Gonzales v Heirs of Cruz (1999) J. Panganiban FACTS - Cruz(es) entered into a Contract of Lease/Purchase with Gonzales of a half-portion of a ‘parcel of land containing an area of 12 hectares, more or less, and an accretion of 2 hectares, more or less, situated in Rodriguez Town, Province of Rizal’ and covered by Transfer Certificate of Title - Important parts of their terms of contract: 1. "The terms of this Contract is for a period of one year upon the signing thereof. After the period of this Contract, the LESSEE shall purchase the property on the agreeable price of One Million Pesos (P1,000,000.00) payable within Two (2) Years period with an interest of 12% per annum subject to the devalued amount of the Philippine Peso, according to the following schedule of payment: Upon the execution of the Deed of Sale 50% - and thereafter 25% every six (6) months thereafter, payable within the first ten (10) days of the beginning of each period of six (6) months. xxxx 9. The LESSORS hereby commit themselves and shall undertake to obtain a separate and distinct T.C.T. over the herein leased portion to the LESSEE within a reasonable period of time which shall not in any case exceed four (4) years, after which a new Contract shall be executed by the herein parties which shall be the same in all respects with this Contract of Lease/Purchase insofar as the terms and conditions are concerned." - Gonzales paid in accordance with the 2nd provision of the Contract of Lease/Purchase, took possession of the property but did not exercise his option to purchase the property immediately after the expiration of the one-year lease. He remained in possession of the property without paying the purchase price provided for in the Contract of Lease/Purchase and without paying any further rentals thereon. - Cruz decided to rescind the contract and served Gonzales a demand to vacate the property. Gonzales refused to leave and also refused to have a barangay settlement. - The property subject of the Contract of Lease/Purchase is currently the subject of an

Extra-Judicial Partition. Title of the property remains in the name of the plaintiff's predecessors-in-interest. - Trial Court: the plaintiffs cannot xxxx rescind the Contract of Purchase in view of the fact that there is a condition precedent which the plaintiffs have not fulfilled (to secure a separate TCT for Gonzales). It is the defendant now who has the option to either rescind or demand the performance of the contract. - CA: Gonzales never exercised his option to purchase therefore he is not entitled to have the title to the property transferred in his name. ISSUES/RATIO 1. Whether or not the Court of Appeals has gravely erred and committed grave abuse of discretion in the interpretation of [the] law between the parties. -YES - Basic is the rule in the interpretation of contracts that if some stipulation therein should admit of several meanings, it shall be understood as bearing that import most adequate to render it effectual. Considering the antecedents of the ownership of the disputed lot, it appears that petitioner’s interpretation renders clause nine most effectual. - Because the property remained registered in the names of their predecessors-in-interest, private respondents could validly sell only their undivided interest in the estate of Severo Cruz, the extent of which was however not shown in the records. - The respondents as sellers were given a maximum of four years within which to acquire a separate TCT in their names, preparatory to the execution of the deed of sale and the payment of the agreed price in the manner described in paragraph nine. - Petitioner can be compelled to perform his obligation under the first paragraph, only after respondents have complied with the ninth. Unless and until respondents have done so, the first paragraph cannot be enforced against petitioner. - The ninth provision was intended to ensure that respondents would have a valid title over the specific portion they were selling to petitioner. Only after the title is assured may the obligation to buy the land and to pay the sums

stated in the Contract be enforced within the period stipulated. 2. Is paragraph 9 of the Lease/Purchase Contract a condition precedent before petitioner could exercise his option to buy the property? YES - The obligation of the petitioner to buy the land cannot be enforced unless respondents comply with the suspensive condition that they acquire first a separate and distinct TCT in their names. The suspensive condition not having been fulfilled, then the obligation of the petitioner to purchase the land has not arisen. 3. Can plaintiff rescind or terminate the Contract of Lease after the one-year period? NO - “There can be no rescission (or more properly, resolution) of an obligation as yet non-existent, because the suspensive condition has not happened.” Trial court decision reinstated but award of damages and fees deleted (no basis)

Coronel v. CA (1996)

J. Melo

Facts:

On Jan. 19, 1985, the Coronels executed a document entitled “Receipt of Down Payment” in favor of Ramona Patricia Alcaraz containing the following conditions appurtenant to the sale of their house and lot: 1. Ramona will make a down payment of

P50,000 upon execution of the document aforestated.

2. The Coronels will cause the transfer in their names of the title of their property registered in the name of their deceased father, Constancio P. Coronel, upon receipt of the P50,000 down payment.

3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona and the latter will pay the former the whole balance of P1,190,000.

On the same date, Concepcion Alcaraz, mother of Ramona, paid the down payment of P50,000.

On Feb. 6, 1985, the property originally registered in the name of the Coronels’ father was transferred in their names. Subsequently, the Coronels sold the property covered to intervenor-appellant Mabanag for P1,580,000 after the latter paid P300,000.

For this reason, the Coronels canceled and rescinded the contract with Ramona.

Concepcion, et al., then filed a complaint for specific performance against the Coronels and caused the annotation of a notice of lis pendens.

RTC rendered judgment for specific performance ordering the Coronels to execute in favor of Concepcion, et al.,

o a deed of absolute sale covering that parcel of land embraced in and to immediately deliver the said document of sale to Concepcion, et al.

o Upon receipt thereof, Concepcion, et al., were ordered to pay the Coronels the whole balance of the purchase price amounting to P1,190,000 in cash.

o The title in the name of Mabanag was canceled and delivered to be without force and effect.

o Coronels, Mabanag, and all other persons claiming under them were ordered to vacate the subject property and deliver possession thereof to Concepcion, et al.

o The claim for damages and attorney’s fees filed by Concepcion, et al., as well as the counterclaims by the Coronels and intervenors were dismissed.

