E.E.M.
DELACRUZ
installment, there is no sufficient evidence thereof and, on the
contrary, Campos admits, and defendants' evidence so indicate,
that January 22, 1937, was the last extension granted to him to
make this payment.lwphi1.nt
On March 23, 1937 the Manila Jockey Club, Inc., was organized
and to it were transferred all the properties, rights and actions of
the Manila Jockey Club.
This action is filed by the plaintiff against the Manila Jockey Club
and its partners for the recovery from them of the forfeited
amount of P100,000 and for the payment of P50,000 as damages.
The appealed judgment absolves the defendants.
HELD:
Assuming these facts to be true, if the clause of the
contract referring to the forfeiture of the P100,000 already paid,
should the purchaser Campos fail to pay the subsequent
installments, is valid, the case does not present any difficulty
because the contract is clear on this point.
This clause regarding the forfeiture of what has been partially
paid is valid. It is in the nature of a penal clause which may be
legally established by the parties (article 1152 and 1255 of the
Civil Code). In its double purpose of insuring compliance with the
contract and of otherwise measuring beforehand the damages
which may result from non-compliance, it is not contrary to law,
morals or public order because it was voluntarily and knowingly
agreed upon by the parties. Viewing concretely the true effects
thereof in the present case, the amount forfeited constitutes
only eight per cent of the stipulated price, which is not excessive
if considered as profit which would have been obtained had the
contract been complied with. There is, moreover, evidence that
the defendants, because of this contract with Campos, had to
reject other propositions to buy the same property. At any rate,
the penal clause does away with the duty to prove the existence
and measure of the damages caused by the breach.
On the other hand, the allegation that the defendants were
responsible for non-compliance with the contract is in no wise
justified. It is said that the majority of the members of the Manila
1. THE MANILA RACING CLUB, INC., vs.
THE MANILA JOCKEY CLUB, ET AL.,
G.R. No. L-46533 October 28, 1939
AVANCEA, C. J.:p
FACTS:
On September 18, 1936 Rafael J. Campos entered a
contract (Exhibit C) with the Manila Jockey Club, an unregistered
partnership, whereby he purchased from it the parcel of land
described in transfer certificate of title No. 8724 with its
improvements, the good-will, and certain personal property. The
price agreed upon in this transaction is P1,200,000 payable as
follows: P50,000 upon the signing of the contract; P50,000 on or
before September 28, 1936; P300,000 on or before December 24,
1936; P200,000 on or before March 24, 1937. It was agreed that
should the purchaser fail to pay the amounts paid for itself. One
of the clauses of the deed also states that the purchaser may
form a corporation called the Manila Racing Club, Inc., to whom
he may transfer all his rights and obligations under the contract.
The purchaser Campos made the down payment P50,000 upon
signing the contract and on September 28, 1938 paid the second
installment of P50,000.
On October 22, 1936, the Manila Racing Club, Inc., was organized
and Campos transferred to it all his rights and obligations under
his contract with the Manila Jockey Club.
As the third installment of P300,000 became due on December
24, 1936, and the purchaser could not pay it, the vendor, on
January 11, 1937, declared the contract cancelled and kept the
amount of P100,000 already paid, corresponding to the first
installments. The purchaser was, however, granted an extension
until January 22, 1937, to revive the contract by paying the
P300,000, but having failed to do this, the partners of the vendor
ratified on January 23, 1937, the cancellation of the contract
agreed upon by its board of directors and the forfeiture of the
P100,000 paid by the purchaser. Although the plaintiff contends
that the Manila Jockey Club granted to purchaser Campos an
indefinite time to pay the P300,000, corresponding to the third
 E.E.M.DELACRUZ
Thereafter, Adelfa Properties expressed interest in buying the western portion of the
property from Rosario and Salud. Accordingly, on 25 November 1989, an Exclusive
Option to Purchase was executed between the parties, with the condition that the selling
price shall be P2,856,150, that the option money of P50,000 shall be credited as partial
payment upon the consummation of sale, that the balance is to be paid on or before 30
November 1989, and that in case of default by Adelfa Properties to pay the balance, the
option is cancelled and 50% of the option money shall be forfeited and the other 50%
refunded upon the sale of the property to a third party.
Before Adelfa Properties could make payment, it received summons on 29 November
1989, together with a copy of a complaint filed by the nephews and nieces of Rosario
and Salud against the latter, Jose and Dominador Jimenez, and Adelfa Properties in the
RTC Makati (Civil Case 89-5541), for annulment of the deed of sale in favor of
Household Corporation and recovery of ownership of the property covered by TCT
309773.
As a consequence, in a letter dated 29 November 1989, Adelfa Properties informed
Rosario and Salud that it would hold payment of the full purchase price and suggested
that the latter settle the case with their nephews and nieces. . Salud Jimenez refused to
heed the suggestion of Adelfa Properties and attributed the suspension of payment of the
purchase price to lack of word of honor
. On 14 December 1989, Rosario and Salud sent Francisca Jimenez to see Atty. Bernardo,
in his capacity as Adelfa Properties counsel, and to inform the latter that they were
cancelling the transaction. In turn, Atty. Bernardo offered to pay the purchase price
provided that P500,000.00 be deducted therefrom for the settlement of the civil case.
This was rejected by Rosario and Salud. On 22 December 1989, Atty. Bernardo wrote
Rosario and Salud on the same matter but this time reducing the amount from
P500,000.00 to P300,000.00, and this was also rejected by the latter. On 23 February
1990, the RTC dismissed Civil Case 89-5541.
On 16 April 1990, Atty. Bernardo wrote Rosario and Salud informing the latter that in
view of the dismissal of the case against them, Adelfa Properties was willing to pay the
purchase price, and he requested that the corresponding deed of absolute sale be
executed. This was ignored by Rosario and Salud. On 27 July 1990, Jimenez counsel
sent a letter to Adelfa Properties enclosing therein a check for P25,000.00 representing
the refund of 50% of the option money paid under the exclusive option to purchase.
Rosario and Salud then requested Adelfa Properties to return the owners duplicate copy
of the certificate of title of Salud Jimenez. Adelfa Properties failed to surrender the
certificate of title.
Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for
annulment of contract with damages, praying, among others, that the exclusive option to
purchase be declared null and void; that Adelfa Properties be ordered to return the
owners duplicate certificate of title; and that the annotation of the option contract on
TCT 309773 be cancelled.
RTC: On 5 September 1991, the trial court rendered judgment holding that the
agreement entered into by the parties was merely an option contract, and declaring that
the suspension of payment by Adelfa Properties constituted a counter-offer which,
therefore, was tantamount to a rejection of the option. It likewise ruled that Adelfa
Jockey Club promised to subscribe to one-half of the shares of
the plaintiff, and for failure to live up to this promise, the money
to pay the third installment of P300,000 could not be raised.
There is, however, no sufficient evidence of such promise which,
according to Campos, was merely verbal. Furthermore, Campos
himself attributes the failure to pay the third installment to the
fact that the public, due to the state of the stock market, did not
respond to the expectations of the incorporators of the plaintiff.
But it seems that even this is not the cause of the breach, for on
the date the third installment became due, the plaintiff had
subscribed shares of its capital stock in the amount of P600,000,
paid in part and the remainder payable on demand. The
deduction from all this is that the breach of the contract cannot
be attributed to the defendants and, much less, to the company
which, it is also alleged, the defendants brought into being to
defeat the organization of the plaintiff.
In view of the foregoing considerations, the appealed judgment is
affirmed, with the costs to the appellant. So ordered.
2. Adelfa Properties vs. CA
[G.R. No. 111238. January 25, 1995.]
Second Division, Regalado (J): 3 concur
PARTIES: Roasrio and Salud Jimenez Seller
Adelfa Properties Buyer
Subject:: western portion of a parcel of land 8855 sq. ms. Covered by TCT 309773
situated in Barrio Culasi, Las Pinas, Metro Manila
Facts:
Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and
Dominador Jimenez, were the registered co-owners of a parcel of land consisting of
17,710 sq. ms (TCT 309773) situated in Barrio Culasi, Las Pias, Metro Manila. On 28
July 1988, Jose and Dominador Jimenez sold their share consisting of 1/2 of said parcel
of land, specifically the eastern portion thereof, to Adelfa Properties pursuant to a
Kasulatan sa Bilihan ng Lupa. Subsequently, a Confirmatory Extrajudicial Partition
Agreement was executed by the Jimenezes, wherein the eastern portion of the subject
lot, with an area of 8,855 sq. ms. was adjudicated to Jose and Dominador Jimenez, while
the western portion was allocated to Rosario and Salud Jimenez.
 E.E.M.DELACRUZ
The important task in contract interpretation is always the ascertainment of the intention
of the contracting parties and that task is to be discharged by looking to the words they
used to project that intention in their contract, all the words not just a particular word or
two, and words in context not words standing alone. Moreover, judging from the
subsequent acts of the parties which will hereinafter be discussed, it is undeniable that
the intention of the parties was to enter into a contract to sell. In addition, 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.
.
Test to determine contract as a contract of sale or purchase or mere option document subject of the case at bar.
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 Adelfas obligation to pay the purchase price is specific, definite and certain,
and consequently binding and enforceable. Had the Jimenezes chosen to enforce the
contract, they could have specifically compelled Adelfa to pay the balance of
P2,806,150.00. 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.
Adelfa Properties justified in suspending payment of balance by reason of
vindicatory action filed against it
In Civil Case 89-5541, it is easily discernible that, although the complaint prayed for the
annulment only of the contract of sale executed between Adelfa Properties and the
Jimenez brothers, the same likewise prayed for the recovery of therein Jimenez share in
that parcel of land specifically covered by TCT 309773. In other words, the Jimenezes
were claiming to be co-owners of the entire parcel of land described in TCT 309773, and
not only of a portion thereof nor did their claim pertain exclusively to the eastern half
adjudicated to the Jimenez brothers. Therefore, Adelfa Properties 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 the Jimenezes that Adelfa
Properties 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.
