ETERNAL GARDENS MEMORIAL PARKS CORPORATION, petitioner, vs.

CA

Facts: ETERNAL Gardens Memorial Parks Corporation (ETERNAL) and North Philippine Union MISSION
Corporations (MISSION) executed a Land Development Agreement (Agreement) over the property
owned by the latter into a memorial park. The lot will be subdivided into and sold as memorial plot lots.
In said agreement, MISSION is entitled to receive 40% of the net gross collection. Under the
implementation of the agreement, MISSION received initial payment as part of its share under the
above Agreement. However, MAYSILO Estate (MAYSILO) asserted its claim of ownership over the
property in question. In view of the conflicting claims of ownership of the defendants over the
properties, petitioner filed a complaint for interpleader against MISSION and MAYSILO. MISSION then
presented a motion for the placing on judicial deposit the amounts due and unpaid from ETERNAL. The
trial court denied the motion. MISSION filed a petition for certiorari with the then IAC praying that the
aforementioned Orders of trial court be set aside and that an order be issued to deposit in court or in a
depositor trustee bank of any and all payments, plus interest thereon, due the private respondent
MISSION under the Land Development Agreement, said amounts deposited to be paid to whomever
may be found later to be entitled thereto. IAC dismissed the petition. It however later reversed its
decision, and ordered ETERNAL to deposit whatever amounts are due from it under the Land
Development Agreement with a reputable bank to be designated by the respondent court to be the
depository trustee of the said amounts to be paid to whoever shall be found entitled thereto. ETERNAL
moved for a reconsideration of the above decision but it was denied for lack of merit.

Issue: Whether or not respondent CA abused its discretion amounting to lack of jurisdiction in
reconsidering its resolution and in requiring instead that ETERNAL deposit whatever amounts are due
from it under the Land Development Agreement

Held: NO. Petitioner admitted among others in its complaint in Interpleader that it is still obligated to
pay certain amounts to private respondent; that it claims no interest in such amounts due and is willing
to pay whoever is declared entitled to said amounts. As correctly observed by the Court of Appeals, the
essence of an interpleader, aside from the disavowal of interest in the property in litigation on the part
of the petitioner, is the deposit of the property or funds in controversy with the court. It is a rule
founded on justice and equity: "that the plaintiff may not continue to benefit from the property or funds
in litigation during the pendency of the suit at the expense of whoever will ultimately be decided as
entitled thereto." The case at bar was elevated to the Court of Appeals on certiorari with prohibitory
and mandatory injunction. Said appellate court found that more than twenty million pesos are involved;
so that on interest alone for savings or time deposit would be considerable, now accruing in favor of the
ETERNAL. Finding that such is violative of the very essence of the complaint for interpleader as it clearly
runs against the interest of justice in this case, the Court of Appeals cannot be faulted for finding that
the lower court committed a grave abuse of discretion which requires correction by the requirement
that a deposit of said amounts should be made to a bank approved by the Court
Rayos vs Reyes

Facts: Petitioner assailed the decision of the Court of Appeals which affirmed in toto the Decision of the
Regional Trial Court of Alaminos, Pangasinan declaring void the separate Deeds of Absolute Sale
executed by Francisco Tazal in favor of Blas Rayos, and to spouses Teofilo and Simeona Rayos and by
Blas Rayos to the same spouses, all-encompassing the three parcels of land sold under the Deed of Sale
with Right to Repurchase in favor of Mamerto Reyes, predecessor-in-interest of the respondents. In its
Decision, the trial court declared the respondents, heirs of Mamerto Reyes, as absolute owners of the
subject property and ordered petitioner-spouses to vacate and surrender the subject lot in favor of the
respondents. It rationalized that petitioners did not present any evidence to prove that they and their
predecessor-in-interest were able to repurchase the property within the period of redemption. Issue:
Among others, petitioners argued that the consignation of P724.00 in the civil case provides the best
evidence of the repurchase of the subject property and had the full effect of redeeming the properties
from respondents and their predecessors-in-interest. Held:

The Court denied the petition and affirmed the decision of the Court of Appeals affirming in toto the
decision of the court a quo, except for the sole modification to delete and set aside the award of
damages. The Court found no evidence to prove that petitioners paid at any time the repurchase price
for the three parcels of land in dispute except for the deposit of P724.00 in the then Court of First
Instance which, however, fell short of all the acts necessary for a valid consignation and discharge of
their obligation to respondents. First, petitioners failed to offer a valid and unconditional tender of
payment. Consignation and tender of payment must not be encumbered by conditions if they are to
produce the intended result of fulfilling the obligationn. Here, petitioners' tender of payment of P724.00
was conditional upon his waiver of the two-year redemption period stipulated in the deed of sale with
right to repurchase.

