Romero vs. Court of Appeals

ROMERO vs. COURT OF APPEALS

G.R. No. 107207 November 23, 1995

Facts:

Romero, a civil engineer, was engaged in the business of production, manufacture and exportation of

perlite filter aids, permalite insulation and processed perlite ore. In 1988, he decided to put up a central

warehouse in Metro Manila.

Flores and his wife offered a parcel of land measuring 1,952 square meters. The lot was covered in a TCT

in the name of private respondent Enriqueta Chua vda. de Ongsiong. Petitioner visited the property and,

except for the presence of squatters in the area, he found the place suitable for a central warehouse.

Flores called on petitioner with a proposal that should he advance the amount of P50,000.00 which could

be used in taking up an ejectment case against the squatters, private respondent would agree to sell the

property for only P800/square meter. Romero agreed. Later, a “Deed of Conditional Sale” was executed

between Flores and Ongsiong.

Purchase price = P1,561,600.00; Downpayment = P50K; Balance = to be paid 45 days after the removal of

all the squatters; upon full payment, Ongsiong shall execute deed of absolute sale in favour of Romero.

Ongsiong sought to return the P50,000.00 she received from petitioner since, she said, she could not “get

rid of the squatters” on the lot. She opted to rescind the sale in view of her failure to get rid of the

squatters. Regional Trial Court of Makati rendered decision holding that private respondent had no right

to rescind the contract since it was she who “violated her obligation to eject the squatters from the subject

property” and that petitioner, being the injured party, was the party who could, under Article 1191 of the

Civil Code, rescind the agreement.

Issue: WON there was a perfected contract of sale? YES

Held:

A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver and

to transfer ownership of a specified thing or right to another (the buyer) over which the latter agrees.

(BILATERAL and RECIPROCAL CHARACTERISTIC OF SALE)

In determining the real character of the contract, the title given to it by the parties is not as much

significant as its substance. For example, a deed of sale, although denominated as a deed of conditional

sale, may be treated as absolute in nature, if title to the property sold is not reserved in the vendor or if

the vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or

non-fulfillment, as the case may be, of the prescribed condition.

From the moment the contract is perfected, the parties are bound not only to the fulfillment of what has

been expressly stipulated but also to all the consequences which, according to their nature, may be in

keeping with good faith, usage and law. Under the agreement, private respondent is obligated to evict the

squatters on the property. The ejectment of the squatters is a condition the operative act of which sets

into motion the period of compliance by petitioner of his own obligation, i.e., to pay the balance of the

purchase price. Private respondent’s failure “to remove the squatters from the property” within the

stipulated period gives petitioner the right to either refuse to proceed with the agreement or waive that

condition in consonance with Article 1545 of the Civil Code. This option clearly belongs to petitioner and

not to private respondent.

There was no potestative condition on the part of Ongsiong but a “mixed” condition “dependent not on the

will of the vendor alone but also of third persons like the squatters and government agencies and

personnel concerned.”

Coronel v. CA

263 SCRA 15

Facts:

Romulo Coronel executed a document entitled ³Receipt of Down payment´ in favor of Ramona Patricia

Alcaraz for P50,000 down payment of the amount of P1.24M as purchase pricefor an inherited house and

lot, without reservation to withhold the transfer of such property until full payment. The purpose of such

down payment was for the heirs to transfer the title to their name. Upon the registration of the property to

name of the heirs, the Coronels sold the same property to Catalina B. Mabanag for P1.58M. The Coronels

rescinded the contract with Alcaraz by depositing the downpayment amount in a bank account in favor of

Alcaraz. Alcaraz filed a complaint for specific performance, which the trial and the appellate court ruled in

her favor.

Issue: Whether the ³receipt of down payment´ serves a contract to sell or a conditional contract of sale.

Held: The agreement is a contract of sale as there was no express reservation of ownership or title to the

subject parcel of land. Petitioners did not merely promise to sell the property to private respondent upon

the fulfillment of the suspensive condition but on the contrary, having already agreed to sell the subject

property, they undertook to have the certificate of title changedto their names and immediately thereafter,

to execute the written deed of absolute sale. The suspensive condition was fulfilled on 6 February 1985

and thus, the conditional contract of sale between the parties 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 the³Receipt of Down Payment.´

ADELFA

DEMAFELIS,

Petitioner,

- versus -

COURT OF

APPEALS and

FERNANDO CONDEZ,*

G.R. No. 152164

Present:

Quisumbing, J.,

Chairperson,

Carpio,

Carpio Morales,

Tinga, and

VELASCO, JR., JJ.

Promulgated:

Respondents. November 23, 2007

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RESOLUTION QUISUMBING, J.:

On appeal are the Decision[1] dated September 6, 2001 and the

Resolution[2] dated February 8, 2002 of the Court of Appeals in CA-G.R. SP

No. 58859. The appellate court had reversed the Decision[3]dated July 28,

1995 of the Regional Trial Court (RTC), Branch 274, Parañaque City.

The facts of the case are as follows:

On April 17, 1987, petitioner Adelfa Demafelis bought from the heirs of

Hermogenes Rodriguez a 155-square meter parcel of land, part of a larger

undivided parcel, Lot No. Psu-103596 covered by Tax Declaration No. D-

010-07184. The land is situated in the Barrio of San Dionisio, Parañaque

City. Petitioner said that she had allowed respondent Fernando Condez to

stay in the property but later, she asked respondent to vacate the property.

However, respondent did not leave. Thus, she filed with the Metropolitan

Trial Court (MeTC), Branch 78, Parañaque City, a complaint for ejectment

against respondent.

Respondent for his part maintains that on March 7, 1988, he bought the

property from Antonio F. Bernabe[4] and that he had stayed in the said

property as early as 1985, even before he acquired it from Bernabe.

The MeTC ordered respondent’s eviction.[5] Respondent appealed to the

RTC which affirmed the findings of the MeTC. The dispositive portion of the

decision reads:

WHEREFORE, the decision of the court a quo is hereby affirmed in its entirety, and that, the court a quo is hereby ordered to issue a writ of

execution in favor of the [petitioner].

SO ORDERED.[6]

Respondent appealed to the Court of Appeals, asking whether the

affirmation by the RTC of the decision of the MeTC was proper under the

circumstances.[7] The Court of Appeals held:

Comparing the two lots, i.e., 75 square meters allegedly purchased by

petitioner from Antonio Bernabe, Jr., and the 115 square meters portion

allegedly bought by respondent from Ismael Favila, it appears that the lot

sold by Favila to Bernabe on March 7, 1998, which consists of 115,132

square meters, a portion of 75 square meters of which was in turn sold by

Bernabe to petitioner Condes, is described as Lot 1, Psu-55940, and covered by TCT No. 272. On the other hand, the lot sold by Favila to

respondent Demafelis with an area of 115 square meters is a portion of the

86,320 square meters known asLot No. Psu-103592, and covered by Tax

Declaration No. 010-07184. On the basis of the Psu number alone, it shows

that the origin of the lot claimed by petitioner is different from the origin of

the lot claimed by respondent.

Correspondingly, there is no certainty as to the identity of the property

purchased by petitioner and that of respondent, except the bare contracts

executed in their favor. Had there been a relocation survey of the

boundaries of the property in question, the controversy as to the identity of

the lot subject matter of the instant case would have been avoided. If there

is no identity between the property purchased by petitioner and the property

purchased by respondent, the instant case for ejectment will not prosper as the parties have exclusive rights over their respective property.

WHEREFORE, the Decision, dated July 28, 1995, of the Regional Trial Court

affirming the Decision, dated March 12, 1995, of the Metropolitan Trial Court

is REVERSED and SET ASIDE. Civil Case No. 9216 of the M[e]TC, Branch

78, Parañaque City, is DISMISSED.

SO ORDERED.[8]

The Court of Appeals later denied petitioner’s subsequent motion for

reconsideration.[9]

Hence, the instant petition, which raises the following issues:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS, SEVENTH

DIVISION WENT BEYOND THE ISSUES RAISED IN THE PETITION FOR REVIEW IN RENDERING THE DECISION SOUGHT TO BE REVIEWED.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS, SEVENTH

DIVISION ERRED IN ITS FINDINGS THAT THERE IS NO IDENTITY OF THE

PROPERTY SUBJECT OF EJECTMENT BEING CONTRARY TO THE EVIDENCE

ON RECORD.

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS, SEVENTH

DIVISION ERRED IN CONCLUDING THAT THE DOCUMENT OF SALE IN FAVOR

OF RESPONDENT FERNANDO CONDES TRANSFERRED OWNERSHIP

CONTRARY TO THE FINDINGS OF THE LOWER COURT THAT THE DOCUMENT

NAMELY: “KASUNDUAN SA BILIHAN NG LUPA” IS ACTUALLY AN AGREEMENT TO ENTER INTO A CONTRACT TO SELL AND DID NOT TRANSFER THE

OWNERSHIP OF THE LOT SUBJECT THEREIN.

IV.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS, SEVENTH

DIVISION ERRED IN NOT REMANDING THE CASE TO THE COURT OF ORIGIN

FOR THE PURPOSE OF ESTABLISHING IDENTITY OF THE PROPERTY RATHER

THAN DISMISSING OUTRIGHT CIVIL CASE NO. 9216 OF THE M[e]TC,

BRANCH 78, PARAÑAQUE CITY.[10]

More simply stated, the issues for resolution now are: (1) Did the Court of

Appeals err in going beyond the issues raised in the petition for review? (2)

Did the Court of Appeals err in finding that the identity of the property in

question has not been established? (3) Lastly, did the Court of Appeals err in

concluding that the document of sale in favor of respondent transferred ownership?

On the first issue, petitioner contends that a review of the arguments of

respondent in the MeTC would clearly reveal that the matter of identity of

the property subject of ejectment was not raised. In fact, the first time that

the matter surfaced was when the Court of Appeals rendered the decision

which is sought to be reviewed in this appeal.[11]

Respondent, on the other hand, states that the Court of Appeals is clothed

with ample authority to review matters although not assigned as errors if their consideration is necessary in arriving at a just decision.[12]

The pertinent rule is Section 8, Rule 51 of the Revised Rules of Court. It

states:

SEC. 8. Questions that may be decided. ? No error which does not affect the

jurisdiction over the subject matter or the validity of the judgment appealed

from or the proceedings therein will be considered unless stated in the

assignment of errors, or closely related to or dependent on an assigned error

and properly argued in the brief, save as the court may pass upon plain

errors and clerical errors.

In several cases we have also explained that the Court of Appeals is imbued

with sufficient authority and discretion to review matters, not otherwise

assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the

interests of justice or to avoid dispensing piecemeal

justice.[13] In Sesbreño v. Central Board of Assessment Appeals[14] we

held that an appellate court has an inherent authority to review unassigned

errors, e.g. (1) which are closely related to an error properly raised; (2)

upon which the determination of the error properly assigned is dependent;

or (3) where the Court finds that consideration of them is necessary in

arriving at a just decision of the case.[15]

We note that the issue raised in the court a quo was:

Whether the affirmance by the Regional Trial Court, Branch 274, Parañaque

City, of the decision of the Metropolitan Trial Court, Branch 78, Parañaque

City is proper under the circumstances.[16]

Patently, the matter of identity of the property subject of ejectment is closely related to the error raised. Even the petitioner herself in her

Memorandum admitted that the issue raised was broad enough to cover a lot

of issues.[17] Here therefore, the resolution of the assigned error is

dependent on the matter of identity of the property subject of ejectment,

and the identification of the property is necessary in arriving at a just

decision of the case. Thus, we agree that the appellate court did not err in

tackling the issue.

On the second issue, petitioner contends that the Court of Appeals simply

overlooked the existence of the Location Plan submitted in evidence by

petitioner in the lower court when it found that there was no identity of the

property subject of ejectment.[18]

Respondent counters that the issue as to the identity of the subject land is a question of fact already determined by the appellate court which cannot be

raised in a petition for review on certiorari and cannot be disturbed by this

Court unless those findings are not supported by the evidence.[19]

In the case of Towne & City Development Corporation v. Court of

Appeals,[20] the Court said that there is a question of fact when a doubt or

difference arises as to the truth or the falsehood of alleged facts, while there

is a question of law when such doubt or difference refers to what the law is

on a certain state of facts.[21] The identity of the subject land is a factual

finding supported by evidence, hence, cannot be disturbed in this petition.

We are bound by this factual finding of the appellate court, and cannot

review again the credibility of witnesses and calibrate the probative value of

the evidence on record.[22]

At this juncture, it is worthy to note that the petitioner’s Location Plan was

not even mentioned in her Complaint[23] before the MeTC. Nor was it

attached to her Motion for Reconsideration and Reply to Comment in the

Court of Appeals when she raised this as the main ground for the

reconsideration of the Court of Appeals’ decision. But

assuming arguendo that the Location Plan was attached, there is still not

enough reason to say that the Court of Appeals overlooked the Location Plan

submitted by petitioner. Lending more credence to the evidence of one party

does not necessarily mean overlooking the evidence of the other.

