Sps. Fortunato Santos v. Court of Appeals

Summary

The Santos spouses entered into an agreement with the Casedas for the sale of their house and lot for P350,000 plus assumption of mortgage. The Casedas made partial payments but failed to complete payment due to financial difficulties. When the Santos repossessed the property, the Casedas sued for specific performance. The Supreme Court distinguished between contracts of sale and contracts to sell, ruling that this was a contract to sell since ownership never transferred (title remained with Santos). In contracts to sell, the vendor enforces rather than rescinds the contract when the buyer fails to pay, making judicial rescission unnecessary. The Court reversed the Court of Appeals' decision favoring the Casedas and reinstated the trial court's dismissal of their complaint, establishing important precedent on the distinction between sale contracts and contracts to sell in Philippine law.