Second, petitioners failed to notify respondents of the intention to deposit the amount with the court.
The consignation as a means of payment is void without any announcement of the intention to resort to
consignation first being made to the persons interested in the fulfillment of the obligation. Third,
petitioners failed to show the acceptance by the creditor of the amount deposited as full settlement of
the obligation, or in the alternative, a declaration by the court of the validity of the consignation. While
it was held that the approval of the court or the obligee's acceptance of the deposit is not necessary
where the obligor has performed all acts necessary to a valid consignation such that court approval
thereof cannot be doubted, the ruling is, however, applicable only where there is unmistakable evidence
on record that the prerequisites of a valid consignation are present, especially the conformity of the
proffered payment to the terms of the obligation which is to be paid. In the instant case, there was no
clear and preponderant evidence that the consignation of P724.00 satisfied all the requirements for
validity and enforceability. Mamerto Reyes likewise vehemently contested the propriety of the
consignation. Petitioners, therefore, cannot rely upon sheer speculation and unfounded inference to
construe the Decision of the then Court of First Instance as one impliedly approving the consignation
and perfecting the redemption of the three parcels of land. Thus, the Court held that the failure of the
petitioners to comply with the requirements rendered the consignation ineffective.
BADAYOS v CA

Facts: On 9 March 1973, petitioner executed in favor of private respondents spouses a Deed of Sale
With The Right to Repurchase over her undivided half portion of Lot No. 3493 of the Talisay-
Minglanilla Estate located at Tabunok, Talisay, Cebu for a consideration of Seven Thousand Four
Hundred Pesos (P7,400.00); the sale was made subject to the following stipulation: "That it is the
essence of this contract that the vendor, Clara Badayos has the right to repurchase the above
described property after two (2) years from and after the execution of this contract for the same
amount of SEVEN THOUSAND FOUR HUNDRED PESOS (P7,400.00)." Two (2) years after the execution
of the document in question, or specifically on 17 April 1975, private respondents filed with the then
Court of First Instance (now Regional Trial Court) of Cebu an action, docketed as Civil Case No.
14516, to consolidate ownership over the property in question; it is alleged therein that "the two
years (sic) period from March 9, 1973 had already elapsed but defendant never repurchased the said
property in violation of the contract of p a c t o d e R e t r o Sale." In her Answer With Counterclaim,
petitioner, as defendant, alleges, in t e r alia , that: (1) the document in question is actually an
equitable mortgage intended to secure her loan of P4,000.00 from private respondents who charged
an interest of P3,400.00; (2) after the expiration of the two-year period counted from 9 March 1973,
she approached the private respondents to request for an extension of time within which to pay the
obligation, which was granted, as she was waiting for the approval of the loan of her daughter in the
amount of P30,000.00 with the Philippine National Bank; (3) she owns the property in question and
is in possession thereof, enjoying its fruits, and paying the taxes thereon; (4) the piece of land,
located in the commercial district of Tabunok, Talisay, Cebu, is classified as residential and has a
commercial value of P100.00 per square meter; and (6) the private respondents are lessees thereof,
paying rentals of P18.00 only annually, for a term of 20 years to expire in 1976." In their Reply,
private respondents deny that the document in question is an equitable mortgage and that they had
granted the petitioner an extension of time within which to pay her obligation. RTC ruled in favour of
Badayo, but CA reversed such decision, since petitioner abandoned her theory of equitable
mortgage, she should have exercised her right of redemption within two (2) years from 9 March
1973, or on or before 9 March 1975. Since she failed to do so, she lost that right.