Jimenezes may no longer be compelled to sell and deliver subject property
Be that as it may, and the validity of the suspension of payment notwithstanding, the
Jimenezes may no longer be compelled to sell and deliver the subject property to Adelfa
Properties for two reasons, that is, Adelfas 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 the Jimenezes.
Rescission in a contract to sell
Article 1592 of the Civil Code which requires rescission either by judicial action or
notarial act is not applicable to a contract to sell. 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. By
Properties could not validly suspend payment in favor of Rosario and Salud on the
ground that the vindicatory action filed by the latters kin did not involve the western
portion of the land covered by the contract between the parties, but the eastern portion
thereof which was the subject of the sale between Adelfa Properties and the brothers Jose
and Dominador Jimenez. The trial court then directed the cancellation of the exclusive
option to purchase.
On appeal,
RTC: the Court of appeals affirmed in toto the decision of the court a quo. That Article
1590 of the Civil Code on suspension of payments applies only to a contract of sale or a
contract to sell, but not to an option contract which it opined was the nature of the
Hence, the petition for review on certiorari.
Adelfa properties posits that the contract is a Contract of Sale and not an Option Contract
or Contract to Sell, making the suspension of payment applicable in the case.
ISSUE: Whether or not the contract is a Contract of Sale , Option Contract or Contract
to Sell.
HELD:
SC: The Supreme Court affirmed the assailed judgment of the Court of
Appeals in CA-GR CV 34767, with modificatory premises.
Agreement between parties a contract to sell and not an option contract or a
contract of sale
The alleged option contract is a contract to sell, rather than a contract of sale. The
distinction between the two is important for in contract of sale, the title passes to the
vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement
the ownership is reserved in the vendor and is not to pass until the full payment of the
price. In a contract of sale, the vendor has lost and cannot recover ownership until and
unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained
by the vendor until the full payment of the price Thus, a deed of sale is considered
absolute in nature where there is neither a stipulation in the deed that title to the property
sold is reserved in the seller until the full payment of the price, nor one giving the vendor
the right to unilaterally resolve the contract the moment the buyer fails to pay within a
fixed period.
That the parties really intended to execute a contract to sell is bolstered by the fact that
the deed of absolute sale would have been issued only upon the payment of the balance
of the purchase price, as may be gleaned from Adelfa Properties letter dated 16 April
1990 wherein it informed the vendors that it is now ready and willing to pay you
simultaneously with the execution of the corresponding deed of absolute sale.
Contract interpreted to ascertain intent of parties; Title not controlling if text shows
otherwise
 E.E.M.DELACRUZ

material alteration is one which changes the items which are required to be stated under Adelfas failure to comply with its obligation, the Jimenezes elected to resort to and did
Section 1 of the Negotiable Instrument Law announce the rescission of the contract through its letter to Adelfa dated 27 July 1990.
That written notice of rescission is deemed sufficient under the circumstances.
The case at the bench is unique in the sense that what was altered is the serial number of
WHEREFORE, on the foregoing modificatory premises, and considering that the same
the check in question, an item which, it can readily be observed, is not an essential
result has been reached by respondent Court of Appeals with respect to the relief
requisite for negotiability under Section 1 of the Negotiable Instruments Law. The
awarded to private respondents by the court a quo which we find to be correct, its
aforementioned alteration did not change the relations between the parties. The name of
assailed judgment in CA-G.R. CV No. 34767 is hereby AFFIRMED.
the drawer and the drawee were not altered. The intended payee was the same. The sum
of money due to the payee remained the same.

If the purpose of the serial number is merely to identify the issuing government office or
agency, its alteration in this case had no material effect whatsoever on the integrity of the
check. The identity of the issuing government office or agency was not changed thereby
and the amount of the check was not charged against the account of another government 3. PHILIPPINE NATIONAL BANK vs. COURT OF
office or agency which had no liability under the check. APPEALS
Posted on February 6, 2013 by winnieclaire
Petitioner, thus cannot refuse to accept the check in question on the ground that the serial Standard
number was altered, the same being an immaterial or innocent one. [G.R. No. 107508. April 25, 1996]

FACTS:
A check with serial number 7-3666-223-3, dated August 7, 1981 in the amount
of P97,650.00 was issued by the Ministry of Education and Culture payable to F. Abante
Marketing. This check was drawn against Philippine National Bank (herein petitioner).

F. Abante Marketing, a client of Capitol City Development Bank (Capitol), deposited the
questioned check in its savings account with said bank. In turn, Capitol deposited the
same in its account with the Philippine Bank of Communications (PBCom) which, in
turn, sent the check to petitioner for clearing.

4. Babasa vs. CA
[G.R.No.124045.May21,1998.]
FirstDivision,Bellosillo(J):4concurring
Facts:
On11April1981acontractofConditionalSaleofRegisteredLands
wasexecutedbetweenthespousesVivencioandElenaBabasaasvendorsand
TabangaoRealtyInc.(Tabangao)asvendeeover3parcelsofland,Lots17827
A,17827Band17827C,situatedinBrgy.Libjo,BatangasCity.Sincethe
certificatesoftitleoverthelotswereinthenameofthirdpersonswhohad
alreadyexecuteddeedsofreconveyanceanddisclaimerinfavoroftheBabasas,
itwasagreedthatthetotalpurchasepriceofP2,121,920.00wouldbepaidinthe
followingmanner:P300,000.00uponsigningofthecontract,andP1,821,920.00
Petitioner cleared the check as good and, thereafter, PBCom credited Capitols account
for the amount stated in the check. However, petitioner PNB returned the check to
PBCom and debited PBComs account for the amount covered by the check, the reason
being that there was a material alteration of the check number.
PBCom, as collecting agent of Capitol, then proceeded to debit the latters account for
the same amount. On the other hand, Capitol could not, in turn, debit F. Abante
Marketings account since the latter had already withdrawn the amount of the check.
ISSUE: WHETHER OR NOT AN ALTERATION OF THE SERIAL NUMBER OF A
CHECK IS A MATERIAL ALTERATION UNDER THE NEGOTIABLE
INSTRUMENTS LAW.
HELD:
No. An alteration is said to be material if it alters the effect of the instrument. It
means an unauthorized change in an instrument that purports to modify in any respect
the obligation of a party or an unauthorized addition of words or numbers or other
change to an incomplete instrument relating to the obligation of a party.In other words, a

thatthenotarialrescissionexecutedbytheBabasasvoidandofnolegaleffect;
declaringthattheleasecontractbetweenTabangaoandSHELLdeemedlegally
bindingonthespouses;orderingthespousestodelivertoTabangaoclean
transfercertificatesintheirnameandexecuteallnecessarydeedsanddocument
necessaryfortheRegisterofDeedstofacilitatetheissuanceofTCTs;directing
TabangaotopaythespousestheremainingbalanceofP1,821,920.00outofthe
fullpurchasepriceforthesethreelotsenumeratedintheagreementplusinterest
thereonof17%perannumorP20,648.43amonthcompoundedannually
beginningJanuary1983untilfullypaid;makingtherestrainingorderagainst
thespousesinputtingupstructuresinterferingwiththeactivitiesofSHELL,its
employeesandagents,andcancelingthebondpostedbyShell;andorderingthe
spousestopaythecostoftheproceedingsaswellasthepremiumSHELLpaid
inthepostingoftheP2millionbondfortheissuanceoftherestrainingorder.
ThespousesappealedtotheCourtofAppealswhichon29February1996
affirmedthedecisionofthetrialcourt;butorderedthatthecompoundedinterest
tobepaidfrom19July1983onlyandnotfromJanuary1983asdecreedbythe ownersofthehousesstandingthereoninadditiontograntingthemresidential
trialcourt.Hence,theappeal.
TheSupremeCourtdeniedthepetition,andaffirmedtheappealeddecisionof
theCourtofAppealsinCAGRCV39554;withoutcosts.
1.Contractofsaleandnotoflease
Thecontractisrepletewithtermsandstipulationsclearlyindicativeof
acontractofsale.Thus,theopeningwhereasclausestatesthatthepartiesdesire
andmutuallyagreedonthesaleandpurchaseofthethreeparcelsofland;the notyetbeenresolvedwithfinalityintheirfavor.Tabangaorefusedtherequest.
BabasasweredescribedasthevendorswhileTabangaoasthevendeefrom InretaliationtheBabasasexecutedanotarizedunilateralrescissiondated28
thebeginningofthecontracttoitsend;theamountofP2,121,920.00wasstated
asthepurchasepriceofthelots;Tabangao,asvendee,wasgrantedabsoluteand
unconditionalrighttotakeimmediatepossessionofthepremiseswhilethe
Babasas,asvendors,warrantedsuchpeacefulpossessionforever;Tabangaowas
toshoulderthecapitalgainstax,and;lastly,theBabasaswereexpectedto
executeaFinalDeedofAbsoluteSaleinfavorofTabangaonecessaryforthe
issuanceoftransfercertificatesoftitlethemomenttheywereabletosecure
cleancertificatesoftitleintheirname.Itcannotbesaidthatthecontractwas
oneofleasesimplybecausethewordownershipwasnevermentioned
therein.Besides,thespousesdidnotobjecttothetermsandstipulations
employedinthecontractatthetimeofitsexecutionwhentheycouldhave
easilydonesoconsideringthattheywerethenablyassistedbytheircounsel,
Atty.EdgardoM.Carreon,whoselegaltrainingnegatestheirpretended
ignoranceonthematter.
