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, plaintiff-appellee,
PABLO SANTERO, defendant-appellant.
On November 28, 1934, the Caridad Estates, Inc., through its manager, Hammon H. Buck, leased to
Pablo Santero cadastral lots Nos. 1080 B-1, 1080 b-2 and 1116 in the municipality of Cavite, Cavite,
for one year for P2,200. Said lands were used for fishpond and salt bed purposes. About three
months prior to the expiration of the contract of lease, or on August 24, 1935, the lessor sold the
same lots to the leases for P30,000, payable as follows: P1,500 on the execution of the agreement;
P4,000 on or before December, 1935; P4,500 on or before March, 1936; and the remaining balance
of P20,000 in ten years, each annual installment to be paid on or before the month of August of each
year beginning 1937. In said contract (Exhibit A), the parties stipulated that should the vendee fail to
make the payments agreed upon within sixty days of the date they fall due, the total balance shall
become due and payable and recoverable by an action at law, or the vendor may recover
possession of the property and consider any and all sums paid by the vendee forfeited.
On account of the purchase price of P30,000, the vendee, defendant-appellant here, made the
following payments: P1,500 on August 12, 1935 (Exhibit 7), P435 on December 28, 1935 (Exhibit 8),
P225 on December 31, 1935 (Exhibit 9), P2,460 on January 3, 1936 (Exhibits 10 and 11), P1,500 on
May 1, 1936 (Exhibit 12), and P1,470 on May 3, 1936 (Exhibits 13 and 14). As things thus stood, the
amount outstanding in vendee's account as of March, 1936, was P2,445.20. The defendantappellant claims that he offered to pay this amount on September 21, 1936, with check No. C-65060,
but the plaintiff refused to accept payment on the ground that the contract of sale had been definitely
cancelled since September 15, 1936, when the same lands were conveyed by sale to Triston Sison.
On the other hand, it is alleged by the plaintiff-appellee that on August 31, 1936, its general manager
by formal communication (Exhibit B), advised the defendant of the revocation of the contract of sale
and asked the latter to vacate the premises immediately thereafter.
As the defendants-appellant would not surrender possession of the lands in question, the Caridad
Estates, Inc., on October 2, 1936, filed a complaint for illegal detainer and recovery of rentals against
Pablo Santero in the justice of the peace of court of Cavite. The defendant, on January 27, 1937,
submitted his answer, the principal argument of which being that the justice of the peace of court
was without jurisdiction to entertain the action as it involved, besides the question of ownership, a
contract of P30,000. On May 28, 1937, the court rendered its decision, ordering the defendant to
surrender the property in question, and to pay the plaintiff, for its use and occupation, a monthly
rental of P200, beginning September 16, 1936, until actual delivery, with legal interest from the
commencement of the suit.
Defendant-appellant brought the case on appeal to the Court of First Instance which affirmed the
ruling of the justice of the peace court, in its decision of December 29, 1937. The dispositive part of
the decision reads:
En virtud de todo lo espuesto, el Juzgado condena al demandado Pablo Santero a restituir
la posesion de las propriedas descritas en la demanda a la demandante Caridad Estates of
Cavite, Inc., manteniendo asi su derecho de posesion sobre las referidas propriedas
adquirino desde el 13 de septiembre de 1937, en virtud de la orden de ejucucion dictada por

