!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !

"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
CnA1Lk 11:
kLMLDILS ICk kLSCISSICN AND
CANCLLLA1ICN ICk IMMCVA8LLS:
CCN1kAC1 CI SALL VLkSUS
CCN1kAC1 1C SLLL

I. Nature Cf kemedy Cf kesc|ss|on (!"#$%&'($)) (Art|c|es 1191, 1479,
1S92)

Art|c|e 1191.
1he power to resc|nd ob||gat|ons |s |mp||ed |n rec|proca| ones, |n case
one of the ob||gors shou|d not comp|y w|th what |s |ncumbent upon
h|m.

1he |n[ured party may choose between the fu|f|||ment and the
resc|ss|on of the ob||gat|on, w|th the payment of damages |n e|ther
case. ne may a|so seek resc|ss|on, even after he has chosen fu|f|||ment,
|f the |atter shou|d become |mposs|b|e.

1he court sha|| decree the resc|ss|on c|a|med, un|ess there be [ust
cause author|z|ng the f|x|ng of a per|od.

1h|s |s understood to be w|thout pre[ud|ce to the r|ghts of th|rd
persons who have acqu|red the th|ng, |n accordance w|th art|c|es 138S
and 1388 and the Mortgage Law. (1124)

Art|c|e 1479.
A prom|se to buy and se|| a determ|nate th|ng for a pr|ce certa|n |s
rec|proca||y demandab|e.

An accepted un||atera| prom|se to buy or to se|| a determ|nate th|ng
for a pr|ce certa|n |s b|nd|ng upon the prom|sor |f the prom|se |s
supported by a cons|derat|on d|st|nct from the pr|ce. (14S1a)

Art|c|e 1S92.
In the sa|e of |mmovab|e property, even though |t may have been
st|pu|ated that upon fa||ure to pay the pr|ce at the t|me agreed upon
the resc|ss|on of the contract sha|| of r|ght take p|ace, the vendee may
pay, even after the exp|rat|on of the per|od, as |ong as no demand for
resc|ss|on of the contract has been made upon h|m e|ther [ud|c|a||y or
by a notar|a| act. After the demand, the court may not grant h|m a
new term. (1S04a)

ArLlcle 1191 ls resclsslon grounded on SubsLanLlal 8reach and ls
acLually resoluLlon.

A. D|st|ngu|sh|ng Irom Cther kemedy Cf kesc|ss|on *+)(,"-#.% 0$$1
2$-34 ,4 2$&-' $5 633".%#7 88 92!6 :: ;<=>?@
<
4 A&' #"" B$)'-. 9&-(. ,4
C627 <D< 92!6 EE< ;<=F>@G4


1
"#$%#&'%#( $) *+),&#,'%$+) +- %.# "#/$,$+01 +- %.# 2$&,$) 3'&4 56 7&+/', 333
SC8A 378 (2008), 8#$&1 +- 9)%+)$+ :6 ;#&)'<# 56 *+0&% +- 9==#'/1, 339 SC8A 33
(2008), *+),&#,'%$+) +- %.# "#/$,$+01 +- %.# 2$&,$) 3'&4 56 7&+/', 333 SC8A 378
(2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1. Art|c|e 1191 v. Art|c|e 1383

Art|c|e 1191 Art|c|e 1383
naLure ls acLually a 8esoluLlon naLure ls a subsldlary acLlon
1he premlse ls subsLanLlal
breach of conLracL
remlse ls llmlLed Lo cases under
ArLlcle 1381 (resclsslble conLracLs)
May only be lnsLlLuLed lf Lhe parLy
sufferlng damage has no oLher legal
means Lo obLaln reparaLlon
AcLlon prescrlbes wlLhln 10
years from Lhe Llme Lhe rlghLs
Lo brlng an acLlon accrues
AcLlon prescrlbes wlLhln 4 years from
Lhe Llme Lhe rlghL Lo brlng an acLlon
accrues
1here ls an obllgaLlon Lo reLurn Lhe Lhlngs whlch were Lhe ob[ecL of Lhe
conLracL, LogeLher wlLh Lhe frulLs, and Lhe prlce wlLh lLs lnLeresL, and
LhaL consequenLly, such resclsslon can be carrled ouL only when he who
demands resclsslon can reLurn whaLever he may be obllged Lo resLore.

Whlle ArLlcle 1191 uses Lhe Lerm resclsslon," Lhe orlglnal Lerm
whlch was used ln Lhe old Clvll Code was resoluLlon."
8esoluLlon ls a prlnclpal acLlon whlch ls based on breach of a
parLy, whlle resclsslon under ArLlcle 1383 ls a subsldlary acLlon
llmlLed Lo cases of resclsslon for leslon under ArLlcle 13814
HI)J ,4 2$&-' $5 633".%#7 8<? 92!6 < *<===G4
<


2. Art|c|e 1S92

1
>&$),') 56 *+0&% +- 9==#'/1, 366 SC8A 41 (2001).
ArLlcle 1392 has been consLrued Lo apply Lo all sales of
lmmovables even when Lhere ls no sLlpulaLlon on auLomaLlc
resclsslon, because of Lhe use of Lhe phrase even Lhough."
2


3. Act|on Ior kesc|ss|on Not S|m||ar 1o An Act|on Ior
keconveyance - ln Lhe sale of real properLy, Lhe seller ls noL
precluded from golng Lo Lhe courL Lo demand [udlclal resclsslon
ln lleu of a noLarlal acL of resclsslon. 8uL such acLlon ls dlfferenL
from an acLlon for reconveyance of possesslon on Lhe Lhesls of a
prlor resclsslon of Lhe conLracL coverlng Lhe properLy. 1he
effecLs LhaL flow from an afflrmaLlve [udgmenL ln elLher case
would be maLerlally dlsslmllar ln varlous respecLs: [udlclal
resoluLlon of a conLracL glves rlse Lo muLual resLlLuLlon whlch ls
noL necessarlly Lhe slLuaLlon LhaL arlse ln an acLlon for
reconveyance. ln an acLlon for resclsslon, unllke ln an acLlon for
reconveyance predlcaLed on an exLra[udlclal resclsslon
(resclsslon by noLarlal acL), Lhe courL, lnsLead of decreelng
resclsslon, may auLhorlze for a [usL cause Lhe flxlng of a perlod.
HI%KL3(. M$&#()J ,4 N.).#(.'(B O-.,"% 2$-347 8=D 92!6 :=F
*:??8G.

8. kemedy of "kesc|ss|on" Covered
1. 8as|s Cf kemedy Cf kesc|ss|on, Nature Cf 1he kemedy of
keso|ut|on or keso|ut|on
8esclsslon under ArLlcle 1191 ls predlcaLed on a breach of falLh
by Lhe oLher parLy who vlolaLes Lhe reclproclLy beLween Lhem,
and Lhe breach conLemplaLed ls Lhe obllgor's fallure Lo comply

2
!aclnLo v. kaparaz, 209 SC8A 246 (1992).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
wlLh an exlsLlng obllgaLlon. When Lhe obllgee may seek
resclsslon and, ln Lhe absence of any [usL cause for Lhe courL Lo
deLermlne Lhe perlod of compllance, Lhe courL shall decree Lhe
resclsslon. HP"%.-1" ,4 2$&-' $5 633".%#7 8E< 92!6 DE *:??<G4
<

1o resclnd ls Lo declare a conLracL vold aL lLs lncepLlon and Lo
puL an end Lo lL as Lhough lL never was. lL ls noL merely Lo
LermlnaLe lL and release Lhe parLles from furLher obllgaLlons Lo
each oLher, buL Lo abrogaLe lL from Lhe beglnnlng and resLore
Lhe parLles Lo Lhelr relaLlve poslLlons as lf no conLracL has been
made4 HP"%.-1" ,4 2$&-' $5 633".%#7 8E< 92!6 DE *:??<G4
:

When a parLy asks for Lhe resoluLlon or cancellaLlon of a
conLracL lL ls lmplled LhaL he recognlzes lL exlsLence - a non-
exlsLenL conLracL cannoL be cancelled. HN.) N.B(5(B C)1&#'-(.%
9.%"# 2$47 C)B4 ,4 2$&-' $5 633".%#7 QF: 92!6 <EQ *:??EG4
non-paymenL of Lhe purchase prlce ls a resoluLory condlLlon for
whlch Lhe remedy ls elLher resclsslon or speclflc performance
under ArLlcle 1191. 1hls ls Lrue for reclprocal obllgaLlons where
Lhe obllgaLlon ls a resoluLory condlLlon of Lhe oLher. Cn Lhe
oLher hand, Lhe buyer ls enLlLled Lo reLaln Lhe purchase prlce or
a parL Lhereof lf Lhe seller falls Lo perform any essenLlal
obllgaLlon of Lhe conLracL. Such rlghL ls premlsed on Lhe general
prlnclples of reclprocal obllgaLlon. HR(% ,4 2$&-' $5 633".%#7 Q<<
92!6 <F *:??8G4
8


1
9/?$&' 56 *+0&% +- 9==#'/1, 399 SC8A 331 (2003).
2
7@'?=+ 56 *+0&% +- 9==#'/1A 233 SC8A 331 (1994), *+ 56 *+0&% +- 9==#'/1A 312
SC8A 328 (1999).
3
*#)%&'/ B.$/$==$)# C)$5#&1$%4 56 *+0&% +- 9==#'/1A 246 SC8A 311 (1993), "+?#+
56 *+0&% +- 9==#'/1A 230 SC8A 223 (1993), *.#), 56 D#)'%+A 300 SC8A 722
(1998), C4 56 *+0&% +- 9==#'/1A 314 SC8A 63 (1999).
ConslgnaLlon by Lhe buyer of Lhe purchase prlce of Lhe properLy,
Lhere havlng been no prevlous recelpL of a noLarlal demand for
resclsslon, ls sufflclenL Lo defeaL Lhe rlghL of Lhe seller Lo
demand for a resclsslon of Lhe deed of absoluLe sale. HR(% ,4
2$&-' $5 633".%#7 Q<< 92!6 <F *:??8G4
CredlLors do noL have such maLerlal lnLeresL as Lo allow Lhem Lo
sue for resclsslon of a sale - Lhelrs ls only a personal rlghL Lo
recelve paymenL for Lhe loan, noL a real rlghL over Lhe properLy
sub[ecL of Lhe deed of sale. H61$-.S%" ,4 2$&-' $5 633".%#7 8<=
92!6 :?? *<===G4

2. Ground Ior kesc|ss|on Under Art|c|e 1191: Substant|a| 8reach
1he power Lo resclnd under ArLlcle 1191 ls based only on
subsLanLlal breach, pursuanL Lo Lhe prlnclple lald down ln ArLlcle
1234.
o Lven when Lhere ls subsLanLlal breach as Lo allow Lhe
rlghLful parLy Lo resclnd, and ln facL he does resclnd Lhe
conLracL, lL ls wlLhln Lhe power of Lhe courLs Lo flx a
perlod Lo allow Lhe defaulLlng parLy an opporLunlLy Lo
comply wlLh hls obllgaLlon. 1hls ls especlally so when
Lhe breach consLlLuLes mere negllgence (culpa) as
dlsLlngulshed from fraud or mallce (dolo) whlch ls
deflned as a consclous and lnLenLlonal deslgn Lo evade
Lhe normal fulflllmenL of exlsLlng obllgaLlons."
4


C. Who May Demand kesc|ss|on

4
Luzon 8rokerage Co., lnc. v. MarlLlme 8ulldlng Co., lnc., 43 SC8A 93 (1972).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Slnce resclsslon ls predlcaLed on a breach of falLh by Lhe oLher
parLy LhaL vlolaLes Lhe reclproclLy beLween Lhem, Lhe power Lo
resclnd ls glven only Lo Lhe ln[ured parLy. +K ,4 2$&-' $5
633".%#7 8<Q 92!6 E= *<===G4
8esclsslon can be carrled ouL only when Lhe one who demands
resclsslon can reLurn whaLever he may be obllged Lo resLore.
T.5$-'"U. ,4 V.BW&B.7 888 92!6 EQ8 *:???G4

D. Lxerc|s|ng kesc|ss|on
1. ower 1o kesc|nd Genera||y Iud|c|a| In Nature
ln a Lrue conLracL of sale, a provlslon granLlng Lhe non-
defaulLlng parLy a rlghL Lo resclnd would be superfluous because
such remedy ls lnherenL ln a conLracL of sale under ArLlcle 1191,
consequenLly, Lhe speclflcaLlon ln Lhe conLracL LhaL ln case of
breach, Lhe oLher parLy has a rlghL Lo resclnd does noL generally
confer any addlLlonal rlghL. noneLheless, wheLher express or
lmplled, Lhe remedy of resclsslon ls lnherenLly [udlclal ln naLure.
IB"X$7 N"-"U Y 2$4 ,4 C)'"-).'($).% A.)Z()J 2$-347 8> NW(%4 E8<
*<=<FG[ !"3&S%(B ,4 M$#3('.% 1" 9.) \&.) 1" ]($#7 FQ NW(%4 F:?
*<=Q=G[ ]" %. !.L. 9'".L#W(3 2$4 ,4 O.)7 R4!4 ^$4 F>FQ7 V.K
:<7 <=DE7 == NW(%4 <?8Q +)-"34 *<=DEG4
1he remedy of resclsslon ln reclprocal conLracLs ls noL absoluLe,
slnce Lhe Lhlrd paragraph of ArLlcle 1191 whlch provldes LhaL
Lhe courLs shall decree Lhe resclsslon clalmed, unless Lhere be
[usL cause auLhorlzlng Lhe flxlng of Lhe perlod," has been Lhe
sLaLuLory basls by whlch Lhe CourL has held LhaL Lhe ln[ured
parLy hlmself cannoL resolve Lhe obllgaLlon,
1
and requlres
conflrmaLlon of such remedy by Lhe courLs.
2
ln Lhe case of
lmmovables, Lhe general provlslons of ArLlcle 1191 should glve
way Lo Lhe parLlcular provlslons of ArLlcle 1392 whlch provldes
LhaL when Lhere has been a demand made on Lhe buyer for
resclsslon elLher [udlclally or by a noLarlal acL, Lhe courL may
noL granL hlm a new Lerm."
3

A seller cannoL unllaLerally and exLra[udlclally resclnd a conLracL
of sale where Lhere ls no express sLlpulaLlon auLhorlzlng lL.
unllaLeral resclsslon wlll noL be [udlclally favored or allowed lf
Lhe breach ls noL subsLanLlal and fundamenLal Lo Lhe fulflllmenL
of Lhe obllgaLlon. HA")('$ ,4 9._&('.)`!&(U7 8=Q 92!6 :D?
*:??:G4
Q


2. When Lxtra[ud|c|a| kesc|ss|on A||owed
noneLheless, Lhe law does noL prohlblL Lhe parLles from
enLerlng lnLo agreemenL LhaL vlolaLlon of Lhe Lerms of Lhe
conLracL would cause cancellaLlon Lhereof, even wlLhouL courL

1
1CLLn1lnC, CCMMLn1A8lLS Anu !u8lS8uuLnCL Cn 1PL ClvlL CCuL Cl
1PL PlLllnLS, vol. lv, p. 171 (1973). Angeles v. Calasanz, 133 SC8A 323
(1983).
2
Caboya v. Cul, 38 SC8A 83 (1971), Luzon 8rokerage Co., lnc. v. MarlLlme
8ulldlng Co., lnc., 43 SC8A 93 (1972).
3
Luzon 8rokerage Co., lnc. v. MarlLlme 8ulldlng Co., lnc., 86 SC8A 303 (1978).
4
7@#E+A B#&#F G *+6 56 >)%#&)'%$+)'/ ;')H$), *+&=6 37 hll. 631 (1918), "#=0</$@
56 8+1=$%'/ (# I') J0') (# K$+1A 84 hll. 820 (1949), K# /' "'?' I%#'?1.$= *+6
56 L'), C.8. no. 8784, May 21, 1936, 99 hll. 1034 (unrep.) (1936), 8#$&1 +-
J#101 36 3'1@0M')' 56 *+0&% +- 9==#'/1, 461 SC8A 186 (2003).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
lnLervenLlon. H0-$(%.) ,4 N.) I-(")'.% 9W(33()J 2$47 <: 92!6
:>E *<=EQG4
<

o 1here ls noLhlng ln Lhls law whlch prohlblLs Lhe parLles
from enLerlng lnLo an agreemenL LhaL a vlolaLlon of Lhe
Lerms of Lhe conLracL would cause lLs cancellaLlon even
wlLhouL courL lnLervenLlon. 1he raLlonale for Lhe
foregolng ls LhaL ln conLracLs provldlng for auLomaLlc
revocaLlon, [udlclal lnLervenLlon ls necessary noL for
purposes of obLalnlng a [udlclal declaraLlon resclndlng a
conLracL already deemed resclnded by vlrLue of an
agreemenL provldlng for resclsslon wlLhouL [udlclal
lnLervenLlon, buL ln order Lo deLermlne wheLher or noL
Lhe resclsslon was proper. Where such proprleLy ls
susLalned, Lhe declslon of Lhe courL wlll be merely
declaraLory of Lhe revocaLlon, buL lL ls noL ln lLself Lhe
revocaLory acL. N.)J(%().) ,4 2$&-' $5 633".%#7 :>=
92!6 D=? *<==>G4
Lega| consequences when there |s no contractua| c|ause
a||ow|ng extra[ud|c|a| resc|ss|on: ConsequenLly, even lf Lhe rlghL
Lo resclnd ls made avallable Lo Lhe ln[ured parLy, Lhe obllgaLlon
ls noL lpso facLo erased by Lhe fallure of Lhe oLher parLy Lo
comply wlLh whaL ls lncumbenL upon hlm. 1he parLy enLlLled Lo
resclnd should apply Lo Lhe courL for a decree of resclsslon. 1he
rlghL cannoL be exerclsed solely on a parLy's own [udgmenL LhaL
Lhe oLher commlLLed a breach of Lhe obllgaLlon. 1he operaLlve
acL whlch produces Lhe resoluLlon of Lhe conLracL ls Lhe decree
of Lhe courL and noL Lhe mere acL of Lhe vendor. Slnce a [udlclal

