Heirs of Bernabe v. CA & Titan Construction Corp.
agreement was subsequently entered into by Titan and the remaining
Voluntary Dealings with Registered Lands - General Provisions|
July 21, 2008| Tinga, J.
Nature of Case:
Digest Maker: Lyn Ilagan
SUMMARY: Through a Deed of Sale, private respondent Titan bought
land from petitioners on the condition that the rest of the contract price will
be paid after petitioners fulfill certain obligations. Petitioners failed to
accomplish their end of the bargain. A compromise agreement was later
entered by both parties, giving rise to new Deeds of Conditional Sale. The
Court ruled that the subsequent Deeds of Conditional Sale novated the
previous Deed of Sale.
DOCTRINE: The vendee may compel the vendors to execute a registerable
deed of sale based on payment of substantial portion as down payment.
When the parties entered into a compromise, they executed new contracts
involving the shares of the heirs in the properties. These new contracts are
the three deeds of conditional sale. These contracts, all entitled Deed of
Conditional Sale, are contracts to sell
FACTS:
 Titan Construction Corporation (Titan) filed a complaint for specific
performance against petitioners.
 Petitioners are co-owners of 1/2 of two parcels of land in Paranaque,
Metro Manila.
 Titan and the petitioners entered into a Deed of Sale wherein the
petitioners sold their share of the properties to Titan for P17Mn.
o Titan paid an upfront deposit of P1Mn, with the condition
that the balance will be paid within 60 days after (1) the
petitioners’ acquisition of a right of way from the local
government, and (2) the petitioners’ agreement with another
developer that their share is the northern half of the property.
 Petitioners were not able to comply with their obligations. Titan
prayed that they be ordered to do so because it already has paid a
substantial portion of the contract price.
 Titan then received a letter from petitioners’ counsel, cancelling and
revoking the deed of sale allegedly in view of Titan’s failure to
comply with the terms of the deed. Insisting that it was the
petitioners who had incurred in default, Titan also sought the award
of damages.
 While the case was pending, one of the original petitioners died
without leaving any heir except his co-defendants. A compromise
defendants, whereby the latter agreed to the sale of their one-half (½)
share in the properties to Titan and waived whatever cause of action
for damages they might have against each other. By virtue of the
compromise agreement, similar Deeds of Conditional Sale were
separately entered
 Petitioners denied on their Answer that a consummated sale was
made between Titan and the original defendants since only an
unconcluded negotiation is reflected in the Deed of Sale; the fact that
the negotiations did not push through is shown by the absence of the
signatures of some petitioners.
o Petitioners also questioned the genuineness of the Deed of
Conditional Sale, pointing out that it had been signed only
later by Titan’s representative. They argued that, hence, the
Deed of Conditional Sale is null and void and if found
otherwise, should be cancelled and rescinded for failure of
Titan to comply with its undertaking.
 The RTC ordered the petitioners to execute a registrable Deed of
Absolute Sale over the one-third (1/3) share of Bernabe in the
property pursuant to the Deed of Conditional Sale, upon Titan’s
payment to them of the amount of P3,431,058.42 representing the
balance of the purchase price.
 Petitioners appealed the RTC decision to the Court of Appeals, which
affirmed the findings of the lower court.
ISSUE/S & RATIO:
ISSUE # 1: Under a deed of conditional sale of a parcel of land, may the
vendee compel the vendors to execute a registerable deed of sale based on the
allegation that it had paid a substantial portion of the P1 million down
payment of the total consideration of P17MN, where it was expressly
stipulated that the vendors would execute the necessary deed of absolute sale
in favor of the vendee only upon full payment? – YES
 The vendee may compel the vendors to execute a registerable deed of
sale based on payment of substantial portion as down payment.
When the parties entered into a compromise, they executed new
contracts involving the shares of the heirs in the properties. These
new contracts are the three deeds of conditional sale. These contracts,
all entitled Deed of Conditional Sale, are contracts to sell.
 Titan has a cause of action since it has already partially performed the
contract by making down payment and other payments on the
purchase price, as well as effecting and spending for the segregation
and titling of the shares of petitioners and their co-owners in the
properties.
  The document that spells out the nature of the transaction of the NOTE
parties is the Deed of Conditional Sale. Stemming from the  In a contract of sale, the title to the property passes to the vendee upon
compromise agreement entered into by Titan and petitioners, the the delivery of the thing sold; in a contract to sell, ownership is, by
Deed of Conditional Sale has superseded the Deed of Sale of Real agreement, reserved in the vendor and is not to pass to the vendee
Estate which is the original contract. The whole essence of a until full payment of the purchase price. Otherwise stated, in a
compromise is that by making reciprocal concessions, the parties contract of sale, the vendor loses ownership over the property and
avoid litigation or put an end to one already commenced. A cannot recover it until and unless the contract is resolved or
compromise agreement can be entered into without novating or rescinded; whereas in a contract to sell, title is retained by the vendor
supplanting existing contracts, but in this case, the irreconcilable until full payment of the price. In the latter contract, payment of the
incompatibility between the Deed of Sale of Real Estate and the Deed price is a positive suspensive condition, failure of which is not a
of Conditional Sale inevitably resulted in extinctive novation. breach but an event that prevents the obligation of the vendor to
convey title from becoming effective.
ISSUE # 2: May the vendors in a deed of conditional sale ask for rescission of
contract for failure of the vendee to pay in full the agreed consideration? - NO
 The vendors cannot seek for rescission on the contract for failure of
the vendee to pay in full the agreed consideration. The demand for
rescission based on the contention that Titan failed to pay the
remainder of the purchase price is based on Article 1191 of the New
Civil Code. This article refers to rescission applicable to reciprocal
obligations. Under the Deed of Conditional Sale, the balance of the
purchase price should be paid within sixty (60) days from the
fulfillment of several conditions. At the time of the filing of the
supplemental complaint, only three of the four conditions had been
carried out. Thus, at that point, the balance of the purchase price had
not yet become due and so, too, petitioners’ obligation to execute a
registerable deed of absolute sale had not yet arisen.
 Petitioners cannot ask for rescission of the Deed of Conditional Sale
since it has been proven that far from violating the conditions of the
deed, Titan was ready and willing to perform its contractual
obligations. That the balance had not yet become due and
demandable is a result of the appeal from the RTC and CA decisions,
and is not due to Titan’s alleged refusal to comply with the contract.
Accordingly, the Deed of Conditional Sale remains valid, but
petitioners cannot be compelled by specific performance to execute
the deed of absolute sale in favor of Titan until and unless Titan settles
the balance of the purchase price as agreed upon.

WHEREFORE, in view of the foregoing, the petition is DENIED. Respondent

Titan Construction Corporation is ORDERED to PAY petitioners Heirs of
Antonio F. Bernabe the amount of ₱3,431,058.42 within sixty (60) days from
the finality of this decision. Petitioners are ORDERED to ACCEPT the
payment and thereupon EXECUTE the proper deed of absolute sale. Both
parties are ORDERED to COMPLY with the other stipulations in the Deed of
Conditional Sale. No pronouncement as to costs.