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Respondent: Benita Ong ‐bought land from de leon “That for and in consideration of the sum of ONE MILLION ONE HUNDRED THOUSAND PESOS (P1.1 million), Philippine currency, the receipt whereof is hereby acknowledged from [RESPONDENT] to the entire satisfaction of [PETITIONER], said [PETITIONER] does hereby sell, transfer and convey in a manner absolute and irrevocable, unto said [RESPONDENT], his heirs and assigns that certain real estate together with the buildings and other improvements existing thereon, situated in [Barrio] Mayamot, Antipolo, Rizal under the following terms and conditions: 1. That upon full payment of [respondent] of the amount of FOUR HUNDRED FIFTEEN THOUSAND FIVE HUNDRED (P415,000), [petitioner] shall execute and sign a deed of assumption of mortgage in favor of [respondent] without any further cost whatsoever; 2. That [respondent] shall assume payment of the outstanding loan of SIX HUNDRED EIGHTY  FOUR THOUSAND FIVE HUNDRED PESOS (P684,500) with REAL SAVINGS AND LOAN, Cainta, Rizal… (emphasis supplied)” Ong paid the purchase price of 415,000, was given the keys to the house, made some repairs and improvements, and tried to assume the mortgage. But before the assumption of mortgage could happen, De Leon sold the land to another person, Leona Viloria. Ong now sues for specific performance, declaration of nullity of the second sale and damages De Leon contends that there was no obligation since the contract was subject to a condition (contract to sell) that Ong assume the mortgage which he did not fulfill hence he can freely dispose of the property Issue: Whether the parties entered into a contract of sale or a contract to sell? Held:In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfectionof the contract. The non‐payment of the price is a negative resolutory condition. Contract to sellis subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price.In the present case, the deed executed by the parties did not show that the owner intends toreserve ownership of the properties. The terms and conditions affected only the manner of payment and not the immediate transfer of ownership. It was clear that the owner intended a sale because he unqualifiedly delivered and transferred ownership of the properties to the respondent. Even if the contract was subject to such suspensive condition, the action of De Leon paying the mortgage prohibited Ong from fulfilling the same which in effect renders the condition fulfilled (Art. 1186)
informing the bank of the execution of the Deed of Sale with Assumption of Mortgage.R. February 2. "Contracts. In this connection.” . In this regard. 170405. No. Moreover. it required respondent to pay P 415. it was a contract of sale the parties entered into. 2010In a very recent case decided a couple of months ago. In this instance. not only did petitioner turn over the keys to the properties to respondent. he also authorized RSLAI to receive payment from respondent and release his certificates of title to her.R. February 2. Ong. Article 1498 of the Civil Code provides that. Even assuming arguendo that the agreement of the parties was subject to the condition that RSLAI had to approve the assumption of mortgage. De Leon vs.170405. petitioner executed a notarized deed of absolute sale in favor of respondent. not the immediate transfer of ownership (upon the execution of the notarized contract) from petitioner as seller to respondent as buyer. with the balance payable directly to RSLAI (on behalf of petitioner)within a reasonable time. Article 1186of the Civil Code provides: “Article 1186. the terms and conditions of the deed only affected the manner of payment. On the contrary. Benita T. No. the Supreme Court ruled in favor of the firm's client.500 in cash to petitioner upon thee xecution of the deed. 2010 April 08. Ong. Benita T. G. as a rule. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. and others ‐ which showed that the Petitioner intended to transfer ownership to the Respondent. With regard to the manner of payment. Nothing in said instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase price. 2010. the said condition was considered fulfilled as petitioner prevented its fulfillment by paying his outstanding obligation and taking back the certificates of title without even notifying respondent. Raymundo de Leon vs. The totality of petitioner’s acts clearly indicates that he had unqualifiedly delivered and transferred ownership of the properties to respondent. G . Benita T. the said terms and conditions pertained to the performance of the contract. Otherwise stated. Ong. Clearly.Raymundo S. not the perfection thereof nor the transfer of ownership. Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer.1 million. the execution of a notarized deed of sale is equivalent to the delivery of a thing sold. This decision is important and serves as a precedent because the High Tribunal considered the totality of the vendor's (Petitioner de Leon) acts in handing the keys over to Ong. fulfillment of condition. The Supreme Court held that:"The deed executed by the parties (as previously quoted) stated that petitioner sold the properties to respondent "in a manner absolute and irrevocable" for a sum of P1.
