Bareng vs. Court of Appeals G.R. No.

L-12973April 25, 1960

FACTS:
Vicente Bareng purchased from respondent Alegria the cinematographic equipment installed at the Pioneer
Theater in Laoag, Ilocos Norte, for the sum of P15,000. P10,000 of which was paid, and Bareng signed 4
promissory notes for the balance. The first promissory note amounting to P1,000 was duly paid by Bareng. On
February 15, 1952, shortly before the second note fell due, the other respondent Agustin Ruiz informed Bareng
that he was a co-owner of the equipment in question, and several days later, Ruiz sent Bareng a telegram
instructing him to suspend payments to Alegria for the balance of the price as he was not agreeable to the sale.
When Alegria sought to collect the second note on the same day, Bareng only paid P400 and refused to make
any more payments on account of Ruizs claims. On March 31, 1952, Ruiz filed suit against Alegria and Bareng
for his share in the price of the cinema equipment. Thereafter in May of the same year, Alegria and Ruiz reached
a compromise wherein the former recognized the latter as co-owner of the equipment sold to Bareng and
promised to pay 2/3 of whatever amount he could recover from the latter. Alegria then sued Bareng for the
amount of P13,500, allegedly the unpaid balance of the price. But Bareng answered that only P3,600 had not
been paid, and prayed for the rescission of the sale for the supposed violation of Alegria of certain express
warranties as to the quality of the equipment, and asked for payment of damages for alleged violation of Alegrias
warranty of title. Bareng added that he is not liable to pay interests to Alegria because he was justified in
suspending payment of the balance of the price of the equipment from the time he learned of Ruizs adverse
claims over said equipment, pursuant to Art. 1590 of the Civil Code.
ISSUE:
Whether or not Bareng is liable to pay interest of the unpaid balance of the price of the equipment.
HELD:
Bareng is liable to pay interest of the unpaid balance of the price of the equipment in question. Art. 1590 of the
Civil Code provides that: Should the vendee be disturbed in the possession or ownership of the thing acquired,
or should he have reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of
mortgage, he may suspend the payment of the price until the vendor has caused the disturbance or danger to
cease, unless the latter gives security for the return of the price in a proper case, or it has been stipulated that,
notwithstanding any such contingency, the vendee shall be bound to make the payment. A mere act of trespass
shall not authorize the suspension of the payment of the price. It is undisputed that petitioner had the right to
suspend payment of the balance of the price of the cinema equipment in question to his vendor from the time he
was informed by Ruiz of the latters claims of co-ownership thereof, especially upon his receipt of Ruizs telegram
wherein the latter asserted that he was not agreeable to the sale. However, said right of Barend ended as soon
as the vendor has caused the disturbance or danger to cease, which, in this case, was when Alegria reached
a compromise with Ruiz whereby Ruiz expressed his conformity to the sale to Bareng, subject to the payment
of his share in the price by Alegria. From the time Alegria and Ruiz reached this settlement, there was no longer
any danger of threat to Barengs ownership and full enjoyment of the equipment he bought from Alegria, by virtue
of which Alegria sued petitioner for the unpaid balance. Bareng admitted his indebtedness in the amount of
P3,600, yet he did not tender payment of said amount nor did he deposit the same in court, but instead sought
for rescission of the sale. It is clear that Bareng was in default on the unpaid balance of the price of the equipment
from the date of filing of the complaint by Alegria, and under Art. 2209 of the Civil Code, he must pay legal
interests thereon from said date.
G.R. No. L-67929 October 27, 1987
LEDA DINO GRAGEDA and TERESITA MONTILLA, petitioners,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT and FRANCISCO MONTALLANA, JR., respondents.
FACTS:
Petitioner Grageda is the owner and manager of the Sorsogon Home Enterprises while private respodent is a
seller of abaca finished products. On March 26, 1975, Grageda ordered from private respondent 500 sets of
rectangular ("bacbac") pyrex trays and 500 sets of square ("bacbac") pyrex trays with 3 measurements per
sample with handle, at P4.50 per set.
Prior to April 27, 1975, private respondent delivered some of the items ordered but they were outrightly rejected.
After making the proper corrections, private respondent made subsequent deliveries. Said items were all
received and duly receipted for by Grageda's caretaker, herein co-petitioner Montilla.
On June 13, 1975, private respondent sought the assistance of the Albay PC Command and a confrontation was
conducted between Grageda and private respondent. When pressed for payment, Grageda ultimately said that
she rejected the items delivered by private respondent because they were defective. Subsequently, Grageda
sent a letter dated June 20, 1975 to private respondent, to which a Nacida certification dated June 23, 1975
informing private respondent of her rejection of the items delivered, and requesting for their withdrawal from,her
bodega. In view of the foregoing, private respondent filed a Complaint for Sum of Money against the petitioners
before the Municipal Trial Court of Daraga, Albay.
Grageda, on the other hand, claimed that the rectangular and square "bacbac" pyrex trays delivered by the
private respondent from April 27, 1975 until May 25, 1975 were not in accordance with the sample agreed upon
by and between them, which is that the edging or "pleje" should be made of steel; that as early as May, 1975,
she advised private respondent of her rejection of the said items because their edgings were made of tin plates
or of inferior quality; that she demanded their withdrawal from her bodega but despite repeated requests, private
respondent refused to withdraw the same; that she likewise informed private respondent of her rejection of the
said items at the confrontation with the police on June 13, 1975 and in her letter dated June 20, 1975 to which a
certification of the Nacida dated June 23, 1975 stating therein that said items are inferior and cannot be exported.
In addition, Grageda presented two (2) disinterested witnesses who testified that the items delivered by private
respondent were different from the samples desired by her.
ISSUE:
Whether or not there was an acceptance of the deliveries made, or otherwise stated, whether or not there was
a rejection seasonably made.
HELD:
The petition is devoid of merit.
While it is true that Article 1584 of the Civil Code accords Grageda (as buyer) the right to a reasonable opportunity
to examine the abaca "bacbac" goods to ascertain whether they are in conformity with the contract, such
opportunity to examine should be availed of within a reasonable time in order that private respondent (as the
seller) may not be subjected to undue delay or prejudice in the payment of his raw materials, workers and other
damages which may be incurred due to the deterioration of his products.
The provisions of Article 1585 (New Civil Code) which provides, among others, that "the buyer is deemed to
have accepted them," ... "when, after the lapse of a reasonable time, he retains the goods without intimating to
the seller that he has rejected them" is applicable in the instant case. The evidence clearly and unmistakably
shows that the defendants retained possession of the abaca goods, subject matter in this case, for practically a
month and almost two (2) months on June 20, 1975 or until this case was filed on June 27, 1975, without
intimating their rejection to the supplier or seller, within a reasonable time ... for which reason such retention of
the abaca "bacbac" goods for a month or more already amounts to a waiver of defendants' right to reject
acceptance and payment of the plaintiffs' abaca "bacbac" goods.
The petition is hereby DENIED.

