Fernando Carrascoso, Jr. v. Court of Appeals and Lauro Levist, G.R. No. 123672, December 14, 2005.

FACTS: On March 1972, El Dorado Plantation Inc, through board member Lauro Leviste, executed a
Deed of Sale with Carrascoso. The subject of the sale was a 1,825 hectare of land. It was agreed upon
that the petitioner to pay P1.8 Million. P290 thousand would be paid by Carrascoso to PNB to settle the
mortgage placed on the said land and P210 thousand would be paid directly to Leviste. The balance of
P1.3 million plus 10% interest would be paid over the next 3 years at P519 thousand every 25th day of
March. Leviste also assured that there were no tenants, hence the land does not fall under the Land
Reform Code. Leviste allowed Carrascoso to mortgage the land which the latter did. Carrascoso obtained
a total of P1.07 million as mortgage and he used the same to pay the down payment which was agreed
upon in the contract. Carrascoso defaulted from his obligation which was supposed to be settled on
March 25, 1975. Leviste then sent him letters to make good his end of the contract otherwise he will be
litigated. In 1977, Carrascoso executed a Buy and Sell Contract with PLDT. The subject of the sale was
the same land sold to Carrascoso by Leviste but it was only 1000 sq m portion thereof. The land is to be
sold at P3 million. Part of the terms and conditions agreed upon was that Carrascoso , to remove all
tenants from the land within one year. He is also given a six-month extension in case he will be needed.
Thereafter, PLDT will notify Carrascoso if whether or not PLDT will finalize the sale. PLDT gained
possession of the land. El Dorado filed a civil case against Carrascoso. PLDT intervened averring that it
was a buyer in good faith. The RTC ruled in favor of Carrascoso and CA reversed the RTC ruling.

ISSUE: What is the nature of each contract?

HELD: The contract executed between El Dorado and Carrascoso was a contract of sale. It was perfected
by their meeting of the minds and was consummated by the delivery of the property to Carrascoso.
However, El Dorado has the right to rescind the contract by reason of Carrascoso’s failure to perform his
obligation. A contract of sale is a reciprocal obligation. The seller obligates himself to transfer the
ownership and deliver a determinate thing, and the buyer obligates himself to pay a price certain in
money or its equivalent.

The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction
for a time existed, and discharges the obligations created there under. Such failure to pay the price in
the manner prescribed by the contract of sale entitles the unpaid seller to sue for collection or to
rescind the contract.

The contract between Carrascoso and PLDT is a contract to sell. This is evidenced by the terms and
conditions that they have agreed upon that after fulfillment of Carrascoso’s obligation PLDT has “to
notify Carrascoso of its decision whether or not to finalize the sale.” Carrascoso also averred that there
was a breach on El Dorado’s part when it comes to warranty. Carrascoso claimed that there were
tenants on the land and he spent about P2.9 million relocating them. The SC ruled that Carrascoso
merely had a bare claim without additional proof to support it.

Requisites of Express warranty in a Contract of Sale (1) the express warranty must be an affirmation of
fact or any promise by the seller relating tothe subject matter of the sale; (2) the natural tendency of
such affirmation or promise is to induce the buyer to purchase thething; and 3) the buyer purchases the
thing relying on such affirmation or promise thereon.