Escolar Documentos
Profissional Documentos
Cultura Documentos
that there is gross inadequacy in price if a reasonable man will not agree to
dispose of his property.
Same; Same; In sales denominated as pacto de retro, the price agreed
upon should not generally be considered as the just value of the thing sold,
absent other corroborative evidencethere is no requirement in sales that
the price be equal to the exact value of the thing subject matter of the sale.
In De Ocampo and Custodio v. Lim, 38 Phil. 579 (1918), this Court held
that in sales denominated as pacto de retro, the price agreed upon
should not generally be considered as the just value of the thing
sold, absent other corroborative evidence. This is because, on the part
of the vendor, the right to repurchase the land makes it immaterial to him
whether or not the price of the sale is the just value thereof. As for the
vendee, the price does not induce him to enter into the contract as he does
not acquire the thing irrevocably, but subject to repurchase at the stated
period. Rather, the vendee pins his hope on the expectancy that he will
acquire the thing absolutely at a favorable price should the vendor fail to
redeem the thing sold. Subsequently, inBuenaventura v. Court of Appeals,
416 SCRA 263 (2003), this Court ruled that there is no requirement in
sales that the price be equal to the exact value of the thing subject matter
of the sale.
Same; Same; If the terms of the pacto de retro sale were unfavorable to
the vendor, the Supreme Court has no business extricating her from that
bad bargaincourts are not guardians of persons who are not legally
incompetent.Following De Ocampoand Buenaventura, this Court finds no
cogent reason to conclude that the 1949 price of P5,300.00 as agreed upon
by the parties was unreasonable or unusually inadequate. Moreover, under
the rules of evidence, it is presumed that a person takes ordinary care of
his concerns. In the present case, there is no evidence herein whatsoever to
show that Dionisia did not understand the ramifications of her signing the
Deed of Sale with Right of Redemption. Nor is there any showing that she
was threatened, forced or defrauded into affixing her signature on the said
contract. If the terms of the pacto de retro sale were unfavorable to
Dionisia, this Court has no business extricating her from that bad bargain.
1
Courts are not guardians of persons who are not legally incompetent, like
Dionisia.
Same; Same; Tax Receipts; Settled is the rule that tax receipts per se
are not conclusive evidence of land ownership absent other corroborative
evidence.Even assuming that the contract of sale with right to
repurchase executed by Dionisia and Gumersindo in 1949 is an equitable
mortgage, the fact remains that from 1949 up to the filing of the complaint
in 1964, or a period of 15 years, she failed to redeem the property. Her
heirs claim that since Dionisia had been paying the realty taxes follows
that she owns the property, not Gumersindo. Settled is the rule that tax
receipts per se are not conclusive evidence of land ownership absent other
corroborative evidence. Moreover, we agree with the Court of Appeals that
the timing of the payment of realty taxes raises some questions. We note
that the real estate taxes corresponding to the period from 1955 to 1963
were paid only on December 27, 1963 or barely six (6) months before
Dionisia filed Civil Case No. V-2760 on June 8, 1964. The inescapable
conclusion is that she paid the taxes in preparation for the filing of Civil
Case No. V-2760.
10
realty taxes raises some questions. We note that the real estate taxes
corresponding to the period from 1955 to 1963 were paid only on
December 27, 1963 or barely six (6) months before Dionisia filed Civil
Case No. V-2760 on June 8, 1964. The inescapable conclusion is that
she paid the taxes in preparation for the filing of Civil Case No. V2760.
WHEREFORE, we DENY the petition. The Decision of the Court
of Appeals (Ninth Division) dated April 11, 2000 in CAG.R. CV No.
37210 is AFFIRMED. Costs against the heirs of Dionisia.
Puno (C.J.,
Chairperson),Corona, Azcuna and LeonardoDe
Castro, JJ., concur.
Petition denied, judgment affirmed.
Notes.In case of doubt, a contract purporting to be a sale with
right to repurchase shall be construed as an equitable mortgage.
(Olea vs. Court of Appeals, 247 SCRA 274 [1995])
The explicit provision of Article 1602 of the Civil Code that any
of the circumstances enumerated therein would suffice to construe a
contract of sale to be one of equitable mortgage is in consonance with
the rule that the law favors the least transmission of property rights.
(Oronce vs. Court of Appeals, 298 SCRA 133[1998])
11
12
forms part of the consideration only if the sale is consummated upon full
payment of the purchase price.
Same; Same; Same; It is only upon the existence of the contract of sale
that the seller becomes obligated to transfer the ownership of the thing sold
to the buyer.It is only upon the existence of the contract of sale that the
seller becomes obligated to transfer the ownership of the thing sold to the
buyer. Article 1458 of the Civil Code defines a contract of sale as follows:
Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership ofand to deliver a determinate thing, and
the other to pay therefor a price certain in money or its equivalent. x x x.
(Emphasis supplied) Prior to the existence of the contract of sale, the seller
is not obligated to transfer ownership to the buyer, even if there is a
contract to sell between them. It is also upon the existence of the contract
of sale that the buyer is obligated to pay the purchase price to the seller.
Since the transfer of ownership is in exchange for the purchase price, these
obligations must be simultaneously fulfilled at the time of the execution of
the contract of sale, in the absence of a contrary stipulation.
Same; Same; Same; Delivery; The delivery, therefore, made in any of
the forms provided in articles 1497 to 1505 signifies that the transmission of
ownership from vendor to vendee has taken place.Delivery is not only a
necessary condition for the enjoyment of the thing, but is a mode of
acquiring dominion and determines the transmission of ownership, the
birth of the real right. The delivery, therefore, made in any of the forms
provided in articles 1497 to 1505 signifies that the transmission of
ownership from vendor to vendee has taken place. The delivery of the thing
constitutes an indispensable requisite for the purpose of acquiring
ownership. Our law does not admit the doctrine of transfer of property by
mere consent; the ownership, the property right, is derived only from
delivery of the thing. x x x. (Emphasis supplied)
Same; Same; Same; Same; Payment of the capital gains tax, however,
is not a pre-requisite to the transfer of ownership to the lawyer.The buyer
has more interest in having the capital gains tax paid immediately since
this is a pre-requisite to the issuance of a new Torrens title in his name.
Nevertheless, as far as the government is concerned, the capital gains tax
remains a liability of the seller since it is a tax on the sellers gain from the
5
sale of the real estate.Payment of the capital gains tax, however, is not a
pre-requisite to the transfer of ownership to the buyer. The transfer of
ownership takes effect upon the signing and notarization of the deed of
absolute sale.
CARPIO, J.:
The Case
The Facts
Valdes-Choy advertised for sale her paraphernal house and lot
(Property) with an area of 718 square meters located at No. 40
Tampingco Street comer Hidalgo Street, San Lorenzo Village,
Makati City. The Property is covered by Transfer Certificate of Title
No. 162955 (TCT) issued by the Register of Deeds of Makati City in
the name of Valdes-Choy. Chua responded to the advertisement.
After several meetings, Chua and Valdes-Choy agreed on a purchase
price of P10,800,000.00 payable in cash.
10
vendee signed two Deeds of Absolute Sale (Deeds of Sale). The first
Deed of Sale covered the house and lot for the purchase price of
P8,000,000.00. The second Deed of Sale covered the furnishings,
fixtures and movable properties contained in the house for the
purchase price of P2,800,000.00. The parties also computed the
capital gains tax to amount to P485,000.00.
On 14 July 1989, the parties met again at the office of ValdesChoys counsel. Chua handed to Valdes-Choy the PBCom managers
check for P485,000.00 so Valdes-Choy could pay the capital gains tax
as she did not have sufficient funds to pay the tax. Valdes-Choy
issued a receipt showing that Chua had a remaining balance of
P10,215,000.00 after deducting the advances made by Chua. This
receipt reads:
P10,295,000.00
11
12
SELLING PRICE
P10,800,000.00
EARNEST P100,000.00
MONEY
PARTIAL
485,000.00
PAYMENT
585,000.00
BALANCE DUE TO
ENCARNACION
P10,215,000.00
VALDEZ-CHOY
PLUS P80,000.00 for
documentary
80,000.00
x x x.
13
15
16
17
19
18
The trial court held that the parties entered into a contract to
sell on 30 June 1989, as evidenced by the Receipt for the P100,000.00
earnest money. The trial court pointed out that the contract to sell
was subject to the following conditions: (1) the balance of
P10,700,000.00 was payable not later than 15 July 1989; (2) Valdes9
Choy may stay in the Property until 13 August 1989; and (3) all
papers must be in proper order before full payment is made.
The trial court held that Chua complied with the terms of.the
contract to sell. Chua showed that he was prepared to pay ValdesChoy the consideration in full on 13 July 1989, two days before the
deadline of 15 July 1989. Chua even added P80,000.00 for the
documentary stamp tax. He purchased from PBCom two managers
checks both payable to Valdes-Choy. The first check for P485,000.00
was to pay the capital gains tax. The second check for
P10,215,000.00 was to pay the balance of the purchase price. The
trial court was convinced that Chua demonstrated his capacity and
readiness to pay the balance on 13 July 1989 with the production of
the PBCom managers check for P10,215,000.00.
On the other hand, the trial court found that Valdes-Choy did not
perform her correlative obligation under the contract to sell to put all
the papers in order. The trial court noted that as of 14 July 1989, the
capital gains tax had not been paid because Valdes-Choys counsel
who was supposed to pay the tax did not do so. The trial court
declared that Valdes-Choy was in a position to deliver only the
owners duplicate copy of the TCT, the signed Deeds of Sale, the tax
declarations, and the latest realty tax receipt. The trial court
concluded that these documents were all useless without the Bureau
of Internal Revenue receipt evidencing full payment of the capital
gains tax which is a pre-requisite to the issuance of a new certificate
of title in Chuas name.
The trial court held that Chuas non-payment of the balance of
P10,215,000.00 on the agreed date was due to Valdes-Choys fault.
The Issues
In his Memorandum, Chua raises the following issues:
1.WHETHER THERE IS A PERFECTED CONTRACT OF SALE OF
IMMOVABLE PROPERTY;
______________
21
The issues for our resolution are: (a) whether the transaction
between Chua and Valdes-Choy is a perfected contract of sale or a
mere contract to sell, and (b) whether Chua can compel Valdes-Choy
to cause the issuance of a new TCT in Chuas name even before
payment of the full purchase price.
The Courts Ruling
The petition is bereft of merit.
There is no dispute that Valdes-Choy is .the absolute owner of the
Property which is registered in her name under TCT No. 162955,
free from all liens and encumbrances. She was ready, able and
willing to deliver to Chua the owners duplicate copy of the TCT, the
signed Deeds of Sale, the tax declarations, and the latest realty tax
receipt. There is also no dispute that on 13 July 1989, Valdes-Choy
received PBCom Check No. 206011 for P100,000.00 as earnest
money from Chua. Likewise, there is no controversy that the Receipt
for the P100,000.00 earnest money embodied the terms of the
binding contract between Valdes-Choy and Chua.
Further, there is no controversy that as embodied in the Receipt,
Valdes-Choy and Chua agreed on the following terms: (1) the balance
of P10,215,000.00 is payable on or before 15 July 1989; (2) the
Ibid., p. 203.
65
65
capital gains tax is for the account of Valdes-Choy; and (3) if Chua
fails to pay the balance of P10,215,000.00 on or before 15 July 1989,
Valdes-Choy has the right to forfeit the earnest money, provided that
all papers are in proper order. On 13 July 1989, Chua gave ValdesChoy the PBCom managers check for P485,000.00 to pay the capital
gains tax.
Both the trial and appellate courts found that the balance of
P10,215,000.00 was not actually paid to Valdes-Choy on the agreed
date. On 13 July 1989, Chua didshow to Valdes-Choy the PBCom
managers check for P10,215,000.00, with Valdes-Choy as payee.
However, Chua refusedto give this check to Valdes-Choy until a new
TCT covering the Property is registered in Chuas name. Or, as the
trial court put it, until there is proof of payment of the capital gains
tax which is a pre-requisite to the issuance of a new certificate of
title.
First and Second Issues: Contract of Sale or Contract to Sell?
Chua has consistently characterized his agreement with ValdezChoy, as evidenced by the Receipt, as a contract to sell and not a
contract of sale. This has been Chuas persistent contention in his
pleadings before the trial and appellate courts.
Chua now pleads for the first time that there is a perfected
contract of sale rather than a contract to sell. He contends that there
was no reservation in the contract of sale that Valdes-Choy shall
retain title to the Property until after the sale. There was no
agreement for an automatic rescission of the contract in case of
Chuas default. He argues for the first time that his payment of
earnest money and its acceptance by Valdes-Choy precludes the
11
latter from rejecting the binding effect of the contract of sale. Thus,
Chua claims that Valdes-Choy may not validly rescind the contract
of sale without following Article 1592 of the Civil Code which
requires demand, either judicially or by notarial act, before
rescission may take place.
22
24
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.
25
27
28
29
12
31
The trial court made much fuss in connection with the payment of the
capital gains tax, of which Section 33 of the National Internal Revenue
Code of 1977, is the governing provision insofar as its computation is
concerned. The trial court failed to consider Section 34-(a) of the said Code,
the last sentence of which provides, that [t]he amount realized from the
sale or other disposition of propertyshall be the sum of money receivedplus
the fair market value of the property (other than money) received; and
that the computation of the capital gains tax can only be finally assessed by
the Commission on Internal Revenue upon the presentation of the Deeds of
Absolute Sale themselves, without which any premature computation of
the capital gains tax becomes of no moment. At any rate, the computation
and payment of the capital gains tax has no bearing insofar as the validity
and effectiveness of the deeds of sale in question are concerned, because it
is only after the contracts of sale are finally executed in due form and have
been duly notarized that the final computation of the capital gains tax can
follow as a matter of course. Indeed, exhibit D, the PBC Check No.
325851, dated July 13, 1989, in the amount of P485,000.00, which is
considered as part of the consideration of the sale, was deposited in the
name of appellant, from which she in turn, purchased the corresponding
check in the amount representing the sum to be paid for capital gains tax
and drawn in the name of the Commissioner of Internal Revenue, which
then allayed any fear or doubt that that amount would not be paid to the
Government after all.
32
13
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 x. (Emphasis supplied)
ownership, the birth of the real right. The delivery, therefore, made in any
of the forms provided in articles 1497 to 1505 signifies that the transmission
of ownership from vendor to vendee has taken place. The delivery of the
thing constitutes an indispensable requisite for the purpose of acquiring
ownership. Our law does not admit the doctrine of transfer of property by
mere consent; the ownership, the property right, is derived only from
delivery of the thing. x x x. (Emphasis supplied)
33
In this case, the contract to sell stipulated that Chua should pay
the balance of the purchase price on or before 15 July 1989. The
signed Deeds of Sale also stipulated that the buyer shall pay the
balance of the purchase price upon signing of the deeds. Thus, the
Deeds of Sale, both signed by Chua, state as follows:
Deed of Absolute Sale covering the lot:
xxx
For and in consideration of the sum of EIGHT MILLION PESOS
(P8,000,000.00), Philippine Currency,receipt of which in full is hereby
acknowledged by the VENDOR from the VENDEE, the VENDOR sells,
transfers and conveys unto the VENDEE, his heirs, successors and assigns,
the said parcel of land, together with the improvements existing thereon,
free from all liens and encumbrances. (Emphasis supplied)
However, on the agreed date, Chua refused to pay the balance of the
purchase price as required by the contract to sell, the signed Deeds of
Sale, and Article 1582 of the Civil Code. Chua was therefore in
default and has only himself to blame for the rescission by ValdesChoy of the contract to sell.
Even if measured under existing usage or custom, ValdesChoy had all her papers in proper order. Article 1376 of the Civil
Code provides that:
Art. 1376. The usage or custom of the place shall be borne in mind in the
interpretation of the ambiguities of a contract, and shall fill the omission of
stipulations which are ordinarily established.