EUSEBIO DE LA CRUZ v. APOLONIO LEGASPI

G.R. No. L-8024, Nov. 29, 1955
PONENTE: Bengzon, J.

FACTS: Plaintiff-appellee Eusebio de la Cruz sued herein defendant- appellant Apolonio Legaspi and his wife to
compel the delivery of a parcel of land the latter sold to De la Cruz in December, 1949. It was alleged in the
complaint an execution of a contract, the terms thereof, the refusal of defendants to accept payment of the
purchase price of P450 which De la Cruz had tendered, and the undue retention of the land. In their answer,
spouses Legaspi admitted the sale and the price. However, they claimed that before the document of sale was
made, De la Cruz agreed to pay them purchase price right after the document is executed on December 5, 1949.
But after the signing and ratification of the document by the Notary Public and after De la Cruz took the original
document, he refused to pay the P450. For lack of consideration and for deceit, they argued that the document
should be annulled. De la Cruz in turn claimed that spouses Legaspi's allegation gave no excuse for them to
retain the property, rejecting the price. The trial court rendered judgment ordering De la Cruz to pay the P450
and the spouses Legaspi to receive such and to deliver possession of the property to him after such payment.
Spouses Legaspi filed a motion for reconsideration but the same failed. Hence, this appeal.

ISSUE: Whether or not the contract of sale is void for lack of consideration.

