PHILIPPINE LAWIN BUS, CO., MASTER TOURS & TRAVEL CORP.

, MARCIANO TAN, ISIDRO TAN, ESTEBAN TAN and HENRY TAN, petitioners, vs. COURT OF APPEALS and ADVANCE CAPITAL CORPORATION, respondents. The Facts Plaintiff Advance Capital Corporation, a licensed lending investor, extended a loan to defendant Philippine Lawin Bus Company. To guarantee payment of the loan, defendant Lawin executed in favor of plaintiff the following documents a Deed of Chattel Mortgage wherein 9 units of buses were constituted as collaterals a joint and several UNDERTAKINGS. Lawin failed to pay said Mortgages.Thus, plaintiff foreclosed the mortgaged buses and as the sole bidder thereof, the amount of P2,000,000.00 was accepted by the deputy sheriff conducting the sale and credited to the account of defendant LAWIN. Thereafter demand letters were sent to the defendants to pay their existing obligation. Despite repeated demands, the defendants failed to pay their indebtedness which totaled of P16,484,992.42 Thus, the suit for sum of money, wherein the plaintiff prays that defendants solidarily pay plaintiff their principal obligation, interest and damages. Lawin in its defense said that there was already an arrangement tosettle the obligation A. Sale of the nine (9) units passenger buses the proceeds of which will be credited against the loan amount as full payment thereof; or in the alternative. B. Plaintiff will shoulder and bear the cost of rehabilitating the buses, with the amount thereof to be included in the total obligation of defendant Lawin and the bus operated, with the earnings thereof to be applied to the loan obligation of defendant Lawin. The Issue whether there was dacion en pago between the parties upon the surrender or transfer of the mortgaged buses to the respondent.i The Courts Ruling We deny the petition, with modification. Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion en pago. A contract of sale is perfected at the moment there is a meeting of the minds of the parties thereto upon the thing which is the object of the contract and upon the price.ii[19] In Filinvest Credit Corporation v. Philippine Acetylene Co., Inc., we said: In this case, there was no meeting of the minds between the parties on whether the loan of the petitioners would be extinguished by dacion en pago. The petitioners anchor their claim solely

on the testimony of Marciano Tan that he proposed to extinguish petitioners obligation by the surrender of the nine buses to the respondent acceded to as shown by receipts its representative made.iii[21] However, the receipts executed by respondents representative as proof of an agreement of the parties that delivery of the buses to private respondent would result in extinguishing petitioners obligation do not in any way reflect the intention of the parties that ownership thereof by respondent would be complete and absolute.

G.R. No. 170479

February 18, 2008

ANDRE T. ALMOCERA, petitioner, vs. JOHNNY ONG, respondent. DECISION CHICO-NAZARIO, J.: Johnny Ong tried to acquire from the defendants a "townhome". The selling price of the unit was P3,400,000.00 pesos, for the lot and a three-storey building. Plaintiff was able to pay the amount of P1,060,000.00. Prior to the full payment of this amount, Andre Almocera and First Builders fraudulently concealed the fact that before and at the time of the perfection of the aforesaid contract to sell, the property was already mortgaged to and encumbered with the Land Bank of the Philippines (LBP). In addition, the construction of the house has long been delayed and remains unfinished. Subsequently the house and lot was published in local tabloid for public auction for foreclosure of mortgage. It is the assertion of the plaintiff that had it not for the fraudulent concealment of the mortgage and encumbrance by defendants, he would have not entered into the contract to sell. Ong filed a complaint for Damages. Issue: Whether or not the contract is a contract to sell or a conditional sale? Held: It cannot be disputed that the contract entered into by the parties was a contract to sell. The contract was denominated as such and it contained the provision that the unit shall be conveyed by way of an Absolute Deed of Sale, together with the attendant documents of Ownership the Transfer Certificate of Title and Certificate of Occupancy and that the balance of the contract price shall be paid upon the completion and delivery of the unit, as well as the acceptance thereof by respondent. All these clearly indicate that ownership of the townhouse has not passed to respondent. A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendors obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the

conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price. In the case at bar, the obligation of petitioner and FBMC which is to complete and deliver the townhouse unit within the prescribed period, is determinative of the respondents obligation to pay the balance of the contract price. With their failure to fulfill their obligation as stipulated in the contract, they incurred delay and are liable for damages.