On appeal. Respondent then filed a complaintfor specific performance and declaration of nullity of the second sale and damages. Petitioner reiterated that they only entered into a contract to sell. The parties then executed a notarized deed of absolute sale with assumption of mortgage. de leon handed the keys to Ong and de leon wrote a letter to inform RSLAI that themortgage will be assumed by Ong. Subsequently. the CA upheld the sale to respondent and nullified the sale to Viloria. Feb. The buyer does not acquire ownership of the property until he fully pays the purchase price. The petitioner contended that respondent does not have a cause of action against him because the sale was subject to a condition which requires the approval of RSLAI of the mortgage. rendering the keys given to her useless. The said properties were mortgaged to a financial institution. Ong(respondent). Benita T. Respondent proceeded to RSLAI but she was informed that the mortgage has beenfully paid and that the titles have been given to the said person. On the other hand. 1993. 2010 Absolute and Conditional Sales Facts: On March 10. It was clear that the owner intended a sale because he unqualifiedly delivered and transferred ownership of the properties to the respondent. the deed executed by the parties did not show that the owner intends to reserve ownership of the properties. the respondent took repairs and made improvements in the properties. The RTC dismissed the case. The respondent then subsequently gave petitioner P415. Thereafter. . Contract to sell is subject to a positive suspensive condition.000.000 as partial payment. Petitioner moved for reconsideration to the SC. Real Savings & Loan Association Inc. the seller conveys ownership of the property to the buyer upon the perfection of the contract. 2. They also agreed that the respondent (Ong) shall assume the mortgage. (RSLAI). The non‐payment of the price is a negative resolutory condition. De Leon (petitioner) sold 3 parcels of land to Benita T. In the present case. As indicated in the deed of mortgage. Raymundo S. 170405. Issue: Whether the parties entered into a contract of sale or a contract to sell? Held: In a contract of sale. The terms and conditions affected only the manner of payment and not the immediate transfer of ownership. the parties stipulated that the petitioner (de leon) shall execute a deed of assumption of mortgage in favor of Ong (respondent)after full payment of the P415. respondent learned that the same properties weres old to a certain Viloria after March 10. 1993 and changed the locks.De Leon vs. Ong GR No.
2M in 3 fixed . No. 188064 June 1.200. If Reyes can find a buyer for 6. Petitioner. 2011 MILA A.00 o ₱278.5M in 3 months. conditional sale will be cancelled.00 payable on or before June 30.274 sqm residential and commercial lot in Karuhatan. VICTORIA T.000. 1990.87 Cash payment to Reyes o ₱1.G. ₱200.00 to be paid in installments as follows: 1. 1991.00 payable on or before January 31.000. Reyes can operate her drugstore and cosmetics store rent free for the duration of installment payments 3. Drugstore and cosmetics store at the G/F 2.13 partial payment to mortgage.R.00 payable on or before December 31. • November 26. and return of all payments made (to Reyes and FSL) + 6% monthly interest 2. Inc (FSL Bank) for 2M payable in installments o Nov 1990 – outstanding account on the mortgage reached 2. After full payment of the property. Remaining mortgage of 2M assumed by Tuparan o ₱721. Tuparan will renew and pay fire insurance of the 2 buildings until full payment o Verbally accepted by Reyes • FSL Bank approved the arrangement on the condition that petitioner would sign or remain as co‐maker for the mortgage obligation assumed by respondent. TUPARAN.000. Valenzuela City o 2 buildings in the property – 1) 3 storey commercial building known as RBJ Building and 2)a residential apartment building 1.1. 1991. FACTS Action for Rescission of Contract with Damages • Mila Reyes o Owner of 1. REYES. o Note: All the installments shall not bear any interest.5M to liquidate her bank loan and finance her business • Tuparan verbally offered to conditionally buy the property for 4. 1991. 3.2 M payable on installment basis without interest and to assume the bank loan o Concessions offered by Tuparan: 1. Respondent. Deed of Conditional Sale of Real Properties with Assumption of Mortgage (FSL Bank + Reyes + Tuparan) o Purchase price = ₱4.921. vs. 15 year lease @ 8K/month 4.000.078.000. Residing at G/F 3. ₱800.200. ₱200. 2.278 M o Petitioner decided to sell the property for at least 6. Other areas being leased out • Victoria Tuparan o December 1989 leased from Reyes a space on the ground floor of the RBJ building for pawnshop (4K/month) o Close friendship developed between Reyes and Tuparan which led to Tuparan investing thousands of pesos in petitioner’s financing/lending business from Feb – May 1990 with interest rate of 6%/month • Mortgage with FSL Bank o June 1998 – Reyes mortgaged the her property to Farmers Savings Bank and Loan Bank.
