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UNITED MUSLIM v. VS.BRYC-V DEVELOPMENT CORPORATION

FACTS:

Respondent Sea Foods Corporation (SFC) is the registered owner of Lot No. 300 in Zamboanga City. Petitioner United Muslim and Christian Urban Poor Association, Inc. (UMCUPAI) initiated negotiations with SFC to purchase the property using the proceeds of its loan application. The parties executed a Letter of Intent to Sell by SFC and Letter of Intent to Purchase by UMCUPAI, stating the intention to sell and buy the property. However, UMCUPAI failed to secure the loan and proposed the subdivision of the property. Lot No. 300 was subdivided into three parts and UMCUPAI purchased Lot No. 300-A. UMCUPAI failed to buy Lot No. 300-C and SFC sold it to respondent BRYC-V Development Corporation (BRYC). UMCUPAI filed a complaint seeking to annul the sale of Lot No. 300-C, alleging violation of the Letter of Intent. The RTC dismissed the complaint and the CA affirmed the ruling. UMCUPAI filed a petition for review, arguing that the Letter of Intent is a bilateral reciprocal contract within the meaning of Article 1479 of the Civil Code.

ISSUES:

  1. Whether the Letter of Intent is a bilateral contract to sell or a unilateral promise to sell.

  2. Whether the Letter of Intent is binding on the parties.

  3. Whether the Letter of Intent to Buy and Sell is a binding contract between the parties.

  4. Whether the Letter of Intent can be considered an option contract.

  5. Whether the Letter of Intent can be considered a bilateral reciprocal contract to sell and to buy.

  6. Whether or not the accused is entitled to the defense of insanity.

  7. Whether or not the CA erred in ruling that the accused was not entitled to the privilege mitigating circumstance of passion and obfuscation.

RULING:

  1. The Letter of Intent is neither a bilateral contract to sell nor a unilateral promise to sell. It was executed to accommodate UMCUPAI and facilitate its loan application with NHMF.

  2. The Letter of Intent is not binding on the parties as it does not contain the essential elements of a contract to sell or a promise to sell.

  3. The Letter of Intent to Buy and Sell is not a binding contract between the parties. It is merely a declaration of intention to sell and buy the subject property, subject to certain conditions. It does not contain a binding promise or commitment to sell and buy, and it does not give rise to an obligation to give, do, or not to do something. Therefore, it does not meet the requirements of a contract under Article 1156 of the Civil Code.

  4. The Letter of Intent cannot be considered an option contract because it does not contain a binding promise to sell and buy the property, and it is not supported by a distinct consideration other than the price of the land. It does not grant UMCUPAI the exclusive right to buy the property within a fixed period.

  5. The Letter of Intent cannot be considered a bilateral reciprocal contract to sell and to buy under Article 1479 of the Civil Code because it does not contain a promise to sell and buy the property. It is merely a declaration of intention to buy the land, subject to certain conditions.

  6. The accused is not entitled to the defense of insanity. The defense of insanity must be proved beyond reasonable doubt, and the accused failed to present sufficient evidence to support his claim of insanity.

  7. The CA did not err in ruling that the accused was not entitled to the privilege mitigating circumstance of passion and obfuscation. The accused failed to prove the presence of all the elements required for the application of this mitigating circumstance.

PRINCIPLES:

  • A contract to sell is a bilateral contract whereby the prospective seller reserves ownership of the property and binds himself to sell the property exclusively to the prospective buyer upon fulfillment of a condition, such as full payment of the purchase price.

  • A unilateral promise to sell or buy is binding on the promissor if it is supported by a consideration distinct from the price.

  • In a conditional contract of sale, upon fulfillment of the suspensive condition, the sale becomes absolute and ownership is automatically transferred to the buyer.

  • In cases where the subject property is sold by the owner to a third person, a contract to sell does not result in double sale, unlike a conditional contract of sale. The third person buyer cannot be considered a buyer in bad faith.

  • A Letter of Intent is a written statement expressing the intention of the parties to enter into a formal agreement or transaction. It is not a binding contract in itself.

  • An intention is a mere idea, goal, or plan and cannot give rise to an obligation. A mere intention to sell or buy does not create a binding contract.

  • To constitute an option contract, there must be a binding promise to sell or buy, and it must be supported by a distinct consideration. The option must grant the exclusive right to buy within a fixed period.

  • A bilateral reciprocal contract to sell and to buy must contain a promise to sell and to buy the property. It must be reciprocally demandable.

  • The defense of insanity must be proved beyond reasonable doubt.

  • The privilege mitigating circumstance of passion and obfuscation can only be appreciated if all the elements required by law are established.