RULING: No. The Court stressed that it cannot be denied that when the document was signed, the cause or
consideration existed: P450. The document specifically said so; and such was undoubtedly the agreement.
Subsequent non-payment of the price at the time agreed upon did not convert the contract into one without cause
or consideration: a nudum pactum. In the case at bar, the situation was rather one in which there is failure to pay
the consideration, with its resultant consequences. As such, when after the notarization of the contract, De la
Cruz failed to hand the money to spouses Legaspi as he previously promised. There was default on his part at
most, and the spouses Legaspi has the right to demand interest (legal interest) for the delay, pursuant to article
1501 (3) of the Civil Code, or to demand rescission in court. However, said failure did not resolve the contract
since no stipulation to that effect was alleged. There was neither any agreement nor allegation that payment on
time was essential.
Moreover, even if the contract of sale herein question had expressly provided for "automatic rescission upon
failure to pay the price," the trial judge could allow De la Cruz to enforce the contract in effect because spouses
Legaspi did not make a previous demand on him for payment of the purchase price through a suit or notarial act.
As provided for by Article 1504 of the Civil Code, in the sale of real property, even though it may have been
stipulated that in default of the price within the time agreed upon, the resolution of the contract shall take place
ipso facto, the vendee may pay even after the expiration of the period, at any time before demand has been
made upon him either by suit or by notarial act. After such demand has been made the judge cannot grant him
further time. It was noted by the Court that the demand referred to by the law is a demand for rescission. From
the foregoing, the Court affirmed the judgment of the trial court.
Adelfa Properties vs. CA [G.R. No. 111238. January 25, 1995.]
Second Division, Regalado (J): 3 concur
PARTIES: Roasrio and Salud Jimenez Seller
Adelfa Properties Buyer
Subject:: western portion of a parcel of land 8855 sq. ms. Covered by TCT 309773 situated in Barrio Culasi, Las
Pinas, Metro Manila
Facts:
Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and Dominador Jimenez, were the
registered co-owners of a parcel of land consisting of 17,710 sq. ms (TCT 309773) situated in Barrio Culasi,
Las Pias, Metro Manila. On 28 July 1988, Jose and Dominador Jimenez sold their share consisting of 1/2 of
said parcel of land, specifically the eastern portion thereof, to Adelfa Properties pursuant to a Kasulatan sa
Bilihan ng Lupa. Subsequently, a Confirmatory Extrajudicial Partition Agreement was executed by the
Jimenezes, wherein the eastern portion of the subject lot, with an area of 8,855 sq. ms. was adjudicated to Jose
and Dominador Jimenez, while the western portion was allocated to Rosario and Salud Jimenez.
Thereafter, Adelfa Properties expressed interest in buying the western portion of the property from Rosario and
Salud. Accordingly, on 25 November 1989, an Exclusive Option to Purchase was executed between the parties,
with the condition that the selling price shall be P2,856,150, that the option money of P50,000 shall be credited
as partial payment upon the consummation of sale, that the balance is to be paid on or before 30 November
1989, and that in case of default by Adelfa Properties to pay the balance, the option is cancelled and 50% of the
option money shall be forfeited and the other 50% refunded upon the sale of the property to a third party.
Before Adelfa Properties could make payment, it received summons on 29 November 1989, together with a copy
of a complaint filed by the nephews and nieces of Rosario and Salud against the latter, Jose and Dominador
Jimenez, and Adelfa Properties in the RTC Makati (Civil Case 89-5541), for annulment of the deed of sale in
favor of Household Corporation and recovery of ownership of the property covered by TCT 309773.
As a consequence, in a letter dated 29 November 1989, Adelfa Properties informed Rosario and Salud that it
would hold payment of the full purchase price and suggested that the latter settle the case with their nephews
and nieces. . Salud Jimenez refused to heed the suggestion of Adelfa Properties and attributed the suspension
of payment of the purchase price to lack of word of honor
. On 14 December 1989, Rosario and Salud sent Francisca Jimenez to see Atty. Bernardo, in his capacity as
Adelfa Properties counsel, and to inform the latter that they were cancelling the transaction. In turn, Atty.
Bernardo offered to pay the purchase price provided that P500,000.00 be deducted therefrom for the settlement
of the civil case. This was rejected by Rosario and Salud. On 22 December 1989, Atty. Bernardo wrote Rosario
and Salud on the same matter but this time reducing the amount from P500,000.00 to P300,000.00, and this
was also rejected by the latter. On 23 February 1990, the RTC dismissed Civil Case 89-5541.
On 16 April 1990, Atty. Bernardo wrote Rosario and Salud informing the latter that in view of the dismissal of the
case against them, Adelfa Properties was willing to pay the purchase price, and he requested that the
corresponding deed of absolute sale be executed. This was ignored by Rosario and Salud. On 27 July 1990,
Jimenez counsel sent a letter to Adelfa Properties enclosing therein a check for P25,000.00 representing the
refund of 50% of the option money paid under the exclusive option to purchase. Rosario and Salud then
requested Adelfa Properties to return the owners duplicate copy of the certificate of title of Salud Jimenez. Adelfa
Properties failed to surrender the certificate of title.
Rosario and Salud Jimenez filed Civil Case 7532 in the RTC Pasay City (Branch 113) for annulment of contract
with damages, praying, among others, that the exclusive option to purchase be declared null and void; that
Adelfa Properties be ordered to return the owners duplicate certificate of title; and that the annotation of the
option contract on TCT 309773 be cancelled.
RTC: On 5 September 1991, the trial court rendered judgment holding that the agreement entered into by the
parties was merely an option contract, and declaring that the suspension of payment by Adelfa Properties
constituted a counter-offer which, therefore, was tantamount to a rejection of the option. It likewise ruled that
Adelfa Properties could not validly suspend payment in favor of Rosario and Salud on the ground that the
vindicatory action filed by the latters kin did not involve the western portion of the land covered by the contract
between the parties, but the eastern portion thereof which was the subject of the sale between Adelfa Properties
and the brothers Jose and Dominador Jimenez. The trial court then directed the cancellation of the exclusive
option to purchase.
On appeal,
RTC: the Court of appeals affirmed in toto the decision of the court a quo. That Article 1590 of the Civil Code on
suspension of payments applies only to a contract of sale or a contract to sell, but not to an option contract which
it opined was the nature of the document subject of the case at bar.
Hence, the petition for review on certiorari.
Adelfa properties posits that the contract is a Contract of Sale and not an Option Contract or Contract to Sell,
making the suspension of payment applicable in the case.

