa. Knowing that Bernardo was only a sales representative, hence a mere agent of petitioner, it was incumbent upon Sosa to act with ordinary prudence and reasonable diligence to know the extent of Bernardo’s authority 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.

Accordingly, in a sale on installment basis which is financed by a financing company, the financing company 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.

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.

nikko ✨

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there are things that you can and cannot hold back. this profile contains most of the things i want to hold back but can't.

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