1. SPS SERRANO AND HERRERA VS.

CAGUIAT actual or constructive delivery of the ownership of the evidencing sale under the contract and not the lease
G.R. No. 139173 property. Finally, should the transaction pushed of the property. Further, as found by the trial court,
through, Caguiat‘s payment of the remaining balance Joaquin Pacson’s non-signing of the second page of a
FACTS: would have been a suspensive condition since the carbon copy of the Deed of Conditional Sale was
transfer of ownership was subordinated to the through sheer inadvertence, since the original
Spouses Serrano agreed to sell in favor of respondent
happening of a future and uncertain event. contract[34] and the other copies of the contract were
Caguiat a parcel of land at ₱1,500.00 per square
all signed by Joaquin Pacson and the other parties to
meter. Caguiat paid a partial amount of ₱100, 000.00
the contract.
as evidenced by a receipt issued by petitioners
indicating therein respondent‘s promise to pay the 2. JULIE NABUS, MICHELLE NABUS and BETTY
On the second issue, petitioners contend that the
remaining balance. After making known of his TOLERO vs. JOAQUIN and JULIA PACSON
contract executed by the respondents and the
readiness to pay the balance, respondent requested G.R. No. 161318 November 25, 2009
Spouses Nabus was a contract to sell, not a contract
from the petitioners to prepare the Deed of Sale.
of sale. They allege that the contract was subject to
When petitioners cancelled the transaction and FACTS:
the suspensive condition of full payment of the
intended to return to respondent his partial payment, The spouses Bate and Julie Nabus were the owners
consideration agreed upon before ownership of the
Caguiat filed a complaint for specific performance and of parcels of land with a total area of 1,665 square
subject
damages. The Trial Court relying on Article 1482 of meters, situated in Pico, La Trinidad, Benguet, duly
property could be transferred to the vendees. Since
the Civil Code ruled that the partial payment made by registered in their names. The property was
respondents failed to pay the full amount of the
Caguiat of ₱ 100, 000.00 being an earnest money mortgaged by the Spouses Nabus to the Philippine
consideration, having an unpaid balance of
signified the perfection of the contract of sale. The National Bank (PNB), La Trinidad Branch, to secure a
P57,544.84, the obligation of the vendors to execute
Court of Appeals denied the petitioner‘s motion for loan in the amount of P30,000.00. On February 19,
the Deed of Absolute Sale in favor of respondents did
reconsideration in affirmation of the lower court‘s 1977, the Spouses Nabus executed a Deed of
not arise. Thus, the subsequent Deed of Absolute
decision. Conditional Sale [4] covering 1,000 square meters of
Sale executed in favor of Betty Tolero, covering the
the 1,665 square meters of land in favor of
same parcel of land was valid, even if Tolero was
respondents Spouses Pacson for a consideration of
aware of the previous deed of conditional sale.
P170,000.00, which was duly notarized on February
ISSUE: Whether or not the partial payment Ramos v. Heruela differentiates a contract of absolute
21, 1977.
constitutes an earnest money as manifested in Article sale and a contract of conditional sale as follows:
1482 of the Civil Code. Article 1458 of the Civil Code provides that a contract
The consideration was to be paid, thus:
of sale may be absolute or conditional. A contract of
sale is absolute when title to the property passes to
ISSUES:
the vendee upon delivery of the thing sold. A deed of
HELD: 1) Whether or not the Deed of Conditional Sale was
sale is absolute when there is no stipulation in the
converted into a contract of lease;
No. Article 1482 applies only to earnest money given contract that title to the property remains with the
2) Whether the Deed of Conditional Sale was a
in a contract of sale. It was apparent that the earnest seller until full payment of the purchase price. The
contract to sell or a contract of sale.
money in the case at bar was given in lieu of a sale is also absolute if there is no stipulation giving
contract to sell. Unlike in a contract of sale, the the vendor the right to cancel unilaterally the contract
ownership of the parcel of land was retained by the the moment the vendee fails to pay within a fixed
RULING: period. In a conditional sale, as in a contract to sell,
Spouses Serrano and shall only be passed to Caguiat As regards the first issue, the Deed of Conditional
upon full payment of the purchase price as evidenced ownership remains with the vendor and does not pass
Sale entered into by the Spouses Pacson and the to the vendee until full payment of the purchase price.