ISSUE:
Whether or not the contract is a Contract of Sale , Option Contract or Contract to Sell.

SC: The Supreme Court affirmed the assailed judgment of the Court of Appeals in CA-GR CV 34767, with
modificatory premises.
Agreement between parties a contract to sell and not an option contract or a contract of sale
The alleged option contract is a contract to sell, rather than a contract of sale. 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 Thus, a deed of sale is considered absolute in nature where there is neither a stipulation in the deed that
title to the property sold is reserved in the seller until the full payment of the price, nor one giving the vendor the
right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.
That the parties really intended to execute a contract to sell is bolstered by the fact that the deed of absolute
sale would have been issued only upon the payment of the balance of the purchase price, as may be gleaned
from Adelfa Properties letter dated 16 April 1990 wherein it informed the vendors that it is now ready and willing
to pay you simultaneously with the execution of the corresponding deed of absolute sale.
Contract interpreted to ascertain intent of parties; Title not controlling if text shows otherwise
The important task in contract interpretation is always the ascertainment of the intention of the contracting parties
and that task is to be discharged by looking to the words they used to project that intention in their contract, all
the words not just a particular word or two, and words in context not words standing alone. Moreover, judging
from the subsequent acts of the parties which will hereinafter be discussed, it is undeniable that the intention of
the parties was to enter into a contract to sell. In addition, the title of a contract does not necessarily determine
its true nature. Hence, the fact that the document under discussion is entitled Exclusive Option to Purchase is
not controlling where the text thereof shows that it is a contract to sell.

