Facts:

• The case involves the Spouses Mario and Elizabeth Torcuator (petitioners) against the Spouses Remigio and Gloria Bernabe and Spouses Diosdado and Lourdes Salvador (respondents).
• The dispute arose from the purchase of Lot 17, Block 5 of Ayala Alabang Village, Muntinlupa, Metro-Manila, covering 569 square meters and under TCT No. S-79773.
• The Salvadors acquired the lot from Ayala Corporation with conditions: construct a house within two years, obtain architectural approval, and prohibit resale without a house.
• On December 18, 1980, the Salvadors sold the property to the Bernabes, who were authorized to build a house and transfer the title.
• The Bernabes failed to build any improvements and later attempted to sell the property to the Torcuators in September 1986.
• The parties agreed to cancel the sale between the Salvadors and the Bernabes to execute a new deed of sale directly from the Salvadors to the Torcuators.
• The Torcuators prepared architectural plans and were ready to pay, but the sale was never finalized.
• The Bernabes subsequently sold the property to Leonardo Angeles without notarizing the document.
• The Torcuators filed a complaint for specific performance or rescission with damages against the Bernabes and Salvadors.
• The trial court dismissed the complaint, stating the Torcuators did not suffer real damage, and the Bernabes' counterclaim was also dismissed.
• The Court of Appeals affirmed the trial court's decision, citing irregularities and bad faith in the sale, which circumvented Ayala Corporation's restrictions.

Issue:

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Ruling:

• The Court of Appeals did not err in affirming the trial court's dismissal of the Torcuators' complaint for specific performance.
• The contract between the Torcuators and the Bernabes was deemed a contract to sell, not a valid contract of sale.
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Ratio:

• The Supreme Court upheld the lower courts' decisions, clarifying that the agreement constituted a contract to sell rather than a contract of sale.
• In a contract to sell, ownership remains with the seller until the buyer fulfills specific conditions, such as full payment.
• The Court noted that the Torcuators had not made a valid tender of payment or cons...continue reading