Facts:

• Traders Royal Bank (petitioner) and Cuison Lumber Co., Inc. (CLCI) along with Josefa Jerodias Vda. de Cuison (respondents) are involved in the case.
• CLCI, through its then-president Roman Cuison Sr., obtained two loans from the bank on July 14, 1978, and December 9, 1979, secured by a real estate mortgage.
• CLCI failed to repay the loans, leading to the bank's extrajudicial foreclosure of the mortgage.
• The bank emerged as the highest bidder at the public auction on August 1, 1985.
• CLCI expressed its intention to restructure its loan obligations and repurchase the foreclosed property through written communications.
• On July 31, 1986, Mrs. Cuison proposed terms for repurchase, including paying interest and additional expenses, followed by a 20% payment of the bid price, and amortizing the remaining balance over five years.
• CLCI made partial payments, which the bank considered as "earnest money."
• On October 20, 1986, the bank's board of directors laid down specific terms for the repurchase, which CLCI failed to meet.
• Despite extensions, CLCI's payments were insufficient, and the bank eventually considered the repurchase agreement canceled.
• CLCI and Mrs. Cuison filed a complaint for breach of contract, specific performance, damages, and attorney's fees.
• The Regional Trial Court (RTC) ruled in favor of the respondents, ordering the bank to execute a Contract to Sell and pay damages.
• The Court of Appeals (CA) affirmed the RTC's decision with modifications, deleting the awards for moral and exemplary damages, and attorney's fees.
• The bank filed a petition for review on certiorari with the Supreme Court.

Issue:

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Ruling:

• The Supreme Court granted the petition, reversing and setting aside the CA's decision.
• The complaint for breach of contract, specific performance, damages, and attorney's fees filed by CLCI and Mrs. Cuison was dismissed.
• The respondents were ordered to vacate the subject property and restore its possession to the petitioner bank.
• The respondents were ordered to pay reasonable compensation for the use and occupation of the property, amounting to P1,123,500.00, less the amount of P485,000.00 representing deposits paid by the respondents.
• They wer...(Unlock)

Ratio:

• The Supreme Court found that while there was a perfected contract between the parties, the bank effectively canceled the contract due to CLCI's failure to comply with its obligations under the agreement.
• A contract is perfected by mere consent, which requires a meeting of the offer and acceptance upon the thing and the caus...continue reading