Anexo 3 KAIZEN
V. ADMINISTRACION DEL CAMBIO
1. Although there was no doubt that the buyer was no longer entitled to the benefits of the grace period under the Maceda Law, the court held that if the motion for the issuance of the writ of execution is considered as the notice of cancellation under the said law, Mclaughlin could cancel the contract only 30 days after the receipt of such notice.
2. The Court concluded that since the tender of payment of the balance of the purchase price was made within the 30 day period, this prevented the cancellation of the contract.
3.
Although the Maceda law seem to require rescission and cancellation to be both notarial act, the case would hold notarial act as merely applicable to rescission, whereas “notice of cancellation” need not be by notarial act.4. Even after the expiration of the grace period provided by the Law, the buyer still can prevent rescission or cancellation of the contract within the 30 day period when rescission or cancellation is to take effect.
5. Buyers have a jurisprudential grace period which allows them to prevent the rescission or cancellation of their contracts even after they have received the demand for rescission or notice of cancellation, by paying-up the unpaid balance prior to the expiration of the 30-day period provided in the Maceda law.
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.
Coronel vs CA
– Romulo Coronel et al executed a document entitled "Receipt of Downpayment" in favor of Ramona Alcaraz.
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It said, "Total amount P1.24M, P50k downpayment. Received from Ms. Ramona Alcaraz the sum of P50k. We bind ourselves to effect the transfer in our names from our deceased father the transfer certificate of title immediately upon receipt of the downpayment above-stated.On our presentation of the TCT already in our name, we will immediately execute the deed of absolute sale of said property and Miss Alcaraz shall immediately pay the balance of the P1.19M."
– On Jan 5, 1985, Ramona's mom paid already the P50k. On Feb 6, the property, originally registered in the name of Coronel's father, was transferred in their names.
– On Feb 18, the Coronels sold the property to Catalina Mabanag for P1.85M after Catalina had paid P300k.
– For this reason, the Coronels cancelled and rescinded the contract with Ramona by depositing the downpayment paid in the bank in trust for Ramona.
– Ramona and her mom filed a complaint for specific performance against the Coronels.
– But the Coronels still executed a Deed of Absolute Sale over the property in favor of Catalina.
– RTC: Coronel is ordered to execute in favor of Ramona a deed of absolute sale, and Ramona is to pay the balance. CA: Affirmed.
Issue: Contract to sell or contract of sale?
Held: Conditional contract of sale. Consummation is subject only to the successful transfer of the certificate of title from the name of Coronel’s father to their names.
DOCTRINE:
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Under the definition of a contract of sale (consent + determinate subject matter + price), a contract to sell is NOT a contract of sale, because the first essential element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered. In other words, the full payment of the purchase price partakes of a suspensive condition, the non-fullfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.–
Stated positively, upon fulfillment of the suspensive condition (full payment of the purchase price), the prospective seller’s obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable, as provided in Art 1479 (“A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.”). A contract to sell may thus be defined as a bilateral contract (the prospective seller, while expressly reserving ownership of the property despite delivery thereof to the buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition which is full payment of the purchase price.– In a contract to sell, upon fulfillment of the suspensive condition (full payment), ownership will NOT automatically transfer to the buyer, although the property may have been previously delivered to him.
The seller still has to convey title by entering into a contract of absolute sale.
In the present case: The agreement was NOT a contract to sell.
– The seller made no express reservation of ownership or title to the subject parcel of land.
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Plus, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (remember the certificate of title was NOT in their names) and NOT the full payment of the purchase price. The seller had already agreed to sell the lot, but it just so happened that the certificate of title was still in the name of their father. As soon as the new certificate of title is issued in their names, they were committed to immediately execute the deed of absolute sale. Only then will the obligation of the buyer to pay the remainder of the purchase price will arise.– Unlike in a contract to sell (where there is a condition of full payment by the buyer), the sellers here were the ones unable to enter into a contract of absolute sale by reason of the fact that the certificate was in the name of their father. It was the sellers who had the impediment. Besides, this condition was actually fulfilled when a new title was issued in their names.
– Art 1169 then applies: “In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him.”
– There is thus no legal basis to rescind the contract of sale.
– And the sale to Catalina was a double sale. Catalina registered it, so the second paragraph of Art 1544 applies (“Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property”). Catalina could NOT have been in good faith because a notice of lis pendens had been annotated in February when Catalina registered the sale in April.
CA judgment affirmed. Coronel ordered to executed deed of sale in favor of Ramona.
PNB vs CA (1996)
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Ong (buyer) and the spouses Robles (sellers) executed an Agreement of Purchase and Sale respecting 2 parcels of land in Quezon.○ The conditions of the contract: Purchase price of P2M, to be paid: initial payment of P600k (P100k was already paid, and P500 shall be paid directly by the buyer to BPI to answer for the loan of the sellers from BPI of P500k and the interest that may have accrued). P1.4M shall be paid in four quarterly installments. The land shall be delivered upon execution of the document.
– Ong took possession of the land together with the piggery, building, ricemill and house that was on it. He paid P100k, by depositing with UCPB, and deposited sums of money with BPI pursuant to the stipulations.
– For the P1.4M balance, Ong issued 4 postdated Metrobank checks. However, they were dishonored due to insufficient funds. He promised to replace the checks but failed. What’s more, it turned out he did not pay to BPI the full amount.
