1

G.R. No. 147405 April 25, 2006 PLATINUM PLANS PHIL. INC vs CUCUEC
PLATINUM PLANS PHIL. INC., !UTH E"UCATINAL PLANS, INC., AN" ERNEST L. SALAS,
PETITINERS, #S. RME R. CUCUEC, RESPN"ENT.
Challenged in this petition for review on certiorari
[1]
is the Decision
[2]
dated February 21, 2001 rendered by the
Court of Appeals CA! in CA"#$%$ C& 'o$ (00)1 setting aside the decision
[*]
of the %egional +rial Court %+C!
of ,asig City, -ranch 2((, in Civil Case 'o$ (./0* entitled 0%o1eo %$ Cucueco vs$ ,latinu1 ,hilippines 2nc$,
3outh 4ducational ,lans, 2nc$, and 4rnesto 5$ 6alas$7
+his case is rooted in the co1plaint
[.]
filed by respondent %o1eo %$ Cucueco against petitioners ,latinu1
,hilippines 2nc$, 3outh 4ducational ,lans, 2nc$, and 4rnesto 5$ 6alas for specific perfor1ance and da1ages
pursuant to an alleged contract of sale e8ecuted by the1 for the purchase of a condo1iniu1 unit
[9]
in &alle
&erde, ,asig City$
+he antecedent facts are as follows:
,laintiff"appellant [herein respondent] alleged in his co1plaint that so1eti1e in ;uly 1//*, being the lessee
and present occupant of the said condo1iniu1 unit, he verbally offered to buy the sa1e fro1 the defendants"
appellants [herein petitioners], free fro1 any lien or encu1brance in two2! install1ents of ,2,000,000$00$
+his was 1ade into a for1al offer in writing, the salient conditions of which are: 1! ,laintiff"appellant will issue
a chec< for ,100,000$00 as earnest 1oney= 2! ,laintiff will also issue a post"dated chec< for ,1,/00,000$00
encashable on *0 6epte1ber$ 1//* on the condition that he will stop paying rentals! for the said unit after *0
6epte1ber 1//*= and *! +hat in case the defendants"appellants still had an outstanding loan with the said
unit as collateral>security! with the ban< of less than ,2,000,000$00, as of *1 Dece1ber 1//*, plaintiff"
appellant shall assu1e the said loan and pay the defendants"appellants the difference fro1 the re1aining
,2,000,000$00$
,laintiff"appellant clai1s that the defendants"appellants duly accepted his offer" the chec<s he issued in favor
of the defendants"appellants were accepted and encashed$ ?owever, he was surprised to receive a letter fro1
the defendants"appellants where the due date for the second install1ent was changed to 2* 6epte1ber 1//*$
Despite earnest efforts, both parties failed to settle the said difference a1icably$ Apparently, the plaintiff"
appellant felt he was on the short end of the bargain since he stood to forfeit the initial ,2,000,000$00 he has
paid in favor of the defendants"appellants as provided in their agree1ent$ +he refusal of the defendants"
appellants to return the said initial pay1ent thus pro1pted the plaintiff"appellant to file a case for specific
perfor1ance of the said sale and clai1 of da1ages for the in@ury he suffered as a result of the defendants"
appellantsA un@ust refusal to co1ply with their obligation$
2n the 1ain, plaintiff"appellant argued before the lower court that there was a perfected sale between the1, as
based on the facts he alleged -ased on such perfected sale, plaintiff"appellant 1aintains that he 1ay validly
