Spouses Serrano vs.

Caguiat
517 SCRA 57
G.R. No. 139173
February 28, 2007
FACTS:
Spouses Serrano are registered owners of a
lot located in Las Pinas. On March 23, 1990,
Caguiat offered to buythe lot and the
Serranos agreed to sell it at 1,500.00/sqm.
Caguiat then paid them a partial payment of
100,000.00 as evidenced by a receipt
indicating therein Caguiats promise to pay
the remaining balance.
Respondent, after making known his
readiness to pay the balance, requested
from petitioners the preparationof the
necessary Deed of Sale.
Petitioners informed respondent in a letter
that Amparo Herrera would be leaving for
abroad on or before April 15, 1990 and they
are canceling the transaction and that
respondent may recover the earnest
money(100,000) anytime. Petitioners also
wrote him stating that they already delivered
a managers check to hiscounsel in said
amount.
Respondent thus filed a complaint for
specific performance and damages with the
RTC of Makati.
The trial court relying on Article 1482 of the
Civil Code ruled that the payment of
100,000.00 being an earnestmoney signified
perfection of the contract of sale and
ordered the petitioners to execute a final
deed of sale infavor of respondent.
The Court of Appeals denied petitioners
motion for reconsideration in affirmation of
the lower courtsdecision.
ISSUE:
WON there was a contract of sale. NO.
HELD:
The transaction was a contract to sell.
When petitioners declared in the Receipt of
Partial Payment that they
Received from Mr. GodofredoCaguiat the
amount of one hundred thousand pesos
asPartial payment of our lot situated in Las
PinasMr. Caguiat promised to pay the
balance of the purchase price on or before
March 23, 1990 And that we will execute

and sign the final deed of sale on this

date,
-- there can be no other interpretation than that
they agreed to a conditional contract of sale,
consummation of which is subject only to the full
payment of the purchase price.
A contract to sell is akin to a conditional sale
where the efficacy or obligatory force of the
vendors obligation to transfer title is
subordinated to the happening of a future and
uncertain event, so that if the suspensive
condition does not take place, the parties would
stand as if the conditional obligation had never
existed. The suspensive condition is commonly
full payment of the purchase price.
In this case, the Receipt of Partial Payment
shows that the true agreement between the
parties is a contract to sell.
First, ownership of the parcel of land was
retained by petitioners and was not to pass to
respondent until full payment of the purchase
price. Second, the agreement between the
parties was not embodied in a deed of sale.
The absence of a formal deed of conveyance is
a strong indication that the parties did not intend
immediate transfer of ownership, but only a
transfer after full payment of the purchase price.
Third, petitioners retained possession of the
certificate of the lot.
It is true that Article 1482 provides that
whenever earnest money is given in a contract
of sale, it shall be considered as part of the price
and proof of the perfection of the contract.
However, this article speaks of earnest money
given in a contract of sale. In this case, the
earnest money forms part of the consideration
only if the sale is consummated upon full
payment of the purchase price.
Clearly, respondent cannot compel petitioners to
transfer ownership of the property to him.

Nabus vs.Pacson
G.R. No. 161318
November 25, 2009
FACTS:
In 1977, the spouses Nabus executed a
Deed of Conditional Sale (DOCS) in favor of
the Spouses Pacson.
This deed covered 1,000sqm out of the
1,665sqm land owned by the Nabuses. The
deed states that after thePacsons have paid
the full consideration of 170k, the
corresponding transfer documents shall be
executed by theNabuses. The Pacsons
thereafter occupied the land and built an
auto shop thereon.
In 1977, Bate Nabus died,leaving Julie
Nabus and her daughter Michelle to execute
a Deed of Extrajudicial Settlement over the
property. Anew TCT was issued in their
names in 1984.
By 1984, the Pacsons have made 364
payments, leaving a balance of57k.
Sometime later, Julie Nabus approached
Joaquin Pacson for the remaining balance.
While the Pacsonsclaimed they were ready
to pay the balance, they asked Nabus to
return in 4 days as they wanted to make
sure of the remaining balance; wanted to
see the new deeds issued in the Nabuses
name;
wanted
to
see
the
guardianshippapers of the Nabus child.
However, Julie Nabus did not return.
The Pacsons later discovered that the entire
lothad been sold to a Betty Tolero, and that
a new title had been issued in Toleros
name.
Aggrieved they prayed to annul Toleros title,
as well as of the other documents issued to
the Nabuses.
Intheir defense, the Nabuses claimed that
their DoCS was converted in a contract of
lease, as Joaquin Pacson had misgivings
about buying the land after knowing that it
was in dispute.
They also claimed that Pacsons signature in
apage of the contract was absent.
The RTC and the CA both ruled in favor of
the Pacsons and ordered the execution of a
Deed of AbsoluteSale in favor of the
Pacsons, upon their payment of the full
purchase price.
The Nabuses appealed.

