Cruzado v. Bustos
– the record
Case:
• An appeal from the judgment of CFI Pampanga allowing declaring defendant
Bustos as the rightful owner of the property in question.
• Bustos and Escaler who has said to be detaining such land, refused to deliver the
possession thereof to plaintiff and refused to recognize his ownership of the same.
Facts:
• Agapito Cruzado was a poor man living in Pampanga, he had a job in court but
was still not enough to support his family. He aspired to hold the office of procurador in
the CFI of Pampanga but he was unable to give the required bond, an indispensable
condition for his appointment.
• Since Cruzado was friends with Bustos, a rich woman in their place. He begged
the latter to simulate a mortgage deed of a certain property and have it executed in court
in his favor only to pose that he has real property to enable him to qualify to such position
of procurador. In truth, the said mortagage was a front and fraudulent but was effected by
making a pretended contract which bore the appearance of truth.
• It is unquestionable that the contract of sale was perfect and binding upon both
contracting parties since their names both appear in that instrument to have agreed upon
the thing sold. But it is also undeniable that the said contract was not consummated. 1.)
Cruzado did not pay the purchase price of P2,200 2.) he never took possession of the land
apparently sold in the said deed. All that the vendee did was to pledge the land as a
security for the faithful discharge of the duties of his office.
• Santiago Cruzado, the son, brought an action for recovery of possession, founded
on the right transmitted to him by his father at his death – a right arising from the said
simulated deed of sale of the land in question.
Issue:
• W/N the said deed of sale was simulated, not with the intent to defraud 3rd
persons, but for the sole purpose of making it appear that Agapito Cruzado has real
property?
• W/N rights of transmission acquired by Santiago Cruzado from the death of his
father, pertaining to the said land in contest is valid and without defect?
Ruling:
• Under the law, the contract of purchase and sale, as consensual, is perfected by
consent as to the price and the thing and is consummated by the reciprocal delivery of the
one and the other. Full ownership of the thing sold being conveyed to the vendee, from
which moment the right of action derived from this right may be exercised.
discloses that there was no payment made by Cruzado to Bustos, thus, rendering the
contract not to be consummated.
• Art 1164 states that, a creditor has a right to the fruits of the time the obligation
to deliver it arise. However, he shall not acquire a property right thereto until it has been
delivered to him.
• Besides the failure to pay the purchase price, neither the vendee nor his heirs,
had at any time taken possession of the land. Seven witnesses attest to the fact, Bustos
and her husband while still living, continued to possess the said land supposedly sold to
Agapito Cruzado and cultivated it, as she had done long before the sale of September
1875 to September 1891, the date of complaint by Santiago Cruzado.
• Consequently, at the death of Agapito, he could not have transmitted to the
Santiago as his successor any greater right than a personal right to exact fulfillment of a
contract, as plaintiff was not the owner of the said land, he could not validly register it.
This fulfillment of a right has already prescribed since, under the law, prescription towards
real property shall be 30 years. In the case at bar, the action to recover took 34 years to
bring it to court, thus has already prescribed.
• Petition is denied.
PENACO VS. RUAYA
110SCRA45
FACTS:
On January 14, 1957, the defendant spouses Ruaya executed a document
dominated: “Pacto de Retro of Residential Building as Public Land applicant on the lot on
which constructed.” The terms and condition are:
“spouses Ruaya, in consideration of sum of P1000 whereof in full is hereby acknowledge
and paid by Pershing Tan Queto, do these presents hereby sell, cede and convey by way
of Pacto de Retro…one two-storey residential building…in the name of Zoilo Ruaya and
therein assessed at P1500 and erected on a public land along the road to the wharf, city of
ozami.”
The vendors a retro failed to exercise their right to repurchase in the said period. On sept.
10, 1960, the trial court rendered judgment declaring that the title is consolidated in the
vendee, Pershing Tan Queto, On April 18, 1961, Queto assigned his rights to plaintiff
Penaco. Thereafter, Penaco demanded to relinquish and complete transfer of their legal
rights but defendant refused. The defendant answered that the condition in the contract
Pacto re Retro , is void for want of consideration, there being no price mentioned therein
and that the parcel of land which is sought to be transferred has not been identified.
ISSUE:
Is the defendant’s contention valid?
RULING:
No. There were only one contract entered into by the appellant and Queto and
which is a sale of a residential building for P1000 with the condition that: the vendor may
repurchase the same within a period of 1 year by paying back the vendee, upon failure to
repurchase, the building shall pass and become vested in the vendee, and transfer
relinquish and effect legal transfer of all their rights. Article 1350 of the civil code provides
that, “in onerous contracts the cause is understood to be, for each contracting party the
prestation or promise of a thing or service by the other.” Besides, article 1354 provides,
“it is presumed that consideration exist and is lawful, unless the debtor proves the
contrary. The second contention that parcel of land on which the building sold a retro is
constructed has not been identified if likewise without merit. The vendors a retro are
obligated to transfer to the vendee a retro and his assigns all their rights, interest and
participation , as public claimant, in and the lot on which the building sold a retro has
consolidated his title over the building sold a retro.