1
N0F+) ;&+H#&',# *+6A >)@6 56 3'&$%$?# ;0$/($), *+6A >)@6A 43 SC8A 93 (1972),
N0F+) ;&+H#&',# 56 3'&$%$?# ;/(,6, 86 SC8A 303 (1978).
or noLarlal acL ls requlred by law for a valld resclsslon Lo Lake
place, Lhe leLLer wrlLLen by respondenL declarlng hls lnLenLlon Lo
resclnd dld noL operaLe Lo valldly resclnd Lhe conLracL. C-()J.) ,4
2$&-' $5 633".%#7 8EE 92!6 Q< *:??<G4

3. kesc|ss|on kequ|res os|t|ve Act
8esclsslon ls a remedy LhaL would have no auLomaLlc
appllcaLlon, even when Lhe facLual basls Lherefor (subsLanLlal
breach) be presenL ln Lhe slLuaLlon. 8elng prlmarlly a remedy,
resclsslon requlres a poslLlve acL on Lhe parL of Lhe ln[ured
parLy, slnce lL ls legally posslble LhaL he may walve resclsslon
and proceed wlLh speclflc performance.
o 1hls prlnclple ls afflrmed ln Lhe language of ArLlcle 1392
LhaL does noL allow auLomaLlc resclsslon Lo Lake place
even by sLlpulaLlon, and mandaLes a poslLlve acL of
noLarlal or [udlclal demand on Lhe parL of Lhe unpald
seller.
ln a case lnvolvlng a sale of real properLy, when Lhe buyer falled
Lo pay Lhe sLlpulaLed purchase prlce ln accordance wlLh Lhe
Lerms of Lhe conLracL, buL Lhe seller dld noL glve a noLlce of
resclsslon, and Lhe only noLlce glven Lo Lhe buyer was a demand
Lo vacaLe Lhe premlses, Lhe CourL held LhaL such wrlLLen
demand dld noL amounL Lo a demand for resclsslon under
ArLlcle 1392. 2('K $5 2"S& ,4 M"(-# $5 2.)1(1$ !&S(7 8?E 92!6
Q?F *<===G4

L. Mutua| kest|tut|on And Iorfe|ture (Art|c|e 138S)

Art|c|e 138S.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
kesc|ss|on creates the ob||gat|on to return the th|ngs wh|ch were the
ob[ect of the contract, together w|th the|r fru|ts, and the pr|ce w|th |ts
|nterest, consequent|y, |t can be carr|ed out on|y when he who
demands resc|ss|on can return whatever he may be ob||ged to restore.

Ne|ther sha|| resc|ss|on take p|ace when the th|ngs wh|ch are the
ob[ect of the contract are |ega||y |n the possess|on of th|rd persons
who d|d not act |n bad fa|th.

In th|s case, |ndemn|ty for damages may be demanded from the
person caus|ng the |oss. (129S)

1. kest|tut|on As Consequence Cf kesc|ss|on
1he lasL paragraph ln ArLlcle 1191 cross-refers Lo ArLlcles 1383
and 1388 whlch apply Lo resclsslble conLracLs. 1he prlmary
consequence of an effecLlve exerclse of Lhe remedy of resclsslon
or resoluLlon would be muLual resLlLuLlon.
When sale ls annulled, parLles are governed by ArLlcle 1398
whereunder Lhey shall resLore Lo each oLher Lhe Lhlngs whlch
have been Lhe sub[ecL maLLer of Lhe conLracL, wlLh Lhelr frulLs,
and prlce wlLh lnLeresL. HC)"# ,4 2$&-' $5 633".%#7 :Q> 92!6 8<:
*<==DG4
<

ursuanL Lo ArLlcle 1188, ln a conLracL Lo sell, even lf Lhe buyers
dld noL mlsLakenly make parLlal paymenLs, lnasmuch as Lhe
suspenslve condlLlon was noL fulfllled, lL ls only falr and [usL LhaL
Lhe buyers be allowed Lo recover whaL Lhey had pald ln
expecLancy LhaL Lhe condlLlon would happen, oLherwlse, Lhere

1
2#/'&(# 56 *+0&% +- 9==#'/1, 361 SC8A 36 (2001), 7&(#) 56 90&#', 362 SC8A
660 (2008).
would be un[usL enrlchmenL on Lhe parL of Lhe seller. HA&$' ,4
2$&-' $5 633".%#7 8D> 92!6 FQE *:??<G4

2. When Iorfe|ture Cf ayments A||owed In kesc|ss|on
1he effecL of resLlLuLlon ln Lhe remedy of resclsslon may be
sLlpulaLed agalnsL, and such sLlpulaLlon would be enforceable Lo
Lhe exLenL LhaL lL ls reasonable.
A provlslon ln Lhe conLracL provldlng for forfelLure of Lhe
amounLs pald ln a conLracL of sale ls valld belng ln Lhe naLure of
a penal clause (now governed by ArLlcle 1226) and wlLhln Lhe
amblL of Lhe freedom of Lhe parLles Lo sLlpulaLe ln a conLracL
(now governed by ArLlcle 1306), slnce [l]n lLs double purpose of
lnsurlng compllance wlLh Lhe conLracL and of oLherwlse
measurlng beforehand Lhe damages whlch may resulL from non-
compllance, lL ls noL conLrary Lo law, morals or publlc order
because lL was volunLarlly and knowlngly agreed upon." V.)(%.
!.B()J 2%&S ,4 OW" V.)(%. \$BZ"K 2%&S7 E= NW(%4 DD *<=8=G4
1he seller's rlghL ln a conLracL Lo sell wlLh reserved LlLle Lo
exLra[udlclally cancel Lhe sale upon fallure of Lhe buyer Lo pay
Lhe sLlpulaLed lnsLallmenLs and reLaln Lhe sums and lnsLallmenLs
already recelved has long been recognlzed by Lhe well-
esLabllshed docLrlne of 39 years sLandlng. HN.)J(%().) ,4 2$&-'
$5 633".%#7 :>= 92!6 D=? *<==>G4
:

neverLheless, lL should be noLed LhaL Lhe CourL may sLlll allow
such forfelLure even ln Lhe absence of a forfelLure clause, as a
reasonable compensaLlon for Lhe use of Lhe sub[ecL maLLer of
Lhe conLracL. R$L"U ,4 2$&-' $5 633".%#7 8Q? 92!6 >:? *:???G4

2
L.# 3')$/' "'@$), */0< 56 L.# 3')$/' J+@H#4 */0<, 69 hll. 33 (1939).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

II. D|st|nct|ons 8etween Contract Cf Sa|e And Contract 1o Se||

A. Contract Cf Sa|e P"-#&# Contract 1o Se|| (Art|c|e 14S8) 61"%5.
N-$3"-'("#7 C)B4 ,4 2$&-' $5 633".%#, :Q? 92!6 D>D *<==DG.
1


Art|c|e 14S8.
8y the contract of sa|e one of the contract|ng part|es ob||gates h|mse|f
to transfer the ownersh|p and to de||ver a determ|nate th|ng, and the
other to pay therefor a pr|ce certa|n |n money or |ts equ|va|ent.

A contract of sa|e may be abso|ute or cond|t|ona|. (144Sa)

61"%5. N-$3"-'("#7 C)B4 ,4 2$&-' $5 633".%#

Iacts: !"#$%&" (&)*+*,-!"#$"%&'"( *"+,' -./&%&0 "%' $1&.2 324$1&2#(
!"#$ &'( )"*+'&(", !+*$'$-. /$,$ 01$ ,$2+#0$,$( 3"-!"#$%& !( ) *)%+$,
!" $%&' (& )%* +(,%*- .& /0112 3!*4 %&' 5!6(&%'!7 *!$' Lhelr share
conslsLlng of 1/2 of sald parcel of land, speclflcally Lhe easLern porLlon
Lhereof, Lo Adelfa roperLles. SubsequenLly, a ConflrmaLory
LxLra[udlclal arLlLlon AgreemenL" was execuLed by Lhe !lmenezes,
whereln Lhe easLern porLlon of Lhe sub[ecL loL, was ad[udlcaLed Lo !ose
and uomlnador !lmenez, whlle Lhe wesLern porLlon was allocaLed Lo
8osarlo and Salud !lmenez. 1hereafLer, Adelfa roperLles expressed
lnLeresL ln buylng Lhe wesLern porLlon of Lhe properLy from 8osarlo and
Salud. Accordlngly, ln 1989, an Lxcluslve CpLlon Lo urchase" was

1
I%'6 N0@$' "#'/%4 G K#56A >)@6 26 C4#@$+, 362 SC8A 226 (2008), 2#& "#4#1 56
I'/5'(+&A I&6, 364 SC8A 436 (2008).
execuLed beLween Lhe parLles, wlLh Lhe condlLlon LhaL Lhe selllng prlce
shall be 2.86M, LhaL Lhe opLlon money of 30,000 shall be credlLed as
parLlal paymenL upon Lhe consummaLlon of sale, LhaL Lhe balance ls Lo
be pald on or before 30 november 1989, and LhaL ln case of defaulL by
Adelfa roperLles Lo pay Lhe balance, Lhe opLlon ls cancelled and 30 of
Lhe opLlon money shall be forfelLed and Lhe oLher 30 refunded upon
Lhe sale of Lhe properLy Lo a Lhlrd parLy.

Meanwhlle, a complalnL was flled by Lhe nephews and nleces of 8osarlo
and Salud agalnsL !ose and uomlnador for annulmenL of Lhe deed of
sale ln favor of Pousehold CorporaLlon and recovery of ownershlp of Lhe
properLy. As a consequence, Adelfa roperLles held paymenL of Lhe full
purchase prlce and suggesLed LhaL Lhey seLLle Lhe case wlLh Lhelr
nephews and nleces.

ln 1990, Adelfa roperLles caused Lo be annoLaLed on Lhe 1C1 Lhe
excluslve opLlon Lo purchase. Cn Lhe same day, 8osarlo and Salud
execuLed a ueed of CondlLlonal Sale ln favor of Lmylene Chua over Lhe
same parcel of land for 3M, of whlch 1.3M was pald Lo Lhe former on
sald daLe, wlLh Lhe balance Lo be pald upon Lhe Lransfer of LlLle Lo Lhe
speclfled 1/2 porLlon. ALLy. 8ernardo wroLe 8osarlo and Salud lnformlng
Lhe laLLer LhaL ln vlew of Lhe dlsmlssal of Lhe case agalnsL Lhem, Adelfa
roperLles was wllllng Lo pay Lhe purchase prlce, and he requesLed LhaL
Lhe correspondlng deed of absoluLe sale be execuLed. 1hls was lgnored
by 8osarlo and Salud. !lmenez' counsel senL a leLLer Lo Adelfa roperLles
encloslng Lhereln a check for 23,000.00 represenLlng Lhe refund of 30
of Lhe opLlon money pald under Lhe excluslve opLlon Lo purchase.
8osarlo and Salud Lhen requesLed Adelfa roperLles Lo reLurn Lhe
owner's dupllcaLe copy of Lhe cerLlflcaLe of LlLle of Salud !lmenez. Adelfa
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
roperLles falled Lo surrender Lhe cerLlflcaLe of LlLle.

8osarlo and Salud !lmenez flled a peLlLlon for Lhe annulmenL of conLracL,
whlle Lmylene Chua, Lhe subsequenL purchaser of Lhe loL, flled a
complalnL ln lnLervenLlon. 1he 8eglonal 1rlal CourL ruled ln favor of Lhe
!lmenezes and CourL of Appeals afflrmed.

Issue: WheLher or noL Lhe conLracL beLween Lhe !lmenezes and Adelfa
roperLles ls an opLlon conLracL

ne|d: nC. 1he alleged opLlon conLracL ls a conLracL Lo sell, raLher Lhan a
conLracL of sale. 1he parLles never lnLended Lo Lransfer ownershlp Lo
Adelfa roperLles Lo compleLlon of paymenL of Lhe purchase prlce, Lhls
ls lnferred by Lhe facL LhaL Lhe excluslve opLlon Lo purchase, alLhough lL
provlded for auLomaLlc resclsslon of Lhe conLracL and parLlal forfelLure
of Lhe amounL already pald ln case of defaulL, does noL menLlon LhaL
Adelfa roperLles ls obllged Lo reLurn possesslon or ownershlp of Lhe
properLy as a consequence of non-paymenL. 1here ls no sLlpulaLlon
anenL reverslon or reconveyance of Lhe properLy ln Lhe evenL LhaL
peLlLloner does noL comply wlLh lLs obllgaLlon. WlLh Lhe absence of such
a sLlpulaLlon, lL may legally be lnferred LhaL Lhere was an lmplled
agreemenL LhaL ownershlp shall noL pass Lo Lhe purchaser unLll he had
fully pald Lhe prlce. ArLlcle 1478 of Lhe Clvll Code does noL requlre LhaL
such a sLlpulaLlon be expressly made. ConsequenLly, an lmplled
sLlpulaLlon Lo LhaL effecL ls consldered valld and blndlng and enforceable
beLween Lhe parLles. A conLracL whlch conLalns Lhls klnd of sLlpulaLlon ls
consldered a conLracL Lo sell. Moreover, LhaL Lhe parLles really lnLended
Lo execuLe a conLracL Lo sell ls bolsLered by Lhe facL LhaL Lhe deed of
absoluLe sale would have been lssued only upon Lhe paymenL of Lhe
balance of Lhe purchase prlce, as may be gleaned from Adelfa
roperLles' leLLer daLed 16 Aprll 1990 whereln lL lnformed Lhe vendors
LhaL lL ls now ready and wllllng Lo pay you slmulLaneously wlLh Lhe
execuLlon of Lhe correspondlng deed of absoluLe sale."

