WELGO DICHOSO, ET AL., plaintiffs-appellees, vs. LAURA ROXAS, ET AL., defendants, CELSO BORJA and NELIA ALANGUILAN, defendants-appellants.G.R. No. L-17441 July 31, 1962 DIZON, J.:Facts:1. On December 13, 1954, Laura A. Roxas sold to Borja for the sum of P850.00 a parcel of unregistered coconut land with an area of 16,965 square meters and with 393 coconut trees, situated in Barrio San Diego, San Pablo, Laguna, subject to the condition that the vendor could repurchase it for the same amount within five years, but not earlier than three years, from the date of the sale, which was evidenced by a public document.2. From November 26, 1955 to July 5, 1957, Roxas had received from Dichoso several sums of money amounting to P770.00, their agreement being that after December 13, 1957, Roxas would sell the same property, by absolute sale, to Dichoso for the total sum of P2,000.00, the aforesaid sum of P770.00 to be considered as initial or advance payment on the purchase price.3. Out of the balance of P1,230.00, Dichoso would use the sum of P850.00 to repurchase the property from Roxas after December 13, 1954 but within the five years stipulated for the exercise of Roxas' right to repurchase.4. On October 22, 1957, pursuant to Roxas' request made on July 23, 1957, Dichoso sent her a check for the sum of P320.00 "in full payment of the P2,000.00 consideration for the deed of absolute sale" and thereafter they informed Borja of their readiness to repurchase the property.5. On November 29, 1957 Roxas sent them back the check just referred to with the request that they endorse the same to Borja when they made the repurchase, because it appeared that, aside from the P850.00 consideration of the pacto de retro sale, Roxas had received additional sums from Borja.6. After December 13, 1957, Dichoso made representations to Borja that they were ready to make the repurchase, as well as to Roxas for the latter to be ready to execute the corresponding deed of absolute sale in their favor after they had made the repurchase; that notwithstanding these demand and representations, Roxas and Borja had deliberately failed to execute the corresponding deed of absolute sale and deed of resale already mentioned.7. On January 8, 1958 Borja filed a motion to dismiss the complaint upon the ground that Dichoso had no cause of action against them because their contract was not them but with Laura A. Roxas. LC sustained the motion and dismissed the complaint because, according to the same, "there exists no written contract of assignment of rights executed by Laura A. Roxas in favor of the herein plaintiffs concerning property which said Laura A. Roxas sold to her co-defendants under a deed of pacto de retro sale, and that the purpose of the present action is precisely to compel Laura A. Roxas to execute the corresponding deed of assignment."Issue/Held/ Rationale:May Dichoso repurchase the coconut land which was sold to Borja by Laura Roxas? NO.It is obvious that, in deciding the case, the lower court failed to give due weight to the deed of absolute sale executed by Laura A. Roxas in favor of appellants on December 8, 1957 in effect superseding the pacto de retro sale mentioned heretofore for a total consideration of P1,684.00, of which the amount of P850.00 paid as consideration for the pacto de retro sale was considered as a part. There is no dispute at all as to the genuineness of this private deed of absolute sale nor as to its execution on December 8, 1957. that is, five days prior to December 13, 1957, when. according to appellees themselves, they made the first attempt to repurchase the property in question, and on which occasion appellants refused to allow the repurchase "because Laura A. Roxas was not with them", according to the lower court. After December 8, 1957, appellants' rights were no longer based on the superseded pacto de retro sale but on the aforesaid deed of absolute sale which was a perfectly valid contract as between the parties. In plain words, after that date Laura A. Roxas no longer had any right to repurchase the property. Moreover, Borja had no knowledge until December 13, 1957 that Roxas had assigned her right to repurchase to Dichoso.