On the third issue, petitioner contends that the statement of the Court of

Appeals that respondent was the owner of the lot that he allegedly

purchased from Antonio F. Bernabe is contrary to the statements of the

lower courts which should be binding and conclusive upon the Court of Appeals.[24] She further argues in her reply that the findings of facts by the

Court of Appeals are subject to review by the Court.[25]

On the other hand, respondent reiterates that the findings of the Court of

Appeals as to the lack of identity of the subject lot, are amply supported by

evidence, hence, they should not be disturbed by the Court, as these are

now conclusive on the parties and are not reviewable by this Court.[26]

The trial court held that there was a contract to sell or conditional sale

between Bernabe and respondent, while, according to the petitioner, the

Court of Appeals implied that the parties had entered into a contract of sale.

Since there was an apparent conflict between the findings of the Court of

Appeals and the trial court, we went through the records of the case.

The Kasunduan sa Bilihan ng Lupa[27] or Kasunduan between Bernabe and

the respondent reads:

SA SINUMANG MAKAKAALAM:

Ako si Ginoong Antonio F. Bernabe, may asawa nakatira sa 54 Bonn st. BF

Homes, Paranaque Metro Manila. May-ari sa isang parcelang lupa na aking

pinahuhulugang sa mababang halaga.

Ang kabuang sukat ng lupa ay humigit kumulang sa 75 metro kuadrado.

Bilang may-ari ng lupa ay sumangayon ako sa [kasunduan] ng bilihan ng

lupa sa murang halaga.

Ako si Ginoong Fernando Condez may asawa nakatira sa Sucat Paranaque.

Bumili ng lupa kay Ginoong Antonio F. Bernabe sa murang halaga. Aking

pong huhulugan ang lote sa mababang halaga.

Na si Ginoong Fernando Condez ay nangangako na ang

halagangP18,550.00 (labing walo libo limangdaan limangpung piso) ay babayaran niya sa may-ari sa [loob] [ng] labing dalawang taon (12 years)

sa halagang P250.00 ang hulog buwan buwan.

Na kung hindi makahulog si G. Fernando Condez sa buwaanang hulog siya

ay magbabayad ng multang P50.00 isang buwan.

Sa katunayan, si G. Antonio F. Bernabe at si G. Fernando Condez ay

lumagda ngayon ika 7 Marso 1988 Bernabe Subd. Sucat Parque., Metro

Manila.

(Nilagdaan) (Nilagdaan)

G. Antonio F. Bernabe G. Fernando Condez

NAGBIBILI BUMILI

Lumagda sa harap nina:

(Nilagdaan) (Nilagdaan)

The case of Gomez v. Court of Appeals held:

To be sure, a contract of sale may either be absolute or conditional. One

form of conditional sale 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.[28]

It would seem that the Kasunduan, showing payment by installment, embodied a contract to sell or a conditional sale, reserving ownership in the

vendor Bernabe until the full payment by respondent of the purchase price.

However, the fact that the Kasunduan was a contract to sell does not

necessarily mean that the Court of Appeals erred when it said “a portion of

75 square meters of which was in turn sold by Bernabe to petitioner Condez,

is described as Lot 1, Psu-55940, and covered by TCT No. 272.” Patently,

the Court of Appeals implied only that ownership had transferred to the

respondent when it said this, a fact which is not inconsistent with the Deed

of Sale being conditional at first. That the Court of Appeals concluded that

the document of sale or the Kasunduan in favor of respondent transferred

ownership cannot be inferred in its assailed Decision or Resolution.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated September 6, 2001 and the Resolution dated February 8,

2002 of the Court of Appeals in CA-G.R. SP No. 58859 areAFFIRMED.

Costs against petitioner.

SO ORDERED.

WILLIAM G. KWONG, G.R. No. 152984 Petitioner, Present: - versus - PANGANIBAN, C.J.,

Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, ATTY. RAMON GARGANTOS, CALLEJO, SR. and ANACLETO GARGANTOS, CHICO-NAZARIO, JJ. SPS. REY & REMY SANTOS, and SPS. LORNA & DANIEL ARCEO, Promulgated: Respondents. November 22, 2006

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D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Petitioner William G. Kwong is the owner of fifteen (15) lots located in

the province of Pampanga. In an unnotarized Deed of Conditional Sale, petitioner,

for himself and in behalf of William G. Kwong Management, sold said lots to

respondents Anacleto Gargantos, Remy Santos and Lorna Arceo for the sum of

$137,255.00 payable in two installments, with $10,000.00 being paid by

respondents at the time of the execution of the contract, and the balance of

$127,255.00 to be paid on or before December 15, 1986.[1]

When respondents

failed to pay the balance on the expected date, it was subsequently agreed that the

same shall be paid on a staggered basis starting March 1989. Respondents,

however, again failed to comply with their obligation. This compelled petitioner to

write a letter of demand, through counsel, on November 16, 1989, asking

respondents’ compliance with their monetary obligation; otherwise, the contract

shall be rescinded.[2]

The letter was addressed to respondent Gargantos. There

being no reply, another letter of demand dated February 21, 1990 was sent.[3]

On May 1, 1990, Atty. Ramon Gargantos (brother of respondent Anacleto

Gargantos), armed with a Special Power of Attorney[4]

executed by respondents,

paid the amount of P1,776,200.00.[5]

Thereafter, petitioner and Atty. Gargantos

executed a notarized Deed of Absolute Sale, wherein petitioner sold to respondent

Gargantos 11 out of the 15 lots for the sum of P500,000.00,[6]

and

Atty. Gargantos signed a Promissory Note for the payment of the amount

of P373,074.95, on or before June 30, 1990, representing the unpaid balance of the

purchase covering the remaining four lots.[7]

Again, respondent Gargantos failed to pay the agreed amount, forcing

petitioner to write subsequent demand letters on November 12, 1990,[8]

November

10, 1994,[9]

October 15, 1995,[10]

and July 29, 1996.[11]

Respondent Gargantos,

through counsel, finally answered, claiming that it was petitioner who did not

comply with his undertaking to transfer 11 of the 15 titles to respondents prior to

the payment of the balance, with the remaining four titles to be transferred

afterwards.[12]

Petitioner then wrote respondents on September 15, 1996 asking for a

conference in order to settle the matter.[13]

In a letter dated November 12, 1996,

respondent Gargantos’s counsel reiterated his demand for the delivery of the 11

titles, failing which a complaint for specific performance with damages and a

criminal case for estafa will be filed against petitioner.[14]

On November 14, 1996, petitioner filed before the Regional Trial Court

(RTC) of Angeles City, Branch 62, a complaint for the rescission of the Deed of

Conditional Sale and forfeiture of all the payments made by respondents against

herein respondents.[15]

Respondents filed an Answer with Compulsory Counterclaim, denying

petitioner’s allegations, and asking for the dismissal of the

complaint. Respondents also prayed for the delivery of the 11 titles indicated in

the Deed of Absolute Sale in exchange for the remaining balance and for

damages.[16]

In a Pre-trial Order issued by the RTC on June 9, 1997, the following facts

were admitted:

1. That plaintiff [petitioner] agreed to sell his real properties, consisting of 15

lots, to defendant for $137,255.00 U.S. Currency or in Philippine

Currency at the rate of P20.40 per dollar, as evidenced by a deed of

conditional sale dated November 1986.

2. That on the date the conditional sale was executed, defendants

paid $10,000.00 U.S. Currency or P204,000.00, Philippine

Currency thereby leaving a balance of $127,255.00 or P2,596,002.00 Philippine Currency which shall be paid on

December 15, 1986 without interest.

3. That to guarantee payment of the balance defendants thru their attorney-

in-fact, Atty. Ramon Gargantos, executed a promissory note dated May 1,

1990; and

4. That on the same date a deed of absolute sale was likewise executed.[17]

The issues were defined as follows:

1. Whether or not the terms and conditions of the deed of

conditional sale dated November 1986 has been complied with by

the parties;

2. Whether or not the said deed of conditional sale has been

superseded or novated by the subsequent execution of the deed of

absolute sale dated May 1, 1990; and

3. Whether or not the deed of absolute sale is binding and/or

enforceable.[18]

On the first issue, the RTC ruled that “not only that defendants failed to

comply with the terms and conditions of the Deed of Conditional Sale of 1986 but

also of the Promissory Note of May 1, 1990.”[19]

On the second issue, the RTC ruled that there was no novation of the Deed

of Conditional Sale by the execution of the Deed of Absolute Sale because the

parties continued to recognize the validity of the conditional sale; the absolute sale

was executed without the knowledge and consent of the other respondents; and

there was no showing that the other respondents were released from their

obligation under the conditional sale.[20]

On the third and last issue, the RTC ruled that the Deed of Absolute Sale

cannot be enforced since Atty. Gargantos exceeded his powers under the Special

Power of Attorney when he entered into the transaction.[21]

Thus, in its Decision dated February 4, 1999, the RTC granted rescission of

the Deed of Conditional Sale and ordered petitioner to refund one-half of the

amount paid by respondents, subject to 6% interest, with respondents forfeiting the

other half in favor of petitioner. Respondents’ counterclaim was dismissed.[22]

Respondents appealed to the Court of Appeals (CA), which reversed and set

aside the RTC Decision, and dismissed petitioner’s complaint and respondents’

counterclaim per its Decision[23]

dated December 14, 2001. The CA held that

petitioner does not have any right to rescind the Deed of Conditional Sale because

the Deed of Absolute Sale and the Promissory Note have already superseded

it.[24]

The CA also denied petitioner’s Motion for Reconsideration per Resolution

dated April 11, 2002.[25]

Petitioner now comes before the Court by way of a petition for review under

Rule 45 of the Rules of Court, submitting that the CA committed a serious

reversible error when it held that it was the parties’ intention to supersede the Deed

of Conditional Sale with the Deed of Absolute Sale.

The petition lacks merit.

Novation is the extinguishment of an obligation by the substitution or

change of the obligation by a subsequent one which extinguishes or modifies the

first, either by changing the object or principal conditions, or, by substituting

another in place of the debtor, or by subrogating a third person in the rights of the

creditor.[26]

Under Article 1292 of the Civil Code, in order that an obligation may be

extinguished by another which substitutes the same, it is imperative that it be so

declared in unequivocal terms, or that the old and the new obligations be on every

point incompatible with each other. The parties to a contract must expressly agree

that they are abrogating their old contract in favor of a new one. In the absence of

an express agreement, novation takes place only when the old and the new

obligations are incompatible on every point.[27]

In Iloilo Traders Finance, Inc, v. Heirs of Soriano, Jr.,[28]

the nature of

novation was explained, thus:

Novation may either be extinctive or modificatory, much being

dependent on the nature of the change and the intention of the

parties. Extinctive novation is never presumed; there must be an express intention to novate; in cases where it is implied, the acts of the parties

must clearly demonstrate their intent to dissolve the old obligation as the

moving consideration for the emergence of the new one.Implied novation necessitates that the incompatibility between the old and new

obligation be total on every point such that the old obligation is completely superseded by the new one. The test of incompatibility is

whether they can stand together, each one having an independent

existence; if they cannot and are irreconcilable, the subsequent

obligation would also extinguish the first. (Emphasis supplied)

The test of incompatibility between two obligations or contracts is whether

or not they can stand together, each one having an independent existence. If they

cannot, they are incompatible, and the later obligation novates the first.[29]

In this case, an examination of the Deed of Absolute Sale and the

Promissory Note, as well as the surrounding circumstances of this case, shows that

it was meant to novate and replace the Deed of Conditional Sale. Logically, the

Deed of Conditional Sale and the Deed of Absolute Sale cannot co-exist as these

are of different nature and provide for separate and distinct obligations, to wit:

A contract of sale is absolute when title to the property passes to the

vendee upon delivery of the thing sold. A deed of sale is absolute when

there is no stipulation in the contract that title to the property remains with the seller until full payment of the purchase price. The sale is also

absolute if there is no stipulation giving the vendor the right to cancel

unilaterally the contract the moment the vendee fails to pay within a fixed period. In a conditional sale, as in a contract to sell, ownership

remains with the vendor and does not pass to the vendee until full payment of the purchase price. The full payment of the purchase price

partakes of a suspensive condition, and non-fulfillment of the condition

prevents the obligation to sell from arising.[30]

The fact that the Deed of Absolute Sale of the 11 lots was executed even

without respondents having fully paid the purchase price for the entire 15 parcels

of land covered by the Deed of Conditional Sale enforces the conclusion that the

parties intended to enter into a new agreement and discard the old one; otherwise,

petitioner could have enforced his right to rescind the contract by filing a

complaint instead of dealing anew with respondents and entering into the

succeeding agreements. What subsequently occurred was a segregated sale of the

11 lots, while the Promissory Note covered the remaining four lots.

The Court notes that respondents had already paid a substantial amount for

the subject lots. Petitioner admitted that a down payment of $10,000.00 was made

upon the execution of the Deed of Conditional Sale, and respondents also made

further payments in the amount of $20,000.00.[31]

Thereafter, Atty. Gargantos, in

behalf of respondents, paid P1,776,200.00 on May 1, 1990. It was after such

payment was made that the parties entered into the Deed of Absolute Sale and the

Promissory Note. Obviously, the Deed of Absolute Sale was intended by the

parties to close the transaction involving the 11 lots. What remained for

enforcement is the Promissory Note, which covers the four remaining lots.