1990 for the use and occupancy of the ground floor of the building.00 with interest and took several pieces of jewelry worth ₱120. both parties chose not to reduce into writing the other terms of their agreement (verbal agreements).000.13 mortgage and was able to obtain a deed of cancellation of mortgage • She already paid full the purchase price of ₱4.• • • • installments: Due to their close personal friendship and business relationship.000.078. as full payment of the purchase price of the property and demanded the simultaneous execution of the corresponding Deed of Absolute Sale (DOAS) o • Respondent’s Contention • The Deed of Conditional Sale of Real Property with Assumption of Mortgage was actually a pure and absolute contract of sale with a term period. only 395K has been paid.000.00 On September 10.00. • She paid fully the ₱2. Since 1990. o It could not be considered a conditional sale because the acquisition of contractual rights and the performance of the obligation did not depend upon a future and uncertain event. thus. Tuparan agreed on 6% interest a month As of August 1992. . rescission could not be resorted to.800. Tuparan had taken possession of the real property and collected rent from the tenants Respondent failed to pay in their due dates. As a result of their business relationship. Tuparan offered 751K only payable on Sep 7.000. parties could no longer be restored to their original positions. According to Reyes. Hence. • • She had introduced improvements thereon worth more than ₱4. Reyes obtained from her a loan of ₱400. instead paid small amounts from time to time.000. Reyes filed a complaint for Rescission of Contract with Damages against Tuparan before the RTC. to compensate.00. accumulating arrears in the amount of ₱470.200.278. • Petitioner refused to pay monthly rental of ₱20K since November 16. 1992. balance of 805K in the principal and 466K in unpaid interest On September 1992.00 as of October 1992.
o Respondent had already paid a substantial amount of the purchase price. o Only upon full payment (positive suspensive condition) shall the .RTC o Respondent failed to pay in full the ₱4. Reyes to execute DOAS and transfer property Affirmed RTC decision with modifications o Contract entered into by the parties is a contract to sell o But the remedy of rescission could not apply because the respondent’s failure to pay the ₱805. it would be more equitable to give respondent a chance to pay the balance plus interest within a given period of time. Whether or not the CA was correct in ruling that there was no legal basis for the rescission of the Deed of Conditional Sale with Assumption of Mortgage DECISION SC AFFIRMED THE CA RULING Contract to Sell or Contract of Sale o Deed of Conditional Sale with Assumption of Mortgage is a contract to sell based on the following stipulations: o The title and ownership of the properties remains with the petitioner until full payment of purchase price and mortgage o Thereafter. it could not be permitted because her non‐payment in full of the purchase price "may not be considered as substantial and fundamental breach of the contract as to defeat the object of the 4 parties in entering into the contract. it was but right and just to allow her to pay the unpaid balance of the purchase price plus interest.000. Note: 20% of Contract Price The Deed of Conditional Sale of Real Property with Assumption of Mortgage is a contract to sell." The RTC believed that the respondent’s offer stated in her counsel’s letter dated September 2.00 showed her sincerity and willingness to settle her obligation. and not a contract of sale.00 was not a breach of contract.00. Hence.000.000. 1992 to settle what she thought was her unpaid balance of ₱751. o o o Although the petitioner was entitled to a rescission of the contract. but merely an event that prevented the seller (petitioner) from conveying title to the purchaser (respondent). FSL Bank shall then issue the corresponding deed of cancellation of mortgage and the petitioner shall execute the corresponding deed of absolute sale in favor of the respondent. CA ISSUE RTC Order: o Respondent to pay balance of 805K + interest from filing of case within 30 days o Failure to pay shall cause automatic rescission of contract (Deed of Conditional Sale of Real Property with Assumption of Mortgage) o Reyes can use the space without rent until full payment o Upon full payment – contract of lease @8K/month o Upon full payment.2 million total purchase price of the subject real properties leaving a balance of ₱805.