de1and of the defendants"appellants to e8ecute the necessary deed of sale and other docu1ents transferring
ownership and title over the property in his favor$
Bn the other hand, defendants"appellants denied the substantial allegations of the plaintiff"appellant and
asserted during trial that the plaintiff"appellant has already forfeited his initial downpay1ent of ,2,000,000$00
as based on the ter1s and conditions agreed upon, to wit:
1$ +he ter1s of pay1ent is only for two install1entsCpayable on 1 August 1//* and the balance payable
on *0 6epte1ber 1//*$
2$ +o ensure perfor1ance, the! parties herein further agreed that in case of non"co1pliance on the part
of the plaintiff, all install1ents 1ade shall be forfeited in favor of the defendants=
*$ Bwnership over sub@ect property is retained by defendants and is not to pass until full pay1ent of the
purchase price$
2
Defendants"appellants counter the plaintiff"appellantAs contention, stating they never accepted the plaintiff"
appellantAs offer to pay the re1aining balance only on *1 Dece1ber 1//*$ +heir letter of 2* 6epte1ber 1//*
undoubtedly contained their non"acceptance of the plaintiff"appellantAs offer$ Along with this, they 1aintain that
the very fact that the plaintiff"appellant went to the defendants"appellants to negotiate the due date of the final
pay1ent belies the plaintiff"appellantAs assertion that there was any sale perfected between the1$ +hey further
sub1it as evidence the want of consent to the plaintiff"appellantAs offer as shown by the absence of their
signature of confor1ity on the letter sent to the1$
[(]
+he trial court found that under the circu1stances, the essential ele1ent of consent to the contract was lac<ing
as indicated by the failure of the parties to agree on a definite date when full pay1ent of the purchase price
should be 1ade by respondent$ As a result, the court ruled against the e8istence of a perfected contract of sale
between the parties and ordered petitioners to return the +wo Dillion ,esos ,2,000,000! they received fro1
respondent as downpay1ent for the condo1iniu1 unit and to li<ewise pay respondent interest, 1oral
da1ages and attorneyAs fees$ For his part, respondent was directed to pay petitioners rentals in arrears for the
use of the unit in the a1ount of 4ighteen +housand ,esos ,1E,000! per 1onth co11encing in ;uly 1//*$
Fnsatisfied, both parties appealed the decision to the CA$
+he CA, on the other hand, differed fro1 the conclusion of the trial court and ruled that there was, in this
instance, a perfected contract of sale despite the fact that the parties never agreed on the date of pay1ent of
the re1aining balance of the purchase price$ Accordingly, the CA reversed and set aside the @udg1ent of the
%+C in its Decision dated February 21, 2001, the dispositive portion of which reads:
G?4%4FB%4, pre1ises considered, the @udg1ent of the %egional +rial Court of ,asig City, -ranch 22(, in
Civil Case 'o$ (./0* is hereby %4&4%64D and 64+ A62D4 and a new one is %4'D4%4D as follows:
1$ ,laintiff"appellant %BD4B %$ CFCF4CB is hereby ordered to pay the defendants"appellants the
balance of the purchase price in the a1ount of ,2,000,000$00 with (H interest per annu1 starting fro1
