Consequently, a certificate of award[6]dated 02 July 1978 was
granted by the CTSC in favor of Luisa Gomez, who paid the purchase
G.R. No. 120747. September 21, 2000]\VICENTE GOMEZ, as
successor-in-interest of awardee LUISA GOMEZ, petitioner, vs.
COURT OF APPEALS, City of MANILA acting thru the City Tenants
Security Committee now the Urban Settlement Office, Register of
Deeds of Manila, respondents.
DECISION
BUENA, J.:
Sought to be reversed in this petition for review on certiorari under
Rule 45 of the Rules of Court is the decision[1] of the Court of Appeals in
C.A. G.R. Sp. No. 32101 promulgated on 22 February 1995 which
annulled and set aside the decision of the Regional Trial Court of Manila,
Branch 12 in Civil Case No. 51930.
Impugned similarly is the resolution[2] of the Court of Appeals dated
29 June 1995 denying petitioners motion for reconsideration.
From the records, we find the following antecedents:
Pursuant to the Land for the Landless Program of the City of Manila
and in accordance with City Ordinance No. 6880, the Office of City Mayor
issued Resolution No. 16-A,[3] Series of 1978, dated 17 May 1978, which
effectively set guidelines and criteria for the award of city home lots to
qualified and deserving applicants. Attached to said resolution and made
as integral part thereof was a Contract to Sell[4] that further laid down
terms and conditions which the lot awardee must comply with.
On 30 June 1978, the City of Manila, through the City Tenants
Security Committee (CTSC) presently known as the Urban Settlement
Office (URBAN), passed Resolution 17-78[5] which in effect awarded to 46
applicants, 37 homelots in the former Ampil-Gorospe estate located in
Tondo, Manila. Luisa Gomez, predecessor-in-interest of herein petitioner
Vicente Gomez, was awarded Lot 4, Block 1, subject to the provisions of
Resolution No. 3-78 of the CTSC and building, subdivision and zoning
rules and regulations.
price of the lot in the amount of P3,556.00 on installment basis,[7] said
payments being duly covered by official receipts.
In 1979, Luisa Gomez traveled to the Unites States of America but
returned to the Philippines in the same year.
On 18 January 1980, Luisa Gomez finally paid in full the P 3,556.00
purchase price of the lot. Despite the full payment, Luisa still paid in
installment an amount of P8,244.00, in excess of the purchase price,
which the City of Manila, through the CTSC, accepted. Additionally, the
lot was declared for taxation purposes and the corresponding real estate
taxes thereon paid from 1980-1988. In 1982, Luisa, together with her
spouse Daniel, left again for the United States of America where she
died[8] on 09 January 1983. She is survived by her husband and four
children, namely, Ramona G. Takorda, Edgardo Gomez, Erlinda G. Pena,
and Rebecca G. Dizon.[9]
Subsequently, in a memorandum dated 07 February 1984, the
Urban Settlements Officer and Member-Executive Secretary of the CTSC
directed the Western Police District, City Hall Detachment, to conduct an
investigation regarding reported violations of the terms and conditions of
the award committed by the lot awardees.
Thus, on 23 November 1984, a team headed by Pfc. Reynaldo
Cristobal of the Western Police District, proceeded to the former Ampil-
Gorospe estate where the subject lots are located, and conducted an
investigation of alleged violations thereat.
On 19 December 1984, team leader Pfc. Reynaldo Cristobal
rendered an investigation report[10] addressed to the City Mayor of Manila,
as Chairman of the CTSC, stating, among others, the following findings:
X X X After the said operation, it was found out that of all the lot awardees in
the said estate, the following were confirmed to have violated the terms and
conditions of their respective awards as indicated opposite their names, to wit:
X X X 2. Name of awardee : Daniel Gomez
Address : No. 2557-C Juan Luna St. Tondo, Manila
 Violation: The place was found actually occupied by Mrs. Erlinda
Perez and her family together with Mr. Mignony Lorghas and
family, who are paying monthly rentals of P 210.00 each to Vicente
Gomez, brother of awardee. Daniel Gomez is now presently
residing in the United States of America and only returns for
vacation once in a while as a Balikbayan X X X.
Thus, on 01 July 1986, the CTSC, headed by then City Mayor
Gemiliano Lopez, Jr. as Chairman, issued Resolution No. 015-
86,[11] adopting the findings of the investigation report submitted by Pfc.
Cristobal, and ordering the cancellation of the lot awards of Daniel Gomez
and other awardees who were found to have committed violations, and
further declaring the forfeiture of payments made by said awardees as
reasonable compensation for the use of the homelots.
In a letter[12] dated 04 August 1986, herein petitioner Vicente Gomez,
acting as attorney-in-fact[13] of his brother Daniel Gomez (spouse of Luisa
Gomez) asked for reconsideration of the CTSC resolution revoking the
award of the lot.
On 28 June 1988, Daniel Gomez, spouse of awardee Luisa Gomez,
died in the United States of America. Eventually, on 01 February 1989,
the surviving children of the deceased spouses, who were American
citizens and residents of the United States of America, executed an
affidavit of adjudication with deed of donation[14] disposing gratuitously Lot
No. 1, Block 4, in favor of their uncle Vicente Gomez.
On 20 February 1989, petitioner Vicente Gomez filed a
memorandum[15] before the CTSC praying that Resolution 15-86 be set
aside and that the award of the lot be restored to Luisa Gomez, or her
heirs or successor-in-interest , preferably Vicente Gomez.
Thereafter, two supplemental memoranda, dated 26 July
1989[16] and 10 January 1990,[17] were submitted by petitioner before the
CTSC reiterating the prayer in the initial memorandum.
