GENERAL PRINCIPLES:

REYES VS TUPARAN
FACTS
Petitioner Mila Reyes owns a three-storey commercial building in
Valenzuela City. Respondent, Victoria Tuparan leased a space on
said building for a monthly rental of P4, 000. Aside from being a
tenant, respondent also invested in petitioner's financing business.
On June 20, 1988, Petitioner borrowed P2 Million from Farmers
Savings and Loan Bank (FSL Bank) and mortgaged the building and
lot (subject real properties). Reyes decided to sell the property for
P6.5 Million to liquidate her loan and finance her business.
Respondent offered to conditionally buy the real properties for P4.2
Million on installment basis without interest and to assume the bank
loan. The conditions are the following:
1. Sale will be cancelled if the petitioner can find a buyer of said
properties for the amount of P6.5 Million within the next three
months. All payments made by the respondent to the petitioner and
the bank will be refunded to Tuparan with an additional 6% monthly
interest.
2. Petitioner Reyes will continue using the space occupied by her
drug store without rentals for the duration of the installment
payments.
3. There will be a lease for 15 years in favor of Reyes for a monthly
rental of P8, 000 after full payment has been made by the
defendant.
4. The defendant will undertake the renewal and payment of the
fire insurance policies of the 2 buildings, following the expiration of
the current policies, up to the time the respondent has fully paid the
purchase price.
They presented the proposal for Tuparan to assume the mortgage to
FSL Bank. The bank approved on the condition that the petitioner
would remain as co-maker of the mortgage obligation.
Petitioner's Contention
Under their Deed of Conditional Sale, the respondent is obliged to
pay a lump sum of P1.2 Million in three fixed installments.
Respondent, however defaulted in the payment of the installments.
To compensate for her delayed payments, respondent agreed to pay
petitioner monthly interest. But again, respondent failed to fulfill
this obligation. The petitioner further alleged that despite her
success in finding another buyer according to their conditional sale
agreement, respondent refused to cancel their transaction. The
respondent also neglected to renew the fire insurance policy of the
buildings.
Respondent's Answer
Respondent alleges that the deed of Conditional Sale of Real
Property with Assumption of Mortgage was actually a pure and
absolute contract of sale with a term period. It could not be
considered a conditional sale because the performance of the
obligation therein did not depend upon a future and uncertain
event. She also averred that she was able to fully pay the loan and
secure the release of the mortgage. Since she also paid more than
the P4.2 Million purchase price, rescission could not be resorted to
since the parties could no longer be restored to their original
positions.
ISSUE
Can the transaction or obligation be rescinded given that the
conditions were not satisfied?
RULING(S)