Issue:
1. Whether or not petitioner was able to repurchase the property in question within the period
stipulated in the deed of sale with right to repurchase. Held: The foregoing stipulation is clear and
needs no further interpretation; hence, its literal meaning is binding. It simply means that petitioner
can redeem the property in question "AFTER TWO (2) years from and after the execution of the
contract," NOT WITHIN two (2) years from such execution. Since the contract was executed on 9
March 1973, petitioner can redeem the property only a f t e r 9 M a r c h 1 9 7 5 . The rule in this
jurisdiction is that if the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control. And the period within which
to exercise the right is within four (4) years as per Article 1606 of the New Civil Code
2. WON Article 1590 applies in this case, thereby justifiying the refusal by Adelfa to pay the balance
of the purchase price.
3. WON Private respondents could unilaterally and prematurely terminate the option period, if
indeed it is a option contract, as the option period has not lapsed yet.
HELD: The judgement of the CA is AFFIRMED 1. NO. The agreement between the parties is a contract
to sell, and not an option contract or a contract of sale.
Contract to SELL – by agreement the ownership is reserved in the vendor and is not to pass until the
full payment of the price
– title is retained by the vendor until the full payment of the price, such payment being a positive
Contract of SALE
– the title passes to the vendee upon the delivery of the thing sold
– the vendor has lost and cannot recover ownership until and unless the contract is resolved or
rescinded There are two features which convince us that the parties never intended to transfer
ownership to petitioner except upon the full payment of the purchase price.
(1) the exclusive option to purchase, although it provided for automatic rescission of the contract
and partial forfeiture of the amount already paid in case of default, does not mention that petitioner
is obliged to return possession or ownership of the property as a consequence of non-payment.
(2) Secondly, it has not been shown there was delivery of the property, actual or constructive, made
to herein petitioner. The exclusive option to purchase is not contained in a public instrument the
execution of which would have been considered equivalent to delivery. Neither did petitioner take
actual, physical possession of the property at any given time. It is true that after the reconstitution of
private respondents’ certificate of title, it remained in the possession of petitioner’s counsel, Atty.
Bayani L. Bernardo, who thereafter delivered the same to herein petitioner. Normally, under the law,
such possession by the vendee is to be understood as a delivery. 18 However, private respondents
explained that there was really no intention on their part to deliver the title to herein petitioner with
the purpose of transferring ownership to it. They claim that Atty. Bernardo had possession of the
title only because he was their counsel in the petition for reconstitution. In effect, there was an
implied agreement that ownership shall not pass to the purchaser until he had fully paid the price in
this case. The important task in contract interpretation is always the ascertainment of the intention
(parties never intended to transfer ownership to petitioner except upon the full payment of the
purchase price) of the contracting parties and that task is, of course, to be discharged by looking to
the words they used to project that intention in their contract. The title of a contract does not
necessarily determine its true nature. Hence, the fact that the document under discussion is entitled
“Exclusive Option to Purchase” is not controlling where the text thereof shows that it is a contract to
sell.
The test in determining whether a contract is a “contract of sale or purchase” or a mere “option” is
whether or not the agreement could be specifically enforced. There is no doubt that the obligation
of petitioner to pay the purchase price is specific, definite and certain, and consequently binding and
enforceable. Had private respondents chosen to enforce the contract, they could have specifically
compelled petitioner to pay the balance of P2M. This is distinctly made manifest in the contract
itself as an integral stipulation, compliance with which could legally and definitely be demanded
from petitioner as a consequence. While there is jurisprudence to the effect that a contract which
provides that the initial payment shall be totally forfeited in case of default in payment is to be
considered as an option contract, still we are not inclined to conform with the findings of
respondent court and the court a quo that the contract executed between the parties is an option
contract, for the reason that the parties were already contemplating the payment of the balance of
the purchase price, and were not merely quoting an agreed value for the property. The term
“balance,” connotes a remainder or something remaining from the original total sum already agreed
upon. In other words, the alleged option money was actually earnest money which was intended to
form part of the purchase price. The amount was not distinct from the cause or consideration for
the sale of the property, but was itself a part thereof. 2. Such being the case, petitioner was justified
in suspending payment of the balance of the purchase price by reason of the aforesaid vindicatory
action filed against it. The assurance made by private respondents that petitioner did not have to
worry about the case because it was pure and simple harassment is not the kind of guaranty
contemplated under the exceptive clause in Article 1590 wherein the vendor is bound to make
payment even with the existence of a vindicatory action if the vendee should give a security for the
return of the price.
3. YES. The private respondents may no longer be compelled to sell and deliver the subject property
to petitioner for two reasons, that is, petitioner’s failure to duly effect the consignation of the
purchase price after the disturbance had ceased; and, secondarily, the fact that the contract to sell
had been validly rescinded by private respondents. The mere sending of a letter by the vendee
expressing the intention to pay, without the accompanying payment, is not considered a valid tender
of payment. Besides, a mere tender of payment is not sufficient to compel private respondents to
deliver the property and execute the deed of absolute sale. It is consignation which is essential in
order to extinguish petitioner’s obligation to pay the balance of the purchase price. Furthermore,
petitioner no longer had the right to suspend payment after the disturbance ceased with the
dismissal of the civil case filed against it. Necessarily, therefore, its obligation to pay the balance
again arose and resumed after it received notice of such dismissal. Furthermore, judicial action for
rescission of a contract is not necessary where the contract provides for automatic rescission in case
of breach, as in the contract involved in the present controversy.

