G.R. No. L-13438, Nov 20, 1918, Gutierrez Repide vs. Afzelus, 39 Phil.

90
Malcolm, J.

Facts:

 The plaintiff, owner of a parcel of real estate in Manila, entered into a contract with the defendants for the sale of the
property for P10,000, with P2,000 to be paid upon signing and the balance in monthly installments.
 The property was to be mortgaged back to the plaintiff to secure the balance payment.
 Despite initial agreement and preparation by the plaintiff, including incurring expenses for survey and deed
preparation, the defendants withdrew from the purchase, citing financial incapability due to business failure.
 The plaintiff wanted to compel the defendants to fulfill their contractual obligations through a lawsuit, however, the
lower court decided in favor of the dependent.
 Hence, an appeal before the SC.
 The plaintiff wanted specific performance to compel the defendants to sign the deed and mortgage and to fulfill the
payment terms.

Issue:

Whether or not the plaintiff entitled to compel the defendants to specifically perform the contract for the sale of real estate
despite the defendants' financial inability to fulfill the contract terms.

Supreme Court Ruling:

Yes. The Supreme Court reversed the trial court's decision, ruling in favor of specific performance. It held that the contract
was valid and bilateral, imposing mutual obligations on both parties.

The Supreme Court's ruling on the appeal for the specific performance of a contract for the sale and purchase of real
estate emphasizes a fundamental principle of both civil and common law: the enforceability of valid contracts through
specific performance, especially when damages are not adequate. This principle is pivotal for ensuring the stability and
integrity of commercial transactions by protecting the rights of both sellers and buyers to compel the fulfillment of
contractual obligations.

In this case, the plaintiff wanted to compel the defendants to complete the agreed sale of a parcel of land in Manila, after
the defendants have withdrawn on their commitment due to financial difficulties.

The trial court had initially dismissed the plaintiff's complaint, deeming specific performance impractical and potentially
burdensome for the defendants who lacked the funds for the cash payment required by the contract.

However, upon appeal, the higher court revisited the tenets of specific performance within the context of the Civil Code, ,
which collectively establish the enforceability of contracts and the mutual obligations of contracting parties.

The court emphasized that civil law does not distinguish between the rights of vendors and vendees to demand
performance, a stance mirrored in the jurisprudence of the Supreme Court of Spain

The court also acknowledged the equitable remedy of specific performance in common law jurisdictions, which
consistently affirm the vendor's right to compel contract completion. This is grounded in the principle of mutual
performance obligation inherent in bilateral contracts, where neither party should be left without recourse when the other
fails to uphold their end of the bargain.

.The Court ordered the defendants to sign the deed and mortgage and to pay the stipulated purchase price, emphasizing
the use of court execution on the defendants' property as a means to enforce compliance. Costs were awarded to the
appellant.