Flancia vs. Court of Appeals G.R. No.
146997, April On appeal, CA set aside the decision of the regular
26, 2005
Facts:Spouses Flancia allege that they purchased from
Oakland Development Resources Corp. a parcel of land
and the spouses were authorized to transport all their
personal belongings to their house at the lot. On
December 24, 1992, Flancias received a copy of the
execution foreclosing the mortgage issued by the RTC,
Branch 98 ordering defendant Sheriff Sula to sell at
public auction several lots of Oakland including the land
they purchased. They seek to nullify the foreclosed
mortgage and also seeks for payment of damages
Defendant William Ong claimed that on May 19,
1989, Oakland mortgaged to him two (2) parcels of
land (which includes the lot of the Spouses Flancia)
as security and guaranty for the payment of a loan
in the sum of P2,000,000.00 which was not paid by
Oakland resulting to an action for foreclosure of
the said real estate mortgage which was already
affirmed by the CA. Genato alleges that the
Contract to Sell between the spouses and Oakland
does not appear to have been registered with the
Register of Deeds of Quezon City to affect him and
Oakland so they are not bound by it making the
registered mortgage superior to
to the Contract to Sell since ownership of the lot
was not yet passed to the spouses, not until full
payment.
After trial, the assisting judge of the trial court
rendered a decision dated August 16, 1996,
ordering Oakland to pay Spouses Flancia the
payments they made for the option to purchase,
downpayment, amortizations plus legal interest
including moral and exemplary damages, and
attorney’s fees plus cost. Decision included
dismissing Oakland counterclaim and Genatos (dili
ko sure kung si Genato jud or ang Spouses Flancia
pero Genato man ang naa sa decision, hehehe)
counterclaim.
On motion for reconsideration, the regular
presiding judge set aside the judgment of the
assisting judge and rendered a new one on
November 27, 1996, favoring of the Spouses
Flancia, declaring the mortgage and the foreclosure
null and void and ordered Oakland to pay the
Spouses Flancia litigation-related expenses, Sheriff
Sula to desist from conducting further proceedings
in the foreclosure, and dismissing the
counterclaims of defendants Oakland and Genato
(Oh, kani murag sakto Genato na jud) and with
costs against them.
presiding judge and reinstated the judgment of the
assisting judge August 16, 1996.
Issues: (1) whether or not the registered mortgage
constituted over the property was valid;
(2) whether or not the registered mortgage was
superior to the contract to sell; and
(3) whether or not the mortgagee was in good
faith.
Held: SC Affirmed the decision of the CA.
All the essential requisites of a contract of
mortgage under the Article 2085 of the Civil Code
are present.
FIRST ISSUE: WAS THE REGISTERED MORTGAGE
VALID? (Mao ni ang topic sa Syllabus:
The contract between Spouses Flancia and
Oakland, aside from the fact that it was
denominated as a contract to sell, the intention of
Oakland not to transfer ownership to petitioners
until full payment of the purchase price was very
clear. Acts of ownership over the property were
expressly withheld by Oakland from petitioner. All
that was granted to them by the occupancy permit
was the right to possess it.
Clearly, when the property was mortgaged to
Genato in May 1989, what was in effect between
Oakland and Spouses Flancia was a contract to
sell, not a contract of sale. Oakland retained
absolute ownership over the property.
Ownership is the independent and general power
of a person over a thing for purposes recognized by
law and within the limits established thereby.
According to Art. 428 of the Civil Code, this means
that:
The owner has the right to enjoy and dispose of a
thing, without other limitations than those
established by law. Aside from the jus utendi and
the jus abutendi inherent in the right to enjoy the
thing, the right to dispose, or the jus disponendi, is
the power of the owner to alienate, encumber,
transform and even destroy the thing owned.
Because Oakland retained all the foregoing rights
as owner of the property, it was entitled
absolutely to mortgage it to Genato. Hence, the
mortgage was valid.
SECOND ISSUE: WAS THE REGISTERED MORTGAGE
SUPERIOR TO THE CONTRACT TO SELL?
