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GR No. 189145

2013-12-04

OPTIMUM DEVELOPMENT BANK v. SPS. BENIGNO V. JOVELLANOS AND LOURDES R. JOVELLANOS

PERLAS-BERNABE, J.

Further, it is significant to note that given that the Contract to Sell in this case is one which has for its object real property to be sold on an installment basis, the said contract is especially governed by and thus, must be examined under the provisions of RA 6552, or the "Realty Installment Buyer Protection Act", which provides for the rights of the buyer in case of his default in the payment of succeeding installments. Breaking down the provisions of the law, the Court, in the case of Rillo v. CA,[40] explained the mechanics of cancellation under RA 6552 which are based mainly on the amount of installments already paid by the buyer under the subject contract, to wit:[41]

GR No. 179594

2013-09-11

MANUEL UY v. VALBUECO

PERALTA, J.

The Court of Appeals correctly held that R.A. No. 6552, otherwise known as the Realty Installment Buyer Act, applies to the subject contracts to sell. R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.[29] It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments[30] as follows:Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

GR No. 163244

2009-06-22

SPS. JOSE T. VALENZUELA AND GLORIA VALENZUELA v. KALAYAAN DEVELOPMENT

PERALTA, J.

Article 1292 of the Civil Code provides that "[i]n order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other." Novation is never presumed. Parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point.[30] The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first.[31]

GR No. 174286

2009-06-05

TRADERS ROYAL BANK v. CUISON LUMBER CO.

BRION, J.

We note, additionally, that the TRB Repurchase Agreement is in the nature of a contract to sell where the title to the subject property remains in the bank's name, as the vendor, and shall only pass to the respondents, as vendees, upon the full payment of the repurchase price.[36] The settled rule for contracts to sell is that the full payment of the purchase price is a positive suspensive condition; the failure to pay in full is not to be considered a breach, casual or serious, but simply an event that prevents the obligation of the vendor to convey title from acquiring any obligatory force.[37] Viewed in this light, the bank cannot be compelled to perform its obligations under the TRB Repurchase Agreement that has been rendered ineffective by the respondents' non-performance of their own obligations.

GR No. 176217

2008-08-13

STA. LUCIA REALTY DEVELOPMENT INC. v. ROMEO UYECIO

CARPIO MORALES, J.

The case involves contracts to sell, not a contract which absolutely conveys real property. Distinguishing the two contracts, the Court, in Rillo v. Court of Appeals,[21] held:x x x In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event which 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 purchase price. We held in Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc. that there can be no rescission of an obligation that is still non-existent, the suspensive condition not having happened. (Citations omitted; emphasis and underscoring supplied) Articles 1191 of the Civil Code does not thus apply to a contract to sell since there can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred. In other words, the breach contemplated in Article 1191 is the obligor's failure to comply with an obligation already extant, like a contract of sale, not a failure of a condition to render binding that obligation.[22]

GR NO. 152984

2006-11-22

WILLIAM G. KWONG v. ATTY. RAMON GARGANTOS

AUSTRIA-MARTINEZ, J.

Under Article 1292 of the Civil Code, in order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. The parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point.[27]

GR NO. 167213

2006-10-31

DARREL CORDERO v. F.S. MANAGEMENT

CARPIO-MORALES, J.

The non-fulfillment by the respondent of his obligation to pay, which is a suspensive condition to the obligation of the petitioners to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect. The parties stand as if the conditional obligation had never existed. Article 1191 of the New Civil Code will not apply because it presupposes an obligation already extant. There can be no rescission of an obligation that is still non-existing, the suspensive condition not having happened. [Emphasis and underscoring supplied; citations omitted] The subject contract to sell clearly states that "title will be transferred by the owner (petitioners) to the buyer (respondent) upon complete payment of the agreed purchase price."[27] Since respondent failed to fully pay the purchase price, petitioners' obligation to convey title to the properties did not arise. While rescission does not apply in this case, petitioners may nevertheless cancel the contract to sell, their obligation not having arisen.[28] This brings this Court to Republic Act No. 6552 (THE REALTY INSTALLMENT BUYER PROTECTION ACT). In Ramos v. Heruela[29] this Court held: Articles 1191 and 1592 of the Civil Code are applicable to contracts of sale. In contracts to sell, RA 6552 applies. In Rillo v. Court of Appeals,[30] the Court declared: x x x Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments x x x. [Emphasis supplied] The properties subject of the contract having been intended for commercial, and not for residential, purposes,[31] petitioners are entitled to retain the payments already made by respondent. RA 6552 expressly recognizes the vendor's right to cancel contracts to sell on installment basis industrial and commercial properties with full retention of previous payments.[32] But even assuming that the properties were not intended for commercial or industrial purpose, since respondent paid less than two years of installments, it is not entitled to any refund.[33] It is on this score that a modification of the challenged issuances of the appellate court is in order.

