SO ORDERED.
In order to address Juan Cabrera's concerns, Henry On September 21, 1994, Henry Ysaac's counsel, Atty.
Ysaac expanded his offer to include the two adjoining Luis Ruben General, wrote a letter addressed to Atty.
lands that Henry Ysaac was then leasing to the Borbe Leoncio Clemente, Juan Cabrera's counsel.16 Atty.
family and the Espiritu family. Those three parcels of General informed Atty. Clemente that his client is
land have a combined area of 439-square-meters. formally rescinding the contract of sale because Juan
However, Henry Ysaac warned Juan Cabrera that the Cabrera failed to pay the balance of the purchase
sale for those two parcels could only proceed if the price of the land between May 1990 and May 1992.
two families agree to it. The letter also stated that Juan Cabrera's initial
payment of P1,500.00 and the subsequent payment of
Juan Cabrera accepted the new offer. Henry Ysaac P6,100.00 were going to be applied as payment for
and Juan Cabrera settled on the price of P250.00 per overdue rent of the parcel of land Juan Cabrera was
square meter, but Juan Cabrera stated that he could leasing from Henry Ysaac.17 The letter also denied the
only pay in full after his retirement on June 15, 1992.8 allegation of Juan Cabrera that Henry Ysaac agreed to
Henry Ysaac agreed but demanded for an initial shoulder the costs of the resurveying of the
payment of P1,500.00, which Juan Cabrera property.18chanRoblesvirtualLawlibrary
paid.9chanRoblesvirtualLawlibrary
Juan Cabrera, together with his uncle, Delfin Cabrera, [Henry Ysaac] or to any of the co-owners his intention
went to Henry Ysaac's house on September 16, 1995 to pay for the land or he could have consigned the
to settle the matter.19 Henry Ysaac told Juan Cabrera amount in court at the same time notifying [Henry
that he could no longer sell the property because the Ysaac] of the consignation in accordance with Article
new administrator of the property was his brother, 1256 of the Civil Code. Furthermore, in September,
Franklin Ysaac.20chanRoblesvirtualLawlibrary 1993 [Juan Cabrera] was able to meet [Henry Ysaac]
when the latter allegedly talked to him about the
Due to Juan Cabrera's inability to enforce the contract reduction of the area he was going to buy. There is no
of sale between him and Henry Ysaac, he decided to showing that [Juan Cabrera] again tendered his
file a civil case for specific performance on September payment to Henry Ysaac. Instead, he allegedly made
20, 1995.21 Juan Cabrera prayed for the execution of a his offer after he had the land resurveyed but
formal deed of sale and for the transfer of the title of defendant was then in Manila. There is no evidence as
the property in his name.22 He tendered the sum of to what date this offer was made. . .
P69,650.00 to the clerk of court as payment of the
remaining balance of the original sale price.23 On . . . [T]he court does not see any serious demand
September 22, 1995, a notice of lis pendens was made for performance of the contract on the part of
annotated on OCT No. [Juan Cabrera] in 1992 when he allegedly promised to
560.24chanRoblesvirtualLawlibrary pay the balance of the purchase price. Neither could
he demand for the sale of the adjoining lots because.
In his answer with counterclaim,25 Henry Ysaac prayed the occupants thereof did not manifest their consent
for the dismissal of Juan Cabrera's complaint.26 He thereto. At the most, he could have demanded the
also prayed for compensation in the form of moral sale of the lot which he was occupying. If his payment
damages, attorney's fees, and incidental litigation was refused in 1995, he cannot demand for damages
expenses.27chanRoblesvirtualLawlibrary because the rescission of the contract was relayed to
him in writing in Exhibit "4".35
Before the Regional Trial Court decided the case, the
heirs of Luis and Matilde Ysaac, under the The Regional Trial Court dismissed Juan Cabrera's
administration of Franklin Ysaac, sold their property to complaint and Henry Ysaac's counterclaim.36 Juan
the local government of Naga City on February 12, Cabrera appealed the Regional Trial Court's
1997.28 The property was turned into a project for the decision.37chanRoblesvirtualLawlibrary
urban poor of the city.29chanRoblesvirtualLawlibrary
The Court of Appeals agreed with the Regional Trial
During the trial, Corazon Borbe Combe of the Borbe Court that there was a perfected contract of sale
family testified that contrary to what Juan Cabrera between Juan Cabrera and Henry Ysaac.38 According
claimed, her family never agreed to sell the land they to the Court of Appeals, even if the subject of the sale
were formerly leasing from Henry Ysaac in favor of is part of Henry Ysaac's undivided property, a co-
Juan Cabrera.30 The Borbe family bought the property owner may sell a definite portion of the
from Naga City's urban poor program after the sale property.39chanRoblesvirtualLawlibrary
between the Ysaacs and the local government of
Naga City.31chanRoblesvirtualLawlibrary The Court of Appeals also ruled that the contract of
sale between Juan Cabrera and Henry Ysaac was not
On September 22, 1999, the Regional Trial Court of validly rescinded.40 For the rescission to be valid
Naga City ruled that the contract of sale between Juan under Article 1592 of the Civil Code, it should have
Cabrera and Henry Ysaac was duly rescinded when been done through a judicial or notarial act and not
the former failed to pay the balance of the purchase merely through a letter.41chanRoblesvirtualLawlibrary
price in the period agreed upon.32 The Regional Trial
Court found that there was an agreement between However, due to the sale of the entire property of the
Juan Cabrera and Henry Ysaac as to the sale of land Ysaac family in favor of the local government of Naga
and the corresponding unit price.33 However, aside City, the Court of Appeals ruled that the verbal
from the receipts turned over by Mamerta Espiritu of contract between Juan Cabrera and Henry Ysaac
the Espiritu family to Juan Cabrera, there was no cannot be subject to the remedy of specific
"evidence that the other adjoining lot occupants performance.42 The local government of Naga City
agreed to sell their respective landholdings" to Juan was an innocent purchaser for value, and following the
Cabrera.34 The Regional Trial Court also doubted that rules on double sales, it had a preferential right since
Juan Cabrera was willing and able to pay Henry the sale, it entered into was in a public instrument,
Ysaac on June 15, 1992. According to the trial while the one with Juan Cabrera was only made
court:chanroblesvirtuallawlibrary orally.43 The only recourse the Court of Appeals could
[A]fter the said refusal of Henry Ysaac's wife, plaintiff do is to order Henry Ysaac to return the initial payment
[Juan Cabrera] did not bother to write to the defendant of the purchase price of P10,600.00 (P1,500.00 and
P6,100.00 as evidenced by the receipts issued by not March 24, 2005, as noted by this court in his
Henry Ysaac to Juan Cabrera, and P3,000.00 for the pleading.51 This court treated the letter as a second
surveying expenses) as payment of actual damages. motion for reconsideration. In the resolution dated
The Court of Appeals likewise awarded attorney's fees March 31, 2006, this court found merit in petitioner's
and litigation costs. To wit:chanroblesvirtuallawlibrary letter.52 The petition was reinstated, and respondent
WHEREFORE, premises considered, the assailed was ordered to file his comment.53 Respondent filed
decision of the lower court is hereby SET ASIDE and his comment on September 18, 2006.54 This court
a new one is entered as required petitioner to file a reply,55 which petitioner
follows:ChanRoblesVirtualawlibrary complied with on January 15,
1. Declaring that there is no valid rescission of the 2007.56chanRoblesvirtualLawlibrary
contract of sale of the subject lot between plaintiff-
appellant [Juan P. Cabrera] and defendant-appellee The issues raised by petitioner and respondent are
[Henry Ysaac]; however, specific performance is not summarized as follows:
an available relief to plaintiff because of the 1. Whether this court could take cognizance of
supervening sale of the property to the City of Naga, issues not raised by petitioner but by
an innocent purchaser and for value; respondent in his comment to the petition for
review;
2. Ordering [Henry Ysaac] to pay [Juan P. Cabrera] 2. Whether there was a valid contract of sale
actual damages in the amount of P10,600.00, with between petitioner and respondent;
legal interest of 12% per annum from September 20, 3. Whether the contract of sale still subsisted;
1995 until paid; a. Whether the contract was terminated
through rescission;
3. Ordering [Henry Ysaac] to pay [Juan P. Cabrera], b. Whether the contract was no longer
the amount of thirty thousand pesos (P30,000.00) by enforceable due to the supervening
way of attorney's fees and litigation expenses. sale of the property to the local
government of Naga City;
Henry Ysaac filed his motion for reconsideration dated
July 14, 2003 of the decision of the Court of Appeals.44 4. Whether petitioner is entitled to the execution
On the other hand, Juan Cabrera immediately filed a of a deed of sale in his favor; and
petition for review on certiorari with this court.45 In the 5. Whether petitioner is entitled to actual
resolution dated October 15, 2003, this court denied damages, attorney's fees, and costs of
the petition "for being premature since respondent's litigation.
motion for reconsideration of the questioned decision
of the Court of Appeals is still pending The petition should be denied.cralawred
resolution."46chanRoblesvirtualLawlibrary I
In the resolution dated January 3, 2005, the Court of This court can resolve issues
Appeals denied Henry Ysaac's motion for raised by both parties
reconsideration. On February 24, 2005, Juan Cabrera
filed another petition with this court, questioning the Petitioner stated that the errors in this case are: (1)
propriety of the Court of Appeals' decision and "the [Court of Appeals] erred in holding that the relief
resolution. of specific performance is not available to [petitioner]
supposedly because of the supervening sale of [the]
This court initially noted that the petition was filed out property to the City Government of Naga";57 and (2)
of time. The stamp on the petition states that it was "consequently, the [Court of Appeals] erred in not
received by this court on March 24, 2005,47 while the ordering the execution of the necessary deed of sale
reglementary period to file the petition expired on in favor of [petitioner]."58 Petitioner argues that this
February 28, 2005. Thus, the petition was dismissed court should limit its adjudication to these two
in this court's resolution dated April 27, 2005.48 errors.59chanRoblesvirtualLawlibrary
Petitioner filed a motion for reconsideration.49
However, the same was denied with finality in this On the other hand, respondent raised issues on the
court's resolution dated August 17, validity of the contract of sale in favor of petitioner, and
2005.50chanRoblesvirtualLawlibrary the propriety of the award of actual damages with
interest, attorney's fees, and litigation
In a letter addressed to the Chief Justice, petitioner expenses.60chanRoblesvirtualLawlibrary
argued that it would be unfair to him if a clerical error
would deprive his petition from being judged on the For petitioner, if respondent wanted to raise issues
merits. Petitioner emphasized that the registry receipts regarding the Court of Appeals' decision, respondent
show that he filed the petition on February 24, 2005, should have interposed a separate
appeal.61chanRoblesvirtualLawlibrary
Petitioner argued that Mamerta Espiritu was not a
Petitioner's position is erroneous. This court can buyer in good faith because in 1990, she voluntarily
resolve issues and assignments of error argued by agreed to surrender the lot for sale in favor of
petitioner and respondent. petitioner because she did not have the money to pay
for the lot. Hence, the sale in favor of Mamerta Espiritu
This court "is clothed with ample authority to review should not supersede the sale in favor of
matters, even if they are not assigned as errors in their petitioner.70chanRoblesvirtualLawlibrary
appeal, if it finds that their consideration is necessary
to arrive at a just decision of the case."62 We can The Regional Trial Court ruled that there was a valid
consider errors not raised by the parties, more so if contract of sale, although it found that there was no
these errors were raised by respondent. evidence to support petitioner's claim that he was able
to secure the consent of the Espiritu family and the
Respondent raised different issues compared with Borbe family to the sale of the land.71 There was a
those raised by petitioner. However, the assignment of valid contract of sale subject to a suspensive
error of respondent was still responsive to the main condition, but the suspensive condition was not
argument of petitioner. Petitioner's argument works on complied with.
the premise that there was a valid contract. By
attacking the validity of the contract, respondent was For the Court of Appeals, there was a valid contract of
merely responding to the premise of petitioner's main sale.72 The Court of Appeals' ruling was based on the
argument. The issue is relevant to the final disposition idea that a co-owner could sell a definite portion of the
of this case; hence, it should be considered by this land owned in common, and not because the
court in arriving at a decision.cralawred suspensive conditions of the contract were complied
II with. In ruling this way, the Court of Appeals relied on
Pamplona v. Morato,73 which stated
There was no valid contract of sale that:chanroblesvirtuallawlibrary
between petitioner and respondent . . . [A] "co-owner may validly sell his undivided share
of the property owned in common. (If the part sold
Petitioner agrees with the decision of the Court of happens to be his allotted share after partition, the
Appeals that there was a perfected contract of sale transaction is entirely valid). Now then if there has
between him and been no express partition as yet, but the co-owner
63
respondent. chanRoblesvirtualLawlibrary who sells points out to his buyers the boundaries of
the part he was selling, and the other co-owners make
Respondent, however, argues that there was no no objection, there is in effect already a partial
contract between him and petitioner because under partition, and the sale of the definite portion can no
Article 1475 of the Civil Code, there has to be a longer be assailed."74
meeting of the minds as to the price and the object of
the contract.64 Respondent argues that there was no We find that there was no contract of sale. It was null
meeting of the minds as to the final price65 and size66 ab initio.
of the property subject of the sale.