E.E.M.DELACRUZ
uponpresentationbytheBabasasoftransfercertificatesoftitlesintheirname,
freefromallliensandencumbrances,anddeliveryofregisterabledocumentsof
saleinfavorofTabangaowithin20monthsfromthesigningofthecontract.In
themeantime,theretainedbalanceofthepurchasepricewouldearninterestat
17%perannumorP20,648.43monthlypayabletotheBabasasuntil31
December1982.ItwasexpresslystipulatedthatTabangaowouldhavethe
absoluteandunconditionalrighttotakeimmediatepossessionofthelotsaswell
asintroduceanyimprovementsthereon.On18May1981Tabangaoleasedthe
lotstoShellGasPhilippines,Inc.(SHELL),whichimmediatelystartedthe
constructionthereonofaLiquefiedPetroleumGasTerminalProject,an
approvedzoneexportenterpriseoftheExportProcessingZone.Tabangaoisthe
realestatearmofSHELL.Thepartiessubstantiallycompliedwiththetermsof
thecontract.TabangaopaidthefirstinstallmentofP300,000.00totheBabasas
whilethelatterdeliveredactualpossessionofthelotstotheformer.Inaddition,
TabangaopaidP379,625.00tothetenantsofthelotsasdisturbance
compensationandaspaymentforexistingcropsaswellasP334,700.00tothe
lotswiththetotalareaof2,800squaremeters.Tabangaolikewisepaidthe
stipulatedmonthlyinterestforthe20monthperiodamountingtoP408,580.80.
Meanwhile,theBabasasfiledCivilCase519andPetition373forthetransferof
titlesofthelotsintheirname.However,2dayspriortotheexpirationofthe20
monthperiod,specificallyon31December1982,theBabasasaskedTabangao
foranindefiniteextensionwithinwhichtodelivercleantitlesoverthelots.
TheyaskedthatTabangaocontinuepayingthemonthlyinterestofP20,648.43
startingJanuary1983onthegroundthatCivilCase519andPetition373had
February1983towhichTabangaorespondedbyremindingtheBabasasthat
theyweretheoneswhodidnotcomplywiththeircontractualobligationto
delivercleantitleswithinthestipulated20monthperiod,hence,hadnorightto
rescindtheircontract.TheBabasasinsistedontheunilateralrescissionand
demandedthatSHELLvacatethelots.
On19July1983Tabangaoinstitutedanactionforspecificperformancewith
damagesintheRTCBatangasCitytocompelthespousestocomplywiththeir
obligationtodelivercleantitlesovertheproperties.TheBabasasmovedto
dismissthecomplaintonthegroundthattheircontractwithTabangaobecame
nullandvoidwiththeexpirationofthe20monthperiodgiventhemwithin
whichtodelivercleancertificatesoftitle.SHELLenteredthedisputeas
intervenorprayingthatitsleaseoverthepremisesberespectedbytheBabasas.
Eventually,judgmentwasrenderedinfavorofTabangaoandSHELL,declaring

toproceedwiththesaleortowaivethecondition.Inthepresentcase,the
spousescontractwithTabangaodidnotloseitsefficacywhenthe20month
periodstipulatedthereinexpiredwithoutthespousesbeingabletodeliverclean
certificatesoftitlesuchthatTabangaomaynolongerdemandperformanceof
theirobligation.
5.Unilateralrescissionofthecontractbythespousesunwarranted
Thespousesactofunilaterallyrescindingtheircontractwith
Tabangaoisunwarranted.Thefailureofpetitionerstodelivercleantitleswithin
20monthsfromthesigningofthecontractmerelygivesTabangaotheoptionto
eitherrefusetoproceedwiththesaleortowaivetheconditioninconsonance
withArticle1545oftheNewCivilCode.Besides,itwouldbetheheightof
inequitytoallowtheBabasastorescindtheircontractofsalewithTabangaoby
invokingasagroundtherefortheirownfailuretodeliverthetitlesoverthelots
withinthestipulatedperiod.
5.SpousesADORACIONC.PANGILINANand
GEORGEB.PANGILINANrepresentedinthissuitby
theirAttorneyinfact,ARCADIOS.MALLARI,
petitioner,vs.COURTOFAPPEALS,JOSER.CANLAS
andLUISR.CANLASandRURALBANKOFSTA.
RITA,INC.,respondents.
DECISION
TORRES,JR.,J.:
SECONDDIVISION
[G.R.No.83588.September29,1997]
ThispetitionforreviewseekstosetasidetheJanuary14,1988decision[1]andMay31,
1988resolutionoftheCourtofAppealsinCAGRCVNo.09175whichreversedthe
December12,1985decisionoftheRegionalTrialCourt,ThirdJudicialRegion,Branch
XLVIII,SanFernando,Pampanga.
FACTS:
OnMay18,1968,petitionersPangilinan(husbandandwife),andtheprivate
respondentsJoseR.CanlasandLuisR.CanlasenteredintoaCotracttoBuyandToSell
asubdivisionlotatSto.NioVillage,SanFernando,Pampanga,particularlyLotNo.1,
Block3;withanareaof577squaremetersatP30.00persquaremeter,foratotal
E.E.M.DELACRUZ
2.Contractsvalidthoughtpartiesenteredintoitagainstownwishand
desire,orevenagainsthisbetterjudgment
AlthoughTabangaodangledthethreatofexpropriationbythe
government(throughtheExportProcessingZoneAuthority)intheevent
voluntarynegotiationsfailed,acausetocommiseratewiththespousesmaybe
perceived,itisnotenoughtoprovidethemwithanavenuetoescapecontractual
obligationsvalidlyenteredinto.Contractsarevalideventhoughoneofthe
partiesenteredintoitagainsthisownwishanddesire,orevenagainsthisbetter
judgment.Besides,athreatofeminentdomainproceedingsbythegovernment
cannotbelegallyclassifiedasthekindofimminent,seriousandwrongfulinjury
toacontractingpartyastovitiatehisconsent.Privatelandownersoughtto
realize,andeventuallyaccept,thatpropertyrightsmustyieldtothevalid
exercisebythestateofitsallimportantpowerofeminentdomain.
3.Contractisabsolutealthoughdenominatedaconditionalsale;Actual
andconstructivedelivery
AlthoughdenominatedConditionalSaleofRegisteredLands,the
contractof11April1981betweenthespousesandTabangaoisoneofabsolute
sale.Asidefromthetermsandstipulationsusedthereinindicatingsuchkindof
sale,thereisabsolutelynoprovisoreservingtitleintheBabasasuntilfull
paymentofthepurchaseprice,noranystipulationgivingthemtherightto
unilaterallyrescindthecontractincaseofnonpayment.Adeedofsaleis
absoluteinnaturealthoughdenominatedaconditionalsaleabsentsuch
stipulations.Insuchcases,ownershipofthethingsoldpassestothevendee
upontheconstructiveoractualdeliverythereof.Intheinstantcase,ownership
overLots17827A,17827Band17827CpassedtoTabangaobothby
constructiveandactualdelivery.Constructivedeliverywasaccomplishedupon
theexecutionofthecontractof11April1981withoutanyreservationoftitleon
thepartoftheBabasaswhileactualdeliverywasmadewhenTabangaotook
unconditionalpossessionofthelotsandleasedthemtoitsassociatecompany
SHELLwhichconstructeditsmultimillionpesoLPGProjectthereon.
4.Distinctionbetweenconditionsimposedontheperfectionofcontractand
conditionimposedontheperformanceofanobligation
InRomerov.CourtofAppealsandLimv.CourtofAppeals,theCourt
distinguishedbetweenaconditionimposedontheperfectionofacontractanda
conditionimposedmerelyontheperformanceofanobligation.Whilefailureto
complywiththefirstconditionresultsinthefailureofacontract,failureto
complywiththesecondmerelygivestheotherpartytheoptiontoeitherrefuse

TheCourtisnotpersuaded.
ThefifthparagraphoftheContracttoBuyandtoSellpertinentlyreads:
Thiscontractshallbeconsideredautomaticallyrescindedandcanceledandofnofurther
forceoreffect,uponfailureoftheVENDEEtopaywhendue,three(3)consecutive
monthlyinstallmentsortocomplywithanyofthetermsandconditionshereof,inwhich
casetheVENDORSshallhavetherighttoresellsaidparceloflandtoanypersonor
purchaser,asifthiscontracthasneverbeenenteredinto.Insuchcaseofcancellationof
thiscontract,allamountspaidinaccordancewiththeagreementtogetherwithallthe
improvementsmadeonthepremisesshallbeconsideredasrentspaidfortheuseand
occupationoftheabovementionedpremisesandasandaspaymentforthedamages
sufferedforthefailureoftheVENDEEtofulfillhispartofthisagreement;andforthe
VENDEEherebyrenounceshisrighttodemandorreclaimthereturnofthesameobliges
himselftopeacefullyvacatethepremisesanddeliverthesametotheVENDORS.[6]
Article1592[7]oftheNewCivilCode,requiringdemandbysuitorbynotarialactin
casethevendorofrealtywantstorescinddoesnotapplytoacontracttosellbutonlyto
contractofsale.Incontractstosell,whereownershipisretainedbythesellerandisnot
topassuntilthefullpayment,suchpayment,aswesaid,isapositivesuspensive
condition,thefailureofwhichisnotabreach,casualorserious,butsimplyaneventthat
preventedtheobligationofthevendortoconveytitlefromacquiringbindingforce.To
arguethattherewasonlyacasualbreachistoproceedfromtheassumptionthatthe
contractisoneofabsolutesale,wherenonpaymentisaresolutorycondition,whichis
notthecase.[8]
TheapplicableprovisionoflawininstantcaseisArticle1191oftheNewCivilCode
whichprovidesasfollows:
Art.1191.Thepowertorescindobligationsisimpliedinreciprocalones,incaseoneof
theobligorsshouldnotcomplywithwhatisincumbentuponhim.
Theinjuredpartymaychoosebetweenthefulfillmentandtherescissionofthe
obligation,withthepaymentofdamagesineithercase.Hemayalsoseekrescission,
evenafterhehaschosenfulfillment,ifthelattershouldbecomeimpossible.
TheCourtshalldecreetherescissionclaimed,unlesstherebejustcauseauthorizingthe
fixingofaperiod.
Thisisunderstoodtobewithoutprejudicetotherightsofthirdpersonswhohave
acquiredthething,inaccordancewitharticles1385and1388andtheMortgageLaw.