An unregistered sale is preferred over a registered
mortgage over the same property yet this
inapplicable to the case at bar. A contract of sale
and a contract to sell are worlds apart. In the case
before us, Oakland retained absolute ownership
over the property under the contract to sell and
therefore had every right to mortgage it. Genatos
registered mortgage was superior to petitioners
contract to sell, subject to any liabilities Oakland
may have incurred in favor of Spouses Flancia by
irresponsibly mortgaging the property to Genato
despite its commitments under their contract to
sell.
THIRD ISSUE: WAS THE MORTGAGE IN GOOD
FAITH?
The third issue involves a factual matter which
should not be raised in this petition. Only questions
of law may be raised in a Rule 45 petition. This
Court is not a trier of facts. Just as an innocent
purchaser for value may rightfully rely on what
appears in the certificate of title, a mortgagee has
the right to rely on what appears in the title
presented to him. In the absence of anything to
arouse suspicion, he is under no obligation to look
beyond the certificate and investigate the title of
the mortgagor appearing on the face of the said
certificate.
Velarde vs. Court of Appeals (361 SCRA 57)
FACTS: The private respondent executed a Deed of
Sale with Assumption of Mortgage, with a balance
of P1.8 million, in favor of the petitioners. Pursuant
to said agreements, plaintiffs paid the bank (BPI)
for three (3) months until they were advised that
the Application for Assumption of Mortgage was
denied. This prompted the plaintiffs not to make
any further payment. Private respondent wrote the
petitioners informing the non-fulfillment of the
obligations. Petitioners, thru counsel responded
that they are willing to pay in cash the balance
subject to several conditions. Private respondents
sent a notarial notice of cancellation/rescission of
the Deed of Sale. Petitioners filed a complaint
which was consequently dismissed by an outgoing
judge but was reversed by the assuming judge in
their Motion for Reconsideration. The Court of
Appeals reinstated the decision to dismiss.
ISSUE: Whether or not there is a substantial
breach of contract that would entitle its rescission.
RULING: YES. Article 1191 of the New Civil Code
applies. The breach committed did not merely
consist of a slight delay in payment or an
irregularity; such breach would not normally defeat
the intention of the parties to the contract. Here,
petitioners not only failed to pay the P1.8 million
balance, but they also imposed upon private
respondents new obligations as preconditions to
the performance of their own obligation. In effect,
the qualified offer to pay was a repudiation of an
existing obligation, which was legally due and
demandable under the contract of sale. Hence,
private respondents were left with the legal option
of seeking rescission to protect their own interest.
Coronel vs ca 263 scra 15
FACTS: This case is about a sale of land in
Roosevelt Avenue, Quezon City by the vendor
Romulo Coronel to the vendees Conception Alcaraz
and her daughter Ramona Patricia Alcaraz with the
following conditions:
The Coronel’s will immediately transfer the
certificate of title in their name upon receipt of the
downpayment which is ₱50,000.
Upon the transfer in their names of the subject
property, the Coronel’s will execute the deed of
absolute sale in favor of Ramona and then Ramona
shall immediately pay the Coronel’s the whole
balance of ₱1,190,000.
On January 15, 1985, Conception paid the
downpayment of ₱50,000 and then on February 6,
1985, the property was now registered under the
name of Coronel’s. By Feb. 18, 1985, the Coronel’s
sold the property to Catalina B. Mabanag for
₱1,580,000 after she made a ₱300,000
downpayment. This is the reason why the Coronel’s
cancelled and rescind the contract with the Alcaraz
by depositing back the ₱50,000 to Ramona’s bank
account.
On Feb. 22, Conception filed a complaint for
specific performance against the Coronel’s. On
April, the Coronel’s executed a deed of absolute
sale over the subject property to Catalina after
which on June Catalina was issued a new title over
the subject property.
ISSUE: Whether or not the “Receipt of Down
payment” embodied a perfected contract of sale or
just a mere contract to sell?