As defined by the Civil Code, "[a] contract is a meeting
In addition, while respondent admits that he was of minds between two persons whereby one binds
willing to sell the property being leased from him by himself, with respect to the other, to give something or
the Borbe family and the Espiritu family, petitioner to render some service."75 For there to be a valid
presented no evidence to show that these families contract, there must be consent of the contracting
agreed to the sale in favor of petitioner. During trial, parties, an object certain which is the subject matter of
Corazon Borbe Combe of the Borbe family testified the contract, and cause of the obligation which is
that her family never agreed to allow the sale of the established.76chanRoblesvirtualLawlibrary
property in favor of petitioner.67 Respondent likewise
alleged that Mamerta Espiritu of the Espiritu family Sale is a special contract. The seller obligates himself
eventually bought the property occupied by her family, to deliver a determinate thing and to transfer its
which is contrary to the claim that petitioner obtained ownership to the buyer. In turn, the buyer pays for a
the consent of Mamerta Espiritu to have the land sold price certain in money or its equivalent.77 A "contract
in his favor.68chanRoblesvirtualLawlibrary of sale is perfected at the moment there is a -meeting
of minds upon the thing which is the object of the
Petitioner replied that respondent sold 113 square contract and upon the price.'"78 The seller and buyer
meters of the 321-square-meter property to the must agree as to the certain thing that will be subject
Espiritu family on January 17, of the sale as well as the price in which the thing will
1996.69chanRoblesvirtualLawlibrary be sold. The thing to be sold is the object of the
contract, while the price is the cause or consideration. petitioner and respondent, the entire property was still
held in common. This is evidenced by the original
The object of a valid sales contract must be owned by certificate of title, which was under the names of
the seller. If the seller is not the owner, the seller must Matilde Ysaac, Priscilla Ysaac, Walter Ysaac,
be authorized by the owner to sell the respondent Henry Ysaac, Elizabeth Ysaac, Norma
object.79chanRoblesvirtualLawlibrary Ysaac, Luis Ysaac, Jr., George Ysaac, Franklin
Ysaac, Marison Ysaac, Helen Ysaac, Erlinda Ysaac,
Specific rules attach when the seller co-owns the and Maridel Ysaac.85chanRoblesvirtualLawlibrary
object of the contract. Sale of a portion of the property
is considered an alteration of the thing owned in The rules allow respondent to sell his undivided
common. Under the Civil Code, such disposition interest in the co-ownership. However, this was not
requires the unanimous consent of the other co- the object of the sale between him and petitioner. The
owners.80 However, the rules also allow a co-owner to object of the sale was a definite portion. Even if it was
alienate his or her part in the co-ownership. These two respondent who was benefiting from the fruits of the
rules are reconciled through lease contract to petitioner, respondent has "no right
jurisprudence.81chanRoblesvirtualLawlibrary to sell or alienate a concrete, specific or determinate
part of the thing owned in common, because his right
If the alienation precedes the partition, the co-owner over the thing is represented by quota or ideal portion
cannot sell a definite portion of the land without without any physical
86
consent from his or her co-owners. He or she could adjudication." chanRoblesvirtualLawlibrary
only sell the undivided interest of the co-owned
property.82 As summarized in Lopez v. Ilustre,83 "[i]f he There was no showing that respondent was
is the owner of an undivided half of a tract of land, he authorized by his co-owners to sell the portion of land
has a right to sell and convey an undivided half, but he occupied by Juan Cabrera, the Espiritu family, or the
has no right to divide the lot into two parts, and convey Borbe family. Without the consent of his co-owners,
the whole of one part by metes and respondent could not sell a definite portion of the co-
bounds."84chanRoblesvirtualLawlibrary owned property.
The undivided interest of a co-owner is also referred to Respondent had no right to define a 95-square-meter
as the "ideal or abstract quota" or "proportionate parcel of land, a 439-square-meter parcel of land, or a
share." On the other hand, the definite portion of the 321-square-meter parcel of land for purposes of
land refers to specific metes and bounds of a co- selling to petitioner. The determination of those metes
owned property. and bounds are not binding to the co-ownership and,
hence, cannot be subject to sale, unless consented to
To illustrate, if a ten-hectare property is owned equally by all the co-owners.
by ten co-owners, the undivided interest of a co-owner
is one hectare. The definite portion of that interest is In finding that there was a valid contract of sale
usually determined during judicial or extrajudicial between petitioner and respondent, the Court of
partition. After partition, a definite portion of the Appeals erred in the application of Pamplona v.
property held in common is allocated to a specific co- Moreto.87 The ruling in Pamplona should be read and
owner. The co-ownership is dissolved and, in effect, applied only in situations similar to the context of that
each of the former co-owners is free to exercise case.
autonomously the rights attached to his or her
ownership over the definite portion of the land. Pamplona involved the Spouses Moreto who owned
three (3) parcels of land with a total, area of 2,346
It is crucial that the co-owners agree to which portion square meters. The spouses had six (6) children. After
of the land goes to whom. the wife had died, the husband sold one of the parcels
to the Pamplona family, even if the conjugal
Hence, prior to partition, a sale of a definite portion of partnership had not yet been liquidated. The parcel
common property requires the consent of all co- sold measured 781 square meters, which was less
owners because it operates to partition the land with than the ideal share of the husband in the estate. This
respect to the co-owner selling his or her share. The court allowed the sale to prosper because of the
co-owner or seller is already marking which portion tolerance from the husband's co-heirs. This court
should redound to his or her autonomous ownership ruled:chanroblesvirtuallawlibrary
upon future partition. The title may be pro-indiviso or inchoate but the
moment the co-owner as vendor pointed out its
The object of the sales contract between petitioner location and even indicated the boundaries over which
and respondent was a definite portion of a co-owned the fences were to be erected without objection,
parcel of land. At the time of the alleged sale between protest or complaint by the other co-owners, on the
contrary they acquiesced and tolerated such
alienation, occupation and possession, We rule that a Since petitioner believes that there was a perfected
factual partition or termination of the co-ownership, contract of sale between him and respondent, he
although partial, was created, and barred not only the argues that a deed of sale should be formally
vendor, Flaviano Moreto, but also his heirs, the private executed. Petitioner agrees with the Court of Appeals'
respondents herein from asserting as against the finding that there was no valid rescission of the
vendees-petitioners any right or title in derogation of contract in accordance with Article 1592 of the Civil
the deed of sale executed by said vendor Flaviano Code.90 However, petitioner disagrees with the Court
Moreto.88(Emphasis supplied) of Appeals when it ruled that the contract was no
longer enforceable due to the supervening sale with
In Pamplona, the co-heirs of Flaviano Moreto only the local government of Naga City. Petitioner argues
questioned the sale to the Pamplona family nine (9) that the sale in favor of the local government of Naga
years after the sale. By then, the Pamplona family had City was not made in good faith. Before the sale was
exercised several acts of ownership over the land. finalized between the local government and the heirs
That is why this court considered it acquiescence or of Luis and Matilde Ysaac, petitioner had a notice of lis
tolerance on the part of the co-heirs when they pendens annotated to OCT No. 506.91 It was
allowed the Pamplonas to take possession and build presumed that the local government had due notice of
upon the land sold, and only questioned these acts petitioner's adverse claim, thus, it cannot be
several years later. considered an innocent purchaser.
The ruling in Pamplona does not apply to petitioner. For respondent, due to the inexistence of a valid
There was no evidence adduced during the trial that contract of sale, petitioner cannot demand specific
respondent's co-owners acquiesced or tolerated the performance from respondent.92 Respondent
sale to petitioner. The co-owners tolerated petitioner's disagrees with the Court of Appeals when it stated that
possession of a portion of their land because Article 1592 of the rescission of contract of sale
petitioner was a lessee over a 95-square-meter applies. There is no need to apply Article 1592
portion of the property, not the buyer of the 321- because there was no contract to begin with.93 The
square-meter portion. contract between respondent and petitioner was
terminated by virtue of the letter dated September 21,
There was also no evidence of consent to sell from the 1994.94chanRoblesvirtualLawlibrary
co-owners. When petitioner approached respondent in
1995 to enforce the contract of sale, respondent We rule in favor of respondent.
referred him to Franklin Ysaac, the administrator over
the entire property. Respondent's act suggests the The absence of a contract of sale means that there is
absence of consent from the co-owners. Petitioner did no source of obligations for respondent, as seller, or
not show that he sought Franklin Ysaac's consent as petitioner, as buyer. Rescission is impossible because
administrator and the consent of the other co-owners. there is no contract to rescind. The rule in Article 1592
Without the consent of the co-owners, no partial that requires a judicial or notarial act to formalize
partition operated in favor of the sale to petitioner. rescission of a contract of sale of an immovable
property does not apply. This court does not need to
At best, the agreement between petitioner and rule whether a letter is a valid method of rescinding a
respondent is a contract to sell, not a contract of sale. sales contract over an immovable property because
A contract to sell is a promise to sell an object, subject the question is moot and academic.
to suspensive conditions.89 Without the fulfillment of
these suspensive conditions, the sale does not Even if we assume that respondent had full ownership
operate to determine the obligation of the seller to of the property and that he agreed to sell a portion of
deliver the object. the property to petitioner, the letter was enough to
cancel the contract to sell.
A co-owner could enter into a contract to sell a definite
portion of the property. However, such contract is still Generally, "[t]he power to rescind obligations is
subject to the suspensive condition of the partition of implied in reciprocal ones, in case one of the obligors
the property, and that the other co-owners agree that should not comply with what is incumbent on
the part subject of the contract to sell vests in favor of him."95chanRoblesvirtualLawlibrary
the co-owner's buyer. Hence, the co-owners' consent
is an important factor for the sale to ripen. For the sale of immovable property, the following
provision governs its
A non-existent contract cannot be a rescission:chanroblesvirtuallawlibrary
source of obligations, and it cannot be Article 1592. In the sale of immovable property, even
enforced by the courts though it may have been stipulated that upon failure to
pay the price at the time agreed upon the rescission of only required if a contract of sale is being rescinded.
the contract shall of right take place, the vendee may
pay, even after the expiration of the period, as long as Petitioner argued that he was willing to comply with
no demand for rescission of the contract has been the suspensive condition on the contract to sell
made upon him either judicially or by notarial act. After because he was ready to pay the balance of the
the demand, the court may not grant him a new term. purchase price on June 15, 1992.99 However, his
argument is unmeritorious. As ruled by the Regional
This provision contemplates (1) a contract of sale of Trial Court, petitioner should have resorted to the
an immovable property and (2) a stipulation in the various modes of consignment when respondent's
contract that failure to pay the price at the time agreed wife refused to accept the payment on respondent's
upon will cause the rescission of the contract. The behalf.100chanRoblesvirtualLawlibrary
vendee or the buyer can still pay even after the time
agreed upon, if the agreement between the parties Therefore, even if we assumed that the contract
has these requisites. This right of the vendee to pay between petitioner and respondents were perfected,
ceases when the vendor or the seller demands the the strict requisites in Article 1592 did not apply
rescission of the contract judicially or extrajudicially. In because the only perfected contract was a contract to
case of an extrajudicial demand to rescind the sell, not a contract of sale. The courts cannot enforce
contract, it should be notarized. the right of petitioner to buy respondent's property. We
cannot order the execution of a deed of sale between
Hence, this provision does not apply if it is not a petitioner and respondent.
contract of sale of an immovable property and merely
a contract to sell an immovable property. A contract to The question of double sale also becomes moot and
sell is "where the ownership or title is retained by the academic. There was no valid sale between petitioner
seller and is not to pass until the full payment of the and respondent, while there was a valid sale between
price, such payment being a positive suspensive the local government of Naga City and respondent
condition and failure of which is not a breach, casual and his co-owners. Since there is only one valid sale,
or serious, but simply an event that prevented the the rule on double sales under Article 1544 of the Civil
obligation of the vendor to convey title from acquiring Code does not apply.101chanRoblesvirtualLawlibrary
binding force."96chanRoblesvirtualLawlibrary
Compensatory damages, attorney's
In a similar case entitled Manuel v. Rodriguez,97 fees, and costs of litigation
Eusebio Manuel offered to buy the land owned by
Payatas Subdivision, Inc. The Secretary-Treasurer of Respondent argued that petitioner is not entitled to the
Payatas Subdivision, Eulogio.Rodriguez, Sr., agreed compensatory damages that the Court of Appeals
to sell the land to Eusebio Manuel after negotiations. awarded. According to respondent, petitioner
Similar to this case, the agreement was only made continues to occupy the 95-square-meter property that
orally and not in writing. An initial payment was made, he has been leasing since 1986 because the parcel
and a final payment was to be made nine (9) to ten was not included in the sale to the local government of
(10) months later. Manuel never paid for the latter Naga City.102 Since April 30, 1990, petitioner has not
installment; hence, Eulogio Rodriguez cancelled their been paying rent to respondent despite his continued
agreement and sold the land to someone else. occupation of the property.103 Therefore, there was no
unjust enrichment on the part of respondent when he
In Manuel, this court categorically stated that Article applied petitioner's initial payment over the sale of the
1592 "does not apply to a contract to sell or promise to property as payment for rent.
sell, where title remains with the vendor until fulfillment
to a positive suspensive condition, such as full Respondent argued further that the award of
payment of the price."98 This court upheld that the attorney's fees and litigation expenses in favor of
contract to sell was validly cancelled through the non- petitioner was also erroneous because prior to this
payment of Eusebio Manuel. The same conclusion litigation, respondent already informed petitioner that
applies in this case. his claim has no basis in law and fact.104 Yet,
petitioner persisted on filing this
The law does not prescribe a form to rescind a case.105chanRoblesvirtualLawlibrary
contract to sell immovable property. In Manuel, the
non-payment operated to cancel the contract. If mere We rule that petitioner is entitled to the return of the
non-payment is enough to cancel a contract to sell, amount of money because he paid it as consideration
the letter given to petitioner's lawyer is also an for ownership of the land. Since the ownership of the
acceptable form of rescinding the contract. The law land could not be transferred to him, the money he
does not require notarization for a letter to rescind a paid for that purpose must be returned to him.
contract to sell immovable property. Notarization is Otherwise, respondent will be unjustly enriched.
Respondent's claim for rent in arrears is a separate
cause of action from this case. For petitioner's earnest
money payment to be considered payment for his rent
liabilities, the rules of compensation under Article 1279
of the Civil Code must be
followed.106chanRoblesvirtualLawlibrary
SO ORDERED.
