Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=40315:g-r-no-120820-august-1,-2000-fortunato-santos,-et-al-v-court-of-appeals,-et-al&amp;catid=1396&amp;Itemid=566
Timestamp: 2019-04-24 22:06:21+00:00

Document:
SPS. FORTUNATO SANTOS and ROSALINDA R SANTOS, Petitioners, v. COURT OF APPEALS, SPS. MARIANO R. CASEDA and CARMEN CASEDA, Respondents.
"3.	No pronouncement as to costs.
The spouses Fortunato and Rosalinda Santos owned the house and lot consisting of 350 square meters located at Lot 7, Block 8, Better Living Subdivision, Parañaque, Metro Manila, as evidenced by TCT (S-11029) 28005 of the Register of Deeds of Parañaque. The land together with the house, was mortgaged with the Rural Bank of Salinas, Inc., to secure a loan of P150,000.00 maturing on June 16, 1987.
On June 16, 1984, the bank sent Rosalinda Santos a letter demanding payment of P16,915.84 in unpaid interest and other charges. Since the Santos couple had no funds, Rosalinda offered to sell the house and lot to Carmen. After inspecting the real property, Carmen and her husband agreed.
"Received the amount of P54,100.00 as a partial payment of Mrs. Carmen Caseda to the (total) amount of 350,000.00 (house and lot) that is own (sic) by Mrs. Rosalinda R. Santos.
The Casedas gave an initial payment of P54,100.00 and immediately took possession of the property, which they then leased out. They also paid in installments, P81,696.84 of the mortgage loan. The Casedas, however, failed to pay the remaining balance of the loan because they suffered bankruptcy in 1987. Notwithstanding the state of their finances, Carmen nonetheless paid in March 1990, the real estate taxes on the property for 1981-1984. She also settled the electric bills from December 12, 1988 to July 12, 1989. All these payments were made in the name of Rosalinda Santos.
In February 1989, Carmen Caseda sold her fishpond in Batangas. She then approached petitioners and offered to pay the balance of the purchase price for the house and lot. The parties, however, could not agree, and the deal could not push through because the Santoses wanted a higher price. For understandably, the real estate boom in Metro Manila at this time, had considerably jacked up realty values. On August 11, 1989, the Casedas filed Civil Case No. 89-4759, with the RTC of Makati, to have the Santoses execute the final deed of conveyance over the property, or in default thereof, to reimburse the amount of P180,000.00 paid in cash and P249,900.00 paid to the rural bank, plus interest, as well as rentals for eight months amounting to P32,000.00, plus damages and costs of suit.
(b)	declaring the agreement; marked as Annex "C" of the complaint rescinded. Costs against plaintiffs.
Hence, this instant petition for review on certiorari filed by the Santoses.
WHETHER OR NOT THE COURT OF APPEALS, HAS JURISDICTION TO DECIDE PRIVATE RESPONDENT’S APPEAL INTERPOSING PURELY QUESTIONS OF LAW.
WHETHER THE SUBJECT TRANSACTION IS NOT A CONTRACT OF ABSOLUTE SALE BUT A MERE ORAL CONTRACT TO SELL IN WHICH CASE JUDICIAL DEMAND FOR RESCISSION (ART. 1592, 7 CIVIL CODE) IS NOT APPLICABLE.
ASSUMING ARGUENDO THAT A JUDICIAL DEMAND FOR RESCISSION IS REQUIRED, WHETHER PETITIONERS’ DEMAND AND PRAYER FOR RESCISSION CONTAINED IN THEIR ANSWER FILED BEFORE THE TRIAL SATISFIED THE SAID REQUIREMENT.
WHETHER OR NOT THE NON-PAYMENT OF MORE THAN HALF OF THE ENTIRE PURCHASE PRICE INCLUDING THE NON-COMPLIANCE WITH THE STIPULATION TO LIQUIDATE THE MORTGAGE LOAN ON TIME WHICH CAUSED GRAVE DAMAGE AND PREJUDICE TO PETITIONERS, CONSTITUTE SUBSTANTIAL BREACH TO JUSTIFY RESCISSION OF A CONTRACT TO SELL UNDER ARTICLE 1191 8 (CIVIL CODE).
There is a question of law in a given case when the doubt or difference arises as to how the law is on a certain set of facts, and there is a question of fact when the doubt or difference arises as to the truth or falsehood of the alleged facts. 11 But we note that the first assignment of error submitted by respondents for consideration by the appellate court dealt with the trial court’s finding that herein petitioners got back the property in question because respondents did not have the means to pay the installments and/or amortization of the loan. 12 The resolution of this question involved an evaluation of proof, and not only a consideration of the applicable statutory and case laws. Clearly, C.A.-G.R. CV No. 30955 did not involve pure questions of law, hence the Court of Appeals had jurisdiction and there was no violation of our Circular No. 2-90.
The second and third issues deal with the question: Did the Court of Appeals err in holding that a judicial rescission of the agreement was necessary? In resolving both issues, we must first make a preliminary determination of the nature of the contract in question: Was it a contract of sale, as insisted by the respondents or a mere contract to sell, as contended by petitioners?
