Evelyn Delos Santos (No. 17)

Doctrine: Where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration.

Moreover, Article 1471 of the Civil Code, provides that if the price is simulated, the sale is void, which applies to the instant case, since the price purportedly paid as indicated in the contract of sale was simulated for no payment was actually made.

Catindig vs De MenesesGR No 165851, February 2, 2011

Ponente: Peralta, J.Petition:Petition for review on certioriari of a resolution of the Court of Appeals; and Special Civil Action in the Supreme Court. Certiorari.

Facts:The property subject of this controversy pertains to a parcel of land situated in Malolos, Bulacan, titled in the name of the late Rosendo Meneses, Sr., under TCT No. T-1749 (or the Masusuwi Fishpond). Respondent Aurora Irene C. Vda. de Meneses is the surviving spouse of the registered owner, Rosendo Meneses, Sr.. She was issued Letters of Administration over the estate of her late husband in Special Proceedings Case pending before the Court of First Instance of the City of Manila, Branch 22. On May 17, 1995, respondent, in her capacity as administratrix of her husbands estate, filed a Complaint for Recovery of Possession, Sum of Money and Damages against petitioners Manuel Catindig and Silvino Roxas, Sr. before the Regional Trial Court of Malolos, Bulacan, to recover possession over the Masusuwi Fishpond.

Respondent alleged that in September 1975, petitioner Catindig, a cousin of her husband, deprived her of the possession over the Masusuwi Fishpond, through fraud, undue influence and intimidation. Though demanded verbally to vacate, Catindig ignored said demands. Respondent filed a suit against the petitioners to recover the property and demanded payment of unearned income, damages, attorneys fees and costs of suit. Catindig maintained that he bought the Masusuwi Fishpond from respondent and her children in January 1978, as evidenced by a Deed of Absolute Sale. Catindig further argued that her cause of action had already prescribed considering the lapse of about 20 years from 1975, which was allegedly the year when she was fraudulently deprived of her possession over the property.

Petitioner Roxas, on the other hand, asserted that respondent has no cause of action against him, because Catindig is the lawful owner of the Masusuwi Fishpond, to whom he had paid his rentals in advance until the year 2001.

The Trial Court ruled in favor of Meneses.Petitioners challenged the Trial Courts Decision before the CA.Petitioner Catindig insisted that he holds a valid Deed of Sale, thus ownership belongs to him. Petitioner Roxas argued that he, relying on that Deed of Sales, is a lessee in good faith.

Issue: Whether or not Catindigs claim that the Deed of Sale was genuine.

Held:The trial court found that the deed of sale was simulated.On its face, the deed of absolute face:1. is not complete and is not in due form. It is a 3-page document but with several items left unfilled or left blank, like the day the document was supposed to be entered into, the tax account numbers of the persons appearing as signatories to the document and the names of the witnesses. In other words, it was not witnessed by any one. More importantly, it was not notarized. While the name Ramon E. Rodrigo, appeared typed in the Acknowledgement, it was not signed by him. 2. The questioned deed was supposedly executed in January, 1978. Catindig testified that his brother Francisco Catindig was with him when Meneses signed the document. The evidence, however, shows that Francisco Catindig died on January 1, 1978.3. The document mentions 49,130 square meters, as the area sold by Meneses and her two (2) children to Catindig. But this is the entire area of the property as appearing in the title and they are not the only owners. The other owner is Rosendo Meneses, Jr. whose name does not appear in the document. The declaration of Catindig that Rosendo Meneses, Jr. likewise sold his share of the property to him in another document does not inspire rational belief. This other document was not presented in evidence and Rosendo Meneses, Jr., did not testify, if only to corroborate Catindigs claim.4. The Court also finds no compelling reason to depart from the court a quos finding that respondent never received the consideration stipulated in the simulated deed of sale, thus:The title to this property is still in the name of Rosendo Meneses, Sr., and the owners duplicate copy of the title is still in the possession of Meneses. If Catindig was really a legitimate buyer of the property who paid the consideration with good money, why then did he not register the document of sale or had it annotated at the back of the title, or better still, why then did he not have the title in the name of Rosendo Meneses, Sr. canceled so that a new title can be issued in his name? Equally telling is Catindigs failure to pay the real estate taxes for the property from 1978 up to the present.

It is a well-entrenched rule that where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration. Moreover, Article 1471 of the Civil Code, provides that if the price is simulated, the sale is void, which applies to the instant case, since the price purportedly paid as indicated in the contract of sale was simulated for no payment was actually made.

Since it was well established that the Deed of Sale is simulated and, therefore void, petitioners claim that respondents cause of action is one for annulment of contract, which already prescribed, is unavailing, because only voidable contracts may be annulled. On the other hand, respondents defense for the declaration of the inexistence of the contract does not prescribe.

There is even more reason to apply this doctrine here, because the subject Deed of Sale is not only unregistered, it is undated and unnotarized.In Pascual v. Coronel, Court held that as against the registered owners and the holder of an unregistered deed of sale, it is the former who has a better right to possess. Likewise, in the recent case of Umpoc v. Mercado, the Court declared that the trial court did not err in giving more probative weight to the TCT in the name of the decedent vis--vis the contested unregistered Deed of Sale. Further, it is a fundamental principle in land registration that the certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. It is conclusive evidence with respect to the ownership of the land described therein. Moreover, the age-old rule is that the person who has a Torrens title over a land is entitled to possession thereof.