On August 9, 1993, Tan amended his Tan further contends that the CA erred when it
Complaint, contending that if the respondents insist on recognized the validity of the forfeiture of the down
forfeiting the down payment, he would be willing to payment in favor of the vendors. While admitting that
pay the balance of the purchase price provided there the Deed of Conditional Sale contained a forfeiture
is reformation of the Deed of Conditional Sale. In the clause, he insists that this clause applies only if the
meantime, Tan caused the annotation on the title of a failure to pay the balance of the purchase price was
notice of lis pendens. through his own fault or negligence. In the present
case, Tan claims that he was justified in refusing to
On August 21, 1993, the respondents pay the balance price since the vendors would not
executed a Deed of Absolute Sale over the property in have been able to comply with their obligation to
favor of Hector de Guzman (de Guzman) for the price deliver a clean title covering the property.
of P689,000.00.
Lastly, Tan maintains that the CA erred in
Thereafter, the respondents moved for the ordering him to pay the respondents P30,000.00, plus
cancellation of the notice of lis pendens on the ground P1,000.00 per court appearance as attorneys fees,
that it was inappropriate since the case that Tan filed since he filed the foregoing action in good faith,
was a personal action which did not involve either title believing that he is in the right.
to, or possession of, real property. The RTC issued an
order dated October 22, 1993 granting the The respondents, on the other hand, assert that the
respondents motion to cancel the lis pendens petition should be dismissed for raising pure questions
annotation on the title. of fact, in contravention of the provisions of Rule 45 of
the Rules which provides that only questions of law
Meanwhile, based on the Deed of Absolute can be raised in petitions for review on certiorari.
Sale in his favor, de Guzman registered the property
THE COURTS RULING Contrary to the respondents claim, the issue raised in
the present petition defined in the opening paragraph
The petition is granted. of this Decision is a pure question of law. Hence, the
petition and the issue it presents are properly
No new cognizable by this Court.
issues
can be Lis
raised in pendens
the annotatio
Memoran n not
dum proper in
personal
At the onset, we note that Tan raised the actions
following additional assignment of errors in his
Memorandum: (a) the CA erred in holding that the Section 14, Rule 13 of the Rules enumerates
petitioner could seek reformation of the Deed of the instances when a notice of lis pendens can be
Conditional Sale only if he paid the balance of the validly annotated on the title to real property:
purchase price and if the vendors refused to execute
the deed of absolute sale; and (b) the CA erred in Sec. 14. Notice of lis pendens.
holding that the petitioner was estopped from asking In an action affecting the title
for the reformation of the contract or for specific or the right of possession of real
performance. property, the plaintiff and the
defendant, when affirmative relief is
The Courts September 27, 2004 Resolution claimed in his answer, may record in
expressly stated that No new issues may be raised by the office of the registry of deeds of the
a party in his/its Memorandum. Explaining the reason province in which the property is
for this rule, we said that: situated a notice of the pendency of the
action. Said notice shall contain the
The raising of additional issues names of the parties and the object of
in a memorandum before the Supreme the action or defense, and a description
Court is irregular, because said of the property in that province affected
memorandum is supposed to be in thereby. Only from the time of filing
support merely of the position taken by such notice for record shall a
the party concerned in his petition, and purchaser, or encumbrancer of the
the raising of new issues amounts to property affected thereby, be deemed
the filing of a petition beyond the to have constructive notice of the
reglementary period. The purpose of pendency of the action, and only of its
this rule is to provide all parties to a pendency against the parties
case a fair opportunity to be heard. No designated by their real names.
new points of law, theories, issues or
arguments may be raised by a party in The notice of lis pendens
the Memorandum for the reason that to hereinabove mentioned may be
permit these would be offensive to the cancelled only upon order of the court,
basic rules of fair play, justice and due after proper showing that the notice is
process. for the purpose of molesting the
adverse party, or that it is not
necessary to protect the rights of the
Tan contravened the Courts explicit instructions by party who caused it to be recorded.
raising these additional errors. Hence, we disregard
them and focus instead on the issues previously The litigation subject of the notice of lis
raised in the petition and properly included in the pendens must directly involve a specific property
Memorandum. which is necessarily affected by the judgment.
The settled rule is that the aim In contrast, a contract to sell is defined as a
and object of an action determine its bilateral contract whereby the prospective seller, while
character. Whether a proceeding is in expressly reserving the ownership of the property
rem, or in personam, or quasi in rem for despite delivery thereof to the prospective buyer,
that matter, is determined by its nature binds himself to sell the property exclusively to
and purpose, and by these only. A the prospective buyer upon fulfillment of the
proceeding in personam is a condition agreed, i.e., full payment of the purchase
proceeding to enforce personal rights price. A contract to sell may not even be considered
and obligations brought against the as a conditional contract of sale where the seller
person and is based on the jurisdiction may likewise reserve title to the property subject of
of the person, although it may involve the sale until the fulfillment of a suspensive
his right to, or the exercise of condition, because in a conditional contract of
ownership of, specific property, or seek sale, the first element of consent is present,
to compel him to control or dispose of it although it is conditioned upon the happening of a
in accordance with the mandate of the contingent event which may or may not occur.
court. The purpose of a proceeding in
personam is to impose, through the In the present case, the true nature of the
judgment of a court, some responsibility contract is revealed by paragraph D thereof, which
or liability directly upon the person of states:
the defendant. Of this character are xxx
suits to compel a defendant to d) That in case, BUYER has complied with
specifically perform some act or actions the terms and conditions of this contract,
to fasten a pecuniary liability on him. then the SELLERS shall execute and
deliver to the BUYER the appropriate Deed
of Absolute Sale;
Furthermore, as will be explained in detail below, the
contract between the parties was merely a contract to xxx
sell where the vendors retained title and ownership to
the property until Tan had fully paid the purchase
price. Since Tan had no claim of ownership or title to Jurisprudence has established that where the
the property yet, he obviously had no right to ask for seller promises to execute a deed of absolute sale
the annotation of a lis pendens notice on the title of upon the completion by the buyer of the payment of
the property. the price, the contract is only a contract to sell. Thus,
while the contract is denominated as a Deed of
Contract Conditional Sale, the presence of the above-quoted
is a mere provision identifies the contract as being a mere
contract contract to sell.
to sell
A
A contract is what the law defines it to be, Section
taking into consideration its essential elements, and 4, Rule
not what the contracting parties call it. Article 1485 of 74
the Civil Code defines a contract of sale as follows: annotatio
n is an
Art. 1458. By the contract of sale one of encumbr
the contracting parties obligates himself ance on
to transfer the ownership and to deliver the
a determinate thing, and the other to property
pay therefor a price certain in money or
its equivalent. While Tan admits that he refused to pay the
balance of the purchase price, he claims that he had
valid reason to do so the sudden appearance of an
annotation on the title pursuant to Section 4, Rule 74 transfers of real estate that may have
of the Rules, which Tan considered an encumbrance been made. [Emphasis supplied.]
on the property.
Monetary
award is
subject
to legal
interest
CHICO-NAZARIO, J.:
SPOUSES EMMA H. VER G.R. No. 139047
REYES and RAMON
REYES, The two Petitions for Review on Certiorari now before
Petitioners, this Court seek to challenge, under Rule 45 of the
Rules of Court, the Decision dated 17 June 1999 of
the Court of Appeals in CA-G.R. CV No. 35688, which
- versus - reversed and set aside the Decision dated 25
November 1991 of the Regional Trial Court (RTC) of
Pasay City, Branch 119, in the consolidated cases of
DOMINADOR LRC Case No. LP-553-P (an application for
SALVADOR, SR., EMILIO registration of title to real property) and Civil Case No.
FUERTE, FELIZA 6914-P (an action to declare ownership over real
LOZADA, ROSALINA property, formerly numbered Pq-8557-P). The Court of
PADLAN, AURORA Appeals upheld the title of Rosario Bondoc to the
TOLENTINO, TRINIDAD disputed property, thus, overturning the finding of the
L. CASTILLO, ROSARIO RTC of Pasay City that Maria Q. Cristobal and Dulos
BONDOC, MARIA Q. Realty & Development Corporation have a registrable
CRISTOBAL and DULOS title to the same property.
REALTY &
DEVELOPMENT The Contracts
CORPORATION, At the core of the controversy in the Petitions
TRINIDAD LOZADA, at bar is a parcel of unregistered land located in
JOHN DOE and Tungtong, Las Pias, formerly of the Province of Rizal,
RICHARD DOE, G.R. No. 139365 now a part of Metro Manila, designated as Lot 1 of
Respondents. Plan Psu-205035, with an area of 19,545 square
meters (subject property). It previously formed part of
x- - - - - - - - - - - - - - - - - - - Present: a bigger parcel of agricultural land first declared in the
---x name of Domingo Lozada (Domingo) in the year 1916
TINGA,* J., under Tax Declaration No. 2932.
MARIA Q. CRISTOBAL CHICO-NAZARIO,
and DULOS REALTY & Acting Chairperson, During the lifetime of Domingo, he was married
DEVELOPMENT VELASCO,* twice. From his first marriage to Hisberta Guevarra in
CORPORATION, NACHURA, and the year 1873, he fathered two children, namely
Petitioners, REYES, JJ. Bernardo and Anatalia. After the death of Hisberta,
Domingo married Graciana San Jose in the year 1887
and their marriage produced two children, namely
- versus - Nicomedes and Pablo.
2. [That] upon the delivery by the The records of this case show that, of the entire
SELLER [Nicomedes] to the BUYER consideration stipulated upon in the Agreement,
[Rosario] of a valid title of the aforesaid only the first installment was paid by Rosario. No
parcel of land, free from any and all title to the subject property was ever delivered to
liens and encumbrances, and the her since, at the time of the execution of the above
contract, Nicomedess application for the Land. The heirs declared in said Deed of Extrajudicial
registration of the subject property was still Settlement that the only property left by Nicomedes
pending. upon his death was the subject property. They also
Five months thereafter, Nicomedes executed on ratified therein the prior sale of a portion of the subject
10 August 1969 a third contract, a Deed of property made by Nicomedes in favor of Maria, but
Absolute Sale of Unregistered Land, involving a they clarified that the actual area of the portion sold as
portion of the subject property measuring 2,000 presented in the plan was 2,287 square meters, not
square meters, in favor of Maria Q. Cristobal 2,000 square meters. After excluding the portion sold
(Maria). The relevant terms of the Deed recite: to Maria, the heirs claimed equal pro indiviso shares in
the remaining 17,258 square meters of the subject
THAT I, NICOMEDES J. LOZADA, of property.
legal age, Filipino citizen, married and
a resident of Las Pias, Rizal, On 30 July 1980, Nicomedess heirs collectively sold,
Philippines, for and in consideration of for the sum of P414,192.00, their shares in the subject
the sum of TWENTY FIVE THOUSAND property in favor of Dulos Realty and Development
(P25,000.00) PESOS, Philippine Corporation (Dulos Realty), as represented by its
currency, receipt of which is hereby President Juan B. Dulos, via a Deed of Absolute
acknowledged to my full and entire Sale of an Unregistered Land. The said Deed of
satisfaction, do hereby sell, transfer Absolute Sale dated 30 July 1980, however, was not
and convey to MARIA Q. registered.
CRISTOBAL, likewise of legal age,
Filipino citizen, married to Juan [Dulos], The Cases
and a resident of 114 Real Street, Las
Pias, Rizal, Philippines, her heirs, On 11 April 1966, after executing the Deed of
executors, administrators and assigns, Conditional Sale in favor of Emma on 23 June 1965,
TWO THOUSAND SQUARE METERS Nicomedes filed an application for the registration of
(2,000) for an easement of way of a the subject property with the then Court of First
parcel of unregistered land situated Instance (CFI) of Pasig, docketed as LRC Case No.
in the Barrio of Tungtong, Municipality N-6577. The grandchildren of Domingo by his former
of Las Pias, Province of Rizal, marriage opposed the application for registration and
Philippines, exclusively belonging to Emma and her husband Ramon filed their
and possessed by me, and more intervention.
particularly described as follows:
Sometime in 1973, following the execution in
A parcel of land her favor of the Agreement of Purchase and Sale
described under Tax dated 14 June 1968 and Joint Affidavit dated 7 March
Declaration No. 9575 1969, Rosario filed a motion to intervene in LRC Case
(Lot No. 1, Psu 205035), No. N-6577 then pending before the CFI of Pasig;
situated in the Barrio of however, her motion was denied by the CFI of Pasig,
Tuntong, Municipality of in an Order dated 2 June 1973. Rosario no longer
Las Pias, Province of appealed from the order denying her motion to
Rizal, Philippines. xxx intervene in said case.
[C]ontaining an area of
1.9545 hectares, more In view of the conflicting claims over the
or less. (Emphasis ours.) subject property, the CFI of Pasig dismissed without
prejudice LRC Case No. N-6577 on 21 November
1975 and ordered the parties therein, namely, the
Nicomedes passed away on 29 June 1972. The Deed applicant Nicomedes and the oppositors/intervenors,
of Absolute Sale of Unregistered Land between to litigate first the issues of ownership and possession.
Nicomedes and Maria was registered only on 8
February 1973, or more than seven months after the Five years later, on 27 June 1980, Domingos
formers death. grandchildren from his first marriage, Dominador, et
On 10 August 1979, Nicomedess heirs, namely, the al., filed an Application for Registration of title to the
four children from his first marriage, the six children subject property with the CFI of Rizal, docketed as
from his second marriage, and his surviving second LRC Case No. LP-553-P. In their Application,
spouse Genoveva Pallera Vda. De Lozada, executed Dominador, et al., alleged, inter alia, that they were
a Deed of Extrajudicial Settlement of the Estate of the owners of the subject property by virtue of
the Late Nicomedes J. Lozada with Ratification of inheritance; they were the actual occupants of the said
a Certain Deed of Absolute Sale of Unregistered property; and, other than Emma, they had no
knowledge of any encumbrance or claim of title heirs from his first marriage, Dominador, et al., were
affecting the same. not entitled to the subject property.