RTC
The deed of conditional sale was a contract to sell. It was of the
opinion that although the petitioner was entitled to a rescission of
the contract, it could not be permitted because her non-payment in
full of the purchase price may not be considered as substantial and
fundamental breach of the contract as to defeat the object of the
parties in entering into the contract. The RTC believed that
respondent showed her sincerity and willingness to settle her
obligation. Hence, it would be more equitable to give respondent a
chance to pay the balance plus interest within a given period of
time. The court ordered the respondent to pay the petitioner the
unpaid balance of the purchase price.
CA
The CA agreed with the RTC that the remedy of rescission could not
apply because the respondents failure to pay the petitioner the
balance of the purchase price in the total amount of 805,000.00
was not a breach of contract, but merely an event that prevented
the seller (petitioner) from conveying title to the purchaser
(respondent). Since respondent had already paid a substantial
amount of the purchase price, it was but right and just to allow her
to pay the unpaid balance of the purchase price plus interest.
SC
The SC agrees that the conditional sale is a contract to sell. The title
and ownership of the subject properties remains with the petitioner
until the respondent fully pays the balance of the purchase price and
the assumed mortgage obligation. Without respondents full
payment, there can be no breach of contract to speak of because
petitioner has no obligation yet to turn over the title. The court
agrees that a substantial amount of the purchase price has already
been paid. It is only right and just to allow Tuparan to pay the said
unpaid balance of the purchase price to Reyes. Granting that a
rescission can be permitted under Article 1191, the Court still cannot
allow it for the reason that, considering the circumstances, there
was only a slight or casual breach in the fulfillment of the obligation.
The court considered fulfillment of 20% of the purchase price is NOT
a substantial breach. Unless the parties stipulated it, rescission is
allowed only when the breach of the contract is substantial and
fundamental to the fulfillment of the obligation. Whether the breach
is slight or substantial is largely determined by the attendant
circumstance. As for the 6% interest, petitioner failed to
substantiate her claim that the respondent committed to pay it.
Petition is denied.
RELEVANT JURISPRUDENCE
Art. 1458. By the contract of sale, one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefore a price certain in
money or its equivalent. The essential elements of a contract of sale
are the following:
a) Consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
In a contract to sell, the seller explicitly reserves the transfer of title
to the prospective buyer. The first element (in the contract of sale) is
missing. There is no consent yet to the transfer of ownership of the
property. (Nabus v Joaquin). The payment of the price is a positive
suspensive condition, failure of which is not a breach but an event
that prevents the obligation of the vendor to convey title from
becoming effective. (Chua v CA)
Art. 1191 does not apply in a contract to sell since the breach
contemplated in said article is an obligors failure to comply with an
existing obligation. It does not apply in the failure of a condition to
make that obligation arise.

STARBRIGHT SALES ENTERPRISES, INC., PETITIONER, VS. PHILIPPINE

REALTY CORPORATION, MSGR. DOMINGO A. CIRILOS, TROPICANA
PROPERTIES AND DEVELOPMENT CORPORATION AND STANDARD
REALTY CORPORATION, RESPONDENTS.
[G.R. No. 177936, January 18, 2012]

the letter of agreement between SSE and Msgr. Cirilos. SSE cannot
revert to the original terms stated in Licup's letter to Msgr. Cirilos
since it was not privy to such contract. The parties to it were Licup
and Msgr. Cirilos. Under the principle of relativity of contracts,
contracts can only bind the parties who entered into it.

ABAD, J.:

PRICE

Facts:
On April 17, 1988 Ramon Licup wrote Msgr. Domingo A. Cirilos,
offering to buy three contiguous parcels of land in Paraaque that
The Holy See and Philippine Realty Corporation (PRC) owned for
P1,240.00 per square meter. Licup accepted the responsibility for
removing the illegal settlers on the land and enclosed a check for
P100,000.00 to "close the transaction. He undertook to pay the
balance of the purchase price upon presentation of the title for
transfer and once the property has been cleared of its occupants.
Msgr. Cirilos, representing The Holy See and PRC, signed his name
on the conforme portion of the letter and accepted the check. But
the check could not be encashed due to Licup's stop-order payment.
Licup wrote Msgr. Cirilos on April 26, 1988, requesting that the titles
to the land be instead transferred to petitioner Starbright Sales
Enterprises, Inc. (SSE). He enclosed a new check for the same
amount. SSE's representatives, Mr. and Mrs. Cu, did not sign the
letter.
On November 29, 1988 Msgr. Cirilos wrote SSE, requesting it to
remove the occupants on the property and, should it decide not to
do this, Msgr. Cirilos would return to it the P100,000.00 that he
received. On January 24, 1989 SSE replied with an "updated
proposal. It would be willing to comply with Msgr. Cirilos' condition
provided the purchase price is lowered to P1,150.00 per square
meter.
On January 26, 1989 Msgr. Cirilos wrote back, rejecting the "updated
proposal." He said that other buyers were willing to acquire the
property on an "as is, where is" basis at P1,400.00 per square meter.
He gave SSE seven days within which to buy the property at
P1,400.00 per square meter, otherwise, Msgr. Cirilos would take it
that SSE has lost interest in the same. He enclosed a check for
P100,000.00 in his letter as refund of what he earlier received. The
property was eventually sold to Tropicana Properties and then sold
Standard Realty.
Issue:
Whether or not there is a perfected contract existing between SSE
and land owners, represented by Msgr. Cirilos.

