TITLE: Taok v.

Conde

GR NO. 254248

DATE: November 6, 2023

SUBJECT Contract of Sale; Contract to Sell; Rescission

MATTER:

DOCTRINES: 1. In determining the real nature of a contract, the express terms of

the written agreement and the contemporaneous and
subsequent acts of the parties are taken into consideration. The
Court is also guided by Article 1370 of the Civil Code which
states "[i]f the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning
of its stipulations shall control."
2. The distinction between a contract of sale and contract to sell is
well-established in the decisions of the Court:
In a contract of sale, the title to the property passes to the
vendee upon the delivery of the thing sold; in a contract to sell,
ownership is, by agreement, reserved in the vendor and is not to
pass to the vendee until full payment or the purchase price.
Otherwise stated, in a contract or sale, the vendor loses
ownership over the properly and cannot recover it until and
unless the contract is resolved or rescinded; whereas, in a
contract to sell, title is retained by the vendor until full payment of
the price. In the latter contract, payment of the price is a positive
suspensive condition, failure of which is not a breach but an
event that prevents the obligation or the vendor to convey title
from becoming effective.
3. Article 1458 of the Civil Code states that in a contract of sale
"one of the contracting parties obligates himself [or herself] to
transfer the ownership and to deliver a determinate thing, and
the other to pay therefor a price certain in money or its
equivalent." It is a consensual contract which is perfected at the
moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price. A valid contract of sale
has the following elements: (1) consent or meeting of the minds;
(2) determinate subject matter; and (3) price certain in money or
its equivalent.
4. The full payment of the purchase price is a positive suspensive
condition in a contract to sell. Its non-fulfillment does not
constitute a breach of contract, rather, it is merely an event
preventing the seller from conveying title to the buyer.
Consequently, the remedy of rescission is unavailable in a
contract to sell since it is impossible to rescind a non-existing
obligation as the suspensive condition has yet to materialize.
More, where the buyer fails to pay the purchase price, the
contract to sell is only rendered ineffective and without force and
 effect
5. As a reciprocal contract, a contract of sale such as the subject
Agreement may be the proper subject of rescission under Article
1191 of the Civil Code. In case of the obligor's failure to perform
the obligation, Article 1191 of the Civil Code provides the injured
party with two options: rescission (also known as resolution of
the contract) or fulfillment of the obligation, with damages in
either case. Resolution is considered a principal action which is
based on substantial breach by a party.
Section 9. Evidence of written agreements. — When the terms of
an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add
to the terms of written agreement if he puts in issue in his
pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written
agreement;
(b) The failure of the written agreement to express the true intent
and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their
successors in interest after the execution of the written
agreement.
The term "agreement" includes wills.
6. Under the general rule in Section 9 of Rule 130 or the Rules of
Court, when the terms of an agreement were reduced to writing,
as in this case, it is deemed to contain all the terms agreed upon
and no evidence of such terms can be admitted other than the
contents thereof.
7. Case law requires that the exceptions to the parol evidence rule
be expressly put in issue in the pleadings.
8. A mere showing that there was a sufficiency of available funds
only affirms the capacity or ability of the obligor to pay. As
succinctly put by the Court "proof that an act could have been
done is no proof that it was actually done.

FACTS: On September 14, 2009, Virgilio Taok (petitioner) filed with the Regional
Trial Court, Bogo, Cebu a complaint against respondents Supremido
Conde (Supremido) and Raul Conde (Raul) (collectively, respondents)
for rescission of contract, damages, and attorney's fees. Petitioner
alleged that he was the owner of a 943 sqm. parcel of land in Agujo,
Daanbantayan, Cebu identified as Cadastral Lot 906-P(B-1) under Tax
Declaration 21274 which became the subject of a transaction that he
had with respondents. This transaction was recorded in an Agreement
dated January 29, 2007.

Based on the Agreement, the first monthly installment was due on

February 29, 2007 through bank payment. Despite demands, however,
 respondents did not make even single amortization payment. Petitioner
was therefore constrained to seek assistance from the barangay office
of Agujo, but respondents ignored his plea and just continued to violate
the Agreement. Respondents made no payment for two years and
seven months, prompting him to file the complaint for rescission of
contract, attorney's fees, litigation expenses, and exemplary damages

ISSUE/S: 1) Was the Agreement a contract of sale or a contract to sell?