(1124)
E.E.M.DELACRUZ
contractpriceofP17,310.00,payableoninstallmentbasisatP189.02amonthfor120
months.[2]ThesumofP1,731representing10%ofthetotalpriceofthelotwaspaidby
thepetitionertotheprivaterespondentsandthereaftermonthlyinstallmentswhich
amountedtoabout85%ofthetotalpricewereeffectedasofJanuary,1974;thelast
paymentthereofwasmadeonMay14,1975(Exh.C54).[3]Paragraph5ofthecontract
providedforautomaticextrajudicialrescissionupondefaultinpaymentofthree(3)
consecutivemonthlyinstallmentsortocomplywithanyofthetermsandconditions,
withforfeituresofinstallmentasrentsandaspaymentfordamages.Thesaidcontractto
buyandtosellaswellasthereceiptsofvariouspaymentsmadebypetitionersinfavorof
privaterespondentsweregivenbyformertoMr.ArcadioS.Mallari.Mr.Mallari
equippedwithaSpecialPowerofAttorneydatedMay15,1983fromthespouses
AdoracionC.PangilinanandGeorgePangilinanwentpersonallytotheprivate
respondentsandrequestedthemtoreleasethetitleofthelotashewouldpayinfullthe
allegedremainingbalanceofP1,875.00.Theprivaterespondentstoldhimtoreturnafter
twoweeksastheywouldconferwitheachother.Whenhereturned,theprivate
respondentJoseR.Canlastoldhimthattheywerenotinapositiontoreleasethetitleof
saidlotbecausethesamehadalreadybeendisposedof.Mr.Mallaridiscoveredthatthe
lotwasmortgagedtotheRuralBankofSta.Rita.OnJuly25,1983,afterthelapseof
eightyearsfromthelastdateofpayment,heinstitutedacomplaintforSpecific
PerformanceandDamagesdocketedasCivilCaseNo.6843entitled"SpousesAdoracion
G.Pangilinan,et.al.vs.JoseR.Canlas,et.al.beforetheRegionalTrialCourt,Branch
XLVIII,SanFernando,Pampanga.OnDecember12,1985,thetrialcourtrenderedits
decision,thedecretalpartofwhichprovides:
Petitionerfiledamotionforreconsiderationbutwasdeniedforlackofmeritbythe
CourtofAppealsinitsresolutionofMay31,1988.
ISSUE:
1)THECOURTOFAPPEALSERREDTHATACREDITORCANUNILATERALLY
ANDSUMMARILYRESCINDACONTRACTTOSELLASUBDIVISIONLOT;
2)THECOURTOFAPPEALSERREDINRULINGTHATHEREINPETITIONERS
AREGUILTYOFLACHES.
HELD:
Petitionersvigorouslyarguethatautomaticrescissionofacontract
extrajudiciallyundertakenbyacreditormaybeeffectedonlyifthedefaulterwasduly
informedoftheintentionofthecreditortorescindthecontract.Ifthedefaulterwillnot
object,thenthecreditormayproceedtoextrajudiciallyrescindorcancelthecontract,
however,ifthedefaulterwillmanifesthisobjection,thenthematterofrescissionwillbe
subjectedtojudicialdetermination.Theyfurtherallegedthatevenifthereisawaiver
stipulatedinthecontractofadhesion,regardingrescission,suchwaiverwillnotapply
becausethewaivermustbeunequivocalandintelligentlymade.Moreover,grantingthat
petitionerhavecommittedabreachofcontractfortheirfailuretopaythebalanceofthe
consideration,yetthisbreachisslight,consideringthat85%ofthetotalconsiderationfor
thelothasbeenpaid.

nature,maybeinkeepingwithgoodfaith,usageandlaw.[13]TheContracttoBuyand
toSell,specificallyparagraph5thereof,notbeingcontrarytolaw,morals,good
customs,publicorderorpublicpolicy,isvalidandbindingbetweenthepartiesthereto.
Asstatedbytheappellatecourt,thus:
Thepeculiarfactthatmilitatesagainstthecauseoftheappelleesisthatthe
appelleesspousesPangilinandidnotdirectlyandpersonallyprosecutethepresent
proceedings.Asshownfromtherecords,Mr.Mallarihadequippedhimselfwiththe
specialpowerofattorneyinhisfavorbytheappelleesexecutedonlyonMay15,1983or
aboutsix(shouldbeeight)yearsfromthedateoflastpayment,madeonMay14,1975
fortheJanuary,1974installment,duringwhichtime,theactualbuyers,thePangilinans
hadnotbythemselvespersonallyshowninterestincompellingtheappellantstoaccept
theremainingbalanceofthepurchasepriceofthesaidsubdivisionlot,toexecuteintheir
favortheDeedofAbsoluteSaleanddelivertothemtheTransferCertificateofTitleover
thesaidproperty.Theaforesaidcircumstancesconstitutelaches.Therewasfailureor
neglectonthepartofthePangilinanspousesforanunreasonableandunexplainedlength
oftimetodothatwhichbyexercisingduediligenceorcouldhavebeendoneearlier,
suchfailureornegligencewarrantspresumptionthattheyhadabandonedordeclinedto
assertsuchright(Tejadovs.Zamacoma,138SCRA78).
Further,theCourtofAppeals,stated:
ThedisturbingfactinthecaseatbaristhatthespousesPangilinanwhobought
thesubjectlotfromtheappellantsellerdidnotdirectlyandpersonallyprosecutethe
presentcasefromMay,1975(dateoflastpaymentforJanuary,1974installment).Mr.
ArcadioS.Mallari,theallegedattorneyinfactofthesaidspouses,representedthemin
theinstantcasewhichwasfiledonlyonJuly25,1983.Hehasanallegedspecialpower
ofattorneyinhisfavorbytheappelleeswhichappearstohavebeenexecutedonMay
15,1983orabouteight(8)yearsfromthedateoflastpaymentonMay14,1975bythe Thesamehasnomerit.Itmustbenotedthatuponacarefulexaminationoftherecordsof
buyerspousesfortheJanuary,1974installment.Mr.Mallariwastheonlywitnessforthe
prosecution.Healoneidentifiedthesaidpowerofattorneyexecutedinhisfavorand
testifiedonitsdueexecution.Thenotarypublicwhoappearstohavenotarizedthesaid
documentwasnotpresentedneitherdidthePangilinanspousesappearinthelowercourt.
Therewasnomentioninhis(Mallari)testimonyofthewhereaboutsofthesaid
Pangilinanspousesnorwhytheinstantcasehadtobefiledbyhimforthem.TheCourt
hasdoubtswhetherornotthesaidPangilinanspousesarereallyinterestedinthe
prosecutionofthiscase.Andmorethanthis,inthemindoftheCourt,thegenuinenessof
thesaidspecialpowerofattorneyhasnotbeensatisfactorilyproved.
ItalsobearsemphasisthatfromthesaidlastpaymentonMay14,1975,fortheJanuary,
1974installmentuptotheexecutionoftheallegedspecialpowerofattorney(assuming
thesametobetrue)infavorofMr.Mallari,onMay15,1983,andthefilingofMallariof theybecomedue,otherwise,therightofrescissionwouldberenderedinutile.Inthe
theinstantcase(whichcoversaperiodofeight(8)years)*theactualbuyers,the
Pangilinanspouseshadnotbythemselvespersonallyshowninterestincompellingthe
appellantstoaccepttheremainingbalanceofthepurchasepriceofthesubdivisionlot,to
executeintheirfavortheDeedofAbsoluteSaleanddelivertothemtheTransfer
E.E.M.DELACRUZ
Pursuanttotheabove,thelawmakesitavailabletotheinjuredpartyalternativeremedies
suchasthepowertorescindorenforcefulfillmentofthecontract,withdamagesineither
caseiftheobligordoesnotcomplywithwhatisincumbentuponhim.Thereisnothingin
thislawwhichprohibitsthepartiesfromenteringintoanagreementthataviolationof
thetermsofthecontractwouldcauseitscancellationevenwithoutcourtintervention.
Therationalefortheforegoingisthatincontractsprovidingforautomaticrevocation,
judicialinterventionisnecessarynotforpurposesofobtainingajudicialdeclaration
rescindingacontractalreadydeemedrescindedbyvirtueofanagreementprovidingfor
rescissionevenwithoutjudicialintervention,butinordertodeterminewhetherornotthe
rescissionwasproper.Wheresuchproprietyissustained,thedecisionofthecourtwill
bemerelydeclaratoryoftherevocation,butitisnotitselftherevocatoryact.[9]
Moreover,thevendorsrightincontractstosellwithreservedtitletoextrajudicially
cancelthesaleuponfailureofthevendeetopaythestipulatedinstallmentsandretainthe
sumsandinstallmentsalreadyreceivedhaslongbeenrecognizedbythewellestablished
doctrineof39yearsstanding.[10]Thevalidityofthestipulationinthecontractproviding
forautomaticrescissionuponnonpaymentcannotbedoubted.Itisinthenatureofan
agreementgrantingapartytherighttorescindacontractunilaterallyincaseofbreach
withoutneedofgoingtocourt.Thus,rescissionunderArticle1191wasinevitabledueto
petitionersfailuretopaythestipulatedpricewithintheoriginalperiodfixedinthe
agreement.
