1191 RESCISSION/RESOLUTION[G.R. No. 139523. May 26, 2005]SPS. FELIPE AND LETICIA CANNU,petitioners, vs. SPS. GIL AND FERNANDINA GALANG AND NATIONAL HOME MORTGAGE FINANCE CORPORATION,respondents.D E C I S I O NCHICO-NAZARIO,J.:Before Us is a Petition for Review onCertiorariwhich seeks to set aside the decision[1]of the Court of Appeals dated 30 September 1998 which affirmed with modification the decision of Branch 135 of the Regional Trial Court (RTC) of Makati City, dismissing the complaint for Specific Performance and Damages filed by petitioners, and its Resolution[2]dated 22 July 1999 denying petitioners motion for reconsideration.A complaint[3]for Specific Performance and Damages was filed by petitioners-spouses Felipe and Leticia Cannu against respondents-spouses Gil and Fernandina Galang and the National Home Mortgage Finance Corporation (NHMFC) before Branch 135 of the RTC of Makati, on 24 June 1993. The case was docketed as Civil Case No. 93-2069.The facts that gave rise to the aforesaid complaint are as follows:Respondents-spouses Gil and Fernandina Galang obtained a loan from Fortune Savings & Loan Association forP173,800.00 to purchase a house and lot located at Pulang Lupa, Las Pias, with an area of 150 square meters covered by Transfer Certificate of Title (TCT) No. T-8505 in the names of respondents-spouses. To secure payment, a real estate mortgage was constituted on the said house and lot in favor of Fortune Savings & Loan Association. In early 1990, NHMFC purchased the mortgage loan of respondents-spouses from Fortune Savings & Loan Association forP173,800.00.Respondent Fernandina Galang authorized[4]her attorney-in-fact, Adelina R. Timbang, to sell the subject house and lot.Petitioner Leticia Cannu agreed to buy the property forP120,000.00 and to assume the balance of the mortgage obligations with the NHMFC and with CERF Realty[5](the Developer of the property).Of theP120,000.00, the following payments were made by petitioners:DateAmount Paid

July 19, 1990P40,000.00[6]

March 13, 199115,000.00[7]

April 6, 199115,000.00[8]

November 28, 19915,000.00[9]

TotalP75,000.00

Thus, leaving a balance ofP45,000.00.A Deed of Sale with Assumption of Mortgage Obligation[10]dated 20 August 1990 was made and entered into by and between spouses Fernandina and Gil Galang (vendors) and spouses Leticia and Felipe Cannu (vendees) over the house and lot in question which contains,inter alia, the following:NOW, THEREFORE, for and in consideration of the sum of TWO HUNDRED FIFTY THOUSAND PESOS (P250,000.00), Philippine Currency, receipt of which is hereby acknowledged by the Vendors and the assumption of the mortgage obligation, the Vendors hereby sell, cede and transfer unto the Vendees, their heirs, assigns and successor in interest the above-described property together with the existing improvement thereon.It is a special condition of this contract that the Vendees shall assume and continue with the payment of the amortization with the National Home Mortgage Finance Corporation Inc. in the outstanding balance ofP_______________, as of __________ and shall comply with and abide by the terms and conditions of the mortgage document dated Feb. 27, 1989 and identified as Doc. No. 82, Page 18, Book VII, S. of 1989 of Notary Public for Quezon City Marites Sto. Tomas Alonzo, as if the Vendees are the original signatories.Petitioners immediately took possession and occupied the house and lot.Petitioners made the following payments to the NHMFC:DateAmountReceipt No.

July 9, 1990P14,312.47D-503986[11]

March 12, 1991 8,000.00D-729478[12]

February 4, 1992 10,000.00D-999127[13]

March 31, 1993 6,000.00E-563749[14]

April 19, 1993 10,000.00E-582432[15]

April 27, 1993 7,000.00E-618326[16]