DEL PRADO VS CABALLERO

Ruling:
Three elements are needed to create a perfected contract: 1) the
consent of the contracting parties; (2) an object certain which is the
subject matter of the contract; and (3) the cause of the obligation
which is established. Under the law on sales, a contract of sale is
perfected when the seller, obligates himself, for a price certain, to
deliver and to transfer ownership of a thing or right to the buyer,
over which the latter agrees. From that moment, the parties may
demand reciprocal performance.
The Court believes that the letter between Licup and Msgr. Cirilos,
the representative of the property's owners, constituted a perfected
contract. However, when Licup ordered to stop his deposit and
instead transferred the property to SSE, a novation took place.
Novation serves two functions - one is to extinguish an existing
obligation, the other to substitute a new one in its place - requiring
concurrence of four requisites: 1) a previous valid obligation; 2) an
agreement of all parties concerned to a new contract; 3) the
extinguishment of the old obligation; and 4) the birth of a valid new
obligation. In the given case, it was noted that the signatures
present during Licup and Msgr. Cirilos agreement are not present in

Several parcels of land, including Cadastral Lot No. 11909, were

adjudicatedin favor of Spouses Antonio and Leonarda Caballero in
1985; hence, the courtordered for the issuance of the decree of
registration and the corresponding titles of the lots in favor of the
Caballeros.On June 11, 1990, Spouses Caballero sold to Carmen del
Prado, Cadastral LotNo. 11909 on the basis of the tax declaration
covering the property. On March 20,1991, petitioner filed in the
same cadastral proceedings a "Petition for Registrationof Document
Under PD 1529" in order that a certificate of title be issued in
hername, covering the whole Lot No. 11909, which is in excess of
the allotted area tobe sold. In the petition, she alleged that the
tenor of the instrument of saleindicated that the sale was for a lump
sum, in which case, the vendor was bound todeliver all that was
included within said boundaries even when it exceeded the
areaspecified in the contract.
Issue
WON the petitioners recourse, by filing the petition for registration
in thesame cadastral case, was proper.
Ruling
Petitioners recourse, by filing the petition for registration in the
samecadastral case, was improper. It is a fundamental principle in
land registration that acertificate of title serves as evidence of an
indefeasible and incontrovertible title tothe property in favor of the
person whose name appears therein. Suchindefeasibility
commences after one year from the date of entry of the decree of
registration. Inasmuch as the petition for registration of document
did not interruptthe running of the period to file the appropriate
petition for review and consideringthat the prescribed one-year
period had long since expired, the decree of registration, as well as
the certificate of title issued in favor of respondents, hadbecome
incontrovertible.In addition, what really defines a piece of ground is
not the area, calculatedwith more or less certainty, mentioned in its
description, but the boundaries thereinlaid down, as enclosing the
land and indicating its limits. However, numerical dataare not the
sole gauge of unreasonableness of the excess or deficiency in area.
Inthe instant case, the parties agreed on the purchase price of P
40,000.00 for apredetermined area of 4,000 sq m, with the specified
boundaries. Clearly, thediscrepancy of 10,475 sq m cannot be
considered a slight difference in quantity. Itis not a reasonable
excess or deficiency that should be deemed included in thedeed of
sale
PROHIBITION
FUENTES vs ROCA
FACTS: On, Oct 11, 1982, Tarciano Roca bought a 358-square meter
lot in Zambales from his mother. Six years later in 1988, Tarciano
offered to sell the lot to the petitioners Fuentes spouses through the
help of Atty. Plagata who would prepare the documents and
requirements to complete the sale. In the agreement between
Tarciano and Fuentes spouses there will be a Php 60,000 down
payment and Php 140,000 will be paid upon the removal of Tarciano
of certain structures on the land and after the consent of the

estranged wife of Tarciano, Rosario, would be attained. Atty. Plagata

thus went about to complete such tasks and claimed that he went to
Manila to get the signature of Rosario but notarized the document
at Zamboanga . The deed of sale was executed January 11, 1989. As
time passed, Tarciano and Rosario died while the Fuentes spouses
and possession and control over the lot. Eight years later in 1997,
the children of Tarciano and Rosario filed a case to annul the sale
and reconvey the property on the ground that the sale was void
since the consent of Rosario was not attained and that Rosarios
signature was a mere forgery. The Fuentes spouses claim that the
action has prescribed since an action to annul a sale on the ground
of fraud is 4 years from discovery.

