Absolute and Conditional Cases

8/6/2019 Absolute and Conditional Cases

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Republic of the Philippines

SUPREME COURTManila

SECOND DIVISION

G.R. No. L-61623 December 26, 1984

PEOPLE'S HOMESITE & HOUSING CORPORATION, petitioner-appellant,

vs.COURT OF APPEALS, RIZALINO L. MENDOZA and ADELAIDA R. MENDOZA,respondents-appellees.

Manuel M. Lazaro, Pilipinas Arenas Laborte and Antonio M. Brillantes for petitionerPHHC.

Tolentino, Cruz, Reyes, Lava and Manuel for private respondents.

AQUINO, J.:

The question in this case is whether the People's Homesite& Housing Corporationbound itself to sell to the Mendoza spouses Lot 4 (Road) Pcs- 4564 of the revisedconsolidation subdivision plan withan area of 2,6,08.7 (2,503.7) square meters locatedat Diliman, Quezon City.

The PHHC board of directors on February 18, 1960 passed Resolution No. 513 w

hereinit stated "that subject to the approval of the Quezon City Councilof the above-

mentioned Consolidation Subdivision Plan, Lot 4. containing4,182.2 square meters be,as it is hereby awarded to Spouses Rizalino Mendoza and Adelaida Mendoza, at a priceof twenty-one pesos (P21.00) per square meter" and "that this award shall be subject tothe approval of the OEC (PHHC) Valuation Committee and higher authorities".

The city council disapproved the proposed consolidation subdivision plan on August 20,1961 (Exh. 2). The said spouses were advised by registered mail of the disapproval ofthe plan (Exh. 2-PHHC). Another subdivision plan was prepared and submitted to thecity council for approval. The revised plan, which included Lot 4, with a reduced area of

2,608.7, was approved by th

e city council on February 25, 1964 (Exh

. H).

On April 26, 1965 the PHHC board of directors passed a resolution recalling all awardsof lots to persons who failed to pay the deposit or down payment for the lots awarded tothem (Exh. 5). The Mendozas never paid the price of the lot nor made the 20% initialdeposit.


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On October 18, 1965 the PHHC board of directors passed Resolution No. 218,withdrawing the tentative award of Lot 4 to the Mendoza -spouses under Resolution No.513 and re-awarding said lot jointly and in equal shares to MiguelaSto. Domingo,Enrique Esteban, Virgilio Pinzon, Leonardo Redublo and Jose Fernandez, subject toexisting PHHC rules and regulations. The prices would be the same as those of the

adjoining lots.Th

e awardees were required to deposit an amount equivalent to 20% ofthe total selling price (Exh. F).

The five awardees made the initial deposit. The corresponding deeds of sale wereexecuted in their favor. The subdivision of Lot 4 into five lots was approved by the citycouncil and the Bureau of Lands.

On March 16, 1966 the Mendoza spouses asked for reconsideration of the withdrawalof the previous award to them of Lot 4 and for the cancellation of the re-award of said lotto Sto. Domingo and four others. Before the request could be acted upon, the spousesfiled the instant action for specific performance and damages.

The trial court sustained the withdrawal of the award. The Mendozas appealed. TheAppellate Court reversed that decision and declared void the re-award of Lot 4 and thedeeds of sale and directed the PHHC to sell to the Mendozas Lot 4 with an area of2,603.7 square meters at P21 a square meter and pay to them P4,000 as attorney'sfees and litigation expenses. The PHHC appealed to this Court.

The issue is whether there was a perfected sale of Lot 4, with the reduced area, to theMendozas which they can enforce against the PHHC by an action for specificperformance.

Wehold t

hat t

here was no perfected sale of Lot 4. It was conditionally or contingentlyawarded to the Mendozas subject to the approval by the city council of the proposed

consolidation subdivision plan and the approval of the award by the valuation committeeand higher authorities.

The city council did not approve the subdivision plan. The Mendozas were advised in1961 of the disapproval. In 1964, when the plan with the area of Lot 4 reduced to2,608.7 square meters was approved, the Mendozas should have manifested in writingtheir acceptance of the award for the purchase of Lot 4 just to show that they were stillinterested in its purchase although the area was reduced and to obviate ally doubt onthe matter. They did not do so. The PHHC board of directors acted within its rights inwithdrawing the tentative award.

"The contract of sale is perfected at the moment there is a meeting of minds upon thething which is the object of the contract and upon the price. From that moment, theparties may reciprocally demand performance, subject to the law governing the form ofcontracts." (Art. 1475, Civil Code).


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"Son, sin embargo, excepcion a estaregla los casos en queporvirtud de la voluntad delaspartes o de la ley, se celebra la ventabajounacondicionsuspensiva, y en los cualesno se perfecciona la venta hasta el cumplimiento de la condicion"(4 CastanTobenas,Derecho Civil Espaol 8th ed. p. 81).

"In conditional obligations, th

e acquisition of rights, as well as t

he extinguis

hment or lossof those already acquired, shall depend upon the happening of the event which

constitutes the condition. (Art. 1181, Civil Code). "Se llama suspensive la condicion dela quedepende la perfeccion, o sea el principio del contrato".(9 Giorgi, Teoria delasObligaciones, p. 57).

Under the facts of this case, we cannot say there was a meeting of minds on thepurchase of Lot 4 with an area of 2,608.7 square meters at P21 a square meter.

The case ofLapinig vs. Court of Appeals, 115 SCRA 213 is not in point because theawardee in that case applied for the purchase of the lot, paid the 10% deposit and a

conditional contract to sell was executed inhis favor.

The PHHC could not re-award t

hatlot to another person.

WHEREFORE, the decision of the Appellate Court is reversed and set aside and thejudgment of the trial court is affirmed. No costs.

SO ORDERED.

Makasiar (Chairman), Concepcion, Jr., Abad Santos, Escolin and Cuevas, JJ., concur.


SUPREME COURTManila

THIRD DIVISION

G.R. No. L-55665 February 8, 1989

DELTA MOTOR CORPORATION, petitioner,vs.EDUARDA SAMSON GENUINO, JACINTO S. GENUINO, Jr., VICTOR S. GENUINO,HECTOR S. GENUINO, EVELYN S. GENUINO, and The COURT OF APPEALS,respondents.

Alcasid, Villanueva & Associates for petitioner.


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Luna, Puruganan, Sison&Ongkiko for respondents.

CORTES,J.:Petitioner, through this petition for review by certiorari, appeals from the decision ofrespondent appellate court in CA-G.R. No. 59848-R entitled "Eduarda SamsonGenuino, et al. v. Delta Motor Corporation" promulgated on October 27, 1980.

The facts are as follows:

Petitioner Delta Motor Corporation (hereinafter referred to as Delta) is a corporation dulyorganized and existing under Philippine laws.

On the otherhand, private respondents are the owners of an iceplant and cold storage

located at 1879 E. Rodriguez Sr. Avenue, Quezon City doing business under the name"Espaa Extension Iceplant and Cold Storage."

In July 1972, two letter-quotations were submitted by Delta to Hector Genuino offeringto sell black iron pipes. T

The letter dated July 3, 1972 quoted Delta's selling price for 1,200 length of black ironpipes schedule 40, 2" x 20' including delivery at P66,000.00 with the following terms ofpayment:

a. 20% of the net contract price or P13,200.00 will be due and payable upon signing ofthe contract papers.

b. 20% of the net contract price or P13,200.00 will be due and payable beforecommencement of delivery.

c. The balance of 60% of the net contract price or P39,600.00 with 8% financing chargeper annum will be covered by a Promissory Note bearing interest at the rate of 14% perannum and payable in TWELVE (12) equal monthly installment (sic), the first of which willbecome due thirty (30) days after the completion of delivery. Additional 14% will becharged for all delayed payments. [Exh."A"; Exh. 1.]

The second letter-quotation dated July 18, 1972 provides for the selling price of 150lengths of black iron pipes schedule 40, 1 1/4" x 20' including delivery at P5,400.00 with

the following terms of payment:

a. 50% of the net contract price or P 2,700.00 will be due and payable upon signing of thecontract papers.

b. 50% of the net contract price or P 2,700.00 will be due and payable beforecommencement of delivery. [Exh."C"; Exh. "2".]


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Both letter-quotations also contain the following stipulations as to delivery and priceoffer:

DELIVERY

Ex-stock subject to prior sales.

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Our price offer indicated herein shall remain firm within a period of thirty (30) days fromthe date hereof. Any order placed after said period will be subject to our review andconfirmation. [Exh."A" and "C"; Exhs. "l" and "2".]

Hector Genuino was agreeable to the offers of Delta hence, he manifested hisconformity thereto by signing his name in the space provided on July 17, 1972 and July24, 1972 for the first and second letter-quotations, respectively.

It is undisputed that private respondents made initial payments on bot

hcontracts forthe first contract, P13,200.00 and, for the second, P2,700.00 for a total sum of

P15,900.00 on July 28, 1972 (Exhs. "B" and "D"].

Likewise unquestionable are the following. the non-delivery of the iron pipes by Delta;the non-payment of the subsequent installments by the Genuinos; and the non-execution by the Genuinos of the promissory note called for by the first contract.