este Juzgado por falta de pago de las mensualidades especificadas en la sentencia apelada
del Juzgado de Paz. Se condena tambien a dicho demandado a pagar a dicha demandante
la cantidad de doscientos pesos (P200) mensuales por el uso y ocupacion de las propiedas
detentadas ilegalmente, a contar desde el dis 16 de septiembre de 1936 y hasta el dia 13 de
septiembre de 1937, en que se hizo la entrega de su posesion a la demandante, con sus
intereses legales y las costas del juicio.
His exception and motion for new trial having been denied, the defendant-appellant, on February 2,
1938, moved to declare the provincial sheriff in contempt of court for the reasons stated in his
petition, and on February 11, 1938, presented another motion praying for the dissolution of the order
of execution issued by the justice of the peace court of Cavite on June 2, 1937. On March 22, 1938,
the Court of First Instance disallowed the two motions of the defendant. From this judgment, the
defendant appealed assigning the following alleged errors as committed by the trial court a quo in its
decision, to wit:
1. The lower court erred in holding that the contract of purchase and the sale of the real
property in question may be rescinded by the vendor-plaintiff on the mere failure of the
vendee-defendant to complete the payment of the installment due during the month of
March, 1936.
2. The lower court erred in sustaining that vendor-plaintiff could forfeit to his own benefit the
whole sum of P7,590 paid by the defendant on account of the purchase price and apply it all
to the rental of the land involved for the period from December, 1935 to August 31, 1936, or
nine months.
3. The lower court erred in holding that the plaintiff can institute this ejectment proceedings in
the justice of the peace court before demand has been made by suit in the Court of First
Instance for the rescission of the contract of purchase and the sale of this real estate, or for
the payment of what is due from the defendant.
4. The lower court erred in holding that it has appellate jurisdiction over the case of
ejectment, and that the justice of the peace court had original jurisdiction over this case.
5. The lower court erred in holding that no extension of time has been granted to defendant
to pay the balance of P2,445.20 of the installment of P4,500 due in the month of March,
1936, and the payment of this P2,445.20 may be refused by plaintiff after the term specified
in the contract expired.
6. The lower court erred in not giving to the defendant a new trial to enable him to prove
damages sustained by him on account of the execution in January 28, 1938, of the order of
attachment of June 2, 1937.

7. The lower court erred in holding that it had no jurisdiction to discharge the order of
attachment of June 2, 1937, issued by the justice of the peace court.

8. The lower court erred in not discharging the order of attachment, in not absolving the
defendant of this complaint and in not requiring the plaintiff to accept the payment of
P2,445.20 tendered by defendant and in not assessing damages against the plaintiff, and in
not crediting the defendant of the sum of P550 over payment of rental.
Notwithstanding that, as afore-transcribed, appellant pointed out eight errors as having been
committed by the court below, there are, to our mind, only three important questions of law that
stand to be resolved: (1) whether or not provisions of the contract of sale (Exhibit A), more
specifically paragraphs 3 and 4 thereof, violate those legal principles which condemn pacto
commissorio; (2) whether or not the justice of the peace of court of Cavite had jurisdiction to
entertain the ejectment suit filed by the plaintiff; and (3) whether or not the Court of First Instance
had legal authority to decree the discharge of the order of attachment issued by the justice of the
peace on June 2, 1937.
The first question to be decided is raised in the first and second assignments of errors. The attack of
nullity is centered around paragraphs 3 and 4 of the contract of sale which, as appellant contends,
ordain a procedure or mode of action basically and fundamentally pactum commissorium.
The pertinent portion of paragraph 4 provides as follows:
. . . But if the said party of the second part should fail to make the payments above specified
within sixty days of the date or dates stipulated in this agreement or neglect to repair any
damage caused to the above described property within sixty days of formal notification of
such damages by the party of the first part, the total remaining purchase price shall become
due and payable and recoverable by action at law, or the party of the first part, may, at its
option, recover possession of the above described property in which case any and all sums
paid by the party of the second part under the provisions of this court shall be considered as
rental for the use and occupancy of the property.
Paragraph 3 recites:
The party of the second part acknowledge that he has received the above described
property and all the improvements thereon in good condition and engages during the period
of this contract to repair at his own expense any damage that may be caused to the said
property or improvements through storm, fire or deterioration and in the event of failure to
fulfill the terms of payment as above stated to faithfully comply with the penal clause here
appended and in the event that the party of the first part should demand the return of the
property on account of non-compliance with the terms of payment, to deliver possession of
the said property and improvements thereon in good condition and repair.
As may be seen, paragraph 4 gives the vendor, if the vendee fails to make the specified payments,
the option of (1) considering the total remaining purchase price due and payable and recoverable by
an action at law or (2) recovering the possession of the property in which case any and all sums paid
by the vendee shall be regarded as rental for the use and occupancy of the property. On the other
hand, paragraph 3 obligates the vendee to deliver the possession of the property and the
improvements thereon in good condition and repair in the event that the vendor should demand the

