PROJECT BUILDERS, INC., GALICANO A. CALAPATIA, JR., and LEANDRO ENRIQUEZ, petitioners, vs.

THE COURT OF APPEALS and INDUSTRIAL FINANCE CORPORATION Facts: A collection was filed by Industrial Finance Corporation against defendant Project Builders, Inc. Galicano Calapatia, Jr., Pablo Malasarte, Teodoro Banas and Leandro Enriquez, arising from an alleged deficiency of P1,323,053.08, after the extrajudicial foreclosure of the real estate mortgage. The defendants deny liability and in their answer they allege that plaintiff has no cause or right of action because the obligation is already fully paid out of the proceeds of foreclosure sale of defendants property. Further, defendants alleged that a proper accounting of the transaction between the parties will show that it is the plaintiff who is liable to the defendants. The Trial Court dismissed the complaint and ruled on the counterclaim. The Court of Appeals overturned the judgment of the trial court. Defendants are ordered to pay, jointly and severally, to the plaintiff the deficiency in the amount of P1,237,802.48 with interest thereon at the rate of 12% per annum computed from August 13, 1981 minus the amount of the promissory note in the sum of P238,052.53 with interest thereon at the rate of 12% per annum computed from September 14, 1976, the respective computation of the interest to end upon execution of this decision. Issue: Whether or not the defendants be held jointly and severally liable through transmissibility of rights and obligations. Ruling: An assignment of credit is an act of transferring, either onerously or gratuitously, the right of an assignor to an assignee who would then be capable of proceeding against the debtor for enforcement or satisfaction of the credit. The transfer of rights takes place upon perfection of the contract, and ownership of the right, including all appurtenant accessory rights, is thereupon acquired by the assignee. The assignment binds the debtor only upon acquiring knowledge of the assignment but he is entitled, even then, to raise against the assignee the same defenses he could set up against the assignor. Where the assignment is on account of pure liberality on the part of the assignor, the rules on donation would likewise be pertinent; where valuable consideration is involved, the assignment partakes of the nature of a contract of sale or purchase. Upon an assignment of a contract to sell, the assignee is effectively subrogated in place of the assignor and in a position to enforce the contract to sell to the same extent as the assignor could. Thus, the Supreme Court denied the petition.

HONGKONG AND SHANGHAI BANKING CORP., LTD. STAFF RETIREMENT PLAN, Retirement Trust Fund, Inc.) Petitioner, vs. SPOUSES BIENVENIDO AND EDITHA BROQUEZA, Respondents.

Facts: Petitioners Gerong and [Editha] Broqueza are employees of Hongkong and Shanghai Banking Corporation (HSBC). They are also members of respondent Hongkong Shanghai Banking Corporation, Ltd. Staff Retirement Plan (HSBCL-SRP).The HSBCL-SRP is a retirement plan established by HSBC through its Board of Trustees for the benefit of the employees. Broqueza obtained car loan while Gerong was granted emergency loan. These loans are paid through salary deduction. Later, Broqueza and Gerong were terminated by HSBC because of labor dispute. Because of their dismissal, petitioners were not able to pay the monthly amortizations of their respective loans. HSBCL-SRP filed a civil case against petitioners. The MeTC promulgated its Decision in favor of HSBCL-SRP. The RTC affirmed the MeTCs decision in toto. The assailed decision was reversed by the Court of Appeals. Issue: Whether the balance of the loan is immediately demandable. Ruling:

In ruling for HSBCL-SRP, the first paragraph of Article 1179 of the Civil Code applied: Art. 1179. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once.

The Supreme Court affirms the findings of the MeTC and the RTC that there is no date of payment indicated in the Promissory Notes. The RTC is correct in ruling that since the Promissory Notes do not contain a period, HSBCL-SRP has the right to demand immediate payment. Article 1179 of the Civil Code applies. The spouses Broquezas obligation to pay HSBCL-SRP is a pure obligation. The fact that HSBCL-SRP was content with the prior monthly check-off from Editha Broquezas salary is of no moment. Once Editha Broqueza defaulted in her monthly payment, HSBCL-SRP made a demand to enforce a pure obligation. Therefore, petition is granted.