On 05 February 1990, herein petitioner filed before the Regional Trial
Court (RTC) of Manila, Branch 12, a petition for certiorari, prohibition
and mandamus docketed as Civil Case No. 90-51930, entitled Vicente
Gomez, as successor-in-interest of Awardee, Luisa Gomez, petitioner,
versus City Tenants Security Committee (now Urban Settlement Office)
andRegister of Deeds of Manila, respondents.
In an order[18] dated 24 April 1990, the lower court directed the
petitioner to amend its petition so as to implead the proper government
agency.
Hence, petitioner filed an amended petition[19] impleading the City of
Manila as respondent, to which the latter submitted an answer.[20]
Accordingly, after the presentation of evidence, the lower court
promulgated its decision[21]dated 20 January 1993, the decretal portion of
which reads:
Wherefore, the petition is hereby granted :
1. Ordering the City of Manila through its agency the City Tenants Security
Committee (now Urban Settlement Office) to set aside the order of cancellation
of the award for Lot No. 4, Block 1 (formerly of the Ampil-Gorospe estate) in
favor of Luisa Gomez, her heirs and successor-in-interest, the herein petitioner;
2. Prohibiting the City of Manila through its agency including the Register of
Deeds of Manila from awarding the same lot and issuing the corresponding
certificate of title therefor to any other person;
3. Ordering the City of Manila through its agency the City Tenants Security
Committee (now Urban Settlement Office) to execute a Deed of Absolute Sale
over the aforementioned lot in favor of the petitioner as successor-in-interest of
the awardee and further ordering them to stop and/or refrain from disturbing the
peaceful physical possession thereof of (sic) the petitioner; and
4. Ordering the City of Manila through its agency the City Tenants Security
Committee (now Urban Settlement Office) to refund to the petitioner his
overpayments amounting to P8,244.00 and to pay the costs of suit.
On appeal, the Court of Appeals reversed the lower courts decision
prompting petitioner to file a motion for reconsideration which the
appellate court denied via its assailed resolution dated 29 June 1995.
Hence, the instant appeal where the core of controversy revolves
around the propriety of CTSCs act of canceling the lot award, through
Resolution No. 015-86, and further declaring the forfeiture of amounts
paid by the awardee, as reasonable compensation for the use of the home
lot.
 The petition is unmeritorious.
A thorough scrutiny of the records and an even more exhaustive
perusal of the evidence, both documentary and testimonial, would lead to
the inevitable conclusion that the fact of cancellation of the award covering
Lot 4, Block 1, by the City of Manila, acting through the CTSC, was
properly exercised within the bounds of law and contractual stipulation
between the parties.
Viewed broadly, petitioner anchors his case on the premise, albeit
erroneous, that upon full payment of the purchase price of the lot in
January 1980, Luisa Gomez, actual awardee, already acquired a vested
right over the real property subject of the present controversy. Thus,
according to petitioner, upon the death of Luisa Gomez on 09 January
1983, the alleged vested right was transmitted by operation of law to her
lawful heirs, pursuant to Article 777 of the Civil Code. Additionally,
petitioner submits that by virtue of the affidavit of adjudication with Deed
of Donation executed on 01 February 1989 in his favor by the surviving
children of Luisa, he, in effect, became the successor-in-interest of Luisa
and thus entitled to whatever rights enjoyed by the latter over the property.
In the light of existing law and jurisprudence and based on the
evidence adduced, this Court finds difficulty giving credence and weight
to petitioners submissions. We therefore rule that the cancellation of the
award of Lot 4, Block 1, through the expediency of Resolution No. 015-
86, was proper.
Primarily, it must be stressed that the contract entered into between
the City of Manila and awardee Luisa Gomez was not one of sale but a
contract to sell, which, under both statutory and case law, has its own
attributes, peculiarities and effects.
Speaking through Mr. Justice Florenz Regalado, this Court in Adelfa
Properties, Inc. vs. Court of Appeals,[22] mapped out the bold
distinctions between these species of contracts, to wit:
In a contract of sale, the title passes to the vendee upon the delivery of the thing
sold; whereas in a contract to sell, by agreement, the ownership is reserved in
the vendor and is not to pass until the full payment of the price. In a contract of
sale, the vendor has lost and cannot recover ownership until and unless the
contract is resolved or rescinded; whereas in a contract to sell, title is retained
by the vendor until the full payment of the purchase price, such payment being a
positive suspensive condition and failure of which is not a breach but an event
that prevents the obligation of the vendor to convey title from being effective.
Thus, a deed of sale is considered absolute in nature where there is neither a
stipulation in the deed that title to the property sold is reserved in the seller until
the full payment of the price, nor one giving the vendor the right to unilaterally
resolve the contract the moment the buyer fails to pay within a fixed period.
To our mind, however, this pronouncement should not curtail the
right of the parties in a contract to sell to provide additional stipulations,
nor bar them from imposing conditionsrelative to the transfer of ownership.
To be sure, a contract of sale may either be absolute or conditional.
One form of conditional sales is what is now popularly termed as a
Contract to Sell, where ownership or title is retained until the fulfillment of
a positive suspensive condition normally the payment of the purchase
price in the manner agreed upon.[23] (Emphasis ours)
From the above disquisition in Galang and applying Article 1306 of
the Civil Code, the contracting parties are accorded the liberality and
freedom to establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided the same are not contrary to law,
morals, good custom, public order or public policy. In the law on contracts,
such fundamental principle is known as the autonomy of contracts.
Under the present circumstances, we see no hindrance that prohibits
the parties from stipulating other lawful conditions, aside from full payment
of the purchase price, which they pledge to bind themselves and upon
which transfer of ownership depends.