return of the same on account of noncompliance with the terms and conditions of payment. It is quite
plain, therefore, that the course followed by the vendor in cancelling the contract and demanding the
repossession of the property was well supported by the employed in consonance with, the
covenants embodied in their agreement. As the stipulations in question do not violate the prohibitive
provisions of the land or defeat morals and public order they constitute the law between the parties,
binding and effectual upon them. (Arts. 1255 and 1278, Civil Code; Jimeno vs. Gacilago, 12 Phil.,
Appellant, however, gives full reliance on article 1504 of the Civil Code, and vigorously argues that
whatever be the provision of the contract, resolution may not be declared in the absence of a
demand upon the vendee "either judicially or by a notarial act." A cursory reading of the provision
would be the best refutation of the appellant's argument, as it leaves no doubt as to its inapplicability
in the present instance. The contract (Exhibit A) is a sale in installment, in which the parties have laid
down the procedure to be followed in the event the vendee failed to fulfill his obligation. There is,
consequently, no occasion for the application of the requirements of article 1504.
Taking up the argument that the stipulations outlined in paragraphs 3 and 4 of the contract have
resulted in apactum commissorium, we are of the opinion that the objection is without legal basis.
Historically and in point of strict law, pactum commissorium, referred to in Law 41, title 5, and Law
12, title 12 of the Fifth Partida, and included in articles 1859 and 1884 of the Civil Code,
presupposes the existence of mortgage or pledge or that of antichresis. (Alcantara vs. Alinea et al., 8
Phil., 111.) Upon this account, it becomes hardly conceivable, although the argument has been
employed here rather extravagantly, that the idea of pactum commissorium should occur in the
present contract of sale, considering that, it is admitted, the person to whom the property is forfeited
is the real and equitable owner of the same because title would not pass until equitable owner of the
same because title would not pass until the payment of the last installment. At most, the provisions in
point, as the parties themselves have indicated in the contract, is a penal clause which carries the
express waiver of the vendee to any and all sums he paid when the vendor, upon his inability to
comply with his duty, seeks to recover possession of the property, a conclusive recognition of the
right of the vendor to said sums, and avoid unnecessary litigation designed to enforce fulfillment of
the terms and conditions agreed upon. Said provisions are not unjust or inequitable and does not, as
appellant contends, make the vendor unduly rich at his cost and expense. The charge that the
amount forfeited greatly exceeded that which should be paid had the contract been one of lease
loses its weight when we consider that during the years 1935 and 1936, when the agreement was
full force and effect, the price of salt rose high to bring big profits and returns.
The factual background of this case is not lacking in point of authority. In The Manila Racing Club,
Inc. vs. The Manila Jockey Club, et al., G.R. No. 46533, promulgated October 28, 1939, the
condition of the contract was that "si el comprador no paga en su debido tiempo la cantidad
correspondiente a cualquiera de los plazos la vendedora podria declarar resuelto el contrato y
confiscadas en su favor las cantidades pagadas." In deciding the main question raised on appeal,
similar in all respects to the one which now confronts us, the court said: "Esta clausula de
confiscacion de lo pagado parcialmente es valida. Tiene el caracter de clausula penal, que puede se
establecida legalmente por las partes (arts. 1152 y 1255 del Codigo Civil). En su doble objecto de
asegurar el cumplimiento, no es contraria a la ley, ni a la moral, ni al orden publico, habiendo sido
pactada voluntaria y conscientemente por las partes."