21 Bctober 1//* until full pay1ent, for the sale of Fnit 1), -loc< *, Casa &erde +ownhouse, &alle
&erde, ,asig City as covered by +C+ 'o$ ,+"E0.1* registered with the %egistry of Deeds of ,asig City$
2$ Defendants"appellants, ,5A+2'FD ,5A'6 ,?252,,2'46, 2'C$ is hereby ordered to e8ecute and
deliver the sufficient Deed of 6ale of the said property in favor of said plaintiff"appellant, as well as any
other pertinent docu1ent necessary for the transfer of ownership and title of the said property to the
plaintiff"appellant, after full pay1ent of the balance purchase price plus interest has been 1ade by the
plaintiff"appellant in their favor$
6B B%D4%4D$
[)]
?ence, this petition which assigns the following errors:
2$
+?4 ?B'B%A-54 CBF%+ BF A,,4A56 64%2BF653 D26A,,%4?4'D4D +?4 FAC+6 BF +?4 CA64
A'D #%B6653 D26A,,%4C2A+4D +?4 4&2D4'C4, A'D +?F6 CBDD2++4D ,A+4'+ 4%%B% G?4' 2+
%F54D +?A+ +?4%4 GA6 A ,4%F4C+4D CB'+%AC+ BF 6A54 B&4% +?4 6F-;4C+ ,%B,4%+3$
22$
+?4 ?B'B%A-54 CBF%+ BF A,,4A56 64%2BF653 4%%4D G?4' 2+ FBF'D +?A+ +?4 ,%2&A+4
%46,B'D4'+A6 -%4AC? BF +?4 CB'+%AC+ GA6 'B+ 6F-6+A'+2A5 A6 +B GA%%A'+ +?4
%46C2662B' +?4%4BF$
222$
3
+?4 ?B'B%A-54 CBF%+ BF A,,4A56 64%2BF653 4%%4D G?4' 2+ %F54D A#A2'6+ +?4
,4+2+2B'4%6A FB%F42+F%4 BF +?4 ,%2&A+4 %46,B'D4'+A6 16+ 2'6+A55D4'+$
2&$
+?4 ?B'B%A-54 CBF%+ BF A,,4A56 64%2BF653 4%%4D G?4' 2+ %4&4%64D +?4 D4C262B' BF
+?4 %4#2B'A5 +%2A5 CBF%+ 2'6BFA% A6 +?4 +%2A5 CBF%+A6 B%D4% D2%4C+4D +?4 ,%2&A+4
%46,B'D4'+ +B ,A3 -ACI %4'+A56 2' +?4 ADBF'+ BF ,2 E,000$00 ,4% DB'+? CBDD4'C2'#
F%BD ;F53 1//*
+he petition has 1erit$
+he pri1ary issue in this case centers upon a deter1ination of the true nature of the agree1ent of the parties
concerning the condo1iniu1 unit$ 2n brief, petitioners clai1 that the parties 1erely entered into a contract to
sell while respondent insists that it was already a perfected contract of sale$ 2t is therefore critical to ascertain
whether the parties intended to enter into a contract of sale or a contract to sell as these two contracts produce
very different effects under the law$
+o begin with, a contract of sale is defined under Article 1.9E of the Civil Code as follows:
-y the contract of sale one of the contracting parties obligates hi1self to transfer the ownership of and to
deliver a deter1inate thing, and the other to pay therefor a price certain in 1oney or its eJuivalent$
2n a contract of sale, the vendor cannot recover ownership of the thing sold until and unless the contract itself
is resolved and set aside$
[E]
Bn this score, it is significant to note that the resolution or rescission of a contract
of sale is further circu1scribed by Article 19/2 of the Civil Code which provides:
2n the sale of i11ovable property, even though it 1ay have been stipulated that upon failure to pay the price at
the ti1e agreed upon, the rescission of the contract shall of right ta<e place, the vendee 1ay pay, even after
the e8piration of the period, $s lo%& $s %o '()$%' *or r(s+issio% o* ,-( +o%,r$+, -$s .((% )$'( /po%
-i) (i,-(r 0/'i+i$ll1 or .1 $ %o,$ri$l $+,. After the de1and, the court 1ay not grant hi1 a new ter1$
Emphasis supplied.!