P55,312.47

Petitioners paid the equity or second mortgage to CERF Realty.[17]Despite requests from Adelina R. Timbang and Fernandina Galang to pay the balance ofP45,000.00 or in the alternative to vacate the property in question, petitioners refused to do so.In a letter[18]dated 29 March 1993, petitioner Leticia Cannu informed Mr. Fermin T. Arzaga, Vice President, Fund Management Group of the NHMFC, that the ownership rights over the land covered by TCT No. T-8505 in the names of respondents-spouses had been ceded and transferred to her and her husband per Deed of Sale with Assumption of Mortgage, and that they were obligated to assume the mortgage and pay the remaining unpaid loan balance. Petitioners formal assumption of mortgage was not approved by the NHMFC.[19]Because the Cannus failed to fully comply with their obligations, respondent Fernandina Galang, on 21 May 1993, paidP233,957.64 as full payment of her remaining mortgage loan with NHMFC.[20]Petitioners opposed the release of TCT No. T-8505 in favor of respondents-spouses insisting that the subject property had already been sold to them. Consequently, the NHMFC held in abeyance the release of said TCT.Thereupon, a Complaint for Specific Performance and Damages was filed asking, among other things, that petitioners (plaintiffs therein) be declared the owners of the property involved subject to reimbursements of the amount made by respondents-spouses (defendants therein) in preterminating the mortgage loan with NHMFC.Respondent NHMFC filed its Answer.[21]It claimed that petitioners have no cause of action against it because they have not submitted the formal requirements to be considered assignees and successors-in-interest of the property under litigation.In their Answer,[22]respondents-spouses alleged that because of petitioners-spouses failure to fully pay the consideration and to update the monthly amortizations with the NHMFC, they paid in full the existing obligations with NHMFC as an initial step in the rescission and annulment of the Deed of Sale with Assumption of Mortgage. In their counterclaim, they maintain that the acts of petitioners in not fully complying with their obligations give rise to rescission of the Deed of Sale with Assumption of Mortgage with the corresponding damages.After trial, the lower court rendered its decision ratiocinating:On the basis of the evidence on record, testimonial and documentary, this Court is of the view that plaintiffs have no cause of action either against the spouses Galang or the NHMFC. Plaintiffs have admitted on record they failed to pay the amount of P45,000.00 the balance due to the Galangs in consideration of the Deed of Sale With Assumption of Mortgage Obligation (Exhs. C and 3). Consequently, this is a breach of contract and evidently a failure to comply with obligation arising from contracts. . . In this case, NHMFC has not been duly informed due to lack of formal requirements to acknowledge plaintiffs as legal assignees, or legitimate tranferees and, therefore, successors-in-interest to the property, plaintiffs should have no legal personality to claim any right to the same property.[23]The decretal portion of the decision reads:Premises considered, the foregoing complaint has not been proven even by preponderance of evidence, and, as such, plaintiffs have no cause of action against the defendants herein. The above-entitled case is ordered dismissed for lack of merit.Judgment is hereby rendered by way of counterclaim, in favor of defendants and against plaintiffs, to wit:1. Ordering the Deed of Sale With Assumption of Mortgage Obligation (Exhs. C and 3) rescinded and hereby declared the same as nullified without prejudice for defendants-spouses Galang to return the partial payments made by plaintiffs; and the plaintiffs are ordered, on the other hand, to return the physical and legal possession of the subject property to spouses Galang by way of mutual restitution;2. To pay defendants spouses Galang and NHMFC, each the amount of P10,000.00 as litigation expenses, jointly and severally;3. To pay attorneys fees to defendants in the amount of P20,000.00, jointly and severally; and4. The costs of suit.5. No moral and exemplary damages awarded.[24]A Motion for Reconsideration[25]was filed, but same was denied. Petitioners appealed the decision of the RTC to the Court of Appeals. On 30 September 1998, the Court of Appeals disposed of the appeal as follows:Obligations arising from contract have the force of law between the contracting parties and should be complied in good faith. The terms of a written contract are binding on the parties thereto.Plaintiffs-appellants therefore are under obligation to pay defendants-appellees spouses Galang the sum of P250,000.00, and to assume the mortgage.Records show that upon the execution of the Contract of Sale or on July 19, 1990 plaintiffs-appellants paid defendants-appellees spouses Galang the amount of only P40,000.00.The next payment was made by plaintiffs-appellants on March 13, 1991 or eight (8) months after the execution of the contract. Plaintiffs-appellants paid the amount of P5,000.00.The next payment was made on April 6, 1991 for P15,000.00 and on November 28, 1991, for another P15,000.00.From 1991 until the present, no other payments were made by plaintiffs-appellants to defendants-appellees spouses Galang.Out of the P250,000.00 purchase price which was supposed to be paid on the day of the execution of contract in July, 1990 plaintiffs-appellants have paid,in thespan of eight (8) years, from 1990 to present, the amount of only P75,000.00. Plaintiffs-appellants should have paid the P250,000.00 at the time of the execution of contract in 1990. Eight (8) years have already lapsed and plaintiffs-appellants have not yet complied with their obligation.We consider this breach to be substantial.The tender made by plaintiffs-appellants after the filing of this case, of the Managerial Check in the amount of P278,957.00 dated January 24, 1994 cannot be considered as an effective mode of payment.Performance or payment may be effected not by tender of payment alone but by both tender and consignation. It is consignation which is essential in order to extinguish plaintiffs-appellants obligation to pay the balance of the purchase price.In addition, plaintiffs-appellants failed to comply with their obligation to pay the monthly amortizations due on the mortgage.In the span of three (3) years from 1990 to 1993, plaintiffs-appellants made only six payments. The payments made by plaintiffs-appellants are not even sufficient to answer for the arrearages, interests and penalty charges.On account of these circumstances, the rescission of the Contract of Sale is warranted and justified.. . .WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification. Defendants-appellees spouses Galang are hereby ordered to return the partial payments made by plaintiff-appellants in the amount of P135,000.00.No pronouncement as to cost.[26]The motion for reconsideration[27]filed by petitioners was denied by the Court of Appeals in a Resolution[28]dated 22 July 1999.Hence, this Petition forCertiorari.Petitioners raise the following assignment of errors:1. THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD THAT PETITIONERS BREACH OF THE OBLIGATION WAS SUBSTANTIAL.2. THE HONORABLE COURT OF APPEALS ERRED WHEN IN EFFECT IT HELD THAT THERE WAS NO SUBSTANTIAL COMPLIANCE WITH THE OBLIGATION TO PAY THE MONTHLY AMORTIZATION WITH NHMFC.3. THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO CONSIDER THE OTHER FACTS AND CIRCUMSTANCES THAT MILITATE AGAINST RESCISSION.4. THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO CONSIDER THAT THE ACTION FOR RESCISSION IS SUBSIDIARY.[29]Before discussing the errors allegedly committed by the Court of Appeals, it must be stateda priorithat the latter made a misappreciation of evidence regarding the consideration of the property in litigation when it relied solely on the Deed of Sale with Assumption of Mortgage executed by the respondents-spouses Galang and petitioners-spouses Cannu.As above-quoted, the consideration for the house and lot stated in the Deed of Sale with Assumption of Mortgage isP250,000.00, plus the assumption of the balance of the mortgage loan with NHMFC. However, after going over the record of the case, more particularly the Answer of respondents-spouses, the evidence shows the consideration therefor isP120,000.00, plus the payment of the outstanding loan mortgage with NHMFC, and of the equity or second mortgage with CERF Realty (Developer of the property).[30]Nowhere in the complaint and answer of the petitioners-spouses Cannu and respondents-spouses Galang shows that the consideration is P250,000.00. In fact, what is clear is that of theP120,000.00 to be paid to the latter, onlyP75,000.00 was paid to Adelina Timbang, the spouses Galangs attorney-in-fact. This debunks the provision in the Deed of Sale with Assumption of Mortgage that the amount ofP250,000.00 has been received by petitioners.Inasmuch as the Deed of Sale with Assumption of Mortgage failed to express the true intent and agreement of the parties regarding its consideration, the same should not be fully relied upon. The foregoing facts lead us to hold that the case on hand falls within one of the recognized exceptions to the parole evidence rule. Under the Rules of Court, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading, among others, its failure to express the true intent and agreement of the parties thereto.[31]In the case at bar, when respondents-spouses enumerated in their Answer the terms and conditions for the sale of the property under litigation, which is different from that stated in the Deed of Sale with Assumption with Mortgage, they already put in issue the matter of consideration. Since there is a difference as to what the true consideration is, this Court has admitted evidencealiundeto explain such inconsistency. Thus, the Court has looked into the pleadings and testimonies of the parties to thresh out the discrepancy and to clarify the intent of the parties.As regards the computation[32]of petitioners as to the breakdown of theP250,000.00 consideration, we find the same to be self-serving and unsupported by evidence.On the first assigned error, petitioners argue that the Court erred when it ruled that their breach of the obligation was substantial.Settled is the rule that rescission or, more accurately, resolution,[33]of a party to an obligation under Article 1191[34]is predicated on a breach of faith by the other party that violates the reciprocity between them.[35]Article 1191 reads:Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.Rescission will not be permitted for a slight or casual breach of the contract. Rescission may be had only for such breaches that are substantial and fundamental as to defeat the object of the parties in making the agreement.[36]The question of whether a breach of contract is substantial depends upon the attending circumstances[37]and not merely on the percentage of the amount not paid.In the case at bar, we find petitioners failure to pay the remaining balance ofP45,000.00 to be substantial. Even assumingarguendothat only said amount was left out of the supposed consideration ofP250,000.00, or eighteen (18%) percent thereof, this percentage is still substantial. Taken together with the fact that the last payment made was on 28 November 1991, eighteen months before the respondent Fernandina Galang paid the outstanding balance of the mortgage loan with NHMFC, the intention of petitioners to renege on their obligation is utterly clear.CitingMassive Construction, Inc. v. Intermediate Appellate Court,[38]petitioners ask that they be granted additional time to complete their obligation. Under the facts of the case, to give petitioners additional time to comply with their obligation will be putting premium on their blatant non-compliance of their obligation. They had all the time to do what was required of them (i.e., pay the P45,000.00 balance and to properly assume the mortgage loan with the NHMFC), but still they failed to comply. Despite demands for them to pay the balance, no payments were made.