Case Digests

In Sales and Lease

Submitted by

Jamairah B. Macabanding

V-Arellano

Submitted to

Atty. Fatima Suzanne Disamburun

EUSEBIO DE LA CRUZ, plaintiff-appellee, 
vs.
APOLONIO LEGASPI and CONCORDIA SAMPEROY, defendants-appellants.
G.R. No. L-8024           November 29, 1955

FACTS:

Eusebio de la Cruz sued Apolonio Legaspi and his wife to compel delivery of the parcel of land
they had sold to him in December, 1949. The complaint alleged the execution of the contract, the
terms thereof, the refusal of defendants to accept payment of the purchse price of P450 which he
had tendered, and undue retention of the realty.

The defendants, in their answer, admitted the sale and the price; but they alleged that before the
document (of sale) "was made, the plaintiff agreed to pay the defendants the amount of P450
right after the document is executed.

After the document was signed and ratified by the Notary Public and after the plaintiff has taken
the original of the said document, the sad plaintiff refused to pay the sum of P450 which is the
purchase price of the said land in question." They asserted that for lack of consideration and for
deceit, the document of sald should be annulled.

The defendants retained the property.

ISSUE:

Whether or not there was lack of consideration

RULING:

They err in the assertion that as plaintiff failed to pay the price after the execution of the
document of sale as agreed previously, the contract became null and void for lack of
consideration. It cannot be denied that when the document was signed the cause or consideration
existed: P450. The document specifically said so; and such was undoubtedly the agreement.
Subsequent non-payment of the price at the time agreed upon did not convert the contract into
one without cause or consideration: a nudum pactum.
The situation was rather one in which there is failure to pay the consideration, with its resultant
consequences. In other words, when after the notarization of the contract, plaintiff failed to hand
the money to defendants as he previously promised, there was default on his part at most, and
defendants' right was to demand interest — legal interest — for the delay, pursuant to article
1501 (3) of the Civil, or to demand rescission in court. Such failure, however, did not ipso facto
resolve the contract, no stipulation to that effect having been alleged.

Neither was there any agreement nor allegation that payment on time was essential.
RODOLFO ALFONSO and NORMA G. ALFONSO, petitioners, 
vs.
COURT OF APPEALS, ROBERTO CHANCO and MYRNA GARCIA
CHANCO, respondents.
G.R. No. L-63745 June 8, 1990

FACTS:

Mr. and Mrs. Roberto Chanco were the registered owners of a lot in Barrio Sto. Angel, Sta. Cruz,
Laguna. They entered into an oral agreement with Mr. and Mrs. Rodolfo Alfonso regarding the
lot. What is undisputed is that the Alfonsos paid P2,000.00 to the Chancos, and that on that
occasion the latter executed a private

It is the Alfonso's claim that their understanding with the Chancos was that they would pay to
them the sum of P4,000.00, the balance of the consideration for the transfer of the land to them,
as soon as they obtained a loan from the Philippine National Bank.

It is the Chancos' claim, on the other hand, that they were selling their property because they
were in urgent need of money at the time. Hence, they returned the initial payment and rejected
the additional payment of the Alfonsos. Then the Chancos executed a deed of sale, conveying the
land to the spouses, Serafin Namit and Clarita Alvarez, for P6,000.00, and on the strength
thereof, a new certificate of title over the land was issued to the Namits.

The complaint of the Alfonsos was founded on the theory that their contract with the Chancos
was one of absolute sale which could not be unilaterally cancelled but required for its rescission
demand therefor, judicially or by notarial act, conformably with Article 1592 of the Civil Code.

ISSUE:

Whether or not there has been an absolute sale between the parties for the applicability of Article
1592 of the Civil Code.

RULING:
The facts declared by the Court of Appeals to have been satisfactorily proven do not demonstrate
the existence of a contract of sale of the immovable in question but rather, a contract to sell it;
hence the legal provision invoked by the Alfonsos, Article 1592 of the Civil Code cannot apply.

In the Manuel case, "only the price and the terns of payment were in writing," but the most
important matter in the controversy, the alleged transfer of title was never "reduced to any
written document. It was held that the contract should not be considered as a written but an oral
one; not a sale but a promise to sell; and that "the absence of a formal deed of conveyance" was a
strong indication "that the parties did not intend immediate transfer of title, but only a transfer
after full payment of the price." Under these circumstances, the Court ruled Article 1504 of the
Civil Code of 1889 (Art. 1592 of the present Code) to be inapplicable to the contract in
controversy-a contract to sell or promise to sell-"where title remains with the vendor until
fulfillment of a positive suspensive condition, such as full payment of the price ...5

And in Roque v. Lapuz, the Court reiterated the doctrine, affirmed by the "overwhelming weight
of authority culminating in the Luzon Brokerage v. Maritime cases, 6 ... that Article, 1592 of the
New Civil Code does not apply to a contract to sell where title remains with the vendor until full
payment of the price as in the case at bar."
PILAR T. OCAMPO, petitioner, 
vs.
COURT OF APPEALS and MAGDALENA S. VILLARUZ, respondents.
G.R. No. 97442 June 30, 1994

FACTS:

Two (2) documents, an "Agreement to Sell Real Property" and a "Contract to Sell," covering the
same parcel of land were executed by a seller in favor of two (2) different buyers. Both buyers
now assert against each other a better title to the property.