by the receipt. Relatively, no Deed of Sale has been Spouses Nabus was not converted into a contract of
executed as proof of the intention of the parties to The full payment of the purchase price partakes of a
lease. The 364 receipts issued to the Spouses suspensive condition, and non-fulfillment of the
immediately transfer the ownership of the parcel of Pacson contained either the phrase “as partial
land. Spouses Serrano also retained ownership of the condition prevents the obligation to sell from arising.
payment of lot located in Km. 4” or “cash vale” or [36]
certificate of title of the lot, thereby indicating no “cash vale (partial payment of lot located in Km. 4),”
 Under their Deed of Conditional Sale, the respondent respondent to pay the petitioner the unpaid balance of
is obliged to pay a lump sum of P1.2 Million in three the purchase price.
3. REYES VS TUPARAN fixed installments. Respondent, however defaulted in
the payment of the installments. To compensate for CA
FACTS:
her delayed payments, respondent agreed to pay The CA agreed with the RTC that the remedy of
Petitioner Mila Reyes owns a commercial building in
petitioner monthly interest. But again, respondent rescission could not apply because the respondent’s
Valenzuela City. Respondent, Victoria Tuparan leased
failed to fulfill this obligation. The petitioner further failure to pay the petitioner the balance of the
a space on said building for her pawnshop business.
alleged that despite her success in finding another purchase price in the total amount of ₱805,000.00
They then became close friends which led to the
buyer according to their conditional sale agreement, was not a breach of contract, but merely an event that
respondent in petitioner’s financing business. On June
respondent refused to cancel their transaction. The prevented the seller (petitioner) from conveying title to
20, 1988, Petitioner borrowed P2 Million from Farmers
respondent also neglected to renew the fire insurance the purchaser (respondent). Since respondent had
Savings and Loan Bank (FSL Bank) and mortgaged
policy of the buildings. already paid a substantial amount of the purchase
the building and lot (subject real properties). Reyes
  price, it was but right and just to allow her to pay the
decided to sell the property for P6.5 Million to liquidate
Respondent's Answer unpaid balance of the purchase price plus interest.
her loan and finance her business. Respondent
Respondent alleges that the deed of Conditional Sale SC
offered to conditionally buy the real properties for P4.2
of Real Property with Assumption of Mortgage was The SC agrees that the conditional sale is a contract
Million on installment basis without interest and to
actually a pure and absolute contract of sale with a to sell. The title and ownership of the subject
assume the bank loan. The conditions are the
term period. It could not be considered a conditional properties remains with the petitioner until the
following:
sale because the performance of the obligation respondent fully pays the balance of the purchase
 
therein did not depend upon a future and uncertain price and the assumed mortgage obligation.  Without
1.    Sale will be cancelled if the petitioner can find a
event. She also averred that she was able to fully pay respondent’s full payment, there can be no breach of
buyer of said properties for the amount of P6.5 Million
the loan and secure the release of the mortgage. contract to speak of because petitioner has no
within the next three months. All payments made by
Since she also paid more than the P4.2 Million obligation yet to turn over the title. The court agrees
the respondent to the petitioner and the bank will be
purchase price, rescission could not be resorted to that a substantial amount of the purchase price has
refunded to Tuparan with an additional 6% monthly
since the parties could no longer be restored to their already been paid. It is only right and just to allow
interest.
original positions. Tuparan to pay the said unpaid balance of the
2.    Petitioner Reyes will continue using the space
  purchase price to Reyes. Granting that a rescission
occupied by her drug store without rentals for the
ISSUE can be permitted under Article 1191, the Court still
duration of the installment payments.
Can the transaction or obligation be rescinded given cannot allow it for the reason that, considering the
3.    There will be a lease for 15 years in favor of
that the conditions were not satisfied? circumstances, there was only a slight or casual
Reyes for a monthly rental of P8, 000 after full
  breach in the fulfillment of the obligation. The court
payment has been made by the defendant.