On 6 November 1980, Rosario, assisted by her The lower court also found that neither Emma
husband Mariano Bondoc, invoking the Agreement of nor Rosario acquired a better title to the subject
Purchase and Sale executed in her favor by property as against Maria and Dulos Realty. No final
Nicomedes on 14 June 1968, filed a Complaint before deed of sale over the subject property was executed in
the CFI of Rizal for the declaration in her favor of favor of Emma or Rosario, while the sales of portions
ownership over the subject property, with an of the same property in favor of Maria and of the rest
application for a temporary restraining order or to Dulos Realty were fully consummated as evidenced
preliminary injunction, against Trinidad Lozada (one of by the absolute deeds of sale dated 10 August 1969
Domingos heirs from his first marriage who applied for and 30 July 1980, respectively.
registration of the subject property in LRC Case No. Dominador, et al., Emma and her spouse Ramon
LP-553-P) and two other persons, who allegedly Reyes (Ramon), and Rosario separately appealed to
trespassed into the subject property. Rosarios the Court of Appeals the foregoing Decision dated 25
complaint was docketed as Civil Case No. Pq-8557- November 1991 of the RTC of Pasay City. Their
P. consolidated appeals were docketed as CA-G.R. CV
No. 35688.
On 4 August 1981, the parties agreed to have LRC
Case No. LP-553-P (the application for land Dominador, et al., however, moved to withdraw their
registration of Dominador, et al.) consolidated with appeal in light of the amicable settlement they entered
Civil Case No. Pq-8557-P (the action for declaration of into with Maria and Dulos Realty. In a Resolution
ownership of Rosario). dated 24 September 1992, the Court of Appeals
granted their Motion to Withdraw Appeal. Dominador,
By subsequent events, and in consideration of the et al., later filed a motion to withdraw their earlier
location of the subject property in Las Pias, LRC Case Motion to Withdraw Appeal, but this was denied by the
No. LP-553-P and Civil Case No. Pq-8557-P, Court of Appeals in a Resolution dated 15 January
reinstated as Civil Case No. 6914-P, were finally 1993.
transferred to and decided by the RTC of Pasay City. In their respective Briefs before the appellate court,
Emma and Rosario both faulted the RTC of Pasay
In its Decision dated 25 November 1991, the RTC of City for awarding the subject property to Maria and
Pasay City, Branch 119, disposed of the cases thus: Dulos Realty. They each claimed entitlement to the
WHEREFORE, considering all subject property and asserted the superiority of their
the foregoing, the court denies the respective contracts as against those of the others.
application of Dominador Salvador, Sr.
et al, having no more right over the On 17 June 1999, the Court of Appeals rendered its
land applied for, dismisses Civil Case assailed Decision, ruling as follows:
No. Pq-8557-P now 6914 for lack of As gathered above, both
merit, and hereby declares Maria contracts [entered into with Emma and
Cristobal Dulos and Dulos Realty Rosario] gave Nicomedes, as vendor,
and Development Corporation to the right to unilaterally rescind the
have a registrable title, confirming title contract the moment the buyer failed
and decreeing the registration of Lot 1 to pay within a fixed period (Pingol v.
PSU-205035 containing a total area of CA, 226 SCRA 118), after which he,
19,545 square meters, 2,287 square as vendor, was obliged to return
meters of which appertains to Maria without interest the sums of money he
Cristobal Dulos married to Juan Dulos had received from the buyer (under the
and the remaining portion, in favor of Deed of Conditional Sale [to Emma],
Dulos Realty and Development upon the sale of the property to
Corporation, without pronouncement another). Additionally, under the
as to costs. (Emphasis ours.) Agreement of Purchase and Sale [with
Rosario], the vendor, in case of
rescission, would become the owner
In so ruling, the RTC rationalized that the subject and entitled to the possession of
property constituted Domingos share in the conjugal whatever improvements introduced by
properties of his second marriage to Graciana San the buyer.
Jose and, therefore, properly pertained to Nicomedes
as one of his sons in said marriage. Being Domingos Under the Deed of Conditional Sale [to
Emma], there was no provision that
possession would be, in case of stating that an Agreement of Purchase
rescission, returned to the vendor, and Sale wherein the former
thereby implying that possession (Nicomedes...) sold to the latter
remained with him (vendor). Such (Rosario...) a parcel of land, had been
being the case, it appears to be a executed, there is no mistaking that
contract to sell. Whereas under the the lot was sold to Rosario xxx.
Agreement of Purchase and Sale [with
Rosario], the provision that in case of Anent the effect of Rosarios
rescission, any improvements registration of the Agreement of
introduced by the vendee would Purchase and Sale on Emmas
become the vendors implies that contract involving the same lot, Act No.
possession was transferred to the 3344 (Amending Sec. 194 of the
vendee and, therefore, it appears to be Administrative Code [Recording of
a contract of sale. instruments or deeds relating to real
estate not registered under Act No.
That the Agreement of Purchase and 496 or under the Spanish Mortgage
Sale [with Rosario] was a contract of Law]) provides that any registration
sale gains light from the Joint Affidavit made under Sec. 194 of the
subsequently executed by Rosario and Administrative Code shall be
Nicomedes stating that an Agreement understood to be without prejudice to a
of Purchase and Sale wherein the third party who has a better right.
former (Nicomedes J. Lozada) sold to
the latter (Rosario D. Bondoc) a parcel Better right, however, was not defined
of land had been executed but that the by law.
lot not having been registered under
Act No. 496 nor under the Spanish But author Narciso Pea is inclined to
Mortgage Law, the parties hereto have concur that better right should refer to
agreed to register the Agreement of a right which must have been acquired
Purchase and Sale ... under the by a third party independently of the
provision of Section 194 of the unregistered deed, such as, for
Revised Administrative Code, as instance, title by prescription, and that
amended by Act No. 3344. it has no reference to rights acquired
under that unregistered deed itself, he
Rosario registered the Agreement of citing Nisce v. Milo, G.R. No. 425016,
Purchase and Sale alright on March January 17, 1936 Unrep. 62 Phil. 976
10, 1969. She paid taxes on the lot x x x.
from 1980 1985. She fenced the lot
with concrete and hollow blocks. And Given the fact that the contract in
apart from opposing the land Emmas favor is a mere contract to sell,
registration case, she filed a complaint as against Rosarios contract which, as
against Trinidad, et al., for declaration demonstrated above is one of sale
ownership. and, in any event, independently of
Emmas contract to sell, she has no
Article 1371 of the Civil Code provides: claim of a better right unlike Rosario
who has, not to mention the fact that
Art. 1371. In order to she (Rosario) registered her contract
judge the intention of earlier than Emmas, Rosario must
the contracting parties, prevail.
their contemporaneous
and subsequent acts The lot having been previously sold to
shall be principally Rosario, there was no lot or portion
considered. thereof to be later sold to Maria and to
Dulos Realty in 1979 and 1980,
respectively.
From the provisions of the Agreement
of Purchase and Sale [to Rosario] and WHEREFORE, the appealed Joint
the subsequent acts of the parties then Decision is hereby REVERSED and
including the execution of the Joint SET ASIDE and another is rendered
Affidavit by Rosario and Nicomedes confirming the title of Rosario D.
Bondoc over subject lot, Lot 1, PSU-
205035 containing an area of 19,545 III.
sq.m., ordering its registration in her
name, and dismissing the claims of WHETHER OR NOT EMMA VER
ownership of all other claimants. REYES AND RAMON REYES ARE
Appellees Maria Cristobal and Dulos BARRED BY PRESCRIPTION OR
Realty and Development Corporation LACHES.
and all other claimants to subject land
including all persons claiming under IV.
them are hereby ordered to vacate and
restore possession to appellant WHETHER OR NOT THE COURT OF
Rosario D. Bondoc. APPEALS PATENTLY AND
GRAVELY ERRED IN CONFIRMING
Upon issuance of title to subject lot, THE TITLE OF ROSARIO BONDOC
appellant Rosario D. Bondoc is OVER THE DISPUTED LOT,
ordered to pay the balance of the ORDERING ITS REGISTRATION IN
purchase price to the heirs of HER NAME AND DISMISSING THE
Nicomedes Lozada in accordance with CLAIM OF EMMA VER REYES AND
the Agreement of Purchase and Sale RAMON REYES.
executed by the latter in her favor. This
judgment is without prejudice to the
rights which Emma Ver Reyes and Maria and Dulos Realty, on the other hand, submitted
Maria Cristobal and Dulos Realty and in their Petition the following issues for consideration
Development Corporation might have of this Court:
against the estate or surviving heirs of
Nicomedes Lozada to the extent that
the latter was/were benefited.
(Emphasis ours.) I.
II.
The fundamental issue that the Court is called upon to
WHETHER OR NOT MARIA resolve is, in consideration of all the contracts
CRISTOBAL DULOS AND DULOS executed by Nicomedes and/or his heirs involving the
REALTY AND DEVELOPMENT subject property, which party acquired valid and
CORPORATION ARE PURCHASERS registrable title to the same.
IN BAD FAITH.
Emma and Ramon contend that although the subject After a conscientious review of the arguments
property was conditionally sold to them by Nicomedes, and evidence presented by the parties, the Court finds
the conditionality of the sale did not suspend the that the Deed of Conditional Sale between Nicomedes
transfer of ownership over the subject property from and Emma and the Agreement of Purchase and Sale
Nicomedes to Emma. Even though Nicomedes may between Nicomedes and Rosario were both mere
automatically rescind the contract in case of non- contracts to sell and did not transfer ownership or
payment by Emma of the balance of the purchase title to either of the buyers in light of their failure to fully
price, it did not bar the transfer of title to the subject pay for the purchase price of the subject property.
property to Emma in the meantime. Emma and Reyes
likewise claim that there was constructive delivery of In Coronel v. Court of Appeals, this Court effectively
the subject property to Emma, inasmuch as the Deed provided the guidelines for differentiating between a
of Conditional Sale in her favor was a public contract to sell and a contract of sale, to wit:
instrument. Furthermore, Emma was in possession of
the subject property in the concept of owner since she The Civil Code defines a
had been paying realty taxes for the same, albeit in contract of sale, thus:
the name of Nicomedes (in whose name it was
declared), from the time of the sale in 1965 until 1972. Art. 1458. By the
Emma and Ramon also assert that Maria and Dulos contract of sale one of
Realty were in bad faith as the sales of the subject the contracting parties
property in their favor, on 10 August 1969 and 30 July obligates himself to
1980, respectively, occurred only after the filing of the transfer the ownership of
cases involving the property and the registration of the and to deliver a
sale to Emma. Finally, Emma and Ramon maintain determinate thing, and
that the Court of Appeals erred in ruling that the the other to pay therefor
contract in favor of Rosario was a contract of sale for a price certain in money
the sole reason that actual possession of the property or its equivalent.
was already transferred to the latter.
Sale, by its very nature, is a
For their part, Maria and Dulos Realty point out that consensual contract because it is
Emma and Rosario are not holders of absolute deeds perfected by mere consent. The
of conveyances over the subject property, which essential elements of a contract of sale
would have entitled them to register the same in their are the following:
respective names. They further buttress their alleged
superior right to the subject property based on the a) Consent or meeting of the
execution of two notarized documents of sale in their minds, that is, consent to
favor, which constituted symbolic and constructive transfer ownership in
delivery of the subject property to them. Maria and exchange for the price;
Dulos Realty likewise assert that the claims of Emma b) Determinate subject matter;
and Rosario are already barred by laches and and
prescription because they only decided to enforce c) Price certain in money or its
their respective rights over the subject property after equivalent.
Domingos heirs filed with the CFI of Rizal on 27 June
1980 an application for registration of the subject Under this definition, a Contract
property, docketed as LRC Case No. LP-553-P, to Sell may not be considered as a
notwithstanding their knowledge of Nicomedess death Contract of Sale because the first
on 29 June 1972. Lastly, Maria and Dulos Realty aver essential element is lacking. In a
that Rosario is already barred by res judicata since her contract to sell, the prospective seller
motion to intervene in LRC Case No. 6577, the case explicitly reserves the transfer of title to
instituted by Nicomedes to register the subject the prospective buyer, meaning, the
property, was denied by the CFI of Pasig. The prospective seller does not as yet agree
dismissal of Rosarios motion to intervene in the case or consent to transfer ownership of the
for registration of the subject property already became property subject of the contract to sell
final and executory, thus, barring Rosario from until the happening of an event, which
pursuing her claim over the same. for present purposes we shall take as
the full payment of the purchase price.
What the seller agrees or obliges
himself to do is to fulfill his promise to
This Courts Ruling sell the subject property when the entire
amount of the purchase price is
delivered to him. In other words the full the prospective seller, while expressly
payment of the purchase price partakes reserving the ownership of the
of a suspensive condition, the non- subject property despite delivery
fulfillment of which prevents the thereof to the prospective buyer, binds
obligation to sell from arising and thus, himself to sell the said property
ownership is retained by the exclusively to the prospective buyer
prospective seller without further upon fulfillment of the condition agreed
remedies by the prospective buyer. In upon, that is, full payment of the
Roque vs. Lapuz (96 SCRA 741 purchase price.