In the instant case, we uphold the Contract to Sell, duly annexed and
attached to Resolution 16-A, which explicitly provides for additional terms
and conditions upon which the lot awardees are bound. Although
unsigned, the Contract to Sell, in addition to the provisions of Resolution
16-A, constitutes the law between the contracting parties. After all, under
the law there exists a binding contract between the parties whose minds
have met on a certain matter notwithstanding that they did not affix their
signatures to its written form.[24]
For a contract, like a contract to sell, involves a meeting of minds
between two persons whereby one binds himself, with respect to the
other, to give something or to render some service. Contracts, in general,
are perfected by mere consent, which is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the acceptance
absolute.[25]
 As to the matter of acceptance, the same may be evidenced by some
acts, or conduct, communicated to the offeror, either in a formal or an
informal manner, that clearly manifest the intention or determination to
accept the offer to buy or sell.[26]
In the case at bar, acceptance on the part of the vendee was
manifested through a plethora of acts, such as payment of the purchase
price, declaration of the property for taxation purposes, and payment of
real estate taxes thereon, and similar acts showing vendee's assent to the
contract.
Verily, Resolution 16-A and the Contract to Sell which was annexed,
attached and made to form part of said resolution, clearly laid down the
terms and conditions which the awardee-vendee must comply
with. Accordingly, as an awardee, Luisa Gomez, her heirs and
successors-in-interest alike, are duty-bound to perform the correlative
obligations embodied in Resolution 16-A and the Contract to Sell.
or a buyer on installment basis of any lot other than that which he is occupying
and for which he is applying for award
from the City.
c) Capacity to pay- The applicant must have such financial means and/or
support as will enable him to make regular payments of amortizations or
installments for the lot if the same is awarded to him.
Of equal importance are the essential terms and conditions
embraced in the Contract to Sell, which awardee Luisa Gomez, her heirs
and successors-in-interest, violated, to wit:
X X X Par.(3). The vendee shall occupy and use the lot exclusively for
his/her residential purpose . X X X
X X X Par. (5). The vendee hereby warrants and declares under oath that he/she
is a bonafide and actual occupant and tenant of the lot; X X X and that he/she
fully understands that any false statement or misrepresentation hereof (sic) shall
be sufficient cause for the automatic cancellation of his/her rights under this
agreement as well as ground for criminal prosecution.
Par. (6). Until complete payment of the purchase price and compliance with
all the vendees obligations herein, title to the lot remains in the name of the
Resolution 16-A, Series of 1978, explicitly provides that aside from
the requirement of Filipino citizenship and legal age, the basic criteria for
award of the lot pursuant to the Land for the Landless Program of the City
of Manila shall be the following:
a) Occupancy - The applicant must be the legal and actual or physical occupant
of the lot in question at the time of its acquisition by the City. He must be the
owner of the house and lot, must be using the same for his residential purposes,
and must have had a lessee-lessor relationship with the previous owner of the
land or landed estate of which the subject lot is a part.
b) Non-ownership of land - The applicant and/or his spouse, if he is married,
must not be an owner of any parcel of land in Manila, Metropolitan Manila or
elsewhere in the Philippines. Neither must he and/or his spouse be a prospective
owner
owner. During the effectivity of this agreement, however, the owner may
transfer its title or assign its rights and interest under this agreement to any
person, corporation, bank or financial institution.
Title shall pass to the vendee upon execution of a final deed of sale in his/her
favor. X X X
Par. (8). In order not to defeat the purpose of this social land reform
program of the City of Manila, and to prevent real estate
speculations within twenty years from complete payment of the purchase
price and execution of the final deed of sale, the lot and residential house or
improvement thereon shall not be sold, transferred, mortgaged, leased or
otherwise alienated or encumbered without the written consent of the City
Mayor.
Par. (9). During the effectivity of this agreement, the residential house or
improvement thereon shall not be leased, sold, transferred or otherwise
alienated by the vendee without the written consent of the owner. X X X
Par. (14). In the event that the vendee dies before full payment of the purchase
price of the lot, his/her surviving spouse, children heirs and/or successors-in-
interest shall succeed in all his/her rights and interest, as well as assume
all/his/her obligations under this agreement.
Par. (15). This agreement shall be binding upon the heirs, executors and
administrators of the vendee. (emphasis ours)
Petitioner urges that awardee Luisa Gomez did not commit any
violation of the lot award. On the contrary, the records would indubitably
show that Luisa Gomez, including her heirs and successors-in-interest,
have performed acts that constitute gross, if not brazen, violation of the
aforementioned terms and conditions of the award, as evidenced by the
investigation report submitted by Pfc. Cristobal, dated 19 December 1984.
Results of the investigation conducted on 23 November 1984, reveal
that the lot was actually occupied and leased by a certain Erlinda Perez
and Mignony Lorghas, together with their respective families, who were
paying rentals to petitioner Vicente Gomez for the lease of the subject
premises.
Moreover, in a conference held on 13 January 1989 at the Office of
the Acting Urban Settlement Officer, Lorghas admitted that she has been
leasing the property and paying rent to petitioner Vicente Gomez, thus:[27]
Atty. Bernardo: Mrs. Lorghas, how long have you been renting the
property?
Mrs. Lorghas: I was living there since 1960 until today. I was renting a
small room downfloor (sic).When the family of Mr. Gomez died,
kami na ang tumira sa itaas until now.
Atty. Bernardo : Magkano ang upa mo?
Mrs. Lorghas: P300 a month.
Atty. Bernardo: Kanino?
Mrs. Lorghas: Kay Vicente Gomez.
Atty. Bernardo: Meron bang resibo?
Mrs. Lorghas: Wala po.
Atty. Bernardo: Noong 1973, kayo na rin ang nakatira sa lugar ni
Gomez.
Mrs. Lorghas: Opo.
