Chua v CA

FACTS:

Encarnacion Valdes Choy (Valdes-Choy) entered into a contract of sale with Tomas Chua (Chua) of her
paraphernal house and lot covering an area of 718 sqm with a total purchase price of P10,800,000. Chua
paid the sum of P100,000 to Valdes-Choy as earnest money for the said property on sale and issued a
managers check for the capital gains tax in the sum of P485,000. Now, left with the balance of
P10,215,000 payable until July 15, 1989.

However, Chua required Valdes-Choy to transfer first the title of the lot to his name before he would pay
the balance of P10,700,000 in which Valdes-Choy did not agree.

Chua then filed a complaint for specific performance against Valdes-Choy which the Trial court ruled in his
favor.

The trial court held that Chua complied with the terms of contract to sell. Chua was able to show that he
was prepared to pay Valdes-Choy the consideration in full on July 13, 1989. He even added the P80,000
for the documentary tax, issued a managers check for P485,000 capital gains tax and issued another
managers check for P10, 215,000 for the balance of the purchase price. The trial court was convinced
that Chua demonstrated his capacity and readiness to pay the balance. On the other hand, the trial court
found that Valdes-Choy did not perform her correlative obligation. Neither the amount of P485,000
intended for capital gains tax was not paid which was pre-requisite to the transfer of title.

The Court of Appeals reversed the Trial Courts ruling. It held that Chuas stance to transfer first the title
to his name before making the full payment was not part of the agreement. The court also found that
Valdes-Choy was able to perform is correlative obligation as to the needed documents and therefore they
did not see any reason Chua will not pay Valdes-Choy on the agreed date. The non-payment of the capital
gains taz has no bearing to the validity of the sale. Moreover, Chuas act of showing the check to Valdes-
Choy can never be considered as compliance with his obligation to pay, neither can be equated with the
actual payment which Chua refused to do.

Chua now appealed before the Supreme Court.

ISSUE: Whether there is a perfected contract of sale of IMMOVABLE PROPERTY?

RULING:

No.

There sale was not perfected. The agreement between Chua and Valdes-Choy was embedded in a receipt
as evidenced in the payment of the earnest money and not a deed of sale which is a form of public
document. The receipt only provides that the earnest money shall be forfeited in case the buyer fails to
pay the balance of the purchase price before July 15, 1989. The deed of sale was just about to effect
when Valdes-Choy was under the impression that Chua was about to pay the balance of the purchase
price which did not take place because of the refusal of Chua that he will only pay the purchase price in
full when the certificate of title was transferred in his name. In the absence of a formal deed of
conveyance, Chuas cannot compell Valdes-Choy to consummate the sale of the Property.

Under Article 1498 of the Civil Code, Symbolic delivery as a species of constructive delivery, effects the
transfer of ownership through the execution of a public document.

In the case at bar, Chua acquired no right to compelll Valdes-Choy to transfer ownership of the Property
to him because the suspensive condition of the full payment of the purchase price did not happen.

Hence, CA ruling is affirmed.