7/28/2019 Sales 1 to 9 6-26-13

1/59

THIRD DIVISION

[G.R. No. 166714. February 9, 2007.]

AMELIA S. ROBERTS, petitioner, vs. MARTIN B. PAPIO, respondent.

D E C I S I O N

CALLEJO, SR., Jp:

Assailed in this petition for review on certiorariis the Decision1 of the Court of Appeals (CA), in CA-G.R.CV No. 69034 which reversed and set aside the Decision 2 of the Regional Trial Court (RTC), Branch 150,Makati City, in Civil Case No. 01-431. The RTC ruling had affirmed with modification the Decision3of theMetropolitan Trial Court (MeTC), Branch 64, Makati City in Civil Case No. 66847. The petition likewiseassails the Resolution of the CA denying the motion for reconsideration of its decision.

The Antecedents

The spouses Martin and Lucina Papio were the owners of a 274-square-meter residential lot located inMakati (now Makati City) and covered by Transfer Certificate of Title (TCT) No. S-44980.4 In order tosecure a P59,000.00 loan from the Amparo Investments Corporation, they executed a real estatemortgage on the property. Upon Papio's failure to pay the loan, the corporation filed a petition for theextrajudicial foreclosure of the mortgage.

Since the couple needed money to redeem the property and to prevent the foreclosure of the real estatemortgage, they executed a Deed of Absolute Sale over the property on April 13, 1982 in favor of MartinPapio's cousin, Amelia Roberts. Of the P85,000.00 purchase price, P59,000.00 was paid to the AmparoInvestments Corporation, while the P26,000.00 difference was retained by the spouses. 5As soon as thespouses had settled their obligation, the corporation returned the owner's duplicate of TCT No. S-44980,which was then delivered to Amelia Roberts.

Thereafter, the parties (Amelia Roberts as lessor and Martin Papio as lessee) execof lease dated April 15, 1982, effective May 1, 1982. The contract was subject to ra like period at the option of the lessor, the lessee waiving thereby the benefits ofThe lessee was obliged to pay monthly rentals of P800.00 to be deposited in the leBank of America, Makati City branch.6

On July 6, 1982, TCT No. S-44980 was cancelled, and TCT No. 114478 was issuedRoberts as owner.7

Martin Papio paid the rentals from May 1, 1982 to May 1, 1984, and thereafter, fothen failed to pay rentals, but he and his family nevertheless remained in possessperiod of almost thirteen (13) years.

In a letter dated June 3, 1998, Amelia Roberts, through counsel, reminded Papio tmonthly rental of P2,500.00 from January 1, 1986 to December 31, 1997, and P101998 to May 31, 1998; thus, his total liability was P410,000.00. She demanded thaproperty within 15 days from receipt of the letter in case he failed to settle the amrefused to pay, Papio received another letter from Roberts on April 22 , 1999, demthat he and his family vacate the property.10Again, Papio refused to leave the p

On June 28, 1999, Amelia Roberts, through her attorney-in-fact, Matilde Aguilar, funlawful detainer and damages against Martin Papio before the MeTC, Branch 64,

the following in her complaint:

Sometime in 1982 she purchased from defendant a 274-sq-m residential house an1046 Teresa St., Brgy. Valenzuela, Makati City.12Upon Papio's pleas to continue they executed a two-year lease contract13 which commenced on May 1, 1982. TP800.00. Thereafter, TCT No. 11447814 was issued in her favor and she paid all the property. When the term of the lease expired, she still allowed Papio and his fthe property. However, he took advantage of her absence and stopped payment band refused to pay despite repeated demands. In June 1998, she sent a demand counsel requiring Papio to pay rentals from January 1986 up to May 1998 and to vproperty. The accumulated arrears in rental are as follows: (a) P360,000.00 from December 31, 1997 at P2,500.00 per month; and (b) P50,000.00, from January 1at P10,000.00 per month.16 She came to the Philippines but all efforts at an amifutile. Thus, in April 1999, she sent the final demand letter to defendant directing pay and immediately vacate the leased premises.17

http://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

2/59

7/28/2019 Sales 1 to 9 6-26-13

3/59

She further alleged that defendant's own inaction belies his claim of ownership over the property: first, hefailed to cause any notice or annotation to be made on the Register of Deed's copy of TCT No. 114478 inorder to protect his supposed adverse claim; second, he did not institute any action against Roberts tocompel the execution of the necessary deed of transfer of title i n his favor; and third, the defense ofownership over the property was raised only after Roberts demanded him to vacate the property.

Based solely on the parties' pleadings, the MeTC rendered its January 18, 2001 Decision30in favor ofRoberts. The falloof the decision reads:

WHEREFORE, premises considered, finding this case for the plaintiff, the defendant ishereby ordered to:

1.Vacate the leased premises known as 1046 Teresa St., Valenzuela, Makati City;

2.Pay plaintiff the reasonable rentals accrual for the period January 1, 1996 toDecember 13, 1997 at the rate equivalent to Php2,500.00 per month and thereafter,Php10,000.00 from January 1998 until he actually vacates the premises;

3.Pay the plaintiff attorney's fees as Php20,000.00; and

4.Pay the costs.

SO ORDERED.31

The MeTC held that Roberts merely tolerated the stay of Papio in the property after the expiration of thecontract of lease on May 1, 1984; hence, she had a cause of action against him since the only elements inan unlawful detainer action are the fact of lease and the expiration of its term. The defendant as tenantcannot controvert the title of the plaintiff o r assert any right adverse thereto or set up any inconsistentright to change the existing relation between them. The plaintiff need not prove her ownership over theproperty inasmuch as evidence of ownership can be admitted only for the purpose of determining thecharacter and extent of possession, and the amount of damages arising from the detention.

The court further ruled that Papio made no denials as to the existence and authenticity of Roberts' title tothe property. It declared that "the certificate of title is indefeasible in favor of the person whose nameappears therein and incontrovertible upon the expiration of the one-year period from the date of issue,"and that a Torrens title, "which enjoys a strong presumption of regularity and validity, is generally a

conclusive evidence of ownership of the land referred to therein."

As to Papio's claim that the transfer of the property was one with right of repurchbe bereft of merit since the Deed of Sale is termed as "absolute and unconditionalthe right to repurchase is not a right granted to the seller by the buyer in a subseqrather, a right reserved in the same contract of sale. Once the deed of absolute sacan no longer reserve the right to repurchase; any right thereafter granted in a sebe a right of repurchase but some other right.

As to the receipts of payment signed by Ventura, the court gave credence to Rob

Affidavit that she authorized Ventura only to collect rentals from Papio, and not toprice. Papio's letter of January 31, 1998, which called her attention to the fact thapeople without written authority to collect money since 1985, bolstered the court'spayment, if at all intended for the supposed repurchase, never redounded to the bRoberts.

Papio appealed the decision to the RTC, alleging the following:

I.

THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOUTRIGHT ON THE GROUND OF LACK OF CAUSE OF ACTION.

II.

THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THE DOCEVIDENCE ADDUCED BY DEFENDANT-APPELLANT WHICH ESTABLISHEREPURCHASE TRANSACTION EXISTED BETWEEN THE PARTIES ONLY T

APPELLEE WITHHELD THE EXECUTION OF THE ABSOLUTE DEED OF SATRANSFER OF TITLE OF THE SAME IN DEFENDANT-APPELLANT'S NAM

III.

THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THAT THEPLAINTIFF-[APPELLEE] AND OF HER HUSBAND ADDRESSED TO DEFEN

APPELLANT AND HIS WIFE ARE IN THEMSELVES ADMISSION AND/OR OF THE FACT THAT DEFENDANT-APPELLANT HAD DULY PAID PLAINTITHE PURCHASE AMOUNT COVERING THE SUBJECT PROPERTY.

http://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

4/59

IV.

THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOR EJECTMENTOUTRIGHT CONSIDERING THAT PLAINTIFF-APPELLEE WHO IS [AN] AMERICANCITIZEN AND RESIDENT THEREIN HAD NOT APPEARED IN COURT ONCE, NEITHERWAS HER ALLEGED ATTORNEY-IN-FACT, MATILDE AGUILAR NOR [DID] THE LATTEREVER [FURNISH] THE LOWER COURT A SPECIAL POWER OF ATTORNEY AUTHORIZINGHER TO APPEAR IN COURT IN BEHALF OF HER PRINCIPAL. 32

Papio maintained that Roberts had no cause of action for eviction because she had already ceded her rightthereto when she allowed him to redeem and reacquire the property upon payment of P250,000.00 to

Ventura, her duly authorized representative. He also contended that Roberts's claim that the authority ofVentura is limited only to the collection of the rentals and not of the purchase price was a mereafterthought, since her appended Affidavit was executed sometime in October 1999 when the proceedingsin the MeTC had already started.

On March 26, 2001, Roberts filed a Motion for Issuance of Writ of Execution. 33 The court granted themotion in an Order34 dated June 19, 2001. Subsequently, a Writ of Execution 35 pending appeal wasissued on September 28, 2001. On October 29, 2001, Sheriff Melvin M. Alidon enforced the writ andplaced Roberts in possession of the property.

Meanwhile, Papio filed a complaint with the RTC of Makati City, for specific performance with damages

against Roberts. Papio, as plaintiff, claimed that he entered into a contract of sale with pacto de retrowithRoberts, and prayed that the latter be ordered to execute a Deed of Sale over the property in his favorand transfer the title over the property to and in his name. The case was docketed as Civil Case No. 01-851.

On October 24, 2001, the RTC rendered judgment affirming the appealed decision of the MeTC.Thefalloof the decision reads:36

Being in accordance with law and the circumstances attendant to the instant case, thecourt finds merit in plaintiff-appellee's claim. Wherefore, the challenged decision datedJanuary 18, 2001 is hereby affirmed in toto.

SO ORDERED.37

Both parties filed their respective motions for reconsideration. 38 In an Order392002, the court denied the motion of Papio but modified its decision declaring thataccrued rentals should commence from January 1986, not January 1996. The decdecision reads:

Wherefore, the challenged decision dated January 18, 2001 is hereby afmodification that defendant pay plaintiff the reasonable rentals accruedJanuary 1, 1986 to December [31, 1997] per month and thereafter and

month] from January 1998 to October 28, 2001 when defendant-appellvacated the subject leased premises.

SO ORDERED.40

On February 28, 2002, Papio filed a petition for review 41 in the CA, alleging thatfinding that he had reacquired the property from Roberts for P250,000.00, but theexecute a deed of absolute sale and transfer the title in his favor. He insisted thaterred in giving credence to petitioner's claim that she did not authorize Ventura tofor the purchase price of the property, citing Roberts' letter dated July 25, 1986 anRoberts to Ventura of even date. He also averred that the MeTC and the RTC erredocumentary evidence in deciding the case.

On August 31, 2004, the CA rendered judgment granting the petition. The appella

decision of the RTC and ordered the RTC to dismiss the complaint. The decretal pDecision42 reads:

WHEREFORE, the judgment appealed from is hereby REVERSED andASIDE and a new one entered: (1) rendering an initial determination thAbsolute Sale" dated April 13, 1982 is in fact an equitable mortgage undof the New Civil Code; and (2) resolving therefore that petitioner Martinentitled to possession of the property subject of this action; (3) But suchof ownership and equitable mortgage are not clothed with finality and wa binding and conclusive adjudication on the merits with respect to the ownership and such judgment shall not bar an action between the samerespecting title to the land, nor shall it be held conclusive of the facts ththe case between the same parties upon a different cause of action notpossession. All other counterclaims for damages are hereby dismissed. respondent.

http://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

5/59

SO ORDERED.43

According to the appellate court, although the MeTC and RTC were correct in holding that the MeTC hadjurisdiction over the complaint for unlawful detainer, they erred in ignoring Papio's defense of equitablemortgage, and in not finding that the transaction covered by the deed of absolute sale by and betweenthe parties was one of equitable mortgage under Article 1602 of the New Civil Code. The appellate courtruled that Papio retained the ownership of the property and its peaceful possession; hence, the MeTCshould have dismissed the complaint without prejudice to the outcome of Civ il Case No. 01-851 relative to

his claim of ownership over the property.

Roberts filed a motion for reconsideration of the decision on the following grounds:

I.Petitioner did not allege in his Answer the defense of equitable mortgage; hence, thelower courts [should] not have discussed the same;

II.Even assuming that Petitioner alleged the defense o f equitable mortgage, the MeTCcould not have ruled upon the said defense,

III.The M[e]TC and the RTC were not remiss in the exercise of their jurisdiction. 44

The CA denied the motion.

In this petition for review, Amelia Salvador-Roberts, as petitioner, avers that:

I.THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN DECLARINGTHAT THE M[e]TC AN(D) THE RTC WERE REMISS IN THE EXERCISE OF THATJURISDICTION ACQUIRED BECAUSE IT DID NOT CONSIDER ALL PETITIONER'SDEFENSE OF EQUITABLE MORTGAGE.

II.THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN REQUIRINGTHE M[e]TC AND RTC TO RULE ON A DEFENSE WHICH WAS NEVER AVAILEDOF BY RESPONDENT.45

Petitioner argues that respondent is barred from raising the issue of equitable mortgage because his

defense in the MeTC and RTC was that he had repurchased the property from the petitione r; by such

representation, he had impliedly admitted the existence and validity of the deed oownership of the property was transferred to petitioner but reverted to him upon right. The respondent even filed a complaint for specific performance with damagin the RTC of Makati City, docketed as Civil Case No. 01-851 entitled " Martin B. PaRoberts." In that case, respondent claimed that his transaction with the petitionerde retro. Petitioner posits that Article 1602 of the Civil Code applies only when thealleges this defense. Consequently, the appellate court was proscribed from findinrespondent had entered into an equitable mortgage under the deed of absolute sa

Petitioner further avers that respondent was ably represented by counsel and wasbetween a pacto de retrosale and an equitable mortgage; thus, he could not havdeclaring that he repurchased the property from her.