Doctr|ne: 1he dlsLlncLlon beLween a conLracL of sale and a conLracL Lo
sell ls lmporLanL for ln conLracL of sale, Lhe LlLle passes Lo Lhe vendee
upon Lhe dellvery of Lhe Lhlng sold, whereas ln a conLracL Lo sell, by
agreemenL Lhe ownershlp ls reserved ln Lhe vendor and ls noL Lo pass
unLll Lhe full paymenL of Lhe prlce. ln a conLracL of sale, Lhe vendor has
losL and cannoL recover ownershlp unLll and unless Lhe conLracL ls
resolved or resclnded, whereas ln a conLracL Lo sell, LlLle ls reLalned by
Lhe vendor unLll Lhe full paymenL of Lhe prlce, such paymenL belng a
poslLlve suspenslve condlLlon and fallure of whlch ls noL a breach buL an
evenL LhaL prevenLs Lhe obllgaLlon of Lhe vendor Lo convey LlLle from
becomlng effecLlve. 1hus, a deed of sale ls consldered absoluLe ln
naLure where Lhere ls nelLher a sLlpulaLlon ln Lhe deed LhaL LlLle Lo Lhe
properLy sold ls reserved ln Lhe seller unLll Lhe full paymenL of Lhe prlce,
nor one glvlng Lhe vendor Lhe rlghL Lo unllaLerally resolve Lhe conLracL
Lhe momenL Lhe buyer falls Lo pay wlLhln a flxed perlod.

ln a conLracL of sale, LlLle Lo Lhe properLy passes Lo buyer upon
Lhe dellvery of Lhe Lhlng sold, ln a conLracL Lo sell, ownershlp ls,
by agreemenL, reserved ln Lhe seller and ls noL Lo pass Lo buyer
unLll full paymenL of purchase prlce. CLherwlse sLaLed, ln a
conLracL of sale, seller loses ownershlp over Lhe properLy and
cannoL recover lL unLll and unless Lhe conLracL ls resolved or
resclnded, whereas ln a conLracL Lo sell, LlLle ls reLalned by Lhe
seller unLll full paymenL of Lhe prlce. ln Lhe laLLer conLracL,
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
paymenL of Lhe prlce ls a poslLlve suspenslve condlLlon, fallure
of whlch ls noL a breach buL an evenL LhaL prevenLs Lhe
obllgaLlon of Lhe vendor Lo convey LlLle from becomlng
effecLlve. H2.#'(%%$ ,4 !"K"#7 D8= 92!6 <=8 *:??>G4
<


1. kat|ona|e Cf Contracts 1o Se||
A conLracL Lo sell ls commonly enLered lnLo so as Lo proLecL Lhe
seller agalnsL a buyer who lnLends Lo buy Lhe properLy ln
lnsLallmenLs by wlLhholdlng ownershlp over Lhe properLy unLll
Lhe buyer effecLs full paymenL Lherefor. lL cannoL be lnferred ln
a slLuaLlon where boLh parLles undersLood Lhe prlce Lo be pald
ln cash4 H2('K $5 2"S& ,4 M"(-# $5 2.)1(1$ !&S(7 8?E 92!6 Q?F
*<===G4
:


2. Is A Contract 1o Se|| A "Sa|e" Under Art|c|e 14S8?
A conLracL Lo sell" as a bllaLeral conLracL whereby Lhe
prospecLlve seller, whlle expressly reservlng Lhe ownershlp of
Lhe sub[ecL properLy desplLe dellvery Lhereof Lo Lhe prospecLlve
buyer, blnds hlmself Lo sell Lhe sald properLy excluslvely Lo Lhe

1
N$? 56 *+0&% +- 9==#'/1, 182 SC8A 364 (1990), ;0+% 56 *+0&% +- 9==#'/1, 337
SC8A 846 (2001), 9<#1'?$1 56 *+0&% +- 9==#'/1, 361 SC8A 328 (2001), L0'F+) 56
D'&$/'+, 362 SC8A 634 (2001), N#'M+ 56 *+0&% +- 9==#'/1A 369 SC8A 36 (2001),
C)$5#&1'/ "+<$)' I0,'& 3$//$), *+&=6 56 8#$&1 +- 9),#/ L#5#1, 389 SC8A 316
(2002), 9/?$&' 56 *+0&% +- 9==#'/1, 399 SC8A 331 (2003), *.0' 56 *+0&% +-
9==#'/1, 401 SC8A 34 (2002), :/')@$' 56 *+0&% +- 9==#'/1, 437 SC8A 224 (2003),
2$('(A I&6 56 L'4'?#), 331 SC8A 147 (2007), 80/1% 56 B" ;0$/(#&1A >)@6, 332 SC8A
74 (2007), 8#$&1 +- 9)%+)$+ :6 ;#&)'<# 56 *+0&% +- 9==#'/1, 339 SC8A 33 (2008),
7&(#) 56 90&#', 362 SC8A 660 (2008), L') 56 ;#)+/$&'+, 604 SC8A36 (2009),
;')H +- B6>6 56 I3BA >)@6, 609 SC8A 134 (2009), K# N#+) 56 7),, 611 SC8A 381
(2010), 3+)%#@'/5+ 56 8#$&1 +- O0,#)$' L6 B&$?#&+, 624 SC8A 373 (2010).
2
3+)%#@'/5+ 56 8#$&1 +- O0,#)$' L6 B&$?#&+, 624 SC8A 373 (2010).
prospecLlve buyer upon fulflllmenL of Lhe condlLlon agreed
upon, LhaL ls, full paymenL of Lhe purchase prlce." 2$-$)"% ,4
2$&-' $5 633".%#, :E8 92!6 <D7 :> *<==EG6
P
A&' #""a N^A ,4
2$&-' $5 633".%#7 :E: 92!6 QEQ *<==EG6

2$-$)"% ,4 2$&-' $5 633".%#

Iacts: ln 1983, Coronel execuLed a documenL enLlLled "8ecelpL of uown
aymenL" ln favor of Alcaraz for 30,000 down paymenL of 1.24M as
purchase prlce for an lnherlLed house and loL promlslng Lo execuLe a
deed of absoluLe sale as soon as lL has been Lransferred ln Lhelr name.
1he balance of 1.19M ls due upon Lhe execuLlon of Lhe deed. When
LlLle Lo Lhe properLy was flnally Lransferred Lo Lhelr names, Lhe Coronels
sold Lhe properLy Lo Mabanag for 1.38M afLer she pald 300k down
paymenL. 8ecause of Lhls, Lhey cancelled and resclnded Lhe conLracL
wlLh Alcaraz by reLurnlng Lhe 30,00 down paymenL

Alcaraz flled a complalnL for speclflc performance agalnsL Lhe Coronels
and cause Lhe annoLaLlon of a noLlce of lls pendens on Lhe 1C1.
Mabanag, on Lhe oLher hand, caused Lhe annoLaLlon of a noLlce of
adverse clalm wlLh Lhe 8u. Powever, Lhe Coronels execuLed a ueed of
AbsoluLe Sale ln favor Mabanag. 81C ruled ln favor of Alcaraz. CA
afflrmed.

Issue: WheLher or noL Lhe recelpL of downpaymenL" serves a conLracL
Lo sell or a condlLlonal conLracL of sale

3
B/'%$)0? B/')1 B.$/6A >)@6 56 *0@0#@+, 488 SC8A 136 (2006), 2'/#)F0#/' 56
Q'/'4'') K#56 ')( >)(01%&$'/ *+&=6, 390 SC8A 380 (2009),L') 56 ;#)+/$&'+, 604
SC8A 36 (2009),
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

ne|d: nC. 1he agreemenL could noL have been a conLracL Lo sell because
Lhe sellers made no express reservaLlon of ownershlp or LlLle Lo Lhe
sub[ecL parcel of land. lurLhermore, Lhe clrcumsLance, whlch prevenLed
Lhe parLles from enLerlng lnLo an absoluLe conLracL of sale, perLalned Lo
Lhe sellers Lhemselves (Lhe cerLlflcaLe of LlLle was noL ln Lhelr names)
and noL Lhe full paymenL of Lhe purchase prlce. under Lhe esLabllshed
facLs and clrcumsLances of Lhe case, had Lhe cerLlflcaLe of LlLle been ln
Lhe names of peLlLloners-sellers aL LhaL Llme, Lhere would have been no
reason why an absoluLe conLracL of sale could noL have been execuLed
and consummaLed rlghL Lhere and Lhen. Moreover, unllke ln a conLracL
Lo sell, peLlLloners dld noL merely promlse Lo sell Lhe properLy Lo prlvaLe
respondenL upon Lhe fulflllmenL of Lhe suspenslve condlLlon. Cn Lhe
conLrary, havlng already agreed Lo sell Lhe sub[ecL properLy, Lhey
underLook Lo have Lhe cerLlflcaLe of LlLle changed Lo Lhelr names and
lmmedlaLely LhereafLer, Lo execuLe Lhe wrlLLen deed of absoluLe sale.
WhaL ls clearly esLabllshed by Lhe plaln language of Lhe sub[ecL
documenL ls LhaL when Lhe sald 8ecelpL of uown aymenL" was
prepared and slgned by peLlLloners, Lhe parLles had agreed Lo a
condlLlonal conLracL of sale, consummaLlon of whlch ls sub[ecL only Lo
Lhe successful Lransfer of Lhe cerLlflcaLe of LlLle from Lhe name of
peLlLloners' faLher Lo Lhelr names. 1he suspenslve condlLlon was fulfllled
on 6 lebruary 1983 and Lhus, Lhe condlLlonal conLracL of sale beLween
Lhe parLles became obllgaLory, Lhe only acL requlred for Lhe
consummaLlon Lhereof belng Lhe dellvery of Lhe properLy by means of
Lhe execuLlon of Lhe deed of absoluLe sale ln a publlc lnsLrumenL, whlch
peLlLloners unequlvocally commlLLed Lhemselves Lo do as evldenced by
Lhe 8ecelpL of uown aymenL."

Doctr|ne: ln a conLracL Lo sell, Lhe prospecLlve seller expllclLly reserves
Lhe Lransfer of LlLle Lo Lhe prospecLlve buyer, meanlng, Lhe prospecLlve
seller does noL as yeL agree or consenL Lo Lransfer ownershlp of Lhe
properLy sub[ecL of Lhe conLracL Lo sell unLll Lhe happenlng of an evenL,
whlch for presenL purposes we shall Lake as Lhe full paymenL of Lhe
purchase prlce. WhaL Lhe seller agrees or obllges hlmself Lo do ls Lo
fulflll hls promlse Lo sell Lhe sub[ecL properLy when Lhe enLlre amounL of
Lhe purchase prlce ls dellvered Lo hlm. ln oLher words, Lhe full paymenL
of Lhe purchase prlce parLakes of a suspenslve condlLlon, Lhe non-
fulflllmenL of whlch prevenLs Lhe obllgaLlon Lo sell from arlslng and Lhus,
ownershlp ls reLalned by Lhe prospecLlve seller wlLhouL furLher
remedles by Lhe prospecLlve buyer... SLaLed poslLlvely, upon Lhe
fulflllmenL of Lhe suspenslve condlLlon whlch ls Lhe full paymenL of Lhe
purchase prlce, Lhe prospecLlve seller's obllgaLlon Lo sell Lhe sub[ecL
properLy by enLerlng lnLo a conLracL of sale wlLh Lhe prospecLlve buyer
becomes demandable as provlded ln ArLlcle 1479 of Lhe Clvll Code.

N^A ,4 2$&-' $5 633".%#

Iacts: n8 owned a parcel of land whlch Lapaz kaw ngo offered Lo buy.

LvenLs under Lhe flrsL leLLer-agreemenL. n8 accepLed Lapaz's offer
sub[ecL Lo cerLaln sLlpulaLlons. 1he lmporLanL ones are Lhe followlng:
1. 1he selllng prlce shall be 3.4mllllon. Lapaz had already pald 100,000
as deposlL.
2. upon fallure Lo pay Lhe addlLlonal deposlL worLh 970,000, Lhe
100,000 shall be forfelLed and n8 shall be auLhorlzed Lo sell Lhe
properLy Lo anoLher.
3. 1he properLy shall be cleared of lLs presenL LenanLs aL Lhe expense of
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Lapaz.
4. Sale was sub[ecL Lo oLher Lerms and condlLlons Lo be lmposed.
Lapaz agreed, so she proceeded Lo clear Lhe loL of lLs LenanLs aL her own
expense. Powever, due Lo dlfflculLles ln money, she requesLed for
ad[usLmenL of paymenL proposals, whlch Lhe bank denled. n8 also
remlnded her LhaL she had noL yeL senL her leLLer of conformlLy Lo Lhe
agreemenL reached and Lold her Lo pay Lhe full prlce of 3.4mllllon. lf
noL, Lhe loL wlll be sold Lo oLher parLles. Lapaz requesLed for a reducLlon
of Lhe prlce as Lhe slze of Lhe land was subsLanLlally reduced. n8
agreed. Powever, n8 sLlll dld noL recelve paymenL from Lapaz, and
Lhus gave Lhe laLLer a lasL chance Lo pay Lhe balance of Lhe down
paymenL. lf she falled Lo pay, Lhe sale shall be cancelled and Lhe
100,000 paymenL shall be forfelLed. Lapaz falled Lo pay, so 100,000
was forfelLed and Lhe sale never maLerlallzed. n8 leased Lhe premlses
Lo a cerLaln 8lvera. Lapaz requesLed for a refund of her deposlL ln Lhe
LoLal amounL of 660,000 and asked LhaL Lhe forfelLed 100,000 be
reduced Lo 30,000. n8 agreed.

LvenLs under Lhe second leLLer-agreemenL. Lapaz requesLed for a revlval
of Lhe prevlously approved offer Lo n8. n8 approved. All condlLlons
as ln Lhe flrsL agreemenL were Lhe same, excepL for Lhe purchase prlce
and deposlL. 1he prlce was 3.1mllllon, Lhe deposlL was 200,000. Lapaz
refused, however, Lo conform Lo Lhe condlLlon of vacaLlng Lhe premlses
aL her expense as she had already done so under Lhe flrsL agreemenL.
(She apparenLly consldered Lhls second leLLer-agreemenL as a
conLlnuaLlon of Lhe flrsL so she sald LhaL she was no longer requlred Lo
evlcL Lhe LenanLs as she had already done so.) 8esldes, accordlng Lo her,
Lhe occupanLs of Lhe properLy were LenanLs of n8. n8 refused Lhls
offer . 1o prevenL Lhe forfelLure of her 200,000 deposlL, she slgned Lhe
leLLer-agreemenL. She Lold n8 LhaL she was wllllng Lo pay Lhe
remalnlng deposlL of 800k as long as lL was n8 who would clear Lhe
properLy. n8 refused, and forfelLed Lhe 200,000 of Lapaz. n8
lnformed Lapaz LhaL Lhey had already declded Lo sell Lhe properLy for
noL less Lhan 7M.

Issue: WheLher or noL Lhere was Lhere a perfecLed conLracL of sale
beLween ngo and n8

ne|d: nC. 1he leLLer agreemenLs were ln Lhe naLure of conLracLs Lo sell.
A conLracL Lo sell ls akln Lo a condlLlonal sale where Lhe efflcacy or
obllgaLory force of Lhe vendor's obllgaLlon Lo Lransfer LlLle ls
subordlnaLed Lo Lhe happenlng of a fuLure and uncerLaln evenL so LhaL lf
Lhe suspenslve condlLlon does noL Lake place, Lhe parLles would sLand as
lf Lhe condlLlonal obllgaLlon had never exlsLed. Commonly, Lhe
suspenslve condlLlon Lo Lransfer ownershlp ls full paymenL of Lhe
purchase prlce. ln Lhls case, ngo's obllgaLlon was Lo deposlL an lnlLlal
amounL (100k ln Lhe flrsL agreemenL, 200k ln Lhe 2nd) and Lhen
subsequenLly Lo deposlL an addlLlonal amounL represenLlng 20 of Lhe
purchase prlce (ln boLh agreemenLs). And under boLh leLLer-
agreemenLs, Lhe fallure of Lhe buyer Lo remlL Lhe addlLlonal deposlLs,
deposlLs already glven shall be forfelLed and Lhe bank can sell Lhe
properLy Lo oLhers.

1he fallure Lo remlL Lhe requlred amounLs gave occaslon for n8 Lo
cancel Lhe agreemenL. 1hls speclflc rlghL by n8 ls ln Lhe naLure of a
sLlpulaLlon reservlng LlLle ln Lhe vendor unLll full paymenL of Lhe
purchase prlce or glvlng Lhe vendor Lhe rlghL Lo unllaLerally resclnd Lhe
conLracL Lhe momenL Lhe buyer falls Lo pay wlLhln a flxed perlod. 1he
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
leLLer- agreemenLs were noL deeds of sale, no LlLle passes from seller Lo
buyer under such documenLs. 1he presumpLlon LhaL earnesL money
glven ln a sale LransacLlon ls consldered as parL of Lhe purchase prlce
and ls a proof of a perfecLed conLracL of sale ls rebuLLable. Clearly, Lhe
leLLer-agreemenLs show Lhe lnLenLlon of Lhe parLles Lo enLer lnLo
negoLlaLlons leadlng Lo a conLracL of sale. 1he lnlLlal deposlLs should be
consLrued as parL of Lhe conslderaLlon for n8's promlse Lo reserve
sub[ecL properLy for ngo.

lL should be noLed LhaL Lhere were Lwo separaLe LransacLlons-Lhe flrsL
was uncondlLlonally cancelled and Lhe effecLs Lhereof cannoL be
deemed appllcable Lo Lhe second LransacLlon.

Note: lnLeresLlng enough, 7 days afLer Lhls declslon, Coronel v. CA was
declded. ln LhaL case, Lhe SC sald LhaL ln a conLracL Lo sell, Lhe
happenlng of a suspenslve condlLlon does noL glve rlse Lo an execuLory
conLracL of sale sub[ecL Lo an acLlon for speclflc performance, slnce Lhe
obllgaLlon of Lhe seller ls Lo enLer lnLo a conLracL of sale (an obllgaLlon Lo
do). 8uL ln Lhe case above, Lhe SC sald LhaL Lhe happenlng of a condlLlon
ln a conLracL Lo sell converLs lL Lo a conLracL of sell or aL Lhe mosL an
execuLory sale Lo an execuLed one.

