Felix Plazo vs Lipat
them. Consequently, from the time the contract is perfected, all
Facts: Lipat Sr, as represented by Lipat jr executed a Contract to
Sell Agreement in favor of Felix Plazo Urban Poor Settlers Assn,
petitioner, whereby the former agreed to sell two parcels of land
in Naga City for a consideration of 200 pesos per square meters.
The parties stipulated that Felix Plazo has 90 days to pay the
purchase price and failure to do so will automatically terminate
the contract to sell agreement. Furtheremore, it was also
stipulated that the subject properties be cleared from all claims
of third persons. Felix Plazo failed to pay within the stipulated
price.
Felix rendered financial assistant for litigation against the claims
of third persons despite the fact that the within was already
expired. Felix demanded to transfer the subject lots in their favor
but Lipat declined due to the fact of expiration of the 90 days
period.
Felix filed specific performance to execute the contract to sell
agreement. The Regional Trial Court rendered decision in his
favor. However, the Court of Appeals reversed the decision of
the trial court.
Issue: Whether or not the contract to sell should be executed
despite of the fact that the 90 days period was already expired?
Held: No. The parties are bound to the stipulations they may
mutually agreed upon in the Contract to sell.
Indeed, the contract executed by the parties is the law between
parties privy to it are bound not only to the fulfillment of what
has been expressly stipulated but likewise to all consequences
which, according to their nature, may be in keeping with good
faith, usage and law.
In this case, the contract is in nature of contract to sell. The
obligation of the seller to sell becomes demandable only upon
the occurrence of suspensive condition. The suspensive
condition here is the payment in full of the purchase price by the
petitioner prior to the expiration of the 90 day stipulation period.
The petitioner did not pay the full purchase price which its
obligation under the contract. As the payment of the full
purchase price is a positive suspensive condition the non-
fulfillment of which prevents the perfection of the contract, it is
indubitable that the contract to sell is ineffective, and without
force and effect.