[39]The fact that petitioners tendered a Managers Check to respondents-spouses Galang in the amount of P278,957.00 seven months after the filing of this case is of no moment. Tender of payment does not by itself produce legal payment, unless it is completed by consignation.[40]Their failure to fulfill their obligation gave the respondents-spouses Galang the right to rescission.Anent the second assigned error, we find that petitioners were not religious in paying the amortization with the NHMFC. As admitted by them, in the span of three years from 1990 to 1993, their payments covered only thirty months.[41]This, indeed, constitutes another breach or violation of the Deed of Sale with Assumption of Mortgage. On top of this, there was no formal assumption of the mortgage obligation with NHMFC because of the lack of approval by the NHMFC[42]on account of petitioners non-submission of requirements in order to be considered as assignees/successors-in-interest over the property covered by the mortgage obligation.[43]On the third assigned error, petitioners claim there was no clear evidence to show that respondents-spouses Galang demanded from them a strict and/or faithful compliance of the Deed of Sale with Assumption of Mortgage.We do not agree.There is sufficient evidence showing that demands were made from petitioners to comply with their obligation. Adelina R. Timbang, attorney-in-fact of respondents-spouses, per instruction of respondent Fernandina Galang, made constant follow-ups after the last payment made on 28 November 1991, but petitioners did not pay.[44]Respondent Fernandina Galang stated in her Answer[45]that upon her arrival from America in October 1992, she demanded from petitioners the complete compliance of their obligation by paying the full amount of the consideration (P120,000.00) or in the alternative to vacate the property in question, but still, petitioners refused to fulfill their obligations under the Deed of Sale with Assumption of Mortgage. Sometime in March 1993, due to the fact that full payment has not been paid and that the monthly amortizations with the NHMFC have not been fully updated, she made her intentions clear with petitioner Leticia Cannu that she will rescind or annul the Deed of Sale with Assumption of Mortgage.We likewise rule that there was no waiver on the part of petitioners to demand the rescission of the Deed of Sale with Assumption of Mortgage. The fact that respondents-spouses accepted, through their attorney-in-fact, payments in installments does not constitute waiver on their part to exercise their right to rescind the Deed of Sale with Assumption of Mortgage. Adelina Timbang merely accepted the installment payments as an accommodation to petitioners since they kept on promising they would pay. However, after the lapse of considerable time (18 months from last payment) and the purchase price was not yet fully paid, respondents-spouses exercised their right of rescission when they paid the outstanding balance of the mortgage loan with NHMFC. It was only after petitioners stopped paying that respondents-spouses moved to exercise their right of rescission.Petitioners cite the case ofAngeles v. Calasanz[46]to support their claim that respondents-spouses waived their right to rescind. We cannot apply this case since it is not on all fours with the case before us. First, inAngeles, the breach was only slight and casual which is not true in the case before us. Second, inAngeles, the buyer had already paid more than the principal obligation, while in the instant case, the buyers (petitioners) did not pay P45,000.00 of the P120,000.00 they were obligated to pay.We find petitioners statement that there is no evidence of prejudice or damage to justify rescission in favor of respondents-spouses to be unfounded. The damage suffered by respondents-spouses is the effect of petitioners failure to fully comply with their obligation, that is, their failure to pay the remaining P45,000.00 and to update the amortizations on the mortgage loan with the NHMFC. Petitioners have in their possession the property under litigation. Having parted with their house and lot, respondents-spouses should be fully compensated for it, not only monetarily, but also as to the terms and conditions agreed upon by the parties. This did not happen in the case before us.CitingSeva v. Berwin & Co., Inc.,[47]petitioners argue that no rescission should be decreed because there is no evidence on record that respondent Fernandina Galang is ready, willing and able to comply with her own obligation to restore to them the total payments they made. They added that no allegation to that effect is contained in respondents-spouses Answer.We find this argument to be misleading.First, the facts obtaining inSevacase do not fall squarely with the case on hand. In the former, the failure of one party to perform his obligation was the fault of the other party, while in the case on hand, failure on the part of petitioners to perform their obligation was due to their own fault.Second, what is stated in the book of Justice Edgardo L. Paras is [i]t (referring to the right to rescind or resolve) can be demanded only if the plaintiff is ready, willing and able to comply with his own obligation, and the other is not. In other words, if one party has complied or fulfilled his obligation, and the other has not, then the former can exercise his right to rescind. In this case, respondents-spouses complied with their obligation when they gave the possession of the property in question to petitioners. Thus, they have the right to ask for the rescission of the Deed of Sale with Assumption of Mortgage.On the fourth assigned error, petitioners, relying on Article 1383 of the Civil Code, maintain that the Court of Appeals erred when it failed to consider that the action for rescission is subsidiary.Their reliance on Article 1383 is misplaced.The subsidiary character of the action for rescission applies to contracts enumerated in Articles 1381[48]of the Civil Code. The contract involved in the case before us is not one of those mentioned therein. The provision that applies in the case at bar is Article 1191.In the concurring opinion of Justice Jose B.L. Reyes inUniversal Food Corp. v. Court of Appeals,[49]rescission under Article 1191 was distinguished from rescission under Article 1381. Justice J.B.L. Reyes said:. . . The rescission on account of breach of stipulations is not predicated on injury to economic interests of the party plaintiff but on the breach of faith by the defendant, that violates the reciprocity between the parties. It is not a subsidiary action, and Article 1191 may be scanned without disclosing anywhere that the action for rescission thereunder is subordinated to anything other than the culpable breach of his obligations by the defendant. This rescission is a principal action retaliatory in character, it being unjust that a party be held bound to fulfill his promises when the other violates his. As expressed in the old Latin aphorism: Non servanti fidem, non est fides servanda. Hence, the reparation of damages for the breach is purely secondary.On the contrary, in the rescission by reason oflesionor economic prejudice, the cause of action is subordinated to the existence of that prejudice, because it is theraisondtreas well as the measure of the right to rescind. Hence, where the defendant makes good the damages caused, the action cannot be maintained or continued, as expressly provided in Articles 1383 and 1384. But the operation of these two articles is limited to the cases of rescission forlesionenumerated in Article 1381 of the Civil Code of the Philippines, and does not apply to cases under Article 1191.From the foregoing, it is clear that rescission (resolution in the Old Civil Code) under Article 1191 is a principal action, while rescission under Article 1383 is a subsidiary action. The former is based on breach by the other party that violates the reciprocity between the parties, while the latter is not.In the case at bar, the reciprocity between the parties was violated when petitioners failed to fully pay the balance of P45,000.00 to respondents-spouses and their failure to update their amortizations with the NHMFC.Petitioners maintain that inasmuch as respondents-spouses Galang were not granted the right to unilaterally rescind the sale under the Deed of Sale with Assumption of Mortgage, they should have first asked the court for the rescission thereof before they fully paid the outstanding balance of the mortgage loan with the NHMFC. They claim that such payment is a unilateral act of rescission which violates existing jurisprudence.InTan v. Court of Appeals,[50]this court said:. . . [T]he power to rescind obligations is implied in reciprocal ones in case one of the obligors should not comply with what is incumbent upon him is clear from a reading of the Civil Code provisions. However, it is equally settled that, in the absence of a stipulation to the contrary, this power must be invoked judicially; it cannot be exercised solely on a partys own judgment that the other has committed a breach of the obligation. Where there is nothing in the contract empowering the petitioner to rescind it without resort to the courts, the petitioners action in unilaterally terminating the contract in this case is unjustified.It is evident that the contract under consideration does not contain a provision authorizing its extrajudicial rescission in case one of the parties fails to comply with what is incumbent upon him. This being the case, respondents-spouses should have asked for judicial intervention to obtain a judicial declaration of rescission. Be that as it may, and considering that respondents-spouses Answer (with affirmative defenses) with Counterclaim seeks for the rescission of the Deed of Sale with Assumption of Mortgage, it behooves the court to settle the matter once and for all than to have the case re-litigated again on an issue already heard on the merits and which this court has already taken cognizance of. Having found that petitioners seriously breached the contract, we, therefore, declare the same is rescinded in favor of respondents-spouses.As a consequence of the rescission or, more accurately, resolution of the Deed of Sale with Assumption of Mortgage, it is the duty of the court to require the parties to surrender whatever they may have received from the other. The parties should be restored to their original situation.[51]The record shows petitioners paid respondents-spouses the amount of P75,000.00 out of the P120,000.00 agreed upon. They also made payments to NHMFC amounting to P55,312.47. As to the petitioners alleged payment to CERF Realty of P46,616.70, except for petitioner Leticia Cannus bare allegation, we find the same not to be supported by competent evidence. As a general rule, one who pleads payment has the burden of proving it.[52]However, since it has been admitted in respondents-spouses Answer that petitioners shall assume the second mortgage with CERF Realty in the amount of P35,000.00, and that Adelina Timbang, respondents-spouses very own witness, testified[53]that same has been paid, it is but proper to return this amount to petitioners. The three amounts total P165,312.47 -- the sum to be returned to petitioners.WHEREFORE, premises considered, the decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION. Spouses Gil and Fernandina Galang are hereby ordered to return the partial payments made by petitioners in the amount of P165,312.47. With costs.SO ORDERED.