RULING(S) considered fulfillment of 20% of the purchase price is
4.    The defendant will undertake the renewal and
RTC NOT a substantial breach. Unless the parties
payment of the fire insurance policies of the 2
The deed of conditional sale was a contract to sell. It stipulated it, rescission is allowed only when the
buildings, following the expiration of the current
was of the opinion that although the petitioner was breach of the contract is substantial and fundamental
policies, up to the time the respondent has fully paid
entitled to a rescission of the contract, it could not be to the fulfillment of the obligation. Whether the breach
the purchase price.
permitted because her non-payment in full of the is slight or substantial is largely determined by the
 
purchase price “may not be considered as substantial attendant circumstance. As for the 6% interest,
They presented the proposal for Tuparan to assume
and fundamental breach of the contract as to defeat petitioner failed to substantiate her claim that the
the mortgage to FSL Bank. The bank approved on the
the object of the parties in entering into the contract.” respondent committed to pay it. Petition is denied.
condition that the petitioner would remain as co-maker
The RTC believed that respondent showed her  
of the mortgage obligation.
sincerity and willingness to settle her obligation. RELEVANT JURISPRUDENCE
Hence, it would be more equitable to give respondent Art. 1458.  By the contract of sale, one of the
Petitioner's Contention
a chance to pay the balance plus interest within a contracting parties obligates himself to transfer the
given period of time. The court ordered the ownership of and to deliver a determinate thing, and
the other to pay therefore a price certain in money or was still in possession of his agent which was ordered Thereafter, the parties executed a Letter of Intent to
its equivalent. The essential elements of a contract of not to give Borres the title until payment of the Sell... and Letter of Intent to Purchase
sale are the following:  purchase price.
a) Consent or meeting of the minds, that is, consent to However, the intended sale was derailed due to
transfer ownership in exchange for the price; Prior to the payment of the price, Salazar called his UMCUPAI's inability to secure the loan from NHMF as
b) Determinate subject matter; and agent from US to cancel the sale. Now, Borres filed not all its members occupying Lot No. 300 were
c) Price certain in money or its equivalent. an action for specific performance to compel Salazar willing to join the undertaking.
In a contract to sell, the seller explicitly reserves the to give the title upon the payment of the price.
Lot No. 300 was subdivided into three (3) parts
transfer of title to the prospective buyer. The first
element (in the contract of sale) is missing. There is ISSUE: UMCUPAI purchased Lot No. 300-A
no consent yet to the transfer of ownership of the
property. (Nabus v Joaquin). The payment of the price Whether or not Salazar can be compelled to sell his Lot No. 300-B was constituted as road right of way
is a positive suspensive condition, failure of which property to Borres and donated by SFC to the local government.
is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming HELD: UMCUPAI failed to acquire Lot No. 300-C for lack of
effective. (Chua v CA) funds.
Art. 1191 does not apply in a contract to sell since the No. The real intention of the parties was that of a
breach contemplated in said article is an obligor’s contract to sell and not of a contract of sale. This UMCUPAI negotiated anew with SFC and was given
failure to comply with an existing obligation. It does intention was evidenced by the warranty and oral by the latter another three months to purchase Lot No.
not apply in the failure of a condition to make that evidence adduced in the trial. 300-C. However, despite the extension, the three-
obligation arise. month period lapsed with the sale not consummated...
Further, it was evident that Salazar, in continuously because UMCUPAI still failed to obtain a loan from
4. SALAZAR V CA GR 118203 refusing to give the title to Borres, shows his real NHMF.
intent not to transfer ownership of the said property
SFC sold Lot No. 300-C... to respondent BRYC-V
FACTS: until the full payment of the purchase price.
Development Corporation
Salazar met with Borres at a restaurant in Makati. UMCUPAI filed with the RTC a complaint against
They negotiated a sale regarding the property of 5. CASTILLO V REYES 539 SCRA 199 respondents SFC and BRYC seeking to annul the
Salazar. In the said meeting, the parties agreed that sale of Lot No. 300-C,... UMCUPAI alleged that the
Salazar will lend the title of his property to Borres so 6. UNITED MUSLIM V BRYC-V DEVELOPMENT
sale between the respondents violated its valid and
that the latter could secure a loan to be used as subsisting agreement with SFC... embodied in the
payment for the piece of land. Borres on the other Facts:
Letter of Intent.
hand executed a warranty that the title of the land will
Sea Foods Corporation... is the registered owner of
not pass unto her until the full payment of the According to UMCUPAI, the Letter of Intent granted it
Lot No. 300... petitioner United Muslim and Christian
purchase price. a prior, better, and preferred right over BRYC in the
Urban Poor Association, Inc.
purchase of Lot No. 300-C.
