• Sans a binding contract, demand repayment of deposit

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    Persida Acosta

    Persida Acosta

    Dear PAO,
    We bought a piece of land and since we do not have sufficient funds, we decided to apply for a PAG-IBIG housing loan to pay for it. The seller did not approve of our application with the PAG-IBIG. We already made our deposit and since he disapproved of our getting a loan with PAG-IBIG and that there was a discrepancy in the total area of the property, we decided to demand for a refund of our deposit, but the seller refused. What are our remedies?
    Concerned Citizen

    Dear Concerned Citizen,
    The law defines the contract of sale as a contract where one party (seller or vendor) obligates himself to transfer the ownership of and to deliver a determinate thing, while the other party (buyer or vendee) obligates himself to pay for the said thing at a given period in money or its equivalent. The essential elements of the contract of sale (those without which there can be no valid sale) are as follows:

    1. Consent or meeting of minds (consent to transfer ownership in exchange of price).

    2. Determinate subject matter.

    3. Cause or consideration (price certain in money or its equivalent).

    In your query, it is not very clear whether you and your seller had already executed a Deed of Sale. Thus, your remedies will then be dependent on the absence or presence of a Deed of Sale. If there is a Contract of Sale, you may file a case for the rescission of the same pursuant to Article 1380 of the NCC. Rescission, as defined by Scaevola, is the process designated to render inefficacious a contract validly entered into and normally binding, by reason of external conditions, causing an economic prejudice to a party or to his creditors. Thus, any party to a contract can seek the intercession of the courts to declare as ineffective an existing valid contract on account of certain conditions that caused damage to the other party. It is a remedy afforded to a party when one of the parties to the contract acted in bad faith and thus cause damage to the other party.  In your case, the act of the seller in altering the size of the property subject matter of the contract is tantamount to bad faith. The alteration would thus cause damage to you.

    Both parties in a rescinded contract have the obligation to return what each had received by virtue of a rescissible contract.

    However, in the absence of a contract of sale, the remedy would be different.  If there was no perfected contract of sale, there is nothing to rescind because there was no valid agreement. Negotiation is different from the perfection of the contract. You mentioned that the seller disapproved of the fact that the payments to the subject parcel of land will be taken from the proceeds of your loan applied with the PAG-IBIG.

    It is therefore clear that there was yet no meeting of minds between you and the seller. The seller’s disapproval of the cause or consideration is a manifest unwillingness to transfer ownership on his part.

    In the absence of a perfected contract of sale, the seller has no right to demand from you a deposit. Accordingly, the seller cannot as a matter of right withhold from you whatever deposit you had paid him in the course of your negotiation. If the seller will refuse to refund your money, a collection suit against your seller is an appropriate remedy.

    We hope that we were able to address your concern. Please be reminded that the above legal opinion is solely based on our appreciation of the problem that you have stated. The opinion may vary when other facts are included or elaborated.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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