The buyer has more interest in having the capital gains tax paid
immediately since this is a pre-requisite to the issuance of a new
Torrens title in his name. Nevertheless, as far as the government is
concerned, the capital gains tax remains a liability of the seller since
it is a tax on the sellers gain from the sale of the real
34
15
estate. Payment of the capital gains tax, however, is not a prerequisite to the transfer of ownership to the buyer. The transfer of
ownership takes effect upon the signing and notarization of the deed
of absolute sale.
______________
36
Section 53. Presentation of owners duplicate upon entry of new certificate.No voluntary
instrument shall be registered by the Register of Deeds, unless the owners duplicate certificate is
presented with such instrument, except in cases expressly provided for in this Decree or upon
order of the court, for cause shown.
The production of the owners duplicate certificate, whenever any voluntary instrument is
presented for registration, shall be conclusive authority from the registered owner to the Register
of Deeds to enter a new certificate or to make a memorandum of registration in accordance with
such instrument, and the new certificate or memorandum shall be binding upon the registered
owner and upon all persons claiming under him, in favor of every purchaser for value and in good
faith.
x x x.
74
38
39
40
17
The Facts
This case involves a parcel of land originally claimed by Severina
San
Miguel
(petitioners
predecessor-in-interest,
hereafter,
Severina). The land is situated in Panapan, Bacoor, Cavite with an
area of six hundred thirty two square meters (632 sq. m.), more or
less.
Without Severinas knowledge, Dominador managed to cause the
subdivision of the land into three (3) lots, to wit;
4
12
19
14
15
16
17
22
On July 25, 1994, Severinas heirs filed with the trial court a motion
for reconsideration of the afore-quoted order.
23
18
19
20
On January 23, 1995, the trial court denied the motion for
reconsideration for lack of merit and further ordered:
24
20
26
27
We resolve the issue in the negative, and find the petition without
merit.
Severinas heirs anchor their claim on the kasunduan, stressing
on their freedom to stipulate and the binding effect of contracts. This
argument is misplaced. The Civil Code provides:
33
29
30
The Issues
Severinas heirs submit that the Court of Appeals erred and
committed grave abuse of discretion: First, when it held that
the kasunduan had no effect on the kasulatan sa bilihan ng lupa.
Second, when it ordered them to surrender the certificate of title to
Dominador, et al., despite non-compliance with their prior
obligations stipulated under thekasunduan. Third, when it did not
find that the kasunduan was null and void for having been entered
into by Dominador, et al. fraudulently and in bad faith.
We find the above issues raised by Severinas heirs to be factual.
The question whether the prerequisites to justify release of the
certificate of title to Dominador, et al. have been complied with is a
question of fact.
31
32
35
Article 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 a price certain in money or its equivalent, x x x
Article 1459. The thing must be licit and the vendor must have a right to
transfer the ownership thereof at the time it is delivered.
Article 1495. The vendor is bound to transfer the ownership of and
deliver, as well as warrant the thing which is the object of sale (italics
ours).
True, in contracts of sale, the vendor need not possess title to the
thing sold at the perfection of the contract. However, the vendor
must possess title and must be able to transfer title at the time of
36
21
38
39
40
41
42
43
Article 1405. The following contracts are inexistent and void from the
beginning: x x x.
(5) Those which contemplate an impossible service. x x x
but on its fulfillment, only the condition is avoided, leaving unaffected the
obligation itself.
Same; Same; Rescission; The right of rescission of a party to an
obligation under Article 1191 of the Civil Code is predicated on a breach of
faith by the other party that violates the reciprocity between them.In any
case, private respondents action for rescission is not warranted. She is not
the injured party. The right of resolution of a party to an obligation under
Article 1191 of the Civil Code is predicated on a breach of faith by the other
party that violates the reciprocity between them. It is private respondent
who has failed in her obligation under the contract. Petitioner did not
breach the agreement. He has agreed, in fact, to shoulder the expenses of
the execution of the judgment in the ejectment case and to make
arrangements with the sheriff to effect such execution.
Law
VITUG, J.:
The parties pose this question: May the vendor demand the
rescission of a contract for the sale of a parcel of land for a cause
traceable to his own failure to have the squatters on the subject
property evicted within the contractually-stipulated period?
Petitioner Virgilio R. 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,
petitioner and his foreign partners decided to put up a central
warehouse in Metro Manila on a land area of approximately 2,000
square meters. The project was made known to several freelance real
estate brokers.
That in the event that the VENDEE shall not be able to pay the
VENDOR the balance of the purchase price of ONE MILLION FIVE
HUNDRED
ELEVEN
THOUSAND
SIX
HUNDRED
PESOS
(P1,511,600.00) ONLY after 45 days from written notification to the
VENDEE of the removal of the squatters from the property being
purchased, the FIFTY THOUSAND PESOS (P50,000.00) previously paid as
downpayment shall be forfeited in favor of the VENDOR.
Expenses for the registration such as registration fees, documentary
stamp, transfer fee, assurances and such other fees and expenses as may
be necessary to transfer the title to the name of the VENDEE shall be for
the account of the VENDEE while capital gains tax shall be paid by the
VENDOR.
IN WITNESS WHEREOF, the parties hereunto signed those (sic)
presents in the City of Makati, MM, Philippines on this 9th day of June,
1988. f
(Sgd.)
VIRGILIO R.
ROMERO
(Sgd.)
ENRIQUETA
CHUA VDA.
DE ONGSIONG
Vendee
Vendor
SIGNED IN THE PRESENCE
OF:
(Sgd.)
(Sgd.)
Rowena C.
Jack M. Cruz
Ongsiong
1
25
The contract of sale between the parties was perfected from the very
moment that there was a meeting of the minds of the parties upon the
subject lot and the price in the amount of P1,561,600.00. Moreover, the
contract had already been partially fulfilled and executed upon receipt of
This Court is not convinced of the ground relied upon by the plaintiff in
seeking the rescission, namely: (1) he (sic) is afraid of the squatters; and (2)
she has spent so much to eject them from the premises (p. 6, tsn, ses. Jan.
3, 1990). Militating against her profession of good faith is plaintiffs
conduct which is not in accord with the rules of fair play and justice.
Notably, she caused the issuance of an alias writ of execution on August 25,
1989 (Exh. 6) in the ejectment suit which was almost two months after she
filed the complaint before this Court on June 27, 1989. If she were really
afraid of the squatters, then she should not have pursued the issuance of
an alias writ of execution. Besides, she did not even report to the police the
alleged phone threats from the squatters. To the mind of the Court, the socalled squatter factor is simply factuitous (sic).
9
obligation to evict the squatters; that it was petitioner who was not
ready to pay the purchase price and fulfill his part of the contract,
and that the provision requiring a mandatory return/reimbursement
of the P50,000.00 in case private respondent would fail to eject the
squatters within the 60day period was not a penal clause. Thus, it
concluded:
WHEREFORE, the decision appealed from is REVERSED and SET
ASIDE, and a new one entered declaring the contract of conditional sale
dated June 9, 1988 cancelled and ordering the defendantappellee to accept
the return of the downpayment in the amount of P50,000.00 which was
deposited in the court below. No pronouncement as to costs.
11
13
27
15
with Article 1545 of the Civil Code. This option clearly belongs to
petitioner and not to private respondent.
16
18
19
20
21
22
23
28
29
By way of reply, Sacobia informed respondent that it had a norefund policy, and that it had endorsed respondent to Century
Properties, Inc. for assistance on the resale of his share to third
persons.
Thus, on July 21, 1999, respondent filed a complaint for rescission
and damages before the SEC but the case was eventually transferred
31
. . . We went up and down the hills on board the golf cart, and have seen
the entire golf course. The 9 holes area are already operational and
playable, we have seen the tee bank (mount soil) color coded flags, blue for
regular golfers, white for senior golfers and red for ladies golfers. We have
seen all their playing areas which all appeared in order except the main
clubhouse which is undergoing finishing touches. Likewise the road leading
to the clubhouse area is undergoing pavement works and concreting.
We learned from our tour guide Mr. Gerry Zoleta, Site Supervisor, that
the timetable in finishing all remaining things (e.g. Clubhouse and the road
leading to it) to be done, are influenced or rather, hampered by the
prevailing weather condition. Such that when it rain, (which often happens
in the area during afternoon or early morning) they cannot really push
thru with the construction due to the soil condition (easily eroded) and
sloping terrain of the place. Except, the clubhouse, all seem prim and
proper for golf playing. In fact, according to Mr. Zoleta, the site has been
operational since January 2002. The first tournament was conducted on
October 2000 and there were three tournaments already took place in the
area.
...
In summary, we found nothing amiss for one not to be able to play and
enjoy golf to the fullest, except as earlier said the clubhouse.
within thirty (30) days from the finality of this decision, otherwise, he
forfeits his payments.
IT IS SO ORDERED.
11
The trial court found that the contract between the parties did not
warrant that the golf course and clubhouse would be completed
within a certain period of time to entitle respondent to rescind. It
also noted that the completion of the project was subject to the
issuance of an ECC and the approval by the SEC of the registration
of non-proprietary golf club shares, which is beyond Sacobias
control.
The appellate court, in its decision dated August 19, 2004,
disposed of the appeal as follows:
WHEREFORE, the appealed November 29, 2002 decision of the Regional
Trial Court of Manila, Branch 46, is hereby REVERSED and SET ASIDE,
and a new one is hereby entered with this Court hereby CONFIRMING the
RESCISSION of the contract of purchase of one (1) Class A proprietary
share of True North Golf and Country Club as elected choice by plaintiffappellant Ty, the aggrieved party, and hereby DIRECTING defendantappellee SACOBIA to:
1) Refund to the plaintiff-appellant Allan U. Ty the amount of
P409,090.20 and all payments made by him thus far on the TRUE
NORTH share, with legal interest of 12% per annum from July 21,
1999, the date of the filing of the complaint with the SEC, until
fully paid;
10
12
The Court of Appeals agreed with the trial court that Sacobia was
in delay in the performance of its obligation to respondent. As such,
Ty could properly rescind the contract, or demand specific
32
fails to comply with his obligation of remitting the full purchase price
within the deadline. In fact, Sacobia, after having cancelled the
agreement, can offer the share to other interested parties.
In addition, the execution of the deed of absolute sale and other
pertinent documents shall be made only upon full payment of the
purchase price. The terms of the agreement between Sacobia and Ty
can be deduced, not on a formal document like a deed of sale, but
from a series of correspondence and acts signifying the parties
intention to enter into a contract. The absence of a formal deed of
conveyance is a strong indication that Sacobia did not intend to
transfer title until respondent shall have completely complied with
his correlative obligation of paying the contact price.
Since the agreement between Sacobia and Ty is a contract to sell,
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 ownership is retained by the seller without further
remedies by the buyer. In Cheng v. Genato, we explained the nature
of a contract to sell and its legal implications in this wise:
13
fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him. Upon the
fulfillment of the suspensive condition, ownership will not
automatically transfer to the buyer although the property may have
been previously delivered to him. The prospective seller still has to
convey title to the prospective buyer by entering into a contract of
absolute sale.
According to True North Payment Schedule, respondents checks
dated from October 12, 1997 until January 12, 1998 were marked as
stale. His failure to cover the value of the checks and by issuing a
stop payment order effectively abated the perfection of the contract.
For it is understood that when a sale is made subject to a suspensive
condition, perfection is had only from the moment the condition is
fulfilled.
14
15
16
As shown, Ty did not pay the full purchase price which is his
obligation under the contract to sell, therefore, it cannot be said that
Sacobia breached its obligation. No obligations arose on its part
because respondents non-fulfillment of the suspensive condition
rendered the contract to sell ineffective and unperfected. Indeed,
there can be no rescission under Article 1191 of the Civil Code
because until the happening of the condition, i.e. full payment of the
contract price, Sacobias obligation to deliver the title and object of
the sale is not yet extant. A non-existent obligation cannot be subject
of rescission. Article 1191 speaks of obligations already existing,
which may be rescinded in case one of the obligors fails to comply
with what is incumbent upon him.
As earlier discussed, the payment by Ty of the reservation fee as
well as the issuance of the postdated checks is subject to the
condition that Sacobia was reserving title until full payment, which
is the essence of a contract to sell. The perfection of this kind of
contract would give rise to two distinct obligations, namely, 1) the
buyers obligation to fulfill the suspensive condition, i.e. the full
payment of the contract price as in the instant case, and, 2) the
17
34
J.:
Sulu, on the other; and (2) the petitioner did not raise at the earliest
opportunity the nullity of the sale and remained passive for 39 years,
as it was raised only in 2001.22
The CA also ruled that the Deed of Sale is not a mere contract to
sell but a perfected contract of sale. There was no express
reservation of ownership of title by the petitioner and the fact that
there was yet no payment at the time of the sale does not affect the
validity or prevent the perfection of the sale.23
As regards the issue of whether payment of the price was made,
the CA ruled that there was actual payment, as evidenced by the
Municipal Voucher, which the petitioner himself prepared and
signed despite the lack of approval of the Municipal Treasurer. Even
if he was not paid the consideration, it does not affect the validity of
the contract of sale for it is not the fact of payment of the price that
determines its validity.24
In addition, the CA noted that there was an erroneous
cancellation of the certificate of title in the name of the respondent
and the registration of the same property in the name of the
petitioner in Miscellaneous Case No. 866. According to the CA, this
does not affect in any way the ownership of the respondent over the
subject property because registration or issuance of a certificate of
title is not one of the modes of acquiring ownership.25
The petitioner sought reconsideration of the CA Decision, which
was denied by the CA in its Resolution26 dated October 29, 2008.
Hence, this petition.
Issue
WHETHER THE PETITIONER IS ENTITLED TO RECOVER
OWNERSHIP AND POSSESSION OF THE PROPERTY IN DISPUTE.
payment of the purchase price. The rule is settled that issues raised
for the first time on appeal and not raised in the proceedings in the
lower court are barred by estoppel. To consider the alleged facts and
arguments raised belatedly would amount to trampling on the basic
principles of fair play, justice, and due process.30 Accordingly, the
petitioners attack on the validity of the Deed of Sale vis--vis its
compliance with the 2004 New Notarial Law must be disregarded.31
The Deed of Sale is a Valid
Contract of Sale
The petitioner alleges that the Deed of Sale is merely an
agreement to sell, which was not perfected due to non-payment of the
stipulated consideration.32 The respondent, meanwhile, claims that
the Deed of Sale is a valid and perfected contract of absolute sale.33
A contract of sale is defined under Article 1458 of the Civil Code:
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 therefore a price certain in money or its
equivalent.
40
Even assuming, arguendo, that the petitioner was not paid, such
non payment is immaterial and has no effect on the validity of the
contract of sale. A contract of sale is a consensual contract and what
is required is the meeting of the minds on the object and the price for
its perfection and validity.38 In this case, the contract was perfected
the moment the petitioner and the respondent agreed on the object of
the sale the two-hectare parcel of land, and the price Three
Thousand Pesos (P3,000.00). Non-payment of the purchase price
merely gave rise to a right in favor of the petitioner to either demand
specific performance or rescission of the contract of sale.39
Sections 145 and 146 of the Administrative Code of Mindanao
and Sulu, and Section 120 of the PLA, as amended, are not
applicable
The petitioner relies on the foregoing laws in assailing the validity
of the Deed of Sale, claiming that the contract lacks executive
approval and that he is an illiterate non-Christian to whom the
benefits of Sections 145 and 146 of the Administrative Code of
Mindanao and Sulu should apply.
Section 145 of the Administrative Code of Mindanao and Sulu
essentially provides for the requisites of the contracts entered into by
a person with any Moro or other non-Christian inhabitants.40
Section 146,41 meanwhile, provides that contracts entered into in
violation of Section 145 are void. These provisions aim to safeguard
the patrimony of the less developed ethnic groups in the Philippines
by shielding them against imposition and fraud when they enter into
agreements dealing with realty.42
Section 120 of the PLA (Commonwealth Act No. 141) affords the
same protection.43 R.A. No. No. 387244 likewise provides that
conveyances and encumbrances made by illiterate non-Christian or
literate non-Christians where the instrument of conveyance or
encumbrance is in a language not understood by said literate nonChristians shall not be valid unless duly approved by the Chairman
of the Commission on National Integration.