For the foregoing reasons, we find no merit in the first, second, and third assignment of errors.
The next question raised in the fourth assignment of error is whether or not the justice of the peace
court of Cavite had jurisdiction to entertain the ejectment suit filed by the plaintiff. The controversy is
reduced to interpretation of section 80 of the Code of Civil Procedure.
Section 80 provides:
Anyone deprived of the possession of any land or building by force, intimidation, threat,
strategy, or stealth, and any landlord, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or determination
of the right to hold possession, by virtue of any contract, express or implied, and the legal
representative or assigns of any such landlord, vendor, vendee, or other person, shall at any
time within one year after such unlawful deprivation or withholding of possession be entitled,
as against the person or persons unlawfully withholding or depriving of possession, or
against any persons claiming under them, to restitution of the land, building, and premises
possession of which is unlawfully withheld, together with damages and costs: . . . (Cf. sec. 1,
Rule 72.)
In conformity with the above-copied provision, it is clear that any vendor against whom the
possession of any land is unlawfully withheld after the expiration of the right to hold the same by
virtue of an express contract, shall be entitled to restitution together with damages and costs, and
when the action arising therefrom is commenced within one year from the time the acts of
deprivation took place, the justice of the peace court of the place where the land is situated has
exclusive jurisdiction to try the case. (Monteblanco vs. Hinigaran Plantation, Inc., and Corua, G.R.
No. 43550, promulgated November 27, 1936.) This, in our opinion, is the precise position of the
parties, and a review of the environmental circumstances leads to the conclusion that the essential
requirements of section 80 are here present.
In violation of the provisions of the contract (Exhibit A), the vendor-appellant failed to complete his
payment of the installment due in March, 1936. Subsequently, or on August 31, 1936, he received
the notification letter of Manager H.H. Buck of the Caridad Estates, Inc. cancelling the contract and
asking him to vacate the premises. After his receipt of the letter, therefore, his right to remain in
possession of the property by virtue of the contract of sale expired, and his retention of the same
became, to all intents and purposes, illegal and violative of the propriety rights of the appellee. As
the action for ejectment was filed on October 2, 1936, it is clear that more than fifteen days had
elapsed from the receipt of the notification letter and that the same was brought within the one-year
period contemplated under section 80. It follows that the Court of First Instance acted properly in
overruling the objection of the peace court, and in taking cognizance of the case in its appellate
With reference to the last question relative to the denial of the motion of the defendant for the
dissolution of the order of attachment issued by the justice of the peace court, it is sufficient to state
that the same proper and legal under the circumstances, because the failure or neglect of the
appellant to raise the question of the correctness of the decision of the justice of the peace court of
June 18, 1937, disallowing the petition for annulment of the said order of attachment on appeal

limited or confined the jurisdiction of the court below to deciding the merits of the ejectment
The other assignments of errors deals strictly with bare questions of fact and findings of the court
below should not be disturbed.
The judgment appealed from should be, as it is hereby affirmed, with costs against the appellant.
In view of the result, the deposit of P2,400 which appears to have been made by the defendantappellant at his own instance with the clerk of this court is ordered returned to him. So ordered.

------------------------------------------------------------------------------------------------------------------------------G.R. No. L-13435

July 27, 1960

EUSEBIO MANUEL, plaintiff and appellant,

EULOGIO RODRIGUEZ, SR., ET AL., defendants and appellees.
Sumulong, Hialo and Vidanes for appellant.
Generoso, Tolentino, Garcia and Cruz for appellee E. Rodriguez, Sr.
Celestino L. de Dios for appellee Llanos Vda. de Landahl.
REYES, J.B.L., J.:
Eusebio Manuel appeals from the judgment of the Court of First Instance of Rizal, promulgated on
October 31,1957, dismissing his complaint.
Questions of law and of fact are involved, but the property being worth over P2,000,000.00, the
appeal was directly taken to this Court.
The complaint seeks to have plaintiff Eusebio Manuel declared absolute owner of Lot 51, Plan Psu32606, situated in San Mateo, Rizal; to compel defendants to execute a deed of absolute sale of
said lot in favor of said plaintiff and to receive the unpaid balance of the purchase price thereof; and
to declare the subsequent sales of said lot null and void and to cancel the transfer certificates of title
issued to the transferees. The cross-claim by defendant Eulogio Rodriquez against his co-defendant
Dolores Vda. de Landahl(as Administratrix of the intestate estate of John Landahl)having been
dismissed, and there being no appeal therefrom, the facts pertaining thereto will be omitted.
It appears that Januaria Rodriguez was the original registered owner of a big tract of land (part of
which is the land in question), embraced by Transfer Certificate of Title No. 8821 of the Register of
Deeds of Rizal. In 1924, Januara Rodriguez ceded and transferred said land to the Payatas
Subdivision Inc., to be administered by said firm, subdivided, sold, leased or otherwise disposed of
(Exhibit "A"-1). Defendant-appellee Eulogio Rodriguez was then the Secretary-Treasurer of said
Payatas Subdivision Inc.

