Santos vs. CA (G.R. No. 120820.

August 1, 2000)
A contract is what the law defines it to be, taking into consideration its
essential elements, and not what the contracting parties call it. Article 1458
expressly obliges the vendor to transfer ownership of the thing sold as an
essential element of a contract of sale. This is because the transfer of
ownership in exchange for a price paid or promised is the very essence of a
contract of sale.
There was no transfer of ownership simultaneously with the delivery of the
property purportedly sold. The records clearly show that, notwithstanding the
fact that the Casedas first took then lost possession of the disputed house
and lot, the title to the property has remained always in the name of
Rosalinda Santos. Although the parties had agreed that the Casedas would
assume the mortgage, all amortization
payments made by Carmen Caseda to the bank were in the name of
Rosalinda Santos. The foregoing circumstances categorically and clearly
show that no valid transfer of ownership was made by the Santoses to the
Casedas. Absent this essential element, their agreement cannot be deemed
a contract of sale.It was a contract to sell. Ownership is reserved by the
vendor and is not to pass until full payment of the purchase price. This we
find fully applicable and understandable in this case, given that the property
involved is a titled realty under mortgage to a bank and would require
notarial and other formalities of law before transfer thereof could be validly
effected.
SANTOS vs. COURT OF APPEALSG.R. No. 120820. August 1, 2000Facts:
Spouses Santos owned the house and lot in Better Living Subdivision, Paranaque,
Metro Manila. The landtogether with the house, was mortgaged with the Rural Bank
of Salinas, Inc., to secure a loan of P150K. The bank sent Rosalinda Santos a letter
demanding payment of P16K in unpaid interest and other charges. Since theSantos couple had no
funds, Rosalinda offered to sell the house and lot to Carmen Caseda. After inspecting thereal
property, Carmen and her husband agreed.Carmen and Rosalinda signed a document,
involving the sale of the house P350K as full amount, P54K as downpayment. Among
other condition set is that Caseda will pay the balance of the mortgage in the bank, realestate
taxes and the electric and water bills.The Casedas complied with the bank mortgage
and the
bills.
The
Santoses,
seeing
that
the Casedas
lacked
them e a n s t o p a y t h e r e m a i n i n g i n s t a l l m e n t s a n d / o r a m o r t i z a t i o n o f t h e l o a n
, r e p o s s e s s e d t h e p r o p e r t y. T h e Santoses then collected the rentals from the
tenants. Carmen approached petitioners and offered to pay the balance of the
purchase price for the house and lot. The parties, however, could not agree, and the
deal couldnot push through because the Santoses wanted a higher price.Carmen is now praying
that the Santoses execute the final deed of conveyance over the property.
Issue:
WON there was a perfected contract of sale?
NOHeld:

A contract is what the law defines it to be, taking into consideration its essential
elements, and not what the contracting parties call it. Article 1458 expressly obliges the
vendor to transfer ownership of the thing sold as anessential element of a contract of sale. This is
because the transfer of ownership in exchange for a price paid or promised is the very essence of
a contract of sale.There was no transfer of ownership simultaneously with the delivery
of the property purportedly sold. The r e c o r d s
clearly
show
that,
notwithstanding the fact that the Casedas first took then lost possession of
t h e disputed house and lot, the title to the property has remained always in the name of
Rosalinda Santos. Althoughthe parties had agreed that the Casedas would assume the mortgage,
all amortization payments made by CarmenCaseda to the bank were in the name of
Rosalinda Santos. The foregoing circumstances categorically and clearly show that no
valid transfer of ownership was made by the Santoses to the Casedas. Absent this
essentialelement, their agreement cannot be deemed a contract of sale.
It was a contract to sell.
Ownership is reserved by the vendor and is not to pass until full payment of
the purchase price. This we find fully applicable and understandable in this case, given that the
property involvedis a titled realty under mortgage to a bank and would require notarial and other
formalities of law before transfer thereof could be validly effected.
The CA cannot order rescission.
If the vendor should eject the vendee for failure to meet the
condition precedent, he is
enforcing the contract and not rescinding it.
W h e n t h e p e t i t i o n e r s i n t h e i n s t a n t c a s e repossessed the disputed house and lot for
failure of private respondents to pay the purchase price in full, theywere merely enforcing the
contract and not rescinding it.