+he de1and 1entioned above refers to that 1ade, upon the vendee to agree to the resolution of the contract$
A party who fails to invo<e @udicially or by notarial act the resolution of the contract of sale would be prevented
fro1 bloc<ing the consu11ation of the sa1e in light of the precept that 1ere failure to fulfill that contract does
not operate ipso facto as its rescission$
[/]
Bn the other hand, a contract to sell is defined as a bilateral contract whereby the prospective seller, while
e8pressly reserving the ownership of the sub@ect property despite its delivery to the prospective buyer, co11its
to sell the property e8clusively to the prospective buyer upon fulfill1ent of the condition agreed upon, that is,
full pay1ent of the purchase price$ Full pay1ent in this conte8t is dee1ed a positive suspensive condition$ 2t
bears stressing that ownership of the property offered for sale is reserved in the seller and is not to pass to the
buyer until such condition has been fulfilled$
As a result, if the party contracting to sell, because of non"co1pliance with the suspensive condition stipulated,
see<s to e@ect the would"be buyer fro1 the land ob@ect of the agree1ent, the for1er is enforcing the contract
and not resolving it$
[10]
+he failure to 1a<e pay1ent is not a breach of the contract but an event that prevented
the obligation to convey the title fro1 1aterialiKing$
[11]
-ased on the foregoing distinctions, a contract to sell 1ay not be considered as a contract of sale because the
first essential ele1ent of consent to a transfer of ownership is lac<ing in the for1er$ 6ince the prospective
seller in a contract to sell e8plicitly reserves the transfer of title to the prospective buyer, the prospective seller
does not as yet uneJuivocally agree or consent to a transfer ownership of the property sub@ect of the contract
4
to sell$ Bn the happening of an event, that is, the full pay1ent of the purchase price, the obligation then arises
to e8ecute a contract of sale that alone will transfer such ownership$
2n its decision, the CA characteriKed the transaction as a straight sale and ruled that the failure of the parties to
agree with respect to the 1anner of pay1ent did not negate the e8istence of a perfected contract of sale
between the1, e8plaining as follows:
Apparently, the lower court relied upon the ti1e ele1ent regarding the pay1ent of the balance of the purchase
price$ Ge consider, however, that first, the ob@ect and the total a1ount of the purchase price has been agreed
upon$ 2t was error on the part of the lower court to consider any for1 or 1anner of pay1ent since under the
present circu1stances, and based upon the 5evy ?er1anosA definition of what a sale on install1ent is, the
agree1ent between the parties to this case would constitute a si1ple 0straight sale$7 6uch 1anner of pay1ent
as discussed by the lower court, to Bur 1ind, would find pertinent application in the real1 of install1ent sales$
+hus, being a case of straight sale, the 1anner of pay1ent" which 1ust be construed here as being 1ade in
cash" has no bearing in the present case$ +he 1ode of pay1ent is cash and there is no subseJuent
install1ent to spea< of$ -eing such, the perfor1ance of the contract will not necessarily affect the validity of the
perfected contract of sale$
[12]
?owever, the reliance of the CA upon Levy Hermanos, Inc. vs. Gervacio
[1*]
is 1isplaced because the factual
circu1stances as well as the issues raised therein are not on all fours with those in the present case$ 5evy
?er1anos involved a collection suit to recover the balance of the purchase price in a sale of personal property
after the vendee already paid partly in cash and partly on ter1 by way of a pro1issory note that was secured
with a 1ortgage over the property$ 6ince the vendee failed to pay the note upon its 1aturity, the vendor was
constrained to foreclose on the 1ortgage$ +he proceeds fro1 the foreclosure sale, however, were insufficient
to discharge the note, pro1pting the vendor to see< @udicial recourse$
2n Levy Hermanos, there was no Juestion as to the intent and nature of the agree1ent entered into by the
parties$ Clearly, it was a contract of sale which i11ediately vested unto the vendee the ownership of the
personal property sub@ect of the transaction$ +he issue posed in that case, rather, pertained to the applicability
of Article 1.9."A
[1.]
of the old Civil Code regarding the right of the vendor to recover the re1aining balance of
the purchase price when such vendor has previously e8ercised the right to foreclose the sub@ect property$ 2n
resolving the issue, this Court delineated the difference between an install1ent sale and a 0straight7 sale and
declared that the transaction between the parties in that case was a 0straight7 sale not falling within the purview
of 6ection 1.9."A of the old Civil Code$
2n the present case, it was unnecessary for the CA to distinguish whether the transaction between the parties
was an install1ent sale or a straight sale$ 2n the first place, there is no valid and enforceable contract to spea<
of$ 2t was error for the appellate court to rely upon Article 1.E2 of the Civil Code in concluding that the earnest
1oney given 0would be considered as part of the purchase price and proof of the perfection of the contract$7
[19]
+his Court has e1phasiKed that it is the proof of the concurrence of all the essential ele1ents of the contract of
sale, and not the giving of earnest 1oney, which establishes the e8istence of a perfected sale$
[1(]
As correctly pointed out by the trial court, the fact that respondent delivered to petitioners and petitioners
accepted part of the downpay1ent on the price cannot be considered as proof of the perfection of the contract
as they had not agreed on how and when the balance was to be paid$ %espondent ad1itted as 1uch during
his cross"e8a1ination on August 12, 1//(, to wit:
Co/r,2 "o I /%'(rs,$%' *ro) 1o/ ,-$, $*,(r $ll i% r(&$r' ,o 3ri,i%&, ,-(r( 3$s %o +o%s/))$,('
$&r(()(%, i% r(&$r's ,o ,-( ,(r)s $%' p(rio' o* p$1)(%,4
A2 No%(, 1o/r Ho%or.
