AINZA VS.

PADUA

This is a case involving family members. In April 1987, Ainza and her
daughter Eugenia orally agreed that Ainza pay P100k in exchange for
half of the portion of Eugenia’s undivided conjugal property (a lot
located in QC). No Deed of Absolute Sale was executed. There was
physical delivery of the land through Concepcion’s other daughter
(Natividad) acting as atty-in-fact. Concepcion thereafter allowed
Natividad and her husband occupy the purchased portion of the land.
In 1994, Antonio caused the division of the lot into three (two were
occupied by the spouses), necessarily displacing Natividad. He also
had each subdivision titled. Antonio requested Natividad to vacate the
premises. Antonio averred that his wife only admitted of selling 1/3 of
the property to Concepcion for which a receipt was issued signed by
Concepcion. The RTC ruled in favor of Concepcion. The CA reversed
the RTC ruling. CA explained that the property is conjugal hence the
sale should have been with Antonio’s consent.
ISSUE: Whether or not the contract of sale between Ainza and
Eugenia is valid.
HELD: Yes it is valid until annulled (voidable). There was a perfected
contract of sale between Eugenia and Concepcion. The records show
that Eugenia offered to sell aportion of the property to Concepcion,
who accepted the offer and agreed to pay P100,000.00 as
consideration. The contract of sale was consummated when both
parties fully complied with their respective obligations. Eugenia
delivered the property to Concepcion, who in turn, paid Eugenia the
price of P100,000.00, as evidenced by the receipt. Since the land was
undivided when it was sold, Concepcion is entitled to have half of it.
Antonio cannot, however, attack the validity of the sale b/n his wife
and his mom-in-law, either under the Family Code or the Old Civil
Code due to prescription. The sale came to his knowledge in 1987. He
only filed the case in 1999. His right prescribed in 1993 (under the FC
[5 years]) and 1997 (under OCC [10 years]).

MCCULLOUGH VS BERGER
DICHOSO VS ROXAS

FACTS: Roxas sold to Dichoso and Hernandez a parcel of

unregistered coconut land, subject to the condition that the
vendor could repurchase the land within 5 years from the
date of sale. Roxas received from Dichoso several sums of
money as initial or advance payments, with the agreement that
Roxas would sell the same property, by absolute sale, to Dichoso.
Out of their remaining balance, they would use P850 to repurchase
the property from Borja and Alanguilan within the period
stipulated. Dichosoinformed Borja of their readiness to
repurchase and sent Roxas a check. Roxas returned the
check with the request that they indorsed it to Borja and
Alanguilan when they make the repurchase. Despite the
repeated demands and representations, Roxas and Borja had
deliberately fails to execute the corresponding deed
of absolute sale and deed of resale.

ISSUE:Whether or not there was a double sale.

HELD:No. The contract between the petitioners and Roxas was a

mere promise to sell because Roxas merely promised to execute a
deed of absolute sale upon Dichoso’s completion of payment. On
the date that Roxas could possibly sell or convey in relation to
the property in question was her right to repurchase the same
from Borja. The private document executed between Roxas and
Dichoso can be considered as an assignment by Roxas to
Dischoso of her right to repurchase which Roxas only had
knowledge thereof when Dichoso attempted to make the
repurchase. Such being its condition, it could not possibly give
rise to the case of one and the same property having been
sold to two different purchasers. The sale in favor of Borja was
of the property itself, while the one in favor of Dichoso, if not a
mere promise to assign, was at most an actual assignment of the
right to repurchase the same PROPERTY. Art. 1544, par.3 of the
CC do not apply.

LUZON BROKERAGE VS. MARITIME BUILDING

Luzon Brokerage Co. v. Maritime Building Co. (1972)

Plaintiff-appellee: Luzon Brokerage Co.
Defendants: Maritime Building Co and Myers Building Co
Ponente: Reyes, J.B.L., J.

