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:
1. The relief sought by Cucueco was for specific performance to compel Platinum
Plans to receive the balance of the purchase price.
2. The relief provide in Art 1592 only applies to contracts of sale
3. 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 nonfulfillment 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.