the prospective seller does not as yet agree or consent to transfer ownership of the property subject of . however. the prospective seller explicitly reserves the transfer of title to the prospective buyer. Contract of Sale vs Contract to Sell CONTRACT OF SALE A contract of sale is defined in Article 1458 of the Civil Code." The CA was. correct in imposing interest at the rate of 6% per annum starting from the filing of the complaint on September 11. December 31. and c) Price certain in money or its equivalent. Interest o Petitioner failed to substantiate her claim that respondent made a personal commitment to pay a 6% monthly interest on the ₱805. 1992. (20% of contract price) – There is only a slight or casual breach in the fulfillment of obligation o It is only right and just to allow Tuparan to pay the said unpaid balance of the purchase price to Reyes. By the contract of sale." o Rescission can only be allowed when breach is substantial and fundamental to the fulfillment of the obligation. The essential elements of a contract of sale are the following: a) Consent or meeting of the minds.000. 1458. CONTRACT TO SELL Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking.00.obligation arise Right to Cancel Contract due to non‐payment of installment o Of the 4. only 805K remains unpaid and as sunstantial amount of the purchase price has already been paid. In a contract to sell. 1991. thus: Art. unless stipulated by the parties o The respondent showed her sincerity and willingness to comply with her obligation when she offered to pay the petitioner the amount of ₱751.2 M purchase price. x x x Sale. that is. and the other to pay therefor a price certain in money or its equivalent.1avvphi1 Damages o None o Not enough evidence on record to prove that respondent acted fraudulently and maliciously against the petitioner. o Contract Stipulation: "All the installments shall not bear interest.00 from the date of delinquency. one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. consent to transfer ownership in exchange for the price. b) Determinate subject matter. is a consensual contract because it is perfected by mere consent. by its very nature.000. meaning.
The title to the property passes to the buyer upon the delivery of the thing sold.Full Payment o the buyer’s non-payment of the price is a negative resolutory condition the contract to sell until the happening of an event. failure of a positive suspensive condition not regarded a breach in the sense that there can be no rescission of an obligation (to turn over title) that did not yet exist since the suspensive . retained by the seller and is not to pass to the vendee until full payment of the purchase price. o The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.) If the suspensive condition is not fulfilled. (The obligor having failed to perform the suspensive condition which enforces a juridical relation. = no contract. o Title remains in the seller o Failure to pay installments Breach of contract upon failure of payment o the ownership is. by agreement. Failure = not a breach of contract (simply an event that prevented the obligation of the vendor to convey title from acquiring binding force) o o Art 1191 Applicability • Applicable o Non-fulfilment. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. Property o o The seller has lost and cannot recover the ownership of the property unless he takes action to set aside the contract of sale. o the buyer’s full payment of the price is a positive suspensive condition to the coming into effect of the agreement (obligation to convey property) o upon the fulfillment of the suspensive condition which is the full payment of the purchase price. the perfection of the contract of sale is completely abated.
condition had not taken place. not a failure of a condition to render binding that obligation. • The breach contemplated in Article 1191 of the New Civil Code is the obligor’s failure to comply with an obligation already extant. .
The discounting arrangements entered into by Arsenio under the Deeds of Assignment were the very transactions envisioned in the two board resolutions of Great Asian to raise funds for its business. Bancasia filed a complaint for collection of a sum of money against Great Asian and Tan Chong Lin. INDEPENDENT OF THE NEGOTIABLE INSTRUMENTS LAW. through its Treasurer and General Manager Arsenio. 1982. the two board resolutions clearly authorize Great Asian to secure a loan or discounting line from Bancasia. The total amount of the fifteen dishonored checks is P1. • 2. • Article 1207 of the Civil Code provides. 1982.6 – Great Asian vs. Jr. in case the drawers fail to pay the checks on maturity. The assailed Decision of the Court of Appeals in CA‐G. • On June 23. CV No. WHETHER TAN CHONG LIN IS LIABLE TO GREAT ASIAN UNDER THE SURETY AGREEMENTS.00.00. That is. or when the law or nature of the obligation requires solidarity. Great Asian subsequently withdrew its petition of insolvency.632. ”xxx There is a solidary liability only when the obligation expressly so states.R. WHETHER GREAT ASIAN IS LIABLE TO BANCASIA UNDER THE DEEDS OF ASSIGNMENT FOR BREACH OF CONTRACT PURSUANT TO THE CIVIL CODE. Arsenio acted completely within the limits of his authority under the two board resolutions. . the debts of Great Asian to Bancasia. 20167 is AFFIRMED with MODIFICATION. • There is one vital suspensive condition in the Deeds of Assignment. solidarily. • On May 21. • Great Asian.005. • 3. The failure of the drawers to pay the checks is a suspensive condition. Issues: • 1. in particular household appliances. the happening of which gives rise to Bancasia’s right to demand payment from Great Asian.243.042. WHETHER ARSENIO HAD AUTHORITY TO EXECUTE THE DEEDS OF ASSIGNMENT AND THUS BIND GREAT ASIAN. Great Asian obligated itself to pay Bancasia the full face value of the dishonored checks. to secure a loan and to secure a discounting line from Bancasia in an amount not exceeding P1million and P2million. CA Facts • Great Asian is engaged in the business of buying and selling general merchandise. signed four (4) Deeds of Assignment of Receivables assigning to Bancasia fifteen (15) postdated checks with recourse. • Tan Chong Lin (the president of Great Asian) signed a Surety Agreement in favor of Bancasia to guarantee. • The board of directors of Great Asian approved two resolutions authorizing its Treasurer and General Manager. including penalty and attorney’s fees. Arsenio Lim Piat. Held: • As plain as daylight. respectively.” The stipulations in the Surety Agreements undeniably mandate the solidary liability of Tan Chong Lin with Great Asian. This conditional obligation of Great Asian arises from its written contracts with Bancasia as embodied in the Deeds of Assignment. Great Asian filed with the then Court of First Instance of Manila a petition for insolvency listing Bancasia as one of the creditors of Great Asian in the amount of P1.
