LEANO vs.

Court of Appeals percent of the total payments made and, after five
369 SCRA 295 (Art. 1169) 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
Facts:
of the contract shall take place after thirty days from
D buyers of lots on installments. According to Trial Court,
receipt by the buyer of the notice of cancellation or
transaction was an absolute sale, making Leaño the
the demand for rescission of the contract by a notarial
owner upon actual & constructive delivery thereof.
act and upon full payment of the cash surrender value
Fernando divested of ownership & cannot recover the
to the buyer.”
same unless rescinded under Art. 1592
Leaño was in delay because under Art. 1169, provides
that Reciprocal Obligation; Neither party incurs in delay
ISSUE: if the other does not comply or is not ready to comply
WON the transaction was an absolute sale or in a proper manner with what is incumbent upon him.
conditional sale? Conditional Sale From the moment one of the parties fulfills his
WON was there a proper cancellation of the contract obligation, delay by the other begins.
to sell? NO
WON petitioner was in delay? YES
Fernando performed his part by allowing Leaño to
continue in possession & use of the property. Clearly,
HELD: when Leaño did not pay the monthly amortization, she
It was a conditional sale because the intention of the was in delay and liable for damages.
parties was to reserve the ownership of the land in the
seller until the buyer has paid the total purchase price.

Contract of sale Contract to Sell

Consideration: (a) Contract was subject to condition.
(b) What was transferred was the possession & not the title passes to the buyer the ownership is reserved in
ownership. (c) It was covered by Torrens title. Act of upon delivery of the thing sold the seller and is not to pass
Registration was the operative act that could transfer until full payment of the
ownership.
purchase price
What was transferred was the possession of the non-payment of the price is a full payment is a positive
property, not ownership. negative resolutory condition suspensive condition

the vendor loses and cannot the title remains in the vendor
In a contract to sell real property on installments, the full recover the ownership of the if the vendee does not comply
payment of the purchase price is a positive suspensive thing sold until and unless the with the condition precedent of
condition, the failure of which is not considered a
contract of sale is rescinded or making full payment as
set aside specified in the contract
breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title
from acquiring any obligatory force. The transfer of
ownership and title would occur after full payment of
the price.

No proper cancellation as Leaño was not given the

cash surrender value. She may still reinstate the
contract by updating the account during grace period
& before actual cancellation.

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

seller shall refund to the buyer the cash surrender value
of the payments on the property equivalent to fifty

HEIRS OF LUIS BACUS VS CA AND DURAY SPOUSES
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
effectivity of the contract. Bacus died before the
expiration of the contract. On March 1990, the Duray
spouses communicated to the petitioners (heirs of
Bacus) their willingness to purchase the property. The
petitioners on the other hand insist that they cannot be
compelled to sell the disputed property by virtue of the
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 Megaworld’s failure to deliver the unit
on time.
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.
Article 1174 of the Civil Code provides:
Art. 1174. Except in cases expressly specified by the
law, or when it is otherwise declared by stipulation, or
when the nature of the

Issue:

WON Megaworld was already in delay given that

Megaworld’s notice of turnover preceded Tanseco’s
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

(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 Megaworld’s sending of a notice of turnover

preceded Tanseco’s 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.