2) Was there a material breach of the Agreement with respect to
the payment of the purchase price?
3) Was the rescission of the Agreement proper?
4) Can oral conditions be admitted as parol evidence?
5) Was there a valid tender of payment?

RULING: 1. The Agreement was a contract of sale.

The Court agrees with the Court of Appeals that the Agreement was a
contract of sale, not a contract to sell.

Here, nowhere in the subject Agreement states that the parties agreed
or intended to condition the transfer of ownership upon full payment of
the purchase price by the buyer. Notably, the contract of sale has all the
three elements of a contract of sale: (1) consent or meeting of the
minds; (2) determinate subject matter; and (3) price certain in money or
its equivalent.

2. There was a material breach of the Agreement with respect

to the payment of the purchase price.

The vendee's failure to pay the balance of the purchase price gives rise
to a right in favor of the vendor to demand rescission of the contract of
sale. The Court has held that "[n]on-payment of the purchase price of
property constitutes a very good reason to rescind a sale for it violates
the very essence of the contract of sale." The determination of whether
the breach of contract is slight or substantial depends on the
appreciation of the attendant circumstances.

Here, respondents failed to pay any of the monthly installments. In fact,

respondents did not pay the balance of the purchase price at all. The
Agreement expressly provided that the balance of the purchase price
"will be paid in the form of installment basis of TWENTY THOUSAND
PESOS (P20,000.00) monthly through BANK payments."[42]
Unmistakably, respondents' failure to pay the balance of the purchase
price amounting to PHP 835,000.00 or 83.5% of the total purchase price
of PHP 1,000,000.00 for more than two years and seven months
constitutes a substantial breach of the contract of sale.

3. The rescission of the Agreement was proper

Rescission of a contract necessarily creates the obligation to return the

object of the contract as the parties must be restored to their relative
positions as if no contract has been made. In view of the rescission of
the Agreement, there is no sale to speak of, dispensing with the need for
any kind of down payment in order to return the parties to their original
positions prior to the Agreement. Having received the amount of PHP
165,000.00 from respondents, petitioner is obliged to return the same to
the former.

4. Such oral conditions cannot be permitted to modify the

deeds of sale pursuant to the parol evidence

Private respondents' oral testimony on the alleged conditions,

coming from a party who has an interest in the outcome of the
case, depending exclusively on human memory, is not as reliable
as written or documentary evidence. Spoken words could be
notoriously unreliable unlike a written contract which speaks of a
uniform language.

Considering that the written deeds of sale were the only repository
of the truth, whatever is not found in said instruments must have
been waived and abandoned by the parties. Examining the deeds
of sale, we cannot even make an inference that the sale was
subject to any condition. As a contract, it is the law between the
parties.

we disagree with private respondents' argument that their parol evidence

is admissible under the exceptions provided by the Rules, specifically,
the alleged failure of the agreement to express the true intent of the
parties. Such exception obtains only in the following instance:

[W]here the written contract is so ambiguous or obscure in terms that

the contractual intention of the parties cannot be understood from a
mere reading of the instrument. In such a case, extrinsic evidence of the
subject matter of the contract, of the relations of the parties to each
other, and of the facts and circumstances surrounding them when they
entered into the contract may be received to enable the court to make a
proper interpretation of the instrument.

In this case, the deeds of sale are clear, without any ambiguity, mistake
or imperfection, much less obscurity or doubt in the terms thereof.

The record shows that private respondents did not expressly plead
that the deeds of sale were incomplete or that it did not reflect the
intention of the buyer (petitioner) and the seller (private
respondents). Such issue must be "squarely presented." Private
respondents merely alleged that the sale was subject to four (4)
conditions which they tried to prove during trial by parol evidence.

Here, respondents merely countered in their statement of facts that the

terms of the Agreement had been modified by oral agreement of the
parties. Having failed to squarely present the alleged modifications to
the Agreement in issue, respondents may not rely on the exception to
the parol evidence rule.

5. There was no valid tender of payment

With respect to respondents' supposed tenders of payment, the same is

but a self-serving assertion. Too, their so-called notice to consign the
amount did not constitute a valid tender. Besides, a delayed tender of
payment that was due over two years and seven months ago further
negates its validity.