TOYOTA SHAW INC V CA G.R. No. L-116650, May 23, 1995

FACTS Luna L. Sosa and her son, wanted to purchase a Toyota Lite Ace with Toyota Shaw which they will use in their provincial visit. There they met Popong Bernardo, a sales representative. Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989. Bernardo assured Sosa that a unit would be ready for pick up on the specified date. An agreement between Bernardo and the respondent was signed. It was also agreed upon by the parties that the balance of the purchase price would be paid by B.A. Finance, a credit financing company. 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. However come June 17, 1989, the Lite Ace car was not delivered because it was sold to another customer. Toyota contends, however, it was not delivered 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 him but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but the latter refused 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. The trial court found that there was a valid perfected contract of sale between Sosa and Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed the said decision. 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.