Sps. Orden Vs Sps. Aurea

Submitted by: Ma. Nikka Floan M.
Ramirez
Case Title: Sps. Orden vs Sps. Aurea
Relevant Facts: The involved parties are spouses Cornelio Joel I. Orden and Maria Nympha
V. Orden (petitioners) and spouses Arturo Aurea, Melodia C. Aurea,
Ernesto P. Cobile, and Susana M. Cobile (respondents), along with
respondent Franklin M. Quijano. The petitioners owned two parcels of land
with a residential house in Sibulan, Negros Oriental. They entered into a
Deed of Absolute Sale with the respondents Aurea for the sale of the
properties for P1.9 million. Simultaneous with the sale, respondents Aurea
executed a Joint Affidavit declaring that the true buyers were respondents
Cobile, who were American citizens. Respondents Cobile paid P384,000 as
partial payment and executed a promissory note promising to pay the
remaining balance. They failed to pay the balance on time. Petitioners sent
a letter to respondents Cobile, giving them 10 days to pay the balance or
risk the sale to other parties. Failing to receive the full payment from
respondents Cobile, petitioners sold the properties to Fortunata Adalim
Houthuijzen, a subsequent purchaser. Respondents Cobile filed a complaint
against petitioners for Enforcement of Contract and Damages, seeking the
delivery of property titles or full payment of the purchase price plus interest.
Argument of the Petitioners argued that the transaction between them and respondents
Petitioner Cobile was a contract to sell, not a contract of sale. They assert that
ownership of the property was intended to be retained by the sellers until full
payment of the purchase price.
Argument of the Respondents argued that the transaction was a perfected contract of sale
Respondent rather than a contract to sell. They contend that ownership of the property
transferred to them upon the execution of the deed of sale and the payment
of the initial amount.
Ruling of the trial The trial court determined that the transaction between the parties was a
court (if any) contract to sell rather than a perfected contract of sale. This distinction was
crucial because it meant that ownership of the property would transfer to the
buyers (respondents) only upon full payment of the purchase price. The trial
court found that the respondents failed to comply with the payment terms
specified in the contract. The respondents did not complete the payment of
the purchase price within the agreed-upon time frame. The trial court held
that the failure of the respondents to make the full payment justified the
petitioners' decision to rescind the contract. The court recognized that the
respondents' delays in payment were substantial and material breaches that
entitled the petitioners to rescind the contract. It ordered the petitioners to
return the payments already made by the respondents, minus any
reasonable deductions for the use and occupation of the property. This
decision was based on the principle that the rescission of the contract would
necessitate the restoration of the parties to their original positions as much
as possible.
Ruling of the The CA affirmed the trial court's finding that the transaction was a contract
appellate court (if to sell. This distinction meant that ownership of the property would transfer
any) to the buyers (respondents) only upon full payment of the purchase price.
The CA agreed that no perfected sale occurred because the full payment, a
suspensive condition, was not met. It upheld the trial court's decision that
the petitioners were justified in rescinding the contract due to the
respondents' material breach. The failure to make full payment was a valid
ground for the rescission of the contract to sell.
Ruling of the The Supreme Court affirmed the lower courts' findings that the transaction
Supreme Court between the parties was a contract to sell, not a contract of sale. The Court
emphasized that ownership of the property would transfer only upon full
payment of the purchase price, and this condition was clearly stipulated in
the contract. It upheld the trial court and the CA's ruling that the
respondents (buyers) materially breached the contract by failing to pay the
full purchase price within the agreed period. The Court agreed that this
breach justified the rescission of the contract by the petitioners (sellers).
The Supreme Court validated the legality of the petitioners' subsequent sale
of the property to another buyer. The Court found that since the original
contract with the respondents was rightfully rescinded due to their breach,
the petitioners retained the right to sell the property to a third party.
RELEVANCE TO In Contract to Sell the seller retains ownership of the property until the buyer
THE TOPIC ON completes all payment obligations. The transfer of ownership is contingent
LAW ON SALE upon the buyer fulfilling the condition precedent, which is the full payment of
the purchase price. While in Contract of sale, ownership of the property is
transferred to the buyer upon the mutual agreement of both parties,
regardless of whether the full payment has been made, subject to certain
conditions.

Sps. Orden Vs Sps. Aurea

Uploaded by

Copyright:

Available Formats

Sps. Orden Vs Sps. Aurea

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sps. Orden Vs Sps. Aurea

Uploaded by

Copyright:

Available Formats

Submitted by: Ma. Nikka Floan M.

Case Title: Sps. Orden vs Sps. Aurea

You might also like