d2015memberLuzon 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.o Myers sold the land for P1million.o They agreed on the manner of payment (instalment, initial payment upon execution of contract, interest rate)o In the contract it was stipulated that in case of failure of buyer to pay any of the instalments, the contract will be annulled at theoption of the seller and all payments made by the buyer is forfeited. Later on, the stipulated instalment of P10k with 5%interest was amended to the P5k with 5.5% per annum.o Maritime paid the monthly instalments but failed to pay the monthly instalment of March. VP of Maritime wrote to Pres of Myers requesting for a moratorium on the monthly payment of the instalments because the company was undergoing financial problems. o Myers refused.o 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 Saleo Myers demanded return of possession of propertieso Held Maritime liable for use and occupation amounting to P10k per month In the meantime, Luzon Brokerage was leasing the property from Maritime.o Myers demanded from Luzon the payment of monthly rentals of P10ko 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 4 more years. Turns out, Maritimes suspension of its payments to Myers corp arose from a previous event: An award of backwages made by the Court ofIndustrial Relations in favor of Luzon Labor Union (employees employed by Luzon).o FH Myers was a major stockholder of Luzon Brokerage. FH Myers promised to indemnify Schedler (who controlled Maritime) when Shedler purchased FH Myerss stock in Luzon Brokerage company. (This indemnification is for the award of backwages by the CIR) o Schedler claims that after FH Myers estates closed, he was notified that the indemnity on the Labor Union case will not be honored anymore.o And so, Schedler advised Myers corp that Maritime is withholding payments to Myers corp in order to offset the liability when Myers heirs 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. 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 Nyers corp agreed to assume responsibility 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 wasattempting to burden the Myers corp with an uncollectible debt,since enforcement against FH Myers estate was already barred. Maritime acted in bad faith. Maritimes 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 repeateddecisions 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 v.Cristobal456 scra 577, April 22, 2005Contract to Sell vs Contract of SaleIn 1968, spouses Portic acquired a parcel of land with a 3 door apartment from Sps. Alcantara even though theyre aware that the land was mortgaged to the SSS. Portic defaulted in paying SSS. The Portics then executed a contract with Cristobal and the latter agreed to buy the said property for P200k. Cristobals down payment was P45k and she also agreed to pay SSS. The contract between them states:That while the balance of P155,000.00 has not yet been fully paid the FIRST PARTY OWNERS shall retain the ownership of the above described parcel of land together with its improvements but the SECOND PARTY BUYER shall have the right to collect the monthly rentals due on the first door (13-A) of the said apartment; (payment is due 22 May 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 the due date. A suit ensued to lift the cloud on the title.ISSUE: Who is the rightful owner of the parcel of land?HELD: The Portics insofar as there was no contract of sale. What transpired between the parties was a contract to sell. The provision of the contract characterizes the agreement between the parties as a contract to sell, not a contract of sale. Ownership is retained by the vendors, 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 with it is not a breach of obligation; it is merely an event that prevents the effectivity of the obligation of the vendor to convey the title. In short, until the full price is paid, the vendor retains ownership.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, but merely 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, as long as it remains unpaid, she cannot feign good faith. She is also precluded from asserting ownership against the Portics. The CAs finding that she had a valid title to the property must be set aside.

Ursal v. CA14 October 2005, 473 SCRA 52Contract to Sell vs Contract of SaleIn January 1985, Ursal and spouses Monesets 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 w/ 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. Read full text here. NOTES What is a conditional contract of sale?The fulfillment of the suspensive condition, which is the full payment of the purchase price, will not automatically transfer ownership to the buyer although the property may have been previously delivered to him. The prospective vendor still has to convey title to the prospective buyer by entering into a contract of absolute sale. While in a conditional contract of sale, the fulfillment of the suspensive condition renders the sale absolute and affects the sellers title thereto such that if there was previous delivery of the property, the sellers ownership or title to the property is automatically transferred to the buyer.