ISSUES:
1) WON the DOCS was converted to a
Contract of Lease? NO.
2) What is the nature of the contract between
the Nabuses and the Pacsons? CONTRACT
TO SELL
HELD:
1.) The DOCS was not converted to a Contract
of Lease.
The receipts issued to the Pacsons
contained the phrase as partial payment to
lot evidencing the intentof sale, rather than
of lease. Further, as found by the trial court,
Joaquin Pacsons non-signing of the second
page of a carbon copy of the Deed of
Conditional Sale was through sheer
inadvertence, since the original contract and
the other copies of the contract were all
signed by Joaquin Pacson and the other
parties to the contract.
2.) The DOCS was a contract to sell, and
because the Pacsons failed to pay the full
price, no obligation arose on the part of the
Nabuses.
It is not the title of the contract, but its
express terms or stipulations that determine
the kind of contractentered into by the
parties. In this case, the contract entitled
"Deed of Conditional Sale" is actually a
contract to sell. The contract stipulated that
"as soon as the full consideration of the sale
has been paid by the vendee, the
corresponding transfer documents shall be
executed by the vendor to the vendee for
the portion sold."
Where the vendor promises to execute a
deed of absolute sale upon the completion
by the vendee of the payment of the price,
the contract is only a contract to sell." The
aforecited stipulation shows that the vendors
reserved title to the subject property until full
payment of the purchase price.
Unfortunately for the Spouses Pacson, since
the Deed of Conditional Sale executed in
their favor was merely a contract to sell, the
obligation of the seller to sell becomes
demandable only upon the happening of
thesuspensive condition. The full payment
of the purchase price is the positive
suspensive condition, the failure of which is
not a breach of contract, but simply an event

that prevented the obligation of the vendor

to convey title from acquiring binding force.
Thus, for its non-fulfillment, there is no
contract to speak of, the obligor having
failed to perform the suspensive condition
which enforces a juridical relation. With this
circumstance, there can be no rescission or
fulfillment of an obligation that is still nonexistent, the suspensive condition not
having occurred as yet.
Emphasis should be made that the breach
contemplated in Article 1191 of the New Civil
Code is the obligors failure to comply with
an obligation already extant, not a failure of
a condition to render binding that obligation.
Therefore, since the Pacsons failed to fulfill
the suspensive condition, the obligation on
the part of the Nabuses to sell them the land
never arose, and the Nabuses were well
within their rights when they sold the land to
Tolero. The Pacsons, of course, are entitled
to reimbursement.

Reyes vs.Tuparan
G.R. No. 188064
June 1, 2011
FACTS:
Petitioner Mila Reyes owns a building which
the respondent Victoria Tuparan was leasing
a space for her pawnshop business.
Thereafter, petitioner mortgaged the building
to Farmer Savings and Loan Bank for P2M.
However, the loan reached P2,278,078.13.
Petitioner then decided to sell her real
properties for P6.5M in order topay the
bank.
As a gesture of friendship, respondent
verbally offered to conditionally buy the
building for P4.2Mand to assume the bank
loan.
It was stipulated however that title to the
ownership of the subject real properties shall
remain with thepetitioner until full payment of
respondent. And only upon payment of full
balance will the bank issue the Deed
ofCancellation of Mortgage and the
petitioner to execute the corresponding
Deed of Absolute Sale.
Respondent however defaulted, revealing a
balance of P805,000. She was already able
to pay the amountP3.4M and the bank loan.
Petitioner now is seeking the rescission of
her contract with respondent for the breach
of nonpayment.
RTC: the contract entered into by the parties
is a contract to sell but ruled that the remedy
of rescission could notapply because the
respondents failure to pay the petitioner the
balance of the purchase price in the total
amountof 805,000.00 was not a breach of
contract, but merely an event that prevented
the seller (petitioner) fromconveying title to
the purchaser (respondent).
CA: Affirmed.
ISSUE:
W/N the contract entered into by the parties is a
contract to sell? YES.
HELD:
The subject Deed of Conditional Sale with
Assumption of Mortgage entered into by and
among the two parties and FSL Bank is a
contract to sell and not a contract of sale. The
nonpayment of the full purchase pricecannot
give the petitioner the remedy for rescission
since the obligation did not yet exist since the

