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G.R. No. 123672: Fernando Carrascoso, Jr. v.
Court of Appeals and Lauro Leviste

December 14, 2005. 477 scra 666

Contract to Sell vs Contract of Sale

In March 1972, El Dorado Plantation Inc, through

board member Lauro Leviste, executed a Deed of
Sale with Carrascoso. The subject of the sale was
a 1825 hectare of land. It was agreed that
Carrascoso is to pay P1.8M. P290K would be paid
by Carrascoso to PNB to settle the mortgage
placed on the said land. P210k would be paid
directly to Leviste. The balance of P1.3M plus 10%
interest would be paid over the next 3 years at
P519k every 25th of March. Leviste also assured
that there were no tenants hence the land does not
fall under the Land Reform Code. Leviste allowed
Carrascoso to mortgage the land which the latter
did.

Carrascoso obtained a total of P1.07M as

mortgage and he used the same to pay the down
payment agreed upon in the contract. Carrascoso
defaulted from his obligation which was supposed
to be settled on March 25, 1975. Leviste then sent
him letters to make good his end of the contract
otherwise he will be litigated.

In 1977, Carrascoso executed a Buy and Sell

Contract with PLDT. The subject of the sale was
the same land sold to Carrascoso by Leviste but it
was only the 1000 sq m portion thereof. The land
is to be sold at P3M. Part of the terms and

conditions agreed upon was that Carrascoso is to

remove all tenants from the land within one year.
He is also given a 6 month extension in case hell
need one. Thereafter, PLDT will notify Carrascoso
if whether or not PLDt will finalize the sale. PLDT
gained possession of the land.

El Dorado filed a civil case against Carrascoso.

PLDT intervened averring that it was a buyer in
good faith. The RTC ruled in favor of Carrascoso.
CA reversed the RTC ruling.

ISSUE: What is the nature of each contract?

HELD: The contract executed between El Dorado

and Carrascoso was a contract of sale. It was
perfected by their meeting of the minds and was
consummated by the delivery of the property to
Carrascoso. However, El Dorado has the right to
rescind the contract by reason of Carrascosos
failure to perform his obligation.

A contract of sale is a reciprocal obligation. The

seller obligates itself to transfer the ownership of
and deliver a determinate thing, and the buyer
obligates itself to pay therefor a price certain in
money or its equivalent. The non-payment of the
price by the buyer is a resolutory condition which
extinguishes the transaction that for a time existed,
and discharges the obligations created thereunder.
Such failure to pay the price in the manner
prescribed by the contract of sale entitles the
unpaid seller to sue for collection or to rescind the
contract.

The contract between Carrascoso and PLDT is a

contract to sell. This is evidenced by the terms and
conditions that they have agreed upon that after
fulfillment of Carrascosos obligation PLDT has to

notify Carrascoso of its decision whether or not to

finalize the sale.

Carrascoso also averred that there was a breach

on El Dorados part when it comes to warranty.
Carrascoso claimed that there were tenants on the
land and he spent about P2.9M relocating them.
The SC ruled that Carrascoso merely had a bare
claim without additional proof to support it.

Requisites of Express warranty in a Contract of

Sale

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the express warranty must be an affirmation of fact

or any promise by the seller relating to the subject
matter of the sale;

the natural tendency of such affirmation or promise

is to induce the buyer to purchase the thing; and
the buyer purchases the thing relying on such
affirmation or promise thereon.