The evidence presented in the trial court also showed that sometime in July 1972 Deltaoffered to deliver the iron pipes but the Genuinos did not accept the offer because theconstruction of the ice plant building where the pipes were to be installed was not yet

finish

ed.

Almost three years later, on April 15, 1975, Hector Genuino, in behalf of EspaaExtension Ice Plant and Cold Storage, asked Delta to deliver the iron pipes within thirty(30) days from its receipt of the request. At the same time private respondentsmanifested their preparedness to pay the second installment on both contracts uponnotice of Delta's readiness to deliver.

Delta countered that the black iron pipes cannot be delivered on the prices quoted as ofJuly 1972. The company called the attention of the Genuinos to the stipulation in theirtwo (2) contracts that the quoted prices were good only within thirty (30) days from date

of offer. Whereupon Delta sent new price quotations to t

he Genuinos based on itscurrent price of black iron pipes, as follows:

P241,800.00 for 1,200 lengths of black iron pjpes schedule 40, 2" x 20' [Exh. "G-1".]

P17,550.00 for 150 lengths of black iron pipes schedule 40, 1 1/4" x 20' [Exh. "G-2".]

The Genuinos rejected the new quoted prices and instead filed a complaint for specificperformance with damages seeking to compel Delta to deliver the pipes. Delta, in its


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answer prayed for rescission of the contracts pursuant to Art. 1191 of the New CivilCode. The case was docketed as Civil Case No. Q-20120 of the then Court of FirstInstance of Rizal, Branch XVIII, Quezon City.

After trial the Court of First Instance ruled in favor of Delta,the dispositive portion of its

decision reading as follows:

WHEREFORE, premises considered, judgment is rendered:

1. Declaring the contracts, Annexes "A" and "C" of the complaint rescinded;

2. Ordering defendant to refund to plaintiffs the sum of P15,900.00 delivered by the latteras downpayments on the aforesaid contracts;

3. Ordering plaintiffs to pay defendant the sum of P10,000.00 as attorney's fees; and,

4. To pay the costs of suit. [CFI Decision, pp. 13-14; Rollo, pp. 53-54.]

On appeal, the Court of Appeals reversed and ordered private respondents to make thepayments specified in "Terms of Payment (b)" of the contracts and to execute thepromissory note required in the first contract and thereafter, Delta should immediatelycommence delivery of the black iron pipes.* [CA Decision, p. 20; Rollo, p. 75.]

The Court of Appeals cited two main reasons why it reversed the trial court, namely:

1. As Delta was the one who prepared the contracts and admittedly, it had knowledge ofthe fact that the black iron pipes would be used by the Genuinos in their cold storageplant which was then undergoing construction and therefore, would require sometimebefore the Genuinos would require delivery, Delta should have included in said contracts

a deadline for delivery but it did not. As a matter of fact neither did it insist on deliverywhen the Genuinos refused to accept its offer of delivery. [CA Decision, pp. 16-17; Rollo,pp. 71-72.]

2. Delta's refusal to make delivery in 1975 unless the Genuinos pay a price very muchhigher than the prices it previously quoted would mean an amendment of the contracts. Itwould be too unfair for the plaintiffs if they will be made to bear the increase in prices ofthe black iron pipes when they had already paid quite an amount for said items anddefendant had made use of the advance payments. That would be unjust enrichment onthe part of the defendant at the expense of the plaintiffs and is considered an abominablebusiness practice. [CA Decision, pp. 18-19; Rollo, pp. 73-74.]

Respondent court denied Delta's motion for reconsideration hence this petition for

review praying for the reversal of the Court of Appeals decision and affirmance of that ofthe trial court.

Petitioner argues that its obligation to deliver the goods under both contracts is subjectto conditions required of private respondents as vendees. These conditions are:payment of 20% of the net contract price or P13,200.00 and execution of a promissorynote called for by the first contract; and payment of 50% of the net contract price orP2,700.00 under the second contract. These, Delta posits, are suspensive conditions


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and only upon their performance or compliance would its obligation to deliver the pipesarise [Petition, pp. 9-12; Rollo, pp. 1720.] Thus, when private respondents did notperform their obligations; when they refused to accept petitioner's offer to deliver thegoods; and, when it took them three (3) long years before they demanded delivery ofthe iron pipes that in the meantime, great and sudden fluctuation in market prices have

occurred; Delta is entitled to rescind the two (2) contracts.

Delta relies on the following provision of law on rescission:

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one ofthe obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation,with the payment of damages in either case. He may also seek rescission, even afterhe

has chosen fulfillment, if the latter should become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing thefixing of a period.

This is understood to be without prejudice to the rights of third persons who haveacquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law.

In construing Art. 1191, the Supreme Court has stated that, "[r]escission will be orderedonly where the breach complained of is substantial as to defeat the object of the partiesin entering into the agreement. It will not be granted where the breach is slight orcasual." [Phil. Amusement Enterprises, Inc. v. Natividad, G.R. No.L-21876, September29, 1967, 21 SCRA 284, 290.] Further, "[t]he question of whether a breach of a contractis substantial depends upon the attendant circumstances." [Universal Food Corporationv. Court of Appeals, G. R. No. L-29155, May 13,1970,33 SCRA 1, 18].

In the case at bar, the conduct of Delta indicates that the Genuinos' non-performance ofits obligations was not a substantial breach, let alone a breach of contract, as wouldwarrant rescission.

Firstly, it is undisputed that a month after the execution of the two (2) contracts, Delta'soffer to deliver the black iron pipes was rejected by the Genuinos who were "not readyto accept delivery because the cold storage rooms have not been constructed yet.Plaintiffs (private respondents herein) were short-funded, and did not have the space toaccommodate the pipes they ordered" [CFI Decision, p. 9; Rollo, p. 49].

Given this answer to its offer, Delta did not do anything. As testified by CrispinVillanueva, manager of the Technical Service department of petitioner:

Q You stated that you sent a certain Evangelista to the Espaa Extension and Cold Storage tooffer the delivery subject matter of the contract and then you said that Mr. Evangelista reported(sic) to you that plaintiff would not accept delivery, is that correct, as a summary of your

statement?

AA Yes, sir.


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Q Now, what did you do in the premises (sic)?

A Yes, well, we take the word of Mr. Evangelista. We could not deliver the said black iron pipes,

because as per information the Ice Plant is not yet finished.

Q Did you not report that fact to ... any other defendant-officials of the Delta Motor Corporation?

A No.

Q And you did not do anything after that?

A Because taking the word of my Engineer we did not do anything. [TSN, December 8, 1975, pp.

18-19.]

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And secondly, three (3) years later when the Genuinos offered to make payment Deltadid not raise any argument but merely demanded that the quoted prices be increased.Thus, in its answer to private respondents' request for delivery of the pipes, Deltacountered:

Thank you for your letter dated April 15, 1975, requesting for delivery of Black Iron pipes;.

We regret to say, however, that we cannot base our price on our proposals dated July 3and July 18, 1972 as per the following paragraph quoted on said proposal:

Our price offer indicated herein shall remain firm within a period of thirty(30) days from the date hereof. Any order placed after said period will besubject to our review and confirmation.

We are, therefore, enclosing our re-quoted proposal based on our current price. [Exh."G".]

Moreover, the power to rescind under Art. 1191 is not absolute. "[T]he act of a party intreating a contract as cancelled or resolved on account of infractions by the othercontracting party must be made known to the otherand is always provisional, beingever subject to scrutiny and review by the proper court." [University of the Phils. v. Delos Angeles, G. R. No. L-28602, September 29, 1970, 35 SCRA 102, 107; Emphasissupplied.]

In the instant case, Delta made no manifestation whatsoever that it had opted to rescindits contracts with f-he Genuinos. It only raised rescission as a defense when it was suedfor specific performance by private respondents.

Further, it would be highly inequitable for petitioner Delta to rescind the two (2) contractsconsidering the fact that not only does it have in its possession and ownership the blackiron pipes, but also the P15,900.00 down payments private respondents have paid. Andif petitioner Delta claims the right to rescission, at the very least, it should have offeredto return the P15,900.00 down payments [See Art. 1385, Civil Code and Hodges v.Granada, 59 Phil. 429 (1934)].


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It is for these same reasons that while there is merit in Delta's claim that the sale issubject to suspensive conditions, the Court finds that it has, nevertheless, waivedperformance of these conditions and opted to go on with the contracts although at amuchhigher price. Art. 1545 of the Civil Code provides:

Art. 1545. Where the obligation of either party to a contract of sale is subject to anycondition which is not performed, such party may refuse to proceed with the contract or

he may waived performance of the condition. . . . [Emphasis supplied.]

Finally, Delta cannot ask for increased prices based on the price offer stipulation in thecontracts and in the increase in the cost of goods. Reliance by Delta on the price offerstipulation is misplaced. Said stipulation makes reference to Delta's price offer asremaining firm for thirty (30) days and thereafter, will be subject to its review andconfirmation. The offers of Delta, however, were accepted by the private respondentswithin the thirty (30)-day period. And as stipulated in the two (2) letter-quotations,acceptance of the offer gives rise to a contract between the parties:

In the event that this proposal is acceptable to you, please indicate your conformity bysigning the space provided herein below which also serves as a contract of this proposal.[Exhs."A" and "C"; Exhs."1" and "2".]