property to their heirs, namely, the Rocas. As lawful owners, the

Rocas had the right, under Article 429 of the Civil Code, to exclude
any person from its enjoyment and disposal.
OBLIGATION OF THE VENDOR
HEIRS OF PAULINO ATIENZA versus DOMINGO P. ESPIDOL
G.R. No. 180665, Aug. 11,2010

Facts:
The RTC ruled in favor of the Fuentes spouses ruling that there was
no forgery, that the testimony of Atty. Plagata who witnessed the
signing of Rosario must be given weight, and that the action has
already prescribed.
On the other hand, the CA reversed the ruling of the CA stating that
the action has not prescribed since the applicable law is the 1950
Civil Code which provided that the sale of Conjugal Property without
the consent of the other spouse is voidable and the action must be
brought within 10 years. Given that the transaction was in 1989 and
the action was brought in 1997 hence it was well within the
prescriptive period.
ISSUES: 1. Whether or not Rosarios signature on the document of
consent to her husband Tarcianos sale of their conjugal land to the
Fuentes spouses was forged;

This case is about the legal consequences when a buyer in a contract

to sell on installment fails to make the next payments that he
promised.

On August 12, 2002 the Atienzas and respondent Domingo P. Espidol

entered into a contract called Kasunduan sa Pagbibili ng Lupa na
may Paunang-Bayad (contract to sell land with a down payment)
covering the property. They agreed on a price, payable in three
installments.

2. Whether or not the Rocas action for the declaration of nullity of

that sale to the spouses already prescribed; and

When the Atienzas demanded payment of the second installment of

P1,750,000.00 in December 2002, however, respondent Espidol
could not pay it. Claiming that Espidol breached his obligation, on
February 21, 2003 the Atienzas filed a complaint for the annulment
of their agreement with damages before the Regional Trial Court
(RTC)of Cabanatuan City in a Civil Case.

3. Whether or not only Rosario, the wife whose consent was not
had, could bring the action to annul that sale.

Issue:

RULING: 1. The SC ruled that there was forgery due to the difference
in the signatures of Rosario in the document giving consent and
another document executed at the same time period. The SC noted
that the CA was correct in ruling that the heavy handwriting in the
document which stated consent was completely different from the
sample signature. There was no evidence provided to explain why
there was such difference in the handwriting.
2. Although Tarciano and Rosario was married during the 1950 civil
code, the sale was done in 1989, after the effectivity of the Family
Code. The Family Code applies to Conjugal Partnerships already
established at the enactment of the Family Code. The sale of
conjugal property done by Tarciano without the consent of Rosario
is completely void under Art 124 of the family code. With that, it is a
given fact that assailing a void contract never prescribes. On the
argument that the action has already prescribed based on the
discovery of the fraud, that prescriptive period applied to the
Fuentes spouses since it was them who should have assailed such
contract due to the fraud but they failed to do so. On the other
hand, the action to assail a sale based on no consent given by the
other spouse does not prescribe since it is a void contract.
3. It is argued by the Spouses Fuentes that it is only the spouse,
Rosario, who can file such a case to assail the validity of the sale but
given that Rosario was already dead no one could bring the action
anymore. The SC ruled that such position is wrong since as stated
above, that sale was void from the beginning. Consequently, the
land remained the property of Tarciano and Rosario despite that
sale. When the two died, they passed on the ownership of the

Whether or not the Atienzas were entitled to the cancellation of the

contract to sell they entered into with respondent Espidol on the
ground of the latters failure to pay the second installment when it
fell due.