Certainly, said acts constitute a brazen transgression of Resolution
16-A and clear contravention of the Contract to Sell, specifically par. (3),
(8) and (9) thereof.
The contract provides in no uncertain terms, that the
abovementioned terms and conditions shall bind the heirs, executors and
administrators of the vendee. The contract further states that breach
thereof would result to the automatic cancellation of the vendees rights
thereunder.
Thus, par.(10) (b) (a) of the Contract to Sell, which reads:
X X X any violation of the terms and conditions of this agreement shall
automatically cause the cancellation of the vendees rights under this agreement
without necessity of prior notice or judicial declaration X X X.
Such kind of stipulation was upheld by this Court in the Adelfa case
where we categorically declared that Article 1592 of the Civil Code, which
requires rescission either by judicial action, or notarial act, does not apply
to a contract to sell.[28]
Moreover, judicial action for rescission of a contract is not necessary
where the contract provides for automatic rescission in case of
breach,[29] as in the contract involved in the present controversy.
Likewise, this Court sustains the forfeiture of the payments made by
awardee as reasonable compensation for the use of the lot. At this
juncture, par. (1) of the Contract to Sell furnishes support to this
conclusion:
X X X In case of the cancellation of the vendees rights under this agreement as
hereinafter stipulated, all payments made by him/her shall be forfeited and
considered as rentals for the use of the lot X X X.
Further, Article 1486 of the Civil Code provides that a stipulation that
the installments or rents paid shall not be returned to the vendee or lessee
shall be valid insofar as the same may not be unconscionable under the
circumstances.[30]
Applying the foregoing, we are of the considered view that the
payment of the purchase price of P3,556.00, constitutes fair and
reasonable rental for the period in which said property was under the
control of awardee Luisa Gomez, her heirs and successors-in-interest.
Undeniably, the awardee together with her heirs and successors-in-
interest, have gained benefits, financial or otherwise, for a period of eight
years - from the time of actual award of the lot to the time of cancellation
thereof (1978-1986).
Nonetheless, we ought to stress that in the present case, forfeiture
of the installments paid as rentals, only applies to the purchase price
of P3,556.00 and not to the overpayment of the amount of P8,244.00.
Under these circumstances, the vendor should refund the amount
of P8,244.00 representing the overpayment made, plus interest, to be
computed in accordance with the rule of thumb enunciated in the
landmark case of Eastern Shipping Lines, Inc. vs. Court of Appeals[31] and
reiterated in the case of Philippine National Bank vs. Court of Appeals.[32]
For us to uphold the forfeiture of the amount representing the
overpayment would be to revolt against the dictates of justice and
fairness. A contrary ruling would unjustly enrich the vendor to the
prejudice of the vendee.
In the same vein, the provisions of Article 777 of the Civil Code
notwithstanding, we hold that the surviving children of awardee Luisa
Gomez are not qualified transferees of Lot 4, Block 1 for failure to conform
with the prerequisites set by Resolution 16-A, to wit, Filipino citizenship
and actual occupancy, which in the present case, are basic criteria for the
award of the lot, pursuant to the Land for the Landless Program of the City
of Manila.
The records reveal that the children of Luisa Gomez are American
citizens and permanent residents of the United States of
America. Notably, Resolution 16-A specifically enumerates Filipino
citizenship and actual occupancy of the lot for residential purposes, as
qualifications for entitlement to the lot award. For this court to consider
said surviving children as qualified awardee-transferees would render
illusory the purposes for which Resolution 16-A and the Land for the
Landless Program of the City of Manila were adopted.
Even assuming arguendo that the surviving children of Luisa Gomez
are entitled to the lot by virtue of Article 777 of the Civil Code, said heirs
nevertheless abandoned their right when they violated the terms and
conditions of the award by donating the subject property to petitioner
Vicente Gomez.
As paragraph (15) of the agreement provides that the heirs of the
vendee shall be bound thereby, it is then incumbent upon said heirs to
render strict compliance with the provisions thereof.
In particular, paragraph (8) of the Contract proscribes the sale,
transfer, mortgage, lease, alienation or encumbrance of the lot, residential
house, or improvement thereon, without the written consent of the City
Mayor, within a period of twenty (20) years from complete payment of the
purchase price and execution of the final deed of sale. The execution of
the Deed of Donation by the surviving children of Luisa Gomez on
February 1, 1989, in favor of Vicente Gomez, was clearly within the
prohibited period of 20 years from the full payment of the purchase price
on January 18, 1980.
Without doubt, the prohibition applies to them.
Furthermore, the subject lot and residential house were occupied by,
and leased to, third persons, in crystalline and evident derogation of the
terms of the award.
WHEREFORE, premises considered, the instant petition is
DISMISSED for lack of merit, and the assailed decision of the Court of
Appeals with respect to the cancellation of the award of Lot 4, Block 1, is
AFFIRMED SUBJECT TO MODIFICATION as to the forfeiture of amounts
paid by the vendee.
As modified, the City of Manila, is hereby ordered to refund with
dispatch the amount ofP8,244.00 representing the overpayment made by
petitioner plus interest.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr.,
JJ., concur.
[G.R. No. 103577. October 7, 1996]ROMULO A. CORONEL, ALARICO A.
CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for
herself and on behalf of Floraida C. Tupper, as attorney-in-fact),
CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA
BALAIS MABANAG, petitioners, vs. THE COURT OF APPEALS,
CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ,
assisted by GLORIA F. NOEL as attorney-in-fact, respondents.
DECISION
MELO, J.:
The petition before us has its roots in a complaint for specific
performance to compel herein petitioners (except the last named, Catalina
Balais Mabanag) to consummate the sale of a parcel of land with its
improvements located along Roosevelt Avenue in Quezon City entered into
by the parties sometime in January 1985 for the price of P1,240,000.00.