And as further provided by the Civil Code:

Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon thething and the cause which are to constitute the contract.

Art. 1475. The contract of sale is perfected at the moment there is a meeting of mindsupon thing which is the object of the contract and upon the price.

Thus, the moment private respondents accepted the offer of Delta, the contract of salebetween them was perfected and neither party could change the terms thereof.

Neither could petitioner Delta rely on the fluctuation in the market price of goods tosupport its claim for rescission. As testified to by petitioner's Vice-President of Marketingfor the Electronics, Airconditioning and Refrigeration division, MarcelinoCaja, thestipulation in the two (2) contracts as to delivery, ex-stock subject to prior sales, meansthat "the goods have not been delivered and that there are no priorcommitments otherthan the sale covered by the contracts.. . once the offer is accepted, the company hasno more option to change the price." [CFI Decision, p. 5; Rollo, p. 45; Emphasissupplied.] Thus, petitioner cannot claim forhigher prices for the black iron pipes due to

the increase in the cost of goods. Based on the foregoing, petitioner Delta and privaterespondents Genuinos should comply with the original terms of their contracts.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.


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Footnotes

* The Court of Appeals decision was penned by Justice German. Justice de la Fuente wrote a separate concurringopinion. Justice Cenzon concurred both with Justice German's decision and Justice de la Fuente's opinion. Justice

Gancayco,h

owever, wrote a separate dissenting opinion to which

Justice Patajo concurred.


SUPREME COURTManila

THIRD DIVISION

G.R. No. L-59266 February 29, 1988

SILVESTRE DIGNOS and ISABEL LUMUNGSOD, petitioners,

vs.HON. COURT OF APPEALS and ATILANO G. JABIL, respondents.

BIDIN, J.:

This is a petition for review on certiorari seeking the reversal of the: (1) Decision * of the9th Division, Court of Appeals dated July 31,1981, affirming with modification the

Decision, dated August 25, 1972 of th

e Court of First Instance**

of Cebu in civil CaseNo. 23-L entitled Atilano G. Jabil vs. Silvestre T. Dignos and IsabelaLumungsod deDignos and PanfiloJabalde, as Attorney-in-Fact of Luciano Cabigas and Jovita L. deCabigas; and (2) its Resolution dated December 16, 1981, denying defendant-appellant's (Petitioner's) motion for reconsideration, for lack of merit.

The undisputed facts as found by the Court of Appeals are as follows:

The Dignos spouses were owners of a parcel of land, known as Lot No. 3453, of thecadastral survey of Opon, Lapu-Lapu City. On June 7, 1965, appellants (petitioners)Dignos spouses sold the said parcel of land to plaintiff-appellant (respondent Atilano J.Jabil) for the sum of P28,000.00, payable in two installments, with an assumption of

indebtedness with

the First Insular Bank of Cebu in t

he sum of P12,000.00, w

hich

waspaid and acknowledged by the vendors in the deed of sale (Exh. C) executed in favor ofplaintiff-appellant, and the next installment in the sum of P4,000.00 to be paid on orbefore September 15, 1965.

On November 25, 1965, the Dignos spouses sold the same land in favor of defendantsspouses, Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for theprice of P35,000.00. A deed of absolute sale (Exh.J, also marked Exh. 3) was executedby the Dignos spouses in favor of the Cabigas spouses, and which was registered in theOffice of the Register of Deeds pursuant to the provisions of Act No. 3344.


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As the Dignos spouses refused to accept from plaintiff-appellant the balance of thepurchase price of the land, and as plaintiff- appellant discovered the second sale madeby defendants-appellants to the Cabigas spouses, plaintiff-appellant brought the presentsuit. (Rollo, pp. 27-28)

After due trial, the Court of first Instance of Cebu rendered its Decision on August

25,1972, the decretal portion of which reads:

WHEREFORE, the Court hereby declares the deed of sale executed on November 25,1965 by defendant Isabela L. de Dignos in favor of defendant Luciano Cabigas, a citizenof the United States of America, null and void ab initio, and the deed of sale executed bydefendants Silvestre T. Dignos and IsabelaLumungsod de Dignos not rescinded.Consequently, the plaintiff Atilano G. Jabil is hereby ordered to pay the sum, of SixteenThousand Pesos (P16,000.00) to the defendants-spouses upon the execution of theDeed of absolute Sale of Lot No. 3453, Opon Cadastre and when the decision of thiscase becomes final and executory.

The plaintiff Atilano G. Jabil is ordered to reimburse the defendants Luciano Cabigas andJovita L. de Cabigas, through their attorney-in-fact, PanfiloJabalde, reasonable amount

corresponding to the expenses or costs of the hollow block fence, so far constructed.

It is further ordered that defendants-spouses Silvestre T. Dignos and IsabelaLumungsodde Dignos should return to defendants-spouses Luciano Cabigas and Jovita L. deCabigas the sum of P35,000.00, as equity demands that nobody shall enrichhimself atthe expense of another.

The writ of preliminary injunction issued on September 23, 1966, automatically becomespermanent in virtue of this decision.

With costs against the defendants.

From the foregoing, the plaintiff (respondent herein) and defendants-spouss (petitionersherein) appealed to the Court of Appeals, which appeal was docketed therein as CA-G.R. No. 54393-R, "Atilano G. Jabil v. Silvestre T. Dignos, et al."

On July 31, 1981, the Court of Appeals affirmed the decision of the lower court exceptas to the portion ordering Jabil to pay for the expenses incurred by the Cabigas spousesfor the building of a fence upon the land in question. The disposive portion of saiddecision of the Court of Appeals reads:

IN VIEW OF THE FOREGOING CONSIDERATIONS, except as to the modification of thejudgment as pertains to plaintiff-appellant above indicated, the judgment appealed from is

hereby AFFIRMED in all other respects.

With costs against defendants-appellants.

SO ORDERED.

Judgment MODIFIED.


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A motion for reconsideration of said decision was filed by the defendants- appellants(petitioners) Dignos spouses, but on December 16, 1981, a resolution was issued bythe Court of Appeals denying the motion for lack of merit.

Hence, this petition.

In the resolution of February 10, 1982, the Second Division of this Court denied thepetition for lack of merit. A motion for reconsideration of said resolution was filed onMarch 16, 1982. In the resolution dated April 26,1982, respondents were required tocomment thereon, which comment was filed on May 11, 1982 and a reply thereto wasfiled on July 26, 1982 in compliance with the resolution of June 16,1 982. On August9,1982, acting on the motion for reconsideration and on all subsequent pleadings filed,this Court resolved to reconsider its resolution of February 10, 1982 and to give duecourse to the instant petition. On September 6, 1982, respondents filed a rejoinder toreply of petitioners which was noted on the resolution of September 20, 1982.

Petitioners raised th

e following assignment of errors:

I

THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW IN GROSSLY,INCORRECTLY INTERPRETING THE TERMS OF THE CONTRACT, EXHIBIT C,HOLDING IT AS AN ABSOLUTE SALE, EFFECTIVE TO TRANSFER OWNERSHIPOVER THE PROPERTY IN QUESTION TO THE RESPONDENT AND NOT MERELY ACONTRACTTO SELL OR PROMISE TO SELL; THE COURT ALSO ERRED INMISAPPLYING ARTICLE 1371 AS WARRANTING READING OF THE AGREEMENT,EXHIBIT C, AS ONE OF ABSOLUTE SALE, DESPITE THE CLARITY OF THE TERMST

HEREOF SHOWING IT

IS A CONT

RACT

OF PROMISET

O SELL.

II

THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN INCORRECTLYAPPLYING AND OR IN MISAPPLYING ARTICLE 1592 OF THE NEW CIVIL CODE ASWARRANTING THE ERRONEOUS CONCLUSION THATTHE NOTICE OFRESCISSION, EXHIBIT G, IS INEFFECTIVE SINCE IT HAS NOT BEEN JUDICIALLYDEMANDED NOR IS IT A NOTARIAL ACT.

III

THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN REJECTING THEAPPLICABILITY OF ARTICLES 2208,2217 and 2219 OF THE NEW CIVIL CODE ANDESTABLISHED JURISPRUDENCE AS TO WARRANTTHE AWARD OF DAMAGES

AND ATTORNEY'S FEES TO PETITIONERS.

IV


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PLAINTIFF'S COMPLAINT FOR SPECIFIC PERFORMANCE SHOULD HAVE BEENDISMISSED, HE HAVING COME TO COURT WITH UNCLEAN HANDS.

V

BY AND LARGE,T

HE COURT

OF APPEALS COMMITT

ED AN ERROR INAFFIRMING WITH MODIFICATION THE DECISION OF THE TRIAL COURT DUE TOGRAVE MISINTERPRETATION, MISAPPLICATION AND MISAPPREHENSION OFTHE TERMS OF THE QUESTIONED CONTRACT AND THE LAW APPLICABLETHERETO.

The foregoing assignment of errors may be synthesized into two main issues, to wit:

I. Whether or not subject contract is a deed of absolute sale or a contract Lot sell.

II. Whether or not there was a valid rescission thereof.

There is no merit in this petition.

