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PLATINUM PLANS PHILS INC V.

CUCUECO 488 SCRA 156 (2006)

FACTS: Respondent Cucueco filed a case for specific performance with damages against petitioner Platinum Plans
pursuant to an alleged contract of sale executed by them for the purchase of a condominium unit.

According to the respondent: sometime in July 1993, he offered to buy from petitioner Platinum Plans Phils a
condominium unit he was leasing from the latter for P 4 million payable in 2 installments of P2 million with the
following terms and conditions:

a. Cucueco will issue a check for P100,00 as earnest money

b. He will issue a post-dated check for P1.9 million to be encashed on September 30, 1993 on the condition that
he will stop paying rentals for the said unit after September 30

c. In case Platinum Plans has an outstanding loan of less than P2 million with the bank as of December 1993,
Cucueco shall assume the same and pay the difference from the remaining P2 million

Cucueco likewise claimed that Platinum Plans accepted his offerby encashing the checks he issued. However, he
was surprised to learn that Platinum Plans had changed the due date of the installment payment to September 30,
1993.

Respondent argued that there was a perfected sale between him and Platinum plans and as such, he may validly
demand from the petitioner to execute the necessary deed of sale transferring ownership and title over the
property in his favor

Platinum Plans denied Cucuecos allegations and asserted that Cucuecos initial down payment was forfeited based
on the following terms and conditions:

a. The terms of payment only includes two installments (August 1993 and September 1993)

b. In case of non-compliance on the part of the vendee, all installments made shall be forfeited in favor of the
vendor Platinum Plans

c. Ownership over the property shall not pass until payment of the full purchase price

Petitioners anchor their argument on the claim that there was no meeting of the minds between the two parties,
as evidenced by their letter of non-acceptance.

The trial court ruled in favor of Platinum, citing that since the element of consent was absent there was no
perfected contract. The trial court ordered Platinum Plans to return the P2 million they had received from
Cucueco, and for Cucueco to pay Platinum Plans rentals in arrears for the use of the unit.

Upon appeal, CA held that there was a perfected contract despite the fact that both parties never agreed on the
date of payment of the remaining balance. CA ordered Cucueco to pay the remaining balance of the purchase price
and for Platinum Plans, to execute a deed of sale over the property
ISSUE: WON the contract there is a perfected contract of sale

HELD: No, it is a contract to sell.

In a contract of sale, the vendor cannot recover ownership of the thing sold until and unless the contract itself is
resolved and set aside. Art 1592 provides:

In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at
the time agreed upon, the rescission of the contract shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission of the contract has been upon him either judicially or
by a notarial act. After the demand, the court may not grant him a new term.

Based on the above provision, a party who fails to invoke judicially or by notarial act would be prevented from
blocking the consummation of the same in light of the precept that mere failure to fulfill the contract does not by
itself have the effect of rescission.

On the other hand, a contract to sell is bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the subject property despite its delivery to the prospective buyer, commits to sell the property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., full payment of the
purchase price. Full payment here is considered as a positive suspensive condition.

As a result if the party contracting to sell, because of non-compliance with the suspensive condition, seeks to eject
the prospective buyer from, the land, the seller is enforcing the contract and is not resolving it. The failure to pay is
not a breach of contract but an event which prevent the obligation to convey title from materializing.

In the present case, neither side was able to produce any written evidence documenting the actual terms of their
agreement. The trial court was correct in finding that there was no meeting of minds in this case considering that
the acceptance of the offer was not absolute and uncondition. In earlier cases, the SC held that before a valid and
binding contract of sale can exist, the manner of payment of the purchase price must first be established.

Furthermore, the reservation of the title in the name of Platinum Plans clearly indicates an intention of the parties
to enter into a contract of sell.Where the seller promises to execute a deed of absolute sale upon completion of
the payment of purchase price, the agreement is a contract to sell.
The court cannot, in this case, step in to cure the deficiency by fixing the period pursuant to:

The relief sought by Cucueco was for specific performance to compel Platinum Plans to receive the balance of the
purchase price.

The relief provide in Art 1592 only applies to contracts of sale

Because of the differing dates set by both parties, the court would have no basis for granting Cucueco an
extension of time within which to pay the outstanding balance

SELLER CANNOT TREAT THE CONTRACT AS CANCELLED WITHOUT SERVING NOTICE

The act of a party in treating the contract as cancelled should be made known to the other party because this act is
subject to scrutiny and review by the courts in cased the alleged defaulter brings the matter for judicial
determination as explained in UP v. De los Angeles. In the case at bar, there were repeated written notices sent by
Platinum Plans to Cucueco that failure to pay the balance would result in the cancellation of the contract and
forfeiture of the down payment already made. Under these circumstance, the cancellation made by Platinum Plans
is valid and reasonable (except for the forfeiture of the down payment because Cucueco never agreed to the
same)

EFFECTS OF CONTRACT TO SELL

A contract to sell would be rendered ineffective and without force and effect by the non-fulfillment of the buyers
obligation to pay since this is a suspensive condition to the obligation of the seller to sell and deliver the title of the
property. As an effect, the parties stand as if the conditional obligation had never existed. There can be no
rescission of an obligation that is still non-existent as the suspensive condition has not yet occurred.

CAS RELIANCE ON LEVY HERMANOS V. GERVACIO IS MISPLACED

It was unnecessary for CA to distinguish whether the transaction between the parties was an installment sale or a
straight sale. In the first place, there is no valid and enforceable contract to speak of.