[1980]), this Court had occasion to rule:
A contract to sell as defined
Hence, We hold hereinabove, may not even be
that the contract considered as a conditional contract
between the petitioner of sale where the seller may likewise
and the respondent was reserve title to the property subject of
a contract to sell where the sale until the fulfillment of a
the ownership or title is suspensive condition, because in a
retained by the seller conditional contract of sale, the first
and is not to pass until element of consent is present, although
the full payment of the it is conditioned upon the happening of
price, such payment a contingent event which may or may
being a positive not occur. If the suspensive condition is
suspensive condition not fulfilled, the perfection of the
and failure of which is contract of sale is completely abated
not a breach, casual or (cf. Homesite and Housing Corp. vs.
serious, but simply an Court of Appeals, 133 SCRA 777
event that prevented the [1984]). However, if the suspensive
obligation of the vendor condition is fulfilled, the contract of
to convey title from sale is thereby perfected, such that if
acquiring binding force. there had already been previous
delivery of the property subject of the
Stated positively, upon the sale to the buyer, ownership thereto
fulfillment of the suspensive condition automatically transfers to the buyer
which is the full payment of the by operation of law without any further
purchase price, the prospective sellers act having to be performed by the
obligation to sell the subject property by seller.
entering into a contract of sale with the
prospective buyer becomes In a contract to sell, upon the
demandable as provided in Article 1479 fulfillment of the suspensive
of the Civil Code which states: condition which is the full payment of
the purchase price, ownership will not
Art. 1479. A automatically transfer to the buyer
promise to buy and sell a although the property may have been
determinate thing for a previously delivered to him. The
price certain is prospective seller still has to convey
reciprocally demandable. title to the prospective buyer by
entering into a contract of absolute
An accepted sale. (Emphases ours.)
unilateral promise to buy
or to sell a determinate
thing for a price certain is Also in Coronel v. Court of Appeals, the Court
binding upon the highlighted the importance of making the distinction
promissor if the promise between a contract to sell and a contract of sale:
is supported by a It is essential to distinguish
consideration distinct between a contract to sell and a
from the price. conditional contract of sale specially in
cases where the subject property is sold
A contract to sell may thus be by the owner not to the party the seller
defined as a bilateral contract whereby contracted with, but to a third person, as
in the case at bench. In a contract to price. Consequently, the contract involved in the
sell, there being no previous sale of the aforementioned case was a mere contract to sell.
property, a third person buying such
property despite the fulfillment of the An agreement is also considered a contract to sell if
suspensive condition such as the full there is a stipulation therein giving the vendor the
payment of the purchase price, for rights to unilaterally rescind the contract the moment
instance, cannot be deemed a buyer in the vendee fails to pay within a fixed period and to
bad faith and the prospective buyer consequently open the subject property anew to
cannot seek the relief of reconveyance purchase offers. In the same vein, where the seller
of the property. There is no double sale promises to execute a deed of absolute sale upon the
in such case. Title to the property will completion by the buyer of the payment of the price,
transfer to the buyer after registration the contract is only a contract to sell.
because there is no defect in the owner-
sellers title per se, but the latter, of Viewed in light of the foregoing pronouncements,
course, may be sued for damages by the Deed of Conditional Sale executed by Nicomedes
the intending buyer. in favor of Emma on 23 June 1965 is unmistakably a
mere contract to sell. The Court looks beyond the title
In a conditional contract of of said document, since the denomination or title given
sale, however, upon the fulfillment of by the parties in their contract is not conclusive of the
the suspensive condition, the sale nature of its contents. In the construction or
becomes absolute and this will definitely interpretation of an instrument, the intention of the
affect the sellers title thereto. In fact, if parties is primordial and is to be pursued. If the terms
there had been previous delivery of the of the contract are clear and leave no doubt upon the
subject property, the sellers ownership intention of the contracting parties, the literal meaning
or title to the property is automatically of its stipulations shall control. If the words appear to
transferred to the buyer such that, the be contrary to the evident intention of the parties, the
seller will no longer have any title to latter shall prevail over the former.
transfer to any third person. Applying A simple reading of the terms of the 23 June 1965
Article 1544 of the Civil Code, such Deed of Conditional Sale readily discloses that it
second buyer of the property who may contains stipulations characteristic of a contract to sell.
have had actual or constructive It provides for the automatic cancellation of the
knowledge of such defect in the sellers contract should Emma fail to pay the purchase price
title, or at least was charged with the as required therein; and, in such an event, it grants
obligation to discover such defect, Nicomedes the exclusive right to thereafter sell the
cannot be a registrant in good faith. subject property to a third person. As in Adelfa
Such second buyer cannot defeat the Properties, the contract between Nicomedes and
first buyers title. In case a title is issued Emma does not provide for reversion or reconveyance
to the second buyer, the first buyer may of the subject property to Nicomedes in the event of
seek reconveyance of the property nonpayment by Emma of the purchase price. More
subject of the sale. importantly, the Deed in question clearly states that
Even in the absence of an express stipulation to such Nicomedes will issue a final deed of absolute sale only
effect, the intention of the parties to execute a contract upon the full payment of the purchase price for the
to sell may be implied from the provisions of the subject property. Taken together, the terms of the
contract. While Article 1478 of the Civil Code Deeds reveal the evident intention of the parties to
recognizes the right of the parties to agree that the reserve ownership over the subject property to
ownership of the thing shall not pass to the purchaser Nicomedes pending payment by Emma of the full
until he has fully paid the price therefore, the same purchase price for the same.
statutory provision does not require that such be
expressly stipulated in the contract. While the Deed of Conditional Sale dated 23 June
1965 was indeed contained in a public instrument, it
In Adelfa Properties, Inc. v. Court of Appeals, did not constitute constructive delivery of the subject
the Court ruled that since the contract between the property to Emma in view of the contrary inference in
parties therein did not contain a stipulation on the Deed itself that the ownership over the subject
reversion or reconveyance of the property to the seller property was reserved by Nicomedes. Moreover, other
in the event that the buyer did not comply with its than her claim that she paid the realty taxes on the
obligation, it may legally be inferred that the parties subject property, Emma did not present any evidence
never intended to transfer ownership to the buyer prior that she took actual and physical possession of the
to the completion of the payment of the purchase subject property at any given time.
This Court also finds that, contrary to the ruling of the subject property shall thereby accrue to Nicomedes,
Court of Appeals, the Agreement of Purchase and viz:
Sale executed by Nicomedes in favor of Rosario on 14
June 1968 is likewise a mere contract to sell. 3. That in the event the BUYER fails
to pay any amount as specified in
The Agreement itself categorically states that Section 2, Paragraph II, then this
Nicomedes only undertakes to sell the subject contract, shall, by the mere fact of
property to Rosario upon the payment of the stipulated non-payment expire itself and shall
purchase price and that an absolute deed of sale is be considered automatically
yet to be executed between the parties. Thus: cancelled, of no value and effect,
and immediately thereafter the
NOW, THEREFORE, for and in SELLER shall return to the buyer the
consideration of the foregoing premises sums of money he had received from
and of the sum of ONE HUNDRED the BUYER without any interests and
SEVENTY FIVE THOUSAND NINE whatever improvement or
HUNDRED FIVE PESOS improvements made or introduced
(P175,905.00) Philippine Currency, by the BUYER on the lot being sold
which the BUYER shall pay to the shall accrue to the ownership and
SELLER in the manner and form possession of the SELLER.
hereinafter specified, the SELLER by
these presents hereby agreed and
contracted to sell all his rights, As can be clearly read above, only the rights to
interests, title and ownership over possess the property and construct improvements
the parcel of land xxx unto the thereon have been evidently given to Rosario. The
BUYER, who hereby agrees and provisions of the Agreement do not in any way
binds herself to purchase from the indicate that the ownership of the subject property has
former, the aforesaid parcel of land, likewise been transferred to Rosario. That Nicomedes
subject to the following terms and shall appropriate the improvements as his own should
conditions: Rosario default in her payment of the purchase price
only further supports the conclusion that title to the
1. Upon the execution of this subject property itself still remained with Nicomedes.
Agreement, the BUYER shall pay the
SELLER, the sum of FIFTEEN The Court concludes that the Deed of Conditional Sale
THOUSAND PESOS (P15,000.00), in favor of Emma and the Agreement of Purchase and
Philippine Currency. Sale in favor of Rosario were mere contracts to sell.
As both contracts remained unperfected by reason of
2. That upon the delivery by the non-compliance with conditions thereof by all of
the SELLER to the BUYER of a valid the parties thereto, Nicomedes can still validly convey
title of the aforesaid parcel of land, free the subject property to another buyer. This fact,
from any and all liens and however, is without prejudice to the rights of Emma
encumbrances, and the execution of and Rosario to seek relief by way of damages against
the final Deed of Sale, the BUYER the estate and heirs of Nicomedes to the extent that
shall pay to the SELLER, the sum of the latter were benefited by the sale to succeeding
THIRTY SEVEN THOUSAND SEVEN buyers.
HUNDRED FIVE PESOS (P37,705.00)
Philippine Currency, and the final Thus, the Deeds of Absolute Sale in favor of Maria
balance of ONE HUNDRED TWENTY and Dulos Realty were the only conveyances of the
THREE THOUSAND AND TWO subject property in this case that can be the source of
HUNDRED PESOS (P123,200.00) a valid and registrable title. Both contracts were
Philippine Currency, one year from the designated as absolute sales and the provisions
date of the execution of the final deed thereof leave no doubt that the same were true
of sale, all without interest. (Emphases contracts of sale. The total considerations for the
ours.) respective portions of the subject property were fully
paid by the buyers and no conditions whatsoever were
stipulated upon by the parties as regards the
The Agreement additionally grants Nicomedes transmission of the ownership of the said property to
the right to automatically cancel the same in the event the said buyers.
of nonpayment by Rosario of any of the specified
sums therein and any improvement introduced in the
The fact that Rosario was the first among the parties
to register her contract in the Registry of Property for
Unregistered Lands on 10 March 1969 is of no
moment.
SO ORDERED.
MINITA V. CHICO -
NAZARIO
Associate Justice
Acting Chair person
W E CONCUR:
DANTE O. TINGA
Associate Justice
Republic of the Philippines Severino explained that his initial asking price for the
SUPREME COURT property was only P1,800,000.00 as shown in the first
Manila deed. But he later asked for a higher price because
SECOND DIVISION Henry could not give the money as soon as expected.
G.R. No. 133749 August 23, 2001 However, Severino claimed that he made it clear to
HERNANDO R. PEÑALOSA alias "HENRY Henry that he agreed to sell the property under the
PEÑALOSA," petitioner, second deed for P2,000,000.00, provided that
vs. payment be immediately effected. Severino said that
SEVERINO C. SANTOS (deceased), Substituted by he wanted to use the money to invest in another
his heirs: OLIVER SANTOS and ADYLL M. property located in Alabang and told Henry that if
SANTOS, and ADELA DURAN MENDEZ SANTOS, payment was made at a later date, the price would be
respondents. the current market value at the time of payment.
QUISUMBING, J.: Henry then gave Severino P300,000.00 as "earnest
Petitioner appeals by certiorari from the decision of the money", purportedly with the understanding that the
Court of Appeals, which affirmed the judgment of the former was to pay the balance within 60 days.
Regional Trial Court of Quezon City, Branch 78, in Otherwise, said amount would be forfeited in favor of
Civil Case No. Q-92-13531, declaring the deed of Severino.8 The latter also maintained that he signed
absolute sale entered into between petitioner and the second deed only for the purpose of facilitating
respondents as void and inexistent and ordering Henry's acquisition of a bank loan to finance payment
petitioner to vacate the subject property and to pay of the balance of the purchase price9 and added that
reasonable compensation for its use. execution of the second deed was necessary to
The facts, as revealed by the records, are as follows: enable Henry to file a court action for ejectment of the
Respondents Severino C. Santos (deceased) and tenant.10
Adela Mendez Santos are registered owners of a After execution of the second deed, Henry filed a loan
residential house and lot located at No. 113 Scout application with the Philippine American Life Insurance
Rallos Street, Quezon City under TCT No. PT-23458 Company (Philam Life) for the amount of
(54434).1 In 1988, Severino and Adela decided to sell P2,500,000.00.11 According to Henry, he had agreed
their property and for this purpose, negotiated with with Severino during the signing of the second deed,
petitioner Hernando (or Henry) Peñalosa. The that the balance of P1,700,000.00 would be paid by
property was then occupied by a lessee, Eleuterio means of a loan, with the property itself given as
Perez, who was given preference to buy it under the collateral.12
same terms offered by the buyer.2 Perez proposed Meanwhile, on the strength of the first deed and as
less favorable terms3 and expectedly, Severino new "owner" of the property, Henry wrote a letter13
rejected his offer. dated August 8, 1988 to the lessee, Eleuterio Perez,
On August 1, 1988, petitioner Henry Peñalosa and demanding that the latter vacate the premises within
respondent Severino Santos attempted to enter into 10 days. Failing in this effort, Henry brought a
an agreement whereby the latter, for a consideration complaint for ejectment14 against Perez before the
of P1,800.000.00, would sell to the former the property Office of the Barangay Captain.
subject of the instant case. The deed of absolute sale4 On September 1, 1988, a Certification To File Action15
(first deed) evidencing this transaction was signed by was issued by the barangay lupon. This led to the
Henry but not by Severino, because according to the subsequent filing of Civil Case No. 88 0439 for
latter, Henry "took time to decide" on the matter.5 unlawful detainer, before the Metropolitan Trial Court
On August 15, 1988, Henry signed a document6 of Quezon City, Branch 43, entitled "Henry Peñalosa,
stating that the first deed was executed between him Plaintiff vs. Eleuterio Perez, Defendant". Claiming that
and Severino, for the sole purpose of helping the latter he still had a subsisting contract of lease over the
eject Perez, the occupant of the property. Henry property, Perez countersued and brought Civil Case
acknowledged in said document that although No. Q-88-1062 before the Regional Trial Court of
Severino had agreed to sell the property to him, he Quezon City, Branch 96, entitled "Eleuterio Perez,
had not paid the consideration stated in the first deed. Plaintiffs vs. Severino Santos, et. al, Defendants". In
Thereafter, Henry and Severino executed another this latter case, Perez assailed the validity of the sale
deed of absolute sale7 (second deed) for a higher transaction between Henry and Severino and
consideration of P2,000,000.00. Although the second impleaded the former as co-defendant of Severino.
deed was originally dated "August 1988", While the aforesaid court cases were pending
superimposed upon the same was the date resolution, Philam Life informed Severino through a
"September 12, 1988". This second deed was signed letter,16 that Henry's loan application had been
by both parties and duly notarized. It states that approved by the company on January 18, 1989.