It is significant to note that this petition was denied by the Second Division of this Courtin its Resolution dated February 1 0, 1 982 for lack of merit, but on motion forreconsideration and on the basis of all subsequent pleadings filed, the petition wasgiven due course.

I.

The contract in question (Exhibit C) is a Deed of Sale, with the following conditions:

1. That AtilanoG..Jabilis to pay the amount ofTwelve Thousand Pesos P12,000.00) Phil.Philippine Currency as advance payment;

2. That Atilano G. Jabil is to assume the balance ofTwelve Thousand Pesos(P12,000.00) Loan from the First Insular Bank of Cebu;

3. That Atilano G. Jabil is to pay the said spouses the balance of Four. Thousand Pesos(P4,000.00) on or before September 15,1965;

4. That the said spouses agrees to defend the said Atilano G. Jabil from other claims onthe said property;

5. That the spouses agrees to sign a final deed of absolute sale in favor of Atilano G.Jabil over the above-mentioned property upon the payment of the balance of Four

Thousand Pesos. (Original Record, pp. 10-11)

In their motion for reconsideration, petitioners reiterated their contention that the Deedof Sale (Exhibit "C") is a mere contract to sell and not an absolute sale; that the same issubject to two (2) positive suspensive conditions, namely: the payment of the balance ofP4,000.00 on or before September 15,1965 and the immediate assumption of the


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mortgage of P12,000.00 with the First Insular Bank of Cebu. It is further contended thatin said contract, title or ownership over the property was expressly reserved in thevendor, the Dignos spouses until the suspensive condition of full and punctual paymentof the balance of the purchase price shall have been met. So that there is no actual saleuntil full payment is made (Rollo, pp. 51-52).

In bolstering their contention that Exhibit "C" is merely a contract to sell, petitioners averthat there is absolutely nothing in Exhibit "C" that indicates that the vendors thereby sell,convey or transfer their ownership to the alleged vendee. Petitioners insist that Exhibit"C" (or 6) is a private instrument and the absence of a formal deed of conveyance is avery strong indication that the parties did not intend "transfer of ownership and title butonly a transfer after full payment" (Rollo, p. 52). Moreover, petitioners anchored theircontention on the very terms and conditions of the contract, more particularly paragraphfour which reads, "that said spouses has agreed to sell the herein mentioned property to

Atilano G. Jabil ..." and condition number five which reads, "that the spouses agrees tosign a final deed of absolute sale over the mentioned property upon the payment of the

balance of four th

ousand pesos."

Such contention is untenable.

By and large, the issues in this case have already been settled by this Court inanalogous cases.

Thus, it has been held that a deed of sale is absolute in nature although denominatedas a "Deed of Conditional Sale" where nowhere in the contract in question is a provisoor stipulation to the effect that title to the property sold is reserved in the vendor until fullpayment of the purchase price, nor is there a stipulation giving the vendor the right to

unilaterally rescind the contract t

he moment t

he vendee fails to pay wit

hin a fixed periodTaguba v. Vda. de Leon, 132 SCRA 722; Luzon Brokerage Co., Inc. v. Maritime

Building Co., Inc., 86 SCRA 305).

A careful examination of the contract shows that there is no such stipulation reservingthe title of the property on the vendors nor does it give them the right to unilaterallyrescind the contract upon non-payment of the balance thereof within a fixed period.

On the contrary, all the elements of a valid contract of sale under Article 1458 of theCivil Code, are present, such as: (1) consent or meeting of the minds; (2) determinatesubject matter; and (3) price certain in money or its equivalent. In addition, Article 1477of the same Code provides that "The ownership of the thing sold shall be transferred tothe vendee upon actual or constructive delivery thereof." As applied in the case ofFroilan v. Pan Oriental Shipping Co., et al. (12 SCRA 276), this Court held that in theabsence of stipulation to the contrary, the ownership of the thing sold passes to thevendee upon actual or constructive delivery thereof.

While it may be conceded that there was no constructive delivery of the land sold in thecase at bar, as subject Deed of Sale is a private instrument, it is beyond question that


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there was actual delivery thereof. As found by the trial court, the Dignos spousesdelivered the possession of the land in question to Jabil as early as March 27,1965 sothat the latter constructed thereon Sally's Beach Resort also known as Jabil's BeachResort in March, 1965; Mactan White Beach Resort on January 15,1966 and Bevirlyn'sBeach Resort on September 1, 1965. Such facts were admitted by petitioner spouses

(Decision, Civil Case No. 23-L; Record on Appeal, p. 108).

Moreover, the Court of Appeals in its resolution dated December 16,1981 found that theacts of petitioners, contemporaneous with the contract, clearly show that an absolutedeed of sale was intended by the parties and not a contract to sell.

Be that as it may, it is evident that when petitioners sold said land to the Cabigasspouses, they were no longer owners of the same and the sale is null and void.

II.

Petitioners claim that w

hen t

hey sold t

he land to t

he Cabigas spouses, t

he contract ofsale was already rescinded.

Applying the rationale of the case ofTaguba v. Vda.de Leon (supra) which is on allfours with the case at bar, the contract of sale being absolute in nature is governed by

Article 1592 of the Civil Code. It is undisputed that petitioners never notified privaterespondents Jabil by notarial act that they were rescinding the contract, and neither didthey file a suit in court to rescind the sale. The most that they were able to show is aletter of Cipriano Amistad who, claiming to be an emissary of Jabil, informed the Dignosspouses not to go to the house of Jabil because the latterhad no money and furtheradvised petitioners to sell the land in litigation to another party (Record on Appeal, p.

23). As correctly found by th

e Court of Appeals, there is no s

howing t

hat Amistad wasproperly authorized by Jabil to make such extra-judicial rescission for the latter who, on

the contrary, vigorously denied having sent Amistad to tell petitioners that he wasalready waiving his rights to the land in question. Under Article 1358 of the Civil Code, itis required that acts and contracts whichhave for their object the extinguishment of realrights over immovable property must appear in a public document.

Petitioners laid considerable emphasis on the fact that private respondent Jabil had nomoney on the stipulated date of payment on September 15,1965 and was able to raisethe necessary amount only by mid-October 1965.

Ith

as been ruled,h

owever, th

at "wh

ere time is not of th

e essence of th

e agreement, aslight delay on the part of one party in the performance ofhis obligation is not asufficient ground for the rescission of the agreement" (Taguba v. Vda. de Leon, supra).Considering that private respondent has only a balance of P4,000.00 and was delayedin payment only for one month, equity and justice mandate as in the aforecited case thatJabil be given an additional period within which to complete payment of the purchaseprice.


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WHEREFORE, the petition filed is hereby Dismissed for lack of merit and the assaileddecision of the Court of Appeals is Affirmed in toto.

SO ORDERED.

Fernan (Chairman), Gutierrez, Jr., Feliciano and Cortes, JJ., concur.

Footnotes

* Penned by Justice Elias B. Asuncion and concurred by Justices Porfirio V. Sison and Vicente V. Mendoza.

** Penned by Judge Ramon E. Nazareno.

The Lawphil Project - Arellano Law Foundation


SUPREME COURTManila

THIRD DIVISION

G.R. No. 107207 November 23, 1995

VIRGILIO R. ROMERO, petitioner,vs.HON. COURT OF APPEALS and ENRIQUETA CHUA VDA. DE ONGSIONG,respondents.

VITUG, J.:

The parties pose this question: May the vendordemand the rescission of a contract forthe sale of a parcel of land for a cause traceable to his own failure to have the squatterson the subject property evicted within the contractually-stipulated period?

Petitioner Virgilio R. Romero, a civil engineer, was engaged in the business ofproduction, manufacture and exportation of perlite filter aids, permalite insulation andprocessed perlite ore. In 1988, petitioner and his foreign partners decided to put up acentral warehouse in Metro Manila on a land area of approximately 2,000 squaremeters. The project was made known to several freelance real estate brokers.


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A day or so after the announcement, Alfonso Flores and his wife, accompanied by abroker, offered a parcel of land measuring 1,952 square meters. Located in BarangaySan Dionisio, Paraaque, Metro Manila, the lot was covered by TCT No. 361402 in thename of private respondent Enriqueta Chua vda. deOngsiong. Petitioner visited theproperty and, except for the presence of squatters in the area, he found the place

suitable for a central warehouse.