Test to determine contract as a contract of sale or purchase or mere option

The test in determining whether a contract is a contract of sale or purchase or a mere option is whether or
not the agreement could be specifically enforced. There is no doubt that Adelfas obligation to pay the purchase
price is specific, definite and certain, and consequently binding and enforceable. Had the Jimenezes chosen to
enforce the contract, they could have specifically compelled Adelfa to pay the balance of P2,806,150.00. This is
distinctly made manifest in the contract itself as an integral stipulation, compliance with which could legally and
definitely be demanded from petitioner as a consequence.
Adelfa Properties justified in suspending payment of balance by reason of vindicatory action filed
against it
In Civil Case 89-5541, it is easily discernible that, although the complaint prayed for the annulment only of the
contract of sale executed between Adelfa Properties and the Jimenez brothers, the same likewise prayed for the
recovery of therein Jimenez share in that parcel of land specifically covered by TCT 309773. In other words, the
Jimenezes were claiming to be co-owners of the entire parcel of land described in TCT 309773, and not only of
a portion thereof nor did their claim pertain exclusively to the eastern half adjudicated to the Jimenez brothers.
Therefore, Adelfa Properties was justified in suspending payment of the balance of the purchase price by reason
of the aforesaid vindicatory action filed against it. The assurance made by the Jimenezes that Adelfa Properties
did not have to worry about the case because it was pure and simple harassment is not the kind of guaranty
contemplated under the exceptive clause in Article 1590 wherein the vendor is bound to make payment even
with the existence of a vindicatory action if the vendee should give a security for the return of the price.
Jimenezes may no longer be compelled to sell and deliver subject property
Be that as it may, and the validity of the suspension of payment notwithstanding, the Jimenezes may no longer
be compelled to sell and deliver the subject property to Adelfa Properties for two reasons, that is, Adelfas failure
to duly effect the consignation of the purchase price after the disturbance had ceased; and, secondarily, the fact
that the contract to sell had been validly rescinded by the Jimenezes.
Rescission in a contract to sell
Article 1592 of the Civil Code which requires rescission either by judicial action or notarial act is not applicable
to a contract to sell. Furthermore, judicial action for rescission of a contract is not necessary where the contract
provides for automatic rescission in case of breach, as in the contract involved in the present controversy. By
Adelfas failure to comply with its obligation, the Jimenezes elected to resort to and did announce the rescission
of the contract through its letter to Adelfa dated 27 July 1990. That written notice of rescission is deemed
sufficient under the circumstances.
WHEREFORE, on the foregoing modificatory premises, and considering that the same result has been reached
by respondent Court of Appeals with respect to the relief awarded to private respondents by the court a quo
which we find to be correct, its assailed judgment in CA-G.R. CV No. 34767 is hereby AFFIRMED.

[ CARIDAD ESTATES V SANTERO]

[ VILLAREAL V TAN KING]
Luzon Brokerage Co. v. Maritime Building Co. (1972)Plaintiff-appellee: Luzon Brokerage Co.Defendants:
Maritime Building Co and Myers Building Co Ponente: Reyes, J.B.L., J.
Doctrine: The distinction between contracts of sale and contract to sell with reserved title has been recognized
by this Court in repeated decisions upholding the power of promisors under contracts to sell in case of failure of
the other party to complete payment, to extra judicially terminate the operation of the contract, refuse conveyance
and retain the sums or installments already received, where such rights are expressly provided for, as in this
case.
Short version: Myers corp sold land to Maritime. In the agreement, they agreed on an installment plan and that
if Maritime missed a payment, the contract will be annulled and the payments already made will be forfeited.
Maritime failed to pay so Myers annulled the contract and did not return payments. SC says Myers can do this
because under contracts to sell, promisors, in case of failure of the other party to complete payment, can extra
judicially terminate the contract, refuse conveyance, and retain installments already received, where such rights
are provided.
1. In Manila, Myers owned 3 parcels of land w/ improvements. Myers then entered into a contract called a
Deed of Conditional Sale with Maritime Building.
O Myers sold the land for P1million.
O They agreed on the manner of payment (instalment, initial payment upon execution of contract, interest
rate)
O In the contract it was stipulated that in case of failure of buyer to pay any of the instalments, the contract
will be annulled at the option of the seller and all payments made by the buyer is forfeited.
2. Later on, the stipulated instalment of P10k with 5%interest was amended to the P5k with 5.5% per annum.
O Maritime paid the monthly instalments but failed to pay the monthly instalment of March.
VP of Maritime wrote to Pres of Myers requesting for a moratorium on the monthly payment of the instalments
because the company was undergoing financial problems.
O Myers refused.
O For the months of March, April, and May, Maritime failed to pay and did not heed the demand of Myers.
3. Myers wrote Maritime cancelling the Deed of Conditional Sale
O Myers demanded return of possession of properties
O Held Maritime liable for use and occupation amounting to P10k per month
4. In the meantime, Luzon Brokerage was leasing the property from Maritime.
O Myers demanded from Luzon the payment of monthly rentals of P10k
O Myers also demanded surrender of property.
5. While actions and cross claims between Myers and Maritime were happening, the contract between
Maritime and Luzon was extended for 4more years.
6. Turns out, Maritimes suspension of its payments to Myers corp arose from a previous event: An award
of back wages made by the Court of Industrial Relations in favor of Luzon Labor Union (employees employed
by Luzon).
 O FH Myers was a major stockholder of Luzon Brokerage. FH Myers promised to indemnify Schedler
(who controlled Maritime) when Shedler purchased FH Myerss stock in Luzon Brokerage company. (The
indemnification is for the award of back wages by the CIR)
O Schedler claims that after FH Myers estates closed, he was notified that the indemnity on the Labor
Union case will not be.
O And so, Schedler advised Myers corp that Maritime is withholding payments to Myers corp in order to
offset the liability when Myersheirs failed to honor the indemnity agreement.
7. TC ruled Maritime in breach of contract.