G.R. No. 147695 September 13, 2007MANUEL C. PAGTALUNAN,petitioner,vs.RUFINA DELA CRUZ VDA. DE MANZANO,respondent.D E C I S I O NAZCUNA,J.:This is a petition for review oncertiorariunder Rule 45 of the Rules of Court of the Court of Appeals (CA) Decision promulgated on October 30, 2000 and its Resolution dated March 23, 2001 denying petitioners motion for reconsideration. The Decision of the CA affirmed the Decision of the Regional Trial Court (RTC) of Malolos, Bulacan, dated June 25, 1999 dismissing the case of unlawful detainer for lack of merit.The facts are as follows:On July 19, 1974, Patricio Pagtalunan (Patricio), petitioners stepfather and predecessor-in-interest, entered into a Contract to Sell with respondent, wife of Patricios former mechanic, Teodoro Manzano, whereby the former agreed to sell, and the latter to buy, a house and lot which formed half of a parcel of land, covered by Transfer Certificate of Title (TCT) No. T-10029 (now TCT No. RT59929 [T-254773]), with an area of 236 square meters. The consideration ofP17,800 was agreed to be paid in the following manner:P1,500 as downpayment upon execution of the Contract to Sell, and the balance to be paid in equal monthly installments ofP150 on or before the last day of each month until fully paid.It was also stipulated in the contract that respondent could immediately occupy the house and lot; that in case of default in the payment of any of the installments for 90 days after its due date, the contract would be automatically rescinded without need of judicial declaration, and that all payments made and all improvements done on the premises by respondent would be considered as rentals for the use and occupation of the property or payment for damages suffered, and respondent was obliged to peacefully vacate the premises and deliver the possession thereof to the vendor.Petitioner claimed that respondent paid onlyP12,950. She allegedly stopped paying after December 1979 without any justification or explanation. Moreover, in a "Kasunduan"1dated November 18, 1979, respondent borrowedP3,000 from Patricio payable in one year either in one lump sum payment or by installments, failing which the balance of the loan would be added to the principal subject of the monthly amortizations on the land.Lastly, petitioner asserted that when respondent ceased paying her installments, her status of buyer was automatically transformed to that of a lessee. Therefore, she continued to possess the property by mere tolerance of Patricio and, subsequently, of petitioner.On the other hand, respondent alleged that she paid her monthly installments religiously, until sometime in 1980 when Patricio changed his mind and offered to refund all her payments provided she would surrender the house. She refused. Patricio then started harassing her and began demolishing the house portion by portion. Respondent admitted that she failed to pay some installments after December 1979, but that she resumed paying in 1980 until her balance dwindled toP5,650. She claimed that despite several months of delay in payment, Patricio never sued for ejectment and even accepted her late payments.Respondent also averred that on September 14, 1981, she and Patricio signed an agreement (Exh. 2) whereby he consented to the suspension of respondents monthly payments until December 1981. However, even before the lapse of said period, Patricio resumed demolishing respondents house, prompting her to lodge a complaint with theBarangayCaptain who advised her that she could continue suspending payment even beyond December 31, 1981 until Patricio returned all the materials he took from her house. This Patricio failed to do until his death.Respondent did not deny that she still owed PatricioP5,650, but claimed that she did not resume paying her monthly installment because of the unlawful acts committed by Patricio, as well as the filing of the ejectment case against her. She denied having any knowledge of theKasunduanof November 18, 1979.Patricio and his wife died on September 17, 1992 and on October 17, 1994, respectively. Petitioner became their sole successor-in-interest pursuant to a waiver by the other heirs. On March 5, 1997, respondent received a letter from petitioners counsel dated February 24, 1997 demanding that she vacate the premises within five days on the ground that her possession had become unlawful. Respondent ignored the demand. ThePunong Barangayfailed to settle the dispute amicably.On April 8, 1997, petitioner filed a Complaint for unlawful detainer against respondent with the Municipal Trial Court (MTC) of Guiguinto, Bulacan praying that, after hearing, judgment be rendered ordering respondent to immediately vacate the subject property and surrender it to petitioner; forfeiting the amount ofP12,950 in favor of petitioner as rentals; ordering respondent to pay petitioner the amount ofP3,000 under theKasunduanand the amount ofP500 per month from January 1980 until she vacates the property, and to pay petitioner attorneys fees and the costs.On December 22, 1998, the MTC rendered a decision in favor of petitioner. It stated that although the Contract to Sell provides for a rescission of the agreement upon failure of the vendee to pay any installment, what the contract actually allows is properly termed a resolution under Art. 1191 of the Civil Code.The MTC held that respondents failure to pay not a few installments caused the resolution or termination of the Contract to Sell. The last payment made by respondent was on January 9, 1980 (Exh. 71). Thereafter, respondents right of possessionipso factoceased to be a legal right, and became possession by mere tolerance of Patricio and his successors-in-interest. Said tolerance ceased upon demand on respondent to vacate the property.The dispositive portion of the MTC Decision reads:Wherefore, all the foregoing considered, judgment is hereby rendered, ordering the defendant:a. to vacate the property covered by Transfer Certificate of Title No. T-10029 of the Register of Deeds of Bulacan (now TCT No. RT-59929 of the Register of Deeds of Bulacan), and to surrender possession thereof to the plaintiff;b. to pay the plaintiff the amount ofP113,500 representing rentals from January 1980 to the present;c. to pay the plaintiff such amount of rentals, atP500/month, that may become due after the date of judgment, until she finally vacates the subject property;d. to pay to the plaintiff the amount ofP25,000 as attorneys fees.SO ORDERED.2On appeal, the RTC of Malolos, Bulacan, in a Decision dated June 25, 1999, reversed the decision of the MTC and dismissed the case for lack of merit. According to the RTC, the agreement could not be automatically rescinded since there was delivery to the buyer. A judicial determination of rescission must be secured by petitioner as a condition precedent to convert the possessionde factoof respondent from lawful to unlawful.The dispositive portion of the RTC Decision states:WHEREFORE, judgment is hereby rendered reversing the decision of the Municipal Trial Court of Guiguinto, Bulacan and the ejectment case instead be dismissed for lack of merit.3The motion for reconsideration and motion for execution filed by petitioner were denied by the RTC for lack of merit in an Order dated August 10, 1999.Thereafter, petitioner filed a petition for review with the CA.In a Decision promulgated on October 30, 2000, the CA denied the petition and affirmed the Decision of the RTC. The dispositive portion of the Decision reads:WHEREFORE, the petition for review on certiorari is Denied. The assailed Decision of the Regional Trial Court of Malolos, Bulacan dated 25 June 1999 and its Order dated 10 August 1999 are hereby AFFIRMED.SO ORDERED.4The CA found that the parties, as well as the MTC and RTC failed to advert to and to apply Republic Act (R.A.) No. 6552, more commonly referred to as the Maceda Law, which is a special law enacted in 1972 to protect buyers of real estate on installment payments against onerous and oppressive conditions.The CA held that the Contract to Sell was not validly cancelled or rescinded under Sec. 3 (b) of R.A. No. 6552, and recognized respondents right to continue occupying unmolested the property subject of the contract to sell.The CA denied petitioners motion for reconsideration in a Resolution dated March 23, 2001.Hence, this petition for review oncertiorari.Petitioner contends that:A. Respondent Dela Cruz must bear the consequences of her deliberate withholding of, and refusal to pay, the monthly payment. The Court of Appeals erred in allowing Dela Cruz who acted in bad faith from benefiting under the Maceda Law.B. The Court of Appeals erred in resolving the issue on the applicability of the Maceda Law, which issue was not raised in the proceedingsa quo.C. Assumingarguendothat the RTC was correct in ruling that the MTC has no jurisdiction over a rescission case, the Court of Appeals erred in not remanding the case to the RTC for trial.5Petitioner submits that the Maceda Law supports and recognizes the right of vendors of real estate to cancel the sale outside of court, without need for a judicial declaration of rescission, citingLuzon Brokerage Co., Inc., v. Maritime Building Co., Inc.6Petitioner contends that respondent also had more than the grace periods provided under the Maceda Law within which to pay. Under Sec. 37of the said law, a buyer who has paid at least two years of installments has a grace period of one month for every year of installment paid. Based on the amount ofP12,950 which respondent had already paid, she is entitled to a grace period of six months within which to pay her unpaid installments after December, 1979. Respondent was given more than six months from January 1980 within which to settle her unpaid installments, but she failed to do so. Petitioners demand to vacate was sent to respondent in February 1997.There is nothing in the Maceda Law, petitioner asserts, which gives the buyer a right to pay arrearages after the grace periods have lapsed, in the event of an invalid demand for rescission. The Maceda Law only provides that actual cancellation shall take place after 30 days from receipt of the notice of cancellation or demand for rescission and upon full payment of the cash surrender value to the buyer.Petitioner contends that his demand letter dated February 24, 1997 should be considered the notice of cancellation since the demand letter informed respondent that she had "long ceased to have any right to possess the premises in question due to [her] failure to pay without justifiable cause." In support of his contention, he citedLayug v. Intermediate Appellate Court8which held that "the additional formality of a demand on [the sellers] part for rescission by notarial act would appear, in the premises, to be merely circuitous and consequently superfluous." He stated that inLayug, the seller already made a written demand upon the buyer.In addition, petitioner asserts that whatever cash surrender value respondent is entitled to have been applied and must be applied to rentals for her use of the house and lot after December, 1979 or after she stopped payment of her installments.Petitioner argues that assuming Patricio accepted respondents delayed installments in 1981, such act cannot prevent the cancellation of the Contract to Sell. Installments after 1981 were still unpaid and the applicable grace periods under the Maceda Law on the unpaid installments have long lapsed. Respondent cannot be allowed to hide behind the Maceda Law. She acted with bad faith and must bear the consequences of her deliberate withholding of and refusal to make the monthly payments.Petitioner also contends that the applicability of the Maceda Law was never raised in the proceedings below; hence, it should not have been applied by the CA in resolving the case.The Court is not persuaded.The CA correctly ruled that R.A No. 6552, which governs sales of real estate on installment, is applicable in the resolution of this case.This case originated as an action for unlawful detainer. Respondent is alleged to be illegally withholding possession of the subject property after the termination of the Contract to Sell between Patricio and respondent. It is, therefore, incumbent upon petitioner to prove that the Contract to Sell had been cancelled in accordance with R.A. No. 6552.The pertinent provision of R.A. No. 6552 reads:Sec. 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.(b)If the contract is cancelled,theseller shall refund to the buyerthe cash surrender value of the payments on the propertyequivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made:Provided, Thatthe actual cancellation of the contract shall take place after thirty days from receipt by the buyer of thenotice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.9R.A. No. 6552, otherwise known as the "Realty Installment Buyer Protection Act," recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.10The Court agrees with petitioner that the cancellation of the Contract to Sell may be done outside the court particularly when the buyer agrees to such cancellation.However, the cancellation of the contract by the seller must be in accordance with Sec. 3 (b) of R.A. No. 6552, which requires a notarial act of rescission and the refund to the buyer of the full payment of the cash surrender value of the payments on the property. Actual cancellation of the contract takes place after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.Based on the records of the case, the Contract to Sell was not validly cancelled or rescinded under Sec. 3 (b) of R.A. No. 6552.First, Patricio, the vendor in the Contract to Sell, died on September 17, 1992 without canceling the Contract to Sell.Second, petitioner also failed to cancel the Contract to Sell in accordance with law.Petitioner contends that he has complied with the requirements of cancellation under Sec. 3 (b) of R.A. No. 6552. He asserts that his demand letter dated February 24, 1997 should be considered as the notice of cancellation or demand for rescission by notarial act and that the cash surrender value of the payments on the property has been applied to rentals for the use of the house and lot after respondent stopped payment after January 1980.The Court, however, finds that the letter11dated February 24, 1997, which was written by petitioners counsel, merely made formal demand upon respondent to vacate the premises in question within five days from receipt thereof since she had "long ceased to have any right to possess the premises x x x due to [her] failure to pay without justifiable cause the installment payments x x x."Clearly, the demand letter is not the same as the notice of cancellation or demand for rescissionby a notarial actrequired by R.A No. 6552. Petitioner cannot rely onLayug v. Intermediate Appellate Court12to support his contention that the demand letter was sufficient compliance.Layugheld that "the additional formality of a demand on [the sellers] part for rescission by notarial act would appear, in the premises, to be merely circuitous and consequently superfluous" since the seller therein filed an action forannulment of contract,which is a kindred concept of rescission by notarial act.13Evidently, the case of unlawful detainer filed by petitioner does not exempt him from complying with the said requirement.In addition, Sec. 3 (b) of R.A. No. 6552 requires refund of the cash surrender value of the payments on the property to the buyer before cancellation of the contract. The provision does not provide a different requirement for contracts to sell which allow possession of the property by the buyer upon execution of the contract like the instant case. Hence, petitioner cannot insist on compliance with the requirement by assuming that the cash surrender value payable to the buyer had been applied to rentals of the property after respondent failed to pay the installments due.There being no valid cancellation of the Contract to Sell, the CA correctly recognized respondents right to continue occupying the property subject of the Contract to Sell and affirmed the dismissal of the unlawful detainer case by the RTC.The Court notes that this case has been pending for more than ten years. Both parties prayed for other reliefs that are just and equitable under the premises. Hence, the rights of the parties over the subject property shall be resolved to finally dispose of that issue in this case.Considering that the Contract to Sell was not cancelled by the vendor, Patricio, during his lifetime or by petitioner in accordance with R.A. No. 6552 when petitioner filed this case of unlawful detainer after 22 years of continuous possession of the property by respondent who has paid the substantial amount ofP12,300 out of the purchase price ofP17,800, the Court agrees with the CA that it is only right and just to allow respondent to pay her arrears and settle the balance of the purchase price.For respondents delay in the payment of the installments, the Court, in its discretion, and applying Article 220914of the Civil Code, may award interest at the rate of 6% per annum15on the unpaid balance considering that there is no stipulation in the Contract to Sell for such interest. For purposes of computing the legal interest, the reckoning period should be the filing of the complaint for unlawful detainer on April 8, 1997.Based on respondents evidence16of payments made, the MTC found that respondent paid a total ofP12,300 out of the purchase price ofP17,800. Hence, respondent still has a balance ofP5,500, plus legal interest at the rate of 6% per annum on the unpaid balance starting April 8, 1997.The third issue is disregarded since petitioner assails an inexistent ruling of the RTC on the lack of jurisdiction of the MTC over a rescission case when the instant case he filed is for unlawful detainer.WHEREFORE, the Decision of the Court of Appeals dated October 30, 2000 sustaining the dismissal of the unlawful detainer case by the RTC isAFFIRMEDwith the followingMODIFICATIONS:1. Respondent Rufina Dela Cruz Vda. de Manzano shall pay petitioner Manuel C. Pagtalunan the balance of the purchase price in the amount of Five Thousand Five Hundred Pesos (P5,500) plus interest at 6% per annum from April 8, 1997 up to the finality of this judgment, and thereafter, at the rate of 12% per annum;2. Upon payment, petitioner Manuel C. Pagtalunan shall execute a Deed of Absolute Sale of the subject property and deliver the certificate of title in favor of respondent Rufina Dela Cruz Vda. de Manzano; and3. In case of failure to pay within 60 days from finality of this Decision, respondent Rufina Dela Cruz Vda. de Manzano shall immediately vacate the premises without need of further demand, and the downpayment and installment payments ofP12,300 paid by her shall constitute rental for the subject property.No costs.SO ORDERED.