Later, the Flores spouses called on petitioner with a proposal that should he advancethe amount of P50,000.00 which could be used in taking up an ejectment case againstthe squatters, private respondent would agree to sell the property for only P800.00 persquare meter. Petitioner expressed his concurrence. On 09 June 1988, a contract,denominated "Deed of Conditional Sale," was executed between petitioner and privaterespondent. The simply-drawn contract read:

DEED OF CONDITIONAL SALE

KNOW ALL MEN BY THESE PRESENTS:

This Contract, made and executed in the Municipality of Makati, Philippines this 9th dayof June, 1988 by and between:

ENRIQUETA CHUA VDA. DE ONGSIONG, of legal age, widow, Filipinoand residing at 105 Simoun St., Quezon City, Metro Manila, hereinafterreferred to as the VENDOR;

-and-

VIRGILIO R. ROMERO, married to Severina L. Lat, of Legal age,Filipino, and residing at 110 San Miguel St., Plainview Subd.,

Mandaluyong Metro Manila, hereinafter referred to as the VENDEE:

W I T N E S S E T H : That

WHEREAS, the VENDOR is the owner of One (1) parcel of land with a total area of ONETHOUSAND NINE HUNDRED FIFTY TWO (1,952) SQUARE METERS, more or less,located in Barrio San Dionisio, Municipality of Paraaque, Province of Rizal, covered byTCT No. 361402 issued by the Registry of Deeds of Pasig and more particularlydescribed as follows:

xxxxxxxxx

WHEREAS, the VENDEE, for (sic) has offered to buy a parcel of land and the VENDOR

has accepted the offer, subject to the terms and conditions hereinafter stipulated:

NOW, THEREFORE, for and in consideration of the sum of ONE MILLION FIVEHUNDRED SIXTY ONE THOUSAND SIX HUNDRED PESOS (P1,561,600.00) ONLY,Philippine Currency, payable by VENDEE to in to (sic) manner set forth, the VENDORagrees to sell to the VENDEE, theirheirs, successors, administrators, executors, assign,all her rights, titles and interest in and to the property mentioned in the FIRST WHEREASCLAUSE, subject to the following terms and conditions:


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1. That the sum of FIFTY THOUSAND PESOS (P50,000.00) ONLYPhilippine Currency, is to be paid upon signing and execution of thisinstrument.

2. The balance of the purchase price in the amount of ONE MILLIONFIVE HUNDRED ELEVEN THOUSAND SIX HUNDRED PESOS

(P1,511,600.00) ONLY shall be paid 45 days after t

he removal of allsquatters from the above described property.

3. Upon full payment of the overall purchase price as aforesaid,VENDOR without necessity of demand shall immediately sign, execute,acknowledged (sic) and deliver the corresponding deed of absolute salein favor of the VENDEE free from all liens and encumbrances and allReal Estate taxes are all paid and updated.

It is hereby agreed, covenanted and stipulated by and between the parties hereto that ifafter 60 days from the date of the signing of this contract the VENDOR shall not be ableto remove the squatters from the property being purchased, the downpayment made bythe buyer shall be returned/reimbursed by the VENDOR to the VENDEE.

That in the event that the VENDEE shall not be able to pay the VENDOR the balance ofthe purchase price of ONE MILLION FIVE HUNDRED ELEVEN THOUSAND SIXHUNDRED PESOS (P1,511,600.00) ONLY after 45 days from written notification to theVENDEE of the removal of the squatters from the property being purchased, the FIFTYTHOUSAND PESOS (P50,000.00) previously paid as downpayment shall be forfeited infavor of the VENDOR.

Expenses for the registration such as registration fees, documentary stamp, transfer fee,assurances and such other fees and expenses as may be necessary to transfer the titleto the name of the VENDEE shall be for the account of the VENDEE while capital gainstax shall be paid by the VENDOR.

IN WITNESS WHEREOF, the parties hereunto signed those (sic) presents in the City ofMakati MM, Philippines on this 9th day of June, 1988.

(Sgd.)(Sgd.)

VIRGILIO R. ROMERO ENRIQUETA CHUA VDA.

DE ONGSIONG

Vendee Vendor

SIGNED IN THE PRESENCE OF:

(Sgd.)(Sgd.)

Rowena C. Ongsiong Jack M. Cruz1

Alfonso Flores, in behalf of private respondent, forthwith received andacknowledged a check for P50,000.00 2from petitioner. 3


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Pursuant to the agreement, private respondent filed a complaint for ejectment (CivilCase No. 7579) against Melchor Musa and 29 other squatter families with theMetropolitan Trial Court of Paraaque. A few months later, or on 21 February 1989,

judgment was rendered ordering the defendants to vacate the premises. The decisionwas handed down beyond the 60-day period (expiring 09 August 1988) stipulated in the

contract.Th

e writ of execution of th

e judgment was issued, still later, on 30 March

1989.

In a letter, dated 07 April 1989, private respondent sought to return the P50,000.00 shereceived from petitioner since, she said, she could not "get rid of the squatters" on thelot. Atty. Sergio A.F. Apostol, counsel for petitioner, in his reply of 17 April 1989, refusedthe tender and stated:.

Our client believes that with the exercise of reasonable diligence considering thefavorable decision rendered by the Court and the writ of execution issued pursuantthereto, it is now possible to eject the squatters from the premises of the subject property,for which reason, he proposes that he shall take it upon himself to eject the squatters,provided, that expenses which shall be incurred by reason thereof shall be chargeable to

the purc

hase price of t

he land.

4

Meanwhile, the Presidential Commission for the Urban Poor ("PCUD"), through itsRegional Director for Luzon, Farley O. Viloria, asked the Metropolitan Trial Court ofParaaque for a grace period of 45 days from 21 April 1989 within which to relocate andtransfer the squatter families. Acting favorably on the request, the court suspended theenforcement of the writ of execution accordingly.

On 08 June 1989, Atty. Apostol reminded private respondent on the expiry of the 45-daygrace period and his client's willingness to "underwrite the expenses for the execution ofthe judgment and ejectment of the occupants." 5

In his letter of 19 June 1989, Atty. Joaquin Yuseco, Jr., counsel for private respondent,advised Atty. Apostol that the Deed of Conditional Sale had been rendered nulland voidby virtue ofhis client's failure to evict the squatters from the premises within the agreed60-day period. He added that private respondent had "decided to retain the property." 6

On 23 June 1989, Atty. Apostol wrote back to explain:

The contract of sale between the parties was perfected from the very moment that therewas a meeting of the minds of the parties upon the subject lot and the price in the amountof P1,561,600.00. Moreover, the contract had already been partially fulfilled and executedupon receipt of the downpayment of your client. Ms.Ongsiong is precluded from rejecting

its binding effects relying upon her inability to eject the squatters from the premises ofsubject property during the agreed period. Suffice it to state that, the provision of theDeed of Conditional Sale do not grant her the option or prerogative to rescind thecontract and to retain the property should she fail to comply with the obligation she hasassumed under the contract. In fact, a perusal of the terms and conditions of the contractclearly shows that the right to rescind the contract and to demand thereturn/reimbursement of the downpayment is granted to our client forhis protection.

Instead, however, of availing himself of the power to rescind the contract and demand thereturn, reimbursement of the downpayment, our client had opted to take it upon himself to


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eject the squatters from the premises. Precisely, we refer you to our letters addressed toyour client dated April 17, 1989 and June 8, 1989.

Moreover, it is basic under the law on contracts that the power to rescind is given to theinjured party. Undoubtedly, under the circumstances, our client is the injured party.

Furthermore, your client has not complied withher obligation under their contract in goodfaith. It is undeniable that Ms.Ongsiong deliberately refused to exert efforts to eject thesquatters from the premises of the subject property and her decision to retain theproperty was brought about by the sudden increase in the value of realties in thesurrounding areas.

Please consider this letter as a tender of payment to your client and a demand to executethe absolute Deed of Sale.

7

A few days later (or on 27 June 1989), private respondent, prompted by petitioner'scontinued refusal to accept the return of the P50,000.00 advance payment, filed with theRegional Trial Court of Makati, Branch 133, Civil Case No. 89-4394 for rescission of the

deed of "conditional" sale, plus damages, and for the consignation of P50,000.00 cash.

Meanwhile, on 25 August 1989, the Metropolitan Trial Court issued an alias writ ofexecution in Civil Case No. 7579 on motion of private respondent but the squattersapparently still stayed on.

Back to Civil Case No. 89-4394, on 26 June 1990, the Regional Trial Court of Makati8rendered decision holding that private respondent had no right to rescind the contractsince it was she who "violated her obligation to eject the squatters from the subjectproperty" and that petitioner, being the injured party, was the party who could, under

Article 1191 of the Civil Code, rescind the agreement. The court ruled that the

provisions in the contract relating to (a) the return/reimbursement of the P50,000.00 ifthe vendor were to fail in her obligation to free the property from squatters within thestipulated period or (b), upon the otherhand, the sum's forfeiture by the vendor if thevendee were to fail in paying the agreed purchase price, amounted to "penalty clauses".The court added:

This Court is not convinced of the ground relied upon by the plaintiff in seeking therescission, namely: (1) he (sic) is afraid of the squatters; and (2) she has spent so muchto eject them from the premises (p. 6, tsn, ses. Jan. 3, 1990). Militating against herprofession of good faith is plaintiffs conduct which is not in accord with the rules of fairplay and justice. Notably, she caused the issuance of an alias writ of execution on August25, 1989 (Exh. 6) in the ejectment suit which was almost two months after she filed thecomplaint before this Court on June 27, 1989. If she were really afraid of the squatters,then she should not have pursued the issuance of an alias writ of execution. Besides, shedid not even report to the police the alleged phone threats from the squatters. To themind of the Court, the so-called squatter factor is simply factuitous (sic).

9

The lower court, accordingly, dismissed the complaint and ordered, instead,private respondent to eject or cause the ejectment of the squatters from theproperty and to execute the absolute deed of conveyance upon payment of thefull purchase price by petitioner.