41
In Jandoc-Gatdula
v.
Dimalanta,45 however,
the
Court
categorically stated that while the purpose of Sections 145 and 146 of
the Administrative Code of Mindanao and Sulu in requiring
executive approval of contracts entered into by cultural minorities is
indeed to protect them, the Court cannot blindly apply that law
without considering how the parties exercised their rights
and obligations. In this case, Municipality Resolution No. 70,
which approved the appropriation of P3,000.00, was, in fact, accepted
by the Provincial Board of Cotabato. In approving the appropriation
of P3,000.00, the Municipal Council of Isulan and the Provincial
Board of Cotabato, necessarily, scrutinized the Deed of Sale
containing the terms and conditions of the sale. Moreover, there is
nothing on record that proves that the petitioner was duped into
signing the contract, that he was taken advantage of by the
respondent and that his rights were not protected.
The courts duty to protect the native vendor, however, should not
be carried out to such an extent as to deny justice to the vendee when
truth and justice happen to be on the latters side. The law cannot be
used to shield the enrichment of one at the expense of another. More
important, the law will not be applied so stringently as to render
ineffective a contract that is otherwise valid, except for want of
approval by the CNI. This principle holds, especially when the evils
sought to be avoided are not obtaining.46
The Court must also reject the petitioners claim that he did not
understand the import of the agreement. He alleged that he signed
in Arabic the Deed of Sale, the Joint Affidavit and the Municipal
Voucher, which were all in English, and that he was not able to
comprehend its contents. Records show the contrary. The petitioner,
in fact, was able to execute in favor of Baikong a Special Power of
Attorney (SPA) dated July 23, 1996, which was written in English
albeit signed by the petitioner in Arabic. Said SPA authorized
Baikong, the petitioners sister, to follow-up the payment of the
purchase price. This raises doubt on the veracity of the petitioners
SO ORDERED.
Sereno
(CJ.,
Chairperson),
Leonardo-De
Bersaminand Villarama, Jr., JJ., concur.
Appeal denied, judgment and resolution affirmed.
Castro,
and return the down payment, or to reform the contract by extending the
period given to pay the remaining balance of the purchase price. Either
way, Tan wants to enforce his personal rights against the respondents, not
against the property subject of the Deed. As we explained in Domagas v.
Jensen, 448 SCRA 663 (2005): The settled rule is that the aim and object of
an action determine its character. Whether a proceeding is in rem, or in
personam, or quasi in rem for that matter, is determined by its nature and
purpose, and by these only. A proceeding in personam is a proceeding to
enforce personal rights and obligations brought against the person and is
based on the jurisdiction of the person, although it may involve his right to,
or the exercise of ownership of, specific property, or seek to compel him to
control or dispose of it in accordance with the mandate of the court. The
purpose of a proceeding in personam is to impose, through the judgment of
a court, some responsibility or liability directly upon the person of the
defendant. Of this character are suits to compel a defendant to specifically
perform some act or actions to fasten a pecuniary liability on him.
Sales; Contract to Sell; The very essence of a contract of sale is the
transfer of ownership in exchange for a price paid or promised; A contract to
sell is defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the property despite delivery thereof to
the prospective buyer, binds himself to sell the property exclusively to the
prospective buyer upon fulfillment of the condition agreed, i.e., full payment
of the purchase price.A contract is what the law defines it to be, taking
into consideration its essential elements, and not what the contracting
parties call it. Article 1485 of the Civil Code defines a contract of sale as
follows: Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership and to deliver a determinate
thing, and the other to pay therefor a price certain in money or its
equivalent. A contract of sale may be absolute or conditional. The very
essence of a contract of sale is the transfer of ownership in exchange
for a price paid or promised. In contrast, a contract to sell is defined as a
bilateral contract whereby the prospective seller, whileexpressly
reserving the ownership of the property despite delivery thereof to the
prospective buyer,binds himself to sell the property exclusively to
the prospective buyer upon fulfillment of the condition agreed, i.e., full
44
the vendors should return the P200,000.00 down payment to Tan, subject
to the legal interest of 6% per annum computed from May 28, 1993, the
date of the first demand letter. Furthermore, after a judgment has become
final and executory, the rate of legal interest, whether the obligation was in
the form of a loan or forbearance of money or oth40erwise, shall be 12% per annum from such finality until its
satisfaction. Accordingly, the principal obligation of P200,000.00 shall bear
6% interest from the date of first demand or from May 28, 1993. From the
date the liability for the principal obligation and attorneys fees has become
final and executory, an annual interest of 12% shall be imposed on these
obligations until their final satisfaction, this interim period being deemed
to be by then an equivalent to a forbearance of credit.
over the property. Tan prayed for the refund of the down payment
and the rescission of the contract.
On August 9, 1993, Tan amended his Complaint, contending that
if the respondents insist on forfeiting the down payment, he would be
willing to pay the balance of the purchase price provided there is
reformation of the Deed of Conditional Sale. In the meantime, Tan
caused the annotation on the title of a notice of lis pendens.
On August 21, 1993, the respondents executed a Deed of Absolute
Sale over the property in favor of Hector de Guzman (de Guzman) for
the price of P689,000.00.
Thereafter, the respondents moved for the cancellation of the
notice of lis pendens on the ground that it was inappropriate since
the case that Tan filed was a personal action which did not involve
either title to, or possession of, real property. The RTC issued an
order dated October 22, 1993 granting the respondents motion to
cancel the lis pendens annotation on the title.
Meanwhile, based on the Deed of Absolute Sale in his favor, de
Guzman registered the property and TCT No. 28104 was issued in
his name. Tan then filed a motion to carry over the lis
pendensannotation to TCT No. 28104 registered in de Guzmans
name, but the RTC denied the motion.
On September 8, 1995, after due proceedings, the RTC rendered
judgment ruling that the respondents forfeiture of
44Tans down payment was proper in accordance with the terms and
conditions of the contract between the parties.4 The RTC ordered Tan
to pay the respondents the amount of P30,000.00, plus P1,000.00 per
court appearance, as attorneys fees, and to pay the cost of suit.
On appeal, the CA dismissed the petition and affirmed the ruling
of the trial court in toto. Hence, the present petition.
The Issues
Tan argues that the CA erred in affirming the RTCs ruling to
cancel the lis pendens annotation on TCT No. 27335. Due to the
unauthorized novation of the agreement, Tan presented before the
trial court two alternative remedies in his complainteither the
47
rescission of the contract and the return of the down payment, or the
reformation of the contract to adjust the payment period, so that Tan
will pay the remaining balance of the purchase price only after the
lapse of the required two-year encumbrance on the title. Tan posits
that the CA erroneously disregarded the alternative remedy of
reformation of contract when it affirmed the removal of the lis
pendensannotation on the title.
Tan further contends that the CA erred when it recognized the
validity of the forfeiture of the down payment in favor of the vendors.
While admitting that the Deed of Conditional Sale contained a
forfeiture clause, he insists that this clause applies only if the failure
to pay the balance of the purchase price was through his own fault or
negligence. In the present case, Tan claims that he was justified in
refusing to pay the balance price since the vendors would not have
been able to comply with their obligation to deliver a clean title
covering the property.
Lastly, Tan maintains that the CA erred in ordering him to pay
the respondents P30,000.00, plus P1,000.00 per court appearance as
attorneys fees, since he filed the foregoing action in good faith,
believing that he is in the right.
The respondents, on the other hand, assert that the petition
should be dismissed for raising pure questions of fact, in
contravention of the provisions of Rule 45 of the Rules which
provides that only questions of law can be raised in petitions for
review on certiorari.
The Courts Ruling
The petition is granted.
No new issues can be raised in the
Memorandum
At the onset, we note that Tan raised the following additional
assignment of errors in his Memorandum: (a) the CA erred in
holding that the petitioner could seek reformation of the Deed of
Conditional Sale only if he paid the balance of the purchase price and
if the vendors refused to execute the deed of absolute sale; and (b)
the CA erred in holding that the petitioner was estopped from asking
for the reformation of the contract or for specific performance.
The Courts September 27, 2004 Resolution expressly stated that
No new issues may be raised by a party in his/its Memorandum.
Explaining the reason for this rule, we said that:
The raising of additional issues in a memorandum before the Supreme
Court is irregular, because said memorandum is supposed to be in support
merely of the position taken by the party concerned in his petition, and the
raising of new issues amounts to the filing of a petition beyond the
reglementary period. The purpose of this rule is to provide all parties to a
case a fair opportunity to be heard. No new points of law, theories, issues or
arguments may be raised by a
46party in the Memorandum for the reason that to permit these would be
offensive to the basic rules of fair play, justice and due process.5
be paid the value of his participation with interest. But in case the
lawful participation of the heir consists in his share in personal property of
money left by the decedent, or in case unpaid debts are discovered within
the said period of two years, the procedure is not to cancel the partition,
nor to appoint an administrator to re-assemble the assets, as was allowed
under the old Code, but the court, after hearing, shall fix the amount of
such debts or lawful participation in proportion to or to the extent of the
assets they have respectively received and, if circumstances require, it may
issue execution against the real estate belonging to the decedent, or both.
The present procedure is more expedient and less expensive in that it
dispenses with the appointment of an administrator and does not disturb
the possession enjoyed by the distributees.14 [Emphasis supplied.]
counter to the letter of the above rule and the spirit of these summary
settlements. [Emphasis supplied.]
We, therefore, hold that the contract to sell was terminated when
the vendors could no longer legally compel Tan to pay the balance of
the purchase price as a result of the legal encumbrance which
attached to the title of the property. Since Tans refusal to pay was
due to the supervening event of a legal encumbrance on the property
and not through his own fault or negligence, we find and so hold that
the forfeiture of Tans down payment was clearly unwarranted.
Award of Attorneys fees
As evident from our previous discussion, Tan had a valid reason
for refusing to pay the balance of the purchase price for the property.
Consequently, there is no basis for the award of attorneys fees in
favor of the respondents.
On the other hand, we award attorneys fees in favor of Tan, since
he was compelled to litigate due to the respondents refusal to return
his down payment despite the fact that they could no longer comply
with their obligation under the contract to sell, i.e., to convey a clean
title. Given the facts of this case, we find the award of P50,000.00 as
attorneys fees proper.
Monetary award is subject to legal interest
Undoubtedly, Tan made a clear and unequivocal demand on the
vendors to return his down payment as early as May 28, 1993.
Pursuant to our definitive ruling in Eastern Ship55ping Lines, Inc. v. Court of Appeals,20 we hold that the vendors
should return the P200,000.00 down payment to Tan, subject to the
legal interest of 6% per annum computed from May 28, 1993, the
date of the first demand letter.
Furthermore, after a judgment has become final and executory,
the rate of legal interest, whether the obligation was in the form of a
loan or forbearance of money or otherwise, shall be 12% per
annumfrom such finality until its satisfaction. Accordingly, the
principal obligation of P200,000.00 shall bear 6% interest from the
date of first demand or from May 28, 1993. From the date the
liability for the principal obligation and attorneys fees has become
final and executory, an annual interest of 12% shall be imposed on
these obligations until their final satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of credit.
WHEREFORE, premises considered, we hereby GRANT the
petition and, accordingly, ANNUL and SET ASIDE the May 30, 2002
decision of the Court of Appeals in CA-G.R. CV No. 52033. Another
judgment is rendered declaring the Deed of Conditional Sale
terminated and ordering the respondents to return the P200,000.00
down payment to petitioner Delfin Tan, subject to legal interest of
6% per annum, computed from May 28, 1993. The respondents are
also ordered to pay, jointly and severally, petitioner Delfin Tan the
amount of P50,000.00 as and by way of attorneys fees. Once this
decision becomes final and executory, respondents are ordered to pay
interest at 12% per annum on the principal obligation as well as the
52
53
vendee. It did, certainly, subject only to the right of the vendor to redeem it
within the period specified.
Same; Same; Same; Same; Same; Same; It is unnecessary for the
parties to enter into a second contract over the property which was merely
an affirmation or reiteration of the parties in the first transaction, and the
first contract of sale had already been perfected and consummated; Purpose
of the second contract was to manifest the sellers waiver of his right to
repurchase.To be sure, Paulino Bollozos could have repurchased the
property within seven years pursuant to the first contract. However, he did
not choose to do so and in fact renounced and repudiated this right two
years later in the second contract. It is noted that this contract also
purported to convey the same property to Yu but this was merely an
affirmation or reiteration of the parties intention in the first transaction. It
was not really necessary to repeat the sale because the first contract had
already been perfected and consummated. Indeed, the sale could not have
been made for the first time then for it would have been illegal under the
provisions of the new Constitution that had come into force in 1935.
Actually, the real purpose of the second contract was to manifest Paulino
Bollozos waiver of his right to repurchase, for which he received the
additional sum of P295.00.
Same; Same; Same; Failure to register the sale did not vitiate it or
render it unenforceable; An unrecorded deed of sale is binding between the
parties and their privies because actual notice is equivalent to registration;
Real purpose of registration.The first deed of sale took effect on
September 1, 1934, and legally transferred ownership of the land subject
thereof from the vendor to Yu on the said date. Failure to register the sale
did not vitiate it or render it unenforceable. As we have held in several
cases, an unrecorded deed of sale is binding between the parties and their
privies because actual notice is equivalent to registration. The real purpose
of registration being to give notice to third persons, deed of sale that has
not been registered does not lose its efficacy insofar as the parties thereto
and their heirs are concerned.
Same; Same; Same; Registration is not a mode of acquiring
ownership.It is settled that registration is not a mode of acquiring
ownership.
54
Same; Same; Same; Same; Title and ownership over lands within the
meaning and purpose of the constitutional prohibition dates back to the
time of their purchase, not later; Alien owners also acquired their lands in
good faith before the prohibition but failed to register them or register them
only after the Constitution was adopted is illegal or unjust.And with
particular reference to problems such as the one at bar, we have ruled that:
Title and ownership over lands within the meaning and for the purposes of
the constitutional prohibition, dates back to the time of their purchase, not
later. Any other ruling would be illegal and unjust, and would operate to
dispossess alien owners who had acquired their lands in good faith before
the prohibition was established, but either failed wholly to register them or
registered them only after the Constitution was adopted.
Same; Same; Same; Equitable mortgage, not a case of; Although the
land continued to be registered and all tax declarations were made in the
name of the vendor-seller, such circumstance would not change the nature of
the 1934 contract of sale but may demonstrate neglect of the vendee who had
a right td transfer the registration in his name.As for the finding of the
trial court that the deed of sale with the right of repurchase was an
equitable mortgage, we hold it has no basis in fact and law. All that is
invoked in its support is that the land continued to be registered, and all
the tax declarations thereon were made, in the name of Paulino Bollozos.
That may well be, but that circumstance would not change the nature of
the contract concluded in 1934. At best, it may demonstrate neglect on the
part of the vendee, who had a right to transfer the registration in his name,
but that would not signify that Paulino Bollozos retained or recovered
ownership of the land he had already sold.
Same; Same; Same; Same; Provision of Art. 1602 of the Civil Code on
equitable mortgage was not embodied in the old Civil Code which was
enforced in 1934; One of the indicia of an equitable mortgage is that the
vendor remains in possession of the property; In case at bar, the vendors
complaint asks for recovery of possession of the land from the vendee.The
defendant-appellant cites Article 1602^ of the Civil Code and argues that
none of the indications mentioned therein of an equitable mortgage are
present in this case. While we are inclined to agree, it should be noted that
the said article is not applicable because it was not embodied in the old
Civil Code which was in force in 1934. This is an innovation in the present
Code. In any event, it is worth stressing that one of the indicia mentioned
in the said article is that the vendor remains in possession of the property
in question, which is not the situation here. The complaint, in fact, asks for
recovery of possession of the land from defendant Yu.