CLv: 1he foregolng rullngs all polnL Lo one Lhlng: LhaL Lhe
Supreme CourL uses Lhe same Lerm conLracL Lo sell" Lo ldenLlfy
Lwo dlfferenL Lypes of condlLlonal conLracLs - one where Lhe
underlylng conLracL embodles bllaLeral-reclprocal real
obllgaLlons Lo glve, buL LhaL Lhe conLracL's efflcacy ls sub[ecLed
Lo a suspenslve condlLlon, and Lhe oLher, where Lhe prlmary
obllgaLlons creaLed ls an obllgaLlon Lo do, l.e., Lo enLer lnLo a
conLracL of sale, sub[ecL Lo fulflllmenL of Lhe obllgaLlon of Lhe
buyer Lo fully pay Lhe purchase prlce. 1he confuslng, use of
Lerms has Lhereby undermlned Lhe [urlsprudenLlal rules
perLalnlng Lo Lhe remedles avallable Lo Lhe parLles.

3. Contract 1o Se|| v. Cond|t|ona| Contract Cf Sa|e: "Cn Where"
the Suspens|ve Cond|t|on Is |nned Determ|nes Nature of a
Sa|e

C|ass|c Contract to Se|| Cond|t|ona| Sa|e
MuLual promlse Lo buy and sell
Clear reservaLlon of ownershlp no reservaLlon of ownershlp
1here ls no Lransfer of ownershlp. 1ransfer of ownershlp ls
condlLloned on Lhe paymenL,
buL even lf Lhe buyer defaulLs,
Lhe ownershlp has already
vesLed ln Lhe buyer.
CondlLlon ls usually full paymenL,
before lnLenL Lo Lransfer ownershlp
would arlse.
lnLenL Lo Lransfer ownershlp ls
clear.
1here musL be a reservaLlon of Lhe
rlghL Lo resclnd (auLomaLlc resclsslon)

uoes noL requlre resclsslon (ln Lheory)
! 1hus Lhe acLlon should be for
reconveyance for properLy.
8equlres [udlclal resclsslon (ln
Lheory)

1he maln lngredlenL of a conLracL Lo sell, whlch lL shares wlLh a
condlLlonal conLracL of sale, ls LhaL lL conLalns clearly a
sLlpulaLlon LhaL musL amounL Lo a suspenslve condlLlon, for noL
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
every modallLy lnLroduced ln a sale conLracL would necessarlly
be a condlLlon.
o 1herefore, boLh a condlLlonal conLracL of sale and a
conLracL Lo sell are sub[ecL Lo a suspenslve condlLlon,
whlch usually Lakes Lhe form of Lhe full paymenL of Lhe
purchase prlce by Lhe buyer. Accordlng Lo a llne of
declslons, Lhe maln lngredlenL ln a conLracL Lo sell ls Lhe
exlsLence of a sLlpulaLlon or agreemenL lmposlng a
suspenslve condlLlon on Lhe effecLlvlLy or demandablllLy
of Lhe conLracL lLself, and noL [usL on Lhe obllgaLlon of
Lhe seller Lo Lransfer and dellver Lhe sub[ecL maLLer, for
ln Lhe laLLer case, lL would amounL Lo a condlLlonal
conLracL of sale.
1o be sure, a conLracL of sale may elLher be absoluLe or
condlLlonal. Cne form of condlLlonal sales ls whaL ls now
popularly Lermed as a ConLracL Lo Sell," where ownershlp or
LlLle ls reLalned unLll Lhe fulflllmenL of a poslLlve suspenslve
condlLlon )+&?'//4 Lhe paymenL of Lhe purchase prlce ln Lhe
manner agreed upon. lor a conLracL, llke a conLracL Lo sell,
lnvolves a meeLlng of mlnds beLween Lwo persons whereby one
blnds hlmself, wlLh respecL Lo Lhe oLher, Lo glve someLhlng or Lo
render some servlce. HR$L"U ,4 2$&-' $5 633".%#7 8Q? 92!6
>:?7 >:F *:???G4
<

o A conLracL Lo sell ls akln Lo a condlLlonal sale, ln whlch
Lhe efflcacy or obllgaLory force of Lhe vendor's
obllgaLlon Lo Lransfer LlLle ls subordlnaLed Lo Lhe
happenlng of a fuLure and uncerLaln evenL, so LhaL lf Lhe

1
K#?'-#/$1 56 *+0&% +- 9==#'/1, 338 SC8A 303 (2007).
suspenslve condlLlon does noL Lake place, Lhe parLles
would sLand as lf Lhe condlLlonal obllgaLlon never
exlsLed. I-1") ,4 6&-".7 DE: 92!6 EE? *:??FG4
:

A perfecLed conLracL of sale (as dlsLlngulshed from a conLracL Lo
sell) may elLher be absoluLe or condlLlonal dependlng on
wheLher Lhe agreemenL ls devold of, or sub[ecL Lo, any condlLlon
on Lhe passlng of LlLle of Lhe Lhlng Lo be conveyed or on Lhe
obllgaLlon of a parLy LhereLo. lL held LhaL Lhe Lerm condlLlon" ln
Lhe conLexL of a perfecLed conLracL of sale perLalns ln reallLy Lo
Lhe compllance by one parLy of an underLaklng Lhe fulflllmenL of
whlch would beckon ln Lurn Lhe demandablllLy of Lhe reclprocal
presLaLlon of Lhe oLher parLy. lL also held LhaL where Lhe so-
called poLesLaLlve condlLlon" ls lmposed noL on Lhe blrLh of Lhe
obllgaLlon buL on lLs fulflllmenL, only Lhe condlLlon ls avolded
leavlng unaffecLed Lhe obllgaLlon lLself. !$L"-$ ,4 2$&-' $5
633".%#7 :D? 92!6 ::8 *<==DG4
o lL dlsLlngulshed beLween one slLuaLlon where Lhe
condlLlon ls lmposed on an obllgaLlon of a parLy whlch ls
noL complled wlLh, Lhe oLher parLy may elLher refuse Lo
proceed or walve sald condlLlon, from Lhe oLher
slLuaLlon where Lhe condlLlon ls lmposed upon Lhe
perfecLlon of Lhe conLracL lLself, Lhe fallure of such
condlLlon would prevenL Lhe [urldlcal relaLlon lLself from
comlng lnLo exlsLence. Slnce under Lhe agreemenL, Lhe
seller was obllged Lo evlcL Lhe squaLLers on Lhe
properLy, Lherefore Lhe e[ecLmenL of Lhe squaLLers was
a condlLlon, Lhe operaLlve acL of whlch seLs lnLo moLlon

2
K# N#+) 56 K# N#+), 393 SC8A 768 (2009).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Lhe perlod of Lhe paymenL of Lhe balance of Lhe
purchase prlce. 1he seller's fallure Lo remove Lhe
squaLLers from Lhe properLy wlLhln Lhe sLlpulaLed
perlod gave Lhe buyer Lhe rlghL Lo elLher refuse Lo
proceed wlLh Lhe agreemenL or walve LhaL condlLlon ln
consonance wlLh ArLlcle 1343 of Lhe Clvll Code. !$L"-$
,4 2$&-' $5 633".%#7 :D? 92!6 ::8 *<==DG4

4. Importance Cf "Locat|ng" 1he Cond|t|on 1o ay r|ce In Iu||
ln a conLracL of sale, Lhe non-paymenL of Lhe prlce ls a
resoluLory condlLlon whlch exLlngulshes Lhe LransacLlon LhaL, for
a Llme exlsLed, and dlscharges Lhe obllgaLlons creaLed
Lhereunder4 HA%.# ,4 6)J"%"#`M&'.%%.7 Q8= 92!6 :>8 *:??QG4
<

Whereas, ln a conLracL Lo sell, Lhe paymenL of Lhe purchase
prlce ls a poslLlve suspenslve condlLlon. 1he vendor's obllgaLlon
Lo convey Lhe LlLle does noL become effecLlve ln case of fallure
Lo pay. HA&$' ,4 2$&-' $5 633".%#7 8D> 92!6 FQE *:??<G4
:

When Lhe obllgaLlon of buyer Lo pay Lhe full amounL of Lhe
purchase prlce was made sub[ecL Lo Lhe condlLlon LhaL Lhe seller
flrsL dellvery Lhe clean LlLle over Lhe parcel bough wlLhln LwenLy
(20) monLhs from Lhe slgnlng of Lhe conLracL, such condlLlon ls
lmposed merely on Lhe performance of Lhe obllgaLlon, as
dlsLlngulshed from a condlLlon lmposed on Lhe perfecLlon of Lhe
conLracL. 1he non-happenlng of Lhe condlLlon merely granLed
Lhe buyer Lhe rlghL Lo resclnd Lhe conLracL or even Lo walve lL

1
2'/#)F0#/' 56 Q'/'4')) K#5#/+=?#)% ')( >)(01%&$'/ *+&=6, 390 SC8A 380
(2009), L&'(#&1 "+4'/ ;')H 56 *0$1+) N0?<#& *+6A >)@6, 388 SC8A 690 (2009).
2
8#$&1 +- I=+01#1 I')(#E'1 56 N$)'A 331 SC8A 183 (2001), R'?+&' "#'/%4 ')(
K#56 *+&= 56 7--$@# +- %.# B&#1$(#)%, 306 SC8A 391 (2006).
and enforce performance on Lhe parL of Lhe seller, all ln
consonance wlLh ArLlcle 1343 of Clvll Code whlch provldes LhaL
Where Lhe obllgaLlon of elLher parLy Lo a conLracL of sale ls
sub[ecL Lo any condlLlon whlch ls noL performed, such parLy may
refuse Lo proceed wlLh Lhe conLracL or he may walve
performance of Lhe condlLlon." A.S.#. ,4 2$&-' $5 633".%#7
:=? 92!6 D8: *<==FG6

A.S.#. ,4 2$&-' $5 633".%#

Iacts: ln 1981, a conLracL of CondlLlonal Sale of 8eglsLered Lands" was
execuLed beLween Lhe spouses vlvenclo and Llena 8abasa as vendors
and 1abangao 8ealLy lnc. (1abangao) as vendee over 3 parcels of land ln
8aLangas. Slnce Lhe cerLlflcaLes of LlLle over Lhe loLs were ln Lhe name of
Lhlrd persons who had already execuLed deeds of reconveyance and
dlsclalmer ln favor of Lhe 8abasas, lL was agreed LhaL Lhe LoLal purchase
prlce of 2,121,920.00 would be pald ln Lhe followlng manner:
300,000.00 upon slgnlng of Lhe conLracL, and 1,821,920.00 upon
presenLaLlon by Lhe 8abasas of Lransfer cerLlflcaLes of LlLles ln Lhelr
name, free from all llens and encumbrances, and dellvery of reglsLerable
documenLs of sale ln favor of 1abangao wlLhln 20 monLhs from Lhe
slgnlng of Lhe conLracL. ln Lhe meanLlme, Lhe reLalned balance of Lhe
purchase prlce would earn lnLeresL aL 17 per annum or 20,648.43
monLhly payable Lo Lhe 8abasas unLll 31 uecember 1982. lL was
expressly sLlpulaLed LhaL 1abangao would have Lhe absoluLe and
uncondlLlonal rlghL Lo Lake lmmedlaLe possesslon of Lhe loLs as well as
lnLroduce any lmprovemenLs Lhereon. Cn 18 May 1981 1abangao leased
Lhe loLs Lo Shell Cas hlllpplnes, lnc. (SPLLL), whlch lmmedlaLely sLarLed
Lhe consLrucLlon Lhereon of a Llquefled eLroleum Cas 1ermlnal ro[ecL,
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
an approved zone exporL enLerprlse of Lhe LxporL rocesslng Zone.
1abangao ls Lhe real esLaLe arm of SPLLL. 1he parLles subsLanLlally
complled wlLh Lhe Lerms of Lhe conLracL. 1abangao pald Lhe flrsL
lnsLallmenL of 300,000.00 Lo Lhe 8abasas whlle Lhe laLLer dellvered
acLual possesslon of Lhe loLs Lo Lhe former . ln addlLlon, 1 abangao pald
379,623.00 Lo Lhe LenanLs of Lhe loLs as dlsLurbance compensaLlon and
as paymenL for exlsLlng crops as well as 334,700.00 Lo Lhe owners of
Lhe houses sLandlng Lhereon ln addlLlon Lo granLlng Lhem resldenLlal
loLs wlLh Lhe LoLal area of 2,800 square meLers. 1abangao llkewlse pald
Lhe sLlpulaLed monLhly lnLeresL for Lhe 20- monLh perlod amounLlng Lo
408,380.80. Meanwhlle, Lhe 8abasas flled Clvll Case 319 and eLlLlon
373 for Lhe Lransfer of LlLles of Lhe loLs ln Lhelr name. Powever, 2 days
prlor Lo Lhe explraLlon of Lhe 20-monLh perlod, speclflcally on 31
uecember 1982, Lhe 8abasas asked 1abangao for an lndeflnlLe
exLenslon wlLhln whlch Lo dellver clean LlLles over Lhe loLs. 1hey asked
LhaL 1abangao conLlnue paylng Lhe monLhly lnLeresL of 20,648.43
sLarLlng !anuary 1983 on Lhe ground LhaL Clvll Case 319 and eLlLlon 373
had noL yeL been resolved wlLh flnallLy ln Lhelr favor. 1abangao refused
Lhe requesL. ln reLallaLlon Lhe 8abasas execuLed a noLarlzed unllaLeral
resclsslon daLed 28 lebruary 1983 Lo whlch 1abangao responded by
remlndlng Lhe 8abasas LhaL Lhey were Lhe ones who dld noL comply
wlLh Lhelr conLracLual obllgaLlon Lo dellver clean LlLles wlLhln Lhe
sLlpulaLed 20-monLh perlod, hence, had no rlghL Lo resclnd Lhelr
conLracL. 1he 8abasas lnslsLed on Lhe unllaLeral resclsslon and
demanded LhaL SPLLL vacaLe Lhe loLs.

Cn 19 !uly 1983 1abangao lnsLlLuLed an acLlon for speclflc performance
wlLh damages ln Lhe 81C 8aLangas ClLy Lo compel Lhe spouses Lo comply
wlLh Lhelr obllgaLlon Lo dellver clean LlLles over Lhe properLles. 1he
8abasas moved Lo dlsmlss Lhe complalnL on Lhe ground LhaL Lhelr
conLracL wlLh 1abangao became null and vold wlLh Lhe explraLlon of Lhe
20-monLh perlod glven Lhem wlLhln whlch Lo dellver clean cerLlflcaLes of
LlLle. SPLLL enLered Lhe dlspuLe as lnLervenor praylng LhaL lLs lease over
Lhe premlses be respecLed by Lhe 8abasas. 81C ruled ln favor of
1abangao and Shell. CA afflrmed.

Issue: WheLher or noL Lhere was a conLracL of absoluLe sale beLween
Lhe 8abasa and 1abagao

ne|d: ?LS. AlLhough denomlnaLed CondlLlonal Sale of 8eglsLered
Lands," Lhe conLracL beLween Lhe spouses and 1abangao ls one of
absoluLe sale. Aslde from Lhe Lerms and sLlpulaLlons used Lhereln
lndlcaLlng such klnd of sale, Lhere ls absoluLely no provlso reservlng LlLle
ln Lhe 8abasas unLll full paymenL of Lhe purchase prlce, nor any
sLlpulaLlon glvlng Lhem Lhe rlghL Lo unllaLerally resclnd Lhe conLracL ln
case of non-paymenL. A deed of sale ls absoluLe ln naLure alLhough
denomlnaLed a condlLlonal sale" absenL such sLlpulaLlons. ln such cases,
ownershlp of Lhe Lhlng sold passes Lo Lhe vendee upon Lhe consLrucLlve
or acLual dellvery Lhereof. ln Lhe lnsLanL case, ownershlp over LoLs
17827-A, 17827-8 and 17827-C passed Lo 1abangao boLh by
consLrucLlve and acLual dellvery. ConsLrucLlve dellvery was
accompllshed upon Lhe execuLlon of Lhe conLracL of 11 Aprll 1981
wlLhouL any reservaLlon of LlLle on Lhe parL of Lhe 8abasas whlle acLual
dellvery was made when 1abangao Look uncondlLlonal possesslon of Lhe
loLs and leased Lhem Lo lLs assoclaLe company SPLLL whlch consLrucLed
lLs mulLl-mllllon peso LC ro[ecL Lhereon.

ln 8omero v. CourL of Appeals and Llm v. CourL of Appeals, Lhe CourL
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
dlsLlngulshed beLween a condlLlon lmposed on Lhe perfecLlon of a
conLracL and a condlLlon lmposed merely on Lhe performance of an
obllgaLlon. Whlle fallure Lo comply wlLh Lhe flrsL condlLlon resulLs ln Lhe
fallure of a conLracL, fallure Lo comply wlLh Lhe second merely glves Lhe
oLher parLy Lhe opLlon Lo elLher refuse Lo proceed wlLh Lhe sale or Lo
walve Lhe condlLlon. ln Lhe presenL case, Lhe spouses' conLracL wlLh
1abangao dld noL lose lLs efflcacy when Lhe 20- monLh perlod sLlpulaLed
Lhereln explred wlLhouL Lhe spouses belng able Lo dellver clean
cerLlflcaLes of LlLle such LhaL 1abangao may no longer demand
performance of Lhelr obllgaLlon.