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, Sps. NORMY D. CARPIO and CARMEN ORQUISA; Sps. ROLANDO D. CARPIO and RAFAELA VILLANUEVA; Sps. ELISEO D. CARPIO and ANUNCIACION del ROSARIO; LUZ C. REYES, MARIO C. REYES, JULIET REYES-RUBIN, respondents. FACTS: Private respondents are original owners of a parcel of land in Ozamis City. They mortgaged said land to DBP. When private respondents defaulted on their obligation, petitioner foreclosed the mortgage on the land and emerged as sole bidder in the ensuing auction sale. DBP & PR entered into a deed of conditional sale where DBP agreed to convey the foreclosed property to them. Upon completing the payment of the full repurchase price DBP, private respondents demanded the execution of the deed of conveyance in their favor. However, DBP denied the execution & delivery because it had become legally impossible in view of sec. 6 of RA 6657 (CARL) that upon effectivity of this act, any sale lease, management contract/transfer of possession of private/lands executed by the original land owner in violation of this act shall be null & void. ISSUE: Whether or not the obligation to execute a Deed of Sale to private respondents. RULING: According to Manresa, it is a rule that if the obligation depends upon a suspensive condition, the demandability as well as the acquisition or effectivity of the rights arising from the obligation is suspended pending the happening or fulfillment of the fact or event which constitutes the condition. Once the event which constitutes the condition is fulfilled resulting in the effectivity of the obligation, its effects retroact to the moment when the essential elements which gave birth to the obligation have taken place. Applying this precept to the case, the full payment by the appellee on April 6, 1990 retroacts to the time the contract of conditional sale was executed on April 6, 1984. From that time, all elements of the contract of sale were present. Consequently, the contract of sale was perfected. As such, the said sale does not come under the coverage of R.A. 6657. Under Art 1181, in conditional obligations, the acquisition of rights as well as the extinguishment or loss of those already acquired depend upon the happening of the event which constitutes the conditions. The deed of conditional sale between petitioner & PR was executed on April 6 1984. Since PR had religiously paid the agreed installment on the property until April 6, 1990, PR is entitled for the land.

The laws RA 6657, was enacted on June 10, 1988 as well as E.O. 407 after the execution of the deed of conditional sale, thus, these laws cannot have retroactive effect or to the time the contract had on April 6 1984. Petitioner cannot invoke the last paragraph of sec.6 to set aside its obligations already existing prior to its enactment because the original owner in this case is not DBP but PR. DBP only acquired land through foreclosure proceedings but agreed thereafter to recovery it to private respondents conditionally.

MARIA SOLEDAD TOMIMBANG, Petitioner, vs. ATTY. JOSE TOMIMBANG, Respondent.

Facts: Petitioner and respondent are siblings. Their parents donated to petitioner an eight-door apartment located at 149 Santolan Road, Murphy, Quezon City, with the condition that during the parents' lifetime, they shall retain control over the property and petitioner shall be the administrator thereof. In 1995, petitioner applied for a loan from PAG-IBIG Fund to finance the renovations on Unit H, of said apartment which she intended to use as her residence. Petitioner failed to obtain a loan from PAG-IBIG Fund, hence, respondent offered to extend a credit line to petitioner on the following conditions: (1) petitioner shall keep a record of all the advances; (2) petitioner shall start paying the loan upon the completion of the renovation; (3) upon completion of the renovation, a loan and mortgage agreement based on the amount of the advances made shall be executed by petitioner and respondent; and (4) the loan agreement shall contain comfortable terms and conditions which petitioner could have obtained from PAG-IBIG. An altercation broke out between the herein parties. Respondent and petitioner entered into a new agreement whereby petitioner was to start making monthly payments on her loan. Another quarrel occurred and they had a hearing at the barangay where the respondent reminded the petitioner of her monthly payment. Petitioner left the unit and was nowhere to be found. She stopped making monthly payments and ignored the demand letter. Respondent filed a complaint. Petitioner does not deny that she obtained a loan from respondent. She, however, contends that the loan is not yet due and demandable because the suspensive condition the completion of the renovation of the apartment units - has not yet been fulfilled. She also assails the award of attorney's fees to respondent as baseless Issue: Whether or not petitioner's obligation is due and demandable. Ruling: It is undisputed that herein parties entered into a valid loan contract. The only question is, has petitioner's obligation become due and demandable? The Court resolves the question in the affirmative.The evidence on record clearly shows that after renovation of seven out of the eight apartment units had been completed, petitioner and respondent agreed that the former shall already start making monthly payments on the loan even if renovation on the last unit (Unit A) was still pending. Evidently, by virtue of the subsequent agreement, the parties mutually dispensed with the condition that petitioner shall only begin paying after the completion of all renovations. There was, in effect, a modificatory or partial novation, of petitioner's obligation. Article 1291 of the Civil Code. The decision of the Court of Appeals is granted.