Same; Same; Same; Contract of sale with pacto de retro became
absolute when the vendor waived his right to repurchase under the second
contract.In sum, we hold that the trial court erred in disregarding the
sale with right of repurchase concluded on September 1, 1934, and in
considering it an equitable mortgage. The second contract executed on
September 21, 1936, could not have validly conveyed the land in question
to defendant Yu, who was an alien, as this was already prohibited by the
Commonwealth Constitution. Nevertheless, it was effective in affirming
the earlier contract of September 1,1934, and, more importantly, in making
it absolute with the renunciation by the vendor of his right to repurchase
the property. Accordingly, Yu should be recognized as the lawful owner of
the land in dispute, acquired by him by virtue of a legitimate contract of
sale with pacto de retro which became absolute when the vendor waived his
right of repurchase.
Same; Same; Same; Aliens; Fact that defendant-vendee was an alien
cannot be taken against him as he was not disqualified from acquiring the
land when the sale was concluded in 1934; Supreme Court dispenses equal
justice to the citizen and the alien and judges them on the merits of their
cause and not on the color of their skin.The fact that the defendant in this
case was an alien cannot be taken against him for he was not disqualified
from acquiring the land in question when the sale was concluded in 1934.
It should not deter us from ruling in his favor now. This Court dispenses
equal justice to the citizen and the alien and judges them on the merits of
their cause and not the color of their skin. Having admitted him into our
territory, the State is committed to the recognition of all the rights of the
stranger in our midst save only where they unduly clash with the higher
interests of our own nation. There is no such collision here. On the
contrary, we see here an opportunity to prove, as we do now, that respect
for the foreign guest is ingrained in the law of the land and in the nature of
our people.
55
1. That both parties hereby agree on the identity of the parcel of land
in litigation as described in paragraph II of the amended complaint,
which parcel of land is covered by OCT No. 5033 in the name of
Paulino Bollozos;
2. That plaintiffs Fortunato Bollozos and Andrea Bollozos are the only
surviving children of the late Paulino Bollozos while the rest of the
above-named plaintiffs are the grandchildren of said Paulino
Bollozos;
3. That sometime on September 1, 1934, the late Paulino Bollozos
executed a document entitled Escritura de Compra y Venta Con
Pacto de Retro, the original of which is hereto attached as Annex A
to form part hereof and another document was executed by the late
Paulino Bollozos entitled A Definite and Absolute Purchase and
Sale dated September 21, 1936, the original copy of which is hereto
attached to form an integral part of this complete stipulation of
facts, that the parties agree to submit the entitled case for decision
on the basis of the following issue or issues:
4.
(a) Whether a valid conveyance of ownership was made of the
parcel of land in litigation on September 1, 1934 as
appearing in Annex A, entitled Escritura de Compra y Venta
Con Pacto de Retro, or on September 21, 1936 as appearing
in Annex B, entitled A Definite and Absolute Purchase and
Sale of the parcel of land in litigation, and for the Honorable
Court to determine the legality or nullity of the abovementioned documents.
3
56
The above rulings are the subject of this appeal, which we find
meritorious. We shall reverse.
It is important to note at the outset that there is nothing in the
record to show that the disputed property had merely been entrusted
to Yu for administration in connection with Paulino Bollozos
indebtedness to him, as claimed by the plaintiff. Neither is there any
evidence of such indebtedness. This allegation, which was the very
basis of the complaint, was not among those admitted in the
stipulation of facts and indeed had been categorically denied in the
answer. It thus remained a bare averment without any actual or
presumptive support.
It should also be noted that, by contrast, the defendant, to
substantiate his answer, produced the two above-cited documents
Annexes A and B, which clearly indicate the intention of the
parties regarding the ownership and disposition of the land in
question. These documents are the best and, as it happens, the only
evidence adduced of such intention.
Annex A reads as follows:
***
(Technical Description)
2nd.That the said parcel of land together with all existing
improvements thereon is registered in my name in the Office of the
Register of Deeds of the Province of Oriental Misamis, as
evidenced by the ORIGINAL CERTIFICATE OF TITLE number
FIVE THOUSAND THIRTY THREE (5033).
3rd.That the said parcel of land, together with all existing
improvements thereon was sold by me to Mr. YU TIENG SU,
married to Sia Pute on September 1, 1934 for the sum of SIX
HUNDRED THIRTY SIX (P636.00) under the instrument of
purchase with right or repurchase (Compra venta con pacto de
retro) and said document is ratified before Notary Public Mr.
Eufrosino Limbaco, of Mambajao, Misamis Oriental, on the 1st day
of September 1934, Not. Reg. No. 149-Page No. 97-Book No. 8-Series
of 1934.
4th.That by these presents I do hereby declare and say that I will
forever renounce and repudiate my rights and privileges to
repurchase the said parcel of land together with all its existing
improvements thereon and for and in consideration of an
additional sum of TWO HUNDRED NINETY-FIVE PESOS
(P295.00), Philippine Currency to me in hand paid and the receipt
whereof is hereby acknowledged by Mr. YU TIENG SU, 36 years of
age, Chinese, married to Sia Pute, 31 years of age, Chinese and
resident of this Municipality of Catarman, Misamis Oriental, P.I.,
by these presents I do hereby sell, transfer and forever convey a
deliver unto said Mr. YU TIENG SU, his heirs, executors,
administrators and assigns that parcel of land together with all its
existing improvements thereon, particularly described above (Lot
No. 473). Original Certificate of Title number Five Thousand
Thirty-three.
The Court holds that the first transaction was a valid sale with
right of repurchase and effectively transferred ownership of the land
in dispute to the defendant-appellant. All the elements of a valid
contract were present, and in any case the plaintiffs-appellees
themselves have stipulated on its authenticity. As it was concluded
in 1934, the prohibition against the acquisition of agricultural lands
by aliens was not yet applicable, having become effective only from
November 15, 1935, under the Commonwealth Constitution.
Moreover, the title acquired by Yu was recognized in the said
Constitution as a vested right that could no longer be disturbed
under the new provisions of that charter reserving ownership of such
lands to Filipino citizens.
5
A sale with pacto de retro transfers the legal title to the vendee and
this, in the absence of an agreement to the contrary, carries with it the
right of possession. In the case of Santos v. Heirs of Crisostomo and
Tiongson (41 Phil. 342), this court, in discussing the nature of sale
with pacto de retro,said: x x x It is our opinion, however, that the insertion
of a stipulation for repurchase by the vendor in a contract of sale does not
necessarily create any right inconsistent with the right of ownership in the
purchaser. Such a stipulation is in the nature of an option, and the possible
exercise of it rests upon contingency.x x x.
7
This is not correct. The first deed of sale took effect on September
1, 1934, and legally transferred ownership of the land subject thereof
59
from the vendor to Yu on the said date. Failure to register the sale
did not vitiate it or render it unenforceable. As we have held in
several cases, an unrecorded deed of sale is binding between the
parties and their privies because actual notice is equivalent to
registration. The real purpose of registration being to give notice to
third persons, deed of sale that has not been registered does not lose
its efficacy insofar as the parties thereto and their heirs are
concerned.
It is settled that registration is not a mode of acquiring ownership.
Thus:
8
As for the finding of the trial court that the deed of sale with the
right of repurchase was an equitable mortgage, we hold it has no
basis in fact and law. All that is invoked in its support is that the
land continued to be registered, and all the tax declarations thereon
were made, in the name of Paulino Bollozos. That may well be, but
that circumstance would not change the nature of the contract
concluded in 1934. At best, it may demonstrate neglect on the part of
the vendee, who had a right to transfer the registration in his name,
but that would not signify that Paulino Bollozos retained or
recovered ownership of the land he had already sold.
only where they unduly clash with the higher interests of our own
nation. There is no such collision here. On the contrary, we see here
an opportunity to prove, as we do now, that respect for the foreign
guest is ingrained in the law of the land and in the nature of our
people.
WHEREFORE, the appealed decision is REVERSED. The
complaint and the counterclaim in Civil Case No. 66-C are
DISMISSED, with costs against the plaintiffs-appellees. It is so
ordered.
Teehankee, (C.J.), Narvasa, Paras andGancayco, JJ., concur.
Decision reversed.
Notes.Since the case at bar involves the exercise of the right to
repurchase, a showing that petitioner made a valid lender is
sufficient. (Legaspi vs. CA, 142 SCRA 82.)
A contract is not equitable mortgage, but deed of sale with right of
repurchase ownership of property in the absence of any instances in
the law which presumes that the contract is one of equitable
mortgage. (De Bayquen vs. Vda. de Elpa, 143 SCRA 412).
o0o
61
"ATTY. PAMPLONA:
So that Mr. Witness, it is clear now that, per your receipt
and your answer, the company will not return the unit
without paying a sum of money, more particularly the
balance of the account?
WITNESS:
Yes, sir."
4
64
Sales; Chattel
mortgage; Execution; Where
the
mortgagee
in
installment sales of personal property chose the remedy of specific
performance in a replevin suit with damages, it is entitled to an alias writ of
execution for the portion of the judgment that has not been satisfied.
According to article 1484, it is only when there has been a foreclosure that
the mortgagor is not liable for any deficiency. In this case, there was no
foreclosure. The mortgagee evidently chose the remedy of specific
performance. It levied upon the car by virtue of an execution and not as an
incident of a foreclosure proceeding. It is entitled to an alias writ of
execution for the portion of the judgment that has not been satisfied.
Same; Same; Same; Same.The rule is that in installment sales, if
the action instituted is for specific performance and the mortgaged
property is subsequently attached and sold, the sale thereof does not
amount to a foreclosure of the mortgage. Hence, the seller-creditor is
entitled to a deficiency judgment.
P 13,157.89
285.47
656.40
P 14,099.76
P 731.06
730.99
716.39
4,023.51
219.76
Balance still due
6,421.71
P 7,678.05
vvvvvvvvv
Civil Code, formerly Act No. 4122, otherwise known as the Recto
Installment Sales Law.
It is necessary to scrutinize the allegations of the complaint
because of the controversy between the parties as to whether, by
means of that complaint, Industrial Finance Corporation sought to
foreclose the chattel mortgage as contemplated in article 1484 of the
Civil Code, formerly Act No. 4122, otherwise known as the Recto
Installment Sale Law.
In its complaint Industrial Finance Corporation prayed
for alternative reliefs. The main objective of its complaint was
recovery of the mortgaged car by means of a writ of replevin. It
submitted a redelivery bond. Un doubtedly, the mortgagee-assignee
wanted to foreclose extrajudicially the chattel mortgage but before it
could do so, the sheriff had to seize the car by means of the
provisional remedy of an order for the delivery of personal property.
Industrial Finance Corporation prayed that, if the car could not be
recovered by means of replevin, then Consuelo Alcoba should be
ordered to pay the corporation the sum of P11,083.38, plus twelve
percent interest per annum,damages, and attorneys fees in the sum
of P2,770.85. There was no prayer for the foreclosure of the
mortgage, a relief that should be invoked if the complaint had been
filed under section 8, Rule 68 of the Rules of Court.
Consuelo Alcoba in her answer merely pleaded that Industrial
Finance Corporation waived the recovery of the car by accepting
the sum of P4,228.67. She did not state what that amount
represented. It was the amount paid on January 12, 1972 by the
Malayan Insurance Co., Inc., as insurer of the mortgaged car, to
Industrial Finance Corporation. As indicated in the computation set
forth above, the corporation applied that amount to the partial
payment of Consuelo Alcobas obligation. The record does not show
why the insurance company paid that amount to Industrial Finance
Corporation.
Consuelo Alcobas lawyer, after making reference to the
corporations acceptance of the sum of P4,228.68, incoherently
not comply with the stipulation that, upon her default, the car
should be delivered, on demand, to the mortgagee in Manila.
The corporations action was for specific performance or
fulfillment of the obligation and not for judicial foreclosure Consuelo
Alcobas payment of P2,000 on account of the money judgment
against her signified that she acquiesced in the action for specific
performance. She cannot now be heard to say that the judgment
resulting from that action could not be enforced because the
mortgagees had opted for foreclosure of the mortgage. The Civil Code
provides.
ART. 1484. In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the following
remedies:
(1)Exact fulfillment of the obligation, should the vendee fail to pay;
(2)Cancel the sale, should the vendees failure to pay cover two or
more installments;
(3)Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendees failure to pay cover two or more
installments, In this case, he shall have no further action against
the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void. (1454-A-a).
67
JJ.,
ACTIVE
REALTY
&
DEVELOPMENT
CORPORATION,
petitioner, vs.NECITA G. DAROYA, represented by Attorney-In-Fact
Shirley Daroya-Quinones, respondents.
Civil Law; Contracts; The declared policy of Republic Act No. 6552
The Realty Installment Buyer Protection Act is to protect buyer of real
estate on installment basis against onerous and oppressive conditions.The
contract to sell in the case at bar is governed by Republic Act No. 6552
The Realty Installment Buyer Protection Act, or more popularly known
as the Maceda Lawwhich came into effect in September 1972. Its
declared public policy is to protect buyer of real estate on installment basis
against onerous and oppressive conditions. The law seeks to address the
acute housing shortage problem in our country that has prompted
thousands of middle and lower class buyers of houses, lots and
condominium units to enter into all sorts of contracts with private housing
developers involving installment schemes. Lot buyers, mostly low income
earners eager to acquire a lot upon which to build their homes, readily affix
their signatures on these contracts, without an opportunity to question the
onerous provisions therein as the contract is offered to them on a take it or
leave it basis.
Same; Same; Petitioner failed to comply with the mandatory twin
requirements for a valid and effective cancellation under the law.The
records clearly show that the petitioner failed to comply with themandatory
twin requirements for a valid and effective cancellation under the
law,i.e., he failed to send a notarized notice of cancellation and refund the
cash surrender value. At no time, from the date it gave a notice of
cancellation up to the time immediately before the respondent filed the
case against petitioner, did the latter exert effort to pay the cash surrender
value.
Same; Same; For failure to cancel the contract in accordance with
procedure provided by law, Court holds that the contract to sell between the
parties remains valid and subsisting.For failure to cancel the contract in
accordance with the procedure provided by law, we hold that the contract
to sell between the parties remains valid and subsisting. Following Section
3(a) of R.A. No. 6552, respondent has the right to offer to pay for the
balance of the purchase price, without interest, which she did in this case.
The contract to sell stipulated that the respondent shall pay the
initial amount of P53,766.00 upon execution of the contract and the
balance of P170,259.00 in sixty (60) monthly installments of
P4,893.35. Adding the down payment and installment payments, it
would appear that the total amount is P346,367.00, a figure higher
than that stated as the contract price.
On May 5, 1989, petitioner accepted respondents amortization in
the amount of P40,000.00. By August 8, 1989, respondent was in
default of P15,282.85 representing three (3) monthly amortizations.
69
13
II
THE HONORABLE COURT OF APPEALS ANCHORED THE DENIAL
OF
PETITIONERS
MOTION
FOR RECONSIDERATION ON
INCONSISTENT AND CONFLICTING RULINGS NOT BORNE BY THE
FACTS AND THE RECORDS OF THE CASE.