The undisputed facts of the case were summarized by respondent court
in this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter
referred to as Coronels) executed a document entitled Receipt of Down Payment
(Exh. A) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as
Ramona) which is reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 - Total amount
50,000.00 - Down payment
------------------------------------------
P1,190,000.00 - Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum
of Fifty Thousand Pesos purchase price of our inherited house and lot, covered by
TCT No. 119627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased father,
Constancio P. Coronel, the transfer certificate of title immediately upon receipt of
the down payment above-stated.
On our presentation of the TCT already in or name, We will immediately execute the
deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall
immediately pay the balance of the P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon
execution of the document aforestated;
2. The Coronels will cause the transfer in their names of the title of the property
registered in the name of their deceased father upon receipt of the Fifty Thousand
(P50,000.00) Pesos down payment;
3. Upon the transfer in their names of the subject property, the Coronels will execute
the deed of absolute sale in favor of Ramona and the latter will pay the former the
whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00)
Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz
(hereinafter referred to as Concepcion), mother of Ramona, paid the down payment
of Fifty Thousand (P50,000.00) Pesos (Exh. B, Exh. 2).
On February 6, 1985, the property originally registered in the name of the Coronels
father was transferred in their names under TCT No. 327043 (Exh. D; Exh 4)
On February 18, 1985, the Coronels sold the property covered by TCT No. 327043
to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for
One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter
has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C)
For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona
by depositing the down payment paid by Concepcion in the bank in trust for
Ramona Patricia Alcaraz.
On February 22, 1985, Concepcion, et. al., filed a complaint for a specific
performance against the Coronels and caused the annotation of a notice of lis
pendens at the back of TCT No. 327403 (Exh. E; Exh. 5).
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim
covering the same property with the Registry of Deeds of Quezon City (Exh. F; Exh.
6).
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject
property in favor of Catalina (Exh. G; Exh. 7).
On June 5, 1985, a new title over the subject property was issued in the name of
Catalina under TCT No. 351582 (Exh. H; Exh. 8).
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court (Branch 83,
RTC, Quezon City) the parties agreed to submit the case for decision solely
on the basis of documentary exhibits.Thus, plaintiffs therein (now private
respondents) proffered their documentary evidence accordingly marked as
Exhibits A through J, inclusive of their corresponding submarkings.Adopting
these same exhibits as their own, then defendants (now petitioners)
accordingly offered and marked them as Exhibits 1 through 10, likewise
inclusive of their corresponding submarkings. Upon motion of the parties, the
trial court gave them thirty (30) days within which to simultaneously submit
their respective memoranda, and an additional 15 days within which to submit
their corresponding comment or reply thereto, after which, the case would be
deemed submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge
Reynaldo Roura, who was then temporarily detailed to preside over Branch
82 of the RTC of Quezon City. On March 1, 1989, judgment was handed down
by Judge Roura from his regular bench at Macabebe, Pampanga for
the Quezon City branch, disposing as follows:
WHEREFORE, judgment for specific performance is hereby rendered ordering
defendant to execute in favor of plaintiffs a deed of absolute sale covering that
parcel of land embraced in and covered by Transfer Certificate of Title No. 327403
(now TCT No. 331582) of the Registry of Deeds for Quezon City, together with all
the improvements existing thereon free from all liens and encumbrances, and once
accomplished, to immediately deliver the said document of sale to plaintiffs and
upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance
of the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of
Title No. 331582 of the Registry of Deeds for Quezon City in the name of intervenor
is hereby canceled and declared to be without force and effect.Defendants and
intervenor and all other persons claiming under them are hereby ordered to vacate
the subject property and deliver possession thereof to plaintiffs. Plaintiffs claim for
damages and attorneys fees, as well as the counterclaims of defendants and
intervenors are hereby dismissed.
No pronouncement as to costs.
So Ordered.
Macabebe, Pampanga for Quezon City, March 1, 1989.
(Rollo, p. 106)
A motion for reconsideration was filed by petitioners before the new
presiding judge of the Quezon City RTC but the same was denied by Judge
Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision and to render
anew decision by the undersigned Presiding Judge should be denied for the
following reasons: (1) The instant case became submitted for decision as of April
14, 1988 when the parties terminated the presentation of their respective
documentary evidence and when the Presiding Judge at that time was Judge
Reynaldo Roura.The fact that they were allowed to file memoranda at some future
date did not change the fact that the hearing of the case was terminated before Judge
Roura and therefore the same should be submitted to him for decision; (2) When the
defendants and intervenor did not object to the authority of Judge Reynaldo Roura to
decide the case prior to the rendition of the decision, when they met for the first time
before the undersigned Presiding Judge at the hearing of a pending incident in Civil
Case No. Q-46145 on November 11, 1988, they were deemed to have acquiesced
thereto and they are now estopped from questioning said authority of Judge Roura
after they received the decision in question which happens to be adverse to them; (3)
While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at this
Branch of the Court, he was in all respects the Presiding Judge with full authority to
act on any pending incident submitted before this Court during his
incumbency. When he returned to his Official Station at Macabebe, Pampanga, he
did not lose his authority to decide or resolve cases submitted to him for decision or
resolution because he continued as Judge of the Regional Trial Court and is of co-
equal rank with the undersigned Presiding Judge. The standing rule and supported
by jurisprudence is that a Judge to whom a case is submitted for decision has the
authority to decide the case notwithstanding his transfer to another branch or region
of the same court (Sec. 9, Rule 135, Rule of Court).
Coming now to the twin prayer for reconsideration of the Decision dated March 1,
1989 rendered in the instant case, resolution of which now pertains to the
undersigned Presiding Judge, after a meticulous examination of the documentary
evidence presented by the parties, she is convinced that the Decision of March 1,
1989 is supported by evidence and, therefore, should not be disturbed.
IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul
Decision and Render Anew Decision by the Incumbent Presiding Judge dated March
20, 1989 is hereby DENIED.
SO ORDERED.
Quezon City, Philippines, July 12, 1989.
(Rollo, pp. 108-109)
Petitioners thereupon interposed an appeal, but on December 16, 1991,
the Court of Appeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.)
rendered its decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last
pleading, private respondents Reply Memorandum, was filed on September
15, 1993. The case was, however, re-raffled to undersigned ponente only
on August 28, 1996, due to the voluntary inhibition of the Justice to whom the
case was last assigned.
While we deem it necessary to introduce certain refinements in the
disquisition of respondent court in the affirmance of the trial courts decision,
we definitely find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the resolution
of the other issues in the case at bar is the precise determination of the legal
significance of the document entitled Receipt of Down Payment which was
offered in evidence by both parties. There is no dispute as to the fact that the
said document embodied the binding contract between Ramona Patricia
Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other,
pertaining to a particular house and lot covered by TCT No. 119627, as
defined in Article 1305 of the Civil Code of the Philippines which reads as
follows:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
While, it is the position of private respondents that the Receipt of Down
Payment embodied a perfected contract of sale, which perforce, they seek to
enforce by means of an action for specific performance, petitioners on their
part insist that what the document signified was a mere executory contract to
sell, subject to certain suspensive conditions, and because of the absence of
Ramona P. Alcaraz, who left for the United States of America, said contract
could not possibly ripen into a contract of absolute sale.
Plainly, such variance in the contending parties contention is brought
about by the way each interprets the terms and/or conditions set forth in said
private instrument. Withal, based on whatever relevant and admissible
evidence may be available on record, this Court, as were the courts below, is
now called upon to adjudge what the real intent of the parties was at the time
the said document was executed.
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
Sale, by its very nature, is a consensual contract because it is perfected
by mere consent.The essential elements of a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a
Contract of Salebecause the first essential element is lacking. In a contract to
sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or
consent to transfer ownership of the property subject of the contract to sell
until the happening of an event, which 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 sell the subject property when the entire
amount of the purchase price is delivered to him. In other words the full
payment of the purchase price partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell from arising and thus,
ownership is retained by the prospective seller without further remedies by the
prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had
occasion to rule:
Hence, We hold that the contract between the petitioner and the respondent was a
contract to sell where the ownership or title is retained by the seller and is not to
pass until the full payment of the price, such payment being a positive suspensive
condition and failure of which is not a breach, casual or serious, but simply an event
that prevented the obligation of the vendor to convey title from acquiring binding
force.
Stated positively, upon the fulfillment of the suspensive condition which
is the full payment of the purchase price, the prospective sellers obligation to
sell the subject property by entering into a contract of sale with the prospective
buyer becomes demandable as provided in Article 1479 of the Civil Code
which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promissor of the promise is supported by a consideration
distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the subject
property despite delivery thereof to the prospective buyer, binds himself to sell
the said property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered
as a conditional contract of sale where the seller may likewise reserve title to
the property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is
present, although it is conditioned upon the happening of a contingent event
which may or may not occur. If the suspensive condition is not fulfilled, the
perfection of the contract of sale is completely abated (cf. Homesite and
Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the
suspensive condition is fulfilled, the contract of sale is thereby perfected, such
that if there had already been previous delivery of the property subject of the
sale to the buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition
which is the full payment of the purchase price, ownership will not
automatically transfer to the buyer although the property may have been
previously delivered to him. The prospective seller still has to convey title to
the prospective buyer by entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person, as in
the case at bench. In a contract to sell, there being no previous sale of the
property, a third person buying such property despite the fulfillment of the
suspensive condition such as the full payment of the purchase price, for
instance, cannot be deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There is no double
sale in such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-sellers title per se, but the
latter, of course, may be sued for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely affect
the sellers title thereto. In fact, if there had been previous delivery of the
subject property, the sellers ownership or title to the property is automatically
transferred to the buyer such that, the seller will no longer have any title to
transfer to any third person. Applying Article 1544 of the Civil Code, such
second buyer of the property who may have had actual or constructive
knowledge of such defect in the sellers title, or at least was charged with the
obligation to discover such defect, cannot be a registrant in good faith. Such
second buyer cannot defeat the first buyers title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property subject
of the sale.
With the above postulates as guidelines, we now proceed to the task of
deciphering the real nature of the contract entered into by petitioners and
private respondents.
It is a canon in the interpretation of contracts that the words used therein
should be given their natural and ordinary meaning unless a technical
meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586
[1992]). Thus, when petitioners declared in the said Receipt of Down Payment
that they --
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum
of Fifty Thousand Pesos purchase price of our inherited house and lot, covered
by TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount
of P1,240,000.00.
without any reservation of title until full payment of the entire purchase price,
the natural and ordinary idea conveyed is that they sold their property.
When the Receipt of Down payment is considered in its entirety, it
becomes more manifest that there was a clear intent on the part of petitioners
to transfer title to the buyer, but since the transfer certificate of title was still in
the name of petitioners father, they could not fully effect such transfer although
the buyer was then willing and able to immediately pay the purchase
price. Therefore, petitioners-sellers undertook upon receipt of the down
payment from private respondent Ramona P. Alcaraz, to cause the issuance
of a new certificate of title in their names from that of their father, after which,
they promised to present said title, now in their names, to the latter and to
execute the deed of absolute sale whereupon, the latter shall, in turn, pay the
entire balance of the purchase price.