As to whether a sale is in fact an equitable mortgage, petitioner claims that the isaddressed and resolved by the RTC in an action to enforce ownership, not in an eMeTC where the main issue involved is possession de facto. According to her, the CA Decision is that, in resolving an ejectment case, the lower court must pass upo(in this case, by applying the presumptions under Art. 1602) which, in effect, wouyardstick as though it is the main action. The procedure wi ll not only promote muplace the new owner in the absurd position of having to first seek the declaration filing an ejectment suit.

Respondent counters that the defense of equitable mortgage need not be particulpetitioner of the nature and character of the repurchase agreement. He contends discussed in his pleadings before the trial and appellate courts all the surroundingcase, such as the relative situation of the parties at the time; their attitude, acts, cdeclarations; and the negotiations between them that led to the repurchase agreethat the CA correctly ruled that the contract was one of equitable mortgage. He inallowed him to redeem and reacquire the property, and accepted his full payment

Ventura, the authorized representative, as shown by the signed receipts.

The threshold issues are the following: (1) whether the MeTC had jurisdiction in adetainer to resolve the issue of who between petitioner and respondent is the ownentitled to the de factopossession thereof; (2) whether the transaction entered inunder the Deed of Absolute Sale and the Contract of Lease is an equitable mortgaand (3) whether the petitioner is entitled to the material or de factopossession of

http://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

6/59

The Ruling of the Court

On the first issue, the CA ruling (which upheld the jurisdiction of the MeTC to resolve the issue of whobetween petitioner or respondent is the lawful owner of the property, and is thus entitled to the materialor de factopossession thereof) is correct. Section 18, Rule 70 of the Rules of Court provides that when thedefendant raises the defense of ownership in his pleadings and the question of possession cannot beresolved without deciding the issue of ownership, the issue of ownership shall be resolved only todetermine the issue of possession. The judgment rendered in an action for unlawful detainer shall be

conclusive with respect to the possession only and shall in no wise bind the title o r affect the ownership ofthe land or building. Such judgment would not bar an action between the same parties respecting title tothe land or building.46

The summary nature of the action is not changed by the claim of ownership of the property of thedefendant.47 The MeTC is not divested of its jurisdiction over the unlawful detainer action simplybecause the defendant asserts ownership over the property. CcAESI

The sole issue for resolution in an action for unlawful detainer is material or de factopossession of theproperty. Even if the defendant claims juridical possession or ownership over the property based on aclaim that his transaction with the plaintiff relative to the property is merely an equitable mortgage, or thathe had repurchased the property from the plaintiff, the MeTC may still delve into and take cognizance ofthe case and make an initial or provisional determination of who between the plaintiff and the defendant isthe owner and, in the process, resolve the issue of who is entitled to the possession. The MeTC, inunlawful detainer case, decides the question of ownership only if it is intertwined with and necessary toresolve the issue of possession.48 The resolution of the MeTC on the ownership of the property is merelyprovisional or interlocutory. Any question involving the issue of ownership should be raised and resolved ina separate action brought specifically to settle the question with finality, in this case, Civil Case No. 01-851which respondent filed before the RTC.

The ruling of the CA, that the contract between petitioner and respondent was an equitable mortgage, isincorrect. The fact of the matter is that the respondent intransigently alleged in his answer, and even inhis affidavit and position paper, that petitioner had granted him the right to redeem or repurchase theproperty at any time and for a reasonable amount; and that, he had, in fact, repurchased the property inJuly 1985 for P250,000.00 which he remitted to petitioner through an authorized representative whosigned receipts therefor; he had reacquired ownership and juridical possession of the property after hisrepurchase thereof in 1985; and consequently, petitioner was obliged to execute a deed of absolute saleover the property in his favor.

Notably, respondent alleged that, as stated in his letter to petitioner, he was giventhe property in 1982 within two years upon the payment of P53,000.00, plus petittrip to the Philippines from the USA and back; petitioner promised to sign the deedeven filed a complaint against the petitioner in the RTC, docketed as Civil Case Noperformance with damages to compel petitioner to execute the said deed of absolproperty presumably on the strength of Articles 1357 and 1358 of the New Civi l Cclaim that petitioner had given him the right to repurchase the property is antithetmortgage.

An equitable mortgage is one that, although lacking in some formality, form or wodemanded by a statute, nevertheless reveals the intention of the parties to changsecurity for a debt and contain nothing impossible or contrary to law.49A contraan equitable mortgage if the following requisites are present: (a) the parties enterdenominated as a contract of sale; and (b) the intention was to secure an existingmortgage.50 The decisive factor is the intentionof the parties.

In an equitable mortgage, the mortgagor retains ownership over the property butand sale at public auction upon failure of the mortgagor to pay his obligation.51retrosale, ownership of the property sold is immediately transferred to the vendeethe right of the vendor a retroto repurchase the property upon compliance with lerepurchase. The failure of the vendor a retroto exercise the right to repurchase wvests upon the vendee a retro, by operation of law, absolute title over the propert

One repurchases only what one has previously sold. The right to repurchase presuof sale between the same parties.53By insisting that he had repurchased the prothereby admitted that the deed of absolute sale executed by him and petitioner onfact and in law, a deed of absolute sale and not an equitable mortgage; hence, heover the property based on said deed. Respondent is, thus, estopped from assertiunder the deed of absolute sale is an equitable mortgage unless there is allegationpalpable mistake on the part of respondent;54 or a fraud on the part of petitionesuch allegation in his pleadings and affidavit. On the contrary, he maintained that property to him in July 1985 and acknowledged receipt of the purchase price thereP39,000.00 retained by Perlita Ventura. Respondent is thus bound by his admissioownership of the property and is barred from claiming o therwise.55

http://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

7/59

Respondent's admission that petitioner acquired ownership over the property under the April 13, 1982deed of absolute sale is buttressed by his admission in the Contract of Lease dated April 15, 1982 thatpetitioner was the owner of the property, and that he had paid the rentals for the duration of the contractof lease and even until 1985 upon its extension. Respondent was obliged to prove his defense thatpetitioner had given him the right to repurchase, and that petitioner obliged herself to resell the propertyfor P250,000.00 when they executed the April 13, 1982 deed of absolute sale.

We have carefully reviewed the case and find that respondent failed to adduce competent and credible

evidence to prove his claim.