The Court also notes that the Deed of Conditional Sale reflected the amount

of $137,255.00 or its peso equivalent at the rate of P20.40 per US dollar

(or P2,800,002.00), as purchase price for the entire 15 lots. On the other hand, the

Deed of Absolute Sale provided that the 11 parcels of land were being sold

for P500,000.00, while the Promissory Note reflects the intention of petitioner to

sell the other four lots for an undisclosed amount the balance of which

is P373,074.95. Apparently, these two subsequent agreements do not show the

true value of the subject lots.

Nevertheless, it is well-settled that if the terms of a contract are clear

and leave no doubt upon the intention of the contracting parties, the literal

meaning of its stipulations shall control; however, if the contract appears to be

contrary to the evident intentions of the parties, the latter shall prevail over the

former. Moreover, the agreement of the parties may be embodied in only one

contract or in two or more separate writings. In such event, the writings of the

parties should be read and interpreted together in such a way as to render their

intention effective.[32]

It is at this point that the receipt[33]

dated May 1, 1990 for P1,776,200.00

becomes material. Construed in conjunction with the Deed of Absolute Sale and

the Promissory Note, it becomes clear that the 15 lots have already been

substantially paid for by respondents, and there only remains the balance

of P373,074.95. What the parties clearly intended was that the Deed of Absolute

Sale will then cover the 11 lots, the purchase price of which shall be considered as

fully paid, with the payment of the P500,000.00 acknowledged in the Deed of

Absolute Sale, while the Promissory Note will answer for the other four lots. For

whatever purpose the parties in this case may have had in undervaluing the

properties, the fact remains that the Deed of Absolute Sale and the Promissory

Note were meant to supplant the Deed of Conditional Sale.

What’s more, it was petitioner’s own counsel, Atty. Avelino Liangco, who

drafted the Deed of Absolute Sale and Promissory Note on May 1, 1990, after

petitioner met with Atty. Gargantos at the Shanghai Restaurant, which was owned

by petitioner. According to Atty. Liangco, on May 1, 1990, Atty. Gargantos paid a

“considerable” sum of money to petitioner as partial fulfillment of respondents’

obligation under the Deed of Conditional Sale. Thereafter, Atty. Liangco prepared

the Deed of Absolute Sale of the 11 lots and the Promissory Note for the remaining

obligation.[34]

Atty. Liangco also testified that it was petitioner himself who

dictated the amount to be indicated in the Deed of Absolute Sale and the

Promissory Note, and petitioner kept the original copies of these documents.[35]

It

is settled that in order to ascertain the true intention of the parties, their actions,

subsequent or contemporaneous, must be principally considered.[36]

The foregoing

circumstances confirm petitioner’s grasp of what he was entering into and was

very well aware of the terms and conditions of the Deed of Absolute Sale and the

Promissory Note. He cannot now turn his back on it and claim that it was merely

executed so that Atty. Gargantos will have something to show his principals. To

sustain this is to make a mockery of the sanctity of contracts. In addition, it is

merely bare allegation supported by nothing but uncorroborated words.

In fine, the Deed of Conditional Sale had ceased to exist with the execution

of the Deed of Absolute Sale and the Promissory Note. There is nothing more to

rescind. Petitioner’s complaint must therefore fail.

Petitioner cannot be compelled, in the present petition, to deliver to

respondents the titles to the 11 lots because the latter did not appeal from the CA’s

dismissal of their counterclaim.

WHEREFORE¸ the petition is DENIED. The assailed Decision

dated December 14, 2001 and Resolution dated April 11, 2002 of the Court of

Appeals areAFFIRMED.

Costs against petitioner.

SO ORDERED.

AMADO VS. SALVADOR

Petitioners are the heirs of the late Judge Amado, who was the owner of a parcel of land situated at

Barangay Burgos, Rodriguez, Rizal. The property subject of the present controversy is a portion there of in

the name of Judge Amado.

SALVADOR’S SIDE:

Salvador alleges that in or around September 1979, Judge Amado agreed to sell to him the subject

property for P60.00 per square meter, or in the total sum of P66,360.00, payable in cash or construction

materials which would be delivered to Judge Amado, or to whomsoever the latter wished during his

lifetime. Salvador though failed to state the terms of payment, such as the period within which the

payment was supposed to be completed, or how much of the payment should be made in cash. In view of

the sale in his favor, Salvador undertook the transfer and relocation of about five squatter families residing

on the subject property. Thereafter, Judge Amado allowed Salvador to take possession of the subject

property and to build thereon a residential structure, office, warehouse, perimeter fence and a deep well

pump. Salvador claims that by October 1980, he had already given Judge Amado total cash advances of

P30,310.93 and delivered construction materials amounting to P36,904.45, the total of which exceeded

the agreed price for the subject property.

PETITIONERS’ SIDE

According to the petitioners, on the other hand, Judge Amado let Salvador use the subject property, upon

the request of the latter’s father and grandfather, who were Judge Amado’s friends. Salvador used the

subject property for his business of manufacturing hollow blocks. The petitioners maintain that the cash

advances and the various construction materials were received by Judge Amado from Salvador in

connection with a loan agreement, and not as payment for the sale of the subject property. Petitioners

assert that when Salvadors business folded up, he failed to pay his share of the monthly amortization of

the loan with the bank. Judge Amado paid the loan to prevent the foreclosure of his mortgaged property.

Salvador also allowed his brother Lamberto Salvador to occupy the premises without the consent of Judge

Amado.

STORY CONTINUES...

On 4 November 1983, Judge Amado sent a demand letter to Salvador directing the latter to vacate the

subject property, which Salvador merely ignored. Judge Amado filed an ejectment suit against Salvador

before the Municipal Trial Court (MTC) of Rodriguez During the hearing before the MTC, Salvador and his

brother, Lamberto Salvador, defendants therein, stated in their Answer with Counterclaim that a balance of

P

4,040.62 from the purchase price of the subject property was left unpaid due to the failure of Judge

Amado to execute and deliver a deed of sale. MTC and RTC dismissed the case for lack of jurisdiction. On

22 August 1996, Salvador filed before the RTC Civil Case No. 1252,

an action for specific performance with damages against the petitioners

.As evidence that the sale of the subject property was perfected between Judge Amado and himself,

Salvador presented a note written by Judge Amado asking Salvador to give him P500.00 and stating that

Judge Amado was considering to sign the letter given to him by Kapitan Maeng.

To prove that he paid the purchase price, Salvador submitted documents including cash advances,

statement of accounts considering construction materials, etc. showing he paid cash and delivered

construction materials to Judge Amado.

RTC’s RULING

The RTC dismissed Salvadors complaint.(1)The trial court observed that it was not indicated in the

documentary evidence presented by Salvador that themoney and construction materials were intended as

payment for the subject property. It gave little probative value to tax declarations in the name of Salvador

since they referred to the improvements on the land and not the land itself.(2)The testimonial evidence

given by Ismael Angeles was considered insufficient to prove the fact of sale because the witness failed to

categorically state that a sale transaction had taken place between Salvador and Judge Amado.(3)Salvador

was disqualified under the Dead Mans Statute from testifying on any matter of fact involving a transaction

between him and Judge Amado which occurred before the death of the latter.

COURT OF APPEALS’ RULING

(1)The Court of Appeals found that Salvador paid for the subject land with cash advances and construction

materials, since petitioners failed to present any evidence showing that the construction materials

Salvador delivered to Judge Amado had been paid for.(2)It construed as adequate proof of the sale the

handwritten note of Judge Amado wherein the latter promised to sign an unidentified deed after the

subdivision of an unnamed property, in light of Ismael Angeles testimony that Judge Amado had promised

to sign a deed of sale over the subject property in favor of Salvador.(3) Salvador’s testimony was not

barred because of the Dead Mans Statute.

RELEVANT ISSUE: Whether there was a perfected contract of sale or none SUPREME COURT: No contract of

sale was perfected between Judge Amado and Salvador.

A contract of sale is perfected by mere consent, upon a meeting of the minds in the offer and the

acceptance thereof based on subject matter, price and terms of payment. Until the contract of sale is

perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between

the parties. Consent is essential for the existence of a contract, and where it is absent, the contract is

non-existent. Consent in contracts presupposes the following requisites: (1) it should be intelligent or

with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be

spontaneous. Moreover, a definite agreement on the manner of payment of the price is an essential

element in the formation of a binding and enforceable contract of sale. This is so because the agreement

as to the manner of payment goes into the price such that a disagreement on the manner of payment is

tantamount to a failure to agree on the price or consideration. Salvador fails to allege the manner of

payment of the purchase price on which the parties should have agreed. No period was set within which

the payment must be made. Of the purchase price of P66,360.00, which the parties purportedly agreed

upon, the amount which should be paid in cash and the amount for construction materials was not

determined. This means that the parties had no exact notion of the consideration for the contract to which

they supposedly gave their consent. Thus, such failure is fatal to Salvadors claim that a sale had been

agreed upon by the parties.

(1)

First of all, the statements of accounts and the delivery receipts do not indicate that the construction

materials or the cash advances were made in connection with the sale of the subject property. Any doubt

as to the real meaning of the contract must be resolved against the person who drafted the instrument

and is responsible for the ambiguity thereof.

(2)Irregular statements(3)P67k vs.P69k

This Court cannot presume the existence of a sale of land, absent any direct proof of it. The construction

of the terms of a contract, which would amount to impairment or loss of rights, is not favored.

Conservation and preservation, not waiver or abandonment or forfeiture of a right, is the rule. Absent any

tangible connection with the sale of land, these transactions stand by themselves as loans and purchases

of construction materials. Ismael Angeles’ testimony is not conclusive. At best, it only proves that judge

Amado considered to sell the land .Even if Ismael Angeles testimony was given full credence, it would still

be insufficient to establish that a sale agreement was perfected between Salvador and Judge Amado. His

testimony that Judge Amado ordered the preparation of the deed of sale only proves that Judge Amado

and Salvador were in the process of negotiating the sale of the subject property, not that they had already

set and agreed to the terms and conditions of the sale. In fact, Ismael Angeles testimony that Judge

Amado refused to sign the contract reinforces the fact that the latter had not consented to the sale of the

subject property. From the evidence presented, an agreement of sale of the subject property between him

and Judge Amado had not yet reached the stage of perfection:

A contract undergoes various stages that include its negotiation or preparation, its perfection and,finally,

its consummation. Negotiation covers the period from the time the prospective contracting parties

indicate interest in the contract to the time the contract is concluded (perfected).The perfection of the

contract takes place upon the concurrence of the essential elements thereof. A contract which is

consensual as to perfection is so established upon a mere meeting of the minds, i.e. the concurrence of

offer and acceptance, on the object and on the cause thereof. x x x. The stage of consummation begins

when the parties perform their respective undertakings under the contract culminating in the

extinguishment thereof. Until the contract is perfected, it cannot, as an independent source of obligation,

serve as a binding juridical relation. In sales, particularly, to which the topic for discussion about the case

at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a price

certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the

latter agrees.

In the present case, the terms of payment have not even been alleged. No positive proof was adduced that

Judge Amado had fully accepted Salvadors sketchy proposal. Even if the handwritten note actually referred

to the subject property, it merely points to the fact that the parties were, at best, negotiating a contract of

sale. At the time it was written on 1 October 1980, Judge Amado had not expressed his unconditional

acceptance of Salvadors offer. He merely expressed that he was considering the sale of the subject

property, but it was nevertheless clear that he still was unprepared to sign the contract.

Absent the valid sale agreement between Salvador and Judge Amado, the formers possession of the

subject property hinges on the permission and goodwill of Judge Amado and the petitioners, as his

successors-in-interest.

[G.R. No. 120600. September 22, 1998]

ERNESTO C. DAWSON, LOUIS P. DAWSON, JR., BENJAMIN C.

DAWSON, JOSEPHINE DAWSON SOLIVEN, RALPH D. CUDILLA,

ELIZA C. ISIP and LARRY D. ISIP, petitioners, vs. REGISTER OF

DEEDS OF QUEZON CITY and JUDGE OF REGIONAL TRIAL

COURT OF QUEZON CITY, BRANCH 85, respondents.

D E C I S I O N

PANGANIBAN, J.:

In a contract to sell, the title over the subject property vests in the vendee only upon full

payment of the consideration. Where the installments agreed on have not been completely paid

upon the death of the original vendee and the certificate of title was erroneously issued in his

name, his heirs, who assumed his obligations and completed the payment, can resort to the

summary proceedings under Section 108 of Presidential Decree (PD) 1529 to correct the

manifest mistake.

The Case

Before us is a petition for review assailing the February 9, 1995 Decision and the May 29,

1995 Resolution of the Court of Appeals[1] in CA-GR SP No. 34515 entitled “Dr. Ernesto

Dawson, et. al., v. Register of Deeds of Quezon City, Judge of RTC, QC, Branch 85.” The

assailed Decision affirmed the Resolution[2] of the trial court[3] dated December 29, 1993 in LRC

Case No. Q-6403 (93), dismissing the petition for cancellation of Transfer Certificate of Title

(TCT) No. RT-58706 (248057). The May 29, 1995 Resolution denied petitioners’ Motion for

Reconsideration.