On the second meeting of the parties, Salazar refused an organization of squatters occupying Lot No. 300...
to sign the Deed of Absolute Sale prepared by Borres. initiated negotiations with SFC for the purchase BRYC said that UMCUPAI's complaint did not state a
The former stated that he changed his mind about thereof. cause of action since UMCUPAI had unequivocally
lending the title to Borres and will only do so if the recognized its ownership of Lot No. 300-C when
latter already pays the full purchase price. UMCUPAI expressed its intention... to buy the subject UMCUPAI likewise sent BRYC a Letter of Intent
property using the proceeds of its pending loan
application with National Home Mortgage Finance SFC countered that the Letter of Intent... is not, and
On their third meeting, when Salazar was in the
Corporation cannot be considered, a valid and subsisting contract
airport because he was going to the US, he reluctantly
of sale.
signed the Deed of Absolute Sale. However, the title
SFC maintained that the Letter of Intent... subject to a the promissor if the promise is supported by a Such second buyer cannot defeat the first buyer's
condition i.e., payment of the acquisition price, which consideration distinct from the price. title.
UMCUPAI failed to do when it did not obtain the loan
from NHMF. The case of Coronel v. Court of Appeals In the instant case, however, the parties executed a
Letter of Intent, which is neither a contract to sell nor a
RTC dismissed UMCUPAI's complaint. A contract to sell may thus be defined as a bilateral conditional contract of sale.
contract whereby the prospective seller, while
Letter of Intent was simply SFC's... declaration of expressly reserving the ownership of the subject Nowhere in the Letter of Intent does it state that SFC
intention to sell, and not a promise to sell, the subject property despite delivery thereof to the prospective relinquishes its title over the subject property, subject
lot. buyer, binds himself to sell the said property only to the condition of complete payment of the
exclusively to... the prospective buyer upon fulfillment purchase price; nor, at the least, that SFC, although
CA, on appeal, affirmed in toto the RTC's ruling. of the condition agreed upon, that is, full payment of expressly retaining ownership thereof, binds itself to
the purchase price. sell the... property exclusively to UMCUPAI.

A contract to sell... may not even be considered as a The Letter of Intent to Buy and Sell is just that - a
Issues:
conditional contract of sale where the seller may manifestation of SFC's intention to sell the property
IS THE LETTER OF INTENT TO SELL AND LETTER likewise reserve title to the property subject of the sale and UMCUPAI's intention to acquire the same.
OF INTENT TO BUY A BILATERAL RECIPROCAL until the fulfillment of a suspensive condition, because
in a conditional contract of sale, the... first element of It is a written statement expressing the intention of the
CONTRACT WITHIN THE MEANING OR
consent is present, although it is conditioned upon the parties to enter into a formal agreement especially a
CONTEMPLATION OF ARTICLE 1479, FIRST
happening of a contingent event which may or may business arrangement or transaction.
PARAGRAPH, CIVIL CODE OF THE PHILIPPINES?
not occur.
SFC expressly declared its "intention" to sell and
The prospective seller still has to... convey title to the UMCUPAI expressly declared its "intention" to buy
Ruling: prospective buyer by entering into a contract of subject property.
absolute sale.