Court: 6o there was no definite period when the full pay1entC
5
A: 'o, your honor$ +here is a definite agree1ent as to the period of pay1ent, your ?onor, but apparently there
is a 1isunderstanding or both parties alleged different date, thatAs whyC
Court: +hatAs why 1y Juestion is, there was no definite ti1e fra1e agreed upon by you and the defendant as
to when the last pay1ent of full pay1ent will be 1adeL
A: -ased on 1y letterC
Court: 'o, between you Cyung definite na pinagkasunduan ninyo. Yung proposal nyo that was re@ected by
the defendant$7 Dy Juestion is, ,-(r( 3$s %o,-i%& '(*i%i,( i% r(&$r' ,o sp(+i*i+ '$,( 3-(% ,-( */ll
p$1)(%, )$1 .( )$'(, .(+$/s( 1o/r propos$l 3$s r(0(+,(', is%5, i,4
A2 !(s, 1o/r Ho%or, i, 3$s r(0(+,('.
Court: Alright, to clarify, what was the date you proposedL
A: Dece1ber *0, your ?onor$
Court: Ghat was the counter date 1ade by the defendantL
A: +he last pay1ent, your ?onor, they as<ed 1e to pay Bctober 1/C Bctober 19 and Bctober *1$
888
Co/r,2 A%' 1o/ 'i' %o, $&r(( i% r(&$r' ,o ,-( '$,(s *i6(' .1 '(*(%'$%,s4
A2 !(s, 1o/r Ho%or, I 'i' %o, $&r((.
888
M: Do you recall having gone to the office of defendant corporation on 'ove1ber ., 1//*L
A: 3es, 1aA1$
M: Ghat was the purpose of your visit to the office of defendant corporationL
A: +o re1ind the1 of 1y proposal that the balance$ 2 will only pay it on Dece1ber *0$
72 8$s ,-(r( $%1 %(&o,i$,io% o% ,-( p$1)(%, o* ,-( .$l$%+( o* ,-( p/r+-$s( pri+( o* ,-( /%i,4
A2 T-(1 i%sis,s 9si+: o% ,-$, I 3ill p$1 i, ($rli(r, )$5).
72 ;/, 1o/ 'i' %o, $&r(( ,o ,-( p$1)(%,4
A2 !(s, )$5).
72 8(r( 1o/ %o, &iv(% $%o,-(r p(rio' 3i,-i% 3-i+- 1o/ +o/l' p$1 ,-( .$l$%+( i%s,($' o* "(+().(r <0,
1==<4
A2 T-(1 &$v( )( $ p(rio' ($rli(r ,-$% "(+().(r <0 ./, I 'i' %o, $++(p,.
M: Are you saying that in the negotiation, you @ust went to tell the defendant corporation that you are not
acceeding sic! to their proposal of an earlier pay1entL
6
A: 3es, 1aA1
$[1)]
Emphasis supplied.!