As gleaned from the April 13, 1982 deed, the right of respondent to repurchase the property is notincorporated therein. The contract is one of absolute sale and not one with right to repurchase. The lawstates that if the terms of a contract are clear and leave no doubt upon the intention of the contractingparties, the literal meaning of its stipulations shall control. 56 When the language of the contract isexplicit, leaving no doubt as to the intention o f the drafters, the courts may not read into it any otherintention that would contradict its plain import. 57 The clear terms of the contract should never be thesubject matter of interpretation. Neither abstract justice nor the rule of liberal interpretation justifies thecreation of a contract for the parties which they did not make themselves, or the imposition upon oneparty to a contract or obligation to assume simply or merely to avoid seeming hardships. 58 Their truemeaning must be enforced, as it is to be presumed that the contracting parties know their scope andeffects.59As the Court held in Villarica, et al. v. Court of Appeals:60

The right of repurchase is not a right granted the vendor by the vendee in a subsequentinstrument, but is a right reserved by the vendor in the same instrument of sale as oneof the stipulations of the contract. Once the instrument of absolute sale is executed, thevendor can no longer reserve the right to repurchase, and any right thereafter grantedthe vendor by the vendee in a separate instrument cannot be a right of repurchase butsome other right like the option to buy in the instant case. 61

In Ramos v. Icasiano,62 we also held that an agreement to repurchase becomes a promise to sell whenmade after the sale because when the sale is made without such agreement the purchaser acquires thething sold absolutely; and, if he afterwards grants the vendor the right to repurchase, it is a new contractentered into by the purchaser as absolute owner. An option to buy or a promise to sell is different anddistinct from the right of repurchase that must be reserved by means of stipulations to that effect in thecontract of sale.63

There is no evidence on record that, on or before July 1985, petitioner agreed to srespondent for P250,000.00. Neither is there any documentary evidence showing authorized to offer for sale or sell the property for and in behalf of petitioner for Preceive the said amount from respondent as purchase price of the property. The rof a piece of land or any interest therein is through an agent, the authority of the otherwise, the sale shall be void64 and cannot produce any legal effect as to tranits lawful owner.65 Being inexistent and void from the very beginning, said contrratified.66Any contract entered into by Ventura for and in behalf of petitioner re

property is void and cannot be ratified by the l atter. A void contract produces no efavor of anyone.67

Respondent also failed to prove that the negotiations between him and petitioner offer to buy the property for P250,000.00, and that they later on agreed to the salsame amount. He likewise failed to prove that he purchased and reacquired the pevidence on record shows that petitioner had offered to sell the property for US$1leave it" basis in May 1984 upon the expiration of the Contract of Lease68 an by respondent which is why on December 30, 1997, petitioner and her husbandthe property to respondent for P670,000.00 inclusive of back rentals and the purcproperty under the April 13, 1982 Deed of absolute Sale. 69 The offer was again The final offer appears to have been made on January 11, 199870 but again, likenegotiations, no contract was perfected between the parties.

A contract is a meeting of minds between two persons whereby one binds himself

other, to give something or to render some service.71 Under Article 1318 of the Nno contract unless the following requisites concur:

(1)Consent of the contracting parties;

(2)Object certain which is the subject matter of the contract;

(3)Cause of the obligation which is established.

Contracts are perfected by mere consent manifested by the meeting of the offer athe thing and the cause which are to constitute the contract.72 Once perfected, parties and the obligations arising therefrom have the form of law between the pacomplied with in good faith. The parties are bound not only to the fulfillment of w

http://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

8/59

stipulated but also to the consequences which, according to their nature, may be in keeping with goodfaith, usage and law.73

There was no contract of sale entered into by the parties based on the Receipts dated July 1985 and June16, 1986, signed by Perlita Ventura and the letter of petitioner to respondent dated July 25, 1986. TEHDIA

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of anddeliver a determinate thing and the other, to pay therefor a price certain in money o r its

equivalent.74The absence of any of the essential elements will negate the existence of a perfectedcontract of sale. As the Court ruled in Boston Bank of the Philippines v. Manalo:75

A definite agreement as to the price is an essential element of a binding agreement tosell personal or real property because it seriously affects the rights and obligations ofthe parties. Price is an essential element in the formation of a binding and enforceablecontract of sale. The fixing of the price can never be left to the decision of one of thecontracting parties. But a price fixed by one of the contracting parties, if accepted bythe other, gives rise to a perfected sale.76

A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there ismerely an offer by one party without acceptance of the other, there is no contract.77 When the contractof sale is not perfected, it cannot, as an independent source of obligation, serve as a binding juridicalrelation between the parties.78

Respondent's reliance on petitioner's letter to him dated July 25, 1986 is misplaced. The letter reads infull:

7-25-86

Dear Martin & Ising,

Enclosed for your information is the letter written by my husband to Perlita. I hope thatyou will be able to convince your cousin that it's to her best interest to deposit thebalance of your payment to me of P39,000.00 in my bank acct. per our agreement andsend me my bank book right away so that we can transfer the title of the property.

Regards,

Amie79

We have carefully considered the letter of Perlita Ventura, dated July 18, 1986, anRoberts, dated July 25, 1986, where Ventura admitted having used the money of P39,000.00 without the latter's knowledge fo r the plane fare of Ventura's parents.refund the amount of P39,000.00, inclusive of interests, within one year. 80 Euge

Ventura and called her a thief for stealing his and petitioner's money and that of rwho allegedly told petitioner that she, Ising, loaned the money to her parents for USA. Neither Ventura nor Eugene Roberts declared in their letters that Ventura hawhich respondent gave to her.

Petitioner in her letter to respondent did not admit, either expressly or impliedly, hP211,000.00 from Ventura. Moreover, in her letter to petitioner, only a week earli

Ventura admitted having spent the P39,000.00 and pleaded that she be allowed twithin one (1) year, including interests.

Naririto ang total ng pera mo sa bankbook mo, P55,000.00 pati na yongmo at bale ang nagalaw ko diyan ay P39,000.00. Huwag kang mag-alalasa iyo sa loob ng isang taon pati interest.

Ate Per81

It is incredible that Ventura was able to remit to petitioner P211,000.00 before Julweek earlier, she was pleading to petitioner for a period of one year within which t

P39,000.00 to petitioner.

It would have bolstered his cause if respondent had submitted an affidavit of Ventremitted P211,000.00 out of the P250,000.00 she received from respondent in July1986.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed DecisioAppeals in CA-G.R. CV No. 69034 is REVERSED and SET ASIDE. The Decision of tCourt, affirmed with modification by the Regional Trial Court, is AFFIRMED.

SO ORDERED.

http://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/5232?search=gr%3A+%28166714%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

9/59

SECOND DIVISION

[G.R. No. 145470. December 9, 2005.]

SPS. LUIS V. CRUZ and AIDA CRUZ , petitioners, vs. SPS. ALEJANDROFERNANDO, SR., and RITA FERNANDO, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, Jp:

For resolution is a petition for review on certiorariunder Rule 45 of the Rules of Court, assailing theDecision1 dated October 3, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 61247, dismissingpetitioners' appeal and affirming the decision of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch79, in Civil Case No. 877-M-94.