We completely agree with the lower courts' rulings. A mere "intention" cannot give rise to an obligation to
In a contract to sell,... there being no previous sale of give, to do or not to do
UMCUPAI claims that the Letter of Intent did not the property, a third person buying such property
merely grant the parties the option to respectively sell A Letter of Intent is not a contract between the parties
despite the fulfillment of the suspensive condition
or buy the subject property. thereto... because it does not bind one party, with
such as the full payment of the purchase price, for
respect to the other, to give something, or to render
instance, cannot be deemed a buyer in bad faith and
Although not stated plainly, UMCUPAI claims that the some service
the prospective buyer cannot seek the... relief of
Letter of Intent is equivalent to a conditional... contract reconveyance of the property.
of sale subject only to the suspensive condition of Letter of Intent to Sell fell short of an "offer"
payment of the purchase price. contemplated in Article 1319 of the Civil Code
In a conditional contract of sale, however, upon the
because it... is not a certain and definite proposal to
fulfillment of the suspensive condition, the sale
The first paragraph of Article 1479 contemplates the make a contract but merely a declaration of SFC's
becomes absolute and this will definitely affect the
bilateral relationship of a contract to sell as intention to enter into a contract.
seller's title thereto.
distinguished from a contract of sale which may be
absolute or conditional under Article 1458 UMCUPAI's declaration of intention to buy is also not
Applying Article 1544 of the Civil Code, such second
certain and definite as it is subject to the condition that
buyer of the property who may have had actual or
Art. 1479. A promise to buy and sell a determinate UMCUPAI shall endeavor to raise funds... to acquire
constructive knowledge of... such defect in the seller's
thing for a price certain is reciprocally demandable. subject land.
title, or at least was charged with the obligation to
An accepted unilateral promise to buy or to sell a discover such defect, cannot be a registrant in good The Letter of Intent/Agreement is not an "option
determinate thing for a price certain is binding upon faith. contract" because aside from the fact that it is merely
a declaration of intention to sell and to buy subject to award of Lot 4 to the spouses Mendoza for the latter‘s board of directors acted within its rights in withdrawing
the condition that UMCUPAI shall raise the necessary failure neither to pay its price nor to make a 20% initial the tentative award.
funds to pay the price of the land, and does not deposit, and re-awarded said lot jointly and in equal
contain a... binding promise to sell and buy, it is not shares to Miguela Sto. Domingo, Enrique Esteban, "The contract of sale is perfected at the moment there
supported by a distinct consideration distinct from the Virgilio Pinzon, Leonardo Redublo and Jose is a meeting of minds upon the
price of the land intended to be sold and to be bought Fernandez, all of whom made the initial deposit. The
thing which is the object of the contract and upon the
x x x No option was granted to UMCUPAI under the subdivision of Lot 4 into five lots was later approved
price. From that moment, the parties may reciprocally
Letter of Intent/Agreement to buy subject land to the by the Court council and the Bureau of Lands.
demand performance, subject to the law governing
exclusion of all... others within a fixed period nor was
The spouses Mendoza asked for reconsideration and the form of contracts." (Art. 1475, Civil Code).
SFC bound under said Agreement to Sell exclusively
to UMCUPAI only the said land within the fixed period. for the withdrawal of the said 2nd

Neither can the Letter of Intent/Agreement be award to Sto. Domingo and four others, and at the
8. LIM V CA 182 SCRA 118
considered a bilateral reciprocal contract to sell and to same time filed an action for specific performance
buy contemplated under Article 1479 of the Civil Code plus damages. The trial court sustained the award but FACTS:
which is reciprocally demandable. the Court of Appeals reversed the said decision,
declared void the re-award to Sto. Domingo and four
The Letter of Intent/Agreement does not contain a others, and ordered the PHHC to sell Lot 4 with an Private respondent entered into a contract of lease
PROMISE to sell and to buy subject... property. area of 2,608.7 square meters at P21.00 per square with petitioner for a period of three (3) years, that is,
meter to spouses Mendoza. from 1976 to 1979. After the stipulated term expired,
While UMCUPAI succeeded in raising funds to private respondent refused to vacate the premises,
acquire a portion of Lot No. 300-A, it failed to raise ISSUE: hence, petitioner filed an ejectment suit against the
funds to pay for Lot No. 300-C. former in the City Court of Manila. The case was
Whether or not there was a perfected sale of Lot 4, terminated by a judicially compromise agreement. On
petition is hereby DENIED. with the reduced area, to the 1985 Dy, informed Lim of his intention to renew the
lease up to 1988, Lim did not agree to the renewal.
Mendoza‘s which they can enforce against the PHHC
Another ejectment suit was filed by Lim against Dy
by an action for specific performance.
