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Leano vs CAFactsPrivate respondent Hermogenes Fernando, asvendor, and petitioner Carmelita Leao, asvendee, executed a contract to sell involving apiece of land, Lot No. 876!, "it# an area of $%&s'uare meters, located at (to. Cristo, !aliuag,!ulacan. )n t#e contract, Carmelita Leao *ound#erself to pa+ Hermogenes Fernando t#e sum ofone #undred seven t#ousand seven #undred andft+ pesos -P&7,7/.0 as t#e total purc#aseprice of t#e lot. 1fter t#e execution of t#econtract, Carmelita Leao made severalpa+ments in lump sum. 2#ereafter, s#econstructed a #ouse on t#e lot valued atP8,.. 3.

2#e trial court, #o"ever, rendered a decision inan e4ectment case earlier led *+ respondentFernando ordering petitioner Leao to vacate t#epremises and to pa+ P3/. per mont# *+ "a+of compensation for t#e use and occupation oft#e propert+ from 5a+ 37, && until s#e vacatedt#e premises. Petitioner Leao led "it# t#eegional 2rial Court of 5alolos, !ulacan, acomplaint for specic performance "it#preliminar+ in4unction. %.

2#e trial court rendered a decision orderingpetitioner to pa+ to t#e defendant t#e sum ofP&%,.7 corresponding to #er outstandingo*ligations under t#e contract to sell consisting oft#e principal of said o*ligation toget#er "it# t#einterest and surc#arges due t#ereon as ofFe*ruar+ 38, &$, plus interest t#ereon at t#e

rate of &8per annum. espondent Fernando led a motion forreconsideration. 2#e trial court increased t#eamount of P&%,.7 to P&8%,687..1ccording to t#e trial court, t#e transaction*et"een t#e parties "as an a*solute sale,ma9ing petitioner Leao t#e o"ner of t#e lotupon actual and constructive deliver+ t#ereof.espondent Fernando, t#e seller, "as divested ofo"ners#ip and cannot recover t#e same unlesst#e contract is rescinded pursuant to 1rticle &/3of t#e Civil Code "#ic# re'uires a 4udicial or

notarial demand. (ince t#ere #ad *een norescission, petitioner Leao, as t#e o"ner inpossession of t#e propert+, cannot *e evicted. $.)n time, petitioner Leao appealed t#e decision tot#e Court of 1ppeals. 2#e Court of 1ppealspromulgated a decision a:rming t#at of t#eegional 2rial Courtin toto. Petitioner Leao led a motion forreconsideration. 2#e Court of 1ppeals denied t#emotion. /.

Hence, t#e present petition.)ssue

&. ;#et#er or not t#e transaction "as ana*solute and not a conditional saleationations. 1rticle &&6of t#e Civil Code provides t#at in reciprocalo*ligations, neit#er part+ incurs in dela+ if t#eot#er does not compl+ or is not read+ to compl+in a proper manner "it# "#at is incum*ent upon#im. From t#e moment one of t#e parties fullls#is o*ligation, dela+ *+ t#e ot#er *egins. )n t#e

case at *ar, respondent Fernando performed #ispart of t#e o*ligation *+ allo"ing petitioner Leaoto continue in possession and use of t#e propert+.Clearl+, "#en petitioner Leao did not pa+ t#emont#l+ amorti>ations in accordance "it# t#eterms of t#e contract, s#e "as in dela+ and lia*lefor damages. 2#e Court, #o"ever, up#eld t#e trialcourt in #olding t#at t#e default committed *+petitioner Leao in respect of t#e o*ligation could*e compensated *+ t#e interest and surc#argesimposed upon #er under t#e contract in 'uestion.

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Heirs of Luis Bacus vs CA and SpousesDurayFacts)n t#e contract of lease of agricultural landexecuted *et"een Luis !acus and Faustino ura+,an option to *u+ clause "as included.Later, Luis died and t#e ura+ spouses informedt#e #eirs of Luis t#eir "illingness to exercise t#eiroption to *u+ t#e propert+ under t#e option to*u+ clause.Petitioners refused to sell t#e propert+, promptingura+ to le a complaint for specicperformance.