FELIX L. GONZALES, petitioner, vs. THE HEIRS OF THOMAS and PAULA CRUZ, herein represented by ELENA C. TALENS, respondents. Facts: Paula Ao Cruz together with the plaintiffs heirs of Thomas and Paula Cruz, namely Ricardo A. Cruz, Carmelita M. Cruz, Salome A. Cruz, Irenea C. Victoria, Leticia C. Salvador and Elena C. Talens, entered into a Contract of Lease/Purchase with the defendant, Felix L. Gonzales, the sole proprietor and manager of Felgon Farms, of a half-portion of a parcel of land containing an area of 12 hectares, more or less, and an accretion of 2 hectares, more or less, situated in Rodriguez Town, Province of Rizal and covered by Transfer Certificate of Title No. 12111. The defendant Gonzales paid the P2,500.00 per hectare or P15,000.00 annual rental on the half-portion of the property covered by Transfer Certificate of Title No. 12111 in accordance with the second provision of the Contract of Lease/Purchase and thereafter took possession of the property, installing thereon the defendant Jesus Sambrano as his caretaker. The defendant Gonzales did not, however, exercise his option to purchase the property immediately after the expiration of the one-year lease. He remained in possession of the property without paying the purchase price provided for in the Contract of Lease/Purchase (Ibid.) and without paying any further rentals thereon. A letter was sent by one of the plaintiffs-heirs Ricardo Cruz to the defendant Gonzales informing him of the lessors decision to rescind the Contract of Lease/Purchase due to a breach thereof committed by the defendant. The letter also served as a demand on the defendant to vacate the premises within 10 days from receipt of said letter. The defendant Gonzales refused to vacate the property and continued possession thereof. The lessor, Paula Ao Cruz died. A final demand letter to vacate the premises was sent by the remaining lessors who are also the heirs of the deceased lessor Paula Ao Cruz, through their counsel on August 24, 1987 which the defendant Gonzales received but did not heed Issues: Whether or not the plaintiff can rescind or terminate the Contract of Lease after the one-year period. Ruling: Respondents cannot rescind the contract, because they have not caused the transfer of the TCT to their names, which is a condition precedent to petitioners obligation. This Court has held that there can be no rescission (or more properly, resolution) of an obligation as yet non-existent, because the suspensive condition has not happened.

