PNB VS CA

FACTS: The Philippine National Bank owns a parcel of land located in Sta. Cruz, Manila. A
portion of that land is reserved for road widening while the remaining portion was intended to be
purchased by one Lapaz Ngo. Ngo made an offer to PNB and the latter accepted the offer but
imposed certain conditions before the sale could take place, among of which are that Lapaz
should take responsibility for ejecting the squatters occupying the land at her own expense, and
upon her failure to pay as deposit 20% of the purchase price (978,000 php ---20% of 5.3 M), her
100,000 php deposit shall be forfeited. Lapaz undertook the ejectment of the squatters but failed
to pay the additional deposit of 20%, hence, the sale never materialized.

However, when Lapaz requested for the revival of the same contract, the bank granted it subject
to almost the same conditions with the exception that the purchase price, and consequently, the
additional deposit required have been reduced and with the inclusion that upon her failure to pay
the additional deposit, the bank may sell the property to other interested parties and that the
previous deposit of 100,000php shall not be considered as part of the purchase price for the
reason that Lapaz failed to consummate the previously approved sale. Lapaz then deposited
200,000php as down payment. The condition that Lapaz should eject the unwanted occupants
was again imposed by PNB but this time, Lapaz refused and requested that this condition be
stricken out in the contract since under the first contract, she already took the liberty of ejecting
squatters. She also held that she would only pay the additional deposit of 20% if PNB would get
rid of the occupants of the land, despite repeated demands from the bank for her to pay the
additional deposit. Instead of heeding to Lapaz’s request, the bank rescinded the contract and
decided to sell the property through a sealed bidding.

Lapaz filed an action for specific performance with damages against PNB.

ISSUES: a. Whether or not there was a perfected contract of sale between PNB and Lapaz
Ngo.
b. Whether of not PNB has the right to rescind the contract by reason of Lapaz’s
failure to pay the additional deposit.

HELD: a. Negative. What was entered into between Mrs. Ngo and the bank is not one of a
contract of sale but that of a contract to sell. In a contract to sell, ownership is retained by the
seller and is not to pass to the buyer until full payment of the price or fulfillment of some other
conditions. In this case, although the buyer had fulfilled some of the conditions required, she
failed to comply with the other conditions. The court also finds that the letter-agreements between
the parties reveal their intention of making the sale dependent on Lapaz Ngo’s compliance with
certain other conditions. Moreover, no less revealing is the fact that the letter-agreements are not
deeds of sale, there under no title having been passed from the bank to Mrs. Ngo.

b. Affirmative. It is clear that Mrs. Ngo and the bank were negotiating for terms mutually
acceptable to them. Unfortunately, a mutually acceptable set of terms was not reached between
them and the bank exercised its right under the second letter-agreement to cancel or rescind the
agreement entered into between them.