Doctrine: The distinction between contracts of sale and contract to sell

with reserved title has been recognized by this Court in repeated
decisions upholding the power of promisors under contracts to sell in
case of failure of the other party to complete payment, to
extrajudicially terminate the operation of the contract, refuse
conveyance and retain the sums or installments already received,
where such rights are expressly provided for, as in this case.

Short version: Myers corp sold land to Maritime. In the agreement,

they agreed on an installment plan and that if Maritime missed a
payment, the contract will be annulled and the payments already
made will be forfeited. Maritime failed to pay so Myers annulled the
contract and did not return payments. SC says Myers can do this
because under contracts to sell, promisors, in case of failure of the
other party to complete payment, can extrajudicially terminate the
contract, refuse conveyance, and retain installments already received,
where such rights are provided.
In Manila, Myers owned 3 parcels of land w/ improvements. Myers
then entered into a contract called a “Deed of Conditional Sale” with
Maritime Building.

Myers sold the land for P1million. They agreed on the manner of
payment (installment, initial payment upon execution of contract,
interest rate) In the contract it was stipulated that in case of failure of
buyer to pay any of the installments, the contract will be annulled at
the option of the seller and all payments made by the buyer is
forfeited.

Later on, the stipulated installment of P10k with 5%interest was

amended to the P5k with 5.5% per annum. Maritime paid the monthly
installments but failed to pay the monthly installment of March.
VP of Maritime wrote to Pres of Myers requesting for a moratorium on
the monthly payment of the installments because the company was
undergoing financial problems. Myers refused.

For the months of March, April, and May, Maritime failed to pay and
did not heed the demand of Myers.
Myers wrote Maritime cancelling the “Deed of Conditional Sale” Myers
demanded return of possession of properties

Held Maritime liable for use and occupation amounting to P10k per
month

In the meantime, Luzon Brokerage was leasing the property from

Maritime. Myers demanded from Luzon the payment of monthly
rentals of P10k. Myers also demanded surrender of property.While
actions and crossclaims between Myers and Maritime were
happening, the contract between Maritime and Luzon was extended
for 4more years. Turns out, Maritime’s suspension of its payments to
Myers corp arose from a previous event: An award of backwages
made by the Court of Industrial Relations in favor of Luzon Labor
Union (employees employed by Luzon).
FH Myers was a major stockholder of Luzon Brokerage. FH Myers
promised to indemnify Schedler (who controlled Maritime)
whenShedler purchased FH Myers’s stock in Luzon Brokerage
company. (This indemnification is for the award of backwages by the
CIR)

Schedler claims that after FH Myers estates closed, he was notified

that the indemnity on the Labor Union case will not be honored
anymore. And so, Schedler advised Myers corp that Maritime is
withholding payments to Myers corp in order to offset the liability when
Myersheirs failed to honor the indemnity agreement.

TC ruled Maritime in breach of contract.

Issue: Has there been a breach of contract?

Can Myers extrajudicially terminate the contract?

Held: Yes.

Ratio: Failure to pay monthly installments constitute a breach of

contract. Default was not made in good faith. The letter to Myers corp
means that the non-payment of installments was deliberately made to
coerce Myers crp into answering for an alleged promise of the dead
FH Myers.Whatever obligation FH Myers had assumed is not an
obligation of Myers corp. No proof that board of Myers corp agreed to
assumeresponsibility to debts of FH Myers and heirs.

Schaedler allowed the estate proceedings of FH Myers to close

without providing liability.By the balance (of payment) in the Deed of
Conditional Sale, Maritime was attempting to burden the Myers corp
with an uncollectible debt,since enforcement against FH Myers estate
was already barred.Maritime acted in bad faith.