INSULAR LIFE ASSURANCE COMPANY, LTD., INSULAR SAVINGS BANK and JACINTO D. JIMENEZ, petitioners, vs. ROBERT YOUNG, GABRIEL LA'O II, ARTHUR TAN, LOPE JUBAN, JR., MARIA LOURDES ONGPIN, ANTONIO ONGPIN, ELSIE DIZON, YOLANDA BAYER, CECILIA VIRAY, MANUEL VIRAY and JOSE VITO BORROMEO, respondents. Facts: Respondent Robert Young, together with his associates and co-respondents, namely: Gabriel La'O II, Arthur Tan, Lope Juban, Jr., Maria Lourdes Ongpin, Antonio Ongpin, Elsie Dizon, Yolanda Bayer, Cecilia Viray, Manuel Viray and Jose Vito Borromeo, acquired by purchase Home Bankers Savings and Trust Co., now petitioner Insular Savings Bank ("the Bank," for brevity), from the Licaros family for P65,000,000.00. Young and his group obtained 55% equity in the Bank, while Jorge Go and his group owned the remaining 45%. Subsequently, the Bank granted respondents and others individual loans in the total amount of P153,000,000.00, secured by promissory notes. Benito Araneta, a stockholder of the Bank, signified his intention to purchase 99.82% of its outstanding capital stock for P340,000,000.00, subject to the condition that the ownership of all the shares will be consolidated in Young's name. Araneta paid Young P14,000,000.00 as part of the downpayment. In order to carry out the intended sale to Araneta, Young bought from Jorge Go and his group their 45% equity in the Bank for P153,000,000.00. In order to pay this amount, Young obtained a short-term loan of P170,000,000.00 from International Corporate Bank ("Interbank") to finance the purchase. However, Araneta backed out from the intended sale and demanded the return of his downpayment. Meanwhile, Young's loan from Interbank became due, causing his serious financial problem. Consequently, he engaged the services of Asian Oceanic Investment House, Inc. ("Asian Oceanic"), a domestic company owned and controlled by another petitioner, Insular Life Assurance Co., Ltd. ("Insular Life"), to look for possible sources of capital. Through the intervention of Asian Oceanic, Young and Insular Life entered into a Credit Agreement. Insular Life extended a loan to Young in the amount ofP200,000,000.00. To secure the loan, Young, acting in his behalf and as attorney-in-fact of the other stockholders, executed on the same day a Deed of Pledge over 1,324,864 shares which represented 99.82% of the outstanding capital stock of the Bank. Young signed a letter prepared by Atty. Jacinto Jimenez, counsel of Insular Life, addressed to Mr. Vicente R. Ayllon, Chairman of the Bank's Board of Directors, stating that due to business reverses, he shall not be able to pay his obligations under the Credit Agreement between him and Insular Life. Consequently, Young "unconditionally and irrevocably waive(s) the benefit of the period" of the loan (up to December 26, 1991) and Insular "may consider (his) obligations thereunder as defaulted." He likewise interposes no objection to Insular Life's exercise of its rights under the said agreement.

Issue:

Whether or not the MOA is valid and enforceable between the parties despite respondent Young's failure to comply with the terms and conditions thereof.

Ruling:

The provisions of the MOA negate the existence of a perfected contract of sale. The MOA is merely a contract to sell since the parties therein specifically undertook to enter into a contract of sale if the stipulated conditions are met and the representation and warranties given by Young prove to be true. The obligation of petitioner Insular Life to purchase, as well as the concomitant obligation of Young to convey to it the shares, are subject to the fulfillment of the conditions contained in the MOA. Once the conditions, representation and warranties are satisfied, then it is incumbent upon the parties to perform their respective obligations under the contract. Conversely, in the event that these conditions are not met or complied with, no obligation on the part of either party arises. This is in accord with Article 1181 of the Civil Code which provides that "(i)n conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition." And when the obligation assumed by a party to a contract is expressly subjected to a condition, the obligation cannot be enforced against him unless the condition is complied with.

DIRECT FUNDERS HOLDINGS CORPORATION, petitioner, vs. JUDGE CELSO D. LAVIA, PRESIDING JUDGE OF RTC- Pasig City, Branch 71 and KAMBIAK Y. CHAN, JR., respondents. Facts: It is alleged by the petitioner that the respondent Judge issued the writ of preliminary injunction, despite clear and express prayer in the Amended Complaint (Rollo, p. 23) that private respondent Kambiak Y. Chan, Jr. sought the issuance of a writ of preliminary mandatory injunction. This is again despite the fact this error was brought to respondent Judges attention denied the Motion for Reconsideration on May 29, 1998 justifying the issuance thereof due to petitioners alleged misappreciation of facts and reliefs sought for. During the hearing for the issuance of temporary restraining order, it was made clear to the respondent Judge that the property in question was occupied by the petitioner by virtue of a writ of possession issued by the Regional Trial Court of Pasig, Branch 157 in LRC Case No. R-5475 in a petition for the issuance of writ of possession thereof way back on October 23, 1997. espite the lawful order of a coordinate and co-equal court, the respondent Judge, presiding Regional Trial Court of Pasig, Branch 71, issued the questioned orders to restore possession to private respondent Chan, alleging an obviously grave abuse of discretion, tantamount to lack of jurisdiction. On the same date on December 8, 1997, the temporary restraining order (TRO) was issued, the Court Sheriff IV Cresencio Rabello, Jr. implemented the TRO and submitted the Return on December 9, 1997. Then, on January 21, 1998, the respondent Judge issued the questioned order granting the issuance of a writ of preliminary injunction who subsequently denied the petitioners motion to dismiss and supplemental motion to dismiss and the very urgent motion for reconsideration on February 16, 1998. On May 29, 1998, the motion for inhibition and the motion to dissolve the writ of preliminary injunction were also denied