SECOND DIVISIONG.R. No. 179965 February 20, 2013NICOLAS P. DIEGO,Petitioner,vs.RODOLFO P. DIEGO and EDUARDO P. DIEGO,Respondents.D E C I S I O NDEL CASTILLO,J.:It is settled jurisprudence, to the point of being elementary, that an agreement which stipulates that the seller shall execute a deed of sale only upon or after tl1ll payment of the purchase price is acontract to sell,not a contract of sale. InReyes v. Tuparan,1this Court declared in categorical terms that"[w]here the vendor promises to execute a deed of absolute sale upon the completion by the vendee of the payment of the price, the contract is only a contract to sell. The aforecited stipulation shows that the vendors reserved title to the subject property until full payment of the purchase price."In this case, it is not disputed as in tact both parties agreed that the deed of sale shall only be executed upon payment of the remaining balance of the purchase price. Thus, pursuant to the above stated jurisprudence, we similarly declare that the transaction entered into by the parties is a contract to sell.Before us is a Petition for Review onCertiorari2questioning the June 29, 2007 Decision3and the October 3, 2007 Resolution4of the Court of Appeals (CA) in CA-G.R. CV No. 86512, which affirmed the April 19, 2005 Decision5of the Regional Trial Court (RTC), Branch 40, of Dagupan City in Civil Case No. 99-02971-D.Factual AntecedentsIn 1993, petitioner Nicolas P. Diego (Nicolas) and his brother Rodolfo, respondent herein, entered into an oral contract to sell covering Nicolass share, fixed atP500,000.00, as co-owner of the familys Diego Building situated in Dagupan City. Rodolfo made a downpayment ofP250,000.00. It was agreed that the deed of sale shall be executed upon payment of the remaining balance ofP250,000.00. However, Rodolfo failed to pay the remaining balance.Meanwhile, the building was leased out to third parties, but Nicolass share in the rents were not remitted to him by herein respondent Eduardo, another brother of Nicolas and designated administrator of the Diego Building. Instead, Eduardo gave Nicolass monthly share in the rents to Rodolfo. Despite demands and protestations by Nicolas, Rodolfo and Eduardo failed to render an accounting and remit his share in the rents and fruits of the building, and Eduardo continued to hand them over to Rodolfo.Thus, on May 17, 1999, Nicolas filed a Complaint6against Rodolfo and Eduardo before the RTC of Dagupan City and docketed as Civil Case No. 99-02971-D. Nicolas prayed that Eduardo be ordered to render an accounting of all the transactions over the Diego Building; that Eduardo and Rodolfo be ordered to deliver to Nicolas his share in the rents; and that Eduardo and Rodolfo be held solidarily liable for attorneys fees and litigation expenses.Rodolfo and Eduardo filed their Answer with Counterclaim7for damages and attorneys fees. They argued that Nicolas had no more claim in the rents in the Diego Building since he had already sold his share to Rodolfo. Rodolfo admitted having remitted onlyP250,000.00 to Nicolas. He asserted that he would pay the balance of the purchase price to Nicolas only after the latter shall have executed a deed of absolute sale.Ruling of the Regional Trial CourtAfter trial on the merits, or on April 19, 2005, the trial court rendered its Decision8dismissing Civil Case No. 99-02971-D for lack of merit and ordering Nicolas to execute a deed of absolute sale in favor of Rodolfo upon payment by the latter of theP250,000.00 balance of the agreed purchase price. It made the following interesting pronouncement:It is undisputed that plaintiff (Nicolas) is one of the co-owners of the Diego Building, x x x. As a co-owner, he is entitled to [his] share in the rentals of the said building. However, plaintiff [had] already sold his share to defendant Rodolfo Diego in the amount ofP500,000.00 and in fact, [had] already received a partial payment in the purchase price in the amount ofP250,000.00.Defendant Eduardo Diego testified that as per agreement, verbal, of the plaintiff and defendant Rodolfo Diego, the remaining balance ofP250,000.00 will be paid upon the execution of the Deed of Absolute Sale.It was in the year 1997 when plaintiff was being required by defendant Eduardo Diego to sign the Deed of Absolute Sale. Clearly, defendant Rodolfo Diego was not yet in default as the plaintiff claims which cause [sic] him to refuse to sign [sic] document. The contract of sale was already perfected as early as the year 1993 when plaintiff received the partial payment, hence, he cannot unilaterally revoke or rescind the same. From then on, plaintiff has, therefore, ceased to be a co-owner of the building and is no longer entitled to the fruits of the Diego Building.Equity and fairness dictate that defendant [sic] has to execute the necessary document regarding the sale of his share to defendant Rodolfo Diego. Correspondingly, defendant Rodolfo Diego has to perform his obligation as per their verbal agreement by paying the remaining balance ofP250,000.00.9To summarize, the trial court ruled that as early as 1993, Nicolas was no longer entitled to the fruits of his aliquot share in the Diego Building because he had "ceased to be a co-owner" thereof. The trial court held that when Nicolas received theP250,000.00 downpayment, a "contract of sale" was perfected. Consequently, Nicolas is obligated to convey such share to Rodolfo, without right of rescission. Finally, the trial court held that theP250,000.00 balance from Rodolfo will only be due and demandable when Nicolas executes an absolute deed of sale.Ruling of the Court of AppealsNicolas appealed to the CA which sustained the trial courts Decisionin toto. The CA held that since there was a perfected contract of sale between Nicolas and Rodolfo, the latter may compel the former to execute the proper sale document. Besides, Nicolass insistence that he has since rescinded their agreement in 1997 proved the existence of a perfected sale. It added that Nicolas could not validly rescind the contract because: "1) Rodolfo ha[d] already made a partial payment; 2) Nicolas ha[d] already partially performed his part regarding the contract; and 3) Rodolfo opposes the rescission."10The CA then proceeded to rule that since no period was stipulated within which Rodolfo shall deliver the balance of the purchase price, it was incumbent upon Nicolas to have filed a civil case to fix the same. But because he failed to do so, Rodolfo cannot be considered to be in delay or default.Finally, the CA made another interesting pronouncement, that by virtue of the agreement Nicolas entered into with Rodolfo, he had already transferred his ownership over the subject property and as a consequence, Rodolfo is legally entitled to collect the fruits thereof in the form of rentals. Nicolas remaining right is to demand payment of the balance of the purchase price, provided that he first executes a deed of absolute sale in favor of Rodolfo.Nicolas moved for reconsideration but the same was denied by the CA in its Resolution dated October 3, 2007.Hence, this Petition.IssuesThe Petition raises the following errors that must be rectified:ITHE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN PETITIONER NICOLAS DIEGO AND RESPONDENT RODOLFO DIEGO OVER NICOLASS SHARE OF THE BUILDING BECAUSE THE SUSPENSIVE CONDITION HAS NOT YET BEEN FULFILLED.IITHE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE CONTRACT OF SALE BETWEEN PETITIONER AND RESPONDENT RODOLFO DIEGO REMAINS LEGALLY BINDING AND IS NOT RESCINDED GIVING MISPLACED RELIANCE ON PETITIONER NICOLAS STATEMENT THAT THE SALE HAS NOT YET BEEN REVOKED.IIITHE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER NICOLAS DIEGO ACTED LEGALLY AND CORRECTLY WHEN HE UNILATERALLY RESCINDED AND REVOKED HIS AGREEMENT OF SALE WITH RESPONDENT RODOLFO DIEGO CONSIDERING RODOLFOS MATERIAL, SUBSTANTIAL BREACH OF THE CONTRACT.IVTHE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAS NO MORE RIGHTS OVER HIS SHARE IN THE BUILDING, DESPITE THE FACT THAT THERE WAS AS YET NO PERFECTED CONTRACT OF SALE BETWEEN PETITIONER NICOLAS DIEGO AND RODOLFO DIEGO AND THERE WAS YET NO TRANSFER OF OWNERSHIP OF PETITIONERS SHARE TO RODOLFO DUE TO THE NON-FULFILLMENT BY RODOLFO OF THE SUSPENSIVE CONDITION UNDER THE CONTRACT.VTHE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENT RODOLFO HAS UNJUSTLY ENRICHED HIMSELF AT THE EXPENSE OF PETITIONER BECAUSE DESPITE NOT HAVING PAID THE BALANCE OF THE PURCHASE PRICE OF THE SALE, THAT RODOLFO HAS NOT YET ACQUIRED OWNERSHIP OVER THE SHARE OF PETITIONER NICOLAS, HE HAS ALREADY BEEN APPROPRIATING FOR HIMSELF AND FOR HIS PERSONAL BENEFIT THE SHARE OF THE INCOME OF THE BUILDING AND THE PORTION OF THE BUILDING ITSELF WHICH WAS DUE TO AND OWNED BY PETITIONER NICOLAS.VITHE HONORABLE COURT OF APPEALS ERRED IN NOT AWARDING ACTUAL DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES TO THE PETITIONER DESPITE THE FACT THAT PETITIONERS RIGHTS HAD BEEN WANTONLY VIOLATED BY THE RESPONDENTS.11Petitioners ArgumentsIn his Petition, the Supplement12thereon, and Reply,13Nicolas argues that, contrary to what the CA found, there was no perfected contract of sale even though Rodolfo had partially paid the price; that in the absence of the third element in a sale contract the price there could be no perfected sale; that failing to pay the required price in full, Nicolas had the right to rescind the agreement as an unpaid seller.Nicolas likewise takes exception to the CA finding that Rodolfo was not in default or delay in the payment of the agreed balance for his (Nicolass) failure to file a case to fix the period within which payment of the balance should be made. He believes that Rodolfos failure to pay within a reasonable time was a substantial and material breach of the agreement which gave him the right to unilaterally and extrajudicially rescind the agreement and be discharged of his obligations as seller; and that his repeated written demands upon Rodolfo to pay the balance granted him such rights.Nicolas further claims that based on his agreement with Rodolfo, there was to be no transfer of title over his share in the building until Rodolfo has effected full payment of the purchase price, thus, giving no right to the latter to collect his share in the rentals.Finally, Nicolas bewails the CAs failure to award damages, attorneys fees and litigation expenses for what he believes is a case of unjust enrichment at his expense.Respondents ArgumentsApart from echoing the RTC and CA pronouncements, respondents accuse the petitioner of "cheating" them, claiming that after the latter received theP250,000.00 downpayment, he "vanished like thin air and hibernated in the USA, he being an American citizen,"14only to come back claiming that the said amount was a mere loan.They add that