Carrascoso v. CADecember 14, 2005. 477 scra 666Contract to Sell vs Contract of SaleIn March 1972, El Dorado Plantation Inc, through board member Lauro Leviste, executed a Deed of Sale with Carrascoso. The subject of the sale was a 1825 hectare of land. It was agreed that Carrascoso is to pay P1.8M. P290K would be paid by Carrascoso to PNB to settle the 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 25th of March. Leviste also assured that there were no tenants hence the land does not fall under the Land Reform 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 down payment agreed upon in the contract. Carrascoso defaulted from his obligation which was supposed to be settled on March 25, 1975. Leviste then sent him letters to make good his end of the contract otherwise he will be litigated.In 1977, Carrascoso executed a Buy and Sell Contract with PLDT. The subject of the sale was the same land sold to Carrascoso by Leviste but it was only the 1000 sq m portion thereof. The land is to be sold at P3M. Part of the terms and conditions agreed upon was that Carrascoso is to remove all tenants from the land within one year. He is also given a 6 month extension in case hell need one. Thereafter, PLDT will notify Carrascoso if whether or not PLDt will finalize the sale. PLDT gained possession of the land.El Dorado filed a civil case against Carrascoso. PLDT intervened averring that it was a buyer in good 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 was perfected by their meeting of the minds and was consummated by the delivery of the property to Carrascoso. However, El Dorado has the right to rescind the contract by reason of Carrascosos failure to perform his obligation.A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer obligates itself to pay therefor a price certain in money or its equivalent. The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction that for a time existed, and discharges the obligations created 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 terms and conditions that they have agreed upon that after fulfillment of Carrascosos obligation PLDT has to notify Carrascoso of its decision whether or not to finalize the sale.Carrascoso also averred that there was a breach on El Dorados part when it comes to warranty. Carrascoso claimed that there were tenants on the land and he spent about P2.9M relocating 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 to the subject matter of the sale;(2) the natural tendency of such affirmation or promise is to induce the buyer to purchase the thing; and(3) the buyer purchases the thing relying on such affirmation or promise thereon.

Topic: Contract to sell Art. 1478Case: Sacobia Hills Devt Corp. v. Ty, 470 SCRA 395, September 20, 2005 Prepared by: Leny IgnalagaFacts: Petitioner Sacobia Hills Development Corporation (Sacobia) is the developer of True North Golf and Country Club which boasts of amenities that include a golf course, clubhouse, sports complex and several vacation villas. Respondent Allan U. Ty wrote to Sacobia a letter expressing his intention to acquire one Class A share of True North and accordingly paid the reservation fee of P180,000.00 as evidenced by PCI Bank Check No. 0038053. Sacobia assured its prospective shareholders that the development of True North was proceeding on schedule; that the golf course would be playable by October 1999; that the Environmental Clearance Certificate (ECC) by the Department of Environment and Natural Resources (DENR) as well as the Permit to Sell from the Securities and Exchange Commission (SEC) should have been released by October 1997; and that their registration deposits remained intact in an escrow account. Sacobia then approved the purchase application and membership of Ty for P600,000.00, subject to certain terms and conditions. The notice of approval provided the following:Terms and Conditions1. Approval of an application to purchase golf/country club shares is subjected to the full payment of the total purchase price. Should the buyer opt for the deferred payment scheme, approval is subject to our receipt of a down payment of at least 30% and the balance payable in installments over a maximum of eleven (11) months from the date of application, and covered by postdated cheques.2. Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail to settle your obligation within fifteen (15) days from due date, or failure to cover the value of the postdated cheques upon their maturity, or your failure to issue the required postdated cheques. In which case, we shall reserve the right to offer the said shares to other interested parties. This also means forfeiture of 50% of the total amount you have already paid.3. We will undertake to execute the corresponding sales documents/ Deed of Absolute Sale covering the reserved shares upon full payment of the total purchase price. The Certificate of Membership shall be issued thereafter.However, on January 12, 1998, Ty notified Sacobia that he is rescinding the contract and sought refund of the payments already made due to the latters failure to complete the project on time as promised (supposedly October 1997). Sacobia wrote him a letter, stating that the DENR had issued the required ECC only on March 5, 1998, and that the golf course would be ready for use by end of 1998( in fact ahead of promised date which is October 1999). Sacobia again wrote the respondent advising him that the 18-hole golf course would be fully operational by summer of 