Issue: Whether or not the petitioner or respondent Kambiak Y. Chan, Jr. has a better right to the possession of the subject property. Ruling:

The conditional sale agreement was the only document that the respondent presented during the summary hearing of the application for a temporary restraining order before the Regional Trial Court, Branch 71, Pasig City. We find that the conditional sale agreement is officious and ineffectual. First, it was not consummated. Second, it was not registered and duly annotated on the Transfer Certificate of Title (No. 12357) covering the subject property. Third, it was executed about eight (8) years after the execution of the real estate mortgage over the subject property. To emphasize, the mortgagee (United Savings Bank) did not give its consent to the change of debtor. It is a fundamental axiom in the law on contracts that a person not a party to an agreement cannot be affected thereby. Worse, not only was the conditional sale agreement. It is inexorable to conclude that petitioner, not the respondent, has a better right to the possession

of subject property executed without the consent of the mortgagee-creditor, United Savings Bank, the same was also a material breach of the stipulations of the real estate mortgage over the subject property.

FIDELA DEL CASTILLO Vda. DE MISTICA, petitioner, vs. Spouses BERNARDINO NAGUIAT and MARIA PAULINA GERONA-NAGUIAT, respondents.

Facts: Predecessor-in-interest of Petitioner and herein Defendants entered into a contract to sell in which the latter prayed the initial payment and undertake to pay the remaining by installment within 10 years subject to 12% interest per annum. Petitioner filed a complaint for rescission alleging failure and refusal of Defendants to pay the balance constitutes a violation of the contract which entitles her to rescind the same. Petitioner argues that period for performance of obligation cannot be extended to 10 years because to do so would convert the obligation to purely potestative. Issues: Whether or not the Honorable Court of Appeals erred in the application of Art. 1191 of the New Civil Code, as it ruled that there is no breach of obligation inspite of the lapse of the stipulated period and the failure of the private respondents to pay. Ruling: Under Art. 1191 of Civil Code, the right to rescind an obligation is predicated on violation between parties brought about by breach of faith by one of them. Rescission, however, is allowed only when the breach is substantial and fundamental to the fulfillment of the obligation. In this case, no substantial breach in the Kasulatan, it was stipulated that payment could be made even after 10 years from execution of contract, provided they will pay the 12% interest. Civil Code prohibits purely potestative, suspensive, conditional obligation that depend on the whims of the debtor. Nowhere in the deed that payment of purchase price is dependent whether respondents want to pay it or not, the fact that they already made partial payment shows that parties intended to be bound by the Kasulatan

LUZ HERMOSA, as administratrix of the Intestate Estate of Fernando Hermosa, Sr., and FERNANDO HERMOSA, JR., petitioners, vs. EPIFANIO M. LONGARA, respondent.