Onthesecondassignederror,petitionersaverthatthedoctrineoflachesisnotapplicable
inthisparticularcasebecause(1)petitionersfailuretopayinfullthebalanceof15%of
thetotalpriceofthelotwasduetotherenegedobligationoftheprivaterespondentto
improvethesubdivisionandinstallfacilities;and,(2)themortgageofthelottotheRural
BankofSta.Ritawasdonewithouttheirconsentandknowledge.
thiscase,itappearsthatthecontentionofthepetitionersthattheirfailuretopaythe
balanceof15%ofthetotalcontractpriceofthelotwasduetotheinabilityoftheprivate
respondenttoimprovethesubdivisionandinstallfacilitieswhichwasraisedonlyforthe
firsttimeonappeal.Theydidnotraisedthisissuebeforethelowercourts.Itissettled
thatanissuewhichwasneitheraverredinthecomplaintnorraisedduringthetrialinthe
courtbelowcannotberaisedforthefirsttimeonappeal.[11]Issuesoffactand
argumentsnotadequatelybroughttotheattentionofthetrialcourtneednotbeand
ordinarilywillnotbeconsideredbyareviewingcourtastheycannotberaisedforthe
firsttimeonappeal.[12]Assumingarguendothatitwasraisedbeforethetrialcourt,the
samewouldbewithoutmeritbecausethefailureoftheprivaterespondentstoinstall
facilitieswouldnotdeterthemfromaskingfortherescissionoftheagreementif
petitionersfailedtocomplywiththeirobligationtopaythemonthlyinstallmentswhen
samevein,petitionersbyvirtueoftheircontractwithprivaterespondentsshouldhave
compliedingoodfaithwithitstermsandconditionsbeingthelawbetweenthem.From
themomentthecontractisperfected,thepartiesareboundnotonlytothefulfillmentof
whathasbeenexpresslystipulatedbutalsotoallconsequenceswhich,accordingtotheir
 E.E.M.DELACRUZ
February 1986 but he paid only P5,000.00 instead of the
stipulated P7,092.00. On 20 July 1987 or 17 months after Rillos
last payment, Corb Realty informed him by letter that it is
cancelling their contract due to his failure to settle his accounts
on time. Corb Realty also expressed its willingness to refund
Rillos money. Corb Realty, however, did not cancel the contract
for on 28 September 1987, it received P60,000.00 from Rillo. Rillo
defaulted again in his monthly installment payment.
Consequently, Corb Realty informed Rillo through letter that it
was proceeding to rescind their contract. In a letter dated 29
August 1988, it requested Rillo to come to its office and
withdraw P102,459.35 less the rentals of the unit from 1 July
1985 to 28 February 1989. Again the threatened rescission did
not materialize. A compromise was entered into by the parties
on 12 March 1989 (Restructure Outstanding Balance Down to
P50,000.00; Payment @ P2,000.00/Month @ 18% -Monthly- To
Compute No. of Installments; To Pay Titling Plus Any Real Estate
Tax Due; Installments to start 15 April 1989). Rillo once more
failed to honor their agreement. Rillo was able to pay P2,000.00
on 25 April 1989 and P2,000.00 on 15 May 1989. On 3 April 1990,
Corb Realty sent Rillo a statement of accounts which fixed his
total arrears, including interests and penalties, to P155,129.00.
When Rillo failed to pay the amount, Corb Realty filed a
complaint for cancellation of the contract to sell with the RTC
Pasig. In his answer to the complaint, Rillo averred, among
others, that while he had already paid a total of P149,000.00,
Corb Realty could not deliver to him his individual title to the
subject property; that Corb Realty could not claim any right
under their previous agreement as the same was already novated
by their new agreement for him to pay P50,000.00 representing
interest charges and other penalties spread through 25 months
beginning April 1989; and that Corb Realtys claim of P155,129.99
over and above the amount he already paid has no legal basis.
After trial, the RTC held that Corb Realty cannot rescind the
Contract to Sell because Rillo did not commit a substantial
breach of its terms. It found that Rillo substantially complied
with the Contract to Sell by paying a total of P154,184.00. It
ruled that the remedy of Corb Realty is to file a case for specific
performance to collect the outstanding balance of the purchase
price.
CertificateofTitleoverthesaidlot.Suchfailure/neglectontheirpartconstituteslaches
becauseforanunreasonableandunexplainedlengthoftime[eight(8)years],they
failed/neglectedtodothatwhichbyexercisingduediligencecouldorshouldhavebeen
doneearlier,andasstatedinthedecisionrenderedinthepresentappeal,suchfailureor
negligencewarrantsapresumptionthattheyhadabadonedordeclinedtoassertsuch
right.
Explicitly,spousesPangilinaninsteadofbeingvigilantanddiligentinassertingtheir
rightsoverthesubjectpropertyhadfailedtoasserttheirrightswhenthelawrequires
themtoact.Lachesorstaledemandsisbasedupongroundsofpublicpolicywhich
requires,forthepeaceofsociety,thediscouragementofstaleclaimsandunlikethe
statuteoflimitations,isnotamerequestionoftimebutisprincipallyaquestionofthe
inequityorunfairnessofpermittingarightorclaimtobeenforcedorasserted.[14]
Thelegaladagefindsapplicationinthecaseatbar.Tempusenimmodus
tollendiobligationesetactiones,quiatempuscurritcontradesidesetsuijuris
contemptoresFortimeisameansofdissipatingobligationsandactions,becausetime
runsagainsttheslothfulandcarelessoftheirownrights.
INVIEWWHEREOF,thepetitionisherebyDENIEDandthedecisionofrespondent
courtAFFIRMEDintoto.
6.Rillovs.CA
[G.R. No. 125347. June 19, 1997.] Second Division,
Puno (J): 4 concur
Facts:
On 18 June 1985, Emiliano Rillo signed a Contract To Sell
of Condominium Unit with Corb Realty Investment Corporation.
Under the contract, Corb Realty agreed to sell to Rillo a 61.5 sq.
m. condominium unit located in Mandaluyong, Metro Manila. The
contract price was P150,000.00, of which was paid upon its
execution, while the balance of P75,000.00 was to be paid in 12
equal monthly installments of P7,092.00 beginning 18 July 1985.
It was also stipulated that all outstanding balance would bear an
interest of 24% per annum; the installment in arrears would be
subject to liquidated penalty of 1.5% for every month of default
from due date. It was further agreed that should the buyer
default in the payment of 3 or 4 monthly installments, forfeiture
proceedings would be governed by existing laws, particularly the
Condominium Act. On 18 July 1985, Rillo failed to pay the initial
monthly amortization. On 18 August 1985, he again defaulted in
his payment. On 20 September 1985, he paid the first monthly
installment of P7,092.00. On 2 October 1985, he paid the second
monthly installment of P7,092.00. His third payment was on 2
 E.E.M.DELACRUZ
obligation that is still non-existent, the suspensive condition not
having happened.
2. RA 6552, or Maceda Law, applies
Given the nature of the contract of the parties, the
appellate court correctly applied RA 6552, also known as the
Maceda Law. TA 6552 recognizes in conditional sales of all kinds
of real estate (industrial, commercial, residential) the right of the
seller to cancel the contract upon non-payment of an installment
by the buyer, which is simply an event that prevents the
obligation of the vendor to convey title from acquiring binding
force. It also provides the right of the buyer on installments in
case he defaults in the payment of succeeding installments, i.e.
(1) Where he has paid at least 2 years of installments, (a) To pay,
without additional interest, the unpaid installments due within
the total grace period earned by him, which is hereby fixed at the
rate of 1 month grace period for every year of installment
payments made: Provided, That this right shall be exercised by
the buyer only once in every 5 years of the life of the contract
and its extensions, if any; or (b) If the contract is cancelled, the
seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to 50% of the total
payments made and, after 5 years of installments, an additional
5% every year but not to exceed 90% of the total payments
made: Provided, That the actual cancellation of the contract
shall take place after cancellation or the demand for rescission
of the contract by a notarial act and upon full payment of the
cash surrender value to the buyer. Down payments, deposits or
options on the contract shall be included in the computation of
the total number of installments made; (2) Where he has paid
less than two years in installments, (Sec. 4) the seller shall give
the buyer a grace period of not less than 60 days from the date
the installment became due. If the buyer fails to pay the
installments due at the expiration of the grace period, the seller
may cancel the contract after 30 days from receipt by the buyer
of the notice of cancellation or the demand for rescission of the
contract by a notarial act.
3. Rillo not entitled to grace period of 60 days; Corb Realty has
right to cancel contract after 30 days of Rillos receipt of
cancellation
Corb Realty appealed the decision to the Court of Appeals
(CA GR CV 39108), which reversed the decision. It ruled that
rescission does not apply as the contract between the parties is
not an absolute conveyance of real property but is a contract to
sell; that the Condominium Act (RA 4726, as amended by RA
7899) does not provide anything on forfeiture proceedings in
cases involving installment sales of condominium units, hence, it
is PD 957 (Subdivision and Condominium Buyers Protective
Decree) which should be applied to the present case. Under PD
957, the rights of a buyer in the event of failure to pay installment
due, other than the failure of the owner or developer to develop
the project, shall be governed by RA 6552 or the Realty
Installment Buyer Protection Act also known as the Maceda Law
(enacted on 14 September 1972). The Court thus declared the
contract to sell cancelled and rendered ineffective and ordered
Corb Realty to return 50% of P158,184.00 (or P79,092.00) to Rillo
who was ordered to vacate the subject premises. Rillo appealed
pursuant to Rule 45 of the Rules of Court.
The Supreme Court affirmed with modification the decision
appealed from, in the sense that the refund of 50% P158,184.00
or P79,092.00 made in favor of Rillo is deleted; without costs.
1. Article 1191 and 1592 do not apply as contract is not an
absolute conveyance of real property but a contract to sell;
Payment is a positive suspensive condition and not a breach; No
rescission of an obligation which is still not existent
The appellate court did not err when it did not apply
Articles 1191 and 1592 of the Civil Code on rescission to the
present case. The contract between the parties is not an
absolute conveyance of real property but a contract to sell. In a
contract to sell real property on installments, the full payment of
the purchase price is a positive suspensive condition, the failure
of which is not considered a breach, casual or serious, but
simply an event which prevented the obligation of the vendor to
convey title from acquiring any obligatory force. The transfer of
ownership and title would occur after full payment of the
purchase price. It was held in Luzon Brokerage Co., Inc. v.
Maritime Building Co., Inc. that there can be no rescission of an
 E.E.M.DELACRUZ
Bancom Development Corporation and Odyssey Park, Inc., entered into a Contract to
Sell, whereby the former agreed to sell to the latter the parcel of land with an area of
8,499 square meters situated in Baguio City and the structure constructed thereon
identified as the Europa Clubhouse. Subsequently, in a document entitled "Separate
Deed of Conveyance", Bancom confirmed and acknowledged that it has ceded,
transferred and conveyed in favor of Union Bank all the rights, title and interest it has
over the property.