Issues:
Has there been a breach of contract?
Can Myers extra judicially terminate the contract?

Held:
Yes.
Yes.

Ratio:
Failure to pay monthly installments constitute a breach of contract. Default was not made in good faith.
The letter to Myers corp means that the non-payment of installments was deliberately made to coerce
Myers crp into answering for an alleged promise of the dead FH Myers.
Whatever obligation FH Myers had assumed is not an obligation of Myers corp. No proof that board of
Nyers corp agreed to assume responsibility to debts of FH Myers and heirs.
Schaedler allowed the estate proceedings of FH Myers to close without providing liability.
By the balance (of payment) in the Deed of Conditional Sale, Maritime was attempting to burden the
Myers corp with an uncollectible debt, since enforcement against FH Myers estate was already barred.
Maritime acted in bad faith.
Maritimes contract with Myers is not the ordinary sale contemplated in NCC 1592 (transferring ownership
simultaneously with
delivery).

The distinction between contracts of sale and contract to sell with reserved title has been recognized by
this Court in repeated decisions upholding the power of promisors under contracts to sell in case of failure of the
other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance
and retain the sums or installments already received, where such rights are expressly provided for, as in this
case. Decision affirmed.
ISAIAS F. FABRIGAS AND MARCELINA R. FABRIGAS VS. SAN FRANCISCO DEL MONTE, INC.
G.R. No. 152346, November 25, 2005

FACTS:
Spouses Fabrigas(petitioner) and respondent San francisco Del Monte, Inc.(Del Monte) entered into an
agreement, denominated as Contract to Sell No. 2482-V, whereby the latter agreed to sell to Spouses Fabrigas
a parcel of residential land. The said lot was worth P109,200.00 and it was registered in the name of respondent
Del Monte. The agreement stipulated that Spouses Fabrigas shall pay P30,000.00 as downpayment and the
balance within ten years in monthly successive installments of P1,285.69.
After paying P30,000.00, Spouses Fabrigas took possession of the property but failed to make any installment
payments on the balance of the purchase price. Despite the demand letter made by Del Monte and the grace
period given still the said Spouses did not comply with their obligations.
On January 21, 1985, petitioner Marcelina and Del Monte entered into another agreement denominated as
Contract to Sell No. 2941-V, covering the same property but under restructed terms of payment. Under the
second contract, the parties agreed on a new purchase price of P131,642.58, the amount of P26,328.52 as
downpayment and the balance to be paid in monthly installments of P2,984.60 each.
After the said deal, the petitioner made some delinquent installments paying less than the stated amount, to
which Del Monte made a demand letter to the petitioners. And this time they ordered the cancellation of the
Contract to Sell No. 2941-V

ISSUE:
Whether or not the Contract to Sell No. 2941-V was valid.