the Petition is a mere rehash and reiteration of the petitioners arguments below, which are deemed to have been sufficiently passed upon and debunked by the appellate court.Our RulingThe Court finds merit in the Petition.The contract entered into by Nicolas and Rodolfo was a contract to sell.a) The stipulation to execute a deed of sale upon full payment of the purchase price is a unique and distinguishing characteristic of a contract to sell. It also shows that the vendor reserved title to the property until full payment.There is no dispute that in 1993, Rodolfo agreed to buy Nicolass share in the Diego Building for the price ofP500,000.00. There is also no dispute that of the total purchase price, Rodolfo paid, and Nicolas received,P250,000.00. Significantly, it is also not disputed that the parties agreed that the remaining amount ofP250,000.00 would be paid after Nicolas shall have executed a deed of sale.This stipulation,i.e., to execute a deed of absolute sale upon full payment of the purchase price, is a unique and distinguishing characteristic of acontract to sell. InReyes v. Tuparan,15this Court ruled that a stipulation in the contract,"[w]here the vendor promises to execute a deed of absolute sale upon the completion by the vendee of the payment of the price,"indicates that the parties entered into acontract to sell. According to this Court, this particular provision is tantamount to a reservation of ownership on the part of the vendor. Explicitly stated, the Court ruled that the agreement to execute a deed of sale upon full payment of the purchase price"shows that the vendors reserved title to the subject property until full payment of the purchase price."16InTan v. Benolirao,17this Court, speaking throughJustice Brion, ruled that the parties entered into acontract to sellas revealed by the following stipulation:d) That in case, BUYER has complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale;18The Court further held that"[j]urisprudence has established that where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell."19b) The acknowledgement receipt signed by Nicolas as well as the contemporaneous acts of the parties show that they agreed on a contract to sell, not of sale. The absence of a formal deed of conveyance is indicative of a contract to sell.InSan Lorenzo Development Corporation v. Court of Appeals,20the facts show that spouses Miguel and Pacita Lu (Lu) sold a certain parcel of land to Pablo Babasanta (Pablo). After several payments, Pablo wrote Lu demanding "the execution of a final deed of sale in his favor so that he could effect full payment of the purchase price."21To prove his allegation that there was a perfected contract of sale between him and Lu, Pablo presented a receipt signed by Lu acknowledging receipt ofP50,000.00 as partial payment.22However, when the case reached this Court, it was ruled that the transaction entered into by Pablo and Lu was only acontract to sell, not a contract of sale. The Court held thus:The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos (P50,000.00) from Babasanta as partial payment of 3.6 hectares of farm lot situated in Sta. Rosa, Laguna. While there is no stipulation that the seller reserves the ownership of the property until full payment of the price which is a distinguishing feature of a contract to sell, the subsequent acts of the parties convince us thatthe Spouses Lu never intended to transfer ownership to Babasanta except upon full payment of the purchase price.Babasantas letter dated 22 May 1989 was quite telling. He stated therein that despite his repeated requests for the execution of the final deed of sale in his favor so that he could effect full payment of the price, Pacita Lu allegedly refused to do so.In effect, Babasanta himself recognized that ownership of the property would not be transferred to him until such time as he shall have effected full payment of the price. Moreover, had the sellers intended to transfer title, they could have easily executed the document of sale in its required form simultaneously with their acceptance of the partial payment, but they did not. Doubtlessly, the receipt signed by Pacita Lu should legally be considered as a perfected contract to sell.23In the instant case, records show that Nicolas signed a mere receipt24acknowledging partial payment ofP250,000.00 from Rodolfo. It states:July 8, 1993Received the amount of [P250,000.00] for 1 share of Diego Building as partial payment for Nicolas Diego.(signed)Nicolas Diego25As we ruled inSan Lorenzo Development Corporation v. Court of Appeals,26the parties could have executed a document of sale upon receipt of the partial payment but they did not. This is thus an indication that Nicolas did not intend to immediately transfer title over his share but only upon full payment of the purchase price. Having thus reserved title over the property, the contract entered into by Nicolas is a contract to sell. In addition, Eduardo admitted that he and Rodolfo repeatedly asked Nicolas to sign the deed of sale27but the latter refused because he was not yet paid the full amount. As we have ruled inSan Lorenzo Development Corporation v. Court of Appeals,28the fact that Eduardo and Rodolfo asked Nicolas to execute a deed of sale is a clear recognition on their part that the ownership over the property still remains with Nicolas. In fine, the totality of the parties acts convinces us that Nicolas never intended to transfer the ownership over his share in the Diego Building until the full payment of the purchase price. Without doubt, the transaction agreed upon by the parties was a contract to sell, not of sale.InChua v. Court of Appeals,29the parties reached an impasse when the seller wanted to be first paid the consideration before a new transfer certificate of title (TCT) is issued in the name of the buyer. Contrarily, the buyer wanted to secure a new TCT in his name before paying the full amount. Their agreement was embodied in a receipt containing the following terms: "(1) the balance ofP10,215,000.00 is payable on or before 15 July 1989; (2) the capital gains tax is for the account of x x x; and (3) if [the buyer] fails to pay the balance x x x the [seller] has the right to forfeit the earnest money x x x."30The case eventually reached this Court. In resolving the impasse, the Court, speaking throughJustice Carpio, held that "[a] perusal of the Receipt shows that the true agreement between the parties was a contract to sell."31The Court noted that "the agreement x x x was embodied in a receipt rather than in a deed of sale, ownership not having passed between them."32The Court thus concluded that"[t]he absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price."33Thus, the "true agreement between the parties wasa contract to sell."34In the instant case, the parties were similarly embroiled in an impasse. The parties agreement was likewise embodied only in a receipt. Also, Nicolas did not want to sign the deed of sale unless he is fully paid. On the other hand, Rodolfo did not want to pay unless a deed of sale is duly executed in his favor. We thus say, pursuant to our ruling inChua v. Court of Appeals35that the agreement between Nicolas and Rodolfo is a contract to sell.This Court cannot subscribe to the appellate courts view that Nicolas shouldfirstexecute a deed of absolute sale in favor of Rodolfo, before the latter can be compelled to pay the balance of the price. This is patently ridiculous, and goes against every rule in the book. This pronouncement virtually places the prospective seller in a contract to sell at the mercy of the prospective buyer, and sustaining this point of view would place all contracts to sell in jeopardy of being rendered ineffective by the act of the prospective buyers, who naturally would demand that the deeds of absolute sale be first executed before they pay the balance of the price. Surely, no prospective seller would accommodate.In fine,"the need to execute a deed of absolute sale upon completion of payment of the price generally indicates that it is a contract to sell, as it implies the reservation of title in the vendor until the vendee has completed the payment of the price."36In addition, "[a] stipulation reserving ownership in the vendor until full payment of the price is x x x typical in a contract to sell."37Thus, contrary to the pronouncements of the trial and appellate courts, the parties to this case only entered into a contract to sell; as such title cannot legally pass to Rodolfo until he makes full payment of the agreed purchase price.c) Nicolas did not surrender or deliver title or possession to Rodolfo.Moreover, there could not even be a surrender or delivery of title or possession to the prospective buyer Rodolfo. This was made clear by the nature of the agreement, by Nicolass repeated demands for the return of all rents unlawfully and unjustly remitted to Rodolfo by Eduardo, and by Rodolfo and Eduardos repeated demands for Nicolas to execute a deed of sale which, as we said before, is a recognition on their part that ownership over the subject property still remains with Nicolas.Significantly, when Eduardo testified, he claimed to be knowledgeable about the terms and conditions of the transaction between Nicolas and Rodolfo. However, aside from stating that out of the total consideration ofP500,000.00, the amount ofP250,000.00 had already been paid while the remainingP250,000.00 would be paid after the execution of the Deed of Sale, he never testified that there was a stipulation as regards delivery of title or possession.38It is also quite understandable why Nicolas belatedly demanded the payment of the rentals. Records show that the structural integrity of the Diego Building was severely compromised when an earthquake struck Dagupan City in 1990.39In order to rehabilitate the building, the co-owners obtained a loan from a bank.40Starting May 1994, the property was leased to third parties and the rentals received were used to pay off the loan.41It was only in 1996, or after payment of the loan that the co-owners started receiving their share in the rentals.42During this time, Nicolas was in the USA but immediately upon his return, he demanded for the payment of his share in the rentals which Eduardo remitted to Rodolfo. Failing which, he filed the instant Complaint. To us, this bolsters our findings that Nicolas did not intend to immediately transfer title over the property.It must be stressed that it is anathema in a contract to sell that the prospective seller should deliver title to the property to the prospective buyer pending the latters payment of the price in full. It certainly is absurd to assume that in the absence of stipulation, a buyer under a contract to sell is granted ownership of the property even when he has not paid