Petitioners argue that the transaction between them and respondents was a mere contract to sell, and not a contract of sale, since the sole documentary evidence (Exh. D, receipt) referring to their agreement clearly showed that they did not transfer ownership of the property in question simultaneous with its delivery and hence remained its owners, pending fulfillment of the other suspensive conditions, i.e. full payment of the balance of the purchase price and the loan amortizations. Petitioners point to Manuel v. Rodriguez, 109 Phil. 1 (1960) and Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., 43 SCRA 93 (1972), where he held that article 1592 of the Civil Code is inapplicable to a contract to sell. They charge the court a quo with reversible error in holding that petitioners should have judicially rescinded the agreement with respondents when the latter failed to pay the amortizations on the bank loan.
It must be emphasized from the outset that a contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. 14 Article 1458 15 of the Civil Code defines a contract of sale. Note that the said article expressly obliges the vendor to transfer the ownership of the thing sold as an essential element of a contract of sale. 16 We have carefully examined the contents of the unofficial receipt, Exh. D, with the terms and conditions informally agreed upon by the parties, as well as the proofs submitted to support their respective contentions. We are far from persuaded that there was a transfer of ownership simultaneously with the delivery of the property purportedly sold. The records clearly show that, notwithstanding the fact that the Casedas first took then lost possession of the disputed house and lot, the title to the property, TCT No. 28005 (S-11029) issued by the Register of Deeds of Parañaque, has remained always in the name of Rosalinda Santos. 17 Note further that although the parties agreed that the Casedas would assume the mortgage, all amortization payments made by Carmen Caseda to the bank were in the name of Rosalinda Santos. 18 We likewise find that the bank’s cancellation and discharge of mortgage dated January 20, 1990, was made in favor of Rosalinda Santos. 19 The foregoing circumstances categorically and clearly show that no valid transfer of ownership was made by the Santoses to the Casedas. Absent this essential element, their agreement cannot be deemed a contract of sale. We agree with petitioner’s averment that the agreement between Rosalinda Santos and Carmen Caseda is a contract to sell. In contracts to sell, ownership is reserved the by the vendor and is not to pass until full payment of the purchase price. This we find fully applicable and understandable in this case, given that the property involved is a titled realty under mortgage to a bank and would require notarial and other formalities of law before transfer thereof could be validly effected.
In view of our finding in the present case that the agreement between the parties is a contract to sell, it follows that the appellate court erred when it decreed that a judicial rescission of said agreement was necessary. This is because there was no rescission to speak of in the first place. As we earlier pointed, in a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full, Thus, in contract to sell, the payment of the purchase price is a positive suspensive condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. 20 This is entirely different from the situation in a contract of sale, where non-payment of the price is a negative resolutory condition. The effects in law are not identical. In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside. 21 In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase. If the vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not rescinding it. When the petitioners in the instant case repossessed the disputed house and lot for failure of private respondents to pay the purchase price in full, they were merely enforcing the contract and not rescinding it. As petitioners correctly point out the Court of Appeals erred when it ruled that petitioners should have judicially rescinded the contract pursuant to Articles 1592 and 1191 of the Civil Code. Article 1592 speaks of non-payment of the purchase price as a resolutory condition. It does not apply to a contract to sell. 22 As to Article 1191, it is subordinated to the provisions of Article 1592 when applied to sales of immovable property. 23 Neither provision is applicable in the present case.
As to the last issue, we need not tarry to make a determination of whether the breach of contract by private respondents is so substantial as to defeat the purpose of the parties in entering into the agreement and thus entitle petitioners to rescission. Having ruled that there is no rescission to speak of in this case, the question is moot.
Mendoza, Buena and De Leon, Jr., JJ., concur.
Bellosillo, J., on official leave.
2.	Exhibit "D," Records, p. 119.
8. "ART. 1191.	The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.
"The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
"The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
10. "4. Erroneous Appeals. — An appeal taken to either the Supreme Court or the Court of Appeals by the wrong or inappropriate mode shall be dismissed.
11.	Dela Torre v. Pepsi Cola Products Phils., Inc., 298 SCRA 363, 373 (1998); Commissioner of Internal Revenue v. Court of Appeals, 298 SCRA 83, 91 (1998).
12.	CA Rollo, p. 27.
13.	Tijam v. Sibonghanoy, 23 SCRA 29, 35-36 (1968).
14.	Quiroga v. Parsons Hardware Co., 38 Phil. 501 (1918).
16.	Schmid & Oberly, Inc. v. RJL Martinez Fishing Corp., 166 SCRA 493, 501 (1988) citing Commissioner of Internal Revenue v. Constantino, 31 SCRA 779, 785 (1970); Ker & Co., Ltd., v. Lingad, 38 SCRA 524, 530 (1971) citing Salisbury v. Brooks, 94 SE 117 (1917).
17.	Exhibit "A", Records, pp. 112-115.
18.	Exhibit "E", Id. p. 120; Exhibits "E-1" to "E-17", Id. pp. 121-129.
19.	Exhibit "3", Id. at 164.
20.	Ong v. Court of Appeals, 310 SCRA 1, 10 (1999) citing Agustin v. Court of Appeals, 186 SCRA 375 (1990); Roque v. Lapuz, 96 SCRA 741 (1980), Manuel v. Rodriguez, 109 Phil. 1 (1960).
22.	Luzon Brokerage Co, Inc. v. Maritime Building Co., Inc., 43 SCRA 93, 104 (1972).
23.	Villaruel v. Tan King, 43 Phil. 251, 255 (1922).

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