Bareng vs.

Court of Appeals
G.R. No. L-12973
April 25, 1960

FACTS: Vicente Bareng purchased from respondent Alegria the cinematographic equipment
installed at the Pioneer Theater in Laoag, Ilocos Norte, for the sum of P15,000. P10,000 of
which was paid, and Bareng signed 4 promissory notes for the balance. The first promissory
note amounting to P1,000 was duly paid by Bareng. On February 15, 1952, shortly before the
second note fell due, the other respondent Agustin Ruiz informed Bareng that he was a co-
owner of the equipment in question, and several days later, Ruiz sent Bareng a telegram
instructing him to suspend payments to Alegria for thebalance of the price as he was not
agreeable to the sale. When Alegria sought to collect the second note on the same day, Bareng
only paid P400 and refused to make any more payments on account of Ruizs claims.

On March 31, 1952, Ruiz filed suit against Alegria and Bareng for his share in the price of the
cinema equipment. Thereafter in May of the same year, Alegria and Ruiz reached a compromise
wherein the former recognized the latter as co-owner of the equipment sold to Bareng and
promised to pay 2/3 of whatever amount he could recover from the latter. Alegria then sued
Bareng for the amount of P13,500, allegedly the unpaid balance of the price. But Bareng
answered that only P3,600 had not been paid, and prayed for the rescission of the sale for the
supposed violation of Alegria of certain express warranties as to the quality of the equipment,
and asked for payment of damages for alleged violation of Alegrias warranty of title. Bareng
added that he is not liable to pay interests to Alegria because he was justified in suspending
payment of the balance of the price of the equipment from the time he learned of Ruizs
adverse claims over said equipment, pursuant to Art. 1590 of the Civil Code.

ISSUE: Whether or not Bareng is liable to pay interest of the unpaid balance of the price of the
equipment.

HELD: Bareng is liable to pay interest of the unpaid balance of the price of the equipment in
question. Art. 1590 of the Civil Code provides that: Should the vendee be disturbed in the
possession or ownership of the thing acquired, or should he have reasonable grounds to fear
such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend the
payment of the price until the vendor has caused the disturbance or danger to cease, unless the
latter gives security for the return of the price in a proper case, or it has been stipulated that,
notwithstanding any such contingency, the vendee shall be bound to make the payment. A
mere act of trespass shall not authorize the suspension of the payment of the price.

It is undisputed that petitioner had the right to suspend payment of the balance of the price of
the cinema equipment in question to his vendor from the time he was informed by Ruiz of the
latters claims of co-ownership thereof, especially upon his receipt of Ruizs telegram wherein
the latter asserted that he was not agreeable to the sale. However, said right of Barend ended
as soon as the vendor has caused the disturbance or danger to cease, which, in this case, was
when Alegria reached a compromise with Ruiz whereby Ruiz expressed his conformity to the
sale to Bareng, subject to the payment of his share in the price by Alegria. From the time
Alegria and Ruiz reached this settlement, there was no longer any danger of threat to Barengs
ownership and full enjoyment of the equipment he bought from Alegria, by virtue of which
Alegria sued petitioner for the unpaid balance. Bareng admitted his indebtedness in the
amount of P3,600, yet he did not tender payment of said amount nor did he deposit the same
in court, but instead sought for rescission of the sale. It is clear that Bareng was in default on
the unpaid balance of the price of the equipment from the date of filing of the complaint by
Alegria, and under Art. 2209 of the Civil Code, he must pay legal interests thereon from said
date.

Adelfa Properties vs CA (1995)

FACTS:
Private respondents and their brothers, Jose and Dominador Jimenez, were the registered co-
owners of a parcel of land.
Jose and Dominador Jimenez sold their share consisting of one-half of said parcel of land to
Adelfa Properties.
Subsequently, a "Confirmatory Extrajudicial Partition Agreement" 4 was executed by the
Jimenezes, wherein the eastern portion of the subject lot was adjudicated to Jose and
Dominador Jimenez, while the western portion was allocated to herein private respondents.
An "Exclusive Option to Purchase" 5 was executed between Adelfa Properties and private
respondents, under certain conditions.
Before petitioner could make payment it received summons for annulment of the deed of sale
in favor of Household Corporation and recovery of ownership.
As a consequence, Adelfa informed PR that it would hold payment of the full purchase price
and suggested that PR settle the case with their nephews and nieces.
Respondent Salud Jimenez refused to heed the suggestion of petitioner and attributed the
suspension of payment of the purchase price to "lack of word of honor."
The RTC dismissed the civil case, and PR executed a Deed of Conditional Sale in favor of
Emylene Chua over the same parcel of land.
Thus, Adelfa demanded refund of the 50% dp it has paid, but PR demanded the return of the
certificate of title.
Adelfa failed to return the certificate, so PR filed for annulment of the contract.
RTC: agreement was an option contract, suspension of payment was a counter-offer, which
was rejected. Exclusive Option to Purchase contract was cancelled (basically ruled in favor of
PR)
CA: affirmed

ISSUE: I. W/N the "Exclusive Option to Purchase" executed Adelfa Properties, Inc. and private
respondents is an option contract.