Sometime in April, 1926, plaintiff-appellant offered to buy the lot in question (about 248,310 sq.
meters in area).The Company agreed to sell said lot (Lot 51) for P2,240 in cash, or by installments
with 10% interest (Exhibit "C"). Plaintiff-appellant made a counter-offer for P2,000, which the
Payatas Subdivision accepted, provided it was paid in each (Exhibit "E"). Plaintiff-appellant wanted
to pay in installments, and on August 2, 1926, the Company wrote him that it was agreeable to a
down-payment of P1,500, the balance to be paid within 9 to 10 months without interest, or if the
down-payment be less than P1,500, with interest at 10% on the balance (Exhibit "F"). Plaintiffappellant then requested that the down-payment be reduced to P1,300, and through the intercession
of defendant-appellee Eulogio Rodriguez, Sr., who was plaintiff-appellant's friend, this was granted.
After making the initial payment of P1,300, a provisional receipt was issued, which, on August 25,
1926, was substituted by the official receipt sent by Casiano M. de Vera, the Company's bookkeeper
(Exhibits "G" & "G"-1). Soon after, plaintiff-appellant was placed in the possession of the lot.
It also appears that plaintiff-appellant did not make any payments within the 9 to 10-month period
mentioned in Exhibit "F", so that on April 30, 1928, the Payatas Subdivision Inc. sent him a letter
urging immediate payment of his unpaid account with the Company, which, including interest,
amounted to P819.23, and asking him to answer within 10 days (Exhibit "H"). Thereafter, plaintiffappellant made another payment of P300 for which a receipt dated June 20, 1928 was issued to him
(Exhibit "I"). So far as the record discloses, this appears to be the last payment made by plaintiffappellant on Lot 51, the property in question. On April 24, 1929, the Payatas Subdivision Inc. sent
plaintiff-appellant a detailed statement of his unpaid account which, including interest and taxes,
amounted to P596.21, urging immediate payment thereof, so that title could be transferred to him as
per agreement, and requesting answer within 10 days (Exhibit "J"). Still, plaintiff-appellant did not
pay his account, despite the fact that thereafter, on several occasions, the Company sent to his
residence its acting secretary, Conrado Vicente, to collect the balance.
Defendants-appellees advance the theory that in view of plaintiff-appellant's repeated default in
paying his outstanding account, the Payatas Subdivision Inc. then considered his contract cancelled
and extinguished, and the amounts already paid (P1,600), forfeited to the Company, the transaction
being merely a contract to sell or promise to sell; that sometime in 1939, the Payatas Subdivision
Inc., having sold all its properties (except some properties it was administering for Januaria
Rodriguez), was extrajudically dissolved, but its papers of dissolution were lost or destroyed during
the war; that after said dissolution, all unsold properties belonging to Januaria Rodriguez were
returned to her.
Sometime in 1941, Januaria Rodriguez, who was the aunt of defendant-appellee Eulogio Rodriguez,
sold several properties to the latter, including Lot 51 in question, in consideration of the monthly
advances, support, services, care, maintenance, medical expenses, etc. which she received from
the said Eulogio Rodriguez (Exhibit "U").Pursuant to such sale, Transfer Certificate of Title No.
44709 was issued to Eulogio Rodriguez, Sr. (Exhibit 21-a).
Likewise, it appears that on February 4, 1941, Eulogio Rodriguez, Sr., then Mayor of Manila,
instructed his secretary to write plaintiff-appellant to urge him to pay his unsettled account with the
Payatas Subdivision, Inc. As per instructions, his secretary wrote plaintiff-appellant (Exhibit "O"). Still,
there was no payment.