HELD: CONTRACT OF SALE- contracting parties
obligates himself to transfer the ownership and to
deliver a determinate thing and the other to pay a
price certain in money or its equivalent.
CONTRACT TO SELL- the prospective seller explicitly
reserves the transfer of the title to the prospective
buyer, meaning the seller does not yet agree or
consent to transfer the ownership of the property
until the happening of a contingent event like full
payment of price.
SUPREME COURT RULING:
When the “Receipt of Down Payment” document
was prepared and signed by Romulo Coronel, the
parties had agreed to a conditional contract of sale
the consummation of the contract is subject only to
the successful transfer of the certificate of Title.
According to Supreme Court, the receipt of down
payment document manifests a clear intent of the
Coronel’s to transfer the title to the buyer, but
since the title is still in the name effect the transfer
even though the buyers are able and willing to
immediately pay the purchase price. The
agreement as well could not have been a contract
to sell because the seller or the Coronel’s made no
express reservation of ownership or the title of the
land.
On Feb. 6, 1985, the Contract of Sale between the
Coronel’s and the Alcaraz’ became obligatory.
Republic vs Florendo 549 scra 527
Facts: Petitioner Republic of the Philippines is
represented in this case by the Philippine Economic
Zone Authority (PEZA), a government corporation
created under RA 7916, as amended.
On April 14, 1991, the Export Processing Zone
Authority, (PEZA), predecessor of PEZA, filed a
complaint for the expropriation of seven parcels of
land located at Barrio Ibo, Lapu-Lapu City, Cebu,
owned by respondents. The purpose of the
expropriation was to establish and develop an
export processing zone or a part thereof on those
real properties. After trial on the merits, the RTC
rendered a decision ordering the expropriation of
the seven parcels of land and payment of just
compensation of P1,500 per sq. m. with 12%
interest per annum from the time petitioner took
possession. During the pendency of petitioner’s
appeal for the correctness of valuation, both
parties reached an amicable settlement and agreed
for the payment as fixed by RTC; as well as
presentation by respondents of clean titles of all
the subject properties before payment by
petitioner.
Accordingly, the parties executed a deed of
absolute sale dated June 25, 2001 which set out
the terms and conditions of their settlement, the
transfer of ownership from respondents to
petitioner and the execution by the parties of the
corresponding deed of absolute sale for the
remaining six lots as soon as respondents could
settle or clear the encumbrances or other problems
affecting them. Petitioner prepared a joint motion
to dismiss the expropriation case but respondent
Antonio Florendo refused to sign because there
were still three lots which had not yet been paid.
Respondents could not clear these properties of
their encumbrances and liens as there were
pending cases filed by third party claimants over
them. Instead, they proposed that a partial
compromise agreement be executed to cover the
four lots that had already been sold and
transferred to PEZA. Petitioner, however, found the
proposal unacceptable and contrary to their
compromise agreement.
Issue: Whether or not there was a perfected
compromise agreement between the parties.
Ruling: The compromise agreement the parties
executed was in the form of a contract of sale. The
elements of a valid contract of sale are: (a) consent
or meeting of the minds; (b) determinate subject
matter and (c) price certain in money or its
equivalent. All the elements are present here. The
parties agreed on the sale of a determinate object
and the price certain. The contention of the
respondent that there was no meeting of mind
because the condition relating to the delivery of
clean titles was not fulfilled is wrong. The delivery
of clean titles was not a condition imposed on the
perfection of the contract of sale but a condition
imposed on petitioner's obligation to pay the
purchase price of these lots. As ruled in the case of
Jardine Davies Inc. vs CA, the court distinguished
between a condition imposed on the perfection of
a contract and a condition imposed merely on the
performance of an obligation. While failure to
comply with the first condition results in the failure
of a contract, non-compliance with the second
merely gives the other party options and/or
remedies to protect its interest.
SAN MIGUEL PROPERTIES PHILS., INC. v SPOUSES
ALFREDO and GRACE HUANG, G. R. No. 137290, 31
July 2000
Nature of the Case: A petition for review for a
decision of the Court of Appeals which reversed
the decision of the RTC dismissing the complaint
brought by the Huangs against San Miguel
Properties for enforcement of a contract of sale.
