Ayala Life Assurance v. Ray Burton Development Corporation

Summary

This Supreme Court case clarifies the distinction between contracts to sell and contracts of sale in real estate transactions. Ayala Life sued Ray Burton for specific performance when the latter defaulted on a land purchase contract during the 1998 economic crisis. The Supreme Court affirmed the Court of Appeals' reversal of the trial court, holding that in a contract to sell, the seller retains ownership until full payment. Non-payment is not a contractual breach but an event preventing title transfer. Therefore, specific performance is not an available remedy. Instead, the contract's default provisions govern, requiring the seller to refund payments with applicable deductions. The decision establishes important precedent on contractual remedies in real estate transactions and the legal consequences of distinguishing between sale and contract-to-sell arrangements.