2#e #eirs of Luis, #o"ever, asserted t#at t#eura+s #ad failed to pa+ t#e purc#ase price oft#e land *efore t#e expiration of t#e contract.Hence, "it# t#e expiration of t#e contract, t#eoption to *u+ #ad also expired.2C ruled in favor of private respondents.Petitioners appealed to C1 "#o denied suc#appeal.Hence t#is petition.)ssue

&. ;?N petitioners can *e compelled to sellt#e disputed propert+ *+ virtue of t#e nonfulllment of t#e o*ligation under t#eoption contract of t#e private respondents.

ulingDes, petitioners can *e compelled to sell t#edisputed propert+

ationali>ation&. ?*ligations under an option to *u+ arereciprocal o*ligations. 2#e performance of oneo*ligation is conditioned on t#e simultaneousfulllment of t#e ot#er o*ligation. )n ot#er "ords,in an option to *u+, t#e pa+ment of t#e purc#aseprice *+ t#e creditor is contingent upon t#eexecution and deliver+ of deed of sale *+ t#ede*tor. )n t#is case, "#en private respondentsopted to *u+ t#e propert+, t#eir o*ligation "as toadvise petitioners of t#eir decision and t#eirreadiness to pa+ t#e price. 2#e+ "ere not +et

o*liged to ma9e actual pa+ment. ?nl+ uponpetitionersG actual execution and deliver+ of t#edeed of sale "ere t#e+ re'uired to pa+. 2#e latter"as contingent upon t#e former.

3. )n Nietes vs. Court of 1ppeals, $6 (C1 6/$-&730, "e #eld t#at notice of t#e creditorGsdecision to exercise #is option to *u+ need not *ecoupled "it# actual pa+ment of t#e price, so longas t#is is delivered to t#e o"ner of t#e propert+upon performance of #is part of t#e agreement.Conse'uentl+, since t#e o*ligation "as not +etdue, consignation in court of t#e purc#ase price

"as not +et re'uired. Consignation is t#e act ofdepositing t#e t#ing due "it# t#e court or 4udicialaut#orities "#enever t#e creditor cannot acceptor refuses to accept pa+ment and it generall+re'uires a prior tender of pa+ment. )n instances,"#ere no de*t is due and o"ing, consignation isnot proper. 2#erefore, petitionersG contention t#atprivate respondents failed to compl+ "it# t#eiro*ligation under t#e option to *u+ *ecause t#e+failed to actuall+ deliver t#e purc#ase price orconsign it in court *efore t#e contract expired

and *efore t#e+ execute a deed, #as no leg tostand on.

%. Private respondents did not incur in dela+"#en t#e+ did not +et deliver pa+ment nor ma9ea consignation *efore t#e expiration of t#econtract. )n reciprocal o*ligations, neit#er part+incurs in dela+ if t#e ot#er does not compl+ or isnot read+ to compl+ in a proper manner "it#"#at is incum*ent upon #im. ?nl+ from t#emoment one of t#e parties fullls #is o*ligation,does dela+ *+ t#e ot#er *egin. )n t#is case,private respondents, communicated to petitionerst#eir intention to *u+ t#e propert+ and t#e+ "ereat t#at time underta9ing to meet t#eir o*ligation*efore t#e expiration of t#e contract. Ho"ever,petitioners refused to execute t#e deed of saleand it "as t#eir demand to private respondentsto rst deliver t#e mone+ *efore t#e+ "ouldexecute t#e same "#ic# prompted privaterespondents to institute a case for specicperformance. Later, after t#e case #ad *eensu*mitted for decision *ut *efore t#e trial courtrendered its decision, private respondents issueda cas#ierGs c#ec9 in petitionersG favor purportedl+to *olster t#eir claim t#at t#e+ "ere read+ to pa+t#e purc#ase price. 2#e trial court considered t#isin private respondentsG favor and "e *elieve t#atit rig#tl+ did so, *ecause at t#e time t#e c#ec9"as issued, petitioners #ad not +et executed adeed of sale nor expressed readiness to do so.1ccordingl+, as t#ere "as no compliance +et "it#"#at "as incum*ent upon petitioners under t#eoption to *u+, private respondents #ad notincurred in dela+ "#en t#e cas#ierGs c#ec9 "asissued even after t#e contract expired.

