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456 SCRA 577 – Civil Law – Law on Sales – Contract to Sell vs Contract of Sale
In 1968, spouses Ricardo and Ferma Portic acquired a parcel of land with a 3 door apartment from spouses Alcantara even though they’re aware that the land was mortgaged to the SSS. Portic defaulted in paying SSS. The Portics then executed a contract with Anastacia Cristobal and the latter agreed to buy the said property for P200k. Cristobal’s down payment was P45k and she also agreed to pay SSS. The contract between them states:
That while the balance of P155,000.00 has not yet been fully paid the FIRST PARTY OWNERS shall retain the ownership of the above described parcel of land together with its improvements but the SECOND PARTY BUYER shall have the right to collect the monthly rentals due on the first door (13-A) of the said apartment; (payment is due 22 May 1985, if Cristobal will not be able to pay Portic will reimburse)
A transfer certificate was executed in favor of Cristobal. Cristobal was not able to pay on the due date. A suit ensued to lift the cloud on the title.
ISSUE: Who is the rightful owner of the parcel of land?
HELD: The Portics insofar as there was no contract of sale. What transpired between the parties was a contract to sell. The provision of the contract characterizes the agreement between the parties as a contract to sell, not a contract of sale. Ownership is retained by the vendors, the Portics; it will not be passed to the vendee, the Cristobals, until the full payment of the purchase price. Such payment is a positive suspensive condition, and failure to comply with it is not a breach of obligation; it is merely an event that prevents the effectivity of the obligation of the vendor to convey the title. In short, until the full price is paid, the vendor retains ownership.
The mere issuance of the Certificate of Title in favor of Cristobal did not vest ownership in her. Neither did it validate the alleged absolute purchase of the lot. Registration does not vest, but merely serves as evidence of, title. Our land registration laws do not give the holders any better title than that which they actually have prior to registration.
Under Article 1544 of the Civil Code, mere registration is not enough to acquire a new title. Good faith must concur. Clearly, Cristobal has not yet fully paid the purchase price. Hence, as long as it remains unpaid, she cannot feign good faith. She is also precluded from asserting ownership against the Portics. The CA’s finding that she had a valid title to the property must be set aside.