The agreement could not have been a contract to sell because the
sellers herein made no express reservation of ownership or title to the subject
parcel of land. Furthermore, the circumstance which prevented the parties
from entering into an absolute contract of sale pertained to the sellers
themselves (the certificate of title was not in their names) and not the full
payment of the purchase price. Under the established facts and
circumstances of the case, the Court may safely presume that, had the
certificate of title been in the names of petitioners-sellers at that time, there
would have been no reason why an absolute contract of sale could not have
been executed and consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did
not merely promise to sell the property to private respondent upon the
fulfillment of the suspensive condition. On the contrary, having already agreed
to sell the subject property, they undertook to have the certificate of title
change to their names and immediately thereafter, to execute the written deed
of absolute sale.
Thus, the parties did not merely enter into a contract to sell where the
sellers, after compliance by the buyer with certain terms and conditions,
promised to sell the property to the latter. What may be perceived from the
respective undertakings of the parties to the contract is that petitioners had
already agreed to sell the house and lot they inherited from their father,
completely willing to transfer ownership of the subject house and lot to the
buyer if the documents were then in order. It just so happened, however, that
the transfer certificate of title was then still in the name of their father. It was
more expedient to first effect the change in the certificate of title so as to bear
their names. That is why they undertook to cause the issuance of a new
transfer of the certificate of title in their names upon receipt of the down
payment in the amount of P50,000.00. As soon as the new certificate of title
is issued in their names, petitioners were committed to immediately execute
the deed of absolute sale. Only then will the obligation of the buyer to pay the
remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly
entered into so as to protect the seller against a buyer who intends to buy the
property in installment by withholding ownership over the property until the
buyer effects full payment therefor, in the contract entered into in the case at
bar, the sellers were the ones who were unable to enter into a contract of
absolute sale by reason of the fact that the certificate of title to the property
was still in the name of their father. It was the sellers in this case who, as it
were, had the impediment which prevented, so to speak, the execution of an
contract of absolute sale.
What is clearly established by the plain language of the subject
document is that when the said Receipt of Down Payment was prepared and
signed by petitioners Romulo A. Coronel, et. al., the parties had agreed to a
conditional contract of sale, consummation of which is subject only to the
successful transfer of the certificate of title from the name of petitioners father,
Constancio P. Coronel, to their names.
The Court significantly notes that this suspensive condition was, in fact,
fulfilled on February 6, 1985 (Exh. D; Exh. 4). Thus, on said date, the
conditional contract of sale between petitioners and private respondent
Ramona P. Alcaraz became obligatory, the only act required for the
consummation thereof being the delivery of the property by means of the
execution of the deed of absolute sale in a public instrument, which petitioners
unequivocally committed themselves to do as evidenced by the Receipt of
Down Payment.
Article 1475, in correlation with Article 1181, both of the Civil Code,
plainly applies to the case at bench. Thus,
Art. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the happening
of the event which constitutes the condition.
Since the condition contemplated by the parties which is the issuance of
a certificate of title in petitioners names was fulfilled on February 6, 1985, the
respective obligations of the parties under the contract of sale became
mutually demandable, that is, petitioners, as sellers, were obliged to present
the transfer certificate of title already in their names to private respondent
Ramona P. Alcaraz, the buyer, and to immediately execute the deed of
absolute sale, while the buyer on her part, was obliged to forthwith pay the
balance of the purchase price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their
petition, petitioners conclusively admitted that:
 3. The petitioners-sellers Coronel bound themselves to effect the
transfer in our names from our deceased father Constancio P.
Coronel, the transfer certificate of title immediately upon receipt
of the downpayment above-stated". The sale was still subject
to this suspensive condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of
sale subject to a suspensive condition. Only, they contend, continuing in the
same paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first transferring the
title to the property under their names, there could be no perfected contract of
sale. (Emphasis supplied.)
(Ibid.)
not aware that they have set their own trap for themselves, for Article 1186 of
the Civil Code expressly provides that:
Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment.
Besides, it should be stressed and emphasized that what is more
controlling than these mere hypothetical arguments is the fact that
the condition herein referred to was actually and indisputably fulfilled on
February 6, 1985, when a new title was issued in the names of petitioners as
evidenced by TCT No. 327403 (Exh. D; Exh. 4).
The inevitable conclusion is that on January 19, 1985, as evidenced by
the document denominated as Receipt of Down Payment (Exh. A; Exh. 1), the
parties entered into a contract of sale subject to the suspensive condition that
the sellers shall effect the issuance of new certificate title from that of their
fathers name to their names and that, on February 6, 1985, this condition was
fulfilled (Exh. D; Exh. 4).
We, therefore, hold that, in accordance with Article 1187 which
pertinently provides -
Art. 1187. The effects of conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the obligation . . .
In obligations to do or not to do, the courts shall determine, in each case, the
retroactive effect of the condition that has been complied with.
the rights and obligations of the parties with respect to the perfected contract
of sale became mutually due and demandable as of the time of fulfillment or
occurrence of the suspensive condition on February 6, 1985. As of that point
in time, reciprocal obligations of both seller and buyer arose.
Petitioners also argue there could been no perfected contract on
January 19, 1985 because they were then not yet the absolute owners of the
inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of
transferring ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights
and obligations to the extent and value of the inheritance of a person are transmitted
through his death to another or others by his will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the
decedent Constancio P. Coronel are compulsory heirs who were called to
succession by operation of law. Thus, at the point their father drew his last
breath, petitioners stepped into his shoes insofar as the subject property is
concerned, such that any rights or obligations pertaining thereto became
binding and enforceable upon them. It is expressly provided that rights to the
succession are transmitted from the moment of death of the decedent (Article
777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners claim that succession may not be
declared unless the creditors have been paid is rendered moot by the fact that
they were able to effect the transfer of the title to the property from the
decedents name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed
lack of capacity to enter into an agreement at that time and they cannot be
allowed to now take a posture contrary to that which they took when they
entered into the agreement with private respondent Ramona P. Alcaraz. The
Civil Code expressly states that:
Art. 1431. Through estoppel an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person
relying thereon.
