CHENG V. GENATO (December 29, 1998)

FACTS:

Respondent Genato entered a contract to sell to spouses Da Jose pertaining to his property in Bulacan. The contract made in public document states that the spouses shall pay the down payment and 30 days after verifying the authenticity of the documents, they shall pay the remaining purchase price.

Da Jose spouses was not able to finish verifying the documents and as such asked for a 30 day extension. Pending the extension and without notice to the spouses, Genato made a document for the annulment of the contract.

Petitioner Cheng expressed interest over the property and paid 50K check with the assurance that the contract between Genato and the spouses Da Jose will be annulled. Da Jose spouses protested with the annulment and persuaded Genato to continue the contract. Genato returned the check to Cheng and hence, this petition.

HELD:

The contract between Genato and spouses Da Jose was a contract to sell which is subject to a suspensive condition. Thus, there will be no contract to speak of, if the obligor failed to perform the suspensive condition which enforces a juridical relation. Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired.

Even assuming that the spouses defaulted, the contract also cannot be validly rescinded because no notice was given to them. Thus, Cheng's contention that the Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission finds no support in this case.

The contract between Genato and Cheng is a contract to sell not a contract of sale. But But even assuming that it should be treated as a conditional contract of sale, it did not acquire any obligatory force since it was subject to a suspensive condition that the earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded.

Art.1544 should apply because for not only was the contract between herein respondents first in time; it was also registered long before petitioner's intrusion as a second buyer (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made annotation on the title of Genato). Since Cheng was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering into such agreement.