Severino sells and transfers the house and lot to Philam Life stated in the letter that of the total
Henry, who had paid the full price of P2,000,000.00 purchase price of P2,500,000.00, the amount of
therefor. P1,700,000.00 would be paid directly to Severino by
Philam Life, while P800,000.00 would be paid by For his part, Henry asserted that he was already the
Henry. owner of the property being claimed by Severino, by
The release of the loan proceeds was made subject to virtue of a final agreement reached with the latter.
the submission of certain documents in Severino's Contrary to Severino's claim, the price of the property
possession, one of which is the owner's duplicate of was pegged at P2,000,000.00, as agreed upon by the
the Transfer Certificate of Title (TCT) pertaining to the parties under the second deed. Prior to the filing of the
property. However, when Henry and Severino met action, his possession of the property remained
with officials of Philam Life to finalize the undisturbed for three (3) years. Nevertheless, he
loan/mortgage contract, Severino refused to surrender admitted that since the signing of the second deed, he
the owner's duplicate title and insisted on being paid has not paid Severino the balance of the purchase
immediately in cash.17 As a consequence, the price. He, however, faulted the latter for the non-
loan/mortgage contract with Philam Life did not payment, since according to him, Severino refused to
materialize. deliver the owner's duplicate title to the financing
Subsequently, on April 28, 1989, judgment18 was company.
rendered by the MTC-QC, Branch 43, in Civil Case On Aug. 20, 1993, the trial court rendered judgment in
No. 0439, ordering the tenant Perez to vacate and favor of Severino and disposed:
surrender possession of the property to Henry. In said WHEREFORE, judgment is rendered as
judgment, Henry was explicitly recognized as the new follows:
owner of the property by virtue of the contract of sale 1) DECLARING the "Deed of Absolute Sale"
dated September 12, 1988, after full payment of the which was signed by the plaintiff Severino C.
purchase price of P2,000,000.00, receipt of which was Santos as vendor and the defendant as
duly acknowledged by Severino. vendee and which was entered in the notarial
Upon finality of said judgment, Henry and his family register of notary public Dionilo Marfil of
moved into the disputed house and lot on August Quezon City as Doc. No. 474, Page No. 95,
1989, after making repairs and improvements.19 Henry Book No. 173, Series of 1988, as inexistent
spent a total of P700,000.00 for the renovation, as and void from the beginning; and
evidenced by receipts.20 consequently, plaintiff's title to the property
On July 27, 1992, Severino sent a letter21 to Henry, under T.C.T. No. PT-23458 (54434) issued by
through counsel, demanding that Henry vacate the the Register of Deeds of Quezon City is
house and lot, on the ground that Henry did not quieted, sustained and maintained;
conclusively offer nor tender a price certain for the 2) ORDERING the defendant to pay plaintiffs
purchase of the property. The letter also stated that the amount of P15, 000.00 a month as
Henry's alleged offer and promise to buy the property reasonable compensation for the use of the
has since been rejected by Severino. House and Lot located at No. 113 Scout Rallos
When Henry refused to vacate the property, Severino St., Quezon City, beginning on the month of
brought this action for quieting of title, recovery of August, 1993, until the premises is fully
possession and damages before the Regional Trial vacated, (the compensation for the use thereof
Court of Quezon City, Branch 78, on September 28, from the time the defendant had occupied the
1992. Severino alleged in his complaint22 that there premises up to July, 1993, is recompensed for
was a cloud over the title to the property, brought the repairs made by him); and
about by the existence of the second deed of sale. 3) ORDERING the plaintiffs to reimburse the
Essentially, Severino averred that the second deed defendant the amount of P300,000.00 after
was void and inexistent because: a) there was no defendant had vacated the premises in
cause or consideration therefor, since he did not question, and the reasonable compensation for
receive the P2,000,000.00 stated in the deed; b) his the use thereof had been paid.
wife, Adela, in whose name the property was titled, did All other claims and counterclaims are
not consent to the sale nor sign the deed; c) the deed DENIED for lack of legal and factual bases. No
was not registered with the Register of Deeds; d) he pronouncement as to costs.
did not acknowledge the deed personally before the SO ORDERED.23
notary public; e) his residence certificate, as appearing Both Henry and Severino appealed the above decision
in the deed, was falsified; and f) the deed is fictitious to the Court of Appeals. Before the appellate court
and simulated because it was executed only for the could decide the same, Severino passed away and
purpose of placing Henry in possession of the property was substituted by his wife and children as
because he tendered "earnest money". Severino also respondents. Henry filed a motion for leave to be
claimed that there was no meeting of minds with allowed to deposit P1,700,000.00 in escrow with the
respect to the cause or consideration, since Henry's Landbank of the Philippines to answer for the money
varied offers of P1,800,000.00, P2,000,000.00, and portion of the decision.24 This motion was granted.
P2,500,000.00, were all rejected by him. On December 29, 1997, the appellate court affirmed25
the judgment of the trial court and thereafter, denied
Henry's motion for reconsideration.26 Thus, Henry petition on the ground that it raises only factual
brought this petition, citing the following as alleged questions.
errors: Considering the pivotal issue presented after close
I. scrutiny of the assigned errors as well as the
THE HONORABLE COURT OF APPEALS arguments of the parties, we are unable to agree with
GRIEVOUSLY ERRED IN CONCLUDING THAT respondents and we must give due course to the
THERE WAS NO PERFECTED CONTRACT OF petition.
SALE BETWEEN SEVERINO C. SANTOS AND First of all, the petition filed before this Court explicitly
PETITIONER HENRY R. PEÑALOSA. questions "the legal significance and consequences of
II. the established facts"28 and not the findings of fact
THE HONORABLE COURT OF APPEALS themselves. As pointed out by petitioner, he submits
GRIEVOUSLY ERRED IN CONSIDERING NON- to the factual findings of the lower court, but maintains
PAYMENT OF THE FULL PURCHASE PRICE AS that its legal conclusions are irreconcilable and
CAUSE FOR DECLARING A PERFECTED inconsistent therewith. He also states that the grounds
CONTRACT OF SALE AS NULL AND VOID. relied upon in this petition do not call for the weighing
III. of conflicting evidence submitted by the parties.
THE HONORABLE COURT OF APPEALS Rather, he merely asks the Court to give due
GRIEVOUSLY ERRED IN REFUSING TO significance to certain undisputed and admitted facts
RECOGNIZE THAT OWNERSHIP OF THE SUBJECT spread throughout the record, which, if properly
PROPERTY HAD BEEN EFFECTIVELY VESTED appreciated, would justify a different conclusion.
UPON PETITIONER HENRY R. PEÑALOSA WHEN At any rate, in Baricuatro, Jr. vs. Court of Appeals, 325
ACTUAL POSSESSION THEREOF HAD LAWFULLY SCRA 137, 145 (2000), we reiterated the doctrine that
TRANSFERRED TO PETITIONER HENRY R. findings of fact of the Court of Appeals are binding and
PEÑALOSA BY VIRTUE OF THE COURT conclusive upon this Court, subject to certain
JUDGMENT IN THE EJECTMENT SUIT AGAINST exceptions, one of which is when the judgment is
THE FORMER LESSEE.27 based on a misapprehension of facts. In this case,
The pivotal issue presented before us is whether or after carefully poring over the records, we are
not the second deed is valid and constitutes evidence convinced that the lower courts misappreciated the
of the final agreement between the parties regarding evidence presented by the parties and that, indeed, a
the sale transaction entered into by them. reversal of the assailed judgment is in order.
Petitioner maintains that the existence of a perfected It should have been readily apparent to the trial court
contract of sale in this case is beyond doubt, since that the circumstances it cited in its decision are not
there clearly was a meeting of minds between the proper grounds for holding that the second deed is
parties as to the object and consideration of the simulated. Simulation is a declaration of a fictitious
contract. According to petitioner, the agreement of the will, deliberately made by agreement of the parties, in
parties is evidenced by provisions contained in the order to produce, for purposes of deception, the
second deed, which cannot possibly be simulated or appearance of a juridical act which does not exist or is
fictitious. Subsequent and contemporaneous acts different from that which was really executed. Its
indubitably point to the fact that the parties truly requisites are: a) an outward declaration of will
intended to be bound by the second deed. different from the will of the parties; b) the false
Accordingly, the P2,000,000.00 stated therein was the appearance must have been intended by mutual
actual price agreed upon by the parties as agreement; and c) the purpose is to deceive third
consideration for the sale. persons.29 None of these requisites is present in this
On the other hand, in their memorandum, respondents case.
insist that the second deed is a complete nullity The basic characteristic of an absolutely simulated or
because, as found by both the appellate and trial fictitious contract is that the apparent contract is not
court: a) the consideration stated in the deed was not really desired or intended to produce legal effects or
paid; b) Severino's passport showed that he was in the alter the juridical situation of the parties in any way.30
U.S. when said deed was notarized; c) Severino did However, in this case, the parties already undertook
not surrender a copy of the title at the time of the certain acts which were directed towards fulfillment of
alleged sale; d) petitioner did not pay real estate taxes their respective covenants under the second deed,
on the property; e) it was executed only for the indicating that they intended to give effect to their
purpose of helping Severino eject the tenant; f) agreement.
Severino's wife, Adela, did not sign the deed; and g) In particular, as early as August 8, 1988, after
the various documentary exhibits proved that there execution of the first deed, Severino authorized
was no price certain accepted or paid. petitioner to bring an action for ejectment against the
Respondents additionally argue that petitioner merely overstaying tenant and allowed petitioner to pursue
seeks a review of the aforesaid factual findings of the the ejectment case to its final conclusion, presumably
lower court and that consequently, we should deny the to secure possession of the property in petitioner's
favor. Petitioner also applied for a loan, which was Since the genuineness and due execution of the
approved by Philam Life, to complete payment of the second deed was not seriously put in issue, it should
stipulated price. After making extensive repairs with be upheld as the best evidence of the intent and true
the knowledge of Severino, petitioner moved into the agreement of the parties. Oral testimony, depending
premises and actually occupied the same for three as it does exclusively on human memory, is not as
years before this action was brought. Moreover, reliable as written or documentary evidence.33
simultaneous with the execution of the second deed, It should be emphasized that the non-appearance of
petitioner gave Severino P300,000.00 in earnest the parties before the notary public who notarized the
money, which under Article 148231 of the New Civil deed does not necessarily nullify nor render the
Code, is part of the purchase price and proof of parties' transaction void ab initio. We have held
perfection of the contract. previously that the provision of Article 135834 of the
What may have led the lower courts into incorrectly New Civil Code on the necessity of a public document
believing that the second deed was simulated is is only for convenience, not for validity or
Exhibit D — a document in which petitioner declared enforceability. Failure to follow the proper form does
that the deed was executed only for the purpose of not invalidate a contract. Where a contract is not in the
helping Severino eject the tenant. However, a perusal form prescribed by law, the parties can merely compel
of this document reveals that it made reference to the each other to observe that form, once the contract has
first deed and not the second deed, which was been perfected.35 This is consistent with the basic
executed only after Exhibit D. So that while the first principle that contracts are obligatory in whatever form
deed was qualified by stipulations contained in Exhibit they may have been entered into, provided all
D, the same cannot be said of the second deed which essential requisites are present.36
was signed by both parties. The elements of a valid contract of sale under Art.
Further, the fact that Severino executed the two deeds 1458 of the Civil Code are: (1) consent or meeting of
in question, primarily so that petitioner could eject the the minds; (2) determinate subject matter; and (3)
tenant and enter into a loan/mortgage contract with price certain in money or its equivalent.37 In the instant
Philam Life, is to our mind, a strong indication that he case, the second deed reflects the presence of all
intended to transfer ownership of the property to these elements and as such, there is already a
petitioner. For why else would he authorize the latter perfected contract of sale.
to sue the tenant for ejectment under a claim of Respondent's contention that the second deed was
ownership, if he truly did not intend to sell the property correctly nullified by the lower court because
to petitioner in the first place? Needless to state, it Severino's wife, Adela, in whose name the property
does not make sense for Severino to allow petitioner was titled, did not sign the same, is unavailing. The
to pursue the ejectment case, in petitioner's own records are replete with admissions made by Adela
name, with petitioner arguing that he had bought the that she had agreed with her husband to sell the
property from Severino and thus entitled to possession property38 which is conjugal in nature39 and that she
thereof, if petitioner did not have any right to the was aware of this particular transaction with petitioner.
property. She also said that it was Severino who actually
Also worth noting is the fact that in the case filed by administered their properties with her consent,
Severino's tenant against Severino and petitioner in because she did not consider this as her
1989, assailing the validity of the sale made to responsibility.40
petitioner, Severino explicitly asserted in his sworn We also observe that Severino's testimony in court
answer to the complaint that the sale was a legitimate contained (1) admissions that he indeed agreed to sell
transaction. He further alleged that the ejectment case the property and (2) references to petitioner's failure to
filed by petitioner against the tenant was a legitimate pay the purchase price.41 He did not mention that he
action by an owner against one who refuses to turn did not intend at all to sell the property to petitioner
over possession of his property.32 and instead, stressed the fact that the purchase price
Our attention is also drawn to the fact that the had not yet been paid. Why would Severino stress
genuineness and due execution of the second deed non-payment if there was no sale at all?
was not denied by Severino. Except to allege that he However, it is well-settled that non-payment of the
was not physically present when the second deed was purchase price is not among the instances where the
notarized before the notary public, Severino did not law declares a contract to be null and void. It should
assail the truth of its contents nor deny that he ever be pointed out that the second deed specifically
signed the same. As a matter of fact, he even provides:
admitted that he affixed his signature on the second That for and in consideration of' the sum of
deed to help petitioner acquire a loan. This can only TWO MILLION PESOS (P2,000,000.00),
signify that he consented to the manner proposed by Philippine Currency paid in full by HENRY R.
petitioner for payment of the balance and that he PEÑALOSA, receipt of which is hereby
accepted the stipulated price of P2,000,000.00 as acknowledged by me to my full satisfaction, I
consideration for the sale. hereby by these presents, sells (sic), cede,
convey and otherwise dispose of the above escrow, representing the balance of the purchase
described parcel of land, unto HENRY R. price agreed upon by the parties under the deed of
PEÑALOSA, his heirs, successors and absolute sale. Finally, the respondents are ordered to
assigns, free from all liens and encumbrances. DELIVER to petitioner the owner's duplicate copy of
xxx xxx xxx TCT No. PT-23458 after said release, with the
(SGD.) corresponding payment of taxes due. Costs against
SEVERINO C. SANTOS respondents.