The Facts

The undisputed facts, as summarized by Respondent Court of Appeals, are reproduced

hereunder:[4]

“On October 7, 1993, the petitioners herein filed a petition with the Regional Trial Court in Quezon City alleging, inter alia, the following:

‘-- On May 2, 1967, during his lifetime. Louis P. Dawson offered to buy on

installment from the SISKA DEVELOPMENT CORPORATION, per contract to sell,

a parcel of land in Quezon City, consisting of 638 square meters for P27,632.00, now

covered by Transfer Certificate of Title No. RT-58706 (248057);

-- On June 3, 1971, Louis P. Dawson died intestate;

-- Upon his death, the petitioners assumed the rights and obligations of deceased Louis P. Dawson in the aforementioned contract to sell, paying in full the selling price

of the lot from their own funds, which payment was completed in 1978;

-- With said full payment, vendor SISKA DEVELOPMENT CORPORATION executed on March 16, 1978 a deed of absolute sale in favor of deceased Louis P.

Dawson who had died seven (7) years earlier, instead of in favor of the petitioners

who assumed and to whom [were] transferred the rights and obligations of deceased Louis P. Dawson upon the latter’s death;

-- Because of the obvious error, Transfer Certificate of Title No. RT-58706 (248057) was issued in the name of deceased Louis P. Dawson instead of those of petitioners --

hence, the petition for the cancellation and correction of TCT No. RT - 58706

(248057) in the name of Louis P. Dawson and the issuance of a new title in the names of herein petitioners, to wit: Dr. Ernesto C. Dawson (1/5), Louis P. Dawson, Jr. (1/5),

Benjamin C. Dawson (1/5), Josephine Dawson Soliven (1/5), Ralph D. Cudilla (1/15),

Eliza C. Isip (1/15) and Larry D. Cudilla (1/15);

-- this petition is filed pursuant to Section 108 of P.D. 1529 (formerly Section 112 of

Act No. 496);

-- the herein petition is not without legal precedent;

-- the petition is not controversial, considering the unanimity among all the interested

parties, who are all petitioners herein, being the only surviving heirs of deceased Louis P. Dawson.’ (pages 1-6 of the Record).

“On December 1, 1993, the respondent court issued an Order allowing the petitioners to present ex-parte their evidence before the Branch Clerk of Court. (page 16 of the

Record).

“On December 20, 1993, the respondent court rendered its first assailed Resolution (pages 36-38 thereof), the dispositive portion of which was earlier quoted.

“On February 2, 1993, the petitioner herein filed a motion for reconsideration (pages

39-48 of the Record) from the afore-quoted Resolution of the respondent court.

“Said motion was denied by the respondent court in its second assailed Order (dated

March 21, 1994) which was earlier quoted.”

Hence, this petition for review.[5]

Ruling of the Court of Appeals

In affirming the dismissal of the petition for cancellation of TCT No. RT-58706 (248057),

the Court of Appeals held that the summary proceedings under Section 108, PD 1529, do not

apply to the present case, viz.:

“Petitioners’ contention that the respondent court erred in holding that Section 108 of

Presidential Decree No. 1529 ‘does not apply’ was torpedoed by the following:

--Wrong Action. Petitioners’ evidence showed that their father, Louis P. Dawson,

died on June 3, 1971 (Exhibit ‘D’), while the deed of absolute sale for the subject

parcel was executed on March 16, 1978 by the Siska Development Corporation in favor of Louis P. Dawson (Exhibit ‘E’). It was on this basis that a certificate of title

(TCT No. RT-58706) was issued in the name of Louis P. Dawson, which title was

entered at the Office of the Register of Deeds in Quezon City on August 17, 1978. As per the tax declaration and real property tax bill, the subject parcel is still in the name

of Louis P. Dawson (pages 23-24, tsn of December 8, 1993), although his wife (Soledad Dawson) died in 1988 (Exhibit ‘I’). We are intrigued why the petitioners

only took action by filing the petition for cancellation of the certificate of title in their

father’s name only on October 7, 1993. Was it designed to evade the payment of the necessary taxes to the government?

--Legal shortcut. As aptly observed by the respondent court in its assailed resolution, ‘the case at bar pertains more to the partition of the estate which will in effect transfer

ownership of title of the property to the petitioners as compulsory heirs of the

decedent.’ Hence, Section 108 of Presidential Decree No. 1529 (which calls for summary proceedings) does not apply. Certainly, to allow petitioners’ move will

open the floodgate [of] tax evasion[s]. Petitioners’ posture can be likened to a petition

seeking to change/alter one’s paternity or citizenship by merely seeking the correction/revision of birth certificate. Such is not allowable -- there must be a

petition for naturalization. In the case at bench, [w]e further took note of the fact that the wife of the property owner (Soledad Dawson) died in 1988, almost ten years after

a certificate of title was issued by the respondent Register of Deeds in the name of

Louis P. Dawson.

“With the foregoing, [w]e find no error committed by the respondent court in handing

down its assailed resolution (dated December 20, 1993) and Order (dated March 21, 1994). The law abhors shortcuts.”[6]

The Issue

Petitioners submit, for the consideration of the Court, a single issue:

“The Court of Appeals erred in affirming that Section 108 of P.D. 1529 does not apply herein.”

The Court’s Ruling

The petition is meritorious.

Sole Issue: Applicability of Section 108, PD 1529

Section 108 of PD 1529 reads:

“SEC. 108. Amendment and alteration of certificates. - No erasure, alteration, or

amendment shall be made upon the registration book after the entry of a certificate of title or of a memorandum thereon and the attestation of the same by the Register of

Deeds, except by order of the proper Court of First Instance. A registered owner or

other person having an interest in registered property, or, in proper cases, the Register of Deeds with the approval of the Commissioner of Land Registration, may apply by

petition to the court upon the ground that the registered interests of any description, whether vested, contingent, expectant or inchoate appearing on the certificate, have

terminated and ceased; or that [a] new interest not appearing upon the certificate have

arisen or been created; or that an omission or error was made in entering a certificate or any memorandum thereon, or on any duplicate certificate; or that the name of any

person on the certificate has been changed; or that the registered owner has married, or, if registered as married, that the marriage has been terminated and no right or

interest of heirs or creditors will thereby be affected; or that a corporation which

owned registered land and has been dissolved has not conveyed the same within three years after its dissolution; or upon any other reasonable ground; and the court may

hear and determine the petition after notice to all parties in interest, and may order the

entry or cancellation of a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant any other relief upon such terms and conditions, requiring

security or bond if necessary, as it may consider proper; Provided, however, that this

section shall not be construed to give the court authority to reopen the judgment or decree of registration, and that nothing shall be done or ordered by the court which

shall impair the title or other interest of a purchaser holding a certificate for value in good faith, or his heirs and assigns, without his or their written consent. Where the

owner’s duplicate certificate is not presented, a similar petition may be filed as

provided in the preceding section.

“All petitions or motions filed under this section as well as under any other provision

of this Decree after original registration shall be filed and entitled in the original case

in which the decree or registration was entered.”[7]

Petitioners contend that, as the sole heirs of Louis P. Dawson, they assumed upon his death

in 1971 the obligations under the contract to sell that he had entered into in 1967. Thus, when

the contract price was fully paid by them in 1978, ownership over the property in question

should have been transferred to them, and not to the deceased, Louis P. Dawson. Since the

issuance of the aforesaid TCT in the name of the deceased was manifestly an error, petitioners

posit that they can avail of the remedy provided under the aforecited statutory provision.

On the other hand, the Court of Appeals and the trial court ruled that petitioners could not

avail themselves of the summary proceedings under the said provision, because the present

controversy involved not the cancellation of a certificate of title but the partition of the estate of

the deceased.

In his Comment[8] dated May 8, 1996 and Memorandum[9] dated May 5, 1998, the Office of

the Solicitor General sides with petitioners and argues that, under the given factual

circumstances, a resort to Section 108 of PD 1529 is proper.

We agree with both the petitioners and the solicitor general.

On May 2, 1967, Louis P. Dawson and Siska Development Corporation executed a contract

to sell, the subject of which was the parcel of land in question. By the nature of a contract to sell,

the title over the subject property is transferred to the vendee only upon the full payment of the

stipulated consideration. Unlike in a contract of sale, the title does not pass to the vendee upon

the execution of the agreement or the delivery of the thing sold. In Salazar v. Court of

Appeals,[10] this Court explained the distinction between a contract to sell and a contract of sale:

“In a contract of sale, the title to the property passes to the vendee upon the delivery

of the thing sold; in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase

price. Otherwise stated, in a contract of sale, the vendor loses ownership over the

property and cannot recover it until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until full payment of the

price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor

to convey title from becoming effective.”

It is undisputed that Louis P. Dawson died in June 1971, without having completed the

installments on the property. His heirs, herein petitioners, then took over the contract to sell,

assumed his obligations by paying the selling price of the lot from their own funds, and

completed the payment in 1978. Accordingly, the ownership of the lot had not been vested in

Louis P. Dawson during his lifetime.

Indeed, on March 16, 1978, Siska Development Corporation could not have transferred the

title over the lot, through a Deed of Absolute Sale, to Louis P. Dawson, who had died seven

years earlier in 1971. In 1978, the deceased had no more civil personality or juridical

capacity.[11] “His juridical capacity, which is the fitness to be the subject of legal relations, was

lost through death.”[12]

In other words, the said property did not become part of the estate of Louis P.

Dawson. Necessarily, partition is not the remedy to determine ownership thereof and to

consolidate title in herein petitioners.

Hence, we agree with the following assertion of the solicitor general: “Having stepped into

the shoes of the deceased Louis P. Dawson upon his death in June, 1971 with respect to the said

contract, and being the ones who continued the installment payments of the selling price from

their own funds until its full payment in 1978, petitioners necessarily became the lawful owners

of the said lot in whose favor the deed of absolute sale should have been executed by vendor

Siska Development Corporation.”[13]

In view of the circumstances of this case, Section 108 of PD 1529 is clearly available as a

remedy to correct the erroneous issuance of the subject TCT in the name of Louis P.

Dawson. The issue is not really novel. Faced with substantially similar facts in Cruz v.

Tan,[14] this Court also allowed the application of Section 112 of the Public Land Act, which is identical to Section

108 of PD 1529. A translation of the said case from Spanish reads:[15]

“Simeon de la Cruz purchased a parcel of land on a ten-year installment basis. He

died in 1939 and his wife died in 1942, leaving three children. The vendor of the land

executed the corresponding deed of sale over the land in 1950 upon completion of the payment. The transfer certificate of title was then issued in the name of the deceased

buyer, Simeon de la Cruz. Petitioner filed this petition under the original land registration case praying that the court order the Register of Deeds to substitute the

name of Regino de la Cruz, petitioner herein, for that of Simeon de la Cruz in the

transfer certificate of title. Petitioner claimed that Simeon during his lifetime transferred all rights over the land to him. The petition carried the conformity of the

heirs of the deceased Simeon de la Cruz. Respondent court denied the petition on the

ground that the substitution of owners cannot be ordered by the court acting on its jurisdiction granted by the Land Registration Law, because Simeon de la Cruz and

Regino de la Cruz are two different persons. The court also said that the petition should be brought before an ordinary court for the protection of the interested parties.

Held: The danger that respondent judge feared that other interested parties might be

prejudiced of their rights is remote, considering that the heirs of Simeon de la Cruz

signified their conformity to the petition. Intestate proceedings are not necessary

when the heirs have amicably settled the estate among themselves and when the deceased left no debts. Section 112 of the Land Registration Law (now Section 108

of Presidential Decree No. 1529) authorizes the court upon proper petition and notification to order the cancellation of a certificate of title and substitute the name of

the person who appears to be entitled to the property. The order of respondent judge

is revoked and the Register of Deeds is ordered to make the necessary substitution.”

Accordingly, petitioners may avail of the remedy provided under Section 108 of PD

1529. This, however, does not necessarily mean that they are automatically entitled to the relief

prayed for -- the cancellation of the title issued in the name of Louis P. Dawson and the issuance

of new titles. It is incumbent upon them to satisfy the requirements and conditions prescribed

under the statutory provision.

Respondent Court questioned the filing of the petition for cancellation only in 1993, hinting

that the remedy was “designed to evade the payment of the necessary taxes to the

government.” Respondent Court, however, failed to state which taxes petitioners sought to

avoid. Although they are required to pay capital gains tax and, thereafter, real estate tax, there is

no showing that said taxes have not been paid. Thus, we cannot withhold the relief prayed for by

petitioners, merely on the basis of some speculation of improper motivation.

WHEREFORE, the petition is GRANTED and the assailed Decision is REVERSED and

SET ASIDE. The Regional Trial Court of Quezon City is ORDERED to cause the cancellation

of TCT No. RT-58706 (248057) issued in the name of Louis P. Dawson and to cause the

issuance, in lieu thereof, of a new certificate of title in the names of the petitioners as co-

owners of the subject property, after said petitioners have fulfilled the requirements stated in

Section 108 of PD 1529. No costs.

SO ORDERED.

Republic of the Philippines SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 165724 November 2, 2006

ZAMORA REALTY and DEVELOPMENT CORPORATION and/or ERNESTO ZAMORA, Petitioners, vs. OFFICE OF THE PRESIDENT OF THE PHILIPPINES and EDILBERTO C. GALLARDO, Respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 78319 and its Resolution2 denying the motion for reconsideration thereof.