GR NO. 145330

2005-10-14

SPS. GOMER v. SPS. SANTIAGO

CARPIO, J.

Articles 1191[19] and 1592[20] of the Civil Code are applicable to contracts of sale. In contracts to sell, RA 6552 applies. In Rillo v. Court of Appeals,[21] the Court declared:xxx Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments xxx.

GR No. 143273

2004-09-20

RISER AIRCONDITIONING SERVICES CORPORATION v. CONFIELD CONSTRUCTION DEVELOPMENT CORPORATION

SANDOVAL-GUTIERREZ, J.

Petitioner's stance is misplaced. First, a compromise agreement can be entered into without novating or supplanting existing contracts.[16] The whole essence of a compromise is that by making reciprocal concessions, the parties avoid litigation or put an end to one already commenced. In this case, the parties orally agreed to a settlement in order to avoid a litigious situation.

GR No. 129018

2001-11-15

CARMELITA LEAÑO v. CA

PARDO, J.

In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force.[33] The transfer of ownership and title would occur after full payment of the price.[34]

GR No. 129018

2001-11-15

CARMELITA LEAÑO v. CA

PARDO, J.

In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force.[33] The transfer of ownership and title would occur after full payment of the price.[34]

GR No. 129018

2001-11-15

CARMELITA LEAÑO v. CA

PARDO, J.

Contrary to the findings of the trial court, Article 1592 of the Civil Code is inapplicable to the case at bar.[35] However, any attempt to cancel the contract to sell would have to comply with the provisions of Republic Act No. 6552, the "Realty Installment Buyer Protection Act."

GR No. 129018

2001-11-15

CARMELITA LEAÑO v. CA

PARDO, J.

R. A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.[36] The law also provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the law provides that:"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 percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer." [Emphasis supplied]