VENDOR SO ORDERED.
xxx xxx xxx42 Bellosillo, Mendoza, Buena and De Leon, Jr., JJ .,
As can be seen from above, the contract in this case concur.
is absolute in nature and is devoid of any proviso that
title to the property is reserved in the seller until full
payment of the purchase price. Neither does the
second deed give Severino a unilateral right to resolve
the contract the moment the buyer fails to pay within a
fixed period.43 At most, the non-payment of the
contract price merely results in a breach of contract for
non-performance and warrants an action for rescission
or specific performance under Article 1191 of the Civil
Code.44
Be that as it may, we agree with petitioner that
although the law allows rescission as a remedy for
breach of contract, the same may not be availed of by
respondents in this case. To begin with, it was
Severino who prevented full payment of the stipulated
price when he refused to deliver the owner's original
duplicate title to Philam Life. His refusal to cooperate
was unjustified, because as Severino himself
admitted, he signed the deed precisely to enable
petitioner to acquire the loan. He also knew that the
property was to be given as security therefor. Thus, it
cannot be said that petitioner breached his obligation
towards Severino since the former has always been
willing to and could comply with what was incumbent
upon him.
In sum, the only conclusion which can be deduced
from the aforesaid circumstances is that ownership of
the property has been transferred to petitioner. Article
1477 of the Civil Code states that ownership of the
thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof. It is undisputed
that the property was placed in the control and
possession of petitioner45 when he came into material
possession thereof after judgment in the ejectment
case. Not only was the contract of sale perfected, but
also actual delivery of the property effectively
consummated the sale.
WHEREFORE, the petition is GRANTED. The
decision of the Court of Appeals dated December 29,
1997 and its resolution dated April 15, 1998 in CA-
G.R. CV No. 45206 which had affirmed the judgment
of the Regional Trial Court of Quezon City, Branch 78,
are REVERSED and SET ASIDE. A new judgment is
hereby rendered UPHOLDING the validity of Exhibit B,
the Deed of Absolute Sale dated September 12, 1988,
entered into between the parties. The Landbank of the
Philippines is further ordered to RELEASE to
respondents the amount of P1,700,000.00 held in
Republic of the Philippines As proof of the sale to him of 509 square meters,
SUPREME COURT respondent attached to his answer a receipt (Exh. 2) 5
Manila signed by the late Juan San Andres, which reads in
SECOND DIVISION full as follows:
G.R. No. 135634 May 31, 2000 Received from Vicente Rodriguez the
HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) sum of Five Hundred (P500.00) Pesos
and SALVACION S. TRIA, petitioners, representing an advance payment for a
vs. residential lot adjoining his previously
VICENTE RODRIGUEZ, respondent. paid lot on three sides excepting on the
frontage with the agreed price of
MENDOZA, J.: Fifteen (15.00) Pesos per square meter
This is a petition for review on certiorari of the decision and the payment of the full
of the Court of Appeals 1 reversing the decision of the consideration based on a survey shall
Regional Trial Court, Naga City, Branch 19, in Civil be due and payable in five (5) years
Case No. 87-1335, as well as the appellate court's period from the execution of the formal
resolution denying reconsideration. deed of sale; and it is agreed that the
The antecedent facts are as follows: expenses of survey and its approval by
Juan San Andres was the registered owner of Lot No. the Bureau of Lands shall be borne by
1914-B-2 situated in Liboton, Naga City. On Mr. Rodriguez.
September 28, 1964, he sold a portion thereof, Naga City, September 29, 1964.
consisting of 345 square meters, to respondent (Sgd.)
Vicente S. Rodriguez for P2,415.00. The sale is JUAN R. SAN ANDRES
evidenced by a Deed of Sale. 2 Vendor
Upon the death of Juan San Andres on May 5, 1965,
Ramon San Andres was appointed judicial Noted:
administrator of the decedent's estate in Special (Sgd.)
Proceedings No. R-21, RTC, Branch 19, Naga City. VICENTE RODRIGUEZ
Ramon San Andres engaged the services of a Vendee
geodetic engineer, Jose Peñero, to prepare a Respondent also attached to his answer a
consolidated plan (Exh. A) of the estate. Engineer letter of judicial administrator Ramon San
Peñero also prepared a sketch plan of the 345-square Andres (Exh. 3), 6 asking payment of the
meter lot sold to respondent. From the result of the balance of the purchase price. The letter
survey, it was found that respondent had enlarged the reads:
area which he purchased from the late Juan San Dear Inting,
Andres by 509 square meters. 3 Please accommodate my request for
Accordingly, the judicial administrator sent a letter, 4 Three Hundred (P300.00) Pesos as I
dated July 27, 1987, to respondent demanding that am in need of funds as I intimated to
the latter vacate the portion allegedly encroached by you the other day.
him. However, respondent refused to do so, claiming We will just adjust it with whatever
he had purchased the same from the late Juan San balance you have payable to the
Andres. Thereafter, on November 24, 1987, the subdivision.
judicial administrator brought an action, in behalf of Thanks.
the estate of Juan San Andres, for recovery of
possession of the 509-square meter lot. Sincerely,
In his Re-amended Answer filed on February 6, 1989, (Sgd.)
respondent alleged that apart from the 345-square
meter lot which had been sold to him by Juan San RAMON SAN ANDRES
Andres on September 28, 1964, the latter likewise Vicente Rodriguez
sold to him the following day the remaining portion of Penafrancia Subdivision, Naga City
the lot consisting of 509 square meters, with both P.S.
parties treating the two lots as one whole parcel with a You can let bearer Enrique del Castillo
total area of 854 square meters. Respondent alleged sign for the amount.
that the full payment of the 509-square meter lot would Received
be effected within five (5) years from the execution of One
a formal deed of sale after a survey is conducted over Hundred
said property. He further alleged that with the consent Only
of the former owner, Juan San Andres, he took
possession of the same and introduced improvements
thereon as early as 1964.
d to identify the property subject of the sale, hence, the
. need to execute a new contract.
) Respondent appealed to the Court of Appeals, which
RAMON on April 21, 1998 rendered a decision reversing the
SAN decision of the trial court. The appellate court held that
ANDRES the object of the contract was determinable, and that
3/30/66 there was a conditional sale with the balance of the
Respondent deposited in court the balance of the purchase price payable within five years from the
purchase price amounting to P7,035.00 for the execution of the deed of sale. The dispositive portion
aforesaid 509-square meter lot. of its decision's reads:
While the proceedings were pending, judicial IN VIEW OF ALL THE FOREGOING,
administrator Ramon San Andres died and was the judgment appealed from is hereby
substituted by his son Ricardo San Andres. On the REVERSED and SET ASIDE and a
other band, respondent Vicente Rodriguez died on new one entered DISMISSING the
August 15, 1989 and was substituted by his heirs. 7 complaint and rendering judgment
Petitioner, as plaintiff, presented two witnesses. The against the plaintiff-appellee:
first witness, Engr. Jose Peñero, 8 testified that based 1. to accept the P7,035.00 representing
on his survey conducted sometime between 1982 and the balance of the purchase price of the
1985, respondent had enlarged the area which he portion and which is deposited in court
purchased from the late Juan San Andres by 509 under Official Receipt No. 105754
square meters belonging to the latter's estate. (page 122, Records);
According to Peñero, the titled property (Exh. A-5) of 2. to execute the formal deed of sale
respondent was enclosed with a fence with metal over the said 509 square meter portion
holes and barbed wire, while the expanded area was of Lot 1914-B-2 in favor of appellant
fenced with barbed wire and bamboo and light Vicente Rodriguez;
materials. 3. to pay the defendant-appellant the
The second witness, Ricardo San Andres, 9 amount of P50,000.00 as damages and
administrator of the estate, testified that respondent P10,000.00 attorney's fees as
had not filed any claim before Special Proceedings stipulated by them during the trial of
No. R-21 and denied knowledge of Exhibits 2 and 3. this case; and
However, he recognized the signature in Exhibit 3 as 4. to pay the costs of the suit.
similar to that of the former administrator, Ramon San SO ORDERED.
Andres. Finally, he declared that the expanded portion Hence, this petition. Petitioner assigns the following
occupied by the family of respondent is now enclosed errors as having been allegedly committed by the trial
with barbed wire fence unlike before where it was court:
found without fence. I. THE HON. COURT OF
On the other hand, Bibiana B. Rodriguez, 10 widow of APPEALS ERRED IN
respondent Vicente Rodriguez, testified that they had HOLDING THAT THE
purchased the subject lot from Juan San Andres, who DOCUMENT (EXHIBIT
was their compadre, on September 29, 1964, at "2") IS A CONTRACT
P15.00 per square meter. According to her, they gave TO SELL DESPITE ITS
P500.00 to the late Juan San Andres who later affixed LACKING ONE OF THE
his signature to Exhibit 2. She added that on March ESSENTIAL
30, 1966; Ramon San Andres wrote them a letter ELEMENTS OF A
asking for P300.00 as partial payment for the subject CONTRACT, NAMELY,
lot, but they were able to give him only P100.00. She OBJECT CERTAIN AND
added that they had paid the total purchase price of SUFFICIENTLY
P7,035.00 on November 21, 1988 by depositing it in DESCRIBED.
court. Bibiana B. Rodriquez stated that they had been II. THE HON. COURT
in possession of the 509-square meter lot since 1964 OF APPEALS ERRED
when the late Juan San Andres signed the receipt. IN HOLDING THAT
(Exh. 2) Lastly, she testified that they did not know at PETITIONER IS
that time the exact area sold to them because they OBLIGED TO HONOR
were told that the same would be known after the THE PURPORTED
survey of the subject lot. CONTRACT TO SELL
On September 20, 1994, the trial court 11 rendered DESPITE NON-
judgment in favor of petitioner. It ruled that there was FULFILLMENT BY
no contract of sale to speak of for lack of a valid object RESPONDENT OF THE
because there was no sufficient indication in Exhibit 2 CONDITION THEREIN
OF PAYMENT OF THE survey is needed to determine its exact size and the
BALANCE OF THE full purchase price therefor" 14 In support of his
PURCHASE PRICE. contention, petitioner cites the following provisions of
III. THE HON. COURT the Civil Code:
OF APPEALS ERRED Art. 1349. The object of every contract
IN HOLDING THAT must be determinate as to its kind. The
CONSIGNATION WAS fact that the quantity is not
VALID DESPITE NON- determinable shall not be an obstacle
COMPLIANCE WITH to the existence of a contract, provided
THE MANDATORY it is possible to determine the same
REQUIREMENTS without the need of a new contract
THEREOF. between the parties.
IV. THE HON. COURT Art. 1460. . . . The requisite that a thing
OF APPEALS ERRED be determinate is satisfied if at the time
IN HOLDING THAT the contract is entered into, the thing is
LACHES AND capable of being made determinate
PRESCRIPTION DO without the necessity of a new and
NOT APPLY TO further agreement between the parties.
RESPONDENT WHO Petitioner's contention is without merit. There is no
SOUGHT INDIRECTLY dispute that respondent purchased a portion of Lot
TO ENFORCE THE 1914-B-2 consisting of 345 square meters. This
PURPORTED portion is located in the middle of Lot 1914-B-2, which
CONTRACT AFTER has a total area of 854 square meters, and is clearly
THE LAPSE OF 24 what was referred to in the receipt as the "previously
YEARS. paid lot." Since the lot subsequently sold to
The petition has no merit. respondent is said to adjoin the "previously paid lot"
First. Art. 1458 of the Civil Code provides: on three sides thereof, the subject lot is capable of
By the contract of sale one of the being determined without the need of any new
contracting parties obligates himself to contract. The fact that the exact area of these
transfer the ownership of and to deliver adjoining residential lots is subject to the result of a
a determinate thing, and the other to survey does not detract from the fact that they are
pay therefor a price certain in money or determinate or determinable. As the Court of Appeals
its equivalent. explained: 15
A contract of sale may be absolute or Concomitantly, the object of the sale is
conditional. certain and determinate. Under Article
As thus defined, the essential elements of sale are the 1460 of the New Civil Code, a thing
following: sold is determinate if at the time the
a) Consent or meeting of the minds, contract is entered into, the thing is
that is, consent to transfer ownership in capable of being determinate without
exchange for the price; necessity of a new or further agreement
b) Determinate subject matter; and, between the parties. Here, this
c) Price certain in money or its definition finds realization.
equivalent. 12 Appellee's Exhibit "A" (page 4,
As shown in the receipt, dated September 29, 1964, Records) affirmingly shows that the
the late Juan San Andres received P500.00 from original 345 sq. m. portion earlier sold
respondent as "advance payment for the residential lot lies at the middle of Lot 1914-B-2
adjoining his previously paid lot on three sides surrounded by the remaining portion of
excepting on the frontage; the agreed purchase price the said Lot 1914-B-2 on three (3)
was P15.00 per square meter; and the full amount of sides, in the east, in the west and in the
the purchase price was to be based on the results of a north. The northern boundary is a 12
survey and would be due and payable in five (5) years meter road. Conclusively, therefore,
from the execution of a deed of sale. this is the only remaining 509 sq. m.
Petitioner contends, however, that the "property portion of Lot 1914-B-2 surrounding the
subject of the sale was not described with sufficient 345 sq. m. lot initially purchased by
certainty such that there is a necessity of another Rodriguez. It is quite difined,
agreement between the parties to finally ascertain the determinate and certain. Withal, this is
identity; size and purchase price of the property which the same portion adjunctively occupied
is the object of the alleged sale." 1 He argues that the and possessed by Rodriguez since
"quantity of the object is not determinate as in fact a September 29, 1964, unperturbed by
anyone for over twenty (20) years until consideration, based on a survey of the lot, would be
appellee instituted this suit. due and payable within five (5) years from the
Thus, all of the essential elements of a contract of sale execution of a formal deed of sale. It is evident from
are present, i.e., that there was a meeting of the minds the stipulations in the receipt that the vendor Juan San
between the parties, by virtue of which the late Juan Andres sold the residential lot in question to
San Andres undertook to transfer ownership of and to respondent and undertook to transfer the ownership
deliver a determinate thing for a price certain in thereof to respondent without any qualification,
money. As Art. 1475 of the Civil Code provides: reservation or condition. In Ang Yu Asuncion v. Court
The contract of sale is perfected at the of Appeals, 17 we held:
moment there is a meeting of minds In Dignos v. Court of Appeals (158
upon the thing which is the object of the SCRA 375), we have said that,
contract and upon the price. . . . although denominated a "Deed of
That the contract of sale is perfected was confirmed Conditional Sale," a sale is still absolute
by the former administrator of the estates, Ramon San where the contract is devoid of any
Andres, who wrote a letter to respondent on March 30, proviso that title is reserved or the right
1966 asking for P300.00 as partial payment for the to unilaterally rescind is stipulated, e.g.,
subject lot. As the Court of Appeals observed: until or unless the price is paid.