The antecedent facts are as follows:

Luis V. Cruz and Aida Cruz (petitioners) are occupants of the front portion of a 710 -square meter propertylocated in Sto. Cristo, Baliuag, Bulacan. On October 21, 1994, spouses Alejandro Fernando, Sr. and RitaFernando (respondents) filed before the RTC a complaint for accion publicianaagainst petitioners,demanding the latter to vacate the premises and to pay the amount of P500.00 a month as reasonablerental for the use thereof. Respondents alleged in their complaint that: (1) they are owners of theproperty, having bought the same from the spouses Clodualdo and Teresita Glorioso (Gloriosos) per Deedof Sale dated March 9, 1987; (2) prior to their acquisition of the property, the Gloriosos offered to sell topetitioners the rear portion of the property but the transaction did not materialize due to petitioners'failure to exercise their option; (3) the offer to sell is embodied in a Kasunduandated August 6, 1983executed before the Barangay Captain; (4) due to petitioners' failure to buy the allotted portion,respondents bought the whole property from the Gloriosos; and (5) despite repeated demands, petitionersrefused to vacate the property.2

Petitioners filed a Motion to Dismiss but the RTC dismissed it for lack of merit in its Order dated March 6,1995.3 Petitioners then filed their Answer setting forth the affirmative defenses that: (1)

the Kasunduanis a perfected contract of sale; (2) the agreement has already beeconsummated" as they already relocated their house from the rear portion of the that was sold to them; (3) Mrs. Glorioso prevented the complete consummation orefused to have the exact boundaries of the lot bought by petitioners surveyed, anwas made without their knowledge and participation; and (4) respondents are buybought that portion of the lot occupied by them (petitioners) with full knowledge oby the Gloriosos.4

After due proceedings, the RTC rendered a Decision on April 3, 1998 in favor of reportion of the decision provides:

PREMISES CONSIDERED, the herein plaintiffs was able to prove by prepevidence the case ofaccion publiciana, against the defendants and judgrendered as follows:

1.Ordering defendants and all persons claiming under them to vacate ppremises in question and to remove their house therefore (sic); EIDTAa

2.Ordering defendants to pay plaintiff the sum of P500.00 as reasonablemonth beginning October 21, 1994 when the case was filed before this month thereafter until they vacate the subject premises and to pay the

The counter claim is hereby DISMISSED for lack of merit.

SO ORDERED.5

Petitioners appealed the RTC decision but it was affirmed by the CA per its Decisio2000.

Hence, the present petition raising the following issues:

1.Whether the Honorable Court of Appeals committed an error of law inAgreement (Kasunduan) between the parties was a "mere offer to sell,"perfected "Contract of Purchase and Sale"?

2.Whether the Honorable Court of Appeals committed an error of law in

where the parties clearly gave the petitioners a period of time within wh

http://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

10/59

price, but did not fix said period, the remedy of the vendors is to ask the Court to fix theperiod for the payment of the price, and not an "accion publiciana"?

3.Whether the Honorable Court of Appeals committed an error of law in not orderingrespondents to at least deliver the "back portion" of the lot in question upon payment ofthe agreed price thereof by petitioners, assuming that the Regional Trial Court wascorrect in finding that the subject matter of the sale was said "back portion", and notthe "front" portion of the property?

4.Whether the Honorable Court of Appeals committed an error of law in affirming thedecision of the trial court ordering the petitioners, who are possessors in good faith, topay rentals for the portion of the lot possessed by them?6

The RTC dwelt on the issue of which portion was being sold by the Gloriosos to petitioners, finding that itwas the rear portion and not the front portion that was being sold; while the CA construedthe Kasunduanas a mere contract to sell and due to petitioners' failure to pay the purchase price, theGloriosos were not obliged to deliver to them (petitioners) the portion being sold.

Petitioners, however, insist that the agreement was a perfected contract of sale, and their failure to paythe purchase price is immaterial. They also contend that respondents have no cause of action againstthem, as the obligation set in the Kasunduandid not set a period, consequently, there is no breach of anyobligation by petitioners.

The resolution of the issues in this case principally is dependent on the interpretation ofthe Kasunduandated August 6, 1983 executed by petitioners and the Gloriosos. The Kasunduanprovidedthe following pertinent stipulations:

a.Na pumayag ang mga maysumbong (referring to the Gloriosos) na pagbilhan ang mgaipinagsumbong (referring to petitioners) na bahagi ng lupa at ang ipagbibili aymay sukat na 213 metrong parisukat humigit kumulang sa halagang P40.00bawat metrong parisukat;

b.Na sa titulong papapanaugin ang magiging kabuuang sukat na mauukol sa mgaipinagsusumbong ay 223 metrong parisukat at ang 10 metro nito ay bilangkaloob ng mga maysumbong sa mga Ipinagsusumbong na bahagi ng right ofway;

c.Na ang right of way ay may luwang na 1.75 meters magmula sa daanJaena patungo sa likuran ng lote na pagtatayuan ng bahIpinagsusumbong na kanyang bibilhin;

d.Na ang gugol sa pagpapasukat at pagpapanaog ng titulo ay paghahatmagkabilang panig na ang panig ay magbibigay ng halagang hisa halagang tig-AAPAT NA DAANG PISO (P400.00);

e.Na ang ipinagsusumbong ay tiyakang ililipat ang bahay sa bahaging kmabibili sa buwan ng Enero 31, 1984; 7 (Emphasis supplied)A

Under Article 1458 of the Civil Code, a contract of sale is a contract by which one parties obligates himself to transfer the ownership and to deliver a determinate ththerefor a price certain in money or its equivalent. Article 1475 of the Code furthecontract of sale is perfected at the moment there is meeting of the minds upon thobject of the contract and upon the price. From that moment the parties may reciperformance subject to the provisions of the law governing the form of contracts.

In a contract of sale, the title to the property passes to the vendee upon the delivedistinguished from a contract to sell where ownership is, by agreement, reserved to pass to the vendee until full payment of the purchase price. 8 Otherwise statedthe vendor loses ownership over the property and cannot recover it until and unleresolved or rescinded; whereas, in a contract to sell, title is retained by the vendothe price. In the latter contract, payment of the price is a positive suspensive condnot a breach but an event that prevents the obligation of the vendor to convey titeffective.

The Kasunduanprovides for the following terms and conditions: (a) that the Gloripetitioners a portion of the property with an area of 213 meters at the price of P40(b) that in the title that will be caused to be issued, the aggregate area is 223 squmeters thereof serving as right of way; (c) that the right of way shall have a widthLopez Jaena road going towards the back of the lot where petitioners will build theof the lot that they will buy; (d) that the expenses for the survey and for the issuadivided between the parties with each party giving an amount of no less than P40petitioners will definitely relocate their house to the portion they bought or will bu

http://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

11/59

The foregoing terms and conditions show that it is a contract to sell and not a contract of sale. For one,the conspicuous absence of a definite manner of payment of the purchase price in the agreement confirmsthe conclusion that it is a contract to sell. This is because the manner of payment of the purchaseprice is an essential element before a valid and binding contract of sale can exist.9Althoughthe Civil Code does not expressly state that the minds of the parties must also meet on the terms ormanner of payment of the price, the same is needed, otherwise there is no sale. 10As held inToyotaShaw, Inc. vs. Court of Appeals,11 a definite agreement on the manner of payment of the price is anessential element in the formation of a binding and enforceable contract of sale.