11
14
71
18
In this case, respondent has already paid in four (4) years a total of
P314,860.76 or P90,835.76 more than the contract price of
P224,035.00. In April 1989, petitioner decided to cancel the contract
when the respondent incurred in delay in the payment of P15,282.85,
representing three (3) monthly amortizations. Petitioner refused to
accept respondents subsequent tender of payment of the outstanding
balance alleging that it has already cancelled the contract and sold
the subject lot to another buyer. However, the records clearly show
that the petitioner failed to comply with themandatory twin
requirements for a valid and effective cancellation under the
law, i.e., he failed to send a notarized notice of cancellation and
refund the cash surrender value. At no time, from the date it gave a
notice of cancellation up to the time immediately before the
respondent filed the case against petitioner, did the latter exert
effort to pay the cash surrender value. In fact, the records disclose
that it was only during the preliminary hearing of the case before the
HLURB arbiter when petitioner offered to pay the cash surrender
value. Petitioner justifies its inaction on the ground that the
respondent was always out of the country. Even then, the records are
bereft of evidence to show that petitioner attempted to pay the cash
surrender value to respondent through her last known address. The
omission is surprising considering that even during the times
respondent was out of the country, petitioner has been sending her
written notices to remind her to pay her installment arrears through
her last known address. Clearly, had respondent not filed a case
demanding a final deed of sale in her favor, petitioner would not
have lifted a finger to give respondent what was due heractual
payment of the cash surrender value, among others. In disregard of
basic equitable principles, petitioners stance would enable it to resell
the property, keep respondents installment payments, not to
mention the cash surrender value which it was obligated to return.
The Layug case cited by petitioner is inapropos. InLayug, the lot
buyer did not pay for the outstanding balance of his account and the
Court found that notarial rescission or cancellation was no longer
necessary as the seller has already filed in court a case for rescission
19
20
72
73
_______________
74
balance. This is the logical import of the letter: that the transaction in this
case is a lease in name only. The so-called monthly rentals are in truth
monthly amortizations of the price of the leased office equipment. On the
whole, then, we rule, as did the trial court, that the PCI
LEASINGGIRAFFE lease agreement is in reality a lease with an option to
purchase the equipment. This has been made manifest by the actions of the
petitioner itself, foremost of which is the declarations made in its demand
letter to the respondent. There could be no other explanation than that if
the respondent paid the balance, then it could keep the equipment for its
own; if not, then it should return them. This is clearly an option to
purchase given to the respondent. Being so, Article 1485 of the Civil Code
should apply.
Same; Same; The Supreme Court has long been aware of the practice of
vendors of personal property of denominating a contract of sale on
installment as one of lease to prevent the ownership of the object of the sale
from passing to the vendee until and unless the price is fully paid.The
present case reflects a situation where the financing company can withhold
and concealup to the last momentits intention to sell the property
subject of the finance lease, in order that the provisions of the Recto
Law may be circumvented. It may be, as petitioner pointed out, that the
basic lease agreement does not contain a purchase option clause. The
absence, however, does not necessarily argue against the idea that what
the parties are into is not a straight lease, but a lease with option to
purchase. This Court has, to be sure, long been aware of the practice of
vendors of personal property of denominating a contract of sale on
installment as one of lease to prevent the ownership of the object of the sale
from passing to the vendee until and unless the price is fully paid.
Same; Same; Replevin; The lessor in a lease with option to purchase, in
choosing, through replevin, to deprive the lessee of possession of the leased
equipment, waived its right to bring an action to recover unpaid rentals on
the said leased items; The remedies provided for in Article 1484 of the Civil
Code are alternative, not cumulativethe exercise of one bars the exercise of
the others.In choosing, through replevin, to deprive the respondent of
possession of the leased equipment, the petitioner waived its right to bring
an action to recover unpaid rentals on the said leased items. Paragraph (3),
75
Article 1484 in relation to Article 1485 of the Civil Code, which we are
hereunder re-reproducing, cannot be any clearer. As we articulated
in Elisco Tool Manufacturing Corp. v. Court of Appeals, 307 SCRA 731
(1999), the remedies provided for in Article 1484 of the Civil Code are
alternative, not cumulative. The exercise of one bars the exercise of the
others. This limitation applies to contracts purporting to be leases of
personal property with option to buy by virtue of the same Article 1485.
The condition that the lessor has deprived the lessee of possession or
enjoyment of the thing for the purpose of applying Article 1485 was
fulfilled in this case by the filing by petitioner of the complaint for a sum of
money with prayer for replevin to recover possession of the office
equipment. By virtue of the writ of seizure issued by the trial court, the
petitioner has effectively deprived respondent of their use, a situation
which, by force of the Recto Law, in turn precludes the former from
maintaining an action for recovery of accrued rentals or the recovery of
the balance of the purchase price plus interest.
Same; Same; Human Relations; The imperatives of honest dealings
given prominence in the Civil Code under the heading, Human Relations,
provide another reason why we must hold the petitioner to its word as
embodied in its demand letter; The Recto Law was precisely enacted to
prevent the kind of aberration where the financial lessor would end up
making an instant killing out of the transaction at the expense of its
client.The imperatives of honest dealings given prominence in the Civil
Code under the heading: Human Relations, provide another reason why we
must hold the petitioner to its word as embodied in its demand letter. Else,
we would witness a situation where even if the respondent surrendered the
equipment voluntarily, the petitioner can still sue upon its claim. This
would be most unfair for the respondent. We cannot allow the petitioner to
renege on its word. Yet more than that, the very word or as used in the
letter conveysdistinctly its intention not to claim both the unpaid balance
and the equipment. It is not difficult to discern why: if we add up the
amounts paid by the respondent, the residual value of the property
recovered, and the amount claimed by the petitioner as sued upon herein
(for a total of P21,779,029.47), then it would end up making an instant
killing out of the transaction at the expense of its client, the respondent.
76
=P
4,207,615.56
=P
6,529,032.00
P 10,736,647.56
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendees failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has
been constituted, should the vendees failure to pay cover two or more
installments. In this case, he shall have no further action against
the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void. (Emphasis added.)
ART. 1485. The preceding article shall be applied to contracts
purporting to be leases of personal property with option to buy, when the
lessor has deprived the lessee of the possession or enjoyment of the thing.
With
court
come
issue
78
The Court can allow that the underlying lease agreement has the
earmarks or made to appear as afinancial leasing, a term defined in
Section 3(d) of R.A. No. 8556 as
Petitioner foists the argument that the Recto Law, i.e., the Civil Code
provisions on installment sales of movable property, does not apply
to a financial leasing agreement because such agreement, by
definition, does not confer on the lessee the option to buy the
property subject of the financial lease. To the petitioner, the absence
of an option-to-buy stipulation in a financial leasing agreement, as
understood under R.A. No. 8556, prevents the application thereto of
Articles 1484 and 1485 of the Civil Code.
In its previous holdings, however, the Court, taking into account the
following mix: the imperatives of equity, the contractual stipulations
in question and the actuations of parties vis--vis their contract,
treated disguised transactions technically tagged as financing lease,
like here, as creating a different contractual relationship. Notable
among the Courts decisions because of its parallelism with this case
is BA Finance Corporation v. Court of Appeals which involved a
motor vehicle. Thereat, the Court has treated a purported financial
lease as actually a sale of a movable property on installments and
prevented recovery beyond the buyers arrearages. Wrote the Court
in BA Finance:
10
and circumstances existing in this case, and which the court must consider in
deciding the case, if it is to decide the case according to all the facts. x x x.
xxx
xxx
xxx
Credit shall mean any loan, . . . any contract to sell, or sale or contract of sale
of property or service, . . . under which part or all of the price is payable
subsequent to the making of such sale or contract; any rental-purchase contract; . .
. .;
Considering the factual findings of both the court a quo and the
appellate court, the only logical conclusion is that the private
respondent did opt, as he has claimed, to acquire the motor
vehicle, justifying then the application of the guarantee deposit to
the balance still due and obligating the petitioner to recognize it as
an exercise of the option by the private respondent. The result
would thereby entitle said respondent to the ownership and
possession of the vehicle as the buyer thereof. We, therefore, see no
reversible error in the ultimate judgment of the appellate court. (Italics in
the original; underscoring supplied and words in bracket added.)
11
The acquisition cost for both the Silicon High Impact Graphics
equipment and the Oxberry Cinescan was, as stated in no less than
the petitioners letter to the respondent dated November 11,
1996 approving in the latters favor a lease facility,
was P8,100,000.00. Subtracting the acquisition cost of P8,100,000.00
from the total amount, i.e., P13,530,372.00, creditable to the
respondent, it would clearly appear that petitioner realized a gross
income of P5,430,372.00 from its lease transaction with the
respondent. The amount of P5,430,372.00 is not yet a final figure as
14
Evidently, the letter did not make a demand for the payment of the
P8,248,657.47 AND the return of the equipment; only either one of
the two was required. The demand letter was prepared and signed by
Atty. Florecita R. Gonzales, presumably petitioners counsel. As
such, the use of or instead of and in the letter could hardly be
treated as a simple typographical error, bearing in mind the nature
of the demand, the amount involved, and the fact that it was made
by a lawyer. Certainly Atty. Gonzales would have known that a
The demand could only be that the respondent need not return the
equipment if it paid the P8,248,657.47 outstanding balance,
ineluctably suggesting that the respondent can keep possession of
the equipment if it exercises its option to acquire the same by paying
the unpaid balance of the purchase price. Stated otherwise, if the
respondent was not minded to exercise its option of acquiring the
equipment by returning them, then it need not pay the outstanding
balance. This is the logical import of the letter: that the transaction
in this case is a lease in name only. The so-called monthly rentals are
in truth monthly amortizations of the price of the leased office
equipment.
On the whole, then, we rule, as did the trial court, that the PCI
LEASING-GIRAFFE lease agreement is in reality a lease with an
option to purchase the equipment. This has been made manifest by
the actions of the petitioner itself, foremost of which is the
declarations made in its demand letter to the respondent. There
could be no other explanation than that if the respondent paid the
balance, then it could keep the equipment for its own; if not, then it
should return them. This is clearly an option to purchase given to the
respondent. Being so, Article 1485 of the Civil Code should apply.
82
. . . There can hardly be any question that the so-called contracts of lease
on which the present action is based were veritable leases of personal
property with option to purchase, and as such come within the purview of
the above article [Art. 1454-A of the old Civil Code on sale of personal
property by installment]. x x x
83
and West by National Road; covered by Tax Declaration No. 11079 in the
name of Purificacion Seraspi, Series of 1984, and having an assessed value
of P1,650.00.
the ground that the action of the Seraspis was barred by the statute
of limitations. Hence, this petition filed by Quirico Seraspi who, in
the meantime, had passed away and was thus substituted by his
heirs.
Two issues are presented: (1) whether petitioners action is barred
by extinctive prescription; and (2) whether private respondent
Simeon Recasa acquired ownership of the properties in question
through acquisitive prescription.
We rule for petitioners.
The Court of Appeals, while ruling that petitioners were able to
establish the identity of the property as well as the credibility of
their titlethe elements required to prove ones claim for recovery of
property nonetheless held that the action was barred by
prescription. Citing Arradaza v. Court of Appeals, it held that an
action for recovery of title or possession of real property or an
interest therein can only be brought within ten (10) years after the
cause of action has accrued. Since the action for recovery of
possession and ownership was filed by petitioners only on April 12,
1987,i.e., thirteen (13) years after their predecessor-in-interest had
been allegedly deprived of the possession of the property by private
respondent, it was held that the action had prescribed.
Arradaza involves acquisitive, not extinctive, prescription. What
is more, the facts in that case arose before the effectivity of the Civil
Code. Accordingly, what was applied was 41 of the Code of Civil
Procedure which provides that title by prescription is acquired after
ten (10) years, in whatever manner possession may have been
commenced or continued, and regardless of good faith or with just
title. On the other hand, what is involved here is extinctive
prescription, and the applicable law is Art. 1141 of the Civil Code
which provides:
2
The contention has no merit, because he has neither just title nor
good faith. As Art. 1129 provides:
For the purposes of prescription, there is just title when the adverse
claimant came into possession of the property through one of the modes
recognized by law for the acquisition of ownership or other real rights, but
the grantor was not the owner or could not transmit any right.
87
ordered
to
return
Where an heir who owns one-half undivided share in two lots sells
one of the lots without giving to his co-heir the latters share of the
proceeds, the latter may lay exclusive claim to the remaining lot as
his own. (Imperial vs. Court of Appeals, 259 SCRA 65 [1996])
o0o
89
PANGANIBAN, J.:
Is the sellers failure to eject the lessees from a lot that is the subject
of a contract of sale with assumption of mortgage a ground (1) for
rescission of such contract and (2) for a return by the mortgagee of
the amortization payments made by the buyer who assumed such
mortgage?
Petitioner posits an affirmative answer to such question in this
petition for review on certiorari of the March 27, 1995 Decision of
the Court of Appeals, Eighth Division, in CA-G.R. CV Case No.
32298 upholding the validity of the contract of sale with assumption
of mortgage and absolving the mortgagee from the liability of
returning the mortgage payments already made.
1
The Facts
Petitioner Power Commercial & Industrial Development
Corporation, an industrial asbestos manufacturer, needed a bigger
office space and warehouse for its products. For this purpose, on
January 31, 1979, it entered into a contract of sale with the spouses
Reynaldo and Angelita R. Quiambao, herein private respondents.
The contract involved a 612-sq. m. parcel of land covered by Transfer
Certificate of Title No. S-6686 located at the corner of Bagtican and
St. Paul Streets, San Antonio Village, Makati City. The parties
agreed that petitioner would pay private respondents P108,000.00 as
down payment, and the balance of P295,000.00 upon the execution of
the deed of transfer of the title over the property. Further, petitioner
assumed, as part of the purchase price, the existing mortgage on the
land. In full satisfaction thereof, he paid P79,145.77 to Respondent
Philippine National Bank (PNB for brevity).
On June 1, 1979, respondent spouses mortgaged again said land
to PNB to guarantee a loan of P145,000.00, P80,000.00 of which was
paid to respondent spouses. Petitioner agreed to assume payment of
the loan.
92
above described plus interest and bank charges, to the said mortgagee
bank, thus holding the herein vendor free from all claims by the said bank;
That both parties herein agree to seek and secure the agreement and
approval of the said Philippine National Bank to the herein sale of this
property, hereby agreeing to abide by any and all requirements of the said
bank, agreeing that failure to do so shall give to the bank first lieu (sic)
over the herein described property.
With regard to the presence of the people who are currently in physical
occupancy of the (l)ot xxx it is our desire as buyers and new owners of this
lot to make use of this lot for our own purpose, which is why it is our desire
and intention that all the people who are currently physically present and
in occupation of said lot should be removed immediately.
For this purpose we respectfully request that xxx our assumption of
mortgage be given favorable consideration, and that the mortgage and title
be transferred to our name so that we may undertake the necessary
procedures to make use of this lot ourselves.
It was our understanding that this lot was free and clear of problems of
this nature, and that the previous owner would be responsible for the
removal of the people who were there. Inasmuch as the previous owner has
not been able to keep his commitment, it will be necessary for us to take
legal possession of this lot inorder (sic) to take physical possession.
(T)his refers to the loan granted to Mr. Reynaldo Quiambao which was
assumed by you on June 4, 1979 for P101,500.00. It was last renewed on
December 24, 1980 to mature on June 4, 1981.
A review of our records show that it has been past due from last
maturity with interest arrearages amounting to P25,826.08 as of February
19, 1982. The last payment received by us was on December 24, 1980 for
P20,283.14. In order to place your account in current form, we request you
to remit payments to cover interest, charges, and at least part of the
principal.
On July 12, 1990, the trial court ruled that the failure of
respondent spouses to deliver actual possession to petitioner entitled
the latter to rescind the sale, and in view of such failure and of the
denial of the latters assumption of mortgage, PNB was obliged to
return the payments made by the latter. The dispositive portion of
said decision states:
9
10
93
SO ORDERED.