On October 8, 1985, respondent Edilberto C. Gallardo entered into a contract to sell with Amlac Development Corporation (Amlac). The property subject of the contract is Lot 1, Block 3 of Amlac-Ville Subdivision. Under the contract, Gallardo was to pay a downpayment of P26,058.00, upon execution, the balance to be paid in installments of P1,987.50 until full settlement of the purchase price of P130,290.00. Gallardo delivered the downpayment upon the signing of the contract, and several months later, on March 11, 1987,3 the initial installment. Gallardo later informed the owner/developer of his intention to stop further payments due to the latter’s non-compliance with its obligation to complete the development of the subdivision project. The owner/developer nevertheless made several demands for him to pay the monthly amortizations, which the latter ignored, insisting that he would suspend payment until the completion of the subdivision project.

Thereafter, Zamora Realty and Development Corporation (Zamora Realty) sent a letter4 dated January 22, 1990, addressed to Jaime dela Rosa, copy furnished to all Amlac-Ville Subdivision buyers, advising them to defer payment of monthly amortization due to a pending case between it and Amlac. On November 5, 1991, Gallardo sent a letter5 to the Amlac-Ville Subdivision reiterating his stand to suspend the amortization payments. The realty firm still made demands on Gallardo to pay his back arrears which, per its second notice dated January 28, 1992, amounted to P147,075.00. A final notice of demand was also sent to Gallardo, stating that his arrears already amounted to P153,037.50.6 Finally, on May 14, 1992, Amlac/Zamora Realty sent Gallardo a notarial notice of cancellation of the contract.7

On June 3, 1992, Gallardo filed a complaint with the Housing and Land Use Regulatory Board (HLURB) against Zamora Realty and Development Corporation and/or Ernesto Zamora, assailing the notarial rescission of the contract to sell.8 In his complaint, he averred that his suspension of the amortization payment was justified by the non-development of the subdivision project.

For their part, defendants countered that the subject project was almost substantially complete; the centralized water distribution system had been installed, and the concreting of sidewalks had been concluded. They likewise argued that plaintiff failed to observe the provision of Section 23 of Presidential Decree (P.D.) No. 957 before suspending payments.9

The HLURB Arbiter conducted an ocular inspection of the project and found that development of the project was still ongoing.10 Thus, the HLURB Arbiter rendered a decision in favor of Gallardo. The fallo reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the complainant’s suspension of payment beginning November 21, 1991, as legal and valid;

2. As a consequence of the foregoing, holding respondent’s rescission of contract over the controverted lot as illegal; and

3. Ordering the complainant to pay the whole balance of his obligations sans penalty interest or interest of this nature except the legal interest as stipulated in their contract conditioned upon respondent’s substantial compliance with his obligation as certified by the Board.11

Aggrieved, defendants appealed to the HLURB Board of Commissioners. On May 29, 1995, the Board dismissed the appeal and affirmed in toto the decision of the HLURB Arbiter.12

It noted that Amlac-Ville subdivision was registered as early as 1985, and under applicable laws, a subdivision owner/developer must complete the development of the project within one year from the date of issuance of the license of the subdivision.13 The Board gave credence to the ocular inspection report which stated that the development of the subject subdivision was still ongoing as of 1992. It concluded that since there was no request for extension, the project remained incomplete, and Gallardo was justified in withholding his payments.

Zamora Realty elevated the matter to the Office of the President (OP), which, however, dismissed the appeal in its Resolution14 dated March 6, 2003. It then filed a motion for reconsideration, which was likewise denied in an Order15 dated June 18, 2003.

Unsatisfied, Zamora Realty filed before the CA a petition for review16 under Rule 43 of the Revised Rules of Court. It relied on the following grounds:

1. We firmly submit to this Honorable Court that the Public Respondent OPP had grossly erred in not finding that the herein Private Respondent clearly violated the Contract to Sell dated October 8, 1998 (sic);

2. The same Office likewise erred in not holding that Petitioners validly and lawfully rescinded already the said Contract to Sell dated October 8, 1998; and

3. The said Public Respondent OPP also erred in not just requiring the herein Petitioners to reimburse any payments already made therein by the herein Private Respondent plus the lawful rate of interest thereof or in the alternative for the herein Petitioners to just give the herein Private Respondent a similar lot that can still be transferred to the said Private Respondent granting that the latter is entitled to affirmative relief from it.17

On May 31, 2004, the CA rendered a Decision18 dismissing the petition. It sustained the validity of respondent Gallardo’s suspension of payments, and ruled that it was in accordance with Sections 20 and 23 of Presidential Decree (P.D.) No. 957. The CA stated that the development of the subdivision was still ongoing as of 1992, way beyond 1985 when it was first registered, and that such delay justified the buyer’s act of suspending payment. The CA, likewise, gave weight to Gallardo’s letter19 to Amlac-Ville Subdivision, dated November 5, 1991, where he stated that after March 11, 1987, he was stopping payment of his amortization due to non-development of the project.

After its motion for reconsideration was denied, petitioner sought recourse to the Court via petition for review on certiorari, anchored on the following grounds:

I. THE HONORABLE COURT OF APPEALS CLEARLY ERRED IN NOT HOLDING THAT RESPONDENT EDILBERTO C. GALLARDO VIOLATED HIS CONTRACT TO SELL WITH THE HEREIN PETITIONER;

II. THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN NOT HOLDING THAT RESPONDENT EDILBERTO C. GALLARDO ALREADY VIOLATED THE SAID CONTRACT TO SELL WHEN HE OPTED TO SUSPEND HIS MONTHLY AMORTIZATION THEREIN; and

III. THE HONORABLE COURT OF APPEALS ERRED IN NOT REQUIRING INSTEAD THE HEREIN PETITIONER TO JUST REIMBURSE [PAYMENTS OF] THE RESPONDENT EDILBERTO C. GALLARDO OR CHANGE THE SAID LOT WITH AN EQUIVALENT ONE.20

Petitioner avers that respondent is in bad faith; by his failure to pay the monthly amortization as agreed upon, he flagrantly violated the contract to sell.21 It likewise claims that respondent is not an ordinary buyer of the property as he was, in fact, a broker who could not simply feign ignorance of the stages of the development works.22 After the contract to sell was cancelled by notarial rescission,

the subject property was already sold to another person. Consequently, it should have instead been directed to reimburse payments made by respondent, or to sell an equivalent lot to him.23

In his Comment24 on the petition, respondent insists that he is not in bad faith because the suspension of payment is the direct result of petitioner’s failure to develop the subdivision. In fact, it had advised all Amlac buyers to suspend amortization payments because of the issue of non-development. He insists that there is no showing that the lot in question had already been sold.

After petitioner submitted its Reply,25 the parties were required to submit their respective Memoranda. Petitioner reiterated that the contract between it and respondent was a contract to sell, and as such, ownership was reserved to it until after respondent had fully paid. In fact, even after full payment, ownership is not automatically vested in the buyer as a Deed of Absolute Sale is yet to be executed.26 Lastly, petitioner asserts that the belated suspension of payment by respondent is nothing but a mere afterthought.27

The issues for determination can be summed up as follows: (a) whether respondent violated the contract to sell by his failure to pay the monthly amortizations, and, if in the negative, whether he was justified to suspend payment due to incomplete development of petitioner’s project; and (b) whether the CA erred in not directing petitioner either to reimburse respondent’s payments, together with interests, or require it to sell to respondent a different lot equivalent to the subject property.

The petition is bereft of merit.

At the outset, the Court noted that the instant petition is erroneously captioned as one filed against the "Office of the President and Edilberto Gallardo." However, as correctly pointed out by the Office of the Solicitor General, the petition is an offshoot of respondent’s complaint against the HLURB assailing the rescission of his contract with petitioner. As such, a purely private interest is involved. In light of the provisions of Section 6,28 Rule 43 of the Revised Rules of Court, the agency which issued the assailed order should not have been impleaded, whether in the petition before the CA or in this Court.

The contract entered into between petitioner and respondent is a contract to sell a subdivision lot. It bears stressing that a contract to sell is 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.29 In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. Thus, for its non-fulfillment, there will be no contract to speak of, the obligor having failed to perform the suspensive condition which enforces a juridical relation.30

The subject matter of the contract being a subdivision lot, the applicable law is P.D. No. 957 or "The Subdivision and Condominium Buyers’ Protective Decree." As such, the right of the seller to consider the contract to sell ineffectual in case of failure of the prospective buyer to pay the amortization, is limited. Sections 20 and 23 of P.D. No. 957 read as follows:

Section 20. Time of Completion. – Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority.

Section 23. Non-forfeiture of Payments. – No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.

Thus, the only requirement under the law is to give due notice to the owner or developer of the buyer’s intention to suspend payment.

It is undisputed that respondent had refused to pay the monthly amortizations on the property after the March 11, 1987 payment. Per findings of the HLURB, as of 1992, the development of the project was still ongoing. Since the development of the subdivision was registered as early as 1985 and there is no showing that petitioner had been granted an extension by the HLURB, petitioner in effect failed to complete the project within one year from the date of the issuance of the license therefor, and as such is guilty of incomplete development of the subdivision project. Thus, petitioner could not have validly exercised its right to cancel the contract to sell in favor of respondent.

A careful perusal of the records also show that respondent had refused to make payment as early as 1987, and sent a letter to Amlac-Ville Subdivision only on November 5, 1991 with the following statement: "After paying your office last March 11, 1987, (please refer to the attached xeroxed receipt) I said that I would suspend further payments until such time that your office shall have complied with some of your development commitments to your lot buyers, e.g., centralized water system, concrete curbs and

gutters, etc. because I had then planned to construct a house on the lot I had contracted to buy from you (Lot 1 Block 3 Contract to Sell No. 017)." While the written notice of suspension of payment was belatedly given, the above-quoted portion of the letter shows that petitioner was verbally notified of respondent’s intention to suspend payment as early as 1987.

The law does not specifically provide the form of notice to be given to the owner/developer. Considering the purpose of the law and the evil sought to be prevented, the Court holds that a verbal notice of the intention to suspend remittance of payment is sufficient. Such a holding is consistent with our ruling in Francel Realty Corporation v. Sycip,31 where the requirement of an HLURB clearance under Section 23, Rule VI of the Rules Implementing P.D. No. 957 before the buyer of a subdivision lot or a home could lawfully withhold monthly payments was declared void. The Court explained:

x x x [T]o require clearance from the HLURB before stopping payment would not be in keeping with the intent of the law to protect innocent buyer of lots or homes from scheming subdivision developers. To give full effect to such intent, it would be fitting to treat the right to stop payment to be immediately effective upon giving due notice to the owner or developer or upon filing a complaint before the HLURB against the erring developer.1âwphi1 Such course of action would be without prejudice to the subsequent determination of its propriety and consequences, should the suspension of payment subsequently be found improper.32

It must be stressed that P.D. No. 957 was enacted with no other end in view than to provide a protective mantle over helpless citizens who may fall prey to the manipulations and machinations of unscrupulous subdivision and condominium sellers.33 It was issued in the wake of numerous reports that many real estate subdivision owners, developers, operators and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other basic requirements for the health and safety of home and lot buyers.34 Such intent of the law is nowhere expressed more clearly than in its preamble, the pertinent portion of which reads:

WHERE

WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and to provide them with ample opportunities for improving their quality of life;

WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers for value; x x x

Thus, respondent justly withheld the payment of amortization of the subject lot, and petitioner’s unilateral cancellation of the contract to sell cannot be sustained. Consequently, the contract to sell between it and respondent subsists.

We note, however, that the HLURB Arbiter declared as valid the suspension of amortization payments by private respondent beginning November 21, 1991. This finding has been affirmed by the HLURB Board of Commissioners, the Office of the President, and the CA. Such ruling, however, requires re-examination. The decisions below contain statements of fact to the effect that the last payment made by respondent was on March 11, 1987. The CA, in fact, categorically stated that respondent did not make any more payments after March 11, 1987.35 The same was later reiterated in respondent’s November 1991 letter. Thus, respondent stopped remitting the amortizations over the subject property after March 11, 1987. Since the subdivision was registered in 1985 and the completion of the development

was still ongoing as of 1992, it follows that as of 1987, petitioner was already guilty of incomplete development. In fine then, the validity of the suspension of payment should be reckoned from 1987, specifically after the last payment made by respondent on March 11, 1987. This is more in keeping with the law and the factual circumstances of the case.

As to whether or not the CA should have directed petitioner to reimburse the payments already made by respondent, with payment of interest, or to require it to sell another lot equivalent to the subject property, we rule in the negative.

In case the developer of a subdivision or condominium fails in its obligation under Section 20 of P.D. No. 957, Section 23 of the law gives the buyer the option to demand reimbursement of the total amount paid, or to wait for further development of the subdivision, and when the buyer opts for the latter alternative, he may suspend payment of installments until such time that the owner or developer had fulfilled its obligation to him.36

It is thus clear that the law provides two remedies in case of incomplete development of the subdivision project: (1) reimbursement of the total amount paid, including amortization interests but excluding delinquency interests, with interest thereon at the legal rate;37 or (2) for the buyer to suspend amortization payments until the completion of the project. These remedies are available to the

prospective buyer to give effect to the law’s intent to protect the buyers from abusive owners/developers of subdivisions. In cases of incomplete development, it is the developer who is the one at fault, as it would then have violated its promise to the prospective buyers to provide the necessary facilities in the subdivision. The aggrieved party, therefore, is the prospective buyer because of the non-fulfillment of the developer’s commitment. As such, it is but logical that the option is given to the prospective buyer, not to the developer.