the seller in full. If this were the case, then prospective sellers in a contract to sell would in all likelihood not be paid the balance of the price.Thisponentehas had occasion to rule that "[a] contract to sell is one where the prospective seller reserves the transfer of title to the prospective buyer until the happening of an event, such as full payment of the purchase price. What the seller obliges himself to do is to sell the subject property only when the entire amount of the purchase price has already been delivered to him. In other words, the full payment of the purchase price partakes of a suspensive condition, the nonfulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. It does not, by itself, transfer ownership to the buyer."43The contract to sell is terminated or cancelled.Having established that the transaction was a contract to sell, what happens now to the parties agreement?The remedy of rescission is not available in contracts to sell.44As explained inSpouses Santos v. Court of Appeals:45In view of our finding in the present case that the agreement between the parties is a contract to sell, it follows that the appellate court erred when it decreed that a judicial rescission of said agreement was necessary. This is because there was no rescission to speak of in the first place. As we earlier pointed out, in a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase price is a positive suspensive condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. This is entirely different from the situation in a contract of sale, where non-payment of the price is a negative resolutory condition. The effects in law are not identical. In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside. In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price. If the vendor should eject the vendee for failure to meet the condition precedent, he isenforcing the contract and not rescinding it. When the petitioners in the instant case repossessed the disputed house and lot for failure of private respondents to pay the purchase price in full, they were merely enforcing the contract and not rescinding it. As petitioners correctly point out, the Court of Appeals erred when it ruled that petitioners should have judicially rescinded the contract pursuant to Articles 1592 and 1191 of the Civil Code. Article 1592 speaks of non-payment of the purchase price as a resolutory condition. It does not apply to a contract to sell. As to Article 1191, it is subordinated to the provisions of Article 1592 when applied to sales of immovable property. Neither provision is applicable in the present case.46Similarly, we held inChua v. Court of Appeals47that "Article 1592 of the Civil Code permits the buyer to pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by notarial act. However, Article 1592 does not apply to a contract to sell where the seller reserves the ownership until full payment of the price,"48as in this case.1wphi1Applying the above jurisprudence, we hold that when Rodolfo failed to fully pay the purchase price, the contract to sell was deemed terminated or cancelled.49As we have held inChua v. Court of Appeals,50"[s]ince the agreement x x x is a mere contract to sell, the full payment of the purchase price partakes of a suspensive condition.The non-fulfillment of the condition prevents the obligation to sell from arising and ownership is retained by the seller without further remedies by the buyer." Similarly, we held inReyes v. Tuparan51that "petitioners obligation to sell the subject properties becomes demandable only upon the happening of the positive suspensive condition, which is the respondents full payment of the purchase price.Without respondents full payment, there can be no breach of contract to speak of because petitioner has no obligation yet to turn over the title.Respondents failure to pay in full the purchase price in full is not the breach of contract contemplated under Article 1191 of the New Civil Code but rather just an event that prevents the petitioner from being bound to convey title to respondent." Otherwise stated, Rodolfo has no right to compel Nicolas to transfer ownership to him because he failed to pay in full the purchase price. Correlatively, Nicolas has no obligation to transfer his ownership over his share in the Diego Building to Rodolfo.52Thus, it was erroneous for the CA to rule that Nicolas should have filed a case to fix the period for Rodolfos payment of the balance of the purchase price. It was not Nicolass obligation to compel Rodolfo to pay the balance; it was Rodolfos duty to remit it.It would appear that after Nicolas refused to sign the deed as there was yet no full payment, Rodolfo and Eduardo hired the services of the Daroya Accounting Office "for the purpose of estimating the amount to which [Nicolas] still owes [Rodolfo] as a consequence of the unconsummated verbal agreement regarding the formers share in the co-ownership of [Diego Building] in favor of the latter."53According to the accountants report, after Nicolas revoked his agreement with Rodolfo due to non-payment, the downpayment ofP250,000.00 was considered a loan of Nicolas from Rodolfo.54The accountant opined that theP250,000.00 should earn interest at 18%.55Nicolas however objected as regards the imposition of interest as it was not previously agreed upon. Notably, the contents of the accountants report were not disputed or rebutted by the respondents. In fact, it was stated therein that "[a]ll the bases and assumptions made particularly in the fixing of the applicable rate of interest have been discussed with [Eduardo]."56We find it irrelevant and immaterial that Nicolas described the termination or cancellation of his agreement with Rodolfo as one of rescission. Being a layman, he is understandably not adept in legal terms and their implications. Besides, this Court should not be held captive or bound by the conclusion reached by the parties. The proper characterization of an action should be based on what the law says it to be, not by what a party believed it to be. "A contract is what the law defines it to be x x x and not what the contracting parties call it."57On the other hand, the respondents additional submission that Nicolas cheated them by "vanishing and hibernating" in the USA after receiving RodolfosP250,000.00 downpayment, only to come back later and claim that the amount he received was a mere loan cannot be believed. How the respondents could have been cheated or disadvantaged by Nicolass leaving is beyond comprehension. If there was anybody who benefited from Nicolass perceived "hibernation", it was the respondents, for they certainly had free rein over Nicolass interest in the Diego Building. Rodolfo put off payment of the balance of the price, yet, with the aid of Eduardo, collected and appropriated for himself the rents which belonged to Nicolas.Eduardo is solidarily liable with Rodolfo as regards the share of Nicolas in the rents.For his complicity, bad faith and abuse of authority as the Diego Building administrator, Eduardo must be held solidarily liable with Rodolfo for all that Nicolas should be entitled to from 1993 up to the present, or in respect of actual damages suffered in relation to his interest in the Diego Building. Eduardo was the primary cause of Nicolass loss, being directly responsible for making and causing the wrongful payments to Rodolfo, who received them under obligation to return them to Nicolas, the true recipient.1wphi1As such, Eduardo should be principally responsible to Nicolas as well. Suffice it to state that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith; and every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.58Attorneys fees and other costs."Although attorneys fees are not allowed in the absence of stipulation, the court can award the same when the defendants act or omission has compelled the plaintiff to incur expenses to protect his interest or where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim."59In the instant case, it is beyond cavil that petitioner was constrained to file the instant case to protect his interest because of respondents unreasonable and unjustified refusal to render an accounting and to remit to the petitioner his rightful share in rents and fruits in the Diego Building. Thus, we deem it proper to award to petitioner attorneys fees in the amount ofP50,000.00,60as well as litigation expenses in the amount ofP20,000.00 and the sum ofP1,000.00 for each court appearance by his lawyer or lawyers, as prayed for.WHEREFORE, premises considered, the Petition isGRANTED. The June 29, 2007 Decision and October 3, 2007 Resolution of the Court of Appeals in CA-G.R. CV No. 86512, and the April 19, 2005 Decision of the Dagupan City Regional Trial Court, Branch 40 in Civil Case No. 99-02971-D, are herebyANNULLED and SET ASIDE.The Court further decrees the following:1. The oral contract to sell between petitioner Nicolas P. Diego and respondent Rodolfo P. Diego isDECLAREDterminated/cancelled;2. Respondents Rodolfo P. Diego and Eduardo P. Diego areORDEREDto surrender possession and control, as the case may be, of Nicolas P. Diegos share in the Diego Building. Respondents are further commanded to return or surrender to the petitioner the documents of title, receipts, papers, contracts, and all other documents in any form or manner pertaining to the latters share in the building, which are deemed to be in their unauthorized and illegal possession;3. Respondents Rodolfo P. Diego and Eduardo P. Diego areORDEREDto immediately render an accounting of all the transactions, from the period beginning 1993 up to the present, pertaining to Nicolas P. Diegos share in the Diego Building, and thereafter commanded to jointly and severally remit to the petitioner all rents, monies, payments and benefits of whatever kind or nature pertaining thereto, which are hereby deemed received by them during the said period, and made to them or are due, demandable and forthcoming during the said period and from the date of this Decision, with legal interest from the filing of the Complaint;4. Respondents Rodolfo P. Diego and Eduardo P. Diego areORDERED, immediately and without further delay upon receipt of this Decision, to solidarily pay the petitioner attorneys fees in the amount ofP50,000.00; litigation expenses in the amount ofP20,000.00 and the sum ofP1,000.00 per counsel for each court appearance by his lawyer or lawyers;5. The payment ofP250,000.00 made by respondent Rodolfo P. Diego, with legal interest from the filing of the Complaint, shall beAPPLIED, by way of compensation, to his liabilities to the petitioner and to answer for all damages and other awards and interests which are owing to the latter under this Decision; and6. Respondents counterclaim isDISMISSED.SO ORDERED.