14
Issues
Petitioner contends that: (1) there was a substantial breach of
the contract between the parties warranting rescission; and (2) there
We hereby also warrant that we are the lawful and absolute owners of
the above described property, free from any lien and/or encumbrance, and
we hereby agree and warrant to defend its title and peaceful possession
thereof in favor of the said Power Commercial and Industrial Development
Corporation, its successors and assigns, against any claims whatsoever of
94
any and all third persons; subject, however, to the provisions hereunder
provided to wit:
16
17
18
22
95
xxx (I)n order that this symbolic delivery may produce the effect of
tradition, it is necessary that the vendor shall have had such control over
the thing sold that xxx its material delivery could have been made. It is not
enough to confer upon the purchaser the ownership and the right of
possession. The thing sold must be placed in his control. When there is no
impediment whatever to prevent the thing sold passing into the tenancy of
the purchaser by the sole will of the vendor, symbolic delivery through the
execution of a public instrument is sufficient. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it himself or through
another in his name, because such tenancy and enjoyment are opposed by
the interposition of another will, then fiction yields to realitythe delivery
has not been effected.
facts of the case do not show that the requisites for such breach have
been satisfied. A breach of this warranty requires the concurrence of
the following circumstances:
(1) The purchaser has been deprived of the whole or part of the thing
sold;
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the sale made by the
vendor; and
(4) The vendor has been summoned and made co-defendant in the suit
for eviction at the instance of the vendee.
25
Considering that the deed of sale between the parties did not
stipulate or infer otherwise, delivery was effected through the
execution of said deed. The lot sold had been placed under the control
of petitioner; thus, the filing of the ejectment suit was subsequently
done. It signified that its new owner intended to obtain for itself and
to terminate said occupants actual possession thereof. Prior physical
delivery or possession is not legally required and the execution of the
deed of sale is deemed equivalent to delivery. This deed operates as
a formal or symbolic delivery of the property sold and authorizes the
buyer to use the document as proof of ownership. Nothing more is
required.
24
26
28
29
30
(e) The Mortgagor shall neither lease the mortgaged property xxx nor sell
or dispose of the same in any manner, without the written consent of the
Mortgagee. However, if not withstanding this stipulation and during the
existence of this mortgage, the property herein mortgaged, or any portion
thereof, is xxx sold, it shall be the obligation of the Mortgagor to impose as
a condition of the sale, alienation or encumbrance that the vendee, or the
party in whose favor the alienation or encumbrance is to be made, should
take the property subject to the obligation of this mortgage in the same
terms and condition under which it is constituted, it being understood that
the Mortgagor is not in any manner relieved of his obligation to the
Mortgagee under this mortgage by such sale, alienation or encumbrance;
on the contrary both the vendor and the vendee, or the party in whose favor
the alienation or encumbrance is made shall be jointly and severally liable
for said mortgage obligations. xxx.
Therefore, it cannot be said that it did not have a duty to pay to PNB
the amortization on the mortgage.
Also, petitioner insists that its payment of the amortization was a
mistake because PNB disapproved its assumption of mortgage after
it failed to submit the necessary papers for the approval of such
assumption.
But even if petitioner was a third party in regard to the mortgage
of the land purchased, the payment of the loan by petitioner was a
condition clearly imposed by the contract of sale. This fact alone
disproves petitioners insistence that there was a mistake in
All told, respondent Court did not commit any reversible error
which would warrant the reversal of the assailed Decision.
WHEREFORE, the petition is hereby DENIED, and the assailed
Decision is AFFIRMED.
SO ORDERED.
Narvasa (C.J., Chairman),Davide, Jr. and Melo, JJ., concur.
Petition denied, judgment affirmed.
Notes.The delivery of the instrument is the final act essential
to its consummation as an obligation. (Lim vs. Court of Appeals, 251
SCRA 408 [1995])
Article 1169 of the Civil Code is explicit-those obliged to deliver or
to do something incur in delay from the time the obli-gee judicially or
extrajudicially demands from them the fulfillment of their obligation.
(Navoa vs. Court of Appeals, 251 SCRA 545 [1995])
o0o
97
JOSE
V.
LAGON,
petitioner, vs. HOOVEN
INDUSTRIES, INC, respondent.
COMALCO
Appeals; Evidence; While factual issues are not within the province of
the Supreme Court, as it is not a trier of facts and is not required to examine
or contrast the oral and documentary evidence de novo, nevertheless, the
Court has the authority to review and, in proper cases, reverse the factual
findings of lower courts in exceptional instances.While factual issues are
not within the province of this Court, as it is not a trier of facts and is not
required to examine or contrast the oral and documentary evidence de
novo, nevertheless, the Court has the authority to review and, in proper
cases, reverse the factual findings of lower courts in these instances: (a)
when the findings of fact of the trial court are in conflict with those of the
appellate court; (b) when the judgment of the appellate court is based on
misapprehension of facts; and, (c) when the appellate court manifestly
overlooked certain relevant facts which, if properly considered, would
justify a different conclusion. This case falls squarely within the foregoing
exceptions.
Sales; Credit Transactions; It is contrary to common experience that a
creditor would take its own sweet time in collecting its credit, more so when
the amount involved is not minuscule but substantial.Even more strange
is the fact that HOOVEN instituted the present action for collection of sum
of money against Lagon only on 24 February 1987, or more than five (5)
years after the supposed completion of the project. Indeed, it is contrary to
common experience that a creditor would take its own sweet time in
collecting its credit, more so in this case when the amount involved is not
miniscule but substantial.
Same; Same; Where it is stipulated that deliveries must be made to the
buyer or his duly authorized representative named in the contracts, the
seller is under obligation to deliver to the buyer only and to no other, unless
the buyer specifically designated someone to receive the delivery of materials
and
his
name
is
written
opposite
the
words
Authorized
Receiver/Depository.As above specifically stated, deliveries must be made
contracts the balance of the purchase price became due and demandable
only upon the completion of the project. Consequently, the resulting social
humiliation and damage to petitioners reputation as a respected
businessman in the community, occasioned by the filing of this suit provide
sufficient grounds for the award of P50,000.00 as moral damages.
that I will admit that these were installed by the plaintiff but I do not
know exactly the materials, but I really accept that these were installed
sometime in 1981, before the occupation of the DBP. But I have paid that
already in 1981. I could not identify the materials delivered in 1981
because I do not know the exact names of those materials. (Ocular
Inspection, TSN, p. 12); 5) on Exhibit C-2, the glasses are not tinted but
plain white; on Exhibit C-3, the materials cannot be formed (sic) in the
place where they are supposed to be (Ocular Inspection, TSN, p. 7); 6)
Exhibit D and D-1, that the materials were supplied by plaintiff but
they did not install them. It was the defendant who caused the installation
thereof (Ocular Inspection, TSN, p. 13.); and 7) Exhibit E-1, as NUMain
and Cross-Runners and supplied by plaintiff but plaintiff did not install.
They had it installed (Ocular Inspection, TSN, p. 14).
The fact alone that the findings of fact show an unpaid account of the
defendant is proof that the complaint is not completely unfounded though
evidence shows also that plaintiff is guilty of partial breach of contract by
reason of failure to completely deliver and install the materials defendant
ordered pursuant to the contract so that plaintiff is liable for damages. As
plaintiff acted in good faith in the filing of the instant complaint in the
belief that it has a valid cause of action against the defendant to enforce its
claim, engaging a lawyer to prosecute it, plaintiff is entitled to a reasonable
attorneys fees equivalent to 25% of the collectible amount of P13,020.00 or
the amount of P3,225.00. Defendants claim of attorneys fees in the
amount of P152,629.15 is in the opinion of the court clearly unreasonable
and unconscionable considering the nature of the action and the amount
involved. The court has the power to reduce it to render it reasonable and
conscionable whether the contract for attorneys fees is written or oral. The
attorneys fees is fixed at P30,000.00. The defendant presented evidence of
litigation expenses incurred in the course of the trial for plane fare of its
lawyer in coming to Davao City from Manila from 1987 up to July 1990 in
the total amount of P34,730.50 as evidenced by Exhibit 11 to 11-E. The
records show that the defendants counsel came to Davao City from Manila
to attend eleven (11) hearings of the case and the plane fare from 1987 up
to August, 1989 is P2,524.50 and from August 1989 to June 1990 is
P3,007.50. Hotel expenses of defendants counsel at the Maguindanao Hotel
where he was billeted everytime he came to Davao City to attend the trial
amounted to P11,824.00 as evidenced by Exhibit 17, the certification
issued by the said hotel management. So that the total amount of the
actual damage suffered by defendant is 245,534.50. Said amount of
P45,534.50 is partially offsetted (sic) by the amount of P13,020.00
representing the unpaid obligation of the defendant to the plaintiff so that
the plaintiff is still liable to pay the defendant the difference in the amount
of P32,514.50.
Exhibit F-1Proposal
dated 3 April 1981
Hooven Aluminum
Casement Windows Anolok
Finish Manually Operated,
with 6.0 mm Brozepane
Tinted Glass
Five x 126-1/2 (w/
(5) transom)
sets:
65
One x 126-1/2 (w/ AC
(1) provision)
set:
65
Two x 125-1/2 -do(2)
sets:
391/2
One x 87 -do(1)
set:
391/2
One x 223 -do(1)
set:
391/2
One x 57-1/2 (w/
(1) transom)
set:
65
One x 4 -do-
(1)
set:
65
P42,530.00
Hooven Aluminum
Entrances and Fixed
Windows Anolok Finish,
with 6.0 mm Bromepane
Tinted Glass
One (1) set: 100-1/2 x 761/2, double sash, double
acting swing door, with
transom.
Two (2) sets: 80 x 278,
fixed panels
Hooven Aluminum
Sliding Windows
Fabricated From SDSections, Anolok Finish,
with 6.0 mm Bromepane
Tinted Glass
One (1) set: 54 x 191
One (1) set: 45 x 302
Add: Delivery and Installation
charge
21,740.00
11,650.00
75,920.00
7,500.00
P84,420.00
Exhibit AInvoice No.
11094 dated
29 December
1982
Eighty Six (86) Pieces, 2.0 mm
Hishilite
Diffusers
Exhibit BInvoice No.
P3,344.00
103
11095 dated
29 December
1982
Forty-Three
Pieces: For the
Supply and
Installation of
Light Boxes
Fabricated from
GA. 032
Aluminum Plain
Sheet
Delivery and Installers
P5,718.00
subsistence
Exhibit CInvoice No.
14349 dated
29 December
1984
Five (5) sets 1.651
Hooven Aluminum
m 3.213 m
Casementwindows,
Anolok finish,
manually operated
with
6.0 Bronzepane tinted
glass.
One (1) set 1.651 m - do - with a/c
3.367 m
provision
Two (2) sets 1.00 m - do - - do
3.188 m
One (1) set 1.00 m
- do - - do
2.210 m
One (1) set 1.00 m
- do - - do
5.664 m
One (1) set 1.651 m - do - - do - with
1.461 m
transom
- do -
with transom
- do - - do
Hooven aluminum
double sash, double
acting swing door,
with transom, with 6.0
mm Bronze-pane
tinted glass.
Fixed windows,
Anolok finish.
Aluminum tubulars
with aluminum
YP-100 cladding,
Anolok finish.
Hooven aluminum
sliding windows
fabricated
from SD sections,
Anolok finish, with 6.0
mm Bronzepane tinted
glass, with 1.88 m
tubular posts.
- do
P75,291.83
4% tax
Delivery
& Subs.
3,011.67
78,303.50
7,500.00
P85,803.50
1984
For the supply of materials
P5,310.00
and installation
of aluminum stucco
embossed sheet on
spiral staircase
Exhibit EInvoice No.
14264 dated
29
November
1984
For the supply of materials and installation of
suspended aluminum ceiling system.
Materials: NU-4 main and cross runners
NU-5 perimeter mouldings
GI wire hangers
Alum strap stiffeners
Blind
P17,057.00
rivets and
screws
Exhibit A-1Delivery
Receipt dated
9 June 1981
Twenty (20) pieces Light
boxes fabricated from
aluminum sheets
Forty (40) pieces 2.0 mm x
24 x 24 Hishilite
Diffusers
Lump sum cost including
discount and Delivery and
Installer Subsistence
P4,340.00
Exhibit A-2Delivery
Receipt dated
8 August 1981
P180.00
P40.00
P140.00
375
105
Windows Anolok
Finish with 6.0 mm
Bronzepane Tinted
Glass:
One (1) set: 100-1/2 x 76-1/2,
double sash,
double acting swing door, with
transom
Two (2) sets: 80 x 278
fixed panels
Exhibit C-3Delivery
Receipt dated
25 August 1983
Hoven Alum Sliding Windows
Fabricated from
SD Sections Anolok Finish
with 6.0 mm
Bronzepane Tinted Glass:
One (1) set: 45 x 191
One (1) set: 45 x
302
Add: Delivery and Installation
Less: 7% Discount
Exhibit D-1Delivery
Receipt dated
25 August 1983
For the supply of
materials and
installation of
aluminum
stucco embossed
sheet on spiral
P42,530.00
P21,740.00
P11,650.00
7,500.00
6,256.50
P77,163.50
106
P17,057.00
showing your balance. Kindly favor us with a partial payment to cover our
operation costs. Also kindly relay to him all other installations you wish us
to undertake.
Hoping for your favorable action, we shall remain.
Very Truly Yours,
Hooven Comalco Industries, Inc.
Davao Branch
(Sgd.) Alberto P. Villanueva
109
P 680.00
3,220.00
14,176.65
21,740.00
4,860.00
14,110.00
P58,786.65
4,408.99
P54,377.66
48,000.00
P6,377.66
13
15
Business forms, e.g., order slip, delivery charge invoice and the
like, which are issued by the seller in the ordinary course of business
are not always fully accomplished to contain all the necessary
information describing in detail the whole business transaction
more often than not they are accomplished perfunctorily without
proper regard to any legal repercussion for such neglect such that
despite their being often incomplete, said business forms are
commonly recognized in ordinary commercial transactions as valid
between the parties and at the very least they serve as an
acknowledgment that a business transaction has in fact transpired.
(Donato C. Cruz Trading Corporation vs. Court of Appeals, 347
SCRA 13 [2000])
o0o
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.
Decision modified.
Notes.As the term imparts, an ocular inspection is one by
means of actual sight or viewingwhat is visual to the eye though, is
not always reflective of the real cause behind. (Southeastern College,
Inc. vs. Court of Appeals,292 SCRA 422 [1998])
For sure, conducting ocular inspections is only one way of
ensuring compliance with laws and rules relative to the professional
practice of electrical engineering, but it certainty is not the only way.
(Philippine Registered Electrical Practitioners. Inc. [PREPI] vs.
Francia, Jr., 322 SCRA 587 [2000])
111
INC.,
Ownership; Leases; Rent is a civil fruit that belongs to the owner of the
property producing it by the right of accession.To better understand the
peculiarity of the instant case, let us begin with some basic parameters.
Rent is a civil fruit that belongs to the owner of the property producing it
by right of accession. Consequently and ordinarily, the rentals that fell due
from the time of the perfection of the sale to petitioner until its rescission
by final judgment should belong to the owner of the property during that
period.
Same; Sales; Ownership of the thing sold is a real right, which the
buyer acquires only upon delivery of the thing to him in any of the ways
specified in articles 1497 to 1501, or in any other manner signifying an
agreement that the possession is transferred from the vendor to the vendee;
While the execution of a public instrument of sale is recognized by law as
equivalent to the delivery of the thing sold, such constructive or symbolic
delivery, being merely presumptive, is deemed negated by the failure of the
vendee to take actual possession of the land sold.Ownership of the thing
sold is a real right, which the buyer acquires only upon delivery of the
thing to him in any of the ways specified in articles 1497 to 1501, or in any
other manner signifying an agreement that the possession is transferred
from the vendor to the vendee. This right is transferred, not merely by
contract, but also by tradition or delivery. Non nudis pactis sed traditione
dominia rerum transferantur. And there is said to be delivery if and when
the thing sold is placed in the control and possession of the vendee. Thus,
it has been held that while the execution of a public instrument of sale is
recognized by law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery, being merely presumptive, is deemed
negated by the failure of the vendee to take actual possession of the land
sold.
