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Almocera vs.

Ong

Facts

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Johnny Ong tried to acquire from the defendants a townhome described as Unit No. 4
of Atrium Townhomes in Cebu City. As reflected in a Contract to Sell, the selling price of
the unit was P3,400,000.00 pesos - to which Johnny Ong was able to pay = 1.060M

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Prior to full payment - Respondent allege that petitioner and First Builders
concealed the fact that before and at the time of the perfection:

- property was mortgaged and encumbered to Land Bank
-construction of the house has long been delayed and remains unfinished
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Petitioner asserts that on March 20, 1995, First Builders Multi-purpose Coop. Inc.,
borrowed money in the amount of P500,000.00 from Tommy Ong, respondents brother.

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This money will be 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.

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When the project was under way, Tommy Ong wanted to buy another townhouse for his
brother, Johnny Ong, respondent herein, which then, the amount of P150,000.00 was
given as additional partial payment.

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January 10, 1997 - Tommy Ong identified Unit No. 4 as respondents chosen unit and
again tendered P350,000.00 as his third partial payment.

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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.

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Later, Tommy Ong informed then that he will go with Unit 5, but upon knowing that Unit
4 will be sold to another person for 4 million pesos, then the latter informed petitioners
that he will choose Unit 4 again.

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In trying to recover his downpayment, Tommy Ong filed a complaint for damaged with
the RTC of Cebu City


RTCs Decision - FOR RESPONDENT
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Petitioners acted in bad faith and did not comply fully with their obligations

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Petitioners failed to complete the construction of, as well as deliver to respondent, the
townhouse within six months from the signing of the contract.

-
Respondent was not informed by petitioners at the time of the perfection of their contract
that the subject townhouse was already mortgaged to LBP.


CAs Decision - FOR RESPONDENT
-
Petitioners incurred delay when they failed to deliver the townhouse unit to the
respondent within six months from the signing of the contract to sell.

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nonpayment of the balance of P2.4M by respondent to defendants was proper in light of
such delay and the fact that the property subject of the case was foreclosed and
auctioned.


ISSUES
-
WON petitioner has incurred delay in the fulfilment of his obligation.

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WON it was proper for respondent not to pay the remaining balance.


SC - AFFIRM ruling of CA


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Contract was a CONTRACT TO SELL - ownership of the townhouse has not passed to
respondent.

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Serrano v. Caguiat - contract to sell is akin to a conditional sale where the efficacy or
obligatory force of the vendors obligation to transfer title is subordinated to the
happening of a future and uncertain event, so that if the suspensive condition does not
take place, the parties would stand as if the conditional obligation had never
existed. The suspensive condition is commonly full payment of the purchase price.

-
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.

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The evidence adduced shows that petitioner and FBMC failed to fulfill their obligation --
to complete and deliver the townhouse within the six-month period.

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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.

-
The obligation of petitioner and FBMC which is to complete and deliver the townhouse
unit within the prescribed period, is determinative of the respondents obligation to pay
the balance of the contract price therefore they cannot insist that respondent comply
with his obligation. Where one of the parties to a contract did not perform the
undertaking to which he was bound by the terms of the agreement to perform, he is not
entitled to insist upon the performance of the other party.

-
Demand is not necessary in the instant case. Demand by the respondent would be
useless because the impossibility of complying with their (petitioner and FBMC)
obligation was due to their fault.

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Respondent is justified in refusing to pay the balance of the contract price.

-
He was never in possession of the townhouse unit and he can no longer be its owner
since ownership thereof has been transferred to a third person who was not a party to
the proceedings below.

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To allow this would result in the unjust enrichment of petitioner and FBMC.

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What is worse is the fact that petitioner and FBMC intentionally failed to inform
respondent that the subject townhouse which he was going to purchase was already
mortgaged to LBP at the time of the perfection of their contract.