The purchase price of P3,500,000.00 was, per Section 2 of the Contract to Sell, with the
agreement that
Sec. 5: In the event Odyssey fails to pay any portion of the purchase price of the Property
or the interest and service charge thereon as and when it falls due, or otherwise fails to
comply with or violate any of the provisions of this Contract, Bancom may at its absolute
discretion cancel and rescind this Contract and declare the same as null, void and no
further force and effect by serving on Odyssey a written notice of cancellation and
rescission thirty (30) days in advance.
In the event this Contract is cancelled and rescinded as provided in this Section, all the
amounts which the Odyssey may have paid to Bancom pursuant to and in accordance
with this Contract shall be forfeited in favor of Bancom as rentals for the use and
occupancy of the Property and as penalty for the breach and violation of this Contract.
Furthermore, all the improvements which Odyssey may have introduced on the Property
shall form part thereof and belong to Bancom without right of reimbursements to
Odyssey; Provided, that Bancom may at its absolute discretion instead require Odyssey
to remove such improvements from the Property at expense of Odyssey.
Mr. Vicente A. Araneta, President of Europa Condominium Villas, Inc., wrote Union
Bank, a letter stating that the Europa Center was reported to prospective buyers as well
as government authorities as part of common areas and amenities under the
condominium concept of selling to the public and for that reason wants to make it of
record that Europa Condominium Villas, Inc., questions the propriety of the contract
to sell. Odyssey, through its Chairman of the Board, Mr. Carmelito A. Montano, wrote
Bancom a letter stating that it acknowledges receipt of a copy of the letter-protest from
the Europa Condominium Villas, Inc., and that in the meantime that there is a question
on the propriety of the sale, it is stopping/withholding payments of the amortization.
On the same date Bancom, through its Senior Vice-President, wrote Europa
Condominium Villas, Inc. a letter explaining that the Europa Center and the parcel of
land on which it is built are not part of the EuropaCondominium Villas, Inc.Union Bank
wrote Odyssey Park a letter demanding payment of the overdue account of inclusive of
interest andservice charges, otherwise the contract to sell would be cancelled and
rescinded. Odyssey wrote Union Bank a letter proposing a manner of settlement which
Union Bank answered asking for more details of the proposal. The series of
communications led to the drafting of a Memorandum of Agreement which was not,
however, signed bythe parties. Union Bank, through counsel, wrote Odyssey Park a
letter formally rescinding and/or cancelling the contract to sell and demanding that
Rillo paid less than two years in installment payments,
hence, he is only entitled to a grace period of not less than 60
days from the due date within which to make his installment
payment. Corb Realty, on the other hand, has the right to cancel
the contract after 30 days from receipt by Rillo of the notice of
cancellation. The appellate court did not err when it upheld Corb
Realtys right to cancel the subject contract upon repeated
defaults in payment by Rillo.
4. Novation not presumed; In absence of express agreement,
novation occurs when old and new obligations are incompatible
on every point; Contract in present case not novated
Article 1292 of the Civil Code provides that In order that
an obligation may be extinguished by another which substitutes
the same, it is imperative that it be so declared in unequivocal
terms, or that the old and the new obligations be on every point
incompatible with each other. Novation is never presumed.
Parties to a contract must expressly agree that they are
abrogating their old contract in favor of a new one. In the
absence of an express agreement, novation takes place only
when the old and the new obligations are incompatible on every
point. In the present case, the parties executed their 12 May
1989 compromise agreement precisely to give life to their
Contract to Sell. It merely clarified the total sum owed by Rillo
to Corb Realty with the view that the former would find it easier
to comply with his obligations under the Contract to Sell. In fine,
the compromise agreement can stand together with the
Contract to Sell.
5. Rillo not entitled to refund of 50% of payments
Under RA 6552, the right of the buyer to a refund accrues
only when he has paid at least 2 years of installments. In the
present case, Rillo has paid less than 2 years in installments,
hence, he is not entitled to a refund.
7.OdysseyParkv.CA
Facts:
 E.E.M.DELACRUZ
Plaintiff Roque and defendant Lapuz entered in an agreement of sale for a couple of lots
to be paid in 120 equal monthly payments. After some time, Lapuz requested Roque if he
can substitute the present lots and move and occupy to another lot. The new lots are
corner lots which have better location, thus much more expensive. Roque agreed to the
request of Lapuz but Roque charged a higher rate which correspond to the higher value
of the new lot. Lapuz first agreed to the new rate but he never paid for another instalment
again. Roque made demands that Lapuz pay his accrued instalments but the latter refused
to comply with the demands. Roque then demanded the vacation of the land but still to
no avail. The petitioner brought the matter to the courts and CA granted Lapuz a period
of (90) ninety days to pay the balance remaining. SC reversed CA holding that having
been in default and acted in bad faith, he is not entitled to the new period of 90 days
FACTS (Just read this if you want the details, otherwise the short version will suffice)
Sometime in 1964. plaintiff Roque and defendant Lapuz entered into an agreement of
sale covering Lots 1, 2 and 9, Block 1, of said property, payable in 120 equal monthly
installments at the rate of P16.00, P15.00 per square meter, respectively. In accordance
with said agreement, defendant paid to plaintiff the sum of P150.00 as deposit and the
further sum of P740.56 to complete the payment of four monthly installments covering
the months of July, August, September, and October, 1954.
On January 24, 1955, defendant requested plaintiff that he be allowed to abandon and
substitute Lots 1, 2 and 9, the subject with Lots 4 and 12, Block 2 of the Rockville
Subdivision, which are corner lots, to which request plaintiff graciously acceded. The
evidence discloses that defendant proposed to plaintiff modification of their previous
contract to sell because he found it quite difficult to pay the monthly installments on the
three lots, and besides the two lots he had chosen were better lots, being corner lots. In
addition, it was agreed that the purchase price of these two lots would be at the uniform
rate of P17.00 per square meter payable in 120 equal monthly installments, with interest
at 8% annually on the balance unpaid. Pursuant to this new agreement, defendant
occupied and possessed Lots 4 and 12, and enclosed them, including the portion where
his house now stands, with barbed wires and adobe walls. However, aside from the
deposit of P150.00 and the amount of P740.56, which were paid under their previous
agreement, defendant failed to make any further payment on account of the agreed
monthly installments for the two lots in dispute, under the new contract to sell. Plaintiff
demanded upon defendant not only to pay the stipulated monthly installments in arrears,
but also to make up-to-date his payments, but defendant refused to comply with
plaintiff's demands.
On or about November 3, 1957, plaintiff demanded upon defendant to vacate the lots in
question and to pay the reasonable rentals thereon at the rate of P60.00 per month from
August, 1955. On January 22, 1960, petitioner Felipe C, Roque filed the complaint
against defendant Nicanor Lapuz for rescission and cancellation of the agreement of sale
between them involving the two lots in question and prayed that judgment be rendered
ordering the rescission and cancellation of the agreement of sale, the defendant to vacate
Odyssey vacate and peaceably surrender possession of the premises.For failure of
Odyssey to vacate, Union Bank filed a case for illegal detainer and damages. Odyssey, on
the otherhand, filed this case for "Declaration of the Nullity of the Rescission of the
Contract to Sell With Damages"
LC: Contract to Sell have been properly rescinded; dismissing the complaint for being
frivolous and unfounded
CA: affirmed; MR denied
Issue:
Whether or not the rescission of the contract to sell by private respondent accords with
the requirements of Republic Act (R.A.) No. 6552, also known as An Act to Protect
Buyers of Real Estate on Installment Payments which, petitioner insists, requires a
cancellation or rescission of the contract by means of a notarial act.
Held:
Contract properly rescinded, RA 6552 does not apply. Unfortunately for petitioner,
the invocation of Republic Act No. 6552 is misplaced. This law, which normally applies
to the sale or financing of real estate on installment payments, excludes industrial lots,
commercial buildings, and sales to tenants under R.A. No. 3844. The appellate court
has thus aptly said:
While the law applies to all transactions or contracts involving the sale or financing of
real estate on installment payments, including residential condominium apartments,
excluded are industrial lots, commercial buildings and sales to tenants under R.A. 3844
as amended. The property subject of the contract to sell is not a residential
condominium apartment. Even on the basis of the letter of Mr. Vicente A. Araneta,
Exhibit E, the building is merely `part of common areas and amenities under the
Condominium concept of selling to the public. The property subject of the contract to
sell is more of a commercial building.
8. ROQUE vs LAPUZ
GR ## GR No. L-32811
Petitioner: Felipe C. Roque,
Respondents: Nicanor Lapuz and Court of Appeals
March 31, 1980
Guerrero, J.
DOCTRINE
(SHORT VERSION)
 E.E.M.DELACRUZ
[G.R. No. L-42283. March 18, 1985.]
En Banc, Gutierrez Jr. (J): 5 concurring, 1 took no part
Facts:
On 19 December 1957, Ursula Torres Calasanz and Tomas Calasanz and
Buenaventura Angeles and Teofila Juani entered into a contract to sell a piece of land
located in Cainta, Rizal for the amount of P3,920.00 plus 7% interest per annum.
Angeles made a downpayment of P392.00 upon the execution of the contract. They
promised to pay the balance in monthly installments of P41.20 until fully paid, the
installments being due and payable on the 19th day of each month. They paid the
monthly installments until July 1966, when their aggregate payment already amounted to
P4,533.38. On numerous occasions, Calasanz accepted and received delayed installment
payments from Angeles. On 7 December 1966, Calasanz wrote Angeles a letter
requesting the remittance of past due accounts. On 28 January 1967, Calasanz cancelled
the said contract because Angeles failed to meet subsequent payments. Angeles letter
with their plea for reconsideration of the said cancellation was denied by Calasanz.