Held:

The Court declares the Kasunduan sa Pagbibili ng Lupa na may

Paunang-Bayad between petitioner Heirs of Paulino Atienza and
respondent Domingo P. Espidol dated August 12, 2002 cancelled and
the Heirs obligation under it non-existent. Regarding the right to
cancel the contract for non-payment of an installment, there is need
to initially determine if what the parties had was a contract of sale
or a contract to sell. In a contract of sale, the title to the property
passes to the buyer upon the delivery of the thing sold. In a contract
to sell, on the other hand, the ownership is, by agreement, retained
by the seller and is not to pass to the vendee until full payment of
the purchase price. In the first place, since Espidol failed to pay the
installment on a day certain fixed in their agreement, the Atienzas
can afterwards validly cancel and ignore the contract to sell because
their obligation to sell under it did not arise. Since the suspensive
condition did not arise, the parties stood as if the conditional
obligation had never existed.

Delivery
EQUATORIAL REALTY DEVELOPMENT, INC., vs. MAYFAIR THEATER,
INC.
Posted on September 21, 2013 by winnieclaire
Standard
[G.R. No. 133879. November 21, 2001.]
FACTS:
Mayfair Theater, Inc. was a lessee of portions of a building owned by
Carmelo & Bauermann, Inc. Their lease contracts of 20 years (1.
which covered a portion of the second floor and mezzanine of a twostorey building with about 1,610 square meters of floor area, which
respondent used as a movie house known as Maxim Theater 2. two
store spaces on the ground floor and the mezzanine, with a
combined floor area of about 300 square meters also used as a
movie house Miramar Theater)
Lease contracts contained a provision granting Mayfair a right of first
refusal to purchase the subject properties.
However, before the contracts ended, the subject properties were
sold for P11,300 by Carmelo to Equatorial Realty Development, Inc.
This prompted Mayfair to file a case for the annulment of the Deed
of Absolute Sale between Carmelo and Equatorial, specific
performance and damages.
In 1996, the Court ruled in favor of Mayfair.
Barely five months after Mayfair had submitted its Motion for
Execution, Equatorial filed an action for collection of sum of money
against Mayfair claiming payment of rentals or reasonable
compensation for the defendants use of the subject premises after
its lease contracts had expired.
Maxim Theater contract expired on May 31, 1987, while the Lease
Contract covering the premises occupied by Miramar Theater lapsed
on March 31, 1989.
The lower court debunked the claim of Equatorial for unpaid back
rentals, holding that the rescission of the Deed of Absolute Sale in
the mother case did not confer on Equatorial any vested or residual
propriety rights, even in expectancy.
It further ruled that the Court categorically stated that the Deed of
Absolute Sale had been rescinded subjecting the present complaint
to res judicata.
Hence, Equatorial filed the present petition.

ISSUE: whether Equatorial was the owner of the subject property

and could thus enjoy the fruits or rentals therefrom
HELD: NO.
CIVIL LAW; PROPERTY; CIVIL FRUIT OF OWNERSHIP; RENTALS.
Rent is a civil fruit that belongs to the owner of the property
producing it by right of accession. Consequently and ordinarily, the
rentals that fell due from the time of the perfection of the sale to
petitioner until its rescission by final judgment should belong to the
owner of the property during that period.
SALES; OWNERSHIP OF THE THING SOLD IS TRANSFERRED, NOT BY
CONTRACT ALONE, BUT BY TRADITION OR DELIVERY. By a
contract of sale, one of the contracting parties obligates himself to
transfer ownership of and to deliver a determinate thing and the
other to pay therefor a price certain in money or its equivalent.
Ownership of the thing sold is a real right, which the buyer acquires
only upon delivery of the thing to him in any of the ways specified
in Articles 1497 to 1501, or in any other manner signifying an
agreement that the possession is transferred from the vendor to the