– The Robles demanded return of the properties, which went unheeded. They filed a case with the RTC for rescission and recovery of the properties with damages. While the case was pending, Ong constructed a fence of hollow blocks and expanded the piggery.
○ RTC: Ong is to return the land, and the Robles are to return the amount paid, but Ong is liable for damages. CA affirmed.
Issue: Can the contract entered into by the parties be validly rescinded under Art 1191?
Held: NO. Art 1191 does not apply. The contract is a contract to sell and not a contract of sale. Ong failed to pay the purchase price, so Robles had no obligation to deliver the land at all.
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The contract was actually a contract to sell, not a contract of sale. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold, while in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.–
Here, the Robles’ bound themselves to deliver a deed of absolute sale and clean title covering the lands upon full payment of the price of P2M. This promise to sell was subject to the fulfillment of the suspensive condition of full payment of the price. Since Ong failed to pay fully, the non-fulfillment of the condition rendered the contract to sell ineffective and without force and effect.– The breach in Art 1991 is the obligor’s failure to comply with an obligation already existing.
BUT in this case, failure to pay is not a breach but merely an event which prevents the vendor’s obligation to convey title from acquiring binding force. Hence, the agreement of the parties may be set aside, but not because of breach on the part of Ong. Rather, his failure to pay the price brought a situation which prevented the obligation of Robles from acquiring obligatory force.
CA decision affirmed.
BABASA V. CA
Roque vs Lapuz
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Roque and Lapuz entered into an agreement of sale covering lots in Quezon City. The price was to be payable in 120 monthly installments at the rate of P15-16 per square meter.– Lapuez paid to Roque P150 as deposit and the further sum of P740 to complete payment of four monthly installments.
– A subdivision plan of the lots was approved. (It became Rockville Subdivision) Lapuz then requested Roque that he be allowed to substitute the lots with other lots, which are corner lots. He proposed this modification of their contract to sell because he found it difficult to
pay the monthly installments on the former lots. It was agreed that for the new lots, the uniform rate would be P17 per square meter payable in 120 monthly installments.
– But Lapuz failed to make any more payments. He kept asking for extensions instead.
– Roque made a demand for Lapuz to vacate the lots and to pay rentals.
– Both parties agreed that the period to pay for the lots is 10 years, but they disagree on the mode of payment (Lapuz claims that he could pay the purchase price at any time within 10 years with a gradual proportionate discount on the price, while Roque claims that there was an agreement for monthly installments.
○ CFI: Ruled in favor of Roque. CA: Affirmed, but modified by granting Lapuz 90 days to pay the balance of the price in the amount of P11M.
Issue: Is Lapuz entitled to the benefits of the third paragraph of Art 1191, for the fixing of a period within which he should comply with what is incumbent upon him?
Held: NO.
– Art 1191: “… The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.”
– Art 1592: In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.
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In the present case, there is no writing or document evidencing the agreement originally entered into, nor the modified agreement. The absence of a formal deed of conveyance is a strong indication that the parties did NOT intend immediate transfer of ownership and title, but only a transfer after full payment of the price. In this case, the lots were delivered to Lapuz who took possession. BUT the property is registered under the LRA, so it is the act of registration of the Deed of Sale which could legally effect the transfer of title of ownership to the transferee. Hence, the contract between the petitioner and the respondent was a contract to sell (where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force).–
Jurisprudence (Luzon Brokerage) laid down the rule that Art 1592 does not apply to a contract to sell where title remains with the vendor until full payment of the price, as in the case at bar. Art 1191 is the applicable provision, where the obligee (Roque) elects to rescind or cancel his obligation to deliver ownership of the lots in question.– But Lapuz is not entitled to the benefits of paragraph 3. Having been in default, he is not entitled to the new period of 90 days. He refused to pay further installments, he also refused to ever sign a contract of sale, and he failed to pay anything after 26 YEARS! This is evident bad faith and malice, so he does not deserve the benefits of being granted an additional period.
In favor of Roque. Lapuz is not given any additional period to pay.
ANGELES V. CALASANZ
Parties may stipulate for cancellation of the contract by a party w/o judicial intervention / Breach must be substantial
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Ursula & Tomas Calasanz and Angeles & Juani entered into a contract to sell a piece of land in Cainta, rizal for 3,920. Angeles and Juani made a downpayment of 392 and were to pay in monthly installments. They paid such installments until July 1966, when their aggregate payment already amounted to 4,500+. On numerous occasions, Calasanz accepted delayed installment payments.– Calasanz demanded for past due accounts then cancelled the contract for failure to meet the subsequent payments.
– Angeles filed a case to compel Calasanz to execute the final deed of sale since they have already paid 4,500+.
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Calasanz: they had a right to cancel the contract as Angeles violated par. 6 of the contract to sell when they failed to pay the installment for August for more than 5 months. And even without this, they had a right to rescind under Art. 1191.○ Par. 6: that if Angeles failed to pay an installment, he would be given a grace period. And upon lapse of the 90 days from the expiration of the grace period, Calasanz may declare the contract cancelled…
– Angeles: such provision is contrary to law.
Was the contract to sell automatically and validly cancelled? NO
– Par. 6 of the contract to sell is valid. 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. However, the party who deems the contract violated may consider it rescinded, but proceeds at his own risk, as such is always subject to scrutiny and review by the proper court when the other party denies that the rescission is justified.
– HOWEVER, the general rule is that rescission will not be permitted for a slight or casual breach, but
– HOWEVER, the general rule is that rescission will not be permitted for a slight or casual breach, but