Petitioner therefore cannot insist that payments made by respondent be returned to him; neither can respondent be compelled to accept another property in lieu of the lot subject of the contract. To reiterate, respondent, as prospective buyer, had opted to exercise his right to suspend payment and wait for the completion of the subdivision project. He cannot therefore be forced to accept reimbursement of his amortization payments or to accept a lot different from the subject of the contract.

Petitioner claims that the subject property was already sold to another person after it validly and legally cancelled the contract to sell by notarial rescission.38 It further contends that under the situation, to still require the latter to sell the subject property to respondent would be to expose petitioner to inevitable prosecution for estafa arising from the double sale of the same property. As held by the CA, in default of evidentiary support from the records and on account of the paucity of discussion thereon by the Office of the President and the HLURB, we cannot rule on petitioner’s allegation that the subject lot has already been sold.39

IN LIGHT OF ALL THE FOREGOING, the Decision of the Court of Appeals dated May 31, 2004 is AFFIRMED with MODIFICATION. Respondent Edilberto C. Gallardo is declared to have validly exercised his right to suspend remittance of payments as of March 12, 1987, not November 21, 1991.

SO ORDERED.

ROMEO J. CALLEJO, SR. Associate Justice

SPS. GIL TORRECAMPO and BRENDA TORRECAMPO (Petitioners) vs. DENNISALINDOGAN, SR. and HEIDE DE GUZMAN ALINDOGAN (Respondents)

.CIVIL LAW: CONTRACT TO SELL, DISTINGUISHED FROM CONTRACT OF SALE ;NON-APPLICABIITTY OF RULES ON DOUBLE SALE TO A CONTRACT TO SELL.

FACTS:

On May 24, 1997, spouses Jose and Lina Belmes executed a deed of sale to herein respondents, over Lot No. 5524-H and the house constructed thereon located in Rawis, Legazpi City. On July 4, 1997, Lina Belmes wrote respondents wherein she delivered the possession of the house and lot to them. However, on July 5, 1997, before they could take the actual possession of the property, the herein petitioners, and spouses Jonathan Lozares and Jocelyn Torrecampo, entered and occupied the premises. As the petitioners refused to vacate the property despite repeated demands, respondent spouses Alindogan filed against them a complaint for recovery for ownership and possession with damages with the RTC of Legazpi City. In their Answer to the complaint, petitioners claimed that on March 25, 1997, spouses Belmes received from them P73,000.00 as advance payment for the sale of the house and lot. On April 8, 1997, petitioners and spouses Belmes executed a "Contract to Buy and Sell" covering the same property. The parties agreed as follows that the total consideration is P350,000.00; that upon the signing of the contract, petitioners shall pay spouses Belmes P220,000.00; and that the balance of P130,000.00 shall be paid upon the issuance of the certificate of title in the names of petitioners. To complete the agreed partial payment of P220,000.00 mentioned in the contract, petitioners paid spouses Belmes P130,000.00,but the latter refused to accept the amount. Thus, on July 7, 1997, petitioners filed with the RTC ,Branch 18, Tabaco, Albay, Civil Case No. T-1914, a Complaint for Specific Performance against spouses Belmes. On July 14, 2000, the RTC, in Civil Case No. 9421, now before us, rendered a Decision in favor of respondents

ISSUE:

Whether or not the Honorable Court of Appeals erred when it declared the respondents as the owners and entitled them to the possession of the lot in question.

RULING:

The trial court held that the transaction between petitioners and spouses Belmes is a mere contract to sell. Thus, the latter did not transfer ownership of the house and lot to petitioners. The tenor of the afore-quoted provision of the contract clearly confirms that the transaction between the defendants and the Belmeses was not a contract of sale, as defined by Art. 1458 of the Civil Code.

Indeed, the true agreement between petitioners and spouses Belmes is a contract to sell.

Not only did the parties denominate their contract as “Contract to Buy and Sell,” but also specified there in that the balance of the purchase price in the amount of ₱130, 000.00 is to be paid by petitioners upon the issuance of a certificate of title. That spouses Belmes have in their possession the certificate of title indicates that ownership of the subject properly did not pass to petitioners.

Thus, the petition is denied and the assailed Decision of the Court of Appeals dated November 18, 2002 in CA-G.R. CV No. 68583 Affirmed.

EUSEBIO MANUEL, plaintiff and appellant,

vs.

EULOGIO RODRIGUEZ, SR., ET AL., defendants and appellees.

Sumulong, Hialo and Vidanes for appellant.

Generoso, Tolentino, Garcia and Cruz for appellee E. Rodriguez, Sr.

, J.:

Eusebio Manuel appeals from the judgment of the Court of First Instance of Rizal, promulgated on October 31,1957, dismissing his

complaint.

Questions of law and of fact are involved, but the property being worth over P2,000,000.00, the appeal was directly taken to this

Court.

The complaint seeks to have plaintiff Eusebio Manuel declared absolute owner of Lot 51, Plan Psu-32606, situated in San Mateo,

Rizal; to compel defendants to execute a deed of absolute sale of said lot in favor of said plaintiff and to receive the unpaid balance

of the purchase price thereof; and to declare the subsequent sales of said lot null and void and to cancel the transfer certificates of

title issued to the transferees. The cross-claim by defendant Eulogio Rodriquez against his co-defendant Dolores Vda. de Landahl(as

Administratrix of the intestate estate of John Landahl)having been dismissed, and there being no appeal therefrom, the facts

pertaining thereto will be omitted.

It appears that Januaria Rodriguez was the original registered owner of a big tract of land (part of which is the land in question),

embraced by Transfer Certificate of Title No. 8821 of the Register of Deeds of Rizal. In 1924, Januara Rodriguez ceded and

transferred said land to the Payatas Subdivision Inc., to be administered by said firm, subdivided, sold, leased or otherwise

disposed of (Exhibit “A”-1). Defendant-appellee Eulogio Rodriguez was then the Secretary-Treasurer of said Payatas Subdivision

Inc.

Sometime in April, 1926, plaintiff-appellant offered to buy the lot in question (about 248,310 sq. meters in area).The Company

agreed to sell said lot (Lot 51) for P2,240 in cash, or by installments with 10% interest (Exhibit “C”). Plaintiff-appellant made a

counter-offer for P2,000, which the Payatas Subdivision accepted, provided it was paid in each (Exhibit “E”). Plaintiff-appellant

wanted to pay in installments, and on August 2, 1926, the Company wrote him that it was agreeable to a down-payment of P1,500,

the balance to be paid within 9 to 10 months without interest, or if the down-payment be less than P1,500, with interest at 10% on

the balance (Exhibit “F”). Plaintiff-appellant then requested that the down-payment be reduced to P1,300, and through the

intercession of defendant-appellee Eulogio Rodriguez, Sr., who was plaintiff-appellant’s friend, this was granted. After making the

initial payment of P1,300, a provisional receipt was issued, which, on August 25, 1926, was substituted by the official receipt sent

by Casiano M. de Vera, the Company’s bookkeeper (Exhibits “G” & “G”-1). Soon after, plaintiff-appellant was placed in the

possession of the lot.

It also appears that plaintiff-appellant did not make any payments within the 9 to 10-month period mentioned in Exhibit “F”, so that

on April 30, 1928, the Payatas Subdivision Inc. sent him a letter urging immediate payment of his unpaid account with the

Company, which, including interest, amounted to P819.23, and asking him to answer within 10 days (Exhibit “H”). Thereafter,

plaintiff-appellant made another payment of P300 for which a receipt dated June 20, 1928 was issued to him (Exhibit “I”). So far as

the record discloses, this appears to be the last payment made by plaintiff-appellant on Lot 51, the property in question. On April

24, 1929, the Payatas Subdivision Inc. sent plaintiff-appellant a detailed statement of his unpaid account which, including interest

and taxes, amounted to P596.21, urging immediate payment thereof, so that title could be transferred to him as per agreement,

and requesting answer within 10 days (Exhibit “J”). Still, plaintiff-appellant did not pay his account, despite the fact that thereafter,

on several occasions, the Company sent to his residence its acting secretary, Conrado Vicente, to collect the balance.

Defendants-appellees advance the theory that in view of plaintiff-appellant’s repeated default in paying his outstanding account, the

Payatas Subdivision Inc. then considered his contract cancelled and extinguished, and the amounts already paid (P1,600), forfeited

to the Company, the transaction being merely a contract to sell or promise to sell; that sometime in 1939, the Payatas Subdivision

Inc., having sold all its properties (except some properties it was administering for Januaria Rodriguez), was extrajudically

dissolved, but its papers of dissolution were lost or destroyed during the war; that after said dissolution, all unsold properties

belonging to Januaria Rodriguez were returned to her.

Sometime in 1941, Januaria Rodriguez, who was the aunt of defendant-appellee Eulogio Rodriguez, sold several properties to the

latter, including Lot 51 in question, in consideration of the monthly advances, support, services, care, maintenance, medical

expenses, etc. which she received from the said Eulogio Rodriguez (Exhibit “U”).Pursuant to such sale, Transfer Certificate of Title

No. 44709 was issued to Eulogio Rodriguez, Sr. (Exhibit 21-a).

Likewise, it appears that on February 4, 1941, Eulogio Rodriguez, Sr., then Mayor of Manila, instructed his secretary to write

plaintiff-appellant to urge him to pay his unsettled account with the Payatas Subdivision, Inc. As per instructions, his secretary

wrote plaintiff-appellant (Exhibit “O”). Still, there was no payment.

On August 5, 1944, Eulogio Rodriguez, Sr. sold Lot 51(among others) to John Landahl (represented in the transaction by Carlos

Landahl as attorney-in-fact), for and in consideration of P157,192.80, in Japanese war notes (Exhibit 1-Landahl). The sale was duly

registered and Transfer Certificate of Title No. 46521 was issued in Landahl’s name (Exhibit 3-Landahl).

On April 6, 1949, or just a little less than 23 years after the alleged sale to him of Lot 51 in 1926, plaintiff-appellant brought the

instant case, as aforesaid, to compel the execution of a formal deed of conveyance in his favor covering the purported sale in 1926;

to compel receipt of the unpaid balance of the price which plaintiff-appellant consigned in court; and to annul the subsequent sales

to Eulogio Rodriguez and to John Landahl, and the corresponding transfer certificates to title issued to them.

The decision of the trial court dismissing the complaint is predicated on two main findings -

Firstly. – That the transaction in 1926 was mere contract to sell or promise to sell of Lot 51 to plaintiff-appellant, the understanding

being that upon failure to pay the installments as demanded, the vendor corporation had the right to consider the contract

cancelled and the amounts already paid, forfeited.

Secondly. – That even under plaintiff-appellant’s theory that his contract with defunct Payatas Subdivision Inc. was an absolute

sale, involving immediate transfer of ownership, his right of action to compel the execution of a formal deed of conveyance has

prescribed, whether the contract is considered written or verbal (Sec. 43, pars. 1 & 2, Code of Civil Procedure, Act 190); moreover,

the action is barred by laches.

The findings that the contract entered into 1926 was a mere contract to sell or promise to sell was predicted on the following

premises:

1. The alleged contract of absolute sale was not reduced to a formal deed of conveyance, much less registered, which is unlikely if

the contract had been an absolute sale, because plaintiff-appellant would have insisted that it be reduced to a public document, the

land being covered by a Torrens title.

2. It is highly improbable that the Payatas Subdivision Inc. would agree to an immediate transfer of ownership to plaintiff without

any guaranty or security that the balance of the price would be completely paid.

3. The statement in Exhibit “J”, introduced by plaintiff as his evidence, requesting payment of the balance “at ng kayo naman y

mabigyan na ng katibayan, alinsunod sa pinagkayarian”, confirms that the agreement between plaintiff and the company was that

title would be transferred to plaintiff only upon full payment of the price.

4. Plaintiff would not have waited for more than 20 years to file this action to enforce the contract if this where an absolute sale,

considering that the land being covered by a Torrens title, it was easy for the vendor to resell or encumber the same property to

some other person on the basis of a clean title.

5. The nature of the transaction as a mere contract to sell is established by the testimony of witnesses for defendants-appellees.

6. The dissolution of the Payatas Subdivision Inc. sometime in 1939 must have been the reason which prompted the cancellation of

plaintiff’s contract, as it had to wind up all its affairs and conclude all pending business before dissolution.

7. It may be taken judicial notice of that it is a general practice among subdivision companies engaging in installment sales to place

the buyer immediately in possession after the down-payment, the company remaining owner of the property until full payment, at

which time the deed of conveyance is then executed in favor of the buyer; and if the buyer defaults in paying the installments due,

the corporation cancels the contracts and forfeits the amount already paid.