vendee. This right is transferred, not by contract alone, but by

tradition or delivery. Non nudis pactis sed traditione dominia rerum
transferantur.
THERE IS DELIVERY WHEN THE THING SOLD IS PLACED UNDER THE
CONTROL AND POSSESSION OF THE VENDEE. [T]here is said to be
delivery if and when the thing sold is placed in the control and
possession of the vendee. Thus, it has been held that while the
execution of a public instrument of sale is recognized by law as
equivalent to the delivery of the thing sold, such constructive or
symbolic delivery, being merely presumptive, is deemed negated by
the failure of the vendee to take actual possession of the land sold.
Delivery has been described as a composite act, a thing in which
both parties must join and the minds of both parties concur. It is an
act by which one party parts with the title to and the possession of
the property, and the other acquires the right to and the possession
of the same. In its natural sense, delivery means something in
addition to the delivery of property or title; it means transfer of
possession. In the Law on Sales, delivery may be either actual or
constructive, but both forms of delivery contemplate the absolute
giving up of the control and custody of the property on the part of
the vendor, and the assumption of the same by the vendee.
ID.; NOT PRESENT IN CASE AT BAR. [T]heoretically, a rescissible
contract is valid until rescinded. However, this general principle is
not decisive to the issue of whether Equatorial ever acquired the
right to collect rentals. What is decisive is the civil law rule that
ownership is acquired, not by mere agreement, but by tradition or
delivery. Under the factual environment of this controversy as found
by this Court in the mother case, Equatorial was never put in actual
and effective control or possession of the property because of
Mayfairs timely objection.
ID.; EXECUTION OF CONTRACT OF SALE AS FORM OF CONSTRUCTIVE
DELIVERY HOLDS TRUE ONLY WHEN THERE IS NO IMPEDIMENT THAT
MAY PREVENT THE PASSING OF THE PROPERTY FROM THE VENDOR
TO THE VENDEE. From the peculiar facts of this case, it is clear
that petitioner never took actual control and possession of the
property sold, in view of respondents timely objection to the sale
and the continued actual possession of the property. The objection
took the form of a court action impugning the sale which, as we
know, was rescinded by a judgment rendered by this Court in the
mother case. It has been held that the execution of a contract of sale
as a form of constructive delivery is a legal fiction. It holds true only
when there is no impediment that may prevent the passing of the
property from the hands of the vendor into those of the vendee.
When there is such impediment, fiction yields to reality the
delivery has not been effected. Hence, respondents opposition to
the transfer of the property by way of sale to Equatorial was a
legally sufficient impediment that effectively prevented the passing
of the property into the latters hands.
ID.; EXECUTION OF PUBLIC INSTRUMENT GIVES RISE ONLY TO A
PRIMA FACIE PRESUMPTION OF DELIVERY. The execution of a
public instrument gives rise, . . . only to a prima facie presumption of
delivery. Such presumption is destroyed when the instrument itself
expresses or implies that delivery was not intended; or when by
other means it is shown that such delivery was not effected,
because a third person was actually in possession of the thing. In the
latter case, the sale cannot be considered consummated.
ID.; OBLIGATIONS AND CONTRACTS; RESCISSIBLE CONTRACTS; NOT
ONLY THE LAND AND BUILDING SOLD SHALL BE RETURNED TO THE
SELLER BUT ALSO THE RENTAL PAYMENTS PAID, IF ANY. [T]he
point may be raised that under Article 1164 of the Civil Code,