6ignificantly, neither side has been able to produce any written evidence docu1enting the actual ter1s of their
agree1ent, specifically the date of full pay1ent of the purchase price$ +he evidence adduced during the trial
showed that the respective offers and counter"offers 1ade by the parties were not accepted by the other party$
+he trial court properly found that there was no 1eeting of the 1inds in this case considering the acceptance
of the offer was not absolute and unconditional$
[1E]
+his further confir1ed the absence of the contractual
ele1ent of consent$
2n a nu1ber of cases,
[1/]
this Court has held that before a valid and binding contract of sale can e8ist, the
1anner of pay1ent of the purchase price 1ust first be established$ +he 1anner of pay1ent affects the
essential validity of the sale notwithstanding that the ob@ect and purchase price 1ay have previously been
agreed upon$ Although not an e8press statutory reJuire1ent, the 1inds of the parties 1ust 1eet on the ter1s
or 1anner of pay1ent of the price, otherwise, there is no sale$
[20]
An agree1ent on the 1anner of pay1ent
goes into the price such that a disagree1ent on the 1anner of pay1ent is tanta1ount to a failure to agree on
the price
[21]
6econdly, the reservation of the title in the na1e of petitioners indicates the intention of the parties to enter, at
1ost, into a contract to sell$ +he CA already found that 0there was an e8press stipulation regarding the
reservation of title of the property 1ade by the seller until full pay1ent of the price agreed upon$7
[22]
2ndeed, this
finding is supported by the records of this case and ad1itted by respondent hi1self$
[2*]
-oth parties understood
that the docu1ents conveying title over the unit shall be e8ecuted only upon co1pleting pay1ent of the
purchase price$ Btherwise, even prior to the belated tender by respondent of the re1aining balance, he would
have de1anded that petitioners draw in his favor the necessary deed of absolute sale$ Ghere the seller
pro1ises to e8ecute a deed of absolute sale upon co1pletion of pay1ent of the purchase price by the buyer,
the agree1ent is uneJuivocally a contract to sell$[2.]
-e that as it 1ay, the intention of the parties to enter into a contract to sell did not effectively translate into an
enforceable obligation in view of their failure to agree on the contractAs actual ter1s$
[29]
As in a contract of sale,
it is i1portant that there be a stipulation on the period within which the pay1ent would beco1e due and
de1andable, the absence of which would @ustify the conclusion that there was no consent to the contract
proposed$
+he Court, in this instance, cannot step in to cure the deficiency by fi8ing the period of the obligation pursuant
to either Article 11/1
[2(]
[which, incidentally, applies only to contracts of sale] or Article 11/)
[2)]
of the Civil
Code$ 2n the first place, respondent did not pray for this relief when he filed his co1plaint for specific
perfor1ance see<ing to co1pel petitioners to receive the balance of the purchase price and to transfer title of
the property in his na1e$ ?e instead clai1ed that the parties had previously fi8ed the period of the obligation
on Dece1ber *1, 1//*$
6econdly, respondent i1pliedly ad1its in his pleadings below that he was in default when he tendered
pay1ent on August ., 1//., or al1ost eight 1onths after the above"stated deadline$ 4ven as he
ac<nowledges that petitioners 1ade several de1ands upon hi1 to co1plete pay1ent, respondent argues that
his belated tender of pay1ent was still acceptable considering that petitioners did not validly rescind by @udicial
or notarial act their perfected contract$ +his, however, applies only to a contract of sale$
+hirdly, the Court cannot arbitrarily set a period different fro1 the ter1 probably conte1plated by the parties$
[2E]
2n the present case, both parties sub1it that the due date of the final pay1ent had been so1eti1e in 1//*=
they only differ with respect to the e8act 1onth and day$ For this reason, the Court would have no basis for
granting to respondent an e8tension of ti1e within which to pay his outstanding balance well beyond the
conte1plated period$
Further1ore, assu1ing that there was a perfected contract to sell, the Court would not be inclined to interfere
with the decision of petitioners to e8tra"@udicially ter1inate the operation of their contract$ Article 19/2 of the
7
Civil Code which reJuires that prior de1and upon the respondent be 1ade by @udicial or notarial act so as to