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Private respondent appealed to the Court of Appeals. On 29 May 1992, the appellatecourt rendered its decision. 10 It opined that the contract entered into by the parties wassubject to a resolutory condition, i.e., the ejectment of the squatters from the land, thenon-occurrence of which resulted in the failure of the object of the contract; that privaterespondent substantially complied withher obligation to evict the squatters; that it was

petitioner who was not ready to pay t

he purc

hase price and fulfill

his part of t

he contract,and that the provision requiring a mandatory return/reimbursement of the P50,000.00 in

case private respondent would fail to eject the squatters within the 60-day period wasnot a penal clause. Thus, it concluded.

WHEREFORE, the decision appealed from is REVERSED and SET ASIDE, and a newone entered declaring the contract of conditional sale dated June 9, 1988 cancelled andordering the defendant-appellee to accept the return of the downpayment in the amountof P50,000.00 which was deposited in the court below. No pronouncement as to costs.

11

Failing to obtain a reconsideration, petitioner filed this petition for review on certiorariraising issues that, in fine, center on the nature of the contract adverted to and the

P50,000.00 remittance made by petitioner.

A perfected contract of sale may either be absolute or conditional 12depending onwhether the agreement is devoid of, or subject to, any condition imposed on the passingof title of the thing to be conveyed or on the obligation of a party thereto. Whenownership is retained until the fulfillment of a positive condition the breach of thecondition will simply prevent the duty to convey title from acquiring an obligatory force. Ifthe condition is imposed on an obligation of a party which is not complied with, the other

partymay either refuse to proceed or waive said condition (Art. 1545, Civil Code).Where, of course, the condition is imposed upon the perfection of the contract itself, thefailure of such condition would prevent the juridical relation itself from coming into

existence.13

In determining the real character of the contract, the title given to it by the parties is notas much significant as its substance. For example, a deed of sale, althoughdenominated as a deed of conditional sale, may be treated as absolute in nature, if titleto the property sold is not reserved in the vendor or if the vendor is not granted the rightto unilaterally rescind the contract predicatedon the fulfillment or non-fulfillment, as the case may be, of the prescribed condition. 14

The term "condition" in the context of a perfectedcontract of sale pertains, in reality, tothe compliance by one party of an undertaking the fulfillment of which would beckon, in

turn, the demandability of the reciprocal prestation of the other party. The reciprocalobligations referred to would normally be, in the case of vendee, the payment of theagreed purchase price and, in the case of the vendor, the fulfillment of certain expresswarranties (which, in the case at bench is the timely eviction of the squatters on theproperty).

It would be futile to challenge the agreement here in question as not being a dulyperfected contract. A sale is at once perfected when a person (the seller) obligates


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himself, for a price certain, to deliver and to transfer ownership of a specified thing orright to another (the buyer) over which the latter agrees. 15

The object of the sale, in the case before us, was specifically identified to be a 1,952-square meter lot in San Dionisio, Paraaque, Rizal, covered by Transfer Certificate ofT

itle No. 361402 of the Registry of Deeds for Pasig and t

herein tec

hnically described.

The purchase price was fixed at P1,561,600.00, of which P50,000.00 was to be paidupon the execution of the document of sale and the balance of P1,511,600.00 payable"45 days after the removal of all squatters from the above described property."

From the moment the contract is perfected, the parties are bound not only to thefulfillment of what has been expressly stipulated but also to all the consequences which,according to their nature, may be in keeping with good faith, usage and law. Under theagreement, private respondent is obligated to evict the squatters on the property. Theejectment of the squatters is a condition the operative act of which sets into motion theperiod of compliance by petitioner ofhis own obligation, i.e., to pay the balance of the

purch

ase price. Private respondent's failure "to remove the squatters from t

he property"within the stipulated period gives petitioner the right to either refuse to proceed with the

agreement or waive that condition in consonance with Article 1545 of the Civil Code. 16This option clearly belongs to petitioner and not to private respondent.

We share the opinion of the appellate court that the undertaking required of privaterespondent does not constitute a "potestative condition dependent solely on his will"that might, otherwise, be void in accordance with Article 1182 of the Civil Code 17 but a"mixed" condition "dependent not on the will of the vendor alone but also of thirdpersons like the squatters and government agencies and personnel concerned." 18 Wemust hasten to add, however, that where the so-called "potestative condition" is

imposed not on th

e birth

of th

e obligation but on its fulfillment, only th

e obligation isavoided, leaving unaffected the obligation itself. 19

In contracts of sale particularly, Article 1545 of the Civil Code, aforementioned, allowsthe obligee to choose between proceeding with the agreement or waiving theperformance of the condition. It is this provision which is the pertinent rule in the case atbench. Here, evidently, petitionerhas waived the performance of the condition imposedon private respondent to free the property from squatters. 20

In any case, private respondent's action for rescission is not warranted. She is not theinjured party. 21The right of resolution of a party to an obligation under Article 1191 ofthe Civil Code is predicated on a breach of faith by the other party that violates thereciprocity between them. 22 It is private respondent who has failed in her obligationunder the contract. Petitioner did not breach the agreement. He has agreed, in fact, toshoulder the expenses of the execution of the judgment in the ejectment case and tomake arrangements with the sheriff to effect such execution. In his letter of 23 June1989, counsel for petitionerhas tendered payment and demanded forthwith theexecution of the deed of absolute sale. Parenthetically, this offer to pay, having beenmade prior to the demand for rescission, assuming for the sake of argument that such a


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demand is proper under Article 1592 23 of the Civil Code, would likewise suffice to defeatprivate respondent's prerogative to rescind thereunder.

There is no need to still belabor the question of whether the P50,000.00 advancepayment is reimbursable to petitioner or forfeitable by private respondent, since, on the

basis of our foregoing conclusions, th

e matterh

as ceased to be an issue. Suffice it tosay that petitionerhaving opted to proceed with the sale, neither may petitioner demandits reimbursement from private respondent nor may private respondent subject it toforfeiture.

WHEREFORE, the questioned decision of the Court of Appeals is hereby REVERSEDAND SET ASIDE, and another is entered ordering petitioner to pay private respondentthe balance of the purchase price and the latter to execute the deed of absolute sale infavor of petitioner. No costs.

SO ORDERED.

Feliciano, Romero, Melo and Panganiban, JJ., concur.

Footnotes

1 Records, pp. 60-61.

2 Exh. 9.

3 Exh. 2.

4 Records, p. 116.

5 Exh.8-B.

6 Exh. D.

7 Records, pp. 74-75.

8 Presided by Judge Buenaventura J. Guerrero.

9 Records, p. 205.

10 Penned by Associate Justice Fermin A. Martin, Jr. and concurred in by Associate

Justices Emeterio C. Cui and Cezar D. Francisco.

11 Rollo, p. 46.

12 Art.1458, second paragraph, Civil Code of the Philippines.

13 SeeAng Yu Asuncion, et al., vs. Court of Appeals, 238 SCRA 602.


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14 Ibid., Vol. V, p. 3 citingDignos v. Court of Appeals, No. L-59266, February 29, 1988,

158 SCRA 375.

15 Art. 1475. The contract of sale is perfected at the moment there is a meeting of mindsupon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to theprovisions of the law governing the form of contracts.

16 Art. 1545. Where the obligation of either party to a contract of sale is subject to anycondition which is not performed, such party may refuse to proceed with the contract orhe may waive performance of the condition. If the other party has promised that thecondition should happen or be performed, such first mentioned party may also treat thenonperformance of the condition as a breach of warranty.

Where the ownership in the thing has not passed, the buyer may treat the fulfillment bythe seller ofhis obligation to deliver the same as described and as warranted expresslyor by implication in the contract of sale as a condition of the obligation of the buyer toperform his promise to accept and pay for the thing.

17 Art. 1182. When the fulfillment of the condition depends upon the sole will of thedebtor, the conditional obligation shall be void. If it depends upon chance or upon the willof a third person, the obligation shall take effect in conformity with the provisions of thisCode.

18 Decision, p. 17.

19 See Osmea vs. Rama, 14 Phil. 99.

20 See: Intestate Estate of the Late Ricardo P. Presbitero, Sr. v. Court of Appeals, 217

SCRA 372.

21 In Boysaw v. Interphil. Promotions, Inc. (148 SCRA 635, 643), the Court has said:"The power to rescind is given to the injured party. 'Where the plaintiff is the party whodid not perform the undertaking whichhe was bound by the terms of the agreement toperform, he is not entitled to insist upon the performance of the contract by thedefendant, or recover damages by reason ofhis own breach.'"

22 Deiparine, Jr. v. Court of Appeals, 221 SCRA 503, 513 citingUniversal Food

Corporation v. Court of Appeals, 33 SCRA 1.

23 See Ocampo v. Court of Appeals, supra. Art. 1592 states: "In the sale of immovableproperty, even though it may have been stipulated that upon failure to pay the price at thetime agreed upon the rescission of the contract shall of right take place, the vendee may

pay, even after the expiration of the period, as long as no demand for rescission of thecontract has been made upon him either judicially or by a notarial act. After the demand,the court may not grant him a new term."

The Lawphil Project - Arellano Law Foundation


25/46


SUPREME COURTManila

THIRD DIVISION

G.R. No. 103577 October 7, 1996

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL,

ANNABELLE C. GONZALES (for herself and on behalf of Florida C. Tupper, as

attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA

BALAIS MABANAG,petitioners,vs.

