G.R. No. 128579 - City of Cebu vs. Heirs of Rubi

Candido Rubi, a long-time lessee from Cebu, leased a parcel of land identified as Lot 1141 of the Banilad Estate, covering 33,188 square meters, evidenced by Transfer Certificate of Title No. RT-5513.
Under the lease agreement, the premises were for residential and agricultural purposes only; Rubi introduced various improvements, including a residential building constructed in 1961 where he and his family resided.

In 1964, the Province of Cebu donated 210 lots to the City of Cebu, including Lot 1141, which was then subject to a bidding process pursuant to City Council Ordinance No. 522.
During the public auction on August 5, 1965, the highest bid of P104,556.00 was submitted by another bidder. Rubi, asserting his status as actual occupant and his contractual right, indicated his intention to equal the highest bid by depositing the required earnest and down payment.
Soon after, on August 6, 1965, a writ of preliminary injunction in Civil Case 238-BC was issued to enjoin the sale of the donated lots, including Lot 1141.
By July 15, 1974, through a compromise in Civil Case No. 238-BC, Lot 1141 was adjudicated to the City; meanwhile, the lot had been subdivided into Lots 1141-A, 1141-B, 1141-C, and 1141-D, with the latter being the subject of the present dispute.

On January 30, 1976, Rubi paid a cash bond of P4,500.00 for Lot 1141-D, and on February 3, 1976, he formally informed the City Mayor that he was exercising his option to equal the highest bid price, specifying rates of P10.00 and P8.00 per square meter for different portions of the lot.
The bidding committee, through subsequent communications – including the committee’s award on March 2, 1976 and letters from Mayor Eulogio Borres – confirmed the award and instructed Rubi to pay the necessary amount for the transfer.
An appraisal was made by the City Appraisal Committee on April 7, 1976, and further confirmation was effected through correspondence demanding payment within fifteen days, indicating clear intent to execute a sale for a cash price.

Rubi acknowledged his inability to meet the stipulated payment deadline in a letter dated May 11, 1976, requesting an extension due to “circumstances beyond his control.”
The City, however, did not respond affirmatively to that request. An internal legal review and correspondence by the City Attorney in 1981 suggested no legal impediment to Rubi’s position even though full payment had not been effected.
Despite these communications, no deed of sale was formalized, and title remained with the City. Rubi continued to reside on the lot, having made only the partial payment initially and subsequently tendering the remaining amount in 1989 when he filed his complaint for specific performance.

On May 17, 1989, Rubi’s heirs (respondents) filed a complaint for specific performance, tendering the balance of the purchase price and consigning the amount with the Court.
The trial court dismissed the complaint, holding that the contract was merely an agreement to sell subject to the positive suspensive condition of full payment, and that no perfected contract of sale had accrued.
The Court of Appeals reversed the dismissal by ruling that a perfected contract of sale had indeed been formed, noting that the parties’ conduct and the exchange of written communications satisfied the necessary elements.
The petitioner, City of Cebu, sought review, raising issues on the perfection of the contract, the effect of non-payment, extension of time, and the question of legal interest.

Whether a perfected contract of sale existed between the City of Cebu and Candido Rubi despite the absence of a formal deed of sale.

Was the meeting of the minds on the lot’s subject matter, price, and terms sufficient for perfection of the sale?
Does the exchange of written correspondence and partial performance satisfy the statute of frauds?

Whether Rubi’s failure to pay the balance of the purchase price within the stipulated fifteen-day period automatically rescinded the contract.

Does Article 1592 of the Civil Code, governing rescission in the sale of immovable property, mandate automatic rescission upon failure to pay?
In the absence of a judicial or notarial demand for rescission, can the contract still be enforced?

Whether an implied extension of time to pay should be recognized in light of Rubi’s request and the City’s subsequent silence.

Did the City’s inaction on Rubi’s request for an extension imply consent or denial?
How does equitable consideration factor into the granting of an extension and the subsequent enforcement of the contract?

Whether the respondents’ delay (laches) in tendering the full payment and enforcing their rights precluded the impartation of relief such as specific performance.

To what extent did the conduct of both parties contribute to the delay in the performance of the contract?
Does the equitable doctrine of laches bar the demand for specific performance in this context?

Whether it is proper for the petitioner to claim the award of legal interest on the purchase price from the time of the award until its eventual consignation in 1989, given that the issue was raised for the first time on appeal.