On August 5, 1944, Eulogio Rodriguez, Sr. sold Lot 51(among others) to John Landahl (represented
in the transaction by Carlos Landahl as attorney-in-fact), for and in consideration of P157,192.80, in
Japanese war notes (Exhibit 1-Landahl). The sale was duly registered and Transfer Certificate of
Title No. 46521 was issued in Landahl's name (Exhibit 3-Landahl).
On April 6, 1949, or just a little less than 23 years after the alleged sale to him of Lot 51 in 1926,
plaintiff-appellant brought the instant case, as aforesaid, to compel the execution of a formal deed of
conveyance in his favor covering the purported sale in 1926; to compel receipt of the unpaid balance
of the price which plaintiff-appellant consigned in court; and to annul the subsequent sales to Eulogio
Rodriguez and to John Landahl, and the corresponding transfer certificates to title issued to them.
The decision of the trial court dismissing the complaint is predicated on two main findings
Firstly. That the transaction in 1926 was mere contract to sell or promise to sell of Lot 51 to
plaintiff-appellant, the understanding being that upon failure to pay the installments as demanded,
the vendor corporation had the right to consider the contract cancelled and the amounts already
paid, forfeited.
Secondly. That even under plaintiff-appellant's theory that his contract with defunct Payatas
Subdivision Inc. was an absolute sale, involving immediate transfer of ownership, his right of action
to compel the execution of a formal deed of conveyance has prescribed, whether the contract is
considered written or verbal (Sec. 43, pars. 1 & 2, Code of Civil Procedure, Act 190); moreover, the
action is barred by laches.
The findings that the contract entered into 1926 was a mere contract to sell or promise to sell was
predicted on the following premises:
1. The alleged contract of absolute sale was not reduced to a formal deed of conveyance, much less
registered, which is unlikely if the contract had been an absolute sale, because plaintiff-appellant
would have insisted that it be reduced to a public document, the land being covered by a Torrens
2. It is highly improbable that the Payatas Subdivision Inc. would agree to an immediate transfer of
ownership to plaintiff without any guaranty or security that the balance of the price would be
completely paid.
3. The statement in Exhibit "J", introduced by plaintiff as his evidence, requesting payment of the
balance "at ng kayo naman y mabigyan na ng katibayan, alinsunod sa pinagkayarian", confirms that
the agreement between plaintiff and the company was that title would be transferred to plaintiff only
upon full payment of the price.
4. Plaintiff would not have waited for more than 20 years to file this action to enforce the contract if
this where an absolute sale, considering that the land being covered by a Torrens title, it was easy
for the vendor to resell or encumber the same property to some other person on the basis of a clean

5. The nature of the transaction as a mere contract to sell is established by the testimony of
witnesses for defendants-appellees.
6. The dissolution of the Payatas Subdivision Inc. sometime in 1939 must have been the reason
which prompted the cancellation of plaintiff's contract, as it had to wind up all its affairs and conclude
all pending business before dissolution.
7. It may be taken judicial notice of that it is a general practice among subdivision companies
engaging in installment sales to place the buyer immediately in possession after the down-payment,
the company remaining owner of the property until full payment, at which time the deed of
conveyance is then executed in favor of the buyer; and if the buyer defaults in paying the
installments due, the corporation cancels the contracts and forfeits the amount already paid.
In his brief containing 20 assignments of error, plaintiff-appellant insists that the contract in 1926 was
not merely a contract to sell but an absolute sale (Errors I-IV). He contends that contrary to the
finding of the lower court, the 1926 contract was not verbal but written, citing the series of
communications between plaintiff-appellant and the Payatas Subdivision Inc., Exhibits "C" to "G"-1. A
careful examination of these exhibits, however, reveals that Exhibits "C" to "F" are mere bargaining
negotiations that took place before the parties arrived at a full understanding, while Exhibits "G" and
"G"-1 are mere receipts of payment; they fail to show that the parties had committed all the terms of
their agreement to writing. Exhibit "C" merely offers to sell Lot 51 for P2,240, with interest at 10% if it
be by installments; Exhibit "D" offered to reduce the total price for Lots 44 and 51 (early negotiation
were for 2 lots) to P2,955, and also referred to other matters concerning the sale which should be
discussed personally by the parties; Exhibit "E" accepts a previous counter-offer made by plaintiffappellant to buy Lot 51 for P2,000, provided the payment was in cash, and again referred to other
matters regarding the sale which should be threshed out between the parties; Exhibits "F", after
making reference to the terms of payment desired by plaintiff-appellant, laid down the condition that
if the first payment is at least P1,500, the balance payable in 9 to 10 months would not bear interest;
and if the initial payment was less than P1,500, the balance would bear interest at 10%; Exhibit "G"
is a note by Payatas Inc. referring to the attached receipt, Exhibit "G-1"), covering the down-payment
of P1,300 made by plaintiff-appellant for Lot 51.
These letters shows that if at all, only the price and the terms of payments were in writing. The most
important, the alleged transfer of title, and the other matters alluded to in some of the
communications, were not reduced to any written document. It is generally recognized that to be a
written contract, all its terms must be in writing; so that a contract partly in writing and partly oral, is,
in legal effect, an oral contract (Fey vs. Loose Wiles Biscuit Co., 75 P2d 810; Peifer vs. New Comer,
et al., 157 NE 240; 12 Am. Jur. 550). Apart from whether the letters negotiating the transaction could
constitute a written contract of sale, the absence of a formal deed of conveyance strongly indicates
that the parties did not intend immediate transfer of title, but only a transfer after full payment of the
price. As observed by the trial court, if the contract were an absolute sale, it is unlikely that plaintiffappellant would not have insisted that the same be reduced to a public document, considering that
Lot 51 is covered by a Torrens title. On the other hand, it is unlikely for the Payatas Subdivision Inc.
to have agreed to an immediate transfer of ownership without guaranty of the balance being ever