THE COURT OF APPEALS, CONCEPCION D. ALCARAZ, and RAMONA PATRICIAALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact, respondents.

MELO, J.:p

The petition before us has its roots in a complaint for specific performance to compelherein petitioners (except the last named, Catalina BalaisMabanag) to consummate thesale of a parcel of land with its improvements located along Roosevelt Avenue inQuezon City entered into by the parties sometime in January 1985 for the price ofP1,240,000.00.

The undisputed facts of the case were summarized by respondent court in this wise:

On January 19, 1985, defendants-appellants Romulo Coronel, et al. (hereinafter referredto as Coronels) executed a document entitled "Receipt of Down Payment" (Exh. "A") infavor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as Ramona) which isreproduced hereunder:

RECEIPT OF DOWN PAYMENT

P1,240,000.00 Total amount

50,000 Down payment

P1,190,000.00 Balance

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum ofFifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No.119627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00.

We bind ourselves to effect the transfer in our names from our deceased father,Constancio P. Coronel, the transfer certificate of title immediately upon receipt of thedown payment above-stated.


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On our presentation of the TCT already in or name, We will immediately execute thedeed of absolute sale of said property and Miss Ramona Patricia Alcaraz shallimmediately pay the balance of the P1,190,000.00.

Clearly, the conditions appurtenant to the sale are the following:

1. Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos uponexecution of the document aforestated;

2. The Coronels will cause the transfer in their names of the title of the propertyregistered in the name of their deceased father upon receipt of the Fifty Thousand(P50,000.00) Pesos down payment;

3. Upon the transfer in their names of the subject property, the Coronels will execute thedeed of absolute sale in favor of Ramona and the latter will pay the former the wholebalance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.

On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz(hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of

Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh. "2").

On February 6, 1985, the property originally registered in the name of the Coronels'father was transferred in their names underTCTNo. 327043 (Exh. "D"; Exh. "4")

On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 tointervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for OneMillion Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latterhas paidThree Hundred Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")

For this reason, Coronels canceled and rescinded the contract (Exh. "A") with Ramona

by depositing the down payment paid by Concepcion in t

he bank in trust for RamonaPatricia Alcaraz.

On February 22, 1985, Concepcion, et al., filed a complaint for specific performanceagainst the Coronels and caused the annotation of a notice oflispendensat the back of

TCT No. 327403 (Exh. "E"; Exh. "5").

On April 2, 1985, Catalina caused the annotation of a notice of adverse claim coveringthe same property with the Registry of Deeds of Quezon City (Exh. "F"; Exh. "6").

On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subjectproperty in favor of Catalina (Exh. "G"; Exh. "7").

On June 5, 1985, a new title over the subject property was issued in the name of CatalinaunderTCT No. 351582 (Exh. "H"; Exh. "8").

(Rollo, pp. 134-136)

In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City)the parties agreed to submit the case for decision solely on the basis of documentaryexhibits. Thus, plaintiffs therein (now private respondents) proffered their documentary


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evidence accordingly marked as Exhibits "A" through "J", inclusive of theircorresponding submarkings. Adopting these same exhibits as their own, thendefendants (now petitioners) accordingly offered and marked them as Exhibits "1"through "10", likewise inclusive of their corresponding submarkings. Upon motion of theparties, the trial court gave them thirty (30) days within which to simultaneously submit

their respective memoranda, and an additional 15 days wit

hin w

hich

to submit th

eircorresponding comment or reply thereof, after which, the case would be deemedsubmitted for resolution.

On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura,who was then temporarily detailed to preside over Branch 82 of the RTC of QuezonCity. On March 1, 1989, judgment was handed down by Judge Roura from his regularbench at Macabebe, Pampanga for the Quezon City branch, disposing as follows:

WHEREFORE, judgment for specific performance is hereby rendered ordering defendantto execute in favor of plaintiffs a deed of absolute sale covering that parcel of landembraced in and covered by Transfer Certificate ofTitle No. 327403 (now TCT No.

331582) of the Registry of Deeds for Quezon City, together with all the improvementsexisting thereon free from all liens and encumbrances, and once accomplished, toimmediately deliver the said document of sale to plaintiffs and upon receipt thereof, thesaid document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered topay defendants the whole balance of the purchase price amounting to P1,190,000.00 incash. Transfer Certificate ofTitle No. 331582 of the Registry of Deeds for Quezon City inthe name of intervenor is hereby canceled and declared to be without force and effect.Defendants and intervenor and all other persons claiming under them are hereby orderedto vacate the subject property and deliver possession thereof to plaintiffs. Plaintiffs' claimfor damages and attorney's fees, as well as the counterclaims of defendants andintervenors are hereby dismissed.

No pronouncement as to costs.

So Ordered.

Macabebe, Pampanga for Quezon City, March 1, 1989.

(Rollo, p. 106)

A motion for reconsideration was filed by petitioner before the new presiding judge ofthe Quezon City RTC but the same was denied by Judge Estrella T. Estrada, thusly:

The prayer contained in the instant motion, i.e., to annul the decision and to render anewdecision by the undersigned Presiding Judge should be denied for the following reasons:

(1) The instant case became submitted for decision as of April 14, 1988 when the partiesterminated the presentation of their respective documentary evidence and when thePresiding Judge at that time was Judge Reynaldo Roura. The fact that they were allowedto file memoranda at some future date did not change the fact that the hearing of thecase was terminated before Judge Roura and therefore the same should be submitted tohim for decision; (2) When the defendants and intervenor did not object to the authority ofJudge Reynaldo Roura to decide the case prior to the rendition of the decision, whenthey met for the first time before the undersigned Presiding Judge at the hearing of apending incident in Civil Case No. Q-46145 on November 11, 1988, they were deemed to


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have acquiesced thereto and they are now estopped from questioning said authority ofJudge Roura after they received the decision in question whichhappens to be adverse tothem; (3) While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at thisBranch of the Court, he was in all respects the Presiding Judge with full authority to acton any pending incident submitted before this Court during his incumbency. When hereturned to his Official Station at Macabebe, Pampanga, he did not lose his authority todecide or resolve such cases submitted to him for decision or resolution because hecontinued as Judge of the Regional Trial Court and is of co-equal rank with theundersigned Presiding Judge. The standing rule and supported by jurisprudence is that aJudge to whom a case is submitted for decision has the authority to decide the casenotwithstanding his transfer to another branch or region of the same court (Sec. 9, Rule135, Rule of Court).

Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989rendered in the instant case, resolution of which now pertains to the undersignedPresiding Judge, after a meticulous examination of the documentary evidence presentedby the parties, she is convinced that the Decision of March 1, 1989 is supported byevidence and, therefore, should not be disturbed.

IN VIEW OFT

HE FOREGOING, the "Motion for Reconsideration and/or to AnnulDecision and Render Anew Decision by the Incumbent Presiding Judge" dated March 20,

1989 is hereby DENIED.

SO ORDERED.

Quezon City, Philippines, July 12, 1989.

(Rollo, pp. 108-109)

Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court ofAppeals (Buena, Gonzaga-Reyes, Abad Santos (P), JJ.) rendered its decision fully

agreeing with the trial court.

Hence, the instant petition which was filed on March 5, 1992. The last pleading, privaterespondents' Reply Memorandum, was filed on September 15, 1993. The case was,however, re-raffled to undersignedponenteonly on August 28, 1996, due to the voluntaryinhibition of the Justice to whom the case was last assigned.

While we deem it necessary to introduce certain refinements in the disquisition ofrespondent court in the affirmance of the trial court's decision, we definitely find theinstant petition bereft of merit.

The heart of the controversy which is the ultimate key in the resolution of the otherissues in the case at bar is the precise determination of the legal significance of thedocument entitled "Receipt of Down Payment" which was offered in evidence by bothparties. There is no dispute as to the fact that said document embodied the bindingcontract between Ramona Patricia Alcaraz on the one hand, and the heirs ofConstancio P. Coronel on the other, pertaining to a particularhouse and lot covered byTCT No. 119627, as defined in Article 1305 of the Civil Code of the Philippines whichreads as follows:


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Art. 1305. A contract is a meeting of minds between two persons whereby one binds

himself, with respect to the other, to give something or to render some service.

While, it is the position of private respondents that the "Receipt of Down Payment"embodied a perfected contract of sale, which perforce, they seek to enforce by meansof an action for specific performance, petitioners on their part insist that what thedocument signified was a mere executory contract to sell, subject to certain suspensiveconditions, and because of the absence of Ramona P. Alcaraz, who left for the UnitedStates of America, said contract could not possibly ripen into a contract absolute sale.

Plainly, such variance in the contending parties' contentions is brought about by the wayeach interprets the terms and/or conditions set forth in said private instrument. Withal,based on whatever relevant and admissible evidence may be available on record, this,Court, as were the courts below, is now called upon to adjudge what the real intent ofthe parties was at the time the said document was executed.

The Civil Code defines a contract of sale, thus:

Art. 1458. By the contract of sale one of the contracting parties obligates himself totransfer the ownership of and to deliver a determinate thing, and the other to pay therefora price certain in money or its equivalent.