DE MESA v CA
Petitioners Dolores Ligaya de Mesa owns several parcels of land which were mortgaged to the
Development Bank of the Philippines (DBP) as security for the loan she obtained from the bank.
Failing to pay all her mortgage debts, all her mortgaged properties were foreclosed and sold at
public auction. In all said auction sales, DBP was the winning bidder. Petitioner requested DBP that
she be allowed to repurchase her foreclosed properties. In the meantime, petitioner sold the
foreclosed properties to private respondent OSSA House Inc. (OSSA), under a "Deed of Sale with
Assumption of Mortgage," under the condition that the latter was to assume the payment of the
mortgage on installment basis. DBP granted petitioner's request to repurchase the foreclosed
properties. Private respondent OSSA paid DBP the first to eight quarterly installments in the total
amount of P137,593.31, which installment payments were applied to petitioner's obligation with the
DBP. After OSSA paid the eighth quarterly installment, petitioner notified private respondent OSSA
that she was rescinding the Deed of Sale with Assumption of Mortgage in favor of the latter on the
ground that OSSA failed to comply with the terms and conditions of their agreement. OSSA offered
to pay the difference between the purchase price and the mortgage obligation to DBP after
deducting the down payment as stipulated in the Deed of Sale with Assumption of Mortgage, but
petitioner refused to accept such payment. OSSA filed a complaint for consignation against the
petitioner. DBP, likewise, refused to accept the 9th quarterly installment paid by OSSA, forcing the
latter to file against DBP and petitioner a case for specific performance and consignation. The two
cases were eventually consolidated upon petitioner's motion. The trial court rendered a decision
declaring the consignation of OSSA proper and valid and ordered de Mesa and DBP to withdraw and
receive said payments due them which OSSA had consigned with the court. Petitioner appealed to
the Court of Appeals. The appellate court modified the trial court's decision declaring the
consignation valid only as far as petitioner de Mesa is concerned and ordered de Mesa to receive
the said amount consigned with the court and pay DBP the said amount. Petitioner de Mesa filed a
motion for reconsideration but was denied. Hence, the present petition. Issue: Petitioner insisted
that what she sold to respondent OSSA was merely the right to redeem the foreclosed properties
and not the foreclosed properties themselves. Held: NO. The Supreme Court affirmed the decision of
the Court of Appeals. The Court ruled that the terms of the "Deed of Sale with Assumption of
Mortgage" are clear and leave no doubt as to what was sold thereunder. Nowhere is it provided in
the deed, as the petitioner insisted that what she sold to respondent OSSA was merely the right to
redeem the mortgaged properties and not the foreclosed properties themselves. According to the
Court, the contract was so explicit and unambiguous that it does not justify any attempt to read into
it any supposed intention of the parties, as the said contract is to be understood literally, just as they
appear on its face. 1.

CIVIL LAW; CONTRACTS; INTERPRETATION OF CONTRACTS; THE CONTRACT UNDER SCRUTINY IS SO

EXPLICIT AND UNAMBIGUOUS THAT IT DOES NOT JUSTIFY ANY ATTEMPT TO READ INTO IT ANY
SUPPOSED INTENTION OF THE PARTIES, AS THE SAID CONTRACT IS TO BE UNDERSTOOD LITERALLY,
JUST AS THEY APPEAR ON ITS FACE. 2.

FOR REASONS OF EQUITY, THE PROCEDURAL REQUIREMENTS OF CONSIGNATION ARE DEEMED

COMPLIED WITH IN THE PRESENT CASE.
— Petitioner next argues that there was no notice to her regarding OSSA's consignation of the
amounts corresponding to the 12th up to the 20th quarterly installments.
The records, however, show that several tenders of payment were consistently turned down by the
petitioner, so much so that the respondent OSSA found it pointless to keep on making formal
tenders of payment and serving notices of consignation to petitioner.
Moreover, in a motion dated May 7, 1987, OSSA prayed before the lower court that it be allowed to
deposit by way of consignation all the quarterly installments, without making formal tenders of
payment and serving notice of consignation, which prayer was granted by the trial court in the
Order dated July 3, 1982. The motion and the subsequent court order served on the petitioner in
the consignation proceedings sufficiently served as notice to petitioner of OSSA's willingness to pay
the quarterly installments and the consignation of such payments with the court.
For reasons of equity, the procedural requirements of consignation are deemed substantially
complied with in the present case.