The Kasunduandoes not establish any definite agreement between the parties concerning the terms ofpayment. What it merely provides is the purchase price for the 213-square meter property at P40.00 persquare meter.

For another, the telltale provision in the Kasunduanthat: "Na pumayag ang mga maysumbongna pagbilhan ang mga ipinagsumbong na bahagi ng lupa at ang ipagbibili ay may sukat na 213 metrongparisukat humigit kumulang sa halagang P40.00 bawat metrong parisukat," simply means that theGloriosos onlyagreed to sell a portion of the property and that the portion to be sold measures 213 squaremeters.

Another significant provision is that which reads: "Na ang ipinagsusumbong ay tiyakang ililipat ang bahaysa bahaging kanilang nabili o mabibili sa buwan ng Enero 31 , 1984." The foregoing indicates that acontract of sale is yet to be consummated and ownership of the property remained in the Gloriosos.Otherwise, why would the alternative term "mabibili" be used if indeed the property had already been soldto petitioners.

In addition, the absence of any formal deed of conveyance is a strong indication that the parties did notintend immediate transfer of ownership.12

Normally, in a contract to sell, the payment of the purchase price is the positive suspensive condition uponwhich the transfer of ownership depends.13 The parties, however, are not prohibited from stipulatingother lawful conditions that must be fulfilled in order for the contract to be converted from a contract tosell or at the most an executory sale into an executed one. 14

In the present case, aside from the payment of the purchase price, there existed condition, i.e.: that petitioners will relocate their house to the portion they bought31, 1984. ETIHCa

Petitioners failed to abide by the express condition that they should relocate to thproperty being bought by January 31, 1984. Indeed, the Kasunduandiscloses thathat was being sold by the Gloriosos, and not the front portion as petitioners stubevident from the provisions establishing a right of way from Lopez Jaena road goin

the lot, and requiring them to relocate their house to the portion being sold by JanPetitioners are presently occupying the front portion of the property. Why the neefor petitioners to relocate if the front portion on which their house stands is the po

This condition is a suspensive condition noncompliance of which prevented the Glwith the sale and ultimately transferring title to petitioners; and the Kasunduanfrforce.15 It is established by evidence that the petitioners did not transfer their hportion of the subject property to the rear portion which, under the Kasunduan, thThus, no obligation arose on the part of the Gloriosos to consider the subject propto petitioners because the latter's non-fulfillment of the suspensive condition rendineffective and unperfected.

Petitioners admit that they have not paid a single centavo to the Gloriosos. Howevthat their nonpayment of the purchase price was due to the fact that there is yet tthe property. But evidence shows, and petitioners do not dispute, that as early as

days after the execution of the Kasunduan, a survey has already been made and tsubdivided into Lot Nos. 565-B-1 (front portion) and 565-B-2 (rear portion), with Lmeasuring 223 square meters as the portion to be bought by petitioners.

Petitioners question the survey made, asserting that it is a "table survey" made wand participation. It should be pointed out that theKasunduanmerely provides thasurvey will be divided between them and that each party should give an amount oNowhere is it stated that the survey is a condition precedent for the payment of th

Petitioners further claim that respondents have no cause of action against them bpay the purchase price did not yet arise, as the agreement did not provide for a pthe purchase price. They argue that respondents should have filed an action for sp

judicial rescission before they can avail ofaccion publiciana.

http://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

12/59

Notably, petitioners never raised these arguments during the proceedings before the RTC. Suffice it to saythat issues raised for the first time on appeal and not raised timely in the proceedings in the lower courtare barred by estoppel.16 Matters, theories or arguments not brought out in the original proceedingscannot be considered on review or appeal where they are raised for the fir st time. To consider the allegedfacts and arguments raised belatedly would amount to trampling on the basic principles of fair play, justiceand due process.17

Moreover, it would be inutile for respondents to first petition the court to fix a period for the performance

of the contract. In the first place, respondents are not parties to the Kasunduanbetween petitioners andthe Gloriosos, and they have no standing whatsoever to seek such recourse. In the second place, suchrecourse properly pertains to petitioners. It was they who should have sought the court's intercession. Ifpetitioners believed that they have an actionable contract for the sale of the property, prudence andcommon sense dictate that they should have sought its enforcement forthwith. Instead, petitioners whiledaway their time. HEDSCc

Furthermore, there is no need for a judicial rescission of the Kasunduanfor the simple reason that theobligation of the Gloriosos to transfer the property to petitioners has not yet arisen. There can be norescission of an obligation that is nonexistent, considering that the suspensive conditions therefor have notyet happened.18

Hence, petitioners have no superior right of ownership o r possession to speak of. Their occupation of theproperty was merely through the tolerance of the owners. Evidence on re cord shows that petitioners andtheir predecessors were able to live and build their house on the property through the permission and

kindness of the previous owner, Pedro Hipolito , who was their relative,19 and subsequently, TeresitaGlorioso, who is also their relative. They have no title or, at the very least, a contract of lease over theproperty. Based as it was on mere tolerance, petitioners' possession could neither ripen into ownership noroperate to bar any action by respondents to recover absolute possession thereof. 20

There is also no merit to petitioners' contention that respondents are buyers in bad faith. As explainedin Coronel vs. Court of Appeals:

In a contract to sell, there being no previous sale of the property, a third personbuying such property despite the fulfillment of the suspensive condition suchas the full payment of the purchase price, for instance, cannot be deemed abuyer in bad faith and the prospective buyer cannot seek the relief of reconveyanceof the property. There is no double sale in such case . Title to the property willtransfer to the buyer after registration because there is no defect in the owner-seller's

title per se, but the latter, of course, may be sued for damages by the inbuyer.21 (Emphasis supplied)

A person who occupies the land of another at the latter's forbearance or permissiobetween them is necessarily bound by an implied promise that he will vacate upon

Considering that petitioners' continued possession of the property has already beethey are bound to pay reasonable rental for the use and occupation thereof, which

appropriately pegged by the RTC at P500.00 per month beginning October 21, 199filed the case against them until they vacate the premises.

Finally, petitioners seek compensation for the value of the improvements introducAgain, this is the first time that they are raising this point. As such, petitioners areseeking such relief.23

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated G.R. CV No. 61247 is AFFIRMED. IDSETA

SO ORDERED.

http://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/183?search=gr%3A+%28145470%2A%29#footnotes

7/28/2019 Sales 1 to 9 6-26-13

13/59

FIRST DIVISION

[G.R. No. 144225. June 17, 2003.]

SPOUSES GODOFREDO ALFREDO and CARMEN LIMON ALFREDO, SPOUSESARNULFO SAVELLANO and EDITHA B. SAVELLANO, DANTON D. MATAWARAN,SPOUSES DELFIN F. ESPIRITU, JR. and ESTELA S. ESPIRITU and ELIZABETHTUAZON, petitioners, vs. SPOUSES ARMANDO BORRAS and ADELIA LOBATONBORRAS, respondents.