Without any doubt, the receipt Ownership will then be transferred to
profoundly speaks of a meeting of the the buyer upon actual or constructive
mind between San Andres and delivery (e.g., by the execution of a
Rodriguez for the sale of the property public document) of the property sold.
adjoining the 345 square meter portion Where the condition is imposed upon
previously sold to Rodriguez on its the perfection of the contract itself, the
three (3) sides excepting the frontage. failure of the condition would prevent
The price is certain, which is P15.00 such perfection. If the condition is
per square meter. Evidently, this is a imposed on the obligation of a party
perfected contract of sale on a deferred which is not fulfilled, the other party
payment of the purchase price. All the may either waive the condition or
pre-requisite elements for a valid refuse to proceed with the sale. (Art.
purchase transaction are present. Sale 1545, Civil Code).
does not require any formal document Thus, in. one case, when the sellers declared in a
for its existence and validity. And "Receipt of Down Payment" that they received an
delivery of possession of land sold is a amount as purchase price for a house and lot without
consummation of the sale (Galar vs. any reservation of title until full payment of the entire
Husain, 20 SCRA 186 [1967]). A purchase price, the implication was that they sold their
private deed of sale is a valid contract property. 18 In People's Industrial Commercial
between the parties (Carbonell v. CA, Corporation v. Court of Appeals, 19 it was stated:
69 SCRA 99 [1976]). A deed of sale is considered absolute
In the same vein, after the late Juan R. in nature where there is neither a
San Andres received the P500.00 stipulation in the deed that title to the
downpayment on March 30, 1966, property sold is reserved in the seller
Ramon R. San Andres wrote a letter to until full payment of the price, nor one
Rodriguez and received from giving the vendor the right to
Rodriguez the amount of P100.00 unilaterally resolve the contract the
(although P300.00 was being moment the buyer fails to pay within a
requested) deductible from the fixed period.
purchase price of the subject portion. Applying these principles to this case, it cannot be
Enrique del Castillo, Ramon's gainsaid that the contract of sale between the parties
authorized agent, correspondingly is absolute, not conditional. There is no reservation of
signed the receipt for the P100.00. ownership nor a stipulation providing for a unilateral
Surely, this is explicitly a veritable proof rescission by either party. In fact, the sale was
of he sale over the remaining portion of consummated upon the delivery of the lot to
Lot 1914-B-2 and a confirmation by respondent. 20 Thus, Art. 1477 provides that the
Ramon San Andres of the existence ownership of the thing sold shall be transferred to the
thereof. 16 vendee upon the actual or constructive delivery
There is a need, however, to clarify what the Court of thereof.
Appeals said is a conditional contract of sale. The stipulation that the "payment of the full
Apparently, the appellate court considered as a consideration based on a survey shall be due and
"condition" the stipulation of the parties that the full payable in five (5) years from the execution of a formal
deed of sale" is not a condition which affects the approved by the Bureau of Lands, respondent's heirs,
efficacy of the contract of sale. It merely provides the assign or successors-in-interest should reimburse the
manner by which the full consideration is to be expenses incurred by herein petitioners, pursuant to
computed and the time within which the same is to be the provisions of the contract.
paid. But it does not affect in any manner the WHEREFORE, the decision of the Court of Appeals is
effectivity of the contract. Consequently, the AFFIRMED with the modification that respondent is
contention that the absence of a formal deed of sale ORDERED to reimburse petitioners for the expenses
stipulated in the receipt prevents the happening of a of the survey.
sale has no merit. SO ORDERED.
Second. With respect to the contention that the Court Bellosillo and Buena, JJ., concur.
of Appeals erred in upholding the validity of a Quisumbing and De Leon, Jr., JJ., are on leave.
consignation of P7,035.00 representing the balance of
the purchase price of the lot, nowhere in the decision
of the appellate court is there any mention of
consignation. Under Art. 1257 of this Civil Code,
consignation is proper only in cases where an existing
obligation is due. In this case, however, the
contracting parties agreed that full payment of
purchase price shall be due and payable within five (5)
years from the execution of a formal deed of sale. At
the time respondent deposited the amount of
P7,035.00 in the court, no formal deed of sale had yet
been executed by the parties, and, therefore, the five-
year period during which the purchase price should be
paid had not commenced. In short, the purchase price
was not yet due and payable.
This is not to say, however, that the deposit of the
purchase price in the court is erroneous. The Court of
Appeals correctly ordered the execution of a deed of
sale and petitioners to accept the amount deposited
by respondent.
Third. The claim of petitioners that the price of
P7,035.00 is iniquitous is untenable. The amount is
based on the agreement of the parties as evidenced
by the receipt (Exh. 2). Time and again, we have
stressed the rule that a contract is the law between the
parties, and courts have no choice but to enforce such
contract so long as they are not contrary to law,
morals, good customs or public policy. Otherwise,
court would be interfering with the freedom of contract
of the parties. Simply put, courts cannot stipulate for
the parties nor amend the latter's agreement, for to do
so would be to alter the real intentions of the
contracting parties when the contrary function of
courts is to give force and effect to the intentions of
the parties.
Fourth. Finally, petitioners argue that respondent is
barred by prescription and laches from enforcing the
contract. This contention is likewise untenable. The
contract of sale in this case is perfected, and the
delivery of the subject lot to respondent effectively
transferred ownership to him. For this reason,
respondent seeks to comply with his obligation to pay
the full purchase price, but because the deed of sale is
yet to be executed, he deemed it appropriate to
deposit the balance of the purchase price in court.
Accordingly, Art. 1144 of the Civil Code has no
application to the instant case. 21 Considering that a
survey of the lot has already been conducted and
THIRD DIVISION B, was adjudicated to respondent, but no title had
been issued in her name.
HEIRS OF ARTURO G.R. No. 176474 On 25 June 1998, respondent Elena Socco-
REYES, represented by Beltran filed an application for the purchase of Lot No.
Evelyn R. San 6-B before the Department of Agrarian Reform (DAR),
Buenaventura, Present: alleging that it was adjudicated in her favor in the
Petitioners, extra-judicial settlement of Constancia Soccos estate.
YNARES- Petitioners herein, the heirs of the late Arturo
SANTIAGO, Reyes, filed their protest to respondents petition
J., before the DAR on the ground that the subject
Chairperson, property was sold by respondents brother, Miguel R.
- versus - AUSTRIA- Socco, in favor of their father, Arturo Reyes, as
MARTINEZ, evidenced by the Contract to Sell, dated 5 September
CHICO-NAZARIO, 1954, stipulating that:
NACHURA, and
REYES, JJ. That I am one of the co-heirs of
ELENA SOCCO- the Estate of the deceased Constancia
BELTRAN, Promulgated: Socco; and that I am to inherit as such
Respondent. a portion of her lot consisting of Four
November 27, 2008 Hundred Square Meters (400) more or
x-------------------------------------- less located on the (sic) Zamora St.,
-----------x Municipality of Dinalupihan, Province of
Bataan, bounded as follows:
DECISION xxxx
We do not agree.
ROGELIA DACLAG and G.R. No. 159578
ADELINO DACLAG In Caro v. Court of Appeals, we have explicitly held
(deceased), that the prescriptive period for the reconveyance of
substituted by RODEL Present: fraudulently registered real property is 10 years
M. DACLAG, reckoned from the date of the issuance of the certificate
and ADRIAN M. of title x x x.
DACLAG, However, notwithstanding petitioners' unmeritorious
Petitioners, QUISUMBING,* J. argument, the Court deems it necessary to make certain
CARPIO,* J. clarifications. We have earlier ruled that respondents' action
- versus - AUSTRIA- for reconveyance had not prescribed, since it was filed within
MARTINEZ,* J., the 10-year prescriptive period.
Acting Chairperson,
ELINO MACAHILIG, CHICO-NAZARIO, and However, a review of the factual antecedents of the
ADELA case shows that respondents' action for reconveyance was
MACAHILIG, CONRADO NACHURA, JJ. not even subject to prescription.
MACAHILIG, LORENZA
HABER The deed of sale executed by Maxima in favor of
and BENITA DEL Promulgated: petitioners was null and void, since Maxima was not the
ROSARIO, owner of the land she sold to petitioners, and the one-half
Respondents. February 18, 2009 northern portion of such land was owned by respondents.
x--------------------------------------------- Being an absolute nullity, the deed is subject to attack
-------------x anytime, in accordance with Article 1410 of the Civil Code
that an action to declare the inexistence of a void contract
does not prescribe. Likewise, we have consistently ruled that
RESOLUTION when there is a showing of such illegality, the property
registered is deemed to be simply held in trust for the real
owner by the person in whose name it is registered, and the
AUSTRIA-MARTINEZ, J.: former then has the right to sue for the reconveyance of the
property. An action for reconveyance based on a void
Before us is petitioners' Motion for Reconsideration contract is imprescriptible. As long as the land wrongfully
of our Decision dated July 28, 2008 where we affirmed the registered under the Torrens system is still in the name of
Decision dated October 17, 2001 and the Resolution dated the person who caused such registration, an action in
August 7, 2003 of the Court of Appeals (CA) in CA-G.R. CV personam will lie to compel him to reconvey the property to
No. 48498. the real owner. In this case, title to the property is in the
name of petitioner Rogelia; thus, the trial court correctly
Records show that while the land was registered in ordered the reconveyance of the subject land to
the name of petitioner Rogelia in 1984, respondents respondents.
complaint for reconveyance was filed in 1991, which was
within the 10-year prescriptive period. Petitioners next contend that they are possessors in
good faith, thus, the award of damages should not have
We ruled that since petitioners bought the property been imposed. They further contend that under Article 544,
when it was still an unregistered land, the defense of having a possessor in good faith is entitled to the fruits received
purchased the property in good faith is unavailing. We before the possession is legally interrupted; thus, if indeed
affirmed the Regional Trial Court (RTC) in finding that petitioners are jointly and severally liable to respondents for
petitioners should pay respondents their corresponding the produce of the subject land, the liability should be
share in the produce of the subject land from the time they reckoned only for 1991 and not 1984.
were deprived thereof until the possession is restored to
them. We find partial merit in this argument.
Article 528 of the Civil Code provides that
possession acquired in good faith does not lose this
character, except in a case and from the moment facts exist
which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully. Possession in
good faith ceases from the moment defects in the title are
made known to the possessors, by extraneous evidence or
by suit for recovery of the
SO ORDERED.
There is no merit in petitioners assertion that Thus, the City of Cebu could no longer dispose
there was no perfected contract of sale because no of the lot in question when it was included as among
Contract of Purchase and Sale was ever executed by those returned to petitioner pursuant to the
the parties. As previously stated, a contract of sale is a compromise agreement in Civil Case No. 238-BC. The
consensual contract that is perfected upon a meeting City of Cebu had sold the property to Morales even
of minds as to the object of the contract and its price. though there remained a balance on the purchase
Subject to the provisions of the Statute of Frauds, a price and a formal contract of sale had yet to be
formal document is not necessary for the sale executed. Incidentally, the failure of respondents to
transaction to acquire binding effect. For as long as pay the balance on the purchase price and the non-
the essential elements of a contract of sale are proved execution of a formal agreement was sufficiently
to exist in a given transaction, the contract is deemed explained by the fact that the trial court, in Civil Case
perfected regardless of the absence of a formal deed No. 238-BC, issued a writ of preliminary injunction
evidencing the same. enjoining the city from further disposing the donated
lots. According to respondents, there was confusion
Similarly, petitioner erroneously contends that as to the circumstances of payment considering that
the failure of Morales to pay the balance of the both the city and petitioner had refused to accept
purchase price is evidence that there was really no payment by virtue of the injunction. It appears that the
parties simply mistook Lot 646-A-3 as among those
not yet sold by the city. Finally, petitioner cannot raise the issue of prescription
and laches at this stage of the proceedings. Contrary
The City of Cebu was no longer the owner of to petitioners assignment of errors, the appellate court
Lot 646-A-3 when it ceded the same to petitioner made no findings on the issue because petitioner
under the compromise agreement in Civil Case No. never raised the matter of prescription and laches
238-BC. At that time, the city merely retained rights as either before the trial court or Court of Appeals. It is
an unpaid seller but had effectively transferred basic that defenses and issues not raised below
ownership of the lot to Morales. As successor-in- cannot be considered on appeal. Thus, petitioner
interest of the city, petitioner could only acquire rights cannot plead the matter for the first time before this
that its predecessor had over the lot. These rights Court.
include the right to seek rescission or fulfillment of the
terms of the contract and the right to damages in WHEREFORE, in view of the foregoing, the petition is
either case. hereby DENIED and the decision and resolution of the
Court of Appeals in CA-G.R. CV No. 53632 are
In this regard, the records show that AFFIRMED.
respondent Quesada wrote to then Cebu Governor
Eduardo R. Gullas on March 11, 1983, asking for the SO ORDERED.
formal conveyance of Lot 646-A-3 pursuant to the
award and sale earlier made by the City of Cebu. On
October 10, 1986, she again wrote to Governor
Osmundo G. Rama reiterating her previous request.
This means that petitioner had known, at least as far
back as 1983, that the city sold the lot to respondents
predecessor and that the latter had paid the deposit
and the required down payment. Despite this
knowledge, however, petitioner did not avail of any
rightful recourse to resolve the matter.