Doctr|ne:

1he remedy of resclsslon under ArLlcle 1191 of Lhe Clvll Code
cannoL apply Lo mere conLracLs Lo sell-ln a conLracL Lo sell, Lhe
paymenL of Lhe purchase prlce ls a poslLlve suspenslve
condlLlon, and fallure Lo pay Lhe prlce agreed upon ls noL a mere
breach, casual or serlous, buL a slLuaLlon LhaL prevenLs Lhe
obllgaLlon of Lhe vendor Lo convey LlLle from acqulrlng an
obllgaLory force. O.) ,4 A")$%(-.$7 E?Q 92!6 8E *:??=G4
<


S. Necessary St|pu|at|ons In A Contract 1o Se||:
A conLracL ls one of sale, absenL any sLlpulaLlon Lhereln (a)
reservlng LlLle over Lhe properLy Lo Lhe vendee unLll full
paymenL of Lhe purchase prlce,
2
and (b) glvlng Lhe vendor Lhe

1
L&'(#&1 "+4'/ ;')H 56 *0$1+) N0?<#& *+6A >)@6A 388 SC8A 690 (2009), S'<01 56
B'@1+), 603 SC8A 334 (2009).
2
L+='@$+ 56 *+0&% +- 9==#'/1, 211 SC8A 219 (1992), N'-+&%#F' 56 3'@.0@'A 333
SC8A 643 (2000), 9/?$&' 56 *+0&% +- 9==#'/1, 399 SC8A331 (2003).
rlghL Lo unllaLerally resclnd Lhe conLracL ln case of non-
paymenL.
3
P.%1"U ,4 2$&-' $5 633".%#, Q8= 92!6 DD *:??QGT ]"
T"$) ,4 I)J, E<< 92!6 8F< *:?<?G[
U
A+O 9bba ](J)$# ,4 2$&-' $5
633".%#7 <DF 92!6 8>D *<=FFG6

P.%1"U ,4 2$&-' $5 633".%#

Iacts: Carlos valdez Sr. and !oseflna valdez were owners of a parcel of
land. When Carlos Sr. dled, !oseflna subdlvlded Lhe properLy lnLo elghL
loLs. Cn May 1, 1979, she execuLed a speclal power aLLorney,
auLhorlzlng her son Carlos !r, who was a pracLlclng lawyer, Lo sell a
porLlon Lhereof (loLs 3-C and 3-u) Lo !ose Lagon for 80,000. arL of
conslderaLlon was also for Lagon Lo Lransfer Lhe 8ural 8ank of lsulan Lo
Lhe sub[ecL properLy, and Lo consLrucL a commerclal bulldlng beslde Lhe
bank. WlLhouL knowledge of !oseflna, Carlos !r. enLered lnLo a dlfferenL
agreemenL, selllng Lhe properLy for 40/square meLer, and lL was
lndlcaLed ln Lhe deed LhaL Lhe 80,000 had already been pald ln cash. A
downpaymenL of 20,000 was pald by Lhe wlfe of Lagon, Lo whlch
!oseflna lssued a recelpL. Carlos !r. prepared an affldavlL, slgned by
Lagon, Lhe Lransfer of Lhe bank and Lhe consLrucLlon of commerclal
bulldlng as parL of Lhe condlLlon, else Lhe deed of absoluLe sale shall be
null and vold wlLhouL need of demand. Lagon falled Lo comply wlLh Lhe
conslderaLlons sLaLed ln Lhe deed, Lo whlch Lhe valdez refused Lo dellver

3
"+V0# 56 N'=0FA 96 SC8A 741 (1980), 9),#/#1 56 *'/')F, 133 SC8A 323
(1983),9/-+)1+ 56 *+0&% +- 9==#'/1, 186 SC8A 400 (1990)
4
I') 9)(&#1 56 "+(&$,0#FA 332 SC8A 769 (2000), 2('6 K# 3$1%$@' 56 S',0$'%A
418 SC8A 73 (2003), ;/'1 56 9),#/#1W80%'//', 439 SC8A 273 (2004), 2$//'('&A J&6
26 R'<'/', 343 SC8A 323 (2008), 8#$&1 +- 9)%+)$+ :6 ;#&)'<# 56 *+0&% +- 9==#'/1,
339 SC8A 33 (2008), 2#& "#4#1 56 I'/5'(+&A I&6, 364 SC8A 436 (2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Lhe Lorrens LlLle. Lagon had LoL 3-C Lo be subdlvlded lnLo Lhree separaLe
loLs, Lo whlch he pald Lhe professlonal servlces. !oseflna used Lhe
subdlvlslon survey, and sold LoL 3-C-2 Lo Cl8, evldenced by a deed of
absoluLe sale, execLued a real morLgage over LoL 3-C-3 Lo u8, and
execuLed a deed of absoluLe sale ln favor of Carlos !r. over LoL 3-C-1.
She also sold loL 3-u Lo Lngr. 8odolfo uelfln. Lagon flled a complalnL
agalnsL !oseflna and Carlos !r for speclflc performance and damages.
1rlal CourL ruled ln favor of Lagon. CA reversed, buL reversed lLself,
rullng ln favor or Lagon.

Issue: WheLher Lhe agreemenL was a conLracL of sale or conLracL Lo sell,
and wheLher Lhe conLracL was raLlfled.

ne|d: lL ls a conLracL of sale. 1he naLure of Lhe conLracL musL be lnferred
from Lhe express Lerms and agreemenL and from Lhe conLemporaneous
and subsequenL acLs of Lhe parLles LhereLo. When !oseflna, Lhrough her
son acLlng a an aLLorney-ln-facL, execuLed a deed of absoluLe sale ln
favor of Lagon, she dld noL reserve Lhe ownershlp of Lhe properLy,
sub[ecL Lo Lhe compleLlon of paymenL of Lhe conslderaLlon. Powever,
Carlos !r. exceeded hls auLhorlLy when he enLered lnLo a dlfferenL
agreemenL wlLh Lagon, maklng Lhe conLracL unenforceable, unless
raLlfled. ln Lhls case, lL was raLlfled when !oseflna accepLed Lhe
downpaymenL of 20,000 and lssued a recelpL as a consequence of
raLlfylng Lhe conLracL. lL musL be noLed, however, LhaL an affldavlL was
slgned by Lagon as parL of Lhe conslderaLlon, Lo Lransfer Lhe 8ural 8ank
of lsulan as well as consLrucLlng a commerclal bank beslde Lhe bank,
boLh falled Lo perform by Lagon, maklng Lhe deed of absoluLe sale null
and vold. lL cannoL be consldered as an afLerLhoughL conLrlved by Carlos
!r. slnce Lagon admlLLed ln courL Lhe auLhenLlclLy of Lhe affldavlL, and lLs
blndlng effecL agalnsL hlm. 1here was no need Lo resclnd Lhe conLracL
because lL was clearly sLlpulaLed LhaL fallure Lo comply wlLh such
obllgaLlon makes Lhe deed null and vold, Lhough peLlLloners are obllged
Lo refund Lhe respondenL's parLlal paymenL of Lhe sub[ecL properLy.

Doctr|ne:

](J)$# ,4 2$&-' $5 633".%#

Iacts: ulgnos ls Lhe owner of a parcel of land ln Lapu- Lapu ClLy, whlch
Lhey sold Lo !abll for 28,000, payable ln 2 lnsLallmenLs and wlLh an
assumpLlon of lndebLedness wlLh llrsL lnsular 8ank of Cebu for 12,000.
Powever, ulgnos also sold Lhe same land ln favor of Cablgas, who were
uS clLlzens, for 33,000. A ueed of AbsoluLe Sale was execuLed ln favor
of Lhe Cablgas spouses.

!abll flled a sulL agalnsL ulgnos wlLh Cll of Cebu. 81C ruled ln favor of
!abll and declared Lhe sale Lo Cablgas null and vold. Cn appeal, CA
afflrmed 81C declslon wlLh modlflcaLlon.

Issue: WheLher or noL Lhe conLracL beLween ulgnos and !abll ls a
conLracL of sale (as opposed Lo a conLracL Lo sale)

ne|d: ?LS. A deed of sale ls absoluLe ln naLure alLhough denomlnaLed as
a ueed of CondlLlonal Sale" where nowhere ln Lhe conLracL ln quesLlon
ls a provlso or sLlpulaLlon Lo Lhe effecL LhaL LlLle Lo Lhe properLy sold ls
reserved ln Lhe vendor unLll full paymenL of Lhe purchase prlce, nor ls
Lhere a sLlpulaLlon glvlng Lhe vendor Lhe rlghL Lo unllaLerally resclnd Lhe
conLracL Lhe momenL Lhe vendee falls Lo pay wlLhln a flxed perlod. ln
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Lhe presenL case, Lhere ls no sLlpulaLlon reservlng Lhe LlLle of Lhe
properLy on Lhe vendors nor does lL glve Lhem Lhe rlghL Lo unllaLerally
resclnd Lhe conLracL upon non-paymenL of Lhe balance Lhereof wlLhln a
flxed perlod.

Whlle Lhere was no consLrucLlve dellvery of Lhe land sold ln Lhe presenL
case, as sub[ecL ueed of Sale ls a prlvaLe lnsLrumenL, lL ls beyond
quesLlon LhaL Lhere was acLual dellvery Lhereof. As found by Lhe Lrlal
courL, Lhe ulgnos spouses dellvered Lhe possesslon of Lhe land ln
quesLlon Lo !abll as early as 27 March 1963 so LhaL Lhe laLLer
consLrucLed Lhereon Sally's 8each 8esorL also known as !abll's 8each
8esorL ln March, 1963, MacLan WhlLe 8each 8esorL on 13 !anuary 1966
and 8evlrlyn's 8each 8esorL on 1 SepLember 1963. Such facLs were
admlLLed by Lhe ulgnos spouses.

Doctr|ne:

CCN1kCLLING DCC1kINL: AbsenL any sLlpulaLlon ln Lhe deed or
ln Lhe meeLlng of mlnds reservlng LlLle over Lhe properLy Lo Lhe
seller unLll full paymenL of Lhe purchase prlce and glvlng Lhe
seller Lhe rlghL Lo unllaLerally resclnd Lhe conLracL ls case of non-
paymenL, makes Lhe conLracL one of sale raLher Lhan a conLracL
Lo sell.
1


1
1ugaba v. vda. ue Leon, 132 SC8A 722 (1984), ulgnos v. CourL of Appeals, 138
SC8A 373 (1988), 1opaclo v. CourL of Appeals, 211 SC8A 291 (1992), Almlra v.
CourL of Appeals, 399 SC8A 331 (2003), vda. ue MlsLlca v. nagulaL, 418 SC8A
73 (2003), valdez v. CourL of Appeals, 439 SC8A 33 (2004), 8las v. Angeles-
PuLalla, 439 SC8A 273 (2004), orLlc v. CrlsLobal, 436 SC8A 377 (2003).
keservat|on of Cwnersh|p by Se||er: 1he exlsLence or non-
exlsLence of Lhe reservaLlon of ownershlp wlLh seller" clause,
has been a crlLlcal conslderaLlon for Lhe CourL ln deLermlnlng
Lhe naLure of a sale conLracL because lL conslders LhaL Lhe
essence of a Lrue conLracL of sale under ArLlcle 1438 ls Lhe
passlng of ownershlp of Lhe sub[ecL maLLer." 1hus, Lhe CourL
has ofLen ruled LhaL ln a conLracL of sale, ownershlp over Lhe
sub[ecL maLLer generally passes Lo Lhe buyer as a resulL of Lhe
LradlLlon Lhereof, whereas, ln a conLracL Lo sell, Lhe dellvery of
Lhe sub[ecL maLLer does noL pass ownershlp Lo Lhe buyer even
Lhough he possesses Lhe same, under Lhe sLlpulaLlon LhaL
ownershlp shall pass only upon full paymenL of Lhe purchase
prlce,
2
and LhaL Lhe remedles avallable Lo Lhe seller would
depend on Lhls parLlcular polnL.
o lL was enough for Lhe CourL Lo characLerlze Lhe K##( +-
*+)($%$+) I'/# as a conLracL Lo sell" alone by Lhe
reservaLlon of ownershlp. M"(-# $5 6)'$)($ 04 A"-).S"
,4 2$&-' $5 633".%#7 DD= 92!6 D8 *:??FG4
o 1he reservaLlon of LlLle may noL be found ln express
provlslon of Lhe conLracL, buL may also be deLermlned
from proven acLs of Lhe parLles. H9.%.U.- ,4 2$&-' $5
633".%#7 :DF 92!6 8:D *<==EG4
o 1he agreemenL beLween Lhe buyer and seller LhaL Lhe
offer and accepLance was for a bld prlce Lo be pald ln

2
valarao v. CourL of Appeals, 304 SC8A 133 (1999), unlversal 8oblna Sugar
Mllllng Corp. v. Pelrs of Angel 1eves, 389 SC8A 316 (2002), Chua v. CourL of
Appeals, 401 SC8A 34 (2003), uemafells v. CourL of Appeals, 338 SC8A 303
(2007), CasLlllo v. 8eyes, 339 SC8A 193 (2007), vlllador, !r. v. Zaballa, 343 SC8A
323 (2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
cash, noL ln sLaggered paymenLs, Laken LogeLher wlLh
Lhe facL LhaL Lhere was no expressed or apparenL lnLenL
Lo reserve ownershlp over Lhe loL unLll full paymenL was
made, lead Lo no oLher concluslon LhaL Lhe parLles
enLered lnLo a conLracL of sale and noL a conLracL Lo sell.
2('K $5 2"S& ,4 M"(-# $5 2.)1(1$ !&S(7 8?E 92!6 Q?F
*<===G4
o An agreemenL ln whlch ownershlp ls reserved ln Lhe
vendor and ls noL Lo pass Lo Lhe vendee unLll full
paymenL of Lhe purchase prlce ls known as a conLracL Lo
sell. 1he absence of full paymenL suspends Lhe vendors'
obllgaLlon Lo convey LlLle, even lf Lhe sale has already
been reglsLered. 8eglsLraLlon does noL vesL, buL merely
serves as evldence of, LlLle Lo a parLlcular properLy. Cur
land reglsLraLlon laws do noL glve LlLle holders any
beLLer ownershlp Lhan whaL Lhey acLually had prlor Lo
reglsLraLlon. HN$-'(B ,4 2-(#'$S.%7 QDE 92!6 D>> *:??DG4
<

Agreement As 1o Deed Cf Abso|ute Sa|e: ln a number of
declslons, Lhe Supreme CourL has consldered as an lmporLanL
facLor wheLher Lhere ls a sLlpulaLlon or promlse LhaL Lhe seller
shall execuLe a deed of absoluLe sale upon compleLlon of
paymenL of Lhe purchase prlce by Lhe buyer, or wheLher Lhe
agreemenL beLween Lhe parLles ls embodled ln a prlvaLe
documenL. ln oLher words, such slLuaLlons are LreaLed as
equlvalenL Lo reservaLlon of LlLle ln Lhe name of Lhe seller unLll
Lhe buyer shall have compleLed Lhe paymenL of Lhe prlce.