suspensivecondition of payment of the full

purchase price had not taken place.
A contract to sell may thus be defined as a
bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the
subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said
property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon,
that is, full payment of the purchase price.
Based on their contract, the title and ownership
of the subject properties remains with the
petitioner until the respondent fully pays the
balance of the purchase price and the assumed
mortgage obligation. Thereafter, 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.
Accordingly, the petitioners obligation to sell the
subject properties becomes demandable only
upon the happening of the positive suspensive
condition, which is the respondents full payment
of the purchase price.
Without respondents full payment, there can be
no breach of contract to speak of because
petitioner has no obligation yet to turn over the
title. Respondents failure to pay in full the
purchase price is not the breach of contract
contemplated under Article 1191 of the New Civil
Code but rather just an event that prevents the
petitioner from being bound to convey title to the
respondent.

Labagala vs. Santiago

371 SCRA 360
G.R. No. 132305
December 4, 2001

FACTS:
Jose Santiago owned a parcel of land
covered by TCT 64729.
Alleging that Jose had fraudulently
registeredit in his name alone, his sisters
(Nicolasa and Amanda, herein respondents)
sued Jose for the recovery of 2/3 shareof
the property.
RTC ruled in favor of the sisters and their
names were included in the certificate of
title.
Jose died intestate.
Respondents filed a complaint for the
recovery
of
title,
ownership
and
possessionagainst petitioner Labagala to
recover from her the 1/3 portion of the said
property pertaining to Jose, but whichcame
into petitioners sole possession upon his
death.
Respondents alleged that Joses share in
the propertybelongs to them by operation of
law since they are the only legal heirs of
their brother.
Respondents contentions:
o The deed of sale was a forgery. The
deed showed that Jose affixed his
thumb mark, but respondentsaverred
that, having been able to graduate from
college, Jose never put his thumb mark
on documentsand always signed his
name in full.
o Respondents also pointed out that it is
highly improbable for petitioner to have
paid the supposedconsideration of
P150,000 for the sale of the property
because petitioner was unemployed and
withoutany visible means of livelihood at
the time of the alleged sale.
o It was quite unusual and questionable
that petitioner registered the deed of
sale almost 8 years after theexecution of
the sale.
Petitioner claimed to be the daughter of
Jose, and thus entitled to his share in the
property.

ISSUE:
WON there was a valid sale.NO

She argued thatthe sale was in fact a

donation to her, and that nothing could have
precluded Jose from putting his thumb mark
onthe deed of sale instead of his signature.

HELD:
The Court agreed with CA that:
This deed is shot through and through with so
many intrinsic defects that a reasonable mind is
inevitably led to the conclusion that it is fake.
Why hide the nature of the contract in the
faade of a sale? Why did Santiago (fully aware
that he owned only 1/3) sell or donate the whole
property to Ida? Why did Santiago affix only his
thumb mark to a deed that falsely stated that
xxx Ida was of legal age when she was then
only 15 years old? Etc
Clearly, there is no valid sale in this case. Jose
did not have the right to transfer ownership of
the entire property to petitioner since 2/3
belonged to his sisters. Petitioner could not
have given her consent to thecontract, being
a minor at the time. Consent of the
contracting parties is among the essential
requisites of a contract, including one of sale,
absent which there can be no valid contract.
Moreover, petitioner admittedly did not pay any
centavo for the property, which makes the sale
void.
Art 1471: If the price is simulated, the sale is
void, but the act may be shown to have been in
reality a donation, or some other act or contract.
Even assuming that the deed is genuine, it
cannot be a valid donation. It lacks the
acceptance of the donee required by Art 725 of
the Civil Code. Being a minor, the acceptance of
the donation should have been made by her
father (Leon Labagala) or mother, or legal
representative. No one of those mentioned in
the law accepted the donation for Ida.
The Court also ruled that petitioner is not the
child of Jose Santiago, and cannot inherit from
him through succession. No birth certificate was
shown, only a baptismal certificate, which is not
conclusive proof of filiation.