Sale, by its very nature, is a consensual contract because it is perfected by mereconsent. The essential elements of a contract of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchangefor the price;

b) Determinate subject matter; and

c) Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract ofSalebecause the first essential element is lacking. In a contract to sell, the prospective sellerexplicity reserves the transfer of title to the prospective buyer, meaning, the prospectiveseller does not as yet agree or consent to transfer ownership of the property subject ofthe contract to sell until the happening of an event, which for present purposes we shalltake as the full payment of the purchase price. What the seller agrees or obliges himselfto do is to fulfillis promise to sell the subject property when the entire amount of thepurchase price is delivered to him. In other words the full payment of the purchase price

partakes of a suspensive condition, the non-fulfillment of which prevents the obligationto sell from arising and thus, ownership is retained by the prospective seller withoutfurther remedies by the prospective buyer. In Roque vs. Lapuz(96 SCRA 741 [1980]),this Court had occasion to rule:

Hence, We hold that the contract between the petitioner and the respondent was acontract to sell where the ownership or title is retained by the seller and is not to passuntil the full payment of the price, such payment being a positive suspensive condition


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and failure of which is not a breach, casual or serious, but simply an event that preventedthe obligation of the vendor to convey title from acquiring binding force.

Stated positively, upon the fulfillment of the suspensive condition which is the fullpayment of the purchase price, the prospective seller's obligation to sell the subjectproperty by entering into a contract of sale with the prospective buyer becomesdemandable as provided in Article 1479 of the Civil Code which states:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocallydemandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain isbinding upon the promissor if the promise is supported by a consideration distinct fromthe price.

A contract to sell may thus be defined as a bilateral contract whereby the prospectiveseller, while expressly reserving the ownership of the subject property despite deliverythereof to the prospective buyer, binds himself to sell the said property exclusively to theprospective buyer upon fulfillment of the condition agreed upon, that is, full payment ofthe purchase price.

A contract to sell as defined hereinabove, may not even be considered as a conditionalcontract of sale where the seller may likewise reserve title to the property subject of thesale until the fulfillment of a suspensive condition, because in a conditional contract ofsale, the first element of consent is present, although it is conditioned upon thehappening of a contingent event which may or may not occur. If the suspensivecondition is not fulfilled, the perfection of the contract of sale is completely abated (cf.Homesite and housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, ifthe suspensive condition is fulfilled, the contract of sale is thereby perfected, such that ifthere had already been previous delivery of the property subject of the sale to the buyer,ownership thereto automatically transfers to the buyer by operation of law without anyfurther act having to be performed by the seller.

In a contract to sell, upon the fulfillment of the suspensive condition which is the fullpayment of the purchase price, ownership will not automatically transfer to the buyeralthough the property may have been previously delivered to him. The prospectiveseller still has to convey title to the prospective buyer by entering into a contract ofabsolute sale.

It is essential to distinguish between a contract to sell and a conditional contract of salespecially in cases where the subject property is sold by the owner not to the party theseller contracted with, but to a third person, as in the case at bench. In a contract to sell,there being no previous sale of the property, a third person buying such propertydespite the fulfillment of the suspensive condition such as the full payment of thepurchase price, for instance, cannot be deemed a buyer in bad faith and the prospectivebuyer cannot seek the relief of reconveyance of the property. There is no double sale insuch case. Title to the property will transfer to the buyer after registration because there


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is no defect in the owner-seller's title per se, but the latter, of course, may be used fordamages by the intending buyer.

In a conditional contract of sale, however, upon the fulfillment of the suspensivecondition, the sale becomes absolute and this will definitely affect the seller's title

thereto. In fact, if t

here

had been previous delivery of t

he subject property, t

he seller'sownership or title to the property is automatically transferred to the buyer such that, the

seller will no longerhave any title to transfer to any third person. Applying Article 1544of the Civil Code, such second buyer of the property who may have had actual orconstructive knowledge of such defect in the seller's title, or at least was charged withthe obligation to discover such defect, cannot be a registrant in good faith. Such secondbuyer cannot defeat the first buyer's title. In case a title is issued to the second buyer,the first buyer may seek reconveyance of the property subject of the sale.

With the above postulates as guidelines, we now proceed to the task of deciphering thereal nature of the contract entered into by petitioners and private respondents.

It is a canon in the interpretation of contracts that the words used therein should begiven their natural and ordinary meaning unless a technical meaning was intended (Tanvs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in thesaid "Receipt of Down Payment" that they

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum ofFifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No.

1199627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00.

without any reservation of title until full payment of the entire purchase price, thenatural and ordinary idea conveyed is that they sold their property.

When the "Receipt of Down Payment" is considered in its entirety, it becomes moremanifest that there was a clear intent on the part of petitioners to transfer title to thebuyer, but since the transfer certificate of title was still in the name of petitioner's father,they could not fully effect such transfer although the buyer was then willing and able toimmediately pay the purchase price. Therefore, petitioners-sellers undertook uponreceipt of the down payment from private respondent Ramona P. Alcaraz, to cause theissuance of a new certificate of title in their names from that of their father, after which,they promised to present said title, now in their names, to the latter and to execute thedeed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of thepurchase price.

The agreement could not have been a contract to sell because the sellers herein madeno express reservation of ownership or title to the subject parcel of land. Furthermore,the circumstance which prevented the parties from entering into an absolute contract ofsale pertained to the sellers themselves (the certificate of title was not in their names)and not the full payment of the purchase price. Under the established facts andcircumstances of the case, the Court may safely presume that, had the certificate of titlebeen in the names of petitioners-sellers at that time, there would have been no reason


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why an absolute contract of sale could not have been executed and consummated rightthere and then.

Moreover, unlike in a contract to sell, petitioners in the case at bar did not merelypromise to sell the properly to private respondent upon the fulfillment of the suspensive

condition. On th

e contrary,h

aving already agreed to sell the subject property, t

heyundertook to have the certificate of title changed to their names and immediately

thereafter, to execute the written deed of absolute sale.

Thus, the parties did not merely enter into a contract to sell where the sellers, aftercompliance by the buyer with certain terms and conditions, promised to sell the propertyto the latter. What may be perceived from the respective undertakings of the parties tothe contract is that petitioners had already agreed to sell the house and lot theyinherited from their father, completely willing to transfer full ownership of the subjecthouse and lot to the buyer if the documents were then in order. It just happened,however, that the transfer certificate of title was then still in the name of their father. It

was more expedient to first effect the c

hange in t

he certificate of title so as to bear t

heirnames. That is why they undertook to cause the issuance of a new transfer of the

certificate of title in their names upon receipt of the down payment in the amount ofP50,000.00. As soon as the new certificate of title is issued in their names, petitionerswere committed to immediately execute the deed of absolute sale. Only then will theobligation of the buyer to pay the remainder of the purchase price arise.

There is no doubt that unlike in a contract to sell which is most commonly entered intoso as to protect the seller against a buyer who intends to buy the property in installmentby withholding ownership over the property until the buyer effects full payment therefor,in the contract entered into in the case at bar, the sellers were the one who were unable

to enter into a contract of absolute sale by reason of th

e fact th

at th

e certificate of title tothe property was still in the name of their father. It was the sellers in this case who, as itwere, had the impediment which prevented, so to speak, the execution of an contract ofabsolute sale.

What is clearly established by the plain language of the subject document is that whenthe said "Receipt of Down Payment" was prepared and signed by petitioners Romeo A.Coronel, et al., the parties had agreed to a conditional contract of sale, consummationof which is subject only to the successful transfer of the certificate of title from the nameof petitioners' father, Constancio P. Coronel, to their names.

The Court significantly notes this suspensive condition was, in fact, fulfilled on February6, 1985 (Exh. "D"; Exh. "4"). Thus, on said date, the conditional contract of sale betweenpetitioners and private respondent Ramona P. Alcaraz became obligatory, the only actrequired for the consummation thereof being the delivery of the property by means ofthe execution of the deed of absolute sale in a public instrument, which petitionersunequivocally committed themselves to do as evidenced by the "Receipt of DownPayment."


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Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to thecase at bench. Thus,

Art. 1475. The contract of sale is perfected at the moment there is a meeting of mindsupon the thing which is the object of the contract and upon the price.

From the moment, the parties may reciprocally demand performance, subject to theprovisions of the law governing the form of contracts.

Art. 1181. In conditional obligations, the acquisition of rights, as well as theextinguishment or loss of those already acquired, shall depend upon the happening of theevent which constitutes the condition.

Since the condition contemplated by the parties which is the issuance of a certificate oftitle in petitioners' names was fulfilled on February 6, 1985, the respective obligations ofthe parties under the contract of sale became mutually demandable, that is, petitioners,as sellers, were obliged to present the transfer certificate of title already in their namesto private respondent Ramona P. Alcaraz, the buyer, and to immediately execute thedeed of absolute sale, while the buyer on her part, was obliged to forthwith pay thebalance of the purchase price amounting to P1,190,000.00.

It is also significant to note that in the first paragraph in page 9 of their petition,petitioners conclusively admitted that:

3. The petitioners-sellers Coronel bound themselves "to effect the transfer in

Absolute and Conditional Cases

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Transcript of Absolute and Conditional Cases