1
9)%+)$+ :6 ;#&)'<# 56 *+0&% +- 9==#'/1, 339 SC8A 33 (2008), ;')H +- B6>6 56
I3BA >)@6, 609 SC8A 134 (2009).
o CCN1kCLLING DCC1kINL: 1he absence of a formal
deed of conveyance ls Laken as a sLrong conslderaLlon
LhaL Lhe underlylng agreemenL ls a conLracL Lo sell, slnce
Lhere ls a sLrong lndlcaLlon LhaL Lhe parLles dld noL
lnLend Lo lmmedlaLely Lransfer LlLle, buL only a Lransfer
afLer full paymenL of Lhe prlce.
2

o 1he absence of a formal deed of conveyance [or a
sLlpulaLlon Lo execuLe Lhe deed of sale only full paymenL
of Lhe purchase prlce] ls a sLrong lndlcaLlon LhaL Lhe
parLles dld noL lnLend lmmedlaLe Lransfer of ownershlp,
buL only a Lransfer afLer full paymenL of Lhe purchase
prlce,
3
and Lhe seller reLalned possesslon of Lhe
cerLlflcaLe of Llle and all oLher documenLs relaLlve Lo Lhe
sale unLll Lhere was full paymenL of Lhe purchase prlce4
H2W&. ,4 2$&-' $5 633".%#7 Q?< 92!6 DQ *:??8G4
keservat|on Cf k|ght 1o Lxtra[ud|c|a||y kesc|nd In Lvent Cf
Non-Iu|f|||ment Cf Cond|t|on:

CCN1kAC1 1C SLLL CCN1kAC1 CI SALL
ln a conLracL Lo sell, where Lhe suspenslve
condlLlon has noL been fulfllled, no furLher
remedy ls necessary slnce lpso [ure Lhe conLracL
ln a conLracL of sale,
Lhe non-fulflllmenL of
Lhe condlLlon would

2
Manuel v. 8odrlguez, 109 hll. 1 (1960), 8oque v. Lapuz, 96 SC8A 741 (1980),
Alfonso v. CourL of Appeals, 186 SC8A 400 (1990), Lacanllao v. CourL of Appeals,
262 SC8A 486 (1996), uavld v. 1longson, 313 SC8A 63 (1999), 8ayos v. CourL of
Appeals, 434 SC8A 363 (2004), Cruz v. lernando, 477 SC8A 173 (2003).
3
;+X# 56 *+0&% +- 9==#'/1, 220 SC8A 138 (1993), "'4+1 56 *+0&% +- 9==#'/1, 434
SC8A 363 (2004), I+/$(1%'%# 30/%$WB&+(0@%1 *+&=6 56 *'%$#)F'W2$//'5#&(#, 339
SC8A 197 (2008), L') 56 ;#)+/$&'+, 604 SC8A 36 (2009), S'<01 56 B'@1+), 603
SC8A 334 (2009).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
would have already been exLlngulshed by non-
happenlng of Lhe condlLlon. Powever, lf Lhere
has been prevlous dellvery of Lhe sub[ecL
maLLer Lo Lhe buyer, alLhough seller has by
reservaLlon reLalned ownershlp over Lhe
sub[ecL maLLer, slnce Lhe seller sLlll cannoL Lake
Lhe law lnLo hls own hands, Lhe seller would
sLlll have Lo seek courL acLlon Lo recover
possesslon from Lhe buyer lf Lhe laLLer refuses
Lo volunLarlly reLurn Lhe sub[ecL maLLer.
Powever, such acLlon ls noL for resclsslon buL
acLually merely a recovery of possesslon.
auLhorlze Lhe seller Lo
resclnd Lhe conLracL
or Lo walve Lhe
condlLlon and seek
enforcemenL of Lhe
conLracL, ln
accordance wlLh
ArLlcle 1343 of Lhe
Clvll Code.
ln a conLracL Lo sell, by express agreemenL,
dellvery of Lhe sub[ecL maLLer does noL Lransfer
ownershlp Lo Lhe buyer, and Lherefore when
Lhe condlLlon ls noL fulfllled (l.e., non-paymenL
of Lhe purchase prlce) no courL lnLervenLlon ls
needed Lo resclnd" Lhe conLracL slnce
ownershlp has remalned wlLh Lhe seller. lf
courL lnLervenLlon ls necessary, lL ls noL for Lhe
resclsslon of Lhe conLracL, buL for Lhe recovery
of Lhe possesslon from Lhe buyer who ls noL
enLlLled LhereLo, and refuses Lo volunLarlly
reLurn Lhe sub[ecL maLLer of Lhe sale.

ln a conLracL of sale,
dellvery would
Lransfer ownershlp Lo
Lhe buyer, and
Lherefore resclsslon
musL necessarlly be
done [udlclally slnce
only Lhe courLs can
granL Lhe remedy of
recalllng ownershlp
LhaL has passed Lo Lhe
buyer and reverLlng lL
Lo Lhe seller.

CLv: ln some cases, Lhere ls an lmpllcaLlon LhaL a conLracL of
sale ls one LhaL ls perfecLed because Lhe parLles have agreed on
Lhe Lhree (3) elemenLs Lo consLlLuLe a valld sale: sub[ecL maLLer
and Lhe prlce and lLs mode of paymenL, whereas, a conLracL Lo
sell ls noL a perfecLed conLracL. Such lmpllcaLlon ls mlsleadlng,
for boLh a conLracL of sale and a conLracL Lo sell are perfecLed
conLracLs, alLhough Lhe flrsL ls blndlng and demandable, Lhe
laLLer ls blndlng buL wlLh obllgaLlons sub[ecL Lo suspenslve
condlLlons. And [usL because earnesL money has been glven,
does noL deLermlne wheLher lL ls a conLracL of sale or a conLracL
Lo sell, for lndeed even ln a conLracL Lo sell a subsLanLlal porLlon
of Lhe purchase prlce may have been pald, buL LhaL alone does
noL converL lL lnLo a conLracL of sale.

6. Issue Cf Substant|a| 8reach (Art|c|es 1191 And 1234)

Art|c|e 1234.
If the ob||gat|on has been substant|a||y performed |n good fa|th, the
ob||gor may recover as though there had been a str|ct and comp|ete
fu|f|||ment, |ess damages suffered by the ob||gee. (n)

1he concepL of subsLanLlal breach ls lrrelevanL Lo a conLracL of
sale. HT&U$) A-$Z"-.J" 2$47 C)B4 ,4 V.-('(L" A&(%1()J 2$47 C)B47
Q8 92!6 =8 *<=>:G4
<

ln a conLracL Lo sell real properLy on lnsLallmenLs, Lhe full
paymenL of Lhe purchase prlce ls a poslLlve condlLlon, Lhe fallure
of whlch ls noL consldered a breach, casual or serlous, buL
slmply an evenL LhaL prevenLed Lhe obllgaLlon of Lhe vendor Lo
convey LlLle from acqulrlng any obllgaLory force. 1he Lransfer of

1
I$1H' K#56 *+&=6 56 7--$@# +- %.# B&#1$(#)%, 231 SC8A 674 (1994), I%'6 N0@$'
"#'/%4 G K#56A >)@6 56 C4#@$+, 362 SC8A 226 (2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
ownershlp and LlLle would occur afLer full paymenL of Lhe prlce.
HT".c$ ,4 2$&-' $5 633".%#7 8E= 92!6 8E *:??<G4
<


8. Cance||at|on Cf Contract 1o Se||
1. kemedy Cf kesc|ss|on Under Art|c|es 1191 And 1S92 nave No
App||cat|on 1o Contracts 1o Se||
ArLlcles 1191 and 1392, whlch requlre resclsslon elLher by
[udlclal acLlon, or noLarlal acL, do noL apply Lo conLracLs Lo sell.
2

Llkewlse, Lhe remedy of resclsslon under ArLlcles 1380 eL seq.
have no appllcaLlon Lo a conLracL Lo sell, noL belng lncluded
wlLhln Lhe enumeraLed conLracLs Lhereln, nor ls leslon or
damage Lhe basls upon whlch remedy can be soughL under a
conLracL Lo sell.
3

o 1he reasonlng ls Lo Lhe effecL LhaL slnce a conLracL Lo
sell ls consLlLuLed by a suspenslve condlLlon on Lhe full
paymenL of Lhe prlce, Lhe non-paymenL of Lhe prlce
would auLomaLlcally, even wlLhouL Lhe need of furLher
acLlon nor of Lhe remedy of resclsslon, exLlngulsh Lhe
conLracL. V.)&"% ,4 !$1-(J&"U7 <?= NW(%4 < *<=E?G4

2. M|n|mum kequ|rement Ior Cance||at|on Cf Contract 1o Se||,
Iorma| Not|ce kequ|red to Cance| Contracts to Se||
1he acL of a parLy ln LreaLlng a conLracL as cancelled should be
made known Lo Lhe oLher parLy because Lhls acL ls sub[ecL Lo

1
3')0#/ 56 "+(&$,0#F, 109 hll. 1 (1960), N'-+&%#F' 56 3'@.0@'A 333 SC8A 643
(2000), 2$//'?'&$'A J&6 56 *+0&% +- 9==#'/1, 487 SC8A 371 (2006).
2
anglllnan v. CourL of Appeals, 279 SC8A 390 (1997), valarao v. CourL of
Appeals, 304 SC8A 133 (1999), adllla v. Spouses aredes, 328 SC8A 434
(2000), Comez v. CourL of Appeals, 340 SC8A 720 (2000).
3
Cng v. CourL of Appeals, 310 SC8A 1 (1999).
scruLlny and revlew of Lhe courLs ln case Lhe alleged defaulLer
brlng Lhe maLLer for [udlclal deLermlnaLlon. +)(,"-#('K $5 'W"
NW(%(33()"# ,4 ]" %$# 6)J"%"#7 8D 92!6 <?8 *<=>?G[ N.%.K C)B4 ,4
2%.,"7 <:Q 92!6 E8F *<=F8G4
Q


+)(,"-#('K $5 'W" NW(%(33()"# ,4 ]" %$# 6)J"%"#

Iacts: u was glven a land granL whlch shall be developed Lo obLaln
addlLlonal lncome for lLs supporL. u and ALuMCC enLered lnLo a
logglng agreemenL where ALuMCC was granLed Lhe excluslve auLhorlLy
for an exLendlble perlod of 3 years (by muLual agreemenL), Lo cuL and
remove Llmber from Lhe land granL lnconslderaLlon of royalLles and fees
Lo be pald Lo u. ALuMCC lncurred an unpald amounL of 219,363. u
demanded paymenL buL lL falled Lo pay. ALuMCC recelved a leLLer LhaL
u would resclnd or LermlnaLe Lhelr logglng agreemenL. 1hey execuLed
an lnsLrumenL AcknowledgemenL of uebL & roposed Manner of
aymenL" whlch Lhe u resldenL approved. ALuMCC agreed Lo glve
Lhelr credlLor (u) Lhe rlghL Lo conslder Lhe logglng agreemenL as
resclnded wlLhouL necesslLy of any [udlclal sulL and credlLor wlll be
enLlLled Lo 30,000 for llquldaLed damages. ALuMCC conLlnued logglng
buL sLlll lncurred unpald accounLs. u Lhen lnformed Lhem LhaL as of
LhaL daLe, Lhey consldered resclnded Lhe agreemenL and of no furLher
legal effecL. u Lhen flled for collecLlon of Lhe unpald accounLs and Lhe
Lrlal courL gave Lhem prellmlnary ln[uncLlon Lo prevenL ALuMCC from
conLlnulng Lhelr logglng. 1hrough a publlc blddlng, Lhe concesslon was
awarded Lo SLa. Clara Lumber Company and a new agreemenL was
enLered lnLo beLween Lhem and u. ALuMCC Lrled Lo en[oln Lhe blddlng

4
J$1+) 56 *9, 164 SC8A 339 (1988), N$? 56 *9, 182 SC8A 364 (1990), *.#), 56
D#)'%+, 300 SC8A 722 (1998).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
buL Lhe conLracL was already concluded and SLa. Clara sLarLed lLs
operaLlon. upon moLlon by ALuMCC, u was declared ln conLempL of
courL for vlolaLlng Lhe wrlL of ln[uncLlon agalnsL Lhem. ALuMCC's
conLenLlons are Lhe followlng:
a. lL blamed lLs former general manager for Lhelr fallure Lo pay Lhelr
accounL.
b. Logs cuL were roLLen, Lhus, Lhey were unable Lo sell Lhem.
c. u's unllaLeral resclsslon was lnvalld wlLhouL a courL order.

Issue: WheLher or noL u can valldly resclnd lLs agreemenL wlLh
ALuMCC even wlLhouL courL order.

ne|d: ?LS. u can unllaLerally resclnd Lhe agreemenL. u and ALuMCC
expressly sLlpulaLed ln Lhelr AcknowledgemenL of uebL" LhaL upon
defaulL of paymenL, credlLor u has Lhe rlghL and power Lo resclnd Lhelr
Logglng AgreemenL wlLhouL Lhe necesslLy of a [udlclal sulL. 1here ls
noLhlng ln Lhe law LhaL prohlblLs Lhe parLles from enLerlng lnLo
agreemenLs LhaL vlolaLlon of Lerms of Lhe conLracL would cause lLs
cancellaLlon even wlLhouL courL lnLervenLlon. AcL of a parLy ln LreaLlng a
conLracL as cancelled on accounL of any lnfracLlon by Lhe oLher parLy
musL be made known Lo Lhe oLher and ls always provlslonal, belng
sub[ecL Lo scruLlny and revlew by Lhe proper courL. lf Lhe oLher parLy
deems Lhe resclsslon un[usLlfled, he free Lo resorL Lo [udlclal acLlon. 1he
courL shall, afLer due hearlng, declde lf Lhe resclsslon was proper, ln
whlch case lL wlll be afflrmed and lf noL proper, Lhe responslble parLy
wlll be llable for damages. A parLy who deems Lhe conLracL vlolaLed may
conslder lL resclnded and acL accordlngly, even wlLhouL courL acLlon buL
lL proceeds aL lLs own rlsk. Cnly Lhe flnal [udgmenL of Lhe courL wlll
concluslvely seLLle wheLher Lhe acLlon Laken was proper or noL. 8uL Lhe
law does noL prohlblL Lhe parLles from exerclslng due dlllgence Lo
mlnlmlze Lhelr own damages. u was able Lo show a prlma facle case of
breach of conLracL and defaulL ln paymenL by ALuMCC. Lxcuses by
ALuMCC are noL proper for Lhem Lo suspend Lhelr paymenLs. 1hus, Lhe
Supreme CourL llfLed Lhe ln[uncLlon

Doctr|ne: Cf course, lL musL be undersLood LhaL Lhe acL of a parLy ln
LreaLlng a conLracL as cancelled or resolved on accounL of lnfracLlons by
Lhe oLher conLracLlng parLy musL be made known Lo Lhe oLher and ls
always provlslonal, belng ever sub[ecL Lo scruLlny and revlew by Lhe
proper courL. lf Lhe oLher parLy denles Lhe resclsslon ls [usLlfled, lL ls free
Lo resorL Lo [udlclal acLlon ln lLs own behalf, and brlng Lhe maLLer Lo
courL. 1hen, should Lhe courL, afLer due hearlng, declde LhaL Lhe
resoluLlon of Lhe conLracL was noL warranLed, Lhe responslble parLy wlll
be senLenced Lo damages, ln Lhe conLrary case, Lhe resoluLlon wlll be
afflrmed, and Lhe consequenL lndemnlLy awarded Lo Lhe parLy
pre[udlced. ln oLher words, Lhe parLy who deems Lhe conLracL vlolaLed
may conslder lL resolved or resclnded, and acL accordlngly, wlLhouL
prevlous courL acLlon, buL lL proceeds aL lLs own rlsk. lor lL ls only Lhe
flnal [udgmenL of Lhe correspondlng courL LhaL wlll concluslvely and
flnally seLLle wheLher Lhe acLlon Laken was or was noL correcL ln law. 8uL
Lhe law deflnlLely does noL requlre LhaL Lhe conLracLlng parLy who
belleves lLself ln[ured musL flrsL flle sulL and walL for a [udgmenL before
Laklng exLra[udlclal sLeps Lo proLecL lLs lnLeresL. CLherwlse, Lhe parLy
ln[ured by Lhe oLher's breach wlll have Lo passlvely slL and waLch lLs
damages accumulaLe durlng Lhe pendency of Lhe sulL unLll Lhe flnal
[udgmenL of resclsslon ls rendered when Lhe law lLself requlres LhaL he
should exerclse due dlllgence Lo mlnlmlze lLs own damages.

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
N.%.K C)B4 ,4 2%.,"

Iacts: ln 1963, alay lnc., Lhrough lLs resldenL CnsLoLL, execuLed ln
favor of uumplL (respondenL) a ConLracL Lo Sell a parcel of land ln
AnLlpolo, 8lzal. 1he sale was for 23,300 wlLh 9 lnLeresL p.a., payable
wlLh a downpaymenL of 4,660 and monLhly lnsLallmenLs of leasL, Lhere
was a wrlLLen noLlce senL Lo Lhe defaulLer lnformlng hlm of Lhe
resclsslon. ar. 6 cannoL be consldered a walver of uumplL's rlghL Lo be
noLlfled because lL was a conLracL of adheslon. A walver musL be cerLaln
and unequlvocal and lnLelllgenLly made, such walver follows only where
Lhe llberLy of cholce has been fully accorded.