Same; Same; Words and Phrases; Delivery, Explained; In the Law on
Sales, delivery may be either actual or constructive, but both forms of
delivery contemplate the absolute giving up of the control and custody of
the property on the part of the vendor, and the assumption of the same by
demand performance. Does this mean that despite the judgment rescinding
the sale, the right to the fruits belonged to, and remained enforceable by,
Equatorial? Article 1385 of the Civil Code answers this question in the
negative, because [rescission creates the obligation to return the things
which were the object of the contract, together with their fruits, and the
price with its interest; x x x. Not only the land and building sold, but also
the rental payments paid, if any, had to be returned by the buyer.
Same; Same; Same; Bad Faith; Even assuming that there was valid
delivery, the guilty party is not entitled to any benefits from a rescinded
Deed of Absolute Sale where it was guilty of bad faith.Furthermore,
assuming for the sake of argument that there was valid delivery, petitioner
is not entitled to any benefits from the rescinded Deed of Absolute Sale
because of its bad faith. This being the law of the mother case decided in
1996, it may no longer be changed because it has long become final and
executory.
Judgments; Res Judicata; Bar by Prior Judgment; A final judgment on
the merits rendered by a court of competent jurisdiction is conclusive as to
the rights of the parties and their privies and constitutes an absolute bar to
subsequent actions involving the same claim, demand, or cause of action.
Under the doctrine of res judicata or bar by prior judgment, a matter that
has been adjudicated by a court of competent jurisdiction must be deemed
to have been finally and conclusively settled if it arises in any subsequent
litigation between the same parties and for the same cause. Thus, [a] final
judgment on the merits rendered by a court of competent jurisdiction is
conclusive as to the rights of the parties and their privies and constitutes
an absolute bar to subsequent actions involving the same claim, demand,
or cause of action. Res judicata is based on the ground that the party to
be affected, or some other with whom he is in privity, has litigated the
same matter in a former action in a court of competent jurisdiction, and
should not be permitted to litigate it again.
building for all the years when it had no right or, as stated in the decision,
had an inferior right over the property.It can be seen from the above
ruling that the issue of rentals and interests was fully discussed and
passed upon in 1996. Equatorial profited from the use of the building for all
the years when it had no right or, as stated in our decision, had an inferior
right over the property. Mayfair, which had the superior right, continued to
pay rent but it was the rate fixed in the lease contract with Carmelo. We
see no reason for us to now deviate from the reasoning given in our main
decision. The decision has been final and executory for five (5) years and
petitioner has failed to present any valid and reasonable ground to
reconsider, modify or reverse it. Let that which has been fairly adjudicated
remain final.
Contracts; Rescission; As far the injured third party is concerned, the
fraudulent contract, once rescinded, is non-existent or void from its
inception.Mayfair starts its arguments with a discussion of Article 1381
of the Civil Code that contracts entered into in fraud of creditors are
rescissible. There is merit in Mayfairs contention that the legal effects are
not restricted to the contracting parties only. On the contrary, the
rescission is for the benefit of a third party, a stranger to the contract.
Mayfair correctly states that as far as the injured third party is concerned,
the fraudulent contract, once rescinded, is non-existent or void from its
inception. Hence, from Mayfairs standpoint, the deed of absolute sale
which should not have been executed in the first place by reason of
Mayfairs superior right to purchase the property and which deed was
cancelled for that reason by this Court, is legally non-existent. There must
be a restoration of things to the condition prior to the celebration of the
contract (Respondent relies on Almeda vs. J.M. & Company, 43072-R,
December 16, 1975, as cited in the Philippine Law Dictionary; IV Arturo M.
Tolentino, Civil Code of the Philippines, 570, 1990 Ed., citing Manresa; IV
Edgardo L. Paras, Civil Code of the Philippines, 717-718, 1994 Ed.).
the property. Rentals or rental value over that disputed property from 30
July 1978 up to 17 March 1997 should then properly pertain to petitioner.
In this respect, the much abused terms of good faith or bad faith play no
role; ownership, unlike other concepts, is never described as being either in
good faith or in bad faith.
the superior right of Equatorial to the possession of the property. And even
if Mayfair did not recognize Equatorials superior right over the disputed
property, the fact remains that Equatorial was then enjoying the fruits of
its possession.
Same; Same; Same; Degrees of Possession.At this juncture, it will be
of aid to lay down the degrees of possession. The firstdegree is the mere
holding, or possession without title whatsoever, and in violation of the right
of the owner. Here, both the possessor and the public know that the
possession is wrongful. An example of this is the possession of a thief or a
usurper of land. The second is possession with juridical title, but not that of
ownership. This is possession peaceably acquired, such that of a tenant,
depositary, or pledge. The third is possession with a just title, or a title
sufficient to transfer ownership, but not from the true owner. An example
is the possession of a vendee of a piece of land from one who pretends to be
the owner but is in fact not the owner thereof. And the fourth is possession
with a just title from the true owner. This is possession that springs from
ownership. Undoubtedly, Mayfairs possession is by virtue of juridical title
under the contract of lease, while that of Equatorial is by virtue of its right
of ownership under the contract of sale.
Same; Same; It does not always follow that, because a transaction is
prohibited or illegal, title, as between the parties to the transaction, does not
pass from the seller, donor, or transferor to the vendee, donee, or
transferee.In G.R. No. 106063, Mayfairs main concern in its action for
specific performance was the recognition of its right of first refusal. Hence,
the most that Mayfair could secure from the institution of its suit was to be
allowed to exercise its right to buy the property upon rescission of the
contract of sale. Not until Mayfair actually exercised what it was allowed to
do by this Court in G.R. No. 106063, specifically to buy the disputed
property for P11,300,000.00, would it have any right of ownership. How
then, at that early stage, could Mayfairs action be an impediment in the
consummation of the contract between Carmelo and Equatorial?
Pertinently, it does not always follow that, because a transaction is
prohibited or illegal, title, as between the parties to the transaction, does
not pass from the seller, donor, or transferor to the vendee, donee or
transferee.
Same; Rescission; Bad Faith; Where bad faith was the very reason why
the contract was declared rescissible, to utilize bad faith again, this time, to
deprive Equatorial of its entitlement to the rent corresponding to the period
during which the contract was supposed to validly exist, would not only be
unjust, it would also disturb the very nature of a rescissible contract.
Neither should the presence of bad faith prevent the award of rent to
Equatorial. While Equatorial committed bad faith in entering into the
contract with Carmelo, it has been equitably punished when this Court
rendered the contract rescissible. That such bad faith was the very reason
why the contract was declared rescissible is evident from the Decision
itself. To utilize it again, this time, to deprive Equatorial of its entitlement
to the rent corresponding to the period during which the contract was
supposed to validly exist, would not only be unjust, it would also disturb
the very nature of a rescissible contract.
Also questioned is the May 29, 1998 RTC Order denying petitioners Motion for Reconsideration.
4
The Facts
The main factual antecedents of the present Petition are
matters of record, because it arose out of an earlier case decided by
this Court on November 21, 1996, entitledEquatorial Realty
Development, Inc. v. Mayfair Theater, Inc. (henceforth referred to as
the mother case), docketed as GR No. 106063.
5
117
The
trial
court
added:
The
Supreme
Court
in
theEquatorial case, G.R. No. 106063, has categorically stated that
the Deed of Absolute Sale dated July 31, 1978 has been rescinded
subjecting the present complaint to res judicata.
but also ignores the dispositive portion of the Decision of the Supreme
Court in G.R. No. 106063entitled Equatorial Realty Development, Inc. &
Carmelo & Bauermann, Inc. vs. Mayfair Theater, Inc.
B.
The Regional Trial Court erred in holding that the Deed of Absolute
Sale in favor of petitioner by Carmelo & Bauermann, Inc., dated July 31,
1978, over the premises used and occupied by respondent, having been
deemed rescinded by the Supreme Court in G.R. No. 106063, is void at its
inception as though it did not happen.
C.
The Regional Trial Court likewise erred in holding that the aforesaid
Deed of Absolute Sale, dated July 31, 1978, having been deemed rescinded
by the Supreme Court in G.R. No. 106063, petitioner is not the owner and
does not have any right to demand backrentals from the subject property,
and that the rescission of the Deed of Absolute Sale by the Supreme Court
does not confer to petitioner any vested right nor any residual proprietary
rights even in expectancy.
D.
13
14
Issues
Petitioner submits, for the consideration of this Court, the following
issues:
15
A.
The basis of the dismissal of the Complaint by the Regional Trial Court not
only disregards basic concepts and principles in the law on contracts and in
civil law, especially those on rescission and its corresponding legal effects,
The issue upon which the Regional Trial Court dismissed the civil case,
as stated in its Order of March 11, 1998, was not raised by respondent in
its Motion to Dismiss.
E.
The sole ground upon which the Regional Trial Court dismissed Civil Case
No. 97-85141 is not one of the grounds of a Motion to Dismiss under Sec. 1
of Rule 16 of the 1997 Rules of Civil Procedure.
Basically, the issues can be summarized into two: (1) the substantive
issue of whether Equatorial is entitled to back rentals; and (2) the
procedural issue of whether the court a quos dismissal of Civil Case
118
when the thing sold is placed in the control and possession of the
vendee. Thus, it has been held that while the execution of a public
instrument of sale is recognized by law as equivalent to the delivery
of the thing sold, such constructive or symbolic delivery, being merely
presumptive, is deemed negated by the failure of the vendee to take
actual possession of the land sold.
23
24
25
First Issue:
Ownership of Subject Properties
We hold that under the peculiar facts and circumstances of the
case at bar, as found by this Court en banc in its Decision
promulgated in 1996 in the mother case, no right of ownership was
transferred from Carmelo to Equatorial in view of a patent failure to
deliver the property to the buyer.
Rentala Civil Fruit of Ownership
27
16
17
18
19
20
Let us now apply the foregoing discussion to the present issue. From
the peculiar facts of this case, it is clear that petitioner never
took actual control and possession of the property sold, in view of
respondents timely objection to the sale and the continued actual
possession of the property. The objection took the form of a court
action impugning the sale which, as we know, was rescinded by a
judgment rendered by this Court in the mother case. It has been held
that the execution of a contract of sale as a form of constructive
delivery is a legal fiction. It holds true only when there is no
impediment that may prevent the passing of the property from the
hands of the vendor into those of the vendee. When there is such
impediment, fiction yields to realitythe delivery has not been
effected.
28
29
21
22
119
The question that now arises is: Is there any stipulation in the sale in
question from which we can infer that the vendor did not intend to deliver
outright the possession of the lands to the vendee? We find none. On the
contrary, it can be clearly seen therein that the vendor intended to place
the vendee in actual possession of the lands immediately as can be inferred
from the stipulation that the vendee takes actual possession thereof x x x
with full rights to dispose, enjoy and make use thereof in such manner and
form as would be most advantageous to herself. The possession referred to
in the contract evidently refers to actual possession and not merely
symbolical inferable from the mere execution of the document.
Has the vendor complied with this express commitment? she did not.
As provided in Article 1462, the thing sold shall be deemed delivered when
the vendee is placed in the control andpossession thereof, which situation
does not here obtain because from the execution of the sale up to the
present the vendee was never able to take possession of the lands due to
the insistent refusal of Martin Deloso to surrender them claiming
ownership thereof. And although it is postulated in the same article that
the execution of a public document is equivalent to delivery, this legal
fiction only holds true when there is no impediment that may prevent the
passing of the property from the hands of the vendor into those of the
vendee. x x x.
33
Does this mean that despite the judgment rescinding the sale, the
right to the fruits belonged to, and remained enforceable by,
Equatorial?
34
31
120
First and foremost is that the petitioners acted in bad faith to render
Paragraph 8 inutile.
xxx xxx xxx
36
Since Equatorial is a buyer in bad faith, this finding renders the sale to
it of the property in question rescissible. We agree with respondent
Appellate Court that the records bear out the fact that Equatorial was
aware of the lease contracts because its lawyers had, prior to the sale,
studied the said contracts. As such, Equatorial cannot tenably claim to be a
purchaser in good faith, and, therefore, rescission lies.
xxx xxx xxx
As also earlier emphasized, the contract of sale between Equatorial and
Carmelo is characterized by bad faith, since it was knowingly entered into
in violation of the rights of and to the prejudice of Mayfair. In fact, as
correctly observed by the Court of Appeals, Equatorial admitted that its
lawyers had studied the contract of lease prior to the sale. Equatorials
knowledge of the stipulations therein should have cautioned it to look
further into the agreement to determine if it involved stipulations that
would prejudice its own interests.
xxx xxx xxx
On the part of Equatorial, it cannot be a buyer in good faithbecause it
bought the property with notice and full knowledge that Mayfair had a
right to or interest in the property superior to its own. Carmelo and
Equatorial took unconscientious advantage of Mayfair. (Italics supplied)
37
121
Thus, petitioner was and still is entitled solely to the return of the
purchase price it paid to Carmelo; no more, no less. This Court has
firmly ruled in the mother case that neither of them is entitled to
any consideration of equity, as both took unconscientious advantage
of Mayfair.
38
39
The court a quo ruled, inter alia, that the cause of action of petitioner
(plaintiff in the case below) had been barred by a prior judgment of
this Court in GR No. 106063, the mother case.
Although it erred in its interpretation of the said Decision when it
argued that the rescinded Deed of Absolute Sale was void, we hold,
nonetheless, that petitioners cause of action is indeed barred by a
prior judgment of this Court. As already discussed, our Decision
in GR No. 106063 shows that petitioner is not entitled to back
rentals, because it never became the owner of the disputed properties
due to a failure of delivery. And even assuming arguendo that there
was a valid delivery, petitioners bad faith negates its entitlement to
the civil fruits of ownership, like interest and rentals.
Under the doctrine of res judicata or bar by prior judgment, a
matter that has been adjudicated by a court of competent jurisdiction
must be deemed to have been finally and conclusively settled if it
arises in any subsequent litigation between the same parties and for
the same cause. Thus, [a] final judgment on the merits rendered by
a court of competent jurisdiction is conclusive as to the rights of the
parties and their privies and constitutes an absolute bar to
subsequent actions involving the same claim, demand, or cause of
action. Res judicata is based on the ground that the party to be
affected, or some other with whom he is in privity, has litigated the
same matter in a former action in a court of competent jurisdiction,
and should not be permitted to litigate it again.
40
41
42
It frees the parties from undergoing all over again the rigors of
unnecessary suits and repetitive trials. At the same time, it prevents
the clogging of court dockets. Equally important, it stabilizes rights
and promotes the rule of law.
122
The Supreme Court in the Equatorial case, G.R. No. 106063 has
categorically stated that the Deed of Absolute Sale dated July 31, 1978 has
been
rescinded
subjecting
the
present
complaint
to res
judicata. (Emphasis in the original)
43
Hence, the trial court decided the Motion to Dismiss on the basis of
res judicata, even if it erred in interpreting the meaning of
rescinded as equivalent to void. In short, it ruled on the ground
raised; namely, bar by prior judgment. By granting the Motion,
it disposed correctly, even if its legal reason for nullifying the sale
was wrong. The correct reasons are given in this Decision.
WHEREFORE, the Petition is hereby DENIED. Costs against
petitioner.
SO ORDERED.
Davide,
Jr. (C.J.), Quisumbing, Pardo, Buena,YnaresSantiago and Carpio, JJ., concur.
Bellosillo, J., I join the dissent of J. Gutierrez.
Melo, J., Please see concurring opinion.
123
"4. The Owner agrees that at any time before the expiration of the
terms of this lease, the Lessee may purchase the said property by
paying to the owner, in cash, the full value thereof as above fixed,
less all payments theretofore made under this agreement, for the use
of said property." On March 3, 1934, that is, ten months after the
execution of the contract Exhibit A, above-quoted, the same parties
entered into another contract (Exhibit B) of the same tenor, except with
respect to the article and the terms of payment, which are as follows:
"1. No. 400 Piccolo Inst. Water Heater which the Lessee acknowledges
having received in good' state and condition, and the value of which is
hereby mutually agreed to be P95, subject to and under the terms and
conditions hereinafter specified.