HELD:
The Court quotes with approval the following factual observations of the trial court, which cannot be disturbed in
this case, to wit:
The Court notes that defendant, Marcelina Fabrigas, although she had to sign contract No. 2491-V, to avoid
forfeiture of her downpayment, and her other monthly amortizations, was entirely free to refuse to accept the
new contract. There was no clear case of intimidation or threat on the part of plaintiff in offering the new contract
to her. At most, since she was of sufficient intelligence to discern the agreement she is entering into, her signing
of Contract No. 2491-V is taken to be valid and binding. The fact that she has paid monthly amortizations
subsequent to the execution of Contract to Sell No. 2491-V, is an indication that she had recognized the validity
of such contract. . . .
In sum, Contract to Sell No. 2491-V is valid and binding. There is nothing to prevent respondent Del Monte from
enforcing its contractual stipulations and pursuing the proper court action to hold petitioners liable for their breach
thereof.

[ REALTY EXHANGE V SENDINO]

Rillo vs. CA

Facts:
On June 18, 1985, petitioner Rillo signed a "Contract To Sell of Condominium Unit" with private respondent Corb
Realty Investment Corporation. Under the contract, CORB REALTY agreed to sell to RILLO a 61.5 square meter
condominium unit located in Mandaluyong, Metro Manila. The contract price was P150,000.00, one half of which
was paid upon its execution, while the balance of P75,000.00 was to be paid in twelve (12) equal monthly
installments of P7,092.00 beginning July 18, 1985. It was also stipulated that all outstanding balance would bear
an interest of 24% per annum; the installment in arrears would be subject to liquidated penalty of 1.5% for every
month of default from due date. It was further agreed that should petitioner default in the payment of three (3) or
four (4) monthly installments, forfeiture proceedings would be governed by existing laws, particularly the
Condominium Act. On July 18,1985, RILLO failed to pay the initial monthly amortization. On August 18, 1985,
he again defaulted in his payment. On September 20, 1985, he paid the first monthly installment of P7,092.00.
On October 2, 1985, he paid the second monthly installment of P7,092.00. His third payment was on February
2, 1986 but he paid only P5,000.00 instead of the stipulated P7,092.00.On July 20, 1987 or seventeen (17)
months after RILLO's last payment, CORB REALTY informed him by letter that it is cancelling their contract due
to his failure to settle his accounts on time. CORB REALTY also expressed its willingness to refund RILLO's
money.
CORB REALTY, however, did not cancel the contract for on September 28, 1987, it received P60,000.00 from
petitioner. RILLO defaulted again in his monthly installment payment.Consequently, CORB REALTY informed
RILLO through letter that it was proceeding to rescindtheir contract. In a letter dated August 29, 1988, it requested
RILLO to come to its office and withdraw P102,459.35 less the rentals of the unit from July 1, 1985 to February
28, 1989. Again the threatened rescission did not materialize. A "compromise" was entered into by the parties
on March 12, 1989.
Issue:
WON Rillo is subject to a refund upon the rescission of the contract to sell?
Held:
The respondent court did not err when it did not apply Articles 1191 and 1592 of the Civil Code on rescission to
the case at bar. The contract between the parties is not an absolute conveyance of real property but a contract
to sell. 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
which 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 purchase price. We held in Luzon Brokerage Co., Inc.
v. Maritime Building Co., Inc. that there can be no rescission of an obligation that is still non-existent, the
suspensive condition not having happened. We do not agree with the respondent Court so far as it ordered
private respondent CORB REALTY to refund 50% of P158,184.00 or P79,092.00 to petitioner RILLO. Under
Republic Act No. 6552, the right of the buyer to a refund accrues only when he has paid at least two (2) years of
installments. In the case at bar, RILLO has paid less than two (2) years in installments, hence, he is not entitled
to a refund. IN VIEW WHEREOF, the decision appealed from is AFFIRMED with the MODIFICATION that the
refund of 50% P158,184.00 or P79,092.00 madein favor of petitioner Emiliano Rillo is deleted. No costs. SO
ORDERED.