Moreover, Lhe lndlspensablllLy of noLlce of cancellaLlon Lo Lhe buyer ls
proLecLed under 8A 6331. lL ls a maLLer of publlc pollcy Lo proLecL Lhe
buyers of real esLaLe on lnsLallmenL paymenLs agalnsL onerous and
oppresslve condlLlons. Walver of noLlce ls one such onerous and
oppresslve condlLlon Lo buyers of real esLaLe on lnsLallmenL paymenLs.

Issue: WheLher or noL alay should be llable for Lhe refund of Lhe
lnsLallmenL paymenLs made by uumplL.

ne|d: ?LS. As a consequence of Lhe resclsslon of Lhe conLracL, rlghL Lo
Lhe loL should be resLored Lo uumplL or Lhe same should be replaced by
anoLher accepLable loL. Powever, conslderlng LhaL Lhe loL had been
resold Lo a Lhlrd person, uumplL ls enLlLled Lo refund of Lhe lnsLallmenLs
pald plus legal lnLeresL of 12.

Doctr|ne: Well seLLled ls Lhe rule, as held ln prevlous [urlsprudence, LhaL
[udlclal acLlon for resclsslon of a conLracL ls noL necessary where Lhe
conLracL provldes LhaL lL may be revoked and cancelled for vlolaLlon of
any of lLs Lerms and condlLlon. Powever, even ln Lhe clLed cases, Lhere
was aL leasL a wrlLLen noLlce senL Lo Lhe defaulLer lnformlng hlm of Lhe
resclsslon.

neverLheless, [seller] ls noL relleved from Lhe glvlng of a noLlce,
verbal or wrlLLen, Lo Lhe [buyers] for hls declslon Lo resclnd Lhelr
conLracL. ln many cases, even Lhough we upheld Lhe valldlLy of a
sLlpulaLlon ln a conLracL Lo sell auLhorlzlng auLomaLlc resclsslon
for a vlolaLlon of lLs Lerms and condlLlon, aL leasL a wrlLLen
noLlce musL be senL Lo Lhe defaulLer lnformlng hlm of Lhe same.
1he acL of a parLy ln LreaLlng a conLracL as cancelled should be
made known Lo Lhe oLher. lor such acL ls always provlslonal. lL ls
always sub[ecL Lo Lhe scruLlny and revlew by Lhe courLs ln case
Lhe alleged defaulLer brlngs Lhe maLLer Lo Lhe proper courLs.
2W")J ,4 R").'$7 8?? 92!6 >:: *<==FG4
A conLracL Lo sell lmposes reclprocal obllgaLlons and so cannoL
be LermlnaLed unllaLerally by elLher parLy. !udlclal resclsslon ls
requlred under ArLlcle 1191. Powever, Lhls rule ls noL absoluLe.
We have held LhaL ln proper cases, a parLy may Lake lL upon
lLself Lo conslder Lhe conLracL resclnded and acL accordlngly
albelL sub[ecL Lo [udlclal conflrmaLlon, whlch may or may noL be
glven. T(L ,4 2$&-' $5 633".%#7 <F: 92!6 DEQ *<==?G.
o 8U1 SLL: ln a conLracL Lo sell, upon fallure of buyer Lo
comply wlLh lLs obllgaLlon, Lhere was no need Lo
[udlclally resclnd Lhe conLracL Lo sell. lallure by one of
Lhe parLles Lo ablde by Lhe condlLlons ln a conLracL Lo
sell resulLed ln Lhe resclsslon of Lhe conLracL. 60N
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
V&'&.% A")"5(' 6##)47 C)B4 ,4 2$&-' $5 633".%#7 8EQ
92!6 >EF *:??<G6
Y


T(L ,4 2$&-' $5 633".%#

Iacts: ln 1963, Crllnos (3 co-owners) morLgaged a parcel of land ln
ulllman, CC Lo rogresslve Commerclal 8ank as securlLy for a 100k
loan. 1hey falled Lo pay Lhe loan and Lhe morLgage was foreclosed,
where Lhe bank acqulred Lhe properLy as Lhe hlghesL bldder aL Lhe
aucLlon sale. 1he bank Lransferred all lLs asseLs, 246.42 unLll fully pald.
ar. 6 of Lhe conLracL provlded for auLomaLlc exLra[udlclal resclsslon
upon defaulL ln paymenL of any monLhly lnsLallmenL afLer Lhe lapse of
90 days from Lhe explraLlon of Lhe grace perlod of a monLh, wlLhouL
need of noLlce and forfelLure of all lnsLallmenLs pald. uumplL was able
Lo pay Lhe down paymenL and several lnsLallmenLs amounLlng Lo
13,722.30, wlLh Lhe lasL paymenL made on uec. 3, 1967 for
lnsLallmenLs up Lo SepL. 1967.

ln 1973, uumplL requesLed alay lnc Lo updaLe hls overdue accounLs
and soughL lLs permlsslon Lo asslgn hls rlghLs Lo ulzon. Powever, alay
lnformed hlm LhaL hls ConLracL Lo Sell had long been resclnded pursuanL
Lo ar. 6 and LhaL Lhe loL had already been resold.

uumplL flled a complalnL wlLh Lhe nPA for reconveyance wlLh an
alLernaLlve prayer for refund. nPA ruled ln favor of uumplL, sLaLlng LhaL
Lhe resclsslon ls vold for lack of elLher [udlclal or noLarlal demand. Cfflce
of Lhe resldenL afflrmed.

1
L+&&'/<' 56 K# /+1 9),#/#1, 96 SC8A 69 (1980).

Issue: WheLher or noL Lhe LransacLlon beLween Lhe Crllnos and 8C a
conLracL Lo sell.

ne|d: ?LS. 1here was no lmmedlaLe Lransfer of LlLle Lo Lhe Crllnos as
whaL would have happened lf Lhere had been a sale. 1he supposed sale
was never reglsLered and Lhere was no new 1C1 ln favor of Lhe Crllnos.
1hey also acknowledged LhaL Lhe LlLle Lo Lhe properLy would remaln
wlLh Lhe bank unLll Lhelr LransacLlon shall be flnallzed. Moreover , Lhe
conslderaLlon agreed upon was never pald Lo converL Lhe agreemenL
lnLo a conLracL of sale. As paymenL of Lhe conslderaLlon was a poslLlve
suspenslve condlLlon, LlLle Lo Lhe properLy never passed Lo Lhe prlvaLe
respondenLs. 1hus, Lhe properLy was legally unencumbered and sLlll
belonged Lo 8C when lL was sold Lo Llm.

Cn 8LSClSSlCn: AlLhough a conLracL Lo sell lmposes reclprocal
obllgaLlons and cannoL be LermlnaLed unllaLerally by elLher parLy,
[udlclal resclsslon ls requlred under ArL. 1911 of Lhe CC. Powever, Lhls
rule ls noL absoluLe. !urlsprudence has shown LhaL a parLy may Lake lL
upon lLself Lo conslder Lhe conLracL resclnded and acL accordlngly albelL
sub[ecL Lo [udlclal conflrmaLlon, whlch may or may noL be glven. lL ls
Lrue LhaL Lhe resclndlng parLy Lakes a rlsk LhaL lLs acLlon may noL be
approved by Lhe courL. 1he Crllnos obllgaLed Lhemselves Lo dellver Lo
8C 160k and Lhelr share on Lhe properLy ln Caloocan ClLy. Powever,
Lhe Crllnos dld noL acL on Lhelr obllgaLlons. 8C could noL be requlred Lo
walL for Lhem forever. 1hus, 8C had Lhe rlghL Lo conslder Lhe conLracL
Lo sell beLween Lhem LermlnaLed for non-paymenL of Lhe sLlpulaLed
conslderaLlon.

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Doctr|ne: 1he seller ls allowed Lo conslder Lhe conLracL Lo sell beLween
Lhem LermlnaLed for non-paymenL of Lhe sLlpulaLed conslderaLlon," and
Lhe only rlsk lnvolved ls LhaL Lhe courLs may noL afflrm Lhe facLual basls
upon whlch Lo base Lhe non-happenlng of Lhe suspenslve condlLlon.

60N V&'&.% A")"5(' 6##)47 C)B4 ,4 2$&-' $5 633".%#

Iacts: 1hls case lnvolved Solld Pomes lnc's M8 of Lhe SC's declslon
reverslng Lhe CA's declslon and orderlng Lhe 8u Lo cancel Lhe noLlce of
lls pendens on Lhe LlLles lssued Lo AlM8Al, declarlng lL as buyer ln good
falLh and for value. lnvesLco lnc and Solld Pomes lnc enLered lnLo a
conLracL Lo sell. uurlng Lhls Llme, Lhe LlLles Lo Lhe Cuezon ClLy and
Marlklna properLles had noL been Lransferred ln Lhe name of lnvesLco
lnc as aslgnee of Lhe owners, Angela erez SLaley and AnLonlo erez.
1hus, lnvesLco lnc merely agreed Lo sell and Solld Pomes Lo buy Lhe
former's rlghLs and lnLeresL ln Lhe properLles. Powever, Solld Pomes lnc.
reneged or defaulLed on lLs obllgaLlon. 1hus, lnvesLco lnc resclnded
exLra-[udlclally such conLracL Lo sell. AfLer such evenL, AlM8Al and
lnvesLco lnc enLered lnLo a conLracL of absoluLe sale, whereln Lhe
former pald ln full, causlng Lhe Lransfer of LlLles ln lLs name.

Issue: WheLher or noL lnvesLco lnc properly resclnded lLs conLracL Lo sell
and buy wlLh Solld Pomes lnc.

ne|d: ?LS. upon Solld Pomes lnc's fallure Lo comply wlLh lLs obllgaLlon
under Lhe conLracL, Lhere was no need Lo [udlclally resclnd Lhe conLracL.
lallure by one of Lhe parLles Lo ablde by Lhe condlLlons ln a conLracL Lo
sell resulLed ln Lhe resclsslon of Lhe conLracL.

Doctr|ne:

A grace perlod ls a rlghL, noL an obllgaLlon of Lhe debLor, and
when uncondlLlonally conferred, Lhe grace perlod ls effecLlve
wlLhouL furLher need of demand elLher calllng for Lhe paymenL
of Lhe obllgaLlon or for honorlng Lhe rlghL. HA-(BZ'$d) ]",4
2$-34 ,4 6L$- O("--. ]",447 :8= 92!6 <:E *<==DG4
1he acL of Lhe seller ln noLlfylng Lhe buyer of hls lnLenLlon Lo sell
Lhe properLles Lo oLher lnLeresL persons lf Lhe laLLer falled Lo
pay Lhe balance of Lhe purchase prlce ls sufflclenL noLlce for Lhe
cancellaLlon or resoluLlon of Lhelr conLracL Lo sell. I-1") ,4
6&-".7 DE: 92!6 EE? *:??FG4

3. Iorm Cf Not|ce kequ|red Ior Cance||at|on Cf Contract 1o Se||
Such noLlce should be ln a publlc lnsLrumenL pursuanL Lo Lhe
provlslon of ArLlcle 1338 of Lhe Clvll Code whlch requlres LhaL
acLs and conLracLs whlch have for Lhelr ob[ecL Lhe
exLlngulshmenL of real rlghLs over lmmovable properLy musL
appear ln a publlc documenL." ](J)$# ,4 2$&-' $5 633".%#7 <DF
92!6 8>D *<=FFG4

4. kesc|ss|on r|nc|p|es App||ed 1o Contracts 1o Se||
8y Lhe naLure of a conLracL Lo sell, Lhe remedy of resclsslon ls
lrrelevanL Lo conLracLs Lo sell because Lhe non-fulflllmenL of Lhe
suspenslve condlLlon of full paymenL of Lhe purchase prlce
prevenLs a conLracL of sale from even maLerlallzlng, and
Lherefore Lhere ls really noLhlng Lo resolve or resclnd. And
cerLalnly, any sLlpulaLlon auLhorlzlng Lhe seller Lo resclnd" Lhe
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
conLracL Lo sell ln Lhe evenL Lhe buyer falls Lo fully pay Lhe
purchase prlce ls a mere surplusage.

C. Lqu|ty keso|ut|ons Cn Contracts 1o Se||
AlLhough buyer clearly defaulLed ln hls lnsLallmenL paymenLs ln
a conLracL Lo sell coverlng Lwo parcels of land, Lhe Supreme
CourL neverLheless awarded ownershlp over one of Lhe Lwo (2)
loLs [olnLly purchased by Lhe buyer, on Lhe basls LhaL Lhe LoLal
amounL of lnsLallmenLs pald, alLhough noL enough Lo cover Lhe
purchase prlce of Lhe Lwo loLs were enough Lo cover fully Lhe
purchase prlce of one loL, rullng Lhere was subsLanLlal
performance lnsofar as one of Lhe loLs concerned as Lo prevenL
resclsslon LhereLo. HT"J.-1. M"-L.)$# ,4 9.%1.c.7 DD 92!6
8:QE *<=>QG4
Where buyer had rellglously been paylng monLhly lnsLallmenLs
for 8 years, buL even afLer defaulL he was wllllng and had
offered Lo pay all Lhe arrears, Lhe CourL granLed addlLlonal
perlod of 60 days from recelpL of [udgmenL for buyer Lo make all
lnsLallmenLs paymenLs ln arrears plus lnLeresLs, alLhough
demand for resclsslon had already been made4 H\4V4 O&.U$)
2$47 C)B4 ,4 \.,("-7 8< 92!6 F:= *<=>?G4

kLCA CI kULINGS

A. At erfect|on
1. kequ|s|te Contractua| St|pu|at|ons - ln a conLracL Lo sell, Lhere
musL be a sLlpulaLlon LhaL:
a. lull paymenL of Lhe purchase prlce by Lhe buyer
consLlLuLes a suspenslve condlLlon on Lhe obllgaLlon of
Lhe seller Lo sell and Lransfer ownershlp of Lhe sub[ecL
maLLer,
1

b. Accompanled by sLlpulaLlons or agreemenLs LhaL:
l. Cwnershlp of Lhe sub[ecL maLLer shall remaln
wlLh Lhe seller unLll full paymenL of Lhe prlce,
ll. Speclflc rlghL ls granLed Lo Lhe seller Lo
exLra[udlclally resclnd or cancel Lhe conLracL ln
case of defaulL.
2

1he lack of sLlpulaLlon expressly reservlng LlLle Lo Lhe seller ln
splLe dellvery of Lhe sub[ecL maLLer Lo Lhe buyer would noL
consLlLuLe Lhe LransacLlon lnLo a conLracL Lo sell.
3

1he lack of a sLlpulaLlon allowlng Lhe seller Lo resclnd Lhe
conLracL ln Lhe evenL Lhe buyer falls Lo comply wlLh hls
obllgaLlon Lo pay Lhe purchase prlce clearly prevenLs Lhe
conLracL from belng classlfled as a conLracL Lo sell.
4

ConLra Lo (a) !WhaL really deflnes a conLracL Lo sell ls Lhe
express sLlpulaLlon LhaL Lhe effecLlvlLy or demandablllLy of Lhe
conLracL ls sub[ecL Lo Lhe happenlng of a suspenslve condlLlon
(usually full paymenL of Lhe prlce), as dlsLlngulshed from a slLu-

1
Pelrs of San Andres v. 8odrlguez, 332 SC8A 769 (2000).
2
vda. ue MlsLlca v. nagulaL, 418 SC8A 73 (2003), valdez v. CourL of Appeals,
439 SC8A 33 (2004), 8las v. Angeles-PuLalla, 439 SC8A 273 (2004).
3
Coronel v. CourL of Appeals, 263 SC8A 13 (1996), uavld v. 1longson, 313 SC8A
63 (1999), Comez v. CourL of Appeals, 340 SC8A 720 (2000), vlllanueva, !r. v.
CourL of Appeals, 487 SC8A 371 (2006), uemafells v. CourL of Appeals, 338
SC8A 303 (2007), vlllador, !r. v. Zaballa, 343 SC8A 323 (2008).
4
Luzon 8rokerage Co., lnc. v. MarlLlme 8ulldlng Co., lnc., 43 SC8A 93 (1972),
!aclnLo v. kaparaz, 209 SC8A 246 (1992), 1opaclo v. CourL of Appeals, 211 SC8A
219 (1992), Adelfa roperLles, lnc. v. CourL of Appeals, 240 SC8A 373 (1993),
Cng v. CourL of Appeals, 240 SC8A 363 (1993), 8abasa v. CourL of Appeals, 290
SC8A 332 (1998), Almlra v. CourL of Appeals, 399 SC8A 331 (2003).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
aLlon where Lhe suspenslve condlLlon modlfles noL Lhe conLracL
lLself buL raLher only Lhe obllgaLlon of Lhe seller Lo sell and
dellver Lhe sub[ecL maLLer, ln whlch case lL ls a condlLlonal
conLracL of sale.
1

ConLra Lo (b) ! 1he CourL has also ruled LhaL even ln Lhe
absence of such sLlpulaLlons, Lhe conLracL would sLlll be
consldered a conLracL Lo sell, because of Lhe absence of deeds
of conveyance coverlng reglsLered land where Lhe operaLlve acL
of sale ls reglsLraLlon of Lhe deed of sale.
2

8uL See ConLra 8ullngs ln ulgnos v. CourL of Appeals and ln
orLlc v. CrlsLobal whlch held LhaL reglsLraLlon does noL vesL
LlLle, buL when Lhe conLracL Lo sell expressly reserves LlLle wlLh
Lhe seller unLll full paymenL of Lhe purchase prlce.