Maritime’s contract with Myers is not the ordinary sale contemplated in

NCC 1592 (transferring ownership simultaneously with delivery).
The distinction between contracts of sale and contract to sell with
reserved title has been recognized by this Court in repeated decisions
upholding the power of promisors under contracts to sell in case of
failure of the other party to complete payment, to extrajudicially
terminate the operation of the contract, refuse conveyance and retain
the sums or installments already received, where such rights are
expressly provided for, as in this case. Decision affirmed

PORTIC VS. CRISTOBAL

in 1968, spouses Portic acquired a parcel of land with a 3 door apartment from
Sps. Alcantaraeven though they’re aware that the land was mortgaged to the
SSS. Portic defaulted in payingSSS. The Portics then executed a contract with
Cristobal and the latter agreed to buy the saidproperty for P200k. Cristobal’s
down payment was P45k and she also agreed to pay SSS. Thecontract
between them states:That while the balance of P155,000.00 has not yet been
fully paid the FIRST PARTYOWNERS shall retain the ownership of the above
described parcel of land together withits improvements but the SECOND
PARTY BUYER shall have the right to collect themonthly rentals due on the
first door (13-A) of the said apartment; (payment is due 22May 1985, if
Cristobal will not be able to pay Portic will reimburse)A transfer
certificate was executed in favor of Cristobal. Cristobal was not able to
pay on thedue date. A suit ensued to lift the cloud on the title.

ISSUE:Who is the rightful owner of the parcel of land? Or Is there contract of

sale?

HELD:The Portics insofar as there was no contract of sale. What transpired

between theparties was a contract to sell. The provision of the contract
characterizes the agreementbetween the parties as a contract to sell, not
a contract of sale. Ownership is retained by thevendors, the Portics; it will
not be passed to the vendee, the Cristobals, until the full payment
of the purchase price. Such payment is a positive suspensive
condition, and failure to comply withit is not a breach of obligation; it is
merely an event that prevents the effectivity of the obligationof
the vendor to convey the title. In short, until thefull price is paid,
the vendor retainsownership.The mere issuance of the Certificate of
Title in favor of Cristobal did not vest ownership in her.Neither did it
validate the alleged absolute purchase of the lot. Registration does not
vest, butmerely serves as evidence of, title. Our land registration laws
do not give the holders any better title than that which they actually have
prior to registration.Under Article 1544 of the Civil Code, mere
registration is not enough to acquire a new title.Good faith must concur.
Clearly, Cristobal has not yet fully paid the purchase price. Hence, aslong as it
remains unpaid, she cannot feign good faith. She is also precluded from
assertingownership against the Portics. The CA’s finding that she had a
valid title to the property mustbe set aside.

HEIRS OF MASCUNANA VS. CA

Facts: Masunana bought a parcel of land from the Wuthrich siblings. Part of
which Mascunana, he later sold to Sumilhig. The contract price is 4,690 with
3,690 as down payment. Their agreement says: That the balance of ONE
THOUSAND PESOS (P1,000.00) shall be paid by the VENDEE unto the
VENDOR as soon as the above-portions of Lot 124 shall have been surveyed
in the name of the VENDEE and all papers pertinent and necessary to the
issuance of a separate Certificate of Title in the name of the VENDEE shall
have been prepared.
Sumilhig later sold the same lot to Layumas. Years after, Layumas wrote to
the heirs of Mascunana(since Mascunana died already) offering to pay the
1,000 balance of the purchase price of the property. The addressee, however,
refused to receive the mail matter. Heirs Mascunana then filed a complaint
for recovery of possession against Barte( an individual whom Layumas
allowed to stay on the subject property).

Issue: WON the contract of alienation of the subject lot in favor of Sumilhig
was a contract to sell or a contract of sale
Held:
In this case, there was a meeting of the minds between the vendor and the
vendee, when the vendor undertook to deliver and transfer ownership over
the property covered by the deed of absolute sale to the vendee for the price
of P4,690.00 of which P3,690.00 was paid by the vendee to the vendor as
down payment. The
vendor undertook to have the property sold, surveyed and segregated and a
separate title therefor issued in the name of the vendee, upon which the latter
would be obliged to pay the balance of P1,000.00. There was no stipulation
in the deed that the title to the property remained with the vendor, or that the
right to unilaterally resolve the contract upon the buyer’s failure to pay within
a fixed period was given to such vendor. Patently, the contract executed by
the parties is a deed of sale and not a contract to sell.