Almocera vs. Ong
546 SCRA 164
G.R. No. 170479
February 18, 2008
FACTS:
Johnny Ong tried to acquire from Andre T. Almocera and First Builder Multi-Purpose
Cooperative (FBMC) a "townhome" in Cebu City. As reflected in a Contract to Sell, the
selling price of the unit was P3,400,000.00 pesos.
Out of the purchase price, he was able to pay the amount of P1,060,000.00.
Prior to the full payment of this amount, Ong claims that defendants Andre Almocera and
First Builders fraudulently concealed the fact that before and at the time of the perfection
of the aforesaid contract to sell, the property was already mortgaged to and encumbered
with the Land Bank of the Philippines (LBP). In addition, the construction of the house has
long been delayed and remains unfinished. On March 13, 1999, Lot 4-a covering the unit
was advertised in a local tabloid for public auction for foreclosure of mortgage. It is the
assertion of Ong that had it not for the fraudulent concealment of the mortgage and
encumbrance by defendants, he would have not entered into the contract to sell.
On the other hand, defendants assert that on March 20, 1995, First Builders Multi-purpose
Coop. Inc., borrowed money in the amount of P500,000.00 from Tommy Ong, plaintiff’s
brother. This amount was used to finance the documentation requirements of the LBP for
the funding of the Atrium Town Homes. This loan will be applied in payment of one (1)
town house unit which Tommy Ong may eventually purchase from the project. When the
project was under way, Tommy Ong wanted to buy another townhouse for his brother,
Johnny Ong, plaintiff herein, which then, the amount of P150,000.00 was given as
additional partial payment.
However, the particular unit was not yet identified. It was only on January 10, 1997 that
Tommy Ong identified Unit No. 4 plaintiff’s chosen unit and again tendered P350,000.00
as his third partial payment. When the contract to sell for Unit 4 was being drafted,
Tommy Ong requested that another contract to sell covering Unit 5 be made so as to give
Johnny Ong another option to choose whichever unit he might decide to have. When the
construction was already in full blast, defendants were informed by Tommy Ong that their
final choice was Unit 5. It was only upon knowing that the defendants will be selling Unit 4
to some other persons for P4million that plaintiff changed his choice from Unit 5 to Unit 4.
In trying to recover the amount he paid as down payment for the townhouse unit, Johnny
Ong filed a complaint for Damages against Andre T. Almocera and FBMC alleging that they
were guilty of fraudulent concealment and breach of contract when they sold to him a
townhouse unit without divulging that the same, at the time of the perfection of their
contract, was already mortgaged with the Land Bank of the Philippines (LBP), with the
latter causing the foreclosure of the mortgage and the eventual sale of the townhouse unit
to a third person.
In their Answer, Almocera and FBMC denied liability claiming that the foreclosure of the
mortgage on the townhouse unit was caused by the failure of Johnny Ong to pay the
balance of the price of said townhouse unit.
ISSUES:
1. WON it was a contract to sell or a contract of sale.
2. WON the respondent’s refusal to pay the balance of the purchase price is justified. -
YES
HELD:
1. It cannot be disputed that the contract entered into by the parties was a contract to
sell. In a contract to sell, ownership is retained by the seller and is not to pass to the
buyer until full payment of the price.
The contract was denominated as such and it contained the provision that the unit
shall be conveyed by way of an Absolute Deed of Sale, together with the attendant
documents of Ownership – the Transfer Certificate of Title and Certificate of
Occupancy – and that the balance of the contract price shall be paid upon the
completion and delivery of the unit, as well as the acceptance thereof by respondent.
All these clearly indicate that ownership of the townhouse has not passed to
respondent.
The unit shall be completed and conveyed by way of an Absolute Deed of Sale
together with the attendant documents of Ownership in the name of the BUYER – the
Transfer Certificate of Title and Certificate of Occupancy within a period of six (6)
months from the signing of Contract to Sell.
2. The respondent is justified in refusing to pay the balance of the contract price.
From the terms of the contract, it is clear that petitioner and FBMC had the obligation
to complete the townhouse unit within six months from the signing of the contract.
Upon compliance therewith, the obligation of respondent to pay the balance of
P2,400,000.00 arises. Upon payment thereof, the townhouse shall be delivered and
conveyed to respondent upon the execution of the Absolute Deed of Sale and other
relevant documents.

The evidence adduced shows that petitioner and FBMC failed to fulfill their obligation -
- to complete and deliver the townhouse within the six-month period. With petitioner
and FBMC’s non-fulfillment of their obligation, respondent refused to pay the balance
of the contract price. Respondent does not ask that ownership of the townhouse be
transferred to him, but merely asks that the amount or down payment he had made
be returned to him.

The contract subject of this case contains reciprocal obligations which were to be
fulfilled by the parties, i.e., to complete and deliver the townhouse within six months
from the execution of the contract to sell on the part of petitioner and FBMC, and to
pay the balance of the contract price upon completion and delivery of the townhouse
on the part of the respondent.