City Court CFI CA *the City Court of Manila decided in favor of lessor Ducusin on the ground that he needs his premises for his own children Respondents vacate the premises and surrender possession Defendants to pay P220 monthly until the same is vacated and surrendered Defendants to pay P263. terms would be on a month to month basis commencing on Feb 19.AGAPITO DUCUSIN & AGAPITO DUCUSIN. paying its rentals. A second letter dated February 14 was sent to make a follow up. CFI affirmed CCM’s decision *Sustained the validity of the clause in the contract of lease” terminated by lessor on the ground that his children need the premises for their own use or residence” Contract was terminated upon the happening of the resolutory condition—need of the lease premises by lessor’s children The happening of the condition not dependent solely upon the will of the . CA and Sps. On April 14. petitioner Ducusin sent a “Notice to Terminate Lease Contract” and gave them until March to vacate the premises for the reason that his two children were getting married and will need the apartment for their own use and residence.29reimbursement for the use of booster pump Defendants to pay P700-as atty’s fees and cost of suit *on the lessees/Baliola spouses’ appeal. Baliola spouses occupied the apartment for almost two years. 1975 until by mutual agreement or terminated by lessor on the ground that his children need the premises for their own use or residence upon any ground provided for in accordance with law. Jr. vs. BALIOLA Agapito Ducusin leased a one-door apartment unit (3319-A) to Sps. Respondent Baliola made no reply and instead wrote a letter to the Sec of Nat’l Defense reporting the intent of Ducusin on evicting them from the lease premises. On Janurary 1977. Under the contract of lease. petitioners filed an action for ejectment against the Baliola spouses. Baliola for a monthly rental of P220.
its validity or compliance cannot be left to the will of one of them. Evidence on alleged marriage was only presented after respondents file a ‘Motion to Reopen the Case for Reception of Rebuttal Evidence’. The validity of the said condition as agreed by parties stands. Art 1182. admitted. both holding that marriage has been sufficiently proved Testimony of Agapito Ducusin. If it depends upon chance or upon the will of a third person. the obligation shall take effect with the provisions of this code.and he knows this fact of marriage since he was present.lessor. Sr. as proved by the pictures taken during the SC . *BUT held that petitioners have not proved by a preponderance of evidence the alleged need of the immediate members of petitioner Ducusin’s family of the use of the leased premises. and considered the decisions in CFI and CCM. the conditional obligation shall be void. Reversed CA decision. affirmed CCM & CFI decision: *all of the evidence of the wedding were noted. Art 1308-The contract must bind both contracting parties. and runs counter to the timehonored rule against hearsay evidence Ducusin did not show that the one-door apartment leased to Baliola was the only place available for the use of his son. rather upon the will of a third person—lessor’s children.When the fulfillment of the condition depends upon chance or upon the will of the debtor. Ducusin even informed him that another apartment unit 3319-D similarly owned by the latter would soon be vacated.
letter of Ducusin.Judicial ejectment lies when the lease is for a definite period or when the fixed or definite period agreed upon has expired in the present case. *The contract of lease is for a definite period.ceremony in Canada The testimony of Arturo Ducusin. as an act of declaration about pedigree *the intention to use the leased premises as residence of Ducusin. Jr. Jr. and remaining 5 doors are all occupied. *Evidence show that there is no other place available for the use and residence of petitioner’s son Out of the 8 doors apartment building owned by petitioner: 3 doors.Jr. alleged vacancy is nearly speculative and there is no showing that it actually became vacant and available. documentary evidence. PD20.now 31 years old. is not covered by PD 20. Reversed CA decision. Assuming Ducusin had really informed that another unit 3319 would soon be vacated. stating his intent to settle in the Phil. become untenantable due to wear and tear.Costs in favor of Petitioner .. brother of Agapito Ducusin. affirmed CCM & CFI decision . being on a month-to-month basis. Lessor has the right to judicially eject lessee from the premises may be duly enforced. has been satisfactorily and sufficiently proved by substantial evidence in the record of the case Petitioner sent “Notice to Terminate his contract” Telephone talk.
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