Applying these principles to this case, it cannot be gainsaid that the contract
of sale between the parties is absolute, not conditional. There is no
reservation of ownership nor a stipulation providing for a unilateral rescission
by either party. In fact, the sale was consummated upon the delivery of the
lot to respondent. Thus,
Art. 1477 provides that the ownership of the thing sold shall be transferred to
the vendee upon the actual or constructive delivery thereof.
The condition in the deed that the balance of P1,000.00 shall be paid to the
vendor by the vendee as soon as the property sold shall have been surveyed
in the name of the vendee and all papers pertinent and necessary to the
issuance of a separate certificate of title in the name of the vendee shall have
been prepared is not a condition which prevented the efficacy of the contract
of sale. It merely provides the manner by which the total purchase price of
the property is to be paid. The condition did not prevent the contract from
being in full force and effect:
The stipulation that the “payment of the full consideration based on a survey
shall be due and payable in five (5) years from the execution of a formal deed
of sale” is not a condition which affects the efficacy of the contract of sale. It
merely provides the manner by which the full consideration is to be
computed and the time within which the same is to be paid. But it does not
affect in any manner the effectivity of the contract. …

In a contract to sell, ownership is retained by a seller and is not to be

transferred to the vendee until full payment of the price. Such payment is a
positive suspensive condition, the failure of which is not a breach of contract
but simply an event that prevented the obligation from acquiring binding
force.

It bears stressing that in a contract of sale, the non-payment of the price is a

resolutory condition which extinguishes the transaction that, for a time,
existed and discharges the obligation created under the transaction.
A seller cannot unilaterally and extrajudicially rescind a contract of sale
unless there is an express stipulation authorizing it. In such case, the vendor
may file an action for specific performance or judicial rescission.

Article 1169 of the New Civil Code provides that in reciprocal obligations,
neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him; from the
moment one of the parties fulfills his obligation, delay by the other begins.
In this case, the vendor (Jesus Mascuñana) failed to comply with his
obligation of segregating Lot No. 124-B and the issuance of a Torrens title
over the property in favor of the vendee, or the latter’s successors-in-interest,
the respondents herein. Worse, petitioner Jose Mascuñana was able to secure
title over the property under the name of his deceased father.

URSAL VS. CA
In January 1985, WinifredaUrsal and spouses Jesus and
CristitaMoneset entered into a “Contract to Sell Lot & House”. The
amount agreed upon was P130,000.00. Ursal is to pay P50k as down
payment and will continue to pay P3k monthly starting the next month
until the balance is paid off. After 6 months, Ursal stopped paying the
Monesets for the latter failed to give her the transfer of certificate title.
In November 1985, the Monesets executed an absolute deed of sale
with one Dr. Canora. In September 1986, the Monesets mortgaged
the same property to the Rural Bank of Larena for P100k. The
Monesets failed to pay the P100k hence the bank filed for foreclosure.
Trial ensued and the RTC ruled in favor of Ursal. The trial court ruled
that there was fraud on the part of the Monesets for executing multiple
sales contracts. That the bank is not liable for fraud but preference to
redeem should be given to Ursal. The Monesets are ordered to
reimburse Ursal plus to pay damages and fees. Ursal was not
satisfied as she believed that the bank was also at fault.
ISSUE: Whether or not the Contract to Sell vested ownership in Ursal.
HELD: No. There should be no special preference granted to Ursal in
redeeming the property. What she had with the Monesets was
contract to sell in which case ownership was not transferred to her due
the suspensive condition of full payment. Further, the property was
sold to other properties already.
A contract to sell is a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property
despite delivery thereof to the prospective buyer, binds himself to sell
the said property exclusively to the prospective buyer upon fulfillment
of the condition agreed upon, that is, full payment of the purchase
price.
In such contract, the prospective seller expressly reserves the transfer
of title to the prospective buyer, until the happening of an event, which
in this case is the full payment of the purchase price. What the seller
agrees or obligates himself to do is to fulfill his promise to sell the
subject property when the entire amount of the purchase price is
delivered to him. Stated differently, the full payment of the purchase
price partakes of a suspensive condition, the non-fulfillment of which
prevents the obligation to sell from arising and thus, ownership is
retained by the prospective seller without further remedies by the
prospective buyer.
Since the contract in this case is a contract to sell, the ownership of
the property remained with the Monesets even after petitioner has
paid the down payment and took possession of the property.