1999. Sacobia also sought to collect from respondent the latters outstanding balance of P190,909.08 which was covered by five (5) post dated checks. However, Ty notified Sacobia that he had stopped payment on the five (5) post dated checks and reiterated his demand for the refund of his payments which amounted to P409,090.92. Sacobia denied his request thus Ty filed a complaint for rescission and damages.Issue: Whether or not respondent Ty can rescind the contract and demand for damages from Sacobia Hills for breach of contractHeld:No, Ty cannot rescind the contract and demand for damages from Sacobia Hills for breach of contract because the contract to sell between them has not yet been perfected for failure by Ty to pay the full purchase price. The Supreme Court ruled as follows:1. The terms of the agreement between Sacobia and Ty can be deduced, not on a formal document like a deed of sale, but from a series of correspondence and acts signifying the parties intention to enter into a contract. The absence of a formal deed of conveyance is a strong indication that Sacobia did not intend to transfer title until respondent shall have completely complied with his correlative obligation of paying the contact price.2. In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. It is one where the happening of the event gives rise to an obligation. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having failed to perform the suspensive condition which enforces a juridical relation. In fact with this circumstance, there can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred as yet. Emphasis should be made that the breach contemplated in Article 1191 of the New Civil Code is the obligors failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation.3. Ty did not pay the full purchase price which is his obligation under the contract to sell, therefore, it cannot be said that Sacobia breached its obligation. No obligations arose on its part because respondents non-fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected. Indeed, there can be no rescission under Article 1191of the Civil Code because until the happening of the condition, i.e. full payment of the contract price, Sacobias obligation to deliver the title and object of the sale is not yet extant. A non-existent obligation cannot be subject of rescission. Article 1191 speaks of obligations already existing, which may be rescinded in case one of the obligors fails to comply with what is incumbent upon him.4. In the present case, respondents failure to fulfill this suspensive condition prevented the perfection of the contract to sell. With an ineffective contract, Ty had not acquired the status of a shareholder but remained, at most, a prospective investor. In the absence of a juridical tie between the parties, Ty cannot claim the rights and privileges accorded to Sacobias full-fledged members and shareowners, including the full enjoyment of the amenities being offered. Unfortunately for Ty, he cannot avail of rescission as envisioned by Article 1191 of the Civil Code. However, he can withdraw his investment subject to the restrictions under the terms and conditions pertinent to a reneging investor.5. Tys complaint for rescission of contract and damages in Civil Case No. 01-99696 is dismissed He is ordered to pay to Sacobia Hills Development Corporation the amount of Pesos: One Hundred Ninety Thousand Nine Hundred Nine and Eight Centavos (P190,909.08) without interest within thirty (30) days from finality of this decision; otherwise, fifty percent (50%) of his total payments shall be forfeited.

Contract to Sell vs Contract of SaleKeppel v. AdaoProject Movers Realty and Development Corporation (PMRDC) owe P200M to Keppel Banks. By way of dacion en pago, PMRDC transferred and conveyed to the bank 25 of its properties consisting of townhouses and condominiums. One of the units transferred was occupied by Adao.In Feb 2000, the Bank demanded Adao to vacate. Adao refused. An ejectment case was filed. Adao averred that he had a Contract to Sell with PMRDC. He presented an affidavit showing that he made full payment thereof. The MeTC, RTC and CA ruled in favor of Adao. The lower courts ordered Keppel to respect the contract to sell between Adao and PMRDC for when the properties were transferred by way of dacion en pago, the bank merely stepped on the shoes of PMRDC.ISSUE: Whether or not Keppel is bound by the contract to sell.HELD: No. Though Keppel is not a purchaser in good faith for not looking into the property (checking if it was infirm and free from other claims), the bank is not bound by it.The contract to sell does not by itself give Adao the right to possess the property. Unlike in a contract of sale, here in a contract to sell, there is yet no actual sale nor any transfer of title, until and unless, full payment is made. The payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. Adao must have fully paid the price to acquire title over the property and the right to retain possession thereof. In cases of non-payment, the unpaid seller can avail of the remedy of ejectment since he retains ownership of the property.Adao must also, aside from showing an affidavit, show other proof of full payment made to PMRDC. Considering that Adao failed to discharge the burden of proving payment, he cannot claim ownership of the property and his possession thereof was by mere tolerance. His continued possession became unlawful upon the owners demand to vacate the property.