	GR No. 189145 2013-12-04	OPTIMUM DEVELOPMENT BANK v. SPS. BENIGNO V. JOVELLANOS AND LOURDES R. JOVELLANOS PERLAS-BERNABE, J.
Further, it is significant to note that given that the Contract to Sell in this case is one which has for its object real property to be sold on an installment basis, the said contract is especially governed by and thus, must be examined under the provisions of RA 6552, or the "Realty Installment Buyer Protection Act", which provides for the rights of the buyer in case of his default in the payment of succeeding installments. Breaking down the provisions of the law, the Court, in the case of Rillo v. CA,[40] explained the mechanics of cancellation under RA 6552 which are based mainly on the amount of installments already paid by the buyer under the subject contract, to wit:[41]
	GR No. 179594 2013-09-11	MANUEL UY v. VALBUECO PERALTA, J.
The Court of Appeals correctly held that R.A. No. 6552, otherwise known as the Realty Installment Buyer Act, applies to the subject contracts to sell. R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.[29] It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments[30] as follows:Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
	GR No. 163244 2009-06-22	SPS. JOSE T. VALENZUELA AND GLORIA VALENZUELA v. KALAYAAN DEVELOPMENT PERALTA, J.
Article 1292 of the Civil Code provides that "[i]n order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other." Novation is never presumed. Parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point.[30] The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first.[31]
	GR No. 174286 2009-06-05	TRADERS ROYAL BANK v. CUISON LUMBER CO. BRION, J.
We note, additionally, that the TRB Repurchase Agreement is in the nature of a contract to sell where the title to the subject property remains in the bank's name, as the vendor, and shall only pass to the respondents, as vendees, upon the full payment of the repurchase price.[36] The settled rule for contracts to sell is that the full payment of the purchase price is a positive suspensive condition; the failure to pay in full is not to be considered a breach, casual or serious, but simply an event that prevents the obligation of the vendor to convey title from acquiring any obligatory force.[37] Viewed in this light, the bank cannot be compelled to perform its obligations under the TRB Repurchase Agreement that has been rendered ineffective by the respondents' non-performance of their own obligations.
	GR No. 176217 2008-08-13	STA. LUCIA REALTY DEVELOPMENT INC. v. ROMEO UYECIO CARPIO MORALES, J.
The case involves contracts to sell, not a contract which absolutely conveys real property. Distinguishing the two contracts, the Court, in Rillo v. Court of Appeals,[21] held:x x x In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event which 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 purchase price. We held in Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc. that there can be no rescission of an obligation that is still non-existent, the suspensive condition not having happened. (Citations omitted; emphasis and underscoring supplied) Articles 1191 of the Civil Code does not thus apply to a contract to sell since there can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred. In other words, the breach contemplated in Article 1191 is the obligor's failure to comply with an obligation already extant, like a contract of sale, not a failure of a condition to render binding that obligation.[22]
	GR NO. 152984 2006-11-22	WILLIAM G. KWONG v. ATTY. RAMON GARGANTOS AUSTRIA-MARTINEZ, J.
Under Article 1292 of the Civil Code, in order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. The parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point.[27]
	GR NO. 167213 2006-10-31	DARREL CORDERO v. F.S. MANAGEMENT CARPIO-MORALES, J.
The non-fulfillment by the respondent of his obligation to pay, which is a suspensive condition to the obligation of the petitioners to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect. The parties stand as if the conditional obligation had never existed. Article 1191 of the New Civil Code will not apply because it presupposes an obligation already extant. There can be no rescission of an obligation that is still non-existing, the suspensive condition not having happened. [Emphasis and underscoring supplied; citations omitted] The subject contract to sell clearly states that "title will be transferred by the owner (petitioners) to the buyer (respondent) upon complete payment of the agreed purchase price."[27] Since respondent failed to fully pay the purchase price, petitioners' obligation to convey title to the properties did not arise. While rescission does not apply in this case, petitioners may nevertheless cancel the contract to sell, their obligation not having arisen.[28] This brings this Court to Republic Act No. 6552 (THE REALTY INSTALLMENT BUYER PROTECTION ACT). In Ramos v. Heruela[29] this Court held: Articles 1191 and 1592 of the Civil Code are applicable to contracts of sale. In contracts to sell, RA 6552 applies. In Rillo v. Court of Appeals,[30] the Court declared: x x x Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments x x x. [Emphasis supplied] The properties subject of the contract having been intended for commercial, and not for residential, purposes,[31] petitioners are entitled to retain the payments already made by respondent. RA 6552 expressly recognizes the vendor's right to cancel contracts to sell on installment basis industrial and commercial properties with full retention of previous payments.[32] But even assuming that the properties were not intended for commercial or industrial purpose, since respondent paid less than two years of installments, it is not entitled to any refund.[33] It is on this score that a modification of the challenged issuances of the appellate court is in order.
	GR NO. 145330 2005-10-14	SPS. GOMER v. SPS. SANTIAGO CARPIO, J.
Articles 1191[19] and 1592[20] of the Civil Code are applicable to contracts of sale. In contracts to sell, RA 6552 applies. In Rillo v. Court of Appeals,[21] the Court declared:xxx Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments xxx.
	GR No. 143273 2004-09-20	RISER AIRCONDITIONING SERVICES CORPORATION v. CONFIELD CONSTRUCTION DEVELOPMENT CORPORATION SANDOVAL-GUTIERREZ, J.
Petitioner's stance is misplaced. First, a compromise agreement can be entered into without novating or supplanting existing contracts.[16] The whole essence of a compromise is that by making reciprocal concessions, the parties avoid litigation or put an end to one already commenced. In this case, the parties orally agreed to a settlement in order to avoid a litigious situation.
	GR No. 129018 2001-11-15	CARMELITA LEAÑO v. CA PARDO, J.
In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force.[33] The transfer of ownership and title would occur after full payment of the price.[34]
	GR No. 129018 2001-11-15	CARMELITA LEAÑO v. CA PARDO, J.
In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force.[33] The transfer of ownership and title would occur after full payment of the price.[34]
	GR No. 129018 2001-11-15	CARMELITA LEAÑO v. CA PARDO, J.
Contrary to the findings of the trial court, Article 1592 of the Civil Code is inapplicable to the case at bar.[35] However, any attempt to cancel the contract to sell would have to comply with the provisions of Republic Act No. 6552, the "Realty Installment Buyer Protection Act."
	GR No. 129018 2001-11-15	CARMELITA LEAÑO v. CA PARDO, J.
R. A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.[36] The law also provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the law provides that:"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 percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer." [Emphasis supplied]

EMILIANO RILLO v. CA