Ortiguera, Zuniga, Pomer, Salaria, Sison Law Officesfor petitioners.

David G. Paguiofor private respondents.

SYNOPSIS

The spouses Alfredo were the registered owners of the land in issue. They sold the same to the spousesBorras where some of the money was used to pay the mortgage loan. Thereafter, the spouses Borras tookpossession of the land but discovered that the spouses Alfredo re-sold the land to other persons. Whenthe spouses Borras filed an adverse claim, the spouses Alfredo argued that the action was unenforceable

under the Statute of Frauds as there was no written instrument evidencing the sale. Further, the allegedsubsequent land buyers from the spouses Alfredo were buyers in good faith.

The Court ruled in favor of the spouses Borras. The contract of sale between the spouses Alfredo and thespouses Borras on the land was not only a perfected contract but also a consummated contract. Thus, theStatute of Frauds does not apply. On the alleged good faith of the subsequent buyers, the same wasbelied by the fact that the spouses Borras registered their adverse claim earlier than subsequent buyers'date of purchase and registration. Thus, they have constructive notice of the defect in the titles of thesellers.

SYLLABUS

1.REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE TRIAL COURT AFFIRMCOURT, RESPECTED. In a petition for review on certiorariunder Rule 45, this Cof law and not errors of facts. The factual findings of the appellate court are geneCourt. This applies with greater force when both the trial court and the Court of Aagreement on their factual findings.

2.CIVIL LAW; CONTRACTS; SALES; PERFECTED CONTRACT OF SALE, PRESENT INcontract is perfected once there is consent of the contracting parties on the object

cause of the obligation. In the instant case, the object of the sale is the Subject Lacertain is P15,000.00. The trial and appellate courts found that there was a meetisale of the Subject Land and on the purchase price of P15,000.00 .

3.ID.; ID.; ID.; CONSUMMATED AS CONTRACTING PARTIES COMPLIED WITH THOBLIGATIONS. The contract of sale of the Subject Land has also been consummsellers and buyers have performed their respective obligations under the contract.the seller obligates himself to transfer the ownership o f the determinate thing soldsame, to the buyer who obligates himself to pay a price certain to the seller. In thGodofredo and Carmen delivered the Subject Land to Armando and Adelia, placingphysical possession of the Subject Land. This physical delivery of the Subject Landtransfer of ownership of the Subject Land to Armando and Adelia. Ownership of thtransferred to the vendee upon its actual or constructive delivery. Godofredo and to Armando and Adelia the documents of ownership to the Subject Land, namely tcopy of OCT No. 284, the t ax declaration and the receipts of realty tax payments.

the seller himself deliver the title of the property to the buyer because the thing sodelivered when it is placed in the control and possession of the vendee.

4.ID.; ID.; UNENFORCEABLE CONTRACTS; STATUTE OF FRAUDS; NOT APPLICABMEMORANDUM OF SALE AND ALSO PERFORMANCE OF OBLIGATION. The Statthat a contract for the sale of real property shall be unenforceable unless the contmemorandum of the sale is in writing and subscribed by the party charged or his the receipt dated 11 March 1970, which is a memorandum of the sale, removes thprovisions of the Statute of Frauds. The Statute of Frauds applies only to executorcontracts either partially or totally performed. Thus, where one party has performeevidence will be admitted to prove the agreement. In the instant case, the partiessale of the Subject Land, with both sellers and buyers performing their respectivecontract of sale. In addition, a contract that violates the Statute of Frauds is ratifiebenefits under the contract. Godofredo and Carmen benefited from the contract b

DBP loan and secured the cancellation of their mortgage using the money given b

7/28/2019 Sales 1 to 9 6-26-13

14/59

Godofredo and Carmen also accepted payment of the balance of the purchase price. Godofredo andCarmen cannot invoke the Statute of Frauds to deny the existence of the verbal contract of sale becausethey have performed their obligations, and have accepted benefits, under the verbal contract. Armandoand Adelia have also performed their obligations under the verbal contract. Clearly, both the sellers andthe buyers have consummated the verbal contract of sale of the Subject Land. The Statute of Frauds wasenacted to prevent fraud. This law cannot be used to advance the very evil the law seeks to prevent.

5.ID.; FAMILY RELATIONS; PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE; CONJUGAL

PARTNERSHIP OF GAINS; ADMINISTRATION; DISPOSITION OF CONJUGAL PROPERTY WITHOUT WIFE'SCONSENT IS VOIDABLE. The Family Code, which took effect on 3 August 1988, provides that anyalienation or encumbrance made by the husband of the conjugal partnership property without the consentof the wife is void. However, when the sale is made before the effectivity of the Family Code. theapplicable law is the Civil Code. Article 173 of the Civil Code provides that the disposition of conjugalproperty without the wife's consent is not void but merely voidable.

6.ID.; ID.; ID.; ID.; ID.; ID.; SUSCEPTIBLE TO RATIFICATION BY ACTION OF NON-CONSENTINGSPOUSE. That Carmen sold the land to Armando and Adelia without the consent of Carmen's husband,the sale would only be voidable and not vo id. However, Godofredo can no longer question the sale.

Voidable contracts are susceptible of ratification. Godofredo ratified the sale when he introduced Armandoand Adelia to his tenants as the new owners of the Subject Land. That Godofredo and Carmen allowed

Armando and Adelia to enjoy possession of the Subject Land for 24 years is formidable proof ofGodofredo's acquiescence to the sale. If the sale was truly unauthorized, then Godofredo should have filedan action to annul the sale. He did not. The prescriptive period to annul the sale has long lapsed.

Godofredo's conduct belies his claim that his wife sold the Subject Land without his consent.

7.ID.; ID.; ID.; ID.; CHARGES UPON AND OBLIGATIONS OF THE CONJUGAL PARTNERSHIP; CONJUGALPROPERTY LIABLE FOR DEBTS CONTRACTED BY WIFE FOR THE BENEFIT OF CONJUGAL PARTNERSHIP. Godofredo and Carmen used most of the proceeds of the sale to pay their debt with the DBP. The saleredounded to the benefit of the conjugal partnership. Article 161 of the Civil Code provides that theconjugal partnership shall be liable for debts and obligations contracted by the wife for the benefit of theconjugal partnership. Hence, even if Carmen sold the land without the consent of her husband, the salestill binds the conjugal partnership.

