Civil Law

Spouses Luis and Aida Cruz vs Spouses Alejandro and Rita Fernando

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G.R. No. 145470 – 477 SCRA 173 – Civil Law – Law on Sale – Elements of Sale; Purchase Price – Manner of Payment Essential in a Contract of Sale

In 1983, Cruz executed a Kasunduan with the Gloriosos for the consideration of the rear portion of a 223 sq. m. lot. The Kasunduan provides that the lot will be sold at a P40 per sq m. That the portion of the lot to be sold is the rear portion of it. That upon selling, the Cruz will transfer their house from the front portion to the rear portion of the land once it is bought. That they will have a right of way from the front portion going to the back end of the lot. The Cruz never gave anything to the Gloriosos for there was an alleged failure to have the land surveyed. Due to non payment, the Gloriosos instead sold the whole lot (back and rear portion) to the Fernandos.

In 1994, after repeated demands, the Fernandos filed a case in court for accion publiciana demanding the Cruz to vacate the lot and to pay a rental of P500.00. The RTC ruled in favor of the Fernandos. The CA affirmed the RTC ruling.

ISSUE: Whether or not what transpired between the Cruzes and the Gloriosos was a contract of sale.

HELD: No. The absence of a specific manner of payment in the terms and conditions of the contract makes it a contract to sell. Ownership was never transferred to the Cruzes. This is because the manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist. Although the Civil Code does not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the same is needed, otherwise there is no sale. Also, the Cruzes never transferred their house from the front portion to the rear portion of the lot. It was evident in the contract that they will transfer the house to the rear portion once they were able to buy it.

The SC also ruled that the Fernandos were not buyers in bad faith. There was no consummated sale between the Cruzes and the Gloriosos. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.  There is no double sale in such case.  Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer.

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