Respondents argue that the "Receipt of Down Payment" embodied a perfected contract of sale, which perforce, they seek to enforce by means of an action for specific performance.

Petitioners aver that what the document signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence of Ramona P. Alcaraz, who left for the United States of America, said contract could not possibly ripen into a contract of absolute sale.

Issue:

W/N the “Receipt of Down Payment” is a contract to sell.

Held:

No. SC ruled that it was a conditional contract of sale.

Ratio:

The Court distinguished between contract to sell and contract of sale:

CONTRACT OF SALE CONTRACT TO SELL

Definition Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

A bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

Elements a.) Consent or meeting of the minds, that is, consent to transfer ownership exchange for the price;

b.) Determinate subject matter; and

c.) Price certain in money or its equivalent.

Lacks the element of consent because the prospective buyer reserves the transfer of title to the prospective buyer upon a suspensive condition.

Upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective seller’s obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479.

Court also distinguished between conditional contract of sale and contract to sell

CONDITIONAL CONTRACT OF SALE CONTRACT TO SELL

Both have a suspensive condition

Has element of consent Lacks element of consent

If the suspensive condition is fulfilled, ownership automatically transfers to the buyer by operation of law without any further act having to be performed by the seller.

If the suspensive condition is fulfilled, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him.

The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale

It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless a technical meaning was intended.

In the case at bar, the agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title to the subject parcel of land.

Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price.

What is clearly established by the plain language of the subject document is that when the said “Receipt of Down Payment” was prepared and signed by the Coronels,

the parties had agreed to a conditional contract of sale, perfection of which is subject only to the successful transfer of the certificate of title from the name of petitioners’ father, Constancio P. Coronel, to their names.

The suspensive condition was fulfilled on Feb 6 1985 and thus, the conditional contract of sale between the parties became obligatory, the only act required for the consummation hereof being the delivery of the property by means of the execution of the deed of absolute sale in a public instrument, which petitioners unequivocally committed themselves to do as evidenced by the “Receipt of Down Payment.”

WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment AFFIRM

ED.

PARKS v. PROVINCE of TARLAC [1926] Appeal from a judgment of the Court of First Instance of Tarlac C. J. Avaceña Facts:

On October 18, 1910, Concepcion Cirer and James Hill, owners of parcel of land No. 2 referred to in the complaint, donated the said land perpetually to the municipality of Tarlac, Province of Tarlac.

o Such donation was made under certain conditions.

The donation was accepted by one Mr. Santiago de Jesus on behalf of the municipal council of Tarlac of which he was the municipal president.

o The parcel was later registered in the name of the donee, the municipal of Tarlac.

On January 15, 1921, the said parcel of land was donated by Cirer and Hill to plaintiff George L. Parks.

On August 24, 1923, the municipality transferred the parcel of land to the Province of Tarlac with a corresponding certificate of title.

Petitioner Parks petitioned against the Province of Tarlac, Cirer and Hill contending that the conditions of the donation had not been complied with and invoking the sale made by Cirer and Hill in his favor. The petitioner prayed that the transfer be annulled and the certificate of title be cancelled.

The lower court dismissed the petition. Issues Held Whether or not Parks had a right of action

NO. The Court held that the sale could not take effect. The parcel of land was donated to the municipality of Tarlac which was

accepted by the latter along with the title to the property. The donation could have been revoked for causes provided by law, but the

fact is that it was not revoked when Cirer and Hill made the sale of the parcel to the plaintiff.

o Even if the said causes had existed for the revocation of the donation, it was still necessary for it to be revoked that such revocation had been consented to by the done, or that it had been judicially decreed. These circumstances were non-existent in the case.

o Also, Cirer and Hill were no longer the owners of the said land when it was “sold” so they could not have sold it to Parks nor could the latter have acquired it from them.

Whether or not the conditions in the donation were condition precedents (suspensive)

PETITIONER: The donation never became effective as a condition precedent had been imposed on the donation which was not complied with.

A condition was imposed that one of the parcels was to be used for the erection of a central school and the other for a public park, the work for both to commence within six months from the date of ratification by the parties of the document evidencing the donation.

COURT: NO MERIT. The allegation that it is a condition precedent is erroneous. Condition Precedent - a condition must first be complied or deemed

complied with before the acquisition of right is effected. A condition is not suspensive when compliance of which cannot be effected

except when the right is deemed acquired. In the case, the condition that a public school and a public park be erected on

the said lands could not be really complied with until the donation is given effect. The donee/recipient of the land could not do any work on the land if the donation had not really been effected because it would be an invasion of another’s title.

Whether or not noncompliance

PETIITONER: Even if it weren’t a condition precedent but subsequent, the noncompliance thereof was already a sufficient cause for the revocation.

with condition subsequent (resolutory) a sufficient cause for the revocation of the donation.

COURT: YES. HOWEVER, the period for bringing an action for the revocation had prescribed.

- revocation by subsequent birth of children: 5 years (Art. 646, Civil Code) - revocation by reason of ingratitude: 1 year - revocation by reason of noncompliance with the conditions of the donation

(Art. 647, Civil Code) as governed by the law of contracts and general rules of prescription (Sec. 43, Code of Civil Procedure): 10 years

In the case, the action for revocation arose on April 19, 1911, six months after the ratification of the instrument of donation on October 18, 1910. The complaint was filed on July 5, 1924, more than ten years after the cause accrued.

Judgment of the lower court AFFIRMED.