One other evidence of the true character of the transaction is the statement contained in Exhibit "J"
of the following tenor: "at ng kayo naman ay mabigyan na ng katibayan, alinsunod sa
pinagkayarian", strengthening the conclusion that what transpired in 1926 was a mere contract to
sell, transfer of title being conditioned on full payment of the price. Plaintiff-appellant tries to refute
this by citing El Banco Nacional Filipino vs. Ah Sing, 69 Phil. 611, wherein the contract captioned
"Promesa De Venta" was held to be an absolute sale. Suffice it to say that comparison will not hold,
because in the cited case, the contract was reduced to a formal deed conveyance and the court
found that the parties had agreed to and actually effectuated a delivery. In the instant case, there
was a formal deed of conveyance, and, as the land is covered by the Torrens title, there could be no
delivery except by the act of registration of the deed or instrument.
Adding to the pile of circumstances, the fact that plaintiff-appellant did not file this action to enforce
the contract until after more than 20 years from the alleged absolute sale in 1926 induces no other
conclusion than that the transaction was a mere contract to sell, for it if were an absolute sale, it was
unlikely for plaintiff-appellant to wait as long as he did before commencing the present action,
considering that as the land was covered by a Torrens title, it could have been very easy for the
Payatas Subdivision to dispose or encumber the same to another party. Considering the steady
increase in land values since 1926 (Martin vs. Martin,* 57 Off. Gaz. [9] 1589), plaintiff's laches and
his neglect to comply with his own obligations are powerful indicia against the merits of his case
rendering his case highly inequitable.
The dissolution of the Payatas Subdivision Inc. sometime in 1939 is sufficiently established by the
evidence. The only argument advanced by plaintiff-appellant to show that it was not dissolved in
1939 (Error I-IV; IX-X) is Exhibit "O", the letter written in 1941 by the secretary of defendant-appellee
Eulogio Rodriguez, asking for payment of the balance of the price, wherein the statement appears
"Sa utos ng pangasiwan ng Payatas Estate Subdivision . . .", from which it is supposed to be inferred
that said corporation had not yet been dissolved. However, in Exhibit "O" itself, the payment was
being asked to be made at the office of defendant-appellee Eulogio Rodriguez at the City Hall,
showing that Payatas Subdivision no longer even had an office. Also significant is the computation of
interest mentioned in Exhibit "O" which, according to said letter, accrued only up to January, 1939.
All these, plus the other circumstances on record, give credence to defendant-appellees' contention
that the corporation was really dissolved in 1939.
Although this dissolution cannot be determinative of the character of the sale in 1926 (as to whether
conditional or absolute), it must really have been the occasion which prompted the termination of the
contract, as the corporation had to wind up its affairs and close all pending business. Plaintiffappellant, however, argues (Errors I-IV; VI; VIII) that the Payatas Subdivision had no right to cancel
the contract, as there was no demand by suit or notarial act, as provided by Article 1504 of the Old
Code (Art. 1592, N. C. C.). This is without merit, because Article 1504 requiring demand by suit or
notarial act in case the vendor of realty wants to rescind, does not apply to a contract to sell or
promise to sell, where title remains with the vendor until fulfillment to a positive suspensive condition,
such as full payment of the price (Caridad Estates vs. Santero, 71 Phil., 114, 121;
Albea vs. Inquimboy, 86 Phil., 476; 47 Off. Gaz. Supp. 12, p. 131; Jocson vs. Capitol Subdivision Inc.
et al., L-6573, February 28, 1955; Miranda vs. Caridad Estates, L-2077 and Aspuria vs. Caridad
Estates, L-2121, October 3, 1950).