7. PEOPLE'S HOMESITE & HOUSING CORP. VS. due to the failure to vacate the premises. The RTC
COURT OF APPEALS December 26, 1984 HELD: dismissed the case then later affirmed by the CA for
the following reasons: (1) the stipulation in the
FACTS: We hold that there was no perfected sale of Lot 4. It compromise agreement which allows the lessee
was conditionally or contingently (Benito Dy) to stay on the premises as long as he
The PHHC board of directors on February 18, 1960 needs it and can pay rents is valid, being a resolutory
passed Resolution No. 513 wherein it awarded to the Mendoza‘s subject to the approval by condition, and therefore beyond the ambit of art 1308
the city council of the proposed consolidation of the NCC; and (2) the compromise agreement has
stated "that subject to the approval of the Court subdivision plan and the approval of the award by the the effect of res judicata.
Council of the PHHC‘s consolidation subdivision plan, valuation committee and higher authorities.
awarding Lot 4 with an area of 4,182.2 square meters
located at Diliman, Court City to respondents Rizalino When the plan with the area of Lot 4 reduced to ISSUE:
and Adelaida Mendoza (spouses Mendoza) at a price 2,608.7 square meters was approved,
of twenty-one pesos (P21.00) per square meter. The Whether or not the stipulation in the compromise
City Council disapproved the consolidation the Mendoza‘s should have manifested in writing their
agreement which allows the lessee to stay on the
subdivision plan in August 1960 but approved in acceptance of the award for the purchase of Lot 4 just
premises as long as he needs it and can pay rents is
February 1964 its revised version where Lot 4 was to show that they were still interested in its purchase
valid?
reduced to an area of 2,608.7 square meters. Then in although the area was reduced and to obviate ally
October 1965, the PHHC withdrew the tentative doubt on the matter. They did not do so. The PHHC
RULING: obligation, the sale was deemed to have been
cancelled.
No, the stipulation in the compromise agreement is Issue:
not valid. The statement “for as long as the defendant
needed the premises and can meet and pay said Whether the parties entered into a contract to sell.
increases” is a purely potestative condition because it
leaves the effectivity and enjoyment of leasehold Ruling: NO. The plain and clear tenor of the deed of
rights to the sole and exclusive will of the lessee. sale and Pingol’s failure to reserve his title lead to the
conclusion that the deed embodies a contract of sale.
A deed of sale is absolute in nature although
denominated as a "Deed of Conditional Sale" where
there is no stipulation in the deed that title to the
9. PINGOL V CA 226 SCRA 118 property sold is reserved in the seller until the full
payment of the price, nor is there a stipulation giving
A deed of sale is absolute in nature although the vendor the right to unilaterally resolve the contract
denominated as a "Deed of Conditional Sale" where the moment the buyer fails to pay within a fixed
there is no stipulation in the deed that title to the period. The deed of sale in this case contains neither
property sold is reserved in the seller until the full stipulation. In addition, the contract here being one of
payment of the price, nor is there a stipulation giving absolute sale, the ownership of the subject lot was
the vendor the right to unilaterally resolve the contract transferred to the buyer upon the actual and
the moment the buyer fails to pay within a fixed constructive delivery thereof. The constructive
period. Additionally, in a contract of sale, the title delivery of the subject lot was made upon the
passes to the vendee upon the delivery of the thing execution of the deed of sale while the actual delivery
sold, whereas in a contract to sell, by agreement, was effected when the heirs took possession of and
ownership is reserved in the vendor and is not to pass constructed a house
until the full payment of the price.

Facts:

Vicente Pingol was the owner of the subject lot. He

executed in favor of Francisco Donasco a deed of
absolute sale under which the purchase price will be
paid in installments. Donasco immediately took
possession of the subject lot and constructed a house
thereon. He started paying the monthly installments
but was able to pay only for up to two years. When he
died, the subject house and lot remained in the
possession of his heirs. Now, the heirs filed an action
for Specific Performance against spouses Pingol, and
prayed that the defendants be ordered to accept the
payment of the balance for the agreed price on the lot.
In their answer, spouses Pingol argued that the deed
of sale embodied a conditional contract of sale as the
consideration is to be paid on installment basis, and
considering the breach by Francisco of his contractual