8.REMEDIAL LAW; APPEAL; ISSUE RAISED FOR THE FIRST TIME ON APPEAL, NOT PROPER; RULELIBERALLY CONSTRUED TO PUT END TO CASE. Petitioners invoke the absence of approval of the saleby the Secretary of Agriculture and Natural Resources to nullify the sale. Petitioners never raised this issuebefore the trial court or the Court o f Appeals. Litigants cannot raise an issue for the first time on appeal,

as this would contravene the basic rules of fair play, justice and due process. Howthis new issue to finally put an end to this case. HAICET

9.CIVIL LAW; PUBLIC LAND ACT; SALE OF LAND ACQUIRED UNDER FREE PATENTOF AGRICULTURE SECRETARY IN THE ABSENCE OF GROUND TO DENY THE SAMLATER. The sale of the Subject Land cannot be annulled on the ground that theapprove the sale, which was made within 25 years from the issuance of the homeof the Public Land Act (Commonwealth Act No. 141) reads as follows: SEC. 118. E

Government or any of its branches, units, or i nstitutions or legally constituted banacquired under free. patent or homestead provisions shall not be subject to encumfrom the date of the approval of the application and for a term of five years from issuance of the patent or grant. . . . No alienation, transfer, or conveyance of any and before twenty-five years after the issuance of title shall be valid without the aof Agriculture and Commerce, which approval shall not be denied except on constgrounds. A grantee or homesteader is prohibited from alienating to a private indivfive years from the time that the patent or grant is issued. A violation of this prohivoid. This prohibition, however, expires on the fifth year. From then on until the ngrant may be alienated provided the Secretary of Agriculture and Natural Resourcalienation. The Secretary is required to approve the alienation unless there are "cogrounds" to deny the approval. In this case, there are no apparent constitutional oSecretary to disapprove the sale of the Subject Land. The failure to secure the appdoes not ipso factomake a sale void. The absence of approval by the Secretary domade after the expiration of the 5-year period, for i n such event the requirement

Public Land Act becomes merely directory or a formality. The approval may be secthe effect of ratifying and adopting the transaction as if the sale had been previou

10.REMEDIAL LAW; CIVIL PROCEDURE; PLEADINGS; NATURE OF ACTION DETEROF THE COMPLAINT. The Amended Complaint filed by Armando and Adelia witcaptioned as one for Specific Performance. In reality, the ultimate relief sought bythe reconveyance to them of the Subject Land. An action for reconveyance is one property, wrongfully registered by another, to its rightful and legal owner. The bocomplaint determines the nature of an action, not its title or heading. Thus, the ptreated as one for reconveyance.

11.CIVIL LAW; CONTRACTS; IMPLIED TRUSTS; ONE WHO ACQUIRED PROPERTY

BECOMES TRUSTEE FOR THE BENEFIT OF REAL PROPERTY OWNER WHO HAS RI

7/28/2019 Sales 1 to 9 6-26-13

15/59

RECONVEYANCE OF PROPERTY. Article 1456 of the Civil Code provides that a person acquiring propertythrough fraud becomes by operation of law a trustee of an implied trust for the benefit of the real ownerof the property. The presence of fraud in this case created an implied trust in favor of Armando and

Adelia. This gives Armando and Adelia the right to seek reconveyance of the property from theSubsequent Buyers.

12.ID.; MODES OF ACQUIRING OWNERSHIP; PRESCRIPTION OF ACTIONS; ACTION FORRECONVEYANCE; PRESCRIPTION DOES NOT RUN WHERE OWNER IS IN POSSESSION OF THE PROPERTY

AS ACTION IS IN THE NATURE OF QUIETING OF TITLE WHICH IS IMPRESCRIPTIBLE. To determinewhen the prescriptive period commenced in an action for reconveyance, plaintiff's possession of thedisputed property is material. An action for reconveyance based on an implied trust prescribes in tenyears. The ten-year prescriptive period applies only if there is an actual need to reconvey the property aswhen the plaintiff is not in possession of the property. However, if the plaintiff, as the real owner of theproperty also remains in possession of the property, the prescriptive period to recover title and possessionof the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed,would be in the nature of a suit for quieting of title, an action that is imprescriptible. Prescription does notrun against the plaintiff in actual possession of the disputed land because such plaintiff has a right to waituntil his possession is disturbed or his title is questioned before initiating an action to vindicate his right.His undisturbed possession gives him the continuing right to seek the aid of a court of equity to determinethe nature of the adverse claim of a third party and its effect on his title.

13.ID.; ID.; ID.; ACTION FOR RECONVEYANCE BASED ON IMPLIED TRUST PRESCRIBES IN TEN YEARS;PERIOD STARTED TO RUN FROM DATE OF REGISTRATION OF SUBSEQUENT BUYERS. Armando and

Adelia lost possession of the Subject Land when the Subsequent Buyers forcibly drove away from theSubject Land the Natanawans, the tenants of Armando and Adelia. This created an actual need for

Armando and Adelia to seek reconveyance of the Subject Land. The statute of limitation becomes relevantin this case. The ten-year prescriptive period started to run from the date the Subsequent Buyersregistered their deeds of sale with the Register of Deeds.

14.REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; LACHES; NOT PRESENT IN CASE AT BAR. Neither isthe action barred by laches. We have defined laches as the failure or neglect, for an unreasonable time, todo that which, by the exercise of due diligence, could or should have been done earlier. It is negligence oromission to assert a right within a reasonable time, warranting a presumption that the party entitled toassert it either has abandoned it or declined to assert it. Armando and Adelia discovered in January 1994the subsequent sale of the Subject Land and they filed this case on 7 March 1994. Plainly, Armando and

Adelia did not sleep on their rights.

15.CIVIL LAW; CONTRACTS; SALES; DOUBLE SALE; WHERE SECOND BUYER HASSALE, GOOD FAITH, NOT PRESENT. The settled rule is when ownership or title seller ceases to have any title to transfer to any third person. If the seller sells thethe second buyer who has actual or constructive knowledge of the prior sale canngood faith. Such second buyer cannot defeat the first buyer's title. In case a title ibuyer, the first buyer may seek reconveyance of the property subject of the sale. under the second paragraph of Article 1544 of the Civil Code, the second buyer mregistering the deed. In this case, the Subsequent Buyers' good faith hinges on whknowledge of the previous sale. Petitioners do not dispute that Armando and Adeadverse claim with the Registry of Deeds of Bataan on 8 February 1994. The Subspurchased their respective lots only on 22 February 1994 as shown by the date of Consequently, the adverse claim registered prior to the second sale charged the Sconstructive notice of the defect in the title of the sellers, Godofredo and Carmen.adverse claim on 8 February 1994 constituted, by operation of law, notice to the wSubsequent Buyers were not buyers in good faith when they purchased their lots They were also not registrants in good faith when they registered their deeds of saDeeds on 24 February 1994.

16.ID.; LAND TITLES; INDEFEASIBILITY DOES NOT APPLY WHERE FRAUD ATTENTHEREOF. The Subsequent Buyers' individual titles to their respective lots are nindefeasible. The defense of indefeasibility of the Torrens Title does not extend tothe certificate of title with notice of a flaw in his title. The principle of indefeasibilitwhere fraud attended the issuance of the titles as in this case. cDTACE

17.ID.; DAMAGES; ATTORNEY'S FEES; PROPER WHERE PARTY COMPELLED TO FIsustain the award of attorney