Petitioner Roxas is not regarded as lessee in good faith because of his reliance to an unregistered and unnotarized Deed of Sale.

The petition in G.R. No. 165851 is DENIED. The Decision of the Court of Appeals which affirmed the decision of the Regional Trial Court of Malolos, Bulacan in Civil Case No. 320-M-95, is AFFIRMED.

Evelyn Delos Santos (No. 18)

Doctrine: Respondents failure to pay in full the purchase price is not the breach of contract contemplated under Article 1191 of the NCC but rather just an even that prevents the petitioner from being bound to convey title to the respondent.

The petitioners obligation to sell the subject properties becomes demandable only upon the happening of the positive suspensive condition, which is the respondents full payment of the purchase price. Without respondents full payment, there can be no breach of contract to speak of because petitioner has no obligation yet to turn over the title. Respondents failure to pay in full the purchase price is not the breach of contract contemplated under Article 1191 of the New Civil Code but rather just an event that prevents the petitioner from being bound to convey title to the respondent.

Doctrine: Rescission is allowed only when the breach of the contract is substantial and fundamental to the fulfillment of the obligation.Unless the parties stipulated it, rescission is allowed only when the breach of the contract is substantial and fundamental to the fulfillment of the obligation. Whether the breach is slight or substantial is largely determined by the attendant circumstances.

Reyes v. TuparanGR No 188064, June 1, 2011

Ponente: Mendoza, J.Petition:Petition for review on certioriari of a decision of the Court of Appeals

Facts:In December 1989, Tuparan leased from Reyes a space on the RBJ Building for her pawnshop business for Php 4,000 a month rental fees. A close friendship developed between them which led to Tuparan investing money in Reyess financing/lending business from February 7, 1990 to May 27, 1990, with 6% a month interest rate. On June 2, 1988, Reyes mortgaged the subject real properties to Farmers Savings Bank and Loan Bank, Inc. (FSL Bank) to secure a P2M loan payable in installments. Reyes, after failing to sustain payments to her loan obligations, decided to sell her real properties so she could liquidate her bank loan and finance her businesses. Tuparan, being a friend, verbally offered to conditionally buy Reyess properties for P4.2M payable on installment basis without interest and to assume the bank loan (P2,278,078.13). After Reyess verbal acceptance of all the conditions/concessions, both parties worked together to obtain FSL Banks approval for respondent to assumer her outstanding bank account. That would be part of the purchase price for Reyess mortgaged real properties. FSL Bank approved their proposal provided Reyes would remain as co-maker for the mortgage obligation. The parties and FSL Bank executed the corresponding Deed of Conditional Sale of Real Properties with Assumption of Mortgage. Both parties chose not to reduce into writing the other terms of their agreement, FSL Bank didnt want it appearing also. Tuparan defaulted in the payment of her obligations on their due dates. She, however, had taken possession of the subject real properties and had been continuously collecting and receiving monthly rental income from the tenants of the buildings and vendors of the sidewalk fronting the RBJ building without sharing it with petitioner Reyes. Hence, Reyes filed charges to RTC.RTC held that Tuparan indeed failed to pay in full the P4.2M total purchase price leaving a balance of Php 805,000. The RTC also considered the Deed of Conditional Sale of Real Property with Assumption of Mortgage executed by and among the two parties and FSL Bank a contract to sell, and not a contract of sale. It was of the opinion that although the petitioner was entitled to a rescission of the contract, it could not be permitted because her non-payment in full of the purchase price may not be considered as substantial and fundamental breach of the contract as to defeat the object of the parties in entering into the contract. RTC ruled that upon failure of Tuparan to pay said amount within the said period shall cause the automatic rescission of the contract.CA ruled that indeed the contract was a Contract to Sell but rescission could not apply. There was no breach of contract. The petitioner filed this petition to SC.

Issue: 1. Whether or not the sale was a conditional sale or contract to sell2. Whether or not rescission is a proper remedy for the contract.

Held:The petition lacks merit. The Court agrees with the ruling of the courts below that the subject Deed of Conditional Sale with Assumption of Mortgage entered into by and among the two parties and FSL Bank on November 26, 1990 is a contract to sell and not a contract of sale. The subject contract was correctly classified as a contract to sell based on the stipulations that the title and ownership of the subject properties remains with the petitioner until the respondent fully pays the balance of the purchase price and the assumed mortgage obligation. Thereafter, FSL Bank shall then issue the corresponding deed of cancellation of mortgage and the petitioner shall execute the corresponding deed of absolute sale in favor of the respondent. Accordingly, the petitioners obligation to sell the subject properties becomes demandable only upon the happening of the positive suspensive condition, which is the respondents full payment of the purchase price. Without respondents full payment, there can be no breach of contract to speak of because petitioner has no obligation yet to turn over the title. Respondents failure to pay in full the purchase price is not the breach of contract contemplated under Article 1191 of the New Civil Code but rather just an event that prevents the petitioner from being bound to convey title to the respondent. Art. 1458.By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.x x xSale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of sale are the following:a)Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;b)Determinate subject matter; andc)Price certain in money or its equivalent.Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and, thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.x x xx x xx x xStated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective sellers obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code which states:Art.1479.A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.Unless the parties stipulated it, rescission is allowed only when the breach of the contract is substantial and fundamental to the fulfillment of the obligation. Whether the breach is slight or substantial is largely determined by the attendant circumstances. The Court agrees with the courts below that the respondent showed her sincerity and willingness to comply with her obligation when she offered to pay the petitioner the amount of P751,000.00.