2. St|pu|at|on on Lxecut|on of Deed of Abso|ute Sa|e When
Lhere ls a sLlpulaLlon or promlse LhaL Lhe seller shall execuLe a
deed of absoluLe sale upon compleLlon of paymenL of Lhe
purchase prlce by Lhe buyer, Lhe agreemenL ls a conLracL Lo sell,
because lL would be equlvalenL Lo reservaLlon of LlLle clause.
3

ConLra: Where Lhere ls an express sLlpulaLlon LhaL Lhe sellers
would execuLe a flnal deed of absoluLe sale ln favor of Lhe buyer
upon paymenL of Lhe balance of Lhe purchase prlce, Lhe
conLracL would sLlll noL be a conLracL Lo sell, where nowhere ln

1
8omero v. CourL of Appeals, 230 SC8A 223 (1993), Coronel v. CourL of
Appeals, 263 SC8A 13, 27 (1996), Pelrs of edro Lscanlar v. CourL of Appeals,
281 SC8A 176 (1997), Almocera v. Cng, 346 SC8A 164 (2008).
2
8oque v. Lapuz, 96 SC8A 741 (1980).
3
8oque v. Lapuz, 96 SC8A 741 (1980), Lacanllao v. CourL of Appeals, 262 SC8A
486 (1996), adllla v. Spouses aredes, 328 SC8A 434 (2000), 8ayos v. CourL of
Appeals, 434 SC8A 363 (2004), Cruz v. lernando, 477 SC8A 173 (2003).
Lhe conLracL ln quesLlon ls a provlso or sLlpulaLlon Lo Lhe effecL
LhaL LlLle Lo Lhe properLy sold ls reserved ln Lhe seller unLll full
paymenL of Lhe purchase prlce, nor ls Lhere a sLlpulaLlon glvlng
Lhe seller Lhe rlghL Lo unllaLerally resclnd Lhe conLracL Lhe
momenL Lhe buyer falls Lo pay wlLhln a flxed perlod.
4


3. St|pu|at|on on the ayment of r|ce - ln conLracL Lo sell,
paymenL of Lhe prlce ls a suspenslve condlLlon, fallure of whlch
ls noL a breach, casual or serlous, buL an evenL LhaL prevenLs Lhe
obllgaLlon of Lhe seller Lo convey LlLle from acqulrlng obllgaLory
force.
3

ConLra: lf Lhere has been subsLanLlal compllance wlLh Lhe
obllgaLlon Lo pay Lhe prlce, Lhen cancellaLlon cannoL be
effecLed, for unllaLeral resclsslon wlll noL be [udlclally favored or
allowed lf Lhe breach ls noL subsLanLlal and fundamenLal Lo Lhe
fulflllmenL of Lhe obllgaLlon.
6


8. Dur|ng Consummat|on Stage
1. Lega| Lffect Cf De||very Made - ln conLracL of sale, Lhe LlLle Lo
Lhe properLy passes Lo Lhe buyer upon Lhe dellvery of Lhe Lhlng
sold, whereas, ln a conLracL Lo sell, ownershlp ls, by agreemenL,

4
ulgnos v. CourL of Appeals, 138 SC8A 373 (1988).
3
Salazar v. CourL of Appeals, 238 SC8A 323 (1996), Lacanllao v. CourL of
Appeals, 262 SC8A 486 (1996), 8lllo v. CourL of Appeals, 274 SC8A 461 (1997),
Cdyssey ark, lnc. v. CourL of Appeals, 280 SC8A 233 (1997), Cng v. CourL of
Appeals, 310 SC8A 1 (1999), 8las v. Angeles-PuLalla, 439 SC8A 273 (2004), Cruz
v. lernando, 477 SC8A 173 (2003).
6
!"#$%&% (&)*+# ,- !./$*+.)-!"#$% '() *+!, -./ 0-//-12 34#56 78 946"6 :;
!"#$%&"'" )* +,%-. ,/ 0112"3#4 567 SC8A 186 (2003).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
reserved ln Lhe seller and ls noL Lo pass Lo Lhe buyer unLll full
paymenL of Lhe purchase prlce.
1


2. Lega| Lffect of Iu|| ayment of r|ce ln a conLracL Lo sell, full
paymenL of Lhe prlce consLlLuLes Lhe happenlng of Lhe condlLlon
whlch would converL lL lnLo an execuLory conLracL of sale,
2
Lhus:
a. lf dellvery of Lhe sub[ecL maLLer had prevlously been
made, Lhen ownershlp ls Lransferred lpso [ure Lo Lhe
buyer.
3

b. lf dellvery of Lhe sub[ecL maLLer has noL been made,
Lhen lL allows Lhe buyer Lo demand for speclflc
performance.
4

ConLra: 1here ls sLlll no perfecLed or execuLory conLracL of sale,
lL merely glves rlse Lo an acLlon Lo enforce Lhe obllgaLlon of Lhe
seller Lo enLer lnLo a conLracL of sale, Lhere ls no Lransfer of
ownershlp Lo buyer even when dellvery was prevlously made,
and much less can Lhere be demand Lo dellver Lhe sub[ecL
maLLer when no conLracL of sale has been execuLed.
3


3. Lega| Lffect Cf Non-ayment Cf r|ce -

1
Salazar v. CourL of Appeals, 238 SC8A 323 (1996), unlversal 8oblna Sugar
Mllllng Corp. v. Pelrs of Angel 1eves, 389 SC8A 3167 (2002), Chua v. CourL of
Appeals, 401 SC8A 34 (2002), vldal, Sr. v. 1ayamen, 331 SC8A 147 (2007), PulsL
v. 8 8ullders, lnc., 332 SC8A 74 (2007), CasLlllo v. 8eyes, 339 SC8A 193 (2007).
2
hlllpplne naLlonal 8ank v. CourL of Appeals, 262 SC8A 464 (1996).
3
!"#$% '( )%*+, %- .//"#012 345 6)7. 34 89::;<= )#++#1>%1%2 ?+( '( )%*+, %-
Appeals, 477 SC8A 666 (2003).
4
uavld v. 1longson, 313 SC8A 63 (1999).
3
Coronel v. CourL of Appeals, 263 SC8A 13, 27 (1996), Abesamls v. CourL of
Appeals, 361 SC8A 328 (2001), PulsL v. 8 8ullders, lnc., 332 SC8A 74 (2007).
a. ln conLracL of sale, Lhe non-paymenL of Lhe purchase
prlce ls a breach, and when subsLanLlal ln naLure, would
allow Lhe seller Lo resclnd Lhe sale.
b. ln conLracL Lo sell, where ownershlp ls reLalned by Lhe
seller unLll paymenL of Lhe prlce ln full, such paymenL ls
a poslLlve suspenslve condlLlon, fallure of whlch ls noL
really a breach buL an evenL LhaL prevenLs Lhe obllgaLlon
of Lhe vendor Lo convey LlLle ln accordance wlLh ArLlcle
1184 of Lhe Clvll Code."
6

ConLra Lo (b):
o Lven when Lhe basls for Lhe breach of Lhe condlLlon ls
presenL, a noLlce of resclsslon" or cancellaLlon musL be
made on buyer Lo effecL Lhe exLlngulshmenL of Lhe
conLracL Lo sell.
7

" 8u1 SLL ConLra 8ullng ln 1orralba v. ue los
Angeles
o ln resldenLlal real esLaLe, when Lhe non-paymenL of Lhe
purchase prlce consLlLuLe merely a casual breach, lL
would noL exLlngulsh Lhe conLracL Lo sell, and Lhe courLs
may exLend equlLy rlghLs Lo Lhe buyer.

C. kemed|es Ava||ab|e

6
Lacanllao v. CourL of Appeals, 262 SC8A 486 (1996), Cdyssey ark, lnc. v.
CourL of Appeals, 280 SC8A 233 (1997), vldal, Sr. v. 1ayamen, 331 SC8A 147
(2007), PulsL v. 8 8ullders, lnc., 332 SC8A 74 (2007).
7
unlverslLy of Lhe hlllpplnes v. ue los Angeles, 33 SC8A 103 (1970), alay, lnc.
v. Clave, 124 SC8A 638 (1983), !lson v. CourL of Appeals, 164 SC8A 339 (1988),
Slska uevelopmenL Corp. v. Cfflce of Lhe resldenL, 231 SC8A 674 (1994),
Ccampo v. CourL of Appeals, 233 SC8A 331 (1994), Spouses 8enlLo v. SaqulLan-
8ulz, 394 SC8A 230 (2002).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1. When Cond|t|on Cn r|ce ayment Not Iu|f|||ed:
a. ln conLracL of sale, lf seller had dellvered Lhe sub[ecL
maLLer prevlously wlLhouL reservlng LlLle, lL would mean
LhaL ownershlp has been Lransferred Lo Lhe buyer, and
seller cannoL recover ownershlp unLll and unless Lhe
conLracL ls resolved or resclnded by courL acLlon.
Whereas ln conLracL Lo sell, slnce ownershlp was
reLalned by Lhe seller by express reservaLlon unLll full
paymenL of Lhe prlce, and Lhe conLracL ls exLlngulshed,
Lhen no acLlon ls necessary oLher Lhan recovery of
possesslon ln case buyer refuses Lo volunLarlly dellver.
1

b. ln condlLlonal conLracL of sale, Lhe non-happenlng of
Lhe condlLlon may be walved by Lhe obllgee who may
sLlll seek speclflc performance.
Whereas, ln conLracL Lo sell, Lhe non-happenlng of Lhe
condlLlon prevenLs Lhe conLracL from comlng lnLo
exlsLence (l.e., exLlngulshes Lhe conLracL) and con-
sequenLly nelLher resclsslon or speclflc performance
may be pursued.
2

c. ln condlLlonal conLracL of sale, Lhe basls of resclsslon
musL be subsLanLlal breach.
Whereas, ln a conLracL Lo sell, Lhe lssue of breach ls
compleLely lrrelevanL.
3


1
1he Carldad LsLaLes, lnc. v. SanLero, 71 hll. 114 (1940), Manuel v. 8odrlguez,
109 hll. 1 (1960), Salazar v. CourL of Appeals, 238 SC8A 323 (1996), anglllnan
v. CourL of Appeals, 279 SC8A 390 (1997), vldal, Sr. v. 1ayamen, 331 SC8A 147
(2007), PulsL v. 8 8ullders, lnc., 332 SC8A 74 (2007).
2
8omero v. CourL of Appeals, 230 SC8A 223 (1993), Llm v. CourL of Appeals,
263 SC8A 369 (1996).
3
Luzon 8rokerage Co., lnc. v. MarlLlme 8ulldlng Co., lnc., 43 SC8A 93 (1972).
d. ln conLracL of sale and condlLlonal conLracL of sale,
resclsslon may be pursued wlLh forfelLure of Lhe
amounLs pald when LhaL has been expressly pro- vlded
for.
Whereas, ln conLracL Lo sell, lL becomes lmperaLlve LhaL
Lhe amounLs pald musL be reLurned and Lhere would be
no basls upon whlch Lo reLaln Lhem slnce Lhere was no
breach upon whlch a clalm of damage may be
lnLerposed.
4

o ConLra Lo (d): 8ased on equlLy prlnclples, Lhe docLrlne of
subsLanLlal breach Lo allow resclsslon and courL
dlscreLlon under ArLlcle 1191 have been made Lo apply
Lo conLracLs Lo sell lnvolvlng resldenLlal lmmovables.
3

" 8u1 SLL conLrary rullng ln Lacanllao v. CourL of
Appeals. Lven when Lhe suspenslve condlLlon
has noL happened, whlch would exLlngulsh
Lhereby Lhe conLracL Lo sell, neverLheless, such
exLlngulshmenL can only have legal effecL lf
noLlce of cancellaLlon ls glven Lo Lhe buyer.
6

" 8u1 SLL conLrary rullng ln 1orralba v. ue los
Angeles.

2. Laws App||cab|e - ln conLracL of sale, Lhe appllcable rules are

4
1he Manlla 8aclng Club v. 1he Manlla !ockey Club, 69 hll. 33 (1939).
3
!.M. 1uazon Co., lnc. v. !avler, 31 SC8A 829 (1970), Legarda Permanos v.
Saldana, 33 SC8A 3246 (1974), Slska uev. Corp. v. Cfflce of Lhe resldenL, 231
SC8A 674 (1994).
6
unlverslLy of Lhe hlllpplnes v. ue los Angeles, 33 SC8A 103 (1970), alay, lnc.
v. Clave, 124 SC8A 638 (1983), Slska uev. Corp. v. Cfflce of Lhe resldenL, 231
SC8A 674 (1994).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
found ln ArLlcles 1191 and 1392 provldlng for Lhe remedy of
resclsslon, buL when Lhere ls a suspenslve condlLlon, ArLlcle
1343 allows Lhe seller Lo choose beLween resclsslon or walvlng
Lhe condlLlon, whereas, ln conLracL Lo sell, Lhe remedles of
resclsslon belng lncompaLlble LhereLo,
1
Lhe appllcable rules are
found ln ArLlcles 1184 and 1343.
2
1he lssue of wheLher Lhe
breach was casual or serlous under ArLlcle 1191 ls compleLely
lrrelevanL ln a conLracL Lo sell.
3

ConLra: 1here have been several lnsLances when ArLlcle 1191
was made Lo apply Lo a conLracL Lo sell lnvolvlng resldenLlal real
esLaLe, wlLh appllcaLlon of Lhe docLrlne of subsLanLlal breach.
4

8u1: 1he requlremenLs of Lhe Maceda Law on grace perlod,
cash surrender value and prescrlbed manner of noLarlal
resclsslon or cancellaLlon musL always apply, wheLher lL ls a

1
Luzon 8rokerage Co., lnc. v. MarlLlme 8ulldlng Co., lnc., 46 SC8A 381 (1972),
8lllo v. CourL of Appeals, 274 SC8A 461 (1997), anglllnan v. CourL of Appeals,
279 SC8A 390 (1997), Cdyssey ark, lnc. v. CourL of Appeals, 280 SC8A 233
(1997), valarao v. CourL of Appeals, 304 SC8A 133 (1999), Conzales v. Pelrs of
1homas and aula Cruz, 314 SC8A 383 (1999), adllla v. Spouses aredes, 328
SC8A 434 (2000),
2
1opaclo v. CourL of Appeals, 211 SC8A 219 (1992), Lacanllao v. CourL of
Appeals, 262 SC8A 486 (1996), 8lllo v. CourL of Appeals, 274 SC8A 461 (1997),
Cdyssey ark, lnc. v. CourL of Appeals, 280 SC8A 233 (1997).
3
Luzon 8rokerage Co., v. MarlLlme 8ulldlng Co., lnc., 86 SC8A 303 (1978),
SanLos v. CourL of Appeals, 337 SC8A 67 (2000).
4
Carldad LsLaLes, lnc. v. SanLero, 71 hll. 114 (1940), Albea v. lnqulmboy, 86
hll. 477 (1930), Manuel v. 8odrlguez, 109 hll. 1 (1960), Luzon 8rokerage v.
MarLlme 8ulldlng, lnc., 86 SC8A 303 (1978), 8oque v. Lapuz, 96 SC8A 741, 739
(1980), Angeles v. Calasanz, 133 SC8A 323 (1983), !oseph & Sons LnLerprlses,
lnc. v. CourL of Appeals, 143 SC8A 663 (1986), Llm v. CourL of Appeals, 182
SC8A 364 (1990), !aclnLo v. kaparaz, 209 SC8A 246 (1992).
conLracL of sale or conLracL Lo sell, lnvolvlng lnsLallmenL sales of
resldenLlal real esLaLe and resldenLlal condomlnlum unlL.
3



3
8lllo v. CourL of Appeals, 274 SC8A 461 (1997).