"2. The Lessee hereby agrees
"(1) To pay to the Owner, at its office above stated, for the use of the
above described property, the sum of P5 upon the signing of this
agreement, and a monthly rental of P5, on or before the 5th day of each
succeeding month, beginning with the month next ensuing the date
thereof."
125
The complaint has to do not only with the collection of rentals, but
also, implicitly, with the rescission of the two contracts of lease of
personal property for non-compliance with the obligation to pay
rentals (art. 1124, Civil Code), and the personal delivery thereof (sec.
262, Act No. 190). With respect to the complaint for the rescission of
the contract of lease of personal property and the personal delivery
thereof, the Court of First Instance of Manila has original exclusive
jurisdiction to take cognizance thereof irrespective of the amount of
the due and unpaid rentals.
The trial court, therefore, had original jurisdiction to take
cognizance of the complaint.
As to the first assignment of error, wherein it is alleged that the
trial court erred in holding that the two contracts Exhibits A and B
are contracts of lease and not of sale of personal property on
installment, we have seen above that in both contracts the
defendant, Alfredo B. Calupitan, paid in advance P5 for the kitchen
stove (Exhibit A) and another P5 for the water heater (Exhibit B),
plus P4 and P5 every month for said stove and water heater,
respectively. The price of the stove is P60 and that of the water
heater, P95, the said defendant being able to purchase said goods at
said prices, respectively, before the expiration of the period of the
alleged lease, deducting in each case the amounts already paid
therefor. The periods of the alleged leases have not been fixed in the
contracts; but considering the prices of the goods and monthly
payments to be made, said periods are the number of months which
would result by dividing P60 by P4, which is the supposed monthly
rental of the stove, and P95 by P5, which is supposed to be the
monthly rental of the water heater, that is, 15 and 18 months,
respectively. In the accounts Exhibits A-1 and B-1 of the said
defendant, which the plaintiff carries, the monthly payments made
by the former to the latter for said goods were made to appear as
paid upon the account of their values and were deducted therefrom,
stating the balances after each monthly payment; and in the receipt
issued to the said defendant on March 8, 1935 (Exhibit 1) there was
JJ.,
Judgment reversed.
__________
127
SERAFIN
B.
YNGSON,
plaintiff-appellant, vs. THE
HON.
SECRETARY OF AGRICULTURE and NATURAL RESOURCES,
ANITA V. DE GONZALES and JOSE M. LOPEZ, defendantsappellees.
Public Land Act; Leases; Until public lands are released as alienable or
disposable neither the Bureau of Lands nor the Bureau of Fisheries may
lease or otherwise dispose of said lands.It is elementary in the law
governing the disposition of lands of the public domain that until timber or
forest lands are released as disposable and alienable neither the Bureau of
Lands nor the Bureau of Fisheries has authority to lease, grant, sell, or
otherwise dispose of these lands for homesteads, sales patents, leases for
grazing or other purposes, fishpond leases, and other modes of utilization.
(Mapa v. Insular Government, 10 Phil. 175; Ankron v. Government of the
Philippine Islands, 40 Phil. 10; Vda. de Alfafara v. Mapa, 95 Phil. 125;
Director of Forestry v. Muoz, 23 SCRA 1184).
Same; Same: Fisheries Act; Bureau of Fisheries has no jurisdiction to
dispose of swamplands or mangrove lands while same classified as forest or
timberland.The Bureau of Fisheries has no jurisdiction to administer and
dispose of swamplands or mangrove lands forming part of the public
domain while such lands are still classified as forest land or timberland
and not released for fishery or other purposes.
Same; Same; Same; Applications to lease mangrove or swampland for
fishpond purposes are premature if filed before their release to the Bureau of
Fisheries.All the applications being premature, not one of the applicants
can claim to have a preferential right over another. The priority given in
paragraph d of Section 14 is only for those applications filed so close in
time to the actual opening of the swampland for disposition and utilization,
within a period of one year, as to be given some kind of administrative
preferential treatment. Whether or not the administrative agencies could
validly issue such an administrative order is not challenged in this case.
The validity of paragraph d is not in issue because petitioner-appellant
Yngson is clearly not covered by the provision. His application was filed
almost two years before the release of the area for fishpond purposes. The
private respondents, who filed their applications within the one-year
period, do not object to sharing the area with the petitioner-appellant, in
spite of the fact that the latter has apparently the least right to the
fishpond leases. As a matter of fact, the respondent Secretarys order states
that all three applications must be considered as having been filed at the
same time on the day the area was released to the Bureau of Fisheries and
to share the lease of the 66 hectares among the three of them equally. The
private respondents accept this order. They pray that the decision of the
lower court be affirmed in toto.
Same; Same; Same; Statutes;Administrative Law; Interpretation of
Executive Branch that rejected premature applications for fishpond leases
shall be considered filed at the same time when public land is released for
fishpond purposes entitled to controlling weight.The Office of the
President holds the view that the only purpose of the provision in question
is to redeem a rejected premature application and to consider it filed as of
the date the area was released and not to grant a premature application a
better right over another of the same category. We find such an
interpretation as an exercise of sound discretion which should not be
disturbed. In the case of Salaria v. Buenviaje (81 SCRA 722) we reiterated
the rule that the construction of the officer charged with implementing and
enforcing the provision of a statute should be given controlling weight.
Similarly, in Pastor v. Echavez (79 SCRA 220) we held that in the absence
of a clear showing of abuse, the discretion of the appropriate department
head must be respected. The records show that the above rulings should
also apply to the present case.
Same; Contempt; Petitioner failed to show that entry by respondents on
lands in question disturbed the proper administration of justice.The
petitioner has failed to show that the acts committed by the respondents
were a direct disturbance in the proper administration of justice and
processes of the law which constitutes contempt of court. If there were any
violations of petitioners rights, he should resort to PACLAP which issued
the resolution between him and respondents or file, as he alleged he did, a
criminal complaint or other action before the courts. The motion also raises
128
considered as communal forest and therefore not yet available for fishpond
purposes.
On March 19, 1952, petitioner-appellant Serafin B. Yngson filed a
similar application for fishpond permit with the Bureau of Fisheries
followed by those of the respondents-appellees, Anita de Gonzales and Jose
M. Lopez, who filed their respective applications with the same bureau on
March 19 and April 24, 1958. When the applications were filed by the
aforesaid parties in the instant case, said area was not yet available for
fishpond purposes and the same was only released for said purpose on
January 14, 1954. The conflicting claims of the aforesaid parties were
brought to the attention of the Director of the Bureau of Fisheries who
issued an order on April 10, 1954 awarding the whole area in favor of the
petitioner-appellant and rejecting the claims of the respondents-appellees
(pp. 1-3, Rec. on Appeal). Appellants Anita V. de Gonzales and Jose M.
Lopez appealed the order of the Director of Fisheries to the Department of
Agriculture and Natural Resources where their-appeals were docketed as
D.A.N.R. Cases Nos. 901 and 901-A (p. 3, Rec. on Appeal).
In an order dated April 5, 1955, the Honorable Secretary of the
Department of Agriculture and Natural Resources set aside the order of the
Director of the Bureau of Fisheries and caused the division of the area in
question into three portions giving each party an area of one-third (1/3) of
the whole area covered by their respective applications (pp. 4-5, Rec. on
Appeal). Appellant filed a petition for review dated July 6, 1955 from the
aforesaid order of the Department of Agriculture and Natural Resources
but the same was dismissed by the Office of the President of the
Philippines on December 20, 1955 (pp. 5-8, Rec. on Appeal). A motion for
reconsideration filed by the appellant on February 15, 1956 was likewise
denied on August 3, 1956. A second and third motion for reconsiderations
filed by the appellant was also denied on August 5, 1958 and October 26,
1960, respectively (p. 18, Rec. on Appeal).
III
THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT.
other action before the courts. The motion also raises factual
considerations including boundaries and geographical locations more
proper for a trial court.
We have held that contempt of court presupposes contumacious
and arrogant defiance of the court. (De Midgely v. Ferandos, 64
SCRA 23; Matutina v. Judge Buslon, 109 Phil. 140, 142)
The petitioner has failed to show a contempt of court which we
can take cognizance of and punish. If any of his property or other
rights over his one-thirds share of the disputed property are
violated, he can pursue the correct action before the proper lower
court.
WHEREFORE, the judgment appealed from is hereby
AFFIRMED. The motion for contempt is also DENIED for lack of
merit. Costs against petitioner-appellant.
SO ORDERED.
Teehankee (Chairman), Plana,Escolin and Relova,
JJ., concur.
Melencio-Herrera and Vasquez, JJ., on leave.
Judgment affirmed. Motion for contempt dented.
Notes.A Spanish document entitled Estadistica is not
considered a title. (Mun. of Santiago, Isabela vs. Court of
Appeals, 120 SCRA 734.)
The Court takes judicial notice of the fact that in all fishpond
permits issued by the Bureau of Fisheries there is the condition that
such permit does not authorize the permittee to interfere with any
prior claim by settlement or occupancy within the areas granted to
him until the consent of the occupant or settler is first had and
obtained or until such claim shall have been legally extinguished.
(Republic vs. De los Angeles, 44 SCRA 255.)
132
133
lessee. As possessors of the building and the land on which it stands based
on a right derived from a mere sublessor, appellees can invoke no right of
possession superior to that of their sublessor, (Sipin v. Court, 74 Phil. 649;
Madrigal v. Ang Sam To, 46 O.G. 2173), who in turn derives his right to
possession from his lessor, appellant herein. As mere sublessees of
appellants lessee, therefore, appellees can have no right to the premises
better than the original lessee, herein appellant. (Italics ours. The
Philippine Consolidated Freight Lines, Inc. v. Emiliano Ajon, et al., G.R.
Nos. L-10206-08, April 16, 1958)
The view taken by appellees is untenable for several reasons. In the
first place, appellees are, as already stated, occupying not only the land of
the government, but the building of appellant as well. If appellees are in
possession of the land, it is only because appellants building stands
thereon. Their possession of the land is therefore, dependent on and cannot
be dissociated from their possession of the building x x x. (Emphasis
supplied. The Phil. Consolidated Freight Lines, Inc. v. Emiliano Ajon, et
al., supra.)
been done in good faith the right to appropriate as his own the thing so
built, sown, or planted, upon paying the indemnity provided for in Articles
453 and 454. The builder, the planter, and the sower have the natural
possession of the land on which they built,planted, or sowed, because had
they lacked this tenancy or possession in fact, the building, planting, or
sowing would not have been possible x x x
The right of a builder in good faith to retain both the improvements
and the land on which they have been made until the necessary and useful
expenses have been paid has been recognized by the Supreme Court in
other cases (Martines v. Baganus, 28 Phil. 550; De Guzman v. De la
Fuente, 55 Phil. 501).
Viewed in the light of the rules expressed in the above cited cases of
Chian Kian and Baquiran, the Court of Appeals should have found the
herein appellees-lessees of the house, and for all legal purposes, of the lot
on which it was built as well. The occupancy and tenancy of the first cannot
be dissociated from the second. Consequently, We cannot hold the herein
appellant to have made it false, much less a malicious declaration when
she wrote that Bonifacio Gotico was renting one of my lands in Tacloban
and for almost a year now did not pay the rent.
ART. 1652. The sublessee is subsidiarily liable to the lessor for any
rent due from the lessee. However, the sublessee shall not be responsible
beyond the amount of rent due from him in accordance with the terms of
the sublease, at the time of the extra-judicial demand by the lessor.
Payments of rent in advance by the sublessee shall be deemed not to
have been made, so far as the lessors claim is concerned, unless said
payments were effected in virtue of the custom of the place.
138
140
On May 18, 1990, the lower court issued an Order referring the
case to the Department of Agrarian Reform for preliminary
determination and certification as to whether it was proper for trial
by said court.
On July 4, 1990, the lower court issued another Order referring
the case to Branch 172 of the RTC of Valenzuela which was
designated to hear cases involving agrarian land, after the
Department of Agrarian Reform issued a letter-certification stating
that referral to it for preliminary determination is no longer
required.
On July 16, 1990, the lower court issued an Order denying the
Motion to Intervene, holding that Lanozos rights may well be
ventilated in another proceeding in due time.
After trial on the merits, the RTC of Valenzuela, Branch 172
rendered its Decision on January 4, 1993, dismissing the Complaint
and ordering petitioner to pay Victor P30,000.00 as attorneys fees.
On appeal to the CA, the Decision was affirmed in toto.
Hence, the instant Petition assigning the following errors:
5
(A)
FIRST ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
THE PROVISION ON THE NOTICE TO EXERCISE OPTION WAS NOT
TRANSMISSIBLE.
(B)
SECOND ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
THE NOTICE Of OPTION MUST BE SERVED BY DKC UPON
ENCARNACION BARTOLOME PERSONALLY.
(C)
As early as 1903, it was held that (H)e who contracts does so for
himself and his heirs. In 1952, it was ruled that if the predecessor
was duty-bound to reconvey land to another, and at his death the
reconveyance had not been made, the heirs can be compelled to
execute the proper deed for reconveyance. This was grounded upon
the principle that heirs cannot escape the legal consequence of a
transaction entered into by their predecessor-in-interest because
they have inherited the property subject to the liability affecting
their common ancestor.
It is futile for Victor to insist that he is not a party to the contract
because of the clear provision of Article 1311 of the Civil Code.
Indeed, being an heir of Encarnacion, there is privity of interest
between him and his deceased mother. He only succeeds to what
rights his mother had and what is valid and binding against her is
also valid and binding as against him. This is clear from Paraaque
Kings Enterprises vs. Court of Appeals, where this Court rejected a
similar defense
12
13
14
15
142
pleadings also alleged collusion between him and respondent Santos which
defeated the exercise by petitioner of its right of first refusal.
In order then to accord complete relief to petitioner, respondent
Raymundo was a necessary, if not indispensable, party to the case. A
favorable judgment for the petitioner will necessarily affect the rights of
respondent Raymundo as the buyer of the property over which petitioner
would like to assert its right of first option to buy.
17
ATTY. MOJADO:
One request, Your Honor. The last
payment which was allegedly made in
January 1990 just indicate in that
stipulation that it was issued
November of 1989 and postdated
Janaury 1990 and then we will admit
all.
COURT:
All reservation fee?
ATTY. MOJADO:
Yes, Your Honor.
COURT:
All as part of the lease?
ATTY. MOJADO:
Reservation fee, Your Honor. There
was no payment with respect to
payment of rentals.
18
Petitioner also paid the P15,000.00 monthly rental fee on the subject
property by depositing the same in China Bank Savings Account No.
1-04-02558-I-1, in the name of Victor as the sole heir of Encarnacion
Bartolome, for the months of March to July 30, 1990, or a total of
five (5) months, despite the refusal of Victor to turn over the subject
property.
Likewise, petitioner complied with its duty to inform the other
party of its intention to exercise its option to lease through its letter
dated March 12, 1990, well within the twoyear period for it to
exercise its option. Considering that at that time Encarnacion
Bartolome had already passed away, it was legitimate for petitioner
to have addressed its letter to her heir.
It appears, therefore, that the exercise by petitioner of its option
to lease the subject property was made in accordance with the
contractual provisions. Concomitantly, private respondent Victor
Bartolome has the obligation to surrender possession of and lease the
premises to petitioner for a period of six (6) years, pursuant to the
Contract of Lease with Option to Buy.
Coming now to the issue of tenancy, we find that this is not for
this Court to pass upon in the present petition. We note that the
Motion to Intervene and to Dismiss of the alleged tenant, Andres
Lanozo, was denied by the lower court and that such denial was
never made the subject of an appeal. As the lower court stated in its
Order, the alleged right of the tenant may well be ventilated in
another proceeding in due time.
19
20
21
143
and cannot be the source of any right nor the creator of any
obligation between the parties. (Taedo vs. Court of Appeals, 252
SCRA 80[1996])
Grandchildren are not entitled to provisional support from the
funds of the decedents estate. (Estate of Hilario M. Ruiz vs. Court of
Appeals, 252 SCRA 541 [1996])
o0o
147