Angeles filed Civil Case 8943 with the CFI Rizal, Seventh Judicial District,
Branch X to compel Calasanz to execute in their favor the final deed of sale alleging
inter alia that after computing all subsequent payments for the land in question, they
found out that they have already paid the total amount of P4,533.38 including interests,
realty taxes and incidental expenses for the registration and transfer of the land.
Calasanz, on the other hand, alleged that the complaint states no cause of action and that
Angeles violated paragraph 6 of the contract to sell when they failed and refused to pay
and/or offer to pay the monthly installments corresponding to the month of August, 1966
for more than 5 months, thereby constraining Calasanz to cancel the said contract. The
lower court rendered judgment in favor of Angeles, ordering that the contract was not
validly cancelled by Calasanz, and ordered the latter to execute a final Deed of Sale In
favor of Angeles, and to pay the sum of P500 by way of attorneys fees; with costs
against Calasanz. A motion for reconsideration filed by Calasanz was denied.
On Appeal, the then Court of Appeals certified the case to the Supreme Court
considering that the appeal involves pure questions of law.
The Supreme Court denied the petition for lack of merit, affirmed the decision appealed
from is with the modification that Angeles should pay the balance of P671.67 without
any interests; with costs against Calasanz.
1. Contents of Paragraph 6 of the Contract
Paragraph six of the contract provides In case the party of the SECOND
PART fails to satisfy any monthly installments, or any other payments herein agreed
upon, he is granted a month of grace within which to make the retarded payment,
together with the one corresponding to the said month of grace; it is understood,
however, that should the month of grace herein granted to the party of the SECOND
PART expired; without the payments corresponding to both months having been
satisfied, an interest of 10% per annum will be charged on the amounts he should have
paid; it is understood further, that should a period of 90 days elapse, to begin from the
expiration of the month of grace herein mentioned, and the party of SECOND PART has
the two parcels of land and remove his house therefrom and to pay to the plaintiff the
reasonable rental thereof at the rate of P60.00 a month from August 1955 until such time
as he shall have vacated the premises, and to pay the sum of P2,000.00 as attorney's fees,
costs of the suit and award such other relief or remedy as may be deemed just and
equitable in the premises.
The Court of Appeals rendered its decision that the defendant Nicanor Lapuz is granted
a period of ninety (90) days from entry hereof within which to pay the balance. Hence,
this appeal.
ISSUES/HELD
(1) WoN Lapuz is entitled to the benefits of the third paragraph of Article 1191 New
Civil Code, for fixing period - NO
RATIO
(1) No. Respondent as obligor is not entitled to the benefits of paragraph 3 of Art. 1191,
NCC Having been in default and acted in bad faith, he is not entitled to the new period of
90 days from entry of judgment within which to pay petitioner the balance of P11,434.44
with interest due on the purchase price of P12,325.00 for the two lots. To allow and grant
respondent an additional period for him to pay the balance of the purchase price, which
balance is about 92% of the agreed price, would be tantamount to excusing his bad faith
and sanctioning the deliberate infringement of a contractual obligation that is repugnant
and contrary to the stability, security and obligatory force of contracts. Moreover,
respondent's failure to pay the succeeding 116 monthly installments after paying only 4
monthly installments is a substantial and material breach on his part, not merely casual,
which takes the case out of the application of the benefits of pa paragraph 3, Art. 1191,
N.C.C.
Pursuant to Art. 1191, New Civil Code, petitioner is entitled to rescission with payment
of damages which the trial court and the appellate court, in the latter's original decision,
granted in the form of rental at the rate of P60.00 per month from August, 1955 until
respondent shall have actually vacated the premises, plus P2,000.00 as attorney's fees.
The Court affirmed the same to be fair and reasonable. The Court also sustained the right
of the petitioner to the possession of the land, ordering thereby respondent to vacate the
same and remove his house therefrom.
DECISION
Judgment reversed.
9. Angeles vs. Calasanz
 E.E.M.DELACRUZ
contrary case, the resolution will be affirmed, and the consequent indemnity awarded to
the party prejudiced. Thus, the party who deems the contract violated many consider it
resolved or rescinded, and act accordingly, without previous court action, but it proceeds
at its own risk. For it is only the final judgment of the corresponding court that will
conclusively and finally settle whether the action taken was or was not correct in
law . . .
5. Extrajudicial resolution remains contestable and thus subject to judicial
invalidation, unless barred by acquiescence, estoppel or prescription
There is no conflict between this ruling and the previous jurisprudence of the
Court declaring that judicial action is necessary for the resolution of a reciprocal
obligation; (Ocejo, Perez & Co. v. International Banking Corp., 37 Phil. 631; Republic v.
Hospital de San Juan de Dios, et al., 84 Phil. 820) since in every case where the
extrajudicial resolution is contested only the final award of the court of competent
jurisdiction can conclusively settle whether the resolution was proper or not. It is in this
sense that judicial action will be necessary, as without it, the extrajudicial resolution will
remain contestable and subject to judicial invalidation, unless attack thereon should
become barred by acquiescence, estoppel or prescription.
6. Right to rescind contract for non-performance of stipulations not absolute;
Universal Food Corp. vs. CA
The right to rescind the contract for non-performance of one of its stipulations
is not absolute. In Universal Food Corp. v. Court of Appeals (33 SCRA 1) the Court
stated that the general rule is that rescission of a contract will not be permitted for a
slight or casual breach, but only for such substantial and fundamental breach as would
defeat the very object of the parties in making the agreement. (Song Fo & Co. v.
Hawaiian-Philippine Co., 47 Phil. 821, 827) The question of whether a breach of a
contract is substantial depends upon the attendant circumstances. (Corpus v. Hon.
Alikpala, et al., L-23707 & L-23720, Jan. 17, 1968).
7. Breach too slight; Sanctioning the rescission will do injustice, leads to unjust
enrichment
The breach of the contract adverted to by Calasanz is so slight and casual
considering that apart from the initial downpayment of P392.00 Angeles had already paid
the monthly installments for a period of almost 9 years. In other words, in only a short
time, the entire obligation would have been paid. Furthermore, although the principal
obligation was only P3,920.00 excluding the 7% interests, Angeles had already paid an
aggregate amount of P4,533.38. To sanction the rescission made by Calasanz will work
injustice to Angeles. (See J.M. Tuazon and Co., Inc. v. Javier, 31 SCRA 829) It would
unjustly enrich Calasanz.
8. Article 1234 of the Civil Code; Substantial performance
Article 1234 of the Civil Code which provides that: If the obligation has been
substantially performed in good faith, the obligor may recover as though there had been a
strict and complete fulfillment, less damages suffered by the obligee.
9. Purpose of subdivisions
not paid all the amounts he should have paid with the corresponding interest up to that
date, the party of the FIRST PART has the right to declare this contract cancelled and of
no effect, and as consequence thereof, the party of the FIRST PART may dispose of the
parcel of land covered by this contract in favor of other persons, as if this contract had
never been entered into. In case of such cancellation of the contract, all the amounts paid
in accordance with this agreement together with all the improvements made on the
premises, shall be considered as rents paid for the use and occupation of the above
mentioned premises, and as payment for the damages suffered by failure of the party of
the SECOND PART to fulfill his part of the agreement, and the party of the SECOND
PART hereby renounces all his right to demand or reclaim the return of the same and
obliges himself to peacefully vacate the premises and deliver the same to the party of the
FIRST PART.
2. Article 1191 of the Civil Code; Rescission of reciprocal obligations
Article 1191 of the Civil Code on the rescission of reciprocal obligations
provides:The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him. The injured party may
choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he has chosen fulfillment,
if the later should become impossible. Article 1191 is explicit. In reciprocal obligations,
either party has the right to rescind the contract upon the failure of the other to perform
the obligation assumed thereunder.
3. Judicial action for rescission not necessary where contract provides for
revocation for breach; Froilan vs. Pan Oriental Shipping
There is nothing in the law that prohibits the parties from entering into an
agreement that violation of the terms of the contract would cause its cancellation even
without court intervention (Froilan v. Pan Oriental Shipping, Co., et al., 12 SCRA 276).
A judicial action for the rescission of a contract is not necessary where the contract
provides that it may be revoked and cancelled for violation of any of its terms and
conditions (Lopez v. Commissioner of Customs, 37 SCRA 327, 334, and cases cited
therein). Resort to judicial action for rescission is obviously not contemplated . . . The
validity of the stipulation can not be seriously disputed. It is in the nature of a facultative
resolutory condition which in many cases has been upheld by the Supreme Court. (Ponce
Enrile v. Court of Appeals, 29 SCRA 504).
4. UP vs. delos Angeles: Qualification to the Froilan ruling; Rescission must be
justified
The rule that it is not always necessary for the injured party to resort to court
for rescission of the contract when the contract itself provides that it may be rescinded
for violation of its terms and conditions, was qualified by the Court in University of the
Philippines v. De los Angeles, (35 SCRA 102). It was held therein that the act of a party
in treating a contract as cancelled or resolved on account of infractions by the other
contracting party must be made known to the other and is always provisional, being ever
subject to scrutiny and review by the proper court. If the other party denies that
rescission is justified, it is free to resort to judicial action in its own behalf, and bring the
matter to court. Then, should the court, after due hearing, decide that the resolution of the
contract was not warranted, the responsible party will be sentenced to damages; in the
 E.E.M.DELACRUZ

Although the primary object of selling subdivided lots is business, yet, it

cannot be denied that this subdivision is likewise purposely done to afford those landless,
low income group people of realizing their dream of a little parcel of land which they can
10. Dignos vs. CA/ Lumungsod really call their own.
[G.R. No. L-59266. February 29, 1988.]
10. Acceptance of delayed payments of installments, a waiver; Sellers estopped from
Third Division, Bidin (J): 4 concurring
exercising right of rescission
When Calasanz, instead of availing of their alleged right to rescind, have
Facts:
accepted and received delayed payments of installments, though Angeles have been in
The spouses Silvestre Dignos and Isabel Lumungsod were owners of a parcel
arrears beyond the grace period mentioned in paragraph 6 of the contract, Calasanz has
of land (Lot 3453, Opon Cadastre), of the cadastral survey of Opon, Lapu-Lapu City. On
waived and is now estopped from exercising her alleged right of rescission.
