Cruz vs Fernando

G.R. NO. 145470, December 9, 2005

Doctrine: The absence of a specific manner of payment in the terms and
conditions of the contract makes it a contract to sell. Ownership was never
transferred. This is because the manner of payment of the purchase price is an
essential element before a valid and binding contract of sale can exist.
Facts: In 1983, Cruz executed a Kasunduan with the Gloriosos for the consideration
of the rear portion of a 223 sq m lot. The Kasunduanprovides that the lot will be sold
at a P40 per sq m. That the portion of the lot to be sold is the rear portion of it. That
upon selling, the Cruz will transfer their house from the front portion to the rear
portion of the land once it is bought. That they will have a right of way from the
front portion going to the back end of the lot. The Cruz never gave anything to the
Gloriosos for there was an alleged failure to have the land surveyed. Due to non
payment, the Gloriosos instead sold the whole lot (back and rear portion) to the
Fernandos.

In 1994, after repeated demands, the Fernandos filed a case in court for accion
publiciana demanding the Cruz to vacate the lot and to pay a rental of P500.00. The
RTC ruled in favor of the Fernandos. The CA affirmed the RTC ruling.

ISSUE: Whether or not what transpired between the Cruzes and the Gloriosos was a
contract of sale.

HELD: No. The absence of a specific manner of payment in the terms and
conditions of the contract makes it a contract to sell. Ownership was never
transferred to the Cruzes. This is because the manner of payment of the purchase
price is an essential element before a valid and binding contract of sale can exist.
Although the Civil Code does not expressly state that the minds of the parties must
also meet on the terms or manner of payment of the price, the same is needed,
otherwise there is no sale. Also, the Cruzes never transferred their house from the
front portion to the rear portion of the lot. It was evident in the contract that they
will transfer the house to the rear portion once they were able to buy it.

The SC also ruled that the Fernandos were not buyers in bad faith. There was no
consummated sale between the Cruzes and the Gloriosos. In a contract to sell, there
being no previous sale of the property, a third person buying such property despite
the fulfillment of the suspensive condition such as the full payment of the purchase
price, for instance, cannot be deemed a buyer in bad faith and the prospective
buyer cannot seek the relief of reconveyance of the property. There is no double
sale in such case. Title to the property will transfer to the buyer after registration
because there is no defect in the owner-sellers title per se, but the latter, of course,
may be sued for damages by the intending buyer.