Facts: The Court of Appeals approved certain claims presented by Epifanio M. Longara against the testate estate of Fernando Hermosa, Sr. The claims are of three kinds, namely, P2,341.41 representing credit advances made to the intestate from 1932 to 1944, P12,924.12 made to his son Francisco Hermosa, and P3,772 made to his grandson, Fernando Hermosa, Jr. from 1945 to 1947, after the death of the intestate, which occurred in December, 1944. The claimant presented evidence and the Court of Appeals found, in accordance therewith, that the intestate had asked for the said credit advances for himself and for the members of his family "on condition that their payment should be made by Fernando Hermosa, Sr. as soon as he receive funds derived from the sale of his property in Spain." Claimant had testified without opposition that the credit advances were to be "payable as soon as Fernando Hermosa, Sr.'s property in Spain was sold and he receive money derived from the sale." The Court of Appeals held that payment of the advances did not become due until the administratrix received the sum of P20,000 from the buyer of the property. Upon authorization of the probate court in October, 1947, and the same was paid for subsequently. The Claim was filed on October 2, 1948. Issue: Whether or not obligation contracted by the intestate was subject to a condition exclusively dependent upon the will of the debtor (a condicion potestativa) and therefore null and void, in accordance with article 1115 of the old Civil Code. Ruling: A careful consideration of the condition upon which payment of the sums advanced was made to depend, "as soon as he (intestate) receive funds derived from the sale of his property in Spain," discloses the fact that the condition in question does not depend exclusively upon the will of the debtor, but also upon other circumstances beyond his power or control. If the condition were "if he decides to sell his house." or "if he likes to pay the sums advanced," or any other condition of similar import implying that upon him (the debtor) alone payment would depend, the condition would be protestativa, dependent exclusively upon his will or discretion. In the form that the condition was found by the Court of Appeals however the condition implies that the intestate had already decided to sell his house, or at least that he had made his creditors believe that he had done so, and that all that we needed to make his obligation (to pay his indebtedness) demandable is that the sale be consummated and the price thereof remitted to the islands. Note that if the intestate would prevent or would have prevented the consummation of the sale voluntarily, the condition would be or would have been deemed or considered complied with (article 1119, old Civil Code).The will to sell on the part of the intestate was, therefore, present in fact, or presumed legally to exist, although the price and other conditions thereof were still within his

discretion and final approval. But in addition of the sale to him (the intestate-vendor), there were still other conditions that had no concur to effect the sale, mainly that of the presence of a buyer, ready, able and willing to purchase the property under the conditions demanded by the intestate. Without such a buyer the sale could not be carried out or the proceeds thereof sent to the islands. It is evident, therefore sent to the islands. It is evident, therefore, that the condition of the obligation was not a purely protestative one, depending exclusively upon the will of the intestate, but a mixed one, depending partly upon the will of intestate and partly upon chance, i.e., the presence of a buyer of the property for the price and under the conditions desired by the intestate. The obligation is clearly governed by the second sentence of article 1115 of the old Civil Code (8 Manresa, 126). The condition is, besides, a suspensive condition, upon the happening of which the obligation to pay is made dependent. And upon the happening of the condition, the debt became immediately due and demandable.

NAZARIO TRILLANA, administrator-appellee, vs. QUEZON COLLEGE, INC., claimant-appellant.

Facts: Deceased Damasa Crisostomo sent a letter to defendant regarding to her subscription to shares of capital stock in QC, Inc. When Damasa died, QC, Inc. presented a claim in her testate proceeding for collection of sum, representing the value of subscription to capital stock. Damasa, in her letter: 1. did not enclose initial payment, 2. stated babayaran kong lahat pagkatapos manghuli ng isda Issue: Whether or not the obligation is null and void. Ruling: Indeed, the need for express acceptance on the part of the Quezon College, Inc. becomes the more imperative, in view of the proposal of Damasa Crisostomo to pay the value of the subscription after she has harvested fish, a condition obviously dependent upon her sole will and, therefore, facultative in nature, rendering the obligation void, under article 1115 of the old Civil Code which provides as follows: "If the fulfillment of the condition should depend upon the exclusive will of the debtor, the conditional obligation shall be void. If it should depend upon chance, or upon the will of a third person, the obligation shall produce all its effects in accordance with the provisions of this code." It cannot be argued that the condition solely is void, because it would have served to create the obligation to pay, unlike a case, exemplified by Osmea vs. Rama (14 Phil., 99), wherein only the potestative condition was held void because it referred merely to the fulfillment of an already existing indebtedness. In the case of Taylor vs. Uy Tieng Piao, et al. (43 Phil., 873, 879), this Court already held that "a condition, facultative as to the debtor, is obnoxious to the first sentence contained in article 1115 and renders the whole obligation void."