In dispute is an 18,260-square meter lot in the Poblacion of Tigbauan, Iloilo. On 20 August 1974,
Tolosa mortgaged the land to the Philippine Veterans Bank and had the encumbrance annotated
on his certificate of title under Entry No. 238353.

Tolosa and Pilar T. Ocampo entered into a contract whereby Tolosa undertook to sell the same
parcel of land to Ocampo.

On 21 April 1975, the parties entered into an "Agreement to Sell Real Property" whereby Tolosa
"sells, cedes and transfers" the land to Ocampo in consideration of P25,000.00, P12,500.00 of
which was paid upon signing of the deed and the balance to be due within six (6) months
thereafter. Paragraph 4 of the contract provides that "immediately upon complete payment of the
purchase price . . . by the VENDEE, the VENDOR . . . agrees to execute and deliver unto the
VENDEE whatever pertinent document or documents necessary to implement this sale and to
transfer title to the VENDEE."

Before the six-month period to complete the payment of the purchase price expired, Ocampo
paid but only the total of P16,700.00. Nevertheless Tolosa accepted her subsequent late
payments amounting to P3,900.00. Meanwhile, the subject property was involved in a boundary
dispute.

On 6 June 1976, upon learning of the mortgage lien, Ocampo caused her adverse claim to be
annotated on Tolosa’s certificate of title as Entry No. 279936.
Tolosa sought the cancellation of Ocampo’s adverse claim and presented her with two options,
namely, a refund of payments made, or a share from the net proceeds if sold to a third party.
Ocampo wrote Tolosa expressing her readiness to pay the balance of the purchase price, which
was P5,400.00, should Tolosa be ready to deliver to her the deed of absolute sale and the owner’s
duplicate of OCT No. 0-7743 for purposes of registration. 

On 3 June 1977, Tolosa and Magdalena S. Villaruz executed a "Contract to Sell" 9 whereby

Tolosa "sells, cedes, transfers, and conveys" to Villaruz the same land in consideration of
P94,300.00. The contract stipulated the immediate conveyance of the physical possession of the
land to Villaruz, although no deed of definite sale would be delivered to her unless the price was
fully paid. The contract noted the supposed judicial termination of the boundary dispute over the
land.

Tolosa wrote Ocampo offering to reimburse her what she paid provided she would sign a
document canceling her adverse claim. 

ISSUE:

Whether or not the contract entered between Tolosa and Ocampo is a contract to sell and not a
contract for sale

Whether or not Villaruz is in good faith

RULING:

The agreement between Tolosa and Ocampo dated 21 April 1975 although titled "Agreement to
Sell Real Property" was a perfected contract of absolute sale.

In Dignos v. CA,  we laid down the criteria that:

. . . a deed of sale is absolute in nature although denominated as a "Deed of

Conditional Sale" where nowhere in the contract in question is a proviso or
stipulation to the effect that title to the property sold is reserved in the vendor
until full payment of the purchase price, nor is there a stipulation giving the
 vendor the right to unilaterally rescind the contract the moment the vendee fails to
pay within a fixed period.

Paragraph 4 pertains to the undertaking of the seller to execute and deliver to the buyer any
document deemed necessary by law to implement the sale and transfer title since the parties were
unsure of what documents were pertinent. If the intent was for the seller to retain ownership and
possession of the land through non-delivery of certain documents unless the price be fully paid,
par. 4 alone should be inutile; it should have been complemented with a proviso that the sale
would not be implemented nor the title considered transferred unless another document
specifically for said purpose be first executed and delivered to the buyer. In this regard, no right
to retain ownership and possession of the land pending full payment of the price can be inferred
from the fact that no delivery was made to Ocampo. 

The failure of the buyer to pay the price in full within a fixed period does not, by itself, bar the
transfer of the ownership or possession, much less dissolve the contract of sale.

Under Art. 1592 of the Civil Code, the failure of Ocampo to complete her payment of the
purchase price within the stipulated period merely accorded Tolosa the option to rescind the
contract of sale upon judicial or notarial demand. 

While the contract in favor of Villaruz is also a contract of sale, that of Ocampo dated 21 April
1975 should prevail pursuant to Art. 1544 of the Civil code on double sales. While Villaruz may
have registered his contract or came into possession ahead of Ocampo, Villaruz was never in
good faith.

Since Ocampo had her adverse claim annotated on Tolosa’s OCT on 6 June 1976, Villaruz could
not profess innocence thereof when she signed her contract on 3 June 1977; in fact, her full
payment of the purchase price was made dependent, among others, on the cancelation of this
claim. In sum, Ocampo having the older title in good faith and considering that personal
knowledge thereof by Villaruz constitutes registration as against the latter, Ocampo should be
considered the preferred buyer.