rescind the contract would be inapplicable in this case as the provision conte1plates only contracts of sale$
%ather, the contract to sell would be rendered ineffective and without force and effect by the non"fulfill1ent of
respondentAs obligation to pay, which is a suspensive condition to the obligation of petitioners to sell and
deliver the title to the property$ +he parties stand as if the conditional obligation had never e8isted$
[2/]
+here can
be no rescission of an obligation that is still non"e8istent, the suspensive condition not having as yet occurred$
[*0]
+his is not to say that petitioners can treat the agree1ent as cancelled without serving notice to respondent of
their decision to do so$ +he act of a party in treating a contract as cancelled should be 1ade <nown to the
other party because this act is sub@ect to scrutiny and review by the courts in case the alleged defaulter brings
the 1atter for @udicial deter1ination$
[*1]
+his point was e8plained in niversity of the !hilippines v. "e Los
#ngeles,
[*2]
thus:
2t is understood that the act of a party in treating a contract as rescinded or cancelled or resolved on account of
infractions by the other contracting party 1ust be 1ade <nown to the other and is always provisional, being
ever sub@ect to the scrutiny and review by the proper court$ 2f the other party denies that rescission is @ustified,
it is free to resort to @udicial action in its own behalf, and bring the 1atter to court$ +hen, should the court, after
due hearing, decide that the resolution of the contract was not warranted, the responsible party will be
sentenced to da1ages= in the contrary case, the resolution will be affir1ed, and the conseJuent inde1nity
awarded to the party pre@udiced$
2n other words, the party who dee1s the contract violated 1ay consider it resolved or rescinded, and act
accordingly, without previous court action, but it proceeds at its own ris<$ For it is only the final @udg1ent of the
corresponding court that will conclusively and finally settle whether the action ta<en was or was not correct in
law$ -ut the law definitely does not reJuire that the contracting party who believes itself in@ured 1ust first file
suit and wait for a @udg1ent before ta<ing e8tra"@udicial steps to protect its interest$ Btherwise, the party in@ured
by the otherAs breach will have to passively sit and watch its da1ages accu1ulate during the pendency of the
suit until the final @udg1ent of rescission is rendered when the law itself reJuires that [it] should e8ercise due
diligence to 1ini1iKe its own da1ages$
2n the present case, petitioners repeatedly re1inded respondent in writing to pay the outstanding balance of
the purchase price of the unit, always with a warning that his failure to do so would result in the cancellation of
their agree1ent and the forfeiture of the downpay1ent already 1ade$
[**]
Finally, because of respondentAs
continuing default in his obligation, petitioners served notice of their decision to rescind the contract in a letter
dated 6epte1ber 2*, 1//.$
[*.]
Fnder such circu1stances, the cancellation by petitioners of the purported
contract is reasonable and valid$ ?owever, the forfeiture of the downpay1ent is unwarranted as respondent
never acceded to the sa1e$
Considering that the agree1ent of the parties did not ripen into a binding and enforceable contract 1eaning it
did not acJuire any obligatory force either for the transfer of the ownership of the property or the rendition of
pay1ents as part of the purchase price due to the absence of the essential ele1ent of consent, the Court is
precluded fro1 finding any cause of action that would warrant the granting of the reliefs prayed for in
respondentAs co1plaint$ Accordingly, the initial pay1ent of +wo Dillion ,esos ,2,000,000! advanced by
respondent should be returned by petitioners lest the latter un@ustly enrich the1selves at the e8pense of the
for1er$ 2n the sa1e vein, considering that respondent has been in continuous possession of the sub@ect unit
beginning ;uly of 1//*, the award of bac< rentals in favor of petitioners is li<ewise proper, but the award of
1oral da1ages and attorneyAs fees should be deleted for lac< of sufficient basis$
8HERE>RE, the petition is GRANTE" and the assailed Decision dated February 21, 2001 rendered by the
Court of Appeals CA! in CA"#$%$ C& 'o$ (00)1 is RE#ERSE" and SET ASI"E. Accordingly, the Decision
dated Day 1E, 1//E of the %egional +rial Court of ,asig City, -ranch 2((, in Civil Case 'o, (./0* is
%42'6+A+4D$
?owever, 1oral da1ages and attorneyAs fees awarded are "ELETE" for lac< of basis$
8
'o costs$