CARRASCOSO VS. CA
In March 1972, El Dorado Plantation Inc, through board member LauroLeviste,
executed aDeed of Sale with Carrascoso. The subject of the sale was a 1825 hectare of
land. It wasagreed that Carrascoso is to pay P1.8M. P290K would be paid by
Carrascoso to PNB to settlethe mortgage placed on the said land. P210k would be paid
directly to Leviste. The balance of P1.3M plus 10% interest would be paid over the next
3 years at P519k every 25thof March.Leviste also assured that there were no tenants
hence the land does not fall under the LandReform Code. Leviste allowed Carrascoso to
mortgage the land which the latter did.Carrascoso obtained a total of P1.07M as
mortgage and he used the same to pay the downpayment agreed upon in the contract.
Carrascoso defaulted from his obligation which wassupposed to be settled on
March 25, 1975. Leviste then sent him lettersto make good his endof the
contract otherwise he will be litigated.In 1977, Carrascoso executed a Buy and Sell
Contract with PLDT. The subject of the sale wasthe same land sold to Carrascoso
by Leviste but it was only the 1000 sq m portion thereof. Theland is to be sold
at P3M. Part of the terms and conditions agreed upon was that Carrascoso isto remove
all tenants from the land within one year. He is also given a 6 month extension incase
he’ll need one. Thereafter, PLDT will notify Carrascoso if whether or not
PLDt will finalizethe sale. PLDT gained possession of the land.El Dorado filed a
civil case against Carrascoso. PLDT intervened averring that it was a buyer
ingood faith. The RTC ruled in favor of Carrascoso. CA reversed the RTC ruling.

ISSUE:What is the nature of each contract?

HELD:The contract executed between El Dorado and Carrascoso was a contract of

sale. It wasperfected by their meeting of the minds and was consummated by the
delivery of the property toCarrascoso. However, ElDorado has the right to
rescind the contract by reason of Carrascoso’sfailure to perform his obligation.

A contract of sale is a reciprocal obligation. The seller obligates itself to

transfer the ownershipof and deliver a determinate thing, and the buyer obligates
itself to pay therefor a price certain inmoney or its equivalent. The non-payment of the
price by the buyer is a resolutory conditionwhich extinguishes the transaction that for a
time existed, and discharges the obligationscreated thereunder. Such failure to pay the
price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for
collection or to rescind the contract.The contract between Carrascoso and PLDT is a
contract to sell. This is evidenced by the termsand conditions that they have agreed
upon that after fulfillment of Carrascoso’s obligation PLDThas “to notify
Carrascoso of its decision whether or not to finalize the sale.”Carrascoso also
averred that there was a breach on El Dorado’s part when itcomes towarranty.
Carrascoso claimed that there were tenants on the land and he spent about
P2.9Mrelocating them. The SC ruled that Carrascoso merely had a bare claim
without additional proof to support it.

Requisites of Express warranty in a Contract of Sale

(1) the express warranty must be an affirmation of fact or any promise by the seller
relating tothe subject matter of the sale;
(2) the natural tendency of such affirmation or promise is to induce the buyer to purchase
thething; and
(3) the buyer purchases the thing relying on such affirmation or promise thereon