G.R. No. 201167 February 27, 2013GOTESCO PROPERTIES, INC., JOSE C. GO, EVELYN GO, LOURDES G. ORTIGA, GEORGE GO, and VICENTE GO,Petitioners,vs.SPOUSES EUGENIO and ANGELINA FAJARDO,Respondents.D E C I S I O NPERLAS-BERNABE,J.:Assailed in this Petition for Review onCertiorariunder Rule 45 of the Rules of Court is the July 22, 2011 Decision1and February 29, 2012 Resolution2of the Court of Appeals (CA) in CA-G.R. SP No. 112981, which affirmed with modification the August 27, 2009 Decision3of the Office of the President (OP).The FactsOn January 24, 1995, respondent-spouses Eugenio and Angelina Fajardo (Sps. Fajardo) entered into a Contract to Sell4(contract) with petitioner-corporation Gotesco Properties, Inc. (GPI) for the purchase of a 100-square meter lot identified as Lot No. 13, Block No.6, Phase No. IV of Evergreen Executive Village, a subdivision project owned and developed by GPI located at Deparo Road, Novaliches, Caloocan City. The subject lot is a portion of a bigger lot covered by Transfer Certificate of Title (TCT) No. 2442205(mother title).Under the contract, Sps. Fajardo undertook to pay the purchase price ofP126,000.00 within a 10-year period, including interest at the rate of nine percent (9%) per annum. GPI, on the other hand, agreed to execute a final deed of sale (deed) in favor of Sps. Fajardo upon full payment of the stipulated consideration. However, despite its full payment of the purchase price on January 17, 20006and subsequent demands,7GPI failed to execute the deed and to deliver the title and physical possession of the subject lot. Thus, on May 3, 2006, Sps. Fajardo filed before the Housing and Land Use Regulatory Board-Expanded National Capital Region Field Office (HLURBENCRFO) a complaint8for specific performance or rescission of contract with damages against GPI and the members of its Board of Directors namely, Jose C. Go, Evelyn Go, Lourdes G. Ortiga, George Go, and Vicente Go (individual petitioners), docketed as HLURB Case No. REM-050306-13319.Sps. Fajardo averred that GPI violated Section 209of Presidential Decree No. 95710(PD 957) due to its failure to construct and provide water facilities, improvements, infrastructures and other forms of development including water supply and lighting facilities for the subdivision project. They also alleged that GPI failed to provide boundary marks for each lot and that the mother title including the subject lot had no technical description and was even levied upon by the Bangko Sentral ng Pilipinas (BSP) without their knowledge. They thus prayed that GPI be ordered to execute the deed, to deliver the corresponding certificate of title and the physical possession of the subject lot within a reasonable period, and to develop Evergreen Executive Village; or in the alternative, to cancel and/or rescind the contract and refund the total payments made plus legal interest starting January 2000.For their part, petitioners maintained that at the time of the execution of the contract, Sps. Fajardo were actually aware that GPI's certificate of title had no technical description inscribed on it. Nonetheless, the title to the subject lot was free from any liens or encumbrances.11Petitioners claimed that the failure to deliver the title to Sps. Fajardo was beyond their control12because while GPI's petition for inscription of technical description (LRC Case No. 4211) was favorably granted13by the Regional Trial Court of Caloocan City, Branch 131 (RTC-Caloocan), the same was reversed14by the CA; this caused the delay in the subdivision of the property into individual lots with individual titles. Given the foregoing incidents, petitioners thus argued that Article 1191 of the Civil Code (Code) the provision on which Sps. Fajardo anchor their right of rescission remained inapplicable since they were actually willing to comply with their obligation but were only prevented from doing so due to circumstances beyond their control. Separately, petitioners pointed out that BSP's adverse claim/levy which was annotated long after the execution of the contract had already been settled.The Ruling of the HLURB-ENCRFOOn February 9, 2007, the HLURB-ENCRFO issued a Decision15in favor of Sps. Fajardo, holding that GPIs obligation to execute the corresponding deed and to deliver the transfer certificate of title and possession of the subject lot arose and thus became due and demandable at the time Sps. Fajardo had fully paid the purchase price for the subject lot. Consequently, GPIs failure to meet the said obligation constituted a substantial breach of the contract which perforce warranted its rescission. In this regard, Sps. Fajardo were given the option to recover the money they paid to GPI in the amount ofP168,728.83, plus legal interest reckoned from date of extra-judicial demand in September 2002 until fully paid. Petitioners were likewise held jointly and solidarily liable for the payment of moral and exemplary damages, attorney's fees and the costs of suit.The Ruling of the HLURB Board of CommissionersOn appeal, the HLURB Board of Commissioners affirmed the above ruling in its August 3, 2007 Decision,16finding that the failure to execute the deed and to deliver the title to Sps. Fajardo amounted to a violation of Section 25 of PD 957 which therefore, warranted the refund of payments in favor of Sps. Fajardo.The Ruling of the OPOn further appeal, the OP affirmed the HLURB rulings in its August 27, 2009 Decision.17In so doing, it emphasized the mandatory tenor of Section 25 of PD 957 which requires the delivery of title to the buyer upon full payment and found that GPI unjustifiably failed to comply with the same.The Ruling of the CAOn petition for review, the CA affirmed the above rulings with modification, fixing the amount to be refunded to Sps. Fajardo at the prevailing market value of the property18pursuant to the ruling inSolid Homes v. Tan(Solid Homes).19The PetitionPetitioners insist that Sps. Fajardo have no right to rescind the contract considering that GPI's inability to comply therewith was due to reasons beyond its control and thus, should not be held liable to refund the payments they had received. Further, since the individual petitioners never participated in the acts complained of nor found to have acted in bad faith, they should not be held liable to pay damages and attorney's fees.The Court's RulingThe petition is partly meritorious.A. Sps. Fajardos right to rescindIt is settled that in a contract to sell, the seller's obligation to deliver the corresponding certificates of title is simultaneous and reciprocal to the buyer's full payment of the purchase price.20In this relation, Section 25 of PD 957, which regulates the subject transaction, imposes on the subdivision owner or developer the obligation to cause the transfer of the corresponding certificate of title to the buyer upon full payment, to wit:Sec. 25.Issuance of Title.The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the titl