Yu Tek & Co. v. Gonzales

Facts: A contract was executed between the herein parties, whereby Mr. Basilio Gonzales
acknowledges the receipt of P3,000 from Yu Tek & Co., and that in consideration of which he
obligates himself to deliver to the latter 600 piculs of sugar of the first and second grade, according
to the result of polarization, within 3 months. There is a stipulation providing for rescission with
P1,200 penalty in case of failure to deliver. No sugar was delivered, so plaintiff filed a case praying
for the judgment of P3,000 plus P1,200. P3,000 was awarded, thus, both parties appealed.
Issues:
(1) Whether compliance of the obligation to deliver depends upon the production in
defendant’s plantation
(2) Whether there is a perfected sale
(3) Whether liquidated damages of P1,200 should be awarded to the plaintiff
Held:
(1) There is not the slightest intimation in the contract that the sugar was to be raised by the
defendant. Parties are presumed to have reduced to writing all the essential conditions of their
contract. While parole evidence is admissible in a variety of ways to explain the meaning of written
contracts, it cannot serve the purpose of incorporating into the contract additional
contemporaneous conditions which are not mentioned at all in the writing, unless there has been
fraud or mistake. It may be true that defendant owned a plantation and expected to raise the sugar
himself, but he did not limit his obligation to his own crop of sugar. Our conclusion is that the
condition which the defendant seeks to add to the contract by parole evidence cannot be
considered. The rights of the parties must be determined by the writing itself.(2) We conclude that
the contract in the case at bar was merely an executory agreement; a promise of sale and not a sale.
At there was no perfected sale, it is clear that articles 1452,1096, and 1182 are not applicable. The
defendant having defaulted in his engagement, the plaintiff is entitled to recover the P3,000 which it
advanced to the defendant, and this portion of the judgment appealed from must therefore be
affirmed.(3) The contract plainly states that if the defendant fails to deliver the 600 piculs of sugar
within the time agreed on, the contract will be rescinded and he will be obliged to return the
P3,000and pay the sum of P1,200 by way of indemnity for loss and damages. There cannot be the
slightest doubt about the meaning of this language or the intention of the parties. There is no room
for either interpretation or construction. Under the provisions of article 1255 of the Civil

Code contracting parties are free to execute the contracts that they may consider suitable, provided
they are not in contravention of law, morals, or public order. In our opinion there is nothing in the
contract under consideration which is opposed to any of these principles

Labayen vs Talisay-Silay Milling Co. Inc. G.R. No. L-29298 (1928)

Facts: Reynaldo Labayen and Teodoro Labayen are the owners of Dos Hermanos, a hacienda in
Talisay, Negros Occidental. They entered into a contract with Talisay-Silay Milling Company
Incorporated, also called the Central, for the milling of sugar canes from their hacienda.
Stipulated in the contract is the construction of a railroad with three and a half meters right of way
and maintenance of such railroad by the central. However, the central was only able to construct a
railroad reaching hacienda Esmeralda No. 2, four kilometers away from hacienda Dos Hermanos. For
a railroad to extend to hacienda Dos Hermanos, the construction would require a gradual elevation
of 4.84% to 7%, would necessitate 26 curves and would cost Php80,000.00. A civil engineer testifying
in behalf of the defendants allege that to construct such would be possible but it would be very
dangerous.
This led to an action for damages in the amount of Php 28,620.00 by the petitioners for the alleged
breach of contract to grind sugar canes at the Court of First Instance of Negros Occidental. The court
ruled against the petitioners and on the cross-complaint of the defendants, condemned the
petitioners to pay the sum of Php 12, 114.00.
Hence, this petition.
Issue: Whether or not the action for damages should prosper.
Ruling: No. If the obligor voluntarily prevented the fulfillment of the condition of the obligation, such
condition shall be deemed fulfilled (article 1186 of the New Civil Code). The path of the railroad has
to pass through the haciendas of Esteban de la Rama. Since he would not grant permission to use his
land, therefore preventing the compliance of the obligation to grind, the action cannot prosper.
(Note: See original case and appealed case here.)