Megaworld Globus Asia Inc. V. anseco!"#$SC%A &"$'Facts

?n Iul+ 7, &/, petitioner 5ega"orldJlo*us 1sia, )nc. -5ega"orld0 andrespondent 5ila(. 2anseco -2anseco0 entered into a Contract to!u+ and (ell a33$ s'uaremeter -more or less0condominium unit at a preselling pro4ect,K2#e(alcedo Par9,K located along (enator JilPu+at 1venue, 5a9ati Cit+.

2#e purc#ase price "as P&6,83,%7.%3,to *e paid as follo"s -&0 % lesst#e reservation

fee of P&,, or P$,$,6&&.&, *+ postdatedc#ec9 pa+a*le onIul+ &$, &/@ -30 P,3$&,&3./t#roug# % e'ual mont#l+ installments ofP%8,%7.%/ from 1ugust &$, &/ to Ianuar+ &$,&8@ and -%0 t#e *alance of P3,/3,%/.6% on?cto*er %&, &8, t#e stipulated deliver+ date oft#e unit@ provided t#at if t#e construction iscompleted earlier, 2anseco "ould pa+ t#e *alance"it#in seven da+s from receipt of a notice ofturnover.

(ection $ of t#e Contract to !u+ and (ellprovided t#at t#e pro4ect must *ecompleted anddelivered not later t#an ?cto*er %&, &8 "it#

additional grace period of six -60 mont#s "it#in"#ic# to complete t#e Pro4ect and t#e units,*arring dela+s due to re, eart#'ua9es, t#eelements, acts of Jod, "ar, civildistur*ances,stri9es or ot#er la*or distur*ances, governmentand economiccontrols ma9ing it, among ot#ers,impossi*le or di:cult to o*tain t#e necessar+materials, acts of t#ird person, or an+ ot#er causeor conditions *e+ond t#e controlof t#e (ELLE.

Herein respondent paid all installmentsexcept for t#e *alance of P3,/3,%/.6% pendingdeliver+ of t#e unit. 5ega"orld, #o"ever, "as

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onl+ a*le todeliver t#e unit to 2anseco on 1pril33, 33 "#ic# is "a+ past t#e due date andt#egrace period. 2anseco t#en replied t#roug#counsel t#at in vie" of 5ega"orld=s failure todeliver t#e said unit on time, s#e "as demandingt#e return of P&$,38&,7%&.7 representing t#etotal installment pa+ment s#e #ad made,"it#interest at &3 per annum from 1pril %,&, t#e expiration of t#e sixmont#graceperiod. 2anseco pointed out t#at none of t#eexcepted causes of dela+existed.

5ega"orld averred t#at t#e dela+ "ascaused *+ t#e &7 1sian FinancialCrisis, "#ic#"as favored *+ t#e Housing 1r*iter. 2anseco,t#en, led a petitionfor revie" at t#e Court of1ppeals "#ic# ruled in #er favor and reversed allprevious rulings.

)((ME ;#et#er or not 2anseco is entitled todamages.

HELDes. (upreme Court a:rmed t#e decision ofC1 t#at 4udicial or extra4udicial demand *+

2anseco "as not necessar+ to put t#e o*ligor indefault if t#e contract states t#e date in "#ic#t#e o*ligation must *e performed as providedin1rticle &&6 of t#e Civil Code. 2#ere *eing noforce ma4eure to "arrant t#eapplication of t#ealternative date of 1pril %, & and t#at t#ealleged dela+ dueto t#e recession *eing invalid,t#e damages must *e rig#tfull+ a"arded to

2anseco.2#e (C, #o"ever, modied t#edispositive portion of t#e decision "#ic#cancelledt#e contract. Furt#ermore, petitioner, 5ega"orldJlo*us 1sia, )nc., isdirected to pa+ respondent,5ila (. 2anseco, t#e amount of P&$,38&,7%&.7,to *ear 6 interest per annum starting 5a+ 6,33 and &3 interest per annum fromt#e timet#e 4udgment *ecomes nal and executor+@ andto pa+ P3, attorne+=s fees,P&,exemplar+ damages, and costs of suit.