Facts: San Miguel Properties offered two parcels
of land for sale and the offer was made to an agent
of the respondents. An “earnest-deposit” of P1
million was offered by the respondents and was
accepted by the petitioner’s authorized officer
subject to certain terms.
Petitioner, through its executive officer, wrote the
respondent’s lawyer that because ethe parties
failed to agree on the terms and conditions of the
sale despite the extension granted by the
petitioner, the latter was returning the “earnest-
deposit”.
The respondents demanded execution of a deed of
sale covering the properties and attempted to
return the “earnest-deposit” but petitioner refused
on the ground that the option to purchase had
already expired.
A complaint for specific performance was filed
against the petitioner and the latter filed a motion
to dismiss the complaint because the alleged
“exclusive option” of the respondents lacked a
consideration separate and distinct from the
purchase price and was thus unenforceable; the
complaint did not allege a cause of action because
there was no “meeting of the mind” between the
parties and therefore the contact of sale was not
perfected.
The trial court granted the petitioner’s motion and
dismissed the action. The respondents filed a
motion for reconsideration but were denied by the
trial court. The respondents elevated the matter to
the Court of Appeals and the latter reversed the
decision of the trial court and held that a valid
contract of sale had been complied with.
Petitioner filed a motion for reconsideration but
was denied.
Issue: WON there was a perfected contract of sale
between the parties
Ruling: The decision of the appellate court was
reversed and the respondents’ complaint was
dismissed.
Ratio Decidendi: It is not the giving of earnest
money , but the proof of the concurrence of all the
essential elements of the contract of sale which
establishes the existence of a perfected sale.
The P1 million “earnest-deposit” could not have
been given as earnest money because at the time
when petitioner accepted the terms of
respondents’ offer, their contract had not yet been
perfected. This is evident from the following
conditions attached by respondents to their letter.
The first condition for an option period of 30 days
sufficiently shows that a sale was never perfected.
As petitioner correctly points out, acceptance of
this condition did not give rise to a perfected sale
but merely to an option or an accepted unilateral
promise on the part of respondents to buy the
subject properties within 30 days from the date of
acceptance of the offer. Such option giving
respondents the exclusive right to buy the
properties within the period agreed upon is
separate and distinct from the contract of sale
which the parties may enter. All that respondents
had was just the option to buy the properties
which privilege was not, however, exercised by
them because there was a failure to agree on the
terms of payment. No contract of sale may thus be
enforced by respondents.
Even the option secured by respondents from
petitioner was fatally defective. Under the second
paragraph of Art. 1479, an accepted unilateral
promise to buy or sell a determinate thing for a
price certain is binding upon the promisor only if
the promise is supported by a distinct
consideration. Consideration in an option contract
may be anything of value, unlike in sale where it
must be the price certain in money or its
equivalent. There is no showing here of any
consideration for the option. Lacking any proof of
such consideration, the option is unenforceable.
Equally compelling as proof of the absence of a
perfected sale is the second condition that, during
the option period, the parties would negotiate the
terms and conditions of the purchase. The stages
of a contract of sale are as follows: (1) negotiation,
covering the period from the time the prospective
contracting parties indicate interest in the contract
to the time the contract is perfected; (2)
perfection, which takes place upon the
concurrence of the essential elements of the sale
which are the meeting of the minds of the parties
as to the object of the contract and upon the price;
and (3) consummation, which begins when the
parties perform their respective undertakings
under the contract of sale, culminating in the
extinguishment thereof.
In the present case, the parties never got past the
negotiation stage. The alleged “indubitable
evidence” of a perfected sale cited by the appellate
court was nothing more than offers and counter-
offers which did not amount to any final
arrangement containing the essential elements of a
contract of sale. While the parties already agreed
on the real properties which were the objects of
the sale and on the purchase price, the fact
remains that they failed to arrive at mutually
acceptable terms of payment, despite the 45-day
extension given by petitioner.