The contention of plaintiff-appellant that Payatas Subdivision Inc. had no right to cancel the contract
as there was only a "casual breach" is likewise untenable. In contracts to sell, where ownership is
retained by the seller and is not to pass until the full payment of the price, such payment, as we said,
is a positive suspensive condition, the failure of which is not a breach, casual or serious, but simply
an event that prevented the obligation of the vendor to convey title from acquiring binding force, in
accordance with Article 1117 of the Old Civil Code. To argue that there was only a casual breach is
to proceed from the assumption that the contract is one of absolute sale, where non-payment is a
resolutory condition, which is not the case.
Whether the trial court could take judicial notice of the alleged practice in subdivision companies to
retain ownership over lands they contracted to sell, until full payment of the price, we find not
necessary to discuss. The circumstances shown by the trend of evidence, including the oral
testimony of the witnesses for defendant-appellees, more than convince this Court that the
transaction in 1926 was merely a contract to sell, subject to a suspensive condition that was
terminated for the Payatas Subdivision Inc. before its dissolution, by reason of the non-payment of
the balance of the price.
It is contended (Error V) that the balance of the price was not due and payable within the 9 to 10month period mentioned in Exhibit "F". this Court had examined said letter, and finds nothing to
justify such a strained conclusion. Reasonably interpreted, the pertinent portion merely stated that if
the first payment is at least P1,500, then, the balance will bear interest at 10%. In other words, the
initial payment determines whether or not interest will be paid, not the period within which the
balance will fall due. The period here bears no relation to the amount to be initially paid. At any rate,
plaintiff-appellant was legally bound to pay the obligation due upon judicial or extra-judicial demand
(Art. 1100, Old Civil Code; Article 1169, N.C.C.); and it appears that demands were made which
plaintiff-appellant failed to heed.
Plaintiff-appellant next contends (Errors IX-XI) that when Exhibit "O" was sent by Clemente Felix,
upon instructions of defendant-appellee Eulogio Rodriguez, the latter was not yet the owner of Lot
51 and the Payatas Subdivision Inc. had not yet been dissolved. As earlier discussed, there is
enough evidence that the company was dissolved in 1939. As to whether or not Eulogio Rodriguez
had already acquired Lot 51 when Exhibit "O" was sent to plaintiff-appellant, it would really seem that
said Eulogio Rodriguez, as of that time, was not yet the owner of Lot 51, since Exhibit "O" is dated
February 4, 1941 while Exhibit "U" (the deed of sale from Januaria Rodriguez to Eulogio Rodriguez)
is dated December 26, 1941. But this is not material, since it would merely show that, for whomever
Eulogio Rodriguez was acting, he still wanted to give plaintiff-appellant a chance to own the land as
a gesture of liberality. Anyway, appellant failed to take advantage of the proposal, and the same
remains without binding effect.
Having lost all rights to the land, plaintiff-appellant has no personality to question the sales
subsequently made to Eulogio Rodriguez, and later, to John Landhal. Hence, it becomes academic
to discuss the assignments of error pertaining thereto (Errors VII, XII, XIII, XIV, XV, XVI), specially
since there is no evidence that Landhal was prevented from relying on the clear certificate of title in
the name of Rodriguez.

From a different perspective, there is yet another reason why the purported sale to plaintiff-appellant
could not have transferred title to him, and could not have prevented the subsequent sale of the
property to another party. The land in question being covered by a Torrens title, only the act of
registration of the deed or instrument could effect transfer of ownership (Worcester vs. Ocampo, 34
Phil. 646; Tuason vs. Raymundo, 28 Phil. 635; Buzon vs.Lichauco, 13 Phil. 354). In the instant case,
there is not even a deed or instrument that could possibly be registered.
Having reached the conclusion that title to the disputed property never passed to plaintiff-appellant;
that his failure to complete payment of the price and his laches in enforcing his rights render it
inequitable to compel performance of the contract at the present time, we find it unnecessary to
discuss the remaining errors assigned in appellant's brief.
Equity would, of course, demand that, in the absence of stipulation, the amounts paid by plaintiff be
returned, since the purpose for which he paid them was not attained; and it appears of record that
such reimbursement was made as early as 1945 (Exhibits 1 to 1-C).
In view of the foregoing, the judgment of the trial court is affirmed. Costs against plaintiff-appellant.
Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Barrera, and Gutierrez David,
JJ., concur.