CHUA vs.

CA (April 9, 2003)
GR No. 119255

Petitioner: Tomas K. Chua

Respondents: Court of Appeals and Encarnacion Valdes-Choy

Doctrine: In a contract to sell, the obligation of the seller to sell becomes demandable only
upon the happening of the suspensive condition. In this case, the suspensive condition is the full
payment of the purchase price by Chua. Such full payment gives rise to Chua’s right to demand
the execution of the contract of sale. Since Chua refused to pay the consideration in full on the
agreed date, which is a suspensive condition, Chua cannot compel Valdes-Choy to
consummate the sale of the property.

Facts:
 Valdes-Choy owns a house and lot (718 sqm) located in San Lorenzo Village, Makati
City. She advertised for the sale of her property.
 Chua responded to the advertisement and after several meetings Valdes-Choy and
Chua agreed on a purchase price of 10,800,000 payable in cash.
 Valdes-Choy received a check for 100,000 from Chua and agreed that the balance is
payable on or before July 15, 1989 and failure to pay the balance on the said date
forfeits the earnest money.
 On July 13, 1989, Valdes-Choy as vendor and Chua as vendee signed two Deeds of
Absolute Sale (one covering the house and lot and the other covering the furniture and
fixtures of the house.) The parties also computed the capital gains tax amounting to
485,000.
 On July 14, 1989, Chua handed Valdes-Choy a manager’s check for 485,000 so Valdes-
Choy could pay the capital gains tax. Valdes-Choy issued a receipt showing that Chua
had a remaining balance of 10,215,000. Chua also showed Valdes-Choy a manager’s
check for 10,215,000 however, Chua refused to give the check until a new TCT covering
the property is registered under Chua’s name which angered Valdes-Choy.
 Chua filed a complaint for specific performance against Valdes-Choy and contends that
there is a perfected contract of sale rather than a contract to sell, and there was no
reservation in the contract of sale that Valdes-Choy shall retain the title to the property
until after the sale. Chua argues that his payment of earnest money and its acceptance
by Valdes-Choy precludes the latter from rejecting the binding effect of the contract of
sale.

Issue: whether there is a perfected contract of sale by the payment of the earnest money.

Held:
No. The receipt shows that the true agreement between the parties was a contract to sell.
Ownership over the property was retained by Valdes-Choy and was not to pass to Chua until
after full payment of the purchase price.
The receipt also provides that the earnest money shall be forfeited in case the buyer fails to pay
the balance of the purchase price on or before July 15, 1989. This is also similar to giving the
seller (Valdes-Choy) the right to rescind unilaterally the contract the moment the buyer (Chua)
fails to pay within a fixed period.