In his brief containing 20 assignments of error, plaintiff-appellant insists that the contract in 1926 was not merely a contract to sell

but an absolute sale (Errors I-IV). He contends that contrary to the finding of the lower court, the 1926 contract was not verbal but

written, citing the series of communications between plaintiff-appellant and the Payatas Subdivision Inc., Exhibits “C” to “G”-1. A

careful examination of these exhibits, however, reveals that Exhibits “C” to “F” are mere bargaining negotiations that took place

before the parties arrived at a full understanding, while Exhibits “G” and “G”-1 are mere receipts of payment; they fail to show that

the parties had committed all the terms of their agreement to writing. Exhibit “C” merely offers to sell Lot 51 for P2,240, with

interest at 10% if it be by installments; Exhibit “D” offered to reduce the total price for Lots 44 and 51 (early negotiation were for 2

lots) to P2,955, and also referred to other matters concerning the sale which should be discussed personally by the parties; Exhibit

“E” accepts a previous counter-offer made by plaintiff-appellant to buy Lot 51 for P2,000, provided the payment was in cash, and

again referred to other matters regarding the sale which should be threshed out between the parties; Exhibits “F”, after making

reference to the terms of payment desired by plaintiff-appellant, laid down the condition that if the first payment is at least P1,500,

the balance payable in 9 to 10 months would not bear interest; and if the initial payment was less than P1,500, the balance would

bear interest at 10%; Exhibit “G” is a note by Payatas Inc. referring to the attached receipt, Exhibit “G-1″), covering the down-

payment of P1,300 made by plaintiff-appellant for Lot 51.

These letters shows that if at all, only the price and the terms of payments were in writing. The most important, the alleged

transfer of title, and the other matters alluded to in some of the communications, were not reduced to any written document. It is

generally recognized that to be a written contract, all its terms must be in writing; so that a contract partly in writing and partly

oral, is, in legal effect, an oral contract (Fey vs. Loose Wiles Biscuit Co., 75 P2d 810; Peifer vs. New Comer, et al., 157 NE 240; 12

Am. Jur. 550). Apart from whether the letters negotiating the transaction could constitute a written contract of sale, the absence of

a formal deed of conveyance strongly indicates that the parties did not intend immediate transfer of title, but only a transfer after

full payment of the price. As observed by the trial court, if the contract were an absolute sale, it is unlikely that plaintiff-appellant

would not have insisted that the same be reduced to a public document, considering that Lot 51 is covered by a Torrens title. On

the other hand, it is unlikely for the Payatas Subdivision Inc. to have agreed to an immediate transfer of ownership without

guaranty of the balance being ever paid.

One other evidence of the true character of the transaction is the statement contained in Exhibit “J” of the following tenor: “at ng

kayo naman ay mabigyan na ng katibayan, alinsunod sa pinagkayarian”, strengthening the conclusion that what transpired in 1926

was a mere contract to sell, transfer of title being conditioned on full payment of the price. Plaintiff-appellant tries to refute this by

citing El Banco Nacional Filipino vs. Ah Sing, 69 Phil. 611, wherein the contract captioned “Promesa De Venta” was held to be an

absolute sale. Suffice it to say that comparison will not hold, because in the cited case, the contract was reduced to a formal deed

conveyance and the court found that the parties had agreed to and actually effectuated a delivery. In the instant case, there was a

formal deed of conveyance, and, as the land is covered by the Torrens title, there could be no delivery except by the act of

registration of the deed or instrument.

Adding to the pile of circumstances, the fact that plaintiff-appellant did not file this action to enforce the contract until after more

than 20 years from the alleged absolute sale in 1926 induces no other conclusion than that the transaction was a mere contract to

sell, for it if were an absolute sale, it was unlikely for plaintiff-appellant to wait as long as he did before commencing the present

action, considering that as the land was covered by a Torrens title, it could have been very easy for the Payatas Subdivision to

dispose or encumber the same to another party. Considering the steady increase in land values since 1926 (Martin vs. Martin,* 57

O.G. [9] 1589), plaintiff’s laches and his neglect to comply with his own obligations are powerful indicia against the merits of his

case rendering his case highly inequitable.

The dissolution of the Payatas Subdivision Inc. sometime in 1939 is sufficiently established by the evidence. The only argument

advanced by plaintiff-appellant to show that it was not dissolved in 1939 (Error I-IV; IX-X) is Exhibit “O”, the letter written in 1941

by the secretary of defendant-appellee Eulogio Rodriguez, asking for payment of the balance of the price, wherein the statement

appears “Sa utos ng pangasiwan ng Payatas Estate Subdivision . . .”, from which it is supposed to be inferred that said corporation

had not yet been dissolved. However, in Exhibit “O” itself, the payment was being asked to be made at the office of defendant-

appellee Eulogio Rodriguez at the City Hall, showing that Payatas Subdivision no longer even had an office. Also significant is the

computation of interest mentioned in Exhibit “O” which, according to said letter, accrued only up to January, 1939. All these, plus

the other circumstances on record, give credence to defendant-appellees’ contention that the corporation was really dissolved in

1939.

Although this dissolution cannot be determinative of the character of the sale in 1926 (as to whether conditional or absolute), it

must really have been the occasion which prompted the termination of the contract, as the corporation had to wind up its affairs

and close all pending business. Plaintiff-appellant, however, argues (Errors I-IV; VI; VIII) that the Payatas Subdivision had no right

to cancel the contract, as there was no demand by suit or notarial act, as provided by Article 1504 of the Old Code (Art. 1592, N. C.

C.). This is without merit, because Article 1504 requiring demand by suit or notarial act in case the vendor of realty wants to

rescind, does not apply to a contract to sell or promise to sell, where title remains with the vendor until fulfillment to a positive

suspensive condition, such as full payment of the price (Caridad Estates vs. Santero, 71 Phil. 114, 121; Albea vs. Inquimboy, 86

Phil. 476; 47 O.G. Supp. 12, p. 131; Jocson vs. Capitol Subdivision Inc. et al., L-6573, February 28, 1955; Miranda vs. Caridad

Estates, L-2077 and Aspuria vs. Caridad Estates, L-2121, October 3, 1950).

The contention of plaintiff-appellant that Payatas Subdivision Inc. had no right to cancel the contract as there was only a “casual

breach” is likewise untenable. In contracts to sell, where ownership is retained by the seller and is not to pass until the full payment

of the price, such payment, as we said, is a positive suspensive condition, the 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, in accordance with Article

1117 of the Old Civil Code. To argue that there was only a casual breach is to proceed from the assumption that the contract is one

of absolute sale, where non-payment is a resolutory condition, which is not the case.

Whether the trial court could take judicial notice of the alleged practice in subdivision companies to retain ownership over lands

they contracted to sell, until full payment of the price, we find not necessary to discuss. The circumstances shown by the trend of

evidence, including the oral testimony of the witnesses for defendant-appellees, more than convince this Court that the transaction

in 1926 was merely a contract to sell, subject to a suspensive condition that was terminated for the Payatas Subdivision Inc. before

its dissolution, by reason of the non-payment of the balance of the price.

It is contended (Error V) that the balance of the price was not due and payable within the 9 to 10-month period mentioned in

Exhibit “F”. this Court had examined said letter, and finds nothing to justify such a strained conclusion. Reasonably interpreted, the

pertinent portion merely stated that if the first payment is at least P1,500, then, the balance will bear interest at 10%. In other

words, the initial payment determines whether or not interest will be paid, not the period within which the balance will fall due. The

period here bears no relation to the amount to be initially paid. At any rate, plaintiff-appellant was legally bound to pay the

obligation due upon judicial or extra-judicial demand (Art. 1100, Old Civil Code; Article 1169, N.C.C.); and it appears that demands

were made which plaintiff-appellant failed to heed.

Plaintiff-appellant next contends (Errors IX-XI) that when Exhibit “O” was sent by Clemente Felix, upon instructions of defendant-

appellee Eulogio Rodriguez, the latter was not yet the owner of Lot 51 and the Payatas Subdivision Inc. had not yet been dissolved.

As earlier discussed, there is enough evidence that the company was dissolved in 1939. As to whether or not Eulogio Rodriguez had

already acquired Lot 51 when Exhibit “O” was sent to plaintiff-appellant, it would really seem that said Eulogio Rodriguez, as of that

time, was not yet the owner of Lot 51, since Exhibit “O” is dated February 4, 1941 while Exhibit “U” (the deed of sale from Januaria

Rodriguez to Eulogio Rodriguez) is dated December 26, 1941. But this is not material, since it would merely show that, for

whomever Eulogio Rodriguez was acting, he still wanted to give plaintiff-appellant a chance to own the land as a gesture of

liberality. Anyway, appellant failed to take advantage of the proposal, and the same remains without binding effect.

Having lost all rights to the land, plaintiff-appellant has no personality to question the sales subsequently made to Eulogio

Rodriguez, and later, to John Landhal. Hence, it becomes academic to discuss the assignments of error pertaining thereto (Errors

VII, XII, XIII, XIV, XV, XVI), specially since there is no evidence that Landhal was prevented from relying on the clear certificate of

title in the name of Rodriguez.

From a different perspective, there is yet another reason why the purported sale to plaintiff-appellant could not have transferred

title to him, and could not have prevented the subsequent sale of the property to another party. The land in question being covered

by a Torrens title, only the act of registration of the deed or instrument could effect transfer of ownership (Worcester vs. Ocampo,

34 Phil. 646; Tuason vs. Raymundo, 28 Phil. 635; Buzon vs. Lichauco, 13 Phil. 354). In the instant case, there is not even a deed

or instrument that could possibly be registered.

Having reached the conclusion that title to the disputed property never passed to plaintiff-appellant; that his failure to complete

payment of the price and his laches in enforcing his rights render it inequitable to compel performance of the contract at the

present time, we find it unnecessary to discuss the remaining errors assigned in appellant’s brief.

Equity would, of course, demand that, in the absence of stipulation, the amounts paid by plaintiff be returned, since the purpose for

which he paid them was not attained; and it appears of record that such reimbursement was made as early as 1945 (Exhibits 1 to

1-C).

In view of the foregoing, the judgment of the trial court is affirmed. Costs against plaintiff-appellant.

Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Barrera, and Gutierrez David, JJ., concur.

Republic of the Philippines SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 170479 February 18, 2008

ANDRE T. ALMOCERA, petitioner, vs. JOHNNY ONG, respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which seeks to set aside the Decision1 of the Court of Appeals dated 18 July 2005 in CA-G.R. CV No. 75610 affirming in toto the Decision2 of Branch 11 of the Regional Trial Court (RTC) of Cebu City in Civil Case No. CEB-23687 and its Resolution3 dated 16 November 2005 denying petitioner’s motion for reconsideration. The RTC decision found petitioner Andre T. Almocera, Chairman and Chief Executive Officer of First Builder Multi-Purpose Cooperative (FBMC), solidarily liable with FMBC for damages.

Stripped of non-essentials, the respective versions of the parties have been summarized by the Court of Appeals as follows:

Plaintiff Johnny Ong tried to acquire from the defendants a "townhome" described as Unit No. 4 of Atrium Townhomes in Cebu City. As reflected in a Contract to Sell, the selling price of the unit was P3,400,000.00 pesos, for a lot area of eighty-eight (88) square meters with a three-storey building. Out of the purchase price, plaintiff was able to pay the amount of P1,060,000.00. Prior to the full payment of this amount, plaintiff claims that defendants Andre Almocera and First Builders fraudulently concealed the fact that before and at the time of the perfection of the aforesaid contract to sell, the property was already mortgaged to and encumbered with the Land Bank of the Philippines (LBP). In addition, the construction of the house has long been delayed and remains unfinished. On March 13, 1999, Lot 4-a covered by TCT No. 148818, covering the unit was advertised in a local tabloid for public auction for foreclosure of mortgage. It is the assertion of the plaintiff that had it not for the fraudulent concealment of the mortgage and encumbrance by defendants, he would have not entered into the contract to sell.

On the other hand, defendants assert that on March 20, 1995, First Builders Multi-purpose Coop. Inc., borrowed money in the amount of P500,000.00 from Tommy Ong, plaintiff’s brother. This amount was used to finance the documentation requirements of the LBP for the

funding of the Atrium Town Homes. This loan will be applied in payment of one (1) town house unit which Tommy Ong may eventually purchase from the project. When the project was under way, Tommy Ong wanted to buy another townhouse for his brother, Johnny Ong, plaintiff herein, which then, the amount of P150,000.00 was given as additional partial payment. However, the particular unit was not yet identified. It was only on January 10, 1997 that Tommy Ong identified Unit No. 4 plaintiff’s chosen unit and again tendered P350,000.00 as his third partial payment. When the contract to sell for Unit 4 was being drafted, Tommy Ong requested that another contract to sell covering Unit 5 be made so as to give Johnny Ong another option to choose whichever unit he might decide to have. When the construction was already in full blast, defendants were informed by Tommy Ong that their final choice was Unit 5. It was only upon knowing that the defendants will be selling Unit 4 to some other persons for P4million that plaintiff changed his choice from Unit 5 to Unit 4.4

In trying to recover the amount he paid as down payment for the townhouse unit, respondent Johnny Ong filed a complaint for Damages before the RTC of Cebu City, docketed as Civil Case No. CEB-23687, against defendants Andre T. Almocera and FBMC alleging that defendants were guilty of fraudulent concealment and breach of contract when they sold to him a townhouse unit without divulging that the same, at the time of the perfection of their contract, was already mortgaged with the Land Bank of the Philippines (LBP), with the latter causing the foreclosure of the mortgage and the eventual sale of the townhouse unit to a third person.

In their Answer, defendants denied liability claiming that the foreclosure of the mortgage on the townhouse unit was caused by the failure of complainant Johnny Ong to pay the balance of the price of said townhouse unit.