Equatorial as buyer acquired a right to the fruits of the thing sold

from the time the obligation to deliver the property to petitioner
arose. That time arose upon the perfection of the Contract of Sale
on July 30, 1978, from which moment the laws provide that the
parties to a sale may reciprocally demand performance. Does this
mean that despite the judgment rescinding the sale, the right to the
fruits belonged to, and remained enforceable by, Equatorial? Article
1385 of the Civil Code answers this question in the negative,
because [r]escission creates the obligation to return the things
which were the object of the contract, together with their fruits, and
the price with its interest; . . . . Not only the land and building sold,
but also the rental payments paid, if any, had to be returned by the
buyer.
ID.; SALES; CONTRACT OF SALE; RENTAL PAYMENTS MADE SHOULD
NOT BE CONSTRUED AS A RECOGNITION OF THE BUYER AS NEW
ORDER BUT MERELY TO AVOID IMMINENT EVICTION; CASE AT BAR.
The fact that Mayfair paid rentals to Equatorial during the
litigation should not be interpreted to mean either actual delivery or
ipso facto recognition of Equatorials title. The CA Records of the
mother case show that Equatorial as alleged buyer of the
disputed properties and as alleged successor-in-interest of
Carmelos rights as lessor submitted two ejectment suits against
Mayfair. Filed in the Metropolitan Trial Court of Manila, the first was
docketed as Civil Case No. 121570 on July 9, 1987; and the second,
as Civil Case No. 131944 on May 28, 1990. Mayfair eventually won
them both. However, to be able to maintain physical possession of
the premises while awaiting the outcome of the mother case, it had
no choice but to pay the rentals. The rental payments made by
Mayfair should not be construed as a recognition of Equatorial as
the new owner. They were made merely to avoid imminent eviction.
STATUTORY CONSTRUCTION; GENERAL PROPOSITIONS DO NOT
DECIDE SPECIFIC CASES. As pointed out by Justice Holmes,
general propositions do not decide specific cases. Rather, laws are
interpreted in the context of the peculiar factual situation of each
case. Each case has its own flesh and blood and cannot be decided
on the basis of isolated clinical classroom principles.
CIVIL LAW; SALES; VALID FROM INCEPTION BUT JUDICIALLY
RESCINDED BEFORE IT COULD BE CONSUMMATED; CASE AT BAR.
[T]he sale to Equatorial may have been valid from inception, but it
was judicially rescinded before it could be consummated. Petitioner
never acquired ownership, not because the sale was void, as
erroneously claimed by the trial court, but because the sale was not
consummated by a legally effective delivery of the property sold.
ID.; ID.; BUYER IN BAD FAITH; NOT ENTITLED TO ANY BENEFIT;
ENTITLED SOLELY TO THE RETURN OF THE PURCHASE PRICE; MUST
BEAR ANY LOSS. [A]ssuming for the sake of argument that there
was valid delivery, petitioner is not entitled to any benefits from the
rescinded Deed of Absolute Sale because of its bad faith. This
being the law of the mother case decided in 1996, it may no longer
be changed because it has long become final and executory. . . .
Thus, petitioner was and still is entitled solely to the return of the
purchase price it paid to Carmelo; no more, no less. This Court has
firmly ruled in the mother case that neither of them is entitled to
any consideration of equity, as both took unconscientious
advantage of Mayfair. In the mother case, this Court categorically
denied the payment of interest, a fruit of ownership. By the same
token, rentals, another fruit of ownership, cannot be granted
without mocking this Courts en banc Decision, which has long
become final. Petitioners claim of reasonable compensation for
respondents use and occupation of the subject property from the
time the lease expired cannot be countenanced. If it suffered any

loss, petitioner must bear it in silence, since it had wrought that loss
upon itself. Otherwise, bad faith would be rewarded instead of
punished.
ID.; ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. Suffice it to say that,
clearly, our ruling in the mother case bars petitioner from claiming
back rentals from respondent. Although the court a quo erred when
it declared void from inception the Deed of Absolute Sale between
Carmelo and petitioner, our foregoing discussion supports the grant
of the Motion to Dismiss on the ground that our prior judgment in
GR No. 106063 has already resolved the issue of back rentals. On the
basis of the evidence presented during the hearing of Mayfairs
Motion to Dismiss, the trial court found that the issue of ownership
of the subject property has been decided by this Court in favor of
Mayfair. . . . Hence, the trial court decided the Motion to Dismiss on
the basis of res judicata, even if it erred in interpreting the meaning
of rescinded as equivalent to void. In short, it ruled on the
ground raised; namely, bar by prior judgment. By granting the
Motion, it disposed correctly, even if its legal reason for nullifying
the sale was wrong.