VISAYAN SAWMILL COMPANY, INC., and ANG TAY, petitioners, vs. THE HONORABLE COURT OF APPEALS and RJH TRADING, represented by RAMON J. HIBIONADA, proprietor, respondents. Facts: Herein plaintiff-appellee and defendants-appellants entered into a sale involving scrap iron located at the stockyard of defendant-appellant corporation at Cawitan, Sta. Catalina, Negros Oriental, subject to the condition that plaintiff-appellee will open a letter of credit in the amount of P250,000.00 in favor of defendant-appellant corporation on or before May 15, 1983. This is evidenced by a contract entitled `Purchase and Sale of Scrap Iron' duly signed by both parties. plaintiff-appellee through his man (sic), started to dig and gather and (sic) scrap iron at the defendant-appellant's (sic) premises, proceeding with such endeavor until May 30 when defendants-appellants allegedly directed plaintiff-appellee's men to desist from pursuing the work in view of an alleged case filed against plaintiff-appellee by a certain Alberto Pursuelo. This, however, is denied by defendants-appellants who allege that on May 23, 1983, they sent a telegram to plaintiff-appellee cancelling the contract of sale because of failure of the latter to comply with the conditions thereof. plaintiff-appellee sent a series of telegrams stating that the case filed against him by Pursuelo had been dismissed and demanding that defendants-appellants comply with the deed of sale, otherwise a case will be filed against them. In reply to those telegrams, defendants-appellants' lawyer, on July 20, 1983 informed plaintiff-appellee's lawyer that defendant-appellant corporation is unwilling to continue with the sale due to plaintiffappellee's failure to comply with essential pre-conditions of the contract. Issues: Whether or not the plaintiff had not complied with the conditions in the contract of sale Ruling: Even if one were to grant that there was a breach of the contract by the buyer, automatic rescission cannot take place because, as already (sic) stated, delivery had already been made. And, in cases where there has already been delivery, the intervention of the court is necessary to annul the contract. Both the trial court and the public respondent erred in the appreciation of the nature of the transaction between the petitioner corporation and the private respondent. To this Court's mind, what obtains in the case at bar is a mere contract to sell or promise to sell, and not a contract of sale. Article 1593 of the Civil Code provides: "ARTICLE 1593. With respect to movable property, the rescission of the sale shall of right take place in the interest of the vendor, if the vendee, upon the expiration of the period fixed for the delivery of the thing, should not have appeared to receive it, or, having appeared, he should not have tendered the price at the same time, unless a longer period has been stipulated for its payment."

Article 1191 provides: "ARTICLE 1191. 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 latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period."

CARMELITA LEAO, assisted by her husband GREGORIO CUACHON, petitioner, vs. COURT OF APPEALS and HERMOGENES FERNANDO, respondents. Facts: Hermogenes Fernando, as vendor and Carmelita Leao, as vendee executed a contract to sell involving a piece of land. In the contract, Leao bond herself to pay Fernando the sum of P107,750 as the total purchase price.Carmelita Leao made several payments in lump sum. Thereafter she constructed a house (P800K). Last payment she made was on April 1989. Trial Court rendered decision in an ejectment case filed by Fernando. Leao filed with the RTC for specific performance with preliminary injunction and assailing that for being violative of her right to due process being contrary to R.A 6552 regarding protection to buyers of lots on installments. According to Trial Court, transaction was an absolute sale, making Leao the owner upon actual & constructive delivery thereof. Fernando divested of ownership & cannot recover the same unless rescinded under Art. 1592 Issue: Whether the transaction between the parties in an absolute sale or a conditional sale. Whether there was a proper cancellation of the contract to sell. Ruling: 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 that 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 price. In the case at bar, petitioner Leao's non-payment of the installments after April 1, 1989, prevented the obligation of respondent Fernando to convey the property from arising. In fact, it brought into effect the provision of the contract on cancellation. Should petitioner Leao wish to reinstate the contract, she would have to update her accounts with respondent Fernando in accordance with the statement of account which amount was P183,687.00.