LEANO vs.

Court of Appeals

parties was to reserve the ownership of the land in the

369 SCRA 295 (Art. 1169)

seller until the buyer has paid the total purchase price.

Facts:

Consideration: (a) Contract was subject to condition.

Hermogenes Fernando, as vendor and Carmelita

(b) What was transferred was the possession & not

Leao, as vendee executed a contract to sell involving

ownership. (c) It was covered by Torrens title. Act of

a piece of land. In the contract, Leao bond herself to

Registration was the operative act that could transfer

pay Fernando the sum of P107,750 as the total

ownership.

purchase price.

What was transferred was the possession of the

property, not ownership.

P10,775 shall be paid at the signing of the contract;

P96,975 shall be paid within 10 yrs. at a monthly

In a contract to sell real property on installments, the full

amortization of P1,747.30 to begin from Dec. 7, 1985

payment of the purchase price is a positive suspensive

with

annum;

condition, the failure of which is not considered a

18% per annum shall be charged if the month of grace

breach, casual or serious, but simply an event that

period

installments;

prevented the obligation of the vendor to convey title

should the 90 days elapse from the expiration of the

from acquiring any obligatory force. The transfer of

grace period, Respondent was authorized to declare

ownership and title would occur after full payment of

the contract cancelled & to dispose of the land.

the price.

Carmelita Leao made several payments in lump sum.

No proper cancellation as Leao was not given the

Thereafter she constructed a house (P800K). Last

cash surrender value. She may still reinstate the

payment she made was on April 1989.

contract by updating the account during grace period

interest
expires

of

18%

w/out

per
the

& before actual cancellation.

Trial Court rendered decision in an ejectment case filed
by Fernando.

Sec. 3 of RA 6552. If the contract is cancelled, the

seller shall refund to the buyer the cash surrender value

Leao filed with the RTC for specific performance with

preliminary injunction and assailing that for being
violative of her right to due process being contrary to
R.A 6552 regarding protection to buyers of lots on
installments. According to Trial Court, transaction was
an absolute sale, making Leao the owner upon actual
& constructive delivery thereof. Fernando divested of
ownership & cannot recover the same unless rescinded
under Art. 1592

of the payments on the property equivalent to fifty

percent of the total payments made and, after five
years of installments, an additional five percent every
year but not to exceed ninety percent of the total
payment made: Provided, That the actual cancellation
of the contract shall take place after thirty days from
receipt by the buyer of the notice of cancellation or
the demand for rescission of the contract by a notarial
act and upon full payment of the cash surrender value
to

the

buyer.

Leao was in delay because under Art. 1169, provides

ISSUE:
WON

that Reciprocal Obligation; Neither party incurs in delay

the

or

if the other does not comply or is not ready to comply

Sale

in a proper manner with what is incumbent upon him.

WON was there a proper cancellation of the contract

From the moment one of the parties fulfills his

to

obligation, delay by the other begins.

conditional

transaction was an
sale?

absolute

Conditional
sell?

sale

NO

WON petitioner was in delay? YES

Fernando performed his part by allowing Leao to
HELD:

continue in possession & use of the property. Clearly,

It was a conditional sale because the intention of the

when Leao did not pay the monthly amortization, she

was in delay and liable for damages.

HEIRS OF LUIS BACUS VS CA AND DURAY SPOUSES

Contract of sale

Contract to Sell

the title passes to the buyer

upon delivery of the thing sold

the ownership is reserved in

the seller and is not to pass
until full payment of the
purchase price

non-payment of the price is a

negative resolutory condition
the vendor loses and cannot
recover the ownership of the
thing sold until and unless the
contract of sale is rescinded or
set aside

Facts:

On June 1984, Luis Bacus leased to Private Respondent

Faustino Duray a parcel of land. The lease was for six
years, ending May 1990. The contract contained an
option to buy clause giving the lessee the right to buy
the property within five years from a year after the
full payment is a positive
effectivity of the contract. Bacus died before the
suspensive condition
expiration of the contract. On March 1990, the Duray
the title remains in the vendor spouses communicated to the petitioners (heirs of
if the vendee does not complyBacus) their willingness to purchase the property. The
with the condition precedent ofpetitioners on the other hand insist that they cannot be
compelled to sell the disputed property by virtue of the
making full payment as
specified in the contract
nonfulfillment of the obligation under the option
contract of the private respondents.
They contend that there was failure to comply because
there was neither actual delivery to them nor
consignation in court of the purchase price before the
contract expired.
Issue:
WON the private respondents were in delay when they
did not deliver the purchase price or consign it in court
on or before the expiration of the contract (No)
Ruling:
Obligations under an option to buy are reciprocal
obligations. The performance of one obligation is
conditioned on the simultaneous fulfillment of the other
obligation. In other words, in an option to buy, the
payment of the purchase price by the creditor is
contingent upon the execution and delivery of a deed
of sale by the debtor. In this case, when private
respondents opted to buy the property, their obligation
was to advise petitioners of their decision and their
readiness to pay the price. They were not yet obliged
to make actual payment. Only upon petitioners' actual
execution and delivery of the deed of sale were they
required to pay. Hence, since the obligation was not
yet due, consignation3 in court of the purchase price
was not yet required.
Anent the main issue, the private respondents did not
incur in delay when they did not yet deliver payment
nor make a consignation before the expiration of the
contract because after they manifested their intention
to exercise their right, there was failure on the part of
the petitioners to comply with what is incumbent upon
them. In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent
upon him. Only from the moment one of the parties
fulfills his obligation, does delay by the other begin.

MEGAWORLD vs. TANSECO (G.R. No. 181206, October

9, 2009)5
Facts:
On 1995, petitioner Megaworld and respondent
Tanseco entered into a Contract to Buy and Sell a
condominium unit at a pre-selling project. The
purchase price was to be paid as follows: (1) 30% of the
purchase price by postdated check payable on July
14, 1995; (2) P9,241,120.50 through 30 equal monthly
installments and (3) the balance of P2,520,305.63 on
October 31, 1998, the stipulated delivery date of the
unit.
The Construction Schedule which was provided for in
the Contract states that the purchased condominium
shall be completed and delivered not later than
October 31, 1998 with additional grace period of six
months.
Tanseco paid all installments due, leaving unpaid the
balance of P2,520,305.63 pending delivery of the unit.
Megaworld, however, failed to deliver the unit within
the stipulated period.
Three years later, Megaworld sent Tanseco a notice of
Turnover, informing Tanseco that the unit was ready.
Tanseco on the othand replied through counsel,
demanding the return the amount that she paid with
interest due to Megaworlds failure to deliver the unit
on time.

(2) When from the nature and the circumstances of the

obligation it appears that the designation of the time
when the thing is to be delivered or the service is to be
rendered was a controlling motive for the
establishment of the contract; or
(3) When demand would be useless, as when the
obligor has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if
the other does not comply or is not ready to comply in
a proper manner with what is incumbent upon him.
From the moment one of the parties fulfills his
obligation, delay by the other begins.
The Contract to Buy and Sell of the parties contains
reciprocal obligations, i.e., to complete and deliver the
condominium unit within the stipulated period on the
part of Megaworld, and to pay the balance of the
purchase price at or about the time of delivery on the
part of Tanseco. Compliance by Megaworld with its
obligation is determinative of compliance by Tanseco
with her obligation to pay the balance of the purchase
price. Megaworld having failed to comply with its
obligation under the contract, it is liable therefor.
That Megaworlds sending of a notice of turnover
preceded Tansecos demand for refund does not
abate her cause. For demand would have been
useless, Megaworld admittedly having failed in its
obligation to deliver the unit on the agreed date.
Article 1174 of the Civil Code provides:

In its Answer, Megaworld attributed the delay to the

1997 Asian financial crisis which was beyond its control;
and argued that default had not set in, Tanseco not
having made any judicial or extrajudicial demand for
delivery before receipt of the notice of turnover.
Issue:
WON Megaworld was already in delay given that
Megaworlds notice of turnover preceded Tansecos
demand. Yes Megaworld was already in delay.
Ruling:
Article 1169 of the Civil Code provides:
Art. 1169. Those obliged to deliver or to do something
incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of
their obligation.
However, the demand by the creditor shall not be
necessary in order that delay may exist:
(1) When the obligation or the law expressly so
declares; or

Art. 1174. Except in cases expressly specified by the

law, or when it is otherwise declared by stipulation, or
when the nature of the