After the pre-trial conference was terminated, trial on the merits ensued. Respondent and his brother, Thomas Y. Ong, took the witness stand. For defendants, petitioner testified.

In a Decision dated 20 May 2002, the RTC disposed of the case in this manner:

WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered in this case in favor of the plaintiff and against the defendants:

(a) Ordering the defendants to solidarily pay to the plaintiff the sum of P1,060,000.00, together with a legal interest thereon at 6% per annum from April 21, 1999 until its full payment before finality of the judgment. Thereafter, if the amount adjudged remains unpaid, the interest rate shall be 12% per annum computed from the time when the judgment becomes final and executory until fully satisfied;

(b) Ordering the defendants to solidarily pay to the plaintiff the sum of P100,000.00 as moral damages, the sum of P50,000.00 as attorney’s fee and the sum of P15,619.80 as expenses of litigation; and

(c) Ordering the defendants to pay the cost of this suit.5

The trial court ruled against defendants for not acting in good faith and for not complying with their obligations under their contract with respondent. In the Contract to Sell6 involving Unit 4 of the Atrium Townhomes, defendants agreed to sell said townhouse to respondent for P3,400,000.00. The down payment wasP1,000,000.00, while the balance of P2,400,000.00 was to be paid in full upon completion, delivery and acceptance of the townhouse. Under the contract which was signed on 10 January 1997, defendants agreed to complete and convey to respondent the unit within six months from the signing thereof.

The trial court found that respondent was able to make a down payment or partial payment of P1,060,000.00 and that the defendants failed to complete the construction of, as well as deliver to respondent, the townhouse within six months from the signing of the contract. Moreover, respondent was not informed by the defendants at the time of the perfection of their contract that the subject townhouse was already mortgaged to LBP. The mortgage was foreclosed by the LBP and the townhouse was eventually sold at public auction. It said that defendants were guilty of fraud in their dealing with respondent because the mortgage was not disclosed to respondent when the contract was perfected. There was also non-compliance with their obligations under the contract when they failed to complete and deliver the townhouse unit at the agreed time. On the part of respondent, the trial court declared he was justified in suspending further payments to the defendants and was entitled to the return of the down payment.

Aggrieved, defendants appealed the decision to the Court of Appeals assigning the following as errors:

1. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF HAS A VALID CAUSE OF ACTION FOR DAMAGES AGAINST DEFENDANT(S).

2. THE LOWER COURT ERRED IN HOLDING THAT DEFENDANT ANDRE T. ALMOCERA IS SOLIDARILY LIABLE WITH THE COOPERATIVE FOR THE DAMAGES TO THE PLAINTIFF.7

The Court of Appeals ruled that the defendants incurred delay when they failed to deliver the townhouse unit to the respondent within six months from the signing of the contract to sell. It agreed with the finding of the trial court that the nonpayment of the balance of P2.4M by respondent to defendants was proper in light of such delay and the fact that the property subject of the case was foreclosed and auctioned. It added that the trial court did not err in giving credence to respondent’s assertion that had he known beforehand that the unit was used as collateral with the LBP, he would not have proceeded in buying the townhouse. Like the trial court, the Court of Appeals gave no weight to defendants’ argument that had respondent paid the balance of the purchase price of the townhouse, the mortgage could have been released. It explained:

We cannot find fault with the choice of plaintiff not to further dole out money for a property that in all events, would never be his. Moreover, defendants could, if they were really desirous of satisfying their obligation, demanded that plaintiff pay the outstanding balance based on their contract. This they had not done. We can fairly surmise that defendants could not comply with their obligation themselves, because as testified to by Mr. Almocera, they already signified to LBP that they cannot pay their outstanding loan obligations resulting to the foreclosure of the townhouse.8

Moreover, as to the issue of petitioner’s solidary liability, it said that this issue was belatedly raised and cannot be treated for the first time on appeal.

On 18 July 2005, the Court of Appeals denied the appeal and affirmed in toto the decision of the trial court. The dispositive portion of the decision reads:

IN LIGHT OF ALL THE FOREGOING, this appeal is DENIED. The assailed decision of the Regional Trial Court, Branch 11, Cebu City in Civil Case No. CEB-23687 is AFFIRMED in toto.9

In a Resolution dated 16 November 2005, the Court of Appeals denied defendants’ motion for reconsideration.

Petitioner is now before us pleading his case via a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure. The petition raises the following issues:

I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT HAS INCURRED DELAY.

II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING RESPONDENT’S REFUSAL TO PAY THE BALANCE OF THE PURCHASE PRICE.

III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT ANDRE T. ALMOCERA IS SOLIDARILY LIABLE WITH THE DEFENDANT COOPERATIVE FOR DAMAGES TO PLAINTIFF.10

It cannot be disputed that the contract entered into by the parties was a contract to sell. The contract was denominated as such and it contained the provision that the unit shall be conveyed by way of an Absolute Deed of Sale, together with the attendant documents of Ownership – the Transfer Certificate of Title and Certificate of Occupancy – and that the balance of the contract price shall be paid upon the completion and delivery of the unit, as well as the acceptance thereof by respondent. All these clearly indicate that ownership of the townhouse has not passed to respondent.

In Serrano v. Caguiat, 11 we explained:

A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price.

The differences between a contract to sell and a contract of sale are well-settled in jurisprudence. As early as 1951, in Sing Yee v. Santos [47 O.G. 6372 (1951)], we held that:

"x x x [a] distinction must be made between a contract of sale in which title passes to the buyer upon delivery of the thing sold and a contract to sell x x x where by agreement the ownership is reserved in the seller and is not to pass until the full payment of the purchase price is made. In the first case, non-payment of the price is a negative resolutory condition; in the second case, full payment is a positive suspensive condition. Being contraries, their effect in law cannot be identical. In the first case, the vendor has lost and cannot recover the ownership of the land sold until and unless the contract of sale is itself resolved and set aside. In the second case, however, the title remains in the vendor if the vendee does not comply with the condition precedent of making payment at the time specified in the contract."

In other words, in a contract to sell, ownership is retained by the seller and is not to pass to the buyer until full payment of the price.

The Contract to Sell entered into by the parties contains the following pertinent provisions:

4. TERMS OF PAYMENT:

4a. ONE MILLION PESOS (P1,000,000.00) is hereby acknowledged as Downpayment for the above-mentioned Contract Price.

4b. The Balance, in the amount of TWO MILLION FOUR HUNDRED PESOS (P2,400,000.00) shall be paid thru financing Institution facilitated by the SELLER, preferably Landbank of the Philippines (LBP).

Upon completion, delivery and acceptance of the BUYER of the Townhouse Unit, the BUYER shall have paid the Contract Price in full to the SELLER.

x x x x

6. COMPLETION DATES OF THE TOWNHOUSE UNIT:

The unit shall be completed and conveyed by way of an Absolute Deed of Sale together with the attendant documents of Ownership in the name of the BUYER – the Transfer Certificate of Title and Certificate of Occupancy within a period of six (6) months from the signing of Contract to Sell.12

From the foregoing provisions, it is clear that petitioner and FBMC had the obligation to complete the townhouse unit within six months from the signing of the contract. Upon compliance therewith, the obligation of respondent to pay the balance of P2,400,000.00 arises. Upon payment thereof, the townhouse shall be delivered and conveyed to respondent upon the execution of the Absolute Deed of Sale and other relevant documents.

The evidence adduced shows that petitioner and FBMC failed to fulfill their obligation -- to complete and deliver the townhouse within the six-month period. With petitioner and FBMC’s non-fulfillment of their obligation, respondent refused to pay the balance of the contract price. Respondent does not ask that ownership of the townhouse be transferred to him, but merely asks that the amount or down payment he had made be returned to him.

Article 1169 of the Civil Code reads:

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.

However, the demand by the creditor shall not be necessary in order that delay may exist:

(1) When the obligation or the law expressly so declares; or

(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.

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 fulfills his obligation, delay by the other begins.

The contract subject of this case contains reciprocal obligations which were to be fulfilled by the parties, i.e., to complete and deliver the townhouse within six months from the execution of the

contract to sell on the part of petitioner and FBMC, and to pay the balance of the contract price upon completion and delivery of the townhouse on the part of the respondent.

In the case at bar, the obligation of petitioner and FBMC which is to complete and deliver the townhouse unit within the prescribed period, is determinative of the respondent’s obligation to pay the balance of the contract price. With their failure to fulfill their obligation as stipulated in the contract, they incurred delay and are liable for damages.13They cannot insist that respondent comply with his obligation. Where one of the parties to a contract did not perform the undertaking to which he was bound by the terms of the agreement to perform, he is not entitled to insist upon the performance of the other party.14

On the first assigned error, petitioner insists there was no delay when the townhouse unit was not completed within six months from the signing of the contract inasmuch as the mere lapse of the stipulated six (6) month period is not by itself enough to constitute delay on his part and that of FBMC, since the law requires that there must either be judicial or extrajudicial demand to fulfill an obligation so that the obligor may be declared in default. He argues there was no evidence introduced showing that a prior demand was made by respondent before the original action was instituted in the trial court.

We do not agree.

Demand is not necessary in the instant case. Demand by the respondent would be useless because the impossibility of complying with their (petitioner and FBMC) obligation was due to their fault. If only they paid their loans with the LBP, the mortgage on the subject townhouse would not have been foreclosed and thereafter sold to a third person.

Anent the second assigned error, petitioner argues that if there was any delay, the same was incurred by respondent because he refused to pay the balance of the contract price.

We find his argument specious.

As above-discussed, the obligation of respondent to pay the balance of the contract price was conditioned on petitioner and FBMC’s performance of their obligation. Considering that the latter did not comply with their obligation to complete and deliver the townhouse unit within the period agreed upon, respondent could not have incurred delay. For failure of one party to assume and perform the obligation imposed on him, the other party does not incur delay.15

Under the circumstances obtaining in this case, we find that respondent is justified in refusing to pay the balance of the contract price. He was never in possession of the townhouse unit and he can no longer be its owner since ownership thereof has been transferred to a third person who was not a party to the proceedings below. It would simply be the height of inequity if we are to require respondent to pay the balance of the contract price. To allow this would result in the unjust enrichment of petitioner and FBMC. The fundamental doctrine of unjust enrichment is the transfer of value without just cause or consideration. The elements of this doctrine which are present in this case are: enrichment on the part of the defendant; impoverishment on the part of the plaintiff; and lack of cause. The main objective is to prevent one to enrich himself at the expense of another. It is commonly accepted that this doctrine simply means a person shall not be allowed to profit or enrich himself inequitably at another's expense.16Hence, to allow petitioner and FBMC keep the down payment made by respondent amounting to P1,060,000.00 would result in their unjust enrichment at the expense of the respondent. Thus, said amount should be returned.

What is worse is the fact that petitioner and FBMC intentionally failed to inform respondent that the subject townhouse which he was going to purchase was already mortgaged to LBP at the time of the perfection of their contract. This deliberate withholding by petitioner and FBMC of the mortgage constitutes fraud and bad faith. The trial court had this say:

In the light of the foregoing environmental circumstances and milieu, therefore, it appears that the defendants are guilty of fraud in dealing with the plaintiff. They performed voluntary and willful acts which prevent the normal realization of the prestation, knowing the effects which naturally and necessarily arise from such acts. Their acts import a dishonest purpose or some moral obliquity and conscious doing of a wrong. The said acts certainly gtive rise to liability for damages (8 Manresa 72; Borrell-Macia 26-27; 3 Camus 34; O’Leary v. Macondray & Company, 454 Phil. 812; Heredia v. Salinas, 10 Phil. 157). Article 1170 of the New Civil Code of the Philippines provides expressly that "those who in the performance of their obligations are guilty of fraud and those who in any manner contravene the tenor thereof are liable for damages.17

On the last assigned error, petitioner contends that he should not be held solidarily liable with defendant FBMC, because the latter is a separate and distinct entity which is the seller of the subject townhouse. He claims that he, as Chairman and Chief Executive Officer of FBMC, cannot be held liable because his representing FBMC in its dealings is a corporate act for which only FBMC should be held liable.

This issue of piercing the veil of corporate fiction was never raised before the trial court. The same was raised for the first time before the Court of Appeals which ruled that it was too late in the day to raise the same. The Court of Appeals declared:

In the case below, the pleadings and the evidence of the defendants are one and the same and never had it made to appear that Almocera is a person distinct and separate from the other defendant. In fine, we cannot treat this error for the first time on appeal. We cannot in good conscience, let the defendant Almocera raise the issue of piercing the veil of corporate fiction just because of the adverse decision against him. x x x.18

To allow petitioner to pursue such a defense would undermine basic considerations of due process. Points of law, theories, issues and arguments not brought to the attention of the trial court will not be and ought not to be considered by a reviewing court, as these cannot be raised for the first time on appeal. It would be unfair to the adverse party who would have no opportunity to present further evidence material to the new theory not ventilated before the trial court.19

As to the award of damages granted by the trial court, and affirmed by the Court of Appeals, we find the same to be proper and reasonable under the circumstances.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 18 July 2005 in CA-G.R. CV No. 75610 is AFFIRMED. Costs against the petitioner.

SO ORDERED.

MINITA V. CHICO-NAZARIO Associate Justice