7 June 1965, the Dignos spouses sold the said parcel of land to Atilano J. Jabil for the
sum of P28,000.00, payable in two installments, with an assumption of indebtedness
11. De Guzman vs. Guieb in point
with the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and
In De Guzman v. Guieb (48 SCRA 68), the Court held therein that In spite of
acknowledged by the vendors in the deed of sale executed in favor of Jabil, and the next
the long arrearages, neither they nor their predecessor, Teodoro de Guzman, even took
installment in the sum of P4,000.00 to be paid on or before 15 September 1965. On 25
steps to cancel the option or to eject the appellees from the home-lot in question. On the
November 1965, the Dignos spouses sold the same land in favor of Luciano Cabigas and
contrary, it is admitted that the delayed payments were received without protest or
Jovita L. De Cabigas, who were then US citizens, for the price of P35,000.00. A deed of
qualification. Under these circumstances, the Court cannot but agree with the lower
absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses, and
court that at the time appellees exercised their option, appellants had already forfeited
which was registered in the Office of the Register of Deeds pursuant to the provisions of
their right to invoke the above-quoted provision regarding the nullifying effect of the
Act 3344.
non-payment of six months rentals by appellees by their having accepted without
qualification on July 21, 1964 the full payment by appellees of all their arrearages.
As the Dignos spouses refused to accept from Jabil the balance of the purchase
price of the land, and as Jabil discovered the second sale made by the Dignos spouses to
12. Present contract to sell has characteristics of contract of adhesion
the Cabigas spouses, Jabil filed the suit with the CFI Cebu (Civil Case 23-L). After due
The contract to sell entered into by the parties has some characteristics of a
trial, the CFI Cebu rendered its Decision on 25 August 1972, declaring the deed of sale
contract of adhesion. Calasanz drafted and prepared the contract; while Angeles, eager to
executed on 25 November 1965 in favor of the Cabigas spouses null and void, and the
acquire a lot upon which to build a home, affixed their signatures and assented to the
deed of sale in favor of Jabil not rescinded; ordering Jabil to pay the sum of P16,0000 to
terms and conditions of the contract. They had no opportunity to question nor change any
the Dignos spouses upon the execution of the Deed of Absolute Sale and when the
of the terms of the agreement. It was offered to them on a take it or leave it basis.
decision of the case becomes final and executory; ordering Jabil to reimburse the
Cabigas couple reasonable amount corresponding to the expenses or costs of the hollow
13. Contract of adhesion; Sweet Lines vs. Teves
block fence, so far constructed; ordering the Dignos spouses to return to the Cabigas
In Sweet Lines, Inc. v. Teves (83 SCRA 361), the Court held that while
spouses the sum of P35,000; and making the writ of preliminary injunction issued 23
generally, stipulations in a contract come about after deliberate drafting by the parties
September 1966 permanent by virtue of the decision.
thereto, .. there are certain contracts almost all the provisions of which have been drafted
only by one party, usually a corporation. Such contracts are called contracts of adhesion,
Jabil and the Dignos spouses appealed to the Court of Appeals (CA-GR 54393-
because the only participation of the party is the signing of his signature or his `adhesion
R). On 31 July 1981, the Court of Appeals affirmed the decision of the lower court
thereto. Insurance contracts, bills of lading, contracts of sale of lots on the installment
except as to the portion ordering Jabil to pay for the expenses incurred by the Cabigas
plan fall into this category. (Paras, Civil Code of the Philippines, Seventh ed., Vol. I, p.
spouses for the building of a fence upon the land in question. A motion for
80.)
reconsideration of said decision was filed by the Dignos spouses, but on 16 December
1981, a resolution was issued by the Court of Appeals denying the motion for lack of
14. Construction of a contract of adhesion
merit. Hence, the petition for review on certiorari.
The contract to sell, being a contract of adhesion, must be construed against the
party causing it. The terms of a contract must be interpreted against the party who drafted
In the resolution of 10 February 1982, the Second Division of the Supreme
the same, especially where such interpretation will help effect justice to buyers who,
Court denied the petition for lack of merit. A motion for reconsideration of said
after having invested a big amount of money, are now sought to be deprived of the same
resolution was filed on 16 March 1982. In the resolution dated 26 April 1982, Jabil was
thru the prayed application of a contract clever in its phraseology, condemnable in its
required to comment thereon, which comment was filed on 11 May 1982 and a reply
lopsidedness and injurious in its effect which, in essence, and in its entirety is most
thereto was filed on 26 July 1982 in compliance with the resolution of 16 June 1982 . On
unfair to the buyers.
 E.E.M.DELACRUZ
thereon Sallys Beach Resort also known as Jabils Beach Resort in March, 1965;
Mactan White Beach Resort on 15 January 1966 and Bevirlyns Beach Resort on 1
September 1965. Such facts were admitted by the Dignos spouses.
6. Contemporaneous acts show that absolute deed of sale was intended
The Court of Appeals in its resolution dated 16 December 1981 found that the
acts of the Dignos spouses, contemporaneous with the contract, clearly show that an
absolute deed of sale was intended by the parties and not a contract to sell.
7. Subsequent sale to the Cabigas spouses null and void
When the Dignoes spouses sold said land to the Cabigas spouses, they were no
longer owners of the same and the sale is null and void.
8. Taguba vs. Vda. De Leon on all fours; Articles 1592 of the Civil Code
Applying the rationale of the case of Taguba v. Vda. de Leon (supra) which is
on all fours with the present case, the contract of sale being absolute in nature is
governed by Article 1592 of the Civil Code. The Dignos spouses never notified Jabil by
notarial act that they were rescinding the contract, and neither did they file a suit in court
to rescind the sale.
9. Article 1358 of the Civil Code, Acts and contracts for the extinguishments of reaql
rights over immovable property must appear in public document
The most that the Dignos spouses were able to show is a letter of Cipriano
Amistad who, claiming to be an emissary of Jabil, informed the Dignos spouses not to go
to the house of Jabil because the latter had no money and further advised the Dignos
spouses to sell the land in litigation to another party. There is no showing that Amistad
was properly authorized by Jabil to make such extra judicial rescission for the latter who,
on the contrary, vigorously denied having sent Amistad to tell the Dignos spouses that he
was already waiving his rights to the land in question. Under Article 1358 of the Civil
Code, it is required that acts and contracts which have for their object the extinguishment
of real rights over immovable property must appear in a public document.
10. Slight delay by one party not sufficient ground fro rescission
Where time is not of the essence of the agreement, a slight delay on the part of
one party in the performance of his obligation is not a sufficient ground for the rescission
of the agreement (Taguba v. Vda. de Leon, supra). Considering that Jabil has only a
balance of P4,000.00 and was delayed in payment only for one month, equity and justice
mandate as in the case that Jabil be given an additional period within which to complete
payment of the purchase price.
9 August 1982, acting on the motion for reconsideration and on all subsequent pleadings
filed, the Supreme Court resolved to reconsider its resolution of 10 February 1982 and to
give due course to the present petition. On 6 September 1982, Jabil filed a rejoinder to
reply of the Dignos spouses which was noted on the resolution of 20 September 1982.
The Supreme Court dismissed the petition filed for lack of merit and affirmed the
assailed decision of the Court of Appeals in toto.
1. Contract is a Deed of Sale
The contract in question is a Deed of Sale, with the conditions that (1) Atilano
G. Jabil is to pay the amount of Twelve Thousand Pesos (P12,000.00) Philippine
Currency as advance payment; (2) Atilano G. Jabil is to assume the balance of Twelve
Thousand Pesos (P12,000.00) Loan from the First Insular Bank of Cebu; (3) Atilano G.
Jabil is to pay the said spouses the balance of Four Thousand Pesos (P4,000.00) on or
before September 15, 1965. (4) That the said spouses agreed to defend the said Atilano
G. Jabil from other claims on the said property; (5) the spouses agrees to sign a final
deed of absolute sale in favor of Atilano G. Jabil over the above-mentioned property
upon the payment of the balance of Four Thousand Pesos. By and large, the issues in
the present case have already been settled by the Court in analogous cases.
2. Deed of Sale absolute although denominated as a Deed of Conditional Sale
A deed of sale is absolute in nature although denominated as a Deed of
Conditional Sale where nowhere in the contract in question is a proviso or stipulation to
the effect that title to the property sold is reserved in the vendor until full payment of the
purchase price, nor is there a stipulation giving the vendor the right to unilaterally
rescind the contract the moment the vendee fails to pay within a fixed period (Taguba v.
Vda. de Leon, 132 SCRA 722; Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc.,
86 SCRA 305). In the present case, there is no stipulation reserving the title of the
property on the vendors nor does it give them the right to unilaterally rescind the contract
upon non-payment of the balance thereof within a fixed period.
3. Elements of valid contract present; Article 1458
All the elements of a valid contract of sale under Article 1458 of the Civil
Code, are present, such as: (1) consent or meeting of the minds; (2) determinate subject
matter; and (3) price certain in money or its equivalent.
4. Ownership transferred upon actual or constructive delivery; Froilan vs. Pan
Oriental Shipping
In addition, Article 1477 of the same Code provides that The ownership of the
thing sold shall be transferred to the vendee upon actual or constructive delivery thereof.
As applied in the case of Froilan v. Pan Oriental Shipping Co., et al. (12 SCRA 276), the
Supreme Court held that in the absence of stipulation to the contrary, the ownership of
the thing sold passes to the vendee upon actual or constructive delivery thereof. .
5. Actual delivery made in the present case
While there was no constructive delivery of the land sold in the present case, as
subject Deed of Sale is a private instrument, it is beyond question that there was actual
delivery thereof. As found by the trial court, the Dignos spouses delivered the possession
of the land in question to Jabil as early as 27 March 1965 so that the latter constructed