Having represented themselves as the true owners of the subject property at
the time of sale, petitioners cannot claim now that they were not yet the
absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected
contract of sale between them and Ramona P. Alcaraz, the latter breach her
reciprocal obligation when she rendered impossible the consummation
thereof by going to the United States of America, without leaving her address,
telephone number, and Special Power of Attorney (Paragraphs 14 and 15,
Answer with Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo,
p. 43), for which reason, so petitioners conclude, they were correct in
unilaterally rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the
contract of sale in the instant case. We note that these supposed grounds for
petitioners rescission, are mere allegations found only in their responsive
pleadings, which by express provision of the rules, are deemed controverted
even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of
Court). The records are absolutely bereft of any supporting evidence to
substantiate petitioners allegations. We have stressed time and again that
allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong,
110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere
allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United
States of America on February 6, 1985, we cannot justify petitioners-sellers
act of unilaterally and extrajudicially rescinding the contract of sale, there
being no express stipulation authorizing the sellers to extrajudicially rescind
the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs.
Vda. De Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of
Ramona P. Alcaraz because although the evidence on record shows that the
sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been
dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted for and
in behalf of her daughter, if not also in her own behalf. Indeed, the down
payment was made by Concepcion D. Alcaraz with her own personal Check
(Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence
showing that petitioners ever questioned Concepcions authority to represent
Ramona P. Alcaraz when they accepted her personal check. Neither did they
raise any objection as regards payment being effected by a third
person. Accordingly, as far as petitioners are concerned, the physical
absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default,
insofar as her obligation to pay the full purchase price is
concerned. Petitioners who are precluded from setting up the defense of the
physical absence of Ramona P. Alcaraz as above-explained offered no proof
whatsoever to show that they actually presented the new transfer certificate
of title in their names and signified their willingness and readiness to execute
the deed of absolute sale in accordance with their agreement. Ramonas
corresponding obligation to pay the balance of the purchase price in the
amount of P1,190,000.00 (as buyer) never became due and demandable and,
therefore, she cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving
reciprocal obligations may be considered in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time
the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation.
xxx
In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon
him. From the moment one of the parties fulfill his obligation, delay by the other
begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of
sale between petitioners and respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina
B. Mabanag, gave rise to a case of double sale where Article 1544 of the Civil
Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring
it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof to the person who
presents the oldest title, provided there is good faith.
The record of the case shows that the Deed of Absolute Sale dated April
25, 1985 as proof of the second contract of sale was registered with the
Registry of Deeds of Quezon City giving rise to the issuance of a new
certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus,
the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to
pass to the buyer, the exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b) should there be no
inscription by either of the two buyers, when the second buyer, in good faith,
acquires possession of the property ahead of the first buyer. Unless, the
second buyer satisfies these requirements, title or ownership will not transfer
to him to the prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the
subject, now a distinguished member of the Court, Justice Jose C. Vitug,
explains:
The governing principle is prius tempore, potior jure (first in time, stronger in
right). Knowledge by the first buyer of the second sale cannot defeat the first buyers
rights except when the second buyer first registers in good faith the second sale
(Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second
buyer of the first sale defeats his rights even if he is first to register, since knowledge
taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No.
58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129
SCRA 656), it was held that it is essential, to merit the protection of Art. 1544,
second paragraph, that the second realty buyer must act in good faith in registering
his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs.
CA, G.R. No. 95843, 02 September 1992).
(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioners point out that the notice of lis pendens in the case at bar was
annotated on the title of the subject property only on February 22, 1985,
whereas, the second sale between petitioners Coronels and petitioner
Mabanag was supposedly perfected prior thereto or on February 18,
1985. The idea conveyed is that at the time petitioner Mabanag, the second
buyer, bought the property under a clean title, she was unaware of any
adverse claim or previous sale, for which reason she is a buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not
whether or not the second buyer in good faith but whether or not said second
buyer registers such second sale in good faith, that is, without knowledge of
any defect in the title of the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag
could not have in good faith, registered the sale entered into on February 18,
1985 because as early as February 22, 1985, a notice of lis pendens had been
annotated on the transfer certificate of title in the names of petitioners,
whereas petitioner Mabanag registered the said sale sometime in April,
1985. At the time of registration, therefore, petitioner Mabanag knew that the
same property had already been previously sold to private respondents, or, at
least, she was charged with knowledge that a previous buyer is claiming title
to the same property.Petitioner Mabanag cannot close her eyes to the defect
in petitioners title to the property at the time of the registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers the sale after he has acquired knowledge that
there was a previous sale of the same property to a third party or that another person
claims said property in a previous sale, the registration will constitute a registration
in bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA
349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs.
Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and
Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between
petitioners and Catalina B. Mabanag on February 18, 1985, was correctly
upheld by both the courts below.
Although there may be ample indications that there was in fact an
agency between Ramona as principal and Concepcion, her mother, as agent
insofar as the subject contract of sale is concerned, the issue of whether or
not Concepcion was also acting in her own behalf as a co-buyer is not
squarely raised in the instant petition, nor in such assumption disputed
between mother and daughter. Thus, We will not touch this issue and no
longer disturb the lower courts ruling on this point.
WHEREFORE, premises considered, the instant petition is hereby
DISMISSED and the appealed judgment AFFIRMED.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide, Jr., and Francisco, JJ., concur.
Panganiban, J., no part.