HELD: I. CONTRACT TO SELL, NOT OPTION CONTRACT NOR CONTRACT OF SALE

1. 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, such payment being a positive
suspensive condition and failure of which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming effective.
2. There are two features which convince us that the parties never intended to transfer
ownership to petitioner except upon the full payment of the purchase price. Firstly, the
exclusive option to purchase, although it provided for automatic rescission of the contract
and partial forfeiture of the amount already paid in case of default, does not mention that
 petitioner is obliged to return possession or ownership of the property as a consequence of
non-payment.
3. Secondly, it has not been shown there was delivery of the property, actual or constructive,
made to herein petitioner. The exclusive option to purchase is not contained in a public
instrument the execution of which would have been considered equivalent to delivery.

FABRIGAS V. SAN FRANCISCO

FACTS:
Spouses Fabrigas entered into an agreement denominanted as Contract to Sell No. 2482-V
with San Francisco Del Monte, Inc. a parcel of residential lot situated in Barrio Almanza, Las
Pias, Manila for a consideration of P109,200,00. The agreement includes that the spouses shall
pay a downpayment of P30,000 with balance within 10 years in successive instalments of
P1,285.69 and a contract con
taining an automatic cancellation clause, in the event the purchaser fail to pay any installments
and in the event of forfeiture, all sums of money paid will betreated as rentals and waives all
right to ask or demand the return of the amount and agrees to peaceably vacate the premises.
Fabrigas paid the downpayment and took possession of the property but failed to pay any
installments. Del Monte sent demand letters on 4 occasions to Fabrigas as final letter sent on
December 7, 1983 having grace period of 15 days and otherwise will forfeit all payments maid
and the rescission however letter was received by Fabrigas on December 23, 1983 but the
contract was considered canc
elled by Del Monte but did not notice Fabrigas on the cacellation.
Marcelina Fabrigas continued remitting money to Del Monte until on January 21, 1985,
parties enter into another contract to sell of No. 2491-V but under different terms. Between
March 1985 and January 1986, spouses Fabrigas made irregular payments for the second
contract then on February 3, 1986 Del Monte senta demand letter to Fabrigas for overdue
account.
A petition for review was made in assailment for the decision made by the Court of Appeals in
CA-G.R. CV No. 45203 and its resolution denying petitioners motion for reconsideration. In the
decision, the spouses Fabrigas, as defendants, considered paid by the amount of P78,152.00
were ordered (a) to make complete payment under the conditions of Contract to Sell No. 2491-
V dated January 21, 1985 wit
hin 20 days from the receipt of the decision and in the event of failure or refusal, all persons
claiming right and possession or occupation are ordered to vacate and leave the premises of
the house and lot, (b) if defendants chose to surrender possession of the property will be
ordered to pay San Francisco, the plaintiff, P206,223.80 as unpaid installments on the land
inclusive of interests (c) ordering defendants to jointly and severally pay plaintiff the amount of
P10,000.00 for attorneys fees and (d) to pay the costs of suit.

ISSUES:
1. Whether or not Contract to Sell No. 2482-V, the first contract entered into by the parties,
has really been cancelled and no longer valid.
2. Whether or not consent by the husband needed for novation was achieved.
RULINGS:
1. Yes, Contract to Sell No. 2482-V has really been cancelled and replaced by Contract to Sell
No.2491-V. It is already novated by the second contract because of the ratification made by the
Fabrigas.
According to the Maceda Law Sec 4, the cancellation of the contract is atwo-step process.
First, the seller should extend the buyer a grace period of at least sixty days from the due date
of the instalment . Second, at the end of the grace period, the seller shall furnish the buyer with
a notice of cancellatio
n or demand for rescission through a notarial act, effective thirty days fro thebuyers receipt
thereof. The mere notice or letter will not suffice.
Del Monte did not comply with this but applied automatic rescission clause of the contract,
but rescission is not the only mode of extinguishing obligations. In this case Novation was
applied. Novation takes place when an old obligation is terminated by the creation of a new
obligation or when the old obligation subsists to the extent it remains compatible with the
amendatory agreement. Requisites for novation are a previous valid obligation, an agreement
of all parties concerned to a new contract, the extinguishment of the old obligation and the
birth of a valid new obligation. These requisites were complied with by the bot
h parties even though a question of consent takes place.
2. Yes, consent for novation was achieved.
On article 172 of the civil code expressly classifies a contract executed by th
e husband without the consent of the wife as merely annullable at the instance o
f the wife. However, there is no comparable provision covering an instance where
the wife alone consented to a contract involving conjugal property. Art. 168, t
he wife may, by express authority of the husband embodied in a public instrument
, administer the conjugal partnership property. Art. 169, the wife may also, my
express authority of the husband appearing in a public instrument, administer th
e latter s estate. Any transaction entered by the wife without the court or the hu
sbands authority is unenforceable in accordance with Art. 1317.
Being unenforceable, Contract to Sell No. 2491- is susceptible to ratifi
cation. In here, Isaias Fabrigas, the husband continued remitting payments for t
he satisfaction of the obligation under Contract to Sell No. 2491-V, constitute
ratification of the contract.
Therefore, Contract to Sell No. 2482-V was novated by Contract to Sell N
o. 2491-V due to ratification, then the spouses Fabrigas shall follow the decisi
on of the Court of Appeals.